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Elements of Relationship

G.R. Nos. 192084, September 14, 2011, Carpio

Bernarte and Guevarra aver that they were invited to join the PBA as referees and they were made to
sign contracts on a year-to-year basis. However, changes were made on the terms of their employment.
Bernarte received a letter advising him that his contract would not be renewed citing his unsatisfactory
performance on and off the court. Guevarra alleged that beginning February 2004, he was no longer
made to sign a contract. Respondents averred that complainants entered into two contracts of retainer
with the PBA in the year 2003 and after December 2003, PBA decided not to renew their contracts.

ISSUE: WON petitioner is an employee of the PBA, thus illegally dismissed.

RULING: No. To determine the existence of an employer- employee relationship, case law has
consistently applied the four-fold test, to wit: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee on
the means and methods by which the work is accomplished. The so-called "control test" is the most
important indicator of the presence or absence of an employer-employee relationship. In this case, PBA
admits repeatedly engaging petitioner's services, as shown in the retainer contracts. PBA pays petitioner
a retainer fee, exclusive of per diem or allowances, as stipulated in the retainer contract. PBA can
terminate the retainer contract for petitioner's violation of its terms and conditions.
We agree with respondents that once in the playing court, the referees exercise their own independent
judgment, based on the rules of the game, as to when and how a call or decision is to be made. The
referees decide whether an infraction was committed, and the PBA cannot overrule them once the
decision is made on the playing court. The referees are the only, absolute, and final authority on the
playing court. Respondents or any of the PBA officers cannot and do not determine which calls to make or
not to make and cannot control the referee when he blows the whistle because such authority exclusively
belongs to the referees. The very nature of petitioner's job of officiating a professional basketball game
undoubtedly calls for freedom of control by respondents.
The fact that PBA repeatedly hired petitioner does not by itself prove that petitioner is an employee of the
former. For a hired party to be considered an employee, the hiring party must have control over the
means and methods by which the hired party is to perform his work, which is absent in this case.


G.R. No. 200575, February 5, 2014, Mendoza

Cabiles was initially hired by Intel Phil. on April 16, 1997 as an Inventory Analyst. He was subsequently
promoted several times over the years and was also assigned at Intel Arizona and Intel Chengdu. He
later applied for a position at Intel Semiconductor Limited Hong Kong (Intel HK).
In a letter dated December 12, 2006, Cabiles was offered the position of Finance Manager by Intel HK.
Before accepting the offer, he inquired from Intel Phil., through an email, the consequences of accepting
the newly presented opportunity in Hong Kong, particularly his retirement benefits. He will celebrate his
10th year of service with Intel on April 16, 2007. However, he will be moving to Hong Kong as a local hire
starting February 1. On January 23, 2007, Intel Phil., through Penny Gabronino (Gabronino), stated that
he is not entitled to receive his entitlement benefit.

On January 31, 2007, Cabiles signed the job offer.8OCabiles executed a Release, Waiver and Quitclaim
(Waiver) in favor of Intel Phil. acknowledging receipt of P165,857.62 as full and complete settlement of all
benefits due him by reason of his separation from Intel Phil. On September 8, 2007, after seven (7)
months of employment, Cabiles resigned from Intel HK.

On August 18, 2009, Cabiles filed a complaint for non- payment of retirement benefits and for moral and
exemplary damages with the NLRC Regional Arbitration Branch-IV. He insisted that he was employed by
Intel for 10 years and 5 months from April 1997 to September 2007 a period which included his seven
(7) month stint with Intel HK. Thus, he believed he was qualified to avail of the benefits under the
companys retirement policy allowing an employee who served for 10 years or more to receive retirement
On March 18, 2010, the LA ordered Intel Phil. together with Grace Ong, Nida delos Santos, Gabronino,
and Pia Viloria, to pay Cabiles the amount of HKD 419,868.77 or its peso equivalent as retirement pay
with legal interest and attorneys fees. The LA held that Cabiles did not sever his employment with Intel
Phil. when he moved to Intel HK, similar to the instances when he was assigned at Intel Arizona and Intel

Aggrieved, Intel Phil. elevated the case to the CA via a petition for certiorari with application for a
Temporary Restraining Order (TRO) on April 5, 2011. The application for TRO was denied. Earlier, on
September 19, 2011, pending disposition of the petition before the CA, the NLRC issued a writ of
execution14 against Intel Phil. As ordered by the NLRC, Intel Phil. satisfied the judgment on December
13, 2011 by paying the amount ofP3,201,398.60 which included the applicable withholding taxes due and
paid to the Bureau of Internal Revenue. Cabiles received a net amount ofP2,485,337.35, covered by the
Bank of the Philippine Islands Managers Check No. 0000000806.16 By reason thereof, Intel Phil. filed on
December 21, 2011 a Supplement to the Petition for Certiorari17 praying, in addition to the reliefs sought
in the main, that the CA order the restitution of all the amounts paid by them pursuant to the NLRCs writ
of execution, dated September 19, 2011.

ISSUE: WON Cabiles had completed the required 10 year continuous service21 with Intel Phil., thus,
qualifying him for retirement benefits.


Resignation is the formal relinquishment of an office,24 the overt act of which is coupled with an intent to
renounce. This intent could be inferred from the acts of the employee before and after the alleged
resignation.25 In this case, Cabiles, while still on a temporary assignment in Intel Chengdu, was offered
by Intel HK the job of a Finance Manager. In contemplating whether to accept the offer, Cabiles wrote
Intel Phil. providing details and asked about the retirement benefits. Despite a non-favorable reply as to
his retirement concerns, Cabiles still accepted the offer of Intel HK.
His acceptance of the offer meant letting go of the retirement benefits he now claims as he was informed
through email correspondence that his 9.5 years of service with Intel Phil. would not be rounded off in his
favor. He, thus, placed himself in this position, as he chose to be employed in a company that would pay
him more than what he could earn in Chengdu or in the Philippines. The choice of staying with Intel Phil.
vis--vis a very attractive opportunity with Intel HK put him in a dilemma.
Cabiles views his employment in Hong Kong as an assignment or an extension of his employment with
Intel Phil. He cited as evidence the offer made to him as well as the letter, dated January 8, 2007,27 both
of which used the word "assignment" in reference to his engagement in Hong Kong as a clear indication
of the alleged continuation of his ties with Intel Phil. The foregoing arguments of Cabiles, in essence,
speak of the "theory of secondment."

The Court, however, is again not convinced. The continuity, existence or termination of an employer-
employee relationship in a typical secondment contract or any employment contract for that matter is
measured by the following yardsticks:1. the selection and engagement of the employee;2. the payment of
wages;. the power of dismissal; and4. the employers power to control the employees conduct.

As applied, all of the above benchmarks ceased upon Cabiles assumption of duties with Intel HK on
February 1, 2007. Intel HK became the new employer. It provided Cabiles his compensation. Cabiles then
became subject to Hong Kong labor laws, and necessarily, the rights appurtenant thereto, including
the right of Intel HK to fire him on available grounds. Lastly, Intel HK had control and supervision over
him as its new Finance Manager. Evidently, Intel Phil. no longer had any control over him. Hence,
Cabiles theory of secondment must fail.

What distinguishes Intel Chengdu and Intel Arizona from Intel HK is the lack of intervention of Intel Phil.
on the matter. In the two previous transfers, Intel Phil. remained as the principal employer while Cabiles
was on a temporary assignment. By virtue of which, it still assumed responsibility for the payment of
compensation and benefits due him. The assignment to Intel HK, on the other hand, was a permanent
transfer and Intel Phil. never participated in any way in the process of his employment there. It was
Cabiles himself who took the opportunity and the risk. If it were indeed similar to Intel Arizona and Intel
Chengdu assignments, Intel Philippines would have had a say in it. Petition granted.


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

Petitioners worked as merchandisers of P&G. They all individually signed employment contracts with
either Promm-Gem or SAPS for periods of more or less five months at a time.They were assigned at
different outlets, supermarkets and stores where they handled all the products of P&G. They received
their wages from Promm-Gem or SAPS. Subsequently, petitioners filed a complaint against P&G for
regularization, service incentive leave pay and other benefits with damages. The complaint was later
amendedto include the matter of their subsequent dismissal. The Labor Arbiter dismissed the complaint
for lack of merit and ruled that there was no employer-employee relationship between petitioners and
P&G. He found that the selection and engagement of the petitioners, the payment of their wages, the
power of dismissal and control with respect to the means and methods by which their work was
accomplished, were all done and exercised by Promm-Gem/SAPS. He further found that Promm-Gem
and SAPS were legitimate independent job contractors. On appeal to the NLRC, it affirmed the decision
of the LA.

ISSUE: Whether or not the respondent is the employer of the petitioner.

HELD: In order to determine whether P&G is the employer of petitioners, it is necessary to first determine
whether Promm-Gem and SAPS are labor-only contractors or legitimate job contractors. There is "labor-
only" contracting where the person supplying workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are directly related to the principal
business of such employer. The Court held that Promm-Gem cannot be regarded as labor-only contractor
but a legitimate independent contractor because the financial statement of Promm-Gem shows that it has
authorized capital stock of P1 million and a paid-in capital, or capital available for operations, of
P500,000.00 as of 1990.
On the other hand, the Articles of Incorporation of SAPS shows that it has a paid-in capital of only P31, 80
250.00. There is no other evidence presented to show how much its working capital and assets are.
Considering that SAPS has no substantial capital or investment and the workers it recruited are
performing activities which are directly related to the principal business of P&G, the court held that SAPS
is engaged in "labor-only contracting". The contractor is considered merely an agent of the principal
employer and the latter is responsible to the employees of the labor-only contractor as if such employees
had been directly employed by the principal employer.
Classes of Employees


G.R. No. 149985, May 5, 2006

In May 1990, respondent Rosalina Arceo (Arceo) applied for the position of telephone operator with
petitioner PLDT Tarlac Exchange. She, however, failed the pre-employment qualifying examination.
Having failed the test, Arceo requested PLDT to allow her to work at the latters office even without pay.
PLDT agreed and assigned her to its commercial section where she was made to perform various tasks
like photocopying documents, sorting out telephone bills and notices of disconnection, and other minor
assignments and activities. After two weeks, PLDT decided to pay her the minimum wage.

On February 15, 1991, PLDT saw no further need for Arceos services and decided to fire her but, through
the intervention of one employee, she was recommended for an on-the-job training on minor traffic work.
When she failed to assimilate traffic procedures, the company transferred her to auxiliary services, a
minor facility. Subsequently, Arceo took the pre-qualifying exams for the position of telephone operator
two more times but again failed in both attempts. Finally, on October 13, 1991, PLDT discharged Arceo
from employment. She then filed a case for illegal dismissal before the labor arbiter. The latter ruled in her
favor. Arceo was reinstated as casual employee with a minimum wage of P106 per day. On September 3,
1996 or more than three years after her reinstatement, Arceo filed a complaint for unfair labor practice,
underpayment of salary, underpayment of overtime pay, holiday pay, rest day pay and other monetary
claims. She alleged in her complaint that, since her reinstatement, she had yet to be regularized and had
yet to receive the benefits due to a regular employee. Labor arbiter ruled that Arceo was already qualified
to become a regular employee. NLRC affirmed. PLDT went to the CA via a petition for certiorari. CA also
affirmed and declared that,

It is doctrinaire that in determining what constitutes regular employment, what is considered [as] the
reasonable connection between the particular activity performed by the employee in relation to the usual
business or trade of the employer, i.e. if the work is usually necessary or desirable in the usual
business or trade of the employer. xxx And even granting the argument of petitioner that the nature of
Arceos work is casual or temporary, still she had been converted into a regular employee by virtue of the
proviso in the second paragraph of Article 280 for having worked with PLDT for more than one (1) year.

PLDT argues that while Article 280 of the Labor Code regularizes a casual employee who has rendered at
least one year of service (whether continuous or broken) the proviso is subject to the condition that the
employment subsists or the position still exists. Even if Arceo had rendered more than one year of service
as a casual employee, PLDT insisted that this fact alone would not automatically make her a regular
employee since her position had long been abolished. PLDT also argues that it would be an even greater
error if Arceo were to be regularized as a telephone operator since she repeatedly failed the qualifying
exams for that position.

ISSUE Is Arceo eligible to become a regular employee of PLDT


Yes. Under Art 280 of the LC, a regular employee is are necessary or desirable in the usual trade or
business of the employer or (2) a casual employee who has rendered at least one year of service,
whether continuous or broken, with respect to the activity in which he is employed.

Under the first criterion, respondent is qualified to be a regular employee. Her work, consisting mainly of
photocopying documents, sorting out telephone bills and disconnection notices, was certainly necessary
or desirable to the business of PLDT. But even if the contrary were true, the uncontested fact is that she
rendered service for more than one year as a casual employee. Hence, under the second criterion, she is
still eligible to become a regular employee. Petitioners argument that respondents position has
been abolished, if indeed true, does not preclude Arceos becoming a regular employee. The
order to reinstate her also included the alternative to reinstate her to a position equivalent thereto. Thus,
PLDT can still regularize her in an equivalent position.

Under Article 280, any employee who has rendered at least one year of service shall be considered a
regular employee with respect to the activity in which he is employed and his employment shall continue
while such activity exists. For PLDTs failure to show that the activity undertaken by Arceo has been
discontinued, we are constrained to confirm her regularization in that position.

No. 170388, September 04, 2013, Del Castillo

Colegio del Santisimo Rosario (CSR) hired respondent as a high school teacher on probationary basis for
the school years 1992-1993, 1993-19947 and 1994-1995.

On April 5, 1995, CSR, through Mofada, decided not to renew respondents services. Thus, on July 13,
1995, respondent filed a Complaint for illegal dismissal. He alleged that since he had served three
consecutive school years which is the maximum number of terms allowed for probationary employment,
he should be extended permanent employment. Citing paragraph 75 of the 1970 Manual of Regulations
for Private Schools (1970 Manual), respondent asserted that full- time teachers who have rendered three
(3) consecutive years of satisfactory services shall be considered permanent.

On the other hand, petitioners argued that respondent knew that his Teachers Contract for school year
1994- 1995 with CSR would expire on March 31, 1995. Accordingly, respondent was not dismissed but
his probationary contract merely expired and was not renewed. Petitioners also claimed that the three
years mentioned in paragraph 75 of the 1970 Manual refer to 36 months, not three school years. And
since respondent served for only three school years of 10 months each or 30 months, then he had not yet
served the three years or 36 months mentioned in paragraph 75 of the 1970 Manual.

Whether or not Rojo has acquired permanent status

Yes. The common practice is for the employer and the teacher to enter into a contract, effective for one
school year. At the end of the school year, the employer has the option not to renew the contract,
particularly considering the teachers performance.
If the contract is not renewed, the employment relationship terminates. If the contract is renewed, usually
for another school year, the probationary employment continues. Again, at the end of that period, the
parties may opt to renew or not to renew the contract. If renewed, this second renewal of the contract for
another school year would then be the last year since it would be the third school year of probationary
At the end of this third year, the employer may now decide whether to extend a permanent appointment to
the employee, primarily on the basis of the employee having met the reasonable standards of
competence and efficiency set by the employer. For the entire duration of this three-year period, the
teacher remains under probation.
Upon the expiration of his contract of employment, being simply on probation, he cannot automatically
claim security of tenure and compel the employer to renew his employment contract. It is when the yearly
contract is renewed for the third time that Section 93 of the manual becomes operative, and the teacher
then is entitled to regular or permanent employment status.
G.R. NO. 155679, Dec. 19, 2006, Carpio Morales

The labor sector staged a welga ng bayan to protest the accelerating prices of oil. Petitioner-unions, led
by their officers, herein petitioners,staged a work stoppage which lasted for several days, prompting
respondents to file on October 31, 1990 a petition to declare the work stoppage illegal for failure to
comply with procedural requirements.

(1) Is welga ng bayan an illegal strike?
(2) Was there an illegal lockout?
(3)Are union officers liable for blocking the free ingress to and egress of the company premises?


(1) Yes. Stoppage of work due to welga ng bayan is in the nature of a general strike, an extended
sympathy strike. It affects numerous employers including those who do not have a dispute with their
employees regarding their terms and conditions of employment.
Employees who have no labor dispute with their employer but who, on a day they are scheduled to work,
refuse to work and instead join a welga ng bayan commit an illegal work stoppage.
(2) No. If there was illegal lockout, why, indeed, did not petitioners file a protest with the management or a
complaint therefor against respondents? As the Labor Arbiter observed, [t]he inaction of [petitioners]
betrays the weakness of their contention for normally a locked- out union will immediately bring
management before the bar of justice.
(3) Yes. They violated Article 264(e) of the Labor Code which provides that [n]o person engaged in
picketing shall obstruct the free ingress to or egress from the employers premises for lawful purposes, or
obstruct public thoroughfares.
Petitioners, being union officers, should thus bear the consequences of their acts of knowingly
participating in an illegal strike, conformably with the third paragraph of Article 264 (a) of the Labor Code


G.R. Nos. 171618-19, March 20, 2009, Corona

Due to the adverse effects of the Asian economic crisis on the construction industry beginning 1997,
Jackbilt Industries, Inc. decided to temporarily stop its business. Jackbilt Employees Workers Union-
NAFLU- KMU immediately protested the temporary shutdown and contented that petitioner halted
production to avoid its duty to bargain collectively. The shutdown was allegedly motivated by anti-union
sentiments. Accordingly, on March 9, 1998, respondent went on strike. Its officers and members picketed
petitioners main gates and deliberately prevented persons and vehicles from going into and out of the
compound. On its July 17, 1998 decision, the NLRC found out that respondent prevented the free entry
into and exit of vehicles from petitioners compound.

ISSUE : Whether or not the filing of a petition with the labor arbiter to declare a strike illegal is a condition
sine qua non for the valid termination of employees who commit an illegal act in the course of such strike.


No. Article 264(e) of the Labor Code prohibits any person engaged in picketing from obstructing the free
ingress to and egress from the employers premises. Since respondent was found in the July 17, 1998
decision of the NLRC to have prevented the free entry into and exit of vehicles from petitioners
compound, respondents officers and employees clearly committed illegal acts in the course of the March
9, 1998 strike. The use of unlawful means in the course of a strike renders such strike illegal. Therefore,
pursuant to the principle of conclusiveness of judgment, the March 9, 1998 strike was ipso facto illegal.
The filing of a petition to declare the strike illegal was thus unnecessary.
Dongon v Rapid Movers
G.R. No. 163431, August 28, 2013, Bersamin

Dongon is a truck helper leadman in Rapid Movers and Forwarders. Dongons area of assignment is in
Tanduay Otis Warehouse where he and his driver Villaruz tried to get the goods to be distributed to
clients. To get the clearance for the release of goods, Dongon lent his ID card to Villaruz. But, the security
guard noticed the misrepresentation, accosted them, and reported the matter to the management of
Tanduay. Dongon was dismissed from work due to willful disobedience. He now claims that he was
illegally dismissed from work.
He argues that the dismissal as a penalty is too harsh and disproportionate to his supposed violation.
Said violation was only his first infraction and was even committed in good faith without malice. Rapid
Movers and Forwarders argues that they rightly exercised their power to dismiss petitioner on the ground
of violation of the companys manual of discipline.
The LA dismissed the complaint. NLRC reversed the LA. The CA affirmed the decision of the NLRC.

ISSUE: Was the dismissal of Dongon legal?

NO. Dongon was illegally dismissed. The SC held that the disobedience attributed to Dongon could not
be justly characterized as willful within the contemplation of the law. Wilfullness must be attended by a
wrongful and perverse mental attitude rendering the eomployees act inconsistent with proper
subordination. Dongon did not benefit from it nor was the business of respondent prejudiced. The Court
believed Dongons explanation that his deed had been
intended to benefit Rapid Movers and Forwarders. The SC also took into consideration the fact that
Dongon had served respondent for seven long unblemished years, thus, arriving at a conclusion that his
dismissal was plainly unwarranted.
The SC reiterated that an employer is given wide latitude of discretion in managing its own affairs. But the
exercise of management prerogative is not limitless, but hemmed in by good faith and due consideration
of the rights of employees.


G.R. No. 177937, January 19, 2011, Nachura
Respondent was a probationary employee of petitioner Robinsons Galleria/Robinsons Supermarket
Corporation (petitioner Supermarket) for a period of five (5) months. Two weeks after she was hired,
respondent reported to her supervisor the loss of cash amounting to Twenty Thousand Two Hundred
Ninety- Nine Pesos (P20,299.00) which she had placed inside the company locker.An information for
Qualified Theft was filed against her.Respondent filed a complaint for illegal dismissal and damages, and
was put in prison for 2 weeks. On March 12, 1998, petitioners sent to respondent by mail a notice of
termination and/or notice of expiration of probationary employment dated
March 9, 1998.In dismissing the complaint for illegal dismissal, the Labor Arbiter ratiocinated that at the
time respondent filed the complaint for illegal dismissal, she was not yet dismissed by petitioners.

Whether respondent was constructively and illegally dismissed by petitioner?

