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No. 125212 June 28, 1999 YNARES-SANTIAGO

A former employee of petitioner cooperative, Cosette O. Quinto, sent a letter to its
General Manager, petitioner Eugenio A. Balugo, informing Balugo of her decision to
be separated with SURNECO due to her pressing personal problems. No action was
taken on this matter by either petitioner Balugo or petitioner cooperative's Board of
Directors. Nearly four months later, private respondent Elsie Esculano, being then
the Personnel Officer of petitioner cooperative sent a letter to petitioner Balugo
regarding Quinto's letter-request, attached to her letter was a report containing her
findings and recommendations. In her attached report, private respondent
concluded that petitioner cooperative had not properly accorded Quinto due process
before terminating her services, enumerating the circumstances evidencing such
lack of due process. Thus, private respondent recommended that petitioner
cooperative grant Quinto separation pay, otherwise, the latter would be entitled to
reinstatement without loss of seniority rights and other privileges and benefits.
Meanwhile, with no action taken by petitioner cooperative on her letter-request,
Quinto filed a Complaint for Illegal Dismissal against petitioner cooperative. Without
a doubt, the complaint was based largely on the report submitted to petitioner
Balugo by private respondent Esculano. On account of the filing of the illegal
dismissal case against petitioner cooperative, based largely on private respondent's
report, Balugo issued a Memorandum to Esculano in which she was made to explain
on why she made a review of Quintos case even if she was not authorized to do so
and for furnishing the copy of the report to Quinto. Esculano submitted her Written
Explanation to Balugo and reasoned out that it was inherent in her job as Personnel
Officer "to assist Management in formulating and evaluating plans, policies and
procedures on personnel related matters, and recommend to Management and (the)
Board of Directors wage, salary and other benefits. Petitioner cooperative, however,
through its Board of Directors, proceeded to act on the case of private respondent
terminating the services of the latter. Private respondent filed a Complaint for illegal
dismissal. Labor Arbiter declared private respondent's dismissal as valid and legal
which was set aside by the NLRC.
Issue: WON private respondent was illegally dismissed.
First, there is no basis for petitioner cooperative's charge of serious misconduct on
the part of private respondent. Misconduct is transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment. In the case at bench,
private respondent's review of Quinto's case hardly qualifies as serious
misconduct.As acknowledged by petitioners, private respondent, as Personnel

Officer, holds a managerial position. As such, her authority is not merely routinary
or clerical in nature but requires independent judgment. Indeed, those occupying
managerial positions are considered vested with a certain amount of discretion and
independent judgment. As Personnel Officer, private respondent could very well
take charge of matters involving employees, even former ones, and proceed to
make recommendations thereon. This is precisely what private respondent did. To
require private respondent to wait for management authorization before acting on
matters already obviously within her job jurisdiction would be tantamount to making
her a mere rank and file employee stripped of discretionary powers.
Second, private respondent's dismissal cannot be justified on the basis of loss of
confidence. To be a valid ground for dismissal, loss of trust and confidence must be
based on a willful breach of trust and founded on clearly established facts. A breach
is willful if it is done intentionally, knowingly and purposely, without justifiable
excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently. It must rest on substantial grounds and not on the employer's
arbitrariness, whims, caprices or suspicion, otherwise, the employee would eternally
remain at the mercy of the employer. In the case at bench, there was no direct proof
that private respondent did furnish a copy of her report to Quinto. As such,
petitioners cannot validly rely on loss of confidence as a ground to dismiss private
Petition is dismissed.
131405 July 20, 1999 PANGANIBAN
Petitioner Leilani Mendoza worked with the private respondent and later, she was
appointed as finance manager of the private respondent and her tasks included,
among others, custody of and disbursement of company funds. Petitioner claims
that she was summoned by Ms. Ma. Angela Celeridad, the company's vicepresident, who informed her that management had decided to terminate her
employment Hence, she was told either to resign or face dismissal. Later that day
petitioner alleged that the president of the company, Johnny P. Lee, announced that
her employment was already terminated. Petitioner lodged her complaint against
the company for illegal dismissal. Private respondent denies having dismissed the
petitioner as no memorandum or letter of dismissal was issued to her. The company
asserts that it received a complaint from several of its marketing and sales agents
accusing petitioner of committing deliberate delays in the payment of their
commission in violation of company policy. They alleged that she refused to release
their commissions despite payment of the price of the properties they had brokered
unless she [was] given a certain amount as her cut. The company also claims that
another employee of the company, a certain Rufino Pahati, lodged a separate

complaint against petitioner regarding his application for cash advance. Mr. Pahati
claimed that petitioner made him apply for cash advance but it was she who took
the money. She promised to pay him back but failed. Allegedly, the company sent a
letter to Mendoza demanding her to explain all the irregularities imputed to her.
NLRC ruled in favor of the company.
Issue: WON Mendoza was illegally dismissed.
True, employers cannot be compelled to retain in their service employees who are
guilty of acts inimical to the interest of the former. True also, management has the
right to dismiss erring employees as a measure of self-protection. In the case of
managerial employees, employers are allowed a wider latitude of discretion in
terminating their employment because they perform functions which by their nature
require the full trust and confidence of the company. However, loss of trust and
confidence has never been intended to afford an occasion for abuse. It cannot be
used arbitrarily, whimsically or capriciously; it must be supported with substantial
evidence. Unsubstantiated suspicions, accusations and conclusions of employers do
not provide legal justifications for dismissing employees. In case of doubt, such
cases should be resolved in favor of labor, pursuant to the social justice policy of
our labor laws and the Constitution. In the case at bench, the act of extorting money
from sales agents in exchange for releasing their commissions is a serious
accusation, but allegation is not proof. The employer has the burden of proof.
However, the company failed to present sufficient evidence that petitioner was
responsible for such abnormality. The relevant evidence for the private respondent
consisted only of the following: (a) Gonzales' commission voucher; (b) the lettercomplaint signed by the division heads of the Sales Department; (c) Pahatis lettercomplaint; (d) the affidavits of Celeridad, Gonzales and Mendoza; (e) Lee's letternotice dated June 2, 1995; (f) Celeridad's letter-notice dated June 24, 1995; and (g)
several cash disbursement vouchers including those of Mendoza and Gonzales.
While the cash disbursement voucher and Gonzales' affidavit support the claim that
her commission was released to another person, they do not show that petitioner
was responsible for such irregularity. As finance manager, she approved
disbursement of the company's funds, but the actual payment of cash was usually
the function of the company cashier. Labor tribunals should be cautioned against
confusing conjecture with evidence. The absence of petitioner, who failed to contest
the charges against her in the investigation conducted by private respondent, did
not mean admission of the accusations.
Petition is granted.

Petitioner Sugbuanon Rural Bank, Inc., (SRBI) is a duly-registered banking
institution. Private respondent SRBI-Association of Professional, Supervisory, Office,
and Technical Employees Union (APSOTEU) is a legitimate labor organization
affiliated with the Trade Unions Congress of the Philippines (TUCP). DOLE granted
Certificate of Registration to APSOTEU. The union filed a petition for certification
election of the supervisory employees of SRBI. SRBI filed a motion to dismiss the
union's petition on the ground that the members of APSOTEU-TUCP were in fact
managerial or confidential employees. Petitioner submitted detailed job descriptions
to support its contention that the union members are managerial employees and/or
confidential employees proscribed from engaging in labor activities. Petitioner
argues that the functions and responsibilities of the employees involved constitute
the very core of the bank's business, lending of money to clients and borrowers,
evaluating their capacity to pay, approving the loan and its amount, scheduling the
terms of repayment, and endorsing delinquent accounts to counsel for collection.
The union filed its opposition to the motion to dismiss arguing that its members
were not managerial employees but merely supervisory employees. Med-Arbiter
denied petitioner's motion to dismiss. SRBI appealed the Med-Arbiter's decision to
the Secretary of Labor which was denied for lack of merit. The certification election
was ordered.
Issue: WON the members of the union are managerial employees and/or highlyplaced confidential employees, hence prohibited by law from joining labor
organizations and engaging in union activities.
Under Article 212 (m), Labor Code: Managerial employee is one who is vested with
powers or prerogatives to lay down and execute management policies and/or hire,
transfer, suspend, lay-off, recall, discharge, assign or discipline employees.
Supervisory employees are those who, in the interest of the employer, effectively
recommend such managerial actions if the exercise of such authority is not merely
routinary or clerical in nature but requires the use of independent judgment. All
employees not falling within any of the above definitions are considered rank-andfile employees for purposes of this Book.
In the case at bench, the employees in question only had recommendatory powers
subject to evaluation, review, and final decision by the bank's management. The job
description forms submitted by petitioner clearly show that the union members in
question may not transfer, suspend, lay-off, recall, discharge, assign, or discipline
employees. Moreover, the forms also do not show that the Cashiers, Accountants,
and Acting Chiefs of the loans Department formulate and execute management
policies which are normally expected of management officers. The Cashiers,

