Body

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

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MANILA GOLF & COUNTRY CLUB, INC., VS IAC AND FERMIN LLAMAR (1994)
G.R. 64948
Facts:
Respondents were caddies and employees of Manila Golf & Country Club who originally filed
a petition with the Social Security Commission (SSC) for coverage and availment of benefits
under the Social Security Act. They alleged that although the petitioners were employees of
the Manila Golf and Country Club, a domestic corporation, the latter had not registered them
as such with the SSS.
In the case before the SSC, the respondent Club alleged that the petitioners, caddies by
occupation, were allowed into the Club premises to render services as such to the individual
members and guests playing the Club's golf course and who themselves paid for such
services; that as such caddies, the petitioners were not subject to the direction and control
of the Club as regards the manner in which they performed their work; and hence, they were
not the Club's employees.
Issue: WON there exist an employer-employee relationship between the cadies and the Golf
Club?
Held:
No existence of employer-employee relationship.
In the very nature of things, caddies must submit to some supervision of their conduct while
enjoying the privilege of pursuing their occupation within the premises and grounds of
whatever club they do their work in. For all that is made to appear, they work for the club to
which they attach themselves on sufferance but, on the other hand, also without having to
observe any working hours, free to leave anytime they please, to stay away for as long they
like. It is not pretended that if found remiss in the observance of said rules, any discipline
may be meted them beyond barring them from the premises which, it may be supposed, the
Club may do in any case even absent any breach of the rules, and without violating any right
to work on their part. All these considerations clash frontally with the concept of
employment.
The IAC would point to the fact that the Club suggests the rate of fees payable by the
players to the caddies as still another indication of the latter's status as employees. It seems
to the Court, however, that the intendment of such fact is to the contrary, showing that the
Club has not the measure of control over the incidents of the caddies' work and
compensation that an employer would possess. Court agree that the group rotation system
so-called, is less a measure of employer control than an assurance that the work is fairly
distributed, a caddy who is absent when his turn number is called simply losing his turn to
serve and being assigned instead the last number for the day.
Moreover, as pointed out by petitioner which was never refuted that: has no means of
compelling the presence of a caddy. A caddy is not required to exercise his occupation in the
premises of petitioner. He may work with any other golf club or he may seek employment a
caddy or otherwise with any entity or individual without restriction by petitioner.

ENCYCLOPAEDIA BRITANNICA (PHIL) INC., VS NLRC (1996)
G.R. 87098
Facts:

2|Page

Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner
Encyclopaedia Britannica and was in charge of selling petitioner’s products through some
sales representatives. As compensation, private respondent received commissions from the
products sold by his agents. He was also allowed to use petitioner’s name, goodwill and
logo. It was, however, agreed upon that office expenses would be deducted from private
respondent’s commissions. Petitioner would also be informed about appointments,
promotions, and transfers of employees in private respondent’s district.
On June 1974, Limjoco resigned from office to pursue his private business. He then filed a
complaint against petitioner Encyclopaedia Britannica with DOLE, claiming for non-payment
of separation pay and other benefits, and also illegal deduction from his sales commissions.
Petitioner alleged that Limjoco was not its employee but an independent dealer authorized
to promote and sell its products and in return, received commissions there from. Limjoco did
not have any salary and his income from the company was dependent on the volume of
sales accomplished. He also had his own separate office, financed the business expenses,
and maintained his own workforce. The salaries of his secretary, utility man, and sales
representatives were chargeable to his commissions. Thus, petitioner argued that it had no
control and supervision over the complainant as to the manner and means he conducted his
business operations, moreover, the latter did not even report to the office of the petitioner
and did not observe fixed office hours
Issue: WON there exist an employer-employee relationship and necessarily entitles Limjoco
of his claims?
Held:
Private respondent was merely an agent or an independent dealer of the petitioner.
In ascertaining whether the relationship is that of employer-employee or one of independent
contractor, each case must be determined by its own facts and all features of the
relationship are to be considered.
Respondent was free to conduct his work and he was free to engage in other means of
livelihood. At the time he was connected with the petitioner company, private respondent
was also a director and later the president of the Farmers’ Rural Bank. Had he been an
employee of the company, he could not be employed elsewhere and he would be required to
devote full time for petitioner. If private respondent was indeed an employee, it was rather
unusual for him to wait for more than a year from his separation from work before he
decided to file his claims. As he pointed out in his resignation letter, Limjoco was aware of
“conflict with other interests which xxx have increasingly required my personal attention”.
At the very least, it would indicate that petitioner has no effective control over the personal
activities of Limjoco, who as admitted by the latter had other “conflict of interest” requiring
his personal attention.
As pointed out “the element of control is absent; where a person who works for another does
so more or less at his own pleasure and is not subject to definite hours or conditions of work,
and in turn is compensated according to the result of his efforts and not the amount
thereof.”

CARUNGCONG VS NLRC, SUN LIFE ASSURANCE CO. OF CANADA (1997)
G.R. 118086
Facts:

3|Page

Susan Carungcong began as an agent of Sun Life in 1974, she signed an “Agent’s
Agreement” and was designated to solicit applications for insurance and annuity services.
The contract set out in detail the terms and conditions — particularly those concerning the
commissions payable to her — under which her relationship with the company would be
governed. Five years later, said contract was superseded by 2 new agreements: first, is the
"Career Agent's (or Unit Manager's) Agreement," dealt with such matters as the agent's
commissions, his obligations, limitations on his authority, and termination of the agreement
by death, or by written notice "with or without cause." It declared that the "Agent shall be an
independent contractor and none of the terms of agreement shall be construed as creating
an employer-employee relationship; second, was titled, "MANAGER'S Supplementary
Agreement." Making explicit reference to the first agreement "which became effective on
the 1st day of July, 1979" said second contract — explicitly described as a "further
agreement" — contained provisions regarding remuneration (overriding commissions in
accordance with a fixed schedule), limitation of authority, and termination of the agreement
inter alia by written notice "without cause."
Subsequently, Carungcong and Sun Life executed another Agreement - by which the former
was named New Business Manager with the function generally "to manage a New Business
Office established by her and to obtain applications for life insurance policies and other
products offered by or distributed through Sun Life and to perform such other duties in
connection therewith as Sun Life may require from time to time." This latest Agreement
stressed that the "New Business Manager in performance of his duties defined herein, shall
be considered an independent contractor and not . . an employee of Sun Life," and that
"under no circumstance shall the New Business Manager and/or his employees be
considered employees of Sun Life."
After receiving reports of anomalies in relation thereto from unit managers and agents by
the company’s VP, the Manager of Sun Life's Internal Audit Department, commenced an
inquiry into the special fund availments of Carungcong and other New Business Managers
which later prompted the petitioner’s termination. She then instituted proceedings for
vindication in the Arbitration Branch of the National Labor Relations Commission where she
succeeded in obtaining a favorable judgment finding that there existed an employeremployee relationship between her and Sun Life; ruled that she had been illegally dismissed,
thus entitled to reinstatement without loss of seniority rights and other benefits.
Issue: WON there existed an employer-employee relationship between Caruncong and
Sunlife?
Held:
Carungcong was an independent contractor and not an employee of Sun Life.
The contracts she had willingly and knowingly signed with Sun Life repeatedly and clearly
provided that said agreements were terminable by either party by written notice with or
without cause.
Noteworthy is that this last agreement, it was emphasized, like the "Career Agent's (or Unit
Manager's) Agreement" first signed by her, that in the performance of her duties defined
herein. Carungcong would be considered an independent contractor and not . . an employee
of Sun Life," and that "(u)nder no circumstance shall the New Business Manager and/or his
employees
be
considered
employees
of
Sun
Life."

SONZA V. ABS-CBN BROADCASTING CORPORATION
G.R. No. 138051 June 10, 2004

4|Page

Facts:
ABS-CBN Broadcasting Corporation, herein respondent, signed an agreement with the Mel
and Jay Management and Development Corporation (MJMDC) which listed the services
Sonza, herein petitioner, would render.
Petitioner wrote a letter to respondent corporation regarding his irrevocable resignation
alleging further that the station did acts violative of their agreement prompting him to serve
the notice of rescission of said agreement. He then filed a complaint against respondent
corporation before the Department of Labor and Employment (DOLE) alleging that the
respondent corporation did not pay his salaries, separation pay, service incentives, leave
pay, 13th month pay, among others.
Respondent corporation filed a motion to dismiss on the ground that no employer-employee
relationship existed between the parties. It, however, continued remitting petitioner’s
monthly talent fee. The Labor Arbiter denied the motion. It later decided to dismiss the
complaint for lack of jurisdiction. The National Labor Relations Commission (NLRC) and Court
of Appeals (CA) affirmed the Labor Arbiter’s decision.
Issue: Whether or not an employer-employee relationship existed between Sonza and ABSCBN Corporation.
Held:
Sonza is not an employee of the respondent corporation. The existence of an employeremployee relationship could be established if the following elements are present: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal and; (d) the employee’s power to control the employee on the means and methods
by which the works is accomplished. The last element (control test) is the most important
element.
Independent contractors often present themselves to possess unique skills, expertise or
talent to distinguish them from other employees. The respondent corporation specifically
select and hire Sonza because of his unique skills and talent and celebrity status not
possessed by ordinary employees.
With regard to the payment of wages, all the talent fees and benefits paid to Sonza were the
result of negotiations that led to the agreement. If petitioner were an employee, there would
be no need for the parties to stipulate on benefits which the law automatically incorporates
into ever employer-employee contract.
During the life of the agreement, respondent agreed to pay Sonza’s talent fees as long as
“agent and Sonza shall faithfully and completely perform each condition of their
agreement.” Even if it suffered severe business losses, respondent could not retrench Sonza
because it remained obligated to pay his’ talent fees during the life of the agreement. This
indicates an independent contractual relationship.
Applying the control test, the Court found petitioner not an employee but an independent
contractor, petitioner being a talent of respondent corporation. This test is based on the
extent of control the hirer exercises over a worker. The greater the supervision and control
the hirer exercises, the more likely is deemed an employee. Conversely, the more likely the
worker
is
considered
an
independent
contractor.

5|Page

RAMOS V. CA
380 SCRA 467
Facts:
Petitioner Erlinda Ramos, after seeking professional medical help, was advised to undergo an
operation for the removal of a stone in her gall bladder (cholecystectomy) and was referred
to Dr. Hosaka, a surgeon, who agreed to perform the operation on her. Since neither
petitioner Erlinda nor her husband, petitioner Rogelio, knew of any anesthesiologist, Dr.
Hosaka recommended to them the services of Dr. Gutierrez. Petitioner Erlinda was admitted
to the Delos Santos Medical Center. Erlinda was scheduled to be operated 9 in the morning
but Dr. Hosaka only arrived three hours later. When Dr. Gutierrez tried to intubate the
patient, there were some bluish discoloration of Erlinda’s nailbeds on her left hand. The
doctors explained to petitioner Rogelio that his wife had bronchospasm. Erlinda stayed in the
ICU for a month and remained in comatose condition until she died on 1999.
Petitioners filed a civil case for damages against private respondents who where found by
the lower court as negligent in the performance of their duties to Erlinda and were found
solidarily liable. Private respondent Dr. Hosaka argued that he cannot be held liable on the
basis of the “captain-of-the-ship doctrine”. Gutierrez contended that she was not liable. De
Los Santos Medical Center stated that no employer-employee relationship exists between
the hospital and Osaka and Gutierrez and hence it could not be held solidarily liable.
Issues: 1. Whether or not Dr. Hosaka and Gutierrez are negligent
2. Whether or not the hospital is liable for act of negligence committed by their
consultant surgeon and anesthesiologist.
Held:
On the first issue, Dr. Hosaka and Dr. Gutierrez are negligent. The court ruled that Gutierrez
failed to exercise the standards of care in the administration of anesthesia on a patient. The
injury incurred by petitioner Erlinda does not normally happen absent any negligence in the
administration of anesthesia and in the use of an endotracheal tube. The instruments used
in the administration of anesthesia, including the endotracheal tube, were all under the
exclusive control of private respondent Dr. Gutierrez.
As to Hosaka, the court inferred that he exercised a certain degree of, at the very least,
supervision over the procedure then being performed on Erlinda. First, it was he who
recommended to petitioners the services of Dr. Gutierrez. Second, he himself admitted that
he was the attending physician of Erlinda. Thus, when Erlinda showed signs of cyanosis, it
was Dr. Hosaka who gave instructions to call for another anesthesiologist and cardiologist to
help resuscitate Erlinda. Third, it is conceded that in performing their responsibilities to the
patient, Drs. Hosaka and Gutierrez worked as a team. Last, the delay in the operation
caused by his late arrival had been proven to have caused a worse effect to Erlinda’s
condition.
As to the liability of DLSMC, applying the four-fold test in determining whether such a
relationship exists between it and the respondent doctors, the court ruled that there is no
employer-employee relationship between DLSMC and Drs. Gutierrez and Hosaka which
would hold DLSMC solidarily liable for the injury suffered by petitioner Erlinda under Article
2180 of the Civil Code. First, the hospital does not hire or engage the services of a
consultant, but rather, accredits the latter and grants him or her the privilege of maintaining
a clinic and/or admitting patients in the hospital upon a showing by the consultant that he or
she possesses the necessary qualifications, such as accreditation by the appropriate board
(diplomate), evidence of fellowship and references. Second, it is not the hospital but the
patient who pays the consultant’s fee for services rendered by the latter. Third, a hospital
does not dismiss a consultant; instead, the latter may lose his or her accreditation or

6|Page

privileges granted by the hospital. Lastly, when a doctor refers a patient for admission in a
hospital, it is the doctor who prescribes the treatment to be given to said patient. The
hospital’s obligation is limited to providing the patient with the preferred room
accommodation, the nutritional diet and medications prescribed by the doctor, the
equipment and facilities necessary for the treatment of the patient, as well as the services of
the hospital staff who perform the ministerial tasks of ensuring that the doctor’s orders are
carried out strictly. Further, no evidence was adduced to show that the injury suffered by
petitioner Erlinda was due to a failure on the part of respondent DLSMC to provide for
hospital
facilities
and
staff
necessary
for
her
treatment.

LAZARO V SSS
G.R. NO. 138254; JULY 30, 2004
Facts:
Lazaro is a proprietor of Royal Star Marketing ("Royal Star"), which is engaged in the
business of selling home appliances. Private respondent Laudato alleged that despite her
employment as sales supervisor of the sales agents for Royal Star, Lazaro had failed during
the said period to report her to the SSC for compulsory coverage or remit Laudato’s social
security contributions.
Lazaro denied the respondent’s allegation and instead avers that she was mere sales agent
whom he paid purely on commission basis. He also maintained that Laudato was not
subjected to definite hours and conditions for work and as such could not be deemed an
employee of Royal Star.
Issue: Whether or not Laudato is an employee of Royal Star Marketing.
Held:
Yes she is an
and thus was
end results.
interaction of

employee. Laudato oversaw and supervised the sales agents of the company
subject to the control of management as to she implements its policies and its
Based on the particular factual circumstances attending the professional
the parties, it can be well said that private respondent is an employee.

The fact that Laudato was paid by commission does not preclude the establishment of an
employer-employee relationship neither does it follow that a person who does not observe
normal hours of work cannot be deemed an employee. The Court declared that employeremployee relationship exists although supervisor is compensated on commission basis for
his
compensation
is
measured
by
the
number
of
sales
she
makes.
PHILIPPINE GLOBAL COMMUNICATION V. DE VERA
459 SCRA 260 [2005]
Facts:
Petitioner Global is a corporation engaged in the business of communication services who
enlisted Dr. De Vera to attend to the medical needs of its employees through a document
denominated as Retainership Contract. After 14 years however, petitioner terminated the
retainer’s contract. De Vera now filed a complaint of illegal dismissal before the NLRC.
Issue: Whether an employer-employee relationship exists.
Decision:

7|Page

No.
Applying the four-fold test, in determining the existence of an employer-employee
relationship:
- It was the respondent who sets the parameters of what his duties would be in
offering to petitioner. He was also not considered an employee by Global as he was
never included in the payroll; was never deducted any contribution for remittance to
the Social Security System. He can even propose his own time schedule for an
employee could not negotiate as this hours of work.
- His payment is in the form of professional fees and was in fact subjected to 10%
withholding tax for his professional fee. He even had to bill petitioner for his monthly
professional fees which is not done by an employee.
- The power to terminate the relationship was mutually vested on both. Either may
terminate the arrangement with or without cause.
- Global had no control over the means and methods by which respondent went about
performing his work at the company. He could even embark in the private practice of
his profession, not to mention that De Vera could negotiate the schedule of his work.

ABS-CBN VS. NAZARENO; G.R. NO. 164156
SEPTEMBER 26, 2006
Facts:
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting
business and owns a network of television and radio stations, whose operations revolve
around the broadcast, transmission, and relay of telecommunication signals. It sells and
deals in or otherwise utilizes the airtime it generates from its radio and television operations.
It has a franchise as a broadcasting company, and was likewise issued a license and
authority to operate by the National Telecommunications Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production
assistants (PAs) on different dates. They were assigned at the news and public affairs, for
various radio programs in the Cebu Broadcasting Station, with a monthly compensation of
P4,000. They were issued ABS-CBN employees' identification cards and were required to
work for a minimum of eight hours a day, including Sundays and holidays. They were made
to perform the following tasks and duties:
a) Prepare, arrange airing of commercial broadcasting based on the daily operations
log and digicart of respondent ABS-CBN;
b) Coordinate, arrange personalities for air interviews;
c) Coordinate, prepare schedule of reporters for scheduled news reporting and lead-in
or incoming reports;
d) Facilitate, prepare and arrange airtime schedule for public service announcement
and complaints;
e) Assist, anchor program interview, etc; and
f) Record, log clerical reports, man based control radio.
Their respective working hours were as follows:
Name
Time
No. of Hours
1. Marlene Nazareno 4:30 A.M.-8:00 A.M.
7 1/2
8:00 A.M.-12:00 noon
2. Jennifer Deiparine 4:30 A.M.-12:00M.N
7 1/2
3. Joy Sanchez
1:00 P.M.-10:00 P.M.(Sunday)
9 hrs.
9:00 A.M.-6:00 P.M. (WF)
9 hrs.
4. Merlou Gerzon
9:00 A.M.-6:00 P.M.
9 hrs.

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The PAs were under the control and supervision of Assistant Station Manager Dante J. Luzon,
and News Manager Leo Lastimosa.
On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a
Collective Bargaining Agreement (CBA) to be effective during the period from December 11,
1996 to December 11, 1999. However, since petitioner refused to recognize PAs as part of
the bargaining unit, respondents were not included to the CBA.
On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment
Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay,
Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before the NLRC.
Petitioner maintained that PAs, reporters, anchors and talents occasionally "sideline" for
other programs they produce, such as drama talents in other productions. As program
employees, a PA's engagement is coterminous with the completion of the program, and may
be extended/renewed provided that the program is on-going; a PA may also be assigned to
new programs upon the cancellation of one program and the commencement of another. As
such program employees, their compensation is computed on a program basis, a fixed
amount for performance services irrespective of the time consumed. At any rate, petitioner
claimed, as the payroll will show, respondents were paid all salaries and benefits due them
under the law.
Issue:

What is the nature of the employment of respondents?

Held:
We reject, as barren of factual basis, petitioner's contention that respondents are considered
as its talents, hence, not regular employees of the broadcasting company. Petitioner's claim
that the functions performed by the respondents are not at all necessary, desirable, or even
vital to its trade or business is belied by the evidence on record.
The question of whether respondents are regular or project employees or independent
contractors is essentially factual in nature; nonetheless, the Court is constrained to resolve it
due to its tremendous effects to the legions of production assistants working in the
Philippine broadcasting industry.
We agree with respondents' contention that where a person has rendered at least one year
of service, regardless of the nature of the activity performed, or where the work is
continuous or intermittent, the employment is considered regular as long as the activity
exists, the reason being that a customary appointment is not indispensable before one may
be formally declared as having attained regular status. Article 280 of the Labor Code
provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT. — The provisions of written
agreement to the contrary notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be regular where the employee has
been engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer except where the employment has been
fixed for a specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where the work
or services to be performed is seasonal in nature and the employment is for the
duration of the season.
It is of no moment that petitioner hired respondents as "talents." The fact that respondents
received pre-agreed "talent fees" instead of salaries, that they did not observe the required

9|Page

office hours, and that they were permitted to join other productions during their free time
are not conclusive of the nature of their employment. Respondents cannot be considered
"talents" because they are not actors or actresses or radio specialists or mere clerks or
utility employees. They are regular employees who perform several different duties under
the control and direction of ABS-CBN executives and supervisors.
Thus, there are two kinds of regular employees under the law: (1) those engaged to perform
activities which are necessary or desirable in the usual business or trade of the employer;
and (2) those casual employees who have rendered at least one year of service, whether
continuous or broken, with respect to the activities in which they are employed.
The law overrides such conditions which are prejudicial to the interest of the worker whose
weak bargaining situation necessitates the succor of the State. What determines whether a
certain employment is regular or otherwise is not the will or word of the employer, to which
the worker oftentimes acquiesces, much less the procedure of hiring the employee or the
manner of paying the salary or the actual time spent at work. It is the character of the
activities performed in relation to the particular trade or business taking into account all the
circumstances, and in some cases the length of time of its performance and its continued
existence. It is obvious that one year after they were employed by petitioner, respondents
became regular employees by operation of law.
Additionally, respondents cannot be considered as project or program employees because
no evidence was presented to show that the duration and scope of the project were
determined or specified at the time of their engagement. Under existing jurisprudence,
project could refer to two distinguishable types of activities. First, a project may refer to a
particular job or undertaking that is within the regular or usual business of the employer, but
which is distinct and separate, and identifiable as such, from the other undertakings of the
company. Such job or undertaking begins and ends at determined or determinable times.
Second, the term project may also refer to a particular job or undertaking that is not within
the regular business of the employer. Such a job or undertaking must also be identifiably
separate and distinct from the ordinary or regular business operations of the employer. The
job or undertaking also begins and ends at determined or determinable times.
In this case, it is undisputed that respondents had continuously performed the same
activities for an average of five years. Their assigned tasks are necessary or desirable in the
usual business or trade of the petitioner.
The persisting need for their services is sufficient evidence of the necessity and
indispensability of such services to petitioner's business or trade. While length of time may
not be a sole controlling test for project employment, it can be a strong factor to determine
whether the employee was hired for a specific undertaking or in fact tasked to perform
functions which are vital, necessary and indispensable to the usual trade or business of the
employer. We note further that petitioner did not report the termination of respondents'
employment in the particular "project" to the Department of Labor and Employment
Regional Office having jurisdiction over the workplace within 30 days following the date of
their
separation
from
work,
using
the
prescribed
form
on
employees'
termination/dismissals/suspensions.
As earlier stated, it is not the will or word of the employer which determines the nature of
employment of an employee but the nature of the activities performed by such employee in
relation to the particular business or trade of the employer. Considering that We have clearly
found that private respondents are regular employees of petitioner, their exclusion from the
said CBA on the misplaced belief of the parties to the said agreement that they are project
employees, is therefore not proper. Finding said private respondents as regular employees
and not as mere project employees, they must be accorded the benefits due under the said

10 | P a g e

Collective

Bargaining

Agreement.

FRANCISCO VS. NLRC
500 SCRA 690
Facts:
In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was
designated as Accountant and Corporate Secretary and was assigned to handle all the
accounting needs of the company. She was also designated as Liaison Officer to the City of
Makati to secure business permits, construction permits and other licenses for the initial
operation of the company.
Although she was designated as Corporate Secretary, she was not entrusted with the
corporate documents; neither did she attend any board meeting nor required to do so. She
never prepared any legal document and never represented the company as its Corporate
Secretary. However, on some occasions, she was prevailed upon to sign documentation for
the company.
In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as
accountant in lieu of petitioner. As Acting Manager, petitioner was assigned to handle
recruitment of all employees and perform management administration functions; represent
the company in all dealings with government agencies, especially with the Bureau of Internal
Revenue (BIR), Social Security System (SSS) and in the city government of Makati; and to
administer all other matters pertaining to the operation of Kasei Restaurant which is owned
and operated by Kasei Corporation.
For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000
her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit
of Kasei Corporation.
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged
that she was required to sign a prepared resolution for her replacement but she was assured
that she would still be connected with Kasei Corporation. Timoteo Acedo, the designated
Treasurer, convened a meeting of all employees of Kasei Corporation and announced that
nothing had changed and that petitioner was still connected with Kasei Corporation as
Technical Assistant to Seiji Kamura and in charge of all BIR matters.
Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January
up to September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner
was not paid her mid-year bonus allegedly because the company was not earning well. On
October 2001, petitioner did not receive her salary from the company. She made repeated
follow-ups with the company cashier but she was advised that the company was not earning
well.
On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers
but she was informed that she is no longer connected with the company.
Since she was no longer paid her salary, petitioner did not report for work and filed an action
for constructive dismissal before the labor arbiter.
Issue: Whether there was an employer-employee relationship between petitioner and
private respondent Kasei Corporation.

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Held:
In certain cases the control test is not sufficient to give a complete picture of the relationship
between the parties, owing to the complexity of such a relationship where several positions
have been held by the worker. There are instances when, aside from the employer's power
to control the employee with respect to the means and methods by which the work is to be
accomplished, economic realities of the employment relations help provide a comprehensive
analysis of the true classification of the individual, whether as employee, independent
contractor, corporate officer or some other capacity.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative
employer's power to control the employee with respect to the means and methods by which
the work is to be accomplished; and (2) the underlying economic realities of the activity or
relationship.
This two-tiered test would provide us with a framework of analysis, which would take into
consideration the totality of circumstances surrounding the true nature of the relationship
between the parties. This is especially appropriate in this case where there is no written
agreement or terms of reference to base the relationship on; and due to the complexity of
the relationship based on the various positions and responsibilities given to the worker over
the period of the latter's employment.
Thus, the determination of the relationship between employer and employee depends upon
the circumstances of the whole economic activity, such as: (1) the extent to which the
services performed are an integral part of the employer's business; (2) the extent of the
worker's investment in equipment and facilities; (3) the nature and degree of control
exercised by the employer; (4) the worker's opportunity for profit and loss; (5) the amount of
initiative, skill, judgment or foresight required for the success of the claimed independent
enterprise; (6) the permanency and duration of the relationship between the worker and the
employer; and (7) the degree of dependency of the worker upon the employer for his
continued employment in that line of business.
The proper standard of economic dependence is whether the worker is dependent on the
alleged employer for his continued employment in that line of business.
By applying the control test, there is no doubt that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji Kamura, the
corporation's Technical Consultant. She reported for work regularly and served in various
capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and
Corporate Secretary, with substantially the same job functions, that is, rendering accounting
and tax services to the company and performing functions necessary and desirable for the
proper operation of the corporation such as securing business permits and other licenses
over an indefinite period of engagement.
Under the broader economic reality test, the petitioner can likewise be said to be an
employee of respondent corporation because she had served the company for six years
before her dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th
month pay, bonuses and allowances, as well as deductions and Social Security contributions
from August 1, 1999 to December 18, 2000. When petitioner was designated General
Manager, respondent corporation made a report to the SSS signed by Irene Ballesteros.
Petitioner's membership in the SSS as manifested by a copy of the SSS specimen signature
card which was signed by the President of Kasei Corporation and the inclusion of her name
in the on-line inquiry system of the SSS evinces the existence of an employer-employee
relationship between petitioner and respondent corporation.
It is therefore apparent that petitioner is economically dependent on respondent corporation

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for

her

continued

employment

in

the

latter's

line

of

business.

NOGALES ET AL. VS. CAPITOL MEDICAL CENTER
G.R. NO. 142625; DECEMBER 19, 2006
Facts:
Pregnant with her fourth child, Corazon Nogales ("Corazon"), who was then 37 years old,
was under the exclusive prenatal care of Dr. Oscar Estrada ("Dr. Estrada") beginning on her
fourth month of pregnancy or as early as December 1975. While Corazon was on her last
trimester of pregnancy, Dr. Estrada noted an increase in her blood pressure and
development of leg edema indicating preeclampsia, which is a dangerous complication of
pregnancy.
Around midnight of 25 May 1976, Corazon started to experience mild labor pains prompting
Corazon and Rogelio Nogales ("Spouses Nogales") to see Dr. Estrada at his home. After
examining Corazon, Dr. Estrada advised her immediate admission to the Capitol Medical
Center ("CMC").
On 26 May 1976, Corazon was admitted at 2:30 a.m. at the CMC after the staff nurse noted
the written admission request of Dr. Estrada. Upon Corazon's admission at the CMC, Rogelio
Nogales ("Rogelio") executed and signed the "Consent on Admission and Agreement" and
"Admission Agreement." Corazon was then brought to the labor room of the CMC.
Dr. Rosa Uy ("Dr. Uy"), who was then a resident physician of CMC, conducted an internal
examination of Corazon. Dr. Uy then called up Dr. Estrada to notify him of her findings.
Based on the Doctor's Order Sheet, around 3:00 a.m., Dr. Estrada ordered for 10 mg. of
valium to be administered immediately by intramuscular injection. Dr. Estrada later ordered
the start of intravenous administration of syntocinon admixed with dextrose, 5%, in lactated
Ringers' solution, at the rate of eight to ten micro-drops per minute.
At 6:22 a.m., Dr. Estrada, assisted by Dr. Villaflor, applied low forceps to extract Corazon's
baby. In the process, a 1.0 x 2.5 cm. piece of cervical tissue was allegedly torn. The baby
came out in an apnic, cyanotic, weak and injured condition. Consequently, the baby had to
be intubated and resuscitated by Dr. Enriquez and Dr. Payumo.
At 6:27 a.m., Corazon began to manifest moderate vaginal bleeding which rapidly became
profuse. Corazon's blood pressure dropped from 130/80 to 60/40 within five minutes. There
was continuous profuse vaginal bleeding. The assisting nurse administered hemacel through
a gauge needle as a side drip to the ongoing intravenous injection of dextrose.
At 8:00 a.m., Dr. Noe Espinola ("Dr. Espinola"), head of the Obstetrics-Gynecology
Department of the CMC, was apprised of Corazon's condition by telephone. Upon being
informed that Corazon was bleeding profusely, Dr. Espinola ordered immediate
hysterectomy. Rogelio was made to sign a "Consent to Operation."
Due to the inclement weather then, Dr. Espinola, who was fetched from his residence by an
ambulance, arrived at the CMC about an hour later or at 9:00 a.m. He examined the patient
and ordered some resuscitative measures to be administered. Despite Dr. Espinola's efforts,
Corazon died at 9:15 a.m. The cause of death was "hemorrhage, post partum."
On 14 May 1980, petitioners filed a complaint for damages with the Regional Trial Court of
Manila against CMC, Dr. Estrada, Dr. Villaflor, Dr. Uy, Dr. Enriquez, Dr. Lacson, Dr. Espinola,
and a certain Nurse J. Dumlao for the death of Corazon. Petitioners mainly contended that

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defendant physicians and CMC personnel were negligent in the treatment and management
of Corazon's condition. Petitioners charged CMC with negligence in the selection and
supervision of defendant physicians and hospital staff.
Issue: Whether or not there is an existing employer-employee relationship between CMC
and Dr. Estrada as to hold the former vicariously liable for the negligence of the latter.
Held:
Dr. Estrada's negligence in handling the treatment and management of Corazon's condition
which ultimately resulted in Corazon's death is no longer in issue. Dr. Estrada did not appeal
the decision of the Court of Appeals which affirmed the ruling of the trial court finding Dr.
Estrada solely liable for damages. Accordingly, the finding of the trial court on Dr. Estrada's
negligence is already final.
Petitioners maintain that CMC is vicariously liable for Dr. Estrada's negligence based on
Article 2180 in relation to Article 2176 of the Civil Code. These provisions pertinently state:
Art. 2180. The obligation imposed by article 2176 is demandable not only for
one's own acts or omissions, but also for those of persons for whom one is
responsible.
xxx
xxx
xxx
Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even
though the former are not engaged in any business or industry.
xxx
xxx
xxx
The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a
family to prevent damage.
In the present case, petitioners maintain that CMC, in allowing Dr. Estrada to practice and
admit patients at CMC, should be liable for Dr. Estrada's malpractice. Rogelio claims that he
knew Dr. Estrada as an accredited physician of CMC, though he discovered later that Dr.
Estrada was not a salaried employee of the CMC. Rogelio further claims that he was dealing
with CMC, whose primary concern was the treatment and management of his wife's
condition. Dr. Estrada just happened to be the specific person he talked to representing
CMC. Moreover, the fact that CMC made Rogelio sign a Consent on Admission and Admission
Agreement and a Consent to Operation printed on the letterhead of CMC indicates that CMC
considered Dr. Estrada as a member of its medical staff.
On the other hand, CMC disclaims liability by asserting that Dr. Estrada was a mere visiting
physician and that it admitted Corazon because her physical condition then was classified an
emergency obstetrics case. CMC alleges that Dr. Estrada is an independent contractor "for
whose actuations CMC would be a total stranger." CMC maintains that it had no control or
supervision over Dr. Estrada in the exercise of his medical profession.
The Court had the occasion to determine the relationship between a hospital and a
consultant or visiting physician and the liability of such hospital for that physician's
negligence in Ramos v. Court of Appeals, to wit:
In the first place, hospitals exercise significant control in the hiring and firing of
consultants and in the conduct of their work within the hospital premises. Doctors
who apply for "consultant" slots, visiting or attending, are required to submit proof of
completion of residency, their educational qualifications; generally, evidence of
accreditation by the appropriate board (diplomate), evidence of fellowship in most
cases, and references. These requirements are carefully scrutinized by members of
the hospital administration or by a review committee set up by the hospital who

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either accept or reject the application. This is particularly true with respondent
hospital.While "consultants" are not, technically employees, a point which respondent
hospital asserts in denying all responsibility for the patient's condition, the control
exercised, the hiring, and the right to terminate consultants all fulfill the important
hallmarks of an employer-employee relationship, with the exception of the payment
of wages. In assessing whether such a relationship in fact exists, the control test is
determining. Accordingly, on the basis of the foregoing, we rule that for the purpose
of allocating responsibility in medical negligence cases, an employer-employee
relationship in effect exists between hospitals and their attending and visiting
physicians. This being the case, the question now arises as to whether or not
respondent hospital is solidarily liable with respondent doctors for petitioner's
condition.
After a thorough examination of the voluminous records of this case, the Court finds no
single evidence pointing to CMC's exercise of control over Dr. Estrada's treatment and
management of Corazon's condition. It is undisputed that throughout Corazon's pregnancy,
she was under the exclusive prenatal care of Dr. Estrada. At the time of Corazon's admission
at CMC and during her delivery, it was Dr. Estrada, assisted by Dr. Villaflor, who attended to
Corazon. There was no showing that CMC had a part in diagnosing Corazon's condition.
While Dr. Estrada enjoyed staff privileges at CMC, such fact alone did not make him an
employee of CMC. CMC merely allowed Dr. Estrada to use its facilities when Corazon was
about to give birth, which CMC considered an emergency. Considering these circumstances,
Dr. Estrada is not an employee of CMC, but an independent contractor.
COCA-COLA BOTTLERS PHILS. VS. DR. CLIMACO
G.R. NO. 146881; FEBRUARY 15, 2007
Facts:
Respondent Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca-Cola
Bottlers Phils., Inc. by virtue of a Retainer Agreement that stated:
WHEREAS, the COMPANY desires to engage on a retainer basis the services of
a physician and the said DOCTOR is accepting such engagement upon terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
agreement hereinafter contained, the parties agree as follows:
1. This Agreement shall only be for a period of one (1) year beginning January
1, 1988 up to December 31, 1988. The said term notwithstanding, either party
may terminate the contract upon giving a thirty (30)-day written notice to the
other.
2. The compensation to be paid by the company for the services of the
DOCTOR is hereby fixed at PESOS: Three Thousand Eight Hundred (P3,800.00)
per month. The DOCTOR may charge professional fee for hospital services
rendered in line with his specialization. All payments in connection with the
Retainer Agreement shall be subject to a withholding tax of ten percent (10%)
to be withheld by the COMPANY under the Expanded Withholding Tax System.
In the event the withholding tax rate shall be increased or decreased by
appropriate laws, then the rate herein stipulated shall accordingly be
increased or decreased pursuant to such laws.
3. That in consideration of the above mentioned retainer's fee, the DOCTOR
agrees to perform the duties and obligations enumerated in the
COMPREHENSIVE MEDICAL PLAN, hereto attached as Annex "A" and made an
integral part of this Retainer Agreement.
4. That the applicable provisions in the Occupational Safety and Health

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Standards, Ministry of Labor and Employment shall be followed.
5. That the DOCTOR shall be directly responsible to the employee concerned
and their dependents for any injury inflicted on, harm done against or damage
caused upon the employee of the COMPANY or their dependents during the
course of his examination, treatment or consultation, if such injury, harm or
damage was committed through professional negligence or incompetence or
due to the other valid causes for action.
6. That the DOCTOR shall observe clinic hours at the COMPANY'S premises
from Monday to Saturday of a minimum of two (2) hours each day or a
maximum of TWO (2) hours each day or treatment from 7:30 a.m. to 8:30
a.m. and 3:00 p.m. to 4:00 p.m., respectively unless such schedule is
otherwise changed by the COMPANY as [the] situation so warrants, subject to
the Labor Code provisions on Occupational Safety and Health Standards as
the COMPANY may determine. It is understood that the DOCTOR shall stay at
least two (2) hours a day in the COMPANY clinic and that such two (2) hours
be devoted to the workshifts with the most number of employees. It is further
understood that the DOCTOR shall be on call at all times during the other
workshifts to attend to emergency case[s];
7. That no employee-employer relationship shall exist between the COMPANY
and the DOCTOR whilst this contract is in effect, and in case of its termination,
the DOCTOR shall be entitled only to such retainer fee as may be due him at
the time of termination.
It is noted that as early as September 1992, petitioner was already making inquiries
regarding his status with petitioner company.
On February 24, 1994, respondent filed a Complaint before the NLRC, Bacolod City, seeking
recognition as a regular employee of petitioner company and prayed for the payment of all
benefits of a regular employee, including 13th Month Pay, Cost of Living Allowance, Holiday
Pay, Service Incentive Leave Pay, and Christmas Bonus.
Issue: Whether or not there exists an employer-employee relationship between the parties.
Held:
The Court, in determining the existence of an employer-employee relationship, has
invariably adhered to the four-fold test: (1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employee's conduct, or the so-called "control test," considered to be the most important
element.
The Court agrees with the finding of the Labor Arbiter and the NLRC that the circumstances
of this case show that no employer-employee relationship exists between the parties. The
Labor Arbiter and the NLRC correctly found that petitioner company lacked the power of
control over the performance by respondent of his duties. The Labor Arbiter reasoned that
the Comprehensive Medical Plan, which contains the respondent's objectives, duties and
obligations, does not tell respondent "how to conduct his physical examination, how to
immunize, or how to diagnose and treat his patients, employees of [petitioner] company, in
each case."
Likewise, the allegation of complainant that since he is on call at anytime of the day and
night makes him a regular employee is off-tangent. Complainant does not dispute the fact
that outside of the two (2) hours that he is required to be at respondent company's
premises, he is not at all further required to just sit around in the premises and wait for an
emergency to occur so as to enable him from using such hours for his own benefit and
advantage. In fact, complainant maintains his own private clinic attending to his private

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practice in the city, where he services his patients, bills them accordingly — and if it is an
employee of respondent company who is attended to by him for special treatment that
needs hospitalization or operation, this is subject to a special billing. More often than not, an
employee is required to stay in the employer's workplace or proximately close thereto that
he cannot utilize his time effectively and gainfully for his own purpose. Such is not the
prevailing situation here.
In addition, the Court finds that the schedule of work and the requirement to be on call for
emergency cases do not amount to such control, but are necessary incidents to the
Retainership Agreement.
Considering that there is no employer-employee relationship between the parties, the
termination of the Retainership Agreement, which is in accordance with the provisions of the
Agreement, does not constitute illegal dismissal of respondent.

CALAMBA MEDICAL CENTER V NLRC ET AL.
G.R. NO. 176484. NOVEMBER 25, 2008
Facts:
The Calamba Medical Center (petitioner), a privately-owned hospital, engaged the services
of medical doctors-spouses Ronaldo Lanzanas (Dr. Lanzanas) and Merceditha Lanzanas (Dr.
Merceditha) in March 1992 and August 1995, respectively, as part of its team of resident
physicians. Reporting at the hospital twice-a-week on twenty-four-hour shifts, respondents
were paid a monthly "retainer" of P4,800.00 each. It appears that resident physicians were
also given a percentage share out of fees charged for out-patient treatments, operating
room assistance and discharge billings, in addition to their fixed monthly retainer.
The work schedules of the members of the team of resident physicians were fixed by
petitioner's medical director Dr. Raul Desipeda (Dr. Desipeda). And they were issued
identification cards by petitioner and were enrolled in the Social Security System (SSS).
Income taxes were withheld from them.
On March 7, 1998, Dr. Meluz Trinidad (Dr. Trinidad), also a resident physician at the hospital,
inadvertently overheard a telephone conversation of respondent Dr. Lanzanas with a fellow
employee, Diosdado Miscala, through an extension telephone line. Apparently, Dr. Lanzanas
and Miscala were discussing the low "census" or admission of patients to the hospital.
Inexplicably, petitioner did not give respondent Dr. Merceditha, who was not involved in the
said incident, any work schedule after sending her husband Dr. Lanzanas the memorandum,
nor inform her the reason therefor, albeit she was later informed by the Human Resource
Department (HRD) officer that that was part of petitioner's cost-cutting measures.
On March 20, 1998, Dr. Lanzanas filed a complaint for illegal suspension before the National
Labor Relations Commission (NLRC)-Regional Arbitration Board (RAB) IV. Dr. Merceditha
subsequently filed a complaint for illegal dismissal.\
Issue: Whether there exists an employer-employee relationship between petitioner and the
spouses-respondents.
Held:
Denying the existence of such relationship, petitioner argues that the appellate court, as
well as the NLRC, overlooked its twice-a-week reporting arrangement with respondents who
are free to practice their profession elsewhere the rest of the week. And it invites attention

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to the uncontroverted allegation that respondents, aside from their monthly retainers, were
entitled to one-half of all suturing, admitting, consultation, medico-legal and operating room
assistance fees. These circumstances, it stresses, are clear badges of the absence of any
employment relationship between them.
This Court is unimpressed.
Under the "control test", an employment relationship exists between a physician and a
hospital if the hospital controls both the means and the details of the process by which the
physician is to accomplish his task.
As priorly stated, private respondents maintained specific work-schedules, as determined by
petitioner through its medical director, which consisted of 24-hour shifts totaling forty-eight
hours each week and which were strictly to be observed under pain of administrative
sanctions.
That petitioner exercised control over respondents gains light from the undisputed fact that
in the emergency room, the operating room, or any department or ward for that matter,
respondents' work is monitored through its nursing supervisors, charge nurses and orderlies.
Without the approval or consent of petitioner or its medical director, no operations can be
undertaken in those areas. For control test to apply, it is not essential for the employer to
actually supervise the performance of duties of the employee, it being enough that it has
the right to wield the power.
Finally, under Section 15, Rule X of Book III of the Implementing Rules of the Labor Code, an
employer-employee relationship exists between the resident physicians and the training
hospitals, unless there is a training agreement between them, and the training program is
duly accredited or approved by the appropriate government agency. In respondents' case,
they were not undergoing any specialization training. They were considered non-training
general practitioners, assigned at the emergency rooms and ward sections.

ESCASIÑAS ET AL, VS. SHANGRI-LA’S MACTAN ISLAND RESORT;
G.R. NO. 178827, MARCH 4, 2009
Facts:
Registered nurses Jeromie Escasiñas and Evan Rigor Singco were engaged by Dr. Jessica
Pepito to work in her clinic at Shangri-la’s Mactan Island Resort in Cebu where she was a
retained physician.
In 2002, petitioners filed with the NLRC a complaint for regularization, underpayment of
wages, non-payment of holiday pay, nights shift differential and 13 th mother pay against
respondents, claiming that they are regular employees of Shangri-la.
Shangri-la claimed that petitioners were not its employees but that of Dr. Pepito, whon it
retained via a MOA. Dr. Pepito for her part claimed that petitioners were already working for
the previous retained physicians of Shangri-la before she was retained, and that she
maintained petitioners’ services upon their request.
Petitioners insist that under Article 157 of the Labor Code, Shangri-la is required to hire a
full-time registered nurse, apart from a physician, hence their engagement should be
deemed as regular employment, the provisions of the MOA notwithstanding.
Issue: WON Petitioners are employees of Shangri-la

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Held:
Petitioners are employees of Dr. Pepito and not of Shangri-la
Under Article 157, Shangri-la, which employs more than 200 workers, is mandated to
“furnish” its employees with the services of a full-time registered nurse, a part-time
physician and dentist, and an emergency clinic which means that it should provide or make
available medical and allied services to its employees, but not necessarily to hire or employ
a service provider.
The term “full-time” cannot be construed as referring to the type of employment of the
person engaged to provide the service. The phrase “services of a full-time registered nurse”
should be taken to refer to the kind of services that the nurse will render in the company’s
premises and its employees, not the manner of his engagement.
The court also held that respondent doctor is a legitimate independent contractor.
As to the payment of wages, respondent doctor is the one who underwrites their salaries,
SSS contributions and other benefits. It is unlikely that respondent doctor would report
petitioners as workers, pay their SSS premium as well as their wages if they were not indeed
her employees. With respect to supervision and control, the document “Clinic Policies and
Employment Manual” was prepared by respondent doctor to which petitioners gave their
conformity. It is thus presumed that the document, and not the employee manual being
followed by Shangri-la’s regular workers, governs how they perform their respective tasks
and responsibilities.
Contrary to petitioners’ contention, the various office directives issued by Shangri-la’s
officers do not imply that it is Shangri-la’s management and not respondent doctor who
exercises control over them or that Shangri-la has control over how the doctor and the nurse
perform their work.

TONGKO VS. MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC.
G.R. NO. 167622; JANUARY 25, 2011
Facts:
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged
in life insurance business. Petitioner started as a manager in a certain region by virtue of a
Career Agent's Agreement which he executed with Manulife. In the course of his work with
respondent, the latter, through a letter, directed Tongko to exercise particular administrative
activities to improve their operations in the region where the latter was assigned. This is due
to the data collected by Manulife that the region that petitioner is handling is the lowest
performer in terms of recruiting in 2000 and, as of today, continues to remain one of the
laggards in this area. A few months passed, Manulife was still dissatisfied with the
petitioner’s performance despite the letters sent to the latter. This urged Manulife to
terminate Tongko effective 15 days from the receipt of such notice. Tongko then filed a case
with the labor arbiter for illegal dismissal which was denied by the motion of Manulife
arguing that no ER-EE relationship exists based on the agreement contract they entered
from the time Tongko was engaged. Raised to the NLRC, and decided in favor of Tongko.
Manulife appealed to CA, which reversed the decision of NLRC. Hence the case at bar.
Issue:
WON there existed an ER-EE relationship between Tongko and Manulife, which
would lead to illegal dismissal by the latter.

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Held:
YES.
The NLRC, for its part, applied the four-fold test and found the existence of all the elements
and declared Tongko an employee of Manulife. The CA, on the other hand, found that the
element of control as an indicator of the existence of an employer-employee relationship
was lacking in this case. The NLRC and the CA based their rulings on the same findings of
facts but differed on the ruling. NLRC arrived at its conclusion, first, on the basis of the letter
dated November 6, 2001 addressed by De Dios to Tongko. According to the NLRC, the letter
contained "an abundance of directives or orders that are intended to directly affect
complainant's authority and manner of carrying out his functions as Regional Sales
Manager." The NLRC further ruled that the different codes of conduct that were applicable to
Tongko served as the foundations of the power of control wielded by Manulife over Tongko
that is further manifested in the different administrative and other tasks that he was
required to perform. It also found that Tongko was required to render exclusive service to
Manulife, further bolstering the existence of an ER-EE relationship. Finally, the NLRC ruled
that Tongko was integrated into a management structure over which Manulife exercised
control, including the actions of its officers. The NLRC held that such integration added to
the fact that Tongko did not have his own agency belied Manulife's claim that Tongko was an
independent contractor.
SC said that in the instant case, Manulife had the power of control over Tongko that would
make him its employee. Several factors contribute to this conclusion. In an agreement
executed by Tongko and Manulife:
The Agent hereby agrees to comply with all regulations and requirements of the Company as
herein provided as well as maintain a standard of knowledge and competency in the sale of
the Company's products which satisfies those set by the Company and sufficiently meets the
volume of new business required of Production Club membership.
Among the company regulations of Manulife are the different codes of conduct such as the
Agent Code of Conduct, Manulife Financial Code of Conduct, and Manulife Financial Code of
Conduct Agreement, which demonstrate the power of control exercised by the company over
Tongko. Thus, with the company regulations and requirements alone, the fact that Tongko
was an employee of Manulife may already be established. Certainly, these requirements
controlled the means and methods by which Tongko was to achieve the company's goals.
More importantly, Manulife's evidence establishes the fact that Tongko was tasked to
perform administrative duties that establishes his employment with Manulife. Additionally, it
must be pointed out that the fact that Tongko was tasked with recruiting a certain number of
agents, in addition to his other administrative functions, leads to no other conclusion that he
was an employee of Manulife.
And so, due to the findings of the SC regarding the existence of ER-EE relationship between
Tongko and Manulife, the latter is liable to the former for illegal dismissal.

ATOK BIG WEDGE COMPANY VS. GISON;
G.R. NO. 169510; AUGUST 8, 2011
Facts:
Jesus P. Gison, was engaged as part-time consultant of Atok Big Wedge Company thorugh its
then Asst. VP and Acting Resident Manager, Rutillo A. Torres. As a consultant on retainer
basis, the former assisted the petitioner’s retained legal counsel with matters pertaining to
the prosecution of cases against illegal surface occupants within the area covered by the
company’s mineral claims. He also tasked to perform liason work with government agencies

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which he said his expertise. Respondent is not required to report to its office on a regular
basis, except when occassionally requested by the management to discuss the matters
which needs of his expertise as a consultant. He is paid a retainer fee of 3,000Php a month
and delivered to him either in his residence or in a local restaurant. They have also executed
a retainer agreement however was misplaced and can no longer be found. This kind of
arrangement continued on for the next 11 years. Since respondent was getting old, he
requested petitioner to cause his registration with the Social Security System but petitioner
did not accede to his request considering the former only a retainer/consultant.
Respondent herein, filed a complaint with SSS against petitioner’s refusal to cause his
registration with the SSS. The Resident Manager of the petitioner issued then a
Memorandum advising respondent that within 30 days from receipt thereof, petitioner’s
services as a retainer/consultant will be terminated since his services are no longer
necessary. As a result, respondent filed a complaint for illegal dismissal, unfair labor
practice, underpayment of wages, non-payment of 13th Month pay, vacation pay and sick
leave with the NLRC, Regional Arbitration Branch and Cordillera Administrative Region
against the petitioner.
The Labor Arbiter rendered a decision in favor of the petitioner ruling that there is no
employer-employee relationship and dismissed the complaint for lack of merit. An appeal
was made before the NLRC but same was dismissed and affirmed the decision of the Labor
Arbiter. A petition for review was filed under Rule 65 before the Court of Appeals. The Court
of Appeals annuled and has set aside the decision of NLRC. The CA opined that, both the
Labor Arbiter and NLRC overlooked Article 280 of the Labor Code, which distinguishes
between the two kinds of employees, i.e., regular and casual employees. The respondent is
deemed a regular employee of the petitioner after the lapse of one year from his
employment. Considering also that the respondent had been performing services for the
petitioner for the last 11 years entitling him to the rights and privileges of a regular
employee. The CA added that although there was an agreement between the parties that
the employment of the respondent will be only temporary, it clearly disregarded the same
by repeatedly giving petitioner several tasks to perform. Moreover, although the respondent
may have waived his right to attain a regular status when he agreed to perform these tasks
on a temporary employment status, still it was the law that recognized and considered him a
regular employee after his first year of rendering service to petitioner. As such, the waiver
is ineffective.
Petitioner herein posits that CA erred in applying Article 280 of the Labor Code in
determining whether there exists an employer-employee relationship. Petitioner contends
that where the existence of an employer-employee relationship is in dispute, Article 280 of
the Labor Code is inapplicable. The said article only set the distinction between a casual
employee from a regular employee for purposes of determining the rights of an employee to
be entitled to certain benefits.
Issue: Whether or not CA erred in applying Article 280
Held:
Well-entrenched is the doctrine that the existence of an employer-employee relationship is
ultimately a question of fact and that the findings thereon by the Labor Arbiter and the NLRC
shall be accorded not only respect but even finality when supported by substantial evidence.
Being a question of fact, the determination whether such a relationship exists between
petitioner and respondent was well within the province of the Labor Arbiter and the NLRC.
Being supported by substantial evidence, such determination should have been accorded
great weight by the CA in resolving the issue. To ascertain the existence of an employeremployee relationship jurisprudence has invariably adhered to the four-fold test, to wit: (1)
the selection and engagement of the employee; (2) the payment of wages; (3) the power of

21 | P a g e

dismissal; and (4) the power to control the employee's conduct, or the so-called "control
test." The so-called "control test" is commonly regarded as the most crucial and
determinative indicator of the presence or absence of an employer-employee relationship
Applying the aforementioned test, an employer-employee relationship is apparently absent
in the case at bar. Among other things, respondent was not required to report everyday
during regular office hours of petitioner. Respondent's monthly retainer fees were paid to
him either at his residence or a local restaurant. More importantly, petitioner did not
prescribe the manner in which respondent would accomplish any of the tasks in which his
expertise as a liaison officer was needed; respondent was left alone and given the freedom
to accomplish the tasks using his own means and method. Respondent was assigned tasks
to perform, but petitioner did not control the manner and methods by which respondent
performed these tasks. Verily, the absence of the element of control on the part of the
petitioner engenders a conclusion that he is not an employee of the petitioner. Moreover, the
absence of the parties' retainership agreement notwithstanding, respondent clearly
admitted that petitioner hired him in a limited capacity only and that there will be no
employer-employee relationship between them.
Respondent was well aware of the agreement that he was hired merely as a liaison or
consultant of the petitioner and he agreed to perform tasks for the petitioner on a temporary
employment status only. However, respondent anchors his claim that he became a regular
employee of the petitioner based on his contention that the "temporary" aspect of his job
and its "limited" nature could not have lasted for eleven years unless some time during that
period, he became a regular employee of the petitioner by continually performing services
for the company.
Respondent is not an employee, much more a regular employee of petitioner. The appellate
court's premise that regular employees are those who perform activities which are desirable
and necessary for the business of the employer is not determinative in this case. In fact, any
agreement may provide that one party shall render services for and in behalf of another, no
matter how necessary for the latter's business, even without being hired as an employee.
Hence,respondent's length of service and petitioner's repeated act of assigning respondent
some tasks to be performed did not result to respondent's entitlement to the rights and
privileges of a regular employee.
Furthermore, despite the fact that petitioner made use of the services of respondent for
eleven years, he still cannot be considered as a regular employee of petitioner. Article 280 of
the Labor Code, in which the lower court used to buttress its findings that respondent
became a regular employee of the petitioner, is not applicable in the case at bar. Indeed, the
Court has ruled that said provision is not the yardstick for determining the existence of an
employment relationship because it merely distinguishes between two kinds of
employees, i.e., regular employees and casual employees, for purposes of determining the
right of an employee to certain benefits, to join or form a union, or to security of tenure; it
does not apply where the existence of an employment relationship is in dispute.It is,
therefore, erroneous on the part of the Court of Appeals to rely on Article 280 in determining
whether an employer-employee relationship exists between respondent and the petitioner.
Considering that there is no employer-employee relationship between the parties, the
termination of respondent's services by the petitioner after due notice did not constitute
illegal dismissal warranting his reinstatement and the payment of full backwages,
allowances and other benefits.

SEMBLANTE ET.AL. VS. COURT OF APPEALS

22 | P a g e

G.R. NO. 196426 AUGUST 15, 2011
Facts:
Marticio Semblante and Dubrick Pilar worked in the Gallera de Mandaue owned by the
respondents-spouses Vicente and Maria Luisa Loot. The petitioners rendered their services
as the official massiador and sentenciador in 1993. As the masiador, Semblante calls and
takes the bets from the gamecock owners and other bettors and orders the start of the
cockfight. He also distributes the winnings after deducting the arriba, or the commission for
the cockpit. Meanwhile, as the sentenciador, Pilar oversees the proper gaffing of fighting
cocks, determines the fighting cocks' physical condition and capabilities to continue the
cockfight,
and
eventually
declares
the
result
of
the
cockfight. As masiador and sentenciador, Semblante receives PhP2,000 per week or a total
of PhP8,000 per month, while Pilar gets PhP3,500 a week or PhP14,000 per month. They
work every Tuesday, Wednesday, Saturday, and Sunday every week, excluding monthly
derbies and cockfights held on special holidays. Their working days start at 1:00 p.m. and
last until 12:00 midnight, or until the early hours of the morning depending on the needs of
the cockpit. Petitioners had both been issued employees' identification cards that they wear
every time they report for duty. However on November 14,1993, petitioners were denied
entry into the cockpit upon the instructions of respondents and were informed of the
termination of their employment effective that date.
Respondents denied that petitioners were their employees and alleged that they were
associates of respondents’ independent contractor, Tomas Vega. They claimed that
petitioners have no regular working time or day and they are free to decide for themselves
whether to report for work or not on any cockfighting day. And the identification card issued
was only to free them from the normal entrance fees and to differentiate them from the
general public.
The Labor Arbiter found that there exist an employer-employee relationship between the
petitioner and the respondents because the latter performed the works necessary and
indispensable to the usual trade or business of the respondents for a number of years. It has
ruled that petitioners were illegally dismissed and are entitled to their backwages and
separation pay. However, the NLRC reversed the Labor Arbiter’s decision. It held that
respondents having no power on the selection and engagement of petitioners and that no
separate individual contract with respondents was ever executed by petitioners. In its appeal
to the CA, the latter ruled in favor for the respondents and held that referees and bet-takers
in a cockfight need to have the kind of expertise that is characteristic of the game to
interpret messages conveyed by mere gestures. Hence, petitioners are akin to independent
contractors who possess unique skills , expertise and talent to distinguish them from
ordinary employees. Further, petitioners were not provided by tools and instrumentalities
they needed to perform their work. They only need their unique skills and talents in the
performance of their job as masiador and sentenciador.
Issue: Whether or not the dismissal of the petitioners is illegal on the ground that that they
are regular employees of the respondents
Held:
Respondents had no part in petitioners' selection and management; petitioners'
compensation was paid out of the arriba (which is a percentage deducted from the total
bets),
not
by
petitioners;
and petitioners
performed
their
functions
as masiador and sentenciador free from the direction and control of respondents. In the
conduct of their work, petitioners relied mainly on their "expertise that is characteristic of
the cockfight gambling," and were never given by respondents any tool needed for the
performance of their work. Respondents, not being petitioners' employers, could never have
dismissed, legally or illegally, petitioners, since respondents were without power or

23 | P a g e

prerogative to do so in the first place. The rule on the posting of an appeal bond cannot
defeat the substantive rights of respondents to be free from an unwarranted burden of
answering for an illegal dismissal for which they were never responsible.

BERNARTE VS. PBA
G.R. NO. 192084, SEPTEMBER 14, 2011
Facts:
Complainants Jose Mel Bernarte and Renato Guevarra aver that they were invited to join the
PBA as referees. During the leadership of Commissioner Emilio Bernardino, they were made
to sign contracts on a year-to-year basis. During the term of Commissioner Eala, however,
changes were made on the terms of their employment.
Complainant Bernarte, for instance, was not made to sign a contract during the first
conference of the All-Filipino Cup which was from February 23, 2003 to June 2003. It was
only during the second conference when he was made to sign a one and a half month
contract for the period July 1 to August 5, 2003.
On January 15, 2004, Bernarte received a letter from the Office of the Commissioner
advising him that his contract would not be renewed citing his unsatisfactory performance
on and off the court. It was a total shock for Bernarte who was awarded Referee of the year
in 2003. He felt that the dismissal was caused by his refusal to fix a game upon order of
Ernie De Leon.
On the other hand, complainant Guevarra alleges that he was invited to join the PBA pool of
referees in February 2001. On March 1, 2001, he signed a contract as trainee. Beginning
2002, he signed a yearly contract as Regular Class C referee. On May 6, 2003, respondent
Martinez issued a memorandum to Guevarra expressing dissatisfaction over his questioning
on the assignment of referees officiating out-of-town games. Beginning February 2004, he
was
no
longer
made
to
sign
a
contract.
Respondents aver, on the other hand, that complainants entered into two contracts of
retainer with the PBA in the year 2003. The first contract was for the period January 1, 2003
to July 15, 2003; and the second was for September 1 to December 2003. After the lapse of
the latter period, PBA decided not to renew their contracts.
Complainants were not illegally dismissed because they were not employees of the PBA.
Their respective contracts of retainer were simply not renewed. PBA had the prerogative of
whether or not to renew their contracts, which they knew were fixed.
Both the Labor Arbiter and NLRC decided that the petitioners were employees whose
dismissals by respondents were illegal. However, the Court of Appeals overturned the
decisions of the NLRC and Labor Arbiter on the ground that the petitioner is an independent
contractor since respondents did not exercise any form of control over the means and
methods by which petitioner performed his work as a basketball referee.
Issue: WON petitioner is an employee of respondents, which in turn determines whether
petitioner
was
illegally
dismissed.
Held:
The Supreme

Court

affirmed

the

assailed

decision

of

the

Court

of

Appeals.

To determine the existence of an employer-employee relationship, case law has consistently
applied the four-fold test, to wit: (a) the selection and engagement of the employee; (b) the

24 | P a g e

payment of wages; (c) the power of dismissal; and (d) the employer's power to control the
employee on the means and methods by which the work is accomplished. The so-called
"control test" is the most important indicator of the presence or absence of an employeremployee relationship.
In this case, PBA admits repeatedly engaging petitioner's services, as shown in the retainer
contracts. PBA pays petitioner a retainer fee, exclusive of per diem or allowances, as
stipulated in the retainer contract. PBA can terminate the retainer contract for petitioner's
violation of its terms and conditions.
However, respondents argue that the all-important element of control is lacking in this case,
making petitioner an independent contractor and not an employee of respondents.
We agree with respondents that once in the playing court, the referees exercise their own
independent judgment, based on the rules of the game, as to when and how a call or
decision is to be made. The referees decide whether an infraction was committed, and the
PBA cannot overrule them once the decision is made on the playing court. The referees are
the only, absolute, and final authority on the playing court. Respondents or any of the PBA
officers cannot and do not determine which calls to make or not to make and cannot control
the referee when he blows the whistle because such authority exclusively belongs to the
referees. The very nature of petitioner's job of officiating a professional basketball game
undoubtedly calls for freedom of control by respondents.
Moreover, the following circumstances indicate that petitioner is an independent contractor:
(1) the referees are required to report for work only when PBA games are scheduled, which
is three times a week spread over an average of only 105 playing days a year, and they
officiate games at an average of two hours per game; and (2) the only deductions from the
fees received by the referees are withholding taxes.
In other words, unlike regular employees who ordinarily report for work eight hours per day
for five days a week, petitioner is required to report for work only when PBA games are
scheduled or three times a week at two hours per game. In addition, there are no deductions
for contributions to the Social Security System, Philhealth or Pag-Ibig, which are the usual
deductions from employees' salaries. These undisputed circumstances buttress the fact that
petitioner is an independent contractor, and not an employee of respondents.
Furthermore, the applicable foreign case law declares that a referee is an independent
contractor, whose special skills and independent judgment is required specifically for such
position and cannot possibly be controlled by the hiring party.
In addition, the fact that PBA repeatedly hired petitioner does not by itself prove that
petitioner is an employee of the former. For a hired party to be considered an employee, the
hiring party must have control over the means and methods by which the hired party is to
perform his work, which is absent in this case. The continuous rehiring by PBA of petitioner
simply signifies the renewal of the contract between PBA and petitioner, and highlights the
satisfactory services rendered by petitioner warranting such contract renewal. Conversely, if
PBA decides to discontinue petitioner's services at the end of the term fixed in the contract,
whether for unsatisfactory services, or violation of the terms and conditions of the contract,
or for whatever other reason, the same merely results in the non-renewal of the contract, as
in the present case. The non-renewal of the contract between the parties does not constitute
illegal dismissal of petitioner by respondents.

LIRIO VS. GENOVIA
G.R. NO. 169757, NOVEMBER 23, 2011

25 | P a g e

Facts:
Wilmer D. Genovia filed a complaint against petitioner Cesar Lirio and/or Celkor Ad Sonicmix
Recording Studio for illegal dismissal, non-payment of commission and award of moral and
exemplary damages.
Respondent Genovia alleged in his position paper that on August 15, 2001, he was hired as
studio manager by petitioner Lirio, owner of Celkor Ad Sonicmix Recording Studio (Celkor).
He was employed to manage and operate Celkor and to promote and sell the recording
studio's services to music enthusiasts and other prospective clients. He received a monthly
salary of P7,000.00. They also agreed that he was entitled to an additional commission
of P100.00 per hour as recording technician whenever a client uses the studio for recording,
editing or any related work. He was made to report for work from Monday to Friday from
9:00 a.m. to 6 p.m. On Saturdays, he was required to work half-day only, but most of the
time, he still rendered eight hours of work or more. All the employees of petitioner, including
respondent, rendered overtime work almost everyday, but petitioner never kept a daily time
record to avoid paying the employees overtime pay.
He also alleged that petitioner approached him and told him about his project to produce an
album for his daughter, Celine Mei Lirio. Petitioner asked respondent to compose and
arrange songs for Celine and promised that he (Lirio) would draft a contract to assure
respondent of his compensation for such services. As agreed upon, the additional services
that respondent would render included composing and arranging musical scores only, while
the technical aspect in producing the album, such as digital editing, mixing and sound
engineering would be performed by respondent in his capacity as studio manager for which
he was paid on a monthly basis. Petitioner instructed respondent that his work on the album
as composer and arranger would only be done during his spare time, since his other work as
studio manager was the priority. Respondent then started working on the album.
After the album was completed and released, respondent again reminded petitioner about
the contract on his compensation as composer and arranger of the album. Petitioner told
respondent that since he was practically a nobody and had proven nothing yet in the music
industry, respondent did not deserve a high compensation, and he should be thankful that
he was given a job to feed his family. Petitioner informed respondent that he was entitled
only to 20% of the net profit, and not of the gross sales of the album, and that the salaries
he received and would continue to receive as studio manager of Celkor would be deducted
from the said 20% net profit share. Respondent objected and insisted that he be properly
compensated. On March 14, 2002, petitioner verbally terminated respondent’s services, and
he was instructed not to report for work.
Respondent asserts that he was illegally dismissed as he was terminated without any valid
grounds, and no hearing was conducted before he was terminated, in violation of his
constitutional right to due process. Having worked for more than six months, he was already
a regular employee. Although he was a so called “studio manager,” he had no managerial
powers, but was merely an ordinary employee.
Respondent prayed for his reinstatement without loss of seniority rights, or, in the
alternative, that he be paid separation pay, backwages and overtime pay; and that he be
awarded unpaid commission for services rendered as a studio technician as well as moral
and exemplary damages.
Respondent’s evidence consisted of the Payroll dated July 31, 2001 to March 15, 2002, which
was certified correct by petitioner, and Petty Cash Voucher evidencing receipt of payroll
payments by respondent from Celkor.

26 | P a g e

In defense, petitioner stated in his Position Paper that respondent was not hired as studio
manager, composer, technician or as an employee in any other capacity of Celkor.
Respondent could not have been hired as a studio manager, since the recording studio has
no personnel except petitioner.
According to petitioner, respondent had no track record as a composer, and he was not
known in the field of music. Nevertheless, after some discussion, respondent verbally agreed
with petitioner to co-produce the album.
Petitioner asserted that his relationship with respondent is one of an informal partnership
and that he had no control over the time and manner by which respondent composed or
arranged the songs, except on the result thereof. Respondent reported to the recording
studio between 10:00 a.m. and 12:00 noon. Hence, petitioner contended that no employeremployee relationship existed between him and the respondent, and there was no illegal
dismissal to speak of.
The Labor Arbiter rendered a decision finding that an employer-employee relationship
existed between petitioner and respondent, and that respondent was illegally dismissed.
However, the NLRC reversed and set aside the decision of the Labor Arbiter on the ground
that respondent failed to prove his employment tale with substantial evidence. It held
that respondent failed to proved with substantial evidence that he was selected and
engaged by petitioner, that petitioner had the power to dismiss him, and that they had the
power to control him not only as to the result of his work, but also as to the means and
methods of accomplishing his work. The Court of Appeals rendered a decision reversing
and setting aside the resolution of the NLRC, and reinstating the decision of the Labor
Arbiter.
Issue: Whether respondent is an employee of the petitioner, which in turn determines
whether
respondent
was
illegally
dismissed.
Held:
The Supreme Court affirmed the assailed decision of the Court of Appeals.
The elements to determine the existence of an employment relationship are: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employer’s power to control the employee’s conduct. The most
important element is the employer’s control of the employee’s conduct, not only as to the
result of the work to be done, but also as to the means and methods to accomplish it.
It is settled that no particular form of evidence is required to prove the existence of an
employer-employee relationship. Any competent and relevant evidence to prove the
relationship may be admitted.
In this case, the documentary evidence presented by respondent to prove that he was an
employee of petitioner are as follows: (a) a document denominated as "payroll" (dated July
31, 2001 to March 15, 2002) certified correct by petitioner, which showed that respondent
received a monthly salary of P7,000.00 (P3,500.00 every 15th of the month and
another P3,500.00 every 30th of the month) with the corresponding deductions due to
absences incurred by respondent; and (2) copies of petty cash vouchers, showing the
amounts he received and signed for in the payrolls.
The said documents showed that petitioner hired respondent as an employee and he was
paid monthly wages of P7,000.00. Petitioner wielded the power to dismiss as respondent
stated that he was verbally dismissed by petitioner, and respondent, thereafter, filed an

27 | P a g e

action for illegal dismissal against petitioner. The power of control refers merely to the
existence of the power. It is not essential for the employer to actually supervise the
performance of duties of the employee, as it is sufficient that the former has a right to wield
the power. Nevertheless, petitioner stated in his Position Paper that it was agreed that he
would help and teach respondent how to use the studio equipment. In such case,
petitioner certainly had the power to check on the progress and work of respondent.
On the other hand, petitioner failed to prove that his relationship with respondent was one of
partnership. Such claim was not supported by any written agreement. The Court notes that
in the payroll dated July 31, 2001 to March 15, 2002, there were deductions from the wages
of respondent for his absence from work, which negates petitioner’s claim that the wages
paid were advances for respondent’s work in the partnership.
The Court agrees with the Court of Appeals that the evidence presented by the parties
showed that an employer-employee relationship existed between petitioner and
respondent.
In termination cases, the burden is upon the employer to show by substantial evidence that
the termination was for lawful cause and validly made.Article 277 (b) of the Labor Code puts
the burden of proving that the dismissal of an employee was for a valid or authorized cause
on the employer, without distinction whether the employer admits or does not admit the
dismissal. For an employee’s dismissal to be valid, (a) the dismissal must be for a valid
cause, and (b) the employee must be afforded due process. Procedural due process requires
the employer to furnish an employee with two written notices before the latter is dismissed:
(1) the notice to apprise the employee of the particular acts or omissions for which his
sought, which is the equivalent of a charge; and (2) the notice informing the employee of his
dismissal, to be issued after the employee has been given reasonable opportunity to answer
and to be heard on his defense. Petitioner failed to comply with these legal requirements;
hence, the Court of Appeals correctly affirmed the Labor Arbiter’s finding that respondent
was illegally dismissed, and entitled to the payment of backwages, and separation pay in
lieu of reinstatement.

CHARLIE JAO VS. BCC PRODUCT SALES INC.
GR NO. 163700, APRIL 18 2012
Facts:
Petitioner maintained that respondent BCC Product Sales Inc. (BCC) and its President,
Terrance Ty, employed him as comptroller starting from September 1995 with a monthly
salary of P20,000.00 to handle the financial aspect of BCC’s business. On October 19,1995,
the security guards of BCC, acting upon the instruction of Ty, barred him from entering the
premises of BCC where he then worked. His attempts to report to work in November and
December 12, 1995 were frustrated because he continued to be barred from entering the
premises of BCC. He then filed a complaint for illegal dismissal, reinstatement with full
backwages, non-payment of wages, damages and attorney’s fees.
Respondents countered that petitioner was not their employee but the employee of Sobien
Food Corporation (SFC), the major creditor and supplier of BCC; and that SFC had posted him
as its comptroller in BCC to oversee BCC’s finances and business operations and to look after
SFC’s interests or investments in BCC.
Issue: Whether or not an employer-employee relationship existed between petitioner Jao
and BCC

28 | P a g e

Held:
The Supreme Court speaking through Justice Bersamin declared that the court cannot side
with petitioner.
In determining the presence or absence of an employer-employee relationship, the Court has
consistently looked for the following incidents, to wit: (a) the selection and engagement of
the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s
power to control the employee on the means and methods by which the work is
accomplished. The last element, the so-called control test, is the most important element.
Hereunder are some of the circumstances and incidents occurring while petitioner was
supposedly employed by BCC that debunked his claim against respondents. It can be
deduced from the March 1996 affidavit of petitioner that respondents challenged his
authority to deliver some 158 checks to SFC. Considering that he contested respondents’
challenge by pointing to the existing arrangements between BCC and SFC, it should be
clear that respondents did not exercise the power of control over him, because he
thereby acted for the benefit and in the interest of SFC more than of BCC.

LEGEND HOTEL (MANILA) VS. REALUYO
G.R. NO. 153511; JULY 18, 2012
Facts:
Respondent averred that he had worked as a pianist at the Legend Hotel’s Tanglaw
Restaurant from September 1992 with an initial rate of P400.00/night that was given to him
after each night’s performance; that his rate had increased to P750.00/night; and that during
his employment, he could not choose the time of performance, which had been fixed from
7:00 pm to 10:00 pm for three to six times/week. He added that the Legend Hotel’s
restaurant manager had required him to conform with the venue’s motif; that he had been
subjected to the rules on employees’ representation checks and chits, a privilege granted to
other employees; that on July 9, 1999, the management had notified him that as a costcutting measure his services as a pianist would no longer be required effective July 30, 1999;
that he disputed the excuse, insisting that Legend Hotel had been lucratively operating as of
the filing of his complaint; and that the loss of his employment made him bring his
complaint.
In its defense, petitioner denied the existence of an employer-employee relationship with
respondent, insisting that he had been only a talent engaged to provide live music at Legend
Hotel’s Madison Coffee Shop for three hours/day on two days each week; and stated that the
economic crisis that had hit the country constrained management to dispense with his
services.
Issue: Whether or not there existed an employer-employee relationship between the Parties
Held:
Employer-employee relationship existed between the parties. The factors that determine the
issue include who has the power to select the employee, who pays the employee’s wages,
who has the power to dismiss the employee, and who exercises control of the methods and
results by which the work of the employee is accomplished.
First of all, petitioner actually wielded the power of selection at the time it entered into the
service contract dated September 1, 1992 with respondent. Secondly, respondent was paid
P400.00 per three hours of performance from 7:00 pm to 10:00 pm, three to six nights a
week, thus, clearly respondent received compensation for the services he entered as pianist

29 | P a g e

in petitioner’s hotel. Thirdly, respondent performed his work as a pianist under petitioner’s
supervision and control, specifically, petitioner’s control of both the end achieved and the
manner and means used to achieve that end. The power of the employer to control the work
of the employee is considered the most significant determinant of the existence of an
employer-employee relationship. This is the so-called control test, and is premised on
whether the person for whom the services are performed reserves the right to control both
the end achieved and the manner and means used to achieve that end. Lastly, petitioner
had power to dismiss respondent as shown by the memorandum informing respondent of
the discontinuance of his service because of the present business or financial condition of
petitioner showed that the latter had the power to dismiss him from employment.

THE NEW PHILIPPINE SKYLANDERS, INC. VS. DAKILA
G.R. NO. 199547; SEPTEMBER 24, 2012
Facts:
Respondent Dakila was employed by petitioner corporation as early as 1987 and terminated
for cause in April 1997 when the corporation was sold. In May 1997, he was rehired as
consultant by the petitioners under a Contract for Consultancy Services dated April 30,
1997.
Thereafter, in a letter dated April 19, 2007, respondent Dakila informed petitioners of his
compulsory retirement effective May 2, 2007 and sought for the payment of his retirement
benefits pursuant to the Collective Bargaining Agreement. His request, however, was not
acted upon. Instead, he was terminated from service effective May 1, 2007.
Consequently, respondent Dakila filed a complaint for constructive illegal dismissal, nonpayment of retirement benefits, under/non-payment of wages and other benefits of a regular
employee, and damages against petitioners.
On the other hand, petitioners, in their position paper, asserted that respondent Dakila was
a consultant and not their regular employee. The latter was not included in petitioners'
payroll and paid a fixed amount under the consultancy contract. He was not required to
observe regular working hours and was free to adopt means and methods to accomplish his
task except as to the results of the work required of him. Hence, no employer-employee
relationship existed between them.
The Labor Arbiter declared respondent Dakila to be a regular employee on the basis of the
unrebutted documentary evidence showing that he was under the petitioners' direct control
and supervision and performed tasks that were either incidental or usually desirable and
necessary in the trade or business of petitioner corporation for a period of ten years.
Issue: WON there was a valid dismissal.
Held:
The issue of illegal dismissal is premised on the existence of an employer-employee
relationship between the parties herein.Records reveal that both the LA and the NLRC, as
affirmed by the CA, have found substantial evidence to show that respondent Dakila was a
regular employee who was dismissed without cause.
Following Article 279 of the Labor Code, an employee who is unjustly dismissed from work is
entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages computed from the time he was illegally dismissed. However, considering that
respondent Dakila was terminated on May 1, 2007, or one (1) day prior to his compulsory

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retirement on May 2, 2007, his reinstatement is no longer feasible. Accordingly, the NLRC
correctly held him entitled to the payment of his retirement benefits pursuant to the CBA. On
the other hand, his backwages should be computed only for days prior to his compulsory
retirement which in this case is only a day.

TESORO ET AL. VS. METRO MANILA RETREADERS, INC. ET AL.
G.R. NO. 171482; MARCH 12, 2014
Facts:
Petitioners used to work as salesmen for respondents Metro Manila Retreaders, Inc.,
Northern Luzon Retreaders, Inc., or Power Tire and Rubber Corporation, apparently sister
companies, collectively called “Bandag.” Bandag offered repair and retread services for used
tires. Bandag developed a franchising scheme that would enable others to operate tire and
retreading
businesses
using
its
trade
name
and
service
system.
Petitioners quit their jobs as salesmen and entered into separate Service Franchise
Agreements (SFAs) with Bandag for the operation of their respective franchises. Under the
SFAs, Bandag would provide funding support to the petitioners subject to a regular or
periodic liquidation of their revolving funds. The expenses out of these funds would be
deducted from petitioners’ sales to determine their incomes.
At first, petitioners managed and operated their respective franchises without any problem.
However, they began to default on their obligations to submit periodic liquidations of their
operational expenses in relation to the revolving funds Bandag provided them.
Consequently,
Bandag
terminated
their
respective
SFA.
Aggrieved, petitioners filed a complaint for constructive dismissal, non–payment of wages,
incentive pay, 13th month pay and damages against Bandag with the National Labor
Relations Commission (NLRC). Petitioners contend that, notwithstanding the execution of the
SFAs, they remained to be Bandag’s employees, the SFAs being but a circumvention of their
status
as
regular
employees.
For its part, Bandag pointed out that petitioners freely resigned from their employment and
decided to avail themselves of the opportunity to be independent entrepreneurs under the
franchise scheme that Bandag had. Thus, no employer–employee relationship existed
between petitioners and Bandag.
Issue: WON petitioners remained to be Bandag’s salesmen under the franchise scheme it
entered into with them.
Held:
No.
When petitioners agreed to operate Bandag’s franchise branches in different parts of the
country, they knew that this substantially changed their former relationships. They were to
cease working as Bandag’s salesmen, the positions they occupied before they ventured into
running separate Bandag branches.
The tests for determining employer–employee relationship are: (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 last is called the “control test,” the most
important element.

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It is pointed out that Bandag continued, like an employer, to exercise control over
petitioners’ work. It points out that Bandag: (a) retained the right to adjust the price rates of
products and services; (b) imposed minimum processed tire requirement (MPR); (c) reviewed
and regulated credit applications; and (d) retained the power to suspend petitioners’
services for failure to meet service standards.
But uniformity in prices, quality of services, and good business practices are the essence of
all franchises. These business constraints are needed to maintain collective responsibility for
faultless and reliable service to the same class of customers for the same prices.
This is not the “control” contemplated in employer–employee relationships. Control in such
relationships addresses the details of day to day work like assigning the particular task that
has to be done, monitoring the way tasks are done and their results, and determining the
time during which the employee must report for work or accomplish his assigned task.
Franchising involves the use of an established business expertise, trademark, knowledge,
and training. As such, the franchisee is required to follow a certain established system.
Accordingly, the franchisors may impose guidelines that somehow restrict the petitioners’
conduct which do not necessarily indicate “control.” The important factor to consider is still
the element of control over how the work itself is done, not just its end result.

RIGHT TO SECURITY OF TENURE
ALU-TUCP vs. NLRC
234 SCRA 678 [1994]
Facts:
National Steel Corporation (NSC) employed petitioners in connection with its Five Year
Expansion Program. It undertook this program with the end in view of expanding the volume
and increasing the kinds of products that it may offer for sale to the public. Petitioners were
then terminated. They filed a complaint for unfair labor practice, regularization and
monetary benefits. Their contention was that they should be considered regular employees
because their jobs are necessary, desirable and work related to NSC’s main business which
is steel making and that they have rendered service for more than six years.
Issue: Whether or not petitioners were properly characterized as regular employees rather
than project employees.

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Held:
Petitioners are project employees.
Project employees are those employed for a fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of
the employee. On the other hand, regular employees are legally entitled to remain in the
service of their employer until that service is terminated by one or another of the recognized
modes or termination of service under the Labor Code. The principal test for determining
whether an employee is properly characterized as project employees is whether or not the
project employees were carrying out a specific project or undertaking, the duration and the
scope of which were specified at the time the employees were engaged for that project.
There are two types of project activities. First is that a project could refer to a particular job
or undertaking that is within the regular or usual business of the employer company, but
which is distinct and separate and identifiable as such, from the other undertakings of the
company. Such job or undertaking begins and ends at determined or determinable times.
Second is a particular job or undertaking that is not within the regular business of the
corporation. Such a job or undertaking must also be identifiably separate and distinct from
the ordinary or regular business operations of the employer. It must also begin and end at
determined or determinable times.
The case at bar falls on the second type of project activity. The carrying out of the Five Year
Expansion Program constitutes a distinct undertaking identifiable from the ordinary business
and activity of NSC. Each component project, of course, begins and ends at specified times
which had already been determined by the time petitioners were engaged. During the time
petitioners rendered services to NSC, their work was limited to one or another of the specific
component projects which made up the Five Year Expansion Program. They were not hired or
assigned to any other purpose.
The services of these project employees may be lawfully terminated at the completion of the
project. It is dependent and coterminous with the completion or termination of the specific
undertaking or activity for which the employee was hired which has been pre-determined at
the time of the engagement. Furthermore, the length of service of a project employee is not
the controlling test of employment of tenure. The simple fact that the employment of
petitioners as project employees had gone beyond one year does not detract from or legally
dissolve their status as project employees. Whichever type of project employment is found
in a particular case, a common basic requisite is that the designation of named employees
as "project employees" and their assignment to a specific project, are effected and
implemented in good faith, and not merely as a means of evading otherwise applicable
requirements of labor laws.
Private respondent NSC was not in the business of constructing buildings and installing plant
machinery for the general business community, i.e., for unrelated, third party, corporations.
NSC did not hold itself out to the public as a construction company or as an engineering
corporation.
The present case therefore strictly falls under definition of 'project employees' on paragraph
one of Article 280 of the Labor Code, as amended. Moreover, it has been held that the
length of service of a project employee is not the controlling test of employment tenure but
whether or not 'the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of
the employee'.

COSMOS BOTTLING CORP., VS NLRC
255 SCRA 358 [1996]

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Facts:
Gil C. Castro was employed by Cosmos Bottling Corporation for a specific period. Having
satisfactorily served the company for two (2) terms, Castro was recommended for
reemployment with the company’s Maintenance Team for the Davao Project, he was re-hired
and assigned to the Maintenance Division of the Davao Project tasked to install the private
respondent’s annex plant machines in its Davao plant. Castro’s employment was terminated
due to the completion of the special project. Cosmos Bottling Corporation in valid exercise of
its management prerogative terminated the services of some 228 regular employees by
reason of retrenchment. For obvious reasons, Castro was not among the list of those regular
employees whose services were terminated by reason of retrenchment or those who
voluntarily resigned. Castro filed a complaint for illegal dismissal against Cosmos Bottling
Corporation with the Labor Arbiter contending that being a regular employee, he could not
be dismissed without a just and valid cause. The company alleged that Castro was a mere
project employee whose employment was co-terminous with the project for which he was
hired.
Issue: WON Castro is a regular employee or was a mere project employee of petitioner
Cosmos Bottling Corporation.
Held:
After a careful examination of the records of the case, we find merit in the petition and hold
that respondent NLRC gravely abused its discretion when it rendered the challenged decision
finding private respondent a regular employee. Article 280 of the Labor Code which defines
regular, project and casual employment is applicable here. The same reads in full:
Article 280. Regular and Casual Employment. — The provisions of written agreement
to the contrary notwithstanding and regardless of the oral agreement of the parties,
an employment shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer, except where the employment has been fixed for
a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That, any employee who has rendered at least one year of service
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while
such actually exists.
The case at bar presents what appears, to our mind, as a typical example of the first type.
Petitioner Cosmos Bottling Corporation is a duly organized corporation engaged in the
manufacture, production, bottling, sale and distribution of beverage. In the course of its
business, it undertakes distinct identifiable projects as it did in the instant case when it
formed special teams assigned to install and dismantle its annex plant machines in various
plants all over the country. These projects are distinct and separate, and are identifiable as
such, from its usual business of bottling beverage.
Their duration and scope are made known prior to their undertaking and their specified goal
and purpose are fulfilled once the projects are completed. When private respondent was
initially hired for a period of one month and re-hired for another five months, and then
subsequently re-hired for another five months, he was assigned to the petitioner's
Maintenance Division tasked with the- installation and dismantling of its annex plant

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machines. Evidently, these projects or undertakings, the duration and scope of which had
been determined and made known to private respondent at the time of his employment, can
properly be treated as "projects" within the meaning of the "first" kind. Considered as such,
the services rendered by private respondent hired therein for the duration of the projects
may lawfully be terminated at the end or completion of the same.
Clearly, therefore, private respondent being a project employee, or to use the correct term,
seasonal employee, considering that his employment was limited to the installation and
dismantling of petitioners annex plant machines after which there was no more work to do,
his employment legally ended upon completion of the project.

PURE FOODS CORPORATION VS. NLRC
G.R. NO. 122653. DECEMBER 12, 1997
Facts:
Pure Foods Corporation hired workers numbering 906 (private respondents) to work for a
fixed period of five months at its tuna cannery plant. Their work consisted in the receiving,
skinning, loining, packing, and casing-up of tuna fish which were then exported by Pure
Foods. Their services were terminated after the expiration of their respective contracts of
employment. They filed before the NLRC a complaint for illegal dismissal against the
petitioner.
Labor Arbiter dismissed the complaint on the ground that the private respondents were
mere contractual workers, and not regular employees; hence, they could not avail of the law
on security of tenure. The termination of their services by reason of the expiration of their
contracts of employment was, therefore, justified. The private respondents appealed from
the decision to the NLRC.
The NLRC rendered a decision holding that the private
respondents and their co-complainants were regular employees.
Issue: WON the employees hired for a definite period (five-month basis) and whose services
are necessary and desirable in the usual business or trade of the employer considered
regular employees
Held:
YES.
They are regular employees because they performed work usually necessary or desirable in
petitioner's business or trade.
The private respondents could not be regarded as having been hired for a specific project or
undertaking. The term "specific project or undertaking" under Article 280 of the Labor Code
contemplates an activity which is not commonly or habitually performed or such type of
work which is not done on a daily basis but only for a specific duration of time or until
completion; the services employed are then necessary and desirable in the employer's usual
business only for the period of time it takes to complete the project.
The fact that the petitioner repeatedly and continuously hired workers to do the
same kind of work as that performed by those whose contracts had expired
negates petitioner's contention that those workers were hired for a specific
project or undertaking only.
On the validity of private respondents' five-month contracts of employment. In the leading
case of Brent School, Inc. v. Zamora, which was reaffirmed in numerous subsequent cases,
this Court has upheld the legality of fixed-term employment. It ruled that the decisive

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determinant in term employment should not be the activities that the employee is called
upon to perform but the day certain agreed upon by the parties for the commencement and
termination of their employment relationship. But, this Court went on to say that where from
the circumstances it is apparent that the periods have been imposed to preclude acquisition
of tenurial security by the employee, they should be struck down or disregarded as contrary
to public policy and morals.
Brent also laid down the criteria under which term employment cannot be said to be in
circumvention of the law on security of tenure:
1) The fixed period of employment was knowingly and voluntarily agreed upon by the
parties without any force, duress, or improper pressure being brought to bear upon
the employee and absent any other circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt with each other on
more or less equal terms with no moral dominance exercised by the former or the
latter.
None of these criteria had been met in the present case. It was really the practice of the
company to hire workers on a uniformly fixed contract basis and replace them upon the
expiration of their contracts with other workers on the same employment duration.
This scheme of the petitioner was apparently designed to prevent the private respondents
and the other "casual" employees from attaining the status of a regular employee. It was a
clear circumvention of the employees' right to security of tenure and to other benefits like
minimum wage, cost-of-living allowance, sick leave, holiday pay, and 13th month pay.
Indeed, the petitioner succeeded in evading the application of labor laws. Also, it saved itself
from the trouble or burden of establishing a just cause for terminating employees by the
simple expedient of refusing to renew the employment contracts.
The five-month period specified in private respondents' employment contracts having been
imposed precisely to circumvent the constitutional guarantee on security of tenure should,
therefore, be struck down or disregarded as contrary to public policy or morals . To uphold
the contractual arrangement between the petitioner and the private respondents would, in
effect, permit the former to avoid hiring permanent or regular employees by simply hiring
them on a temporary or casual basis, thereby violating the employees' security of tenure in
their jobs.

PHIL. FRUIT & VEGETABLE INDUSTRIES VS. NLRC
310 SCRA 680
Facts:
Private respondent Philippine Fruit and Vegetable Workers Union-Tupas Local Chapter, for
and in behalf of 127 of its members, filed a complaint for unfair labor practice and/or illegal
dismissal with damages against petitioner corporation. Private respondent alleged that
many of its complaining members started working for San Carlos Fruits Corporation which
later incorporated into PFVII in January or February 1983 until their dismissal on different
dates in 1985, 1986, 1987 and 1988. They further alleged that the dismissals were due to
complainants' involvement in union activities and were without just cause.
Petitioners argue that PFVII operates on a seasonal basis and the complainants who are
members of respondent union are seasonal workers because they work only during the
period that the company is in operation. According to petitioners, its operation starts only in
February with the processing of tomatoes into tomato paste and ceases by the end of the

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same month when the supply is consumed. It then resumes operations at the end of April or
early May, depending on the availability of supply with the processing of mangoes into
purees and ceases operation in June. The severance of complainants' employment from
petitioner corporation was a necessary consequence of the nature of seasonal employment;
and since complainants are seasonal workers as defined by the Labor Code, they cannot
invoke any tenurial benefit.
Issue: Whether or not complaining members of the union are regular employees or are
seasonal workers whose employment ceased during the off-season due to the nonavailability of work.
Held:
Yes.
The complaining members of respondent union are regular employees of PFVII having
performed functions which are necessary and desirable in the usual business of PFVII as
provided under the first paragraph of Art. 280 of the Labor Code.
Article 280 of the Labor Code provides:
Regular and Casual Employment.- The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged
to perform activities which are usually necessary or desirable in the usual business or
trade of the employers, except where the employment has been fixed for a specific
project.
An employment shall be deemed to be casual if it is not covered by the preceeding
paragraph; provided, that, any employee who has rendered at least one year of service
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while
such actually exists.
Under above provision, an employment shall be deemed regular where the employee: a)
has been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer; or b) has rendered at least one year of service, whether
such service is continuous or broken, with respect to the activity in which he is employed.
In the case at bar, the work of complainants as seeders, operators, sorters, slicers, janitors,
drivers, truck helpers, mechanics and office personnel is without doubt necessary in the
usual business of a food processing company like petitioner PFVII. Complainants'
employment has not been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of their appointment or hiring. Neither
is their employment seasonal in nature. While it may be true that some phases of petitioner
company's processing operations is dependent on the supply of fruits for a particular
season, the other equally important aspects of its business, such as manufacturing and
marketing are not seasonal. The fact is that large-scale food processing companies such as
petitioner company continue to operate and do business throughout the year even if the
availability of fruits and vegetables is seasonal.
Having determined that private respondents are regular employees under the first
paragraph, we need not dwell on the question of whether or not they had rendered one year
of service. This Court has clearly stated in Mercado, Sr. vs. NLRC, that:
The second paragraph of Article 280 demarcates as “casual” employees, all other
employees who do not fall under the definition of the preceding paragraph. The proviso, in
said second paragraph, deems as regular employees those “casual” employees who have

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rendered at least one year of service regardless of the fact that such service may be
continuous or broken. Hence, the proviso is applicable only to the employees who are
deemed “casuals” but not to the “project” employees nor the regular employees treated in
paragraph one of Art. 280.

PHILIPS SEMICONDUCTOR VS. FARDIQUELA
G.R. NO. 141717, APRIL 14, 2004
Facts:
Aside from contractual employees, the petitioner employs 1,029 regular workers. The
employees were subjected to periodic performance appraisal based on output, quality,
attendance and work attitude. One was required to obtain a performance rating of at least
3.0 for the period covered by the performance appraisal to maintain good standing as an
employee.
On May 8, 1992, respondent Eloisa Fadriquela executed a Contract of Employment with the
petitioner in which she was hired as a production operator with a daily salary of P118. Her
initial contract was for a period of three months up to August 8, 1992, but was extended for
two months when she garnered a performance rating of 3.15. Her contract was again
renewed for two months or up to December 16, 1992, when she received a performance
rating of 3.8.After the expiration of her third contract, it was extended anew, for three
months, that is, from January 4, 1993 to April 4, 1993. After garnering a performance rating
of 3.4, the respondent’s contract was extended for another three months, that is, from April
5, 1993 to June 4, 1993. She, however, incurred five absences in the month of April, three
absences in the month of May and four absences in the month of June. Line supervisor
Shirley F. Velayo asked the respondent why she incurred the said absences, but the latter
failed to explain her side.
The respondent was warned that if she offered no valid justification for her absences, Velayo
would have no other recourse but to recommend the non-renewal of her contract. The
respondent still failed to respond, as a consequence of which her performance rating
declined to 2.8. Velayo recommended to the petitioner that the respondent’s employment be
terminated due to habitual absenteeism, in accordance with the Company Rules and
Regulations. Thus, the respondent’s contract of employment was no longer renewed.
Issue: Whether or not the respondent was still a contractual employee of the petitioner as
of June 4, 1993.
Held:
The two kinds of regular employees under the law are (1) those engaged to perform
activities which are necessary or desirable in the usual business or trade of the employer;
and (2) those casual employees who have rendered at least one year of service, whether
continuous or broken, with respect to the activities in which they are employed.
The primary standard to determine a regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the business or
trade of the employer. The test is whether the former is usually necessary or desirable in
the usual business or trade of the employer. If the employee has been performing the job for
at least one year, even if the performance is not continuous or merely intermittent, the law
deems the repeated and continuing need for its performance as sufficient evidence of the
necessity, if not indispensability of that activity to the business of the employer. Hence, the
employment is also considered regular, but only with respect to such activity and while such
activity exists.

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The law does not provide the qualification that the employee must first be issued a regular
appointment or must be declared as such before he can acquire a regular employee
status.In this case, the respondent was employed by the petitioner on May 8, 1992 as
production operator. She was assigned to wirebuilding at the transistor division. There is no
dispute that the work of the respondent was necessary or desirable in the business or trade
of the petitioner. She remained under the employ of the petitioner without any interruption
since May 8, 1992 to June 4, 1993 or for one (1) year and twenty-eight (28) days. The
original contract of employment had been extended or renewed for four times, to the same
position, with the same chores.
Such a continuing need for the services of the respondent is sufficient evidence of the
necessity and indispensability of her services to the petitioner’s business. By operation of
law, then, the respondent had attained the regular status of her employment with the
petitioner, and is thus entitled to security of tenure as provided for in Article 279 of the
Labor Code.

ALCIRA VS. NLRC; G.R. NO. 149859
JUNE 9, 2004
Facts:
Middleby Philippines Corp. hired petitioner as engineering support services supervisor on a
probationary basis for six months. On 20 November 1996, a senior officer of Middleby
withheld his time card and did not allow him to work. Alcira filed with the NLRC a complaint
for illegal dismissal on the contention that he had become a regular employee when he was
illegally dismissed. In their defense, respondents claim that, during petitioner’s probationary
employment, he showed poor performance in his assigned tasks, incurred ten absences, was
late several times and violated company rules on the wearing of uniform. Since he failed to
meet company standards, petitioner’s application to become a regular employee was
disapproved and his employment was terminated.
Issue: Whether petitioner was allowed to work beyond his probationary period and was
therefore already a regular employee at the time of his alleged dismissal.
Held:
Petitioner insists that he already attained the status of a regular employee when he was
dismissed on November 20, 1996 because, having started work on May 20, 1996, the sixmonth probationary period ended on November 16, 1996. According to petitioner’s
computation, since Article 13 of the Civil Code provides that one month is composed of thirty
days, six months total one hundred eighty days. As the appointment provided that
petitioner’s status was “probationary (6 mos.)” without any specific date of termination, the
180th day fell on November 16, 1996. Thus, when he was dismissed on November 20, 1996,
he was already a regular employee. Petitioner’s contention is incorrect. Our computation of
the 6-month probationary period is reckoned from the date of appointment up to the same
calendar date of the 6th month following. In short, since the number of days in each
particular month was irrelevant, petitioner was still a probationary employee when
respondent Middleby opted not to “regularize” him on November 20, 1996.
In the instant case, petitioner cannot successfully say that he was never informed by private
respondent of the standards that he must satisfy in order to be converted into regular
status. This runs counter to the agreement between the parties that after five months of
service the petitioner’s performance would be evaluated. It is only but natural that the
evaluation should be made vis-à-vis the performance standards for the job. Private

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respondent Trifona Mamaradlo speaks of such standard in her affidavit referring to the fact
that petitioner did not perform well in his assigned work and his attitude was below par
compared to the company’s standard required of him.
However, even if probationary employees do not enjoy permanent status, they are accorded
the constitutional protection of security of tenure. This means they may only be terminated
for just cause or when they otherwise fail to qualify as regular employees in accordance with
reasonable standards made known to them by the employer at the time of their
engagement. But this constitutional protection ends on the expiration of the probationary
period. On that date, the parties are free to either renew or terminate their contract of
employment. This development has rendered moot the question of whether there was a just
cause for the dismissal of the petitioners. Middleby exercised its option not to renew the
contract when it informed petitioner on the last day of his probationary employment that it
did not intend to grant him a regular status.
Although we can regard petitioner’s severance from work as dismissal, the same cannot be
deemed illegal. As found by the labor arbiter, the NLRC and the Court of Appeals, petitioner
(1) incurred ten absences (2) was tardy several times (3) failed to wear the proper uniform
many times and (4) showed inferior supervisory skills. Petitioner failed to satisfactorily refute
these substantiated allegations. Taking all this in its entirety, respondent Middleby was
clearly justified to end its employment relationship with petitioner.

MITSUBISHI MOTORS PHILS. VS. CHRYSLER PHIL LABOR UNION
G.R. NO. 148738, JUNE 29, 2004
Facts:
Nelson Paras first worked for Mitsubishi Motors Philippines Corporation (MMPC) as a shuttle
bus driver from March 19, 1976 to June 16, 1982, when he resigned to work abroad. After
working in Saudi Arabia, he was re-hired as a welder-fabricator at the MMPC tooling shop
from October 3, 1994 to October 31, 1994. On October 29, 1994, his contract was renewed
from November 1, 1994 up to March 3, 1995.
Sometime in May of 1996, Paras was re-hired on a probationary basis as a manufacturing
trainee at the Plant Engineering Maintenance Department. He and the new and re-hired
employees were given an orientation on May 15, 1996 by Emma P. Aninipot, respecting the
company's history, corporate philosophy, organizational structure, and company rules and
regulations, including the company standards for regularization, code of conduct and
company-provided benefits.
Paras started reporting for work on May 27, 1996. He was assigned at the paint ovens, air
make-up and conveyors. As part of the MMPC's policy, Paras was evaluated by his immediate
supervisors Lito R. Lacambacal and Wilfredo J. Lopez after six (6) months, and received an
average rating. Later, Lacambacal informed Paras that based on his performance rating, he
would be regularized.
However, the Department and Division Managers reviewed the performance evaluation
made on Paras. They unanimously agreed, along with Paras' immediate supervisors, that the
performance of Paras was unsatisfactory. As a consequence, Paras was not considered for
regularization. On November 26, 1996, he received a Notice of Termination dated November
25, 1996, informing him that his services were terminated effective the said date since he
failed to meet the required company standards for regularization.
Issue: Whether or not Paras was already a regular employee when he was terminated.

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Held:
Yes.
Indeed, an employer, in the exercise of its management prerogative, may hire an employee
on a probationary basis in order to determine his fitness to perform work. Under Article 281
of the Labor Code, the employer must inform the employee of the standards for which his
employment may be considered for regularization. Such probationary period, unless covered
by an apprenticeship agreement, shall not exceed six (6) months from the date the
employee started working. The employee’s services may be terminated for just cause or for
his failure to qualify as a regular employee based on reasonable standards made known to
him. Respondent Paras was employed as a management trainee on a probationary basis.
During the orientation conducted on May 15, 1996, he was apprised of the standards upon
which his regularization would be based. He reported for work on May 27, 1996. As per the
company’s policy, the probationary period was from three (3) months to a maximum of six
(6) months.
Applying Article 13 of the Civil Code, the probationary period of six (6) months consists of
one hundred eighty (180) days.This is in conformity with paragraph one, Article 13 of the
Civil Code, which provides that the months which are not designated by their names shall be
understood as consisting of thirty (30) days each. The number of months in the probationary
period, six (6), should then be multiplied by the number of days within a month, thirty (30);
hence, the period of one hundred eighty (180) days.
As clearly provided for in the last paragraph of Article 13, in computing a period, the first
day shall be excluded and the last day included. Thus, the one hundred eighty (180) days
commenced on May 27, 1996, and ended on November 23, 1996. The termination letter
dated November 25, 1996 was served on respondent Paras only at 3:00 a.m. of November
26, 1996. He was, by then, already a regular employee of the petitioner under Article 281 of
the Labor Code.
The basis for which respondent Paras' services were terminated was his alleged
unsatisfactory rating arising from poor performance. It is a settled doctrine that the
employer has the burden of proving the lawfulness of his employee's dismissal. The validity
of the charge must be clearly established in a manner consistent with due process.
Under Article 282 of the Labor Code, an unsatisfactory rating can be a just cause for
dismissal only if it amounts to gross and habitual neglect of duties. Gross negligence has
been defined to be the want or absence of even slight care or diligence as to amount to a
reckless disregard of the safety of person or property. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them. A careful perusal of the records of
this case does not show that respondent Paras was grossly negligent in the performance of
his duties.
In the present case, the immediate supervisor of respondent Paras gave him an average
performance rating and found him fit for regularization. Thereafter, his immediate supervisor
and the department head reviewed the said rating, which was duly noted by the personnel
manager. However, in a complete turn around, the petitioner made it appear that after the
performance evaluation of respondent Paras was reviewed by the department and division
heads, it was unanimously agreed that the respondent's performance rating was
unsatisfactory, making him unfit for regularization.
There is no showing that respondent Paras was informed of the basis for the volte face of the
management group tasked to review his performance rating. His immediate supervisor even
told him that he had garnered a satisfactory rating and was qualified for regularization, only
to later receive a letter notifying him that his employment was being terminated.

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Considering that respondent Paras was not dismissed for a just or authorized cause, his
dismissal from employment was illegal. Furthermore, the petitioner's failure to inform him of
any charges against him deprived him of due process. Clearly, the termination of his
employment based on his alleged unsatisfactory performance rating was effected merely to
cover up and "deodorize" the illegality of his dismissal.
PANGILINAN VS. GENERAL MILLING CO.
G.R. NO. 149329, JULY 2, 2004
Facts:
General Milling Corporation is a domestic corporation engaged in the production and sale of
livestock and poultry. It is, likewise, the distributor of dressed chicken to various restaurants
and establishments nationwide. As such, it employs hundreds of employees, some on a
regular basis and others on a casual basis, as "emergency workers."
The petitioners were employed by the respondent on different dates as emergency workers
at its poultry plant under separate "temporary/casual contracts of employment" for a period
of five months. Most of them worked as chicken dressers, while the others served as packers
or helpers. Upon the expiration of their respective contracts, their services were terminated.
They later filed separate complaints for illegal dismissal and non-payment of holiday pay,
13th month pay, night-shift differential and service incentive leave pay against the
respondent.
The petitioners alleged that their work as chicken dressers was necessary and desirable in
the usual business of the respondent. They stressed that based on the nature of their work,
they were regular employees of the respondent; hence, could not be dismissed from their
employment unless for just cause and after due notice.
Issue: Whether or not petitioners are regular employees and, thus, cannot be dismissed
without just cause and the required due process.
Held:
Article 280 of the Labor Code comprehends three kinds of employees: (a) regular employees
or those whose work is necessary or desirable to the usual business of the employer; (b)
project employees or those whose employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season; and, (c) casual employees or
those who are neither regular nor project employees. A regular employee is one who is
engaged to perform activities which are necessary and desirable in the usual business or
trade of the employer as against those which are undertaken for a specific project or are
seasonal. There are two separate instances whereby it can be determined that an
employment is regular: (1) if the particular activity performed by the employee is necessary
or desirable in the usual business or trade of the employer; and, (2) if the employee has
been performing the job for at least a year.
In the case of St. Theresa’s School of Novaliches Foundation vs. NLRC, 43 we held that
Article 280 of the Labor Code does not proscribe or prohibit an employment contract with a
fixed period. We furthered that it does not necessarily follow that where the duties of the
employee consist of activities usually necessary or desirable in the usual business of the
employer, the parties are forbidden from agreeing on a period of time for the performance of
such activities. There is thus nothing essentially contradictory between a definite period of
employment and the nature of the employee’s duties.

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Indeed, in the leading case of Brent School Inc. v. Zamora, 44 we laid down the guideline
before a contract of employment may be held as valid, to wit:
. . . [S]tipulations in employment contracts providing for term employment or fixed
period employment are valid when the period were agreed upon knowingly and
voluntarily by the parties without force, duress or improper pressure, being brought
to bear upon the employee and absent any other circumstances vitiating his consent,
or where it satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being
exercised by the former over the latter.
The records reveal that the stipulations in the employment contracts were knowingly and
voluntarily agreed to by the petitioners without force, duress or improper pressure, or any
circumstances that vitiated their consent. Similarly, nothing therein shows that these
contracts were used as a subterfuge by the respondent GMC to evade the provisions of
Articles 279 and 280 of the Labor Code. The petitioners were hired as "emergency workers"
and assigned as chicken dressers, packers and helpers at the Cainta Processing Plant. The
respondent GMC is a domestic corporation engaged in the production and sale of livestock
and poultry, and is a distributor of dressed chicken. While the petitioners' employment as
chicken dressers is necessary and desirable in the usual business of the respondent, they
were employed on a mere temporary basis, since their employment was limited to a fixed
period. As such, they cannot be said to be regular employees, but are merely "contractual
employees." Consequently, there was no illegal dismissal when the petitioners' services
were terminated by reason of the expiration of their contracts. Lack of notice of termination
is of no consequence, because when the contract specifies the period of its duration, it
terminates on the expiration of such period. A contract for employment for a definite period
terminates by its own term at the end of such period.

HACIENDA BINO/HORTENCIA STARK VS. CUENCA
G.R. NO. 150478, APRIL 15, 2005, CITING 2003 HACIENDA FATIMA
Facts:
Hortencia L. Starke, herein petitioner, is the owner and operator of the Hacienda Bino.
During the off milling season of 1996 he issued an Order or Notice which stated, that all
Hacienda Employees who signed in favor of CARP are expressing their desire to get out of
employment on their own volition and wherefore, only those who did not sign for CARP will
be given employment by the hacienda.
Herein respondents are employees of the hacienda performing various works, such as
cultivation, planting of cane points, fertilization, watering, weeding, harvesting and loading
of harvested sugarcanes to cargo trucks are those who signed in favor of CARP. They allege
that they are regular and permanent workers of the hacienda and that they were dismissed
without just and lawful cause. They further alleged that they were dismissed because they
applied as beneficiaries under the Comprehensive Agrarian Reform Program (CARP) over the
land owned by petitioner Starke. Petitioner Starke alleged that in there was little work in the
plantation as it was off-season; and so, on account of the seasonal nature of the work, she
issued the order giving preference to those who supported the re-classification. She pointed
out that when the milling season began, the work was plentiful again and she issued notices
to all workers, including the respondents, informing them of the availability of work.
However, the respondents refused to report back to work.

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Issue: Whether or not the respondents are regular employee
Held:
Petitioner Starke contends that the established doctrine that seasonal employees are regular
employees had been overturned and abandoned by Mercado, Sr. v. NLRC. 18 She stresses
that in that case, the Court held that petitioners therein who were sugar workers, are
seasonal employees and their employment legally ends upon completion of the project or
the season.
On the substantial issue of whether the respondents are regular or seasonal employees, the
petitioners contend that the CA violated the doctrine of stare decisis by not applying the
ruling in the Mercado case that sugar workers are seasonal employees. We hold otherwise.
Under the doctrine of stare decisis, when a court has laid down a principle of law as
applicable to a certain state of facts, it will adhere to that principle and apply it to all future
cases in which the facts are substantially the same. 22 Where the facts are essentially
different, however, stare decisis does not apply, for a perfectly sound principle as applied to
one set of facts might be entirely inappropriate when a factual variance is introduced.
The disparity in facts between the Mercado case and the instant case is best exemplified by
the fact that the former decision ruled on the status of employment of farm laborers, who, as
found by the labor arbiter, work only for a definite period for a farm worker, after which they
offer their services to other farm owners, considering the area in question being
comparatively small, comprising of seventeen and a half (17 1/2) hectares of land, such that
the planting of rice and sugar cane thereon could not possibly entail a whole year operation.
The herein case presents a different factual condition as the enormity of the size of the
sugar hacienda of petitioner, with an area of two hundred thirty-six (236) hectares, simply
do not allow for private respondents to render work only for a definite period.
Indeed, in a number of cases, the Court has recognized the peculiar facts attendant in the
Mercado case.
Primary standard for determining regular employment is the reasonable connection between
the particular activity performed by the employee in relation to the usual trade or business
of the employer. 28 There is no doubt that the respondents were performing work necessary
and desirable in the usual trade or business of an employer. Hence, they can properly be
classified as regular employees.
For respondents to be excluded from those classified as regular employees, it is not enough
that they perform work or services that are seasonal in nature. They must have been
employed only for the duration of one season. 29 While the records sufficiently show that
the respondents' work in the hacienda was seasonal in nature, there was, however, no proof
that they were hired for the duration of one season only. In fact, the payrolls, 30 submitted in
evidence by the petitioners, show that they availed the services of the respondents since
1991. Absent any proof to the contrary, the general rule of regular employment should,
therefore, stand. It bears stressing that the employer has the burden of proving the
lawfulness of his employee's dismissal.

PHILIPPINE GLOBAL COMMUNICATIONS INC. VS. DE VERA
G.R. NO. 157214, JUNE 7, 2005
Facts:
Ricardo De Vera is a physician by profession whom petitioner enlisted to attend to the
medical needs of its employees. At the crux of the controversy is Dr. De Vera's status vis a
vis petitioner when the latter terminated his engagement.

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It appears that on 15 May 1981, De Vera, via a letter dated 15 May 1981, 3 offered his
services to the petitioner, therein proposing his plan of works required of a practitioner in
industrial medicine, to include the following:
1. Application of preventive medicine including periodic check-up of employees;
2. Holding of clinic hours in the morning and afternoon for a total of five (5) hours daily
for consultation services to employees;
3. Management and treatment of employees that may necessitate hospitalization
including emergency cases and accidents;
4. Conduct pre-employment physical check-up of prospective employees with no
additional medical fee;
5. Conduct home visits whenever necessary;
6. Attend to certain medical administrative function such as accomplishing medical
forms, evaluating conditions of employees applying for sick leave of absence and
subsequently issuing proper certification, and all matters referred which are medical
in nature.
The parties agreed and formalized respondent's proposal in a document denominated as
RETAINERSHIP CONTRACT 4 which will be for a period of one year subject to renewal, it
being made clear therein that respondent will cover "the retainership the Company
previously had with Dr. K. Eulau" and that respondent's "retainer fee" will be at P4,000.00 a
month. Said contract was renewed yearly. 5 The retainership arrangement went on from
1981 to 1994 with changes in the retainer's fee. However, for the years 1995 and 1996,
renewal of the contract was only made verbally. However, in December 1996 when Philcom,
thru a letter bearing on the subject boldly written as "TERMINATION — RETAINERSHIP
CONTRACT", informed De Vera of its decision to discontinue the latter's "retainer's contract
with the Company effective at the close of business hours of December 31, 1996" because
management has decided that it would be more practical to provide medical services to its
employees through accredited hospitals near the company premises.
Issue: WON an employer-employee relationship exists between petitioner and respondent
Held:
Applying the four-fold test to this case, we initially find that it was respondent himself who
sets the parameters of what his duties would be in offering his services to petitioner. We
note, too, that the power to terminate the parties' relationship was mutually vested on both.
Either may terminate the arrangement at will, with or without cause.
The tenor of this letter indicates that the complainant was proposing to extend his time with
the respondent and seeking additional compensation for said extension. This shows that the
respondent PHILCOM did not have control over the schedule of the complainant as it [is] the
complainant who is proposing his own schedule and asking to be paid for the same. This is
proof that the complainant understood that his relationship with the respondent PHILCOM
was a retained physician and not as an employee. If he were an employee he could not
negotiate as to his hours of work.
The labor arbiter added the indicia, not disputed by respondent, that from the time he
started to work with petitioner, he never was included in its payroll; was never deducted any
contribution for remittance to the Social Security System (SSS); and was in fact subjected by
petitioner to the ten (10%) percent withholding tax for his professional fee, in accordance
with the National Internal Revenue Code, matters which are simply inconsistent with an
employer-employee relationship. Clearly, the elements of an employer-employee
relationship are wanting in this case. We may add that the records are replete with evidence
showing that respondent had to bill petitioner for his monthly professional fees. 19 It simply
runs against the grain of common experience to imagine that an ordinary employee has yet

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to bill his employer to receive his salary.
Finally, remarkably absent from the parties' arrangement is the element of control, whereby
the employer has reserved the right to control the employee not only as to the result of the
work done but also as to the means and methods by which the same is to be accomplished.
Here, petitioner had no control over the means and methods by which respondent went
about performing his work at the company premises. He could even embark in the private
practice of his profession, not to mention the fact that respondent's work hours and the
additional compensation therefor were negotiated upon by the parties.
Article 280 of the Labor Code, quoted by the appellate court, is not the yardstick for
determining the existence of an employment relationship. As it is, the provision merely
distinguishes between two (2) kinds of employees, i.e., regular and casual. It does not
apply where, as here, the very existence of an employment relationship is in
dispute.

LACUESTA VS. ATENEO DE MANILA
G.R. NO. 152777, DECEMBER 9, 2005
Facts:
Respondent Ateneo de Manila University (Ateneo) hired, on a contractual basis, petitioner
Lolita R. Lacuesta as a part-time lecturer in its English Department for the second semester
of school year 1988-1989. She was re-hired, still on a contractual basis, for the first and
second semesters of school year 1989-1990. On July 13, 1990, the petitioner was first
appointed as full-time instructor on probation, in the same department effective June 1,
1990 until March 31, 1991. Thereafter, her contract as faculty on probation was renewed
effective April 1, 1991 until March 31, 1992. She was again hired for a third year effective
April 1, 1992 until March 31, 1993. During these three years she was on probation status.
Respondent Dr. Leovino Ma. Garcia, Dean of Ateneo’s Graduate School and College of Arts
and Sciences, notified petitioner that her contract would no longer be renewed because she
did not integrate well with the English Department.Petitioner filed a complaint for illegal
dismissal with prayer for reinstatement, back wages, and moral and exemplary damages.
She contends that Articles 280 and 281 of the Labor Code, not the Manual of Regulations for
Private Schools, is the applicable law to determine whether or not an employee in an
educational institution has acquired regular or permanent status. She argues that (1) under
Article 281, probationary employment shall not exceed six (6) months from date of
employment unless a longer period had been stipulated by an apprenticeship agreement;
(2) under Article 280, if the apprenticeship agreement stipulates a period longer than one
year and the employee rendered at least one year of service, whether continuous or broken,
the employee shall be considered as regular employee with respect to the activity in which
he is employed while such activity exists; and (3) it is with more reason that petitioner be
made regular since she had rendered services as part-time and full-time English teacher for
four and a half years, services which are necessary and desirable to the usual business of
Ateneo.
Issue:
(1) Whether or not the Court of Appeals erred in ruling that it is the Manual of Regulations
For Private Schools, not the Labor Code, that determines the acquisition of regular or
permanent status of faculty members in an educational institution;
(2) Whether or not after completing the three-year probation with an above-average
performance, petitioner already acquired permanent status.
Held:

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(1)
The Manual of Regulations for Private Schools, and not the Labor Code, determines
whether or not a faculty member in an educational institution has attained regular or
permanent status. Under Policy Instructions No. 11 issued by the Department of Labor and
Employment, “the probationary employment of professors, instructors and teachers shall be
subject to the standards established by the Department of Education and Culture.”
Section 93 of the 1992 Manual of Regulations for Private Schools provides that full-time
teachers who have satisfactorily completed their probationary period shall be considered
regular or permanent. Moreover, for those teaching in the tertiary level, the probationary
period shall not be more than six consecutive regular semesters of satisfactory service.The
requisites to acquire permanent employment, or security of tenure, are
(1) the teacher is a full-time teacher;
(2) the teacher must have rendered three consecutive years of service; and
(3) such service must have been satisfactory.
(2)

A part-time teacher cannot acquire permanent status.

Only when one has served as a full-time teacher can he acquire permanent or regular
status. The petitioner was a part-time lecturer before she was appointed as a full-time
instructor on probation. As a part-time lecturer, her employment as such had ended when
her contract expired. Thus, the three semesters she served as part-time lecturer could not
be credited to her in computing the number of years she has served to qualify her for
permanent status. And completing the probation period does not automatically qualify her to
become a permanent employee of the university. Petitioner could only qualify to become a
permanent employee upon fulfilling the reasonable standards for permanent employment as
faculty member.
Consistent with academic freedom and constitutional autonomy, an institution of higher
learning has the prerogative to provide standards for its teachers and determine whether
these standards have been met.At the end of the probation period, the decision to re-hire an
employee on probation, belongs to the university as the employer alone.

POSEDION FISHING/TERRY DE JESUS VS. NLRC
G.R. NO. 168052, FEBRUARY 20, 2006
Facts:
Private respondent was employed by Poseidon Fishing in January 1988 as Chief Mate. After
five years, he was promoted to Boat Captain. In 1999, petitioners, without reason, demoted
respondent from Boat Captain to Radio Operator of petitioner Poseidon. 4 As a Radio
Operator, he monitored the daily activities in their office and recorded in the duty logbook
the names of the callers and time of their calls.
On 3 July 2000, private respondent failed to record a 7:25 a.m. call in one of the logbooks.
However, he was able to record the same in the other logbook. Consequently, when he
reviewed the two logbooks, he noticed that he was not able to record the said call in one of
the logbooks so he immediately recorded the 7:25 a.m. call after the 7:30 a.m. entry. Around
9:00 o'clock in the morning of 4 July 2000, petitioner Terry de Jesus detected the error in the
entry in the logbook. Subsequently, she asked private respondent to prepare an incident
report to explain the reason for the said oversight. At around 2:00 o'clock in the afternoon of
that same day, petitioner Poseidon's secretary, namely Nenita Laderas, summoned private
respondent to get his separation pay amounting to Fifty-Five Thousand Pesos (P55,000.00).
However, he refused to accept the amount as he believed that he did nothing illegal to
warrant his immediate discharge from work.

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Rising to the occasion, private respondent filed a complaint for illegal dismissal on 11 July
2000
Issue: WON respondent was a contractual or regular employee at the time he was
terminated
Held:
In the case under consideration, the agreement has such an objective — to frustrate the
security of tenure of private respondent- and fittingly, must be nullified. In this case,
petitioners' intent to evade the application of Article 280 of the Labor Code is unmistakable.
In a span of 12 years, private respondent worked for petitioner company first as a Chief
Mate, then Boat Captain, and later as Radio Operator. His job was directly related to the
deep-sea fishing business of petitioner Poseidon. His work was, therefore, necessary and
important to the business of his employer. Such being the scenario involved, private
respondent is considered a regular employee of petitioner under Article 280 of the Labor
Code.
Ostensibly, in the case at bar, at different times, private respondent occupied the position of
Chief Mate, Boat Captain, and Radio Operator. In petitioners' interpretation, however, this
act of hiring and re-hiring actually highlight private respondent's contractual status saying
that for every engagement, a fresh contract was entered into by the parties at the outset as
the conditions of employment changed when the private respondent filled in a different
position. But to this Court, the act of hiring and re-hiring in various capacities is a mere
gambit employed by petitioner to thwart the tenurial protection of private respondent. Such
pattern of re-hiring and the recurring need for his services are testament to the necessity
and indispensability of such services to petitioners' business or trade.
Petitioners next assert that deep-sea fishing is a seasonal industry because catching of fish
could only be undertaken for a limited duration or seasonal within a given year. Thus,
according to petitioners, private respondent was a seasonal or project employee.
As correctly pointed out by the Court of Appeals, the "activity of catching fish is a continuous
process and could hardly be considered as seasonal in nature." In Philex Mining Corp. v.
National Labor Relations Commission, 34 we defined project employees as those workers
hired (1) for a specific project or undertaking, and (2) the completion or termination of such
project has been determined at the time of the engagement of the employee. The principal
test for determining whether particular employees are "project employees" as distinguished
from "regular employees," is whether or not the "project employees" were assigned to carry
out a "specific project or undertaking," the duration and scope of which were specified at the
time the employees were engaged for that project. In this case, petitioners have not shown
that private respondent was informed that he will be assigned to a "specific project or
undertaking." As earlier noted, neither has it been established that he was informed of the
duration and scope of such project or undertaking at the time of their engagement.
More to the point, in Maraguinot, Jr. v. National Labor Relations Commission, 35 we ruled that
once a project or work pool employee has been: (1) continuously, as opposed to
intermittently, re-hired by the same employer for the same tasks or nature of tasks; and (2)
these tasks are vital, necessary and indispensable to the usual business or trade of the
employer, then the employee must be deemed a regular employee.

CEBU METAL CORP., VS. SALILING
G.R. NO. 154463, SEPTEMBER 5, 2006

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Facts:
Cebu Metal Corporation is a corporation engaged in buying and selling of scrap iron. In the
Bacolod branch it has (3) regular employees holding such positions as Officer-in-Charge, a
scaler, and a yardman, whose salaries are paid directly by its main office in Cebu. The
complainants, Gregorio Saliling, Elias Bolido, Manuel Alquiza, Benjie Amparado are the one
who undertakes pakiao work in the unloading of scrap iron. The Bacolod buying station is
mainly a stockyard where scrap metal delivered by its suppliers are stockpiled. The supply
of scrap metal is not steady as it depends upon many factors, such as availability of
supplies, price, competition and demand among others. There are weeks were there are no
delivery while there are weeks were quite a number of trucks are delivered to the stockyard.
The arrivals of these trucks and the deliveries of scrap metal iron are not regular and the
schedules of deliveries to the stockyard are not known before hand by the respondent Cebu
Metal Corporation. These trucks have their own driver and truck boys employed by the
different suppliers. Sometimes, these trucks do not have any truck boys, and in these
instances, the corporation hires the services of people for the unloading of the scrap metal
from these trucks. It is for this reason that the unloaders hired by the respondent to unload
are basically seasonal workers. They are hired whenever there are trucks of suppliers do not
have any accompanying truck boys. Whoever is available and whoever are willing to help
unload on a particular occasion are hired to unload. Usually, there is a leader for a particular
group who is tasked to unload the scrap metal from a particular truck. It is this leader who
distributes the individual takes of each member of the particular group unloading the scrap
metal from a particular work The complainants maintained that they are hired by Cebu Metal
Corparation as employees and filed on January 10, 1997 a complaint with the regional
arbitration in Bacolod City for underpayment of wages and non-payment of the following
benefits 1. 13th month pay; 2. holiday pay; 3. service incentive leave pay. On March 6, 1998
includes the claim for illegal dismissal because they were dismissed after the filing of the
complaint. The Labor Arbiter rendered a decision in favor of the complainants. Aggrieved,
Cebu Metal Corporation filed an appeal with the NLRC. The NLRC reversed and set aside the
decision of the Labor Arbiter and held that the complainants were not regular employees,
thus, they could not have been illegally dismissed. The order of the reversal was based on
the Commission’s finding that the petty cash vouchers submitted by Cebu Metal Corporation
confirmed the fact that unloaders were paid on “pakiao” or task basis at Php 15.00 per
metric ton. The Commission further rationalized that with the irregular nature of the work
involved in the stoppage and resumption of which depended solely on the availability or
supply of scrap metal, it necessarily follows that after the job of unloading was completed
and unloaders are paid the contract price, the latter’s working relationship with Cebu Metal
Corporation legally ended. They were then free to offer their services to others.
The complainants challenged the decision of the NLRC with the Court of Appeals, and it
rendered the decision annulling the decision of the NLRC and reinstated the decision made
by the Labor Arbiter. Hence, this petition.
Issue: Whether or not the complainant respondents are regular employees.
Held:
The above findings validate respondent's position as to the nature of complainants' work.
Their services are needed only when scrap metals are delivered which occurs only one or
twice a week or sometimes no delivery at all in a given week. The irregular nature of work,
stoppage of work and then work again depending on the supply of scrap metal has not been
denied by complainants. On the contrary they even admitted the same in their Reply to
respondent's Appeal. . . . . Indeed, it would be unjust to require respondent to maintain
complainants in the payroll even if there is no more work to be done. To do so would make
complainants privileged retainers who collect payment from their employer for work not
done. This is extremely unfair and amount to cuddling of labor at the expense of
management.

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The Supreme Court ruled there can be no illegal dismissal to speak of. Besides, the
complainants cannot claim regularity in the hiring every time a truck comes loaded with
scrap metal. This is confirmed in the Petty Cash Vouchers which are in the names of different
leaders who are apportion the amount earned among its members. And, quite telling is the
fact that not every truck delivery of scrap metal requires the services of respondent
complainants when particular truck is accompanied by its own unloader. And whenever
required, respondent complainants were not always the ones contracted to undertake the
unloading of the trucks since the work was offered to whomever were available at a given
time. It should be remembered that the Philippine Constitution, while inexorably committed
towards the protection of the working class from exploitation and unfair treatment,
nevertheless mandates the policy of social justice so as to strike a balance between an
avowed predilection for labor, on the one hand, and the maintenance of the legal rights of
capital, the proverbial hen that lays the golden egg, on the other. Indeed we should not be
mindful of the legal norm that justice is in every case for the deserving, to be dispensed with
in the light of established facts, the applicable law, an existing jurisprudence.

HERMONIAS L. LIGANZA VS. RBL SHIPYARD CORPORATION
G.R. NO. 159862, OCTOBER 17, 2006
Facts:
After working as a carpenter for respondent since August 1991, petitioner's employment was
terminated on 30 October 1999. This prompted petitioner to file a complaint for illegal
dismissal, alleging that on said date he was verbally informed that he was already
terminated from employment and barred from entering the premises. On the same occasion,
he was told to look for another job. Thus, he claimed that he was unceremoniously
terminated from employment without any valid or authorized cause. On the other hand,
respondent insisted that petitioner was a mere project employee who was terminated upon
completion of the project for which he was hired.
Issue: WON petitioner is a project employee and whether his termination was illegal.
Held:
Before an employee hired on a per project basis can be dismissed, a report must be made to
the nearest employment office of the termination of the services of the workers every time it
completed a project, pursuant to Policy Instruction No. 20.
Petitioner claims he is a regular employee since he worked for respondent continuously and
without interruption from 13 August 1991 up to 30 October 1999 and that his work as a
carpenter was necessary and desirable to the latter's usual business of shipbuilding and
repair. He asserts that when he was hired by respondent in 1991, there was no employment
contract fixing a definite period or duration of his engagement, and save for the contract
covering the period 20 September 1999 to 19 March 2000, respondent had been unable to
show the other project employment contracts ever since petitioner started working for the
company. Furthermore, respondent failed to file as many termination reports as there are
completed projects involving petitioner, he adds.
On the other hand, respondent insists that petitioner is a project employee as evidenced by
the project employment contracts it signed with him and employee termination reports it
submitted to the DOLE.
In the instant case, respondent seeks to prove the status of petitioner's employment through
four (4) employment contracts covering a period of only two (2) years to declare petitioner

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as a project employee.
Respondent failed to present the contracts purportedly covering petitioner's employment
from 1991 to July 1997, spanning six (6) years of the total eight (8) years of his employment.
To explain its failure in this regard, respondent claims that the records and contracts
covering said period were destroyed by rains and flashfloods that hit the company's office.
The four employment contracts are not sufficient to reach the conclusion that petitioner was,
and has been, a project employee earlier since 1991. The Court is not satisfied with the
explanation that the other employment contracts were destroyed by floods and rains.
Respondent could have used other evidence to prove project employment, but it did not do
so, seemingly content with the convenient excuse of "destroyed documents."
This Court has held that an employment ceases to be co-terminous with specific projects
when the employee is continuously rehired due to the demands of employer's business and
re-engaged for many more projects without interruption. In Maraguinot, Jr. v. NLRC (Second
Division), 21 the Court ruled that "once a project or work pool employee has been: (1)
continuously, as opposed to intermittently, rehired by the same employer for the same tasks
or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual
business or trade of the employer, then the employee must be deemed a regular employee,
pursuant to Article 280 of the Labor Code and jurisprudence."
All considered, there are serious doubts in the evidence on record that petitioner is a project
employee, or that he was terminated for just cause. These doubts shall be resolved in favor
of petitioner, in line with the policy of the law to afford protection to labor and construe
doubts in favor of labor.
It is well-settled that the employer must affirmatively show rationally adequate evidence
that the dismissal was for a justifiable cause. When there is no showing of a clear, valid and
legal cause for the termination of employment, the law considers the matter a case of illegal
dismissal and the burden is on the employer to prove that the termination was for a valid or
authorized cause. For failure to prove otherwise, the Court has no recourse but to grant the
petition.

FABEZA VS. SAN MIGUEL CORPORATION
G.R. NO. 150658, FEBRUARY 9, 2007
Facts:
Petitioners, along with Joselito de Lara and John Alovera, were hired by respondent San
Miguel Corporation (SMC) as "Relief Salesmen" for the Greater Manila Area (GMA) under
separate but almost similarly worded "Contracts of Employment With Fixed Period." After
having entered into successive contracts of the same nature with SMC, the services of
petitioners, as well as de Lara and Alovera, were terminated after SMC no longer agreed to
forge another contract with them.
Respondent SMC and its co-respondent Arman Hicarte, who was its Human Resources
Manager, claimed that the hiring of petitioners was not intended to be permanent, as the
same was merely occasioned by the need to fill in a vacuum arising from SMC's gradual
transition to a new system of selling and delivering its products. Claiming that they were
illegally dismissed, petitioners, as well as de Lara and Alovera, filed separate complaints for
illegal dismissal against respondents.
Issue: Whether they were hired for a fixed period, as claimed by respondents, or as regular

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employees who may not be dismissed except for just or authorized causes.
Held:
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while
such activity actually exists.
Although Article 280 does not expressly recognize employment for a fixed period, which is
distinct from employment which has been fixed for a specific project or undertaking, Brent
School, Inc. v. Zamora 11 has clarified that employment for a fixed period is not in itself
illegal.
Thus, even if the duties of an employee consist of activities usually necessary or desirable in
the usual business of the employer, it does not necessarily follow that the parties are
forbidden from agreeing on a period of time for the performance of such activities through a
contract of employment for a fixed term.
Albeit the Court of Appeals ruled in respondents' favor on the basis of a finding that
petitioners were validly hired as project employees, respondents deny that petitioners were
project employees, asserting that they were hired only as fixed-term employees.
Since respondents attribute the termination of petitioners' employment to the expiration of
their respective contracts, a determination of whether petitioners were hired as project or
seasonal employees, or as fixed-term employees without any force, duress or improper
pressure having been exerted against them is in order. If petitioners fall under any of these
categories, then indeed their termination follows from the expiration of their contracts.
Since, as earlier stated, respondents themselves deny that petitioners were project
employees, and they do not allege that they were seasonal employees, what remains for
determination is whether petitioners were fixed-term employees under the Brent doctrine.
Significantly, both the Labor Arbiter and the NLRC found that petitioners were all regular
employees. The NLRC even explicitly stated that the periods stated in petitioners' contracts
were fixed not because of temporary exigencies but because of a scheme to preclude
petitioners from acquiring tenurial security.
Brent instructs that a contract of employment stipulating a fixed-term, even if clear as
regards the existence of a period, is invalid if it can be shown that the same was executed
with the intention of circumventing security of tenure, and should thus be ignored.
Indeed, substantial evidence exists in the present case showing that the subject contracts
were utilized to deprive petitioners of their security of tenure.
As Brent pronounces, a fixed-term employment is valid only under certain circumstances,
such as when the employee himself insists upon the period, or where the nature of the
engagement is such that, without being seasonal or for a specific project, a definite date of
termination is a sine qua non.

Soriano vs. NLRC; G.R. No. 165594
April 23, 2007 citing 2005 Filipina Pre-fabricated Bldg. System (Filisystem)

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Facts:
Petitioner and certain individuals namely Sergio Benjamin (Benjamin), Maximino Gonzales
(Gonzales), and Noel Apostol (Apostol) were employed by the respondent as Switchman
Helpers in its Tondo Exchange Office (TEO). After participating in several trainings and
seminars, petitioner, Benjamin, and Gonzales were promoted as Switchmen. Apostol, on the
other hand, was elevated to the position of Frameman. One of their duties as Switchmen and
Frameman was the manual operation and maintenance of the Electronic Mechanical Device
(EMD) of the TEO.
In November 1995, respondent PLDT implemented a company-wide redundancy program.
Subsequently, the respondent PLDT gave separate letters dated 15 July 1996 to petitioner,
Benjamin, Gonzales, and Apostol informing them that their respective positions were
deemed redundant due to the above-cited reasons and that their services will be terminated
on 16 August 1996. They requested the respondent PLDT for transfer to some vacant
positions but their requests were denied since all positions were already filled up. Hence, on
16 August 1996, respondent PLDT dismissed the four from employment.
Held:
Redundancy exists when the service capability of the workforce is in excess of what is
reasonably needed to meet the demands of the business enterprise. A position is redundant
where it is superfluous, and superfluity of a position or positions may be the outcome of a
number of factors such as over-hiring of workers, decrease in volume of business, or
dropping a particular product line or service activity previously manufactured or undertaken
by the enterprise.
The records show that respondent PLDT had sufficiently established the existence of
redundancy in the position of Switchman.
Generally, deeds of release, waiver or quitclaims cannot bar employees from demanding
benefits to which they are legally entitled or from contesting the legality of their dismissal
since quitclaims are looked upon with disfavor and are frowned upon as contrary to public
policy. Where, however, the person making the waiver has done so voluntarily, with a full
understanding thereof, and the consideration for the quitclaim is credible and reasonable,
the transaction must be recognized as being a valid and binding undertaking.
The requisites for a valid quitclaim are: 1) that there was no fraud or deceit on the part of
any of the parties; 2) that the consideration for the quitclaim is credible and reasonable; and
3) that 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.
It cannot be gainfully said that the petitioner did not fully understand the consequences of
signing the "Receipt, Release, and Quitclaim" dated 15 August 1996. Petitioner is not an
illiterate person who needs special protection. He held responsible positions in the office of
the respondent PLDT and had attended and passed various training courses for his position.
It is thus assumed that he comprehended the contents of the "Receipt, Release, and
Quitclaim" which he signed on 15 August 1996. There is also no showing that the execution
thereof was tainted with deceit or coercion.
Given the foregoing circumstances, the "Receipt, Release, and Quitclaim" dated 15 August
1996 should be considered as legal and binding on petitioner. It is settled that a legitimate
waiver which represents a voluntary and reasonable settlement of a worker's claim should
be respected as the law between the parties.

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CASERES VS. UNIVERSAL ROBINA SUGAR MILLING CORP.
G.R. NO. 159343, SEPTEMBER 28, 2007
Facts:
Universal Robina Sugar Milling Corporation (respondent) is a corporation engaged in the
cane sugar milling business.
Pedy Caseres (petitioner Caseres) started working for
respondent in 1989, while Andito Pael (petitioner Pael) in 1993. At the start of their
respective employments, they were made to sign a Contract of Employment for Specific
Project or Undertaking. Petitioners' contracts were renewed from time to time; until May
1999 when they were informed that their contracts will not be renewed anymore. Petitioners
filed a complaint for illegal dismissal, regularization, incentive leave pay, 13th month pay,
damages and attorney’s fees.
Issue: Whether or not the petitioners are seasonal/project/term employees and not regular
employees of respondents
Held:
Article 280 of the Labor Code provides:
ART. 280. Regular and Casual Employees. – The provision of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged
to perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined
at the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the
season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while
such actually exists.
The foregoing provision provides for three kinds of employees: (a) regular employees or
those who have been “engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer”; (b) project employees or those
“whose employment has been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the engagement of the employee
or where the work or services to be performed is seasonal in nature and the employment is
for the duration of the season”; and (c) casual employees or those who are neither regular
nor project employees.
The principal test for determining whether an employee is a project employee or a regular
employee is whether the employment has been fixed for a specific project or undertaking,
the completion or termination of which has been determined at the time of the engagement
of the employee. 10 A project employee is one whose employment has been fixed for a
specific project or undertaking, the completion or termination of which has been determined
at the time of the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the season. A true
project employee should be assigned to a project which begins and ends at determined or
determinable times, and be informed thereof at the time of hiring.
In the case at bar, We note that complainants never bothered to deny that they voluntarily,

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knowingly and willfully executed the contracts of employment. Neither was there any
showing that respondents exercised moral dominance on the complainants, . . . it is clear
that the contracts of employment are valid and binding on the complainants.
The execution of these contracts in the case at bar is necessitated by the peculiar nature of
the work in the sugar industry which has an off milling season. The very nature of the terms
and conditions of complainants' hiring reveals that they were required to perform phases of
special projects for a definite period after, their services are available to other farm owners.
This is so because the planting of sugar does not entail a whole year operation, and utility
works are comparatively small during the off-milling season.
The fact that petitioners were constantly re-hired does not ipso facto establish that they
became regular employees. Their respective contracts with respondent show that there were
intervals in their employment. In petitioner Caseres's case, while his employment lasted
from August 1989 to May 1999, the duration of his employment ranged from one day to
several months at a time, and such successive employments were not continuous. With
regard to petitioner Pael, his employment never lasted for more than a month at a time.
These support the conclusion that they were indeed project employees, and since their work
depended on the availability of such contracts or projects, necessarily the employment of
respondent's work force was not permanent but co-terminous with the projects to which they
were assigned and from whose payrolls they were paid.
Accordingly, petitioners cannot complain of illegal dismissal inasmuch as the completion of
the contract or phase thereof for which they have been engaged automatically terminates
their employment.

PIER 8 ARRASTRE & STEVEDORING SERVICES, INC. VS BOCLOT
G.R. NO. 173849, SEPTEMBER 28, 2007
Facts:
Petitioner Pier 8 Arrastre and Stevedoring Services, Inc. (PASSI) is a domestic corporation
engaged in the business of providing arrastre and stevedoring services[5] at Pier 8 in the
Manila North Harbor. PASSI has been rendering arrastre and stevedoring services at the port
area since 1974 and employs stevedores who assist in the loading and unloading of cargoes
to and from the vessels. Petitioner Eliodoro C. Cruz is its Vice-President and General
Manager. Respondent Jeff B. Boclot was hired by PASSI to perform the functions of a
stevedore starting 20 September 1999.
On 15 April 2000, the Philippine Ports Authority (PPA) seized the facilities and took over the
operations of PASSI through its Special Takeover Unit, absorbing PASSI workers as well as
their relievers. By virtue of a Decision dated 9 January 2001 of the Court of Appeals,
petitioners were able to regain control of their arrastre and stevedoring operations at Pier 8
on 12 March 2001.
On 9 May 2003, respondent filed a Complaint with the Labor Arbiter of the NLRC, claiming
regularization; payment of service incentive leave and 13th month pays; moral, exemplary
and actual damages; and attorney's fees. Respondent alleged that he was hired by PASSI in
October 1999 and was issued company ID No. 304, 8 a PPA Pass and SSS documents. In fact,
respondent contended that he became a regular employee by April 2000, since it was his
sixth continuous month in service in PASSI's regular course of business. He argued on the
basis of Articles 280 9 and 281 10 of the Labor Code. He maintains that under paragraph 2
of Article 280, he should be deemed a regular employee having rendered at least one year
of service with the company. In opposition thereto, petitioners alleged that respondent was

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hired as a mere "reliever" stevedore and could thus not become a regular employee
Held:
Under the 1987 Philippine Constitution, the State affords full protection to labor, local and
overseas, organized and unorganized; and the promotion of full employment and equality of
employment opportunities for all. The State affirms labor as a primary social economic force
and guarantees that it shall protect the rights of workers and promote their welfare.
The Labor Code, which implements the foregoing Constitutional mandate, draws a fine line
between regular and casual employees to protect the interests of labor. 19 "Its language
evidently manifests the intent to safeguard the tenurial interest of the worker who may be
denied the rights and benefits due a regular employee by virtue of lopsided agreements with
the economically powerful employer who can maneuver to keep an employee on a casual
status for as long as convenient." Thus, the standards for determining whether an employee
is a regular employee or a casual or project employee have been delineated in Article 280 of
the Labor Code.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while
such actually exist.
Under the foregoing provision, a regular employee is (1) one who is either engaged to
perform activities that are necessary or desirable in the usual trade or business of the
employer except for project 21 or seasonal employees; or (2) a casual employee who has
rendered at least one year of service, whether continuous or broken, with respect to the
activity in which he is employed. 22 Additionally, Article 281 of the Labor Code further
considers a regular employee as one who is allowed to work after a probationary period.
Based on the aforementioned, although performing activities that are necessary or desirable
in the usual trade or business of the employer, an employee such as a project or seasonal
employee is not necessarily a regular employee. The situation of respondent is similar to
that of a project or seasonal employee, albeit on a daily basis.
Under the second paragraph of the same provision, all other employees who do not fall
under the definition of the preceding paragraph are casual employees. However, the second
paragraph also provides that it deems as regular employees those casual employees who
have rendered at least one year of service regardless of the fact that such service may be
continuous or broken.
The primary standard, therefore, of determining a regular employment is the reasonable
connection between the particular activity performed by the employee in relation to the
usual business or trade of the employer. The test is whether the former is usually necessary
or desirable in the usual business or trade of the employer. The connection can be
determined by considering the nature of the work performed and its relation to the scheme
of the particular business or trade in its entirety. Also, if the employee has been performing
the job for at least one year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for its performance as
sufficient evidence of the necessity if not indispensability of that activity to the business.
Hence, the employment is also considered regular, but only with respect to such activity and
while such activity exists. (Emphasis supplied.)
PASSI is engaged in providing stevedoring and arrastre services in the port area in Manila.
Stevedoring, dock and arrastre operations include, but are not limited to, the opening and
closing of a vessel's hatches; discharging of cargoes from ship to truck or dock, lighters and

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barges, and vice-versa; movement of cargoes inside vessels, warehouses, terminals and
docks; and other related work. In line with this, petitioners hire stevedores who assist in the
loading and unloading of cargoes to and from the vessels.
Based on the circumstances of the instant case, this Court agrees. It takes judicial notice 24
that it is an industry practice in port services to hire "reliever" stevedores in order to ensure
smooth-flowing 24-hour stevedoring and arrastre operations in the port area. No doubt,
serving as a stevedore, respondent performs tasks necessary or desirable to the usual
business of petitioners. However, it should be deemed part of the nature of his work that he
can only work as a stevedore in the absence of the employee regularly employed for the
very same function. Bearing in mind that respondent performed services from September
1999 until June 2003 for a period of only 228.5 days in 36 months, or roughly an average of
6.34 days a month; while a regular stevedore working for petitioners, on the other hand,
renders service for an average of 16 days a month, demonstrates that respondent's
employment is subject to the availability of work, depending on the absences of the regular
stevedores. Moreover, respondent does not contest that he was well aware that he would
only be given work when there are absent or unavailable employees. Respondent also does
not allege, nor is there any showing, that he was disallowed or prevented from offering his
services to other cargo handlers in the other piers at the North Harbor other than
petitioners. As aforestated, the situation of respondent is akin to that of a seasonal or project
or term employee, albeit on a daily basis
The second paragraph thereof stipulates in unequivocal terms that all other employees who
do not fall under the definitions in the first paragraph of regular, project and seasonal
employees, are deemed casual employees. 25 Not qualifying under any of the kinds of
employees covered by the first paragraph of Article 280 of the Labor Code, then respondent
is a casual employee under the second paragraph of the same provision.
The same provision, however, provides that a casual employee can be considered as regular
employee if said casual employee has rendered at least one year of service regardless of the
fact that such service may be continuous or broken. Section 3, Rule V, Book II of the
Implementing Rules and Regulations of the Labor Code clearly defines the term "at least one
year of service" to mean service within 12 months, whether continuous or broken, reckoned
from the date the employee started working, including authorized absences and paid regular
holidays, unless the working days in the establishment as a matter of practice or policy, or
that provided in the employment contract, is less than 12 months, in which case said period
shall be considered one year. 26 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. 27 Applying
the foregoing, respondent, who has performed actual stevedoring services for petitioners
only for an accumulated period of 228.5 days does not fall under the classification of a
casual turned regular employee after rendering at least one year of service, whether
continuous or intermittent.
Where from the circumstances it is apparent that periods have been imposed to preclude
acquisition of tenurial security by an employee, such imposition should be struck down or
disregarded as contrary to public policy and morals. 30 However, we take this occasion to
emphasize that the law, while protecting the rights of the employees, authorizes neither the
oppression nor the destruction of the employer. When the law tilts the scale of justice in
favor of labor, the scale should never be so tilted if the result would be an injustice to the
employer. Thus, this Court cannot be compelled to declare respondent as a regular
employee when by the nature of respondent's work as a reliever stevedore and his
accumulated length of service of only eight months do not qualify him to be declared as
such under the provisions of the Labor Code alone.

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In light of the foregoing, petitioners must accord respondent the status of a regular
employee.

PACQUING VS. COCA-COLA BOTTLERS PHILS., INC.
G.R. NO. 157966, JANUARY 31, 2008 CITING MAGSALIN VS. NATIONAL
ORGANIZATION OF WORKINGMEN, G.R. NO. 148492, MAY 9, 2003
Facts:
Eddie Pacquing, Roderick Centeno, Juanito M. Guerra, Claro Dupilad, Jr., Louie Centeno, David
Reblora, Raymundo Andrade (petitioners) were sales route helpers or cargadores-pahinantes
of Coca-Cola Bottlers Philippines, Inc.
Petitioners were part of a complement of three personnel comprised of a driver, a salesman
and a regular route helper, for every delivery truck. They worked exclusively at
respondent's plants, sales offices, and company premises. On October 22, 1996, petitioners
filed a Complaint against respondent for unfair labor practice and illegal dismissal with
claims for regularization, recovery of benefits under the Collective Bargaining Agreement
(CBA), moral and exemplary damages, and attorney's fees. In their Position Paper,
petitioners alleged that they should be declared regular employees of respondent since the
nature of their work as cargadores-pahinantes was necessary or desirable to respondent's
usual business and was directly related to respondent's business and trade. In its Position
Paper, respondent denied liability to petitioners and countered that petitioners were
temporary workers who were engaged for a five-month period to act as substitutes for an
absent regular employee.
Held:
WON the respondent's sales route helpers or cargadores or pahinantes are regular workers
of respondent has already been resolved in Magsalin v. National Organization of Working
Men.
The basic law on the case is Article 280 of the Labor Code.
In determining whether an employment should be considered regular or non-regular, the
applicable test is the reasonable connection between the particular activity performed by
the employee in relation to the usual business or trade of the employer. The standard,
supplied by the law itself, is whether the work undertaken is necessary or desirable in the
usual business or trade of the employer, a fact that can be assessed by looking into the
nature of the services rendered and its relation to the general scheme under which the
business or trade is pursued in the usual course. It is distinguished from a specific
undertaking that is divorced from the normal activities required in carrying on the particular
business or trade. But, although the work to be performed is only for a specific project or
seasonal, where a person thus engaged has been performing the job for at least one year,
even if the performance is not continuous or is merely intermittent, the law deems the
repeated and continuing need for its performance as being sufficient to indicate the
necessity or desirability of that activity to the business or trade of the employer. The
employment of such person is also then deemed to be regular with respect to such activity
and while such activity exists.
The argument of petitioner that its usual business or trade is softdrink manufacturing and

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that the work assigned to respondent workers as sales route helpers so involves merely
“post production activities, one which is not indispensable in the manufacture of its
products, scarcely can be persuasive. If, as so argued by petitioner company, only those
whose work are directly involved in the production of softdrinks may be held performing
functions necessary and desirable in its usual business or trade, there would have then been
no need for it to even maintain regular truck sales route helpers. The nature of the work
performed must be viewed from a perspective of the business or trade in its entirety and not
on a confined scope.
The repeated rehiring of respondent workers and the continuing need for their services
clearly attest to the necessity or desirability of their services in the regular conduct of the
business or trade of petitioner company. The Court of Appeals has found each of
respondents to have worked for at least one year with petitioner company. While this Court,
in Brent School, Inc. vs. Zamora,has upheld the legality of a fixed-term employment, it has
done so, however, with a stern admonition that where from the circumstances it is apparent
that the period has been imposed to preclude the acquisition of tenurial security by the
employee, then it should be struck down as being contrary to law, morals, good customs,
public order and public policy. The pernicious practice of having employees, workers and
laborers, engaged for a fixed period of few months, short of the normal six-month
probationary period of employment, and, thereafter, to be hired on a day-to-day basis,
mocks the law. Any obvious circumvention of the law cannot be countenanced. The fact
that respondent workers have agreed to be employed on such basis and to forego the
protection given to them on their security of tenure, demonstrate nothing more than the
serious problem of impoverishment of so many of our people and the resulting unevenness
between labor and capital. A contract of employment is impressed with public interest. The
provisions of applicable statutes are deemed written into the contract, and the parties are
not at liberty to insulate themselves and their relationships from the impact of labor laws
and regulations by simply contracting with each other.