Yes. There is probationary employment when the employee upon his engagement is made to undergo a
trial period during which the employer determines his fitness to qualify for regular employment based on
reasonable standards made known to him at the time of engagement. A probationary employee, like a
regular employee, enjoys security of tenure. However, in cases of probationary employment, aside from
just or authorized causes of termination, an additional ground is provided under Article 281 of the Labor
Code, i.e., the probationary employee may also be terminated for failure to qualify as a regular employee
in accordance with reasonable standards made known by the employer to the employee at the time of the
engagement. In the instant case, based on the facts on record, petitioners failed to accord respondent
substantive and procedural due process. The haphazard manner in the investigation of the missing cash,
which was left to the determination of the police authorities and the Prosecutors Office, left respondent
with no choice but to cry foul. Administrative investigation was not conducted by petitioner Supermarket.
On the same day that the missing money was reported by respondent to her immediate superior, the
company already pre-judged her guilt without proper investigation, and instantly reported her to the police
as the suspected thief, which resulted in her languishing in jail for two weeks.
As correctly pointed out by the NLRC, the due process requirements under the Labor Code are
mandatory and may not be supplanted by police investigation or court proceedings. The criminal aspect
of the case is considered independent of the administrative aspect. Thus, employers should not rely
solely on the findings of the Prosecutors Office. They are mandated to conduct their own separate
investigation, and to accord the employee every opportunity to defend himself. Furthermore, respondent
was not represented by counsel when she was strip-searched inside the company premises or during the
police investigation, and in the preliminary investigation before the Prosecutors Office.
Respondent was constructively dismissed by petitioner Supermarket effective October 30, 1997. It was
unreasonable for petitioners to charge her with abandonment for not reporting for work upon her release
in jail. It would be the height of callousness to expect her to return to work after suffering in jail for two
weeks. Work had been rendered unreasonable, unlikely, and definitely impossible, considering the
treatment that was accorded respondent by petitioners.


G.R. No. 167727, July 30, 2007, Tinga

Petitioner Crayons Processing, Inc. (Crayons) employed respondent Felipe Pula (Pula) as a Preparation
Machine Operator beginning June 1993. On 27 November 1999, Pula, then aged 34, suffered a heart
attack and was rushed to the hospital, where he was confined for around a week. Pulas wife duly notified
Crayons of her husbands medical condition. Subsequently, on 25 February 2000, Pula underwent an
Angiogram Test at the Philippine Heart Center under the supervision of a Dr. Recto, who advised him to
take a two-week leave from work. Following the angiogram procedure, respondent was certified as fit to
work by Dr. Recto. On 11 April 2000, Pula returned to work, but 13 days later, he was taken to the
company clinic after complaining of dizziness. Diagnosed as having suffered a relapse, he was advised
by his physician to take a leave of absence from work for one (1) month. Pula reported back for work on
13 June 2000, armed with a certification from his physician that he was fit to work. However, Pula claimed
that he was not given any post or assignment, but instead, on 20 June 2000, he was asked to resign with
an offer from Crayons of P12, 000 as financial assistance. Pula refused the offer and instead filed a
complaint for illegal dismissal.

ISSUE:Whether or not the dismissal without certification issued by a competent public health authority
was proper


No. For a dismissal on the ground of disease to be considered valid, two requisites must concur: (a) the
employee must be suffering from a disease which cannot be cured within six months and his continued
employment is prohibited by law or prejudicial to his health or to the health of his co-employees; and (b) a
certification to that effect must be issued by a competent public health authority. The burden falls upon the
employer to establish these requisites, and in the absence of such certification, the dismissal must
necessarily be declared illegal.

As succinctly stressed in Tan v. NLRC, it is only where there is a prior certification from a competent
public authority that the disease afflicting the employee sought to be dismissed is of such nature or at
such stage that it cannot be cured within six (6) months even with proper medical treatment that the latter
could be validly terminated from his job.

Without the required certification, the characterization or even diagnosis of the disease would primarily be
shaped according to the interests of the parties rather than the studied analysis of the appropriate
medical professionals. The requirement of a medical certificate under Article 284 cannot be dispensed
with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity
or extent of the employee's illness and thus defeat the public policy in the protection of labor.
The NLRCs conclusion that no such certification was required since Pula had effectively been absented
due to illness for more than six (6) months is unsupported by jurisprudence and plainly contrary to the
language of the Implementing Rules. The indefensibility of such conclusion is further heightened by the
fact that Pula was able to obtain two different medical certifications attesting to his fitness to resume work.
Assuming that the burden did fall on Pula to establish that he was fit to return to work, those two medical
certifications stand as incontestable in the absence of contrary evidence of similar nature from Crayons.
Then again, the burden lies solely on Crayons to prove that Pula was unfit to return to work. Even absent
the certifications favorable to Pula, Crayons would still be unable to justify his dismissal on the ground of
ill health or disease, without the necessary certificate from a competent public health authority.

Security of Tenure


G.R. No. 159919, August 8, 2007, Austria Martinez

Petitioner is engaged in the distribution and/or supply of confectioneries to various retail establishments
within the Philippines. Emilio Caparoso and Joeve P. Quindipan (respondents) were employed as its
deliverymen until they were terminated on October 8, 1999.

Respondents filed a complaint for illegal dismissal against petitioner with the National Labor Relations
Commission (NLRC). Petitioner denied that respondents were illegally dismissed, alleging that they
were employed on a month-to-month basis and that they were terminated as a result of the expiration of
their contracts of employment.

The Labor Arbiter issued a Writ of Execution directing the Sheriff to effect respondent's reinstatement.
Consistent with its stand that physical reinstatement was no longer possible, petitioner reinstated
respondents into its payroll, conditioned on the NLRC's ruling on its motion to be allowed to pay
separation pay in lieu of reinstatement.

Article 223 (3rd paragraph) of the Labor Code, as amended by Section 12 of Republic Act (R.A.) No.
6715,34 and Section 2 of the NLRC Interim Rules on Appeals under R.A. No. 6715, Amending the Labor
Code, provide that an order of reinstatement by the Labor Arbiter is immediately executory even pending

In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter
reinstating a dismissed or separated employee, the law itself has laid down a compassionate policy
which, once more, vivifies and enhances the provisions of the 1987 Constitution on labor and the working

Payment of separation pay as a substitute for reinstatement is allowed only under exceptional
circumstances, viz: (1) when reasons exist which are not attributable to the fault or are beyond the control
of the employer, such as when the employer -- who is in severe financial strait, has suffered serious
business losses, and has ceased operations -- implements retrenchment, or abolishes the position due to
the installation of labor-saving devices; (2) when the illegally dismissed employee has contracted a
disease and his reinstatement will endanger the safety of his co-employees; or, (3) where a strained
relationship exists between the employer and the dismissed employee.

In this case, petitioner sought to justify the payment of separation pay instead of reinstatement on the
basis of its implementation of a retrenchment program for "serious and persistent financial
difficulties."However, petitioner only submitted as evidence the notice of its intention to implement a
retrenchment program, which it sent to the Department of Labor and Employment on July 25, 2000. It did
not submit its financial statements duly audited by an independent external auditor. Its failure to do so
seriously casts doubt on its claim of losses and insistence on the payment of separation pay.


G.R. No. 169191, June 1, 2011, Peralta

Doctrine: Since petitioner was not terminated from his employment and, instead, is deemed to have
resigned therefrom, he is not entitled to separation pay under the provisions of the Labor Code.
Respondent averred that petitioner was hired as machine operator from March 1993 until he stopped
working sometime in February 1999 on the ground that he was suffering from illness; after his recovery,
petitioner was directed to report for work, but he never showed up. Respondent claimed that he never
terminated the services of petitioner and that during their mandatory conference, he even told the latter
that he could go back to work anytime but petitioner clearly manifested that he was no longer interested in
returning to work and instead asked for separation pay.

ISSUE: Whether or not petitioner is entitled to Separation Pay?


NO. A plain reading of the provision clearly presupposes that it is the employer who terminates the
services of the employee found to be suffering from any disease and whose continued employment is
prohibited by law or is prejudicial to his health as well as to the health of his co-employees. It does not
contemplate a situation where it is the employee who severs his or her employment ties.

Dispute Settlement

Milan v NLRC(February 4, 2015)

PETITIONERS are employees of respondent Solid Mills, Inc. They are represented by the National
Federation of Labor Unions (NAFLU), their collective bargaining agent. As Solid Mills employees, they
and their families were allowed to occupy SMI Village, a property owned by Solid Mills. In September
2003, petitioners were informed that effective Oct. 10, 2003, Solid Mills would cease its operations due to
serious business losses. NAFLU recognized Solid Mills closure due to serious business losses in the
memorandum of agreement dated Sept. 1, 2003. The memorandum of agreement provided for Solid Mills
grant of separation pay less accountabilities, accrued sick leave benefits, vacation leave benefits, and
13th month pay to the employees. Later, Solid Mills sent petitioners individual notices to vacate SMI
Village. They were made to sign a memorandum of agreement with release and quitclaim before their
benefits would be released. Petitioners refused to sign the documents and instead filed complaints before
the Labor Arbiter alleging non-payment of their benefits. In defense, Solid Mills argued that petitioners
complaint was premature because they had not vacated its property. Does this defense find merit?

Ruling: Yes. Accountability, in its ordinary sense, means obligation or debt. The ordinary meaning of the
term accountability does not limit the definition of accountability to those incurred in the worksite. As
long as the debt or obligation was incurred by virtue of the employer-employee relationship, generally, it
shall be included in the employees accountabilities that are subject to clearance procedures. It may be
true that not all employees enjoyed the privilege of staying in respondent Solid Mills property. However,
this alone does not imply that this privilege when enjoyed was not a result of the employer-employee
relationship. Those who did avail of the privilege were employees of respondent Solid Mills. Petitioners
possession should, therefore, be included in the term accountability. Accountabilities of employees are
personal. They need not be uniform among all employees in order to be included in accountabilities
incurred by virtue of an employer-employee relationship. Petitioners do not categorically deny respondent
Solid Mills ownership of the property, and they do not claim superior right to it. What can be gathered
from the findings of the Labor Arbiter, National Labor Relations Commission, and the Court of Appeals is
that respondent Solid Mills allowed the use of its property for the benefit of petitioners as its employees.
Petitioners were merely allowed to possess and use it out of respondent Solid Mills liberality. The
employer may, therefore, demand the property at will. The return of the propertys possession became an
obligation or liability on the part of the employees when the employer-employee relationship ceased.
Thus, respondent Solid Mills has the right to withhold petitioners wages and benefits because of this
existing debt or liability. The law does not sanction a situation where employees who do not even assert
any claim over the employers property are allowed to take all the benefits out of their employment while
they simultaneously withhold possession of their employers property for no rightful reason. x x x
Withholding of payment by the employer does not mean that the employer may renege on its obligation to
pay employees their wages, termination payments, and due benefits. The employees benefits are also
not being reduced. It is only subjected to the condition that the employees return properties properly
belonging to the employer. This is only consistent with the equitable principle that no one shall be
unjustly enriched or benefited at the expense of another.

Philippine Electric Corp. v CA(December 10,2014)

PHILEC is a domestic corporation engaged in the manufacture and repairs of high voltage transformers.
Among PWU members were selected for promotion, therefore ordering them to undergo training,
eventually shall receive allowance until the training is completed. PWU is a legitimate labor organization
and the exclusive bargaining representative of PHILECs rank and file employees. PHILEC and its rank
and file employees were governed by CBA providing for the steps in increasing the employees basic
salary in case of promotion. PWU members claimed the schedule of training allowance did not conform
to Article X of their CBA. PWU and PHILEC decided to settle their grievance to voluntary arbitration.
PHILEC contends that they applied Modified SGV pay grades to avoid salary distortion. However,
Voluntary Arbitrator held that PHILEC violated its CBA with PWU, therefore ordering the PHILEC to pay
the PWU members allowance based on their CBA. PHILEC filed a petition for certiorari on CA, alleging
the Voluntary Arbitrator gravely abused its discretion in rendering his decision, but the CA affirmed the
decision of Voluntary Arbitrator. PHILEC filed its petition before the SC for review on certiorari insisting
that they did not violate their CBA with PWU.

ISSUE: Whether the voluntary arbitrator gravely abuse its discretion in directing PHILEC to pay training
allowance based on CBA with PWU?


No, The VA did not gravely abuse its discretion. The VA correctly awarded training allowances based on
the amounts and formula of the CBA. A CBA is a contract executed upon the request of either the
employer or the exclusive bargaining representative of the employees incorporating the agreement
reached after the negotiations with respect to wages, hours of work and all other terms and conditions of
employment, including proposals for adjusting any grievances or questions arising under such
agreement. A CBA being a contract its provisions constitute the law between the parties and must be
complied with in good faith. Therefore, the allowance of the members of the PWU must be computed
based on Article X of their CBA. Moreover, PHILEC allegedly applied the Modified SGV pay grade scale
to prevent any salary distortion within PHILECs enterprise. This, however, does not justify PHILECs non
compliance with the CBA. This pay grade scale is not provided in the CBA. It could have invoked Art.252
of the Labor Code, to incorporate the Modified SGV pay grade scale on its CBA with PWU. But it did not,
Therefore, PHILEC cannot insist on the Modified SGV pay grade scales application.