Accountant, and Acting Chief of the Loans Department of the petitioner did not
possess managerial powers and duties.
Neither can these employees be classified as confidential employees. Confidential
employees are those who (1) assist or act in a confidential capacity, in regard (2) to
persons who formulate, determine, and effectuate management policies
[specifically in the field of labor relations]. The two criteria are cumulative, and both
must be met if an employee is to be considered a confidential employee-that is, the
confidential relationship must exist between the employee and his superior officer;
and that officer must handle the prescribed responsibilities relating to labor
relations. Article 245 of the Labor Code does not directly, prohibit confidential
employees from engaging in union activities. However, under the doctrine of
necessary implication, the disqualification of managerial employees equally applies
to confidential employees. The confidential-employee rule justifies exclusion of
confidential employees because in the normal course of their duties they become
aware of management policies relating to labor relations. It must be stressed,
however, that when the employee does not have access to confidential labor
relations information, there is no legal prohibition against confidential employees
from forming, assisting, or joining a union.
In the case at bench, petitioner contends that it has only 5 officers running its dayto-day affairs. They assist in confidential capacities and have complete access to
the bank's confidential data. Petitioner's explanation, however, does not state who
among the employees has access to information specifically relating to its labor
relations policies. Even Cashier Patricia Maluya, who serves as the secretary of the
bank's Board of Directors may not be so classified. True, the board of directors is
responsible for corporate policies, the exercise of corporate powers, and the general
management of the business and affairs of the corporation. As secretary of the
bank's governing body, Patricia Maluya serves the bank's management, but could
not be deemed to have access to confidential information specifically relating to
SRBI's labor relations policies, absent a clear showing on this matter. Thus, while
petitioner's explanation confirms the regular duties of the concerned employees, it
shows nothing about any duties specifically connected to labor relations.
Petition is dismissed.

26, 2001 DE LEON
Petitioner Roberto Gonzales was an employee of private respondent PCPPI. He was
promoted to the position of Route Manager with a post at PCPPI Northbay Sales
Office. As Route Manager, he was tasked with the supervision and coordination of

the activities of salesmen servicing the area under his jurisdiction. Subsequently,
petitioner was served with a notice of termination of his employment. His dismissal
stemmed from alleged irregularities attributed to him as Route Manager and
concurrently as dealer of Pepsi Cola products. Under his dealership contract with
PCPPI, petitioner was extended by PCPPI a credit line of P300,000 payable in 30
days. As concessionaire or dealer, petitioner was entitled to a concession which is
the cash equivalent of the value of empty bottles and its contents given to a dealer
who met the monthly quota requirements in the sale of Pepsi Cola products.
Petitioner operated under the business name of RR Store. Petitioner as proprietor of
RR Store purchased Pepsi Cola products on credit amounting to P116,182.00. The
credit transaction was covered by Charge Invoice. To cover this transaction,
petitioner Gonzales issued a post-dated check. Three days before his said postdated check became due and payable, petitioner issued in favor of respondent
PCPPI another post-dated check to cover the outstanding total debt of P116,182.00.
With the issuance of the new post-dated check, petitioner ordered Mr. Gerry
Alhambra, PCPPI salesman servicing RR Store, to issue an official receipt in the
amount of P116,182.00 to cover his account. However, issuance of official receipt
for post-dated checks is contrary to respondent PCPPI's company policy which
requires that its official receipt shall be issued only for cash sales and/or currently
dated checks. Nonetheless, Gerry Alhambra acceded to his superior, the petitioner,
and issued the official receipt. When salesman Alhambra attempted to settle his
account, the settlement clerk noticed that there was a discrepancy between the
cash amount declared by Alhambra and the sum actually remitted. Alhambra
admitted that petitioner Gonzales pressured him to issue the official receipt.
Alhambra could not likewise present the post-dated check issued by respondent
Gonzales for the reason that under the company rules and regulations, any postdated check must be covered by a post-dated check receipt, duly signed by Mr.
Andy Roxas, the Sales Office Manager. Petitioner issued a third post-dated check
which was signed by the petitioner himself and not by the Sales Office Manager who
has the sole authority to issue the same. After investigation and hearing, petitioner
was notified of his termination from employment on the ground of loss of confidence
and of having violated the company rules and regulations. The Labor Arbiter ruled in
favor of petitioner which was reversed by NLRC, hence this petition.
Issue: WON petitioner was illegally dismissed.
Substantive due process, for validity of the petitioner's dismissal, has likewise been
met by private respondent PCPPI. As aptly found by the NLRC, petitioner was
separated or terminated by private respondent PCPPI from his employment due to
loss of trust and confidence, which is a just and valid cause for dismissal under
Article 282(c) of the Labor Code. We find the evidence adduced in this case contrary
to petitioner's claim that the questionable credit sale transaction he was charged
with was in connection with his being a dealer or concessionaire of PCPPI and not as

an employee thereof, and thus, there was allegedly no just and valid cause to
dismiss him.
Under the Labor Code, an employer can terminate the employment of the employee
concerned for "fraud or willful breach by an employee of the trust reposed in him by
his employer or duly authorized representative." The loss of trust and confidence
must be based on the willful breach of the trust reposed in the employee by his
employer. Ordinary breach will not suffice. A breach of trust is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse, as distinguished
from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Loss of
confidence, as a just cause for termination of employment, is premised on the fact
that the employee concerned holds a position of responsibility, trust and
confidence. He must be invested with confidence on delicate matters such as the
custody, handling, care and protection of the employer's property and/or funds. 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. In a decided case, it has been held that the test of
managerial status has been defined as an authority to act in the interest of the
employer, which authority is not merely routinary or clerical in nature but requires
in dependent judgment.
In the case at bench, petitioner is not an ordinary rank-and-file employee. He is a
Route Manager, a managerial level position. As managerial employee, petitioner is
tasked to perform key and sensitive functions, and thus he is bound by more
exacting work ethics. Records show that maneuvers and machinations on the
questionable credit sale transaction could not have been consummated by the
petitioner if he was not equipped with the knowledge, as a route manager, of how
the respondent company processes these kinds of transactions. It was highly
inconceivable for a mere dealer to have done what petitioner did. First, petitioner
gave himself a credit extension without proper authorization. Second, petitioner, as
route manager prevailed upon salesman Alhambra, his subordinate, over whom he
exercises moral and professional ascendancy to carry out his machination. Third,
upon the discovery by the settlement clerk of the fraudulent official receipt,
petitioner issued another post-dated check together with a post-dated check receipt
(PDCR) signed by petitioner himself although he was not authorized to do so. These
acts of petitioner are patently dishonest and militate against the rules and
regulations of his employer, herein private respondent company. Hence, the loss of
trust and confidence in him by private respondent PCPPI.
As a general rule, employers are allowed a wide 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 employer's full trust and
confidence. Proof beyond reasonable doubt is not required. It is sufficient that there

is some basis for loss of confidence, such as when the employer has reasonable
ground to believe that the employee concerned is responsible for the purported
misconduct, and the nature of his participation therein renders him unworthy of the
trust and confidence demanded by his position. 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.
In the present case, PCPPI has sufficiently shown that petitioner has become
unworthy of the trust and confidence demanded of his position. Petitioner betrayed
his employer's trust and confidence when he instigated the issuance by his
subordinate salesman of an official receipt for his post-dated check whereby
petitioner could have evaded payment to private respondent PCPPI of his debt
amounting to P116,182.00. These acts committed by petitioner adversely reflected
on his integrity. As Route Manager he disregarded the private respondent
company's rules and regulation prohibiting the issuance of official receipt for postdated check payment unless the same is done by the Sales Office Manager. The fact
the private respondent PCPPI ultimately suffered no monetary damage as petitioner
subsequently settled his account is of no moment. This was not the reason for the
termination of his employment in the respondent company but the anomalous
scheme he engineered to cover up his past due account, which constitutes a clear
betrayal of trust and confidence.
Petition is dismissed