AGUSAN DEL NORTE ELECTRONIC VS. CAGAMPANG
G.R. NO. 167627, OCTOBER 10, 2008
Facts:
Respondents Joel Cagampang and Glenn Garzon started working as linemen for petitioner
Agusan del Norte Electric Cooperative, Inc. (ANECO) on October 1, 1990, under an
employment contract which was for a period not exceeding three months.
When the contract expired, the two were laid-off for one to five days and then ordered to
report back to work but on the basis of job orders. After several renewals of their job
contracts in the form of job orders for similar employment periods of about three months
each, the said contracts eventually expired on April 31, 1998 and July 30, 1999.
Respondents' contracts were no longer renewed, resulting in their loss of employment.
Thus, on January 11, 2001, respondents filed an illegal dismissal case against petitioners
Issue: WON the respondents were illegally dismissed.
Held:
After considering the facts and the submissions of the parties, we are in agreement that
respondents were illegally dismissed, and that the petition by the employer lacks merit.
There is no dispute that the respondents' work as linemen was necessary or desirable in the
usual business of ANECO. Additionally, the respondents have been performing the job for at

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least one year. The law deems the repeated and continuing need for its performance as
sufficient evidence of the necessity, if not indispensability, of that activity to the business.
The test to determine whether employment is regular or not is the reasonable connection
between the particular activity performed by the employee in relation to the usual business
or trade of the employer. Also, if the employee has been performing the job for at least one
year, even if the performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence of the necessity, if
not indispensability of that activity to the business. Thus, we held that where the
employment of project employees is extended long after the supposed project has been
finished, the employees are removed from the scope of project employees and are
considered regular employees.
While length of time may not be the controlling test for project employment, it is vital in
determining if the employee was hired for a specific undertaking or tasked to perform
functions vital, necessary and indispensable to the usual business or trade of the employer.
Here, private respondent had been a project employee several times over. His employment
ceased to be coterminous with specific projects when he was repeatedly re-hired due to the
demands of petitioner's business. Where from the circumstances it is apparent that periods
have been imposed to preclude the acquisition of tenurial security by the employee, they
should be struck down as contrary to public policy, morals, good customs or public order.
Respondents in the present case being regular employees, ANECO as the employer had the
burden of proof to show that the respondents' termination was for a just cause.
Unfortunately, however, what petitioners did was merely to refuse, without justifiable
reason, to renew respondents' work contracts for the performance of what would otherwise
be regular jobs in relation to the trade or business of the former. 13 Such conduct dismally
falls short of the requirements of our labor laws regarding dismissals. No twin notices of
termination were issued to the employees, hence the employer did not observe due process
in dismissing them from their employment. Their dismissals were patently illegal.
In termination cases, the burden of proof rests upon the employer to show that the dismissal
is for just and valid cause; failure to do so would necessarily mean that the dismissal was
illegal. The employer's case succeeds or fails on the strength of its evidence and not on the
weakness of the employee's defense. If doubt exists between the evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of the latter.
Moreover, the quantum of proof required in determining the legality of an employee's
dismissal is only substantial evidence. Substantial evidence is more than a mere scintilla of
evidence or relevant evidence as a reasonable mind might accept as adequate to support a
conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.

WILLIAM UY CONSTRUCTION ET. AL VS. TRINIDAD
GR NO. 183250, MARCH 10, 2010
Facts:
Jorge R. Trinidad filed a complaint for illegal dismissal and unpaid benefits against petitioner
William Uy Construction Corporation. Trinidad claimed that he had been working with the
latter company for 16 years since 1988 as driver of its service vehicle, dump truck, and
transit mixer. He had signed several employment contracts with the company that identified
him as a project employee although he had always been assigned to work on one project
after another with some intervals. Respondent Trinidad further alleged that petitioner
company terminated him from work after it shut down operations because of lack of
projects. He learned later, however, that although it opened up a project in Batangas, it did

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not hire him back for that project.
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. Petitioner company stressed that employment intervals or gaps were inherent in the
construction business. In compliance with labor rules, the company submitted an
establishment termination report to the Department of Labor and Employment (DOLE).
The Labor Arbiter rendered a decision, dismissing respondent Trinidad’s complaint for unjust
dismissal. The Labor Arbiter, however, ordered petitioner company to pay Trinidad P1,500.00
in unpaid service incentive leave, taking into consideration the three-year prescriptive
period for money claims. The Labor Arbiter held that, since Trinidad was a project employee
and since his company submitted the appropriate establishment termination report to DOLE,
his loss of work cannot be regarded as unjust dismissal.
Issue: Whether or not petitioner company’s repeated rehiring of respondent Trinidad over
several years as project employee for its various projects automatically entitled him to the
status of a regular employee.
Held:
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 standard will not be fair, if applied to the construction
industry, simply because construction firms cannot guarantee work and funding for its
payrolls beyond the life of each project. And getting projects is not a matter of course.
Construction companies have no control over the decisions and resources of project
proponents or owners. There is no construction company that does not wish it has such
control but the reality, understood by construction workers, is that work depended on
decisions and developments over which construction companies have no say. Respondent
Trinidad’s series of employments with petitioner company were co-terminous with its
projects. When its Boni Serrano-Katipunan Interchange Project was finished, 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. Petitioner company needed only to
show the last status of Trinidad’s employment, namely, that of a project employee under a
contract that had ended and the company’s compliance with the reporting requirement for
the termination of that employment. Indeed, both the Labor Arbiter and the NLRC were
satisfied that the fact of petitioner company’s compliance with DOLE Order 19 had been
proved in this case.

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DACUITAL ET AL, VS. L.M. CAMUS ENGINEERING CORP.
G.R. NO. 176748, SEPTEMBER 1, 2010
Facts:
Petitioners (LMCEC Employees) filed a complaint for illegal dismissal and non-payment of
monetary benefits against respondent LM Camus Engineering Corp. before the National
Labor Relations Commission (NLRC). The employees alleged that they were illegally
dismissed from employment and that their employer failed to pay them their holiday pay,
premium pay for holiday, rest day, service incentive leave pay, and 13th month pay during
the existence and duration of their employment. They also averred that they were not
provided with sick and vacation leaves.
Respondents denied that petitioners were illegally dismissed from employment. They
claimed that petitioners were project employees and, upon the completion of each project,
they were served notices of project completion. They clarified that the termination of
petitioners’ employment was due to the completion of the projects for which they were
hired. Petitioners, however, countered that they were regular employees as they had been
engaged to perform activities which are usually necessary or desirable in the usual business
or trade of LMCEC. They denied that they were project or contractual employees because
their employment was continuous and uninterrupted for more than one (1) year. Finally, they
maintained that they were part of a work pool from which LMCEC drew its workers for its
various projects.
The Labor Arbiter rendered a decision declaring the dismissal of the complainant-employees
as ILLEGAL and the complainants are entitled to reinstatement without back wages. The
NLRC modified the decision of the Labor Arbiter and ordered the reinstatement of the
complainants with limited backwages. The respondents appealed the decision to the Court
of Appeals and the appellate court held that the complainants are PROJECT EMPLOYEES and
hence, there was no illegal dismissal.
Issue: WON petitioners are PROJECT EMPLOYEES and that their dismissal from employment
was legal.
Held:
No.
Article 280 of the Labor Code distinguishes a "project employee" from a "regular employee"
in this wise:
Article 280. Regular and casual employment.—The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged
to perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a
specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where
the work or services to be performed is seasonal in nature and the employment is for
the duration of the season...xxx
The principal test used to determine whether employees are project employees is whether
or not the employees were assigned to carry out a specific project or undertaking, the
duration or scope of which was specified at the time the employees were engaged for that
project.

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Even though the absence of a written contract does not by itself grant regular status to
petitioners, such a contract is evidence that petitioners were informed of the
duration and scope of their work and their status as project employees. In this
case, where no other evidence was offered, the absence of the employment contracts raises
a serious question of whether the employees were properly informed at the onset of their
employment of their status as project employees.
While it is true that respondents presented the employment contract of Dacuital, the
contract does not show that he was informed of the nature, as well as the duration of his
employment. In fact, the duration of the project for which he was allegedly hired was not
specified in the contract.
Hence, the Dismissal of the petitioners are declared ILLEGAL.

MILLENNIUM ERECTORS CORPORATION VS. MAGALLANES
G.R. NO. G.R. NO. 184362, NOVEMBER 15, 2010
Facts:
Respondent Virgilio Magallanes started working in 1988 as a utility man for Laurencito Tiu
(Tiu), Chief Executive Officer of Millennium Erectors Corporation (petitioner), Tiu's family,
and Kenneth Construction Corporation. He was assigned to different construction projects
undertaken by petitioner in Metro Manila, the last of which was for a building in Libis,
Quezon City. In July of 2004 he was told not to report for work anymore allegedly due to old
age, prompting him to file on August 6, 2004 an illegal dismissal complaint 1 before the
Labor Arbiter.
Issue: Whether or not Magallanes’ dismissal violates security of tenure.
Arguments:
MEC
1.) Respondent was a project employee whom it hired for a building project in Libis on
January 30 and which was in near completion on August 3, 2004, when services
were terminated. Said all DOLE requirements were complied.
2.) Petitioner moved for reconsideration of the NLRC decision, contending that
respondent's motion for reconsideration which it treated as an appeal was not
perfected, it having been belatedly filed; that there was no statement of the date of
receipt of the appealed decision; and that it lacked verification and copies thereof
were not furnished the adverse parties
Held:
1.
A project employee is one whose "employment has been fixed for a specific project
or undertaking, the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or service to be performed is seasonal
in nature and the employment is for the duration of the season."
As the Court has consistently held, the service of project employees are coterminus [sic]
with the project and may be terminated upon the end or completion of that project or project
phase for which they were hired. Regular employees, in contrast, enjoy security of tenure
and are entitled to hold on to their work or position until their services are terminated by any
of the modes recognized under the Labor Code.
Assuming arguendo that petitioner hired respondent initially on a per project basis, his
continued rehiring, as shown by the sample payrolls converted his status to that of a regular
employee

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2.
In labor cases, rules of procedure should not be applied in a very rigid and technical
sense. Technicalities should not be permitted to stand in the way of equitably and
completely resolving the rights and obligations of the parties. Where the ends of substantial
justice shall be better served, the application of technical rules of procedure may be relaxed.
As to the defective verification in the appeal memorandum before the NLRC, the same
liberality applies. After all, the requirement regarding verification of a pleading is formal, not
jurisdictional.

EXODUS INTERNATIONAL CONSTRUCTION CORP. VS. BISCOCHO ET. AL
G.R. NO. 166109, FEBRUARY 23, 2011
Facts:
Exodus International Construction Corporation obtained a contract from Dutch Boy
Philippines, Inc. for the painting of the Imperial Sky Garden located in Binondo, Manila. Dutch
Boy awarded another contract to Exodus for the painting of Pacific Plaza, Towers in Fort
Bonifacio, Taguig City. In the furtherance of its business, Exodus hired respondents as
painters on different dates.
On November 27, 2000, respondents filed a complaint for illegal dismissal and non-payment
of holiday pay, service incentive leave pay, 13th month pay and night-shift differential pay.
Petitioners denied respondents' allegations. As regards Gregorio, petitioners averred that he
absented himself from work and applied as a painter with SAEI-EEI which is the general
building contractor of Pacific Plaza Towers. Since then, he never reported back to work.
Guillermo absented himself from work without leave. When he reported for work the
following day, he was reprimanded so he worked only half-day and thereafter was unheard
of until the filing of the instant complaint.
Fernando, Ferdinand, and Miguel were caught eating during working hours for which they
were reprimanded by their foreman. Since then they no longer reported for work.
The Labor Arbiter exonerated Exodus from the charge of illegal dismissal as respondents
chose not to report for work. Since there is neither illegal dismissal nor abandonment of job,
respondents were ordered be reinstated but without any backwages.
Issues: WON respondents were illegally dismissed for abandonment of work
WON they are regular employees, thus entitled to reinstatement
Held:
(1)
No. There was no dismissal, much less illegal, and there was also no abandonment of
job to speak of.
As found by the Labor Arbiter, there was no evidence that respondents were dismissed nor
were they prevented from returning to their work. It was only respondents' unsubstantiated
conclusion that they were dismissed. As a matter of fact, respondents could not name the
particular person who effected their dismissal and under what particular circumstances.
Absent any showing of an overt or positive act proving that petitioners had dismissed
respondents, the latters' claim of illegal dismissal cannot be sustained. Indeed, a cursory
examination of the records reveal no illegal dismissal to speak of.
The Labor Arbiter is also correct in ruling that there was no abandonment on the part of
respondents that would justify their dismissal from their employment.

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Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment. It is a settled rule that mere absence or failure to report for work is not enough
to amount to abandonment of work. To constitute abandonment of work, two elements must
concur:
1. the employee must have failed to report for work or must have been absent without
valid or justifiable reason and
2. there must have been a clear intention on the part of the employee to sever the
employer-employee relationship manifested by some overt act.
It is the employer who has the burden of proof to show a deliberate and unjustified refusal of
the employee to resume his employment without any intention of returning." It is therefore
incumbent upon petitioners to ascertain the respondents' interest or non-interest in the
continuance of their employment. However, petitioners failed to do so.
Petitioners posit that the reinstatement of respondents to their former positions, which were
no longer existing, is impossible, highly unfair and unjust. The project was already
completed by petitioners, having completed their tasks, their positions automatically ceased
to exist. Consequently, there were no more positions where they can be reinstated as
painters.
(2)
Respondents are regular employees of petitioners.
It is clear from the records that when one project is completed, respondents were
automatically transferred to the next project awarded to petitioners. There was no
employment agreement given to respondents which clearly spelled out the duration of their
employment, the specific work to be performed and that such is made clear to them at the
time of hiring. It is now too late for petitioners to claim that respondents are project
employees whose employment is coterminous with each project or phase of the project to
which they are assigned.
Nonetheless, assuming that respondents were initially hired as project employees, a project
employee may acquire the status of a regular employee.
The evidence on record shows that respondents were employed and assigned continuously
to the various projects of petitioners. As painters, they performed activities which were
necessary and desirable in the usual business of petitioners, who are engaged in
subcontracting jobs for painting of residential units, condominium and commercial buildings.
As regular employees, respondents are entitled to be reinstated without loss of seniority
rights.
Respondents are also entitled to their money claims such as the payment of holiday pay,
service incentive leave pay, and 13th month pay. However, they cannot be entitled to
backwages. In cases where there is no evidence of dismissal, the remedy is reinstatement
but without backwages.

LEYTE GEOTHERMAL POWER PROGRESSIVE EMPLOYEES UNION VS. PHIL NATIONAL
OIL CO.
G.R. NO. 176351, MARCH 30, 2011
Facts:
Respondent Philippine National Oil Corporation-Energy Development Corporation [PNOCEDC] is a government-owned and controlled corporation engaged in exploration,
development, utilization, generation and distribution of energy resources like geothermal

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energy. Petitioner is a legitimate labor organization, duly registered with the Department of
Labor and Employment (DOLE) Regional Office No. VIII, Tacloban City. Among [respondent's]
geothermal projects is the Leyte Geothermal Power Project located at the Greater Tongonan
Geothermal Reservation in Leyte. The said Project is composed of the Tongonan 1
Geothermal Project (T1GP) and the Leyte Geothermal Production Field Project (LGPF) which
provide the power and electricity needed not only in the provinces and cities of Central and
Eastern Visayas (Region VII and VIII), but also in the island of Luzon as well. Thus, the
[respondent] hired and employed hundreds of employees on a contractual basis, whereby,
their employment was only good up to the completion or termination of the project and
would automatically expire upon the completion of such project. Majority of the employees
hired by [respondent] in its Leyte Geothermal Power Projects had become members of
petitioner. In view of that circumstance, the petitioner demands from the [respondent] for
recognition of it as the collective bargaining agent of said employees and for a CBA
negotiation with it. However, the [respondent] did not heed such demands of the petitioner.
Sometime in 1998 when the project was about to be completed, the [respondent] proceeded
to serve Notices of Termination of Employment upon the employees who are members of the
petitioner. On December 28, 1998, the petitioner filed a Notice of Strike with DOLE against
the [respondent] on the ground of purported commission by the latter of unfair labor
practice for "refusal to bargain collectively, union busting and mass termination." On the
same day, the petitioner declared a strike and staged such strike. To avert any work
stoppage, then Secretary of Labor Bienvenido E. Laguesma intervened and issued the Order,
dated January 4, 1999, certifying the labor dispute to the NLRC for compulsory arbitration.
Accordingly, all the striking workers were directed to return to work within twelve (12) hours
from receipt of the Order and for the [respondent] to accept them back under the same
terms and conditions of employment prior to the strike. Further, the parties were directed to
cease and desist from committing any act that would exacerbate the situation. However,
despite earnest efforts on the part of the Secretary of Labor and Employment to settle the
dispute amicably, the petitioner remained adamant and unreasonable in its position, causing
the failure of the negotiation towards a peaceful compromise. In effect, the petitioner did not
abide by [the] assumption order issued by the Secretary of Labor. Consequently, on January
15, 1999, the [respondent] filed a Complaint for Strike Illegality, Declaration of Loss of
Employment and Damages at the NLRC-RAB VIII in Tacloban City and at the same time, filed
a Petition for Cancellation of Petitioner's Certificate of Registration with DOLE, Regional
Office No. VIII. The two cases were later on consolidated pursuant to the New NLRC Rules of
Procedure. The consolidated case was docketed as NLRC Certified Case No. V-02-99 (NCMBRAB VIII-NS-12-0190-98; RAB Case No. VIII-1-0019-99). The said certified case was indorsed
to the NLRC 4th Division in Cebu City on June 21, 1999 for the proper disposition thereof.
Issues:
1 Whether the officers and members of petitioner Union are project employees of
respondent; and
2 Whether the officers and members of petitioner Union engaged in an illegal strike.
Held:
On the first issue, petitioner Union contends that its officers and members performed
activities that were usually necessary and desirable to respondent's usual business. In fact,
petitioner Union reiterates that its officers and members were assigned to the Construction
Department of respondent as carpenters and masons, and to other jobs pursuant to civil
works, which are usually necessary and desirable to the department. Petitioner Union
likewise points out that there was no interval in the employment contract of its officers and
members, who were all employees of respondent, which lack of interval, for petitioner Union,
"manifests that the `undertaking' is usually necessary and desirable to the usual trade or
business of the employer."
The distinction between a regular and a project employment is provided in Article 280,

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paragraph 1, of the Labor Code:
ART. 280. Regular and Casual Employment.-- The provisions of written agreement to
the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of
the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or service to be performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while
such actually exists.
The foregoing contemplates four (4) kinds of employees: (a) regular employees or those who
have been "engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer"; (b) project employees or those "whose
employment has been fixed for a specific project or undertaking[,] the completion or
termination of which has been determined at the time of the engagement of the employee";
(c) seasonal employees or those who work or perform services which are seasonal in nature,
and the employment is for the duration of the season; and (d) casual employees or those
who are not regular, project, or seasonal employees. Jurisprudence has added a fifth kind-- a
fixed-term employee.
Article 280 of the Labor Code, as worded, establishes that the nature of the employment is
determined by law, regardless of any contract expressing otherwise. The supremacy of the
law over the nomenclature of the contract and the stipulations contained therein is to bring
to life the policy enshrined in the Constitution to "afford full protection to labor." Thus, labor
contracts are placed on a higher plane than ordinary contracts; these are imbued with public
interest and therefore subject to the police power of the State.
However, notwithstanding the foregoing iterations, project employment contracts which fix
the employment for a specific project or undertaking remain valid under the law: x x x By
entering into such a contract, an employee is deemed to understand that his employment is
coterminous with the project. He may not expect to be employed continuously beyond the
completion of the project. It is of judicial notice that project employees engaged for manual
services or those for special skills like those of carpenters or masons, are, as a rule,
unschooled. However, this fact alone is not a valid reason for bestowing special treatment on
them or for invalidating a contract of employment. Project employment contracts are not
lopsided agreements in favor of only one party thereto. The employer's interest is equally
important as that of the employee[s'] for theirs is the interest that propels economic activity.
While it may be true that it is the employer who drafts project employment contracts with its
business interest as overriding consideration, such contracts do not, of necessity, prejudice
the employee. Neither is the employee left helpless by a prejudicial employment contract.
After all, under the law, the interest of the worker is paramount.
In the case at bar, the records reveal that the officers and the members of petitioner Union
signed employment contracts indicating the specific project or phase of work for which they
were hired, with a fixed period of employment. The NLRC correctly disposed of this issue: A
deeper examination also shows that [the individual members of petitioner Union] indeed
signed and accepted the [employment contracts] freely and voluntarily. No evidence was
presented by [petitioner] Union to prove improper pressure or undue influence when they

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entered, perfected and consummated [the employment] contracts. In fact, it was clearly
established in the course of the trial of this case, as explained by no less than the President
of [petitioner] Union, that the contracts of employment were read, comprehended, and
voluntarily accepted by them. x x x.
As clearly shown by [petitioner] Union's own admission, both parties had executed the
contracts freely and voluntarily without force, duress or acts tending to vitiate the worker[s']
consent. Thus, we see no reason not to honor and give effect to the terms and conditions
stipulated therein. x x x.
Thus, we are hard pressed to find cause to disturb the findings of the NLRC which are
supported by substantial evidence.
It is well-settled in jurisprudence that factual findings of administrative or quasi-judicial
bodies, which are deemed to have acquired expertise in matters within their respective
jurisdictions, are generally accorded not only respect but even finality, and bind the Court
when supported by substantial evidence. Rule 133, Section 5 defines substantial evidence as
"that amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion."
Consistent therewith is the doctrine that this Court is not a trier of facts, and this is strictly
adhered to in labor cases. We may take cognizance of and resolve factual issues, only when
the findings of fact and conclusions of law of the Labor Arbiter or the NLRC are inconsistent
with those of the CA.
In the case at bar, both the NLRC and the CA were one in the conclusion that the officers and
the members of petitioner Union were project employees. Nonetheless, petitioner Union
insists that they were regular employees since they performed work which was usually
necessary or desirable to the usual business or trade of the Construction Department of
respondent.
Policy Instruction No. 12 of the Department of Labor and Employment discloses that the
concept of regular and casual employees was designed to put an end to casual employment
in regular jobs, which has been abused by many employers to prevent so - called casuals
from enjoying the benefits of regular employees or to prevent casuals from joining unions.
The same instructions show that the proviso in the second paragraph of Art. 280 was not
designed to stifle small-scale businesses nor to oppress agricultural land owners to further
the interests of laborers, whether agricultural or industrial. What it seeks to eliminate are
abuses of employers against their employees and not, as petitioners would have us believe,
to prevent small-scale businesses from engaging in legitimate methods to realize profit.
Hence, the proviso is applicable only to the employees who are deemed "casuals" but not to
the "project" employees nor the regular employees treated in paragraph one of Art. 280.
Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal
employees, their employment legally ends upon completion of the project or the [end of the]
season. The termination of their employment cannot and should not constitute an illegal
dismissal.
ST. PAUL COLLEGE QUEZON CITY VS. SPOUSES ANCHETA
G.R. NO. 169905, SEPTEMBER 7, 2011
Facts:
Remigio Michael Ancheta was a full-time probationary teacher in the School Year 1996-1997
which was renewed in the following SY 1997-1998. His wife, Cynthia was hired as a part time
teacher of the Mass Communication Department in the second semester of SY 1996-1997
and her appointment was renewed for SY 1997-1998.

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On February 13, 1998, respondents signified their intentions to renew their contracts for SY
1998-1999. They were later sent two letters informing them that the school is extending to
them new contracts for SY 1998-1999.
Thereafter, a letter was written to Remigio Michael, enumerating the departmental and
instructional policies that spouses failed to comply with, such as the late submission of final
grades, failure to submit final test questions to the Program Coordinator, the giving of tests
in the essay form instead of the multiple choice format as mandated by the school, failure to
report to work on time; the high number of students with failing grades in the classes that
they handled, and not being open to suggestions to improve themselves as teachers, among
others.
Thereafter, Sr. Bernadette (Department Coordinator) endorsed the immediate termination of
the teaching services of the spouses. Respondent spouses were given an opportunity to
comment on the letter-recommendation. Subsequently however, they received their
respective letters of termination. Thus, spouses filed a Complaint for illegal dismissal.
St. Paul contends that it did not extend the contracts of respondent spouses. Although, it has
sent letters to the spouses informing them that the school is extending to them new
contracts for the coming school year, the letters do not constitute as actual employment
contracts but merely offers to teach on the said school year.
Issues: WON respondents were considered regular employees
WON they were illegally dismissed
Held:
(1)
Employment on probationary status of teaching personnel is that they are not
governed purely by the Labor Code. The Labor Code is supplemented with respect to the
period of probation by special rules found in the Manual of Regulations for Private Schools.
On the matter of probationary period, Section 92 of these regulations provides:
Section 92.Probationary Period. — Subject in all instances to compliance with the
Department and school requirements, the probationary period for academic
personnel shall not be more than three (3) consecutive years of satisfactory service
for those in the elementary and secondary levels, six (6) consecutive regular
semesters of satisfactory service for those in the tertiary level, and nine (9)
consecutive trimesters of satisfactory service for those in the tertiary level where
collegiate courses are offered on a trimester basis.
A probationary employee or probationer is one who is on trial for an employer, during which
the latter determines whether or not he is qualified for permanent employment. The
probationary employment is intended to afford the employer an opportunity to observe the
fitness of a probationary employee while at work, and to ascertain whether he will become
an efficient and productive employee. While the employer observes the fitness, propriety
and efficiency of a probationer to ascertain whether he is qualified for permanent
employment, the probationer, on the other hand, seeks to prove to the employer that he has
the qualifications to meet the reasonable standards for permanent employment. Thus, the
word probationary, as used to describe the period of employment, implies the purpose of the
term or period, not its length.
The common practice is for the employer and the teacher to enter into a contract, effective
for one school year. At the end of the school year, the employer has the option not to renew
the contract, particularly considering the teacher's performance. If the contract is not
renewed, the employment relationship terminates. If the contract is renewed, usually for
another school year, the probationary employment continues. Again, at the end of that

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period, the parties may opt to renew or not to renew the contract. If renewed, this second
renewal of the contract for another school year would then be the last year — since it would
be the third school year — of probationary employment. At the end of this third year, the
employer may now decide whether to extend a permanent appointment to the employee,
primarily on the basis of the employee having met the reasonable standards of competence
and efficiency set by the employer. For the entire duration of this three-year period, the
teacher remains under probation. Upon the expiration of his contract of employment, being
simply on probation, he cannot automatically claim security of tenure and compel the
employer to renew his employment contract.
(2)

No.
Section 91 of the Manual of Regulations for Private Schools, states that:
Section 91.Employment Contract. — Every contract of employment shall specify the
designation, qualification, salary rate, the period and nature of service and its date of
effectivity, and such other terms and condition of employment as may be consistent
with laws and rules, regulations and standards of the school. A copy of the contract
shall be furnished the personnel concerned.

It is important that the contract of probationary employment specify the period or term of its
effectivity. The failure to stipulate its precise duration could lead to the inference that the
contract is binding for the full three-year probationary period. Therefore, the letters sent by
petitioner Sr. Bernadette, which were void of any specifics cannot be considered as
contracts. The closest they can resemble to are that of informal correspondence among the
said individuals. As such, petitioner school has the right not to renew the contracts of the
respondents, the old ones having been expired at the end of their terms.
Assuming, arguendo, that the employment contracts between the school and the spouses
were renewed, this Court finds that there was a valid and just cause for their dismissal.
The Labor Code commands that before an employer may legally dismiss an employee from
the service, the requirement of substantial and procedural due process must be complied
with. Under the requirement of substantial due process, the grounds for termination of
employment must be based on just or authorized causes.
Of the charges against Remigio Michael, his spouse also shared the same defenses and
admissions as to the charges against her.
The plain admissions of the charges against them were the considerations taken into
account by the petitioner school in their decision not to renew the respondent spouses'
employment contracts. This is a right of the school that is mandated by law and
jurisprudence. It is the prerogative of the school to set high standards of efficiency for its
teachers since quality education is a mandate of the Constitution. As long as the standards
fixed are reasonable and not arbitrary, courts are not at liberty to set them aside. Schools
cannot be required to adopt standards which barely satisfy criteria set for government
recognition. The same academic freedom grants the school the autonomy to decide for itself
the terms and conditions for hiring its teacher, subject of course to the overarching
limitations under the Labor Code. The authority to hire is likewise covered and protected by
its management prerogative — the right of an employer to regulate all aspects of
employment, such as hiring, the freedom to prescribe work assignments, working methods,
process to be followed, regulation regarding transfer of employees, supervision of their work,
lay-off and discipline, and dismissal and recall of workers.

LANVYL FISHING ENTERPRISES, INC. VS. ARIOLA ET. AL.

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G.R. NO. 181974, FEBRUARY 1, 2012
Facts:
Petitioner Lynvil Fishing Enterprises, Inc. (Lynvil) is engaged in deep-sea fishing.
Respondents’ services were engaged in various capacities: Andres G. Ariola, captain; Jessie
D. Alcovendas, chief mate; Jimmy B. Calinao, chief engineer; Ismael G. Nubla, cook; Elorde
Bañez, oiler; and Leopoldo G. Sebullen, bodegero.
On Aug. 1, 1998, Lynvil received a report from Ramonito Clarido, one of its employees, that
on July 31, 1998, he witnessed that while on board the company vessel Analyn VIII,
respondents conspired with one another and stole eight tubs of “pampano” and “tangigue”
fish and delivered them to another vessel.
Petitioner filed a criminal complaint against respondents before the office of the City
Prosecutor of Malabon City which found probable cause for indictment of respondents for the
crime of qualified theft. Relying on the finding and Nasipit Lumber Company v. NLRC, 257
Phil. 937 (1989), Lynvil asserted there was sufficient basis for valid termination of
employment of respondents based on serious misconduct and/or loss of trust and
confidence.
Issues: Whether a finding of the city prosecutor of probable cause to indict employees of
qualified theft is sufficient basis for valid termination for serious misconduct and/or loss of
trust or confidence
Whether the employees were validly terminated
Held:
On the first issue, the Supreme Court ruled in the negative. We ruled that proof beyond
reasonable doubt of an employee’s misconduct is not required when loss of confidence is the
ground for dismissal. It is sufficient if the employer has “some basis” to lose confidence or
that the employer has reasonable ground to believe or to entertain the moral conviction that
the employee concerned is responsible for the misconduct and that the nature of his
participation therein rendered him absolutely unworthy of the trust and confidence
demanded by his position.
Lynvil cannot argue that since the Office of the Prosecutor found probable cause for theft the
Labor Arbiter must follow the finding as a valid reason for the termination of respondents’
employment. The proof required for purposes that differ from one and the other are likewise
different.
(2)
On the second question, the Court stated that nonetheless, even without reliance on
the prosecutor’s finding, we find that there was valid cause for respondents’ dismissal.
Just cause is required for a valid dismissal. The Labor Code provides that an employer may
terminate an employment based on fraud or willful breach of the trust reposed on the
employee. Such breach is considered willful if it is done intentionally, knowingly, and
purposely, without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. It must also be based on substantial evidence and
not on the employer’s whims or caprices or suspicions otherwise, the employee would
eternally remain at the mercy of the employer. Loss of confidence must not be
indiscriminately used as a shield by the employer against a claim that the dismissal of an
employee was arbitrary. And, in order to constitute a just cause for dismissal, the act
complained of must be work-related and shows that the employee concerned is unfit to
continue working for the employer. In addition, loss of confidence as a just cause for
termination of employment is premised on the fact that the employee concerned holds a

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

D.M. CONSUNJI, INC. VS. JASMIN
GR NO 912594, APRIL 18, 2012
Facts:
On December 17, 1968, petitioner D.M. Consunji, Inc. (DMCI), a construction company, hired
respondent Estelito L. Jamin as a laborer. Sometime in 1975, Jamin became a helper
carpenter. Since his initial hiring, Jamin’s employment contract had been renewed a number
of times. On March 20, 1999, his work at DMCI was terminated due to the completion of the
SM Manila project. This termination marked the end of his employment with DMCI as he was
not rehired again.

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On April 5, 1999, Jamin filed a complaint for illegal dismissal, with several money claims
(including attorney’s fees), against DMCI and its President/General Manager, David M.
Consunji. Jamin alleged that DMCI terminated his employment without a just and authorized
cause at a time when he was already 55 years old and had no independent source of
livelihood. He claimed that he rendered service to DMCI continuously for almost 31 years. In
addition to the schedule of projects (where he was assigned) submitted by DMCI to the labor
arbiter, he alleged that he worked for three other DMCI projects: Twin Towers, Ritz Towers,
from July 29, 1980 to June 12, 1982; New Istana Project, B.S.B. Brunei, from June 23, 1982 to
February 16, 1984; and New Istana Project, B.S.B. Brunei, from January 24, 1986 to May 25,
1986.
DMCI denied liability. It argued that it hired Jamin on a project-to-project basis, from the start
of his engagement in 1968 until the completion of its SM Manila project on March 20, 1999
where Jamin last worked. With the completion of the project, it terminated Jamin’s
employment. It alleged that it submitted a report to the Department of Labor and
Employment (DOLE) everytime it terminated Jamin’s services.
Issue: Whether there was violation of security of tenure.
Held:
Jamin worked for DMCI for almost 31 years, initially as a laborer and, for the most part, as a
carpenter. Through all those years, DMCI treated him as a project employee, so that he
never obtained tenure. On the surface and at first glance, DMCI appears to be correct. Jamin
entered into a contract of employment (actually an appointment paper to which he signified
his conformity) with DMCI either as a field worker, a temporary worker, a casual employee,
or a project employee everytime DMCI needed his services and a termination of employment
paper was served on him upon completion of every project or phase of the project where he
worked.
The CA pierced the cover of Jamin’s project employment contract and declared him a regular
employee who had been dismissed without cause and without notice. To reiterate, the CA’s
findings were based on: (1) Jamin’s repeated and successive engagements in DMCI’s
construction projects, and (2) Jamin’s performance of activities necessary or desirable in
DMCI’s usual trade or business.
We agree with the CA. In Liganza v. RBL Shipyard Corporation, the Court held that
"[a]ssuming, without granting[,] that [the] petitioner was initially hired for specific projects
or undertakings, the repeated re-hiring and continuing need for his services for over eight
(8) years have undeniably made him a regular employee." We find the Liganza ruling
squarely applicable to this case, considering that for almost 31 years, DMCI had repeatedly,
continuously and successively engaged Jamin’s services since he was hired on December
17, 1968 or for a total of 38 times — 35 as shown by the schedule of projects submitted by
DMCI to the labor arbiter and three more projects or engagements added by Jamin, which he
claimed DMCI intentionally did not include in its schedule so as to make it appear that there
were wide gaps in his engagements.
We reviewed Jamin’s employment contracts as the CA did and we noted that while the
contracts indeed show that Jamin had been engaged as a project employee, there was an
almost unbroken string of Jamin’s rehiring from December 17, 1968 up to the termination of
his employment on March 20, 1999. While the history of Jamin’s employment (schedule of
projects) relied upon by DMCI shows a gap of almost four years in his employment for the
period between July 28, 1980 (the supposed completion date of the Midtown Plaza project)
and June 13, 1984 (the start of the IRRI Dorm IV project), the gap was caused by the
company’s omission of the three projects.

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For not disclosing that there had been other projects where DMCI engaged his services,
Jamin accuses the company of suppressing vital evidence that supports his contention that
he rendered service in the company’s construction projects continuously and repeatedly for
more than three decades. The non-disclosure might not have constituted suppression of
evidence — it could just have been overlooked by the company — but the oversight is unfair
to Jamin as the non-inclusion of the three projects gives the impression that there were
substantial gaps not only of several months but years in his employment with DMCI.
To reiterate, Jamin’s employment history with DMCI stands out for his continuous, repeated
and successive rehiring in the company’s construction projects. In all the 38 projects where
DMCI engaged Jamin’s services, the tasks he performed as a carpenter were indisputably
necessary and desirable in DMCI’s construction business. He might not have been a member
of a work pool as DMCI insisted that it does not maintain a work pool, but his continuous
rehiring and the nature of his work unmistakably made him a regular employee. In
Maraguinot, Jr. v. NLRC, the Court held that once a project or work pool employee has been:
(1) continuously, as opposed to intermittently, rehired by the same employer for the same
tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the
usual business or trade of the employer, then the employee must be deemed a regular
employee.
Further, as we stressed in Liganza, "[r]espondent capitalizes on our ruling in D.M. Consunji,
Inc. v. NLRC which reiterates the rule that the length of service of a project employee is not
the controlling test of employment tenure but whether or not ‘the employment has been
fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee.’"
"Surely, length of time is not the controlling test for project employment. Nevertheless, it is
vital in determining if the employee was hired for a specific undertaking or tasked to perform
functions vital, necessary and indispensable to the usual business or trade of the employer.
Here, [private] respondent had been a project employee several times over. His employment
ceased to be coterminous with specific projects when he was repeatedly re-hired due to the
demands of petitioner’s business." Without doubt, Jamin’s case fits squarely into the
employment situation just quoted.

GAPAYAO VS. FULO
G.R. NO. 193493; JUNE 13, 2013
Facts:
Jaime Fulo (deceased) died of "acute renal failure secondary to 1st degree burn 70%
secondary electrocution"5 while doing repairs at the residence and business establishment of
petitioner.
Thereafter, private respondent filed a claim for social security benefits with the Social
Security System (SSS)–Sorosogon Branch.8 However, upon verification and evaluation, it was
discovered that the deceased was not a registered member of the SSS.
respondent filed a Petition before the SSC on 17 February 2003. In her Petition, she sought
social security coverage and payment of contributions in order to avail herself of the
benefits accruing from the death of her husband.
On 6 May 2003, petitioner filed an Answer disclaiming any liability on the premise that the
deceased was not the former’s employee, but was rather an independent

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contractor whose tasks were not subject to petitioner’s control and supervision.
Issue: Won there exists between the deceased Jaime Fulo and petitioner an employeremployee relationship that would merit an award of benefits in favor of private respondent
under social security laws.
Held:
In asserting the existence of an employer-employee relationship, private respondent alleges
that her late husband had been in the employ of petitioner for 14 years, from 1983 to 1997.
During that period, he was made to work as a laborer in the agricultural landholdings,
a harvester in the abaca plantation, and a repairman/utility worker in several
business establishments owned by petitioner.
Lastly, petitioner alleges that the deceased is a freelance worker. Since he was engaged on
a pakyaw basis and worked for a short period of time, in the nature of a farm
worker every season, he was not precluded from working with other persons and in fact
worked for them. Under Article 280 of the Labor Code, seasonal employees are not
covered by the definitions of regular and casual employees.
Farm workers may be considered regular seasonal employees.
Jurisprudence has identified the three types of employees mentioned in the provision: (1)
regular employees or those who have been engaged to perform activities that are usually
necessary or desirable in the usual business or trade of the employer; (2) project employees
or those whose employment has been fixed for a specific project or undertaking, the
completion or termination of which has been determined at the time of their engagement, or
those whose work or service is seasonal in nature and is performed for the duration of the
season; and (3) casual employees or those who are neither regular nor project employees.
Farm workers generally fall under the definition of seasonal employees.
We have consistently held that seasonal employees may be considered as regular
employees.
Regular seasonal employees are those called to work from time to time.
For regular employees to be considered as such, the primary standard used is the
reasonable connection between the particular activity they perform and the usual trade or
business of the employer.
Hence, the employment is also considered regular, but only with respect to such activity and
while such activity exists.
A reading of the records reveals that the deceased was indeed a farm worker who was in the
regular employ of petitioner. From year to year, starting January 1983 up until his death,
the deceased had been working on petitioner’s land by harvesting abaca and coconut,
processing copra, and clearing weeds. His employment was continuous in the sense that it
was done for more than one harvesting season. Moreover, no amount of reasoning
could detract from the fact that these tasks were necessary or desirable in the usual
business of petitioner.
Pakyaw workers are considered employees for as long as their employers exercise control
over them

CONCRETE SOLUTIONS, INC. ET AL. VS. CABUSAS
G.R. NO. 177812; JUNE 19, 2013
Facts:

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Respondent Arthur Cabusas (respondent) was hired by petitioner Primary Structures
Corporation (PSC) as transit mixer driver for petitioner Concrete Solutions Inc. (CSI) –
Batching Plant Project.
The appointment letter stated:
xxx the status of his employment was that of a project employee and, as such, his
employment was co-terminus with the completion of the project or any phase
thereof; that upon completion of the particular project or phase, he was free to
seek other employment of his choice; xxxx
He was accused of theft in the company, investigations were conducted, he sought
assistance of counsel.
On June 12, 2001, petitioners, thru Manager Ardiente, sent respondent a termination
letter15 reading as follows:
Starting on May 6, 2001, you were absent from work without filing a Leave of Absence. A
Notice of Abandonment was sent to you on May 25, 2001 via telegram. Likewise, you were
required to report or notify the company as soon as possible. However, two weeks already
elapsed from the time the notice was sent to you but you continued defying said request.
Due to this, we are constrained to TERMINATE your services effective on the date you
abandoned your work with a strong belief that you are no longer interested to come back to
your work anymore.
Issue: WON there was valid termination.
Held:
It is well settled that in termination cases, the burden of proof rests upon the employer to
show that the dismissal was for a just and valid cause, and failure to discharge the same
would
mean
that
the
dismissal
is
not
justified
and,
therefore,
illegal
To constitute abandonment, two elements must concur, to wit: (1) the failure to report for
work or absence without valid or justifiable reason; and (2) a clear intention to sever the
employer-employee relationship, with the second element as the more determinative factor
and being manifested by some overt acts.
Respondent explained that his absence from work was due to the fact that he and
his counsel had asked and were waiting for a copy of result of the investigation
on his alleged act of theft or dishonesty conducted on May 4, 2001 but were not
given at all. We find his absence from work not sufficient to establish that he already had
intention of abandoning his job. Besides, settled is the rule that mere absence or failure to
report for work is not tantamount to abandonment of work.
Reinstatement
and
backwages.
Petitioners contend that respondent was a project employee and the project to which he
was hired was already completed, thus he could not be reinstated anymore.
Considering that respondent was dismissed prior to the expiration of the duration of his
employment and without a valid or just cause, his termination was therefore illegal.
However, respondent could no longer be reinstated since the project he was assigned to was
already completely finished. However, we find that he is entitled to the salary corresponding
to the unexpired portion of his employment.

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D.M. CONSUNJI VS. BELLO
G.R. NO. 159371; JULY 19, 2013
Facts:
Bello brought a complaint for illegal dismissal and damages against DMCI and/or Rachel
Consunji. He claimed that DMCI had employed him as a mason without any interruption from
February 1, 1990 until October 10, 1997 at an hourly rate of P25.081; that he had been
diagnosed to be suffering from pulmonary tuberculosis, thereby necessitating his leave of
absence; that upon his recovery, he had reported back to work, but DMCI had refused to
accept him and had instead handed to him a termination paper that the cause had not been
explained to him.
DMCI’s
projects
had
not
yet
been
completed.
DMCI contended that Bello had only been a project employee, as borne out by his
contract of employment and appointment papersand that although his last project
employment contract had been set to expire on October 7, 1997, he had tendered his
voluntary resignation on October 4, 1997 for health reasons that had rendered him
incapable
of
performing
his
job,
per
his
resignation
letter.
Issues:
1.
WHETHER OR NOT PRIVATE RESPONDENT WAS A REGULAR EMPLOYEE; AND
2.
WHETHER OR NOT PRIVATE RESPONDENT WAS DISMISSED OR VOLUNTARILY
RESIGNED.
Held:
In the context of the law, Bello was a project employee of DMCI at the beginning of their
employer-employee relationship. The project employment contract they then entered into
clearly gave notice to him at the time of his engagement about his employment being for a
specific project or phase of work. He was also thereby notified of the duration of the project,
and
the
determinable
completion
date
of
the
project.
However, the history of Bello’s appointment and employment showed that he performed his
tasks as a mason in DMCI’s various constructions projects, Tthus, Bello acquired in time
the status of a regular employee by virtue of his continuous work as a mason of DMCI.
It is settled that the extension of the employment of a project employee long after
the supposed project has been completed removes the employee from the scope
of a project employee and makes him a regular employee. In this regard, the length
of time of the employee’s service, while not a controlling determinant of project
employment, is a strong factor in determining whether he was hired for a specific
undertaking or in fact tasked to perform functions vital, necessary and indispensable to the
usual business or trade of the employer.1
Voluntary resignation
Yet, even had the letter been actually signed by him, the voluntariness of the resignation
could not be assumed from such fact alone. His claim that he had been led to believe that
the letter would serve only as the means of extending his sick leave from work should have
alerted DMCI to the task of proving the voluntariness of the resignation.
Under the circumstances, DMCI became burdened with the obligation to prove the due
execution and genuineness of the document as a letter of resignation, which it failed to
prove.

COLEGIO DEL SANTISIMO ROSARIO ET AL. VS. ROJO

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G.R. NO. 170388; SEPTEMBER 4, 2013
Facts:
Petitioner Colegio del Santisimo Rosario (CSR) hired respondent as a high school teacher on
probationary basis for the school years 1992-1993, 1993-1994 7 and 1994-1995. On April 5,
1995, CSR, through petitioner Sr. Zenaida S. Mofada, OP (Mofada), decided not to renew
respondent’s services.
Respondent filed a Complaint for illegal dismissal. He alleged that since he had served three
consecutive school years which is the maximum number of terms allowed for probationary
employment, he should be extended permanent employment. Citing paragraph 75 of the
1970 Manual of Regulations for Private Schools (1970 Manual), respondent asserted that
"full- time teachers who have rendered three (3) consecutive years of satisfactory services
shall be considered permanent."
Petitioners maintain that upon the expiration of the probationary period, both the school and
the respondent were free to renew the contract or let it lapse. Petitioners insist that a
teacher hired for three consecutive years as a probationary employee does not
automatically become a regular employee upon completion of his third year of probation. It
is the positive act of the school – the hiring of the teacher who has just completed three
consecutive years of employment on probation for the next school year – that makes the
teacher a regular employee of the school.
Held:
In Mercado v. AMA Computer College-Parañaque City, Inc., we had occasion to rule that
cases dealing with employment on probationary status of teaching personnel are not
governed solely by the Labor Code as the law is supplemented, with respect to the period of
probation, by special rules found in the Manual of Regulations for Private Schools (the
Manual).
With regard to the probationary period, Section 92 of the 1992 Manual provides:
Section 92. Probationary Period. – Subject in all instances to compliance with the
Department and school requirements, the probationary period for academic
personnel shall not be more than three (3) consecutive years of satisfactory service
for those in the elementary and secondary levels, six (6) consecutive regular
semesters of satisfactory service for those in the tertiary level, and nine (9)
consecutive trimesters of satisfactory service for those in the tertiary level where
collegiate courses are offered on a trimester basis.
In this case, petitioners’ teachers who were on probationary employment were made to
enter into a contract effective for one school year. Thereafter, it may be renewed for another
school year, and the probationary employment continues. At the end of the second fixed
period of probationary employment, the contract may again be renewed for the last time.
Such employment for fixed terms during the teachers’ probationary period is an accepted
practice in the teaching profession.
That teachers on probationary employment also enjoy the protection afforded by Article 281
of the Labor Code is supported by Section 93 of the 1992 Manual which provides:
Sec. 93. Regular or Permanent Status. - Those who have served the probationary
period shall be made regular or permanent. Full-time teachers who have satisfactorily
completed their probationary period shall be considered regular or permanent.

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The above provision clearly provides that full-time teachers become regular or permanent
employees once they have satisfactorily completed the probationary period of three school
years. The use of the term satisfactorily necessarily connotes the requirement for schools to
set reasonable standards to be followed by teachers on probationary employment. For how
else can one determine if probationary teachers have satisfactorily completed the
probationary period if standards therefor are not provided?
As such, "no vested right to a permanent appointment shall accrue until the employee has
completed the prerequisite three-year period necessary for the acquisition of a permanent
status. [However, it must be emphasized that] mere rendition of service for three
consecutive years does not automatically ripen into a permanent appointment. It is also
necessary that the employee be a full-time teacher, and that the services he rendered are
satisfactory.
However, for teachers on probationary employment, in which case a fixed term contract is
not specifically used for the fixed term it offers, it is incumbent upon the school to have not
only set reasonable standards to be followed by said teachers in determining qualification
for regular employment, the same must have also been communicated to the teachers at
the start of the probationary period, or at the very least, at the start of the period when they
were to be applied. These terms, in addition to those expressly provided by the Labor Code,
would serve as the just cause for the termination of the probationary contract.
In this case, glaringly absent from petitioners’ evidence are the reasonable standards that
respondent was expected to meet that could have served as proper guidelines for purposes
of evaluating his performance. Nowhere in the Teacher’s Contract could such standards be
found. Neither was it mentioned that the same were ever conveyed to respondent. Even
assuming that respondent failed to meet the standards set forth by CSR and made known to
the former at the time he was engaged as a teacher on probationary status, still, the
termination was flawed for failure to give the required notice to respondent.

HERRERA-MANAOIS VS. ST. SCHOLASTICAS COLLEGE
G.R. NO. 188914; DECEMBER 11, 2013
Facts:
SSC, situated in the City of Manila, is a private educational institution offering elementary,
secondary, and tertiary education. Manaois graduated from SSC in October 1992 with a
degree in Bachelor of Arts in English. In 1994, she returned to her alma mater as a part-time
English teacher. After taking a leave of absence for one year, she was again rehired by SSC
for the same position. Four years into the service, she was later on recommended by her
Department Chairperson to become a full-time faculty member of the English Department.
Manaois thus applied for a position as full-time instructor for school year 2000-2001.
She mentioned in her application letter that she had been taking the course Master of Arts in
English Studies, Major in Creative Writing, at the University of the Philippines, Diliman (UP);
that she was completing her master's thesis; and that her oral defense was scheduled for
June 2000. In a reply letter 4 dated 17 April 2000, the Dean of Arts and Sciences informed
her of the SSC Administrative Council's approval of her application. SSC hired her as a
probationary full-time faculty member with the assigned task of instructor for the school
year 2000-2001. Her probationary employment continued for a total of three consecutive
years.
Because of the forthcoming completion of her third year of probationary employment,
Manaois wrote the Dean of Arts and Sciences requesting an extension of her teaching load
for the school year 2003-2004. Manaois eventually received a letter from the Dean of
College and Chairperson of the Promotions and Permanency Board officially informing her of

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the board's decision not to renew her contract.
Issue: Whether the completion of a master's degree is required in order for a tertiary level
educator to earn the status of permanency in a private educational institution.
Held:
Probationary employment refers to the trial stage or period during which the employer
examines the competency and qualifications of job applicants, and determines whether they
are qualified to be extended permanent employment status. Such an arrangement affords
an employer the opportunity — before the full force of the guarantee of security of tenure
comes into play — to fully scrutinize and observe the fitness and worth of probationers while
on the job and to determine whether they would become proper and efficient employees. It
also gives the probationers the chance to prove to the employer that they possess the
necessary qualities and qualifications to meet reasonable standards for permanent
employment.
Viewed next to the statements and actions of Manaois — i.e., the references to obtaining a
master's degree in her application letter, in the subsequent correspondences between her
and SSC, and in the letter seeking the extension of a teaching load for the school year 20032004; and her submission of certifications from UP and from her thesis adviser — we find
that there is indeed substantial evidence proving that she knew about the necessary
academic qualifications to obtain the status of permanency.
At this juncture, we reiterate the rule that mere completion of the three-year probation, even
with an above-average performance, does not guarantee that the employee will
automatically acquire a permanent employment status. It is settled jurisprudence that the
probationer can only qualify upon fulfillment of the reasonable standards set for permanent
employment as a member of the teaching personnel.
Thus, pursuant to the 1992 Manual, private educational institutions in the tertiary level may
extend "full-time faculty" status only to those who possess, inter alia, a master's degree in
the field of study that will be taught. This minimum requirement is neither subject to the
prerogative of the school nor to the agreement between the parties. For all intents and
purposes, this qualification must be deemed impliedly written in the employment contracts
between private educational institutions and prospective faculty members. The issue of
whether probationers were informed of this academic requirement before they were
engaged as probationary employees is thus no longer material, as those who are seeking to
be educators are presumed to know these mandated qualifications. In the light of the failure
of Manaois to satisfy the academic requirements for the position, she may only be
considered as a part-time instructor pursuant to Section 45 of the 1992 Manual.

UNIVERSAL ROBINA SUGAR MILLING CORP. VS. ACIBO ET AL.
G.R NO. 186439; JANUARY 15, 2014
Facts:
URSUMCO is a domestic corporation engaged in the sugar cane milling business; Cabati is
URSUMCO's Business Unit General Manager. The complainants were employees of
URSUMCO. They were hired on various dates (between February 1988 and April 1996) and
on different capacities, 8 i.e., drivers, crane operators, bucket hookers, welders, mechanics,
laboratory attendants and aides, steel workers, laborers, carpenters and masons, among
others. At the start of their respective engagements, the complainants signed contracts of
employment for a period of one (1) month or for a given season. URSUMCO repeatedly hired
the complainants to perform the same duties and, for every engagement, required the latter

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to sign new employment contracts for the same duration of one month or a given season.
The complainants filed before the LA complaints for regularization, entitlement to the
benefits under the existing Collective Bargaining Agreement (CBA), and attorney's fees.
Issue: Whether or not respondents are regular employees of URSUMCO
Held:
We find the respondents to be regular seasonal employees of URSUMCO.
Seasonal employment operates much in the same way as project employment, albeit it
involves work or service that is seasonal in nature or lasting for the duration of the season.
As with project employment, although the seasonal employment arrangement involves work
that is seasonal or periodic in nature, the employment itself is not automatically considered
seasonal so as to prevent the employee from attaining regular status. To exclude the
asserted "seasonal" employee from those classified as regular employees, the employer
must show that: (1) the employee must be performing work or services that are seasonal in
nature; and (2) he had been employed for the duration of the season. Hence, when the
"seasonal" workers are continuously and repeatedly hired to perform the same tasks or
activities for several seasons or even after the cessation of the season, this length of time
may likewise serve as badge of regular employment. In fact, even though denominated as
"seasonal workers," if these workers are called to work from time to time and are only
temporarily laid off during the off-season, the law does not consider them separated from
the service during the off-season period. The law simply considers these seasonal workers
on leave until re-employed.
The nature of the employment depends on the nature of the activities to be performed by
the employee, considering the nature of the employer's business, the duration and scope to
be done, and, in some cases, even the length of time of the performance and its continued
existence. In light of the above legal parameters laid down by the law and applicable
jurisprudence, the respondents are neither project, seasonal nor fixed-term employees, but
regular seasonal workers of URSUMCO.
(1) The respondents were made to perform various tasks that did not at all pertain to
any specific phase of URSUMCO's strict milling operations that would ultimately
cease upon completion of a particular phase in the milling of sugar; rather, they were
tasked to perform duties regularly and habitually needed in URSUMCO's operations
during the milling season.
(2) The respondents were regularly and repeatedly hired to perform the same tasks year
after year.

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MANAGEMENT PREROGATIVE
DOSCH VS. NLRC
G.R. NO. L-51182. JULY 5, 1983
Facts:
Helmut Dosch, an American citizen, married to a Filipina, was the resident Manager of
Northwest Airlines, Inc. in the Philippines. He has to his credit 11 years of continuous service
with the company, including 9 years as Northwest Manager with station at Manila. He
received an inter-office communication from R.C. Jenkins, Northwest's Vice President for
Orient Region based in Tokyo, promoting him to the position of Director of International Sales
and transferring him to Northwest's General Office in Minneapolis, U.S.A., effective
immediately.
Dosch in his letter, expressed appreciation for the promotion and at the same time regretted
that "for personal reasons and reasons involving his family, he is unable to accept a transfer
from the Philippines and that he would, therefore, prefer to remain in his position, of
Manager-Philippines until such time that his services in that capacity are no longer required
by the company. Petitioner tried to resume his duties as Manager after an authorized
vacation but the Vice-President for the Orient Region of Northwest advised petitioner that in
view of his letter, his status as an employee of the company ceased on the close of business
and the company therefore considers his letter to be a resignation without notice.
Issue: Whether or not the employer’s letter constitute a transfer as a valid exercise of a
management prerogative.
Held:
No. The Supreme Court treats the Jenkins letter as directing the promotion of the petitioner
from his position as Philippine manager to Director of International Sales in Minneapolis,
U.S.A. It is not merely a transfer order but "it is more in the nature of a promotion that a
transfer, the latter being merely incidental to such promotion." The inter-office

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communication of Vice President Jenkins is captioned "Transfer" but it is basically and
essentially a promotion for the nature of an instrument is characterized not by the title given
to it but by its body and contents. The communication informed the petitioner that effective
August 18, 1975, he was to be promoted to the position of Director of International Sales,
and his compensation would be upgraded and the payroll accordingly adjusted. Petitioner
was, therefore, advanced to a higher position and rank and his salary was increased and
that is a promotion.
There is no law that compels an employee to accept a promotion, as a promotion is in the
nature of a gift or a reward, which a person has a right to refuse. When petitioner refused to
accept his promotion to Director of International Sales, he was exercising a right and he
cannot be punished for it as qui jure suo utitur neminem laedit. He who uses his own legal
right injures no one. While it may be true that the right to transfer or reassign an employee
is an employer's exclusive right and the prerogative of management, such right is not
absolute. The right of an employer to freely select or discharge his employee is limited by
the paramount police power for the relations between capital and labor are not merely
contractual but impressed with public interest (Article 1700, New Civil Code). And neither
capital nor labor shall act oppressively against each other. The Court did not agree to
Northwest's submission that petitioner was guilty of disobedience and insubordination which
respondent Commission sustained. Petitioners acknowledgment of his promotion and the
way he expressed his desire to remain in his position in the Philippines for reasons involving
his family, the Court could not discern even the slightest hint of defiance, much less imply
insubordination on the part of petitioner.
The Court emphasized the long and faithful years of service that petitioner had rendered to
respondent company, eleven good years, nine of which as Manager with station at Manila. It
is plainly abusive of the company and oppressive to the petitioner that the latter is
peremptorily dismissed on the shallow claim of "resignation without notice,". The Court
ordered petitioner's reinstatement to his former position with full backwages for three (3)
years without loss of seniority rights and other benefits recognized by law, including
attorney's fees equivalent to 10% of the total monetary benefits which the petitioner may
recover, and ordered petitioners reinstatement.

PT&T VS. COURT OF APPEALS
G.R. NO. 152057. SEPTEMBER 29, 2003
Facts:
PT&T is a domestic corporation engaged in the business of providing telegraph and
communication services thru its branches all over the country. Sometime in 1997, after
conducting several studies, PT and T came up with a Relocation and Restructuring Program
that aimed to (a) sustain its retail operations (b) decongest surplus workforce in some
branches, to promote efficiency and productivity; (c) lower expenses incidental to hiring and
training new personnel; and (d) avoid retrenchment of employees occupying redundant
positions. The company offered relocation benefits/allowances to employees who would
agree to be transferred to new PT and T branches in the provinces. Moreover, employees
who would agree to the transfer would be considered promoted.
In line with the petitioner’s program, seven employees were directed by the company to
“relocate” to their new PT&T branches. The seven employees however rejected the
petitioner company’s offer on the reason that the said transfers involved distant places
which would require their separation from their families.
Due to the employee’s refusal, the company dismissed the seven employees on the ground
that their refusal amounted to insubordination and willful disobedience to a lawful order. As

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the seven employees were all members of a registered labor union, their union in behalf of
them, filed with the Labor Arbiter a complaint for unfair labor practice and illegal dismissal
against PT&T.
The petitioner company’s defense was that the transfers were valid exercise of management
prerogative. The Labor Arbiter dismissed the complaint and upheld the company, but on
appeal, the National Labor Relations Commission declared the employee’s dismissal as
illegal. The Court of Appeals affirmed the NLRC’s ruling.
Issue:
(1) Whether or not the transfers initiated by petitioner PT and T to its employees were in the
nature of a promotion.
(2) Whether or not the dismissal of the employees was valid on the ground that there was
insubordination and willful disobedience to a lawful order.
Held:
(1) The employee’s transfers are promotions in nature even if they were not accompanied by
an increase in salary.
It was petitioner company itself that admitted to this fact as was stated in their position
paper submitted to the Labor Arbiter. With or without a corresponding increase in salary, the
respective transfers of the private respondents were in fact promotions, following the ruling
enunciated in Homeowners Savings and Loan Association, Inc. v. NLRC:
… [P]romotion, as we defined in Millares v, Subido, is “the advancement from one
position to another with an increase in duties and responsibilities as authorized by
law, and usually accompanied by an increase in salary.” Apparently, the
indispensable element for there to be a promotion is that there must
be“advancement from one position to another” or an upward vertical movement of
the employee’s rank or position. Any increase in salary should only be considered
incidental but never determinative of whether or not a promotion is bestowed upon
an employee.
(2) An employee cannot be promoted, even if merely as a result of transfer, without his
consent. A transfer that results in promotion or demotion, advancement or reduction or a
transfer that aims to ‘lure the employee away from his permanent position cannot be done
without the employees’ consent.
There is no law that compels an employee to accept a promotion for the reason that a
promotion is in the nature of a gift or reward, which a person has a right to refuse. Hence,
the exercise by the private respondents of their right cannot be considered in law as
insubordination, or willful disobedience of a lawful order of the employer. As such, there was
no valid cause for the private respondents’ dismissal.
As the questioned dismissal is not based on any of the just or valid grounds under Article
282 of the Labor Code, the NLRC correctly ordered the private respondents’ reinstatement
without loss of seniority rights and the payment of back wages from the time of their
dismissal up to their actual reinstatement.

MENDOZA VS. RURAL BANK OF LUCBAN
G.R. NO. 155421, JULY 7, 2004
Facts:
On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board
Resolution Nos. 99-52 and 99-53, ordering the reshuffling of its and employees in line with
the policy of the bank to familiarize bank employees with the various phases of bank

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operations and further strengthen the existing internal control system.
In that Board resolution, Mendoza was assigned to Clerk-Meralco collection from the position
of Appraiser. Petitioner in an undated letter to the Bank’s Board Chairman stated that the
transfer was in effect a demotion on his part without legal basis and is a blatant harassment
on from the employer as a prelude petitioners termination in due time. That it resulted to
unfair labor practice.
The Board’s Chairman in his reply, only reiterated that the reason behind the resolution on
the reshuffling of its employees was merely familiarize bank employees with the various
phases of bank operations and further strengthen the existing internal control system.
On June 7, 2009, petitioner in a letter applied for leave of absence due to an ailment good
for ten days, and another was submitted for 30 days. Within this period, petitioner filed a
complaint before Arbitration Branch No. IV of the National Labor Relations Commission
against the Rural Bank of Lucban for illegal dismissal, underpayment, separation pay and
damages. The Labor Arbiter upheld petitioner’s claims but then it was reversed by the NLRC
on appeal. The Court of Appeals also found no grave abuse of discretion on the part of the
NLRC.
Issue: Whether or not the reshuffling or transfer is deemed to be a demotion on petitioner’s
position.
Held:
Constructive dismissal is defined as an involuntary resignation resorted to when continued
employment is rendered impossible, unreasonable or unlikely; when there is a demotion in
rank or a diminution of pay; or when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to the employee.
In the pursuit of its legitimate business interest, management has the prerogative to transfer
or assign employees from one office or area of operation to another — provided there is no
demotion in rank or diminution of salary, benefits, and other privileges; and the action is not
motivated by discrimination, made in bad faith, or effected as a form of punishment or
demotion without sufficient cause. This privilege is inherent in the right of employers to
control and manage their enterprise effectively. The right of employees to security of tenure
does not give them vested rights to their positions to the extent of depriving management of
its prerogative to change their assignments or to transfer them. Managerial prerogatives,
however, are subject to limitations provided by law, collective bargaining agreements, and
general principles of fair play and justice.
Management Prerogative to Transfer Employees. Jurisprudence recognizes the exercise of
management prerogatives. For this reason, courts often decline to interfere in legitimate
business decisions of employers. Indeed, labor laws discourage interference in employers’
judgments concerning the conduct of their business. The law must protect not only the
welfare of employees, but also the right of employers. In the pursuit of its legitimate
business interest, management has the prerogative to transfer or assign employees from
one office or area of operation to another -- provided there is no demotion in rank or
diminution of salary, benefits, and other privileges; and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion without
sufficient cause. This privilege is inherent in the right of employers to control and manage
their enterprise effectively. The right of employees to security of tenure does not give them
vested rights to their positions to the extent of depriving management of its prerogative to
change their assignments or to transfer them.
Petitioner’s Transfer Lawful. Petitioner’s transfer was made in pursuit of respondent’s policy

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to “familiarize bank employees with the various phases of bank operations and further
strengthen the existing internal control system” of all officers and employees. We have
previously held that employees may be transferred -- based on their qualifications, aptitudes
and competencies -- to positions in which they can function with maximum benefit to the
company. There appears no justification for denying an employer the right to transfer
employees to expand their competence and maximize their full potential for the
advancement of the establishment. Petitioner was not singled out; other employees were
also reassigned without their express consent. Neither was there any demotion in the rank of
petitioner; or any diminution of his salary, privileges and other benefits. This fact is clear in
respondent’s Board Resolutions, the April 30, 1999 letter of Bank President Daya to Branch
Manager Cada, and the May 10, 1999 letter of Daya to petitioner.

DUNCAN ASSOCIATION OF DETAILMAN VS. GLAXO WELLCOME PHILS.
G.R. 162994, SEPTEMBER 17, 2004
Facts:
Petitioner Tecson was hired by respondent Glaxo Wellcome Phils. as a medical
representative. Tecson signed a contract of employment, which stipulates among others,
that he agrees to disclose existing or future relationship with co-employees and employees
of competing companies that should such relationship poses a conflict of interest, to resign
from the company. Despite repeated warnings, Tecson and Bettsy, an employee of a
competing company, got married. Glaxo transferred Tecson to Butuan, but he defied such
orders and continued acting as medical representative in Camarines area. The National
Conciliation and Mediation board rendered as valid the policy and the right to transfer.
Issue: Whether or not the policy constitutes a prohibition against marriage.
Held:
No.
Glaxo’s policy prohibiting an employee from having a relationship is a valid exercise of
management prerogatives as relationships of that nature might compromise the interests of
the company. Glaxo has a right to guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and information for competitors.
The right to protect its economic interests is recognized by the constitution which recognizes
the right of enterprises to adopt and enforce such a policy to protect its right to reasonable
returns on investments and for expansion and growth. Indeed, while our laws endeavor to
give life to the constitutional policy on social justice and the protection of labor, it does not
mean that every labor dispute will be decided in favor of the workers.
The law also recognized that management has rights which are also entitled to respect and
enforcement in the interest of fair play. The challenged company policy does not violate the
equal protection clause of the constitution as such clause is addressed only to the state or
those acting under color of its authority.
The policy being questioned is not a policy against marriage. An employee of the company
remains free to marry anyone of his or her choosing. The policy is aimed at restricting a
personal prerogative that belongs only to the individual. However, an employee’s personal
decision does not detract the employer from exercising management prerogatives to ensure
maximum profit and business success.

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PLDT VS. PAQUIO
G.R. NO. 152689, OCTOBER 12, 2005
Facts:
In 1994, PLDT assessed the performance of the 27 Exchanges comprising the GMM Network.
Upon receipt of the ratings, Alfredo Paguio, Head of the Garnet Exchange, sent a letter to his
immediate supervisor and Asst. VP criticizing the PLDT criteria for performance rating as
unfair because they depended on manpower after receiving its appraisal rating. He also
suggested that the criteria failed to recognize that exchanges with new plants could easily
meet the objectives of GMM compared to those with old plants.
Despite Paguio’s criticism, Garnet Exchange, the oldest plant in GMM, obtained the top
rating in the GMM. Nevertheless, Paguio reiterated his letter to Santos and objected to the
performance rating as it was based only on the attainment of objectives, without considering
other relevant factors. Two years later on June 1996, PLDT rebalanced the manpower of the
East Center.
Paguio wrote Santos and requested reconsideration of the manpower
rebalancing, claiming it was unfair to Garnet Exchange because as the oldest exchange in
the East Center, it was disallowed to use contractors for new installations and was not made
beneficiary of the cut-over bonus.
He was then was reassigned as Head for Special Assignment at the Office of the GMM East
Center and asked to turn over his functions as Garnet Exchange Head to Tessie Go.
Believing that his transfer was a disciplinary action, Paguio requested the first VP for a
formal hearing of the charges against him and asked that his reassignment be deferred. He
also filed a complaint against his supervisor for grave abuse of authority and manipulation of
the East Center performance. Findings were that the memo was in order as it was based on
the finding that Paguio was not a team player and cannot accept decisions of management,
which is short of insubordination. He was then advised to transfer to any group in the
company that may avail of his services. Likewise, another memo informed Paguio that his
transfer was not in the nature of a disciplinary action that required investigation and that he
agreed with the reasons of the transfer. Aggrieved, Paguio files a complaint for illegal
dismissal with prayer for reinstatement and damages which was later amended to illegal
demotion with prayer for reversion to old position, damages and attorney’s fees.
Issue: Whether or not the transfer of Paguio is legal.
Held:
PLDT alleges that the NLRC ruling would allow a change of cause of action since the
complaint alleged “illegal demotion” while the decision involved “illegal transfer.” Prefatorily,
we note from the records that there has been no change of cause of action from “illegal
demotion” to “illegal transfer.” Illegal demotion is a type of illegal transfer. Moreover, it is
familiar and fundamental doctrine that it is not the title of the action but the allegations in
the pleading that determines the nature of the action. An employer is free to regulate,
according to his own discretion and judgment, all aspects of employment, including the
transfer of employees. It is the employer’s prerogative, based on its assessment and
perception of its employees’ qualifications, aptitudes, and competence, to deploy its
employees in the various areas of its business operations in order to ascertain where they
will function with maximum benefit to the company. An employee’s right to security of
tenure does not give him such a vested right in his position as would deprive the company of
its prerogative to change his assignment or transfer him where he will be most useful.
Nonetheless, there are limits to the management prerogative. While it may be conceded
that management is in the best position to know its operational needs, the exercise of
management prerogative cannot be utilized to circumvent the law and public policy on labor

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and social justice. That prerogative accorded management should not defeat the very
purpose for which our labor laws exist: to balance the conflicting interests of labor and
management. By its very nature, management prerogative must be exercised always with
the principles of fair play and justice. In particular, the employer must be able to show that
the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of his salaries, privileges and other benefits. The
employer bears the burden of proving that the transfer of the employee has complied with
the foregoing test.
In the present case, we see no credible reason for Paguio’s transfer except his criticisms of
the company’s performance evaluation methods. Based on the undisputed facts, Garnet
Exchange was doing well and excelled in the performance rating. In the same way, Paguio’s
performance was consistently rated as outstanding. There was also no proof that Paguio
refused to comply with any management policy. Patently, his transfer could not be due to
poor performance. Neither was it because he was needed in the new post for the new
assignment was functionless and it was nothing but a title. Paguio’s transfer could only be
caused by the management’s negative reception of his comments. It is prejudicial to Paguio
because it left him out for a possible promotion as he was assigned to a functionless position
with neither office nor staff.
Hence, transfer was not valid.

STAR PAPER CORP., VS. SIMBOL
G.R. NO. 164774, APRIL 12, 2006
Facts:
Petitioner Star Paper Corporation is a corporation engaged in trading, principally of paper
products. Josephine Ongsitco is its Manager of the Personnel and Administration Department
while Sebastian Chua is its Managing Director.
Respondents Ronaldo D. Simbol (Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella
(Estrella) were all regular employees of the company. Simbol was employed by the company
on October 1993 and met Alma Dayrit, also an employee of the company, whom he married
on June 1998. Prior to the marriage, Ongsitco advised the couple that should they decide to
get married, one of them should resign pursuant to a company policy. Simbol resigned on
June 20, 1998 pursuant to the company policy.
Comia was hired by the company on February 1997. She met Howard Comia, a co-employee,
whom she married on June 1, 2000. Ongsitco likewise reminded them that pursuant to
company policy, one must resign should they decide to get married. Comia resigned on June
30, 2000.
Estrella was hired on July 29, 1994. She met Luisito Zuñiga (Zuñiga), also a co-worker.
Petitioners stated that Zuñiga, a married man, got Estrella pregnant. The company allegedly
could have terminated her services due to immorality but she opted to resign on December
21, 1999.
The respondents signed a Release and Confirmation Agreement and stated therein that they
have no money and property accountabilities in the company. Respondents offer a different
version of their dismissal. Respondents later filed a complaint for unfair labor practice,
constructive dismissal, separation pay and attorney’s fees. They averred that the
aforementioned company policy is illegal and contravenes Article 136 of the Labor Code.

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Labor Arbiter dismissed the complaint and states that the company policy was decreed
pursuant to what the respondent corporation perceived as management prerogative. On
appeal to the NLRC, the Commission affirmed the decision of the Labor Arbiter. In its assailed
Decision dated August 3, 2004, the Court of Appeals reversed the NLRC decision.
Issue: Whether such company policy violates the Labor Code.
Held:
Such policy violates the fundamental right of an employee. Art 136 of the Labor Code
provides:
Art. 136. It shall be unlawful for an employer to require as a condition of employment or
continuation of employment that a woman employee shall not get married, or to stipulate
expressly or tacitly that upon getting married a woman employee shall be deemed resigned
or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman
employee merely by reason of her marriage.
With more women entering the workforce, employers are also enacting employment policies
specifically prohibiting spouses from working for the same company. We note that two types
of employment policies involve spouses: policies banning only spouses from working in the
same company (no-spouse employment policies), and those banning all immediate family
members, including spouses, from working in the same company (anti-nepotism
employment policies).
It utilizes two theories of employment discrimination: the disparate treatment and the
disparate impact. Under the disparate treatment analysis, the plaintiff must prove that an
employment policy is discriminatory on its face. No-spouse employment policies requiring an
employee of a particular sex to either quit, transfer, or be fired are facially discriminatory. On
the other hand, to establish disparate impact, the complainants must prove that a facially
neutral policy has a disproportionate effect on a particular class.

RIVERA VS. SOLIDBANK
G.R. NO. 163269, APRIL 19, 2006
Facts:
Rivera started working with Solidbank Corporation as an audit clerk since July 1, 1977. Then
he was promoted as credit investigator, senior clerk, assistant accountant, and finally as
assistant manager. Prior to his retirement, he became the Manager of the bank’s Credit
Investigation and Appraisal Division of the Consumer's Banking Group. In the meantime,
Rivera and his brother-in-law put up a poultry business in Cavite.
In December 1994, Solidbank offered two retirement programs to its employees: (a) the
Ordinary Retirement Program (ORP), under which an employee would receive 85% of his
monthly basic salary multiplied by the number of years in service; and (b) the Special
Retirement Program (SRP), under which a retiring employee would receive 250% of the gross
monthly salary multiplied by the number of years in service. Rivera decided to devote his
time and attention to his poultry business in Cavite and applied for retirement under the
SRP. Solidbank approved the application and confirmed his separation from Solidbank on
February 25, 1995. However, Solidbank required Rivera to sign an undated Release, Waiver
and Quitclaim, which was notarized on March 1, 1995. He acknowledged receipt of the net
proceeds of his separation and retirement benefits and promised that "he would not, at any
time, in any manner whatsoever, directly or indirectly engage in any unlawful activity

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prejudicial to the interest of Solidbank, its parent, affiliate or subsidiary companies, their
stockholders, officers, directors, agents or employees, and their successors-in-interest and
will not disclose any information concerning the business of Solidbank, its manner or
operation, its plans, processes, or data of any kind." He also signed in an Undertaking upon
which he promised that "not to seek employment with a competitor bank or financial
institution within one (1) year from February 28, 1995, and that any breach of the
Undertaking or the provisions of the Release, Waiver and Quitclaim would entitle Solidbank
to a cause of action against him before the appropriate courts of law”.
But on May 1, 1995, Rivera got employed with Equitable Banking Corporation (Equitable) as
Manager of its Credit Investigation and Appraisal Division of its Consumers' Banking Group.
Upon learning this, Solidbank wrote a letter dated May 18, 1995, informing Rivera that he
had violated the Undertaking and demanded the return of all the monetary benefits he
received in consideration of the SRP within five (5) days from receipt; otherwise, appropriate
legal action would be taken against him.
Issue: Whether the employment ban incorporated in the Undertaking which petitioner
executed upon his retirement is unreasonable, oppressive, hence, contrary to public policy.
Held:
The SC held that Article 1306 of the New Civil Code provides that the contracting parties
may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order or
public policy. The freedom of contract is both a constitutional and statutory right. A
contract is the law between the parties and courts have no choice but to enforce such
contract as long as it is not contrary to law, morals, good customs and against public policy.
The well-entrenched doctrine is that the law does not relieve a party from the effects of an
unwise, foolish or disastrous contract, entered into with full awareness of what he was doing
and entered into and carried out in good faith. Such a contract will not be discarded even if
there was a mistake of law or fact. Courts have no jurisdiction to look into the wisdom of the
contract entered into by and between the parties or to render a decision different therefrom.
They have no power to relieve parties from obligation voluntarily assailed, simply because
their contracts turned out to be disastrous deals.
In the present case, there is no factual basis to agree with the contention of the respondent
bank. On the face of the Undertaking, the post-retirement competitive employment ban is
unreasonable because it has no geographical limits; respondent is barred from accepting
any kind of employment in any competitive bank within the proscribed period. Although the
period of one year may appear reasonable, the matter of whether the restriction is
reasonable or unreasonable cannot be ascertained with finality solely from the terms and
conditions of the Undertaking, or even in tandem with the Release, Waiver and Quitclaim.
Undeniably, petitioner retired under the SRP and received P963,619.28 from respondent.
However, petitioner is not proscribed, by waiver or estoppel, from assailing the postretirement competitive employment ban since under Article 1409 of the New Civil Code,
those contracts whose cause, object or purpose is contrary to law, morals, good customs,
public order or public policy are inexistent or void from the beginning.
Respondent, as employer, is burdened to establish that a restrictive covenant barring an
employee from accepting a competitive employment after retirement or resignation is not an
unreasonable or oppressive, or in undue or unreasonable restraint of trade, thus,
unenforceable for being repugnant to public policy. There are two principal grounds on
which the doctrine is founded that a contract in restraint of trade is void as against public
policy. One is, the injury to the public by being deprived of the restricted party’s industry;
and the other is, the injury to the party himself by being precluded from pursuing his

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occupation, and thus being prevented from supporting himself and his family.
In cases where an employee assails a contract containing a provision prohibiting him or her
from accepting competitive employment as against public policy, the employer has to
adduce evidence to prove that the restriction is reasonable and not greater than necessary
to protect the employer’s legitimate business interests. The restraint may not be unduly
harsh or oppressive in curtailing the employee’s legitimate efforts to earn a livelihood and
must be reasonable in light of sound public policy.
Courts should carefully scrutinize all contracts limiting a man’s natural right to follow any
trade or profession anywhere he pleases and in any lawful manner. But it is just as
important to protect the enjoyment of an establishment in trade or profession, which its
employer has built up by his own honest application to every day duty and the faithful
performance of the tasks which every day imposes upon the ordinary man. What one
creates by his own labor is his. Freedom to contract must not be unreasonably abridged.
Neither must the right to protect by reasonable restrictions that which a man by industry,
skill and good judgment has built up, be denied.
The Court reiterates that the determination of reasonableness is made on the particular
facts and circumstances of each case. The question of reasonableness of a restraint
requires a thorough consideration of surrounding circumstances, including the subject
matter of the contract, the purpose to be served, the determination of the parties, the
extent of the restraint and the specialization of the business of the employer. The court has
to consider whether its enforcement will be injurious to the public or cause undue hardships
to the employee, and whether the restraint imposed is greater than necessary to protect the
employer.
Consideration must be given to the employee’s right to earn a living and to his ability to
determine with certainty the area within which his employment ban is restituted. A
provision on territorial limitation is necessary to guide an employee of what constitutes as
violation of a restrictive covenant and whether the geographic scope is co-extensive with
that in which the employer is doing business. In considering a territorial restriction, the facts
and circumstances surrounding the case must be considered.
Thus, in determining whether the contract is reasonable or not, the trial court should
consider the following factors: (a) whether the covenant protects a legitimate business
interest of the employer; (b) whether the covenant creates an undue burden on the
employee; (c) whether the covenant is injurious to the public welfare; (d) whether the time
and territorial limitations contained in the covenant are reasonable; and (e) whether the
restraint is reasonable from the standpoint of public policy.
We are not impervious of the distinction between restrictive covenants barring an employee
to accept a post-employment competitive employment or restraint on trade in employment
contracts and restraints on post-retirement competitive employment in pension and
retirement plans either incorporated in employment contracts or in collective bargaining
agreements between the employer and the union of employees, or separate from said
contracts or collective bargaining agreements which provide that an employee who accepts
post retirement competitive employment will forfeit retirement and other benefits or will be
obliged to restitute the same to the employer. The strong weight of authority is that
forfeitures for engaging in subsequent competitive employment included in pension and
retirement plans are valid even though unrestricted in time or geography.
A post-retirement competitive employment restriction is designed to protect the employer
against competition by former employees who may retire and obtain retirement or pension
benefits and, at the same time, engage in competitive employment.

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DAISY B. TIU VS.PLATINUM PLANS PHIL., INC.
G.R. NO. 163512 FEBRUARY 28, 2007
Facts:
Tiu was a division marketing director of Platinum plans, a domestic corp. engaged in the pre
need- industry. Tiu was then rehired as senior vice president and territorial operations head
in charge of Hongkong and ASEAN operations. Respondent and petitioner agreed on and
executed a five year contract of employment, on of the salient features thereof being a noninvolvement provision to the effect that during the employee’s engagement, and two years
after separation form the company, the employee will not engage in or be involved with any
corporation or entity whether directly or indirectly, which is engaged in the same business or
belongs to the same pre-need industry as the employee. Any breach of this provision by the
employee will render him liable to the employer for liquidated damages in the sum of
P100.000.
On September 16 1995, petitioner stopped working for respondent. In November 1995, she
became the Vice- president for sales of another company engaged in the pre – need
industry, the Professional Pension’s Plans, Inc. So, respondent filed a complaint for damages
against petitioner before the RTC of Pasig for violation of non- involvement clause in the
contract of employment.
In response, petitioner argued that the non- involvement clause was unenforceable for being
against public order and public policy because first, it is a restraint much greater than what
is necessary to afford respondent a fair and reasonable protection; Second, respondent did
not invest in petitioners training and improvement as at the time she was hired she already
possessed the knowledge and expertise required in the industry and respondent benefited
tremendously from it; third, a strict application of the clause would deprive her of the right
to engage in the only work she knew.
Issue: Whether or not the said clause is valid.
Held:
As early as 1916, we already had the occasion to discuss the validity of a non-involvement
clause. In Ferrazzini v. Gsell, we said that such clause was unreasonable restraint of trade
and therefore against public policy. InFerrazzini, the employee was prohibited from engaging
in any business or occupation in the Philippines for a period of five years after the
termination of his employment contract and must first get the written permission of his
employer if he were to do so. The Court ruled that while the stipulation was indeed limited
as to time and space, it was not limited as to trade. Such prohibition, in effect, forces an
employee to leave the Philippines to work should his employer refuse to give a written
permission.
In G. Martini, Ltd. v. Glaiserman, we also declared a similar stipulation as void for being an
unreasonable restraint of trade. There, the employee was prohibited from engaging in any
business similar to that of his employer for a period of one year. Since the employee was
employed only in connection with the purchase and export of abaca, among the many
businesses of the employer, the Court considered the restraint too broad since it effectively
prevented the employee from working in any other business similar to his employer even if
his employment was limited only to one of its multifarious business activities.
However, in Del Castillo v. Richmond, we upheld a similar stipulation as legal, reasonable,
and not contrary to public policy. In the said case, the employee was restricted from
opening, owning or having any connection with any other drugstore within a radius of four
miles from the employer’s place of business during the time the employer was operating his
drugstore. We said that a contract in restraint of trade is valid provided there is a limitation
upon either time or place and the restraint upon one party is not greater than the protection

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the other party requires.
Finally, in Consulta v. Court of Appeals, we considered a non-involvement clause in
accordance with Article 1306 of the Civil Code. While the complainant in that case was an
independent agent and not an employee, she was prohibited for one year from engaging
directly or indirectly in activities of other companies that compete with the business of her
principal. We noted therein that the restriction did not prohibit the agent from engaging in
any other business, or from being connected with any other company, for as long as the
business or company did not compete with the principal’s business. Further, the prohibition
applied only for one year after the termination of the agent’s contract and was therefore a
reasonable restriction designed to prevent acts prejudicial to the employer.
Conformably then with the aforementioned pronouncements, a non-involvement clause is
not necessarily void for being in restraint of trade as long as there are reasonable limitations
as to time, trade, and place.
In this case, the non-involvement clause has a time limit: two years from the time
petitioner’s employment with respondent ends. It is also limited as to trade, since it only
prohibits petitioner from engaging in any pre-need business akin to respondent’s.
More significantly, since petitioner was the Senior Assistant Vice-President and Territorial
Operations Head in charge of respondent’s Hongkong and Asean operations, she had been
privy to confidential and highly sensitive marketing strategies of respondent’s business. To
allow her to engage in a rival business soon after she leaves would make respondent’s trade
secrets vulnerable especially in a highly competitive marketing environment. In sum, we find
the non-involvement clause not contrary to public welfare and not greater than is necessary
to afford a fair and reasonable protection to respondent.
In any event, Article 1306 of the Civil Code provides that parties to a contract may establish
such stipulations, clauses, terms and conditions as they may deem convenient, provided
they are not contrary to law, morals, good customs, public order, or public policy. Article
1159 of the same Code also provides that obligations arising from contracts have the force
of law between the contracting parties and should be complied with in good faith. Courts
cannot stipulate for the parties nor amend their agreement where the same does not
contravene law, morals, good customs, public order or public policy, for to do so would be to
alter the real intent of the parties, and would run contrary to the function of the courts to
give force and effect thereto.15 Not being contrary to public policy, the non-involvement
clause, which petitioner and respondent freely agreed upon, has the force of law between
them, and thus, should be complied with in good faith.

DULDULAO VS. COURT OF APPEALS
G.R. NO. 164893, MARCH 1, 2007
Facts:
Constancia P. Duldulao was hired by respondent Baguio Colleges Foundation (BCF) as
secretary/clerk-typist and assigned to the College of Law sometime in June of 1987.
In August 1996, a certain law student filed a complaint against petitioner for alleged
irregularities in the performance of her work. Petitioner was told to submit her answer to the
complaint and given several extensions within which to do so. Despite the extensions, she
failed to submit her answer. On 1 October 1996, Dean Honorato V. Aquino of the College of
Law informed respondent’s President, Atty. Edilberto B. Tenefrancia, of petitioner’s failure to
file her answer and recommended the assignment of petitioner outside the College of Law,

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not only because of such failure to answer but also her having admitted fraternizing with
students of the College. On the same day, respondent’s Vice President for Administration,
Leonardo S. dela Cruz, issued a Department Order to Mrs. Duldulao informing her of her
transfer to the Office of the Principals of the High School and Elementary Departments.
On 21 January 1997, the Administrative Investigating Committee found the Department
Order appropriate since it was intended to prevent the controversy between petitioner and
the complaining student from adversely affecting a harmonious relationship within the
College of Law among all its constituents. On 17 February 1997, petitioner filed a complaint
for constructive dismissal with prayer for moral and exemplary damages and attorney’s fees
before the NLRC Regional Arbitration Branch-Cordillera Administrative Region. She stated
that aside from being tainted with procedural lapses in violation of her right to due process,
the transfer also amounted to her demotion in rank. The NLRC dismissed the complaint for
lack of merit which decision was affirmed by the Court of Appeals.
Issue:
Whether petitioner’s transfer as secretary/clerk-typist from the College of Law to the High
School and Elementary Departments amounts to constructive dismissal.
Held:
There was no constructive dismissal.
The SC held that there is constructive dismissal if an act of clear discrimination, insensibility,
or disdain by an employer becomes so unbearable on the part of the employee that it would
foreclose any choice by him except to forego his continued employment. It exists where
there is cessation of work because “continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay.”
The factual milieu in this case is different. It is the employer’s prerogative, based on its
assessment and perception of its employees’ qualifications, aptitudes, and competence, to
move them around in the various areas of its business operations in order to ascertain where
they will function with maximum benefit to the company. An employee’s right to security of
tenure does not give him such a vested right in his position as would deprive the company of
its prerogative to change his assignment or transfer him where he will be most useful.
When his transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does
not involve a demotion in rank or a diminution of his salaries, benefits, and other privileges,
the employee may not complain that it amounts to a constructive dismissal. The transfer of
petitioner does not amount to a demotion in rank and status.
At the onset, it must be stressed that petitioner has no vested right to the position of
secretary/clerk-typist of the College of Law that may operate to deprive respondent of its
prerogative to change or transfer her assignment to another department where she will
be most useful in its judgment. After all, petitioner was employed by respondent which is
the BCF system itself, not the College of Law only, which is but a component part of the
system. Thus, to respondent belongs the prerogative to reassign petitioner to any of its
departments as it sees fit, provided that such reassignment is made in good faith.
Petitioner was a secretary/clerk-typist of the College of Law. As such secretary/clerk-typist,
she would only have to perform the same duties in the Office of the Principals of the High
School and Elementary Departments. Petitioner was not denied due process. Reassignments
made by management pending investigation of irregularities allegedly committed by an
employee fall within the ambit of management prerogative. The transfer, while incidental to
the pending charges against petitioner, was not meant to be a penalty, but rather a

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preventive measure to avoid further damage to the College of Law. The purpose of
reassignments is no different from that of preventive suspension which management could
validly impose as a measure of protection of the company’s property pending investigation
of any malfeasance or misfeasance committed by the employee.
ALMARIO VS. PHILIPPINE AIRLINES
G.R. NO. 170928, SEPTEMBER 11, 2007
Facts:
This is a complaint for reimbursement of training costs filed by PAL against its pilot, Almario.
Almario was initially hired as a Boeing 747 Systems Engineer. Later on, he successfully bid
for the higher position of Airbus 300 First Officer, for which he was given
additional training at PAL’s expense. After completing the course,Almario served as A-300
First Officer of PAL but after eight months of service, he tendered his resignation for
“personal reasons.”
PAL then wrote him a letter, stating that they invested heavily on his professional training on
the basis that he continue to serve the Company for a definite period of time which is
approximately 3 yrs. In short, PAL wanted Almario to reconsider his resignation, otherwise
they would be compelled to ask reimbursement for the training costs from
him. Despite this,Almario pushed through with his resignation. Hence, a reimbursement case
was filed.
In the lower court, PAL invoked the existence of an innominate contract of do ut facias (I give
that you may do) withAlmario in that by spending for his training, he would render service to
it until the costs of training were recovered in at least 3 yrs. They based the period of “3 yrs”
to a decision of the Secretary of Labor concerning PAL’s CBA with its employee-union.
For his part, Almario denied the existence of any agreement with PAL that he would render
service to it for three years after his training, failing which he would reimburse
the training costs. The lower court ruled in favor of Almario. On appeal, CA
found Almario liable under the CBA and under Article 22 of the Civil Code.
Issue: Whether or not Almario is obliged to reimburse the costs incurred by PAL for
his training
Held:
The petition fails.
The rationale of the three-year period is the prohibitive training costs. At an earlier time,
when the CBA between PAL and its employees were still negotiated, the Secretary of Labor
basically ruled that PAL should be allowed a return on investment for their
pilots’ training expenses. Thus, the provisions that pilots 57 years of age shall be frozen and
pilots less than 57, provided they have previously qualified in any company’s turbo-jet
aircraft, shall be permitted to occupy anyposition in the company’s turbo-jet fleet, were
incorporated in later incarnations of the CBA.
When Almario took the training course, he was about 39 yrs old, 21 yrs away from
the retirement age of 60. Hence, with the maturity, expertise and experience he gained from
the training course, he was expected to serve PAL for at least three yrs to offset “the
prohibitive costs” thereof.
Article 22 of the Civil Code applies. This provision on unjust enrichment recognizes the
principle that one may not enrich himself at the expense of another.
Enrichment of the defendant consists in every patrimonial, physical, or moral advantage, so

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long as it is appreciable in money. It may consist of some positive pecuniary value
incorporated into the patrimony of the defendant, such as: (1) the enjoyment of a thing
belonging to the plaintiff; (2) the benefits from service rendered by the plaintiff to the
defendant; (3) the acquisition of a right, whether real or personal; (4) the increase of value
of property of the defendant; (5) the improvement of a right of the defendant, such as the
acquisition of a right of preference; (6) the recognition of the existence of a right in the
defendant; and (7) the improvement of the conditions of life of the defendant.
The enrichment of the defendant must have a correlative prejudice, disadvantage, or injury
to the plaintiff. This prejudice may consist, not only of the loss of property or the deprivation
of its enjoyment, but also of non-payment of compensation for a prestation or service
rendered to the defendant without intent to donate on the part of the plaintiff, or the failure
to acquire something which the latter would have obtained. The injury to the plaintiff,
however, need not be the cause of the enrichment of the defendant. It is enough that there
be some relation between them, that theenrichment of the defendant would not have been
produced had it not been for the fact from which the injury to the plaintiff is derived.
In the present case, PAL invested for the training of Almario on the expectation that they
may recover by availing ofAlmario’s services for at least three years. This expectation was
not fully realized, however, due to Almario’s resignation after only eight months of service
following the completion of his training course. He cannot, therefore, refuse to reimburse the
costs of training without violating the principle of unjust enrichment.

BISIG MANGGAGAWA SA TRYCO VS. NLRC
G.R. NO. 151309, OCT. 15, 2008
Facts:
Petitioners are employees of Tryco Pharmaceuticals Corporation, maker of veterinary
medicines and products. Tryco and the petitioners signed a Memorandum of Agreement
(MOA), providing for a compressed workweek schedule to be implemented in the company
effective May 20, 1996. The MOA was entered into pursuant to Department of Labor and
Employment Department Order (D.O.) No. 21, Series of 1990, Guidelines on the
Implementation of Compressed Workweek.
As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered
as the regular working hours, and no overtime pay shall be due and payable to the
employee for work rendered during those hours. The MOA specifically stated that the
employee waives the right to claim overtime pay for work rendered after 5:00 p.m. until 6:12
p.m. from Monday to Friday considering that the compressed workweek schedule is adopted
in lieu of the regular workweek schedule which also consists of 46 hours. However, should
an employee be permitted or required to work beyond 6:12 p.m., such employee shall be
entitled to overtime pay. Tryco informed the Bureau of Working Conditions of the Department
of Labor and Employment of the implementation of a compressed workweek in the company.
In January 1997, BMT and Tryco negotiated for the renewal of their collective bargaining
agreement (CBA) but failed to arrive at a new agreement. Meantime, Tryco received the
Letter dated March 26, 1997 from the Bureau of Animal Industry of the Department of
Agriculture reminding it that its production should be conducted in San Rafael, Bulacan, not
in Caloocan City since its operating permit was licensed there. Accordingly, Tryco issued a
Memorandum dated April 7, 1997 which directed petitioners to report to the company's
plant site in Bulacan. BMT opposed the transfer of its members to San Rafael, Bulacan,
contending that it constitutes unfair labor practice. In protest, BMT declared a strike on May
26, 1997. Petitioners then filed their complaints to the labor arbiter alleging that Tryco
negotiated in bad faith and unfair labor practice of Tryco by transferring the members of the

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union in order to paralyze it and that therefore it amounted to constructive dismissal.
Issue: WON there was constructive dismissal due to the transfer of the petitioners from
Caloocan City to San Rafael Bulacan
Held:
The petition has no merit.
Tryco's decision to transfer its production activities to San Rafael, Bulacan, regardless of
whether it was made pursuant to the letter of the Bureau of Animal Industry, was within the
scope of its inherent right to control and manage its enterprise effectively. While the law is
solicitous of the welfare of employees, it must also protect the right of an employer to
exercise what are clearly management prerogatives. The free will of management to conduct
its own business affairs to achieve its purpose cannot be denied.
This prerogative extends to the management's right to regulate, according to its own
discretion and judgment, all aspects of employment, including the freedom to transfer and
reassign employees according to the requirements of its business.Management's prerogative
of transferring and reassigning employees from one area of operation to another in order to
meet the requirements of the business is, therefore, generally not constitutive of
constructive dismissal. Thus, the consequent transfer of Tryco's personnel, assigned to the
Production Department was well within the scope of its management prerogative.
When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and
it does not involve a demotion in rank or diminution of salaries, benefits, and other
privileges, the employee may not complain that it amounts to a constructive dismissal.
However, the employer has the burden of proving that the transfer of an employee is for
valid and legitimate grounds. The employer must show that the transfer is not unreasonable,
inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a
diminution of his salaries, privileges and other benefits.
Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or
diminution of salaries, benefits and other privileges of the petitioners. Petitioners, therefore,
anchor their objection solely on the ground that it would cause them great inconvenience
since they are all residents of Metro Manila and they would incur additional expenses to
travel daily from Manila to Bulacan.
The Court has previously declared that mere incidental inconvenience is not sufficient to
warrant a claim of constructive dismissal. Objection to a transfer that is grounded solely
upon the personal inconvenience or hardship that will be caused to the employee by reason
of the transfer is not a valid reason to disobey an order of transfer.

MANILA ELECTRIC CO. VS. LIM
G.R. NO. 184769; OCTOBER 5, 2010
Facts:
Rosario G. Lim (respondent), also known as Cherry Lim, is an administrative clerk at the
Manila Electric Company (MERALCO). On June 4, 2008, an anonymous letter was posted at
the door of the Metering Office of the Administration building of MERALCO Plaridel, Bulacan
Sector, at which respondent is assigned, denouncing respondent. The letter reads:
Cherry Lim:
MATAPOS MONG LAMUNIN LAHAT NG BIYAYA NG MERALCO, NGAYON NAMAN AY

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GUSTO MONG PALAMON ANG BUONG KUMPANYA SA MGA BUWAYA NG GOBYERNO.
KAPAL NG MUKHA MO, LUMAYAS KA RITO, WALANG UTANG NA LOOB
Resource Staffing, directed the transfer of respondent to MERALCO's Alabang Sector in
Muntinlupa as "A/F OTMS Clerk," effective July 18, 2008 in light of the receipt of ". . . reports
that there were accusations and threats directed against her from unknown individuals and
which could possibly compromise her safety and security."
Respondent, by letter of July 10, 2008 addressed to petitioner Ruben A. Sapitula, VicePresident and Head of MERALCO's Human Resource Administration, appealed her transfer
and requested for a dialogue so she could voice her concerns and misgivings on the matter,
claiming that the "punitive" nature of the transfer amounted to a denial of due process.
Citing the grueling travel from her residence in Pampanga to Alabang and back entails, and
violation of the provisions on job security of their Collective Bargaining Agreement (CBA).
Respondent filed a petition for the issuance of a writ of habeas data against petitioners
before the Regional Trial Court (RTC) of Bulacan. By respondent's allegation,
petitioners' unlawful act and omission consisting of their continued failure and refusal to
provide her with details or information about the alleged report which MERALCO purportedly
received concerning threats to her safety and security amount to a violation of her right to
privacy in life, liberty and security, correctible by habeas data.
Respondent is essentially questioning the transfer of her place of work by her
employer and the terms and conditions of her employment which arise from an employeremployee relationship over which the NLRC and the Labor Arbiters under Article 217 of the
Labor Code have jurisdiction.
Petitioners moved for the dismissal of the petition and recall of the TRO on the grounds
that, inter alia, resort to a petition for writ of habeas data was not in order; and the RTC
lacked jurisdiction over the case which properly belongs to the NLRC.
Issue: Whether or not, RTC has jurisdiction.
Held:
Respondent's plea that she be spared from complying with MERALCO's Memorandum
directing her reassignment to the Alabang Sector, under the guise of a quest for information
or data allegedly in possession of petitioners, does not fall within the province of a writ
of habeas data.
It is evident that respondent's reservations on the real reasons for her transfer — a
legitimate concern respecting the terms and conditions of one's employment — are what
prompted her to adopt the extraordinary remedy of habeas data. Jurisdiction over such
concerns is inarguably lodged by law with the NLRC and the Labor Arbiters.

BELLO VS. BONIFACIO SECURITY SERVICES, INC.
G.R. NO. 188086; AUGUST 3, 2011
Facts:
Respondent Bonifacio Security Services, Inc. (BSSI) is a domestic private corporation
engaged in the business of providing security services. In July 2001, the BSSI hired Bello as a
roving traffic marshal to manage traffic and to conduct security and safety-related
operations in the Bonifacio Global City (BGC). In August 2001, Bello was posted at the
Negros Navigation Company in Pier 2, North Harbor, to supervise sectoral operations. In
November 2001, he was assigned at BGC as assistant detachment commander. After a

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week, he was transferred to Pacific Plaza Towers as assistant detachment commander and
later as detachment commander. In June 2002, he was assigned at Pier 2, North Harbor as
assistant detachment commander, but later reassigned to BGC. In August 2002, the BSSI
hired a new operations manager, resulting in the reorganization of posts. In October 2002,
Bello was assigned as roving traffic marshal at the BGC. On October 25, 2002, he filed an
indefinite leave of absence when his new assignment took effect.
On November 5, 2002, Bello filed a complaint against the BSSI and its General Manager,
respondent Samuel Tomas, with the National Labor Relations Commission (NLRC), claiming
that he had been constructively dismissed when he was demoted from a detachment
commander to a mere traffic marshal. He alleged that he received a series of promotions
from 2001 to 2002, from traffic marshal to supervisor, to assistant detachment commander,
and to detachment commander.
The BSSI denied Bello's claim of constructive dismissal, arguing that no promotion took
place; Bello's designation as assistant detachment commander or detachment commander
was not an employment position but a duty-related assignment; Bello abandoned his job
when he went on an indefinite leave of absence and did not report for work.
Labor Arbiter Cresencio G. Ramos, Jr. found that Bello was illegally dismissed, noting that the
BSSI failed to adduce evidence that Bello abandoned his employment.
In its March 26, 2008 resolution, the NLRC affirmed the labor arbiter's decision, finding that
Bello had been constructively dismissed when he was demoted to the rank-and-file position
of traffic marshal after occupying the supervisory position of assistant detachment
commander and detachment commander.
The CA nullified the NLRC resolutions, finding the records bereft of evidence substantiating
the labor arbiter's and the NLRC's conclusions that Bello had been constructively
dismissed. It noted that Bello offered no evidence to prove that there was a series of
promotions that would justify his claim of subsequent demotion. The CA denied the BSSI's
motion for reconsideration, paving the way for the present petition.
Issue: Whether or not, Bello was illegally dismissed.
Held:
We find no reason to disturb the CA conclusion that there was no constructive dismissal.
Case law defines constructive dismissal as a cessation of work because continued
employment has been rendered impossible, unreasonable, or unlikely, as when there is a
demotion in rank or diminution in pay, or both, or when a clear discrimination, insensibility,
or disdain by an employer becomes unbearable to the employee.
Other than his bare and self-serving allegations, Bello has not offered any evidence that he
was promoted in a span of four months since his employment as traffic marshal in July 2001
to a detachment commander in November 2001. During his six-month probationary period
of employment, it is highly improbable that Bello would be promoted after just a month of
employment, from a traffic marshal in July 2001 to supervisor in August 2001, and three
months later to assistant detachment commander and to detachment commander in
November 2001. At most, the BSSI merely changed his assignment or transferred him to the
post where his service would be most beneficial to its clients. The management's
prerogative of transferring and reassigning employees from one area of operation to another
in order to meet the requirements of the business is generally not constitutive of
constructive dismissal. We see this to be the case in the present dispute so that the
consequent reassignment of Bello to a traffic marshal post was well within the scope of the
BSSI's management prerogative.

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ALERT SECURITY VS. PASAWILAN
G.R. NO. 182397, SEPTEMBER 14, 2011
Facts:
Respondents Saidali Pasawilan, Wilfredo Verceles and Melchor Bulusan were all employed by
petitioner Alert Security and Investigation Agency, Inc. (Alert Security) as security guards
beginning March 31, 1996, January 14, 1997, and January 24, 1997, respectively. They were
paid 165.00 pesos a day as regular employees, and assigned at the Department of Science
and Technology (DOST) pursuant to a security service contract between the DOST and Alert
Security.
Respondents aver that because they were underpaid, they filed a complaint for money
claims against Alert Security and its president and general manager, petitioner Manuel D.
Dasig, before Labor Arbiter Ariel C. Santos. As a result of their complaint, they were relieved
from their posts in the DOST and were not given new assignments despite the lapse of six
months. On January 26, 1999, they filed a joint complaint for illegal dismissal against
petitioners.
Petitioners, on the other hand, deny that they dismissed the respondents. Petitioners
presented "Duty Detail Orders" that Alert Security issued to show that respondents were in
fact assigned to LRTA. Respondents, however, failed to report at the LRTA and instead kept
loitering at the DOST and tried to convince other security guards to file complaints against
Alert Security. Thus, on August 3, 1998, Alert Security filed a "termination report" with the
Department of Labor and Employment relative to the termination of the respondents.
Issue: Whether respondents were illegally dismissed
Held:
We rule in the affirmative.
As a rule, employment cannot be terminated by an employer without any just or authorized
cause. No less than the 1987 Constitution in Section 3, Article 13 guarantees security of
tenure for workers and because of this, an employee may only be terminated for just or
authorized causes that must comply with the due process requirements mandated by law.
Hence, employers are barred from arbitrarily removing their workers whenever and however
they want. The law sets the valid grounds for termination as well as the proper procedure to
take when terminating the services of an employee.
Although we recognize the right of employers to shape their own work force, this
management prerogative must not curtail the basic right of employees to security of tenure.
There must be a valid and lawful reason for terminating the employment of a worker.
Otherwise, it is illegal and would be dealt with by the courts accordingly.
The Labor Code, as amended, enumerates several just and authorized causes for a valid
termination of employment. An employee asserting his right and asking for minimum wage
is not among those causes. Dismissing an employee on this ground amounts to retaliation by
management for an employee’s legitimate grievance without due process. Such stroke of
retribution has no place in Philippine Labor Laws.
On the element of the failure of the employee to report for work, we also cannot accept the
allegations of petitioners that respondents unjustifiably refused to report for duty in their
new posts. A careful review of the records reveals that there is no showing that respondents
were notified of their new assignments. Granting that the "Duty Detail Orders" were indeed
issued, they served no purpose unless the intended recipients of the orders are informed of

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such.
The employer cannot simply conclude that an employee is ipso facto notified of a transfer
when there is no evidence to indicate that the employee had knowledge of the transfer
order. Hence, the failure of an employee to report for work at the new location cannot be
taken against him as an element of abandonment.
We acknowledge and recognize the right of an employer to transfer employees in the
interest of the service. This exercise is a management prerogative which is a lawful right of
an employer. However, like all rights, there are limitations to the right to transfer employees.
As ruled in the case of Blue Dairy Corporation v. NLRC:
x x x The managerial prerogative to transfer personnel must be exercised without
grave abuse of discretion, bearing in mind the basic elements of justice and fair play.
Having the right should not be confused with the manner in which that right is
exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of
an undesirable worker. In particular, the employer must be able to show that the
transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of his salaries, privileges and other
benefits. x x x
In addition to these tests for a valid transfer, there should be proper and effective notice to
the employee concerned. It is the employer’s burden to show that the employee was duly
notified of the transfer. Verily, an employer cannot reasonably expect an employee to report
for work in a new location without first informing said employee of the transfer. Petitioners’
insistence on the sufficiency of mere issuance of the transfer order is indicative of bad faith
on their part.

MANILA PAVILION HOTEL VS. DELADA
G.R. NO. 189947, JANUARY 25, 2011
Facts:
Delada was the Union President of the Manila Pavilion Supervisors Association at MPH. He
was originally assigned as Head Waiter of Rotisserie, a fine-dining restaurant operated by
petitioner. Pursuant to a supervisory personnel reorganization program, MPH reassigned him
as Head Waiter of Seasons Coffee Shop, another restaurant operated by petitioner at the
same hotel. Respondent declined the inter-outlet transfer and instead asked for a grievance
meeting on the matter, pursuant to their Collective Bargaining Agreement (CBA). He also
requested his retention as Head Waiter of Rotisserie while the grievance procedure was
ongoing.
MPH replied and told respondent to report to his new assignment for the time being, without
prejudice to the resolution of the grievance involving the transfer. He adamantly refused to
assume his new post at the Seasons Coffee Shop and instead continued to report to his
previous assignment at Rotisserie. Thus, MPH sent him several memoranda on various
dates, requiring him to explain in writing why he should not be penalized for the following
offenses: serious misconduct; willful disobedience of the lawful orders of the employer; gross
insubordination; gross and habitual neglect of duties; and willful breach of trust. Despite the
notices from MPH, Delada persistently rebuffed orders for him to report to his new
assignment. According to him, since the grievance machinery under their CBA had already
been initiated, his transfer must be held in abeyance. Thus, on 9 May 2007, MPH initiated
administrative proceedings against him.
Issue: WON MPH retained the authority to continue with the administrative case against

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Delada for insubordination and willful disobedience of the transfer order.
Held:
MPH did not lose its authority to discipline respondent for his continued refusal to report to
his new assignment.
In Allied Banking Corporation, employer Allied Bank reassigned respondent Galanida from its
Cebu City branch to its Bacolod and Tagbilaran branches. He refused to follow the transfer
order and instead filed a Complaint before the Labor Arbiter for constructive dismissal. While
the case was pending, Allied Bank insisted that he report to his new assignment. When he
continued to refuse, it directed him to explain in writing why no disciplinary action should be
meted out to him. Due to his continued refusal to report to his new assignment, Allied Bank
eventually terminated his services. When the issue of whether he could validly refuse to
obey the transfer orders was brought before this Court, we ruled thus:
The refusal to obey a valid transfer order constitutes willful disobedience of a lawful order of
an employer.1âwphi1 Employees may object to, negotiate and seek redress against
employers for rules or orders that they regard as unjust or illegal. However, until and unless
these rules or orders are declared illegal or improper by competent authority, the employees
ignore or disobey them at their peril. For Galanida’s continued refusal to obey Allied Bank's
transfer orders, we hold that the bank dismissed Galanida for just cause in accordance with
Article 282(a) of the Labor Code. Galanida is thus not entitled to reinstatement or to
separation pay.
It is important to note what the PVA said on Delada’s defiance of the transfer order:
In fact, Delada cannot hide under the legal cloak of the grievance machinery of the
CBA or the voluntary arbitration proceedings to disobey a valid order of transfer from
the management of the hotel. While it is true that Delada’s transfer to Seasons is the
subject of the grievance machinery in accordance with the provisions of their CBA,
Delada is expected to comply first with the said lawful directive while awaiting the
results of the decision in the grievance proceedings. This issue falls squarely in the
case of Allied Banking Corporation vs. Court of Appeals x x x.
Pursuant to Allied Banking, unless the order of MPH is rendered invalid, there is a
presumption of the validity of that order. Since the PVA eventually ruled that the transfer
order was a valid exercise of management prerogative, we hereby reverse the Decision and
the Resolution of the CA affirming the Decision of the PVA in this respect. MPH had the
authority to continue with the administrative proceedings for insubordination and willful
disobedience against Delada and to impose on him the penalty of suspension. As a
consequence, petitioner is not liable to pay back wages and other benefits for the period
corresponding to the penalty of 90-day suspension.

BARBA VS. LICEO DE CAGAYAN UNIVERSITY
G.R. NO. 193857; NOVEMBER 28, 2012
Facts:
Petitioner started working for respondent on July 8, 1993 as medical officer/school physician
for a period of one school year or until March 31, 1994and she was chosen by respondent to
be the recipient of a scholarship grant to pursue a three-year residency training in
Rehabilitation Medicine at the Veterans Memorial Medical Center (VMMC) provided that after
the duration of her study and training the petitioner shall serve the SCHOOL in whatever
position the SCHOOL desires related to the SCHOLAR's studies for a period of not less than

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ten (10) years;
After completing her residency training with VMMC in June 1997, petitioner returned to
continue working for respondent until she was appointed as Dean of Physical Therapy
effective July 1, 2002 for a period of three (3) years unless sooner revoked for a valid cause.
Due to the low number of enrollees, respondent decided to freeze the operation of the
College of Physical Therapy indefinitely thus, respondent's President Dr. Rafaelita PelaezGolez wrote petitioner a letter dated March 16, 2005 informing her that her services as
dean of the said college will end at the close of the school year. Thereafter, the College of
Physical Therapy ceased operations on March 31, 2005, and petitioner went on leave
without pay starting on April 9, 2005.
Subsequently, respondent’s Executive Vice President, Dr. Marian M. Lerin, through Dr. Glory
S. Magdale, respondent's Vice President for Academic Affairs repeatedly sent letters to the
petitioner directing her to report to the College of Nursing for her teaching load to wit:






Letter dated April 27, 2005 instructing petitioner to return to work on June 1, 2005
wherein the latter responded that she has not committed to teach in the College of
Nursing and that as far as she can recall, her employment is not dependent on any
teaching load.
Letter dated June 21, 2005, directing petitioner to report for work and to teach her
assigned subjects on or before June 23, 2005, otherwise, she will be dismissed from
employment on the ground of abandonment wherein the latter replied through
counsel, that teaching in the College of Nursing is in no way related to her
scholarship and training in the field of rehabilitation medicine. Petitioner added that
coercing her to become a faculty member from her position as College Dean is a
great demotion which amounts to constructive dismissal.
Letter dated June 24, 2005 ordering her to report for work as she was still bound by
the Scholarship Contract to serve respondent for two more years which petitioner
refused to heed.

On June 22, 2005, , petitioner filed a complaint before the Labor Arbiter for illegal dismissal,
payment of separation pay and retirement benefits against respondent, Dr. Magdale and Dr.
Golez. She alleged that her transfer to the College of Nursing as a faculty member is a
demotion amounting to constructive dismissal.
June 28, 2005, Dr. Magdale sent petitioner a notice terminating her services on the ground of
abandonment.
Issue: Whether or not the petitioner’s transfer to the College of Nursing as faculty member
is a demotion amounting to constructive dismissal
Held:
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. In this case, petitioner's transfer was not unreasonable,
inconvenient or prejudicial to her. On the contrary, the assignment of a teaching load in the
College of Nursing was undertaken by respondent to accommodate petitioner following the
closure of the College of Physical Therapy. Respondent further considered the fact that
petitioner still has two years to serve the university under the Scholarship Contract.
Petitioner's subsequent transfer to another department or college is not tantamount to

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demotion as it was a valid transfer. There is therefore no constructive dismissal to speak of.
That petitioner ceased to enjoy the compensation, privileges and benefits as College Dean
was but a logical consequence of the valid revocation or termination of such fixed-term
position. Indeed, it would be absurd and unjust for respondent to maintain a deanship
position in a college or department that has ceased to exist. Under the circumstances, giving
petitioner a teaching load in another College/Department that is related to Physical Therapy
— thus enabling her to serve and complete her remaining two years under the Scholarship
Contract — is a valid exercise of management prerogative on the part of respondent.

BEST WEAR GARMENTS VS. DE LEMOS
G.R. NO. 191281; DECEMBER 5, 2012
Facts:
Petitioner Best Wear Garments is a sole proprietorship represented by its General Manager
Alex Sitosta. Respondents Cecile M. Ocubillo and Adelaida B. De Lemos were hired as sewers
on piece-rate basis by petitioners on October 27, 1993 and July 12, 1994, respectively.
De Lemos claimed that after two months in her new assignment, she was able to adjust but
Sitosta again transferred her to a "different operation where she could not earn much as
before because by-products require long period of time to finish." She averred that the
reason for her transfer was her refusal "to render [overtime work] up to 7:00 p.m."
On her part, Ocubillo alleged that her transfer was precipitated by her having "incurred
excessive absences since 2001." Her absences were due to the fact that her father became
very sick since 2001 until his untimely demise on November 9, 2003; aside from this, she
herself became very sickly. She claimed that from September to October 2003, Sitosta
assigned her to different machines "whichever is available" and that "there were times, she
could not earn for a day because there was no available machine to use."
On May 20, 2004, De Lemos filed a complaint for illegal dismissal with prayer for backwages
and other accrued benefits, separation pay, service incentive leave pay and attorney's fees.
A similar complaint was filed by Ocubillo on June 10, 2004. Both alleged in their position
paper that in August 2003, Sitosta arbitrarily transferred them to other areas of operation of
petitioner's garments company, which they said amounted to constructive dismissal as it
resulted in less earnings for them.
Respondent company points out that it is engaged in the business of garments
manufacturing as a sub-contractor. That, the kind of work it performs is dependent into with
its client which specifies the work it has to perform. And, that corollary thereto, the work to
be performed by its employees will depend on the work specifications in the contract. Thus,
if complainants have been assigned to different operations, it was pursuant to the
requirements of its contracts. As to the allegation of respondents that the reason for their
transfer was their refusal to render overtime work until 7:00 p.m., petitioners asserted that
respondents are piece-rate workers and hence they are not paid according to the number of
hours worked.
Issue: Whether or not deployment of sewers to work on different types of garments as is
arbitrary and constitute constructive dismissal
Held:
The right of employees to security of tenure does not give them vested rights to their
positions to the extent of depriving management of its prerogative to change their
assignments or to transfer them. Thus, an employer may transfer or assign employees from

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one office or area of operation to another, provided there is no demotion in rank or
diminution of salary, benefits, and other privileges, and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion without
sufficient cause.
In Blue Dairy Corporation v. NLRC, we held that:
The managerial prerogative to transfer personnel must be exercised without grave
abuse of discretion, bearing in mind the basic elements of justice and fair play.
Having the right should not be confused with the manner in which that right is
exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of
an undesirable worker. In particular, the employer must be able to show that the
transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of his salaries, privileges and other
benefits. Should the employer fail to overcome this burden of proof, the employee's
transfer shall be tantamount to constructive dismissal, which has been defined as a
quitting because continued employment is rendered impossible, unreasonable or
unlikely; as an offer involving a demotion in rank and diminution in pay. Likewise,
constructive dismissal exists when an act of clear discrimination, insensibility or
disdain by an employer has become so unbearable to the employee leaving him with
no option but to forego with his continued employment.
Being piece-rate workers assigned to individual sewing machines, respondents' earnings
depended on the quality and quantity of finished products. That their work output might
have been affected by the change in their specific work assignments does not necessarily
imply that any resulting reduction in pay is tantamount to constructive dismissal. Workers
under piece-rate employment have no fixed salaries and their compensation is computed on
the basis of accomplished tasks. As admitted by respondent De Lemos, some garments or
by-products took a longer time to finish so they could not earn as much as before. Also, the
type of sewing jobs available would depend on the specifications made by the clients of
petitioner company. Under these circumstances, it cannot be said that the transfer was
unreasonable, inconvenient or prejudicial to the respondents. Such deployment of sewers to
work on different types of garments as dictated by present business necessity is within the
ambit of management prerogative which, in the absence of bad faith, ill motive or
discrimination, should not be interfered with by the courts.

ROYAL PLANT WORKERS UNION VS. COCA-COLA BOTTLERS PHILS., INC. -CEBU
PLANT
G.R. NO. 198783, APRIL 15, 2013
Facts:
Under the employ of each bottling plant are bottling operators. In the case of the plant in
Cebu City, there are 20 bottling operators who work for its Bottling Line 1 while there are 1214 bottling operators who man its Bottling Line 2. All of them are male and they are
members of herein respondent Royal Plant Workers Union (ROPWU).
The bottling operators work in two shifts. The first shift is from 8 a.m. to 5 p.m. and the
second shift is from 5 p.m. up to the time production operations is finished. Thus, the second
shift varies and may end beyond eight (8) hours. However, the bottling operators are
compensated with overtime pay if the shift extends beyond eight (8) hours. For Bottling Line
1, 10 bottling operators work for each shift while 6 to 7 bottling operators work for each shift
for Bottling Line 2.

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Each shift has rotations of work time and break time. Prior to September 2008, the rotation
is this: after two and a half (2 1/2) hours of work, the bottling operators are given a 30minute break and this goes on until the shift ends. In September 2008 and up to the present,
the rotation has changed and bottling operators are now given a 30-minute break after one
and one half (1 1/2) hours of work.
In 1974, the bottling operators of then Bottling Line 2 were provided with chairs upon their
request. In 1988, the bottling operators of then Bottling Line 1 followed suit and asked to be
provided also with chairs. Their request was likewise granted. Sometime in September 2008,
the chairs provided for the operators were removed pursuant to a national directive of
petitioner. With this task of moving constantly to check on the machinery and equipment
assigned to him, a bottling operator does not need a chair anymore, hence, petitioner's
directive to remove them. Furthermore, CCBPI rationalized that the removal of the chairs is
implemented so that the bottling operators will avoid sleeping, thus, prevent injuries to their
persons.
The bottling operators took issue with the removal of the chairs.
Issue: Whether or not the removal of the bottling operators' chairs from CCBPI's
production/manufacturing lines a valid exercise of a management prerogative
Held:
Yes.
The Court has held that management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments, working methods,
time, place, and manner of work, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of workers, and discipline,
dismissal and recall of workers. The exercise of management prerogative, however, is not
absolute as it must be exercised in good faith and with due regard to the rights of labor.
In the present controversy, it cannot be denied that CCBPI removed the operators' chairs
pursuant to a national directive and in line with its "I Operate, I Maintain, I Clean" program,
launched to enable the Union to perform their duties and responsibilities more efficiently.
The chairs were not removed indiscriminately. They were carefully studied with due regard
to the welfare of the members of the Union. The removal of the chairs was compensated
by: a) a reduction of the operating hours of the bottling operators from a two-and-onehalf (2 1/2)-hour rotation period to a one-and-a-half (1 1/2) hour rotation period;
and b) anincrease of the break period from 15 to 30 minutes between rotations.
Apparently, the decision to remove the chairs was done with good intentions as CCBPI
wanted to avoid instances of operators sleeping on the job while in the performance of their
duties and responsibilities and because of the fact that the chairs were not necessary
considering that the operators constantly move about while working. In short, the removal of
the chairs was designed to increase work efficiency. Hence, CCBPI's exercise of its
management prerogative was made in good faith without doing any harm to the workers'
rights.
The rights of the Union under any labor law were not violated. There is no law that requires
employers to provide chairs for bottling operators. Further, The operators' chairs cannot be
considered as one of the employee benefits covered in Article 100 of the Labor Code. In the
Court's view, the term "benefits" mentioned in the non-diminution rule refers to monetary
benefits or privileges given to the employee with monetary equivalents. Such benefits or
privileges form part of the employees' wage, salary or compensation making them
enforceable obligations.

PECKSON VS. ROBINSONS SUPERMARKET CORP.

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G.R. NO. 198534, JULY 3, 2013
Facts:
The petitioner first joined the Robinsons Supermarket Corporation (RSC) as a Sales Clerk on
November 3, 1987. On October 26, 2006, she was holding the position of Category Buyer
when respondent Roena Sarte (Sarte), RSC's Assistant Vice-President for Merchandising,
reassigned her to the position of Provincial Coordinator, effective November 1, 2006.
Claiming that her new assignment was a demotion because it was non-supervisory and
clerical in nature, the petitioner refused to turn over her responsibilities to the new Category
Buyer, or to accept her new responsibilities as Provincial Coordinator.
Issue: Whether or not petitioner’s lateral transfer from Category Buyer to Provincial
Coordinator is considered a demotion amounting to constructive dismissal
Held:
Under the doctrine of management prerogative, every employer has the inherent right to
regulate, according to his own discretion and judgment, all aspects of employment, including
hiring, work assignments, working methods, the time, place and manner of work, work
supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of
employees. The only limitations to the exercise of this prerogative are those imposed by
labor laws and the principles of equity and substantial justice.
Concerning the transfer of employees, these are the following jurisprudential guidelines: (a)
a transfer is a movement from one position to another of equivalent rank, level or salary
without break in the service or a lateral movement from one position to another of
equivalent rank or salary; (b) the employer has the inherent right to transfer or reassign an
employee for legitimate business purposes; (c) a transfer becomes unlawful where it is
motivated by discrimination or bad faith or is effected as a form of punishment or is a
demotion without sufficient cause; (d) the employer must be able to show that the transfer
is not unreasonable, inconvenient, or prejudicial to the employee.
If the transfer of an employee is not unreasonable, or inconvenient, or prejudicial to him,
and it does not involve a demotion in rank or a diminution of his salaries, benefits and
other privileges, the employee may not complain that it amounts to a constructive
dismissal.
The respondents had the burden of proof that the transfer of the petitioner was not
tantamount to constructive dismissal. The respondents have discharged the burden of proof
that the transfer of the petitioner was not tantamount to constructive dismissal.
In the case at bar, we agree with the appellate court that there is substantial showing that
the transfer of the petitioner from Category Buyer to Provincial Coordinator was not
unreasonable, inconvenient, or prejudicial to her. The petitioner failed to dispute that the job
classifications of Category Buyer and Provincial Coordinator are similar, or that they
command a similar salary structure and responsibilities. We agree with the NLRC that the
Provincial Coordinator's position does not involve mere clerical functions but requires the
exercise of discretion from time to time, as well as independent judgment, since the
Provincial Coordinator gives appropriate recommendations to management and ensures the
faithful implementation of policies and programs of the company. It even has influence over
a Category Buyer because of its recommendatory function that enables the Category Buyer
to make right decisions on assortment, price and quantity of the items to be sold by the
store.

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TERMINATION OF EMPLOYMENT
RETUYA VS. NLRC; G.R. NO. 148848.
AUGUST 5, 2003
Facts:
Private respondent, Insular Builders, Inc., is a family-owned corporation managed and
operated principally by Antonio Murillo, father, and his son, Rodolfo Murillo. It is engaged in
the construction business. Petitioners, on the other hand, were workers who have rendered
services in various corporations of private respondents, namely Mindanao Integrated
Builders, Inc., Sta. Clara Plywood, Inc., Insular Builders, Inc. and Queen City Builders, Inc.
Early 1993, at the height of the feud between private respondents Antonio Murillo and
Rodolfo Murillo, the former discharged the latter from his position as manager of Insular
Builders, Inc. and assumed control of the company. Petitioners found themselves in the
middle of the crossfire and were told to temporarily stop working. Later, or on July 26, 1993,
private respondent Antonio Murillo dismissed petitioners and reported the matter to the
DOLE. Petitioners were however made to continue their work, rendering the same services,
in the same place, locality and at the same office but under a different company, the Queen
City Builders, Inc., managed and controlled by private respondent Rodolfo Murillo. On August
3, 1993, petitioners filed with the NLRC-RAB X, a complaint for illegal dismissal, non-

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payment of wages, 13th month pay, and retirement pay as regards petitioner Abdon
Dayson. Petitioners averred that they were terminated from employment on July 26, 1993
without prior notice and also in absence of any valid cause. They alleged that their
termination was an off-shoot of the supposed personal rift and disagreements between
private respondents Antonio Murillo and Rodolfo Murillo. On the other hand, private
respondents Insular Builders, Inc. and Antonio Murillo deny having employed petitioners
Baltazar Quilat, Abdon Dayson and Eleuterio Ensalada as they were personal employees of
and rendering services to private respondent Rodolfo Murillo.
Issue:
Whether or not petitioners are entitled to full back wages and separation pay considering
they were found to be illegally dismissed?
Ruling:
The SC held that illegally dismissed employees were entitled to full back wages that
should not be diminished or reduced by the amount they had earned from another
employment during the period of their illegal dismissal. While litigating, employees must still
earn a living. Furthermore, as penalty for their illegal dismissal, their employers must pay
them full back wages.
In the present case, petitioners were dismissed because of a "change of management."
They were not given any prior written notice, but simply told that their services were
terminated on the day they stopped working for Insular Builders, Inc. Under the
circumstances, the CA was correct in upholding the labor arbiter's finding that they had been
illegally dismissed. Having been illegally dismissed, petitioners should be awarded back
wages in accordance with Bustamante v. NLRC. The fact that they worked for a sister
company immediately after being dismissed from Insular Builders, Inc. should not preclude
such award.
The Court deems it appropriate, however, to reconsider such earlier ruling on the
computation of backwages as enunciated in said Pines City Educational Center case, by now
holding that comfortably with the evident legislative intent as expressed in Rep. Act. No.
6715, above-quoted, backwages to be awarded to an illegally dismissed employee, should
not, as a general rule, be diminished or reduced by the earnings derived by him elsewhere
during the period of his illegal dismissal. The underlying reason for this ruling is that the
employee, while litigating the legality (illegality) of his dismissal, must still earn a living to
support himself and family, while full backwages have to be paid by the employer as part of
the price or penalty he has to pay for illegally dismissing his employee. The clear legislative
intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was
previously given them under the Mercury Drug rule or the 'deduction of earnings elsewhere'
rule. Therefore, in accordance with R.A. No. 6715, petitioners are entitled to their full
backwages, inclusive of allowances and other benefits or their monetary equivalent, from
the time their actual compensation was withheld from them up to the time of their actual
reinstatement.
While it may be true that petitioners continued to work in the same place and office as in
their previous employment, it is equally true that they had in fact been illegally dismissed by
their previous employer. Thus, they lost their former work status and benefits in a manner
violative of the law. They became new employees of the latter firm and, as such, were
deprived of seniority and other employment benefits they had when they were still with their
former employer. Moreover, petitioners are entitled to separation pay. As provided by Article
279 of the Labor Code, an illegally dismissed employee is entitled to the twin reliefs of 1)
either reinstatement or separation pay, if reinstatement is no longer feasible; and 2) back
wages. These are distinct and separate reliefs given to alleviate the economic setback
brought about by the employee's dismissal. The award of one does not bar the other. Back

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wages may be awarded without reinstatement, and reinstatement may be ordered without
awarding back wages. Petition for backwages and separation is granted.

AGABON VS. NLRC
GR NO. 158693. NOVEMBER 17, 2003
Facts:
Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling
and installing ornamental and construction materials. It employed petitioners Virgilio Agabon
and Jenny Agabon as gypsum board and cornice installers on January 2, 1992 until February
23, 1999 when they were dismissed for abandonment of work. Petitioners then filed a
complaint for illegal dismissal and payment of money claims and on December 28, 1999, the
Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private
respondent to pay the monetary claims and, in lieu of reinstatement to pay them their
separation pay of one (1) month for every year of service from date of hiring up to
November 29, 1999.
Petitioners assert that they were dismissed because the private respondent refused to give
them assignments unless they agreed to work on a "pakyaw" basis when they reported for
duty on February 23, 1999. They did not agree on this arrangement because it would mean
losing benefits as Social Security System (SSS) members. Petitioners also claim that private
respondent did not comply with the twin requirements of notice and hearing.
Private respondent, on the other hand, maintained that petitioners were not dismissed but
had abandoned their work. In fact, private respondent sent two letters to the last known
addresses of the petitioners advising them to report for work. Private respondent's manager
even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him
about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice
installation work. However, petitioners did not report for work because they had
subcontracted to perform installation work for another company. Petitioners also demanded
for an increase in their wage to P280.00 per day. When this was not granted, petitioners
stopped reporting for work and filed the illegal dismissal case.
Issue:
Whether or not petitioners abandoned their work.
Ruling:
Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment. 14 It is a form of neglect of duty, hence, a just cause for termination of
employment by the employer. 15 For a valid finding of abandonment, these two factors
should be present: (1) the failure to report for work or absence without valid or justifiable
reason; and (2) a clear intention to sever employer-employee relationship, with the second
as the more determinative factor which is manifested by overt acts from which it may be
deduced that the employees has no more intention to work. The intent to discontinue the
employment must be shown by clear proof that it was deliberate and unjustified.
In February 1999, petitioners were frequently absent having subcontracted for an installation
work for another company. Subcontracting for another company clearly showed the intention
to sever the employer-employee relationship with private respondent. This was not the first
time they did this. In January 1996, they did not report for work because they were working
for another company. Private respondent at that time warned petitioners that they would be
dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear
intention to sever their employer-employee relationship. The record of an employee is a

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relevant consideration in determining the penalty that should be meted out to him.
The dismissal should be upheld because it was established that the petitioners abandoned
their jobs to work for another company. Private respondent, however, did not follow the
notice requirements and instead argued that sending notices to the last known addresses
would have been useless because they did not reside there anymore. Unfortunately for the
private respondent, this is not a valid excuse because the law mandates the twin notice
requirements to the employee's last known address. Thus, it should be held liable for noncompliance with the procedural requirements of due process.

JAKA FOOD PROCESSING VS. PACOT
G.R. NO. 151378. MARCH 28, 2005
Facts:
Respondents Darwin Pacot, Robert Parohinog, David Bisnar, Marlon Domingo, Rhoel Lescano
and Jonathan Cagabcab were earlier hired by petitioner JAKA Foods Processing Corporation
(JAKA, for short) until the latter terminated their employment on August 29, 1997 because
the corporation was "in dire financial straits". It is not disputed, however, that the
termination was effected without JAKA complying with the requirement under Article 283 of
the Labor Code regarding the service of a written notice upon the employees and the
Department of Labor and Employment at least one (1) month before the intended date of
termination.
In time, respondents separately filed with the Regional Arbitration Branch of the National
Labor Relations Commission (NLRC) complaints for illegal dismissal, underpayment of wages
and nonpayment of service incentive leave and 13th month pay against JAKA and its HRD
Manager, Rosana Castelo. After due proceedings, the Labor Arbiter rendered a decision 3
declaring the termination illegal and ordering JAKA and its HRD Manager to reinstate
respondents with full backwages, and separation pay if reinstatement is not possible.
Issue: What are the legal implications of a situation where an employee is dismissed for
cause but such dismissal was effected without the employer's compliance with the notice
requirement under the Labor Code.
Ruling:
In the very recent case of Agabon vs. NLRC, 8 we had the opportunity to resolve a similar
question. Therein, we found that the employees committed a grave offense, i.e.,
abandonment, which is a form of a neglect of duty which, in turn, is one of the just causes
enumerated under Article 282 of the Labor Code. In said case, we upheld the validity of the
dismissal despite non-compliance with the notice requirement of the Labor Code. However,
we required the employer to pay the dismissed employees the amount of P30,000.00,
representing nominal damages for non-compliance with statutory due process. The
difference between Agabon and the instant case is that in the former, the dismissal was
based on a just cause under Article 282 of the Labor Code while in the present case,
respondents were dismissed due to retrenchment, which is one of the authorized causes
under Article 283 of the same Code. A dismissal for just cause under Article 282 implies
that the employee concerned has committed, or is guilty of, some violation against the
employer, i.e. the employee has committed some serious misconduct, is guilty of some
fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be
said that the employee himself initiated the dismissal process.
On another breath, a dismissal for an authorized cause under Article 283 does not
necessarily imply delinquency or culpability on the part of the employee. Instead, the
dismissal process is initiated by the employer's exercise of his management prerogative, i.e.

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when the employer opts to install labor saving devices, when he decides to cease business
operations or when, as in this case, he undertakes to implement a retrenchment program.
Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article
282 but the employer failed to comply with the notice requirement, the sanction to be
imposed upon him should be tempered because the dismissal process was, in effect,
initiated by an act imputable to the employee; and (2) if the dismissal is based on an
authorized cause under Article 283 but the employer failed to comply with the notice
requirement, the sanction should be stiffer because the dismissal, process was initiated by
the employer's exercise of his management prerogative.
It is, therefore, established that there was ground for respondents' dismissal, i.e.,
retrenchment, which is one of the authorized causes enumerated under Article 283 of the
Labor Code. Likewise, it is established that JAKA failed to comply with the notice requirement
under the same Article. Considering the factual circumstances in the instant case and the
above ratiocination, we, therefore, deem it proper to fix the indemnity at P50,000.00.

MAURICIO VS. NLRC
G.R. NO.164635. NOVEMBER 17, 2005
Facts:
Petitioner, Majurine L. Mauricio, started working as an Administrative Assistant in the Legal
Department of the Manila Banking Corporation on July 1, 1999 as a probationary employee.
As a pre-employment requirement, the bank directed the submission by petitioner of, among
other things, a 1x1 ID picture, 2 x 2 ID picture, two reference letters, and clearance from the
employee’s previous employment. Petitioner failed to submit the required documents,
however. The bank thus gave her up to December 15, 1999 to comply, and advised her that
the processing of her regularization as employee would be held in abeyance. Despite the
deadline given her, petitioner still failed to comply with the requirements, drawing the bank
to send her a Memorandum dated December 27, 1999 signed by its Vice-President for
Personnel Department Clarence D. Guerrero (Guerrero), giving her until December 29, 1999
to submit the requirements, and informing that her failure to do so would cause the
termination of her employment effective December 29, 1999.
Petitioner, by letter of December 28, 1999, informed the bank that she could not secure a
clearance from her previous employer, the Manila Bankers Life Insurance Corporation
(MBLIC), as she had a pending case with it. She thus requested that any action relative to
her employment be held in abeyance as she was still following up the early resolution of the
case. Said request was denied by the bank. Petitioner thus filed on January 21, 2000 a
complaint for illegal dismissal, unpaid salary, and moral and exemplary damages against the
bank and Guerrero.
Issue:
Whether or not petitioner was illegally dismissed?
Ruling:
The SC held that the CA was correct when it ruled that in terminating petitioner’s
probationary employment due to her failure to submit a certificate of clearance from her
previous employer, the bank was merely exercising its management prerogative.

INDUSTRIAL TIMBER CORP. VS. ABABON
G.R. NO. 164518. JANUARY 25, 2006

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Facts:
Industrial Plywood Group Corporation (IPGC) is the owner of a plywood plant located at
Agusan, Pequeño, Butuan City, leased to Industrial Timber Corporation (ITC) on August 30,
1985 for a period of five years. Thereafter, ITC commenced operation of the plywood plant
and hired 387 workers.On March 16, 1990, ITC notified the Department of Labor and
Employment (DOLE) and its workers that effective March 19, 1990 it will undergo a "no plant
operation" due to lack of raw materials and will resume only after it can secure logs for
milling. Meanwhile, IPGC notified ITC of the expiration of the lease contract in August 1990
and its intention not to renew the same. On June 26, 1990, ITC notified the DOLE and its
workers of the plant's shutdown due to the non-renewal of anti-pollution permit that expired
in April 1990. 6 This fact and the alleged lack of logs for milling constrained ITC to lay off all
its workers until further notice. This was followed by a final notice of closure or cessation of
business operations on August 17, 1990 with an advice for all the workers to collect the
benefits due them under the law and CBA. On October 15, 1990, IPGC took over the plywood
plant after it was issued a Wood Processing Plant Permit No. WPR-1004-081791-042, 8 which
included the anti-pollution permit, by the Department of Environment and Natural Resources
(DENR) coincidentally on the same day the ITC ceased operation of the plant. This prompted
Virgilio Ababon, et al. to file a complaint against ITC and IPGC for illegal dismissal, unfair
labor practice and damages. They alleged, among others, that the cessation of ITC's
operation was intended to bust the union and that both corporations are one and the same
entity being controlled by one owner. On January 20, 1992, after requiring both parties to
submit their respective position papers, Labor Arbiter Irving A. Petilla rendered a decision
which refused to pierce the veil of corporate fiction for lack of evidence to prove that it was
used to perpetuate fraud or illegal act; upheld the validity of the closure; and ordered ITC to
pay separation pay of 1/2 month for every year of service.
Ababon, et al. appealed to the NLRC. On May 20, 1993, the NLRC set aside the decision of
the Labor Arbiter and ordered the reinstatement of the employees to their former positions,
and the payment of full back wages, damages and attorney's fees. On the second Petition
for Relief, the NLRC set aside all its prior decision and resolutions.
Issue: Whether Ababon, et al. were illegally dismissed due to the closure of ITC's business;
and whether they are entitled to separation pay, backwages, and other monetary awards.
Ruling:
Work is a necessity that has economic significance deserving legal protection. The social
justice and protection to labor provisions in the Constitution dictate so. On the other hand,
employers are also accorded rights and privileges to assure their self-determination and
independence, and reasonable return of capital. This mass of privileges comprises the socalled management prerogatives. Although they may be broad and unlimited in scope, the
State has the right to determine whether an employer's privilege is exercised in a manner
that complies with the legal requirements and does not offend the protected rights of labor.
One of the rights accorded an employer is the right to close an establishment or
undertaking. The right to close the operation of an establishment or undertaking is one of
the authorized causes in terminating employment of workers, the only limitation being that
the closure must not be for the purpose of circumventing the provisions on termination of
employment embodied in the Labor Code.
A reading of Article 283 of the Labor Code shows that a partial or total closure or cessation
of operations of establishment or undertaking may either be due to serious business losses
or financial reverses or otherwise. Under the first kind, the employer must sufficiently and
convincingly prove its allegation of substantial losses, while under the second kind, the
employer can lawfully close shop anytime as long as cessation of or withdrawal from
business operations was bona fide in character and not impelled by a motive to defeat or
circumvent the tenurial rights of employees, and as long as he pays his employees their

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termination pay in the amount corresponding to their length of service. Just as no law forces
anyone to go into business, no law can compel anybody to continue the same.
It would be stretching the intent and spirit of the law if a court interferes with management's
prerogative to close or cease its business operations just because the business is not
suffering from any loss or because of the desire to provide the workers continued
employment. Having established that ITC's closure of the plywood plant was done in good
faith and that it was due to causes beyond its control, the conclusion is inevitable that said
closure is valid.
Consequently, Ababon, et al. could not have been illegally dismissed to be entitled to full
backwages.

EQUITABLE BANK VS. SADAC
G.R. NO. 164772. JUNE 8, 2006
Facts:
Respondent Sadac was appointed Vice President of the Legal Department of petitioner Bank
effective 1 August 1981, and subsequently General Counsel on 8 December 1981. On 26
June 1989, nine lawyers of petitioner Bank’s Legal Department, in a letter-petition to the
Chairman of the Board of Directors, accused respondent Sadac of abusive conduct, and
ultimately, petitioned for a change in leadership of the department.
On the ground of lack of confidence in respondent Sadac, under the rules of client and
lawyer relationship, petitioner Bank instructed respondent Sadac to deliver all materials in
his custody in all cases in which the latter was appearing as its counsel of record. In
reaction thereto, respondent Sadac requested for a full hearing and formal investigation but
the same remained unheeded. On 9 November 1989, respondent Sadac filed a complaint
for illegal dismissal with damages against petitioner Bank and individual members of the
Board of Directors thereof. After learning of the filing of the complaint, petitioner Bank
terminated the services of respondent Sadac. Finally, on 10 August 1989, respondent Sadac
was removed from his office and ordered disentitled to any compensation and other
benefits.
Issue: Whether or not Respondent Sadac was illegally dismissed?
Ruling:
The SC held that respondent Sadac was dismissal illegal. The existence of the employeremployee relationship between petitioner Bank and respondent Sadac had been duly
established bringing the case within the coverage of the Labor Code. Sec. 26, Rule 138 of
the Rules of Court is not applicable, as claimed by the petitioner, that the association
between the parties was one of a client-lawyer relationship, and, thus, it could terminate at
any time the services of respondent Sadac. Respondent Sadac’s dismissal was grounded on
any of the causes stated in Article 282 of the Labor Code. Petitioner Bank disregarded the
procedural requirements in terminating respondent Sadac’s employment as so required by
Section 2 and Section 5, Rule XIV, Book V of the Implementing Rules of the Labor Code.
Decision of the NLRC is affirmed.
HEIRS OF SARA LEE VS. REY
G.R. NO. 1499013. AUGUST 31, 2006

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Facts:
The House of Sara Lee (petitioner) is engaged in the direct selling of a variety of product
lines for men and women. In the pursuit of its business, the petitioner engages and contracts
with dealers to sell the aforementioned merchandise. These dealers, known either as
"Independent Business Managers" (IBMs) or "Independent Group Supervisors" (IGSs),
depending on whether they sell individually or through their own group, would obtain at
discounted rates the merchandise from the petitioner on credit and then sell the same
products to their own customers at fixed prices also determined by the petitioner. Under
existing company policy, the dealers must remit to the petitioner the proceeds of their sales
within a designated credit period, which would either be 38 days for IGSs or 52 days for
IBMs, counted from the day the said dealers acquired the merchandise from the petitioner.
Cynthia Rey (respondent), at the time of her dismissal from employment, or on June 25,
1996, held the position of Credit Administration Supervisor or CAS at the Cagayan de Oro
City branch of the petitioner. While respondent was still working in Butuan City, she allegedly
instructed the Accounts Receivable Clerk of the Cagayan de Oro outlet, to change the credit
term of one of the IBMs of the petitioner, who happens to be respondent’s sister-in-law, from
the 52-day limit to an "unauthorized" term of 60 days. The respondent made the instruction,
just before the computer data for the computation of the Service Fee accruing to Ms. ReyPetilla was about to be generated. Ms. Mendoza then reported this allegedly unauthorized
act of respondent to her Branch Operations Manager, Mr. Villagracia. Acting on the report, as
the petitioner alleges, BOM Villagracia discreetly verified the records and discovered that it
was not only the 52-day credit term of IBM Rey-Petilla that had been extended by the
respondent, but there were several other IBMs whose credit terms had been similarly
extended beyond the periods allowed by company policy. BOM Villagracia then summoned
the respondent and required her to explain the unauthorized credit extensions.
On the basis of the hearing, the alleged voluntary admissions of respondent, and the
findings of the auditor’s report, the petitioner, on June 25, 1996, formally dismissed the
respondent for breach of trust and confidence.
Issue: Whether or not the petitioner validly terminated respondent’s employment on the
ground of loss of trust and confidence.
Ruling:
Contrary to the findings of the NLRC and the CA, the Court holds that respondent was
dismissed for a just cause.
Loss of confidence as a just cause for dismissal is premised on the fact that an employee
concerned holds a position of trust and confidence. This situation applies where a person is
entrusted with confidence on delicate matters, such as the custody, handling, or care and
protection of the employer’s property. But, in order to constitute a just cause for dismissal,
the act complained of must be "work-related," such that the employee concerned is unfit to
continue working for the employer.
The nature of her work requires a substantial amount of trust and confidence on the part of
the employer. Being the Credit Administration Supervisor of the Cagayan de Oro and Butuan
City branches of the petitioner, respondent occupied a highly sensitive and critical position
and may thus be dismissed on the ground of loss of trust and confidence. Clearly,
respondent’s position involves a high degree of responsibility requiring trust and confidence.
The position carried with it the duty to observe proper company procedures in the fulfillment
of her job, as it relates closely to the financial interests of the company. Respondent’s
unauthorized extensions of the credit periods of the dealers are prejudicial to the interest of
the petitioner and bear serious financial implications

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Well-settled is the rule that separation pay shall be allowed only in those instances where
the employee is validly dismissed for causes other than serious misconduct or those
reflecting on her moral character. Inasmuch as the reason for which the respondent was
validly separated involves her integrity, which is required for the position of Credit
Administration Supervisor, she is not worthy of compassion as to deserve separation pay for
her length of service.

GALAXIE STEEL WORKERS UNION VS. NLRC
G.R. NO. 165757. OCTOBER 17, 2006
Facts:
Respondent Galaxie Steel Corporation (Galaxie) is a corporation engaged in the business of
manufacturing and sale of re-bars and steel billets which are used primarily in the
construction of high-rise buildings. On account of serious business losses which occurred in
1997 up to mid-1999 totaling around P127,000,000.00, Galaxie decided to close down its
business operations.
Galaxie thus filed on July 30, 1999 a written notice with the Department of Labor and
Employment (DOLE) informing the latter of its intended closure and the consequent
termination of its employees effective August 31, 1999. And it posted the notice of closure
on the corporate bulletin board
Galaxie thus filed on July 30, 1999 a written notice with the Department of Labor and
Employment (DOLE) informing the latter of its intended closure and the consequent
termination of its employees effective August 31, 1999. And it posted the notice of closure
on the corporate bulletin board. Petitioners Galaxie Steel Workers Union and Galaxie
employees filed a complaint for illegal dismissal, unfair labor practice, and money claims
against Galaxie.
Issue: Whether or not there was a valid termination of employment of petitioners due to
closure on account of serious losses.
Ruling:
In this case, the Labor Arbiter, the NLRC, and the Court of Appeals were unanimous in ruling
that Galaxie’s closure or cessation of business operations was due to serious business losses
or financial reverses, and not because of any alleged anti-union position. This Court finds no
reason to Respecting petitioners’ claim for separation pay, modify such finding.
Where, the closure then is due to serious business losses, the Labor Code does not impose
any obligation upon the employer to pay separation benefits. Explaining the policy
distinction in Article 283 of the Labor Code, this Court, in Cama v. Joni’s Food Services, Inc.,
declared:16
The Constitution, while affording full protection to labor, nonetheless, recognizes "the right
of enterprises to reasonable returns on investments, and to expansion and growth." In line
with this protection afforded to business by the fundamental law, Article 283 of the Labor
Code clearly makes a policy distinction. It is only in instances of "retrenchment to prevent
losses and in cases of closures or cessation of operations of establishment or undertaking
not due to serious business losses or financial reverses" that employees whose employment
has been terminated as a result are entitled to separation pay. In other words, Article 283 of
the Labor Code does not obligate an employer to pay separation benefits when the closure is
due to serious losses. To require an employer to be generous when it is no longer in a
position to do so, in our view, would be unduly oppressive, unjust, and unfair to the

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employer. Ours is a system of laws, and the law in protecting the rights of the working man,
authorizes neither the oppression nor the self-destruction of the employer
Finally, with regard to the notice requirement, the Labor Arbiter found, and it was upheld by
the NLRC and the Court of Appeals, that the written notice of closure or cessation of
Galaxie’s business operations was posted on the company bulletin board one month prior to
its effectivity. The mere posting on the company bulletin board does not, however, meet the
requirement under Article 283 of "serving a written notice on the workers." The purpose of
the written notice is to inform the employees of the specific date of termination or closure of
business operations, and must be served upon them at least one month before the date of
effectivity to give them sufficient time to make the necessary arrangements. Nevertheless,
the validity of termination of services can exist independently of the procedural infirmity in
the dismissal. After analyzing the consequences of the divergent doctrines on employment
termination, the Court held that in cases involving dismissals for cause, but without
observance of statutory due process, the better rule is to abandon the Serrano doctrine and
to follow Wenphil by declaring that the dismissal was for cause but imposing sanctions on
the employer. By so doing, dispensing justice not just to employees but to employers as well
is achieved.
Under the facts and circumstances attendant to the case, this Court finds the amount of
P20,000 in nominal damages sufficient to vindicate each petitioner’s right to due process.

SY VS. METROBANK
GR NO. 160618. NOVEMBER 2, 2006
Facts:
Petitioner Dennis D. Sy, as the branch manager in Bajada, Davao City, of respondent
Metropolitan Bank and Trust Company.
Under the bank’s Retirement Plan, an employee must retire upon reaching the age of 55
years or after rendering 30 years of service, whichever comes first. Sy would have rendered
30 years of service by August 18, 1999. However, on February 5, 1999, he was reappointed
as branch manager for a term of one year starting August 18, 1999 until August 18, 2000.
His monthly compensation was accordingly increased from P50,400 to P54,500, effective
August 16, 1999.
Meanwhile, on November 10 and 15, 1999, the bank released the results of the audit
conducted in its Bajada branch. The bank alleged that Sy allowed spouses Gorgonio and
Elizabeth Ong to conduct "kiting" activities in their account with the bank. Thus, the bank
placed Sy under preventive suspension and gave him 48 hours to submit a written
explanation. In response, Sy wrote a letter explaining that he only made a wrong credit
judgment. Unconvinced, the bank dismissed Sy on December 15, 1999.
Issue:
(1) Whether or not the petitioner was illegally terminated? If his dismissal was valid, would
he still be entitled to retirement benefits?
Ruling:
We hold that petitioner Sy was validly dismissed on the ground of fraud and willful breach of
trust under Article 282 of the Labor Code. Records show that as bank manager, he
authorized "kiting" or drawing of checks against uncollected funds in wanton violation of the
bank’s policies. It was sufficient basis for the bank to lose trust in him.
Petitioner’s conduct betrays his culpability. Shortly after the audit conducted in the Bajada
branch, he tendered an "irrevocable letter of retirement." In the said letter, he requested

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that his retirement be made effective December 1, 1999. Said request arouses suspicion
considering that he had previously agreed to the extension of his employment as branch
manager until August 18, 2000. Petitioner’s evident failure to offer any reasonable
explanation for such sudden shift in his plans is prejudicial to his cause. As for the
requirement of due process, records show that it has been fully satisfied in the instant case.
The bank had complied with the two-notice requirement, i.e.: (a) a written notice of the
cause for his dismissal to afford him ample opportunity to be heard and to defend himself
with the assistance of counsel, if he so desires; and (b) a written notice of the decision to
terminate him, stating clearly the reason therefor.
Is petitioner nevertheless entitled to retirement benefits?
Under the Labor Code, only unjustly dismissed employees are entitled to retirement benefits
and other privileges including reinstatement and backwages. Since petitioner’s dismissal
was for a just cause, he is not entitled to any retirement benefit. To hold otherwise would be
to reward acts of willful breach of trust by the employee. It would also open the floodgate to
potential anomalous banking transactions by bank employees whose employments have
been extended. Since a bank’s operation is essentially imbued with public interest, it owes
great fidelity to the public it deals with. In turn, it cannot be compelled to continue in its
employ a person in whom it has lost trust and confidence and whose continued employment
would patently be inimical to the bank’s interest. While the scale of justice is tilted in favor
of workers, the law does not authorize blind submission to the claim of labor regardless of
merit.
While the Court commiserates with petitioner who has spent with the bank the best three
decades of his employable life, we find no room to accord him compassionate justice.
Records showed that he violated the bank policies prior to his compulsory retirement. Thus,
there can be no earned retirement benefits to speak of. No such provision is provided for by
the Labor Code. In fact, even the Civil Service Law imposes forfeiture of retirement benefits
in valid dismissal cases.

KING OF KINGS TRANSPORT VS. NLRC
G.R. NO 166208 JUNE 29, 2007
Facts:
Petitioner KKTI is a corporation engaged in public transportation and managed by Claire Dela
Fuente and Melissa Lim. Respondent Mamac was hired as bus conductor of Don Mariano
Transit Corporation (DMTC) on April 29, 1999.
The KKTI employees later organized the Kaisahan ng mga Kawani sa King of Kings (KKKK)
which was registered with DOLE. Respondent was elected KKKK president.
Respondent was required to accomplish a “Conductor’s Trip Report” and submit it to the
company after each trip. As a background, this report indicates the ticket opening and
closing for the particular day of duty. After submission, the company audits the reports.
Once an irregularity is discovered, the company issues an “Irregularity Report” against the
employee, indicating the nature and details of the irregularity. Thereafter, the concerned
employee is asked to explain the incident by making a written statement or counter-affidavit
at the back of the same Irregularity Report. After considering the explanation of the
employee, the company then makes a determination of whether to accept the explanation
or impose upon the employee a penalty for committing an infraction. That decision shall be
stated on said Irregularity Report and will be furnished to the employee.

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Upon audit of the October 28, 2001 Conductor’s Report of respondent, KKTI noted an
irregularity. It discovered that respondent declared several sold tickets as returned tickets
causing KKTI to lose an income of eight hundred and ninety pesos. While no irregularity
report was prepared on the October 28, 2001 incident, KKTI nevertheless asked respondent
to explain the discrepancy. In his letter,[3] respondent said that the erroneous declaration in
his October 28, 2001 Trip Report was unintentional. He explained that during that day’s trip,
the windshield of the bus assigned to them was smashed; and they had to cut short the trip
in order to immediately report the matter to the police. As a result of the incident, he got
confused in making the trip report.
On November 26, 2001, respondent received a letter terminating his employment effective
November 29, 2001. The dismissal letter alleged that the October 28, 2001 irregularity was
an act of fraud against the company. KKTI also cited as basis for respondent’s dismissal the
other offenses he allegedly committed since 1999.
On December 11, 2001, respondent filed a Complaint for illegal dismissal, illegal deductions,
nonpayment of 13th-month pay, service incentive leave, and separation pay. He denied
committing any infraction and alleged that his dismissal was intended to bust union
activities. Moreover, he claimed that his dismissal was effected without due process.
In its April 3, 2002 Position Paper,[5] KKTI contended that respondent was legally dismissed
after his commission of a series of misconducts and misdeeds. It claimed that respondent
had violated the trust and confidence reposed upon him by KKTI. Also, it averred that it had
observed due process in dismissing respondent and maintained that respondent was not
entitled to his money claims such as service incentive leave and 13th-month pay because he
was paid on commission or percentage basis. On September 16, 2002, Labor Arbiter Ramon
Valentin C. Reyes rendered judgment dismissing respondent’s Complaint for lack of merit.
Affirming the NLRC, the CA held that there was just cause for respondent’s dismissal. It ruled
that respondent’s act in “declaring sold tickets as returned tickets x x x constituted fraud or
acts of dishonesty justifying his dismissal.
Issue:
Whether the Honorable Court of Appeals erred in ruling that KKTI did not comply with the
requirements of procedural due process before dismissing the services of the
complainant/private respondent.
Ruling:
The petition is partly meritorious.
The disposition of the first assigned error depends on whether petitioner KKTI complied with
the due process requirements in terminating respondent’s employment; thus, it shall be
discussed secondly.
Non-compliance with the Due Process Requirements
Due process under the Labor Code involves two aspects: first, substantive––the valid and
authorized causes of termination of employment under the Labor Code; and second,
procedural––the manner of dismissal. In the present case, the CA affirmed the findings of
the labor arbiter and the NLRC that the termination of employment of respondent was based
on a “just cause.” This ruling is not at issue in this case. The question to be determined is
whether the procedural requirements were complied with.
Art. 277 of the Labor Code provides the manner of termination of employment, thus:
Art. 277. Miscellaneous Provisions.––x x x
(b) Subject to the constitutional right of workers to security of tenure and their right
to be protected against dismissal except for a just and authorized cause without
prejudice to the requirement of notice under Article 283 of this Code, the employer

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shall furnish the worker whose employment is sought to be terminated a written
notice containing a statement of the causes for termination and shall afford the latter
ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires in accordance with company rules and regulations
promulgated pursuant to guidelines set by the Department of Labor and
Employment. Any decision taken by the employer shall be without prejudice to the
right of the worker to contest the validity or legality of his dismissal by filing a
complaint with the regional branch of the National Labor Relations Commission. The
burden of proving that the termination was for a valid or authorized cause shall rest
on the employer.
Accordingly, the implementing rule of the aforesaid provision states:
SEC. 2. Standards of due process; requirements of notice.––In all cases of termination
of employment, the following standards of due process shall be substantially
observed:
I. For termination of employment based on just causes as defined in Article 282 of
the Code:
(a)
A written notice served on the employee specifying the ground or grounds
for termination, and giving said employee reasonable opportunity within which to
explain his side.
(b)
A hearing or conference during which the employee concerned, with the
assistance of counsel if he so desires is given opportunity to respond to the charge,
present his evidence, or rebut the evidence presented against him.
(c)
A written notice of termination served on the employee, indicating that upon
due consideration of all the circumstances, grounds have been established to justify
his termination. [13]
In case of termination, the foregoing notices shall be served on the employee’s last known
address.[14]
To clarify, the following should be considered in terminating the services of employees:
(1) The first written notice to be served on the employees should contain the specific
causes or grounds for termination against them, and a directive that the employees are
given the opportunity to submit their written explanation within a reasonable period.
“Reasonable opportunity” under the Omnibus Rules means every kind of assistance that
management must accord to the employees to enable them to prepare adequately for their
defense.[15] This should be construed as a period of at least five (5) calendar days from
receipt of the notice to give the employees an opportunity to study the accusation against
them, consult a union official or lawyer, gather data and evidence, and decide on the
defenses they will raise against the complaint. Moreover, in order to enable the employees
to intelligently prepare their explanation and defenses, the notice should contain a detailed
narration of the facts and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice. Lastly, the notice should
specifically mention which company rules, if any, are violated and/or which among the
grounds under Art. 282 is being charged against the employees.
(2)
After serving the first notice, the employers should schedule and conduct a
hearing or conference wherein the employees will be given the opportunity to: (1) explain
and clarify their defenses to the charge against them; (2) present evidence in support of
their defenses; and (3) rebut the evidence presented against them by the management.
During the hearing or conference, the employees are given the chance to defend
themselves personally, with the assistance of a representative or counsel of their choice.
Moreover, this conference or hearing could be used by the parties as an opportunity to come

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to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall
serve the employees a written notice of termination indicating that: (1) all circumstances
involving the charge against the employees have been considered; and (2) grounds have
been established to justify the severance of their employment.
In the instant case, KKTI admits that it had failed to provide respondent with a “charge
sheet.”[16] However, it maintains that it had substantially complied with the rules, claiming
that “respondent would not have issued a written explanation had he not been informed of
the charges against him.”[17]
We are not convinced.
First, respondent was not issued a written notice charging him of committing an infraction.
The law is clear on the matter. A verbal appraisal of the charges against an employee does
not comply with the first notice requirement. In Pepsi Cola Bottling Co. v. NLRC,[18] the
Court held that consultations or conferences are not a substitute for the actual observance
of notice and hearing. Also, in Loadstar Shipping Co., Inc. v. Mesano,[19] the Court,
sanctioning the employer for disregarding the due process requirements, held that the
employee’s written explanation did not excuse the fact that there was a complete absence
of the first notice.
Second, even assuming that petitioner KKTI was able to furnish respondent an Irregularity
Report notifying him of his offense, such would not comply with the requirements of the law.
We observe from the irregularity reports against respondent for his other offenses that such
contained merely a general description of the charges against him. The reports did not even
state a company rule or policy that the employee had allegedly violated. Likewise, there is
no mention of any of the grounds for termination of employment under Art. 282 of the Labor
Code. Thus, KKTI’s “standard” charge sheet is not sufficient notice to the employee.
Third, no hearing was conducted. Regardless of respondent’s written explanation, a hearing
was still necessary in order for him to clarify and present evidence in support of his defense.
Moreover, respondent made the letter merely to explain the circumstances relating to the
irregularity in his October 28, 2001 Conductor’s Trip Report. He was unaware that a
dismissal proceeding was already being effected. Thus, he was surprised to receive the
November 26, 2001 termination letter indicating as grounds, not only his October 28, 2001
infraction, but also his previous infractions.

ASIAN TERMINAL VS. NLRC
GR NO. 158458. DECEMBER 19, 2007
Facts:
Romeo Labrague (respondent) was a stevedore antigo employed with Asian Terminals, Inc.
since the 1980's. Beginning September 9, 1993, respondent failed to report for work
allegedly because he was arrested and placed in detention for reasons not related to his
work. After respondent had been absent for more than one year, Asian Terminals, Inc.,
through Atty. Rodolfo G. Corvite, Jr., (petitioners) sent him (respondent) a letter, dated
December 27, 1994, at his last known address at Area H, Parola, Tondo, Manila, requiring
him to explain within 72 hours why he should not suffer disciplinary penalty for his
prolonged absence. The following month, petitioner sent respondent another notice of
similar tenor.
Finally, on February 8, 1995, petitioner terminated Labrague’s employment.

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Following his acquittal and release from detention, respondent reported for work on July 3,
1996 but was advised by petitioners to file a new application so that he may be rehired.
Thus, respondent filed with the NLRC a complaint for illegal dismissal, separation pay, nonpayment of labor standard benefits, damages and attorney's fees.
Issue: Whether or not there was abandonment of work on the part of the respondent to
justify his dismissal from work.
Ruling:
To justify the dismissal of respondent for abandonment, petitioners should have established
by concrete evidence the concurrence of two elements: first, that respondent had the
intention to deliberately and without justification abandon his employment or refuse to
resume his work; and second, that respondent performed overt acts from which it may be
deduced that he no longer intended to work.
Absences incurred by an employee who is prevented from reporting for work due to his
detention to answer some criminal charge is excusable if his detention is baseless, in that
the criminal charge against him is not at all supported by sufficient evidence. In Magtoto v.
National Labor Relations Commission as well as Pedroso v. Castro, we declared such
absences as not constitutive of abandonment, and held the dismissal of the employeedetainee invalid
Respondent herein was prevented from reporting for work by reason of his detention. That
his detention turned out to be without basis, as the criminal charge upon which said
detention was ordered was later dismissed for lack of evidence, made the absences he
incurred as a consequence thereof not only involuntary but also excusable. It was certainly
not the intention of respondent to absent himself, or his fault that he was detained on an
erroneous charge. In no way may the absences he incurred under such circumstances be
likened to abandonment. The CA, therefore, correctly held that the dismissal of respondent
was illegal, for the absences he incurred by reason of his unwarranted detention did not
amount to abandonment.
His dismissal being illegal, respondent is entitled to backwages as a matter of right provided
by law.

SMART COMMUNICATIONS VS. ASTORGA
GR NO. 148142, JANUARY 28, 2008
Facts:
Regina M. Astorga (Astorga) was employed by respondent Smart Communications,
Incorporated (SMART) on May 8, 1997 as District Sales Manager of the Corporate Sales
Marketing Group/ Fixed Services Division (CSMG/FSD). She was receiving a monthly salary of
P33,650.00. As District Sales Manager, Astorga enjoyed additional benefits, namely, annual
performance incentive equivalent to 30% of her annual gross salary, a group life and
hospitalization insurance coverage, and a car plan in the amount of P455,000.00.
In February 1998, SMART launched an organizational realignment to achieve more efficient
operations. This was made known to the employees on February 27, 1998. Part of the
reorganization was the outsourcing of the marketing and sales force. Thus, SMART entered
into a joint venture agreement with NTT of Japan, and formed SMART-NTT Multimedia,
Incorporated (SNMI). Since SNMI was formed to do the sales and marketing work, SMART
abolished the CSMG/FSD, Astorga’s division.
Despite the abolition of the CSMG/FSD, Astorga continued reporting for work. But on March
3, 1998, SMART issued a memorandum advising Astorga of the termination of her

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employment on ground of redundancy, effective April 3, 1998. Astorga received it on March
16, 1998.
Issue: Whether or not Astorga was validly terminated on the ground of redundancy.
Ruling:
Astorga was terminated due to redundancy, which is one of the authorized causes for the
dismissal of an employee. The characterization of an employee’s services as superfluous or
no longer necessary and, therefore, properly terminable, is an exercise of business judgment
on the part of the employer. The wisdom and soundness of such characterization or decision
is not subject to discretionary review provided, of course, that a violation of law or arbitrary
or malicious action is not shown.
Astorga claims that the termination of her employment was illegal and tainted with bad
faith. She asserts that the reorganization was done in order to get rid of her. But except for
her barefaced allegation, no convincing evidence was offered to prove it. This Court finds it
extremely difficult to believe that SMART would enter into a joint venture agreement with
NTT, form SNMI and abolish CSMG/FSD simply for the sole purpose of easing out a particular
employee, such as Astorga.
Moreover, Astorga never denied that SMART offered her a
supervisory position in the Customer Care Department, but she refused the offer because
the position carried a lower salary rank and rate. If indeed SMART simply wanted to get rid of
her, it would not have offered her a position in any department in the enterprise.
Astorga also states that the justification advanced by SMART is not true because there was
no compelling economic reason for redundancy. But contrary to her claim, an employer is
not precluded from adopting a new policy conducive to a more economical and effective
management even if it is not experiencing economic reverses. Neither does the law require
that the employer should suffer financial losses before he can terminate the services of the
employee on the ground of redundancy.
But while tilting the scales of justice in favor of workers, the fundamental law also
guarantees the right of the employer to reasonable returns for his investment. In this light,
we must acknowledge the prerogative of the employer to adopt such measures as will
promote greater efficiency, reduce overhead costs and enhance prospects of economic
gains, albeit always within the framework of existing laws. Accordingly, we sustain the
reorganization and redundancy program undertaken by SMART.
However, as aptly found by the CA, SMART failed to comply with the mandated one (1)
month notice prior to termination. The record is clear that Astorga received the notice of
termination only on March 16, 1998 or less than a month prior to its effectivity on April 3,
1998. Likewise, the Department of Labor and Employment was notified of the redundancy
program only on March 6, 1998.
Be that as it may, this procedural infirmity would not render the termination of Astorga’s
employment illegal. However, we find the need to modify, by increasing, the indemnity
awarded by the CA to Astorga, as a sanction on SMART for non-compliance with the onemonth mandatory notice requirement. We deem it proper to increase the amount of the
penalty on SMART to P50,000.00.

RB MICHAEL PRESS VS. GALIT
G.R. 153510 FEB. 13, 2008
Facts:

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On May 1, 1997, respondent was employed by petitioner R.B. Michael Press as an offset
machine operator, whose work schedule was from 8:00 a.m. to 5:00 p.m., Mondays to
Saturdays, and he was paid PhP 230 a day. During his employment, Galit was tardy for a
total of 190 times, totaling to 6,117 minutes, and was absent without leave for a total of
nine and a half days.
On February 22, 1999, respondent was ordered to render overtime service in order to
comply with a job order deadline, but he refused to do so. The following day, February 23,
1999, respondent reported for work but petitioner Escobia told him not to work, and to
return later in the afternoon for a hearing. When he returned, a copy of an Office
Memorandum was served on him, as follows:
To

:

Mr. Nicasio Galit

From

:

ANNALENE REYES-ESCOBIA

Re

:

WARNING FOR DISMISSAL; NOTICE OF
HEARING

This warning for dismissal is being issued for the following offenses:

(4)

(1)

habitual and excessive tardiness

(2)

committing acts of discourtesy, disrespect in addressing
superiors

(3)

failure to work overtime after having been instructed to
do so

Insubordination - willfully disobeying, defying or
disregarding company authority

The offenses you’ve committed are just causes for termination of employment as
provided by the Labor Code. You were given verbal warnings before, but there had been no
improvement on your conduct.
Further investigation of this matter is required, therefore, you are summoned to a
hearing at 4:00 p.m. today. The hearing wills determine your employment status with this
company.
(SGD) ANNALENE REYES-ESCOBIA
Manager[1]
On February 24, 1999, respondent was terminated from employment. Respondent
subsequently filed a complaint for illegal dismissal and money claims before the National
Labor Relations Commission (NLRC) Regional Arbitration Branch No. IV, which was docketed
as NLRC Case No. RAB IV-2-10806-99-C. On October 29, 1999, the labor arbiter rendered a
Decision,
Issue: WHETHER OR OR NOT THERE WAS AN ILLEGAL DISMISSAL
Ruling:
Respondent’s tardiness cannot be considered condoned by petitioners
Habitual tardiness is a form of neglect of duty. Lack of initiative, diligence, and discipline to

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come to work on time everyday exhibit the employee’s deportment towards work. Habitual
and excessive tardiness is inimical to the general productivity and business of the employer.
This is especially true when the tardiness and/or absenteeism occurred frequently and
repeatedly within an extensive period of time.
In resolving the issue on tardiness, the labor arbiter ruled that petitioners cannot use
respondent’s habitual tardiness and unauthorized absences to justify his dismissal since
they had already deducted the corresponding amounts from his salary. Furthermore, the
labor arbiter explained that since respondent was not subjected to any admonition or
penalty for tardiness, petitioners then had condoned the offense or that the infraction is not
serious enough to merit any penalty. The CA then supported the labor arbiter’s ruling by
ratiocinating that petitioners cannot draw on respondent’s habitual tardiness in order to
dismiss him since there is no evidence which shows that he had been warned or
reprimanded for his excessive and habitual tardiness.
We find the ruling incorrect.
The mere fact that the numerous infractions of respondent have not been immediately
subjected to sanctions cannot be interpreted as condonation of the offenses or waiver of the
company to enforce company rules. A waiver is a voluntary and intentional relinquishment
or abandonment of a known legal right or privilege.[9] It has been ruled that “a waiver to be
valid and effective must be couched in clear and unequivocal terms which leave no doubt as
to the intention of a party to give up a right or benefit which legally pertains to him.”[10]
Hence, the management prerogative to discipline employees and impose punishment is a
legal right which cannot, as a general rule, be impliedly waived.
Insubordination or willful disobedience
While the CA is correct that the charge of serious misconduct was not substantiated, the
charge of insubordination however is meritorious.
For willful disobedience to be a valid cause for dismissal, these two elements must concur:
(1) the employee’s assailed conduct must have been willful, that is, characterized by a
wrongful and perverse attitude; and (2) the order violated must have been reasonable,
lawful, made known to the employee, and must pertain to the duties which he had been
engaged to discharge.
Respondent’s excuse that he was not feeling well that day is unbelievable and obviously an
afterthought. He failed to present any evidence other than his own assertion that he was
sick. Also, if it was true that he was then not feeling well, he would have taken the day off,
or had gone home earlier, on the contrary, he stayed and continued to work all day, and
even tried to go to work the next day, thus belying his excuse, which is, at most, a selfserving statement.
Due process: twin notice and hearing requirement
On the issue of due process, petitioners claim that they had afforded respondent due
process.
Petitioners maintain that they had observed due process when they gave
respondent two notices and that they had even scheduled a hearing where he could have
had explained his side and defended himself.
We held in Agabon v. NLRC:
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer
must give the employee two written notices and a hearing or opportunity to be heard if
requested by the employee before terminating the employment: a notice specifying the

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grounds for which dismissal is sought a hearing or an opportunity to be heard and after
hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the
dismissal is based on authorized causes under Articles 283 and 284, the employer must give
the employee and the Department of Labor and Employment written notices 30 days prior to
the effectivity of his separation.[15]
Under the twin notice requirement, the employees must be given two (2) notices before his
employment could be terminated: (1) a first notice to apprise the employees of their fault,
and (2) a second notice to communicate to the employees that their employment is being
terminated. Not to be taken lightly of course is the hearing or opportunity for the employee
to defend himself personally or by counsel of his choice.
In view of the infirmities in the proceedings, we conclude that termination of respondent was
railroaded in serious breach of his right to due process. And as a consequence of the
violation of his statutory right to due process and following Agabon, petitioners are liable
jointly and solidarily to pay nominal damages to the respondent in the amount of PhP
30,000.

SCHOOL OF THE HOLY SPIRIT OF Q.C. VS. TAGUIAM
G.R. NO. 165565. JUNE 7, 2004
Facts:
Respondent Corazon P. Taguiam was the Class Adviser of Grade 5-Esmeralda of the
petitioner, School of the Holy Spirit of Quezon City. On March 10, 2000, the class president,
wrote a letter to the grade school principal requesting permission to hold a year-end
celebration at the school grounds. The principal authorized the activity and allowed the
pupils to use the swimming pool.
In this connection, respondent distributed the
parent's/guardian's permit forms to the pupils.
Respondent admitted that Chiara Mae Federico's permit form was unsigned. Nevertheless,
she concluded that Chiara Mae was allowed by her mother to join the activity since her
mother personally brought her to the school with her packed lunch and swimsuit.
Before the activity started, respondent warned the pupils who did not know how to swim to
avoid the deeper area. However, while the pupils were swimming, two of them sneaked out.
Respondent went after them to verify where they were going.
Unfortunately, while respondent was away, Chiara Mae drowned.
When respondent
returned, the maintenance man was already administering cardiopulmonary resuscitation on
Chiara Mae. She was still alive when respondent rushed her to the General Malvar Hospital
where she was pronounced dead on arrival.
Petitioners dismissed respondent on the ground of gross negligence resulting to loss of trust
and confidence. Respondent in turn filed a complaint against the school and/or Sr. Crispina
Tolentino for illegal dismissal, with a prayer for reinstatement with full backwages and other
money claims, damages and attorney's fees.
Issue: Whether or not respondent's dismissal on the ground of gross negligence resulting to
loss of trust and confidence was valid.
Ruling:
Under Article 282 of the Labor Code, gross and habitual neglect of duties is a valid ground
for an employer to terminate an employee. Gross negligence implies a want or absence of
or a failure to exercise slight care or diligence, or the entire absence of care. It evinces a
thoughtless disregard of consequences without exerting any effort to avoid them. Habitual
neglect implies repeated failure to perform one's duties for a period of time, depending upon

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the circumstances.
As a result of gross negligence in the present case, petitioners lost its trust and confidence
in respondent. Loss of trust and confidence to be a valid ground for dismissal must be based
on a willful breach of trust and founded on clearly established facts. A breach is willful if it is
done intentionally, knowingly and purposely, without justifiable excuse, as distinguished
from an act done carelessly, thoughtlessly, heedlessly or inadvertently.
As a teacher who stands in loco parentis to her pupils, respondent should have made sure
that the children were protected from all harm while in her company. Respondent should
have known that leaving the pupils in the swimming pool area all by themselves may result
in an accident. A simple reminder "not to go to the deepest part of the pool" was insufficient
to cast away all the serious dangers that the situation presented to the children, especially
when respondent knew that Chiara Mae cannot swim.
All told, there being a clear showing that respondent was culpable for gross negligence
resulting to loss of trust and confidence, her dismissal was valid and legal. It was error for
the Court of Appeals to reverse and set aside the resolution of the NLRC.

FLIGHT ATTENDANTS AND STEWARD ASSOC. OF THE PHILS. VS. PHIL. AIRLINES
G.R. NO. 178083. JULY 23, 2008
Facts:
Petitioner FASAP is the duly certified collective bargaining representative of PAL flight
attendants and stewards, or collectively known as PAL cabin crew personnel. Respondent
PAL is a domestic corporation organized and existing under the laws of the Republic of the
Philippines, operating as a common carrier transporting passengers and cargo through
aircraft.
On June 15, 1998, PAL retrenched 5,000 of its employees, including more than 1,400 of its
cabin crew personnel, to take effect on July 15, 1998. PAL adopted the retrenchment scheme
allegedly to cut costs and mitigate huge financial losses as a result of a downturn in the
airline industry brought about by the Asian financial crisis. During said period, PAL claims to
have incurred P90 billion in liabilities, while its assets stood at P85 billion
Prior to the full implementation of the assailed retrenchment program, FASAP and PAL
conducted a series of consultations and meetings and explored all possibilities of cushioning
the impact of the impending reduction in cabin crew personnel. However, the parties failed
to agree on how the scheme would be implemented. Thus PAL unilaterally resolved to utilize
the criteria set forth in Section 112 of the PAL-FASAP Collective Bargaining Agreement (CBA)
in retrenching cabin crew personnel: that is, that retrenchment shall be based on the
individual employee's efficiency rating and seniority.
While consultations between FASAP and PAL were ongoing, the latter began implementing its
retrenchment program by initially terminating the services of 140 probationary cabin
attendants only to rehire them in April 1998. Moreover, their employment was made
permanent and regular.
On July 15, 1998, however, PAL carried out the retrenchment of its more than 1,400 cabin
crew personnel.
Meanwhile, in June 1998, PAL was placed under corporate rehabilitation and a rehabilitation
plan was approved per Securities and Exchange Commission (SEC) Order dated June 23,
1998 in SEC Case No. 06-98-6004.

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On June 22, 1998, FASAP filed a Complaint against PAL and Patria T. Chiong (Chiong) for
unfair labor practice, illegal retrenchment with claims for reinstatement and payment of
salaries, allowances and backwages of affected FASAP members, actual, moral and
exemplary damages with a prayer to enjoin the retrenchment program then being
implemented.
Issue:
Whether or not PAL's retrenchment scheme was justified.
Ruling:
Under the Labor Code, retrenchment or reduction of employees is authorized as follows:
ART. 283. Closure of establishment and reduction of personnel. - The employer may also
terminate the employment of any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor
and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at least his one (1)
month pay or to at least one (1) month pay for every year of service, whichever is higher. In
case of retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay
for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
The law recognizes the right of every business entity to reduce its work force if the same is
made necessary by compelling economic factors which would endanger its existence or
stability.
The burden clearly falls upon the employer to prove economic or business losses with
sufficient supporting evidence. Its failure to prove these reverses or losses necessarily
means that the employee's dismissal was not justified. Any claim of actual or potential
business losses must satisfy certain established standards, all of which must concur, before
any reduction of personnel becomes legal. These are:
(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if
only expected, are reasonably imminent as perceived objectively and in good faith by the
employer;
(2) That the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one (1)
month pay or at least one-half (½) month pay for every year of service, whichever is
higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees' right to security
of tenure; and,
(5) That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status, efficiency,

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seniority, physical fitness, age, and financial hardship for certain workers.
In the instant case, PAL failed to substantiate its claim of actual and imminent substantial
losses which would justify the retrenchment of more than 1,400 of its cabin crew personnel.
Although the Philippine economy was gravely affected by the Asian financial crisis, however,
it cannot be assumed that it has likewise brought PAL to the brink of bankruptcy. Likewise,
the fact that PAL underwent corporate rehabilitation does not automatically justify the
retrenchment of its cabin crew personnel.
To prove that PAL was financially distressed, it could have submitted its audited financial
statements but it failed to present the same with the Labor Arbiter. Instead, it narrated a
litany of woes without offering any evidence to show that they translated into specific and
substantial losses that would necessitate retrenchment.
We find that PAL had implemented its retrenchment program in an arbitrary manner and
with evident bad faith, which prejudiced the tenurial rights of the cabin crew personnel.
In sum, PAL's retrenchment program is illegal because it was based on wrongful premise
(Plan 14, which in reality turned out to be Plan 22, resulting in retrenchment of more cabin
attendants than was necessary) and in a set of criteria or rating variables that is unfair and
unreasonable when implemented. It failed to take into account each cabin attendant's
respective service record, thereby disregarding seniority and loyalty in the evaluation of
overall employee performance.

JOHN HANCOCK LIFE INSURANCE CORP. VS. DAVIS
G.R. NO. 169549. OCTOBER 18, 2000
Facts:
Respondent Joanna Cantre Davis was agency administration officer of petitioner John
Hancock Life Insurance Corporation.
On October 18, 2000, Patricia Yuseco, petitioner's corporate affairs manager, discovered that
her wallet was missing. She immediately reported the loss of her credit cards to AIG and BPI
Express. To her surprise, she was informed that "Patricia Yuseco" had just made substantial
purchases using her credit cards in various stores in the City of Manila. She was also told
that a proposed transaction in Abenson's-Robinsons Place was disapproved because "she"
gave the wrong information upon verification.
Because loss of personal property among its employees had become rampant in its office,
petitioner sought the assistance of the National Bureau of Investigation (NBI). The NBI, in the
course of its investigation, obtained a security video from Abenson's showing the person
who used Yuseco's credit cards. Yuseco and other witnesses positively identified the person
in the video as respondent.
Consequently, the NBI and Yuseco filed a complaint for qualified theft against respondent in
the office of the Manila city prosecutor. But because the affidavits presented by the NBI
(identifying respondent as the culprit) were not properly verified, the city prosecutor
dismissed the complaint due to insufficiency of evidence.
Meanwhile, petitioner placed respondent under preventive suspension and instructed her to
cooperate with its ongoing investigation. Instead of doing so, however, respondent filed a
complaint for illegal dismissal alleging that petitioner terminated her employment without
cause.
Issue:
Whether or not petitioner substantially proved the presence of valid cause for respondent's
termination.

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Ruling:
Article 282. Termination by Employer. - An employer may terminate an employment for any
of the following causes:
(a) Serious misconduct or willful disobendience by the employee of the lawful orders of his
employer or his representatives in connection with his work;
(e) Other causes analogous to the foregoing.
Misconduct involves "the transgression of some established and definite rule of action,
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not
mere error in judgment." For misconduct to be serious and therefore a valid ground for
dismissal, it must be:
1. of grave and aggravated character and not merely trivial or unimportant and
2. connected with the work of the employee.
In this case, petitioner dismissed respondent based on the NBI's finding that the latter stole
and used Yuseco's credit cards. But since the theft was not committed against petitioner
itself but against one of its employees, respondent's misconduct was not work-related and
therefore, she could not be dismissed for serious misconduct.
Nonetheless, Article 282(e) of the Labor Code talks of other analogous causes or those which
are susceptible of comparison to another in general or in specific detail. For an employee to
be validly dismissed for a cause analogous to those enumerated in Article 282, the cause
must involve a voluntary and/or willful act or omission of the employee.
A cause analogous to serious misconduct is a voluntary and/or willful act or omission
attesting to an employee's moral depravity. Theft committed by an employee against a
person other than his employer, if proven by substantial evidence, is a cause analogous to
serious misconduct.
All things considered, petitioner validly dismissed respondent for cause analogous to serious
misconduct.

YRASUEGUI VS. PHIL. AIRLINES
GR NO. 168081. OCTOBER 17, 2008
Facts:
An international flight steward was dismissed for "his failure to adhere to the weight
standards of the airline company."
In consequence thereof, petitioner filed a complaint for illegal dismissal against PAL before
LA. The LA ruled that petitioner was illegally dismissed. NLRC affirmed LA's decision.
Respondent PAL appealed to the CA. CA reversed the NLRC case.
Issue: WON the dismissal was valid.
Ruling:
Yes, the dismissal was valid.
The Court found that obesity of petitioner is a ground for dismissal under Article 282(e) of
the Labor Code. It found that the weight standards of PAL “constitute a continuing
qualification of an employee in order to keep the job.” And “an employee may be dismissed
the moment he is unable to comply with his ideal weight as prescribed by the weight
standards.” Hence a dismissal of the employee falls under Article 282(e) [1] of the Labor
Code.
The Court held that the obesity of petitioner, in the context of his work as flight attendant,
“becomes an analogous cause under Article 282(e) of the Labor Code that justifies his
dismissal from the service.” His obesity may not be intentional but it is “voluntary.” This
element runs through all just causes under Article 282.

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The weight standards of PAL are reasonable. PAL being a common carrier “is bound to
observe extraordinary diligence for the safety of the passengers it transports.” The weight
standards of PAL show its effort to comply with these exacting obligations. PAL “has
committed itself to safely transport its passengers. In order to achieve this, it must
necessarily rely on its employees, most particularly the cabin flight deck crew who are on
board the aircraft.”
Flight safety was given primary importance by the court, stating that: It cannot be gainsaid
that cabin attendants must maintain agility at all times in order to inspire passenger
confidence on their ability to care for the passengers when something goes wrong. It is not
farfetched to say that airline companies, just like all common carriers, thrive due to public
confidence on their safety records. People, especially the riding public, expect no less than
that airline companies transport their passengers to their respective destinations safely and
soundly.”
Cabin crew do not only serve meals or attend to passengers’ whims. Their “most important
activity” is “to care for the safety of passengers and the evacuation of the aircraft when an
emergency occurs. Passenger safety goes to the core of the job of a cabin attendant. Truly,
airlines need cabin attendants who have the necessary strength to open emergency doors,
the agility to attend to passengers in cramped working conditions, and the stamina to
withstand grueling flight schedules.” And the “body weight and size of a cabin attendant are
important factors to consider in case of emergency. Aircrafts have constricted cabin space,
and narrow aisles and exit doors.” Airline companies cannot be compelled to reconfigure the
aircraft just for overweight cabin attendants.
He was also found to be in estoppel since the weight standards were made known to him
prior to his employment. He never questioned the authority of PAL when he was asked to
trim down his weight.
Nevertheless the Court granted him separation pay even if normally, a legally dismissed
employee is not entitled to separation pay. But it may be awarded as an act “social justice,”
or based on “equity”, if the dismissal is not for serious misconduct and does not reflect on
the moral character of the employee. He was thus given separation pay equivalent to onehalf (1/2) month’s pay for every year of service.

GARCIA VS. PAL
G.R. NO. 160798. JUNE 8, 2005
Facts:
The case stemmed from the administrative charge filed by PAL against its employees-herein
petitioners after they were allegedly caught in the act of sniffing shabu when a team of
company security personnel and law enforcers raided the PAL Technical Center’s Toolroom
Section on July 24, 1995.
After due notice, PAL dismissed petitioners on October 9, 1995 for transgressing the PAL
Code of Discipline, prompting them to file a complaint for illegal dismissal and damages
which was, by Decision of January 11, 1999, resolved by the Labor Arbiter in their favor, thus
ordering PAL to, inter alia, immediately comply with the reinstatement aspect of the
decision.
Prior to the promulgation of the Labor Arbiter’s decision, the Securities and Exchange
Commission (SEC) placed PAL (hereafter referred to as respondent), which was suffering
from severe financial losses, under an Interim Rehabilitation Receiver, who was
subsequently replaced by a Permanent Rehabilitation Receiver on June 7, 1999.

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Issue: Whether or not petitioners may collect their wages during the period between the
Labor Arbiter’s order of reinstatement pending appeal and the NLRC decision overturning
that of the Labor Arbiter, now that respondent has exited from rehabilitation proceedings.
Ruling:
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be executory,
pending appeal. The employee shall either be admitted back to work under the same terms
and conditions prevailing prior to his dismissal or separation or, at the option of the
employer, merely reinstated in the payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided herein.
The view as maintained in a number of cases is that:
Even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory
on the part of the employer to reinstate and pay the wages of the dismissed employee
during the period of appeal until reversal by the higher court. On the other hand, if the
employee has been reinstated during the appeal period and such reinstatement order is
reversed with finality, the employee is not required to reimburse whatever salary he
received for he is entitled to such, more so if he actually rendered services during the
period.
The opposite view is articulated in Genuino which states:
If the decision of the labor arbiter is later reversed on appeal upon the finding that the
ground for dismissal is valid, then the employer has the right to require the dismissed
employee on payroll reinstatement to refund the salaries s/he received while the case was
pending appeal, or it can be deducted from the accrued benefits that the dismissed
employee was entitled to receive from his/her employer under existing laws, collective
bargaining agreement provisions, and company practices. However, if the employee was
reinstated to work during the pendency of the appeal, then the employee is entitled to the
compensation received for actual services rendered without need of refund.
Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and
her dismissal is based on a just cause, then she is not entitled to be paid the salaries stated
in item no. 3 of the fallo of the September 3, 1994 NLRC Decision.
The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement
shall be immediately executory even pending appeal and the posting of a bond by the
employer shall not stay the execution for reinstatement. The legislative intent is quite
obvious, i.e., to make an award of reinstatement immediately enforceable, even pending
appeal. To require the application for and issuance of a writ of execution as prerequisites for
the execution of a reinstatement award would certainly betray and run counter to the very
object and intent of Article 223, i.e., the immediate execution of a reinstatement order. The
reason is simple. An application for a writ of execution and its issuance could be delayed for
numerous reasons. A mere continuance or postponement of a scheduled hearing, for
instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the
issuance of the writ thereby setting at naught the strict mandate and noble purpose
envisioned by Article 223. In other words, if the requirements of Article 224 [including the
issuance of a writ of execution] were to govern, as we so declared in Maranaw, then the
executory nature of a reinstatement order or award contemplated by Article 223 will be
unduly circumscribed and rendered ineffectual.
The Court reaffirms the prevailing principle that even if the order of reinstatement of the
Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate
and pay the wages of the dismissed employee during the period of appeal until reversal by
the higher court. It settles the view that the Labor Arbiter's order of reinstatement is
immediately executory and the employer has to either re-admit them to work under the
same terms and conditions prevailing prior to their dismissal, or to reinstate them in the
payroll, and that failing to exercise the options in the alternative, employer must pay the
employee’s salaries.
After the labor arbiter’s decision is reversed by a higher tribunal, the employee may be

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barred from collecting the accrued wages, if it is shown that the delay in enforcing the
reinstatement pending appeal was without fault on the part of the employer.
The test is two-fold: (1) there must be actual delay or the fact that the order of
reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must
not be due to the employer’s unjustified act or omission. If the delay is due to the
employer’s unjustified refusal, the employer may still be required to pay the salaries
notwithstanding the reversal of the Labor Arbiter’s decision.
PEREZ VS. PT&T CO.
G.R. NO. 152048. APRIL 7, 2009
Facts:
Petitioners Felix B. Perez and Amante G. Doria were employed by respondent Philippine
Telegraph and Telephone Company (PT&T) as shipping clerk and supervisor, respectively, in
PT&T’s Shipping Section, Materials Management Group.
Acting on an alleged unsigned letter regarding anomalous transactions at the Shipping
Section, respondents formed a special audit team to investigate the matter. It was
discovered that the Shipping Section jacked up the value of the freight costs for goods
shipped and that the duplicates of the shipping documents allegedly showed traces of
tampering, alteration and superimposition.
On September 3, 1993, petitioners were placed on preventive suspension for 30 days for
their alleged involvement in the anomaly. Their suspension was extended for 15 days twice:
first on October 3, 1993 and second on October 18, 1993.
On October 29, 1993, a memorandum with the following tenor was issued by respondents:
In line with the recommendation of the AVP-Audit as presented in his report of October 15,
1993 (copy attached) and the subsequent filing of criminal charges against the parties
mentioned therein, [Mr. Felix Perez and Mr. Amante Doria are] hereby dismissed from the
service for having falsified company documents.
On November 9, 1993, petitioners filed a complaint for illegal suspension and illegal
dismissal. They alleged that they were dismissed on November 8, 1993, the date they
received the above-mentioned memorandum.
Issue: Whether or not the dismissal was legal.
Ruling:
Willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative is a just cause for termination.
The burden of proof rests on the employer to establish that the dismissal is for cause in view
of the security of tenure that employees enjoy under the Constitution and the Labor Code.
The employer’s evidence must clearly and convincingly show the facts on which the loss of
confidence in the employee may be fairly made to rest. It must be adequately proven by
substantial evidence. Respondents failed to discharge this burden.
Respondents’ illegal act of dismissing petitioners was aggravated by their failure to observe
due process. To meet the requirements of due process in the dismissal of an employee, an
employer must furnish the worker with two written notices: (1) a written notice specifying
the grounds for termination and giving to said employee a reasonable opportunity to explain
his side and (2) another written notice indicating that, upon due consideration of all
circumstances, grounds have been established to justify the employer's decision to dismiss
the employee.
This Court has consistently ruled that the due process requirement in cases of termination of
employment does not require an actual or formal hearing.Where the dismissal was without
just or authorized cause and there was no due process, Article 279 of the Labor Code, as
amended, mandates that the employee is entitled to reinstatement without loss of seniority
rights and other privileges and full backwages, inclusive of allowances, and other benefits or

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their monetary equivalent computed from the time the compensation was not paid up to the
time of actual reinstatement. In this case, however, reinstatement is no longer possible
because of the length of time that has passed from the date of the incident to final
resolution. Fourteen years have transpired from the time petitioners were wrongfully
dismissed. To order reinstatement at this juncture will no longer serve any prudent or
practical purpose.

TELECOMMUNICATIONS DISTRIBUTORS SPECIALISTS, INC. VS. GARRIEL
G.R. NO. 174981 MAY 25, 1981
Facts:
Respondent was a Customer Sales Assistant (CSA)[5] of petitioner Telecommunications
Distributors Specialist, Inc. (TDSI).[6] He had direct access to company assets and property,
in terms of cash collections from subscribers and customers as well as goods and inventory
to be sold to subscribers and customers.
Three incidents triggered the filing of this case. The first incident involved one Lourdes
Ratcliffe who subscribed to mobile phone services and purchased a mobile phone unit from
TDSI through respondent, the attending CSA. Respondent failed to make Ratcliffe sign a
coverage waiver.[7] Days later, respondent called up Ratcliffe and asked her to just answer
“yes” in case she was questioned by the company regarding her application.[8] It was later
found that Ratcliffe’s signature in the coverage waiver was forged.
(Respondent’s
instruction for Ratcliffe to say “yes” was apparently meant to validate the forged signature
he affixed on the coverage waiver.)
A similar incident involving one Mila Huilar occurred. Respondent also failed to ask Huilar to
sign the coverage waiver. Huilar’s signature was likewise found to have been forged.
In the third incident, a subscriber named Helcon Mabesa purchased a mobile phone unit
from TDSI. Respondent attended to him but did not issue an official receipt. It was later
discovered that respondent sold a defective mobile phone personally owned by him to
Mabesa who eventually demanded a replacement. Respondent replaced the defective unit
with a similar unit from one of TDSI’s counters. Respondent thereafter attempted to
influence Jason Mapa, his co-employee and fellow CSA, to declare a cash shortage of P5,000
as he (respondent) could not pay for the unit he filched to replace Mabesa’s defective
phone.
These incidents came to the attention of TDSI’s human resources department manager,
Joann P. Hizon, who lost no time in meeting with Ratcliffe, Huilar and Mabesa. The latter
reiterated their complaints. On October 17, 2000, respondent was issued a notice to explain
which served as a formal notice of violation of company rules and procedures.
Respondent was formally investigated. In a notice dated February 7, 2001,[12] respondent
was dismissed on grounds of serious misconduct and loss of trust and confidence.
Issue: Whether there was illegal dismissal
Ruling:
RESPONDENT’S ACTS OF DISLOYALTY AND DISHONESTY
MISCONDUCT AND LOSS OF TRUST AND CONFIDENCE

CONSTITUTED

SERIOUS

An employee’s dismissal must be supported by substantial evidence.[17] This burden of

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proof is on the employer. This TDSI was able to discharge.
Respondent failed to make Ratcliffe and Huilar sign the coverage waivers. Such failure, in
itself, although a misconduct, was not serious enough to warrant dismissal. The serious
misconduct was respondent’s act of forging the signatures of Ratcliffe and Huilar to cover up
his negligence. In fact, he even instructed Ratcliffe to lie and “just say yes” to the questions
that may be asked of her by the company.
Respondent’s acts of forging subscribers’ signatures, attempting to cover up his failure to
secure their signatures on the coverage waivers, selling a personally owned mobile phone to
a company customer (a defective one at that) and attempting to connive with other TDSI
employees to cover up his illicit schemes were serious acts of dishonesty.
In Philippine Long Distance Telephone Company v. Bolso,[24] we held:
Misconduct is improper or wrong conduct. It is the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies
wrongful intent and not mere error in judgment. The misconduct, to be serious within the
meaning of the Labor Code must be of such grave and aggravated character and not merely
trivial or unimportant. Such misconduct, however serious, must nevertheless be in
connection with the employee’s work to constitute just cause for his separation.

MARTINEZ VS. B&B FISH BROKER
GR. NO. 179985. SEPTEMBER 18, 2009
Facts:
Odilon L. Martinez (petitioner) was employed as a cashier on February 2000 by B&B Fish
Broker, a partnership owned and managed by respondent Norberto M. Lucinario (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, 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. 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 filed on December 2, 2002 for a four-day leave of absence
had been denied.
The following day or on December 10, 2002, 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 on December 19,
2002 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 NLRC. Denying petitioner’s charge that his services were illegally
terminated, Lucinario claimed, in effect, that petitioner abandoned his job.
Issue: WON Martinez abandoned his job.
Ruling:
Abandonment is a form of neglect of duty, one of the just causes for an employer to
terminate an employee. It is a hornbook precept that in illegal dismissal cases, the employer
bears the burden of proof. For a valid termination of employment on the ground of
abandonment, Lucinario must prove, by substantial evidence, the concurrence of petitioner’s
failure to report for work for no valid reason and his categorical intention to discontinue
employment.

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Indeed, Lucinario, however, failed to establish any overt act on the part of petitioner to show
his intention to abandon employment. As reflected above, petitioner, after being informed of
his alleged shortages in collections and despite his relegation to that of company custodian,
still reported for work. He later applied for a 4-day leave of absence. On his return, he
discovered that his name was erased from the logbook, was refused entry into the company
premises, and learned that his application for a 4-day leave was not approved. He
thereupon exerted efforts to communicate with Lucinario on the status of his employment,
but to no avail. To the Court, these circumstances do not indicate abandonment. Finally,
that petitioner immediately filed the illegal dismissal complaint with prayer for
reinstatement should dissipate any doubts that he wanted to return to work.
What thus surfaces is that petitioner was constructively dismissed. No actual dismissal might
have occurred in the sense that petitioner was not served with a notice of termination, but
there was constructive dismissal, petitioner having been placed in a position where
continued employment was rendered impossible and unreasonable by the circumstances
indicated above.
FLIGHT ATTENDANTS AND STEWARD ASSOC. OF THE PHILS. VS. PHIL. AIRLINES
GR NO. 178083. OCTOBER 2, 2009, SEE MAIN DECISION OF JULY 22, 2008
Facts:
FASAP is the duly certified collective bargaining representative of PAL flight attendants and
stewards. On June 1998, PAL retrenched 5,000 of its employees, including more than 1,400
of its cabin crew personnel. It adopted the retrenchment scheme allegedly to cut costs and
mitigate huge financial losses as a result of a downturn in the airline industry brought about
by the Asian financial crisis. PAL was adjudged guilty of illegal dismissal for failing to comply
with the requirements of a valid retrenchment. First, it failed to substantiate its claim of
actual and imminent substantial losses which would justify the retrenchment of more than
1,400 of its cabin crew personnel. Second, it implemented its retrenchment program in an
arbitrary manner and with evident bad faith, which prejudiced the tenurial rights of the cabin
crew personnel. Finally, in assessing the overall performance of each cabin crew personnel,
PAL only considered the year 1997 which made the evaluation of each cabin attendant’s
efficiency rating capricious and prejudicial to PAL employees covered by it. Now, PAL comes
before the Court via a motion for reconsideration. PAL has all the time tried to convince the
Court that its decision to downsize its flight fleet was the principal reason why it undertook a
corresponding downsizing of cabin crew personnel. This time, however, it significantly
changed stance and blamed the June 5, 1998 pilots’ strike as the real culprit which drove it
to undertake the massive retrenchment under scrutiny characterizing the retrenchment
scheme and the downsizing of aircraft as mere necessary reactions to or unfortunate
consequences of the pilots’ strike, which it claims likewise necessitated a disregard of all
previous negotiations for the implementation of cost-cutting measures that could have
rendered the retrenchment scheme unnecessary, and which cost-cutting measures it no
longer found necessary to undertake.
Ruling:
The Court finds no reason to disturb its finding that the retrenchment of the flight attendants
was illegally executed. As held in the Decision sought to be reconsidered, PAL failed to
observe the procedure and requirements for a valid retrenchment.
The strike was a temporary occurrence that did not necessitate the immediate and sweeping
retrenchment of 1,400 cabin or flight attendants. Some of the striking pilots went back to
work less than one month after the strike began. Moreover, PAL admitted that it remedied
the situation by employing “management pilots.” It could have hired new pilots as well. It
could have implemented the cost-cutting measures being discussed as a temporary
measure to obviate the adverse effects of the pilots’ strike. There was no reason to
drastically implement a permanent retrenchment scheme in response to a temporary strike,

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which could have ended at any time, or remedied promptly, if management acted with
alacrity. Juxtaposed with its failure to implement the required cost-cutting measures, the
retrenchment scheme was a knee-jerk solution to a temporary problem that beset PAL at the
time.
PAL cannot just blame the striking pilots for causing the massive retrenchment of cabin
personnel. Using them as scapegoats to validate a comprehensive retrenchment scheme of
cabin personnel without observing the requirements set by law is both unfair and
underhanded. PAL must still prove that it implemented cost-cutting measures to obviate
retrenchment, which under the law should be the last resort. By its own admission, however,
the cabin personnel retrenchment scheme was one of the first remedies it resorted to, even
before it could complete the proposed downsizing of its aircraft fleet. It admittedly dropped
all plans of implementing cost-cutting measures as soon as the pilots went on strike, and
right away it sent notices of termination to its cabin personnel. This knee-jerk reaction would
explain why it had to eventually recall and rehire some of the cabin attendants almost
immediately after it retrenched them, because the retrenchment simply was not
commensurate with the downsizing of aircraft fleet size. This only shows that the decision to
retrench came even before a final determination of how many aircraft were needed to be
retained or discarded, or even before the rehabilitation plan could be approved.
In order for a retrenchment scheme to be valid, all of the following elements under Article
283 of the Labor Code must concur or be present, to wit:
(1)
That retrenchment is reasonably necessary and likely to prevent business losses
which, if already incurred, are not merely de minimis, but substantial, serious, actual and
real, or if only expected, are reasonably imminent as perceived objectively and in good faith
by the employer;
(2)
That the employer served written notice both to the employees and to the
Department of Labor and Employment at least one month prior to the intended date of
retrenchment;
(3)
That the employer pays the retrenched employees separation pay equivalent to one
(1) month pay or at least one-half (½) month pay for every year of service, whichever is
higher;
(4)
That the employer exercises its prerogative to retrench employees in good faith for
the advancement of its interest and not to defeat or circumvent the employees’ right to
security of tenure; and,
(5)
That the employer uses fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status, efficiency,
seniority, physical fitness, age, and financial hardship for certain workers.
In the absence of one element, the retrenchment scheme becomes an irregular exercise of
management prerogative. The employer’s obligation to exhaust all other means to avoid
further losses without retrenching its employees is a component of the first element as
enumerated above. To impart operational meaning to the constitutional policy of providing
full protection to labor, 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.
Here, PAL admitted that since the pilots’ strike allegedly created a situation of extreme
urgency, it no longer implemented cost-cutting measures and proceeded directly to
retrench. This being so, it clearly did not abide by all the requirements under Art. 283. At the
time it was implemented, the retrenchment scheme under scrutiny was not triggered
directly by any financial difficulty PAL was experiencing at the time, nor borne of an actual
implementation of its proposed downsizing of aircraft. It was brought about by – and
resorted to as an immediate reaction to – a pilots’ strike which, in strict point of law, may not
be considered as a valid reason to retrench, nor may it be used to excuse PAL for its non-

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observance of the requirements of the law on retrenchment under the Labor Code.

PLANTATION BAY RESORT AND SPA VS. DUBRICO
G.R. NO. 182216. DECEMBER 4, 2009
Facts:
Efren Belarmino (Belarmino) challenge the Court of Appeals Resolution dismissing their
petition and affirming the Resolutions of the National Labor Relations Commission (NLRC)in
favor of herein respondents.
Dubrico, Villaflor and Ngujo are former employees of Plantation Bay located in Cebu, of
which Belarmino is the Manager. On several dates Plantation Bay issued a series of
memoranda and conducted seminars relative to its drug-free workplace policy, Plantation
Bay, in compliance with Republic Act No. 9165 (Comprehensive Dangerous Drugs Act of
2002), conducted surprise random drug tests on its employees. The drug tests, said to have
been carried out with the assistance of the Philippine National Police-Scene of Crime
Operations (SOCO), were administered on about 122 employees by the Martell Medical Trade
and Lab Services (Martell), a drug testing laboratory.
And confirmatory tests were
conducted by the Philippine Drug Screening Laboratory, Inc. (Phil. Drug), a Department of
Health-accredited laboratory.
Dubrico failed to take the drug test conducted, hence, he was issued a memorandum
requiring him to appear in a mandatory conference. Before the scheduled conference,
Dubrico explained in writing his failure to undergo the drug test, he averring that, inter alia,
the procedure for the random drug testing was not followed such that he was not informed
about his selection; and that he was at the appointed time and place for the pre-test
meeting but that the duty manager was not around, hence, he left and failed to be tested.
Dubrico was later tested and found positive for use of methamphetamine hydrochloride
(shabu).Twenty other employees were found positive for use of shabu including Godfrey
Ngujo (Ngujo) and Julius Villaflor (Villaflor).
In compliance with separate memoranda issued by the management of Plantation Bay, the
employees submitted their explanations on the result of the tests, which explanations were
found unsatisfactory, hence, Plantation Bay dismissed them.
Dubrico, Ngujo and Villaflor and three others filed their respective complaints for illegal
dismissal, questioning the conduct of the drug tests without the presence of the DOLE
Regional Director or his representative. Labor Arbiter dismissed the employees’ complaints,
holding that in testing positive for the use of shabu, they were guilty of serious misconduct,
hence, Plantation Bay validly terminated their employment; and that they were afforded
due process, they having been issued memoranda as to the mandatory investigation and
given the chance to, as they did refute the results of the drug tests by submitting results of
recent drug tests.
The Labor Arbiter discredited the drug test results presented by the employees as the tests
were taken more than 72 hours after the conduct of the random drug tests. On appeal, the
NLRC, affirmed the Decision of the Labor Arbiter. Upon motion for reconsideration, it,
however, reversed its Decision and declared that respondents were illegally dismissed.
NLRC held that the results of the confirmatory drug tests cannot be given credence since
they were conducted prior to the conduct by the employer of the drug tests. It ratiocinated:
Considering the indubitable documentary evidence on record notably submitted by
respondents [petitioners herein] themselves, we agree with complainants that either or both
drug tests and confirmatory tests conducted on them were fabricated, farce or sham. For
how could one “confirm” some thing which was yet to be established or discovered?
Needless to say, the drug testing should always come ahead of the confirmatory testing, not

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the other way around. We thus agree with complainants that if the drug tests against them
were true, the supposed confirmatory tests conducted on them were not based on their
urine samples that were the subject of the drug tests. Or that is the confirmatory tests were
correct, these could not have been gotten from their urine samples which were yet to
undergo drug testing. At any rate, there is not only doubt that on the version of respondents
but also their conduct is highly suspicious based on their own evidence. Thus, we now rule
that respondents were not really into drugs.
On the issue of due process, the NLRC abandoned its earlier statement that it was the SOCO
which conducted the drug tests, this time declaring that it was Martell which actually
administered them. It added that respondents were not given the opportunity to examine
the evidence and confront the witnesses against them through their counsel.
Plantation Bay appealed to the Court of Appeals, in which the appellate court affirmed the
NLRC Resolution with modification by deleting the award of damages. Hence, Plantation Bay
elevate the matter to the SC.
Issue: Whether or not the termination of the services of respondents, relied on the results of
the random drug tests undertaken by an accredited and licensed drug testing facility, and if
the results turned out to be questionable or erroneous, they should not be made liable
therefore.
Ruling:
The petition is bereft of merit.
While it is a well-settled rule, also applicable in labor cases, that Issue not raised below
cannot be raised for the first time on appeal, there are exceptions thereto among which are
for reasons of public policy or interest.
The NLRC did not err in considering the issue of the veracity of the confirmatory tests even if
the same was raised only in respondents’ Motion for Reconsideration of its Decision, it being
crucial in determining the validity of respondents’ dismissal from their employment.
Technical rules of procedure are not strictly adhered to in labor cases. In the interest of
substantial justice, new or additional evidence may be introduced on appeal before the
NLRC. Such move is proper, provided due process is observed, as was the case here, by
giving the opposing party sufficient opportunity to meet and rebut the new or additional
evidence introduced.
The Constitution no less directs the State to afford full protection to labor. To achieve this
goal, technical rules of procedure shall be liberally construed in favor of the working class in
accordance with the demands of substantial justice. On the merits, the petition just the
same fails. The importance of the confirmatory test is underscored in Plantation Bay’s own
“Policy and Procedures,” in compliance with Republic Act No. 9165, requiring that a
confirmatory test must be conducted if an employee is found positive for drugs in the
Employee’s Prior Screening Test, and that both tests must arrive at the same positive result.
Records show the following timeline, based on the reports on respondents’ respective drug
tests administered by Martell and confirmatory tests undertaken by the Phil. Drug:
Name Drug Test
Confirmatory Test
Romel Dubrico
Urine sample received on 09/29/04 at 5:14 p.m. Issued on 09/29/04
at 3:57 p.m.
Godfrey NgujoUrine sample received on 09/29/04 at 5:24 p.m. Issued on 09/29/04 at 3:57
p.m.
Julius Villaflor Urine sample received on 09/29/04 at 5:32 p.m. Issued on 09/29/04 at 4:15
p.m.
As reflected in the above matrix, the confirmatory test results were released earlier
than those of the drug test, thereby casting doubts on the veracity of the confirmatory
results.
Indeed, how can the presence of shabu be confirmed when the results of the initial screening
were not yet out?

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Plantation Bay’s arguments that it should not be made liable thereof and that the doubt
arising from the time of the conduct of the drug and confirmatory tests was the result of the
big volume of printouts being handled by Martell do not thus lie. It was Plantation Bay’s
responsibility to ensure that the tests would be properly administered, the results thereof
being the bases in terminating the employees’ services.
Time and again, we have ruled that where there is no showing of a clear, valid and legal
cause for termination of employment, the law considers the case a matter of illegal
dismissal. The burden is on the employer to prove that the termination of employment was
for a valid and legal cause. For an employee's dismissal to be valid, (a) the dismissal must
be for a valid cause and (b) the employee must be afforded due process.
Plantation Bay failed to indubitably prove that respondents were guilty of drug use in
contravention of its drug-free workplace policy amounting to serious misconduct,
respondents are deemed to have been illegally dismissed.

FULACHE VS. ABS-CBN BROADCASTING CORP.
G.R. NO. 183810. JANUARY 21, 2010
Facts:
Petitioners here are cameraman, editors, personal assistant, teleprompter operator-editing,
VTR man/editor. They alleged that they had been excluded from the coverage in the CBA as
ABS-CBN considered them temporary and not regular employees, in violation of the Labor
Code. They claimed that they had already rendered more than a year of service in the
company and therefore they should be considered as regular employees entitled privileges
and benefits enjoyed by regular employees. Respondent on the other hand claimed that the
production of programs per se is not necessary or desirable in its business because it could
general profits by selling airtime to block timers or through advertising. It further claimed
that to cope with fluctuating business conditions, it contracts on a case to case basis the
services of persons who possess the necessary requirements. It alleged that petitioners’
services were contracted on various dates as independent contractors and they were not
entitled to regularization in these capacities.
Labor Arbiter Rendoque rendered a decision holding petitioners as regular employees of
ABS-CBN and are entitled to the benefits and privileges of regular employees. Respondent
appealed the ruling to the NLRC contending that petitioners are not regular employees but
are independent contractors.
While the appeal was pending, respondent dismissed the petitioner drivers for their refusal
to sign up contracts of employment with service contractor Able Services. Respondent
alleged that before there was a decision rendered in the regularization case, it had already
decided to course through legitimate service contractors all driving, messengerial, janitorial,
utility, make up, wardrobe and security services to improve operations and to make
economically viable. Petitioner drivers were not singled out for dismissal, as drivers, they
were dismissed because they belong to a job category that had already been contracted out.
Labor Arbiter upheld the validity of ABS-CBS’s contracting out. The petitioner had been
dismissed due to redundancy and authorized cause under the law. He awarded them
separation pay.
Again, ABS-CBN appealed to the NLRC which rendered a joint decision on the regularization
and illegal dismissal case. It ruled that there was employer-employee relationship 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 trade or business. It, however, reversed the ruling in the illegal
dismissal case. It found that the petitioners were illegally dismissed and awarded them

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backwages and separation pay in lieu of reinstatement. Both parties filed their respective
motion for reconsideration. The NLRC resolved the motions. On the regularization issue, the
NLRC ruled that petitioners were regular employees and are entitled to benefits and
privileges of regular employees. On the illegal dismissal case, the petitioners, while
recognized as regular employee, were declared dismissed due to redundancy.
The petitioners went to the Court of Appeals through a petition for certiorari. CA ruled that
the petitioners were not illegally dismissed as their separation from service was due to
redundancy; they had not presented any evidence that respondent abused it prerogative in
contracting out the services of drivers. The petitioners moved for reconsideration but was
denied. Hence, the present petition.
Issue: Whether or not the petitioners were illegally dismissed.
Ruling:
The petitioners were illegally dismissed.
It forgot that by claiming redundancy as authorized cause for dismissal, it impliedly admitted
that the petitioners were regular employees whose services, by law, can only be terminated
for the just and authorized causes defined under the Labor Code. It similarly forgot that an
exercise of management prerogative can be valid only if it is undertaken in good faith and
with no intent to defeat or circumvent the rights of its employees under the laws or under
valid agreements.
Lastly, it forgot that there was a standing labor arbiter’s decision that, while not yet final
because of its own pending appeal, cannot simply be disregarded. By implementing the
dismissal action at the time the labor arbiter’s ruling was under review, the company
unilaterally negated the effects of the labor arbiter’s ruling while at the same time
appealling the same ruling to the NLRC. This unilateral move is a direct affront to the NLRC’s
authority and an abuse of the appeal process.
All these go to show that ABS-CBN acted with patent bad faith. A close parallel we can draw
to characterize this bad faith is the prohibition against forum-shopping under the Rules of
Court. In forum-shopping, the Rules characterize as bad faith the act of filing similar and
repetitive actions for the same cause with the intent of somehow finding a favorable ruling
in one of the actions filed. ABS-CBN’s actions in the two cases, as described above, are of
the same character, since its obvious intent was to defeat and render useless, in a
roundabout way and other than through the appeal it had taken, the labor arbiter’s decision
in the regularization case. Forum-shopping is penalized by the dismissal of the actions
involved. The penalty against ABS-CBN for its bad faith in the present case should be no
less.
While notice has been made to the employees whose positions were declared redundant, the
element of good faith in abolishing the positions of the complainants appear to be wanting.
In fact, it remains undisputed that herein complainants were terminated when they refused
to sign an employment contract with Able Services which would make them appear as
employees of the agency and not of ABS-CBN. Such act by itself clearly demonstrates bad
faith on the part of the respondent in carrying out the company’s redundancy program x x x.
The injustice committed on the petitioners/drivers requires rectification. Their dismissal was
not only unjust and in bad faith as the above discussions abundantly show. The bad faith in
ABS-CBN’s move toward its illegitimate goal was not even hidden; it dismissed the
petitioners – already recognized as regular employees – for refusing to sign up with its
service contractor. Thus, from every perspective, the petitioners were illegally dismissed.

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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.

ANCHETA VS. DESTINAY 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 by respondent Arsenio Bartolome (Bartolome) at the conference room of
respondent company. Present at the meeting were petitioner, respondent Bartolome, various
leaders of the marketing team, and the operations director of the company. During the
meeting, respondent Bartolome made several announcements. However, to the surprise of
petitioner, respondent Bartolome announced that petitioner was to resign from the
respondent company. On February 11, 2004, petitioner received a letter from respondent
company, asking him to explain within forty-eight (48) hours why his services should not be
terminated for loss of confidence in his ability to perform the functions of Marketing Director
of the company. On February 13, 2004, petitioner submitted his letter of explanation to
respondent company. On February 17, 2004, the board of directors of respondent company
terminated 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. On April 28, 2005, the Labor
Arbiter rendered a Decision in favor of petitioner Ancheta. National Labor Relations
Commission (NLRC) reversed the decision of the Labor Arbiter. Aggrieved, petitioner filed a
petition for certiorari under Rule 65 of the Rules of Court before the CA. On April 19, 2007,
the CA rendered a Decision, affirming with modification the decision of the NLRC.
Issue: Whether petitioner’s employment was validly terminated because of loss of
confidence.
Ruling:
Two requisites must concur in order that there be a valid dismissal from employment,
namely: (1) the dismissal must be for any of the causes expressed in Article 282 of the Labor
Code; and (2) the employee must be given an opportunity to be heard and to defend
himself. Under Article 282(c) of the Labor Code, an employer can terminate the employment
of the employee concerned for "fraud or willful breach by an employee of the trust reposed
in him by his employer or duly authorized representative." The doctrine of loss of
confidence requires the concurrence of the following: (1) loss of confidence should not be
simulated; (2) it should not be used as a subterfuge for causes which are improper, illegal,
or unjustified; (3) it may not be arbitrarily asserted in the face of overwhelming evidence to
the contrary; (4) it must be genuine, not a mere afterthought to justify an earlier action
taken in bad faith; and (5) the employee involved holds a position of trust and confidence.
Loss of confidence, as a just cause for termination of employment, is premised on the fact
that the employee concerned holds a position of responsibility, trust and confidence. He
must be invested with confidence on delicate matters, such as the custody, handling, care,
and protection of the employer's property and/or funds. In order to constitute a just cause
for dismissal, the act complained of must be "work-related" such as would show the

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employee concerned to be unfit to continue working for the employer. Petitioner was a
managerial employee of respondent company, holding a highly sensitive position. Being the
Head of the Marketing Group of respondent company, he was in charge, among others,
of the over-all production and sales performance of the company. Thus, as aptly pointed out
by the CA, his performance was practically the lifeblood of the corporation, because its
earnings depended on the sales of the marketing group, which he used to head. The position
held by petitioner required the highest degree of trust and confidence of his employer in the
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. If these were not timely addressed and corrected, the company could have
collapsed, to the detriment of its policy holders, stockholders, employees, and the public in
general. The power to dismiss an employee is a recognized prerogative inherent in the
employer’s right to freely manage and regulate his business. The law, in protecting the
rights of the laborers, authorizes neither oppression nor self-destruction of the employer. The
worker's right to security of tenure is not an absolute right, for the law provides that he may
be dismissed for cause. In this case, as admitted by petitioner, he was hired because of his
expertise in the pre-need industry. His competence and satisfactory performance as head of
the marketing group assumed primordial importance for his continued employment in the
company. His dismal performance was causing the company financial losses; thus, it was not
wise for the company to continue his services. To be sure, an employer cannot be compelled
to continue with the employment of workers when continued employment will prove inimical
to the employer’s interest. The SC agrees to CA that private respondents did not strictly
comply with the “two notice” requirement in dismissing petitioner Ancheta. While private
respondents sent a show cause letter to petitioner Ancheta, the same letter precipitately
implemented termination procedures, i.e., demanded the return of the Executive elevator
key which allows petitioner Ancheta access to the office premises and the surrender of the
company car assigned to him, even as petitioner Ancheta had yet to answer and air his side.
Such betrays the fact that the said show cause letter was but a formality and petitioner
Ancheta’s dismissal is a foregone conclusion. It is thus apparent that private respondents
did not comply with the procedural requirements of due process in dismissing petitioner
Ancheta. Respondents’ failure to observe due process in the termination of employment of
petitioner for a just cause does not invalidate the dismissal but makes respondent company
liable for non-compliance with the procedural requirements of due process. The violation of
petitioner’s right to statutory due process warrants the payment of nominal damages, the
amount of which is addressed to the sound discretion of the court, taking into account the
relevant circumstances. Petition Denied.

JAVELLANA, JR. VS. BELEN
G.R. NOS. 181913 & 182158. MARCH 5, 2010
Facts:
Belen was hired by Javellana as company driver and assigned him the tasks of picking up
and delivering live hogs, feeds, and lime stones used for cleaning the pigpens. On August
19, 1999 Javellana gave him instructions to (a) pick up lime stones in Tayabas, Quezon; (b)
deliver live hogs at Barrio Quiling, Talisay, Batangas; (c) have the delivery truck repaired;
and (d) pick up a boar at Joliza Farms in Norzagaray, Bulacan. Petitioner Belen further
alleged that his long and arduous day finally ended at 4:30 a.m. of the following day, August
20, 1999. But after just three hours of sleep, respondent Javellana summoned him to the
office. When he arrived at 8:20 a.m., Javellana had left. After being told that the latter would
not be back until 4:00 p.m., Belen decided to go home and get some more sleep. Petitioner
Belen was promptly at the office at 4:00 p.m. but respondent Javellana suddenly blurted out
that he was firing Belen from work. Deeply worried that he might not soon get another job,

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Belen asked for a separation pay. When Javellana offered him only P5,000.00, he did not
accept it. Javellana claimed, on the other hand, that he hired petitioner Belen in 1995, not as
a company driver, but as family driver. Belen did not do work for his farm on a regular basis,
but picked up feeds or delivered livestock only on rare occasions when the farm driver and
vehicle were unavailable.
Regarding petitioner Belen's dismissal from work, respondent Javellana insisted that he did it
for a reason. Belen intentionally failed to report for work on August 20, 1999 and this
warranted his dismissal.
Issue: Does the amount that the Labor Arbiter awarded petitioner Belen represent all that
he will get when the decision in his case becomes final or does it represent only the amount
that he was entitled to at the time the Labor Arbiter rendered his decision, leaving room for
increase up to the date the decision in the case becomes final?
Ruling:
Article 279 of the Labor Code, as amended by Section 34 of Republic Act 6715 instructs:
Art. 279. Security of Tenure. - In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by this
Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time
his compensation was withheld from him up to the time of his actual reinstatement.
Clearly, the law intends the award of backwages and similar benefits to accumulate past the
date of the Labor Arbiter's decision until the dismissed employee is actually reinstated. But
if, as in this case, reinstatement is no longer possible, this Court has consistently ruled that
backwages shall be computed from the time of illegal dismissal until the date the decision
becomes final
As it happens, the parties filed separate petitions before this Court. The petition in G.R.
181913, filed by respondent Javellana, questioned the CA's finding of illegality of dismissal
while the petition in G.R. 182158, filed by petitioner Belen, challenged the amounts of
money claims awarded to him. The Court denied the first with finality in its resolution of
September 22, 2008; the second is the subject of the present case. Consequently, Belen
should be entitled to backwages from August 20, 1999, when he was dismissed, to
September 22, 2008, when the judgment for unjust dismissal in G.R. 181913 became final.
Separation pay, on the other hand, is equivalent to one month pay for every year of service,
a fraction of six months to be considered as one whole year. Here that would begin from
January 31, 1994 when petitioner Belen began his service. Technically the computation of his
separation pay would end on the day he was dismissed on August 20, 1999 when he
supposedly ceased to render service and his wages ended. But, since Belen was entitled to
collect backwages until the judgment for illegal dismissal in his favor became final, here on
September 22, 2008, the computation of his separation pay should also end on that date.
Further, since the monetary awards remained unpaid even after it became final on
September 22, 2008 because of Issue raised respecting the correct computation of such
awards, it is but fair that respondent Javellana be required to pay 12% interest per annum on
those awards from September 22, 2008 until they are paid. The 12% interest is proper
because the Court treats monetary claims in labor cases the equivalent of a forbearance of
credit. It matters not that the amounts of the claims were still in question on September 22,
2008. What is decisive is that the issue of illegal dismissal from which the order to pay
monetary awards to petitioner Belen stemmed had been long terminated.

WPP MARKETING COMMUNICATIONS, INC. VS. GALERA

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G.R. NO. 169207, MARCH 25, 2010
Facts:
Petitioner is Jocelyn Galera, an American citizen who was recruited from the US by private
respondent John Steedman, Chairman-WPP Worldwide and Chief Executive Officer of
Mindshare, Co., a corporation based in Hong Kong, China, to work in the Philippines for
private respondent WPP Marketing Communications, Inc. (WPP). On December 14, 2000,
GALERA alleged she was verbally notified by private STEEDMAN that her services had been
terminated from private respondent WPP. A termination letter followed the next day. On 3
January 2001, Galera filed a complaint for illegal dismissal, holiday pay, service incentive
leave pay, 13th month pay, incentive plan, actual and moral damages, and attorney's fees
against WPP and/or John Steedman (Steedman), Mark Webster (Webster) and Nominada
Lansang (Lansang). The Labor Arbiter's Ruling for illegal dismissal and damages in favor of
GALERA. The First Division of the NLRC reversed the ruling of Arbiter Madriaga. Yet it was
reversed again by CA.
Issues:
1.
Whether Galera is an Employee or a Corporate Officer.
2.
Whether WPP illegally dismissed Galera.
Ruling:
Employee. Galera, on the belief that she is an employee, filed her complaint before the
Labor Arbiter. On the other hand, WPP, Steedman, Webster and Lansang contend that Galera
is a corporate officer; hence, any controversy regarding her dismissal is under the
jurisdiction of the Regional Trial Court. We agree with Galera. Corporate officers are given
such character either by the Corporation Code or by the corporation's by-laws. Galera's
appointment as a corporate officer (Vice-President with the operational title of Managing
Director of Mindshare) during a special meeting of WPP's Board of Directors is an
appointment to a non-existent corporate office. At the time of Galera's appointment, WPP
already had one Vice-President in the person of Webster and all five directorship positions
provided in the by-laws are already occupied. Another indicator that she was a regular
employee and not a corporate officer is Section 14 of the contract, which clearly states that
she is a permanent employee — not a Vice-President or a member of the Board of Directors.
Another convincing indication that she was only a regular employee and not a corporate
officer is the disciplinary procedure, which states that her right of redress is through
Mindshare's Chief Executive Officer for the Asia-Pacific. This implies that she was not under
the disciplinary control of private respondent WPP's Board of Directors (BOD), which should
have been the case if in fact she was a corporate officer because only the Board of Directors
could appoint and terminate such a corporate officer.
WPP's dismissal of Galera lacked both substantive and procedural due process. Apart from
Steedman's letter dated 15 December 2000 to Galera, WPP failed to prove any just or
authorized cause for Galera's dismissal. Steedman's letter to Galera reads: The operations
are currently in a shamble. There is lack of leadership and confidence in your abilities from
within, our agency partners and some clients. Most of the staff I spoke with felt they got
more guidance and direction from Minda than yourself. In your role as Managing Director,
that is just not acceptable. I believe your priorities are mismanaged. The recent situation
where you felt an internal strategy meeting was more important than a new business pitch is
a good example. You failed to lead and advise on the two new business pitches. In both
cases, those involved sort (sic) Minda's input. As I discussed with you back in July, my
directive was for you to lead and review all business pitches. It is obvious [that] confusion
existed internally right up until the day of the pitch. The quality output is still not to an
acceptable standard, which was also part of my directive that you needed to focus on back
in July. I do not believe you understand the basic skills and industry knowledge required to
run a media special operation.

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WPP, Steedman, Webster, and Lansang, however, failed to substantiate the allegations in
Steedman's letter. Galera, on the other hand, presented documentary evidence 22 in the
form of congratulatory letters, including one from Steedman, which contents are
diametrically opposed to the 15 December 2000 letter. The law further requires that the
employer must furnish the worker sought to be dismissed with two written notices before
termination of employment can be legally effected: (1) notice which apprises the employee
of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent
notice which informs the employee of the employer's decision to dismiss him. Failure to
comply with the requirements taints the dismissal with illegality. 23 WPP's acts clearly show
that Galera's dismissal did not comply with the two-notice rule.

MARIBAGO BLUEWATER BEACH RESORT VS. DUAL
G.R. NO. 180660 JULY 20, 2010
Facts:
On 18 October 1995, petitioner hired respondent Dual as waiter and promoted him later as
outlet cashier of its Poolbar/Allegro Restaurant
On 9 January 2005, around 6:30 p.m., a group of Japanese guests and their companions
dined at Allegro. Pursuant to the order slip, fourteen (14) sets of dinner were prepared by the
chef.
After dinner, at around 9:00 p.m., the guests asked for their bill. Since Hiyas was attending
to other guests, he gave a signal to Mission to give the bill. Mission asked respondent Dual
for the sales transaction receipt and presented this to the guests. The guests paid the
amount indicated on the receipt and thereafter left in a hurry.
The receipt printed at 10:40 p.m. shows that only P3,036.00 was remitted by cashier Dual
corresponding to six (6) sets of dinner.
In view of the discrepancy between the order slip and the receipt issued, petitioner
Maribago, through its Human Resource Development (HRD) manager, issued memoranda, all
dated 12 January 2005, requiring respondent Dual, Alvin Hiyas, Ernesto Avenido and Basilio
Alcoseba to explain why they should not be penalized for violating House Rule 4.1
(dishonesty in any nature).
On 14 January 2005, the concerned employees were requested to attend a clarificatory
hearing to be conducted on 15 January 2005. The hearing was attended by respondent Dual,
Human Resource Manager Ignacio Hermias, Jr., Chief Security Officer Roland Cubillan,
Captain Waiter Hiyas, Chef Arman, Bartender Avenido, Room Service Waiter Alcoseba,
Butcher Ryan Alegrado, John Marollana, and union officials. This was followed by another
clarificatory hearing conducted on 16 January 2005.
After the investigation, respondent Dual was found guilty of dishonesty for his fabricated
statements and for asking one of the waiters (Mission) to corroborate his allegations. He was
terminated per memorandum dated 22 January 2005. On 3 February 2005, Dual filed a
complaint for unfair labor practice, illegal dismissal, non-payment of 13th month and
separation pay, and damages before the NLRC, Regional Arbitration Branch No. VII, Cebu
City.
The Labor Arbiter found that respondent’s termination was without valid cause and ruled
that respondent is entitled to separation pay.

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The NLRC set aside the Labor Arbiter’s decision and dismissed the complaint. The NLRC also
denied respondent’s motion for reconsideration.It ruled that complainant’s act of depriving
respondent of its lawful revenue is tantamount to fraud against the company which warrants
dismissal from the service. The Court of Appeals reversed the decision and resolution of the
NLRC. Hence this petition
Issue: Whether the Court of Appeals erred in ruling that respondent was illegally dismissed.
Ruling:
After a full review of the case, we are constrained to reverse the Court of Appeals.
The law requires that an employer shall not terminate the services of an employee except
for a just or authorized cause. Otherwise, an employee unjustly dismissed from work is
entitled to reinstatement and full backwages. The law also requires the employer to observe
due process in termination cases. In Agabon v. National Labor Relations Commission, we
ruled that violation of the employee’s statutory right to due process makes the employer
liable to pay indemnity in the form of nominal damages. The law further requires that the
burden of proving the cause for termination rests with the employer. In this case, we are in
agreement that petitioner’s evidence proved that respondent is guilty of dishonesty and of
stealing money entrusted to him as cashier.
Respondent’s acts constitute serious misconduct which is a just cause for termination under
the law.Theft committed by an employee is a valid reason for his dismissal by the employer.
Although as a rule this Court leans over backwards to help workers and employees continue
with their employment or to mitigate the penalties imposed on them, acts of dishonesty in
the handling of company property, petitioner’s income in this case, are a different matter.

NACAGUE VS. SULPICIO LINES, INC.
G.R. NO. 172589. AUGUST 8, 2010
Facts:
Jeffrey Nacague (Nacague) was “hepe de viaje” or the representative of Sulpicio Lines,
Inc. (Sulpicio) on board one its vessels (the ship). A housekeeper on the ship reported to
Sulpicio that Nacague and the chief mate made a threat on his life after he found drug
paraphernalia on board the ship. Sulpicio sent Nacague a notice of investigation informing
him of the charges against him – use of illegal drugs and threatening a co-employee. When
the ship docked in the port of Manila, crew members, including Nacague, were subjected to
a random drug test at the S.M. Lazo Medical Clinic (S.M. Lazo Clinic). Nacague tested
positive for methamphetamine hydrochloride or shabu and was subsequently subjected to a
formal investigation. Nacague denied using illegal drugs and on the fifth day following the
random drug test, underwent a voluntary drug test at the Chong Hua Hospital in Cebu City,
which yielded a negative result. Nacague submitted this result to Sulpicio, but Sulpicio later
terminated his services. Nacague filed a complaint for illegal suspension, illegal dismissal
and reinstatement with backwages. The Labor Arbiter declared that Nacague was illegally
dismissed and awarded him separation pay in lieu of reinstatement due to his strained
relations with Sulpicio. The Labor Arbiter gave more weight to the drug test result from
Chong Hua Hospital because it was accredited by the Dangerous Drugs Board, unlike S.M.
Lazo Clinic. On Sulpicio’s appeal, the National Labor Relations Commission (NLRC) reversed
the Labor Arbiter’s decision, holding that there was a presumption that S.M. Lazo Clinic was
an accredited drug testing center and it was incumbent on Nacague to show otherwise.
Nacague filed a petition for certiorari with the Court of Appeals which sustained the
termination of his employment. Nacague brought the case to the Supreme Court for review.

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Issue: Whether or not there was just cause to terminate Nacague’s employment.
Ruling:
Sulpicio failed to clearly show that Nacague was guilty of using illegal drugs. The lack of
accreditation of S.M. Lazo Clinic made its drug test results doubtful.
Section 36 of Republic Act No. 9165 (Comprehensive Dangerous Drugs Act of 2002) provides
that drug tests shall be performed only by any government forensic laboratories or any of
the drug testing laboratories accredited and monitored by the Department of Health, to
safeguard the quality of test results. The same provision also requires that drug testing
should consist of both the screening test and the confirmatory test. In this case, Sulpicio
failed to prove that S.M. Lazo Clinic was an accredited drug testing center. Sulpicio did not
even deny Nacague’s allegation that S.M. Lazo Clinic was not accredited. Also, only a
screening test was conducted to determine if Nacague was guilty of using illegal drugs.
Sulpicio Lines did not confirm the positive result of the screening test with a confirmatory
test. Sulpicio Lines failed to clearly show that it had a valid and legal cause for terminating
Nacague’s employment. When the alleged valid cause for the termination of employment is
not clearly proven, as in this case, the law considers the matter a case of illegal dismissal.
As the Labor Arbiter found, Nacague’s reinstatement was no longer feasible due to the
strained relations between Nacague and Sulpicio and he should instead be granted
separation pay. The Labor Arbiter’s decision was reinstated.

ST. MARY’S ACADEMY OF DIPOLOG CITY VS. PALACIO
G.R. NO. 164913, SEPTEMBER 8, 2010
DECS Memorandum No. 10 provides that all incumbent teachers have until September 19,
2000 to pass the Licensure Examination for Teachers (LET), otherwise they cannot continue
teaching in public or private schools unless they obtain a temporary permit to teach as parateachers. The complainants in this case were dismissed from the school on March 31, 2000
after they failed to pass the LET. The Supreme Court held that their dismissal was illegal and
premature. The law has provided a specific timeframe within which the teachers could
comply with the requirement of passing the LET hence, the school cannot deny them this
privilege, which the law has accorded to them, without violating their right to security of
tenure.
To reiterate, this Court will not hesitate to defend respondents’ right to security of tenure.
The premature dismissal from the service of respondents Palacio, Calibod, Laquio, Santander
and Montederamos is unwarranted. However, we take exception to the case of respondent
Saile who, as alleged by petitioner, was not qualified to take the LET as she only had three
out of the minimum 10 required educational units to be admitted to take the LET pursuant to
Section 15 of RA 7836, which fact respondent Saile did not refute. Not being qualified to take
the examination to become a duly licensed professional teacher, petitioner cannot be
compelled to retain her services as she cannot possibly obtain the needed prerequisite to
allow her to continue practicing the teaching profession. Thus, we find her termination just
and legal.

PLDT VS. TEVES
GR NO. 143511, NOVEMBER 15, 2010
Even assuming that respondent’s absenteeism constitutes willful disobedience, such offense

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does not warrant respondent’s dismissal. Not every case of insubordination or willful
disobedience by an employee reasonably deserves the penalty of dismissal. There must be a
reasonable proportionality between the offense and the penalty.
While management has the prerogative to discipline its employees and to impose
appropriate penalties on erring workers, pursuant to company rules and regulations,
however, such management prerogatives must be exercised in good faith for the
advancement of the employer’s interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws and valid agreements. The
Court is wont to reiterate that while an employer has its own interest to protect, and
pursuant thereto, it may terminate an employee for a just cause, such prerogative to dismiss
or lay off an employee must be exercised without abuse of discretion. Its implementation
should be tempered with compassion and understanding. The employer should bear in mind
that, in the execution of said prerogative, what is at stake is not only the employee’s
position, but his very livelihood, his very breadbasket.

SHIMIZU PHILS CONTRACTORS VS. CALLANTA
G.R. NO. 165923, SEPTEMBER 29, 2010
Facts:
Shimizu Phils. a corporation engaged in the construction business, employed Virgilio Callanta
on August 23, 1994 as Safety Officer assigned at Yutaka-Giken Project and eventually as
Project Administrator of petitioner’s Structural Steel Division (SSD) in 1995. Virgilio Callanta
was informed that his services will be terminated effective July 9, 1997 due to the lack of
any vacancy in other projects and the need to re-align the company’s personnel
requirements brought about by the imperatives of maximum financial commitments. He
then filed an illegal dismissal complaint against petitioner assailing his dismissal as without
any valid cause.
Shimizu advanced that respondent’s services was terminated in accordance with a valid
retrenchment program being implemented by the company since 1996 due to financial crisis
that plague the construction industry. To prove its financial deficit, petitioner presented
financial statements for the years 1995 to 1997 as well as the Securities and Exchange
Commission’s approval of petitioner’s application for a new paid-in capital amounting to
P330,000,000. Shimizu alleged that in order not to jeopardize the completion of its projects,
the abolition of several departments and the concomitant termination of some employees
were implemented as each project is completed. When respondent’s Honda Project was
completed, petitioner offered respondent his separation pay which the latter refused to
accept and instead filed an illegal dismissal complaint.
Mr. Callanta claimed that Shimizu failed to comply with the requirements called for by law
before implementing a retrenchment program thereby rendering it legally infirmed. First, it
did not comply with the provision of the Labor Code mandating the service of notice of
retrenchment. He pointed out that the notice sent to him never mentioned retrenchment but
only project completion as the cause of termination. Also, the notice sent to the Department
of Labor and Employment (DOLE) did not conform to the 30-day prior notice requirement.
Second, petitioner failed to use fair and reasonable criteria in determining which employees
shall be retrenched or retained. In the termination report submitted to DOLE, he was the
only one dismissed out of 333 employees. Worse, junior and inexperienced employees were
appointed/assigned in his stead to new projects thus also ignoring seniority in hiring and
firing employees.
Shimizu argued that when it submitted the retrenchment notice/termination report to DOLE,

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there was already substantial compliance with the requirement.
Labor Arbiter rendered a decision holding that Mr. Callanta was validly retrenched. He found
that sufficient evidence was presented to establish company losses; that petitioner offered
respondent his separation pay; and that petitioner duly notified DOLE about the
retrenchment. The Labor Arbiter further relied on petitioner’s factual version relating to
respondent’s employment background with regard to his position and behavioral conduct.
NLRC upheld the ruling that there was valid ground for respondent’s termination but
modified the Labor Arbiter’s Decision by holding that petitioner violated respondent’s right
to procedural due process. The NLRC found that petitioner failed to comply with the 30-day
prior notice to the DOLE and that there is no proof that petitioner used fair and reasonable
criteria in the selection of employees to be retrenched. Shimizu Philippine Contractor, Inc., is
ordered to pay complainant-appellant Virgilio P. Callanta his separation pay equivalent to
one (1) month pay for every year of service. For want of due notice, respondent is further
directed to pay complainant an indemnity equivalent to one (1) month salary.
CA reversed and set aside the NLRC’s ruling. The CA opined that Shimizu failed to prove that
there were employees other than respondent who were similarly dismissed due to
retrenchment and that respondent’s alleged replacements held much higher ranks and were
more deserving employees. Moreover, there were no proofs to sustain that petitioner used
fair and reasonable criteria in determining which employees to retrench. According to the
CA, petitioner’s failure to produce evidence raises the presumption that such evidence will
be adverse to it. Consequently, the CA invalidated the retrenchment, held respondent to
have been illegally dismissed, and ordered respondent’s reinstatement and payment of
backwages.
Issue: Whether or not Shimizu has failed to obeserve fair and reasonable standards or
criteria in effecting the dismissal or Mr. Callanta?
Ruling:
There was substantial compliance for a valid retrenchment; Shimizu used fair and
reasonable criteria in effecting retrenchment.
As an authorized cause for separation from service under Article 283 of the Labor Code,
retrenchment is a valid exercise of management prerogative subject to the strict
requirements set by jurisprudence:
(1) That the retrenchment is reasonably necessary and likely to prevent business losses
which, if already incurred, are not merely de minimis, but substantial, serious, actual and
real, or if only expected, are reasonably imminent as perceived objectively and in good faith
by the employer;
(2) That the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one
month pay or at least ½ month pay for every year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees’ right to security
of tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status, efficiency,
seniority, physical fitness, age, and financial hardship for certain workers.
Both the Labor Arbiter and the NLRC found sufficient compliance with these substantive
requirements, there being enough evidence to prove that petitioner was sustaining business
losses, that separation pay was offered to respondent, and that notices of termination of

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service were furnished respondent and DOLE. However, the NLRC modified the Decision of
the Labor Arbiter by granting respondent indemnity since the notice to DOLE was served
short of the 30-day notice requirement and that there is no proof of the use of fair and
reasonable criteria in the selection of employees to be retrenched or retained. The CA, then,
reversed the Decision of the NLRC by ruling that the absence of fair and reasonable criteria
in implementing the retrenchment invalidates altogether the retrenchment.
In implementing its retrenchment scheme, petitioner was constrained to streamline its
operations and to downsize its complements in a progressive manner in order not to
jeopardize the completion of its projects. Thus, several departments like the Civil Works
Division, Electro-mechanical Works Division and the Territorial Project Management Offices,
among others, were abolished in the early part of 1996 and thereafter the Structural Steel
Division, of which respondent was an Administrator. Respondent was among the last batch of
employees who were retrenched and by the end of year 1997, all of the employees of the
Structural Steel Division were severed from employment.
Mr. Callanta argued that that he was singled out for termination as allegedly shown in
petitioner’s monthly termination report for the month of July 1997 filed with the DOLE does
not persuade this Court. Standing alone, this document is not proof of the total number of
retrenched employees or that respondent was the only one retrenched. It merely serves as
notice to DOLE of the names of employees terminated/ retrenched only for the month of July.
In other words, it cannot be deemed as an evidence of the number of employees affected by
the retrenchment program. Thus we cannot conclude that no other employees were
previously retrenched.
Shimizu implemented its retrenchment program in good faith because it undertook several
measures in cutting down its costs, to wit, withdrawing certain privileges of petitioner’s
executives and expatriates; limiting the grant of additional monetary benefits to managerial
employees and cutting down expenses; selling of company vehicles; and infusing fresh
capital into the company. Respondent did not attempt to refute that petitioner adopted these
measures before implementing its retrenchment program.
Shimizu was able to prove that it incurred substantial business losses, that it offered to pay
respondent his separation pay, that the retrenchment scheme was arrived at in good faith,
and lastly, that the criteria or standard used in selecting the employees to be retrenched
was work efficiency which passed the test of fairness and reasonableness.
The termination notice sent to DOLE did not comply with the 30-day notice requirement,
thus, respondent is entitled to indemnity for violation of due process. However, petitioner
admitted that the reports were submitted 21 days, in the case of the first notice, and 16
days, in the case of the second notice, before the intended date of respondent’s dismissal.
The purpose of the one month prior notice rule is to give DOLE an opportunity to ascertain
the veracity of the cause of termination. Non-compliance with this rule clearly violates the
employee’s right to statutory due process.
Consequently, we affirm the NLRC’s award of indemnity to respondent for want of sufficient
due notice. But to be consistent with our ruling in Jaka Food Processing Corporation v. Pacot,
the indemnity in the form of nominal damages should be fixed in the amount of P50,000.00.

MANILA MINING CORP. EMPLOYEES ASSOC.-FFW VS. MANILA MINING CORP.
G.R. NO. 178222-23, SEPTEMBER 29, 2010

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

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imposed by DENR-EMB in granting its application for a permanent permit. It is precisely
MMC’s faultless failure to secure a permit which caused the temporary shutdown of its
mining operations.
For a charge of unfair labor practice to prosper, it must be shown that the employer was
motivated by ill-will, bad faith or fraud, or was oppressive to labor. The employer must have
acted in a manner contrary to morals, good customs, or public policy causing social
humiliation, wounded feelings or grave anxiety. While the law makes it an obligation for the
employer and the employees to bargain collectively with each other, such compulsion does
not include the commitment to precipitately accept or agree to the proposals of the other. All
it contemplates is that both parties should approach the negotiation with an open mind and
make reasonable effort to reach a common ground of agreement.
Even as we declare the validity of the lay-off, we cannot say that MMC has no obligation at
all to the laid-off employees. The validity of its act of suspending its operations does not
excuse it from paying separation pay.
Article 286 of the Labor Code allows the bona fide suspension of operations for a period not
exceeding six (6) months. During the suspension, an employee is not deemed terminated.
As a matter of fact, the employee is entitled to be reinstated once the employer resumes
operations within the 6-month period. However, Article 286 is silent with respect to the
rights of the employee if the suspension of operations lasts for more than 6 months. Thus is
bred the issue regarding the responsibility of MMC toward its employees.
The Court is not impressed with the claim that actual severe financial losses exempt MMC
from paying separation benefits to complainants. In the first place, MMC did not appeal the
decision of the Court of Appeals which affirmed the NLRC’s award of separation pay to
complainants. MMC’s failure had the effect of making the awards final so that MMC could no
longer seek any other affirmative relief. In the second place, the non-issuance of a permit
forced MMC to permanently cease its business operations, as confirmed by the Court of
Appeals. Under Article 283, the employer can lawfully close shop anytime as long as
cessation of or withdrawal from business operations is bona fide in character and not
impelled by a motive to defeat or circumvent the tenurial rights of employees, and as long
as he pays his employees their termination pay in the amount corresponding to their length
of service. The cessation of operations, in the case at bar is of such nature. It was proven
that MMC stopped its operations precisely due to failure to secure permit to operate a
tailings pond. Separation pay must nonetheless be given to the separated employees.

ROBINSONS GALLERIA/ROBINSONS SUPERMARKET CORPORATION VS. RANCHEZ
G.R. NO. 177937, JANUARY 19, 2011
Facts:
Respondent was a probationary employee of petitioner Robinsons Galleria/Robinsons
Supermarket Corporation (petitioner Supermarket) for a period of five (5) months, or from
October 15, 1997 until March 14, 1998. She underwent six (6) weeks of training as a cashier
before she was hired as such on October 15, 1997.
Two weeks after she was hired, or on October 30, 1997, respondent reported to her
supervisor the loss of cash amounting to Twenty Thousand Two Hundred Ninety-Nine Pesos
(P20,299.00) which she had placed inside the company locker. Petitioner Jess Manuel
(petitioner Manuel), the Operations Manager of petitioner Supermarket, ordered that
respondent be strip-searched by the company guards. However, the search on her and her
personal belongings yielded nothing.
Respondent acknowledged her responsibility and requested that she be allowed to settle
and pay the lost amount. However, petitioner Manuel did not heed her request and instead

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reported the matter to the police. An information for Qualified Theft was filed with the
Quezon City Regional Trial Court. Respondent was constrained to spend two weeks in jail for
failure to immediately post bail. On November 25, 1997, respondent filed a complaint for
illegal dismissal and damages.
On March 12, 1998, petitioners sent to respondent by mail a notice of termination and/or
notice of expiration of probationary employment dated March 9, 1998. In dismissing the
complaint for illegal dismissal, the Labor Arbiter ratiocinated that at the time respondent
filed the complaint for illegal dismissal, she was not yet dismissed by petitioners. When she
was strip- searched by the security personnel of petitioner Supermarket, the guards were
merely conducting an investigation. The subsequent referral of the loss to the police
authorities might be considered routine. Respondent's non-reporting for work after her
release from detention could be taken against her in the investigation that petitioner
supermarket would conduct. In reversing the decision of the Labor Arbiter, the NLRC ruled
that respondent was denied due process by petitioners. Strip-searching respondent and
sending her to jail for two weeks certainly amounted to constructive dismissal because
continued employment had been rendered impossible, unreasonable, and unlikely.
Issue: The sole issue for resolution is whether respondent was illegally terminated from
employment by petitioners.
Ruling:
Yes. There is probationary employment when the employee upon his engagement is made to
undergo a trial period during which the employer determines his fitness to qualify for regular
employment based on reasonable standards made known to him at the time of engagement.
A probationary employee, like a regular employee, enjoys security of tenure. However, in
cases of probationary employment, aside from just or authorized causes of termination, an
additional ground is provided under Article 281 of the Labor Code,i.e., the probationary
employee may also be terminated for failure to qualify as a regular employee in accordance
with reasonable standards made known by the employer to the employee at the time of the
engagement. Thus, the services of an employee who has been engaged on probationary
basis may be terminated for any of the following: (1) a just or (2) an authorized cause; and
(3) when he fails to qualify as a regular employee in accordance with reasonable standards
prescribed by the employer.
Article 277(b) of the Labor Code mandates that subject to the constitutional right of workers
to security of tenure and their right to be protected against dismissal, except for just and
authorized cause and without prejudice to the requirement of notice under Article 283 of the
same Code, the employer shall furnish the worker, whose employment is sought to be
terminated, a written notice containing a statement of the causes of termination, and shall
afford the latter ample opportunity to be heard and to defend himself with the assistance of
a representative if he so desires, in accordance with company rules and regulations pursuant
to the guidelines set by the Department of Labor and Employment.
In the instant case, based on the facts on record, petitioners failed to accord respondent
substantive and procedural due process. The haphazard manner in the investigation of the
missing cash, which was left to the determination of the police authorities and the
Prosecutor's Office, left respondent with no choice but to cry foul.
Administrative
investigation was not conducted by petitioner Supermarket. On the same day that the
missing money was reported by respondent to her immediate superior, the company already
pre-judged her guilt without proper investigation, and instantly reported her to the police as
the suspected thief, which resulted in her languishing in jail for two weeks.

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As correctly pointed out by the NLRC, the due process requirements under the Labor Code
are mandatory and may not be supplanted by police investigation or court proceedings. The
criminal aspect of the case is considered independent of the administrative aspect. Thus,
employers should not rely solely on the findings of the Prosecutor's Office. They are
mandated to conduct their own separate investigation, and to accord the employee every
opportunity to defend himself. Furthermore, respondent was not represented by counsel
when she was strip-searched inside the company premises or during the police
investigation, and in the preliminary investigation before the Prosecutor's Office.
Respondent was constructively dismissed by petitioner Supermarket effective October 30,
1997. It was unreasonable for petitioners to charge her with abandonment for not reporting
for work upon her release in jail. It would be the height of callousness to expect her to return
to work after suffering in jail for two weeks. Work had been rendered unreasonable, unlikely,
and definitely impossible, considering the treatment that was accorded respondent by
petitioners.

UNIVERSITY OF THE IMMACULADA CONCEPCION VS. NLRC
G.R. NO. 181146, JANUARY 26, 2011
Facts:
Petitioner University of the Immaculate Conception is a private educational institution
located in Davao City. Private respondent Teodora C. Axalan is a regular faculty member in
the university holding the position of Associate Professor II. Aside from being a regular
faculty member, Axalan is the elected president of the employees' union.
From November 18-22, 2002, Axalan attended a seminar in Quezon City on website
development. Axalan then received a memorandum from Dean Maria Rosa Celestial asking
her to explain in writing why she should not be dismissed for having been absent without
official leave.
Dean Celestial relayed to Axalan the message of the university president that no
administrative charge would be filed if Axalan would admit having been absent without
official leave and write a letter of apology seeking forgiveness. Axalan opted not to write the
letter of admission and contrition the university president requested. The Dean wrote Axalan
that the university president had created an ad hoc grievance committee to investigate the
AWOL charge.
From 28 January to 3 February 2003, Axalan attended a seminar in Baguio City on advanced
paralegal training. Dean Celestial wrote Axalan informing her that her participation in the
paralegal seminar in Baguio City was the subject of a second AWOL charge. The dean asked
Axalan to explain in writing why no disciplinary action should be taken against her.
After conducting hearings and receiving evidence, the ad hoc grievance committee found
Axalan to have incurred AWOL on both instances and recommended that Axalan be
suspended without pay for six months on each AWOL charge. The university president
approved the committee's recommendation.
The university president then wrote Axalan informing her that she incurred absences without
official leave when she attended the seminars on website development in Quezon City and
on advanced paralegal training in Baguio City on 18-22 November 2002 and on 28 January-3
February 2003, respectively. In the same letter, the university president informed Axalan
that the total penalty of one-year suspension without pay for both AWOL charges would be
effective immediately.

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On 1 December 2003, Axalan filed a complaint against the university for illegal suspension,
constructive dismissal, reinstatement with backwages, and unfair labor practice with prayer
for damages and attorney's fees.
Meanwhile, upon the expiration of the one-year suspension, Axalan promptly resumed
teaching at the university on 1 October 2004.
Issue: WON Axalan was constructively dismissed
Held:
Constructive dismissal occurs when there is cessation of work because continued
employment is rendered impossible, unreasonable, or unlikely as when there is a demotion
in rank or diminution in pay or when a clear discrimination, insensibility, or disdain by an
employer becomes unbearable to the employee leaving the latter with no other option but
to quit.
In this case however, there was no cessation of employment relations between the parties. It
is unrefuted that Axalan promptly resumed teaching at the university right after the
expiration of the suspension period. In other words, Axalan never quit. Hence, Axalan cannot
claim that she was left with no choice but to quit, a crucial element in a finding of
constructive dismissal. Thus, Axalan cannot be deemed to have been constructively
dismissed.
Significantly, at the time the Labor Arbiter rendered his Decision on 11 October 2004, Axalan
had already returned to her teaching job at the university on 1 October 2004. The Labor
Arbiter's Decision ordering the reinstatement of Axalan, who at the time had already
returned to work, is thus absurd.
There being no constructive dismissal, there is no legal basis for the Labor Arbiter's order of
reinstatement as well as payment of backwages, salary differentials, damages, and
attorney's fees.
Note that on the first AWOL incident, the university even offered to drop the AWOL charge
against Axalan if she would only write a letter of contrition. But Axalan adamantly refused
knowing fully well that the administrative case would take its course leading to possible
sanctions. She cannot now be heard that the imposition of the penalty of six-month
suspension without pay for each AWOL charge is unreasonable. We are convinced that
Axalan was validly suspended for cause and in accord with procedural due process.
The Court recognizes the right of employers to discipline its employees for serious violations
of company rules after affording the latter due process and if the evidence warrants. The
university, after affording Axalan due process and finding her guilty of incurring AWOL on
two separate occasions, acted well within the bounds of labor laws in imposing the penalty
of six-month suspension without pay for each incidence of AWOL.
As a learning institution, the university cannot be expected to take lightly absences without
official leave among its employees, more so among its faculty members even if they happen
to be union officers. To do so would send the wrong signal to the studentry and the rest of its
teaching staff that irresponsibility is widely tolerated in the academe.

HOSPITAL MANAGEMENT SERVICES, INC. VS. HOSPITAL MANAGEMENT SERVICES,
INC. – MEDICAL CENTER MANILA EMPLOYEES ASSOCIATION
G.R. NO. 176287. JANUARY 31, 2011
Facts:
De Castro and ward-clerk orientee Gina Guillergan were at the nurse station on night duty

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when Rufina Causaren, an 81-year-old patient confined at Room 724-1 of petitioner hospital
fell from the right side of the bed as she was trying to reach for the bedpan. The niece of
the latter sought assistance from the nurse station but instead of personally seeing the
patient, respondent De Castro directed ward-clerk orientee Guillergan to check the patient.
Thereafter, a formal investigation was conducted and during the committee investigation,
respondent De Castro explained that she was attending to a newly-admitted patient at Room
710 2:30 a.m. to 3:00 a.m. (March 24,1999) and, because of this, she instructed Nursing
Assistant Tatad to check the vital signs of patient Causaren, with ward-clerk orientee
Guillergan accompanying the latter.
However, the Investigation Committee found that the subject incident happened between
11:00 a.m. to 11:30 a.m. of March 23, 1999. The committee recommended that despite her
more than seven years of service, respondent De Castro should be terminated from
employment for her lapse in responding to the incident and for trying to manipulate and
influence her staff to cover-up the incident.
Issue: WON De Castro was illegally dismissed by the employer hospital.
Ruling:
Yes.
Article 282 (b) of the Labor Code provides that an employer may terminate an
employment for gross and habitual neglect by the employee of his duties.
It is incumbent upon respondent De Castro to ensure that patients, covered by the nurse
station to which she was assigned, be accorded utmost health care at all times without any
qualification or distinction. Respondent De Castro’s failure to
o
personally assist patient Causaren
o
check her vital signs and examine if she sustained any injury,
o
refer the matter to the patient's attending physician or any physician-on-duty, and
o
note the incident in the report sheet for endorsement to the next shift for proper
monitoring constitute serious misconduct that warrants her termination of employment.
However neglect of duty, to be a ground for dismissal, must be both gross and habitual.
Gross negligence connotes want of care in the performance of one's duties. Habitual neglect
implies repeated failure to perform one's duties for a period of time, depending upon the
circumstances. A single or isolated act of negligence does not constitute a just cause for the
dismissal of the employee.
There was no any wrongful intent, deliberate refusal, or bad faith on her part when, instead
of personally attending to patient Causaren, she requested Nursing Assistant Tatad and
ward-clerk orientee Guillergan to see the patient, as she was then attending to a newlyadmitted patient at Room 710. It was her judgment call, albeit an error of judgment, being
the staff nurse with presumably more work experience and better learning curve, to send
Nursing Assistant Tatad and ward-clerk orientee Guillergan to check on the health condition
of the patient, as she deemed it best, under the given situation, to attend to a newlyadmitted patient who had more concerns that needed to be addressed accordingly. Being
her first offense, respondent De Castro cannot be said to be grossly negligent so as to justify
her termination of employment. Moreover, petitioners’ allegation, that respondent De
Castro exerted undue pressure upon her co-nurses to alter the actual time of the incident so
as to exculpate her from any liability, was not clearly substantiated.

CULILI VS. EASTERN TELECOMMUNICATIONS PHILIPPINES, INC.

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G.R. NO. 165381 FEBRUARY 9, 2011
Facts:
Respondent Eastern Telecommunications Philippines, Inc. (ETPI) is a telecommunications
company engaged mainly in the business of establishing commercial telecommunications
systems and leasing of international datalines or circuits that pass through the international
gateway facility (IGF).
Petitioner Nelson A. Culili (Culili) was employed by ETPI as a Technician in its Field Operations
Department on January 27, 1981. On December 12, 1996, Culili was promoted to Senior
Technician in the Customer Premises Equipment Management Unit of the Service Quality
Department and his basic salary was increased.
In 1998, due to business troubles and losses, ETPI was compelled to implement a RightSizing Program which consisted of two phases: the first phase involved the reduction of
ETPI’s workforce to only those employees that were necessary and which ETPI could sustain;
the second phase entailed a company-wide reorganization which would result in the transfer,
merger, absorption or abolition of certain departments of ETPI.
Among the departments abolished was the Service Quality Department. The functions of the
Customer Premises Equipment Management Unit, Culili’s unit, were absorbed by the
Business and Consumer Accounts Department. The abolition of the Service Quality
Department rendered the specialized functions of a Senior Technician unnecessary. As a
result, Culili’s position was abolished due to redundancy and his functions were absorbed by
Andre Andrada, another employee already with the Business and Consumer Accounts
Department.
On February 8, 2000, Culili filed a complaint against ETPI and its officers for illegal dismissal,
unfair labor practice, and money claims before the Labor Arbiter.
On April 30, 2001,
the Labor Arbiter rendered a decision finding ETPI guilty of illegal dismissal and unfair labor
practice. On appeal, the NLRC affirmed the Labor Arbiter’s decision but modified the amount
of moral and exemplary damages awarded.
Issue: WON Culili was legally dismissed.
Ruling:
Culili asserted that he was illegally dismissed because there was no valid cause to terminate
his employment. He claimed that ETPI failed to prove that his position had become
redundant and that ETPI was indeed incurring losses. Culili further alleged that his functions
as a Senior Technician could not be considered a superfluity because his tasks were crucial
and critical to ETPI’s business.
Under our laws, an employee may be terminated for reasons involving measures taken by
the employer due to business necessities. Article 283 of the Labor Code provides:
Art. 283. Closure of establishment and reduction of personnel. - The employer may
also terminate the employment of any employee due to the installation of labor
saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for
the purpose of circumventing the provisions of this Title, by serving a written notice
on the workers and the Department of Labor and Employment at least one (1) month
before the intended date thereof. In case of termination due to the installation of
labor-saving devices or redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to
prevent losses and in cases of closures or cessation of operations of establishment or

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undertaking not due to serious business losses or financial reverses, the separation
pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall
be considered one (1) whole year.
There is redundancy when the service capability of the workforce is greater than what is
reasonably required to meet the demands of the business enterprise. A position becomes
redundant when it is rendered superfluous by any number of factors such as over-hiring of
workers, decrease in volume of business, or dropping a particular product line or service
activity previously manufactured or undertaken by the enterprise.
This Court has been consistent in holding that the determination of whether or not an
employee’s services are still needed or sustainable properly belongs to the employer.
Provided there is no violation of law or a showing that the employer was prompted by an
arbitrary or malicious act, the soundness or wisdom of this exercise of business judgment is
not subject to the discretionary review of the Labor Arbiter and the NLRC.
However, an employer cannot simply declare that it has become overmanned and dismiss
its employees without producing adequate proof to sustain its claim of redundancy. Among
the requisites of a valid redundancy program are: (1) the good faith of the employer in
abolishing the redundant position; and (2) fair and reasonable criteria in ascertaining what
positions are to be declared redundant, such as but not limited to: preferred status,
efficiency, and seniority.
This Court also held that the following evidence may be proffered to substantiate
redundancy: the new staffing pattern, feasibility studies/ proposal on the viability of the
newly created positions, job description and the approval by the management of the
restructuring.
In the case at bar, ETPI was upfront with its employees about its plan to implement a RightSizing Program. Even in the face of initial opposition from and rejection of the said program
by ETEU, ETPI patiently negotiated with ETEU’s officers to make them understand ETPI’s
business dilemma and its need to reduce its workforce and streamline its organization. This
evidently rules out bad faith on the part of ETPI.
In deciding which positions to retain and which to abolish, ETPI chose on the basis of
efficiency, economy, versatility and flexibility. It needed to reduce its workforce to a
sustainable level while maintaining functions necessary to keep it operating. The records
show that ETPI had sufficiently established not only its need to reduce its workforce and
streamline its organization, but also the existence of redundancy in the position of a Senior
Technician. ETPI explained how it failed to meet its business targets and the factors that
caused this, and how this necessitated it to reduce its workforce and streamline its
organization. ETPI also submitted its old and new tables of organization and sufficiently
described how limited the functions of the abolished position of a Senior Technician were and
how it decided on whom to absorb these functions.
For termination of employment as defined in Article 283 of the Labor Code, the requirement
of due process shall be deemed complied with upon service of a written notice to the
employee and the appropriate Regional Office of the Department of Labor and Employment
at least thirty days before effectivity of the termination, specifying the ground or grounds for
termination.
ETPI does not deny its failure to provide DOLE with a written notice regarding Culili’s
termination. It, however, insists that it has complied with the requirement to serve a written
notice to Culili as evidenced by his admission of having received it and forwarding it to his

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union president. Accordingly, it is wise to hold that: (1) if the dismissal is based on a just
cause under Article 282 but the employer failed to comply with the notice requirement, the
sanction to be imposed upon him should be tempered because the dismissal process was, in
effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an
authorized cause under Article 283 but the employer failed to comply with the notice
requirement, the sanction should be stiffer because the dismissal process was initiated by
the employer's exercise of his management prerogative.
Hence, since it has been established that Culili’s termination was due to an authorized cause
and cannot be considered unfair labor practice on the part of ETPI, his dismissal is valid.
However, in view of ETPI’s failure to comply with the notice requirements under the Labor
Code, Culili is entitled to nominal damages in addition to his separation pay.

PLASTIMER INDUTRIAL CORP. VS. GOPO
GR NO. 183390, FEBRUARY 16, 2011
Facts:
On 7 May 2004, Plastimer issued a Memo informing all its employees of the decision of the
Board of Directors to downsize and reorganize its business operations due to withdrawal of
investments and shares of stocks which resulted in the change of its corporate structure. On
14 May 2004, the employees of Plastimer, including respondents were served written notices
of their termination effective 13 June 2004. On 24 May 2004, Plastimer and Plastimer
Industrial Corporation Christian Brotherhood (PICCB), the CBA representative of all rank and
file employees, entered into a MOA relative to the terms and conditions that would govern
the retrenchment of the affected employees. On 26 May 2004, Plastimer submitted to the
Department of Labor and Employment (DOLE) an Establishment Termination Report
containing the list of the employees affected by the reorganization and downsizing. On 28
May 2004, the affected employees, including respondents, signed individual “Release Waiver
and Quitclaim.”
Thereafter, respondents filed a complaint against Plastimer before the Labor Arbiter for
illegal dismissal with prayer for reinstatement and full backwages, underpayment of
separation pay, moral and exemplary damages and attorney’s fees. Respondents alleged
that they did not voluntarily relinquish their jobs and that they were required to sign the
waivers and quitclaims without giving them an opportunity to read them and without
explaining their contents. Respondents further alleged that Plastimer failed to establish the
causes/valid reasons for the retrenchment and to comply with the one-month notice to the
DOLE as well as the standard prescribed under the CBA. Petitioners countered that the
retrenchment was a management prerogative and that respondents got their retrenchment
or separation pay even before the effective date of their separation from service.
Labor Arbiter: Plastimer were able to prove that there was a substantial withdrawal of stocks
that led to the downsizing of the workforce. Notices to the affected employees were given on
14 May 2004, 30 days before its effective date on 14 June 2004. It was only the notice to the
DOLE that was filed short of the 30-day period. Labor Arbiter further ruled that respondents
could not claim ignorance of the contents of the waivers and quitclaims because they were
assisted by the union President and their counsel in signing them.
Issue:

Whether respondents were illegally retrenched by petitioners.

Ruling:
No.
One-Month Notice of Termination of Employment

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Plastimer submitted the notice of termination of employment to the DOLE on 26 May 2004.
However, notices to the affected employees were given to them on 14 May 2004 or 30 days
before the effectivity of their termination from employment on 13 June 2004. While notice to
the DOLE was short of the one-month notice requirement, the affected employees were
sufficiently informed of their retrenchment 30 days before its effectivity. Petitioners’ failure
to comply with the one-month notice to the DOLE is only a procedural infirmity and does not
render the retrenchment illegal. In Agabon v. NLRC, we ruled that when the dismissal is for a
just cause, the absence of proper notice should not nullify the dismissal or render it illegal or
ineffectual. Instead, the employer should indemnify the employee for the violation of his
statutory rights. Here, the failure to fully comply with the one-month notice of termination of
employment did not render the retrenchment illegal but it entitles respondents to nominal
damages.
Validity of Retrenchment
The Court of Appeals ruled that there was no valid cause for retrenchment. We do not agree.
The Court of Appeals acknowledged that an independent auditor confirmed petitioners’
losses for the years 2001 and 2002. The fact that there was a net income in 2003 does not
justify the Court of Appeals’ ruling that there was no valid reason for the retrenchment.
Records showed that the net income of P6,185,707.05 for 2003 was not even enough for
petitioners to recover from the P52,904,297.88 loss in 2002.Article 283 of the Labor Code
recognizes retrenchment to prevent losses as a right of the management to meet clear and
continuing economic threats or during periods of economic recession to prevent losses.
There is no need for the employer to wait for substantial losses to materialize before
exercising ultimate and drastic option to prevent such losses.
Validity of Waivers and Quitclaims
The Court has ruled that a waiver or quitclaim is a valid and binding agreement between the
parties, provided that it constitutes a credible and reasonable settlement, and that the one
accomplishing it has done so voluntarily and with a full understanding of its import.
We agree with LA and NLRC that respondents were sufficiently apprised of their rights under
the waivers and quitclaims that they signed. Each document contained the signatures of
Edward Marcaida (Marcaida), PICCB President, and Atty.Bayani Diwa, the counsel for the
union, which proved that respondents were duly assisted when they signed the waivers and
quitclaims.
SC uphold the validity of respondents’ retrenchment with MODIFICATION that petitioners pay
each of the respondents the amount of P30,000 as nominal damages for non-compliance
with statutory due process.

LOPEZ VS. ALTURAS GROUP OF COMPANIES
G.R. NO. 191008. APRIL 11, 2011
Facts:
Petitioner Quirico Lopez was hired as a truck driver by Alturas Group of Companies.
Sometime in 1997, he was dismissed after he was allegedly caught by respondent's security
guard in the act of attempting to smuggle out of the company premises 60 kilos of scrap iron
worth P840. In compliance with the Show Cause Order, petitioner answered the allegations
by a handwritten explanation.
Finding petitioner's explanation unsatisfactory, respondent company terminated his
employment by Notice of Termination, on the grounds of loss of trust and confidence, and of
violation of company rules and regulations.
Petitioner thereupon filed a complaint against respondent company for illegal dismissal and

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underpayment of wages. He claimed that the smuggling charge against him was fabricated
to justify his illegal dismissal; that the filing of the charge came about after he reported the
loss of the original copy of his pay slip, which report, he went on to claim, respondent
company took to mean that he could use the pay slip as evidence for filing a complaint for
violation of labor laws.
By decision of the Labor Arbiter, it was held that petitioner's dismissal was justified, for he, a
truck driver, held a position of trust and confidence, and his act of stealing company
property was a violation of the trust reposed upon him.
On appeal, the National Labor Relations Commission's (NLRC), reversed the ruling of the
Labor Arbiter upon finding that respondent's evidence did not suffice to warrant the
termination of petitioner's services.
When the respondent appealed the case to the Court of Appeals, it reversed the NLRC ruling
and held that respondent company was justified in terminating petitioner's employment on
the ground of loss of trust and confidence, his alleged act of smuggling out the scrap iron
having been sufficiently established through the affidavits of superior employees.
Albeit the appellate court found that petitioner's dismissal was for a just cause, it held that
due process was not observed when respondent company failed to give him a chance to
defend his side in a proper hearing.
Issues:
WON the termination was for a just cause.
WON the petitioner was afforded due process.
Ruling:
1.
The termination was for a just cause.
Dismissals have two facets: the legality of the act of dismissal, which constitutes substantive
due process, and the legality of the manner of dismissal which constitutes procedural due
process.
As to substantive due process, the Court finds that respondent company's loss of trust and
confidence arising from petitioner's smuggling out of the scrap iron, compounded by his past
acts of unauthorized selling cartons belonging to respondent company, constituted just
cause for terminating his services.
Petitioner, a driver assigned with a specific vehicle, was entrusted with the transportation of
respondent company's goods and property, and consequently with its handling and
protection, hence, even if he did not occupy a managerial position, he can be said to be
holding a position of responsibility. As to his act — principal ground for his dismissal — his
attempt to smuggle out the scrap iron belonging to respondent company, the same is
undoubtedly work-related.
2.
The Petitioner was given due process.
Procedural due process has been defined as giving an opportunity to be heard before
judgment is rendered. Petitioner was given the opportunity to explain his side when he was
informed of the charge against him and required to submit his written explanation with
which he complied. There is no violation of due process even if no hearing was conducted,
where the party was given a chance to explain his side of the controversy. The right to
counsel and the assistance of one in investigations involving termination cases is neither
indispensable nor mandatory, except when the employee himself requests for one or that he
manifests that he wants a formal hearing on the charges against him. In petitioner's case,
there is no showing that he requested for a formal hearing to be conducted or that he be
assisted by counsel.
Hence, the petition was denied.

APACIBLE VS. MUTIMED INDUSTRIES INC.

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G.R. NO. 178903. MAY 30, 2011
Facts:
Petitioner Juliet Apacible was the company’s Assistant Area Sales Manager for Cebu
Operations when she was separated from service.
On 2003, Petitioner was informed that she will be transferred to the company's main office in
Pasig City on account of the ongoing reorganization. At the same time, she was placed under
investigation for the delayed released of BCRs (cash budget for customer representation in
sealed envelopes which are given to loyal clients). In her written explanation, petitioner,
admitting that the delay constituted a violation of company policies, averred that she forgot
to endorse the BCRs because she was thinking about her impending transfer; and that she
did not misappropriate the money as she had already released the BCRs. Finding that the
delay in releasing the BCRs amounted to loss of trust and confidence, petitioner was given
the option to resign. She thereupon reported to the head office in Pasig City. In the meeting
there, she was given the options of resignation, termination, availment of an early
retirement package, or transfer to Pasig City. Without availing of any option, petitioner took a
leave of absence.
Petitioner, through counsel, inform the company that the meeting that took place was
"illegal," "insensitive," "inhumane" and petitioner's dismissals a "unilateral arrangement and
ruthless display of power." In the same letter, her counsel demanded payment of separation
pay and stated that he had advised petitioner to remain in her current position in Cebu.
The respondent company then sent petitioner a memorandum-directive for her to
immediately report to the head office in Pasig City and to return the company vehicle
assigned to her to the Cebu Office within 24 hours. Petitioner did not heed the directive,
however. She instead filed an application for sick leave.
By Memorandum, respondent reiterated its directive to petitioner, but her counsel sent
another letter to the company, faulting her for pressuring petitioner to resign and reiterating
the demand for separation pay. Again counsel stated that he had advised petitioner to
remain in Cebu.
Petitioner then requested that she be given her daily work assignment in Cebu, which
request was denied by the respondent. Later on, petitioner was given a show cause notice
for her to explain in writing why she should not be sanctioned for insubordination for failure
to comply with the transfer order.
Again, petitioner, through counsel, wrote respondent company, maintaining that she was
"not transferring to Manila" and that if the company "want[ed] petitioner out of the
company," separation pay must be paid.
By letter to the petitioner’s counsel, respondent company denied having pressured
petitioner as it stressed that the transfer was based on business demands and did not entail
a demotion in rank nor diminution of benefits.
Respondent company then sent petitioner a notice of termination for insubordination,
prompting petitioner to file a complaint for illegal dismissal, non-payment of overtime pay,
13th month pay, service incentive leave pay, separation pay, damages and attorney's fees
before the Labor Arbiter.
The Labor Arbiter dismissed petitioner's complaint, ruling that she was dismissed for just
cause, i.e., fraud or loss or trust and confidence under Article 282 (a) and (c) of the Labor
Code.
On appeal, the National Labor Relations Commission (NLRC), affirmed the Labor Arbiter's
decision but on a different ground — petitioner's refusal to obey the transfer orders which
amounted to insubordination. The NLRC, however, granted petitioner separation pay by way
of financial assistance, 13th month pay, and an amount representing salary for five unpaid
days.
The Court of Appeals granted respondent company's appeal by modifying the NLRC
Decision. It ruled that petitioner was not entitled to separation pay because, contrary to the
NLRC's finding, she "lacked good faith." It noted that petitioner, from the start, knew and
accepted the company policy on transfers whenever so required, and could not thus refuse

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"another valid reassignment by treating it as an imposition and burden."
The appellate court further held that as an Assistant Area Sales Manager, petitioner was
expected to "show more exacting work ethics, a higher degree of loyalty and respect as
opposed to her subordinate employees," yet she "openly and continually defied" the transfer
orders; and that her belligerent attitude became even more pronounced when her counsel
sent several insulting and threatening letters to respondent company and its officers.
The appellate court went on to find that petitioner's acts were "highly insolent, impertinent
and lacking in good faith," hence, not entitled to separation pay by way of financial
assistance.
Issue: WON petitioner is entitled separation pay by way of financial assistance.
Ruling:
The petition fails.
As found by the Labor Arbiter, the NLRC and the appellate court, petitioner was justly
dismissed from employment.
The law is clear. Separation pay is only warranted when the cause for termination is not
attributable to the employee's fault such as those provided in Articles 283 and 284 of the
Labor Code, as well as in cases of illegal dismissal in which reinstatement is no longer
feasible. It is not allowed when an employee is dismissed for just cause, such as serious
misconduct. In clear and unmistakable language, it has been held that the award of financial
assistance shall not be given to validly terminated employees, whose offenses are iniquitous
or reflective of some depravity in their moral character. When the employee commits an act
of dishonesty, depravity, or iniquity, the grant of financial assistance is misplaced
compassion.
Petitioner was, it bears reiteration, dismissed for willfully disobeying the lawful order of her
employer to transfer from Cebu to Pasig City. As correctly noted by the appellate court,
petitioner knew and accepted respondent company's policy on transfers when she was hired
and was in fact even transferred many times from one area of operations to another —
Bacolod City, Iloilo City and Cebu.
The act of the Petitioner constitutes serious misconduct or willful disobedience. Willful
disobedience of the employer's lawful orders, as a just cause for dismissal of an employee,
envisages 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.
Clearly, petitioner's adamant refusal to transfer, coupled with her failure to heed the order
for her return the company vehicle assigned to her and, more importantly, allowing her
counsel to write letters couched in harsh language to her superiors unquestionably show
that she was guilty of insubordination, hence, not entitled to the award of separation pay.

BARROGA V. DATA CENTER COLLEGE OF THE PHILIPPINES
G.R. NO. 174158. JUNE 27, 2011
Facts:
Petitioner was employed as an Instructor in Data Center College Laoag City branch in Ilocos
Norte. A Memorandum was issued by the respondent which transferred him to University of
Northern Philippines (UNP) in Vigan, Ilocos Sur where the school had a tie-up program.
Petitioner was informed that he would be receiving, in addition to his monthly salary, an
allowance for board and lodging during his stint as instructor in UNP-Vigan. He was recalled
to Laoag campus afterwards. Again, petitioner received a Memorandum transferring him to
Data Center College Bangued, Abra branch as Head for Education/Instructor due to an
urgent need for an experienced officer and computer instructor thereat.

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However, petitioner declined to accept his transfer to Abra citing among others, the absence
of additional remuneration to defray expenses for board and lodging which constitutes
implicit diminution of his salary. Petitioner filed a Complaint for constructive dismissal
against respondents. Petitioner alleged that his proposed transfer to Abra constitutes a
demotion in rank and diminution in pay and would cause personal inconvenience and
hardship.
For their part, respondents claimed that they were merely exercising their management
prerogative to transfer employees for the purpose of advancing the school's interests. They
argued that petitioner's refusal to be transferred to Abra constitutes insubordination. They
claimed that petitioner's appointment as instructor carries a proviso of possible reassignments to any branch or tie-up schools as the school's necessity demands. Head for
Education in Laoag branch was merely temporary and that he would still occupy his original
plantilla item as instructor at his proposed assignment in Abra branch.
The Labor Arbiter rendered a Decision dismissing the Complaint for lack of merit. The Labor
Arbiter ruled that there was no demotion in rank as petitioner's original appointment as
instructor conferred upon respondents the right to transfer him to any of the school's
branches and that petitioner's designation as Head for Education can be withdrawn anytime
since he held such administrative position in a non-permanent capacity.
The NLRC affirmed the findings of the Labor Arbiter that there was no constructive dismissal.
It ruled that the management decision to transfer petitioner was well within the rights of
respondents in consonance with petitioner's contract of employment and which was not
sufficiently shown to have been exercised arbitrarily by respondents.
The CA dismissed the petition because of the non-compliance of certain procedural
requirements.
Issue: WON the transfer of the petitioner was tantamount to constructive dismissal.
Ruling:
Petitioner's transfer was not tantamount to constructive dismissal.
Constructive dismissal is quitting because continued employment is rendered impossible,
unreasonable or unlikely, or because of a demotion in rank or a diminution of pay. It exists
when there is a clear act of discrimination, insensibility or disdain by an employer which
becomes unbearable for the employee to continue his employment.
Petitioner was originally appointed as instructor and was given additional administrative
functions as Head for Education during his stint in Laoag branch. He did not deny having
been designated as Head for Education in a temporary capacity for which he cannot invoke
any tenurial security. Hence, being temporary in character, such designation is terminable at
the pleasure of respondents who made such appointment. It is management prerogative for
employers to transfer employees on just and valid grounds such as genuine business
necessity.
The Court agrees with the Labor Arbiter that there was no violation of the prohibition on
diminution of benefits. Indeed, any benefit and perks being enjoyed by employees cannot be
reduced and discontinued; otherwise, the constitutional mandate to afford full protection to
labor shall be offended. But the rule against diminution of benefits is applicable only if the
grant or benefit is founded on an express policy or has ripened into a practice over a long
period which is consistent and deliberate.
Petitioner failed to present any other evidence that respondents committed to provide the
additional allowance or that they were consistently granting such benefit as to have ripened
into a practice which cannot be peremptorily withdrawn. Moreover, there is no conclusive
proof that petitioner's basic salary will be reduced as it was not shown that such allowance is
part of petitioner's basic salary. Hence, there will be no violation of the rule against
diminution of pay enunciated under Article 100 of the Labor Code.

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LOPEZ VS KEPPEL BANK PHILIPPINES
G.R. NO. 176800, SEPTEMBER 05, 2011
Facts:
PETITIONER was the branch manager of Keppel Bank Philippines, Inc. in Iloilo City. InAugust
2003, respondent specifically instructed him not to proceed with Hertz Exclusive Cars, Inc.’s
loan application because of the negative credit rating issued by the bank’s credit committee.
This, notwithstanding, Lopez processed the loan. He was dismissed from the service.
Issue: Was the dismissal justified?
Ruling:
Yes. Lopez’s good intentions, assuming them to be true, are beside the point because
ultimately, what comes out is his defiance of a direct order of the bank on a matter of
business judgment. The right of an employer to freely select or discharge his employee is a
recognized prerogative of management; an employer cannot be compelled to continue
employing one who has been guilty of acts inimical to its interests. When this happens, the
employer can dismiss the employee for loss of confidence. At the same time, loss of
confidence as a just cause of dismissal was never intended to provide employers with a
blank check for terminating employment. Loss of confidence should ideally apply only (1) to
cases involving employees occupying positions of trust and confidence, or (2)to situations
where the employee is routinely charged with the care and custody of the employer’s money
or property. To the first class belong managerial employees, i.e., those vested with the
powers and prerogatives to lay down management policies and/or to hire, transfer, suspend,
lay-off, recall, discharge, assign or discipline employees, or effectively recommend such
managerial actions. To the second class belong cashiers, auditors, property custodians, or
those who, in the normal and routine exercise of their functions, regularly handle significant
amounts of money or property. As branch manager, Lopez clearly occupies a "position of
trust." His hold on his position and his stay in the service depend on the employer's trust
and confidence in him and on his managerial services.[27] According to the bank, Lopez
betrayed this trust and confidence when he issued the subject POs without authority and
despite the express directive to put the client's application on hold. In response, Lopez
insists that he had sufficient authority to act as he did, as this authority is inherent in his
position as bank manager. He points to his record in the past when he issued POs which
were honored and paid by the bank and which constituted the arbiter's "overwhelming
evidence"[28] in support of the finding that "complainant's dismissal from work was without
just cause, hence, illegal."
The due process issue
As the NLRC and the CA did, we find Lopez to have been afforded due process when he was
dismissed. He was given the required notices. More importantly, he was actually given the
opportunity to be heard; when he moved for reconsideration of the bank's decision to
terminate his employment, it scheduled a hearing where he appeared together with his
lawyer and a military man. This was an opportunity to be heard that the law recognizes.

ST. PAUL COLLEGE QUEZON CITY VS. ANCHETA II
G.R. NO. 169905 SEPT. 7, 2011
Facts:
RESPONDENT Remigio Michael was hired by the petitioner St. Paul College Quezon City
(SPCQC) as a teacher in the General Education Department, with a probationary rank, in the
school year (SY) 1996-1997. This was renewed in the following SY 1997-1998. His wife,

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respondent Cynthia, was hired by the same school as a part-time teacher of the Mass
Communication Department in the second semester of SY 1996-1997 and her appointment
was renewed for SY 1997-1998.
In response to respondent spouses’ request for renewal of contract, petitioner SPCQC
through Sr. Bernadete Racadio sent each of them letters both dated March 9, 1998,
informing them that the school was extending to them new contracts for SY 1998-1999.
On April 30, 1998, Sr. Racadio endorsed the immediate termination of the teaching services
of respondent spouses for failure to comply with enumerated departmental and instructional
policies of SPCQC. On May 14, 1998, the spouses received their letters of termination.
Both the labor arbiter and the National Labor Relations Commission (NLRC) dismissed the
respondents’ complaint for illegal dismissal. The Court of Appeals (CA) granted their petition
for certiorari and reversed the decisions of the labor arbiter and the NLRC. Did the CA err?
Ruling:
Yes.
The common practice is for the employer and the teacher to enter into a contract, effective
for one school year. At the end of the school year, the employer has the option not to renew
the contract, particularly considering the teacher’s performance.
If the contract is not renewed, the employment relationship terminates. If the contract is
renewed, usually for another school year, the probationary employment continues. Again, at
the end of that period, the parties may opt to renew or not to renew the contract. If
renewed, this second renewal of the contract for another school year would then be the last
year – since it would be the third school year – of probationary employment. At the end of
this third year, the employer may now decide whether to extend a permanent appointment
to the employee, primarily on the basis of the employee having met the reasonable
standards of competence and efficiency set by the employer. For the entire duration of this
three-year period, the teacher remains under probation. Upon the expiration of his contract
of employment, being simply on probation, he cannot automatically claim security of tenure
and compel the employer to renew his employment contract.
xxx
It is important that the contract of probationary employment specify the period or term of its
effectivity. The failure to stipulate its precise duration could lead to the inference that the
contract is binding for the full three-year probationary period. Therefore, the letters sent by
petitioner Sr. Racadio, which were void of any specifics cannot be considered as contracts.
The closest they can resemble to are that of informal correspondence among the said
individuals. As such, petitioner school has the right not to renew the contracts of the
respondents, the old ones having been expired at the end of their terms. (St. Paul College
Quezon City, et. al. vs. Remigio Michael A. Ancheta II, G.R. No. 169905, Sept. 7, 2011).

JUMUAD VS. HI-FLYER FOOD
G.R. NO. 187887, SEPT. 7, 2011
Ruling:
Jumuad was found to have willfully breached her duties as to be unworthy of the trust and
confidence of Hi-Flyer. First, Jumuad was a managerial employee; she executed management
policies and had the power to discipline the employees of KFC branches in her area. She
recommended actions on employees to the head office. According to the Supreme Court,
based on established facts, the mere existence of the grounds for the loss of trust and
confidence justifies petitioner’s dismissal. In the present case, the CER’s reports of Hi-Flyer
show that there were anomalies committed in the KFC branches managed by Jumuad. On
the principle ofrespondeat superior or command responsibility alone, Jumuad may be held
liable for negligence in the performance of her managerial duties. She may not have been

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directly involved in causing the cash shortages in KFC-Bohol, but her involvement in not
performing her duty monitoring and supporting the day to day operations of the branches
and ensure that all the facilities and equipment at the restaurant were properly maintained
and serviced, could have prevented the whole debacle from occurring.Pamela Florentina P.
Jumuad vs. Hi-Flyer Food, Inc. and/or Jesus R.
Nissan Mortor Phils vs. Angelo
Ruling:
Neglect of duty, to be a ground for dismissal, must be both gross and habitual. In this case,
Respondent’s repeated failure to turn over his task of preparing the payroll of the
petitioner’s employees to someone capable of performing the vital tasks which he could not
effectively perform or undertake because of his heart ailment or condition constitutes gross
neglect. However, although the dismissal was legal, respondent was still held to be entitled
to a separation pay as a measure of compassionate justice, considering his length of service
and his poor physical condition which was one of the reasons he filed a leave of absence. As
a general rule, an employee who has been dismissed for any of the just causes enumerated
under Article 282 of the Labor Code is not entitled to separation pay. By way of exception,
however, the grant of separation pay or some other financial assistance may be allowed to
an employee dismissed for just causes on the basis of equity.

PNB VS. PADAO
G.R. NO. 180849, NOVEMBER 16, 2011
Facts:
Padao was a credit investigator at PNB, Dipolog City branch. Sometime in 1994, PNB
became embroiled in a scandal involving "behest loans." The questionable loans were
reportedly being extended to select bank clients that the collateral provided in numerous
loan accommodations were grossly over-appraised. The credit standing of the loan
applicants was also fabricated, allowing them to obtain larger loan portfolios from PNB.
These borrowers eventually defaulted on the payment of their loans, causing PNB to suffer
millions in losses.
Padao was administratively charged. After due investigation, PNB found Padao guilty of gross
and habitual neglect of duty and ordered him dismissed from the bank.
Held:
Dismissal; gross and habitual neglect of duties. Gross negligence connotes want of care in
the performance of one’s duties, while habitual neglect implies repeated failure to perform
one’s duties for a period of time, depending on the circumstances. In the case at bench,
Padao was accused of having presented a fraudulently positive evaluation of the business,
credit standing/rating and financial capability of Reynaldo and Luzvilla Baluma and eleven
other loan applicants. Some businesses were eventually found not to exist at all, while in
other transactions, the financial status of the borrowers simply could not support the grant
of loans in the approved amounts. Moreover, Padao over-appraised the collateral of spouses
Gardito and Alma Ajero, and that of spouses Ihaba and Rolly Pango. Padao’s repeated failure
to discharge his duties as a credit investigator of the bank amounted to gross and habitual
neglect of duties under Article 282 (b) of the Labor Code. He not only failed to perform what
he was employed to do, but also did so repetitively and habitually, causing millions of pesos
in damage to PNB. Thus, PNB acted within the bounds of the law by meting out the penalty
of dismissal, which it deemed appropriate given the circumstances.
That there is no proof that Padao derived any benefit from the scheme is immaterial. What
is crucial is that his gross and habitual negligence caused great damage to his employer.
Padao was aware that there was something irregular about the practices being implemented

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by his superiors, but he went along with, became part of, and participated in the scheme.
Dismissed employees; separation pay. Padao is not entitled to financial assistance. The rule
regarding separation pay as a measure of social justice is that it shall be paid only in those
instances where the employee is validly dismissed for causes other than serious misconduct,
willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust,
commission of a crime against the employer or his family, or those reflecting on his moral
character. In this case, Padao was guilty of gross and habitual neglect of duties.
Termination of employment; when company tolerated violation of company policy. The CA
was correct in stating that when the violation of company policy or breach of company rules
and regulations is tolerated by management, it cannot serve as a basis for termination. This
principle, however, only applies when the breach or violation is one which neither amounts
to nor involves fraud or illegal activities. In such a case, one cannot evade liability or
culpability based on obedience to the corporate chain of command. In this case, Padao, in
affixing his signature on the fraudulent reports, attested to the falsehoods contained therein.
Moreover, by doing so, he repeatedly failed to perform his duties as a credit investigator.
Thus, the termination of his employment is justified.

TAMSON’S ENTERPRISES VS. CA
G.R. NO. 192881, NOVEMBER 16, 2011
Facts:
On September 1, 2006, Rosemarie L. Sy was hired by Tamson's as Assistant to the President.
Despite the title, she did not act as such because, per instruction of the company President,
she was directed to act as payroll officer, though she actually worked as a payroll clerk. On
February 24, 2007, four days before she completed her sixth month of working in Tamson's,
Sy was informed that her services would be terminated due to inefficiency. She was asked
to sign a letter of resignation and quitclaim. She was told not to report for work anymore
because her services were no longer needed.
During her pre-employment interview, Lee had nice comments about her good work
experience and educational background. She was assured of a long-term employment with
benefits. Throughout her employment, she earnestly performed her duties, had a perfect
attendance record, worked even during brownouts and typhoons, and would often work
overtime just to finish her work.
Ruling:
Probationary employment; security of tenure. It is settled that even if probationary
employees do not enjoy permanent status, they are accorded the constitutional protection of
security of tenure. This means they may only be terminated for a just cause or when they
otherwise fail to qualify as regular employees in accordance with reasonable standards
made known to them by the employer at the time of their engagement. In this case, the
justification given by the petitioners for Sy’s dismissal was her alleged failure to qualify by
the company’s standard. Other than the general allegation that said standards were made
known to her at the time of her employment, however, no evidence, documentary or
otherwise, was presented to substantiate the same. Neither was there any performance
evaluation presented to prove that indeed hers was unsatisfactory. Hence, for failure of the
petitioners to support their claim of unsatisfactory performance by Sy, the SC held that Sy’s
employment was unjustly terminated to prevent her from acquiring a regular status in
circumvention of the law on security of tenure.
Probationary employment; termination. Even on the assumption that Sy indeed failed to
meet the standards set by the petitioner-employer and made known to the former at the
time of her engagement, still, the termination was flawed for failure to give the required
notice to Sy. Section 2, Rule I, Book VI of the Implementing Rules provides that: “If the
termination is brought about by the completion of a contract or phase thereof, or by failure

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of an employee to meet the standards of the employer in the case of probationary
employment, it shall be sufficient that a written notice is served the employee, within a
reasonable time from the effective date of termination.”

CONCEPCION VS. MINEX IMPORT
G.R. NO. 153569, JANUARY 24, 2012
Facts:
Respondent Minex Import-Export Corporation is engaged in the retail of semi-precious
stones, selling them in kiosks or stalls installed in various shopping centers within Metro
Manila. It employed petitioner Concepcion initially as a salesgirl and then made her a
supervisor. One day, petitioner determined their total for three days to be P50,912.00. The
next day, petitioner phoned the assistant manager to report that the said amount was
missing, explaining how she and her salesgirls had placed the wrapped amount at the
bottom of the cabinet the night before, and how she had found upon reporting to work that
morning that the contents of the cabinet were in disarray and the money already missing.
While petitioner was giving a detailed statement on the theft to the security investigator of
the shopping center, her superiors arrived with a policeman who immediately placed her
under arrest and brought her to the police station where she was investigated and detained
for a day. Petitioner complained against the respondents for illegal dismissal in the
Department of Labor and Employment. Minex filed a complaint for qualified theft against
the petitioner in the Office of the City Prosecutor in Manila.
Ruling:
Employee dismissal; just cause; loss of confidence. To dismiss an employee, the law requires
the existence of a just and valid cause. Article 282 of the Labor Code enumerates the just
causes for termination by the employer. It is unfair to require an employer to first be morally
certain of the guilt of the employee by awaiting a conviction before terminating him when
there is already sufficient showing of the wrongdoing. Requiring that certainty may prove too
late for the employer, whose loss may potentially be beyond repair. In the present case, no
less than the DOJ Secretary found probable cause for qualified theft against Concepcion.
That finding was enough to justify her termination for loss of confidence.
Indeed, the employer is not expected to be as strict and rigorous as a judge in a criminal
trial in weighing all the probabilities of guilt before terminating the employee. Unlike a
criminal case, which necessitates a moral certainty of guilt due to the loss of the personal
liberty of the accused being the issue, a case concerning an employee suspected of
wrongdoing leads only to his termination as a consequence. The quantum of proof required
for convicting an accused is thus higher — proof of guilt beyond reasonable doubt — than
the quantum prescribed for dismissing an employee — substantial evidence.
Employee dismissal; due process. Even if there is a just or valid cause for terminating an
employee, it is necessary to comply with the requirements of due process prior to the
termination. The petitioner plainly demonstrated how quickly and summarily her dismissal
was carried out without first requiring her to explain anything in her defense as demanded
under Section 2 (d) of Rule I of the Implementing Rules of Book VI of the Labor Code.
Instead, the respondents forthwith had her arrested and investigated by the police
authorities for qualified theft. This, we think, was a denial of her right to due process of law,
consisting in the opportunity to be heard and to defend herself. In Agabon v. NLRC the Court
said: “Where the dismissal is for a just cause, as in the instant case, the lack of statutory
due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the
employer should indemnify the employee for the violation of his statutory rights, as ruled in
Reta v. National Labor Relations Commission.”

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MORALES VS. HARBOUR CENTRE PORT TERMINAL
G.R. NO. 174208, JANUARY 25, 2012
Facts:
Petitioner Morales was a Division Manager of the Accounting Department of respondent
Harbour Centre Port Terminal, Inc. (HCPTI). Subsequent to HCPTI's transfer to its new offices,
Morales received an inter-office memorandum reassigning him to Operations Cost
Accounting. Morales wrote Singson, HCPTI’s Administration Manager, protesting that his
reassignment was a clear demotion since the position to which he was transferred was not
even included in HCPTI's plantilla. In response to Morales' grievance that he had been
effectively placed on floating status, Singson issued a inter-office memorandum to the effect
that "transfer of employees is a management prerogative." For the whole of the ensuing
month Morales was absent from work and/or tardy. As a consequence, Singson issued to
Morales the following inter-office memoranda: First Warning, Second Warning and a Notice to
Report for Work and Final Warning.
In the meantime, Morales filed a complaint against HCPTI for constructive dismissal. He
alleged that subsequent to its transfer to its new offices, HCPTI had suspended all the
privileges enjoyed by its Managers, Division Chiefs and Section Heads.
HCPTI argued that Morales abandoned his employment and was not constructively
dismissed.
Ruling:
Constructive dismissal; change in position. Constructive dismissal exists where there is
cessation of work because “continued employment is rendered impossible, unreasonable or
unlikely, as an offer involving a demotion in rank or a diminution in pay” and other benefits.
Aptly called a dismissal in disguise of an act amounting to dismissal but made to appear as if
it were not, constructive dismissal may, likewise, exist if an act of clear discrimination,
insensibility, or disdain by an employer becomes so unbearable on the part of the employee
that it could foreclose any choice by him except to forego his continued employment.In
cases of a transfer of an employee, the rule is settled that the employer is charged with the
burden of proving that its conduct and action are for valid and legitimate grounds such as
genuine business necessity and that the transfer is not unreasonable, inconvenient or
prejudicial to the employee. If the employer cannot overcome this burden of proof, the
employee’s transfer shall be tantamount to unlawful constructive dismissal.
Dismissal; abandonment. As a just and valid ground for dismissal, at any rate, abandonment
requires the deliberate, unjustified refusal of the employee to resume his employment,
without any intention of returning. Since an employee like Morales who takes steps to
protest his dismissal cannot logically be said to have abandoned his work, it is a settled
doctrine that the filing of a complaint for illegal dismissal is inconsistent with abandonment
of employment.

MIRANT (PHILIPPINES) CORPORATION VS. SARIO
G.R. NO. 197598. NOVEMBER 21, 2012
Facts:
Respondent Sario worked for the company as procurement officer from March 1998 to
October 2005.
The company issued the 2002 MMD Policies and Procedures Manual (2002 Procurement
Manual) for the guidance of its employees and officers in soliciting bid quotations and
proposals from vendors, suppliers and contractors. Subsequently, this manual was replaced

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by the 2004 Procurement Policies of the Company which was disseminated and which
became effective on Aug. 31, 2004, seminars were conducted and a proficiency examination
was administered and Respondent took the proficiency examination on Sept. 28, 2004.
On September 8, 2005, Sario received a Show Cause Notice from the company, advising him
that based on an internal audit, he was found to have committed the following violations:
1.Non-compliance with the Minimum Bid/Quotation Requirements; 2.Non-compliance with
the Single Tender Justification Requirement; 3.No Evidence of Independent Approval of the
PRF; 4.No Evidence of Authorized Recommendation or Approval of the PO; 5.PO not Awarded
to the lowest Bidder; and 6.No TAS Attached.
Sario was given ten (10) days, or until September 18, 2005, to explain why no disciplinary
action should be taken against him for the violations. He was also notified that an
investigation would be conducted on the matter. He was placed on preventive suspension
pending the investigation. He submitted his written explanation on September 17, 2005.
At the administrative hearing on October 6, 2005, Sario argued that he could not be faulted
for not complying with the 2004 Procurement Manual because it was never properly
disseminated (rolled out) and neither did he take the proficiency examination on the manual.
He admitted, however, that he failed to comply with the procurement procedures laid out in
the manual due to his desire to meet the quota imposed by his supervisors.
On October 25, 2005, Sliman sent Sario a letter informing him of the termination of his
employment for his failure to comply with the standard operating procedures/instructions;
for his serious misconduct or willful disobedience of the lawful orders of the company in
connection with his work; and for his gross and habitual neglect of his duties. The company
found Sario liable for his failure to comply with the 2002 and 2004 Procurement Manuals,
especially his unabated practice of sending Requests for Quotation (RFQs) to suppliers who
have a history of not responding to requests or of not sending quotes. The practice, the
company lamented, resulted in the issuance of purchase orders to the lone bidders.
Issue: WON respondent was illegal dismissed?
Ruling:
Under the law, the burden of proving that the termination of a worker's employment was for
a valid or authorized cause rests on the employer. In this case, the company was able to
prove that Sario's dismissal was for a valid cause. Through his repeated violations of the
company's 2002 and 2004 Procurement Manuals, Sario committed a serious misconduct or
willful disobedience of the lawful directives or orders of his employer, constituting a just
cause for termination of employment.
As the records show, Sario failed to faithfully discharge his duties as procurement officer.
These duties placed him at the early but critical stage of the company's procurement
process. The very first one in the list of his duties at once suggests the heavy responsibility
he had to bear and the sensitiveness of his functions, considering that he had to "[p]erform
the entire purchasing process of a Station's set of materials, parts, equipment, and/or
project[.]" Flowing from this catch-all statement, Sario's activities consisted of (1) receiving
purchase requisition form assignments; (2) identifying the vendors/suppliers to be invited,
setting bid periods and deadlines for bid submission, including the RFQ process —
coordinating critical issues with end-users and preparing the RFQ package, sending RFQs to
vendors and initiating RFQ confirmation status, and resolving commercial issues with
vendors; (3) receiving quotes/bids, reviewing tenders and performing tender analysis
summary when necessary; (4) securing and evaluating justification for single tender
transactions, and coordinating price, payment and delivery terms with vendors; (5)
preparing purchase orders and checking of approval of purchase orders in accordance with
the limits of authority; and (6) coordinating vendor performance evaluation, resolving
disputes between end-users and vendors, and recommending appropriate sanctions for
infractions committed by the vendors. ScaCEH
Over a span of almost one-and-a-half years, from January 2004 to May 2005 (not two years
as the company claims), Sario committed 27 violations of the 2002 and 2004 Procurement

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Manuals in critical areas of the procurement process, in particular, non-compliance with the
minimum bid/quotation requirements, non-compliance with the single tender justification
requirement, failure to provide proof of approval of the purchase requisition form, failure to
provide proof of authorized recommendation of the purchase order, failure to award
purchase order to the lowest bidder, and no tender analysis summary.
Given the critical and sensitive role Sario played in the company's procurement program, we
appreciate why the company has employed all legal means to terminate his services. Sario's
continued employment has become inimical to its business interests which rely critically on
the effectiveness and integrity of its procurement procedure. We can, therefore, also
understand why it had to issue the 2002 and 2004 Procurement Manuals — to ensure that
the procedure is not compromised. To be sure, the company has the prerogative to issue the
2002 and 2004 Procurement Manuals.
As the NLRC aptly noted, "the issuance of the 2002 and 2004 Procurement Manuals was a
reasonable and valid exercise of management prerogative . . . to curb the rampant practice
of some unscrupulous employees to favor some suppliers over the others in the award of
Purchase Orders[.]" "Any employee may be dismissed for violation of a reasonable company
rule or regulation for the conduct of the latter's business[.]"
Sario has to account for his own actions. The circumstance that his recommendations were
approved by his superiors does not erase the fact that he repeatedly violated the 2002 and
2004 Procurement Manuals. He was well aware of his duties and their parameters, based on
the 2002 and 2004 Procurement Manuals. He committed the violations for one-and-a-half
years. These repeated violations can only indicate a willful disobedience to reasonable
company rules and regulations.
Based on the facts, the law and jurisprudence, Sario deserves to be dismissed for willful
disobedience. In Gold City Integrated Port Services, Inc. v. NLRC, the Court stressed that
willful disobedience of an employee contemplates the concurrence of at least two requisites:
the employee's assailed conduct must have been willful or intentional, the willfulness being
characterized by a "wrongful and perverse attitude"; and the order violated must have been
reasonable, lawful and made known to the employee, and must pertain to the duties which
he had been engaged to discharge. We find the two requisites present in this case.
Sario's repeated violations of the company's 2002 and 2004 Procurement Manuals — lawful
orders in themselves as they provide the dos and, necessarily, thedon'ts of a procurement
officer — constitute willful disobedience. He committed the repeated violations because he
knew or was confident that he would not get caught since his actions were being approved,
as he claims, by his superiors, evidencing wrongful or perverse intent.
Sario has become unfit to remain in employment. "The law, in protecting the rights of the
laborer, authorizes neither oppression nor self-destruction of the employer."

MANSION PRINTING VS. BITARA
G.R. NO. 168120, JANUARY 25, 2012
Facts:
Petitioner Mansion Printing Center is engaged in the printing of quality self-adhesive labels
and the like. Respondent Bitara was the company's sole driver tasked to pick-up raw
materials, collect account receivables and deliver the products within the delivery schedules.
Petitioner noted his habitual tardiness and absenteeism.
Petitioner issued several
memoranda to respondent requiring the latter to submit written explanations: first, as to
why no administrative sanction should be imposed on him for his habitual tardiness; and
then several months later, after Bitara’s apology and a failed undertaking to adhere to the
attendance policies, why his services should not be terminated. The last memoranda was
personally handed to him, but the latter, after reading the directive, refused to acknowledge
receipt thereof. He did not submit any explanation and, thereafter, never reported for work.

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As a consequence, Davis Cheng, General Manager, personally served another Memorandum
(Notice of Termination) upon him informing him that the company found him grossly
negligent of his duties, for which reason, his services were terminated. Respondent met with
the management requesting for reconsideration of his termination. However, after hearing
his position, the management decided to implement the last Memorandum. Respondent
filed a complaint for illegal dismissal.
Ruling:
Employee dismissal; gross negligence; habitual neglect. Gross negligence has been defined
as the “want of care in the performance of one’s duties” and habitual neglect has been
defined as “repeated failure to perform one’s duties for a period of time, depending upon the
circumstances.” These are not overly technical terms, which, in the first place, are expressly
sanctioned by the Labor Code of the Philippines, to wit: ART. 282. Termination by employer. –
An employer may terminate an employment for any of the following causes: [xxx](b) Gross
and habitual neglect by the employee of his duties; [xxx] Diosdado Bitara was dismissed
from service due to habitual tardiness and absenteeism, and for having continued
disregarding attendance policies despite his undertaking to report on time. His weekly time
record for the first quarter of the year 2000 revealed that he came late 19 times out of the
47 times he reported for work. He also incurred 19 absences out of the 66 working days
during the quarter. His absences without prior notice and approval from March 11-16, 2000
were considered to be the most serious infraction of all because of its adverse effect on
business operations. The Supreme Court held that even in the absence of a written company
rule defining gross and habitual neglect of duties, Bitara’s omissions qualify as such
warranting his dismissal from the service.
Dismissal; procedural due process. Procedural due process entails compliance with the twonotice rule in dismissing an employee, to wit: (1) the employer must inform the employee of
the specific acts or omissions for which his dismissal is sought; and (2) after the employee
has been given the opportunity to be heard, the employer must inform him of the decision to
terminate his employment.
In Bughaw v. Treasure Island Industrial Corporation, this Court, in verifying the veracity of
the allegation that respondent refused to receive the Notice of Termination, essentially
looked for the following: (1) affidavit of service stating the reason for failure to serve the
notice upon the recipient; and (2) a notation to that effect, which shall be written on the
notice itself. We are convinced that the notices have been validly served.

MANILA ELECTRIC COMPANY VS. BELTRAN
G.R. NO. 173774. JANUARY 30, 2012
Facts:
Petitioner, the respondent’s employer, dismissed the latter on the ground of breach of trust
and confidence for allegedly having withheld and misappropriated for her personal purpose
or benefit an electric bill payment of a Meralco customer.
Respondent filed for illegal dismissal against petitioner and argued that “she had no
intention to withhold company funds. Besides, it was not her customary duty to collect and
remit payments from customers. She claimed good faith, believing that her acceptance of
Chang's payment is considered goodwill in favor of both MERALCO and its customer. If at all,
her only violation was a simple delay in remitting the payment, which caused no
considerable harm to the company. Further, her nine years of unblemished service to the
company should be taken into account such that the penalty of dismissal is not a
commensurate penalty for the unintentional act committed.”
MERALCO, on the other hand, maintained that under company policy, Beltran had the duty

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to remit payment for electric bills by any customer on the day the same was received. It
opined that if indeed the money was kept intact inside the drawer and was not put to
personal use, Beltran could have easily turned over the same when Garcia instructed her to
do so on January 7, 1997. However, Beltran failed to remit the money on said date and even
on the following day, January 8, when she reported for work. Worse, in the two succeeding
days, she went on leave. Thus, there was a clear sign of misappropriation of company funds,
considered a serious misconduct and punishable by dismissal from the service. Further,
Beltran's reason for her failure to perform such obligation on account of family problems
deserves scant consideration. MERALCO insisted that Beltran's act renders her unworthy of
the trust and confidence demanded of her position.
LA ruled for respondent stating that the penalty of dismissal as not commensurate to the
degree of infraction committed as there was no adequate proof of misappropriation on the
part of Beltran and that it was unintentional and same cannot serve as sufficient basis to
conclude that there was misappropriation of company funds. While the Labor Arbiter
commiserated with Beltran's circumstances and took into account her long and untainted
service, he nonetheless imposed disciplinary action in the form of forfeiture of salary for her
neglect in remitting the funds at once.
NLRC reversed and found that Beltran withheld company funds by failing to remit it for
almost four months. It disregarded Beltran's assertion of family problems as the same
cannot be used as an excuse for committing a serious misconduct in violation of the trust
reposed on her as a Senior Branch Clerk. The NLRC was convinced that Beltran used the
money for her personal needs since her act of taking a leave of absence right after her
confrontation with Garcia suggested that she needed time to produce it. The NLRC thus
ruled that MERALCO validly dismissed Beltran from the service in the exercise of its inherent
right to discipline its employees. It likewise denied Beltran’s MR.
CA affirmed LA.
Issue: WON CA SERIOUSLY ERRED IN ORDERING THE REINSTATEMENT OF [BELTRAN]
DESPITE THE UNDISPUTED FINDING THAT SHE IS GUILTY OF WITHHOLDING COMPANY FUNDS.
Held:
Court finds for respondent, affirms CA.
For loss of trust and confidence to be a valid ground for dismissal, it must be based on a
willful breach of trust and founded on clearly established facts. A breach is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an
act done carelessly, thoughtlessly, heedlessly or inadvertently. In addition, loss of trust and
confidence must rest on substantial grounds and not on the employer's arbitrariness, whims,
caprices or suspicion.
In the case at bench, Beltran attributed her delay in turning over Chang's payment to her
difficult family situation as she and her husband were having marital problems and her child
was suffering from an illness. Admittedly, she was reminded of Chang's payment by her
supervisor on January 7, 1997 but denied having been ordered to remit the money on that
day. She then reasoned that her continued delay was caused by an inevitable need to take a
leave of absence for her to attend to the needs of her child who was suffering from asthma.
It should be emphasized at this point that the burden of proving the legality of an
employee's dismissal lies with the employer. 26 "Unsubstantiated suspicions, accusations,
and conclusions of employers do not provide legal justification for dismissing employees." 27
"[M]ere conjectures cannot work to deprive employees of their means of livelihood." 28 To
begin with, MERALCO cannot claim or conclude that Beltran misappropriated the money
based on mere suspicion. The NLRC thus erred in concluding that Beltran made use of the

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money from the mere fact that she took a leave of absence after having been reminded of
the unremitted funds. And even if Beltran delayed handing over the funds to the company,
MERALCO still has the burden of proof to show clearly that such act of negligence is
sufficient to justify termination from employment. Moreover, we find that Beltran's delay
does not clearly and convincingly establish a willful breach on her part, that is, which is done
"intentionally, knowingly and purposely, without any justifiable excuse." True, the reasons
Beltran proffered for her delay in remitting the cash payment are mere allegations without
any concrete proof. Nonetheless, we emphasize that as the employer, the burden still lies on
MERALCO to provide clear and convincing facts upon which the alleged loss of confidence is
to be made to rest.
Undoubtedly, Beltran was remiss in her duties for her failure to immediately turn over
Chang's payment to the company. Such negligence, however, is not sufficient to warrant
separation from employment. To justify removal from service, the negligence should be
gross and habitual. 29 "Gross negligence . . . is the want of even slight care, acting or
omitting to act in a situation where there is duty to act, not inadvertently but willfully and
intentionally, with a conscious indifference to consequences insofar as other persons may be
affected." Habitual neglect, on the other hand, connotes repeated failure to perform one's
duties for a period of time, depending upon the circumstances. 31 No concrete evidence was
presented by MERALCO to show that Beltran's delay in remitting the funds was done
intentionally. Neither was it shown that same is willful, unlawful and felonious contrary to
MERALCO's finding as stated in the letter of termination it sent to Beltran. 32 Surely,
Beltran's single and isolated act of negligence cannot justify her dismissal from service.
Moreover, Beltran's simple negligence did not result in any loss. From the time she received
the payment on September 28, 1996 until January 7, 1997 when she was apprised by her
supervisor about Chang's payment, no harm or damage to the company or to its customers
attributable to Beltran's negligence was alleged by MERALCO. Also, from the time she was
apprised of the non-remittance by her superior on January 7, 1997, until the turn-over of the
amount on January 13, 1997, no such harm or damage was ever claimed by MERALCO.
Under the circumstances, MERALCO's sanction of dismissal will not be commensurate to
Beltran's inadvertence not only because there was no clear showing of bad faith and malice
but also in consideration of her untainted record of long and dedicated service to MERALCO.
33 In the similar case of Philippine Long Distance Telephone Company v. Berbano, Jr., 34we
held that:
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 [her]
very livelihood.
Where a penalty less punitive would suffice, whatever missteps may be committed by an
employee ought not to be visited with a consequence so severe such as dismissal from
employment. 35 Hence, we find no reversible error or any grave abuse of discretion on the
part of the CA in ordering Beltran's reinstatement without backwages. The forfeiture of her
salary is an equitable punishment for the simple negligence committed.

BANK OF LUBAO, INC. VS. MANABAT
G.R. NO. 188722. FEBRUARY 1, 2012
Facts:
Respondent which was a market collector and subsequently assigned as an encoder of the
Bank of Lubao's Sta. Cruz Extension Office, was terminated from his employment by reason

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of serious misconduct tantamount to willful breach of trust and was likewise charged with
criminal complaints for Qualified Theft with a certain Lingad. Respondent's primary duty is to
encode the clients' deposits on the bank's computer after the same are received by Lingad.
Petitioner after investigation had findings of discrepancies during the audit that showed a
misappropriation of funds in the amount of P 3,000,000.00, hence the dismissal from
service.
Respondent filed a Complaint 3 for illegal dismissal with the Regional Arbitration Branch of
the National Labor Relations Commission (NLRC) in San Fernando City, Pampanga. In the
said complaint, the respondent, to bolster his claim that there was no valid ground for his
dismissal, averred that the charge against him for qualified theft was dismissed for lack of
sufficient basis to conclude that he conspired with Lingad. The respondent sought an award
for separation pay, full backwages, 13th month pay for 2004 and moral and exemplary
damages.
For its part, the petitioner insists that the dismissal of the respondent is justified, asserting
the February 14, 2006 Audit Report which confirmed the participation of the respondent in
the alleged misappropriations. Likewise, the petitioner asserted that the dismissal of the
qualified theft charge against the respondent is immaterial to the validity of the ground for
the latter's dismissal.
LA sustained respondent's claim of illegal dismissal thus ordering the petitioner to reinstate
the respondent to his former position and awarding the latter backwages in the amount of
P111,960.00 and 13th month pay in the amount of P6,220.00. The LA opined that the
petitioner failed to adduce substantial evidence that there was a valid ground for the
respondent's dismissal.
NLRC affirmed decision of LA: “it was sufficiently established that only Lingad was the one
responsible for the said misappropriations. Further, the NLRC asserted that the February 14,
2006 and April 30, 2007 audit reports presented by the petitioner could not be given
evidentiary weight as the same were executed after the respondent had already been
dismissed.” NLRC denied MR of petitioner.
CA denied petitioner’s Certiorari, CA agreed with the LA and the NLRC that the petitioner
failed to establish by substantial evidence that there was indeed a valid ground for the
respondent's dismissal. Nevertheless, the CA held that the petitioner should pay the
respondent separation pay since the latter did not pray for reinstatement before the LA and
that the same would be in the best interest of the parties considering the animosity and
antagonism that exist between them.
Issues:
WON the CA erred in ordering the petitioner to pay the respondent separation pay in lieu of
reinstatement;
WON the respondent is entitled to payment of backwages.
Ruling:
Court finds for respondent, upheld unanimous decisions of LA, NLRC and CA.
Doctrine of Strained Relations. 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. 17

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Under the doctrine of strained relations, the payment of separation pay is considered an
acceptable alternative to reinstatement when the latter option is no longer desirable or
viable. On one hand, such payment liberates the employee from what could be a highly
oppressive work environment. On the other hand, it releases the employer from the grossly
unpalatable obligation of maintaining in its employ a worker it could no longer trust. 18
In such cases, 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.
Here, we agree with the CA that the relations between the parties had been already strained
thereby justifying the grant of separation pay in lieu of reinstatement in favor of the
respondent.
First, it cannot be gainsaid that the petitioner's reinstatement to his former position would
only serve to intensify the atmosphere of antipathy and antagonism between the parties.
Undoubtedly, the petitioner's filing of various criminal complaints against the respondent for
qualified theft and the subsequent filing by the latter of the complaint for illegal dismissal
against the latter, taken together with the pendency of the instant case for more than six
years, had caused strained relations between the parties.
Second, considering that the respondent's former position as bank encoder involves the
handling of accounts of the depositors of the Bank of Lubao, it would not be equitable on the
part of the petitioner to be ordered to maintain the former in its employ since it may only
inspire vindictiveness on the part of the respondent.
Third, the refusal of the respondent to be re-admitted to work is in itself indicative of the
existence of strained relations between him and the petitioner. In the case of Lagniton, Sr. v.
National Labor Relations Commission, 20 the Court held that the refusal of the dismissed
employee to be re-admitted is constitutive of strained relations:
It appears that relations between the petitioner and the complainants have been so strained
that the complainants are no longer willing to be reinstated. As such reinstatement would
only exacerbate the animosities that have developed between the parties, the public
respondents were correct in ordering instead the grant of separation pay to the dismissed
employees in the interest of industrial peace. 21
Time and again, this Court has recognized that strained relations between the employer and
employee is an exception to the rule requiring actual reinstatement for illegally dismissed
employees for the practical reason that the already existing antagonism will only fester and
deteriorate, and will only worsen with possible adverse effects on the parties, if we shall
compel reinstatement; thus, the use of a viable substitute that protects the interests of both
parties while ensuring that the law is respected.
Backwages. The arguments raised by the petitioner with regard to the issue of
backwages, essentially, attacks the factual findings of the CA, the NLRC and the LA. As
stated earlier, subject to well-defined exceptions, factual questions may not be raised in a
petition for review on certiorari under Rule 45 as this Court is not a trier of facts. The
petitioner failed to assert any circumstance which would impel this Court to disregard the
findings of fact of the lower tribunals on the propriety of the award of backwages in favor of
the respondent.
However, the backwages that should be awarded to the respondent should be modified.
Employees who are illegally dismissed are entitled to full backwages, inclusive of allowances
and other benefits or their monetary equivalent, computed from the time their actual

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compensation was withheld from them up to the time of their actual reinstatement. But if
reinstatement is no longer possible, the backwages shall be computed from the time of their
illegal termination up to the finality of the decision. 23
Thus, when there is an order of reinstatement, the computation of backwages shall be
reckoned from the time of illegal dismissal up to the time that the employee is actually
reinstated to his former position.
Pursuant to the order of reinstatement rendered by the LA, the petitioner sent the
respondent a letter requiring him to report back to work on May 4, 2007. Notwithstanding
the said letter, the respondent opted not to report for work. Thus, it is but fair that the
backwages that should be awarded to the respondent be computed from the time that the
respondent was illegally dismissed until the time when he was required to report for work,
i.e., from September 1, 2005 until May 4, 2007. It is only during the said period that the
respondent is deemed to be entitled to the payment of backwages.
The fact that the CA, in its April 4, 2009 decision, ordered the payment of separation pay in
lieu of the respondent's reinstatement would not entitle the latter to backwages. It bears
stressing that decisions of the CA, unlike that of the LA, are not immediately executory.
Accordingly, the petitioner should only pay the respondent backwages from September 1,
2005, the date when the respondent was illegally dismissed, until May 4, 2007, the date
when the petitioner required the former to report to work.

CANADIAN OPPORTUNITIES UNLIMITED, INC. VS. DALANGIN, JR.
G.R. NO. 172223. FEBRUARY 6, 2012.
Facts:
Respondent was hired as Immigration and Legal Manager of petitioner company. He was
placed on probation for six months. He was to report directly to the Chief Operations Officer,
Annie Llamanzares Abad. His tasks involved principally the review of the clients' applications
for immigration to Canada to ensure that they are in accordance with Canadian and
Philippine laws.
The company terminated Dalangin's employment, declaring him "unfit" and "unqualified" to
continue as Immigration and Legal Manager on the grounds of:
a)
Obstinacy and utter disregard of company policies. Propensity to take prolonged and
extended lunch breaks, shows no interest in familiarizing oneself with the policies and
objectives.
b)
Lack of concern for the company's interest despite having just been employed in the
company. (Declined to attend company sponsored activities, seminars intended to
familiarize company employees with Management objectives and enhancement of company
interest and objectives.)
c)
Showed lack of enthusiasm toward work.
d)
Showed lack of interest in fostering relationship with his co-employees.
Respondent filed a complaint for illegal dismissal with prayer for reinstatement and
backwages, as well as damages (moral and exemplary) and attorney's fees, against
petitioner. He argues that the seminar he was required to attend bears no connection with
his duties and functions and that it is beyond his work hours as stipulated in his employment
contract. Aside from that he posits that he should not be treated similarly with other
employees (required to attend such seminars) as they are differently situated in terms of
positions and duties.

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Through their position paper, 10 the company and its principal officers alleged that at the
time of Dalangin's engagement, he was advised that he was under probation for six months
and his employment could be terminated should he fail to meet the standards to qualify him
as a regular employee. He was informed that he would be evaluated on the basis of the
results of his work; on his attitude towards the company, his work and his co-employees, as
spelled out in his job description. The company argued that since Dalangin failed to qualify
for the position of Immigration and Legal Manager, the company decided to terminate his
services, after duly notifying him of the company's decision and the reason for his
separation.
LA declared Dalangin's dismissal illegal, and awarded him backwages of P75,000.00, moral
damages of P50,000.00 and exemplary damages of P50,000.00, plus 10% attorney's fees.
The labor arbiter found that the charges against Dalangin, which led to his dismissal, were
not established by clear and substantial proof.
NLRC rendered a decision on March 26, 2004 14 granting the appeal, thereby reversing the
labor arbiter's ruling. It found Dalangin's dismissal to be a valid exercise of the company's
management prerogative because Dalangin failed to meet the standards for regular
employment. NLRC denied MR.
CA found for respondent agreeing with LA that he was illegally dismissed. CA found that the
company failed to support, with substantial evidence, its claim that Dalangin failed to meet
the standards to qualify as a regular employee. CA pointed out that the company did not
allow Dalangin to prove that he possessed the qualifications to meet the reasonable
standards for his regular employment; instead, it dismissed Dalangin peremptorily from the
service. It opined that it was quite improbable that the company could fully determine
Dalangin's performance barely one month into his employment. CA denied MR.
Issue: WON respondent as a probationary employee was validly dismissed.
Ruling:
Court finds for petitionerfinding substantial evidence indicating that the company was
justified in terminating Dalangin's employment, however brief it had been.
3.
One month enough to determine respondent’s unfitness, probationary term or period
denotes its purpose but not its length. Dalangin admitted in compulsory arbitration that the
proximate cause for his dismissal was his refusal to attend the company's "Values Formation
Seminar" scheduled for October 27, 2001, a Saturday. He refused to attend the seminar after
he learned that it had no relation to his duties, as he claimed, and that he had to leave at
2:00 p.m. because he wanted to be with his family in the province. When Abad insisted that
he attend the seminar to encourage his co-employees to attend, he stood pat on not
attending, arguing that marked differences exist between their positions and duties, and
insinuating that he did not want to join the other employees. He also questioned the
scheduled 2:00 p.m. seminars on Saturdays as they were not supposed to be doing a
company activity beyond 2:00 p.m. He considers 2:00 p.m. as the close of working hours on
Saturdays; thus, holding them beyond 2:00 p.m. would be in violation of the law.
The "Values Formation Seminar" incident is an eye-opener on the kind of person and
employee Dalangin was. His refusal to attend the seminar brings into focus and validates
what was wrong with him, as Abad narrated in her affidavit 36 and as reflected in the
termination of employment memorandum. 37 It highlights his lack of interest in familiarizing
himself with the company's objectives and policies. Significantly, the seminar involved
acquainting and updating the employees with the company's policies and objectives. Had he
attended the seminar, Dalangin could have broadened his awareness of the company's
policies, in addition to Abad's briefing him about the company's policies on punctuality and

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attendance, and the procedures to be followed in handling the clients' applications. No
wonder the company charged him with obstinacy.
The incident also reveals Dalangin's lack of interest in establishing good working relationship
with his co-employees, especially the rank and file; he did not want to join them because of
his view that the seminar was not relevant to his position and duties. It also betrays an
arrogant and condescending attitude on his part towards his co-employees, and a lack of
support for the company objective that company managers be examples to the rank and file
employees.
Additionally, very early in his employment, Dalangin exhibited negative working habits,
particularly with respect to the one hour lunch break policy of the company and the
observance of the company's working hours. Thus, Abad stated that Dalangin would take
prolonged lunch breaks or would go out of the office — without leave of the company — only
to call the personnel manager later to inform the latter that he would be unable to return as
he had to attend to personal matters. Without expressly countering or denying Abad's
statement, Dalangin dismissed the charge for the company's failure to produce his daily
time record. 38
The same thing is true with Dalangin's handling of Tecson's application for immigration to
Canada, especially his failure to find ways to appeal the denial of Tecson's application, as
Abad stated in her affidavit. Again, without expressly denying Abad's statement or
explaining exactly what he did with Tecson's application, Dalangin brushes aside Abad's
insinuation that he was not doing his job well, with the ready argument that the company
did not even bother to present Tecson's testimony.
In the face of Abad's direct statements, as well as those of his co-employees, it is puzzling
that Dalangin chose to be silent about the charges, other than saying that the company
could not cite any policy he violated. All along, he had been complaining that he was not
able to explain his side, yet from the labor arbiter's level, all the way to this Court, he offered
no satisfactory explanation of the charges. In this light, coupled with Dalangin's adamant
refusal to attend the company's "Values Formation Seminar" and a similar program
scheduled earlier, we find credence in the company's submission that Dalangin was unfit to
continue as its Immigration and Legal Manager. As we stressed earlier, we are convinced
that the company had seen enough from Dalangin's actuations, behavior and deportment
during a four-week period to realize that Dalangin would be a liability rather than an asset to
its operations.
We, therefore, disagree with the CA that the company could not have fully determined
Dalangin's performance barely one month into his employment. As we said in International
Catholic Migration Commission, the probationary term or period denotes its purpose but not
its length. To our mind, four weeks was enough for the company to assess Dalangin's fitness
for the job and he was found wanting. In separating Dalangin from the service before the
situation got worse, we find the company not liable for illegal dismissal.
4.
Procedural Due Process. The notice served on him did not give him a reasonable
time, from the effective date of his separation, as required by the rules. He was dismissed on
the very day the notice was given to him, or, on October 27, 2001. Although we cannot
invalidate his dismissal in light of the valid cause for his separation, the company's noncompliance with the notice requirement entitles Dalangin to indemnity, in the form of
nominal damages in an amount subject to our discretion. 40 Under the circumstances, we
consider appropriate an award of nominal damages of P10,000.00 to Dalangin.

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MANILA ELECTRIC COMPANY VS. GALA
G.R. NOS. 191288 & 191304. FEBRUARY 29, 2012
Facts:
Respondent was employed as a probationary lineman of petitioner company, barely 4
months on the job he was dismissed for alleged complicity in pilferages of Meralco's
electrical supplies, particularly, for the incident which took place on May 25, 2006. On that
day, Gala and other Meralco workers were instructed to replace a worn-out electrical pole at
the Pacheco Subdivision in Valenzuela City.
While the Meralco crew was at work, one Noberto "Bing" Llanes, a non-Meralco employee,
arrived. He appeared to be known to the Meralco foremen as they were seen conversing
with him. Llanes boarded the trucks, without being stopped, and took out what were later
found as electrical supplies. Aside from Gala, the foremen and the other linemen who were
at the worksite when the pilferage happened were later charged with misconduct and
dishonesty for their involvement in the incident. Unknown to them the whole incident was
being videoed by Meralco surveillance task force.
Meralco called for an investigation of the incident and asked Gala to explain. Gala denied
involvement in the pilferage, contending that even if his superiors might have committed a
wrongdoing, he had no participation in what they did. He claimed that: (1) he was at some
distance away from the trucks when the pilferage happened; (2) he did not have an inkling
that an illegal activity was taking place since his supervisors were conversing with Llanes,
giving him the impression that they knew him; (3) he did not call the attention of his
superiors because he was not in a position to do so as he was a mere lineman; and (4) he
was just following instructions in connection with his work and had no control in the
disposition of company supplies and materials. He maintained that his mere presence at the
scene of the incident was not sufficient to hold him liable as a conspirator.
Despite Gala's explanation, Meralco proceeded with the investigation and eventually
terminated his employment on July 27, 2006. 4 Gala responded by filing an illegal dismissal
complaint against Meralco.
LA dismissed the complaint for lack of merit. She held that Gala's participation in the
pilferage of Meralco's property rendered him unqualified to become a regular employee.
NLRC reversed the labor arbiter's ruling. It found that Gala had been illegally dismissed,
since
there
was
"no
concrete
showing
of
complicity
with
the
alleged
misconduct/dishonesty[.]" 8 The NLRC, however, ruled out Gala's reinstatement, stating that
his tenure lasted only up to the end of his probationary period. It awarded him backwages
and attorney's fees.
Both parties moved for partial reconsideration; Gala, on the ground that he should have
been reinstated with full backwages, damages and interests; and Meralco, on the ground
that the NLRC erred in finding that Gala had been illegally dismissed. The NLRC denied the
motions.
CA denied Meralco's petition for lack of merit and partially granted Gala's petition. It
concurred with the NLRC that Gala had been illegally dismissed, a ruling that was supported
by the evidence. It opined that nothing in the records show Gala's knowledge of or
complicity in the pilferage. It ordered Gala's reinstatement with full backwages and other
benefits. The CA also denied Meralco's motion for reconsideration.
Issue: WON respondent was illegaly dismissed

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Ruling:
Court finds for petitioner, contrary to conclusions of NLRC and CA.
Respondent failed to meet standards and qualification of company. Gala misses the point.
He forgets that as a probationary employee, his overall job performance and his behavior
were being monitored and measured in accordance with the standards (i.e., the terms and
conditions) laid down in his probationary employment agreement. 22 Under paragraph 8 of
the agreement, he was subject to strict compliance with, and non-violation of the Company
Code on Employee Discipline, Safety Code, rules and regulations and existing policies. Par.
10 required him to observe at all times the highest degree of transparency, selflessness and
integrity in the performance of his duties and responsibilities, free from any form of conflict
or contradicting with his own personal interest. TDAHCS
The evidence on record established Gala's presence in the worksite where the pilferage of
company property happened. It also established that it was not only on May 25, 2006 that
Llanes, the pilferer, had been seen during a Meralco operation. He had been previously
noticed by Meralco employees, including Gala (based on his admission), 23 in past
operations. If Gala had seen Llanes in earlier projects or operations of the company, it is
incredulous for him to say that he did not know why Llanes was there or what Zuñiga and
Llanes were talking about. To our mind, the Meralco crew (the foremen and the linemen)
allowed or could have even asked Llanes to be there during their operations for one and only
purpose — to serve as their conduit for pilfered company supplies to be sold to ready buyers
outside Meralco worksites.
The familiarity of the Meralco crew with Llanes, a non-Meralco employee who had been
present in Meralco field operations, does not contradict at all but rather support the Meralco
submission that there had been "reported pilferage" or "rampant theft," by the crew, of
company property even before May 25, 2006.
The established fact that Llanes, a non-Meralco employee, was often seen during company
operations, conversing with the foremen, for reason or reasons connected with the ongoing
company operations, gives rise to the question: what was he doing there? Apparently, he
had been visiting Meralco worksites, at least in the Valenzuela Sector, not simply to
socialize, but to do something else. As testified to by witnesses, he was picking up unused
supplies and materials that were not returned to the company. From these factual premises,
it is not hard to conclude that this activity was for the mutual pecuniary benefit of himself
and the crew who tolerated the practice. For one working at the scene who had seen or who
had shown familiarity with Llanes (a non-Meralco employee), not to have known the reason
for his presence is to disregard the obvious, or at least the very suspicious.
We consider, too, and we find credible the company submission that the Meralco crew who
worked at the Pacheco Subdivision in Valenzuela City on May 25, 2006 had not been
returning unused supplies and materials, to the prejudice of the company. From all these, the
allegedly hearsay evidence that is not competent in judicial proceedings (as noted above),
takes on special meaning and relevance.
On the whole, the totality of the circumstances obtaining in the case convinces us that Gala
could not but have knowledge of the pilferage of company electrical supplies on May 25,
2006; he was complicit in its commission, if not by direct participation, certainly, by his
inaction while it was being perpetrated and by not reporting the incident to company
authorities. Thus, we find substantial evidence to support the conclusion that Gala does not
deserve to remain in Meralco's employ as a regular employee. He violated his probationary
employment agreement, especially the requirement for him "to observe at all times the
highest degree of transparency, selflessness and integrity in the performance of their duties

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and responsibilities[.]" 27 He failed to qualify as a regular employee.
Complaint dismissed for lack of merit.

ARO VS. NLRC
G.R. NO. 174792. MARCH 7, 2012
Facts:
Several employees of private respondent Benthel Development Corporation, including the
petitioners, filed a Complaint for illegal dismissal with various money claims and prayer for
damages against the respondent.
LA found for the private respondents, ruled illegal dismissal and ordered to pay their
separation pay.
NLRC affirmed decision of the LA but with the modification that private respondent pay
backwages computed from the respective dates of dismissal until finality of the decision.
Private respondent, unsatisfied with the modification made by the NLRC, filed a motion for
reconsideration with the contention that, since it has been found by the Labor Arbiter and
affirmed in the assailed decision that the employees were project employees, the
computation of backwages should be limited to the date of the completion of the project and
not to the finality of the decision. The NLRC, however, denied the motion ruling that private
respondent failed to establish the date of the completion of the project.
CA denied petition for certiorari and MR.
Private Respondent appealed to NLRC contending that the computation for backwages must
be only until the completion of the project and not until the finality of the decision. Public
respondent, in its Decision dated June 25, 2004, affirmed the Order of Labor Arbiter Bantug,
but reduced the total amount to P4,073,858.00, inclusive of attorney's fees. Thereafter
private respondent filed another MR which was denied by public respondent, hence, private
respondent filed a petition for certiorari with the CA, alleging that public respondent
committed grave abuse of discretion in promulgating its assailed decision and denying its
motion for reconsideration. The CA granted the petition, therefore, annulling and setting
aside the decision and resolution of the NLRC as to the award for backwages and remanded
the case to the same public respondent for the proper computation of the backwages due to
each of the petitioners herein. Hence the present petition.
Issues:
WON employees were project employees.
WON the computation of their backwages was to be reckoned from the time of their illegal
dismissal up to the time of the finality of judgment.
Held:
Court finds for private respondent, denied petitioners petition for review and affirming
decision of CA dated March 7, 2006 and Resolution dated July 27, 2006 in toto.
1.
Termination of project employees and their backwages. According to the CA,
petitioners are project employees as found by Labor Arbiter Ernesto Carreon in his Decision
dated May 28, 1998, because they were hired for the construction of the Cordova Reef
Village Resort in Cordova, Cebu, which was later on affirmed by the NLRC in its January 12,

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1999 decision. The only discrepancy is the Order of the NLRC that petitioners are entitled to
backwages up to the finality of its decision, when as project employees, private respondents
are only entitled to payment of backwages until the date of the completion of the project. In
a later resolution on private respondent's motion for reconsideration of its January 12, 1999
decision, the NLRC changed its findings by ruling that petitioners herein were regular
employees and, therefore, entitled to full backwages, until finality of the decision, citing that
petitioners' repeated rehiring over a long span of time made them regular employees.
this Court agrees with the findings of the CA that petitioners were project employees. It is
not disputed that petitioners were hired for the construction of the Cordova Reef Village
Resort in Cordova, Cebu. By the nature of the contract alone, it is clear that petitioners'
employment was to carry out a specific project. Hence, the CA did not commit grave abuse
of discretion when it affirmed the findings of the Labor Arbiter. The CA correctly ruled:
A review of the facts and the evidence in this case readily shows that a finding had been
made by Labor Arbiter Ernesto Carreon, in his decision dated May 28, 1998, that
complainants, including private respondents, are project employees. They were hired for the
construction of the Cordova Reef Village Resort in Cordova, Cebu. We note that no appeal
had been made by the complainants, including herein private respondents, from the said
finding. Thus, that private respondents are project employees has already been effectively
established.
Likewise, a review of the public respondent's January 12, 1999 decision shows that it
affirmed the labor arbiter's finding of the private respondents' being project employees.
We therefore cannot fathom how the public respondent could have ordered backwages up to
the finality of its decision when, as project employees, private respondents are only entitled
to payment of the same until the date of the completion of the project. It is settled that,
without a valid cause, the employment of project employees cannot be terminated prior to
expiration. Otherwise, they shall be entitled to reinstatement with full backwages. However,
if the project or work is completed during the pendency of the ensuing suit for illegal
dismissal, the employees shall be entitled only to full backwages from the date of the
termination of their employment until the actual completion of the work.
While it may be true that in the proceedings below the date of completion of the project for
which the private respondents were hired had not been clearly established, it constitutes
grave abuse of discretion on the part of the public respondent for not determining for itself
the date of said completion instead of merely ordering payment of backwages until finality
of its decision.
xxx xxx xxx
The decision of the labor arbiter, as affirmed by the public respondent in its January 12, 1999
decision, clearly established that private respondents were project employees. Because
there was no showing then that the project for which their services were engaged had
already been completed, the public respondent likewise found that private respondents were
illegally dismissed and thus entitled to backwages.
However, in utter disregard of the law and prevailing jurisprudence, the public respondents
capriciously and arbitrarily ordered that the said backwages be computed until the finality of
its decision instead of only until the date of the project completion. In grave abuse of its
discretion, the public respondent refused to consider the evidence presented before it as to
the date of completion of the Cordova Reef Village Resort project. The records show that
affidavits have been executed by the petitioner's manager, corporate architect and project
engineer as to the fact of the completion of the project in October 1996. As these evidences

185 | P a g e

[sic] were already a matter of record, the public respondent should not have closed its eyes
and should have endeavored to render a correct and just judgment. CHcTIA
xxx xxx xxx
Furthermore, as earlier noted, private respondents did not appeal from the Labor Arbiter's
findings that they were indubitably project employees. However, they were entitled to the
payment of separation pay only for the reason that the date of the completion of the project
for which they were hired had not been clearly established. Thus, in affirming the labor
arbiter's decision, the public respondent in effect sustained the finding that private
respondents are project employees. The statement, therefore, contained in the resolution of
the petitioner's motion for reconsideration of its January 12, 1999 decision that repeated
rehiring makes the worker a regular employee, is at best an obiter, especially considering
that such conclusion had not been shown to apply to the circumstances then obtaining with
the private respondents' employment with the petitioner. 17
Therefore, being project employees, petitioners are only entitled to full backwages,
computed from the date of the termination of their employment until the actual completion
of the work. Illegally dismissed workers are entitled to the payment of their salaries
corresponding to the unexpired portion of their employment where the employment is for a
definite period. 18 In this case, as found by the CA, the Cordova Reef Village Resort project
had been completed in October 1996 and private respondent herein had signified its
willingness, by way of concession to petitioners, to set the date of completion of the project
as March 18, 1997; hence, the latter date should be considered as the date of completion of
the project for purposes of computing the full backwages of petitioners.

YMBONG VS ABS-CBN BROADCASTING CORP.
G.R. NO. 184885; MARCH 7, 2012
Facts:
Petitioner Ernesto G. Ymbong started working for ABS-CBN Broadcasting Corporation (ABSCBN) in 1993 at its regional station in Cebu as a television talent, co-anchoring Hoy Gising
and TV Patrol Cebu. His stint in ABS-CBN later extended to radio when ABS-CBN Cebu
launched its AM station DYAB in 1995 where he worked as drama and voice talent, spinner,
scriptwriter and public affairs program anchor.
Like Ymbong, Leandro Patalinghug also worked for ABS-CBN Cebu. Starting 1995, he worked
as talent, director and scriptwriter for various radio programs aired over DYAB.
On January 1, 1996, the ABS-CBN Head Office in Manila issued Policy No. HR-ER-016 or the
"Policy on Employees Seeking Public Office." The pertinent portions read:
1.Any employee who intends to run for any public office position, must file his/her letter of
resignation, at least thirty (30) days prior to the official filing of the certificate of candidacy
either for national or local election.
xxx xxx xxx
3.Further, any employee who intends to join a political group/party or even with no political
affiliation but who intends to openly and aggressively campaign for a candidate or group of
candidates (e.g., publicly speaking/endorsing candidate, recruiting campaign workers, etc.)
must file a request for leave of absence subject to management's approval. For this
particular reason, the employee should file the leave request at least thirty (30) days prior to
the start of the planned leave period.
Because of the impending May 1998 elections and based on his immediate recollection of
the policy at that time, Dante Luzon, Assistant Station Manager of DYAB issued the following
memorandum:

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TO:ALL CONCERNED
FROM:DANTE LUZON
DATE:MARCH 25, 1998
SUBJECT:AS STATED
Please be informed that per company policy, any employee/talent who wants to run for any
position in the coming election will have to file a leave of absence the moment he/she files
his/her certificate of candidacy.
The services rendered by the concerned employee/talent to this company will then be
temporarily suspended for the entire campaign/election period.
After the issuance of the March 25, 1998 Memorandum, Ymbong got in touch with Luzon.
Luzon claims that Ymbong approached him and told him that he would leave radio for a
couple of months because he will campaign for the administration ticket. It was only after
the elections that they found out that Ymbong actually ran for public office himself at the
eleventh hour. Ymbong, on the other hand, claims that in accordance with the March 25,
1998 Memorandum, he informed Luzon through a letter that he would take a few months
leave of absence from March 8, 1998 to May 18, 1998 since he was running for councilor of
Lapu-Lapu City.
As regards Patalinghug, Patalinghug approached Luzon and advised him that he will run as
councilor for Naga, Cebu. According to Luzon, he clarified to Patalinghug that he will be
considered resigned and not just on leave once he files a certificate of candidacy
Later, Ymbong and Patalinghug both tried to come back to ABS-CBN Cebu. According to
Luzon, he informed them that they cannot work there anymore because of company policy.
As a result, they filed as illegal dismissal suit against ABS-CBN.
Issues:
(1) whether Policy No. HR-ER-016 is valid;
(2) whether the March 25, 1998 Memorandum issued by Luzon superseded Policy No. HR-ER016; and
(3) whether Ymbong, by seeking an elective post, is deemed to have resigned and not
dismissed by ABS-CBN.
Rulings:
(1)
Policy No. HR-ER-016 is valid.
We have consistently held that so long as a company's management prerogatives are
exercised in good faith for the advancement of the employer's interest and not for the
purpose of defeating or circumventing the rights of the employees under special laws or
under valid agreements, this Court will uphold them. In the instant case, ABS-CBN validly
justified the implementation of Policy No. HR-ER-016. It is well within its rights to ensure that
it maintains its objectivity and credibility and freeing itself from any appearance of
impartiality so that the confidence of the viewing and listening public in it will not be in any
way eroded. Even as the law is solicitous of the welfare of the employees, it must also
protect the right of an employer to exercise what are clearly management prerogatives. The
free will of management to conduct its own business affairs to achieve its purpose cannot be
denied.
(2)
Policy No. HR-ER-016 was not superseded by the March 25, 1998 Memorandum
The CA correctly ruled that though Luzon, as Assistant Station Manager for Radio of ABSCBN, has policy-making powers in relation to his principal task of administering the
network's radio station in the Cebu region, the exercise of such power should be in accord
with the general rules and regulations imposed by the ABS-CBN Head Office to its
employees. Clearly, the March 25, 1998 Memorandum issued by Luzon which only requires
employees to go on leave if they intend to run for any elective position is in absolute
contradiction with Policy No. HR-ER-016 issued by the ABS-CBN Head Office in Manila which
requires the resignation, not only the filing of a leave of absence, of any employee who

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

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other hand reversed the previous one which in turn reinstated the Labor Arbiter’s dismissal
of the complaint saying that respondents were holding positions of trust and that the loss of
the company’s property are substantially proven. The CA on the other hand found merit on
their claims, though found respondents to have positions of trust and confidence, petitioner
in this case failed to sufficiently establish the charge against respondents which was the
basis for its loss of trust and confidence that warranted their dismissal.
Issue: Whether or not respondents Blas and Silvano committed a breach of trust
Ruling:
The rule is long and well settled that, in illegal dismissal cases like the one at bench, the
burden of proof is upon the employer to show that the employee's termination from service
is for a just and valid cause. The employer's case succeeds or fails on the strength of its
evidence and not on the weakness of that adduced by the employee, in keeping with the
principle that the scales of justice should be tilted in favor of the latter in case of doubt in
the evidence presented by them. Often described as more than a mere scintilla, the
quantum of proof is substantial evidence which is understood as such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion, even if other equally
reasonable minds might conceivably opine otherwise. Failure of the employer to discharge
the foregoing onus would mean that the dismissal is not justified and therefore illegal.
We find no error in the CA's findings that the petitioners had not adequately proven by
substantial evidence that Arlene and Joseph indeed participated or cooperated in the
commission of theft relative to the six missing intensifying screens so as to justify the latter's
termination from employment on the ground of loss of trust and confidence.
We note that the parties disagree as to what tasks were actually and regularly performed by
Arlene and Joseph. They are at odds as to the issue of whether or not Arlene and Joseph had
custody of the missing screens. We observe though that neither of the parties presented any
documentary evidence, such as employment contracts, to establish their claims relative to
the actual nature of Arlene and Joseph's daily tasks.
The petitioners also argue that if Arlene and Joseph had not been grossly negligent in the
performance of their duties, Blue Sky would not have incurred the loss. We observe though
that in the notices sent to Arlene and Joseph, first charging them with theft, and later,
informing them of their dismissal from service, gross negligence was not stated therein as a
ground. Hence, Arlene and Joseph could not have defended themselves against the charge
of gross negligence. They cannot be dismissed on that ground lest due process be violated.
Other Matters: (For Discussion Purposes)
•
Impropriety of the Preventive Suspension
The purpose of the suspension is to prevent an employee from causing harm or injury
to his colleagues and to the employer. The maximum period of suspension is 30 days,
beyond which the employee should either be reinstated or be paid wages and benefits due
to him.
While we do not agree with Blue Sky's subsequent decision to terminate them from
service, we find no impropriety in its act of imposing preventive suspension upon the
respondents since the period did not exceed the maximum imposed by law and there was a
valid purpose for the same.
•
In lieu of reinstatement, separation pay
If reinstatement proves impracticable, and hardly in the best interest of the parties,
perhaps due to the lapse of time since the employee's dismissal, or if the employee decides
not to be reinstated, the latter should be awarded separation pay in lieu of reinstatement.
In the case at bar, Arlene and Joseph were dismissed from service on February 5,
2005. We find that the lapse of more than seven years already renders their reinstatement
impracticable. Further, from the stubborn stances of the parties, to wit, the petitioners'
insistence that dismissal was valid on one hand, and the respondents' express prayer for the
payment of separation pay on the other, we find that reinstatement would no longer be in

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the best interest of the contending parties.
•
Liability of Corporate Officers
As a general rule, a corporate officer cannot be held liable for acts done in his official
capacity because a corporation, by legal fiction, has a personality separate and distinct from
its officers, stockholders, and members. In illegal dismissal cases, corporate officers may
only be held solidarily liable with the corporation if the termination was done with malice or
bad faith. We find that the aforementioned circumstance did not obtain in the case of Jose
(vice-president) and Linda (secretary) relative to Arlene and Joseph's dismissal from service.

INTERNATIONAL MANAGEMENT SERVICES VS. LOGARTA
G.R. NO. 163657, APRIL 18, 2012
Facts:
Recruitment agency, International Management Services (IMS), owned and operated by
Marilyn C. Pascual, deployed respondent Roel P. Logarta to work for Petrocon Arabia Limited
(Petrocon) in Alkhobar, Kingdom of Saudi Arabia, in connection with general engineering
services of Petrocon for the Saudi Arabian Oil Company (Saudi Aramco). Respondent was
employed for a period of two (2) years, commencing on October 2, 1997, with a monthly
salary of eight hundred US Dollars (US$800.00).
On April 29, 1998, Saudi Aramco notified Petrocon that due to changes in the general
engineering services work forecast for 1998, the man-hours that were formerly allotted to
Petrocon is going to be reduced by 40% which constrained Petrocon to reduce its personnel.
Thus, on June 1, 1998, Petrocon gave respondent a written notice informing the latter that
due to the lack of project works related to his expertise, he is given a 30-day notice of
termination, and that his last day of work with Petrocon will be on July 1, 1998. Petrocon also
informed respondent that all due benefits in accordance with the terms and conditions of his
employment contract will be paid to respondent, including his ticket back to the Philippines.
Before his departure from Saudi Arabia, respondent received his final paycheck from
Petrocon amounting SR7,488.57.
Upon his return, respondent filed a complaint with the Regional Arbitration Branch VII,
National Labor Relations Commission (NLRC), Cebu City, against petitioner as the
recruitment agency which employed him for employment abroad. In filing the complaint,
respondent sought to recover his unearned salaries covering the unexpired portion of his
employment contract with Petrocon on the ground that he was illegally dismissed.
The Labor Arbiter rendered judgment in favor of the respondent and ordered petitioner to
pay the peso equivalent of US$5,600.00 based on the rate at the time of actual payment, as
payment of his wages for the unexpired portion of his contract of employment. The NLRC on
appeal affirmed the Labor Arbiter’s decision but reduced the award to only US$4,800.00 or
its peso equivalent at the time of payment. The CA likewise dismissed the petition and
affirmed the NLRC decision.
Issue: Whether or not respondents dismissal through retrenchment illegal.
Ruling:
No
Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed
to cut down costs for operation particularly on salaries and wages. It is one of the economic
grounds to dismiss employees and is resorted by an employer primarily to avoid or minimize
business losses. ISTHED
Retrenchment programs are purely business decisions within the purview of a valid and
reasonable exercise of management prerogative. It is one way of downsizing an employer's
workforce and is often resorted to by the employer during periods of business recession,
industrial depression, or seasonal fluctuations, and during lulls in production occasioned by

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lack of orders, shortage of materials, conversion of the plant for a new production program,
or introduction of new methods or more efficient machinery or automation. It is a valid
management prerogative, provided it is done in good faith and the employer faithfully
complies with the substantive and procedural requirements laid down by law and
jurisprudence.
Philippine Law recognizes retrenchment as a valid cause for the dismissal of a migrant or
overseas Filipino worker under Article 283 of the Labor Code.
Thus, retrenchment is a valid exercise of management prerogative subject to the strict
requirements set by jurisprudence, to wit: DHSCT
(1)That the retrenchment is reasonably necessary and likely to prevent business losses
which, if already incurred, are not merely de minimis, but substantial, serious, actual and
real, or if only expected, are reasonably imminent as perceived objectively and in good faith
by the employer;
(2)That the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;
(3)That the employer pays the retrenched employees separation pay equivalent to one
month pay or at least 1/2 month pay for every year of service, whichever is higher;
(4)That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees' right to security
of tenure; and
(5)That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status,…efficiency,
seniority, physical fitness, age, and financial hardship for certain workers. 28
Applying the above-stated requisites for a valid retrenchment in the case at bar, it is
apparent that the first, fourth and fifth requirements were complied with by respondent's
employer. However, the second and third requisites were absent when Petrocon terminated
the services of respondent.
As aptly found by the NLRC and justly sustained by the CA, Petrocon exercised its
prerogative to retrench its employees in good faith and the considerable reduction of work
allotments of Petrocon by Saudi Aramco was sufficient basis for Petrocon to reduce the
number of its personnel.
As for the notice requirement, however, contrary to petitioner's contention, proper notice to
the DOLE within 30 days prior to the intended date of retrenchment is necessary and must
be complied with despite the fact that respondent is an overseas Filipino worker. In the
present case, although respondent was duly notified of his termination by Petrocon 30 days
before its effectivity, no allegation or proof was advanced by petitioner to establish that
Petrocon ever sent a notice to the DOLE 30 days before the respondent was terminated.
Thus, this requirement of the law was not complied with.
In the case at bar, despite the fact that respondent was employed by Petrocon as an OFW in
Saudi Arabia, still both he and his employer are subject to the provisions of the Labor Code
when applicable. The basic policy in this jurisdiction is that all Filipino workers, whether
employed locally or overseas, enjoy the protective mantle of Philippine labor and social
legislations.
Also, respondent is entitled to the payment of his separation pay. However, this Court
disagrees with the conclusion of the Labor Arbiter, the NLRC and the CA, that respondent
should be paid his separation pay in accordance with the provision of Section 10 of R.A. No.
8042. A plain reading of the said provision clearly reveals that it applies only to an illegally
dismissed overseas contract worker or a worker dismissed from overseas employment
without just, valid or authorized cause.
In the case at bar, notwithstanding the fact that respondent's termination from his
employment was procedurally infirm, having not complied with the notice requirement,
nevertheless the same remains to be for a just, valid and authorized cause, i.e.,

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retrenchment as a valid exercise of management prerogative. To stress, despite the
employer's failure to comply with the one-month notice to the DOLE prior to respondent's
termination, it is only a procedural infirmity which does not render the retrenchment illegal.
In Agabon v. NLRC, this Court ruled that when the dismissal is for a just cause, the absence
of proper notice should not nullify the dismissal or render it illegal or ineffectual. Instead, the
employer should indemnify the employee for violation of his statutory rights.
Consequently, it is Article 283 of the Labor Code and not Section 10 of R.A. No. 8042 that is
controlling. Thus, respondent is entitled to payment of separation pay equivalent to one (1)
month pay, or at least one-half (1/2) month pay for every year of service, whichever is
higher. Considering that respondent was employed by Petrocon for a period of eight (8)
months, he is entitled to receive one (1) month pay as separation pay. In addition, pursuant
to current jurisprudence, for failure to fully comply with the statutory due process of
sufficient notice, respondent is entitled to nominal damages in the amount P50,000.00.

JIAO VS. NLRC
G.R. NO. 182331, APRIL 18, 2012
Facts:
The petitioners were regular employees of the Philippine Banking Corporation (Philbank),
each with at least ten years of service in the company. Pursuant to its Memorandum dated
August 28, 1970, Philbank established a Gratuity Pay Plan (Old Plan) for its employees. The
Old Plan provided:
1. Any employee who has reached the compulsory retirement age of 60 years, or who
wishes to retire or resign prior to the attainment of such age or who is separated from
service by reason of death, sickness or other causes beyond his/her control shall for himself
or thru his/her heirs file with the personnel office an application for the payment of benefits
under the plan
On March 8, 1991, Philbank implemented a new Gratuity Pay Plan (New Gratuity Plan). In
particular, the New Gratuity Plan stated thus:
x x x An Employee who is involuntarily separated from the service by reason of death,
sickness or physical disability, or for any authorized cause under the law such as
redundancy, or other causes not due to his own fault, misconduct or voluntary resignation,
shall be entitled to either one hundred percent (100%) of his accrued gratuity benefit or the
actual benefit due him under the Plan, whichever is greater. [7]
In February 2000, Philbank merged with Global Business Bank, Inc. (Globalbank), with the
former as the surviving corporation and the latter as the absorbed corporation, but the bank
operated under the name Global Business Bank, Inc. As a result of the merger,
complainants’ respective positions became redundant. A Special Separation Program (SSP)
was implemented and the petitioners were granted a separation package equivalent to one
and a half month’s pay (or 150% of one month’s salary) for every year of service based on
their current salary. Before the petitioners could avail of this program, they were required to
sign two documents, namely, an Acceptance Letter and a Release, Waiver, Quitclaim
(quitclaim).
As their positions were included in the redundancy declaration, the petitioners availed of the
SSP, signed acceptance letters and executed quitclaims in Globalbank’s favor in
consideration of their receipt of separation pay equivalent to 150% of their monthly salaries
for every year of service.
Subsequently, the petitioners filed separate complaints for non-payment of separation pay
with prayer for damages and attorney’s fees before the National Labor Relations Commission
(NLRC)
The petitioners asserted that, under the Old Plan, they were entitled to an additional 50% of

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their gratuity pay on top of 150% of one month’s salary for every year of service they had
already received. They insisted that 100% of the 150% rightfully belongs to them as their
separation pay. Thus, the remaining 50% was only half of the gratuity pay that they are
entitled to under the Old Plan.
The petitioners further argued that the quitclaims they signed should not bar them from
claiming their full entitlement under the law. They also claimed that they were defrauded
into signing the same without full knowledge of its legal implications.
Issues: WON there was proper payment of separation pay.
Ruling:
The petitioners’ receipt of separation pay equivalent to their one and a half months salary
for every year of service as provided in the SSP and the New Gratuity Plan more than
sufficiently complies with the Labor Code, which only requires the payment of separation
pay at the rate of one month salary for every year of service.
Globalbank’s right to replace the Old Plan and the New Gratuity Plan is within legal bounds
as the terms thereof are in accordance with the provisions of the Labor Code and complies
with the minimum requirements thereof. Contrary to the petitioners’ claim, they had no
vested right over the benefits under the Old Plan considering that none of the events
contemplated thereunder occurred prior to the repeal thereof by the adoption of the New
Gratuity Plan. Such right accrues only upon their separation from service for causes
contemplated under the Old Plan and the petitioners can only avail the benefits under the
plan that is effective at the time of their dismissal. In this case, when the merger and the
redundancy program were implemented, what was in effect were the New Gratuity Plan and
the SSP; the petitioners cannot, thus, insist on the provisions of the Old Plan which is no
longer existent.
The SSP did not revoke or supersede the New Gratuity Plan.
The SSP was not intended to supersede the New Gratuity Plan. On the contrary, the SSP was
issued to make the benefits under the New Gratuity Plan available to employees whose
positions had become redundant because of the merger between Philbank and Globalbank,
subject to compliance with certain requirements such as age and length of service, and to
improve such benefits by increasing or rounding it up to an amount equivalent to the
affected employees’ one and a half monthly salary for every year of service. In other words,
the benefits to which the redundated employees are entitled to, including the petitioners,
are the benefits under the New Gratuity Plan, albeit increased by the SSP.
Considering that the New Gratuity Plan still stands and has not been revoked by the SSP,
does this mean that the petitioners can claim the benefits thereunder in addition to or on
top of what is required under the Article 283 of the Labor Code?
For as long as the minimum requirements of the Labor Code are met, it is within the
management prerogatives of employers to come up with separation packages that will be
given in lieu of what is provided under the Labor Code.
Article 283 of the Labor Code provides only the required minimum amount of separation
pay, which employees dismissed for any of the authorized causes are entitled to receive.
Employers, therefore, have the right to create plans, providing for separation pay in an
amount over and above what is imposed by Article 283. There is nothing therein that
prohibits employers and employees from contracting on the terms of employment, or from
entering into agreements on employee benefits, so long as they do not violate the Labor
Code or any other law, and are not contrary to morals, good customs, public order, or public
policy.
In the absence of proof that any of the vices of consent are present, the petitioners’
acceptance letters and quitclaims are valid; thus, barring them from claiming additional
separation pay.
The Court, in other cases, has upheld quitclaims if found to comply with the following
requisites: (1) the employee executes a deed of quitclaim voluntarily; (2) there is no fraud or
deceit on the part of any of the parties; (3) the consideration of the quitclaim is credible and

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reasonable; and (4) the contract is not contrary to law, public order, public policy, morals or
good customs or prejudicial to a third person with a right recognized by law.
We hold that Metrobank cannot be held liable for the petitioners’ claims.
WHEREFORE, the foregoing premises considered, the petition is DENIED

REALDA VS. NEW AGE GRAPHICS INC.
G.R. NO. 192190, APRIL 25, 2012
Facts
Petitioner Realda was dismissed by Respondent New Age Graphics Inc. for unjustified refusal
to render overtime work, unexplained failure to observe prescribed work standards, habitual
tardiness and chronic absenteeism despite warning and non-compliance with the directive
for him to explain his numerous unauthorized absences. The Court of Appeals recognized the
existence of just causes for petitioner’s dismissal, however, the appellate court found that
the respondent failed to observe the procedural requirements of due process and, as a
consequence, awarded the petitioner P5,000.00 as Nominal Damages.
Issues
WoN the dismissal based on the grounds cited constituted just causes; and
WoN the amount awarded as Nominal Damages of P5,000.00 was valid
Ruling
First, the petitioner’s arbitrary defiance to Graphics, Inc.’s order for him to render overtime
work constitutes willful disobedience. Taking this in conjunction with his inclination to
absent himself and to report late for work despite being previously penalized, the CA
correctly ruled that the petitioner is indeed utterly defiant of the lawful orders and the
reasonable work standards prescribed by his employer.
Second, the petitioner’s failure to observe Graphics, Inc.’s work standards constitutes
inefficiency that is a valid cause for dismissal. Failure to observe prescribed standards of
work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause
for dismissal. Such inefficiency is understood to mean failure to attain work goals or work
quotas, either by failing to complete the same within the alloted reasonable period, or by
producing unsatisfactory results. As the operator of Graphics, Inc.’s printer, he is mandated
to check whether the colors that would be printed are in accordance with the client’s
specifications and for him to do so, he must consult the General Manager and the color
guide used by Graphics, Inc. before making a full run. Unfortunately, he failed to observe
this simple procedure and proceeded to print without making sure that the colors were at
par with the client’s demands. This resulted to delays in the delivery of output, client
dissatisfaction, and additional costs on Graphics, Inc.’s part.
While a penalty in the form of suspension had already been imposed on the petitioner for his
habitual tardiness and repeated absenteeism, the principle of “totality of infractions”
sanctions the act of Graphics, Inc. of considering such previous infractions in decreeing
dismissal as the proper penalty for his tardiness and unauthorized absences incurred
afterwards, in addition to his refusal to render overtime work and conform to the prescribed
work standards.
This Court cannot likewise agree to the petitioner’s attempt to brush aside his refusal to
render overtime work as inconsequential when Graphics, Inc.’s order for him to do so is
justified by Graphics, Inc.’s contractual commitments to its clients. Such an order is legal
under Article 89 of the Labor Code and the petitioner’s unexplained refusal to obey is
insubordination that merits dismissal from service.
Nonetheless, while the CA finding that the petitioner is entitled to nominal damages as his
right to procedural due process was not respected despite the presence of just causes for his
dismissal is affirmed, this Court finds the CA to have erred in fixing the amount that the

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Company is liable to pay. The CA should have taken cognizance of the numerous cases
decided by this Court where the amount of nominal damages was fixed at P30,000.00 if the
dismissal was for a just cause.

KAKAMPI & ITS MEMBERS, PANUELOS, ET AL. VS. KINGSPOINT EXPRESS AND
LOGISTIC
G.R. NO. 194813 APRIL 25, 2012
Facts:
Victor Pañuelos (Pañuelos), Bobby Dacara (Dacara), Alson Dizon (Dizon), Saldy Dimabayao
(Dimabayao), Fernando Lupangco, Jr. (Lupangco), Sandy Pazi (Pazi), Camilo Tabarangao, Jr.
(Tabarangao), Eduardo Hizole (Hizole) and Reginald Carillo (Carillo) were the former drivers
of Kingspoint Express and Logistic (Kingspoint Express), a sole proprietorship registered in
the name of Mary Ann Co (Co) and engaged in the business of transport of goods. On
January 16, 2006, Kingspoint Express issued separate notices to individual petitioners
uniformly stating that they have been charged with dishonesty, serious misconduct, loss of
confidence, and acts inimical to the company, by filing with the NLRC false, malicious, and
fabricated cases against the company. In addition, Kingspoint stated that the petitioners’
refusal to undergo drug testing is unwarranted and against company policy. The petitioners
were given 48 hrs (2 days) to submit their answers and explanation to the charges.
The individual petitioners failed to submit their written explanation within the stated period.
Subsequently, Kingspoint Express issued to them separate yet uniformly worded notices
informing them of their dismissal. The charges were allegedly based on these acts:
FABRICATION OF BASELESS MONEY CLAIMS against the company;
MISLEADING FELLOW CO-WORKERS to sign the MALICIOUS COMPLAINT FOR MONEY
CLAIMS against the company;
REFUSAL TO UNDERGO THE COMPANY’S GENERAL DRUG TEST
EXTORTING MONEY FROM CO-WORKERS TO FUND ACTIVITIES THAT THEY WERE
NEVER FULLY INFORMED OF.
A complaint for illegal dismissal was subsequently filed by petitioners, alleging that the
charges against them were fabricated and that their dismissal was prompted by Kingspoint
Express’ aversion to their union activities.
The Labor Arbiter found Dacara, Lupangco, Pazi, Tabarangao, Hizole and Carillo illegally
dismissed. On the other hand, the complaint was dismissed insofar as Panuelos, Dizon and
Dimabayao are concerned as they were deemed not to have filed their position papers.
While the allegation of anti-unionism as the primordial motivation for the dismissal is
considered unfounded, the respondents failed to prove that the dismissal was for a just
cause.
On appeal, the NLRC affirmed the Labor Arbiter’s Decision. In addition, the NLRC ruled that
the respondents failed to comply with the procedural requirements of due process
considering that the uniformly worded first notice sent by Kingspoint to the petitioners, did
not apprise them of the particular acts or omission for which their dismissal were sought.
Respondents moved for reconsideration and the NLRC reversed itself and declared the
individual petitioners legally dismissed.
Subsequently, the petitioners filed a petition for certiorari with the CA. The CA reversed and
set aside the NLRC Decision. Respondents promptly filed a motion for reconsideration.
Similar to the NLRC, the CA reversed itself and retracted its earlier finding that the individual
petitioners were illegally dismissed. The CA concluded that the 2 notices issued by
Kingspoint Express complied with the requirements of the law.
Issue: Whether or not the individual petitioners’ dismissal is valid.

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Ruling:
Yes, the petitioners were legally dismissed.
It is fundamental that in order to validly dismiss an employee, the employer is required to
observe both substantive and procedural due process – the termination of employment must
be based on a just or authorized cause and the dismissal must be effected after due notice
and hearing. The Court agreed with the CA that the petitioners’ refusal to submit themselves
to drug test is a just cause for their dismissal. An employer may terminate an employment
on the ground of serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work. Willful disobedience
requires the concurrence of two elements: (1) the employee's assailed conduct must have
been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order
violated must have been reasonable, lawful, made known to the employee, and must pertain
to the duties which he had been engaged to discharge. Both elements are present in this
case.
At no point did the dismissed employees deny Kingspoint Express’ claim that they refused to
comply with the directive for them to submit to a drug test or, at the very least, explain their
refusal. Thus, this gives rise to the impression that their non-compliance is deliberate. The
utter lack of reason or justification for their insubordination indicates that it was prompted
by mere obstinacy, hence, willful and warranting of dismissal. Drivers are indispensable to
Kingspoint Express’ primary business of rendering door-to-door delivery services. It is
common knowledge that the use of dangerous drugs has adverse effects on driving abilities
that may render the dismissed employees incapable of performing their duties to Kingspoint
Express and acting against its interests, in addition to the threat they pose to the public.
Nonetheless, while Kingspoint Express had reason to sever their employment relations, the
Court found its supposed observance of the requirements of procedural due process
pretentious. While Kingspoint Express required the dismissed employees to explain their
refusal to submit to a drug test, the 2 days afforded to them to do so cannot qualify as
“reasonable opportunity”, which the Court construed in King of Kings Transport, Inc. v.
Mamac as a period of at least 5 calendar days from receipt of the notice. Thus, even if
Kingspoint Express’ defective attempt to comply with procedural due process does not
negate the existence of a just cause for their dismissal, it was held that Kingspoint Express is
still liable to indemnify the dismissed employees.

WATERFRONT CEBU CITY HOTEL VS. JIMENEZ
G.R. NO. 174214, JUNE 13, 2012
Facts:
Respondents Ma. Melanie P. Jimenez, Jacqueline C. Baguio, Lovella V. Carillo, and Maila G.
Roble were hired for Club Waterfront (the Club), a division under petitioner Waterfront Cebu
City Hotel (the Hotel) which catered to foreign high stakes gamblers, for different positions
and dates as indicated below:
NAME
POSITION
DATE HIRED
Ma. Melanie Jimenez
P. Guest Service Asst
Sept. 4, 1996
Jacqueline Cosep Baguio Treasury Supervisor
June 1, 1996
Lovella V. Carillo
Guest Services Asst
May 26, 1998
Maila G. Roble
Pit Supervisor
Sept. 1, 1996

MONTHLY SALARY
15,148.67
16,082.22
15,652.00
16,452.00

On 12 May 2003, respondents received identical letters of termination from petitioner's
Director of Human Resources informing them of the temporary suspension of business of the
Club. A total of 45 employees were notified of the imminent closure. On the following day,
petitioner served the notice of suspension of business with the Department of Labor and

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Employment (DOLE).
The dismissed employees were offered separation pay equivalent to half-month pay for
every year of service. The Club's closure took effect on 15 June 2003.On 26 June 2003,
respondents filed a complaint before the Labor Arbiter for illegal dismissal, illegal
suspension, and non-payment of salaries and other monetary benefits. They likewise prayed
for damages and attorney's fees.
Respondents refused to believe that the Club was suffering from losses because they knew
exactly the number of arrivals as well as junket clients of the Club. They presented
documents to show the arrival of foreign guests at the Club and that ,they are employees of
petitioner assigned to the Club, hence they should have been allowed to work in other
departments of the hotel.
Petitioner anchors its arguments mainly on the thesis that retrenchment to prevent losses
was undertaken to justify the dismissal of respondents. Petitioner likened the closure of the
Club, which it deemed as a division/department, to retrenchment. Acting on the same
premise that the Club is a division of petitioner, respondents demanded that they should be
transferred to another department of petitioner, instead of being dismissed from
employment. Respondents also claim that petitioner failed to prove losses to support
retrenchment.
Issue: Whether or not retrenchment of the respondents was valid
Ruling:
Retrenchment is subject to faithful compliance with the substantative and procedural
requirements laid down by law and jurisprudence. For a valid retrenchment, the following
elements must be present:
(1)That retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if
only expected, are reasonably imminent as perceived objectively and in good faith by the
employer;
(2)That the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;
(3)That the employer pays the retrenched employees separation pay equivalent to one (1)
month pay or at least 1/2 month pay for every year of service, whichever is higher;
(4)That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees' right to security
of tenure; and
(5)That the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status, efficiency,
seniority, physical fitness, age, and financial hardship for certain workers.
All these elements were successfully proven by petitioner. First, the huge losses suffered by
the Club for the past two years had forced petitioner to close it down to avert further losses
which would eventually affect the operations of petitioner. Second, all 45 employees working
under the Club were served with notice of termination. The corresponding notice was
likewise served to the DOLE one month prior to retrenchment. Third, the employees were
offered separation pay, most of whom have accepted and opted not to join in this complaint.
Fourth, cessation of or withdrawal from business operations was bona fide in character and
not impelled by a motive to defeat or circumvent the tenurial rights of employees.

RAMIREZ VS. MAR FISHING CO., INC.;
G.R. NO. 168208, JUNE 13, 2012
Facts:
On 28 June 2001, respondent Mar Fishing Co., Inc. (Mar Fishing), engaged in the business of

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fishing and canning of tuna, sold its principal assets to co-respondent Miramar Fishing Co.,
Inc. (Miramar) through public bidding. The proceeds of the sale were paid to the Trade and
Investment Corporation of the Philippines (TIDCORP) to cover Mar Fishing's outstanding
obligation in the amount of P897,560,041.26. In view of that transfer, Mar Fishing issued a
Memorandum dated 23 October 2001 informing all its workers that the company would
cease to operate by the end of the month. On 29 October 2001 or merely two days prior to
the month's end, it notified the Department of Labor and Employment (DOLE) of the closure
of its business operations.
Thereafter, Mar Fishing's labor union, Mar Fishing Workers Union — NFL — and Miramar
entered into a Memorandum of Agreement. The Agreement provided that the acquiring
company, Miramar, shall absorb Mar Fishing's regular rank and file employees whose
performance was satisfactory, without loss of seniority rights and privileges previously
enjoyed.
Unfortunately, petitioners, who worked as rank and file employees, were not hired or given
separation pay by Miramar. Thus, petitioners filed Complaints for illegal dismissal with
money claims before the Arbitration Branch of the National Labor Relations Commission
(NLRC).
In its 30 July 2002 Decision, the Labor Arbiter (LA) found that Mar Fishing had necessarily
closed its operations, considering that Miramar had already bought the tuna canning plant.
By reason of the closure, petitioners were legally dismissed for authorized cause. In
addition, even if Mar Fishing reneged on notifying the DOLE within 30 days prior to its
closure, that failure did not make the dismissals void. Consequently, the LA ordered Mar
Fishing to give separation pay to its workers.
Aggrieved, petitioners pursued the action before the NLRC, which modified the LA's
Decision. Noting that Mar Fishing notified the DOLE only two days before the business
closed, the labor court considered petitioners' dismissal as ineffectual. Hence, it awarded,
apart from separation pay, full back wages to petitioners from the time they were
terminated on 31 October 2001 until the date when the LA upheld the validity of their
dismissal on 30 July 2002.
Additionally, the NLRC pierced the veil of corporate fiction and ruled that Mar Fishing and
Miramar were one and the same entity, since their officers were the same. Hence, both
companies were ordered to solidarily pay the monetary claims. On reconsideration, the
NLRC modified its ruling by imposing liability only on Mar Fishing. The labor court held that
petitioners had no cause of action against Miramar, since labor contracts cannot be enforced
against the transferee of an enterprise in the absence of a stipulation in the contract that
the transferee assumes the obligation of the transferor.
Issue: Whether or not Mar Fishing and Miramar should be held solidarily liable to petitioners
Ruling:
For a dismissal based on the closure of business to be valid, three (3) requirements must be
established. Firstly, the cessation of or withdrawal from business operations must be bona
fide in character. Secondly, there must be payment to the employees of termination pay
amounting to at least one-half (1/2) month pay for each year of service, or one (1) month
pay, whichever is higher. Thirdly, the company must serve a written notice on the
employees and on the DOLE at least one (1) month before the intended termination.
In their Petition for Review on Certiorari, petitioners did not dispute the conclusion of the LA
and the NLRC that Mar Fishing had an authorized cause to dismiss its workers. Neither did
petitioners challenge the computation of their separation pay.
Rather, they questioned the holding that only Mar Fishing was liable for their monetary
claims.
Basing their conclusion on the Memorandum of Agreement and Supplemental Agreement
between Miramar and Mar Fishing's labor union, as well as the General Information Sheets
and Company Profiles of the two companies, petitioners assert that Miramar simply took
over the operations of Mar Fishing. In addition, they assert that these companies are one

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and the same entity, given the commonality of their directors and the similarity of their
business venture in tuna canning plant operations.
At the fore, the question of whether one corporation is merely an alter ego of another is
purely one of fact generally beyond the jurisdiction of this Court. In any case, given only
these bare reiterations, this Court sustains the ruling of the LA as affirmed by the NLRC that
Miramar and Mar Fishing are separate and distinct entities, based on the marked differences
in their stock ownership. Also, the fact that Mar Fishing's officers remained as such in
Miramar does not by itself warrant a conclusion that the two companies are one and the
same. As this Court held in Sesbreño v. Court of Appeals, the mere showing that the
corporations had a common director sitting in all the boards without more does not authorize
disregarding their separate juridical personalities. Neither can the veil of corporate fiction
between the two companies be pierced by the rest of petitioners' submissions, namely, the
alleged take-over by Miramar of Mar Fishing's operations and the evident similarity of their
businesses. At this point, it bears emphasizing that since piercing the veil of corporate fiction
is frowned upon, those who seek to pierce the veil must clearly establish that the separate
and distinct personalities of the corporations are set up to justify a wrong, protect a fraud, or
perpetrate a deception. This, unfortunately, petitioners have failed to do. In Indophil Textile
Mill Workers Union vs. Calica, we ruled thus:
In the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging
that the creation of the corporation is a devi[c]e to evade the application of the CBA
between petitioner Union and private respondent company. While we do not discount the
possibility of the similarities of the businesses of private respondent and Acrylic, neither are
we inclined to apply the doctrine invoked by petitioner in granting the relief sought. The fact
that the businesses of private respondent and Acrylic are related, that some of the
employees of the private respondent are the same persons manning and providing for
auxiliary services to the units of Acrylic, and that the physical plants, offices and facilities
are situated in the same compound, it is our considered opinion that these facts are not
sufficient to justify the piercing of the corporate veil of Acrylic. (Emphasis supplied.)
Having been found by the trial courts to be a separate entity, Mar Fishing — and not Miramar
— is required to compensate petitioners. Indeed, the back wages and retirement pay earned
from the former employer cannot be filed against the new owners or operators of an
enterprise.
Prudential Guarantee & Assurance Employee Labor Union vs. NLRC
Facts:
On November 11, 2005, PGAI's Human Resource Manager, Atty. Joaquin R. Rillo (Atty. Rillo),
invited Union President, Mike Apostol (Apostol) to his office. Atty. Rillo informed Apostol that
PGAI was going to conduct an on-the-spot security check in the Information and Technology
(IT) Department. Atty. Rillo also requested that Union representatives witness the inspection
to which Apostol agreed. TDAHCS
The inspection team proceeded to the IT Department, and the EDP head, through PGAI
network administrator Angelo Gutierrez (Gutierrez), initiated the spot check of IT
Department computers, beginning with the one assigned to Vallota. After exploring the
contents of all the folders and subfolders in the "My Documents" folder, Gutierrez apparently
did not find anything unusual with Vallota's computer and said "Wala naman, saan dito?"
Retizos insisted, "Nandyan yan," and took over the inspection until she found a folder named
"MAA." She then exclaimed, "Heto oh! Ano to? Bakit may MAA dito?" Retizos asked Vallota,
"Are you working for MAA?" Vallota replied, "Hindi po, MAA mutual life po yan na makikita po
sa internet." Gutierrez saved a copy of the contents of the MAA folder in a floppy disk.
Sensing that Vallota was being singled out, Apostol insisted that all the computers in the IT
Department, including that of Retizos, be also subjected to a spot security check. Later, at
Retizos' office, and in the presence of Atty. Rillo, Vallota was informed that Retizos and Atty.

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Rillo would print the files found in his computer under the folder "MAA." Vallota did not
object. After the files were printed, Vallota and the Union Secretary were asked to sign each
page of the printout. Vallota, however, was not given a copy of the printed file.
On November 14, 2005, Vallota received a memorandum directing him to explain within 72
hours why highly confidential files were stored in his computer.
Meanwhile, the Union sent a letter 11 to PGAI President Philip K. Rico (Rico) requesting that a
grievance committee be convened and that the contents of the computers of other IT
personnel be similarly produced. The request for the convening of a grievance committee
was ignored. On December 21, 2005, Vallota was given a notice of termination of his
employment effective January 10, 2006 on the ground of loss of trust and confidence. The
decision (AC-05-02) was embodied in a memorandum dated December 21, 2005.
Thus, the petitioners filed a complaint for illegal dismissal with claims for full backwages,
moral and exemplary damages, and attorney's fees. The case was docketed as NLRC-NCR
Case No. 00-01-00387-06.
On March 31, 2006, Labor Arbiter Aliman D. Mangandog (LA) rendered a decision in favor of
the petitioners.
NLRC granted the respondents' motion for reconsideration and reversed and set aside the
decision of the LA.
Issue: Whether Vallota was validly dismissed on the ground of loss of trust and confidence;
and (2) whether the requirements of procedural due process for termination were observed.
Ruling:
The Court's discussion in Mabeza v. National Labor Relations Commission is instructive:
ISAcHD
Loss of confidence as a just cause for dismissal was never intended to provide employers
with a blank check for terminating their employees. Such a vague, all-encompassing pretext
as loss of confidence, if unqualifiedly given the seal of approval by this Court, could readily
reduce to barren form the words of the constitutional guarantee of security of tenure. Having
this in mind, loss of confidence should ideally apply only to cases involving employees
occupying positions of trust and confidence or to those situations where the employee is
routinely charged with the care and custody of the employer's money or property. To the first
class belong managerial employees, i.e., those vested with the powers or prerogatives to lay
down management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign
or discipline employees or effectively recommend such managerial actions; and to the
second class belong cashiers, auditors, property custodians, etc., or those who, in the
normal and routine exercise of their functions, regularly handle significant amounts of
money or property. Evidently, an ordinary chambermaid who has to sign out for linen and
other hotel property from the property custodian each day and who has to account for each
and every towel or bedsheet utilized by the hotel's guests at the end of her shift would not
fall under any of these two classes of employees for which loss of confidence, if ably
supported by evidence, would normally apply. Illustrating this distinction, this Court, in
Marina Port Services, Inc. vs. NLRC, has stated that:
To be sure, every employee must enjoy some degree of trust and confidence from the
employer as that is one reason why he was employed in the first place. One certainly does
not employ a person he distrusts. Indeed, even the lowly janitor must enjoy that trust and
confidence in some measure if only because he is the one who opens the office in the
morning and closes it at night and in this sense is entrusted with the care or protection of
the employer's property. The keys he holds are the symbol of that trust and confidence.
By the same token, the security guard must also be considered as enjoying the trust and
confidence of his employer, whose property he is safeguarding. Like the janitor, he has
access to this property. He too, is charged with its care and protection.
Notably, however, and like the janitor again, he is entrusted only with the physical task of
protecting that property. The employer's trust and confidence in him is limited to that
ministerial function. He is not entrusted, in the Labor Arbiter's words, 'with the duties of

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safekeeping and safeguarding company policies, management instructions, and company
secrets such as operation devices.' He is not privy to these confidential matters, which are
shared only in the higher echelons of management. It is the persons on such levels who,
because they discharge these sensitive duties, may be considered holding positions of trust
and confidence. The security guard does not belong in such category.
More importantly, we have repeatedly held that loss of confidence should not be simulated
in order to justify what would otherwise be, under the provisions of law, an illegal dismissal.
"It should not be used as a subterfuge for causes which are illegal, improper and unjustified.
It must be genuine, not a mere afterthought to justify an earlier action taken in bad faith."
In Bristol Myers Squibb (Phils.), Inc. v. Baban, the Court discussed the requisites for a valid
dismissal on the ground of loss of trust and confidence:
It is clear that Article 282(c) of the Labor Code allows an employer to terminate the services
of an employee for loss of trust and confidence. The right of employers to dismiss
employees by reason of loss of trust and confidence is well established in jurisprudence.
The first requisite for dismissal on the ground of loss of trust and confidence is that the
employee concerned must be one holding a position of trust and confidence. Verily, We must
first determine if respondent holds such a position.
There are two (2) classes of positions of trust. The first class consists of managerial
employees. They are defined as those vested with the powers or prerogatives to lay down
management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees or effectively recommend such managerial actions. The second class
consists of cashiers, auditors, property custodians, etc. They are defined as those who in the
normal and routine exercise of their functions, regularly handle significant amounts of
money or property.
xxx xxx xxx
The second requisite is that there must be an act that would justify the loss 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.
Thus, the first question to be addressed is whether Vallota held a position of trust and
confidence.
Based on the standards set by previous jurisprudence, Vallota's position as Junior
Programmer is analogous to the second class of positions of trust and confidence. Though he
did not physically handle money or property, he became privy to confidential data or
information by the nature of his functions. At a time when the most sensitive of information
is found not printed on paper but stored on hard drives and servers, an employee who
handles or has access to data in electronic form naturally becomes the unwilling recipient of
confidential information. HEDSIc
Having addressed the nature of his position, the next question is whether the act
complained of justified the loss of trust and confidence of Vallota's employer so as to
constitute a valid cause for dismissal. It must, thus, be determined whether the alleged basis
for dismissal was based on clearly established facts.
To be a valid ground for dismissal, loss of trust and confidence must be based on a willful
breach of trust and founded on clearly established facts. A breach is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an
act done carelessly, thoughtlessly, heedlessly or inadvertently. It must rest on substantial
grounds and not on the employer's arbitrariness, whims, caprices or suspicion; otherwise,
the employee would remain eternally at the mercy of the employer. Further, in order to
constitute a just cause for dismissal, the act complained of must be work-related and show
that the employee concerned is unfit to continue working for the employer. Such ground for
dismissal has never been intended to afford an occasion for abuse because of its subjective
nature.
It must also be remembered that in illegal dismissal cases like the one at bench, the burden
of proof is upon the employer to show that the employee's termination from service is for a

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just and valid cause. The employer's case succeeds or fails on the strength of its evidence
and not the weakness of that adduced by the employee, in keeping with the principle that
the scales of justice should be tilted in favor of the latter in case of doubt in the evidence
presented by them. Often described as more than a mere scintilla, the quantum of proof is
substantial evidence which is understood as such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion, even if other equally reasonable minds
might conceivably opine otherwise. Failure of the employer to discharge the foregoing onus
would mean that the dismissal is not justified and, therefore, illegal. TADCSE
In this case, there was no other evidence presented to prove fraud in the manner of securing
or obtaining the files found in Vallota's computer. In fact, aside from the presence of these
files in Vallota's hard drive, there was no other evidence to prove any gross misconduct on
his part. There was no proof either that the presence of such files was part of an attempt to
defraud his employer or to use the files for a purpose other than that for which they were
intended. If anything, the presence of the files reveals some degree of carelessness or
neglect in his failure to delete them, but it is an extremely farfetched conclusion bordering
on paranoia to state that it is part of a larger conspiracy involving corporate espionage.
2. In this case, the two-notice requirement was complied with. By the petitioners' own
admission, PGAI issued to Vallota a written Notice of Charges & Preventive Suspension (Ref.
No. AC-05-02) dated November 14, 2005. After an exchange of memoranda, PGAI then
informed Vallota of his dismissal in its decision dated December 21, 2005.
Given, however, that the petitioners expressly requested a conference or a convening of a
grievance committee, following the Court's ruling in the Perez case, which was later cited in
the recent case of Lopez v. Alturas Group of Companies, such formal hearing became
mandatory. After PGAI failed to affirmatively respond to such request, it follows that the
hearing requirement was not complied with and, therefore, Vallota was denied his right to
procedural due process.
In light of the above discussion, Vallota is entitled to reinstatement and backwages,
reckoned from the date he was illegally dismissed until the finality of this decision in
accordance with jurisprudence.

PAULINO VS. NLRC
G.R. NO. 176184 JUNE 13, 2012
Facts:
On 16 January 1995, petitioner, who was then employed by private respondent Philippine
Long Distance Telephone Company, Inc. (PLDT) as Cable Splicer III, surrendered his service
vehicle to PLDT's motor pool for body repairs. For this reason, he unloaded the companyissued plant materials contained in the vehicle and stored them at his residence for
safekeeping.
For 1 month and 11 days, PLDT's properties were in the custody of petitioner. Thus, on 27
February 1995, members of the Philippine National Police (PNP), armed with a search
warrant, searched his house.
At that time, based on the investigation by the PNP, petitioner did not present any
documents or requisition slips that would justify his possession of the materials.
Consequently, PLDT caused the filing of an Information for qualified theft against him.
The next day, PLDT issued an invitation to V. Pesayco, the manager of petitioner, requesting
him to make petitioner available to clarify certain matters. Petitioner attended this meeting
along with his lawyer, but PLDT's investigators merely talked with the counsel. PLDT then
received a security report stating that petitioner had engaged in the illicit disposal of its
plant materials, which were recovered during the search conducted at his residence.
jur2005
On 3 April 1995, PLDT issued an Inter-Office Memo requiring petitioner to explain why he
should not be terminated from employment for serious misconduct (theft of company

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property). The Memo also gave him the option to ask for a formal hearing of his case. In
reply, he requested that the proceedings be held in abeyance until the criminal case against
him had been concluded.
Then, on 26 May 1995, Pesayco informed petitioner in writing that since his reply did not
provide any clarification whatsoever that would have warranted an evaluation of his case,
the company was terminating his services effective on the said date.
Three years later, after the criminal case for qualified theft had been terminated for failure of
the prosecution to prove his guilt beyond reasonable doubt, petitioner filed a Complaint for
Illegal Dismissal which the Labor Arbiter (LA) dismissed for utter lack of merit.
Both the NLRC and the CA upheld the dismissal of petitioner.
Issue: Petitioner raises the sole issue of whether or not the CA gravely erred in upholding
his dismissal as valid based on just cause.
Ruling:
The Labor Code recognizes that an employer, for just cause, may validly terminate the
services of an employee for serious misconduct or willful disobedience of the lawful orders of
the employer or representative in connection with the employee's work. Fraud or willful
breach by the employee of the trust reposed by the employer in the former, or simply loss of
confidence, also justifies an employee's dismissal from employment.
The LA, the NLRC and the CA all acknowledged that, notwithstanding petitioner's acquittal in
the criminal case for qualified theft, respondent PLDT had adequately established the basis
for the company's loss of confidence as a just cause to terminate petitioner. This Court finds
that approach to be correct, since proof beyond reasonable doubt of an employee's
misconduct is not required in dismissing an employee. Rather, as opposed to the "proof
beyond reasonable doubt" standard of evidence required in criminal cases, labor suits
require only substantial evidence to prove the validity of the dismissal.
Willful breach of trust or loss of confidence requires that the employee (1) occupied a
position of trust or (2) was routinely charged with the care of the employer's property. As
correctly appreciated by the CA, petitioner was charged with the care and custody of PLDT's
property.
To warrant dismissal based on loss of confidence, there must be some basis for the loss of
trust or the employer must have reasonable grounds to believe that the employee is
responsible for misconduct that renders the latter unworthy of the trust and confidence
demanded by his or her position. Here, petitioner disputes the sufficiency of PLDT's basis for
loss of trust and confidence. He alleges that he did not steal the plant materials, considering
that he had lawful possession.
However, assuming that he lawfully possessed the materials, PLDT still had ample reason or
basis to already distrust petitioner. For more than a month, he did not even inform PLDT of
the whereabouts of the plant materials. Instead, he stocked these materials at his residence
even if they were needed in the daily operations of the company. In keeping with the
honesty and integrity demanded by his position, he should have turned over these materials
to the plant's warehouse.
The fact that petitioner did not present any documents or requisition slips at the time that
the PNP took the plant materials logically excites suspicion. In addition, PLDT received a
security report stating that petitioner had engaged in the illicit disposal of its plant
materials, which were recovered during the search conducted at his residence.
Thus, PLDT reasonably suspected petitioner of stealing the company's property. At that
juncture, the employer may already dismiss the employee since it had reasonable grounds
to believe or to entertain the moral conviction that the latter was responsible for the
misconduct, and the nature of his participation therein rendered him absolutely unworthy of
the trust and confidence demanded by his position.
Given these circumstances, it would have been unfair for PLDT to keep petitioner in its
employ. Petitioner displayed actions that made him untrustworthy. Thus, as a measure of

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self-protection, PLDT validly terminated his services for serious misconduct and loss of
confidence.

MANILA ELECTRIC CO. VS. DEJAN
G.R. NO. 194106 JUNE 18, 2012
Facts:
Respondent Herminigildo Dejan commenced employment with the Manila Electric Company
(Meralco) on July 7, 1992. He was then Meralco's branch representative in its San Pedro,
Laguna branch, with a monthly salary of P30,500.00. His work consisted of accepting
payments of the required fees from applicants for electric service installation and issuing the
corresponding meter sockets/bases after payment of a deposit, preceded by an inspection of
the premises to be energized by a Meralco field personnel.
In the mid-afternoon of March 18, 2005, the security guard on duty at the branch, Warlito
Silverio, noticed a certain Estanislao Gozarin a.k.a. Mang Islao, a private electrician, take out
from the branch premises 20 pieces of meter sockets which were then loaded into a parked
Meralco contracted jeep belonging to one Cesar Reyes. Reyes brought the meter sockets to
his house. The meter sockets were thereafter allegedly picked up by Gil Duenas, a Meralco
field representative. Dejan was asked to explain the incident. aCITEH
In his letter-explanation, dated March 23, 2005, to a certain Emilia SJ Reaso, Dejan admitted
that he released the meter sockets in question because the deposit fees had already been
paid. The payor, a certain Antonio A. Depante a.k.a. Bruce, also an electrician, asked for the
release of the items. Allegedly, he had several contracts for service installation with the
branch. Dejan indicated the list of contracts covering the released meter sockets. Sometime
in September, October and November 2005, Meralco asked Gozarin, Dejan, and Reyes to
give their sworn statements on the incident.
On February 10, 2006, Dejan received a letter from Marcelino Rosario, head of Meralco's
Investigation-Paralegal Services, charging him with the unauthorized taking of 20 meter
sockets, in violation of Section 7, paragraphs 4 and 11 of the Company Code of Employee
Discipline, in relation to Article 282 of the Labor Code. On February 17, 2006, Meralco
conducted a formal investigation where Dejan admitted issuing the meter sockets without
the authorization of the applicants for electric connection. He alleged that he released the
items even without authorization as it had been the accepted practice in the office, provided
the deposit fee had been paid. He claimed that he talked with Depante, through the cell
phone of Duenas, about it, after Duenas himself requested him (Dejan) to release the meter
sockets to Gozarin. When Dejan released the meter sockets, Duenas instructed Gozarin to
take them out of the Meralco premises and load them in Reyes' jeep.
Also testifying at the investigation, Depante corroborated Dejan's account of the incident. He
alleged that he made the request for the release of the meter sockets due to his inability to
pick up the items himself as he was busy with another project at the time. He and Duenas
retrieved the meter sockets from Reyes' house the next day.
Unconvinced with Dejan's explanation, Meralco served Dejan a letter on April 6, 2006, 9
terminating his employment effective the following day, with forfeiture of all rights and
privileges. On April 20, 2006, Dejan filed his complaint with the National Labor Relations
Commission (NLRC).
Issue: the validity of dejan’s termination.
Ruling:
We found for petitioner.
Dejan is liable as charged. More specifically, he is liable for violation of Section 7, paragraphs
4 and 11 of the Company Code of Employee Discipline, constituting serious misconduct,
fraud and willful breach of trust of the employer, just causes for termination of employment

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under the law. The facts and the evidence on record clearly bear this out and we wonder
how the CA could have missed the seriousness or gravity of Dejan's transgressions.
There is no dispute about the release of the meter sockets. Also, the persons involved were
clearly identified — Dejan; Gozarin or Mang Islao, a private electrician who received the
meter sockets; Reyes, the owner of the jeep where the meter sockets were loaded by
Gozarin; Duenas, a Meralco field representative; and Depante, another private electrician
who purportedly owned the meter sockets.
There is also no question that Dejan released the meter sockets to Gozarin without the
written authority or SPA from the customer or customers who applied for electric connection
(as a matter of company policy). Dejan released the meter sockets to Gozarin on the mere
say-so of Depante, as he claimed, through a call to Duenas' cell phone, and justified his act
to be in accord with accepted company practice.
Dejan tried to minimize the gravity of his offense by denying that the meter sockets were
lost and that he issued them without authority since they were all contracted, as shown by
the SINs he submitted in evidence.
Dejan's tale fails to convince us. While the meter sockets might not have been lost, their
issuance or release was highly irregular, perpetrated to defraud the company. As we see it,
the release of the meter sockets served as a key element in a private contracting activity for
electric service connection of Dejan and Duenas. AEaSTC
On the day of the release of the meter sockets, March 18, 2005, a Friday, Duenas was in the
branch office, interceding for private electrician Depante. Gozarin, Depante's emissary, was
there also, waiting for the release. Dejan had then already put the 20 meter sockets in boxes
when he received a call from Depante on Duenas' cell phone requesting for the release of
the meter sockets to Gozarin, saying that he could not pick them up as he was attending to
another project.
After Depante's call, Dejan released the meter sockets to Gozarin who had them loaded in
Reyes' jeep; Reyes, in turn, brought them to his house. On the Sunday of that week, March
20, 2005, the meter sockets were picked up. Reyes testified that Duenas picked them up;
Duenas, on the other hand, stated that it was Depante who retrieved the meter sockets.
While there was no unanimity as to who picked up the meter sockets, it appears that it was
Duenas who was the most active or the most interested in having the meter sockets
released. Gozarin, who had known Duenas for quite some time, testified that it was Duenas
who told him to get the meter sockets from Dejan and load them in Reyes' jeep.
Questioned as to whether Dejan asked him for a written authorization, Gozarin answered no.
Reyes, like Gozarin, had also known Duenas for some time; in fact, since 1993. Also, it was
Duenas who asked him to load the meter sockets in his jeep.
Given Duenas' involvement in the release of the meter sockets on March 18, 2005, there is
reason to believe that it was more through his intervention than Depante's representation
that the meter sockets were released. There is reason to believe, too, that it was Duenas
who picked the meter sockets from Reyes' house and that Depante made a call to Dejan to
accommodate the latter and Duenas, whom he likewise knew very well, in taking the meter
sockets out of the branch premises for reason or reasons only known to them. Depante is a
private contractor for electric services and it would work to his favor if he cooperated with
the two Meralco employees.
It was bad enough that Dejan failed to ask for a written authorization for the release of the
meter sockets as required by company policy. His apparent motive behind the move — to
mislead the company, in concert with Duenas, as to the real recipient of the meter sockets
— made it worse. It could only result in a loss to Meralco as it was not the customer, who
applied for electric service, or his authorized representative who received the meter sockets.
As the circumstances strongly indicate, it was Duenas who retrieved the meter sockets. It
was obviously an act intended to defraud the company. It lends credence to Meralco's
submission that Duenas was engaged in private contracting for electric connection, together
with Dejan. TSDHCc
The above impression is bolstered by Dejan's false claim that the meter sockets were all
accounted for because they were issued for Depante's service applications. As the company

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discovered, however, the SINs Dejan submitted in evidence covered applications which had
already been inspected, approved and provided (installed) with meters even before March
18, 2005, the date when the 20 meter sockets were released. Meralco argued before the
NLRC 27 that if Depante's service applications had already been installed with meters, it
could only be that the meter sockets Dejan issued were intended for purposes which the
company had not approved or authorized. It added that there was clear indication of Dejan's
intent to gain from and to defraud the company. Meralco reiterated the same argument
before the CA.
The CA brushed aside the argument, relying on Dejan's explanation that Depante's "practice
of leaving the deposit with him whenever customers abounded often resulted in the
accumulation of contracts for the meter base."
We disagree with this finding. Dejan stated in his Sinumpaang Salaysay given on October 21,
2005:
T:Bakit ikaw ang kinausap ni Bruce na mag-issue ng 20 meter sockets?
S:Kasi po ako po ang gumawa ng mga kontrata niya.
T:Kung gayon ay kaya mo ito ibinigay ay bayad na lahat ng mga deposito nito?
S:Opo.
Further, in the Malayang Salaysay given by Dejan and Depante on February 17, 2006, Dejan
said:
T:Anong masasabi mo Ginoong Dejan hinggil sa paratang sa iyo?
S:Hindi po totoo na sinasabi nila na nawala po ang meter base at hindi rin po totoo na ito ay
aking inisyu ng walang pahintulot dahil ang lahat nito ay kontrata. Akin po[ng] isinusumite
ang ilan sa mga kontratang ukol sa mga SIN na siyang dahilan kaya ko ini-issue ang mga ito.
Based on the above depositions, we cannot accept the CA's insinuation that Dejan mixed up
the SINs he submitted in evidence (to cover for the released 20 meter sockets) with the SINs
pertaining to other service applications which Depante contracted. There could not have
been room for confusion as far as Dejan is concerned. He was the one preparing Depante's
contracts, as he himself admitted. He knew or should have known the contracts' status
(whether they had already been acted upon or not). It would be gross negligence on his part
if it were otherwise.
Under the circumstances, we believe that Dejan submitted the SINs in question to make it
appear that the released meter sockets pertained to outstanding service applications
contracted by Depante; in other words, to give a semblance of regularity in the transaction
and to avoid liability for their unauthorized release. He released the meter sockets with
intent to defraud the company.
We cannot blame Meralco for losing its trust and confidence in Dejan. He is no ordinary
employee. As branch representative, "he was principally charged with the function and
responsibility to accept payment of fees required for the installation of electric service and
facilitate issuance of meter sockets." The duties of his position require him to always act
with the highest degree of honesty, integrity and sincerity, as the company puts it. In light of
his fraudulent act, Meralco, an enterprise imbued with public interest, cannot be compelled
to continue Dejan's employment, as it would be inimical to its interest. Needless to say,
"[t]he law, in protecting the rights of the laborer, authorizes neither oppression nor selfdestruction of the employer." For sure, Dejan was validly dismissed for serious misconduct,
and loss of trust and confidence.
The procedural question
Dejan posits that the petition is improper because it raises only questions of facts. We do not
see this as a legal problem. As we stressed earlier, the CA grossly misapprehended the facts
and the evidence on record. The case falls within the exceptions to the rule on the
conclusiveness of the CA findings, thereby opening the CA rulings to the Court's
discretionary review authority

APO CEMENT CORPORATION VS. BAPTISMA

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G.R. NO 176671 JUNE 20, 2012
Facts:
On June 16, 1998, respondent Zaldy E. Baptisma was employed by petitioner Apo Cement
Corporation, a duly registered corporation maintaining and operating a cement
manufacturing plant in Tinaan, Naga, Cebu. 4
Sometime in September 2003, petitioner received information from one of its employees,
Armando Moralda (Moralda), that some of its personnel, including respondent who was then
the manager of petitioner's Power Plant Department, were receiving commissions or
"kickbacks" from suppliers. 5 To ascertain the veracity of the information given by Moralda,
the top management of petitioner conducted an investigation during which Jerome Lobitaña
(Lobitaña), one of petitioner's accredited suppliers, doing business under the name and style
"Precision Process," came forward to corroborate the statement of Moralda. 6
On October 10, 2003, Moralda and Lobitaña executed separate affidavits 7 to substantiate
their claims. Pertinent portions of the affidavits read:
Lobitaña's Affidavit:
xxx xxx xxx
8.1.There were times when Mr. Tinoco himself talked directly to the end-user [to]
negotiate for the amount or percentage of the kickback that they would get from me.
There was one time when Mr. Tinoco informed me that he has negotiated with Mr.
Zaldy Baptisma, the Power Plant Manager, and committed to give him a ten percent
(10%) "commission" or kickback for all transactions which would be awarded to me.
Upon the award of the contract amounting to approximately Two Hundred Thousand
Pesos (P200,000.00) and the remittance by Apo of the payment, I met with Mr.
Baptisma outside the Apo plant and personally handed to him his ten percent (10%)
"commission"/kickback in cash.
Having been implicated in the irregularities, respondent, on November 3, 2003,
received a Show Cause Letter with Notice of Preventive Suspension. Respondent
submitted his written explanation 12 denying the accusations hurled against him.
To further afford respondent ample opportunity to defend himself, petitioner
conducted a series of administrative investigation hearings during which respondent
was able to face his accusers.
For his part, respondent presented his co-employees Bobby Banzon (Banzon), Reno
Cedeño (Cedeño) and Chrstopher Navarro. 16 Banzon testified that sometime in
December 2002, he, along with respondent and other Apo employees, went to Papa's
Grill; that on said occasion, he saw Lobitaña with some companions at another table;
and that Lobitaña did not approach them but only gave food and bottles of beer
through a waiter. 17 Cedeño, on the other hand, denied meeting Lobitaña at Papa's
Grill. 18
On March 22, 2004, respondent received the Notice of Termination 19 dated March 19, 2004
informing him of his dismissal from employment effective immediately on the ground of loss
of trust and confidence.
The Labor Arbiter favored the respondent. Commissioner reversed the decision. However, CA
reinstated the Decision of the Labor Arbiter. It ruled that petitioner failed to prove the
existence of a just cause to warrant the termination of respondent as the alleged loss of
trust and confidence was not based on established facts.
Issue: Whether there was just cause for the dismissal of respondent.
Ruling:

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To validly dismiss an employee on the ground of loss of trust and confidence under Article
282 (c) of the Labor Code of the Philippines, the following guidelines must be observed: "1)
loss of confidence should not be simulated; 2) it should not be used as 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; and 4) it must be genuine, not a mere afterthought
to justify earlier action taken in bad faith." More important, it "must be based on a willful
breach of trust and founded on clearly established facts."
In this case, we agree with the NLRC that the termination of respondent on the ground of
loss of trust and confidence was justified. Unlike the Labor Arbiter and the CA, we find the
testimony of Lobitaña credible and truthful.
All told, we find that the testimony of Lobitaña constitutes substantial evidence to prove that
respondent, as the then Power Plant Manager, accepted commissions and/or "kickbacks"
from suppliers, which is a clear violation of Section 2.04 of petitioner's Company Rules and
Regulations. Jurisprudence consistently holds that for managerial employees "the mere
existence of a basis for believing that such employee has breached the trust of his employer
would suffice for his dismissal." As we then see it, respondent's termination was for a just
and valid cause.

COSMOS BOTTLING VS. FERMIN
G.R. NO 193676 JUNE 20, 2012
Facts:
-Wilson B. Fermin (Fermin) was a forklift operator at Cosmos Bottling Corporation (COSMOS),
where he started his employment on 27 August 1976. 4 On 16 December 2002, he was
accused of stealing the cellphone of his fellow employee, Luis Braga (Braga). 5 Fermin was
then given a Show Cause Memorandum, requiring him to explain why the cellphone was
found inside his locker. In compliance therewith, he submitted an affidavit the following day,
explaining that he only hid the phone as a practical joke and had every intention of returning
it to Braga. Braga executed a handwritten narration of events.
After conducting an investigation, COSMOS found Fermin guilty of stealing Braga's phone in
violation of company rules and regulations. Consequently, on 2 October 2003, the company
terminated Fermin from employment after 27 years of service.
Meanwhile, Fermin filed a Complaint for Illegal Dismissal, which the Labor Arbiter (LA)
dismissed for lack of merit on the ground that the act of taking a fellow employee's
cellphone amounted to gross misconduct. Further, the LA likewise took into consideration
Fermin's other infractions, namely: (a) committing acts of disrespect to a superior officer,
and (b) sleeping on duty and abandonment of duty. This was affirmed by the
Commission.Court of Appeals reversed the rulings of the LA and the NLRC and awarded him
his full retirement benefits. Although the CA accorded with finality the factual findings of the
lower tribunals as regards Fermin's commission of theft, it nevertheless held that the penalty
of dismissal from service was improper on the ground that the said violation did not amount
to serious misconduct or willful disobedience.
Issue: Whether or not the imposition of the penalty of dismissal was appropriate.
Ruling:
Affirmative. Theft committed against a co-employee is considered as a case analogous to
serious misconduct, for which the penalty of dismissal from service may be meted out to the
erring employee, viz.:
Article 282 of the Labor Code provides:

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Article 282.Termination by Employer. — An employer may terminate an employment
for any of the following causes:
(a)Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or his representatives in connection with his work.
Misconduct involves "the transgression of some established and definite rule of action,
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not
mere error in judgment."
In this case, the LA has already made a factual finding, which was affirmed by both the NLRC
and the CA, that Fermin had committed theft when he took Braga's cellphone. Thus, this act
is deemed analogous to serious misconduct, rendering Fermin's dismissal from service just
and valid.
Further, the CA was correct in ruling that previous infractions may be cited as justification for
dismissing an employee only if they are related to the subsequent offense. However, it must
be noted that such a discussion was unnecessary since the theft, taken in isolation from
Fermin's other violations, was in itself a valid cause for the termination of his employment.
Finally, it must be emphasized that the award of financial compensation or assistance to an
employee validly dismissed from service has no basis in law. Therefore, considering that
Fermin's act of taking the cellphone of his co-employee is a case analogous to serious
misconduct, this Court is constrained to reverse the CA's ruling as regards the payment of
his full retirement benefits. In the same breath, neither can this Court grant his prayer for
backwages.

REYES-RAVEL VS. PHILIPPINE LUEN THAI HOLDINGS
G.R. NO 174893 JULY 11, 2012
Facts:
In February 2000, PLTHC hired petitioner as Corporate Human Resources (CHR) Director for
Manufacturing for its subsidiary/affiliate company, L&T. In the employment contract, 5
petitioner was tasked to perform functions in relation to administration, recruitment,
benefits, audit/compliance, policy development/structure, project plan, and such other works
as may be assigned by her immediate superior, Frank Sauceda (Sauceda), PLTHC's
Corporate Director for Human Resources.
On September 6, 2001, petitioner received a Prerequisite Notice from Sauceda and the
Corporate Legal Counsel of PLTHC, Ma. Lorelie T. Edles with reference to her failure to
perform in accordance with management directives in various instances, which collectively
have resulted in loss of confidence because on numerous occasions. Also, in the presence of
colleagues and subordinates, she made statements that serve to undermine the Company's
efforts at pursuing the HR2 Program of which the other colleagues complained about her.
She explained that her alleged failure to perform management directives could be attributed
to the lack of effective communication with her superiors due to malfunctioning email
system. This caused her to miss certain directives coming from her superiors and likewise,
for her superiors to overlook the reports she was submitting. She denied uttering negative
comments about the HR2 Program and instead claimed to have intimated her support for it.
Petitioner was dismissed from the service for loss of confidence on her ability to promote the
interests of the company. This led petitioner to file a Complaint for illegal dismissal, payment

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of separation pay, 13th month pay, moral and exemplary damages, attorney's fees, and
other unpaid company benefits against respondents and its officers.
Issue: Whether or not there was a valid dismissal.
Ruling:
There exists a valid ground for petitioner's termination for employment.
Jurisprudence provides that an employer has a distinct prerogative and wider latitude of
discretion in dismissing a managerial personnel who performs functions which by their
nature require the employer's full trust and confidence. As distinguished from a rank and file
personnel, mere existence of a basis for believing that a managerial employee has breached
the trust of the employer justifies dismissal. Loss of confidence as a ground for dismissal
does not require proof beyond reasonable doubt as the law requires only that there be at
least some basis to justify it.
Petitioner was L&T's CHR Director for Manufacturing. As such, she was directly responsible
for managing her own departmental staff. It is therefore without question that the CHR
Director for Manufacturing is a managerial position saddled with great responsibility.
Because of this, petitioner must enjoy the full trust and confidence of her superiors. Not only
that, she ought to know that she is "bound by more exacting work ethics" and should live up
to this high standard of responsibility.
records show that petitioner indeed unreasonably failed to effectively communicate with her
immediate superior. There was an apparent neglect in her obligation to maintain constant
communication with Sauceda in order to ensure that her work is up to par. Second, the
affidavits of petitioner's co-workers revealed her negative attitude and unprofessional
behavior towards them and the company. The third and most important is petitioner's
display of inefficiency and ineptitude in her job.
An employer has the right to regulate, according to its discretion and best judgment, all
aspects of employment, including work assignment, working methods, processes to be
followed, working regulations, transfer of employees, work supervision, lay-off of workers
and the discipline, dismissal and recall of workers soo long as they are exercised in good
faith.

OMAR VERDADERO VS. BARNEY AUTOLINES GROUP OF COMPANIES TRANSPORT,
INC.
G.R. NO 195428 AUGUST 29, 2012
Facts:
Jomar Verdadero is a bus conductor of Barney Autolines. In January 2008, he had an
altercation with Gerardo Gimenez, a Disciplinary Officer employed by Barney Autolines. The
altercation resulted from a misunderstanding when Verdadero failed to give Gimenez’s wife
a free ride (under Barney Autolines’s guidelines, employees and their wives are given free
rides in Barney buses). Later, Gimenez filed an administrative complaint against Verdadero.
Barney and Rosela Chito, owners of Barney Autolines, presided over the case. The
administrative case however was fruitless and thereafter Verdadero failed to report to work
as he allegedly feared Gimenez and his friends – Gimenez has a higher rank than Verdadero.
Verdadero would only report to Barney Autolines premises if Gimenez is not around and
would only sign the logbook. He also failed to meet with the Chitos. Despite this, the Chitos
advised Verdadero to report to work and also to submit a letter of apology to Gimenez (as
requested by Gimenez). But instead of complying, Verdadero filed a case for illegal dismissal

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against Barney Autolines as he claimed that he was constructively dismissed when he was
not given any more work assignments and when he was berated by Gimenez during their
altercation. Verdadero is praying that due to his strained relations with the owners, he
should be awarded separation pay and backwages.
Issue: Whether or not Verdadero was illegally dismissed (constructively dismissed) and as
such entitled to separation pay and backwages.
Ruling:
No. As a rule, reinstatement and backwages are reliefs available to an illegally dismissed
employee. Reinstatement restores the employee who was unjustly dismissed to the position
from which he was removed, that is, to his status quo ante dismissal, while the grant of
backwages allows the same employee to recover from the employer that which he had lost
by way of wages as a result of his dismissal. If reinstatement is not possible due to strained
relations, separation pay as well as backwages are in order. HOWEVER, in this case, there is
no constructive or illegal dismissal. Verdadero brought this to himself. He was being ordered
to return to work but he refused to do so based on his unfounded fear of Gimenez. How can
the Chitos assign him any work when he refused to appear before them? Further, the alleged
act of Gimenez berating him cannot be imputed as an act of illegal dismissal on the part of
the Chitos. Gimenez and Verdadero are both employees of the Chitos. Unlawful acts
committed by a co-employee will not bring the matter within the ambit of constructive
dismissal. Gimenez may be of higher rank than Verdadero but his functions as a disciplinary
officer do not involve the power or authority to dismiss or even suspend an employee. Such
power is exclusively lodged in the Barney Autolines management. Without such illegal
dismissal, there can be no strained relations to speak of, hence there can be no award of
separation pay or backwages in favor of Verdadero. In fact, the Chitos intimated that they
are willing take back Verdadero as their employee without any demotion should he report for
work.

NARANJO VS. BIOMEDICA HEALTH CARE, INC.
G.R. NO 193789 SEPT. 19, 2012
Facts:
Respondent Biomedica Health Care, Inc. (Biomedica) was, during the material period,
engaged in the distribution of medical equipment. Petitioners were former employees of
Biomedica who November 7, 2006, with two (2) other employees, were all absent for various
personal reasons. Notably, these are the same employees who filed a letter to the National
Director, National Capital Region-Department of Labor and Employment (DOLE) against
Biomedica for lack of salary increases, failure to remit Social Security System and Pag-IBIG
contributions, and violation of the minimum wage law, among other grievances. Later that
day, petitioners reported for work after receiving text messages for them to proceed to
Biomedica. They were, however, refused entry and told to start looking for another
workplace. The next day, petitioners allegedly came in for work but were not allowed to
enter the premises. Motol purportedly informed petitioners, using foul language, to just find
other employment.
Biomedica issued a notice of preventive suspension and notices to explain within 24 hours to
petitioners. In the Notices, Biomedica accused the petitioners of having conducted an illegal
strike and were accordingly directed to explain why they should not be held guilty of and
dismissed for violating the company policy against illegal strikes. Thereafter, Biomedica
served Notices of Termination on petitioners.
Issue: WON there was a valid dismissal.

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Ruling:
Petitioners were not afforded procedural due process.
It bears pointing out that in the dismissal of an employee, the law requires that due process
be observed. Such due process requirement is two-fold, procedural and substantive, that is,
"the termination of employment must be based on a just or authorized cause of dismissal
and the dismissal must be effected after due notice and hearing." In the instant case,
petitioners were not afforded both procedural and substantive due process.
Art. 277 (b) of the Labor Code contains the procedural due process requirements in the
dismissal of an employee:
Art. 277.Miscellaneous Provisions. — . . .
(b)Subject to the constitutional right of workers to security of tenure and their right to
be protected against dismissal except for a just and authorized cause without
prejudice to the requirement of notice under Article 283 of this Code, the employer
shall furnish the worker whose employment is sought to be terminated a written
notice containing a statement of the causes for termination and shall afford the latter
ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires in accordance with company rules and regulations
promulgated pursuant to guidelines set by the Department of Labor and
Employment….
Thus, the Court elaborated in King of Kings Transport, Inc. v. Mamac that a mere general
description of the charges against an employee by the employer is insufficient to comply
with the above provisions of the law:
. . . Moreover, in order to enable the employees to intelligently prepare their explanation and
defenses, the notice should contain a detailed narration of the facts and circumstances that
will serve as basis for the charge against the employees. A general description of the charge
will not suffice. Lastly, the notice should specifically mention which company rules, if any,
are violated and/or which among the grounds under Art. 282 is being charged against the
employees.
Clearly, petitioners were charged with conducting an illegal strike, not a mass leave, without
specifying the exact acts that the company considers as constituting an illegal strike or
violative of company policies. Such allegation falls short of the requirement in King of Kings
Transport, Inc. of "a detailed narration of the facts and circumstances that will serve as basis
for the charge against the employees." A bare mention of an "illegal strike" will not suffice.
Further, it failed to quote the provisions in the company rules in the notice so petitioners can
be adequately informed of the nature of the charges against them and intelligently file their
explanation and defenses to said accusations. It is incumbent upon respondent company to
show that petitioners were duly informed of said company policies at the time of their
employment and were given copies of these policies. No such proof was presented by
respondents. Worse, respondent Biomedica did not even quote or reproduce the company
policies referred to in the notice while on trial. Moreover, the period of 24 hours allotted to
petitioners to answer the notice was severely insufficient and in violation of the
implementing rules of the Labor Code.
In addition, Biomedica did not set the charges against petitioners for hearing or conference
in accordance with Sec. 2, Book V, Rule XIII of the Implementing Rules and Regulations of the
Labor Code and in line with ruling in King of Kings Transport, Inc., where the Court explained:
(2)After serving the first notice, the employers should schedule and conduct a
hearing or conference wherein the employees will be given the opportunity to: (1)
explain and clarify their defenses to the charge
against them; (2) present evidence
in support of their defenses; and (3) rebut the evidence presented against them by

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the management.
While petitioners did not submit any written explanation to the charges, it is incumbent for
Biomedica to set the matter for hearing or conference to hear the defenses and receive
evidence of the employees.
Lastly, Biomedica again deviated from the dictated contents of a written notice of
termination as laid down in Sec. 2, Book V, Rule XIII of the Implementing Rules that it should
embody the facts and circumstances to support the grounds justifying the termination. As
amplified in King of Kings Transport, Inc.:
(3)After determining that termination of employment is justified, the employers shall serve
the employees a written notice of termination indicating that: (1) all circumstances involving
the charge against the employees have been considered; and (2) grounds have been
established to justify the severance of their employment.
Petitioners were denied substantive due process.
Serious misconduct, as a justifying ground for the dismissal of an employee, has been
explained in Aliviado v. Procter & Gamble, Phils., Inc.:
Misconduct has been defined as improper or wrong conduct; the transgression of
some established and definite rule of action, a forbidden act, a dereliction of duty,
unlawful in character implying wrongful intent and not mere error of judgment. The
misconduct to be serious must be of such grave and aggravated character and not
merely trivial and unimportant. To be a 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.
AacCIT
Clearly, to justify the dismissal of an employee on the ground of serious misconduct, the
employer must first establish that the employee is guilty of improper conduct, that the
employee violated an existing and valid company rule or regulation, or that the employee is
guilty of a wrongdoing. In the instant case, Biomedica failed to even establish that
petitioners indeed violated company rules, failing to even present a copy of the rules and to
prove that petitioners were made aware of such regulations. In fact, from the records of the
case, Biomedica has failed to prove that petitioners are guilty of a wrongdoing that is
punishable with termination from employment. In the instant case, Biomedica failed to
overcome such burden. As will be shown, petitioners' absence on November 7, 2006 cannot
be considered a mass leave, much less a strike and, thus, cannot justify their dismissal from
employment.
But setting aside from the nonce the facts established above, the most pivotal argument
against the dismissal of petitioners is that the penalty of dismissal from employment cannot
be imposed even if we assume that petitioners went on an illegal strike. It has not been
shown that petitioners are officers of the Union. The convergence of these facts coupled with
the filing by petitioners of their complaint with the DOLE shows a relationship governed by
antipathy and antagonism as to justify the award of separation pay in lieu of reinstatement.
Thus, in addition to backwages, owing to the strained relations between the parties,
separation pay in lieu of reinstatement would be proper. And in line with prevailing
jurisprudence, petitioners are entitled to nominal damages in the amount of PhP30,000 each
for Biomedica's violation of procedural due process.

THE NEW PHILIPPINE SKYLANDERS, INC. VS. DAKILA
G.R. NO 199547 SEPT. 24, 2012

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Facts:
Respondent Dakila was employed by petitioner corporation as early as 1987 and terminated
for cause in April 1997 when the corporation was sold. In May 1997, he was rehired as
consultant by the petitioners under a Contract for Consultancy Services dated April 30,
1997.
Thereafter, in a letter dated April 19, 2007, respondent Dakila informed petitioners of his
compulsory retirement effective May 2, 2007 and sought for the payment of his retirement
benefits pursuant to the Collective Bargaining Agreement. His request, however, was not
acted upon. Instead, he was terminated from service effective May 1, 2007.
Consequently, respondent Dakila filed a complaint for constructive illegal dismissal, nonpayment of retirement benefits, under/non-payment of wages and other benefits of a regular
employee, and damages against petitioners.
On the other hand, petitioners, in their position paper, 8 asserted that respondent Dakila
was a consultant and not their regular employee. The latter was not included in petitioners'
payroll and paid a fixed amount under the consultancy contract. He was not required to
observe regular working hours and was free to adopt means and methods to accomplish his
task except as to the results of the work required of him. Hence, no employer-employee
relationship existed between them.
The Labor Arbiter declared respondent Dakila to be a regular employee on the basis of the
unrebutted documentary evidence showing that he was under the petitioners' direct control
and supervision and performed tasks that were either incidental or usually desirable and
necessary in the trade or business of petitioner corporation for a period of ten years.
Issue: WON there was a valid dismissal.
Ruling:
The issue of illegal dismissal is premised on the existence of an employer-employee
relationship between the parties herein.Records reveal that both the LA and the NLRC, as
affirmed by the CA, have found substantial evidence to show that respondent Dakila was a
regular employee who was dismissed without cause.
Following Article 279 of the Labor Code, an employee who is unjustly dismissed from work is
entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages computed from the time he was illegally dismissed. However, considering that
respondent Dakila was terminated on May 1, 2007, or one (1) day prior to his compulsory
retirement on May 2, 2007, his reinstatement is no longer feasible. Accordingly, the NLRC
correctly held him entitled to the payment of his retirement benefits pursuant to the CBA. On
the other hand, his backwages should be computed only for days prior to his compulsory
retirement which in this case is only a day.

MORALES VS. METROPOLITAN BANK AND TRUST COMPANY
G.R. NO 182475 NOV. 21, 2012
Facts:
Petitioner Lenn Morales was hired by Solidbank as Teller for its Rizal Avenue Branch in
Tacloban City. With said bank's merger with respondent Metropolitan Bank & Trust Company
(Metrobank) the latter, as surviving entity, absorbed Morales and assigned him to its
Customer Service Relations-Reserve Pool (CSR-RP) which was composed of employees who,
with no permanent places of assignment, acted as relievers whenever temporary vacancies
arise in other branches. Morales was subsequently promoted to the position of Customer

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Service Representative. It was while occupying the latter position that Morales was informed
by Federico Mariano, the Senior Manager of Metrobank's Tacloban City Main Branch, that he
was covered by the bank's Special Separation Program (SSP) and that, in accordance
therewith, his employment was going to be terminated on the ground of redundancy. 5
Assured that his termination was through no fault of his own but mainly due to business
exigencies and developments in the banking industry, Morales was notified that he shall be
paid the following: (a) a redundancy premium/separation pay, on top of his entitlements
under the bank's retirement plan; (b) proportionate 13th month pay; (c) cash conversion of
his outstanding vacation and sick leave credits; and, if applicable, (d) the return of his
Provident Fund contributions; and, (e) cash surrender value of his Insurance.
Morales filed against Metrobank a complaint for illegal dismissal, separation pay,
backwages, moral and exemplary damages as well as attorney's fees. In its position paper,
Metrobank averred that it had adopted the SSP since 1995 as a way of addressing worsening
economic conditions and stiff competition with strategies designed to make its operations
efficient but cost-effective. Morales was duly informed of the management's decision more
than one month ahead of his actual severance from service, Metrobank claimed to have
served the Department of Labor and Employment (DOLE) the required Establishment
Termination Report on 29 August 2003.
Issue: WON Morales was validly dismissed on the ground of reduncy.
Ruling:
One of the authorized causes for the dismissal of an employee, redundancy exists when the
service capability of the workforce is in excess of what is reasonably needed to meet the
demands of the business enterprise. 21 A position is redundant when it is superfluous, and
superfluity of a position or positions could be the result of a number of factors, such as the
overhiring of workers, a decrease in the volume of business or the dropping of a particular
line or service previously manufactured or undertaken by the enterprise. 22 Time and again,
it has been ruled that an employer has no legal obligation to keep more employees than are
necessary for the operation of its business. 23 For the implementation of a redundancy
program to be valid, however, the employer must comply with the following requisites: (1)
written notice served on both the employees and the DOLE at least one month prior to the
intended date of termination of employment; (2) payment of separation pay equivalent to at
least one month pay for every year of service; (3) good faith in abolishing the redundant
positions; and (4) fair and reasonable criteria in ascertaining what positions are to be
declared redundant and accordingly abolished. 24
Our perusal of the record shows that Metrobank has more than amply proven compliance
with the above-enumerated requisites for the validity of his termination from service on the
ground of redundancy. Under the SSP which Metrobank adopted in 1995, employees who
voluntarily gave up their employment were paid the amount of separation pay they were
entitled under the law and a premium equivalent to 50%-75% of their salaries. It appears
that employees "whose work evaluation showed consistent poor performance and/or those
who had not been promoted for five years" were also considered primary candidates for
optional separation from service. 25 In order to meet the challenges of the business and to
make its operations efficient and cost effective, however, it was shown that Metrobank
further conducted a bank-wide operational review and study.
In implementing a redundancy program, it has been ruled that the employer is required to
adopt a fair and reasonable criteria, taking into consideration such factors as (a) preferred
status; (b) efficiency; and (c) seniority, 27 among others. Consistent with this principle,
Metrobank established that, as a direct result of the adoption of the HRP, it was determined
that the volume of transactions in Visayas Region III required the further reduction of its
eight-man reserve pool by two employees. 28As these employees had no permanent place

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of assignment and merely acted as relievers whenever temporary vacancies arise in other
branches, they were the most logical candidates for inclusion in the SSP. Already lacking
preferred status in Metrobank's hierarchy of positions, Morales was included in the SSP
because of his poor work performance which reportedly caused complaints from the
branches where he was temporarily assigned as reliever.
Given Morales' previous record of not reporting for work for one whole week without prior
leave of absence while assigned as reliever in its Borongan, Samar Branch,33 we find that
Metrobank cannot be faulted for including him in the list of employees covered by the SSP.
The rule is settled that "the determination that the employee's services are no longer
necessary or sustainable and, therefore, properly terminable for being redundant is an
exercise of business judgment of the employer." 34 "While it is true that management may
not, under the guise of invoking its prerogative, ease out employees and defeat their
constitutional right to security of tenure," 35 the wisdom and soundness of such
characterization or decision is not subject to discretionary review unless a violation of law or
arbitrary or malicious action is shown.

KAKAMPI & ITS MEMBERS PANUELOS ET AL. VS. KINGSPOINT EXPRESS AND
LOGISTICS
G.R. NO 194813, APRIL 25, 2012
Facts:
Victor Pañuelos (Pañuelos), Bobby Dacara (Dacara), Alson Dizon (Dizon), Saldy Dimabayao
(Dimabayao), Fernando Lupangco, Jr. (Lupangco), Sandy Pazi (Pazi), Camilo Tabarangao, Jr.
(Tabarangao), Eduardo Hizole (Hizole) and Reginald Carillo (Carillo) were the former drivers
of Kingspoint Express and Logistic (Kingspoint Express), a sole proprietorship registered in
the name of Mary Ann Co (Co) and engaged in the business of transport of goods. On
January 16, 2006, Kingspoint Express issued separate notices to individual petitioners
uniformly stating that they have been charged with dishonesty, serious misconduct, loss of
confidence, and acts inimical to the company, by filing with the NLRC false, malicious, and
fabricated cases against the company. In addition, Kingspoint stated that the petitioners’
refusal to undergo drug testing is unwarranted and against company policy. The petitioners
were given 48 hrs (2 days) to submit their answers and explanation to the charges.
The individual petitioners failed to submit their written explanation within the stated period.
Subsequently, Kingspoint Express issued to them separate yet uniformly worded notices
informing them of their dismissal. The charges were allegedly based on these acts:
-

FABRICATION OF BASELESS MONEY CLAIMS against the company;
MISLEADING FELLOW CO-WORKERS to sign the MALICIOUS COMPLAINT FOR MONEY
CLAIMS against the company;
REFUSAL TO UNDERGO THE COMPANY’S GENERAL DRUG TEST
EXTORTING MONEY FROM CO-WORKERS TO FUND ACTIVITIES THAT THEY WERE
NEVER FULLY INFORMED OF.

A complaint for illegal dismissal was subsequently filed by petitioners, alleging that the
charges against them were fabricated and that their dismissal was prompted by Kingspoint
Express’ aversion to their union activities.
The Labor Arbiter found Dacara, Lupangco, Pazi, Tabarangao, Hizole and Carillo illegally
dismissed. On the other hand, the complaint was dismissed insofar as Panuelos, Dizon and
Dimabayao are concerned as they were deemed not to have filed their position papers.
While the allegation of anti-unionism as the primordial motivation for the dismissal is
considered unfounded, the respondents failed to prove that the dismissal was for a just

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cause.
On appeal, the NLRC affirmed the Labor Arbiter’s Decision. In addition, the NLRC ruled that
the respondents failed to comply with the procedural requirements of due process
considering that the uniformly worded first notice sent by Kingspoint to the petitioners, did
not apprise them of the particular acts or omission for which their dismissal were sought.
Respondents moved for reconsideration and the NLRC reversed itself and declared the
individual petitioners legally dismissed.
Subsequently, the petitioners filed a petition for certiorari with the CA. The CA reversed and
set aside the NLRC Decision. Respondents promptly filed a motion for reconsideration.
Similar to the NLRC, the CA reversed itself and retracted its earlier finding that the individual
petitioners were illegally dismissed. The CA concluded that the 2 notices issued by
Kingspoint Express complied with the requirements of the law.
Issue: Whether or not the individual petitioners’ dismissal is valid.
Ruling:
Yes, the petitioners were legally dismissed.
It is fundamental that in order to validly dismiss an employee, the employer is required to
observe both substantive and procedural due process – the termination of employment must
be based on a just or authorized cause and the dismissal must be effected after due notice
and hearing. The Court agreed with the CA that the petitioners’ refusal to submit themselves
to drug test is a just cause for their dismissal. An employer may terminate an employment
on the ground of serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work. Willful disobedience
requires the concurrence of two elements: (1) the employee's assailed conduct must have
been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order
violated must have been reasonable, lawful, made known to the employee, and must pertain
to the duties which he had been engaged to discharge. Both elements are present in this
case.
At no point did the dismissed employees deny Kingspoint Express’ claim that they refused to
comply with the directive for them to submit to a drug test or, at the very least, explain their
refusal. Thus, this gives rise to the impression that their non-compliance is deliberate. The
utter lack of reason or justification for their insubordination indicates that it was prompted
by mere obstinacy, hence, willful and warranting of dismissal. Drivers are indispensable to
Kingspoint Express’ primary business of rendering door-to-door delivery services. It is
common knowledge that the use of dangerous drugs has adverse effects on driving abilities
that may render the dismissed employees incapable of performing their duties to Kingspoint
Express and acting against its interests, in addition to the threat they pose to the public.
Nonetheless, while Kingspoint Express had reason to sever their employment relations, the
Court found its supposed observance of the requirements of procedural due process
pretentious. While Kingspoint Express required the dismissed employees to explain their
refusal to submit to a drug test, the 2 days afforded to them to do so cannot qualify as
“reasonable opportunity”, which the Court construed in King of Kings Transport, Inc. v.
Mamac as a period of at least 5 calendar days from receipt of the notice. Thus, even if
Kingspoint Express’ defective attempt to comply with procedural due process does not
negate the existence of a just cause for their dismissal, it was held that Kingspoint Express is
still liable to indemnify the dismissed employees.

SAMPAGUITA AUTO TRANSPORT CORP. VS. NLRC

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G.R NO. 197384 JAN. 30, 2013
Facts:
On May 14, 2006, Sagad was hired by the company hired him as a regular bus driver until
his dismissal on November 5, 2006 for allegedly conniving with conductor Vitola in issuing
tickets outside their assigned route
However, the company claimed that it employed Sagad as a probationary bus driver
(evidenced by a probationary employment contract) from May 14, 2006 to October 14,
2006; he was duly informed of his corresponding duties and responsibilities. He was further
informed that during the probationary period, his attendance, performance and work
attitude shall be evaluated to determine whether he would qualify for regular employment.
For this purpose and as a matter of company policy, an evaluator was deployed on a
company bus (in the guise of a passenger) to observe the driver's work performance and
attitude.
On September 21, 2006, an evaluator boarded Sagad's bus. The evaluator described
Sagad's manner of driving as "reckless driver, nakikipaggitgitan, nakikipaghabulan,
nagsasakay sa gitna ng kalsada, sumusubsob ang pasahero[.]" Sagad disputed the
evaluator's observations. In an explanation, he claimed that he could not have been driving
as reported because his wife (who was pregnant) and one of his children were with him on
the bus. He admitted though that at one time, he chased an "Everlasting" bus to serve
warning on its driver not to block his bus when he was overtaking. He also admitted that
once in a while, he sped up to make up for lost time in making trips.
The company further alleged that on October 13, 2006, it conducted a thorough evaluation
of Sagad's performance. It requested conductors who had worked with Sagad to comment
on his work. Conductors A. Hemoroz and Israel Lucero revealed that Sagad proposed that
they cheat on the company by way of an unreported early bus trip. Dispatcher E. Castillo
likewise submitted a negative report and even recommended the termination of Sagad's
employment. The company also cited Sagad's involvement in a hit-and-run accident on
September 9, 2006 along Commonwealth Avenue in Quezon City while on a trip (bus with
Plate No. NYK-216 and Body No. 3094). Allegedly, Sagad did not report the accident to the
company.
On October 15, 2006, upon conclusion of the evaluation, the company terminated Sagad's
employment for his failure to qualify as a regular employee.
Issues:
I.
WON the employee was dismissed as a regular employee, and not as a probationary.
II.
WON the employee was dismissed for just cause.
III.
WON the employer failed to observe procedural due process. Hence, the employee is
entitled to nominal damages.
Ruling:
I. The employee was dismissed as a regular employee, and not as a probationary.
The employer was not able to clearly establish that the employee was a probationary. The
employee denied having signed any probationary contract. Moreover, the employer had
retained the employee beyond the supposed probationary period of employment. The
payslips presented by the employee evidences such extension.
In labor law, it is an elementary rule that "an employee who is allowed to work after a
probationary period shall be considered a regular employee."
II. The employee was dismissed for just cause.
The employee was evidently dismissed for just cause.

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First, it was established that the employer called the employee's attention to his "negative
actuations as a bus driver". These were reported by a company evaluator who boarded the
employee's bus. The evaluator reported that the employee was "driving recklessly, racing
and jostling for position on the road, thereby jarring the passengers on their seats, and
picking up passengers on the middle of the road."
By way of reply, the employee claimed that he could not have been driving recklessly as his
wife and one of his children were with him on the bus at the time of evaluation. However, he
admitted to two things: (a) that, on one occasion, he chased on "Everlasting" bus in order
"to warn the driver not to block him", and (b) that, once in a while, "he sped up to
compensate for lost time in his trips".
"Sagad's explanation reveals more than what is stated. During his brief employment with the
company, he exhibited the tendency to speed up when he finds the need for it, very
obviously in violation of traffic rules, regulations and company policy. Instead of negating the
evaluator's observations, his admissions make them credible."
Second, the two conductors who had worked with the employee commented that the
employee "proposed to them that they cheat on the company by making early trips (but not
to be reported) bus trips". The two conductors had no ax to grind against the employee.
Furthermore, the evaluator's evaluation report rated the employee's work performance as
poor on account of: "(1) the low revenue of Sagad's bus; (2) his inability to make all his
scheduled trips; and (3) his habit of bringing his wife with him on trips". He likewise heard of
talks of the employee's orders to the conductors "to earn money in a questionable way".
As the two conductors have no ax to grind with the employee, their testimony is credible. In
addition, their testimony validates the evaluator's observation that he heard talks of the
employee's orders to the conductors "for them to cheat on the company".
"x x x The scheme, contrary to Sagad's explanation, can only be committed with the
corporation, or even at the behest of the driver, as the proposed scheme is for the
bus to make unscheduled, but unreported, early trips.
Third, the employee's involvement in a hit-and-run incident while driving his assigned bus
was clearly established. The following were the substantial evidence presented: (1) the
Traffic Accident Investigation Report; (2) Sworn Statement of the driver of the Elf truck,
which was hit; (3) Sworn Statement of the driver of the White Honda City (owned by
Purefoods Hormel Co.), the first party to the vehicular accident; and, (4) Demand Letter by
the insurance company demanding reimbursement it paid to Purefoods.
In view of the above-mentioned grounds, the "irregularities or infractions committed by
Sagad in connection with his work as a bus driver constitutes a serious misconduct under
Article 282 of the Labor Code.
"The irregularities or infractions committed by Sagad in connection with his work as a bus
driver constitutes serious misconduct or, at the very least, conduct analogous to serious
misconduct, under the above-cited Article 282 of the Labor Code. To be sure his tendency to
speed up during his trips, his reckless driving, his picking up passengers in the middle of the
road, his racing with other buses and his jostling for vantage positions do not speak well of
him as a bus driver. While he denies being informed when he was hired, of the duties and
responsibilities of a driver contained in a document submitted in evidence by the company the requirement "3. to obey traffic rules and regulations as well as the company policies. 4.
to ensure the safety of the riding public as well as the other vehicles and motorist (sic)" is so
fundamental and so universal that any bus driver is expected to satisfy the requirement
whether or not he has been so informed." (Citations omitted.)

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While the employee tried to minimize the adverse effect of the evaluator's report by
claiming that he had already been penalized by a 5-day suspension, the same is of no
moment. "He was penalized for one reckless driving incident, but it does not erase all other
infractions he committed."
III. The employer failed to observe procedural due process. Hence, the employee is entitled
to nominal damages.
While the employee was dismissed based on a just cause, the employer failed to comply
with the two-notice rule.That is to say, the employer failed to serve: (1) the initial notice stating the particular acts on which the employee is being dismissed on 05 November 2006,
and (2) the termination notice.
Following Agabon v. NLRC, the violation of the employee's right to procedural due process
entitles him to nominal damages in the amount of Php30,000.00.

PHILIPPINE HOLDINGS INC. VS. EPISCOPE
G.R. NO. 192826 FEB. 27, 2013
Facts:
Petitioner Philippine Plaza Holdings, Inc. (PPHI) is the owner and operator of the Westin
Philippine Plaza Hotel (Hotel). Respondent Ma. Flora M. Episcope (Episcope) was employed
by PPHI since July 24, 1984 until she was terminated on November 4, 2004 for dishonesty,
willful disobedience and serious misconduct amounting to loss of trust and confidence.
In order to check the performance of the employees and the services in the different outlets
of the Hotel, PPHI regularly employed the services of independent auditors and/or
professional shoppers. For this purpose, Sycip, Gorres and Velayo auditors dined at the
Hotel's Café Plaza on August 28, 2004. After dining, the auditors were billed the total amount
of P2,306.65, representing the cost of the food and drinks they had ordered under Check No.
565938. 4 Based on the audit report 5 submitted to PPHI, Episcope was one of those who
attended to the auditors and was the one who handed the check and received the payment
of P2,400.00. She thereafter returned Check No. 565938, which was stamp marked "paid,"
together with the change.
Upon verification of the foregoing check receipt with the sales report of Café Plaza, it was
discovered that the Hotel's copy of the receipt bore a discount of P906.45 6 on account of
the use of a Starwood Privilege Discount Card registered in the name of Peter A. Pamintuan,
while the receipt issued by Episcope to the auditors reflected the undiscounted amount of
P2,306.65 considering that none of the auditors had such discount card. In view of the
foregoing, the amount actually remitted to the Hotel was only P1,400.20 thus, leaving a
shortage of P906.45.
On September 30, 2004, the Hotel issued a Show-Cause Memo 7 directing Episcope to
explain in writing why no disciplinary action should be taken against her for the questionable
and invalid discount application on the settlement check issued to the auditors on August
28, 2004.
Finding Episcope to have failed to sufficiently explain the questionable discount application
on the settlement bill of the auditors, her employment was terminated for committing acts
of dishonesty, which was classified as a Class D offense under the Hotel's Code of Discipline,
as well as for willful disobedience, serious misconduct and loss of trust and confidence. 12

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Aggrieved, Episcope filed a complaint 13 for illegal dismissal with prayer for payment of
damages and attorney's fees against PPHI before the NLRC docketed as NLRC-NCR Case No.
00-12-13621-04.
Issue: WON there was illegal dismissal.
Ruling:
Article 293 (formerly Article 279) of the Labor Code 25 provides that the employer shall not
terminate the services of an employee except only for a just or authorized cause. If an
employer terminates the employment without a just or authorized cause, then the employee
is considered to have been illegally dismissed and is thus, entitled to reinstatement or in
certain instances, separation pay in lieu thereof, as well as the payment of backwages.
Among the just causes for termination is the employer's loss of trust and confidence in its
employee. Article 296 (c) (formerly Article 282 [c]) of the Labor Code provides that an
employer may terminate the services of an employee for fraud or willful breach of the trust
reposed in him. But in order for the said cause to be properly invoked, certain requirements
must be complied with namely, (1) the employee concerned must be holding a position of
trust and confidence and (2) there must be an act that would justify the loss of trust and
confidence.
It is noteworthy to mention that there are two classes of positions of trust: on the one hand,
there are managerial employees whose primary duty consists of the management of the
establishment in which they are employed or of a department or a subdivision thereof, and
to other officers or members of the managerial staff; on the other hand, there are fiduciary
rank-and-file employees, such as cashiers, auditors, property custodians, or those who, in
the normal exercise of their functions, regularly handle significant amounts of money or
property. These employees, though rank-and-file, are routinely charged with the care and
custody of the employer's money or property, and are thus classified as occupying positions
of trust and confidence. 27 Episcope belongs to this latter class and therefore, occupies a
position of trust and confidence.
As may be readily gleaned from the records, Episcope was employed by PPHI as a service
attendant in its Café Plaza. In this regard, she was tasked to attend to dining guests, handle
their bills and receive their payments for transmittal to the cashier. It is also apparent that
whenever discount cards are presented, she maintained the responsibility to take them to
the cashier for the application of discounts. Being therefore involved in the handling of
company funds, Episcope is undeniably considered an employee occupying a position of
trust and confidence and as such, was expected to act with utmost honesty and fidelity.
Anent the second requisite, records likewise reveal that Episcope committed an act which
justified her employer's (PPHI's) loss of trust and confidence in her.
Primarily, it is apt to point out that proof beyond reasonable doubt is not required in
dismissing an employee on the ground of loss of trust and confidence; it is sufficient that
there lies some basis to believe that the employee concerned is responsible for the
misconduct and that the nature of the employee's participation therein rendered him
absolutely unworthy of trust and confidence demanded by his position.
Perforce, having substantially established the actual breach of duty committed by Episcope
and the due observance of due process, no grave abuse of discretion can be imputed
against the NLRC in sustaining the finding of the LA that her dismissal was proper under the
circumstances.
Finally, with respect to Episcope's other monetary claims, namely, service incentive leave
credits and 13th month pay, the Court finds no error on the part of the LA when it denied the

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foregoing claims considering that Episcope failed to proffer any legitimate basis to
substantiate her entitlement to the same

THE ORCHARD GOLF AND COUNTRY CLUB VS. FRANCISCO
G.R. NO. 178125, MARCH 13, 2013
Facts:
On March 17, 1997, respondent was employed as Club Accountant, to head the Club's
General Accounting Division and the four divisions under it.
On May 18, 2000, Famy directed Francisco to draft a letter to SGV & Co. (SGV), the Club's
external auditor, inquiring about the accounting treatment that should be accorded property
that will be sold or donated to the Club. Francisco failed to prepare the letter, even after
Famy's repeated verbal and written reminders, the last of which was made on June 22, 2000.
Francisco went to the Club's General Manager, Tomas B. Clemente III (Clemente), and
personally explained to the latter that due to the alleged heavy volume of work that needed
her attention, she was unable to draft the letter. Because Francisco did not submit the
required written explanation, Famy issued a June 29, 2000 memorandum suspending
Francisco without pay for a period of 15 days.
On July 3, 2000 Francisco wrote to the Club's General and Administrative Manager, Ma. Irma
Corazon A. Nuevo (Nuevo), questioning Famy's act of charging, investigating, and
suspending her without coursing the same through the Club's Personnel Department. Nuevo
exonerated Famy and justified Famy’s actions as falling within his power and authority as
department head.
On July 20, 2000, or a day after Francisco's period of suspension expired, Famy issued
separate memoranda to Francisco and Clemente informing them of Francisco's transfer,
without diminution in salary and benefits, to the Club's Cost Accounting Section.
Issue: WON the transfer of respondent form the position of club accountant to cost
accountant was tantamount to a demotion
Ruling:
Yes, there was constructive dismissal when Francisco was transferred to the cost accounting
section as there was not valid basis that it amounted to a demotion in rank
When Francisco was placed on forced leave and transferred to the Cost Accounting Section,
not once was Francisco given the opportunity to contest these company actions taken
against her. It has also not escaped our attention that just when one penalty has been
served by Francisco, another would instantaneously take its place. And all these happened
even while the supposed case against her, the alleged charge of "betrayal of company
trust", was still pending and remained unresolved.
As for her October 12, 2000 permanent transfer, the same is null and void for lack of just
cause. Also, the transfer is a penalty imposed on a charge that has not yet been resolved.
Definitely, to punish one for an offense that has not been proved is truly unfair; this is
deprivation without due process. Finally, the Court sees no necessity for Francisco's transfer;
on the contrary, such transfer is outweighed by the need to secure her office and documents
from Famy's possible intervention on account of the complaint she filed against him.

TORRES VS. RURAL BANK OF SAN JUAN INC. ET AL.
G.R. NO. 184520, MARCH 13, 2013

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Facts:
PETITIONER Rolando Torres was temporarily assigned as the manager of the N. Domingo
branch of respondent Rural Bank of San Juan Inc. (RBSJI), in view of the resignation of Jacinto
Figuroa.
Three days after his assignment, Figuroa requested and the petitioner signed a standard
employment clearance pertaining to the former’s accountabilities with RBSJI.
Petitioner was dismissed from the service by RBSJI on the ground of loss of trust and
confidence, for issuing without authority and audit a clearance to Figuroa, who turned out to
be still liable for unpaid cash advances and for an P11-million fraudulent transaction that
exposed the bank to a lawsuit.
Issue: WON the dismissal was justified.
Ruling:
No.
As correctly argued by the petitioner, the onus of submitting a copy of the clearance
allegedly exonerating Figuroa from all his accountabilities fell on the respondents. It was the
single and absolute evidence of the petitioner’s act that purportedly kindled the
respondents’ loss of trust.
Without it, the respondents’ allegation of loss of trust and confidence has no leg to stand on
and must thus be rejected. Moreover, one can reasonably expect that a copy of the
clearance, an essential personnel document, is with the respondents. Their failure to present
it and the lack of explanation for such failure or the document’s unavailability props up the
presumption that its contents are unfavorable to the respondents’ assertions.
At any rate, the absence of the clearance upon which the contradicting claims of the parties
could ideally be resolved should work against the respondents. With only sworn pleadings as
proof of their opposite claims on the true contents of the clearance, the Court is bound to
apply the principle that the scales of justice should be tilted in favor of labor in case of doubt
in the evidence presented.

THE ORCHARD GOLF & COUNTRY CLUB VS. FRANCISCO
G.R. NO. 178125, MARCH 15, 2013
Facts:
On March 17, 1997, respondent was employed as Club Accountant, to head the Club's
General Accounting Division and the four divisions under it.
On May 18, 2000, Famy directed Francisco to draft a letter to SGV & Co. (SGV), the Club's
external auditor, inquiring about the accounting treatment that should be accorded property
that will be sold or donated to the Club. Francisco failed to prepare the letter, even after
Famy's repeated verbal and written reminders, the last of which was made on June 22, 2000.
Francisco went to the Club's General Manager, Tomas B. Clemente III (Clemente), and
personally explained to the latter that due to the alleged heavy volume of work that needed
her attention, she was unable to draft the letter. Because Francisco did not submit the
required written explanation, Famy issued a June 29, 2000 memorandum suspending
Francisco without pay for a period of 15 days.
On July 3, 2000 Francisco wrote to the Club's General and Administrative Manager, Ma. Irma
Corazon A. Nuevo (Nuevo), questioning Famy's act of charging, investigating, and

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suspending her without coursing the same through the Club's Personnel Department. Nuevo
exonerated Famy and justified Famy’s actions as falling within his power and authority as
department head.
On July 20, 2000, or a day after Francisco's period of suspension expired, Famy issued
separate memoranda to Francisco and Clemente informing them of Francisco's transfer,
without diminution in salary and benefits, to the Club's Cost Accounting Section.
Issue: WON the transfer of respondent form the position of club accountant to cost
accountant was tantamount to a demotion
Ruling:
Yes, there was constructive dismissal when Francisco was transferred to the cost accounting
section as there was not valid basis that it amounted to a demotion in rank
When Francisco was placed on forced leave and transferred to the Cost Accounting Section,
not once was Francisco given the opportunity to contest these company actions taken
against her. It has also not escaped our attention that just when one penalty has been
served by Francisco, another would instantaneously take its place. And all these happened
even while the supposed case against her, the alleged charge of "betrayal of company
trust", was still pending and remained unresolved.
As for her October 12, 2000 permanent transfer, the same is null and void for lack of just
cause. Also, the transfer is a penalty imposed on a charge that has not yet been resolved.
Definitely, to punish one for an offense that has not been proved is truly unfair; this is
deprivation without due process. Finally, the Court sees no necessity for Francisco's transfer;
on the contrary, such transfer is outweighed by the need to secure her office and documents
from Famy's possible intervention on account of the complaint she filed against him.

BANARES VS. TABACO WOMENS TRANSPORT SERVICE COOPERATIVE
G.R. NO. 197353, APRIL 1, 2013
Facts:
PETITIONER Alexander B. Bañares worked for some time as general manager of respondent
Tabaco Women’s Transport Service Cooperative (TAWTRASCO). He filed a complaint for illegal
dismissal and payment of monetary claims against TAWTRASCO. Among others, the Labor
Arbiter ordered TAWTRASCO to immediately reinstate petitioner to his former position.
In compliance with the decision, TAWTRASCO directed the petitioner to report at the
company’s Virac, Catanduanes terminal. Petitioner asked for a lodging allowance, which he
used to enjoy in his previous assignment but was told to just stay at the Virac office.
He, however, found the Virac office very dilapidated and empty of an office table, chairs,
filing cabinet and other office supplies. He asked for expenses for renovation, which
respondents turned deaf ears to. Hence, he stopped reporting to work and filed a complaint
for non-payment of salaries.
Issue: WON the complaint will prosper.
Ruling:
Yes.
Under Article 223 of the Labor Code, an employee entitled to reinstatement “shall either be
admitted back to work under the same terms and conditions prevailing prior to his dismissal
or separation x x x.” An illegally dismissed employee is entitled to reinstatement without
loss of seniority rights and to other established employment privileges, and to his full back

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wages. The boarding house privilege, being an established perk accorded to petitioner,
ought to have been granted him if a real and authentic reinstatement to his former position
as general manager is to be posited.
It cannot be stressed enough that TAWTRASCO withheld petitioner’s salaries for and after his
purported refusal to report for work at the Virac terminal. The reality, however, is that
TAWTRASCO directed petitioner to work under terms and conditions prejudicial to him, the
most hurtful cut being that he was required to work without a decent office, partly
performing a checker’s job. This embarrassing work arrangement is what doubtless triggered
the refusal to work, which under the premises appears justified.
Generally, employees have a demandable right over benefits voluntarily granted to them by
their employers. And if the grant or benefit is founded on an express policy or has, for a
considerable period, been given regularly and deliberately, then the grant ripens into a
vested right that the employer cannot unilaterally diminish, discontinue or eliminate. So it
must be here with respect, at the minimum, to the lodging accommodation which
TAWTRASCO, as found by the National Labor Relations Commission, appears to have
regularly extended for free for some time to petitioner.

REYES, ET AL., VS. RP GUARDIANS SECURITY AGENCY INC.
G.R. NO. 193756, APRIL 10, 2013
Facts:
PETITIONERS were hired by the respondent, RP Guardians Security Agency, Inc., as security
guards. Their last assignments were in the different branches of Banco Filipino Savings and
Mortgage Bank. In September 2006, the respondent’s security contract with Banco Filipino
was terminated. Petitioners were individually informed of the termination.
In a complaint for constructive dismissal, the labor arbiter (LA), the National Labor Relations
Commission (NLRC) and the Court of Appeals (CA) found that petitioners were constructively
dismissed.
The CA, however, reduced the computation of the LA and NLRC of the separation pay from
one month to one-half month per year of service.
Issue: WON the CA err in determining the separation pay.
Ruling:
Yes.
There is no doubt that petitioners were constructively dismissed. The LA, the NLRC and the
CA were one in their conclusion that respondent was guilty of illegal dismissal when it placed
petitioners on floating status beyond the reasonable six-month period after the termination
of their service contract with Banco de Oro.
Temporary displacement or temporary off-detail of security guard is, generally, allowed in a
situation where a security agency’s client decided not to renew their service contract with
the agency and no post is available for the relieved security guard. Such situation does not
normally result in a constructive dismissal.
Nonetheless, when the floating status lasts for more than six (6) months, the employee may
be considered to have been constructively dismissed.
xxx
The normal consequences of respondents’ illegal dismissal, then, are reinstatement
without loss of seniority rights, and payment of back wages computed from the time
compensation was withheld up to the date of actual reinstatement. Where
reinstatement is no longer viable as an option, separation pay equivalent to one

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month salary for every year of service should be awarded as an alternative. The
payment of separation pay is in addition to payment of back wages.
xxx
In this case, respondent would have been liable for reinstatement and payment of back
wages. Reinstatement, however, was no longer feasible because, as found by the LA,
respondent had already ceased operation of its business. Thus, back wages and separation
pay, in the amount of one month for every year of service, should be paid in lieu of
reinstatement.

CELDRAN VS. FORZA INTEGRATED SERVICES ET AL.
G.R. NO. 189460, JUNE 5, 2013, RES.
Facts:
Petitioner Leo Mario C. Celdran was hired by private respondent City Service as VicePresident for the Visayas Regional Office in Cebu City. Private respondents City Service
Corporation and Peerless Integrated Services, Incorporated are affiliate companies of
respondent FORZA Integrated Corporation. According to petitioner, his compensation
package included a car plan wherein they would assume the remaining balance of his car
plan, with 50% by the company and the other 50% by Celdran himself; but, to private
respondents, it was a car lease arrangement. Celdran consistently refused to sign the said
lease contract as it was contrary to what he allegedly agreed with private respondent
Valentin B. Prieto, Jr. during his employment interview way back in May 2005.
On November 10, 2005, Celdran was accused of dishonesty, for charging a personal lunch to
the company, and was demanded to resign by the Chief Operating Officer Santiago. Celdran
received a termination notice signed by private respondent Santiago which led the former to
file a complaint for illegal dismissal on November 22, 2005, before the Regional Arbitration
Branch of the National Labor Relations Commission. However, the said case was settled as
he was reinstated to his position on December 27, 2005.
However, upon his return, Celdran was told to occupy the last open cubicle at the ground
floor ands given a new copy of the motor vehicle lease contract for his signature which he
refused to sign. He was relieved as Mancom Chairman for no reason at all. He was subjected
to check and inspection by the security guard and his transportation and cellular phone
allowances were subjected to new guidelines. Private respondent City Service Corporation
gave Celdran the option to buy the Honda CRV at its residual value until February 9, 2006,
otherwise, the former would recover the vehicle from the latter.
On February 14, 2006, Celdran filed a complaint with the Regional Arbitration Branch of the
NLRC charging private respondents with violation of the terms of the car plan. On March 2,
2006, Celdran was placed under preventive suspension for 30 days due to his belligerent
attitude and required to explain why he should not be terminated. He was not asked to
return to work after his suspension for which reason he amended his complaint on April 11,
2006, to include charges of illegal suspension, constructive dismissal and unpaid money
claims.
In a letter dated April 11, 2006, private respondent City Service Corporation informed all its
employees, including Celdran, that by virtue of a board resolution dated March 17, 2006, the
company decided to replace the Visayas Regional Office with a small Liaison Office.
Consequently, Celdran made a second amendment of his complaint on April 18, 2006 to
include charges of illegal lay-off/downsizing.

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Issues:
1. Whether or not there was constructive dismissal.
2. Whether or not the petitioner was illegally dismissed.
3. Whether or not individual respondents may not be held solidarily liable with respondent
corporations.
Ruling:
There was no constructive dismissal in the case at bar.
According to petitioner, he had been experiencing a kind of treatment that rendered
"employment impossible and unreasonable" as early as in the last quarter of 2005. However,
he never resigned. In fact, when he filed a complaint in March 2006 regarding his car plan
benefit, he did not make any allegation concerning his inability to continue working for
respondents due to an alleged ill working environment. We thus find that he was still willing
and able to continue his employment despite any alleged ill treatment. For there to be
constructive dismissal, the employer must be shown to have committed an act of clear
discrimination, insensibility, or disdain, which had become so unbearable on the part of the
employee that it foreclosed any choice other than for the latter to forego continued
employment.
Petitioner was not illegally dismissed when respondent company implemented a
downsizing program for their Visayas regional office.
Pursuant to Article 283 of the Labor Code, an employer may reduce the number of its
employees based on economic grounds in order to protect and preserve the employer's
viability and ensure its survival. Consequently, employers are given the management
prerogative to implement a retrenchment program for the purpose of preventing losses or
cessation of business operations due to business recession, industrial depression, seasonal
fluctuations, lack of work, or considerable reduction in the volume of their business.
Respondents were able to prove that their retrenchment program was justified and not
implemented in bad faith. As found by the ELA and the NLRC, respondents had been
experiencing a downtrend in their Visayas operations since three years before they decided
to downsize. In fact, City Service was suffering from continuous defeats in numerous
biddings it had participated in. Furthermore, they showed that they had complied with the
requirement of written notice to the employees and to the DOLE at least one month prior to
the intended date of downsizing or retrenchment.
Individual respondents may not be held personally liable.
As a general rule, corporate directors, trustees, or officers are not personally liable for their
official acts, unless they have exceeded the scope of their authority. Indeed, personal
liability may attach when directors, trustees, or officers assent to a patently unlawful act of
the corporation, or when they act in bad faith, resulting in damages to the corporation, its
stockholders, or other persons. However, there was no substantial evidence on record
proving bad faith in the termination of petitioner's employment due to retrenchment.

SURIGAO DEL NORTE ELECTRIC COOPERATIVE INC. VS. GONZAGA
G.R. NO. 187722, JUNE 10, 2013
Facts:
Respondent Gonzaga was a lineman of the petitioner Surigao Del Norte Electric Cooperative,
Inc. (SURNECO). However, on February 15, 2000, he was assigned as Temporary Teller at
SURNECO's sub-office in Gigaquit, Surigao Del Norte. On June 26, 2001, petitioner Danny
Escalante, General Manager of SURNECO, issued Memorandum 34-01, with Collection Report
and two (2)sets of summaries of collections and remittances, seeking an explanation from

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Gonzaga regarding his remittance shortages in the total amount of P314,252.23, covering
the period from February 2000 to May 2001. Gonzaga denied any unremitted amount on his
part and states that the report cannot accurately establish any remittance shortage on his
part since it was not supported by any bills or official receipts. SURNECO formed an
Investigation Committee to investigate Gonzaga's alleged remittance shortages, in which he
participated. Pending investigation, Gonzaga was placed under preventive suspension from
July 31 to August 29, 2001.
On August 9, 2001, the Committee tendered its report, finding Gonzaga guilty of (a) gross
and habitual neglect of duty under Section 5.2.15 of the Code of Ethics and Discipline for
Rural Electric Cooperative (REC) Employees; (b) misappropriation of REC funds under
Section 7.2.1 of the Code of Ethics; and (c) failure to remit collections/monies under Section
7.2.2 of the Code of Ethics. Thereafter, a notice of termination was served on Gonzaga on
September 13, 2001. Gonzaga sought reconsideration before SURNECO's Board of Directors
but the latter denied the same after he presented his case. On October 25, 2001, Final
Notice of Termination was served on Gonzaga. Consequently, he was dismissed from the
service on November 26, 2001.
Gonzaga filed a complaint with the NLRC Regional Arbitration for illegal dismissal with
payment of backwages including damages and attorney's fees, claiming that he was denied
due process and dismissed without just cause. He alleged that he was nonetheless denied
due process since the actual grounds for his dismissal were not indicated in the
memorandum. He also claimed that petitioners' evidence failed to show any missing
collection.
In defense, petitioners maintained that Gonzaga's dismissal was attended with due process
and founded on a just and valid cause. Petitioners further argued that Gonzaga was given
enough opportunity to defend himself during the investigation. Likewise, he was properly
informed of the accusation against him since the charge of cash shortage has a direct and
logical relation to the findings of gross and habitual neglect of duties and responsibilities,
misappropriation of REC funds and failure to remit collections/monies. In this regard, there
was no conflict between the charge stated in Memorandum 34-01 and the grounds cited in
the Final Notice of Termination.
In reply, Gonzaga added that the cooperative's proper procedure for the conduct of
investigation, as outlined in Section 16.5 of the Code of Ethics was not followed; hence, he
was denied due process.
Issues:
1. Whether or not there was a valid cause of termination.
2. Whether or not there was statutory compliance of termination procedure.
3. Whether or not there was a breach in the company’s procedure in investigating
employees.
Ruling:
There was a valid cause of termination.
The petitioner’s evidence– which consists of the Collection Report, the Summaries, and the
September 15, 2003 Audit Report with attached Cash Flow Summary – adequately supports
the conclusion that Gonzaga misappropriated the funds of the cooperative. The data
indicated therein show gaping discrepancies between Gonzaga's collections and
remittances, of which he was accountable for. In this accord, the burden of evidence shifted
to Gonzaga to prove that the reflected shortage was not attributable to him. However,
despite being allowed to peruse the bills and receipts on record together with the assistance
of an accountant and a counsel during the investigation proceedings, Gonzaga could not
reconcile the amounts of his collections and remittances and, instead, merely interposed

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bare and general denials.
Considering the totality of circumstances in this case, the evidence presented by the
petitioners, as opposed to the bare denial of Gonzaga, is sufficient to constitute substantial
evidence to prove that he committed serious misconduct and gross and habitual neglect of
duty to warrant his dismissal from employment. Such are just causes for termination which
are explicitly enumerated under Article 296 of the Labor Code. At any rate, Gonzaga had
admitted that he failed to remit his collections daily in violation of SURNECO's company
policy, rendering such fact conclusive and binding upon him. Therefore, for his equal
violation of Section 7.2.2 of the Code of Ethics (failure to remit collections/monies), his
dismissal is justified altogether.
There was statutory compliance in the termination procedure of Gonzaga.
The statutory procedure for terminating an employee is found in Section 2 (III), Rule XXIII,
Book V of the Omnibus Rules Implementing the Labor Code (Omnibus Rules) consists of (a) a
first written notice stating the intended grounds for termination; (b) a hearing or conference
where the employee is given the opportunity to explain his side; and (c) a second written
notice informing the employee of his termination and the grounds therefor. Records disclose
that petitioners were able to prove that they sufficiently complied with these procedural
requirements.
First, petitioners have furnished Gonzaga a written first notice specifying the grounds on
which his termination was sought, in particular, Memorandum 34-01. While the actual
grounds of Gonzaga's dismissal were not explicitly stated in Memorandum 34-01, these
infractions are, however, implicit in the charge of cash shortage. Due to the direct and
logical relation between these grounds, any defense to the charge of cash shortage equally
constitutes an adequate defense to the charges of gross and habitual neglect of duties and
responsibilities, misappropriation of REC funds and failure to remit collections/monies.
Therefore, based on these considerations, the Court finds that the first notice requirement
had been properly met
Second, petitioners have conducted an informal inquiry in order to allow Gonzaga to explain
his side. SURNECO formed an investigation committee to investigate Gonzaga's alleged
remittance shortages. Gonzaga never denied his participation during the said proceedings.
Perforce, the second requirement had been equally complied with.
Third, second written notice was sent to Gonzaga informing him of the company's decision
to relieve him from employment, as well as the grounds. A notice of termination was served
on Gonzaga on September 13, 2001, stating the aforesaid grounds. Thereafter, Gonzaga
tried to appeal his dismissal before SURNECO's Board of Directors which was, however,
denied after again being given an adequate opportunity to present his case. On October 25,
2001, a Final Notice of Termination was served on Gonzaga.
SURNECO failed to adhere to their established policy in investing employees.
At this juncture, it must be pointed out that while petitioners have complied with the
procedure laid down in the Omnibus Rules, they, however, failed to show that the
established company policy in investigating employees was adhered to. In this regard,
SURNECO's breach of its company procedure necessitates the payment of nominal damages.
Jurisprudence dictates that it is not enough that the employee is given an "ample
opportunity to be heard" if company rules or practices require a formal hearing or
conference. The rationale behind this mandatory characterization is premised on the fact
that company rules and regulations which regulate the procedure and requirements for
termination, are generally binding on the employer.

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Records reveal that while Gonzaga was given an ample opportunity to be heard within the
purview of the foregoing principles, SURNECO, however, failed to show that it followed its
own rules which mandate that the employee who is sought to be terminated be afforded a
formal hearing or conference. SURNECO remains bound by – and hence, must faithfully
observe – its company policy embodied in Section 16.5 of its own Code of Ethics.
Accordingly, since only an informal inquiry was conducted in investigating Gonzaga's
alleged cash shortages, SURNECO failed to comply with its own company policy, violating
the proper termination procedure altogether.
In this relation, case law states that an employer who terminates an employee for a valid
cause but does so through invalid procedure is liable to pay the latter nominal damages.
Hence, although the dismissal stands, the Court deems it appropriate to award Gonzaga
nominal damages in the amount of P30,000.00.

UNIVAC DEVELOPMENTS INC. VS. SORIANO
G.R. NO. 182072, JUNE 19, 2013
Facts:
William M. Soriano was hired on August 23, 2004 by Univac Development, Inc. on
probationary basis as legal assistant of the company with a monthly salary of P15,000.00.
He claimed that on February 15, 2005, or eight (8) days prior to the completion of his six
months probationary period, Castro allegedly informed him that he was being terminated
from employment due to the company's cost-cutting measures. He allegedly asked for a
thirty-day notice but his termination was ordered to be effective immediately. Thus, he was
left with no choice but to leave the company.
Petitioner, on the other hand, denied the allegation of respondent and claimed instead that
prior to his employment, respondent was informed of the standards required for
regularization and also supposedly informed him of his duties and obligations. Petitioner
recalled that on January 5, 2005, a company meeting was held where respondent allegedly
expressed his intention to leave the company because he wanted to review for the bar
examinations. It was also in that meeting where he was informed of his unsatisfactory
performance in the company. Thus, when respondent did not report for work on February 16,
2005, petitioner assumed that he pushed through with his plan to leave the company. In
other words, petitioner claimed that respondent was not illegally dismissed from
employment; rather, he in fact abandoned his job by his failure to report for work.
The CA gave more credence to respondent's claim that he was illegally dismissed rather
than petitioner's theory of abandonment. Contrary to the LA and NLRC conclusions, the
appellate court held that petitioner failed to apprise respondent of the standards required for
regularization, coupled with the fact that it failed to make an evaluation of his performance,
making his dismissal illegal. Petitioner's employment of another person to replace
respondent on the day of the alleged abandonment was taken by the appellate court against
petitioner as it negates the claim of abandonment. In sum, the CA considered respondent's
dismissal from employment illegal because he was not informed of the standards required
for regularization; petitioner failed to show proof that respondent's performance was poor
and unsatisfactory constituting a just cause for termination; and that the evidence presented
negates petitioner's claim that respondent abandoned his job. As a consequence of the
illegal dismissal, the CA awarded respondent backwages, separation pay in lieu of
reinstatement and attorney's fees. Hence, the petition.
Issue: Whether or not the respondent was illegally dismissed from employment by the
petitioner.

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Ruling:
The respondent was illegally dismissed from employment.
It is undisputed that respondent was hired as a probationary employee. As such, he did not
enjoy a permanent status. Nevertheless, he is accorded the constitutional protection of
security of tenure which means that he can only be dismissed from employment for a just
cause or when he fails to qualify as a regular employee in accordance with reasonable
standards made known to him by the employer at the time of his engagement.
In this case, petitioner failed to present adequate evidence to substantiate its claim that
respondent was apprised of said standards. Equally important is the requirement that in
order to invoke "failure to meet the probationary standards" as a justification for dismissal,
the employer must show how these standards have been applied to the subject employee.
In this case, aside from its bare allegation, it was not shown that a performance evaluation
was conducted to prove that his performance was indeed unsatisfactory.
The power of the employer to terminate a probationary employee is subject to three
limitations, namely: (1) it must be exercised in accordance with the specific requirements of
the contract; (2) the dissatisfaction on the part of the employer must be real and in good
faith, not feigned so as to circumvent the contract or the law; and (3) there must be no
unlawful discrimination in the dismissal. In this case, not only did petitioner fail to show that
respondent was apprised of the standards for regularization but it was likewise not shown
how these standards had been applied in his case.
Pursuant to well-settled doctrine, petitioner's failure to specify the reasonable standards by
which respondent's alleged poor performance was evaluated as well as to prove that such
standards were made known to him at the start of his employment, makes respondent a
regular employee. In other words, because of this omission on the part of petitioner,
respondent is deemed to have been hired from day one as a regular employee.
The respondent's termination from employment is without just and valid ground. Neither was
due process observed, making his termination illegal. He is, therefore, entitled to the twin
relief of reinstatement and backwages granted under the Labor Code. However, considering
the strained relations between petitioner and respondent, separation pay should be awarded
in lieu of reinstatement. Backwages shall be computed from the time of illegal dismissal until
the date the decision becomes final. Separation pay, on the other hand, is equivalent to at
least one month pay, or one month pay for every year of service, whichever is higher (with a
fraction of at least six months being considered as one whole year), computed from the
time of employment or engagement up to the finality of the decision.
Having been forced to litigate in order to seek redress of his grievances, respondent is
entitled to the payment of attorney's fees equivalent to 10% of his monetary
award. Pursuant to prevailing jurisprudence, legal interest shall be imposed on the monetary
awards herein granted at the rate of 6% per annum from date of termination until full
payment.

UNILEVER PHILS VS. RIVERA
G.R. NO. 201701, JUNE 3, 2013
Facts:

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ON OCT. 19, 2007, respondent Maria Ruby M. Rivera filed a complaint for illegal dismissal
and other monetary claims against petitioner Unilever Philippines, Inc. (Unilever).
When the case reached the National Labor Relations Commission (NLRC), Unilever was
ordered to pay respondent P30,000 as nominal damages, retirement benefits and separation
pay. Upon a motion for reconsideration filed by Unilever, the NLRC, in a resolution of March
31, 2009, modified its ruling by deleting the award of separation pay and reducing the
nominal damages from P30,000 to P20,000 but affirmed the award of retirement benefits.
Unilever elevated the case to the Court of Appeals (CA), Cagayan de Oro City, via a petition
for certiorari under Rule 65 of the Rules of Court. Respondent Rivera did not appeal the
decision of the NLRC. The CA deleted the award for retirement benefit but awarded
separation pay as a measure of social justice.
Issue: WON CA was correct in awarding separation pay.
Ruling:
Yes.
In this case, Rivera was dismissed from work because she intentionally circumvented a strict
company policy, manipulated another entity to carry out her instructions without the
company’s knowledge and approval, and directed the diversion of funds, which she even
admitted doing under the guise of shortening the laborious process of securing funds for
promotional activities from the head office. These transgressions were serious offenses that
warranted her dismissal from employment and proved that her termination from work was
for a just cause. Hence, she is not entitled to separation pay.
More importantly, Rivera did not appeal the March 31, 2009 ruling of the NLRC disallowing
the award of separation pay to her. It was Unilever who elevated the case to the CA. It is
axiomatic that a party who does not appeal, or file a petition for certiorari, is not entitled to
any affirmative relief.
Due process prevents the grant of additional awards to parties who did not appeal. An
appellee who is not an appellant may assign errors in his brief where his purpose is to
maintain the judgment, but he cannot seek modification or reversal of the judgment or claim
affirmative relief unless he has also appealed. It was, therefore, erroneous for the CA to
grant an affirmative relief to Rivera who did not ask for it.

SAMAR-MED DISTRIBUTION VS. NLRC, ET AL.
G.R. NO. 162385, JULY 15, 2013
Facts:
RESPONDENT Josafat Gutang filed a complaint for money claims against petitioner SamarMed Distribution, a sole proprietorship registered in the name of Danilo V. Roleda. He
claimed that Samar-Med had difficulty paying his compensation during his employment,
resulting in his not being paid salaries since November 1995, allowances since June 1994
and commissions from sales, and 13th month pay in 1996. He also alleged that Samar-Med
made illegal deductions in June 1994 and February 1995. Consequently, he had been
compelled to look for other sources of income beginning on March 26, 1996 in order to
survive.
Roleda contended that since Gutang’s complaint before the labor arbiter did not include
illegal dismissal as his cause of action, this means that the instant case does not involve the
issue of illegal dismissal.
Issue: WON ther was illegal dismissal.

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Ruling:
No.
The petitioner’s contention that the validity of Gutang’s dismissal should not be determined
because it had not been included in his complaint before the National Labor Relations
Commission (NLRC) is bereft of merit.
The complaint of Gutang was a mere checklist of possible causes of action that he might
have against Roleda. Such manner of preparing the complaint was obviously designed to
facilitate the filing of complaints by employees and laborers who are thereby enabled to
expediently set forth their grievances in a general manner.
But the non-inclusion in the complaint of the issue of dismissal did not necessarily mean that
the validity of the dismissal could not be an issue. The rules of the NLRC require the
submission of verified position papers by the parties should they fail to agree upon an
amicable settlement, and bar the inclusion of any cause of action not mentioned in the
complaint or position paper from the time of their submission by the parties.
With Gutang’s position paper having alleged not only the bases for his money claims, but
also that he had been “compelled to look for other sources of income in order to survive”
and that his employment had not been formally terminated, thereby entitling him to “full
backwages aside from his other claims for unpaid monies,” the consideration and ruling on
the propriety of Gutang’s dismissal by the Labor Arbiter and the NLRC were proper.

NARANJO ET AL, VS. BIOMEDICA HEALTH CARE INC.
G.R. NO. 193789, SEPT. 19, 2012
Facts:
On November 7, 2006, petitioners––with two (2) other employees were all absent for various
personal reasons. Notably, these are the same employees who filed a letter-complaint dated
October 31, 2006 against Biomedica for lack of salary increases, failure to remit Social
Security System and Pag-IBIG contributions, and violation of the minimum wage law, among
other grievances.
Later that day, petitioners were allegedly to told to start looking for another workplace and
were not allowed to enter the premises. Biomedica issued a notice of preventive suspension
and notices to explain within 24 hours to petitioners, with accusation that petitioners
conducted an illegal strike and were accordingly directed to explain why they should not be
held guilty of and dismissed for violating the company policy.
Petitioners, without submitting their written explanations, filed a Complaint with the NLRC
for constructive dismissal.
Thereafter, Biomedica served Notices of Termination on petitioners.
Issue: WON the petitioners were illegally dismissed.
Ruling:
This petition is meritorious. In the instant case, petitioners were not afforded both procedural
and substantive due process.
Notice of Charge, Reasonable Opportunity
Rule XIII, Book V, Sec. 2 I (a) of the Implementing Rules and Regulations of the Labor Code
states:
xxx

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I. For termination of employment based on just causes as defined in Article 282 of the
Code:

(a) A written notice served on the employee specifying the ground or grounds for
termination, and giving said employee reasonable opportunity within which to explain
his side.
In King of Kings Transport, Inc. v. Mamac that a mere general description of the
charges against an employee by the employer is insufficient to comply with the
above provisions of the law:
x x x Moreover, in order to enable the employees to intelligently prepare their
explanation and defenses, the notice should contain a detailed narration of the facts
and circumstances that will serve as basis for the charge against the employees. A
general description of the charge will not suffice. Lastly, the notice should specifically
mention which company rules, if any, are violated and/or which among the grounds
under Art. 282 is being charged against the employees.

Clearly, petitioners were charged with conducting an illegal strike, not a mass leave, without
specifying the exact acts that the company considers as constituting an illegal strike or
violative of company policies.
Moreover, the period of 24 hours allotted to petitioners to answer the notice was severely
insufficient and in violation of the implementing rules of the Labor Code. King of Kings
Transport, Inc. elucidates in this wise:
(Reasonable Opportunity) should be construed as a period of at least five (5) calendar days
from receipt of the notice to give the employees an opportunity to study the accusation
against them, consult a union official or lawyer, gather data and evidence, and decide on the
defenses they will raise against the complaint.
Hearing
In addition, Biomedica did not set the charges against petitioners for hearing or conference
in accordance with Sec. 2, Book V, Rule XIII of the Implementing Rules and Regulations of the
Labor Code and in line with ruling in King of Kings Transport, Inc., where the Court explained:
(2) After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (1) explain and clarify
their defenses to the charge against them; (2) present evidence in support of their defenses;
and (3) rebut the evidence presented against them by the management.
While petitioners did not submit any written explanation to the charges, it is incumbent for
Biomedica to set the matter for hearing or conference to hear the defenses and receive
evidence of the employees. More importantly, Biomedica is duty-bound to exert efforts,
during said hearing or conference, to hammer out a settlement of its differences with
petitioners. These prescriptions Biomedica failed to satisfy.
Notice of Termination
Lastly, Biomedica again deviated from the dictated contents of a written notice of
termination as laid down in Sec. 2, Book V, Rule XIII of the Implementing Rules that it:
(3) After determining that termination of employment is justified, the employers shall serve
the employees a written notice of termination indicating that: (1) all circumstances involving
the charge against the employees have been considered; and (2) grounds have been
established to justify the severance of their employment.

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The Notice of Termination issued by Biomedica miserably failed to satisfy the requisite
contents of a valid notice of termination, as it simply mentioned the failure of petitioners to
submit their respective written explanations without discussing the facts and circumstances
to support the alleged violations
Petitioners were denied substantive due process
Serious misconduct, as a justifying ground for the dismissal of an employee, has been
explained in Aliviado v. Procter & Gamble, Phils., Inc.:
Misconduct has been defined as improper or wrong conduct; the transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, unlawful in
character implying wrongful intent and not mere error of judgment.
The misconduct to be serious must be of such grave and aggravated character and not
merely trivial and unimportant. To be a 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.
Petitoners failed to show that there was a mass leave or illegal strike, with the Court
concluding that there were only individual availment of their leaves by petitioners. And they
cannot be held guilty of any wrongdoing, much less anything to justify their dismissal from
employment. On this ground alone, the petition must be granted.
Given the illegality of their dismissal, petitioners are entitled to reinstatement and
backwages.

MANILA JOCKEY CLUB INC. VS. TRAJANO
G.R. NO. 160982, JUNE 26, 2013
Facts:
MJCI had employed Trajano as a selling teller of betting tickets. On one occasion, two regular
bettors gave their respective bets. One of the bettors however requested her to cancel his
bet. As she had authority to do so, she complied. It happened however that she had
mistakenly cancelled the other bettors ticket.
Later that day, Trajano and told her to submit a written explanation about the ticket
cancellation incident which she submitted the next day. She then resumed her work as a
selling teller, until she notified that she was being placed under preventive suspension.
When she reported back 30 days laters, she was no longer admitted. She later learned about
her termination through a memo posted in a selling station of MJCI.
MJCI maintained that Trajano’s dismissal was justified because the unauthorized cancellation
of the ticket had constituted a serious violation of company policy amounting to dishonesty;
that her action had also constituted a just cause for terminating her employment under
Article 282 of the Labor Code, particularly paragraph (a) on serious misconduct or willful
disobedience and paragraph (b) on gross and habitual neglect of duty.
MJCI also posits that Trajano held a position of trust and confidence; that the unauthorized
cancellation of the ticket was a serious misconduct on her part considering that had the bet
of P2,000.00 won the daily double race, the dividend to be paid could have been such a big
amount that she would be unable to pay on her own; that the repercussions of her act to
MJCI would have been disastrous had the bet won.

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Issue: Whether or not there was just cause when Petitioner (MJCI) dismissed Respondent
Aimee O. Trajano from the service; And Whether or not Petitioner MJCI complied with the
due process requirement.
Ruling:
The appeal lacks merit.
Loss of Trust and Confidence
Loss of the employer’s trust and confidence is a just cause under Article 282 (c), a provision
that ideally applies only to cases involving an employee occupying a position of trust and
confidence, or to a situation where the employee has been routinely charged with the care
and custody of the employer’s money or property. But the loss of trust and confidence, to
be a valid ground for dismissal, must be based on a willful breach of trust and confidence
founded on clearly established facts. "A breach is willful," according to AMA Computer
College, Inc. v. Garay, "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."An ordinary breach is not enough.
Moreover, the loss of trust and confidence must be related to the employee’s performance
of duties. As held in Gonzales v. National Labor Relations Commission:
xxx. But in order to constitute a just cause for dismissal, the act complained of must
be "work-related" such as would show the employee concerned to be unfit to
continue working for the employer.
As a selling teller, Trajano held a position of trust and confidence. The nature of her
employment required her to handle and keep in custody the tickets issued and the bets
made in her assigned selling station. The bets were funds belonging to her employer. MJCI
however, did not establish that the unauthorised cancellation of the ticket was intentional,
knowing and purposeful on her part in order for her to have breached the trust and
confidence reposed in her by MJCI, instead of being only out of an honest mistake.
Speculative and Unrealized Prejudice
The contention of MJCI that the unauthorized cancellation of the ticket could have greatly
prejudiced MJCI for causing damage to both its income and reputation is unwarranted.
MJCI’s prejudice remained speculative and unrealized. To dismiss an employee based on
speculation as to the damage the employer could have suffered would be an injustice. The
injustice in the case of Trajano would be greater if the supposed just cause for her dismissal
was not even sufficiently established.
The loss of trust and confidence as a ground for the dismissal of an employee must also be
shown to be genuine: ”x x x loss of confidence should not be simulated in order to justify
what would otherwise be, under the provisions of law, an illegal dismissal. It should not be
used as a subterfuge for causes which are illegal, improper and unjustified. It must be
genuine, not a mere afterthought to justify an earlier action taken in bad faith."
Insufficient Notice
As for the last procedural requirement of giving the second notice, the posting of the notice
of termination at MJCI’s selling stations did not satisfy it, and the fact that Trajano was
eventually notified of her dismissal did not cure the infirmity.
There is no question that an illegally dismissed employee is entitled to her reinstatement

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without loss of seniority rights and other privileges, and to full backwages, inclusive of
allowances and other benefits or their monetary equivalent.
FIANZA VS. NLRC ET AL.
G.R. NO. 163061, JUNE 26, 2013
Facts:
PETITIONER Alfonso L. Fianza was employed as officer for social acceptance of respondent
Binga Hydroelectric Plant, Inc. In February 1999, he did not receive his salary of P15,000 for
the first 15 days of the month. He was advised not to report for work until his status was
officially clarified by the Manila office.
Petitioner made several inquiries concerning his status and was told by a supervisor to
report for work. However, he was told that the new management committee had to concur
in his reappointment before he could be reinstated in the payroll. It also wanted an
opportunity to determine whether his services would still be necessary. Meanwhile, the chief
of the rehabilitation department of the company recommended his return.
As the management committee did not act on his inquiries for several months, on May 24,
1999, petitioner filed a complaint for illegal dismissal against respondent. Respondent
invoked the defense that petitioner abandoned his job.
Issue: Whether or not petitioner abandoned his job.
Ruling:
No.
It is clear that respondent company failed to prove the necessary elements of abandonment.
Additionally, the National Labor Relations Commission (NLRC) and the Court of Appeals (CA)
failed to take into account the strict requirements set by jurisprudence when they
determined the existence of abandonment on the basis of mere allegations that were
contradicted by the evidence shown.
The very act of filing the complaint for illegal dismissal should have negated any intention
on petitioner’s part to sever his employment. In fact, it should already have been sufficient
evidence to declare that there was no abandonment of work. Moreover, petitioner went back
to the company several times to inquire about the status of his employment. The fact that
his inquiries were not answered does not prejudice this position.
Throughout the entire ordeal, petitioner was vigilant in protecting himself from any claim
that he had abandoned his work.
The following circumstances evinced his intent to return to work: his continuous inquiry with
respondent about the status of his work; his willingness to return to work at any time,
subject to the approval of respondent, and his visits to the plant to apply for work; and his
filing of an illegal dismissal case.
Considering all these facts, established by the labor arbiter and confirmed by the NLRC and
the CA, the Supreme Court concluded that both appellate bodies were remiss in declaring
the existence of abandonment.

PASOS VS. PHIL NATIONAL CONSTRUCTION CORP.
G.R. NO. 192394, JULY 3, 2013
Facts:
Pasos started working for PNCC, under a Project Employment Contract which was to last
three month. His employment was however extended two years, and thereafter severally
rehired under similar contracts. Despite the termination of his last contract, he was

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instructed to report back as he will be employed again.
Pasos underwent medical examination for purposes of reemployment. He was advised to
take a 14-day sick leave, and on a subsequent check-up, was advised to take a 60-day sick
leave. It was at this circumstance that petitioner was told he was not entitled to sick leave
as he was not a regular employee. And when petitioner was finally given a clean bill of
health and reported to work, he was no longer admitted and told his contract ended on
October 19, 2000.
This prompted petitioner to file a complaint for illegal dismissal against PNCC. He argued
that he is deemed a regular employee of PNCC due to his prolonged employment as a
project employee as well as the failure on the part of PNCC to report his termination every
time a project is completed.
PNCC countered that petitioner was hired as a project employee in several projects with
specific dates of engagement and termination and had full knowledge and consent that his
appointment was only for the duration of each project.
Issue: WON petitioner is a regular employee with right to security of tenure.
Ruling:
This Court is convinced however that although petitioner started as a project employee, he
eventually became a regular employee of PNCC.
Under Article 280 of the Labor Code, as amended, a project employee is one whose
"employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee
or where the work or services to be performed is seasonal in nature and the employment is
for the duration of the season." Thus, the principal test used to determine whether
employees are project employees is whether or not the employees were assigned to carry
out a specific project or undertaking, the duration or scope of which was specified at the
time the employees were engaged for that project.
In the case at bar, petitioner worked continuously for more than two years after the
supposed three-month duration of his project employment for the NAIA II Project.
The failure of an employer to file termination reports after every project completion proves
that an employee is not a project employee.
Records clearly show that PNCC did not report the termination of petitioner’s supposed
project employment to the DOLE. Department Order No. 19, or the "Guidelines Governing
the Employment of Workers in the Construction Industry," requires employers to submit a
report of an employee’s termination to the nearest public employment office every time an
employee’s employment is terminated due to a completion of a project.
A regular employee dismissed for a cause other than the just or authorized causes provided
by law is illegally dismissed.
Petitioner’s regular employment was terminated by PNCC due to contract expiration or
project completion, which are both not among the just or authorized causes provided in the
Labor Code, as amended, for dismissing a regular employee.
Thus, petitioner was illegally dismissed.

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UNIVERSAL ROBINA CORP. VS. CASTILLO
G.R. NO. 189686, JULY 10, 2013
Facts:
Respondent Wilfredo Z. Castillo (Castillo) was hired by petitioner Universal Robina
Corporation (URC) as a truck salesman on 23 March 1983 with a monthly salary of
P4,000.00. He rose from the ranks and became a Regional Sales Manager, until his dismissal
on
12
January
2006.
As Regional Sales Manager, respondent was responsible for planning, monitoring, leading
and controlling all activities affecting smooth sales operation. His area of responsibility
covered some parts of Laguna, including Liana’s Supermart (Liana) in San Pablo City,
Laguna. On 19 August 2005, URC’s Credit and Collection Department (CCD) Analyst in
Silangan, Laguna Branch noted an outright deduction in the amount of P72,000.00 tagged
as Gift Certificate (GC) per Original Receipt No. 625462 dated 18 August 2005. The CCD
Analyst found the issuance of GCs as unusual. This finding prompted URC’s Corporate
Internal Audit (CIA) to conduct a routine audit of the unresolved accounts of Liana’s account
receivables.
On 14 November 2005, respondent was asked to explain in writing why the company should
not institute the appropriate disciplinary action against him for possible violation of Offenses
Subject to Disciplinary Action 2.04. On 17 November 2005, respondent submitted his
explanation. Respondent repeatedly denied that he signed two (2) blank Charge invoices
intended for GCs. He also admitted that only two (2) cut-cases should have been charged
and he assumed liability for the undue payment of one (1) cut-case display. Clarification
inquiries were likewise held on 8 December 2005. On 9 January 2006, respondent was
served a written notice of termination.
MR. CASTILLO WAS DISMISSED AS REGIONAL SALES MANAGER OF ROBINA SALES
CORPORATION FOR JUST CAUSE, SPECIFICALLY, LOSS OF TRUST AND CONFIDENCE UNDER
ART. 282. The principal charge against petitioner Castillo was hinged upon “unauthorized
arrangements” which he allegedly entered into. Petitioner Castillo’s unauthorized dealing
with respect to the changes in the Account Development Agreement is exactly the offending
cause of the host of infractions he committed, i.e., his neglect in signing the blank charge
invoices and his improper receipt of gift certificates for his personal gain. These acts taken
together constitute a breach of the trust and confidence reposed on petitioner Castillo by
private respondent URC. Indeed, petitioner Castillo’s acts of receiving the gift certificates
and signing the blank invoices are closely intertwined and inextricably connected with each
other. In other words, petitioner Castillo’s acquisition of the gift certificates could not have
been facilitated without him signing the blank invoices. Such signing was a ruse to cover up
his receipt of the gift certificates. Oddly enough, petitioner Castillo readily admitted to
signing receipt on Charge Invoices Nos. 2189 and 2190 covering the gift certificates in the
amounts of P60,000.00 and P12,000.00, respectively, but made the qualification that the
same were in blank when he signed on them. Such claim was obviously to create the
impression that he was really not aware of any gift certificates and that whatever misstep he
committed
was
merely
brought
about
by
his
good
faith.
Issue: Whether or not a validly dismissed employee is entitled to separation pay.
Ruling:
NO.

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THE AWARD OF SEPARATION PAY IS AUTHORIZED IN THE SITUATIONS DEALT WITH IN ARTICLE
283 AND 284 OF THE LABOR CODE, BUT NOT IN TERMINATIONS OF EMPLOYMENT BASED ON
INSTANCES ENUMERATED IN ARTICLE 282.
“x x x [L]abor adjudicatory officials and the CA must demur theaward of separation
pay based on social justice when an employee’s dismissal is based on serious
misconduct or willful disobedience; gross and habitual neglect of duty; fraud or willful
breach of trust; or commission of a crime against the person of the employer or his
immediate family— grounds under Art. 282 of the Labor Code that sanction
dismissals of employees. They must be most judicious and circumspect in awarding
separation pay or financial assistance as the constitutional policy to provide full
protection to labor is not meant to be an instrument to oppress the employers. The
commitment of the Court to the cause of labor should not embarrass us from
sustaining the employers when they are right, as here. In fine, we should be more
cautious in awarding financial assistance to the undeserving and those who are
unworthy of the liberality of the law.”

MARTINEZ VS. CENTRAL PANGASINAN ELECTRIC COOPERATIVE
G.R. NO. 192306, JULY 15, 2013
Facts:
In 1991, CENPELCO employed Martinez on a contractual basis and in 1993, was
subsequently regularized as a billing clerk at the former's main office in San Carlos City,
Pangasinan. On January 7, 2002, CENPELCO gave Martinez the position of teller at Area VI in
Malasiqui, Pangasinan.
On April 26, 2002, CENPELCO’s Internal Audit Department (IAD) conducted a cash count
audit concluded that there was an error in the breakdown of collection turned over by
Martinez for April 23, 2002. On June 30 2002, the Company’s Grievance Committee, which
was commissioned to investigate the charges imputed to Martinez, submitted its report
recommending Martinez’s termination from employment as well as the filing of the
appropriate case in court.
It was found that a closer scrutiny of the audit report reveals that on April 25, 2002, Martinez
indeed had a shortage in the amount of P44,846.77, which he himself admitted in his letterexplanation dated May 15, 2002. Further, Martinez was not able to account for such
shortage and instead, tried to offset the same with his April 23, 2002 overage in the amount
of P45,682.58.
On November 26, 2002, Martinez was dismissed from service, prompting him to file a
complaint for illegal dismissal with money claims for 13 th month pay, service incentive leave
pay and allowances, as well as moral and exemplary damages.
The Labor Arbiter (LA) opined that there is no ascribable offense against Martinez which
may constitute the charges of misappropriation and loss of confidence against him and ruled
Martinez’s dismissal illegal. The NLRC reversed the LA’s ruling, declaring Martinez’s
dismissal valid but nevertheless, upheld the award for 13th month pay and cash equivalent of
leave credits. Martinez moved for reconsideration but was denied.
The CA affirmed the NLRC’s ruling. The CA held that the anomalies charged against
Martinez are duly substantiated as such finding is supported by an audit. It echoed the
NLRC’s finding that Martinez cannot offset his April 25, 2002 shortage with his April 23, 2002
overage because the latter is dubious and that the practice of offsetting shortages with

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overages is highly improper. Aggrieved, Martinez moved for reconsideration but was denied.
Issue: Whether Martinez’s dismissal on the ground of loss of trust and confidence is valid.
Ruling:
The petition is DENIED.
To validly dismiss an employee on the ground of loss of trust and confidence under Article
296(c) (formerly Article 282[c]) of the Labor Code, 26 the following guidelines must be
observed:
(1) the employee concerned must be holding a position of trust and confidence; and
(2) there must be an act that would justify the loss of trust and confidence. 27
Anent the first requisite, it is noteworthy to mention that there are two classes of positions of
trust, namely:
(1) managerial employees whose primary duty consists of the management of the
establishment in which they are employed or of a department or a subdivision thereof, and
to other officers or members of the managerial staff; and
(2) fiduciary rank-and-file employees such as cashiers, auditors, property custodians, or
those who, in the normal exercise of their functions, regularly handle significant amounts of
money or property.
Being an employee tasked to collect payments and remit the same to CENPELCO, Martinez
belongs to the latter class and thus, occupies a position of trust and confidence.
Anent the second requisite, Martinez not only admitted the same but even tried to exculpate
himself from liability by attempting to offset said shortage with his alleged overage on April
23, 2002 in the amount of P45,682.58. The Court agrees with the CA that this practice
should never be countenanced because it would allow the employees to patch up
inaccuracies or even their own wrongdoings and thus, the true revenues or losses of the
company will never be conectly identified. Verily, this irregular practice would be detrimental
to the interests of the employer whose bread and butter depends solely on realized profits. 30
Perforce, Martinez's failure to properly account for his shortage of such a significant amount
is enough reason for CENPELCO to lose trust and confidence in him.
Properly adduced evidence which substantially supports the conclusion that on April 25,
2002, Martinez had a shortage in the amount of P44,846.77. As Martinez was accountable
for the discrepancies in his collections vis-a-vis his remittances, the burden of evidence
shifted to him to prove that the reflected shortage was not attributable to any form of
negligence or infraction on his part. However, records disclose that instead of properly
explaining the reason for such shortage, Martinez merely admitted its existence. Worse, he
even tried to offset such shortage with his purported April 23, 2002 overage. In fine,
CENPELCO had every right to dismiss Martinez on the ground of loss of trust and confidence
for the latter's inability to account for the shortages imputed to him.

ZUELLIG PHARMA CORP VS. SIBAL ET AL.
G.R. NO. 173587, JULY 15, 2013
Facts:
Petitioner , Zuellig Corporation, is a domestic Corporation engaged in the manufacture and
distribution of pharmaceutical products. It also distributes pharmaceutical products
manufactured by other companies like Syntex Pharmaceuticals (Syntex). Respondents (36 in
all), on the other hand, were the employees of Zuellig at its Syntex Division. In 1995 Roche
Philippines purchased Syntex and took over Zuellig the distribution of Syntex Products.

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Consequently, Zuellig closed its Syntex Division and terminated the services of respondents
due to redundancy. They were properly notified of their termination and were paid
separation pay according to their CBA and which individually signed Release and Quitclaim
in full settlement of all claims arising from their employment with Zuellig. Controversy arose
when respondents filed in the NLRC separate complaints for payment of retirement gratuity
and monetary equivalent of their unused sick leave .
Issues:
WON the respondents can recover both their separation pay and retirement pay.
WON the respondents can claim their award of monetary equivalent of respondent’s unused
sick leave.
WON the Release and Quitclaim executed between the parties is valid .
Ruling:
1.) No, The CBA does not allow recovery of both separation pay and retirement gratuity.
the CBA contains specific provisions which effectively bar the availment of retirement
benefits once the employees have chosen separation pay or vice versa. Section 2 of
Article XIV explicitly states that any payment of retirement gratuity shall be
chargeable against separation pay. Clearly, respondents cannot have both retirement
gratuity and separation pay, as selecting one will preclude recovery of the other. If
the employees choose to retire, whatever amount they will receive as retirement
gratuity will be charged against the separation pay they would have received had
their separation from employment been for a cause which would entitle them to
severance pay. These causes are enumerated in Section 3, Article XIV of the CBA (i.e.,
retrenchment, closure of business, merger, redundancy, or installation of labor-saving
device). However, if the cause of the termination of their employment was any of the
causes enumerated in said Section 3, they could no longer claim retirement gratuity
as the fund from which the same would be taken had already been used in paying
their separation pay. Put differently, employees who were separated from the
company cannot have both retirement gratuity and separation pay as there is only
one fund from which said benefits would be taken. Consequently, respondents are
entitled only to one.
2.) No, Respondents are not entitled to the monetary equivalent of their unused sick
leave credits. The CA’s ruling in effect put something into the CBA that is not written
in it, contrary to the old and familiar Latin maxim of expressio unius est exclusio
alterius. In this case, Article VIII of the CBA covers only (1) an employee who is 60
years old and due for compulsory retirement; (2) an employee who retires prior to
attaining the compulsory retirement age but has served at least 25 years; and, (3) an
employee who retires before attaining compulsory retirement age due to illness or
disability. Necessarily, the enumeration cannot be extended to include those who will
be leaving the company due to redundancy, death, merger, installation of labor costsaving device, retrenchment, or closure of business as mistakenly ruled by the CA. As
the law between the parties, the CBA must be strictly complied with. It is a familiar
and fundamental doctrine in labor law that the CBA is the law between the parties
and they are obliged to comply with its provisions.
3.) Yes, It is true that quitclaims executed by employees are often frowned upon as
contrary to public policy. However, in this case, there is no showing that Zuellig
coerced or forced respondents to sign the Release and Quitclaim. In fact, there is no
allegation that Zuellig employed fraud or deceit in making respondents sign the
Release and Quitclaim.

ZUELLIG FREIGHT & CARGO SYSTEM VS. NLRC
G.R. NO. 157900, JULY 22, 2013

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Facts:
San Miguel brought a complaint for unfair labor practice, illegal dismissal, non-payment of
salaries and moral damages against petitioner. He alleged that he had been a
checker/customs representative of Zeta since December 16, 1985; that in January 1994, he
and other employees of Zeta were informed that Zeta would cease operations, and that all
affected employees, including him, would be separated. By letter dated February 28, 1994,
Zeta informed him of his termination effective March 31, 1994; that he reluctantly accepted
his separation pay subject to the standing offer to be hired to his former position by
petitioner; and that on April 15, 1994, he was summarily terminated, without any valid cause
and due process.. San Miguel contended that the amendments of the articles of
incorporation of Zeta were for the purpose of changing the corporate name, broadening the
primary functions, and increasing the capital stock; and that such amendment could not
mean that Zeta had been thereby dissolved.
Issue: WON the cessation of business by Zeta was valid to be regarded as a valid ground for
termination of employment of San Miguel.
Ruling:
No, Verily, the amendments of the articles of incorporation of Zeta to change the corporate
name to Zuellig Freight and Cargo Systems, Inc. did not produce the dissolution of the
former as a corporation. The changing of the name of a corporation is no more the creation
of a corporation than the changing of the name of a natural person is begetting of a natural
person. The act, in both cases, would seem to be what the language which we use to
designate it imports – a change of name, and not a change of being. In short, Zeta and
petitioner remained one and the same corporation. The change of name did not give
petitioner the license to terminate employees of Zeta like San Miguel without just or
authorized cause. 18Petitioner, despite its new name, was the mere continuation of Zeta’s
corporate being, and still held the obligation to honor all of Zeta’s obligations, one of which
was to respect San Miguel’s security of tenure. The dismissal of San Miguel from
employment on the pretext that petitioner, being a different corporation, had no obligation
to accept him as its employee, was illegal and ineffectual.

ABBOTT LABORATRORIES PHILS ET AL., VS. ALCARAZ
G.R. NO. 192571, JULY 23, 2013 EN BANC
Facts:
Alcaraz applied for and was accepted as Medical and Regulatory Affairs Manager of Abbott
Laboratories, Philippines. In her employment contract, she was placed on probation for a
period of six (6) months beginning February 15 to August 14, 2005. During her preemployment orientation, she was briefed of her duties and responsibilities for the said
position. During her employment, she was considered as ‘too strict’ by some of the staff as
she would reprimand the latter for their unprofessional behavior. Months later, she was
informed that she failed to meet the regularization standards for the position of Regulatory
Affairs Manager. Hence, she filed a complaint for illegal dismissal and damages against
Abbott and its officers contending that she was unjustly terminated from her employment.
She claimed that she should have already been considered as a regular and not a
probationary employee for Abbott’s failure to appraise her of the reasonable standards for
her regularization upon her engagement as required under Art. 295 of the Labor Code.
Abbott countered saying that Alcaraz was validly terminated given her failure to satisfy the
prescribed standards which were made known to him at the time of her engagement.
Issue:

Whether or not Alcaraz was validly terminated.

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Ruling:
YES. A probationary employee, like a regular employee, enjoys security of tenure. However,
in cases of probationary employment, aside from just or authorized causes of termination,
an additional ground is provided under Article 295 of the Labor Code, i.e., the probationary
employee may also be terminated for failure to qualify as a regular employee in accordance
with the reasonable standards made known by the employer to the employee at the time of
the engagement. Thus, the services of an employee who has been engaged on probationary
basis may be terminated for any of the following: (a) a just or (b) an authorized cause; and
(c) when he fails to qualify as a regular employee in accordance with reasonable standards
prescribed by the employer.
Corollary thereto, Section 6 (d), Rule I, Book VI of the Implementing Rules of the Labor Code
provides that if the employer fails to inform the probationary employee of the reasonable
standards upon which the regularization would be based on at the time of the engagement,
then the said employee shall be deemed a regular employee. In other words, the employer
is made to comply with two (2) requirements when dealing with a probationary employee:
first, the employer must communicate the regularization standards to the probationary
employee; and second, the employer must make such communication at the time of the
probationary employee's engagement. If the employer fails to comply with either, the
employee is deemed as a regular and not a probationary employee.
The records reveal that Abbott had indeed complied with the above-stated requirements.
This conclusion is largely impelled by the fact that Abbott clearly conveyed to Alcaraz her
duties and responsibilities as Regulatory Affairs Manager prior to, during the time of her
engagement, and the incipient stages of her employment. Circumstances show that Alcaraz
was well-aware that her regularization would depend on her ability and capacity to fulfill the
requirements of her position as Regulatory Affairs Manager and that her failure to perform
such would give Abbott a valid cause to terminate her probationary employment.

MANILA POLO CLUB EMPLOYEES UNION VS. MANILA POLO CLUB
G.R. NO. 172846, JULY 24, 2013
Facts:
The Board of Directors of Manila Polo Club Inc. unanimously resolved to completely
terminate the entire operation of its Food and Beverage (F & B) outlets due to yearly losses
and award its operations to a qualified restaurant operator or caterer. A retrenchment
program was then implemented against the 117 employees who are directly and indirectly
involved with the operations of the F & B outlets with payment of their separation pay.
Unaware yet of the termination notice sent to them, the affected employees were surprised
when they were prevented from entering the Club premises as they report for work. They
later learned that the F & B operations had already been awarded to Makati Skyline, Inc.
Aggrieved, the union representing the employees filed a Notice of Strike before the National
Conciliation and Mediation Board (NCMB) for illegal dismissal, violation/non-implementation
of the Collective Bargaining Agreement (CBA), union busting, and other unfair labor
practices (ULP).
Issue: Whether or not the retrenchment of the 117 union members was legal.
Ruling:
YES. This case involves a closure of business undertaking, not retrenchment. Retrenchment
is the reduction of personnel for the purpose of cutting down on costs of operations in terms

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of salaries and wages resorted to by an employer because of losses in operation of a
business occasioned by lack of work and considerable reduction in the volume of business.
On the other hand, closure of a business or undertaking due to business losses is the
reversal of fortune of the employer whereby there is a complete cessation of business
operations to prevent further financial drain upon an employer who cannot pay anymore his
employees since business has already stopped.
Hereunder are the guidelines for a valid termination of employees as a result of closure of
business:
1.Closure or cessation of operations of establishment or undertaking may either be
partial or total.
2.Closure or cessation of operations of establishment or undertaking may or may not
be due to serious business losses or financial reverses. However, in both instances,
proof must be shown that: (1) it was done in good faith to advance the employer's
interest and not for the purpose of defeating or circumventing the rights of
employees under the law or a valid agreement; and (2) a written notice on the
affected employees and the DOLE is served at least one month before the intended
date of termination of employment. EHCcIT
3.The employer can lawfully close shop even if not due to serious business losses or
financial reverses but separation pay, which is equivalent to at least one month pay
as provided for by Article 283 of the Labor Code, as amended, must be given to all
the affected employees.
4.If the closure or cessation of operations of establishment or undertaking is due to
serious business losses or financial reverses, the employer must prove such
allegation in order to avoid the payment of separation pay. Otherwise, the affected
employees are entitled to separation pay.
5.The burden of proving compliance with all the above-stated falls upon the
employer.
In this case, the closure of the F & B Department was due to legitimate business
considerations, a resolution which the Court has no business interfering with. The
characterization of the employee's service as no longer necessary or sustainable, and
therefore, properly terminable, is an exercise of business judgment on the part of the
employer; 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 with
the exercise of such so long as no abuse of discretion or arbitrary or malicious action on the
part of the employer is shown. Just as no law forces anyone to go into business, no law can
compel anybody to continue the same.

CANEDO VS. KAMPILAN SECURITY & DETECTIVE AGENCY INC. ET AL.
G.R. NO. 179326, JULY 31, 2013
Facts:
Luciano Canedo was assigned by Kampilan Security and Detective Agency as security guard
of the National Power Corporation (NPC) at Toledo City. However, for not wearing a uniform
while on duty as per report of Allan Alfafara of the NPC. Canedo was suspended for a month.
NPC thereafter informed Kampilan that it was no longer interested in Canedo’s service and
thus requested for his replacement. In the meantime, Canedo requested from Arquiza of

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Kampilan to issue a certification in connection with his intended retirement to which the
latter acceded. Days later, Canedo filed before the labor arbiter a complaint for illegal
dismissal, illegal suspension and non-payment of monetary benefits against Kampilan. He
claimed that his suspension was without a valid ground and effected without due process,
hence, illegal. Kampilan countered that Canedo was not dismissed from service but he was
just pulled put from NPC in view of NPC’s request for his replacement.
Issue: Whether or not Canedo was dismissed from service.
Ruling:
NO. In illegal dismissal cases, "while the employer bears the burden to prove that the
termination was for a valid or authorized cause, the employee must first establish by
substantial evidence the fact of dismissal from service." The burden of proving the
allegations rests upon the party alleging and the proof must be clear, positive and
convincing. Thus, in this case, it is incumbent upon petitioner to prove his claim of dismissal.
While it is true that he was not allowed to report for work after the period of his suspension
expired, the same was due to NPC's request for his replacement as NPC was no longer
interested in his services. And as correctly argued by Kampilan, Canedo from that point
onward is not considered dismissed but merely on a floating status. "Such a 'floating status'
is lawful and not unusual for security guards employed in security agencies as their
assignments primarily depend on the contracts entered into by the agency with third
parties."
A floating status can ripen into constructive dismissal only when it goes beyond the sixmonth maximum period allowed by law. In this case, Canedo filed the Complaint for illegal
dismissal even before the lapse of the six-month period. Hence, his claim of illegal dismissal
lacks basis. It was in fact Canedo who intended to terminate his relationship with Kampilan
through his planned retirement. This circumstance negates his claim that he was
terminated. Clearly, there is no dismissal to speak of this case.

ANG VS. SAN JOAQUIN JR ET AL.
G.R. NO. 185549, AUG. 7, 2013
Facts:
Respondents San Joaquin, Jr. and Fernandez were regular employees of Virose which Ang is
the proprietor of the business. San Joaquin was hired in 1974 as helper, while Fernandez was
employed in 1982 as driver. Respondents attended the court hearing relative to the 41
criminal cases filed by former Virose employee Abrera against Ang for the latter’s nonremittance of Social Security System (SSS) Contributions. During that hearing, respondents
testified against Ang; it was the second time for San Joaquin to testify, while it was
Fernandez’s first Previously, respondents joined Abrera in questioning Ang’s procedure in
remitting their SSS contributions. After the said hearing Ang began to treat respondents with
hostility and antagonism. On August 28, 1999, a salesclerk who was Instructed to find a
helper by Ang’s wife to transfer monoblock chairs to her restaurant asked San Joaquin to
help, but the latter refused, saying that he was not an employee of the restaurant but a
glass installer of Virose. A heated argument ensued between San Joaquin on the one hand
and Rosa, her son Jonathan, and the salesclerk on the other. San Joaquin left the store,
shouting invectives. San Joaquin returned to the store, only to find out that Ang had
torn his DTR to pieces that day while the DTR of Fernandez was torn to pieces by
Ang immediately after the August 24, 1999 hearing in which the respondents
testified. On the same day, Fernandez reported for work and received a memorandum of
even date issued by Ang informing him that he was placed on a one-week suspension for

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insubordination. The memorandum did not specify the act of insubordination. Respondents
filed against Ang Complaints for illegal constructive dismissal with claims for backwages and
separation pay. Fernandez confronted Ang, demanding that the latter sign certain
documents which the former had with him. Ang refused, and Fernandez – who was then
intoxicated – left uttering unsavory remarks and threatening to sue Ang. San Joaquin
received a memorandum from Ang placing the former under preventive suspension and
ordering him to explain in writing, within three days, why no disciplinary action should be
imposed against him for his refusal to obey instructions to transfer the monobloc chairs.
Fernandez received another memorandum from Ang, ordering him to report for work after
being absent for a week. Ang issued a memorandum terminating San Joaquin’s employment.
Issue: WON there was constructive dismissal
Held:
Respondents were illegally dismissed.
“Constructive dismissal exists where there is cessation of work because continued
employment is rendered impossible, unreasonable or unlikely, as an offer involving a
demotion in rank and a diminution in pay.” It is a “dismissal in disguise or an act amounting
to dismissal but made to appear as if it were not.” Constructive dismissal may likewise exist
if an “act of clear discrimination, insensibility, or disdain by an employer becomes so
unbearable on the part of the employee that it could foreclose any choice by him except to
forego his continued employment.” “Constructive dismissal exists when the employee
involuntarily resigns due to the harsh, hostile, and unfavorable conditions set by the
employer. 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.
The CA is correct in its pronouncement that respondents were constructively dismissed from
work. Moreover, by destroying respondents’ time cards, Ang discontinued and severed his
relationship with respondents. The purpose of a time record is to show an employee’s
attendance in office for work and to be paid accordingly, taking into account the policy of
“no work, no pay”. A daily time record is primarily intended to prevent damage or loss to the
employer, which could result in instances where it pays an employee for no work done; it is a
mandatory requirement for inclusion in the payroll, and in the absence of an employment
agreement, it constitutes evidence of employment. Thus, when Ang tore the respondents’
time cards to pieces, he virtually removed them from Virose’s payroll and erased all vestiges
of respondents’ employment; respondents were effectively dismissed from work. The act
may be considered an outright – not only symbolic – termination of the parties’
employment relationship; the “last straw that finally broke the camel’s back”, as
respondents put it in their Position Paper. In addition, such tearing of respondents’ time
cards confirms petitioner’s vindictive nature and oppressive conduct, as well as his reckless
disregard for respondents’ rights.
For a termination of employment on the ground of abandonment to be valid, the
employer “must prove, by substantial evidence, the concurrence of [the
employee’s] failure to report for work for no valid reason and his categorical
intention to discontinue employment.” In the present case, it appears that there is no
intention to abandon employment; respondents’ repeated absence were caused by Ang’s
oppressive treatment and indifference which respondents simply grew tired of and wanted a
break from. Indeed, an employee cannot be expected to work efficiently in an atmosphere
where the employer’s hostility pervades; certainly, it is too stressful and depressing – the
threat of immediate termination from work, if not aggression, is a heavy burden carried on
the employee’s shoulder. Respondents may have stayed away from work to cool off, but not
necessarily to abandon their employment. The fact remains that respondents returned to
work, but then their time cards had been torn to pieces.

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SANOH FULTON PHILS INC. ET AL., VS. BERNARDO ET AL.
G.R. NO. 187214, AUG. 14, 2013
Facts:
Sanoh is a domestic corporation engaged in the manufacture of automotive parts and wire
condensers for home appliances. Its Wire Condenser Department employed 61 employees
including respondents. In view of job order cancellations relating to the manufacture of wire
condensers by Matsushita, Sanyo and National Panasonic, Sanoh decided to phase out the
Wire Condenser Department. On 22 December 2003, the Human Resources Manager of
Sanoh informed the 17 employees, 16 of whom belonged to the Wire Condenser
Department, of retrenchment effective 22 January 2004. All 17 employees are union
members. A grievance conference was held where the affected employees were informed of
the following grounds for retrenchment:1) Lack of local market.2) Competition from imported
products.3) Phasing out of Wire Condenser Department. Two succeeding conciliation
conferences were likewise held but the parties failed to reach an amicable settlement. The
complainants alleged that there was no valid cause for retrenchment and in effecting
retrenchment, there was a violation of the "first in-last out" and "last in-first out" (LIFO)
policy embodied in the Collective Bargaining Agreement. Sanoh, on the other hand, asserted
that retrenchment was a valid exercise of management prerogative. Sanoh averred that
some employees who were hired much later were either assigned to other departments or
were bound by the terms of their job training agreement to stay with the company for 3
years.
Issue: WON there was valid retrenchment
Held:
There was no valid retrenchment. Nor was there closure of business
For retrenchment, the three (3) basic requirements are: (a) proof that the retrenchment is
necessary to prevent losses or impending losses; (b) service of written notices to the
employees and to the Department of Labor and Employment at least one (1) month prior to
the intended date of retrenchment; and (c) payment of separation pay equivalent to one (1)
month pay, or at least one-half (1/2) month pay for every year of service, whichever is
higher. In addition, jurisprudence has set the standards for losses which may justify
retrenchment, thus:(1) the losses incurred are substantial and not de minimis; (2) the losses
are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is
likely to be effective in preventing the expected losses; and (4) the alleged losses, if already
incurred, or the expected imminent losses sought to be forestalled, are proven by sufficient
and convincing evidence. Upon the other hand, in termination, the law authorizes
termination of employment due to business closure, regardless of the underlying reasons
and motivations therefore, be it financial losses or not. However, to put a stamp to its
validity, the closure/cessation of business must be bona fide, i.e., its purpose is to advance
the interest of the employer and not to defeat or circumvent the rights of employees under
the law or a valid agreement. In termination cases either by retrenchment or closure,
the burden of proving that the termination of services is for a valid or authorized
cause rests upon the employer. Not every loss incurred or expected to be incurred by an
employer can justify retrenchment. The employer must prove, among others, that the losses
are substantial and that the retrenchment is reasonably necessary to avert such losses.
Sanoh asserts that cancelled orders of wire condensers led to the phasing out of the Wire
Condenser Department which triggered retrenchment. Sanoh presented the letters of
cancellation given by Matsushita and Sanyo as evidence of cancelled orders. The evidence
presented by Sanoh barely established the connection between the cancelled orders and the
projected business losses that may be incurred by Sanoh. Sanoh failed to prove that these
cancelled orders would severely impact on their production of wire condensers. We held in
Lambert Pawnbrokers and Jewelry Corporation v. Binamira that the losses must be supported

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by sufficient and convincing evidence and the normal method of discharging this is by the
submission of financial statements duly audited by independent external auditor. It was
aptly observed by the appellate court that no financial statements or documents were
presented to substantiate Sanoh’s claim of loss of P7 million per month. Contrarily,
respondents amply proved that the cancelled orders did not seriously create a dent on
Sanoh’s financial standing. Respondents further presented the production target and actual
production of the Wire Condenser Department for the year 2005, to prove that the
department had realized income for that year.
As the Wire Condenser Department is still in operation and no business losses were proven
by Sanoh, the dismissal of respondents was unlawful.
Respondents are entitled to
reinstatement without loss of seniority rights and other privileges and to full backwages,
computed from the time the compensation was withheld up to the time of actual
reinstatement. Present law says that if reinstatement is not feasible, the payment of full
backwages shall be made from the date of dismissal until finality of judgment.
Reinstatement is no longer practical in view of the length of time that had elapsed. As held
in EDI Staff Builders International Inc. v. Magsino, apart from backwages, respondents
should be awarded separation pay.

DAABAY VS.COCA-COLA BOTTLERS PHILS
G.R. NO. 199890, AUG. 19, 2013
Facts:
The case stems from a complaint for illegal dismissal, illegal suspension, unfair labor
practice and monetary claims filed by Daabay against respondent Coca-Cola Bottlers Phils.,
Inc. (Coca-Cola) and three officers of the company. The records indicate that the
employment of Daabay with Coca-Cola as Sales Logistics Checker was terminated by the
company in June 2005, following receipt of information from one Cesar Sorin (Sorin)
that Daabay was part of a conspiracy that allowed the pilferage of company property. CocaCola then served upon Daabay a Notice to Explain with Preventive Suspension. In
compliance therewith, Daabay submitted an explanation denying said allegations.
Formal Investigation was ensued. Eventually, Coca-Cola served upon Daabay a Notice of
Termination that cited pilferage, serious misconduct and loss of trust and confidence as
grounds. At the time of his dismissal, Daabay had been a regular employee of Coca-Cola for
eight years.
Daabay then filed the subject labor complaint against Coca-Cola. The Executive Labor
Arbiter ruled in favor of Daabay because the alleged participation was not proven with
substantial evidence. In lieu of reinstatement and considering the already strained relations
between the parties, ELA Magbanua ordered the payment of backwages and separation pay
or retirement benefits.
Dissatisfied, Coca-cola appealed the decision to NLRC. NLRC reversed ELA decision and held
that here is a “reasonable and well-founded basis to dismiss” Daabay but awarded
retirement benefits. The NLRC, in awarding retirement benefits, explained that there was a
need "to humanize the severe effects of dismissal" and "tilt the scales of justice in favor of
labor as a measure of equity and compassionate social justice."
Coca-cola appealed to CA regarding the award of retirement benefits. CA agreed that
Daabay should not be entitled to it considering he was dismissed for just cause.
Aggrieved, Daabay filed this petition to SC.
Issue: Whether or not Daabay is entitled to retirement benefits.
Ruling:
No. Daabay was declared by the NLRC to have been lawfully dismissed by Coca-Cola on the

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grounds of serious misconduct, breach of trust and loss of confidence. SC pronouncement
in Philippine Airlines, Inc. v. NLRC was applied in this case. SC held:
“…private respondent was not separated from petitioner's employ due to
mandatory or optional retirement but, rather, by termination of employment for a
just cause…Even private respondent's assertion that, at the time of her lawful dismissal,
she was already qualified for retirement does not aid her case because the fact remains
that private respondent was already terminated for cause thereby rendering
nugatory any entitlement to mandatory or optional retirement pay that she might
have previously possessed. “
Also, the Court has ruled, time and again, that financial assistance, or whatever name it is
called, as a measure of social justice is allowed only in instances where the employee is
validly dismissed for causes other than serious misconduct or those reflecting on his moral
character.||| Clearly, considering that Daabay was dismissed on the grounds of serious
misconduct, breach of trust and loss of confidence, the award based on equity was
unwarranted.

MZR INDUSTRIES ET AL., VS. COLAMBOT
G.R. NO. 179001, AUG. 28, 2013
Facts:
On February 8, 2000, petitioner Marilou Quiroz, Owner and Vice-President for Finance and
Marketing of MZR, hired respondent Majen Colambot (Colambot) as messenger. Colambot’s
duties and responsibilities included field, messengerial and other liaison work.
However, beginning 2002, Colambot’s work performance started to deteriorate. Petitioners
issued several memoranda to Colambot for habitual tardiness, negligence, and violations of
office policies, including insubordinations, among others.
Petitioners claimed that despite written warnings for repeated tardiness and insubordination,
Colambot failed to mend his ways. Hence, in a Memorandum (October 25, 2004) issued by
petitioner Lea Timbal, MZR’s Administrative Manager, Colambot was given a notice of
suspension for insubordination and negligence.
Again, in a Memorandum (November 25, 2004), Colambot was suspended from November
26, 2004 until December 6, 2004 for insubordination. Petitioners claimed they waited for
Colambot to report back for work on December 7, 2004, but they never heard from him
anymore.
Later, petitioners were surprised to find out that Colambot had filed a complaint for illegal
dismissal, illegal suspension, underpayment of salaries, holiday pay, service incentive pay,
13th month pay and separation pay.
Petitioner insisted that while Colambot was suspended due to insubordination and
negligence, they maintained that they never terminated Colambot’s employment. Colambot,
meanwhile, argued that contrary to petitioners’ claim that he abandoned his job, he claimed
that he did not report back to work after the expiration of his suspension on December 6,
2004, because Quiroz told him that his employment was already terminated effective
December 7, 2004.
Labor Arbiter declared petitioner guilty of illegal dismissal. LA held that there was no
abandonment as there was no deliberate intent on the part of Colambot to sever the
employer-employee relationship and petitioner failed to notify Colambot to return to work. |
Aggrieved, petitioner appealed to NLRC. NLRC ruled in favor of Quiroz. But CA reversed.
Issues:
1. Whether or not petitioner Quiroz is guilty of Illegal Dismissal
2. Whether or not Colambot is guilty of abandonment
Ruling:

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1. No.
There was no illegal dismissal, no dismissal having actually taken place. In illegal dismissal
cases, the employer bears the burden of proving that the termination was for a valid or
authorized cause. However, before the employer must bear the burden of proving that the
dismissal was legal, the employee must first establish by substantial evidence the fact of his
dismissal from service. If there is no dismissal, then there can be no question as to the
legality or illegality thereof. In the present case, however, the facts and the evidence do not
establish a prima facie case that the employee was dismissed from employment.
Other than Colambot's unsubstantiated allegation of having been verbally terminated from
his work, there was no evidence presented to show that he was indeed dismissed from work
or was prevented from returning to his work. In the absence of any showing of an overt or
positive act proving that petitioners had dismissed respondent, the latter's claim of illegal
dismissal cannot be sustained. The Notice of Suspension shows that he is merely suspended
from work. It was also apparent that there was a specific instruction for him to return back to
work on Dec. 7.
There were no wordings whatsoever implying actual or constructive dismissal. Thus,
Colambot's general allegation of having been orally dismissed from the service as against
the clear wordings and intent of the notice of suspension which he signed, we are then
inclined to believe that there was no dismissal.
2. No.
To constitute abandonment of work, two elements must be present:
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 on the part of the employee to sever the
employer-employee relationship manifested by some overt act.
Mere absence or failure to report for work, even after notice to return, is not tantamount to
abandonment.
The burden of proof to show that there was unjustified refusal to go back to work rests on
the employer. Abandonment is a matter of intention and cannot lightly be presumed from
certain equivocal acts. To constitute abandonment, there must be clear proof of deliberate
and unjustified intent to sever the employer-employee relationship.
In the instant case, other than Colambot's failure to report back to work after suspension,
petitioners failed to present any evidence which tend to show his intent to abandon his work.
Petitioner failed to discharge the burden.
These circumstances, taken together, the lack of evidence of dismissal and the lack of intent
on the part of the respondent to abandon his work, the remedy is reinstatement but without
backwages. However, considering that reinstatement is no longer applicable due to the
strained relationship between the parties and that Colambot already found another
employment, each party must bear his or her own loss.

INTEGRATED MICORELCTRONICS INC. VS. PIONELLA
G.R. NO. 200222, AUG. 28, 2013
Facts:
Adonis Pionilla was hired by IMI as its production worker. On May 5, 2005, Pionilla received a
notice from IMI requiring him to explain the incident which occurred the day before where he

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was seen escorting a lady to board the company shuttle bus at the Alabang Terminal. It was
reported by the bus marshall that the lady was wearing a company identification card (ID) –
which serves as a free pass for shuttle bus passengers – even if she was just a job applicant
at IMI. In this regard, Pionilla admitted that he lent his ID to the lady who turned out to be his
relative. He further intimated that he risked lending her his ID to save on their transportation
expenses. Nevertheless, he apologized for his actions.
During the Conscience Committee hearing, Pionilla admitted that at the time of the incident,
he had two IDs in his name as he lost his original ID in November 2004 but was able to
secure a temporary ID later. Based on the foregoing, IMI found Pionilla guilty of violating
Article 6.12 of the Company Rules and Regulations (CRR) which prohibits the lending of
one’s ID since the same is considered a breach of its security rules and carries the penalty of
dismissal. Subsequently, Pionilla received a letter informing him of his dismissal from
service.
Three days after, he filed a complaint for illegal dismissal with damages against IMI.
LA ruled in favor of Pionilla ordering reinstatement and payment of backwages. Dissatisfied,
IMI elevated the matter to the National Labor Relations Commission (NLRC).
NLRC reversed the LA’s ruling, finding Pionilla’s dismissal to be valid. It pointed out that
Pionilla’s act of lending his temporary ID was willful and intentional as he, in fact, admitted
and apologized for the same. The NLRC further ruled that Pionilla’s attitude in violating the
CRR could be treated as perverse as bolstered by his failure to surrender his temporary ID
despite locating the original one. Dissatisfied, Pionilla filed a petition for certiorari before the
CA.
CA ruled in favor of Pionilla. It found that while IMI’s regulations on company IDs were
reasonable, the penalty of dismissal was too harsh and not commensurate to the misdeed
committed. It also stated that the while the right of the employer to discipline is beyond
question, it, nevertheless, remains subject to reasonable regulation. It further noted that
Pionilla worked with IMI for a period of nine years without any derogatory record and even
observed that his performance rating had always been "outstanding."
Hence, the present motion for reconsideration.
Issue: Whether or not Pionilla is entitled to reinstatement and full backwages.
Ruling:
The motion for reconsideration is partly granted. Court ordered his reinstatement but
without backwages.
As a general rule, an illegally dismissed employee is entitled to reinstatement (or separation
pay, if reinstatement is not viable) and payment of full backwages. In certain cases,
however, the Court has carved out an exception to the foregoing rule and thereby ordered
the reinstatement of the employee without backwages on account of the following:
(a) the fact that dismissal of the employee would be too harsh of a penalty; and
(b) that the employer was in good faith in terminating the employee.
In this case, the Court observes that: (a) the penalty of dismissal was too harsh of a penalty
to be imposed against Pionilla for his infractions; and (b) IMI was in good faith when it
dismissed Pionilla as his dereliction of its policy on ID usage was honestly perceived to be a
threat to the company's security.
The Court finds it proper to accord the same disposition and consequently directs the
deletion of the award of back wages in favor of Pionilla, notwithstanding the illegality of his
dismissal.

ASIA BREWERY INC. VS. TUNAY NA PAGKAKAISA NG MANGGAGAWA SA ASIA

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G.R. NO. 171594-96, SEPTEMBER 18, 2013
Facts:
Tunay Na Pagkakaisa ng mga Manggagawa sa Asia (TPMA) is a legitimate labor organization,
certified as the sole and exclusive bargaining agent of all regular rank and file employees of
[petitioner corporation] Asia Brewery, Incorporated (ABI). The [petitioner corporation], on the
other hand, is a company engaged in the manufacture, sale and distribution of beer, shandy,
glass and bottled water products. It employs about 1,500 workers and has existing
distributorship agreements with at least 13 companies.
Since their old collective bargaining agreement had already expired, the two are now
negotiating for a new CBA which will apply for the next 3 years. After about 18 sessions or
negotiations, the parties were still unable to reconcile their differences on their respective
positions on most items, particularly on wages and other economic benefits. TPMA declared
a deadlock and filed for a strike.
The Secretary of Labor, Patricia Sto. Tomas, assumed jurisdiction over the matter resolved
the deadlock between the parties. She gave an arbitral award on the Wage increase that will
take effect for the next 3 years and on the Health care premiums.
Thereafter, on February 9, 2004, the parties executed and signed the Collective Bargaining
Agreement with a term from August 1, 2003 to July 31, 2006.
However, TPMA questions the award rendered by the Secretary of Labor and imputing grave
abuse of discretion upon the public respondent because such awards were based on
unaudited financial statements. The Court of Appeals vacated the decision of the Secretary
of Labor and and remanded it back to render the proper awards based on the correct
approach on deciding the dispute.
Issue: Whether or not the CA erred when it remanded to the Secretary of Labor the issue on
wage increase?
Ruling:
The Secretary of Labor gravely abused her discretion when she relied on the unaudited
financial statements of ABI in determining the wage award because such evidence is selfserving and inadmissible. This may have resulted to a wage award that is based on an
inaccurate and biased picture of ABI’s capacity to pay – one of the more significant factors in
making a wage award. Petitioner corporation has offered no reason why it failed and/or
refused to submit its audited financial statements for the past five years relevant to this
case. This only further casts doubt as to the veracity and accuracy of the unaudited financial
statements it submitted to the Secretary of Labor. Verily, we cannot countenance this
procedure because this could unduly deprive labor of its right to a just share in the fruits of
production and provide employers with a means to understate their profitability in order to
defeat the right of labor to a just wage.
As can be seen when it gave the wage award, the Secretary of Labor failed to indicate
the actual data upon which the wage award was based. It even appears that she utilized the
"middle ground approach which we precisely warned against in Meralco. Factors such as the
actual and projected net operating income, impact of the wage increase on net operating
income, the company's previous CBAs, and industry trends were not discussed in detail so
that the precise bases of the wage award are not discernible on the face of the Decision. The
contending parties are effectively precluded from seeking a review of the wage award, even
if proper under our ruling in Meralco, because of the general but unsubstantiated statement
in the Decision that the wage award was based on factors like the bargaining history, trends
of arbitrated and agreed awards, and industry trends. In fine, there is no way of determining
if the Secretary of Labor utilized the proper evidence, figures or data in arriving at the
subject wage award as well as the reasonableness thereof. This falls short of the
requirement of administrative due process obligating the decision-maker to adjudicate the
rights of the parties in such a manner that they can know the various issues involved and
the reasons for the decision rendered.

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Based on the foregoing, we hold that the Secretary of Labor gravely abused her discretion in
making the subject wage award. The appellate court, thus, correctly remanded this case to
the Secretary of Labor for the proper determination of the wage award which should utilize,
among others, the audited financial statements of petitioner corporation and state with
sufficient clarity the facts and law on which the wage award is based.

HORMILLOSA VS. COCA-COLA BOTTLERS PHILS
GR NO. 198699, OCTOBER 9, 2013
Facts:
Hormillosa was employed as a route salesman by Coca-Cola Bottlers Phils., Inc. (CBPI). His
duties included, among others, selling CBPI's soft drink products, either on cash or on credit
basis; receiving payments from proceeds of the sale or payments of past due or current
accounts; issuing sales invoices; and receiving empty bottles and cases of soft
drinks (empties).
Sometime in the early part of 1999, the then CBPI District Sales Supervisor, Tiosayco,
conducted a verification and audit of the accounts handled by Hormillosa. He discovered
transactions in violation of CCBPI Employee Code of Disciplinary Rules and Regulations,
specifically
"Fictitious
sales
transactions;
Falsification
of
company
records/data/documents/invoices/reports; fictitious issuances of TCS/COL (Temporary Credit
Sales/Container on Loan); non-issuance or mis-issuance of invoices and receipts as well as
commercial documents to dealers; forgery; misuse, abuse or defalcation of funds from
market development program." On March 8, 1999, Tiosayco issued a memorandum to
Hormillosa informing him that he was being placed on grounded status and would be
subjected to an investigation.
The investigation showed a number of fictitious transactions that were denied by its clients
such as the extended credits that were extended to them through forged or tampered sales
invoices.
Tiosayco directed Hormillosa to report to his office to submit an explanation on his alleged
violations and warned him that his failure to answer on said allegations is a waiver of his
opportunity to be heard. Homillosa failed to report after a number of chances that were
given to him. Instead, Homillosa informed Tiosayco that he filed a case against CBPI for
Unfair Labor Practice (ULP).
On March 22, 1999, Tiosayco submitted his findings and recommendations to the Regional
Sales Manager, proposing the termination of Hormillosa which CBPI gave credence to the
report and approved his recommendation. Hormillosa was informed of his termination on the
ground of Falsification of Invoices, Misappropriation of Company funds, violation of company
rules and loss of trust and confidence.
On May 24, 1999, Hormillosa filed a complaint for ULP (harassment due to union activities
and union busting), Illegal Dismissal, Illegal Deduction, Illegal Grounding, Non-payment of
Commission, Non-payment of 13th Month pay, Violation of CBA, Damages, and Attorney's
Fees against CBPI before the Sub-Regional Arbitration Branch No. VI(SRAB). Hormillosa
averred in his position paper that prior to his dismissal, he was a member of the Board of
Directors of CBPI's employees union and he became its secretary on March 7, 1999. As
secretary, he sent a copy of the new list of union officers to the management with a warning
that if CBPI would not stop harassing the members of the union, it would declare a strike.
Hormillosa denied the allegations on the anomalous transactions he was charged. He
claimed however, that the verification and audit were contrary to Section 2 (d), Article III of
the Collective Bargaining Agreement (CBA) which provides: "The Company shall coordinate
with the Union authorized representative to witness the account verification that the
company will conduct with respect to questionable accounts issued to Company customers
by route salesman or relief salesmen under investigation." He likewise alleged that as part of
the design to destroy the union, CBPI discriminated against the officers until they were

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pressured to resign.
Issues:
Whether or not Hormillosa was illegally dismissed?
Whether or not Hormillosa is entitled to separation pay?
Ruling:
Art. 282.Termination by employer. – An employee may terminate an employment for any of
the following causes:
(c)Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
There are substantial evidence to justify the dismissal of Hormillosa.
Hormosilla was considered an employee who regularly handled significant amounts of
money and property in the normal and routine exercise of his functions. He occupies a
position of trust. There was a high degree of trust and confidence reposed on him and when
this confidence was breached, the employer was justified in taking the appropriate
disciplinary action.
The Court finds that Hormillosa committed acts which warranted his dismissal from
employment.
Hormillosa was given a chance to confront the witnesses against him and refute the
evidence on record against him. Except for the affidavits of Cecilia Palmes, Fely Paneiro and
Shirley Jardeleza, the evidence against him remained in the records, particularly the
documents and invoices he submitted to CBPI. The falsified invoices remained unexplained
by him.
Hormillosa's act of issuing sales invoices to Arnold Store could not have been performed
without intent and knowledge on his part as such act could not have been done without
planning or merely through negligence. Hence, the breach was willful.
Regarding the issue of separation pay, "The only cases when separation pay shall be paid,
although the employee was lawfully dismissed, are when the cause of termination was not
attributable to the employee's fault but due to: (1) the installation of labor saving devices,
(2) redundancy, (3) retrenchment, (4) cessation of employer's business, or (5) when the
employee is suffering from a disease and his continued employment is prohibited by law or
is prejudicial to his health and to the health of his co-employees (Articles 283 and 284, Labor
Code.) Other than these cases, an employee who is dismissed for a just and lawful cause is
not entitled to separation pay even if the award were to be called by another name." From
our discussion above, Hormillosa is not entitled to separation pay.

ABBOTT LABORATORIES PHILS. VS. ALCARAZ,
GR NO. 192571, APRIL 22, 2013, EN BANC; SEE ALSO RESOLUTION, DATED APRIL
22, 2014
Facts:
Alcaraz was hired as Regulatory Affairs Manager of petitioner Abbott Laboratories, which was
an item under the company’s Hospira Affiliate Local Surveillance Unit (ALSU) department. In
Abbott’s offer sheet, it was stated that Alcaraz was to be employed on a probationary basis.
During her pre-employment orientation, she was briefed on her duties and responsibilities
which include the management, evaluation, and discipline of the staff of Hospira. Days later,
she received an e-mail which contained an explanation of the procedure for evaluating the
performance of probationary employees and further indicated that Abbott had only one
evaluation system for all of its employees. She was also given copies of Abbott’s Code of

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Conduct and Probationary Performance Standards and Evaluation (PPSE) and Performance
Excellence Orientation Modules (Performance Modules).
On May 16, 2005, Alcaraz was called to a meeting with the general manager of Abbott
where she was informed that she failed to meet the regularization standards for the position
of Regulatory Affairs Manager. Thereafter, she was requested Alcaraz to tender her
resignation, else they be forced to terminate her services. She was also told that, regardless
of her choice, she should no longer report for work and was asked to surrender her office
identification cards.
On May 23, 2005, Abbott's officers personally handed to Alcaraz a letter stating that her
services had been terminated effective May 19, 2005. The letter detailed the reasons for
Alcaraz’s termination – particularly, that Alcaraz: (a) did not manage her time effectively; (b)
failed to gain the trust of her staff and to build an effective rapport with them; (c) failed to
train her staff effectively; and (d) was not able to obtain the knowledge and ability to make
sound judgments on case processing and article review which were necessary for the proper
performance of her duties. Alcaraz also received another copy of the said termination letter
via registered mail.
Alcaraz felt that she was unjustly terminated from her employment and thus, filed a
complaint for illegal dismissal and damages against Abbott and its officers. She claimed that
she should have already been considered as a regular and not a probationary employee
given Abbott’s failure to inform her of the reasonable standards for her regularization upon
her engagement as required under Article 29525 of the Labor Code. In this relation, she
contended that while her employment contract stated that she was to be engaged on a
probationary status, the same did not indicate the standards on which her regularization
would be based.
The LA dismissed Alcaraz' petition for lack of merit while the NLRC reversed the same and
was affirmed by the CA. Thus, the petition.
Issues:
a. WON Alcaraz was sufficiently informed of the reasonable standards to qualify her as a
regular employee;
b. WON Alcaraz was validly terminated from her employment
Ruling:
a.) A probationary employee, like a regular employee, enjoys security of tenure. However, in
cases of probationary employment, aside from just or authorized causes of termination, an
additional ground is provided under Article 295 of the Labor Code, i.e., the probationary
employee may also be terminated for failure to qualify as a regular employee in accordance
with the reasonable standards made known by the employer to the employee at the time of
the engagement. Thus, the services of an employee who has been engaged on probationary
basis may be terminated for any of the following: (a) a just or (b) an authorized cause; and
(c) when he fails to qualify as a regular employee in accordance with reasonable standards
prescribed by the employer.
Corollary thereto, Section 6(d), Rule I, Book VI of the Implementing Rules of the Labor Code
provides that if the employer fails to inform the probationary employee of the reasonable
standards upon which the regularization would be based on at the time of the engagement,
then the said employee shall be deemed a regular employee, viz.: (d) In all cases of
probationary employment, the employer shall make known to the employee the standards
under which he will qualify as a regular employee at the time of his engagement. Where no
standards are made known to the employee at that time, he shall be deemed a regular
employee.

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In other words, the employer is made to comply with two (2) requirements when dealing
with a probationary employee: first , the employer must communicate the regularization
standards to the probationary employee; and second , the employer must make such
communication at the time of the probationary employee’s engagement. If the employer
fails to comply with either, the employee is de emed as a regular and not probationary
employee.
An examination of the records reveals that Abbott had indeed complied with the abovestated requirements. This conclusion is largely impelled by the fact that Abbott clearly
conveyed to Alcaraz her duties and responsibilities as Regulatory Affairs Manager prior to,
during the time of her engagement, and the incipient stages of her employment, as
evidenced by the offer sheet and employment contract among others. SC ruled that Alcaraz
was a probationary employee and that her consequent dismissal must stand.
b.) Section 2, Rule I, Book VI of the Implementing Rules of the Labor Code states that “[i]f
the termination is brought about by the x x x failure of an employee to meet the standards
of the employer in case of probationary employment, it shall be sufficient that a written
notice is served the employee, within a reasonable time from the effective date of
termination.”
Alcaraz's dismissal was effected through a letter dated May 19, 2005 which she received on
May 23, 2005 and again on May 27, 2005. Stated therein were the reasons for her
termination, i.e., that after proper evaluation, Abbott determined that she failed to meet the
reasonable standards for her regularization considering her lack of time and people
management and decision-making skills, which are necessary in the performance of her
functions as Regulatory Affairs Manager. Undeniably, this written notice sufficiently meets
the criteria set forth above, thereby legitimizing the cause and manner of Alcaraz’s dismissal
as a probationary employee under the parameters set by the Labor Code.

GEMINA JR VS. BANKWISE INC. ET AL.
GR NO. 175365, OCTOBER 23, 2013
Facts:
Petitioner Gemina signed an employment contract with respondent Bankwise as Marketing
Officer with the rank of Senior Manager, with an annual salary of P750,000.00 b ased on a
fifteen-month scheme or P50,000.00 per month and a service vehicle for his field work. The
same contract stipulated for a fund level commitment of P100,000,000.00 for the first six (6)
months of employment.
During his first months in Bankwise, Gemina's performance was satisfactory. However, when
the former got involved in a controversy, he had difficulty in soliciting new depositors and
after 5 months, he had the lowest performance among the members of the fund
management group. This prompted his supervisors to call his attention and warn him of his
obligations under the contract of employment and failure to comply with those constitute
breach of his contractual obligations.
Despite the warning, Gemina went on leave for eleven (11) days. Thereafter, he incurred
absences without leave and did not bother to inform the bank regarding the reason therefor.
Pascua and Galapate, petitioner's seniors tried to contact him to inquire about the reason of
his long absence and requested him to return the company vehicle but to no avail. Instead,
petitioner filed a complaint for illegal dismissal against Bankwise.

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LA held that Gemina was illegally dismissed while the NLRC held that there was no
constructive dismissal, rather Gemina abandoned his employment. CA on the other hand
denied the petition for certiorari filed by the petitioner.
Issues:
a. WON the fund level commitment is a condition for Gemina’s employment to warrant
breach of his contractual obligations
b. WON Gemina was constructively dismissed
Ruling:
a. The fund level commitment is a condition for Gemina's employment. A fund level
commitment was stipulated as a term or condition on Gemina’s contract of employment.
Though not per se a ground for dismissal, it is the standard by which Gemina’s performance
will be evaluated by Bankwise’s management. Thus, the contract states, "your performance
relative to your ability to generate deposits shall be monitored monthly and reviewed on
your 6th month." The stated amount of funds sets the goal or target amount of funds which
Gemina should strive to generate within a specific number of months.
It must be clear, however, that the fund level commitment is not the sole basis of Gemina’s
employment. In the same manner, the failure to comply with this undertaking does not
automatically lead to dismissal from employment. Gemina will still be subjected to the
management’s evaluation to determine his performance based on the amount of funds he
was able to bring in to the coffers of Bankwise. Even then, Gemina may not conveniently
brush aside compliance with the fund level commitment, thinking that it does not have any
implication on employment. It bears stressing that while not an automatic ground for
dismissal, the failure to generate the funds translates to a poor performance rating which
may ultimately jeopardize his continued employment. Depending on the results of the
periodic evaluation undertaken by the management, the failure to comply with the fund
level commitment may eventually justify his dismissal from employment. Thus, Gemina
must put forth all his efforts in order to fulfill his fund level commitment.
b. There was no constructive dismissal. There is constructive dismissal when "there is
cessation of work, because ‘continued employment is rendered impossible, unreasonable or
unlikely, as an offer involving a demotion in rank or a diminution in pay’ and other benefits.
Aptly called a dismissal in disguise or an act amounting to dismissal but made to appear as
if it were not, constructive dismissal may, likewise, exist if an act of clear discrimination,
insensibility, or disdain by an employer becomes so unbearable on the part of the employee
that it could foreclose any choice by him except to forego his continued employment."

BAGUIO CENTRAL UNIVERSITY VS. GALLENTE
GR NO. 188267, DECEMBER 2, 2013
Facts:
Respondent was hired by BCU as instructor in 1991 and was eventually promoted to dean of
the University’s College of Arts, Sciences and Public Administration. While still serving as
dean, he organized GRC Review and Language Center under the name Genesis Gallente and
listed under the Articles of Incorporation that its purpose is to conduct review classes for PRC
and CSC exams and also provided the address of BCU as its primary address. BCU’s
President, Dr. Fernandez called the respondent’s attention on the matter and conducted
grievance meetings but he resigned from the BCU and then filed before the LA a complaint
for illegal (constructive) dismissal. LA decided in favor of Gallente then it was reversed by
the NLRC. CA then reinstated the ruling of the LA.
Issue: WON Gallente was validly dismissed with loss of trust and confidence as ground

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thereof.
Ruling:
SC finds for the petitioner. For an employee’s dismissal to be valid it must comply with two
basic requirements; 1) just or authorized cause, being the substantive aspect, and 2) the
observance of due process, being the procedural aspect. Article 282 (c) of the Labor Code
provides that an employer may terminate an employment for fraud or willful breach by the
employee of the trust reposed in him by his employer or duly authorized representative
provided that these two conditions are present: 1) the employee holds a position of trust or
a managerial employee and 2) the act constituting such shall be established.
Being the dean of two departments, Gallente was tasked to assist the school head on
matters of policy affecting the entire institution which would then grant him discretion and
powers equivalent to a managerial employee and as such, the first requirement is satisfied.
For the second requirement, the Court found that Gallente engaged in a venture that would
have directly conflicted with BCU’s interest as he now placed himself in a position to perform
substantially the same task of formulating and updating the programs of learning for both
institutions. Further, the fact that BCU suffered no damage because of the failure of GRC to
fully operate is beside the point as the heart of the loss-of-trust charge is the betrayal of the
employee of the employer’s trust. Finally, Gallente invalidly appropriated BCU’s property by
listing its address as that of GRC without authority and worse, it created the notion for the
public that it is a BCU sponsored venture.
SANGWOO PHILS INC. ET AL., VS. SANGWOO PHILS INC EMPLOYEES UNION
GR NO. 173154, DECEMBER 9, 2013
Facts:
This is a consolidated petition where both parties seek to set aside or modify the CA ruling
pertaining to their dispute. On July 25, 2003 while both parties are in the midst of
negotiations for a CBA, SPI filed with the DOLE a letter-notice of temporary suspension of
operations due to lack of orders for one month beginning Sept 15. SPI then asked for
extension until March 15, 2004 which prompted the filing of a complaint on Oct 28, 2003 by
SPEU with the RAB for unfair labor practice with illegal closure and dismissal. On Feb 12,
2004, SPI posted notices in the company premises of its cessation of business operations
effective March 16 and furnished the DOLE and SPEU a copy of said notice. SPI offered
separation pay for its employees and 234 accepted the same and executed quitclaims while
the rest was given until March 25 but still refused. The LA found that SPI was experiencing
economic losses and complied with the notice requirement, thus cannot be held liable for
separation pay. The NLRC upheld but modified the same to grant separation pay as SPI
already paid 234 employees. SPI offered to pay the employees 15,000 pesos each as a
settlement but they refused to accept the same. CA then upheld the ruling but stated that
SPI is not liable for separation pay. Instead, SPI should pay the 15,000 settlement offer.
Issues:
1. WON the employees are entitled to separation pay;
2. WON SPI complied with the notice requirement of Article 297 of the Labor Code.
Ruling:
1. SPI is not liable for separation pay. Generally, closure of business as an authorized cause
for termination of employment requires the employer to give out separation pay to the
employees except when the closure is due to serious business losses. The LA, NLRC and CA
all ruled that SPI was suffering from serious business losses which resulted in its permanent
shutdown. To require an employer to be generous when it is no longer in a position to do so
would be oppressive, unjust and unfair to the employer. The 15,000 offer made by SPI as
settlement was a calculated move to avoid further litigation expenses but was not accepted
by the employees, said offer did not ripen into an enforceable obligation.

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2. The notice posted by the employer in the company premises does not comply with the
requirement, it being necessary that the one month notice be served on each employee
personally. The LA, NLRC and CA erred therefore in ruling that SPI complied with the notice
requirement. Employers with a valid cause for termination but conducts such with a
procedural infirmity is liable for nominal damages amounting to 50,000 for authorized cause
and 30,000 for just causes. Jurisprudence however, exhorts that such damages may be
modified if the payment thereof is unjust, impossible or too burdensome. The Court awarded
nominal damages for the employees for 10,000 each.

INTERNATIONAL SCHOOL MANILA ET AL., VS. INTERNATIONAL SCHOOL ALLIANCE
OF EDUCATORS ET AL.
GR NO. 167286, FEBRUARY 5, 2014
Facts:
Evangeline Santos, herein respondent was a faculty of the International School Manila since
1978. In the year 1992 she applied for a leave of absence. When she returned in 1993, only
one teaching load for Spanish was available, thus she agreed to teach 4 Filipino classes. As
per evaluation during the year 1993, respondent’s evaluation stated that she needed
improvement in key areas such as use of effective questioning techniques and enforcement
of academic and classroom behavior among others. The following school year, Santos
expressed that she will be teaching for the school year and that she did not prefer a change
in the teaching assignments. For said school year, she was again evaluated and her
evaluation results mirrored those areas in which she needed improvement. The situation was
the same for school year 1995-1996.
In 1996, a Professional Growth Plan designed by Asst. Principal Peter Loy was signed by
Santos wherein she undertook to focus and improve on the specifically stated areas of her
teaching that she need to improve on. Phase 1 was Planning. But even with the Professional
Growth Plan and the series of meetings and consultations conducted for the benefit of
Santos, her over-all performance did not improve. In fact, 8 months into the implementation
of the Professional Growth Plan, she was still in Phase 1.
In April 10, 1997, the school then wrote a letter to Santos asking her to explain why she her
services should not be terminated in view of her performance way below the standards set
by said school. Santos was given the chance to answer. A meeting was thereafter conducted
wherein Santos was allowed to bring counsel or representative. Santos was accompanied by
Raquel Ching, President of the International School Alliance of Educators. Positions of the
parties were clarified in the meeting and was held, Santos was being charged by the school
with gross inefficiency or negligence in the performance of duties. An administrative
investigation followed. The committee who conducted the investigation recommended that
the employment of Santos cannot be continued.
Adopting the recommendation by the investigating committee, Santos was informed in a
letter of her termination effective June 7, 1997. Bases of which was the finding of the
committee that despite three years of numerous consultations with her supervisors, no
appreciable improvement was seen in the performance of Santos.
Issues:
1 Whether or not Santos was illegally dismissed?
2 Whether or not Santos is entitled to reinstatement or separation pay with
backwages?
Ruling:
1 Santos was not illegally dismissed.

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To constitute a valid dismissal from employment, two requisites must concur: (1) the
dismissal must be for any of the causes provided in Article 282 of the Labor Code; and, (2)
the employee must be given an opportunity to be heard and to defend himself.
 Dismissal Must be for any causes provided in Art. 282
In the collective bargaining agreement (CBA) between the School and ISAE for the years
1992-1995, Section 13 of Appendix A thereof expressly states that "termination of
employment shall be in accordance with the laws of the Philippines as presented in the
LABOR CODE.
ART. 282. Termination by employer. – An employer may terminate an employment for
any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders
of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized
representative; and
(e) Other causes analogous to the foregoing.
The Court had occasion to explain in Century Iron Works, Inc. v. Bañas the concept of gross
and habitual neglect of duties. Thus:
Gross negligence connotes want or absence of or failure to exercise slight care or diligence,
or the entire absence of care. It evinces a thoughtless disregard of consequences without
exerting any effort to avoid them. Fraud and willful neglect of duties imply bad faith of the
employee in failing to perform his job, to the detriment of the employer and the latter’s
business. Habitual neglect, on the other hand, implies repeated failure to perform one’s
duties for a period of time, depending upon the circumstances.
On gross inefficiency, we ruled in Lim v. National Labor Relations Commission that:
Gross inefficiency falls within the purview of "other causes analogous to the foregoing," and
constitutes, therefore, just cause to terminate an employee under Article 282 of the Labor
Code. One is analogous to another if it is susceptible of comparison with the latter either in
general or in some specific detail; or has a close relationship with the latter. "Gross
inefficiency" is closely related to "gross neglect," for both involve specific acts of omission on
the part of the employee resulting in damage to the employer or to his business. In Buiser
vs. Leogardo, this Court ruled that failure to observe prescribed standards of work, or to
fulfill reasonable work assignments due to inefficiency may constitute just cause for
dismissal.
Viewed in light of the above doctrines, the Court is not convinced that the actuations of
Santos complained of by the petitioners constituted gross and habitual neglect of her duties.
What can be gathered from a thorough review of the records of this case is that the
inadequacies of Santos as a teacher did not stem from a reckless disregard of the welfare of
her students or of the issues raised by the School regarding her teaching. Far from being
tainted with bad faith, Santos’s failings appeared to have resulted from her lack of necessary
skills, in-depth knowledge, and expertise to teach the Filipino language at the standards
required of her by the School.
Be that as it may, we find that the petitioners had sufficiently proved the charge

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of gross inefficiency, which warranted the dismissal of Santos from the School.
The Court enunciated in Peña v. National Labor Relations Commission73 that "it is the
prerogative of the school to set high standards of efficiency for its teachers since quality
education is a mandate of the Constitution. As long as the standards fixed are reasonable
and not arbitrary, courts are not at liberty to set them aside." Moreover, the prerogative of a
school to provide standards for its teachers and to determine whether these standards have
been met is in accordance with academic freedom, which gives the educational institution
the right to choose who should teach.
The Court finds that, not only did the petitioners’ documentary evidence sufficiently prove
Santos’s inefficient performance of duties, but the same also remained unrebutted by
respondents’ own evidence. On the contrary, Santos admits in her pleadings that her
performance as a teacher of Filipino had not been satisfactory but she prays for leniency on
account of her prior good record as a Spanish teacher at the School. Indeed, even the Labor
Arbiter, the NLRC and the Court of Appeals agreed that Santos was not without fault but the
lower tribunals deemed that termination was too harsh a penalty.
Nonetheless, the Court finds that petitioners had satisfactorily discharged the
burden of proving the existence of gross inefficiency on the part of Santos,
warranting her separation from the school.
 As regards the requirements of procedural due process:
Section 2(d) of Rule 1 of The Implementing Rules of Book VI states that:
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
In this case, the School complied with the above requirements. After a thorough evaluation
of Santos’s performance, the School held a series of conferences and meetings with Santos,
in order to improve her performance. On March 29, 1996, the School required Santos to
undertake a Professional Growth Plan. Thereafter, when the intervention of the School failed
to yield any considerable improvement on Santos, McCauley wrote her a letter on April 10,
1997, which required her to explain in writing within forty-eight (48) hours why her
employment should not be terminated in view of her failure to meet the standards of the
School on very specific areas of concern. On April 16, 1997, Santos responded to McCauley’s
letter, asking why she was being required to explain. On April 21, 1997, McCauley wrote
Santos a letter informing her that an administrative investigation would be conducted on
April 23, 1997 where she would be given the opportunity to be heard. On April 23, 1997, an
administrative investigation was conducted. Santos appeared therein with the assistance of
ISAE President Ching. In a letter dated May 29, 1997, the School informed Santos of its
decision to terminate her employment on the ground of her failure to meet the standards of
the School, which as discussed was tantamount to gross inefficiency.
2

In view of the finding that Santos was validly dismissed from employment, she would
not ordinarily be entitled to separation pay. An exception to this rule is when the
court finds justification in applying the principle of social justice according to the
equities of the case.

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We hold that henceforth separation pay shall be allowed as a measure of social justice only
in those instances where the employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character.
In the instant case, the Court finds equitable and proper the award of separation pay in favor
of Santos in view of the length of her service with the School prior to the events that led to
the termination of her employment. To recall, Santos was first employed by the School in
1978 as a Spanish language teacher. During this time, the records of this case are silent as
to the fact of any infraction that she committed and/or any other administrative case against
her that was filed by the School. Thus, an award of separation pay equivalent to one-half
(1/2) month pay for every year of service is awarded in favor of Santos on grounds of equity
and social justice.

DREAMLAND HOTEL RESORT VS. JOHNSON
GR NO. 191455, MARCH 12, 2014
Facts:
Dreamland is a corporation engaged in the hotel, restaurant, and allied business and is duly
registered with the Securities and Exchange Commission. Prentice is its current President
and Chief Executive Officer. Respondent Stephen B. Johnson is an Australian citizen who
came to the Philippines as a businessman/investor.
Sometime on June 21, 2007, Prentice and Johnson entered into an Employment Agreement,
which stipulates among others, that Johnson shall serve as Operations Manager of
Dreamland from August 1, 2007 and shall serve as such for a period of three (3) years.
From the start of August 2007, as stipulated in the Employment Agreement, respondent
Johnson already reported for work. It was then that he found out to his dismay that the
resort was far from finished. However, he was instructed to supervise construction and
speak with potential guests. He also undertook the overall preparation of the guestrooms
and staff for the opening of the hotel, even performing menial tasks (i.e. inspected for
cracked tiles, ensured proper grout installation, proper lighting and air-conditioning unit
installation, measured windows for curtain width and showers for shower curtain rods,
unloaded and installed mattresses, beddings, furniture and appliances and even ironed and
hung guest room curtains).
As Johnson remained unpaid since August 2007 and he has loaned all his money to
petitioners, he asked for his salary after the resort was opened in October 2007 but the
same was not given to him by petitioners. Johnson became very alarmed with the situation
as it appears that there was no intention to pay him his salary, which he now depended on
for his living as he has been left penniless. He was also denied the benefits promised him as
part of his compensation such as service vehicles, meals and insurance.
Thus, on November 3, 2007 respondent Johnson was forced to submit his resignation. In
deference to the Employment Agreement signed, [Johnson] stated that he was willing to
continue work for the three month period stipulated therein.
However, in an SMS or text message sent by Prentice to [Johnson] on the same day at
around 8:20 pm, he was informed that "… I consider your resignation as immediate".
Despite demand, petitioners refused to pay Johnson the salaries and benefits due him.
On January 31, 2008, Johnson filed a Complaint for illegal dismissal and non-payment of
salaries, among others, against the petitioners.
Issue: Whether or not Johnson was illegally dismissed?

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Ruling:
Johnson was illegally dismissed.
As regards the NLRC findings that Johnson was constructively dismissed and did not abandon
his work, the Court is in consonance with this conclusion with the following basis:
Even the most reasonable employee would consider quitting his job after working for three
months and receiving only an insignificant fraction of his salaries. There was, therefore, not
an abandonment of employment nor a resignation in the real sense, but a constructive
dismissal, which is defined as an involuntary resignation resorted to when continued
employment is rendered impossible, unreasonable or unlikely.
"There is constructive dismissal if an act of clear discrimination, insensibility, or
disdain by an employer becomes so unbearable on the part of the employee that it
would foreclose any choice by him except to forego his continued employment. It
exists where there is cessation of work because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a
diminution in pay.”
It is impossible, unreasonable or unlikely that any employee, such as Johnson would
continue working for an employer who does not pay him his salaries. Applying the Court’s
pronouncement in Duldulao v. CA, the Court construes that the act of the petitioners in not
paying Johnson his salaries for three months has become unbearable on the latter’s part that
he had no choice but to cede his employment with them.
The Court quotes the pertinent sections of Johnson’s resignation letter which reflects the real
reason why he was resigning as operations manager of the hotel:
I hereby tender my resignation to you, Mr[.] Wes Prentice, Dreamland Resort, Subic,
Zambales, Philippines.
Since joining Dreamland Resort & Hotel over three months ago I have put my heart and soul
into the business. I have donated many hours of my personal time. I have frequently worked
seven days a week and twelve to thirteen hours a day. I am now literally penniless, due
totally to the fact that I have lent you and your resort/hotel well over $200,000AU (approx
8million pesos) and your non-payment of wages to me from 1st August 2007 as per
Employment Agreement.
The above preceding statement only goes to show that while it was Johnson who tendered
his resignation, it was due to the petitioners’ acts that he was constrained to resign. The
petitioners cannot expect Johnson to tolerate working for them without any compensation.
Since Johnson was constructively dismissed, he was illegally dismissed.
Relief Granted:
Thus, 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.
Under the doctrine of strained relations, the payment of separation pay is considered an
acceptable alternative to reinstatement when the latter option is no longer desirable or
viable. On one hand, such payment liberates the employee from what could be a highly
oppressive work environment. On the other hand, it releases the employer from the grossly
unpalatable obligation of maintaining in its employ a worker it could no longer trust.
In the present case, the NLRC found that due to the strained relations between the parties,
separation pay is to be awarded to Johnson in lieu of his reinstatement.
Accordingly, the award of backwages should be computed from November 3, 2007 to August

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1, 2010 - which is three years from August 1, 2007. Furthermore, separation pay is
computed from the commencement of employment up to the time of termination, including
the imputed service for which the employee is entitled to backwages. As one-month salary is
awarded as separation pay for every year of service, including imputed service, Johnson
should be paid separation pay equivalent to his three-month salary for the three-year
contract.

CASTILLO ET AL., VS. PRUDENTIALIFE PLANS INC.
GR NO. 196142, MARCH 26, 2014
Facts:
Individual petitioners Castillo, Evangelista, Dolendo, and Sy were regular employees of
respondent Prudentialife Plans, Inc. The individual petitioners are members of PPEU-FFW.
Under Section 4, Article X of the parties' Collective Bargaining Agreement, Prudentialife
employees were granted an optical benefit allowance of P2,500.00 to subsidize prescription
eyeglasses for those who have developed vision problems in the course of employment.
Many Prudentialife employees — petitioners included — availed thereof and Prudentialife
was flooded with requests for reimbursement for eyeglasses the employees supposedly
purchased from a single outfit/supplier, Alavera Optical. Suspecting fraud, Prudentialife
began an investigation into the matter, and on February 22, 2006, it sent individual written
Notices to Explain to petitioners and other employees who availed of the benefit. In her
written explanation, Castillo claimed that she acted in good faith in availing of the optical
benefit allowance; that she did not conspire with Alavera Optical in the overpricing of her
eyeglasses; that she was made to believe that her transaction with Alavera Optical —
whereby the latter would issue an official receipt for the eyeglasses even without actual
payment thereof, which Castillo would then claim from Prudentialife — was regular; that she
was unaware that Alavera Optical was using a fictitious address and telephone number; and
that she had no intention to defraud Prudentialife. Other Prudentialife employees admitted
that the eyeglasses they obtained cost only so much, yet were overpriced for purposes of
reimbursement.
Prudentialife through their investigation discovered that the employees who availed of the
optical benefit allowance obtained their eyeglasses from Alavera Optical, based on the
employees' reimbursement requests/petty cash vouchers and that Alavera Optical issued
prescriptions, released the eyeglasses, and issued the official receipts therefor even though
they have not been paid for.
Thus, Prudentialife concluded that petitioners and other employees knowingly availed of the
optical benefit allowance to obtain a refund of the maximum P2,500.00 benefit even though
they did not have vision problems, or that their eyeglasses were worth less than P2,500.00.
On April 10, 2006, Prudentialife issued individual Notices of Termination to petitioners and
other employees.
Petitioners filed a Complaint for illegal dismissal, money claims and damages (illegal
dismissal case) against respondents, In their Position Paper, petitioners mainly contended
that they were illegally dismissed based on a charge of dishonesty that was not proved, but
was mainly founded on suspicion, conjecture and suppositions.
Issue:
(1) Whether or not an affidavit of the co-employee can serve as basis for proving an
employee's guilt or wrongdoing.
(2) Whether or not there was a valid ground for their dismissal.

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Ruling:
(1) Yes. The written statements of petitioners' co-employees admitting their participation in
the scheme are admissible to establish the plan or scheme to defraud Prudentialife; the
latter had the right to rely on them for such purpose. The argument that the said statements
are hearsay because the authors thereof were not presented for cross-examination does not
persuade; the rules of evidence are not strictly observed in proceedings before the NLRC,
which are summary in nature and decisions may be made on the basis of position papers.
Besides, these written declarations do not bear directly on petitioners' participation in the
scheme; their guilt has been established by evidence other than these statements.
Petitioners' reliance on Garcia v. Malayan Insurance Co., Inc. is misplaced. Far from declaring
that the statement of a co-employee may not be used to prove the guilt of an employee
accused of theft of company property, the Court held therein that the affidavit of the coemployee cannot serve as basis for the finding that said petitioner conspired in the theft
because it was so lacking in crucial details. The opposite is thus true: the affidavit or
statement of a co-employee in a labor case may prove an employee's guilt or wrongdoing if
it recites crucial details of his involvement.
(2) Yes. By presenting the false receipt to their employer to obtain reimbursement for an
expense which they did not in fact incur, this constituted dishonesty. By availing of the
benefit, the employee represents to Prudentialife that he has developed vision problems. If
this is not true, then he has committed an act of dishonesty as well. Given the
circumstances then obtaining, the same principle holds true with respect to eyeglasses
whose lenses do not match the corresponding prescription.
For their dishonesty, the penalty of dismissal is justified pursuant to Section 2.6 (i) of the
Prudentialife Personnel Manual which prescribes the penalty of dismissal for acts of padding
receipts for reimbursement or liquidation of advances or expenses. Dishonesty is a serious
offense, and "no employer will take to its bosom a dishonest employee." Dishonesty implies
a "[d]ispposition to lie, cheat, deceive, or defraud; untrustworthiness; lack of integrity; [l]ack
of honesty, probity or integrity in principle; lack of fairness and straightforwardness;
disposition to defraud, deceive or betray." Acts of dishonesty have been held to be sufficient
grounds for dismissal as a measure of self-protection on the part of the employer.

UNIBERSIDAD DE STA ISABEL VS. SAMBAJON, JR.
GR NO. 196280 & 196286, APRIL 2, 2014, CITING 2010 MERCADO VS. AMA
COMPUTER COLLEGE
Facts:
Universidad de Sta. Isabel (petitioner) is a non-stock, non-profit religious educational
institution in Naga City. Petitioner hired Marvin-Julian L. Sambajon, Jr. (respondent) as a fulltime college faculty member with the rank of Assistant Professor on probationary status
effective November 1, 2002 up to March 30, 2003.After the aforesaid contract expired,
petitioner continued to give teaching loads to respondent who remained a full-time faculty
member of the Department of Religious Education for the two semesters of school-year (SY)
2003-2004 (June 1, 2003 to March 31, 2004); and two semesters of SY 2004-2005 Sometime
in June 2003, after respondent completed his course in Master of Arts in Education, major in
Guidance and Counseling, he submitted the corresponding Special Order from the
Commission on Higher Education (CHED), together with his credentials for the said master's
degree, to the Human Resources Department of petitioner for the purpose of salary
adjustment/increase. Subsequently, respondent's salary was increased, as reflected in his
pay slips starting October 1-15, 2004. He was likewise re-ranked from Assistant Professor
to Associate Professor.

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In a letter addressed to the President of petitioner, Sr. Ma. Asuncion G. Evidente, D.C.,
respondent vigorously argued that his salary increase should be made effective as of June
2003 and demanded the payment of his salary differential. The school administration replied
by explaining its policy on re-ranking of faculty members:
xxx xxx xxx
Please be informed that teachers in the Universidad are not re-ranked during their
probationary period. The Faculty Manual as revised for school year 2002-2003
provides (page 38) "Re-ranking is done every two years, hence the personnel hold
their present rank for two years. Those undergoing probationary period and those on
part-time basis of employment are not covered by this provision."
However, respondent found the above explanation insufficient and not clear enough. In his
letter dated January 12, 2005, he pointed out the case of another faculty member — whom
he did not name — also on probationary status whose salary was supposedly adjusted by
petitioner at the start of school year (June) after he/she had completed his/her master's
degree in March. Respondent thus pleaded for the release of his salary differential, or at the
very least, that petitioner give him categorical answers to his questions.
Apparently, to resolve the issue, a dialogue was held between respondent and Sr. Evidente.
Respondent claimed that Sr. Evidente told him that the school administration had decided to
shorten his probationary period to two years on the basis of his satisfactory performance.
This was categorically denied by Sr. Evidente though the latter admitted having informed
respondent "that he was made Associate Professor on account of his incessant requests for a
salary increase which the Universidad de Santa Isabel eventually accommodated . . .
considering that [respondent] had obtained a Master's Degree in June 2003." She further
informed respondent that "his appointment as Associate Professor did not affect his status
as a probationary employee" and that petitioner "was not and did not exercise its
prerogative to shorten his probationary period to only two years." Sr. Stella O. Real, D.C.,
who issued a Certificate of Employment to respondent, likewise denied that she confirmed to
respondent that petitioner has shortened his probationary employment.
On February 26, 2005, respondent received his letter of termination which stated:
Xxxxxxxxxxxx
We regret to inform your good self that your full time probationary appointment will
not be renewed when it expires at the end of this coming March 31, 2005.
Xxxxxxxxxxxxxxx
On April 14, 2005, respondent filed a complaint for illegal dismissal against the
petitioner.
In his Decision dated August 22, 2006, Labor Arbiter Jesus Orlando M. Quinones ruled
that there was no just or authorized cause in the termination of respondent's
probationary employment. Consequently, petitioner was found liable for illegal
dismissal.
Petitioner appealed to the NLRC. On August 1, 2008, the NLRC rendered its Decision
affirming the Labor Arbiter and holding that respondent had acquired a permanent status
pursuant to Sections 91, 92 and 93 of the 1992 Manual of Regulations for Private Schools, in
relation to Article 281 of the Labor Code, as amended. Both parties filed separate appeals
before the CA. The CA sustained the conclusion of the NLRC that respondent had already
acquired permanent status when he was allowed to continue teaching after the expiration of
his first appointment-contract on March 30, 2003. However, the CA found it necessary to
modify the decision of the NLRC to include the award of back wages to respondent.

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Issue: Whether the Marvin Julian L. Sambajon, Jr. was illegally dismissed from the
Universidad De Sta. Isabel.
Ruling:
Yes. The probationary employment of teachers in private schools is not governed purely by
the Labor Code. The Labor Code is supplemented with respect to the period of probation by
special rules found in the Manual of Regulations for Private Schools. On the matter of
probationary period, Section 92 of the 1992 Manual of Regulations for Private Schools
regulations states:
Section 92.Probationary Period. — Subject in all instances to compliance with the
Department and school requirements, the probationary period for academic
personnel shall not be more than three (3) consecutive years of satisfactory
service for those in the elementary and secondary levels, six (6) consecutive
regular semesters of satisfactory service for those in the tertiary level, and
nine (9) consecutive trimesters of satisfactory service for those in the tertiary level
where collegiate courses are offered on a trimester basis. (Emphasis supplied.)
Thus, it is the Manual of Regulations for Private Schools, and not the Labor Code, that
determines whether or not a faculty member in an educational institution has attained
regular or permanent status. Section 93 of the 1992 Manual of Regulations for Private
Schools provides that full-time teachers who have satisfactorily completed their probationary
period shall be considered regular or permanent.
Since it was explicitly provided in the above contract that unless renewed in writing
respondent's appointment automatically expires at the end of the stipulated period of
employment, the CA erred in concluding that simply because the word "probationary" no
longer appears below the designation (Full-Time Faculty Member), respondent had already
become a permanent employee. There can be no dispute that the period of probation may
be reduced if the employer, convinced of the fitness and efficiency of a probationary
employee, voluntarily extends a permanent appointment even before the three-year period
ends. But absent any circumstances which unmistakably show that an abbreviated
probationary period has been agreed upon, the three-year probationary term governs.
Petitioner argues that respondent's probationary period expires after each semester he was
contracted to teach and hence it was not obligated to renew his services at the end of the
fifth semester (March 2005) of his probationary employment. Plainly, petitioner considered
the subject appointment contracts as fixed-term contracts such that it can validly dismiss
respondent at the end of each semester for the reason that his contract had expired.
The Court finds no merit in petitioner's interpretation of the Manual of Regulations,
supplemented by DOLE-DECS-CHED-TESDA Order No. 01, series of 1996. In the case of
Mercado v. AMA Computer College-Parañaque City, Inc. 39 the Court, recognized the right of
respondent school to determine for itself that it shall use fixed-term employment contracts
as its medium for hiring its teachers. Nevertheless, the Court held that the teachers'
probationary status should not be disregarded simply because their contracts were fixedterm. Thus:
The
Conflict:
and Fixed-term Employment

Probationary

Status

That in a situation where the probationary status overlaps with a fixed-term contract not
specifically used for the fixed term it offers , Article 281 should assume primacy and the
fixed-period character of the contract must give way.
Illegal Dismissal

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Notwithstanding the limited engagement of probationary employees, they are entitled to
constitutional protection of security of tenure during and before the end of the probationary
period. The services of an employee who has been engaged on probationary basis may be
terminated for any of the following: (a) a just or (b) an authorized cause; and (c) when he
fails to qualify as a regular employee in accordance with reasonable standards prescribed by
the employer.
Thus, while no vested right to a permanent appointment— he enjoys a limited tenure.
During the said probationary period, he cannot be terminated except (1) for just or
authorized causes, or (2) if he fails to qualify in accordance with reasonable standards
prescribed by petitioner for the acquisition of permanent status of its teaching personnel.
In a letter dated February 26, 2005, petitioner terminated the services of respondent stating
that his probationary employment as teacher will no longer be renewed upon its expiry on
March 31, 2005, respondent's fifth semester of teaching. No just or authorized cause was
given by petitioner. Prior to this, respondent had consistently achieved above average rating
based on evaluation by petitioner's officials and students. He had also been promoted to the
rank of Associate Professor after finishing his master's degree course on his third semester
of teaching. Clearly, respondent's termination after five semesters of satisfactory service
was illegal.

BLUER THAN BLUE JOINT VENTURES CO., VS. ESTEBAN
GR NO. 192582, APRIL 7, 2014
Facts:
Respondent Glyza Esteban (Esteban) was employed in January 2004 as Sales Clerk, and
assigned at Bluer Than Blue Joint Ventures Company's (petitioner) EGG boutique in SM City
Marilao, Bulacan, beginning the year 2006. Part of her primary tasks were attending to all
customer needs, ensuring efficient inventory, coordinating orders from clients, cashiering
and reporting to the accounting department. In November 2006, the petitioner received a
report that several employees have access to its point-of-sale (POS) system through a
universal password given by Elmer Flores (Flores). Upon investigation, it was discovered that
it was Esteban who gave Flores the password. The petitioner sent a letter memorandum to
Esteban on November 8, 2006, asking her to explain in writing why she should not be
disciplinary dealt with for tampering with the company's POS system through the use of an
unauthorized password. Esteban was also placed under preventive suspension for ten days.
In her explanation, Esteban admitted that she used the universal password three times on
the same day in December 2005, after she learned of it from two other employees who she
saw browsing through the petitioner's sales inquiry. She inquired how the employees were
able to open the system and she was told that they used the "123456" password. On
November 13, 2006, Esteban's preventive suspension was lifted, but at the same time, a
notice of termination was sent to her, finding her explanation unsatisfactory and terminating
her employment immediately on the ground of loss of trust and confidence.
On December 6, 2006, Esteban filed a complaint for illegal dismissal, illegal suspension,
holiday pay, rest day and separation pay. The Labor Arbiter (LA) ruled in favor of Esteban
and found that she was illegally dismissed. The NLRC reversed the decision of the LA and
dismissed the case for illegal dismissal. The CA granted Esteban's petition and reinstated the
LA decision
The petitioner argues that it had just cause to terminate the employment of Esteban, that is,

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loss of trust and confidence. Esteban, the petitioner believes, is a rank-and-file employee
whose nature of work is reposed with trust and confidence. Her unauthorized access to the
POS system of the company and her dissemination of the unauthorized password, which
Esteban admitted, is a breach of trust and confidence, and justifies her dismissal.
Esteban, on the other hand, avers that the competency clause she signed with the petitioner
merely states the following functions: (1) attend to and assist the customer in all their
needs; (2) conduct physical inventory; (3) clean and tidy up the merchandise and store; and
(4) coordinate with the stockroom for orders. As regards the cashiering function, it merely
states "to follow." As such, her main task is that of a sales clerk.
Issues:
(1) Whether or not she occupies a position of trust and confidence;
(2) Whether or not Esteban's acts constitute just cause to terminate her employment.
Ruling:
(1) Yes. Esteban was a sales clerk. Her duties, however, were more than that of a sales clerk.
Aside from attending to customers and tending to the shop, Esteban also assumed
cashiering duties. As consistently ruled by the Court, it is not the job title but the actual work
that the employee performs that determines whether he or she occupies a position of trust
and confidence. She had in her care and custody the store's property and funds, she is
considered as a rank-and-file employee occupying a position of trust and confidence.
(2) No. Loss of trust and confidence is premised on the fact that the employee concerned
holds a position of responsibility, trust and confidence. The employee must be invested with
confidence on delicate matters, such as the custody, handling, care and protection of the
employer's property and funds. "[W]ith respect to rank-and-file personnel, loss of trust and
confidence as ground for valid dismissal requires proof of involvement in the alleged events
in question, and that mere uncorroborated assertions and accusations by the employer will
not be sufficient."
In this case, the Court finds that the acts committed by Esteban do not amount to a wilful
breach of trust. She admitted that she accessed the POS system with the use of the
unauthorized "123456" password. She did so, however, out of curiosity and without any
obvious intention of defrauding the petitioner. As professed by Esteban, "she was acting in
good faith in verifying what her co-staff told her about the opening of the computer by the
use of the "123456" password. She even told her co-staff not to open again said computer,
and that was the first and last time she opened said computer."
The Court is not saying that Esteban is innocent of any breach of company policy. That she
relayed the password to another employee is likewise demonstrative of her mindless
appreciation of her duties as a sales clerk in the petitioner's employ. But absent any showing
that her acts were done with "moral perverseness" that would justify the claimed loss of
trust and confidence attendant to her job, the Court must sustain the conclusion that
Esteban was illegally dismissed.

WENPHIL CORP., VS. ABING, ET AL.
GR NO. 207983, APRIL 7, 2014
Facts:
On December 8, 2000, LA Geobel A. Bartolabac ruled 8 that the respondents had been
illegally dismissed by Wenphil. According to the LA, the allegation of serious misconduct
against the respondents had no factual and legal basis. 9 Consequently, LA Bartolabac

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ordered Wenphil to immediately reinstate the respondents to their respective positions or to
equivalent ones, whether actuall or in the payroll. Also, the LA ordered Wenphil to pay the
respondents their backwages from February 3, 2000 until the date of their actual
reinstatement.10
Because of the unfavorable LA decision, Wenphil appealed to the NLRC on April 16, 2001 11.
In the meantime, the respondents moved for the immediate execution of the LA’s December
8, 2000 decision.12
On October 29, 2001, Wenphil and the respondents entered into a compromise
agreement13 before LA Bartolabac. They agreed to the respondents’ payroll reinstatement
while Wenphil’s appeal with the NLRC was ongoing. Wenphil also agreed to pay the
accumulated salaries of the respondents for the payroll period from April 5, 2001 until
October 15, 2001.14 As for the remaining payroll period starting October 16, 2001, Wenphil
committed itself to credit the respective salaries of the respondents to their ATM payroll
accounts until such time that the questioned decision of LA Bartolabac is either modified,
amended or reversed by the Honorable National Labor Relations Commission. 15
On January 30, 2002, the NLRC issued a resolution 16 affirming LA Bartolabac’s decision with
modifications. Instead of ordering the respondents’ reinstatement, the NLRC directed
Wenphil to pay the respondents their respective separation pay at the rate of one (1) month
salary for every year of service. Also, the NLRC found that while the respondents had been
illegally dismissed, they had not been illegally suspended. Thus, the period from February 3
to February 28, 2000 during which the respondents were on preventive suspension – was
excluded by the NLRC in the computation of the respondents’ backwages. 17
Subsequently, Wenphil moved for the reconsideration 18 of the NLRC’s January 30, 2002
resolution, but the NLRC denied the motion in another resolution dated September 24,
2002.19
Wenphil thereafter went up to the CA via a petition for certiorari to question the NLRC’s
January 30, 2002 and September 24, 2002 resolutions. 20 On August 27, 2003, the CA
rendered its decision21 reversing the NLRC’s finding that the respondents had been illegally
dismissed. According to the CA, there was enough evidence to show that the respondents
had been guilty of serious misconduct; thus, their dismissal was for a valid cause. 22The
respondents moved for the reconsideration of the CA’s decision. 23 In a resolution24 dated
February 23, 2004, the CA denied the respondents’ motion.
Issue: WON there was illegal dismissal
Ruling:
We resolve to DENY the petition. An order of reinstatement is immediately executory even
pending appeal. The employer has the obligation to reinstate and pay the wages of the
dismissed employee during the period of appeal until reversal by the higher court.
Under Article 223 of the Labor Code, "the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either be admitted
back to work under the same terms and conditions prevailing prior to his dismissal or
separation, or at the option of the employer, merely reinstated in the payroll. The posting of
a bond by the employer shall not stay the execution for reinstatement."
The Court discussed reason behind this legal policy in Aris v. NLRC, 45 where it explained:
In authorizing execution pending appeal of the reinstatement aspect of a decision of the
Labor Arbiter reinstating a dismissed or separated employee, the law itself has laid down a
compassionate policy which, once more, vivifies and enhances the provisions of the 1987
Constitution on labor and the working-man. These provisions are the quintessence of the
aspirations of the workingman for recognition of his role in the social and economic life of
the nation, for the protection of his rights, and the promotion of his welfare… These duties

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and responsibilities of the State are imposed not so much to express sympathy for the
workingman as to forcefully and meaningfully underscore labor as a primary social and
economic force, which the Constitution also expressly affirms with equal intensity. Labor is
an indispensable partner for the nation's progress and stability. [emphasis ours]
Since the decision is immediately executory, it is the duty of the employer to comply with
the order of reinstatement, which can be done either actually or through payroll
reinstatement. As provided under Article 223 of the Labor Code, this immediately executory
nature of an order of reinstatement is not affected by the existence of an ongoing appeal.
The employer has the duty to reinstate the employee in the interim period until a reversal is
decreed by a higher court or tribunal.
In the case of payroll reinstatement, even if the employer’s appeal turns the tide in its favor,
the reinstated employee has no duty to return or reimburse the salary he received during
the period that the lower court or tribunal’s governing decision was for the employee’s
illegal dismissal.
Otherwise, the situation would run counter to the immediately executory nature of an order
of reinstatement. The case of Garcia v. Philippine Airlines46 is enlightening on this point:
Even outside the theoretical trappings of the discussion and into the mundane realities of
human experience, the "refund doctrine" easily demonstrates how a favorable decision by
the Labor Arbiter could harm, more than help, a dismissed employee. The employee, to
make both ends meet, would necessarily have to use up the salaries received during the
pendency of the appeal, only to end up having to refund the sum in case of a final
unfavorable decision. It is mirage of a stop-gap leading the employee to a risky cliff of
insolvency.
Advisably, the sum is better left unspent. It becomes more logical and practical for the
employee to refuse payroll reinstatement and simply find work elsewhere in the interim, if
any is available.1âwphi1 Notably, the option of payroll reinstatement belongs to the
employer, even if the employee is able and raring to return to work.
We see the situation discussed above to be present in the case before us as Wenphil
observed the mandate of Article 223 to immediately comply with the order of reinstatement
by the LA. On October 29, 2001, while Wenphil’s appeal with the NLRC was pending, it
entered into a compromise agreement with the respondents. In this agreement, Wenphil
committed to reinstate the respondents in its payroll. However, the commitment came with
a condition: Wenphil stipulated that its obligation to pay the wages due to the respondents
would cease if the decision of the LA would be "modified, amended or reversed" by the
NLRC.47
Thus, when the NLRC rendered its decision on the appeal affirming the LA’s finding that the
respondents were illegally dismissed, but modifying the award of reinstatement to payment
of separation pay, Wenphil stopped paying the respondents’ wages.
The reinstatement salaries due to the respondents were, by their nature, payment of
unworked backwages. These were salaries due to the respondents because they had been
prevented from working despite the LA and the NLRC findings that they had been illegally
dismissed.
We point out that reinstatement and backwages are two separate reliefs available to an
illegally dismissed employee. The normal consequences of a finding that an employee has
been illegally dismissed are: first, that the employee becomes entitled to reinstatement to
his former position without loss of seniority rights; and second, the payment of backwages
covers the period running from his illegal dismissal up to his actual reinstatement. 48These
two reliefs are not inconsistent with one another and the labor arbiter can award both

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simultaneously.
Moreover, the relief of separation pay may be granted in lieu of reinstatement but it cannot
be a substitute for the payment of backwages. In instances where reinstatement is no longer
feasible because of strained relations between the employee and the employer, separation
pay should be granted. In effect, an illegally dismissed employee should be entitled to either
reinstatement – if viable, or separation pay if reinstatement is no longer be viable, plus
backwages in either instance. 49 The rationale for such policy of distinction was vividly
explained in Santos v. NLRC under these terms:50
Though the grant of reinstatement commonly carries with it an award of backwages, the
inappropriateness or
non-availability of one does not carry with it the inappropriateness or non-availability of the
other.
Apparently, when the NLRC changed the LA’s decision (specifically, the order to award
separation pay in lieu of reinstatement), Wenphil read this to mean to be the "modification"
envisioned in the compromise agreement, Wenphil likewise effectively concluded that
separation pay and backwages are the same or are interchangeable reliefs. This conclusion
can be deduced from Wenphil’s insistence not to pay the respondent’s remaining backwages
under its erroneous reasoning that this was the effect of the NLRC’s order to Wenphil to pay
separation pay in lieu of reinstatement.
We emphasize that the basis for the payment of backwages is different from that of the
award of separation pay. Separation pay is granted where reinstatement is no longer
advisable because of strained relations between the employee and the employer.
Backwages represent compensation that should have been earned but were not collected
because of the unjust dismissal. The basis for computing separation pay is usually the length
of the employee’s past service, while that for backwages is the actual period when the
employee was unlawfully prevented from working. 51
Had Wenphil really wanted to put a stop to the running of the period for the payment of the
respondents’ backwages, then it should have immediately complied with the NLRC’s order to
award the employees their separation pay in lieu of reinstatement. This action would have
immediately severed the employer-employee relationship. However, the records are bereft
of any evidence that Wenphil actually paid the respondents’ separation pay. Thus, the
employer-employee relationship between Wenphil and the respondents never ceased and
the employment status remained pending and uncertain until the CA actually rendered its
decision that the respondents had not been illegally dismissed. In the context of the parties’
agreement, it was only at this point that the payment of backwages should have stopped.
A compromise agreement should not be contrary to law, morals, good customs and public
policy.
While it is true that a compromise agreement is binding between the parties and becomes
the law between them,52 it is also a rule that to be valid, a compromise agreement must not
be contrary to law, morals, good customs and public policy. 53
The Court reaffirms the prevailing principle that even if the order of reinstatement of the
Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate
and pay the wages of the dismissed employee during the period of appeal until reversal by
the higher court. It settles the view that the Labor Arbiter's order of reinstatement is
immediately executory and the employer has to either re-admit them to work under the
same terms and conditions prevailing prior to their dismissal, or to reinstate them in the
payroll, and that failing to exercise the options in the alternative, employer must pay the
employee’s salaries.

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This ruling embodies a principle and policy of the law that cannot be watered down by any
lesser agreement except perhaps when backwages are already earned entitlements that the
employee chooses to surrender for a valuable consideration (and even then, the
consideration must at least be equitable). This legal policy emphasizes, too, the rule that
separation pay cannot be a substitute for backwages but only for reinstatement. The award
of separation pay is not inconsistent with the payment of backwages. Thus, until a higher
court’s or tribunal’s reversal of the finding that an employee had been illegally dismissed,
the employee would be entitled to receive his reinstatement salary or backwages during the
period of appeal until such reversal. This is in line with the Labor Code’s policy that an order
of reinstatement, which can either be actual or through the payroll, is immediately executory
and is not affected by the period of appeal.
ARABIT ET AL., VS. JARDINE PACIFIC FINANCE INC.
GR NO. 181719, APRIL 21, 2014
Facts:
Petitioners were former regular employees of respondent Jardine Pacific Finance, Inc.
(formerly MB Finance) (Jardine). The petitioners were also officers and members of MB
Finance Employees Association-FFW Chapter (the Union), a legitimate labor union and the
sole exclusive bargaining agent of the employees of Jardine. The table below shows the
petitioners’ previously occupied positions, as well as their total length of service with Jardine
before their dismissal from employment.
Petitioner

Position

Number
Years
Service

Eugene S. Arabit

Field Collector

20 years

Edgardo C. Sadsad

Field Collector

3 years

Lowell C. Funtanoz

Field Collector

7 years

Gerardo F. Punzalan

Field Collector

16 years

Freddie M. Mendoza

Field Collector

20 years

Emilio B. Belen

Senior
Credit
Collector- San Pablo Branch

Violeta C. Diumano

Senior
Accounting 19 years
Clerk/Documentation Clerk-San Pablo Branch

of
of

Investigator/Field 18 years

On the claim of financial losses, Jardine decided to reorganize and implement a redundancy
program among its employees. The petitioners were among those affected by the
redundancy program. Jardine thereafter hired contractual employees to undertake the
functions these employees used to perform.
The Union filed a notice of strike with the National Conciliation and Mediation Board (NCMB),
questioning the termination of employment of the petitioners who were also union officers.
The Union alleged unfair labor practice on the part of Jardine, as well as discrimination in the
dismissal of its officers and members.
Negotiations ensued between the Union and Jardine under the auspices of the NCMB, and
both parties eventually reached an amicable settlement. In the settlement, the petitioners
accepted their redundancy pay without prejudice to their right to question the legality of
their dismissal with the NLRC. Jardine paid the petitioners a separation package composed of
their severance pay, plus their grossed up transportation allowance. 7

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On June 1, 1999, the petitioners and the Union filed a complaint against Jardine with the
NLRC for illegal dismissal and unfair labor practice.
Issue: WON there was illegal dismissal.
Ruling:
In this context, the primary question we confront is: did the CA correctly rule that the NLRC
committed grave abuse of discretion when it found that Jardine validly terminated the
petitioners’ employment because of redundancy?
Redundancy in contrast with retrenchment
Jardine, in its petition for certiorari with the CA, posited that the distinction between
redundancy and retrenchment is not material.48 It contended that employers resort to these
causes of dismissal for purely economic considerations. 49 Jardine further argued that the
immateriality of the distinction between these two just causes for dismissal is shown by the
fact that redundancy and retrenchment are found and lumped together in just one single
provision of the Labor Code (Article 283 thereof).
This Court has already ruled before that retrenchment and redundancy are two different
concepts; they are not synonymous; thus, they should not be used interchangeably. 50 The
clear distinction between these two concepts was discussed in Andrada, et al., v.
NLRC,51 citing the case of Sebuguero v. NLRC,52 where this Court clarified:
Redundancy exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise. A position is redundant where it is
superfluous, and superfluity of a position or positions may be the outcome of a number of
factors, such as over hiring of workers, decreased volume of business, or dropping of a
particular product line or service activity previously manufactured or undertaken by the
enterprise.
Retrenchment, on the other hand, is used interchangeably with the term "lay-off." It is the
termination of employment initiated by the employer through no fault of the employee’s and
without prejudice to the latter, resorted to by management during periods of business
recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack
of orders, shortage of materials, conversion of the plant for a new production program or the
introduction of new methods or more efficient machinery, or of automation. Simply put, it is
an act of the employer of dismissing employees because of losses in the operation of a
business, lack of work, and considerable reduction on the volume of his business, a right
consistently recognized and affirmed by this Court.
These rulings appropriately clarify that redundancy does not need to be always triggered by
a decline in the business. Primarily, employers resort to redundancy when the functions of
an employee have already become superfluous or in excess of what the business requires.
Thus, even if a business is doing well, an employer can still validly dismiss an employee from
the service due to redundancy if that employee’s position has already become in excess of
what the employer’s enterprise requires.
From this perspective, it is illogical for Jardine to terminate the petitioners’ employment and
replace them with contractual employees. The replacement effectively belies Jardine’s claim
that the petitioners’ positions were abolished due to superfluity. Redundancy could have
been justified if the functions of the petitioners were transferred to other existing employees
of the company.
To dismiss the petitioners and hire new contractual employees as replacements necessarily
give rise to the sound conclusion that the petitioners’ services have not really become in
excess of what Jardine’s business requires. To replace the petitioners who were all regular
employees with contractual ones would amount to a violation of their right to security of

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tenure.
Guidelines in implementing redundancy
We recognize that management has the prerogative to characterize an employee’s services
as no longer necessary or sustainable, and therefore properly terminable. 54
In De Ocampo, this Court held that, in the absence of proof that the management abused its
discretion or acted in a malicious or arbitrary manner in replacing dismissed employees with
contractual ones, judicial intervention should not be made in the company’s exercise of its
management prerogative.57
The employer’s exercise of its management prerogative, however, is not an unbridled right
that cannot be subjected to this Court’s scrutiny. The exercise of management prerogative is
subject to the caveat that it should not performed in violation of any law and that it is not
tainted by any arbitrary or malicious motive on the part of the employer. 58
This Court, in several cases, sufficiently explained that the employer must follow certain
guidelines to dismiss employees due to redundancy. These guidelines aim to ensure that the
dismissal is not implemented arbitrarily and is not tainted with bad faith against the
dismissed employees.
In Golden Thread Knitting Industries, Inc. v. NLRC, 59 this Court laid down the principle that
the employer must use fair and reasonable criteria in the selection of employees who will be
dismissed from employment due to redundancy. Such fair and reasonable criteria may
include the following, but are not limited to: (a) less preferred status (e.g. temporary
employee); (b) efficiency; and (c) seniority. The presence of these criteria used by the
employer shows good faith on its part and is evidence that the implementation of
redundancy was painstakingly done by the employer in order to properly justify the
termination from the service of its employees.60
As the petitioners pointed out, the records are bereft of indications that Jardine employed
clear criteria when it decided who among its employees, who held similar positions as the
petitioners, should be removed from their posts because of redundancy. Jardine never
bothered to explain how and why the petitioners were the ones dismissed. Jardine’s acts
became more suspect given that the petitioners were all union officers and some of them
were panel members in the scheduled CBA negotiations between Jardine and the Union.
For the implementation of a redundancy program to be valid, the employer must comply
with the following requisites: (1) written notice served on both the employees and the
Department of Labor and Employment at least one month prior to the intended date of
retrenchment; (2) payment of separation pay equivalent to at least one month pay or at
least one month pay for every year of service, whichever is higher; (3) good faith in
abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining what
positions are to be declared redundant and accordingly abolished. 62
Admittedly, Jardine complied with guidelines 1 and 2 of the guidelines in Asian Alcohol.
Jardine informed the Department of Labor and Employment of the petitioners’ separation
from the service due to redundancy on April 30, 1999, one month before their termination’s
effectivity. Also, the petitioners were given their individual separation packages, composed
of their severance pay, plus their grossed up transportation allowance.
Guidelines 3 and 4 of Asian Alcohol, however, are different matters. These last two
guidelines are interrelated to ensure good faith in abolishing redundant positions; the
employer must clearly show that it used fair and reasonable criteria in ascertaining what
positions are to be declared redundant.

MIRANT (PHILIPPINES) CORP., ET AL., VS. CARO

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GR NO. 181490, APRIL 23, 2014
Facts:
Respondent filed a complaint10 for illegal dismissal and money claims for 13th and 14th
month pay, bonuses and other benefits, as well as the payment of moral and exemplary
damages and attorney’s fees. Respondent posits the following allegations in his Position
Paper:11
On January 3, 1994, respondent was hired by petitioner corporation as its Logistics Officer
and was assigned at petitioner corporation’s corporate office in Pasay City. At the time of the
filing of the complaint, respondent was already a Supervisor at the Logistics and Purchasing
Department with a monthly salary of P39,815.00.
On November 3, 2004, petitioner corporation conducted a random drug test where
respondent was randomly chosen among its employees who would be tested for illegal drug
use. Through an Intracompany Correspondence,12 these employees were informed that they
were selected for random drug testing to be conducted on the same day that they received
the correspondence. Respondent was duly notified that he was scheduled to be tested after
lunch on that day. His receipt of the notice was evidenced by his signature on the
correspondence.
Respondent avers that at around 11:30 a.m. of the same day, he received a phone call from
his wife’s colleague who informed him that a bombing incident occurred near his wife’s work
station in Tel Aviv, Israel where his wife was then working as a caregiver. Respondent
attached to his Position Paper a Press Release 13 of the Department of Foreign Affairs (DFA) in
Manila to prove the occurrence of the bombing incident and a letter 14 from the colleague of
his wife who allegedly gave him a phone call from Tel Aviv.
Respondent claims that after the said phone call, he proceeded to the Israeli Embassy to
confirm the news on the alleged bombing incident. Respondent further claims that before he
left the office on the day of the random drug test, he first informed the secretary of his
Department, Irene Torres (Torres), at around 12:30 p.m. that he will give preferential
attention to the emergency phone call that he just received. He also told Torres that he
would be back at the office as soon as he has resolved his predicament. Respondent
recounts that he tried to contact his wife by phone but he could not reach her. He then had
to go to the Israeli Embassy to confirm the bombing incident. However, he was told by Eveth
Salvador (Salvador), a lobby attendant at the Israeli Embassy, that he could not be allowed
entry due to security reasons.
On that same day, at around 6:15 p.m., respondent returned to petitioner corporation’s
office. When he was finally able to charge his cellphone at the office, he received a text
message from Tina Cecilia (Cecilia), a member of the Drug Watch Committee that conducted
the drug test, informing him to participate in the said drug test. He immediately called up
Cecilia to explain the reasons for his failure to submit himself to the random drug test that
day. He also proposed that he would submit to a drug test the following day at his own
expense. Respondent never heard from Cecilia again.
On November 8, 2004, respondent received a Show Cause Notice 15 from petitioner
corporation through Jaime Dulot (Dulot), his immediate supervisor, requiring him to explain
in writing why he should not be charged with "unjustified refusal to submit to random drug
testing." Respondent submitted his written explanation16 on November 11, 2004. Petitioner
corporation further required respondent on December 14, 2004 to submit additional pieces
of supporting documents to prove that respondent was at the Israeli Embassy in the
afternoon of November 3, 2004 and that the said bombing incident actually occurred.
Respondent requested for a hearing to explain that he could not submit proof that he was
indeed present at the Israeli Embassy during the said day because he was not allegedly
allowed entry by the embassy due to security reasons. On January 3, 2005, respondent
submitted the required additional supporting documents.17
On January 13, 2005, petitioner corporation’s Investigating Panel issued an Investigating

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Report18 finding respondent guilty of "unjustified refusal to submit to random drug testing"
and recommended a penalty of four working weeks suspension without pay, instead of
termination, due to the presence of mitigating circumstances. In the same Report, the
Investigating Panel also recommended that petitioner corporation should review its policy on
random drug testing, especially of the ambiguities cast by the term "unjustified refusal."
On January 19, 2005, petitioner corporation’s Asst. Vice President for Material Management
Department, George K. Lamela, Jr. (Lamela), recommended 19 that respondent be terminated
from employment instead of merely being suspended. Lamela argued that even if
respondent did not outrightly refuse to take the random drug test, he avoided the same.
Lamela averred that "avoidance" was synonymous with "refusal."
On February 14, 2005, respondent received a letter 20 from petitioner corporation’s Vice
President for Operations, Tommy J. Sliman (Sliman), terminating him on the same date.
Respondent filed a Motion to Appeal 21 his termination on February 23, 2005. The motion was
denied by petitioner corporation on March 1, 2005.
It is the contention of respondent that he was illegally dismissed by petitioner corporation
due to the latter’s non-compliance with the twin requirements of notice and hearing. He
asserts that while there was a notice charging him of "unjustified refusal to submit to
random drug testing," there was no notice of hearing and petitioner corporation’s
investigation was not the equivalent of the "hearing" required under the law which should
have accorded respondent the opportunity to be heard.
Issue: WON there was illegal dismissal.
Ruling:
It is beyond debate that petitioner corporation’s enforcement of its Anti-Drugs Policy is an
exercise of its management prerogative. It is also a conceded fact that respondent "failed" to
take the random drug test as scheduled, and under the said company policy, such failure
metes the penalty of termination for the first offense. A plain, simple and literal application
of the said policy to the omission of respondent would have warranted his outright dismissal
from employment – if the facts were that simple in the case at bar. Beyond debate – the
facts of this case are not – and this disables the Court from permitting a straight application
of an otherwise prima facie straightforward rule if the ends of substantial justice have to be
served.
We agree with the disposition of the appellate court that there was illegal dismissal in the
case at bar.
While the adoption and enforcement by petitioner corporation of its Anti-Drugs Policy is
recognized as a valid exercise of its management prerogative as an employer, such exercise
is not absolute and unbridled. Managerial prerogatives are subject to limitations provided by
law, collective bargaining agreements, and the general principles of fair play and justice. 46 In
the exercise of its management prerogative, an employer must therefore ensure that the
policies, rules and regulations on work-related activities of the employees must always be
fair and reasonable and the corresponding penalties, when prescribed, commensurate to the
offense involved and to the degree of the infraction. 47 The Anti-Drugs Policy of Mirant fell
short of these requirements.
Petitioner corporation’s subject Anti-Drugs Policy fell short of being fair and reasonable.
First. The policy was not clear on what constitutes "unjustified refusal" when the subject
drug policy prescribed that an employee’s "unjustified refusal" to submit to a random drug
test shall be punishable by the penalty of termination for the first offense. To be sure, the
term "unjustified refusal" could not possibly cover all forms of "refusal" as the employee’s
resistance, to be punishable by termination, must be "unjustified." To the mind of the Court,
it is on this area where petitioner corporation had fallen short of making it clear to its

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employees – as well as to management – as to what types of acts would fall under the
purview of "unjustified refusal." Even petitioner corporation’s own Investigating Panel
recognized this ambiguity, viz.:
It is not a mere jurisprudential principle, but an enshrined provision of law, that all doubts
shall be resolved in favor of labor. Thus, in Article 4 of the Labor Code, as amended, "[a]ll
doubts in the implementation and interpretation of the provisions of [the Labor] Code,
including its implementing rules and regulations, shall be resolved in favor of labor." In
Article 1702 of the New Civil Code, a similar provision states that "[i]n case of doubt, all
labor legislation and all labor contracts shall be construed in favor of the safety and decent
living for the laborer." Applying these provisions of law to the circumstances in the case at
bar, it is not fair for this Court to allow an ambiguous policy to prejudice the rights of an
employee against illegal dismissal. To hold otherwise and sustain the stance of petitioner
corporation would be to adopt an interpretation that goes against the very grain of labor
protection in this jurisdiction. As correctly stated by the Labor Arbiter, "when a conflicting
interest of labor and capital are weighed on the scales of social justice, the heavier influence
of the latter must be counter-balanced by the sympathy and compassion the law must
accord the underprivileged worker."49
Second. The penalty of termination imposed by petitioner corporation upon respondent fell
short of being reasonable. Company policies and regulations are generally valid and binding
between the employer and the employee unless shown to be grossly oppressive or contrary
to law50 – as in the case at bar.
To be sure, the unreasonableness of the penalty of termination as imposed in this case is
further highlighted by a fact admitted by petitioner corporation itself: that for the ten-year
period that respondent had been employed by petitioner corporation, he did not have any
record of a violation of its company policies.

SUSPENSION OF BUSINESS OPERATIONS
JPL MARKETING PROMOTIONS VS. COURT OF APPEALS
G.R. No. 151966; July 8, 2005
Facts:
JPL Marketing and Promotions (JPL) is a domestic corporation engaged in the business of
recruitment and placement of workers. Private respondents Noel Gonzales, Ramon Abesa III
and Faustino Aninipot were employed by JPL as merchandisers as attendants to the display
of California Marketing Corporation (CMC), one of petitioner’s clients.
JPL notified private respondents that CMC would stop its direct merchandising activity. They
were advised to wait for further notice as they would be transferred to other clients.
Private respondents Abesa and Gonzales filed before the NLRC Regional Arbitration Branch
complaints for illegal dismissal, praying for separation pay, 13 th month pay, service incentive
leave pay and payment for moral damages. Aninipot filed a similar case thereafter.
Executive Labor Arbiter Gelacio L. Rivera, Jr. dismissed the complaints for lack of merit. The
Labor Arbiter found that Gonzales and Abesa applied with and were employed by the store
where they were originally assigned by JPL even before the lapse of the six (6)-month period
given by law to JPL to provide private respondents a new assignment. Thus, they may be

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considered to have unilaterally severed their relation with JPL, and cannot charge JPL with
illegal dismissal.
The NLRC agreed with the Labor Arbiter’s finding that when private respondents filed their
complaints, the six-month period had not yet expired, and that CMC’s decision to stop its
operations in the areas was beyond the control of JPL, thus, they were not illegally
dismissed. However, it found that despite JPL’s effort to look for clients to which private
respondents may be reassigned it was unable to do so, and hence they are entitled to
separation pay. Setting aside the Labor Arbiter’s decision, the NLRC ordered the payment of:
The Court of Appeals dismissed the petition and affirmed in toto the NLRC resolution. While
conceding that there was no illegal dismissal, it justified the award of separation pay on the
grounds of equity and social justice.
Issue: Whether or not private respondents are entitled to separation pay, 13 th month pay
and service incentive leave pay, and granting that they are so entitled, what should be the
reckoning point for computing said awards.
Ruling:
Art. 286 of the Labor Code allows the bona fide suspension of the operation of a business or
undertaking for a period not exceeding six (6) months, wherein an employee/employees are
placed on the so-called “floating status.” When that “floating status” of an employee lasts
for more than six months, he may be considered to have been illegally dismissed from the
service. Thus, he is entitled to the corresponding benefits for his separation, and this would
apply to suspension either of the entire business or of a specific component thereof.
In the instant case, there was no dismissal to speak of. Private respondents were simply not
dismissed at all, whether legally or illegally. What they received from JPL was not a notice of
termination of employment, but a memo informing them of the termination of CMC’s
contract with JPL. More importantly, they were advised that they were to be reassigned. At
that time, there was no severance of employment to speak of. As clearly borne out by the
records of this case, private respondents sought employment from other establishments
even before the expiration of the six (6)-month period provided by law. As they admitted in
their comment, all three of them applied for and were employed by another establishment
after they received the notice from JPL. JPL did not terminate their employment; they
themselves severed their relations with JPL. Thus, they are not entitled to separation pay.
Nonetheless, JPL cannot escape the payment of 13 th month pay and service incentive leave
pay to private respondents. Said benefits are mandated by law and should be given to
employees as a matter of right.
PIDO VS. NLRC
G.R. No. 169812; February 23, 2007
Facts:
Federito B. Pido was hired by Cherubim Security and General Services, Inc. as a security
guard. He was under the operational control and supervision of the Ayala Security Force
(ASF) of the Ayala Group of Companies. Pido then had an altercation with Richard Alcantara
of the ASF, arising from a statement of Alcantara that petitioner’s security license for his .38
caliber revolver service firearm and duty detail order had already expired. On even date,
Alcantara filed a complaint for Gross Misconduct, claiming that when he directed petitioner
to present his security license, petitioner angrily and on top of his voice questioned his

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authority. And Alcantara recommended that petitioner be relieved from his post, and that
immediate disciplinary action against him be taken.
Cherubim Security then conducted an investigation during which petitioner echoed his tale
in his information report. Pido was later to claim that he was suspended by respondent
following his argument with Alcantara.
He filed a complaint for illegal constructive dismissal, illegal suspension, and non-payment
and underpayment of salaries, holiday pay, rest day, service incentive leave, 13th month
pay, meal and travel allowance and night shift differential against respondent, along with its
employee Rosario K. Balais (Rosario) who was allegedly responsible for running the day to
day affairs of respondent’s business.
Pido likewise prayed for reinstatement and payment of full backwages, attorney’s fees and
other money claims.
Issues:
(1) Whether or not the petitioner’s nine-month suspension is tantamount to constructive
dismissal.
(2) Whether or not petitioner should be paid his backwages aside from his separation pay.
Ruling:
ART. 286. When employment not deemed terminated. - The bona fide suspension of the
operation of a business or undertaking for a period not exceeding six (6) months, or the
fulfillment of the employee of a military or civic duty shall not terminate employment. In all
such cases, the employer shall reinstate the employee to his former position without loss of
seniority rights if he indicates his desire to resume his work not later than one (1) month
from the resumption of operations of his employer or from his relief from the military or civic
duty.
When a security guard is placed on a "floating status," he does not receive any salary or
financial benefit provided by law. Due to the grim economic consequences to the employee,
the employer should bear the burden of proving that there are no posts available to which
the employee temporarily out of work can be assigned. This, respondent failed to discharge.
SEC. 8. Preventive suspension. - The employer may place the worker concerned under
preventive suspension if his continued employment poses a serious and imminent threat to
the life or property of the employer or of his co-workers.
SEC. 9. Period of suspension. - No preventive suspension shall last longer than thirty (30)
days. The employer shall thereafter reinstate the worker in his former or in a substantially
equivalent position or the employer may extend the period of suspension provided that
during the period of extension, he pays the wages and other benefits due to the worker. In
such case, the worker shall not be bound to reimburse the amount paid to him during the
extension if the employer decides, after completion of the hearing, to dismiss the worker.
Respondent did not inform petitioner that it was extending its investigation, nor did it pay
him his wages and other benefits after the lapse of the 30-day period of suspension. Neither
did respondent issue an order lifting petitioner’s suspension, or any official assignment,
memorandum or detail order for him to assume his post or another post. Respondent merely
chose to dawdle with the investigation, in absolute disregard of petitioner’s welfare.
This Court thus rules that petitioner’s prolonged suspension, owing to respondent’s neglect
to conclude the investigation, had ripened to constructive dismissal. Petitioner, who is a

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regular employee of respondent, is entitled to reinstatement without loss of seniority and
payment of backwages from the time his compensation was withheld up to the time of his
actual reinstatement.

