Labor Compiled

Justice Teresita Leonardo-De Castro Cases (2008-2015) Labor Law
RECRUITMENT AND PLACEMENT

ILLEGAL RECRUITMENT
PEOPLE OF THE PHILIPPINES vs. ROSARIO "ROSE" OCHOA
G.R. No. 173792, August 31, 2011, J. Leonardo-De Castro
To prove illegal recruitment, it must be shown that appellant gave complainants the distinct
impression that she had the power or ability to send complainants abroad for work such that the
latter were convinced to part with their money in order to be employed. All eight private complainants
consistently declared that Ochoa promised them employment overseas after they submit their biodata, birth certificates,passports and payment for placement and medical fees.
Facts:
The Information filed before the RTC and docketed as Criminal Case No. 98-77300, charged
Ochoa with illegal recruitment in large scale, allegedly committed as follows:
That on or about the period of February 1997 up to April 1998 Rosario Ochoa (Ochoa) did
then and there willfully, unlawfully and feloniously recruit Robert Gubat, Junior Agustin, Cesar
Aquino, Richard Luciano, Fernando Rivera, Mariano R. Mislang, Helen B. Palogo, Joebert
Decolongon, Corazon S. Austria, Cristopher A. Bermejo, Letecia D. Londonio, Alma Borromeo,
Francisco Pascual, Raymundo A. Bermejo and Rosemarie A. Bermejo for a consideration ranging
from P2,000.00 to P32,000.00 or a total amount of P124,000.00 as placement fee which the
complainants paid to Ochoa without the accused having secured the necessary license from the
Department of Labor and Employment.
Three other Informations were filed before the RTC and docketed as Criminal Case Nos. 9877301, 98-77302, and 98-77303, this time charging Ochoa with three counts of estafa, committed
separately upon three private complainants Robert Gubat (Gubat), Cesar Aquino (Cesar), and Junior
Agustin (Agustin). The Information in Criminal Case No. 98-77301 accuses Ochoa of the following
acts constituting estafa:
That on or about March 3, 1998, Ochoa did then and there willfully, unlawfully and
feloniously recruit and promise employment in Taiwan to one ROBERT GUBAT for a consideration
of P18,800.00 as placement fee, knowing that she has no power, capacity or lawful authority and
with no intention to fulfill her said promise, but merely as scheme or excuse to get and exact money
from said complainant.
The two other Informations for estafa were similarly worded as the Information, except as
to the name of the private complainants and the amount purportedly collected by Ochoa from them,
particularly:
Docket No.
Private Complainant
Criminal Case No. 98-773025
Cesar Aquino
Amount Collected
P19.000.00
Page 1 of 80

Criminal Case No. 98-773036
Junior Agustin
P32,000.00
As prayed for by the State Prosecutor, all four criminal cases against Ochoa before the RTC were
consolidated.
Ochoa stated that she was employed by AXIL International Services and Consultant (AXIL)
as recruiter and was paid on a commission basis. AXIL had a temporary license to recruit Filipino
workers for overseas employment. She admitted recruiting private complainants and receiving
from them substantial amounts as placement and medical fees. Ochoa claimed though that she
remitted private complainants money to a person named Mercy, the manager of AXIL, but AXIL
failed to issue receipts because the private complainants did not pay in full.
On April 17, 2000, the RTC rendered a Decision finding Ochoa guilty beyond reasonable
doubt of the crimes of illegal recruitment in large scale (Criminal Case No. 98-77300) and three
counts of estafa (Criminal Case Nos. 98-77301, 98-77302, 98-77303).
The Court of Appeals promulgated its Decision affirming the appealed RTC decision. Ochoa
filed a Motion for Reconsideration which the People opposed for being bereft of merit.
In its Resolution dated August 6, 2003, the Court of Appeals declared that it had no
jurisdiction over Ochoas appeal, ratiocinating thus:
While neither the accused-appellant nor the Office of the Solicitor General representing the people
ever raised the issue of jurisdiction, our second look at the suit proved worthwhile because we
came to realize that we mistakenly assumed jurisdiction over this case where it does not obtain.
It was error to consider accused-appellants appeal from a trial court judgment imposing
life imprisonment in Criminal Case No. Q-98-77300 for illegal recruitment in a large scale.
Consequently, the judgment we rendered is null and void.
Despite its lack of jurisdiction over Ochoas appeal, the Court of Appeals did not dismiss the
same and merely ordered its transfer to us: While the Supreme Court Circular No. 2-90 directs the
dismissal of appeals filed before the wrong court, the Supreme Court has in practice allowed the
transfer of records from this Court to the highest court. In which case, we shall subscribe to this
practice in the interest of substantial justice.
Issue:
Can the court a quo erred when it ruled that Ochoa is guilty of illegal recruitment in large
scale and estafa?
Ruling:
No, We find no reversible error in the assailed Court of Appeals decision.
Illegal recruitment in large scale
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Ochoa was charged with violation of Section 6 of Republic Act No. 8042. Said provision
broadens the concept of illegal recruitment under the Labor Code and provides stiffer penalties,
especially for those that constitute economic sabotage, i.e., illegal recruitment in large scale and
illegal recruitment committed by a syndicate.
Section 6 of Republic Act No. 8042 defines illegal recruitment as follows:
SEC. 6. Definition. - For purposes of this Act, illegal recruitment shall mean any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring,
contract services, promising or advertising for employment abroad, whether for profit or not, when
undertaken by a non-licensee or non-holder of authority contemplated under Article 13(f) of
Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines:
Provided, That any such non-licensee or non-holder who, in any manner, offers or promises for a
fee employment abroad to two or more persons shall be deemed so engaged. It shall likewise
include the following acts, whether committed by any person, whether a non-licensee, non-holder,
licensee or holder of authority:
xxxx
(m) Failure to reimburse expenses incurred by the worker in connection with his documentation
and processing for purposes of deployment, in cases where the deployment does not actually take
place without the worker's fault. Illegal recruitment when committed by a syndicate or in large
scale shall be considered an offense involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3)
or more persons conspiring or confederating with one another. It is deemed committed in large
scale if committed against three (3) or more persons individually or as a group.
It is well-settled that to prove illegal recruitment, it must be shown that appellant gave
complainants the distinct impression that she had the power or ability to send complainants abroad
for work such that the latter were convinced to part with their money in order to be employed. All
eight private complainants herein consistently declared that Ochoa offered and promised them
employment overseas. Ochoa required private complainants to submit their bio-data, birth
certificates, and passports, which private complainants did. Private complainants also gave various
amounts to Ochoa as payment for placement and medical fees as evidenced by the receipts Ochoa
issued to Gubat, Cesar, and Agustin. Despite private complainants compliance with all the
requirements Ochoa specified, they were not able to leave for work abroad. Private complainants
pleaded that Ochoa return their hard-earned money, but Ochoa failed to do so.
Section 6 of Republic Act No. 8042 clearly provides that any person, whether a non-licensee,
non-holder, licensee or holder of authority may be held liable for illegal recruitment for certain acts
as enumerated in paragraphs (a) to (m) thereof. Among such acts, under Section 6(m) of Republic
Act No. 8042, is the "failure to reimburse expenses incurred by the worker in connection with his
documentation and processing for purposes of deployment, in cases where the deployment does
not actually take place without the workers fault." Ochoa committed illegal recruitment as
described in the said provision by receiving placement and medical fees from private complainants,
evidenced by the receipts issued by her, and failing to reimburse the private complainants the
amounts they had paid when they were not able to leave for Taiwan and Saudi Arabia, through no
fault of their own.
Page 3 of 80
Ochoa further argues in her defense that she should not be found personally and criminally
liable for illegal recruitment because she was a mere employee of AXIL and that she had turned
over the money she received from private complainants to AXIL.
We are not convinced. Ochoas claim was not supported by any corroborating evidence. The
POEA verification and presented by Ochoa during trial, pertains only to the status of AXIL as a
placement agency with a "limited temporary authority" which had already expired. Said verification
did not show whether or not Ochoa was employed by AXIL. Strangely, for an alleged employee of
AXIL, Ochoa was not able to present the most basic evidence of employment, such as appointment
papers, identification card (ID), and/or payslips. The receipts presented by some of the private
complainants were issued and signed by Ochoa herself, and did not contain any indication that
Ochoa issued and signed the same on behalf of AXIL. Also, Ochoa was not able to present any proof
that private complainants money were actually turned over to or received by AXIL.
Under the last paragraph of Section 6 of Republic Act No. 8042, illegal recruitment shall be
considered an offense involving economic sabotage if committed in a large scale, that is, committed
against three or more persons individually or as a group. Here, there are eight private complainants
who convincingly testified on Ochoas acts of illegal recruitment.
In view of the overwhelming evidence presented by the prosecution, we uphold the verdict
of the RTC, as affirmed by the Court of Appeals, that Ochoa is guilty of illegal recruitment
constituting economic sabotage.
Section 7(b) of Republic Act No. 8042 provides that the penalty of life imprisonment and a
fine of not less than P500,000.00 nor more than P1,000.000.00 shall be imposed when the illegal
recruitment constitutes economic sabotage.
Estafa
We affirm as well the conviction of Ochoa for estafa committed against three private
complainants in Criminal Case Nos. 98-77301, 98-77302, and 98-77303. The very same evidence
proving Ochoas criminal liability for illegal recruitment also established her criminal liability for
estafa.
It is settled that a person may be charged and convicted separately of illegal recruitment
under Republic Act No. 8042, in relation to the Labor Code, and estafa under Article 315, paragraph
2(a) of the Revised Penal Code. We explicated in People v. Cortez and Yabut that:
In this jurisdiction, it is settled that a person who commits illegal recruitment may be
charged and convicted separately of illegal recruitment under the Labor Code and estafa under par.
2(a) of Art. 315 of the Revised Penal Code. The offense of illegal recruitment is malum prohibitum
where the criminal intent of the accused is not necessary for conviction, while estafa is malum in se
where the criminal intent of the accused is crucial for conviction. Conviction for offenses under the
Labor Code does not bar conviction for offenses punishable by other laws. Conversely, conviction
for estafa under par. 2(a) of Art. 315 of the Revised Penal Code does not bar a conviction for illegal
recruitment under the Labor Code. It follows that ones acquittal of the crime of estafa will not
necessarily result in his acquittal of the crime of illegal recruitment in large scale, and vice versa.
Page 4 of 80

Article 315, paragraph 2(a) of the Revised Penal Code defines estafa as:
Art. 315. Swindling (estafa). - Any person who shall defraud another by any of the means
mentioned hereinbelow x x x:
xxxx
2. By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of the fraud:
(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications,
property, credit, agency, business or imaginary transactions; or by means of other similar deceits.
The elements of estafa are: (a) that the accused defrauded another by abuse of confidence or by
means of deceit, and (b) that damage or prejudice capable of pecuniary estimation is caused to the
offended party or third person.
Both elements are present in Criminal Case Nos. 98-77301, 98-77302, and 98-77303.
Ochoas deceit was evident in her false representation to private complainants Gubat, Cesar, and
Agustin that she possessed the authority and capability to send said private complainants to
Taiwan/Saudi Arabia for employment as early as one to two weeks from completion of the
requirements, among which were the payment of placement fees and submission of a medical
examination report. Ochoa promised that there were already existing job vacancies overseas for
private complainants, even quoting the corresponding salaries. Ochoa carried on the deceit by
receiving application documents from the private complainants, accompanying them to the clinic
for medical examination, and/or making them go to the offices of certain recruitment/placement
agencies to which Ochoa had actually no connection at all. Clearly deceived by Ochoas words and
actions, private complainants Gubat, Cesar, and Aquino were persuaded to hand over their money
to Ochoa to pay for their placement and medical fees. Sadly, private complainants Gubat, Cesar, and
Aquino were never able to leave for work abroad, nor recover their money.
OVERSEAS EMPLOYMENT
SANTOSA B. DATUMAN vs. FIRST COSMOPOLITAN MANPOWER AND
PROMOTION SERVICES, INC.
G.R. No. 156029, November 14, 2008, J. De Castro
The subsequently executed side agreement of an overseas contract worker with her foreign
employer which reduced his salary below the amount approved by the POEA is void because it is
against our existing laws, morals and public policy. The said side agreement cannot supersede the
terms of the standard employment contract approved by the POEA. Consequently, the solidary liability
of respondent with petitioners foreign employer for the money claims continues although she was
forced to sign another contract. It is the terms of the original POEA-approved employment contract
that shall govern the relationship of petitioner with the respondent recruitment agency and the
foreign employer.
Facts:
Page 5 of 80

Respondent First Cosmopolitan Manpower & Promotion Services, Inc. recruited petitioner
Santosa B. Datuman to work in Bahrain as Saleslady with a basic monthly salary of US$370.00 for a
period of one (1) year. On April 17, 1989, petitioner was deployed however, her employer took her
passport and instead of working as a saleslady, she was forced to work as a domestic helper with a
salary of Forty Bahrain Dinar (BD40.00), equivalent only to US$100.00.
On September 1, 1989, her employer compelled her to sign another contract, transferring
her to another employer as housemaid with a salary of BD40.00 for the duration of two (2)
years. She continued working against her will. Worse, she even worked without compensation from
September 1991 to April 1993. In May 1993, she was able to finally return to
the Philippines through the help of the Bahrain Passport and Immigration Department.
In May 1995, petitioner filed a complaint before the POEA Adjudication Office against
respondent for underpayment and non-payment of salary, vacation leave pay and refund of her
plane fare. Respondent countered that petitioner actually agreed to work in Bahrain as a housemaid
for one (1) year because it was the only position available then. However, since such position was
not yet allowed by the POEA at that time, they mutually agreed to submit the contract to the POEA
indicating petitioners position as saleslady. Respondent raised the defense of prescription of cause
of action since the claim was filed beyond the three (3)-year period from the time the right accrued,
reckoned from either 1990 or 1991.
The Labor Arbiter rendered a decision finding respondent liable for violating the terms of
the employment contract and ordered to pay the petitioner US$4,050.00 representing her salary
differentials. On appeal, the NLRC affirmed the decision but reduced the award of salary
differentials to US$2,970.00 and held that the claims for salary differentials accruing earlier than
April of 1993 had already prescribed since the complainant had filed her complaint on May 31,
1995. Upon elevation to CA, the CA reversed the Labor Arbiter and NLRC and ruled that all of
petitioners monetary claims have prescribed pursuant to Article 291 of the Labor Code. Further, it
ruled that when the NLRC decreed that the money claims accruing before April 1993 as having
prescribed, it has no more jurisdiction to hold respondent for salary differentials after that period.
The local agency is liable only for all the claims in connection with the implementation of the first
contract.
Issue:
Whether or not respondent liable for petitioners money claims pursuant to their Contract
of Employment.
Ruling:
Yes, respondent is liable.
Private employment agencies are held jointly and severally liable with the foreign-based
employer for any violation of the recruitment agreement or contract of employment. The Court did
not agree with the view of the CA that the solidary liability of respondent extends only to the first
contract (i.e. the original, POEA-approved contract which had a term of until April 1990). The
signing of the substitute contracts with the foreign employer/principal before the expiration of the
POEA-approved contract and any continuation of petitioners employment beyond the original oneyear term, against the will of petitioner, are continuing breaches of the original POEA-approved
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contract. The diminution in the salary of petitioner from US$370.00 to US$100 (BD 40.00) per
month is void for violating the POEA-approved contract which set the minimum standards, terms,
and conditions of her employment.
The three-year prescriptive period should be not reckoned from September 1, 1989 when
petitioner was forced to sign another contract against her will as declared by the CA. The right to
claim unpaid salaries (or in this case, unpaid salary differentials) accrue as they fall due. Thus,
petitioners cause of action to claim salary differential for October 1989 only accrued after she had
rendered service for that month (or at the end of October 1989). Her right to claim salary
differential for November 1989 only accrued at the end of November 1989, and so on and so forth.
To determine for which months petitioners right to claim salary differentials has not prescribed, we
must count three years prior to the filing of the complaint on May 31, 1995. Thus, only claims
accruing prior to May 31, 1992 have prescribed when the complaint was filed on May 31,
1995. Petitioner is entitled to her claims for salary differentials for the period May 31, 1992 to April
1993, or approximately eleven (11) months. The NLRC correctly computed the salary differential
due to petitioner at US$2,970.00 (US$370.00 as approved salary rate US$100.00 as salary received
= US$290 as underpaid salary per month x 11 months). However, it should be for the period May
31, 1992 to April 1993 and not May 1993 to April 1994 as erroneously stated in the NLRCs
Decision.
LABOR STANDARDS
WAGES (Non-Diminution of Benefits)
METROPOLITAN BANK AND TRUST COMPANY vs. NATIONAL LABOR RELATIONS
COMMISSION, FELIPE E. PATAG AND BIENVENIDO C. FLORA
G.R. No. 152928, June 18, 2009, J. Leonardo De-Castro
It is a jurisprudential rule that where there is an established employer practice of regularly,
knowingly and voluntarily granting benefits to employees over a significant period of time, despite the
lack of a legal or contractual obligation on the part of the employer to do so, the grant of such benefits
ripens into a vested right of the employees and can no longer be unilaterally reduced or withdrawn by
the employer.
Facts:
Respondents Felipe Patag and Bienvenido Flora were former employees of petitioner
Metropolitan Bank and Trust Company. Both of them availed of the banks compulsory retirement
plan in accordance with the 1995 Officers Benefits Memorandum. At the time of their retirement,
both of them received their respective retirement benefits computed at 185% of their gross
monthly salary for every year of service as provided under the said 1995 Memorandum.
Meanwhile, early in 1998, Collective Bargaining Agreement negotiations were on-going between
Metrobank and its rank and file employees for the period 1998-2000 and was later on signed. Both
Patag and Flora wrote letters to Metrobank requesting the bank to use as basis in the computation
of their retirement benefits the increased rate of 200% as embodied in the just concluded CBA
between the bank and its rank and file employees but the latter denied their requests. Records
show that since the 1986-1988 CBA, and continuing with each CBA concluded thereafter with its
rank and file employees, Metrobank would issue a Memorandum granting similar or better benefits
Page 7 of 80

to its managerial employees or officers, retroactive to January 1st of the first year of effectivity of
the CBA. When the 1998-2000 CBA was approved, Metrobank, in line with its past practice, issued
on June 10, 1998, a Memorandum. Pertinently, the compulsory retirement benefit for officers was
increased from 185% to 200% effective January 1, 1998, but with the condition that the benefits
shall only be extended to those who remain in service as of June 15, 1998. Respondents Patag and
Flora sought reconsideration of abovementioned conditions but the same was once again denied
by Metrobank hence this present case.
Issue:
Whether respondents can still recover higher benefits under the 1998 Officers Benefits
Memorandum despite the fact that they have compulsorily retired prior to the issuance of said
memorandum and did not meet the condition therein requiring them to be employed as of June 15,
1998.
Ruling:
Yes, they can.
It appears from the facts that there was an established company practice or policy of
granting improved benefits to its officers effective January 1 of the year and without any condition
that the officers should remain employees of Metrobank as of a certain date. For over a decade,
Metrobank has consistently, deliberately and voluntarily granted improved benefits to its officers,
after the signing of each CBA with its rank and file employees, retroactive to January 1st of the same
year as the grant of improved benefits and without the condition that the officers should remain
employees as of a certain date. This undeniably indicates a unilateral and voluntary act on
Metrobanks part, to give said benefits to its officers, knowing that such act was not required by law
or the company retirement plan. Such voluntary act cannot be unilaterally withdrawn or
diminished by the employer without violating the spirit and intent of Art. 100 of the Labor Code, to
wit:
Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book
shall be construed to eliminate or in any way diminish supplements, or other employee
benefits being enjoyed at the time of promulgation of this Code.
Ordinarily, an employee would have no right to demand benefits that the employer was not
obligated by law or contract to give. However, it is the jurisprudential rule that where there is an
established employer practice of regularly, knowingly and voluntarily granting benefits to
employees over a significant period of time, despite the lack of a legal or contractual obligation on
the part of the employer to do so, the grant of such benefits ripens into a vested right of the
employees and can no longer be unilaterally reduced or withdrawn by the employer.
DISABILITY BENEFITS
MAGSAYSAY MARITIME CORP. and/or CONRADO N. DELA CRUZ and ODF JELL ASA vs. JAIME
M. VELASQUEZ and THE HONORABLE COURT OF APPEALS
G.R. No. 179802, November 14, 2008, J. Leonardo-De Castro
Page 8 of 80

Respondents disability can only be assessed by the company-designated physician. If the
company-designated physician declares him fit to work, then the seaman is bound by such declaration.
In order to claim disability benefits under the Standard Employment Contract, it is the companydesignated physician who must proclaim that the seaman suffered a permanent disability, whether
total or partial, due to either injury or illness, during the term of the latters employment.
Facts:
Respondent Jaime M. Velasquez was hired by petitioner Magsaysay Maritime Corporation as
second cook for its foreign principal, co-petitioner ODF Jell ASA. While on duty as second cook on
board a vessel, respondent suffered high fever and was unable to work. He took fever relieving
medicine but his condition worsened. By the fourth day, his body temperature reached 40.9C. His
extremities were swollen and he could not walk. Respondent was brought to a hospital
in Singapore where he was confined from August 12 to October 13, 2003. Thereafter, he was
repatriated to the Philippines.
Respondent alleged that upon his repatriation, he was not confined to St.
Lukes Medical Center as he expected. He claimed that he was compelled to seek medical treatment
from an independent doctor. He consulted a certain Dr. Efren Vicaldo who concluded that
respondent was unfit to resume work as seaman in any capacity. Hence, respondent filed a claim for
disability benefits, illness allowance/ reimbursement of medical expenses, damages and attorneys
fees but petitioners refused to pay. Petitioners, on the other hand, maintained that upon
respondents repatriation, he was immediately referred to a company designated physician for
further medical care and treatment; that he was under the care of said physician for three (3)
months; that he was admitted and confined at St. Lukes Medical Center from October 13, 2003 to
November 11, 2003; that progress reports on his recovery have been issued; that by January 5,
2004, respondent was declared as cleared to work resumption as seafarer; and that petitioners
were the ones who shouldered respondents hospitalization expenses.
The Labor Arbiter rendered a decision in favor of respondent. Petitioners filed an appeal
with the NLRC which rendered a decision reversing that of the Labor Arbiter and dismissed
respondents complaint for lack of merit. Respondent elevated the matter to the CA via petition for
certiorari. The CA rendered a decision setting aside the decision of the NLRC and reinstating that of
the labor arbiter. It upheld the findings of respondents private physician rather than the findings of
the company-designated physician.
Issue:
Whether or not the CA erred in upholding the findings of the private physician rather than
the company-designated physician.
Ruling:
The POEA standard contract is clear in its provisions when it provided who should
determine the disability grading or fitness to work of seafarers. The POEA contract recognizes only
the disability grading provided by the company-designated physicians. Section 20 B.3 of the POEA
contract provides:
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3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to
sickness allowance equivalent to his basic wage until he is declared fit to work or
the degree of permanent disability has been assessed by the company-designated
physician but in no case shall exceed one hundred twenty (120) days.
The POEA Contract, of which the parties are both signatories, is the law between them and
as such, its provisions bind both of them. Thus, the parties are both bound by the provisions of the
POEA Contract which declares that the degree of disability or fitness to work of a seafarer should be
assessed by the company-designated physician. Jurisprudence is replete with pronouncements that
it is the company-designated physicians findings which should form the basis of any disability
claim of the seafarer. In this particular case, respondent refused to accept the assessment made by
the company-designated physician that he is fit to work. It is beyond cavil that it is the companydesignated physician who is entrusted with the task of assessing the seamans disability.
The company-designated physician cleared respondent for work resumption upon finding
that his infection has subsided after successful medication. We agree with the NLRC that the doctor
more qualified to assess the disability grade of the respondent seaman is the doctor who regularly
monitored and treated him. The company-designated physician possessed personal knowledge of
the actual condition of respondent. Since the company-designated physician in this case deemed the
respondent as fit to work, then such declaration should be given credence, considering the amount
of time and effort the company doctor gave to monitoring and treating respondents condition. It is
undisputed that the recommendation of Dr. Vicaldo was based on a single medical report which
outlined the alleged findings and medical history of respondent despite the fact that Dr. Vicaldo
treated or examined respondent only once. On the other hand, the company-designated physician
outlined the progress of respondents successful treatment over a period of several months in
several reports, as can be gleaned from the record. As between the findings of the companydesignated physician (Dr. Alegre) and the physician appointed by respondent (Dr. Vicaldo), the
former deserves to be given greater evidentiary weight.
PHILASIA SHIPPING AGENCY CORPORATION AND/OR INTERMODAL SHIPPING, INC. vs.
ANDRES G. TOMACRUZ
G.R. No. 181180, August 15, 2012, J. De Castro
The petitioners are mistaken in their notion that only the POEA SEC should be considered in
resolving the issue involving a seafarer. The applicability of the Labor Code provisions on permanent
disability, particularly Article 192(c)(1), to seafarers, is already a settled matter. Section 29 of the
1996 POEA Standard Employment Contract itself provides that "all rights and obligations of the
parties to the Contract, including the annexes thereof, shall be governed by the laws of the Republic of
the Philippines, international conventions, treaties and covenants where the Philippines is a
signatory." Even without this provision, a contract of labor is so impressed with public interest that the
New Civil Code expressly subjects it to the "special laws on labor unions, collective bargaining, strikes
and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects."
Facts:
Andres G. Tomacruz (Tomacruz) was a seafarer, whose services were engaged by PHILASIA
Shipping Agency Corp., (PHILASIA) on behalf of Intermodal Shipping Inc. (petitioners) as Oiler #1
on board the vessel M/V Saligna. A total of five Philippine Overseas Employment Administration
(POEA) Contracts of Employment were completed by Tomazruz for the petitioners.For all five
Page 10 of 80