August 9, 2001 DE LEON
Petitioner companies are both government-controlled corporations, 60% of their
stocks being owned by the National Development Corporation. They were
incorporated in the early 1980's to develop, operate and maintain integrated palm
projects in Agusan del Sur. Pursuant to their purpose clause, NGPI and NGEI hired
hundreds of farm workers to establish and maintain their respective plantations as
well as several supervisors to oversee and superintend their workers. Kumar Das
was the designated general manager of petitioner companies at the time of the
supposed illegal dismissal. NGPI discovered that it was sustaining tremendous
losses which threatened to further upset its precarious financial condition. In a
desperate attempt to reverse its fortune and prevent its coffers from further
depletion, NGPI terminated the services of 72 field workers. Still, the company was
confronted with an audit report prepared by COA reflecting losses. Faced with

mounting losses, NGPI further terminated the employment of 49 field workers,

followed by another 158 farm hands. With this as backdrop, several employees of
petitioner companies bonded together and formed the NDC-GUTHRIE Union.
Petitioner companies notified the DOLE of their financial condition and their decision
to retrench employees numbering 120. Subsequently, petitioner companies sent
notices to 17 of their office and supervisory employees advising them that in view
of the companies' financial problems, they would be retrenched from their
employment. Believing that their dismissal was resorted to because of their union
activities and hence, in violation of their rights to self-organization and to collective
bargaining, the said 17 employees who were laid off filed with the Labor Arbiter a
Complaint for illegal dismissal and unfair labor practice against petitioner
companies and petitioner Kumar Das. NLRC ruled in favor of private respondents.
Issue: WON private respondents were illegally dismissed.
As the retrenchment programs undertaken by petitioner companies were purely
business decisions properly within the reasonable exercise of management
prerogative, the NLRC cannot delve into their wisdom and soundness. Indeed,
management cannot be denied recourses to retrenchment if it can successfully
prove the existence of the following factors: (a) substantial losses which are not
merely de minimis in extent; (b) imminence of such substantial losses; (c)
retrenchment would effectively prevent the expected additional losses; and, (d)
alleged losses and expected losses must be proven by sufficient and convincing
evidence. In the case at bench, these guidelines were faithfully observed by
petitioner companies.
However, notwithstanding the propriety of the retrenchment programs, petitioner
companies are not excused from complying with the required written notice to the
affected employees and DOLE at least one month before the intended date of
termination. In this case, it is undisputed that petitioner companies informed both
the retrenched employees and DOLE of the impending retrenchment. The
requirement of law mandating the giving of notices was intended not only to enable
the employees to look for other employment and therefore ease the impact of the
loss of their jobs and the corresponding income, but, more importantly, to give the
DOLE the opportunity to ascertain the verity of the alleged authorized cause of
termination. Accordingly, inasmuch as private respondents' separation from service
was both substantively and procedurally just, petitioner companies should only be
held liable for separation pay and the proportionate 13th month pay.
Petition is granted.
EDGAR AGUSTILO vs. CA and SAN MIGUEL CORP G.R. No. 142875 September 7,

Petitioner Edgar Agustilo was hired by respondent San Miguel Corporation (SMC) as
a temporary employee at its Mandaue Brewery in Mandaue, Cebu. On October 1,
1979, he was made permanent and designated as a safety clerk. He was transferred
to the Engineering Department of the SMC Mandaue Brewery as an administrative
secretary. SMC Mandaue Brewery adopted a policy that managers would no longer
be assigned secretaries and that only director level positions may be given
secretaries. As a result, petitioner's position as administrative secretary was
abolished and he was transferred to the company's Plant Director's Office-Quality
Improvement Team. Petitioner was informed that 584 employees, including him,
would be retrenched due to the modernization program of the company. Petitioner
was told that his services would be terminated and that he would be paid his
benefits 30 days after he was cleared of all accountabilities. SMC notified the DOLE
of its modernization program. Petitioner then filed a complaint against respondents
for unfair labor practice, illegal dismissal, and payment of separation pay. The Labor
Arbiter dismissed the complaint.
Issue: WON petitioner was illegally dismissed.
Art. 283 of the Labor Code provides: 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 xxx.
In the case at bench, petitioner was not constructively dismissed but his services
was terminated on the ground of the installation of labor saving devices by SMC. As
stated in the notice of termination sent to petitioner the PDO-QIT GROUP has been
abolished after a thorough study. Consequently, petitioners position therein has
also been abolished. As stated by the Court of Appeals: Private respondent
demonstrated before the Labor Arbiter by clear and convincing evidence that the
Mandaue plant where petitioners used to work had instituted a modernization
program. The operations of which are "all automated using microprocessor and
electronic process controllers and instrumentation systems through intelligent
interfacing with Siemens Industrial computers." All of these high-technology
innovations, at the cost of 2.6 billion pesos, truly render the functions of the Plant
Director's Office Quality Control Unit, where private respondent was transferred
after his post as Administrative Secretary to the plant manager was validly
abolished, upon management prerogative that the same "did not add value to the
Petition is denied.

127718 March 2, 2000 DE LEON
Petitioners are bona fide members of the National Federation of Labor (NFL), a
legitimate labor organization duly registered with DOLE. They were employed by
private respondents Charlie Reith and Susie Galle Reith, general manager and
owner, respectively, of the 354-hectare Patalon Coconut Estate. Patalon Coconut
Estate was engaged in growing agricultural products and in raising livestock. In
1988, Congress enacted the Comprehensive Agrarian Reform Law which mandated
the compulsory acquisition of all covered agricultural lands for distribution to
qualified farmer beneficiaries under the so-called CARP. Pursuant to R.A. No. 6657,
the Patalon Coconut Estate was awarded to the Patalon Estate Agrarian Reform
Association (PEARA), a cooperative accredited by DAR, of which petitioners are
members and co-owners. As a result of this acquisition, private respondents shut
down the operation of the Patalon Coconut Estate and the employment of the
petitioners was severed. Petitioners did not receive any separation pay. The
cooperative took over the estate. Petitioners filed complaints praying for their
reinstatement with full backwages on the ground that they were illegally dismissed.
The petitioners were represented by their labor organization, the NFL. NLRC ruled
that petitioners were not illegally dismissed. Hence, this petition.
Issue: WON petitioners were illegally dismissed.
Under Article 283 of the Labor Code the employer may also terminate the
employment of any employee due xxx closing or cessation of operation of the
establishment or undertaking xxx. In cases of xxx closures or cessation of
operations of establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of service, whichever is higher. A
fraction of at least six (6) months shall be considered as one (1) whole year.
It is clear that Article 283 of the Labor Code applies in cases of closures of
establishment and reduction of personnel. The peculiar circumstances in the case at
bar, however, involves neither the closure of an establishment nor a reduction of
personnel as contemplated under the aforesaid article. When the Patalon Coconut
Estate was closed because a large portion of the estate was acquired by DAR
pursuant to CARP, the ownership of that large portion of the estate was precisely
transferred to PEARA and ultimately to the petitioners as members thereof and as
agrarian lot beneficiaries. Hence, Article 283 of the Labor Code is not applicable to
the case at bench.

Even assuming, arguendo, that the situation in this case were a closure of the
business establishment called Patalon Coconut Estate of private respondents, still
the petitioners/employees are not entitled to separation pay. The closure
contemplated under Article 283 of the Labor Code is a unilateral and voluntary act
on the part of the employer to close the business establishment as may be gleaned
from the wording of the said legal provision that "The employer may also terminate
the employment of any employee due to xxx. The use of the word "may," in a
statute, denotes that it is directory in nature and generally permissive only. In other
words, Article 283 of the Labor Code does not contemplate a situation where the
closure of the business establishment is forced upon the employer and ultimately
for the benefit of the employees.
In this case, the Patalon Coconut Estate was closed down because a large portion of
the said estate was acquired by the DAR pursuant to the CARP. Hence, the closure
of the Patalon Coconut Estate was not effected voluntarily by private respondents
who even filed a petition to have said estate exempted from the coverage of RA
Petition is denied.
c. Procedure of Termination (Procedural Due Process of Dismissal)

i. Notice and Hearing

a. For Just Causes:
Written Notice- a written notice served on the employee specifying the
ground or grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side;
Hearing- A hearing or conference during which the employee concerned, with
the assistance of counsel if the employee so desires, is given opportunity to respond
to the charge, present his evidence or rebut the evidence presented against him;
Written Notice of Termination- A written notice of termination served on the
employee indicating that upon due consideration of all the circumstances, grounds
have been established to justify his termination. In case of termination, the
foregoing notices shall be served on the employees last known address.
b. For Authorized Causes:

The requirements of due process shall be deemed complied with upon service
of a written notice to the employee and the appropriate Regional Office of the DOLE

at least 30 days before effectivity of the termination, specifying the ground or

grounds for termination.

When termination of employment is brought by the failure of an employee to

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

When termination is brought about by the completion of the contract or

phase thereof, no prior notice is required.
ii. Burden of Proof

The employer has the burden of proving the lawfulness of his employees
dismissal. The validity of the charge must be clearly established in a manner
consistent with due process.
iii. Preventive Suspension

When there is an imminent threat to the lives and properties of the employer;
his family and representatives as well as the offenders co-workers by the continued
service of the employee, then he may be placed under preventive suspension
pending his investigation.

