LABOR CASES FEBRUARY, 2009

JANUARY, 2014
January 2014 Philippine Supreme Court
Decisions on Labor Law
Posted on February 21, 2014 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law

Here are select January 2014 rulings of the Supreme Court of the Philippines on labor law:

Backwages; when awarded. As a general rule, backwages are granted to indemnify a dismissed employee for his
loss of earnings during the whole period that he is out of his job. Considering that an illegally dismissed employee
is not deemed to have left his employment, he is entitled to all the rights and privileges that accrue to him from
the employment. The grant of backwages to him is in furtherance and effectuation of the public objectives of the
Labor Code, and is in the nature of a command to the employer to make a public reparation for dismissing the
employee in violation of the Labor Code.
The Court held that the respondents are not entitled to the payment of backwages. The Court, citing G&S
Transport Corporation v. Infante (G. R. No. 160303, September 13, 2007) stated that the principle of a fair
days wage for a fair days labor remains as the basic factor in determining the award thereof. An exception to
the rule would be if the laborer was able, willing and ready to work but was illegally locked out, suspended or
dismissed or otherwise illegally prevented from working. It is, however, required, for this exception to apply,
that the strike be legal, a situation which does not obtain in the case at bar. Visayas Community Medical Center
(VCMC) formerly known as Metro Cebu Community Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156,
January 15, 2014
Dismissal; burden of proof on employer. The burden is on the employer to prove that the termination was for
valid cause. Unsubstantiated accusations or baseless conclusions of the employer are insufficient legal
justifications to dismiss an employee. The unflinching rule in illegal dismissal cases is that the employer bears
the burden of proof.
One of CCBPIs policies requires that, on a daily basis, CCBPI Salesmen/Account Specialists must account for
their sales/collections and obtain clearance from the company Cashier before they are allowed to leave company
premises at the end of their shift and report for work the next day. If there is a shortage/failure to account, the
concerned Salesmen/Account Specialist is not allowed to leave the company premises until he settles the same.
In addition, shortages are deducted from the employees salaries. If CCBPI expects to proceed with its case
against petitioner, it should have negated this policy, for its existence and application are inextricably tied to
CCBPIs accusations against petitioner. In the first place, as petitioners employer, upon it lay the burden of
proving by convincing evidence that he was dismissed for cause. If petitioner continued to work until June 2004,
this meant that he committed no infraction, going by this company policy; it could also mean that any infraction
or shortage/non-remittance incurred by petitioner has been duly settled. Respondents decision to ignore this
issue generates the belief that petitioner is telling the truth, and that the alleged infractions are fabricated, or have
been forgiven. Coupled with Macatangays statement which remains equally unrefuted that the charges
against petitioner are a scheme by local CCBPI management to cover up problems in the Naga City Plant, the
conclusion is indeed telling that petitioner is being wrongfully made to account. Jonas Michael R. Garza v.
Coca-Cola Bottlers Phils., Inc., et al.,G.R. No. 180972. January 20, 2014.
Embezzlement; failure to remit collections. The irregularity attributed to petitioner with regard to the Asanza
account should fail as well. To be sure, Asanza herself confirmed that she did not make any payment in cash or
check of P8,160.00 covering the October 15, 2003 delivery for which petitioner is being held to account. This
being the case, petitioner could not be charged with embezzlement for failure to remit funds which he has not
collected. There was nothing to embezzle or remit because the customer made no payment yet. It may appear
from Official Receipt No. 303203 issued to Asanza that the October 15 delivery of products to her has been paid;
but as admitted by her, she has not paid for the said delivered products. The reason for petitioners issuance of
said official receipt to Asanza is the latters concurrent promise that she would immediately issue the check
covering the said amount, which she failed to do. Jonas Michael R. Garza v. Coca-Cola Bottlers Phils., Inc., et
al.,G.R. No. 180972. January 20, 2014
Grave abuse of discretion; concept of. Having established through substantial evidence that respondents injury
was self-inflicted and, hence, not compensable pursuant to Section 20 (D) of the 1996 POEA-SEC, no grave
abuse of discretion can be imputed against the NLRC in upholding LAs decision to dismiss respondents
complaint for disability benefits. It is well-settled that an act of a court or tribunal can only be considered to be
tainted with grave abuse of discretion when such act is done in a capricious or whimsical exercise of judgment
as is equivalent to lack of jurisdiction. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or
Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014
Illegal strike and illegal acts during the strike; distinction between union members and union officers in
determining when they lose their employment status. The Supreme Court stressed that the law makes a
distinction between union members and union officers. A union member who merely participates in an illegal
strike may not be terminated from employment. It is only when he commits illegal acts during a strike that he
may be declared to have lost employment status. In contrast, a union officer may be terminated from employment
for knowingly participating in an illegal strike or participates in the commission of illegal acts during a strike.
The law grants the employer the option of declaring a union officer who participated in an illegal strike as having
lost his employment. It possesses the right and prerogative to terminate the union officers from service.
NAMA-MCCH-NFL is not a legitimate labor organization, thus, the strike staged by its leaders and members
was declared illegal. The union leaders who conducted the illegal strike despite knowledge that NAMA-MCCH-
NFL is not a duly registered labor union were declared to have been validly terminated by petitioner. However,
as to the respondents who were mere union members, it was not shown that they committed any illegal act during
the strike. The Labor Arbiter and the NLRC were one in finding that respondents actively supported the
concerted protest activities, signed the collective reply of union members manifesting that they launched the
mass actions to protest managements refusal to negotiate a new CBA, refused to appear in the investigations
scheduled by petitioner because it was the unions stand that they would only attend these investigations as a
group, and failed to heed petitioners final directive for them to desist from further taking part in the illegal
strike. The CA, on the other hand, found that respondents participation in the strike was limited to the wearing
of armbands. Since an ordinary striking worker cannot be dismissed for such mere participation in the illegal
strike, the CA correctly ruled that respondents were illegally dismissed. However, the CA erred in awarding
respondents full back wages and ordering their reinstatement despite the prevailing circumstances. Visayas
Community Medical Center (VCMC) formerly known as Metro Cebu Commnunity Hospital (MCCH) v. Erma
Yballe, et al.,G.R. No. 196156, January 15, 2014
Labor law; kinds of employment; casual employment; requisites. Casual employment, the third kind of
employment arrangement, refers to any other employment arrangement that does not fall under any of the first
two categories, i.e., regular or project/seasonal. Universal Robina Sugar Milling Corporation and Rene
Cabati, G.R. No. 186439. January 15, 2014.
Labor law; kinds of employment; fixed term employment; requisites. The Labor Code does not mention another
employment arrangement contractual or fixed term employment (or employment for a term) which, if not
for the fixed term, should fall under the category of regular employment in view of the nature of the employees
engagement, which is to perform an activity usually necessary or desirable in the employers business.
In Brent School, Inc. v. Zamora (G.R. No. L-48494, February 5, 1990), the Court, for the first time,
recognized and resolved the anomaly created by a narrow and literal interpretation of Article 280 of the
Labor Code that appears to restrict the employees right to freely stipulate with his employer on the duration of
his engagement. In this case, the Court upheld the validity of the fixed-term
employment agreed upon by the employer, Brent School, Inc., and the employee, Dorotio Alegre, declaring
that the restrictive clause in Article 280 should be construed to refer to the substantive evil that the Code
itself x x x singled out: agreements entered into precisely to circumvent security of tenure. It should have no
application to instances where [the] fixed period of employment was agreed upon knowingly and voluntarily
by the parties x x x absent any x x x circumstances vitiating [the employees] consent, or where [the facts
satisfactorily show] that the employer and [the] employee dealt with each other on more or less equal terms[.]
The indispensability or desirability of the activity performed by the employee will not preclude the parties from
entering into an otherwise valid fixed term employment agreement; a definite period of employment does not
essentially contradict the nature of the employees duties as necessary and desirable to the usual business or trade
of the employer.

Nevertheless, where the circumstances evidently show that the

employer imposed the period precisely to preclude the employee from acquiring tenurial security, the law
and this Court will not hesitate to strike down or disregard the period as contrary to public policy, morals, etc.
In such a case, the general restrictive rule under Article 280 of the Labor Code will apply and the employee shall
be deemed regular. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January
15, 2014.
Labor law; kinds of employment; nature of the employment depends on the nature of the activities to be
performed by the employee. The nature of the employment does not depend solely on the will or word of the
employer or on the procedure for hiring and the manner of designating the employee. Rather, the nature of the
employment depends on the nature of the activities to be performed by the employee, taking into account the
nature of the employers business, the duration and scope of work to be done, and, in some cases, even the length
of time of the performance and its continued existence. Universal Robina Sugar Milling Corporation and Rene
Cabati, G.R. No. 186439. January 15, 2014.
Labor law; kinds of employment; project employment; requisites; length of time not
controlling. A project employment, on the other hand, contemplates on arrangement whereby the
employment has been fixed for a specific project or undertaking whose completion or termination has been
determined at the time of the engagement of the employee[.] Two requirements, therefore, clearly need to be
satisfied to remove the engagement from the presumption of regularity of employment, namely: (1) designation
of a specific project or undertaking for which the employee is hired; and (2) clear determination of the completion
or termination of the project at the time of the employees engagement. The services of the project employees
are legally and automatically terminated upon the end or completion of the project as the employees services
are coterminous with the project. Unlike in a regular employment under Article 280 of the Labor Code, however,
the length of time of the asserted project employees engagement is not controlling as the employment may,
in fact, last for more than a year, depending on the needs or circumstances of the project. Nevertheless, this
length of time (or the continuous rehiring of the employee even after the cessation of the project) may serve as
a badge of regular employment when the activities performed by the purported project employee are necessary
and indispensable to the usual business or trade of the employer. In this latter case, the law will regard the
arrangement as regular employment. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No.
186439. January 15, 2014.
Labor law; kinds of employment; regular employment; requisites. Article 280 of the Labor Code provides for
three kinds of employment arrangements, namely: regular, project/seasonal and casual. Regular employment
refers to that arrangement whereby the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer[.] Under this definition, the primary
standard that determines regular employment is the reasonable connection between the particular activity
performed by the employee and the usual business or trade of the
employer; the emphasis is on the necessity or desirability of the employees activity. Thus, when the
employee performs activities considered necessary and desirable to the overall business scheme of the employer,
the law regards the employee as regular.
By way of an exception, paragraph 2, Article 280 of the Labor Code also considers as regular, a casual
employment arrangement when the casual employees engagement is made to last for at least one year, whether
the service is continuous or broken. The controlling test in this arrangement is the length of time during which
the employee is engaged. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439.
January 15, 2014.
Labor law; kinds of employment; seasonal employment; requisites.
Seasonal employment operates much in the same way as project employment, albeit it involves work or
service that is seasonal in nature or lasting for the duration of the season. As with project employment,
although the seasonal employment arrangement involves work that is seasonal or periodic in nature, the
employment itself is not automatically considered seasonal so as to prevent the employee from attaining regular
status. To exclude the asserted seasonal employee from those classified as regular employees, the employer
must show that: (1) the employee must be performing work or services that are seasonal in nature; and (2) he
had been employed for the duration of the season. Hence, when the seasonal workers are continuously and
repeatedly hired to perform the same tasks or activities for several seasons or even after the cessation of the
season, this length of time may likewise serve as badge of regular employment. In fact, even though denominated
as seasonal workers, if these workers are called to work from time to time and are only temporarily laid off
during the off-season, the law does not consider them separated from the service during the off-season period.
The law simply considers these seasonal workers on leave until re-employed. Universal Robina Sugar Milling
Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.
Overseas employment; that the entitlement of seamen on overseas work to disability benefits is a matter
governed, not only by medical findings, but by law and by contract. With respect to the applicable rules, it is
doctrinal that the entitlement of seamen on overseas work to disability benefits is a matter governed, not only
by medical findings, but by law and by contract. The material statutory provisions are Articles 191 to 193 under
Chapter VI (Disability Benefits) of the Labor Code, in relation [to] Rule X of the Rules and Regulations
Implementing Book IV of the Labor Code. By contract, the POEA-SEC, as provided under Department Order
No. 4, series of 2000 of the Department of Labor and Employment, and the parties Collective Bargaining
Agreement bind the seaman and his employer to each other.
In the foregoing light, the Court observes that respondent executed his contract of employment on July 17, 2000,
incorporating therein the terms and conditions of the 2000 POEA-SEC which took effect on June 25, 2000.
However, since the implementation of the provisions of the foregoing 2000 POEA-SEC was temporarily
suspended by the Court on September 11, 2000, particularly Section 20, paragraphs (A), (B), and (D) thereof,
and was lifted only on June 5, 2002, through POEA Memorandum Circular No. 2, series of 2002, the
determination of respondents entitlement to the disability benefits should be resolved under the provisions of
the 1996 POEA-SEC as it was, effectively, the governing circular at the time respondents employment contract
was executed. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation
Limited v. Alexander L. Moradas,G.R. No., January 15, 2014
Payment of separation pay as alternative relief for union members who were dismissed for having participated
in an illegal strike is in lieu of reinstatement; circumstances when applicable. The alternative relief for union
members who were dismissed for having participated in an illegal strike is the payment of separation pay in lieu
of reinstatement under the following circumstances: (a) when reinstatement can no longer be effected in view of
the passage of a long period of time or because of the realities of the situation; (b) reinstatement is inimical to
the employers interest; (c) reinstatement is no longer feasible; (d) reinstatement does not serve the best interests
of the parties involved; (e) the employer is prejudiced by the workers continued employment; (f) facts that make
execution unjust or inequitable have supervened; or (g) strained relations between the employer and employee.
The Court ruled that the grant of separation pay to respondents is the appropriate relief under the circumstances
considering that 15 years had lapsed from the onset of this labor dispute, and in view of strained relations that
ensued, in addition to the reality of replacements already hired by the hospital which had apparently recovered
from its huge losses, and with many of the petitioners either employed elsewhere, already old and sickly, or
otherwise incapacitated. Visayas Community Medical Center (VCMC) formerly known as Metro Cebu
Commnunity Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156, January 15, 2014
Rule 45; only questions of law are allowed in a petition for review on certiorari. It is a settled rule in this
jurisdiction that only questions of law are allowed in a petition for review on certiorari. The Courts power of
review in a Rule 45 petition is limited to resolving matters pertaining to any perceived legal errors, which the
CA may have committed in issuing the assailed decision. In reviewing the legal correctness of the CAs Rule 65
decision in a labor case, the Court examines the CA decision in the context that it determined whether or not
there is grave abuse of discretion in the NLRC decision subject of its review and not on the basis of whether the
NLRC decision on the merits of the case was correct. Universal Robina Sugar Milling Corporation and Rene
Cabati, G.R. No. 186439. January 15, 2014.
Rule 45; the Courts jurisdiction in a Rule 45 petition is limited to the review of pure questions of law; exceptions.
The Courts jurisdiction in cases brought before it from the CA via Rule 45 of the Rules of Court is generally
limited to reviewing errors of law. The Court is not the proper venue to consider a factual issue as it is not a trier
of facts. This rule, however, is not ironclad and a departure therefrom may be warranted where the findings of
fact of the CA are contrary to the findings and conclusions of the NLRC and LA, as in this case. In this regard,
there is therefore a need to review the records to determine which of them should be preferred as more
conformable to evidentiary facts. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient
Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014.
Section 20 (B) of the 1996 POEA-SEC; an employer shall be liable for the injury or illness suffered by a seafarer
during the term of his contract; exception. The prevailing rule under Section 20 (B) of the 1996 POEA-SEC on
compensation and benefits for injury or illness was that an employer shall be liable for the injury or illness
suffered by a seafarer during the term of his contract. To be compensable, the injury or illness must be proven
to have been contracted during the term of the contract. However, the employer may be exempt from liability if
he can successfully prove that the cause of the seamans injury was directly attributable to his deliberate or
willful act as provided under Section 20 (D) thereof, to wit:
D. No compensation shall be payable in respect of any injury, incapacity, disability or death of the seafarer
resulting from his willful or criminal act, provided however, that the employer can prove that such injury,
incapacity, disability or death is directly attributable to seafarer.

Hence, the onus probandi falls on the petitioners herein to establish or substantiate their claim that the
respondents injury was caused by his willful act with the requisite quantum of evidence. INC Shipmanagement,
Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No.,
January 15, 2014
Substantial evidence; concept of. In labor cases, as in other administrative proceedings, only substantial evidence
or such relevant evidence as a reasonable mind might accept as sufficient to support a conclusion is required. To
note, considering that substantial evidence is an evidentiary threshold, the Court, on exceptional cases, may
assess the factual determinations made by the NLRC in a particular case.
The Court ruled that NLRC had cogent legal bases to conclude that petitioners have successfully discharged the
burden of proving by substantial evidence that respondents injury was directly attributable to himself. Records
bear out circumstances which all lead to the reasonable conclusion that respondent was responsible for the
flooding and burning incidents. While respondent contended that the affidavits and statements of the
vessels officers and his fellow crew members should not be given probative value as they were biased, self-
serving, and mere hearsay, he nonetheless failed to present any evidence to substantiate his own theory.
Besides, as correctly pointed out by the NLRC, the corroborating affidavits and
statements of the vessels officers and crew members must be taken as a whole and cannot just be
perfunctorily dismissed as self-serving absent any showing that they were lying when they made the statements
therein. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v.
Alexander L. Moradas,G.R. No., January 15, 2014

December 2013 Philippine Supreme Court

Decisions on Labor Law
Posted on January 17, 2014 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law
Here are select December 2013 rulings of the Supreme Court of the Philippines on labor law:

Appeal; NLRC; accredited bonding company; revocation of authority is prospective in application. The
respondents filed a surety bond issued by Security Pacific Assurance Corporation (Security Pacific) on June 28,
2002. At that time, Security Pacific was still an accredited bonding company. However, the NLRC revoked its
accreditation on February 16, 2003. This subsequent revocation should not prejudice the respondents who relied
in good faith on the then subsisting accreditation of Security Pacific. In Del Rosario v. Philippine Journalists,
Inc. (G.R. No. 181516, August 19, 2009), it was held that a bonding companys revocation of authority is
prospective in application. Nonetheless, the respondents should post a new bond issued by an accredited bonding
company in compliance with paragraph 4, Section 6, Rule 6 of the NLRC Rules of Procedure, which states that
[a] cash or surety bond shall be valid and effective from the date of deposit or posting, until the case is finally
decided, resolved or terminated or the award satisfied. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R.
No. 189404, December 11, 2013.
Appeal; NLRC; bond; jurisdictional. Paragraph 2, Article 223 of the Labor Code provides that [i]n case of a
judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a
cash or surety bond issued by a reputable bonding company duly accredited by the NLRC in the amount
equivalent to the monetary award in the judgment appealed from. Contrary to the respondents claim, the issue
of the appeal bonds validity may be raised for the first time on appeal since its proper filing is a jurisdictional
requirement. The requirement that the appeal bond should be issued by an accredited bonding company is
mandatory and jurisdictional. The rationale of requiring an appeal bond is to discourage the employers from
using an appeal to delay or evade the employees just and lawful claims. It is intended to assure the workers that
they will receive the money judgment in their favor if the employers appeal is dismissed. Wilgen Loon, et al. v.
Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.
Appeal; NLRC; verification; formal requisite, not jurisdictional. Neither the laws nor the rules require the
verification of the supplemental appeal. Furthermore, verification is a formal, not a jurisdictional, requirement.
It is mainly intended to give assurance that the matters alleged in the pleading are true and correct and not of
mere speculation. Also, a supplemental appeal is merely an addendum to the verified memorandum on appeal
that was earlier filed in the case; hence, the requirement for verification has been substantially complied. Wilgen
Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.
Appeal; Rule 45; limited to review of questions of law. In this Rule 45 petition for review on certiorari, the
Supreme Court (SC) reviewed the Court of Appeals (CA) decision of a Rule 65 petition for certiorari. The
Supreme Courts power of review in such case is limited to legal errors that the CA might have committed in
issuing its assailed decision, in contrast with the review for jurisdictional errors which it undertakes in an original
certiorari (Rule 65) action filed with it. The SC examines the CA decision based on how it determined the
presence or absence of grave abuse of discretion in the manner by which the NLRC rendered its decision and
not on the basis of whether the NLRC decision on the merits of the case was correct. Moreover, the Courts
power in a Rule 45 petition limits it to a review of questions of law raised against the assailed CA
decision. Baguio Central University v. Ignacio Gallente,G.R. No. 188267, December 2, 2013.
Attorneys fees; when entitled. An employee is entitled to an award of attorneys fees equivalent to ten percent
(10%) of the amount of the wages in actions for unlawful withholding of wages pursuant to Article 111 of the
Labor Code. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.
Backwages; when entitled. In termination cases, the burden of proving just and valid cause for dismissing an
employee from his employment rests upon the employer. The employers failure to discharge this burden in the
instant case arising from their non-submission of evidence at the proceedings before the labor arbiter resulted in
the finding that the dismissal is unjustified. Thus, the employees are entitled to the payment of
backwages. Wilgen Loon, et al. v. Power Master, Inc., et al.,G.R. No. 189404, December 11, 2013.
Deeds of release and quitclaim; grounds to invalidate. As a rule, deeds of release and quitclaim cannot bar
employees from demanding benefits to which they are legally entitled or from contesting the legality of their
dismissal. The acceptance of those benefits would not amount to estoppel. To excuse respondents from
complying with the terms of their waivers, any one of the following grounds must exist: (1) the employer used
fraud or deceit in obtaining the waivers; (2) the consideration the employer paid is incredible and unreasonable;
or (3) the terms of the waiver are contrary to law, public order, public policy, morals, or good customs or
prejudicial to a third person with a right recognized by law. The Court concluded that the instant case falls under
the first situation.
As the ground for termination of employment was illegal, the quitclaims are deemed illegal because the
employees consent had been vitiated by mistake or fraud. The law looks with disfavor upon quitclaims and
releases by employees pressured into signing by unscrupulous employers minded to evade legal
responsibilities. The circumstances show that petitioners misrepresentation led its employees, specifically
respondents herein, to believe that the company was suffering losses which necessitated the implementation of
the voluntary retirement and retrenchment programs, and eventually the execution of the deeds of release, waiver
and quitclaim. The amounts already received by respondents as consideration for signing the releases and
quitclaims, however, should be deducted from their respective monetary awards. Philippine Carpet
Manufacturing Corporation, et al. v. Ignacio B. Tagyamon, et al., G.R. No. 191475, December 11, 2013.
Disability benefits; principle of work-aggravation; concept of. Compensability may be established on the basis
of the theory of work aggravation if, by substantial evidence, it can be demonstrated that the working conditions
aggravated or at least contributed in the advancement of respondents cancer. As held in Rosario v. Denklav
Marine, the burden is on the beneficiaries to show a reasonable connection between the causative circumstances
in the employment of the deceased employee and his death or permanent total disability. In the present case,
both parties failed to discharge their respective burdens for petitioners, they failed to prove the non-work-
relatedness of the disease; and for respondent, he failed to prove that his work aggravated his condition. Thus,
the Court had to resolve the case on some other basis. The Court held that disability should be understood not
more on its medical significance, but on the loss of earning capacity. Permanent total disability means
disablement of an employee to earn wages in the same kind of work or work of similar nature that he was trained
for or accustomed to perform, or any kind of work which a person of his mentality and attainment could do. It
does not mean absolute helplessness. Evidence of this condition can be found in a certification of
fitness/unfitness to work issued by the company-designated physician. In this case, records reveal that the
medical report issued by the company-designated oncologist was bereft of any certification that respondent
remained fit to work as a seafarer despite his cancer. This is important, according to the Court, since the
certification is the document that contains the assessment of his disability which can be questioned in case of
disagreement as provided under Section 20 (B) (3) of the POEA-SEC. In the absence of any certification, the
law presumes that the employee remains in a state of temporary disability. Should no certification be issued
within 240 day maximum period, as in this case, the pertinent disability becomes permanent in nature.
Accordingly, the Court affirmed respondents entitlement to permanent total disability benefits awarded to
him. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076, December 4, 2013.
Disability benefits; principle of work-relation; concept of. As a general rule, the principle of work-relation
requires that the disease in question must be one of those listed as an occupational disease under Sec. 32-A of
the POEA-SEC. Nevertheless, should it be not classified as occupational in nature, Section 20 (B) paragraph 4
of the POEA-SEC provides that such diseases are disputably presumed as work-related.
In this case, it is undisputed that Nasopharyngeal Carcinoma (NPC) afflicted respondent while on board the
petitioners vessel. As a non-occupational disease, it has the disputable presumption of being work-related. This
presumption obviously works in the seafarers favor. Hence, unless contrary evidence is presented by the
employers, the work-relatedness of the disease must be sustained. The Court held that the petitioners, as
employers, failed to disprove the presumption of NPCs work-relatedness. The petitioners primarily relied on
the medical report issued by Dr. Co Pefia which, however, failed to make a categorical statement confirming the
total absence of work relation. As the doctor opined only a probability, there was no certainty that his condition
was not work related. There being no certainty, the Court will lean in favor of the seafarer consistent with the
mandate of POEA-SEC to secure the best terms and conditions of employment for Filipino workers. Hence, the
presumption of NPCs work-relatedness stays. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076,
December 4, 2013.
Illegal dismissal; burden of proof. In termination cases, the burden of proving just and valid cause for dismissing
an employee from his employment rests upon the employer. The employers failure to discharge this burden
results in the finding that the dismissal is unjustified.
Failing to prove just and valid cause for the dismissal, the Court held that the petitioners are entitled to salary
differential, service incentive, holiday, and thirteenth month pays. As in illegal dismissal cases, the general rule
is that the burden rests on the defendant to prove payment rather than on the plaintiff to prove non-payment of
these money claims. However, the Court decided that they are not entitled to overtime and premium pays. The
burden of proving entitlement to overtime pay and premium pay for holidays and rest days rests on the employee
because these are not incurred in the normal course of business. In the present case, the petitioners failed to
adduce any evidence that would show that they actually rendered service in excess of the regular eight working
hours a day, and that they in fact worked on holidays and rest days. Wilgen Loon, et al. v. Power Master, Inc.,
et al., G.R. No. 189404, December 11, 2013.
Labor cases; strict adherence to the technical rules of procedure is not required; when liberality allowed. In labor
cases, strict adherence to the technical rules of procedure is not required. Time and again, the Court has allowed
evidence to be submitted for the first time on appeal with the NLRC in the interest of substantial justice. Thus,
it has consistently supported the rule that labor officials should use all reasonable means to ascertain the facts in
each case speedily and objectively, without regard to technicalities of law or procedure, in the interest of due
process. However, this liberal policy should still be subject to rules of reason and fairplay. The liberality of
procedural rules is qualified by two requirements: (1) a party should adequately explain any delay in the
submission of evidence; and (2) a party should sufficiently prove the allegations sought to be proven. The reason
for these requirements is that the liberal application of the rules before quasi-judicial agencies cannot be used to
perpetuate injustice and hamper the just resolution of the case. Neither is the rule on liberal construction a license
to disregard the rules of procedure. In the present case, the Court held that the respondents failed to adequately
explain their delay in the submission of evidence and prove the allegations sought to be proven. Wilgen Loon,
et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.
Labor; ground for valid dismissal; loss of trust and confidence; requisites. Loss of trust and confidence is a just
cause for dismissal under Article 282(c) of the Labor Code. Article 282(c) provides that an employer may
terminate an employment for fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representative. However, in order for the employer to properly invoke this ground, the
employer must satisfy two conditions. First, the employer must show that the employee concerned holds a
position of trust and confidence. Second, the employer must establish the existence of an act justifying the loss
of trust and confidence. To be a valid cause for dismissal, the act that betrays the employers trust must be real,
i.e., founded on clearly established facts, and the employees breach of the trust must be willful, i.e., it was done
intentionally, knowingly and purposely, without justifiable excuse.
In Lopez v. Keppel Bank Philippines, Inc. (G.R. No. 176800, September 5, 2011), the Court repeated the
guidelines for the application of loss of confidence as follows: (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.

As applied to the dismissal of managerial employees, employers as a rule enjoy wider latitude of discretion.
They are not required to present proof beyond reasonable doubt as the mere existence of a basis for believing
that such employee has breached the trust of the employer would suffice for the dismissal. Thus, as long as 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, the dismissal on this ground is valid.

The Court held that there was sufficient basis to dismiss the respondent for loss of trust and confidence. First,
the Court believed that the respondent held a position of trust and confidence because he was a managerial
employee of the petitioner. As the Dean of two of the petitioners departments, he was tasked, among others, to
assist the school head in all matters affecting the general policies of the entire institution, to direct and advise
the students in their programs of study and to approve their subject load and exercise educational leadership
among his faculty. These tasks involved the exercise of powers and prerogatives equivalent to managerial
actions. Second, the Court ruled that the respondent committed wilful breach of trust sufficient to justify
dismissal. The heart of the loss-of-trust charge is the employees betrayal of the employers trust. Damage
aggravates the charge but its absence does not mitigate nor negate the employees liability. The respondent
betrayed his owed fidelity the moment he engaged in a venture that required him to perform tasks and make
calculated decisions which his duty to the petitioner would have equally required him to perform or would have
otherwise required him to oppose. The Court was convinced that actual conflict of interest existed when
respondent sought to conduct review courses for nursing examination knowing that the petitioner was already
offering similar classes. The respondents good intentions were beside the point. Ultimately, the determinant is
his deliberate engagement in a venture that would have directly conflicted with the petitioners interests. If
respondent merely intended to help the petitioner and its students in increasing their chances of passing the Civil
Service Examination, he could have just offered, as part of the BCUs course curriculum, review classes for the
Civil Service Examination instead of altogether organizing a review center that obviously will offer the course
to everyone minded to enroll. Baguio Central University v. Ignacio Gallente, G.R. No. 188267, December 2,
2013.
Labor; valid dismissal; requisites. Our Constitution, statutes and jurisprudence uniformly guarantee to every
employee or worker tenurial security. What this means is that an employer shall not dismiss an employee except
for just or authorized cause and only after due process is observed. Thus, for an employees dismissal to be valid,
the employer must meet these basic requirements of: (1) just or authorized cause (which constitutes the
substantive aspect of a valid dismissal); and (2) observance of due process (the procedural aspect). Baguio
Central University v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.
Petition for review on certiorari; only questions of law can be reviewed; exceptions.The well-entrenched rule in
this jurisdiction is that only questions of law may be entertained by the SC in a petition for review on certiorari
under Rule 45. This rule, however, is not absolute and admits certain exceptions, such as when the petitioner
persuasively alleges that there is insufficient or insubstantial evidence on record to support the factual findings
of the tribunal or court a quo as Section 5, Rule 133 of the Rules of Court states in express terms that in cases
filed before administrative or quasi-judicial bodies, a fact may be deemed established only if supported by
substantial evidence. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076, December 4, 2013.
Probationary employment; concept of; probationer can only qualify upon fulfillment of the reasonable standards
set for permanent employment of a teaching personnel. Probationary employment refers to the trial stage or
period during which the employer examines the competency and qualifications of job applicants, and determines
whether they are qualified to be extended permanent employment status. Such an arrangement affords an
employer the opportunity before the full force of the guarantee of security of tenure comes into play to fully
scrutinize and observe the fitness and worth of probationers while on the job and to determine whether they
would become proper and efficient employees. It also gives the probationers the chance to prove to the employer
that they possess the necessary qualities and qualifications to meet reasonable standards for permanent
employment.
Mere completion of the three-year probation, even with an above-average performance, does not guarantee that
the employee will automatically acquire a permanent employment status. It is settled jurisprudence that the
probationer can only qualify upon fulfillment of the reasonable standards set for permanent employment of a
teaching personnel.

The Court ruled that the requirement to obtain a masters degree was made known to the petitioner. The contract
she signed clearly incorporates the rules, regulations, and employment conditions contained in the SSC Faculty
Manual. The Manual provided for a criteria for permanency which includes, among others, the requirement that
the faculty member must have completed at least a masters degree. Viewed next to the statements and actions
of Manaois i.e., the references to obtaining a masters degree in her application letter, in the subsequent
correspondences between her and SSC, and in the letter seeking the extension of a teaching load for the school
year 2003-2004; and her submission of certifications from UP and from her thesis adviser the Court found that
there is indeed substantial evidence proving that she knew about the necessary academic qualifications to obtain
the status of permanency. Jocelyn Herrera-Manaois v. St. Scholasticas College, G.R. No. 188914, December
11, 2013.
Probationary employment; part-time member of the academic personnel; requisites to acquire permanence of
employment and security of tenure. Pursuant to the 1992 Manual of Regulations for Private Schools, private
educational institutions in the tertiary level may extend full-time faculty status only to those who possess, inter
alia, a masters degree in the field of study that will be taught. This minimum requirement is neither subject to
the prerogative of the school nor to the agreement between the parties. For all intents and purposes, this
qualification must be deemed impliedly written in the employment contracts between private educational
institutions and prospective faculty members. The issue of whether probationers were informed of this academic
requirement before they were engaged as probationary employees is thus no longer material, as those who are
seeking to be educators are presumed to know these mandated qualifications. Thus, all those who fail to meet
the criteria under the 1992 Manual cannot legally attain the status of permanent full-time faculty members, even
if they have completed three years of satisfactory service.
Further, the Court stated that in line with academic freedom and constitutional autonomy, an institution of higher
learning has the discretion and prerogative to impose standards on its teachers and determine whether these have
been met. Upon conclusion of the probation period, the college or university, being the employer, has the sole
prerogative to make a decision on whether or not to re-hire the probationer. The probationer cannot automatically
assert the acquisition of security of tenure and force the employer to renew the employment contract. In the case
at bar, petitioner failed to comply with the stated academic qualifications required for the position of a permanent
full-time faculty member. Jocelyn Herrera-Manaois v. St. Scholasticas College, G.R. No. 188914, December
11, 2013.
Question of law; distinguished from a question of fact. A question of law arises when the doubt or controversy
concerns the correct application of law or jurisprudence to a certain set of facts. In contrast, a question of fact
exists when a doubt or difference arises as to the truth or falsehood of facts.
In this petition, the petitioner essentially asks the question whether, under the circumstances and the presented
evidence, the termination of respondents employment was valid. As framed, therefore, the question before the
Court is a proscribed factual issue that it cannot generally consider in this Rule 45 petition, except to the extent
necessary to determine whether the CA correctly found the NLRC in grave abuse of its discretion in considering
and appreciating this factual issue.

Nonetheless, as an exception to the Rule 45 requirement, the Court deemed it proper to review the conflicting
factual findings of the LA and the CA, on the one hand, and the NLRC, on the other. Such exception applies
when, based on the records, the factual findings of the tribunals below are in conflict. Baguio Central University
v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.
Stare decisis; doctrine of. Under the doctrine of stare decisis, when a court has laid down a principle of law as
applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in which the
facts are substantially the same, even though the parties may be different. Where the facts are essentially
different, however, stare decisis does not apply because a perfectly sound principle as applied to one set of facts
might be entirely inappropriate when a factual variant is introduced.
This case and the Philippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas case (Philcea case;
G.R. No. 168719, February 22, 2006), involve the same period which is March to April 2004; the issuance of
the Memorandum to employees informing them of the implementation of the cost reduction program; the
implementation of the voluntary retirement program and retrenchment program, except that this case involves
different employees; the execution of deeds of release, waiver, and quitclaim, and the acceptance of separation
pay by the affected employees. As the respondents here were similarly situated as the union members in the
Philcea case, and considering that the questioned dismissal from the service was based on the same grounds
under the same circumstances, there is no need to re-litigate the issues presented herein. In short, stare
decisis applies and the Court deems it wise to adopt its earlier findings in the Philcea case that there was no valid
ground to terminate the services of the employees. Philippine Carpet Manufacturing Corporation, et al. v.
Ignacio B. Tagyamon, et al., G.R. No. 191475, December 11, 2013.
Substantial evidence; definition of. The assertions of respondent do not constitute as substantial evidence that a
reasonable mind might accept as adequate to support the conclusion that there is a causal relationship between
his illness and the working conditions on board the petitioners vessel. Although the Court has recognized as
sufficient that work conditions are proven to have contributed even to a small degree, such must, however, be
reasonable, and anchored on credible information. The claimant must, therefore, prove a convincing proposition
other than by his mere allegations. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076, December
4, 2013.
Termination of employment; authorized causes; retrenchment. The illegality of the basis of the implementation
of both voluntary retirement and retrenchment programs of petitioners had been thoroughly ruled upon by the
Court in Philippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas (G.R. No. 168719, February
22, 2006). It discussed the requisites of both retrenchment and redundancy as authorized causes of termination
and concluded that petitioners failed to substantiate them. In ascertaining the bases of the termination of
employees, it took into consideration petitioners claim of business losses; the purchase of machinery and
equipment after the termination, the declaration of cash dividends to stockholders, the hiring of 100 new
employees after the retrenchment, and the authorization of full blast overtime work for six hours daily. These,
said the Court, are inconsistent with petitioners claim that there was a slump in the demand for its products
which compelled them to implement the termination programs. In arriving at its conclusions, the Court took note
of petitioners net sales, gross and net profits, as well as net income. The Court, thus, reached the conclusion that
the retrenchment effected by the company is invalid due to a substantive defect. Philippine Carpet
Manufacturing Corporation, et al. v. Ignacio B. Tagyamon, et al., G.R. No. 191475, December 11, 2013.
Termination of employment; ground; closure of business due to serious business losses; notice requirement.
Article 297 of the Labor Code provides that before any employee is terminated due to closure of business, it
must give one (1) months prior written notice to the employee and to the Department of Labor and
Employment. In this relation, case law instructs that it is the personal right of the employee to be personally
informed of his proposed dismissal as well as the reasons therefor; and such requirement of notice is not a mere
technicality or formality which the employer may dispense with. Since the purpose of previous notice is to,
among others, give the employee some time to prepare for the eventual loss of his job, the employer has the
positive duty to inform each and every employee of their impending termination of employment. To this end,
jurisprudence states that an employers act of posting notices to this effect in conspicuous areas in the workplace
is not enough. Verily, for something as significant as the involuntary loss of ones employment, nothing less
than an individually-addressed notice of dismissal supplied to each worker is proper. The Court held that the
Labor Arbiter, NLRC, and Court of Appeals erred in ruling that SPI complied with the notice requirement when
it merely posted various copies of its notice of closure in conspicuous places within the business premises. SPI
is required to serve individual written notices of termination to its employees. Sangwoo Philippines, Inc. and/or
Sang Ik Jang, Jisso Jang, et al. v. Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia
Salibongcogon/Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon v.
Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al., G.R. No. 173154./G.R. No. 173229, December
9, 2013
Termination of employment; authorized cause; closure of business due to serious business losses; separation
pay. Closure of business is the reversal of fortune of the employer whereby there is a complete cessation of
business operations and/or an actual locking-up of the doors of establishment, usually due to financial losses.
Closure of business, as an authorized cause for termination of employment, aims to prevent further financial
drain upon an employer who cannot pay anymore his employees since business has already stopped. In such a
case, the employer is generally required to give separation benefits to its employees, unless the closure is due to
serious business losses. As explained in the case of Galaxie Steel Workers Union (GSWU-NAFLU-KMU) v.
NLRC (G.R. No. 165757, October 17, 2006): The Constitution, while affording full protection to labor,
nonetheless, recognizes the right of enterprises to reasonable returns on investments, and to expansion and
growth. In line with this protection afforded to business by the fundamental law, Article [297] of the Labor
Code clearly makes a policy distinction. It is only in instances of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or undertaking not due to serious business losses or financial
reverses that employees whose employment has been terminated as a result are entitled to separation pay. In
other words, Article [297] of the Labor Code does not obligate an employer to pay separation benefits when the
closure is due to serious losses. To require an employer to be generous when it is no longer in a position to do
so, in our view, would be unduly oppressive, unjust, and unfair to the employer. Ours is a system of laws, and
the law in protecting the rights of the working man, authorizes neither the oppression nor the self-destruction of
the employer.
In this case, the Labor Arbiter, NLRC, and the Court of Appeals all consistently found that petitioners indeed
suffered from serious business losses which resulted in its permanent shutdown and accordingly, held the
companys closure to be valid. It is a rule that absent any showing that the findings of fact of the labor tribunals
and the appellate court are not supported by evidence on record or the judgment is based on a misapprehension
of facts, the Court shall not examine anew the evidence submitted by the parties. Perforce, without any cogent
reason to deviate from the findings on the validity of respondents closure, the Court held that it is not obliged
to give separation benefits to minority employees pursuant to Article 297 of the Labor Code. Sangwoo
Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al. v. Sangwoo Philippines, Inc. Employees Union-OLALIA,
rep. by Porferia Salibongcogon/Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by Porferia
Salibongcogon v. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al., G.R. No. 173154./G.R. No.
173229, December 9, 2013.
Termination of employment due to closure; procedural infirmity; nominal damages as sanction. It is well to
stress that while respondent had a valid ground to terminate its employees, i.e., closure of business, its failure to
comply with the proper procedure for termination renders it liable to pay the employee nominal damages for
such omission. Based on existing jurisprudence, an employer which has a valid cause for dismissing its
employee but conducts the dismissal with procedural infirmity is liable to pay the employee nominal damages
in the amount of P30,000.00 if the ground for dismissal is a just cause, or the amount of P50,000.00 if the ground
for dismissal is an authorized cause. However, case law exhorts that in instances where the payment of such
damages becomes impossible, unjust, or too burdensome, modification becomes necessary in order to harmonize
the disposition with the prevailing circumstance. In this case, considering that SPI closed down its operations
due to serious business losses and that said closure appears to have been done in good faith, the Court as in the
case of Industrial Timber Corporation v. Ababon (G.R. No. 164518, March 30, 2006), deems it just to reduce
the amount of nominal damages to be awarded to each of the minority employees from P50,000.00 to
Pl0,000.00. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al. v. Sangwoo Philippines, Inc.
Employees Union-OLALIA, rep. by Porferia Salibongcogon/Sangwoo Philippines, Inc. Employees Union-
OLALIA, rep. by Porferia Salibongcogon v. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et
al., G.R. No. 173154./G.R. No. 173229, December 9, 2013.

January 2013 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on February 11, 2013 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law
Tagged appeal, arbitration, backwages, forum shopping, NLRC, redundancy, reinstatement
Here are select January 2013 rulings of the Supreme Court of the Philippines on labor law and procedure:

Appeal to the National Labor Relations Commission (NLRC); Requisites for perfection of appeal; Joint
declaration under oath accompanying the surety bond; Substantial compliance with procedural rules. There was
substantial compliance with the NLRC Rules of Procedure when the respondents PAL Maritime Corporation
and Western Shipping Agencies, Pte., Ltd. filed, albeit belatedly, the Joint Declaration Under Oath, which is
required when an employer appeals from the Labor Arbiters decision granting a monetary award and posts a
surety bond. Under the NLRC rules, the following requisites are required to perfect the employers appeal: (1)
it must be filed within the reglementary period; (2) it must be under oath, with proof of payment of the required
appeal fee and the posting of a cash or surety bond; and (3) it must be accompanied by typewritten or printed
copies of the memorandum of appeal, stating the grounds relied upon, the supporting arguments, the reliefs
prayed for, and a statement of the date of receipt of the appealed decision, with proof of service on the other
party of said appeal. If the employer posts a surety bond, the NLRC rules further require the submission by the
employer, his or her counsel, and the bonding company of a joint declaration under oath attesting that the surety
bond posted is genuine and that it shall be in effect until the final disposition of the case.
In the case at bar, the respondents posted a surety bond equivalent to the monetary award and filed the notice of
appeal and the appeal memorandum within the reglementary period. When the NLRC subsequently directed the
filing of a Joint Declaration Under Oath, the respondents immediately complied with the said order. There was
only a late submission of the Joint Declaration. Considering that there was substantial compliance with the rules,
the same may be liberally construed. The application of technical rules may be relaxed in labor cases to serve
the demands of substantial justice. Rolando L. Cervantes vs. PAL Maritime Corporation and/or Western
Shipping Agencies, Pte., Ltd. G.R. No. 175209. January 16, 2013.
Completeness of service by registered mail; Exception to the general rule regarding a corporations verification
and certification of non-forum shopping; Interpretation of school CBA. A school CBA must be read in
conjunction with statutory and administrative regulations governing faculty qualifications. Such regulations
form part of a valid CBA without need for the parties to make express reference to the same.
In the case at bar, the University of the East (UE) repeatedly extended only semester-to-semester faculty
appointments to the respondents Pepanio and Bueno, since they had not completed postgraduate degrees. The
respondents, however, claimed that the 1994 CBA between UE and the faculty union did not yet require a
masters degree for a teacher to acquire regular status. Having rendered more than three consecutive years of
full-time service to the school, the respondents insisted that UE should have given them permanent appointments.

The Supreme Court observed that the policy requiring college teachers to have postgraduate degrees was
provided in the Manual of Regulations issued as early as 1992 by the Department of Education, Culture and
Sports (DECS), now the Department of Education. In promulgating the Manual of Regulations, DECS exercised
its power of regulation over educational institutions, which includes prescribing the minimum academic
qualifications for teaching personnel. The legislature subsequently transferred the power to prescribe such
qualifications for teachers in institutions of higher learning to the Commission on Higher Education
(CHED). However, the 1992 Manual of Regulations issued by DECS continued to apply to colleges and
universities until 2010, when CHED issued a Revised Manual of Regulations.
Thus, the requirement of a masters degree for college teachers, as originally provided in the 1992 Manual of
Regulations, was deemed incorporated in the 1994 CBA between UE and the faculty union. Furthermore, the
subsequent CBA in 2001, which provided for the extension of conditional probationary status to the respondents,
subject to their obtaining a masters degree within the probationary period, clearly showed that UE intended to
subject the respondents appointments to the standards set by the law.

The requirement of a masters degree for tertiary education teachers is not unreasonable, considering that the
operation of educational institutions involves public interest. The government has a right to ensure that only
qualified persons, in possession of sufficient academic knowledge and teaching skills, are allowed to teach in
such institutions.

The Supreme Court also overruled the respondents contention that UE filed its appeal to the NLRC beyond the
required ten (10)-day period. For completeness of service by registered mail, the reckoning period starts either
from the date of actual receipt of the mail by the addressee or after five (5) days from the date he or she received
the first notice from the postmaster. In this case, the respondents averred that, on March 17, 2005, the postmaster
gave UEs counsel a notice to claim the mail containing the Labor Arbiters decision. The respondents claimed
that UEs counsel was deemed in receipt of the decision 5 days after the giving of the notice, or on March 22,
2005. Thus, according to the respondents, when UE filed its appeal to the NLRC on April 14, 2005, the 10-day
reglementary period had already lapsed. The Supreme Court, however, ruled that there must be conclusive proof
that the registry notice was received by or at least served on the addressee. In this case, the records did not show
that UEs counsel in fact received the alleged registry notice requiring him to claim the mail. On the other hand,
UE was able to present a registry return receipt showing that its counsel actually received a copy of the Labor
Arbiters decision on April 4, 2005. Reckoned from this date, the 10-day reglementary period had not yet lapsed
when UE filed its appeal to the NLRC on April 14, 2005.

Anent UEs failure to comply with the general rule that the Board of Directors or Board of Trustees of a
corporation must authorize the person who shall sign the verification and certification of non-forum shopping
accompanying a petition, the Supreme Court held that such authorization is not necessary when it is self-evident
that the signatory is in a position to verify the truthfulness and correctness of the allegations in the petition. The
Supreme Court declared that Dean Eleanor Javier, who signed UEs verification and certification, was in such a
position, since she knew the factual antecedents of the case and she actually communicated with the respondents
regarding the required postgraduate qualification. University of the East, et al. vs. Analiza F. Pepanio and Mariti
D. Bueno. G.R. No. 193897. January 23, 2013.
Disease as a ground for termination; Retirement under the Labor Code; Age and tenure requirements for
retirement; Financial assistance. Under the Labor Code provision on disease as a ground for termination
(formerly, Article 284, but now renumbered pursuant to Republic Act No. 10151), it must be the employer who
initiates the termination of the employees services. The aforementioned provision cannot be applied in this
case, considering that it was the late petitioner Padillo, and not the Rural Bank of Nabunturan, Inc. (Bank), who
severed the employment relations. With his memory impaired after suffering a mild stroke due to hypertension,
Padillo wrote a letter to the Bank, expressing his intention to avail of an early retirement package. The clear
import of Padillos letter and the fact that he had stopped reporting for work even before sending the said letter
shows that he voluntarily retired. Given the inapplicability of the Labor Code provision on disease as a ground
for termination, it necessarily follows that Padillos claim for separation pay must be denied.
As regards Padillos claim for retirement benefits, the provision of the Labor Code on retirement (formerly, Art.
287, but now renumbered pursuant to R.A. No. 10151) states that, in the absence of any applicable agreement,
an employee who has served at least five (5) years in the company may retire upon reaching the age of sixty (60)
years, but not beyond sixty-five (65) years, to be entitled to retirement pay equivalent to at least one-half (1/2)
month salary for every year of service, with a fraction of at least six (6) months being considered as one whole
year. Notably, the aforementioned age and tenure requirements are cumulative, and non-compliance with either
negates the employees entitlement to the retirement pay under the Labor Code. In this case, the Bank did not
have a retirement plan or any other contract with its employees, setting the terms and conditions for
retirement. Padillo also served the Bank for twenty-nine (29) years, far more than the 5-year tenure
requirement. Padillo, however, did not meet the age requirement, considering that he was only fifty-five (55)
years old, or less than 60 years of age, when he retired. Thus, Padillos claim for retirement pay must also be
denied.

Nevertheless, the Supreme Court awarded Padillo financial assistance in the amount of P75,000, considering the
length of time which had supervened before the disposition of this case and Padillos unblemished record of 29
years of service to the Bank. The award was in addition to the P100,000 benefit receivable under the Philam
Life Plan that the Bank had procured in favor of Padillo. Eleazar S. Padillo vs. Rural Bank of Nabunturan, Inc.,
et al. G.R. No. 199338. January 21, 2013.
Redundancy as an authorized cause for termination; Difference between retirement and termination due to
redundancy; General rule regarding the factual findings of the NLRC and the exceptions thereto. Under the
Labor Code, redundancy is one of the authorized causes for termination of employment. The following are the
requisites for the valid implementation of a redundancy program: (a) the employer must serve a written notice
to the affected employees and to the Department of Labor and Employment (DOLE) at least one month before
the intended date of termination; (b) the employer must pay the employees separation pay equivalent to at least
one month pay or at least one month pay for every year of service, whichever is higher; (c) the employer must
abolish the redundant positions in good faith; and (d) the employer must set fair and reasonable criteria in
ascertaining which positions are redundant and may be abolished. The Supreme Court has also held that a
company cannot simply declare redundancy without basis. To exhibit its good faith and to show that there were
fair and reasonable criteria in ascertaining redundant positions, a company claiming to be over manned must
produce adequate proof of the same.
In the case at bar, the General Milling Corporation (GMC) furnished respondent Viajar a written notice informing
her of the termination of her services on the ground of redundancy. GMC also submitted to the DOLE an
Establishment Termination Report, regarding the employees, including Viajar, whose positions were deemed
redundant. Viajar and the DOLE received the respective notices one month before the effective date of the
employees termination. Furthermore, GMC issued to Viajar two checks amounting to P440,253.02 and
P21,211.35, representing her separation pay. However, the Supreme Court held that, notwithstanding
compliance with the requirements on notice and the payment of separation pay, GMC is still considered to have
illegally dismissed Viajar because the company failed to present substantial proof to support its general
allegations of redundancy. GMC could have presented evidence to substantiate redundancy, such as a new
staffing pattern or feasibility studies or proposals on the viability of newly created positions, job descriptions
and the approval by management of the restructuring program, or the companys audited financial
reports. However, no such evidence was submitted by GMC.

On the other hand, Viajar presented proof negating GMCs claim of redundancy and clearly showing GMCs
bad faith in implementing the redundancy program: (1) GMC had hired new employees before it terminated
Viajars employment; (2) Vaijar was barred from entering the company premises even before the effectivity of
her separation; and (3) Viajar was also forced to sign an Application for Retirement and Benefits so that she
could avail of her separation pay. The last circumstance is significant, considering that there is a difference
between voluntary retirement and forced termination of an employee. Retirement from service is contractual or
based on a bilateral agreement of the employer and the employee, while termination of employment is statutory
or governed by the Labor Code and other related laws. Voluntary retirement cuts employment ties, leaving no
residual employer liability; involuntary retirement amounts to a discharge, rendering the employer liable for
termination without cause. GMCs demand that Viajar sign an Application for Retirement and Benefits, when
she had already been informed of the termination of her services due to redundancy, shows that this case involves
not a voluntary retirement, but an illegal termination.

While the Labor Arbiter and the NLRC both found that Viajar was validly dismissed, the general rule that the
factual findings of the NLRC must be accorded respect and finality is not applicable in this case. One of the
exceptions to the said rule covers instances when the findings of fact of the trial court, or of the quasi-judicial
agencies concerned, are conflicting or contradictory with those of the Court of Appeals, as in the present
case. Another exception to the general rule is when the said findings are not supported by substantial evidence
or the inference or conclusion arrived at is manifestly erroneous. In the case at bar, the Supreme Court agreed
with the Court of Appeals that the NLRCs conclusion that Viajar was legally dismissed is manifestly
erroneous. General Milling Corporation vs. Violeta L. Viajar. G.R. No. 181738. January 30, 2013.
Reinstatement; Backwages. It is basic in jurisprudence that illegally dismissed workers are entitled to
reinstatement with backwages plus interest at the legal rate.
This labor controversy started when the employer Automotive Engine Rebuilders, Inc. (AER) and the
Progresibong Unyon ng mga Manggagawa sa AER (Union) filed charges against each other for violating labor
laws. AER filed a complaint against the Union and eighteen (18) of its members for conducting an illegal
strike. On the other hand, thirty-two (32) employees filed a complaint against AER for unfair labor practices,
illegal dismissal, illegal suspension, and run-away shop. In a previous decision (G.R. No. 160138, July 13,
2011), the Supreme Court had held that both parties were at fault or in pari delicto; hence, the complaining
employees should be reinstated but without backwages. The Motion for Partial Reconsideration filed by the
Union is resolved in the present case.

The Supreme Court found that, of the 32 employees who filed the complaint against AER, only 18 had been
charged by AER with illegal strike, leaving 14 excluded from the employers complaint. As no charges had
been filed against the 14 workers, they cannot be found guilty of illegal strike. Neither can they be considered in
pari delicto. However, of the 14 employees, five failed to write their names and affix their signatures in the
Membership Resolution attached to their petition before the Court of Appeals, authorizing the union president
to represent them. Thus, while these five employees will also be reinstated, they cannot be granted
backwages. On the other hand, the nine workers who signed their names in the aforementioned Membership
Resolution will be reinstated with backwages plus interest at the legal rate. Automotive Engine Rebuilders, Inc.
(AER), et al. vs. Progresibong Unyon ng mga Manggagawa sa AER, et al. / Progresibong Unyon ng mga
Manggagawa sa AER, et al. vs. Automotive Engine Rebuilders, Inc., et al. G.R. Nos. 160138 and 160192.
January 16, 2013.
Resignation; Resignation in relation to the subsequent filing of an illegal dismissal case. Petitioner Cervantess
claim that he did not resign but was terminated from employment is untenable. Resignation is the voluntary act
of an employee who finds himself in a situation where he believes that personal reasons cannot be sacrificed in
favor of the exigency of the service, such that he has no other choice but to disassociate himself from his
employment.
In the present case, Cervantess employer merely informed him of the numerous complaints against him. It was
Cervantes himself who opted to be relieved from his post and who initiated his repatriation to Manila. This is
clear from the tenor of his telex message, which reads in part: ANYHOW TO AVOID REPETITION [ON]
MORE HARSH REPORTS TO COME. BETTER ARRANGE MY RELIEVER [AND] C/O BUSTILLO
RELIEVER ALSO. UPON ARR NEXT USA LOADING PORT FOR THEIR SATISFACTION. Cervantess
message contains an unmistakable demand to be relieved of his assignment. His employer merely accepted his
resignation. Thus, the rule that the filing of a complaint for illegal dismissal is inconsistent with resignation does
not hold true in this case. The clear tenor of Cervantess resignation letter and the filing of this case one year
after his alleged termination shows that the complaint for illegal dismissal was a mere afterthought. Rolando L.
Cervantes vs. PAL Maritime Corporation and/or Western Shipping Agencies, Pte., Ltd. G.R. No. 175209.
January 16, 2013.
Voluntary Arbitration; Plenary authority and jurisdiction of a voluntary arbitrator; Concept and exercise of
management prerogative; Limitations on the exercise of management prerogative; Nature of collective
bargaining agreements (CBA). Goya, Inc.s contention that the Voluntary Arbitrator (VA) exceeded his power
in ruling on a matter not covered by the sole issue submitted for voluntary arbitration is untenable. In a prior
case, the Supreme Court has ruled that, in general, the arbitrator is expected to decide those questions expressly
stated and limited in the submission agreement. However, since arbitration is the final resort for the adjudication
of disputes, the arbitrator can assume that he has the power to make a final settlement. The VA has plenary
jurisdiction and authority to interpret the CBA and to determine the scope of his or her own authority. Subject
to judicial review, this leeway of authority and adequate prerogative is aimed at accomplishing the rationale of
the law on voluntary arbitration speedy labor justice.
In the case at bar, Goya, Inc. and Goya, Inc. Employees Union (Union) submitted for voluntary arbitration the
sole issue of whether or not the company is guilty of an unfair labor practice in engaging the services of PESO,
a third party service provider, under existing CBA, laws, and jurisprudence. The Union claimed that the hiring
of contractual workers from PESO violated the CBA provision that prescribes only three categories of workers
in the company, namely: the probationary, the regular, and the casual employees. Instead of hiring contractual
workers, Goya, Inc. should have hired probationary or casual employees, who could have become additional
Union members, pursuant to the union security clause in the CBA. The VA ruled that while Goya, Inc. was not
guilty of any unfair labor practice, it still committed a violation of the CBA, though such violation was not gross
in character. The Supreme Court held that the VAs ruling is interrelated and intertwined with the sole issue
submitted for arbitration. The ruling was necessary to make a complete and final adjudication of the dispute
between the parties.

Furthermore, Goya, Inc.s assertion that its hiring of contractual workers was a valid exercise of management
prerogative is erroneous. Declaring that a particular act falls within the concept of management prerogative is
significantly different from acknowledging that such act is a valid exercise thereof. While the VA and the Court
of Appeals ruled that the act of contracting out or outsourcing work is within the purview of management
prerogative, they did not declare such act to be a valid exercise thereof. As repeatedly held, the exercise of
management prerogative is not unlimited; it is subject to the limitations found in the law, CBA, or general
principles of fair play and justice.

In this case, the CBA provision prescribing the categories of employees in the company and the union security
clause are interconnected and must be given full force and effect. The parties in a CBA are free to establish such
stipulations they may deem convenient, provided that the same are not contrary to law, morals, good customs,
public order, or public policy. Where the CBA is clear and unambiguous, the literal meaning of its stipulations
shall control. The CBA becomes the law between the parties, and compliance therewith is mandated by the
express policy of the law. Goya, Inc. vs. Goya, Inc. Employees Union-FFW. G.R. No. 170054. January 21,
2013.

September 2012 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on October 8, 2012 by Leslie C. Dy Posted in Labor Law
Here are select September 2012 rulings of the Philippine Supreme Court on labor law and procedure:

Breach of contract; Contract substitution; Constructive dismissal; Illegal recruitment. The agency and its
principal, Modern Metal, committed a prohibited practice and engaged in illegal recruitment when they altered
or substituted the contracts approved by the Philippine Overseas Employment Administration (POEA). Article
34 (i) of the Labor Code provides: It shall be unlawful for any individual, entity, licensee, or holder of authority
to substitute or alter employment contracts approved and verified by the Department of Labor from the time of
actual signing thereof by the parties up to and including the period of expiration of the same without the approval
of the Secretary of Labor. Meanwhile, Article 38 (i) of the Labor Code, as amended by R.A. 8042, defined
illegal recruitment to include the substitution or alteration, to the prejudice of the worker, of employment
contracts approved and verified by the Department of Labor and Employment from the time of actual signing
thereof by the parties up to and including the period of the expiration of the same without the approval of the
Department of Labor and Employment.
Furthermore, the agency and Modern Metal committed breach of contract by providing substandard working
and living arrangements, when the contract provided free and suitable housing. The living quarters were cramped
as they shared them with 27 other workers. The lodging house was far from the jobsite, leaving them only three
to four hours of sleep every workday because of the long hours of travel to and from their place of work, not to
mention that there was no potable water in the lodging house which was located in an area where the air was
polluted. They complained with the agency about the hardships that they were suffering, but the agency failed
to act on their reports. Significantly, the agency failed to refute their claims.
Thus, with their original contracts substituted and their oppressive working and living conditions unmitigated or
unresolved, the decision to resign is not surprising. They were compelled by the dismal state of their
employment to give up their jobs; effectively, they were constructively dismissed. A constructive dismissal or
discharge is a quitting because continued employment is rendered impossible, unreasonable or unlikely, as, an
offer involving a demotion in rank and a diminution in pay.

Without doubt, continued employment with Modern Metal had become unreasonable. A reasonable mind would
not approve of a substituted contract that pays a diminished salary from 1350 AED a month in the original
contract to 1,000 AED to 1,200 AED in the appointment letters, a difference of 150 AED to 250 AED (not just
50 AED as the agency claimed) or an extended employment (from 2 to 3 years) at such inferior terms, or a free
and suitable housing which is hours away from the job site, cramped and crowded, without potable water and
exposed to air pollution.

We thus cannot accept the agencys insistence that the respondents voluntarily resigned since they personally
prepared their resignation letters in their own handwriting. Pert/CPM Manpower Exponent Co., Inc. vs. Amando
A. Vinuya, et al. G.R. No. 197528. September 5, 2012.
Disability benefit. Deemed read and incorporated into the Contract of Employment between David and
respondents are the provisions of the 2000 Philippine Overseas Employment Agency Standard Employment
Contract (POEASEC). Sec. 20(B)(4) of the POEA-SEC clearly established a disputable presumption in favor of
the compensability of an illness suffered by a seafarer during the term of his contract. Hence, unless contrary
evidence is presented by the seafarers employer/s, this disputable presumption stands.
In this case, David not only relies on this disputable presumption of the compensability of his illness but David
has provided more than a reasonable nexus between the nature of his job and the disease that manifested itself
on the sixth month of his last contract with respondents.

It is not necessary that the nature of the employment be the sole and only reason for the illness suffered by the
seafarer. It is sufficient that there is a reasonable linkage between the disease suffered by the employee and his
work to lead a rational mind to conclude that his work may have contributed to the establishment or, at the very
least, aggravation of any pre-existing condition he might have had.

David showed that part of his duties as a Third Officer of the crude tanker M/T Raphael involved overseeing
the loading, stowage, securing and unloading of cargoes. As a necessary corollary, David was frequently
exposed to the crude oil that M/T Raphael was carrying. The chemical components of crude oil include, among
others, sulfur, vanadium and arsenic compounds. Hydrogen sulfide and carbon monoxide may also be
encountered, while benzene is a naturally occurring chemical in crude oil. It has been regarded that these
hazardous chemicals can possibly contribute to the formation of cancerous masses.

In this case, David was diagnosed with MFH (now known as undifferentiated pleomorphic sarcoma [UPS]),
which is a class of soft tissue sarcoma or an illness that account for approximately 1% of the known malignant
tumors. As stated by Dr. Pea of the MMC, who was consulted by the company-designated physician, the
etiology of soft tissue sarcomas are multifactorial. However, some factors are associated with a higher risk.
These factors include exposure to chemical carcinogens like some of the chemical components of crude
oil. Jessie V. David, represented by his wife, Ma. Theresa S. David, and children, Katherine and Kristina David
vs. OSG Shipmanagement Manila, Inc. and/or Michaelmar Shipping Services. G.R. No. 197205. September 26,
2012.
Dismissal; Unfair labor practice; Liability of corporate officers; Moral and exemplary damages. The requisites
for a valid dismissal are: (a) the employee must be afforded due process, i.e., he must be given an opportunity
to be heard and defend himself; and (b) the dismissal must be for a valid cause as provided in Article 282 of the
Labor Code, or for any of the authorized causes under Articles 283 and 284 of the same Code. In the case before
us, both elements are completely lacking. Respondents were dismissed without any just or authorized cause and
without being given the opportunity to be heard and defend themselves. The law mandates that the burden of
proving the validity of the termination of employment rests with the employer. Failure to discharge this
evidentiary burden would necessarily mean that the dismissal was not justified and, therefore,
illegal. Unsubstantiated suspicions, accusations, and conclusions of employers do not provide for legal
justification for dismissing employees. In case of doubt, such cases should be resolved in favor of labor, pursuant
to the social justice policy of labor laws and the Constitution.
Anent the charge of unfair labor practice, Article 248 (a) of the Labor Code considers it an unfair labor practice
when an employer interferes, restrains or coerces employees in the exercise of their right to self-organization or
the right to form an association. In order to show that the employer committed unfair labor practice under the
Labor Code, substantial evidence is required to support the claim. Substantial evidence has been defined as such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion. In the case at bar,
respondents were indeed unceremoniously dismissed from work by reason of their intent to form and organize
a union.

A corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations
incurred by them, while acting as corporate agents, are not their personal liability but the direct accountability
of the corporation they represent. However, corporate officers may be deemed solidarily liable with the
corporation for the termination of employees if they acted with malice or bad faith. In the present case, the lower
tribunals unanimously found that Percy and Harbutt, in their capacity as corporate officers of Burgos, acted
maliciously in terminating the services of respondents without any valid ground and in order to suppress their
right to self-organization. Section 31 of the Corporation Code makes a director personally liable for corporate
debts if he willfully and knowingly votes for or assents to patently unlawful acts of the corporation. It also
makes a director personally liable if he is guilty of gross negligence or bad faith in directing the affairs of the
corporation. Thus, Percy and Harbutt, having acted in bad faith in directing the affairs of Burgos, are jointly and
severally liable with the latter for respondents dismissal.