Facts:

MEGAFORCE SECURITY AND ALLIED SERVICES, INC. VS. HENRY LACTAO
G.R. No. 160940; July 21, 2008

Megaforce Security and Allied Services, Inc. hired Henry Lactao as a security guard. He was
detailed at Merville Park Subdivision in Parañaque City.
Lactao later filed with the Arbitration Branch of the NLRC a complaint against Megaforce for
underpayment of wages, non-payment of overtime pay, service incentive leave pay and 13 th
month pay.
On May 3, 2000, Lactao was reassigned to ABB Industry, Inc. in Sucat, Parañaque City
Megaforce Operations Manager, Lt. Col. Nicomedes P. Olaso, issued a Recall Order, recalling
Lactao from his assignment at ABB Industry, Inc. effective May 31, 2000 and directing him to
report to the Headquarters for proper disposition and new assignment.
Lactao reported to the Headquarters but he was not given a new assignment. Believing he
was terminated, Lactao amended his complaint to one for illegal dismissal with prayer for
reinstatement with the same prayer for underpayment of wages, non-payment of overtime
pay, service incentive leave pay and 13 th month pay, plus moral and exemplary damages
and attorney's fees.
Megaforce General Manager Raul U. Manalo, denied the illegal dismissal charge. It alleged
that Lactao had committed various offenses such as abandoning his post and sleeping on
duty during his detail at Merville Park Subdivision; when Lactao was reassigned to ABB
Industry, Inc., the Management thereof requested that he be relieved of his post because of
improper discipline and appearance, i.e., for incomplete or worn-out paraphernalia and
unshaved moustache;
The Labor Arbiter rendered a Decision dismissing the complaint for lack of merit.
Dissatisfied, Lactao filed an Appeal Memorandum with the NLRC.
The NLRC ordered Megaforce to reinstate Lactao to his former or equivalent position and to
pay his backwages from the time of his dismissal until he was actually reinstated. Lactao's
other claims were denied for lack of merit.
Issue: Whether or not Megaforce was guilty for illegally dismissing the respondent.
Ruling:
In the present case, while the charge of illegal dismissal may have been premature because
Lactao has not been given a new assignment or temporary "off-detail" for a period of seven
days only when he amended his complaint, the continued failure of Megaforce to offer him a
new assignment during the proceedings of the case before the LA and beyond the
reasonable six-month period makes it liable for constructive dismissal. It exists where there
is cessation of work because continued employment is rendered impossible, unreasonable or
unlikely, as an offer involving a demotion in rank and a diminution in pay.
The Court cannot accept the contention of Megaforce that Lactao did not report to work after

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his recall and had abandoned his job since it failed to present credible proof of any act on
the part of Lactao to abandon his employment. Moreover, it is a settled doctrine that the
filing of a complaint for illegal dismissal is inconsistent with abandonment of employment.
An employee who takes steps to protest his dismissal cannot logically be said to have
abandoned his work. The filing of such complaint is proof enough of his desire to return to
work, thus negating any suggestion of abandonment.
Under Article 279 of the Labor Code, as amended, an employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights and other
privileges; to his full backwages, inclusive of allowances; and to other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to
the time of his actual reinstatement. Thus, Lactao is entitled to reinstatement and
backwages as a necessary consequence.

NATIONAL MINES AND ALLIED WORKERS UNION VS. MARCOPPER MINING CORP.
G.R. No. 119381; March 11, 1996
Facts:
DENR ordered the indefinite suspension of MARCOPPER's operations for causing damage to
the environment of the Province of Marinduque by spilling the company's mine waste or
tailings from an old underground impounding area into the Boac River, in violation of its
Environmental Compliance Certificate (ECC).
NAMAWU was the exclusive bargaining representative of the rank-and-file workers of
MARCOPPER. it filed a complaint with the Regional Arbitration Branch No. IV of the NLRC
against MARCOPPER for nonpayment of wages, separation pay, damages, and attorney's
fees; the case is hereinafter referred to as the "environmental incident case." NAMAWU
claimed that due to the indefinite suspension of MARCOPPER's operations, its members were
not paid the wages due them for six months.
MARCOPPER denied liability, contending that NAMAWU had not been authorized by the
individual employees - the real parties-in-interest - to file the complaint; and that the
complaint should be dismissed for lack of certification of non-forum shopping, for the
pendency of another action between the same parties, and for lack of factual and legal
basis.
Issue: Whether or not the suspension of operation entitles the employee for separation pay.
Ruling:
The suspension of MARCOPPER's operations was decreed in an Ex-Parte Order dated April 1,
1996 issued by the Pollution Adjudication Board of the DENR pursuant to Presidential Decree
(P.D.) No. 984 and Section 36 of its Implementing Rules.
Because the initial suspension of operations that the DENR imposed eventually turned into
an involuntary closure. Article 283 of the Labor Code comes into play entitling the three
remaining employees the payment of separation pay computed under the terms of that
Article. The termination of employment date, for separation pay purposes, should be
computed from June 21, 1996 and not from October 12, 1996 (or six months from the April
12, 1996 suspension of operation date); June 21, 1996 must be the closure date as it is from
this date that MARCOPPER, by law, ceased to have any authority to conduct its mining

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operations.

EAGLE STAR SECURITY SERVICES INC. VS. MIRANDO ET AL.
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, was posted at the Heroes Hill Branch of Equitable-PCI Bank (now Banco de
Oro-EPCI Bank) with a 9:00 a.m.-to-5:00 p.m. shift and a daily wage of P250.00.
On December 14, 2001, respondent was made to sign a duty schedule for December 15 (a
Saturday). When he reported for work on December 15, 2001, he was told by the
detachment commander, Juanito Endencio, not to report for duty per instruction of the head
office. Respondent thus called up the head office and was told that he was removed from
duty by petitioner’s operations manager.
As Mirando was no longer asked to report for duty, he filed a complaint for illegal dismissal.
He later amended his complaint 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 (AWOL) on December 16, 2001 and had not since reported for work, drawing it
to send him a notice on December 26, 2001 to explain his absence, but he failed to respond
thereto.
Issue: Whether or not he was illegally dismissed.
Ruling:
The petition must be denied.
AT ALL EVENTS, on the merits, the appellate court did not commit any reversible error in
affirming the congruent findings of the Labor Arbiter and the NLRC that respondent was
illegally dismissed.
The persistence of respondent to resume his duties, not to mention his immediate filing of
the illegal dismissal complaint, should dissipate any doubt that he did not abandon his job.
Clutching at straws, petitioner argues that respondent was on temporary "off-detail," the
period of time a security guard is made to wait until he is transferred or assigned to a new
post or client; and since 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.
Petitioner’s citation of Article 286 of the Labor Code is misplaced.
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

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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.
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.

NATIONWIDE SECURITY & ALLIED SERVICES VS.VALDERAMA
G.R. No. 186614 February 23, 2011
Facts:
Ronald Valderama was hired by petitioner as security guard.
Philippine Heart Center (PHC) until his relief on January 30, 2006.

He was assigned at the

His relief from the assignment was allegedly because of respondent’s serious violations of
the security rules in the workplace. On February 10, 2006, he got his cash bond and firearm
deposit. Valderama was not given any assignment thereafter.
Thus, on August 2, 2006, he filed a complaint for constructive dismissal against petitioner.
Nationwide Security alleged that respondent was not constructively or illegally dismissed,
but had voluntarily resigned. The Labor Arbiter rendered a decision in favor of respondent,
finding that the latter was constructively dismissed. The NLRC modified the decision ruling
that there neither was constructive dismissal nor voluntary resignation. The CA set aside the
ruling of the NLRC and reinstated that of the Labor Arbiter’s.
Issue: Whether or not the Court of Appeals erred in sustaining respondent’s claim for
constructive dismissal.
Ruling:
The appeal lacks merit.
In cases involving security guards, a relief and transfer order in itself does not sever
employment relationship between a security guard and his agency. An employee has the
right to security of tenure, but this does not give him a vested right to his position as would
deprive the company of its prerogative to change his assignment or transfer him where his
service, as security guard, will be most beneficial to the client. Temporary "off-detail" or the
period of time security guards are made to wait until they are transferred or assigned to a
new post or client does not constitute constructive dismissal, so long as such status does not
continue beyond six months.
When a security guard is placed on a "floating status," he does not receive any salary or
financial benefit provided by law. Due to the grim economic consequences to the employee,
the employer should bear the burden of proving that there are no posts available to which
the employee temporarily out of work can be assigned.

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Respondent claims that he was relieved from PHC on January 30, 2006; thereafter, he was
not given a new assignment. Petitioner, on the other hand, asserts that respondent refused
to report to petitioner for his reassignment. Otherwise stated, petitioner claims that
respondent abandoned his job.
The jurisprudential rule on abandonment is constant. It is a matter of intention and cannot
lightly be presumed from certain equivocal acts. To constitute abandonment, two elements
must concur: (1) the failure to report for work or absence without valid or justifiable reason;
and (2) a clear intent, manifested through overt acts, to sever the employer-employee
relationship.
In this case, petitioner failed to establish clear evidence of respondent's intention to
abandon his employment. It is a settled doctrine that the filing of a complaint for illegal
dismissal is inconsistent with the charge of abandonment, for an employee who takes steps
to protest his dismissal cannot by logic be said to have abandoned his work.
In Mobile Protective & Detective Agency v. Ompad and Mora v. Avesco Marketing
Corporation,we ruled that should the employer interpose the defense of resignation, it is
incumbent upon the employer to prove that the employee voluntarily resigned. On this
point, petitioner failed to discharge the burden. It failed to present the alleged resignation
letter of respondent. We also note that, in its March 24, 2006 letter, petitioner required
respondent to report at its office for reassignment. It strains credulity that petitioner would
require respondent to report for reassignment if the latter already tendered his resignation
effective February 10, 2006.
It would have been illogical for herein petitioner to resign and then file a complaint for illegal
dismissal. Resignation is inconsistent with the filing of the said complaint.

NIPPON HOUSING PHILS. VS. LEYNES
G.R. No. 177816; August 3, 2011
Facts:
Petitioner, originally engaged in the business of providing building maintenance From its
original ventured into building management and gained Bay Gardens Condominium Project
(the Project) of the Bay Gardens Condominium Corporation (BGCC) as its first and only
building maintenance client. In this regard, petitioner hired respondent Maiah Angela Leynes
on 26 March 2001 for the position of Property Manager, with a salary of P40,000.00 per
month. Her responsibilities include surveying the requirements of the government and the
client for said project, the formulation of house rules and regulations, the preparation of the
annual operating and capital expenditure budget, hiring and deployment of manpower,
salary and position determination as well as the assignment of the schedules and
responsibilities of employees.
Leynes had a misunderstanding with the building engineer of the project (Cantuba) and
barred the latter’s entry to the site. The Engr. also accused the former of conceit, pride and
poor managerial skills. Takada, the NHPI's Vice President issued a memorandum attributing
the incident to "simple personal differences" and directing Leynes to allow Engr. Cantuba to
report back for work. Disappointed with this management decision, she submitted a letter
to NHPI’s President (Ota) asking for an emergency leave of absence for the supposed
purpose of coordinating with her lawyer regarding her resignation letter. NHPI offered the
Property Manager position to Engr. Carlos Jose as a consequence Leynes' signification of her

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intention to resign. However, she sent another letter expressing her intention to return to
work and to call off her planned resignation. However, she received a letter from the
management to report instead to the main office as one in a “floating status” because
someone already occupies her post.
Aggrieved, Leynes filed a complaint against petitioner for illegal dismissal, unpaid salaries,
benefits, damages and attorney's fees. The Labor arbiter found that the petitioner’s act of
putting Leynes on a floating status was equivalent to termination without just cause. The
NLRC ruled that NHPI's placement of Leynes on floating status was necessitated by the
client's contractually guaranteed right to request for her relief. However, this was later on
reversed by the CA, hence, this present petition before the SC.
Issue: WON petitioners' decision to place respondent on floating status is tantamount to
constructive dismissal. (Alternative: what is the effect of withdrawn resignation?)
Ruling:
No, the placement of Leynes on a floating status due to redundancy is valid. There is no
constructive dismissal.
The factual antecedents suggest that NHPI's immediate hiring of Engr. Jose as the new
Property Manager for the Project was brought about by Leynes' own rash announcement of
her intention to resign from her position. Although she subsequently changed her mind and
sent Reyes a letter by telefax announcing the reconsideration of her planned resignation and
her intention to return to work, Leynes evidently had only herself to blame for precipitately
setting in motion the events which led to NHPI's hiring of her own replacement.
The record, moreover, shows that NHPI simply placed her on floating status "until such time
that another project could be secured" for her. Traditionally invoked by security agencies
when guards are temporarily sidelined from duty while waiting to be transferred or assigned
to a new post or client, Article 286 of the Labor Code has been applied to other industries
when, as a consequence of the bona fide suspension of the operation of a business or
undertaking, an employer is constrained to put employees on floating status for a period not
exceeding six months. In brushing aside respondents' reliance on said provision to justify the
act of putting Leynes on floating status, the CA ruled that no evidence was adduced to show
that there was a bona fide suspension of NHPI's business. What said court clearly
overlooked, however, is the fact that NHPI had belatedly ventured into building management
and, with BGCC as its only client in said undertaking, had no other Property Manager
position available to Leynes.
The rule is settled, however, that "off-detailing" is not equivalent to dismissal, so long as
such status does not continue beyond a reasonable time and that it is only when such a
"floating status" lasts for more than six months that the employee may be considered to
have been constructively dismissed. A complaint for illegal dismissal filed prior to the lapse
of said six-month and/or the actual dismissal of the employee is generally considered as
prematurely filed.
Since the petitioner has no other client for the building management side of its business, it
acted within its prerogatives when it eventually terminated Leynes' services on the ground
of redundancy. One of the recognized authorized causes for the termination of employment,
redundancy exists when the service capability of the workforce is in excess of what is
reasonably needed to meet the demands of the business enterprise. A redundant position is
one rendered superfluous by any number of factors, such as overhiring of workers,
decreased volume of business, dropping of a particular product line previously manufactured
by the company or phasing out of service activity priorly undertaken by the business An

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employer has no legal obligation to keep more employees than are necessary for the
operation of its business.
Considering that Leynes was terminated from service upon an authorized cause, we find that
the CA likewise erred in faulting NHPI for supposedly failing to notify said employee of the
particular act or omission leveled against her and the ground/s for which she was dismissed
from employment. Where dismissal, however, is for an authorized cause like redundancy,
the employer is, instead, required to serve a written notice of termination on the worker
concerned and the DOLE, at least one month from the intended date thereof. For its failure
to comply strictly with the 30-day minimum requirement for said notice and effectively
violating Leynes' right to due process, NHPI should be held liable to pay nominal damages in
the sum of P50,000.00.

MINDANAO TERMINAL & BROKERAGE SERVICE, INC. VS. NAGKAHIUSANG
MAMUMUO SA MINTERBRO-SOUTHERN PHILS. FEDERATION OF LABOR
G.R. No. 174300; December 5, 2012
Facts:
It was alleged that the union members/employees were deprived of gainful employment on
April 14, 1997 after the last vessel was serviced prior to the repair of the pier or on August 1,
1997 when repair works on the pier were commenced.
Minterbro is a domestic corporation and is engaged in the business of providing arrastre and
stevedoring services to its clientele at Port Area, Sasa, Davao City. It has a Contract for Use
of Pier with Del Monte Philippines, Inc. (Del Monte), which provides for the exclusive use by
Del Monte of the Minterbro pier. Thus, at the time relevant to this controversy, Del Monte
was Minterbro's only client.
The docking of vessels at the piers in Davao City, including that of Minterbro, is being carried
out by the Davao Pilots' Association, Inc. (DPAI). In a letter dated January 6, 1996, DPAI
requested Minterbro to waive any claim of liability against it for any damage to the pier or
vessel. DPAI alleged that Minterbro's pier vibrates everytime a ship docks due to weak posts
at the underwater portion.
In a letter dated January 15, 1997, Minterbro denied the request explaining that DPAI's
observation had no basis as any damage to the pier was actually caused by a vessel under
the control of DPAI which bumped the pier on December 28, 1996. DPAI replied in a
letter dated January 23, 1997 informing Minterbro of its intention to refrain from docking
vessels at Minterbro's pier for security and safety reasons, until such time as Minterbro shall
have caused the restoration of the original independent fenders of the said pier. cHAaCE
Minterbro decided to rehabilitate the pier on August 1, 1997 and, on the same day, sent a
letter to the Department of Labor and Employment (DOLE) to inform DOLE of Minterbro's
intention to temporarily suspend arrastre and stevedoring operations. Minterbro alleged
that, despite the condition of the pier, it was able to service 16 vessels from January 1997 to
April 13, 1997 and it was ready and awaiting vessels to dock at the pier from April 14, 1997
to July 31, 1997 during which Minterbro's office, motor pool, and field personnel continued
operations.
On November 4, 1997, respondent Nagkahiusang Mamumuo sa Minterbro-Southern
Philippines Federation of Labor composed of respondents Manuel Abellana, et al., employees
of Minterbro working on a rotation basis and employed for arrastre and stevedoring work
depending on the actual requirements of the vessels serviced by Minterbro, filed a

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complaint for payment of separation pay against Minterbro and De Castro in the
Regional Arbitration Branch No. XI at Davao City of the National Labor Relations Commission
(NLRC).
At the initial hearing before the Labor Arbiter on December 10, 1997, Minterbro and De
Castro informed the union and its members that the rehabilitation of the pier had been
completed and that they were just awaiting clearance to operate from the PPA. In a
manifestation dated December 12, 1997, the union and its members stated, among others,
that "they . . . are not anymore amenable to going back to work with [the]
company, for the reason that the latter has not been operating for more than six
(6) months, even if it resumes operation at a later date and would just demand
that they be given Retirement or Separation Pay, as the case may be."
Issue: WON respondents are entitled to separation pay
Ruling:
Lay-off is essentially retrenchment and under Article 283 of the Labor Code a retrenched
employee is entitled to separation pay equivalent to one (1) month salary or one-half (1/2)
month salary per year of service, whichever is higher.
The union members/employees were not given work starting April 14, 1997 and that more
than six months have elapsed after the union members were laid off when the next vessel
was serviced at the Minterbro pier on December 22 to 28, 1997.
Petitioners' inaction on what they allege to be the unexplained abandonment by Del Monte
of its obligations under the Contract for the Use of Pier coupled with petitioners' belated
action on the damaged condition of the pier caused the absence of available work for the
union members. As petitioners were responsible for the lack of work at the pier and,
consequently, the layoff of the union members, they are liable for the separation from
employment of the union members on a ground similar to retrenchment.
When petitioners failed to make work available to the union members for a period of more
than six months starting April 14, 1997 by failing to call the attention of Del Monte on the
latter's obligations under the Contract of Use of Pier and to undertake a timely rehabilitation
of the pier, they are deemed to have constructively dismissed the union members.

LEOPARD SECURITY AND INVESTIGATION AGENCY VS. QUITOY
G.R. No. 186344; February 28, 2013
Facts:
Respondents were hired as security guards by Petitioner (LSIA). They were assigned by the
petitioner to the different branches of Union Bank in Cebu city. On April 1, 2005, Union Bank
served notice to LSIA terminating the security service contract effective at the end of
business hours of April 30, 2005. However, the respondents were only informed of the
termination of the contract with Union Bank on April 29, 2005. The respondents went to
union bank on April 30, 2005 for the turnover of their service firearms to Cortes, Union Bank
Chief security officer. Respondents filed a complaint for illegal dismissal against LSIA. CA
sustained the award of separation pay of NLRC to respondents on the ground that the
parties' relationship had already been strained.
Issues:

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WON there was illegal dismissal.
WON the award of separation pay was proper.
Ruling:
NO. Applying Article 286 of the Labor Code of the Philippines by analogy, this Court has
repeatedly recognized that security guards may be temporarily sidelined by their security
agency as their assignments primarily depend on the contracts entered into by the latter
with third parties. Temporary "off-detail" or "floating status" is the period of time when
security guards are in between assignments or when they are made to wait after being
relieved from a previous post until they are transferred to a new one. It takes place when, as
here, the security agency's clients decide not to renew their contracts with the agency,
resulting in a situation where the available posts under its existing contracts are less than
the number of guards in its roster. For as long as such temporary inactivity does not
continue for a period exceeding six months, it has been ruled that placing an employee on
temporary "off-detail" or "floating status" is not equivalent to dismissal.
Considering that a security guard is only considered illegally dismissed from service when he
is sidelined from duty for a period exceeding six months, respondents were not illegally
dismissed by LSIA. Under Article 279 of the Labor Code, an illegally dismissed employee is
entitled to the twin reliefs of full backwages and reinstatement without loss of seniority
rights. Aside from the instances provided under Articles 283 and 284 of the Labor Code,
separation pay is, however, granted when reinstatement is no longer feasible because of
strained relations between the employer and the employee. In cases of illegal dismissal, the
accepted doctrine is that separation pay is available in lieu of reinstatement when the latter
recourse is no longer practical or in the best interest of the parties.
As a relief granted in lieu of reinstatement, however, it consequently goes without saying
that an award of separation pay is inconsistent with a finding that there was no illegal
dismissal. Even in cases of illegal dismissal, the doctrine of strained relations is not applied
indiscriminately as to bar reinstatement, especially when the employee has not indicated an
aversion to returning to work or does not occupy a position of trust and confidence in or
has no say in the operation of the employer's business. Although litigation may also
engender a certain degree of hostility, it has likewise been ruled that the understandable
strain in the parties' relations would not necessarily rule out reinstatement which would,
otherwise, become the rule rather than the exception in illegal dismissal cases.
Our perusal of the position paper they filed a quo shows that, despite erroneously believing
themselves to have been illegally dismissed, respondents had alleged no circumstance
indicating the strained relations between them and LSIA and had even alternatively prayed
for reinstatement alongside the payment of separation pay. Since application of the doctrine
of strained relations presupposes a question of fact which must be demonstrated and
adequately supported by evidence, the CA clearly erred in ruling that the parties' relations
had already soured and that an award of separation pay in favor of respondents is proper.

SKM ART CRAFT CORP. VS. BAUCA
G.R. No. 171282; November 27, 2013
Facts:
RESPONDENTS Efren Bauca and 22 others were employed by petitioner SKM Art Craft Corp.

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Last Oct. 18, 2000, a fire occurred in the inspection and receiving, repair and packing area of
petitioner’s premises in Intramuros, Manila. The fire investigation report stated that the
structure and the beach rubber building were destroyed. Also burned were four cargo
containers and a trailer truck. The estimated damage was P22 million.
Last May 8, 2000, petitioner informed respondents that it will suspend its operations for six
months, effective May 9, 2000. Last May 16, 2000, only eight days after receiving notice of
the suspension of petitioner’s operations, the 23 respondents (and other co-workers) filed a
complaint for illegal dismissal. They alleged that there was discrimination in choosing the
workers to be laid off.
Issue: Was there valid suspension of operations?
Ruling:
Yes.
We agree with the National Labor Relations Commission (NLRC) that petitioner’s suspension
of operations is valid because the fire caused substantial losses to petitioner and damaged
its factory. On this point, we disagree with the Court of Appeals (CA) that petitioner failed to
prove that its suspension of operations is bona fide. The list of materials burned was not the
only evidence submitted by petitioner.
It was corroborated by pictures and the fire investigation report, and they constitute
substantial evidence of petitioner’s losses.
Under Article 286 of the Labor Code, the bona fide suspension of the operations of a
business or undertaking for a period not exceeding six months shall not terminate
employment.
Article 286 provides, “When employment not deemed terminated. The bona fide suspension
of the operations of a business or undertaking for a period not exceeding six (6) months, or
the fulfillment by the employee of a military or civic duty shall not terminate employment. In
all such cases, the employer shall reinstate the employee to his former position without loss
of seniority rights if he indicates his desire to resume his work not later than one month from
the resumption of operations of his employer or from his relief from the military or civic
duty.”
The NLRC correctly noted that the complaint for illegal dismissal filed by respondents was
premature since it was filed only eight days after petitioner announced that it will suspend
its operations for six months. In Nippon Housing Phil., Inc. v. Leynes, G.R. No. 177816,
August 3, 2011, 655 SCRA 77, 88, we said that a complaint for illegal dismissal filed prior to
the lapse of said six months is generally considered as prematurely filed.

NAVOTAS SHIPYARD CORP. VS. MONTALLANA
G.R No. 190053; March 24, 2014
Facts:
The case arose when respondents Montellana, et al filed a complaint for illegal
(constructive) dismissal, with money claims against petitioners, Navotas Shipyard
Corporation and its President/General Manager, Jesus Villafolor.
According to respondents, on Ocober 20, 2003, the company’s employees were
called to a meeting where Villaflor told them that he intends to close the business and that

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he will just pay them separation pay since he cannot pay them their salary since he still had
many debts to pay. Since then, they were not allowed to report for work but Villaflor’s
promise to give them separation pay never materialized despite persistent demands.
The petitioners argue that the company is suffering financial reverses due to the
seasonal lack of fish caught and uncollected receivables. It was thus constrained to
temporarily cease operations but they projected that the company could resume operations
before the end of six months. The company had reported the temporary shutdown to the
DOLE-NCR and filed an Establishment Termination Report.
Under Compulsory Arbitration the respondents’ complaint was dismissed for lack of
merit, but they were awarded 13th month pay and service incentive leave pay for 2003. The
LA considered the temporary shutdown as a suspension of the employment relationship
between the parties. The respondents appealed the ruling and argued before the NLRC that
since they were not given work assignments for more than six months, they should have
been considered constructively dismissed and granted backwages as well as separation pay.
The NLRC dismissed the appeal for lack of merit.
When the case was brought before the Court of Appeals, the CA held that the
company’s shutdown was not temporary, but permanent. It set aside the challenged NLRC
decision and granted the respondents' claims for service incentive leave pay, 13th month
pay, separation pay and backwages. Thus Petitioner now brings the case up to the Supreme
Court.
Issues:
1. Whether or not the respondents were illegally dismissed
2. Whether or not they are entitled to backwages, separation pay, incentive leave pay
and 13th month pay.
Ruling:
The Court found the petition to be partially meritorious.
1. On illegal dismissal
Under the circumstances, we cannot say that the company's employees were
illegally dismissed; rather, they lost their employment because the company
ceased operations after failing to recover from their financial reverses.
The respondents' verbal account of what happened during the meeting, particularly the
company's imminent closure, to our mind, confirmed the company's dire situation. The
temporary shutdown, it appears, was a last ditch effort on the part of Villaflor to make the
company's operations viable but, as it turned out, the effort proved futile. The shutdown
became permanent as the CA itself acknowledged. The CA misappreciated the facts when it
opined that the respondents were illegally dismissed because they were not reinstated by
the petitioners after the lapse of the company's temporary shutdown. It lost sight of the fact
that the company did not resume operations anymore, a situation the CA itself recognized.
The respondents, therefore, had no more jobs to go back to; hence, their non-reinstatement.
In these lights, the CA was not only incorrect from the point of law; it likewise
disregarded, or at the very least, grossly misappreciated the evidence on record — that the
petitioner was in distress and had temporarily suspended its operations, and duly
reflected these circumstances to the DOLE. From this perspective, there was no grave abuse
of discretion to justify the CA's reversal of the NLRC's findings and conclusions.

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2. On backwages/nominal damages
Since there was no illegal dismissal, the respondents are not entitled to
backwages. The term "backwages" presupposes illegal termination of employment. It is
restitution of earnings unduly withheld from the employee because of illegal termination.
Hence, where there is no illegal termination, there is no basis for claim or award of
backwages.
The lack of basis for backwages notwithstanding, we note that the respondents
claimed that they were not given individual written notices of the company's temporary
shutdown or of its closure.. Pursuant to existing jurisprudence, if the dismissal is by
virtue of a just or authorized cause, but without due process, the dismissed
workers are entitled to an indemnity in the form of nominal damages
In the present case, the evidence on hand substantially shows that the company
closed down due to serious business reverses, an authorized cause for termination of
employment. The failure to notify the respondents in writing of the closure of the company
will not invalidate the termination of their employment, but the company has to pay them
nominal damages for the violation of their right to procedural due process. This amount is
addressed to the sound discretion of the court, taking into account the relevant
circumstances, as the Court explained in Agabon v. NLRC.
In Jaka Food Processing Corp. v. Pacot, the Court made a distinction between "just"
and "authorized" cause in relation to the award of nominal damages. Thus, the Court said:
"if the dismissal is based on a just cause under Article 282 but the employer failed to comply
with the notice requirement, the sanction to be imposed upon him should be tempered
because the dismissal process was, in effect, initiated by an act imputable to the employee;
and (2) if the dismissal is based on an authorized cause under Article 283 but the employer
failed to comply with the notice requirement, the sanction should be stiffer because the
dismissal process was initiated by the employer's exercise of his management prerogative."
The Court awarded P50,000.00 nominal damages in Jaka.
Although the respondents were not individually served written notice of the
termination of their employment, the company, nonetheless, filed an Establishment
Termination Report which included the names of the respondents. The filing of the report
indicates that the company made the bona fide effort to comply with the notice requirement
under the law and the rules. Given the circumstances surrounding the company's
closure and guided by the ruling in Industrial Timber, we find it reasonable to
award the respondents P10,000.00 in nominal damages.
3. On the award of separation pay,service incentive leave pay and13th month pay
Considering that the company's closure was due to serious financial
reverses, it is not legally bound to give the separated employees separation pay.
In Reahs Corporation v. NLRC, the Court explained that "[t]he grant of separation pay, as an
incidence of termination of employment under Article 283, is a statutory obligation on the
part of the employer and a demandable right on the part of the employee, except only
where the closure or cessation of operations was due to serious business losses or financial
reverses and there is sufficient proof of this fact or condition."
We note, however, that in his meeting with the employees, including the
respondents, on October 20, 2003, Villaflor told them that he would be giving them
separation pay as a consequence of the company's closure. He should now honor his
undertaking to the respondents and grant them separation pay. Except for the petitioners'
claim that "they gave the separation pays of their employees," they failed to present proof

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of actual payment. In this light, Villaflor's grant of separation pay to the respondents has still
to be fulfilled.
Finally, the petitioners did not appeal the LA's award of service incentive leave pay
and 13th month pay for the year 2003 to the respondents. Accordingly, the award stands.

EMERITUS SECURITY & MAINTENANCE SYSTEMS, INC. VS. DAILIG
G.R. No. 204761; April 2, 2014
Facts:

Respondent Dailig is one of the security guards employed by Petitioner Emeritus
Security & Maintenance. During his employment, respondent was assigned to petitioner's
various clients, the last of which was Panasonic in Calamba, Laguna starting 16 December
2004.
On December 10, 2005, he was relieved from his post.
On 16 June 2006, respondent filed a complaint for illegal dismissal and payment of
separation pay against petitioner before the Conciliation and Mediation Center of the NLRC.
On 14 July 2006, respondent filed another complaint for illegal dismissal, underpayment of
salaries and non-payment of full backwages before the NLRC
Respondent claimed that on various dates in December 2005 and from January to
May 2006, he went to petitioner's office to follow-up his next assignment. After more than
six months since his last assignment, still respondent was not given a new assignment.
Respondent argued that if an employee is on floating status for more than six months, such
employee is deemed illegally dismissed.
Petitioner admits it relieved respondent from his last assignment on December 10
2005, but it required respondent to report to the head office within 48 hours from receipts of
the order of relief. Petitioner claims that respondent allegedly failed to comply with this
notice as well as a second notice sent to his last known address requiring him to report to
the office within 72 hours or else he would be deemed to be no longer interested to continue
his employment. In addition, petitioner claims that there was no termination letter sent to
respondent purportedly proved that respondent was not dismissed.
The Labor Arbiter held that respondent was illegally dismissed and is thus entitled to
reinstatement along with backwages, and his claim for underpayment is denied for lack of
merit. Petitioner appealed before the NLRC but was dismissed, and its motion for
reconsideration was denied. The Court of Appeals affirmed the finding of the Labor Arbiter
and the NLRC but it set aside the reinstatement order and ordered the payment of
separation pay, invoking the doctrine of strained relations between the parties. The petition
thus brought the case before the Supreme Court.
Issues:
1.Whether or not respondent was illegally dismissed by respondent
2. Whether or not respondent is entitled to separation pay, instead of reimbursement.
Ruling:
The Court affirms the finding of illegal dismissal of the Labor Arbiter, NLRC, and Court
of Appeals. However, the Court sets aside the Court of Appeals' award of separation pay in

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favor of respondent, and reinstates the Labor Arbiter's reinstatement order.
Petitioner admits relieving respondent from his post as security guard on 10
December 2005. There is also no dispute that respondent remained on floating status at the
time he filed his complaint for illegal dismissal on 16 June 2006. In other words, respondent
was on floating status from 10 December 2005 to 16 June 2006 or more than six months.
Petitioner's allegation of sending respondent a notice sometime in January 2006, requiring
him to report for work, is unsubstantiated, and thus, self-serving
The Court agrees with the ruling of the Labor Arbiter, NLRC and Court of Appeals that
a floating status of a security guard, such as respondent, for more than six months
constitutes constructive dismissal. In Nationwide Security and Allied Services, Inc. v.
Valderama, the Court held:
The temporary inactivity or "floating status" of security guards
should continue only for six months. Otherwise, the security agency
concerned could be liable for constructive dismissal. The failure of
petitioner to give respondent a work assignment beyond the reasonable
six-month period makes it liable for constructive dismissal.
On the issue of separation pay:
Reinstatement is the general rule, while the award of separation pay is the
exception. The circumstances warranting the grant of separation pay, in lieu of
reinstatement, are laid down by the Court in Globe-Mackay Cable and Radio Corporation
v. National Labor Relations Commission, thus:
Over time, the following reasons have been advanced by the Court for
denying reinstatement under the facts of the case and the law
applicable thereto; that reinstatement can no longer be effected in
view of the long passage of time (22 years of litigation) or because of
the realities of the situation; or that it would be 'inimical to the
employer's interest;' or that reinstatement may no longer be feasible;
or, that it will not serve the best interests of the parties involved; or
that the company would be prejudiced by the workers' continued
employment; or that it will not serve any prudent purpose as when
supervening facts have transpired which make execution on that score
unjust or inequitable or, to an increasing extent, due to the resultant
atmosphere of 'antipathy and antagonism' or 'strained relations' or
'irretrievable estrangement' between the employer and the employee.
Contrary to the Court of Appeals' ruling, there is nothing in the records showing any
strained relations between the parties to warrant the award of separation pay. There is
neither allegation nor proof that such animosity existed between petitioner and respondent.
In fact, petitioner complied with the Labor Arbiter's reinstatement order.
Considering that (1) petitioner reinstated respondent in compliance with the Labor
Arbiter's decision, and (2) there is no ground, particularly strained relations between the
parties, to justify the grant of separation pay, the Court of Appeals erred in ordering the
payment thereof, in lieu of reinstatement.

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DISEASE AS GROUND FOR TERMINATION
SY VS. COURT OF APPEALS
G.R. No. 142293; February 27, 2003
Facts:
Jaime Sahot started working as a truck helper for petitioners’ family-owned trucking
business named Vicente Sy Trucking. In 1965, he became a truck driver of the same family
business. Throughout the changes in names and for 36 years, private respondent
continuously served the trucking business of petitioners.
Sahot was already 59 years old. He had been incurring absences as he was suffering from
various ailments. Sahot had filed a week-long leave to be medically examined and treated
for EOR, presleyopia, hypertensive retinopathy G II HPM, UTI, Osteoarthritis and heart
enlargement. On said grounds, Belen Paulino of the SBT Trucking Service management told
him to file a formal request for extension of his leave. At the end of his week-long absence,
Sahot applied for extension of his leave for the whole month of June, 1994. It was at this
time when petitioners allegedly threatened to terminate his employment should he refuse to
go back to work. Ultimately, petitioners carried out their threat and dismissed him from
work. He ended up sick, jobless and penniless.
Sahot filed with the NLRC NCR Arbitration Branch, a complaint for illegal dismissal, He
prayed for the recovery of separation pay and attorneys fees against herein petitioners.
Petitioners contended that Sahot was not illegally dismissed as a driver because he was in
fact petitioner’s industrial partner and that due to Sahot’s refusal to work after the
expiration of his authorized leave of absence, he should be deemed to have voluntarily
resigned from his work. The NLRC NCR Arbitration Branch, ruled that there was no illegal
dismissal in Sahot’s case. Private respondent had failed to report to work. Moreover, said the
Labor Arbiter, petitioners and private respondent were industrial partners. On appeal, the
NLRC declared that private respondent was an employee, not an industrial partner, since the
start. In its decision the appellate court affirmed with modification the judgment of the NLRC.
It held that private respondent was indeed an employee of petitioners since 1958.
Issues:
Whether or not an employer-employee relationship existed between petitioners and
respondent Sahot;
Whether or not there was valid dismissal; and Whether or not respondent Sahot is entitled to
separation pay.
Held:
Private respondent Jaime Sahot was not an industrial partner but an employee of petitioners
from 1958 to 1994.
In termination cases, the burden is upon the employer to show by substantial evidence that
the termination was for lawful cause and validly made. Article 277(b) of the Labor Code puts

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the burden of proving that the dismissal of an employee was for a valid or authorized cause
on the employer, without distinction whether the employer admits or does not admit the
dismissal. For an employee’s dismissal to be valid, (a) the dismissal must be for a valid
cause and (b) the employee must be afforded due process.
In order to validly terminate employment under Article 284 of the Labor Code on the ground
of a disease, Book VI, Rule I, Section 8 of the Omnibus Implementing Rules of the Labor Code
requires:
Sec. 8. Disease as a ground for dismissal- Where the employee suffers from a disease and
his continued employment is prohibited by law or prejudicial to his health or to the health of
his co-employees, the employer shall not terminate his employment unless there is a
certification by competent public health authority that the disease is of such nature or at
such a stage that it cannot be cured within a period of six (6) months even with proper
medical treatment. If the disease or ailment can be cured within the period, the employer
shall not terminate the employee but shall ask the employee to take a leave. The employer
shall reinstate such employee to his former position immediately upon the restoration of his
normal health.
In the case at bar, the employer clearly did not comply with the medical certificate
requirement before Sahot’s dismissal was effected. From the records, it clearly appears that
procedural due process was not observed in the separation of private respondent by the
management of the trucking company. The employer is required to furnish an employee with
two written notices before the latter is dismissed: (1) the notice to apprise the employee of
the particular acts or omissions for which his dismissal is sought, which is the equivalent of a
charge; and (2) the notice informing the employee of his dismissal, to be issued after the
employee has been given reasonable opportunity to answer and to be heard on his defense.
These, the petitioners failed to do, even only for record purposes. What management did
was to threaten the employee with dismissal, then actually implement the threat when the
occasion presented itself because of private respondent’s painful left thigh.
All told, both the substantive and procedural aspects of due process were violated. Clearly,
therefore, Sahot’s dismissal is tainted with invalidity.
On the last issue, respondent Jaime Sahot is entitled to separation pay. An employee who is
terminated because of disease is entitled to "separation pay equivalent to at least one
month salary or to one-half month salary for every year of service, whichever is greater.

MANLY EXPRESS, INC. VS. PAYONG
G.R. No. 167462; October 25, 2005
Facts:
Romualdo Payong, Jr. was employed as a welder by petitioner. Sometime in December 1999,
he was complaining of eyesight problems. Brought to an eye specialist by private
respondent Ching, he was diagnosed to be suffering from eye cataract. Despite having the
cataract removed in January of 2000, he was disallowed to return to his work by Ching.
Much later, on August 1, 2000, he was given a letter of termination of employment.
Thus, a complaint for illegal dismissal with money claims was filed against Manly.
The Labor Arbiter rendered a judgment ordering the respondent company to pay
complainant Payong, the total amount of SEVENTY-FIVE THOUSAND NINE HUNDRED PESOS
(P75, 900.00).
The appellate court observed that considering that the termination was based on his alleged

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partial blindness, Manly should have presented a certification by a competent public health
authority that Payong was suffering from such a disease and his continued employment is
prejudicial to his health and that of his co-employees. Without the certification, the
dismissal was illegal.
Issue:
Whether or not there was a valid termination.
Held:
The petition lacks merit.
Article 284 of the Labor Code authorizes an employer to terminate an employee on the
ground of disease, thus:
Art. 284. Disease as ground for termination. – An employer may terminate the
services of an employee who has been found to be suffering from any disease and
whose continued employment is prohibited by law or is prejudicial to his health as
well as to the health of his co-employees: ….
The rule is explicit. For a dismissal on the ground of disease to be considered valid, two
requisites must concur: (a) the employee suffers from a disease which cannot be cured
within six months and his continued employment is prohibited by law or prejudicial to his
health or to the health of his co-employees, and (b) a certification to that effect must be
issued by a competent public health authority.
In the present case, there was no proof that Payong’s continued employment was prohibited
by law or prejudicial to his health and that of his co-employees. No medical certificate by a
competent public health authority was submitted that Payong was suffering from a disease
that cannot be cured within a period of six months. In the absence of such certification,
Payong’s dismissal must necessarily be declared illegal.
The burden of proving the validity of the dismissal rests on the employer. As such, the
employer must prove that the requisites for a valid dismissal due to a disease have been
complied with. In the absence of the required certification by a competent public health
authority, this Court has ruled against the validity of the employee’s dismissal.
We also note that Manly failed to comply with the procedure for terminating an employee. In
dismissing an employee, the employer has the burden of proving that the employee has
been served two notices: (1) one to apprise him of the particular acts or omissions for which
his dismissal is sought, and (2) the other to inform him of his employer’s decision to dismiss
him. The first notice must state that dismissal is sought for the act or omission charged
against the employee, otherwise, the notice cannot be considered sufficient compliance with
the rules.
All told, Payong’s dismissal did not comply with both the substantive and procedural
aspects of due process. Clearly, his dismissal is tainted with invalidity.

DUTERTE VS. KINGSWOOD TRADING CO.
G.R. No. 160325; October 4, 2007
Facts:
Roque Duterte was hired as truck/trailer driver by respondent Kingswood Trading Company,
Inc., of which co-respondent Filemon Lim is the President.

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On November 8, 1998, petitioner had his first heart attack and was confined for two weeks
at the Philippine Heart Center. This was confirmed by respondent KTC which admitted that
petitioner was declared on sick leave with corresponding notification.
A month later, petitioner returned to work armed with a medical certificate signed by his
attending physician at the PHC, attesting to petitioner’s fitness to work. However, said
certificate was not honored by the respondents who refused to allow petitioner to work.
Respondents refused to declare petitioner fit to work unless physically examined by the
company physician. Respondents’ promise to pay petitioner his separation pay turned out to
be an empty one. Instead, petitioner was presented, for his signature, a document as proof
of his receipt of the amount of P14,375.00 as first installment of his Social Security System
(SSS) benefits. Having received no such amount, petitioner refused to affix his signature
thereon and instead requested for the necessary documents from respondents to enable him
to claim his SSS benefits, but the latter did not heed his request.
Petitioner filed against his employer a complaint for illegal dismissal and damages.
Issue: Whether or not there was legality of the termination.
Held:
Art. 284. DISEASE AS GROUND FOR TERMINATION. -- An employer may terminate the
services of an employee who has been found to be suffering from any disease and whose
continued employment is prohibited by law or is prejudicial to his health as well as to the
health of his co-employees: Provided, That he is paid separation pay equivalent to at least
one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is
greater, a fraction of at least six (6) months being considered as one (1) whole year.
Corollarily, in order to validly terminate employment on the basis of disease, Book VI, Rule I,
Section 8 of the Omnibus Implementing Rules of the Labor Code requires:
Disease as a ground for dismissal. -- Where the employee suffers from a disease and his
continued employment is prohibited by law or prejudicial to his health or to the health of his
co-employees, the employer shall not terminate his employment unless there is a
certification by a competent public health authority that the disease is of such nature or at
such a stage that it cannot be cured within a period of six (6) months even with proper
medical treatment. If the disease or ailment can be cured within the period, the employer
shall not terminate the employee but shall ask the employee to take a leave. The employer
shall reinstate such employee to his former position immediately upon the restoration of his
normal health. (Book VI, Rule 1, Sec. 8 of the Implementing Rules)
The law is unequivocal: the employer, before it can legally dismiss its employee on the
ground of disease, must adduce a certification from a competent public authority that the
disease of which its employee is suffering is of such nature or at such a stage that it cannot
be cured within a period of six months even with proper treatment.
Here, the record does not contain the required certification. And when the respondents
asked the petitioner to look for another job because he was unfit to work, such unilateral
declaration, even if backed up by the findings of its company doctors, did not meet the
quantum requirement mandated by the law, i.e., there must be a certification by a
competent public authority.
The requirement for a medical certificate under Article 284 of the Labor Code cannot be
dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by
the employer of the gravity or extent of the employee’s illness and thus defeat the public

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policy on the protection of labor.

VILLARUEL VS. YEO HAN GUAN
G.R. No. 169191; June 1, 2011
Facts:
Petitioner alleged that in June 1963, he was employed as a machine operator by Ribonette
Manufacturing Company, an enterprise engaged in the business of manufacturing and
selling PVC pipes and is owned and managed by herein respondent Yeo Han Guan. Over a
period of almost twenty (20) years, the company changed its name four times. Starting in
1993 up to the time of the filing of petitioner's complaint in 1999, the company was
operating under the name of Yuhans Enterprises. Despite the changes in the company's
name, petitioner remained in the employ of respondent. Petitioner further alleged that on
October 5, 1998, he got sick and was confined in a hospital; on December 12, 1998, he
reported for work but was no longer permitted to go back because of his illness; he asked
that respondent allow him to continue working but be assigned a lighter kind of work but his
request was denied; instead, he was offered a sum of P15,000.00 as his separation pay;
however, the said amount corresponds only to the period between 1993 and 1999;
petitioner prayed that he be granted separation pay computed from his first day of
employment in June 1963, but respondent refused. Aside from separation pay, petitioner
prayed for the payment of service incentive leave for three years as well as attorney's fees.
The Labor Arbiter found for the respondent, granting him separation pay from the June 1963
up to the time of separation, and service incentive leave equivalent to 15 days. The NLRC
affirmed. On appeal, the CA reversed the NLRC on the issue of separation pay.
Issue: WON petitioner is entitled to separation pay under the provisions of the Labor Code,
particularly Article 284
Held:
Article 284 of the Labor Code reads:
An employer may terminate the services of an employee who has been found to be
suffering from any disease and whose continued employment is prohibited by law or
is prejudicial to his health as well as to the health of his co-employees: Provided, That
he is paid separation pay equivalent to at least one (1) month salary or to one-half
(½) month salary for every year of service whichever is greater, a fraction of at least
six months being considered as one (1) whole year.
A plain reading of the abovequoted provision clearly presupposes that it is the employer who
terminates the services of the employee found to be suffering from any disease and whose
continued employment is prohibited by law or is prejudicial to his health as well as to the
health of his co-employees. It does not contemplate a situation where it is the employee
who severs his or her employment ties. This is precisely the reason why Section 8, Rule 1,
Book VI of the Omnibus Rules Implementing the Labor Code, directs that an employer shall
not terminate the services of the employee unless there is a certification by a competent
public health authority that the disease is of such nature or at such a stage that it cannot be
cured within a period of six (6) months even with proper medical treatment.
On the other hand, the Court agrees with the CA in its observation of the following
circumstances as proof that respondent did not terminate petitioner's employment: first, the
only cause of action in petitioner's original complaint is that he was “offered a very low
separation pay”; second, there was no allegation of illegal dismissal, both in petitioner's
original and amended complaints and position paper; and, third, there was no prayer for

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reinstatement.
In consonance with the above findings, the Court finds that petitioner was the one who
initiated the severance of his employment relations with respondent. It is evident from the
various pleadings filed by petitioner that he never intended to return to his employment with
respondent on the ground that his health is failing. Indeed, petitioner did not ask for
reinstatement. In fact, he rejected respondent's offer for him to return to work. This is
tantamount to resignation.
Resignation is defined as the voluntary act of an employee who finds himself in a situation
where he believes that personal reasons cannot be sacrificed in favor of the exigency of the
service and he has no other choice but to disassociate himself from his employment.
It may not be amiss to point out at this juncture that aside from Article 284 of the Labor
Code, the award of separation pay is also authorized in the situations dealt with in Article
283 of the same Code and under Section 4 (b), Rule I, Book VI of the Implementing Rules
and Regulations of the said Code where there is illegal dismissal and reinstatement is no
longer feasible. By way of exception, this Court has allowed grants of separation pay to
stand as “a measure of social justice” where the employee is validly dismissed for causes
other than serious misconduct or those reflecting on his moral character. However, there is
no provision in the Labor Code which grants separation pay to voluntarily resigning
employees. In fact, the rule is that an employee who voluntarily resigns from employment is
not entitled to separation pay, except when it is stipulated in the employment contract or
CBA, or it is sanctioned by established employer practice or policy. In the present case,
neither the abovementioned provisions of the Labor Code and its implementing rules and
regulations nor the exceptions apply because petitioner was not dismissed from his
employment and there is no evidence to show that payment of separation pay is stipulated
in his employment contract or sanctioned by established practice or policy of herein
respondent, his employer.
Since petitioner was not terminated from his employment and, instead, is deemed to have
resigned therefrom, he is not entitled to separation pay under the provisions of the Labor
Code.
The foregoing notwithstanding, this Court, in a number of cases, has granted financial
assistance to separated employees as a measure of social and compassionate justice and as
an equitable concession. Taking into consideration the factual circumstances obtaining in the
present case, the Court finds that petitioner is entitled to this kind of assistance.
In this regard, the Court finds credence in petitioner's contention that he is in the employ of
respondent for more than 35 years. In the absence of a substantial refutation on the part of
respondent, the Court agrees with the findings of the Labor Arbiter and the NLRC that
respondent company is not distinct from its predecessors but, in fact, merely continued the
operation of the latter under the same owners and the same business venture. The Court
further notes that there is no evidence on record to show that petitioner has any derogatory
record during his long years of service with respondent and that his employment was
severed not by reason of any infraction on his part but because of his failing physical
condition. Add to this the willingness of respondent to give him financial assistance. Hence,
based on the foregoing, the Court finds that the award of P50,000.00 to petitioner as
financial assistance is deemed equitable under the circumstances.

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OTHER CAUSES OF SEVERANCE OF EMPLOYMENT RELATION
PANTRANCO NORTH EXPRESS, INC. VS. NLRC
259 SCRA 161
Facts:
Private respondent was hired by petitioner in 1964 as a bus conductor. He eventually joined
the Pantranco Employees Association-PTGWO. He continued in petitioner's employ until
August 12, 1989, when he was retired at the age of fifty-two (52) after having rendered
twenty five years' service. The basis of his retirement was the compulsory retirement
provision of the collective bargaining agreement between the petitioner and the aforenamed
union. Private respondent received P49,300.00 as retirement pay.
On February 15, 1990, private respondent filed a complaint for illegal dismissal against
petitioner with the Sub-Regional Arbitration Branch of the respondent Commission in
Dagupan City. The complaint was consolidated with two other cases of illegal dismissal
having similar facts and issues, filed by other employees, non-union members.
Issue:
Whether the CBA stipulation on compulsory retirement after twenty-five years of service is
legal and enforceable.
Ruling:
Art. 287 of the Labor Code as worded permits employers and employees to fix the applicable
retirement age at below 60 years. Moreover, providing for early retirement does not
constitute diminution of benefits. In almost all countries today, early retirement, i.e., before
age 60, is considered a reward for services rendered since it enables an employee to reap
the fruits of his labor — particularly retirement benefits, whether lump-sum or otherwise —
at an earlier age, when said employee, in presumably better physical and mental condition,
can enjoy them better and longer. As a matter of fact, one of the advantages of early
retirement is that the corresponding retirement benefits, usually consisting of a substantial
cash windfall, can early on be put to productive and profitable uses by way of incomegenerating investments, thereby affording a more significant measure of financial security
and independence for the retiree who, up till then, had to contend with life's vicissitudes
within the parameters of his fortnightly or weekly wages. Thus we are now seeing many
CBAs with such early retirement provisions. And the same cannot be considered a
diminution of employment benefits.
Being a product of negotiation, the CBA between the petitioner and the union intended the
provision on compulsory retirement to be beneficial to the employees-union members,

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including herein private respondent. When private respondent ratified the CBA with the
union, he not only agreed to the CBA but also agreed to conform to and abide by its
provisions. Thus, it cannot be said that he was illegally dismissed when the CBA provision
on compulsory retirement was applied to his case.
Incidentally, we call attention to Republic Act No. 7641, known as "The Retirement Pay Law,"
which went into effect on January 7, 1993. Although passed many years after the
compulsory retirement of herein private respondent, nevertheless, the said statute sheds
light on the present discussion when it amended Art. 287 of the Labor Code, to make it read
as follows:
"ART. 7.
Retirement. — Any employee may be retired upon reaching the retirement
age establish in the collective bargaining agreement or other applicable employment
contract.
In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in the said establishment may retire x
x x."
The aforequoted provision makes clear the intention and spirit of the law to give employers
and employees a free hand to determine and agree upon the terms and conditions of
retirement. Providing in a CBA for compulsory retirement of employees after twenty-five
(25) years of service is legal and enforceable so long as the parties agree to be governed by
such CBA. The law presumes that employees know what they want and what is good for
them absent any showing that fraud or intimidation was employed to secure their consent
thereto.
PAL. VS. AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINE
G.R. NO. 143686 JANUARY 15, 2002

Facts:
The instant labor dispute between petitioner Philippine Airlines, Inc. (PAL) and respondent
Airline Pilots Association of the Philippines (ALPAP), the exclusive bargaining representative
of all commercial airline pilots of petitioner, stemmed from petitioner's act of unilaterally
retiring airline pilot Captain Albino Collantes under Section 2, Article VII, of the 1967 PALALPAP Retirement Plan. Contending, inter alia, that the retirement of Captain Collantes
constituted illegal dismissal and union busting, ALPAP filed a Notice of Strike with the
Department of Labor and Employment (DOLE). Pursuant of Article 263 (g) of the Labor Code,
the Secretary of the DOLE (hereafter referred to as Secretary) assumed jurisdiction over the
labor dispute.
On June 13, 1998, the Secretary issued the assailed order upholding PAL's action of
unilaterally retiring Captain Collantes and recognizing the same as a valid exercise of its
option under Section 2, Article VII, of the 1967 PAL-ALPAP Retirement Plan. The Secretary
further ordered that the basis of the computation of Captain Collantes' retirement benefits
should be Article 287 of the Labor Code (as amended by Republic Act No. 7641) and not
Section 2, Article VII, of the PAL-ALPAP Retirement Plan. The Secretary added that in the
exercise of its option to retire pilots, PAL should first consult the pilot concerned before
implementing his retirement.
Issue:
Whether or not the retirement of Collantes constitutes illegal dismissal.
Ruling:
Art. 287. Retirement. - Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as
he may have earned under existing laws and any collective bargaining agreement and other
agreements: provided, however, That an employee's retirement benefits under any
collective bargaining and other agreements shall not be less than those provided herein.

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In the absence of a retirement plan or agreement plant providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years which is hereby declared as the compulsory
retirement age, who has served at least five (5) years in the said establishment, may retire
and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for
every year of service, a fraction of at least six (6) months being considered as one whole
year.
Unless the parties provide for broader inclusions, the term 'one-half (1/2) month salary' shall
mean fifteen (15) days plus one-twelfth (1/12) of the 13 th month pay and the cash equivalent
of not more than five (5) days of service incentive leaves. xxx xxx xxx.
In short, the retirement benefits that a pilot would get under the provisions of the abovequoted Article 287 of the Labor Code are less than those that he would get under the
applicable retirement plans of petitioner.
Finally, on the issue of whether petitioner should consult the pilot concerned before
exercising its option to retire pilots, we rule that this added requirement, in effect, amended
the terms of Article VII, Section 2 of the 1976 PAL-ALPAP Retirement Plan. The option of an
employer to retire its employees is recognized as valid.
Furthermore, when the Secretary of Labor and Employment imposed the added requirement
that petitioner should consult its pilots prior to retirement, he resolved a question which was
outside of the issues raised, thereby depriving petitioner an opportunity to be heard on this
point.
CAINTA CATHOLIC SCHOOL VS. CAINTA CATHOLIC SCHOOL EMPLOYEES UNION
G.R. NO. 151021 MAY 4, 2006
Facts:
On 6 March 1986, a Collective Bargaining Agreement (CBA) was entered into between Cainta
Catholic School (School) and the Cainta Catholic School Employees Union (Union) effective 1
January 1986 to 31 May 1989. This CBA provided, among others, that:
This Collective Bargaining Agreement shall become effective and binding upon the parties
from January 1, 1986 up to May 31, 1989. At least sixty (60) days before the expiration of
this Agreement, the parties hereto shall submit written proposals which shall be made the
basis of negotiations for the execution of a new agreement.
If no new agreement is reached by the parties at the expiration of this agreement, all the
provisions of this Agreement shall remain full force and in effect, up to the time a new
Agreement shall be executed.
On 15 October 1993, the School retired Llagas and Javier, who had rendered more than
twenty (20) years of continuous service, pursuant to Section 2, Article X of the CBA, to wit:
An employee may be retired, either upon application by the employee himself or by the
decision of the Director of the School, upon reaching the age of sixty (60) or after having
rendered at least twenty (20) years of service to the School the last three (3) years of which
must be continuous.
Issue:
Whether the forced retirement of Llagas and Javier was a valid exercise of management
prerogative.
Ruling:
ART. 287. Retirement. –
Any employee may be retired upon reaching the retirement age established in the collective
bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as
he may have earned under existing laws and any collective bargaining agreement and other
agreements: Provided, however, That an employee’s retirement benefits under any
collective bargaining agreement and other agreements shall not be less than those provided
herein.
In the absence of a retirement plan or agreement providing for retirement benefits of

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employees in the establishment, an employee upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in the said establishment, may retire
and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for
every year of service, a fraction of at least six (6) months being considered as one whole
year.
The CBA in the case at bar established 60 as the compulsory retirement age. However, it is
not alleged that either Javier or Llagas had reached the compulsory retirement age of 60
years, but instead that they had rendered at least 20 years of service in the School, the last
three (3) years continuous. Clearly, the CBA provision allows the employee to be retired by
the School even before reaching the age of 60, provided that he/she had rendered 20 years
of service. Jurisprudence affirms the position of the School.
We affirm the continued validity of Pantranco and its kindred cases, and thus reiterate that
under Article 287 of the Labor Code, a CBA may validly accord management the prerogative
to optionally retire an employee under the terms and conditions mutually agreed upon by
management and the bargaining union, even if such agreement allows for retirement at an
age lower than the optional retirement age or the compulsory retirement age.
ALPHA C. JACULBE VS. SILLIMAN UNIVERSITY
G.R. NO. 156934 MARCH 16, 2007
Facts:
Sometime in 1958, petitioner began working for respondent’s university medical center as a
nurse.
In a letter dated December 3, 1992, respondent, through its Human Resources Development
Office, informed petitioner that she was approaching her 35th year of service with the
university and was due for automatic retirement on November 18, 1993, at which time she
would be 57 years old. This was pursuant to respondent’s retirement plan for its employees
which provided that its members could be automatically retired "upon reaching the age of
65 or after 35 years of uninterrupted service to the university." Respondent required certain
documents in connection with petitioner’s impending retirement.
Petitioner emphatically insisted that the compulsory retirement under the plan was
tantamount to a dismissal and pleaded with respondent to be allowed to work until the age
of 60 because this was the minimum age at which she could qualify for suspension. But
respondent stood pat on its decision to retire her, citing "company policy."
Issue:
Whether or not respondent commit illegal dismissal by retiring petitioner solely by reason of
such provision in its retirement plan?
Ruling:
Retirement plans allowing employers to retire employees who are less than the compulsory
retirement age of 65 are not per se repugnant to the constitutional guaranty of security of
tenure. Article 287 of the Labor Code provides:
ART. 287. Retirement - Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.
By its express language, the Labor Code permits employers and employees to fix the
applicable retirement age at below 60 years.
However, after reviewing the assailed decision together with the rules and regulations of
respondent’s retirement plan, we find that the plan runs afoul of the constitutional guaranty
of security of tenure contained in Article XIII, also known as the provision on Social Justice
and Human Rights.
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the
employer and the employee whereby the latter, after reaching a certain age agrees to sever
his or her employment with the former.
The truth was that petitioner had no choice but to participate in the plan, given that the only
way she could refrain from doing so was to resign or lose her job. It is axiomatic that

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employer and employee do not stand on equal footing, a situation which often causes an
employee to act out of need instead of any genuine acquiescence to the employer. This was
clearly just such an instance.
Not only was petitioner still a good eight years away from the compulsory retirement age
but she was also still fully capable of discharging her duties as shown by the fact that
respondent’s board of trustees seriously considered rehiring her after the affectivity of her
"compulsory retirement."
As already stated, an employer is free to impose a retirement age less than 65 for as long as
it has the employees’ consent. Stated conversely, employees are free to accept the
employer’s offer to lower the retirement age if they feel they can get a better deal with the
retirement plan presented by the employer. Thus, having terminated petitioner solely on the
basis of a provision of a retirement plan which was not freely assented to by her, respondent
was guilty of illegal dismissal.
GLOBE TELECOM VS. CRISOLOGO
G.R. NO. 17644 AUGUST 10, 2007

Facts:
Respondent Jenette Marie B. Crisologo, a lawyer, joined Globe Telecom (Globe) on November
3, 1998 as a manager in its corporate legal services department. Her tasks included
negotiating, drafting and reviewing the company’s supply contracts.
On April 5, 2002, respondent (who was then pregnant) was rushed to the Makati Medical
Center due to profuse bleeding. It was later diagnosed as a possible miscarriage.
After a week-long absence, respondent reported back to work on April 12, 2002.On the same
day, she tendered her resignation letter explaining that she was advised by her doctor to
rest for the duration of her pregnancy. She also requested permission to exhaust her unused
leaves until the effective date of her resignation on May 30, 2002. Globe accepted her
resignation.
On April 30, 2002, respondent called on her immediate supervisor, petitioner Ma. Caridad
Gonzales. In the course of their conversation, petitioner Gonzales casually informed
respondent of an e-mail circulating within the company to the effect that she (respondent)
allegedly solicited money from one of the company’s suppliers. Because the e-mail was not
forwarded to her (being its subject), respondent requested a copy and an opportunity to
confront the person(s) responsible. Petitioner Gonzales declined as there was no longer any
reason to pursue the matter.
On May 2, 2002, respondent sent petitioner Gonzales a letter complaining of her "illtreatment" by the company after she submitted her resignation letter.She also confided that
she resigned only because the e-mail damaged her name and reputation. For that reason,
she requested petitioner Gonzales to issue a certification clearing her of "any wrongdoing,
misconduct or transgression."
Believing that Globe would not comply with her demands, respondent filed a complaint for
illegal dismissal against petitioners on July 3, 2002.According to respondent, petitioners fired
her on the basis of a rumor whose veracity was never proven. She was neither furnished a
copy of the e-mail nor allowed to confront the person(s) who circulated it. Petitioner
Gonzales immediately closed the matter with finality without conducting any inquiry.
Furthermore, petitioners failed not only to adduce clear and substantial proof of loss of
confidence but also to observe due processas petitioner Gonzales summarily forced her to
resign.
Petitioners, on the other hand, contended that respondent’s clear and unequivocal
resignation letter showed her unconditional desire to resign.
Issue:
Whether or not respondent was illegally dismissed by petitioner.
Ruling:
To support their contention that respondent voluntarily resigned, petitioners presented her
resignation letter dated April 12, 2002:

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This is to inform you that as per my doctor’s advice, I have to take a long rest due to a very
difficult pregnancy and other health reasons. I am therefore tendering my resignation
effective 30 May 2002 and would like to request that I be allowed to exhaust all leaves due
to me until such date. Furthermore, I hereby undertake to turn over all my pending work to
other lawyers until said effective date of my termination.
Thank you very much.
Respondent personally drafted her resignation letter in a clear, concise and categorical
language. Its content, as quoted above, confirmed her unequivocal intent to resign.
An employee of respondent’s accomplished educational background and professional
standing will not easily relinquish her legal rights unless she intends to. Respondent’s
resignation letter without doubt proved petitioners’ assertion that she voluntarily resigned
from her job.
Resignation is the voluntary act of an employee who finds herself in a situation where
shebelieves that personal reasons cannot be sacrificed in favor of the exigency of the
service and that she has no other choice but to disassociate herself from employment.
Employees resign for various reasons. A big salary is certainly no hindrance to a voluntary
cessation of employment. Human resource studies reveal that various factors (in and out of
the workplace) affect an employee’s employment decision. In this instance, respondent
would have suffered a miscarriage had she continued to work. She obviously resigned for
the sake of her child's well-being, motherhood clearly taking precedence over her job.
Coercion exists when there is a reasonable or well-grounded fear of an imminent evil upon a
person or his property or upon the person or property of his spouse, descendants or
ascendants.No such situation existed in this case.

BMG RECORDS PHILS. VS. APARECIO
G.R. NO. 153290 SEPTEMBER 5, 2007
Facts:
Petitioner BMG Records (Phils.), Inc. (BMG) is engaged in the business of selling various
audio records nationwide. On September 2, 1990, it hired private respondent Aida C.
Aparecio (Aparecio) as one of the promo girls in its Cebu branch. For working from Monday
to Sunday, she received a salary of P181.00 per day.
On May 25, 1998, Aparecio filed a complaint against BMG and its Branch Manager, Jose Yap,
Jr., co-petitioner herein, for illegal dismissal and non-payment of overtime pay, holiday pay,
premium pay for rest day, 13th month pay, service incentive leave, and separation pay.
Petitioners, however, proffer a different version of the facts. They narrate that Aparecio was
initially performing well as an employee but as years passed by she seemed to be
complacent in the performance of her job and had been comparing the salaries of promo
girls in other companies. It appeared that she was no longer interested in her job. In April
1998, Aparecio and two other promo girls, Jovelina V. Soco and Veronica P. Mutya, intimated
to their supervisor that they were intending to resign and were requesting for some financial
assistance. BMG made it clear that, as a company policy, an employee who resigns from
service is not entitled to financial assistance, but considering the length of their service and
due to humanitarian consideration it would accede to the request after they secure their
respective clearances. Forthwith, the three employees tendered their resignations, which
were accepted. When they processed the required individual clearance, it was found out that
they had incurred some shortages after inventory. Per agreement, said shortages were
deducted from the amounts due them. Thus, Soco and Mutya received their last salary, a
proportion of the 13th month pay, tax refund and financial assistance less the deductions,
and they executed their releases and quitclaims. Except for the financial assistance,
Aparecio also obtained the same yet refused to sign the release and quitclaim, protesting
the amount of P9,170.12 deducted from the financial assistance. She was adamant but BMG
stood by the previous agreement.

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Aparecio submits that fraud, undue influence, intimidation, and/or mistake were attendant
upon her resignation from BMG. As her consent was allegedly vitiated, the act of resigning
became involuntary; hence, petitioners are guilty of illegal dismissal.
Issue:
Whether or not respondent voluntarily resigned or illegally dismissed.
Ruling:
Resignation is the voluntary act of an employee who is in a situation where one believes that
personal reasons cannot be sacrificed in favor of the exigency of the service, and one has no
other choice but to dissociate oneself from employment. It is a formal pronouncement or
relinquishment of an office, with the intention of relinquishing the office accompanied by the
act of relinquishment. As the intent to relinquish must concur with the overt act of
relinquishment, the acts of the employee before and after the alleged resignation must be
considered in determining whether in fact, he or she intended to sever from his or her
employment.
Thus, this Court agrees with petitioners' contention that the circumstances surrounding
Aparecio's resignation should be given due weight in determining whether she had intended
to resign. In this case, such intent is very evident:
First, Aparecio already communicated to other people that she was about to resign to look
for a better paying job since she had been complaining that employees like her in other
companies were earning much more;
Second, prior to the submission of her resignation letter, Aparecio and two other promo girls,
Soco and Mutya, approached their supervisor, intimated their desire to resign, and
requested that they be given financial assistance, which petitioners granted on the condition
that deductions would be made in case of shortage after inventory;
Third, Aparecio, Soco, and Mutya submitted their duly signed resignation letters, which were
accepted by petitioners; and
Fourth, Aparecio already initiated the processing of her clearance; thus, she was able to
receive her last salary, 13th month pay, and tax refund but refused to receive the financial
assistance less the deductions made.
The acceptance by petitioners of Aparecio's resignation rendered the same effective. Upon
such acceptance, it may not be unilaterally withdrawn without the consent of petitioners.
When the employee later signified the intention of continuing his or her work, it was already
up to the employer to accept the withdrawal of his or her resignation. The mere fact that the
withdrawal was not accepted does not constitute illegal dismissal, the acceptance of the
withdrawal of the resignation being the employer's sole prerogative.
Certainly, what transpired here was caused by an employee's error of judgment and not by
the employer's application of means vitiating the consent to resign. It would be utterly unfair
to attribute to petitioners the commission of illegal dismissal and to impose upon them the
burden of accepting back Aparecio who unequivocally manifested her intent and willingness
to sever her employment ties.
Once an employee resigns and his resignation is accepted, he no longer has any right to the
job. If the employee later changes his mind, he must ask for approval of the withdrawal of
his resignation from his employer, as if he were re-applying for the job. It will then be up to
the employer to determine whether or not his service would be continued. If the employer
accepts said withdrawal, the employee retains his job. If the employer does not x x x the
employee cannot claim illegal dismissal for the employer has the right to determine who his
employees will be. To say that an employee who has resigned is illegally dismissed, is to
encroach upon the right of employers to hire persons who will be of service to them.
A resigned employee who desires to take his job back has to re-apply therefor, and he shall
have the status of a stranger who cannot unilaterally demand an appointment. He cannot
arrogate unto himself the same position which he earlier decided to leave. To allow him to do
so would be to deprive the employer of his basic right to choose whom to employ. Such is
tantamount to undue oppression of the employer. It has been held that an employer is free
to regulate, according to his own discretion and judgment, all aspects of employment
including hiring. The law, in protecting the rights of the laborer, impels neither the

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oppression nor self-destruction of the employer.
BLUE ANGEL MANPOWER AND SECURITY SERVICES, INC. VS. CA
G.R. NO. 161196 JULY 28, 2008

Facts:
Blue Angel, a messengerial and security agency, hired private respondents Romel Castillo,
Wilson Ciriaco, Gary Garces, and Chesterfield Mercader as security guards and detailed them
at the National College of Business and Arts (NCBA) in Cubao, Quezon City.
On April 20, 1999, Castillo and Mercader, later joined by Ciriaco and Garces, filed a
complaint for illegal deductions and other money claims against Blue Angel. Eventually, they
amended their complaint to include illegal dismissal. According to the four guards, they
were required, while still with Blue Angel, to work from 7:00 a.m. to 7:00 p.m. without
overtime and premium holiday pay, among other benefits. They also alleged receiving only
PhP 5,000 a month or PhP 166 per day and, from this amount, Blue Angel deducted PhP 100
as cash bond. They further averred that Blue Angel, when apprised of their original
complaint, illegally terminated Garces and Ciriaco on April 11 and 12, 1999, respectively,
and Castillo and Mercader on April 28, 1999. The four guards prayed for (1) payment of
backwages, wage differentials, premium and overtime pay for holidays, and 13th month pay;
(2) reimbursement of their cash bond; (3) reinstatement or separation pay; and (4)
damages.
Blue Angel, for its part, denied the charges of illegal dismissal. It alleged that, on two
occasions, the officer-in-charge (OIC) of the Security Force of NCBA, Reynaldo Dayag,
reported that the four complaining guards had, while on guard duty detail with the school,
committed several infractions, among them: insubordination, sleeping while on duty, and
absence without leave (AWOL). When summoned to explain their side on the derogatory
report, only Castillo, Ciriaco, and Garces, according to Blue Angel, showed up, but not
Mercader who had since stopped reporting for work and thus considered on AWOL.
Continuing, Blue Angel alleged that when told that they would be subjected to an
investigation, Castillo, Ciriaco, and Garces pleaded that they be allowed to resign instead.
The three, so Blue Angel claimed, then tendered their pro-forma letters of resignation
followed by handwritten resignation letters in the nature of quitclaims. To refute the guards’
claims of non-payment of what was due them, Blue Angel presented the payrolls and
vouchers from July 1997 to April 1999 that showed the four guards’ respective gross salaries
and deductions.
Issue:
Whether or not private respondents were illegally dismissed.
Ruling:
The resignations were involuntary and the termination of private respondents was illegal. We
are not unaware that the execution of the resignation letters was undisputed, but the
aforementioned circumstances of this case and the fact that private respondents filed a
complaint for illegal dismissal from employment against Blue Angel completely negate the
claim that private respondents voluntarily resigned. Well-entrenched is the rule that
resignation is inconsistent with the filing of a complaint for illegal dismissal. To constitute
resignation, the resignation must be unconditional with the intent to operate as such. There
must be clear intention to relinquish the position. In this case, private respondents actively
pursued their illegal dismissal case against Blue Angel such that they cannot be said to have
voluntarily resigned from their jobs.
With the finding that private respondents were illegally dismissed, they are entitled to
reinstatement to their positions without loss of their seniority rights and with full backwages,
inclusive of allowances, and to other benefits or their monetary equivalent computed from
the time private respondents’ compensation was withheld from them up to the time of their
actual reinstatement as provided for in Article 279 of the Labor Code.
As the law now stands, illegally dismissed employees are entitled to two reliefs, namely:
backwages and reinstatement. They are entitled to reinstatement, if viable, or
separation pay, if reinstatement is no longer feasible, and backwages. The award of one

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does not preclude the other as the Court had, in proper cases, ordered the payment of both.
Where an employee would have been entitled to reinstatement with full backwages, but
circumstances, i.e., strained relationships, make reinstatement impossible, the more
equitable disposition would be to award separation pay equivalent to at least one month
pay, or one month pay for every year of service, whichever is higher, in addition to full
backwages, inclusive of allowances, and benefits or their monetary equivalent, computed
from the time the employee’s compensation was withheld up to the time of the employee’s
actual reinstatement.
GUERZON, JR. VS. PASIG INDUSTIES, INC.
G.R. NO. 170266 SEPTEMBER 12, 2008

Facts:
Petitioners Engracio A. Guerzon, Jr., Lilian E. Cruz and Josefina O. Bauyon were employees of
respondent Pasig Industries, Inc. (PII) stationed in its Makati office. Guerzon was PII’s
export/import manager for 21 years; Cruz was the company’s chief accountant for 20 years
and Bauyon was a member of PII’s accounting staff since 1989.
In 1995, respondent Yoshikitsu Fujita informed petitioners that PII’s parent company had
decided to close the Makati office. To streamline operations, functions performed by the
Makati office would be transferred to its facilities in the Bataan Export Processing Zone. For
this reason, petitioners were given the option to resign, in which case they would be entitled
to a special separation package (SSP) equivalent to one-month basic salary for each year of
service.
Petitioners decided to resign but requested a recomputation of their respective separation
pay based on the monthly gross pay (i.e., basic pay plus all allowances). PII, through Fujita,
acceded and accordingly paid Guerzon, P548,100; Cruz, P414,500.22 and Bauyon,
P10,219.66 on September 25, 1995.
Despite voluntarily availing of the SSP, petitioners filed a complaint for illegal dismissal and
payment of separation pay, retirement benefits, leave pay and 13 th month pay against PII, its
president Masahiro Fukada and Fujita.
Issue:
Whether or not petitioners were illegally dismissed.
Ruling:
Petitioners held responsible positions in PII. Employees of their educational backgrounds and
professional standing do not easily relinquish their legal rights unless they intend to. In fact,
petitioners even bargained to improve the terms of the SSP and, after successfully doing so,
voluntarily resigned from PII.
Consequently, whether the streamlining of PII’s operations constituted an authorized cause
for petitioners’ termination became immaterial in view of their voluntary resignation.

SUAREZ, JR., ET AL. VS. NATIONAL STEEL CORP.
G.R. NO. 150180 OCTOBER 17, 2008

Facts:
Respondent National Steel Corporation was engaged in the business of manufacturing steel
products needed for pipe making, ship building, can-making and production of appliances.
Sometime in 1994, respondent suffered substantial financial losses due to an increase in the
volume of steel products manufactured by foreign countries. With this development,
respondent adopted an organizational streamlining program that resulted in the
retrenchment of seven hundred (700) employees in its main plant in Iligan City, among
whom were herein petitioners. At that time, respondent and the National Steel Labor UnionFederation of Free Workers (NASLU-FFW), the certified collective bargaining agent of
respondent’s rank-and-file employees, were negotiating for the renewal of the Collective
Bargaining Agreement (CBA) which expired on June 30, 1994.

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On July 18, 1994, respondent sent out individual notices to the seven hundred (700)
employees affected by the retrenchment, including petitioners. The notices specifically
stated that their services were terminated effective August 18, 1994 and they will each
receive a separation package in accordance with the retrenchment program. The separation
package consisted of the following: (1) separation pay equivalent to two (2) months salary
for every year of service; (2) leave balance credits; (3) 13 th month pay; and (4) uniform plus
rice subsidy differential. After having been paid their separation benefits, the employees,
including herein petitioners, each executed and signed a release and quitclaim, written in
English and containing a translation in the Visayan dialect in the same document. The
release and quitclaims were acknowledged before a notary public.
On October 27, 1994, respondent and NASLU-FFW signed a new CBA, retroactive to July 1,
1994 and effective until June 30, 1996. Pursuant thereto, the retrenched employees were
given their salary differentials, for which they executed and signed another release and
quitclaim.
Nothing was heard from the retrenched employees, until February 1997 or about two and
half years after their separation from the company, when herein petitioners wrote
respondent demanding payment of retirement benefits under the CBA. They claimed that
they were qualified for optional retirement after having rendered services for at least ten
(10) years when they were retrenched on August 18, 1994. Respondent rejected petitioners’
claim, forcing petitioners to file a complaint for payment of retirement benefits against
respondent.
For its part, respondent maintains that its retirement plan expressly prohibits the payment of
retirement benefits to employees terminated for cause. Thus, retrenched employees who
were granted their separation package are already precluded from receiving retirement
benefits. Moreover, petitioners executed valid quitclaims.
Issue:
Whether petitioners who were retrenched employees that had already received their
separation pay can still recover retirement benefits.
Ruling:
Petitioners’ entitlement to retirement benefits in addition to the separation pay they already
received would depend upon the provisions of respondent’s retirement plan and its CBA with
NASLU-FFW.
Contrary to the stance taken by petitioners, the retirement plan of respondent company
reveals that an employee who was terminated for cause is not entitled to retirement
benefits, E. Resignations and Terminations. No retirement benefits are payable in instances
of resignations or terminations for cause; provided, however, that an employee who resigns
voluntarily after he has qualified for optional early retirement under Article IV, B, 2 or 3 shall
be deemed to have opted to avail of such early retirement and paid the applicable and
corresponding retirement pay/benefit provided therein. All terminations other than for cause
will be governed by the applicable provisions of the Labor Code of the Philippines.(Emphasis
supplied)
From the foregoing, it is clear that respondent’s retirement plan explicitly prohibits the
recovery of retirement benefits in cases of terminations for cause. Here, there is no dispute
that petitioners were separated from the service for cause, as it was due to a valid
retrenchment undertaken by respondent company. Unarguably, retrenchment is recognized
as one of the authorized causes for termination of employment under Article 283 of the
Labor Code, which states:
The employer may also terminate the employment of any employee due to the installation
of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operations of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this title, by serving a written notice on the
workers and the Department of Labor and Employment at least one (1) month before the
intended date thereof. In case of termination due to the installation of labor-saving devices
or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent
to at least one (1) month pay or to at least one (1) month pay for every year of service,

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whichever is higher. In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to serious business losses
or financial reverses, the separation pay shall be equivalent to at least one (1) month pay or
at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of
at least six (6) months shall be considered as one (1) whole year.
Having been separated from employment due to an authorized cause, petitioners are barred
from receiving retirement benefits pursuant to Article X(E) of respondent’s retirement plan.
With the inclusion of such provision in the retirement plan, respondent categorically
disallows payment of retirement benefits to retrenched employees. They are only entitled to
payment of separation pay in accordance with Article 283 of the Labor Code.
We likewise uphold the CA’s finding that petitioners voluntarily executed and signed a
release and quitclaim after receiving their separation package, acknowledging full and final
payment of all benefits that they may be entitled to in relation to their employment. The
validity of quitclaims executed by laborers has long been recognized in this jurisdiction.
Indubitably, payment to petitioners of both separation pay and retirement benefits is
proscribed under Article X of respondent’s retirement plan, as well as under Article XIV of the
CBA. Both the retirement plan and the CBA are binding agreements, not being contrary to
law, morals, good customs, public order or public policy and must therefore be upheld.
Hence, petitioners’ theory that there is nothing in the retirement plan and the CBA that
prohibits them from receiving the retirement pay over and above their separation package
must obviously fail.

GOODRICH MANUFACTURING CORP. VS. ATIVO ET AL.
G.R. NO. 188002 FEBRUARY 1, 2010

Facts:
Emerlina Ativo et al., are former employees of petitioner Goodrich Manufacturing
Corporation (Goodrich) assigned as machine or maintenance operators. In the last quarter of
2004, Goodrich suffered financial constraints and gave all its employees the option to
voluntarily resign from the company. Respondents were among those who availed of that
option and were paid their separation pay. Ativo et al., executed their waivers and
quitclaims. However, they changed their minds and filed for illegal dismissal against
Goorichwith prayer for payment of their full monetary benefits before the NLRC. The Labor
Arbiter held that there was no illegal dismissal but ruled that Goodrich was still liable for the
employee’s SIL, ECOLA, and 13th month pay, and that the separation pay was insufficient.
Mutually unhappy, both parties appealed to the NLRC which reversed the LA’s decision. The
NLRC said that the considerations they received are not unreasonable, vis-à-vis the awards
granted [to] them in the assailed Decision. Notably, the awards even include the 13th month
pays for 2002 and 2003 which, by respondents’ proof appear already paid. We also noted
that complainants are not shown to have signed the deeds of waiver and quitclaim
involuntarily, without understanding the implication and consequences thereof. The case
was brought before the CA which renderred a decision in favor of Ativo et. al., holding that
they are entitled to receive their unpaid 13th month pay, SIL, and ECOLA. And so the issue is
now before the Supreme Court.
Issue:
Whether or not the release, waiver and quitclaim signed by respondents are valid and
binding; and whether respondents may still receive the deficiency amounts due them.
Ruling:
The release, waiver and quitclaim are valid and binding. Capital wins this time.
Requisites of a valid quitclaim
It is true that the law looks with disfavor on quitclaims and releases by employees who have
been inveigled or pressured into signing them by unscrupulous employers seeking to evade
their legal responsibilities and frustrate just claims of employees. In certain cases, however,
the Court has given effect to quitclaims executed by employees if the employer is able to

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prove the following requisites, to wit:
(1) the employee executes a deed of quitclaim voluntarily;
(2) there is no fraud or deceit on the part of any of the parties;
(3) the consideration of the quitclaim is credible and reasonable; and
(4) the contract is not contrary to law, public order, public policy, morals or
good customs, or prejudicial to a third person with a right recognized by
law.
Not all waivers and quitclaims are invalid as against public policy. If the agreement was
voluntarily entered into and represents a reasonable settlement, it is binding on the parties
and may not later be disowned simply because of a change of mind.
In their Comment dated October 1, 2009, respondents themselves admitted that they were
not coerced to sign the quitclaims. They, however, maintain that two (2) reasons moved
them to sign the said documents: first, they believed Goodrich was terminating its business
on account of financial hardship; and second, they thought petitioners will pay them the full
amount of their compensation.Respondents insist that they were deceived into signing the
quitclaims when they learned that they were not paid their full monetary benefits and after
discovering that the company did not really close shop, but instead only assumed a different
company name.
Quitclaims were simple, clear and unequivocal
The records of the case are bereft of any substantial evidence to show that respondents did
not know that they were relinquishing their right short of what they had expected to receive
and contrary to what they have so declared. Put differently, at the time they were signing
their quitclaims, respondents honestly believed that the amounts received by them were fair
and reasonable settlements of the amounts which they would have received had they
refused to voluntarily resign from the said company.
Respondents were not deceived
Ativo and company claim that they were deceived because petitioners did not really
terminate their business since Mr. Chua Goy had set up another company with the same line
of business as Goodrich. Such contention, however, was not proven during the hearing
before the Labor Arbiter and the NLRC. Hence, such claim is based only on respondents’
surmises and speculations which, unfortunately, can never be used as a valid and legal
ground to repudiate respondents’ quitclaims.
Considerations received were not grossly inadequate
As correctly pointed out by the NLRC, the total awards computed by the Labor Arbiter will
definitely even be lesser after deducting the 13th month pay for the years 2002 and 2003,
which have already been received by the respondents prior to the filing of their complaints,
but which the Labor Arbiter still included in his computation. The difference between the
amounts expected from those that were received may, therefore, be considered as a fair and
reasonable bargain on the part of both parties.

KOREAN AIR CO. LTD. VS. YUSON
G.R. NO. 170369 JUNE 16, 2010

Facts:
Korean Air Co., Ltd. (Korean Air) hired Adelina A.S. Yuson (Yuson) as reservations agent.
Korean Air promoted Yuson to assistant manager in 1993, and to passenger sales manager
in 1999.
Korean Air suffered a net loss of over $367,000,000. Consequently, Korean Air reduced its
budget for 2001 by 10 percent.
In order to cut costs, Korean Air offered its employees an early retirement program (ERP). In
a memorandum6dated 21 August 2001, Korean Air stated that:
“MNLSM Management, on its discretion, is hereby offering the said early
retirement program to its staff. Availing employees shall be given ONE AND A
HALF MONTHS (1.50%) [sic] salary for every year of service and other

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benefits. This rate is 50% higher than the retrenchment pay prevailing in the
CBA.”
Yuson accepted the offer for early retirement.
However, she was excluded from the ERP because she was retiring on 8 January 2002. That
the program is intended to staffs, upon discretion of management, who still have long years
left with the Company before reaching retirement age. You are already due for retirement on
January 8, 2002. This program is being implemented by the Company as a cost saving tool
to prevent further losses.
Yuson claimed that Korean Air was bound by the perfected contract and accused the
company of harassment and discrimination.
Yuson filed with the arbitration branch of the NLRC a complaint against Korean Air and Suk
for payment of benefit under the ERP
On her 60th birthday, Yuson availed of the optional retirement under Article 287 of the Labor
Code.
LA ruling: Labor Arbiter Santos denied for lack of merit Yuson’s claims for benefit under the
ERP, for moral and exemplary damages, and for attorney’s fees.
NLRC ruling: NLRC adopted the report and recommendations of Labor Arbiter Tamayo to
order Korean Air and Suk to pay Yuson her benefit under the ERP and to give her 10 Korean
Air economy tickets.
Issue:
Whether or not the claim for benefit under the ERP became moot when she availed of the
optional retirement under Article 287 of the Labor Code, as amended.
Ruling:
Yuson’s claim for benefit under the ERP became moot when she availed of the optional
retirement under Article 287 and accepted the benefit. By her acceptance of the benefit,
Yuson is deemed to have opted to retire under Article 287.
By her acceptance of retirement benefits the petitioner is deemed to have opted to retire
under the third paragraph of Article 287 of the Labor Code, as amended by R.A. No. 7641.
Thereunder he could choose to retire upon reaching the age of 60 years, provided it is before
reaching 65 years, which is the compulsory age of retirement.
CERCADO VS. UNIPROM, INC.
G.R. NO. 188154 OCTOBER 13, 2010

Facts:
Petitioner Lourdes A. Cercado (Cercado) started working for respondent UNIPROM, Inc.
(UNIPROM) on December 15, 1978 as a ticket seller assigned at Fiesta Carnival, Araneta
Center, Quezon City. Later on, she was promoted as cashier and then as clerk typist.
On April 1, 1980, UNIPROM instituted an Employees Non-Contributory Retirement Plan which
provides that any participant with twenty (20) years of service, regardless of age, may be
retired at his option or at the option of the company. The retirement plan was later on
amended on January 1, 2001 wherein UNIPROM reserved the option to retire employees who
were qualified to retire under the program.
Respondent implemented a company-wide early retirement program in 2000 for 41
employees, including petitioner who was 47 years old at that time with 22 years of
continuous service to the company. UNIPROM exercised its option under the retirement plan,
and decided to retire Cercado effective at the end of business hours on February 15, 2001.
She rejected the early retirement package offered to her and also refused to accept the
check issued to her representing her benefits from the regular retirement package.
Cercado filed a complaint with the Labor Arbiter for illegal dismissal alleging that UNIPROM
does not have a bona fide retirement plan, and even if there was, she did not consent
thereto.
Issue:
WON UNIPROM has a bona fide retirement plan; and whether petitioner was validly retired
pursuant thereto.

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Ruling:
Article 287 of the Labor Code, as amended by R.A. No. 7641, pegs the age for compulsory
retirement at 65 years, while the minimum age for optional retirement is set at 60 years. An
employer is, however, free to impose a retirement age earlier than the foregoing mandates.
This has been upheld in numerous cases as a valid exercise of management prerogative.
In this case, petitioner was retired by UNIPROM at the age of 47, after having served the
company for 22 years, pursuant to UNIPROMs Employees Non-Contributory Retirement
Plan, which provides that employees who have rendered at least 20 years of service may be
retired at the option of the company. At first blush, respondents retirement plan can be
expediently stamped with validity and justified under the all encompassing phrase
"management prerogative," which is what the CA did. But the attendant circumstances in
this case, vis-à-vis the factual milieu of the string of jurisprudence on this matter, impel us to
take a deeper look.
It is axiomatic that a retirement plan giving the employer the option to retire its employees
below the ages provided by law must be assented to and accepted by the latter, otherwise,
its adhesive imposition will amount to a deprivation of property without due process of law.
The assailed retirement plan of UNIPROM is not embodied in a CBA or in any employment
contract or agreement assented to by petitioner and her co-employees. On the contrary,
UNIPROMs Employees Non-Contributory Retirement Plan was unilaterally and compulsorily
imposed on them. Verily, petitioner was forced to participate in the plan, and the only way
she could have rejected the same was to resign or lose her job. The assailed CA Decision did
not really make a finding that petitioner actually accepted and consented to the plan. The
CA simply declared that petitioner was deemed aware of the retirement plan on account of
the length of her employment with respondent. Implied knowledge, regardless of duration,
cannot equate to the voluntary acceptance required by law in granting an early retirement
age option to an employer. The law demands more than a passive acquiescence on the part
of employees, considering that an employers early retirement age option involves a
concession of the formers constitutional right to security of tenure.
We reiterate the well-established meaning of retirement in this jurisdiction: Retirement is the
result of a bilateral act of the parties, a voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain age, agrees to sever his or her
employment with the former.
Acceptance by the employees of an early retirement age option must be explicit, voluntary,
free, and uncompelled. While an employer may unilaterally retire an employee earlier than
the legally permissible ages under the Labor Code, this prerogative must be exercised
pursuant to a mutually instituted early retirement plan. In other words, only the
implementation and execution of the option may be unilateral, but not the adoption and
institution of the retirement plan containing such option. For the option to be valid, the
retirement plan containing it must be voluntarily assented to by the employees or at least by
a majority of them through a bargaining representative.
Hence, consistent with the Courts ruling in Jaculbe, having terminated petitioner merely on
the basis of a provision in the retirement plan which was not freely assented to by her,
UNIPROM is guilty of illegal dismissal. Petitioner is thus entitled to reinstatement without loss
of seniority rights and to full backwages computed from the time of her illegal dismissal in
February 16, 2001 until the actual date of her reinstatement. If reinstatement is no longer
possible because the position that petitioner held no longer exists, UNIPROM shall pay
backwages as computed above, plus, in lieu of reinstatement, separation pay equivalent to
one-month pay for every year of service. This is consistent with the preponderance of
jurisprudence relative to the award of separation pay in case reinstatement is no longer
feasible.

Facts:

BILBAO VS SAUDI ARABIAN AIRLINES
G.R. NO. 183915 DECEMBER 14, 2011

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Bilbao was a former employee of respondent Saudia, having been hired as a Flight Attendant
on May 13, 1986 until her separation from Saudia in September 2004. During the course of
her employment, Bilbao was assigned to work at the Manila Office, although the nature of
her work as a flight attendant entailed regular flights from Manila to Jeddah, Saudi Arabia,
and back.
On August 25, 2004, the In-Flight Service Senior Manager of Saudia assigned in Manila
received an inter-office Memorandum dated August 17, 2004 from its Jeddah Office
regarding the transfer of 10 flight attendants from Manila to Jeddah effective September 1,
2004. The said memorandum explained that such transfer was made "due to operational
requirements." Bilbao was among the 10 flight attendants to be transferred.
Bilbao initially complied with the transfer order and proceeded to Jeddah for her new
assignment. However, on September 7, 2004, she opted to resign and relinquish her post by
tendering a resignation letter.
On October 28, 2004, Bilbao executed and signed an Undertaking similar to that of a
Receipt, Release and Quitclaim wherein she acknowledged receipt of a sum of money as "full
and complete end-of-service award with final settlement and have no further claims
whatsoever against Saudi Arabian Airlines."
The Labor Arbiter found that Saudia illegally dismissed Bilbao, while the NLRC and the Court
of Appeals are in agreement that Bilbao voluntarily tendered her resignation.
Issue:
(1) Whether or not Bilbao was illegally dismissed thus entitled to her claims for
reinstatement, payment of full backwages; moral, exemplary and actual damages; and
attorney's fees.
(2) Whether or not Undertaking signed by Bilbao was validly and voluntarily executed.
Ruling:
(1)
After a review of the case, we uphold the findings of the Court of Appeals that Bilbao
voluntarily resigned from her employment with Saudia.
Her resignation letter and
undertaking that evidenced her receipt of separation pay, when taken together with her
educational attainment and the circumstances surrounding the filing of the complaint for
illegal dismissal, comprise substantial proof of Bilbao's voluntary resignation.
Resignation is the voluntary act of an employee who is in a situation where one believes that
personal reasons cannot be sacrificed in favor of the exigency of the service, and one has no
other choice but to dissociate oneself from employment. It is a formal pronouncement or
relinquishment of an office, with the intention of relinquishing the office accompanied by the
act of relinquishment. As the intent to relinquish must concur with the overt act of
relinquishment, the acts of the employee before and after the alleged resignation must be
considered in determining whether he or she, in fact, intended to sever his or her
employment.
In the instant case, Bilbao tendered her resignation letter a week after her transfer to the
Jeddah office. In the said letter, Bilbao expressed her gratitude for the support which Saudia
had given her for her eighteen years of service. Clearly, her use of words of appreciation
and gratitude negates the notion that she was forced and coerced to resign. Besides, the
resignation letter was hand-written by Bilbao on a Saudia form and was in English, a
language she is conversant in.
Additionally, instead of immediately filing a complaint for illegal dismissal after she was
allegedly forced to resign, Bilbao executed an Undertaking in favor of Saudia, wherein she
declared that she received her full and complete end-of-service award with final settlement.
What is more, Bilbao waited for more than 10 months after her separation from Saudia to file
a complaint for illegal dismissal.
Even assuming that Saudia prepared the form in which Bilbao wrote her resignation letter as
claimed, this Court is not convinced that she was coerced and intimidated into signing it.
Bilbao is no ordinary employee who may not be able to completely comprehend and realize
the consequences of her acts. She is an educated individual. It is highly improbable that
with her long years in the profession and her educational attainment, she could be tricked
and forced into doing something she does not intend to do. Under these circumstances, it

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can hardly be said that Bilbao was coerced into resigning from Saudia.
Besides, Bilbao did not adduce any competent evidence to prove that she was forced or
threatened by Saudia. It must be remembered that for intimidation to vitiate consent, the
following requisites must be present: (1) that the intimidation caused the consent to be
given; (2) that the threatened act be unjust or unlawful; (3) that the threat be real or
serious, there being evident disproportion between the evil and the resistance which all men
can offer, leading to the choice of doing the act which is forced on the person to do as the
lesser evil; and (4) that it produces a well-grounded fear from the fact that the person from
whom it comes has the necessary means or ability to inflict the threatened injury to his
person or property. In the instant case, Bilbao did not prove the existence of any one of
these essential elements. Bare and self-serving allegations of coercion or intimidation,
unsubstantiated by evidence, do not constitute proof to sufficiently support a finding of
forced resignation. It would be utterly unfair and unjust to hold that Saudia illegally
dismissed Bilbao and to impose upon it the burden of accepting back Bilbao who
unequivocally and voluntarily manifested her intent and willingness to sever her
employment ties.
(2)
Periquet v. National Labor Relations Commission, held that:
“Not all waivers and quitclaims are invalid as against public policy. If the agreement was
voluntarily entered into and represents a reasonable settlement, it is binding on the parties
and may not later be disowned simply because of a change of mind. It is only where there is
clear proof that the waiver was wangled from an unsuspecting or gullible person, or the
terms of settlement are unconscionable on its face, that the law will step in to annul the
questionable transaction. But where it is shown that the person making the waiver did so
voluntarily, with full understanding of what he was doing, and the consideration for the
quitclaim is credible and reasonable, the transaction must be recognized as a valid and
binding undertaking. x x x.”
This Court quotes with approval the finding of the NLRC, to wit:
Having signed the waiver, it is hard to conclude that [Bilbao was] merely forced by the
necessity to execute the "undertaking." [Bilbao is] not [a] gullible nor unsuspecting [person]
who can easily be tricked or inveigled and, thus, need the extra protection of law. [She is a]
well-educated and highly experienced flight [attendant]. The "undertaking" executed by
[Bilbao is] therefore considered valid and binding on [her] and [Saudia].
Due to [her] voluntary resignation, [Bilbao is] actually not entitled to any separation pay
benefits. Thus, the financial package given to [her] is more than sufficient consideration for
[her] execution of the "undertaking."
SAN MIGUEL PROPERTIES PHILIPPINES, INC, VS. GUCABAN
G.R. NO. 153982 JULY 18, 2011
Facts:
Respondent Gucaban, civil engineer, joined the workforce of petitioner San Miguel Properties
Philippines, Inc. (SMPI) in 1991. Initially engaged as a construction management specialist,
she, by her satisfactory performance on the job, was promoted in 1994 and 1995,
respectively, to the position of technical services manager, and then of project development
manager. As project development manager, she also sat as a member of the company's
management committee. She had been in continuous service in the latter capacity until her
severance from the company in February 1998.
In her complaint for illegal dismissal, Gucaban alleged that her separation from service was
practically forced upon her by management. She claimed that on January 27, 1998, she was
informed by SMPI's President and Chief Executive Officer that the company was planning to
reorganize its manpower in order to cut on costs, and that she must file for resignation or
otherwise face termination.
Gucaban complained of the ugly treatment which she had since received from Gonzalez and
the management supposedly on account of her refusal to sign the resignation letter. She
claimed she had been kept off from all the meetings of the management committee. Her

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performance of duties had been reported to be negligent and unsatisfactory. She found said
report to be unfounded and unfair, because no less than the company's Vice-President for
Property Management in a subsequent memorandum, had actually vouched for her
competence and efficiency on the job. It was supposedly the extreme humiliation and
alienation that impelled her to submit a signed resignation letter on February 18, 1998.
Gucaban surmised that she had merely been tricked by SMPI into filing her resignation letter
because it never actualized its reorganization and streamlining plan; on the contrary, SMPI
allegedly expanded its employee population and also made new appointments and
promotions to various other positions. She felt that she had been dismissed without cause
and, hence, prayed for reinstatement and payment of backwages and damages.
The Labor Arbiter dismissed the complaint for lack of merit, finding no proven force,
coercion, intimidation or any other circumstance which could otherwise invalidate Gucaban's
resignation. He likewise dismissed her claim that SMPI merely feigned the necessity of
reorganization in that while the company indeed made new other appointments following
Gucaban's resignation, still, this measure was an implementation of its reorganization plan.
Gucaban appealed to the NLRC which reversed the ruling of the Labor Arbiter. Finding that
Gucaban has been illegally dismissed, it ordered her reinstatement without loss of seniority
rights and with full backwages, as well as ordered the award of damages and attorney's
fees. It elevated the matter to the Court of Appeals via a petition for certiorari.
The Court of Appeals issued the assailed Decision finding partial merit in the petition. It
affirmed the NLRC's finding of illegal/constructive dismissal, but modified the monetary
award.
Issue:
Whether or not the resignation of Gucaban was tendered voluntarily.
Ruling:
Resignation — the formal pronouncement or relinquishment of a position or office — is the
voluntary act of an employee who is in a situation where he believes that personal reasons
cannot be sacrificed in favor of the exigency of the service, and he has then no other choice
but to disassociate himself from employment. The intent to relinquish must concur with the
overt act of relinquishment; hence, the acts of the employee before and after the alleged
resignation must be considered in determining whether he in fact intended to terminate his
employment. In illegal dismissal cases, fundamental is the rule that when an employer
interposes the defense of resignation, on him necessarily rests the burden to prove that the
employee indeed voluntarily resigned. Guided by these principles, we agree with the Court
of Appeals that with the availing evidence, SMPI was unable to discharge this burden.
The question of whether or not there was such reorganization plan in place at the time of
Gucaban's separation from the company, is material to the determination of whether her
resignation was of her own volition as claimed by SMPI, inasmuch as the facts of this case
tell that Gucaban could not have filed for resignation had Gonzalez not communicated to her
the alleged reorganization plan for the company.
True, while a reorganization of SMPI's corporate structure might have indeed taken place as
shown by the notices, nevertheless, it happened only in the latter part of 1999 — or more
than a year after Gucaban's separation from the company and incidentally, after she filed
the instant complaint.
It is not difficult to see that, shortly prior to and at the time of Gucaban's alleged resignation,
there was actually no genuine corporate restructuring plan in place as yet. In other words,
although the company might have been suffering from losses due to market decline as
alleged, there was still no concrete plan for a corporate reorganization at the time Gonzalez
presented to Gucaban the seemingly last available alternative options of voluntary
resignation and termination by abolition of her office.
It is then understandable for Gucaban, considering the attractive financial package which
SMPI admittedly offered to her, to opt for resignation instead of suffer termination — a
consequence the certainty of which she was made to believe.
As respondent was dismissed without cause, the NLRC ruling is correct that she is entitled to
reinstatement and backwages, the latter to be computed from her dismissal up to the time

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of her actual reinstatement pursuant to Art. 279 of the Labor Code.
However, there is the possibility that Gucaban's rejoining SMPI's workforce would only
exacerbate the tension and strained relations which in the first place had given rise to this
incident. Thus, the ruling of the Court of Appeals is modified in this respect. In lieu of
reinstatement, an award of separation pay is in order, equivalent to one (1) month salary for
every year of service.

SKIPPERS UNITED PACIFIC VS. DOZA ET. AL.
G.R. NO. 175558 FEBRUARY 8, 2012
Facts:
Petitioner deployed De Gracia, Lata and Aprosta to work on board the vessel MV Wisdom
Star.
On December 3 1998, Skippers alleges that De Garcia smelling strongly of alcohol, went to
the cabin of Gabriel Oleszek, MV Wisdom Stars’ Master. Skippers claims that he was rude
and shouted noisily to the master. De Gracia left the master’s cabin after a few minutes and
was heard shouting very loudly somewhere down the corridors. The incident was evidenced
by the Captain’s Report sent on said date.
Furthermore, Skippers also claim that on January 22, 1999, Aprosta, De Gracia, Lata and
Daza arrived in the master’s cabin and demanded immediate repatriation because they
were not satisfied with the ship. De Gracia, et al. threatened that they may become crazy
any moment and demanded for all outstanding payments due to them. The incident is
evidenced by a telex of Cosmoship MV Wisdom to skippers but had conflicting dates.
De Gracia claims that Skippers failed to remit their respective allotments, compelling them
to vent their grievances with the Romanian Seafarers Union. On January 28, 1999, the
Filipino seafarers were unceremoniously discharged and immediately repatriated. Upon
arrival in the Philippines, they filed a complaint for illegal dismissal with the LA.
The LA dismissed the seafarers’ complaint as the seafarers’ demand for immediate
repatriation due to the dissatisfaction with the ship is considered a voluntary pre-termination
of employment. Such act was deemed akin to resignation recognized under Article 285 of
the LC. The LA gave credence to the telex of the master’s report that the seafarers indeed
demanded immediate repatriation.
The NLRC agreed with the LA’s decision.
The CA however reversed the LA’s and the NLRC’s decision. The Court deemed the telex
message as a self-serving document that does not satisfy the requirement of substantial
evidence, or that amount of relevant evidence which a reasonable mind might accept as
adequate to justify the conclusion that petitioners indeed voluntarily demanded their
immediate repatriation.
Aggrieved, Skippers appeals the case with the Supreme Court.
Issue:
WON the seafarer’s demand for immediate repatriation can be considered an act of
voluntary resignation.
Ruling:
For a worker's dismissal to be considered valid, it must comply with both procedural and
substantive due process. The legality of the manner of dismissal constitutes procedural due
process, while the legality of the act of dismissal constitutes substantive due process.
Procedural due process in dismissal cases consists of the twin requirements of notice and
hearing. The employer must furnish the employee with two written notices before the
termination of employment can be effected: (1) the first notice apprises the employee of the
particular acts or omissions for which his dismissal is sought; and (2) the second notice
informs the employee of the employer's decision to dismiss him. Before the issuance of the
second notice, the requirement of a hearing must be complied with by giving the worker an
opportunity to be heard. It is not necessary that an actual hearing be conducted.
Substantive due process, on the other hand, requires that dismissal by the employer be

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made under a just or authorized cause under Articles 282 to 284 of the Labor Code.
In this case, there was no written notice furnished to De Gracia, et al., regarding the cause of
their dismissal. Cosmoship furnished a written notice (telex) to Skippers, the local manning
agency, claiming that De Gracia, et al., were repatriated because the latter voluntarily preterminated their contracts. This telex was given credibility and weight by the Labor Arbiter
and NLRC in deciding that there was pre-termination of the employment contract "akin to
resignation" and no illegal dismissal. However, as correctly ruled by the CA, the telex
message is "a biased and self-serving document that does not satisfy the requirement of
substantial evidence." If, indeed, De Gracia, et al., voluntarily pre-terminated their contracts,
then De Gracia, et al., should have submitted their written resignations.
Article 285 of the Labor Code recognizes termination by the employee of the employment
contract by "serving written notice on the employer at least one (1) month in advance."
Given that provision, the law contemplates the requirement of a written notice of
resignation. In the absence of a written resignation, it is safe to presume that the employer
terminated the seafarers. In addition, the telex message relied upon by the Labor Arbiter
and NLRC bore conflicting dates of 22 January 1998 and 22 January 1999, giving doubt to
the veracity and authenticity of the document. In 22 January 1998, De Gracia, et al., were
not even employed yet by the foreign principal.

AUZA, JR. ET AL. VS. MOL PHILS., INC.
G.R. NO. 175481 NOVEMBER, 21, 2012
Facts:
Petitioners were employees of MOL Phils., a common carrier engaged in transporting cargoes
to and from the different parts of the world. Petitioners tendered their resignation, and they
received their separation pay and monetary value of their leave credits, 13 th month pay, and
other benefits. After which, they executed a Release and Quitclaims and then issued a
separation clearance. However, 15 months after the severance of their employment,
petitioners filed a complaint for illegal dismissal. They alleged that their consent to resign
was not voluntarily given but was instead obtained through mistake and fraud. They claimed
that they were led to believe that MOL's Cebu branch would be downsized into a mere
skeletal force due to alleged low productivity and profitability volume. Pressured into
resigning prior to the branch's closure as they might be denied separation pay, petitioners
were constrained to resign. Later, they discovered that the planned downsizing of the Cebu
branch was a mere malicious scheme to oust them and to accommodate Tiutan's own
people. This is because after they were duped to resign, additional employees were hired by
the management as their replacement; they moved to a bigger office; and more telephone
lines were installed.
Issue:
WON there was illegal dismissal.
Ruling:
NO. "Resignation is the formal pronouncement or relinquishment of an office." The overt act
of relinquishment should be coupled with intent to relinquish, which intent could be inferred
from the acts of the employee before and after the alleged resignation. It appears that
petitioners, on their own volition, decided to resign from their positions after being informed
of the management's decision that the Cebu branch would eventually be manned by a mere
skeletal force. As proven by the email correspondences presented, petitioners were fully
aware and had, in fact, acknowledged that Cebu branch has been incurring losses and was
already unprofitable to operate. Note that there was evidence produced to prove that
indeed the Cebu branch's productivity had deteriorated as shown in a Profit and Loss
Statement for the years 2001 and 2002. As aptly observed by the CA, no element of force
can be deduced from their letters of resignation as the same even contained expressions of
gratitude and thus contradicting their allegations that same were prepared by their
employer. Petitioners aver that right after receiving their separation pay, they found out that

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the Cebu branch was not closed but merely transferred to a bigger office and staffed by
newly hired employees. Notably, however, despite such knowledge, petitioners did not
immediately contest their resignations but waited for more than a year or nearly 15 months
before contesting them. This negates their claim that they were victims of deceit.
GAN VS. GALDERMA PHILIPPINES, INC.
G.R. NO. 177167 JANUARY 17, 2013

Facts:
Galderma is engaged in the business of selling, marketing, and distribution of Cetaphil Brand
Product Lines (CBPL) that include Cetaphil liquid and bar cleansers, and pharmaceutical
products, such as Locetar, Benzac and other prescription drugs. Nelson Gan was hired by
Galderma as Product Manager for its Customer Products Division to handle the marketing of
CBPL. Gan received a Fully Effective rating for his Overall performance for the first year.
Galderma surpassed their forecasted sales to the extent that it almost reached a 100
percent increase. The increase was due to the excellent performance of Gan specifically on
its marketing skills. The management gave Gan additional product management
responsibilities in which it provided Gan with product knowledge training on Benzac and
Locetar brands in December 2001. However, on April 11, 2002, Gan tendered his resignation
letter which was accepted by the management. Three months after the severance of his
employment, Gan filed a complaint for illegal constructive dismissal against Galderma. He
alleged that, he was unfairly and falsely accused of being remiss in his duties as Product
Manager. That he was lambasted by the General Manager Veneracion for his alleged
negative work behavior and for his poor performance, and that he was required to
voluntarily resign by Veneracion, and that his incentive scheme was revised which lowered
its benifits. On the other hand, Galderma on its side alleged that Veneracion did not lambast
him or insinuate that Gan should resign from Galderma. It was alleged also that Gan had a
change of attitude from the time the management decided to include the Benzac and
Locetar brands under his responsibility. Despite the fact that the company provided [Gan]
with product knowledge training on the said brands, he initially refused to accept the
additional assignment. Labor arbiter and NLRC ruled in favor of Galderma.
Issue:
WON there was illegal dismissal.
Ruling:
NO. To begin with, constructive dismissal is defined as quitting or cessation of work because
continued employment is rendered impossible, unreasonable or unlikely; when there is a
demotion in rank or a diminution of pay and other benefits. It exists if an act of clear
discrimination, insensibility, or disdain by an employer becomes so unbearable on the part
of the employee that it could foreclose any choice by him except to forego his continued
employment. There is involuntary resignation due to the harsh, hostile, and unfavorable
conditions set by the employer. The test of constructive dismissal is whether a reasonable
person in the employee's position would have felt compelled to give up his
employment/position under the circumstances. On the other hand, "[r]esignation is the
voluntary act of an employee who is in a situation where one believes that personal reasons
cannot be sacrificed in favor of the exigency of the service, and one has no other choice but
to dissociate oneself from employment. It is a formal pronouncement or relinquishment of an
office, with the intention of relinquishing the office accompanied by the act of
relinquishment. As the intent to relinquish must concur with the overt act of relinquishment,
the acts of the employee before and after the alleged resignation must be considered in
determining whether he or she, in fact, intended to sever his or her employment."
Since Gan submitted a resignation letter, it is incumbent upon him to prove with clear,
positive, and convincing evidence that his resignation was not voluntary but was actually a
case of constructive dismissal; that it is a product of coercion or intimidation. He has to
prove his allegations with particularity. What the records of this case reveal is that Gan
deliberately wrote and filed a resignation letter that is couched in a clear, concise, and

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categorical language. Its content confirmed his unmistakable intent to resign. The
resignation letter indicates that he was resigning "to pursue the establishment of [his] own
business or explore opportunities with other companies." The reasons stated for
relinquishing his position are but logical options for a person of his experience and standing.
The instances of "harassment" alleged by Gan are more apparent than real. Aside from the
need to treat his accusations with caution for being self-serving due to lack of substantial
documentary or testimonial evidence to corroborate the same, the acts of "harassment," if
true, do not suffice to be considered as "peculiar circumstances" material to the execution of
the subject resignation letter. First, the words allegedly uttered by Veneracion which asked
Gan to "reconsider his stay," "make [his] move," or that "[Galderma] will be better off
without him,"are ambivalent and susceptible of varying interpretations depending on one's
feelings, bias, and emotional threshold. All these are subjective and highly speculative or
even presumptuous. Second, Gan repeatedly boasts of his "excellent performance" in
and "immense contribution" to Galderma's success. If that is the case, his proper mindset
towards Veneracion's attacks on his purported work ethics (such as "slow," "lacking in
initiative," "uncooperative," "negative attitude," "remiss in duties as product manager,"
"negative work behaviour," "poor performance," "incompetence," "distraction/liability in
Galderma") should have been to simply brush them aside and continue doing what he is
supposed to do as the product manager of CBPL, Locetar and Benzac brands. His
oversensitivity, which is rather surprising for an experienced sales and marketing manager
who should have been so used to customer rejection or indifference and to superior's
assertive or temperamental side due to constant pressure of keeping up and beating market
competition, would not help him make a case. Third, the revision of Gan's 2002 incentive
scheme cannot be considered as a form of harassment. The change is not a diminution of
benefits, since Gan would have also received the same sum if he achieved the desired
targets for the Locetar and Benzac brands, the two new products which were added under
his watch. Lastly, he also appears to have a good professional track record that highlights
his marketability. At the time he resigned, he had more than a decade of experience in sales
and marketing with expertise in product management. Indeed, it would be absurd to assume
that he did not understand the full import of the words he used in his resignation letter and
the consequences of executing the same.

PADILLO VS. RURAL BANK OF NABUNTURAN, INC.
G.R. NO. 199338 JANUARY 21, 2013

Facts:
Padillo was employed by respondent bank as SA bookkeeper. The bank took out insurance
plans with Philam life for all its employees in anticipation of its possible closure and the
concomitant severance of its personnel. On October 14, 2004, Mark Oropeza, President of
the Bank, bought majority shares of stocks of the bank and took over its management
brought about its gradual rehabilitation. The bank’s liquidity was eventually regained. During
2007, Padillo suffered a mild stroke due to hypertension which consequently impaired his
ability to effectively pursue his work. On September 10, 2007, he wrote a letter addressed to
respondent Oropeza expressing his intention to avail of an early retirement package. Despite
several follow-ups, his request remained unheeded. Padillo resigned, at the age of fifty-five
due to his poor and failing health. He did not received his claimed retirement benefits, thus
he filed a complaint for the recovery of the unpaid retirement benefits. He asserted, among
others, that the Bank had adopted a policy of granting its aging employees early retirement
packages, pointing out that one of his co-employees, Nenita Lusan (Lusan), was accorded
retirement benefits in the amount of P348,672.72 when she retired at the age of only fiftythree (53).
Issue:
WON Padillo is entitled to retirement benefits.

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Ruling:
NO. The Labor Code provision on termination on the ground of disease under Article
297 does not apply in this case, considering that it was the petitioner and not the Bank who
severed the employment relations. As borne from the records, the clear import of Padillo's
September 10, 2007 letter and the fact that he stopped working before the foregoing date
and never reported for work even thereafter show that it was Padillo who voluntarily retired
and that he was not terminated by the Bank. Art. 300.Retirement. — Any employee may be
retired upon reaching the retirement age established in the collective bargaining agreement
or other applicable employment contract. In the absence of a retirement plan or
agreement providing for retirement benefits of employees in the establishment,
an employee upon reaching the age of sixty (60) years or more, but not beyond
sixty-five (65) years which is hereby declared the compulsory retirement age, who has
served at least five (5) years in the said establishment, may retire and shall be entitled
to retirement pay equivalent to at least one-half (1/2) month salary for every year of
service, a fraction of at least six (6) months being considered as one whole year. Simply
stated, in the absence of any applicable agreement, an employee must (1) retire when he is
at least sixty (60) years of age and (2) serve at least (5) years in the company to entitle
him/her to a retirement benefit of at least one-half (1/2) month salary for every year of
service, with a fraction of at least six (6) months being considered as one whole year.
Notably, these age and tenure requirements are cumulative and non-compliance with one
negates the employee's entitlement to the retirement benefits under Article 300 of the
Labor Code altogether.
In this case, it is undisputed that there exists no retirement plan, collective bargaining
agreement or any other equivalent contract between the parties which set out the terms
and condition for the retirement of employees, with the sole exception of the Philam Life
Plan which premiums had already been paid by the Bank. Neither was it proven that there
exists an established company policy of giving early retirement packages to the Bank's
aging employees. In the case of Metropolitan Bank and Trust Company v. National Labor
Relations Commission, it has been pronounced that to be considered a company practice,
the giving of the benefits should have been done over a long period of time, and must be
shown to have been consistent and deliberate. Unfortunately, while Padillo was able to
comply with the five (5) year tenure requirement — as he served for twenty-nine (29) years
— he, however, fell short with respect to the sixty (60) year age requirement given that he
was only fifty-five (55) years old when he retired. Therefore, without prejudice to the
proceeds due under the Philam Life Plan, petitioners' claim for retirement benefits must be
denied.

Facts:

INTEL TECHNOLOGY PHILS INC. VS. NLRC ET AL
G.R. NO. 200575. FEBRUARY 5, 2014

Private respondent Jeremias Cabiles (Cabiles) was hired by petitioner Intel Technology
Philippines, Inc. (Intel Phil) in April 16, 1997. Throgh the years, Cabiles was promoted several
times and was also assigned to Intel Arizona and Intel Chengdu. He later applied for a
position in Intel Hong Kong (Intel HK). In December of 2006, Cabiles received an offer by
Intel HK for the position of Finance Manager. Before accepting such offer, Cabiles inquired
with Intel Phil through an email as to the consequences of him accepting the offer,
specifically on his retirement benefits from Intel Phil. Intel Phil, through Penny Gabronino,
replied to Cabiles that he is not yet eligible for the retirement plan as he has not reached the
minimum 10 years of service with them (just over 9 years of service) and such counting of
the period will be suspended if he does indeed transfer to Intel HK but will be continued if he
decides to work for Intel Phil again in the future. Despite such, Cabiles signed the job offer

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on January 31, 2007.
On March 8, 2007, Intel Phil issued his “Intel Final Pay Separation Voucher” to which he
accepted and executed a Waiver and Quitclaim in favor of Intel Phil. On September8, 2007,
after 7 months of employment in Intel HK, he resigned. About 2 years after, or on August 18,
2009, he filed a Complaint for non-payment of retirement benefits against Intel Phil before
the NLRC RAB-IV.
The LA ordered Intel Phil to pay the retirement pay to Cabiles holding that he did not sever
his employment with Intel Phil when he moved to Intel HK, similar to when he was assigned
at Intel Arizona and Intel Chengdu. The NLRC affirmed the LA decision. The CA affirmed the
findings of the NLRC.
Issue:
Whether or not the transfer of Cabiles to Intel HK was tantamount to resignation from Intel
Phil.
Ruling:
The petition is granted and the decision of the CA is reversed and set aside and Cabiles is
ordered to restitute to petitioner whatever amount he has received.
Resignation is the formal relinquishment of an office, the overt act of which is coupled with
an intent to renounce. This intent could be inferred from the acts of the employee
before and after the alleged resignation.
In this case, Cabiles, while still on a temporary assignment in Intel Chengdu, was offered by
Intel HK the job of a Finance Manager. The words he used in his inquiry email — local hire,
close, clearance — denote nothing but his firm resolve to voluntarily disassociate himself
from Intel Phil. and take on new responsibilities with Intel HK. Despite a non-favorable reply
as to his retirement concerns, Cabiles still accepted the offer of Intel HK. His acceptance of
the offer meant letting go of the retirement benefits he now claims as he was informed
through email correspondence that his 9.5 years of service with Intel Phil. would not be
rounded off in his favor.
The continuity, existence or termination of an employer-employee relationship in a typical
secondment contract or any employment contract for that matter is measured by the
following yardsticks: 1. the selection and engagement of the employee; 2. the payment of
wages; 3. the power of dismissal; and 4. the employer's power to control the employee's
conduct.
As applied, all of the above benchmarks ceased upon Cabiles' assumption of duties with
Intel HK on February 1, 2007. Intel HK became the new employer. It provided Cabiles his
compensation. Cabiles then became subject to Hong Kong labor laws, and necessarily, the
rights appurtenant thereto, including the right of Intel HK to fire him on available grounds.
Lastly, Intel HK had control and supervision over him as its new Finance Manager. Evidently,
Intel Phil. no longer had any control over him.
Although in various instances, his move to Hong Kong was referred to as an "assignment," it
bears stressing that it was categorized as a "permanent transfer." In Sta. Maria v.
Lopez, the Court held that "no permanent transfer can take place unless the officer
or employee is first removed from the position held, and then appointed to
another position." Undoubtedly, Cabiles' decision to move to Hong Kong required the
abandonment of his permanent position with Intel Phil. in order for him to assume a position
in an entirely different company. Clearly, the "transfer" was more than just an

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assignment. It constituted a severance of Cabiles' relationship with Intel Phil., for the
assumption of a position with a different employer, rank, compensation and benefits.

Facts:

SUTHERLAND & GLOBAL SERVICES PHILS INC., VS. LABRADOR
G.R. NO. 193107. MARCH 24, 2014

In August 2006, Sutherland hired Labrador as one of its call center agents with the main
responsibility of answering carious queries and complaints through phoned-in calls. In his
two years of working at Sutherland, Labrador committed several infractions. But it was only
on June 17, 2008 that Labrador was finally charged with violation for transgressing the "NonCompliance Sale Attribute" policy clause stated in the Employee Handbook. Labrador
created a second account for a customer which charged the same customer twice by using
the credit card number given supposedly only for verification purposes.
Under Sutherland's Employee Handbook, Labrador's action is classified as an act of
dishonesty or fraud. On May 24, 2008, Sutherland sent Labrador a Notice to Explain in
writing why he should not be held administratively liable. On May 28, 2008, an
administrative hearing was conducted that took into consideration Labrador's past
infractions. After investigation, a recommendation was issued finding Labrador guilty of
violating the Employee Handbook due to gross or habitual neglect of duty.
On June 17, 2008, Labrador submitted his resignation letter. On October 27, 2008, Labrador
filed a complaint for constructive/illegal dismissal before the NLRC.
On February 27, 2009, the LA dismissed the complaint for lack of merit. The LA found just
cause to terminate Labrador's employment, and that his resignation letter had been
voluntarily executed. The NLRC reversed the LA's ruling on May 21, 2009.
The CA affirmed the NLRC’s finding of illegal dismissal. It ruled that Sutherland's decision to
terminate Labrador's services was the proximate cause of his resignation; the resignation
letter was submitted solely for the purpose of avoiding any derogatory record that would
adversely affect his future employment. In effect, he cannot be deemed to have voluntarily
resigned because he was forced to relinquish his position in order to avoid the inevitable
termination of employment.
Issue:
Whether or not Labrador’s resignation was a valid termination of his employment.
Ruling:
The appeal is granted and the decision of the CA is reversed and set aside and the complaint
for illegal dismissal is dismissed.
In the evidence leading to Labrador's dismissal — evidence that Labrador had acknowledged
to have received, thus binding him to its terms — no dispute exists that Labrador committed
several infractions. In fact, the final infraction that brought on his termination was actually a
repetition of the first offense.
The first offense (committed on September 24, 2007) already gave rise to a "Last Written
Warning" with the statement that it was a serious offense, constituting neglect of duty for
deviating from the program/department's standard operating procedures. Under this clear
warning, a second similar offense would necessarily lead to his dismissal;

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otherwise the purpose of a "Last Written Warning" would have been negated.
The failure to faithfully comply with the company rules and regulations is
considered to be a just cause in terminating one's employment, depending on the
nature, severity and circumstances of non-compliance. "An employer 'has the right to
regulate, according to its discretion and best judgment, all aspects of employment, including
work assignment, working methods, processes to be followed, working regulations, transfer
of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of
workers.'"
It was within Sutherland's prerogative to terminate Labrador's employment when he
committed a serious infraction and, despite a previous warning, repeated it. To Sutherland's
credit, it duly complied with the procedural requirement in dismissing an employee; it clearly
observed both substantive and procedural due process. Its action was based on a just and
authorized cause, and the dismissal was effected after due notice and hearing. But before
Sutherland could finally pronounce its verdict, Labrador submitted his resignation
letter, impelled no doubt, as Sutherland alleged, by the need to protect his
reputation and his future employment chances.
The issue of whether the resignation letter was voluntarily executed is now moot. Even if
Labrador had not submitted his resignation letter, Sutherland could still not be
held liable for constructive dismissal given the existing just cause to terminate
Labrador's employment.

CHIANG KAI SHEK COLLEGE ET AL., VS. TORRES
G.R. NO. 189456. APRIL 2, 2014
Facts:
Respondent had been employed as a grade school teacher of the school from July 1970 until
31 May 2003. She was accused of leaking a copy of a special quiz given to Grade 5 students
in HEKASI (Heograpiya, Kasaysayan at Sibika (Geography, History and Civics)). Ms. Benabese
narrated that after giving a special quiz, she borrowed the book of one of her students,
Aileen Regine M. Anduyan (Aileen), for the purpose of making an answer key. When she
opened Aileen's book, a piece of paper fell. Said paper turned out to be a copy of the same
quiz she had just given and the same already contained answers.
Ms. Benabese informed the school's Assistant Supervisor Mrs. Gloria Caneda (Mrs. Caneda)
about the incident. Mrs. Caneda conferred with Assistant Supervisor Encarnacion Koo (Mrs.
Koo), who was in charge of the HEKASI area, and Supervisor Luningning Tibi (Ms. Tibi). Mrs.
Koo confronted respondent, who had initially denied leaking the test paper but later on
admitted that she gave the test paper to Mrs. Teresita Anduyan (Mrs. Anduyan), her coteacher and the mother of Aileen. Respondent and Mrs. Anduyan were both directed to
submit their written statement on the incident.
On 5 August 2002, Mrs. Koo, Mrs. Caneda and Ms. Tibi executed a written statement stating
that when confronted by Mrs. Koo, respondent initially denied leaking a copy of the quiz but
later on admitted to doing the same. An administrative hearing was conducted on 28 August
2002 wherein respondent and Mrs. Anduyan were asked questions by the Investigating
Committee relative to the leakage of test paper. On 30 August 2002, the Investigating
Committee held a meeting and found respondent and Mrs. Anduyan guilty of committing a
grave offense of the school policies by leaking a special quiz. As shown in the Minutes of the
Meeting on 30 August 2002, the Committee decided to impose the penalty of one-month

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suspension without pay on respondent and forfeiture of all the benefits scheduled to be
given on Teacher's Day.
The Investigating Committee had actually decided to terminate respondent and had in fact
prepared a memorandum of termination, but respondent allegedly pleaded for a
change of punishment in a short letter dated 5 September 2002, to wit: “Request for
change of punishment from termination to suspension and I am resigning at the end of the
school year. - Mrs. Rosalinda M. Torres” Petitioners acceded to the request and suspended
respondent and Mrs. Anduyan effective 16 September to October 2002. The duo was
directed to report to work on 4 November 2002. Respondent continued her employment
from 4 November 2002 until the end of the school year on 26 March 2003.
However, respondent filed on February 14, 2003 a complaint with the tenor of accusing
petitioner school of constructive dismissal alleging that she was forced and pressured to
submit the written request for a change of penalty and commitment to resign at the end of
the school year.
The LA dismissed the complaint for lack of merit. The LA deemed respondent's suspension
coupled with petitioner's allowance of respondent's resignation at the end of the school year
as generous acts considering the offense committed. The LA held that there was no
constructive dismissal because respondent was not coerced nor pressured to write her
resignation letter. The NLRC affirmed the LA's findings but ordering petitioners to pay
respondent separation pay equivalent to one-half (1/2) month salary for every year of
service on the grounds of equity and social justice.
The CA reversed the NLRC decision and held that respondent was constructively dismissed
as there was no voluntary resignation.
Issue:
Whether or not the school's act of imposing the penalty of suspension instead of immediate
dismissal from service at the request of the erring employee, in exchange for the employee's
resignation at the end of the school year, constitutes constructive dismissal.
Ruling:
Petition is granted and the decision of the CA is reversed and set aside and the NLRC
decision reinstated.
Resignation is the voluntary act of an employee who is in a situation where one believes that
personal reasons cannot be sacrificed for the favor of employment, and opts to leave rather
than stay employed. It is a formal pronouncement or relinquishment of an office, with the
intention of relinquishing the office accompanied by the act of relinquishment. As the
intent to relinquish must concur with the overt act of relinquishment, the acts of
the employee before and after the alleged resignation must be considered in
determining whether, he or she, in fact, intended to sever his or her employment.
Respondent had admitted to leaking a copy of the HEKASI 5 special quiz. On 30 August
2002, the Investigating Committee found respondent guilty of leaking a copy of the special
quiz. Based on this infraction alone, Chiang Kai Shek College would have been justified to
validly terminate respondent from service. Before the Investigating Committee could
formalize respondent's dismissal, respondent handwrote a letter requesting that
the penalty be lowered from dismissal to suspension in exchange for respondent's
resignation at the end of the school year.
There is nothing irregular with respondent's handwritten letter. The letter came about

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because respondent was faced with an imminent dismissal and opted for an
honorable severance from employment. That respondent voluntarily resigned is a
logical conclusion.
Given the indications of voluntary resignation, therefore there is no constructive dismissal in
this case. There was here no discrimination committed by petitioners. While respondent
did not tender her resignation wholeheartedly, circumstances of her own making
did not give her any other option. With due process, she was found to have committed
the grave offense of leaking test questions. Dismissal from employment was the justified
equivalent penalty. Having realized that, she asked for, and was granted, not just a deferred
imposition of, but also an acceptable cover for the penalty.
Respondent should not be rewarded for reneging on her promise to resign at the end of the
school year. Otherwise, employers placed in similar situations would no longer extend
compassion to employees. Compromise agreements, like that in the instant case, which lean
towards desired liberality that favor labor, would be discouraged.

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PRESCRIPTION OF CLAIMS
LUDO & LUYM VS. SAORNIDO
G.R. No. 140960; January 20, 2003
Facts:
Petitioner LUDO & LUYM CORPORATION (LUDO for brevity) is a domestic corporation engaged
in the manufacture of coconut oil, corn starch, glucose and related products. It operates a
manufacturing plant located at Tupas Street, Cebu City and a wharf where raw materials and
finished products are shipped out.
In the course of its business operations, LUDO engaged the arrastre services of Cresencio Lu
Arrastre Services (CLAS) for the loading and unloading of its finished products at the wharf.
Accordingly, several arrastre workers were deployed by CLAS to perform the services
needed by LUDO.
These arrastre workers were subsequently hired, on different dates, as regular rank-and-file
employees of LUDO every time the latter needed additional manpower services. Said
employees thereafter joined respondent union, the LUDO Employees Union (LEU), which
acted as the exclusive bargaining agent of the rank-and-file employees.
Respondent union entered into a collective bargaining agreement with LUDO which provides
certain benefits to the employees, the amount of which vary according to the length of
service rendered by the availing employee.
Thereafter, the union requested LUDO to include in its members’ period of service the time
during which they rendered arrastre services to LUDO through the CLAS so that they could
get higher benefits. LUDO failed to act on the request. Thus, the matter was submitted for
voluntary arbitration.
The parties accordingly executed a submission agreement raising the sole issue of the date
of regularization of the workers for resolution by the Voluntary Arbitrator.
Voluntary Arbitrator ruled that: (1) the respondent employees were engaged in activities
necessary and desirable to the business of petitioner, and (2) CLAS is a labor-only contractor
of petitioner.
Court of Appeals affirmed in toto the decision of the Voluntary Arbitrator.
Issue: Whether or not petitioners are considered regular employees from the moment they
started working for private respondents thru CLAS.
Held:
Supreme Court upheld the decision of the voluntary arbitrator affirmed by the Court of
Appeals that the 214 complainants shall be considered regular employees of the
respondents six (6) months from the first day of service at CLAS. Consequently, the said
complainants, being entitled to the CBA benefits during the regular employment, are
awarded sick leave, vacation leave & annual wage and salary increases during such period

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in the amount of FIVE MILLION SEVEN HUNDRED SEVEN THOUSAND TWO HUNDRED SIXTY
ONE PESOS AND SIXTY ONE CENTAVOS (P5,707,261.61).
The issue of regularization should be viewed as two-tiered issue. While the submission
agreement mentioned only the determination of the date or regularization, law and
jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate
prerogative to accomplish the reason for which the law on voluntary arbitration was created
– speedy labor justice. It bears stressing that the underlying reason why this case arose is to
settle, once and for all, the ultimate question of whether respondent employees are entitled
to higher benefits. To require them to file another action for payment of such benefits would
certainly undermine labor proceedings and contravene the constitutional mandate providing
full protection to labor.

DEGAMO VS. AVANT LARD SHIPPING LINES
G.R. No. 154460; November 22, 2005
Facts:
Avantgarde, acting in behalf of its foreign principal, Sembawang Johnson Management, Pte.,
Ltd. (Sembawang), hired Lauro C. Degamo as Oiler of the vessel for a period of ten months.
While working in the vessel's engine room, a spanner dropped and hit petitioner on his right
thigh. He was hospitalized and was repatriated to the Philippines on March 4, 1995.
Upon his arrival, petitioner reported to respondent Avantgarde's office, but there was no one
to assist him, so he went to Cebu for operation. Avantgarde paid all his hospital bills and
promised to work out his sickness benefit with Sembawang as soon as he was declared fit to
work. Petitioner was treated until early 1997. Thereafter, petitioner was declared fit to
work.
On December 24, 1997, Demago asked Avantgarde to pay his sickness benefits. On January
6, 1998, Avantgarde replied that it could no longer act on petitioner's claim as he had
deviated from the legal procedure. Petitioner wrote a letter to Sembawang regarding his
claim but the latter did not reply.
Petitioner filed a complaint for payment of disability benefits and other money claims
against the respondents with the RAB. The labor arbiter dismissed the case without
prejudice, stating that the action had already prescribed. On appeal, the NLRC likewise ruled
that petitioner's cause of action had prescribed as a mere letter of demand would not toll
the prescriptive period for filing the complaint. Hence this petition.
Issue:Whether petitioner's cause of action had already prescribed.
Held:
YES. Petitioner’s cause of action has already prescribed.
Petitioner, citing Article 1155 of the New Civil Code, contends that his cause of action had
not prescribed as the running of the prescriptive period was tolled by his extrajudicial
demand for unpaid sickness benefits on Dec. 24, 1997.
Respondents counter that the Civil Code provision on extinctive prescription applies only to
obligations that are intrinsically civil in nature and is inapplicable to labor cases.
Respondents assert that that petitioner's demand was made more than one year from his
date of arrival in the Philippines, contrary to what is prescribed in Sec. 28 of the POEA
Memorandum Circular No. 55, Series of 1996. They add that the institution of the action was

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beyond the three-year period prescribed in Article 291 of the Labor Code as his employment
with the respondents' ended on March 4, 1995 but the complaint was filed only on March 2,
2001.
POEA Circular No. 55, Series of 1996 became effective only on January 1, 1997 while the
employment contract between the parties was entered earlier on November 8, 1994. The
earlier standard employment contract issued by the POEA did not have a provision on
prescription of claims. Hence, the applicable provision in this case is Article 291 of the Labor
Code.
In Cadalin v. POEA's Administrator, we held that Article 291 covers all money claims from
employer-employee relationship and is broader in scope than claims arising from a specific
law. It is not limited to money claims recoverable under the Labor Code, but applies also to
claims of overseas contract workers.
Article 291 provides that all money claims arising from employer-employee relations shall be
filed within three years from the time the cause of action accrued, otherwise, these shall be
forever barred. A cause of action accrues upon the categorical denial of claim. Petitioner's
cause of action accrued only on January 6, 1998, when Avantgarde denied his claim and so
breached its obligation to petitioner. Petitioner could not have a cause of action prior to this
because his earlier requests were warded off by indefinite promises. The complaint filed on
March 2, 2001 is beyond the three-year period mandated by the Labor Code.

INTERCONTINENTAL BROADCASTING CORP., VS. PANGANIBAN
G.R. No. 151407; February 6, 2007
Facts:
Ireneo Panganiban was employed as Assistant General Manager of the petitioner
Intercontinental Broadcasting Corporation from May 1986 until his preventive suspension on
August 26, 1988. Respondent resigned from his employment on September 2, 1988. On April
12, 1989, respondent filed with the trial court a case against the members of the Board of
Administrators (BOA) of petitioner alleging, among others, non-payment of his unpaid
commissions.
A motion to dismiss was filed by Joselito Santiago, one of the defendants, on the ground of
lack of jurisdiction, as respondent's claim was a labor money claim, but this was denied by
the RTC.
Thus, Santiago filed a petition for certiorari with the CA, which granted Santiago's petition
for lack of jurisdiction and set aside the RTC's Orders. Thereafter, respondent was elected by
the BOA as Vice-President for Marketing in July 1992. He resigned in April 1993.
On July 24, 1996, respondent filed against petitioner a complaint for illegal dismissal,
separation pay, retirement benefits, unpaid commissions, and damages.
Issue: Whether or not respondent's claim for unpaid commissions has already prescribed.
Held:
Yes.
The applicable law in this case is Article 291 of the Labor Code which provides that "all
money claims arising from employer-employee relations accruing during the effectivity of
this Code shall be filed within three (3) years from the time the cause of action accrued;
otherwise they shall be forever barred." The term "money claims" covers all money
claims arising from an employer-employee relation.

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Like other causes of action, the prescriptive period for money claims is subject to
interruption, and in the absence of an equivalent Labor Code provision for determining
whether the said period may be interrupted, Article 1155 of the Civil Code may be
applied.
Thus, the prescription of an action is interrupted by (a) the filing of an action, (b) a written
extrajudicial demand by the creditor, and (c) a written acknowledgment of the debt by the
debtor. On this point, the Court ruled that although the commencement of a civil action
stops the running of the statute of prescription or limitations, its dismissal or
voluntary abandonment by plaintiff leaves the parties in exactly the same
position as though no action had been commenced at all.
Hence, while the filing of the civil could have interrupted the running of the three-year
prescriptive period, its consequent dismissal by the CA due to lack of jurisdiction effectively
canceled the tolling of the prescriptive period within which to file his money claim, leaving
respondent in exactly the same position as though no civil case had been filed at all. The
running of the three-year prescriptive period not having been interrupted by the filing of the
civil case, respondent's cause of action had already prescribed on September 2, 1991, three
years after his cessation of employment on September 2, 1988. Consequently, when
respondent filed his complaint for illegal dismissal, separation pay, retirement benefits, and
damages in July 24, 1996, his claim, clearly, had already been barred by prescription.

FAR EAST AGRICULTURAL SUPPLY, INC. VS. LEBATIQUE
G.R. No. 162813; February 12, 2007
Facts:
Petitioner Far East Agricultural Supply, Inc. (Far East) hired private respondent Jimmy
Lebatique as truck driver with a daily wage of P223.50. He delivered animal feeds to the
company’s clients.
Lebatique complained of nonpayment of overtime work particularly on January 22, 2000,
when he was required to make a second delivery in Novaliches, Quezon City. That same
day, Manuel Uy, brother of Far East’s General Manager and petitioner Alexander Uy,
suspended Lebatique apparently for illegal use of company vehicle. Even so, Lebatique
reported for work the next day but he was prohibited from entering the company premises.
Lebatique sought the assistance of the Department of Labor and Employment (DOLE) Public
Assistance and Complaints Unit concerning the nonpayment of his overtime pay. According
to Lebatique, two days later, he received a telegram from petitioners requiring him to report
for work. When he did the next day, January 29, 2000, Alexander asked him why he was
claiming overtime pay. Lebatique explained that he had never been paid for overtime work
since he started working for the company. He also told Alexander that Manuel had fired
him. After talking to Manuel, Alexander terminated Lebatique and told him to look for
another job.
On March 20, 2000, Lebatique filed a complaint for illegal dismissal and nonpayment of
overtime pay. The Labor Arbiter found that Lebatique was illegally dismissed, and ordered
his reinstatement and the payment of his full back wages, 13 th month pay, service incentive
leave pay, and overtime pay.
Petitioners contend that, (1) Lebatique was not dismissed from service but merely
suspended for a day due to violation of company rules; (2) Lebatique was not barred from
entering the company premises since he never reported back to work; and (3) Lebatique is

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estopped from claiming that he was illegally dismissed since his complaint before the DOLE
was only on the nonpayment of his overtime pay.
Also, petitioners maintain that Lebatique, as a driver, is not entitled to overtime pay since he
is a field personnel whose time outside the company premises cannot be determined with
reasonable certainty. According to petitioners, the drivers do not observe regular working
hours unlike the other office employees. The drivers may report early in the morning to
make their deliveries or in the afternoon, depending on the production of animal feeds and
the traffic conditions. Petitioners also aver that Lebatique worked for less than eight hours a
day.
Issue: Whether or not Respondent is Illegally Dismiss and/or was not paid an Overtime pay.
Held:
Even petitioners admit that the drivers can report early in the morning, to make their
deliveries, or in the afternoon, depending on the production of animal feeds. Drivers, like
Lebatique, are under the control and supervision of management officers. Lebatique,
therefore, is a regular employee whose tasks are usually necessary and desirable to the
usual trade and business of the company. Thus, he is entitled to the benefits accorded to
regular employees of Far East, including overtime pay and service incentive leave pay.
The Decision dated September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and
its Resolution dated March 15, 2004 are AFFIRMED with MODIFICATION to the effect that the
case is hereby REMANDED to the Labor Arbiter for further proceedings to determine the
exact amount of overtime pay and other monetary benefits due Jimmy Lebatique which
herein petitioners should pay without further delay.

VICTORY LINER VS. RACE; G.R. NO. 164820
March 28, 2007
Facts:
Race was employed by Victory Liner, Inc. as a bus driver. On August 24, 1994, while he was
driving his route, he met an accident. As a result, he suffered a fractured leg and was rushed
to the hospital. His confinement lasted for a month. On January 1998, Race reported for work
but he was informed that he was considered resigned from his job. He then filed a complaint
for illegal dismissal. Victory Liner contend that respondent’s action had already prescribed
because when he instituted the complaint on September 1, 1999, more than five years had
already lapsed from the accrual his cause of action on August 24, 1994.
Issue: Whether or not the respondent’s cause of action had already prescribed.
Held:
Respondent’s cause of action had not yet prescribed.
In illegal dismissal cases, the employee concerned is given a period of four years from
the time of his dismissal within which to institute a complaint. This is based on
Article 1146 of the New Civil Code which states that actions based upon an injury to
the rights of the plaintiff must be brought within four years.
The four-year prescriptive period shall commence to run only upon the accrual of a cause of
action of the worker. It is settled that in illegal dismissal cases, the cause of action accrues
from the time the employment of the worker was unjustly terminated. Thus, the fouryear prescriptive period shall be counted and computed from the date of the employee’s

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dismissal up to the date of the filing of complaint for unlawful termination of employment.
Proceeding therefrom, we shall now discuss and determine when the respondent’s cause of
action accrued in order to ascertain whether the same had already prescribed.
It is error to conclude that the employment of the respondent was unjustly terminated on 10
November 1994 because he was, at that time, still confined at the Specialist Group Hospital,
Dagupan City, for further treatment of his fractured left leg. He must be considered as
merely on sick leave at such time. Likewise, the respondent cannot also be deemed as
illegally dismissed from work upon his release from the said hospital in December 1994 up
to December 1997 since the records show that the respondent still reported for work to the
petitioner and was granted sick and disability leave by the petitioner during the same
period.
The respondent must be considered as unjustly terminated from work in January 1998 since
this was the first time he was informed by the petitioner that he was deemed resigned from
his work. During that same occasion, the petitioner, in fact, tried to convince the
respondent to accept an amount of P50,000.00 as a consolation for his dismissal but the
latter rejected it. Thus, it was only at this time that the respondent’s cause of action
accrued. Consequently, the respondent’s filing of complaint for illegal dismissal on 1
September 1999 was well within the four-year prescriptive period.
It is also significant to note that from 10 November 1994 up to December 1997, the
petitioner never formally informed the respondent of the fact of his dismissal either through
a written notice or hearing. Indeed, it cannot be gainfully said that respondent was
unlawfully dismissed on 10 November 1994 and that the cause of action accrued on that
date.

J.K. MERCADO & SONS AGRICULTURAL ENTERPRISES VS. HON. STO. TOMAS
G.R. No. 158084; August 29, 2008
Facts:
On December 3, 1993, the Regional Tripartite Wages and Productivity Board, Region XI,
issued a wage order, granting a Cost of Living Allowance (COLA) to covered workers.
Notwithstanding the said order, private respondents were not given the benefits due them
under the wage order. On July 10, 1998, private respondents filed a motion for writ of
execution and writ of garnishment.
On October 7, 1998, the OIC-Regional Director, Region XI, issued a writ of execution for the
enforcement of the Order dated April 11, 1994 of the Regional Tripartite Wages and
Productivity Board. On November 17, 1998 and November 23, 1998, respectively, petitioner
filed a motion to quash the writ of execution and a supplemental motion to the motion to
quash. Petitioner argued that herein private respondents' right had already prescribed due
to their failure to move for the execution of the April 11, 1994 Order within the period
provided under Article 291 of the Labor Code, as amended, or within three (3) years from
the
finality
of
the
said
order.
Ruling that the benefits which remained unpaid have not prescribed and that the private
respondents need not file a claim to be entitled thereto, the Regional Director denied the
motion to quash in an Order dated January 7, 1999.
Petitioner argued that the Regional Director abused his discretion in issuing the writ of
execution in the absence of any motion filed by private respondents. Petitioner claimed that
since more than three (3) years have already elapsed from the time of the finality of the

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order dated April 11, 1994, the right of private respondents to claim the benefits under the
same had already prescribed.
Issue: Whether a money claim must be filed first by private respondents against petitioner
for the latter's refusal to pay the COLA granted under the wage order.
Held:
It must be emphasized that the order dated April 11, 1994 had long become final and
executory. Petitioner did not appeal the said order. Having failed to avail of the remedy of
appeal of the said order, petitioner cannot belatedly avoid its duty to comply with the said
order by insisting that a money claim must first be filed by herein private respondents. A
contrary ruling would result to absurdity and would even unjustly benefit petitioner who for
quite some time had exerted every effort to avoid the obligation of giving the wage
differential or COLA granted under the wage order.
Art. 291 of the Labor Code applies to money claims in general and provides for a 3-year
prescriptive period to file them.
On the other hand, respondent employees' money claims in this case had been reduced to a
judgment, in the form of a Wage Order, which has become final and executory. The
prescription applicable, therefore, is not the general one that applies to money claims, but
the specific one applying to judgments. Thus, the right to enforce the judgment, having been
exercised within five years, has not yet prescribed.
Stated otherwise, a claimant has three years to press a money claim. Once judgment is
rendered in her favor, she has five years to ask for execution of the judgment, counted from
its finality. This is consistent with the rule on statutory construction that a general provision
should yield to a specific one and with the mandate of social justice that doubts should be
resolved in favor of labor.

REYES VS. NLRC, CCBPI
G.R. No. 180551; February 10, 2009
Facts:
The present Petition arose from a Complaint for illegal dismissal with claims for moral and
exemplary damages and attorney’s fees filed by petitioner against respondents Coca Cola
Bottlers Philippines (CCBP) and Rotaida Taguibao (Taguibao) before the Labor Arbiter on 14
June 2004. Respondent CCBP is a corporation engaged in the business of production and
distribution of carbonated drinks, and Taguibao is its Human Resource Manager.
In his Complaint, petitioner alleged that he was first employed by respondent CCBP, through
Interserve Manpower Agency (Interserve), as a Leadman in February 1988. Petitioner was
initially assigned to the Mendiola Sales Office of respondent CCBP. Petitioner’s employment
contract was renewed every five months and he was assigned a different task every time.
Such an arrangement continued until petitioner was directly hired by respondent CCBP as a
Route Salesman on 15 September 2000. Exactly one year from the time of petitioner’s
employment as a Route Salesman, respondent CCBP, thru Taguibao, terminated his services
on 15 September 2001. Since he already acquired the status of a regular employee,
petitioner asserted that his dismissal from employment without the benefit of due process
was unlawful.
Issue:

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Whether or not respondent’s claim for backwages has already prescribed.
Held:
The Court was more emphatic in Philippine Industrial Security Agency Corporation v.
Dapiton, when it ruled that backwages had to be paid by the employer as part of the price or
penalty he had to pay for illegally dismissing his employee. It was to be computed from the
time of the employee’s illegal dismissal (or from the time his compensation was withheld
from him) up to the time of his reinstatement.
One of the natural consequences of a finding that an employee has been illegally dismissed
is the payment of backwages corresponding to the period from his dismissal up to actual
reinstatement. The statutory intent of this matter is clearly discernible. The payment of
backwages allows the employee to recover from the employer that which he has lost by way
of wages as a result of his dismissal. Logically, it must be computed from the date of
petitioner’s illegal dismissal up to the time of actual reinstatement. There can be no gap or
interruption, lest we defeat the very reason of the law in granting the same. That petitioner
did not immediately file his Complaint should not affect or diminish his right to backwages,
for it is a right clearly granted to him by law -- should he be found to have been illegally
dismissed -- and for as long as his cause of action has not been barred by prescription.
The law fixes the period of time within which petitioner could seek remedy for his illegal
dismissal and for as long as he filed his Complaint within the prescriptive period, he shall be
entitled to the full protection of his right to backwages. In illegal dismissal cases, the
employee concerned is given a period of four years from the time of his illegal dismissal
within which to institute the complaint. This is based on Article 1146 of the New Civil Code
which states that actions based upon an injury to the rights of the plaintiff must be brought
within four years. The four-year prescriptive period shall commence to run only upon the
accrual of a cause of action of the worker. Here, petitioner was dismissed from service on 15
September 2001. He filed his complaint for illegal dismissal on 14 June 2004.
Clearly, then, the instant case was filed within the prescriptive period.

LWV CONSTRUCTION CORP. VS. DUPO
G.R. No. 172342; July 13, 2009
Facts:
Petitioner, a domestic corporation which recruits Filipino workers, hired respondent Marcelo
Dupo as Civil Structural Superintendent to work in Saudi Arabia for its principal, Mohammad
Al-Mojil Group/Establishment (MMG). On February 26, 1992, respondent signed his first
overseas employment contract, renewable after one year. It was renewed five times on the
following dates: May 10, 1993, November 16, 1994, January 22, 1996, April 14, 1997, and
March 26, 1998. All were fixed-period contracts for one year. The sixth and last contract
stated that respondent’s employment starts upon reporting to work and ends when he
leaves the work site. Respondent left Saudi Arabia on April 30, 1999 and arrived in the
Philippines on May 1, 1999. Respondent then has signed 6 overseas contracts and worked
for seven years in Saudi Arabia.
On July 6, 1999, respondent through a letter resigned from his work and asked MMG to give
him his ‘long service award’ in accordance with the Article 87 of Saudi Law which states
that;
Article 87.

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Where the term of a labor contract concluded for a specified period comes to an end
or where the employer cancels a contract of unspecified period, the employer shall
pay to the workman an award for the period of his service to be computed on the
basis of half a month’s pay for each of the first five years and one month’s pay for
each of the subsequent years. The last rate of pay shall be taken as basis for the
computation of the award. For fractions of a year, the workman shall be entitled to
an award which is proportionate to his service period during that year. Furthermore,
the workman shall be entitled to the service award provided for at the beginning of
this article in the following cases:
A If he is called to military service.
B If a workman resigns because of marriage or childbirth.
C If the workman is leaving the work as a result of a force majeure beyond his
control. (Emphasis supplied.)
However, MMG did not reply to the letter of the respondent Dupo which led to the filing of
the case before the labor arbiter for the payment of the long service award in the amount of
US$12,640.33.
On the other hand, petitioner presented two defenses namely payment and prescription.
Firstly, petitioner said the long service award has already been paid every time each of the
contracts of employment of the respondent comes to an end, since, the contract is for a
fixed period of time. In effect, the severance pay received by the respondent every time
each of the 6 contracts of employment comes to an end, is also the longevity service award.
Petitioner claimed that long service award is the same with severance pay. Secondly,
petitioner insists that prescription barred respondent’s claim for long service award because
under Article 13 of the Saudi Labor Law it provides that no case or claim relating to any of
the rights provided for under said law shall be heard after the lapse of 12 months from the
date of the termination of the contract. Respondent’s sixth contract ended on April 30, 1999
the date he left his work which was also in effect the date of the termination of his contract,
and he filed the case on December 11, 2000 which is 1 year and seven months from the
date of the termination of his contract.
Issue:
(1) Whether or not CA erred in ruling that respondent is entitled to long service pay which is
different from severance pay.
(2) Whether or not the cause of action has prescribed.
Held:
SC said that CA has committed an error in ruling that the long service pay is different from
severance pay. According to SC the severance pay received by the respondent at the end of
each of the six contracts of employment is equivalent to the long service pay. This is the
reason why the formula in computing the severance pay is the same with the computation
of the long service award. Moreover, SC said that respondent’s employment contracts
expressly stated that his employment ended upon his departure from work. Each year he
departed from work and successively new contracts were executed before he reported for
work anew. His service was not cumulative. Pertinently, in Brent School, Inc. v. Zamora, we
said that “a fixed term is an essential and natural appurtenance” of overseas employment
contracts as in this case. We also said in that case that under American law, “[w]here a
contract specifies the period of its duration, it terminates on the expiration of such period. A
contract of employment for a definite period terminates by its own terms at the end of such
period.” As it is, Article 72 of the Saudi Labor Law is also of similar import. It reads:
A labor contract concluded for a specified period shall terminate upon the expiry of its term.
If both parties continue to enforce the contract, thereafter, it shall be considered renewed
for an unspecified period.

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(2) SC ruled that the claim has not yet prescribed because the law that should be applied on
prescription is not the Saudi Law which grants 12 months period of time to file the claim
from the time of the termination of contract but it should be the Labor Code particularly ART.
291. Money claims. — All money claims arising from employer-employee relations accruing
during the effectivity of this Code shall be filed within three (3) years from the time the
cause of action accrued; otherwise they shall be forever barred. The reason is because
prescription is a procedural law and under the conflict of laws rules of the Philippines the
procedural law of the lex fori or law of the forum (law of the place where the case is filed)
must be applied. However, an argument can be raised that even if the conflict of laws rule
provides that the procedural law of the lex fori must be followed, Sec. 48 of our Code of Civil
Procedure which is a borrowing statute provides that “If by the laws of the state or country
where the cause of action arose, the action is barred, it is also barred in the Philippine
Islands.” Section 48 has not been repealed or amended by the Civil Code of the Philippines.
Article 2270 of said Code repealed only those provisions of the Code of Civil Procedure as to
which were inconsistent with it. There is no provision in the Civil Code of the Philippines,
which is inconsistent with or contradictory to Section 48 of the Code of Civil Procedure
(Paras, Philippine Conflict of Laws, 104 [7th ed.]).
In the light of the 1987 Constitution, however, Section 48 [of the Code of Civil Procedure]
cannot be enforced ex proprio vigore insofar as it ordains the application in this jurisdiction
of [Article] 156 of the Amiri Decree No. 23 of 1976.
The courts of the forum will not enforce any foreign claim obnoxious to the forum’s
public policy. To enforce the one-year prescriptive period of the Saudi Law as regards
the claims in question would contravene the public policy on the protection to labor.
Respondent’s complaint was filed well within the three-year prescriptive period under Article
291 of our Labor Code. This point, however, has already been mooted by SC’s finding that
respondent’s service award had been paid, albeit the payroll termed such payment as
severance pay. Petition is Granted.
PLDT VS. ROBERTO R. PINGOL
G.R. No. 182622; September 8, 2010
Facts:
In 1979, respondent Roberto R. Pingol (Pingol) was hired by petitioner PLDT as a
maintenance technician.
From September 16, 1999 to December 31, 1999, Pingol was absent from work without
official leave. According to PLDT, notices were sent to him with a stern warning that he
would be dismissed from employment if he continued to be absent without official leave
"pursuant to PLDT Systems Practice A-007 which provides that ‘Absence without authorized
leaves for seven (7) consecutive days is subject to termination from the service.’" Despite
the warning, he failed to show up for work. On January 1, 2000, PLDT terminated his services
on the grounds of unauthorized absences and abandonment of office.
On March 29, 2004, four years later, Pingol filed a Complaint for Constructive Dismissal and
Monetary Claims against PLDT. In his complaint, he alleged that he was hastily dismissed
from his employment
on January 1, 2000.
In response, PLDT filed a motion to dismiss claiming, among others, that respondent’s cause
of action had already prescribed as the complaint was filed four (4) years and three (3)
months after his dismissal.
Issue: Whether or not respondent Pingol filed his complaint for constructive dismissal and

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money claims within the prescriptive period of four (4) years as provided in Article 1146 of
the Civil Code and three (3) years as provided in Article 291 of the Labor Code, respectively.
Held:
Parties apparently do not dispute the applicable prescriptive period. Article 1146 of the New
Civil Code provides:
Art. 1146. The following actions must be instituted within four years:
(1) Upon an injury to the rights of the plaintiff;
x xx
x xx
x xx
As this Court stated in Callanta v. Carnation, when one is arbitrarily and unjustly deprived of
his job or means of livelihood, the action instituted to contest the legality of one's dismissal
from employment constitutes, in essence, an action predicated "upon an injury to the rights
of the plaintiff," as contemplated under Art. 1146 of the New Civil Code, which must be
brought within four (4) years.
With regard to the prescriptive period for money claims, Article 291 of the Labor Code
states:
Article 291. Money Claims. – All money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three (3) years from the time
the cause of action accrued; otherwise they shall be barred forever.
The pivotal question in resolving the issues is the date when the cause of action of
respondent Pingol accrued.
It is a settled jurisprudence that a cause of action has three (3) elements, to wit: (1) a right
in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2)
an obligation on the part of the named defendant to respect or not to violate such right; and
(3) an act or omission on the part of such defendant violative of the right of the plaintiff or
constituting a breach of the obligation of the defendant to the plaintiff.
In the case at bench, Pingol himself alleged the date January 1, 2000 as the date of his
dismissal in his complaint filed on March 29, 2004, exactly four (4) years and three (3)
months later. Respondent never denied making such admission or raised palpable mistake
as the reason therefor. Thus, the petitioner correctly relied on such allegation in the
complaint to move for the dismissal of the case on the ground of prescription.
The Labor Code has no specific provision on when a claim for illegal dismissal or a
monetary claim accrues. Thus, the general law on prescription applies. Article 1150
of the Civil Code states:
Article 1150. The time for prescription for all kinds of actions, when there is no special
provision which ordains otherwise, shall be counted from the day they may be brought
The day the action may be brought is the day a claim starts as a legal possibility. In the
present case, January 1, 2000 was the date that respondent Pingol was not allowed to
perform his usual and regular job as a maintenance technician. Respondent Pingol cited the
same date of dismissal in his complaint before the LA. As, thus, correctly ruled by the LA, the
complaint filed had already prescribed.
Like other causes of action, the prescriptive period for money claims is subject to
interruption, and in the absence of an equivalent Labor Code provision for determining
whether the said period may be interrupted, Article 1155 of the Civil Code may be applied,
to wit:
ART. 1155. The prescription of actions is interrupted when they are filed before the

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Court, when there is a written extrajudicial demand by the creditors, and when there
is any written acknowledgment of the debt by the debtor.
Thus, the prescription of an action is interrupted by (a) the filing of an action, (b) a written
extrajudicial demand by the creditor, and (c) a written acknowledgment of the debt by the
debtor.
In this case, respondent Pingol never made any written extrajudicial demand. Neither did
petitioner make any written acknowledgment of its alleged obligation. Thus, the claimed
"follow-ups" could not have validly tolled the running of the prescriptive period. It is worthy
to note that respondent never presented any proof to substantiate his allegation of followups.

MEDLINE MANAGEMENT, INC. VS. ROSLINDA
G.R. No. 1687151; Spetember 15, 2010
Facts:
Medline Management, Inc. (MMI), on behalf of its foreign principal, petitioner Grecomar
Shipping Agency (GSA), hired Juliano Roslinda (Juliano) to work on board the vessel MV
"Victory." Juliano was previously employed by the petitioners under two successive separate
employment contracts of varying durations. His latest contract was approved by the POEA
on September 9, 1998 for a duration of nine months. In accordance with which, he boarded
the vessel MV "Victory" on October 25, 1998 as an oiler and, after several months of
extension, was discharged on January 20, 2000.
Months after his repatriation, or on March 6, 2000, Juliano consulted Dr. Pamela R. Lloren (Dr.
Lloren) of Metropolitan Hospital. He complained about abdominal distention which is the
medical term for a patient who vomits previously ingested foods. From March 8 to August
24, 2000, Juliano has undergone Hemodialysis, a method of removing waste products such
as creatinine and urea, as well as freeing water from the blood, when the kidneys are in
renal failure.
On August 27, 2001, Juliano died. On September 4, 2003, his wife Gliceria Roslinda and son
Ariel Roslinda, respondents herein, filed a complaint against MMI and GSA for payment of
death compensation, reimbursement of medical expenses, damages, and attorney's fees
before the Labor Arbitration Branch of the NLRC.
Instead of filing an answer, they filed a Motion to Dismiss on the grounds of prescription,
lack of jurisdiction and prematurity. Petitioners contended that the action has already
prescribed because it was filed three years, seven months and 22 days from the time the
deceased seafarer reached the point of hire.
Issue: Whether or not the claim is not yet barred by prescription despite the fact that it was
filed beyond the one-year prescriptive period provided by the POEA Standard Employment
Contract.
Held:
The employment contract signed by Juliano stated that "Upon approval, the same shall be
deemed an integral part of the Standard Employment Contract (SEC) for seafarers." Section
28 of the POEA SEC states:
SECTION 28.JURISDICTION
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Recognizing the peculiar nature of overseas shipboard employment, the employer
and the seafarer agree that all claims arising from this contract shall be made within
one (1) year from the date of the seafarer's return to the point of hire . (Emphasis
supplied)
On the other hand, the Labor Code states:
ART. 291.Money
claims. — All money claims arising from employer-employee
relations accruing during the effectivity of this Code shall be filed within three (3)
years from the time the cause of action accrued; otherwise they shall forever be
barred.
In Southeastern Shipping v. Navarra, Jr., we ruled that "Article 291 is the law governing the
prescription of money claims of seafarers, a class of overseas contract workers. This law
prevails over Section 28 of the Standard Employment Contract for Seafarers which provides
for claims to be brought only within one year from the date of the seafarer's return to the
point of hire." We further declared that "for the guidance of all, Section 28 of the Standard
Employment Contract for Seafarers, insofar as it limits the prescriptive period within which
the seafarers may file their money claims, is hereby declared null and void. The applicable
provision is Article 291 of the Labor Code, it being more favorable to the seafarers and more
in accord with the State's declared policy to afford full protection to labor. The prescriptive
period in the present case is thus three years from the time the cause of action accrues."
In the present case, the cause of action accrued on August 27, 2001 when Juliano died.
Hence, the claim has not yet prescribed, since the complaint was filed with the arbitration
branch of the NLRC on September 4, 2003.

UNIVERSITY OF THE EAST VS. UNIVERSITY OF THE EAST EMPLOYEES' ASSOCIATION
G.R. No. 179593; September 14, 2011
Facts:
Petitioner University of the East (UE) is an educational institution duly organized and existing
under Philippine laws. On the other hand, respondent University of the East Employees'
Association (UEEA) is a duly registered labor union of the rank-and-file employees of UE.
It appears from the records that prior to school year (SY) 1983-1984, the 70% incremental
proceeds from tuition fee increases as mandated by Presidential Decree No. 451 (P.D. No.
451), as amended, was distributed by UE in proportion to the average number of academic
and non-academic personnel. The distribution scheme became the subject of an
Agreement dated October 18, 1983 signed by the management, faculty association and
respondent. Starting SY 1994-1995, however, the 70% incremental proceeds from the
tuition fee increase was distributed by UE to its covered employees based on a new formula
of percentage of salary.
On June 19, 1995, a tripartite meeting was held among the representatives of management,
faculty union and UEEA. In the said meeting, it was agreed that the distribution of the
incremental proceeds would now be based on percentage of salary, and not anymore on the
average number of personnel. The Minutes of the June 19, 1995 meeting was signed and
attested to by UEEA officers who attended.
On April 27, 1999, UEEA filed a complaint before the NLRC for non-payment/underpayment
of the rank-and-file employees' share of the tuition fee increases against UE pursuant to P.D.
No. 451, as amended, and Republic Act (R.A.) No. 6728 otherwise known as Government
Assistance to Students and Teachers in Private Education Act.

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UE asserted that the claim of the UEEA was already barred since it was filed three (3) years
from the time its supposed cause of action accrued.
Issue: Whether or not prescription has already set in.
Held:
The Court agrees with UE and holds that UEEA's right to question the distribution of the
incremental proceeds for SY 1994-1995 has already prescribed. Article 291 of the Labor
Code provides that money claims arising from an employer-employee relationship must be
filed within three (3) years from the time the cause of action accrued. In the present case,
the cause of action accrued when the distribution of the incremental proceeds based on
percentage of salary of the covered employees was discussed in the tripartite meeting held
on June 19, 1995. UEEA did not question the manner of its distribution and only on April 27,
1999 did it file an action based therein. Hence, prescription had set in.

JURISDICTION OF THE LABOR ARBITER
TOLOSA VS. NLRC
G.R. No. 149578; April 10, 2003
Facts:
Evelyn Tolosa is the widow of Captain Virgilio Tolosa who was hired by Qwana-Kaiun, through
its manning agent, Asia Bulk Transport Phils. Inc., to be the master of the vessel named M/V
Lady Dona.Capt. Tolosa died while performing his duties during their voyage from Japan to

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Long Beach California. Because of her husband’s death, Evelyn filed a complaint before the
POEA against Qwana-Kaiun, through its resident-agent, Mr. Fumio Nakagawa, Asia Bulk,
Pedro Garate and Mario Asis (Lady Dona’s Chief Mate and Second mate in-charge of the
primary medical care of the crew and who took care of Capt. Tolosa while he was sick). The
case was transferred to the NLRC and the Labor Arbiter held the respondents solidarily liable
and granted all the damages as prayed for by petitioner including lost income, moral and
exemplary damages, attorney’s fees plus interest. On appeal, NLRC dismissed the case for
lack of jurisdiction over the subject matter of the action pursuant to the provision of the
Labor Code. Sustaining the NLRC, the CA ruled that the labor commission had no jurisdiction
over the subject matter of the action filed by petitioner. Her cause did not arise from an
employer-employee relation, but from a quasi delict or tort. Further, there is no reasonable
causal connection between her suit for damages and her claim under Article 217 (a)(4) of
the Labor Code, which allows an award of damages incident to an employer-employee
relation.
Issue:
Whether the labor arbiter and the NLRC had jurisdiction over petitioner's action
Held:
The NLRC and the labor arbiter had no jurisdiction over petitioner's claim for damages,
because that ruling was based on a quasi delict or tort per Article 2176 of the Civil Code. The
allegations in her complaint are in the nature of an action based on a quasi delict or tort. It is
evident that she sued Pedro Garate and Mario Asis for gross negligence. Petitioner's
complaint/position paper refers to and extensively discusses the negligent acts of shipmates
Garate and Asis, who had no employer-employee relation with Captain Tolosa.
The pivotal question is whether the Labor Code has any relevance to the relief sought by
petitioner. From her paper, it is evident that the primary reliefs she seeks are as follows: (a)
loss of earning capacity denominated therein as "actual damages" or "lost income" and (b)
blacklisting. The loss she claims does not refer to the actual earnings of the deceased, but to
his earning capacity based on a life expectancy of 65 years. This amount is recoverable if
the action is based on a quasi delict as provided for in Article 2206 of the Civil Code, but not
in the Labor Code.
While it is true that labor arbiters and the NLRC have jurisdiction to award not only reliefs
provided by labor laws, but also damages governed by the Civil Code, these reliefs must still
he based on an action that has a reasonable causal connection with the Labor Code, other
labor statutes, or collective bargaining agreements. It must be noted that a worker's loss of
earning capacity and blacklisting are not to be equated with wages, overtime compensation
or separation pay, and other labor benefits that are generally cognized in labor disputes. The
loss of earning capacity is a relief or claim resulting from a quasi delict or a similar cause
within the realm of civil law. Claims for damages under paragraph 4 of Article 217 must have
a reasonable causal connection with any of the claims provided for in the article in order to
be cognizable by the labor arbiter. Only if there is such a connection with the other claims
can the claim for damages be considered as arising from employer-employee relations." In
the present case, petitioner's claim for damages is not related to any other claim under
Article 217, other labor statutes, or collective bargaining agreements.
Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code, which does
not grant or specify a claim or relief. This provision is only a safety and health standard
under Book IV of the same Code. The enforcement of this labor standard rests with the labor
secretary. Thus, claims for an employer's violation thereof are beyond the jurisdiction of the
labor arbiter. In other words, petitioner cannot enforce the labor standard provided for in
Article 161 by suing for damages before the labor arbiter.

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It is not the NLRC but the regular courts that have jurisdiction over actions for damages, in
which the employer-employee relation is merely incidental, and in which the cause of action
proceeds from a different source of obligation such as a tort. Since petitioner's claim for
damages is predicated on a quasi delict or tort that has no reasonable causal connection
with any of the claims provided for in Article 217, other labor statutes, or collective
bargaining agreements, jurisdiction over the action lies with the regular courts -- not with
the NLRC or the labor arbiters.

AUSTRIA VS. NLRC;
312 SCRA 413
Facts:
Pastor Dionisio V. Austria worked with the SDA for twenty eight (28) years from 1963 to
1991.He held the position of district pastor until his services were terminated on 31 October
1991.
On various occasions from August up to October, 1991, petitioner received several
communications from Mr. Eufronio Ibesate, the treasurer of the Negros Mission asking him to
admit accountability and responsibility for the church tithes and offerings collected by his
wife, Mrs. Thelma Austria, in his district which amounted to P15,078.10, and to remit the
same to the Negros Mission.
On 16 October 1991, at around 7:30 a.m., petitioner went to the office of Pastor Buhat, the
president of the Negros Mission. During said call, petitioner tried to persuade Pastor Buhat to
convene the Executive Committee for the purpose of settling the dispute between him and
the private respondent, Pastor David Rodrigo. The dispute between Pastor Rodrigo and
petitioner arose from an incident in which petitioner assisted his friend, Danny Diamada, to
collect from Pastor Rodrigo the unpaid balance for the repair of the latter's motor vehicle
which he failed to pay to Diamada. Due to the assistance of petitioner in collecting Pastor
Rodrigo's debt, the latter harbored ill-feelings against petitioner. When news reached
petitioner that Pastor Rodrigo was about to file a complaint against him with the Negros
Mission, he immediately proceeded to the office of Pastor Buhat and asked the latter to
convene the Executive Committee. Pastor Buhat denied the request of petitioner since some
committee members were out of town and there was no quorum. Thereafter, the two
exchanged heated arguments. Petitioner then left the office of Pastor Buhat. While on his
way out, petitioner overheard Pastor Buhat saying, "Pastor daw inisog na ina iya (Pador you
are talking tough)." Irked by such remark, petitioner returned to the office of Pastor Buhat,
and tried to overturn the latter's table, though unsuccessfully, since it was heavy. Thereafter,
petitioner banged the attaché case of Pastor Buhat on the table, scattered the books in his
office, and threw the phone.
Thereafter, petitioner received a letter inviting him and his wife to attend the Executive
Committee meeting at the Negros Mission Conference Room on 21 October 1991, at nine in
the morning. To be discussed in the meeting were the non-remittance of church collection
and the events that transpired on 16 October 1991. Subsequently, petitioner received a
letter of dismissal citing misappropriation of denominational funds, willful breach of trust,
serious misconduct, gross and habitual neglect of duties, and commission of an offense
against the person of employer's duly authorized representative, as grounds for the
termination of his services.
Issues:
1 Whether or not the termination of the services of petitioner is an ecclesiastical affair,
and, as such, involves the separation of church and state and as such, the Labor

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2
3
4

Arbiter/NLRC has no jurisdiction to try and decide the case
Whether or not the dismissal was valid
Whether or not there was breach of trust
Whether or not there was serious misconduct.

Held:
1. The principle of separation of church and state finds no application in this case.
An ecclesiastical affair is "one that concerns doctrine, creed, or form of worship of the
church, or the adoption and enforcement within a religious association of needful laws and
regulations for the government of the membership, and the power of excluding from such
associations those deemed unworthy of membership. Based on this definition, an
ecclesiastical affair involves the relationship between the church and its members and relate
to matters of faith, religious doctrines, worship and governance of the congregation. While
the matter at hand relates to the church and its religious minister it does not ipso facto give
the case a religious significance. Simply stated, what is involved here is the relationship of
the church as an employer and the minister as an employee. It is purely secular and has no
relation whatsoever with the practice of faith, worship or doctrines of the church.
Under the Labor Code, the provision which governs the dismissal of employees, is
comprehensive enough to include religious corporations, such as the SDA, in its coverage.
Article 278 of the Labor Code on post-employment states that "the provisions of this Title
shall apply to all establishments or undertakings, whether for profit or not." Obviously, the
cited article does not make any exception in favor of a religious corporation. This is made
more evident by the fact that the Rules Implementing the Labor Code, particularly, Section
1, Rule 1, Book VI on the Termination of Employment and Retirement, categorically includes
religious institutions in the coverage of the law, to wit:
Sec. 1. Coverage. — This Rule shall apply to all establishments and undertakings, whether
operated for profit or not, including educational, medical, charitable and religious institutions
and organizations, in cases of regular employment with the exception of the Government
and its political subdivisions including government-owned or controlled corporations.
2. The issue being the legality of petitioner's dismissal, the same must be measured against
the requisites for a valid dismissal, namely: (a) the employee must be afforded due process,
i.e., he must be given an opportunity to be heard and to defend himself, and; (b) the
dismissal must be for a valid cause as provided in Article 282 of the Labor Code. Without the
concurrence of this twin requirements, the termination would, in the eyes of the law, be
illegal.
Before the services of an employee can be validly terminated, Article 277 (b) of the Labor
Code and Section 2, Rule XXIII, Book V of the Rules Implementing the Labor Code further
require the employer to furnish the employee with two (2) written notices, to wit: (a) a
written notice served on the employee specifying the ground or grounds for termination, and
giving to said employee reasonable opportunity within which to explain his side; and, (b) 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 first notice, which may be considered as the proper charge, serves to apprise the
employee of the particular acts or omissions for which his dismissal is sought. The second
notice on the other hand seeks to inform 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 a representative, if he so
desires. Private respondent failed to substantially comply with the above requirements. With
regard to the first notice, the letter, dated 17 October 1991, which notified petitioner and his

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wife to attend the meeting on 21 October 1991, cannot be construed as the written charge
required by law. It never categorically stated the particular acts or omissions on which
petitioner's impending termination was grounded. In fact, the letter never even mentioned
that petitioner would be subject to investigation. The letter merely mentioned that petitioner
and his wife were invited to a meeting wherein what would be discussed were the alleged
unremitted church tithes and the events that transpired on 16 October 1991. The alleged
grounds for the dismissal of petitioner from the service were only revealed to him when the
actual letter of dismissal was finally issued. For this reason, it cannot be said that petitioner
was given enough opportunity to properly prepare for his defense. While admittedly, private
respondents complied with the second requirement, the notice of termination, this does not
cure the initial defect of lack of the proper written charge required by law.
3. The validity of dismissal cannot be sustained based on the ground of breach of trust.
Private respondents allege that they have lost their confidence in petitioner for his failure,
despite demands, to remit the tithes and offerings amounting to P15,078.10, which were
collected in his district. Settled is the rule that under Article 282 (c) of the Labor Code, the
breach of trust must be willful. 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.39 It should be genuine and not simulated. In
fact, as admitted by their own witness, Naomi Geniebla, petitioner remitted the amounts
which he collected to the Negros Mission for which corresponding receipts were issued to
him. Thus, the allegations of private respondents that petitioner breached their trust have
no leg to stand on.
4. No. and, as such, do not warrant petitioner's dismissal from the service.
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 in judgment.For misconduct to be
considered serious it must be of such grave and aggravated character and not merely trivial
or unimportant. Based on this standard, we believe that the act of petitioner in banging the
attaché case on the table, throwing the telephone and scattering the books in the office of
Pastor Buhat, although improper, cannot be considered as grave enough to be considered as
serious misconduct. After all, as correctly observed by the Labor Arbiter, though petitioner
committed damage to property, he did not physically assault Pastor Buhat or any other
pastor present during the incident. In fact, the alleged offense committed upon the person of
the employer's representatives was never really established or proven by private
respondents. Hence, there is no basis for the allegation that petitioner's act constituted
serious misconduct or that the same was an offense against the person of the employer's
duly authorized representative. As such, the cited actuation of petitioner does not justify the
ultimate penalty of dismissal from employment.

EVIOTA VS. COURT OF APPEALS;
407 SCRA 394
Facts:
Standard Chartered Bank and petitioner Eduardo G. Eviota executed a contract of
employment under which the petitioner was employed by the respondent bank as
Compensation and Benefits Manager, VP (M21). However, the petitioner abruptly resigned
from the respondent bank barely a month after his employment and rejoined his former

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employer.
Standard Charter Bank filed with the Regional Trial court of Makati a complaint against
Eviota’s acts which it claimed constitute a clear violation of Articles 19, 20 and 21 of
Republic Act No. 386, as amended (the "Civil Code") and that Eviota not only violated
Presidential Decree No. 442, as amended (the Labor Code), wherein it states that an
employee may terminate without just cause the employer-employee relationship by serving
written notice on the employer at least one (1) month in advance But he also violated,
Section 13 of the his Employment Contract specifically provides that: "Your [i.e., Eviota's]
employment may be terminated by either party giving notice of at least one month.
According to the bank Eviota is liable for damages. For in good faith the Bank has complied
with its part of the agreement, among them were the purchase of a CRV for Evita’s use,
making traveling arrangement for him to join a Conference in Singapore for the bank, and
furnishing him with a new office. Aside form Eviota’s sudden resignation he also took a
diskette with him containing and other papers and documents containing confidential
information on employee compensation and other Bank matters
Although Eviota has already returned his singing bonus and he has paid for the expenses of
the CRV but he had induced the Bank to believe that he was committed to fulfilling his
obligations under the Employment Contract. As a result, the Bank incurred expenses in
carrying out its part of the contract. Thus the bank is asking not only for actual damages,
but also moral and exemplary damages.
The petitioner filed a motion to dismiss the complaint on the ground that the action for
damages of the respondent bank was within the exclusive jurisdiction of the Labor Arbiter
under paragraph 4, Article 217 of the Labor Code of the Philippines, as amended, which
states that the Labor Arbiter and Commission has jurisdiction over claims for actual, moral,
exemplary and other forms of damages arising from the employer-employee relations.
The petitioner averred that the respondent bank's claim for damages arose out of or were in
connection with his employer-employee relationship with the respondent bank or some
aspect or incident of such relationship.
Issue:
Whether or not the Regional Trial Court has jurisdiction
Held:
The action was for breach of a contractual obligation, which is intrinsically a civil dispute.
While seemingly the cause of action arose from employer-employee relations, the
employer's claim for damages is grounded on "wanton failure and refusal" without just cause
to report to duty coupled with the averment that the employee "maliciously and with bad
faith" violated the terms and conditions of the contract to the damage of the employer. Such
averments removed the controversy from the coverage of the Labor Code of the Philippines
and brought it within the purview of the Civil Law.
Jurisprudence has evolved the rule that claims for damages under paragraph 4 of Article
217, to be cognizable by the Labor Arbiter, must have a reasonable causal connection with
any of the claims provided for in that article. Only if there is such a connection with the other
claims can the claim for damages be considered as arising from employer-employee
relations.
Petitioner does not ask for any relief under the Labor Code of the Philippines. It seeks to
recover damages agreed upon in the contract as redress for private respondent's breach of
his contractual obligation to its "damage and prejudice". Such cause of action is within the

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realm of Civil Law, and jurisdiction over the controversy belongs to the regular courts. More
so when we consider that the stipulation refers to the post-employment relations of the
parties.
In this case, the private respondent's first cause of action for damages is anchored on the
petitioner's employment of deceit and of making the private respondent believe that he
would fulfill his obligation under the employment contract with assiduousness and
earnestness. The petitioner volte face when, without the requisite thirty-day notice under
the contract and the Labor Code of the Philippines, as amended, he abandoned his office
and rejoined his former employer; thus, forcing the private respondent to hire a
replacement. The private respondent was left in a lurch, and its corporate plans and program
in jeopardy and disarray. Moreover, the petitioner took off with the private respondent's
computer diskette, papers and documents containing confidential information on employee
compensation and other bank matters. On its second cause of action, the petitioner simply
walked away from his employment with the private respondent sans any written notice, to
the prejudice of the private respondent, its banking operations and the conduct of its
business. Anent its third cause of action, the petitioner made false and derogatory
statements that the private respondent reneged on its obligations under their contract of
employment; thus, depicting the private respondent as unworthy of trust.
It is evident that the causes of action of the private respondent against the petitioner do not
involve the provisions of the Labor Code of the Philippines and other labor laws but the New
Civil Code. Thus, the said causes of action are intrinsically civil. There is no causal
relationship between the causes of action of the private respondent's causes of action
against the petitioner and their employer-employee relationship. The fact that the private
respondent was the erstwhile employer of the petitioner under an existing employment
contract before the latter abandoned his employment is merely incidental. In fact, the
petitioner had already been replaced by the private respondent before the action was filed
against the petitioner. The Petition is DENIED.

DYNAMIC SIGNMAKER OUTDOOR ADVERTISING SERVICES VS. POTONGAN;
G.R. No. 156589; June 27, 2005
Facts:
Respondent started working for Dynamic Signmaker as a Production Supervisor. In early
February 1996, the union of rank and file employees of petitioner corporation, declared a
strike on account of which petitioner corporation replaced all its supervisors and designated,
by letter memorandum, certain persons to take over the operations of the corporation
including Rufino Hornilla who took over respondent’s functions.
Potongan’s salary was withheld and was advised to take a leave of absence until further
notice and later received a letter from petitioner Hernandez, President/General Manager of
the corporation, “inviting” him to answer the following charges:
1.) that he entered the company fabrication shop where he was assigned as
supervisor and caused to create fire by secretly switching ‘on’ the idle plastic oven
and grounded the 2 electric machine welders while the ‘strike’ was on-going outside
the premises.
2.) that he allegedly on several occasions, urged strongly contractors led by Mr. Luis
Mimay, working on some left over jobs at the factory, to slow down work or not to
work at all in sympathy to the ‘strikers’ who are in the ranking files.
Potongan, through counsel, denied the charges against him and insisted that those were
only fabricated to justify his termination due to suspicions that he was a strike-sympathizer.

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He later on filed a complaint of illegal dismissal against the corporation contending that
although he was not sent a formal notice of termination, he was effectively dismissed from
employment because after he was asked to take a leave of absence, he was not instructed
nor allowed to return to work, nor paid his salaries. On the other hand, petitioners insisted
that respondent was not illegally dismissed as the “management [having] merely opted to
reorganize.” The Labor Arbiter dismissed the complaint on the ground that respondent’s
cause of action was barred by prior judgment that was rendered on June 24, 1996 by Labor
Arbiter Nieves V. De Castro which found respondent among those guilty of committing
prohibited acts and whose employment was consequently declared lost.
Respondent appealed to the NLRC and argued that the Labor Arbiter did not acquire
jurisdiction over his person in the above-said consolidated cases since service of summons
to the therein respondents President of the union, of which he is not a member, cannot be
considered proper service to him. Respondent thus concluded that a void judgment such as
one rendered without jurisdiction over the person of the party maybe assailed at any time,
either directly or collaterally.
Issues:
1 Whether or not respondent was illegally or constructively dismissed.
2 Whether or not the Labor Arbiter in the prior consolidated cases was able to take
jurisdiction over the person of respondent.
Held:
1. A letter sent by petitioner to respondent confirmed that respondent’s employment was
terminated as early as February 21, 1996 (when he was instructed to go on indefinite leave
and his salary was since then withheld), not for any of the just or authorized causes under
the Labor Code, but on account of the filing against him by petitioner corporation of a labor
case and a criminal case.
Surely, this Court recognizes that management has wide latitude to regulate, according to its
own discretion and judgment, all aspects of employment, including the freedom to transfer
and reassign employees according to the requirements of its business. The scope and limits
of the exercise of management prerogatives, must, however, be balanced against the
security of tenure given to labor.
If exercised in good faith for the purpose of advancing business interests, not of defeating or
circumventing the rights of employees, the managerial prerogative to transfer personnel
from one area of operation to another is justified.
This Court finds it difficult, however, to attribute good faith on the part of petitioners
because reespondent was instructed to go on indefinite leave and was asked to return to
work only after more than three years during which period his salaries were withheld, and
only after the NLRC promulgated its decision.
2. Petitioners fault the appellate court for failure to recognize the final and executory nature
of the NLRC Decision rendered in the consolidated cases and for affirming the nullification of
said decision, with respect to respondent, which could be attacked only by direct action.
Contrary to petitioners’ position, the validity of a judgment or order of a court or quasijudicial tribunal which has become final and executory may be attacked when the records
show that it lacked jurisdiction to render the judgment. For a judgment rendered against one
in a case where jurisdiction over his person was not acquired is void, and a void judgment
maybe assailed or impugned at any time either directly or collaterally by means of a petition
filed in the same or separate case, or by resisting such judgment in any action or proceeding
wherein it is invoked.

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Petitioners in fact do not even dispute respondent’s claim that no summons was ever issued
and served on him either personally or through registered mail as required under Rule III,
Sections 3 and 6 of the Rules of Procedure of the NLRC, as amended by Resolution No. 0102, Series of 2002:
SEC. 3. Issuance of Summons. Within two (2) days from receipt of a case, the Labor Arbiter
shall issue the required summons, attaching thereto a copy of the complaint/petition and
supporting documents, if any. The summons, together with a copy of the complaint, shall
specify the date, time and place of the conciliation and mediation conference in two (2)
settings.
SEC. 6. Service of Notices and Resolutions. a) Notices or summonses and copies of orders,
shall be served on the parties to the case personally by the bailiff or duly authorized public
officer within three (3) days from receipt thereof or by registered mail, provided that in
special circumstances, service of summons may be effected in accordance with the
pertinent provisions of the Rules of Court; xxx
Supplementary or applied by analogy to these provisions are the provisions and prevailing
jurisprudence in Civil Procedure. Where there is then no service of summons on or a
voluntary general appearance by the defendant, the court acquires no jurisdiction to
pronounce a judgment in the cause.
At all events, even if administrative tribunals exercising quasi-judicial powers are not strictly
bound by procedural requirements, they are still bound by law and equity to observe the
fundamental requirements of due process.

METROMEDIA TIMES CORP. VS. PASTORIN;
G.R. No. 154295; July 29, 2005
Facts:
Pastorin was employed by Metromedia Times Corporation (Petitioner) as a Field
Representative/Collector. His task entailed the periodic collection of receivables from
dealers of petitioner's newspapers. Prior to the subject incident, respondent claimed to have
received a termination letter dated 7 May 1998 from management terminating his services
for tardiness effective 16 June 1988. Respondent, member of Metro Media Times Employees
Union, was not dismissed due to the intervention of the labor union, the collective
bargaining agent in the company.
In May 1998, he obtained a loan from one of the dealers whom he dealt with, De Manuel,
amounting to P9,000.00. After paying P1,125.00, respondent reneged on the balance of his
loan. De Manuel wrote a letter to petitioner, and seeking assistance for collection on the
remainder of the loan. She claimed that when respondent became remissed on his personal
obligation, he stopped collecting periodically the outstanding dues of De Manuel.
Petitioner sent a letter addressed to respondent, requiring an explanation for the transaction
with De Manuel, as well as for his failure to pay back the loan according to the conditions
agreed upon. In his reply letter, respondent admitted having incurred the loan, but offered
no definitive explanation for his failure to repay the same.
Petitioner, through a Memorandum, imposed the penalty of suspension on respondent for 4
days for violating Company Policy and ordered his transfer to the Administration
Department. Respondent wrote a letter to petitioner, stating that he wanted to sign a

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transfer memo before assuming his new position. Later, he was handed the Payroll Change
Advice indicating his new assignment to the Traffic and Order Department of Metromedia.
Nonetheless, respondent stopped reporting for work. Respondent sent a letter to petitioner
communicating his refusal to accept the transfer. Respondent duly filed a complaint for
constructive dismissal, non-payment of back wages and other money claims with the Labor
Arbiter.
Issue:
Whether or not Metromedia is estopped from questioning the jurisdiction of the Labor Arbiter
over the subject matter of the case for the first time only in their appeal before the NLRC.
Held:
Applying the general rule that estoppel does not confer jurisdiction, petitioner is not
estopped from assailing the jurisdiction of the labor arbiter before the NLRC on appeal.
Respondent relied solely on estoppel to oppose petitioner’s claim of lack of jurisdiction on
the part of the labor arbiter. He adduced no other legal ground in support of his contention
that the Labor Arbiter had jurisdiction over the case. Thus, his claim falls flat in light of our
pronouncement, and more so considering the NLRC’s correct observation that jurisdiction
over grievance Issue, such as the propriety of the reassignment of a union member falls
under the jurisdiction of the voluntary arbitrator.

YUSEN AIR & SEA SERVICE PHILS VS. VILLAMOR;
G.R. No. 154942; August 16, 2005
Facts:
Petitioner is engaged in the business of freight forwarding. As such, it is contracted by
clients to pick-up, unpack, consolidate, deliver, transport and distribute all kinds of cargoes,
acts as cargo or freight accommodation and enters into charter parties for the carriage of all
kinds of cargoes or freight. On August 16, 1993, petitioner hired respondent as branch
manager in its Cebu Office. Later, petitioner reclassified respondent’s position to that of
Division Manager, which position respondent held until his resignation on February 1, 2002.
Immediately after his resignation, respondent started working for Aspac International, a
corporation engaged in the same line of business as that of petitioner. On February 11,
2002, in the Regional Trial Court at Parañaque City, petitioner filed against respondent a
complaint for injunction and damages with prayer for a temporary restraining order. The
complaint alleged that [respondent] duly signed an undertaking to abide by the policies of
the [Petitioner] which includes the provision on the employees’ responsibility and obligation
in cases of conflict of interest, which reads:
No employee may engage in any business or undertaking that is directly or indirectly
in competition with that of the company and its affiliates or engage directly or
indirectly in any undertaking or activity prejudicial to the interests of the company or
to the performance of his/her job or work assignments. The same provision will be
implemented for a period of two (2) years from the date of an employee’s
resignation, termination or separation from the company.
That in clear violation and breach of his undertaking and agreement with the policies of
[petitioner], [respondent] joined Aspac International, within two years from [his] date of
resignation, whose business is directly in conflict with that of [petitioner].
Petitioner thus prayed for a judgment enjoining respondent from “further pursuing his work
at Aspac International”, and awarding it P2,000,000 as actual damages; P300,000 as

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exemplary damages; and another P300,000 as attorney’s fees.
On March 4, 2002,
apparently not to be outdone, respondent filed against petitioner a case for illegal dismissal
before the National Labor Relations Commission. Meanwhile, instead of filing his answer in
the civil case, respondent filed a Motion to Dismiss, arguing that the RTC has no jurisdiction
over the subject matter of said case because an employer-employee relationship is involved.
On March 20, 2002, the trial court issued the herein first assailed order dismissing
petitioner’s complaint for lack of jurisdiction over the subject matter thereof on the ground
that the action was for damages arising from employer-employee relations. Citing Article
217 of the Labor Code, the trial court ruled that it is the labor arbiter which had jurisdiction
over petitioner’s complaint. In time, petitioner moved for a reconsideration but its motion
was denied by the trial court in its subsequent order of June 21, 2002.
Issue:
Whether or not the petitioner’s cause of action arises from employer-employee relations
even if the claim therein is based on a provision in its handbook.
Held:
No, the petitioner’s cause of action does not arises from employer-employee relations,
because, petitioner does not ask for any relief under the Labor Code of the Philippines. It
seeks to recover damages agreed upon in the contract as redress for private respondent’s
breach of his contractual obligation to its “damage and prejudice”. Such cause of action is
within the realm of Civil Law, and jurisdiction over the controversy belongs to the regular
courts. More so when we consider that the stipulation refers to the post-employment
relations of the parties.
While seemingly the cause of action arose from employer-employee relations, the
employer’s claim for damages is grounded on wanton failure and refusal without just cause
to report to duty coupled with the averment that the employee maliciously and with bad
faith violated the terms and conditions of the contract to the damage of the employer. Such
averments removed the controversy from the coverage of the Labor Code of the Philippines
and brought it within the purview of Civil Law.
Indeed, jurisprudence has evolved the rule that claims for damages under paragraph 4 of
Article 217, to be cognizable by the Labor Arbiter, must have a reasonable causal connection
with any of the claims provided for in that article. Only if there is such a connection with the
other claims can a claim for damages be considered as arising from employer-employee
relations.
Article 217, as amended by Section 9 of RA 6715, provides:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) Except as otherwise
provided under this Code, the Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide, within thirty (30) calendar days after the submission
of the case by the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers, whether agricultural or
non-agricultural:
xxx
xxx
xxx
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;"
xxx
xxx
xxx
In San Miguel Corporation vs. National Labor Relations Commission, we had occasion to
construe Article 217, as amended by B.P. Blg. 227. Article 217 then provided that the Labor
Arbiter had jurisdiction over all money claims of workers, but the phrase ‘arising from
employer-employee relation’ was deleted. We ruled thus:

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While paragraph 3 above refers to “all money claims of workers,” it is not necessary to
suppose that the entire universe of money claims that might be asserted by workers against
their employers has been absorbed into the original and exclusive jurisdiction of Labor
Arbiters. In the first place, paragraph 3 should be read not in isolation from but rather within
the context formed by paragraph 1 (relating to unfair labor practices), paragraph 2 (relating
to claims concerning terms and conditions of employment), paragraph 4 (claims relating to
household services, a particular species of employer-employee relations), and paragraph 5
(relating to certain activities prohibited to employees or employers). It is evident that there
is a unifying element which runs through paragraph 1 to 5 and that is, that they all refer to
cases or disputes arising out of or in connection with an employer-employee relationship.
This is, in other words, a situation where the rule of noscitur a sociis may be usefully invoked
in clarifying the scope of paragraph 3, and any other paragraph of Article 217 of the Labor
Code, as amended. We reach the above conclusion from an examination of the terms
themselves of Article 217, as last amended by B.P. Blg 227, and even though earlier versions
of Article 217 of the Labor Code expressly brought within the jurisdiction of the Labor
Arbiters and the NLRC “cases arising from employer-employee relations,” which clause was
not expressly carried over, in printer’s ink, in Article 217 as it exists today. For it cannot be
presumed that money claims of workers which do not arise out of or in connection with their
employer-employee relationship, and which would therefore fall within the general
jurisdiction of regular courts of justice, were intended by the legislative authority to be taken
away from the jurisdiction of the courts and lodged with Labor Arbiters on an exclusive basis.
The Court, therefore, believes and so holds that the “money claims of workers” referred to in
paragraph 3 of Article 217 embraces money claims which arise out of or in connection with
the employer-employee relationship, or some aspect or incident of such relationship. Put a
little differently, that money claims of workers which now fall within the original and
exclusive jurisdiction of Labor Arbiters are those money claims which have some reasonable
causal connection with the employer-employee relationship.
When, as here, the cause of action is based on a quasi-delict or tort, which has no
reasonable causal connection with any of the claims provided for in Article 217, jurisdiction
over the action is with the regular courts.
It is basic that jurisdiction over the subject matter is determined upon the allegations made
in the complaint, irrespective of whether or not the plaintiff is entitled to recover upon the
claim asserted therein, which is a matter resolved only after and as a result of a trial.
Neither can jurisdiction of a court be made to depend upon the defenses made by a
defendant in his answer or motion to dismiss. If such were the rule, the question of
jurisdiction would depend almost entirely upon the defendant.

DUTY FREE PHILIPPINES VS. MOJICA;
G.R. No. 166365; September 30, 2005
Facts:
The Discipline Committee of Duty Free Philippines (DFP) on November 28, 2007 found Stock
Clerk Rossano A. Mojica guilty of Neglect of Duty by causing considerable damage to or loss
of materials, assets and property of DFP. Thus, Mojica was considered forcibly resigned from
the service with forfeiture of all benefits except his salary and the monetary value of the
accrued leave credits. He was formally informed of his forced resignation on January 14,
1998. Thereupon, he filed a complaint for illegal dismissal with prayer for reinstatement,
payment of full back wages, damages, and attorney’s fees, against DFP before the National
Labor Relations Commission (NLRC).

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The Labor Arbiter rendered a decision finding that Mojica was illegally dismissed. The NLRC
later reversed the ruling of the arbiter. The CA sustained the ruling of the arbiter.
Issue:
WON the Labor Arbiter and the NLRC had jurisdiction to decide the case
Held:
NO. Mojica is a civil service employee; therefore, jurisdiction is lodged not with the NLRC, but
with the Civil Service Commission.
DFP was created under Executive Order (EO) No. 46 on September 4, 1986 primarily to
augment the service facilities for tourists and to generate foreign exchange and revenue for
the government. In order for the government to exercise direct and effective control and
regulation over the tax and duty free shops, their establishment and operation was vested in
the Ministry, now Department of Tourism (DOT), through its implementing arm, the
Philippine Tourism Authority (PTA). All the net profits from the merchandising operations of
the shops accrued to the DOT.
As provided under Presidential Decree (PD) No. 564, PTA is a corporate body attached to the
DOT. As an attached agency, the recruitment, transfer, promotion and dismissal of all its
personnel was governed by a merit system established in accordance with the civil service
rules. In fact, all PTA officials and employees are subject to the Civil Service rules and
regulations.
Accordingly, since DFP is under the exclusive authority of the PTA, it follows that its officials
and employees are likewise subject to the Civil Service rules and regulations. Clearly then,
Mojica’s recourse to the Labor Arbiter was not proper. He should have followed the
procedure laid down in DFP’s merit system and the Civil Service rules and regulations.
In sum, the labor arbiter and the NLRC erred in taking cognizance of the complaint as
jurisdiction over the complaint for illegal dismissal is lodged with the Civil Service
Commission. The Court of Appeals likewise erred in sustaining the labor arbiter.

EASYCALL COMMUNICATION PHILS. VS. KING;
G.R. No. 145901; December 15, 2005
Facts:
Easycall Communications Phils., Inc. was a domestic corporation primarily engaged in the
business of message handling. Petitioner, through its general manager, Roberto B. Malonzo,
hired the services of respondent as assistant to the general manager which became vicepresident for nationwide expansion.
Malonzo reviewed the sales performance of respondent. He also scrutinized the status of
petitioner’s Nationwide Expansion Program (NEP) which was under respondent’s
responsibility. He found that respondent’s actual sales for the period October 1992–March
1993 was 78% of his sales commitment and 70% of his sales target.
Malonzo also checked the frequency and duration of the provincial sales development visits
made by respondent for the same period to expansion areas under his jurisdiction. He
discovered that the latter spent around 40% of the total number of working days for that
period in the field.
Rockwell Gohu, petitioner’s deputy general manager, talked to respondent to discuss his

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sales performance. In the course of the conversation, Gohu informed respondent that
Malonzo wanted his resignation. This prompted respondent to write a memorandum to
Malonzo. In his memorandum, he inquired whether Malonzo really wanted him to resign. He
emphasized that his work performance had yet to be evaluated. He also stated that, based
on the approved budget for fiscal year ending in June 1993, he was within the budget and
targets set forth by petitioner. He further declared that he had no intention of resigning from
his position.
Respondent received a notice of termination signed by Malonzo.
Issue:
Whether the termination was valid or not.
Held:
While loss of confidence is a valid ground for dismissing an employee, it should not be
simulated. It must not be indiscriminately used as a shield by the employer against a claim
that the dismissal of an employee was arbitrary.
To be a valid ground for an employee’s dismissal, loss of trust and confidence must be based
on a willful breach and founded on clearly established facts. A breach is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an
act done carelessly, thoughtlessly, heedlessly or inadvertently. Thus, a willful breach cannot
be a breach resulting from mere carelessness.
In this case, the labor arbiter’s finding, affirmed by the NLRC, was that the sales record of
respondent and the time he spent in the field were “clear indications of complainant’s
inefficiency and/or negligence.” Inefficiency implies negligence, incompetence, ignorance
and carelessness. Negligence is the want or lack of care required by the circumstances.
The grounds cited by petitioner, i.e., respondent’s alleged poor sales performance and the
allegedly excessive time he spent in the field, were not sufficient to support a claim of loss of
confidence as a ground for dismissal.
Furthermore, the alleged loss of confidence was not founded on clearly established facts.
First, petitioner included the sales performance of respondent for the period covering
October 1992 to December 1992 in arriving at the conclusion that his sales record was
dismal. However, as the CA correctly pointed out, petitioner previously recognized that
respondent’s performance for that period “was not merely satisfactory” but “more than
extra-ordinary that it merited his promotion not only to the position of assistant vice
president, to which he was recommended by his supervisor, but to the even higher position
of vice president.” This self-contradictory position of petitioner negates its claim of loss of
confidence in repondent.
Moreover, the promotion of an employee negates the employer’s claim that it has lost its
trust and confidence in the employee. Hence, petitioner’s claim of loss of confidence
crumbles in the light of respondent’s promotion not only to assistant vice-president but to
the even higher position of vice- president.
Second, the sales record of respondent for the period October 1992–December 1992 was
recognized as so exemplary that it merited his promotion. Later, however, this very same
record was suddenly deemed poor and dismal to justify loss of confidence. Thus, petitioner
interpreted one and the same sales record as proof of respondent’s simultaneous efficiency
and inefficiency. This could only mean that there was no sufficient standard with which to
measure the performance of respondent, an indication of the arbitrariness of petitioner.
Finally, during the hearing of this case before the labor arbiter, Malonzo stated that the

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percentage of the time spent by respondent in his sales area was actually “not below par.”
This admission of petitioner’s general manager only proves all the more the lack of sufficient
standard for determining respondent’s performance.
The lack of just cause in respondent’s dismissal was aggravated by the absence of due
process.
The twin requirements of notice and hearing constitute the essential elements of due
process. The law requires the employer to furnish the employee sought to be dismissed with
two written notices before termination of employment can be legally effected: (1) a written
notice apprising the employee of the particular acts or omissions for which his dismissal is
sought in order to afford him an opportunity to be heard and to defend himself with the
assistance of counsel, if he desires, and (2) a subsequent notice informing the employee of
the employer’s decision to dismiss him. This procedure is mandatory and its absence taints
the dismissal with illegality.
In this case, respondent was served with one notice only ― the notice of his termination. The
series of dialogues between petitioner’s management and respondent was not enough as it
failed to show that the latter was apprised of the cause of his dismissal. These dialogues or
consultations could not validly substitute for the actual observance of notice and hearing.

SAN MIGUEL FOODS INC. VS. SAN MIGUEL CORP EMPLOYEES UNION – PTGWO;
G.R. No. 168569; October 5, 2007
Facts:
San Miguel Corporation Employees Union – PTWGO (the Union), was the sole bargaining
agent of all the monthly paid employees of petitioner San Miguel Foods, Incorporated (SMFI).
On November 9, 1992, some employees of SMFI’s Finance Department, through the Union
represented by Edgar Moraleda, brought a grievance against Finance Manager Gideon
Montesa (Montesa), for “discrimination, favoritism, unfair labor practices, not flexible [sic],
harassment, promoting divisiveness and sectarianism, etc.,”before SMFI Plant Operations
Manager George Nava in accordance with Step 1 of the grievance machinery adopted in the
Collective Bargaining Agreement (CBA) forged by SMFI and the Union.
The Union sought the “1. review, evaluat[ion] & upgrad[ing of] all Finance staff and 2.
promot[ion of] G.Q. Montesa to other SMC affiliate[s] & subsidiaries.”
At the grievance meeting held on January 14, 1993, SMFI informed the Union that it planned
to address the grievance through a “work management review” which would be completed
by March 1993, hence, it asked the finance personnel to give it their attention and
cooperation. The “work management review” was not completed by March 1993, however,
prompting the Union to, on March 26, 1993, elevate the grievance to Step 2。
Almost nine months after the grievance meeting was held or on October 6, 1993, SMFI
rendered a “Decision on Step 1 Grievance” stating that it was still in the process of
completing the “work management review,”[4] hence, the Union’s requests could not be
granted.
The Union thereupon filed a complaint on October 20, 1993 before the National Labor
Relations Commission (NLRC), Arbitration Branch, against SMFI,[5] its President Amadeo P.
Veloso, and its Finance Manager Montesa for “unfair labor practice, [and] unjust
discrimination in matters of promotion . . . ” It prayed that SMFI et al. be ordered to promote
the therein named employees “with the corresponding pay increases or adjustment
including payment of salary differentials plus attorney’s fees[,] and to cease and desist from
committing the same unjust discrimination in matters of promotion.”

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Instead of filing a position paper as required by the Labor Arbiter, SMFI et al. filed a motion
to dismiss, contending that the Issue raised in the complaint were grievance Issue and,
therefore, “should be resolved in the grievance machinery provided in [the] collective
bargaining agreements [sic] of the parties or in the mandated provision of voluntary
arbitration which is also provided in the CBA.”[9] The Union opposed the motion to dismiss.
In its Position Paper, the Union specified acts of ULP of SMFI et al. under Article 248,
paragraphs (e) and (i) of the Labor Code[10] which Article reads:
Art. 248. Unfair labor practices of employers. – It shall be unlawful for an employer to
commit any of the following unfair labor practices:
xxxx
(e) To discriminate in regard to wages, hours of work, and other terms and conditions
of employment in order to encourage or discourage membership in any labor
organization. x x x
xxxx
(i) To violate a collective bargaining agreement.
xxxx
Held:
The jurisdiction of Labor Arbiters, enumerated in Article 217 of the Labor Code, includes
complaints for ULP.
As stated above, the Union, in its Position Paper, mentioned the particular acts of ULP and
the ultimate facts in support thereof.
1. large scale and wanton unjust discrimination in matters of promotion, particularly
upon the following members of complainant: Ellen Ventura, Julie Geronimo, Ronnie
Cruz, Rita Calasin, Romy de Peralta, Malou Alano, And E. M. Moraleda, all assigned
with the Finance Department or respondent SMFI.
2. gross and blatant violations by respondent SMFI of Section 5, Article III (Job
Security) and Section 4, Article VIII (Grievance Machinery) of the current collective
bargaining agreement (CBA) between complainant and respondent SMFI, which
provisions of said CBA are hereunder quoted for easy reference. (Emphasis and
underscoring supplied)
On the questioned promotions, the Union did not allege that they were done to encourage or
discourage membership in a labor organization. In fact, those promoted were members of
the complaining Union. The promotions do not thus amount to ULP under Article 248(e) of
the Labor Code.
As for the alleged ULP committed under Article 248(i), for violation of a CBA, this Article is
qualified by Article 261 of the Labor Code, the pertinent portion of which latter Article reads:
x x x violations of a Collective Bargaining Agreement, except those which are gross in
character, shall no longer be treated as unfair labor practice and shall be resolved as
grievances under the Collective Bargaining Agreement. For purposes of this article, gross
violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to
comply with the economic provisions of such agreement. (Emphasis and underscoring
supplied)
Silva v. NLRC instructs that for a 　ULP case to be cognizable by the Labor Arbiter, and the
NLRC to exercise its appellate jurisdiction, the allegations in the complaint should show
prima facie the concurrence of two things, namely: (1) gross violation of the CBA; AND (2)
the violation pertains to the economic provisions of the CBA.[17]
(Emphasis and
underscoring supplied)

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As reflected in the above-quoted allegations of the Union in its Position Paper, the Union
charges SMFI to have violated the grievance machinery provision in the CBA. The grievance
machinery provision in the CBA is not an economic provision, however, hence, the second
requirement for a Labor Arbiter to exercise jurisdiction of a ULP is not present.
The Union likewise charges SMFI, however, to have violated the Job Security provision in the
CBA, specifically the seniority rule, in that SMFI “appointed less senior employees to
positions at its Finance Department, consequently intentionally by-passing more senior
employees who are deserving of said appointment.”
Article 4 of the Labor Code provides that “All doubts in the implementation and
interpretation of the provisions of this Code, including implementing rules and regulations,
shall be resolved in favor of labor.” Since the seniority rule in the promotion of employees
has a bearing on salary and benefits, it may, following a liberal construction of Article 261 of
the Labor Code, be considered an “economic provision” of the CBA.
As above-stated, the Union charges SMFI to have promoted less senior employees, thus
bypassing others who were more senior and equally or more qualified. It may not be
seriously disputed that this charge is a gross or flagrant violation of the seniority rule under
the CBA, a ULP over which the Labor Arbiter has jurisdiction.
SMFI, at all events, questions why the Court of Appeals came out with a finding that it (SMFI)
disregarded the seniority rule under the CBA when its petition before said court merely
raised a question of jurisdiction. The Court of Appeals having affirmed the NLRC decision
finding that the Labor Arbiter has jurisdiction over the Union’s complaint and thus remanding
it to the Labor Arbiter for continuation of proceedings thereon, the appellate court’s said
finding may be taken to have been made only for the purpose of determining jurisdiction.

LEYTE IV ELECTRIC COOPERATIVE, INC. VS. LEYECO IV EMPLOYEES UNION-ALU;
G.R. No. 157745; October 19, 2007
Facts:
On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees
Union-ALU (respondent) entered into a CBAS covering petitioner rank-and-file employees, for
a period of five (5) years effective January 1, 1998.
On June 7, 2000, respondent, through its Regional Vice-President, Vicente P. Casilan, sent a
letter to petitioner demanding holiday pay for all employees, as provided for in the CBA.
On June 20, 2000, petitioner, through its legal counsel, sent a letter-reply to Casilan,
explaining that after perusing all available pay slips, it found that it had paid all employees
all the holiday pays enumerated in the CBA.
After exhausting the procedures of the grievance machinery, the parties agreed to submit
the Issue of the interpretation and implementation of Section 2, Article VIII of the CBA on the
payment of holiday pay, for arbitration of the National Conciliation and Mediation Board
(NCMB), Regional Office No. VIII in Tacloban City.[6] The parties were required to submit
their respective position papers, after which the dispute was submitted for decision.
While admitting in its Position Paper[7] that the employees were paid all of the days of the
month even if there was no work, respondent alleged that it is not prevented from making

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separate demands for the payment of regular holidays concomitant with the provisions of
the CBA, with its supporting documents consisting of a letter demanding payment of holiday
pay, petitioner's reply thereto and respondent's rejoinder, a computation in the amount of
P1,054,393.07 for the unpaid legal holidays, and several pay slips.
Petitioner, on the other hand, in its Position Paper,[8] insisted payment of the holiday pay in
compliance with the CBA provisions, stating that payment was presumed since the formula
used in determining the daily rate of pay of the covered employees is Basic Monthly Salary
divided by 30 days or Basic Monthly Salary multiplied by 12 divided by 360 days, thus with
said formula, the employees are already paid their regular and special days, the days when
no work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays.
On March 1, 2001, Voluntary Arbitrator Antonio C. Lopez, Jr. rendered a Decision[9] in favor
of respondent, holding petitioner liable for payment of unpaid holidays from 1998 to 2000 in
the sum of P1,054,393.07. He reasoned that petitioner miserably failed to show that it
complied with the CBA mandate that holiday pay be “reflected during any payroll period of
occurrence” since the payroll slips did not reflect any payment of the paid holidays. He
found unacceptable not only petitioner's presumption of payment of holiday pay based on a
formula used in determining and computing the daily rate of each covered employee, but
also petitioner's further submission that the rate of its employees is not less than the
statutory minimum wage multiplied by 365 days and divided by twelve.
On April 11, 2001, petitioner filed a Motion for Reconsideration[10] but it was denied by the
Voluntary Arbitrator in a Resolution 、 dated June 17, 2002. Petitioner received said
Resolution on June 27, 2002.[12]
Thirty days later, or on July 27, 2002 　 petitioner filed a Petition for Certiorariin the CA,
ascribing grave abuse of discretion amounting to lack of jurisdiction to the Voluntary
Arbitrator: (a) for ignoring that in said company the divisor for computing the applicable
daily rate of rank-and-file employees is 360 days which already includes payment of 13 unworked regular holidays under Section 2, Article VIII of the CBA; 　 and (b) for holding the
petitioner liable for the unpaid holidays just because the payroll slips submitted as evidence
did not show any payment for the regular holidays. 　 In a Resolution dated September 4,
2002, the CA dismissed outright petitioner's Petition for Certiorari for adopting a wrong
mode of appeal. It reasoned:
Considering that what is assailed in the present recourse is a Decision of a Voluntary
Arbitrator, the proper remedy is a petition for review under Rule 43 of the 1997 Rules of Civil
Procedure; hence, the present petition for certiorari under Rule 65 filed on August 15, 2002,
should be rejected, as such a petition cannot be a substitute for a lost appeal. And in this
case, the period for appeal via a petition for review has already lapsed since the petitioner
received a copy of the Resolution denying its motion for reconsideration on June 27, 2002, so
that its last day to appeal lapsed on July 12, 2002.
Held:
It has long been settled in the landmark case Luzon Development Bank that a voluntary
arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial
agency; hence, his decisions and awards are appealable to the CA. This is so because the
awards of voluntary arbitrators become final and executory upon the lapse of the period to
appeal;[27] and since their awards determine the rights of parties, their decisions have the
same effect as judgments of a court. Therefore, the proper remedy from an award of a
voluntary arbitrator is a petition for review to the CA, following Revised Administrative
Circular No. 1-95, which provided for a uniform procedure for appellate review of all
adjudications of quasi-judicial entities, which is now embodied in Section 1, Rule 43 of the
1997 Rules of Civil Procedure, which reads:

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SECTION 1. Scope. — This Rule shall apply to appeals from judgments or final orders
of the Court of Tax Appeals and from awards, judgments, final orders or resolutions of
or authorized by any quasi-judicial agency in the exercise of its quasi-judicial
functions. Among these agencies are the Civil Service Commission, Central Board of
Assessment Appeals, Securities and Exchange Commission, Office of the President,
Land Registration Authority, Social Security Commission, Civil Aeronautics Board,
Bureau of Patents, Trademarks and Technology Transfer, National Electrification
Administration, Energy Regulatory Board, National Telecommunications Commission,
Department of Agrarian Reform under Republic Act No. 6657, Government Service
Insurance System, Employees Compensation Commission, Agricultural Inventions
Board, Insurance Commission, Philippine Atomic Energy Commission, Board of
Investments, Construction Industry Arbitration Commission, and voluntary arbitrators
authorized by law.[28] (Emphasis supplied)
Section 2, Rule 43 of the 1997 Rules of Civil Procedure which provides that:
SEC. 2. Cases not covered. - This Rule shall not apply to judgments or final orders
issued under the Labor Code of the Philippines.
It did not alter the Court's ruling in Luzon Development Bank. Section 2, Rule 42 of the 1997
Rules of Civil Procedure, is nothing more than a reiteration of the exception to the exclusive
appellate jurisdiction of the CA,[29] as provided for in Section 9, Batas Pambansa Blg. 129,
[30] as amended by Republic Act No. 7902:[31]
(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders or
awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or
commissions, including the Securities and Exchange Commission, the Employees’
Compensation Commission and the Civil Service Commission, except those falling within the
appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor
Code of the Philippines under Presidential Decree No. 442, as amended, the provisions of
this Act and of subparagraph (1) of the third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948.
The Court took into account this exception in Luzon Development Bank but, nevertheless,
held that the decisions of voluntary arbitrators issued pursuant to the Labor Code do not
come within its ambit, thus:
x x x. The fact that [the voluntary arbitrator’s] functions and powers are provided for
in the Labor Code does not place him within the exceptions to said Sec. 9 since he is
a quasi-judicial instrumentality as contemplated therein. It will be noted that,
although the Employees’ Compensation Commission is also provided for in the Labor
Code, Circular No. 1-91, which is the forerunner of the present Revised Administrative
Circular No. 1-95, laid down the procedure for the appealability of its decisions to the
Court of Appeals under the foregoing rationalization, and this was later adopted by
Republic Act No. 7902 in amending Sec. 9 of B.P. 129.
A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should
likewise be appealable to the Court of Appeals, in line with the procedure outlined in Revised
Administrative Circular No. 1-95, just like those of the quasi-judicial agencies, boards and
commissions enumerated therein.
This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91
to provide a uniform procedure for the appellate review of adjudications of all quasi-judicial
entities not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the

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Constitution or another statute. Nor will it run counter to the legislative intendment that
decisions of the NLRC be reviewable directly by the Supreme Court since, precisely, the
cases within the adjudicative competence of the voluntary arbitrator are excluded from the
jurisdiction of the NLRC or the labor arbiter.[32]
This ruling has been repeatedly reiterated in subsequent cases[33] and continues to be the
controlling doctrine. Thus, the general rule is that the proper remedy from decisions of
voluntary arbitrators is a petition for review under Rule 43 of the Rules of Court.
Nonetheless, a special civil action for certiorari under Rule 65 of the Rules of Court is the
proper remedy for one who complains that the tribunal, board or officer exercising judicial or
quasi-judicial functions acted in total disregard of evidence material to or decisive of the
controversy.[34]
As this Court elucidated in Garcia v. National Labor Relations
Commission[35] [I]n Ong v. People, we ruled that certiorari can be properly resorted to where the factual
findings complained of are not supported by the evidence on record. Earlier, in Gutib v. Court
of Appeals, we emphasized thus:
[I]t has been said that a wide breadth of discretion is granted a court of justice in certiorari
proceedings. The cases in which certiorari will issue cannot be defined, because to do so
would be to destroy its comprehensiveness and usefulness. So wide is the discretion of the
court that authority is not wanting to show that certiorari is more discretionary than either
prohibition or mandamus. In the exercise of our superintending control over inferior courts,
we are to be guided by all the circumstances of each particular case “as the ends of justice
may require.” So it is that the writ will be granted where necessary to prevent a substantial
wrong or to do substantial justice.
In addition, while the settled rule is that an independent action for certiorari may be availed
of only when there is no appeal or any plain, speedy and adequate remedy in the ordinary
course of law[37] and certiorari is not a substitute for the lapsed remedy of appeal,[38]
there are a few significant exceptions when the extraordinary remedy of certiorari may be
resorted to despite the availability of an appeal, namely: (a) when public welfare and the
advancement of public policy dictate; (b) when the broader interests of justice so require; (c)
when the writs issued are null; and (d) when the questioned order amounts to an oppressive
exercise of judicial authority.
In this case, while the petition was filed on July 27, 2002,[40] 15 days after July 12, 2002, the
expiration of the 15-day reglementary period for filing an appeal under Rule 43, the broader
interests of justice warrant relaxation of the rules on procedure. Besides, petitioner alleges
that the Voluntary Arbitrator’s conclusions have no basis in fact and in law; hence, the
petition should not be dismissed on procedural grounds.
The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal
interpretation of the CBA provisions that the holiday pay be reflected in the payroll slips.
Such literal interpretation ignores the admission of respondent in its Position Paper[41] that
the employees were paid all the days of the month even if not worked. In light of such
admission, petitioner's submission of its 360 divisor in the computation of employees’
salaries gains significance.
In this case, the employees are required to work only from Monday to Friday. Thus, the
minimum allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays
and 51 un-worked Saturdays from 365 days. Considering that petitioner used the 360-day
divisor, which is clearly above the minimum, indubitably, petitioner's employees are being
given their holiday pay.

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Thus, the Voluntary Arbitrator should not have simply brushed aside petitioner's divisor
formula. In granting respondent's claim of non-payment of holiday pay, a “double burden”
was imposed upon petitioner because it was being made to pay twice for its employees'
holiday pay when payment thereof had already been included in the computation of their
monthly salaries. Moreover, it is absurd to grant respondent's claim of non-payment when
they in fact admitted that they were being paid all of the days of the month even if not
worked.
By granting respondent's claim, the Voluntary Arbitrator sanctioned unjust
enrichment in favor of the respondent and caused unjust financial burden to the petitioner.
Obviously, the Court cannot allow this.

ATTY. GARCIA VS. EASTERN TELECOMMUNICATIONS PHILS., ET AL.;
G.R. No. 173115 & 173163-64; April 16, 2009
Facts:
Atty. Virgilio R. Garcia was the Vice President and Head of Business Support Services and
Human Resource Departments of the Eastern Telecommunications Philippines, Inc. (ETPI).
Atty. Garcia was placed under preventive suspension based on three complaints for sexual
harassment filed by Atty. Maria Larrie Alinsunurin, former manager of ETPIs Office of the
Legal Counsel; Ms. Emma Valeros-Cruz, Assistant Vice President of ETPI and former secretary
of Atty. Garcia; and Dr. Mercedita M. Macalintal, medical retainer/company physician of ETPI.
In response to the complaints, the Human Resources Department constituted a Committee
on Decorum to investigate the complaints. By reason of said complaints, Atty. Garcia was
placed in preventive suspension. The committee conducted an investigation where Atty.
Garcia was given copies of affidavits of the witnesses against him and a chance to defend
himself and to submit affidavits of his witnesses. The Committee submitted a report which
recommended his dismissal. In a letter dated 14 April 2000, Atty. Hizon advised Atty. Garcia
that his employment with ETPI was, per recommendation of the Committee, terminated
effective 16 April 2000.
The Labor Arbiter Reyes found the preventive suspension and subsequent dismissal of Atty.
Garcia illegal. On 21 March 2003, the NLRC rendered its decision in NLRC NCR CA Case No.
028901-01 reversing the decision of Labor Arbiter Reyes and dismissing the case for lack of
jurisdiction. The decretal portion of the decision reads: The Commission ruled that the
dismissal of Atty. Garcia, being ETPIs Vice President, partook of the nature of an intracorporate dispute cognizable by Regional Trial Courts and not by Labor Arbiters. It added
that ETPI and Atty. Hizon were not barred by estoppel from challenging the jurisdiction of the
Labor Arbiter over the instant case.
Atty. Garcia moved for the reconsideration of the decision, which ETPI and Atty. Hizon
opposed.In a resolution dated 16 December 2003, the motion for reconsideration was denied
for lack of merit.　On 3 April 2003, the NLRC made permanent the TRO it issued pursuant to
its ruling in NLRC NCR CA Case No. 028901-01, that since the Labor Arbiter had no
jurisdiction over the case, the decision of the Labor Arbiter dated 30 September 2002 was
void. 　 On 6 March 2004, the resolution dated 16 December 2003 became final and
executory. Consequently, on 14 June 2004, an entry of judgment was made recording said
resolution in the Book of Entries of Judgments.
The CA ruled that Atty. Garcia, being the Vice President for Business Support Services and
Human Resource Departments of ETPI, was a corporate officer at the time he was removed.
Being a corporate officer, his removal was a corporate act and/or an intra-corporate
controversy, the jurisdiction of which rested with the Securities and Exchange Commission
(now with the Regional Trial Court), and not the Labor Arbiter and the NLRC. It added that

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ETPI and Atty. Hizon were not estopped from questioning the jurisdiction of the Labor Arbiter
before the NLRC on appeal, inasmuch as said issue was seasonably raised by ETPI and Atty.
Hizon in their reply memorandum before the Labor Arbiter. On 18 April 2006, Atty. Garcia
filed his Motion for Reconsideration. On 20 April 2006, ETPI and Atty. Hizon filed a Motion for
Partial Reconsideration.The parties filed their respective comments thereon. On 14 June
2006, the Court of Appeals denied the motions for reconsideration.
Atty. Garcia is now before us via a Petition for Review, which he filed on 3 August 2006.The
petition was docketed as G.R. No. 173115. On 8 August 2006, he filed an Amended Petition
for Review.He prays that the decision of the NLRC dated 21 March 2003 and its resolution
dated 16 December 2003, and the decision of the Court of Appeals dated 24 March 2006
and its resolution dated 14 June 2006, be reconsidered and set aside and that the decision of
the Labor Arbiter dated 30 September 2002 be affirmed and reinstated.
Issue:
WHETHER THE QUESTION OF LEGALITY OR ILLEGALITY OF THE REMOVAL OR TERMINATION
OF EMPLOYMENT OF AN OFFICER OF A CORPORATION IS AN INTRA-CORPORATE
CONTROVERSY THAT FALLS UNDER THE ORIGINAL EXCLUSIVE JURISDICTION OF THE
REGIONAL TRIAL COURTS?
Held:
The issue raised by Atty. Garcia whether the termination or removal of an officer of a
corporation is an intra-corporate controversy that falls under the original exclusive
jurisdiction of the regional trial courts is not novel. The Supreme Court, in a long line of
cases, has decreed that a corporate officers dismissal or removal is always a corporate act
and/or an intra-corporate controversy, over which the Securities and Exchange Commission
[SEC] (now the Regional Trial Court) has original and exclusive jurisdiction.
We have ruled that an intra-corporate controversy is one which pertains to any of the
following relationships: (1) between the corporation, partnership or association and the
public; (2) between the corporation, partnership or association and the State insofar as the
formers franchise, permit or license to operate is concerned; (3) between the corporation,
partnership or association and its stockholders, partners, members or officers; and (4)
among the stockholders, partners or associates themselves.In Lozon v. National Labor
Relations Commission, we declared that Presidential Decree No. 902-A confers on the SEC
original and exclusive jurisdiction to hear and decide controversies and cases involving intracorporate and partnership relations between or among the corporation, officers and
stockholders and partners, including their elections or appointments x x x. c
Before a dismissal or removal could properly fall within the jurisdiction of the SEC, it has to
be first established that the person removed or dismissed was a corporate officer. Corporate
officers in the context of Presidential Decree No. 902-A are those officers of the corporation
who are given that character by the Corporation Code or by the corporations by-laws.There
are three specific officers whom a corporation must have under Section 25 of the
Corporation Code.These are the president, secretary and the treasurer. The number of
officers is not limited to these three. A corporation may have such other officers as may be
provided for by its by-laws like, but not limited to, the vice-president, cashier, auditor or
general manager. The number of corporate officers is thus limited by law and by the
corporations by-laws.
In the case before us, the by-laws of ETPI provide:
ARTICLE V
Officers。
Section 1. Number. The officers of the Company shall be a Chairman of
the Board, a President, one or more Vice-Presidents, a Treasurer, a Secretary, an

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Assistant Secretary, and such other officers as may be from time to time be elected
or appointed by the Board of Directors. One person may hold any two compatible
offices.
Atty. Garcia tries to deny he is an officer of ETPI. Not being a corporate officer, he argues
that the Labor Arbiter has jurisdiction over the case. One of the corporate officers provided
for in the by-laws of ETPI is the Vice-President. It can be gathered from Atty. Garcias
complaint-affidavit that he was Vice President for Business Support Services and Human
Resource Departments of ETPI when his employment was terminated effective 16 April 2000.
It is therefore clear from the by-laws and from Atty. Garcia himself that he is a corporate
officer. One who is included in the by-laws of a corporation in its roster of corporate officers
is an officer of said corporation and not a mere employee.Being a corporate officer, his
removal is deemed to be an intra-corporate dispute cognizable by the SEC and not by the
Labor Arbiter.
We agree with both the NLRC and the Court of Appeals that Atty. Garcias ouster as VicePresident, who is a corporate officer of ETPI, partakes of the nature of an intra-corporate
controversy, jurisdiction over which is vested in the SEC (now the RTC). The Labor Arbiter
thus erred in assuming jurisdiction over the case filed by Atty. Garcia, because he had no
jurisdiction over the subject matter of the controversy.
Having ruled which body has jurisdiction over the instant case, we find it unnecessary, due
to mootness, to further discuss and rule on the Issue raised by ETPI and Atty. Hizon
regarding the NLRC order dated 23 August 2004 granting Atty. Garcias Motion to Set Aside
Finality of Judgment with Opposition to Motion to Discharge Appeal Bond, and its resolution
dated 10 January 2005 denying their motion for reconsideration thereon. The decision of the
Labor Arbiter, who had jurisdiction over the case, was properly dismissed by the NLRC.
Consequently, Supersedeas Bond No. JCL (15) 00823 SICI Bond No. 75069 dated 18
November 2002, posted by ETPI as a requirement for the filing of an appeal before the NLRC,
is ordered discharged.

HALAGUENA ET AL., VS. PHIL AIRLINES;
G.R. No. 172013; October 2, 2009
Facts:
Petitioners were employed as female flight attendants of respondent Philippine Airlines (PAL)
on different dates prior to November 22, 1996. They are members of the Flight Attendants
and Stewards Association of the Philippines (FASAP), a labor organization certified as the
sole and exclusive bargaining representative of the flight attendants, flight stewards and
pursers of respondent.
On July 11, 2001, respondent and FASAP entered into a Collective Bargaining Agreement[3]
incorporating the terms and conditions of their agreement for the years 2000 to 2005.
Section 144, Part A of the PAL-FASAP CBA, provides that:
A. For the Cabin Attendants hired before 22 November 1996:
xxxx
3.
Compulsory Retirement
Subject to the grooming standards provisions of this Agreement, compulsory retirement shall
be fifty-five (55) for females and sixty (60) for males. x x x.
Petitioners and several female cabin crews manifested that the aforementioned CBA
provision on compulsory retirement is discriminatory, and demanded for an equal treatment

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with their male counterparts. Hence, they filed a case with the RTC.
On August 9, 2004, the RTC issued an Order 　 upholding its jurisdiction over the present
case. The RTC reasoned that:
In the instant case, 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. This case is not directed specifically against respondent
arising from any act of the latter, nor does it involve a claim against the respondent.
Rather, this case seeks a declaration of the nullity of the questioned provision of the
CBA, which is within the Court's competence, with the allegations in the Petition
constituting the bases for such relief sought.
Upon appeal, The CA rendered a Decision, dated August 31, 2005, granting the respondent's
petition, and ruled that the RTC is by us declared to have NO JURISDICTION OVER THE CASE
BELOW and, consequently, all the proceedings, orders and processes it has so far issued
therein are ANNULED and SET ASIDE.
Issue:
Whether the RTC has jurisdiction over the petitioners' action challenging the legality or
constitutionality of the provisions on the compulsory retirement age contained in the CBA
between respondent PAL and FASAP.
Held:
The petition is meritorious. Jurisdiction of the court is determined on the basis of the
material allegations of the complaint and the character of the relief prayed for irrespective
of whether plaintiff is entitled to such relief.
In the case at bar, the allegations in the petition for declaratory relief plainly show that
petitioners' cause of action is the annulment of Section 144, Part A of the PAL-FASAP CBA.
From the petitioners' allegations and relief prayed for in its petition, it is clear that the issue
raised is whether Section 144, Part A of the PAL-FASAP CBA is unlawful and unconstitutional.
Here, the petitioners' primary relief in Civil Case No. 04-886 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 Batas Pambansa Blg. 129, as amended.
Being an ordinary civil action, the same is beyond the jurisdiction of labor tribunals.
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 Convention on the
Elimination of All Forms of Discrimination Against Women, and the power to apply and
interpret the constitution and CEDAW is within the jurisdiction of trial courts, a court of
general jurisdiction.
In Georg 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.
In Eviota v. Court of Appeals, 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

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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.
Thus, where the principal relief sought is to be resolved not by reference to the Labor Code
or other labor relations statute or a collective bargaining agreement but by the general civil
law, the jurisdiction over the dispute belongs to the regular courts of justice and not to the
labor arbiter and the NLRC. In such situations, resolution of the dispute requires expertise,
not in labor management relations nor in wage structures and other terms and conditions of
employment, but rather in the application of the general civil law. Clearly, such claims fall
outside the area of competence or expertise ordinarily ascribed to labor arbiters and the
NLRC and the rationale for granting jurisdiction over such claims to these agencies
disappears.
If we divest the regular courts of jurisdiction over the case, then which tribunal or forum
shall determine the constitutionality or legality of the assailed CBA provision?
This Court holds that the grievance machinery and voluntary arbitrators do not have the
power to determine and settle the Issue at hand. They have no jurisdiction and competence
to decide constitutional Issue relative to the questioned compulsory retirement age. Their
exercise of jurisdiction is futile, as it is like vesting power to someone who cannot wield it.
In Saura v. Saura, Jr., this Court emphasized the primacy of the regular court's judicial power
enshrined in the Constitution that is true that the trend is towards vesting administrative
bodies like the SEC with the power to adjudicate matters coming under their particular
specialization, to insure a more knowledgeable solution of the problems submitted to them.
This would also relieve the regular courts of a substantial number of cases that would
otherwise swell their already clogged dockets. But as expedient as this policy may be, it
should not deprive the courts of justice of their power to decide ordinary cases in
accordance with the general laws that do not require any particular expertise or training to
interpret and apply. Otherwise, the creeping take-over by the administrative agencies of
the judicial power vested in the courts would render the judiciary virtually impotent in the
discharge of the duties assigned to it by the Constitution.
To be sure, in Rivera v. Espiritu, after Philippine Airlines (PAL) and PAL Employees Association
(PALEA) entered into an agreement, which includes the provision to suspend the PAL-PALEA
CBA for 10 years, several employees questioned its validity via a petition for certiorari
directly to the Supreme Court. They said that the suspension was unconstitutional and
contrary to public policy. Petitioners submit that the suspension was inordinately long, way
beyond the maximum statutory life of 5 years for a CBA provided for in Article 253-A of the
Labor Code. By agreeing to a 10-year suspension, PALEA, in effect, abdicated the workers'
constitutional right to bargain for another CBA at the mandated time. In that case, this Court
denied the petition for certiorari, ruling that there is available to petitioners a plain, speedy,
and adequate remedy in the ordinary course of law. The Court said that while the petition
was denominated as one for certiorari and prohibition, its object was actually the
nullification of the PAL-PALEA agreement. As such, petitioners' proper remedy is an ordinary
civil action for annulment of contract, an action which properly falls under the jurisdiction of
the regional trial courts.
The trial court in this case is not asked to interpret Section 144, Part A of the PAL-FASAP CBA.
Interpretation, as defined in Black's Law Dictionary, is the art of or process of discovering
and ascertaining the meaning of a statute, will, contract, or other written document. The
provision regarding the compulsory retirement of flight attendants is not ambiguous and

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does not require interpretation. Neither is there any question regarding the implementation
of the subject CBA provision, because the manner of implementing the same is clear in itself.
The only controversy lies in its intrinsic validity.
The rule is settled that pure questions of fact may not be the proper subject of an appeal by
certiorari under Rule 45 of the Revised Rules of Court. This mode of appeal is generally
limited only to questions of law which must be distinctly set forth in the petition. The
Supreme Court is not a trier of facts.
The question as to whether said Section 114, Part A of the PAL-FASAP CBA is discriminatory
or not is a question of fact. A full-blown trial is necessary, which jurisdiction to hear the same
is properly lodged with the the RTC. Therefore, a remand of this case to the RTC for the
proper determination of the merits of the petition for declaratory relief is just and proper

OKOL VS. SLIMMER’S WORLD INTERNATIONAL ET AL.;
G.R. No. 160146; December 11, 2009
Facts:
Slimmers World International employed Leslie Okol as a management trainee on 15 June
1992. She rose up the ranks to become Head Office Manager and then Director and Vice
President from 1996 until her dismissal on 22 September 1999. Prior to Okol’s dismissal,
Slimmers World preventively suspended Okol because the seizure by the Bureau of Customs
of equipments belonging to or consigned to Slimmers World. The shipment of the
equipment was placed under the names of Okol for being undervalued. Okol filed her
written explanation, however, Slimmers World found it to be unsatisfactory. Through a letter
dated 22 September 1999 signed by its president Ronald Joseph Moy, Slimmers World
terminated Okol’s employment.
Okol filed a complaint with the Arbitration branch of the NLRC against Slimmers World,
Behavior Modifications, Inc. and Moy (collectively called respondents) for illegal suspension,
illegal dismissal, unpaid commissions, damages and attorney’s fees, with prayer for
reinstatement and payment of backwages. Respondents asserted 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 intracorporate controversy falling outside the jurisdiction of the Arbitration branch.
Okol filed an appeal with the NLRC, which reversed and set aside the labor arbiter’s order.
Respondents contended that the relief prayed for was confined only to the question of
jurisdiction. The NLRC denied the motion for lack of merit. The appellate court set aside the
NLRC’s Resolution and affirmed the labor arbiter’s Order. It ruled that the case, being an
intra-corporate dispute, falls within the jurisdiction of the regular courts pursuant to Republic
Act No. 8799 and that the NLRC had acted without jurisdiction in giving due course to the
complaint and deprived respondents of their right to due process in deciding the case on the
merits.
Issue:
Whether or not the NLRC has jurisdiction over the illegal dismissal case filed by petitioner
(whether or not the petitioner was an employee or a corporate officer of Slimmers World)
Held:
The petition lacks merit. Petitioner insists that the Court of Appeals erred in ruling that she
was a corporate officer and that the case is an intra-corporate dispute falling within the
jurisdiction of the regular courts. Petitioner asserts that even as vice-president, the work

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that she performed conforms to that of an employee rather than a corporate officer. Mere
title or designation in a corporation will not, by itself, determine the existence of an
employer-employee relationship. It is the “four-fold” test, namely (1) the power to hire, (2)
the payment of wages, (3) the power to dismiss, and (4) the power to control, which must be
applied.
Petitioner enumerated the instances that she was under the power and control of Moy,
Slimmers World’s president: (1) petitioner received salary evidenced by pay slips, (2) Moy
deducted Medicare and SSS benefits from petitioner’s salary, and (3) petitioner was
dismissed from employment not through a board resolution but by virtue of a letter from
Moy. Thus, having shown that an employer-employee relationship exists, the jurisdiction to
hear and decide the case is vested with the labor arbiter and the NLRC.
Respondents maintain that petitioner was a corporate officer at the time of her dismissal
from Slimmers World as supported by the General Information Sheet and Director’s Affidavit
attesting that petitioner was an officer. Also, the factors cited by petitioner that she was a
mere employee do not prove that she was not an officer of Slimmers World. Even the alleged
absence of any resolution of the Board of Directors approving petitioner’s termination does
not constitute proof that petitioner was not an officer. Respondents assert that petitioner
was not only an officer but also a stockholder and director; which facts provide further basis
that petitioner’s separation from Slimmers World does not come under the NLRC’s
jurisdiction.
The issue is whether petitioner was an employee or a corporate officer of Slimmers World.
Section 25 of the Corporation Code enumerates corporate officers as the president,
secretary, treasurer and such other officers as may be provided for in the by-laws. In
Tabang v. NLRC, we held that an “office” is created by the charter of the corporation and the
officer is elected by the directors or stockholders. On the other hand, an “employee” usually
occupies no office and generally is employed not by action of the directors or stockholders
but by the managing officer of the corporation who also determines the compensation to be
paid to such employee.
The respondents, in their motion to dismiss filed before the labor arbiter, questioned the
jurisdiction of the NLRC in taking cognizance of petitioner’s complaint. In the motion,
respondents attached the General Information Sheet (GIS), Minutes of the meeting of the
Board of Directors and Secretary’s Certificate, and the Amended By-Lawsof Slimmers World
as submitted to the SEC to show that petitioner was a corporate officer whose rights do not
fall within the NLRC’s jurisdiction. The GIS and minutes of the meeting of the board of
directors indicated that petitioner was a member of the board of directors, holding one
subscribed share of the capital stock, and an elected corporate officer.
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 respondents fall squarely within the ambit of intra-corporate disputes. 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.
Prior to its
within the
Subsection
transferred
PD 902-A:

amendment, Section 5(c) PD 902-A provided that intra-corporate disputes fall
jurisdiction of the Securities and Exchange Commission (SEC). However,
5.2, Section 5 of Republic Act No. 8799, which took effect on 8 August 2000,
to regional trial courts the SEC’s jurisdiction over all cases listed in Section 5 of

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5.2. The Commission’s jurisdiction over all cases enumerated under Section 5 of
Presidential Decree No. 902-A is hereby transferred to the Courts of general
jurisdiction or the appropriate Regional Trial Court. x x x
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.

HUGO ET AL. VS. LIGHT RAIL TRANSIT AUTHORITY;
G.R. No. 181866; March 18, 2010
Facts:
Respondent Light Rail Transit Authority (LRTA), a government-owned and controlled
corporation, constructed a light rail transit system which traverses from Baclaran in
Parañaque City to Monumento in Kalookan City, Metro Manila pursuant to its mandate under
its charter.
To effectively carry out its mandate, LRTA entered into a ten-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”
METRO thus hired its own employees including herein petitioners-members of the Pinagisang 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 forging of a new collective
bargaining agreement 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.
Then Secretary of Labor Bienvenido E. Laguesma assumed jurisdiction over the conflict and
directed the striking employees including herein petitioners to immediately return to work
and METRO to accept them back under the same terms and conditions of employment
prevailing prior to the strike.
By LRTA’s claim, the striking employees including petitioners defied the return-to-work order.
Contradicting such claim, petitioners alleged that upon learning of the order, they attempted
to comply with it but the security guards of METRO barred them from entering their
workplace for security reasons, the latter being afraid that they (the striking employees)
might sabotage the vital machineries and equipment of the light rail transit system.
When the Agreement expired on July 31, 2000, LRTA did not renew it. It instead took over the

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management and operations of the light rail transit system, hiring new personnel for the
purpose. METRO thus considered the employment of all its personnel terminated effective
September 30, 2000. 　 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).
In impleading LRTA in their complaint, petitioners alleged that the "non-renewal of the
[Agreement] is but an ingenious, albeit unlawful, scheme carried out by the respondents to
get rid of personnel they perceived as activists and troublemakers, thus, terminating the
complainants without any just or lawful cause."
LRTA filed a motion to dismiss the complaint on the ground that the Labor Arbiter and the
NLRC have no jurisdiction over it, for, by petitioners’ own admission, there was no employeremployee relationship between it and petitioners.
Issue:
Whether or not Labor Arbiter and the NLRC have jurisdiction over LRTA?
Held:
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.
Light Rail Transit Authority v. Venus, Jr., which has a similar factual backdrop, holds that
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, viz:
. . . [E]mployees of petitioner 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
petitioner LRTA, a government-owned and controlled corporation with original charter, are
covered by civil service rules. Herein private respondent workers cannot have the best of
two worlds, e.g., be considered government employees of petitioner LRTA, yet allowed to
strike as private employees under our labor laws.
In sum, petitioner LRTA cannot be held liable to the employees of petitioner METRO.

MATLING INDUSTRIAL AND COMMERCIAL CORPORATION ET. AL. VS. COROS;
G.R. No. 157802; October 13, 2010
Facts:
After his dismissal by Matling as its Vice President for Finance and Administration, the
respondent filed on August 10, 2000 a complaint for illegal suspension and illegal dismissal
against Matling and some of its corporate officers (petitioners) in the NLRC, Sub-Regional
Arbitration Branch XII, Iligan City.
The petitioners moved to dismiss the complaint, raising the ground, among others, that the
complaint pertained to the jurisdiction of the Securities and Exchange Commission (SEC) due
to the controversy being intra-corporate inasmuch as the respondent was a member of
Matling’s Board of Directors aside from being its Vice-President for Finance and
Administration prior to his termination.

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The petitioners contend that the position of Vice President for Finance and Administration
was a corporate office, having been created by Matling’s President pursuant to By-Law No. V,
as amended
In justification, they cite Tabang v. National Labor Relations Commission, which held that
"other offices are sometimes created by the charter or by-laws of a corporation, or the board
of directors may be empowered under the by-laws of a corporation to create additional
officers as may be necessary."
The respondent counters that Matling’s By-Laws did not list his position as Vice President for
Finance and Administration as one of the corporate offices; that Matling’s By-Law No. III
listed only four corporate officers, namely: President, Executive Vice President, Secretary,
and Treasurer; that the corporate offices contemplated in the phrase "and such other officers
as may be provided for in the by-laws" found in Section 25 of the Corporation Code should
be clearly and expressly stated in the By-Laws;
Issue:
Whether the respondent was a corporate officer of Matling or not. That whether the LA or
the RTC had jurisdiction over his complaint for illegal dismissal.
Held:
As a rule, the illegal dismissal of an officer or other employee of a private employer is
properly cognizable by the LA. This is pursuant to Article 217 (a) 2 of the Labor Code, as
amended, which provides as follows:
Article 217. Jurisdiction of the Labor Arbiters and the Commission. - (a) Except as otherwise
provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to
hear and decide, within thirty (30) calendar days after the submission of the case by the
parties for decision without extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or non-agricultural:
2. Termination disputes;
Where the complaint for illegal dismissal concerns a corporate officer, however, the
controversy falls under the jurisdiction of the Securities and Exchange Commission (SEC),
because the controversy arises out of intra-corporate or partnership relations between and
among stockholders, members, or associates, or between any or all of them and the
corporation, partnership, or association of which they are stockholders, members, or
associates, respectively; and between such corporation, partnership, or association and the
State insofar as the controversy concerns their individual franchise or right to exist as such
entity; or because the controversy involves the election or appointment of a director,
trustee, officer, or manager of such corporation, partnership, or association. 14 Such
controversy, among others, is known as an intra-corporate dispute.
Effective on August 8, 2000, upon the passage of Republic Act No. 8799, 15 otherwise known
as The Securities Regulation Code, the SEC’s jurisdiction over all intra-corporate disputes
was transferred to the RTC, pursuant to Section 5.2 of RA No. 8799.
Issue:
Whether or not the respondent is a corporate officer
Held:
We agree with respondent. Section 25 of the Corporation Code provides:
Section 25. Corporate officers, quorum.--Immediately after their election, the directors of a
corporation must formally organize by the election of a president, who shall be a director, a
treasurer who may or may not be a director, a secretary who shall be a resident and citizen

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of the Philippines, and such other officers as may be provided for in the by-laws. Any two (2)
or more positions may be held concurrently by the same person, except that no one shall act
as president and secretary or as president and treasurer at the same time.
Conformably with Section 25, a position must be expressly mentioned in the By-Laws in
order to be considered as a corporate office. Thus, the creation of an office pursuant to or
under a By-Law enabling provision is not enough to make a position a corporate office.
Guerrea v. Lezama, the first ruling on the matter, held that the only officers of a corporation
were those given that character either by the Corporation Code or by the By-Laws; the rest
of the corporate officers could be considered only as employees or subordinate officials.
Thus, it was held in Easycall Communications Phils., Inc. v. King:
An "office" is created by the charter of the corporation and the officer is elected by the
directors or stockholders. On the other hand, an employee occupies no office and generally
is employed not by the action of the directors or stockholders but by the managing officer of
the corporation who also determines the compensation to be paid to such employee.
In this case, respondent was appointed vice president for nationwide expansion by Malonzo,
petitioner’'s general manager, not by the board of directors of petitioner. It was also Malonzo
who determined the compensation package of respondent. Thus, respondent was an
employee, not a "corporate officer." The CA was therefore correct in ruling that jurisdiction
over the case was properly with the NLRC, not the SEC (now the RTC).
This interpretation is the correct application of Section 25 of the Corporation Code, which
plainly states that the corporate officers are the President, Secretary, Treasurer and such
other officers as may be provided for in the By-Laws. Accordingly, the corporate officers in
the context of PD No. 902-A are exclusively those who are given that character either by the
Corporation Code or by the corporation’s By-Laws.
Thus, pursuant to the above provision (Section 25 of the Corporation Code), whoever are the
corporate officers enumerated in the by-laws are the exclusive Officers of the corporation
and the Board has no power to create other Offices without amending first the corporate Bylaws. However, the Board may create appointive positions other than the positions
of corporate Officers, but the persons occupying such positions are not
considered as corporate officers within the meaning of Section 25 of the
Corporation Code and are not empowered to exercise the functions of the corporate
Officers, except those functions lawfully delegated to them. Their functions and duties are to
be determined by the Board of Directors/Trustees.
In Nacpil v. Intercontinental Broadcasting Corporation, which may be the more appropriate
ruling, the position subject of the controversy was not expressly mentioned in the By-Laws,
but was created pursuant to a By-Law enabling provision authorizing the Board of Directors
to create other offices that the Board of Directors might see fit to create. The Court held
there that the position was a corporate office, relying on the obiter dictum in Tabang.

MANILA ELECTRIC COMPANY ET. AL. VS. ROSARIO GOPEZ LIM;
G.R. No. 184769; October 5, 2010
Facts:
Rosario G. Lim (respondent), also known as Cherry Lim, is an administrative clerk at the
Manila Electric Company (MERALCO). On June 4, 2008, an anonymous letter was posted at
the door of the Metering Office of the Administration building of MERALCO Plaridel, Bulacan

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Sector, at which respondent is assigned, denouncing respondent
By Memorandum dated July 4, 2008, petitioner Alexander Deyto, Head of MERALCO’s Human
Resource Staffing, directed the transfer of respondent to MERALCO’s Alabang Sector in
Muntinlupa as "A/F OTMS Clerk," effective July 18, 2008 in light of the receipt of "… reports
that there were accusations and threats directed against [her] from unknown individuals and
which could possibly compromise [her] safety and security."
Respondent addressed to petitioner Ruben A. Sapitula, Vice-President and Head of
MERALCO’s Human Resource Administration, appealed her transfer and requested for a
dialogue so she could voice her concerns and misgivings on the matter, claiming that the
"punitive" nature of the transfer amounted to a denial of due process. No response to her
request having been received, respondent filed a petition for the issuance of a writ of habeas
data against petitioners before the Regional Trial Court (RTC) of Bulacan.
By respondent’s allegation, petitioners’ unlawful act and omission consisting of their
continued failure and refusalto provide her with details or information about the alleged
report which MERALCO purportedly receivedconcerning threats to her safety and
security amount to a violation of her right to privacy in life, liberty and security, correctible
by habeas data. Respondent thus prayed for the issuance of a writ commanding petitioners
to file a written return containing the following:
a) a full disclosure of the data or information about respondent in relation to the report
purportedly received by petitioners on the alleged threat to her safety and security; the
nature of such data and the purpose for its collection;
b) the measures taken by petitioners to ensure the confidentiality of such data or
information; and
c) the currency and accuracy of such data or information obtained.
Additionally, respondent prayed for the issuance of a Temporary Restraining Order (TRO)
enjoining petitioners from effecting her transfer to the MERALCO Alabang Sector.
Maintaining that the RTC has no jurisdiction over what they contend is clearly a labor
dispute, petitioners argue that "although ingeniously crafted as a petition for habeas data,
respondent is essentially questioning the transfer of her place of work by her
employer" and the terms and conditions of her employment which arise from an employeremployee relationship over which the NLRC and the Labor Arbiters under Article 217 of the
Labor Code have jurisdiction.
Issue:
Whether or not RTC has jurisdiction
Held:
No. Section 1. Habeas Data. – The writ of habeas data is a remedy available to any person
whose right to privacy in life, liberty or security is violated or threatened by an unlawful act
or omission of a public official or employee or of a private individual or entity engaged in the
gathering, collecting or storing of data or information regarding the person, family, home
and correspondence of the aggrieved party.
Castillo v. Cruz underscores the emphasis laid down in Tapuz v. del Rosario that the writs of
amparo and habeas data will NOT issue to protect purely property or commercial concerns
nor when the grounds invoked in support of the petitions therefor are vague or
doubtful. Employment constitutes a property right under the context of the due process
clause of the Constitution. It is evident that respondent’s reservations on the real reasons for
her transfer - a legitimate concern respecting the terms and conditions of one’s employment
- are what prompted her to adopt the extraordinary remedy of habeas data. Jurisdiction over

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such concerns is inarguably lodged by law with the NLRC and the Labor Arbiters.
In another vein, there is no showing from the facts presented that petitioners committed any
unjustifiable or unlawful violation of respondent’s right to privacy vis-a-vis the right to life,
liberty or security. To argue that petitioners’ refusal to disclose the contents of reports
allegedly received on the threats to respondent’s safety amounts to a violation of her right
to privacy is at best speculative.

HONGKONG AND SHANGHAI BANKING CORP. VS. SPS. BROQUEZA;
G.R. No. 178610; November 17, 2010
Facts:
Sps. Broqueza are employees of Hongkong and Shanghai Banking Corporation (HSBC). They
are also members of respondent Hongkong Shanghai Banking Corporation, Ltd. Staff
Retirement Plan (HSBCL-SRP, plaintiff below). The HSBCL-SRP is a retirement plan
established by HSBC through its Board of Trustees for the benefit of the employees.
Petitioner [Editha] Broqueza obtained a car loan in the amount of Php175,000.00. On
December 12, 1991, she again applied and was granted an appliance loan in the amount of
Php24,000.00. On the other hand, petitioner Gerong applied and was granted an emergency
loan in the amount of Php35,780.00. These loans are paid through automatic salary
deduction.
A labor dispute arose between HSBC and its employees. Majority of HSBC’s employees were
terminated, among whom are petitioners Editha Broqueza and Fe Gerong. The employees
then filed an illegal dismissal case before the National Labor Relations Commission (NLRC)
against HSBC. The legality or illegality of such termination is now pending before the
supreme Court in CA G.R. CV No. 56797, entitled Hongkong Shanghai Banking Corp.
Employees Union, et al. vs. National Labor Relations Commission, et al.
Because of their dismissal, petitioners were not able to pay the monthly amortizations of
their respective loans. Thus, respondent HSBCL-SRP considered the accounts of petitioners
delinquent. Demands to pay the respective obligations were made upon petitioners, but they
failed to pay HSBCL-SRP, acting through its Board of Trustees and represented by Alejandro
L. Custodio, filed Civil Case No. 52400 against the spouses Broqueza on 31 July 1996. On 19
September 1996, HSBCL-SRP filed Civil Case No. 52911 against Gerong. Both suits were civil
actions for recovery and collection of sums of money.
Held:
The RTC is correct in ruling that since the Promissory Notes do not contain a period, HSBCLSRP has the right to demand immediate payment.
Article 1179 of the Civil Code applies. The spouses Broqueza’s obligation to pay HSBCL-SRP
is a pure obligation. The fact that HSBCL-SRP was content with the prior monthly check-off
from Editha Broqueza’s salary is of no moment. Once Editha Broqueza defaulted in her
monthly payment, HSBCL-SRP made a demand to enforce a pure obligation.
In their Answer, the spouses Broqueza admitted that prior to Editha Broqueza’s dismissal
from HSBC in December 1993, she "religiously paid the loan amortizations, which HSBC
collected through payroll check-off." 16 A definite amount is paid to HSBCL-SRP on a specific
date. Editha Broqueza authorized HSBCL-SRP to make deductions from her payroll until her
loans are fully paid. Editha Broqueza, however, defaulted in her monthly loan payment due
to her dismissal. Despite the spouses Broqueza’s protestations, the payroll deduction is
merely a convenient mode of payment and not the sole source of payment for the loans.
HSBCL-SRP never agreed that the loans will be paid only through salary deductions. Neither

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did HSBCL-SRP agree that if Editha Broqueza ceases to be an employee of HSBC, her
obligation to pay the loans will be suspended. HSBCL-SRP can immediately demand payment
of the loans at anytime because the obligation to pay has no period. Moreover, the spouses
Broqueza have already incurred in default in paying the monthly installments.
Finally, the enforcement of a loan agreement involves "debtor-creditor relations founded on
contract and does not in any way concern employee relations. As such it should be enforced
through a separate civil action in the regular courts and not before the Labor Arbiter."

REAL VS. SANGU PHILS, INC. ET. AL;
G.R. No. 168757; January 19, 2011
Facts:
Petitioner Renato Real was the Manager of respondent corporation Sangu Philippines, Inc., a
corporation engaged in the business of providing manpower for general services, like
janitors, janitresses and other maintenance personnel, to various clients. In 2001, petitioner,
together with 29 others, filed their respective Complaints for illegal dismissal against the
latter and respondent Kiichi Abe, the corporation’s Vice-President and General Manager.
With regard to petitioner, he was removed from his position as Manager through Board
Resolution 2001-03 adopted by respondent corporation Board of Directors. Petitioner
complained that he was neither notified of the Board Meeting during which said board
resolution was passed nor formally charged with any infraction. He just received from
respondents a letter dated March 26, 2001 stating that he has been terminated from service
effective March 25, 2001 for the following reasons: (1) continuous absences at his post at
Ogino Philippines Inc. for several months which was detrimental to the corporation’s
operation; (2) loss of trust and confidence; and, (3) to cut down operational expenses to
reduce further losses being experienced by respondent corporation.
Respondents raised as one of the Issue the lack of jurisdiction of the Labor Arbiter over
petitioner’s complaint. Respondents claimed that petitioner is both a stockholder and a
corporate officer of respondent corporation, hence, his action against respondents is an
intra-corporate controversy over which the Labor Arbiter has no jurisdiction.
Petitioner continues to insist that he is not a corporate officer. He argues that a corporate
officer is one who holds an elective position as provided in the Articles of Incorporation or
one who is appointed to such other positions by the Board of Directors as specifically
authorized by its By-Laws.
He believes that his action against the respondents does not arise from intra-corporate
relations but rather from employer-employee relations. This, according to him, was even
impliedly recognized by respondents as shown by the earlier quoted portion of the
termination letter they sent to him.
Issue:
Whether petitioner’s complaint for illegal dismissal constitutes
controversy and thus, beyond the jurisdiction of the Labor Arbiter.

an

intra-corporate

Held:
Two-tier test in determining the existence of intra-corporate controversy
It is worthy to note, however, that before the promulgation of the Tabang case, the Court
provided in Mainland Construction Co., Inc. v. Movilla a "better policy" in determining which
between the Securities and Exchange Commission (SEC) and the Labor Arbiter has
jurisdiction over termination disputes, or similarly, whether they are intra-corporate or not

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The fact that the parties involved in the controversy are all stockholders or that the parties
involved are the stockholders and the corporation does not necessarily place the dispute
within the ambit of the jurisdiction of the SEC (now the Regional Trial Court). The better
policy to be followed in determining jurisdiction over a case should be to consider concurrent
factors such as the status or relationship of the parties or the nature of the question that is
subject of their controversy. In the absence of any one of these factors, the SEC will not have
jurisdiction. Furthermore, it does not necessarily follow that every conflict between the
corporation and its stockholders would involve such corporate matters as only SEC (now the
Regional Trial Court) can resolve in the exercise of its adjudicatory or quasi-judicial powers
And, while Tabang was promulgated later than Mainland Construction Co., Inc., the "better
policy" enunciated in the latter appears to have developed into a standard approach in
classifying what constitutes an intra-corporate controversy. This is explained lengthily
in Reyes v. Regional Trial Court of Makati,
Intra-Corporate Controversy
A review of relevant jurisprudence shows a development in the Court’s approach in
classifying what constitutes an intra-corporate controversy. Initially, the main consideration
in determining whether a dispute constitutes an intra-corporate controversy was limited to a
consideration of the intra-corporate relationship existing between or among the parties. The
types of relationships embraced under Section 5(b) x x x were as follows:
a) between the corporation, partnership or association and the public;
b) between the corporation, partnership or association and its stockholders, partners,
members or officers;
c) between the corporation, partnership or association and the State as far as its franchise,
permit or license to operate is concerned; and
d) among the stockholders, partners or associates themselves.
The existence of any of the above intra-corporate relations was sufficient to confer
jurisdiction to the SEC (now the RTC), regardless of the subject matter of the dispute. This
came to be known as the relationship test.
However, in the 1984 case of DMRC Enterprises v. Esta del Sol Mountain Reserve, Inc., the
Court introduced the nature of the controversy test. We declared in this case that it is not
the mere existence of an intra-corporate relationship that gives rise to an intra-corporate
controversy; to rely on the relationship test alone will divest the regular courts of their
jurisdiction for the sole reason that the dispute involves a corporation, its directors, officers,
or stockholders. We saw that there is no legal sense in disregarding or minimizing the value
of the nature of the transactions which gives rise to the dispute.
Under the nature of the controversy test, the incidents of that relationship must also be
considered for the purpose of ascertaining whether the controversy itself is intra-corporate.
The controversy must not only be rooted in the existence of an intra-corporate relationship,
but must as well pertain to the enforcement of the parties’ correlative rights and obligations
under the Corporation Code and the internal and intra-corporate regulatory rules of the
corporation. If the relationship and its incidents are merely incidental to the controversy or if
there will still be conflict even if the relationship does not exist, then no intra-corporate
controversy exists.
The Court then combined the two tests and declared that jurisdiction should be determined
by considering not only the status or relationship of the parties, but also the nature of the
question under controversy. This two-tier test was adopted in the recent case of Speed
Distribution Inc. v. Court of Appeals:
‘To determine whether a case involves an intra-corporate controversy, and is to be heard

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and decided by the branches of the RTC specifically designated by the Court to try and
decide such cases, two elements must concur: (a) the status or relationship of the parties,
and (2) the nature of the question that is the subject of their controversy.
The first element requires that the controversy must arise out of intra-corporate or
partnership relations between any or all of the parties and the corporation, partnership, or
association of which they are not stockholders, members or associates, between any or all of
them and the corporation, partnership or association of which they are stockholders,
members or associates, respectively; and between such corporation, partnership, or
association and the State insofar as it concerns the individual franchises. The second
element requires that the dispute among the parties be intrinsically connected with the
regulation of the corporation. If the nature of the controversy involves matters that are
purely civil in character, necessarily, the case does not involve an intra-corporate
controversy.’
Guided by this recent jurisprudence, we thus find no merit in respondents’ contention that
the fact alone that petitioner is a stockholder and director of respondent corporation
automatically classifies this case as an intra-corporate controversy. To reiterate, not all
conflicts between the stockholders and the corporation are classified as intra-corporate.
There are other factors to consider in determining whether the dispute involves corporate
matters as to consider them as intra-corporate controversies.
Corporate officers’ in the context of Presidential Decree No. 902-A are those officers of the
corporation who are given that character by the Corporation Code or by the corporation’s
by-laws. There are three specific officers whom a corporation must have under Section 25 of
the Corporation Code. These are the president, secretary and the treasurer. The number of
officers is not limited to these three. A corporation may have such other officers as may be
provided for by its by-laws like, but not limited to, the vice-president, cashier, auditor or
general manager. The number of corporate officers is thus limited by law and by the
corporation’s by-laws.
With the elements of intra-corporate controversy being absent in this case, we thus hold that
petitioner’s complaint for illegal dismissal against respondents is not intra-corporate. Rather,
it is a termination dispute and, consequently, falls under the jurisdiction of the Labor Arbiter
pursuant to Section 2173 of the Labor Code.

PORTILLO VS. RUDOLF LIETZ, INC. ET AL.;
G.R. No. 196539; October 10, 2012
Facts:
Marietta Portillo was hired by Rudolf Lietz, Inc.. After ten years of service, she was promoted
to Sales Representative. In this regard, Portillo signed a letter agreement containing a
"Goodwill Clause” which provides that on the termination of his employment by act of either
him or respondent, and for a period of three (3) years thereafter, she shall not engage
directly or indirectly as employee, manager, proprietor, or solicitor for himself or others in a
similar or competitive business or the same character of work which he was employed by
Lietz, Inc. to do and perform. Should she breach such clause, she shall pay as liquidated
damages the amount of 100% of her gross compensation over the last 12 months, it being
agreed that this sum is reasonable and just.
Three years thereafter, Portillo resigned from Rudolf Lietz, Inc., and subsequently, they
learned that Portillo had been hired by Ed Keller Philippines, Limited to head its Pharma Raw
Material Department. Ed Keller Limited is purportedly a direct competitor of Lietz, Inc.

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Meanwhile, Portillo's demands from the respondents for the payment of her remaining
salaries and commissions went unheeded. Respondents gave Portillo the run around, on the
pretext that her salaries and commissions were still being computed.
It was then that Portillo filed a complaint with NLRC for non-payment of 1 1/2 months' salary,
two (2) months' commission, 13th month pay, plus moral, exemplary and actual damages
and attorney's fees.
Lietz, Inc. admitted liability for Portillo's money claims. However, Lietz, Inc. raised the
defense of legal compensation that Portillo's money claims should be offset against her
liability to Lietz, Inc. for liquidated damages for Portillo's alleged breach of the "Goodwill
Clause" in the employment contract when she became employed with Ed Keller Philippines,
Limited.
The Labor Arbiter Daniel J. Cajilig granted Portillo's complaint ordering respondents Rudolf
Lietz, Inc. to pay complainant Marietta N. Portillo the amount representing her salary and
commissions, including 13th month pay.
On appeal by respondents, the NLRC, through its Second Division, affirmed the ruling of
Labor Arbiter. On motion for reconsideration, the NLRC stood pat on its ruling.
Expectedly, respondents filed a petition for certiorari before the Court of Appeals, alleging
grave abuse of discretion in the labor tribunals' rulings. CA denied the respondents petition
but modified its previous decision on respondents motion for reconsideration allowing the
legal compensation or set-off invoked by the respondents.
Issue:
Whether or not, Portillo's money claims for unpaid salaries may be offset against
respondents' claim for liquidated damages?
Held:
No. It cannot be offset.
Paragraph 4 of Article 217 of the Labor Code to wit:
Art. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) Except as otherwise
provided under this code, the Arbiters shall have original and exclusive jurisdiction to
hear and decide, within thirty (30) calendar days after the submission of the case by
the parties for decision without extension, even in the absence of stenographic notes,
the following case involving all workers, whether agricultural or non-agricultural:
xxx xxx xxx
4.Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
The Court of Appeals was convinced that the claim for liquidated damages emanates from
the "Goodwill Clause” of the employment contract and, therefore, is a claim for damages
arising from the employer-employee relations.
But, as early as Singapore Airlines Limited v. Paño, it has already been established that not
all disputes between an employer and his employee(s) fall within the jurisdiction of the labor
tribunals.
In the case at bar, there is no causal connection between the petitioner employees' claim for
unpaid wages and the respondent employers' claim for damages for the alleged "Goodwill
Clause" violation. Portillo's claim for unpaid salaries did not have anything to do with her
alleged violation of the employment contract as, in fact, her separation from employment is
not "rooted" in the alleged contractual violation. She resigned from her employment. She
was not dismissed. The alleged contractual violation did not arise during the existence of the

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employer-employee relationship. It was a post-employment matter, a post-employment
violation.
The cause of action is based on a quasi-delict or tort, which has no reasonable causal
connection with any of the claims provided for in Article 217, jurisdiction over the action is
with the regular courts. As it is, petitioner does not ask for any relief under the Labor Code,
rather, merely seeks to recover damages based on the parties' contract of employment as
redress for respondent's breach thereof. Such cause of action is within the realm of Civil Law,
and jurisdiction over the controversy belongs to the regular courts. More so must this be in
the present case, what with the reality that the stipulation refers to the post-employment
relations of the parties. Thus, the original decision of the appellate court, the right ruling,
should not have been reconsidered.

ACE NAVIGATION CO., INC. ET AL. VS. FERNANDEZ;
G.R. No. 197309; October 10, 2012
Facts:
Seaman Teodorico Fernandez, assisted by his wife, Glenita Fernandez, filed with the NLRC a
complaint for disability benefits, with prayer for moral and exemplary damages, plus
attorney's fees, against Ace Navigation Co., Inc., Vela International Marine Ltd., and/or
Rodolfo Pamintuan.
The petitioners moved to dismiss the complaint, contending that the labor arbiter had no
jurisdiction over the dispute. They argued that exclusive original jurisdiction is with the
voluntary arbitrator or panel of voluntary arbitrators, pursuant to Section 29 of the POEA
Standard Employment Contract (POEA-SEC), since the parties are covered by the AMOSUPTCC or AMOSUP-VELA collective bargaining agreement (CBA). Under Section 14 of the CBA, a
dispute between a seafarer and the company shall be settled through the grievance
machinery and mandatory voluntary arbitration. Fernandez opposed the motion. He argued
that inasmuch as his complaint involves a money claim, original and exclusive jurisdiction
over the case is vested with the labor arbiter.
Issue:
Whether or not, the labor arbiter has the original and exclusive jurisdiction over Fernandez's
disability claim under Section 10 of R.A. No. 8042?
Held:
No. It is not within the original and exclusive jurisdiction of the Labor Arbiter but rather with
the voluntary arbitrators.
The POEA-SEC, which governs the employment of Filipino seafarers, provides that in cases
of claims and disputes arising from this employment, the parties covered by a
collective bargaining agreement shall submit the claim or dispute to the original
and exclusive jurisdiction of the voluntary arbitrator or panel of voluntary
arbitrators.
The voluntary arbitrator or panel of voluntary arbitrators has original and exclusive
jurisdiction over Fernandez's disability claim. There is no dispute that the claim arose out of
Fernandez's employment with the petitioners and that their relationship is covered by a CBA
— the AMOSUP/TCC or the AMOSUP-VELA CBA. The CBA provides for a grievance procedure
for the resolution of grievances or disputes which occur during the employment relationship
and, like the grievance machinery created under Article 261 of the Labor Code, it is a twotiered mechanism, with voluntary arbitration as the last step.

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What might have caused the CA to miss the clear intent of the parties in prescribing a
grievance procedure in their CBA is, as the petitioners' have intimated, the use of the
auxiliary verb "may" in Article 14.7 (a) of the CBA which, to reiterate, provides that "[i]f by
reason of the nature of the Dispute, the parties are unable to amicably settle the
dispute, either party may refer the case to a MANDATORY ARBITRATION
COMMITTEE."
It is reasonable to conclude that it viewed as optional the referral of a dispute to the
mandatory arbitration committee when the parties are unable to amicably settle the
dispute.
It bears stressing at this point that we are upholding the jurisdiction of the voluntary
arbitrator or panel of voluntary arbitrators over the present dispute, not only because of the
clear language of the parties' CBA on the matter; more importantly, we so uphold the
voluntary arbitrator's jurisdiction, in recognition of the State's express preference for
voluntary modes of dispute settlement, such as conciliation and voluntary arbitration as
expressed in the Constitution, the law and the rules.
It is settled that when the parties have validly agreed on a procedure for resolving
grievances and to submit a dispute to voluntary arbitration then that procedure should be
strictly observed.

COSARE VS. BROADCOM ASIA, INC.
GR No. 201298; February 5, 2014
Facts:
Cosare was employed as a salesman by Broadcom. Several years later, he was named as an
incorporator of the said company having been assigned 100 shares of stocks. He was also
promoted to the position of Assistant Vice President for Sales (AVP for Sales)
Cosare accused his immediate superior (Alex Abiog) for committing some irregularities in his
office. Instead of acting the accusation thrown against Abiog, it was Cosare who was asked
by the employer to tender his resignation and offered him financial assistance. Cosare
refused. He was charged of serious misconduct and willful breach of trust, and according to
the employer (Broadcom) it was him (Cosare) who committed some irregularities and
anomalies in his office. In line with that, Cosare was suspended and precluded from entering
the work premises.
A complaint was filed for illegal dismissal was filed against Broadcom before the Labor
Arbiter. The latter moved for the dismissal of the case on the ground that Cosare was a
corporate officer which means that the controversy is an intra-corporate dispute that falls
within the jurisdiction of the RTC.
Issue:
Whether or not the controversy is an intra-corporate dispute which would be beyond the
jurisdiction of the Labor Arbiter.
Held:
The LA had the original jurisdiction over the complaint for illegal dismissal because Cosare,
although an officer of Broadcom for being its AVP for Sales, was not a "corporate officer" as
the term is defined by law. “‘Corporate officers’ in the context of Presidential Decree No.
902-A are those officers of the corporation who are given that character by the Corporation
Code or by the corporation’s by-laws. There are three specific officers whom a corporation
must have under Section 25 of the Corporation Code. These are the president, secretary and
the treasurer. The number of officers is not limited to these three. A corporation may have

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such other officers as may be provided for by its by-laws like, but not limited to, the vicepresident, cashier, auditor or general manager. The number of corporate officers is thus
limited by law and by the corporation’s by-laws."
It has been held that an "office" is created by the charter of the corporation and the officer is
elected by the directors and stockholders. On the other hand, an "employee" usually
occupies no office and generally is employed not by action of the directors or stockholders
but by the managing officer of the corporation who also determines the compensation to be
paid to such employee.
Nowhere in the Broadcom’s by-laws that an AVP for Sales is a corporate officer neither is
there any indication that Cosare was appointed by the Board of Directors. Broadcom failed to
sufficiently establish that the position of AVP for Sales was created by virtue of an act of
Broadcom’s board, and that Cosare was specifically elected or appointed to such position by
the directors.
Hence, in line with the above findings, the said controversy falls within the jurisdiction of the
Labor Arbiter and not with the RTC.

MATLING INDUSTRIAL AND COMMERCIAL CORP ET AL., VS. COROS,
GR No. 157802
Facts:
Coros as Vice President for Finance and Administration filed a complaint against Matling
Industrial for illegal dismissal before the Labor Arbiter.
Matling Industrial moved for dismissal of the complaint on the ground that the controversy is
an intra-corporate dispute. Matling contended that aside of being a VP for Finance and
Administration, Coros is also a Board of Director and a stockholder of Matling Industry. The
latter relied on a court ruling that “if the controversy pertains between the stockholder and
the corporation such matter is considered as an intra-corporate dispute”
Issues:
1. Whether or not Coros is a corporate officer
2. Whether or not Coros’ status as a stockholder converted the controversy into an
intracorporate dispute
Held:
Section 25 of the Corporation Code plainly states that the corporate officers are the
President, Secretary and Treasurer and such other officers as may be provided for in the bylaws. The corporate officers in the context of PD # 902 are exclusively those who are given
that character under the Corporation Code or by the Corporation’s by-laws. Additionally, in
order to create a corporate office, the appointment of which is exclusively vested in the
Board of Directors.
Coros’ position was not expressly provided in the Matling’s Constitution and by-laws. In fact,
it was the President of the corporation who designated him as VP for Finance and
Administration contrary to the above ruling that an officer to be considered as a corporate
officer, he must be appointed and elected by the Board of Directors.
The mere fact that Coros is a stockholder such controversy will not necessarily convert it into
an intra-corporate dispute. Applying the controversy and relationship test, in order to

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determine whether the conflict is intra-corporate or not two factors must concurrently
determine, to wit: a.) the status and the relationship of the parties; and b.) the nature of the
question that is the subject of their controversy.
In this case, he was terminated by reason of his obligations as a VP for Finance and
Administration and not as a stockholder. The said controversy is not an intra-corporate
dispute. It would be different if such termination was due to his being a stockholder.
Hence, jurisdiction lies within the Labor Arbiter.

REAL VS. SANGU PHILS., INC., ET AL.,
G.R. No. 168757, January 19, 2011
Facts:
Renato Real was the manager of Sangu Phils. Inc., a corporation engaged in the business of
providing manpower for general services. Mr. Real was terminated from his position because
he was always absent from work without informing the corporation of his whereabouts.
Sangu Phils. moved for the dismissal of the case considering that Mr. Real was a corporate
officer at the time of the dismissal and a stockholder of Sangu Phils.; thus, it is an intracorporate dispute which is not cognizable before the Labor Arbiter, much less the NLRC.
Issues:
1. Whether or not Mr. Real is a corporate office
2. Whether or not being a stockholder will convert the controversy into an intra-corporate
dispute.
Held:
The better policy to be followed in determining jurisdiction over a case should be to consider
two concurrent factors, viz:



The status and relationship of the parties (relationship test); and
The nature of the question which is the subject of the controversy.

Relationship test. It has been consistently held that an office is created by the charter of the
corporation and the officer is elected by the directors and stockholders (aside from the office
provided under the Corporation Code). Clearly here, neither is there any proof that Mr. Real
was appointed by the Board of Directors nor his office is labeled as a corporate officer under
its by-laws. Hence, he is not a corporate officer.
Controversy test. The element of the controversy test is absent into this case because the
reasons given by Sangu Phils. in dismissing Mr. Real have something to do with his being a
manager and nothing with his being a stockholder.
Therefore, the said matter is not an intra-corporate dispute and thus it falls within the
jurisdiction of the Labor Arbiter.

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2011 NLRC RULES OF PROCEDURE
MINDANAO TIMES CORP. VS. CONFESSOR
G.R. No. 183417; February 5, 2012
Facts:
Mitchel Confesor (respondent) was employed by petitioner in 1998, publisher of a
newspaper of general circulation in Mindanao and Davao City. He became petitioner’s
Associate Editor in six months.
Respondent resigned June 2003. On August 2003, he filed a verified complaint before the
Labor Arbiter for payment of separation pay and pro-rated 13 th month pay for 2003. He later
amended his complaint from one of money claims to illegal dismissal, averring that
petitioner’s President forced him to resign after he published articles which appeared in
petitioner’s newspaper accusing political figures of being involved in some anomalies; and
that he did resign as he was told that he would be entitled to separation pay and other
benefits, but that the promised benefits were not forthcoming, hence, his filing of the
complaint.

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The Labor Arbiter finds that respondent was constructively dismissed. Both parties appealed
to the NLRC. Petitioner, on the other hand, questioned the Labor Arbiter’s finding of
constructive dismissal. In compliance with the appeal bond requirement, petitioner
deposited the amount of P71,909.77 with UCPB and surrendered to the NLRC the passbook
covering the deposit, along with a Deed of Assignment.
The NLRC reversed the ruling of the Labor Arbiter and dismissed respondent’s complaint,
holding that there was no constructive dismissal since respondent effectively resigned from
his employment. NLRC also held that the bank deposit complied with the appeal bond
requirement and is a substantial compliance with Sec. 6, Rule 6 of the NLRC Rules of
Procedure.
The Court of Appeals, to which respondent assailed the NLRC resolution via petition for
certiorari, dismissed said petition. On respondent’s Motion for Reconsideration, CA set aside
the NLRC Resolution and reinstated the Labor Arbiter’s Decision which it declared to have
become final and executory. It held that the bank deposit of petitioner failed to substantially
comply with the appeal bond requirement, noting that its Deed of Assignment “cannot be a
substitute for the cash or surety bond contemplated under the Rules for the perfection of
appeal” as the deed “does not ensure payment of the adjudged monetary award in case the
appeal of fails.”
Petitioner filed the present petition insisting that its bank deposit and Deed of Assignment
which it transmitted to the NLRC, along with the passbook, constituted substantial
compliance with the rule on perfection of appeals.
Issue:
Whether or not bank deposit complied with the appeal bond requirement thus perfection of
appeals.
Held:
The petition is bereft of merit. 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 duly accredited by the NLRC, in an amount equivalent to the monetary
award in the judgment appealed from. “Cash,” means a sum of money; cash bail (the sense
in which the term “cash bond” is used) is a sum of money posted by a criminal defendant to
ensure his presence in court, used in place of a surety bond and real estate.
To comply with the appeal bond requirement, the company deposited the amount
of P71,909.77 with UCPB and 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 the employee and authorizing the NLRC to release the same in the event that the Labor
Arbiter’s Decision becomes final and executory. Such Deed of Assignment, as well as the
passbook, is neither a cash bond nor a surety bond. The company’s appeal to the NLRC was
thus not duly perfected, thereby rendering the Labor Arbiter’s Decision final and executory.
Bank deposit does not comply with the appeal bond requirement under Section 6, Rule 6, of
the NLRC Rules of Procedure, viz.:
Section 6. Bond. In case the decision of the Labor Arbiter or the Regional Director
involves a monetary award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond. The appeal bond shall either be in cash or
surety in an amount equivalent to the monetary award, exclusive of damages and
attorney’s fees.
The Supreme Court, giving no merit to petitioner’s contention, held that bank deposit is not

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sufficient compliance with the appeal bond requirement under the aforementioned section.
“Clearly, an appeal from a judgment as that involved in the present case is perfected “only”
upon the posting of a 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 LA. The intention of the lawmakers to make the
bond a mandatory requisite for the perfection of an appeal by the employer is clearly limned
in the provision that an appeal by the employer may be perfected “only upon the posting of
a cash or surety bond.” The word “only” makes it perfectly plain that the lawmakers
intended the posting of a cash or surety bond by the employer to be the essential and
exclusive means by which an employer’s appeal may be perfected. The word “may” refers to
the perfection of an appeal as optional on the part of the defeated party, but not to the
compulsory posting of an appeal bond, if he desires to appeal.
“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 therewith
renders the decision of the LA 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. It is intended to discourage employers from
using an appeal to delay or evade their obligation to satisfy their employees’ just and lawful
claims.
“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.”

COLLEGE OF IMMACULATE CONCEPCION VS. NLRC;
G.R. No. 167563; March 22, 2012
Facts:
CIC appointed private respondent Atty. Carlos as Acting Dean of the Department of Business
Administration and Accountancy. After a year, he was appointed as Dean of the Department
of Business, Economics and Accountancy effective June 1, 1996 until May 31, 2000. He
served as Dean of said department for the designated term. Upon the expiration of his term,
Atty. Carlos became a full-time professor without the diminution of salary as former Dean.
However, he was charged with violation of CHED Memorandum No. 19, s.1998 for teaching
part-time in another school and handling cases without the prior approval or consent of CIC;
and pursuant to the Memorandum, he was not assigned any teaching load for the
succeeding semester.
Carlos protested the imposition of sanction against him arising from his part-time teaching of
law in another university. He further claims that even assuming that he violated Section
16.8, CHED Memorandum No. 19, series of 1998, he is only liable for mere censure or oral
reprimand. On October 19, 2000, respondent filed a complaint against petitioner before
Regional Arbitration Branch No. III of San Fernando, Pampanga, for unfair labor practice,
illegal dismissal, with payment of backwages and damages. Respondent argued that the
non-renewal of his appointment as Dean and his alleged demotion to a faculty member
already constituted constructive dismissal and was but a prelude to his actual dismissal.
Thereafter, his dismissal materialized when he was deprived of his teaching load.
The Labor Arbiter rendered a decision which provided, among others, the reinstatement of

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Atty. Carlos as Dean. CIC appealed to the NLRC, but the latter affirmed the decision of the LA
with modification – reinstating the respondent to his full-time teaching position. Petitioner
filed a Motion for Clarification and/or Partial Reconsideration, praying that since the
respondent was not illegally dismissed, then he should be directed to refund the petitioner
all the amounts he received by way of payroll reinstatement. The NLRC denied petitioner's
motion for lack of merit.
Issue:
Does the subsequent reversal of the LA's findings mean that respondent should reimburse
petitioner all the salaries and benefits he received pursuant to the immediate execution of
the LA's erroneous decision ordering his reinstatement as Department Dean?
Held:
The SC cited the case of Air Philippines Corporation v. Zamora,15 citing Roquero v. Philippine
Airlines, Inc., wherein it held that:
x x x Hence, even if the order of reinstatement of the Labor Arbiter is reversed on
appeal, it is obligatory on the part of the employer to reinstate and pay the wages of
the dismissed employee during the period of appeal until reversal by the higher
court. On the other hand, if the employee has been reinstated during the appeal
period and such reinstatement order is reversed with finality, the employee is not
required to reimburse whatever salary he received for he is entitled to such, more so
if he actually rendered services during the period.
It is not disputed at this point that the LA erred in ordering respondent's reinstatement as
Dean. The NLRC ruled that respondent should have been merely reinstated as a full-time law
professor, because the term of his appointment as Dean had long expired. However, such
mistake on the part of the LA cannot, in any way, alter the fact that during the pendency of
the appeal of his decision, his order for respondent's reinstatement as Dean was
immediately executory. Article 223 of the Labor Code explicitly provides that:
Art. 223. - Appeal. – x x x
xxxx
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated in the payroll. The posting of a
bond by the employer shall not stay the execution for reinstatement provided
therein. (Emphasis supplied)
Therefore, petitioner could not validly insist that it is entitled to reimbursement for the
payment of the salaries of respondent pursuant to the execution of the LA's decision by
simply arguing that the LA's order for reinstatement is incorrect. The pertinent law on the
matter is not concerned with the wisdom or propriety of the LA's order of reinstatement, for
if it was, then it should have provided that the pendency of an appeal should stay its
execution. After all, a decision cannot be deemed irrefragable unless it attains finality.
The Court went on to discuss the illogical and unjust effects of the "refund doctrine" as it
easily demonstrates how a favorable decision by the Labor Arbiter could harm, more than
help, a dismissed employee. The employee, to make both ends meet, would necessarily
have to use up the salaries received during the pendency of the appeal, only to end up
having to refund the sum in case of a final unfavorable decision. It is mirage of a stop-gap
leading the employee to a risky cliff of insolvency. It also disregards the social justice
principles behind the rule, but also institutes a scheme unduly favorable to management.

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Under such scheme, the salaries dispensed pendente lite merely serve as a bond posted in
installment by the employer. For in the event of a reversal of the Labor Arbiter’s decision
ordering reinstatement, the employer gets back the same amount without having to spend
ordinarily for bond premiums. This circumvents, if not directly contradicts, the proscription
that the "posting of a bond [even a cash bond] by the employer shall not stay the execution
for reinstatement."

ORIENTAL SHIP MANAGEMENT CO. VS. BASTOL;
G.R. No. 186280; June 29, 2012
Facts:
OSCI hired Romy B. Bastol (Bastol) as bosun evidenced by a Contract of Employment and
was deployed on board the vessel MV Felicita. While on board the vessel, Bastol suffered
chest pains and cold clammy perspiration. He was hospitalized in Algiers and found to be
suffering from anterior myocardial infarction. In short, he had a heart attack. He was
subsequently repatriated due to his illness. The company referred Bastol for medical
treatment to the Metropolitan Hospital under the care of company-designated physician Dr.
Robert D. Lim. Unsatisfied with the treatment by Dr. Lim and seeking a second opinion, he
went to Dr. Efren R. Vicaldo, a Cardiologist and Congenital Heart Disease Specialist of the
Philippine Heart Center, who diagnosed him to be suffering from "Coronary Artery Disease
and Extensive Anteriorseptalmia" with the corresponding remarks: "For Disability,
Impediment Grade 1 (120%).” Feeling abandoned and aggrieved, Bastol, through counsel,
sent a letter on the President of OSCI, for a possible settlement of his claim for disability
benefits. He attached the Medical Certificate issued by Dr. Vicaldo. His letter did not merit a
response from OSCI. Bastol was compelled to file a Complaint before the Labor Arbiter but
OSCI countered that Bastol is not entitled to his indemnity claims, among others, for
disability benefits on account of non-compliance with the requirements of the 1994 revised
Standard Employment Contract (SEC) by failing to properly submit himself for treatment and
examination by the company-designated physician who is the only one authorized to set the
degree of disability.
Labor Arbiter Mayor, Jr. rendered a Decision based on the parties’ respective position
papers and the documentary evidence presented in NLRC in favor of Bastol. The Labor
Arbiter saw no need to conduct formal hearings. He found that Bastol was healthy when
deployed but subsequently contracted or suffered heart ailment during his period of
employment with OSCI. He also found that Bastol did not show any appreciable
improvement despite treatment by the company-designated physician, thus ruling that the
fact that Dr. Lim had not issued a certification as to Bastol’s condition did not negate his
claim for disability indemnity, as the determination of the degree thereof by Dr. Vicaldo of
the Philippine Heart Center sufficed. NLRC ruled in favor of OSCI in that Bastol should have
presented himself before the Labor Arbiter for the latter to properly assess his condition, and
that Dr. Lim and Dr. Vicaldo should be presented to determine with certainty the status of
Bastol’s heart ailment. The CA ruled that the NLRC gravely erred in construing the proviso
that it is only the company-designated physician who could declare the fitness of the
seafarer to work or establish the degree of his disability for it does not prohibit a second
medical opinion.
Issue:
Whether the Complaint filed before the Labor Arbiter ought to be dismissed for lack of
certification against forum shopping as required by the Rules and W/N seeking a second
opinion and the certification of Dr. Vicaldo is sufficient.
Held:

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Bastol should not be denied his claims.
For the expeditious and inexpensive filing of complaints by employees, the Regional
Arbitration Branch (RAB) of the NLRC provides pro-forma complaint forms. This is to facilitate
the exercise and protection of employees’ rights by the convenient assertion of their claims
against employers untrammeled by procedural rules and complexities. To comply with the
certification against forum shopping requirement, a simple question embodied in the
Complaint form answerable by "yes" or "no" suffices. Employee-complainants are not even
required to have a counsel before they can file their complaint. An officer of the RAB, duly
authorized to administer oaths, is readily available to facilitate the execution of the required
subscription or jurat of the complaint. It is thus clear that the strict application of Sec. 4,
Rule 7 of the Rules of Court does not apply to labor complaints filed before the NLRC RAB.
Labor arbiters given full discretion whether to conduct a hearing or not and to decide the
case before him through position papers: The foregoing provisos manifestly show the nonlitigious and the summary nature of the proceedings before the Labor Arbiter, who is given
full discretion whether to conduct a hearing or not and to decide the case before him
through position papers. A hearing cannot be demanded by either party as a matter of right.
The rationale behind this is to avoid delay and curtail the pernicious practice of withholding
of evidence. The proceedings before the Labor Arbiter are non-litigious in nature and the
technicalities of law and procedure, and the rules obtaining in the courts of law are not
applicable. Thus, the rules allow the admission of affidavits by the Labor Arbiter as evidence
despite the fact that the affiants were not presented for cross-examination by the counsel
for the adverse party. To require otherwise would be to negate the rationale and purpose of
the summary nature of the administrative proceedings and to make mandatory the
application of the technical rules of evidence. The belated submission of additional
documentary evidence by Bastol after the case was already submitted for decision did not
make the proceedings before the Labor Arbiter improper. The basic reason is that technical
rules of procedure are not binding in labor cases.
Bastol had been treated by these company-designated doctors for a period spanning around
seven months and 20 days or for approximately 230 days. Clearly then, the maximum
period of 120 days stipulated in the SEC for medical treatment and the declaration or
assessment by the company-designated physician of either being fit to work or the degree of
permanent disability had already lapsed. Thus, by law, if Bastol’s condition was with the
lapse of the 120 days of post-employment medical examination and treatment, without his
being employed at his usual job, then it was certainly total permanent disability.
It has been held that disability is intimately related to one’s earning capacity. It should be
understood less on its medical significance but more on the loss of earning capacity. Total
disability does not mean absolute helplessness. In disability compensation, it is not the
injury which is compensated, but rather the incapacity to work resulting in the impairment of
one’s earning capacity. Thus, permanent disability is the inability of a worker to perform
his job for more than 120 days, regardless of whether or not he loses the use of any part
of his body.
We can say that Bastol had the right to seek medical treatment other than the companydesignated physician after the lapse of the 120-day considering that said physician, within
the maximum 120-day period stipulated in the SEC neither declared him fit to work or gave
the assessment of the degree of his permanent disability which he is incumbent to do. Dr.
Vicaldo’s diagnosis and assessment should be accorded greater weight considering that he
is a Cardiologist and Congenital Heart Disease Specialist of the Philippine Heart Center.
MILLENNIUM ERECTORS CORP. VS. MAGALLANES;
G.R. No. 184362; November 15, 2010

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Facts:
Respondent Magallanes started working in 1988 as a utility man for Laurencito Tiu (Tiu),
Chief Executive Officer of Millennium Erectors Corporation (petitioner), Tiu’s family, and
Kenneth Construction Corporation. He was assigned to different construction projects
undertaken by petitioner in Metro Manila, the last of which was for a building in Libis,
Quezon City. In July of 2004 he was told not to report for work anymore allegedly due to old
age, prompting him to file on August 6, 2004 an illegal dismissal complaint before the Labor
Arbiter.
Petitioner claimed that respondent was a project employee, that respondent’s services were
terminated as the project was nearing completion. Petitioner likewise submitted a
termination report to the DOLE dated August 17, 2004.
The Labor Arbiter ruled in favor of petitioner and dismissed the complaint, holding that
respondent knew of the nature of his employment as a project employee.
On appeal, the NLRC set aside the Labor Arbiter’s Decision holding that respondent was a
regular, not a project employee, as the employment contract he supposedly signed
contained the date of commencement but not a specific date when it would end, contrary to
the rule that the duration and scope of similar contracts should be clearly set forth therein.
Petitioner moved for reconsideration of the NLRC decision, contending that respondent’s
motion for reconsideration which it treated as an appeal was not perfected, it having been
belatedly filed; that there was no statement of the date of receipt of the appealed decision;
and that it lacked verification and copies thereof were not furnished the adverse parties.
Petitioner’s motion was denied. The Court of Appeals, to which petitioner appealed, affirmed
the NLRC’s ruling by Decision.
Issue:
WON the NLRC erred in treating the respondent’s motion for reconsideration as an appeal
despite its technical flaws.
Held:
The NLRC did not err in treating respondent’s motion for reconsideration as an appeal, the
presence of some procedural flaws including the lack of verification and proof of service
notwithstanding.
In labor cases, rules of procedure should not be applied in a very rigid and technical sense.
They are merely tools designed to facilitate the attainment of justice, and where their strict
application would result in the frustration rather than promotion of substantial justice,
technicalities must be avoided. Technicalities should not be permitted to stand in the way of
equitably and completely resolving the rights and obligations of the parties. Where the ends
of substantial justice shall be better served, the application of technical rules of procedure
may be relaxed.
As to the defective verification in the appeal memorandum before the NLRC, the same
liberality applies. After all, the requirement regarding verification of a pleading is formal, not
jurisdictional. Such requirement is simply a condition affecting the form of pleading, the noncompliance of which does not necessarily render the pleading fatally defective. As for the
requirement on proof of service, it may also be dispensed with since in appeals in labor
cases, non-service of copy of the appeal or appeal memorandum to the adverse party is not
a jurisdictional defect which calls for the dismissal of the appeal.
On the merits of the case, the Court finds that, indeed, respondent was a regular, not a

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project employee.
Assuming arguendo that petitioner hired respondent initially on a per project basis, his
continued rehiring, as shown by the sample payrolls converted his status to that of a regular
employee.

ISLRIZ TRADING/LU VS. CAPADE;
G.R. No. 168501; January 31, 2011
Facts:
Respondents were employees of Islriz Trading, a gravel and sand business owned and
operated by petitioner Victor Hugo Lu. Claiming that they were illegally dismissed,
respondents filed a Complaint for illegal dismissal and non-payment of overtime pay, holiday
pay, rest day pay, allowances and separation pay against petitioner. On his part, petitioner
imputed abandonment of work against respondents.
The Labor Arbiter rendered judgment declaring Islriz Trading guilty of illegal dismissal and
ordered the latter to reinstate the respondents and for payment of backwages until actual
reinstatement. Upon appeal, the NLRC set aside the Decision of Labor Arbiter. Finding that
respondents’ failure to continue working for petitioner was neither caused by termination
nor abandonment of work, the NLRC ordered respondents’ reinstatement but without
backwages. However, pending appeal, respondents moved for the execution of the
reinstatement aspect of the Labor Arbiter’s decision. However, until the issuance of the
NLRC Resolution overturning Labor Arbiter Gan’s decision, petitioner still failed to reinstate
respondents or effect payroll reinstatement. This prompted respondents to apply for a Writ
of Execution to enforce the monetary award. A Writ of Execution was issued by Labor Arbiter
Castillon. The proceedings thereafter were likewise upheld by the CA.
Issue:
Whether respondents may collect their wages during the period between the Labor Arbiter’s
order of reinstatement pending appeal and the NLRC Resolution overturning that of the
Labor Arbiter.
Held:
The petition is not meritorious.
Petitioner contends that the CA’s act in upholding the issuance of the questioned Writ of
Execution for the enforcement of respondents’ accrued salaries, said Decision and
Resolution, in effect, altered the NLRC Resolution which only decreed respondents’
reinstatement without backwages.
Paragraph 3 of Article 223 of the Labor Code reads:
‘In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be executory,
pending appeal. The employee shall either be admitted back to work under the same terms
and conditions prevailing prior to his dismissal or separation or, at the option of the
employer, merely reinstated in the payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided herein.’
Thus in several cases, it has maintained that even if the order of reinstatement of the Labor
Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and
pay the wages of the dismissed employee during the period of appeal until reversal by the
higher court. On the other hand, if the employee has been reinstated during the appeal
period and such reinstatement order is reversed with finality, the employee is not required
to reimburse whatever salary he received for he is entitled to such, more so if he actually

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rendered services during the period. In other words, a dismissed employee whose case was
favorably decided by the Labor Arbiter is entitled to receive wages pending appeal upon
reinstatement, which is immediately executory. Unless there is a restraining order, it is
ministerial upon the Labor Arbiter to implement the order of reinstatement and it is
mandatory on the employer to comply therewith.
To come up with the answer to the present issue, we shall apply the two-fold test used in
Garcia. Was there an actual delay or was the order of reinstatement pending appeal
executed prior to its reversal? As can be recalled, until the issuance of the September 5,
2002 NLRC Resolution overturning Labor Arbiter Gan’s Decision, petitioner still failed to
reinstate respondents or effect payroll reinstatement in accordance with Article 223 of the
Labor Code. This was what actually prompted respondents to move for the issuance of a
computation of the award of backwages and Alias Writ of Execution for its enforcement. It
cannot therefore be denied that there was an actual delay in the execution of the
reinstatement aspect of the Decision of Labor Arbiter Gan prior to the issuance of the NLRC
Resolution overturning the same.
Now, the next question is: Was the delay not due to the employer’s unjustified act or
omission? Unlike in Garcia where PAL, as the employer, was then under corporate
rehabilitation, Islriz Trading here did not undergo rehabilitation or was under any analogous
situation which would justify petitioner’s non-exercise of the options provided under Article
223 of the Labor Code. Petitioner, without any satisfactory reason, failed to fulfill its
obligation and respondents remained to be not reinstated until the NLRC resolved
petitioner’s appeal. Evidently, the delay in the execution of respondents’ reinstatement was
due to petitioner’s unjustified refusal to effect the same.
Hence, the conclusion is that respondents have the right to collect their accrued salaries
during the period between the Labor Arbiter’s Decision ordering their reinstatement pending
appeal and the NLRC Resolution overturning the same because petitioner’s failure to
reinstate them either actually or through payroll was due to petitioner’s unjustified refusal to
effect reinstatement. In order to enforce this, Labor Arbiter Castillon thus correctly issued
the Writ of Execution dated March 9, 2004 as well as the Order dated June 3, 2004 denying
petitioner’s Motion to Quash Writ of Execution and granting respondents’ Urgent Motion for
Issuance of Break-Open Order. Consequently, we find no error on the part of the CA in
upholding these issuances and in dismissing the petition for certiorari before it.
To clarify, respondents are entitled to their accrued salaries only from the time petitioner
received a copy of Labor Arbiter Gan’s Decision declaring respondents’ termination illegal
and ordering their reinstatement up to the date of the NLRC Resolution overturning that of
the Labor Arbiter. This is because it is only during said period that respondents are deemed
to have been illegally dismissed and are entitled to reinstatement pursuant to Labor Arbiter
Gan’s Decision which was the one in effect at that time. Beyond that period, the NLRC
Resolution declaring that there was no illegal dismissal is already the one prevailing. From
such point, respondents’ salaries did not accrue not only because there is no more illegal
dismissal to speak of but also because respondents have not yet been actually reinstated
and have not rendered services to petitioner.

PANLILIO ET AL. VS. RTC BR. 51, CITY OF MANILA;
G.R. No. 173846; February 2, 2011
Facts:
On October 15, 2004, Jose Marcel Panlilio, Erlinda Panlilio, Nicole Morris and Marlo Cristobal

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(petitioners), as corporate officers of Silahis International Hotel, Inc. (SIHI), filed with the
Regional Trial Court (RTC) of Manila, Branch 24, a petition for Suspension of Payments and
Rehabilitation[4] in SEC Corp. Case No. 04-111180.
On October 18, 2004, the RTC of Manila, Branch 24, issued an Order staying all claims
against SIHI upon finding the petition sufficient in form and substance.
At the time, however, of the filing of the petition for rehabilitation, there were a number of
criminal charges[7] pending against petitioners in Branch 51 of the RTC of Manila. These
criminal charges were initiated by respondent Social Security System (SSS) and involved
charges of violations of Section 28 (h)[8] of Republic Act 8282, or the Social Security Act of
1997 (SSS law), in relation to Article 315 (1) (b)[9] of the Revised Penal Code, or Estafa.
Consequently, petitioners filed with the RTC of Manila, Branch 51, a Manifestation and
Motion to Suspend Proceedings.[10] Petitioners argued that the stay order issued by Branch
24 should also apply to the criminal charges pending in Branch 51. Petitioners, thus, prayed
that Branch 51 suspend its proceedings until the petition for rehabilitation was finally
resolved.
Branch 51 issued an Order[11] denying petitioners’ motion to suspend the proceedings. It
ruled that the stay order issued by Branch 24 did not cover criminal proceedings, to wit:
Xxxx
The Court shares the view of the private complainants and the SSS that the said stay order
does not include the prosecution of criminal offenses. Precisely, the law “criminalizes” the
non-remittance of SSS contributions by an employer to protect the employees from
unscrupulous employers. Clearly, in these cases, public interest requires that the said
criminal acts be immediately investigated and prosecuted for the protection of society.
Issue:
Whether or not the stay order issued by branch 24, regional trial court of manila, in sec corp.
Case no. 04-111180 covers also violation of sss law for non-remittance of premiums and
violation of [article] [3] 515 of the revised penal code.
Held:
Yes. Rosario is at fours with the case at bar. Petitioners are charged with violations of Section
28 (h) of the SSS law, in relation to Article 315 (1) (b) of the Revised Penal Code, or Estafa.
The SSS law clearly “criminalizes” the non-remittance of SSS contributions by an employer
to protect the employees from unscrupulous employers. Therefore, public interest requires
that the said criminal acts be immediately investigated and prosecuted for the protection of
society.
The rehabilitation of SIHI and the settlement of claims against the corporation is not a legal
ground for the extinction of petitioners’ criminal liabilities. There is no reason why criminal
proceedings should be suspended during corporate rehabilitation, more so, since the prime
purpose of the criminal action is to punish the offender in order to deter him and others from
committing the same or similar offense, to isolate him from society, reform and rehabilitate
him or, in general, to maintain social order.[26] As correctly observed in Rosario,[27] it would
be absurd for one who has engaged in criminal conduct could escape punishment by the
mere filing of a petition for rehabilitation by the corporation of which he is an officer.
The prosecution of the officers of the corporation has no bearing on the pending
rehabilitation of the corporation, especially since they are charged in their individual
capacities. Such being the case, the purpose of the law for the issuance of the stay order is
not compromised, since the appointed rehabilitation receiver can still fully discharge his
functions as mandated by law. It bears to stress that the rehabilitation receiver is not

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charged to defend the officers of the corporation. If there is anything that the rehabilitation
receiver might be remotely interested in is whether the court also rules that petitioners are
civilly liable. Such a scenario, however, is not a reason to suspend the criminal proceedings,
because as aptly discussed in Rosario, should the court prosecuting the officers of the
corporation find that an award or indemnification is warranted, such award would fall under
the category of claims, the execution of which would be subject to the stay order issued by
the rehabilitation court.[28] The penal sanctions as a consequence of violation of the SSS
law, in relation to the revised penal code can therefore be implemented if petitioners are
found guilty after trial. However, any civil indemnity awarded as a result of their conviction
would be subject to the stay order issued by the rehabilitation court. Only to this extent can
the order of suspension be considered obligatory upon any court, tribunal, branch or body
where there are pending actions for claims against the distressed corporation.

ANDO VS. CAMPO;
G.R. No. 184007; February 16, 2011
Facts:
Petitioner was the president of Premier Allied and Contracting Services, Inc. (PACSI), an
independent labor contractor. Respondents were hired by PACSI as haulers tasked to
manually carry bags of sugar from the warehouse of Victorias Milling Company and load
them on trucks. The respondents were dismissed from employment and thereafter, filed a
case for illegal dismissal and some money claims with the NLRC. Labor Arbiter promulgated
a decision, ruling in respondents’ favor.
Petitioner and PACSI appealed to the NLRC and the NLRC ruled that petitioner failed to
perfect his appeal because he did not pay the supersedeas bond. It also affirmed the Labor
Arbiter’s decision and upon finality of the decision, respondents moved for its execution.
To answer for the monetary award, NLRC Acting Sheriff Romeo Pasustento issued a Notice of
Sale on Execution of Personal Property over the property in the name of “Paquito V. Ando x x
x married to Erlinda S. Ando.”
This prompted petitioner to file an action for prohibition and damages with prayer for the
issuance of a TRO before RTC claiming that the property belonged to him and his wife, not to
the corporation, and, hence, could not be subject of the execution sale. But the RTC issued
an order denying the prayer for a TRO, holding that the trial court had no jurisdiction to try
and decide the case. The RTC ruled that, pursuant to the NLRC Manual on the Execution of
Judgment, petitioner’s remedy was to file a third-party claim with the NLRC Sheriff.
Petitioner filed a petition for certiorari under Rule 65 before the CA contending that the RTC
acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack
or excess of jurisdiction in issuing the Order. The CA, however, affirmed the RTC Order in so
far as it dismissed the complaint on the ground that it had no jurisdiction over the case, and
nullified all other pronouncements in the same Order. Petitioner moved for reconsideration,
but the motion was denied.
Held:
Regular courts have no jurisdiction to hear and decide questions which arise from and are
incidental to the enforcement of decisions, orders, or awards rendered in labor cases by
appropriate officers and tribunals of the Department of Labor and Employment. To hold
otherwise is to sanction splitting of jurisdiction which is obnoxious to the orderly
administration of justice.

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The NLRC Manual on the Execution of Judgment governs any question on the execution of a
judgment of that body(NLRC). The Rules of Court apply only by analogy or in a suppletory
character.
NLRC Manual on the Execution of Judgment deals specifically with third-party claims in cases
brought before that body. It defines a third-party claim as one where a person, not a party to
the case, asserts title to or right to the possession of the property levied upon. It also sets
out
the
procedure
for
the
filing
of
a
third-party
claim,
to
wit:
SECTION 2. Proceedings. — If property levied upon be claimed by any person other
than the losing party or his agent, such person shall make an affidavit of his title
thereto or right to the possession thereof, stating the grounds of such right or title
and shall file the same with the sheriff and copies thereof served upon the Labor
Arbiter or proper officer issuing the writ and upon the prevailing party. Upon receipt
of the third party claim, all proceedings with respect to the execution of the property
subject of the third party claim shall automatically be suspended and the Labor
Arbiter or proper officer issuing the writ shall conduct a hearing with due notice to all
parties concerned and resolve the validity of the claim within ten (10) working days
from receipt thereof and his decision is appealable to the Commission within ten (10)
working days from notice, and the Commission shall resolve the appeal within same
period.
There is no doubt in our mind that petitioner’s complaint is a third- party claim within the
cognizance of the NLRC. Petitioner may indeed be considered a “third party” in relation to
the property subject of the execution vis-à-vis the Labor Arbiter’s decision. There is no
question that the property belongs to petitioner and his wife, and not to the corporation. It
can be said that the property belongs to the conjugal partnership, not to petitioner alone.
Thus, the property belongs to a third party, i.e., the conjugal partnership. At the
very least, the Court can consider that petitioner’s wife is a third party within contemplation
of the law.
There is no denying that the present controversy arose from the complaint for illegal
dismissal. The subject matter of petitioner’s complaint is the execution of the NLRC decision.
Execution is an essential part of the proceedings before the NLRC. Jurisdiction, once
acquired, continues until the case is finally terminated, and there can be no end to the
controversy without the full and proper implementation of the commission’s directives.
Further underscoring the RTC’s lack of jurisdiction over petitioner’s complaint is Article 254
of the Labor Code, to wit:
ART. 254. INJUNCTION PROHIBITED. – No temporary or permanent injunction or
restraining order in any case involving or growing out of labor disputes shall be
issued by any court or other entity, except as otherwise provided in Articles 218 and
264 of this Code.
Moreover, the power of the NLRC, or the courts, to execute its judgment extends only to
properties unquestionably belonging to the judgment debtor alone. A sheriff, therefore, has
no authority to attach the property of any person except that of the judgment
debtor. Likewise, there is no showing that the sheriff ever tried to execute on the properties
of the corporation.
The TCT of the property bears out that, indeed, it belongs to petitioner and his wife and the
latter stands to lose the property subject of execution without ever being a party to the
case. This will be tantamount to deprivation of property without due process.

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EXODUS INTERNATIONAL CONSTRUCTION CORP. VS. BISCOCHO;
G.R. No. 166109; February 23, 2011
Facts:
Petitioner Exodus International Construction Corporation (Exodus) is a duly licensed labor
contractor for the painting of residential houses, condominium units and commercial
buildings. Petitioner Antonio P. Javalera is the President and General Manager of Exodus.
Exodus obtained from Dutch Boy Philippines, Inc. (Dutch Boy) a contract for the painting of
the Imperial Sky Garden. Dutch Boy awarded another contract to Exodus for the painting. In
the furtherance of its business, Exodus hired respondents as painters on different dates.
Guillermo Biscocho (Guillermo) was assigned at the Imperial Sky Garden from February 8,
1999 to February 8, 2000. Fernando Pereda (Fernando) worked in the same project from
February 8, 1999 to June 17, 2000. Likewise, Ferdinand Mariano (Ferdinand) worked there
from April 12, 1999 to February 17, 2000. All of them were then transferred to Pacific Plaza
Towers.
Gregorio S. Bellita (Gregorio) was assigned to work at the house of Mr. Teofilo Yap in Ayala
Alabang, Muntinlupa City from May 20, 1999 to December 4, 1999. Afterwards he was
transferred to Pacific Plaza Towers.
Miguel B. Bobillo (Miguel) was hired and assigned at Pacific Plaza Towers on March 10, 2000.
On November 27, 2000, Guillermo, Fernando, Ferdinand, and Miguel filed a complaint for
illegal dismissal and non-payment of holiday pay, service incentive leave pay, 13th month
pay and night-shift differential pay.
On December 1, 2000, Gregorio also filed a complaint. He claimed that he was dismissed
from the service on September 12, 2000 while Guillermo, Fernando, Ferdinand, and Miguel
were orally notified of their dismissal from the service on November 25, 2000.
Petitioners denied respondents’ allegations. As regards Gregorio, petitioners averred that on
September 15, 2000, he absented himself from work and applied as a painter with SAEI-EEI
which is the general building contractor of Pacific Plaza Towers. Since then, he never
reported back to work.
Guillermo absented himself from work without leave on November 27, 2000. When he
reported for work the following day, he was reprimanded for being Absent Without Official
Leave (AWOL). Because of the reprimand, he worked only half-day and thereafter was
unheard of until the filing of the instant complaint.
On March 21, 2002, the Labor Arbiter rendered a Decision exonerating petitioners from the
charge of illegal dismissal as respondents chose not to report for work. The Labor Arbiter
ruled that since there is neither illegal dismissal nor abandonment of job, respondents
should be reinstated but without any backwages. She disallowed the claims for premium
pay for holidays and rest days and nightshift differential pay as respondents failed to prove
that actual service was rendered on such non-working days. However, she allowed the
claims for holiday pay, service incentive leave pay and 13th month pay.
Petitioners sought recourse to the NLRC limiting their appeal to the award of service
incentive leave pay, 13th month pay, holiday pay and 10% attorney’s fees in the sum of
P70,183.23. NLRC dismissed the appeal. It ruled that petitioners, who have complete control

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over the records of the company, could have easily rebutted the monetary claims against it.
As to the award of attorney’s fees, the NLRC found the same to be proper because
respondents were forced to litigate in order to validate their claim.
The CA also affirmed LA and NLRC decision, hence this petition.
Held:
No illegal dismissal.
The rule is that one who alleges a fact has the burden of proving it; thus, petitioners were
burdened to prove their allegation that respondents dismissed them from their employment.
It must be stressed that the evidence to prove this fact must be clear, positive and
convincing. The rule that the employer bears the burden of proof in illegal dismissal cases
finds no application here because the respondents deny having dismissed the petitioners.
In this case, petitioners were able to show that they never dismissed respondents. As to the
case of Fernando, Miguel and Ferdinand, it was shown that on November 25, 2000, at around
7:30 a.m., the petitioners’ foreman, Wenifredo Lalap (Wenifredo) caught the three still eating
when they were supposed to be working already. Wenifredo reprimanded them and,
apparently, they resented it so they no longer reported for work. In the case of Gregorio, he
absented himself from work on September 15, 2000 to apply as a painter with SAEI-EEI, the
general contractor of Pacific Plaza Towers. Since then he never reported back to work.
Lastly, in the case of Guillermo, he absented himself without leave on November 27, 2000,
and so he was reprimanded when he reported for work the following day. Because of the
reprimand, he did not report for work anymore.
Respondents must be reinstated and paid their holiday pay, service incentive leave pay, and
13th month pay.
However, petitioners are of the position that the reinstatement of respondents to their
former positions, which were no longer existing, is impossible, highly unfair and unjust.
Having completed their tasks, their positions automatically ceased to exist. Consequently,
there were no more positions where they can be reinstated as painters.
Petitioners are misguided. They forgot that there are two types of employees in the
construction industry. The first is referred to as project employees or those employed in
connection with a particular construction project or phase thereof and such employment is
coterminous with each project or phase of the project to which they are assigned. The
second is known as non-project employees or those employed without reference to any
particular construction project or phase of a project.
The second category is where respondents are classified. As such they are regular
employees of petitioners. It is clear from the records of the case that when one project is
completed, respondents were automatically transferred to the next project awarded to
petitioners. There was no employment agreement given to respondents which clearly
spelled out the duration of their employment, the specific work to be performed and that
such is made clear to them at the time of hiring. It is now too late for petitioners to claim
that respondents are project employees whose employment is coterminous with each
project or phase of the project to which they are assigned.
A project employee x x x may acquire the status of a regular employee when the following
[factors] concur:
1. There is a continuous rehiring of project employees even after cessation of a project; and

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2. The tasks performed by the alleged “project employee” are vital, necessary and
indespensable to the usual business or trade of the employer.”
In this case, the evidence on record shows that respondents were employed and assigned
continuously to the various projects of petitioners. As painters, they performed activities
which were necessary and desirable in the usual business of petitioners, who are engaged in
subcontracting jobs for painting of residential units, condominium and commercial buildings.
As regular employees, respondents are entitled to be reinstated without loss of seniority
rights.
Respondents are also entitled to the payment of attorney’s fees.
Even though respondents were not represented by counsel in most of the stages of the
proceedings of this case, the award of attorney’s fees as ruled by the Labor Arbiter, the
NLRC and the CA to the respondents is still proper. In Rutaquio v. National Labor Relations
Commission,[29] this Court held that:
It is settled that in actions for recovery of wages or where an employee was forced to litigate
and, thus, incur expenses to protect his rights and interest, the award of attorney’s fees is
legally and morally justifiable.
In Producers Bank of the Philippines v. Court of Appeals[30] this Court ruled that:
Attorney’s fees may be awarded when a party is compelled to litigate or to incur expenses to
protect his interest by reason of an unjustified act of the other party.
In this case, respondents filed a complaint for illegal dismissal with claim for payment of
their holiday pay, service incentive leave pay, and 13th month pay. The Labor Arbiter, the
NLRC and the CA were one in ruling that petitioners did not pay the respondents their
holiday pay, service incentive leave pay, and 13th month pay as mandated by law. For sure,
this unjustified act of petitioners had compelled the
respondents to institute an action primarily to protect their rights and interests.
As to Backwages
In cases where there is no evidence of dismissal, the remedy is reinstatement
but without backwages. In this case, both the Labor Arbiter and the NLRC made a finding
that there was no dismissal much less an illegal one. “It is settled that factual findings of
quasi-judicial agencies are generally accorded respect and finality so long as these are
supported by substantial evidence.” Thus, inasmuch as no finding of illegal dismissal had
been made, and considering that the absence of such finding is supported by the records of
the case, this Court is bound by such conclusion and cannot allow an award of the payment
of backwages.

PFIZER, INC. VS. VELASCO;
G.R. No. 177467; March 9, 2011
Facts:
Private respondent Geraldine L. Velasco was employed with petitioner PFIZER, INC. as
Professional Health Care Representative since 1 August 1992. Sometime in April 2003,
Velasco had a medical work up for her high-risk pregnancy and was subsequently advised
bed rest which resulted in her extending her leave of absence. Velasco filed her sick leave
for the period from 26 March to 18 June 2003, her vacation leave from 19 June to 20 June

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2003, and leave without pay from 23 June to 14 July 2003.
On 26 June 2003, while Velasco was still on leave, PFIZER through its Area Sales Manager,
herein petitioner Ferdinand Cortez, personally served Velasco a "Show-cause Notice" dated
25 June 2003. Aside from mentioning about an investigation on her possible violations of
company work rules regarding "unauthorized deals and/or discounts in money or samples
and unauthorized withdrawal and/or pull-out of stocks" and instructing her to submit her
explanation on the matter within 48 hours from receipt of the same, the notice also advised
her that she was being placed under "preventive suspension" for 30 days .In response,
Velasco sent a letter addressed to Cortez dated 28 June 2003 denying the charges.
On 12 July 2003, Velasco received a "Second Show-cause Notice" informing her of additional
developments in their investigation. According to the notice, a certain Carlito Jomen
executed an affidavit pointing to Velasco as the one who transacted with a printing shop to
print PFIZER discount coupons. Velasco sent a letter to PFIZER via Aboitiz courier service
asking for additional time to answer the second Show-cause Notice.
That same day, Velasco filed a complaint for illegal suspension with money claims before the
Regional Arbitration Branch. The following day, 17 July 2003, PFIZER sent her a letter inviting
her to a disciplinary hearing to be held on 22 July 2003. On 25 July 2003, Velasco received a
"Third Show-cause Notice," together with copies of the affidavits of two Branch Managers of
Mercury Drug, asking her for her comment within 48 hours. Finally, on 29 July 2003, PFIZER
informed Velasco of its "Management Decision" terminating her employment.
On 5 December 2003, the Labor Arbiter rendered its decision declaring the dismissal of
Velasco illegal, ordering her reinstatement with backwages and further awarding moral and
exemplary damages with attorney’s fees. On appeal, the NLRC affirmed the same but
deleted the award of moral and exemplary damages.
Undaunted, PFIZER filed with the Court of Appeals a special civil action for the issuance of a
writ of certiorariunder Rule 65 of the Rules of Court to annul and set aside the
aforementioned NLRC issuances. In a Decision dated November 23, 2005, the Court of
Appeals upheld the validity of respondent’s dismissal from employment, the dispositive
portion of which reads as follows:
IN VIEW WHEREOF, the dismissal of private respondent Geraldine Velasco is AFFIRMED, but
petitioner PFIZER, INC. is hereby ordered to pay her the wages to which she is entitled to
from the time the reinstatement order was issued until November 23, 2005, the date of
promulgation of Our Decision.11
Issue:
Whether or not the Court of Appeals committed a serious but reversible error when it
ordered Pfizer to pay Velasco wages from the date of the Labor Arbiter’s decision ordering
her reinstatement until November 23, 2005, when the Court of Appeals rendered its decision
declaring Velasco’s dismissal valid.13
Held:
The petition is without merit.
At the outset, we note that PFIZER’s previous payment to respondent of the amount
of P1,963,855.00 (representing her wages from December 5, 2003, or the date of the Labor
Arbiter decision, until May 5, 2005) that was successfully garnished under the Labor
Arbiter’s Writ of Execution dated May 26, 2005 cannot be considered in its favor. Not only
was this sum legally due to respondent under prevailing jurisprudence but also this
circumstance highlighted PFIZER’s unreasonable delay in complying with the reinstatement
order of the Labor Arbiter

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As far back as 1997 in the seminal case of Pioneer Texturizing Corporation v. National Labor
Relations Commission, the Court held that an award or order of reinstatement is
immediately self-executory without the need for the issuance of a writ of execution in
accordance with the third paragraph of Article 22322 of the Labor Code. In that case, we
discussed in length the rationale for that doctrine, to wit:
The provision of Article 223 is clear that an award [by the Labor Arbiter] for
reinstatement shall be immediately executory even pending appeal and the posting of a
bond by the employer shall not stay the execution for reinstatement. The legislative intent is
quite obvious, i.e., to make an award of reinstatement immediately enforceable, even
pending appeal. To require the application for and issuance of a writ of execution as
prerequisites for the execution of a reinstatement award would certainly betray and run
counter to the very object and intent of Article 223, i.e., the immediate execution of a
reinstatement order. The reason is simple. An application for a writ of execution and its
issuance could be delayed for numerous reasons. A mere continuance or postponement of a
scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC
could easily delay the issuance of the writ thereby setting at naught the strict mandate and
noble purpose envisioned by Article 223. In other words, if the requirements of Article
224 [including the issuance of a writ of execution] were to govern, as we so declared
in Maranaw, then the executory nature of a reinstatement order or award contemplated by
Article 223 will be unduly circumscribed and rendered ineffectual. In enacting the law, the
legislature is presumed to have ordained a valid and sensible law, one which operates no
further than may be necessary to achieve its specific purpose. Statutes, as a rule, are to be
construed in the light of the purpose to be achieved and the evil sought to be prevented. x x
x In introducing a new rule on the reinstatement aspect of a labor decision under Republic
Act No. 6715, Congress should not be considered to be indulging in mere semantic exercise.
x x x23 (Italics in the original; emphasis and underscoring supplied.)
In the case at bar, PFIZER did not immediately admit respondent back to work which,
according to the law, should have been done as soon as an order or award of reinstatement
is handed down by the Labor Arbiter without need for the issuance of a writ of execution.
Thus, respondent was entitled to the wages paid to her under the aforementioned writ of
execution. At most, PFIZER’s payment of the same can only be deemed partial
compliance/execution of the Court of Appeals Resolution dated October 23, 2006 and would
not bar respondent from being paid her wages from May 6, 2005 to November 23, 2005.
To reiterate, under Article 223 of the Labor Code, an employee entitled to reinstatement
"shall either be admitted back to work under the same terms and conditions prevailing
prior to his dismissal or separation or, at the option of the employer, merely reinstated in the
payroll."
The view as maintained in a number of cases is that:
x x x [E]ven if the order of reinstatement of the Labor Arbiter is reversed on
appeal, it is obligatory on the part of the employer to reinstate and pay the
wages of the dismissed employee during the period of appeal until reversal
by the higher court. On the other hand, if the employee has been reinstated during
the appeal period and such reinstatement order is reversed with finality, the
employee is not required to reimburse whatever salary he received for he is entitled
to such, more so if he actually rendered services during the period.(Emphasis in the
original; italics and underscoring supplied)
In other words, a dismissed employee whose case was favorably decided by the Labor
Arbiter is entitled to receive wages pending appeal upon reinstatement, which is
immediately executory. Unless there is a restraining order, it is ministerial upon the Labor
Arbiter to implement the order of reinstatement and it is mandatory on the employer to

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comply therewith.

LUNA VS. ALLADO CONSTRUCTION CO., INC.;
G.R. No. 175251; May 30, 2011
Facts:
Petitioner Luna was the employee of the constructions company of the Respondent. He was
assigned in Saranggani Province. As he was caught pilfering the respondent’s property, he
was dismissed from his employment, and thereby filed a case of illegal dismissal against the
respondent.
The Labor Arbiter ruled that there was no illegal dismissal, but awarded financial assistance
in favour of the petitioner. The respondent then appealed to the NLRC questioning solely the
LA’s decision in awarding financial assistance. The NLRC reversed the LA’s decision, finding
out that there was illegal dismissal and awarded the backwages to the petitioner.
Aggrieved by such an unfavourable decision, the respondent via Rule 65 posed in its appeal
the validity of the NLRC’s decision on the ground that it has no jurisdiction to entertain
questions not alleged in the appeal. The respondent’s ground was only questioning the
propriety of the award of the financial assistance, yet NLRC entertained issues other than
that posed in the appeal. With the same adverse decision by the CA, the respondents came
before the SC via petition for certiorari still questioning the validity of the decision.
Respondent argued that the NLRC does not have authority to review issues not brought
before it for appeal.
Issue:
WON the NLRC has jurisdiction to review issues not brought before it for appeal
Held:
NO.
Section 4(c), Rule VI of the 2002 Rules of Procedure of the NLRC, which was in effect at the
time respondents appealed the Labor Arbiter’s decision, expressly provided that, on appeal,
the NLRC shall limit itself only to the specific issues that were elevated for review, to wit:
RULE
VI
Appeals
Section 4. Requisites for Perfection of Appeal. x x x.
xxxx
(c) Subject to the provisions of Article 218, once the appeal is perfected in
accordance with these Rules, the Commission shall limit itself to reviewing and
deciding specific issues that were elevated on appeal.
As a testament to its effectivity and the NLRC’s continued implementation of this procedural
policy, the same provision was retained as Section 4(d), Rule VI of the 2005 Revised Rules of
Procedure of the NLRC.
In the case at bar, the NLRC evidently went against its own rules of procedure when it
passed upon the issue of illegal dismissal although the question raised by respondents in
their appeal was concerned solely with the legality of the labor arbiter’s award of financial
assistance despite the finding that petitioner was lawfully terminated.
An appeal from a decision, award or order of the labor arbiter must be brought to the NLRC
within ten (10) calendar days from receipt of such decision, award or order, otherwise, the
same becomes final and executory [Art. 223, Labor Code; Rule VIII, Sec. 1(a), Revised Rules

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of the NLRC]. Moreover, the rules of the NLRC expressly provide that on appeal, the
Commission shall limit itself only to the specific issues that were elevated for review, all
other matters being final and executory [Rule VIII, Sec. 5(c), Revised Rules of the NLRC,
italics supplied].
In the present case, petitioner, aggrieved by the labor arbiter’s decision ordering the
extension of financial assistance to Galagar despite the finding that his termination was for
just cause, specifically limited his appeal to a single legal question, i.e., the validity of the
award of financial assistance to an employee dismissed for pilfering company property. On
the other hand, private respondent did not appeal.
When petitioner limited the issue on appeal, necessarily the NLRC may review
only that issue raised. All other matters, including the issue of the validity of
private respondent’s dismissal, are final. If private respondent wanted to
challenge the finding of a valid dismissal, he should have appealed his case
seasonably to the NLRC. By raising new issues in the reply to appeal, private
respondent is in effect appealing his case although he has, in fact, allowed his
case to become final by not appealing within the reglementary period. A
reply/opposition to appeal cannot take the place of an appeal. Therefore, in this case, the
dismissal of the complaint for illegal dismissal and the denial of the prayer for
reinstatement, having become final, can no longer be reviewed.
The Labor Code provision, read in its entirety, states that the NLRC’s power to
correct errors, whether substantial or formal, may be exercised only in the
determination of a question, matter or controversywithin its jurisdiction [Art. 218,
Labor Code]. Therefore, by considering the arguments and issues in the reply/opposition to
appeal which were not properly raised by timely appeal nor comprehended within the scope
of the issue raised in petitioner’s appeal, public respondent committed grave abuse of
discretion amounting to excess of jurisdiction.
The contention that the NLRC may nevertheless look into other issues although not raised on
appeal since it is not bound by technical rules of procedure, is likewise devoid of merit.
The law does not provide that the NLRC is totally free from "technical rules of
procedure", but only that the rules of evidence prevailing in courts of law or
equity shall not be controlling in proceedings before the NLRC [Art. 221, Labor
Code]. This is hardly license for the NLRC to disregard and violate the
implementing rules it has itself promulgated. Having done so, the NLRC committed
grave abuse of discretion.

BANAHAW BROADCASTING CORP. VS. PACANA III;
G.R No. 171673; May 30, 2011
Facts:
On August 29, 1995, the DXWG personnel (Pacana III et al.) filed with the Labor Arbiter a
complaint for illegal dismissal, unfair labor practice, reimbursement of unpaid Collective
Bargaining Agreement (CBA) benefits, and attorney’s fees against IBC and BBC.
On June 21, 1996, Labor Arbiter Abdullah L. Alug rendered his Decision awarding the DXWG
personnel a total ofP12,002,157.28 as unpaid CBA benefits consisting of unpaid wages and
increases, 13th month pay, longevity pay, sick leave cash conversion, rice and sugar
subsidy, retirement pay, loyalty reward and separation pay. The Labor Arbiter denied the
other claims of the DXWG personnel for Christmas bonus, educational assistance, medical

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check-up and optical expenses. Both sets of parties appealed to the National Labor Relations
Commission (NLRC).
The NLRC issued a resolution vacating the decision of the Labor Arbiter and remanded the
case to arbitration branch of origin. On October 15, 1998, Labor Arbiter Nicodemus G.
Palangan rendered a Decision adjudging BBC to be liable for the same amount in the
vacated Decision of Labor Arbiter Alug.
Both BBC and respondents appealed to the NLRC anew. In their appeal, the DXWG personnel
reasserted their claim for the remaining CBA benefits not awarded to them, and alleged
error in the reckoning date of the computation of the monetary award. BBC, in its own
Memorandum of Appeal, challenged the monetary award itself, claiming that such benefits
were only due to IBC, not BBC, employees. In the same Memorandum of Appeal, BBC
incorporated a Motion for the Recomputation of the Monetary Award (of the Labor Arbiter), in
order that the appeal bond may be reduced.
The NLRC issued an Order denying the Motion for the Recomputation of the Monetary Award.
According to the NLRC, such recomputation would result in the premature resolution of the
issue raised on appeal. The NLRC ordered BBC to post the required bond within 10
days from receipt of said Order, with a warning that noncompliance will cause the
dismissal of the appeal for non-perfection. Instead of complying with the Order to post
the required bond, BBC filed a Motion for Reconsideration, alleging this time that since it is
wholly owned by the Republic of the Philippines, it need not post an appeal bond.
Issue:
Whether or not Banahaw Broadcasting Corporation (BBC), a Government Owned and
Controlled Corporation is exempt from posting an appeal bond
Held:
We can infer from the foregoing jurisprudential precedents that, as a general rule, the
government and all the attached agencies with no legal personality distinct from the former
are exempt from posting appeal bonds, whereas government-owned and controlled
corporations (GOCCs) are not similarly exempted. This distinction is brought about by the
very reason of the appeal bond itself: to protect the presumptive judgment
creditor against the insolvency of the presumptive judgment debtor. When the
State litigates, it is not required to put up an appeal bond because it is presumed to be
always solvent. This exemption, however, does not, as a general rule, apply to GOCCs for
the reason that the latter has a personality distinct from its shareholders.
In the case at bar, BBC was organized as a private corporation, sequestered in the
1980’s and the ownership of which was subsequently transferred to the government in a
compromise agreement. Further, it is stated in its Amended Articles of Incorporation that
BBC has the following primary function:
To engage in commercial radio and television broadcasting, and for this purpose, to
establish, operate and maintain such stations, both terrestrial and satellite or interplanetary,
as may be necessary for broadcasting on a network wide or international basis.
It is therefore crystal clear that BBC’s function is purely commercial or proprietary and not
governmental. As such, BBC cannot be deemed entitled to an exemption from the posting of
an appeal bond.
Consequently, the NLRC did not commit an error, and much less grave abuse of discretion, in
dismissing the appeal of BBC on account of non-perfection of the same.

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SOCIAL SECURITY COMMISSION VS. RIZAL POULTRY ET AL.;
G.R. No. 167050; June 1, 2011
Facts:
The instant case stemmed from a petition filed by Alberto Angeles (Angeles) before the
Social Security Commission (SSC) to compel respondents Rizal Poultry and Livestock
Association, Inc. (Rizal Poultry) or BSD Agro Industrial Development Corporation (BSD Agro)
to remit to the Social Security System (SSS) all contributions due for and in his behalf.
Angeles had earlier filed a complaint for illegal dismissal against BSD Agro and/or its owner,
Benjamin San Diego (San Diego). The Labor Arbiter initially found that Angeles was an
employee and that he was illegally dismissed. On appeal, however, the NLRC reversed the
Labor Arbiter’s Decision and held that no employer-employee relationship existed between
Angeles and respondents. The ruling was anchored on the finding that the duties performed
by Angeles, such as carpentry, plumbing, painting and electrical works, were not
independent and integral steps in the essential operations of the company, which is
engaged in the poultry business. Angeles elevated the case to the Court of Appeals via
petition for certiorari. The appellate court affirmed the NLRC ruling and upheld the absence
of employer-employee relationship. Angeles moved for reconsideration but it was denied by
the Court of Appeals. No further appeal was undertaken, hence, an entry of judgment was
made on 26 May 2001.
At any rate, the SSC did not take into consideration the decision of the NLRC. It denied
respondents’ motion to dismiss in an Order dated 19 February 2002. The SSC ratiocinated,
thus:
Decisions of the NLRC and other tribunals on the issue of existence of employer-employee
relationship between parties are not binding on the Commission. At most, such finding has
only a persuasive effect and does not constitute res judicata as a ground for dismissal of an
action pending before Us. While it is true that the parties before the NLRC and in this case
are the same, the issues and subject matter are entirely different. The labor case is for
illegal dismissal with demand for backwages and other monetary claims, while the present
action is for remittance of unpaid SS[S] contributions. In other words, although in both suits
the respondents invoke lack of employer-employee relationship, the same does not proceed
from identical causes of action as one is for violation of the Labor Code while the instant
case is for violation of the SS[S] Law.
Respondents sought recourse before the Court of Appeals by way of a petition for certiorari.
The Court of Appeals reversed the rulings of the SSC and held that there is a common issue
between the cases before the SSC and in the NLRC; and it is whether there existed an
employer-employee relationship between Angeles and respondents. Thus, the case falls
squarely under the principle of res judicata, particularly under the rule on conclusiveness of
judgment, as enunciated in Smith Bell and Co. v. Court of Appeals.
Issue:
WON the decision of the NLRC and the Court of Appeals, finding no employer-employee
relationship, constitutes res judicata as a rule on conclusiveness of judgment as to preclude
the relitigation of the issue of employer-employee relationship in a subsequent case filed
before the petitioner.
Held:
The elements of res judicata are: (1) the judgment sought to bar the new action must be
final; (2) the decision must have been rendered by a court having jurisdiction over the
subject matter and the parties; (3) the disposition of the case must be a judgment on the
merits; and (4) there must be as between the first and second action, identity of parties,

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subject matter, and causes of action. Should identity of parties, subject matter, and causes
of action be shown in the two cases, then res judicata in its aspect as a "bar by prior
judgment" would apply. If as between the two cases, only identity of parties can be shown,
but not identical causes of action, then res judicata as "conclusiveness of judgment" applies.
Verily, the principle of res judicata in the mode of "conclusiveness of judgment" applies in
this case. The first element is present in this case. The NLRC ruling was affirmed by the
Court of Appeals. It was a judicial affirmation through a decision duly promulgated and
rendered final and executory when no appeal was undertaken within the reglementary
period. The jurisdiction of the NLRC, which is a quasi-judicial body, was undisputed. Neither
can the jurisdiction of the Court of Appeals over the NLRC decision be the subject of a
dispute. The NLRC case was clearly decided on its merits; likewise on the merits was the
affirmance of the NLRC by the Court of Appeals.
With respect to the fourth element of identity of parties, we hold that there is substantial
compliance.
The parties in SSC and NLRC cases are not strictly identical. Rizal Poultry was impleaded as
additional respondent in the SSC case. Jurisprudence however does not dictate absolute
identity but only substantial identity. There is substantial identity of parties when there is a
community of interest between a party in the first case and a party in the second case, even
if the latter was not impleaded in the first case.
A case in point is Smith Bell and Co. v. Court of Appeals25 which, contrary to SSC, is apt and
proper reference. Smith Bell availed of the services of private respondents to transport
cargoes from the pier to the company's warehouse. Cases were filed against Smith Bell, one
for illegal dismissal before the NLRC and the other one with the SSC, to direct Smith Bell to
report all private respondents to the SSS for coverage. While the SSC case was pending
before the Court of Appeals, Smith Bell presented the resolution of the Supreme Court in
G.R. No. L-44620, which affirmed the NLRC, Secretary of Labor, and Court of Appeals’ finding
that no employer-employee relationship existed between the parties, to constitute as bar to
the SSC case. We granted the petition of Smith Bell and ordered the dismissal of the case.
We held that the controversy is squarely covered by the principle of res judicata, particularly
under the rule on "conclusiveness of judgment." Therefore, the judgment in G.R. No. L-44620
bars the SSC case, as the relief sought in the latter case is inextricably related to the ruling
in G.R. No. L-44620 to the effect that private respondents are not employees of Smith Bell.

UNIVERSITY PLANS, INC. VS. SOLANO;
G.R. No. 170416; June 22, 2011
Facts:
Respondents filed before the Labor Arbiter complaints for illegal dismissal, illegal deductions,
overriding commissions, unfair labor practice, moral and exemplary damages, and actual
damages against petitioner University Plans Incorporated.
The Labor Arbiter found petitioner guilty of illegal dismissal and ordered respondents'
reinstatement as well as the payment of their full backwages, proportionate 13th month
pay, moral/exemplary damages, and attorney's fees.
Petitioner appealed the Decision of the LA to the NLRC and filed its Memorandum on

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Appeal as well as a Motion to Reduce Bond. Simultaneous with the filing of said pleadings, it
posted a cash bond in the amount of P30,000.00.
In its Motion to Reduce Bond, petitioner alleged that it was under receivership and that it
cannot dispose of its assets at such a short notice. Because of this, it could not post the
required bond. Nevertheless, it has P30,000.00 available for immediate disposition and thus
prayed that said amount be deemed sufficient to satisfy the required bond for the perfection
of its appeal. The NLRC denied petitioner's Motion to Reduce Bond and directed it to post an
additional appeal bond in the amount of P3,013,599.50 within an unextendible period of 10
days from notice, otherwise the appeal shall be dismissed for non-perfection.
The NLRC denied petitioner's motion for reconsideration ratiocinating that while it has the
discretion to reduce the appeal bond, it is nevertheless not persuaded that petitioner was
incapable of posting the required bond. It noted that petitioner failed to submit any financial
statement or provide details anent its alleged receivership or its sources of income.
Unsatisfied, petitioner went to the CA through a Petition for Certiorari. The CA upheld the
NLRC Resolution.
Issue:
Whether or not the NLRC erred in not considering the merit or lack of merit of petitioner’s
Motion to Reduce Bond.
Held:
There is merit in the petition.
The NLRC erred in not considering the merit or lack of merit of petitioner's Motion
to Reduce Bond.
Petitioner attached to its Motion to Reduce Bond the SEC Orders dated August 23, 1999 and
May 23, 2000. The Order of August 23, 1999 is a Cease and Desist Order which, among
others, prohibited the officers and agents of petitioner from withdrawing from its trust funds
or from making any disposition thereof and, ordered the freeze of all its assets and
properties. On the other hand, the May 23, 2000 Order placed UPI, Inc. under the
management and control of a RECEIVER.
From the said SEC Orders, it is unmistakable that petitioner was under receivership. And
from the tenor and contents of said Orders, it is possible that petitioner has no liquid asset
which it could use to post the required amount of bond. Also, it is quite understandable that
because of petitioner's financial state, it cannot raise the amount of more than P3 million
within a period of 10 days from receipt of the Labor Arbiter's judgment.
However, the NLRC ignored petitioner's allegations and instead remained adamant that
since the amount of bond is fixed by law, petitioner must post an additional bond of more
than P3 million. This, to us, is an utter disregard of the provision of the Labor Code and of
the NLRC Revised Rules of Procedure allowing the reduction of bond in meritorious cases.
While the NLRC tried to correct this error in its March 21, 2003 Resolution by further
explaining that it was not persuaded by petitioner's alleged incapability of posting the
required amount of bond for failure to submit financial statement, list of sources of income
and other details with respect to the alleged receivership, we still find the hasty denial of the
motion to reduce bond not proper.
Notwithstanding petitioner's failure to submit its financial statement and list of sources of
income and to give more details relative to its receivership, it was nevertheless able to show
through the abovementioned SEC Orders that it was indeed under a state of receivership.
This should have been sufficient reason for the NLRC to not outrightly deny petitioner's

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motion. As to the lacking documents and details on the receivership, it is true that they are
needed by the NLRC in determining petitioner's capacity to post the required amount of
bond. However, their absence should not lead to the outright denial of the motion since as
earlier discussed, the NLRC is not precluded from conducting a preliminary determination on
the merit or lack of merit of a motion to reduce bond. Here, considering the clear showing of
petitioner's state of receivership, the NLRC should have conducted such preliminary
determination and therein require the submission of said documents and other necessary
evidence before proceeding to resolve the subject motion. After all, the present case falls
under those cases where the bond requirement on appeal may be relaxed considering that
(1) there was substantial compliance with the Rules; (2) the surrounding facts and
circumstances constitute meritorious grounds to reduce the bond; and (3) the petitioner, at
the very least, exhibited its willingness and/or good faith by posting a partial bond during
the reglementary period. Also, such a procedure would be in keeping with the Labor Code's
mandate to use every and all reasonable means to ascertain the facts in each case speedily
and objectively, without regard to technicalities of law or procedure, all in the interest of due
process. We thus find error on the part of the NLRC when it denied petitioner's Motion to
Reduce Bond and likewise on the part of the CA when it affirmed said denial.
In view of the foregoing, a remand of this case to the NLRC for the conduct of preliminary
determination of the merit or lack of merit of petitioner's Motion to Reduce Bond is proper.

BPI EMPLOYEES UNION – METRO MANILA VS. BANK OF THE PHIL. ISLANDS;
G.R No. 178699; September 21, 2011
Facts:
Petitioner Uy was a bank teller of the respondent BPI. She was separated from her job
allegedly because of insubordination, disrespect and absence without leave. She together
with the Union, filed a case for illegal dismissal against respondent in the Voluntary
Arbitrator. The VA ruled in favour of her, ordering the respondent to reinstate her and award
full backwages.
Both appealed to the CA which affirmed the VA’s decision with modifications. Still
unsatisfied, Uy and the Union went to SC and alleged that BPI’s remedy is not
a certiorari petition under Rule 65 of the Rules of Court but an appeal from judgments, final
orders and resolutions of voluntary arbitrators under Rule 43 of the Rules of Court. They also
contended that BPI’s petition is wanting in substance.
Issue:
WON BPI’s remedy of certiorari petition under Rule 65 is proper
Held:
YES.
Section 1, Rule 41 of the Rules of Court explicitly provides that no appeal may be taken from
an order of execution, the remedy of an aggrieved party being an appropriate special civil
action under Rule 65 of the Rules of Court. Thus, BPI correctly availed of the remedy
of certiorari under Rule 65 of the Rules of Court when it assailed the December 6, 2005 order
of execution of the Voluntary Arbitrator.

DUP SOUND PHILS. VS. CA;
G.R. No. 168317; November 21, 2011

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Facts:
Private respondent, Pial is an employee of herein petitioner DUP Sound Phils. (DUP);
petitioner Tan is the owner and manager of DUP. Pial was given the job of "mastering tape";
his main function was to adjust the sound level and intensity of the music to be recorded as
well as arrange the sequence of the songs to be recorded in the cassette tapes. Pial got
absent from work because he got sick. The following day when he was ready for work, he
was informed by the office secretary not to report for work until such time that they will
advise him to do so. After three weeks without receiving any notice, Pial again called up their
office. This time the office secretary advised him to look for another job because, per
instruction of Tan, he is no longer allowed to work at DUP. Pial filed a complaint for illegal
dismissal and prayed for the payment of his unpaid service incentive leave pay, full
backwages, separation pay, moral and exemplary damages as well as attorney's fees.
Petitioners DUP and Tan denied the material allegations of Pial; that the latter failed to report
for work following an altercation with his supervisor the previous day and that Pial called up
their office and informed the office secretary that he will be going back to work on
September 17, 2001. However, he failed to report for work on the said date. Petitioners were
subsequently surprised when they learned that Pial filed a complaint for illegal dismissal
against them; Pial was never dismissed, instead, it was his unilateral decision not to work at
DUP anymore.
The Labor Arbiter rendered a decision declaring Pial to have been illegally dismissed and
ordering DUP and Tan to reinstate him to his former position and pay him backwages, cost of
living allowance, service incentive leave pay and attorney's fees. On appeal, the NLRC
modified the decision by deleting the award of backwages and attorney's fees. The NLRC
ruled that there was no illegal dismissal on the part of DUP and Tan, but neither was there
abandonment on the part of Pial. Pial then filed a special civil action for certiorari with the
CA. The CA set aside the decision of the NLRC and reinstated the decision of the LA.
Issue:
Whether or not Pial was illegally dismissed.
Held:
This Court cannot give credence to petitioners' claim that private respondent abandoned his
job. Pial was illegally dismissed.
The settled rule in labor cases is that the employer has the burden of proving that the
employee was not dismissed, or, if dismissed, that the dismissal was not illegal, and failure
to discharge the same would mean that the dismissal is not justified and, therefore, illegal.
In the instant case, what betrays petitioners' claim that private respondent was not
dismissed from his employment but instead abandoned his job is their failure to prove that
the latter indeed stopped reporting for work without any justifiable cause or a valid leave of
absence.
If private respondent indeed abandoned his job, petitioners should have afforded him due
process by serving him written notices, as well as a chance to explain his side, as required
by law. It is settled that, procedurally, if the dismissal is based on a just cause under Article
282 of the Labor Code, the employer must give the employee two written notices and a
hearing or opportunity to be heard if requested by the employee before terminating the
employment: a notice specifying the grounds for which dismissal is sought, a hearing or an
opportunity to be heard and, after hearing or opportunity to be heard, a notice of the
decision to dismiss. Again, petitioners failed to do these. Thus, the foregoing bolsters private
respondent's claim that he did not abandon his work but was, in fact, dismissed.
Neither may private respondent's refusal to report for work subsequent to the LA's issuance

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of an order for his reinstatement be considered as another abandonment of his job. It is a
settled rule that failure to report for work after a notice to return to work has been served
does not necessarily constitute abandonment. As defined under established jurisprudence,
abandonment is the deliberate and unjustified refusal of an employee to resume his
employment. It is a form of neglect of duty, hence, a just cause for termination of
employment by the employer. For a valid finding of abandonment, these two factors should
be present: (1) the failure to report for work or absence without valid or justifiable reason;
and (2) a clear intention to sever employer-employee relationship, with the second as the
more determinative factor which is manifested by overt acts from which it may be deduced
that the employee has no more intention to work. The intent to discontinue the employment
must be shown by clear proof that it was deliberate and unjustified. In the instant case,
private respondent claimed that his subsequent refusal to report for work despite the Labor
Arbiter's order for his reinstatement is due to the fact that he was subsequently made to
perform the job of a "bodegero" of which he is unfamiliar and which is totally different from
his previous task of "mastering tape." Moreover, he was assigned to a different workplace,
which is a warehouse, where he was isolated from all other employees. The Court notes that
petitioners failed to refute the foregoing claims of private respondent.
Under the existing law, an employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights. Article 279 of the Labor Code clearly provides
that an employee who is dismissed without just cause and without due process is entitled to
backwages and reinstatement or payment of separation pay in lieu thereof. Article 223 of
the same Code also provides that an employee entitled to reinstatement shall either be
admitted back to work under the same terms and conditions prevailing prior to his dismissal
or separation, or, at the option of the employer, merely reinstated in the payroll. It is
established in jurisprudence that reinstatement means restoration to a state or condition
from which one had been removed or separated. The person reinstated assumes the
position he had occupied prior to his dismissal. Reinstatement presupposes that the previous
position from which one had been removed still exists, or that there is an unfilled position
which is substantially equivalent or of similar nature as the one previously occupied by the
employee.
This Court has ruled in many instances that reinstatement is no longer viable where, among
others, the relations between the employer and the employee have been so severely
strained, that it is not in the best interest of the parties, nor is it advisable or practical to
order reinstatement, or where the employee decides not to be reinstated. In the instant
case, the resulting circumstances show that reinstatement would be impractical and would
hardly promote the best interest of the parties. Resentment and enmity between petitioners
and private respondent necessarily strained the relationship between them or even
provoked antipathy and antagonism as shown by the acts of the parties subsequent to the
order of reinstatement. Besides, private respondent expressly prayed for an award of
separation pay in lieu of reinstatement from the very start of the proceedings before the
Labor Arbiter. By so doing, he forecloses reinstatement as a relief by implication.
Where reinstatement is no longer viable as an option, separation pay equivalent to one (1)
month salary for every year of service should be awarded as an alternative. This has been
the consistent ruling in the award of separation pay to illegally dismissed employees in lieu
of reinstatement.

AUJERO VS. PHIL. COMMUNICATIONS SATELLITE CORP.;
G.R. No. 193484; January 18, 2012
Facts

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Petitioner started working for Philcomsat in 1967 as an accountant. On August 15, 2001 or
after 34 years of service, he applied for early retirement and the same was approved
on September 15, 2001. During that time, he was the Senior Vice-President. He executed a
Deed of Release and Quitclaim in Philcomsat’s favor on September 12, 2002 with a receipt
from the latter of a check in the amount of P 9,439, 327.91.After almost 3 years, petitioner
filed a complaint for unpaid retirement benefits claiming that the actual amount of his
retirement pay is P 14, 015, 055.00 and the P 9, 439, 327.91 that he received as supposed
settlement is unconscionable. Thus, his quitclaim must be declared as null and void. He said
that he had no choice but to accept said amount because he was in dire need thereof and he
was ready to return to his hometown so he signed the quitclaim despite the deficiency as no
money would be released if he did not execute a release and waiver in Philcomsat’s favor.
According to him, the letter of Philcomsat’s chairman and president addressed to UCPB for
the release of P 9,439,327.91 to him and P 4,575,727.09 to Philcomsat, which predated the
execution of his quitclaim, indicates the company’s pre-conceived plans to deprive him of
a portion of his retirement pay. The LA decided in favor of the petitioner and ordered
Philcomsat to pay him P 4,575,727.09and P 274,805.00 as balance of his retirement benefits
and salary for the period from August 15 to September 15, 2001. Petitioner’s complaint for
unpaid retirement benefits and salary was dismissed because he failed to prove
that Philcomsat employed means to vitiate his consent to the quitclaim. Philcomsat’s appeal
to the NLRC from LA’s decision was filed and its surety bond posted beyond the prescribed
period of 10 days but since it was only one day delayed, the NLRC disregard the procedural
lapse & proceeded with the appeal. Petitioner later filed for a petition for certiorari accusing
NRLC with grave abuse of discretion for proceeding despite respondent’s belated appeal. He
claimed that when Philcomsat filed its appeal and posted its surety bond, LA’s decision
became final and executory and the failure of Philcomsat’s counsel to verify the copy does
not constitute excusable negligence. The CA however, found no merit in the claim of
petitioner and ruled that the NLRC was correct in upholding the validity of the quitclaim
because the terms of the Deed of Release and Quitclaim were reasonable and there was no
showing that Philcomsat employed coercion, fraud or undue influence upon petitioner to
compel him to sign the same.
Issues:
1. Whether or not the delay in the filing of Philcomsat’s appeal and posting of surety bond is
inexcusable; and
2. Whether or not the quitclaim executed by the petitioner in Philcomsat’s favor is valid,
thereby foreclosing his right to institute any claim against Philcomsat
Held:
The Court rules in Philcomsat’s favor since procedural rules may be waived or dispensed
with in absolutely meritorious cases. According to Philcomsat, when petitioner made the
execution of the quitclaim, it was voluntary. His educational attainment and the position he
occupied also militate against his claim that he was pressured or coerced into signing the
quitclaim. Absent any evidence that any vices of consent is present and considering
the petitioner’s position and education, the quitclaim executed by the petitioner constitutes
a valid and binding agreement.
Since petitioner’s claim of fraud and bad faith against Philcomsat is unsubstantiated, this
Court
thus, finds the quitclaim to be legitimate waiver. The factual issues were determined by the
NLRC and were affirmed by the CA. Petition is denied.

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SARONA VS. NLRC;
G.R. No. 185280; January 18, 2012
Facts:
Petitioner, a security guard in Sceptre since April 1976, was asked by Sceptre’s operations
manager on June 2003, to submit a resignation letter as a requirement for an application in
Royale and to fill up an employment application form for the said company. He was then
assigned at Highlight Metal Craft Inc. from July 29 to August 8, 2003 and was later
transferred to Wide Wide World Express Inc. On September 2003, he was informed that his
assignment at WWWE Inc. was withdrawn because Royale has been allegedly replaced by
another security agency which he later discovered to be untrue. Nevertheless, he was once
again assigned at Highlight Metal sometime in September 2003 and when he reported at
Royale’s office on October 1, 2003, he was informed that he would no longer be given any
assignment as instructed by Sceptre’s general manager. He thus filed a complaint for illegal
dismissal. The LA ruled in petitioner’s favor as he found him illegally dismissed and was not
convinced by the respondent’s claim on petitioner’s abandonment.
Respondents were ordered to pay backwages computed from the day he was dismissed up
to the promulgation of his decision on May 11, 2005.The LA also ordered for the payment of
separation pay but refused to pierce Royale’s corporate veil.
Respondents appealed to the NLRC claiming that the LA acted with grave abuse of discretion
upon ruling on the illegal dismissal of petitioner. NLRC partially affirmed the LA’s decision
with regard to petitioner’s illegal dismissal and separation pay but modified the amount of
backwages and limited it to only 3 months of his last month salary reducing P95, 600 to P15,
600 since he worked for Royale for only 1 month and 3 days.
Petitioner did not appeal to LA but raised the validity of LA’s findings on piercing Royale’s
corporate personality and computation of his separation pay and such petition was
dismissed by the NLRC.
Petitioner elevated NLRC’s decision to the CA on a petition for certiorari, and the CA
disagreed with the NLRC’s decision of not proceeding to review the evidence for determining
if Royale is Sceptre’s alter ego that would warrant the piercing of its corporate veil.
Issues:
1) Whether or not Royale’s corporate fiction should be pierced for the purpose of compelling
it to recognize the petitioner’s length of service with Sceptre and for holding it liable for the
benefits that have accrued to him arising from his employment with Sceptre; and
2) Whether or not petitioner’s backwages should be limited to his salary for 3 months
Held:
The doctrine of piercing the corporate veil is applicable on alter ego cases, where a
corporation is merely a farce since it is a mere alter ego or business conduit of a person, or
where the corporation is so organized and controlled and its affairs are so conducted as to
make it merely an instrumentality, agency, conduit or adjunct of another corporation. The
way on how petitioner was made to resign from Sceptre then later on made an employee of
Royale, reflects the use of the legal fiction of the separate corporate personality and is an
implication of continued employment. Royale is a continuation or successor or Sceptre since
the employees of Sceptre and of Royale are the same and said companies have the same
principal place of business.
Because petitioner’s rights were violated and his employer has not changed, he is entitled to
separation pay which must be computed from the time he was hired until the finality of this
decision. Royale is also ordered to pay him backwages from his dismissal on October 1, 2003
until the finality of this decision. However, the amount already received by petitioner from
the respondents shall be deducted. He is also awarded moral and exemplary damages
amounting to P 25, 000.00 each for his dismissal which was tainted with bad faith and fraud.

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Petition is granted. CA’s decision is reversed and set aside.
SALENGA ET AL. VS. CA;
G.R. No. 174941; February 1, 2012
Facts:
President/Chief Executive Officer (CEO) Rufo Colayco issued an Order informing petitioner
that, pursuant to the decision of the board of directors of respondent CDC, the position of
head executive assistant – the position held by petitioner – was declared redundant.
Petitioner filed a Complaint for illegal dismissal with a claim for reinstatement and payment
of back wages, benefits, and moral and exemplary damages against respondent CDC and
Colayco. Respondents, represented by the Office of the Government Corporate Counsel
(OGCC), alleged that the NLRC had no jurisdiction to entertain the case on the ground that
petitioner was a corporate officer and, thus, his dismissal was an intra-corporate matter
falling properly within the jurisdiction of the Securities and Exchange Commission (SEC). LA
Darlucio rendered a Decision in favor of petitioner. From the decision, the OCGCC filed an
appeal with the National Labor Relations Commission (NLRC) via a Memorandum of Appeal
verified and certified by Hilana Timbol-Roman, the executive vice president of respondent
CDC. The petitioner opposed the appeal on the ground that the Memorandum of Appeal and
Joint Affidavit were not accompanied by a board resolution from respondent’s board of
directors authorizing either Timbol-Roman or Atty. Mallare, or both, to pursue the case or to
file the appeal on behalf of respondent.
Issue:
Whether or not the NLRC has jurisdiction to entertain the appeal.
Held:
NLRC has no jurisdiction to entertain the appeal. It is clear from the NLRC Rules of Procedure
that appeals must be verified and certified against forum-shopping by the parties-in-interest
themselves. A corporation can only exercise its powers and transact its business through its
board of directors and through its officers and agents when authorized by a board resolution
or its bylaws. Absent the requisite board resolution, neither Timbol-Roman nor Atty. Mallari,
who signed the Memorandum of Appeal and Joint Affidavit of Declaration allegedly on behalf
of respondent corporation, may be considered as the “appellant” and “employer” referred to
by Rule VI, Sections 4 to 6 of the NLRC Rules of Procedure. The court cannot agree with the
OGCC’s attempt to downplay this procedural flaw by claiming that, as the statutorily
assigned counsel for GOCCs, it does not need such authorization. In Constantino-David v.
Pangandaman-Gania, 456 Phil. 273, 294-298 (2003), the court exhaustively explained why it
was necessary for government agencies or instrumentalities to execute the verification and
the certification against forum-shopping through their duly authorized representatives. The
purpose of verification is to secure an assurance that the allegations in the pleading are true
and correct and have been filed in good faith. Unless equitable circumstances which are
manifest from the record of a case prevail, it therefore becomes necessary for the concerned
government agency or its authorized representatives to certify for non-forum shopping if
only to be sure that no other similar case or incident is pending before any other court.
Anent the corporation’s liability, the decision of the LA still stands. In the case at bar,
respondents failed to adduce any evidence showing that the position of Head Executive
Assistant is superfluous. There is no evidence on record to show that the position of Head
Executive Assistant was abolished by the Board of Directors in its meetings. Hence, the
ground of redundancy is merely a device made by respondent Colayco in order to ease out
the complainant from the respondent corporation. Moreover, the complainant was not
accorded his right to due process prior to his termination. He was not given the opportunity
to be heard and defend himself. However, the court notes that with regards to respondent
Colayco’s solidary liability with the corporation, petitioner notably in the case at hand, did

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not question the ruling made by NLRC in finding that respondent Colayco may not be held
solidarily responsible to him. As a result, it dropped him as a respondent. Based on the
foregoing, all other subsequent proceedings regarding the issue of petitioner’s dismissal are
null and void for having been conducted without jurisdiction.
LOCKHEED DETECTIVE & WATCHMAN AGENCY VS. UNIVERSITY OF THE PHILS.;
G.R No. 185918; April 18, 2012
Facts:
Petitioner entered into a contract for security services with respondent University of the
Philippines and they were both sued by several security guards in 1998 for payment of
underpaid wages and other benefits. The labor arbiter found the claims meritorious and held
both petitioner and respondent solidarily liable as job contractor and principal. Upon appeal
by both, the decision was only modified by dismissing some claims (premium pay and
service incentive leave pay) for lack of basis but they were still held solidarily liable. An MR
on this was also denied by the NLRC. The NLRC decision became final and executor on 2002
and a writ of execution was issued but later quashed by the LA on motion of UP due to the
disputes regarding the amount of the award. But, such order quashing the writ was
reversed by the NLRC.
UP moved to reconsider the NLRC resolution but it was upheld with the modification that the
satisfaction of the judgment award in favor of Lockheed will be only against the funds of UP
which are not identified as public funds. The order and resolution became final and an alias
writ of execution was issued.
Pursuant to such order, a notice of garnishment was issued to PNB for the satisfaction of the
award. UP filed a motion to quash the writ of garnishment and argued that the funds are
public in nature and are earmarked for educational purposes. After 10 days from the receipt
of the notice, PNB released the garnished funds in favor of the NLRC.
UP filed a petition for certiorari before the CA on the garnishment order which was initially
upheld by the CA but upon reconsideration, it reversed itself and ruled in favor of UP after
applying the principles in the NEA case. Thus, Lockheed filed the petition before the SC.
Issue:
WON the money claim against UP, being a Government instrumentality, should have been
coursed to the COA first.
Held:
Yes.
This Court held that like in the NED case, UP is a juridical personality separate and distinct
from the government and has the capacity to sue and be sued and being such, it cannot
evade execution, and its funds may be subject to garnishment or levy. However, before
execution may be had, a claim for payment of the judgment award must first be filed with
the COA. Under Commonwealth Act No. 327 as amended by Section 26 of P.D. No. 1445, it is
the COA which has primary jurisdiction to examine, audit and settle "all debts and claims of
any sort" due from or owing the Government or any of its subdivisions, agencies and
instrumentalities, including government-owned or controlled corporations and their
subsidiaries. With respect to money claims arising from the implementation of Republic Act
No. 6758, their allowance or disallowance is for COA to decide, subject only to the remedy of
appeal by petition for certiorari to this Court.
As to the fait accompli argument of Lockheed, contrary to its claim that there is nothing that
can be done since the funds of UP had already been garnished, since the garnishment was
erroneously carried out and did not go through the proper procedure (the filing of a claim
with the COA), UP is entitled to reimbursement of the garnished funds plus interest of 6%

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per annum, to be computed from the time of judicial demand to be reckoned from the time
UP filed a petition for certiorari before the CA which occurred right after the withdrawal of
the garnished funds from PNB.
Petitioner Lockheed Detective and Watchman Agency, Inc. was ordered to reimburse
University of the Philippines the amount of P12,062,398.71 plus interest of 6% per annum, to
be computed from September 12, 2005 up to the finality of the decision, and 12% interest
on the entire amount from date of finality of the court’s decision until fully paid.

3RD ALERT SECURITY AND DETECTIVE SERVICES, INC. VS. NAVIA;
G.R. No. 200653; June 13, 2012
Facts:
Romualdo Navia filed an illegal dismissal complaint against 3rd Alert and the labor arbiter
issued a decision that Navia's dismissal was illegal. 3rd Alert appealed to the NLRC which
affirmed the ruling of the labor arbiter and later on, it issued an Entry of Judgment certifying
that the NLRC resolution has become final and executory. The labor arbiter issued a writ of
execution to enforce the recomputed monetary awards upon Navia’s motion.
3rd Alert appealed the recomputed amount and alleged that the writ was issued with grave
abuse of discretion since there was already a notice of reinstatement sent to Navia. The
NLRC dismissed the appeal, ruling that 3rd Alert is guilty of bad faith since there was no
earnest effort to reinstate Navia and that there was no notice or reinstatement sent to
Navia's counsel. A motion for reconsideration was filed, but it was likewise denied.
3rd Alert filed a petition for certiorari with the CA which found the petition without merit
because Navia had not been reinstated either physically or in the payroll. The CA also denied
the motion for reconsideration filed by 3rd Alert; hence, this petition.
Issue:
Whether or not, the CA erred in ruling that the NLRC did not commit any grave abuse of
discretion?
Held:
No. CA did not erred in ruling that the NLRC did not commit any grave abuse of discretion
Article 223 of the Labor Code provides that in case there is an order of reinstatement, the
employer must admit the dismissed employee under the same terms and conditions, or
merely reinstate the employee in the payroll. The order shall be immediately executory.
Thus, 3rd Alert cannot escape liability by simply invoking that Navia did not report for work.
The law states that the employer must still reinstate the employee in the payroll. Where
reinstatement is no longer viable as an option, separation pay equivalent to one (1) month
salary for every year of service could be awarded as an alternative.
In the case at bar, 3rd Alert resorted to legal tactics to frustrate the execution of the labor
arbiter's order; for about four (4) years, it evaded the obligation to reinstate Navia. By so
doing, 3rd Alert has made a mockery of justice. We thus find it proper, under the
circumstances, to impose treble costs against 3rd Alert for its utter disregard to comply with
the writ of execution. To reiterate, no indication exists showing that 3rd Alert exerted any
efforts to reinstate Navia; worse, 3rd Alert's lame excuse of having sent a notice of
reinstatement to a certain "Biznar" only compounded the intent to mislead the courts.
Failure to adduce additional evidence, it was held that indeed there was no earnest effort for
3rd alert to reinstate Navia. Thus, CA was correct in affirming the judgment of the NLRC in
this regard.

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RADIO PHILIPPINES NETWORK, INC. VS. YAP;
G.R No. 187713; August 1, 2012
Facts:
Petitioner RPN, represented by OGCC, is a government sequestered corporation, while
petitioners Concio, Linao, Barrameda and Angeles were the President, General Manager,
Assistant General Manager for Finance, and Human Resources Manager, respectively, of RPN
who were impleaded and charged with indirect contempt, the subject matter of the present
petition. Respondents Yap, San Miguel, Dayon, Lemina and Baptista were employees of RPN
and former members of RPNEU, the bargaining agent of the rank-and-file employees of the
said company.
RPN and RPNEU entered into a CBA with a union security clause providing that a member
who has been expelled from the union shall also be terminated from the company.
A conflict arose between the respondents and other members of RPNEU and recommended
to the union's board of directors the expulsion of the respondents from the union. On January
24, 2006, the union wrote to RPN President Concio demanding the termination of the
respondents' employment from the company.
RPN notified the respondents that their employment would be terminated whereupon the
respondents filed with the Labor Arbiter (LA) a complaint for illegal dismissal and nonpayment of benefits.
The LA rendered a decision ordering the reinstatement of the respondents with payment of
backwages and full benefits and without loss of seniority rights after finding that the
petitioners failed to establish the legal basis of the termination of respondents' employment.
The LA also directed the company to pay the respondents certain aggregate monetary
benefits.
The petitioner submitted a Manifestation and Compliance. Respondents alleging that there
was no compliance yet and that no notice was received, respondents filed with the LA a
Manifestation and Urgent Motion to Cite for Contempt.
The petitioners denied any liability, insisting that the respondents had been duly informed
through a letter of their payroll reinstatement. The petitioners explained that because of the
intra-union dispute between the respondents and the union leaders, they deemed it wise not
to allow the respondents inside the company premises to prevent any more untoward
incidents, and to release their salaries only at the gate.This measure was for the protection
not only of respondents but also for the other employees of RPN as well.
Unswayed by these manifestations, the LA cited the petitioners for indirect contempt for
committing disobedience to lawful order.
On appeal, the NLRC dismissed the same and it also denied the petitioners' motion for
reconsideration.
The CA dismissed the petition for failure to attach copies of pertinent pleadings mentioned in
the petition.
Issue:
WON petitioner has fully complied with the decision of the labor arbiter.
Held:
GRANTED

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The manner of reinstating a dismissed employee in the payroll generally involves
an exercise of management prerogative.
The general policy of labor law is to discourage interference with an employer's judgment in
the conduct of his business. Even as the law is solicitous of the welfare of the employees, it
must also protect the right of an employer to exercise what are clearly management
prerogatives. As long as the company's exercise of judgment is in good faith to advance its
interest and not for the purpose of defeating or circumventing the rights of employees under
the laws or valid agreements, such exercise will be upheld. Neither does labor law authorize
the substitution of judgment of the employer in the conduct of his business, unless it is
shown to be contrary to law, morals, or public policy. The only condition is that the exercise
of management prerogatives should not be done in bad faith or with abuse of discretion.
The circumstances of the present case have more than amply shown that the physical
restoration of the respondents to their former positions would be impractical and would
hardly promote the best interest of both parties. Respondents have accused the petitioners
of being directly complicit in the plot to expel them from the union and to terminate their
employment, while petitioners have charged the respondents with trying to sabotage the
peace of the workplace in "furthering their dispute with the union." The resentment and
enmity between the parties have so strained their relationship and even provoked antipathy
and antagonism, as amply borne out by the physical clashes that had ensued every time the
respondents attempted to enter the RPN compound, that respondents' presence in the
workplace will not only be distracting but even disruptive, to say the least.
Petitioners have substantially complied in good faith with the terms of payroll
reinstatement.
The petitioners insist that the respondents were immediately reinstated, albeit in the payroll,
in compliance with the order of the LA, and their salaries have since been regularly paid
without fail. And granting that there were occasional delays, the petitioners assert that the
respondents in their combative hostility toward the petitioners were partly to blame for their
recalcitrant demands as to the place and schedule of payment, and their refusal to
cooperate in the opening of their ATM accounts.All these clearly show that the petitioners
have substantially complied with the LA's Decision
Petitioners are not guilty of indirect contempt.
Indirect contempt refers to contumacious or stubbornly disobedient acts perpetrated outside
of the court or tribunal, any abuse or any unlawful interference with the process or
proceedings of a court not constituting direct contempt; or any improper conduct tending
directly or indirectly to impede, obstruct or degrade the administration of justice. To be
considered contemptuous, an act must be clearly contrary to or prohibited by the order of
the court or tribunal. A person cannot, for disobedience, be punished for contempt unless
the act which is forbidden or required to be done is clearly and exactly defined, so that there
can be no reasonable doubt or uncertainty as to what specific act or thing is forbidden or
required.
It is not denied that after the order of reinstatement of the respondents, RPN forthwith
restored them in its payroll without diminution of their benefits and privileges, or loss of
seniority rights. They retained their entitlement to the benefits under the CBA and there was
no sufficient basis for the charge of indirect contempt against the petitioners, and that the
same was made without due regard for their right to exercise their management
prerogatives to preserve the viability of the company and the harmony of the workplace.

GONZALES VS. SOLID CEMENT CORP.;
G.R. No. 198423; October 23, 2012

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Facts:
The current petition arose from the execution of the final and executory judgment in the
parties' illegal dismissal dispute. Since the LA found that an illegal dismissal took place, the
company reinstated petitioner Gonzales in the payroll.
In the meanwhile, the parties continued to pursue the original case on the merits. The case
was appealed to the NLRC and from there to the CA. The LA's ruling of illegal dismissal was
largely left undisturbed in these subsequent recourses. The original case eventually came
to this Court. We denied the petition of respondent Solid Cement Corporation for lack of
merit. Our ruling became final and entry of judgment took place on July 12, 2005.
Soon after its finality, the original case was remanded to the LA for execution. The LA
decision declared the respondents guilty of illegal dismissal and ordered the reinstatement
of Gonzales to his former position "with full backwages and without loss of seniority rights
and other benefits. Actual reinstatement and return to work for Gonzales (who had been
on payroll reinstatement since January 22, 2001) came on July 15, 2008.
When Gonzales moved for the issuance of an alias writ of execution on August 4, 2008, he
included several items as components in computing the amount of his backwages.
Acting on the motion, the LA added P57,900.00 as rice allowance and P14,675.00 as medical
reimbursement (with the company's apparent conformity), and excluded the rest of the
items prayed for in the motion, either because these items have been paid or that, based on
the records of the case, Gonzales was not entitled thereto. Under the LA's execution
Gonzales was entitled to a total of P965,014.15.
The NLRC, in its decision modified the LA's execution order by including the following
amounts as part of the judgment award. This ruling increased Gonzales' entitlement
to P2,805,698.04.
The CA set aside the NLRC's decision and reinstated the LA's order, prompting Gonzales to
come to the Court via a petition for review on certiorari.
From that point, only the implementation or execution of the final ruling remained to be
done. EDI
Issue:
Whether the CA was legally correct in finding that the NLRC acted outside its jurisdiction
when it modified the LA's execution order.
Held:
PARTIALLY GRANTED.
LA is DIRECTED to issue the appropriate writ of execution incorporating these additional
awards.
Re-computation of awards during execution of an illegal dismissal decision
Gonzales was almost immediately reinstated pending appeal, although only by way of a
payroll reinstatement as allowed by law. Upon the finality of the decision on the appeal,
Gonzales was actually reinstated.
Since Gonzales received his salary and benefit entitlements during his payroll reinstatement;
the general concern in the present case is more on the items that should be included in the
award, part of which are the backwages.
The current petition only generally involves a determination of the scope of the awards that
include the backwages.
The components of the backwages

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a.Salary and 13th month differential due after dismissal
The Court ruled that in computing backwages, salary increases from the time of dismissal
until actual reinstatement, and benefits not yet granted at the time of dismissal
are excluded. Hence, we cannot fault the CA for finding that the NLRC committed grave
abuse of discretion in awarding the salary differential amounting to P617,517.48 and
the 13th month pay differentials amounting to P51,459.48 that accrued subsequent
to Gonzales' dismissal.
b.Legal interest of 12% on total judgment
Gonzales is entitled to 12% interest on the total unpaid judgment amount, from the
time the Court's decision (on the merits in the original case) became final. When the
judgment of the court awarding a sum of money becomes final and executory, the rate of
legal interest shall be 12% per annum from such finality until its satisfaction.
c.Additional backwages and 13th month pay
Even where the plaintiff must allege non-payment, the general rule is that the burden rests
on the defendant to prove payment, rather than on the plaintiff to prove non-payment.
Thus, even without proof of nonpayment, the NLRC was right in requiring the payment of the
13th month pay and the salaries due after the LA's decision until the illegally dismissed
petitioner was reinstated in the payroll, i.e., from December 13, 2000 to January 21, 2001. It
follows that the CA was wrong when it concluded that the NLRC acted outside its jurisdiction
by including these monetary awards as items for execution.
These amounts are not excluded from the concept of backwages as the salaries fell due
after Gonzales should have been reinstated, while the 13th month pay fell due for the same
period by legal mandate. These are entitlements that cannot now be glossed over if the final
decision on the merits in this case were to be respected.

MARTOS VS. NEW SAN JOSE BUILDERS;
G.R. No. 192650; October 24, 2012
Facts:
Petitioner New San Jose Builders, Inc. is a domestic corporation duly organized and existing
under the laws of the Philippines and is engaged in the construction of road, bridges,
buildings, and low cost houses primarily for the government. One of the projects of
petitioner is the San Jose Plains Project. SJPP, calls for the construction of low cost housing,
which are being turned over to the National Housing Authority to be awarded to deserving
poor families.
Private respondents alleged that, on various dates, petitioner hired them on different
positions.
Sometime in 2000, petitioner was constrained to slow down and suspend most of the works
on the SJPP project due to lack of funds of the National Housing Authority. Thus, the workers
were informed that many of them would be laid off and the rest would be reassigned to
other projects.
Some who were retained and were issued new appointment papers to their respective
assignments, indicating therein that they are project employees. However, they refused to
sign the appointment papers as project employees and subsequently refused to continue to
work.
On different dates, three (3) Complaints for Illegal Dismissal and for money claims were filed
before the NLRC against petitioner and Jose Acuzar, by private respondents who claimed to
be the former employees of petitioner.

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Petitioner denies that private respondents were illegally dismissed, and alleged that they
were project employees, whose employments were automatically terminated upon
completion of the project for which they were hired. On the other hand, private respondents
claim that petitioner hired them as regular employees, continuously and without
interruption.
Ruling of the Labor Arbiter
As earlier stated, on May 23, 2003, the LA handed down a decision declaring, among others,
that petitioner Felix Martos (Martos) was illegally dismissed and entitled to separation pay,
backwages and other monetary benefits; and dismissing, without prejudice, the
complaints/claims of the other complainants (petitioners).
Ruling of the NLRC
Both parties appealed the LA decision to the NLRC. Petitioners appealed that part which
dismissed all the complaints, without prejudice, except that of Martos. On the other hand,
New San Jose Builders, Inc. (respondent) appealed that part which held that Martos was its
regular employee and that he was illegally dismissed. The NLRC resolved the appeal by
dismissing the one filed by respondent and partially granting that of the other petitioners.
Ruling of the CA
The CA stated that the factual circumstances of Martos' employment and his dismissal from
work could not equally apply to petitioners because they were not similarly situated. The
NLRC did not even bother to look at the evidence on record and inappropriately granted
monetary awards to petitioners who had either denied having filed a case or withdrawn the
case against respondent. According to the CA, the position papers should have covered only
those claims and causes of action raised in the complaint excluding those that might have
been amicably settled.
With respect to Martos, the CA ruled that he was a regular employee of respondent and his
termination was illegal. It explained that Martos should have been considered a regular
employee because there was no indication that he was merely a project employee when he
was hired.
Issue:
Whether or not Martos should be reinstated.
Held:
DENIED
The verification requirement is significant, as it is intended to secure an assurance that the
allegations in the pleading are true and correct and not the product of the imagination or a
matter of speculation, and that the pleading is filed in good faith. Verification is deemed
substantially complied with when, as in this case, one who has ample knowledge to swear to
the truth of the allegations in the complaint or petition signs the verification, and when
matters alleged in the petition have been made in good faith or are true and correct.
The absence of a proper verification is cause to treat the pleading as unsigned and
dismissible.
The lone signature of Martos would have been sufficient if he was authorized by his copetitioners to sign for them. Unfortunately, petitioners failed to adduce proof that he was so
authorized.
The Court agrees with the CA that the dismissal of the other complaints were brought about
by the own negligence and passive attitude of the complainants themselves.
As to Martos, the Court agrees that the reinstatement being sought by him was no longer

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practicable because of strained relation between the parties. Indeed, he can no longer
question this fact. This issue was never raised or taken up on appeal before the NLRC. It was
only after he lost the appeal in the CA that he raised it.
The accepted doctrine is that separation pay may avail in lieu of reinstatement if
reinstatement is no longer practical or in the best interest of the parties. Separation pay in
lieu of reinstatement may likewise be awarded if the employee decides not to be reinstated.
Under the doctrine of strained relations, the payment of separation pay is considered an
acceptable alternative to reinstatement when the latter option is no longer desirable or
viable. On one hand, such payment liberates the employee from what could be a highly
oppressive work environment. On the other hand, it releases the employer from the grossly
unpalatable obligation of maintaining in its employ a worker it could no longer trust.

LOON ET AL. VS. POWER MASTERS, INC.;
G.R. No. 189404; December 11, 2013
Facts:
Respondents Power Master, Inc. and Tri-C General Services employed and assigned the
petitioners as janitors and leadsmen in various Philippine Long Distance Telephone Company
(PLDT) offices in Metro Manila area. Subsequently, the petitioners filed a complaint for
money claims against Power Master, Inc., Tri-C General Services and their officers, the
spouses Homer and Carina Alumisin (collectively, the respondents). The petitioners alleged
in their complaint that they were not paid minimum wages, overtime, holiday, premium,
service incentive leave, and thirteenth month pays. They further averred that the
respondents made them sign blank payroll sheets. On June 11, 2001, the petitioners
amended their complaint and included illegal dismissal as their cause of action. They
claimed that the respondents relieved them from service in retaliation for the filing of their
original complaint. Notably, the respondents did not participate in the proceedings before
the Labor Arbiter except on April 19, 2001 and May 21, 2001 when Mr. Romulo Pacia,
Jr. appeared on the respondents' behalf. The respondents' counsel also appeared
in a preliminary mandatory conference on July 5, 2001. However, the respondents
neither filed any position paper nor proffered pieces of evidence in their defense despite
their knowledge of the pendency of the case.
In a decision dated March 15, 2002, Labor Arbiter (LA) Elias H. Salinas partially ruled in
favor of the petitioners. The LA awarded the petitioners salary differential, service
incentive leave, and thirteenth month pays. In awarding these claims, the LA stated
that the burden of proving the payment of these money claims rests with the employer. The
LA also awarded attorney's fees in favor of the petitioners, pursuant to Article 111 of the
Labor Code.
However, the LA denied the petitioners' claims for backwages, overtime, holiday, and
premium pays. The LA observed that the petitioners failed to show that they rendered
overtime work and worked on holidays and rest days without compensation. The LA further
concluded that the petitioners cannot be declared to have been dismissed from employment
because they did not show any notice of termination of employment. They were also not
barred from entering the respondents' premises.
Both parties appealed the LA's ruling with the National Labor Relations Commission. The
petitioners disputed the LA's denial of their claim for backwages, overtime, holiday and
premium pays. Meanwhile, the respondents questioned the LA's ruling on the ground that
the LA did not acquire jurisdiction over their persons.
The respondents insisted that they were not personally served with summons and other

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processes. They also claimed that they paid the petitioners minimum wages, service
incentive leave and thirteenth month pays. As proofs, they attached photocopied and
computerized copies of payroll sheets to their memorandum on appeal. They
further maintained that the petitioners were validly dismissed. They argued that the
petitioners' repeated defiance to their transfer to different workplaces and their violations of
the company rules and regulations constituted serious misconduct and willful disobedience.
On January 3, 2003, the respondents filed an unverified supplemental appeal. They
attached photocopied and computerized copies of list of employees with
automated teller machine (ATM) cards to the supplemental appeal. This list also
showed the amounts allegedly deposited in the employees' ATM cards. 11 They also
attached documentary evidence showing that the petitioners were dismissed for
cause and had been accorded due process.
On January 22, 2003, the petitioners filed an Urgent Manifestation and Motion where
they asked for the deletion of the supplemental appeal from the records because it allegedly
suffered from infirmities. First, the supplemental appeal was not verified. Second, it was
belatedly filed six months from the filing of the respondents' notice of appeal with
memorandum on appeal. The petitioners pointed out that they only agreed to the
respondents' filing of a responsive pleading until December 18, 2002. Third, the attached
documentary evidence on the supplemental appeal bore the petitioners' forged signatures.
They reiterated these allegations in an Urgent Motion to Resolve Manifestation and
Motion (To Expunge from the Records Respondents' Supplemental Appeal, Reply
and/or Rejoinder) dated January 31, 2003. Subsequently, the petitioners filed an Urgent
Manifestation with Reiterating Motion to Strike-Off the Record Supplemental
Appeal/Reply, Quitclaims and Spurious Documents Attached to Respondents'
Appeal dated August 7, 2003. The petitioners argued in this last motion that the payrolls
should not be given probative value because they were the respondents' fabrications. They
reiterated that the genuine payrolls bore their signatures, unlike the respondents'
photocopies of the payrolls. They also maintained that their signatures in the respondents'
documents (which showed their receipt of thirteenth month pay) had been forged.
In a resolution dated November 27, 2003, the NLRC partially ruled in favor of the
respondents. The NLRC affirmed the LA's awards of holiday pay and attorney's fees. It
also maintained that the LA acquired jurisdiction over the persons of the respondents
through their voluntary appearance.
However, it allowed the respondents to submit pieces of evidence for the first
time on appeal on the ground that they had been deprived of due process. It found
that the respondents did not actually receive the LA's processes. It also admitted the
respondents' unverified supplemental appeal on the ground that technicalities may be
disregarded to serve the greater interest of substantial due process. Furthermore, the Rules
of Court do not require the verification of a supplemental pleading.
The NLRC also vacated the LA's awards of salary differential, thirteenth month and
service incentive leave pays. In so ruling, it gave weight to the pieces of evidence
attached to the memorandum on appeal and the supplemental appeal. It maintained that
the absence of the petitioners' signatures in the payrolls was not an indispensable factor for
their authenticity. It pointed out that the payment of money claims was further evidenced by
the list of employees with ATM cards. It also found that the petitioners' signatures were not
forged. It took judicial notice that many people use at least two or more different signatures.
AHTICD
The NLRC further ruled that the petitioners were lawfully dismissed on grounds of
serious misconduct and willful disobedience. It found that the petitioners failed to

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comply with various memoranda directing them to transfer to other workplaces and to
attend training seminars for the intended reorganization and reshuffling.
The NLRC denied the petitioners' motion for reconsideration in a resolution dated April 28,
2006. 17 Aggrieved, the petitioners filed a petition for certiorari under Rule 65 of the Rules
of Court before the CA. 18 AEaSTC
The CA affirmed the NLRC's ruling. The CA held that the petitioners were afforded
substantive and procedural due process. Accordingly, the petitioners deliberately did not
explain their side. Instead, they continuously resisted their transfer to other PLDT offices and
violated company rules and regulations. It also upheld the NLRC's findings on the petitioners'
monetary claims.
The CA denied the petitioners' motion for reconsideration in a resolution dated August 28,
2009, prompting the petitioners to file the present petition. 19
Issue:
1. Whether the CA erred when it did not find that the NLRC committed grave abuse of
discretion in giving due course to the respondents' appeal;
2. Whether the respondents perfected their appeal before the NLRC; and
3. Whether the NLRC properly allowed the respondents' supplemental appeal
4. Whether the respondents were estopped from submitting pieces of
evidence for the first time on appeal;
5. Whether the petitioners were illegally dismissed and are thus entitled to
backwages;
Held:
1. The respondents perfected theirappeal with the NLRC because the
revocation of the bonding company'sauthority has a prospectiveapplication
Paragraph 2, Article 223 of the Labor Code provides that "[i]n case of a 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 the amount equivalent to the monetary award in the judgment appealed
from."
Contrary to the respondents' claim, the issue of the appeal bond's validity may be raised for
the first time on appeal since its proper filing is a jurisdictional requirement. The
requirement that the appeal bond should be issued by an accredited bonding
company is mandatory and jurisdictional. The rationale of requiring an appeal bond is
to discourage the employers from using an appeal to delay or evade the employees' just and
lawful claims. It is intended to assure the workers that they will receive the money judgment
in their favor upon the dismissal of the employer's appeal.
In the present case, the respondents filed a surety bond issued by Security Pacific
Assurance Corporation (Security Pacific) on June 28, 2002. At that time, Security
Pacific was still an accredited bonding company. However, the NLRC revoked its
accreditation on February 16, 2003. Nonetheless, this subsequent revocation
should not prejudice the respondents who relied on its then subsisting
accreditation in good faith. A bonding company's revocation of authority is
prospective in application.

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However, the respondents should post a new bond issued by an accredited
bonding company in compliance with paragraph 4, Section 6, Rule 6 of the NLRC Rules of
Procedure. This provision states that "[a] cash or surety bond shall be valid and effective
from the date of deposit or posting, until the case is finally decided, resolved or
terminated or the award satisfied."
2. The CA correctly ruled that the NLRC properly gave due course to the
respondents' supplemental appeal
The CA also correctly ruled that the NLRC properly gave due course to the respondents'
supplemental appeal. Neither the laws nor the rules require the verification of the
supplemental appeal. Furthermore, verification is a formal, not a jurisdictional,
requirement. It is mainly intended for the assurance that the matters alleged in the pleading
are true and correct and not of mere speculation. 27 Also, a supplemental appeal is merely
an addendum to the verified memorandum on appeal that was earlier filed in the present
case; hence, the requirement for verification has substantially been complied with.
The respondents also timely filed their supplemental appeal on January 3, 2003. The records
of the case show that the petitioners themselves agreed that the pleading shall be filed until
December 18, 2002. The NLRC further extended the filing of the supplemental pleading until
January 3, 2003 upon the respondents' motion for extension.
3. A party may only adduce evidence for the first time on appeal if he
adequately explains his delay in the submission of evidence and hesufficiently
proves the allegationssought to be proven
In labor cases, strict adherence to the technical rules of procedure is not required. Time and
again, we have allowed evidence to be submitted for the first time on appeal with
the NLRC in the interest of substantial justice. Thus, we have consistently supported
the rule that labor officials should use all reasonable means to ascertain the facts in each
case speedily and objectively, without regard to technicalities of law or procedure, in the
interest of due process.
However, this liberal policy should still be subject to rules of reason and fairplay.
The liberality of procedural rules is qualified by two requirements:
(1) a party should adequately explain any delay in the submission of
evidence; and
(2) a party should sufficiently prove the allegations sought to be proven.
Guided by these principles, the CA grossly erred in ruling that the NLRC did not commit
grave abuse of discretion in arbitrarily admitting and giving weight to the respondents'
pieces of evidence for the first time on appeal.
A.The respondents failed toadequately explain their delayin the submission
of evidence
We cannot accept the respondents' cavalier attitude in blatantly disregarding the NLRC Rules
of Procedure. The CA gravely erred when it overlooked that the NLRC blindly admitted and
arbitrarily gave probative value to the respondents' evidence despite their failure to
adequately explain their delay in the submission of evidence. Notably, the respondents'
delay was anchored on their assertion that they were oblivious of the proceedings before the
LA. However, the respondents did not dispute the LA's finding that Mr. Romulo Pacia, Jr.
appeared on their behalf on April 19, 2001 and May 21, 2001. The respondents also failed to
contest the petitioners' assertion that the respondents' counsel appeared in a preliminary
mandatory conference on July 5, 2001.

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Indeed, the NLRC capriciously and whimsically admitted and gave weight to the
respondents' evidence despite its finding that they voluntarily appeared in the compulsory
arbitration proceedings. The NLRC blatantly disregarded the fact that the respondents
voluntarily opted not to participate, to adduce evidence in their defense and to file a position
paper despite their knowledge of the pendency of the proceedings before the LA. The
respondents were also grossly negligent in not informing the LA of the specific building unit
where the respondents were conducting their business and their counsel's address despite
their knowledge of their non-receipt of the processes.
B.The respondents failed tosufficiently prove theallegations sought to be
proven
Furthermore, the respondents failed to sufficiently prove the allegations sought to be
proven. Why the respondents' photocopied and computerized copies of documentary
evidence were not presented at the earliest opportunity is a serious question that lends
credence to the petitioners' claim that the respondents fabricated the evidence for purposes
of appeal. While we generally admit in evidence and give probative value to
photocopied documents in administrative proceedings, allegations of forgery and
fabrication should prompt the adverse party to present the original documents
for inspection. It was incumbent upon the respondents to present the originals, especially
in this case where the petitioners had submitted their specimen signatures. Instead, the
respondents effectively deprived the petitioners of the opportunity to examine and
controvert the alleged spurious evidence by not adducing the originals. This Court is thus
left with no option but to rule that the respondents' failure to present the
originals raises the presumption that evidence willfully suppressed would be
adverse if produced.
It was also gross error for the CA to affirm the NLRC's proposition that "[i]t is of common
knowledge that there are many people who use at least two or more different signatures."
37 The NLRC cannot take judicial notice that many people use at least two signatures,
especially in this case where the petitioners themselves disown the signatures in the
respondents' assailed documentary evidence. The NLRC's position is unwarranted and is
patently unsupported by the law and jurisprudence.
3. The petitioners are entitled tobackwages
In termination cases, the burden of proving just and valid cause for dismissing an employee
from his employment rests upon the employer. The employer's failure to discharge this
burden results in the finding that the dismissal is unjustified. 40 This is exactly what
happened in the present case.
4. The petitioners are entitled to salarydifferential, service incentive,holiday,
and thirteenth month pays
As in illegal dismissal cases, the general rule is that the burden rests on the defendant to
prove payment rather than on the plaintiff to prove non-payment of these money claims.
The rationale for this rule is that the pertinent personnel files, payrolls, records, remittances
and other similar documents — which will show that differentials, service incentive leave and
other claims of workers have been paid — are not in the possession of the worker but are in
the custody and control of the employer. 42
5. The petitioners are not entitled toovertime and premium pays
The burden of proving entitlement to overtime pay and premium pay for holidays and rest
days rests on the employee because these are not incurred in the normal course of
business. 43 In the present case, the petitioners failed to adduce any evidence that
would show that they actually rendered service in excess of the regular eight
working hours a day, and that they in fact worked on holidays and rest days.

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6. The petitioners are entitled toattorney's fees
The award of attorney's fees is also warranted under the circumstances of this case. An
employee is entitled to an award of attorney's fees equivalent to ten percent (10%) of the
amount of the wages in actions for unlawful withholding of wages. 44
As a final note, we observe that Kodelito Ayala, Winelito Ojel, Renato Rodrego and Welito
Loon are also named as petitioners in this case. However, we deny their petition for the
reason that they were not part of the proceedings before the CA. Their failure to timely seek
redress before the CA precludes this Court from awarding them monetary claims.
WHEREFORE, based on these premises, we REVERSE and SET ASIDE the decision dated
June 5, 2009, and the resolution dated August 28, 2009 of the Court of Appeals in CA-G.R. SP
No. 95182. This case is REMANDED to the Labor Arbiter for the sole purpose of computing
petitioners' full backwages (computed from the date of their respective dismissals up to the
finality of this decision) and their salary differential, service incentive leave, holiday,
thirteenth month pays, and attorney's fees equivalent to ten percent (10%) of the withheld
wages.

LEPANTO CONSOLIDATED MINING CORP. VS. ICAO;
G.R. No. 196047; January 15, 2014
Facts:
The instant petition stemmed from a complaint for illegal dismissal and damages filed by
private respondent Belio C. Icao [Icao] against petitioners Lepanto Consolidated Mining
Company (LCMC) and its Chief Executive Officer [CEO] Felipe U. Yap [Yap] before the
Arbitration Branch of the NLRC.
Private respondent claimed that his dismissal from work was without just or authorized
cause since petitioners failed to prove by ample and sufficient evidence that he stole
gold bearing highgrade ores from the company premises. If private respondent was
really placing a wrapped object inside his boots, he should have been sitting or bending
down to insert the same, instead of just standing on a muckpile as alleged by
petitioners. Moreover, it is beyond imagination that a person, knowing fully well that he
was being chased for allegedly placing wrapped ore inside his boots, will transfer it to his
skullguard. The tendency in such situation is to throw the object away. As such, private
respondent prayed that petitioners be held liable for illegal dismissal, to reinstate him to
his former position without loss of seniority rights and benefits, and to pay his full
backwages, damages and attorney's fees.
For their defense, petitioners averred that SG Bulwayan saw private respondent standing
on a muckpile and inserting a wrapped object inside his right rubber boot. SG Bulwayan
immediately ran towards private respondent, but the latter ran away to escape. He tried
to chase private respondent but failed to capture him. Thereafter, while SG Bulwayan
was on his way to see his co-guard SG Papsa-ao, he saw private respondent moving out
of a stope. He then shouted at SG Papsa-ao to intercept him. When private respondent
was apprehended, SG Bulwayan ordered him to remove his skullguard for inspection and
saw a wrapped object placed inside the helmet. SG Bulwayan grabbed it, but the
harness of the skullguard was also detached causing the object to fall on the ground.
Immediately, SG Bulwayan recovered and inspected the same which turned out to be
pieces of stone ores. Private respondent and the stone ores were later turned over to the
Mankayan Philippine National Police where he was given a written notice of the charge
against him. On January 9, 2008, a hearing was held where private respondent, together

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with the officers of his union as well as the apprehending guards appeared. On February
4, 2008, private respondent received a copy of the resolution of the company informing
him of his dismissal from employment due to breach of trust and confidence and the act
of highgrading.
On 30 September 2008, the labor arbiter rendered a Decision holding petitioner and its CEO
liable for illegal dismissal and ordering them to pay respondent Icao P345,879.45,
representing his full backwages and separation pay. 3 The alleged highgrading attributed by
LCMC's security guards was found to have been fabricated; consequently, there was no just
cause for the dismissal of respondent. The labor arbiter concluded that the claim of the
security guards that Icao had inserted ores in his boots while in a standing position was not
in accord with normal human physiological functioning. 4
The labor arbiter also noted that it was inconsistent with normal human behavior for a man,
who knew that he was being chased for allegedly placing wrapped ore inside his boots, to
then transfer the ore to his skullguard, where it could be found once he was apprehended. 5
To further support the improbability of the allegation of highgrading, the labor arbiter noted
that throughout the 21 years of service of Icao to LCMC, he had never been accused of or
penalized for highgrading or any other infraction involving moral turpitude — until this
alleged incident. 6
THE NLRC ORDER DISMISSING THE APPEALOF PETITIONER LCMC FOR FAILURE TO
POST THE APPEAL BOND
On 8 December 2008, petitioner and its CEO filed an Appearance with Memorandum of
Appeal 7 before the NLRC. Instead of posting the required appeal bond in the form of a cash
bond or a surety bond in an amount equivalent to the monetary award of P345,879.45
adjudged in favor of Icao, they filed a Consolidated Motion for Release of Cash Bond and to
Apply Bond Subject for Release As Payment for Appeal Bond (Consolidated Motion). 8 They
requested therein that the NLRC release the cash bond of P401,610.84, which they had
posted in the separate case Dangiw Siggaao v. LCMC, 9 and apply that same cash bond to
their present appeal bond liability. They reasoned that since this Court had already decided
Dangiw Siggaao in their favor, and that the ruling therein had become final and executory,
the cash bond posted therein could now be released. 10 They also cited financial difficulty
as a reason for resorting to this course of action and prayed that, in the interest of justice,
the motion be granted.
In its Order dated 27 February 2009, the NLRC First Division dismissed the appeal of
petitioner and the latter's CEO for non-perfection. 11 It found that they had failed to post the
required appeal bond equivalent to the monetary award of P345,879.45.
THE CA RULING AFFIRMING THE ORDER OF THE NLRC
On 27 September 2010, the CA issued its assailed Decision 15 affirming the Order of the
NLRC First Division, which had dismissed the appeal of petitioner and the latter's CEO.
According to the CA, they failed to comply with the requirements of law and consequently
lost the right to appeal. 16
Issue:
whether or not petitioner complied with the appeal bond requirement under the Labor Code
and the NLRC Rules by filing a Consolidated Motion to release the cash bond it posted in
another case, which had been decided with finality in its favor, with a view to applying the
same cash bond to the present case.
Held:
The Petition is meritorious. The Court finds that petitioner substantially complied with the

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appeal bond requirement.
Before discussing its ruling, however, the Court finds it necessary to emphasize the wellentrenched doctrine that an appeal is not a matter of right, but is a mere statutory privilege.
It may be availed of only in the manner provided by law and the rules. Thus, a party who
seeks to exercise the right to appeal must comply with the requirements of the rules;
otherwise, the privilege is lost. 20
In appeals from any decision or order of the labor arbiter, the posting of an appeal bond is
required under Article 223 of the Labor Code, which reads:
Article 223. APPEAL. — Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the Commission by
any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. Such appeal may be entertained only on
any of the following grounds:
xxx xxx xxx
In case of a 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 the amount equivalent to the
monetary award in the judgment appealed from. (Emphasis and
underlining supplied)
The 2011 NLRC Rules of Procedure (NLRC Rules) incorporates this requirement in Rule VI,
Section 6, which provides:
SECTION 6. Bond. — In case the decision of the Labor Arbiter
or the Regional Director involves a monetary award, an
appeal by the employer may be perfected only upon the
posting of a bond, which shall either be in the form of cash deposit
or surety bond equivalent in amount to the monetary award,
exclusive of damages and attorney's fees. (Emphases and
underlining supplied)
We now turn to the main question of whether petitioner's Consolidated Motion to release the
cash bond it posted in a previous case, for application to the present case, constitutes
compliance with the appeal bond requirement. While it is true that the procedure
undertaken by petitioner is not provided under the Labor Code or in the NLRC Rules, we
answer the question in the affirmative.
we rule that petitioner substantially complied with the mandatory requirement of posting an
appeal bond for the reasons explained below.
First, there is no question that the appeal was filed within the 10-day reglementary
period. Except for the alleged failure to post an appeal bond, the appeal to the NLRC was
therefore in order.
Second, it is also undisputed that petitioner has an unencumbered amount of money in the
form of cash in the custody of the NLRC. To reiterate, petitioner had posted a cash bond of
P401,610.84 in the separate case Dangiw Siggaao, which was earlier decided in its favor.
Under the Rule VI, Section 6 of the 2005 NLRC Rules, "[a] cash or surety bond shall be valid
and effective from the date of deposit or posting, until the case is finally decided, resolved or
terminated, or the award satisfied." Hence, it is clear that a bond is encumbered and bound

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to a case only for as long as 1) the case has not been finally decided, resolved or
terminated; or 2) the award has not been satisfied. Therefore, once the appeal is finally
decided and no award needs to be satisfied, the bond is automatically released. Since the
money is now unencumbered, the employer who posted it should now have
unrestricted access to the cash which he may now use as he pleases — as appeal
bond in another case, for instance. This is what petitioner simply did.
Third, the cash bond in the amount of P401,610.84 posted in Dangiw Siggaao is more than
enough to cover the appeal bond in the amount of P345,879.45 required in the present case.
Fourth, this ruling remains faithful to the spirit behind the appeal bond requirement which
is to ensure that workers will receive the money awarded in their favor when the employer's
appeal eventually fails. There was no showing at all of any attempt on the part of petitioner
to evade the posting of the appeal bond. On the contrary, petitioner's move showed a
willingness to comply with the requirement. Hence, the welfare of Icao is adequately
protected.
Having complied with the appeal bond requirement, petitioner's appeal before the NLRC
must therefore be reinstated.
The Court will liberally apply the rules only in very highly exceptional cases such as this, in
keeping with the dictates of justice, reason and equity.

BUILDING CARE CORP. VS. MACARAEG;
G.R. No. 198357; December 10, 2012
Facts:
Petitioners are in the business of providing security services to their clients. They hired
respondent as a security guard beginning August 25, 1996, assigning her at Genato Building
in Caloocan City. However, on March 9, 2008, respondent was relieved of her post. She was
re-assigned to Bayview Park Hotel from March 9-13, 2008, but after said period, she was
allegedly no longer given any assignment. Thus, on September 9, 2008, respondent filed a
complaint against petitioners for illegal dismissal, underpayment of salaries, non-payment of
separation pay and refund of cash bond. Conciliation and mediation proceedings failed, so
the parties were ordered to submit their respective position papers.
Respondent claimed that petitioners failed to give her an assignment for more than nine
months, amounting to constructive dismissal, and this compelled her to file the complaint
for illegal dismissal.
On the other hand, petitioners alleged in their position paper that respondent was relieved
from her post as requested by the client because of her habitual tardiness, persistent
borrowing of money from employees and tenants of the client, and sleeping on the job.
Petitioners allegedly directed respondent to explain why she committed such infractions, but
respondent failed to heed such order. Respondent was nevertheless temporarily assigned to
Bayview Park Hotel from March 9-13, 2008, but she also failed to meet said client's
standards and her posting thereat was not extended.
Respondent then filed an administrative complaint for illegal dismissal with the PNP-Security
Agencies and Guard Supervision Division on June 18, 2008, but she did not attend the
conference hearings for said case. Petitioners brought to the conference hearings a new
assignment order detailing respondent at the Ateneo de Manila University but, due to her
absence, petitioners failed to personally serve respondent said assignment order. Petitioners
then sent respondent a letter ordering her to report to headquarters for work assignment,

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but respondent did not comply with said order. Instead, respondent filed a complaint for
illegal dismissal with the Labor Arbiter.
LA dismissed for lack of merit. NLRC dismissed the appeal for having been filed out of time,
thereby declaring that the Labor Arbiter's Decision had become final and executor. CA the
petition was granted.
Issue:
Whether the CA erred in liberally applying the rules of procedure and ruling that
respondent's appeal should be allowed and resolved on the merits despite having been filed
out of time.
Held:
GRANTED
While procedural rules may be relaxed in the interest of justice, it is well-settled that these
are tools designed to facilitate the adjudication of cases. The relaxation of procedural rules
in the interest of justice was never intended to be a license for erring litigants to violate the
rules with impunity. Liberality in the interpretation and application of the rules can be
invoked only in proper cases and under justifiable causes and circumstances. While litigation
is not a game of technicalities, every case must be prosecuted in accordance with the
prescribed procedure to ensure an orderly and speedy administration of justice.
In this case, the justifications given by the CA for its liberality by choosing to overlook the
belated filing of the appeal are, the importance of the issue raised, i.e., whether respondent
was illegally dismissed; and the belief that respondent should be "afforded the amplest
opportunity for the proper and just determination of his cause, free from the constraints of
technicalities," considering that the belated filing of respondent's appeal before the NLRC
was the fault of respondent's former counsel. Note, however, that neither respondent nor
her former counsel gave any explanation or reason citing extraordinary circumstances for
her lawyer's failure to abide by the rules for filing an appeal. Respondent merely insisted
that she had not been remiss in following up her case with said lawyer.
It is, however, an oft-repeated ruling that the negligence and mistakes of counsel bind the
client. A departure from this rule would bring about never-ending suits, so long as lawyers
could allege their own fault or negligence to support the client's case and obtain remedies
and reliefs already lost by the operation of law. 15 The only exception would be, where the
lawyer's gross negligence would result in the grave injustice of depriving his client of the due
process of law. 16 In this case, there was no such deprivation of due process. Respondent
was able to fully present and argue her case before the Labor Arbiter. She was accorded the
opportunity to be heard. Her failure to appeal the Labor Arbiter's Decision cannot, therefore,
be deemed as a deprivation of her right to due process.

CO SAY COCO PRODUCTS PHILS INC. vs BALTAZAR;
GR No. 188828, March 5, 2014
Facts:
Petitioner Co Say is a domestic corporation duly organized and existing under Philippine laws
and is the owner of a private port located in Bigaa, Legazpi City. Tanawan Port on the other
hand, is a single proprietorship owned and managed by Salazar.
On 18 March 2002, Co Say, thru its President, Efren Co Say, entered into a Contract for
Cargo Handling Services with petitioner Tanawan Port, wherein the latter was given the

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authority to manage and operate the arrastre and stevedoring services of its port. CIAHaT
To jumpstart the operation of its cargo handling services, Tanawan Port employed
respondents Benjamin Baltasar as Manager, Marvin Baltasar as Computer Operator,
Raymundo Botalon as Crane Operator, Nilo Bordeos, Jr. as Crane Helper, Cargo Botalon as
Crane Operator and Geronimo Bas as Fork Lift Operator.
Due to lack of clientele, the business venture of Tanawan Port failed to gain momentum
causing serious alarm to the company. A couple of months after respondents were hired,
Tanawan Port decided to cease operation by sending letters to the City Treasurer of Legaspi
City and the Revenue District Officer of the Bureau of Internal Revenue informing them of its
intention to close its business and to surrender its business registration due to serious
business losses. On 30 August 2002, the City Treasurer approved the retirement from
business of Tanawan Port. On the same day, Salazar convened respondents to formally
inform them of her intention to close Tanawan Port's operation, but she was prevailed upon
by the latter to hold it up while Baltasar is looking for new clients that could help boost the
company's revenue. Efforts to revive the business, however, proved to be futile constraining
the company to finally discontinue its operation and close its business. As a result,
respondents were terminated from employment but were accordingly given their
corresponding separation pay and 13th month pay
Barely a month after they received their separation pay, respondents filed complaints for
illegal dismissal and non-payment of labor standard benefits against petitioners Tanawan
Port, Salazar, Co Say and Efren Co Say before the Labor Arbiter. In their Position Papers,
respondents alleged that Tanawan Port was merely feigning losses in order to ease out
employees, pointing out the absence of evidence to prove business reverses. Respondents
also punctuated Tanawan Port's failure to comply with the procedural requirement of sending
notices to employees concerned and to the Department of Labor and Employment (DOLE)
one month before the intended date of closure as required by law.
Tanawan Port, for its part, asserted that respondents' severance from employment was
brought about by closure or cessation of business operation which is an authorized cause for
termination of employment under the Labor Code. To dispute the allegation of respondents
that the closure was done in bad faith, Tanawan Port insisted that the lack of clientele
caused serious financial drain to the company leaving the management with no other option
but to shutdown its operations.
On 7 August 2003, the Labor Arbiter rendered a Joint Decision in favor of respondents and
held that petitioners are liable for illegal dismissal for failure to comply with the procedural
and substantive requirements of terminating employment due to closure of business
operations. It was found that while Tanawan Port claimed that it was suffering from serious
business losses, it failed to adduce its financial statements to prove that its withdrawal from
operation was bona fide in character. A similar failure to comply with the notice requirement
was likewise observed by the labor officer resulting in the violation of respondents' right to
due process of law. Finally, the Labor Arbiter declared that Tanawan Port is engaged in laboronly contracting and is merely an extension of the business personality of Co Say, which is
thus, solidarily liable with the former, the labor-only contractor, for the rightful claims of the
employees.
Contradicting the Labor Arbiter Decision, the NLRC in its Decision dated 31 May 2004, held
that respondents' severance from employment was not illegal, as the company where
they were working closed due to business losses, and, the closure of business or
establishment is one of the authorized causes recognized by law in dismissing an
employee. The NLRC further ruled that there was sufficient compliance with the
substantive requirement in terminating employment and held that proof of business
losses is not necessary since cessation of business operation is a management

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prerogative and should not be interfered with by courts or labor tribunals.
In a Decision 14 dated 20 April 2009, the Court of Appeals reversed the NLRC Decision due
to failure of petitioners to perfect their appeal and proceeded to affirm the Labor Arbiter's
Decision. Contrary to the ruling of the NLRC, the appellate court ruled that the posting of the
appeal bond after the period to perfect the appeal had expired, resulted in the nonperfection of the appeal. Accordingly, the Court of Appeals ruled that the NLRC has no
authority to alter, modify or reverse the Labor Arbiter decision after the said decision
became final and executory.

Issue:
THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION WHEN IT RULED THAT THE RESPONDENTS FAILED TO PERFECT THEIR
APPEAL ON TIME;
Held:
The NLRC ruled that petitioners were able to post the surety bond and timely perfect their
appeal before the expiration of the 10-day reglementary period, while the Court of Appeals
oppositely ruled although both findings are based on the same pieces of evidence available
on record. According to the appellate court, the First Certification issued by the RAB-NLRC on
2 October 2003 is telling of the petitioners' failure to perfect an appeal. It appeared in the
said certification that the appeal bond, which is a mandatory requirement for perfecting an
appeal, has not been posted as of 2 October 2003
Three months after the said certification was issued, the RAB-NLRC issued a Second
Certification on 19 January 2004, indicating that petitioners posted a surety bond on 24
September 2003 although the said bond was received by the RAB-NLRC only on 28 October
2003.
It was on the basis of the Second Certification that the NLRC allowed the appeal. The
divergence of the findings of the NLRC on the one hand, and the Court of Appeals on the
other, necessitates a review of the records of this case to ascertain which conclusion is
supported by substantial evidence and, enough to remove the conclusion away from the
issue of grave abuse of discretion. Substantial evidence is such amount of relevant evidence
which a reasonable mind might accept as adequate to support a conclusion.
The crucial issue in the resolution of the instant petition concerns the timely posting of the
appeal bond. The pertinent rule on the matter is Article 223 of the Labor Code, as amended,
which sets forth the rules on appeal from the Labor Arbiter's monetary award:
ART. 223.Appeal. — Decisions, awards, or orders of the Labor Arbiter
are final and executory unless appealed to the Commission by any or
both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. . . . .
xxx xxx xxx
In case of a 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 the amount equivalent to the monetary award in
the judgment appealed from. (Emphasis ours).

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Implementing the aforestated provisions of the Labor Code are the provisions of Rule VI of
the 2011 NLRC Rules of Procedure on perfection of appeals which read: aHSAIT
SECTION 1.PERIODS OF APPEAL. — Decisions, awards, or orders of the
Labor Arbiter shall be final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from
receipt thereof; and in case of decisions or resolutions of the Regional
Director of the Department of Labor and Employment pursuant to
Article 129 of the Labor Code, within five (5) calendar days from
receipt thereof. If the 10th or 5th day, as the case may be, falls on a
Saturday, Sunday or holiday, the last day to perfect the appeal shall be
the first working day following such Saturday, Sunday or holiday.
No motion or request for extension of the period within which to
perfect an appeal shall be allowed.
SECTION 2.GROUNDS. — The appeal may be entertained only on any of
the following grounds:
a)If there is prima facie evidence of abuse of discretion on the
part of the Labor Arbiter or Regional Director;
b)If the decision, award or order was secured through fraud or
coercion, including graft and corruption;
c)If made purely on questions of law; and/or
d)If serious errors in the findings of facts are raised which, if
not corrected, would cause grave or irreparable
damage or injury to the appellant.
SECTION 3.WHERE FILED. — The appeal shall be filed with the Regional
Arbitration Branch or Regional Office where the case was heard and
decided. cACTaI
SECTION 4.REQUISITES FOR PERFECTION OF APPEAL. — a) The appeal
shall be:
(1)filed within the reglementary period provided in Section 1
of this Rule;
(2)verified by the appellant himself/herself in accordance with
Section 4, Rule 7 of the Rules of Court, as amended;
(3)in the form of a memorandum of appeal which shall state
the grounds relied upon and the arguments in
support thereof, the relief prayed for, and with a
statement of the date the appellant received the
appealed decision, award or order;
(4)in three (3) legibly typewritten or printed copies; and
(5)accompanied by: aEcTDI
i)proof of payment of the required
appeal fee and legal research fee;

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ii)posting of a cash or surety bond as
provided in Section 6 of this Rule; and
iii)proof
parties.

of

service

upon

the

other

b)A mere notice of appeal without complying with the other
requisites aforestated shall not stop the running of the period for
perfecting an appeal.
c)The appellee may file with the Regional Arbitration Branch or
Regional Office where the appeal was filed, his/her answer or reply
to appellant's memorandum of appeal, not later than ten (10)
calendar days from receipt thereof. Failure on the part of the
appellee who was properly furnished with a copy of the appeal to file
his/her answer or reply within the said period may be construed as a
waiver on his/her part to file the same.
d)Subject to the provisions of Article 218 of the Labor Code, once the
appeal is perfected in accordance with these Rules, the Commission
shall limit itself to reviewing and deciding only the specific issues
that were elevated on appeal.
SECTION 5.APPEAL FEE. — The appellant shall pay the prevailing
appeal fee and legal research fee to the Regional Arbitration Branch or
Regional Office of origin, and the official receipt of such payment shall
form part of the records of the case.
SECTION 6.BOND. — In case the decision of the Labor Arbiter or the
Regional Director involves a monetary award, an appeal by the
employer may be perfected only upon the posting of a bond, which
shall either be in the form of cash deposit or surety bond equivalent in
amount to the monetary award, exclusive of damages and attorney's
fees.
In case of surety bond, the same shall be issued by a reputable
bonding company duly accredited by the Commission or the Supreme
Court, and shall be accompanied by original or certified true copies of
the following:
a)a joint declaration under oath by the employer, his/her
counsel, and the bonding company, attesting that
the bond posted is genuine, and shall be in effect
until final disposition of the case.
b)an indemnity agreement between the employer-appellant
and bonding company;
c)proof of security deposit or collateral securing the bond:
provided, that a check shall not be considered as an
acceptable security;
d)a certificate of authority from the Insurance Commission;
e)certificate of registration from the Securities and Exchange
Commission; THcaDA

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f)certificate of accreditation and authority from the Supreme
Court; and
g)notarized board resolution or secretary's certificate from
the bonding company showing its authorized
signatories and their specimen signatures.
The Commission through the Chairman may on justifiable grounds
blacklist a bonding company, notwithstanding its accreditation by the
Supreme Court.
A cash or surety bond shall be valid and effective from the date of
deposit or posting, until the case is finally decided, resolved or
terminated, or the award satisfied.
This condition shall be deemed incorporated in the terms and
conditions of the surety bond, and shall be binding on the appellants
and the bonding company. cHESAD
The appellant shall furnish the appellee with a certified true copy of the
said surety bond with all the above-mentioned supporting documents.
The appellee shall verify the regularity and genuineness thereof and
immediately report any irregularity to the Commission.
Upon verification by the Commission that the bond is irregular or not
genuine, the Commission shall cause the immediate dismissal of the
appeal, and censure the responsible parties and their counsels, or
subject them to reasonable fine or penalty, and the bonding company
may be blacklisted.
No motion to reduce bond shall be entertained except on meritorious
grounds, and only upon the posting of a bond in a reasonable amount
in relation to the monetary award. DIESaC
The mere filing of a motion to reduce bond without complying with the
requisites in the preceding paragraphs shall not stop the running of the
period to perfect an appeal.
These statutory and regulatory provisions explicitly provide that an appeal from the Labor
Arbiter to the NLRC must be perfected within ten calendar days from receipt of such
decisions, awards or orders of the Labor Arbiter. In a judgment involving a monetary
award, the appeal shall be perfected only upon; (1) proof of payment of the required appeal
fee; (2) posting of a cash or surety bond issued by a reputable bonding company;
and (3) filing of a memorandum of appeal. 23
No appeal was perfected by the petitioners within the 10-day period under Article 223 of the
Labor Code.
The petitioners received the 7 August 2003 Decision of the Labor Arbiter on 15 September
2003, hence, they had until 25 September 2003 to perfect their appeal. A perusal of the
records reveals an apparent contrariety on the date of the posting of the appeal bond, a
material fact decisive of the instant controversy. While the First Certification indicated that
no appeal bond has been posted as of 2 October 2003, the Second Certification and the
Transmittal Letter stated that a surety bond was posted on 24 September 2003.
The Second Certificate is not a document of timeliness of petitioners' appeal bond. It is even
confirmatory of the fact of tardiness that the First Certification stated doubtlessly.

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That the posting of the surety bond requires as necessary addition the seven enumerated
documents is underscored by the provision that the appellant shall furnish the appellee with
a certified true copy of the said surety bond with all the above-mentioned supporting
documents. The appellee shall verify the regularity and genuineness thereof and
immediately report any irregularity to the Commission.
The rule gives the appellee the authority and opportunity, even the duty, to verify the
regularity and genuineness not only of the surety bond but also of the seven attachments. To
reiterate, even if the issuance of the surety bond on 24 September 2003 is considered as the
posting of the bond, the certification cannot furthermore be considered as the posting of the
other seven required documents.
Without a straight statement, the Second Certification seems to consider posting as mailing
such that the date 24 September 2003 should be the reckoning date that determines
timeliness and not the date 28 October 2003 which was the date of receipt of the surety
bond. Even such insinuation, strained and all, is unacceptable considering the absence of
proof of mailing, it being the fact that there was no mention at all in any of the pleadings
below that the surety bond was mailed.
The Court of Appeals therefore, correctly ruled that petitioners failed to perfect their appeal
on time. In holding so, the appellate court only applied the appeal bond requirement as
already well explained in our previous pronouncements that there is legislative and
administrative intent to strictly apply the appeal bond requirement, and the Court should
give utmost regard to this intention. 27 The clear intent of both statutory and procedural law
is to require the employer to post a cash or surety bond securing the full amount of the
monetary award within the ten 10-day reglementary period. 28 Rules on perfection of an
appeal, particularly in labor cases, must be strictly construed because to extend the period
of the appeal is to delay the case, a circumstance which would give the employer a chance
to wear out the efforts and meager resources of the worker to the point that the latter is
constrained to give up for less than what is due him. 29 This is to assure the workers that if
they finally prevail in the case the monetary award will be given to them both upon
dismissal of the employer's appeal. It is further meant to discourage employers from using
the appeal to delay or evade payment of their obligations to the employees. 30 The appeal
bond requirement precisely aims to prevent empty or inconsequential victories secured by
laborers in consonance with the protection of labor clause ensconced and zealously guarded
by our Constitution.
It is entrenched in our jurisprudence that perfection of an appeal in a manner and within the
period prescribed by law is not only mandatory but jurisdictional, and failure to perfect an
appeal has the effect of making judgment final and executory. 32 While dismissal of
an appeal on technical grounds is frowned upon, Article 223 of the Labor Code which
prescribes the appeal bond requirement, however, is a rule of jurisdiction and not of
procedure. 33 Hence, there is a little leeway for condoning a liberal interpretation thereof,
and certainly none premised on the ground that its requirements are mere technicalities. 34
It is axiomatic that an appeal is only a statutory privilege and it may only be exercised in the
manner provided by law. 35 The timely perfection of an appeal is a mandatory requirement,
which cannot be trifled with a "mere technicality" to suit the interest of party. 36 We cannot
condone the practice of parties who, either by their own or their counsel's inadvertence,
have allowed the judgment to become final and executory and, after the same had reached
finality, seeks the shield of substantial justice to assail it.
All considered then, the finding of the Labor Arbiter holding the petitioners liable for illegal
dismissal is binding on them. Not having been timely appealed, this issue is already beyond
our jurisdiction to resolve, and the finding of the Labor Arbiter can no longer be disturbed
without violating the fundamental principle that final judgment is immutable and unalterable
and may no longer be modified in any respect, even if the modification is meant to correct

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erroneous conclusion of fact and law. 37
WHEREFORE, premises considered, the petition is DENIED. The assailed Decision and
Resolution of the Court of Appeals, reversing the NLRC Resolution and effectively reinstating
the Labor Arbiter Decision, are hereby AFFIRMED.

OLORES VS MANILA DOCTORS COLLEGE;
GR NO. 201663, March 31, 2014
Facts:
Respondent is a private higher educational institution dedicated to providing academic
degrees and certificate courses related to Allied Medical Services and Liberal Arts and
Sciences. [Petitioner] was hired as a part-time faculty of respondent on 07 November 2005.
Thereafter, he signed fixed term employment contracts as part-time instructor. From 03
November 2008, [petitioner] signed fixed term employment contracts, this time as a fulltime instructor.
[Petitioner] submitted the final grades of his students to Mr. Jacinto Bernardo, Jr. (Bernardo),
the chair of the Humanities Area. On 13 April 2010, Bernardo charged [petitioner] with
gross misconduct and gross inefficiency in the performance of duty. [Petitioner] was
accused of employing a grading system not in accordance with the system because he: a)
added 50 pts to the final examination raw scores; b) added 50 pts to students who have
not been attending classes; c) credited only 40% instead of 60% of the final examination;
d) did not credit the essay questions; and e) added further incentives (1-4 pts) aside from
50 pts. In so doing, [petitioner] gave grades not based solely on scholastic records.
On 14 April 2010, [petitioner] submitted his answer stating that he: a) did not add 50 pts to
the raw scores as verified by the dean and academic coordinator; b) made certain
adjustments to help students pass; c) did not credit the essay questions because these
have never been discussed in the meetings with Bernardo; and d) did have the judgment to
give an incentive for a task well done. Also on this date, [petitioner] wrote a letter to
respondent's Human Resources Manager asking that he should now be granted a
permanent status.
Acting on the report of Bernardo, respondent created the Manila Doctors Tribunal (MDT)
which was tasked to ascertain the truth. The MDT sent notices of hearing to [petitioner].
During the administrative hearing, [petitioner] stood pat on his answer. He, however,
elucidated on his points by presenting slides.
On 31 May 2010, the MDT submitted its recommendation to the president of respondent.
The culpability of [petitioner] was established, hence, dismissal was recommended. On 07
June 2010, respondent terminated the services of [petitioner] for grave misconduct and
gross inefficiency and incompetence.
dated December 8, 2010, the Labor Arbiter found merit in petitioner's charge for illegal
dismissal. However, it dismissed petitioner's claim for regularization.
Respondent appealed from the aforesaid decision to the NLRC. However, the same was
denied in a Resolution dated February 10, 2011. The NLRC reasoned that respondent's
appeal was not accompanied by neither a cash nor surety bond, thus, no appeal was
perfected from the decision of the Labor Arbiter.
September 30, 2011, the NLRC granted respondent's appeal and reversed its earlier

435 | P a g e

resolution.
Resultantly, petitioner filed a certiorari petition with the CA. In a Resolution dated January 9,
2012, the CA held that since petitioner failed to file a motion for reconsideration against the
NLRC decision before seeking recourse to it via a certiorari petition, the CA dismissed
petitioner's special civil action for certiorari
Issue:
(1) whether respondent's appeal with the NLRC was perfected despite its failure to post a
bond; and
(2) whether the CA erred in dismissing petitioner's Rule 65 petition.
Held:
There is merit in the petition.
At the outset, it must be emphasized that Article 223 of the Labor Code states 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 duly accredited by the NLRC, in an amount equivalent to the
monetary award in the judgment appealed from.
Sections 4 (a) and 6 of Rule VI of the New Rules of Procedure of the NLRC, as amended,
reaffirm the explicit jurisdictional principle in Article 223.
SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. — (a) The appeal shall be:
1) filed within the reglementary period provided in Section 1 of this Rule;
2) verified by the appellant himself in accordance with Section 4, Rule 7 of the Rules of
Court, as amended;
3) in the form of a memorandum of appeal which shall state the grounds relied upon
and the arguments in support thereof, the relief prayed for, and with a statement of
the date the appellant received the appealed decision, resolution or order;
4) in three (3) legibly type written or printed copies; and
5) accompanied by:
i) proof of payment of the required appeal fee;
ii) posting of a cash or surety bond as provided in Section 6 of this
Rule;
iii) a certificate of non-forum shopping; and iv) proof of service upon the other
parties.
SECTION 6. BOND. — In case the decision of the Labor Arbiter or the Regional
Director involves a monetary award, an appeal by the employer may be perfected
only upon the posting of a bond, which shall either be in the form of cash deposit
or surety bond equivalent in the amount to the monetary award, exclusive of
damages and attorney's fees. 15
The posting of a bond is indispensable to the perfection of an appeal in cases involving
monetary awards from the decisions of the Labor Arbiter. Moreover, the filing of the bond is
not only mandatory, but a jurisdictional requirement as well, that must be complied with in
order to confer jurisdiction upon the NLRC. Non-compliance therewith 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. It is intended to discourage employers from using an

436 | P a g e

appeal to delay or evade their obligation to satisfy their employees' just and lawful claims.
Here, it is undisputed that respondent's appeal was not accompanied by any appeal bond
despite the clear monetary obligation to pay petitioner his separation pay in the amount of
P100,000.00. Since the posting of a bond for the perfection of an appeal is both mandatory
and jurisdictional, the decision of the Labor Arbiter sought to be appealed before the NLRC
had already become final and executory. Therefore, the NLRC had no authority to entertain
the appeal, much less to reverse the decision of the Labor Arbiter.
Nevertheless, assuming that the NLRC has jurisdiction to take cognizance of the instant
case, this Court would still be inclined to favor petitioner because the instant case falls
under one of the recognized exceptions to the rule that a motion for reconsideration is
necessary prior to the filing of a certiorari petition.
The general rule is that a motion for reconsideration is indispensable before
resort to the special civil action for certiorari to afford the court or tribunal the
opportunity to correct its error, if any. The rule is well settled that the filing of a motion
for reconsideration is an indispensable condition to the filing of a special civil action for
certiorari.
However, said rule is subject to several recognized exceptions:
(a) Where the order is a patent nullity, as where the court a quo has no jurisdiction;
(b) Where the questions raised in the certiorari proceedings have been duly
raised and passed upon by the lower court, or are the same as those raised
and passed upon in the lower court;
(c) Where there is an urgent necessity for the resolution of the question and any further
delay would prejudice the interests of the Government or of the petitioner or the
subject matter of the action is perishable;
(d) Where, under the circumstances, a motion for reconsideration would be useless;
(e) Where petitioner was deprived of due process and there is extreme urgency for relief;
(f) Where, in a criminal case, relief from an order of arrest is urgent and the granting of
such relief by the trial court is improbable;
(g) Where the proceedings in the lower court are a nullity for lack of due process;
(h) Where the proceeding was ex parte or in which the petitioner had no opportunity to
object; and
(i) Where the issue raised is one purely of law or where public interest is involved. 19
In the instant case, the NLRC had all the opportunity to review its ruling and correct itself.
The NLRC issued a ruling on February 10, 2011 in favor of petitioner dismissing respondent's
appeal on the ground that the latter failed to file an appeal bond. However, upon a motion
for reconsideration filed by respondent, the NLRC completely reversed itself and set aside its
earlier resolution dismissing the appeal. The NLRC had more than enough opportunity to
pass upon the issues raised by both parties on appeal of the ruling of the Labor Arbiter and
the subsequent motion for reconsideration of its resolution disposing the appeal. Thus,
another motion for reconsideration would have been useless under the circumstances since
the questions raised in the certiorari proceedings have already been duly raised and passed
upon by the NLRC.
In a similar case, the Labor Arbiter rendered a decision dismissing petitioner's case for lack
of merit. On appeal, the NLRC rendered a decision reversing the decision of the Labor Arbiter
and ordered the respondent therein to pay petitioner full backwages, separation pay, salary

437 | P a g e

differentials, 13th month pay and allowances. Not satisfied, respondent therein moved for
reconsideration of the aforesaid NLRC resolution. The NLRC, thereafter, granted respondent's
motion and reversed its previous ruling. In a like manner, the petitioner therein filed a
certiorari petition without first filing a motion for reconsideration with the NLRC.
All told, the petition is meritorious. However, since this Court is not a trier of facts, we
cannot rule on the substantive issue of the case, i.e., whether petitioner has attained regular
status, inasmuch as the CA has not yet passed upon the factual issues raised by the parties.
WHEREFORE, premises considered, the instant petition is hereby GRANTED and the
Resolutions dated January 9, 2012 and April 27, 2012, respectively, of the Court of Appeals
in CA-G.R. SP No. 122596, are hereby REVERSED and SET ASIDE. The case is REMANDED
to the Court of Appeals for further proceedings.

BERGONIO VS SOUTH EAST ASIAN AIRLINES;
GR No. 195227,.April 21, 2014
Facts:
On April 30, 2004, the petitioners filed before the LA a complaint for illegal dismissal and
illegal suspension with prayer for reinstatement against respondents South East Asian
Airlines (SEAIR) and Irene Dornier as SEAIR's President (collectively, the respondents).
In a decision dated May 31, 2005, the LA found the petitioners illegally dismissed and
ordered the respondents, among others, to immediately reinstate the petitioners with full
backwages. The respondents received their copy of this decision on July 8, 2005. 6
On August 20, 2005, the petitioners filed before the LA a Motion for issuance of Writ of
Execution for their immediate reinstatement.
During the scheduled pre-execution conference held on September 14, 2005, the
respondents manifested their option to reinstate the petitioners in the payroll. The payroll
reinstatement, however, did not materialize. Thus, on September 22, 2005, the petitioners
filed before the LA a manifestation for their immediate reinstatement.
On October 3, 2005, the respondents filed an opposition to the petitioners' motion for
execution. 7 They claimed that the relationship between them and the petitioners had
already been strained because of the petitioners' threatening text messages, thus
precluding the latter's reinstatement. IAEcCT
On October 7, 2005, the LA granted the petitioners' motion and issued a writ of execution.
8
The respondents moved to quash the writ of execution with a prayer to hold in abeyance the
implementation of the reinstatement order. 9 They maintained that the relationship between
them and the petitioners had been so strained that reinstatement was no longer possible.
The October 7, 2005 writ of execution was returned unsatisfied. In response, the petitioners
filed a motion for re-computation of accrued wages, and, on January 25, 2006, a motion for
execution of the re-computed amount. On February 16, 2006, the LA granted this motion
and issued an alias writ of execution. 10
On February 21, 2006, the respondents issued a Memorandum 11 directing the
petitioners to report for work on February 24, 2006. The petitioners failed to report for
work on the appointed date. On February 28, 2006, the respondents moved before the LA to

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suspend the order for the petitioners' reinstatement. 12
Meanwhile, the respondents appealed with the NLRC the May 31, 2005 illegal dismissal
ruling of the LA.
In an order dated August 15, 2006, 13 the NLRC dismissed the respondents' appeal for nonperfection. The NLRC likewise denied the respondents' motion for reconsideration in its
November 29, 2006 resolution, prompting the respondents to file before the CA a petition for
certiorari.
The NLRC issued an Entry of Judgment on February 6, 2007 declaring its November 29, 2006
resolution final and executory. The petitioners forthwith filed with the LA another motion for
the issuance of a writ of execution, which the LA granted on April 24, 2007. The LA also
issued another writ of execution. 14 A Notice of Garnishment was thereafter issued to the
respondents' depositary bank — Metrobank-San Lorenzo Village Branch, Makati City — in
the amount of P1,900,000.00 on June 6, 2007.
On December 18, 2007, the CA rendered its decision (on the illegal dismissal ruling of the
LA) partly granting the respondents' petition. The CA declared the petitioners' dismissal valid
and awarded them P30,000.00 as nominal damages for the respondents' failure to observe
due process.
The records show that the petitioners appealed the December 18, 2007 CA decision with this
Court. In a resolution dated August 4, 2008, the Court denied the petition. The Court likewise
denied the petitioners' subsequent motion for reconsideration, and thereafter issued an
Entry of Judgment certifying that its August 4, 2008 resolution had become final and
executory on March 9, 2009.
On January 31, 2008, the petitioners filed with the LA an Urgent Ex-Parte Motion for the
Immediate Release of the Garnished Amount.
In its March 13, 2008 order, 15 the LA granted the petitioners' motion; it directed
Metrobank-San Lorenzo to release the P1,900,000.00 garnished amount. The LA found valid
and meritorious the respondents' claim for accrued wages in view of the respondents'
refusal to reinstate the petitioners despite the final and executory nature of the
reinstatement aspect of its (LA's) May 31, 2005 decision. The LA noted that as of the
December 18, 2007 CA decision (that reversed the illegal dismissal findings of the LA), the
petitioners' accrued wages amounted to P3,078,366.33.
In its July 16, 2008 resolution, 16 the NLRC affirmed in toto the LA's March 13, 2008
order. The NLRC afterwards denied the respondents' motion for reconsideration for lack of
merit. 17
The respondents assailed the July 16, 2008 decision and September 29, 2009 resolution of
the NLRC via a petition for certiorari filed with the CA. DIETcH
The CA's ruling
The CA granted the respondents' petition. 18 It reversed and set aside the July 16, 2008
decision and the September 29, 2009 resolution of the NLRC and remanded the case to the
Computation and Examination Unit of the NLRC for the proper computation of the
petitioners' accrued wages, computed up to February 24, 2006.
The CA agreed that the reinstatement aspect of the LA's decision is immediately executory
even pending appeal, such that the employer is obliged to reinstate and pay the wages of
the dismissed employee during the period of appeal until the decision (finding the employee
illegally dismissed including the reinstatement order) is reversed by a higher court. Applying

439 | P a g e

this principle, the CA noted that the petitioners' accrued wages could have been properly
computed until December 18, 2007, the date of the CA's decision finding the petitioners
validly dismissed.
The CA, however, pointed out that when the LA's decision is "reversed by a higher tribunal,
an employee may be barred from collecting the accrued wages if shown that the delay in
enforcing the reinstatement pending appeal was without fault" on the employer's part. In
this case, the CA declared that the delay in the execution of the reinstatement order was not
due to the respondents' unjustified act or omission. Rather, the petitioners' refusal to comply
with the February 21, 2006 return-to-work Memorandum that the respondents issued and
personally delivered to them (the petitioners) prevented the enforcement of the
reinstatement order.
Thus, the CA declared that, given this peculiar circumstance (of the petitioners' failure to
report for work), the petitioners' accrued wages should only be computed until February 24,
2006 when they were supposed to report for work per the return-to-work Memorandum.
Accordingly, the CA reversed, for grave abuse of discretion, the NLRC's July 16, 2008
decision that affirmed the LA's order to release the garnished amount.
Issues:


The petitioners argue that the CA gravely erred when it ruled, contrary to Article 223,
paragraph 3 of the Labor Code, that the computation of their accrued wages stopped
when they failed to report for work on February 24, 2006.



Additionally, the petitioners direct the Court's attention to the several pleadings that
the respondents filed to prevent the execution of the reinstatement aspect of the LA's
May 31, 2005 decision, i.e., the Opposition to the Issuance of the Writ of Execution,
the Motion to Quash the Writ of Execution and the Motion to Suspend the Order of
Reinstatement. They also point out that in all these pleadings, the respondents
claimed that strained relationship barred their (the petitioners') reinstatement,
evidently confirming the respondents' lack of intention to reinstate them.



Finally, the petitioners point out that the February 21, 2006 Memorandum directed
them to report for work at Clark Field, Angeles, Pampanga instead of at the NAIADomestic Airport in Pasay City where they had been assigned. They argue that this
directive to report for work at Clark Field violates Article 223, paragraph 3 of the
Labor Code that requires the employee's reinstatement to be under the same terms
and conditions prevailing prior to the dismissal.



Thus, the petitioners claim that the delay in their reinstatement was in fact due to
the respondents' unjustified acts and that the respondents never really complied with
the LA's reinstatement order.

Held:
We GRANT the petition.
Preliminary considerations: jurisdictionallimitations of the Court's Rule 45
review ofthe CA's Rule 65 decision in labor cases
In a Rule 45 petition for review on certiorari, what we review are the legal errors that the CA
may have committed in the assailed decision, in contrast with the review for jurisdictional
errors that we undertake in an original certiorari action. In reviewing the legal correctness of
the CA decision in a labor case taken under Rule 65 of the Rules of Court, we examine the

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CA decision in the context that it determined the presence or the absence of grave abuse of
discretion in the NLRC decision before it and not on the basis of whether the NLRC decision,
on the merits of the case, was correct. Otherwise stated, we proceed from the premise that
the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged
before it. Within this narrow scope of our Rule 45 review, the question that we ask is: Did the
CA correctly determine whether the NLRC committed grave abuse of discretion in ruling on
the case? 20
In addition, the Court's jurisdiction in a Rule 45 petition for review on certiorari is limited to
resolving only questions of law.
The present petition essentially raises the question — whether the petitioners may recover
the accrued wages prior to the CA's reversal of the LA's May 31, 2005 decision. This is a
question of law that falls well within the Court's power in a Rule 45 petition.
Resolution of this question of law, however, is inextricably linked with the largely factual
issue of whether the accrued wages should be computed until December 17, 2008 when the
CA reversed the illegal dismissal findings of the LA or only until February 24, 2006 when the
petitioners were supposed to report for work per the February 21, 2006 Memorandum. In
either case, the determination of this factual issue presupposes another factual issue, i.e.,
whether the delay in the execution of the reinstatement order was due to the respondents'
fault. As questions of fact, they are proscribed by our Rule 45 jurisdiction; we generally
cannot address these factual issues except to the extent necessary to determine whether
the CA correctly found the NLRC in grave abuse of discretion in affirming the release of the
garnished amount despite the respondents' issuance of and the petitioners' failure to
comply with the February 21, 2006 return-to-work Memorandum.
The jurisdictional limitations of our Rule 45 review of the CA's Rule 65 decision in labor
cases, notwithstanding, we resolve this petition's factual issues for we find legal errors in the
CA's decision. Our consideration of the facts taken within this narrow scope of our factual
review power convinced us, as our subsequent discussion will show, that no grave abuse of
discretion attended the NLRC decision. DSHTaC
Nature of the reinstatement aspect of theLA's decision on a finding of illegal
dismissal
Article 223 (now Article 229) 21 of the Labor Code governs appeals from, and the execution
of, the LA's decision. Pertinently, paragraph 3, Article 223 of the Labor Code provides:
Article 223. APPEAL. —
xxx xxx xxx
In any event, the decision of the Labor Arbiter reinstating a dismissed
or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, pending appeal .
The employee shall either be admitted back to work under the same
terms and conditions prevailing prior to his dismissal or separation or,
at the option of the employer, merely reinstated in the payroll. The
posting of a bond by the employer shall not stay the execution for
reinstatement provided herein. [Emphasis and underscoring supplied]
Under paragraph 3, Article 223 of the Labor Code, the LA's order for the reinstatement of an
employee found illegally dismissed is immediately executory even during pendency of the
employer's appeal from the decision. Under this provision, the employer must reinstate the
employee — either by physically admitting him under the conditions prevailing prior to his
dismissal, and paying his wages; or, at the employer's option, merely reinstating the

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employee in the payroll until the decision is reversed by the higher court. 22 Failure of the
employer to comply with the reinstatement order, by exercising the options in the
alternative, renders him liable to pay the employee's salaries. 23
Otherwise stated, a dismissed employee whose case was favorably decided by the LA is
entitled to receive wages pending appeal upon reinstatement, which
reinstatement is immediately executory. 24 Unless the appellate tribunal issues a
restraining order, the LA is duty bound to implement the order of reinstatement and the
employer has no option but to comply with it. 25
Moreover, and equally worth emphasizing, is that an order of reinstatement issued by
the LA is self-executory, i.e., the dismissed employee need not even apply for and the LA
need not even issue a writ of execution to trigger the employer's duty to reinstate the
dismissed employee. In Pioneer Texturizing Corp. v. NLRC, et al., 26 decided in 1997, the
Court clarified once and for all this self-executory nature of a reinstatement order. After
tracing back the various Court rulings interpreting the amendments introduced by Republic
Act No. 6715 27 on the reinstatement aspect of a labor decision under Article 223 of the
Labor Code, the Court concluded that to otherwise "require the application for and issuance
of a writ of execution as prerequisites for the execution of a reinstatement award would
certainly betray and run counter to the very object and intent of Article 223, i.e., the
immediate execution of a reinstatement order." 28
In short, therefore, with respect to decisions reinstating employees, the law itself has
determined a sufficiently overwhelming reason for its immediate and automatic execution
even pending appeal. 29 The employer is duty-bound to reinstate the employee, failing
which, the employer is liable instead to pay the dismissed employee's salary. The Court's
consistent and prevailing treatment and interpretation of the reinstatement order as
immediately enforceable, in fact, merely underscores the right to security of tenure of
employees that the Constitution 30 protects.
The employer is obliged to pay thedismissed employee's salary if herefuses
to reinstate until actualreinstatement or reversal by a highertribunal;
circumstances that may bar anemployee from receiving the accrued wages
As we amply discussed above, an employer is obliged to immediately reinstate the
employee upon the LA's finding of illegal dismissal; if the employer fails, it is liable to pay
the salary of the dismissed employee. Of course, it is not always the case that the LA's
finding of illegal dismissal is, on appeal by the employer, upheld by the appellate court. After
the LA's decision is reversed by a higher tribunal, the employer's duty to reinstate the
dismissed employee is effectively terminated. This means that an employer is no longer
obliged to keep the employee in the actual service or in the payroll. The employee, in turn, is
not required to return the wages that he had received prior to the reversal of the LA's
decision. 31
The reversal by a higher tribunal of the LA's finding (of illegal dismissal), notwithstanding, an
employer, who, despite the LA's order of reinstatement, did not reinstate the employee
during the pendency of the appeal up to the reversal by a higher tribunal may still be held
liable for the accrued wages of the employee, i.e., the unpaid salary accruing up to the time
the higher tribunal reverses the decision. 32 The rule, therefore, is that an employee may
still recover the accrued wages up to and despite the reversal by the higher tribunal. This
entitlement of the employee to the accrued wages proceeds from the immediate and selfexecutory nature of the reinstatement aspect of the LA's decision. TEHIaA
By way of exception to the above rule, an employee may be barred from collecting the
accrued wages if shown that the delay in enforcing the reinstatement pending appeal was
without fault on the part of the employer. To determine whether an employee is thus barred,

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two tests must be satisfied: (1) actual delay or the fact that the order of reinstatement
pending appeal was not executed prior to its reversal; and (2) the delay must not be due
to the employer's unjustified act or omission. Note that under the second test, the
delay must be without the employer's fault. If the delay is due to the employer's
unjustified refusal, the employer may still be required to pay the salaries
notwithstanding the reversal of the LA's decision. 33
Application of the two-fold test; thepetitioners are entitled to receive their
accrued salaries until December 18, 2007
As we earlier pointed out, the core issue to be resolved is whether the petitioners may
recover the accrued wages until the CA's reversal of the LA's decision. An affirmative answer
to this question will lead us to reverse the assailed CA decision for legal errors and reinstate
the NLRC's decision affirming the release of the garnished amount. Otherwise, we uphold the
CA's decision to be legally correct. To resolve this question, we apply the two-fold test.
First, the existence of delay — whether there was actual delay or whether the order of
reinstatement pending appeal was not executed prior to its reversal? We answer this test in
the affirmative.
To recall, on May 31, 2005, the LA rendered the decision finding the petitioners illegally
dismissed and ordering their immediate reinstatement. Per the records, the respondents
received copy of this decision on July 8, 2005. On August 20, 2005, the petitioners filed
before the LA a Motion for Issuance of Writ of Execution for their immediate reinstatement.
The LA issued the Writ of Execution on October 7, 2005. From the time the respondents
received copy of the LA's decision, and the issuance of the writ of execution, until the CA
reversed this decision on December 17, 2008, the respondents had not reinstated the
petitioners, either by actual reinstatement or in the payroll. This continued non-execution of
the reinstatement order in fact moved the LA to issue an alias writ of execution on February
16, 2006 and another writ of execution on April 24, 2007.
From these facts and without doubt, there was actual delay in the execution of the
reinstatement aspect of the LA's May 31, 2005 decision before it was reversed in the CA's
decision.
Second, the cause of the delay — whether the delay was not due to the employer's
unjustified act or omission. We answer this test in the negative; we find that the delay in the
execution of the reinstatement pending appeal was due to the respondents' unjustified acts.
In reversing, for grave abuse of discretion, the NLRC's order affirming the release of the
garnished amount, the CA relied on the fact of the issuance of the February 21, 2006
Memorandum and of the petitioners' failure to comply with its return-to-work directive. In
other words, with the issuance of this Memorandum, the CA considered the respondents as
having sufficiently complied with their obligation to reinstate the petitioners. And, the
subsequent delay in or the non-execution of the reinstatement order was no longer the
respondents' fault, but rather of the petitioners who refused to report back to work despite
the directive.
Our careful consideration of the facts and the circumstances that surrounded the case
convinced us that the delay in the reinstatement pending appeal was due to the
respondents' fault. For one, the respondents filed several pleadings to suspend the
execution of the LA's reinstatement order, i.e., the opposition to the petitioners' motion for
execution filed on October 3, 2005; the motion to quash the October 7, 2005 writ of
execution with prayer to hold in abeyance the implementation of the reinstatement order;
and the motion to suspend the order for the petitioners' reinstatement filed on February 28,
2006 after the LA issued the February 16, 2006 alias writ of execution. These pleadings, to
our mind, show a determined effort on the respondents' part to prevent or suspend the

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execution of the reinstatement pending appeal. EaCSTc
Another reason is that the respondents, contrary to the CA's conclusion, did not sufficiently
notify the petitioners of their intent to actually reinstate them; neither did the respondents
give them ample opportunity to comply with the return-to-work directive. We note that the
respondents delivered the February 21, 2006 Memorandum (requiring the petitioners to
report for work on February 24, 2006) only in the afternoon of February 23, 2006. Worse, the
respondents handed the notice to only one of the petitioners — Pelaez — who did not act in
representation of the others. Evidently, the petitioners could not reasonably be expected to
comply with a directive that they had no or insufficient notice of.
Lastly, the petitioners continuously and actively pursued the execution of the reinstatement
aspect of the LA's decision, i.e., by filing several motions for execution of the reinstatement
order, and motion to cite the respondents in contempt and re-computation of the accrued
wages for the respondents' continued failure to reinstate them.
These facts altogether show that the respondents were not at all sincere in reinstating the
petitioners. These facts — when taken together with the fact of delay — reveal the
respondents' obstinate resolve and willful disregard of the immediate and self-executory
nature of the reinstatement aspect of the LA's decision.
A further and final point that we considered in concluding that the delay was due to the
respondents' fault is the fact that per the 2005 Revised Rules of Procedure of the NLRC
(2005 NLRC Rules), 34 employers are required to submit a report of compliance within ten
(10) calendar days from receipt of the LA's decision, noncompliance with which signifies a
clear refusal to reinstate. Arguably, the 2005 NLRC Rules took effect only on January 7, 2006;
hence, the respondents could not have been reasonably expected to comply with this duty
that was not yet in effect when the LA rendered its decision (finding illegal dismissal) and
issued the writ of execution in 2005. Nevertheless, when the LA issued the February 16,
2006 alias writ of execution and the April 24, 2007 writ of execution, the 2005 NLRC Rules
was already in place such that the respondents had become duty-bound to submit the
required compliance report; their noncompliance with this rule all the more showed a clear
and determined refusal to reinstate.
All told, under the facts and the surrounding circumstances, the delay was due to the acts of
the respondents that we find were unjustified. We reiterate and emphasize, Article 223,
paragraph 3, of the Labor Code mandates the employer to immediately reinstate
the dismissed employee, either by actually reinstating him/her under the conditions
prevailing prior to the dismissal or, at the option of the employer, in the payroll. The
respondents' failure in this case to exercise either option rendered them liable for the
petitioners' accrued salary until the LA decision was reversed by the CA on December 17,
2008. We, therefore, find that the NLRC, in affirming the release of the garnished amount,
merely implemented the mandate of Article 223; it simply recognized as immediate and selfexecutory the reinstatement aspect of the LA's decision.
Accordingly, we reverse for legal errors the CA decision. We find no grave abuse of discretion
attended the NLRC's July 16, 2008 resolution that affirmed the March 13, 2008 decision of
the LA granting the release of the garnished amount.

ARABIT VS JARDINE PACIFIC FINANCE INC.;
GR NO. 181719, April 21, 2014
Facts:

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Petitioners were former regular employees of respondent Jardine Pacific Finance, Inc.
(formerly MB Finance) (Jardine). The petitioners were also officers and members of MB
Finance Employees Association-FFW Chapter (the Union), a legitimate labor union and the
sole exclusive bargaining agent of the employees of Jardine. On the claim of financial losses,
Jardine decided to reorganize and implement a redundancy program among its employees.
The petitioners were among those affected by the redundancy program. Jardine thereafter
hired contractual employees to undertake the functions these employees used to perform.
The Union filed a notice of strike with the National Conciliation and Mediation Board (NCMB),
questioning the termination of employment of the petitioners who were also union officers.
The Union alleged unfair labor practice on the part of Jardine, as well as discrimination in the
dismissal of its officers and members.
They reached a settlement but In the settlement, the petitioners accepted their redundancy
pay without prejudice to their right to question the legality of their dismissal with the NLRC.
Jardine paid the petitioners a separation package composed of their severance pay, plus
their grossed up transportation allowance.
Issue:
WON the petitioners was illegally dismissed because of the implementation of the
redundancy program
Held:
Yes, We cannot accept Jardine’s shallow understanding of the concepts of redundancy and
retrenchment in determining the validity of the severance of an employer-employee
relationship. These rulings appropriately clarify that redundancy does not need to be always
triggered by a decline in the business. Primarily, employers resort to redundancy when the
functions of an employee have already become superfluous or in excess of what the
business requires. Thus, even if a business is doing well, an employer can still validly dismiss
an employee from the service due to redundancy if that employee’s position has already
become in excess of what the employer’s enterprise requires.
From this perspective, it is illogical for Jardine to terminate the petitioners’ employment and
replace them with contractual employees. The replacement effectively belies Jardine’s claim
that the petitioners’ positions were abolished due to superfluity. Redundancy could have
been justified if the functions of the petitioners were transferred to other existing employees
of the company. To dismiss the petitioners and hire new contractual employees as
replacements necessarily give rise to the sound conclusion that the petitioners’ services
have not really become in excess of what Jardine’s business requires.
Guidelines in implementing redundancy
this Court laid down the principle that the employer must use fair and reasonable criteria in
the selection of employees who will be dismissed from employment due to redundancy. Such
fair and reasonable criteria may include the following, but are not limited to: (a) less
preferred status (e.g. temporary employee); (b) efficiency; and (c) seniority. The
presence of these criteria used by the employer shows good faith on its part and is evidence
that the implementation of redundancy was painstakingly done by the employer in order to
properly justify the termination from the service of its employees (Golden Thread Knitting
Industries vs NLRC). For the implementation of a redundancy program to be valid, the
employer must comply with the following requisites: (1) written notice served on both

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the employees and the Department of Labor and Employment at least one month
prior to the intended date of retrenchment; (2) payment of separation pay
equivalent to at least one month pay or at least one month pay for every year of
service, whichever is higher; (3) good faith in abolishing the redundant positions;
and (4) fair and reasonable criteria in ascertaining what positions are to be
declared redundant and accordingly abolished (Asian Alcohol vs NLRC).
The first level, based on Asian Alcohol, is broader as the case recognized distinctions on a
per position basis. At this level, Jardine failed to explain why among all of the existing
positions in its organization, Jardine chose the petitioners’ posts as the ones which have
already become redundant and terminable.1âwphi1
The second level, derived from Golden Thread, is more specific. Here the distinction narrows
down to the particular employees occupying the same positions which were already declared
to be redundant. At this level, Jardine’s lapse is shown by its failure to explain why among all
of its employees whose positions were determined to be redundant, the petitioners were the
ones selected to be dismissed from the service.

MIRANT VS CARO;
GR NO. 181490, April 23, 2014
Facts:
Respondent was hired by Mirant Pagbilao on January 3, 1994 as its Logistics Officer. In 2002,
when Southern Company was sold to Mirant, respondent was already a Supervisor of the
Logistics and Purchasing Department of petitioner. At the time of the severance of his
employment, respondent was the Procurement Supervisor of Mirant Pagbilao assigned at
petitioner corporation’s corporate office. As Procurement Supervisor, his main task was to
serve as the link between the Materials Management Department of petitioner corporation
and its staff, and the suppliers and service contractors in order to ensure that procurement
is carried out in conformity with set policies, procedures and practices. In addition,
respondent was put incharge of ensuring the timely, economical, safe and expeditious
delivery of materials at the right quality and quantity to petitioner corporation’s plant.
Respondent was also responsible for guiding and overseeing the welfare and training needs
of the staff of the Materials Management Department. Due to the nature of respondent’s
functions, petitioner corporation considers his position as confidential. On November 3,
2004, petitioner corporation conducted a random drug test where respondent was randomly
chosen among its employees who would be tested for illegal drug use. Through an
Intracompany Correspondence,12 these employees were informed that they were selected
for random drug testing to be conducted on the same day that they received the
correspondence. Respondent was duly notified that he was scheduled to be tested after
lunch on that day. His receipt of the notice was evidenced by his signature on the
correspondence.
There was phone call from his wife. She said there was a bombing incident near her
workplace in Tel Aviv. So he acted on and told the secretary of his department that
respondent that he will give preferential attention to the emergency phone call that he just
received. He also told Torres that he would be back at the office as soon as he has resolved
his predicament.
On that same day, at around 6:15 p.m., respondent returned to petitioner corporation’s
office. When he was finally able to charge his cellphone at the office, he received a text

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message from Tina Cecilia (Cecilia), a member of the Drug Watch Committee that conducted
the drug test, informing him to participate in the said drug test. He immediately called up
Cecilia to explain the reasons for his failure to submit himself to the random drug test that
day. He also proposed that he would submit to a drug test the following day at his own
expense. Respondent never heard from Cecilia again.
On November 8, 2004, respondent received a Show Cause Notice 15 from petitioner
corporation through Jaime Dulot (Dulot), his immediate supervisor, requiring him to explain
in writing why he should not be charged with "unjustified refusal to submit to random drug
testing." Respondent submitted his written explanation16 on November 11, 2004. Petitioner
corporation further required respondent on December 14, 2004 to submit additional pieces
of supporting documents.
He was found guilty by the petitioner’s corporation Investigating panel of “unjustified refusal
of to submit random drug testing. and recommended a penalty of four working weeks
suspension without pay, instead of termination, due to the presence of mitigating
circumstances. petitioner corporation’s Asst. Vice President for Material Management
Department, George K. Lamela, Jr. (Lamela), recommended 19 that respondent be terminated
from employment instead of merely being suspended.
Issue:
WON respondent was validly terminated for his failure to take the mandatory drug test
Held:
No, We agree with the disposition of the appellate court that there was illegal dismissal in
the case at bar. While the adoption and enforcement by petitioner corporation of its AntiDrugs Policy is recognized as a valid exercise of its management prerogative as an
employer, such exercise is not absolute and unbridled. Managerial prerogatives are subject
to limitations provided by law, collective bargaining agreements, and the general principles
of fair play and justice.
Petitioner corporation’s subject Anti-Drugs Policy fell short of being fair and reasonable:
First. The policy was not clear on what constitutes "unjustified refusal" when the subject
drug policy prescribed that an employee’s "unjustified refusal" to submit to a random drug
test shall be punishable by the penalty of termination for the first offense. To be sure, the
term "unjustified refusal" could not possibly cover all forms of "refusal" as the employee’s
resistance. The fact that petitioner corporation’s own personnel had to dissect the intended
meaning of "unjustified refusal" is further proof that it is not clear on what context the term
"unjustified refusal" applies to.
Second. The penalty of termination imposed by petitioner corporation upon respondent fell
short of being reasonable. Company policies and regulations are generally valid and binding
between the employer and the employee unless shown to be grossly oppressive or contrary
to law50 – as in the case at bar. Recognizing the ambiguity in the subject policy, the CA was
more inclined to adopt the recommendation of petitioner corporation’s own Investigating
Panel over that of Sliman and the NLRC. Thus, We find that the recommended four (4)
working weeks’ suspension without pay as the reasonable penalty to be imposed on
[respondent] for his disobedience but not the illegal termination of work.

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