contracts, Tomacruz was required to undergo a pre-employment medical examination and obtain a
"fit to work" rating before he could be deployed.
Having been issued a clean bill of health, Tomacruz boarded M/V Saligna performed his
duties without any incident. However, during the term of his last contract, Tomacruz noticed blood
in his urine. Tomacruz immediately reported this to the Ship Captain. Eventually, Tomacruz was
repatriated to the Philippines and referred to Dr. Nicomedes Cruz, the company-designated
physician. On July 25, 2003, Dr. Cruz declared Tomacruz fit to work despite a showing that there
were stones about 0.4 cm in size found in both his kidneys, and there was the possibility of
hematoma. Doubting the veracity of his "fit to work" declaration, he sought the medical opinion of
another physician, Dr. Vicaldo, who found out that he is unfit to resume work as seaman in any
capacity. Months later, or on November 3, 2003, Tomacruz filed a complaint for disability benefits,
sickness wages, damages, and attorneys fees against the petitioners before the Arbitration Branch
of the NLRC.
The Labor Arbiter Virginia T. Luya-Azarraga dismissed the complaint. The Labor Arbiter
said that the company-designated physicians assessment of Tomacruzs medical condition should
be more accurate than that of the subsequent doctors second medical opinion, which was not
supported by sufficient evidence to warrant consideration. Aggrieved, Tomacruz appealed this
decision to the NLRC. Not impressed, the NLRC agreed with the Labor Arbiter and declared that the
opinion of the company-designated physician, as the one with the sole accreditation by law to
determine the fitness or unfitness of a seafarer under POEA SEC, should prevail over the second
opinion of Tomacruzs doctor of choice. Via a Rule 65 petition for certiorari, Tomacruz elevated his
case to the Court of Appeals. Not agreeing with the Labor Arbiter and the NLRC, the Court of
Appeals, on June 16, 2007, granted the petition, on the premise that Tomacruz suffered from
permanent total disability.
Issue:
1. Whether or not the CA erred in granting the Rule 65 petition filed by Tomacruz before it
since the NLRC committed no grave abuse of discretion and the petition merely raised
possible errors of law and misappreciation of evidence by the NLRC in denying the claim.
2. Whether or not the CA is correct in awarding disability benefits to Tomacruz on the basis of
the Labor Code provisions on disability, and despite the company-designated physicians
declaration of his fitness to work.
Ruling:
1. No.
The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition
for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National
Labor Relations Commission. This Court held that the proper vehicle for such review was a Special
Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this action should be filed in
the Court of Appeals in strict observance of the doctrine of the hierarchy of courts. A perusal of the
challenged decision before us will reveal that the Court of Appeals actually sustained the factual
findings of the tribunals below. However, it found itself unable to affirm their rulings, in light of the
applicable law on the matter. Thus, it was compelled to go beyond the issue of grave abuse of
discretion.
Page 11 of 80
2. Yes.
The petitioners are mistaken in their notion that only the POEA SEC should be considered in
resolving the issue at hand. The applicability of the Labor Code provisions on permanent disability,
particularly Article 192(c)(1), to seafarers, is already a settled matter. Section 29 of the 1996 POEA
Standard Employment Contract itself provides that "all rights and obligations of the parties to the
Contract, including the annexes thereof, shall be governed by the laws of the Republic of the
Philippines, international conventions, treaties and covenants where the Philippines is a signatory."
Even without this provision, a contract of labor is so impressed with public interest that the New
Civil Code expressly subjects it to the "special laws on labor unions, collective bargaining, strikes
and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects."
Elucidating on the combination of the Labor Code provisions and the POEA SEC, this Court,
in Vergara Case said:
As these provisions operate, the seafarer, upon sign-off from his vessel, must report to the
company-designated physician within three (3) days from arrival for diagnosis and
treatment. For the duration of the treatment but in no case to exceed 120 days, the seaman
is on temporary total disability as he is totally unable to work. He receives his basic wage
during this period until he is declared fit to work or his temporary disability is
acknowledged by the company to be permanent, either partially or totally, as his condition
is defined under the POEA Standard Employment Contract and by applicable Philippine
laws. If the 120 days initial period exceeded and no such declaration is made because the
seafarer requires further medical attention, then the temporary total disability period may
be extended up to a maximum of 240 days, subject to the right of the employer to declare
within this period that a permanent partial or total disability already exists. The seaman
may of course also be declared fit to work at any time such declaration is justified by his
medical condition.
Now, a temporary total disability only becomes permanent when so declared by the
company-designated physician within the periods he is allowed to do so as stated above, or upon
the expiration of the maximum 240-day medical treatment period without a declaration of either
fitness to work or the existence of a permanent disability. Applying the foregoing considerations in
the case at bar, we affirm the Court of Appeals ruling. While the Court of Appeals held that
Tomacruzs disability was permanent since he was unable to perform his job for more than 120
days, this Court has clarified in Vergara and likewise in Magsaysay, that this "temporary total
disability period may be extended up to a maximum of 240 days." This clarification, however, does
not change the judgment. The sequence of events is undisputed and uncontroverted. From the time
Tomacruz was repatriated on November 18, 2002, he submitted himself to the care and treatment
of the company-designated physician. When the company-designated physician made a declaration
on July 25, 2003 that Tomacruz was already fit to work, 249 days had already lapsed from the time
he was repatriated. As such, his temporary total disability should be deemed total and permanent,
pursuant to Article 192 (c)(1) of the Labor Code and its implementing rule and thus clearly be
entitled to disability benefits.
On the contention that the opinion of Tomacruzs doctor of choice should not prevail over
that of the company-designated physician, this Court deems this issue now irrelevant as Tomacruzs
entitlement to disability benefits had been decided on the bases of law and contract, and not on the
medical findings of either doctor.
Page 12 of 80
FAIR SHIPPING CORP., and/or KOHYU MARINE CO., LTD. vs. JOSELITO T. MEDEL
The statement of Dr. Ong was not a categorical attestation as to the actual fitness of Medel to
resume his occupation as a seafarer. Plainly, after Medel underwent cranioplasty to repair the fracture
in his skull, it is not farfetched to assume that he still needed additional time for his wound to heal and
to recuperate in order to restore himself to his former state of health. To our mind, the medical
certificate of Dr. Lim and not of Dr. Ong is the definitive declaration on the physical condition of Medel.
Unfortunately for petitioners, however, this declaration was issued beyond the 240-day period
pursuant to Section 2 in Rule X of the Implementing Rules of Book IV of the Labor Code (Amended
Rules on Employees Compensation). Hence, Medel has right to the disability benefits.
Facts:
Medel was hired by petitioner Fair Shipping Corporation, for and in behalf of its foreign
principal petitioner Kohyu Marine Co., Ltd. Medel was employed as an Able Seaman of the vessel
M/V Optima for a period of 12 months. Medel boarded subsequently the M/V Optima and
commenced the performance of his duties therein. On March 1, 1999, while the M/V Optima was
docked in Ho Chi Minh City, Vietnam, Medel figured in an unfortunate accident. During the conduct
of emergency drills aboard the vessel, one of Medels co-workers lost control of the manual handle
of a lifeboat, causing the same to turn uncontrollably and it struck Medel in the forehead. Medel was
immediately brought to the Choray Hospital in Ho Chi Minh City on said date.
After undergoing surgical procedure to treat his fractured skull, Medel was discharged from
the hospital. Medels attending physician then recommended his "repatriation for further treatment
at the patients request" and that he should "see a neurosurgeon and an ophthalmologist in the
Philippines." Medel was repatriated to the Philippines on March 13, 1999 and was admitted to the
Metropolitan Hospital on the said date. In a letter dated March 16, 1999, Dr. Robert D. Lim, the
company-designated physician and Medical Coordinator of the Metropolitan Hospital, informed
petitioners that Medel was seen by a neurologist, an ENT specialist, and an ophthalmologist. Medel
subsequently underwent multiple medical operations from April to October 1999. On October 25,
1999, Dr. Daniel L. Ong, a neurologist at the Metropolitan Hospital, sent a report to Dr. Lim stating
that patient can resume sea duties without any disability. Months after, in a letter dated February
15, 2000, Dr. Lim also informed petitioners of Medels condition stating that he was pronounced fit
to resume sea duties as of february 11, 2000.
In the interregnum, before Medel actually underwent the procedure of cranioplasty, he
claimed from petitioners the payment of permanent total disability benefits. Petitioners, however,
refused to grant the same. Consequently, Medel filed before the Arbitration Branch of the NLRC a
complaint against petitioners for disability benefits, medical expenses, loss of earning capacity,
damages and attorneys fees. Medel claimed entitlement to permanent total disability benefits as
more than 120 days had passed since he was repatriated for medical treatment but he was yet to be
declared fit to work or the degree of his disability determined by the company-designated
physician.
Moreover, petitioners also insist that there was no disability assessment from the companydesignated physician. On the contrary, Medel was even assessed to be physically fit to resume work.
Petitioners then faulted the courts for rejecting the certification of Dr. Ong that Medel was fit to
Page 13 of 80

resume sea duties. Petitioners insist that said doctor had personal knowledge of Medels condition,
as he was a member of a team of physicians tasked to treat Medel. Petitioners maintain that Medel
did not present evidence to prove his incapacity, which would entitle him to the disability benefits
that he sought.
Issue:
Whether or not Medel is entitled to permanent total disability benefits.
Ruling:
Yes.
With respect to the alleged earlier pronouncement of Dr. Ong as to the fitness of Medel for
sea duties, the Court is not thereby persuaded. To recall, the said pronouncement was made on
October 25, 1999 in a letter addressed to Dr. Lim after the cranioplasty of Medel was undertaken on
October 20, 1999. After explaining the delay in the conduct of the said procedure, Dr. Ong stated
that he "thinks patient can resume sea duties without any disability." The statement of Dr. Ong,
however, was not a categorical attestation as to the actual fitness of Medel to resume his occupation
as a seafarer. Plainly, after Medel underwent cranioplasty to repair the fracture in his skull, it is not
farfetched to assume that he still needed additional time for his wound to heal and to recuperate in
order to restore himself to his former state of health. In their Memorandum, petitioners even
acknowledged that despite the above opinion of Dr. Ong, Medel continued to avail of further
medical treatment and rehabilitation. Medel also had to be evaluated by specialists to assess his
condition. In their Memorandum, petitioners related that "ultimately, the company-designated
physicians declared that petitioner was 'fit to resume sea duties' by Medical Certificate dated 15
February 2000." The certificate signed by Dr. Lim pertinently stated that "MedeiJ was seen by om
neurologist and neuro-surgeon. His wound is healed. His perimetry result was given to our
neurologist and he opines that patient is now fit to work." The same certificate declared that
"Medel was pronounced fit to resume sea duties as of February 11, 2000." To our mind, the medical
certificate of Dr. Lim dated February 15, 2000 is the definitive declaration on the physical condition
of Medel. Unfortunately for petitioners, however, this declaration was issued beyond the 240-day
period pursuant to Section 2 in Rule X of the Implementing Rules of Book IV of the Labor Code
(Amended Rules on Employees Compensation). Hence, Medel has right to the disability benefits.
PACIFIC OCEAN MANNING, INC. and CELTIC PACIFIC SHIP MANAGEMENT CO., LTD.,
vs. BENJAMIN D. PENALES
G.R. No. 162809, September 5, 2012, J. Leonardo-De Castro
The initial treatment period of 120 days where the seaman is on temporary total disability as
he is totally unable to work making him entitled to basic wage during this period until he is declared
fit to work or his temporary disability is acknowledged by the company to be permanent, either
partially or totally, may be extended up to a maximum of 240 days under the conditions prescribed by
law, subject to the right of the employer to declare within this period that a permanent partial or total
disability already exists.
The provisions of the POEA SEC, the Labor Code, and its implementing rules and regulations,
are to be read hand in hand when determining the disability benefits due a seafarer.
Page 14 of 80

Facts:
Respondent Benjamin Penales is a seafarer and was contracted by petitioner and was
assigned to work on board the vessel, MV "Courage Venture". On or about August 2000, the vessel
"Courage Venture" went to the Port of Chennai, India. On its way to the designated port and while
preparing to moor, the vessel, through its line (rope) tied on the starboard, was pulled by tugboat
MV "Matchless." While awaiting further instructions, the rope rifted and directly recoiled in Penales
direction, hitting him severely in the chest, left arm and head. The impact caused him to miss his
balance, become unconscious and sustain a fracture on his left arm.
Respondent was brought to the National Hospital in India. After the operation, he was
signed off and repatriated to Manila and was referred to the Fatima Medical Clinic but failed to go
back to the clinic for the management of his injuries. Thereafter, he was referred to the Mary Chiles
General Hospital and finally to the Medical Center Manila for treatment and rehabilitation wherein
he continued treatment until January 26, 2001. rll
While still undergoing treatment, respondent filed a complaint before the NLRC. He alleged
that his accident disabled him from earning income as a seafarer, thus, he was entitled to disability
compensation and benefits, which the petitioner denied him without valid cause.
In her decision, the Labor Arbiter held that there is no dispute that Penales injury was
work-related and his treatment went beyond 120 days, which, under the Philippine Overseas
Employment Administration (POEA) Standard Employment Contract (SEC), entitled him to
disability benefits. The NLRC, however, remanded the case for further proceedings only in so far as
the determination of Penaless grade of disability.\Court of Appeals granted Penaless petition and
held that the NLRC abused its discretion.
Issue:
Whether or not the Appellate Court Disregarded The Terms And Conditions Of The POEA
Standard Employment Contract When It Rendered Petitioners Liable To Respondent For Disability
Benefits in light of the fact that he was neither declared fit to work nor given a disability grade
rating within the period allowed by the law.
Ruling: Petition is denied.
This Court finds petitioners to be mistaken in their notion that in determining the disability
benefits due a seafarer, only the POEA SEC, specifically its schedule of benefits, must be considered.
This Court notes that as of January 26, 2001, Penaless medical treatment had gone beyond the 120
days provided for in Section 20 B(6) of the POEA SEC. The provisions of the POEA SEC, the Labor
Code, and its implementing rules and regulations, are to be read hand in hand when determining
the disability benefits due a seafarer.
As these provisions operate, the seafarer, upon sign-off from his vessel, must report to the
company-designated physician within three (3) days from arrival for diagnosis and treatment. For
the duration of the treatment but in no case to exceed 120 days, the seaman is on temporary total
disability as he is totally unable to work. He receives his basic wage during this period until he is
declared fit to work or his temporary disability is acknowledged by the company to be permanent,
either partially or totally, as his condition is defined under the POEA Standard Employment
Page 15 of 80

Contract and by applicable Philippine laws. If the 120 days initial period is exceeded and no such
declaration is made because the seafarer requires further medical attention, then the temporary
total disability period may be extended up to a maximum of 240 days, subject to the right of the
employer to declare within this period that a permanent partial or total disability already exists.
The seaman may of course also be declared fit to work at any time such declaration is justified by
his medical condition.
Based on the foregoing, it is clear that the initial treatment period of 120 days may be
extended up to a maximum of 240 days under the conditions prescribed by law.
The records show that from the time respondent became injured on August 31, 2000, until
his last treatment on January 26, 2001, only 148 days had lapsed. While this might have exceeded
120 days, this was well within the 240-day maximum period for the company-designated physician
to either declare Petitioner fit to work or assign an impediment grade to his disability at that time.
It is worthy to note as well that when respondent filed a complaint before the Labor Arbiter on
October 2, 2000, not only was he remiss in regularly attending his scheduled treatment sessions,
but only 32 days had passed from the time of his injury.
The Court notes that under POEA SEC, the seafarer has the duty to faithfully comply with
and observe the terms and conditions of the contract, including the provisions governing the
procedure for claiming disability benefits.
When respondent filed his complaint and refused to undergo further medical treatment, he
prevented the company-designated physician from fully determining his fitness to work within the
time allowed by the POEA SEC and by law. A temporary total disability only becomes permanent
when so declared by the company[-designated] physician within the periods he is allowed to do so,
or upon the expiration of the maximum 240-day medical treatment period without a declaration of
either fitness to work or the existence of a permanent disability.
Since the Labor Arbiter, the NLRC, and the Court of Appeals all found respondent to be
disabled, this fact is now binding on the petitioners and this Court. The question therefore is the
amount of disability benefits to be awarded to Petitioner. To settle this, Penales disability at the
time of his last treatment should be determined in accordance with Section 20(B) of the POEA.
RETIREMENT BENEFITS
FLAVIO S. SUAREZ, JR., RENATO A. DE ASIS, FRANCISCO G. ADORABLE, et al.
vs. NATIONAL STEEL CORPORATION
G.R. No. 150180, October 17, 2008, J. Leonardo-De Castro
A perusal of Article XIV of the CBA readily shows that retirement benefits shall be gran-ted
only to those employees who, after rendering at least ten (10) years of continuous services, would
retire upon reaching the mandatory retirement age, or would avail of optional voluntary retirement.
Nowhere can it be deduced from the CBA that those employees whose employment was terminated
through one of the authorized causes are entitled to retirement benefits. In fact, Section 3 of the said
article specifically provides that retrenched employees shall be given two (2) months pay for every
year of service. Section 3 shows the intention of the parties to exclude retrenched employees, like
Page 16 of 80

herein petitioners, from receiving retirement benefits under the existing retirement plan as set forth in
Section.
Facts:
Respondent National Steel Corporation experienced financial reverses sometime in 1994,
which culminated in retrenchment affecting herein petitioners. Each of the petitioners received a
separation package consisting 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. Thereafter, petitioners executed and signed release and quitclaim
documents, written in English and translated in the Visayan dialect, which were duly acknowledged
before a notary public. When the new CBA took effect, petitioners were also given their salary
differentials, and for which they executed and signed another release and quitclaim.
In 1997, petitioners wrote National Steel claiming that they were entitled to retirement
benefits under the CBA. National Steel rejected their claims prompting them to file a labor case. The
Labor Arbiter found no merit to the complaint of petitioners while NLRC reversed the same and
thus upholding the provision of retirement benefits to the retrenched employees. The Court of
Appeals held that petitioners were no longer entitled to such benefits considering that they
accepted separation pay and validly signed waivers.
Issue:
Whether or not the petitioners are entitled to retirement benefits under the CBA in spite
their receipt of separation pay.
Ruling:
No, the petitioners can no longer claim retirement benefits.
In past precedents such as Aquino vs. NLRC, University of the East vs. Minister of Labor, and
Batangas Laguna Tayabas Bus Co. vs. Court of Appeals, it is made evident that the right to recover
from the employer both his separation pay and retirement benefits hinges on what is provided in
the retirement plan and the CBA. Accordingly, the retirement plan of National Steel provides:
X.
OTHER GENERAL PROVISIONS
xxx xxx xxx

E. Resignations and Terminations. No retirement benefits are payable in instances of
resignations or terminations for cause; xxx.
Patently, this provision under the retirement plan explicitly prohibits the recovery of
retirement benefit in cases of terminations for cause and undeniably a valid retrenchment is one
the authorized causes under Article 283 of the Labor Code. Contrary to the assertion of petitioners,
it must be clarified that this provision under the CBA does not distinguish between just and
authorized causes. Terminations covered by Articles 282 to 284 are all terminations by the
employer for a lawful cause. In the past, the Court has had occasion to use the term dismissal for
cause to refer to dismissals for just and/or authorized cause.
Page 17 of 80
Apart from the above-quoted provision, the CBA itself controverts the claim of petitionners. Section 3, Article XIV of the CBA states that Employees laid-off by the Company pursuant to a
retrenchment program shall be given two (2) months base pay per year of service credits.
A perusal of Article XIV of the CBA readily shows that retirement benefits shall be gran-ted
only to those employees who, after rendering at least ten (10) years of continuous services, would
retire upon reaching the mandatory retirement age, or would avail of optional voluntary
retirement. Nowhere can it be deduced from the CBA that those employees whose employment was
terminated through one of the authorized causes are entitled to retirement benefits. In fact, Section
3 of the said article specifically provides that retrenched employees shall be given two (2) months
pay for every year of service. Section 3 shows the intention of the parties to exclude retrenched
employees, like herein petitioners, from receiving retirement benefits under the existing retirement
plan as set forth in Section.
TERMINATION OF EMPLOYMENT
EMPLOYER-EMPLOYEE RELATIONSHIP
ILIGAN CEMENT CORPORATION vs. ILIASCOR EMPLOYEES AND WORKERS UNION- SOUTHERN
PHILIPPINES FEDERATION OF LABOR (IEWU-SPFL), AND ITS OFFICERS AND MEMBERS
G.R. No. 158956, April 24, 2009, J. Leonardo- De Castro
The law makes the principal responsible to the employees of the labor-only contractor as if
the principal itself directly hired or employed the employees.
Facts:
Petitioner Iligan Cement Corporation, is a corporation duly organized and existing under
the laws of the Philippines with plant offices at Kiwalan, Iligan City. Iligan Industrial and Agency
Services Corporation, is the accredited job contractor of petitioner which provided stevedoring and
arrastre services to the latter since its operations in the 1970s at its private pier. Vedali General
Services is an accredited service agency which provided general services to petitioners various
departments.
On November 11, 1999, Blue Circle Philippines, Inc. took over the management of ICCs
business, and decided to bid out the services at petitioners private pier. ILIASCOR lost the bidding
to Luzon Visayas Mindanao Arrastre and Stevedoring, Inc. thereby necessitating it to pay
respondents their separation pay of half-month pay for every year of service, contrary to the
stipulation in the Collective Bargaining Agreement. Meanwhile, the contract between LVMASI and
ICC was not perfected. As a stopgap measure, it issued a service order to Vedali to field stevedores
including respondents of the case. On November 15, 2000, ICC entered into a stevedoring and
arrastre contract with Northern Mindanao Industrial and Port Services Corporation and the latter
thereafter took over the stevedoring duties of individual respondents. Hence, respondents filed a
complaint with the NLRC for violation of Article 246 of the Labor Code, illegal dismissal, with prayer
for preliminary injunction, damages and attorneys fees. To counter respondents claim, petitioner
maintained that it never employed the individual respondents and that it only contracted Vedali to
render services at its pier so as not to hamper its activities while it was negotiating with another
Page 18 of 80

contractor.
Issue:
Whether the ICC is the employer of the individual respondents.
Ruling:
Yes, it is.
Vedali is not an independent contractor, it is a labor-only contractor. Labor-only
contracting, which is prohibited, is an arrangement where the contractor or subcontractor merely
recruits, supplies or places workers to perform a job, work or service for a principal. In labor-only
contracting, the following elements are present: (a) The contractor or subcontractor does not have
substantial capital or investment to actually perform the job, work or service under its own account
and responsibility; and b) The employees recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly related to the main business of the
principal. Under this scheme, the laboronly contractor is the agent of the principal. The law
makes the principal responsible to the employees of the laboronly contractor as if the principal
itself directly hired or employed the employees. Hence, ICC and not Vedali, is the employer of
individual respondents. As such, ICC has the burden of proving that the dismissal of petitioner was
for a cause allowed under the law and that petitioner was afforded procedural due process. Failing
to discharge such burden, ICC must be made liable to the respondents.
GMA NETWORK, INC.vs. CARLOS P. PABRIGA, GEOFFREY F. ARIAS, KIRBY N. CAMPO, ARNOLD
L. LAGAHIT, AND ARMANDO A. CATUBIG
G.R. No. 176419, November 27, 2013, J. Leonardo-de Castro
In order to safeguard Athe rights of workers against the arbitrary use of the word project to
prevent employees from attaining the status of regular employees, employers claiming that their
workers are project employees should not only prove that the duration and scope of the employment
was specified at the time they were engaged, but also that there was indeed a project. The project
could either be (1) 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; or (2) a particular job or undertaking that is not within the regular
business of the corporation. As it was with regard to the distinction between a regular and casual
employee, the purpose of this requirement is to delineate whether or not the employer is in constant
need of the services of the specified employee. If the particular job or undertaking is within the regular
or usual business of the employer company and it is not identifiably distinct or separate from the other
undertakings of the company, there is clearly a constant necessity for the performance of the task in
question, and therefore said job or undertaking should not be considered a project.
Facts:
Respondents were television technicians of petitioner GMA Network, Inc. engaged by the
latter to perform the following activities: (1) manning of Technical Operations Center; (2) acting as
Transmitter/VTR men; (3) acting as Maintenance staff; and, (4) acting as Cameramen.
Page 19 of 80