The awards of moral and exemplary damages in favor of respondents are also in order. Moral damages may be
recovered where the dismissal of the employee was tainted by bad faith or fraud, or where it constituted an act
oppressive to labor, and done in a manner contrary to morals, good customs or public policy, while exemplary
damages are recoverable only if the dismissal was done in a wanton, oppressive, or malevolent manner. The
grant of attorneys fees is likewise proper. Attorneys fees may likewise be awarded to respondents who were
illegally dismissed in bad faith and were compelled to litigate or incur expenses to protect their rights by reason
of the oppressive acts of petitioners. The unjustified act of petitioners had obviously compelled respondents to
institute an action primarily to protect their rights and interests which warrants the granting of the award. Park
Hotel, et al. vs. Manolo Soriano, et al. G.R. No. 171118. September 10, 2012.
Employment termination; Substantive and procedural due process; Mass leave; Strike. Petitioners were illegally
dismissed as they were not afforded substantive and procedural due process. To justify the dismissal of an
employee on the ground of serious misconduct, the employer must first establish that the employee is guilty of
improper conduct, that the employee violated an existing and valid company rule or regulation, or that the
employee is guilty of a wrongdoing. In the instant case, Biomedica failed to even present a copy of the rules and
to prove that petitioners were made aware of such regulations. The accusation is for engaging in a mass leave
tantamount to an illegal strike. The phrase mass leave may refer to a simultaneous availment of authorized
leave benefits by a large number of employees in a company. Here, only 5 employees were absent on the same
day. They did not go on strike, which is a temporary stoppage of work by the concerted action of employees as
a result of any industrial or labor dispute. Concerted is defined as mutually contrived or planned or
performed in unison. In the case at bar, the 5 petitioners went on leave for various reasons. They were in
different places to attend to their personal needs or affairs.
The petitioners were charged with conducting an illegal strike, not a mass leave, without specifying the exact
acts that the company considers as constituting an illegal strike or violative of company policies. Such allegation
falls short of the requirement in King of Kings Transport, Inc. of a detailed narration of the facts and
circumstances that will serve as basis for the charge against the employees. A bare mention of an illegal strike
will not suffice. Further, while Biomedica cites the provisions of the company policy which petitioners
purportedly violated, it failed to quote said provisions in the notice so petitioners can be adequately informed of
the nature of the charges against them and intelligently file their explanation and defenses to said accusations.
Moreover, the period of 24 hours allotted to petitioners to answer the notice was severely insufficient and in
violation of the implementing rules of the Labor Code. Under the implementing rule of Art. 277, an employee
should be given reasonable opportunity to file a response to the notice.

In addition, Biomedica did not set the charges against petitioners for hearing or conference. While petitioners
did not submit any written explanation to the charges, it is incumbent for Biomedica to set the matter for hearing
or conference to hear the defenses and receive evidence of the employees. More importantly, Biomedica is duty-
bound to exert efforts, during said hearing or conference, to hammer out a settlement of its differences with
petitioners. These prescriptions Biomedica failed to satisfy. Lastly, Biomedica again deviated from the dictated
contents of a written notice of termination as laid down in Sec. 2, Book V, Rule XIII of the Implementing Rules
that it should embody the facts and circumstances to support the grounds justifying the termination. Alex Q.
Naranjo, et al. vs. Biomedica Health Care, Inc., et al. G.R. No. 193789. September 19, 2012.
Employee dismissal; Reinstatement. Following Article 279 of the Labor Code, an employee who is unjustly
dismissed from work is entitled to reinstatement without loss of seniority rights and other privileges and to his
full backwages computed from the time he was illegally dismissed. However, considering that respondent Dakila
was terminated one (1) day prior to his compulsory retirement on May 2, 2007, his reinstatement is no longer
feasible. Accordingly, the NLRC correctly held him entitled to the payment of his retirement benefits pursuant
to the CBA. On the other hand, his backwages should be computed only for days prior to his compulsory
retirement which in this case is only a day. Consequently, the award of reinstatement wages pending appeal must
be deleted for lack of basis. The New Philippine Skylanders, Inc. and/or Jennifer M. Eano-Bote vs. Francisco
N. Dakila. G.R. No. 199547. September 24, 2012
Evidence; Constructive dismissal; Transfer; Substantial evidence. In labor cases, strict adherence with the
technical rules is not required. This liberal policy, however, should still conform to the rudiments of equitable
principles of law. For instance, belated submission of evidence may only be allowed if the delay is adequately
justified and the evidence is clearly material to establish the partys cause. Labor tribunals, such as the NLRC,
are not precluded from receiving evidence submitted on appeal as technical rules are not binding in cases
submitted before them. However, any delay in the submission of evidence should be adequately explained and
should adequately prove the allegations sought to be proven. In the present case, MORESCO IIs belated
submission of evidence cannot be permitted. MORESCO II did not cite any reason why it had failed to file its
position paper or present its cause before the Labor Arbiter despite sufficient notice and time given to do
so. Only after an adverse decision was rendered did it present its defense and rebut the evidence of Cagalawan
by alleging that his transfer was made in response to the letter-request of the area manager of the Ginoog sub-
office asking for additional personnel to meet its collection quota. To our mind, however, the belated submission
of the said letter-request without any valid explanation casts doubt on its credibility, especially so when the same
is not a newly discovered evidence.
The rule is that it is within the ambit of the employers prerogative to transfer an employee for valid reasons and
according to the requirement of its business, provided that the transfer does not result in demotion in rank or
diminution of salary, benefits and other privileges. This Court has always considered the managements
prerogative to transfer its employees in pursuit of its legitimate interests. But this prerogative should be
exercised without grave abuse of discretion and with due regard to the basic elements of justice and fair play,
such that if there is a showing that the transfer was unnecessary or inconvenient and prejudicial to the employee,
it cannot be upheld. Here, while we find that the transfer of Cagalawan neither entails any demotion in rank since
he did not have tenurial security over the position of head of the disconnection crew, nor result to diminution in
pay as this was not sufficiently proven by him, MORESCO IIs evidence is nevertheless not enough to show
that said transfer was required by the exigency of the electric cooperatives business interest. Simply stated, the
evidence sought to be admitted by MORESCO II is not substantial to prove that there was a genuine business
urgency that necessitated the transfer.

When there is doubt between the evidence submitted by the employer and that submitted by the employee, the
scales of justice must be tilted in favor of the employee. This is consistent with the rule that an employers cause
could only succeed on the strength of its own evidence and not on the weakness of the employees
evidence. Thus, MORESCO II cannot rely on the weakness of Ortizs certification in order to give more credit
to its own evidence. Self-serving and unsubstantiated declarations are not sufficient where the quantum of
evidence required to establish a fact is substantial evidence, described as more than a mere scintilla. The
evidence must be real and substantial, and not merely apparent. MORESCO II has miserably failed to discharge
the onus of proving the validity of Cagalawans transfer. Misamis Oriental II Electric Service Cooperative
(MORESCO II) vs. Virgilio M. Cagalawan. G.R. No. 175170. September 5, 2012.
Retirement benefits. While it is true that based on prevailing jurisprudence, disallowed benefits received in good
faith need not be refunded, the case before us may be distinguished from those cases with that ruling because
the monies involved here are retirement benefits. Retirement benefits belong to a different class of benefits. All
the cases with that ruling involved benefits such as cash gifts, representation allowances, rice subsidies, uniform
allowances, per diems, transportation allowances, and the like. The foregoing allowances or fringe benefits are
given in addition to ones salary, either to reimburse him for expenses he might have incurred in relation to his
work, or as a form of supplementary compensation. On the other hand, retirement benefits are given to one who
is separated from employment either voluntarily or compulsorily. Such benefits, subject to certain requisites
imposed by law and/or contract, are given to the employee on the assumption that he can no longer work. They
are also given as a form of reward for the services he had rendered. The purpose is not to enrich him but to help
him during his non-productive years.
Our Decision does not preclude the retirees from receiving retirement benefits provided by existing retirement
laws. What they are prohibited from getting are the additional benefits under the GSIS RFP, which we found to
have emanated from a void and illegal board resolution. To allow the payees to retain the disallowed benefits
would amount to their unjust enrichment to the prejudice of the GSIS, whose avowed purpose is to maintain its
actuarial solvency to finance the retirement, disability, and life insurance benefits of its members. Government
Service Insurance System (GSIS), et al. vs. Commission on Audit (COA), et al. G.R. No. 162372. September 11,
2012.
Release/Quitclaim; Separation pay. The release/quitclaim affidavits are invalid for being against public policy
for two reasons: (1) the terms of the settlement are unconscionable; the separation pay for termination due to
reorganization/restructuring was deficient by Php400,000.00 for each employee; they were given only half of
the amount they were legally entitled to; and (2) the absence of voluntariness when the employees signed the
document, it was their dire circumstances and inability to support their families that finally drove them to accept
the amount offered. Without jobs and with families to support, they dallied in executing the quitclaim instrument,
but were eventually forced to sign given their circumstances. To be sure, a settlement under these terms is not
and cannot be a reasonable one, given especially the respondents length of service 25 years for Ybarola and
19 years for Rivera. Radio Mindanao Network, Inc. and Eric S. Canoy vs. Domingo Z. Ybarola, et al. G.R. No.
198662. September 12, 2012.
Res judicata. Res judicata means a matter adjudged; a thing judicially acted upon or decided; a thing or matter
settled by judgment. It denotes that a final judgment or decree on the merits by a court of competent
jurisdiction is conclusive of the rights of the parties or their privies in all latter suits on all points and matters
determined in the former suit. For res judicata, in its concept as a bar by former judgment to apply, the following
must be present:
1. The former judgment or order is final;

2. It is rendered by a court having jurisdiction over the subject matter and the parties;

3. It is a judgment or an order on the merits; and,

4. There is between the first and the second identity of parties, identity of subject matter, and identity of
cause of action.

The Decision of this Court in G.R. Nos. 159460 and 159461 became final and executory on May 20, 2011. It is
a decision based on the merits of the case and rendered by this Court in the exercise of its appellate jurisdiction
after the parties invoked its jurisdiction. There is also, between the two sets of consolidated cases, identity of
the parties, subject matter and causes of action. The parties in G.R. No. 159460 and 159461 are also impleaded
as parties in these consolidated cases. And while some of the parties herein are not included in G.R. Nos. 159460
and 159461, the same are only few. In any event, it is well-settled that only substantial, and not absolute, identity
of the parties is required for res judicata to lie. There is substantial identity of the parties when there is a
community of interest between a party in the first case and a party in the second case albeit the latter was not
impleaded in the first case.

With regard to identity of cause of action, it has been held that there is identity of causes of action when the same
evidence will sustain both actions or when the facts essential to the maintenance of the two actions are
identical. Here, the bone of contention in both sets of consolidated cases boils down to the nature and
consequences of complainants April 3, 2000 mass action. The antecedent facts that gave rise to all the cases
were the same. Necessarily, therefore, the same evidence would sustain all actions. Such similarity in the
evidence required to sustain all actions is also borne out by the identity of the issues involved in all these
cases. While the parties have presented a plethora of arguments which we earlier discussed at length, the same
nonetheless boil down to the same crucial issues formulated in G.R. Nos. 159460 and 159461.

It should be recalled that in G.R. No. 153799, the complainants assailed the Resolutions dated January 14, 2002
and February 20, 2002 of the CAs Fourth Division granting Metrobanks request for injunctive reliefs. They
claimed that the reinstatement aspect of the Labor Arbiters Decision is immediately executory. Hence, they are
entitled to backwages from the time the Labor Arbiter promulgated his Decision until it was reversed by the
NLRC.

As discussed above, however, the November 15, 2010 Decision of this Court in G.R. Nos. 159460 and 159461
already adjudicated the respective rights and liabilities of the parties. Said Decision pronouncing the monetary
awards to which the parties herein are entitled became final and executory on May 20, 2011. Under the rule on
immutability of judgment, this Court cannot alter or modify said Decision. It is a well-established rule that once
a judgment has become final and executory, it is no longer susceptible to any modification. Solidbank Union, et
al. vs. Metropolitan Bank and Trust Company/Metropolitan Bank and Trust Company vs. Solidbank Union, et
al./Solidbank Corporation, etc., et al. vs. Solidbank Union, et al./Solidbank Union, et al. vs. Metropolitan Bank
and Trust Company. G.R. No. 153799/G.R. No. 157169/G.R. No. 157327/G.R. No. 157506. September 17,
2012.
Reinstatement; Strained relations. A determination of the applicability of the doctrine of strained relations is
essentially a factual question and, thus, not a proper subject in this petition. This rule, however, admits of
exceptions. In cases where the factual findings of the LA and the NLRC are conflicting, the Court, in the exercise
if equity jurisdiction, may review and re-evaluate the factual issues and look into the records of the case and re-
examine the questioned findings.
As the records bear out, the LA found that patent animosity existed between ACMC and Bides considering the
confrontation that took place between the latter and Matthew. The confrontation coupled with Bides refusal to
be reinstated led to the LAs finding of strained relations necessitating an award of separation pay in lieu of
reinstatement. The NLRC, on the other hand, deleted the said award for lack of factual basis. The CA reinstated
the LAs finding of strained relations and explained that too much enmity had developed between ACMC and
Bides that necessarily barred the latters reinstatement.

The Court is well aware that reinstatement is the rule and, for the exception of strained relations to apply, it
should be proved that it is likely that, if reinstated, an atmosphere of antipathy and antagonism would be
generated as to adversely affect the efficiency and productivity of the employee concerned.

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. Moreover,
the doctrine of strained relations has been made applicable to cases where the employee decides not to be
reinstated and demands for separation pay.
In the present case, Bides has consistently maintained, from the proceedings in the LA up to the CA, his refusal
to be reinstated due to his fear of reprisal which he could experience as a consequence of his return. By doing
so, Bides unequivocally foreclosed reinstatement as a relief.

Apo Chemical Manufacturing and Michael Cheng vs. Ronaldo A. Bides. G.R. No. 186002. September 19, 2012.
Seafarers disability benefits; Attorneys fees. In determining the disability benefits due a seafarer the POEA
Standard Employment Contract (SEC), specifically its schedule of benefits, medical findings, Article 192 (c)(1)
of the Labor Code, and Rule X, Section 2 of its implementing rules and regulations must be considered. The
initial treatment period of 120 days may be extended up to a maximum of 240 days under the conditions
prescribed by law.
Under Article 2298 of the Civil Code, attorneys fees can be recovered [w]hen the defendants act or omission
has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. This Court
sees no reason why damages or attorneys fees should be awarded to Penales. It is obvious that he did not give
the petitioners company-designated physician ample time to assess and evaluate his condition, or to treat him
properly for that matter. The petitioners had a valid reason for refusing to pay his claims, especially when they
were complying with the terms of the POEA SEC with regard to his allowances and treatment. Pacific Ocean
Manning Inc., et al. vs. Benjamin D. Penales. G.R. No. 162809. September 5, 2012.

August 2012 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on September 10, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law, Philippines -
Regulation
Here are select rulings of the Philippine Supreme Court on labor law and procedure:

Disability benefits; entitlement. Entitlement of seafarers to disability benefits is governed not only by medical
findings but also by contract and by law. By contract, Department Order No. 4, series of 2000, of the Department
of Labor and Employment and the parties Collective Bargaining Agreement bind the seafarer and the employer.
By law, the Labor Code provisions on disability apply with equal force to seafarers. The seafarer, upon sign-off
from his vessel, must report to the company-designated physician within three (3) days from arrival for diagnosis
and treatment. For the duration of the treatment but in no case to exceed 120 days, the seaman is on temporary
total disability as he is totally unable to work. He receives his basic wage during this period until he is declared
fit to work or his temporary disability is acknowledged by the company to be permanent, either partially or
totally, as his condition is defined under the POEA Standard Employment Contract and by applicable Philippine
laws. If the 120 days initial period is exceeded and no such declaration is made because the seafarer requires
further medical attention, then the temporary total disability period may be extended up to a maximum of 240
days, subject to the right of the employer to declare within this period that a permanent partial or total disability
already exists. The seaman may of course also be declared fit to work at any time such declaration is justified
by his medical condition.
From the time Tomacruz was repatriated on November 18, 2002, he submitted himself to the care and treatment
of the company-designated physician. When the company-designated physician made a declaration on July 25,
2003 that Tomacruz was already fit to work, 249 days had already lapsed from the time he was repatriated. As
such, his temporary total disability should be deemed total and permanent, pursuant to Article 192 (c)(1) of the
Labor Code and its implementing rule. Philasia Shipping Agency Corporation, et al. vs. Andres G.
Tomacruz. G.R. No. 181180, August 15, 2012.
Employee dismissal; due process requirements. The following standards of due process shall be substantially
observed for termination of employment based on just causes as defined in Article 282 of the Labor Code:
(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said
employee reasonable opportunity within which to explain his side.
(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires
is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him.

(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination.

Petitioners evidence fails to prove their contention that they afforded Atencio with due process. The June 21,
1999 letter, which allegedly proves Atencios knowledge of the charges against him, and which allegedly
constitutes Atencios explanation, clearly discusses an entirely different topic which is the removal of his
construction company from the Caltex project. As for the May 24, 1999 letter, which allegedly constitutes the
notice of termination of Atencios employment as JARLs chief operating manager, the said letter involves the
termination of the subcontracting agreement between JARL and Atencios company, and not the termination of
Atencios employment. For petitioners failure to observe the two-notice rule under Article 277(b) of the Labor
Code, respondent is entitled to nominal damages. Jarl Construction and Armando K. Tejada vs. Simeon A.
Atencio. G.R. No. 175969, August 1, 2012.
Judgment; law of the case.The law of the case has been defined as the opinion delivered on a former appeal. It
means that whatever is once irrevocably established as the controlling legal rule or decision between the same
parties in the same case continues to be the law of the case, whether correct on general principles or not, so long
as the facts on which such decision was predicated continue to be the facts of the case before the court.
Both G.R. No. 168477 and this petition are offshoots of petitioners purported temporary measures to preserve
its neutrality with regard to the perceived void in the union leadership. While these two cases arose out of
different notices to strike, it is undeniable that the facts cited and the arguments raised by petitioner are almost
identical. Inevitably, G.R. No. 168477 and this petition seek only one relief, that is, to absolve petitioner from
respondents charge of committing an unfair labor practice. For this reason, we are constrained to apply the law
of the case doctrine in light of the finality of our July 20, 2005 and September 21, 2005 resolutions in G.R. No.
168477. In other words, our previous affirmance of the Court of Appeals finding that petitioner erred in
suspending collective bargaining negotiations with the union and in placing the union funds in escrow
considering the intra-union dispute between the Aliazas and Baez factions was not a justification therefor is
binding in the present case. De la Salle University vs. De la Salle University Employees Association. G.R. No.
169254. August 23, 2012.
Lien; unpaid wages. Under Republic Act No. 10142, otherwise known as the Financial Rehabilitation and
Insolvency Act of 2010, the right of a secured creditor to enforce his lien during liquidation proceedings is
retained. On the right of first preference as regards unpaid wages, a distinction should be made between a
preference of credit and a lien. A preference applies only to claims which do not attach to specific properties. A
lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized
by Article 110 of the Labor Code does not constitute a lien on the property of the insolvent debtor in favor of
workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to
determine and specify the order in which credits should be paid in the final distribution of the proceeds of the
insolvents assets. It is a right to a first preference in the discharge of the funds of the judgment debtor.
Consequently, the right of first preference for unpaid wages may not be invoked in this case to nullify the
foreclosure sales conducted pursuant to PNBs right as a secured creditor to enforce its lien on specific properties
of its debtor, ARCAM. Manuel D. Yngson, Jr., (in his capacity as the Liquidator of ARCAM & Co., Inc.) vs.
Philippine National Bank. G.R. No. 171132, August 15, 2012.
NLRC; jurisdiction. Although Republic Act No. 8042, through its Section 10, transferred the original and
exclusive jurisdiction to hear and decide money claims involving overseas Filipino workers from the POEA to
the Labor Arbiters, the law did not remove from the POEA the original and exclusive jurisdiction to hear and
decide all disciplinary action cases and other special cases administrative in character involving such workers.
The obvious intent of Republic Act No. 8042 was to have the POEA focus its efforts in resolving all
administrative matters affecting and involving such workers. The NLRC had no appellate jurisdiction to review
the decision of the POEA in disciplinary cases involving overseas contract workers.
Although, as a rule, all laws are prospective in application unless the contrary is expressly provided, or unless
the law is procedural or curative in nature, there is no serious question about the retroactive applicability of
Republic Act No. 8042 to the appeal of the POEAs decision on petitioners disciplinary action against
respondents. In a way, Republic Act No. 8042 was a procedural law due to its providing or omitting guidelines
on appeal. Republic Act No. 8042 applies to petitioners complaint by virtue of the case being then still pending
or undetermined at the time of the laws passage, there being no vested rights in rules of procedure. They could
not validly insist that the reckoning period to ascertain which law or rule should apply was the time when the
disciplinary complaint was originally filed in the POEA in 1993. Moreover, Republic Act No. 8042 and its
implementing rules and regulations were already in effect when petitioners took their appeal. When Republic
Act No. 8042 withheld the appellate jurisdiction of the NLRC in respect of cases decided by the POEA, the
appellate jurisdiction was vested in the Secretary of Labor in accordance with his power of supervision and
control under Section 38(1), Chapter 7, Title II, Book III of the Revised Administrative Code of 1987. Eastern
Mediterranean Maritime Ltd., et al. vs. Estanislao Surio, et al. G.R. No. 154213, August 23, 2012.
Petition for review; question of fact. While generally, only questions of law can be raised in a petition for review
on certiorari under Rule 45 of the Rules of Court, the rule admits of certain exceptions, namely: (1) when the
findings are grounded entirely on speculations, surmises, or conjectures; (2) when the inference made is
manifestly mistaken, absurd, or impossible; (3) when there is a grave abuse of discretion; (4) when the judgment
is based on misappreciation of facts; (5) when the findings of fact are conflicting; (6) when in making its findings,
the same are contrary to the admissions of both appellant and appellee; (7) when the findings are contrary to
those of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they
are based; (9) when the facts set forth in the petition as well as in the petitioners main and reply briefs are not
disputed by the respondent; and (10) when the findings of fact are premised on the supposed absence of evidence
and contradicted by the evidence on record. The illegality of petitioners dismissal was an issue that was squarely
raised before the NLRC. When the NLRC decision was reversed by the Court of Appeals, there was a situation
where the findings of facts are conflicting. The petition for review filed by the Petitioner comes within the
purview of exception (5) and by analogy, exception (7). Mylene Carvajal vs. Luzon Development Bank and/or
Oscar Z. Ramirez. G.R. No. 186169, August 1, 2012.
Probationary employee; security of tenure. 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.
Punctuality is a reasonable standard imposed on every employee, whether in government or private sector. As a
matter of fact, habitual tardiness is a serious offense that may very well constitute gross or habitual neglect of
duty, a just cause to dismiss a regular employee. Assuming that petitioner was not apprised of the standards
concomitant to her job, it is but common sense that she must abide by the work hours imposed by the bank.
Satisfactory performance is and should be one of the basic standards for regularization. Naturally, before an
employer hires an employee, the former can require the employee, upon his engagement, 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.

It is evident that the primary cause of respondents dismissal from her probationary employment was her
chronic tardiness. At the very start of her employment, petitioner already exhibited poor working habits. Even
during her first month on the job, she already incurred eight (8) tardiness. Respondent also cited other infractions
such as unauthorized leaves of absence, mistake in clearing of a check, and underperformance. All of these
infractions were not refuted by petitioner. Mylene Carvajal vs. Luzon Development Bank and/or Oscar Z.
Ramirez. G.R. No. 186169, August 1, 2012.
Salaries; burden of proof of payment. When there is an allegation of nonpayment of salaries and other monetary
benefits, it is the employers burden to prove its payment to its employee. The employers evidence must show,
with a reasonable degree of certainty, that it paid and that the workers actually received the payment. The reason
for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar documents are
not in the possession of the worker but are in the custody and absolute control of the employer. In the case at
bar, the two official receipts issued by Safemark, and offered as JARLs evidence, only prove that JARL made
a total partial payment of P1,891,509.50 to the said company for its professional services. Since JARL admits
that the said company actually rendered services for JARL on its Caltex project, the payment can only be
assumed as covering for the said services. There is nothing on the face of the receipts to support the conclusion
that Atencio (and not his company) received it as payment for his service as a JARL employee. Jarl Construction
and Armando K. Tejada vs. Simeon A. Atencio. G.R. No. 175969, August 1, 2012.
Seafarers; contract. The employment of seafarers, and its incidents, including claims for death benefits, is
governed by the contracts they sign every time they are hired or rehired. Such contracts have the force of law
between the parties as long as their stipulations are not contrary to law, morals, public order or public policy.
While the seafarers and their employers are governed by their mutual agreements, the POEA rules and
regulations require that the POEA Standard Employment Contract, which contains the standard terms and
conditions of the seafarers employment in foreign ocean-going vessels, be integrated in every seafarers
contract. The pertinent provision of the 1996 POEA SEC, which was in effect at the time of Tanawans
employment, was Section 20(B) Compensation and Benefits. Wallem Maritime Services, Inc. vs. Ernesto C.
Tanawan. G.R. No. 160444. August 29, 2012.
Seafarers; disability benefits. The one tasked to determine whether the seafarer suffers from any disability or is
fit to work is the company-designated physician. As such, the seafarer must submit himself to the company-
designated physician for a post-employment medical examination within three days from his repatriation. But
the assessment of the company-designated physician is not final, binding or conclusive on the seafarer, the labor
tribunals, or the courts. The seafarer may request a second opinion and consult a physician of his choice regarding
his ailment or injury, and the medical report issued by the physician of his choice shall also be evaluated on its
inherent merit by the labor tribunal and the court.
Tanawan submitted himself to Dr. Lim, the company-designated physician, for a medical examination within
the 3-day reglementary period from his repatriation. The medical examination conducted focused on Tanawans
foot injury, the cause of his repatriation. Dr. Lim treated Tanawan for the foot injury from December 1, 1997
until May 21, 1998, when Dr. Lim declared him fit to work. Within that period that lasted 172 days, Tanawan
was unable to perform his job, an indication of a permanent disability. Under the law, there is permanent
disability if a worker is unable to perform his job for more than 120 days, regardless of whether or not he loses
the use of any part of his body. Disability should be understood more on the loss of earning capacity rather than
on the medical significance of the disability. Even in the absence of an official finding by the company-
designated physician to the effect that the seafarer suffers a disability and is unfit for sea duty, the seafarer may
still be declared to be suffering from a permanent disability if he is unable to work for more than 120 days. On
the other hand, Tanawans claim for disability benefits due to the eye injury was already barred by his failure to
report the injury and to have his eye examined by a company-designated physician. The rationale for the rule is
that reporting the illness or injury within three days from repatriation fairly makes it easier for a physician to
determine the cause of the illness or injury.

Under the 1996 POEA SEC, it was enough to show that the injury or illness was sustained during the term of
the contract. The Court has declared that the unqualified phrase during the term found in Section 20(B) thereof
covered all injuries or illnesses occurring during the lifetime of the contract. Whoever claims entitlement to the
benefits provided by law should establish his right to the benefits by substantial evidence. Tanawan did not
present any proof of having sustained the eye injury during the term of his contract. All that he submitted was
his bare allegation that his eye had been splashed with some thinner while he was on board the vessel. Wallem
Maritime Services, Inc. vs. Ernesto C. Tanawan. G.R. No. 160444. August 29, 2012.

July 2012 Philippine Supreme Court Decisions

on Labor Law and Procedure
Posted on August 8, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Law Tagged due process, employer-employee
relationship, illegal dismissal, loss of trust and confidence, retirement
Here are select July 2012 rulings of the Supreme Court of the Philippines on labor law and procedure:

Dismissal; due process. Due process requirement is met when there is simply an opportunity to be heard and to
explain ones side even if no hearing is conducted. An employee may be afforded ample opportunity to be heard
by means of any method, verbal or written, whether in a hearing, conference or some other fair, just and
reasonable way. After receiving the first notice apprising him of the charges against him, the employee may
submit a written explanation (which may be in the form of a letter, memorandum, affidavit or position paper)
and offer evidence in support thereof, like relevant company records and the sworn statements of his witnesses.
For this purpose, he may prepare his explanation personally or with the assistance of a representative or counsel.
He may also ask the employer to provide him copy of records material to his defense. His written explanation
may also include a request that a formal hearing or conference be held. In such a case, the conduct of a formal
hearing or conference becomes mandatory, just as it is where there exist substantial evidentiary disputes or where
company rules or practice requires an actual hearing as part of employment pre-termination procedure.
Petitioners written response to the prerequisite notice provided her with an avenue to explain and defend her
side and thus served the purpose of due process. That there was no hearing, investigation or right to appeal,
which petitioner opined to be a violation of company policies, is of no moment since the record is bereft of any
showing that there is an existing company policy that requires these procedures with respect to the termination
of a CHR Director like petitioner or that company practice calls for the same. There was also no request for a
formal hearing on the part of petitioner. As she was served with a notice apprising her of the charges against her
and also a subsequent notice informing her of the managements decision to terminate her services after
respondents found her written response to the first notice unsatisfactory, petitioner was clearly afforded her right
to due process. Flordeliza Maria Reyes-Rayel vs. Philippine Luen Thai Holdings Corporation, et al. G.R. No.
174893, July 11, 2012.
Dismissal; loss of trust and confidence. An employer has a distinct prerogative and wider latitude of discretion
in dismissing a managerial personnel who performs functions which by their nature require the employers full
trust and confidence.As distinguished from a rank and file personnel, mere existence of a basis for believing that
a managerial employee has breached the trust of the employer justifies dismissal. Loss of confidence as a ground
for dismissal does not require proof beyond reasonable doubt as the law requires only that there be at least some
basis to justify it.
Petitioner was L&Ts CHR Director for Manufacturing, which is a managerial position saddled with great
responsibility. As such, she was directly responsible for managing her own departmental staff. Because of this,
petitioner must enjoy the full trust and confidence of her superiors. However, petitioner delivered dismal
performance and displayed poor work attitude, which constitute sufficient reasons for an employer to terminate
an employee on the ground of loss of trust and confidence. First, records show that petitioner indeed
unreasonably failed to effectively communicate with her immediate superior. Second, the affidavits of
petitioners co-workers revealed her negative attitude and unprofessional behavior towards them and the
company. Lastly, petitioner displayed inefficiency and ineptitude in her job as a CHR Director. Taking all these
circumstances collectively, the Court is convinced that respondents have sufficient and valid reasons for
terminating the services of petitioner as her continued employment would be patently inimical to respondents
interest. Flordeliza Maria Reyes-Rayel vs. Philippine Luen Thai Holdings Corporation, et al. G.R. No. 174893,
July 11, 2012.
Employee dismissal; validity of termination. Retrenchment is one of the authorized causes for the dismissal of
employees recognized by the Labor Code. It is a management prerogative resorted to by employers to avoid or
to minimize business losses. The Court has laid down the following standards that an employer should meet to
justify retrenchment and to foil abuse, namely:
(a) The expected losses should be substantial and not merely de minimis in extent;
(b) The substantial losses apprehended must be reasonably imminent;

(c) The retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and

(d) The alleged losses, if already incurred, and the expected imminent losses sought to be forestalled must be
proved by sufficient and convincing evidence

In termination cases, the burden of proving that the dismissal was for a valid or authorized cause rests upon the
employer. The petitioner did not submit evidence of the losses to its business operations and the economic havoc
it would thereby imminently sustain. It only claimed that respondents termination was due to its present
business/financial condition. This bare statement fell short of the norm to show a valid retrenchment. Indeed,
not every loss incurred or expected to be incurred by an employer can justify retrenchment. The employer must
prove, among others, that the losses are substantial and that the retrenchment is reasonably necessary to avert
such losses. Thus, by its failure to present sufficient and convincing evidence to prove that retrenchment was
necessary, respondents termination due to retrenchment is not allowed. Legend Hotel [Manila], owned by
Titatium Corporation, et al. vs. Hernani S. Realuyo, also known as Joey Roa. G.R. No. 153511, July 18, 2012.
Employee training; reimbursement. The Supreme Court recognized the right of PAL to recoup the costs of a
pilots training in the form of service for a period of at least three (3) years. By carrying over the same stipulation
setting the age of fifty-seven (57) years as the reckoning point when a pilot becomes disqualified to bid for a
higher position in the present CBA, both PAL and ALPAP recognized that the companys effort in sending pilots
for training abroad is an investment which necessarily expects a reasonable return in the form of service for a
period of at least three (3) years. This stipulation had been repeatedly adopted by the parties in the succeeding
renewals of their CBA, thus validating the impression that it is a reasonable and acceptable term to both PAL
and ALPAP. Consequently, the petitioner cannot conveniently disregard this stipulation by simply raising the
absence of a contract expressly requiring the pilot to remain within PALs employ within a period of 3 years
after he has been sent on training. The supposed absence of contract being raised by the petitioner cannot stand
as the CBA clearly covered the petitioners obligation to render service to PAL within 3 years to enable it to
recoup the costs of its investment. Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, July 16, 2012.
Employer-employee relationship; existence. The issue of whether or not an employer-employee relationship
existed is essentially a question of fact. The factors that determine the issue include who has the power to select
the employee, who pays the employees wages, who has the power to dismiss the employee, and who exercises
control of the methods and results by which the work of the employee is accomplished. Although no particular
form of evidence is required to prove the existence of the relationship, and any competent and relevant evidence
to prove the relationship may be admitted, a finding that the relationship exists must nonetheless rest on
substantial evidence, which is that amount of relevant evidence that a reasonable mind might accept as adequate
to justify a conclusion.
A review of the circumstances reveals that respondent was, indeed, petitioners employee. He was undeniably
employed as a pianist in petitioners Restaurant. First of all, petitioner actually wielded the power of selection at
the time it entered into the service contract with respondent. The power of selection was firmly evidenced by,
among others, the express written recommendation by petitioners restaurant manager, for the increase of his
remuneration. Secondly, there is no denying that the remuneration denominated as talent fees was fixed on the
basis of his talent and skill and the quality of the music he played during the hours of performance each night,
taking into account the prevailing rate for similar talents in the entertainment industry. Respondents
remuneration, albeit denominated as talent fees, was still considered as included in the term wagein the sense
and context of the Labor Code, regardless of how petitioner chose to designate the remuneration. Thirdly, the
petitioner has the power to dismiss respondent. The memorandum informing respondent of the discontinuance
of his service because of the present business or financial condition of petitioner showed that the latter had the
power to dismiss him from employment. Lastly, the power of the employer to control the work of the employee
is considered the most significant determinant of the existence of an employer-employee relationship. This is
the so-called control test, and is premised on whether the person for whom the services are performed reserves
the right to control both the end achieved and the manner and means used to achieve that end. Respondent
performed his work as a pianist under petitioners supervision and control. Petitioners control of both the end
achieved and the manner and means used to achieve that end was demonstrated by the following, to wit: (1)He
could not choose the time of his performance, which petitioners had fixed from 7:00 pm to 10:00 pm, three to
six times a week; (2)He could not choose the place of his performance; (3) The restaurants manager required
him at certain times to perform only Tagalog songs or music, or to wear barong Tagalog to conform to the
Filipiniana motif; and (4)He was subjected to the rules on employees representation check and chits, a privilege
granted to other employees. Legend Hotel [Manila], owned by Titatium Corporation, et al. vs. Hernani S.
Realuyo, also known as Joey Roa. G.R. No. 153511, July 18, 2012.
Management prerogative; transfer of employees. An employers decision to transfer an employee, if made in
good faith, is a valid exercise of a management prerogative, although it may result in personal inconvenience or
hardship to the employee. Re-assignments made by management pending investigation of irregularities allegedly
committed by an employee fall within the ambit of management prerogative. The purpose of reassignments is
no different from that of preventive suspension which management could validly impose as a disciplinary
measure for the protection of the companys property pending investigation of any alleged malfeasance or
misfeasance committed by the employee.
As the executive assistant of the president, petitioner undeniably occupied a sensitive position that required her
employers utmost trust and confidence. Having lost his trust and confidence in petitioner, respondent Delfin
had the right to transfer her to ensure that she would no longer have access to the companies confidential files.
Although it is true that petitioner has yet to be proven guilty, respondents had the authority to reassign her,
pending investigation. When petitioner was assigned to Cavite, there was an ongoing investigation of the charges
filed against her. It is undisputed that she refused to fill up, for no justifiable reasons, the questionnaire distributed
by her employer to determine who among those who had access to the confidential files was responsible for their
taking. Furthermore, a witness had executed an Affidavit claiming that she found the missing files, and that her
husband told her that it was petitioner who handed those files to him. Lastly, the person who supposedly received
these documents from petitioner did not deny or rebuke the statements made by his wife. Josephine Ruiz vs.
Wendel Osaka Realty Corp., et al. G.R. No. 189082, July 11, 2012.
Retirement Pay; collective bargaining agreement. Article 287 of the Labor Code provides that it is applicable
only to a situation where (1) there is no CBA or other applicable employment contract providing for retirement
benefits for an employee, or (2) there is a CBA or other applicable employment contract providing for retirement
benefits for an employee, but it is below the requirement set by law. The rationale for the first situation is to
prevent the absurd situation where an employee, deserving to receive retirement benefits, is denied to them
through the nefarious scheme of employers to deprive employees of the benefits due them under existing labor
laws. On the other hand, the second situation aims to prevent private contracts from derogating from the public
law. The determining factor in choosing which retirement scheme to apply is still superiorityin terms of benefits
provided. Thus, even if there is an existing CBA but the same does not provide for retirement benefits equal or
superior to that which is provided under Article 287 of the Labor Code, the latter will apply.
There are two retirement schemes at point in this case: (1) Article 287 of the Labor Code, and; (2) the PAL-
ALPAP Retirement Plan and the PAL Pilots Retirement Benefit Plan. The two retirement schemes are
alternative in nature such that the retired pilot can only be entitled to that which provides for superior benefits.
Comparing the benefits under the two (2) retirement schemes, it can readily be perceived that the 22.5 days
worth of salary for every year of service provided under Article 287 of the Labor Code cannot match the 240%
of salary or almost two and a half worth of monthly salary per year of service provided under the PAL Pilots
Retirement Benefit Plan, which will be further added to the 125,000.00 to which the petitioner is entitled under
the PAL-ALPAP Retirement Plan. Clearly then, it is to the petitioners advantage that PALs retirement plans
were applied in the computation of his retirement benefits. Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R.
No. 181995, July 16, 2012.
Unjust enrichment. There is unjust enrichment when a person unjustly retains a benefit at the loss of another, or
when a person retains the money or property of another against the fundamental principles of justice, equity and
good conscience. Two conditions must concur: (1) a person is unjustly benefited; and (2) such benefit is derived
at the expense of or with damages to another. The enrichment may consist of a patrimonial, physical, or moral
advantage, so long as it is appreciable in money. It must have a correlative prejudice, disadvantage or injury to
the plaintiff which may consist, not only of the loss of the property or the deprivation of its enjoyment, but also
of the non-payment of compensation for a prestation or service rendered to the defendant without intent to donate
on the part of the plaintiff, or the failure to acquire something that the latter would have obtained.
PAL invested a considerable amount of money in sending the petitioner abroad to undergo training to prepare
him for his new appointment as B747-400 Captain. In the process, the petitioner acquired new knowledge and
skills which effectively enriched his technical know-how. As all other investors, PAL expects a return on
investment in the form of service by the petitioner for a period of 3 years, which is the estimated length of time
within which the costs of the latters training can be fully recovered. The petitioner is, thus, expected to work
for PAL and utilize whatever knowledge he had learned from the training for the benefit of the company.
However, after only one (1) year of service, the petitioner opted to retire from service, leaving PAL stripped of
a necessary manpower. Undeniably, the petitioner was enriched at the expense of PAL. After undergoing the
training fully shouldered by PAL, he acquired a higher level of technical competence which, in the professional
realm, translates to a higher compensation. Further, his training broadened his opportunities for a better
employment as in fact he was able to transfer to another airline company immediately after he left PAL. To
allow the petitioner to simply leave the company without reimbursing it for the proportionate amount of the
expenses it incurred for his training will only magnify the financial disadvantage sustained by PAL. Reason and
fairness dictate that he must return to the company a proportionate amount of the costs of his training. Bibiano
C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, July 16, 2012.

June 2012 Philippine Supreme Court Decisions

on Labor Law and Procedure
Posted on July 20, 2012 by Leslie C. Dy Posted in Labor Law Tagged abandonment, appeal, attorney's
fees, damages, dismissal, due process, independent contractor, jurisdiction, loss of trust and
confidence, NLRC, reinstatement, retirement, retrenchment

Here are select June 2012 rulings of the Supreme Court of the Philippine on labor law and procedure:

Appeal; issue of employer-employee relationship raised for the first time on appeal. It is a fundamental rule of
procedure that higher courts are precluded from entertaining matters neither alleged in the pleadings nor raised
during the proceedings below, but ventilated for the first time only in a motion for reconsideration or on appeal.
The alleged absence of employer-employee relationship cannot be raised for the first time on appeal. The
resolution of this issue requires the admission and calibration of evidence and the LA and the NLRC did not pass
upon it in their decisions. Petitioner is bound by its submissions that respondent is its employee and it should
not be permitted to change its theory. Such change of theory cannot be tolerated on appeal, not on account of the
strict application of procedural rules, but as a matter of fairness. Duty Free Philippines Services, Inc. vs. Manolito
Q. Tria. G.R. No. 174809. June 27, 2012.
Dismissal; abandonment. 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. Polyfoam-RGC International, Corporation and Precilla A.
Gramaje vs. Edgardo Concepcion. G.R. No. 172349, June 13, 2012.
Dismissal; due process. To meet the requirements of due process in the dismissal of an employee, an employer
must furnish the worker with two written notices: (1) a written notice specifying the grounds for termination and
giving to said employee a reasonable opportunity to explain his side and (2) another written notice indicating
that, upon due consideration of all circumstances, grounds have been established to justify the employers
decision to dismiss the employee. The law does not require that an intention to terminate ones 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 ones employment should be explicitly stated.
The guiding principles in connection with the hearing requirement in dismissal cases are the following:

1. Ample opportunity to be heard means any meaningful opportunity (verbal or written) given to the
employee to answer the charges against him and submit evidence in support of his defense, whether in
a hearing, conference or some other fair, just and reasonable way.
2. 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 when similar
circumstances justify it.
3. The ample opportunity to be heard standard in the Labor Code prevails over the hearing or
conference requirement in the implementing rules and regulations.
The existence of an actual, formal trial-type hearing, although preferred, is not absolutely necessary to satisfy
the employees 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 Esguerras termination. Dolores T. Esguerra vs.
Valle Verde Country Club, Inc. and Ernesto Villaluna. G.R. No. 173012, June 13, 2012.
Dismissal; loss of trust and confidence. 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.
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. It was
Esguerras responsibility to account for the cash proceeds; in case of problems, she should have promptly
reported it, regardless of who was at fault. Instead, she settled the unaccounted amount only after the accounting
department informed her about the discrepancy, almost one month following the incident. Esguerras failure to
make the proper report reflects her irresponsibility in the custody of cash for which she was accountable. Dolores
T. Esguerra vs. Valle Verde Country Club, Inc. and Ernesto Villaluna. G.R. No. 173012, June 13, 2012.
Dismissal; serious misconduct and loss of trust and confidence. Dejan 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, which are just causes for termination of employment under the law. There
is no dispute about the release of the meter sockets. Also, the persons involved were clearly identified Dejan;
Gozarin, 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. The release by Dejan of 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) served as a key element in proving the private contracting activity for electric service
connection being undertaken by Dejan and Duenas.
Moreover, it was bad enough that Dejan failed to ask for a written authorization from the customers for the
release of the meter sockets as required by company policy, but the elaborate scheme pursued by Dejan in
concert with Duenas, were all undertaken to defraud Meralco. Hence, Meralco had valid reasons 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 Dejans employment, as it would be inimical to its
interest. Manila Electric Company (Meralco) vs. Herminigildo H. Dejan. G.R. No. 194106, June 18, 2012.
Employee benefit; attorneys fees. Lazaro must establish a legal basis either by law, contract or other sources
of obligations to merit the receipt of the additional 10% attorneys fees collected in the various foreclosure
procedures he settled as the banks legal officer. Lazaro has not produced any contract or provision of law that
would warrant the payment of the additional attorneys fees. He is only entitled to his salaries as the banks legal
officer, because the services he rendered in the foreclosure proceedings were part of his official tasks. Banco
Filipino Savings and Mortgage Bank vs. Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings
and Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June 27, 2012.
Employee benefit; retirement pay. Banco Filipino maintains that the seven-year period when it was under
liquidation should not be credited in computing Lazaros retirement pay because, during that period, the bank
was considered closed. The Supreme Court held that banks under liquidation retain their legal personality. In
fact, even if they are prohibited from conducting regular banking business, it is necessary that debts owed to
them be collected. Lazaro performed the duty of foreclosing debts in favor of Banco Filipino. It cannot rightfully
disclaim Lazaros work that benefitted it.
As found in the Implementing Rules of the Retirement Pay Law and in jurisprudence, only in the absence of an
applicable retirement agreement shall Article 287 of the Labor Code apply. There is a proviso however, that an
employees retirement benefits under any agreement shall not be less than those provided in the said article. The
Rules of the Banco Filipino Retirement Fund do not provide for benefits lower than those in the Labor Code. In
fact, the bank offers a retirement pay equivalent to one andone-half month salary for every year of service, a rate
over and above the one-half month salary threshold provided by the law. Although the Rules of the Banco
Filipino Retirement Fund do not grant a rounding off scheme, they nonetheless provide that prorated credit shall
be given for incomplete years, regardless of the fraction of months in the retirees length of service.
Notwithstanding the lack of a rounding-up provision, still, the higher retirement pay, together with the prorated
crediting, cannot be deemed to be less favorable than that provided for by the law. Ultimately, the more important
threshold to be considered in construing whether the retirement agreement provides less benefits, compared to
those provided by the Retirement Pay Law, is that the retirement benefits in the said agreement should at least
amount to one-half of the employees monthly salary. Banco Filipino Savings and Mortgage Bank vs. Miguelito
M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and Mortgage Bank, et al. G.R. No. 185346 & G.R.
No. 185442. June 27, 2012
Employee dismissal. When the floating status of employees lasts for more than six (6) months, they may be
considered to have been illegally dismissed from the service. Floating status means an indefinite period of
time when one does not receive any salary or financial benefit provided by law. In this case, petitioners were
actually reassigned to new posts, albeit in a different location from where they resided. Thus, there can be no
floating status or indefinite period to speak of. Instead, petitioners were the ones who refused to report for work
in their new assignment.
In cases involving security guards, a relief and transfer order in itself does not sever the employment relationship
between the security guards and their agency. Employees have the right to security of tenure, but this does not
give them such a vested right to their positions as would deprive the company of its prerogative to change their
assignment or transfer them where their services, as security guards, will be most beneficial to the client. An
employer has the right to transfer or assign its employees from one office or area of operation to another in
pursuit of its legitimate business interest, provided there is no demotion in rank or diminution of salary, benefits,
and other privileges; and the transfer is not motivated by discrimination or bad faith, or effected as a form of
punishment or demotion without sufficient cause. While petitioners may claim that their transfer to Manila will
cause added expenses and inconvenience, absent any showing of bad faith or ill motive on the part of the
employer, the transfer remains valid. Salvador O. Mojar, et al. vs. Agro Commercial Security Service Agency,
et al. G.R. No. 187188, June 27, 2012.
Employee dismissal; burden of proof. Under the law, the burden of proving that the termination of employment
was for a valid or authorized cause rests on the employer. Failure to discharge this burden would result in an
unjust or illegal dismissal. The companys evidence on the respondents alleged infractions do not substantially
show that they violated company rules and regulations to warrant their dismissal. It is obvious that the company
overstepped the bounds of its management prerogative in the dismissal of Mauricio and Camacho. It lost sight
of the principle that management prerogative must be exercised in good faith and with due regard to the rights
of the workers in the spirit of fairness and with justice in mind. Philbag Industrial Manufacturing Corp. vs.
Philbag Workers Union-Lakas at Gabay ng Manggagawang Nagkakaisa. G.R. No. 182486, June 20, 2012.
Employee dismissal; due process. Retrenchment is subject to faithful compliance with the substantive and
procedural requirements laid down by law and jurisprudence. For a valid retrenchment, the following elements
must be present:
1. That retrenchment is reasonably necessary and likely to prevent business losses which, if already
incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are
reasonably imminent as perceived objectively and in good faith by the employer;
2. That the employer served written notice both to the employees and to the Department of Labor and
Employment at least one month prior to the intended date of retrenchment;
3. That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at
least month pay for every year of service, whichever is higher;
4. That the employer exercises its prerogative to retrench employees in good faith for the advancement of
its interest and not to defeat or circumvent the employees right to security of tenure; and
5. That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who
would be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and
financial hardship for certain workers.
All these elements were successfully proven by petitioner. First, the huge losses suffered by the Club for the past
two years had forced petitioner to close it down to avert further losses which would eventually affect the
operations of petitioner. Second, all 45 employees working in the Club were served with notice of termination.
The corresponding notice was likewise served to the DOLE one month prior to retrenchment. Third, the
employees were offered separation pay, most of whom have accepted and opted not to join in this complaint.
Fourth, the cessation of or withdrawal from business operations was bona fide in character and not impelled by
a motive to defeat or circumvent the tenurial rights of employees. Waterfront Cebu City Hotel vs. Ma. Melanie
P. Jimenez, et al. G.R. No. 174214, June 13, 2012.
Employee dismissal; due process. The following are the guiding principles in connection with the hearing
requirement in dismissal cases:
1. Ample opportunity to be heard means any meaningful opportunity (verbal or written) given to the
employee to answer the charges against him and submit evidence in support of his defense, whether in
a hearing, conference or some other fair, just and reasonable way.
2. 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 when similar
circumstances justify it.
3. The ample opportunity to be heard standard in the Labor Code prevails over the hearing or
conference requirement in the implementing rules and regulations.
Given that the petitioners expressly requested a conference or a convening of a grievance committee, 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. Prudential Guarantee and Assurance Employee Labor Union and Sandy T. Vallota vs. NLRC,
Prudential Guarantee and Assurance Inc., and/or Jocelyn Retizos. G.R. No. 185335, June 13, 2012.
Employee dismissal; just cause. 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 as a cause for termination of employment.
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. Previous infractions may be cited as
justification for dismissing an employee only if they are related to the subsequent offense. However, it must be
noted that such a discussion was unnecessary since the theft, taken in isolation from Fermins other violations,
was in itself a valid cause for the termination of his employment. Cosmos Bottling Corp. vs. Wilson
Fermin/Wilson Fermin vs. Cosmos Bottling Corp. and Cecilia Bautista. G.R. No. 193676 & G.R. No.
194303. June 20, 2012.
Employee dismissal; loss of trust and confidence. 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 employees 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
employees dismissal from employment. 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 employers 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 the misconduct that renders the latter unworthy
of the trust and confidence demanded by his or her position. For more than a month, the petitioners 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 plants warehouse. Thus, PLDT reasonably
suspected petitioner of stealing the companys 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. Romeo E. Paulino vs. NLRC, Philippine Long Distance Co.,
Inc. G.R. No. 176184, June 13, 2012.
Employee dismissal; loss of trust and confidence. Loss of confidence as a just cause for dismissal was never
intended to provide employers with a blank check for terminating their employees. It 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 employers 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.
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. The second requisite is that there must be an act that
would justify the loss of trust and confidence. Vallotas 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. There
was no other evidence presented to prove fraud in the manner of securing or obtaining the files found in Vallotas
computer. 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. Prudential Guarantee and Assurance Employee Labor Union and Sandy T. Vallota vs. NLRC,
Prudential Guarantee and Assurance Inc., and/or Jocelyn Retizos. G.R. No. 185335, June 13, 2012.
Employee dismissal; loss of trust and confidence. 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. The testimony
of Lobitaa constitutes substantial evidence to prove that respondent, as the then Power Plant Manager, accepted
commissions and/or kickbacks from suppliers, which is a clear violation of Section 2.04 of petitioners
Company Rules and Regulations. Jurisprudence consistently holds that for managerial employees, the mere
existence of a basis for believing that such employee has breached the trust of his employer would suffice for
his dismissal. Respondents termination was for a just and valid cause. Apo Cement Corporation Vs. Zaldy E.
Baptisma. G.R. No. 176671. June 20, 2012.
Employee dismissal; order of reinstatement. Article 223 of the Labor Code provides that in case there is an order
of reinstatement, the employer must admit the dismissed employee under the same terms and conditions, or
merely reinstate the employee in the payroll. The order shall be immediately executory. Thus, 3rd Alert cannot
escape liability by simply invoking that Navia did not report for work. The law states that the employer must
still reinstate the employee in the payroll. Where reinstatement is no longer viable as an option, separation pay
equivalent to one (1) month salary for every year of service could be awarded as an alternative. 3rd Alert Security
and Detective Services, Inc. vs. Romualdo Navia. G.R. No. 200653, June 13, 2012.
Employee dismissal; retrenchment. Retrenchment is the termination of employment initiated by the employer
through no fault of and without prejudice to the employees. It is resorted to during periods of business recession,
industrial depression, or seasonal fluctuations or during lulls occasioned by lack of orders, shortage of materials,
conversion of the plant for a new production program or the introduction of new methods or more efficient
machinery or of automation. It is an act of the employer of dismissing employees because of losses in the
operation of a business, lack of work, and considerable reduction on the volume of his business. In this case, the
closure of a department or division of a company constitutes retrenchment by, and not closure of, the company
itself. Petitioner has not totally ceased its business operations. It merely ceased operations of a department.
Waterfront Cebu City Hotel vs. Ma. Melanie P. Jimenez, et al. G.R. No. 174214, June 13, 2012.
Employee dismissal; willful breach of trust. 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 employers whims or
caprices or suspicions otherwise, the employee would eternally remain at the mercy of the employer. The
Supreme Court has laid down the guidelines for the application of the loss of trust and confidence 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.
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 Meralcos 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. Meralcos loss of trust and
confidence arising out of Villanuevas 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. Vicente Villanueva, Jr. vs.. The National Labor Relations Commission, Third Division, Manila
Electric Company, Manuel Lopez, Chairman and CEO, and Francisco Collantes, Manager. G.R. No.
176893, June 13, 2012.
Employee suit; damages. To obtain moral damages, the claimant must prove the existence of bad faith by clear
and convincing evidence, for the law always presumes good faith. It is not even enough that one merely suffered
sleepless nights, mental anguish and serious anxiety as the result of the actuations of the other party. In this case,
Lazaro did not state any moral anguish that he suffered. Neither did he substantiate his imputations of malice to
Banco Filipino. He only made a sweeping declaration, without concrete proof, that the bank in refusing his claim
maliciously damaged his property rights and interest. Accordingly, neither moral damages nor exemplary
damage can be awarded to him.
With respect to attorneys fees, an award is proper only if that person was forced to litigate and incur expenses
to protect ones rights and interest by reason of an unjustified act or omission of the party for whom it is sought.
Banco Filipino had a prima facie legitimate defense that, because it underwent liquidation proceedings, it cannot
be compelled to credit that period in the computation of the employees the retirement pay and profit shares.
Considering that Banco Filipinos refusal cannot be accurately characterized as unjustified, Lazaro cannot claim
an award of attorneys fees. Banco Filipino Savings and Mortgage Bank vs. Miguelito M. Lazaro/Miguelito M.
Lazaro vs. Banco Filipino Savings and Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June 27,
2012.
Independent contractor; tests. Permissible job contracting or subcontracting refers to an arrangement whereby a
principal agrees to put out or farm out to a contractor or subcontractor the performance or completion of a specific
job, work or service within a definite or predetermined period, regardless of whether such job, work or service
is to be performed or completed within or outside the premises of the principal. A person is considered engaged
in legitimate job contracting or subcontracting if the following conditions concur:
(a) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform
the job, work or service on its own account and under its own responsibility according to its own manner and
method, and free from the control and direction of the principal in all matters connected with the performance
of the work except as to the results thereof;

(b) The contractor or subcontractor has substantial capital or investment; and

(c) The agreement between the principal and contractor or subcontractor assures the contractual employees
entitlement to all labor and occupational safety and health standards, free exercise of the right to self-
organization, security of tenure, and social welfare benefits.

In contrast, labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor
merely recruits, supplies or places workers to perform a job, work or service for a principal. In labor-only
contracting, the following elements are present:

(a) The contractor or subcontractor does not have substantial capital or investment to actually perform the job,
work or service under its own account and responsibility; and
(b) The employees recruited, supplied or placed by such contractor or subcontractor, are performing activities
which are directly related to the main business of the principal.

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.

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. Neither Gramaje nor Polyfoam
presented evidence showing Gramajes ownership of the equipment and machineries used in the performance of
the alleged contracted job.

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 Polyfoams foam products in Polyfoams premises. As to the recruitment of
respondent, petitioners were able to establish only that respondents application was referred to Gramaje, but
that is all. Prior to his termination, respondent had been performing the same job in Polyfoams business for
almost six (6) years. He was even furnished a copy of Polyfoams Mga Alituntunin at Karampatang
Parusa, which embodied Polyfoams rules on attendance, the manner of performing the employees 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 Polyfoams supervisor,
claiming that the latter did not exercise supervision over respondent because the latter was not Polyfoams but
Gramajes employee, 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
to Polyfoam. It was never established that Gramaje took entire charge, control and supervision of the work and
service agreed upon. Polyfoam-RGC International, Corporation and Precilla A. Gramaje vs. Edgardo
Concepcion. G.R. No. 172349, June 13, 2012.
NLRC; jurisdiction over interpretation or implementation of the CBA. R.A. 8042 is a special law governing
overseas Filipino workers. However, there is no specific provision thereunder which provides for jurisdiction
over disputes or unresolved grievances regarding the interpretation or implementation of a CBA. Section 10 of
R.A. 8042 simply speaks, in general, of claims arising out of an employer-employee relationship or by virtue
of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral,
exemplary and other forms of damages. On the other hand, Articles 217(c) and 261 of the Labor Code are very
specific in stating that voluntary arbitrators have jurisdiction over cases arising from the interpretation or
implementation of collective bargaining agreements. In the present case, the basic issue raised by Merridy Jane
in her complaint filed with the NLRC is: which provision of the subject CBA applies insofar as death benefits
due to the heirs of Nelson are concerned. This issue clearly involves the interpretation or implementation of the
said CBA. Thus, the specific or special provisions of the Labor Code govern.
CBA is the law or contract between the parties. Article 13.1 of the CBA entered into by and between respondent
GCI and AMOSUP provides that the Company and the Union agree that in case of dispute or conflict in the
interpretation or application of any of the provisions of this Agreement, or enforcement of Company policies,
the same shall be settled through negotiation, conciliation or voluntary arbitration. The provisions of the CBA
are in consonance with Rule VII, Section 7 of the present Omnibus Rules and Regulations Implementing the
Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic Act No. 10022, which states that
for OFWs with collective bargaining agreements, the case shall be submitted for voluntary arbitration in
accordance with Articles 261 and 262 of the Labor Code. With respect to disputes involving claims of Filipino
seafarers wherein the parties are covered by a collective bargaining agreement, the dispute or claim should be
submitted to the jurisdiction of a voluntary arbitrator or panel of arbitrators. It is only in the absence of a
collective bargaining agreement that parties may opt to submit the dispute to either the NLRC or to voluntary
arbitration. Estate of Nelson R. Dulay, represented by his wife Meddiry Jane P. Dulay vs. Aboitiz Jebsen
Maritime, Inc. and General Charterers, Inc. G.R. No. 172642, June 13, 2012.
Service; proof of service. Petitioners allege that no affidavit of service was attached to the CA Petition. However,
the Supreme Court noted that in the CA Resolution, the appellate court stated that their records revealed that
Atty. Espinas, petitioners counsel of record at the time, was duly served a copy of the following: CA Resolution
granting respondents Motion for Extension of Time to file the CA Petition; CA Resolution requiring petitioners
to file their Comment on the CA Petition; and CA Resolution, submitting the case for resolution, as no comment
was filed. Such service to Atty. Espinas was valid despite the fact he was already deceased at the time. If a party
to a case has appeared by counsel, service of pleadings and judgments shall be made upon his counsel or one of
them, unless service upon the party is specifically ordered by the court. It is not the duty of the courts to inquire,
during the progress of a case, whether the law firm or partnership representing one of the litigants continues to
exist lawfully, whether the partners are still alive, or whether its associates are still connected with the
firm. Salvador O. Mojar, et al. vs. Agro Commercial Security Service Agency, et al. G.R. No. 187188, June 27,
2012.

April 2012 Philippine Supreme Court Decisions

on Labor Law and Procedure
Posted on May 10, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law Tagged dismissal, due
process, employer-employee relationship, probationary employment, project employee, retrenchment

Here are select April 2012 rulings of the Supreme Court of the Philippines on labor law and procedure:

Dismissal; due process. When the Labor Code speaks of procedural due process, the reference is usually to the
two (2)-written notice rule envisaged in Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing
the Labor Code. MGG Marine Services, Inc. v. NLRC tersely described the mechanics of what may be
considered a two-part due process requirement which includes the two-notice rule, x x x one, of the intention
to dismiss, indicating therein his acts or omissions complained against, and two, notice of the decision to dismiss;
and an opportunity to answer and rebut the charges against him, in between such notices.
Here, the first and second notice requirements have not been properly observed. The adverted memo would have
had constituted the charge sheet, sufficient to answer for the first notice requirement, but for the fact that there
is no proof such letter had been sent to and received by him. Neither was there compliance with the imperatives
of a hearing or conference. Suffice it to point out that the record is devoid of any showing of a hearing or
conference having been conducted. And the written notice of termination itself did not indicate all the
circumstances involving the charge to justify severance of employment. For violating petitioners right to due
process, the Supreme Court ordered the payment to petitioner of the amount of P30,000 as nominal
damages. Armando Ailing vs. Jose B. Feliciano, Manuel F. San Mateo III, et al., G.R. No. 185829. April 25,
2012.
Dismissal; just cause. In fine, an employees failure to meet sales or work quotas falls under the concept of gross
inefficiency, which in turn is analogous to gross neglect of duty that is a just cause for dismissal under Article
282 of the Code. However, in order for the quota imposed to be considered a valid productivity standard and
thereby validate a dismissal, managements prerogative of fixing the quota must be exercised in good faith for
the advancement of its interest. The duty to prove good faith, however, rests with WWWEC as part of its burden
to show that the dismissal was for a just cause. WWWEC must show that such quota was imposed in good faith.
This WWWEC failed to do, perceptibly because it could not. The fact of the matter is that the alleged imposition
of the quota was a desperate attempt to lend a semblance of validity to Alilings illegal dismissal. Armando
Ailing vs. Jose B. Feliciano, Manuel F. San Mateo III, et al., G.R. No. 185829. April 25, 2012.
Dismissal; retrenchment. Retrenchment is a valid exercise of management prerogative subject to the strict
requirements set by jurisprudence, to wit:
(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.

As aptly found by the NLRC and justly sustained by the CA, Petrocon exercised its prerogative to retrench its
employees in good faith and the considerable reduction of work allotments of Petrocon by Saudi Aramco was
sufficient basis for Petrocon to reduce the number of its personnel. As for the notice requirement, however,
contrary to petitioners contention, proper notice to the DOLE within 30 days prior to the intended date of
retrenchment is necessary and must be complied with despite the fact that respondent is an overseas Filipino
worker. In the present case, although respondent was duly notified of his termination by Petrocon 30 days before
its effectivity, no allegation or proof was advanced by petitioner to establish that Petrocon ever sent a notice to
the DOLE 30 days before the respondent was terminated. Thus, this requirement of the law was not complied
with. Despite the fact that respondent was employed by Petrocon as an OFW in Saudi Arabia, still both he and
his employer are subject to the provisions of the Labor Code when applicable. The basic policy in this jurisdiction
is that all Filipino workers, whether employed locally or overseas, enjoy the protective mantle of Philippine
labor and social legislations (citing Philippine National Bank v. Cabansag, G.R. No. 157010, June 21, 2005, 460
SCRA 514, 518 and Royal Crown Internationale v. NLRC, G.R. No. 78085, October 16, 1989, 178 SCRA
569.) International Management Services/Marilyn C. Pascual vs. Roel P. Logarta, G.R. No. 163657, April 18,
2012.
Employee; probationary employee. The aforequoted Section 6 of the Implementing Rules of Book VI, Rule VIII-
A of the Code specifically requires the employer to inform the probationary employee of such reasonable
standards at the time of his engagement, not at any time later; else, the latter shall be considered a regular
employee. Thus, pursuant to the explicit provision of Article 281 of the Labor Code, Section 6(d) of the
Implementing Rules of Book VI, Rule VIII-A of the Labor Code and settled jurisprudence, petitioner Aliling is
deemed a regular employee as of June 11, 2004, the date of his employment contract.
The letter-offer to Aliling states that the regularization standards or the performance norms to be used are still
to be agreed upon by him and his supervisor. Moreover, Aliling was assigned to GX trucking sales, an activity
entirely different to the Seafreight Sales for which he was originally hired and trained for. In the present case,
there was no proof that Aliling was informed of the standards for his continued employment, such as the sales
quota, at the time of his engagement. Armando Ailing vs. Jose B. Feliciano, Manuel F. San Mateo III, et al., G.R.
No. 185829. April 25, 2012.
Employee; separation package. Article 283 of the Labor Code provides only the required minimum amount of
separation pay, which employees dismissed for any of the authorized causes are entitled to receive. Employers,
therefore, have the right to create plans, providing for separation pay in an amount over and above what is
imposed by Article 283. There is nothing therein that prohibits employers and employees from contracting on
the terms of employment, or from entering into agreements on employee benefits, so long as they do not violate
the Labor Code or any other law, and are not contrary to morals, good customs, public order, or public policy.
Consequently, petitioners are not allowed to receive separation pay from both the Labor Code, on the one hand,
and the New Gratuity Plan and the SSP, on the other, they would receive double compensation for the same
cause (i.e., separation from the service due to redundancy). Ma. Corina C. Jiao, et al. vs. Global Business Bank,
Inc., et al., G.R. No. 182331, April 18, 2012.
Employer-employee relationship. In determining the presence or absence of an employer-employee relationship,
the Court has consistently looked for the following incidents, to wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the
employee on the means and methods by which the work is accomplished. The last element, the so-called control
test, is the most important element.
It can be deduced from the March 1996 affidavit of petitioner that respondents challenged his authority to deliver
some 158 checks to SFC. Considering that petitioner contested respondents challenge by pointing to the existing
arrangements between BCC and SFC, it should be clear that respondents did not exercise the power of control
over petitioner, because he thereby acted for the benefit and in the interest of SFC more than of BCC. Charlie
Jao vs. BCC Products Sales, Inc. and Terrance Ty, G.R. No. 163700, April 18, 2012.
Project employee; conversion into regular employee. In all the 38 projects where DMCI engaged Jamins
services, the tasks he performed as a carpenter were indisputably necessary and desirable in DMCIs construction
business. He might not have been a member of a work pool since DMCI insisted that it does not maintain a work
pool, but his continuous rehiring in 38 projects over a period of 31 years and the nature of his work unmistakably
made him a regular employee. In Maraguinot, Jr. v. NLRC, 348 Phil. 580 (1998), the Court held that once a
project or work pool employee has been: (1) continuously, as opposed to intermittently, rehired by the same
employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the
usual business or trade of the employer, then the employee must be deemed a regular employee.
Surely, length of time is not the controlling test for project employment but it is vital in determining if the
employee was hired for a specific undertaking or if it is tasked to perform functions vital, necessary and
indispensable to the usual business or trade of the employer. Here, [private] respondent had been a project
employee several times over. The nature of his employment ceased to be project-based when he was repeatedly
re-hired due to the demands of petitioners business. D.M. Consunji, Inc. and/or David M. Consunji vs.
Estelito, G.R. No. 192514, April 18, 2012.
Dismissal; willful disobedience. For willful disobedience to be a valid cause for dismissal, these two elements
must concur: (1) the employees assailed conduct must have been willful, that is, characterized by a wrongful
and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee,
and must pertain to the duties which he had been engaged to discharge.
The petitioners arbitrary defiance to Graphics, Inc.s order for him to render overtime work constitutes willful
disobedience. Because of his refusal to render overtime work, the company failed to meet its printing deadlines,
resulting in losses to the company. The Supreme Court took into account the fact that petitioner was inclined to
absent himself and to report late for work despite being previously penalized, and affirmed the CAs ruling that
the petitioner is indeed utterly defiant of the lawful orders and the reasonable work standards prescribed by his
employer. The Court reiterated its previous rulings stating that an employer has the right to require the
performance of overtime service in any of the situations contemplated under Article 89 of the Labor Code and
an employees non-compliance is willful disobedience. Realda v. New Age Graphics, Inc. et. al. G.R. No.
192190, April 25, 2012.
Dismissal; inefficiency. The petitioners failure to observe Graphics, Inc.s work standards constitutes
inefficiency that is a valid cause for dismissal. Failure to observe prescribed standards of work, or to fulfill
reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is
understood to mean failure to attain work goals or work quotas, either by failing to complete the same within the
alloted reasonable period, or by producing unsatisfactory results. As the operator of Graphics, Inc.s printer, he
is mandated to check whether the colors that would be printed are in accordance with the clients specifications
and for him to do so, he must consult the General Manager and the color guide used by Graphics, Inc. before
making a full run. The employee in this case failed to observe this simple procedure and proceeded to print
without making sure that the colors were at par with the clients demands. This resulted to delays in the delivery
of output, client dissatisfaction, and additional costs to Graphics, Inc.. Realda v. New Age Graphics, Inc. et.
al. G.R. No. 192190, April 25, 2012.
Dismissal; due process. In King of Kings Transport, Inc. v. Mamac, this Court laid down the manner by which
the procedural due requirements of due process can be satisfied:
(1) The first written notice to be served on the employees should contain the specific causes or grounds
for termination against them, and a directive that the employees are given the opportunity to submit their written
explanation within a reasonable period. Reasonable opportunity under the Omnibus Rules means every kind
of assistance that management must accord to the employees to enable them to prepare adequately for their
defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give
the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather
data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable
the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed
narration of the facts and circumstances that will serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should specifically mention which company rules,
if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees.
(2) After serving the first notice, the employers should schedule and conduct
a hearing or conference wherein the employees will be given the opportunity to: (a) explain and clarify their
defenses to the charge against them; (b) present evidence in support of their defenses; and (c) rebut the evidence
presented against them by the management. During the hearing or conference, the employees are given the
chance to defend themselves personally, with the assistance of a representative or counsel of their
choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an
amicable settlement.
(3) After determining that termination of employment is justified, the employers shall serve the employees
a written notice of termination indicating that: (1) all circumstances involving the charge against the
employees have been considered; and (2) grounds have been established to justify the severance of their
employment.
Graphics, Inc. failed to afford the petitioner with a reasonable opportunity to be heard and defend itself. An
administrative hearing set on the same day that the petitioner received the memorandum and the 24-hour period
given to him to submit a written explanation is far from reasonable. Furthermore, there is no indication that
Graphics, Inc. issued a second notice, informing the petitioner of his dismissal. Graphics, Inc. admitted that it
decided to terminate the petitioners employment when he ceased to report for work after being served with the
memorandum requiring him to explain and subsequent to his failure to submit a written explanation. However,
there is nothing on record showing that Graphics, Inc. placed its decision to dismiss in writing and that a copy
thereof was sent to the petitioner. Notwithstanding the existence of a just cause to terminate petitioners
employment, respondent was ordered to pay P30,000 as nominal damages for violation of the employees right
to due process. Realda v. New Age Graphics, Inc. et. al. G.R. No. 192190, April 25, 2012.
Dismissal; willful disobedience. Willful disobedience requires the concurrence of two elements: (1) the
employees assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude;
and (2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to
the duties which he had been engaged to discharge. Both elements are present in this case.
First, at no point did the dismissed employees deny Kingspoint Express claim that they refused to comply with
the directive for them to submit to a drug test or, at the very least, explain their refusal. This gives rise to the
impression that their non-compliance is deliberate. The utter lack of reason or justification for their
insubordination indicates that it was prompted by mere obstinacy, hence, willful thereby justifying their
dismissal. Second, that the companys order to undergo a drug test is necessary and relevant in the performance
of petitioners functions as drivers of Kingspoint Express is obvious. As the NLRC correctly pointed out, drivers
are indispensable to Kingspoint Express primary business of rendering door-to-door delivery services. It is
common knowledge that the use of dangerous drugs has adverse effects on driving abilities that may render
employees incapable of performing their duties. Not only are they acting against the interests of Kingspoint
Express, they also pose a threat to the public. Kakampi and its members, et al. v. Kingspoint Express and Logistic
and/or Mary Ann Co, G.R. No. 194813, April 25, 2012.
Dismissal; procedural due process requirements. While Kingspoint Express had reason to sever petitioners
employment, this Court finds its supposed observance of the requirements of procedural due process pretentious.
While Kingspoint Express required the dismissed employees to explain their refusal to submit to a drug test, the
two (2) days afforded to them to do so cannot qualify as reasonable opportunity, which the Court construed in
King of Kings Transport, Inc. v. Mamac as a period of at least five (5) calendar days from receipt of the notice.
Thus, even if a just cause exists for the dismissal of petitioners, Kingspoint Express is still liable to indemnify
the dismissed employees, with the exception of Panuelos, Dizon and Dimabayao, who did not appeal the
dismissal of their complaints, with nominal damages in the amount of P30,000.00. Kakampi and its members, et
al. v. Kingspoint Express and Logistic and/or Mary Ann Co, G.R. No. 194813, April 25, 2012.

March 2012 Philippine Supreme Court Decisions

on Labor Law and Procedure
Posted on April 20, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law Tagged Department of
Labor and Employment, dismissal, illegal strike, loss of trust and confidence, probationary employment, project employee

Here are select March 2012 rulings of the Supreme Court of the Philippines on labor law and procedure.

Dismissal; constructive dismissal. Constructive dismissal exists where there is cessation of work because
continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in
rank and a diminution in pay. Constructive dismissal is a dismissal in disguise or an act amounting to dismissal
but made to appear as if it were not. In constructive dismissal cases, the employer is, concededly, charged with
the burden of proving that its conduct and action or the transfer of an employee are for valid and legitimate
grounds such as genuine business necessity. In the instant case, the overt act relied upon by petitioner is not only
a doubtful occurrence but is, if it did transpire, even consistent with the dismissal from employment posited by
the respondent. The factual appraisal of the Court of Appeals is correct. Petitioner was displeased after incurring
expenses for respondents medical check-up and, it is credible that, thereafter, respondent was prevented entry
into the work premises. This is tantamount to constructive dismissal. The Supreme Court agreed with the Court
of Appeals that the incredibility of petitioners submission about abandonment of work renders credible the
position of respondent that she was prevented from entering the property. This was even corroborated by the
affidavits of Siarot and Mendoza which were made part of the records of this case. Ma. Melissa A. Galang vs.
Julia Malasuqui, G.R. No. 174173. March 7, 2012.
Dismissal; loss of trust and confidence. The rule is long and well settled that, in illegal dismissal cases like the
one at bench, the burden of proof is upon the employer to show that the employees termination from service is
for a just and valid cause. The employers case succeeds or fails on the strength of its evidence and not on the
weakness of that adduced by the employee, in keeping with the principle that the scales of justice should be tilted
in favor of the latter in case of doubt in the evidence presented by them. Often described as more than a mere
scintilla, the quantum of proof is substantial evidence which is understood as such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion, even if other equally reasonable minds might
conceivably opine otherwise. Failure of the employer to discharge the foregoing onus would mean that the
dismissal is not justified and therefore illegal.
In the case at bar, the Supreme Court agreed with the petitioners that mere substantial evidence and not proof
beyond reasonable doubt is required to justify the dismissal from service of an employee charged with theft of
company property. However, the Court found no error in the CAs findings that the petitioners had not adequately
proven by substantial evidence that Arlene and Joseph indeed participated or cooperated in the commission of
theft relative to the six missing intensifying screens so as to justify the latters termination from employment on
the ground of loss of trust and confidence. Blue Sky Trading Company, Inc. et al. vs. Arlene P. Blas and Joseph
D. Silvano, G.R. No. 190559. March 7, 2012.
Dismissal; probationary employees. Gala insists that he cannot be sanctioned for the theft of company property
on May 25, 2006. He maintains that he had no direct participation in the incident and that he was not aware that
an illegal activity was going on as he was at some distance from the trucks when the alleged theft was being
committed. He adds that he did not call the attention of the foremen because he was a mere lineman and he was
focused on what he was doing at the time. He argues that in any event, his mere presence in the area was not
enough to make him a conspirator in the commission of the pilferage.
Gala misses the point. He forgets that as a probationary employee, his overall job performance and his behavior
were being monitored and measured in accordance with the standards (i.e., the terms and conditions) laid down
in his probationary employment agreement. Under paragraph 8 of the agreement, he was subject to strict
compliance with, and non-violation of the Company Code on Employee Discipline, Safety Code, rules and
regulations and existing policies. Par. 10 required him to observe at all times the highest degree of transparency,
selflessness and integrity in the performance of his duties and responsibilities, free from any form of conflict or
contradicting with his own personal interest. Manila Electric Company vs. Jan Carlo Gala, G.R. No. 191288.
March 7, 2012.
Dismissal; relief of illegally dismissed employee. An illegally dismissed employee is entitled to two reliefs: back
wages 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 such is viable, or
separation pay if reinstatement is no longer viable, and to back wages. The normal consequences of respondents
illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of back wages computed
from the time compensation was withheld from him up to the date of actual reinstatement. Where reinstatement
is no longer viable as an option, separation pay equivalent to one month salary for every year of service should
be awarded as an alternative. The payment of separation pay is in addition to payment of back wages.
Petitioners question the CA Resolution dated October 24, 2008, arguing that it modified its March 31, 2008
Decision which has already attained finality insofar as respondent is concerned. Such contention is misplaced.
The CA merely clarified the period of payment of back wages and separation pay up to the finality of its decision
(March 31, 2008) modifying the Labor Arbiters decision. In view of the modification of monetary awards in
the Labor Arbiters decision, the time frame for the payment of back wages and separation pay is accordingly
modified to the finality of the CA decision. Norkis Distribution, Inc., et al. vs. Delfin S. Descallar, G.R. No.
185255. March 14, 2012
Employees; project vs. regular employees. The principal test for determining whether particular employees are
properly characterized as project employees as distinguished from regular employees is whether or not the
project employees were assigned to carry out a specific project or undertaking, the duration and scope of which
were specified at the time the employees were engaged for that project.
In a number of cases, the Court has held that the length of service or the re-hiring of construction workers on a
project-to-project basis does not confer upon them regular employment status, since their re-hiring is only a
natural consequence of the fact that experienced construction workers are preferred. Employees who are hired
for carrying out a separate job, distinct from the other undertakings of the company, the scope and duration of
which has been determined and made known to the employees at the time of the employment are properly treated
as project employees and their services may be lawfully terminated upon the completion of a project. Should the
terms of their employment fail to comply with this standard, they cannot be considered project employees.

Applying the above disquisition, the Court agreed with the findings of the CA that petitioners were project
employees. It is not disputed that petitioners were hired for the construction of the Cordova Reef Village Resort
in Cordova, Cebu. By the nature of the contract alone, it is clear that petitioners employment was to carry out
a specific project. Wilfredo Aro, Ronilo Tirol, et al. vs. NLRC, Fourth Division, et al., G.R. No. 174792. March
7, 2012.
Jurisdiction; power of the DOLE to determine the existence of employer-employee relationship. If a complaint
is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly with the
Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and
exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and
conditions of employment, if accompanied by a claim for reinstatement.
In the present case, the finding of the DOLE Regional Director that there was an employer-employee relationship
has been subjected to review by the Supreme Court, with the finding being that there was no employer-employee
relationship between petitioner and private respondent, based on the evidence presented. The DOLE had no
jurisdiction over the case, as there was no employer-employee relationship present. Thus, the dismissal of the
complaint against petitioner is proper. Peoples Broadcasting Service (Bombo Rado Phils., Inc.) vs. The
Secretary of the Dept. of Labor & Employment, et al. G.R. No. 179652. March 6, 2012.
Management prerogative; resignation of employees running for public office. The Supreme Court has
consistently held that so long as a companys management prerogatives are exercised in good faith for the
advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements, the Court will uphold them. In the instant case, ABS-
CBN validly justified the implementation of Policy No. HR-ER-016. It is well within its rights to ensure that it
maintains its objectivity and credibility and freeing itself from any appearance of impartiality so that the
confidence of the viewing and listening public in it will not be in any way eroded. Even as the law is solicitous
of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose
cannot be denied. Ernesto Ymbong vs. ABS-CBN Broadcasting Corporation, Veranda Sy & Dante Luzon, G.R.
No. 184885. March 7, 2012.
Separation pay; payment to those who participated in illegal strikes. Separation pay may be given as a form of
financial assistance when a worker is dismissed in cases such as the installation of labor-saving devices,
redundancy, retrenchment to prevent losses, closing or cessation of operation of the establishment, or in case the
employee was found to have been suffering from a disease such that his continued employment is prohibited by
law. It is a statutory right defined as the amount that an employee receives at the time of his severance from the
service and is designed to provide the employee with the wherewithal during the period that he is looking for
another employment. It is oriented towards the immediate future, the transitional period the dismissed employee
must undergo before locating a replacement job. As a general rule, when just causes for terminating the services
of an employee exist, the employee is not entitled to separation pay because lawbreakers should not benefit from
their illegal acts. The rule, however, is subject to exceptions.
Here, not only did the Court declare the strike illegal, rather, it also found the Union officers to have knowingly
participated in the illegal strike. Worse, the Union members committed prohibited acts during the strike. Thus,
as the Court has concluded in other cases it has previously decided, such Union officers are not entitled to the
award of separation pay in the form of financial assistance. C. Alcantara & Sons, Inc. vs. Court of Appeals, et
al./Nagkahiusang Mamumuo sa Alsons-SPFL, et al. vs. C. Alcantara & Sons, Inc., et al./Nagkahiusang
Mamumuo sa Alsons-SPFL, et al. vs. C. Alcantara & Sons, Inc., et al. G.R. No. 155109/G.R. No. 155135/G.R.
No. 179220. March 14, 2012.

February 2012 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on March 5, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law Tagged appeal, Civil
Service Commission, constructive dismissal, dismissal, employee benefits, employer-employee relationship, forum
shopping, NLRC, probationary employment, reinstatement, res judicata, security of tenure

Here are select February 2012 rulings of the Supreme Court on labor law and procedure:

Appeal; factual finding of NLRC. Findings of fact of administrative agencies and quasi-judicial bodies, which
have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not only
respect but finality when affirmed by the Court of Appeals. Factual findings of quasi-judicial bodies like the
NLRC, if supported by substantial evidence, are accorded respect and even finality by the Supreme Court, more
so when they coincide with those of the Labor Arbiter. Such factual findings are given more weight when the
same are affirmed by the Court of Appeals. In the present case, the Supreme Court found no reason to depart
from these principles since the Labor Arbiter found that there was substantial evidence to conclude that Oasay
had breached the trust and confidence of Palacio Del Gobernador Condominium Corporation, which finding the
NLRC had likewise upheld. Sebastian F. Oasay, Jr. vs. Palacio del Gobernador Condominium Corporation and
Omar T. Cruz, G.R. No. 194306, February 6, 2012.
Civil Service; Clark Development Corporation. Clark Development Corporation (CDC) owes its existence to
Executive Order No. 80 issued by then President Fidel V. Ramos. It was meant to be the implementing and
operating arm of the Bases Conversion and Development Authority tasked to manage the Clark Special
Economic Zone. Expressly, CDC was formed in accordance with Philippine corporation laws and existing rules
and regulations promulgated by the Securities and Exchange Commission pursuant to Section 16 of Republic
Act 7227. CDC, a government owned or controlled corporation without an original charter, was incorporated
under the Corporation Code. Pursuant to Article IX-B, Sec. 2(1) of the Constitution, the civil service embraces
only those government owned or controlled corporations with original charter. As such, CDC and its employees
are covered by the Labor Code and not by the Civil Service Law. Antonio B. Salenga, et al. vs. Court of Appeals,
et al., G.R. No. 174941, February 1, 2012.
Dismissal; resignation vs. illegal dismissal; telex is not equivalent to tender of resignation. Article 285 of the
Labor Code recognizes termination by the employee of the employment contract by serving written notice on
the employer at least one (1) month in advance. Given that provision, the law contemplates the requirement of
a written notice of resignation. In the absence of a written resignation, it is safe to presume that the employer
terminated the seafarers. In this case, the Supreme Court found the dismissal of De Gracia, et al. to be illegal
since Cosmoship merely sent a telex to Skippers, the local manning agency, claiming that De Gracia, et al. were
repatriated because the latter voluntarily pre-terminated their contracts. Skippers United Pacific, Inc. and
Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al., G.R. No. 175558. February 8, 2012.
Dismissal; substantive and procedural due process. For a workers dismissal to be considered valid, it must
comply with both procedural and substantive due process. The legality of the manner of dismissal constitutes
procedural due process, while the legality of the act of dismissal constitutes substantive due process. Procedural
due process in dismissal cases consists of the twin requirements of notice and hearing. The employer must furnish
the employee with two written notices before the termination of employment can be effected: (1) the first notice
apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second
notice informs the employee of the employers decision to dismiss him. Before the issuance of the second notice,
the requirement of a hearing must be complied with by giving the worker an opportunity to be heard. It is not
necessary that an actual hearing be conducted. Substantive due process, on the other hand, requires that dismissal
by the employer be made based on a just or authorized cause under Articles 282 to 284 of the Labor Code. In
this case, there was no written notice furnished to De Gracia, et al. regarding the cause of their dismissal.
Cosmoship furnished a telex to Skippers, the local manning agency, claiming that De Gracia, et al. were
repatriated because they voluntarily pre-terminated their contracts. This telex was given credibility and weight
by the Labor Arbiter and NLRC in deciding that there was pre-termination of the employment contract akin to
resignation and no illegal dismissal. However, as correctly ruled by the CA, the telex message is a biased and
self-serving document that does not satisfy the requirement of substantial evidence. If, indeed, De Gracia, et al.
voluntarily pre-terminated their contracts, then De Gracia, et al. should have submitted their written
resignations. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et
al., G.R. No. 175558. February 8, 2012.
Employee benefits; right to bonus; diminution. From a legal point of view, a bonus is a gratuity or act of liberality
of the giver which the recipient cannot demand as a matter of right. The grant of a bonus is basically a
management prerogative which cannot be forced upon the employer who may not be obliged to assume the
onerous burden of granting bonuses. However, a bonus becomes a demandable or enforceable obligation if the
additional compensation is granted without any conditions imposed for its payment. In such case, the bonus is
treated as part of the wage, salary or compensation of the employee. Particularly instructive is the ruling of the
Court in Metro Transit Organization, Inc. v. National Labor Relations Commission (G.R. No. 116008, July 11,
1995) where the Court said:
Whether or not a bonus forms part of wages depends upon the circumstances and conditions for its payment. If
it is additional compensation which the employer promised and agreed to give without any conditions imposed
for its payment, such as success of business or greater production or output, then it is part of the wage. But if it
is paid only if profits are realized or if a certain level of productivity is achieved, it cannot be considered part of
the wage. Where it is not payable to all but only to some employees and only when their labor becomes more
efficient or more productive, it is only an inducement for efficiency, a prize therefore, not a part of the wage.

In this case, there is no dispute that Eastern Telecommunications Phils., Inc. and Eastern Telecoms Employees
Union agreed on the inclusion of a provision for the grant of 14th, 15th and 16th month bonuses in the 1998-
2001 CBA Side Agreement, as well as in their 2001-2004 CBA Side Agreement, which contained no
qualification for its payment. There were no conditions specified in the CBA Side Agreements for the grant of
the bonus. There was nothing in the relevant provisions of the CBA which made the grant of the bonus dependent
on the companys financial standing or contingent upon the realization of profits. There was also no statement
that if the company derives no profits, no bonus will be given to the employees. In fine, the payment of these
bonuses was not related to the profitability of business operations. Consequently, the giving of the subject
bonuses cannot be peremptorily withdrawn by Eastern Telecommunications Phils., Inc. without violating Article
100 of the Labor Code, which prohibits the unilateral elimination or diminution of benefits by the employer. The
rule is settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished,
discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the
constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full
protection. Eastern Telecommunications Philippines, Inc. vs. Eastern Telecoms Employees Union, G.R. No.
185665, February 8, 2012.
Employee dismissal; constructive dismissal. In constructive dismissal cases, the employer has the burden of
proving that the transfer of an employee is for just or valid ground, such as genuine business necessity. The
employer must demonstrate that the transfer is not unreasonable, inconvenient, or prejudicial to the employee
and that the transfer does not involve a demotion in rank or a diminution in salary and other benefits. If the
employer fails to overcome this burden of proof, the employees transfer is tantamount to unlawful constructive
dismissal. [Merck Sharp and Dohme (Philippines) v. Robles, G.R. No. 176506, November 25, 2009] Petitioners
failed to satisfy the burden of proving that the transfer was based on just or valid ground. Petitioners bare
assertions of imminent threat from the respondents are mere accusations which are not substantiated by any
proof. The Supreme Court agreed with the Court of Appeals in ruling that the transfer of respondents amounted
to a demotion. Julies Bakeshop and/or Edgar Reyes vs. Henry Arnaiz, et al., G.R. No. 173882, February 15,
2012.
Employee dismissal; disease; dereliction of duties. With regard to disease as a ground for termination, Article
284 of the Labor Code provides that an employer may terminate the services of an employee who has been found
to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his
health, as well as to the health of his co-employees. In order to validly terminate employment on this ground,
Section 8, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code requires that: (i) the employee
be suffering from a disease and his continued employment is prohibited by law or prejudicial to his health or to
the health of his co-employees, and (ii) a certification by a competent public health authority that the disease is
of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper
medical treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the
employee but shall ask the employee to take a leave. The employer shall reinstate such employee to his former
position immediately upon the restoration of his normal health. In Triple Eight Integrated Services, Inc. v. NLRC
(G.R. No. 129584, December 3, 1998), the Court held that the requirement for a medical certificate under Article
284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary
determination by the employer of the gravity or extent of the employees illness and, thus, defeat the public
policy on the protection of labor.
In this case, Ynson should have reported back to work or attended the investigations conducted by Wuerth
Philippines, Inc. immediately upon being permitted to work by his doctors, knowing that his position remained
vacant for a considerable length of time. However, he did not even show any sincere effort to return to work.
Clearly, since there is no more hindrance for him to return to work and attend the investigations set by Wuerth
Philippines, Inc., Ynsons failure to do so was without any valid or justifiable reason. His conduct shows his
indifference and utter disregard of his work and his employers interest, and displays his clear, deliberate, and
gross dereliction of duties. The power to dismiss an employee is a recognized prerogative inherent in the
employers right to freely manage and regulate his business. The law, in protecting the rights of the laborers,
authorizes neither oppression nor self-destruction of the employer. The workers right to security of tenure is not
an absolute right, for the law provides that he may be dismissed for cause. As a general rule, employers are
allowed wide latitude of discretion in terminating the employment of managerial personnel. The mere existence
of a basis for believing that such employee has breached the trust and confidence of his employer would suffice
for his dismissal. Needless to say, an irresponsible employee like Ynson does not deserve a position in the
workplace, and it is Wuerth Philippines, Inc.s management prerogative to terminate his employment. To be
sure, an employer cannot be compelled to continue with the employment of workers when continued
employment will prove inimical to the employers interest. Wuerth Philippines, Inc. vs. Rodante Ynson, G.R.
No. 175932, February 15, 2012.
Employee dismissal; due process. With respect to due process requirement, the employer is bound to furnish the
employee concerned with two (2) written notices before termination of employment can be legally effected. One
is the notice apprising the employee of the particular acts or omissions for which his dismissal is sought and
this may loosely be considered as the proper charge. The other is the notice informing the employee of the
managements decision to sever his employment. This decision, however, must come only after the employee
is given a reasonable period from receipt of the first notice within which to answer the charge, thereby giving
him ample opportunity to be heard and defend himself with the assistance of his representative should he so
desire. The requirement of notice, it has been stressed, is not a mere technicality but a requirement of due process
to which every employee is entitled. Here, Palacio Del Gobernador Condominium Corporation complied with
the two-notice rule stated above. Sebastian F. Oasay, Jr. vs. Palacio del Gobernador Condominium
Corporation and Omar T. Cruz, G.R. No. 194306, February 6, 2012.
Employee dismissal; due process. Cityland did not afford Galang the required notice before he was dismissed.
As the Court of Appeals noted, the investigation conference Tupas called to look into the janitors complaints
against Galang did not constitute the written notice required by law as he had no clear idea what the charges
against him were. Romeo A. Galang vs. Citiland Shaw Tower, Inc. and Virgilio Baldemor, G.R. No. 173291,
February 8, 2012.
Employee dismissal; grounds. The validity of an employees dismissal from service hinges on the satisfaction
of the two substantive requirements for a lawful termination. These are, first, whether the employee was
accorded due process the basic components of which are the opportunity to be heard and to defend himself. This
is the procedural aspect. And second, whether the dismissal is for any of the causes provided in the Labor Code
of the Philippines. This constitutes the substantive aspect. On the substantive aspect, the Supreme Court found
that Palacio Del Gobernador Condominium Corporations termination of the Oasays employment was for a
cause provided under the Labor Code. In terminating Oasays employment, Palacio Del Gobernador
Condominium Corporation invoked loss of trust and confidence. The first requisite for dismissal on the ground
of loss of trust and confidence is that the employee concerned must be holding a position of trust and
confidence. Here, it is indubitable that Oasay holds a position of trust and confidence. The position of Building
Administrator, being managerial in nature, necessarily enjoys the trust and confidence of the employer. 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. Palacio Del Gobernador Condominium Corporation had established, by clear and convincing
evidence, Oasays acts which justified its loss of trust and confidence on the former. Sebastian F. Oasay, Jr. vs.
Palacio del Gobernador Condominium Corporation and Omar T. Cruz, G.R. No. 194306, February 6, 2012.
Employee dismissal; just cause. The Supreme Court found that Galang had become unfit to continue his
employment. The evidence supports the view that he continued to exhibit undesirable traits as an employee and
as a person, in relation to both his co-workers and his superiors, particularly Tupas, her immediate supervisor.
Quoting the Court of Appeals decision with approval, the Supreme Court held: Without offering any possible
ill motive that might have impelled [the respondents] to summarily dismiss [Galang], who admitted having been
absorbed by the former as janitor upon the termination of his contract with his agency, this Court is more inclined
to give credence to the evidence pointing to the conclusion that [Galangs] employment was actually severed for
a just cause. Romeo A. Galang vs. Citiland Shaw Tower, Inc. and Virgilio Baldemor, G.R. No. 173291,
February 8, 2012.
Employer; right to discipline employee. In Sagales v. Rustans Commercial Corporation (G.R. No. 166554,
November 27, 2008), the Supreme Court ruled:
Truly, while the employer has the inherent right to discipline, including that of dismissing its employees, this
prerogative is subject to the regulation by the State in the exercise of its police power.

In this regard, it is a hornbook doctrine that infractions committed by an employee should merit only the
corresponding penalty demanded by the circumstance. The penalty must be commensurate with the act,
conduct or omission imputed to the employee and must be imposed in connection with the disciplinary
authority of the employer. (Emphasis in the original.)
In the case at bar, the penalty handed out by the petitioners was the ultimate penalty of dismissal. There was no
warning or admonition for respondents violation of team rules, only outright termination of his services for an
act which could have been punished appropriately with a severe reprimand or suspension. Negros Slashers, Inc.,
Rodolfo C. Alvarez and Vicente Tan vs. Alvin L. Teng, G.R. No. 187122, February 22, 2012.
Employer-employee relationship; onus probandi. The onus probandi falls on petitioner to establish or
substantiate such claim by the requisite quantum of evidence. The issue of Javiers alleged illegal dismissal is
anchored on the existence of an employer-employee relationship between him and Fly Ace. As the records bear
out, the Labor Arbiter and the Court of Appeals found Javiers claim of employment with Fly Ace as wanting
and deficient. Although Section 10, Rule VII of the New Rules of Procedure of the NLRC allows a relaxation
of the rules of procedure and evidence in labor cases, this rule of liberality does not mean a complete dispensation
of proof. Labor officials are enjoined to use reasonable means to ascertain the facts speedily and objectively
with little regard to technicalities or formalities but nowhere in the rules are they provided a license to completely
discount evidence, or the lack of it. The quantum of proof required, however, must still be satisfied. Hence,
when confronted with conflicting versions on factual matters, it is for them in the exercise of discretion to
determine which party deserves credence on the basis of evidence received, subject only to the requirement that
their decision must be supported by substantial evidence. [Salvador Lacorte v. Hon. Amado G. Inciong, 248
Phil. 232 (1988)] Accordingly, Javier needs to show by substantial evidence that he was indeed an employee of
the company against which he claims illegal dismissal. Bitoy Javier (Danilo P. Javier) vs. Fly Ace
Corporation/Flordelyn Castillo, G.R. No. 192558, February 15, 2012.
Employer-employee relationship; test. To determine the existence of an employer-employee relationship, the
following are considered: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control the employees conduct. Of these elements, the most important
criterion is whether the employer controls or has reserved the right to control the employee not only as to the
result of the work but also as to the means and methods by which the result is to be accomplished. In this case,
Javier was not able to persuade the Court that the above elements exist in his case. He could not submit
competent proof that Fly Ace engaged his services as a regular employee; that Fly Ace paid his wages as an
employee, or that Fly Ace could dictate what his conduct should be while at work. In other words, Javiers
allegations did not establish that his relationship with Fly Ace had the attributes of an employer-employee
relationship on the basis of the above-mentioned four-fold test. Worse, Javier was not able to refute Fly Aces
assertion that it had an agreement with a hauling company to undertake the delivery of its goods. It was also
baffling to realize that Javier did not dispute Fly Aces denial of his services exclusivity to the company. In
short, all that Javier laid down were bare allegations without corroborative proof. Bitoy Javier (Danilo P. Javier)
vs. Fly Ace Corporation/Flordelyn Castillo, G.R. No. 192558, February 15, 2012.
Employment contract; stages. Contracts undergo three distinct stages, to wit: negotiation; perfection or birth;
and consummation. Negotiation begins from the time the prospective contracting parties manifest their interest
in the contract and ends at the moment of agreement of the parties. Perfection or birth of the contract takes place
when the parties agree upon the essential elements of the contract. Consummation occurs when the parties fulfill
or perform the terms agreed upon in the contract, culminating in the extinguishment thereof. Under Article 1315
of the Civil Code, a contract is perfected by mere consent and from that moment the parties are bound not only
to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their
nature, may be in keeping with good faith, usage and law. An employment contract, like any other contract, is
perfected at the moment (1) the parties come to agree upon its terms; and (2) concur in the essential elements
thereof: (a) consent of the contracting parties, (b) object certain which is the subject matter of the contract and
(c) cause of the obligation. In the present case, C.F. Sharp, on behalf of its principal, International Shipping
Management, Inc., hired Agustin and Minimo as Sandblaster/Painter for a 3-month contract, with a basic
monthly salary of US$450.00. Thus, the object of the contract is the service to be rendered by Agustin and
Minimo on board the vessel while the cause of the contract is the monthly compensation they expect to
receive. These terms were embodied in the Contract of Employment which was executed by the parties. The
agreement upon the terms of the contract was manifested by the consent freely given by both parties through
their signatures in the contract. Neither parties disavow the consent they both voluntarily gave. Thus, there is a
perfected contract of employment. C.F. Sharp & Co. Inc. and John J. Rocha vs. Pioneer Insurance and Surety
Corporation, et al., G.R. No. 179469, February 15, 2012.
Employment relationship; commencement. The commencement of an employer-employee relationship must be
treated separately from the perfection of an employment contract. Santiago v. CF Sharp Crew Management,
Inc., (G.R. No. 162419, 10 July 2007) is an instructive precedent on this point. In that case, the Supreme Court
made a distinction between the perfection of the employment contract and the commencement of the employer-
employee relationship, thus:
The perfection of the contract, which in this case coincided with the date of execution thereof, occurred when
petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and conditions
therein. The commencement of the employer-employee relationship, as earlier discussed, would have taken place
had petitioner been actually deployed from the point of hire. Thus, even before the start of any employer-
employee relationship, contemporaneous with the perfection of the employment contract was the birth of certain
rights and obligations, the breach of which may give rise to a cause of action against the erring party.
Despite the fact that the employer-employee relationship has not commenced due to the failure to deploy Agustin
and Minimo in this case, Agustin and Minimo are entitled to rights arising from the perfected Contract of
Employment, such as the right to demand performance by C.F. Sharp of its obligation under the contract. C.F.
Sharp & Co. Inc. and John J. Rocha vs. Pioneer Insurance and Surety Corporation, et al., G.R. No. 179469,
February 15, 2012.
Forum shopping; elements; res judicata. For forum shopping to exist, it is necessary that (a) there be identity of
parties or at least such parties that represent the same interests in both actions; (b) there be identity of rights
asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two preceding
particulars is such that any judgment rendered in one action will, regardless of which party is successful, amount
to res judicata in the other action. Petitioners are correct as to the first two requisites of forum shopping. First,
there is identity of parties involved: Negros Slashers Inc. and respondent Teng. Second, there is identity of rights
asserted i.e., the right of management to terminate employment and the right of an employee against illegal
termination. However, the third requisite of forum shopping is missing in this case. Any judgment or ruling of
the Office of the Commissioner of the Metropolitan Basketball Association will not amount to res judicata. Res
judicata is defined in jurisprudence as to have four basic elements: (1) the judgment sought to bar the new action
must be final; (2) the decision must have been rendered by a court having jurisdiction over the subject matter
and the parties; (3) the disposition of the case must be a judgment on the merits; and (4) there must be as between
the first and second action, identity of parties, subject matter, and causes of action. Here, although contractually
authorized to settle disputes, the Office of the Commissioner of the Metropolitan Basketball Association is not
a court of competent jurisdiction as contemplated by law with respect to the application of the doctrine of res
judicata. At best, the Office of the Commissioner of the Metropolitan Basketball Association is a private
mediator or go-between as agreed upon by team management and a player in the Metropolitan Basketball
Association Players Contract of Employment. Any judgment that the Office of the Commissioner of the
Metropolitan Basketball Association may render will not result in a bar for seeking redress in other legal
venues. Hence, respondents action of filing the same complaint in the Regional Arbitration Branch of the NLRC
does not constitute forum shopping. Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan vs. Alvin L.
Teng, G.R. No. 187122, February 22, 2012.
Jurisdiction; NLRC. It is clear from the NLRC Rules of Procedure that appeals must be verified and certified
against forum-shopping by the parties-in-interest themselves. The purpose of verification is to secure an
assurance that the allegations in the pleading are true and correct and have been filed in good faith. In the case
at bar, the parties-in-interest are petitioner Salenga, as the employee, and respondent Clark Development
Corporation as the employer. A corporation can only exercise its powers and transact its business through its
board of directors and through its officers and agents when authorized by a board resolution or its bylaws. The
power of a corporation to sue and be sued is exercised by the board of directors. The physical acts of the
corporation, like the signing of documents, can be performed only by natural persons duly authorized for the
purpose by corporate bylaws or by a specific act of the board. Absent the requisite board resolution, neither
Timbol-Roman nor Atty. Mallari, who signed the Memorandum of Appeal and Joint Affidavit of Declaration
allegedly on behalf of respondent corporation, may be considered as the appellant and employer referred to
by the NLRC Rules of Procedure. As such, the NLRC had no jurisdiction to entertain the appeal. Antonio B.
Salenga, et al. vs. Court of Appeals, et al., G.R. No. 174941, February 1, 2012.
Labor; effect if procedural due process not followed but with a valid cause for termination. It is required that the
employer furnish the employee with two written notices: (1) a written notice served on the employee specifying
the ground or grounds for termination, and giving to said employee reasonable opportunity within which to
explain his side; and (2) a written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his termination. The twin
requirements of notice and hearing constitute the elements of due process in cases of employees dismissal. The
requirement of notice is intended to inform the employee concerned of the employers intent to dismiss and the
reason for the proposed dismissal. Upon the other hand, the requirement of hearing affords the employee an
opportunity to answer his employers charges against him and accordingly, to defend himself therefrom before
dismissal is effected. Obviously, the second written notice, as indispensable as the first, is intended to ensure
the observance of due process. In this case, there was only one written notice which required respondents to
explain within five (5) days why they should not be dismissed from the service. Alcovendas was the only one
who signed the receipt of the notice. The others, as claimed by Lynvil, refused to sign. The other employees
argue that no notice was given to them. Despite the inconsistencies, what is clear is that no final written notice
or notices of termination were sent to the employees. Due to the failure of Lynvil to follow the procedural
requirement of two-notice rule, nominal damages in the amount of P50,000 were granted to Ariola, et al. despite
their dismissal for just cause. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No.
181974, February 1, 2012.
Labor; liability of officers if termination is attended with bad faith. In labor cases, the corporate directors and
officers are solidarily liable with the corporation for the termination of employment of employees done with
malice or in bad faith. Indeed, moral damages are recoverable when the dismissal of an employee is attended by
bad faith or fraud or constitutes an act oppressive to labor, or is done in a manner contrary to good morals, good
customs or public policy. The term bad faith contemplates a state of mind affirmatively operating with furtive
design or with some motive of self-interest or will or for ulterior purpose. The Supreme Court agreed with the
ruling of both the NLRC and the Court of Appeals when they pronounced that there was no evidence on record
that indicates commission of bad faith on the part of De Borja, the general manager of Lynvil, who was tasked
with the supervision of the employees and the operation of the business. There is no proof that he imposed on
Ariola, et al. the por viaje provision for purpose of effecting their summary dismissal. Lynvil Fishing
Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012.
Labor; nature of employment; security of tenure. In the context of these facts (1) Ariola, et al. were doing
tasks necessary to Lynvils fishing business with positions ranging from captain of the vessel to bodegero; (2)
after the end of a trip, they will again be hired for another trip with new contracts; and (3) this arrangement
continued for more than ten years the Court believed that Lynvil intended to go around the security of tenure
of Ariola, et al. as regular employees. The Court held that by the express provisions of the second paragraph of
Article 280 which cover casual employment, Ariola, et al. had become regular employees of Lynvil. Lynvil
Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012.
Labor; procedural and substantive due process; grounds for valid termination; breach of trust. Just cause is
required for a valid dismissal. The Labor Code provides that an employer may terminate an employment based
on fraud or willful breach of the trust reposed on the employee. Such breach is considered willful if it is done
intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. It must also be based on substantial evidence and not on the
employers 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 in delicate matters, such as the handling or care and protection of the
property and assets of the employer. The betrayal of this trust is the essence of the offense for which an employee
is penalized. The Supreme Court found that breach of trust is present in this case, when Ariola (the captain),
Alcovendas (Chief Mate), Calinao (Chief Engineer), Nubla (cook), Baez (oiler), and Sebullen (bodegero)
conspired with one another and stole pampano and tangigue fish and delivered them to another vessel, to
the prejudice of Lynvil. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February
1, 2012.
Labor; public prosecutors decision not binding on the labor tribunal. The Supreme Court has held in Nicolas v.
National Labor Relations Commission [327 Phil. 883, 886-887 (1996)] that a criminal conviction is not
necessary to find just cause for employment termination. Otherwise stated, an employees acquittal in a criminal
case, especially one that is grounded on the existence of reasonable doubt, will not preclude a determination in
a labor case that he is guilty of acts inimical to the employers interests. In the reverse, the finding of probable
cause is not followed by automatic adoption of such finding by the labor tribunals. In other words, whichever
way the public prosecutor disposes of a complaint, the finding does not bind the labor tribunal. Lynvil contends
that the filing of a criminal case before the Office of the Prosecutor is sufficient basis for a valid termination of
employment based on serious misconduct and/or loss of trust and confidence. The Supreme Court held that
Lynvil cannot argue that since the Office of the Prosecutor found probable cause for theft, the Labor Arbiter
must follow the finding as a valid reason for the termination of respondents employment. The proof required
for purposes that differ from one and the other are likewise different. Lynvil Fishing Enterprises, Inc. vs. Andres
G. Ariola, et al., G.R. No. 181974, February 1, 2012.
Labor; regular employee; fixed-contract agreement, requisites for validity. Prior Supreme Court decisions have
laid two conditions for the validity of a fixed-contract agreement between the employer and employee: First, the
fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress,
or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his
consent; or Second, it satisfactorily appears that the employer and the employee dealt with each other on more
or less equal terms with no moral dominance exercised by the former or the latter. Lynvil contends that Ariola,
et al. were employed under a fixed-term contract which expired at the end of the voyage. Contrarily, Ariola, et
al. contend that they became regular employees by reason of their continuous hiring and performance of tasks
necessary and desirable in the usual trade and business of Lynvil. Textually, the provision in the contract between
Lynvil and Ariola, et al. that: NA ako ay sumasang-ayon na maglingkod at gumawa ng mga gawain sang-ayon
sa patakarang por viaje na magmumula sa pagalis sa Navotas papunta sa pangisdaan at pagbabalik sa
pondohan ng lantsa sa Navotas, Metro Manila is for a fixed period of employment. In the context, however,
of the facts that: (1) Ariola, et al. were doing tasks necessarily to Lynvils fishing business with positions ranging
from captain of the vessel to bodegero; (2) after the end of a trip, they will again be hired for another trip with
new contracts; and (3) this arrangement continued for more than ten years, the clear intention is to go around the
security of tenure of Ariola, et al. as regular employees. As such, the Supreme Court found that Ariola, et al. are
regular employees. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1,
2012.
Labor Code; maximum award of attorneys fees in cases of recovery of wages. Article 111 of the Labor Code
provides for a maximum award of attorneys fees in cases of recovery of wages:
a. In cases of unlawful withholding of wages, the culpable party may be assessed attorneys fees equivalent to
ten percent of the amount of wages recovered.

b. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the
recovery of wages, attorneys fees which exceed ten percent of the amount of wages recovered.

Since De Gracia, et al. had to secure the services of the lawyer to recover their unpaid salaries and protect their
interest, attorneys fees in the amount of ten percent (10%) of the total claims was imposed. Skippers United
Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al., G.R. No. 175558. February 8,
2012.
Labor contracting; elements. There is labor-only contracting where: (a) 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 (b) the workers recruited and placed by such person are performing activities which
are directly related to the principal business of the employer. In the present case, the Supreme Court found that
both the capitalization requirement and the power of control on the part of Requio are wanting. Generally, the
presumption is that the contractor is a labor-only contractor unless such contractor overcomes the burden of
proving that it has the substantial capital, investment, tools and the like. In the present case, though Garden of
Memories is not the contractor, it has the burden of proving that Requio has sufficient capital or investment
since it is claiming the supposed status of Requio as independent contractor. Garden of Memories, however,
failed to adduce evidence purporting to show that Requio had sufficient capitalization. Neither did it show that
she invested in the form of tools, equipment, machineries, work premises and other materials which are necessary
in the completion of the service contract. Garden of Memories Park and Life Plan, Inc., et al. vs. NLRC, 2nd
Div., et al., G.R. No. 160278, February 8, 2012.
Migrant Workers; RA No. 8042; money claims in cases of unjust termination. Section 10 of Republic Act No.
8042 (Migrant Workers Act) provides for money claims in cases of unjust termination of employment contracts:
In case of termination of overseas employment without just, valid or authorized cause as defined by law or
contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve
percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3)
months for every year of the unexpired term, whichever is less.
The Migrant Workers Act provides that salaries for the unexpired portion of the employment contract or three
(3) months for every year of the unexpired term, whichever is less, shall be awarded to the overseas Filipino
worker, in cases of illegal dismissal. However, in 24 March 2009, Serrano v. Gallant Maritime Services and
Marlow Navigation Co. Inc. (G.R. No. 167614), the Court, in an En Banc Decision, declared unconstitutional
the clause or for three months for every year of the unexpired term, whichever is less and awarded the entire
unexpired portion of the employment contract to the overseas Filipino worker. On 8 March 2010, however,
Section 7 of Republic Act No. 10022 (RA 10022) amended Section 10 of the Migrant Workers Act, and once
again reiterated the provision of awarding the unexpired portion of the employent contract or three (3) months
for every year of the unexpired term, whichever is less. Nevertheless, since the termination occurred on January
1999 before the passage of the amendatory RA 10022, the Supreme Court applied RA 8042, without touching
on the constitutionality of Section 7 of RA 10022. The declaration in March 2009 of the unconstitutionality of
the clause or for three months for every year of the unexpired term, whichever is less in RA 8042 shall be
given retroactive effect to the termination that occurred in January 1999 because an unconstitutional clause in
the law confers no rights, imposes no duties and affords no protection. The unconstitutional provision is
inoperative, as if it was not passed into law at all. Skippers United Pacific, Inc. and Skippers Maritime Services,
Inc. Ltd. vs. Nathaniel Doza, et al., G.R. No. 175558. February 8, 2012.
NLRC; contempt powers. Under Article 218 the Labor Code, the NLRC (and the labor arbiters) may hold any
offending party in contempt, directly or indirectly, and impose appropriate penalties in accordance with law. The
penalty for direct contempt consists of either imprisonment or fine, the degree or amount depends on whether
the contempt is against the Commission or the labor arbiter. The Labor Code, however, requires the labor arbiter
or the Commission to deal with indirect contempt in the manner prescribed under Rule 71 of the Rules of Court.
Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate indirect contempt
proceedings before the trial court. This mode is to be observed only when there is no law granting them contempt
powers. As is clear under Article 218(d) of the Labor Code, the labor arbiter or the Commission is empowered
or has jurisdiction to hold the offending party or parties in direct or indirect contempt. Robosa, et al., therefore,
have not improperly brought the indirect contempt charges against the respondents before the NLRC. Federico
S. Robosa, et al. vs. National Labor Relations Commission (First Division), et al., G.R. No. 176085, February
8, 2012.
NLRC; factual findings. It is a well-entrenched rule that findings of facts of the NLRC, affirming those of the
Labor Arbiter, are accorded respect and due consideration when supported by substantial evidence. The Supreme
Court, however, found that the doctrine of great respect and finality has no application to the case at bar. The
Labor Arbiter dismissed Arnaiz, et al.s complaints on mere technicality. The NLRC, upon appeal, then came
up with three divergent rulings. At first, it remanded the case to the Labor Arbiter. However, in a subsequent
resolution, it decided to resolve the case on the merits by ruling that Arnaiz, et al. were constructively
dismissed. But later on, it again reversed itself in its third and final resolution of the case and ruled in favor of
Julies bakeshop. Therefore, contrary to Reyess claim, the NLRC did not, on any occasion, affirm any factual
findings of the Labor Arbiter. The Court of Appeals is thus correct in reviewing the entire records of the case to
determine which findings of the NLRC is sound and in accordance with law. Besides, the Court of Appeals may
still resolve factual issues by express mandate of the law despite the respect given to administrative findings of
fact. Julies Bakeshop and/or Edgar Reyes vs. Henry Arnaiz, et al., G.R. No. 173882, February 15, 2012.
Probationary employee; valid cause for dismissal but without procedural due process; employee entitled to
nominal damages. Section 2, Rule I, Book VI of the Labor Codes Implementing Rules and Regulations
provides: If the termination is brought about by the completion of a contract or phase thereof, or by failure of
an employee to meet the standards of the employer in the case of probationary employment, it shall be sufficient
that a written notice is served the employee within a reasonable time from the effective date of termination.
Dalangin was hired by Canadian Opportunities as Immigration and Legal Manager, subject to a probationary
period of six months. One month after hiring Dalangin, the company terminated his employment, declaring him
unfit and unqualified to continue as Immigration and Legal Manager, for reasons which included obstinacy
and utter disregard of company policies. Propensity to take prolonged and extended lunch breaks, shows no
interest in familiarizing oneself with the policies and objectives, lack of concern for the companys interest
despite having just been employed in the company (Declined to attend company sponsored activities, seminars
intended to familiarize company employees with Management objectives and enhancement of company interest
and objectives), lack of enthusiasm toward work, and lack of interest in fostering relationship with his co-
employees. The company contends that it complied with the rule on procedural due process when it asked
Dalangin, through a Memorandum, to explain why he could not attend the seminar. When he failed to submit
his explanation, the company served him a notice the following day terminating his employment. According to
the Supreme Court, the notice to Dalangin was not served within a reasonable time from the effective date of his
termination as required by the rules since he was dismissed on the very day the notice was given to him. However,
because of the existence of a valid cause for termination, the Supreme Court did not invalidate his dismissal but
penalized the company for its non-compliance with the notice requirement, and ordered the company to pay an
indemnity, in the form of nominal damages amounting to P10,000. Canadian Opportunities Unlimited, Inc.
vs. Bart Q. Dalangin, Jr., G.R. No. 172223, February 6, 2012.
Probationary employee; valid dismissal even before 6 months. The essence of a probationary period of
employment fundamentally lies in the purpose or objective of both the employer and the employee during the
period. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain whether
he is qualified for permanent employment, the latter seeks to prove to the former that he has the qualifications
to meet the reasonable standards for permanent employment. The trial period or the length of time the
probationary employee remains on probation depends on the parties agreement, but it shall not exceed six (6)
months under Article 281 of the Labor Code. The Supreme Court found substantial evidence indicating that the
company was justified in terminating Dalangins probationary employment. Dalangin admitted in compulsory
arbitration that the proximate cause for his dismissal was his refusal to attend the companys Values Formation
Seminar scheduled for October 27, 2001, a Saturday. He refused to attend the seminar after he learned that it
had no relation to his duties, as he claimed, and that he had to leave at 2:00 p.m. because he wanted to be with
his family in the province. When the Chief Operations Officer, insisted that he attend the seminar to encourage
his co-employees to attend, he stood pat on not attending, arguing that marked differences exist between their
positions and duties, and insinuating that he did not want to join the other employees. He also questioned the
scheduled 2:00 p.m. seminars on Saturdays as they were not supposed to be doing a company activity beyond
2:00 p.m. He considers 2:00 p.m. as the close of working hours on Saturdays; thus, holding them beyond 2:00
p.m. would be in violation of the law. This incident reveals Dalangins lack of interest in establishing a good
working relationship with his co-employees, especially the rank and file; he did not want to join them because
of his view that the seminar was not relevant to his position and duties. It also betrays his arrogant and
condescending attitude towards his co-employees, and a lack of support for the company objective. Dalangin
also exhibited negative working habits, particularly with respect to the one hour lunch break policy of the
company and the observance of the companys working hours. Dalangin would take prolonged lunch breaks or
would go out of the office without leave of the company and call the personnel manager later only to say that
he would be unable to return to the office because of some personal matters he needs to attend to. Canadian
Opportunities Unlimited, Inc. vs. Bart Q. Dalangin, Jr., G.R. No. 172223, February 6, 2012.
Procedural rules; liberal application. Ordinarily, rules of procedure are strictly enforced by courts in order to
impart stability in the legal system. However, in not a few instances, the Supreme Court has relaxed the rigid
application of the rules of procedure to afford the parties the opportunity to fully ventilate their cases on the
merits. This is in line with the time honored principle that cases should be decided only after giving all the
parties the chance to argue their causes and defenses. In that way, the ends of justice would be better served. For
indeed, the general objective of procedure is to facilitate the application of justice to the rival claims of
contending parties, bearing always in mind that procedure is not to hinder but to promote the administration of
justice. In Ong Lim Sing, Jr. v. FEB Leasing and Finance Corporation (G.R. No. 168115, June 8, 2007), the
Supreme Court ruled:
Courts have the prerogative to relax procedural rules of even the most mandatory character, mindful of the duty
to reconcile both the need to speedily put an end to litigation and the parties right to due process. In numerous
cases, this Court has allowed liberal construction of the rules when to do so would serve the demands of
substantial justice and equity. x x x

Indeed the prevailing trend is to accord party litigants the amplest opportunity for the proper and just
determination of their causes, free from the constraints of needless technicalities. In this case, besides the fact
that a denial of the recourse to the Court of Appeals would serve more to perpetuate an injustice and violation
of Tengs rights under our labor laws, the Supreme Court found that as correctly held by the Court of Appeals,
no intent to delay the administration of justice could be attributed to Teng. The Court of Appeals therefore did
not commit reversible error in excusing Tengs one-day delay in filing his motion for reconsideration and in
giving due course to his petition for certiorari. Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan vs.
Alvin L. Teng, G.R. No. 187122, February 22, 2012.
Reinstatement; backwages. Employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits or their monetary equivalent, computed from the time their actual compensation
was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible,
the backwages shall be computed from the time of their illegal termination up to the finality of the decision.
Thus, when there is an order of reinstatement, the computation of backwages shall be reckoned from the time of
illegal dismissal up to the time that the employee is actually reinstated to his former position. Pursuant to the
order of reinstatement rendered by the Labor Arbiter, the Bank of Lubao sent Manabat a letter requiring him to
report back to work on May 4, 2007. Notwithstanding the said letter, Manabat opted not to report for work. Thus,
it is but fair that the backwages to be awarded to Manabat should be computed from the time that he was illegally
dismissed until the time when he was required to report for work, i.e. from September 1, 2005 until May 4,
2007. Bank of Lubao, Inc. vs. Rommel J. Manabat, et al., G.R. No. 188722, February 1, 2012.
Reinstatement; doctrine of strained relations; when applicable. Under the law and prevailing jurisprudence, an
illegally dismissed employee is entitled to reinstatement as a matter of right. However, if reinstatement would
only exacerbate the tension and strained relations between the parties, or where the relationship between the
employer and the employee has been unduly strained by reason of their irreconcilable differences, particularly
where the illegally dismissed employee held a managerial or key position in the company, it would be more
prudent to order payment of separation pay instead of reinstatement. Under the doctrine of strained relations,
the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is
no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly
oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable
obligation of maintaining in its employ a worker it could no longer trust. In such cases, it should be proved that
the employee concerned occupies a position where he enjoys the trust and confidence of his employer; and that
it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect
the efficiency and productivity of the employee concerned. In the present case, the Supreme Court found that
the relations between the parties had been already strained thereby justifying the grant of separation pay in lieu
of reinstatement in favor of Manabat. Manabats reinstatement to his former position would only serve to
intensify the atmosphere of antipathy and antagonism between the parties. Undoubtedly, Bank of Lubaos filing
of various criminal complaints against Manabat for qualified theft and the subsequent filing by the latter of the
complaint for illegal dismissal against the former, taken together with the pendency of the instant case for more
than six years, had caused strained relations between the parties. Considering that Manabats former position as
bank encoder involves the handling of accounts of the depositors of the Bank of Lubao, it would not be equitable
on the part of the Bank of Lubao to be ordered to maintain the former in its employ since it may only inspire
vindictiveness on the part of Manabat. Also, the refusal of Manabat to return to work is in itself an indication of
the existence of strained relations between him and the petitioner. Bank of Lubao, Inc. vs. Rommel J. Manabat,
et al., G.R. No. 188722, February 1, 2012.
Seafarers; employment contract; perfection stage vs. commencement stage. An employment contract, like any
other contract, is perfected at the moment (1) the parties come to agree upon its terms; and (2) concur in the
essential elements thereof: (a) consent of the contracting parties, (b) object certain which is the subject matter of
the contract, and (c) cause of the obligation. The object of the contract was the rendition of service by Fantonial
on board the vessel for which service he would be paid the salary agreed upon. In this case, the employment
contract was perfected on January 15, 2000 when it was signed by the parties who entered into the contract in
behalf of their principal. However, the employment relationship never commenced since Fantonial was not
allowed to leave on January 17, 2000 and go on board the vessel M/V AUK in Germany on the ground that he
was not yet declared fit to work on the day of his scheduled departure. But, even if no employer-employee
relationship commenced, there was, contemporaneous with the perfection of the employment contract, the birth
of certain rights and obligations, the breach of which may give rise to a cause of action against the erring
party. Bright Maritime Corporation (BMC) / Desiree P. Tenorio vs. Ricardo B. Fantonial, G.R. No.
165935, February 8, 2012.
January 2014 Philippine Supreme Court
Decisions on Labor Law
Posted on February 21, 2014 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law
Here are select January 2014 rulings of the Supreme Court of the Philippines on labor law:

Backwages; when awarded. As a general rule, backwages are granted to indemnify a dismissed employee for his
loss of earnings during the whole period that he is out of his job. Considering that an illegally dismissed employee
is not deemed to have left his employment, he is entitled to all the rights and privileges that accrue to him from
the employment. The grant of backwages to him is in furtherance and effectuation of the public objectives of the
Labor Code, and is in the nature of a command to the employer to make a public reparation for dismissing the
employee in violation of the Labor Code.
The Court held that the respondents are not entitled to the payment of backwages. The Court, citing G&S
Transport Corporation v. Infante (G. R. No. 160303, September 13, 2007) stated that the principle of a fair
days wage for a fair days labor remains as the basic factor in determining the award thereof. An exception to
the rule would be if the laborer was able, willing and ready to work but was illegally locked out, suspended or
dismissed or otherwise illegally prevented from working. It is, however, required, for this exception to apply,
that the strike be legal, a situation which does not obtain in the case at bar. Visayas Community Medical Center
(VCMC) formerly known as Metro Cebu Community Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156,
January 15, 2014
Dismissal; burden of proof on employer. The burden is on the employer to prove that the termination was for
valid cause. Unsubstantiated accusations or baseless conclusions of the employer are insufficient legal
justifications to dismiss an employee. The unflinching rule in illegal dismissal cases is that the employer bears
the burden of proof.
One of CCBPIs policies requires that, on a daily basis, CCBPI Salesmen/Account Specialists must account for
their sales/collections and obtain clearance from the company Cashier before they are allowed to leave company
premises at the end of their shift and report for work the next day. If there is a shortage/failure to account, the
concerned Salesmen/Account Specialist is not allowed to leave the company premises until he settles the same.
In addition, shortages are deducted from the employees salaries. If CCBPI expects to proceed with its case
against petitioner, it should have negated this policy, for its existence and application are inextricably tied to
CCBPIs accusations against petitioner. In the first place, as petitioners employer, upon it lay the burden of
proving by convincing evidence that he was dismissed for cause. If petitioner continued to work until June 2004,
this meant that he committed no infraction, going by this company policy; it could also mean that any infraction
or shortage/non-remittance incurred by petitioner has been duly settled. Respondents decision to ignore this
issue generates the belief that petitioner is telling the truth, and that the alleged infractions are fabricated, or have
been forgiven. Coupled with Macatangays statement which remains equally unrefuted that the charges
against petitioner are a scheme by local CCBPI management to cover up problems in the Naga City Plant, the
conclusion is indeed telling that petitioner is being wrongfully made to account. Jonas Michael R. Garza v.
Coca-Cola Bottlers Phils., Inc., et al.,G.R. No. 180972. January 20, 2014.
Embezzlement; failure to remit collections. The irregularity attributed to petitioner with regard to the Asanza
account should fail as well. To be sure, Asanza herself confirmed that she did not make any payment in cash or
check of P8,160.00 covering the October 15, 2003 delivery for which petitioner is being held to account. This
being the case, petitioner could not be charged with embezzlement for failure to remit funds which he has not
collected. There was nothing to embezzle or remit because the customer made no payment yet. It may appear
from Official Receipt No. 303203 issued to Asanza that the October 15 delivery of products to her has been paid;
but as admitted by her, she has not paid for the said delivered products. The reason for petitioners issuance of
said official receipt to Asanza is the latters concurrent promise that she would immediately issue the check
covering the said amount, which she failed to do. Jonas Michael R. Garza v. Coca-Cola Bottlers Phils., Inc., et
al.,G.R. No. 180972. January 20, 2014
Grave abuse of discretion; concept of. Having established through substantial evidence that respondents injury
was self-inflicted and, hence, not compensable pursuant to Section 20 (D) of the 1996 POEA-SEC, no grave
abuse of discretion can be imputed against the NLRC in upholding LAs decision to dismiss respondents
complaint for disability benefits. It is well-settled that an act of a court or tribunal can only be considered to be
tainted with grave abuse of discretion when such act is done in a capricious or whimsical exercise of judgment
as is equivalent to lack of jurisdiction. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or
Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014
Illegal strike and illegal acts during the strike; distinction between union members and union officers in
determining when they lose their employment status. The Supreme Court stressed that the law makes a
distinction between union members and union officers. A union member who merely participates in an illegal
strike may not be terminated from employment. It is only when he commits illegal acts during a strike that he
may be declared to have lost employment status. In contrast, a union officer may be terminated from employment
for knowingly participating in an illegal strike or participates in the commission of illegal acts during a strike.
The law grants the employer the option of declaring a union officer who participated in an illegal strike as having
lost his employment. It possesses the right and prerogative to terminate the union officers from service.
NAMA-MCCH-NFL is not a legitimate labor organization, thus, the strike staged by its leaders and members
was declared illegal. The union leaders who conducted the illegal strike despite knowledge that NAMA-MCCH-
NFL is not a duly registered labor union were declared to have been validly terminated by petitioner. However,
as to the respondents who were mere union members, it was not shown that they committed any illegal act during
the strike. The Labor Arbiter and the NLRC were one in finding that respondents actively supported the
concerted protest activities, signed the collective reply of union members manifesting that they launched the
mass actions to protest managements refusal to negotiate a new CBA, refused to appear in the investigations
scheduled by petitioner because it was the unions stand that they would only attend these investigations as a
group, and failed to heed petitioners final directive for them to desist from further taking part in the illegal
strike. The CA, on the other hand, found that respondents participation in the strike was limited to the wearing
of armbands. Since an ordinary striking worker cannot be dismissed for such mere participation in the illegal
strike, the CA correctly ruled that respondents were illegally dismissed. However, the CA erred in awarding
respondents full back wages and ordering their reinstatement despite the prevailing circumstances. Visayas
Community Medical Center (VCMC) formerly known as Metro Cebu Commnunity Hospital (MCCH) v. Erma
Yballe, et al.,G.R. No. 196156, January 15, 2014
Labor law; kinds of employment; casual employment; requisites. Casual employment, the third kind of
employment arrangement, refers to any other employment arrangement that does not fall under any of the first
two categories, i.e., regular or project/seasonal. Universal Robina Sugar Milling Corporation and Rene
Cabati, G.R. No. 186439. January 15, 2014.
Labor law; kinds of employment; fixed term employment; requisites. The Labor Code does not mention another
employment arrangement contractual or fixed term employment (or employment for a term) which, if not
for the fixed term, should fall under the category of regular employment in view of the nature of the employees
engagement, which is to perform an activity usually necessary or desirable in the employers business.
In Brent School, Inc. v. Zamora (G.R. No. L-48494, February 5, 1990), the Court, for the first time,
recognized and resolved the anomaly created by a narrow and literal interpretation of Article 280 of the
Labor Code that appears to restrict the employees right to freely stipulate with his employer on the duration of
his engagement. In this case, the Court upheld the validity of the fixed-term
employment agreed upon by the employer, Brent School, Inc., and the employee, Dorotio Alegre, declaring
that the restrictive clause in Article 280 should be construed to refer to the substantive evil that the Code
itself x x x singled out: agreements entered into precisely to circumvent security of tenure. It should have no
application to instances where [the] fixed period of employment was agreed upon knowingly and voluntarily
by the parties x x x absent any x x x circumstances vitiating [the employees] consent, or where [the facts
satisfactorily show] that the employer and [the] employee dealt with each other on more or less equal terms[.]
The indispensability or desirability of the activity performed by the employee will not preclude the parties from
entering into an otherwise valid fixed term employment agreement; a definite period of employment does not
essentially contradict the nature of the employees duties as necessary and desirable to the usual business or trade
of the employer.

Nevertheless, where the circumstances evidently show that the

employer imposed the period precisely to preclude the employee from acquiring tenurial security, the law
and this Court will not hesitate to strike down or disregard the period as contrary to public policy, morals, etc.
In such a case, the general restrictive rule under Article 280 of the Labor Code will apply and the employee shall
be deemed regular. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439. January
15, 2014.
Labor law; kinds of employment; nature of the employment depends on the nature of the activities to be
performed by the employee. The nature of the employment does not depend solely on the will or word of the
employer or on the procedure for hiring and the manner of designating the employee. Rather, the nature of the
employment depends on the nature of the activities to be performed by the employee, taking into account the
nature of the employers business, the duration and scope of work to be done, and, in some cases, even the length
of time of the performance and its continued existence. Universal Robina Sugar Milling Corporation and Rene
Cabati, G.R. No. 186439. January 15, 2014.
Labor law; kinds of employment; project employment; requisites; length of time not
controlling. A project employment, on the other hand, contemplates on arrangement whereby the
employment has been fixed for a specific project or undertaking whose completion or termination has been
determined at the time of the engagement of the employee[.] Two requirements, therefore, clearly need to be
satisfied to remove the engagement from the presumption of regularity of employment, namely: (1) designation
of a specific project or undertaking for which the employee is hired; and (2) clear determination of the completion
or termination of the project at the time of the employees engagement. The services of the project employees
are legally and automatically terminated upon the end or completion of the project as the employees services
are coterminous with the project. Unlike in a regular employment under Article 280 of the Labor Code, however,
the length of time of the asserted project employees engagement is not controlling as the employment may,
in fact, last for more than a year, depending on the needs or circumstances of the project. Nevertheless, this
length of time (or the continuous rehiring of the employee even after the cessation of the project) may serve as
a badge of regular employment when the activities performed by the purported project employee are necessary
and indispensable to the usual business or trade of the employer. In this latter case, the law will regard the
arrangement as regular employment. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No.
186439. January 15, 2014.
Labor law; kinds of employment; regular employment; requisites. Article 280 of the Labor Code provides for
three kinds of employment arrangements, namely: regular, project/seasonal and casual. Regular employment
refers to that arrangement whereby the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer[.] Under this definition, the primary
standard that determines regular employment is the reasonable connection between the particular activity
performed by the employee and the usual business or trade of the
employer; the emphasis is on the necessity or desirability of the employees activity. Thus, when the
employee performs activities considered necessary and desirable to the overall business scheme of the employer,
the law regards the employee as regular.
By way of an exception, paragraph 2, Article 280 of the Labor Code also considers as regular, a casual
employment arrangement when the casual employees engagement is made to last for at least one year, whether
the service is continuous or broken. The controlling test in this arrangement is the length of time during which
the employee is engaged. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R. No. 186439.
January 15, 2014.
Labor law; kinds of employment; seasonal employment; requisites.
Seasonal employment operates much in the same way as project employment, albeit it involves work or
service that is seasonal in nature or lasting for the duration of the season. As with project employment,
although the seasonal employment arrangement involves work that is seasonal or periodic in nature, the
employment itself is not automatically considered seasonal so as to prevent the employee from attaining regular
status. To exclude the asserted seasonal employee from those classified as regular employees, the employer
must show that: (1) the employee must be performing work or services that are seasonal in nature; and (2) he
had been employed for the duration of the season. Hence, when the seasonal workers are continuously and
repeatedly hired to perform the same tasks or activities for several seasons or even after the cessation of the
season, this length of time may likewise serve as badge of regular employment. In fact, even though denominated
as seasonal workers, if these workers are called to work from time to time and are only temporarily laid off
during the off-season, the law does not consider them separated from the service during the off-season period.
The law simply considers these seasonal workers on leave until re-employed. Universal Robina Sugar Milling
Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.
Overseas employment; that the entitlement of seamen on overseas work to disability benefits is a matter
governed, not only by medical findings, but by law and by contract. With respect to the applicable rules, it is
doctrinal that the entitlement of seamen on overseas work to disability benefits is a matter governed, not only
by medical findings, but by law and by contract. The material statutory provisions are Articles 191 to 193 under
Chapter VI (Disability Benefits) of the Labor Code, in relation [to] Rule X of the Rules and Regulations
Implementing Book IV of the Labor Code. By contract, the POEA-SEC, as provided under Department Order
No. 4, series of 2000 of the Department of Labor and Employment, and the parties Collective Bargaining
Agreement bind the seaman and his employer to each other.
In the foregoing light, the Court observes that respondent executed his contract of employment on July 17, 2000,
incorporating therein the terms and conditions of the 2000 POEA-SEC which took effect on June 25, 2000.
However, since the implementation of the provisions of the foregoing 2000 POEA-SEC was temporarily
suspended by the Court on September 11, 2000, particularly Section 20, paragraphs (A), (B), and (D) thereof,
and was lifted only on June 5, 2002, through POEA Memorandum Circular No. 2, series of 2002, the
determination of respondents entitlement to the disability benefits should be resolved under the provisions of
the 1996 POEA-SEC as it was, effectively, the governing circular at the time respondents employment contract
was executed. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation
Limited v. Alexander L. Moradas,G.R. No., January 15, 2014
Payment of separation pay as alternative relief for union members who were dismissed for having participated
in an illegal strike is in lieu of reinstatement; circumstances when applicable. The alternative relief for union
members who were dismissed for having participated in an illegal strike is the payment of separation pay in lieu
of reinstatement under the following circumstances: (a) when reinstatement can no longer be effected in view of
the passage of a long period of time or because of the realities of the situation; (b) reinstatement is inimical to
the employers interest; (c) reinstatement is no longer feasible; (d) reinstatement does not serve the best interests
of the parties involved; (e) the employer is prejudiced by the workers continued employment; (f) facts that make
execution unjust or inequitable have supervened; or (g) strained relations between the employer and employee.
The Court ruled that the grant of separation pay to respondents is the appropriate relief under the circumstances
considering that 15 years had lapsed from the onset of this labor dispute, and in view of strained relations that
ensued, in addition to the reality of replacements already hired by the hospital which had apparently recovered
from its huge losses, and with many of the petitioners either employed elsewhere, already old and sickly, or
otherwise incapacitated. Visayas Community Medical Center (VCMC) formerly known as Metro Cebu
Commnunity Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156, January 15, 2014
Rule 45; only questions of law are allowed in a petition for review on certiorari. It is a settled rule in this
jurisdiction that only questions of law are allowed in a petition for review on certiorari. The Courts power of
review in a Rule 45 petition is limited to resolving matters pertaining to any perceived legal errors, which the
CA may have committed in issuing the assailed decision. In reviewing the legal correctness of the CAs Rule 65
decision in a labor case, the Court examines the CA decision in the context that it determined whether or not
there is grave abuse of discretion in the NLRC decision subject of its review and not on the basis of whether the
NLRC decision on the merits of the case was correct. Universal Robina Sugar Milling Corporation and Rene
Cabati, G.R. No. 186439. January 15, 2014.
Rule 45; the Courts jurisdiction in a Rule 45 petition is limited to the review of pure questions of law; exceptions.
The Courts jurisdiction in cases brought before it from the CA via Rule 45 of the Rules of Court is generally
limited to reviewing errors of law. The Court is not the proper venue to consider a factual issue as it is not a trier
of facts. This rule, however, is not ironclad and a departure therefrom may be warranted where the findings of
fact of the CA are contrary to the findings and conclusions of the NLRC and LA, as in this case. In this regard,
there is therefore a need to review the records to determine which of them should be preferred as more
conformable to evidentiary facts. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient
Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014.
Section 20 (B) of the 1996 POEA-SEC; an employer shall be liable for the injury or illness suffered by a seafarer
during the term of his contract; exception. The prevailing rule under Section 20 (B) of the 1996 POEA-SEC on
compensation and benefits for injury or illness was that an employer shall be liable for the injury or illness
suffered by a seafarer during the term of his contract. To be compensable, the injury or illness must be proven
to have been contracted during the term of the contract. However, the employer may be exempt from liability if
he can successfully prove that the cause of the seamans injury was directly attributable to his deliberate or
willful act as provided under Section 20 (D) thereof, to wit:
D. No compensation shall be payable in respect of any injury, incapacity, disability or death of the seafarer
resulting from his willful or criminal act, provided however, that the employer can prove that such injury,
incapacity, disability or death is directly attributable to seafarer.

Hence, the onus probandi falls on the petitioners herein to establish or substantiate their claim that the
respondents injury was caused by his willful act with the requisite quantum of evidence. INC Shipmanagement,
Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L. Moradas,G.R. No.,
January 15, 2014
Substantial evidence; concept of. In labor cases, as in other administrative proceedings, only substantial evidence
or such relevant evidence as a reasonable mind might accept as sufficient to support a conclusion is required. To
note, considering that substantial evidence is an evidentiary threshold, the Court, on exceptional cases, may
assess the factual determinations made by the NLRC in a particular case.
The Court ruled that NLRC had cogent legal bases to conclude that petitioners have successfully discharged the
burden of proving by substantial evidence that respondents injury was directly attributable to himself. Records
bear out circumstances which all lead to the reasonable conclusion that respondent was responsible for the
flooding and burning incidents. While respondent contended that the affidavits and statements of the
vessels officers and his fellow crew members should not be given probative value as they were biased, self-
serving, and mere hearsay, he nonetheless failed to present any evidence to substantiate his own theory.
Besides, as correctly pointed out by the NLRC, the corroborating affidavits and
statements of the vessels officers and crew members must be taken as a whole and cannot just be
perfunctorily dismissed as self-serving absent any showing that they were lying when they made the statements
therein. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v.
Alexander L. Moradas,G.R. No., January 15, 2014

January 2012 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on February 17, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases

Here are selected January 2012 rulings of the Supreme Court of the Philippines on labor law and procedure:

Certiorari; effect of receipt of award. The prevailing partys receipt of the full amount of the judgment award
pursuant to a writ of execution issued by the labor arbiter does not close or terminate the case if such receipt is
qualified as without prejudice to the outcome of the petition for certiorari pending with the Court of
Appeals. Timoteo H. Sarona vs. National Labor Relations Commission, Royale Security Agency, et al., G.R. No.
185280, January 18, 2011.
Constructive dismissal; change in position. Constructive dismissal exists where there is cessation of work
because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a
demotion in rank or a diminution in pay and other benefits. Aptly called a dismissal in disguise of an act
amounting to dismissal but made to appear as if it were not,constructive dismissal may, likewise, exist if an act
of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the
employee that it could foreclose any choice by him except to forego his continued employment.In cases of a
transfer of an employee, the rule is settled that the employer is charged with the burden of proving that its conduct
and action are for valid and legitimate grounds such as genuine business necessity and that the transfer is not
unreasonable, inconvenient or prejudicial to the employee. If the employer cannot overcome this burden of proof,
the employees transfer shall be tantamount to unlawful constructive dismissal. Jonathan V. Morales vs.
Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2011.
Contract; novation. Novation is the extinguishment of an obligation by the substitution or change of the
obligation by a subsequent one which extinguishes or modifies the first, either by changing the object or principal
conditions, or, by substituting another in place of the debtor, or by subrogating a third person in the rights of the
creditor. In order for novation to take place, the concurrence of the following requisites is indispensable: (1)
There must be a previous valid obligation; (2) There must be an agreement of the parties concerned to a new
contract; (3) There must be the extinguishment of the old contract; and (4) There must be the validity of the new
contract. The parties impliedly extinguished the first contract by agreeing to enter into the second contract. The
records also reveal that the 2ndcontract extinguished the first contract by changing its object or principal. These
contracts were for overseas employment aboard different vessels. The first contract was for employment aboard
the MV Stolt Aspiration while the second contract involved working in another vessel, the MV Stolt Pride.
Petitioners and Madequillo, Jr. accepted the terms and conditions of the second contract. Undoubtedly, he was
still employed under the first contract when he negotiated with petitioners on the second contract. Since
Madequillo was still employed under the first contract when he negotiated with petitioners on the second
contract, novation became an unavoidable conclusion. Stolt-Nielsen Transportation Group, Inc., et al. vs.
Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.
Employee; money claims. On the issue of how the seafarer will be compensated by reason of the unreasonable
non-deployment, the Supreme Court decreed the application of Section 10 of Republic Act No. 8042 (Migrant
Workers Act) which provides for money claims by reason of a contract involving Filipino workers for overseas
deployment. The law provides:
Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and
decide, within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-
employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms of damages. x x x (Underscoring supplied)
Following the law, the claim is still cognizable by the labor arbiters of the NLRC under the second phrase of the
provision. Applying the rules on actual damages, Article 2199 of the New Civil Code provides that one is entitled
to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Stolt-Nielsen
Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.
Employee; preventive suspension; penalty of suspension. Preventive suspension is a disciplinary measure
resorted to by the employer pending investigation of an alleged malfeasance or misfeasance committed by an
employee. The employer temporarily bars the employee from working if his continued employment poses a
serious and imminent threat to the life or property of the employer or of his co-workers. On the other hand, the
penalty of suspension refers to the disciplinary action imposed on the employee after an official investigation or
administrative hearing is conducted. The employer exercises its right to discipline erring employees pursuant to
company rules and regulations. In the present case, Henry Delada filed a grievance against Manila Pavilion Hotel
(MPH). Failing to reach a settlement, Delada lodged a Complaint before the National Conciliation and Mediation
Board, which was eventually referred to a panel of voluntary arbitrators (PVA). Meanwhile, citing security and
safety reasons, MPH placed Delada on a 30-day preventive suspension and proceeded with the administrative
case against him. MPH eventually found Delada liable for insubordination and willful disobedience of the
transfer order and imposed upon him a penalty of 90-day suspension. The PVA ruled that there was no legal and
factual basis to support MPHs imposition of preventive suspension on Delada, and that the penalty of 90-day
suspension imposed by MPH against Delada went beyond the 30-day period of preventive suspension prescribed
by the Implementing Rules of the Labor Code. PVA also ruled that MPH lost its authority to continue with the
administrative proceedings for insubordination and willful disobedience of the transfer order and to impose the
penalty of 90-day suspension on Delada. According to the panel, it acquired exclusive jurisdiction over the issue
when the parties submitted the aforementioned issues before it. The Supreme Court held that MPH did not lose
its authority to discipline, and that MPH had the authority to continue with the administrative proceedings for
insubordination and willful disobedience against Delada and to impose on him the penalty of suspension. Manila
Pavilion Hotel, etc. vs. Henry Delada, G.R. No. 189947, January 25, 2011.
Employee; release and quitclaim. While the law looks with disfavor upon releases and quitclaims by employees
who are inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal
responsibilities, a legitimate waiver representing a voluntary settlement of a laborers claims should be respected
by the courts as the law between the parties. Considering the petitioners claim of fraud and bad faith against
Philcomsat to be unsubstantiated, the Supreme Court found the quitclaim in dispute to be a legitimate waiver.
The Court of Appeals and the National Labor Relations Commission were unanimous in holding that the
petitioner voluntarily executed the subject quitclaim. The Supreme Court is not a trier of facts, and this doctrine
applies with greater force in labor cases. Factual questions are for the labor tribunals to resolve and whether the
petitioner voluntarily executed the subject quitclaim is a question of fact. In this case, the factual issues have
already been determined by the National Labor Relations Commission and its findings were affirmed by the
Court of Appeals. Judicial review by the Supreme Court does not extend to a reevaluation of the sufficiency of
the evidence upon which the proper labor tribunal has based its determination. Hypte R. Aujero vs. Philippine
Communications Satellite Corporation, G.R. No. 193484, January 18, 2011.
Employee benefit; holiday pay, service incentive leave pay and proportionate 13th month pay. Under the Labor
Code, the employee is entitled to his regular rate on holidays even if he does not work. Likewise, express
provision of the law entitles him to service incentive leave benefit if he has rendered service for more than a year
already. Furthermore, under Presidential Decree No. 851, the employee should be paid his 13th month pay. The
employer has the burden of proving that it has paid these benefits to its employees. AbdulJuahid R. Pigcaulan
vs. Security and Credit Investigation, Inc. and/or Rene Amby Reyes, G.R. No. 173648, January 16, 2011.
Employee benefit; overtime pay. In the absence of any concrete proof that additional service beyond the normal
working hours and days had been rendered, overtime pay cannot be granted. Handwritten itemized computations
are self-serving, unreliable and unsubstantiated evidence to sustain the grant of salary differentials, particularly
overtime pay. Unsigned and unauthenticated as they are, there is no way of verifying the truth of the handwritten
entries stated therein. AbdulJuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. and/or Rene Amby
Reyes, G.R. No. 173648, January 16, 2011.
Employee benefit; permanent disability. The Supreme Court reiterated Remigio v. National Labor Relations
Commission, G.R. No. 159887, April 12, 2006, which stated that: Thus, the Court has applied the Labor Code
concept of permanent total disability to the case of seafarers. In Philippine Transmarine Carriers v. NLRC, G.R.
No. 123891, February 28, 2001, seaman Carlos Nietes was found to be suffering from congestive heart failure
and cardiomyopathy and was declared as unfit to work by the company-accredited physician. The Court affirmed
the award of disability benefits to the seaman, citing ECC v. Sanico, G.R. No. 134028, December 17, 1999, GSIS
v. CA, G.R. No. 117572, January 29, 1998, GSIS v. CA, G.R. No. 116015, July 31, 1996 and Bejerano v. ECC, G.
R. No. 84777, January 30, 1992, that disability should not be understood more on its medical significance but
on the loss of earning capacity. Permanent total disability means disablement of an employee to earn wages in
the same kind of work, or work of similar nature that [he] was trained for or accustomed to perform, or any kind
of work which a person of [his] mentality and attainment could do. It does not mean absolute helplessness. It
likewise cited Bejerano to reiterate that in a disability compensation, it is not the injury which is compensated,
but rather it is the incapacity to work resulting in the impairment of ones earning capacity. The Court also cited
the more recent case of Crystal Shipping, Inc. v. Natividad, G.R. No. 154798, October 20, 2005, applying the
same principles, and GSIS v. Cadiz, G.R. No. 145093, July 8, 2003, and Ijares v. CA, G.R. No. 105854, August
26, 1999, which declared that permanent disability is the inability of a worker to perform his job for more than
120 days, regardless of whether or not he loses the use of any part of his body. Magsaysay Maritime
Corporation, et al. vs. Oberto S. Lobusta, G.R. No. 177578, January 25, 2011.
Employee dismissal; due process. Notice and hearing constitute the essential elements of due process in the
dismissal of employees. The employer must furnish the employee with two written notices before termination
of employment can be legally effected. The first apprises the employee of the particular acts or omissions for
which dismissal is sought. The second informs the employee of the employers decision to dismiss him. With
regard to the requirement of a hearing, the essence of due process lies simply in an opportunity to be heard, and
not that an actual hearing should always and indispensably be held. These requirements were satisfied in this
case. The first required notice was dated November 3, 2003, sufficiently notifying Yabut of the particular acts
being imputed against him, as well as the applicable law and the company rules considered to have been violated.
On November 17, 2003, Meralco conducted a hearing on the charges against the petitioner where he was
accorded the right to air his side and present his defenses on the charges against him. Significantly, a high-
ranking officer of the supervisory union of Meralco assisted him during the said investigation. His sworn
statement that forms part of the case records even listed the matters that were raised during the investigation.
Finally, Meralco served a notice of dismissal dated February 4, 2004 upon Yabut. Such notice notified the latter
of the companys decision to dismiss him from employment on the grounds clearly discussed therein.Norman
Yabut vs. Manila Electric Company and Manuel M. Lopez, G.R. No. 190436, January 16, 2011.
Employee dismissal; due process. Even if there is a just or valid cause for terminating an employee, it is
necessary to comply with the requirements of due process prior to the termination. Lolita S. Concepcion vs.
Minex Import Corporation/Minerama Corporation, et al., G.R. No. 153569, January 24, 2011.
Employee dismissal; gross negligence; habitual neglect. Gross negligence has been defined as the want of care
in the performance of ones duties and habitual neglect has been defined as repeated failure to perform ones
duties for a period of time, depending upon the circumstances. These are not overly technical terms, which, in
the first place, are expressly sanctioned by the Labor Code of the Philippines, to wit: ART. 282. Termination by
employer. An employer may terminate an employment for any of the following causes: [xxx](b) Gross and
habitual neglect by the employee of his duties; [xxx] Diosdado Bitara was dismissed from service due to habitual
tardiness and absenteeism, and for having continued disregarding attendance policies despite his undertaking to
report on time. His weekly time record for the first quarter of the year 2000 revealed that he came late 19 times
out of the 47 times he reported for work. He also incurred 19 absences out of the 66 working days during the
quarter. His absences without prior notice and approval from March 11-16, 2000 were considered to be the most
serious infraction of all because of its adverse effect on business operations. The Supreme Court held that even
in the absence of a written company rule defining gross and habitual neglect of duties, Bitaras omissions qualify
as such warranting his dismissal from the service. Mansion Printing Center and Clement Cheng vs. Diosdado
Bitara, Jr., G.R. No. 168120, January 25, 2011.
Employee dismissal; just cause; loss of confidence. To dismiss an employee, the law requires the existence of a
just and valid cause. Article 282 of the Labor Code enumerates the just causes for termination by the
employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer
or the latters representative in connection with the employees 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 his 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.
It is unfair to require an employer to first be morally certain of the guilt of the employee by awaiting a conviction
before terminating him when there is already sufficient showing of the wrongdoing. Requiring that certainty
may prove too late for the employer, whose loss may potentially be beyond repair. In the present case, no less
than the DOJ Secretary found probable cause for qualified theft against Concepcion. That finding was enough
to justify her termination for loss of confidence. Lolita S. Concepcion vs. Minex Import Corporation/Minerama
Corporation, et al., G.R. No. 153569, January 24, 2011.
Employee dismissal; loss of trust and confidence. For loss of trust and confidence to be a valid ground for
dismissal, it must be based on a willful breach of trust and founded on clearly established facts. A breach is
willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an
act done carelessly, thoughtlessly, heedlessly or inadvertently. In addition, loss of trust and confidence must rest
on substantial grounds and not on the employers arbitrariness, whims, caprices or suspicion. Manila Electric
Company (Meralco) vs. Ma. Luisa Beltran, G.R. No. 173774, January 30, 2011.
Employee dismissal; misconduct. Article 282(a) provides that an employer may terminate an employment
because of an employees serious misconduct, a cause that was present in this case in view of the petitioners
violation of his employers 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 employees duties; and (c) it must
show that the employee has become unfit to continue working for the employer. Installation of shunting wires is
without doubt a serious wrong as it demonstrates an act that is willful or deliberate, pursued solely to wrongfully
obtain electric power through unlawful means. The act clearly relates to the petitioners performance of his duties
given his position as branch field representative who is equipped with knowledge on meter operations, and who
has the duty to test electric meters and handle customers violations of contract. Instead of protecting the
companys interest, the petitioner himself used his knowledge to illegally obtain electric power from Meralco.
His involvement in this incident deems him no longer fit to continue performing his functions for respondent-
company. Norman Yabut vs. Manila Electric Company and Manuel M. Lopez, G.R. No. 190436, January 16,
2011.
Employer-employee relationship; commencement. The POEA Standard Employment Contract provides that
employment shall commence upon the actual departure of the seafarer from the airport or seaport in the port of
hire. Distinction must be made between the perfection of the employment contract and the commencement of
the employer-employee relationship. The perfection of the contract, which in this case coincided with the date
of execution thereof, occurred when petitioner and respondent agreed on the object and the cause, as well as the
rest of the terms and conditions therein. The commencement of the employer-employee relationship would have
taken place had petitioner been actually deployed from the point of hire. Stolt-Nielsen Transportation Group,
Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.
Judgment; finality. The petition was brought only on behalf of Pigcaulan. The CA Decision has already become
final and executory as to Canoy since he did not appeal from it. Canoy cannot now simply incorporate in his
affidavit a verification of the contents and allegations of the petition as he is not one of the petitioners
therein. AbdulJuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. and/or Rene Amby Reyes, G.R. No.
173648, January 16, 2011.
Judgment; res judicata. The doctrine of res judicata lays down two main rules which may be stated as follows:
(1) The judgment or decree of a court of competent jurisdiction on the merits concludes the parties and their
privies to the litigation and constitutes a bar to a new action or suit involving the same cause of action either
before the same or any other tribunal; and (2) Any right, fact, or matter in issue directly adjudicated or necessarily
involved in the determination of an action before a competent court in which a judgment or decree is rendered
on the merits is conclusively settled by the judgment therein and cannot again be litigated between the parties
and their privies whether the claim or demand, purpose, or subject matter of the two suits is the same or not.
These two main rules mark the distinction between the principles governing the two typical cases in which a
judgment may operate as evidence. In speaking of these cases, the first general rule, and which corresponds to
paragraph (b) of Section 47 of Rule 39 of the Rules of Court is referred to as bar by former judgment while
the second general rule, which is embodied in paragraph (c) of the same section, is known as conclusiveness of
judgment. The present labor case is closely related to the civil case that was decided with finality. The acts and
omissions alleged by the Bank in the civil case as basis of its counterclaim against Mauricio are the very same
acts and omissions which were used as grounds to terminate his employment. Considering that it has already
been conclusively determined with finality in the civil case that the questioned acts of Mauricio were well within
his discretion as branch manager and approving officer of the Bank, and the same were sanctioned by the Head
Office, the Supreme Court found that the Court of Appeals did not err in holding that there was no valid or just
cause for the Bank to terminate Mauricios employment. Prudential Bank (now Bank of the Philippine Islands)
vs. Antonio S.A. Mauricio, substituted by his legal heirs Maria Fe, Voltaire, Antonio, Jr., Antonio, Earl John,
and Francisco Roberto all surnamed Mauricio, G.R. No. 183350, January 18, 2011.
Jurisdiction; voluntary arbitrators. In Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin, G.R. No.
90426, December 15, 1989, the Supreme Court ruled that the voluntary arbitrator had plenary jurisdiction and
authority to interpret the agreement to arbitrate and to determine the scope of his own authority subject only,
in a proper case, to the certiorari jurisdiction of this Court. It was also held in that case that the failure of the
parties to specifically limit the issues to that which was stated allowed the arbitrator to assume jurisdiction over
the related issue. In Ludo & Luym Corporation v. Saornido, G.R. No. 140960, January 20, 2003, the Supreme
Court recognized that voluntary arbitrators are generally expected to decide only those questions expressly
delineated by the submission agreement; that, nevertheless, they can assume that they have the necessary power
to make a final settlement on the related issues, since arbitration is the final resort for the adjudication of disputes.
Thus, the Supreme Court ruled that even if the specific issue brought before the arbitrators merely mentioned
the question of whether an employee was discharged for just cause, they could reasonably assume that their
powers extended beyond the determination thereof to include the power to reinstate the employee or to grant
back wages. In the same vein, if the specific issue brought before the arbitrators referred to the date of
regularization of the employee, law and jurisprudence gave them enough leeway as well as adequate prerogative
to determine the entitlement of the employees to higher benefits in accordance with the finding of regularization.
Indeed, to require the parties to file another action for payment of those benefits would certainly undermine labor
proceedings and contravene the constitutional mandate providing full protection to labor and speedy labor
justice. Manila Pavilion Hotel, etc. vs. Henry Delada, G.R. No. 189947, January 25, 2011.
Procedural rules; liberal application; when waived. Procedural rules may be waived or dispensed with in
absolutely meritorious cases. The Supreme Court, in past cases, has adhered to the strict implementation of the
rules and considered them inviolable when it is shown that the patent lack of merit of the appeals render liberal
interpretation pointless and naught. The contrary obtains in this case as Philcomsats case is not entirely
unmeritorious. Specifically, Philcomsat alleged that the petitioners execution of the subject quitclaim was
voluntary despite his claim that he did not do so. Philcomsat likewise argued that the petitioners educational
attainment and the position he occupied in Philcomsats hierarchy militate against his claim that he was pressured
or coerced into signing the quitclaim. The emerging trend in our jurisprudence is to afford every party-litigant
the amplest opportunity for the proper and just determination of his cause free from the constraints of
technicalities. Far from having gravely abused its discretion, the NLRC correctly prioritized substantial justice
over the rigid and stringent application of procedural rules. In the present case, the Supreme Court held that the
CA was correct in not finding grave abuse of discretion in the NLRCs decision to give due course to
Philcomsats appeal despite its being belatedly filed. Hypte R. Aujero vs. Philippine Communications Satellite
Corporation, G.R. No. 193484, January 18, 2011.
Public officers; reassignment; constructive dismissal. While a temporary transfer or assignment of personnel is
permissible even without the employees prior consent, it cannot be done when the transfer is a preliminary step
toward his removal, or a scheme to lure him away from his permanent position, or when it is designed to
indirectly terminate his service, or force his resignation. Such a transfer would in effect circumvent the provision
which safeguards the tenure of office of those who are in the Civil Service. Significantly, Section 6, Rule III of
CSC Memorandum Circular No. 40, series of 1998, defines constructive dismissal as a situation when an
employee quits his work because of the agency heads unreasonable, humiliating, or demeaning actuations which
render continued work impossible. Hence, the employee is deemed to have been illegally dismissed. This may
occur although there is no diminution or reduction of salary of the employee. It may be a transfer from one
position of dignity to a more servile or menial job. Republic of the Phil., represented by the Civil Service
Commission vs. Minerva M.P. Pacheco, G.R. No. 178021, January 31, 2011.
Reinstatement; not possible; backwages. In case separation pay is awarded and reinstatement is no longer
feasible, backwages shall be computed from the time of illegal dismissal up to the finality of the decision should
separation pay not be paid in the meantime. It is the employees actual receipt of the full amount of his separation
pay that will effectively terminate the employment of an illegally dismissed employee. Otherwise, the employer-
employee relationship subsists and the illegally dismissed employee is entitled to backwages, taking into account
the increases and other benefits, including the 13th month pay, that were received by his co-employees who are
not dismissed. It is the obligation of the employer to pay an illegally dismissed employee or worker the whole
amount of the salaries or wages, plus all other benefits and bonuses and general increases, to which he would
have been normally entitled had he not been dismissed and had not stopped working. Timoteo H. Sarona vs.
National Labor Relations Commission, Royale Security Agency, et al., G.R. No. 185280, January 18, 2011.
Reorganization; management prerogative. Admittedly, the right of employees to security of tenure does not give
them vested rights to their positions to the extent of depriving management of its prerogative to change their
assignments or to transfer them. By management prerogative is meant the right of an employer to regulate all
aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be
followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and
dismissal and recall of workers. Although jurisprudence recognizes said management prerogative, it has been
ruled that the exercise thereof, while ordinarily not interfered with, is not absolute and is subject to limitations
imposed by law, collective bargaining agreement, and general principles of fair play and justice. Thus, an
employer may transfer or assign employees from one office or area of operation to another, provided there is no
demotion in rank or diminution of salary, benefits, and other privileges, and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient
cause. Indeed, having the right should not be confused with the manner in which that right is exercised. Jonathan
V. Morales was hired by Harbour Centre Port Terminal, Inc. (HCPTI) as an Accountant and Acting Finance
Officer, with a monthly salary of P18,000.00. Regularized on November 17, 2000, Morales was promoted to
Division Manager of the Accounting Department, for which he was compensated a monthly salary
of P33,700.00, plus allowances starting July 1, 2002. Subsequent to HCPTIs transfer to its new offices at Vitas,
Tondo, Manila on January 2, 2003, Morales received an inter-office memorandum dated March 27, 2003,
reassigning him to Operations Cost Accounting, tasked with the duty of monitoring and evaluating all
consumables requests, gears and equipment related to the corporations operations and of interacting with its
sub-contractor, Bulk Fleet Marine Corporation. The memorandum was issued by HCPTIs new Administration
Manager, duly noted by its new Vice President for Administration and Finance, and approved by its President
and Chief Executive Officer. Morales protested that his reassignment was a clear demotion since the position
to which he was transferred was not even included in HCPTIs plantilla. In response to Morales grievance that
he had been effectively placed on floating status, an inter-office memorandum was issued on April 4, 2003 to
the effect that transfer of employees is a management prerogative and that HCPTI had the right and
responsibility to find the perfect balance between the skills and abilities of employees to the needs of the
business. However, the Supreme Court found that HCPTI did not even bother to show that it had implemented
a corporate reorganization and/or approved a new plantilla of positions which included the one to which Morales
was being transferred. Thus, the Court reinstated the NLRCs July 29, 2005 Decision which found Morales
reassignment to be a clear demotion despite lack of showing of diminution of salaries and benefits. Jonathan V.
Morales vs. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2011.
Rule 45; question of law. As a general rule, the Supreme Court is not a trier of facts and a petition for review
on certiorari under Rule 45 of the Rules of Court must exclusively raise questions of law. Moreover, if factual
findings of the National Labor Relations Commission and the Labor Arbiter have been affirmed by the Court of
Appeals, the Supreme Court accords them the respect and finality they deserve. It is well-settled and oft-repeated
that findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because
their jurisdiction is confined to specific matters, are generally accorded not only respect, but finality when
affirmed by the Court of Appeals.Nevertheless, the Supreme Court will not hesitate to deviate from what are
clearly procedural guidelines and disturb and strike down the findings of the Court of Appeals and those of the
labor tribunals if there is a showing that they are unsupported by the evidence on record or there was a patent
misappreciation of facts. Indeed, that the impugned decision of the Court of Appeals is consistent with the
findings of the labor tribunals does not per se conclusively demonstrate the correctness thereof. By way of
exception to the general rule, the Supreme Court will scrutinize the facts if only to rectify the prejudice and
injustice resulting from an incorrect assessment of the evidence presented. Timoteo H. Sarona vs. National Labor
Relations Commission, Royale Security Agency, et al., G.R. No. 185280, January 18, 2011.

November 2011 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on December 16, 2011 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law

Here are selected November 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Award of attorneys fees; concepts. There are two commonly accepted concepts of attorneys fees the ordinary
and extraordinary. In its ordinary concept, an attorneys fee is the reasonable compensation paid to a lawyer by
his client for the legal services the former renders; compensation is paid for the cost and/or results of legal
services per agreement or as may be assessed. In its extraordinary concept, attorneys fees are deemed indemnity
for damages ordered by the court to be paid by the losing party to the winning party. This is payable not to the
lawyer but to the client, unless the client and his lawyer have agreed that the award shall accrue to the lawyer as
additional or part of his compensation. Article 111 of the Labor Code, as amended, contemplates the
extraordinary concept of attorneys fees. Although an express finding of facts and law is still necessary to prove
the merit of the award, there need not be any showing that the employer acted maliciously or in bad faith when
it withheld the wages. Thus the SC concluded that the CA erred in ruling that a finding of the employers malice
or bad faith in withholding wages must precede an award of attorneys fees under Article 111 of the Labor
Code. To reiterate, a plain showing that the lawful wages were not paid without justification is
sufficient. Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union and Eduardo
Borela, etc. vs. Manila Water Company, Inc., G.R. No. 174179. November 16, 2011.
Award of attorneys fees; Article 111. One of the issues of this case involved the effect of the Memorandum of
Agreement provision that attorneys fees shall be deducted from the amelioration allowance (AA) and CBA
receivables. In this regard, the CA held that the additional grant of 10% attorneys fees by the NLRC violates
Article 111 of the Labor Code, considering that the MOA between the parties already ensured the payment of
10% attorneys fees deductible from the AA and CBA receivables of the Unions members. In the present case,
the Union bound itself to pay 10% attorneys fees to its counsel under the MOA and also gave up the attorneys
fees awarded to the Unions members in favor of their counsel. The award by the NLRC cannot be taken to
mean an additional grant of attorneys fees, in violation of the ten percent (10%) limit under Article 111 of the
Labor Code since it rests on an entirely different legal obligation than the one contracted under the MOA. Simply
stated, the attorneys fees contracted under the MOA do not refer to the amount of attorneys fees awarded by
the NLRC; the MOA provision on attorneys fees does not have any bearing at all to the attorneys fees awarded
by the NLRC under Article 111 of the Labor Code. Based on these considerations, it is clear that the CA erred
in ruling that the LAs award of attorneys fees violated the maximum limit of ten percent (10%) fixed by Article
111 of the Labor Code. Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union and
Eduardo Borela, etc. vs. Manila Water Company, Inc., G.R. No. 174179. November 16, 2011.
Disability benefits; compensable. In this case, respondent was diagnosed with Central Retinal Vein Occlusion
of his left eye. Central retinal vein occlusion causes painless vision loss which is usually sudden, but it can also
occur gradually over a period of days to weeks. This condition, despite numerous medical procedures
undertaken, eventually led to a total loss of sight of respondents left eye. Loss of one bodily function falls
within the definition of disability which is essentially loss or impairment of a physical or mental function
resulting from injury or sickness. The disputable presumption that a particular injury or illness that results in
disability, or in some cases death, is work-related stands in the absence of contrary evidence. In the case at
bench, the said presumption was not overturned by the petitioners. Although, the employer is not the insurer of
the health of his employees, he takes them as he finds them and assumes the risk of liability. Consequently, the
Court concurred with the finding of the lower courts that respondents disability is compensable. Fil-star
Maritime Corporation, et al. vs. Hanziel O. Resete, G.R. No. 192686. November 23, 2011.
Disability benefits; total disability. A total disability does not require that the employee be completely disabled,
or totally paralyzed. What is necessary is that the injury must be such that the employee cannot pursue his or
her usual work and earn from it. On the other hand, a total disability is considered permanent if it lasts
continuously for more than 120 days. What is crucial is whether the employee who suffers from disability could
still perform his work notwithstanding the disability he incurred. Evidently, respondent was not able to return
to his job as a seafarer after his left eye was declared legally blind. Records showed that the petitioners did not
give him a new overseas assignment after his disability. This only proved that his disability effectively barred
his chances to be deployed abroad as an officer of an ocean-going vessel. Hence, the Supreme Court found it
fitting that respondent be entitled to permanent total disability benefits considering that he would not be able to
resume his position as a maritime officer, and the probability that he would be hired by other maritime employers
would be close to impossible. Fil-star Maritime Corporation, et al. vs. Hanziel O. Resete, G.R. No. 192686.
November 23, 2011.
Dismissal; gross and habitual neglect of duties. Gross negligence connotes want of care in the performance of
ones duties, while habitual neglect implies repeated failure to perform ones duties for a period of time,
depending on the circumstances. In the case at bench, Padao was accused of having presented a fraudulently
positive evaluation of the business, credit standing/rating and financial capability of Reynaldo and Luzvilla
Baluma and eleven other loan applicants. Some businesses were eventually found not to exist at all, while in
other transactions, the financial status of the borrowers simply could not support the grant of loans in the
approved amounts. Moreover, Padao over-appraised the collateral of spouses Gardito and Alma Ajero, and that
of spouses Ihaba and Rolly Pango. Padaos repeated failure to discharge his duties as a credit investigator of the
bank amounted to gross and habitual neglect of duties under Article 282 (b) of the Labor Code. He not only
failed to perform what he was employed to do, but also did so repetitively and habitually, causing millions of
pesos in damage to PNB. Thus, PNB acted within the bounds of the law by meting out the penalty of dismissal,
which it deemed appropriate given the circumstances. Philippine National Bank vs. Dan Padao, G.R. Nos.
180849 and 187143. November 16, 2011.
Dismissed employees; separation pay. Padao is not entitled to financial assistance. The rule regarding
separation pay as a measure of social justice is that it shall be paid only in those instances where the employee
is validly dismissed for causes other than serious misconduct, willful disobedience, gross and habitual neglect
of duty, fraud or willful breach of trust, commission of a crime against the employer or his family, or those
reflecting on his moral character. In this case, Padao was guilty of gross and habitual neglect of
duties. Philippine National Bank vs. Dan Padao, G.R. Nos. 180849 and 187143. November 16, 2011.
Employment of seafarers. The employment of seafarers, including claims for death benefits, is governed by the
contracts they sign every time they are hired or rehired; and as long as the stipulations therein are not contrary
to law, morals, public order or public policy, they have the force of law between the parties. While the seafarer
and his employer are governed by their mutual agreement, the POEA rules and regulations require that the POEA
Standard Employment Contract (POEA-SEC) be integrated in every seafarers contract. In this case, considering
that petitioner executed an overseas employment contract with respondent company in November 1999, the 1996
POEA-SEC should govern. The 2000 POEA-SEC initially took effect on June 25, 2000. Thereafter, the Court
issued the Temporary Restraining Order (TRO) which was later lifted on June 5, 2002. Thus, petitioner cannot
simply rely on the disputable presumption provision mentioned in Section 20 (B)(4) of the 2000 POEA-SEC
which states that: Those illnesses not listed in Section 32 of this Contract are disputably presumed as work
related. Gilbert Quizora vs. Denholm Crew Management (Philippines), Inc., G.R. No. 185412. November 16,
2011.
Employment of seafarers; disability compensation. Granting that the provisions of the 2000 POEA-SEC apply,
the disputable presumption provision in Section 20 (B) does not allow petitioner to just sit down and wait for
respondent company to present evidence to overcome the disputable presumption of work-relatedness of the
illness. Contrary to his position, the seafarer still has to substantiate his claim in order to be entitled to disability
compensation. He has to prove that the illness he suffered was work-related and that it must have existed during
the term of his employment contract. For disability to be compensable under Section 20 (B) of the 2000 POEA-
SEC, two elements must concur: (1) the injury or illness must be work-related; and (2) the work-related injury
or illness must have existed during the term of the seafarers employment contract. In other words, to be entitled
to compensation and benefits under this provision, it is not sufficient to establish that the seafarers illness or
injury has rendered him permanently or partially disabled; it must also be shown that there is a causal connection
between the seafarers illness or injury and the work for which he had been contracted. Unfortunately for
petitioner, he failed to prove that his varicose veins arose out of his employment with respondent
company. Gilbert Quizora vs. Denholm Crew Management (Philippines), Inc., G.R. No. 185412. November 16,
2011.
Employees compensation; increased risk theory. For a sickness or resulting disability or death to be
compensable, the claimant must prove either (1) that the employees sickness was the result of an occupational
disease listed under Annex A of the Amended Rules on Employees Compensation, or (2) that the risk of
contracting the disease was increased by his working conditions. Under the increased risk theory, there must be
a reasonable proof that the employees working condition increased his risk of contracting the disease, or that
there is a connection between his work and the cause of the disease. In this case, since Besitans ailment, End
Stage Renal Disease secondary to Chronic Glomerulonephritis is not among those listed under Annex A, of
the Amended Rules on Employees Compensation, he needs to show by substantial evidence that his risk of
contracting the disease was increased by his working condition. Government Service Insurance System vs.
Manuel P. Besitan, G.R. No. 178901. November 23, 2011.
Employeess Compensation; proceedings; quantum of proof. Direct and clear evidence, is not necessary to prove
a compensable claim. Strict rules of evidence do not apply as PD No. 626 only requires substantial
evidence. The SC found that Besitan has sufficiently proved that his working condition increased his risk of
contracting Glomerulonephritis, which according to GSIS may be caused by bacterial, viral, and parasitic
infection. When Besitan entered the government service in 1976, he was given a clean bill of health. In 2005,
he was diagnosed with End Stage Renal Disease secondary to Chronic Glomerulonephritis. It would appear
therefore that the nature of his work could have increased his risk of contracting the disease. His frequent travels
to remote areas in the country could have exposed him to certain bacterial, viral, and parasitic infection, which
in turn could have caused his disease. Delaying his urination during his long trips to the provinces could have
also increased his risk of contracting the disease. As a matter of fact, even the Bank Physician of Bangko Sentral
ng Pilipinas, Dr. Gregorio Suarez II, agreed that Besitans working condition could have contributed to the
weakening of his kidneys, which could have caused the disease. This Medical Certificate is sufficient to prove
that the working condition of Besitan increased his risk of contracting Glomerulonephritis. In claims for
compensation benefits, a doctors certification as to the nature of a claimants disability deserves full credence
because no medical practitioner would issue certifications indiscriminately. Government Service Insurance
System vs. Manuel P. Besitan, G.R. No. 178901. November 23, 2011.
Illegal dismissal; employer-employee relationship. The elements to determine the existence of an employment
relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employers power to control the employees conduct. In this case, the documentary
evidence presented by respondent to prove that he was an employee of petitioner are as follows: (a) a document
denominated as payroll (dated July 31, 2001 to March 15, 2002) certified correct by petitioner, which showed
that respondent received a monthly salary of P7,000.00 with the corresponding deductions due to absences
incurred by respondent; and (2) copies of petty cash vouchers, showing the amounts he received and signed for
in the payrolls. These documents showed that petitioner hired respondent as an employee and he was paid
monthly wages of P7,000.00. Additionally, as to the existence of the power of control, it is not essential for the
employer to actually supervise the performance of duties of the employee. It is sufficient that the former has a
right to wield the power. In this case, petitioner even stated in his Position Paper that it was agreed that he would
help and teach respondent how to use the studio equipment. In such case, petitioner certainly had the power to
check on the progress and work of respondent. Cesar C. Lirio, doing business under the name and style of
Celkor Ad Sonimix vs. Wilmer D. Genovia, G.R. No. 169757. November 23, 2011.
Illegal recruitment; elements. The crime of illegal recruitment is committed when two elements concur, namely:
(1) the offender has no valid license or authority required by law to enable one to lawfully engage in recruitment
and placement of workers; and (2) he undertakes either any activity within the meaning of recruitment and
placement defined under Article 13 (b), or any prohibited practices enumerated under Article 34 of the Labor
Code. First, the petitioner was found not to have been issued a license as proven by the certification from the
DOLE-Dagupan District Office stating that petitioner has not been issued any license by the POEA and neither
is it a holder of an authority to engage in recruitment and placement activities. Second, from the testimonies of
the private respondents, it is apparent that petitioner was able to convince the private respondents to apply for
work in Israel after parting with their money in exchange for the services she would render. The said act of the
petitioner, without a doubt, falls within the meaning of recruitment and placement as defined in Article 13 (b) of
the Labor Code. Finally, the Supreme Court noted that in illegal recruitment cases, the failure to present receipts
for money that was paid in connection with the recruitment process will not affect the strength of the evidence
presented by the prosecution as long as the payment can be proved through clear and convincing testimonies of
credible witnesses. Delia D. Romero vs. People of the Philippines, Romulo Padlan and Aruturo Siapno, G.R.
No. 171644. November 23, 2011.
Probationary employment; security of tenure. It is settled that even if probationary employees do not enjoy
permanent status, they are accorded the constitutional protection of security of tenure. This means they may only
be terminated for a just cause or when they otherwise fail to qualify as regular employees in accordance with
reasonable standards made known to them by the employer at the time of their engagement. In this case, the
justification given by the petitioners for Sys dismissal was her alleged failure to qualify by the companys
standard. Other than the general allegation that said standards were made known to her at the time of her
employment, however, no evidence, documentary or otherwise, was presented to substantiate the same. Neither
was there any performance evaluation presented to prove that indeed hers was unsatisfactory. Hence, for failure
of the petitioners to support their claim of unsatisfactory performance by Sy, the SC held that Sys employment
was unjustly terminated to prevent her from acquiring a regular status in circumvention of the law on security of
tenure. Tamsons Enterprises, Inc., et al. vs. Court of Appeals and Rosemarie L. Sy, G.R. No. 192881. November
16, 2011.
Probationary employment; termination. Even on the assumption that Sy indeed failed to meet the standards set
by the petitioner-employer and made known to the former at the time of her engagement, still, the termination
was flawed for failure to give the required notice to Sy. Section 2, Rule I, Book VI of the Implementing Rules
provides that: If the termination is brought about by the completion of a contract or phase thereof, or by failure
of an employee to meet the standards of the employer in the case of probationary employment, it shall be
sufficient that a written notice is served the employee, within a reasonable time from the effective date of
termination. Tamsons Enterprises, Inc., et al. vs. Court of Appeals and Rosemarie L. Sy, G.R. No. 192881.
November 16, 2011.
Termination of employment; when company tolerated violation of company policy. The CA was correct in
stating that when the violation of company policy or breach of company rules and regulations is tolerated by
management, it cannot serve as a basis for termination. This principle, however, only applies when the breach
or violation is one which neither amounts to nor involves fraud or illegal activities. In such a case, one cannot
evade liability or culpability based on obedience to the corporate chain of command. In this case, Padao, in
affixing his signature on the fraudulent reports, attested to the falsehoods contained therein. Moreover, by doing
so, he repeatedly failed to perform his duties as a credit investigator. Thus, the termination of his employment
is justified. Philippine National Bank vs. Dan Padao, G.R. Nos. 180849 and 187143. November 16, 2011.

October 2011 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on November 9, 2011 by Leslie C. Dy Posted in Labor Law

Here are selected October 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor Law
Dismissal; constructive dismissal. For a transfer not to be considered a constructive dismissal, the employer
must be able to show that the transfer is for a valid reason, entails no diminution in the terms and conditions of
employment, and must not be unreasonably inconvenient or prejudicial to the employee. If the employer fails
to meet these standards, the employees transfer shall amount, at the very least, to constructive dismissal. In this
case, the Supreme Court found that the real reason Menese was transferred from being the agencys payroll and
billing clerk of the PGH detachment to being a lady guard in the agencys main office, was because of the request
of Dapula, the new chief of the UP-PGH Security Division. The latters request was based on the fact that she
had committed the previous position of Menese to a certain Amy Claro, a protge of Dapula. Thus, the Supreme
Court found justification for Meneses refusal to be transferred. Not only was the transfer arbitrary and done in
bad faith, it would also result in a demotion in rank and a diminution in pay: (1) she would hold the position of
lady guard and (2) she would be paid in accordance with the statutory minimum wage, or from P11,720.00
to P7,500.00. Clearly, there was a demotion in rank and salary undertaken in bad faith amounting to constructive
dismissal. Emirate Security and Maintenance Systems, Inc. and Roberto Yan vs. Glenda M. Menese, G.R. No.
182848. October 5, 2011.
Dismissal; illegal. Resignation is defined as the voluntary act of employees who are compelled by personal
reasons to disassociate themselves from their employment. It must be done with the intention of relinquishing
an office, accompanied by the act of abandonment. In this case, the evidence on record suggested that petitioner
did not resign; he was orally dismissed by Sy. The crucial factor is the verbal order directly given by Sy, the
company president, for petitioner to immediately turn over his accountabilities. It is this lack of clear, valid and
legal cause, not to mention due process that made his dismissal illegal, warranting reinstatement and the award
of backwages. Moreover, the filing of a complaint for illegal dismissal just three weeks later is difficult to
reconcile with voluntary resignation. Had petitioner intended to voluntarily relinquish his employment after
being unceremoniously dismissed by no less than the company president, he would not have sought redress from
the NLRC and vigorously pursued this case against the respondents. Jhorizaldy Uy vs. Centro Ceramica
Corporation, et al., G.R. No. 174631. October 19, 2011.
Employee; death benefits. The death of a seaman during the term of employment makes the employer liable to
his heirs for death compensation benefits. This rule, however, is not absolute. The employer may be exempt
from liability if he can successfully prove that the seamans death was caused by an injury directly attributable
to his deliberate or willful act. The Supreme Court agreed that Danilo died of Asphyxia by strangulation as
proved by the NBI post-mortem findings and certification issued by the medico-legal officer, Dr. Reyes. The
photocopy of the fax transmission of the purported English translation of Dr. Hameeds medical report to prove
that Danilo committed suicide should not be considered since the medical reports genuineness and due
execution were unverifiable: (1) the existence of the original medical report, which was written in the arabic
language, was not even attached to the records and has not been proved; (2) the identity of the person who made
the translation and whether the translator has the recognized competence in both English and the language the
medical report was originally written were not established; (3) the alleged translated medical report was not even
signed by Dr. Hameed which creates doubt as to its authenticity. The unsigned translated medical report is
nothing but a self-serving document which ought to be treated as a mere scrap of paper devoid of any evidentiary
value even in administrative proceedings. Maritime Factors Inc. vs. Bienvenido R. Hindang, G.R. No. 151993.
October 19, 2011.
Employee benefits; entitlement to retirement benefits. A separation pay at the time of the reorganization of the
National Power Corporation and retirement benefits at the appropriate future time are two separate and distinct
entitlements. Stated otherwise, a retirement plan is a different program from a separation package. In R.A. No.
1616, the retirees are entitled to gratuity benefits to be paid by the last employer and refund of premiums to be
paid by the GSIS. On the other hand, retirement benefits under C.A. No. 186, as amended by R.A. No. 8291,
are to be paid by the GSIS. In view of the fact that separation pay and retirement benefits are different
entitlements, as they have different legal bases, different sources of funds, and different intents, the
exclusiveness of benefits rule provided under R.A. No. 8291 is not applicable. (Section 55 of R.A. No. 8291
states: Whenever other laws provide similar benefits for the same contingencies covered by this Act, the
member who qualifies to the benefits shall have the option to choose which benefits will be paid to
him.) Enrique U. Betoy vs. The Board of Directors, National Power Corporation, G.R. Nos. 156556-57.
October 4, 2011.
Employee; overtime pay. A claim for overtime pay will not be granted in the absence of any factual and legal
basis. In this respect, the records indicated that the labor arbiter granted Meneses claim for holiday pay, rest
day and premium pay on the basis of payrolls. There is no such proof in support of Meneses claim for overtime
pay other than her contention that she worked from 8:00 a.m. up to 5:00 p.m. She presented no evidence to show
that she was working during the entire one hour meal break. The Supreme Court thus found the NLRCs deletion
of the overtime pay award in order. Emirate Security and Maintenance Systems, Inc. and Roberto Yan vs.
Glenda M. Menese, G.R. No. 182848. October 5, 2011.
Employee; permanent disability benefits. Permanent disability refers to the inability of a worker to perform his
job for more than 120 days, regardless of whether he loses the use of any part of his body. What determines
petitioners entitlement to permanent disability benefits is his inability to work for more than 120 days. The
certification by the company-designated physician that petitioner is fit to work was issued after 199 days or more
than 120 days from the time he was medically repatriated to the Philippines. Petitioner herein was medically
repatriated to the Philippines on October 8, 2001. However, it was only on April 25, 2002 or after a lapse of 199
days that Dr. Cruz issued a certification declaring him fit to work. Thus, the Supreme Court found that
petitioners disability is considered permanent and total because the fit to work certification was issued by Dr.
Cruz only on April 25, 2002, or more than 120 days after he was medically repatriated on October 8,
2001. Furthermore, the company-designated physicians certification that petitioner is fit to work does not make
him ineligible for permanent total disability benefits. It does not matter that the company-designated physician
assessed petitioner as fit to work. It is undisputed that from the time petitioner was repatriated on October 8,
2001, he was unable to work for more than 120 days as he was only certified fit to work on April 25,
2002. Consequently, petitioners disability is considered permanent and total. Carmelito N. Valenzona vs. Fair
Shipping Corporation, et al., G.R. No. 176884. October 19, 2011.
GSIS; retirement plan. Section 41(n) of Republic Act No. 8291 contemplates a situation wherein GSIS, due to
a reorganization, a streamlining of its organization, or some other circumstance, which calls for the termination
of some of its employees, must design a plan to encourage, induce, or motivate these employees, who are not
yet qualified for either optional or compulsory retirement under our laws, to instead voluntarily retire. Such is
not the case with the GSIS RFP. Its very objective, to motivate and reward employees for meritorious, faithful,
and satisfactory service, contradicts the nature of an early retirement incentive plan, or a financial assistance
plan, which involves a substantial amount that is given to motivate employees to retire early. Instead, it falls
exactly within the purpose of a retirement benefit, which is a form of reward for an employees loyalty
and lengthy service, in order to help him or her enjoy the remaining years of his life. Without a doubt, the GSIS
RFP is a supplementary retirement plan, which is prohibited by the Teves Retirement Law. Government Service
Insurance System (GSIS), et al. vs. Commission on Audit, et al., G.R. No. 162372. October 19, 2011.
Strike; illegal strike. There is no question that the May 6, 2002 strike was illegal, first, because when Kilusang
Manggagawa ng LGS, Magdala Multipurpose and Livelihood Cooperative (KMLMS) filed the notice of strike
on March 5 or 14, 2002, it had not yet acquired legal personality and, thus, could not legally represent the
eventual union and its members. And second, similarly, when KMLMS conducted the strike-vote on April 8,
2002, there was still no union to speak of, since KMLMS only acquired legal personality as an independent
legitimate labor organization only on April 9, 2002 or the day after it conducted the strike-vote. Consequently,
the mandatory notice of strike and the conduct of the strike-vote report were ineffective for having been filed
and conducted before KMLMS acquired legal personality as a legitimate labor organization, violating Art.
263(c), (d) and (f) of the Labor Code and Rule XXII, Book V of the Omnibus Rules Implementing the Labor
Code. It is, thus, clear that KMLMS did not comply with the mandatory requirement of law and implementing
rules on possession of a legal personality as a legitimate labor organization. Magdala Multipurpose &
Livelihood, et al. vs. KMLMS, et al., G.R. No. 191138-39. October 19, 2011.
Union shop; new employees. May a corporation invoke its merger with another corporation as a valid ground
to exempt its absorbed employees from the coverage of a union shop clause contained in its existing Collective
Bargaining Agreement (CBA) with its own certified labor union? The Supreme Court ruled in the negative. The
former FEBTC employees retained the regular status that they possessed while working for their former
employer upon their absorption by petitioner BPI. This fact would not remove them from the scope of the phrase
new employees as contemplated in the Union Shop Clause of the CBA. The Union Shop Clause in the CBA
simply states that new employees who during the effectivity of the CBA may be regularly employed by the
Bank must join the union within thirty (30) days from their regularization. The plain language of the CBA
provision notwithstanding, the SC held that there is nothing in the said clause that limits its application to only
new employees who possess non-regular status, meaning probationary status, at the start of their
employment. What is indubitable from the Union Shop Clause is that upon the effectivity of the CBA,
petitioners new regular employees (regardless of the manner by which they became employees of BPI) are
required to join the Union as a condition of their continued employment. Bank of the Philippine Islands vs. BPI
Employees Union-Davao Chapter-Federation of Unions in BPI Unibank, G.R. No. 164301. October 19, 2011.
Procedural Law
NLRC; Certiorari. A writ of certiorari is a remedy to correct errors of jurisdiction, for which reason it must
clearly show that the public respondent has no jurisdiction to issue an order or to render a decision. Rule 65 of
the Rules of Court has instituted the petition for certiorari to correct acts of any tribunal, board or officer
exercising judicial or quasi-judicial functions with grave abuse of discretion amounting to lack or excess of
jurisdiction. This remedy serves as a check on acts, either of excess or passivity, that constitute grave abuse of
discretion of a judicial or quasi-judicial function. In this case, the SC found that the CA proceeded to review the
records and to rule on issues that were no longer disputed during the appeal to the NLRC, such as the existence
of an employer-employee relationship. The pivotal issue before the NLRC was whether petitioners telling
respondent to take a rest, or to have a break, was already a positive act of dismissing him. This issue was not
discussed by the CA. The SC reviewed the NLRC Resolution that reversed the LA Decision and found nothing
in it that was whimsical, unreasonable or patently violative of the law. It was the CA which erred in finding
faults that were inexistent in the NLRC Resolution. AGG Trucking and/or Alex Ang Gaeid vs. Melanio B.
Yuag, G.R. No. 195033. October 12, 2011.
NLRC; motion for reconsideration. On the issue of the propriety of entertaining the Petition for Certiorari
despite the prescribed Motion for Reconsideration with the NLRC, the SC found that the CA committed error
when it entertained the petition for certiorari and explained that when respondent failed to file a Motion for
Reconsideration of the NLRCs 30 November 2006 Resolution within the reglementary period, the Resolution
attained finality and could no longer be modified by the Court of Appeals. Untimeliness in filing motions or
petitions is not a mere technical or procedural defect, as leniency regarding this requirement will impinge on the
right of the winning litigant to peace of mind resulting from the laying to rest of the controversy. AGG Trucking
and/or Alex Ang Gaeid vs. Melanio B. Yuag, G.R. No. 195033. October 12, 2011.

September 2011 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on October 19, 2011 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law

Here are selected September 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:
Employee; probationary employee. Employment on probationary status of teaching personnel is not only
governed by the Labor Code but also by the Manual of Regulations for Private Schools. Section 91 of the
Manual of Regulations for Private Schools, states that: Every contract of employment shall specify the
designation, qualification, salary rate, the period and nature of service and its date of effectivity, and such other
terms and condition of employment as may be consistent with laws and rules, regulations and standards of the
school. Thus, it is important that the contract of probationary employment specify the period or term of its
effectivity. In this case, therefore, the letters sent by petitioner College Dean Sr. Racadio, which were devoid of
specifics, cannot be considered as contracts. The closest they can resemble to are that of informal
correspondence among the said individuals. As such, petitioner school has the right not to renew the contracts
of the respondents, the old ones having expired at the end of their terms. Assuming, arguendo, that the
employment contracts between the petitioner school and the respondent spouses were renewed, the SC found
that there was a valid and just cause for their dismissal since petitioners have repeatedly violated several
departmental and instructional policies, such as the late submission of final grades, failure to submit final test
questions to the Program Coordinator, the giving of tests in essay form instead of the multiple choice format as
mandated by the school and the high number of students with failing grades in the classes that he handled. St.
Paul College Quezon City, et al. vs. Remigio Michael A. Ancheta II and Cynthia A. Ancheta, G.R. No. 169905.
September 7, 2011.
Employee; existence of employer-employee relationship. To determine the existence of an employer-employee
relationship, case law has consistently applied the four-fold test. Respondents argue that the element of control
is lacking in this case, making petitioner-referee an independent contractor and not an employee of
respondents. The Supreme Court agreed as it found that there was no control over the means and methods by
which petitioner performs his work as a referee officiating a PBA basketball game. The contractual stipulations
in the retainer contracts do not pertain to, much less dictate, how and when petitioner will blow the whistle and
make calls. On the contrary, they merely serve as rules of conduct or guidelines in order to maintain the integrity
of the professional basketball league. Moreover, the following circumstances indicate that petitioner is an
independent contractor: (1) the referees are required to report for work only when PBA games are scheduled,
which is three times a week spread over an average of only 105 playing days a year, and they officiate games at
an average of two hours per game; and (2) the only deductions from the fees received by the referees are
withholding taxes. There are no deductions for contributions to the Social Security System, Philhealth or Pag-
Ibig, which are the usual deductions from employees salaries. These undisputed circumstances buttress the fact
that petitioner is an independent contractor, and not an employee of respondents. Jose Mel Bernante vs.
Philippine Basketball Association, et al., G.R. No. 192084. September 14, 2011.
Employee benefits; principle against diminution of benefits. The issue in this case was whether or not the change
in the scheme of distribution of the incremental proceeds from tuition fee increase is a diminution of benefit. The
Court held that it was not. Generally, employees have a vested right over existing benefits voluntarily granted
to them by their employer. The principle against diminution of benefits, however, is applicable only if the grant
or benefit is founded on an express policy or has ripened into a practice over a long period of time which is
consistent and deliberate. In other words, the benefit must be characterized by regularity and the voluntary and
deliberate intent of the employer to grant the benefits over a significant period of time. In the case at bench,
contrary to UEEAs claim, the distribution of the 70% incremental proceeds based on equal sharing scheme
cannot be held to have ripened into a company practice since the practice has not been for a long period of
time. The same could not also have ripened into a vested right because such grant was not a deliberate and
voluntary act on the part of the petitioner. The Supreme Court held that the grant by an employer of benefits
through an erroneous application of the law due to the absence of clear administrative guidelines is not
considered a voluntary act which cannot be unilaterally discontinued. University of the East vs. University of
the East Employees Association, G.R. No. 179593. September 14, 2011.
Employment benefits; entitlement to vacation and sick leave. BPI contends that at the time of Uys dismissal,
she was no longer functioning as a teller of the bank but as a low-counter staff and as such, Uy is not anymore
entitled to the tellers functional allowance pursuant to company policy. BPI further argues that Uy is neither
entitled to the monetary conversion of vacation and sick leaves for failure to prove that she is entitled to these
benefits at the time of her dismissal. The Supreme Court ruled that Uy is entitled to the tellers functional
allowance but not to the monetary conversion of vacation and sick leaves. Uys function as a teller at the time
of her dismissal was factually established and was never impugned by the parties during the proceedings held in
the main case. Besides, BPI did not present any evidence to substantiate its allegation that Uy was assigned as
a low-counter staff at the time of her dismissal. It is a hornbook rule that he who alleges must prove. As to the
vacation and sick leave cash conversion benefit, the Supreme Court held that entitlement to the same should be
necessarily proved since this privilege is not statutory or mandatory in character but only voluntarily granted. As
such, the existence of this benefit as well as the employees entitlement thereto cannot be presumed but should
be proved by the employee. In this case, however, the records failed to prove that Uy was receiving this benefit
at the time of her dismissal on December 14, 1995. BPI Employees Union-Metro Manila, et al. vs. Bank of the
Philippine Islands/Bank of the Philippine Islands vs. BPI Employees Union-Metro Manila, et al., G.R. Nos.
178699/178735. September 21, 2011.
Termination; constructive dismissal. The concept of constructive dismissal is inapplicable to respondents in this
case. Constructive dismissal occurs when there is cessation of work because continued employment is rendered
impossible, unreasonable, or unlikely as when there is a demotion in rank or diminution in pay or when a clear
discrimination, insensibility, or disdain by an employer becomes unbearable to the employee leaving the latter
with no other option but to quit. That the respondents were indeed not constructively dismissed was found by
the Supreme Court to be supported by substantial evidence. First, respondents Domingo and Remigio, even
while their petition for certiorari was pending before the CA, remained employed at UNILAB. In those
instances, there was actually no dismissal to speak of. Second, the respondents positions were not abolished,
unlike its provincial depots where the employees therein were considered redundant employees. In this case,
their accounting functions were merely consolidated under the Finance Division of Unilab pursuant to its Shared
Services Policy (SSP). Respondents, who are accounting employees, cannot refuse their assignment to the
Finance Division. The Supreme Court noted that it cannot accept the proposition that when an employee opposes
his employers decision to transfer him to another work place, there being no bad faith or underhanded motives
on the part of either party, that the employees wishes should be made to prevail. United Laboratories, Inc.
vs. Jaime Domingo Substituted by his spouse Carmencita Punzalan Domingo, et al., G.R. No. 186209,
September 21, 2011.
Termination; loss of trust and confidence. Loss of confidence should ideally apply only to: (1) cases involving
employees occupying positions of trust and confidence, or (2) situations where the employee is routinely charged
with the care and custody of the employers money or property. As branch manager of the bank, Lopez occupied
a position of trust. His hold on his position and his stay in the service depend on the employers trust and
confidence in him and on his managerial services. In this case, the Supreme Court found that Lopezs dismissal
was justified. He betrayed the trust and confidence of the employer-bank when he issued the subject purchase
orders without authority and despite the express directive of the bank to put the clients application on hold. The
bank had a genuine concern over the granted loan applications as it found through its credit committee that Hertz
was a credit risk. Whether the credit committee was correct or not is immaterial as the banks direct order left
Lopez without any authority to clear the loan application on his own. Elmer Lopez vs. Keppel Bank Philippines,
Inc. et al., G.R. No. 176800. September 5, 2011.
Termination; loss of trust and confidence. Jumuad was found to have willfully breached her duties as to be
unworthy of the trust and confidence of Hi-Flyer. First, Jumuad was a managerial employee; she executed
management policies and had the power to discipline the employees of KFC branches in her area. She
recommended actions on employees to the head office. According to the Supreme Court, based on established
facts, the mere existence of the grounds for the loss of trust and confidence justifies petitioners dismissal. In
the present case, the CERs reports of Hi-Flyer show that there were anomalies committed in the KFC branches
managed by Jumuad. On the principle of respondeat superior or command responsibility alone, Jumuad may be
held liable for negligence in the performance of her managerial duties. She may not have been directly involved
in causing the cash shortages in KFC-Bohol, but her involvement in not performing her duty monitoring and
supporting the day to day operations of the branches and ensure that all the facilities and equipment at the
restaurant were properly maintained and serviced, could have prevented the whole debacle from
occurring. Pamela Florentina P. Jumuad vs. Hi-Flyer Food, Inc. and/or Jesus R. Montemayor, G.R. No.
187887. September 7, 2011.
Termination; illegal dismissal. In the case at bar, respondent security guards were relieved from their posts
because they filed with the Labor Arbiter a complaint against their employer for money claims due to
underpayment of wages. The Supreme Court found that this was not a valid cause for dismissal. The Labor
Code enumerates several just and authorized causes for a valid termination of employment. An employee
asserting his right and asking for minimum wage is not among those causes. Alert Security and Investigation
Agency, Inc., et al. vs. Saidali Pasawilan, et al., G.R. No. 182397. September 14, 2011.
Termination; abandonment of work. Petitioners aver that respondents were merely transferred to a new post
wherein the wages are adjusted to the current minimum wage standards. They maintain that the respondents
voluntarily abandoned their jobs when they failed to report for duty in the new location. Assuming that this
contention was true, the Supreme Court held that there was no abandonment of work. For there to be
abandonment: first, there should be a failure of the employee to report for work without a valid or justifiable
reason, and second, there should be a showing that the employee intended to sever the employer-employee
relationship. The fact that petitioners filed a complaint for illegal dismissal is indicative of their intention to
remain employed with private respondent. On the first element of failure to report for work, in this case, there
was no showing that respondents were notified of their new assignments. Granting that the Duty Detail Orders
were indeed issued, they served no purpose unless the intended recipients of the orders are informed of
such. Therefore, the Court held that there was no abandonment of work in this case. Alert Security and
Investigation Agency, Inc., et al. vs. Saidali Pasawilan, et al., G.R. No. 182397. September 14, 2011.
Termination; gross and habitual neglect. Neglect of duty, to be a ground for dismissal, must be both gross and
habitual. In this case, Respondents repeated failure to turn over his task of preparing the payroll of the
petitioners employees to someone capable of performing the vital tasks which he could not effectively perform
or undertake because of his heart ailment or condition constitutes gross neglect. However, although the dismissal
was legal, respondent was still held to be entitled to a separation pay as a measure of compassionate justice,
considering his length of service and his poor physical condition which was one of the reasons he filed a leave
of absence. As a general rule, an employee who has been dismissed for any of the just causes enumerated under
Article 282 of the Labor Code is not entitled to separation pay. By way of exception, however, the grant of
separation pay or some other financial assistance may be allowed to an employee dismissed for just causes on
the basis of equity. Nissan Motors Phils., Inc. vs. Victorino Angelo, G.R. No. 164181. September 14, 2011.
Termination; award of backwages. The base figure in computing the award of back wages to an illegally
dismissed employee is the employees basic salary plus regular allowances and benefits received at the time of
dismissal, unqualified by any wage and benefit increases granted in the interim. The full backwages, as referred
to in the body of the March 31, 2005 Supreme Court decision pertains to backwages as defined in Republic
Act No. 6715. Under said law, and as provided in jurisprudence, full backwages means backwages without
any deduction or qualification, including benefits or their monetary equivalent the employee is enjoying at the
time of his dismissal. Consequently, any benefit or allowance over and above that allowed and provided by said
law is deemed excluded under the said Supreme Court Decision. BPI Employees Union-Metro Manila, et al. vs.
Bank of the Philippine Islands/Bank of the Philippine Islands vs. BPI Employees Union-Metro Manila, et
al., G.R. Nos. 178699/178735. September 21, 2011.

August 2011 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on September 15, 2011 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law

Here are selected August 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor relations; appropriate bargaining unit. An appropriate bargaining unit is defined as a group of employees
of a given employer, comprised of all or less than all of the entire body of employees, which the collective
interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve the
reciprocal rights and duties of the parties under the collective bargaining provisions of the law. The test of
grouping is community or mutuality of interest. In this case, there should be only one bargaining unit for the
employees in the Cabuyao, San Fernando, and Otis plants of the Magnolia Poultry Products involved in
dressed chicken processing and Magnolia Poultry Farms engaged in live chicken operations. Certain
factors, such as specific line of work, working conditions, location of work, mode of compensation, and other
relevant conditions do not affect or impede their commonality of interest. Although they seem separate and
distinct from each other, the specific tasks of each division are actually interrelated and there exists mutuality of
interests which warrants the formation of a single bargaining unit. San Miguel Foods, Inc. vs. San Miguel Corp.
Supervisors and Exempt Union, G.R. No. 146206. August 1, 2011.
Labor organization; confidential employees. Confidential employees are defined as those who (1) assist or act
in a confidential capacity, in regard (2) to persons who formulate, determine, and effectuate management policies
in the field of labor relations. The two criteria are cumulative, and both must be met if an employee is to be
considered a confidential employee. Confidential employees, such as accounting personnel, should be excluded
from the bargaining unit, as their access to confidential information may become the source of undue
advantage. However, such fact does not apply to the position of Payroll Master (as in this case) and the whole
gamut of employees who has access to salary and compensation data. The CA correctly held that the position
of Payroll Master does not involve dealing with confidential labor relations information in the course of the
performance of his functions. In other words, since the nature of his work does not pertain to company rules and
regulations and confidential labor relations, it follows that he cannot be excluded from the subject bargaining
unit. San Miguel Foods, Inc. vs. San Miguel Corp. Supervisors and Exempt Union, G.R. No. 146206. August 1,
2011.
Labor organization; ineligibility to join. Although Article 245 of the Labor Code limits the ineligibility to join,
form and assist any labor organization to managerial employees, jurisprudence has extended this prohibition to
confidential employees. In this regard, the CA correctly ruled that the positions of Human Resource Assistant
and Personnel Assistant belong to the category of confidential employees and, hence, are excluded from the
bargaining unit, considering their respective positions and job descriptions. As Human Resource Assistant, the
scope of ones work necessarily involves labor relations, recruitment and selection of employees, access to
employees personal files and compensation package, and human resource management. As regards a Personnel
Assistant, ones work includes the recording of minutes for management during collective bargaining
negotiations, assistance to management during grievance meetings and administrative investigations, and
securing legal advice for labor issues from the petitioners team of lawyers, and implementation of company
programs. Therefore, in the discharge of their functions, both gain access to vital labor relations information
which outrightly disqualifies them from union membership. San Miguel Foods, Inc. vs. San Miguel Corp.
Supervisors and Exempt Union, G.R. No. 146206. August 1, 2011.
Certification election; role of employers. The general rule is that an employer has no standing to question the
process of certification election, since this is the sole concern of the workers. Law and policy demand that
employers take a strict, hands-off stance in certification elections. The bargaining representative of employees
should be chosen free from any extraneous influence of management. The only exception is where the employer
itself has to file the petition pursuant to Article 258 of the Labor Code because of a request to bargain
collectively. San Miguel Foods, Inc. vs. San Miguel Corp. Supervisors and Exempt Union, G.R. No.
146206. August 1, 2011.
Appeal of the decision of the labor arbiter; posting of bond. The posting of a bond is indispensable to the
perfection of an appeal in cases involving monetary awards from the Decision of the Labor Arbiter. However,
the Supreme Court, considering the substantial merits of the case, has on certain occasions relaxed this rule on,
and excused the late posting of, the appeal bond when there are strong and compelling reasons for the
liberality. In this case, the exception applies. The rule on the posting of an appeal bond cannot defeat the
substantive rights of respondents to be free from an unwarranted burden of answering for an illegal dismissal for
which they were never responsible since no employer-employee relationship existed between the two. Marticio
Semblante and Dubrick Pilar vs. Court of Appeals, G.R. No. 196426. August 15, 2011.
Employer-employee relationship; four-fold test. Petitioners are not employees of respondents, since their
relationship failed to pass the four-fold test of employment: (1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct,
which is the most important element. As found by both the NLRC and the CA, respondents had no part in
petitioners selection and management; petitioners compensation was paid out of the arriba (which is a
percentage deducted from the total bets), not by petitioners; and petitioners performed their functions
as masiador and sentenciador free from the direction and control of respondents. Marticio Semblante and
Dubrick Pilar vs. Court of Appeals, G.R. No. 196426. August 15, 2011.
Labor; illegal recruitment in large scale. To prove illegal recruitment, it must be shown that appellant gave
complainants the distinct impression that she had the power or ability to send complainants abroad for work such
that the latter were convinced to part with their money in order to be employed. All eight private complainants
in this case consistently declared that Ochoa offered and promised them employment overseas. Moreover,
Ochoa can also be convicted for illegal recruitment based on Section 6 of Republic Act No. 8042, which clearly
provides that any person, whether or not a licensee or holder of authority may be held liable for illegal
recruitment for certain acts as enumerated in paragraphs (a) to (m). Among such acts is the failure to reimburse
expenses incurred by the worker in connection with his documentation and processing for purposes of
deployment, in cases where the deployment does not actually take place without the workers fault. In this
case, Ochoa received placement and medical fees from private complainants and failed to reimburse the private
complainants the amounts they had paid when they were not able to leave for Taiwan and Saudi Arabia, through
no fault of their own. People of the Philippines vs. Rosario Rose Ochoa, G.R. No. 173792. August 31, 2011.
Illegal recruitment; admissibility of POEA certification. Section 36, Rule 130 of the Revised Rules on Evidence,
states that a witness can testify only to those facts which he knows of or comes from his personal knowledge,
that is, which are derived from his perception. This is known as the hearsay rule. The law, however, provides
for specific exceptions to the hearsay rule, and one of the exceptions refers to entries in official records made in
the performance of duty by a public officer. Accordingly, in the case at bar, although Dir. Mateo was not
presented in court or did not testify during the trial to verify the said certification, such certification is considered
as prima facie evidence of the facts stated therein and is therefore presumed to be truthful, because Ochoa did
not present any plausible proof to rebut its truthfulness. People of the Philippines vs. Rosario Rose
Ochoa, G.R. No. 173792. August 31, 2011.
Illegal recruitment and estafa; may be charged separately. A person may be charged and convicted separately
of illegal recruitment under Republic Act No. 8042, in relation to the Labor Code, and estafa under Article 315,
paragraph 2(a) of the Revised Penal Code. The offense of illegal recruitment is malum prohibitum, while estafa
is malum in se. In this case, therefore, Ochoa may also be charged and correspondingly held liable for estafa
since all the elements for the crime are present in Criminal Case Nos. 98-77301, 98-77302, and 98-77303.
Ochoas deceit was evident in her false representation to private complainants Gubat, Cesar, and Agustin that
she possessed the authority and capability to send said private complainants to Taiwan/Saudi Arabia for
employment as early as one to two weeks from completion of the requirements, among which were the payment
of placement fees and submission of a medical examination report. People of the Philippines vs. Rosario Rose
Ochoa, G.R. No. 173792. August 31, 2011.
Floating status; validity. The rule is settled that off-detailing is not equivalent to dismissal, so long as such
status does not continue beyond a reasonable time and that it is only when such a floating status lasts for more
than six months that the employee may be considered to have been constructively dismissed. A complaint for
illegal dismissal filed prior to the lapse of the six-month period and/or the actual dismissal of the employee is
generally considered as prematurely filed. In this case, the evidence adduced a quo clearly indicates that
petitioners were not in bad faith when they placed Leynes under floating status. Disgruntled by NHPIs
countermanding of her decision to bar Engr. Cantuba from the Project, Leynes twice signified her intention to
resign from her position on 12 February 2002. In view of the sensitive nature of Leynes position and the critical
stage of the Projects business development, NHPI was constrained to hire Engr. Jose as Leynes replacement
as a remedial measure. Nippon Housing Phil. Inc., et al. vs. Maiah Angela Leynes, G.R. No. 177816, August 3,
2011.
Constructive dismissal; burden of proof. Constructive dismissal exists where there is cessation of work because
continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in
rank and a diminution in pay. In constructive dismissal cases, the employer is, concededly, charged with the
burden of proving that its conduct and action or the transfer of an employee are for valid and legitimate grounds
such as genuine business necessity. The Supreme Court found that in this case, respondents have more than
amply discharged this burden with proof of the circumstances surrounding Engr. Carlos employment as
Property Manager for the Project and the consequent unavailability of a similar position for Leynes. Nippon
Housing Phil. Inc., et al. vs. Maiah Angela Leynes, G.R. No. 177816, August 3, 2011.
Pleading; verification. Verification of a pleading is a formal, not jurisdictional, requirement intended to secure
the assurance that the matters alleged in a pleading are true and correct. It is deemed substantially complied with
when one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the
verification, and when matters alleged in the petition have been made in good faith or are true and correct. In
this case, the Supreme Court found that the petitions verification substantially complied with the requirements
of the rules. The SPA authorized Bello-Ona to represent Bello in the case from which the present petition with
the Supreme Court originated. As the daughter of Bello, Bello-Ona is deemed to have sufficient knowledge to
swear to the truth of the allegations in the petition, which are matters of record in the lower tribunals and the
appellate court. Francis Bello, represented herein by his daughter and attorney-in-fact, Geraldine Bello-Ona
vs. Bonifacio Security Services, Inc. and Samuel Tomas, G.R. No. 188086, August 3, 2011.
Dismissal; constructive dismissal. Case law defines constructive dismissal as a cessation of work because
continued employment has been rendered impossible, unreasonable, or unlikely, as when there is a demotion in
rank or diminution in pay, or both, or when a clear discrimination, insensibility, or disdain by an employer
becomes unbearable to the employee. In this case, other than his bare and self-serving allegations, Bello has not
offered any evidence that he was promoted in a span of four months since his employment as traffic marshal in
July 2001 to a detachment commander in November 2001. At most, the BSSI merely changed his assignment or
transferred him to the post where his service would be most beneficial to its clients. The managements
prerogative of transferring and reassigning employees from one area of operation to another in order to meet the
requirements of the business is generally not constitutive of constructive dismissal. This was what exactly
occurred in this case. Francis Bello, represented herein by his daughter and attorney-in-fact, Geraldine Bello-
Ona vs. Bonifacio Security Services, Inc. and Samuel Tomas, G.R. No. 188086, August 3, 2011.
Procedural rules; failure to attach duplicate original or certified true copy of the assailed decision. The refusal
of the Court of Appeals to consider the petition was the absence of a duplicate original or certified true copy of
the assailed NLRC decision, in violation of Section 3, Rule 46 of the Rules of Court (in relation to Section 1,
Rule 65). The company, however, corrected the procedural lapse by attaching a certified copy of the NLRC
decision to its motion for reconsideration. The Supreme Court found that the CA precipitately denied the petition
for certiorari based on an overly rigid application of the rules of procedure. In effect, it sacrificed substance to
form in a situation where the petitioners recourse was not patently frivolous or meritless. Thus, the case was
remanded to the NLRC for resolution of its appeal. Jobel Enterprises and/or Mr. Benedict Lim vs. NLRC and
Eric Martinez, Sr., G.R. No. 194031, August 8, 2011.
Appeal; decision or resolution of NLRC. As was enunciated in the case of St. Martin Funeral Home v.
NLRC, the special civil action of certiorari under Rule 65 of the Rules of Civil Procedure, which is filed before
the CA, is the proper vehicle for judicial review of decisions of the NLRC. The petition should be initially filed
before the Court of Appeals in strict observance of the doctrine on hierarchy of courts as the appropriate forum
for the relief desired. Thus, respondents recourse to the CA was the proper remedy to question the resolution
of the NLRC. Atok Big Wedge Company, Inc. vs. Jesus P. Gison, G.R. No. 169510, August 8, 2011.
Employer-employee relationship; four-fold test. To ascertain the existence of an employer-employee
relationship jurisprudence has invariably adhered to the four-fold test, to wit: (1) the selection and engagement
of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the
employees conduct, or the so-called control test. Applying the aforementioned test, an employer-employee
relationship was found to be absent in the case at bar. Among other things, respondent was not required to report
everyday during regular office hours of petitioner. Respondents monthly retainer fees were paid to him either
at his residence or a local restaurant. More importantly, petitioner did not prescribe the manner in which
respondent would accomplish any of the tasks in which his expertise as a liaison officer was needed; respondent
was left alone and given the freedom to accomplish the tasks using his own means and method. Verily, the
absence of the element of control on the part of the petitioner engenders a conclusion that he is not an employee
of the petitioner. Atok Big Wedge Company, Inc. vs. Jesus P. Gison, G.R. No. 169510, August 8, 2011.
Employment; regular employee. Article 280 of the Labor Code, in which the lower court used to buttress its
findings that respondent became a regular employee of the petitioner, is not applicable in the case at bar. The
Supreme Court has ruled that said provision is not the yardstick for determining the existence of an employment
relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual
employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or
to security of tenure; it does not apply where the existence of an employment relationship is in dispute. It is,
therefore, erroneous on the part of the Court of Appeals to rely on Article 280 in determining whether an
employer-employee relationship exists between respondent and the petitioner. Therefore, despite the fact that
petitioner made use of the services of respondent as a part-time consultant on retainer basis for eleven years, he
still cannot be considered as a regular employee of petitioner using only as basis Article 280 of the Labor
Code. Atok Big Wedge Company, Inc. vs. Jesus P. Gison, G.R. No. 169510, August 8, 2011.
Claim of disability benefits and sickness allowance; reporting requirements. Anent a seafarers entitlement to
compensation and benefits for injury and illness, Section 20-B (3) of 2000 POEA-SEC provides that in order for
the seafarer to claim the said benefits, he must submit himself to a post-employment medical examination by a
company-designated physician within three working days upon his return, except when he is physically
incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as
compliance. Failure of the seafarer to comply with the mandatory reporting requirement shall result in his
forfeiture of the right to claim the above benefits. In this case, there was no dispute regarding the fact that
Esguerra had altogether failed to comply with the mandatory reporting requirement. Esguerra also did not
present any evidence to prove justification for his inability to submit himself to a post-employment medical
examination by a company-designated physician. Self-serving and unsubstantiated declarations are insufficient
to establish a case before quasi-judicial bodies where the quantum of evidence required in establishing a fact is
substantial evidence. Coastal Safeway Marine Services vs. Esguerra, G.R. No. 185352, August 10, 2011.

July 2010 Philippine Supreme Court Decisions

on Labor Law and Procedure
Posted on August 12, 2011 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law Tagged illegal
strike, reorganization

Here are selected July 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor relations; in pari delicto rule in illegal strikes or lockouts. When management and union are in pari
delicto, the contending parties must be brought back to their respective positions before the controversy; that is,
before the strike. In this case, managements fault arose from the fact that a day after the union filed a petition
for certification election before the DOLE, it hit back by requiring all its employees to undergo a compulsory
drug test. Indeed, the timing of the drug test was suspicious. Moreover, management engaged in a runaway shop
when it began pulling out machines from the main building (AER building) to the compound (AER-PSC
premises) located on another street on the pretext that the main building was undergoing renovation. On the
other hand, like management, the union and the affected workers were also at fault for resorting to a concerted
work slowdown and walking out of their jobs in protest of their illegal suspension. It was also wrong for them
to have forced their way to the AER-PSC premises to try to bring out the boring machines. Adding to the injury
was the fact that the picketing employees prevented the entry and exit of non-participating employees and
possibly AERs clients to the premises. Thus, the Supreme Court affirmed the ruling of the Court of Appeals
favoring the reinstatement of all the complaining employees, including those who tested positive for illegal
drugs, without backwages. Automotive Engine Rebuilders, Inc. et al. v. Progresibong Unyon ng mga
Manggagawa sa AER, et al./Progresibong Unyon ng mga Manggagawa sa AER, et al. v. Automotive Engine
Rebuilders, Inc., et al., G.R. No. 160138/G.R. No. 160192. July 13, 2011.
Employee dismissal; reorganization. Resignation is the voluntary act of an employee who is in a situation where
he believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and he has then no
other choice but to disassociate himself from employment. The intent to relinquish must concur with the overt
act of relinquishment; hence, the acts of the employee before and after the alleged resignation must be considered
in determining whether he, in fact, intended to terminate his employment. In this case, the element of
voluntariness was lacking. San Miguel Properties Philippines, Inc. (SMPI) claims that there was an existing
reorganization plan in 1998 and that it was implemented shortly after the effective date of Gucabans resignation.
While a reorganization of SMPIs corporate structure might have indeed taken place, it happened more than a
year after Gucabans separation from the company and incidentally, after she filed the complaint. And although
the company might have been suffering from losses due to market decline as alleged, there was still no concrete
plan for a corporate reorganization at the time Gonzalez presented to Gucaban the seemingly last available
alternative options of voluntary resignation and termination by abolition of her office. In other words, Gucabans
separation from the company was the confluence of the fraudulent representation to her that her office would be
declared redundant, coupled with the subsequent alienation which she suffered from the company by reason of
her refusal to tender resignation. The element of voluntariness in her resignation is, therefore, missing. San
Miguel Properties Philippines, Inc. vs. Gwendellyn Rose Gucaban, G.R. No. 153982. July 18, 2011.
Factual Findings of the CA and NLRC. The Supreme Court, as a rule, is bound by the factual findings of the
Court of Appeals, but has the discretion to reexamine the evidence in a case when a basic conflict exists between
the CAs findings of fact and those of the NLRC. In this case, such a conflict existed and the SC had to determine
whether Barit had been underpaid and/or was not paid her wages during her employment in Saudi Arabia. The
SC found that Barit was fully paid her wages during her employment in Saudi Arabia. Nowhere in the records
did it appear that Barit complained about the alleged underpayment and non-payment of her wages with the
Philippine labor or consular representatives in Saudi Arabia, or even with the Saudi authorities themselves.
Neither was there any showing that she ever objected to or protested her iniquitous work situation directly with
the foreign principal, Hameed, if that had really been the case, nor that Barit identified or spoke of any problem
that could have prevented her from seeking relief in Saudi Arabia. To make the agency liable for Barits
alleged unpaid and underpaid wages on the sole ground that it failed to submit copies of payslips and payrolls is
unfair, as the agency appeared to have taken all available means to secure the
necessary documents from Barits employer to dispute her claims. Jones International Manpower
Services, Inc., represented by its President, Edward G. Cue vs. Bella Agcaoili-Barit, G.R. No. 181919. July 20,
2011.
Compensable death. To be considered as a compensable death under the GSIS law, the injury must be the result
of an employment accident satisfying all of the following: 1) the employee must have been injured at the place
where his work requires him to be; 2) the employee must have been performing his official functions; and 3) if
the injury is sustained elsewhere, the employee must have been executing an order for the employer. The
requirement that the injury must arise out of and in the course of employment proceeds from the limiting premise
that the injury must be the result of an accident. An accident excludes that which happens with intention or
design, with ones foresight or expectation or that which under the circumstances is expected by the person to
whom it happens. In this case, the Supreme Court found that the death of Sgt. Angel did not result from an
accident which is compensable under Presidential Decree No. 626. It was, on the contrary, occasioned by an
intentional or designed act which removes the resulting death from the coverage of the State Insurance Fund.
The circumstances of Sgt. Angels death his lifeless body was found hanging inside his cell with an electric
cord tied around his neck taken together with the unrebutted finding that there is no evidence of foul play
negate respondents claim of murder of her husband and of the compensability of such death. Government
Service Insurance System vs. Jum Angel, G.R. No. 166863. July 20, 2011.
Employee dismissal; evidence. Substantial evidence means such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine
otherwise. In this case, it was found that the agency succeeded in showing by substantial evidence that its
principal, Panstar, had a valid reason for terminating Flores employment. Capt. B.H. Mun, decided to dismiss
Flores (the ships Master) not only for agitating the crew to rebel against the authorities of the vessel M/V
Morning Charm, but for several other infractions. As the records showed, and as Capt. B.H. Mun stressed in his
letter of November 17, 1997 to the agency management, Flores was also charged with inefficiency or neglect of
duty, insubordination, insolent and disrespectful behavior, and other actuations which made him unfit for his
position and rank. Abosta Shipmanagement Corporation vs. National Labor Relations Commission (First
Division) and Arnulfo R. Flores, G.R. No. 163252. July 27, 2011.
Grounds for Dismissal. An employees propensity to commit repetitious infractions evinces wrongful intent,
making him undeserving of the compassion accorded by law to labor; thus, dismissal of said employee would
be justified. In this case, as petitioners employment record showed, it was not the first time that he refused to
collect fares from passengers. In fact, it was already the third instance that he failed to collect fares from the
riding public. His repeated violation of the companys policies and rules showed his want of care for the
employers policies. And although petitioner already suffered the corresponding penalties for his past
misconduct, those infractions were still found to be relevant and may be considered in assessing his liability for
his present infraction. Jerry Mapili vs.. Philippine Rabbit Bus Lines, Inc., G.R. No. 172506. July 27, 2011.
June 2011 Philippine Supreme Court Decisions
on Labor Law and Procedure
Posted on July 10, 2011 by Leslie C. Dy Posted in Labor Law Tagged appeal, collective bargaining
agreement, damages, Department of Labor and Employment, dismissal, independent contractor, jurisdiction, labor-only
contracting, loss of trust and confidence, misconduct

Here are selected June 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Appeal; decision of DOLE Secretary. For petitioners refusal to comply with his deployment assignment,
respondent manning agency filed a complaint against him for breach of contract before the Philippine Overseas
Employment Administration (POEA). The POEA penalized petitioner with one year suspension from overseas
deployment. The suspension was reduced to six months by the Secretary of Labor. Petitioner appealed the latters
decision with the Office of the President (OP). The Supreme Court ruled that petitioners appeal was erroneous.
The proper remedy to question the decisions or orders of the Secretary of Labor is via Petition for Certiorari
under Rule 65. Appeals to the OP in labor cases have been eliminated, except those involving national interest
over which the President may assume jurisdiction. The present case does not affect national interest. Hence,
petitioners appeal to the OP did not toll the running of the period and the assailed decision of the Secretary of
Labor is deemed to have attained finality. Miguel Dela Pena Barairo vs. Office of the President and MST Marine
Services (Phils.) Inc., G.R. No. 189314. June 15, 2011.
Appeal from decisions of labor arbiter; bond requirement for perfection of appeal may be relaxed in meritorious
cases. The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary awards
from the decision of the labor arbiter. However, under Section 6, Rule VI of the NLRCs Revised Rules of
Procedure, the bond may be reduced albeit only (1) on meritorious grounds and (2) upon posting of a partial
bond in a reasonable amount in relation to the monetary award. For this purpose, the NLRC is not precluded
from conducting a preliminary determination of the employers financial capability to post the required bond,
without necessarily passing upon the merits. In the present case, the NLRC gravely abused its discretion in
denying petitioners motion to reduce bond peremptorily without considering the evidence presented by
petitioner showing that it was under a state of receivership. Such circumstance constitutes meritorious grounds
to reduce the bond. Moreover, the petitioner exhibited its good faith by posting a partial cash bond during the
reglementary period. University Plans, Inc. vs. Belinda P. Solano, et al., G.R. No. 170416, June 22, 2011
Certiorari; substantial compliance. The three material dates which should be stated in the petition
for certiorari under Rule 65 are the dates when the notice of judgment was received, when a motion for
reconsideration was filed and when the notice of the denial of the motion for reconsideration was received. These
dates should be reflected in the petition to enable the reviewing court to determine if the petition was filed on
time. In the present case, the petition filed with the Court of Appeals failed to state when petitioner received the
assailed NLRC Decision and when he filed his partial motion for reconsideration. However, this omission is not
at all fatal because these material dates are reflected in petitioners Partial Motion for Reconsideration attached
to the petition. The failure to state these two dates in the petition may be excused if the same are evident from
the records of the case. The Court further stated that the more important material date which must be duly
alleged in the petition is the date of receipt of the resolution of denial of the motion for reconsideration. Since
petitioner has duly complied with this rule, there was substantial compliance with the requisite
formalities. William Endeliseo Barroga vs. Data Center College of the Philippines, et al., G.R. No. 174158. June
27, 2011
Collective bargaining agreement; duty of parties to maintain status quo pending renegotiation. Article 253 of
the Labor Code mandates the parties to keep the status quo and to continue in full force and effect the terms and
conditions of the existing agreement during the 60-day period prior to the expiration of the old CBA and/or until
a new agreement is reached by the parties. The law does not provide for any exception nor qualification on which
economic provisions of the existing agreement are to retain its force and effect. Likewise, the law does not
distinguish between a CBA duly agreed upon by the parties and an imposed CBA like the one in the present
case. Hence, considering that no new CBA had been, in the meantime, agreed upon by respondent GMC and the
Union, the provisions of the imposed CBA continues to have full force and effect until a new CBA is entered
into by the parties. General Milling Corporation-Independent Labor Union [GMC-ILU] vs. General Milling
Corporation/General Milling Corporation vs.General Milling Corporation-Independent Labor Union [GMC-
ILU], et al., G.R. Nos. 183122/183889, June 15, 2011.
Damages; fraud or bad faith for the award of moral damages. Moral and exemplary damages are recoverable
where the dismissal of an employee was attended by bad faith or fraud, or constituted an act oppressive to labor,
or were done in a manner contrary to morals, good customs or public policy. In the present case, P&G dismissed
its employees in a manner oppressive to labor. The sudden and peremptory barring of petitioners from work, and
from admission to the work place, after just a one-day verbal notice, and for no valid cause, constitutes
oppression and utter disregard of the right to due process of the concerned petitioners. Hence, the Supreme
Court held that an award of moral damages is called for under the circumstances. Joeb M. Aliviado, et al. vs.
Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011.
Dismissal; constructive dismissal. Petitioner was employed as an instructor of Data Center College located in
Ilocos Norte. When the college proposed to transfer him to Abra, he filed a complaint alleging constructive
dismissal since his re-assignment will entail an indirect reduction of his salary or diminution of pay considering
that no additional allowance will be given to cover for board and lodging expenses. He claims that such
additional allowance was given in the past and therefore cannot be discontinued and withdrawn without violating
the prohibition against non-diminution of benefits. The Supreme Court affirmed the findings of the lower bodies
and declared that petitioners re-assignment did not amount to constructive dismissal. Constructive dismissal is
quitting because continued employment is rendered impossible, unreasonable or unlikely, or because of a
demotion in rank or a diminution of pay. It exists when there is a clear act of discrimination, insensibility or
disdain by an employer which becomes unbearable for the employee to continue his employment. In the present
case, the colleges right to transfer petitioner is based on contractual stipulation, particularly the condition laid
down in petitioners employment contract that respondents have the prerogative to assign petitioner in any of its
branches or tie-up schools as the necessity demands. In any event, it is management prerogative for employers
to transfer employees on just and valid grounds such as genuine business necessity. Since respondents have
shown that it was experiencing some financial constraints at the time, the re-assignment was not tainted with bad
faith. Furthermore, petitioner failed to present evidence that respondents committed to provide the additional
allowance or that they were consistently granting such benefit as to have ripened into a practice which cannot be
peremptorily withdrawn. Hence, there is no violation of the rule against diminution of pay. William Endeliseo
Barroga vs. Data Center College of the Philippines, et al., G.R. No. 174158. June 27, 2011.
Dismissal; elements for loss of trust or confidence. Petitioners were employees of Promm-Gem, a legitimate
independent contractor, and were hired to work as merchandisers for respondent P&G. When petitioners filed a
claim against P&G for regularization and other benefits, it likewise attacked Promm-Gem as being merely a
labor-only contractor. The latter treated such move as an act of disloyalty against Promm-Gem and petitioners
were dismissed on the ground of grave misconduct and breach of trust. The Supreme Court declared such
termination illegal for being without valid cause. Loss of trust and confidence, as a cause for termination of
employment, is premised on the fact that the employee concerned holds a position of responsibility or of trust
and confidence. As such, he must be invested with confidence on delicate matters, such as custody, handling or
care and protection of the property and assets of the employer. Moreover, in order to constitute a just cause for
dismissal, the act complained of must be work-related and must show that the employee is unfit to continue to
work for the employer. In the instant case, the petitioners have not been shown to be occupying positions of
responsibility or of trust and confidence. Neither is there any evidence to show that they are unfit to continue to
work as merchandisers for Promm-Gem. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R.
No. 160506, June 6, 2011.
Dismissal; elements for serious misconduct. Petitioners were employees of Promm-Gem, a legitimate
independent contractor. After several years of working as merchandisers for respondent P&G, petitioners filed
a claim against P&G for regularization and other benefits, and asserted incidentally that Promm-Gem was merely
a labor-only contractor. The latter treated such move as an act of disloyalty against Promm-Gem and petitioners
were dismissed on the ground of grave misconduct and breach of trust. The Supreme Court declared such
termination illegal for lack of a valid clause. To be a just cause for dismissal, such misconduct (a) must be
serious; (b) must relate to the performance of the employees duties; and (c) must show that the employee has
become unfit to continue working for the employer. In other words, in order to constitute serious misconduct
under Article 282 (a) of the Labor Code, it is not sufficient that the act or conduct complained of has violated
some established rules or policies. It is equally important and required that the act or conduct must have been
performed with wrongful intent. In the instant case, petitioners may have committed an error of judgment in
claiming to be employees of P&G, but it cannot be said that they were motivated by any wrongful intent in doing
so. As such, the court found them guilty of simple misconduct only which does not warrant a dismissal. Joeb
M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011.
Dismissal; financial assistance based on equity . The award of separation pay is authorized under Article 283
and 284 of the Labor Code, and under Section 4 (b), Rule I, Book VI of the Implementing Rules and Regulations
where there is illegal dismissal and reinstatement is no longer feasible. By way of exception, the courts have
allowed grants of separation pay to stand as a measure of social justice where the employee is validly dismissed
for causes other than serious misconduct or those reflecting on his moral character. However, there is no
provision in the Labor Code which grants separation pay to voluntarily resigning employees. In fact, the rule is
that an employee who voluntarily resigns from employment is not entitled to separation pay, except when it is
stipulated in the employment contract or collective bargaining agreement (CBA), or it is sanctioned by
established employer practice or policy. In the present case, neither the abovementioned provisions of the Labor
Code nor the exceptions apply because petitioner was not dismissed from his employment nor is there any
evidence to show that payment of separation pay is stipulated in his employment contract or sanctioned by
established practice or policy of his employer. Nevertheless, the Court noted that petitioner never had any
derogatory record during his long years of service with respondent and that his employment was severed not by
reason of any infraction on his part but because of his failing physical condition. Hence, as a measure of social
and compassionate justice and as an equitable concession, the Court granted separation pay to petitioner by way
of financial assistance. Romeo Villaruel vs. Yeo Han Guan, doing business under the name and style Yuhans
Enterprises, G.R. No. 169191, June 1, 2011.
Dismissal; separation pay due to disease. Petitioner was employed as a machine operator until he stopped
working when he suffered from an illness. After his recovery, petitioner was directed to report for work but he
refused. Instead, he filed a case with the NLRC demanding his separation pay. The NLRC awarded him
separation benefits under Article 284 of the Labor Code. However, the Court of Appeals (CA) deleted such
award. On appeal, the Supreme Court stated that Article 284 presupposes that it is the employer who terminates
the services of the employee found to be suffering from any disease and whose continued employment is
prohibited by law or is prejudicial to his health as well as to the health of his co-employees. It does not
contemplate a situation where it is the employee who severs his or her employment ties. This is precisely the
reason why Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code, directs that an
employer shall not terminate the services of the employee unless there is a certification by a competent public
health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six
(6) months even with proper medical treatment. In the present case, petitioner was not terminated from his
employment and, instead, is deemed to have resigned therefrom, and therefore he is not entitled to separation
pay under Article 284 of the Labor Code. Romeo Villaruel vs. Yeo Han Guan, doing business under the name
and style Yuhans Enterprises, G.R. No. 169191, June 1, 2011.
DOLE assumption of jurisdiction; effects. A strike conducted after the Secretary of Labor has assumed
jurisdiction over a labor dispute is illegal and any union officer who knowingly participates in the strike may be
declared as having lost his employment. The present case involved a slowdown strike. Unlike other forms of
strike, the employees involved in a slowdown do not walk out of their jobs to hurt the company. They need only
to stop work or reduce the rate of their work while generally remaining in their assigned post. The Supreme
Court upheld the finding that the union officers committed illegal acts that warranted their dismissal from work
when they refused to work or abandoned their work to join union assemblies after the Labor Secretary assumed
jurisdiction over the labor dispute. Yolito Fadriquelan, et al. vs. Monterey Foods Corporation/Monterey Foods
Corporation v. Bukluran ng mga Manggagawa sa Monterey-ILAW, et al., G.R. No. 178409/G.R. No.
178434, June 8, 2011.
Independent job contracting; required substantial capital. Petitioners assert that they are employees of P&G and
that Promm-Gem and SAPS are merely labor-only contractors providing manpower services to P&G. 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 the instant case, the Supreme Court found that Promm-Gem has substantial investment
which relates to the work to be performed. The financial statementsshow that it has authorized capital stock
of P1 million and a substantial amount of paid-in capital and other assets to support its operations. Under the
circumstances, Promm-Gem cannot be considered a labor-only contractor; it is in fact a legitimate independent
contractor. On the other hand, the financial records of SAPS show that it has a paid-in capital of
only P31,250.00. There is no other evidence presented to show how much its working capital and assets
are. Furthermore, there is no showing of substantial investment in tools, equipment or other assets. 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, SAPS is considered to be engaged in labor-only
contracting. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011.
Labor law; labor-only contracting v. independent job contracting. The law allows contracting arrangements for
the performance of specific jobs, works or services, regardless of whether such activity is peripheral or core in
nature. However, in order for such outsourcing to be valid, it must be made to an independent contractor because
the current labor rules expressly prohibit labor-only contracting. There is labor-only contracting when the
contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work or service for a
principaland any of the following elements are present: (i) The contractor or subcontractor does not have
substantial capital or investment which relates to the job, work or service to be performed and the employees
recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly
related to the main business of the principal; or (ii) The contractor does not exercise the right of control on the
performance of the work of the contractual employee. Where labor-only contracting exists, the law establishes
an employer-employee relationship between the employer and the employees of the labor-only contractor. The
statute establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws. 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. In the
present case, petitioners, who were recruited by Promm-Gem and SAPS to work as merchandisers of respondent
P&G, filed a complaint against the latter for regularization, service incentive leave pay and other benefits on the
ground that they were employees of P&G. With respect to the contractor Promm-Gem, it was found to be a
legitimate independent job contractor; hence, there was no employer-employee relationship between its workers
and P&G. On the other hand, SAPS was found to be engaged in labor-only contracting. Consequently, the
petitioners who have been recruited and supplied by SAPSare considered to be the employees of P&G. Joeb M.
Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011.
Labor strikes; liability of union officers and participating workers. A distinction exists between the ordinary
workers liability for illegal strike and that of the union officers who participated in it. The ordinary worker
cannot be terminated for merely participating in the strike. There must be proof that he committed illegal acts
during its conduct. On the other hand, a union officer can be terminated upon mere proof that he knowingly
participated in the illegal strike. Moreover, the participating union officers have to be properly identified. In the
present case, with respect to those union officers whose identity and participation in the strike having been
properly established, the termination was legal. Yolito Fadriquelan, et al. vs. Monterey Foods
Corporation/Monterey Foods Corporation v. Bukluran ng mga Manggagawa sa Monterey-ILAW, et al., G.R.
No. 178409/G.R. No. 178434, June 8, 2011.
Secretary of Labor; power to give arbitral awards. The Secretary of Labor is empowered to give arbitral awards
in the exercise of his authority to assume jurisdiction over labor disputes under Art. 263 (g) of the Labor Code.
In the present case, the Supreme Court upheld the authority of the Secretary of Labor to impose arbitral awards
higher than what was supposedly agreed upon in the Memorandum of Agreement (MOA) between the parties.
The Court further stated that while an arbitral award cannot per se be categorized as an agreement voluntarily
entered into by the parties because it requires the interference and imposing power of the State thru the Secretary
of Labor when he assumes jurisdiction, the award can be considered as an approximation of a collective
bargaining agreement which would otherwise have been entered into by the parties. Hence, it has the force and
effect of a valid contract obligation between the parties. Cirtek Employees Labor Union-Federation of Free
workers vs. Cirtek Electronics, Inc., G.R. No. 190515. June 6, 2011.
Termination of employment; resignation v. dismissal. Petitioner claims he was dismissed on the ground of illness
and was therefore entitled to separation benefits under Article 284 of the Labor Code. The Supreme Court (SC)
disagreed and instead found that petitioner was the one who initiated the severance of his employment relations
on the ground that his health was failing. In fact, he rejected respondents offer for him to return to work. The
SC declared that this is tantamount to resignation. Resignation is defined as the voluntary act of an employee
who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the
exigency of the service and he has no other choice but to disassociate himself from his employment. Romeo
Villaruel vs. Yeo Han Guan, doing business under the name and style Yuhans Enterprises, G.R. No. 169191, June
1, 2011.
Unions; disaffiliation. A local union may disaffiliate at any time from its mother federation, absent any showing
that the same is prohibited under its constitution or rules. Such disaffiliation, however, does not result in it losing
its legal personality. A local union does not owe its existence to the federation with which it is affiliated. It is a
separate and distinct voluntary association owing its creation to the will of its members. The mere act of
affiliation does not divest the local union of its own personality, neither does it give the mother federation the
license to act independently of the local union. It only gives rise to a contract of agency where the former acts
in representation of the latter. In the present case, whether the FFW went against the will of its principal (the
member-employees) by pursuing the case despite the signing of the MOA, is not for the Court, nor for respondent
employer to determine, but for the Union and FFW to resolve on their own pursuant to their principal-agent
relationship. Moreover, the issue of disaffiliation is an intra-union dispute which must be resolved in a different
forum in an action at the instance of either or both the FFW and the union or a rival labor organization, but not the
employer as in this case. Cirtek Employees Labor Union-Federation of Free workers vs. Cirtek Electronics,
Inc., G.R. No. 190515. June 6, 2011.

May 2011 Philippine Supreme Court Decisions

on Labor Law and Procedure
Posted on June 21, 2011 by Leslie C. Dy Posted in Constitutional Law, Labor Law Tagged appeal, due process, equal
protection, illegal dismissal, resignation

Here are selected May 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Section 10, Republic Act No. 8042; unconstitutional. Petitioner Yap was employed as an electrician for
respondents vessel under a 12-month contract. He was found to be illegally terminated with nine months
remaining on his contract term. The Court of Appeals (CA) awarded petitioner salaries for three months as
provided under Section 10 of Republic Act No. 8042. On certiorari, the Supreme Court reversed the CA and
declared that petitioner was entitled to his salaries for the full unexpired portion of his contract. The Court has
previously declared in Serrano v. Gallant Maritime Services, Inc. (2009) that the clause or for three months for
every year of the unexpired term, whichever is less provided in the 5th paragraph of Section 10 of R.A. No.
8042 is unconstitutional for being violative of the rights of Overseas Filipino Workers (OFWs) to equal
protection of the laws. The subject clause contains a suspect classification in that, in the computation of the
monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim
of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs
or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and
burdens it with a peculiar disadvantage. Moreover, the subject clause does not state or imply any definitive
governmental purpose; hence, the same violates not just petitioners right to equal protection, but also his right
to substantive due process under Section 1, Article III of the Constitution. Claudio S. Yap vs. Thenamaris Ships
Management and Intermare Maritime Agencies, Inc., G.R. No. 179532, May 30, 2011
Doctrine of Operative Fact; applied as a matter of equity and fair play. Petitioner Yap was employed on
respondents vessel under a 12-month contract. Upon finding that he was illegally terminated, the Court of
Appeals (CA) awarded petitioner salaries for three months as provided under Section 10 of Republic Act No.
8042 (RA 8042). While the case was pending in the Supreme Court, Section 10 of RA 8042 was declared
unconstitutional. In deciding to award petitioner his salaries for the entire unexpired portion of his contract, the
Supreme Court rejected the application of the operative fact doctrine. As an exception to the general rule, the
doctrine applies only as a matter of equity and fair play. It recognizes that the existence of a statute prior to a
determination of unconstitutionality is an operative fact and may have consequences which cannot always be
ignored. The doctrine is applicable when a declaration of unconstitutionality will impose an undue burden on
those who have relied on the invalid law. This case should not be included in the aforementioned exception.
After all, it was not the fault of petitioner that he lost his job due to an act of illegal dismissal committed by
respondents. To rule otherwise would be iniquitous to petitioner and other OFWs, and would, in effect, send a
wrong signal that principals/employers and recruitment/manning agencies may violate an OFWs security of
tenure which an employment contract embodies and actually profit from such violation based on an
unconstitutional provision of law. Claudio S. Yap vs. Thenamaris Ships Management and Intermare Maritime
Agencies, Inc., G.R. No. 179532, May 30, 2011.
Migrant workers; computation of salary award. Petitioner Yap was employed as an electrician for respondents
vessel under a 12-month contract. He was found to be illegally terminated with nine months remaining on his
contract term, and was declared to be entitled to his salaries for the balance of his contract. Respondents claim
that the tanker allowance should be excluded from the definition of the term salary. The Supreme Court, after
examining the relevant clauses of the contract, rejected respondents claim. The word salaries in Section 10 (5)
does not include overtime and leave pay. For seafarers, DOLE Department Order No. 33, series 1996, provides
a Standard Employment Contract of Seafarers, in which salary is understood as the basic wage, exclusive of
overtime, leave pay and other bonuses. A close perusal of the contract reveals that the tanker allowance of
US$130.00 was not categorized as a bonus but was rather encapsulated in the basic salary clause, hence, forming
part of the basic salary of petitioner. If respondents intended it differently, the contract per se should have
indicated that said allowance does not form part of the basic salary or, simply, the contract should have separated
it from the basic salary clause. Claudio S. Yap vs. Thenamaris Ships Management and Intermare Maritime
Agencies, Inc. G.R. No. 179532, May 30, 2011.
Termination for Just Cause; separation pay by way of financial assistance. Petitioner Juliet Apacible was
employed as Assistant Area Sales Manager for respondents Cebu operations. She was informed that she would
be transferred to the Pasig office on account of the ongoing reorganization. Petitioners repeated refusal to
comply with the transfer order was treated by respondent as insubordination and grounds for her dismissal. The
Labor Arbiter, the NLRC and the Court of Appeals all found that petitioner was justly dismissed from
employment. The NLRC awarded separation pay as financial assistance, however, noting that petitioners
obstinacy was upon the advice of her counsel and, therefore, there was a modicum of good faith on her part. On
appeal, the Court of Appeals (CA) deleted the award of separation pay. The Supreme Court upheld the CA and
declared that the award of financial assistance shall not be given to validly terminated employees, whose offenses
are iniquitous or reflective of some depravity in their moral character. When the employee commits an act of
dishonesty, depravity, or iniquity, the grant of financial assistance is misplaced compassion. In this case,
petitioners adamant refusal to transfer, coupled with her failure to heed the order for her to return the company
vehicle assigned to her and, more importantly, allowing her counsel to write letters couched in harsh language
to her superiors unquestionably show that she was guilty of insubordination, hence, not entitled to the award of
separation pay. Juliet G. Apacible vs. Multimed Industries, et al., G.R. No. 178903, May 30, 2011.
Appeal; posting of Appeal Bond; Governments exemption from the same. Respondents are supervisory and
rank and file employees of the DXWG-Iligan City radio station which is owned by petitioner Banahaw
Broadcasting Corporation (BBC). Respondents filed a complaint for illegal dismissal, unfair labor practice, and
reimbursement of unpaid Collective Bargaining Agreement (CBA) benefits against petitioner. The Labor Arbiter
rendered a decision ordering petitioner BBC to pay the money claims. On appeal to the NLRC, petitioner BBC
averred that since it is wholly owned by the Republic of the Philippines, it need not post an appeal bond. The
NLRC dismissed the appeal of BBC for non-perfection. The Court of Appeals affirmed the NLRC. The Supreme
Court, in sustaining the CA, held that as a general rule, the government and all the attached agencies with no
legal personality distinct from the former are exempt from posting appeal bonds. The rationale is to protect the
presumptive judgment creditor against the insolvency of the presumptive judgment debtor. When the State
litigates, it is not required to put up an appeal bond because it is presumed to be always solvent. This exemption,
however, does not, as a general rule, apply to government-owned and controlled corporations (GOCCs) for the
reason that the latter has a personality distinct from its shareholders. In this case, BBC, though owned by the
government, is a corporation with a personality distinct from the Republic or any of its agencies or
instrumentalities, and therefore do not partake in the latters exemption from the posting of appeal
bonds. Banahaw Broadcasting Corporation vs. Cayetano PACANa III, et al, G.R. No. 171673, May 30, 2011.
Appeal; posting of appeal bond within the 10-day period is mandatory and jurisdictional. Respondents filed a
complaint for illegal dismissal, unfair labor practice, and reimbursement of unpaid Collective Bargaining
Agreement (CBA) benefits against petitioner. The Labor Arbiter rendered a decision in favor of respondents and
ordered petitioner BBC to pay the money claims. Petitioner appealed to the NLRC, and without posting the
appeal bond, filed a Motion for the Re-computation of the Monetary Award in order that the appeal bond may
be reduced. The NLRC denied the motion and dismissed the appeal of BBC for non-perfection. The Court of
Appeals and the Supreme Court both sustained the dismissal by the NLRC. The Motion for the Re-computation
of the Monetary Award filed by BBC was tantamount to a motion for extension to perfect the appeal, which is
prohibited by the rules. The payment of the appeal bond within the period provided by law is an indispensable
and jurisdictional requisite and not a mere technicality of law or procedure. Hence, the failure on the part of BBC
to perfect the appeal had the effect of rendering the judgment final and executory. Banahaw Broadcasting
Corporation vs. Cayetano PACANa III, et al, G.R. No. 171673, May 30, 2011.
Voluntary Resignation; financial assistance may be awarded on equity considerations. Petitioner filed a
complaint for illegal dismissal against respondent. Finding instead that petitioner had voluntarily resigned, the
Labor Arbiter dismissed the complaint against respondent, but ordered the latter to pay P18,000.00 by way of
financial assistance. On appeal, the NLRC found petitioner to be illegally dismissed. The Court of Appeals
reaffirmed the findings of the LA but deleted the award of financial assistance, ruling that the same may not be
awarded in cases of voluntary resignation. The Supreme Court, in upholding the award of financial assistance,
stated that while the rule is that financial assistance is allowed only in instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on his moral character, there are instances
when financial assistance may be allowed as a measure of social justice and as an equitable concession. In this
case, petitioner, who has served respondent for more than eight years without committing any infraction, may
be granted such financial assistance on equity considerations. Rodolfo Luna vs. Allado Construction Company,
Inc. and/or Ramon Allado, G.R. No. 175251, May 30, 2011.
National Labor Relations Commission; authority to review is limited to issues specifically brought before it on
appeal. Petitioner filed a complaint for illegal dismissal against respondent. Finding that petitioner had
voluntarily resigned, the Labor Arbiter dismissed the complaint against respondent, but ordered the latter to
pay P18,000.00 by way of financial assistance. Respondents interposed an appeal with the National Labor
Relations Commission (NLRC), purely for the purpose of questioning the validity of the grant of financial
assistance made by the Labor Arbiter. Instead, the NLRC ruled that petitioner was illegally dismissed and was
entitled to separation pay. The Court of Appeals (CA) held that it was grave abuse of discretion for the NLRC
to rule on the issue of illegal dismissal when the only issue raised to it on appeal was the propriety of the award
of financial assistance. The Supreme Court sustained the view of the CA, reasoning that Section 4(d), Rule VI
of the 2005 Revised Rules of Procedure of the NLRC expressly provides that, on appeal, the NLRC shall limit
itself only to the specific issues that were elevated for review. In the case at bar, the NLRC evidently went against
its own rules of procedure when it passed upon the issue of illegal dismissal although this question was not raised
by respondents in their appeal. Rodolfo Luna vs. Allado Construction Company, Inc. and/or Ramon Allado, G.R.
No. 175251, May 30, 2011.

April 2011 Philippine Supreme Court Decisions

on Labor Law and Procedure
Posted on May 19, 2011 by Leslie C. Dy Posted in Labor Law Tagged certiorari, illegal dismissal, loss of trust and confidence

Here are selected April 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Dismissal; breach of trust and confidence. Petitioner was employed as Assistant Vice-President of the Jewelry
Department in respondent bank. His employment was terminated on the ground of willful breach of trust and
confidence. Jurisprudence provides for two requisites for dismissal on the ground of loss of trust and confidence;
(1) the employee concerned must be holding a position of trust and confidence, and (2) there must be an act that
would justify the loss of trust and confidence. 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. Furthermore,
the burden of establishing facts as bases for an employers loss of confidence is on the employer. The court held
that the termination of petitioner was without just cause and therefore illegal. Although the first requisite was
present, the respondent failed to satisfy the second requisite. Respondent bank was not able to show any concrete
proof that petitioner had participated in the approval of the questioned accounts. The invocation by respondent
of the loss of trust and confidence as ground for petitioners termination has therefore no basis at all. James Ben
L. Jerusalem v. Keppel Monte Bank, et al., G.R. No. 169564. April 6, 2011.
Breach of Trust and Confidence; duties of employee. Petitioner was employed as Assistant Vice-President in
respondent bank. His employment was terminated on the ground of willful breach of trust and confidence for
endorsing VISA card applicants who later turned out to be impostors resulting in financial losses to respondent
bank. The court held that petitioner was illegally dismissed. As provided in Article 282 of the Labor Code, an
employer may terminate an employees employment for fraud or willful breach of trust reposed in him. However,
in order to constitute a just cause for dismissal, the act complained of must be work-related such as would show
the employee concerned to be unfit to continue working for the employer. The act of betrayal of trust, if any,
must have been committed by the employee in connection with the performance of his function or position. The
court found that the element of work-connection was not present in this case since petitioner was assigned
under the Jewelry department, and therefore had nothing to do with the approval of VISA Cards, which was
under a different department altogether. James Ben L. Jerusalem v. Keppel Monte Bank, et al., G.R. No.
169564. April 6, 2011.
Certiorari under Rule 45; questions of law and exceptions. The Labor Arbiter and the NLRC found that
respondent employer neglected to pay petitioners sickness allowance. However, on appeal, the Court of Appeals
reversed such findings and held that petitioner already received his sickness allowance from
respondent. Petitioner questioned the ruling of the Court of Appeals by filing a petition for review on certiorari
under Rule 45. The Supreme Court held that, as a rule, only questions of law, not questions of fact, may be raised
in a petition for review on certiorari under Rule 45. However, this principle is subject to recognized exceptions.
In the labor law setting, the Court will delve into factual issues when conflict of factual findings exists among
the labor arbiter, the NLRC, and the Court of Appeals. Considering that in the present case there were differing
factual findings on the part of the Court of Appeals, on one hand, and the Labor Arbiter and the NLRC, on the
other, the Supreme Court found it necessary to make an independent evaluation of the evidence on
record. Wilfredo Y. Antiquina v. Magsaysay Maritime Corporation and/or Masterbulk Pte., Ltd., G.R. No.
168922. April 13, 2011.
Rules of Procedure; liberal construction in favor of working class. Petitioner claimed disability benefits under a
Collective Bargaining Agreement that the respondent employer entered into with a foreign union. The Court of
Appeals refused to admit the evidence of petitioner showing his membership in the union on the ground that it
was submitted only with the Motion for Reconsideration. The Supreme Court, in agreeing to examine the
evidence belatedly submitted by petitioner, pointed out that technical rules of procedure shall be liberally
construed in favor of the working class in accordance with the demands of substantial justice. Rules of procedure
and evidence should not be applied in a very rigid and technical sense in labor cases in order that technicalities
would not stand in the way of equitably and completely resolving the rights and obligations of the
parties. Wilfredo Y. Antiquina v. Magsaysay Maritime Corporation and/or Masterbulk Pte., Ltd., G.R. No.
168922. April 13, 2011.
Disability Benefits; entitlement and burden of proof. Petitioner suffered a fractured arm while working on
respondents vessel. He filed a complaint for permanent disability benefits, among others. Petitioner claims that
he is entitled to the higher amount of disability benefits under the Collective Bargaining Agreement which
respondent entered into with a union of which petitioner was a member. The Court of Appeals denied the
petitioners claim. The Supreme Court, in upholding the Court of Appeals, held that the burden of proof rests
upon the party who asserts the affirmative of an issue. And in labor cases, the quantum of proof necessary is
substantial evidence, or such amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion. Petitioner had the duty to prove by substantial evidence his own positive assertions. He did
not discharge this burden of proof when he submitted photocopied portions of a different CBA with a different
union. Wilfredo Y. Antiquina v. Magsaysay Maritime Corporation and/or Masterbulk Pte., Ltd., G.R. No.
168922. April 13, 2011.
Public office; casual employees. Respondent was a casual teller who was dismissed from service by petitioner
without being formally charged. On appeal, the Civil Service Commission (CSC) upheld the dismissal and
reasoned that respondent was a casual employee, and therefore her services may be terminated at any time,
without need of a just cause. Upon review, both the Court of Appeals and the Supreme Court found that
respondent was illegally terminated. The Supreme Court recognized its pronouncement in a recent case that
Even a casual or temporary employee enjoys security of tenure and cannot be dismissed except for cause
enumerated in Sec. 22, Rule XIV of the Omnibus Civil Service Rules and Regulations and other pertinent laws.
However, the Court also went on to state that, despite this new ruling on casual employees, it is not the intention
of the Court to make the status of a casual employee at par with that of a regular employee, who enjoys
permanence of employment. The rule is still that casual employment will cease automatically at the end of the
period unless renewed. Casual employees may also be terminated anytime though subject to certain conditions
or qualifications with reference to the CSC Form No. 001. Thus, they may be laid-off anytime before the
expiration of the employment period provided any of the following occurs: (1) when their services are no longer
needed; (2) funds are no longer available; (3) the project has already been completed/finished; or (4) their
performance are below par. Philippine Charity Sweepstakes Office Board of Directors and Reynaldo P. Martin v.
Marie Jean C. Lapid, G.R. No. 191940. April 12, 2011.
Public office; security of tenure. Respondent was a casual teller who, having been found guilty of Discourtesy
in the Course of Official Duties and of Grave Misconduct, was dismissed from service by petitioner. On
appeal, the Civil Service Commission (CSC) ruled that despite lapses in procedural due process committed by
petitioner employer, the dismissal was proper since respondent belonged to the category of a casual employee
which does not enjoy security of tenure. Hence, she may be separated from service at any time, there being no
need to show cause. The Court of Appeals disagreed and declared the dismissal illegal. The Supreme Court
affirmed the findings of the Court of Appeals. In doing so, the Court relied on Section 3(2), Article XIII of the
Constitution which guarantees the rights of all workers to security of tenure. The Court also recognized its
pronouncement in a recent case that Even a casual or temporary employee enjoys security of tenure and cannot
be dismissed except for cause enumerated in Sec. 22, Rule XIV of the Omnibus Civil Service Rules and
Regulations and other pertinent laws. Philippine Charity Sweepstakes Office Board of Directors and Reynaldo
P. Martin v. Marie Jean C. Lapid, G.R. No. 191940. April 12, 2011.
Dismissal; due process. Respondent was dismissed from her post as casual teller. When respondent appealed her
dismissal to the Civil Service Commission (CSC), the latter found that respondent was never formally charged
for the administrative offenses for which she was dismissed. However, despite finding that procedural due
process was not complied with, the CSC nevertheless upheld the dismissal on the ground that being a casual
employee, respondent enjoyed no security of tenure and can be dismissed anytime. The Court found that
respondent was illegally terminated and ordered her reinstatement. Casual employees are entitled to due process
especially if they are to be removed for more serious causes or for causes other than the reasons mentioned in
CSC Form No. 001. This is pursuant to Section 2, Article IX(B) of the Constitution. Furthermore, Section 46 of
the Civil Service Law provides that no officer or employee in the Civil Service shall be suspended or dismissed
except for cause as provided by law after due process. The reason for this is that their termination from the
service could carry a penalty affecting their rights and future employment in the government. Philippine Charity
Sweepstakes Office Board of Directors and Reynaldo P. Martin v. Marie Jean C. Lapid, G.R. No. 191940. April
12, 2011.

March 2011 Philippine Supreme Court Decisions

on Labor Law and Procedure
Posted on April 14, 2011 by Leslie C. Dy Posted in Labor Law

Here are selected March 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Abandonment; elements. Respondent employee was dismissed by petitioners on the ground of alleged habitual
absenteeism and abandonment of work. Jurisprudence provides for two essential requirements for abandonment
of work to exist: (1) the failure to report for work or absence without valid or justifiable reason, and (2) clear
intention to sever the employer-employee relationship manifested by some overt acts should both
concur. Further, the employees deliberate and unjustified refusal to resume his employment without any
intention of returning should be established and proven by the employer. The Court held that petitioners failed
to prove that it was respondent employee who voluntarily refused to report back for work by his defiance and
refusal to accept the memoranda and the notices of absences sent to him. Petitioners failed to present evidence
that they sent these notices to respondent employees last known address for the purpose of warning him that his
continued failure to report would be construed as abandonment of work. Moreover, the fact that respondent
employee never prayed for reinstatement and has sought employment in another company which is a competitor
of petitioners cannot be construed as his overt acts of abandoning employment. Neither can the delay of four
months be taken as an indication that the respondent employees filing of a complaint for illegal dismissal is a
mere afterthought. Records show that respondent employee attempted to get his separation pay and alleged
commissions from the company, but it was only after his requests went unheeded that he resorted to judicial
recourse. Harpoon Marine Services, Inc., et al. v. Fernan H. Francisco, GR No. 167751, March 2, 2011.
Corporate officer; solidary liability. Respondent employee filed an illegal dismissal case against the Petitioner
Corporation and its President. Though the Court found that Respondent was illegally dismissed, it held that the
President of the Petitioner Corporation should not be held solidarily liable with Petitioner Corporation.
Obligations incurred by corporate officers, acting as such corporate agents, are not theirs but the direct
accountabilities of the corporation they represent. Thus, they should not be generally held jointly and solidarily
liable with the corporation. The general rule is grounded on the theory that a corporation has a legal personality
separate and distinct from the persons comprising it. As exceptions to the general rule, solidary liability may be
imposed: (1) When directors and trustees or, in appropriate cases, the officers of a corporation (a) vote for or
assent to [patently] unlawful acts of the corporation; (b) act in bad faith or with gross negligence in directing
the corporate affairs; (c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or
members, and other persons; (2) When the director or officer has consented to the issuance of watered stock or
who, having knowledge thereof, did not forthwith file with the corporate secretary his written objection
thereto; (3) When a director, trustee or officer has contractually agreed or stipulated to hold himself personally
and solidarily liable with the corporation; (4) When a director, trustee or officer is made, by specific provision
of law, personally liable for his corporate action. To warrant the piercing of the veil of corporate fiction, the
officers bad faith or wrongdoing must be established clearly and convincingly as bad faith is never
presumed. Harpoon Marine Services, Inc., et al. v. Fernan H. Francisco, GR No. 167751, March 2, 2011.
Labor organization; collateral attack on legal personality. Respondent company questioned the legal personality
of the petitioner union in a certification election proceeding. The Court ruled that the legal personality of the
petitioner union cannot be collaterally attacked by respondent company. Except when it is requested to bargain
collectively, an employer is a mere bystander to any petition for certification election; such proceeding is non-
adversarial and merely investigative, considering that its purpose is to determine if the employees would like to
be represented by a union and to select the organization that will represent them in their collective bargaining
with the employer. The choice of their representative is the exclusive concern of the employees; the employer
cannot have any partisan interest therein; it cannot interfere with, much less oppose, the process by filing a
motion to dismiss or an appeal from it; not even the allegation that some employees participating in a petition
for certification election are actually managerial employees will give an employer legal personality to block the
certification election. The employers only right in the proceeding is to be notified or informed
thereof. Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment
and Reforms [SMCC-SUPER], Zacarrias Jerry Victorio Union President v. Charter Chemical and Coating
Corporation, G.R. No. 169717, March 16, 2011.
Labor organization; membership of supervisory employees. Petitioner union filed a Petition for Certification
Election among the regular rank-and-file employees of the respondent company. Respondent contends that
petitioner union is not a legitimate labor organization because its composition is a mixture of supervisory and
rank-and-file employees. The Court ruled that the inclusion of the supervisory employees in petitioner union
does not divest it of its status as a legitimate labor organization. After a labor organization has been registered,
it may exercise all the rights and privileges of a legitimate labor organization. Any mingling between supervisory
and rank-and-file employees in its membership cannot affect its legitimacy for that is not among the grounds for
cancellation of its registration, unless such mingling was brought about by misrepresentation, false statement or
fraud under Article 239 of the Labor Code. Samahang Manggagawa sa Charter Chemical Solidarity of Unions
in the Philippines for Empowerment and Reforms [SMCC-SUPER], Zacarrias Jerry Victorio Union President
v. Charter Chemical and Coating Corporation, G.R. No. 169717, March 16, 2011.
Labor organization; registration. Petitioner union filed a Petition for Certification Election among the regular
rank-and-file employees of the respondent company. Respondent company filed an Answer with Motion to
Dismiss on the ground that petitioner union is not a legitimate labor organization because of its failure to comply
with the documentary requirements set by law, i.e. non-verification of the charter certificate. The Court ruled
that it was not necessary for the charter certificate to be certified and attested by the local/chapter officers.
Considering that the charter certificate is prepared and issued by the national union and not the local/chapter, it
does not make sense to have the local/chapters officers certify or attest to a document which they did not prepare.
In accordance with this ruling, petitioner unions charter certificate need not be executed under oath.
Consequently, it validly acquired the status of a legitimate labor organization upon submission of (1) its charter
certificate, (2) the names of its officers, their addresses, and its principal office, and (3) its constitution and by-
laws the last two requirements having been executed under oath by the proper union officials. Samahang
Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms
[SMCC-SUPER], Zacarrias Jerry Victorio Union President v. Charter Chemical and Coating
Corporation, G.R. No. 169717, March 16, 2011.
Reinstatement; accrued backwages. The Labor Arbiter and the NLRC held that petitioner employer illegally
dismissed the respondent employee. On appeal, the Court of Appeals reversed the decision and ruled that the
dismissal was valid. However, the Court of Appeals ordered petitioner employer to pay respondent employee
her salary from the date of the Labor Arbiters decision ordering her reinstatement until the Court of Appeals
rendered its decision declaring the dismissal valid. Petitioner employer questioned the order and refused to pay.
The Court held that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory
on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal
until reversal by the higher court. On the other hand, if the employee has been reinstated during the appeal period
and such reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary
he received, more so, if he actually rendered services during the period. The payment of such wages cannot be
deemed as unjust enrichment on respondents part. Pfizer, Inc., et al. v. Geraldine Velasco, G.R. No.
177467, March 9, 2011.
Reinstatement; immediately executory order. The Labor Arbiter held that petitioner employer illegally dismissed
the respondent employee. Pending its appeal, petitioner employer failed to immediately admit respondent
employee back to work despite of an order of reinstatement. The Court held that that the provision of Article
223 is clear that an award by the Labor Arbiter for reinstatement shall be immediately executory even pending
appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The legislative
intent is to make an award of reinstatement immediately enforceable, even pending appeal. To require the
application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement award
would certainly betray the executory nature of a reinstatement order or award. In the case at bar, petitioner
employer did not immediately admit respondent employee back to work which, according to the law, should
have been done as soon as an order or award of reinstatement is handed down by the Labor Arbiter without need
for the issuance of a writ of execution. Pfizer, Inc., et al. v. Geraldine Velasco, G.R. No. 177467, March 9, 2011.
Reinstatement; terms and conditions. Due to the order of reinstatement issued by the Labor Arbiter, petitioner
employer sent a letter to the respondent employee to report back to work and assigned her to a new location. The
Court held that such is not a bona fide reinstatement. Under Article 223 of the Labor Code, an employee entitled
to reinstatement shall either be admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. It is established in
jurisprudence that reinstatement means restoration to a state or condition from which one had been removed or
separated. The person reinstated assumes the position he had occupied prior to his dismissal. Reinstatement
presupposes that the previous position from which one had been removed still exists, or that there is an unfilled
position which is substantially equivalent or of similar nature as the one previously occupied by the employee.
Applying the foregoing principle, it cannot be said that petitioner employer has a clear intent to reinstate
respondent employee to her former position under the same terms and conditions nor to a substantially equivalent
position. To begin with, the return-to-work order petitioner sent to respondent employee is silent with regard to
the position it wanted the respondent employee to assume. Moreover, a transfer of work assignment without any
justification therefor, even if respondent employee would be presumably doing the same job with the same pay,
cannot be deemed as faithful compliance with the reinstatement order. Pfizer, Inc., et al. v. Geraldine
Velasco, G.R. No. 177467, March 9, 2011.
Termination by employer; willful disobedience. Petitioner employer ordered the respondent employee to prepare
checks for payment of petitioners obligations. Respondent did not immediately comply with the instruction
since petitioner employer has no sufficient funds to cover the checks. Petitioner employer dismissed respondent
employee for willful disobedience. The Court held that respondent employee was illegally dismissed. The
offense of willful disobedience requires the concurrence of two (2) requisites: (1) the employees assailed
conduct must have been willful, that is characterized by a wrongful and perverse attitude; and (2) the order
violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which
he had been engaged to discharge. Though there is nothing unlawful in the directive of petitioner employer to
prepare checks in payment of petitioners obligations, respondent employees initial reluctance to prepare the
checks, although seemingly disrespectful and defiant, was for honest and well intentioned reasons. Protecting
the petitioner employer from liability under the Bouncing Checks Law was foremost in her mind. It was not
wrongful or willful. Neither can it be considered an obstinate defiance of company authority. The Court takes
into consideration that respondent employee, despite her initial reluctance, eventually did prepare the checks on
the same day she was tasked to do it. Lores Realty Enterprises, Inc., Lorenzo Y. Sumulong III v. Virginia E.
Pacia, G.R. No. 171189, March 9, 2011.
Wages; facilities and supplements. Respondent employees alleged underpayment of their wages. Petitioner
employer claimed that the cost of food and lodging provided by petitioner to the respondent employees should
be included in the computation of the wages received by respondents. The Court makes a distinction between
facilities and supplements. Supplements constitute extra remuneration or special privileges or benefits given
to or received by the laborers over and above their ordinary earnings or wages. Facilities, on the other hand, are
items of expense necessary for the laborers and his familys existence and subsistence so that by express
provision of law, they form part of the wage and when furnished by the employer are deductible therefrom, since
if they are not so furnished, the laborer would spend and pay for them just the same. In short, the benefit or
privilege given to the employee which constitutes an extra remuneration above and over his basic or ordinary
earning or wage is supplement; and when said benefit or privilege is part of the laborers basic wages, it is a
facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus or sick leave) given,
but in the purpose for which it is given. In the case at bench, the items provided were given freely by petitioner
employer for the purpose of maintaining the efficiency and health of its workers while they were working at
their respective projects. Thus, the Court is of the view that the food and lodging, or the electricity and water
allegedly consumed by respondents in this case were not facilities but supplements which should not be included
in the computation of wages received by respondent employees. SLL International Cables Specialist and Sonny
L. Lagon v. NLRC, Roldan Lopez, et al., G.R. No. 172161, March 2, 2011.
Wages; proof of payment. In an illegal dismissal case against the petitioner employer, respondent employees
alleged that they were underpaid. In their defense, petitioner employer alleged that respondent employees
actually received wages higher than the prescribed minimum. The Court held that as a general rule, a party who
alleged payment of wages as a defense has the burden of proving it. Specifically with respect to labor cases, the
burden of proving payment of monetary claims rests on the employer, the rationale being that the pertinent
personnel files, payrolls, records, remittances and other similar documents which will show that overtime,
differentials, service incentive leave and other claims of workers have been paid are not in the possession of
the worker but in the custody and absolute control of the employer. In this case, petitioner employer, aside from
bare allegations that respondent employees received wages higher than the prescribed minimum, failed to present
any evidence, such as payroll or payslips, to support their defense of payment. Thus, petitioner employer utterly
failed to discharge the onus probandi. SLL International Cables Specialist and Sonny L. Lagon v. NLRC, Roldan
Lopez, et al., G.R. No. 172161, March 2, 2011.
Wages; value of facilities. Petitioner employer alleged that the cost of facilities must be included in the
computation of wages paid. The Court held that before the value of facilities can be deducted from the
employees wages, the following requisites must all be attendant: first, proof must be shown that such facilities
are customarily furnished by the trade; second, the provision of deductible facilities must be voluntarily accepted
in writing by the employee; and finally, facilities must be charged at reasonable value. Mere availment is not
sufficient to allow deductions from employees wages. These requirements, however, have not been met in this
case. Petitioner employer failed to present any company policy or guideline showing that provisions for meals
and lodging were part of the employees salaries. It also failed to provide proof of the employees written
authorization, much less show how they arrived at their valuations. At any rate, it is not even clear whether
respondent employees actually enjoyed said facilities. SLL International Cables Specialist and Sonny L. Lagon
v. NLRC, Roldan Lopez, et al., G.R. No. 172161, March 2, 2011.

ebruary 2011 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on March 18, 2011 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law
Tagged abandonment, burden of proof, certiotari, constructive dismissal, due process, execution, illegal
dismissal, jurisdiction, project employee, quitclaim, redundancy, retrenchment, unfair, union

Here are selected February 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Abandonment; elements. Respondents filed an illegal dismissal case against the petitioner-corporation. For its
defense, petitioner-corporation alleged that the respondents abandoned their work and were not dismissed, and
that it sent letters advising respondents to report for work, but they refused. The Court held that for abandonment
to exist, it is essential (a) that the employee must have failed to report for work or must have been absent without
valid or justifiable reason; and (b) that there must have been a clear intention to sever the employer-employee
relationship manifested by some overt acts. The employer has the burden of proof to show the employees
deliberate and unjustified refusal to resume his employment without any intention of returning. Mere absence is
not sufficient. There must be an unequivocal intent on the part of the employee to discontinue his employment.
Based on the evidence presented, the reason why respondents failed to report for work was because petitioner-
corporation barred them from entering its construction sites. It is a settled rule that failure to report for work after
a notice to return to work has been served does not necessarily constitute abandonment. The intent to discontinue
the employment must be shown by clear proof that it was deliberate and unjustified. Petitioner-corporation failed
to show overt acts committed by respondents from which it may be deduced that they had no more intention to
work. Respondents filing of the case for illegal dismissal barely four (4) days from their alleged abandonment
is totally inconsistent with the known concept of what constitutes abandonment. E.G. & I. Construction
Corporation and Edsel Galeos v. Ananias P. Sato, et al., G.R. No. 182070, February 16, 2011.
Certification election; petition for cancellation of union registration. Respondent union filed a petition for
certification election. Petitioner moved to dismiss the petition for certification election alleging the pendency of
a petition for cancellation of the unions registration. The DOLE Secretary ruled in favor of the legitimacy of
the respondent as a labor organization and ordered the immediate conduct of a certification election. Pending
appeal in the Court of Appeals, the petition for cancellation was granted and became final and executory.
Petitioner argued that the cancellation of the unions certificate of registration should retroact to the time of its
issuance. Thus, it claimed that the unions petition for certification election and its demand to enter into collective
bargaining agreement with the petitioner should be dismissed due to respondents lack of legal personality. The
Court ruled that the pendency of a petition for cancellation of union registration does not preclude collective
bargaining, and that an order to hold a certification election is proper despite the pendency of the petition for
cancellation of the unions registration because at the time the respondent union filed its petition, it still had the
legal personality to perform such act absent an order cancelling its registration. Legend International Resorts
Limited v. Kilusang Manggagawa ng Legenda, G.R. No. 169754, February 23, 2011.
Certiorari under Rule 65; review of facts by the Court of Appeals. While it is true that factual findings made by
quasi-judicial and administrative tribunals, if supported by substantial evidence, are accorded great respect and
even finality by the courts, this general rule admits of exceptions. When there is a showing that a palpable and
demonstrable mistake that needs rectification has been committed or when the factual findings were arrived at
arbitrarily or in disregard of the evidence on record, these findings may be examined by the courts. In the present
case, the Court of Appeals found itself unable to completely sustain the findings of the NLRC thus, it was
compelled to review the facts and evidence and not limit itself to the issue of grave abuse of discretion. Nelson
A. Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011.
Construction Industry; project employees. Petitioner is a duly licensed labor contractor engaged in painting
houses and buildings. Respondents, former painters of the petitioner, filed an illegal dismissal case against
petitioner. Petitioner alleged that the respondents abandoned their job and were not dismissed by the petitioner.
The Labor Arbiter ruled that there was neither illegal dismissal nor abandonment of job and that the respondents
should be reinstated but without any backwages. On appeal, petitioner alleged that the reinstatement of
respondents to their former positions, which were no longer existing, is impossible, highly unfair and unjust. It
further alleged that the project they were working on at the time of their alleged dismissal was already completed.
Having completed their tasks, their positions automatically ceased to exist. Thus, there were no more positions
where they can be reinstated as painters. The Court ruled that there are two types of employees in the construction
industry. The first is referred to as project employees or those employed in connection with a particular
construction project or phase thereof and such employment is coterminous with each project or phase of the
project to which they are assigned. The second is known as non-project employees or those employed without
reference to any particular construction project or phase of a project. Respondents belonged to the second type
and are classified as regular employees of petitioner. It is clear from the records of the case that when one project
is completed, respondents were automatically transferred to the next project awarded to petitioners. There was
no employment agreement given to respondents which clearly spelled out the duration of their employment and
the specific work to be performed and there is no proof that they were made aware of these terms and conditions
of their employment at the time of hiring. Thus, it is now too late for petitioner to claim that respondents are
project employees whose employment is coterminous with each project or phase of the project to which they are
assigned. Nonetheless, assuming that respondents were initially hired as project employees, a project employee
may acquire the status of a regular employee when the following factors concur: (1) There is a continuous
rehiring of project employees even after cessation of a project; and (2) The tasks performed by the alleged project
employee are vital, necessary and indispensable to the usual business or trade of the employer. In this case, the
evidence on record shows that respondents were employed and assigned continuously to the various projects of
petitioners. As painters, they performed activities which were necessary and desirable in the usual business of
petitioner, which was engaged in subcontracting jobs for painting of residential units, condominium and
commercial buildings. As regular employees, respondents are entitled to be reinstated without loss of seniority
rights. Exodus International Construction Corporation, et al. v. Guillermo Biscocho, et al., G.R. No. 166109,
February 23, 2011.
Constructive Dismissal; security guards. Respondent was hired by petitioner, a security agency, as a security
guard. He was assigned at the Philippine Heart Center until his relief on January 30, 2006. Respondent was not
given any assignment thereafter. Thus, on August 2, 2006, he filed a complaint for constructive dismissal and
nonpayment of 13th month pay, with prayer for damages against petitioner. To refute the claim, petitioner alleged
that respondent was not constructively or illegally dismissed, but had voluntarily resigned. The Court held that
respondent was constructively dismissed. In cases involving security guards, a relief and transfer order in itself
does not sever employment relationship between a security guard and his agency. An employee has the right to
security of tenure, but this does not give him a vested right to his position as would deprive the company of its
prerogative to change his assignment or transfer him where his service, as security guard, will be most beneficial
to the client. Temporary off-detail or the period of time security guards are made to wait until they are
transferred or assigned to a new post or client does not constitute constructive dismissal, so long as such status
does not continue beyond six months. The onus of proving that there is no post available to which the security
guard can be assigned rests on the employer. In the instant case, the failure of petitioner to give respondent a
work assignment beyond the reasonable six-month period makes it liable for constructive dismissal. Nationwide
Security and Allied Services, Inc. v. Ronald P. Valderama, G.R. No. 186614, February 23, 2011.
Constructive dismissal; defense of abandonment. Respondent filed an illegal dismissal case against the
petitioner. Petitioner alleged that respondent abandoned his job and was not dismissed. The Court held that
respondent was illegally dismissed. The jurisprudential rule on abandonment is constant. It is a matter of
intention and cannot lightly be presumed from certain equivocal acts. To constitute abandonment, two elements
must concur: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear
intent, manifested through overt acts, to sever the employer-employee relationship. In this case, petitioner failed
to establish clear evidence of respondents intention to abandon his employment. Except for petitioners bare
assertion that respondent did not report to the office for reassignment, no proof was offered to prove that
respondent intended to sever the employer-employee relationship. Besides, the fact that respondent filed the
instant complaint negates any intention on his part to forsake his work. It is a settled doctrine that the filing of a
complaint for illegal dismissal is inconsistent with the charge of abandonment, for an employee who takes steps
to protest his dismissal cannot by logic be said to have abandoned his work. Nationwide Security and Allied
Services, Inc. v. Ronald P. Valderama, G.R. No. 186614, February 23, 2011.
Constructive dismissal; defense of resignation. Respondent, a security guard, filed an illegal dismissal case
against the petitioner. To refute the claim, petitioner alleged that respondent was not constructively or illegally
dismissed, but had voluntarily resigned. Petitioner alleged that respondents resignation is evident from his
withdrawal of his cash and firearm bonds. Resignation is the voluntary act of an employee who is in a situation
where one believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and one
has no other choice but to dissociate oneself from employment. It is a formal pronouncement or relinquishment
of an office. The intent to relinquish must concur with the overt act of relinquishment. Thus, the acts of the
employee before and after the alleged resignation must be considered in determining whether, he or she, in fact,
intended to sever his or her employment. Should the employer interpose the defense of resignation, it is
incumbent upon the employer to prove that the employee voluntarily resigned. On this point, the Court held that
petitioner failed to discharge its burden. Moreover, the filing of a complaint belies petitioners claim that
respondent voluntarily resigned. Nationwide Security and Allied Services, Inc. v. Ronald P. Valderama, G.R.
No. 186614, February 23, 2011.
Execution of Judgment; properties covered. Premier Allied and Contracting Services, Inc. (PACSI) and its
President, the petitioner, were held liable to pay the respondents separation pay and attorneys fees. To execute
this judgment, the NLRC sheriff issued a Notice of Sale of a property with a TCT in the name of the petitioner
and his wife. The Court ruled that the Notice of Sale is null and void. The power of the NLRC, or the courts, to
execute its judgment extends only to properties unquestionably belonging to the judgment debtor alone. A
sheriff, therefore, has no authority to attach the property of any person except that of the judgment
debtor. Likewise, there is no showing that the sheriff ever tried to execute on the properties of the corporation.
The TCT of the property bears out that, indeed, it belongs to petitioner and his wife. Thus, even if we consider
petitioner as an agent of the corporation and, therefore, not a stranger to the case such that the provision on
third-party claims will not apply to him, the property was registered not only in the name of petitioner but also
of his wife. She stands to lose the property subject of execution without ever being a party to the case. This will
be tantamount to deprivation of property without due process. Paquito V. Ando v. Andresito Y. Campo, et
al., G.R. No. 184007, February 16, 2011.
Illegal dismissal; burden of proof. Respondents filed an illegal dismissal case against petitioner. Petitioner
alleged that the respondents abandoned their work and were never dismissed by the petitioner. NLRC ruled that
the respondents were not illegally dismissed since they failed to present a written notice of termination. This was
however reversed by the Court of Appeals. The Court held that a written notice of dismissal is not a pre-requisite
for a finding of illegal dismissal. Petitioner failed to prove that respondents were dismissed for a just or
authorized cause. In an illegal dismissal case, the onus probandi rests on the employer to prove that the dismissal
of an employee is for a valid cause. E.G. & I. Construction Corporation and Edsel Galeos v. Ananias P. Sato,
et al., G.R. No. 182070, February 16, 2011.
Illegal dismissal; burden of proof. Respondents filed an illegal dismissal case against the petitioners. Petitioners,
in their defense, alleged that the respondents abandoned their work and were not dismissed by the petitioners.
Although In cases of illegal dismissal, the employer bears the burden of proof to prove that the termination was
for a valid or authorized cause, the employee must first establish by substantial evidence the fact that he was
dismissed. If there is no dismissal, then there can be no question as to the legality or illegality thereof. In the
present case, the Court held that there was no evidence that respondents were dismissed or that they were
prevented from returning to their work. It was only respondents unsubstantiated conclusion that they were
dismissed. As a matter of fact, respondents could not name the particular person who effected their dismissal
and under what particular circumstances. Absent any showing of an overt or positive act proving that petitioners
had dismissed respondents, the latters claim of illegal dismissal cannot be sustained. Exodus International
Construction Corporation, et al. v. Guillermo Biscocho, et al., G.R. No. 166109, February 23, 2011.
Illegal dismissal; final and executory judgment. Respondent employee filed an illegal dismissal case against the
petitioner-company and Tom Madula, its operations manager. The case was dismissed by the labor arbiter and
the dismissal was affirmed by NLRC. On August 29, 2002, the Court of Appeals reversed and set aside the
NLRC decision and resolution. The CA ordered the petitioner company to pay respondent separation pay, moral
and exemplary damages, and attorneys fees. The decision became final and executory on February 27, 2004,
and consequently a writ of execution was issued. Petitioner-company filed a Motion to Quash Writ of Execution.
The Labor Arbiter granted the Motion and exonerated the petitioner company from paying backwages and held
that it was petitioner Madula who should be liable to pay backwages. Respondent then filed before the CA a
Very Urgent Motion for Clarification of Judgment. On December 10, 2004, CA granted the Motion and held
that petitioner-company is solely liable for the judgment award. As a general rule, final and executory judgments
are immutable and unalterable, except under these recognized exceptions, to wit: (a) clerical errors; (b) nunc pro
tunc entries which cause no prejudice to any party; and (c) void judgments. The underlying reason for the rule
is two-fold: (1) to avoid delay in the administration of justice and thus make orderly the discharge of judicial
business, and (2) to put judicial controversies to an end, at the risk of occasional errors, inasmuch as controversies
cannot be allowed to drag on indefinitely and the rights and obligations of every litigant must not hang in
suspense for an indefinite period of time. What the CA rendered on December 10, 2004 was a nunc pro
tunc order clarifying the decretal portion of its August 29, 2002 Decision. The object of a judgment nunc pro
tunc is not the rendering of a new judgment and the ascertainment and determination of new rights, but is one
placing in proper form on the record, the judgment that had been previously rendered, to make it speak the truth,
so as to make it show what the judicial action really was. It is not to correct judicial errors, such as to render a
judgment anew in place of the one it rendered, nor to supply nonaction by the court, however erroneous the
judgment may have been. Filipinas Palmoil Processing, Inc. and Dennis T. Villareal v. Joel P. Dejapa,
represented by his Attorney-in-Fact Myrna Manzano, G.R. No. 167332, February 7, 2011.
Illegal dismissal; liability of corporate officers. Petitioner filed a complaint against respondent company and its
officers for illegal dismissal, unfair labor practice, and money claims. Petitioner alleged that the officers should
be held personally liable for the acts of company which were tainted with bad faith and arbitrariness. As a general
rule, a corporate officer cannot be held liable for acts done in his official capacity because a corporation, by legal
fiction, has a personality separate and distinct from its officers, stockholders, and members. To pierce this
fictional veil, it must be shown that the corporate personality was used to perpetuate fraud or an illegal act, or to
evade an existing obligation, or to confuse a legitimate issue. In illegal dismissal cases, corporate officers may
be held solidarily liable with the corporation if the termination was done with malice or bad faith. Moral damages
are awarded only where the dismissal was attended by bad faith or fraud, or constituted an act oppressive to
labor, or was done in a manner contrary to morals, good customs or public policy. Exemplary damages may
avail if the dismissal was effected in a wanton, oppressive or malevolent manner. In the present case, the Court
held that petitioner failed to prove that his dismissal was orchestrated by the individual respondents and their
acts were attended with bad faith or were done oppressively. Nelson A. Culili v. Eastern Telecommunications
Philippines, Inc., et al. G.R. No. 165381, February 9, 2011.
Illegal dismissal; redundancy. Respondent-company, due to business troubles and losses, implemented a Right-
Sizing Program which entailed a company-wide reorganization involving the transfer, merger, absorption or
abolition of certain departments of the company. As a result, respondent-company terminated the services of
petitioner on account of redundancy. Petitioner filed a complaint against respondent-company and its officers
for illegal dismissal, unfair labor practice, and money claims. The Court ruled that petitioner was validly
dismissed. There is redundancy when the service capability of the workforce is greater than what is reasonably
required to meet the demands of the business enterprise. A position becomes redundant when it is rendered
superfluous by any number of factors such as over-hiring of workers, decrease in volume of business, or dropping
a particular product line or service activity previously manufactured or undertaken by the enterprise. The Court
has been consistent in holding that the determination of whether or not an employees services are still needed
or sustainable properly belongs to the employer. Provided there is no violation of law or a showing that the
employer was prompted by an arbitrary or malicious act, the soundness or wisdom of this exercise of business
judgment is not subject to the discretionary review of the Labor Arbiter and the NLRC. However, an employer
cannot simply declare that it has become overmanned and dismiss its employees without producing adequate
proof to sustain its claim of redundancy. Among the requisites of a valid redundancy program are: (1) the good
faith of the employer in abolishing the redundant position; and (2) fair and reasonable criteria in ascertaining
what positions are to be declared redundant, such as but not limited to: preferred status, efficiency, and
seniority. The Court also held that the following evidence may be proffered to substantiate redundancy: adoption
of a new staffing pattern, feasibility studies/ proposal on the viability of the newly created positions, job
description and the approval by the management of the restructuring. Nelson A. Culili v. Eastern
Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011.
Labor Union; collateral attack on legal personality. . Petitioner moved to dismiss the petition for certification
election filed by respondent union by questioning the validity of the respondents union registration. The Court
held that legitimacy of the legal personality of respondent cannot be collaterally attacked in a petition for
certification election proceeding but only through a separate action instituted particularly for the purpose of
assailing it. The Implementing Rules stipulate that a labor organization shall be deemed registered and vested
with legal personality on the date of issuance of its certificate of registration. Once a certificate of registration
is issued to a union, its legal personality cannot be subject to a collateral attack. It may be questioned only in an
independent petition for cancellation in accordance with Section 5 of Rule V, Book V of the Implementing
Rules. Legend International Resorts Limited v. Kilusang Manggagawa ng Legenda, G.R. No. 169754 , February
23, 2011.
Money claims; burden of proof. Respondents alleged that petitioner-corporation failed to pay them their full
compensation. The Labor Arbiter granted their monetary claims but the NLRC reversed the award considering
that the petitioner-corporation submitted copies of payrolls, which it annexed to its memorandum on appeal,
showing full payment. The general rule is that the burden rests on the employer to prove payment, rather than
on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls,
records, remittances, and other similar documents which will show that overtime, differentials, service
incentive leave, and other claims of the worker have been paid are not in the possession of the worker but in
the custody and absolute control of the employer. In this case, the submission by petitioner-corporation of the
time records and payrolls only when the case was on appeal before the NLRC is contrary to the elementary
precepts of justice and fair play. Respondents were not given the opportunity to check the authenticity and
correctness of the evidence submitted on appeal. Thus, the Supreme Court held that the monetary claims of
respondents should be granted. It is a time-honored principle that if doubts exist between the evidence presented
by the employer and the employee, the scales of justice must be tilted in favor of the latter. It is the rule in
controversies between a laborer and his master that doubts reasonably arising from the evidence, or in the
interpretation of agreements and writing, should be resolved in the formers favor. E.G. & I. Construction
Corporation and Edsel Galeos v. Ananias P. Sato, et al., G.R. No. 182070 ,February 16, 2011.
National Labor Relations Commission; jurisdiction. Respondents filed an illegal dismissal case against Premier
Allied and Contracting Services, Inc. (PACSI) and its President, the petitioner. PACSI and the petitioner were
held liable to pay the respondents separation pay and attorneys fees. To execute this judgment, NLRC sheriff
issued a Notice of Sale of a property with TCT in the name of the petitioner and his wife. Petitioner filed an
action for prohibition and damages with prayer for the issuance of a temporary restraining order (TRO) before
the Regional Trial Court (RTC). The Court ruled that the RTC lacks jurisdiction to resolve the matter. The Court
has long recognized that regular courts have no jurisdiction to hear and decide questions which arise from and
are incidental to the enforcement of decisions, orders, or awards rendered in labor cases by appropriate officers
and tribunals of the Department of Labor and Employment. To hold otherwise is to sanction splitting of
jurisdiction which is obnoxious to the orderly administration of justice. The NLRC Manual on the Execution of
Judgment deals specifically with third-party claims in cases brought before that body. It defines a third-party
claim as one where a person, not a party to the case, asserts title to or right to the possession of the property
levied upon. It also sets out the procedure for the filing of a third-party claim, to wit: such person shall make
an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title and
shall file the same with the sheriff and copies thereof served upon the Labor Arbiter or proper officer issuing the
writ and upon the prevailing party. In the present case, there is no doubt that petitioners complaint is a third-
party claim within the cognizance of the NLRC. Petitioner may indeed be considered a third party in relation
to the property subject of the execution since there is no question that the property belongs to petitioner and his
wife, and not to the corporation. It can be said that the property belongs to the conjugal partnership, and not to
petitioner alone. At the very least, the Court can consider petitioners wife to be a third party within the
contemplation of the law. Paquito V. Ando v. Andresito Y. Campo, et al., G.R. No. 184007, February 16, 2011.
Placement Fee; proof of excessive collection. Petitioner filed a complaint against respondent for collection of
excess placement fee defined in Article 34(a) of the Labor Code. Petitioner presented as her evidence a
promissory note reflecting excessive fees and testified as to the deductions made by her foreign employer. On
the other hand, respondent presented an acknowledgment receipt reflecting collection of an amount authorized
by POEA. The Court held that the pieces of evidence presented by petitioner are not substantial enough to show
that the respondent collected from her more than the allowable placement fee. In proceedings before
administrative and quasi-judicial agencies, the quantum of evidence required to establish a fact is substantial
evidence, or that level of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion. The Court gave more credence to respondents evidence consisting of the acknowledgment receipt
showing the amount paid by petitioner and received by respondent. A receipt is a written and signed
acknowledgment that money or goods have been delivered. Although a receipt is not conclusive evidence, an
exhaustive review of the records of the case fails to disclose any other evidence sufficient and strong enough to
overturn the acknowledgment embodied in respondents receipt as to the amount it actually received from
petitioner. Having failed to adduce sufficient rebuttal evidence, petitioner is bound by the contents of the receipt
issued by respondent. The subject receipt remains as the primary or best evidence. The promissory note presented
by petitioner cannot be considered as adequate evidence to show the excessive placement fee. It must be
emphasized that a promissory note is a solemn acknowledgment of a debt and a formal commitment to repay it
on the date and under the conditions agreed upon by the borrower and the lender. A person who signs such an
instrument is bound to honor it as a legitimate obligation duly assumed by him through the signature he affixes
thereto as a token of his good faith. The fact that respondent is not a lending company does not preclude it from
extending a loan to petitioner for her personal use. As for the deductions purportedly made by petitioners foreign
employer, the Court noted that there is no single piece of document or receipt showing that deductions have in
fact been made, or is there any proof that these deductions from the salary formed part of the subject placement
fee. To be sure, mere general allegations of payment of excessive placement fees cannot be given merit as the
charge of illegal exaction is considered a grave offense which could cause the suspension or cancellation of the
agencys license. They should be proven and substantiated by clear, credible, and competent evidence. Avelina
F. Sagun v. Sunace International Management Services, Inc., G.R. No. 179242, February 23, 2011.
Procedural due process; notice requirements. Petitioner was dismissed by respondent-company due to
redundancy. However, it failed to provide the Department of Labor and Employment with a written notice
regarding petitioners termination. The notice of termination was also not properly served on the petitioner.
Further, a reading of the notice shows that respondent-company failed to properly inform the petitioner of the
grounds for his termination. There are two aspects which characterize the concept of due process under the
Labor Code: one is substantive whether the termination of employment was based on the provision of the
Labor Code or in accordance with the prevailing jurisprudence; the other is procedural the manner in which
the dismissal was effected. There is a psychological effect or a stigma in immediately finding ones self laid off
from work. This is why our labor laws have provided for procedural due process. While employers have the
right to terminate employees it can no longer sustain, our laws also recognize the employees right to be properly
informed of the impending termination of his employment. Though the failure of respondent-company to comply
with the notice requirements under the Labor Code did not affect the validity of the dismissal, petitioner is
however entitled to nominal damages in addition to his separation pay. Nelson A. Culili v. Eastern
Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011.
Quitclaims; validity. Respondents were terminated from employment due to retrenchment implemented by
petitioner. Upon their dismissal, the respondents signed individual Release Waiver and Quitclaim. The Court
ruled that a waiver or quitclaim is a valid and binding agreement between the parties, provided that it constitutes
a credible and reasonable settlement, and that the one accomplishing it has done so voluntarily and with a full
understanding of its import. In this case, the respondents were sufficiently apprised of their rights under the
waivers and quitclaims that they signed. Each document contained the signatures of the union president and its
counsel, which proved that respondents were duly assisted when they signed the waivers and quitclaims. Hence,
the Court upheld the validity of the waivers and quitclaims signed by the respondents in this case. Plastimer
Industrial Corporation and Teo Kee Bin v. Natalia C. Gopo, et al., G.R. No. 183390, February 16, 2011.
Retrenchment; notice requirements. Petitioner issued a Memorandum informing all its employees of the decision
of the companys Board of Directors to downsize and reorganize its business operations due to the change of its
corporate structure. Petitioner served the individual notice of termination on its employees on May 14, 2004 or
30 days before the effective date of their termination on 13 June 2004, while it submitted the notice of termination
to the Department of Labor and Employment only on 26 May 2004, short of the one-month prior notice
requirement under Article 283 of the Labor Code. The Court held that petitioners failure to comply with the
one-month notice to the DOLE is only a procedural infirmity and does not render the retrenchment illegal. When
the dismissal is for a just cause, the absence of proper notice will not nullify the dismissal or render it illegal or
ineffectual. Instead, the employer should indemnify the employee for violation of his statutory rights. Plastimer
Industrial Corporation and Teo Kee Bin v. Natalia C. Gopo, et al., G.R. No. 183390, February 16, 2011.
Retrenchment; notice requirements. In 2004, the petitioner had to retrench and consequently terminate the
employment of the respondents. Respondents questioned the validity of the retrenchment, and alleged that
though petitioners financial statements in 2001 and 2002 reflected losses, it declared net income in 2003. The
Court ruled that the fact that there was a net income in 2003 does mean that there was no valid reason for the
retrenchment. Records showed that the net income of P6,185,707.05 in 2003 was not enough to allow petitioners
to recover the loss of P52,904,297.88 which it suffered in 2002. Article 283 of the Labor Code recognizes
retrenchment to prevent losses as a right of the management to meet clear and continuing economic threats or
during periods of economic recession to prevent losses. There is no need for the employer to wait for substantial
losses to materialize before exercising ultimate and drastic option to prevent such losses. Plastimer Industrial
Corporation and Teo Kee Bin v. Natalia C. Gopo, et al., G.R. No. 183390, February 16, 2011.
Unfair Labor Practice; right to self-organize. Respondent-company implemented a company-wide
reorganization which resulted in the abolition of petitioners position. Petitioner alleged that he was illegally
dismissed and that respondent-company is guilty of unfair labor practice because his functions were outsourced
to labor-only contractors. The Supreme Court held unfair labor practice refers to acts that violate the workers
right to organize. The prohibited acts are related to the workers right to self-organization and to the observance
of a CBA. Thus, an employer may be held liable for unfair labor practice only if it can be shown that his acts
interfere with his employees right to self-organization. Since there is no showing that the respondent companys
implementation of the Right-Sizing Program was motivated by ill will, bad faith or malice, or that it was aimed
at interfering with its employees right to self-organization, there is no unfair labor practice to speak of in this
case. Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9,
2011.

January 2011 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on February 18, 2011 by Leslie C. Dy Posted in Labor Law Tagged backwages, compensable
illness, complaint, constructive dismissal, due process, employee benefits, employer-employee relationship, illegal
dismissal, illegal recruitment, jurisdiction, NLRC

Here are selected January 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:

Apprenticeship agreement; validity. The apprenticeship agreements did not indicate the trade or occupation in
which the apprentice would be trained; neither was the apprenticeship program approved by the Technical
Education and Skills Development Authority (TESDA). These were defective as they were executed in violation
of the law and the rules. Moreover, with the expiration of the first agreement and the retention of the employees,
the employer, to all intents and purposes, recognized the completion of their training and their acquisition of a
regular employee status. To foist upon them the second apprenticeship agreement for a second skill which was
not even mentioned in the agreement itself, is a violation of the Labor Codes implementing rules and is an act
manifestly unfair to the employees. Atlanta Industries, Inc. and/or Robert Chan vs. Aprilito R. Sebolino, et
al., G.R. No. 187320, January 26, 2011.
Complaint; reinstatement. Petitioners question the order to reinstate respondents to their former positions,
considering that the issue of reinstatement was never brought up before the Court of Appeals and respondents
never questioned the award of separation pay to them. Section 2 (c), Rule 7 of the Rules of Court provides that
a pleading shall specify the relief sought, but may add a general prayer for such further or other reliefs as may
be deemed just and equitable. Under this rule, a court can grant the relief warranted by the allegation and the
evidence even if it is not specifically sought by the injured party; the inclusion of a general prayer may justify
the grant of a remedy different from or in addition to the specific remedy sought, if the facts alleged in the
complaint and the evidence introduced so warrant. The prayer in the complaint for other reliefs equitable and
just in the premises justifies the grant of a relief not otherwise specifically prayed for. Therefore, the court may
grant relief warranted by the allegations and the proof even if no such relief is prayed for. In the instant case,
aside from their specific prayer for reinstatement, respondents, in their separate complaints, prayed for such
reliefs which are deemed just and equitable. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia,
et al., G.R. No. 167291, January 12, 2011.
Collection of accrued wages; two-fold test. After the Labor Arbiters decision is reversed by a higher tribunal,
the employee may be barred from collecting the accrued wages, if it is shown that the delay in enforcing the
reinstatement pending appeal was without fault on the part of the employer. The two-fold test in determining
whether an employee is barred from recovering his accrued wages requires that (1) there must be actual delay
or that the order of reinstatement pending appeal was not executed prior to its reversal; and (2) the delay must
not be due to the employers unjustified act or omission. If the delay is due to the employers unjustified refusal,
the employer may still be required to pay the salaries notwithstanding the reversal of the Labor Arbiters
Decision. Social Security System vs. Efren Capada, et al., G.R. No. 168501, January 31, 2011.
Disciplinary measures; management prerogative. The policy of suspending drivers pending payment of arrears
in their boundary obligations is reasonable. It is acknowledged that an employer has free rein and enjoys a wide
latitude of discretion to regulate all aspects of employment, including the prerogative to instill discipline on his
employees and to impose penalties, including dismissal, if warranted, upon erring employees. This is a
management prerogative. Indeed, the manner in which management conducts its own affairs to achieve its
purpose is within the managements discretion. The only limitation on the exercise of management prerogative
is that the policies, rules, and regulations on work-related activities of the employees must always be fair and
reasonable, and the corresponding penalties, when prescribed, commensurate to the offense involved and to the
degree of the infraction. Primo E. Caong, Jr., et al. vs. Avelino Regualos, G.R. No. 179428, January 26, 2011.
Dismissal; constructive dismissal. Respondent was suspended for one year after being charged with and found
liable for AWOL. After serving her suspension, respondent was allowed to return to work. Respondent cannot
be considered to have been constructively dismissed by the petitioner during her period of suspension.
Constructive dismissal occurs when there is cessation of work because continued employment is rendered
impossible, unreasonable, or unlikely as when there is a demotion in rank or diminution in pay or when a clear
discrimination, insensibility, or disdain by an employer becomes unbearable to the employee leaving the latter
with no other option but to quit. In this case, there was no cessation of employment relations between the parties.
It is unrefuted that respondent promptly resumed teaching at the university right after the expiration of the
suspension period. In other words, respondent never quit. Hence, she cannot claim to have been left with no
choice but to quit, a crucial element in a finding of constructive dismissal. The University of the Immaculate
Conception, et al. vs. NLRC, et al., G.R. No. 181146, January 26, 2011.
Dismissal; due process. Respondent employee reported to the petitioner employer the loss of cash which she
placed inside the company locker. Immediately, petitioner ordered that she be strip-searched by the company
guards. However, the search on her and her personal belongings yielded nothing. The petitioner also reported
the matter to the police and requested the Prosecutors Office for an inquest. Respondent was constrained to
spend two weeks in jail for failure to immediately post bail. The Court ruled that petitioners failed to accord
respondent substantive and procedural due process. Article 277(b) of the Labor Code mandates that subject to
the constitutional right of workers to security of tenure and their right to be protected against dismissal, except
for just and authorized cause and without prejudice to the requirement of notice under Article 283 of the same
Code, the employer shall furnish the worker, whose employment is sought to be terminated, a written notice
containing a statement of the causes of termination, and shall afford the latter ample opportunity to be heard and
to defend himself with the assistance of a representative if he so desires, in accordance with company rules and
regulations pursuant to the guidelines set by the Department of Labor and Employment. 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. Robinsons
Galleria/Robinsons Supermarket Corp. and/or Jess Manuel vs. Irene R. Ranchez, G.R. No. 177937, January 19,
2011.
Dismissal; neglect of duty. Neglect of duty, to be a ground for dismissal, must be both gross and habitual. Gross
negligence connotes want of care in the performance of ones duties. Habitual neglect implies repeated failure
to perform ones duties for a period of time, depending upon the circumstances. A single or isolated act of
negligence does not constitute a just cause for the dismissal of the employee. Hospital Management Services
Medical Center Manila vs. Hospital Management Services, Inc. Medical Center Manila Employees
Association-AFW., G.R. No. 176287, January 31, 2011.
Dismissal; negligence in patient management. Negligence is defined as the failure to exercise the standard of
care that a reasonably prudent person would have exercised in a similar situation. The Court emphasizes that
the nature of the business of a hospital requires a higher degree of caution and exacting standard of diligence in
patient management and health care as what is involved are lives of patients who seek urgent medical
assistance. An act or omission that falls short of the required degree of care and diligence amounts to serious
misconduct which constitutes a sufficient ground for dismissal. Hospital Management Services Medical Center
Manila vs. Hospital Management Services, Inc. Medical Center Manila Employees Association-AFW., G.R.
No. 176287, January 31, 2011.
Employee benefits; compensable illness. The degree of proof required under P.D. 626 is merely substantial
evidence, which means such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion. Accordingly, the claimant must show, at least by substantial evidence that the development of the
disease was brought about largely by the conditions present in the nature of the job. What the law requires is a
reasonable work connection, not a direct causal relation. Alexander B. Gatus vs. Social Security System, G.R.
No. 174725, January 26, 2011.
Employer-employee relationship; jeepney driver. It is already settled that the relationship
between jeepney owners/operators and jeepney drivers under the boundary system is that of employer-employee
and not of lessor-lessee. The fact that the drivers do not receive fixed wages but only get the amount in excess
of the so-called boundary that they pay to the owner/operator is not sufficient to negate the relationship
between them as employer and employee. Primo E. Caong, Jr., et al. vs. Avelino Regualos, G.R. No. 179428,
January 26, 2011.
Employer-employee relationship; primary element. Control over the performance of the task of one providing
service both with respect to the means and manner, and the results of the service is the primary element in
determining whether an employment relationship exists. Petitioner asserts that his employer Manulifes control
over him was demonstrated (1) when it set the objectives and sales targets regarding production, recruitment and
training programs; and (2) when it prescribed the Code of Conduct for Agents and the Manulife Financial Code
of Conduct to govern his activities. However, the court ruled that all these appear to speak of control by the
insurance company over its agents. There are built-in elements of control specific to an insurance agency,
which do not amount to the elements of control that characterize an employment relationship governed by the
Labor Code. They are, however, controls aimed only at specific results in undertaking an insurance agency, and
are, in fact, parameters set by law in defining an insurance agency and the attendant duties and responsibilities
an insurance agent must observe and undertake. They do not reach the level of control into the means and manner
of doing an assigned task that invariably characterizes an employment relationship as defined by labor law. To
reiterate, guidelines indicative of labor law control do not merely relate to the mutually desirable result
intended by the contractual relationship; they must have the nature of dictating the means and methods to be
employed in attaining the result. Petitioner is an insurance agent not an employee. Gregorio V. Tongko vs. The
Manufacturers Life Insurance Co. (Phils.), Inc. and Renato A. Vergel de Dios, G.R. No. 167622, January 25,
2011.
Employer-employee relationship; probationary employment. A probationary employee, like a regular employee,
enjoys security of tenure. However, in cases of probationary employment, aside from just or authorized causes
of termination, an additional ground is provided under Article 281 of the Labor Code, i.e., the probationary
employee may also be terminated for failure to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of the engagement. Thus, the services of an
employee who has been engaged on probationary basis may be terminated for any of the following: (1) a just or
(2) an authorized cause; and (3) when he fails to qualify as a regular employee in accordance with reasonable
standards prescribed by the employer. Robinsons Galleria/Robinsons Supermarket Corp. and/or Jess Manuel
vs. Irene R. Ranchez, G.R. No. 177937, January 19, 2011.
Employer-employee relationship; regular employment. The respondent employees were already rendering
service to the company when they were made to undergo apprenticeship. The respondent were regular
employees because they occupied positions such as machine operator, scaleman and extruder operator tasks
that are usually necessary and desirable in petitioner employers usual business or trade as manufacturer of
plastic building materials. These tasks and their nature characterized the respondents as regular employees under
Article 280 of the Labor Code. Thus, when they were dismissed without just or authorized cause, without notice,
and without the opportunity to be heard, their dismissal was illegal under the law. Atlanta Industries, Inc. and/or
Robert Chan vs. Aprilito R. Sebolino, et al., G.R. No. 187320, January 26, 2011.
Illegal dismissal; strained relations. Article 279 of the Labor Code provides that an employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges, to
full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement. However, due to the
strained relations of the parties, the payment of separation pay has been considered an acceptable alternative to
reinstatement, when the latter option is no longer desirable or viable. On the one hand, such payment liberates
the employee from what could be a highly oppressive work environment. On the other, the payment releases
the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer
trust. Thus, as an illegally or constructively dismissed employee, respondent is entitled to: (1) either
reinstatement, if viable, or separation pay, if reinstatement is no longer viable; and (2) backwages. These two
reliefs are separate and distinct from each other and are awarded conjunctively. Robinsons Galleria/Robinsons
Supermarket Corp. and/or Jess Manuel vs. Irene R. Ranchez, G.R. No. 177937, January 19, 2011.
Illegal recruitment; elements. Recruitment and placement refers to the act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not. When a person or entity, in any manner,
offers or promises for a fee employment to two or more persons, that person or entity shall be deemed engaged
in recruitment and placement. Article 38(a) of the Labor Code, as amended, specifies that recruitment activities
undertaken by non-licensees or non-holders of authority are deemed illegal and punishable by law. And when
the illegal recruitment is committed against three or more persons, individually or as a group, then it is deemed
committed in large scale and carries with it stiffer penalties as the same is deemed a form of economic sabotage.
But to prove illegal recruitment, it must be shown that the accused, without being duly authorized by law, gave
complainants the distinct impression that he had the power or ability to send them abroad for work, such that the
latter were convinced to part with their money in order to be employed. It is important that there must at least
be a promise or offer of an employment from the person posing as a recruiter, whether locally or abroad. People
of the Philippines vs. Teresita Tessie Laogo, G.R. No. 176264, January 10, 2011.
Illegal dismissal; execution of waiver and quitclaim. An employees execution of a final settlement and receipt
of amounts agreed upon does not foreclose his right to pursue a claim for illegal dismissal. Thus, an employee
illegally retrenched is entitled to reinstatement without loss of seniority rights and privileges, as well as to
payment of full backwages from the time of her separation until actual reinstatement, less the amount which
he/she received as retrenchment pay. Bernadeth Londonio and Joan Corcoro vs. Bio Research, Inc. and Wilson
Y. Ang, G.R. No. 191459, January 17, 2011.
Jurisdiction; labor arbiter. Petitioner was removed from his position as a manager through a Board Resolution.
Petitioner filed a complaint for illegal dismissal before the labor arbiter. Respondents claimed that petitioner is
both a stockholder and a corporate officer of respondent corporation, hence, his action against respondents is an
intra-corporate controversy over which the Labor Arbiter has no jurisdiction. The Court ruled that this is not an
intra-corporate controversy but a labor case cognizable by the labor arbiter. To determine whether a case involves
an intra-corporate controversy that is to be heard and decided by the branches of the RTC specifically designated
by the Court to try and decide such cases, two tests must be applied: (a) the status or relationship test, and (2)
the nature of the controversy test. The first test requires that the controversy arise out of intra-corporate or
partnership relations among the stockholders, members or associates of the corporation, partnership or
association, between any or all of them and the corporation, partnership or association of which they are
stockholders, members or associates; between such corporation, partnership, or association and the public or
between such corporation, partnership, or association and the State insofar as it concerns its franchise, license or
permit to operate. The second test requires that the dispute among the parties be intrinsically connected with the
regulation of the corporation. The Court in this case held that petitioner is not a corporate officer because he
was not validly appointed by the Board, thus, failing the relationship test, and that this is a case of employment
termination which is a labor controversy and not an intra-corporate dispute, thus failing the nature of the
controversy test. Renato Real vs. Sangu Philippines, Inc. et al., G.R. No. 168757. January 19, 2011.
Jurisdiction; labor dispute. Article 217 of the Labor Code states that unfair labor practices and termination
disputes fall within the original and exclusive jurisdiction of the Labor Arbiter. As an exception, under Article
262 the Voluntary Arbitrator, upon agreement of the parties, shall also hear and decide all other labor disputes
including unfair labor practices and bargaining deadlocks. For the exception to apply, there must be agreement
between the parties clearly conferring jurisdiction to the voluntary arbitrator. Such agreement may be stipulated
in a collective bargaining agreement. However, in the absence of a collective bargaining agreement, it is enough
that there is evidence on record showing the parties have agreed to resort to voluntary arbitration. The University
of the Immaculate Conception, et al. vs. NLRC, et al., G.R. No. 181146, January 26, 2011.
NLRC; factual findings. Factual findings of labor officials, who are deemed to have acquired expertise in matters
within their jurisdiction, are generally accorded not only respect but even finality by the courts when supported
by substantial evidence, i.e., the amount of relevant evidence which a reasonable mind might accept as adequate
to justify a conclusion. But these findings are not infallible. When there is a showing that they were arrived at
arbitrarily or in disregard of the evidence on record, they may be examined by the courts. The CA can grant the
petition for certiorari if it finds that the NLRC, in its assailed decision or resolution, made a factual finding not
supported by substantial evidence. Thus, it is within the jurisdiction of the CA to review the findings of the
NLRC. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia, et al., G.R. No. 167291, January
12, 2011.
Petition; certificate of non-forum shopping. While the general rule is that the certificate of non-forum shopping
must be signed by all the plaintiffs in a case and the signature of only one of them is insufficient, the Court has
stressed that the rules on forum shopping, which were designed to promote and facilitate the orderly
administration of justice, should not be interpreted with such absolute literalness as to subvert its own ultimate
and legitimate objective. Strict compliance with the provision regarding the certificate of non-forum shopping
underscores its mandatory nature in that the certification cannot be altogether dispensed with or its requirements
completely disregarded. It does not, however, prohibit substantial compliance therewith under justifiable
circumstances, considering especially that although it is obligatory, it is not jurisdictional. In a number of cases,
the Court has consistently held that when all the petitioners share a common interest and invoke a common cause
of action or defense, the signature of only one of them in the certification against forum shopping substantially
complies with the rules. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia, et al., G.R. No.
167291, January 12, 2011.
Petition; failure to attach documents. The respondent workers sought that the petition be dismissed outright for
the petitioners failure to attach to the petition a copy of the Production and Work Schedule and a copy of the
compromise agreement allegedly entered into material portions of the record that should accompany and
support the petition, pursuant to Section 4, Rule 45 of the Rules of Court. In Mariners Polytechnic Colleges
Foundation, Inc. v. Arturo J. Garchitorena the Court held that the phrase of the pleadings and other material
portions of the record xxx as would support the allegation of the petition clearly contemplates the exercise of
discretion on the part of the petitioner in the selection of documents that are deemed to be relevant to the petition.
The crucial issue to consider then is whether or not the documents accompanying the petition sufficiently
supported the allegations therein. The failure to attach copy of the subject documents is not fatal as the
challenged CA decision clearly summarized the labor tribunals rulings. Atlanta Industries, Inc. and/or Robert
Chan vs. Aprilito R. Sebolino, et al., G.R. No. 187320, January 26, 2011.
Petition; verification. The verification requirement is deemed substantially complied with when some of the
parties who undoubtedly have sufficient knowledge and belief to swear to the truth of the allegations in the
petition had signed the same. Such verification is deemed a sufficient assurance that the matters alleged in the
petition have been made in good faith or are true and correct, and not merely speculative. In any case, the settled
rule is that a pleading which is required by the Rules of Court to be verified, may be given due course even
without a verification if the circumstances warrant the suspension of the rules in the interest of justice. Indeed,
the absence of a verification is not jurisdictional, but only a formal defect, which does not of itself justify a court
in refusing to allow and act on a case. Hence, the failure of some of the respondents to sign the verification
attached to their Memorandum of Appeal filed with the NLRC is not fatal to their cause of action. Prince
Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia, et al., G.R. No. 167291, January 12, 2011.
Regional director; review of decision. Petitioner appealed an adverse decision to the BLR. BLR Director
inhibited himself from the case because he had been a former counsel of respondent. In view of the inhibition,
DOLE Secretary took cognizance of the appeal. Jurisdiction to review the decision of the Regional Director lies
with the BLR. Once jurisdiction is acquired by the court, it remains with it until the full termination of the case.
Thus, jurisdiction remained with the BLR despite the BLR Directors inhibition. When the DOLE Secretary
resolved the appeal, she merely stepped into the shoes of the BLR Director and performed a function that the
latter could not himself perform. She did so pursuant to her power of supervision and control over the BLR. The
Heritage Hotel Manila, acting through its owner, Grand Plaza Hotel, Corp. vs. National Union of Workers in
the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-
HHMSC), G.R. No. 178296, January 12, 2011.
Union registration; cancellation. The amendment introduced by RA 9481 sought to strengthen the workers right
to self-organization and enhance the Philippines compliance with its international obligations as embodied in
the International Labour Organization (ILO) Convention No. 87, pertaining to the non-dissolution of workers
organizations by administrative authority. ILO Convention No. 87 provides that workers and employers
organizations shall not be liable to be dissolved or suspended by administrative authority. The ILO has
expressed the opinion that the cancellation of union registration by the registrar of labor unions, which in our
case is the BLR, is tantamount to dissolution of the organization by administrative authority when such measure
would give rise to the loss of legal personality of the union or loss of advantages necessary for it to carry out its
activities, which is true in our jurisdiction. Although the ILO has allowed such measure to be taken, provided
that judicial safeguards are in place, i.e., the right to appeal to a judicial body, it has nonetheless reminded its
members that dissolution of a union, and cancellation of registration for that matter, involve serious
consequences for occupational representation. It has, therefore, deemed it preferable if such actions were to be
taken only as a last resort and after exhausting other possibilities with less serious effects on the organization. It
is undisputed that appellee failed to submit its annual financial reports and list of individual members in
accordance with Article 239 of the Labor Code. However, the existence of this ground should not necessarily
lead to the cancellation of union registration. At any rate, the Court in this case took note of the fact that on 19
May 2000, appellee had submitted its financial statement for the years 1996-1999. With this submission, appellee
has substantially complied with its duty to submit its financial report for the said period. The Heritage Hotel
Manila, acting through its owner, Grand Plaza Hotel, Corp. vs. National Union of Workers in the Hotel,
Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC), G.R. No.
178296, January 12, 2011.
Wages; payment pending reinstatement. Employees are entitled to their accrued salaries during the period
between the Labor Arbiters order of reinstatement pending appeal and the resolution of the National Labor
Relations Commission (NLRC) overturning that of the Labor Arbiter. Otherwise stated, even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, the employer is still obliged to reinstate and pay the
wages of the employee during the period of appeal until reversal by a higher court or tribunal. On the other hand,
if the employee has been reinstated during the appeal period and such reinstatement order is reversed with
finality, the employee is not required to reimburse whatever salary he received for he is entitled to such, more
so if he actually rendered services during the period. Social Security System vs. Efren Capada, et al., G.R. No.
168501, January 31, 2011.

December 2010 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on January 24, 2011 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law Tagged certiorari, due
process, evidence, illegal dismissal, jurisdiction, labor-only contracting, loss of trust and confidence, reinstatement

Here are selected December 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Dismissal; due process; trial-type hearing is not essential. The essence of due process is an opportunity to be
heard or, as applied to administrative proceedings, an opportunity to explain ones side. Records show that Aboc
was duly notified through a letter asking him to explain why his services should not be terminated. In fact, he
replied to the same by submitting a written explanation. He was likewise duly afforded ample opportunity to
defend himself during a conference conducted. Abocs contention that the conference he attended cannot
substitute the hearing mandated by the Labor Code is bereft of merit. A formal trial-type hearing is not at all
times and in all instances essential to due process. It is enough that the parties are given a fair and reasonable
opportunity to explain their respective sides of the controversy and to present supporting evidence on which a
fair decision can be based. Antonio A. Aboc vs. Metropolitan Bank And Trust Company / Metropolitan Bank
And Trust Company vs. Antonio A. Aboc, G.R. Nos. 170542-43 and G.R. No. 176460, December 13, 2010.
Dismissal; due process; trial-type hearing is not essential. In dismissal cases, the essence of due process is a fair
and reasonable opportunity to be heard, or as applied to administrative proceedings, an opportunity to explain
ones side. A formal or trial type hearing is not at all times and in all instances essential. Neither is it necessary
that the witnesses be cross-examined. In the instant case, there was a proceeding where the respondent was
apprised of the charges against him as well as of his rights. Thereafter, he was notified of the formal charges
against him and was required to explain in writing why he should not be dismissed for serious misconduct. A
formal hearing was conducted and subsequently, respondent received a Notice of Termination informing him
that after a careful evaluation, he was found liable as charged and dismissed from the service due to gross
misconduct. Clearly, respondent was afforded ample opportunity to air his side and defend himself. Hence, there
was due process. Philippine Long Distance Telephone Company, vs. Eusebio M. Honrado, G.R. No. 189366,
December 8, 2010.
Dismissal; due process. Respondent harps on the fact that his dismissal was preconceived because there was
already a decision to terminate him even before he was given the show cause memorandum. Contrary to
respondents allegations, he was given more than enough opportunity to defend himself. The audit committees
conclusion to dismiss respondent from the service was merely recommendatory. It was not conclusive upon the
petitioner company. This is precisely the reason why the petitioner still conducted further investigations. To
reiterate, respondent was properly informed of the charges and had every opportunity to rebut the accusations
and present his version. Respondent was not denied due process of law for he was adequately heard as the very
essence of due process is the opportunity to be heard. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.),
vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.
Dismissal; loss of confidence; guidelines for application. The Court has set the guidelines for the application of
the doctrine of loss of confidence as follows: (a) Loss of confidence should not be simulated; (b) It should not
be used as a subterfuge for causes which are improper, illegal or unjustified; (c) It may not be arbitrarily asserted
in the face of overwhelming evidence to the contrary; and (d) It must be genuine, not a mere afterthought to
justify earlier action taken in bad faith. In the case at bar, no mention was made regarding petitioners alleged
loss of trust and confidence in respondent. Neither was there any explanation nor discussion of the alleged
sensitive and delicate position of respondent requiring the utmost trust of petitioner. Because of its subjective
nature, the Court has been very scrutinizing in cases of dismissal based on loss of trust and confidence. Thus,
when the breach of trust or loss of confidence is not clearly established by facts, as in the instant case, such
dismissal on the ground of loss and confidence cannot be countenanced. The Coca-Cola Export Corporation,
vs. Clarita P. Gacayan, G.R. No. 149433, December 15, 2010.
Dismissal; serious misconduct; wrongful intent required. For misconduct or improper behavior to be a just cause
for dismissal, (a) it must be serious; (b) must relate to the performance of the employees duties; and (c) must
show that the employee has become unfit to continue working for the employer. In the present case, the alleged
infractions of respondent could hardly be considered serious misconduct. In order to constitute serious
misconduct which will warrant the dismissal of an employee, it is not sufficient that the act or conduct
complained of has violated some established rules or policies. It is equally important and required that the act
or conduct must have been done with wrongful intent. Such is, however, lacking in the instant case. The Coca-
Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No. 149433, December 15, 2010.
Dismissal; substantial evidence. The quantum of proof required in determining the legality of an employees
dismissal is only substantial evidence. In a similar case, the Court held that the standard of substantial evidence
is met where the employer, as in this case, has reasonable ground to believe that the employee is responsible for
the misconduct and his participation in such misconduct makes him unworthy of the trust and confidence
demanded by his position. In the present case, petitioner has sufficiently established that respondent solicited,
collected and received the P1,500.00 down payment illegally from the spouses Mueda. Taken together, the
petitioner has discharged its burden of establishing the serious misconduct committed by respondent. Such
misconduct makes him unworthy of the trust and confidence demanded by his position. Philippine Long
Distance Telephone Company, vs. Eusebio M. Honrado, G.R. No. 189366, December 8, 2010.
Dismissal; substantial evidence. The burden of proof rests on the employer to show that the dismissal was for a
just cause or authorized cause. Dismissal due to serious misconduct and loss of trust and confidence must be
supported by substantial evidence which is that amount of relevant evidence as a reasonable mind might accept
as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine
otherwise. In the present case, evidence clearly shows that the acts of Aboc in helping organize the credit unions
and in the operations thereof constituted serious misconduct or breach of trust and confidence. His participation
in the credit unions is highly irregular and clearly in conflict with Metrobanks business. Aboc claimed that he
was only an unwilling participant doing a ministerial job. The investigation, however, showed
otherwise. Antonio A. Aboc vs. Metropolitan Bank And Trust Company / Metropolitan Bank And Trust
Company vs. Antonio A. Aboc, G.R. Nos. 170542-43 and G.R. No. 176460, December 13, 2010.
Dismissal; two-notice rule. The requirements of procedural due process were complied with when petitioner sent
a memo to respondent informing him of the specific charges and giving him opportunity to air his
side. Subsequently, in a letter, respondent was informed that on the basis of the results of the investigation
conducted, his written explanation, the written explanation of other employees as well as the audit report, the
management has decided to terminate him. The two-notice requirement, which includes a written notice of the
cause of dismissal to afford the employee ample opportunity to be heard and defend himself, and written notice
of the decision to terminate him which states the reasons therefor, was thus complied with. Equitable PCI Bank
(Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.
Dismissal; willful disobedience. To justify willful disobedience or insubordination as a valid ground for
termination, the employees assailed conduct must have been willful or characterized by a wrongful or perverse
attitude and the order violated must have been reasonable, lawful, made known to the employee, and must pertain
to the duties which he had been engaged to discharge. In the case at bar, while petitioners manual of procedures
does not absolutely prohibit the negotiation or acceptance of second-endorsed checks for deposits, it expressly
disallows the acceptance of checks endorsed by corporations, societies, firms, etc. and checks with unusual
endorsements. As shown by the records, this explicit policy was transgressed by respondent intentionally and
willfully. Respondent was instructed by management to stop the transgression but he did not stop. Respondent
admittedly disobeyed not only his superiors directives but also simple bank rules. Equitable PCI Bank (Now
Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.
Dismissal; willful breach of trust. Willful breach of trust requires that the loss of confidence must not be
simulated; it should not be used as a subterfuge for causes which are illegal, improper or unjustified; it may not
be arbitrarily asserted in the face of overwhelming evidence to the contrary; it must be genuine, not a mere
afterthought to justify earlier action taken in bad faith; and, the employee involved holds a position of trust and
confidence. Respondent, as bank manager, has the duty to ensure that bank rules are strictly complied with to
serve the best interest of the bank as he holds a position of trust and confidence. Any negligence in the exercise
of his responsibilities can be sufficient ground for loss of trust and confidence. As held in one case, the mere
existence of a basis for believing that a managerial employee has breached the trust of his employer would suffice
for his dismissal. Proof beyond reasonable doubt is not required. In the case at bar, respondents wanton
violation of bank policies equates to abuse of authority and, therefore, abuse of the trust reposed in him. Such
is enough for his dismissal from service. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A.
Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.
Illegal dismissal; reinstatement and backwages. Under Article 279 of the Labor Code, an employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his actual
reinstatement. Respondent is entitled to such award. The Coca-Cola Export Corporation, vs. Clarita P.
Gacayan, G.R. No. 149433, December 15, 2010.
Job contracting; conditions. Permissible job contracting or subcontracting refers to an arrangement whereby a
principal agrees to farm out to the contractor the performance of a specific work, or service within a
predetermined period, regardless of whether such work, or service is to be performed within or outside the
premises of the principal. Thus, the following conditions must concur: (a) The contractor carries on a distinct
and independent business and undertakes the contract work on his account under his own responsibility
according to his own manner and method, free from the control and direction of his principal in all matters
connected with the performance of his work except as to the results thereof; (b) The contractor has substantial
capital or investment; and (c) The agreement between the principal and the contractor assures the contractual
employees entitlement to all labor and occupational safety and health standards, free exercise of the right to
self-organization, security of tenure, and social welfare benefits. In the case at bar, BMSI is engaged in labor-
only contracting for LSC. First, petitioners worked at LSCs premises, and nowhere else. There was no evidence
that BMSI exercised control over them. Second, there is no proof that BMSI had substantial capital. The
equipment used by BMSI was merely rented from LSC. Third, petitioners performed activities which were
directly related to the main business of LSC. Lastly, BMSI had no other client except for LSC. Emmanuel Babas,
Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio
Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.
Jurisdiction of Supreme Court; errors of fact; exceptions. The Court has stressed that its jurisdiction in a petition
for review on certiorari under Rule 45 of the Rules of Court is limited to reviewing only errors of law, not of
fact, unless the findings of fact complained of are devoid of support by the evidence on record, or the assailed
judgment is based on the misapprehension of facts. In previous rulings, the Court has declared that when there
is enough basis on which a proper evaluation of the merits can be made, it may dispense with the time-consuming
procedure in order to prevent further delays in the disposition of the case. However, in the case at bar, based on
the nature of the two remaining issues which involve factual issues, and given the inadequacy of the records,
pleadings, and other evidence available before the Court to properly resolve those questions, it is constrained to
refrain from passing upon them. South Cotabato Communications Corporation and Gauvain J. Benzonan vs.
Hon. Patricia A. Sto. Tomas, Secretary Of Labor And Employment, Rolando Fabrigar, Merlyn Velarde, Vince
Lamboc, Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar Jopson, G.R.
No. 173326, December 15, 2010.
Labor-only contracting and job contracting; how determined. The character of a business, that is, whether as
labor-only contractor or as job contractor, should be determined in terms of the criteria set by statute. In one case
the Court has explained that despite the fact that the service contracts contain stipulations which are earmarks of
independent contractorship, they do not make it legally so. The language of a contract is neither determinative
nor conclusive of the relationship between the parties. The parties cannot dictate, by a declaration in a contract,
the character of a business. Thus, in distinguishing between the prohibited labor-only contracting and permissible
job contracting, the totality of the facts and the surrounding circumstances of the case are to be
considered. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa,
Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No.
186091, December 15, 2010.
Labor-only contracting; elements. Labor-only contracting, a prohibited act, is an arrangement where the
contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a
principal. In labor-only contracting, the following elements are present: (a) the contractor or subcontractor does
not have substantial capital or investment to actually perform the job, work, or service under its own account
and responsibility; and (b) the employees recruited, supplied, or placed by such contractor or subcontractor
perform activities which are directly related to the main business of the principal. Emmanuel Babas, Danilo T.
Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque,
And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.
Labor-only contracting; workers are regular employees of principal. Indubitably, BMSI can only be classified
as a labor-only contractor. Consequently, the workers that BMSI supplied to its principal LSC became regular
employees of the latter. Having gained regular status, petitioners were entitled to security of tenure and could
only be dismissed for just or authorized causes and after they had been accorded due process. The termination
of LSCs Agreement with BMSI cannot be considered a just or an authorized cause for petitioners
dismissal. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa,
Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No.
186091, December 15, 2010.
Payroll reinstatement; effect of reversal on appeal. Since Metrobank chose payroll reinstatement for Aboc, he
then became a reinstated regular employee. This means that he was restored to his previous position as a regular
employee without loss of seniority rights and other privileges appurtenant thereto. His payroll reinstatement put
him on equal footing with the other regular employees insofar as entitlement to the benefits given under the
Collective Bargaining Agreement is concerned. The fact that the decision of the LA was reversed on appeal has
no controlling significance. The rule is that even if the order of reinstatement of the LA is reversed on appeal, it
is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the
period of appeal until final reversal by the higher court. Antonio A. Aboc vs. Metropolitan Bank And Trust
Company / Metropolitan Bank And Trust Company vs. Antonio A. Aboc, G.R. Nos. 170542-43 and G.R. No.
176460, December 13, 2010.
Petition for certiorari; period for filing; retroactive application of amendments. By virtue of the latest amendment
of Section 4, Rule 65 of the 1997 Rules of Civil Procedure introduced by Circular No. 56-2000, the 60-day
period to file a petition for certiorari should be reckoned from the date of receipt of the notice of the denial of
the motion for reconsideration or new trial, if one was filed. Being a curative statute, Circular No. 56-2000 has
been applied by Court retroactively in a number of cases. Given the above, respondent had a fresh 60-day period
from the date she received a copy of the NLRC Resolution denying her motion for reconsideration within which
to file the petition for certiorari. Thus, the Court ruled that respondent seasonably filed the petition within the
reglementary period provided. The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No. 149433,
December 15, 2010.
Registration as independent contractor; effect of. The CA erred in considering BMSIs Certificate of Registration
as sufficient proof that it is an independent contractor. In the case of San Miguel Corporation v. Vicente B.
Semillano, et. al., the Court has held that a Certificate of Registration issued by the Department of Labor and
Employment is not conclusive evidence of such status. The fact of registration simply prevents the legal
presumption of being a mere labor-only contractor from arising. Emmanuel Babas, Danilo T. Banag, Arturo V.
Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto
Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.
Reinstatement; immediately executory pending appeal. Under Article 223 of the Labor Code, the decision of the
Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned,
shall be immediately executory pending appeal. The employee shall either be admitted back to work under the
same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely
reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement
provided herein. In the case at bench, it cannot be denied that Metrobank opted to reinstate Aboc in its
payroll. Antonio A. Aboc vs. Metropolitan Bank And Trust Company / Metropolitan Bank And Trust
Company vs. Antonio A. Aboc, G.R. Nos. 170542-43 and G.R. No. 176460, December 13, 2010.
Separation pay as a measure of social justice; when awarded. In several instances the Court has awarded
separation pay as a measure of social justice. However, the matter has been clarified in PLDT Co. v. NLRC
where the Court categorically declared that separation pay shall be allowed as a measure of social justice only
in those instances where the employee is validly dismissed for cause other than serious misconduct. In another
case, the Court ruled that in addition to serious misconduct, separation pay should not be conceded to an
employee who was dismissed based on willful disobedience. In the case at bar, it was established that the
infractions committed by the respondent constituted serious misconduct or willful disobedience resulting to loss
of trust and confidence. Clearly therefore, even based on equity and social justice, respondent does not deserve
the award of separation pay. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A.
Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.
Termination; grounds. Under the requirement of substantial due process, the grounds for termination of
employment must be based on just or authorized causes. Article 282 of the Labor Code enumerates the just
causes for the termination of employment, thus: (a) Serious misconduct or willful disobedience by the employee
of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect
by the employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or his duly authorized representative; and (e)
Other causes analogous to the foregoing. The Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R.
No. 149433, December 15, 2010.
Verification and certification; effect of failure to sign. A petition satisfies the formal requirements only with
regard to those who signed the petition, but not the co-petitioners who did not sign nor authorize the other
petitioners to sign it on their behalf. In the case at bar, only seven (7) of the nine petitioners signed the
verification and certification against forum shopping. Thus, the other petitioners who did not sign cannot be
recognized as petitioners and have no legal standing before the Court. The petition should be dismissed outright
with respect to such non-conforming petitioners. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr.,
Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs.
Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010.
Verification and certification; substantial compliance rule. The requirement of the certification of non-forum
shopping is rooted in the principle that a party-litigant shall not be allowed to pursue simultaneous remedies in
different fora. However, the Court has relaxed the rule under justifiable circumstances, considering that,
although it is obligatory, it is not jurisdictional. Not being jurisdictional, it can be relaxed under the rule of
substantial compliance. In the case at bar, the Court holds that there has been substantial compliance on the
petitioners part in consonance with our ruling in one case that the President of a petitioner-corporation is in a
position to verify the truthfulness and correctness of the allegations in the petition. Petitioner Benzonan clearly
satisfies the aforementioned jurisprudential requirement because he is the President of petitioner-corporation.
Moreover, he is also named as co-respondent of petitioner-corporation in the labor case which is the subject
matter of the special civil action. South Cotabato Communications Corporation and Gauvain J. Benzonan vs.
Hon. Patricia A. Sto. Tomas, Secretary Of Labor And Employment, Rolando Fabrigar, Merlyn Velarde, Vince
Lamboc, Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar Jopson, G.R.
No. 173326, December 15, 2010.
Verification and certification; who can sign for the company without need of board resolution. In previous cases,
the Court has held that the following can sign the verification and certification against forum shopping without
need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the President of a corporation, (3)
the General Manager or Acting General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a
labor case. While the above cases do not provide a complete listing of authorized signatories, the determination
of the sufficiency of the authority was done on a case to case basis. In the foregoing cases the authority of said
corporate representatives to sign the verification or certificate is justified in their being in a position to verify the
truthfulness and correctness of the allegations in the petition. However, the better procedure is still to append a
board resolution to the complaint or petition to obviate questions regarding the authority of the signatory of the
verification and certification. South Cotabato Communications Corporation and Gauvain J. Benzonan vs. Hon.
Patricia A. Sto. Tomas, Secretary Of Labor And Employment, Rolando Fabrigar, Merlyn Velarde, Vince
Lamboc, Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar Jopson, G.R.
No. 173326, December 15, 2010.

November 2010 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on December 13, 2010 by Leslie C. Dy Posted in Labor Law Tagged appeal, compensable illness, constructive
dismissal, employer-employee relationship, evidence, forum shopping, illegal dismissal, illegal strike, jurisdiction, labor-only
contracting, reinstatement, retirement, unfair labor practice

Here are selected November 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Appeal; determination of date of filing. Under Section 3, Rule 13 of the Rules of Court, where the filing of
pleadings, appearances, motions, notices, orders, judgments, and all other papers with the court/tribunal is made
by registered mail, the date of mailing, as shown by the post office stamp on the envelope or the registry receipt,
shall be considered as the date of filing. Thus, the date of filing is determinable from two sources: from the post
office stamp on the envelope or from the registry receipt, either of which may suffice to prove the timeliness of
the filing of the pleadings. If the date stamped on one is earlier than the other, the former may be accepted as the
date of filing. In this case, to prove that it mailed the notice of appeal and appeal memorandum on October 27,
1997, instead of October 28, 1997, as shown by the stamped date on the envelope, petitioner presented Registry
Receipt No. 34581 bearing the earlier date. Government Service Insurance System vs. National Labor Relations
Commission (NLRC), Dionisio Banlasan, et al., G.R. No. 180045, November 17, 2010.
Appeal; filed out of time; exceptional cases. An appeal must be perfected within the statutory or reglementary
period. This is not only mandatory, but also jurisdictional. Failure to perfect the appeal on time renders the
assailed decision final and executory and deprives the appellate court or body of the legal authority to alter the
final judgment, much less entertain the appeal. However, in exceptional cases, a belated appeal may be given
due course if greater injustice will be visited upon the party should the appeal be denied. This is to serve the
greater principles of substantial justice and equity. Technical rules are not binding in labor cases and are not to
be applied strictly if the result would be detrimental to the working man. In the instant case, even if the appeal
was filed one day late, the same should have been entertained by the NLRC. Government Service Insurance
System vs. National Labor Relations Commission (NLRC), Dionisio Banlasan, et al., G.R. No. 180045,
November 17, 2010.
Compensable illness; work-relatedness. Granting arguendo that petitioners illness was not pre-existing, he still
had to show that his illness not only occurred during the term of his contract but also that it resulted from a work-
related injury or illness, or at the very least aggravated by the conditions of the work for which he was contracted
for. Petitioner failed to discharge this burden, however. That the exact and definite cause of petitioners illness
is unknown cannot be used to justify grant of disability benefits, absent proof that there is any reasonable
connection between work actually performed by petitioner and his illness. Jerry M. Francisco, vs. Bahia
Shipping Services, Inc. and/or Cynthia C. Mendoza, and Fred Olsen Cruise Lines, Ltd., G.R. No.
190545, November 22, 2010.
Dismissal; illegal strike; distinction between union officers and mere members. The liabilities of individuals who
participate in an illegal strike must be determined under Article 264 (a) of the Labor Code which makes a
distinction between union officers and mere members. The law grants the employer the option of declaring a
union officer who knowingly participated in an illegal strike as having lost his employment. However, a worker
merely participating in an illegal strike may not be terminated from employment if he does not commit illegal
acts during a strike. Hence, with respect to respondents who are union officers, their termination by petitioners
is valid. Being fully aware that the proceedings before the Secretary of Labor were still pending as in fact they
filed a motion for reconsideration, they cannot invoke good faith as a defense. For the rest of the individual
respondents who are union members, they cannot be terminated for mere participation in the illegal strike. Solid
Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed
Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.
Dismissal; misconduct; substantial evidence. The general rule is that where the findings of the administrative
body are amply supported by substantial evidence, such findings are accorded not only respect but also finality,
and are binding on the Court. The standard of substantial evidence is satisfied when there is reasonable ground
to believe that a person is responsible for the misconduct complained of, even if such evidence might not be
overwhelming or even preponderant. In the present case, the testimonies of the witnesses, the statements during
the preliminary investigation, and the findings of the PNP Crime Lab on its examination of the signatures,
amounted to substantial evidence that adequately supported the conclusion that petitioner Nacu was guilty of the
acts complained of. Nacu was rightfully found guilty of grave misconduct, dishonesty, and conduct prejudicial
to the best interest of the service, and penalized with dismissal. Irene K. Nacu, Substituted By Benjamin M. Nacu,
Ervin K. Nacu, and Nejie N. De Sagun vs. Civil Service Commission and Philippine Economic Zone
Authority,G.R. No. 187752, November 23, 2010.
Employer-employee relationship. Generally, in a business establishment, IDs are issued to identify the holder
as a bona fide employee of the issuing entity. While petitioner Teng alleged that it was the maestros who hired
the respondent workers, it was his company that issued to the respondent workers IDs bearing their names as
employees and Tengs signature as the employer. For the 13 years that the respondent workers worked for Teng,
they received wages on a regular basis, in addition to their shares in the fish caught. More importantly, the
element of control which we have ruled in a number of cases to be a strong indicator of the existence of an
employer-employee relationship is present in this case. Teng not only owned the tools and equipment, he
directed how the respondent workers were to perform their job as checkers. Albert Teng vs. Alfredo S. Pahagac,
et al., G.R. No. 169704, November 17, 2010.
Forum shopping; elements. By forum shopping, a party initiates two or more actions in separate tribunals,
grounded on the same cause, hoping that one or the other tribunal would favorably dispose of the matter. The
elements of forum shopping are: (1) identity of parties, or at least such parties as would represent the same
interest in both actions; (2) identity of rights asserted and relief prayed for, the relief being founded on the same
facts; and (3) identity of the two preceding particulars such that any judgment rendered in the other action will,
regardless of which party is successful, amount to res judicata in the action under consideration. In the instant
case, petitioner CABEU-NFL merely raised the fact of the pendency of two cases without demonstrating any
similarity in the causes of action between the said cases and the present case. In the absence of such evidence
to show that the issues involved in these cases are the same, the Court cannot give credence to petitioners claim
of forum shopping. Central Azucarera De Bais Employees Union-NFL, represented by its President, Pablito
Saguran vs. Central Azucarera De Bais, Inc., represented by its President, Antonio Steven L. Chan, G.R. No.
186605, November 17, 2010.
Illegal strike. Under Article 264 (a) of the Labor Code, as amended, a strike that is undertaken despite the
issuance by the Secretary of Labor of an assumption order and/or certification is illegal. So is a declaration of a
strike during the pendency of cases involving the same grounds for the strike. In the present case, there is no
dispute that when respondents conducted their mass actions on April 3 to 6, 2000, the proceedings before the
Secretary of Labor were still pending as both parties filed motions for reconsideration of the March 24, 2000
Order. Clearly, respondents knowingly violated the aforesaid provision by holding a strike in the guise of mass
demonstration. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union
and its Dismissed Officers and Members, et al.G.R. No. 159460 and G.R. No. 159461, November 15, 2010.
Illegal strike; proof of illegal acts. To justify termination of a union member who participated in an illegal strike,
there must be proof that he or she committed illegal acts during a strike. Substantial evidence available under
the attendant circumstances, which may justify the imposition of the penalty of dismissal, may suffice.
Petitioners have not adduced evidence on such illegal acts committed by each of the individual respondents who
are union members. The dismissal of respondent-union members are therefore unjustified in the absence of a
clear showing that they committed specific illegal acts during the mass actions and concerted work boycott. Solid
Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed
Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.
Illegal dismissal; backwages. The award of backwages is a legal consequence of a finding of illegal
dismissal. However, assuming that respondent-union members have indeed reported back to work at the end of
the concerted mass actions but were soon terminated by petitioners who found their explanation unsatisfactory,
they are not entitled to backwages in view of the illegality of the said strike. Under the circumstances,
respondents reinstatement without backwages suffices for the appropriate relief. Solid Bank Corp. Ernesto U.
Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed Officers and Members, et
al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.
Illegal dismissal; lack of substantive due process. The dismissal of an employee, which the employer must
validate, has a two-fold requirement: one is substantive, the other is procedural. Not only must the dismissal be
for a just or an authorized cause, as provided by law; the rudimentary requirements of due process the
opportunity to be heard and to defend oneself must be observed as well. The employer has the burden of
proving that the dismissal was for a just cause; failure to show this, as in the present case, would necessarily
mean that the dismissal was unjustified and, therefore, illegal. The respondent workers allegation that Teng
summarily dismissed them on suspicion that they were not reporting to him the correct volume of the fish caught
in each fishing voyage was never denied by Teng. Unsubstantiated suspicion is not a just cause to terminate
ones employment under Article 282 of the Labor Code. Albert Teng vs. Alfredo S. Pahagac, et al., G.R. No.
169704, November 17, 2010.
Illegal dismissal; separation pay in lieu of reinstatement. Since reinstatement is no longer possible given the
lapse of considerable time from the occurrence of the strike, not to mention the fact that Solidbank had long
ceased its banking operations, the award of separation pay of one (1) month salary for each year of service, in
lieu of reinstatement, is in order. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs.
Solid Bank Union and its Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461,
November 15, 2010.
Illness; when deemed pre-existing and not compensable. Petitioners illness already existed when he
commenced his fourth contract of employment with respondents, hence, not compensable. Given that the
employment of a seafarer is governed by the contract he signs every time he is rehired and his employment is
terminated when his contract expires, petitioners illness during his previous contract with respondents is deemed
pre-existing during his subsequent contract. That petitioner was subsequently rehired by respondents despite
knowledge of his seizure attacks does not make the latter a guarantor of his health. Jerry M. Francisco, vs.
Bahia Shipping Services, Inc. and/or Cynthia C. Mendoza, and Fred Olsen Cruise Lines, Ltd., G.R. No. 190545,
November 22, 2010.
Indirect employer; solidary liability. The fact that there is no actual and direct employer-employee relationship
between petitioner and respondents does not absolve the former from liability for the latters monetary claims.
When petitioner contracted DNL Securitys services, petitioner became an indirect employer of respondent
security guards, pursuant to Article 107 of the Labor Code. Thus, after the contractor DNL Security failed to
pay respondents the correct wages and other monetary benefits, petitioner, as principal, became jointly and
severally liable, as provided in Articles 106 and 109 of the Labor Code. It should be understood, though, that the
solidary liability of petitioner does not preclude the application of Article 1217 of the Civil Code on the right of
reimbursement from its co-debtor. Government Service Insurance System vs. National Labor Relations
Commission (NLRC), Dionisio Banlasan, et al., G.R. No. 180045, November 17, 2010.
Indirect employer; solidary liability; coverage. Petitioners liability as indirect employer covers the payment of
respondents salary differential and 13th month pay during the time they worked for petitioner. Petitioners
liability, however, cannot extend to the payment of separation pay. An order to pay separation pay is invested
with a punitive character, such that an indirect employer should not be made liable without a finding that it had
conspired in the illegal dismissal of the employees. Government Service Insurance System vs. National Labor
Relations Commission (NLRC), Dionisio Banlasan, et al., G.R. No. 180045, November 17, 2010.
Inefficiency of employee; condonation by employer. While it is acknowledged that petitioner Gregorios service
record shows that his performance as a security guard was below par, respondent Gulf Pacific never issued any
memo citing him for the alleged repeated errors, inefficiency, and poor performance while on duty, and instead
continued to assign him to various posts. This amounts to condonation by Gulf Pacific of whatever infractions
Gregorio may have committed. Even assuming the reasons for relieving Gregorio of his position were true, it
was incumbent upon Gulf Pacific to be vigilant in its compliance with labor laws. Bebina G. Salvaloza vs.
National Labor Relations Commission, Gulf Pacific Security Agency, Inc., and Angel Quizon, G.R. No. 182086,
November 24, 2010.
Jurisdiction; Secretary of Labor. It is well-settled that the Secretary of Labor, in the exercise of his power to
assume jurisdiction over a labor dispute under Art. 263 (g) [11] of the Labor Code, may resolve all issues
involved in the controversy including the award of wage increases and benefits. In the instant case, the fact that
the award was higher than that which was purportedly agreed upon in the MOA between management and the
labor union is of no moment because the Secretary, in resolving the CBA deadlock, is not limited to considering
the MOA as basis in computing the wage increases. He could, as he did, consider the financial documents
submitted by respondent as well as the parties bargaining history and respondents financial outlook and
improvements as stated in its website. Cirtek Employees Labor Union-Federation of Free Workers vs. Cirtek
Electronics, Inc., G.R. No. 190515, November 15, 2010.
Jurisdiction; divestment. It bears noting that the filing and submission of the MOA did not have the effect of
divesting the Secretary of his jurisdiction, or of automatically disposing the controversy. Thus, neither should
the provisions of the MOA restrict the Secretarys leeway in deciding the matters before him. Cirtek Employees
Labor Union-Federation of Free Workers vs. Cirtek Electronics, Inc., G.R. No. 190515, November 15, 2010.
Labor-only contracting. Section 5 of the DO No. 18-02, which implements Article 106 of the Labor Code,
provides that, labor-only contracting shall refer to an arrangement where the contractor or subcontractor
merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the
following elements are present: (i)The contractor or subcontractor does not have substantial capital or investment
which relates to the job, work or service to be performed and the employees recruited, supplied or placed by
such contractor or subcontractor are performing activities which are directly related to the main business of the
principal; or (ii)The contractor does not exercise the right to control over the performance of the work of the
contractual employee. In the present case, Teng admitted that he solely provided the capital and equipment,
while the maestros supplied the workers. Also, the power of control over the respondent workers was lodged not
with the maestros but with Teng. Moreover, they performed tasks that were necessary and desirable in Tengs
fishing business. Taken together, these incidents confirm the existence of a labor-only contracting which is
prohibited in our jurisdiction. Accordingly, a finding that the maestros are labor-only contractors is equivalent
to a finding that an employer-employee relationship exists between Teng and the respondent workers. Albert
Teng vs. Alfredo S. Pahagac, et al., G.R. No. 169704, November 17, 2010
Mootness; amicable settlement as final satisfaction of judgment award. The conditional settlement of the
judgment award insofar as it operates as a final satisfaction thereof renders the case moot and academic. In the
case at bar, the settlement grants the petitioner the luxury of having other remedies available to it such as its
petition for certiorari pending before the appellate court, and an eventual appeal to the Court. On the other hand,
respondent employee could no longer pursue other claims, including interests that may accrue during the
pendency of the case. The Labor Arbiter and the appellate court may not thus be faulted for interpreting
petitioners conditional settlement to be tantamount to an amicable settlement of the case resulting in the
mootness of the petition for certiorari. Career Philippines Ship Management, Inc., vs. Geronimo Madjus, G.R.
No. 186158, November 22, 2010.
Motion for reconsideration. As amended, Article 263 is now Article 262-A in which the word unappealable
from Article 263 has been deleted. Thus, although Art. 262-A makes the voluntary arbitration award final and
executory after ten calendar days from receipt of the copy of the award or decision by the parties, the decision
may still be reconsidered by the Voluntary Arbitrator on the basis of a motion for reconsideration duly filed
during that period. The absence of a categorical language in Article 262-A does not preclude the filing of a
motion for reconsideration of the VAs decision within the 10-day period. Therefore, petitioners allegation that
the VAs decision had become final and executory by the time the respondent workers filed an appeal with the
CA fails. It is consequently ruled that the respondent workers seasonably filed a motion for reconsideration of
the VAs judgment, and the VA erred in denying the motion. Albert Teng vs. Alfredo S. Pahagac, et al., G.R.
No. 169704, November 17, 2010.
Off-detail or Floating status. Temporary off-detail or floating status is the period of time when security
guards are in between assignments or when they are made to wait after being relieved from a previous post. It
takes place when the security agencys clients decide not to renew their contracts with the agency. It also happens
in instances where contracts for security services stipulate that the client may request the agency for the
replacement of the guards assigned to it, such that the replaced security guard may be placed on temporary off-
detail if there are no available posts under the agencys existing contracts. It does not constitute a dismissal, as
the assignments primarily depend on the contracts entered into by the security agencies with third parties, so
long as such status does not continue beyond a reasonable time period. Bebina G. Salvaloza vs. National Labor
Relations Commission, Gulf Pacific Security Agency, Inc., and Angel Quizon, G.R. No. 182086, November 24,
2010.
Off-detail or Floating status; when deemed constructive dismissal. When a floating status lasts for more than
six (6) months, the employee may be considered to have been constructively dismissed. In the present case, of
the three instances when petitioner Gregorio was temporarily off-detailed, the last two already ripened into
constructive dismissal. Although it could have been difficult for respondent Gulf Pacific to post Gregorio given
his age and his service record, still the agency should not have allowed him to wait indefinitely for an assignment
if its clients were in truth less likely to accept him. If, indeed, Gregorio was undesirable as an employee, Gulf
Pacific could have dismissed him for cause. The unreasonable length of time that Gregorio was not posted
inevitably resulted in his being constructively dismissed from employment. Bebina G. Salvaloza vs. National
Labor Relations Commission, Gulf Pacific Security Agency, Inc., and Angel Quizon, G.R. No. 182086, November
24, 2010.
Parol evidence; application in labor cases. The appellate courts brushing aside of the Paliwanag and the
minutes of the meeting because they were not verified and notarized, thus violating, so the appellate court
reasoned, the rules on parol evidence, does not lie. Like any other rule on evidence, parol evidence should not
be strictly applied in labor cases. Cirtek Employees Labor Union-Federation of Free Workers vs. Cirtek
Electronics, Inc., G.R. No. 190515, November 15, 2010.
Petition; service on counsel. Section 1, Rule 65 in relation to Section 3, Rule 46 of the Rules of Court, clearly
provides that in a petition filed originally in the CA, the petitioner is required to serve a copy of the petition on
the adverse party before its filing. If the adverse party appears by counsel, service shall be made on such counsel
pursuant to Section 2, Rule 13. Thus, in the instant case, petitioner CABEU-NFLs insistence that service of the
copy of the CA petition should have been made to it, rather than to its counsel, is unavailing. Central Azucarera
De Bais Employees Union-NFL, represented by its President, Pablito Saguran vs. Central Azucarera De Bais,
Inc., represented by its President, Antonio Steven L. Chan, G.R. No. 186605, November 17, 2010.
Reinstatement; when not granted. Petitioner Gregorios position paper did not pray for reinstatement, but only
sought payment of money claims. Likewise, the strained relations between the parties make reinstatement
impracticable. What is more, even during the time of the LAs decision, reinstatement was no longer legally
feasible since Gregorio was past the age qualification for a security guard license. Section 5[33] of R.A. 5487,
enumerating the qualifications for a security guard, provides that the person should not be less than 21 nor over
50 years of age. And as previously mentioned, as early as June 13, 2002, Gregorio was no longer in possession
of a valid license. Thus, separation pay should be paid in lieu of reinstatement. Bebina G. Salvaloza vs. National
Labor Relations Commission, Gulf Pacific Security Agency, Inc., and Angel Quizon, G.R. No. 182086, November
24, 2010.
Retirement laws; liberal construction. Retirement laws are liberally construed in favor of the retiree because
their objective is to provide for the retirees sustenance and, hopefully, even comfort, when he no longer has the
capability to earn a livelihood. The liberal approach aims to achieve the humanitarian purposes of the law in
order that efficiency, security, and well-being of government employees may be enhanced. Indeed, retirement
laws are administered in favor of the persons intended to be benefited, and all doubts are resolved in their
favor. In this case, as adverted to above, respondent was able to establish that he has a clear legal right to the
reinstatement of his retirement benefits. Government Service Insurance System vs. Fernando P. De Leon, G.R.
No. 186560, November 17, 2010.
Retirement benefit; entitlement. Respondents disqualification from receiving retirement benefits under R.A.
No. 910 does not mean that he is disqualified from receiving any retirement benefit under any other existing
retirement law. Prior to R.A. No. 8291, retiring government employees who were not entitled to the benefits
under R.A. No. 910 had the option to retire under either of two laws: Commonwealth Act No. 186, as amended,
or P.D. No. 1146. In his Comment, respondent implicitly indicated his preference to retire under P.D. No. 1146,
since this law provides for higher benefits. Because respondent had complied with the requirements under the
said law at the time of his retirement, a fact which GSIS does not dispute, he is entitled to receive the benefits
provided under the same law. Government Service Insurance System vs. Fernando P. De Leon, G.R. No. 186560,
November 17, 2010.
Strike; definition. Article 212 of the Labor Code, as amended, defines strike as any temporary stoppage of work
by the concerted action of employees as a result of an industrial or labor dispute. A labor dispute includes any
controversy or matter concerning terms and conditions of employment or the association or representation of
persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment,
regardless of whether or not the disputants stand in the proximate relation of employers and employees. The
term strike shall also include slowdowns, mass leaves, sitdowns, attempts to damage, destroy or sabotage plant
equipment and facilities and similar activities. In the instant case, about 712 employees absented themselves
from work in a concerted fashion for three continuous days. Considering that these mass actions stemmed from
a bargaining deadlock and an order of assumption of jurisdiction had already been issued by the Secretary of
Labor to avert an impending strike, all the elements of strike are evident in the Union-instigated mass
actions. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its
Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.
Unfair labor practice. For a charge of unfair labor practice to prosper, it must be shown that respondent CABs
suspension of negotiation with CABEU-NFL and its act of concluding a CBA with CABELA, another union in
the bargaining unit, were motivated by ill will, bad faith, or fraud, or was oppressive to labor, or done in a
manner contrary to morals, good customs, or public policy However, the facts show that CAB believed that
CABEU-NFL was no longer the representative of the workers. It just wanted to foster industrial peace by bowing
to the wishes of the overwhelming majority of its rank and file workers and by negotiating and concluding in
good faith a CBA with CABELA. Such actions of CAB are nowhere tantamount to anti-unionism, the evil
sought to be punished in cases of unfair labor practices. Central Azucarera De Bais Employees Union-NFL,
represented by its President, Pablito Saguran vs. Central Azucarera De Bais, Inc., represented by its President,
Antonio Steven L. Chan, G.R. No. 186605, November 17, 2010.
Unfair labor practice; burden of proof. Basic is the principle that good faith is presumed and he who alleges bad
faith has the duty to prove the same. By imputing bad faith to the actuations of CAB, CABEU-NFL has the
burden to present substantial evidence to prove the allegation of unfair labor practice. Apparently, CABEU-
NFL refers only to the execution of the supposed CBA between CAB and CABELA and the request to suspend
the negotiations, to conclude that bad faith attended CABs actions. The Court is of the view that CABEU-NFL,
in simply relying on the said circumstances, failed to substantiate its claim of unfair labor practice to rebut the
presumption of good faith. Central Azucarera De Bais Employees Union-NFL, represented by its President,
Pablito Saguran vs. Central Azucarera De Bais, Inc., represented by its President, Antonio Steven L. Chan, G.R.
No. 186605, November 17, 2010.
October 2010 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on November 22, 2010 by Leslie C. Dy Posted in Labor Law Tagged appeal, backwages, damages, employer-employee
relationship, evidence, illegal dismissal, jurisdiction, labor-only contracting, loss of confidence, negligence, probationary
employment, redundancy, reinstatement, retirement, separa, serious misconduct

Here are selected October 2010 rulings of the Supreme Court of the Philippine on labor law and procedure:

Compensable illness. Respondent is entitled to sickness wages because the shooting pain in his right foot is an
injury which he suffered during the course of his employment. This is in consonance with the Standard Terms
and Conditions Governing the Employment of Filipino Seafarers On Board Ocean-Going Vessels of the
Department of Labor and Employment. Applying the said provisions of this standard contract, respondent is
entitled to receive sickness wages covering the maximum period of 120 days. Moreover, petitioners violated the
contract when it failed to provide continuous treatment for respondent in accordance with the recommendation
of their company physician. Because of this failure, respondent was forced to seek immediate medical attention
at his own expense. Thus, he is also entitled to reimbursement of his medical expenses. Varorient Shipping Co.,
Inc., et al. vs. Gil Flores, G.R. No. 161934, October 6, 2010
Compensable illness. For an injury or illness to be duly compensated under the terms of the Philippine Overseas
Employment Administration-Standard Employment Contract (POEA-SEC), there must be a showing that the
injury or illness and the ensuing disability occurred during the effectivity of the employment contract. Moreover,
all of these conditions must be satisfied 1.) The seafarers work must involve the risks described in the POEA-
SEC; 2.) The disease was contracted as a result of the seafarers exposure to the described risks; 3.) The disease
was contracted within a period of exposure and under such other factors necessary to contract it; and 4.) There
was no notorious negligence on the part of the seafarer. Specifically, with respect to mental diseases, the POEA-
SEC requires that it must be due to traumatic injury to the head which did not occur in this case. In fact,
respondent claimed that he became depressed due to the frequent verbal abuse he received from his German
superiors. However, he failed to show concrete proof that, if indeed he was subjected to abuse, it directly resulted
in his depression. Philippine Transmarine Carriers, Inc., Global Navigation, Ltd. vs.. Silvino A. Nazam, G.R.
No. 190804. October 11, 2010.
Constructive dismissal; transfer. It is management prerogative to transfer or assign employees from one office
or area of operation to another. However, the employer must show that the transfer is not unreasonable,
inconvenient or prejudicial to the employee, or that it does not involve a demotion in rank or a diminution of his
salaries, privileges and other benefits. Should the employer fail to overcome this burden, the employees transfer
shall be tantamount to constructive dismissal. In the instant case, Del Villars demotion is readily apparent in his
new designation as a mere Staff Assistant to the Corporate Purchasing and Materials Control Manager from
being Transportation Services Manager. The two posts are not of the same weight in terms of duties and
responsibilities. Moreover, while Del Villars transfer did not result in the reduction of his salary, there was a
diminution in his benefits because as a mere Staff Assistant, he could no longer enjoy the use of a company car,
gasoline allowance, and annual foreign travel, which he previously enjoyed as Transportation Services Manager.
Thus, Del Villar was clearly constructively dismissed. Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del
Villar, G.R. No. 163091, October 6, 2010.
Dismissal; closure of business. Petitioner terminated the employment of respondents on the ground of closure or
cessation of operation of the establishment which is an authorized cause for termination under Article 283 of the
Labor Code. While it is true that a change of ownership in a business concern is not proscribed by law, the sale
or disposition must be motivated by good faith as a condition for exemption from liability. In the instant case,
however, there was, in fact, no change of ownership. Petitioner did not present any documentary evidence to
support its claim that it sold the same to ALPS Transportation. On the contrary, it continuously operates under
the same name, franchises and routes and under the same circumstances as before the alleged sale. Thus, no
actual sale transpired and, as such, there is no closure or cessation of business that can serve as an authorized
cause for the dismissal of respondents. Peafrancia Tours and Travel Transport, Inc. vs. Joselito P. Sarmiento
and Ricardo S. Catimbang, G.R. No. 178397, October 20, 2010.
Dismissal; constructive dismissal. There is constructive dismissal if an act of clear discrimination, insensibility,
or disdain by an employer becomes so unbearable on the part of the employee that it would foreclose any choice
by him except to forego his employment. It also exists where there is cessation of work because continued
employment is rendered impossible, unreasonable or unlikely, such as when an offer involves a demotion in rank
and a diminution in pay. In the present case, what made it impossible, unreasonable or unlikely for respondent
to continue working for SHS was the unlawful withholding of his salary. He then lost no time in submitting his
resignation letter and eventually filing a complaint for illegal dismissal just a few days after his salary was
withheld. These circumstances are inconsistent with voluntary resignation and bolster the finding of constructive
dismissal. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.
Dismissal; corporate officer. It is not the nature of the services performed, but on the manner of creation of the
office that distinguishes corporate officers who may be ousted from office at will and ordinary corporate
employees who may only be terminated for just cause. Under Section 25 of the Corporation Code, a position
must be expressly mentioned in the By-Laws in order to be considered as a corporate office. Thus, the creation
of an office pursuant to a By-Law provision giving a president the power to create an office does not qualify as
a By-Law position. In the present case, the position of Vice President for Finance and Administration which
respondent held was merely created by Matlings President pursuant to the companys By-Laws. It is not a
corporate office or By-Law position, and therefore, respondent was not a corporate officer who could be ousted
from office at will. Matling Industrial and Commercial Corp., et al. vs. Ricardo R. Coros, G.R. No. 157802,
October 13, 2010.
Dismissal; gross and habitual neglect. Under Article 282 (b) of the Labor Code, an employer may terminate an
employee for gross and habitual neglect of duties. Gross negligence connotes want of care in the performance
of ones duties. Habitual neglect implies repeated failure to perform ones duties for a period of time, depending
upon the circumstances. A single or isolated act of negligence does not constitute a just cause for the dismissal
of the employee. Assuming arguendo that respondent was negligent, although the Court found otherwise, the
lapse or inaction could only be regarded as a single or isolated act of negligence that cannot be categorized as
habitual and, hence, not a just cause for his dismissal. St. Lukes Medical Center, Inc. and Robert Kuan vs.
Estrelito Nazario, G.R. No. 152166, October 20, 2010.
Dismissal; loss of confidence. Loss of confidence as a just cause for termination of employment is premised on
the fact that the employee concerned holds a position of trust and confidence. This situation holds where a
person is entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of
the employers property. However, in order to constitute a just cause for dismissal, the act complained of must
be work-related such as would show the employee concerned to be unfit to continue working for the employer.
In the instant case, the Resolution of the PAL Board of Directors, underscored respondents acts of
mismanagement and gross incompetence which resulted in huge financial losses for petitioner. As a general
rule, employers are allowed wider latitude of discretion in terminating the employment of managerial personnel
or those who, while not of similar rank, perform functions which by their nature require the employers full trust
and confidence. This must be distinguished from the case of ordinary rank and file employees, whose
termination on the basis of these same grounds requires a higher proof of involvement in the events in
question. Philippine Airlines, Inc. vs. National Labor Relations Commission and Aida M. Quijano, G.R. No.
123294, October 20, 2010
Dismissal; probationary employee. Although respondent was a probationary employee, he is nonetheless
entitled to security of tenure. Section 3 (2) Article 13 of the Constitution guarantees that right. In using the
expression all workers, the Constitution puts no distinction between a probationary and a permanent or regular
employee. This means that probationary employees cannot be dismissed except for cause or for failure to qualify
as regular employees (i.e., to meet the performance standards set by the company to be eligible for regular
employment). SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.
Dismissal; requirement. In dismissing an employee, the employer must furnish him with two written notices: the
first notice apprises the employee of the particular acts or omissions for which his dismissal is sought, and the
second is a subsequent notice, which informs the employee of the employers decision to dismiss him. An
administrative hearing must likewise be held in order to give the employee a further opportunity to be heard.
Petitioner hospital failed to comply with the rule on twin notice and hearing as it merely required respondent to
give his written explanation and, thereafter, ordered his dismissal. St. Lukes Medical Center, Inc. and Robert
Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.
Dismissal; serious misconduct. Serious misconduct as a valid cause for the dismissal of an employee is defined
simply as improper or wrongful conduct. It is a 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. To be serious, the misconduct must be of such grave and aggravated character and not merely trivial
or unimportant. Moreover, it must be related to the performance of the employees duties such as would show
him to be unfit to continue working for the employer. On the other hand, moral turpitude has been defined as
everything which is done contrary to justice, modesty, or good morals; an act of baseness, vileness or depravity
in the private and social duties which a man owes his fellowmen, or to society in general, contrary to justice,
honesty, modesty, or good morals. In the case at bar, the transgressions imputed to private respondent have never
been firmly established as deliberate and willful acts. At the very most, they can only be characterized as
unintentional, albeit major, lapses in professional judgment. Philippine Airlines, Inc. vs. National Labor
Relations Commission and Aida M. Quijano, G.R. No. 123294, October 20, 2010.
Employer-employee relationship. That complainants were employees of SIP is clear from the fact that SIP paid
their salary. When complainants charged SIP of underpayment, SIP even interposed the defense of free board
and lodging given to complainants. Furthermore, the IDs issued to complainants bear the signature of Alejandro
C. Pablo, proprietor of SIP. Likewise, the memoranda issued to complainants regarding their absences without
leave were signed by Pablo. All these clearly show that SIP is the employer of complainants. Although GMPC
engaged the services of SIP to operate a canteen, SIP and its proprietors could not be considered as labor-only
contractors or mere agents of GMPC because they exercised the essential elements of an employment
relationship with the complainants such as hiring, payment of wages and the power of control. S.I.P. Food House
and Mr. and Mrs. Alejandro Pablo Vs. Restituto Batolina, et al., G.R. No. 192473, October 11, 2010.
Employer-employee relationship; test. The elements to determine the existence of an employment relationship
are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal;
and (d) the employers power to control the employees conduct. The most important of these elements is the
employers control of the employees conduct, not only as to the result of the work to be done, but also as to the
means and methods to accomplish it. It should be remembered that the control test merely calls for the existence
of the right to control, and not necessarily the exercise thereof. Based on this four-fold test, Manila Water
emerges as the employer of respondent collectors. Respondent bill collectors were individually hired by the
contractor, but were under the direct control and supervision of Manila Water. This control is manifested in the
fact that respondent bill collectors reported daily to the branch offices of Manila Water to remit their collections
with the specified monthly targets and comply with the collection reporting procedures prescribed by the latter.
Accordingly, respondent bill collectors are employees of petitioner Manila Water. Manila Water Company, Inc.
vs. Jose J. Dalumpines, et al., G.R. No. 175501, October 4, 2010.
Evidentiary doubts construed in favor of labor. Although it cannot be determined with certainty whether
respondent worked for the entire period from November 16 to November 30, 2005, the consistent rule is that if
doubt exists between the evidence presented by the employer and that by the employee, the scales of justice must
be tilted in favor of the latter in line with the policy mandated by Articles 2 and 3 of the Labor Code to afford
protection to labor and construe doubts in favor of labor. In view of petitioners failure to satisfy their burden
of proof, respondent is presumed to have worked during the period in question and is, accordingly, entitled to
his salary. Therefore, the withholding of respondents salary by petitioners is contrary to Article 116 of the Labor
Code and, thus, unlawful. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October
13, 2010.
Illegal dismissal; full backwages and reinstatement. Under Republic Act No. 6715, employees who are illegally
dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent,
computed from the time their actual compensation was withheld from them up to the time of their actual
reinstatement. If reinstatement is no longer possible, the backwages shall be computed from the time of their
illegal termination up to the finality of the decision. Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del
Villar, G.R. No. 163091, October 6, 2010.
Illegal dismissal; moral and exemplary damages. Award of moral and exemplary damages for an illegally
dismissed employee is proper where the employee had been harassed and arbitrarily terminated by the employer.
Moral damages may be awarded to compensate one for injuries such as mental anguish, besmirched reputation,
wounded feelings, and social humiliation occasioned by the employers unreasonable dismissal of the employee.
The award of such damages is based not on the Labor Code but on the Civil Code. These damages, however,
are not intended to enrich the illegally dismissed employee. Thus, the Court found it proper to reduce the award
of moral damages from P500,000 to P100,000.00 and exemplary damages from P500,000 to P50,000.00. The
reduced amounts are deemed sufficient to assuage the sufferings experienced by Del Villar and to set an example
for the public good. Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091, October 6,
2010.
Illegal dismissal; reinstatement and full backwages. Probationary employees who are unjustly dismissed during
the probationary period are entitled to reinstatement and payment of full backwages and other benefits and
privileges from the time they were dismissed up to their actual reinstatement. Respondent is, thus, entitled to
reinstatement without loss of seniority rights and other privileges as well as to full backwages, inclusive of
allowances and other benefits or their monetary equivalent computed from the time his compensation was
withheld up to the time of actual reinstatement. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R.
No. 185814, October 13, 2010.
Illegal dismissal; reinstatement and payment of backwages. Petitioners lack of just cause and non-compliance
with the procedural requisites in terminating respondents employment renders them guilty of illegal
dismissal. Consequently, under Article 279 of the Labor Code, as amended, respondent is entitled to
reinstatement to his former position without loss of seniority rights and payment of backwages inclusive of
allowances and other benefits, or their monetary equivalent computed from the time the compensation was not
paid up to the time of actual reinstatement. St. Lukes Medical Center, Inc. and Robert Kuan vs. Estrelito
Nazario, G.R. No. 152166, October 20, 2010.
Illegal dismissal; separation pay in lieu of reinstatement. If reinstatement proves impracticable, and hardly in the
best interest of the parties, perhaps due to the lapse of time since the employees dismissal, or if the employee
decides not to be reinstated, respondent should be awarded separation pay in lieu of reinstatement. In the present
case, since reinstatement is no longer feasible due to the long passage of time, petitioners are required to pay
respondent his separation pay equivalent to one (1) months pay for every year of service. Petitioners are thus
ordered to pay respondent his backwages and separation pay. The awards of separation pay and backwages are
not mutually exclusive and both may be given to respondent. St. Lukes Medical Center, Inc. and Robert Kuan
vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.
Job contracting; conditions. Job contracting is permissible only if the following conditions are met: 1) the
contractor carries on an independent business and undertakes the contract work on his own account under his
own responsibility according to his own manner and method, free from the control and direction of his employer
or principal in all matters connected with the performance of the work except as to the results thereof; and 2) the
contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and
other materials which are necessary in the conduct of the business. Substantial capital or investment refers to
capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements,
machineries, and work premises, actually and directly used by the contractor or subcontractor in the performance
or completion of the job, work, or service contracted out. The right to control refers to the right reserved to the
person for whom the services of the contractual workers are performed, to determine not only the end to be
achieved, but also the manner and means to be used in reaching that end. Manila Water Company, Inc. vs. Jose
J. Dalumpines, et al., G.R. No. 175501, October 4, 2010.
Jurisdiction; dismissal. Pursuant to Article 217 (a) 2 of the Labor Code, as amended, the illegal dismissal of an
officer or other employee of a private employer is properly cognizable by the labor arbiter. However, where the
complaint for illegal dismissal concerns a corporate officer, the controversy is considered an intra-corporate
dispute and falls under the jurisdiction of the Securities and Exchange Commission (SEC). This jurisdiction of
the SEC, however, was transferred to the RTC, pursuant to RA No. 8799 which became effective on August 8,
2000. Considering that the respondents complaint for illegal dismissal was commenced on August 10, 2000,
the appropriate jurisdiction lie with the RTC should it turn out that the respondent was a corporate, not a regular,
officer of Matling. Matling Industrial and Commercial Corp., et al. vs. Ricardo R. Coros, G.R. No. 157802,
October 13, 2010.
Jurisdiction; labor dispute vs. intra-corporate dispute. Given Locsins status as a corporate officer, the RTC, not
the Labor Arbiter or the NLRC, has jurisdiction to hear the legality of the termination of his relationship with
Nissan. In a number of cases it has been held that a corporate officers dismissal is always a corporate act, or an
intra-corporate controversy so that the RTC should exercise jurisdiction. Locsin was undeniably Chairman and
President, and was elected to these positions by the Nissan board pursuant to its By-laws. As such, he was a
corporate officer, not an employee. Even as Executive Vice-President/Treasurer, Locsin already acted as a
corporate officer because the position of Executive Vice-President/Treasurer is provided for in Nissans By-
Laws. Arsenio Z. Locsin vs. Nissan Lease Phils. Inc. and Luis Banson, G.R. No. 185567, October 20, 2010.
Labor-only contracting; elements. The Labor Code expressly prohibits labor-only contracting which refers to
an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a
job, work, or service for a principal, and any of the following elements are present: (i) the contractor or
subcontractor does not have substantial capital or investment which relates to the job, work, or service to be
performed and the employees recruited, supplied, or placed by such contractor or subcontractor are performing
activities which are directly related to the main business of the principal; or (ii) the contractor does not exercise
the right to control the performance of the work of the contractual employee. Using the above criteria, it is clear
that FCCSI is a labor-only contractor while the principal Manila Water is the real employer. FCCSI does not
have substantial capital or investment to qualify as an independent contractor as shown by the fact that although
it has an authorized capital stock of P400,000.00, only P100,000.00 of which is actually paid-up. Also, it was
Manila Water that provided the equipment and service vehicles needed in the performance of the contracted
service. Manila Water Company, Inc. vs. Jose J. Dalumpines, et al., G.R. No. 175501, October 4, 2010.
Loss of confidence; distinction between managerial personnel and rank and employees . As a general rule,
employers are allowed wider latitude of discretion in terminating the employment of managerial personnel or
those who, while not of similar rank, perform functions which by their nature require the employers full trust
and confidence. This must be distinguished from the case of ordinary rank and file employees, whose
termination on the basis of these same grounds requires a higher proof of involvement in the events in question;
mere uncorroborated assertions and accusations by the employer will not suffice. Leandro M. Alcantara vs. The
Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.
Motion to dismiss; appeal. Petitioner Locsins submission that the NCLPI improperly elevated the Labor
Arbiters denial of the Motion to Dismiss to the CA is correct. A denial of a motion to dismiss is an interlocutory
order and hence, cannot be appealed until a final judgment on the merits of the case is rendered. As a general
rule, an aggrieved partys proper recourse to the denial is to file his position paper, interpose the grounds relied
upon in the motion to dismiss such as lack of jurisdiction in the present case before the labor arbiter, and
actively participate in the proceedings. Thereafter, the labor arbiters decision can be appealed to the NLRC, not
to the CA. This NLRC rule is similar to the general rule observed in civil procedure. Under the Rules of Court,
the only other recourse of the aggrieved party is to file an appropriate special civil action under Rule 65 but only
when there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law. In the labor
law setting, a plain, speedy and adequate remedy in the form of the corrective power of the NLRC is still open
to the aggrieved party when a labor arbiter denies a motion to dismiss. Arsenio Z. Locsin vs. Nissan Lease Phils.
Inc. and Luis Banson, G.R. No. 185567, October 20, 2010.
Petition; failure to attach documents. Failure to attach all pleadings and documents, by itself, is not a sufficient
ground to dismiss a petition. The courts may liberally construe procedural rules in order to meet and advance
the cause of substantial justice. Procedural lapses will be overlooked when they do not involve public policy,
when they arose from an honest mistake or unforeseen accident, and when they have not prejudiced the adverse
party or deprived the court of its authority. These conditions are present in the instant case. Furthermore, after
petitioners receipt of the Court of Appeals Resolution dismissing his petition for failure to attach documents,
he filed a Motion for Reconsideration along with the documents deemed by the Court of Appeals as lacking in
his original petition. Such subsequent submission should be deemed substantial compliance as supported by
jurisprudence. In these cases, the reasons behind the failure of the petitioners to comply with the required
attachments were no longer scrutinized. Clearly, the Court of Appeals erred in dismissing petitioners special
civil action for certiorari despite subsequent substantial compliance with the rules on procedure. Leandro M.
Alcantara vs. The Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.
Private recruitment agencies; solidary liability. Republic Act No. 8042 provides for the joint and solidary liability
of private recruitment agencies with their foreign principals in any and all money claims against them. Such
provision is automatically incorporated by law in the contract for overseas employment and is a condition
precedent for its approval. This is to afford the OFWs immediate and sufficient payment of what is due
them. Moreover, such obligation is not coterminous with the agreement between the local agent and its foreign
principal so that if either or both of the parties decide to end the agreement, the responsibilities of such parties
towards the contracted employees under the agreement do not at all end, but the same extends up to and until the
expiration of the employment contracts of the employees recruited and employed pursuant to the said recruitment
agreement. Thus, to allow petitioners to simply invoke the immunity from suit of its foreign principal or to wait
for the judicial determination of the foreign principals liability before petitioner can be held liable renders the
law on joint and solidary liability inutile. ATCI Overseas Corporation, et al. vs. Ma. Josefa Echin, G.R. No.
178551. October 11, 2010
Redundancy. Redundancy is one of the authorized causes for the dismissal of an employee under Article 283 of
the Labor Code. Redundancy, exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise. Such superfluity may be due to overhiring of workers,
decreased volume of business, or dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise. The determination of redundancy is an exercise of business
judgment of the employer the soundness of which is not subject to discretionary review of the Labor Arbiter and
the NLRC, provided there is no violation of law and no showing that it was prompted by an arbitrary or malicious
act. Thus, a company must not merely declare that it has become overmanned, it must also produce adequate
proof of such redundancy. Coca-Cola failed to overcome this burden in the instant case. Instead, it offered proof
of Del Villars poor performance which is irrelevant in relation to the issue on redundancy. Coca Cola Bottlers
Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091, October 6, 2010.
Reinstatement; doctrine of strained relations. 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. Payment liberates the employee from what could be a highly oppressive work environment, and at the
same time releases the employer from the obligation of keeping in its employ a worker it no longer trusts. In the
instant case, respondents reinstatement is no longer feasible as antagonism has caused a severe strain in his
working relationship with petitioners. Therefore, a more equitable disposition would be an award of separation
pay equivalent to at least one month pay, in addition to his full backwages, allowances and other benefits. SHS
Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.
Release and quitclaim; validity. Quitclaims executed by the employees are commonly frowned upon as contrary
to public policy. Thus, for quitclaims to be valid the following requisites must be complied with: (a) that there
was no fraud or deceit on the part of any of the parties; (b) that the consideration of the quitclaim is credible and
reasonable; and (c) that the contract is not contrary to law, public order, public policy, morals or good customs,
or prejudicial to a third person with a right recognized by law. Varorient Shipping Co., Inc., et al. vs. Gil
Flores, G.R. No. 161934, October 6, 2010
Retirement; compulsory. Article 287 of the Labor Code, as amended by R.A. No. 7641, pegs the age for
compulsory retirement at 65 years, while the minimum age for optional retirement is set at 60 years. An employer
is, however, free to impose a retirement age earlier than the foregoing mandates provided that the prerogative is
exercised pursuant to a mutually instituted early retirement plan. In the present case, not even an iota of voluntary
acquiescence to UNIPROMs early retirement age option is attributable to petitioner. UNIPROMs Employees
Non-Contributory Retirement Plan was unilaterally and compulsorily imposed on them. Petitioner was forced
to participate in the plan, and the only way she could have rejected the same was to resign or lose her job. Such
passive acquiescence on the part of employees cannot equate to voluntary acceptance which must be explicit,
voluntary, free, and uncompelled. Having terminated petitioner merely on the basis of a provision in the
retirement plan which was not freely assented to by her, UNIPROM is guilty of illegal dismissal. Lourdes A.
Cercado vs. Uniprom, Inc., G.R. No. 188154. October 13, 2010.
Rule on appeal from denial of motion to dismiss; exception. As a general rule, a Labor Arbiters denial of the
Motion to Dismiss on the ground of lack of jurisdiction is appealable to the NLRC and not to the CA by way of
Rule 65. However, we take exception to this general rule in the present case because a strict implementation of
these rules would cause substantial injustice to NCLPI. After all, the parties have sufficiently ventilated their
positions on the disputed employer-employee relationship and have, in fact, submitted the matter for the CAs
consideration. Moreover, the CA correctly ruled that Locsin was a corporate officer, not an employee and
therefore jurisdiction lies with the RTC and not the Labor Arbiter. Arsenio Z. Locsin vs. Nissan Lease Phils. Inc.
and Luis Banson, G.R. No. 185567, October 20, 2010.
Seaman as a contractual employee; disability claims. A seaman is a contractual and not a regular employee.
Thus, in claims of seamen for compensation and disability benefits, the Court cannot just disregard the provisions
of the POEA Standard Employment Contract (POEA SEC). In order to claim disability benefits under the POEA
SEC, it is the company-designated physician who must proclaim that the seaman suffered a permanent
disability, due to either injury or illness, during the term of the latters employment. In this case, the findings of
respondents designated physician that petitioner has been suffering from brief psychotic disorder and that it is
not work-related must be respected. While it is true that labor contracts are impressed with public interest and
the provisions of the POEA SEC must be construed logically and liberally in favor of Filipino seamen in the
pursuit of their employment on board ocean-going vessels, the rule is that justice is, in every case, only for the
deserving; it is to be dispensed with in the light of established facts, the applicable law, and existing
jurisprudence. Edgardo M. Panganiban vs. Tara Trading Ship Management Inc. and Shinline SDN BHD, G.R.
No. 187032, October 18, 2010
Separation pay; equity. In exceptional cases, this Court has granted separation pay to a legally dismissed
employee as an act of social justice or based on equity. In both instances, it is required that the dismissal
(1) was not for serious misconduct; and (2) does not reflect on the moral character of the employee or would
involve moral turpitude. There should be no question that where it comes to such valid but not iniquitous causes
as failure to comply with work standards, the grant of separation pay to the dismissed employee may be both
just and compassionate, particularly if he has worked for some time with the company. Philippine Airlines, Inc.
vs. National Labor Relations Commission and Aida M. Quijano, G.R. No. 123294, October 20, 2010.
Termination; loss of confidence. Loss of confidence as a just cause for termination of employment applies when
the employee concerned holds a position of trust and confidence. However, in order to constitute a just cause
for dismissal, the act complained of must be work-related such as would show the employee concerned to be
unfit to continue working for the employer. Petitioner, who, as Branch Manager of the respondent bank
undoubtedly held a position of trust and confidence, admitted that he personally processed the two Certificates
of Time Deposit (CTDs) at issue, despite his knowledge that they were unfunded. By doing so, he exposed his
employer to great risk. Moreover, by issuing those CTDs, he was in effect certifying the existence of time
deposits in his branch that were actually fictitious. Thus, it can be said that his obvious laxity or negligence in
the issuance of the said CTDs was even tainted with dishonesty. Respondent bank was thus justified in
terminating petitioners employment on the ground of loss of trust and confidence. Leandro M. Alcantara vs.
The Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.
Termination; procedural due process. Notice and hearing constitute the essential elements of due process in the
dismissal of employees. The employer must furnish the employee with two written notices before termination
of employment can be legally effected. With regard to the requirement of a hearing, the essence of due process
lies simply in an opportunity to be heard; an actual trial-type hearing is not indispensable. In this case, respondent
acted in accordance with procedural due process when it gave petitioner considerable leeway with regard to the
submission of his written explanation by allowing multiple extensions of time to submit the same and by
furnishing him the documents used in respondents investigation. Even assuming that petitioner was not fully
heard during the employers investigation, it was his fault because of his misguided insistence on having a trial-
type hearing. Leandro M. Alcantara vs. The Philippine Commercial and International Bank, G.R. No. 151349,
October 20, 2010.
Termination; solidary liability of corporate directors and officers. Corporate directors and officers are only
solidarily liable with the corporation for termination of employment of corporate employees if such is effected
with malice or in bad faith. Bad faith does not connote bad judgment or negligence; it imports dishonest purpose
or some moral obliquity and conscious doing of wrong; it means breach of known duty through some motive or
interest or ill will; it partakes of the nature of fraud. To sustain such a finding, there should be evidence on
record that an officer or director acted maliciously or in bad faith in terminating the employee. In the instant
case, petitioners withheld respondents salary in the sincere belief that respondent did not work for the period in
question. Thus, although they unlawfully withheld respondents salary, it cannot be concluded that such was
made in bad faith. Accordingly, corporate officers, Hartmannshenn and Schumacher, cannot be held personally
liable for the corporate obligations of SHS. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No.
185814, October 13, 2010.
Wages; deduction by employer. The free board and lodging SIP furnished the employees cannot operate as a set-
off for the underpayment of their wages. It was held in Mabeza v. National Labor Relations Commission that
the employer cannot simply deduct from the employees wages the value of the board and lodging without
satisfying the following requirements: (1) proof that such facilities are customarily furnished by the trade; (2)
voluntary acceptance in writing by the employees of the deductible facilities; and (3) proof of the fair and
reasonable value of the facilities charged. It is clear from the records that SIP failed to comply with these
requirements. S.I.P. Food House and Mr. and Mrs. Alejandro Pablo Vs. Restituto Batolina, et al., G.R. No.
192473, October 11, 2010.
Wages, withholding. Management prerogative does not include the right to temporarily withhold wages without
the consent of the employee. Such an interpretation would be contrary to Article 116 of the Labor Code, which
provides that it shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages
of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other
means without the workers consent. Withholding of wages is allowed only in the form of wage deductions under
the circumstances provided in Article 113 of the Labor Code such as: (a) In cases where the worker is insured
with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him
as premium on the insurance; (b) For union dues, in cases where the right of the worker or his union to check-
off has been recognized by the employer or authorized in writing by the individual worker concerned; and (c) In
cases where the employer is authorized by law or regulations issued by the Secretary of Labor. In the present
case, the withholding of complainants wages does not fall under the exceptions provided in Article 113 and is
thus unlawful. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13, 2010.
Work-related illness; substantial evidence. Working conditions cannot be accepted to have caused or at least
increased the risk of contracting the disease in this case, brief psychotic disorder- in the absence of substantial
evidence. The evidence must be real and substantial, and not merely apparent. In sum, petitioner failed to
establish by substantial evidence that his brief psychotic disorder was caused by the nature of his work as oiler
of the company-owned vessel. In fact, he failed to elaborate on the nature of his job as oiler of respondent
company. The Court, therefore, has difficulty in finding any link between his position as oiler and his illness.
Petitioner points out that his brief psychotic disorder which was caused by a family problem is work-related
simply because had it been a land-based employment, petitioner would have easily gone home and attended to
the needs of his family. This is not the work-related instance contemplated by the provisions of the
employment contract in order to be entitled to the benefits. Otherwise, every seaman would automatically be
entitled to compensation because the nature of his work is not land-based. Edgardo M. Panganiban vs. Tara
Trading Ship Management Inc. and Shinline SDN BHD, G.R. No. 187032, October 18, 2010.
Writ of habeas data; labor disputes. Respondent questions her transfer and, through the extraordinary remedy of
habeas data, seeks the disclosure of the reasons behind it. However, since her real objective is to be spared from
complying with MERALCOs Memorandum directing her reassignment, respondent should instead lodge her
complaint with the NLRC and the Labor Arbiters which have jurisdiction over such concerns. The writ of habeas
data is a remedy available only to a person whose right to privacy in life, liberty or security is violated or
threatened by an unlawful act or omission of a public official or employee or of a private individual or entity
engaged in the gathering, collecting or storing of data or information regarding the person, family, home and
correspondence of the aggrieved party. Petitioners refusal to disclose the contents of reports which form the
basis of respondents transfer does not amount to a violation of her right to privacy. Manila Electric Company,
Alexander S. Deyto and Ruben A. Sapitula vs. Rosario Gopez Lim, G.R. No. 184769, October 5, 2010.

September 2010 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on October 13, 2010 by Leslie C. Dy Posted in Labor Law Tagged appeal, backwages, certiorari, compensable
illness, diminution of benefits, due process, illegal dismissal, illegal
strike, jurisdiction, prescription, reinstatement, retrenchment, security of tenure

Here are selected September 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:
Labor Law
Compensable illness. The CBA provision states: If a seafarer/officer, due to no fault of his own, suffers
permanent disability as a result of an accident while serving on board or while traveling to or from the vessel
on Companys business or due to marine peril, and as a result, his ability to work is permanently reduced, totally
or partially, the Company shall pay him a disability compensation. Accident has been defined as: A fortuitous
circumstance, event, or happening, an event happening without any human agency, or if happening wholly or
partly through human agency, an event which under the circumstances is unusual and unexpected by the person
to whom it happens. The Court holds that the snap on the back of respondent was not an accident, but an injury
sustained by respondent from carrying the heavy basketful of fire hydrant caps. The injury cannot be said to be
the result of an accident or fortuitous event. It resulted from the performance of a duty. Although the disability
of respondent was not caused by an accident, his disability is still compensable under the CBA provision: A
seafarer/officer who is disabled as a result of any injury, and who is assessed as less than 50% permanently
disabled, but permanently unfit for further service at sea in any capacity, shall also be entitled to a 100%
compensation. NFD International Manning Agents, Inc./Barber Ship Management Ltd. vs. Esmeraldo C.
Illescas, G.R. No. 183054, September 29, 2010.
Dismissal; due process. SPO2 Roaquin is entitled to reinstatement since he was dismissed from the service
without administrative due process. No one ever filed an administrative action against him in connection with
the crime of which he was charged in court. At any rate, assuming that someone filed an administrative charge
against Roaquin, still the law required the PNP to give him notice of such charge and the right to answer the
same. The PNP gave him no chance to show why he should not be discharged nor does the record show that the
PNP investigated him or conducted a summary proceeding to determine his liability in connection with the
murder of which he was charged in court. While the PNP may have validly suspended Roaquin from the service
pending the adjudication of the criminal case against him, he is entitled, after his acquittal, to reinstatement and
payment of the salaries, allowances, and other benefits withheld from him by reason of his discharge from the
service. P/Chief Superintendent Roberto L. Calinisan, etc., et al. vs. SPO2 Reynaldo L. Roaquin, G.R. No.
159588, September 15, 2010.
Dismissal; misconduct. Misconduct is a transgression of some established and definite rule of action, more
particularly, unlawful behavior or gross negligence by a public officer. As differentiated from simple
misconduct, in grave misconduct the elements of corruption, clear intent to violate the law or flagrant disregard
of established rule, must be manifest. As Acting Branch Cashier, petitioner was charged with responsibility of
handling the banks daily transactions which could run into large amounts. There is a tremendous difference
between the degree of responsibility, care, and trustworthiness expected of an ordinary employee in the
bureaucracy and that required of bank managers and other officials directly handling large sums of money and
properties. The evidence clearly shows that Echano took light of such responsibility and his misconduct and
dishonesty paved the way for the commission of fraud against, and consequent damage to, the City Government
of Manila. There is no doubt, based on the evidence that Echano was guilty of grave misconduct. Salvador O.
Echano, Jr. vs. Liberty Toledo, G.R. No. 173930,September 15, 2010.
Dismissal; strike. By its use of the phrase unjustly dismissed, Article 279 refers to a dismissal that is unjustly
done, that is, the employer dismisses the employee without observing due process, either substantive or
procedural. Substantive due process requires the attendance of any of the just or authorized causes for
terminating an employee as provided under Articles 278, 283 or 284 of the Labor Code; while procedural due
process demands compliance with the twin-notice requirement. In contrast, on the consequences of an illegal
strike, Article 264(a) distinguishes between a union officer and a union member participating in an illegal strike.
A union officer who knowingly participates in an illegal strike is deemed to have lost his employment status, but
a union member who is merely instigated or induced to participate in the illegal strike is more benignly treated.
The petitioners were terminated for joining a strike that was later declared to be illegal. The NLRC ordered their
reinstatement or, in lieu of reinstatement, the payment of their separation pay, because they were mere rank-and-
file workers whom the Unions officers had misled into joining the illegal strike. They were not unjustly
dismissed from work. Danilo Escario, et al vs. National Labor Relations Commission, G.R. No. 160302,
September 27, 2010.
Employee money claim; prescription. The Labor Code provides that money claims arising from employer-
employee relations shall be filed within 3 years from the time the cause of action accrues; otherwise they shall
be barred. In this case, it is undisputed that the complainant was dismissed on January 1, 2000, and this was the
time when the cause of action had accrued. Since the present action was only filed on March 29, 2004, or exactly
4 years and 3 months after his dismissal, the Labor Arbiter was correct in ruling that the action had already
prescribed. The fact that the complainant repeatedly followed up on his money claim with PLDT during the
years of 2001-2003 does not serve to toll the prescriptive period as provided under Art. 1155 of the Civil Code
since the complainant never made any written extrajudicial demand for his claim nor did PLDT make any written
acknowledgment of its obligation. Philippine Long Distance Telephone Company (PLDT) vs. Roberto R.
Pingol, G.R. No. 182622, September 8, 2010.
Employee money claim; prescription. In the case of Southeastern Shipping vs. Navarra Jr., the Court held that
Section 28 of the Standard Employment Contract for Seafarers, insofar as it limits the prescriptive period within
which the seafarers may file their money claims, is hereby declared null and void. The applicable provision is
Article 291 of the Labor Code, it being more favorable to the seafarers and more in accord with the States
declared policy to afford full protection to labor. Therefore, the prescriptive period in the present case is three
years from the time the cause of action accrues and not the one-year period prescribed in the Standard
Employment Contract for Seafarers. Medline Management, Inc. and Grecomar Shipping Agency vs. Gliceria
Roslinda and Ariel Roslinda, G.R. No. 168715, September 15, 2010.
Illegal dismissal. Petitioners are liable for constructive dismissal for placing respondents on shifts of a few days
per month and in eventually denying them workplace access, rendering respondents employment impossible,
unreasonable or unlikely, leaving them no choice but to quit. The petitioners rested their case on the defense of
respondents abandonment of work. For this cause to prosper, petitioners should have proved (1) that the failure
to report for work was without justifiable reason, and (2) respondents intention to sever the employer-employee
relationship as shown by some overt acts. However, petitioners failed to rebut the respondents claim that they
were denied entry to their work area and the respondents act of filing a case for illegal dismissal belies the
intention to abandon work. Pasig Cylinder Manufacturing Corp. vs. Danilo Rollo, et al., G.R. No. 173631,
September 8, 2010.
Lay off. Even as we declare the validity of the lay-off, we cannot say that MMC has no obligation to the laid-off
employees. Article 283 of the Labor Code applies to MMC. Said provision is emphatic that an employee, who
was dismissed due to cessation of business operation, is entitled to the separation pay equivalent to one (1) month
pay or at least one-half (1/2) month pay for every year of service, whichever is higher. It is jurisprudential that
separation pay should also be paid to employees even if the closure or cessation of operations is not due to
losses. The Court is not impressed with the claim that actual severe financial losses exempt MMC from paying
separation benefits to complainants. In the first place, MMC did not appeal the decision of the Court of Appeals
which affirmed the NLRCs award of separation pay. In the second place, the non-issuance of a permit forced
MMC to permanently cease its business operations. Under Article 283, the employer can lawfully close shop
anytime as long as cessation of or withdrawal from business operations is bona fide in character and not impelled
by a motive to defeat or circumvent the tenurial rights of employees, and as long as he pays his employees their
termination pay in the amount corresponding to their length of service.Manila Mining Corp. Employees
Association, et al. vs.. Manila Mining corp, et al., G.R. Nos. 178222-23, September 29, 2010.
Non-diminution of benefits. Apex Mining Company, Inc. v. NLRC is instructive: The prohibition against
elimination or diminution of benefits set out in Article 100 of the Labor Code is specifically concerned with
benefits already enjoyed at the time of the promulgation of the Labor Code. Article 100 does not purport to apply
to situations arising after the promulgation date of the Labor Code. Even assuming arguendo that Article 100
applies to the case at bar, the same does not prohibit a union from offering and agreeing to reduce wages and
benefits of the employees. In Rivera v. Espiritu, this Court ruled that the right to free collective bargaining
includes the right to suspend it. Insular Hotel Employees Union-NFL vs. Waterfront Insular Hotel Davao, G.R.
No. 174040-41, September 22, 2010.
Reinstatement; entitlement to backwages. As a general rule, backwages are granted to indemnify a dismissed
employee for his loss of earnings during the whole period that he is out of his job. Considering that an illegally
dismissed employee is not deemed to have left his employment, he is entitled to all the rights and privileges that
accrue to him from the employment. That backwages are not granted to employees participating in an illegal
strike accords with the reality that they do not render work for the employer during the period of the illegal
strike. Under the principle of a fair days wage for a fair days labor, the petitioners were not entitled to the
wages during the period of the strike (even if the strike might be legal), because they performed no work during
the strike. Thus, the Court deleted the award of backwages and held that the striking workers were entitled only
to reinstatement in Philippine Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) v. Manila Diamond
Hotel Employees Union. Danilo Escario, et al vs. National Labor Relations Commission, G.R. No. 160302,
September 27, 2010.
Reinstatement; separation pay. The absence from an order of reinstatement of an alternative relief should the
employer or a supervening event not within the control of the employee prevent reinstatement negates the very
purpose of the order. To safeguard the spirit of social justice that the Court has advocated in favor of the working
man, the right to reinstatement is to be considered renounced or waived only when the employee unjustifiably
or unreasonably refuses to return to work upon being so ordered or after the employer has offered to reinstate
him. However, separation pay is made an alternative relief in lieu of reinstatement in certain circumstances, like:
(a) when reinstatement can no longer be effected in view of the passage of a long period of time or because of
the realities of the situation; (b) reinstatement is inimical to the employers interest; (c) reinstatement is no longer
feasible; (d) reinstatement does not serve the best interests of the parties involved; (e) the employer is prejudiced
by the workers continued employment; (f) facts that make execution unjust or inequitable have supervened; or
(g) strained relations between the employer and employee. Here, PINA manifested that the reinstatement of the
petitioners would not be feasible because: (a) it would inflict disruption and oppression upon the employer;
(b) petitioners [had] stayed away for more than 15 years; (c) its machines had depreciated and had been
replaced with newer, better ones; and (d) it now sold goods through independent distributors, thereby abolishing
the positions related to sales and distribution. Under the circumstances, the grant of separation pay in lieu of
reinstatement of the petitioners was proper. Danilo Escario, et al vs. National Labor Relations Commission, G.R.
No. 160302, September 27, 2010.
Retrenchment; notice requirement. 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 maintains that it
substantially complied with the requirement of the law in that it submitted two notices or reports with the DOLE.
However, petitioner admitted that the reports were submitted 21 days, in the case of the first notice, and 16 days,
in the case of the second notice, before the intended date of 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 violates the employees right to statutory due process. Consequently, we affirm the
NLRCs award of indemnity to respondent for want of sufficient due notice. Shimizu Philippines Constractors,
Inc. vs. Virgilio P. Callanta, G.R. No. 165923, September 29, 2010.
Retrenchment; validity. 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) 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) The employer served
written notice both to the employees and to the DOLE at least one month prior to the intended date of
retrenchment; (3) 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) 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) The employer used fair and reasonable criteria in ascertaining
who would be dismissed and who would be retained among the employees, such as status, efficiency, seniority,
physical fitness, age, and financial hardship for certain workers. Petitioner implemented its retrenchment
program in good faith because it undertook several measures in cutting down its costs: withdrawing privileges
of its executives and expatriates; limiting the grant of additional monetary benefits to managerial employees and
cutting down expenses; selling of company vehicles; and infusing fresh capital into the company. Petitioner was
able to prove that it incurred substantial business losses, it offered to pay respondent his separation pay, the
retrenchment scheme was arrived at in good faith, and lastly, the criteria or standard used in selecting the
employees to be retrenched was work efficiency which passed the test of fairness and reasonableness. Shimizu
Philippines Constractors, Inc. vs. Virgilio P. Callanta, G.R. No. 165923, September 29, 2010.
Security of tenure. DECS Memorandum No. 10 provides that all incumbent teachers have until September 19,
2000 to pass the Licensure Examination for Teachers (LET), otherwise they cannot continue teaching in public
or private schools unless they obtain a temporary permit to teach as para-teachers. The complainants in this case
were dismissed from the school on March 31, 2000 after they failed to pass the LET. The Supreme Court held
that their dismissal was illegal and premature. The law has provided a specific timeframe within which the
teachers could comply with the requirement of passing the LET hence, the school cannot deny them this
privilege, which the law has accorded to them, without violating their right to security of tenure. St. Marys
Academy of Dipolog City vs. Teresita Palacio, et al., G.R. No. 164913, September 8, 2010.
Separation pay. While it is true that generally the grant of separation pay is not available to employees who are
validly dismissed, there are certain circumstances that warrant the grant of some relief in favor of the terminated
Union members based on equity. Bitter labor disputes, especially strikes, always generate abhorrence that result
in unpleasant consequences. Considering this, the striking employees breach of restrictions imposed on their
concerted actions cannot be regarded as so inherently wicked that the employer can totally disregard their long
years of service prior to such breach. The records fail to disclose any past infractions committed by the dismissed
Union members. Taking these circumstances in consideration, the Court regards the award of financial assistance
to these Union members in the form of one-half month salary for every year of service to the company up to the
date of their termination as equitable and reasonable. C. Alcantara & Sons, Inc. vs. Court of Appeals /
Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al. /
Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al., G.R.
No. 155109/G.R. No. 155135/G.R. No. 179220, September 29, 2010.
Strike; termination of participants in illegal strike. Since the Unions strike has been declared illegal, the Union
officers can be terminated from employment for their actions. This includes the shop stewards who cannot be
shielded from the coverage of Article 264 of the Labor Code since the Union appointed them as such and placed
them in positions of leadership and power over the men in their work units. As regards the rank and file Union
members, Article 264 provides that termination from employment is not warranted by the mere fact that a union
member has taken part in an illegal strike. It must be shown that such union member, clearly identified,
performed an illegal act or acts during the strike.The striking Union members allegedly committed the following
prohibited acts: a. They threatened, coerced, and intimidated non-striking employees, officers, suppliers and
customers; b. They obstructed the free ingress to and egress from the company premises; and c. They resisted
and defied the implementation of the writ of preliminary injunction issued against the strikers. The mere fact
that the criminal complaints against them were subsequently dismissed does not extinguish their liability under
the Labor Code. Nor does such dismissal bar the admission of the affidavits, documents, and photos presented
to establish their identity and guilt during the hearing of the petition to declare the strike illegal. C. Alcantara
& Sons, Inc. vs. Court of Appeals / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C.
Alcantara & Sons, Inc., et al. / Nagkahiusang Mamumuno sa Alsons-SPFL (NAMAAL-SPFL), et al. vs. C.
Alcantara & Sons, Inc., et al., G.R. No. 155109/G.R. No. 155135/G.R. No. 179220, September 29, 2010.
Strike; validity. A strike may be regarded as invalid although the labor union has complied with the strict
requirements for staging one as provided in Article 263 of the Labor Code when the same is held contrary to an
existing agreement, such as a no strike clause or conclusive arbitration clause. Here, the CBA between the parties
contained a no strike, no lockout provision that enjoined both the Union and the Company from resorting to
the use of economic weapons available to them under the law and to instead take recourse to voluntary arbitration
in settling their disputes. No law or public policy prohibits the Union and the Company from mutually waiving
their respective right to strike and lockout, which are otherwise available to them under the law, in favor of
voluntary arbitration. C. Alcantara & Sons, Inc. vs. Court of Appeals / Nagkahiusang Mamumuno sa Alsons-
SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al. / Nagkahiusang Mamumuno sa Alsons-SPFL
(NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al., G.R. No. 155109/G.R. No. 155135/G.R. No.
179220, September 29, 2010.
Unfair labor practice. Unfair labor practice cannot be imputed to MMC since the call of MMC for a suspension
of the CBA negotiations cannot be equated to refusal to bargain. Article 252 of the Labor Code defines the
phrase duty to bargain collectively. For a charge of unfair labor practice to prosper, it must be shown that the
employer was motivated by ill-will, bad faith or fraud, or was oppressive to labor. The employer must have
acted in a manner contrary to morals, good customs, or public policy causing social humiliation, wounded
feelings or grave anxiety. It cannot be said that MMC deliberately avoided the negotiation. It merely sought a
suspension and even expressed its willingness to negotiate once the mining operations resume. There was valid
reliance on the suspension of mining operations for the suspension of the CBA negotiation. The Union failed to
prove bad faith. Manila Mining Corp. Employees Association, et al. vs.. Manila Mining corp, et al., G.R. Nos.
178222-23, September 29, 2010.
LABOR PROCEDURE
Appeal; questions of fact. An issue of fact exists when what is in question is the truth or falsity of the alleged
facts, whereas an issue of law exists when what is in question is what the law is on a certain state of facts. The
test, therefore, for determining whether an issue is one of law or of fact, is whether the CA could adjudicate it
without reviewing or evaluating the evidence, in which case, it is an issue of law; otherwise, it is an issue of fact.
Here the CA needed only to review the records to determine what law should be applied. Such question does
not call for an examination of the probative value of the evidence of the parties. Since petitioners appeal involves
only questions of law, they erred in taking recourse to the CA by Notice of Appeal. P/Chief Superintendent
Roberto L. Calinisan, etc., et al. vs. SPO2 Reynaldo L. Roaquin, G.R. No. 159588, September 15, 2010.
Appeal; timeliness. Under the Rules of Procedure of the NLRC, service of notices and resolutions by registered
mail is completed upon receipt by the addressee or his agent. In this case, the receipt of the Labor Arbiters
decision by the security guard manning the compound where several businesses operated, including that of the
petitioner, does not constitute receipt by the agent of the addressee. It is clear that the security guard was not
employed by the petitioners. For remedial law purposes, the guards receipt of any processes intended for the
petitioners was receipt by a stranger, without legal significance to the petitioners. Hence, the 10-day period for
filing the appeal should be counted from the day after notice was forwarded to the petitioners office. Pasig
Cylinder Manufacturing Corp. vs. Danilo Rollo, et al., G.R. No. 173631, September 8, 2010.
Certiorari; NLRC. 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. It is within the jurisdiction of the CA to review
the findings of the NLRC. Consequently, the CA cannot be faulted in re-evaluating the NLRCs findings as it
can affirm, modify or reverse the same if the evidence so warrants. Shimizu Philippines Constractors, Inc. vs.
Virgilio P. Callanta, G.R. No. 165923, September 29, 2010.
Certiorari; regional director and BLR director. Relief in a special civil action for certiorari is available only
when the following essential requisites concur: (a) the petition must be directed against a tribunal, board, or
officer exercising judicial or quasi-judicial functions; (b) the tribunal, board, or officer must have acted without
or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (c)
there is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of law. There is no
concurrence of these requisites in C.A.-G.R. SP No. 69889. Firstly, the petition for the plebiscite to amend
PALEAs Constitution and By-Laws was merely incidental to the conduct of the general election pursuant to the
final and executory decision of the BLR. As such, the recourse open to PALEA was not to file the petition
for certiorari to assail such denial, but to first await the final election results. Secondly, the Regional Director
and the BLR Director were not exercising judicial or quasi-judicial functions in issuing the order and the letter.
Instead, they were performing the purely ministerial act of enforcing the final and executory BLR resolution
directing the conduct of the general election. Philippine Airlines Employees Association (PALEA) vs. Hon. Hans
Leo J. Cacdac, G.R. No. 155097, September 27, 2010.
Failure to comply with condition precedent. The records show that the respondents failed to comply with a
condition precedent when they did not first bring their claim before the Grievance Machinery as required under
the employment contract. Despite this, the CA did not err in dismissing the petitioners motion to dismiss because
Section 4, Rule III of the NLRC Rules of Procedure is clear that a motion to dismiss on the ground of failure to
comply with a condition precedent is a prohibited pleading. Medline Management, Inc. and Grecomar Shipping
Agency vs. Gliceria Roslinda and Ariel Roslinda, G.R. No. 168715, September 15, 2010.
Labor arbiter; jurisdiction. As heirs of the deceased seaman, the respondents can file a case before the Labor
Arbiter for payment of death benefits as provided under Section 28 of the POEA Standard Employment
Contract. It is clearly provided therein that the NLRC shall have original and exclusive jurisdiction over any
and all disputes or controversies arising out of or by virtue of the seamans contract. Medline Management, Inc.
and Grecomar Shipping Agency vs. Gliceria Roslinda and Ariel Roslinda, G.R. No. 168715, September 15, 2010.
Mediation. Procedurally, the first step to submit a case for mediation is to file a notice of preventive mediation
with the NCMB. It is only after this step that a submission agreement may be entered into by the parties. Section
3, Rule IV of the NCMB Manual of Procedure provides who may file a notice of preventive mediationonly a
certified or duly recognized bargaining agent. Cullo admitted that the case was filed not by the Union but by
individual members thereof. Clearly, the NCMB had no jurisdiction to entertain the notice filed before it. Insular
Hotel Employees Union-NFL vs. Waterfront Insular Hotel Davao, G.R. No. 174040-41, September 22, 2010.
NLRC; acquisition of jurisdiction. The NLRC acquires jurisdiction over parties in cases before it either by
summons served on them or by their voluntary appearance before its Labor Arbiter. The Return of Service of
Summons indicated that 74 out of the 81 impleaded Union members were served with summons. But they
refused either to accept the summons or to acknowledge receipt of the same. Such refusal cannot frustrate the
NLRCs acquisition of jurisdiction over them. Besides, the affected Union members voluntarily entered their
appearance in the case when they sought affirmative relief in the course of the proceedings like an award of
damages in their favor. C. Alcantara & Sons, Inc. vs. Court of Appeals / Nagkahiusang Mamumuno sa Alsons-
SPFL (NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al. / Nagkahiusang Mamumuno sa Alsons-SPFL
(NAMAAL-SPFL), et al. vs. C. Alcantara & Sons, Inc., et al., G.R. No. 155109/G.R. No. 155135/G.R. No.
179220, September 29, 2010.

August 2010 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on September 16, 2010 by Leslie C. Dy Posted in Labor Law Tagged abandonment, backwages, breach of trust, burden
of proof, damages, employee benefits, illegal dismissal, illegal strike, labor-only contracting, loss of trust and
confidence, merger, negligence, NLRC, probationary employment, project
employee, rehabilitation, reinstatement, retirement, security of tenure, serious misconduct, union

Here are selected August 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor Law
Dismissal; abandonment. Time and again, the Supreme Court has held that abandonment is totally inconsistent
with the immediate filing of a complaint for illegal dismissal, more so if the same is accompanied by a prayer
for reinstatement. In the present case, however, petitioner filed his complaint more than one year after his alleged
termination from employment. Moreover, petitioner did not ask for reinstatement in the complaint form, which
he personally filled up and filed with the NLRC. The prayer for reinstatement is made only in the Position Paper
that was later prepared by his counsel. This is an indication that petitioner never had the intention or desire to
return to his job. Elpidio Calipay vs. National Labor Relations Commission, et al., G.R. No. 166411, August 3,
2010.
Dismissal; burden of proof. In termination cases, the employer has the burden of proving, by substantial evidence
that the dismissal is for just cause. If the employer fails to discharge the burden of proof, the dismissal is deemed
illegal. In the present case, BCPI failed to discharge its burden when it failed to present any evidence of the
alleged fistfight, aside from a single statement, which was refuted by statements made by other witnesses and
was found to be incredible by both the Labor Arbiter and the NLRC. Alex Gurango vs. Best Chemicals and
Plastic, Inc., et al., G.R. No. 174593, August 25, 2010.
Dismissal; burden of proof. The law mandates that the burden of proving the validity of the termination of
employment rests with the employer. Failure to discharge this evidentiary burden would necessarily mean that
the dismissal was not justified and, therefore, illegal. Unsubstantiated suspicions, accusations, and conclusions
of employers do not provide for legal justification for dismissing employees. In case of doubt, such cases should
be resolved in favor of labor, pursuant to the social justice policy of labor laws and the Constitution. Century
Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No. 171630, August 8, 2010.
Dismissal; due process. In termination proceedings of employees, procedural due process consists of the twin
requirements of notice and hearing. The employer must furnish the employee with two written notices before
the termination of employment can be effected: (1) the first apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the second informs the employee of the employers decision
to dismiss him. The requirement of a hearing is complied with as long as there was an opportunity to be heard,
and not necessarily that an actual hearing was conducted. Pharmacia and Upjohn, Inc., et al. vs. Ricardo P.
Albayda, Jr., G.R. No. 172724, August 23, 2010.
Dismissal; due process. The Labor Code recognizes the right to due process of all workers, without distinction
as to the cause of their termination, even if the cause was their supposed involvement in strike-related violence.
In the present case, PHIMCO sent a letter to the affected union members/officers, directing them to explain
within 24 hours why they should not be dismissed for the illegal acts they committed during the strike; three
days later, the union members/officers were informed of their dismissal from employment. We do not find this
company procedure to be sufficient compliance with due process. It does not appear from the evidence that the
union officers were specifically informed of the charges against them. Also, the short interval of time between
the first and second notice shows that a mere token recognition of the due process requirements was made,
indicating the companys intent to dismiss the union members involved, without any meaningful resort to the
guarantees accorded them by law. PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association (PILA),
et al., G.R. No. 170830, August 11, 2010.
Dismissal; employees past infractions. A previous offense may be used as valid justification for dismissal from
work only if the past infractions are related to the subsequent offense upon which the basis of termination is
decreed. The respondents previous incidents of tardiness in reporting for work were entirely separate and
distinct from his latest alleged infraction of forgery. Hence, the same could no longer be utilized as an added
justification for his dismissal. Besides, respondent had already been sanctioned for his prior infractions. To
consider these offenses as justification for his dismissal would be penalizing respondent twice for the same
offense. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No. 171630,
August 8, 2010.
Dismissal; feng shui; breach of trust and confidence. The Court finds that the complainants allegations are more
credible and that she was dismissed from her employment because the Feng Shui master found that
complainants Chinese Zodiac Sign was a mismatch to that of respondents. This is not a just and valid cause for
an employees dismissal.
In contrast, respondents pleadings and evidence suffer from several inconsistencies and the affidavits presented
by respondents only pertain to petty matters that are not sufficient to support respondents alleged loss of trust
and confidence. To be a valid cause for termination of employment, the act or acts constituting breach of trust
must have been done intentionally, knowingly, and purposely; and they must be founded on clearly established
facts. Wensha Spa Center, inc. and/or Xu Zhi Jie ,vs. Loreta T. Yung, G.R. No. 185122, August 16, 2010.
Dismissal; gross negligence and loss of confidence. Gross negligence connotes want of care in the performance
of ones duties. Petitioners failure on 3 separate occasions to require clients to sign the requisite documents
constituted gross negligence. Furthermore, it has been held that if the employees are cashiers, managers,
supervisors, salesmen or other personnel occupying positions of responsibility, the employers loss of trust and
confidence in said employees may justify the termination of their employment. As the Banks Personal Banking
Manager, petitioners failure to comply with basic banking policies and procedures were inimical to the interests
of the bank, making his dismissal based on loss of confidence justified. Jesus E. Dycoco, Jr.vs. Equitable PCI
Bank (now Banco de Oro), Rene Bunaventura and Siles Samalea, G.R. No. 188271, August 16, 2010.
Dismissal; loss of trust and confidence. Employers are allowed a wider latitude of discretion in terminating the
services of employees who perform functions which by their nature require the employers full trust and
confidence and the mere existence of basis for believing that the employee has breached the trust of the employer
is sufficient. However, this does not mean that the said basis may be arbitrary and unfounded. 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. It must rest on
substantial grounds and not on the employers arbitrariness, whim, caprice or suspicion; otherwise, the employee
would eternally remain at the mercy of the employer. Century Canning Corporation, Ricardo T. Po, Jr., et al.
vs. Vicente Randy R. Ramil, G.R. No. 171630, August 8, 2010.
Dismissal; probationary employment. Though the acts charged against de Castro took place when he was still
under probationary employment, the records show that de Castro was dismissed on the ninth month of his
employment with LBNI. By then, he was already a regular employee by operation of law. As a regular employee,
de Castro was entitled to security of tenure and his illegal dismissal from LBNI justified the awards of separation
pay, backwages, and damages Carlos De Castro vs. Liberty Broadcasting Network, Inc. and Edgardo
Quigue, G.R. No. 165153. August 25, 2010.
Dismissal; project employees; damages. Prior or advance notice of termination is not part of procedural due
process if the termination of a project employee is brought about by the completion of the contract or phase
thereof. This is because completion of the work or project automatically terminates the employment, in which
case, the employer is, under the law, only obliged to render a report to the DOLE. Therefore, failing to give
project employees advance notice of their termination is not a violation of procedural due process and cannot be
the basis for the payment of nominal damages. D.M. Consunji, Inc. vs. Antonio Gobres, et al., G.R. No. 169170,
August 8, 2010.
Dismissal; separation pay and backwages. The awards of separation pay and backwages are not mutually
exclusive and both may be given to the respondent. The normal consequences of a finding that an employee has
been illegally dismissed are, firstly, that the employee becomes entitled to reinstatement to his former position
without loss of seniority rights and, secondly, the payment of backwages corresponding to the period from his
illegal dismissal up to actual reinstatement. These are two separate and distinct remedies granted to the employee
and the inappropriateness or non-availability of one does not carry with it the inappropriateness or non-
availability of the other. Under the doctrine of strained relations, the payment of separation pay has been
considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. The
grant of separation pay is a proper substitute only for reinstatement; it cannot be an adequate substitute for both
reinstatement and backwages. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R.
Ramil, G.R. No. 171630, August 8, 2010.
Dismissal; serious misconduct. 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 under the law, (a) it must be serious, (b) must
relate to the performance of the employees duties; and (c) must show that the employee has become unfit to
continue working for the employer.
It is noteworthy that prior to this incident, there had been several cases of theft and vandalism involving both
respondent companys property and personal belongings of other employees. In order to address this issue of
losses, respondent company issued two memoranda implementing an intensive inspection procedure and
reminding all employees that those who will be caught stealing and performing acts of vandalism will be dealt
with in accordance with the companys Code of Conduct. Despite these reminders, complainant took the packing
tape and was caught during the routine inspection. All these circumstances point to the conclusion that it was
not just an error of judgment, but a deliberate act of theft of company property. Nagkakaisang Lakas ng
Manggagawa sa Keihin (NLMK-OLALIA-KMU) and Helen Valenzuela vs. Keihin Philippines Corporation, G.R.
No. 171115, August 9, 2010.
Dismissal; union security. In terminating the employment of an employee by enforcing the union security clause,
the employer needs to determine and prove that: (1) the union security clause is applicable; (2) the union is
requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient evidence
to support the decision of the union to expel the employee from the union. These requisites constitute just cause
for terminating an employee based on the union security provision of the CBA.
The petitioner failed to satisfy the third requirement since nothing in the records would show that respondents
failed to maintain their membership in good standing in the union. Significantly, petitioners act of dismissing
respondents stemmed from the latters act of signing an authorization letter to file a petition for certification
election as they signed it outside the freedom period. The mere signing of an authorization letter before the
freedom period is not sufficient ground to terminate the employment of respondents inasmuch as the petition
itself was actually filed during the freedom period. The court emphasizes anew that the employer is bound to
exercise caution in terminating the services of his employees especially so when it is made upon the request of
a labor union pursuant to the Collective Bargaining Agreement. Picop Resources Incorporated (PRI) vs.
Anacleto L. Taeca, et al., G.R. No. 160828, August 9, 2010.
Dimissal; use of illegal drugs. The law is clear that drug tests shall be performed only by authorized drug testing
centers. In this case, Sulpicio Lines failed to prove that S.M. Lazo Clinic is an accredited drug testing center nor
did it deny the complainants allegation that S.M. Lazo Clinic was not accredited. Also, only a screening test
was conducted to determine if the complainant was guilty of using illegal drugs. Sulpicio Lines did not confirm
the positive result of the screening test with a confirmatory test as required by R.A. 9165. Hence, Sulpicio Lines
failed to indubitably prove that Nacague was guilty of using illegal drugs and failed to clearly show that it had a
valid and legal cause for terminating Nacagues employment. When the alleged valid cause for the termination
of employment is not clearly proven, as in this case, the law considers the matter a case of illegal
dismissal. Jeffrey Nacague vs. Sulpicio Lines, Inc., G.R. No. 172589, August 8, 2010.
Dismissal; validity. The company did not adduce any evidence to prove that Siazars dismissal had been for a
just or authorized cause, as in fact it had been its consistent stand that it did not terminate him and that he quit
on his own. But given the findings of the Court that the company had indeed dismissed Siazar and that such
dismissal has remained unexplained, there can be no other conclusion but that the dismissal was
illegal. Agricultural and Industrial Supplies Corporation, et al. vs. Jueber P. Siazar, et al., G.R. No. 177970,
August 25, 2010.
Due process; decision rendered without due process. The violation of a partys right to due process raises a
serious jurisdictional issue that cannot be glossed over or disregarded at will. Where the denial of the
fundamental right to due process is apparent, a decision rendered in disregard of that right is void for lack of
jurisdiction. This rule is equally true in quasi-judicial and administrative proceedings, for the constitutional
guarantee that no man shall be deprived of life, liberty, or property without due process is unqualified by the
type of proceedings (whether judicial or administrative) where he stands to lose the same. Winston F. Garcia vs.
Mario I. Molina, et al./Winston F. Garcia Vs. Mario I. Molina, et al., G.R. No. 157383/G.R. No. 174137, August
10, 2010.
Employee; evaluation and promotion. The fact that employees were re-classified from Job Grade Level 1 to Job
Grade Level 2 as a result of a job evaluation program does not automatically entail a promotion or grant them
an increase in salary. Of primordial consideration is not the nomenclature or title given to the employee, but the
nature of his functions. What transpired in this case was only a promotion in nomenclature. The employees
continued to occupy the same positions they were occupying prior to the job evaluation. Moreover, their job
titles remained the same and they were not given additional duties and responsibilities. SCA Hygiene Products
Corporation Employees Association-FFW vs. SCA Hygiene Products Corporation, G.R. No. 182877, August 9,
2010.
Employee; security of tenure. A workers security of tenure is guaranteed by the Constitution and the Labor
Code. Under the security of tenure guarantee, a worker can only be terminated from his employment for cause
and after due process. For a valid termination by the employer: (1) the dismissal must be for a valid cause as
provided in Article 282, or for any of the authorized causes under Articles 283 and 284 of the Labor Code; and
(2) the employee must be afforded an opportunity to be heard and to defend himself. A just and valid cause for
an employees dismissal must be supported by substantial evidence, and before the employee can be dismissed,
he must be given proper notice of such cause/s and an adequate opportunity to be heard. In the process, the
employer bears the burden of proving that the dismissal of an employee was for a valid cause. Its failure to
discharge this burden renders the dismissal unjustified and, therefore, illegal. Wensha Spa Center, Inc. and/or
Xu Zhi Jie vs. Loreta T. Yung, G.R. No. 185122, August 16, 2010.
Employee benefit; time of death. The death should be deemed compensable under the ECC since Henry was on
his way back to Manila in order to be on time and be ready for work the next day when his accidental death
occurred. He should already be deemed en route to the performance of his duty at the time of the accident. It
should be noted that Henrys superior allowed him to travel to La Union to visit his ailing mother on the condition
that that he return the next day. Under these facts, Henry was in the course of complying with his superiors
order when he met his fatal accident. To be sure, he was not in an actual firefighting or accident situation when
he died, but returning to work as instructed by his superior is no less equivalent to compensable performance of
duty under Section 1, Rule III of the ECC Rules. Government Service Insurance System vs. Felicitas Zarate, as
substituted by her heirs, namely Melanie Zarate, et al., G.R. No. 170847, August 3, 2010.
Illegal dismissal; effect of rehabilitation proceedings. The existence of the Stay Order which would generally
authorize the suspension of judicial proceedings could not have affected the Courts action on the present case
due to the petitioners failure to raise the pendency of the rehabilitation proceedings in its memorandum to the
Court. At any rate, a stay order simply suspends all actions for claims against a corporation undergoing
rehabilitation; it does not work to oust a court of its jurisdiction over a case properly filed before it. Thus, the
Courts ruling on the principal issue of the case stands. Nevertheless, with LBNIs manifestation that it is still
undergoing rehabilitation, the Court resolves to suspend the execution of our Decision until the termination of
the rehabilitation proceedings. Carlos De Castro vs. Liberty Broadcasting Network, Inc. and Edgardo
Quigue, G.R. No. 165153. August 25, 2010.
Job contracting. In permissible job contracting, the principal agrees to put out or farm out with a contractor or
subcontractor the performance or completion of a specific job, work or service within a definite or predetermined
period, regardless of whether such job, work or service is to be performed or completed within or outside the
premises of the principal. The test is whether the independent contractor has contracted to do the work according
to his own methods and without being subject to the principals control except only as to the results, he has
substantial capital, and he has assured the contractual employees entitlement to all labor and occupational safety
and health standards, free exercise of the right to self-organization, security of tenure, and social and welfare
benefits. Spic n Span Services Corp. vs. Gloria Paje, et al., G.R. No. 174084, August 25, 2010.
Management prerogative; transfer of employees. Jurisprudence recognizes the exercise of management
prerogative to transfer or assign employees from one office or area of operation to another, provided there is no
demotion in rank or diminution of salary, benefits, and other privileges, and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. To
determine the validity of the transfer of employees, the employer must show that the transfer is not unreasonable,
inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his
salaries, privileges and other benefits. Should the employer fail to overcome this burden of proof, the employees
transfer shall be tantamount to constructive dismissal. Pharmacia and Upjohn, Inc., et al. vs. Ricardo P. Albayda,
Jr., G.R. No. 172724, August 23, 2010.
Merger; employee terms and conditions. That BPI is the same entity as FEBTC after the merger is but a legal
fiction intended as a tool to adjudicate rights and obligations between and among the merged corporations and
the persons that deal with them. Although in a merger it is as if there is no change in the personality of the
employer, there is in reality a change in the situation of the employee. Once an FEBTC employee is absorbed,
there are presumably changes in his condition of employment even if his previous tenure and salary rate is
recognized by BPI. It is reasonable to assume that BPI would have different rules and regulations and company
practices than FEBTC and it is incumbent upon the former FEBTC employees to obey these new. Not the least
of these changes is the fact that prior to the merger FEBTC employees were employees of an unorganized
establishment and after the merger they became employees of a unionized company that had an existing CBA
with the certified union. Thus, although in a sense BPI is continuing FEBTCs employment of these absorbed
employees, BPIs employment of these absorbed employees will not be under exactly the same terms and
conditions as stated in the latters employment contracts with FEBTC. Bank of the Philippine Islands vs. BPI
Employees Union-Davao Chapter-Federation of Unions in BPI Unibank, G.R. No. 164301, August 10, 2010.
Reinstatement of employee; doctrine of strained relations. Under the doctrine of strained relations, the payment
of separation pay has been considered an acceptable alternative to reinstatement when the latter option is no
longer desirable or viable. On the one hand, such payment liberates the employee from what could be a highly
oppressive work environment. On the other, the payment releases the employer from the grossly unpalatable
obligation of maintaining in its employ a worker it could no longer trust. Wensha Spa Center, Inc. and/or Xu Zhi
Jie vs. Loreta T. Yung, G.R. No. 185122, August 16, 2010.
Retirement pay; applicability to employees on commission basis. Even if the petitioner as bus conductor was
paid on commission basis, he falls within the coverage of R.A. 7641 and its implementing rules. Thus, his
retirement pay should include the cash equivalent of 5-days SIL and 1/12 of 13th month pay. The NLRCs
reliance on the case of R & E Transport, Inc. as a basis for ruling that bus conductors are not covered by the law
on SIL and 13th month pay is erroneous since that involved a taxi driver who was paid according to the boundary
system. There is a difference between drivers paid under the boundary system and conductors who are paid
on commission basis. In practice, taxi drivers do not receive fixed wages and retain only those sums in excess
of the boundary or fee they pay to the owners or operators of the vehicles. Conductors, on the other hand, are
paid a certain percentage of the bus earnings for the day. Rodolfo J. Serrano vs. Severino Santos Transit and/or
Severino Santos, G.R. No. 187698, August 9, 2010.
Separation pay. In those instances where an employee has been validly dismissed for causes other than serious
misconduct or those reflecting on his moral character, separation pay may still be granted after giving
considerable weight to his long years of employment. In this case, equity considerations dictate that respondents
tenure be computed from 1978, the year when respondent started working for Upjohn, and not only from 1996,
when the merger of Pharmacia and Upjohn took place. Pharmacia and Upjohn, Inc., et al. vs. Ricardo p.
Albayda, Jr., G.R. No. 172724, August 23, 2010.
Strike; validity of strike. Despite the validity of the purpose of a strike and the unions compliance with the
procedural requirements, a strike may still be held illegal where the means employed are illegal. While the strike
had not been marred by actual violence and patent intimidation, the picketing that respondent PILA officers and
members undertook as part of their strike activities effectively blocked the free ingress to and egress from
PHIMCOs premises, thus preventing non-striking employees and company vehicles from entering the PHIMCO
compound. In this manner, the picketers violated Article 264(e) of the Labor Code and tainted the strike with
illegality. PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association (PILA), et al., G.R. No. 170830,
August 11, 2010.
Union; eligibility of confidential employees to join. Confidential employees are defined as those who (1) assist
or act in a confidential capacity, (2) to persons who formulate, determine, and effectuate management policies
in the field of labor relations. The two criteria are cumulative, and both must be met if an employee is to be
considered a confidential employee that is, the confidential relationship must exist between the employee and
his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. In the
present case, there is no showing that the secretaries/clerks and checkers assisted or acted in a confidential
capacity to managerial employees and obtained confidential information relating to labor relations policies. And
even assuming that they had exposure to internal business operations of the company, as respondent claims, this
is not per se ground for their exclusion in the bargaining unit of the rank-and-file employees. Tunay na
Pagkakaisa ng Manggagawa sa Asia Brewery vs. Asia Brewery, Inc., G.R. No. 162025, August 3, 2010.
Union; liability for invalid strike. The effects of illegal strikes, outlined in Article 264 of the Labor Code, make
a distinction between participating workers and union officers. The services of an ordinary striking worker
cannot be terminated for mere participation in an illegal strike; proof must be adduced showing that he or she
committed illegal acts during the strike. The services of a participating union officer, on the other hand, may be
terminated, not only when he actually commits an illegal act during a strike, but also if he knowingly participates
in an illegal strike. PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association (PILA), et al., G.R. No.
170830, August 11, 2010.
Union shop; effect of merger. All employees in the bargaining unit covered by a Union Shop Clause in their
CBA with management are subject to its terms. However, under law and jurisprudence, the following kinds of
employees are exempted from its coverage, namely, (1) employees who at the time the union shop agreement
takes effect are bona fide members of a religious organization which prohibits its members from joining labor
unions on religious grounds; (2) employees already in the service and already members of a union other than the
majority at the time the union shop agreement took effect; (3) confidential employees who are excluded from
the rank and file bargaining unit; and (4) employees excluded from the union shop by express terms of the
agreement. In the absence of any of these recognized exceptions, there is no basis to conclude that the terms and
conditions of employment under a valid CBA in force in the surviving corporation should not be made to apply
to the absorbed employees. Bank of the Philippine Islands vs. BPI Employees Union-Davao Chapter-Federation
of Unions in BPI Unibank, G.R. No. 164301, August 10, 2010.
Labor Procedure
CSC; rules for dismissal. The filing of formal charges against the respondents without complying with the
mandated preliminary investigation or at least giving the respondents the opportunity to comment violated the
latters right to due process. These rules on due process apply even in cases where the complainant is the
disciplining officer himself, as in this case. The fact that the charges against the respondents are serious or that
the evidence of their guilt is strong cannot compensate for the procedural shortcut undertaken by
petitioner. Winston F. Garcia vs. Mario I. Molina, et al./Winston F. Garcia Vs. Mario I. Molina, et al., G.R. No.
157383/G.R. No. 174137, August 10, 2010.
Labor case; due process; reevaluation. A reevaluation is a process by which a person or office (in this case the
DOLE secretary) revisits its own initial pronouncement and makes another assessment of its findings. In simple
terms, to reevaluate is to take another look at a previous matter in issue. From a procedural standpoint, a
reevaluation is a continuation of the original case and not a new proceeding. The evidence, financial reports and
other documents submitted by the parties in the course of the original proceeding are to be visited and reviewed
again. A reevaluation does not necessitate the introduction of new materials for review nor does it require a full
hearing for new arguments. Hence, failure to order the presentation of new evidence in the reevaluation of an
Order is not a violation of due process. NASECO Guards Association PEMA vs. National Service
Corporation, G.R. No. 165442, August 25, 2010.
Labor case; non-lawyer as representative. The respondents in this case were represented by a non-lawyer who
never showed any proof of his authority to represent the respondents. Petitioner argued that the respondents
representative had no personality to appear before the Labor Arbiter or the NLRC, and his representation for the
respondents should produce no legal effect. The Court affirmed the ruling of the CA that the cited technical
infirmity cannot defeat the respondents preferred right to security of tenure, without prejudice to whatever action
may be taken against the representative, if he had indeed been engaged in the unauthorized practice of law. Spic
n Span Services Corp. vs. Gloria Paje, et al., G.R. No. 174084, August 25, 2010.
NLRC; factual findings. Findings of fact of the NLRC, affirming those of the LA, are entitled to great weight
and will not be disturbed if they are supported by substantial evidence. The CA had overstepped its legal mandate
by reversing the findings of fact of the LA and the NLRC as it appears that both decisions were based on
substantial evidence. There is no proof of arbitrariness or abuse of discretion in the process by which each body
arrived at its own conclusions. Thus, the CA should have deferred to such specialized agencies that are
considered experts in matters within their jurisdictions. Pharmacia and Upjohn, Inc., et al. vs. Ricardo P.
Albayda, Jr., G.R. No. 172724, August 23, 2010.
NLRC; review of decisions. The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition
for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National Labor
Relations Commission. This Court held that the proper vehicle for such review was a Special Civil Action
for Certiorari under Rule 65 of the Rules of Court, and that this action should be filed in the Court of Appeals
in strict observance of the doctrine of the hierarchy of courts. Moreover, it is already settled that under Sec. 9 of
B.P. 129, as amended, the Court of Appeals pursuant to the exercise of its original jurisdiction over Petitions
for Certiorari is specifically given the power to pass upon the evidence, if and when necessary, to resolve
factual issues. Picop Resources Incorporated (PRI) vs. Anacleto L. Taeca, et al., G.R. No. 160828, August 9,
2010.
Pleading verification. The lack of a verification in a pleading is only a formal defect, not a jurisdictional defect,
and is not necessarily fatal to a case. The primary reason for requiring a verification is simply to ensure that the
allegations in the pleading are done in good faith, are true and correct, and are not mere speculations. As
previously explained in Torres v. Specialized Packaging Development Corporation, where only two of the 25
real parties-in-interest signed the verification, the verification by the two could be sufficient assurance that the
allegations in the petition were made in good faith, are true and correct, and are not speculative. Spic n Span
Services Corp. vs. Gloria Paje, et al., G.R. No. 174084, August 25, 2010.
Procedural rules; strict application. Procedural rules setting the period for perfecting an appeal or filing a petition
for review are generally inviolable. It is doctrinally entrenched that an appeal is not a constitutional right, but a
mere statutory privilege. Hence, parties who seek to avail themselves of such privilege must comply with the
statutes or rules allowing it. Furthermore, the perfection of an appeal in the manner and within the period
permitted by law is not only mandatory, but also jurisdictional. Failure to perfect the appeal renders the judgment
of the court final and executory. Just as a losing party has the privilege to file an appeal within the prescribed
period, so does the winner also have the correlative right to enjoy the finality of the decision. Elpidio Calipay
vs. National Labor Relations Commission, et al., G.R. No. 166411, August 3, 2010.
Real party in interest; dismissed employee. It is clear that the petitioners failed to include the name of the
dismissed employee in the caption and body of its petition for certiorari and, instead, only indicated the name of
the labor union as the party acting on behalf of such dismissed employee. Hence, the Court of Appeals rightly
dismissed the petition for not having been filed by an indispensable party in interest. (The Court still proceeded
to discuss the substantive issues and merits of the case despite affirming the dismissal of the case based on
procedural grounds.) Nagkakaisang Lakas ng Manggagawa sa Keihin (NLMK-OLALIA-KMU) and Helen
Valenzuela vs. Keihin Philippines Corporation, G.R. No. 171115, August 9, 2010.
Rule 45; review of factual findings. As a general rule, only questions of law may be raised in petitions for
certiorari under Rule 45 of the Rules of Court. However, there are recognized exceptions to the rule. Among the
exceptions are when the findings of fact are conflicting and when the findings are conclusions without citation
of specific evidence on which they are based. In the present case, the findings of fact of the Court of Appeals
conflict with the findings of fact of the NLRC and the Labor Arbiter. Also, the finding of the Court of Appeals
that Gurango engaged in a fistfight is a conclusion without citation of specific evidence on which it is based. Alex
Gurango vs. Best Chemicals and Plastic, Inc., et al., G.R. No. 174593, August 25, 2010.

July 2010 Philippine Supreme Court Decisions

on Labor Law and Procedure
Posted on August 27, 2010 by Leslie C. Dy Posted in Labor Law Tagged due process, employee benefits, employer-employee
relationship, illegal dismissal, intra-union dispute, jurisdiction, labor-only
contracting, NLRC, redundancy, retirement, retrenchment, suspension
Here are selected July 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor Law
Assumption of jurisdiction by Secretary of Labor; authority to decide on legality of dismissals arising from
strike. The assumption of jurisdiction powers granted to the Labor Secretary under Article 263(g) is not limited
to the grounds cited in the notice of strike or lockout that may have preceded the strike or lockout; nor is it
limited to the incidents of the strike or lockout that in the meanwhile may have taken place. As the term assume
jurisdiction connotes, the intent of the law is to give the Labor Secretary full authority to resolve all matters
within the dispute that gave rise to or which arose out of the strike or lockout, including cases over which the
labor arbiter has exclusive jurisdiction.
In the present case, what the Labor Secretary refused to rule upon was the dismissal from employment of
employees who violated the return to work order and participated in illegal acts during a strike. This was an issue
that arose from the strike and was, in fact, submitted to the Labor Secretary, through the unions motion for the
issuance of an order for immediate reinstatement of the dismissed officers and the companys opposition to the
motion. The dismissal issue was properly brought before the Labor Secretary and he was mistaken in ruling that
the matter is legally within the exclusive jurisdiction of the labor arbiter to decide. Bagong Pagkakaisa ng
Manggagawa ng Triumph International, et al. vs. Secretary of Department of Labor and Employment, et
al./Triumph International (phils.), Inc. vs. Bagong Pagkakaisa ng Manggagawa ng Triumph International, et
al., G.R. No. 167401, July 5, 2010.
Bargaining deadlock; award; findings of Secretary of Labor. Unless there is a clear showing of grave abuse of
discretion, the Court cannot, and will not, interfere with the expertise of the Secretary of Labor. The award
granted by the Labor Secretary in resolving the bargaining deadlock, drawn as they were from a close
examination of the submissions of the parties, do not indicate any legal error, much less any grave abuse of
discretion, and should not be disturbed. Bagong Pagkakaisa ng Manggagawa ng Triumph International, et al.
vs. Secretary of Department of Labor and Employment, et al./Triumph International (phils.), Inc. vs. Bagong
Pagkakaisa ng Manggagawa ng Triumph International, et al., G.R. No. 167401, July 5, 2010.
Dismissal of employees; just cause. Theft committed by an employee is a valid reason for his dismissal by the
employer. Although as a rule this Court leans over backwards to help workers and employees continue with
their employment or to mitigate the penalties imposed on them, acts of dishonesty in the handling of company
property, petitioners income in this case, are a different matter. Maribago Bluewater Beach Resort, Inc. vs. Nito
Dual, G.R. No. 180660, July 20, 2010.
Dismissal of employees; requirements. The validity of an employees dismissal from service hinges on the
satisfaction of the two substantive requirements for a lawful termination. These are, first, whether the employee
was accorded due process the basic components of which are the opportunity to be heard and to defend
himself. This is the procedural aspect. And second, whether the dismissal is for any of the causes provided in
the Labor Code of the Philippines. This constitutes the substantive aspect. Erector Advertising Sign Group, Inc.
and Arch Jimy C. Amoroto vs. Expedito Cloma, G.R. No. 167218, July 2, 2010.
Dismissal of employees; procedural due process. Furnishing the employee with a suspension order prior to his
notice of termination does not satisfy the requirement of a first notice. It implies that the employer has already
decided, for the reasons stated therein, to suspend the employee from work in the company, and the wording of
the order in the present case gives no indication that the employee is being given an opportunity to submit his
defense or explanation. Erector Advertising Sign Group, Inc. and Arch Jimy C. Amoroto vs. Expedito
Cloma, G.R. No. 167218, July 2, 2010.
Dismissal of employees; procedural due process. In order to validly dismiss an employee, he must be accorded
both substantive and procedural due process by the employer. 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. Even
if the aforesaid procedure is conducted after the filing of the illegal dismissal case, the legality of the dismissal,
as to its procedural aspect, will be upheld provided that the employer is able to show that compliance with these
requirements was not a mere afterthought. New Puerto Commercial and Richard Lim vs. Rodel Lopez and Felix
Gavan, G.R. No. 169999, July 26, 2010.
Employee benefits; 13th month pay; definition of basic salary. The term basic salary of an employee for the
purpose of computing the thirteenth-month pay was interpreted to include all remuneration or earnings paid by
the employer for services rendered, but does not include allowances and monetary benefits which are not
integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave
credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these
salary-related benefits should be included as part of the basic salary in the computation of the thirteenth-month
pay if, by individual or collective agreement, company practice or policy, the same are treated as part of the
basic salary of the employees. Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-
NLU, G.R. No. 188949, July 26, 2010
Employee benefits; 13th month pay; company policy or practice. The practice of petitioner in giving 13th-month
pay based on the employees gross annual earnings which included the basic monthly salary, premium pay for
work on rest days and special holidays, night shift differential pay and holiday pay continued for almost thirty
(30) years and has ripened into a company policy or practice which cannot be unilaterally withdrawn. The
petitioner cannot claim that the practice arose from an erroneous application of the law since no doubtful or
difficult question of law is involved in this case. The guidelines set by the law are not difficult to
decipher. Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU, G.R. No. 188949,
July 26, 2010
Employee benefits; death benefits. For the death of a seafarer to be compensable under the 1996 POEA Standard
Employment Contract, the death must occur during the term of his contract of employment. In this case, the
seaman died 2 years after he was repatriated to the Philippines due to medical reasons, hence the claimants are
not entitled to receive death benefits under the contract. The decedents heirs claimed that the death should be
compensable since the nature of his work as a seaman triggered the illnesses that eventually led to his death.
However, the Court noted that though the immediate cause of the seamans death was pneumonia, the underlying
cause of death was advanced HIV (AIDS). Since the claimants failed to prove that the decedent acquired HIV
during his 2-month employment aboard the respondents vessel, their claim for death benefits was denied. Lydia
Escarcha vs. Leonis Navigation Co., Inc., et al., G.R. No. 182740, July 5, 2010.
Employees; government agency. The Armed Forces of the Philippines Commissary and Exchange Services
(AFPCES) is a government agency performing proprietary functions. By clear implication of law, all AFPCES
personnel should therefore be classified as government employees and any complaint for illegal dismissal
involving such employees should be filed with the CSC and not the NLRC. Such fact cannot be negated by the
failure of AFPCES to follow appropriate civil service rules in the hiring, appointment, discipline and dismissal
of employees. Neither can it be denied by the fact that AFPCES chose to enroll its employees in the SSS instead
of the GSIS. Such considerations cannot be used against the CSC to deprive it of its jurisdiction. Hence, the
Labor Arbiters decision in the illegal dismissal case filed by AFPCES employees is a total nullity for having
been rendered without jurisdiction. Magdalena Hidalgo, et al. vs. Republic of the Philippines, G.R. No. 179793,
July 5, 2010.
Employer-employee relationship; evidence. Any doubt arising from the evaluation of evidence as between the
employer and the employee must be resolved in favor of the latter. It is settled jurisprudence that the burden of
proving payment of monetary claims rests on the employer. It was entirely within the companys power to
present personnel files, payrolls, remittances, and other similar documents which would have proven payment
of respondents money claims as these documents should necessarily be in its possession; hence, failure to
present such evidence must be taken against it. Dansart Security Force & Allied Services Company and Danilo
A. Sarte vs. Ms. Jean O. Bagoy, G.R. No. 168495, July 2, 2010.
Government agencies; reorganization. A reorganization is valid provided it is done in good faith. As a general
rule, the test of good faith lies in whether the purpose of the reorganization is for economy or to make the
bureaucracy more efficient. Removal from office as a result of reorganization must, thus, pass the test of good
faith. A demotion in office is tantamount to removal if no cause is shown for it. Consequently, before a demotion
may be effected pursuant to a reorganization, the observance of the rules on bona fide abolition of public office
is essential. Virginia D. Bautista vs. Civil Service Commission and Devt. Bank of the Philippines, G.R. No.
185215, July 22, 2010.
Government agencies; reorganization; personal liability of local official. The RTC of Cadiz declared void a
resolution that reorganized the city government and effectively purged the city government of Cadiz of all
employees who opposed the mayor politically or disagreed with him in his policies. The RTC ordered the
payment of moral damages to the workers, but it was not clear if the payment was to be made by the city
government or by Mayor Valera, in his personal capacity. The Court held that Varela is personally liable to pay
moral damages. Settled is the principle that a public official may be liable in his personal capacity for whatever
damage he may have caused by his act done with malice and in bad faith or beyond the scope of his authority or
jurisdiction. In the complaint, the employees stated that, due to the illegal acts of the Defendant, Plaintiffs
suffered mental torture and anguish, sleepless nights, wounded feelings, besmirched reputation and social
humiliation. The State can never be the author of illegal acts. The complaint merely identified Varela as the
mayor of Cadiz City. It did not categorically state that Varela was being sued in his official capacity. The
identification and mention of Varela as the mayor of Cadiz City did not automatically transform the action into
one against Varela in his official capacity. The allegations in the complaint determine the nature of the cause of
action. Eduardo Valera vs. Ma. Daisy Revalez, G.R. No. 171705, July 29, 2010.
Illegal dismissal; burden of proof; filing of complaint not sufficient to disprove abandonment. In illegal dismissal
cases, the employer bears the burden of proving that the termination was for a valid or authorized cause.
However, before the employer is asked to prove that the dismissal was legal, the employee must first establish
by substantial evidence the fact of his dismissal from service. Logically, if there is no dismissal, then there can
be no question as to its legality or illegality.
Under normal circumstances, an employees act of filing an illegal dismissal complaint against his employer is
inconsistent with abandonment. However, the courts should not use that one act to conclude that an employee
was constructively dismissed when substantial evidence proves otherwise. In this case, substantial evidence
proves that Pulgar was not constructively dismissed, and that he had abandoned his duties in order to avoid an
investigation being conducted by his employer. Philippine Rural Reconstruction vs. Virgilio Pulgar, G.R. No.
169227. July 5, 2010.
Illegal dismissal; misrepresentation of cause is an act of bad faith. The complainant, Rio Remo, was dismissed
from service on the ground of retrenchment. However, the records show that Sentinel hired a replacement soon
after Remos dismissal, proving that Sentinels financial distress was not as serious as it claimed, and that
retrenchment was not the real reason for Remos dismissal. Sentinel concealed its true intention and committed
misrepresentation when it claimed that Remos dismissal was due to serious financial losses. This act of
misrepresentation is an act of active bad faith that fatally tainted Remos dismissal and rendered it
illegal. Sentinel Integrated Services, Inc. vs. Rio Jose Remo, G.R. No. 188223, July 5, 2010.
Illegal dismissal; relief available to employee. An illegally dismissed employee is entitled to reinstatement
without loss of seniority rights and other privileges and to full backwages, inclusive of allowances, and to her
other benefits or their monetary equivalent, computed from the time the compensation was withheld up to the
time of actual reinstatement. Where reinstatement is no longer feasible, separation pay equivalent to at least one
month salary or one month salary for every year of service, whichever is higher, a fraction of at least six months
being considered as one whole year, should be awarded to respondent. An award for moral and exemplary
damages cannot be justified unless the employer had acted in bad faith. The award of moral and exemplary
damages cannot be justified solely upon the premise that the employer dismissed his employee without
authorized cause and due process. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen
Binamira, G.R. No. 170464. July 12, 2010.
Labor-only contracting. Despite the fact that the service contracts contain stipulations which are earmarks of
independent contractorship, they do not make it legally so. The language of a contract is neither determinative
nor conclusive of the relationship between the parties. The parties cannot dictate, by a declaration in a contract,
the character of the contractors business as a labor-only contractor or a legitimate job contractor, which should
be determined by the criteria set by statute. Here, a closer look at AMPCOs actual status and participation
regarding the employment of the complainants clearly belie the contents of the written service contract. San
Miguel Corporation vs. Vicente Semillan, et al., G.R. No. 164257, July 5, 2010.
Labor-only contracting; evidence. A Certificate of Registration as an Independent Contractor is not conclusive
evidence of such status. In distinguishing between permissible job contracting and prohibited labor-only
contracting, the totality of the facts and the surrounding circumstances of the case are to be considered. San
Miguel Corporation vs. Vicente Semillan, et al., G.R. No. 164257, July 5, 2010.
Liability of officers for illegal dismissal. Corporate officers are only solidarily liable with the corporation for the
illegal termination of services of employees if they acted with malice or bad faith. In Philippine American Life
and General Insurance v. Gramaje, bad faith is defined as a state of mind affirmatively operating with furtive
design or with some motive of self-interest or ill will or for ulterior purpose. It implies a conscious and
intentional design to do a wrongful act for a dishonest purpose or moral obliquity. The lack of authorized or just
cause to terminate ones employment and the failure to observe due process do not ipso facto mean that the
corporate officer acted with malice or bad faith. There must be independent proof of malice or bad faith which
is lacking in the present case. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen
Binamira, G.R. No. 170464. July 12, 2010.
Preventive suspension. Preventive suspension is justified where the employees continued employment poses a
serious and imminent threat to the life or property of the employer or of the employees co-workers. Without
this kind of threat, preventive suspension is not proper. Jose P. Artificio vs. National Labor Relations
Commission, RP Guardians Security Agency, Inc. Juan Victor K. Laurilla, Alberto Aguirre, and Antonio A.
Andres, G.R. No. 172988, July 26, 2010
Public employees; demotion. There is demotion when an employee is appointed to a position that results in a
diminution in duties, responsibilities, status or rank which may or may not involve a reduction in salary. Where
an employee is appointed to a position with the same duties and responsibilities with a rank and salary higher
than those he enjoyed in his previous position, there is no demotion and the appointment is valid. Virginia D.
Bautista vs. Civil Service Commission and Devt. Bank of the Philippines, G.R. No. 185215, July 22, 2010.
Public employees; downgrading of employees. The summary reallocation of Gos position to a lower degree
resulting in the corresponding downgrading of his salary infringed the policy of non-diminution of pay which
the Court recognized and applied in Philippine Ports Authority v. Commission on Audit, as well as in the
subsequent sister cases involving benefits of government employees. Running through the gamut of these cases
is the holding that the affected government employees shall continue to receive benefits they were enjoying as
incumbents upon the effectivity of RA 6758. Relevant to the critical issue at hand is Sec. 15 (b) of PD 985 which,
as amended by Sec. 13 (a) of RA 6758, pertinently reads: Sec. 13. Pay Reduction If an employee is moved
from a higher to a lower class, he shall not suffer a reduction in salary: Provided, That such movement is not
the result of a disciplinary action or voluntary demotion. Gonzalo S. Go, Jr. vs. CA and Office of the
President, G.R. No. 172027. July 29, 2010
Redundancy; definition; requisites. Redundancy exists when the service capability of the workforce is in excess
of what is reasonably needed to meet the demands of the enterprise. A redundant position is one rendered
superfluous by any number of factors, such as over hiring of workers, decreased volume of business, dropping
of a particular product line previously manufactured by the company, or phasing out of a service activity
previously undertaken by the business. Under these conditions, the employer has no legal obligation to keep in
its payroll more employees than are necessary for the operation of its business.
For a valid implementation of a redundancy program, the employer must comply with the following requisites:
(1) written notice served on both the employees and the DOLE at least one month prior to the intended date of
termination of employment; (2) payment of separation pay equivalent to at least one month pay for every year
of service; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining
what positions are to be declared redundant and accordingly abolished. Lambert Pawnbrokers and Jewelry
corporation and Lambert Lim vs. Helen Binamira, G.R. No. 170464. July 12, 2010.
Retirement; retirement age. The retirement age is primarily determined by the existing agreement or employment
contract. Absent such an agreement, the retirement age under Article 287 of the Labor Code will apply. Amelia
R. Obusan vs. Philippine National Bank, G.R. No. 181178, July 26, 2010.
Retirement; retirement plan. Retirement plans allowing employers to retire employees who have not yet reached
the compulsory retirement age of 65 years are not per se repugnant to the constitutional guaranty of security of
tenure. By its express language, the Labor Code permits employers and employees to fix the applicable
retirement age at 60 years or below, provided that the employees retirement benefits under any CBA and other
agreements shall not be less than those provided by law. Amelia R. Obusan vs. Philippine National Bank, G.R.
No. 181178, July 26, 2010.
Retrenchment; definition; requisites. Retrenchment is the termination of employment initiated by the employer
through no fault of and without prejudice to the employees. It is resorted to during periods of business recession,
industrial depression, seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials,
conversion of the plant to a new production program, or automation. It is a management prerogative resorted to
avoid or minimize business losses.
To effect a valid retrenchment, the following elements must be present: (1) the retrenchment is reasonably
necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but
substantial, serious and real, or only if expected, are reasonably imminent as perceived objectively and in good
faith by the employer; (2) the employer serves written notice both to the employee/s concerned and the DOLE
at least one month before the intended date of retrenchment; (3) the employer pays the retrenched employee
separation pay in an amount prescribed by law; (4) the employer exercises its prerogative to retrench in good
faith; and (5) the employer uses fair and reasonable criteria in ascertaining who would be retrenched or
retained. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No.
170464. July 12, 2010
Retrenchment; decrease in income is not business loss. A sharp drop in income from P1million to
only P665,000.00 is not the kind of business losses contemplated by the Labor Code that would justify a valid
retrenchment. A mere decline in gross income cannot in any manner be considered as serious business losses.
It should be substantial, sustained and real. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim
vs. Helen Binamira, G.R. No. 170464. July 12, 2010.
Separation pay; as equitable relief. Having determined that the imposition of preventive suspension was proper
and that the complainant was not illegally dismissed, the Court found no basis to grant backwages. However,
given the attendant circumstances of the case that complainant had been working with the company for a
period of sixteen (16) years without any previous derogatory record the Court held that the ends of social and
compassionate justice would be served if the employee is given some equitable relief in the form of separation
pay. Jose P. Artificio vs. National Labor Relations Commission, RP Guardians Security Agency, Inc. Juan victor
K. Laurilla, Alberto Aguirre, and Antonio A. Andres, G.R. No. 172988, July 26, 2010

LABOR PROCEDURE
Jurisdiction; intra-union disputes. Section 226 of the Labor Code clearly provides that the BLR and the Regional
Directors of DOLE have concurrent jurisdiction over inter-union and intra-union disputes. Such disputes include
the conduct or nullification of election of union and workers association officers. There is, thus, no doubt as to
the BLRs jurisdiction over the instant dispute involving member-unions of a federation arising from
disagreement over the provisions of the federations constitution and by-laws. Atty. Allan S. Montao vs. Atty
Ernesto C. Verceles, G.R. No. 168583, July 26, 2010.
Labor tribunal; factual finding. As a rule, a petition for certiorari under Rule 65 is valid only when the question
involved is an error of jurisdiction, or when there is grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the court or tribunals exercising quasi-judicial functions. Hence, courts exercising
certiorari jurisdiction should refrain from reviewing factual assessments of the respondent court or agency.
Occasionally, however, they are constrained to wade into factual matters when the evidence on record does not
support those factual findings; or when too much is concluded, inferred or deduced from the bare or incomplete
facts appearing on record. The CA rightfully reviewed the correctness of the labor tribunals factual findings not
only because of the foregoing inadequacies, but also because the NLRC and the Labor Arbiter came up with
conflicting findings. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R.
No. 170464. July 12, 2010.
Money claims; effect of failure to include in prayer for relief. The rule is well-settled that points of law, theories,
issues and arguments not adequately brought to the attention of the trial court need not be, and ordinarily will
not be considered by a reviewing court as they cannot be raised for the first time on appeal because this would
be offensive to the basic rules of fair play, justice and due process. Though there is nothing on record which
would show that the amount of P207,693 has been returned to PRRM, a perusal of the pleadings show that
PRRM failed to include the return of such amount in its prayer for relief. Hence, the Labor Arbiter cannot act on
the same. A prayer for a monetary award should have been raised at the earliest opportunity before the Labor
Arbiter. Philippine Rural Reconstruction vs. Virgilio Pulgar, G.R. No. 169227. July 5, 2010.
NLRC Rules of Procedure; certificate of non-forum shopping. The filing of a certificate of non-forum shopping
is mandatory in initiatory pleadings; non-compliance with the required certification is fatal. The filing of the
same is not waived by the other partys failure to immediately assert the defect, and neither is it cured by its
belated submission on the ground that the party was not in any way guilty of actual forum shopping. In cases
where the Court tolerated the deficiency, special circumstances or compelling reasons made the strict application
unjustified. In this case, however, the petitioners offered no valid justification for their failure to comply with
the Circular. Mandaue Galleon Trade, Inc., et al. vs. Bienvenido Isidto, et al., G.R. No. 181051, July 5, 2010.
Rule 45; when review of facts allowed. As a rule, a petition for review under Rule 45 of the Rules of Court must
raise only questions of law. However, the rule has exceptions such as when the findings of the Labor Arbiter,
NLRC and Court of Appeals vary, as in this case. Maribago Bluewater Beach Resort, Inc. vs. Nito Dual, G.R.
No. 180660, July 20, 2010.

June 2010 Philippine Supreme Court Decisions

on Labor Law and Procedure
Posted on July 16, 2010 by Leslie C. Dy Posted in Labor Law Tagged burden of proof, constructive dismissal, employee
benefits, employer-employee relationship, evidence, forum shopping, illegal dismissal, judgment, jurisdiction, loss of trust and
confidence, pleading, prescription, res judicata, waiver

Here are selected June 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor Law
Acceptance of Benefits, render moot claim under other policies. As in the case of Capili v. National Labor
Relations Commission [273 SCRA 576], a claim for benefit under the companys retirement plan becomes moot
when the employee accepts retirement benefits on the basis of Article 287 of the Labor Code. By Yusons
acceptance of her retirement benefits through a compromise agreement entered into with her employer, she is
deemed to have opted to retire under Article 287. Korean Air Co., Ltd and Suk Kyoo Kim v. Adelina A.S.
Yuson, G.R. No. 170369, June 16, 2010.
Approval for companys early retirement program; management prerogative. Approval of applications for the
early retirement program (ERP) is within the employers management prerogatives. The exercise of
management prerogative is valid as long as it is not done in a malicious, harsh, oppressive, vindictive, or wanton
manner. In the present case, the Court sees no bad faith on the part of the employer. The 21 August 2001
memorandum clearly states that petitioner, on its discretion, was offering ERP to its employees. The
memorandum also states that the reason for the ERP was to prevent further losses. Petitioner did not abuse its
discretion when it excluded respondent in the ERP because the latter is already about to retire. To allow
respondent to avail of the ERP would have been contrary to the purpose of the program. Korean Air Co., Ltd
and Suk Kyoo Kim v. Adelina A.S. Yuson, G.R. No. 170369, June 16, 2010.
Constructive dismissal; definition; transfer as management prerogative. Constructive dismissal is defined as a
quitting because continued employment is rendered impossible, unreasonable or unlikely, or when there is a
demotion in rank or a diminution of pay. It exists when an act of clear discrimination, insensibility or disdain by
an employer has become so unbearable to the employee leaving him with no option but to forego with his
continued employment.
Here, there was no diminution of petitioners salary and other benefits. There was no evidence that she was
harassed or discriminated upon, or that respondents made it difficult for her to continue with her other
duties. Absent any evidence of bad faith, it is within the exercise of respondents management prerogative to
transfer some of petitioners duties, if, in their judgment, this would be more beneficial to the
corporation. Estrella Velasco vs. Transit Automotive Supply, Inc. and Antonio de Dios, G.R. No. 171327, June
18, 2010.
Constructive dismissal; off-detailing; resignation; notice requirement. The company evidently placed petitioner
on floating status after being relieved of her position. But, as the Court has repeatedly ruled, such act of off-
detailing does not amount to a dismissal so long as the floating status does not continue beyond a reasonable
time. In this case, the employees floating status ran up to more than six months as of August 16, 2002. For this
reason, the company may be considered to have constructively dismissed the employee from work as of that
date. Hence, petitioners purported resignation on October 15, 2002 could not have been legally possible.
The company claims that it gave petitioner notices on August 23, 2002 and September 2, 2002, asking her to
explain her failure to report for work and informing her that the company would treat such failure as lack of
interest in her continued employment. But these notices cannot possibly take the place of the notices required
by law as they came more than six months after the company placed her on floating status, at which time, the
employee is already deemed to have been constructively dismissed her from work. Elsa S. Mali-on v. Equitable
General Services Inc., G.R. No. 185269, June 29, 2010.
Death benefits; entitlement. In order to avail of death benefits, the death of the employee should occur during
the term of the employment contract. For emphasis, we reiterate that the death of a seaman during the term of
employment contract makes the employer liable to his heirs for death benefits, but if the seaman dies after his
contract of employment has expired, his beneficiaries are not entitled to the death benefits. Southeastern
Shipping, Southeastern Shipping Group, Ltd. vs. Federico U. Navarra, Jr., G.R. No. 167678, June 22, 2010.
Death benefits; post-medical examination; inadvertence of employer. In the cases of Philippines., Inc. v. Joaquin
[437 SCRA 608] and Rivera v. Wallem Maritime Services, Inc.[474 SCRA 714], the Supreme Court stressed
the importance of a post-employment medical examination or its equivalent for the award of death benefits to
seafarers and/or their representatives in compliance with POEA Memorandum Circular No. 055-96 and
Department Order No. 33, Series of 1996, which provide that the seafarer must report to his employer for a post-
employment medical examination within three working days from the date of arrival, otherwise, benefits under
the POEA standard employment contract would be nullified. However, in the present case, the absence of a
post-employment medical examination cannot be used to defeat respondents claim since the failure to subject
the seafarer to this requirement was not due to the seafarers fault but to the inadvertence or deliberate refusal of
petitioners. Interorient Maritime Enterprises, Inc. et al. v. Leonora S. Remo, G.R. No. 181112, June 29, 2010.
Dismissal; breach of trust; lack of loss not a defense. The acts of the employee revealed a mind that was willing
to disregard bank rules and regulations when other branch officers concurred. Her defense that the bank suffered
no loss is of no moment. The focal point is that she betrayed the trust of the bank. Hence, the bank rightfully
terminated the services of the employee for willful breach of the trust that it reposed in her. Luzviminda A. Ang
vs. Philippine National Bank, G.R. No. 178762, June 16, 2010.
Dismissal; burden of proof. In termination cases, the burden of proof rests upon the employer to show that the
dismissal of the employee is for just cause and failure to do so would mean that the dismissal is not justified.
This is in consonance with the guarantee of security of tenure in the Constitution, and elaborated in the Labor
Code. A dismissed employee is not required to prove his innocence to the charges leveled against him by his
employer. The determination of the existence and sufficiency of a just cause must be exercised with fairness and
in good faith and after observing due process. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann
Beloy vs. Marlyn Cuavas, G.R. No. 169523, June 16, 2010.
Dismissal; exercised with compassion and understanding; doubts resolved in favor of employee. While an
employer has its own interest to protect, and pursuant thereto, it may terminate a managerial employee for a just
cause, such prerogative to dismiss or lay off an employee must be exercised without abuse of discretion. Its
implementation should be tempered with compassion and understanding. The employer should bear in mind that,
in the exercise of the said prerogative, what is at stake is not only the employees position, but his very livelihood,
his very breadbasket. Indeed, the consistent rule is that if doubts exist between the evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of the latter. The employer must
affirmatively show rationally adequate evidence that the dismissal was for justifiable cause. Thus, when the
breach of trust or loss of confidence alleged is not borne by clearly established facts, as in this case, such
dismissal on the cited grounds cannot be allowed. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy
Ann Beloy vs. Marlyn Cuavas, G.R. No. 169523, June 16, 2010.
Dismissal; gross neglect of duty; duty to family is no defense. Dr. Estampas defense is not acceptable. A
persons duty to his family is not incompatible with his job-related commitment to come to the rescue of victims
of disasters. Disasters do not strike every day. Besides, knowing that his job as senior medical health officer
entailed the commitment to make a measure of personal sacrifice, he had the choice to resign from it when he
realized that he did not have the will and the heart to respond. Dr. Edilberto Estampa, Jr. vs. Government of
Davao, G.R. No. 190681, June 21, 2010.
Dismissal; loss of confidence not entitled to separation pay. It is significant to stress that for there to be a valid
dismissal based on loss of trust and confidence, the breach of trust must be willful, meaning it must be done
intentionally, knowingly, and purposely, without justifiable excuse. The basic premise for dismissal on the
ground of loss of confidence is that the employee concerned holds a position of trust and confidence. It is the
breach of this trust that results in the employers loss of confidence in the employee.
In the case of Aromin v. NLRC [553 SCRA 273], the assistant vice-president of BPI was validly dismissed for
loss of trust and confidence. The Court disallowed the payment of separation pay on the ground that he was
found guilty of willful betrayal of trust, a serious offense akin to dishonesty. Bank of the Philippine Islands and
BPI Family Bank vs. Hon. National Labor Relations Commission (1st Division) and Ma. Rosario N.
Arambulo, G.R. No. 179801. June 18, 2010.
Dismissal; loss of trust and confidence; managerial employees. Loss of trust and confidence, as a just cause for
termination of employment, is premised on the fact that an employee concerned holds a position where greater
trust is placed by management and from whom greater fidelity to duty is correspondingly expected. This includes
managerial personnel entrusted with confidence on delicate matters, such as the custody, handling, or care and
protection of the employers property. The betrayal of this trust is the essence of the offense for which an
employee is penalized.
It must be noted, however, that in a plethora of cases, the Supreme Court has distinguished the treatment of
managerial employees from that of rank-and-file personnel, insofar as the application of the doctrine of loss of
trust and confidence is concerned. Thus, with respect to rank-and-file personnel, loss of trust and confidence, as
ground for valid dismissal, requires proof of involvement in the alleged events in question, and that mere
uncorroborated assertions and accusations by the employer will not be sufficient. But as regards a managerial
employee, the mere existence of a basis for believing that such employee has breached the trust of his employer
would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond reasonable doubt is
not required, it being sufficient that 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. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann