Case Digest: Canedo v.

Kampilan Security & Arquiza

G.R. No.179326 : July 31, 2013

LUCIANO P. CANEDO, Petitioner, v. KAMPILAN SECURITY AND DETECTIVE

AGENCY, INC. and RAMONCITO L. ARQUIZA, Respondents.

DEL CASTILLO,J.:

FACTS:

Respondent agency hired petitioner as security guard on November 20, 1996 and assigned him at
the Naga Power Barge 102 of the National Power Corporation (NPC) at Sigpit Load Ends,
Lutopan, Toledo City.

For not wearing proper uniform while on duty as per report of Allan Alfafara (Alfafara) of the
NPC, petitioner was suspended for a month effective May 8, 2003.

In a letterdated June 2, 2003, NPC informed respondent agency that it was no longer interested in
petitioners services and thus requested for his replacement.

On June 17, 2003, petitioner requested respondent Arquiza to issue a certification in connection
with his intended retirement effective that month.Thus, respondent Arquiza issued the
Certificationdated June 25, 2003.

Five days later, petitioner filed before the Labor Arbiter a Complaint for illegal dismissal, illegal
suspension and non-payment of monetary benefits against respondents.

Petitioner alleged that his suspension was without valid ground and effected without due process,
hence, illegal. He claimed that Alfafaras report about his non-wearing of uniform was fabricated
and ill-motivated because he declined Alfafaras invitation to convert to their religion. In fact, the
roving inspector who checked the attendance of guards on duty does not have any report
showing his commission of any infraction. Petitioner averred that he was suspended without
being given the chance to explain his side.

Petitioner narrated that when he reported back to work after his one-month suspension, he was
surprised to find out that he was already terminated from the service effective May 7, 2003 as
shown by the June 25, 2003 Certification issued to him by respondent Arquiza. He then claimed
to have been underpaid for services rendered and that he is entitled to holiday pay, rest day pay,
night shift differential, service incentive leave pay, 13th month pay, retirement benefits, damages
and attorneys fees.

Based on the June 25, 2003 Certification, the Labor Arbiter held that petitioner was illegally
dismissed from the service. He also found petitioners prior suspension illegal and granted him all
his monetary claims except for underpayment of wages.
Respondents filed a Memorandum of Appealbefore the NLRC arguing that the Labor Arbiter
erred in concluding that petitioner was illegally dismissed based solely on the June 25, 2003
Certification. They contended that the said Certification is not sufficient to establish petitioners
dismissal as such fact must be proven by direct evidence of actual dismissal. They also averred
that the word "terminated" as used in the said Certification actually meant "pulled-out" and this
can be construed from the following phrase "as per clients request." This position is strengthened
by petitioners June 17, 2003 letter requesting for a Certification in connection with his intended
retirement. At any rate, respondents explained that the subject Certification was only issued upon
petitioners request in order to facilitate his application for entitlement to retirement benefits with
the Social Security System (SSS). And the word "terminated", assuming its literal meaning, was
only used in order to serve the purpose of the same, that is, to show SSS that petitioner is no
longer in service.

Petitioner in his Appellees Memorandumregarded respondents averments as clear afterthoughts

and prayed for the modification of the Labor Arbiters awards to include salary differential, night
shift differential, rest day pay, 13th month pay and retirement benefits.

In a Decisiondated June 28, 2005, the NLRC initially affirmed with modification the Labor
Arbiters Decision.

However, in resolving respondents Motion for Reconsideration,the NLRC reversed itself and set
aside its earlier Decision. In a Resolutiondated October 20, 2005, it held that the June 25, 2003
Certification should be read in conjunction with the June 2, 2003 letter of NPC requesting for
petitioners relief from his post. The NLRC noted that it is common practice for clients of security
agencies to demand replacement of any security guard assigned to them but cannot demand their
dismissal from the employ of the security agency. And from the time petitioner was relieved
from his NPC posting, he was considered on a floating status which can last for a maximum
period of six months. Moreover, the NLRC opined that petitioners intention to retire as shown by
his June 17, 2003 letter negated his claim of termination. Nevertheless, it maintained that
petitioner was suspended without being notified of his infraction. Thus, he should be paid his
salary during the period of his illegal suspension. The dispositive portion of the said Resolution
reads

Petitioner filed an Urgent Motion for Reconsideration,which was, however, denied in a

Resolutiondated December 15, 2005. Hence, he sought recourse to the CA via a Petition for
Certiorari.

The CA, in a Decisiondated January 25, 2007, denied the Petition after it found no grave abuse
of discretion on the part of the NLRC.

In view of the above, the CA concluded that petitioner was merely placed on temporary "off-
detail" which is not equivalent to dismissal. However, like the NLRC, the CA found that
petitioner was deprived of due process when he was suspended and thus affirmed his entitlement
to his salary during the period of suspension. It also affirmed the awards for holiday pay and
service incentive leave pay as well as the deduction therefrom ofP10,000.00 representing
petitioners cash advance.

As petitioners Motion for Reconsiderationwas likewise denied by the CA in its Resolutiondated

July 25, 2007, he now comes to this Court through this Petition for Review on Certiorari.

ISSUE: Whether or not petitioner was dismissed from service?

HELD: Court of Appeals decision is affirmed.

REMEDIAL LAW

At the outset, the Court notes that this is a question of fact which cannot be raised in a Petition
for Review on Certiorari under Rule 45. However, when there is no uniformity in the factual
findings of the tribunals below, as in this case, this Court is resolved to again examine the
records as well as the evidence presented to determine which findings conform with the
evidentiary facts.

LABOR LAW

In illegal dismissal cases, "while the employer bears the burden to prove that the termination was
for a valid or authorized cause, the employee must first establish by substantial evidence the fact
of dismissal from service." The burden of proving the allegations rests upon the party alleging
and the proof must be clear, positive and convincing.Thus, in this case, it is incumbent upon
petitioner to prove his claim of dismissal.

Petitioner relies on the word "terminated" as used in the June 25, 2003 Certification issued him
by respondent Arquiza and argues that the same is a clear indication that he was dismissed from
service. We are, however, not persuaded. Petitioner cannot simply rely on this piece of document
since the fact of dismissal must be evidenced by positive and overt acts of an employer
indicating an intention to dismiss.Here, aside from this single document, petitioner proffered no
other evidence showing that he was dismissed from employment. While it is true that he was not
allowed to report for work after the period of his suspension expired, the same was due to NPCs
request for his replacement as NPC was no longer interested in his services. And as correctly
argued by respondents, petitioner from that point onward is not considered dismissed but merely
on a floating status. "Such a floating status is lawful and not unusual for security guards
employed in security agencies as their assignments primarily depend on the contracts entered
into by the agency with third parties."

Countering such status, petitioner contends that even at present, he is still not given any new
duties.A floating status can ripen into constructive dismissal only when it goes beyond the six-
month maximum period allowed by law.In this case, petitioner filed the Complaint for illegal
dismissal even before the lapse of the six-month period. Hence, his claim of illegal dismissal
lacks basis. Moreover and as aptly observed by the NLRC, it was in fact petitioner who intended
to terminate his relationship with respondents through his planned retirement. This is further
bolstered by his prayer in his Complaint where he sought for separation pay and not for
reinstatement.
At any rate, upon a close reading of the June 25, 2003 Certification, this Court is of the opinion
that petitioner was not dismissed from service. The import of the said Certification is that
petitioner was assigned in NPC from November 20, 1996 up to May 7, 2003 and that on May 7,
2003, respondents terminated his assignment to NPC upon the latters request. This is the correct
interpretation based on the true intention of the parties as shown by their contemporaneous and
subsequent acts and the other evidence on record as discussed above. Section 12 of Rule 130 of
the Rules of Court states that in the construction and interpretation of a document, the intention
of the parties must be pursued. Section 13 of the same Rule further instructs that the
circumstances under which a document was made may be shown in order to ascertain the correct
interpretation of a document.

To recap, petitioner was suspended effective May 8, 2003. On June 2, 2003, NPC requested for
his replacement. He then intimated his desire to retire from service on June 17, 2003. These
circumstances negate petitioners claim that he was terminated on May 7, 2003. Clearly, there is
no dismissal to speak of in this case.

With respect to the additional benefits prayed for by the petitioner, suffice it to state that this
Court cannot grant him such reliefs. "It is settled that a non-appellant cannot, on appeal, seek an
affirmative relief."It was held that "a party cannot impugn the correctness of a judgment not
appealed from by him, and while he may make counter-assignment of errors, he can do so only
to sustain the judgment on other grounds but not to seek modification or reversal thereof for in
such a case he must appea

Case Digest: Villanueva, Sr. v. Baliwag Navigation, Inc., et al.

G.R. No. 206505: July 24, 2013

JEREME G. VILLANUEVA, SR., Petitioner, v. BALIWAG NAVIGATION, INC.,

VICTORIA VDA. DE TENGCO and UNITRA MARITIME CO., LTD., Respondent.

BRION,J.:

FACTS:

On May 13, 2003, Villanueva entered into a ten-month employment contract with the
respondents as bosun for the vessel M/S Forestal Gaia. After his pre-employment medical
examination (PEME) on July 28, 2003, he was declared fit to work, although the PEME report
indicated that he had a heart disease. Villanueva joined the vessel M/S Forestal Gaia on August
17, 2003. Villanueva alleged that while in the performance of his duties on board the vessel one
day, he suddenly felt pain in his chest and experienced difficulty in breathing. He asked for
medical assistance but was given only oral medication to alleviate the pain. He was repatriated
on June 24, 2004 upon the expiration of his contract.

On Villanuevas return to the Philippines, he allegedly reported to the agency and asked for a
medical check-up, but was only referred to the Centerpoint Medical Services (Centerpoint) after
several follow-ups. Centerpoint traced his medical history showing that he had a heart disease
and declared him unfit to work. The declaration prompted him to ask for sickness allowance and
disability benefits from the respondents but his requests were all denied.

At this point, he sought a second opinion from an internist-cardiologist who confirmed that he
had a heart disease and declared him unfit for sea duty; he was given a Grade 1 disability rating.
On this basis, he filed a formal claim for disability benefits against the respondents. The
respondents denied liability, contending that Villanueva was repatriated not for medical reasons,
but for the completion of his contract.

The LA dismissed the complaint for lack of merit, declaring that Villanuevas heart ailment is not
compensable as it was not work-related. NLRC affirmed the LAs decision and denied petitioners
motion for reconsideration. Villanueva filed a petition for certiorari before the CA sustained the
NLRC ruling. He filed a motion for reconsideration but the same was denied. Hence, this
petition.

ISSUE: Whether or not Villanueva is entitled to the benefits

HELD: No.

Labor Law

The CA brushed off Villanuevas submission that his heart ailment, which he allegedly contracted
during his almost twenty (20) years of employment with the respondents, was aggravated by his
work on board the vessel M/S Forestal Gaia. While the CA acknowledged that under Section 32-
A(11) of the 2000 POEA-Standard Employment Contract, an aggravation would make his
claimed heart ailment an occupational disease, no substantial evidence supported this situation.

Further, the CA stressed that the fact that Villanueva was repatriated for finished contract and not
for medical reasons weakened, if not belied, his claim of illness on board the vessel. Lastly, the
CA found that Villanueva failed to comply with the mandatory three-day post-employment
medical examination under Section 20(B)(3) of the 2000 POEA-Standard Employment Contract,
contrary to his claim that he reported to the agency upon his repatriation and asked for a medical
check-up but was refused.

The SC find no reversible legal error in the CA ruling affirming the denial of Villanuevas claim
for disability benefits. We find it undisputed that he was repatriated for finished contract, not for
medical reasons. More importantly, while the 2000 POEA-Standard Employment Contract
(Section 32-A11) considers a heart disease as occupational, Villanueva failed to satisfy by
substantial evidence the condition laid down in the Contract that if the heart disease was known
to have been present during employment, there must be proof that an acute exacerbation was
clearly precipitated by the unusual strain brought about by the nature of his work.

Clearly, as the CA emphasized, Villanueva's repatriation for completion of his contract belies his
submission that his claimed heart disease had been aggravated by his work on board the vessel
MIS Forestal Gaia.
DENIED.
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Case Digest: Sang-An v. Equator

G.R. No. 173189 : February 13, 2013

JONATHAN I. SANG-AN, Petitioner, v. EQUATOR KNIGHTS DETECTIVE AND

SECURITY AGENCY, INC.,Respondent.

BRION, J.:

FACTS:

Jonathan was the Assistant Operation Manager of respondent Equator Knights Detective and
Security Agency, Inc. (Equator). He was tasked, among others, with the duty of assisting in the
operations of the security services. He was also in charge of safekeeping Equators firearms.

On April 21, 2001, Equator discovered that two firearms were missing from its inventory. The
investigation revealed that it was Jonathan who might have been responsible for the loss. On
April 24, 2001, Jonathan was temporarily suspended from work pending further investigation.

On May 8, 2001, while Jonathan was under suspension, a security guard from Equator was
apprehended by policemen for violating the Commission on Elections gun ban rule. The security
guard stated in his affidavit that the unlicensed firearm had been issued to him by Jonathan.

On May 24, 2001, Jonathan filed with the NLRC a complaint for illegal suspension with prayer
for reinstatement. In his position paper, however, he treated his case as one for illegal dismissal
and alleged that he had been denied due process when he was dismissed. Equator, on the other
hand, argued that Jonathans dismissal was for a just cause under Article 282 of the Labor Code.

The LA dismissed the complaint holding that no illegal dismissal took place as Jonathans
services were terminated pursuant to a just cause. The LA found that Jonathan was dismissed due
to the two infractions he committed: (1) the loss of Equators firearms under Jonathans watch, and
(2) issuance of an unlicensed firearm to Equators security guard.

Jonathan appealed to the NLRC, contending that no charge had been laid against him; there was
no hearing or investigation of any kind; and he was not given any chance or opportunity to
defend himself.

The NLRC sustained the findings of the LA. However, it held that Equators letter informing him
of his temporary suspension until further notice did not satisfy the requirements of due process
for a valid dismissal. Thus, the NLRC modified the LAs decision and ordered Equator to pay
Jonathan backwages from April 24, 2001 until the date of the NLRCs decision. Equator moved
for reconsideration but the NLRC denied the motion, prompting the filing of a petition for
certiorari under Rule 65 of the Rules of Court with the CA.

The CA reinstated the LAs decision dismissing Jonathans complaint. Jonathan filed a motion for
reconsideration which the CA denied.

Hence, this petition.

Jonathan contends that when Equator filed a petition for certiorari under Rule 65 of the Rules of
Court, it failed to post a cash or surety bond as required by Article 223 of the Labor Code.
Without complying with this condition, the petition for certiorari should have been dismissed
outright. Also, Jonathan contends that the CAs findings of fact are contrary to the findings of fact
by the NLRC.

ISSUES:

Whether or not the posting of a cash or surety bond is required for the filing of a petition for
certiorari under Rule 65 of the Rules of Court with the CA?

Whether or not Jonathan was validly dismissed?

HELD:

The petition is partly meritorious.

LABOR LAW

The requirement of a cash or surety bond as provided under Article 223 of the Labor Code only
applies to appeals from the orders of the LA to the NLRC. It does not apply to special civil
actions such as a petition for certiorari under Rule 65 of the Rules of Court. In fact, nowhere
under Rule 65 does it state that a bond is required for the filing of the petition.

A petition for certiorari is an original and independent action and is not part of the proceedings
that resulted in the judgment or order assailed before the CA. It deals with the issue of
jurisdiction, and may be directed against an interlocutory order of the lower court or tribunal
prior to an appeal from the judgment, or to a final judgment where there is no appeal or any
plain, speedy or adequate remedy provided by law or by the rules.

LABOR LAW

In order to validly dismiss an employee, it is fundamental that the employer observe both
substantive and procedural due process the termination of employment must be based on a just or
authorized cause and the dismissal can only be effected, after due notice and hearing.

The Court finds that Equator complied with the substantive requirements of due process when
Jonathan committed the two offenses.
Article 282(A) of the Labor Code provides that an employee may be dismissed on the ground of
serious misconduct or willful disobedience of the lawful orders of his employer or representative
in connection with his work. Misconduct is improper or wrongful conduct; it is the transgression
of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error of judgment. The misconduct, to be
serious within the meaning of the Labor Code, must be of such grave and aggravated character
and not merely trivia or unimportant. It is also important that the misconduct be in connection
with the employee's work to constitute just cause for his separation.

By losing two firearms and issuing an unlicensed firearm, Jonathan committed serious
misconduct. He did not merely violate a company policy; he violated the law itself, Presidential
Decree No. 1866, and placed Equator and its employees at risk of being made legally liable.
Thus, Equator had a valid reason that warranted Jonathans dismissal from employment as
Assistant Operation Manager.

However, the Court finds that Equator failed to observe the proper procedure in terminating
Jonathans services.

Jurisprudence has expounded on the guarantee of due process, requiring the employer to furnish
the employee with two written notices before termination of employment can be effected: a first
written notice that informs the employee of the particular acts or omissions for which his or her
dismissal is sought, and a second written notice which informs the employee of the employer's
decision to dismiss him. In considering whether the charge in the first notice is sufficient to
warrant dismissal under the second notice, the employer must afford the employee ample
opportunity to be heard.

A review of the records shows that Jonathan was not furnished with any written notice that
informed him of the acts he committed justifying his dismissal from employment. The notice of
suspension given to Jonathan only pertained to the first offense. With respect to his second
offense, Jonathan was never given any notice that allowed him to air his side and to avail of the
guaranteed opportunity to be heard. That Equator brought the second offense before the LA does
not serve as notice because by then, Jonathan had already been dismissed.

In order to validly dismiss an employee, the observance of both substantive and procedural due
process by the employer is a condition sine qua non. Procedural due process requires that the
employee be given a notice of the charge against him, an ample opportunity to be heard, and a
notice of termination.

The decision and resolution of the Court of Appeals AFFIRMED with MODIFICATION.
The dismissal of the petitioner is valid. Consequently, Equator Knights Detective and
Security Agency, Inc. is ordered to pay petitioner Jonathan I. Sang-an P130, 000.00 as
nominal damages for its non-compliance with procedural due process.

Case Digest: Polyfoam v. Concepcion

G.R. No. 172349 : June 13, 2012

POLYFOAM-RGC INTERNATIONAL, CORPORATION and PRECILLA A.

GRAMAJE, Petitioners, v.EDGARDO CONCEPCION, Respondent.

PERALTA, J.:

FACTS:

In his February 08, 2000 complaint for illegal dismissal against Polyfoam and Natividad Cheng,
Edgardo Concepcion alleged that he was hired by Polyfoam as an "all-around" factory worker
and served as such for almost six years. On January 14, 2000, he allegedly discovered that his
time card was not in the rack and was later informed by the security guard that he could no
longer punch his time card. When he protested to his supervisor, the latter allegedly told him that
the management decided to dismiss him due to an infraction of a company rule. Cheng, the
company manager, also refused to face him. Respondent counsel later wrote a letter to Polyfoam
manager requesting that respondent be re-admitted to work, but the request remained unheeded
prompting the latter to file the complaint for illegal dismissal.

On April 28, 2000, Gramaje filed a Motion for Intervention claiming to be the real employer of
respondent. On the other hand, Polyfoam and Cheng filed a Motion to Dismiss on the grounds
that the NLRC has no jurisdiction over the case, because of the absence of employer-employee
relationship between Polyfoam and respondent and that the money claims had already
prescribed.

On May 24, 2000, Labor Arbiter Adolfo Babiano issued an Order granting Gramaje motion for
intervention, it appearing that she is an indispensable party and denying Polyfoam and Cheng
motion to dismiss as the lack of employer-employee relationship is only a matter of defense.

In their Position Paper, Polyfoam and Cheng insisted that the NLRC has no jurisdiction over the
case, because respondent was not their employee. They likewise contended that respondent
money claims had already prescribed. Finally, they fault respondent for including Cheng as a
party-defendant, considering that she is not even a director of the company.

In her Position Paper,Gramaje claimed that P.A. Gramaje Employment Services (PAGES) is a
legitimate job contractor who provided some manpower needs of Polyfoam. It was alleged that
respondent was hired as "packer" and assigned to Polyfoam, charged with packing the latter
finished foam products. She argued, however, that respondent was not dismissed from
employment, rather, he simply stopped reporting for work.

On December 14, 2001, Labor Arbiter rendered a Decision finding respondent to have been
illegally dismissed from employment and holding Polyfoam and Gramaje/PAGES solidarily
liable for respondent money claims.

On appeal by petitioners, the NLRC modified the LA decision by exonerating Polyfoam from
liability for respondent claim for separation pay and deleting the awards of backwages, 13th
month pay, damages, and attorney fees.

Aggrieved, respondent elevated the case to the CA in a special civil action for certiorari under
Rule 65 of the Rules of Court. On December 19, 2005, the appellate court granted the petition.
The CA agreed with the LA conclusion that Gramaje is not a legitimate job contractor but only a
"labor-only" contractor. The appellate court affirmed the LA findings of illegal dismissal as
respondent was dismissed from the service without cause and due process.Consequently,
separation pay in lieu of reinstatement was awarded. The CA quoted with approval the LA
conclusions on the award of respondent other money claims.

ISSUES:

1. Whether or not Gramaje is an independent job contractor?

2. Whether or not respondent was illegally dismissed from employment?

HELD: The decision of the Court of Appeals is affirmed.

Gramaje is a Labor-Only Contractor - Article 106 of the Labor Code explains the relations which
may arise between an employer, a contractor, and the contractor employees, thus:

ART. 106. Contractor or subcontracting. Whenever an employer enters into a contract with
another person for the performance of the former work, the employees of the contractor and of
the latter subcontractor, if any, shall be paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his contractor
or subcontractor to such employees to the extent of the work performed under the contract, in the
same manner and extent that he is liable to employees directly employed by him.

The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the
contracting out of labor to protect the rights of workers established under the Code. In so
prohibiting or restricting, he may make appropriate distinctions between labor-only contracting
and job contracting as well as differentiations within these types of contracting and determine
who among the parties involved shall be considered the employer for purposes of this Code, to
prevent any violation or circumvention of any provision of this Code.

There is labor-only contracting where the person supplying workers to an employer does not
have substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such person are performing
activities which are directly related to the principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an agent of the employer who shall be
responsible to the workers in the same manner and extent as if the latter were directly employed
by him.

The test of independent contractorship is "whether one claiming to be an independent contractor

has contracted to do the work according to his own methods and without being subject to the
control of the employer, except only as to the results of the work." In San Miguel Corporation v.
Semillano, the Court laid down the criteria in determining the existence of an independent and
permissible contractor relationship, to wit:

x x x [W]hether or not the contractor is carrying on an independent business; the nature and
extent of the work; the skill required; the term and duration of the relationship; the right to assign
the performance of a specified piece of work; the control and supervision of the work to another;
the employer power with respect to the hiring, firing and payment of the contractor workers; the
control of the premises; the duty to supply the premises, tools, appliances, materials, and labor;
and the mode, manner and terms of payment.

Simply put, the totality of the facts and the surrounding circumstances of the case are to be
considered. Each case must be determined by its own facts and all the features of the relationship
are to be considered.

Applying the foregoing tests, we agree with the CA conclusion that Gramaje is not an
independent job contractor, but a "labor-only" contractor.

First, Gramaje has no substantial capital or investment. The presumption is that a contractor is a
labor-only contractor unless he overcomes the burden of proving that it has substantial capital,
investment, tools, and the like. The employee should not be expected to prove the negative fact
that the contractor does not have substantial capital, investment and tools to engage in job-
contracting.

Gramaje claimed that it has substantial capital of its own as well as investment in its office,
equipment and tools. She pointed out that she furnished the plastic containers and carton boxes
used in carrying out the function of packing the mattresses of Polyfoam. She added that she had
placed in Polyfoam workplace ten (10) sealing machines, twenty (20) hand trucks, and two (2)
forklifts to enable respondent and the other employees of Gramaje assigned at Polyfoam to
perform their job. Finally, she explained that she had her own office with her own staff.
However, aside from her own bare statement, neither Gramaje nor Polyfoampresented evidence
showing Gramaje ownership of the equipment and machineries used in the performance of the
alleged contracted job. Considering that these machineries are found in Polyfoam premises, there
can be no other logical conclusion but that the tools and equipment utilized by Gramaje and her
"employees" are owned by Polyfoam. Neither did Polyfoam nor Gramaje show that the latter had
clients other than the former. Since petitioners failed to adduce evidence that Gramaje had any
substantial capital, investment or assets to perform the work contracted for, the presumption that
Gramaje is a labor-only contractor stands.

Second, Gramaje did not carry on an independent business or undertake the performance of its
service contract according to its own manner and method, free from the control and supervision
of its principal,Polyfoam, its apparent role having been merely to recruit persons to work for
Polyfoam.It is undisputed that respondent had performed his task of packing Polyfoam foam
products in Polyfoam premises. As to the recruitment of respondent, petitioners were able to
establish only that respondent application was referred toGramaje, but that is all. Prior to his
termination, respondent had been performing the same job in Polyfoambusiness for almost six
(6) years. He was even furnished a copy of Polyfoam "Mga Alituntunin at
KarampatangParusa,"which embodied Polyfoam rules on attendance, the manner of performing
the employee duties, ethical standards, cleanliness, health, safety, peace and order. These rules
carried with them the corresponding penalties in case of violation.

While it is true that petitioners submitted the Affidavit of Polyfoam supervisor Victor Abadia,
claiming that the latter did not exercise supervision over respondent because the latter was not
Polyfoam but Gramajeemployee, said Affidavit is insufficient to prove such claim. Petitioners
should have presented the person who they claim to have exercised supervision over respondent
and their alleged other employees assigned toPolyfoam. It was never established that Gramaje
took entire charge, control and supervision of the work and service agreed upon. And as aptly
observed by the CA, "it is likewise highly unusual and suspect as to the absence of a written
contract specifying the performance of a specified service, the nature and extent of the service or
work to be done and the term and duration of the relationship."

A finding that a contractor is a "labor-only" contractor, as opposed to permissible job contracting,

is equivalent to declaring that there is an employer-employee relationship between the principal
and the employees of the supposed contractor, and the "labor-only" contractor is considered as a
mere agent of the principal, the real employer.In this case, Polyfoam is the principal employer
and Gramaje is the labor-only contractor. Polyfoam and Gramaje are, therefore, solidarily liable
for the rightful claims of respondent.

Respondent was Illegally DismissedFrom Employment - Respondent stated that on January 14,
2000, his time card was suddenly taken off the rack. His supervisor later informed him that
Polyfoam management decided to dismiss him due to infraction of company rule. In short,
respondent insisted that he was dismissed from employment without just or lawful cause and
without due process. Polyfoam did not offer any explanation of such dismissal. It, instead,
explained that respondent real employer is Gramaje. Gramaje, on the other hand, denied the
claim of illegal dismissal. She shifted the blame on respondent claiming that the latter in fact
abandoned his work.

The LA gave credence to respondent narration of the circumstances of the case. Said conclusion
was affirmed by the CA. We find no reason to depart from such findings.

Abandonment cannot be inferred from the actuations of respondent. When he discovered that his
time card was off the rack, he immediately inquired from his supervisor. He later sought the
assistance of his counsel, who wrote a letter addressed to Polyfoam requesting that he be re-
admitted to work. When said request was not acted upon, he filed the instant illegal dismissal
case. These circumstances clearly negate the intention to abandon his work.

Petitioners failed to show any valid or authorized cause under the Labor Code which allowed it
to terminate the services of respondent. Neither was it shown that respondent was given ample
opportunity to contest the legality of his dismissal. No notice of termination was given to him.
Clearly, respondent was not afforded due process. Having failed to establish compliance with the
requirements of termination of employment under the Labor Code, the dismissal of respondent
was tainted with illegality. Consequently, respondent is 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 up to the time of his actual reinstatement. However, if reinstatement is no longer
feasible as in this case, separation pay equivalent to one-month salary for every year of service
shall be awarded as an alternative. Thus, the CA is correct in affirming the LA award of
separation pay with full backwages and other monetary benefits.

DENIED
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Case Digest: Esguerra v. Valle Verde & Villaluna

G.R. No. 173012 : June 13, 2012

DOLORES T. ESGUERRA, Petitioner, v. VALLE VERDE COUNTRY CLUB, INC. and

ERNESTO VILLALUNA,Respondents.

BRION, J.:

FACTS:

On January 15, 2000, the Couples for Christ held a seminar at the country club. Esguerra, as the
Cost Control Supervisor, was tasked to oversee the seminar held in the two function rooms the
Ballroom and the Tanay Room. The arrangement was that the food shall be served in the form of
pre-paid buffet, while the drinks shall be paid in a "pay as you order" basis.

The Valle Verde Management found out the following day that only the proceeds from the Tanay
Room had been remitted to the accounting department. To resolve the issue, Valle Verde
conducted an investigation; the employees who were assigned in the two function rooms were
summoned and made to explain, in writing, what had transpired.

On March 6, 2000, Valle Verde sent a memorandum to Esguerra requiring her to show cause as
to why no disciplinary action should be taken against her for the non-remittance of the Ballroom
sales. Esguerra was placed under preventive suspension with pay, pending investigation.

In her letter-response, Esguerra denied having committed any misappropriation. She explained
that it had been her daughter (who was assigned as a food checker) who lost the money. To settle
the matter, Esguerra paid the unaccounted amount as soon as her daughter informed her about it.

Valle Verde found Esguerra explanation unsatisfactory and, on July 26, 2000, issued a second
memorandum terminating Esguerra employment.

Esguerra filed a complaint for illegal dismissal. In April 5, 2002, the Labor Arbiter dismissed the
complaint for lack of merit. Esguerra appealed the case to the NLRC. In its December 27, 2002
decision, the NLRC affirmed with modification the ruling of the Labor Arbiter.

Esguerra filed a partial motion for reconsideration, while Valle Verde filed its own motion for
reconsideration.The NLRC denied Esguerra motion, but granted Valle Verde motion. Thus, it set
aside its December 27, 2002 decision and affirmed the April 5, 2002 decision of the labor arbiter.

Aggrieved, Esguerra elevated her case to the CA via a Rule 65 petition for certiorari. In its
February 7, 2006 decision, the CA denied Esguerra petition for certiorari.

ISSUE: Whether or not the Court of Appeals erred in affirming the NLRC decision and
resolution.

HELD: The petition is without merit.

Procedural aspect of Esguerra dismissal - The Court failed to find any irregularities in the service
of notice to Esguerra. The memorandum dated March 6, 2000 informed her of the charges, and
clearly directed her to show cause, in writing, why no disciplinary action should be imposed
against her. Esguerra allegation that the notice was insufficient since it failed to contain any
intention to terminate her is incorrect.

In Perez v. Philippine Telegraph and Telephone Company, the Court underscored the significance
of the two-notice rule in dismissing an employee:

To meet the requirements of due process in the dismissal of an employee, an employer must
furnish the worker with two written notices: (1) a written notice specifying the grounds for
termination and giving to said employee a reasonable opportunity to explain his side and (2)
another written notice indicating that, upon due consideration of all circumstances, grounds have
been established to justify the employer decision to dismiss the employee.

Contrary to Esguerra allegation, the law does not require that an intention to terminate one
employment should be included in the first notice. It is enough that employees are properly
apprised of the charges brought against them so they can properly prepare their defenses; it is
only during the second notice that the intention to terminate one employment should be explicitly
stated.

There is also no basis to question the absence of a proper hearing. The existence of an actual,
formal "trial-type" hearing, although preferred, is not absolutely necessary to satisfy the
employee's right to be heard. Esguerra was able to present her defenses; and only upon proper
consideration of it did Valle Verde send the second memorandum terminating her employment.
Since Valle Verde complied with the two-notice requirement, no procedural defect exists in
Esguerra termination.

Substantive aspect of Esguerra dismissal - There are two (2) classes of positions of trust the first
class consists of managerial employees, or those vested with the power to lay down management
policies; and the second class consists of cashiers, auditors, property custodians or those who, in
the normal and routine exercise of their functions, regularly handle significant amounts of money
or property.

Esguerra held the position of Cost Control Supervisor and had the duty to remit to the accounting
department the cash sales proceeds from every transaction she was assigned to.This is not a
routine task that a regular employee may perform; it is related to the handling of business
expenditures or finances. For this reason, Esguerra occupies a position of trust and confidence a
position enumerated in the second class of positions of trust. Any breach of the trust imposed
upon her can be a valid cause for dismissal.

In Jardine Davies, Inc. v. National Labor Relations Commission, it was held that loss of
confidence as a just cause for termination of employment can be invoked when an employee
holds a position of responsibility, trust and confidence. In order to constitute a just cause for
dismissal, the act complained of must be related to the performance of the duties of the dismissed
employee and must show that he or she is unfit to continue working for the employer for
violation of the trust reposed in him or her.

There is no merit in the allegation that it was Esguerra daughter who should be held liable. She
had no custody of the cash sales since it was not part of her duties as a food checker. It was
Esguerra responsibility to account for the cash proceeds; in case of problems, she should have
promptly reported it, regardless of who was at fault. Esguerra failure to make the proper report
reflects on her irresponsibility in the custody of cash for which she was accountable, it was her
duty to account for the sales proceeds, and she should have known about the missing amount
immediately after the event.

DENIED

DOLORES T. ESGUERRA vs. VALLE VERDE COUNTRY CLUB, I

NC. G.R. No. 173012, 13 June 2012

FACTS:

Valle Verde hired Esguerra as Head Food Checker and was promoted to Cost Control Supervisor
. The Management found out that proceeds had been remitted to the accounting department for a
n event were lacking. There were also unauthorized charges of food on one of the participants. T
o resolve the issue, Valle Verde conducted an investigation; the employees who were assigned in
that event were summoned and made to explain, in writing, what had transpired. A memorandum
was sent to Esguerra requiring her to show cause as to why no disciplinary action should be take
n against her for the non-remittance of the Ballrooms sales. Esguerra was placed under preventi
ve suspension with pay, pending investigation. Unsatisfied with the explanation, Esguerra was te
rminated.
Petitioner said that she couldnt be dismissed on the ground of loss of trust and confidence for sh
e was only a regular employee and did not occupy a supervisory position vested with trust and co
nfidence. Esguerra also questions the manner of dismissal since the notice was insufficient since
it failed to contain any intention to terminate her.

ISSUE:

Whether or not intention to terminate should be included in the notice of informing of cha
rges against an employee.

Whether or not Cost Control Supervisor can be dismissed on the ground of loss of trust a
nd confidence.

HELD:

1.) No. The law does not require that an intention to terminate ones employment should be inclu
ded in the first notice. It is enough that employees are properly apprised of the charges brought a
gainst them so they can properly prepare their defenses; it is only during the second notice that th
e intention to terminate ones employment should be explicitly stated.

The existence of an actual, formal trial-type hearing, although preferred, is not absolutely nece
ssary to satisfy the employees right to be heard. Esguerra was able to present her defenses; and o
nly upon proper consideration of it did Valle Verde send the second memorandum terminating he
r employment. Since Valle Verde complied with the two-notice requirement, no procedural defect
exists in Esguerras termination.

2.) Esguerra held the position of Cost Control Supervisor and had the duty to remit to the accoun
ting department the cash sales proceeds from every transaction she was assigned to. This is not a
routine task that a regular employee may perform; it is related to the handling of business expend
itures or finances. For this reason, Esguerra occupies a position of trust and confidence a positi
on enumerated in the second class of positions of trust(first is for the managerial employees). An
y breach of the trust imposed upon her can be a valid cause for dismissal.

Case Digest: Prudential Guarantee Employees v. NLRC, et al.

G.R. No. 185335 : June 13, 2012

PRUDENTIAL GUARANTEE AND ASSURANCE EMPLOYEE LABOR UNION and

SANDY T. VALLOTA, Petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
PRUDENTIAL GUARANTEE AND ASSURANCE INC., and/or JOCELYN RETIZOS,
Respondents.

MENDOZA, J.:

FACTS:

Vallota was employed by Prudential Guarantee as a Junior Programmer on May 16, 1995. He
reported directly to Gerald Dy Victory, then head of the EDP, until his replacement by respondent
Jocelyn Retizos sometime in 1997. In August of 2005, Vallota was elected to the Board of
Directors of the Union.

On November 11, 2005, HR Manager, Atty. Rillo informed Union President, Mike Apostol that
PGAI was going to conduct an on-the-spot security check in the Information and Technology
Department.

The inspection team proceeded to the IT Department, and the EDP head, through PGAI network
administrator Angelo Gutierrez initiated the spot check of IT Department computers, beginning
with the one assigned to Vallota. After exploring the contents of all the folders and subfolders in
the "My Documents" folder, a folder named AAwas found, which Vallota claimed to be about a
mutual life fund. Retizos, on the other hand, asked Vallota if was working for MAA Mutual Life
and sending them confidential documents of PGAI.

Sensing that Vallota was being singled out, Apostol insisted that all the computers in the IT
Department, including that of Retizos, be also subjected to a spot security check. Later, at
Retizosoffice, and in the presence of Atty. Rillo, Vallota was informed that Retizos and Atty.
Rillo would print the files found in his computer under the folder "MAA." Vallota did not object.
After the files were printed, Vallota and the Union Secretary were asked to sign each page of the
printout. Vallota, however, was not given a copy of the printed file.

On November 14, 2005, Vallota received a memorandum directing him to explain within 72
hours why highly confidential files were stored in his computer, which also informed him that he
was being placed under preventive suspension for 30 days effective upon receipt of the said
notice. A second memorandum, also dated November 14, 2005, notified Vallota of the extension
of his preventive suspension for another 30 days, in view of the fact that the management needed
more time to evaluate the administrative case against him.

On November 24, 2005, PGAI sent him another memorandum requesting further details on some
of the matters he raised in his response. In a letter dated December 6, 2005, Vallota requested a
conference, to be attended by a Union representative and counsel. PGAI sent Vallota another
memorandum dated December 7, 2005, which, among others, set a new deadline for Vallota to
submit his reply and evidence in his defense. In compliance with the deadline set, Vallota
submitted his reply-memorandumdated December 12, 2005, outlining his response to the
charges.

Meanwhile, the Union sent a letterto PGAI President Philip K. Rico requesting that a grievance
committee be convened and that the contents of the computers of other IT personnel be similarly
produced. The request for the convening of a grievance committee was ignored. On December
21, 2005, Vallota was given a notice of termination of his employment effective January 10,
2006 on the ground of loss of trust and confidence.

Thus, the petitioners filed a complaint for illegal dismissal with claims for full backwages, moral
and exemplary damages, and attorney fees.

On March 31, 2006, Labor Arbiter Aliman D. Mangandog rendered a decisionin favor of the
petitioners. The respondents filed their Memorandum of Appealdated May 19, 2006. On June 30,
2006, the National Labor Relations Commission dismissed the appeal on the ground that the
respondents failed to submit a certificate of non-forum shopping in accordance with the Rules of
Procedure of the NLRC.

The respondents filed their Motion for Reconsideration dated July 17, 2006, which the Union
opposed. On October 31, 2007, the NLRC granted the respondentsmotion for reconsideration
and reversed and set aside the decision of the LA.

ISSUE: Whether or not Vallota was validly dismissed on the ground of loss of trust and
confidence?

HELD:

The Court discussion in Mabeza v. National Labor Relations Commission is instructive:

Loss of confidence as a just cause for dismissal was never intended to provide employers with a
blank check for terminating their employees. Such a vague, all-encompassing pretext as loss of
confidence, if unqualifiedly given the seal of approval by this Court, could readily reduce to
barren form the words of the constitutional guarantee of security of tenure. Having this in mind,
loss of confidence should ideally apply only to cases involving employees occupying positions
of trust and confidence or to those situations where the employee is routinely charged with the
care and custody of the employer's money or property. To the first class belong managerial
employees, i.e., those vested with the powers or prerogatives to lay down management policies
and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or
effectively recommend such managerial actions; and to the second class belong cashiers,
auditors, property custodians, etc., or those who, in the normal and routine exercise of their
functions, regularly handle significant amounts of money or property.

In Bristol Myers Squibb (Phils.), Inc. v. Baban,the Court discussed the requisites for a valid
dismissal on the ground of loss of trust and confidence:

It is clear that Article 282(c) of the Labor Code allows an employer to terminate the services of
an employee for loss of trust and confidence. The right of employers to dismiss employees by
reason of loss of trust and confidence is well established in jurisprudence.

The first requisite for dismissal on the ground of loss of trust and confidence is that the employee
concerned must be one holding a position of trust and confidence. There are two (2) classes of
positions of trust. The first class consists of managerial employees. They are defined as those
vested with the powers or prerogatives to lay down management policies and to hire, transfer
suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such
managerial actions. The second class consists of cashiers, auditors, property custodians, etc.
They are defined as those who in the normal and routine exercise of their functions, regularly
handle significant amounts of money or property. xxx

The second requisite is that there must be an act that would justify the loss of trust and
confidence. Loss of trust and confidence to be a valid cause for dismissal must be based on a
willful breach of trust and founded on clearly established facts. The basis for the dismissal must
be clearly and convincingly established but proof beyond reasonable doubt is not necessary.

Thus, the first question to be addressed is whether Vallota held a position of trust and confidence.
Vallota was employed by PGAI as a Junior Programmer assigned to the EDP Department. Based
on the standards set by previous jurisprudence, Vallota position as Junior Programmer is
analogous to the second class of positions of trust and confidence. Though he did not physically
handle money or property, he became privy to confidential data or information by the nature of
his functions. At a time when the most sensitive of information is found not printed on paper but
stored on hard drives and servers, an employee who handles or has access to data in electronic
form naturally becomes the unwilling recipient of confidential information.

Having addressed the nature of his position, the next question is whether the act complained of
justified the loss of trust and confidence of Vallota employer so as to constitute a valid cause for
dismissal. It must, thus, be determined whether the alleged basis for dismissal was based on
clearly established facts.

The act alleged to have caused the loss of trust and confidence of PGAI in Vallota was the
presence in his computer hard drive of a folder named "MAA" allegedly containing files with
information on MAA Mutual Life Philippines, a domestic corporation selling life insurance
policies to the buying public, and files relating to PGAI internal affairs.

While the law and this Court recognize the right of an employer to dismiss an employee based on
loss of trust and confidence, the evidence of the employer must clearly and convincingly
establish the facts upon which the loss of trust and confidence in the employee is based.

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 arbitrariness, whims, caprices or suspicion; otherwise, the employee would
remain eternally at the mercy of the employer.Further, in order to constitute a just cause for
dismissal, the act complained of must be work-related and show that the employee concerned is
unfit to continue working for the employer.Such ground for dismissal has never been intended to
afford an occasion for abuse because of its subjective nature.
In this case, there was no other evidence presented to prove fraud in the manner of securing or
obtaining the files found in Vallota computer. In fact, aside from the presence of these files in
Vallota hard drive, there was no other evidence to prove any gross misconduct on his part. There
was no proof either that the presence of such files was part of an attempt to defraud his employer
or to use the files for a purpose other than that for which they were intended. If anything, the
presence of the files reveals some degree of carelessness or neglect in his failure to delete them,
but it is an extremely farfetched conclusion bordering on paranoia to state that it is part of a
larger conspiracy involving corporate espionage.

Moreover, contrary to the respondentsallegations, the MAA files found in Vallota computer, the
prospectus and corporate profile, are not sensitive corporate documents. These are documents
routinely made available to the public, and serve as means to inform the public about the
company and to disseminate information about the products it sells or the services it provides, in
order that potential clients may make a sound and informed decision whether or not to purchase
or avail of such goods and services.

If anything, the presence of the files would merely merit the development of some suspicion on
the part of the employer, but should not amount to a loss of trust and confidence such as to
justify the termination of his employment. Such act is not of the same class, degree or gravity as
the acts that have been held to be of such character. While Vallota act or omission may have been
done carelessly, it falls short of the standard required for termination of employment. It does not
manifest either that the employee concerned is unfit to continue working for his employer.

Procedural due process requirements for termination - In this case, the two-notice requirement
was complied with. By the petitionersown admission, PGAI issued to Vallota a written Notice of
Charges & Preventive Suspension dated November 14, 2005. After an exchange of memoranda,
PGAI then informed Vallota of his dismissal in its decision dated December 21, 2005.

Given, however, that the petitioners expressly requested a conference or a convening of a

grievance committee, following the Court ruling in the Perez case, which was later cited in the
recent case of Lopez v. Alturas Group of Companies, such formal hearing became mandatory.
After PGAI failed to affirmatively respond to such request, it follows that the hearing
requirement was not complied with and, therefore, Vallota was denied his right to procedural due
process.

Reinstatement and backwages - In light of the above discussion, Vallota is entitled to

reinstatement and backwages, reckoned from the date he was illegally dismissed until the finality
of this decision in accordance with jurisprudence.

In view of the strained relations between Vallota and PGAI, however, it is not in the best interest
of the parties, nor is it advisable or practical to order reinstatement. Where reinstatement is no
longer viable as an option, separation pay equivalent to one (1) month salary for every year of
service should be awarded as an alternative. It must be stressed, however, that an illegally
dismissed employee is entitled to two reliefs: backwages and reinstatement, which are separate
and distinct. In Golden Ace Builders v. Tagle, it was written:
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement.
The two reliefs provided are separate and distinct. In instances where reinstatement is no longer
feasible because of strained relations between the employee and the employer, separation pay is
granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or
separation pay if reinstatement is no longer viable, and backwages.

The normal consequences of respondentsillegal dismissal, then, are reinstatement without loss of
seniority rights, and payment of backwages computed from the time compensation was withheld
up to the date of actual reinstatement. Where reinstatement is no longer viable as an option,
separation pay equivalent to one (1) month salary for every year of service should be awarded as
an alternative. The payment of separation pay is in addition to payment of backwages.

Velasco v. National Labor Relations Commission, emphasizes:

The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is
no longer practical or in the best interest of the parties. Separation pay in lieu of reinstatement
may likewise be awarded if the employee decides not to be reinstated.

Under the doctrine of strained relations, the payment of separation pay is considered an
acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On
one hand, such payment liberates the employee from what could be a highly oppressive work
environment. On the other hand, it releases the employer from the grossly unpalatable obligation
of maintaining in its employ a worker it could no longer trust.

PRUDENTIAL GUARANTEE AND ASSURANCE EMPLOYEE LAB

OR UNION and VALLOTA vs. NLRC, PRUDENTIAL GUARANTE
E AND ASSURANCE INC. G.R. No. 185335, 13 June 2012

FACTS:

Vallota was a Junior Programmer hired by PGAI. In one inspection, a file of the company was fo
und on his computer. He received a memorandum directing him to explain within 72 hours why
highly confidential files were stored in his computer.

Vallota requested for an administrative hearing but was denied without reason by PGAI. Days aft
er he submitted his reply-memorandum, he was terminated on the ground of loss of trust and con
fidence.

ISSUE:
 Whether or not a Junior Programmer is a position of trust and confidence.

Whether or not an employee is denied due process when the employer denied to conduct
administrative hearing on despite his request to have the same.

HELD:

1.) Yes. Vallotas position as Junior Programmer is analogous to the second class of positions of t
rust and confidence(first is the managerial employees). Though he did not physically handle mon
ey or property, he became privy to confidential data or information by the nature of his functions.
At a time when the most sensitive of information is found not printed on paper but stored on hard
drives and servers, an employee who handles or has access to data in electronic form naturally be
comes the unwilling recipient of confidential information.

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, kn
owingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, t
houghtlessly, heedlessly or inadvertently.

Furthermore, the files found in Vallotas computer, the prospectus and corporate profile, are not s
ensitive corporate documents. These are documents routinely made available to the public, and s
erve as means to inform the public about the company and to disseminate information about the
products it sells or the services it provides, in order that potential clients may make a sound and i
nformed decision whether or not to purchase or avail of such goods and services.

2.) Yes. According to the Supreme Court, the following are the guiding principles in connection
with the hearing requirement in dismissal cases: (a) ample opportunity to be heard means any
meaningful opportunity (verbal or written) given to the employee to answer the charges against h
im. (b) a formal hearing or conference becomes mandatory only when requested by the employee
in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or w
hen similar circumstances justify it. (c) the ample opportunity to be heard standard in the Labo
r Code prevails over the hearing or conference requirement in the implementing rules and regu
lations. After PGAI failed to affirmatively respond to such request, it follows that the hearing req
uirement was not complied with and, therefore, Vallota was denied his right to procedural due pr
ocess.

Case Digest: Samar-Med v. NLRC & Gutang

G.R. No. 162385 : JULY 15, 2013

SAMAR-MED DISTRIBUTION, Petitioner, v. NATIONAL LABOR RELATIONS

COMMISSION, AND JOSAFAT GUTANG, Respondents.

BERSAMIN,J.:
FACTS:

Josafat Gutang was hired by Samar-Med Distribution, and had the task of supervising the
companys sales personnel and sales agents, and of representing Samar-Med in transactions with
the government in Region VIII.

Gutang filed a complaint for money claims against Samar-Med in the NLRC. He claimed that
Samar-Med had difficulty paying his compensation during his employment, resulting in his not
being paid salaries since November 1995, allowances since June 1994, and commissions from
sales and 13thmonth pay in 1996, that Samar-Med made illegal deductions in June 1994 and
February 1995, that he had no knowledge of any infraction that had caused his dismissal, that he
did not receive any notice informing of the cessation of Samar-Meds business operations, and
that he had been compelled to look for other sources of income beginning on March 26, 1996 to
survive.

Roleda/Samar-Med denied liability contending that Gutang was not an employee but an
employee of the City Council of Manila.

The LA declared Gutang an employee of Samar-Med, and that he had been illegally dismissed.
The NLRC dismissed the complaint of Gutang. The CA ruled that there is an employer-employee
relationship between the parties, and that Gutang was illegally dismissed.

ISSUE:Whether or not Gutang was illegally dismissed?

HELD: Gutang was not illegally dismissed.

LABOR LAW

Under Article 282(c) of the Labor Code, an employer may terminate an employees employment
on the ground of the latters fraud or wilful breach of the trust and confidence reposed in him. For
loss of trust and confidence to constitute a sufficient ground for termination, the employer must
have a reasonable ground to believe, if not to entertain the moral conviction, that the employee
was responsible for the misconduct, and that the nature of his participation therein rendered him
absolutely unworthy of the trust and confidence demanded by his position. Those requirements
were undeniably met in Gutangs case.

The finding of a just cause to dismiss Gutang notwithstanding, we also find that he was not
accorded due process. Roleda as the employer had the obligation to send to him two written
notices before finally dismissing him.

Article 283 of the Labor Code, the employer shall furnish the worker whose employment is
sought to be terminated a written notice containing a statement of the causes for termination and
shall afford the latter ample opportunity to be heard and to defend himself with the assistance of
his representative if he so desires in accordance with company rules and regulations promulgated
pursuant to guidelines set by the Department of Labor and Employment.
The first written notice would inform Gutang of the particular acts oromissions for which his
dismissal was being sought. The second written notice would notify him of the employers
decision to dismiss him. But the second written notice must not be made until after he was given
a reasonable period after receiving the first written notice within which to answer the charge, and
after he was given the ample opportunity to be heard and to defend himself with the assistance of
his representative, if he so desired. The requirement was mandatory.

Conformably with the ruling inAgabon v. National Labor Relations Commission,the lack of
statutory due process would not nullify the dismissal or render it illegal or ineffectual when the
dismissal was for just cause. But the violation of Gutang's right to statutory due process clearly
warranted the payment of indemnity in the form of nominal damages.

PARTIALLY GRANTED

SAMAR-MED DISTRIBUTION vs. NLRC AND JOSAFAT GUTAN

G G.R. No. 162385, 15 July 2013

FACTS:

Samar-Med Distribution, a sole proprietorship registered in the name of Roleda, engaged in the s
ale and distribution of intravenous fluids (IVs) in Region VIII. Gutang was hired with the task of
supervising the companys sales personnel and sales agents, and of representing Samar-Med in tr
ansactions with the government in Region VIII.

Gutang filed a complaint for money claims against Roleda/Samar-Med in the NLRC for non-
payment of salaries and allowances. The petitioner said that the complaint was a harassment suit
to retaliate for the criminal case Roleda had meanwhile filed against Gutang for misappropriating
Samar-Meds funds totaling P3,302,000.71.

ISSUE:

Whether or not a finding of prima facie case against an employee with regard to his work
is a substantial evidence of breach of trust and confidence and therefore a ground for term
ination.

Whether or not the notice requirement was complied with when respondent received the
demand letter from employer to return the amount which was allegedly not turned over.
RULING:

1.) Yes. Roledas filing of the criminal case against Gutang and the public prosecutors finding o
f a prima facie case for the offense charged after preliminary investigation amounted to substanti
al evidence of Gutangs breach of the trust and confidence reposed in him, a just cause to termina
te the employment based on loss of trust and confidence, her being a managerial employee whom
Roleda had vested with confidence on delicate matters, such as the custody, handling, care and pr
otection of Samar Meds properties and funds.

2.) No. Gutangs receipt of the demand letter from Samar-Med to return the amount of P3,302,00
0.71 was certainly not even a substantial compliance with the twin-notice requirement, because t
he purpose of the demand letter was different from those defined for the sending of the required
notices. Nor was he thereby allowed a meaningful opportunity to be heard or to be notified of his
impending termination. The lack of statutory due process would not nullify the dismissal or rend
er it illegal or ineffectual when the dismissal was for just cause. But the violation of Gutangs rig
ht to statutory due process clearly warranted the payment of indemnity in the form of nominal da
mages

Case Digest: De Jesus v. Hon. Aquino, et al.

G .R. No. 164662 : February 18, 2013

MARIA LOURDES C. DE JESUS, Petitioner, v. HON. RAUL T. AQUINO, PRESIDING

COMMISSIONER, NATIONAL LABOR RELATIONS COMMISSION, SECOND
DIVISION, QUEZON CITY, and SUPERSONIC SERVICES, INC., Respondents.

G.R. No. 165787 : February 18, 2013

SUPERSONIC SERVICES, INC., Petitioner, v. MARIA LOURDES C. DE.JESUS,

Respondent.

BERSAMIN, J.:

FACTS:

On February 20, 2002, petitioner Ma. Lourdes De Jesus (De Jesus) filed with the Labor Arbiter a
complaint for illegal dismissal against private respondents Supersonic Services Inc.,
(Supersonic), et al., praying for the payment of separation pay, full backwages, moral and
exemplary damages, etc., alleging among others that after 25 years of employment, she was
illegally dismissed by Supersonic while holding the position of Sales Promotion Officer where
she solicited clients for Supersonic and sold plane tickets to various travel agencies on credit.
She further alleged that there was no notice and hearing nor any opportunity given her to explain
her side prior to the termination of her employment; Supersonic even filed a case for Estafa
against her for her alleged failure to remit collections despite the fact that she had completely
remitted all her collections; and the termination was done in bad faith and in violation of due
process.

Supersonic countered, among others, that on January 24, 2001, the companys general manager
sent a memorandum to De Jesus informing her of the official endorsement of collectibles from
clients under her account; in March 2001, another memorandum was issued to De Jesus
reminding her to collect payments of accounts guaranteed by her and which had been past due
since the year 2000 and after verifications with its clients, it discovered that the amount of U.S.
$36, 168.39 were already paid to De Jesus but this was not turned over and duly accounted for by
her. Hence, another memorandum was issued to De Jesus directing her to explain in writing why
she should not be dismissed for cause for failure to account for the total amount of U.S.$36,
168.39. De Jesus was likewise verbally notified of the companys intention to dismiss her for
cause.

On October 30, 2002, the Labor Arbiter ruled against De Jesus, declaring her dismissal to be for
just cause and finding that she had been accorded due process of law.

De Jesus appealed to the NLRC, insisting that she had not been afforded the opportunity to
explain her side. However, the NLRC affirmed the LAs decision and dismissed De Jesus appeal
for lack of merit. The NLRC subsequently denied the Motion for Reconsideration filed by De
Jesus.

De Jesus filed a petition for certiorari to the CA, On July 23, 2004, the CA promulgated its
assailed decision that the petition is partly meritorious.

Hence, these consolidated appeal.

ISSUE:

Whether or not Supersonic was justified in terminating De Jesus employment?

Whether or not Supersonic complied with the two-written notice rule?

HELD:

The petition for review of Supersonic in G.R. No. 165787 is partially granted.

LABOR LAW

Supersonic substantially proved that De Jesus had failed to remit and had misappropriated the
amounts she had collected in behalf of Supersonic. In that regard, the factual findings of the
Labor Arbiter and NLRC on the presence of the just cause for terminating her employment,
being already affirmed by the CA, are binding if not conclusive upon this Court. There being no
cogent reason to disturb such findings, the dismissal of De Jesus was valid.

Article 282 of the Labor Code enumerate the causes by which the employer may validly
terminate the employment of the employee, one of which is (c) Fraud or willful breach by the
employee of the trust reposed in him by his employer or duly authorized representative.

The CA observed that De Jesus had not disputed her failure to remit and account for some of her
collections, for, in fact, she herself had expressly admitted her failure to do so through her letters
dated April 5, 2001 and May 15, 2001 sent to Supersonics general manager. Thereby, the CA
concluded, she defrauded her employer or wilfully violated the trust reposed in her by
Supersonic. In that regard, the CA rightly observed that proof beyond reasonable doubt of her
violation of the trust was not required, for it was sufficient that the employer had reasonable
grounds to believe that the employee concerned is responsible for the misconduct as to be
unworthy of the trust and confidence demanded by her position.

LABOR LAW

There is no dispute that the betrayal of the trust the employer reposed in De Jesus was the
essence of the offense for which she was to be validly penalized with the supreme penalty of
dismissal.

Nevertheless, she was still entitled to due process in order to effectively safeguard her security of
tenure. The law affording to her due process as an employee imposed on Supersonic as the
employer the obligation to send to her two written notices before finally dismissing her.

This requirement of two written notices is enunciated in Article 277 of the Labor Code, as
amended.

The first written notice would inform her of the particular acts or omissions for which her
dismissal was being sought. The second written notice would notify her of the employers
decision to dismiss her. But the second written notice must not be made until after she was given
a reasonable period after receiving the first written notice within which to answer the charge, and
after she was given the ample opportunity to be heard and to defend herself with the assistance of
her representative, if she so desired. The requirement was mandatory.

In the case at bar, however, Supersonic failed to satisfy the requirement for the two written
notices required by Art. 277 of the Labor Code on the ground that the various memoranda given
to De Jesus were not the same notices required by the law as they were mere internal
correspondences intended to remind her of the outstanding accountabilities to the company.

LABOR LAW

The CA did not err in relying in the case of Serrano v NLRC (380 Phil. 416) when it ruled that
the violation of Supersonic of the two-written notice requirement rendered ineffectual the
dismissal of De Jesus for just cause under Article 282 of the Labor Code, and entitled her to full
backwages fom the time of her dismissal until the finality of its decision.

The Court cannot ignore that the applicable case law when the CA promulgated its decision on
July 23, 2004, and when it denied Supersonics motion for reconsideration on October 21, 2004
was still Serrano.

CIVIL LAW

As a rule, a judicial interpretation becomes a part of the law as of the date that the law was
originally passed, subject only to the qualification that when a doctrine of the Court is overruled
and the Court adopts a different view, and more so when there is a reversal of the doctrine, the
new doctrine should be applied prospectively and should not apply to parties who relied on the
old doctrine and acted in good faith. To hold otherwise would be to deprive the law of its quality
of fairness and justice, for, then, there is no recognition of what had transpired prior to such
adjudication.

The dismissal of Maria Lourdes C. De Jesus for just or authorized cause is valid and
effectual. Supersonic Services is ordered to pay Maria Lourdes C. De Jesus P50, 000.00 as
nominal damages to indemnify her for the violation of her right to due process.

Case Digest: De Leon Cruz v. BPI

G.R. No. 173357 : February 13, 2013

ROWENA DE LEON CRUZ, Petitioner, v. BANK OF THE PHILIPPINE ISLANDS,

Respondent.

PERALTA, J.:

FACTS:
Petitioner was hired by Far East Bank and Trust Company (FEBTC) in 1989. Upon the merger of
FEBTC with respondent BPI in April 2000, petitioner automatically became an employee of
respondent. Petitioner held the position of Assistant Branch Manager of the BPI Ayala Avenue
Branch in Makati City, and she was in charge of the Trading Section.

On July 12, 2002, after 13 years of continuous service, respondent terminated petitioner on
grounds of gross negligence and breach of trust. Petitioner's dismissal was brought about by the
fraud perpetrated against three depositors, namely, Geoffrey L. Uymatiao, Maybel Caluag and
Evelyn G. Avila, in respondent's Ayala Avenue Branch for the alleged unauthorized pre-
termination and withdrawal from the accounts of the said depositors approved by the petitioner.

Based on the records, it was shown that the petitioner was directed by BPI Vice-President to
explain her side and asserted that she followed the bank procedure/policy on pre-termination of
accounts, opening of transitory accounts and reactivation of dormant accounts. She explained
that she approved the withdrawals from certain accounts of these clients upon verifying the
authenticity of the signatures of the depositors involved. On May 22, 2002, an administrative
hearing was held to give petitioner an opportunity to explain her side of the controversy. With
regard to the pre-termination of Uymatiao's USD CD, petitioner claimed that the Trader
presented to her what she believed was an original and genuine Moreover, petitioner stated that
at the time the alleged fraudulent transactions took place, she was not yet an Assistant Manager,
but only a Cash II Officer of the branch, still operating under the FEBTC set-up. As such, she
was in charge of overseeing and supervising all the transactions in the Trading Section, among
other departments. Hence, her responsibilities required her only to bring out signature card files
from the vault to the Trading Section and to ensure that these files were returned to the vault at
the close of banking hours. On July 10, 2002, a notice of termination was issued informing
petitioner of her dismissal effective July 12, 2002. Petitioner filed an appeal before BPI President
Xavier Loinaz, but her appeal was denied.

Thereafter, petitioner filed a Complaint for illegal dismissal with the Arbitral Office of the
NLRC. The petitioner alleged that her employment record as an officer and staff had always been
beyond par and was not tainted with any fraud or anomaly. When the incidents took place, she
was barely two months as Service Officer of the Ayala Avenue Branch's Trading Section, and she
was hardly familiar with any bank client, not to mention the enormous volume of transactions
handled by the said BPI branch. Being new in her position, she had yet to adjust to the system in
place. Nonetheless, she followed the policies and procedural control prior to affixing her initials
as approving authority; hence, petitioner asserted that her dismissal was grossly disproportionate
as a penalty. On the other hand, respondent asserted that petitioner's dismissal is legal.

The LA held that the dismissal of petitioner was illegal that petitioner cannot be considered a
managerial employee, and that her dismissal on grounds of gross negligence and breach of trust
was unjustified. On appeal, the NLRC set aside the decision of the LA. She then filed a petition
for certiorari with the CA but the CA dismissed her petition holding that petitioner was holding a
highly confidential position, as Assistant Branch Manager, in the banking industry, which
required extraordinary diligence among its employees.

Hence, this petition.

ISSUE:

Whether or not petitioners dismissal from employment is valid?

HELD:

The petition is denied.

LABOR LAW

Accordingly, the findings of the Court of Appeals and the NLRC that petitioner's dismissal was
for a valid cause is proper. In the case at bar, respondent dismissed petitioner from her
employment on grounds of gross negligence and breach of trust reposed on her by respondent
under Article 282 (b) and (c) of the Labor Code.

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. On the other hand, the basic premise for dismissal on the ground of loss
of confidence is that the employees concerned hold a position of trust and confidence. It is the
breach of this trust that results in the employer's loss of confidence in the employee.

LABOR LAW

The test of supervisory or managerial status depends on whether a person possesses authority to
act in the interest of his employer and whether

such authority is not merely routinary or clerical in nature, but requires the use of independent
judgment.

Based on the records, respondent stated that the responsibilities of petitioner, among others, were
as follows:
(1) to maintain the integrity of the signature card files of certificates of deposits and/or detect
spurious signature cards in the same files;

(2) to ensure that releases of original CDS are done only against valid considerations and made
only to the legitimate depositors or their duly authorized representatives;

(3) to approve payments or withdrawals of deposits by clients to ensure that such withdrawals
are valid transactions of the bank; and

(4) to supervise the performance of certain rank-and-file employees of the branch.

In this case, petitioner holds a managerial status since she is tasked to act in the interest of her
employer as she exercises independent judgment when she approves pre-termination of USD
CDs or the withdrawal of deposits. In fact, petitioner admitted the exercise of independent
judgment when she explained that as regards the pre-termination of the USD CDs of Uymatiao
and Caluag, the transactions were approved on the basis of her independent judgment that the
signatures in all the documents presented to her by the traders matched, as shown in her reply
dated April 23, 2002 to respondent's memorandum asking her to explain the unauthorized pre-
terminations/withdrawals of U.S. dollar deposits in the BPI Ayala Avenue Branch.

Further, the petitioner admitted that she did not call the depositors to appear before her, although
she performed other procedures to determine whether the subject transactions were with the
depositors' authorization. She did not determine if it was really Uymatiao and Caluag who were
pre-terminating their respective USD CD, as she based the identification of the said clients from
their matching signatures on the original certificate on file with the branch, withdrawal slips and
signature cards. Moreover, as stated by respondent, petitioner did not require that the original
certificates of time deposit in the possession of Uymatiao and Caluag be surrendered to the bank
when the rolled-over certificates were pre-terminated.
In that regard, petitioner was remiss in the performance of her duty to approve the pre-
termination of certificates of deposits by legitimate depositors or their duly-authorized
representatives, resulting in prejudice to the bank, which reimbursed the monetary loss suffered
by the affected clients. Hence, respondent was justified in dismissing petitioner on the ground of
breach of trust. As long as there is some basis for such 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 of his position, a managerial employee may be dismissed.

CA CONFIRMED.

Case Digest: Meralco v. Dejan

G.R. No. 194106 : June 18, 2012

MANILA ELECTRIC COMPANY (MERALCO), Petitioner, vs. HERMINIGILDO H.

DEJAN, Respondent.

BRION, J.:

FACTS:

Respondent Herminigildo Dejan is employed with the Manila Electric Company as Meralco's
branch representative. The security guard on duty at the branch noticed the private electrician,
take out from the branch premises 20 pieces of meter sockets which were then loaded into a
parked Meralco contracted jeep belonging to one Cesar Reyes. Dejan was asked to explain the
incident.

In his letter-explanation, Dejan admitted that he released the meter sockets in question because
the deposit fees had already been paid.

Dejan received a letter from Marcelino Rosario, head of Meralco's Investigation-Paralegal

Services, charging him with the unauthorized taking of 20 meter sockets, in violation of Section
7, paragraphs 4 and 11 of the Company Code of Employee Discipline, in relation to Article 282
of the Labor Code. Meralco conducted a formal investigation where Dejan admitted issuing the
meter sockets without the authorization of the applicants for electric connection. He alleged that
he released the items even without authorization as it had been the accepted practice in the office,
provided the deposit fee had been paid.

Unconvinced with Dejan's explanation, Meralco served Dejan a letter terminating his
employment effective the following day, with forfeiture of all rights and privileges. Dejan filed
his complaint with the National Labor Relations Commission (NLRC).

Labor Arbiter Antonio R. Macam dismissed the complaint for lack of merit, holding that Dejan
"undoubtedly transgressed the company rules on unauthorized taking of the company
property[.]" Labor Arbiter Macam declared Dejan's dismissal as a valid exercise of Meralco's
management prerogative.

Dejan appealed the labor arbiter's decision to the NLRC. NLRC rendered a decision reversing
the labor arbiter. Both Meralco and Dejan moved for reconsideration, but the NLRC denied the
motions.

CA affirmed, with modification, the NLRC dispositions. It found no grave abuse of discretion in
the NLRC ruling that Dejan is not guilty of unauthorized taking or of stealing of company
property. The CA, however, found irregular the NLRC's failure to award Dejan backwages
considering that it declared him to have been illegally dismissed. Accordingly, it awarded Dejan
backwages from the time he was separated from the service until his actual reinstatement, less
the amount corresponding to his one-month suspension for simple negligence.

ISSUE: Whether or not Dejan is liable only for simple negligence?

HELD: Court of Appeals decision is SET ASIDE.

LABOR LAW

Dejan is liable as charged. More specifically, he is liable for violation of Section 7, paragraphs 4
and 11 of the Company Code of Employee Discipline, constituting serious misconduct, fraud and
willful breach of trust of the employer, just causes for termination of employment under the law.
The facts and the evidence on record clearly bear this out and we wonder how the CA could have
missed the seriousness or gravity of Dejan's transgressions.

There is no dispute about the release of the meter sockets. Also, the persons involved were
clearly identified - Dejan; Gozarin or Mang Islao, a private electrician who received the meter
sockets; Reyes, the owner of the jeep where the meter sockets were loaded by Gozarin; Duenas,
a Meralco field representative; and Depante, another private electrician who purportedly owned
the meter sockets.

There is also no question that Dejan released the meter sockets to Gozarin without the written
authority or SPA from the customer or customers who applied for electric connection (as a matter
of company policy). Dejan released the meter sockets to Gozarin on the mere say-so of Depante,
as he claimed, through a call to Duenas' cell phone, and justified his act to be in accord with
accepted company practice.

We cannot blame Meralco for losing its trust and confidence in Dejan. He is no ordinary
employee. As branch representative, "he was principally charged with the function and
responsibility to accept payment of fees required for the installation of electric service and
facilitate issuance of meter sockets." The duties of his position require him to always act with the
highest degree of honesty, integrity and sincerity, as the company puts it. In light of his
fraudulent act, Meralco, an enterprise imbued with public interest, cannot be compelled to
continue Dejan's employment, as it would be inimical to its interest. Needless to say, "[t]he law,
in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the
employer." For sure, Dejan was validly dismissed for serious misconduct, and loss of trust and
confidence.

DISMISSED.

ase Digest: Paulino v. NLRC & PLDT

G.R. No. 176184 : June 13, 2012

ROMEO E. PAULINO, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION

and PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INCORPORATED.
Respondents.

SERENO, J.:

FACTS:

On 16 January 1995, petitioner, who was then employed by PLDT as Cable Splicer
III,surrendered his service vehicle to PLDT motor pool for body repairs. For this reason, he
unloaded the company-issued plant materials contained in the vehicle and stored them at his
residence for safekeeping.

For 1 month and 11 days, PLDT properties were in the custody of petitioner. On 27 February
1995, members of the PNP, armed with a search warrant, searched his house and found several
items/materials belonging to PLDT.

At that time, based on the investigation by the PNP, petitioner did not present any documents or
requisition slips that would justify his possession of the materials.Consequently, PLDT caused
the filing of an Information for qualified theft against him.

After several meetings and investigations, on 26 May 1995, Pesayco, petitioner manager,
informed petitioner in writing that since he was not able to clarify certain matters regarding the
issue that would have warranted an evaluation of his case, the company was terminating his
services effective on the said date.

Three years later, after the criminal case for qualified theft had been terminated for failure of the
prosecution to prove his guilt beyond reasonable doubt, petitioner filed a Complaint for Illegal
Dismissal which the Labor Arbiter dismissed for utter lack of merit. The LA found petitioner
possession of valuable and material company properties to be highly suspect.In addition, it was
"fully irregular that a highly efficient Company, such as herein respondent, would allow any of
its employees to place expensive and necessary properties for personal safe-keeping."

Aggrieved, petitioner pursued his action before the NLRC. The labor court, however, affirmed
the LA Decision in toto. Thus, petitioner appealed to the CA. However, the CA still ruled against
petitioner.

ISSUE: Whether or not the Court of Appeals gravely erred in upholding Paulino dismissal as
valid based on just cause?

HELD: The decision of the Court of Appeals is affirmed.

The Labor Code recognizes that an employer, for just cause, may validly terminate the services
of an employee for serious misconduct or willful disobedience of the lawful orders of the
employer or representative in connection with the employee work. Fraud or willful breach by the
employee of the trust reposed by the employer in the former, or simply loss of confidence, also
justifies an employee dismissal from employment.

Notwithstanding petitioner acquittal in the criminal case for qualified theft,respondent PLDT had
adequately established the basis for the company loss of confidence as a just cause to terminate
petitioner. This is just correct since proof beyond reasonable doubt of an employee misconduct is
not required in dismissing an employee. Rather, as opposed to the "proof beyond reasonable
doubt" standard of evidence required in criminal cases, labor suits require only substantial
evidence to prove the validity of the dismissal.

Willful breach of trust or loss of confidence requires that the employee (1) occupied a position of
trust or (2) was routinely charged with the care of the employer property. As correctly
appreciated by the CA, petitioner was charged with the care and custody of PLDT property.

To warrant dismissal based on loss of confidence, there must be some basis for the loss of trust
or the employer must have reasonable grounds to believe that the employee is responsible for
misconduct that renders the latter unworthy of the trust and confidence demanded by his or her
position. Here, petitioner disputes the sufficiency of PLDT basis for loss of trust and confidence.
He alleges that he did not steal the plant materials, considering that he had lawful possession.

However, assuming that he lawfully possessed the materials, PLDT still had ample reason or
basis to already distrust petitioner. For more than a month, he did not even inform PLDT of the
whereabouts of the plant materials. Instead, he stocked these materials at his residence even if
they were needed in the daily operations of the company. In keeping with the honesty and
integrity demanded by his position, he should have turned over these materials to the plant
warehouse.

The fact that petitioner did not present any documents or requisition slips at the time that the
PNP took the plant materials logically excites suspicion. In addition, PLDT received a security
report stating that petitioner had engaged in the illicit disposal of its plant materials, which were
recovered during the search conducted at his residence

Thus, PLDT reasonably suspected petitioner of stealing the company property. At that juncture,
the employer may already dismiss the employee since it had reasonable grounds to believe or to
entertain the moral conviction that the latter was responsible for the misconduct, and the nature
of his participation therein rendered him absolutely unworthy of the trust and confidence
demanded by his position.

In a final effort to impugn his dismissal, petitioner claims that he could only be faulted for
breaching PLDT rules and regulations which prohibited the employees from bringing home
company materials. In this regard, petitioner exacerbates his position. By admitting that he
breached company rules, he buttressed his employer claim that he committed serious
misconduct.

Employees cannot take company rules for granted, especially in this case where petitioner breach
involved various plant materials that may cause major disruption in the company operations.
Indeed, an employer may discharge an employee for refusal to obey a reasonable company
rule.As a rule, although this Court leans over backwards to help workers and employees continue
with their employment, acts of dishonesty in the handling of company property are a different
matter.

Given these circumstances, it would have been unfair for PLDT to keep petitioner in its employ.
Petitioner displayed actions that made him untrustworthy. Thus, as a measure of self-protection,
PLDT validly terminated his services for serious misconduct and loss of confidence.

DENIED

Case Digest: Apo Cement Corp v. Baptisma

G.R. No. 176671 : June 20, 2012

APO CEMENT CORPORATION, Petitioner, vs. ZALDY E. BAPTISMA, Respondent.

DEL CASTILLO, J.:

FACTS:

Petitioner received information from one of its employees, Armando Moralda (Moralda), that
some of its personnel, including respondent who was then the manager of petitioners Power
Plant Department, were receiving commissions or "kickbacks" from suppliers. Having been
implicated in the irregularities, respondent received a Show Cause Letter with Notice of
Preventive Suspension. Respondent submitted his written explanationdenying the accusations
hurled against him.

To further afford respondent ample opportunity to defend himself, petitioner conducted a series
of administrative investigation hearings during which respondent was able to face his accusers.

Respondent received the Notice of Termination informing him of his dismissal from employment
effective immediately on the ground of loss of trust and confidence.

Respondent filed with the Regional Arbitration Branch VII of the National Labor Relations
Commission (NLRC) in Cebu City a complaint for illegal dismissal with monetary claims.

Labor Arbiter Jose G. Gutierrez rendered judgment in favor of respondent. Aggrieved, petitioner
filed an appeal with the NLRC. Respondent, on the other hand, filed a Motion for Issuance of a
Writ of Execution.

NLRC reversed the ruling of the Labor Arbiter. It ruled that respondents "personal and direct
involvement in the irregularities complained of renders him unworthy of the trust and confidence
demanded [of] his position."

Respondent moved for reconsideration but his motion was denied by the NLRC. Thus,
respondent elevated the matter to the CA.

CA reinstated the Decision of the Labor Arbiter. It ruled that petitioner failed to prove the
existence of a just cause to warrant the termination of respondent as the alleged loss of trust and
confidence was not based on established facts.

ISSUE: Whether or not there was just cause for the dismissal of respondent?

HELD: Court of Appeals decision is reversed and set aside.

LABOR LAW

To validly dismiss an employee on the ground of loss of trust and confidence under Article 282
(c) of the Labor Code of the Philippines, the following guidelines must be observed:
1) loss of confidence should not be simulated;
2) it should not be used as subterfuge for causes which are improper, illegal or unjustified;
3) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and
4) it must be genuine, not a mere afterthought to justify earlier action taken in bad faith."
More importantly, it "must be based on a willful breach of trust and founded on clearly
established facts."

As between the positive testimony of Lobita that he gave respondent commissions and/or
"kickbacks" on two separate occasions, and the negative testimony of respondents witnesses
Cede and Banzon that no such meeting took place, we are more inclined to give credence to the
former. It bears stressing that a positive testimony prevails over a negative one, more especially
in this case where respondents witnesses did not even execute affidavits to attest to the
truthfulness of their statements. Thus, it was error on the part of the Labor Arbiter and the CA to
disregard the testimony of Lobita.

GRANTED

Case Digest: Villanueva, Jr. v. NLRC, et al.

G.R. No. 176893 : June 13, 2012

VICENTE VILLANUEVA, JR., Petitioner, v. THE NATIONAL LABOR RELATIONS

COMMISSION THIRD DIVISION, MANILA ELECTRIC COMPANY, MANUEL
LOPEZ, Chairman and CEO, and FRANCISCO COLLANTES, Manager, Respondents.
MENDOZA, J.:

FACTS:

Villanueva had been employed with Meralco as bill collector, teller and branch representative.
On June 10, 2002, a report was received by Francisco Collantes, Manager of Meralco Novaliches
Branch claiming that there were customers who were issued Contracts for Electric Service by
Villanueva which indicated their payment ofP 930.00 as deposit payment when they actually
gave him a total amount of P 1,240.00. The discrepancy amounting to P 310.00 was not covered
by any receipt.

Pursuant to the complaints, a field investigation was conducted by the company-designated

investigator who was able to obtain sworn statements from nine (9) out of twenty four (24)
complaining customers.The said complainants identified Villanueva as the person they have
transacted with, from a line-up of pictures of several individuals.

In a letterdated August 1, 2002, Villanueva was informed of the investigation to be conducted by

the company. On the date of the scheduled hearing indicated in the letter, Villanueva appeared
with counsel who requested for time within which to submit a responsive paper. In his counter-
affidavit,he denied demanding payment in excess of the minimum deposit charged from
applicants for electric service connection. Villanueva explained that if ever there was any error or
discrepancy in the preparation of the contract, this would have to be balanced at the end of the
day. He claimed that there were instances when initial entries of applied loads were erroneous
prompting him to modify the contract in order that the customersdeposit payment could be
entered. In cases when the customer was no longer in the office premises, he would just record
them as pre-payment so as to reflect the same in their billing upon installation of the electric
meter.

In a letter dated August 28, 2002, Meralco denied the request of Villanueva counsel to cross-
examine the witnesses (complaining customers) who were not Meralco employees. Management
maintained that it was not the proper place to grill a witness on cross-examination which should
be done in an appropriate proceeding. Villanueva was then advised that the case would be
considered submitted for decision as the issues had already been joined with the submission of
his counter-affidavit.

On January 9, 2003, Villanueva received the Notice of Termination.

On January 21, 2003, Villanueva filed a complaint for illegal dismissal before the Regional
Arbitration Branch. He alleged that he was denied both substantive and procedural due process
because there was no formal charge yet when Meralco effected his termination. Anent the charge
of misappropriation of company funds, Villanueva claimed that the amount was intact with the
office and it was only during the preparation of forms that sometimes confusion would occur, but
this was promptly corrected upon discovery to reflect the correct amount for the kind of service
paid for. He further claimed that even assuming that the error was committed, the offense could
not have warranted a penalty of dismissal because the Company Code of Employee Discipline
failed to make mention of his case in a specific manner. At most, his case was one of simple
negligence because the company was not prejudiced financially.

On June 30, 2004, the Labor Arbiter rendered a decision in favor of Villanueva ordering his
reinstatement with backwages. In its Resolution dated November 30, 2004, the NLRC Third
Division reversed the ruling of the LA and declared Villanueva dismissal as valid.

After having filed his Motion for Reconsideration, Villanueva moved for the execution of the LA
decision alleging that while he had been reinstated in the payroll of Meralco effective July 16,
2004, he was not given the full benefits to which he was entitled prior to his dismissal, like one
(1) sack of rice per month and bonuses for two (2) months. Consequently, the LA ordered the
issuance of a Writ of Execution and Alias Writ of Execution on February 15, 2005. On June 20,
2006, the NLRC denied Villanueva motion for reconsideration rendering its decision as final.

On appeal to the CA, Villanueva petition was dismissed. The CA ruled that Meralco had
established just cause for the dismissal of Villanueva by substantial evidence of his fraudulent
and dishonest acts resulting in the loss of trust and confidence that Meralco had reposed on him.

ISSUE: Whether or not the Court of Appeals erred in reversing the decision of the Labor Arbiter
and declaring petitioner dismissal as valid and justified?

HELD: The petition is without merit.

Dismissal from employment has two aspects:

(1) the legality of the act of dismissal per se, which constitutes substantive due process, and
(2) the legality of the manner of dismissal, which constitutes procedural due process.
As to the first, the legal provision in point is Article 282 of the Labor Code which provides:

Art. 282. Termination by Employer. An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.
In the case of Cruz v. Court of Appeals, the Court had the occasion to enumerate the essential
elements for "willful breach by the employee of the trust reposed in him by his employer":

Xxx the loss of trust and confidence must be based on willful breach of the trust reposed in the
employee by his employer. Such 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. Moreover, it must be based on substantial evidence and not on the
employer whims or caprices or suspicions otherwise, the employee would eternally remain at the
mercy of the employer. Loss of confidence must not be indiscriminately used as a shield by the
employer against a claim that the dismissal of an employee was arbitrary. And, in order to
constitute a just cause for dismissal, the act complained of must be work-related and shows that
the employee concerned is unfit to continue working for the employer. In addition, loss of
confidence as a just cause for termination of employment is premised on the fact that the
employee concerned holds a position of responsibility, trust and confidence or that the employee
concerned is entrusted with confidence with respect to delicate matters, such as handling or case
and protection of the property and assets of the employer. The betrayal of this trust is the essence
of the offense for which an employee is penalized.

As a safeguard against employers who indiscriminately use "loss of trust and confidence" to
justify arbitrary dismissal of employees, the Court, in addition to the above elements, came up
with the following guidelines for the application of the doctrine:
(1) loss of confidence should not be simulated;

(2) it should not be used as a subterfuge for causes which are improper, illegal or unjustified;

(3) it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and

(4) it must be genuine, not a mere afterthought, to justify an earlier action taken in bad faith.
In this case, the above requisites have been met. Meralco loss of trust and confidence arising out
of Villanueva act of misappropriation of company funds in the course of processing customer
applications has been proven by substantial evidence, thus, justified. Verily, the issuance of
additional receipts for excessive payments exacted from customers is a willful breach of the trust
reposed in him by the company.

One. Villanueva worked for Meralco as a Branch Representative whose tasks included the
issuance of Contracts for Electric Service after receipt of the amount due for service connection
from customers. Obviously, he was entrusted not only with the responsibility of handling
company funds but also to cater to customers who intended to avail of Meralco services. This is
nothing but an indication that trust and confidence were reposed in him by the company,
although his position was not strictly managerial by nature.

Two. Villanueva acts of issuing contracts indicating therein an amount less than the actual
payment made by the customers and, thereafter, issuing a receipt in an attempt to document the
discrepancy are certainly work-related. This is, in fact, the core of his position as a Branch
Representative.

Three. Meralco charge against Villanueva was adequately proven by substantial evidence. The
records provide an extensive showing of evidence against Villanueva. The affidavits of co-
employees and, more especially those of the customers themselves, bear weight in establishing
the specific acts constituting the charge against him. In fact, no inconsistencies among these
statements were found. Villanueva likewise failed to pose a plausible defense

Four. The breach of the company trust in Villanueva was shown to have been committed
knowingly and willfully. Although the amount of discrepancy or money misappropriated may be
considered minimal and even inconsequential to an established company such as Meralco, it is
the anomalous practice of requiring applicants for electric service connection to pay amounts
higher than required that is the crux of Villanueva offense. The conscious design of issuing
another receipt to make it appear that there was a mistake in the initial transaction with the
customers exhibits a culpable act bordering on dishonesty and deceit. If not for personal gain,
why did Villanueva exact from customers amounts in excess of what was required by the
company?

Villanueva insistence, that the act which triggered his dismissal did not justify his separation
from the service because the Company Code of Employee Discipline failed to make mention of
his case in a specific manner, fails to persuade the Court. The established facts do not constitute a
mere case of simple negligence. The acts performed were without the slightest connotation of
inadvertence which Villanueva could have demonstrated during the proceedings a quo.

Besides, the Court is not unmindful of the prerogatives available to Meralco as an employer.
Management has the prerogative to discipline its employees and to impose appropriate penalties
on erring workers pursuant to company rules and regulations.So long as they are exercised in
good faith for the advancement of the employer interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid agreements, the
employer exercise of its management prerogative must be upheld.

In his case, no indication of bad faith can be attributed to Meralco as there was no dispute that it
had lost trust and confidence in Villanueva and his abilities to perform his tasks with utmost
efficiency and honesty expected of an employee trusted to handle customers and funds. With
substantial evidence presented and Villanueva failure to proffer plausible explanation denying
the charges against him, there can be no other conclusion for the Court but to affirm his
dismissal.

Lastly, Villanueva argued that management committed a grievous error for not giving him a
chance to confront the customers who stood as witnesses against him. To this, the Court
disagrees. As the NLRC and the CA found, Villanueva was afforded due process when he was
given the required notices. More importantly, he was actually given the opportunity to be heard.
On the date of the scheduled hearing, Villanueva was assisted by counsel who requested for time
within which to submit a counter-affidavit. He was able to submit it, where he denied the charges
against him. Undoubtedly, Villanueva was afforded procedural due process even if the cross-
examination of the witnesses was not permitted by Meralco.

Petition is DENIED.

Case Digest: Nissan v. Angelo

G.R. No.164181 : September 14, 2011

NISSAN MOTORS PHILS., INC., Petitioner, v. VICTORINO ANGELO, Respondent.

PERALTA,J.:
FACTS:

Respondent Victorino Angelo was employed by Nissan on March 11, 1989 as one of its payroll
staff. On April 7 to 17, 2000, respondent was on sick leave, thus, he was not able to prepare the
payroll for the said period. Again, on April 27 and 28, 2000, respondent was on an approved
vacation leave which again resulted in the non-preparation of the payroll for that particular
period.

On May 8, 2000, respondent received a Memorandum informing him that the Company is
considering his dismissal from employment on the grounds ofserious misconduct, willful
disobedience and gross neglect of duties.

Respondent filed a Complaintfor illegal suspension with the Department of Labor and
Employment (DOLE) on May 12, 2000. Petitioner conducted an investigation on May 13, 2000,
and concluded that respondent's explanation was untrue and insufficient. Thus, on June 13, 2000,
petitioner issued a Notice of Termination. Respondent amended his previous complaint against
petitioner on June 22, 2000, to include the charge of illegal dismissal.

Both the Labor Arbiter and the NLRC rendered a decision that respondent was not illegally
dismissed. However, CA reversed the ruling and ordered the reinstatement of the respondent
along with the payment of backwages from the time he was illegally dismissed

ISSUE:

Whether or not respondent was illegally dismissed

HELD:

LABOR LAW: illegal dismissal

It must be emphasized at this point that theonus probandito prove the lawfulness of the dismissal
rests with the employer. In termination cases, the burden of proof rests upon the employer to
show that the dismissal is for just and valid cause. Failure to do so would necessarily mean that
the dismissal was not justified and, therefore, was illegal.In this case, both the Labor Arbiter and
the NLRC were not amiss in finding that the dismissal of respondent was legal or for a just cause
based on substantial evidence presented by petitioner. Substantial evidence, which is the
quantum of proof required in labor cases, is that amount of relevant evidence which a reasonable
mind might accept as adequate to justify a conclusion.

However, although the dismissal was legal, respondent is still entitled to a separation pay as a
measure of financial assistance, considering his length of service and his poor physical condition
which was one of the reasons he filed a leave of absence. As a general rule, an employee who has
been dismissed for any of the just causes enumerated under Article 282 of the Labor Code is not
entitled to separation pay.Although by way of exception, the grant of separation pay or some
other financial assistance may be allowed to an employee dismissed for just causes on the basis
of equity.
GRANTED

Case Digest: Yabut v. Meralco & Lopez

G.R. No. 190436 : January 16, 2012

NORMAN YABUT, Petitioner, v. MANILA ELECTRIC COMPANY AND MANUEL M.

LOPEZ, Respondents.

REYES,J.:

FACTS:

This case stems from a complaint for illegal dismissal and monetary claims filed by herein
petitioner Norman Yabut (Yabut) against respondents Manila Electric Company (Meralco) and
Meralco officer Manuel M. Lopez (Lopez).

The petitioner had worked with Meralco from February 1989 until his dismissal from
employment on February 5, 2004. Meralco's Inspection Office issued a memorandum informing
it of an illegal service connection at the petitioner's residence. Given this report, Meralco's Head
of Investigation-Litigation Office issued to the petitioner a notice of investigation.

Meralcos Litigation Investigation Office summarized the results of Meralco's findings in a

memorandum which indicated that Yabuts electric service was disconnected for account
delinquency. Notwithstanding the disconnection and the fact that Meralcos service had not been
reconnected, Yabut's meter registered electric consumption. In view of these findings, respondent
Meralco, issued a notice of dismissaladdressed to the petitioner. The notice cites violation of
Section 7, paragraph 3 of Meralco's Company Code on Employee Discipline and Article 282 (a),
(c), (d) and (e) of the Labor Code of the Philippines as bases for the dismissal.

Aggrieved by the decision of the management, Yabut filed with the National Labor Relations
Commission (NLRC) a complaintfor illegal dismissal and money claims against Meralco and
Lopez.

Labor Arbiter Antonio R. Macam rendered his Decision,declaring the petitioner illegally
dismissed from the service and hence, entitled to reinstatement plus backwages and attorney's
fees.

NLRC rendered its Resolutiondismissing the herein respondents' appeal for lack of merit.

CA rendered the now assailed Decisionreversing the rulings of the NLRC. In finding the
petitioner's dismissal lawful, the appellate court attributed unto Yabut authorship of the meter
tampering and illegal use of electricity acts which it regarded as serious misconduct.

ISSUE: Whether or not petitioners dismissal is illegal?

HELD: Court of Appeals decision is sustained.

LABOR LAW

Article 279 of the Labor Code of the Philippines provides that (i)n cases of regular employment,
the employer shall not terminate the services of an employee except for a just cause or when
authorized by this Title. x x x The just causes are enumerated in Article 282, which provides:
Article 282.Termination by employer. - An employer may terminate an employment for any of
the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.
Significantly, tampering with electric meters or metering installations of the Company or the
installation of any device, with the purpose of defrauding the Company is classified as an act of
dishonesty from Meralco employees, expressly prohibited under company rules. It is reasonable
that its commission is classified as a severe act of dishonesty, punishable by dismissal even on its
first commission, given the nature and gravity of the offense and the fact that it is a grave wrong
directed against their employer.

Article 282 (a) provides that an employer may terminate an employment because of an
employee's serious misconduct, a cause that was present in this case in view of the petitioner's
violation of his employer's code of conduct. Misconduct is defined as the transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not mere error in judgment. For serious misconduct to justify
dismissal, the following requisites must be present:
(a) it must be serious;
(b) it must relate to the performance of the employee's duties; and
(c) it must show that the employee has become unfit to continue working for the employer.
The dismissal is also justified as the act imputed upon the petitioner qualifies as fraud or willful
breach by the employee of the trust reposed in him by his employer or duly authorized
representative under Article 282 (c) of the Labor Code. While the petitioner contests this ground
by denying that his position is one of trust and confidence, it is undisputed that at the time of his
dismissal, he was holding a supervisory position after he rose from the ranks since
commencement of his employment with Meralco. As a supervisor with duty and power that
included testing of service meters and investigation of violations of contract of customers, his
position can be treated as one of trust and confidence, requiring a high degree of honesty as
compared with ordinary rank-and-file employees.

We emphasize that dismissal of a dishonest employee is to the best interest not only of the
management but also of labor. As a measure of self-protection against acts inimical to its interest,
a company has the right to dismiss its erring employees. An employer cannot be compelled to
continue employing an employee guilty of acts inimical to the employer's interest, justifying loss
of confidence in him.

DENIED
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NATHANIEL N. DONGON vs. RAPID MOVERS AND FORWARD

ERS CO., INC., G.R. No. 163431, 28 August 2013

FACTS:

Tanduays security guard called the attention of private respondent as to the fact that Mr. Villaruz
was not wearing an I.D. Card. Petitioner, then, assured the guard that he will secure a special pe
rmission from the management to warrant the orderly release of goods. Instead of complying wit
h his compromise, he lent his I.D. Card to Villaruz; and by reason of such misrepresentation , pri
vate respondent and Mr. Villaruz got a clearance from Tanduay for the release of the goods. How
ever, the security guard, who saw the misrepresentation committed by private respondent and Mr.
Villaruz, accosted them and reported the matter to the management of Tanduay. He was then dis
missed.

Petitioner submits that his dismissal was a penalty too harsh and disproportionate to his supposed
violation; and that his dismissal was inappropriate due to the violation being his first infraction th
at was even committed in good faith and without malice.

Rapid Movers argues, however, that the strict implementation of company rules and regulations s
hould be accorded respect as a valid exercise of its management prerogative.

ISSUE:

Whether or not an employer can dismiss an employee by virtue of its managerial prerogative con
sidering that it was established that the employees act did not constitute just cause provided by t
he Labor Code.

RULING:

No. It is true that an employer is given wide latitude of discretion in managing its own affairs. Th
e broad discretion includes the implementation of company rules and regulations and the imposit
ion of disciplinary measures on its employees. But the exercise of a management prerogative like
this is not limitless, but hemmed in by good faith and a due consideration of the rights of the wor
ker. In this light, the management prerogative will be upheld for as long as it is not wielded as an
implement to circumvent the laws and oppress labor. The discipline exacted by the employer sho
uld further consider the employees length of service and the number of infractions during his em
ployment. The employer should never forget that always at stake in disciplining its employee are
not only his position but also his livelihood, and that he may also have a family entirely depende
nt on his earnings.

Furthermore, petitioner was not guilty of willful disobedience; hence, his dismissal was illegal. F
or willful disobedience to be a ground, it is required that: (a) the conduct of the employee must b
e willful or intentional; and (b) the order the employee violated must have been reasonable, lawf
ul, made known to the employee, and must pertain to the duties that he had been engaged to disc
harge. Willfulness must be attended by a wrongful and perverse mental attitude rendering the em
ployees act inconsistent with proper subordination. It is implied that in every act of willful disob
edience, the erring employee obtains undue advantage detrimental to the business interest of the
employer. In the case at bar, he neither benefitted from it, nor thereby prejudiced the business int
erest of Rapid Movers but was intended to benefit Rapid Movers.

Case Digest: Dongon v. Rapid Movers & Forwarders, Inc. & Jao, Jr.
G.R. No. 163431 : August 28, 2013

NATHANIEL N. DONGON, Petitioner, v. RAPID MOVERS AND FORWARDERS CO.,

INC., AND/OR NICANOR E. JAO, JR., Respondents.

BERSAMIN, J.:

FACTS:

Petitioner Rapid is engaged in the hauling and trucking business while private respondent
Nathaniel T. Dongon is a former truck helper leadman. Private respondents area of assignment is
the Tanduay Otis Warehouse where he has a job of facilitating the loading and unloading of the
petitioners trucks. On 23 April 2001, private respondent and his driver, Vicente Villaruz, were in
the vicinity of Tanduay as they tried to get some goods to be distributed to their clients.

Tanguay's security guard called the attention of private respondent as to the fact that Mr. Villaruz
was not wearing an Identification Card (I.D. Card). Private respondent, then, assured the guard
that he will secure a special permission from the management to warrant the orderly release of
goods.

Instead of complying with his compromise, private respondent lent his I.D. Card to Villaruz; and
by reason of such misrepresentation, private respondent and Mr. Villaruz got a clearance from
Tanduay for the release of the goods. However, the security guard, who saw the
misrepresentation committed by private respondent and Mr. Villaruz, accosted them and reported
the matter to the management of Tanduay.
After conducting an administrative investigation, private respondent was dismissed from the
petitioning Company. Private respondent filed a case for illegal dismissal against the company.
LA dismissed the complaint. On appeal, however, the NLRC reversed the Labor Arbiter, and
held that Rapid Movers had not discharged its burden to prove the validity of petitioners
dismissal from his employment and that his dismissal was a penalty disproportionate to the act of
petitioner complained of. It awarded him backwages and separation pay in lieu of reinstatement.

Rapid Movers brought a petition for certiorari in the CA, averring grave abuse of discretion on
the part of the NLRC. The CA promulgated its assailed decision reinstating the decision of the
Labor Arbiter, and upholding the right of Rapid Movers to discipline its workers. Petitioner filed
a motion for reconsideration but the same was denied hence, petitioner appealed to the SC.

ISSUE: Whether or not the dismissal was valid?

HELD: No. CA decision reversed and set aside. NLRC decision reinstated.

Labor Law- The prerogative of the employer to dismiss an employee on the ground of willful
disobedience to company policies must be exercised in good faith and with due regard to the
rights of labor.

Petitioner maintains that willful disobedience could not be a ground for his dismissal because he
had acted in good faith and with the sole intention of facilitating deliveries for Rapid Movers
when he allowed Villaruz to use his company ID.

Willful disobedience to the lawful orders of an employer is one of the valid grounds to terminate
an employee under Article 296 (formerly Article 282) of the Labor Code. For willful
disobedience to be a ground, it is required that : (a) the conduct of the employee must be willful
or intentional; and (b) the order the employee violated must have been reasonable, lawful, made
known to the employee, and must pertain to the duties that he had been engaged to discharge.

Under the foregoing standards, the disobedience attributed to petitioner could not be justly
characterized as willful within the contemplation of Article 296 of the Labor Code. He neither
benefitted from it, nor thereby prejudiced the business interest of Rapid Movers. His explanation
that his deed had been intended to benefit Rapid Movers was credible. There could be no wrong
or perversity on his part that warranted the termination of his employment based on willful
disobedience.

It is true that an employer is given a wide latitude of discretion in managing its own affairs. The
broad discretion includes the implementation of company rules and regulations and the
imposition of disciplinary measures on its employees. But the exercise of a management
prerogative like this is not limitless, but hemmed in by good faith and a due consideration of the
rights of the worker.

Dismissal should only be a last resort, a penalty to be meted only after all the relevant
circumstances have been appreciated and evaluated with the goal of ensuring that the ground for
dismissal was not only serious but true. The cause of termination, to be lawful, must be a serious
and grave malfeasance to justify the deprivation of a means of livelihood. This requirement is in
keeping with the spirit of our Constitution and laws to lean over backwards in favor of the
working class, and with the mandate that every doubt must be resolved in their favor.

Considering that petitioners motive in lending his company ID to Villaruz was to benefit Rapid
Movers as their employer by facilitating the loading of goods at the Tanduay Otis Warehouse for
distribution to Rapid Movers clients, and considering also that petitioner had rendered seven long
unblemished years of service to Rapid Movers, his dismissal was plainly unwarranted.

GRANTED.

Case Digest: Cavite Apparel & Timoteo v. Marquez

G.R. No. 172044 : February 06, 2013

CAVITE APPAREL, INCORPORATED and ADRIANO TIMOTEO, Petitioner, v.

MICHELLE MARQUEZ, Respondent.

BRION, J.:

FACTS:
Cavite Apparel is a domestic corporation engaged in the manufacture of garments for export. On
August 22, 1994, it hired Michelle as a regular employee in its Finishing Department. Michelle
enjoyed, among other benefits, vacation and sick leaves of seven (7) days each per annum. Prior
to her dismissal on June 8, 2000, Michelle committed the following infractions (with their
corresponding penalties): (a) First Offense: Absence without leave (AWOL) on December 6,
1999 written warning; (b) Second Offense: AWOL on January 12, 2000 stern warning with three
(3) days suspension; (c) Third Offense: AWOL on April 27, 2000 suspension for six (6) days.

She incurred the following absences on May 8, 2000 and on May 15-17, 2000, respectively due
to illness. When she returned, she submitted the necessary medical certificates. Cavite Apparel,
however, denied receipt of the certificate and suspended Michelle for six (6) days (June 1-7,
2000).

When Michelle returned on June 8, 2000, Cavite Apparel terminated her employment for
habitual absenteeism. On July 4, 2000, Michelle filed a complaint for illegal dismissal with
prayer for reinstatement, backwages and attorneys fees with the NLRC.

The LA dismissed the complaint and held that Michelles four absences without official leave as
habitual and constitutive gross neglect of duty is just ground for termination of employment; that
Cavite Apparel was afforded Michelle and opportunity to explain her side. Thus the dismissal
was valid.

On appeal, NLRC reversed LAs decision. It noted that for Michelles first three absences, she had
already been penalized ranging from a written warning to six days suspension declared. With
these, it should have precluded Cavite Apparel from using Michelles past absences as bases to
impose on her the penalty of dismissal, considering her six years of service with the company.
Thus Michelle had been illegally dismissed and ordered her reinstatement with backwages.

On appeal to the CA, the Court held that while habitual absenteeism without official leave, in
violation of company rules, is sufficient reason to dismiss an employee, it nevertheless did not
consider Michelles four absences as habitual. It especially noted that Michelle submitted a
medical certificate for her May 8, 2000 absence, that Michelle submitted a medical certificate for
her May 8, 2000 absence, and thus disregarded Cavite Apparels contrary assertion. The CA
explained that Michelles failure to attach a copy of the medical certificate in her initiatory
pleading did not disprove her claim.

The CA denied Cavite Apparels motion for reconsideration. Hence, this petition.

ISSUE:

Whether or not Michelles four (4) absences were habitual, thus, warranting her dismissal to be
valid?

HELD:

The petition is unmeritorious.

LABOR LAW

Neglect of duty, to be a ground for dismissal under Article 282 of the Labor Code, must be both
gross and habitual. Gross negligence implies want of care in the performance of ones duties.
Habitual neglect impartsrepeated failure to perform ones duties for a period of time, depending
on the circumstances. Under these standards and the circumstances obtaining in the case, the
Court agrees with the CA that Michelle is not guilty of gross and habitual neglect of duties.

Cavite Apparels contention, among others that, the totality of Michelles infractions justifies her
dismissal failed to convince the Court.

Accordingly, there simply cannot be a case of gross and habitual neglect of duty against
Michelle. Even assuming that she failed to present a medical certificate for her sick leave on
May 8, 2000, the records are bereft of any indication that apart from the four occasions when she
did not report for work, Michelle had been cited for any infraction since she started her
employment with the company in 1994. Four absences in her six years of service cannot be
considered gross and habitual neglect of duty, especially so since the absences were spread out
over a six-month period.

REMEDIAL LAW

The Court does not review questions of fact, but only questions of law in an appeal by certiorari
under Rule 45 of the Rules of Court. The Court is not a trier of facts and will not review the
factual findings of the lower tribunals as these are generally binding and conclusive. The rule
though is not absolute as the Court may review the facts in labor cases where the findings of the
CA and of the labor tribunals are contradictory.

In the case bar, the Court found sufficient basis for a review as the factual findings of the LA, on
the one hand, and those of the CA and the NLRC, on the other hand, are conflicting.

Thus, the Court did not find reversible error committed by the CA when it found no grave abuse
of discretion in the NLRC ruling that Michelle had been illegally dismissed.

LABOR LAW

Although Michelle was fully aware of the company rules regarding leaves of absence, and her
dismissal might have been in accordance with the rules, the Court is not bound by such rules.
The Court will not hesitate to disregard a penalty that is manifestly disproportionate to the
infraction committed.

Michelle might have been guilty of violating company rules on leaves of absence and employee
discipline, still the penalty of dismissal imposed on her unjustified under the circumstances.
While previous infractions may be used to support an employees dismissal from work in
connection with a subsequent similar offense and that that although employers enjoy a wide
latitude of discretion in the formulation of work-related policies, rules and regulations, their
directives and the implementation of their policies must be fair and reasonable; at the very least,
penalties must be commensurate to the offense involved and to the degree of the infraction.
Michelles dismissal is not considered to be commensurate to the four absences she incurred for
her six years of service with the company, even granting that she failed to submit on time a
medical certificate for her May 8, 2000 absence.

Thus, Michelle has been illegally dismissed.

LABOR LAW

While the Court recognizes managements prerogative to discipline its employees, the exercise of
this prerogative should at all times be reasonable and should be tempered with compassion and
understanding.

Dismissal is the ultimate penalty that can be imposed on an employee. Where a penalty less
punitive may suffice, whatever missteps may be committed by labor not ought to be visited with
a consequence so severe for what is at stake is not merely the employees position but his very
livelihood and perhaps the life and subsistence of his family.

Case Digest: Tegimenta Chemical & Garcia v. Oco

G.R. No. 175369 : February 27, 2013

TEGIMENTA CHEMICAL PHILS. and VIVIAN ROSE D. GARCIA, Petitioners,

v.MARY ANNE OCO,Respondent.
SERENO, J.:

FACTS:

Starting 5 September 2001, respondent worked as a clerk, and later on as a material controller,
for petitionerTegimenta Chemical Philippines, Incorporated (Tegimenta), a company owned by
petitioner Vivian Rose D. Garcia (Garcia).

By reason of her pregnancy, Oco incurred numerous instances of absence and tardiness from
March to April 2002. Garcia subsequently advised her to take a vacation, which the latter did
from 1 to 15 May 2002.

On her return, Oco immediately worked for the next four working days of May. However, on 21
May 2002, Garcia allegedly told her to no longer report to the office effective that day. Hence,
respondent no longer went to work. She nevertheless called petitioner at the end of the month,
but was informed that she had no more job to do.

Immediately thereafter, on 3 June 2002, respondent filed a Complaint for illegal dismissal and
prayed for reinstatement and back wages before the LA. Later on, she amended her Complaint
by asking for separation pay instead of reinstatement.

Meanwhile, Oco maintained that petitioner verbally dismissed her without any valid cause and
without due process. To bolster her story, respondent adduced that Tegimenta hired new
employees to replace her. In their defense, petitioners countered that she had abandoned her job
by being continuously absent without official leave (AWOL). They further narrated that they
could not possibly terminate her services, because she still had to settle her accountabilities.

The LA disbelieved the narration of petitioners and thus ruled in favor of respondent. Aggrieved,
petitioners appealed to the NLRC. They assailed the ruling of the LA for having been issued
based not on solid proof, but on mere allegations of the employee. They advanced further that
Oco had abandoned her employment, given that she claimed separation pay instead of
reinstatement. The NLRC reviewed the records of the case and found that the documentary
evidence coincided with the allegations of Oco.

Petitioners pursued their action before the CA via a Rule 65 Petition. Alleging grave abuse of
discretion amounting to lack or excess of jurisdiction, petitioners again assailed the factual
determinations of the LA and the NLRC. In doing so, they attacked Oco allegations for being
inconsistent with the evidence on record.

The CA overturned the courts a quo and pronounced that no actual dismissal transpired; rather,
Oco was merely on AWOL. Subsequently, respondent sought reconsideration. She insisted that
petitioners actually terminated her services, and that they failed to discharge their burden to
prove that it was she who had abandoned work by being on AWOL. This time around, the CA
reversed its earlier ruling.
ISSUE: Whether or not petitioner illegally dismissed respondent.

HELD: The Court of Appeals Decision is affirmed.

LABOR LAW

Petitioners adamantly try to persuade this Court to believe their narration that they did not
dismiss Oco. To prove their version of the story, they poke holes in her narration by harping on
her allegedly false claim thatTegimenta hired replacements and by faulting her for rendering
work on the very day that her services were supposedly terminated. Unfortunately, these
purported defects in her narration cannot carry the day for petitioners.

According to the CA, the hiring of new employees and the presence of Oco on the day of her
termination wereall immaterial to resolving the issue of whether she was on AWOL or was
illegally dismissed. We find this appreciation to be correct. Courts consider the evidence as
material if it refers to the be-all and end-all of a petitioner cause. Here, none of the loopholes can
resolve the case, since it is expected that dismissals may occur even if no prior replacements
were hired, and an employer can indeed attempt to terminate employees on any day that they
come in for work.

Petitioners also make a big fuss about the differing termination dates that Oco stated in her
Complaint (3 June 2002) and her Position Paper (30 May 2002). But in Prieto v. NLRC, it was
held that employees who are not assisted by lawyers when they file a complaint with the LA may
commit a slight error that is forgivable if rectified later on.

Here, Oco only had one inadvertence when she filled out the Complaint in template form. She
also stated in all her subsequent pleadings before the LA, the NLRC, the CA and this Court that
she was dismissed on 30 May 2002. On this point, we similarly rule by regarding the inaccuracy
as an error that is insufficient to destroy her case.

Most notably, the LA observed that the employers "did not deny the claims of complainant [Oco]
that she was simply told not to work." As in Solas v. Power & Telephone Supply Phils. Inc., this
silence constitutes an admission that fortifies the truth of the employee narration. Section 32,
Rule 130 of the Rules Court, provides:

An act or declaration made in the presence and within the hearing or observation of a party who
does or says nothing when the act or declaration is such as naturally to call for action or
comment if not true, and when proper and possible for him to do so, may be given in evidence
against him.

Considering this rule of evidence, together with the immaterial discrepancies, this Court thus
rules against wholly invalidating the findings of the courts a quo.

LABOR LAW

After unsuccessfully assailing the narration of the employee, petitioners argue that Oco
abandoned her job by being on AWOL. As bases for this affirmative defense, they highlight her
previous instances of absence and tardiness. Then, they emphasize the marginal notes in the 16 to
30 Jun 2002 payroll, which showed that she was on leave. Finally, they equate the employee act
of asking for separation pay instead of reinstatement as an act of abandonment.

The bases cited by petitioners are bereft of merit.

First, the nonappearance of Oco at work was already accepted by the company as having resulted
from complications in her pregnancy. In fact, Garcia herself offered respondent a vacation leave.
Therefore, given that the absences of the latter were grounded on justifiable reasons, these
absences cannot serve as the antecedent to the conclusion that she had already abandoned her
job.

For abandonment to exist, two factors must be present: (1) the failure to report for work or
absence without a valid or justifiable reason; and (2) a clear intention to sever the employer-
employee relationship, with the second element as the more determinative factor being
manifested by some overt acts.

The mere absence of an employee is not sufficient to constitute abandonment. As an employer,

Tegimenta has the burden of proof to show the deliberate and unjustified refusal of the employee
to resume the latter employment without any intention of returning.

Here, Tegimenta failed to discharge its burden of proving that Oco desired to leave her job. The
courts a quo uniformly found that she had continuously reported for work right after her
vacation, and that her office attendance was simply cut off when she was categorically told not to
report anymore. These courts even noted that she had also called up the office to follow up her
status; and when informed of her definite termination, she lost no time in filing a case for illegal
dismissal. Evidently, her actions did not constitute abandonment and instead implied her
continued interest to stay employed.

Second, the marginal notes in the 16 to 30 June 2002 payroll showing that she was on leave are
dubious. For one, the CA dutifully detected that none of the succeeding payroll sheets indicated
that Oco was considered by the company as merely AWOL. Hence, it becomes questionable
whether there is regularity in making simple notations as Tegimenta reference in considering the
status of an employee. Therefore, we hold that the marginal notations in a single payroll sheet are
not competent proofs to back up petitioner main defense.

REMEDIAL LAW

This Court also rejects the invocation by petitioners of the best-evidence rule. According to them,
the payroll sheet, and not the mere allegation of Oco, is the best evidence that they did not
terminate her.

However, petitioners seem to miss the whole import of the best-evidence rule. This rule is used
to compel the production of the original document, if the subject of the inquiry is the content of
the document itself.The rule provides that the court shall not receive any evidence that is merely
substitutionary in nature, such as a photocopy, as long as the original evidence of that document
can be had.

Based on the explanation above, the best-evidence rule has no application to this case. The
subject of the inquiry is not the payroll sheet of Tegimenta rather, the thrust of this case is the
abundance of evidence present to prove the allegation that Oco abandoned her job by being on
AWOL. Consequently, the employer cannot be logically stumped by a payroll sheet, but must be
able to submit testimonial and other pieces of documentary evidence like leave forms, office
memos, warning letters and notices to be able to prove that the employee abandoned her work.

LABOR LAW

Petitioners posit that Oco act of replacing the prayer for reinstatement with that for separation
pay implied that respondent abandoned her employment.

Abandonment is a matter of intention and cannot lightly be inferred or legally presumed from
certain equivocal acts. For abandonment to be appreciated, there must be a "clear, willful,
deliberate, and unjustified refusal of the employee to resume employment." Here, the mere fact
that Oco asked for separation pay, after she was told to no longer report for work, does not reflect
her intention to leave her job. She is merely exercising her option under Article 279 of the Labor
Code, which entitles her to either reinstatement and back wages or payment of separation pay.

DENIED.
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Cosmos Bottling Corp vs Fermin

Facts:
Wilson B. Fermin (Fermin) was a forklift operator at Cosmos. He was accused of stealing the
cellphone of his fellow employee. Fermin was then given a Show Cause Memorandum, requiring
him to explain why the cellphone was found inside his locker.] In compliance therewith, he
submitted an affidavit the following day, explaining that he only hid the phone as a practical joke
and had every intention of returning it to Braga. After conducting an investigation, COSMOS
found Fermin guilty of stealing Bragas phone in violation of company rules and regulations]
Consequently, on 2 October 2003, the company terminated Fermin from employment after 27
years of service. Fermin filed a Complaint for Illegal Dismissal.
Labor Arbiter - dismissed for lack of merit on the ground that the act of taking a fellow
employees cellphone amounted to gross misconduct.
NLRC - affirmed
CA - eversed the rulings of the LA and the NLRC and awarded him his full retirement benefitsIt
must be noted that in the case at bar, all the lower tribunals were in agreement that Fermins act
of taking Bragas cellphone amounted to theft.

Issue :
whether the imposition of the penalty of dismissal was appropriate.
Held:
Yes. Theft committed against a co-employee is considered as a case analogous to serious
misconduct, for which the penalty of dismissal from service may be meted out to the erring
employee by virtue of Article 282 of the Labor Code Misconduct involves the transgression of
some established and definite rule of action, forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment.
For misconduct to be serious and therefore a valid ground for dismissal, it must be:
1. of grave and aggravated character and not merely trivial or unimportant and
2. connected with the work of the employee.

Nonetheless, Article 282(e) of the Labor Code talks of other analogous causes or those which
are susceptible of comparison to another in general or in specific detail. For an employee to be
validly dismissed for a cause analogous to those enumerated in Article 282, the cause must
involve a voluntary and/or willful act or omission of the employee. A cause analogous to serious
misconduct is a voluntary and/or willful act or omission attesting to an employees moral
depravity. Theft committed by an employee against a person other than his employer, if proven
by substantial evidence, is a cause analogous to serious misconduct.

SHANE BERIA IMPERIAL2nd Year, Block AG.R. No. 174214 !ne 1", 2#12$A%ER&R'N
% (EB) (I%Y H'%EL, Pe*+*+oner, - .MA. MELANIE P. IMENE , A(/)ELINE (.
BAG)I', L'0ELLA 0. (ARILL', and MAILA G. R'BLE, Re- onden*-.&A(%S
Herein respondents were hired for Club Waterfront, a division under petitioner Waterfront Cebu
City Hotel whichcatered to foreign high stakes gamblers for dierent positions. On 1 !ay
""#, respondents, along with $1 other employees, received identical letters of termination from
petitioner %irector of Human &esources informing them of the temporary suspension of
business of the Club. 'he following day, petitioner served the notice of suspension of business
with the %O()*. 'he dismissed employees were oered separation pay e+uivalent to
half month pay for every year of service. 'he Club closure took eect on 1- une ""#. On
/ une ""#, respondents 0led a complaint before the (abor rbiter for illegal dismissal,
illegal suspension, and non payment of salaries and other monetary bene0ts. 'hey likewise
prayed for damages and attorney fees.
ISS)ES
Whether or not the evidence of losses and closure of Club Waterfront is immaterial and irrelevant
to the termination of petitioners2
HEL3
'he ruling of the Court of ppeals is reversed and set aside. t the outset, it should be stated that
the respondents cannot be accommodated in other departments of the Hotel. 'he duties and
functions they perform are peculiar to the positions they hold in the Club. 3t is likewise
undisputed that the Club remained closed and there is no other department in the Hotel similar to
the Club and which catered to foreign high stakes gamblers. 4erily, reinstatement cannot be and
could not have been an option for petitioner Hotel. review of the consolidated 0nancial
statement proves petitioner assertion that the losses there re5ected refer to the losses of the Club.
'he consolidated 0nancial statement and the corporate relationships it indicates, cannot, however,
be relied upon by petitioner to avoid this particular labor dispute because, as already stated,
petitioner itself has been claiming from the very beginning that the Club is only a
division6department of the hotel. 4erily, retrenchment and not closure was eected to warrant
the valid dismissal of respondents. 7etitioner has not totally ceased its operations. 3t merely
closed down a department. &etrenchment is the termination of employment initiated by the
employer through no fault of and without pre8udice to the employees. 3t is resorted to during
periods of business recession, industrial depression, or seasonal 5uctuations 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 e9cient machinery or of automation.3t is an
act of the employer of dismissing employees because of losses in the operation of a business,
lack of work, and considerable reduction on the volume of his business. ll these elements were
successfully proven by petitioner. :irst, the huge losses suered by the Club for the past two
years had forced petitioner to close it down to avert further losses which would eventually aect
the operations of petitioner. ;econd, all $- employees working under the Club were served with
notice of termination. 'he corresponding notice was likewise served to the %O() one month prior
to retrenchment. 'hird, the employees were oered separation pay, most of whom have accepted
and opted not to 8oin in this complaint. :ourth, cessation of or withdrawal from business
operations was bona 0de in character and not impelled by a motive to defeat or circumvent the
tenurial rights of employees. <either is there a showing that petitioner carried out the closure of
the business inbad faith. <o labor dispute e=isted between management and the employees when
the latter were terminated

Case Digest: Manila Polo Club Employees v. Manila Polo Club (Difference between
Retrenchment & Closure of a Business Establishment)
G.R. No. 172846: July 24, 2013

MANILA POLO CLUB EMPLOYEES' UNION (MPCEU) FUR-TUCP, Petitioner, v.

MANILA POLO CLUB, INC., Respondent.

PERALTA,J.:

FACTS:

On December 13, 2001, the Board of Directors of respondent Manila Polo Club, Inc.,
unanimously resolved to completely terminate the entire operations of its Food and Beverage (F
& B) outlets, except the Last Chukker, and award its operations to a qualified restaurant operator
or caterer.

Subsequently, on March 22, 2002, respondents Board approved the implementation of the
retrenchment program of employees who are directly and indirectly involved with the operations
of the F & B outlets and authorized then General Manager Philippe D. Bartholomi to pay the
employees separation pay. On even date, respondent sent notices to the petitioner and the
affected employees (via registered mail) as well as submitted an Establishment Termination
Report to the DOLE.
On June 17, 2002, the parties agreed to submit before VA Diamonon the lone issue of whether
the retrenchment of the 117 union members is legal. On August 28, 2002, VA Diamonon
dismissed petitioners complaint for lack of merit, but without prejudice to the payment of
separation pay to the affected employees.

Upon an exhaustive examination of the evidence presented by the parties, the CA affirmed in
toto the VAs Decision and denied the substantive aspects of petitioners motion for
reconsideration; hence, this petition.

ISSUE: Whether or not members of petitioner union were illegally dismissed

HELD: No. CA decision sustained.

Labor Law

It is apparent from the records that this case involves a closure of business undertaking, not
retrenchment. The legal requirements and consequences of these two authorized causes in the
termination of employment are discernible.

While retrenchment and closure of a business establishment or undertaking are often used
interchangeably and are interrelated, they are actually two separate and independent authorized
causes for termination of employment.

Retrenchment is the reduction of personnel for the purpose of cutting down on costs of
operations in terms of salaries and wages resorted to by an employer because of losses in
operation of business occasioned by lack of work and considerable reduction in the volume of
business.

Closure of a business or undertaking due to business losses is the reversal of fortune of the
employer whereby there is a complete cessation of business operations to prevent further
financial drain upon an employer who cannot pay anymore his employees since business has
already stopped.

One of the prerogatives of management is the decision to close the entire establishment or to
close or abolish a department or section thereof for economic reasons, such as to minimize
expenses and reduce capitalization.

While the Labor Code provides for the payment of separation package in case of retrenchment to
prevent losses, it does not obligate the employer for the payment thereof if there is closure of
business due to serious losses.

For any bona fide reason, an employer can lawfully close shop anytime. Just as no law forces
anyone to go into business, no law can compel anybody to continue the same. It would be
stretching the intent and spirit of the law if a court interferes with management's prerogative to
close or cease its business operations just because the business is not suffering from any loss or
because of the desire to provide the workers continued employment.
While petitioner did not sufficiently establish substantial losses to justify closure of its F & B
Department on this ground, there is basis for its claim that the continued maintenance of said
department had become more expensive through the years. An evaluation of the financial figures
appearing in the audited financial statements prepared by the SGV & Co. shows that ninety-one
to ninety-six (91%-96%) percent of the actual revenues earned by the F & B Department
comprised the costs and expenses in maintaining the department. Petitioner's decision to place its
F & B operations under a concessionaire must then be respected, absent a showing of bad faith
on its part.

In fine, management's exercise of its prerogative to close a section, branch, department, plant or
shop will be upheld as long as it is done in good faith to advance the employer's interest and not
for the purpose of defeating or circumventing the rights of employees under the law or a valid
agreement.

Guided by the foregoing, the Court shall refuse to dwell on the issue of whether respondent was
in sound financial condition when it resolved to stop the operations of its F & B Department. As
stated, an employer can lawfully close shop anytime even if not due to serious business losses or
financial reverses. Furthermore, the issue would entail an inquiry into the factual veracity of the
evidence presented by the parties, the determination of which is not the SCs statutory function.
Indeed, petitioner is asking the SC to sift through the evidence on record and pass upon whether
respondent had, in truth and in fact, suffered from serious business losses or financial reverses.

That task, however, would be contrary to the well-settled principle that this Court is not a trier of
facts, and cannot re-examine and re-evaluate the probative value of the evidence presented to the
VA and the CA, which formed the basis of the questioned decision.

Further, there is nothing on record to indicate that the closure of respondents F & B Department
was made in bad faith. It was not motivated by any specific and clearly determinable union
activity of the employees; rather, it was truly dictated by economic necessity. Despite petitioners
allegations, no convincing and credible proofs were presented to establish the claim that such
closure qualifies as an act of union-busting and ULP. No evidence was shown that the closure is
stirred not by a desire to avoid further losses but to discourage the workers from organizing
themselves into a union for more effective negotiations with the management.

DENIED.

Case Digest: Shimizu Ph Contractors v. Callanta

G.R. No. 165923: September 29, 2010

SHIMIZU PHILIPPINES CONTRACTORS, INC. Petitioner, v. VIRGILIO P.

CALLANTA, Respondent.

DEL CASTILLO, J.:

FACTS:

Petitioner employed respondent on August 23, 1994 as Safety Officer assigned at petitioners
Yutaka-Giken Project and eventually as Project Administrator of petitioners Structural Steel
Division (SSD) in 1995.

In a Memorandum, respondent was informed that his services will be terminated effective July 9,
1997 due to the lack of any vacancy in other projects and the need to re-align the companys
personnel requirements brought about by the imperatives of maximum financial commitments.

Respondent then filed an illegal dismissal complaint against petitioner assailing his dismissal as
without any valid cause.

Petitioner advanced that respondents services was terminated in accordance with a valid
retrenchment program being implemented by the company. To prove its financial deficit,
petitioner presented financial statements for the years 1995 to 1997 as well as the Securities and
Exchange Commissions approval of petitioners application for a new paid-in capital amounting
to P330,000,000. When respondents Honda Project was completed, petitioner offered
respondent his separation pay which the latter refused to accept and instead filed an illegal
dismissal complaint.

Respondent claimed that petitioner failed to comply with the requirements called for by law
before implementing a retrenchment program thereby rendering it legally infirmed. First, it did
not comply with the provision of the Labor Code mandating the service of notice of
retrenchment. He pointed out that the notice sent to him never mentioned retrenchment but only
project completion as the cause of termination. Also, the notice sent to the Department of Labor
and Employment (DOLE) did not conform to the 30-day prior notice requirement. Second,
petitioner failed to use fair and reasonable criteria in determining which employees shall be
retrenched or retained. As shown in the termination report submitted to DOLE, he was the only
one dismissed out of 333 employees. Worse, junior and inexperienced employees were
appointed/assigned in his stead to new projects thus also ignoring seniority in hiring and firing
employees.

The Labor Arbiter rendered a Decision holding that respondent was validly retrenched. Upon
appeal, the NLRC upheld the ruling that there was valid ground for respondents termination but
modified the Labor Arbiters Decision by holding that petitioner violated respondents right to
procedural due process. The NLRC found that petitioner failed to comply with the 30-day prior
notice to the DOLE and that there is no proof that petitioner used fair and reasonable criteria in
the selection of employees to be retrenched.

Undaunted, respondent filed a petition for certiorari with the CA. The CA reversed and set aside
the NLRCs ruling. The CA opined that petitioner failed to prove that there were employees other
than respondent who were similarly dismissed due to retrenchment and that respondents alleged
replacements held much higher ranks and were more deserving employees. Moreover, there were
no proofs to sustain that petitioner used fair and reasonable criteria in determining which
employees to retrench.
ISSUES:

1. Whether or not the CA exceeded its jurisdiction when it reversed the factual findings of the
Labor Arbiter and the NLRC

2. Whether or not petitioner failed to observe fair and reasonable standards or criteria in
effecting the dismissal of respondent

LABOR LAW: The CA has jurisdiction to review the findings of NLRC

HELD:

At the outset, the power of the CA to review a decision of the NLRC in a petition for certiorari
under Rule 65 of the Rules of Court does not normally include an inquiry into the correctness of
the NLRCs evaluation of the evidence. However, under certain circumstances, the CA is
allowed to review the factual findings or the legal conclusions of the NLRC in order to determine
whether these findings are supported by the evidence presented and the conclusions derived
therefrom are accurately ascertained.

LABOR LAW: Requirements of a valid retrenchment

As an authorized cause for separation from service under Article 283 of the Labor Code,
retrenchment is a valid exercise of management prerogative subject to the strict requirements set
by jurisprudence:
(1) That the retrenchment is reasonably necessary and likely to prevent business losses which, if
already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only
expected, are reasonably imminent as perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the Department of
Labor and Employment at least one month prior to the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one month pay
or at least month pay for every year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees right to security of
tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed
and who would be retained among the employees, such as status, x x x efficiency, seniority,
physical fitness, age, and financial hardship for certain workers.
In implementing its retrenchment scheme, petitioner was constrained to streamline its operations
and to downsize its complements in a progressive manner in order not to jeopardize the
completion of its projects. Thus, several departments like the Civil Works Division, Electro-
mechanical Works Division and the Territorial Project Management Offices, among others, were
abolished in the early part of 1996 and thereafter the Structural Steel Division, of which
respondent was an Administrator. Respondent was among the last batch of employees who were
retrenched and by the end of year 1997, all of the employees of the Structural Steel Division
were severed from employment.
Respondent, in any of the pleadings filed by him, never refuted the foregoing facts. Respondents
argument that he was singled out for termination as allegedly shown in petitioners monthly
termination report for the month of July 1997 filed with the DOLE does not persuade this Court.
Standing alone, this document is not proof of the total number of retrenched employees or that
respondent was the only one retrenched. It merely serves as notice to DOLE of the names of
employees terminated/ retrenched only for the month of July. In other words, it cannot be
deemed as an evidence of the number of employees affected by the retrenchment program. Thus
we cannot conclude that no other employees were previously retrenched.

LABOR LAW: 30-day notice requirement is mandatory

However, although there was authorized cause to dismiss respondent from the service, we find
that petitioner did not comply with the 30-day notice requirement. Petitioner admitted that the
reports were submitted 21 days, in the case of the first notice, and 16 days, in the case of the
second notice, before the intended date of respondents dismissal.

The purpose of the one month prior notice rule is to give DOLE an opportunity to ascertain the
veracity of the cause of termination. Non-compliance with this rule clearly violates the
employees right to statutory due process.