Preventive suspension should not last for more than 30 days. The employee
should be made to resume his work after 30 days.

It can be extended provided the employees wages are paid after the 30 day

19, 2000 DE LEON
Private respondent was employed in petitioner's, business of manufacturing
liquefied petroleum gas (LPG) cylinders. He served as a quality control inspector
with the principal duty of inspecting LPG cylinders for any possible defects and
earning P155.00 a day. His service with the company was abruptly interrupted on
February 14, 1995, when he was served a notice of termination of his employment.
His dismissal stemmed from an incident wherein petitioner's company President,
Alejandro Dy Juanco, allegedly caught private respondent sleeping on the job. On

that same day, private respondent was asked through a written notice to explain
why no disciplinary action should be taken against him for his violation of Company
Rule 15-b which provides for a penalty of separation for sleeping during working
hours. Without delay, private respondent replied in a letter which reads: Sir,
ipagpaumanhin po ninyo kung nakapikit ako sa aking puwesto dahil hinihintay ko po
ang niliha hi Abreu para i quality pasensiya na po kung hindi ko po namalayan ang
pagdaan ninyo dahil maingay po ang painting booth. Notwithstanding his foregoing
reply, he was terminated. Feeling aggrieved, private respondent initially instituted a
criminal suit for Estafa, for alleged withholding of his salary, against the company
President. Said complaint was dismissed for improper forum. He then filed a
complaint for illegal. Labor Arbiter declared that private respondent's dismissal is
anchored on a valid and just cause and the latter's contention of denial of due
process as devoid of merit. NLRC reversed the Labor Arbiter and ordered herein
petitioner to reinstate private respondent with full backwages less one-month pay.
Issue: WON private respondent was illegally dismissed.
While an employer enjoys a wide latitude of discretion in the promulgation of
policies, rules and regulations on work-related activities of the employees, those
directives, however, must always be fair and reasonable, and the corresponding
penalties, when prescribed, must be commensurate to the offense involved and to
the degree of the infraction. In the case at bench, petitioner's claim that private
respondent slept on the job on February 10, 1995 was not substantiated by any
convincing evidence other than the bare allegation of petitioner. The report of
Ronaldo M. Alvarez, Acting Quality Control Department Head of petitioner
corporation, on the circumstances which ultimately served as basis for the
termination of private respondent's employment, did not confirm the alleged
violation by private respondent of the pertinent Company Rule 15-b. The report
merely stated private respondent's denial and response to petitioner's allegation
which he reiterated in his written reply. Moreover, the dismissal meted out on
private respondent for allegedly sleeping on the job, under the attendant
circumstances, appears to be too harsh a penalty, considering that he was being
held liable for first time, after 9 long years of unblemished service, for an alleged
offense which caused no prejudice to the employer, aside from absence of
substantiation of the alleged offense. The authorities cited by petitioner are also
irrelevant for the reason that there is no evidence on the depravity of conduct,
willfulness of the disobedience, or conclusiveness of guilt on the part of private
respondent. Neither was it shown that private respondent's alleged negligence or
neglect of duty, if any, was gross and habitual. Thus, reinstatement is just and
Petition is dismissed.

Antonio Decorion was a regular employee of Maricalum Mining who started out as a
Mill Mechanic assigned to the Concentrator Maintenance Department and was later
promoted to Foreman I. The Concentrator Maintenance Supervisor called a meeting
which Decorion failed to attend as he was then supervising the workers under him.
Because of his alleged insubordination for failure to attend the meeting, he was
placed under preventive suspension on the same day. He was also not allowed to
report for work the following day. A month after, Decorion was served a Notice of
Infraction and Proposed Dismissal to enable him to present his side. He submitted to
the Personnel Department his written reply to the notice. A grievance meeting was
held upon Decorions request, during which he manifested that he failed to attend
the meeting on April 11, 1996 because he was then still assigning work to his men.
He maintained that he has not committed any offense and that his service record
would show his efficiency. Decorion filed NLRC a complaint for illegal dismissal.
Maricalum Mining insists that Decorion was not dismissed but merely preventively
suspended. Petitioner contends that constructive dismissal occurs only after the
lapse of more than 6 months from the time an employee is placed on a "floating
status" as a result of temporary preventive suspension from employment. Thus, it
goes on to argue, since Decorion was suspended for less than 6 months, his
suspension was legal.
Issue: WON private responded was merely suspended from work.
Under the IRR of Labor Code, The employer may place the worker concerned under
preventive suspension if his continued employment poses a serious and imminent
threat to the life or property of the employer or his co-workers. No preventive
suspension shall last longer than thirty (30) days xxx. The Rules are explicit that
preventive suspension is justified where the employees continued employment
poses a serious and imminent threat to the life or property of the employer or of the
employees co-workers. Without this kind of threat, preventive suspension is not
In this case, Decorion was suspended only because he failed to attend a meeting
called by his supervisor. There is no evidence to indicate that his failure to attend
the meeting prejudiced his employer or that his presence in the companys
premises posed a serious threat to his employer and co-workers. The preventive
suspension was clearly unjustified. What is more, Decorions suspension persisted
beyond the 30-day period allowed by the IRR. A preventive suspension which lasts
beyond the maximum period allowed by the Implementing Rules amounts to
constructive dismissal. Similarly, from the time Decorion was placed under

preventive suspension up to the time a grievance meeting was conducted, 55 days

had already passed. Another 48 days went by before he filed a complaint for illegal
dismissal. Thus, at the time Decorion filed a complaint for illegal dismissal, he had
already been suspended for a total of 103 days. Maricalum Minings contention that
there was as yet no illegal dismissal at the time of the filing of the complaint is
evidently unmeritorious. Decorions preventive suspension had already ripened into
constructive dismissal at that time. While actual dismissal and constructive
dismissal do take place in different fashion, the legal consequences they generate
are identical. Decorions employment may not have been actually terminated in the
sense that he was not served walking papers but there is no doubt that he was
constructively dismissed as he was forced to quit because continued employment
was rendered impossible, unreasonable or unlikely by Maricalum Minings act of
preventing him from reporting for work.
Petition is denied.

May 9, 2005 PUNO
Respondent alleged that he was employed by the Agency as security guard in
January 1990 and was, since then, detailed to its various clients. He claimed having
worked 12 hours a day, even during rest days and holidays, without receiving
overtime pay, rest day pay, holiday pay, service incentive leave pay and 13th
month pay. Sometime in June 1997, respondent inquired from the project manager
of the Agency's client, Manila Southwoods, if the latter had already paid their
backwages to the Agency. When petitioners found out about his query, respondent
was allegedly relieved from his post and never given another assignment.
Petitioners allegedly promised that they would pay respondent his money claims
provided he signs a resignation letter. He was also told to copy in his handwriting
the same resignation letter. As he needed the money, he complied. Thereafter,
petitioners would give him only the meager amount of P5,000.00, which he
rejected. Respondent filed a complaint for illegal dismissal and prayed for
reinstatement with backwages or backwages with separation pay and money
claims. Petitioners denied respondent's allegations and claimed that respondent
was not dismissed but resigned as evidenced by another resignation letter signed
by respondent.
Issue: WON respondent has resigned.

As a rule quitclaims, waivers or releases are looked upon with disfavor and are
commonly frowned upon as contrary to public policy and ineffective to bar claims
for the measure of a worker's legal rights. In this case, the Supreme Court sustained
the findings of CA and NLRC that the two resignation letters are not resignation
letters but a bare reading of their content would reveal that they are in the nature of
a quitclaim, waiver or release. They were written in a language obviously not of
respondent's and "lopsidedly worded" to free the Agency from liabilities. As held by
CA: "When the first resignation letter was a pro forma one, entirely drafted by the
petitioner Agency for the private respondent to merely affix his signature, and the
second one entirely copied by the private respondent with his own hand from the
first resignation letter, voluntariness is not attendant." Moreover, it is a rule that
resignation is difficult to reconcile with the filing of a complaint for illegal dismissal.
Hence, the finding that respondent's resignation was involuntary is further
strengthened by the fact that respondent filed the instant case the day after the
alleged tender of resignation.
Petition is dismissed.
Respondent Teresita Vigan alleged that she was hired by the Litonjua Group of
Companies as telex operator. Later, she was assigned as accounting and payroll
clerk under the supervision of Danilo Litonjua. She had been performing well until
1995, when Danilo Litonjua who was already naturally a very ill-tempered, illmouthed and violent employer, became more so due to business problems. In fact,
a complaint letter was sent by the Litonjua Employees to the father and his junior
regarding the boorishness of their kin Danilo Litonjua but apparently the
management just glossed over this. Danilo Litonjua became particularly angry with
Vigan and threw a stapler at her when she refused to give him money upon the
instructions of Eddie Litonjua. From then on, Danilo Litonjua had been rabid towards
her and even threatened to hit her for some petty matters. Danilo Litonjua would
order the security guards to forcibly eject her or prevent her entry in the office
premises whenever he was angry. The incidents prompted Vigan to write Danilo
Litonjua letters asking why she was treated so and what was her fault. She
suspected that Danilo Litonjua wanted her out for he would not let her inside the
office such that even while abroad he would order the guards by phone to bar her.
She pleaded for forgiveness or at least for explanation but it fell on deaf ears. Later,
Danilo Litonjua changed tack and charged that Vigan had been hysterical, emotional
and created scenes at the office. He even required her to secure psychiatric
assistance, but despite proof that she was not suffering from psychosis or organic
brain syndrome as certified to by a Psychiatrist of Danilo Litonjuas choice, still she
was denied by the guards entry to her work upon instructions again of Danilo

Litonjua. Left with no alternative, Vigan filed this case for illegal dismissal. Labor
Arbiter rendered his decision finding Vigan diseased and unfit for work under Article
284 of the Labor Code and awarded the corresponding separation pay. CA ruled that
respondent was illegally dismissed.
Issue: WON respondent is entitled to damages and attorneys fees.
The Supreme Court sustained the findings of CA that respondent Vigan did not
abandon her job but was illegally dismissed. In Vigans letter addressed to petitioner
Danilo Litonjua, respondent Vigan had complained of petitioner Danilos inhumane
treatment in barring her from entering her workplace. Notwithstanding the fact the
she was refused entrance to her workplace, respondent Vigan, to show her earnest
desire to report for work, would sneak her way into the premises and punched her
time card but she could not resume work as the guards in the company gate would
prevent her per petitioner Danilo Litonjuas instructions. Respondents actuations
militate against petitioners claim that she did not heed the notices to return to
work and abandoned her job. She had been going to her workplace to report for
work but was prevented from resuming her work upon the instructions of petitioner
Danilo Litonjua. It would be the height of injustice to allow an employee to claim as
a ground for abandonment a situation which he himself had brought about.
Since respondent Vigan was illegally dismissed from her employment, she is entitled
to: (1) either reinstatement, if viable, or separation pay if reinstatement is no longer
viable, and (2) backwages. The award of moral and exemplary damages to the
respondent is also proper. As a rule, moral damages are recoverable only where the
dismissal of the employee was attended by bad faith or fraud or constituted an act
oppressive to labor, or was done in a manner contrary to morals, good customs or
public policy. In this case, bad faith attended respondents dismissal from her
employment. Bad faith involves a state of mind dominated by ill will or motive. It
implies a conscious and intentional design to do a wrongful act for a dishonest
purpose or some moral obliquity. Petitioner Danilo Litonjua showed ill will in treating
respondent Vigan in a very unfair and cruel manner which made her suffer anxieties
by reason of such job difficulties. Respondent Vigan is also entitled to exemplary
damages as her dismissal was effected in an oppressive and malevolent manner.
The award of attorneys fees is likewise sustained. It is settled that in actions for
recovery of wages or where an employee was forced to litigate and incur expenses
to protect his rights and interest, he is entitled to an award of attorneys fees.
Petition is denied.
Feb. 9, 2000 DE LEON

Private respondent worked as a lady security guard of OSS Security Agency from
June 16, 1986. Petitioner of acquired the assets and properties of OSS Security
Agency and absorbed some of its personnel, including private respondent. As a lady
security guard she was assigned to render security services to the different clients
of petitioner. In a memorandum addressed to petitioner's company President, the
Building Administrator of VM Condominium II complied of the laxity of the guards in
enforcing security measures. In compliance therewith, petitioner issued Duty Detail
Order relieving private respondent and another lady security guard of their
assignment at VM Condominium II for reassignment to other units or detachments
where vacancy exists. Private respondent was detailed to the Minami International
Corporation from to replace lady security guard Susan Tan who filed her vacation
leave for August 1991. However, it appears that private respondent did not report
for duty at her new assignment. Private respondent filed her complaint for under
payment and constructive dismissal. Labor Arbiter declared that private
respondent's transfer was not sanctioned by law, hence illegal and tantamount to
unjust dismissal. The Labor Arbiter ordered for respondents reinstatement and
payment of backwagedHence, this petition.
Issue: WON respondent is entitled to reinstatement and payment of backwages.
In the employment of personnel, the employer can prescribe the hiring, work
assignments, working methods, time, place and manner of work, tools to be used,
processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers and the discipline, dismissal and
recall of work, subject only to limitations imposed by laws. These are called
management prerogatives in which the free will of management to conduct its own
affairs to achieve its purpose, takes from. Thus, the transfer of an employee
ordinarily lies within the ambit of management prerogatives. However, a transfer
amounts to constructive dismissal when the transfer is unreasonable, inconvenient,
or prejudicial to the employee, and it involves a demotion in rank or diminution of
salaries, benefits and other privileges.
In the case at bench, nowhere in the record does it show that that the transfer of
private respondent was anything but done in good faith, without grave abuse of
discretion, and in the best interest of the business enterprise. First. No malice
should be imputed from the fact that private respondent was relieved of her
assignment and, a day later, assigned a new post. When a security guard is placed
"off detail" or on "floating" status, in security agency parlance, it means "waiting to
be posted. Private respondent has not even been "off detail" for a week when she
filed her complaint. Second. Evidence is wanting to support the Labor Arbiter's
conclusion that petitioner discriminated against private respondent when it ordered
her relief and transfer of assignment. Petitioner proved that such transfer was
effected in good faith to comply with the reasonable request of its client, Madrigal

Condominium for a more disciplined service of the security guards on detail. The
renewal of the contract of petitioner with MCCI hinged on the action taken by the
former on the latter's request. Third. It appears that private respondent declined the
post assigned to her inasmuch as she considered it "a booby trap of crippling and
dislocating private respondent from her employment". Private respondent lived in
Sta. Mesa, Manila, and her new assigned post is in Taytay, Rizal, as against her
previous post at VM Condominium II in Makati. Her new assigned post would entail
changes in her routine, something that she was not agreeable with. But the mere
fact that it would be inconvenient for her, as she has been assigned to VM
Condominium II for a number of years, does not by itself make her transfer illegal.
Thus, there was no basis to order reinstatement and back wages inasmuch as
private respondent was not constructively dismissed. Neither is private respondent
entitled to the award of money claims for underpayment, absent evidence to
substantiate the same.
Petition is granted.
CANDIDO ALFARO vs. CA and STAR PAPER CORP G.R. No. 140812 August 28, 2001
Petitioner Candido Alfaro was employed as a helper/operator of private respondent
Star Paper Corp. since November 8, 1990. Alfaro took a sick leave. When he
reported back to work, he was surprised to find out that another worker was
recruited to take his place, and instead, he was transferred to the wrapping section
where he was required to work with overtime up to 9:30 PM, from his regular
working hours of from 7:00 a.m., to 4:00 p.m., despite the fact that he had just
recovered from illness. He was given a new assignment where the work was even
more difficult and when he complained of what he felt was rude treatment or sort of
punishment since he was being exposed to hard labor notwithstanding his
predicament of just coming from sickness, petitioner was told to look for another job
because he was dismissed, when petitioner was seeking his 13th month pay and 15
days SIL, he was ignored when he refused to sign documents which indicated that
he was renouncing claims against private respondent. Petitioner sought private
respondent to pay him, but he was told to come next year. When petitioner came
back, private respondent dangled to him a check worth P3,000.00 which would be
released to him, only if he signed the documents, being forced upon him to sign on
the day he was dismissed. Desperate for the money to support his subsistence, and
against his will, petitioner was constrained to sign the said documents which
contained no amount of money released to him. The actual sum of money received
by petitioner from private respondent amounted to P3,000.00 in the form of check,
while his claims for 15 days sick leave pay was secured by him from SSS. The Labor
Arbiter found that petitioner was not illegally dismissed bur resigned from
employment. Hence, this petition.

Issue: WON petitioner is entitled to separation pay.

Generally, an employee who voluntarily resigns from employment is not entitled to
separation pay. Voluntary resignation is defined as the act of an employee, who
finds himself in a situation in which he believes that personal reasons cannot be
sacrificed in favor of the exigency of the service; thus, he has no other choice but to
disassociate himself from his employment. In this case, The factual findings of the
labor arbiter and the NLRC, as affirmed by the CA, reveal that petitioner resigned
from his work due to his illness, with the understanding that private respondent
would give him separation pay. He was already suffering from a lingering illness at
the time he tendered his resignation. His continued employment would have been
detrimental not only to his health, but also to his performance as an employee of
private respondent. Hence, the termination of the employment relations of
petitioner with private respondent was ultimately, if not outrightly inevitable.
Petitioner negotiated for a resignation with separation pay as the manner in which
his employment relations with private respondent would end, because resignation
with separation pay was the best option for him under the circumstances. Rightly
so, this was the mode adopted and agreed upon by the parties, as evidenced by the
Release and Quitclaim petitioner executed in connection with his resignation.Clearly
then, the claim of petitioner that he was illegally dismissed cannot be sustained. It
should be noted that dismissal and voluntary resignation are adversely opposed
modes of terminating employment relations, in that the presence of one precludes
that of the other.
Not all waivers and quitclaims are invalid as against public policy. If the agreement
was voluntarily entered into and represented a reasonable settlement, it is binding
on the parties and may not later be disowned, simply because of a change of mind.
Unfortunately, it private respondent did not keep its promise to grant the separation
pay, prompting petitioner to institute the present action for illegal dismissal. Thus,
the Supreme Court gave due course to this petition.
Petition is denied.
GLOBE TELECOM vs. JOAN FLORENDO-FLORES G.R. No. 150092 September 27, 2002
Petitioner GLOBE TELECOM is a domestic corporation while respondent Joan
Florendo-Flores was the Senior Account Manager for Northern Luzon. Joan FlorendoFlores filed an amended complaint for constructive dismissal against GLOBE and
alleged that Cacholo M. Santos never accomplished and submitted her performance
evaluation report thereby depriving her of salary increases, bonuses and other
incentives which other employees of the same rank had been receiving. GLOBE

claimed that after receiving her salary in the second week of May 1998 FlorendoFlores went AWOL without signifying through letter or any other means that she was
resigning from her position; that notwithstanding her absence and the filing of her
case, respondents employment was not terminated as shown by the fact that
salary was still provided her until July 1998 to be released upon her presentation
of the attendance-record sheet indicating that she already returned and reported for
work; that she continued to have the use a of company car and company
"handyphone" unit; that she was replaced only when her absence became indefinite
and intolerable as the marketing operations in Northern Luzon began to suffer.
Labor Arbiter ruled that respondent was illegally dismissed. NLRC ruled that
petitioners did not dismiss respondent but that the latter actually abandoned her
employment because of a disagreement with her immediate superior which she
failed to bring to the attention of GLOBE and its officers. However, NLRC ordered
GLOBE to pay backwages to respondent.
Issue: WON respondent is entitled to backwages.
Constructive dismissal exists where there is cessation of work because continued
employment is rendered impossible, unreasonable or unlikely, as an offer involving
a demotion in rank and a diminution in pay. In constructive dismissal, the employer
has the burden of proving that the transfer and demotion of an employee are for
just and valid grounds such as genuine business necessity. The employer must be
able to show that the transfer is not unreasonable, inconvenient, or prejudicial to
the employee. If the employer cannot overcome this burden of proof, the
employee's demotion shall be tantamount to unlawful constructive dismissal.
All these are discernible in respondent's situation. She was singularly edged out of
employment by the unbearable or undesirable treatment she received from her
immediate superior Cacholo M. Santos who discriminated against her without
reason - not preparing and submitting her performance evaluation report that would
have been the basis for her increased salary; not forwarding her project proposals to
management that would have been the source of commendation; diminishing her
supervisor stature by assigning her to house-to-house sales or direct sales; and
withholding from her the enjoyment of bonuses, allowances and other similar
benefits that were necessary for her efficient sales performance. Although
respondent continued to have the rank of a supervisor, her functions were reduced
to a mere house-to-house sales agent or direct sales agent. This was tantamount to
a demotion. She might not have suffered any diminution in her basic salary but
petitioners did not dispute her allegation that she was deprived of all benefits due
to another of her rank and position, benefits which she apparently used to receive.
For this act of illegal dismissal, she deserves no less than full back wages starting
from the time she had been illegally dismissed until her actual reinstatement to her
former position without loss of seniority rights and other benefits - earned, accrued

and demandable. She shall continue to enjoy her benefits, privileges and incentives
including the use of the company car and "handyphone." It should be noted that
the award of back wages in the instant case is justified upon the finding of illegal
dismissal, and not under the principle of "act of grace" for past services rendered.
Decision appealed from is modified.
PATERNO S. MENDOZA vs. SAN MIGUEL FOODS G.R. No. 158684. May 16, 2005
Paterno S. Mendoza, Jr., was hired by San Miguel Corporation (SMC) as a marketing
coordinator in its Trading Department. He was transferred to San Miguel Foods, Inc.
(SMFI), a subsidiary of SMC, and was assigned to Instafood Corporation of the
Philippines (Instafood) as a Purchasing Officer. He, however, remained an employee
of SMFI. In the course of its operations, Instafood suffered serious business losses
for successive years and was closed. SMFI also suffered serious business losses; it
had to implement a redundancy program and give benefits to affected employees.
One of those whose employment was terminated on account of redundancy was
Mendoza. He accepted benefits equivalent to two months salary for every year of
service. SMFI, sent Mendoza a letter of termination informing him that the
severance of his employment was to take effect at the close of business hours of
November 30, 1996, and that his separation benefits would be released 30 days
thereafter. Pursuant to company policy, Mendoza was allowed to go on a one-month
terminal leave before the date of his severance from employment. In this case,
petitioner challenges that deed of release and quitclaim that he signed and insists
that he was merely forced to execute and sign it, and that he received only half of
what he was entitled to receive; worse, he spent as much as P300,000.00 for
processing the release of the subject shipment. The petitioner invokes the rule that
quitclaims are disfavored and do not bar recovery of the full measure of a workers
rights and benefits.
Issue: WON the quitclaim in question is valid.
Generally, quitclaims are commonly frowned upon for being contrary to public
policy, there are, however, legitimate waivers that represent a voluntary and
reasonable settlement of a workers claim which should be respected by the courts
as the law between the parties. Where the person making the waiver has done so
voluntarily, with a full understanding thereof, and the consideration for the
quitclaim is credible and reasonable, the transaction must be recognized as being a
valid and binding undertaking. Not all quitclaims are per se invalid or against policy,
except (1) where there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or (2) where the terms of settlement are

unconscionable on their face; in these cases, the law will step in to annul the
questionable transaction.
In the case at bench, the petitioner is not an unsuspecting or a gullible person. As
adverted to by the respondents, the petitioner is a graduate of the University of the
Philippines no less, with a Bachelor of Arts degree in Economics. Surely, he knew
the nature and the legal effect of the said deed. Neither is the amount involved in
the quitclaim unconscionable. Under Article 283 of the Labor Code, in case of
termination of employment by virtue of redundancy, the worker affected thereby
shall be entitled to a separation pay equivalent to at least one (1) month pay or to
at least one (1) month pay for every year of service, whichever is higher. In this
case, the amount involved in the quitclaim is a rather hefty sum, a gross amount of
P1,102,386.25, equivalent to two months salary for every year of service. Even
assuming that the petitioner, indeed, spent half of what he received in facilitating
the release of the shipment, the remainder thereof is still compliant with the
provision of the aforesaid Article 283, as it would still be equivalent to about one
month of his salary for every year of service.
Petition is denied.
November 17, 2004 YNARES-SANTIAGO
Private respondent Riviera Home Improvements, Inc. is engaged in the business of
selling and installing ornamental and construction materials. It employed petitioners
Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on
January 2, 1992 until February 23, 1999 when they were dismissed for
abandonment of work. Petitioners then filed a complaint for illegal dismissal and
payment of money claims and the Labor Arbiter rendered a decision declaring the
dismissals illegal and ordered private respondent to pay the monetary claims.NLRC
reversed the Labor Arbiter because it found that the petitioners had abandoned
their work, and were not entitled to backwages and separation pay. The other
money claims awarded by the Labor Arbiter were also denied for lack of evidence.
Petitioners assert that they were dismissed because the private respondent refused
to give them assignments unless they agreed to work on a "pakyaw" basis when
they reported for duty. They did not agree on this arrangement because it would
mean losing benefits as SSS members. Petitioners also claim that private
respondent did not comply with the twin requirements of notice and hearing. Private
respondent, on the other hand, maintained that petitioners were not dismissed but
had abandoned their work. In fact, private respondent sent two letters to the last
known addresses of the petitioners advising them to report for work. Private
respondent's manager even talked to petitioner Virgilio Agabon by telephone to tell
him about the new assignment at Pacific Plaza Towers. However, petitioners did not

report for work because they had subcontracted to perform installation work for
another company. Petitioners also demanded for an increase in their wage to
P280.00 per day. When this was not granted, petitioners stopped reporting for work
and filed the illegal dismissal case.
Issue: WON petitioners were illegally dismissed.
To dismiss an employee, the law requires not only the existence of a just and valid
cause but also enjoins the employer to give the employee the opportunity to be
heard and to defend himself. Article 282 of the Labor Code enumerates the just
causes for termination by the employer: xxx (b) gross and habitual neglect by the
employee of his duties; xxx. Abandonment is the deliberate and unjustified refusal
of an employee to resume his employment. It is a form of neglect of duty, hence, a
just cause for termination of employment by the employer. For a valid finding of
abandonment, these two factors should be present: (1) the failure to report for work
or absence without valid or justifiable reason; and (2) a clear intention to sever
employer-employee relationship, with the second as the more determinative factor
which is manifested by overt acts from which it may be deduced that the employees
has no more intention to work. The intent to discontinue the employment must be
shown by clear proof that it was deliberate and unjustified.
In the case at bench, petitioners were frequently absent having subcontracted for
an installation work for another company. Subcontracting for another company
clearly showed the intention to sever the employer-employee relationship with
private respondent. This was not the first time they did this. In January 1996, they
did not report for work because they were working for another company. Private
respondent at that time warned petitioners that they would be dismissed if this
happened again. Petitioners disregarded the warning and exhibited a clear intention
to sever their employer-employee relationship. The record of an employee is a
relevant consideration in determining the penalty that should be meted out to him.
In a decided case, it has been held that an employee who deliberately absented
from work without leave or permission from his employer, for the purpose of looking
for a job elsewhere, is considered to have abandoned his job. We should apply that
rule with more reason here where petitioners were absent because they were
already working in another company.
The law imposes many obligations on the employer such as providing just
compensation to workers, observance of the procedural requirements of notice and
hearing in the termination of employment.
Issue: WON private respondent is liable to indemnify petitioner.

Dismissals based on just causes contemplate acts or omissions attributable to the

employee while dismissals based on authorized causes involve grounds under the
Labor Code which allow the employer to terminate employees. A termination for an
authorized cause requires payment of separation pay. When the termination of
employment is declared illegal, reinstatement and full backwages are mandated
under Article 279. If reinstatement is no longer possible where the dismissal was
unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Article 282, the
employer must give the employee two written notices and a hearing or opportunity
to be heard if requested by the employee before terminating the employment: a
notice specifying the grounds for which dismissal is sought a hearing or an
opportunity to be heard and after hearing or opportunity to be heard, a notice of the
decision to dismiss; and (2) if the dismissal is based on authorized causes under
Articles 283 and 284, the employer must give the employee and DOLE written
notices 30 days prior to the effectivity of his separation.
From the foregoing rules four possible situations may be derived: (1) the dismissal is
for a just cause under Article 282 of the Labor Code, for an authorized cause under
Article 283, or for health reasons under Article 284, and due process was observed;
(2) the dismissal is without just or authorized cause but due process was observed;
(3) the dismissal is without just or authorized cause and there was no due process;
and (4) the dismissal is for just or authorized cause but due process was not
In the first situation, the dismissal is undoubtedly valid and the employer will not
suffer any liability. In the second and third situations where the dismissals are
illegal, Article 279 mandates that the employee is entitled to reinstatement without
loss of seniority rights and other privileges and full backwages, inclusive of
allowances, and other benefits or their monetary equivalent computed from the
time the compensation was not paid up to the time of actual reinstatement. In the
fourth situation, the dismissal should be upheld. While the procedural infirmity
cannot be cured, it should not invalidate the dismissal. However, the employer
should be held liable for non-compliance with the procedural requirements of due
The present case squarely falls under the fourth situation. The dismissal should be
upheld because it was established that the petitioners abandoned their jobs to work
for another company. Private respondent, however, did not follow the notice
requirements and instead argued that sending notices to the last known addresses
would have been useless because they did not reside there anymore. Unfortunately
for the private respondent, this is not a valid excuse because the law mandates the
twin notice requirements to the employee's last known address. Thus, it should be
held liable for non-compliance with the procedural requirements of due process.

In cases involving dismissals for cause but without observance of the twin
requirements of notice and hearing, t the dismissal was for just cause and should be
upheld but imposing sanctions on the employer. Where the dismissal is for a just
cause, as in the instant case, the lack of statutory due process should not nullify the
dismissal, or render it illegal, or ineffectual. However, the employer should
indemnify the employee for the violation of his statutory rights. The sanction should
be in the nature of indemnification or penalty and should depend on the facts of
each case, taking into special consideration the gravity of the due process violation
of the employer.
Petition is denied.
JAKA FOOD PROCESSING CORP vs. DARWIN PACOT G.R. No. 151378. March 28, 2005
Respondents Darwin Pacot et.al were earlier hired by petitioner JAKA Foods
Processing Corporation (JAKA) until the latter terminated their employment because
the corporation was in dire financial straits. It is not disputed, however, that the
termination was effected without JAKA complying with the requirement under Article
283 of the Labor Code regarding the service of a written notice upon the employees
and the DOLE at least one (1) month before the intended date of termination. In
time, respondents filed complaints for illegal dismissal, underpayment of wages and
nonpayment of service incentive leave and 13th month pay against JAKA. Labor
Arbiter rendered a decision declaring the termination illegal and ordering JAKA to
reinstate respondents with full backwages, and separation pay if reinstatement is
not possible. NLRC modified the Labor Arbiter and set aside the awards of
backwages, service incentive leave pay but ordered JAKA to indemnify petitioners
for its failure to observe due process in effecting the retrenchment.
Issue: WON petitioner is liable to indemnify private respondents.
In a decided case, it has been held that where the dismissal is for a just cause, the
lack of statutory due process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify the employee for the violation
of his statutory rights. The violation of petitioners right to statutory due process by
the private respondent warrants the payment of indemnity in the form of nominal
damages. The amount of such damages is addressed to the sound discretion of the
court, taking into account the relevant circumstances.
A dismissal for just cause under Article 282 implies that the employee concerned
has committed, or is guilty of, some violation against the employer, i.e. the
employee has committed some serious misconduct, is guilty of some fraud against

the employer. Thus, it can be said that the employee himself initiated the dismissal
process. On another breath, a dismissal for an authorized cause under Article 283
does not necessarily imply delinquency or culpability on the part of the employee.
Instead, the dismissal process is initiated by the employers exercise of his
management prerogative, i.e. when the employer opts to install labor saving
devices, when he decides to cease business operations or when, as in this case, he
undertakes to implement a retrenchment program. The clear-cut distinction
between a dismissal for just cause under Article 282 and a dismissal for authorized
cause under Article 283 is further reinforced by the fact that in the first, payment of
separation pay, as a rule, is not required, while in the second, the law requires
payment of separation pay. For these reasons, there ought to be a difference in
treatment when the ground for dismissal is one of the just causes under Article 282,
and when based on one of the authorized causes under Article 283.
Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under
Article 282 but the employer failed to comply with the notice requirement, the
sanction to be imposed upon him should be tempered because the dismissal
process was, in effect, initiated by an act imputable to the employee; and (2) if the
dismissal is based on an authorized cause under Article 283 but the employer failed
to comply with the notice requirement, the sanction should be stiffer because the
dismissal process was initiated by the employers exercise of his management
In the case at bench, , JAKA was suffering from serious business losses at the time it
terminated respondents employment. It is, therefore, established that there was
ground for respondents dismissal, i.e., retrenchment, which is one of the authorized
causes enumerated under Article 283 of the Labor Code. Likewise, it is established
that JAKA failed to comply with the notice requirement under the same Article.
Considering the factual circumstances in the instant case and the above
ratiocination, the Supreme Court deem it proper to fix the indemnity at P50,000.00.
SC held that CA erred when it ordered JAKA to pay respondents separation pay
equivalent to 1)month salary for every year of service. This is because the rule is
that in all cases of business closure or cessation of operation or undertaking of the
employer, the affected employee is entitled to separation pay. This is consistent
with the state policy of treating labor as a primary social economic force, affording
full protection to its rights as well as its welfare. The exception is when the closure
of business or cessation of operations is due to serious business losses or financial
reverses; duly proved, in which case, the right of affected employees to separation
pay is lost for obvious reasons.
Petition is granted.

Petitioners hired on a per-voyage basis private respondent Dioscoro Sedan as 3rd
marine engineer and oiler in one of the vessels owned by petitioners. His last
voyage was on July 27, 1997 on board the vessel M/V Eastern Universe. His monthly
pay was P22,000. Additionally, after each voyage his earned leave credits are
monetized and paid in cash. He said he was disembarking because he was going to
take the board examinations for marine engineers. Two months later, Sedan sent a
letter to petitioners applying for optional retirement, citing as reason the death of
his only daughter, hence the retirement benefits he would receive would ease his
financial burden. However, petitioners deferred action on his application for optional
retirement since his services on board ship were still needed. Nonetheless,
according to petitioners, the company expressed intention to extend him a loan in
order to defray the costs incurred for the burial and funeral expenses of his
daughter. Sedan sent petitioners another letter insisting on the release of half of his
optional retirement benefits. Later, he said that he no longer wanted to continue
working on board a vessel for reasons of health. Sedan sent another letter to
petitioners threatening to file a complaint if his application was not granted. In
reply, according to petitioners, the company management sent a telegram
informing Sedan that his services were needed on board a vessel and that he should
report immediately for work as there was no available replacement. Sedan claims
he did not receive the telegram, nor was this fact proved by the company before the
Labor Arbiter or the NLRC. Sedan proceeded to file a complaint with the Labor
Arbiter against petitioners demanding payment of his retirement benefits, leave
pay, 13th month pay and attorneys fees. The Labor Arbiter ruled in favor of Sedan.
CA sustained NLRC and the Labor Arbiter and ruled that private respondent is
entitled to financial assistance.
Issue: WON private respondent is entitled to financial assistance.
The Supreme Court is 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 it is unmindful
of this of the Supreme Courts ruling in one case where it has been held that when
there is no dismissal to speak of, an award of financial assistance is not in order.
The Supreme Court did allow, in several instances, the grant of financial assistance.
Financial assistance may be allowed as a measure of social justice and exceptional
circumstances, and as an equitable concession. In the case at bench, private
respondent joined the company when he was a young man of 25 years and stayed
on until he was 48 years old; that he had given to the company the best years of his
youth, working on board ship for almost 24 years; that in those years there was not
a single report of him transgressing any of the company rules and regulations; that

he applied for optional retirement under the companys non-contributory plan when
his daughter died and for his own health reasons; and that it would appear that he
had served the company well, since even the company said that the reason it
refused his application for optional retirement was that it still needed his services;
that he denies receiving the telegram asking him to report back to work; but that
considering his age and health, he preferred to stay home rather than risk further
working in a ship at sea. These special circumstances warrants the grant of financial
Petition is denied.
HA YUAN RESTAURANT vs. NLRC and JUVY SORIA G.R. No. 147719 January 27, 2006
Respondent Juvy Soria worked as a cashier in petitioners establishment located
inside the SM Food Court Makati. Respondent assaulted her co-worker Ma. Teresa
Sumalague resulting in a scuffle between the two. Despite the intervention of their
supervisor Fiderlie Recide, they were not pacified, prompting Recide to call for
security assistance. The two were then brought to the SM Food Court Administration
Office where they continued to cast tirades at each other notwithstanding the
request of the SM Food Court Manager to stop. Because they refused to be mollified,
they were brought to the Customer Relations Office for further investigation. As a
result of the incident, the SM Food Court Manager banned the two from working
within the SM Food Courts premises. Respondent then filed with the Labor Arbiter a
complaint for illegal dismissal which was dismissed by the Labor Arbiter for lack of
merit. NLRC modified the Labor Arbiter and awarded separation pay to private
Issue: WON private respondent is entitled to separation pay.
In a decided case, it has been held that separation pay shall be allowed as a
measure of social justice only in those instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on his moral
character. Where the reason for the valid dismissal is, for example, habitual
intoxication or an offense involving moral turpitude, like theft or illicit sexual
relations with a fellow worker, the employer may not be required to give the
dismissed employee separation pay, or financial assistance, or whatever other
name it is called, on the ground of social justice. Separation pay therefore, depends
on the cause of dismissal, and may be accordingly awarded provided that the
dismissal does not fall under either of two circumstances: (1) there was serious
misconduct, or (2) the dismissal reflected on the employees moral character.

In the case at bench, respondents cause of dismissal in this case amounts as a

serious misconduct and as such, separation pay should not have been awarded to
her. Thus, the petition should be granted. While it is true, that the Labor Arbiter did
not tag private respondent cause of dismissal as serious misconduct, nevertheless,
it is its nature, not its label that characterizes the cause as serious misconduct.
There is no question as regards the incident that caused respondents dismissal.
While respondents co-worker Sumalague was eating at the back of the store,
respondent rushed toward Sumalague and hit the latter on the face causing injuries.
A scuffle ensued and despite their supervisor Recides pleas, the two continued to
fight, prompting Recide to call the mall security. When the two were brought to the
administration office, they continued bickering and did not heed the request of the
manager to stop, and thus they were brought to the Customer Relations Office.
Because of the incident, the two were banned from working within the premises.
The fact that Sumalague sustained injuries is a matter that cannot be taken lightly.
Moreover, the incident disturbed the peace in the work place, not to mention that
respondent and Sumalague committed a breach of its discipline. Clearly, respondent
committed serious misconduct within the meaning of Art. 282 of the Labor Code
providing for the dismissal of employees. Her cause of dismissal amounting to a
serious misconduct, respondent is not entitled to an award of separation pay.
Petition is granted.


(CCSEU) G.R. No. 151021 May 4, 2006 TINGA
Issue: WON a stipulation in a CBA that allows management to retire an employee in
its employ for a predetermined lengthy period but who has not yet reached the
minimum compulsory retirement age provided in the Labor Code is valid.
Retirement is a different specie of termination of employment from dismissal for just
or authorized causes under Articles 282 and 283 of the Labor Code. While in all
three cases, the employee to be terminated may be unwilling to part from service,
there are eminently higher standards to be met by the employer validly exercising
the prerogative to dismiss for just or authorized causes. In those two instances, it is
indispensable that the employer establish the existence of just or authorized causes
for dismissal as spelled out in the Labor Code. Retirement, on the other hand, is the
result of a bilateral act of the parties, a voluntary agreement between the employer
and the employee whereby the latter after reaching a certain age agrees and/or
consents to sever his employment with the former.
Article 287 of the Labor Code, as amended, governs retirement of employees,
stating: Any employee may be retired upon reaching the retirement age established

in the collective bargaining agreement or other applicable employment contract. In

case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements: Provided, however, That an employees
retirement benefits under any collective bargaining agreement and other
agreements shall not be less than those provided herein. In the absence of a
retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but
not beyond sixty-five (65) years which is hereby declared the compulsory retirement
age, who has served at least five (5) years in the said establishment, may retire and
shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary
for every year of service, a fraction of at least six (6) months being considered as
one whole year.We are impelled to reverse the Court of Appeals and affirm the
validity of the termination of employment of Llagas and Javier, arising as it did from
a management prerogative granted by the mutually-negotiated CBA between the
School and the Union.
In the case at bench, the CBA provided that the School has the option to retire an
employee upon reaching the age limit of sixty (60) or after having rendered at least
twenty (20) years of service to the School, the last three (3) years of which must be
continuous. The CBA established 60 as the compulsory retirement age. However, it
is not alleged that either Javier or Llagas had reached the compulsory retirement
age of 60 years, but instead that they had rendered at least 20 years of service in
the School, the last 3 years continuous. Clearly, the CBA provision allows the
employee to be retired by the School even before reaching the age of 60, provided
that he/she had rendered 20 years of service.
Would such a stipulation be valid?
Yes, such stipulation is valid. In a decided case, it has been held that Labor Code
permitted employers and employees to fix the applicable retirement age at below
60 years of age. Moreover, there was no illegal dismissal since it was the CBA itself
that incorporated the agreement reached between the employer and the bargaining
agent with respect to the terms and conditions of employment; hence, when an
employee ratified the CBA with his union, he concurrently agreed to conform to and
abide by its provisions. By their acceptance of the CBA, the Union and its members
are obliged to abide by the commitments and limitations they had agreed to cede to
management. The questioned retirement provisions cannot be deemed as an
imposition foisted on the Union, which very well had the right to have refused to
agree to allowing management to retire retire employees with at least 20 years of

i. Periods of Prescription (Art. 292)


Period of Prescription

Money Claims

3 years from the accrual of the causes of action

1 year from the accrual of the cause of action

Illegal Dismissal

4 years from the accrual of the cause of action


4 years

The period of prescription under Article 292, Labor Code, refers to and is
limited to money claims, all other cases on injury to rights of a workingman being
governed by the Civil Code. Hence, reinstatement prescribes in 4 years.
Issue: WON the 3-year prescriptive period provided under Article 291 of the Labor
Code, as amended, is applicable to respondents claim of service incentive leave
Article 291 of the Labor Code states that all money claims arising from employeremployee relationship shall be filed within 3 years from the time the cause of action
accrued; otherwise, they shall be forever barred.