On July 19, 1999, due to the miserable working conditions, respondents were forced to file a
complaint against petitioner before the National Labor Relations Commission (NLRC) Regional
Arbitration Branch No. VII of Cebu City.
On August 9, 1999, respondents were summoned to the office of petitioners Area Manager,
Mrs. Susan Alio, and they were made to explain why they filed the complaint. The next day,
respondents were barred from entering and reporting for work without any notice stating the
reasons therefor.
On August 13, 1999, respondents, through their counsel, wrote a letter to Mrs. Susan Alio,
requesting that they be recalled back to work.
On August 23, 1999, a reply letter from Mr. Bienvenido Bustria, petitioners head of
Personnel and Labor Relations Division, admitted the non-payment of benefits but did not mention
the request of respondents to be allowed to return to work.
On September 15, 1999, respondents sent another letter to Mr. Bustria, reiterating their
request to work but the same was totally ignored. Thus, on October 8, 1999, respondents filed an
amended complaint raising the following additional issues: 1) Unfair Labor Practice; 2) Illegal
dismissal; and 3) Damages and Attorneys fees.
On 23 September 1999, a mandatory conference was set to amicably settle the dispute
between the parties but to no avail. As a result, both of them were directed to file their respective
position papers.
The Labor Arbiter dismissed the complaint of respondents for illegal dismissal and unfair
labor practice, but held petitioner liable for 13th month pay.
Respondents, then, appealed to the National Labor Relations Commission (NLRC) which
reversed the Decision of the Labor Arbiter. It held that: (a) respondents were regular employees
with respect to the particular activity to which they were assigned, until it ceased to exist and as
such, they are entitled to payment of separation pay computed at one (1) month salary for every
year of service; (b) they are not entitled to overtime pay and holiday pay; and (c) they are entitled
to 13th month pay, night shift differential and service incentive leave pay. The NLRC also awarded,
without explanation, the respondents the attorneys fees of ten percent (10%) of all the
aforementioned awards.
Petitioner, hence, elevated the case to the Court of Appeals (CA) via a Petition for Certiorari
but the latter denied its petition for lack of merit; thus, the instant Petition for Review on Certiorari.
Petitioner posited that respondents employment was project employment and that they
were merely substitutes or what they call pinch-hitters (which means that they were employed to
take the place of regular employees of petitioner who were absent or on leave). As such, petitioner
claimed that respondents were not illegally dismissed and were, therefore, not entitled to
separation pay.
Meanwhile, the CA previously ruled that even assuming that respondents are project
employees, they would nevertheless have attained regular employment status because of their
continuous rehiring.
Page 20 of 80
In response, petitioner adverted to the fixed period allegedly designated in employment

contracts and reflected in vouchers and argued that respondents were fully aware and freely
entered into agreements to undertake a particular activity for a specific length of time. Hence, they
could not have attained regular status.
As regards night shift differential pay, petitioner claimed that its admission as to the
nonpayment thereof was qualified by its allegation that respondents are not entitled thereto.
Petitioner pointed out that respondents failed to specify the period when such benefits are due, and
did not present additional evidence before the NLRC and the CA.
Lastly, petitioner complained that the NLRC gravely erred in awarding attorneys fees to
respondents in the absence of justification on the part of NLRC.
Issues:
1. Are the respondents regular employees or project employees?
2. Are the respondents entitled to separation pay?
3. Are the respondents entitled to night shift differential pay?
Ruling:
1. Respondents are regular employees.
Article 280 of the Labor Code provides that, regardless of any contract expressing
otherwise, 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.
In ALU-TUCP vs. National Labor Relations Commission, the Supreme Court clarified the term
"project" in the test for determining whether an employee is a regular or project employee. It said
that project could either be: (1) 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; or (2) a particular job or undertaking that is not within the
regular business of the corporation but, also, identifiably separate and distinct from the ordinary or
regular business operations of the employer.
In the instant case, private respondents jobs and undertakings were clearly within the
regular or usual business of the petitioner and were not identifiably distinct or separate from the
other undertakings of the latter. The manning of the operations center to air commercials, acting as
transmitter/VTR men, maintaining the equipment, and acting as cameramen are certainly not
undertakings separate or distinct from the business of a broadcasting company.
Petitioners allegation that respondents were merely substitutes or pinch-hitters does not
change the fact that their jobs cannot be considered projects within the purview of the law.
Page 21 of 80

Meanwhile, in order to safeguard the rights of workers against the arbitrary use of the word
"project" to prevent employees from attaining the status of regular employees, employers claiming
that their workers are project employees should not only prove that the duration and scope of the
employment was specified at the time they were engaged, but also that there was indeed a project
by reporting the completion of its projects and the dismissal of respondents in its finished projects.
In ABS-CBN Broadcasting Corporation vs. Nazareno, the Court held that the employers
failure to report the termination of employees upon project completion to the DOLE Regional Office,
having jurisdiction over the workplace, within the period prescribed militates against the
employers claim of project employment.
Here, as correctly observed by the CA, nowhere in the records was there any showing that
petitioner reported the completion of its projects and the dismissal of private respondents in its
finished projects to the nearest Public Employment Office as per Policy Instruction No. 2015 of the
Department of Labor and Employment [DOLE].
Nevertheless, even assuming that respondents are project employees, they would have
already attained regular employment status because of their continuous rehiring. In one case, the
Court ruled that a project employee or a member of a work pool may acquire the status of a regular
employee when the following concur:
1) there is a continuous rehiring of project employees even after cessation of a project; and
2) the tasks performed by the alleged project employee are vital, necessary and
indispensable to the usual business or trade of the employer.
In the instant case, and, as previously stated, the tasks they performed were vital, necessary
and indispensable to the usual business of the petitioner.
From the foregoing, respondents cannot be considered as project employees but regular
employees of petitioner.
Fixed-term employment, although not expressly mentioned in the Labor Code, is described
in Brent School, Inc. v. Zamora, as an employment contract which specifies that employment will last
only for a definite period. The decisive determinant, then, in fixed-term employment is not the
activity that the employee is called upon to perform but the day certain agreed upon by the parties
for the commencement and termination of the employment relationship.
In the same case, the Court held that such contract is not per se illegal or against public
policy. But, where, from the circumstances, it is apparent that the periods in fixed-term
employments have been imposed to preclude acquisition of tenurial security by the employee, they
should be struck down as contrary to public policy or morals.
On the other hand, the Court laid down indications or criteria under which "fixed-term
employment" cannot be said to be in circumvention of the law on security of tenure, namely:
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.
Page 22 of 80

In connection to this, it is the employer which must satisfactorily show that it was not in a
dominant position of advantage in dealing with its prospective employee.
In the case at bar, the Court found it unjustifiable to allow petitioner to hire and rehire
workers on fixed terms, ad infinitum, depending upon its needs, never attaining regular
employment status. Respondents were repeatedly rehired in several fixed-term contracts from
1996 to 1999. Petitioner presented cash disbursement vouchers signed by respondents, stating that
they were merely hired as pinch-hitters. It is, then, apparent that respondents were in no position
to refuse to sign these vouchers, as such refusal would entail not getting paid for their services. In
other words, respondents as "pinch-hitters" cannot be considered to be in equal footing as
petitioner in the negotiation of their employment contract.
Therefore, respondents should be considered to have eventually attained regular status
entitled to security of tenure.
2. Yes, petitioners are entitled to separation pay.
Under the Labor Code, regular employees who are dismissed without just cause are entitled
to reinstatement or, in lieu thereof, separation pay. Moreover, in illegal dismissal cases, the
employer has the burden of proving with clear, accurate, consistent, and convincing evidence that
the dismissal was valid.
In the instant case, having established that respondents were regular employees, the Court
held that they are entitled to security of tenure and therefore their services may be terminated only
for just or authorized causes. Since petitioner failed to prove any just or authorized cause for their
termination, the Court was constrained to affirm the findings of the NLRC and the Court of Appeals
that they were illegally dismissed.
And, since they were illegally dismissed, respondents are entitled to separation pay
equivalent to one (1) month pay for every year of service, in lieu of reinstatement as reinstatement
is no longer practicable because petitioner refused to accept respondents back to work. Allowing
respondents to return to their work might only subject them to further embarrassment,
humiliation, or even harassment.
3. Yes, respondents are entitled to night shift differential pay.
The Labor Code provides that every employee shall be paid not less than ten percent (10%)
of his regular wage for each hour of work performed between ten oclock in the evening and six
oclock in the morning.
Here, as employees of petitioner, respondents are entitled to the payment of this benefit in
accordance with the number of hours they worked from 10:00 p.m. to 6:00 a.m., if any.
Petitioners defense that respondents failure to specify the period when such benefits are
due and to present additional evidence before the NLRC and the CA militates against their
entitlement to night shift differential pay is untenable.
Page 23 of 80

In Dansart Security Force & Allied Services Company vs. Bagoy, the Court held that it is
entirely within the employer's power to present such employment records that should necessarily
be in their possession, and that failure to present such evidence must be taken against them.
As a matter of sound policy, an award of attorney's fees remains the exception rather than
the rule. They are not awarded every time a party wins a suit. Anent to this, the factual, legal or
equitable justification for the award must be set forth in the text of the decision. The matter of
attorney's fees cannot be touched once and only in the fallo of the decision; else, the award should
be thrown out for being speculative and conjectural.
In the case at bar, the factual basis for the award of attorney's fees was not discussed in the
text of NLRC Decision. Therefore, the Court was constrained to delete the same.
DISMISSAL FROM EMPLOYMENT
SAN MIGUEL CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION AND WILIAM L.
FRIEND JR.
G.R. No. 153983, May 26, 2009, J. Leonardo-De Castro
The right of an employer to dismiss an employee on account of loss of trust and confidence
must not be exercised whimsically and the employer must clearly and convincingly prove by
substantial evidence the facts and incidents upon which loss of confidence in the employee may be
fairly made to rest; otherwise, the latters dismissal will be rendered illegal.
Facts:
Respondent William L. Friend, Jr. was a route salesman of petitioner San Miguel Corporation
Bacoor Sales Office for ten years with a monthly salary of P30,000.00. On April 3, 1995, Rene de
Jesus, respondents supervisor, conducted an audit of his route on account of complaints of certain
customers for an alleged padding of their accounts in the total amount of P20, 540.00. After the
audit, the supervisor found reasonable ground to hold Friend liable for misappropriation of
company funds through falsification of private documents. On April 19, 1995, Friend was
summoned to SMCs Canlubang Bottling Plant for investigation. After the conduct of such
investigation, Friend received a notice of termination on October 3, 1995 for misappropriation of
company funds through falsification of company documents. Hence, this case for illegal suspension
and dismissal.
Issue:
Whether Friends act of paper renewals through padding of customers accounts warrants
termination.
Ruling:
No, it does not.
In termination cases, the employer bears the burden of proving that the dismissal of the
employee is for a just or an authorized cause. Failure to dispose of the burden would imply that the
dismissal is not lawful, and that the employee is entitled to reinstatement, back wages and accruing
Page 24 of 80

benefits. While loss of trust and confidence is by law a valid ground for dismissal, the Court has
ruled in a long line of jurisprudence that ordinary breach does not suffice.
While the paper renewal committed by Friend may be considered as falsification, such did
not amount to misappropriation that could justify outright dismissal for the first offense, as what
SMC did to respondent Friend. SMC utterly failed to establish that Friend or somebody pecuniarily
or materially benefited from the falsification through paper renewal committed by him that could
have warranted his dismissal for the first offense. Neither was there clear and convincing evidence
that SMC suffered any material loss by the Friends act of paper renewal. The penalty of dismissal is
too severe a penalty for the offense committed. Firstly, there is no showing that complainants
service record was replete with offenses. It appears that this is the first time he was charged of
violation of company rule. Secondly, there is no convincing evidence that he materially benefited
from the acts committed. Thirdly, SMC did not suffer from any damage or losses by reason thereof.
COCA-COLA BOTTLERS PHILIPPINES, INC. vs. ANGEL U. DEL VILLAR
Where there is divergence in the findings and conclusions of the National Labor Relations
Commission (NLRC), on the one hand, from those of the Labor Arbiter and the Court of Appeals, on the
other, the Supreme Court is constrained to examine the evidence, to determine which findings and
conclusion are more conformable with the evidentiary facts.
Managerial prerogatives are subject to limitations provided by law, collective bargaining
agreements, and general principles of fair play and justice.
Redundancy, for purposes of the Labor Code, exists where the services of an employee are in
excess of what is reasonably demanded by the actual requirements of the enterprise.
Facts:
Coca-Cola Bottlers Philippines, Inc. (Company), one of the leading and largest manufacturers of
beverages in the country, initially hired respondent Angel U. del Villar (Del Villar) as Physical
Distribution Fleet Manager with a job grade of S-7 and monthly salary of P50,000.00, aside from the
use of a company car, gasoline allowance, and annual foreign travel, among other benefits. In 1992,
as part of the reorganization of the Company, Del Villar became the Transportation Services
Manager, under the Business Logistic Directorate, headed by Director Edgardo I. San Juan (San
Juan). As Transportation Services Manager, Del Villar prepares the budget for the vehicles of the
Company nationwide.
Del Villar submitted a Report to the Company President, Natale J. Di Cosmo (Di Cosmo), detailing an
alleged fraudulent scheme undertaken by certain Company officials in conspiracy with local truck
manufacturers, overpricing the trucks purchased by the Company by as much as P70,000.00 each.
Del Villar also implicated San Juan and Jose L. Pineda, Jr. (Pineda), among other Company officials,
as part of the conspiracy. Pineda then served as the Executive Assistant in the Business Logistic
Directorate in charge of the Refrigeration Services of the Company.
In 1996, the Company embarked on a reorganization of the Business Logistic Directorate. As a
result, the functions related to Refrigeration were assigned to the Transportation Services Manager,
which was renamed the Transportation and Refrigeration Services Manager. Mr. Nathaniel
Page 25 of 80

Evangelista, the Physical Distribution Superintendent of the Zamboanga Plant, was appointed the
Corporate Transportation and Refrigeration Services Manager, replacing both Del Villar and Pineda,
who were in charge of the Transportation Services and Refrigeration Services of the Company,
respectively. Pineda was then appointed as the Corporate Purchasing and Materials Control
Manager, while Del Villar as Pinedas Staff Assistant.
Seven months after the submission of his Report on the fraudulent scheme of several company
officials, Del Villar received a Memorandum from San Juan informing him that he was designated as
Staff Assistant to the Corporate Purchasing and Materials Control Manager, with a job grade of NSVII, hence, he ceased to be entitled to the benefits accruing to an S-7 position under existing
company rules and policies; and he should turn over the vehicle assigned to him as Transportation
Services Manager to Pineda.
Although as the Staff Assistant of the Corporate Purchasing and Materials Control Manager, Del
Villar continued to receive the same salary as Transportation Services Manager, but his car and
other privileges were withdrawn and he spent his time at his new post sitting at a desk with no
meaningful work whatsoever. Del Villar believed that he was demoted by the Company to force him
to resign. Unable to endure any further the harassment, Del Villar filed with the Arbitration Branch
of the NLRC a complaint against the Company for illegal demotion and forfeiture of company
privileges.
The Company filed a Motion to Dismiss, instead of a position paper, praying for the dismissal of Del
Villars complaint on the ground that Del Villar had no cause of action. The Company alleged that it
was merely exercising its inherent management prerogative to transfer an employee from one
position to another.
The Labor Arbiter ruled in favor of Del Villar. The Company, in filing a Motion to Dismiss,
hypothetically admitted the truth of the facts alleged in the complaint, and the failure of the
Company to deny or rebut Del Villars allegations of bad faith on the part of the Company, gave rise
to the presumption against the latter. It further held that Del Villar was illegally dismissed stating
that he was not outrightly dismissed; instead, he was removed from his former position as
Transportation Services Manager, and demoted to Staff Assistant to the Corporate Purchasing and
Materials Control Manager.
The Company expectedly appealed to the NLRC.
While the case was still pending appeal before the NLRC, Del Villar received a letter from the
Company asserting his separation from work since his position has been determined as no longer
necessary due to the reorganization of the Business Logistics Directorate. Contrariwise, NLRC held
that Del Villar was not demoted and that the Company has not acted in bad faith or with malice. Del
Villar moved for the reconsideration of the foregoing NLRC Decision, but the NLRC denied such
motion for lack of merit.
Del Villar appealed to Court of Appeals (CA) via a Petition for Certiorari under Rule 65 of the Rules
of Court. CA decided that NLRC committed grave abuse of discretion by turning a blind eye on
several indicia that clearly showed Del Villar was demoted without any lawful reason and ruled that
there is a bad faith against the Company.
Issues:
Page 26 of 80
1. Whether the Company, in transferring Del Villar from the position of Transportation
Services Manager to Staff Assistant to the Corporate Purchasing and Materials Control
Manager, validly exercised its management prerogative or committed constructive
dismissal, is a factual matter.
2. Whether Del Villar was merely transferred from one position to another and was not
demoted.
3. Whether or not Del Villar was illegally terminated from his service.
Ruling:
1. It is a settled rule that factual findings of labor officials, who are deemed to have acquired
expertise in matters within their respective jurisdictions, are generally accorded not only
respect but even finality. Moreover, in a petition for review on certiorari under Rule 45 of
the Rules of Court, the Supreme Court reviews only errors of law and not errors of
facts. However, where there is divergence in the findings and conclusions of the NLRC, on
the one hand, from those of the Labor Arbiter and the Court of Appeals, on the other, the
Court is constrained to examine the evidence, to determine which findings and conclusion
are more conformable with the evidentiary facts. Hence, in the instant Petition, we embark
on addressing not only the legal, but the factual issues as well.
Jurisprudence recognizes the exercise of management prerogative. For this reason, courts
often decline to interfere in legitimate business decisions of employers. In fact, labor laws
discourage interference in employers judgment concerning the conduct of their business.
In the pursuit of its legitimate business interest, management has the prerogative to
transfer or assign employees from one office or area of operation to another provided there is no
demotion in rank or diminution of salary, benefits, and other privileges; and the action is not
motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion
without sufficient cause. The right of employees to security of tenure does not give them vested
rights to their positions to the extent of depriving management of its prerogative to change their
assignments or to transfer them.
In the case at bar, there is no dispute that Del Villar was transferred by the Company from
the position of Transportation Services Manager to the position of Staff Assistant to the Corporate
Purchasing and Materials Control Manager. The burden thus falls upon the Company to prove that
Del Villars transfer was not tantamount to constructive dismissal. After a careful scrutiny of the
records, we agree with the Labor Arbiter and the Court of Appeals that the Company failed to
discharge this burden of proof.
2. Del Villar was evidently demoted.
The dismal performance evaluations of Del Villar were prepared by San Juan and Pineda
after Del Villar already implicated his two superiors in his Report dated January 4, 1996 in an
alleged fraudulent scheme against the Company. More importantly, we give weight to the following
instances establishing that Del Villar was not merely transferred from the position of
Transportation Services Manager to the position of Staff Assistant to the Corporate Purchasing and
Materials Control Manager; he was evidently demoted.
Page 27 of 80

A transfer is a movement from one position to another which is of equivalent rank, level or
salary, without break in service. Promotion, on the other hand, is the advancement from one
position to another with an increase in duties and responsibilities as authorized by law, and usually
accompanied by an increase in salary. Conversely, demotion involves a situation where an employee
is relegated to a subordinate or less important position constituting a reduction to a lower grade or
rank, with a corresponding decrease in duties and responsibilities, and usually accompanied by a
decrease in salary.
First, as the Court of Appeals observed, Del Villars demotion is readily apparent in his new
designation. Formerly, he was the Transportation Services Manager; then he was made a Staff
Assistant a subordinate to another manager, particularly, the Corporate Purchasing and Materials
Control Manager. Second, the two posts are not of the same weight in terms of duties and
responsibilities. Del Villars position as Transportation Services Manager involved a high degree of
responsibility, he being in charge of preparing the budget for all of the vehicles of the Company
nationwide. Third, while Del Villars transfer did not result in the reduction of his salary, there was a
diminution in his benefits. Fourth, it was not bad enough that Del Villar was demoted, but he was
even placed by the Company under the control and supervision of Pineda as the latters Staff Assistant.
Fifth, all the foregoing caused Del Villar inconvenience and prejudice, so unbearable for him that he
was constrained to seek remedy from the NLRC.
3. Yes. The Company actually terminated Del Villars services effective May 31, 1998, as his
position was no longer necessary or was considered redundant due to the reorganization of
the Business Logistic Directorate.
Redundancy is one of the authorized causes for the dismissal of an employee. It is governed by
Article 283 of the Labor Code, which reads:
ART. 283. Closure of establishment and reduction of personnel. The
employer may also terminate the employment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the provisions of this Title,
by serving a written notice on the workers and the Department of Labor and
Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the
worker affected thereby shall be entitled to a separation pay equivalent to at
least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or undertaking not
due to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or to at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months
shall be considered one (1) whole year.
Redundancy, for purposes of the Labor Code, exists where the services of an employee are
in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly
put, a position is redundant where it is superfluous, and superfluity of a position or positions may
be the outcome of a number of factors, such as overhiring of workers, decreased volume of
Page 28 of 80

business, or dropping of a particular product line or service activity previously manufactured or
undertaken by the enterprise.
It is not enough for a company to merely declare that it has become overmanned. It must
produce adequate proof of such redundancy to justify the dismissal of the affected employees. In
this case, other than its own bare and self-serving allegation that Del Villars position as Staff
Assistant of Corporate Purchasing and Materials Control Manager had already become redundant,
no other evidence was presented by the Company. Del Villars poor employee performance is
irrelevant as regards the issue on redundancy.
There being no authorized cause for the termination of Del Villars employment, then he was
illegally dismissed. An employee who is illegally dismissed is entitled to the twin reliefs of full
backwages and reinstatement. We note that Del Villars reinstatement is no longer possible because
the position he previously occupied no longer exists.
PHILIPPINE AIRLINES, INC. vs. NATIONAL LABOR RELATIONS COMMISSION and AIDA M.
QUIJANO
Loss of confidence as a just cause for termination of employment is premised from the fact that
an employee concerned holds a position of trust and confidence, 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 general rule, employers are allowed a wider latitude of discretion in terminating the
employment of managerial personnel or those who, while not of similar rank, perform functions which
by their nature require the employers full trust and confidence.
Grave abuse of discretion is an evasion of a positive duty or a virtual refusal to perform a duty
enjoined by law or to act in contemplation of law as when the judgment rendered is not based on law
and evidence but on caprice, whim and despotism.
Facts:
Aida Quijano (Quijano) rose from the ranks starting as accounting clerk in December 1967
until she became effective September 1, 1984, Manager-Agents Services Accounting Division
(ASAD).
On May 5, 1989, an investigating committee chaired by Leslie W. Espino (Espino
Committee) formally charged Quijano as Manager-ASAD in connection with the processing and
payment of commission claims to Goldair Pty. Ltd. (Goldair) wherein PAL overpaid commissions to
the latter amounting to several million Australian dollars during the period 1984-1987. Specifically,
Quijano was charged as Manager-ASAD for failure on the job and gross negligence resulting in loss
of trust and confidence, particularly when it failed to exercise the necessary monitoring, control and
supervision over your Senior Accounts Analyst to ensure that the latter was performing the basic
duties and responsibilities of her job in checking and verifying the correctness and validity of the
commission claims from Goldair.
Page 29 of 80

Pending further investigation, the Espino Committee placed Quijano under preventive
suspension and at the same time required her to submit her answer to the charges. During the early
part of 1987, all the production reports from Australia for the period April to September 1986 were
borrowed and audited by Internal Audit and control. Meantime, PAL filed a civil case in Australia
against Goldair seeking to recover AUD 11 million. Twice, Quijano went to Australia as witness for
PAL. Thereafter, a settlement was reached whereby Goldair was to pay PAL a total of around AUD 7
million inclusive of court costs.
The Ocampo Committee having submitted its findings to the PAL Board of Directors, the
latter, in a resolution dated January 18, 1991, considered respondents Leslie W. Espino, Ramon C.
Lozon, Romeo R. Ines, Robin C. Dui, Josefina Sioson, and Aida M. Quijano, resigned from the service
effective immediately, for loss of confidence and for acts inimical to the interest of the company.
Resolving the case of Quijano, the Board said that as Manager-ASAD from 1984 to 1987 (when the
fraud was discovered), she failed to uncover or detect and report or grossly disregarded the fraud
although the commissions vis-a-vis production were scandalously high.
Her motion for reconsideration having been denied by the Board, Quijano filed the instant
case against PAL for illegal suspension and illegal dismissal.
The Labor Arbiter dismissed private respondents complaint. Undeterred, private
respondent filed an appeal before the NLRC wherein the latter decided that the decision appealed
from should be, as it is hereby, vacated and set aside and another one entered, directing the
Philippine Airlines, Inc., thru its responsible officials, to pay Aida M. Quijano her separation pay in
accordance with its Special Retirement & Separation Program.
Quijano filed a Motion for Reconsideration but this was denied by the NLRC. Hence, this
petition for certiorari.
Issue:
Whether or not NLRC committed grave abuse of its discretion amounting to lack of
jurisdiction in awarding separation pay to Quijano.
Ruling:
NLRC is correct in awarding separation pay to Quijano.
At the onset, it should be noted that the parties do not dispute the validity of private
respondents dismissal from employment for loss of confidence and acts inimical to the interest of
the employer. The assailed Decision of the NLRC was emphatic in declaring that it was not prepared
to rule as illegal the preventive suspension and eventual dismissal from the service of Quijano and
rightfully so because the last position that private respondent held, Manager-ASAD, undeniably
qualifies as a position of trust and confidence.
Loss of confidence as a just cause for termination of employment is premised from the fact
that an employee concerned holds a position of trust and confidence. This situation holds where a
person is entrusted with confidence on delicate matters, such as the custody, handling, or care and
protection of the employers property. But, in order to constitute a just cause for dismissal, the act
Page 30 of 80

complained of must be work-related such as would show the employee concerned to be unfit to
continue working for the employer.
As a general rule, employers are allowed a wider latitude of discretion in terminating the
employment of managerial personnel or those who, while not of similar rank, perform functions
which by their nature require the employers full trust and confidence. This must be distinguished
from the case of ordinary rank and file employees, whose termination on the basis of these same
grounds requires a higher proof of involvement in the events in question; mere uncorroborated
assertions and accusations by the employer will not suffice
The Court does not agree with the petitioner that in light of the fact that a just cause forms
the basis for her lawful termination from the job, private respondent is not entitled to separation
pay. Grave abuse of discretion is an evasion of a positive duty or a virtual refusal to perform a
duty enjoined by law or to act in contemplation of law as when the judgment rendered is not based
on law and evidence but on caprice, whim and despotism. This Court holds that the NLRC did not
gravely abuse its discretion in granting separation pay to private respondent as the same is not
characterized by caprice or arbitrariness being rooted in established jurisprudence.
The language of Article 279 of the Labor Code is pregnant with the implication that a legally
dismissed employee is not entitled to separation pay, to wit:
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.
However, in exceptional cases, this Court has granted separation pay to a legally dismissed
employee as an act of social justice or based on equity. In both instances, it is required that the
dismissal (1) was not for serious misconduct; and (2) does not reflect on the moral character of the
employee or would involve moral turpitude.
THE COCA-COLA EXPORT CORPORATION vs. CLARITA P. GACAYAN
G.R. No. 149433, December 15, 2010, J. Leonardo-De Castro
The only criterion to guide the exercise of its management prerogative is that the policies,
rules and regulations on work-related activities of the employees must always be fair and reasonable
and the corresponding penalties, when prescribed, commensurate to the offense involved and to the
degree of the infraction.
Facts:
Respondent Clarita P. Gacayan (Gacayan) began working with Petitioner The Coca-Cola
Export Corporation (Coca-Cola) on October 8, 1985. At the time her employment was terminated on
April 6, 1995, for alleged loss of trust and confidence, Gacayan was holding the position of Senior
Financial Accountant.
According to the Coca-Cola, Gacayans repeated submission of altered or tampered receipts
to support her claim for reimbursement constitutes a betrayal of the employers trust and
confidence and a serious misconduct, thus, giving cause for the termination of her employment with
Coca-Cola.
Page 31 of 80
Coca-Cola also questions the Court of Appeals finding that the termination of Gacayan was
too harsh. Coca-Cola maintains that Gacayan had clearly been established to have authored and
caused the submission of not only one but three different receipts which she intentionally altered to
justify her claimed reimbursement, thus warranting her dismissal from the company.
Issue:
Whether or not the Court of Appeals committed a reversible error in directing Coca-Cola to
immediately reinstate Gacayan to her former position, if possible.
Ruling:
This Court holds that the penalty of dismissal imposed on Gacayan is unduly oppressive and
disproportionate to the infraction which she committed. A lighter penalty would have been more
just.
The Labor Code mandates that before an employer may validly 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. Article 282 of the Labor Code enumerates
the just causes for the termination of employment.
After examining the records of the case, this Court finds that Gacayans dismissal from
employment was not grounded on any of the just causes enumerated under Article 282 of the Labor
Code.
At the outset, it is important to note that the term trust and confidence is restricted to
managerial employees. In the instant case, Gacayan was the Senior Financial Accountant with the
Job Description of a Financial Project Analyst. Gacayan, among others, provides support in the form
of financial analyses and evaluation of alternative strategies or action plans to assist management
in strategic and operational decision-making, x x x liaises with the Bottler to comply with Corporate
Bottler financial reporting requirements and to ensure Bottlers plans are aligned with TCCECs, x x x
and assists management on various initiatives on ad hoc basis.
In the instant case, the basis for terminating the employment of Gacayan was for gross
violation of the companys rules and regulations. Evidently, no mention was made regarding CocaColas alleged loss of trust and confidence in Gacayan. Neither was there any explanation nor
discussion of the alleged sensitive and delicate position of Gacayan requiring the utmost trust of
Coca-Cola.
It bears emphasizing that the right of an employer to dismiss its employees on the ground of
loss of trust and confidence must not be exercised arbitrarily. For loss of trust and confidence to be
a valid ground for dismissal, it must be substantial and founded on clearly established facts. Loss of
confidence must not be used as a subterfuge for causes which are improper, illegal or unjustified; it
must be genuine, not a mere afterthought, to justify earlier action taken in bad faith. Because of its
subjective nature, this Court has been very scrutinizing in cases of dismissal based on loss of trust
and confidence because the same can easily be concocted by an abusive employer. Thus, when the
Page 32 of 80

breach of trust or loss of confidence theorized upon is not borne by clearly established facts, as in
the instant case, such dismissal on the ground of loss and confidence cannot be countenanced.
In the instant case, it was only in the Reply to Gacayans Comment that Coca-Cola made
mention of another ground for the dismissal of Gacayan, that of serious misconduct, when she
submitted altered or tampered receipts to support her claim for reimbursement. Such allegation
appears to be a mere afterthought, being tardily raised only in the Reply.
In this light, the alleged infractions of Gacayan could hardly be considered serious
misconduct. It is well to stress that in order to constitute serious misconduct which will warrant the
dismissal of an employee, it is not sufficient that the act or conduct complained of has violated some
established rules or policies. It is equally important and required that the act or conduct must have
been done with wrongful intent. Such is, however, lacking in the instant case.
While this Court does not condone Gacayans act of submitting altered and/or tampered
receipts to support her claim for reimbursement, we nevertheless agree with the finding of the
Court of Appeals that, under the attendant facts, the dismissal meted out on Gacayan appears to be
too harsh a penalty.
The employers right to conduct the affairs of its business, according to its own discretion
and judgment, is well-recognized. An employer has a free reign and enjoys wide latitude of
discretion to regulate all aspects of employment, including the prerogative to instill discipline in its
employees and to impose penalties, including dismissal, upon erring employees. This is a
management prerogative, where the free will of management to conduct its own affairs to achieve
its purpose takes form. The only criterion to guide the exercise of its management prerogative is
that the policies, rules and regulations on work-related activities of the employees must always be
fair and reasonable and the corresponding penalties, when prescribed, commensurate to the
offense involved and to the degree of the infraction.
As Gacayans employer, Coca-Cola has the right to regulate, according to its discretion and
best judgment, work assignments, work methods, work supervision, and work regulations,
including the hiring, firing and discipline of its employees.Indeed, Coca-Cola has the management
prerogative to discipline its employees, like herein Gacayan, and to impose appropriate penalties on
erring workers pursuant to company rules and regulations. This Court upholds these management
prerogatives so long as they are exercised in good faith for the advancement of the employers
interest and not for the purpose of defeating or circumventing the rights of the employees under
special laws and valid agreements.
In the instant case, Coca-Cola alleged that under its rules and regulations, Gacayans
submission of fraudulent items of expense is punishable by dismissal. However, Coca-Colas rules
cannot preclude the State from inquiring whether the strict and rigid application or interpretation
thereof would be harsh to the employee. Even when an employee is found to have transgressed the
employers rules, in the actual imposition of penalties upon the erring employee, due consideration
must still be given to his length of service and the number of violations committed during his
employ. Gacayan had no previous record in her 9 years of service; this would have been her first
offense. Gacayan had also been a recipient of various commendations attesting to her competence
and diligence in the performance of her duties, not only from Coca-Cola, but also from Coca-Colas
counterparts in Poland and Thailand. Gacayan also countered that she acted in good faith and with
no wrongful intent when she submitted the receipts in support of her claim for reimbursement of
Page 33 of 80

meal allowance. According to Gacayan, only the dates or items were altered on the receipts. She did
not claim more than what was allowed as meal expense for the days that she rendered overtime
work. She believed that the submission of receipts was simply for records-keeping, since she
actually rendered overtime work on the dates that she claimed for meal allowance.
NELSON A. CULILI vs. EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., SALVADOR HIZON
(President and Chief Executive Officer), EMILIANO JURADO (Chairman of the Board),
VIRGILIO GARCIA (Vice President) and STELLA GARCIA (Assistant Vice President)
G.R. No. 165381, February 9, 2011, J. Leonardo-De Castro
The determination of whether or not an employees 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.
Facts:
Respondent ETPI is a telecommunications company engaged in the business of establishing
commercial telecommunications systems and leasing of international datalines or circuits. The
other respondents are ETPIs officers. Petitioner Culili on the other hand was the Senior Technician
in the Customer Premises Equipment Management Unit of the Service Quality Department of
respondent ETPI.
Due to business troubles and losses, respondent ETPI was compelled to implement a RightSizing Program which consisted of two phases: the first phase involved the reduction of ETPIs
workforce to only those employees that were necessary and which respondent 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.
As part of the first phase, respondent ETPI, on December 10, 1998, offered to its employees
who had rendered at least 15 years of service, the Special Retirement Program, which consisted of
the option to voluntarily retire at an earlier age and a retirement package equivalent to 2 months
salary for every year of service. This offer was initially rejected by the ETEU, ETPIs duly recognized
bargaining agent. Respondent ETPI explained to ETEU the details of the Right-Sizing Program and
the Special Retirement Program and after consultations with ETEUs members, ETEU agreed to the
implementation of both programs. Thus, on February 8, 1999, ETPI re-offered the Special
Retirement Program and the corresponding retirement package to the employees who qualified for
the program. Of all the employees who qualified to avail of the program, only petitioner rejected the
offer.
After the successful implementation of the first phase of the Right-Sizing Program,
respondent ETPI, proceeded with the second phase which necessitated the abolition, transfer and
merger of a number of ETPIs departments. Among the departments abolished was the Service
Quality Department. The functions of petitioners unit were absorbed by the Business and
Consumer Accounts Department. The abolition rendered the functions of a Senior Technician
unnecessary. As a result, petitioners position was abolished due to redundancy and his functions
were absorbed by another employee already with the Business and Consumer Accounts
Department.
Page 34 of 80

In a letter dated March 8, 1999, respondent ETPI, through its Assistant Vice President
respondent Garcia, informed petitioner of his termination from employment. This letter was similar
to the memo shown to petitioner by the union president weeks before petitioner was dismissed.
The memo was dated December 7, 1998, and was advising him of his dismissal due to the RightSizing Program ETPI was going to implement.
Thereafter, petitioner filed a complaint against herein respondents before the Labor
Arbiter. Petitioner alleged that neither he nor the DOLE were formally notified of his termination.
He believed that respondent ETPI had already decided to dismiss him even prior to the March 8,
1999 letter as evidenced by the December 7, 1998 version of that letter.
The Labor Arbiter rendered a decision finding respondent ETPI guilty of illegal dismissal
and unfair labor practice. On appeal, the NLRC affirmed the decision of the Labor Arbiter. The Court
of Appeals however held that petitioner was not illegally dismissed and that respondent ETPI is not
guilty of unfair labor practice. Nevertheless it held that respondent ETPI failed to observe the
standards of due process. Hence, this petition.
Issue/s:
1. Whether or not petitioner was illegally dismissed.
2. Whether or not respondent ETPI complied with the procedural due process required in
effecting the termination of petitioner.
Ruling:
1. No, petitioner was not illegally dismissed.
This Court has been consistent in holding that the determination of whether or not an
employees 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.
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.
Page 35 of 80

2. No, it did not.
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.
In Serrano v. National Labor Relations Commission, we noted that "a job is more than the
salary that it carries." There is a psychological effect or a stigma in immediately finding ones self
laid off from work. This is exactly why our labor laws have provided for mandating procedural due
process clauses. Our laws, while recognizing the right of employers to terminate employees it
cannot sustain, also recognize the employees right to be properly informed of the impending
severance of his ties with the company he is working for. In the case at bar, ETPI, in effecting Culilis
termination, simply asked one of its guards to serve the required written notice on Culili. Culili, on
one hand, claims in his petition that this was handed to him by ETPIs vice president, but previously
testified before the Labor Arbiter that this was left on his table. Regardless of how this notice was
served on Culili, this Court believes that ETPI failed to properly notify Culili about his termination.
Aside from the manner the written notice was served, a reading of that notice shows that ETPI
failed to properly inform Culili of the grounds for his termination.
THE COCA-COLA EXPORT CORPORATION vs. CLARITA P. GACAYAN
G.R. No. 149433, June 22, 2011, J. Leonardo-De Castro
She, ironically a Senior Financial Accountant tasked with ensuring financial
reportorial/regulatory compliance from others, repeatedly submitted tampered or altered receipts to
support her claim for meal reimbursements, in gross violation of the rules and regulations of
petitioner company, such acts warrants dismissal.
Facts:
For resolution is the Motion for Reconsideration filed by petitioner The Coca-Cola Export
Corporation (petitioner company) of our Decision promulgated on December 15, 2010, denying its
petition for review on certiorari of the Decision dated May 30, 2001. In the assailed decision, we
held that the dismissal of Gacayan was illegal being not one of the authorized causes under the
Labor Code.
Petitioner The Coca Cola Export Corporation, duly organized and existing under the laws of
the Philippines, is engaged in the manufacture, distribution and export of beverage base,
concentrate, and other products bearing its trade name.
Respondent Clarita P. Gacayan began working with petitioner on October 8, 1985. At the
time her employment was terminated on April 6, 1995, for alleged loss of trust and confidence,
respondent was holding the position of Senior Financial Accountant.
Under petitioners company policy, one of the benefits enjoyed by its employees was the
reimbursement of meal and transportation expenses incurred while rendering overtime work. It
was in connection with this company policy that petitioner called the attention of respondent and
required her to explain the alleged alterations in three receipts which she submitted to support her
claim for reimbursement of meal expenses, to wit: 1) McDonalds Receipt No. 875493 dated
Page 36 of 80

October 1, 1994 for P111.00;5 2) Shakeys Pizza Parlor Receipt No. 122658 dated November 20,
1994 for P174.06;6 and 3) Shakeys Pizza Parlor Receipt No. 41274 dated July 19, 1994 for P130.50.
Coca Cola issued a memorandum to respondent informing her of the alteration in the date
receipts she submitted and requiring her to explain the said alteration. Respondent wrote her
explanation on the same note and stated that the alteration may have been made by the staff from
the fast food chains as they sometimes make mistakes in issuing receipts. Respondent also narrated
that her sister, Odette, sometimes buys food for her and that she is not quite sure if the receipt in
question was the correct one which Odette gave her.
Several notices were given to Gacayan regarding her hearing. The hearing was set to give
Gacayan the opportunity to explain the alterations in the receipts she had submitted for
reimbursement. However, despite repeated notices and opportunities to be heard, Gacayan did not
attend said hearings.
Thereafter, in a letter dated April 4, 1995, petitioner dismissed respondent for fraudulently
submitting tampered and/or altered receipts in support of her petty cash reimbursements in gross
violation of the companys rules and regulations.
Gacayan filed a complaint for illegal dismissal, non-payment of service incentive leave, sick
leave and vacation leave with prayer for reinstatement, payment of backwages as well as for
damages and attorneys fees, against petitioner with the NLRC. Labor Arbiter Ramon Valentin C.
Reyes ruled in favor of petitioner and dismissed respondents complaint for lack of merit. On
appeal, the NLRC affirmed the ruling of the Labor Arbiter. However, the Court of Appeals revised
and set aside the rulings of the NLRC. It ruled that the punishment of dismissal was too harsh a
penalty for the offenses Gacayan allegedly committed.
When the decision of the Court of Appeals was assailed to the Supreme Court, the Supreme
Court affirmed the decisions of the Court of Appeals. Hence, this motion for reconsideration. For the
motion for reconsideration, Coca Cola averred that respondent Gacayans position as a "Senior
Financial Accountant with the Job Description of a Financial Project Analyst" has duties which
clearly qualify her as one occupying a position of trust and responsibility.
Issue:
Whether or not the dismissal of Gacayan was pursuant to an authorized cause as
enumerated in the Labor Code
Ruling:
Yes, the dismissal was due to the loss of trust and confidence, a valid authorized cause
under the Labor Code.
It is well-settled in our jurisdiction that loss of trust and confidence constitutes a just and
valid cause for an employees termination.
In the instant case, respondent Gacayan was the Senior Financial Accountant of petitioner
company. While respondent Gacayan denies that she is handling or has custody of petitioners
funds, a re-examination of the records of this case reveals that she indeed handled delicate and
Page 37 of 80

confidential matters in the financial analyses and evaluations of the action plans and strategies of
petitioner company. Respondent Gacayan was also privy to the strategic and operational decisionmaking of petitioner company, a sensitive and delicate position requiring the latters utmost trust
and confidence. As such, she should be considered as holding a position of responsibility or of trust
and confidence.
We revert to the findings of the Labor Arbiter, as affirmed by the NLRC, that respondent
Gacayan betrayed the trust and confidence reposed on her when she, ironically a Senior Financial
Accountant tasked with ensuring financial reportorial/regulatory compliance from others,
repeatedly submitted tampered or altered receipts to support her claim for meal reimbursements,
in gross violation of the rules and regulations of petitioner company. Upon review, even the Court
of Appeals did not absolve respondent Gacayan of wrongdoing but rather merely held that
dismissal was too harsh a penalty for her infraction.
In its motion for reconsideration, petitioner company emphasized the clear and convincing
evidence on record that respondent Gacayan breached the trust and confidence reposed in her
when she repeatedly submitted tampered or altered receipts to support her claim for meal
reimbursement. Petitioner company maintained that respondent Gacayan cannot mistakenly file a
claim for overtime meal allowance reimbursement for a day she knew she was not entitled to, as
she did not actually render overtime work. Petitioner company reiterated its evidence showing that
respondent Gacayan acted with wrongful, malicious and fraudulent intent when she repeatedly
submitted tampered or altered receipts.
MA. JOY TERESA O. BILBAO vs. SAUDI ARABIAN AIRLINES
Although the Supreme Court has, more often than not, been inclined towards the workers and
has upheld their cause in their conflicts with the employers, such inclination has not blinded it to the
rule that justice is in every case for the deserving, to be dispensed in the light of the established facts
and applicable law and doctrine. An employee who resigns and executes a quitclaim in favor of the
employer is generally stopped from filing any further money claims against the employer arising from
the employment
Facts:
The petitioner, Ma. Joy Teresa Bilboa, is a flight attendant of Saudia for 18 years. She is
assigned in the Manila Office and as a flight attendant, she goes on scheduled flights from Manila to
Saudi and from Saudi to Manila. Because of a memorandum issued by Saudia 10 flight attendants
were transferred from Manila Office to Jeddah Office, one of whom is the Bilboa. Months later,
Bilboa tendered her resignation letter and signed a quitclaim stating that she has received a
separation pay and all other benefits she is entitled to and renounces all her claims against Saudia.
Ten months later, Bilboa and two other flight attendants filed a complaint for illegal
dismissal before the Labor Arbiter. The Labor Arbiter rendered a ruling in favor of Bilboa ruling
that she did not voluntarily resigned from her work and that she was merely forced to resign. On
appeal, the NLRC reversed the decision of the Labor Arbiter. Hence, the current petition.
Issue:
Page 38 of 80

Whether or not petitioner Bilboa was illegally dismissed from service.
Ruling:
No. The Supreme Court affirmed the decision of the NLRC and ruled that Bilboa voluntarily
resigned from her work when she tendered her resignation letter and accepted her separation pay
taking into consideration her educational standing and the circumstances surrounding the case.
The fact that Bilboa accepted her separation pay and signed the quitclaim and waited ten (10)
months before she filed the illegal dismissal complaint bolsters the notion that she indeed
voluntarily resigned from work. Her acts are inconsistent with her allegation that she was forced
and intimidated to resign for work. Moreover, for the allegations of force and intimidation to be
given weight, it is necessary that evidence must be given in order to substantiate such claim. In the
absence of any evidence to support the allegations, such claims cannot be given credence. In the
case at bar, Bilboa presented no evidence in order to support her claim that she was forced and
intimidated to resign. This being the case her allegations are to be considered as merely selfserving.
In addition, the Supreme Court likewise found that the Quitclaim is also voluntarily signed
by Bilboa. Well-settled is the rule that not all quitclaims are null and void. When it is voluntarily
entered into such is considered as a contract and shall be upheld. It cannot be disowned merely
because of a change of heart. It is only when the quitclaim is wangled before an unsuspecting and
gullible person or that the terms and conditions of the contract is unconscionable that the Courts
will step in to declare the contract void.
This being the case, it is clear that the petitioner, Bilboa, voluntarily resigned from work and
signed the waiver and quitclaim. Consequently, she is not illegally dismissed and therefore not
entitled to any of the benefits she claims as a result of her complaint against Saudia.
MINADANAO TERMINAL AND BROKERAGE SERVICE, INC. AND/ OR FORTUNATO DE
CASTRO vs. NAGKAHIUSANG MAMUMUO SA MINTERBO SOUTHERN PHILIPPINES
FEDERATION OF LABOR, ET AL
The NLRC and the Court of Appeals found that 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. In
Sebuguero, the Court ruled on a case regarding lay-off or temporary retrenchment, which
subsequently resulted to the separation from employment of the concerned employee as it lasted for
more than six months. Article 283 of the Labor Code covers retrenchment. This provision, however,
speaks of a permanent retrenchment as opposed to a temporary layoff as is the case here. There is no
specific provision of law which treats of a temporary retrenchment or layoff and provides for the
requisites in effecting it or a period or duration therefor. These employees cannot forever be
temporarily laid- off. To remedy this situation or fill the hiatus, Article 286 may be applied but only by
analogy to set a specific period that employees may remain temporarily laid-off or in floating status
Six months is the period set by law that the operation of a business or undertaking may he suspended
thereby suspending the employment of the employees concerned. The temporary lay-off wherein the
employees likewise cease to work should also not last longer than six months. After six months, the
employees should either be recalled to work or permanently retrenched following the requirements of
the law, and that failing to comply with this would be tantamount to dismissing the employees and the
Page 39 of 80

employer would thus he liable for such dismissal. As the Court of Appeals did not err in ruling that
Sebuguero applies to this case, the consequences arrived at in Sebuguero also apply. Layoff 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 (12) month salary per year of service,
whichever is higher.
Facts:
Mindanao Terminal and Brokerage Service, Inc. (Minterbro) is a domestic corporation
managed by De Castro and 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.
In December 1996, a vessel operated by Davao Pilots Association (DPAI) bumped the pier
and caused damaged thereat. In January 1997, DPAI requested Minterbro to waive any claim of
liability against it for any damage to the pier or vessel. DPAI alleged that Minterbros pier vibrates
everytime a ship docks due to weak posts at the underwater portion.
From January 1 until April 13, 1997, a total of sixteen (16) vessels were serviced at the
Minterbro pier. The last vessel that was serviced was MV Bosco Polar was on April 11-13, 1997.
Subsequently, 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
Minterbros 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 Minterbros office, motor pool, and field personnel continued operations.
On December 16, 1997, Minterbo was issued a certificate declaring the wharf safe and ready
for operations by PPA. Thereafter, MV Uranus was serviced at the Minterbro pier on December 2228, 1997.
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 complaint for payment of
separation pay against Minterbro and De Castro with the Labor Arbiter (LA).
LA later rendered decisions dismissing the complaint for separation pay for lack of merit.
The LA considered the period embraced within August 1, 1997, when respondent formally
informed the DOLE of the temporary cessation of operation up to December 16, 1997, when
respondent was issued a certificate declaring the wharf safe and ready for operations and
December 22-28, 1997, when the respondent company serviced a vessel MV Uranus which
obviously did not exceed six (6) months, thus denying complainants their monetary benefits.
NLRC reversed the LAs decision. It ruled that the period reckoned is incorrect. It ruled that
it is admitted by respondent that the last vessel that was serviced was on April 11-13, 1997 (MV
Bosco Polar), and after the rehabilitation of the wharf, on December 22-28, 1997 (MV Uranus) was
served, thereby covering a period of more or less eight months. Respondent cannot conceal or make
Page 40 of 80

the August 1, 1997 formal notice to DOLE or the alleged continued operations of its office personnel
until July 31, 1997, an excuse to evade the mandated six (6) months period (Article 286 of the Labor
Code, as amended), since the issue at bar concerns the complainants who became jobless and
penniless because of the December 28, 1996 accident.
On appeal, CA dismissed the petition. It ruled that the seasonal nature of the services
rendered by the members of the union did not negate their status as regular employees and that the
temporary suspension of Minterbros operations should be reckoned from April 14, 1997, the day
no more vessel was serviced at Minterbros pier after MV Bosco Polar was serviced at the said pier
on April 11 to 13, 1997. Thus, pursuant to Article 286 of the Labor Code and its application in
Sebuguero v. National Labor Relations Commission, the NLRC Correctly ordered Minterbro and De
Castro to pay the union members their. Hence, this Petition for Review under Rule 45 of the Rules
of Court.
Petitioners Minterbro and De Castro insist that the Court of Appeals erred when it ruled
that the union members are entitled to separation pay under Article 286 of the Labor Code.
Minterbo and De Castro concede that, as enunciated in Sebuguero, where a temporary layoff lasts
longer than six months, the employees should either be recalled to work or permanently
retrenched following the requirements of the law. However, according to petitioners, the lack of
arrastre and stevedoring services in the pier after the servicing of MV Bosco Polar on April 11 to 13,
1997 was a result of Del Montes decision, for reasons unknown to Minterbro, to suddenly stop
docking its vessels at Minterbros pier. And while there were no arrastre and stevedoring services
for lack of any vessel to service, Minterbros office, motorpool and field personnel continued their
work until July 31, 1997, or a day before Minterbro filed the required notices with the DOLE on
August 1, 1997.
Issue:
1. Whether or not the remedy is proper.
2. Whether or not the CA erred in when it ruled that the union members are entitled to
separation pay under Article 286 of the Labor Code.
Ruling:
1. No. The remedy is not proper. At the outset, the Court notes that the petition is fatally
defective. The issue it presents is factual, not legal.
There is a question of fact when the doubt or difference arises as to the truth or the
falsehood of alleged facts. There is a question of fact if the issue invites a review of the evidence
presented. In this case, this Court is effectively being called upon to determine who among the
parties is asserting the truth regarding the date the union members were laid-off.
Such venture requires the evaluation of the respective pieces of evidence presented by the
parties as well as the consideration of the existence and relevancy of specific surrounding
circumstances as well as their relation to each other and to the whole, and the probability of the
situation. However, the nature of petitioners action, a petition for review under Rule 45 of the
Rules of Court, renders that very action inappropriate for this Court to take. Only questions of law
should be raised in a petition for review under Rule 45. While there are recognized exceptions to
that rule, this case is not among them.
Page 41 of 80

2. No. Moreover, this Court finds neither compelling reason nor substantial argument that will
warrant the reversal of the NLRC decision which has been affirmed by the Court of Appeals.
The NLRC and the Court of Appeals found that 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.
In sum, 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.
A layoff, used interchangeably with retrenchment, is a recognized prerogative of
management. It is the termination of employment resorted to by the employer, through no fault of
nor with prejudice to the employees, during periods of business recession, industrial depression,
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 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. The requisites of a valid
retrenchment are covered by Article 283 of the Labor Code.
When a layoff is temporary, the employment status of the employee is not deemed
terminated, but merely suspended. Article 286 of the Labor Code provides, in part, that the bona
fide suspension of the operation of the business or undertaking for a period not exceeding six
months does not terminate employment.
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 latters
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.
As this Court held in Valdez v. National Labor Relations Commission: Under Article 286 of
the Labor Code, the bona fide suspension of the operation of a business or undertaking for a period
not exceeding six months shall not terminate employment. Consequently, when the bona fide
suspension of the operation of a business or undertaking exceeds six months, then the employment
of the employee shall be deemed terminated. By the same token and applying said rule by analogy,
if the employee was forced to remain without work or assignment for a period exceeding six
months, then he is in effect constructively dismissed.
In Sebuguero, the Court ruled on a case regarding layoff or temporary retrenchment, which
subsequently resulted to the separation from employment of the concerned employee as it lasted
for more than six months. Article 283 of the Labor Code which covers retrenchment. This provision,
however, speaks of a permanent retrenchment as opposed to a temporary layoff as is the case here.
There is no specific provision of law which treats of a temporary retrenchment or layoff and
provides for the requisites in effecting it or a period or duration therefor. These employees cannot
Page 42 of 80

forever be temporarily laid- off. To remedy this situation or fill the hiatus, Article 286 may be
applied but only by analogy to set a specific period that employees may remain temporarily laid-off
or in floating status.
Six months is the period set by law that the operation of a business or undertaking may he
suspended thereby suspending the employment of the employees concerned. The temporary lay-off
wherein the employees likewise cease to work should also not last longer than six months. After six
months, the employees should either be recalled to work or permanently retrenched following the
requirements of the law, and that failing to comply with this would be tantamount to dismissing the
employees and the employer would thus he liable for such dismissal.
As the Court of Appeals did not err in ruling that Sebuguero applies to this case, the
consequences arrived at in Sebuguero also apply. Layoff 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 (12) month salary per year of service, whichever is higher.
INTERNATIONAL SCHOOL MANILA AND/OR BRIAN McCAULEY vs.
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE) AND MEMBERS REPRESENTED
BY RAQUEL DAVID CHING, PRESIDENT, EVANGELINE SANTOS, JOSELYN RUCIO AND
METHELYN FILLER
G.R. No. 167286, February 5, 2014, J. Leonardo-De Castro
In all cases involving termination of employment, the burden of proving the existence of the
above just causes rests upon the employer. What can be gathered from a thorough review of the
records of this case is that the inadequacies of the respondent 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, respondents 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. The Court finds that the petitioners had sufficiently proved the charge of
gross inefficiency, which warranted the dismissal of Santos from the School.
Facts:
Evangeline Santos (Santos) was first hired by the International School Manila (ISM) in 1978
as a full-time Spanish language teacher. In April 1992, Santos filed for and was granted a leave of
absence for the school year 1992-1993. She came back from her leave of absence sometime in
August 1993. Upon Santoss return to the School, only one class of Spanish was available for her to
teach. Thus, for the school year 1993-1994, Santos agreed to teach one class of Spanish and four
other classes of Filipino that were left behind by a retired teacher. Since it was Santoss first time to
teach Filipino, the Schools high school administrators observed the way she conducted her classes
For failure to meet the standards of the school, Brian McCauley (McCauley) sent Santos a
letter directing her to explain in writing why her employment from the School should not be
terminated. In her reply letter, Santos blamed the School for her predicament. She said that, in the
last few years, she had been forced to teach Filipino, a subject which she had no preparation for.
The School allegedly made this happen against her objections and despite the fact that she had no
training in Filipino linguistics and literature. Santos also asked for clarification on why she was
being asked to explain and the reasons therefor.
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The School, thereafter, set a formal administrative investigation in order to further clarify
matters and accord Santos the opportunity to explain her side. Santos was given the choice of
bringing a representative or counsel to assist her. During the investigation, Santos was
accompanied by Raquel David Ching, the President of the International School Alliance of
Educators (ISAE). Ching sought clarification as regards the specific charge against Santos. McCauley
clarified that the charge against Santos was gross inefficiency or negligence in the performance of
her assigned work. After the parties made known their positions, the investigating committee
informed Santos and Ching that they would consider the views presented and they would advise
Santos of the Schools action on her case.
Subsequently, Santos was terminated from her employment. Hence, ISAE filed a complaint
of unfair labor practice, illegal dismissal and violation and refusal to comply with grievance
procedures in the CBA. After hearing, Labor Arbiter (LA) ruled that Santos was illegally terminated.
On appeal, NLRC affirmed the decision. On petition for certiorari, CA affirmed the ruling as top
illegal dismissal with modifications as to the award of backwages.
Issue:
1. Whether Santos was validly dismissed.
2. Whether Santos is entitled to separation pay.
Ruling: The Court finds the appeal meritorious.
1. Santos was validly dismissed
In all cases involving termination of employment, the burden of proving the existence of the
above just causes rests upon the employer. The quantum of proof required in these cases is
substantial evidence, that is, such relevant evidence that a reasonable mind might accept as
adequate to support a conclusion, even if other equally reasonable minds might conceivably opine
otherwise.
The Court had occasion to explain in Century Iron Works, Inc. v. Baas68 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
latters business. Habitual neglect, on the other hand, implies repeated failure to perform
ones duties for a period of time, depending upon the circumstances.
The Court also reiterated in Union Motor Corporation v. National Labor Relations
Commission that in dismissing an employee for gross and habitual neglect of duties, the negligence
should not merely be gross, it should also be habitual.
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.
From the very beginning of her tenure as a teacher of the Filipino language, the recurring
problem observed of Santos was that her lesson plans lacked details and coherent correlation to
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each other, to the course, and to the curriculum, which in turn affected how lessons and
instructions were conveyed to the students. After Santos was placed in a Professional Growth Plan
on March 29, 1996, petitioners observed a noticeable improvement on her part. In his memo dated
May 24, 1996, then Assistant Principal Loy even stated that Santoss improvement was a result of
her positive attitude in approaching her growth plan. Unfortunately, though, Santos could not
sustain this progress. Not long after, the School administrators were again admonishing Santos for
her vague lesson plans that lacked specifics.
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, Santoss 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 of gross
inefficiency, which warranted the dismissal of Santos from the School.
In view of the acts and omissions of Santos that constituted gross inefficiency, the Court
finds that the School was justified in not keeping her in its employ. At this point, the Court needs to
stress that Santos voluntarily agreed to teach the Filipino classes given to her when she came back
from her leave of absence. Said classes were not forced upon her by the School. This much she
admitted in the hearing of the case before the Labor Arbiter. She stated therein that for the school
year 1993-1994, she was given the option to teach only one Spanish class and not have any Filipino
teaching loads. She, however, said that if she took that option she would have been underpaid and
her salary would not have been the same. Moreover, for the school years 1994-1995 and 19951996, she made known to the School that she did not prefer a change in teaching assignment. Thus,
when she consented to take on the Filipino classes, it was Santoss responsibility to teach them well
within the standards of teaching required by the School, as she had done previously as a teacher of
Spanish. Failing in this, she must answer for the consequences.
Furthermore, the ISM complied with the above requirements. After a thorough evaluation of
Santoss 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 McCauleys 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. Santos is entitled to separation pay.
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. In the
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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.
DUE PROCESS
Twin-notice Requirement
GENERAL MILLING CORPORATION vs. ERNESTO CASIO, ROLANDO IGOT, MARIO FAMADOR,
NELSON LIM, FELICISIMO BOOC, PROCOPIO OBREGON, JR., and ANTONIO ANINIPOK and
VIRGILIO PINO, PAULINO CABREROS, MA. LUNA P. JUMAOAS, DOMINADOR BOOC, FIDEL
VALLE, BARTOLOME AUMAN, REMEGIO CABANTAN, LORETO GONZAGA, EDILBERTO
MENDOZA and ANTONIO PANILAG
G.R. No. 149552, March 10, 2010, J. LEONARDO-DE CASTRO
The essential elements of procedural due process are the twin requirements of notice and
hearing. Otherwise, the dismissal of an employee will be tainted with illegality. Those requirements
cannot be dispensed with even when the dismissal is pursuant to the closed shop provision in the CBA.
Thus, the rights of an employee to be informed of the charges against him and to reasonable
opportunity to present his side in a controversy with either the company or his own union are not
wiped away by a union security clause or a union shop clause in a collective bargaining agreement.
Facts:
On the one hand, the labor union Ilaw at Buklod ng Mangagawa (IBM)-Local 31 Chapter
(Local 31) was the sole and exclusive bargaining agent of the rank and file employees of General
Milling Corporation (GMC) in Lapu-Lapu City. On November 30, 1991, through its officers and
board members, namely herein respondents, it entered into a Collective Bargaining Agreement
(CBA) with GMC. On the other hand, Casio, et al. were regular employees of GMC with length of
service varying from eight to 25 years. Casio was elected IBM-Local 31 President for a three-year
term in June 1991, while his co-respondents were union shop stewards.
Rodolfo Gabiana (Gabiana), the IBM Regional Director for Visayas and Mindanao, furnished
Casio, et al. with copies of the Affidavits of GMC charging them with "acts inimical to the interest of
the union." Casio, et al. were thus given three days from receipt thereof to file their answers.
However, they refused to acknowledge having received of the same. Thereafter, Pino, et al., as
officers and members of the IBM-Local 31, issued a Resolution expelling them from the union.
Gabiana then wrote a letter addressed to Eduardo Cabahug (Cabahug), GMC Vice-President
for Engineering and Plant Administration, informing the company of the said expulsion and
requested for the immediate dismissal of Casio, et. al. Subsequently, in a follow-up letter he
inquired from Cabahug why Casio, et al. were still employed with GMC despite the request of IBMLocal 31 to immediately dismissed them pursuant to the closed shop provision in the existing CBA.
Reiterating the said demand, he warned GMC that its failure to comply would constitute gross
violation of the existing CBA and will constrain the union to file a case for unfair labor practice
against it.
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Pressured by the threatened filing of a suit for unfair labor practice, GMC acceded to
Gabianas request to terminate the employment of Casio, et al. Thereafter, on March 27, 1992, Casio,
et al., filed a Notice of Strike with the NCMB-Regional Office No. VII. They alleged as bases for the
strike the illegal dismissal of union officers and members, discrimination, coercion, and union
busting. The NCMB-RO held conciliation proceedings, but no settlement was reached among the
parties. Thus, they next sought recourse from the National Labor Relations Commission by filing a
Complaint against GMC and Pino, et al. for unfair labor practice, particularly, the termination of
legitimate union officers, illegal suspension, illegal dismissal, and moral and exemplary damages.
Eventually, the Voluntary Arbitrator dismissed the Complaint for lack of merit, but granted
separation pay and attorneys fees to Casio, et al. As such, they went to the Court of Appeals by way
of a Petition for Certiorari under Rule 65. The appellate court ruled that while the dismissal was
made by GMC pursuant to a valid closed shop provision under the CBA, the company, however,
failed to observe the elementary rules of due process in implementing the same. Consequently,
Casio, et al. were entitled to reinstatement with backwages from the time of their dismissal up to
the time of their reinstatement. GMC then sought for the reconsideration of the CA Decision.
However, the same was denied. Hence, GMC filed the instant Petition for Review.
Issue:
Whether or not Casio, et al. were illegally dismissed.
Ruling:
The dismissal of Casio, et al. was illegal. Not only did GMC fail to make a determination of
the sufficiency of evidence to support the decision of IBM-Local 31 to expel them but also to accord
the expelled union members procedural due process, i.e., notice and hearing, prior to the
termination of their employment. Thus, Casio, et al. are entitled to backwages and separation pay
considering that reinstatement is no longer possible because the positions they previously occupied
are no longer existing, as declared by GMC.
Union security clauses are recognized and explicitly allowed under Article 248(e) of the
Labor Code. It is State policy to promote unionism to enable workers to negotiate with management
on an even playing field and with more persuasiveness than if they were to individually and
separately bargain with the employer. For this reason, the law has allowed stipulations for "union
shop" and "closed shop" as means of encouraging workers to join and support the union of their
choice in the protection of their rights and interest vis--vis the employer. Also, a stipulation in the
CBA authorizing the dismissal of employees are of equal import as the statutory provisions on
dismissal under the Labor Code, since "a CBA is the law between the company and the union and
compliance therewith is mandated by the express policy to give protection to labor."
Clearly, a union security clause in the CBA constitutes a just cause for terminating an
employee, the employer needs only to determine and prove that: (1) the union security clause is
applicable; (2) the union is requesting for the enforcement of the union security provision in the
CBA; and (3) there is sufficient evidence to support the decision of the union to expel the employee
from the union. In the case at bar, there is no question that the CBA between GMC and IBM-Local 31
included a maintenance of membership and closed shop clause as can be gleaned from Sections 3
and 6 of Article II. It is similarly undisputed that IBM-Local 31, through Gabiana, twice requested
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GMC, in the letters dated March 10 and 19, 1992, to terminate the employment of Casio, et al. as a
necessary consequence of their expulsion from the union. It is the third requisite that there is
sufficient evidence to support the decision of IBM-Local 31 to expel Casio, et al. which appears to
be lacking in this case.
The full text of the individual but identical termination letters served by GMC on Casio, et al.,
revealed that it relied upon the Resolution of Pino, et al. expelling Casio, et al. from IBM-Local 31;
Gabianas Letters demanding that GMC terminate the employment of Casio, et al. on the basis of the
closed shop clause in the CBA; and the threat of being sued by IBM-Local 31 for unfair labor
practice. The letters made no mention at all of the evidence supporting the decision of IBM-Local 31
to expel Casio, et al. from the union. GMC never alleged nor attempted to prove that the company
actually looked into the evidence of IBM-Local 31 for expelling Casio, et al. and made a
determination on the sufficiency thereof. Without such a determination, GMC cannot claim that it
had terminated the employment of Casio, et al. for a just cause. Clearly, such failure on the part of
GMC is a direct consequence of its non-observance of procedural due process in the dismissal of its
employees.
The defense that, GMC as an employer, has the duty only to ascertain that IBM-Local 31
accorded Casio, et al. due process; and that it is the finding of the company that IBM-Local 31 did
give Casio, et al. the opportunity to answer the charges against them, but they refused to avail
themselves of such opportunity, is actually bereft of merit. There is nothing on record that would
indicate that IBM-Local 31 actually notified Casio, et al. of the charges against them or that they
were given the chance to explain their side. All that was stated in the Resolution expelling them
from the union, was that "a copy of the said letter complaint was dropped or left in front of E.
Casio." It was not established that said letter-complaint charging Casio, et al. with acts inimical to
the interest of the union was properly served upon Casio, that he willfully refused to accept the said
letter-notice, or that he had the authority to receive the same letter-notice on behalf of the other
employees similarly accused. Its worthy to note that they were expelled only five days after the
issuance of the letter-complaint against them. The Court cannot find proof on record when the
three-day period, within which Casio, et al. was supposed to file their answers, started to run and
had expired. The Court is likewise unconvinced that the said period was sufficient for them to
prepare their defenses and evidence to refute the serious charges against them.
Settled is the rule that the twin requirements of notice and hearing constitute the essential
elements of procedural 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
employers decision to dismiss him. This procedure is mandatory and its absence taints the
dismissal with illegality. Irrefragably, GMC cannot dispense with the requirements of notice and
hearing before dismissing Casio, et al. even when said dismissal is pursuant to the closed shop
provision in the CBA. The rights of an employee to be informed of the charges against him and to
reasonable opportunity to present his side in a controversy with either the company or his own
union are not wiped away by a union security clause or a union shop clause in a collective
bargaining agreement. An employee is entitled to be protected not only from a company which
disregards his rights but also from his own union the leadership of which could yield to the
temptation of swift and arbitrary expulsion from membership and hence dismissal from his job.
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In the case at bar, Casio, et al. did not receive any other communication from GMC, except
the written notice of termination dated March 24, 1992. GMC, by its own admission, did not conduct
a separate and independent investigation to determine the sufficiency of the evidence supporting
the expulsion of Casio, et al. by IBP-Local 31. It straight away acceded to the demand of IBP-Local
31 to dismiss Casio, et al.
REINSTATEMENT
PFIZER, INC. AND/OR REY GERARDO BACARRO, AND/OR FERDINAND CORTES, AND/OR
ALFRED MAGALLON, AND/OR ARISTOTLE ARCE
vs. GERALDINE VELASCO
G.R. No. 177467, March 9, 2011, J. Leonardo-De Castro
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."
Facts:
Respondent Velasco was an employee of petitioner PFIZER. Due to her high-risk pregnancy,
she was advised that she needed bed rest. Consequently, respondent filed her sick leave for the
period from 26 March to 18 June 2003, her vacation leave from 19 June to 20 June 2003, and leave
without pay from 23 June to 14 July 2003.
Thereafter, while respondent was still on leave, petitioner PFIZER through its Area Sales
Manager, herein petitioner Ferdinand Cortez, personally served respondent a "Show-cause Notice".
Aside from mentioning about an investigation on her possible violations of company work rules 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
and consequently ordered to surrender certain accountabilities such as the company car. When a
second show-cause notice was served upon respondent, she then filed a complaint for illegal
suspension against petitioner PFIZER with the Labor Arbiter. However, after a third show-cause
notice was served upon respondent, petitioner PFIZER informed respondent of its Management
Decision terminating her employment.
On December 5, 2003, the Labor Arbiter rendered a decision declaring the dismissal of
respondent illegal, and ordered her reinstatement with backwages. On appeal, the NLRC affirmed
the decision of the Labor Arbiter. Meanwhile, or on June 27, 2005, petitioner PFIZER sent a letter to
respondent requiring the latter to report for work at petitioner PFIZERs main office to which
request respondent did not comply.
The Court of Appeals, however, upheld the validity of respondents dismissal. Nevertheless,
upon respondents motion for reconsideration it ordered petitioner PFIZER to pay respondent her
wages from the date of the Labor Arbiters Decision dated December 5, 2003 up to the Court of
Appeals Decision dated November 23, 2005. Hence, this petition.
Petitioner contends that it should no longer be required to pay wages considering that (1) it
had already previously paid an enormous sum to respondent under the writ of execution issued by
the Labor Arbiter; (2) it was ready to reinstate respondent as of July 1, 2005 but it was respondent
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who unjustifiably refused to report for work; and (3) it would purportedly be tantamount to
allowing respondent to choose "payroll reinstatement" when by law it was the employer which had
the right to choose between actual and payroll reinstatement
Issue:
Whether or not PFIZER is liable to pay respondent backwages.
Ruling:
Yes, it is liable.
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, PFIZERs 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.
Moreover, 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."
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.
Applying the foregoing principle to the case before us, it cannot be said that with PFIZERs
June 27, 2005 Letter, in belated fulfillment of the Labor Arbiters reinstatement order, it had shown
a clear intent to reinstate respondent to her former position under the same terms and
conditions nor to a substantially equivalent position. To begin with, the return-to-work order
PFIZER sent respondent is silent with regard to the position or the exact nature of employment that
it wanted respondent to take up as of July 1, 2005. Even if we assume that the job awaiting
respondent in the new location is of the same designation and pay category as what she had before,
it is plain from the text of PFIZERs June 27, 2005 letter that such reinstatement was not "under the
same terms and conditions" as her previous employment, considering that PFIZER ordered
respondent to report to its main office in Makati City while knowing fully well that respondents
previous job had her stationed in Baguio City (respondents place of residence) and it was still
necessary for respondent to be briefed regarding her work assignments and
responsibilities, including her relocation benefits.
Furthermore, respondents decision to claim separation pay over reinstatement had no
legal effect, not only because there was no genuine compliance by the employer to the
reinstatement order but also because the employer chose not to act on said claim. If it was PFIZERs
position that respondents act amounted to a "resignation" it should have informed respondent that
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it was accepting her resignation and that in view thereof she was not entitled to separation pay.
PFIZER did not respond to respondents demand at all. As it was, PFIZERs failure to effect
reinstatement and accept respondents offer to terminate her employment relationship with the
company meant that, prior to the Court of Appeals reversal in the November 23, 2005 Decision,
PFIZERs liability for backwages continued to accrue for the period not covered by the writ of
execution dated May 24, 2005 until November 23, 2005.
CONSTRUCTIVE DISMISSAL
VIRGINIA SUGUE et. al. vs. TRIUMPH INTERNATIONAL (PHILS.), INC.
G.R. No. 164804/G.R. No. 164784, January 30, 2009, J. De Castro
Constructive dismissal is an involuntary resignation resorted to when continued employment
becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in
pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to an
employee.
For abandonment to be a valid ground for dismissal, two elements must then be satisfied: (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.
Facts:
Triumph hired Sugue as its Assistant Manager for Marketing and was subsequently
promoted to Marketing Services Manager. On the other hand, Valderrama was hired as Direct Sales
Manager. In October 1999, Triumphs top management began to notice a sharp decline in the sales
of the company and the actual sales figures continued to be significantly below the sales targets set
by Valderrama himself. Thereafter, Sugue and Valderrama filed a complaint with the NLRC against
Triumph for payment of money claims arising from allegedly unpaid vacation and sick leave credits,
birthday leave and 14th month pay for the period 1999-2000. On June 19, 2000, Sugue and
Valderrama personally attended the preliminary conference of the said case. The following day, a
memorandum was issued by Triumphs Managing Director/General Manager, Alfredo Escueta,
reminding all department heads of existing company policy that requires department heads to
notify him before leaving the office during work hours. That same day, Triumphs Personnel
Manager, Ralph Funtila, issued separate memoranda to Sugue and Valderrama requiring them to
inform the office of the General Manager of their whereabouts on June 19, 2000 from 9:06 a.m. to
11:15 a.m. They replied that they attended the aforementioned preliminary conference. Upon being
questioned, they explained that they believed they may use company time and the company vehicle
since the hearing they attended was pursuant to a complaint that they filed as employees of the
company. Triumph charged the one-half day utilized by Sugue and Valderrama in attending the
NLRC hearing to their vacation leave credits.
In the pleadings, Valderrama likewise complained that his request for an executive check-up
was disapproved by Triumph. Thereafter, Valderrama did not report for work on July 3 to 5,
2000 due allegedly to persistent cough and vertigo, but his request for sick leave on those dates was
disapproved by Triumph because he failed to submit a medical certificate as required by the
companys rules and policies. Subsequently, Triumph issued a show cause memo to Valderrama
requiring him to explain his departments dismal performance. Valderrama wrote the company a
letter stating that he considered himself constructively dismissed due to the unreasonable
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pressures and harassments he suffered the past months which prevented him from effectively
exercising his tasks as Direct Sales Manager. Triumph decided to terminate Valderramas
employment for abandonment of work.
Meanwhile, Sugue also wrote the company stating that she considers herself constructively
dismissed. From the pleadings, Sugues charge of constructive dismissal was based on the fact that
her request for vacation leave from July 14 to 15, 2000 was subject to the condition that she first
submit a report on the companys 2001 Marketing Plan. Also, the approval of her request for
executive check-up was deferred. Then, she received a memorandum instructing her to report to
Mr. Efren Temblique, which was an outright demotion considering that Mr. Temblique was her
former assistant. Sugues employment was terminated for abandonment of work.
Prior to the actual termination of their employment by Triumph, Sugue and Valderrama
filed a complaint for constructive dismissal against Triumph. The following day, on August 1, 2000,
Valderrama commenced his employment as Sales Director of Fila Phils., Inc., a competitior of
Triumph. The Labor Arbiter found that Sugue and Valderrama were constructively dismissed. The
NLRC reversed the Labor Arbiters decision. The CA set aside NLRCs decision.
Issue:
1. Whether or not Valderrama and Sugue were constructively dismissed by Triumph;
2. Whether or not Valderrama and Sugue abandoned their work
Ruling:
1. No. Constructive dismissal is defined as an involuntary resignation resorted to when continued
employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a
diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes
unbearable to an employee.
First, we can conceive of no reason to ascribe bad faith or malice to Triumph for charging to
the leave credits of Sugue and Valderrama the half-day that they spent in attending the preliminary
conference of the case they instituted against Triumph.
In the case of J.B. Heilbronn Co. v. National Labor Union, the Court held that Laborers who
voluntarily absent themselves from work to attend the hearing of a case in which they seek to prove
and establish their demands against the company, the legality and propriety of which demands is
not yet known, should lose their pay during the period of such absence from work. The age-old rule
governing the relation between labor and capital or management and employee is that a "fair day's
wage for a fair day's labor." If there is no work performed by the employee there can be no wage or
pay, unless of course, the laborer was able, willing and ready to work but was illegally locked out,
dismissed or suspended. It is hardly fair or just for an employee or laborer to fight or litigate against
his employer on the employer's time.
Second, with respect to the complained memorandum issued by Mr. Escueta, regarding the
company policy that required department heads to give prior notice to the General Manager if they
will be away from the office during office hours, did not single out Sugue and Valderrama but was
addressed to all department heads. Such memorandum could not be deemed a form of harassment
but rather it was in keeping with due process. When an employer believes that there has been a
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possible violation of company rules or policies, the law, in fact, requires the employer to give the
employee ample opportunity to explain.
Third, anent Sugue and Valderramas claim that they were unjustly denied availment of
their leaves as part of a scheme on the part of Triumph to harass them, we find the same patently
without merit. In the case of Valderrama, he applied for sick leave for the period July 3 to 5,
2000 allegedly because of persistent cough and vertigo, but this was disapproved by Triumph. The
record, however, reveals that he failed to comply with the companys requirement that an
application for sick leave for two or more days must be supported by a medical certificate which
must be verified by the company physician. He was even given twenty-four (24) hours to submit
the same but he totally ignored it. That his sick leave application was denied was mainly due to his
own fault and must not be unduly blamed on his employer.
For her part, Sugue condemns Triumph for putting a condition on the approval of her two
days vacation leave for July 14 and 15, 2000, when she was required to first submit a report on the
2001 Marketing Plan. Discrimination is the failure to treat all persons equally when no reasonable
distinction can be found between those favored and those not favored. Sugue obviously failed to
substantiate her claim of discrimination. To be sure, he who asserts must prove. As for the nature of
the condition itself, we do not see how it can be deemed unreasonable or in bad faith for the
employer to require its employee to complete her assignments on time or before taking a vacation
leave.
Fourth, both Sugue and Valderrama question the denial by Triumph of their request for
executive check-up. It should be noted that Triumph did not completely turn down their request.
Their request was merely deferred because the 2001 Initial Marketing Plan was due on June 26,
2000 and Triumphs regional product manager was scheduled to visit the country on June 26 to 29,
2000. As Valderrama was the Direct Sales Manager and Sugue was the Marketing Services Manager,
their presence on those dates was undoubtedly needed.
Lastly, Sugues claim that he was demoted when required to report to his subordinate
Temblique, is without merit. In view of Valderramas sudden severance of his employment coupled
with the substantially low sales Triumph had been experiencing for the past nine months, the
company saw an imperative need to effect a reorganization in its sales department, and this
included the temporary designation of Temblique as OIC for Marketing concurrently with his
position as Assistant Manager for Direct Sales-SMSD. When Sugue was directed to report to
Temblique, she was not being made to report to Temblique as Assistant Manager for Direct SalesSMSD but as the newly designated OIC for Marketing, i.e., the officer chiefly responsible for all
marketing matters.
2. Yes. Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment, without any intention of returning. It is a form of neglect of duty, hence, a just cause
for termination of employment by the employer. For abandonment to be a valid ground for
dismissal, two elements must then be satisfied: (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. The second element is the more determinative factor and must be evinced by overt
acts.
The abovementioned elements are present in the instant case. First, Sugue and Valderramas
failure to report for work was without justifiable reason. As earlier discussed, their allegation of
discrimination and harassment lacks factual basis, thus, under the circumstances, we find their
Page 53 of 80

absences to be unjustified and without any valid reason. Second, their overt act of writing letters
informing Triumph that they considered themselves constructively dismissed was a clear
manifestation of their intention to desist from their employment. Too, their defiance and disregard
of the memorandum sent by Triumph requiring them to explain their unauthorized absences
demonstrated a clear intention on their part to sever their employer-employee relationship.
Further, they filed a complaint for constructive dismissal without praying for
reinstatement. By analogy, we point to the doctrine that abandonment of work is inconsistent with
the filing of a complaint for illegal dismissal is not applicable where the complainant does not pray
for reinstatement and just asks for separation pay instead. In this case, Sugue and Valderrama
opted not to ask for reinstatement and even for separation pay, which clearly contradicts their
stance that they did not abandon their work, for it appears they have no intention of ever returning
to their positions in Triumph.
SOCIAL WELFARE LEGISLATION
SSS LAW
ALEXANDER B. GATUS vs. SOCIAL SECURITY SYSTEM
G.R. No. 174725, January 26, 2011, J. Leonardo-De Castro
The degree of proof required under P.D. 626 is merely substantial evidence, which means such
relevant evidence as a reasonable mind might accept as adequate to support a
conclusion. Accordingly, the claimant must show, at least by substantial evidence, that the
development of the disease was brought about largely by the conditions present in the nature of the
job. What the law requires is a reasonable work connection, not a direct causal relation. However, for
humanitarian reasons, as the petitioner pursued his claim all the way to the Court as an indigent
litigant, and due to his advancing age, what had already been given him should no longer be taken
away from him.
Facts:
Petitioner Alexander B. Gatus (Gatus) worked at the Central Azucarera de Tarlac beginning
on January 1, 1972. He was a covered member of the SSS (SS No. 02-0055015-6). He optionally
retired from Central Azucarera de Tarlac upon reaching 30 years of service on January 31, 2002, at
the age of 62 years. By the time of his retirement, he held the position of Tender assigned at the
Distillery Cooling Tower.
In the course of his employment in Central Azucarera de Tarlac, he was certified fit to work
on October 21, 1975 and was accordingly promoted to a year-round regular employment.
He suffered chest pains and was confined at the Central Luzon Doctors Hospital in Tarlac
City. Upon discharge, he was diagnosed to be suffering from Coronary Artery Disease (CAD): Triple
Vessel and Unstable Angina. His medical records showed him to be hypertensive for 10 years and a
smoker.
Page 54 of 80

On account of his CAD, he was given by the SSS the following EC/SSS Permanent Partial
Disability (PPD) benefits: (a) 8 monthly pensions effective September 1, 1994 and (b) 4 monthly
pensions effective January 3, 1997. He became an SSS retirement pensioner on February 1, 2002.
SSS audit revealed the need to recover the EC benefits already paid to him on the ground
that his CAD, being attributed to his chronic smoking, was not work-related.
Convinced that he was entitled to the benefits, he assailed the decision but the SSS
maintained its position. The SSS also denied his motion for reconsideration. He elevated the matter
to the ECC, which denied his appeal.
In the assailed Decision, the Court of Appeals held that petitioner is not entitled to
compensation benefits under Presidential Decree No. 626, as amended, affirming the Decision of
the Employees Compensation Commission (ECC), which was likewise a confirmation of the audit
conducted by the Social Security System (SSS).
Thus, this petition wherein, even without assistance of counsel, Gatus comes to this Court
contending that the appellate courts decision is flawed and if not reversed will result in irreparable
damage to the interest of the petitioner.
Issue:
Whether or not the Court of Appeals committed grave abuse of discretion in affirming the
finding of the ECC that Gatus ailment is not compensable under Presidential Decree No. 626, as
amended.
Ruling:
As found by the Court of Appeals, petitioner failed to submit substantial evidence that might
have shown that he was entitled to the benefits he had applied for. We thus affirm in toto the
findings and conclusions of the Court of Appeals in the questioned Decision.
The degree of proof required under P.D. 626 is merely substantial evidence, which means
such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion. Accordingly, the claimant must show, at least by substantial evidence, that the
development of the disease was brought about largely by the conditions present in the nature of the
job. What the law requires is a reasonable work connection, not a direct causal relation.
The questioned Decision deemed as established fact that petitioner is a cigarette smoker;
but Gatus vehemently denies this, saying there is no competent evidence to prove he had that
habit. What Gatus would like this Court to do is to pass upon a question of fact, which the ECC, the
SSS, and the Court of Appeals have used to deny his claim for compensation. This is not allowed
under Section 1 of Rule 45, which states that "the petition shall raise only questions of law which
must be distinctly set forth." Hence, questions of fact may not be taken up in a petition for review
on certiorari such as this case now before us.
The matter of Gatus cigarette smoking, established by two competent government
agencies and the appellate court, is thus a matter that cannot be questioned before us via
petition for review.
Page 55 of 80
There is no doubt that Gatus deserves sympathy because even the benefits already given to
him were questioned after the SSS found that he was a chronic cigarette smoker. For humanitarian
reasons, as he pursued his claim all the way to the Court as an indigent litigant, and due to his
advancing age, we would like to clarify that what had already been given him should no longer be
taken away from him. But he is not entitled to further compensation for his condition.
We have once more put great weight to the factual findings of administrative agencies and
quasi-judicial bodies, namely the SSS and the ECC, as they have acquired expertise in all matters
relating to employee compensation and disability benefits.
GSIS LAW
SIMEON M. VALDEZ vs. GOVERNMENT SERVICE INSURANCE SYSTEM
G.R. No. 146175. June 30, 2008, J. Leonardo-De Castro
Services in the MMSU, PHIVIDEC and as OIC ViceGovernor of Ilocos Norte cannot be credited
because, aside from having been rendered parttime in said agencies, the said positions were without
compensation as defined in Section 2(i) of RA No. 8291.
Facts:
On October 09, 1998, Valdez filed his application for retirement benefits with the GSIS. On
November 03, 1998, petitioner filed the same application with the CSC and at the same time, he
sought the CSCs opinion on whether his two (2) years and three (3) months stint as Manila
Economic Cultural Office (MECO) Director can be accredited as government service among others.
At the time he was still a member of the Board of Regents of the Mariano Marcos State
University (MMSU) from 1978 to 1992, he was likewise holding the positions of Philvidic Director
(November 1974 March 1987) and as OICVice Governor (August 1986March 1987).
On February 23, 1999, petitioner received two mails, one from the CSC and the other from
GSIS. The letter from CSC contained the challenged January 14, 1999 Opinion 3 denying the
accreditation of Valdezs services as former Director of MECO and of PHIVIDEC and as Member of
the Board of Regents of MMSU.
Petitioner insisted on the inclusion of his services rendered in the MECO, PHIVIDEC and
MMSU in the computation of his retirement benefits pursuant to Sections 10 (b) and 2 (l) of
Republic Act (RA) No. 8291. The CSC, for its part, rendered Resolution No. 991940 8 dated August
31, 1999 denying petitioners request for reconsideration. Petitioner then elevated the matter to
the CA by way of petition for review on certiorari against the CSC and the GSIS. On July 31, 2000, the
CA rendered the herein challenged decision dismissing the petition and affirming both the January
14, 1999 Opinion and Resolution No. 991940 of the CSC.
Issue:
Whether his services rendered in the MECO, MMSU, PHIVIDEC and as OIC ViceGovernor of
Ilocos Norte should be credited in the computation of his retirement benefits
Page 56 of 80

Ruling:
No.
None other than the 1987 Constitution of the Philippines, the Highest Law of the Land,
confines the scope of the civil service as embracing all the branches, subdivisions,
instrumentalities and agencies of the government, including governmentowned and controlled
corporations with original charters. x x x In Philippine National CompanyEnergy Development
Corporation v. Leogardo, 175 SCRA 26, 30 (1989), the Supreme Court categorically ruled that
under the present law, the test in determining whether a governmentowned or controlled
corporation is subject to the Civil Service Law is the manner of its creation such that government
corporations created by special charter are subject to its provision while those incorporated under
the General Corporation Law are not within its coverage.
With this in mind, the CSC was not in error in holding that: It is noted that MECO was
created before the effectivity of the 1987 Constitution. In this regard, granting without admitting
that at the time of its incorporation (during the effectivity of the 1973 Constitution) MECO was yet
under the coverage of the Philippine Civil Service, the appellants (i.e., petitioners services
rendered thereat for that period, however, still cannot be accredited as government service because
at the time of his retirement/filing of the case/complaint, the abovequoted provision (i.e., Section
2[1], Article IX) of the 1987 Constitution has already come into effect. As held by the Honorable
Supreme Court in Lumanta, et al. vs. National Labor Relations Commission and Food Terminal, Inc.
(170 SCRA 79), jurisdiction is determined as of the time of the filing of the complaint.
Relevantly, the last paragraph of Section 10 of RA No. 8291 dictates that for purposes of
computation of government service, only fulltime services with compensation are included: For
the purpose of this section, the term service shall include full time service with compensation:
Provided, That part time and other services with compensation may be included under such rules
and regulations as may be prescribed by the GSIS.
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS) et al. vs. COMMISSION ON AUDIT (COA),
AMORSONIA B. ESCARDA, MA. CRISTINA D. DIMAGIBA, and REYNALDO P. VENTURA
G. R. No. 162372, October 19, 2011, J. Leonardo-De Castro
The GSIS et al.s contention that under Section 3 of Republic Act No. 8291, which provides that
all laws or any law or parts of law specifically inconsistent with it are deemed repealed or modified,
thus, all provisions of the Teves Retirement Law that are inconsistent with Republic Act No. 8291 are
deemed repealed or modified cannot stand. This is because, unless the intention to revoke is clear and
manifest, the abrogation or repeal of a law cannot be assumed. The repealing clause contained in
Republic Act No. 8291 is not an express repealing clause because it fails to identify or designate the
statutes that are intended to be repealed.
Facts:
On May 30, 1997, Republic Act No. 8291, otherwise known as The Government Service
Insurance System Act of 1997 was enacted and approved expanding and increasing the coverage
and benefits of the GSIS, and instituting reforms therein. On October 17, 2000, pursuant to the
powers granted to it under Section 41(n) of the said law, the GSIS Board of Trustees
approved Board Resolution No. 326 wherein they adopted the GSIS Employees Loyalty Incentive
Plan (ELIP). Board Resolution No. 326 was amended by Board Resolution No. 360 which provided
for a single rate for all positions, regardless of salary grade, in the computation of creditable service.
Dimagiba, the corporate auditor of GSIS, communicated to the President and General Manager of
Page 57 of 80

GSIS that the GSIS RFP was contrary to law. However, the GSIS Legal Services Group opined that the
GSIS Board was legally authorized to adopt the plan. Board Resolution No. 6 was approved,
wherein ELIP was renamed GSIS Retirement/Financial Plan (RFP) to conform strictly to the
wordings of Section 41(n) of Republic Act No. 8291.
Upon Garcias assumption of office as President and General Manager, Dimagiba requested
to again review the GSIS RFP. This was denied by Garcia. Believing that the GSIS RFP was morally
indefensible, Dimagiba sought the assistance of COA in determining the legality and/or morality of
the said Plan in so far as it has adopted the best features of the two retirement schemes, the 5-year
lump sum payment under R.A. No. 1616 and the monthly pension of R.A. No. 660. COAs General
Counsel Santos M. Alquizalas issued a Memorandum to COA regarding the GSIS RFP. Alquizalas
opined that the GSIS RFP is a supplementary retirement plan, which is prohibited under Republic
Act No. 4968, or the Teves Retirement Law. Alquizalas pronounced that Board Resolution Nos. 360
and 6 are null and void for being violative of Section 28(b) of Commonwealth Act No. 186 as
amended by Republic Act No. 4968, which bars the creation of a supplemental retirement
scheme; and Section 41(n) of Republic Act No. 8291, which speaks of an early retirement plan or
financial assistance.
Dimagiba, in her letter, added that for lack of legal basis, her office was disallowing in
audit the portion of retirement benefits granted under the GSIS RFP, or the excess of the benefits
due the retirees. Garcia responded to Dimagiba, taking exception to the notice of disallowance for
being highly irregular and precipitate as it was based on a mere opinion of COAs counsel who had
no authority to declare the resolution of the GSIS Board of Trustees as null and void. Moreover,
Garcia asseverated that COA had neither power nor authority to declare as null and void certain
resolutions approved by the Board of Government Corporations, as the power to do so was
exclusively lodged before the courts. Without responding to Garcias, Dimagiba issued the Notices of
Disallowance on the grounds that Pursuant to legal opinion of the General Counsel, Board
Resolution approving the Employees Loyalty Incentive Plan (ELIP) is null and void for being
directly in conflict with Section 28(b) of CA No. 186 as amended by RA 4968 which bars the
creation of supplemental retirement scheme and of Section 41 (n) of RA 8291 which speaks of an
early retirement plan or financial assistance. GSIS, together with some of the petitioners herein,
gave notice that it was appealing the 21 Notices of Disallowance it had received from Dimagiba on
various dates. The petitioners mainly argued that GSIS had the power, under its charter, to adopt
and implement the GSIS RFP. They alleged that their plan was not unique to GSIS as other
government agencies also have their own retirement or financial assistance plans.
The COA, through Escarda, affirmed the disallowances made by Dimagiba. Escarda
sustained the COA general counsels opinion and said that while the GSIS may have the power to
adopt an early retirement or a financial assistance plan under its charter, it cannot supplement a
retirement plan already existing under the law. Thus, Escarda held that the GSIS RFP was in reality
a supplementary retirement plan for these GSIS employees. Finally, Escarda disagreed with GSISs
assertion that the Teves Retirement Law had been modified or repealed as the repealing clause in
Republic Act No. 8291 is a general repealing clause. Thus, the petitioners filed before the COA a
Petition for Review of CAO Is decision.The petitioners sought reconsideration of this decision and
even asked to be heard in oral arguments, but COA, in its Decision No. 2004-004 dated January 27,
2004, denied both motions and affirmed its Decision No. 2003-062 dated March 18, 2003 with
finality. The petitioners are now before us, asking us to nullify COAs March 18, 2003 and January
27, 2004 decisions, on the ground that they were made with grave abuse of discretion amounting to
lack or excess of jurisdiction.
Issue:
Page 58 of 80

1. Whether or not the Board Resolution Nos 360, 326 and 6 (the GSIS RFP) is legal
pursuant to the GSIS Act of 1997 and the GSIS Act as amended by Republic Act No. 4968
or the Teves Retirement Law.
2. Whether or not the COA acted in grave abuse of discretion in disallowing the Board
Resolution.
Ruling:
No, the GSIS et al. cannot enforce the GSIS Retirement/Financial Plan (RFP).
1. The petitioners insist that under Section 3 of Republic Act No. 8291, which provides that
all laws or any law or parts of law specifically inconsistent herewith are hereby repealed or
modified accordingly, all provisions of the Teves Retirement Law that are inconsistent with
Republic Act No. 8291 are deemed repealed or modified. We do not subscribe to petitioners
interpretation of this law. This is because, unless the intention to revoke is clear and manifest, the
abrogation or repeal of a law cannot be assumed. The repealing clause contained in Republic Act
No. 8291 is not an express repealing clause because it fails to identify or designate the statutes that
are intended to be repealed. It is actually a clause, which predicated the intended repeal upon the
condition that a substantial conflict must be found in existing and prior laws. Since Republic Act No.
8291 made no express repeal or abrogation of the provisions of Commonwealth Act No. 186 as
amended by the Teves Retirement Law, the reliance of the petitioners on its general repealing
clause is erroneous. The failure to add a specific repealing clause in Republic Act No. 8291 indicates
that the intent was not to repeal any existing law, unless an irreconcilable inconsistency and
repugnancy exists in the terms of the new and old laws. This Court sees no incompatibility between
the two laws being discussed here. In other words, what the Teves Retirement Law contemplates
and prohibits are separate retirement or insurance plans. In fact, the very same provision declared
inoperative or abolished all supplementary retirement or pension plans.
It is true that under Section 41(n) of Republic Act No. 8291, GSIS is expressly granted the
power to adopt a retirement plan and/or financial assistance for its employees, but a closer look at
the provision readily shows that this power is not absolute. It is qualified by the words early,
incentive, and for the purpose of retirement. The retirement plan must be
an early retirement incentive plan and such early retirement incentive plan or financial assistance
must be for the purpose of retirement. It is clear from the foregoing that Section 41(n) of Republic
Act No. 8291 contemplates a situation wherein GSIS, due to a reorganization, a streamlining of its
organization, or some other circumstance, which calls for the termination of some of its employees,
must design a plan to encourage, induce, or motivate these employees, who are not yet qualified for
either optional or compulsory retirement under our laws, to instead voluntarily retire. This is the
very reason why under the law, the retirement plan to be adopted is in reality an incentive scheme
to encourage the employees to retire before their retirement age.
Such is not the case with the GSIS RFP. Its very objective, to motivate and reward employees
for meritorious, faithful, and satisfactory service, contradicts the nature of an early retirement
incentive plan, or a financial assistance plan, which involves a substantial amount that is given to
motivate employees to retire early. Instead, it falls exactly within the purpose of a retirement
benefit, which is a form of reward for an employees loyalty and lengthy service, in order to help
him or her enjoy the remaining years of his life. Furthermore, to be able to apply for the GSIS RFP,
one must be qualified to retire under Republic Act No. 660 or Republic Act No. 8291, or must have
previously retired under our existing retirement laws. This only means that the employees covered
by the GSIS RFP were those who were already eligible to retire or had already retired. Certainly,
this is not included in the scope of an early retirement incentive plan or financial assistance for the
purpose of retirement. The fact that GSIS changed the name from Employees Loyalty Incentive Plan
to Retirement/Financial Plan does not change its essential nature. A perusal of the plan shows that
Page 59 of 80

its purpose is not to encourage GSISs employees to retire before their retirement age, but to
augment the retirement benefits they would receive under our present laws. Without a doubt, the
GSIS RFP is a supplementary retirement plan, which is prohibited by the Teves Retirement Law.
2. The petitioners also question COAs authority to nullify the resolutions involved in this
case. It must be remembered that none of the COA decisions nullified the Board Resolutions
adopted by GSISs Board of Trustees. What the COA decisions affirmed were the disallowances made
by GSISs own Corporate Auditor, Dimagiba. It is irrelevant that COA, in its decisions, touched upon
issues not brought before it, or that it referred to its general counsels opinion on the GSIS RFP, as
these were done only to reinforce COAs position. They have no bearing upon the weight of COAs
decisions, which are based upon our existing laws and jurisprudence. As for Dimagiba, while she
may have relied on the opinion of COAs legal counsel to support the disallowances she had made, it
is worthy to note that she had already informed Garcia of the GSIS RFPs illegality even before she
sought COAs opinion on the matter. Moreover, neither Dimagibas nor COAs confidence in the
opinion of COAs general counsel could be faulted, as under Presidential Decree No. 1445, or the
Government Auditing Code of the Philippines, one of the responsibilities of COAs legal office is to
interpret pertinent laws and auditing rules and regulations.
LABOR RELATIONS
RIGHT TO SELF-ORGANIZATION
BANK OF THE PHILIPPINE ISLANDS vs. BPI EMPLOYEES UNION-DAVAO CHAPTERFEDERATION OF UNIONS IN BPI UNIBANK
No substantial distinction Under the CBA Between Regular Employees Hired After
Probationary Status and Regular Employees Hired After the Merger. They belong to the same
bargaining unit being represented by the Union. They both enjoy benefits that the Union was able to
secure for them under the CBA. When they both entered the employ of BPI, the CBA and the Union Shop
Clause therein were already in effect and neither of them had the opportunity to express their
preference for unionism or not.
Facts:
On March 23, 2000, the Bangko Sentral ng Pilipinas approved the Articles of Merger
executed on January 20, 2000 by and between BPI, herein petitioner, and FEBTC. This Article and
Plan of Merger was approved by the Securities and Exchange Commission. Pursuant to the Article
and Plan of Merger, all the assets and liabilities of FEBTC were transferred to and absorbed by BPI
as the surviving corporation. FEBTC employees, including those in its different branches across the
country, were hired by petitioner as its own employees, with their status and tenure recognized
and salaries and benefits maintained.
Respondent BPI Employees Union-Davao Chapter - Federation of Unions in BPI Unibank is
the exclusive bargaining agent of BPIs rank and file employees in Davao City. The former FEBTC
rank-and-file employees in Davao City did not belong to any labor union at the time of the merger.
Some of the former FEBTC employees joined the Union, while others refused. Later, however, some
of those who initially joined retracted their membership. When these former FEBTC employees
refused to attend the hearing, the president of the Union requested BPI to implement the Union
Page 60 of 80

Shop Clause of the CBA and to terminate their employment pursuant thereto. The issue remained
unresolved at this level and so it was subsequently submitted for voluntary arbitration by the
parties.
Voluntary Arbitrator Rosalina Letrondo-Montejo, in a Decision ruled in favor of petitioner
BPIs interpretation that the former FEBTC employees were not covered by the Union Security
Clause of the CBA between the Union and the Bank on the ground that the said employees were not
new employees who were hired and subsequently regularized. The Voluntary Arbitrator concluded
that the former FEBTC employees could not be compelled to join the Union, as it was their
constitutional right to join or not to join any organization. Court of Appeals reversed and set aside
the Decision of the Voluntary Arbitrator. Hence, BPI presents recourse.
Issue:
Whether or not there is Substantial Distinction Under the CBA Between Regular Employees
Hired After Probationary Status and Regular Employees Hired After the Merger.
Ruling:
No, there is no substantial distinction.
We agree with the Court of Appeals that there are no substantial differences between a
newly hired non-regular employee who was regularized weeks or months after his hiring and a
new employee who was absorbed from another bank as a regular employee pursuant to a merger,
for purposes of applying the Union Shop Clause. Both employees were hired/employed only after
the CBA was signed. At the time they are being required to join the Union, they are both already
regular rank and file employees of BPI. They belong to the same bargaining unit being represented
by the Union. They both enjoy benefits that the Union was able to secure for them under the
CBA. When they both entered the employ of BPI, the CBA and the Union Shop Clause therein were
already in effect and neither of them had the opportunity to express their preference for unionism
or not. We see no cogent reason why the Union Shop Clause should not be applied equally to these
two types of new employees, for they are undeniably similarly situated.
The effect or consequence of BPIs so-called absorption of former FEBTC employees should
be limited to what they actually agreed to, i.e. recognition of the FEBTC employees years of service,
salary rate and other benefits with their previous employer. The effect should not be stretched so
far as to exempt former FEBTC employees from the existing CBA terms, company policies and rules
which apply to employees similarly situated. If the Union Shop Clause is valid as to other new
regular BPI employees, there is no reason why the same clause would be a violation of the absorbed
employees freedom of association.
RIGHT TO COLLECTIVE BARGAINING
STANDARD CHARTERED BANK vs. STANDARD CHARTERED BANK EMPLOYEES UNION
(SCBEU)
Standard Chartered argues that maternity benefits, under this provision, can only be given to
its own employees and not to spouses of male employees. However, a reading of Section 1 shows that
Page 61 of 80

at the time the CBA was signed there was already an existing group hospitalization insurance plan
and Standard Chartered was committing under the CBA to continue the same.
In determining the coverage of the benefits under the said plan, it is the provision of the plan
itself that govern. In the said plan, the term dependent includes a members spouse who is not more
than 65 years of age. The plan further provides that unless dependents are excluded in any particular
Insurance Schedule the term insured person shall be deemed to include any dependent insured under
the Policy. In other words, dependents enjoy the same benefits as the insured person unless they are
expressly excluded in the Insurance Schedule of benefits. The Court notes that there is nothing in the
Insurance Schedules or the plan itself which excludes dependents from availing of the maternity
benefits granted under the plan.
Facts:
Petitioner Standard Chartered entered into a CBA with its employees union (or SCBEU)
which provided, among others, for medical benefits, particularly under Article XI, Section thereof,
the employees were covered by group hospitalization and major surgical insurance plan including
maternity benefits and that were initially provided by Philippine American Life Insurance
Company. Standard Chartered then changed its insurance provider to Maxicare.
Subsequently, SCBEU charged Standard Chartered with ULP before the DOLE for alleged
violation of the economic provisions of the CBA and diminution or removal of benefits thru the
exclusion of outpatient medicine reimbursements and maternity benefits granted to the spouses of
male employees under the new policy provided by Maxicare, which the bank opposed.
The DOLE ultimately ruled in favor SCBEU and which was later affirmed by the CA.
Issues:
1. Whether or not the spouses of the male employees of Standard Chartered are entitled to
maternity benefits.
2. Whether or not the employees of Standard Chartered have right to claim outpatient
medical reimbursements.
Ruling:
1. Yes, the maternity benefits may be extended to the dependents of male employees.
Article XI, Section 1 of the CBA provides:
The BANK shall continue to cover all its employees with a group hospitalization and major
surgical insurance plan including maternity benefits with a disablement maximum amount of
PhP100,000.00 per illness per year. All employees will be furnished with a copy of the booklet
explaining the coverage of the Plan.
The BANK shall continue extending advances to staff members (or their dependents as
defined in the insurance plan), who have been hospitalized due to ill health. xxx
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Standard Chartered argues that maternity benefits, under this provision, can only be given
to its own employees and not to spouses of male employees. However, a reading of Section 1 shows
that at the time the CBA was signed there was already an existing group hospitalization insurance
plan and Standard Chartered was committing under the CBA to continue the same.
In determining the coverage of the benefits under the said plan, it is the provision of the
plan itself that govern. In the said plan, the term dependent includes a members spouse who is not
more than 65 years of age. The plan further provides that unless dependents are excluded in any
particular Insurance Schedule the term insured person shall be deemed to include any dependent
insured under the Policy. In other words, dependents enjoy the same benefits as the insured person
unless they are expressly excluded in the Insurance Schedule of benefits. The Court notes that there
is nothing in the Insurance Schedules or the plan itself which excludes dependents from availing of
the maternity benefits granted under the plan.
2.
Yes, the employees can claim such reimbursements.
Standard Chartered admits that outpatient benefits, as a matter of practice, were paid by
Philippine American Life Insurance as claims against the disablement maximum. However, it is not
assailing the payment of outpatient benefits in the present case but only assailing the inclusion of
outpatient medicine reimbursements in the term outpatient benefits. On this score, the Court relies
on the DOLEs Order which stated In making this clarification, we are not unaware of the Banks
position that medicine reimbursement is not part of the HMO package but was unilaterally granted by
the service provider. Even if this were so, however, we do not believe that the grant by the service
provider was without the conformity of the Bank in the light of the exhibits submitted by the Union
xxx. Thus, viewed from another angle, a conclusion similar to the spousal maternity obtains, i.e., that a
practice on medicine reimbursement has similarly developed which the Bank cannot now unilaterally
withdraw.
BANK OF THE PHILIPPINE ISLANDS vs. BPI EMPLOYEES UNION-DAVAO CHAPTERFEDERATION OF UNIONS IN BPI UNIBANK
G.R. No. 164301, August 10, 2010, J. LEONARDO-DE CASTRO
Right of an Employee not to join a Union is not Absolute and Must Give Way to the Collective
Good of All Members of the Bargaining Unit. Time and again, this Court has ruled that the individual
employees right not to join a union may be validly restricted by a union security clause in a CBA and
such union security clause is not a violation of the employees constitutional right to freedom of
association
Facts:
On March 23, 2000, the Bangko Sentral ng Pilipinas approved the Articles of Merger
executed on January 20, 2000 by and between BPI, herein petitioner, and FEBTC. This Article and
Plan of Merger was approved by the Securities and Exchange Commission. Pursuant to the Article
and Plan of Merger, all the assets and liabilities of FEBTC were transferred to and absorbed by BPI
as the surviving corporation. FEBTC employees, including those in its different branches across the
country, were hired by petitioner as its own employees, with their status and tenure recognized
and salaries and benefits maintained.
Page 63 of 80

Respondent BPI Employees Union-Davao Chapter - Federation of Unions in BPI Unibank is
the exclusive bargaining agent of BPIs rank and file employees in Davao City. The former FEBTC
rank-and-file employees in Davao City did not belong to any labor union at the time of the merger.
Some of the former FEBTC employees joined the Union, while others refused. Later, however, some
of those who initially joined retracted their membership. When these former FEBTC employees
refused to attend the hearing, the president of the Union requested BPI to implement the Union
Shop Clause of the CBA and to terminate their employment pursuant thereto. The issue remained
unresolved at this level and so it was subsequently submitted for voluntary arbitration by the
parties.
Voluntary Arbitrator Rosalina Letrondo-Montejo, in a Decision ruled in favor of petitioner
BPIs interpretation that the former FEBTC employees were not covered by the Union Security
Clause of the CBA between the Union and the Bank on the ground that the said employees were not
new employees who were hired and subsequently regularized. The Voluntary Arbitrator concluded
that the former FEBTC employees could not be compelled to join the Union, as it was their
constitutional right to join or not to join any organization. Court of Appeals reversed and set aside
the Decision of the Voluntary Arbitrator. Hence, BPI presents recourse.
Issue:
Whether or not the Right of an Employee not to join a Union is not Absolute and Must Give
Way to the Collective Good of All Members of the Bargaining Unit.
Ruling:
No, right to join a union is not absolute.
In the past this Court has upheld even the more stringent type of union security
clause, i.e., the closed shop provision, and held that it can be made applicable to old employees who
are already regular and permanent but have chosen not to join a union. In the early case of Juat v.
Court of Industrial Relations, the Court held that an old employee who had no union may be
compelled to join the union even if the collective bargaining agreement (CBA) imposing the closed
shop provision was only entered into seven years after of the hiring of the said employee. Although
the present case does not involve a closed shop provision that included even old employees,
the Juat example is but one of the cases that laid down the doctrine that the right not to join a union
is not absolute. Theoretically, there is nothing in law or jurisprudence to prevent an employer and a
union from stipulating that existing employees who already attained regular and permanent status
but who are not members of any union are to be included in the coverage of a union security
clause. Even Article 248(e) of the Labor Code only expressly exempts old employees who already
have a union from inclusion in a union security clause.
In Victoriano, the issue that confronted the Court was whether or not employees who were
members of the Iglesia ni Kristo (INK) sect could be compelled to join the union under a closed shop
provision, despite the fact that their religious beliefs prohibited them from joining a
union. If Juat exemplified an exception to the rule that a person has the right not to join a
union, Victoriano merely created an exception to the exception on the ground of religious freedom.
Time and again, this Court has ruled that the individual employees right not to join a union may be
validly restricted by a union security clause in a CBA and such union security clause is not a
violation of the employees constitutional right to freedom of association.
Page 64 of 80
The rationale for upholding the validity of union shop clauses in a CBA, even if they impinge
upon the individual employees right or freedom of association, is not to protect the union for the
unions sake. Laws and jurisprudence promote unionism and afford certain protections to the
certified bargaining agent in a unionized company because a strong and effective union presumably
benefits all employees in the bargaining unit since such a union would be in a better position to
demand improved benefits and conditions of work from the employer.
In the case at bar, since the former FEBTC employees are deemed covered by the Union
Shop Clause, they are required to join the certified bargaining agent, which supposedly has
gathered the support of the majority of workers within the bargaining unit in the appropriate
certification proceeding. Their joining the certified union would, in fact, be in the best interests of
the former FEBTC employees for it unites their interests with the majority of employees in the
bargaining unit. It encourages employee solidarity and affords sufficient protection to the majority
status of the union during the life of the CBA which are the precisely the objectives of union security
clauses, such as the Union Shop Clause involved herein.
In sum, this Court finds it reasonable and just to conclude that the Union Shop Clause of the
CBA covers the former FEBTC employees who were hired/employed by BPI during the effectivity of
the CBA in a manner which BPI describes as absorption. A contrary appreciation of the facts of this
case would, undoubtedly, lead to an inequitable and very volatile labor situation which this Court
has consistently ruled against. In the case of former FEBTC employees who initially joined the union
but later withdrew their membership, there is even greater reason for the union to request their
dismissal from the employer since the CBA also contained a Maintenance of Membership Clause.
UNFAIR LABOR PRACTICE
DE LA SALLE UNIVERSITY vs. DE LA SALLE UNIVERSITY EMPLOYEES ASSOCIATION (DLSUEANAFTEU)
The University is guilty of refusal to bargain amounting to an unfair labor practice under
Article 248 of the Labor Code. Indeed there was a requirement on both parties of the performance of
the mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose of
negotiating an agreement. There was nothing in the March 19, 2001 and July 6, 2001 orders of
Director Maraan and Cacdac which restrained or enjoined compliance by the parties with their
obligations under the CBA and under the law. The issue of union leadership is distinct and separate
from the duty to bargain.
Facts:
Some of De La Salle University Employees Associations (DLSUEANAFTEU) members
headed by Belen Aliazas (the Aliazas faction) filed a petition for the election of union officers in the
Bureau of Labor Relations (BLR). They alleged therein that there has been no election for
DLSUEANAFTEUs officers since 1992 in supposed violation of the DLSUEANAFTEUs constitution
and by-laws which provided for an election of officers every three years. It would appear that
DLSUEANAFTEUs members repeatedly voted to approve the hold-over of the previously elected
officers led by Baylon R. Baez (Baez faction).
Page 65 of 80

On March 19, 2001, BLR Regional Director Maraan issued a Decision ordering the conduct
of an election of union officers to be presided by the Labor Relations Division of DOLE-NCR. He
noted therein that the members of the Baez faction were not elected by the general membership
but were appointed by the Executive Board to their positions since 1985.
The Baez faction appealed the said March 19, 2001 Decision of the BLR Regional Director.
While the appeal was pending, the Aliazas faction filed a Very Urgent Motion for Intervention in the
BLR. They alleged therein that the Baez faction, in complete disregard of the March 19, 2001
Decision, scheduled a "regular" election of union officers without notice to or participation of the
DOLE-NCR. In an Order dated July 6, 2001, BLR Director Cacdac granted the motion for
intervention. He held that the unilateral act of setting the date of election on July 9, 2001 and the
disqualification of the Aliazas faction by the DLSUEA-COMELEC supported the intervening factions
fear of biased elections. Thereafter, in a Resolution dated May 23, 2002, BLR Director Cacdac also
dismissed the appeal of the Baez faction.
Meanwhile, despite the brewing conflict between the Aliazas and Baez factions, De La Salle
University entered into a five-year CBA covering the period from June 1, 2000 to May 31, 2005. On
August 7, 2001, the Aliazas faction wrote a letter to DLSU requesting it to place in escrow the union
dues and other fees deducted from the salaries of employees pending the resolution of the intraunion conflict. Putting the collection on escrow means the continuance of our monthly deductions
but the same will not be remitted to DLSUEANAFTEUs funds.
DLSU acceded to the request of the Aliazas faction and informed the Baez faction that until
the result of this election comes out and a declaration by the DOLE of the validly elected officers is
made, a void in the Union leadership exists and hence cannot collectively bargain with the union.
In view of the foregoing decision of petitioner DLSU, respondent DLSUEANAFTEU filed a
complaint for unfair labor practice in the National Labor Relations Commission (NLRC). It alleged
that DLSU committed a violation of Article 248(a) and (g) of the Labor Code.
Issue:
Whether or not petitioner DLSU is guilty of unfair labor practice on the ground of its refusal
to collectively bargain with respondent DLSUEANAFTEU.
Ruling:
Yes.
The University is guilty of refusal to bargain amounting to an unfair labor practice under
Article 248 of the Labor Code. Indeed there was a requirement on both parties of the performance
of the mutual obligation to meet and convene promptly and expeditiously in good faith for the
purpose of negotiating an agreement. Undoubtedly, both DLSU and DLSUEANAFTEU entered into a
CBA on March 20, 2001. The term of the said CBA commenced on June 1, 2000 and with the
expiration of the economic provisions on the third year, DLSUEANAFTEU initiated negotiation by
sending a letter dated March 15, 2003, together with the CBA proposal. In reply to the letter of
DLSUEANAFTEU, DLSU in its letter dated March 20, 2003 refused.
Page 66 of 80

Such an act constituted an intentional avoidance of a duty imposed by law. There was
nothing in the March 19, 2001 and July 6, 2001 orders of Director Maraan and Cacdac which
restrained or enjoined compliance by the parties with their obligations under the CBA and under
the law. The issue of union leadership is distinct and separate from the duty to bargain.
Anent the so called void in the Union leadership, We declared that the same does not
constitute a valid ground to refuse to negotiate because DLSUs duty to bargain under the law is due
and demandable under the law by DLSUEANAFTEU as a whole and not by any faction within the
union. In fact, BLR Director Cacdac clarified that there was no void in DLSUEANAFTEUs leadership.
The pertinent decision dated March 19, 2001 x x x reads:
We take this opportunity to clarify that there is no void in DLSUEANAFTEUs leadership.
The March 19, 2001 decision x x x should not be construed as an automatic termination of
the incumbent officers tenure of office. As duly-elected officers of DLSUEANAFTEU, their
leadership is not deemed terminated by the expiration of their terms of office, for they shall
continue their functions and enjoy the rights and privileges pertaining to their respective
positions in a hold-over capacity, until their successors shall have been elected and
qualified.
TABANGAO SHELL REFINERY EMPLOYEES ASSOCIATION vs. PILIPINAS SHELL PETROLEUM
CORPORATION
G.R. No. 170007, April 7, 2014, J. Leonardo-De Castro
As there was no bad faith on the part of the company in its bargaining with the union,
deadlock was possible and did occur. Thus, because of the unresolved issue on wage increase, there
was actually a complete stoppage of the ongoing negotiations between the parties and the union filed
a Notice of Strike. A mutual declaration would neither add to nor subtract from the reality of the
deadlock then existing between the parties. Thus, the absence of the parties mutual declaration of
deadlock does not mean that there was no deadlock. At most, it would have been simply a recognition
of the prevailing status quo between the parties.
Facts:
In anticipation of the expiration of the 2001-2004 Collective Bargaining Agreement (CBA)
between the petitioner, Tabangao Shell Refinery Employees Assoc. and the respondent Pilipinas
Shell Petroleum Corporation, started negotiations for a new CBA. The union proposed a 20o/o
annual across-the-board basic salary increase for the next three years that would be covered by the
new CBA. In lieu of the annual salary increases, the company made a counter-proposal to grant all
covered employees a lump sum amount of P80,000.00 yearly for the three-year period of the new
CBA.
The union lowered its proposal to 12% annual across-the-board increase for the next three
years. For its part, the company increased its counter-proposal to a yearly lump sum payment
of P88,000.00 for the next three years. The union requested financial data for the manufacturing
class of business in the Philippines. The company reiterated that its counter-offer is based on its
affordability for the company, comparison with the then existing wage levels of allied industry, and
the then existing total pay and benefits package of the employees.
However, the union remained unconvinced and asked for additional documents to justify
the companys counter-offer. Alleging failure on the part of the company to justify its offer, the
Page 67 of 80

union manifested that the company was bargaining in bad faith. The company, in turn, expressed
its disagreement with the unions manifestation.
On that same day, the union filed a Notice of Strike in the National Conciliation and
Mediation Board (NCMB), alleging bad faith bargaining on the part of the company. The NCMB
immediately summoned the parties for the mandatory conciliation-mediation proceedings but the
parties failed to reach an amicable settlement.
Upon being aware of this development, the company filed a Petition for Assumption of
Jurisdiction with the Secretary of Labor and Employment which the latter granted. The Secretary of
Labor and Employment took notice of the Notice of Strike filed by the union in the NCMB.
Thereafter, SOLE found that the intended strike would likely affect the companys capacity to
provide petroleum products to the companys various clientele, including the transportation sector,
the energy sector, and the manufacturing and industrial sectors.
The union thereafter filed a petition for certiorari in the Court of Appeals. It alleged in its
petition that the Secretary of Labor and Employment acted with grave abuse of discretion in grossly
misappreciating the facts and issue of the case. However, The Court of Appeals dismissed it.
During the pendency of the unions petition for certiorari in the Court of Appeals, the
Secretary of Labor and Employment rendered a Decision stating that there was already deadlock
although the ground for the first Notice of Strike was unfair labor practice for bargaining in bad
faith. Furthermore, the Company is not guilty of bargaining in bad faith. The duty to bargain does
not compel any party to accept a proposal, or make any concession, as recognized by Article 252 of
the Labor Code, as amended
The union now comes to this Court to press its contentions. It insists that the corporation is
guilty of unfair labor practice through bad faith bargaining. According to the union, bad faith
bargaining and a CBA deadlock cannot legally co-exist because an impasse in negotiations can only
exist on the premise that both parties are bargaining in good faith.
Issue:
1) Whether or not decision of SOLE became final & Executory.
2) Whether or not the Company is guilty for unfair labor practice bad faith bargaining.
3) Whether or not there was deadlock between the parties regarding the negotiation of
CBA.
Ruling:
1) Yes, decision of SOLE became final & Executory.
Petition is barred by res judicata in the concept of conclusiveness of judgment. The doctrine
states that a fact or question which was in issue in a former suit, and was there judicially passed on
and determined by a court of competent jurisdiction, is conclusively settled by the judgment
therein, as far as concerns the parties to that action and persons in privity with them, and cannot be
again litigated in any future action between such parties or their privies, in the same court or any
Page 68 of 80

other court of concurrent jurisdiction on either the same or a different cause of action, while the
judgment remains unreversed or unvacated by proper authority. The only identities thus required
for the operation of the judgment as an estoppel x x x are identity of parties and identity of issues.
It has been held that in order that a judgment in one action can be conclusive as to a
particular matter in another action between the same parties or their privies, it is essential that the
issues be identical. If a particular point or question is in issue in the second action, and the
judgment will depend on the determination of that particular point or question, a former judgment
between the same parties [or their privies] will be final and conclusive in the second if that same
point or question was in issue and adjudicated in the first suit.
The Decision of the Secretary of Labor and Employment in the labor dispute over which he
assumed jurisdiction has long attained finality. The union never denied this. In this connection,
Article 263(i) of the Labor Code is clear:
ART. 263. Strikes, picketing, and lockouts. x x x x x x x (i) The Secretary of Labor and
Employment, the Commission or the voluntary arbitrator shall decide or resolve the dispute within
thirty (30) calendar days from the date of the assumption of jurisdiction or the certification or
submission of the dispute, as the case may be. The decision of the President, the Secretary of Labor
and Employment, the Commission or the voluntary arbitrator shall be final and executory ten (10)
calendar days after receipt thereof by the parties.
Pursuant to Article 263(i) of the Labor Code, therefore, the Decision of the Secretary of
Labor and Employment became final and executory after the lapse of the period provided under the
said provision. The Decision of the Secretary of Labor and Employment already considered and
ruled upon the issues being raised by the union in this petition.
2) No, the Company is not guilty for unfair labor practice.
The decision of SOLE correctly characterized the nature of the duty to bargain, that is, it
does not compel any party to accept a proposal or to make any concession. While the purpose of
collective bargaining is the reaching of an agreement between the employer and the employees
union resulting in a binding contract between the parties, the failure to reach an agreement after
negotiations continued for a reasonable period does not mean lack of good faith. The laws invite
and contemplate a collective bargaining contract but do not compel one. For after all, a CBA, like
any contract is a product of mutual consent and not of compulsion. As such, the duty to bargain
does not include the obligation to reach an agreement. In this light, the corporations unswerving
position on the matter of annual lump sum payment in lieu of wage increase did not, by itself,
constitute bad faith even if such position caused a stalemate in the negotiations.
3) Yes, there was deadlock between the parties regarding the negotiation of CBA.
As there was no bad faith on the part of the company in its bargaining with the union,
deadlock was possible and did occur. Thus, because of the unresolved issue on wage increase, there
was actually a complete stoppage of the ongoing negotiations between the parties and the union
filed a Notice of Strike. A mutual declaration would neither add to nor subtract from the reality of
the deadlock then existing between the parties. Thus, the absence of the parties mutual declaration
of deadlock does not mean that there was no deadlock. At most, it would have been simply a
recognition of the prevailing status quo between the parties.
Page 69 of 80

Further, there was already an actual existing deadlock between the parties. What was
lacking was the formal recognition of the existence of such a deadlock because the union refused a
declaration of deadlock. Thus, the unions view that, at the time the Secretary of Labor and
Employment exercised her power of assumption of jurisdiction, the issue of deadlock was neither
an incidental issue to the matter of unfair labor practice nor an existing issue is incorrect.
While the first Notice of Strike is indeed significant in the determination of the existing
labor dispute between the parties, it is not the sole criterion. Law provides that the Secretary of the
DOLE has been explicitly granted by Article 263(g) of the Labor Code the authority to assume
jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, and decide the same accordingly. And, as a matter of
necessity, it includes questions incidental to the labor dispute; that is, issues that are necessarily
involved in the dispute itself, and not just to that ascribed in the Notice of Strike or otherwise
submitted to him for resolution
A "labor dispute" is defined under Article 212(l) of the Labor Code as follows:
ART. 212. Definitions. x x x x (l) "Labor dispute" includes any controversy or matter concerning
terms or conditions of employment or the association or representation of persons in negotiating,
fixing, maintaining, changing or arranging the terms and conditions of employment, regardless of
whether the disputants stand in the proximate relation of employer and employee.
In this case, there was a dispute, an unresolved issue on several matters, between the union
and the company in the course of the negotiations for a new CBA. Among the unsettled issues was
the matter of compensation.
Thus, the labor dispute between the union and the company concerned the unresolved
matters between the parties in relation to their negotiations for a new CBA. The power of the
Secretary of Labor and Employment to assume jurisdiction over this dispute includes and extends
to all questions and controversies arising from the said dispute, such as, but not limited to the
unions allegation of bad faith bargaining. It also includes and extends to the various unresolved
provisions of the new CBA such as compensation, particularly the matter of annual wage increase
or yearly lump sum payment in lieu of such wage increase, whether or not there was deadlock in
the negotiations.
Article 263(g) is both an extraordinary and a preemptive power to address an
extraordinary situation - a strike or lockout in an industry indispensable to the national interest.
This grant is not limited to the grounds cited in the notice of strike or lockout that may have
preceded the strike or lockout; nor is it limited to the incidents of the strike or lockout that in the
meanwhile may have taken place. As the term "assume jurisdiction" connotes, the intent of the law
is to give the Labor Secretary full authority to resolve all matters within the dispute that gave rise to
or which arose out of the strike or lockout; it includes and extends to all questions and
controversies arising from or related to the dispute, including cases over which the labor arbiter
has exclusive jurisdiction.
PROCEDURE AND JURISDICTION
PROCEDURAL RULES AND TECHNICALITIES
Page 70 of 80

LEANDRO M. ALCANTARA vs. THE PHILIPPINE COMMERCIAL AND INTERNATIONAL BANK
Failure to attach all pleadings and documents, by itself, is not a sufficient ground to dismiss a
petition. Lapses in the literal observation of a procedural rule will be overlooked when they do not
involve public policy, when they arose from an honest mistake or unforeseen accident, and when they
have not prejudiced the adverse party or deprived the court of its authority.
When there is enough basis on which a proper evaluation of the merits of petitioners case may
be had, the Court may dispense with the time consuming procedure of remand in order to prevent
further delays in the disposition of the case.
The essence of due process lies simply in an opportunity to be heard, and not that an actual
hearing should always and indispensably be held. Even assuming that an employee was not fully heard
during the employers investigation, it is his fault if the same is due to his misguided insistence on
having a trial type hearing despite established jurisprudence stating that the mere opportunity to be
heard would suffice as due process in administrative proceedings.
Facts:
Leandro M. Alcantara (Petitioner) had been an employee of PCIB from August 15, 1974. He
rose from the ranks until he became a branch manager of the PCIBs branch in Rizal Avenue, Manila.
It is not disputed that prior to the present controversy, he had never been subjected to disciplinary
action by his employer. The last basic monthly salary of the complainant as branch manager was
allegedly P43,900.00.
Philippine Commercial and International Bank (PCIB) alleged that on December 12, 1997, a
certain Romy Espiritu called the office of Ms. Ana Lim of its Customer Care reporting the alleged
involvement of Alcantara with a big syndicate. Two Certificates of Time Deposit (CTD) issued by
PCIB were allegedly being used by the syndicate in their illegal activities.
It appears that on December 23, 1997, Petitioner prepared 2 CTDs with an aggregate
amount of P538,000.00 and P360,000.00. The CTDs were signed by petitioner and Guillerma
Alcantara, the head of Sales. However, the CTDs were unbooked and the duplicate control copy and
PCIAV Input Document Copy do not state the due dates and term of the 2 CTDs. Petitioner was the
one who prepared and processed the CTDs. He was then dismissed from employment because it
was allegedly determined that he took advantage of the trust and confidence reposed in his position
as branch manager and falsified Bank records in order to facilitate a transaction amounting
to P538,360,000.00 that was prejudicial to the welfare and interest of the Bank.
Petitioner admitted that he was the one who processed and prepared the CTDs and claims
that the CTDs were not booked or recorded completely because the same were already cancelled.
He alleged that no bank policy nor rules and regulations prohibit a Branch Manager from assisting a
depositor or depositors of the bank. Nothing was done in secrecy and CTDs were allegedly
promptly cancelled owing to the failure of the clients to come up with the money within the time
frame given by him.
Petitioner then filed with the Regional Arbitration Branch of the NLRC a complaint for
illegal dismissal; illegal suspension; payment of backwages; and non-payment of salaries/wages,
Page 71 of 80

allowance, separation pay, retirement benefits, service incentive leave pay, and accrued/unused
sick leave and vacation leaves against respondent.
Labor Arbiter (LA) dismissed petitioners complaint for illegal dismissal for lack of merit
wherein it was held that there was substantial evidence that petitioner manipulated the records of
respondent to facilitate the anomalous transactions of the members of the alleged criminal
syndicate.
Petitioner appealed the LAs Decision. However, the NLRC affirmed the same and dismissed
petitioners appeal for lack of merit. Undaunted, petitioner filed a Motion for Reconsideration but
the same was denied by the NLRC.
Thus, petitioner filed a petition for certiorari under Rule 65 of the Rules of Court with the
Court of Appeals (CA) assailing the aforementioned NLRC resolutions which denied his appeal and
motion for reconsideration. This petition was dismissed by CA. It then held that due to the
unavailability of the aforementioned portions of the record and relevant or pertinent documents, it
was unable to resolve the issues presented to it and thus was constrained to dismiss the petition on
account of the last paragraph of Section 3, Rule 46 of the 1997 Revised Rules of Civil Procedure.
Petitioner subsequently filed a Motion for Reconsideration but this was denied by the CA.
Issues:
1. Whether or not the Court of Appeals properly dismissed petitioners special civil action for
certiorari and properly denied his Motion for Reconsideration.
2. Whether or not Petitioners termination from employment was both substantially and
procedurally valid.
Ruling:
1. Clearly, the Court of Appeals erred in dismissing petitioners special civil action
for certiorari despite subsequent substantial compliance with the rules on procedure, and in so
doing, unduly upheld technicalities at the expense of a just resolution of the case. Ordinarily,
court procedure dictates that the Court of Appeals should be tasked with properly disposing the
petition, a second time around, on the merits.
Anent the first issue, petitioner does not dispute the Court of Appeals dismissal of his
special civil action for certiorari on the sole ground that his petition was patently defective due to
his failure to attach thereto the material portions of the records of the NLRC along with other
pertinent or relevant documents of the case. However, petitioner insists that the Court of Appeals
should have accepted his belated submission on October 19, 2001 of the required attachments to
his Petition for Certiorari that accompanied the filing of his Motion for Reconsideration because the
admission of said documents will not automatically prejudice respondents cause and that, in labor
cases such as in the case at bar, the relaxation of procedural rules is allowed since what is at stake is
the livelihood and survival of a dismissed employee.
Respondent, on the other hand, argues that CA was correct in dismissing petitioners
Petition for Certiorari and his subsequent Motion for Reconsideration. It further explains in detail
why petitioners proffered reasons to explain his failure to attach the pertinent pleadings and
Page 72 of 80

documents to his Petition cannot be given credence. Thus, a liberal construction of procedural rules
cannot be applied to petitioners case.
With respect to the procedural question raised herein, we hold that petitioners assertions
deserve credit. This Court had previously sustained that failure to attach all pleadings and
documents, by itself, is not a sufficient ground to dismiss a petition. In appropriate cases, the courts
may liberally construe procedural rules in order to meet and advance the cause of substantial
justice. Lapses in the literal observation of a procedural rule will be overlooked when they do not
involve public policy, when they arose from an honest mistake or unforeseen accident, and when
they have not prejudiced the adverse party or deprived the court of its authority. The
aforementioned conditions are present in the case at bar.
Furthermore, 14 days after petitioners receipt of the September 27, 2001 Court of Appeals
Resolution dismissing his petition, he filed a Motion for Reconsideration along with the documents
deemed by the Court of Appeals as lacking in his originally filed petition. Contrary to the
pronouncement made in the December 20, 2001 Court of Appeals Resolution which denied the
aforesaid Motion, petitioners subsequent submission should be deemed substantial compliance
with paragraph 3, Section 3, Rule 46 of the Revised Rules of Civil Procedure.
While it is true that the rules of procedure are intended to promote rather than frustrate the
ends of justice, and the swift unclogging of court docket is a laudable objective, it nevertheless must
not be met at the expense of substantial justice.
2. On the issue of due process, it is settled that notice and hearing constitute the essential
elements of due process in the dismissal of employees. The employer must furnish the
employee with two written notices before termination of employment can be legally
effected. The first apprises the employee of the particular acts or omissions for which his
dismissal is sought. The second informs the employee of the employers decision to dismiss
him. With regard to the requirement of a hearing, the essence of due process lies simply in an
opportunity to be heard, and not that an actual hearing should always and indispensably be
held.
In the case at bar, the records would bear out that respondent gave petitioner a
Memorandum informing him of the specific acts or omissions constituting the alleged violation at
issue and requiring him to explain within 72 hours from receipt thereof. Instead of submitting a
written explanation, petitioners then counsel, Atty. Epifanio Buen, wrote to respondent requesting
that his client be afforded a face-to-face hearing. Respondent replied insisting that as per its
internal administrative rules and established jurisprudence on the matter, due process is satisfied,
not by a full-blown hearing, but by the mere opportunity to be heard. Also, respondent gave
petitioner 48 more hours from receipt thereof within which to tender his written explanation
coupled with the caveat that non-compliance therewith would be deemed by respondent as a
waiver of said right. In response, Atty. Buen again wrote a Letter to respondent reiterating
petitioners previous request for a hearing and, furthermore, requiring that all the papers used by
respondent in its investigation be notarized. Respondent expressed its agreement to furnishing
petitioner with the aforementioned documents albeit not notarized while again reminding him of
the submission of his written explanation and its consequence if not complied with. However,
petitioner remained adamant and, instead of giving his written explanation, sent a Letter wherein
he acknowledged Atty. Buen as his counsel and insisted on his demand for notarized
Page 73 of 80

documents. Thus, respondents Bankwide Evaluation Committee issued its Decision without
petitioners written explanation.
Judging from the aforementioned undisputed sequence of events, it is apt to conclude that
respondent more than acted in accordance with the due process required in the termination of an
employee. It gave petitioner considerable leeway with regard to the submission of his written
explanation by allowing multiple extensions of time to submit the same and by furnishing him the
documents used in respondents investigation. Ultimately, even assuming that he was not fully
heard during the employers investigation, it was petitioners fault because of his misguided
insistence on having a trial-type hearing despite established jurisprudence stating that the mere
opportunity to be heard would suffice as due process in administrative proceedings. In any event,
petitioner was given full opportunity to prove his claim of illegal dismissal before the Labor Arbiter
and the NLRC but he still failed to discharge his burden of proof.
APPEAL
PHILUX, INC. AND MAX KIENLE vs. NATIONAL LABOR RELATIONS COMMISSION AND
PATRICIA PERJES
G.R. No. 151854, September 03, 2008, J. Leonardo-De Castro
While the bond requirement on appeals involving monetary awards has been relaxed in
certain cases, this can only be done where there was substantial compliance of the NLRC Rules of
Procedure or where the appellants, at the very least, exhibited willingness to pay by posting a partial
bond or where the failure to comply with the requirements for perfection of appeal was justified.
Here, the negligence and/or ignorance of the rules of petitioners former counsel is not
sufficient justification for their failure to comply with the posting of the bond within the reglementary
period. Neither can petitioners subsequent but belated posting of the bond be considered as
substantial compliance warranting the relaxation of the rules in the interest of justice.
Facts:
Respondent Perjes was in the employ of Petitioner Philux, Inc. as a saleslady assigned to its
showroom in a certain mall in Las Pias City. The controversy arose from the anomaly in the
reported sales of the said showroom manned by Francis Otong and Perjes, who both admitted to
manipulating the sales and assumed to repay Philux, Inc. by payroll deductions. To be exact, Perjes
consented in writing that starting June 15, 1998, the amount of PhP50.00 shall be deducted from
her daily basic salary plus commission.
Despite the agreement, the National Labor Union on behalf of Perjes filed a complaint for
illegal dismissal with prayer for reinstatement, backwages and other monetary benefits against
Philux, Inc. The management of Philux, Inc. conceded that, after the execution of the agreement, it
transferred Perjes to another showroom, which is far from her residence, because she cannot
anymore be left unsupervised and purposively to avert recurrence of losses due to her absences
and tardiness.
The Labor Arbiter rendered judgment in favor of Perjes stating that Philux, Inc., through the
agreement, condoned the transgressions committed by the former and so the latter is then estopped
from doing further acts which are deemed prejudicial to her interest such as her transfer to another
Page 74 of 80

workplace against her will and causing inconvenience, which action amounted to constructive
dismissal.
All the consequent actions lodged by Philux, Inc. to have Labor Arbiters decision to be
reconsidered and/or modified were all denied by the NLRC and later the Court of Appeals. Philux,
Inc. is now before the Court asserting that there was undue strictness in applying the rule requiring
the posting of an appeal bond.
Issues:
1. Whether or not the requirement of posting an appeal bond within the ten (10) day
period to appeal is mandatory.
2. Whether or not the failure to post an appeal bond by a lawyer is a simple negligence
binding his client to the consequences of such mistake.
Ruling:
1. Yes, the posting of an appeal bond is mandatory and jurisdictional on the part of the
NLRC.
The right to appeal is a statutory privilege that may be exercised only in the manner and in
accordance with the provisions of the applicable law. By explicit provision of law, an appeal from
rulings of the Labor Arbiter to the NLRC must be perfected within ten (10) calendar days from
receipt thereof, otherwise the same shall become final and executor. In case of a judgment involving
a monetary award, the appeal shall be perfected only when 1) there is 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. Failure to comply with such requisites shall not toll the period of
appeal.
In the foregoing case, Philux, Inc. received the decision of the Labor Arbiter on July 14, 2000
and filed a Motion for Reconsideration on July 24, 2000 which happens to be the last day to perfect
an appeal. No cash or surety bond, however, was posted by the petitioners. The motion having been
treated as an appeal by the NLRC, the lack of a bond is fatal to the said appeal assailing a judgment
granting monetary awards.
2. Yes, the fatal mistake of failing to include an appeal bond in filing a Memorandum of
Appeal or Motion for Reconsideration is merely ansimple error that binds the partylitigant to the consequences thereof.
The general rule is that any act performed by a lawyer within the scope of his general or
implied authority is regarded as an act of the client, Philux, Inc. invoke exceptions thereto, i.e.,
where the reckless or gross negligence of counsel would deprive the client of due process of law, or
where it would result in the outright deprivation of the clients property through a techni-cality.
This ground, however, cannot be lightly invoked. Otherwise, there would never be an end to a suit
so long as a new counsel would be employed who could allege and show that the prior counsel had
not been sufficiently diligent, or experience, or learned.
In Salonga vs. Court of Appeals, the Court merely considered the lawyers failure to file an
answer leading to a judgment by default against his client as a simple negligence. In Legarda vs.
Court of Appeals, primacy was laid on the opportunity accorded to a party-litigant in defending her
Page 75 of 80

interests in due course and in the absence of any irregularity in the judicial proceedings such
mistake binds the party-litigant concerned. Lastly, in Escudero vs. Dulay, the general rule was not
applied since the errors committed by the lawyers in terms of procedure and applicable judicial
precedents affected the cause of action and substantive rights of the client, and so the Court took
the exception in order to prevent manifest failure or miscarriage of justice.
The subsequent posting of the bond cannot constitute good faith in complying with Article
223 of the Labor Code and the NLRC Rules of Procedure. The plain intent of the law is to make the
bond an indispensable requisite for the perfection of an appeal and the employment of the word
may makes the perfection of an appeal as optional on the part of the aggrieved party but the posting
of the bond to perfect the same is both mandatory and jurisdictional.
While the bond requirement on appeals involving monetary awards has been relaxed in
certain cases, this can only be done where there was substantial compliance of the NLRC Rules of
Procedure or where the appellants, at the very least, exhibited willingness to pay by posting a
partial bond or where the failure to comply with the requirements for perfection of appeal was
justified.
Here, the negligence and/or ignorance of the rules of petitioners former counsel is not
sufficient justification for their failure to comply with the posting of the bond within the
reglementary period. Neither can petitioners subsequent but belated posting of the bond be
considered as substantial compliance warranting the relaxation of the rules in the interest of
justice.
RODOLFO LUNA vs. ALLADO CONSTRUCTION CO., INC., and/or RAMON ALLADO
The NLRC shall, in cases of perfected appeals, limit itself to reviewing those issues which are
raised on appeal. As a consequence thereof, any other issues which were not included in the appeal
shall become final and executory.
Facts:
Respondent Allado Construction Co., Inc. is a juridical entity engaged in the construction business;
respondent Ramon Allado is the President of the said corporation. Petitioner was an employee of
respondents. He had continuously rendered services as a warehouseman and a timekeeper in every
construction project undertaken by respondents.
Sometime in November 24, 2001, while at respondents construction site in Sarangani
Province, he was given a travel order to proceed to respondents main office in Davao City for
reassignment. Upon arrival at the office of respondents, he was told to sign several sets of "Contract
of Project Employment". He refused to sign the said contracts. Because of his refusal, he was not
given a reassignment or any other work. These incidents prompted him to file a complaint with the
Regional Arbitration Branch against respondents.
Respondents, on the other hand, alleged that petitioner applied for a leave of absence which
was granted. Upon expiration of his leave, petitioner was advised to report to the companys project
Page 76 of 80

in Sarangani Province. However, he refused to report to his new assignment and claimed instead
that he had been dismissed illegally.
Finding that petitioner should be deemed to have resigned, the Labor Arbiter dismissed
petitioners complaint for illegal dismissal against respondents, but ordered the latter to pay the
former the amount of P18,000.00 by way of financial assistance. Only respondents interposed an
appeal with the NLRC, purely for the purpose of questioning the validity of the grant of financial
assistance made by the Labor Arbiter. In its Resolution, the NLRC reversed the Decision of the
Labor Arbiter and declared respondents guilty of illegal dismissal. Thereafter, respondents elevated
their cause to the Court of Appeals via a petition for certiorari under Rule 65 of the Rules of Court.
The Court of Appeals granted respondents petition and held that it was grave abuse of discretion
for the NLRC to rule on the issue of illegal dismissal when the only issue raised to it on appeal was
the propriety of the award of financial assistance. Furthermore, the Court of Appeals further ruled
that financial assistance may not be awarded in cases of voluntary resignation. Hence, this petition.
Issue/s:
1. Whether or not the NLRC, in the exercise of its inherent powers, could still review issues not
brought during the appeal.
2. Whether or not financial assistance may be granted in cases of voluntary resignation.
Ruling:
1. No, it cannot.
We find petitioners argument to be untenable.
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 Arbiters 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.
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 arbiters award of financial assistance
despite the finding that petitioner was lawfully terminated.
To reiterate, the clear import of the aforementioned procedural rule is that the NLRC shall,
in cases of perfected appeals, limit itself to reviewing those issues which are raised on appeal. As a
consequence thereof, any other issues which were not included in the appeal shall become final and
executory.
2. Yes, financial assistance may be granted.
Page 77 of 80
Eastern Shipping Lines, Inc v. Sedan bears certain parallelisms with the present
controversy. In Eastern, the employer likewise questioned the grant of financial assistance on the
ground that the employees refusal to report back to work, despite being duly notified of the need
for his service, is tantamount to voluntary resignation. In that case, however, we ruled:
We are not unmindful of the rule that financial assistance is allowed only in instances where
the employee is validly dismissed for causes other than serious misconduct or those reflecting on
his moral character. Neither are we unmindful of this Court's pronouncements in Arc-Men Food
Industries Corporation v. NLRC, and Lemery Savings and Loan Bank v. NLRC, where the Court ruled
that when there is no dismissal to speak of, an award of financial assistance is not in order.
But we must stress that this Court did allow, in several instances, the grant of financial
assistance. In the words of Justice Sabino de Leon, Jr., now deceased, financial assistance may be
allowed as a measure of social justice and exceptional circumstances, and as an equitable
concession. The instant case equally calls for balancing the interests of the employer with those of
the worker, if only to approximate what Justice Laurel calls justice in its secular sense.
There appears to be no reason why petitioner, who has served respondent corporation for
more than eight years without committing any infraction, cannot be extended the reasonable
financial assistance of P18,000.00 as awarded by the Labor Arbiter on equity considerations.
BANAHAW BROADCASTING CORPORATION
vs. CAYETANO PACANA III, NOE U. DACER, JOHNNY B. RACAZA, LEONARDO S. OREVILLO,
ARACELI T. LIBRE, GENOVEVO E. ROMITMAN, PORFERIA M. VALMORES, MENELEO G.
LACTUAN, DIONISIO G. BANGGA, FRANCISCO D. MANGA, NESTOR A. AMPLAYO, LEILANI B.
GASATAYA, LORETA G. LACTUAN, RICARDO B. PIDO, RESIGOLO M. NACUA and ANACLETO C.
REMEDIO
An appeal is only a statutory privilege and it may only be exercised in the manner provided by
law. Nevertheless, in certain cases, we had occasion to declare that while the rule treats the filing of a
cash or surety bond in the amount equivalent to the monetary award in the judgment appealed from,
as a jurisdictional requirement to perfect an appeal, the bond requirement on appeals involving
monetary awards is sometimes given a liberal interpretation in line with the desired objective of
resolving controversies on the merits.
Facts:
Respondents in the case at bar, are supervisory and rank and file employees of the DXWGIligan City radio station which is owned by petitioner Banahaw Broadcasting Corporation (BBC), a
corporation managed by Intercontinental Broadcasting Corporation (IBC).
Due to unpaid Collective Bargaining Agreement benefits, the respondents filed with the Subregional Arbitration Branch a complaint against petitioner BBC and IBC. The Labor Arbiter ruled in
favor of respondents awarding them a total of P12,002,157.28 as unpaid CBA benefits. On appeal,
the NLRC rendered a decision remanding the case to the Labor Arbiter on the ground that while the
complaint was filed against both IBC and BBC, only IBC was served with summons. Meanwhile, the
Page 78 of 80

case against IBC was dismissed on the ground that IBC is not the employer of respondents as it does
not own DXWG-Iligan City.
Thereafter, the Labor Arbiter, rendered a decision adjudging petitioner to be liable for the
same amount above-mentioned. Both petitioner and respondents appealed to the NLRC anew.
Petitioner BBC, in its own Memorandum of Appeal, 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 however denied the motion for recomputation. The NLRC then ordered petitioner 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, petitioner 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. The NLRC denied
petitioners motion for reconsideration and accordingly dismissed its appeal for non-perfection.
The NLRC likewise dismissed the appeal of respondents for lack of merit in the same Decision.
Petitioner then filed with the Court of Appeals a Petition for Certiorari under Rule 65 of the
Rules of Court assailing the above dispositions by the NLRC. The Court of appeals, however,
rendered a Decision denying petitioners Petition for Certiorari. Hence, this petition.
Issue/s:
1. Whether or not Petitioner is exempt from posting an appeal bond.
2. Whether or not the Court of Appeals erred in dismissing Petitioners appeal.
Ruling:
1. No, it is not.
In the case at bar, BBC was organized as a private corporation, sequestered in the 1980s
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 BBCs 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.
2. No, it did not.
Section 7. No Extension of Period. - No motion or request for extension of the period within
which to perfect an appeal shall be allowed."
As correctly observed by the NLRC, petitioner is presumptuous in assuming that the 10-day
period for perfecting an appeal, during which she was to post her appeal bond, could be easily
extended by the mere filing of an appropriate motion for extension to file the bond and even
Page 79 of 80

without the said motion being granted. It bears emphasizing that an appeal is only a statutory
privilege and it may only be exercised in the manner provided by law. Nevertheless, in certain
cases, we had occasion to declare that while the rule treats the filing of a cash or surety bond in the
amount equivalent to the monetary award in the judgment appealed from, as a jurisdictional
requirement to perfect an appeal, the bond requirement on appeals involving monetary awards is
sometimes given a liberal interpretation in line with the desired objective of resolving
controversies on the merits. However, we find no cogent reason to apply this same liberal
interpretation in this case. Considering that the motion for extension to file appeal bond remained
unacted upon, petitioner, pursuant to the NLRC rules, should have seasonably filed the appeal bond
within the ten (10) day reglementary period following receipt of the order, resolution or decision of
the NLRC to forestall the finality of such order, resolution or decision. Besides, the rule mandates
that no motion or request for extension of the period within which to perfect an appeal shall be
allowed. The motion filed by petitioner in this case is tantamount to an extension of the period for
perfecting an appeal. As payment of the appeal bond is an indispensable and jurisdictional requisite
and not a mere technicality of law or procedure, we find the challenged NLRC Resolution of October
26, 1993 and Order dated January 11, 1994 in accordance with law. The appeal filed by petitioner
was not perfected within the reglementary period because the appeal bond was filed out of time.
Consequently, the decision sought to be reconsidered became final and executory. Unless there is a
clear and patent grave abuse of discretion amounting to lack or excess of jurisdiction, the NLRC's
denial of the appeal and the motion for reconsideration may not be disturbed.
Page 80 of 80

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Justice Teresita Leonardo-De Castro Cases (2008-2015) Labor Law

RECRUITMENT AND PLACEMENT

Criminal Case No. 98-773025

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OTHER GENERAL PROVISIONS

xxx xxx xxx

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In response, petitioner adverted to the fixed period allegedly designated in employment

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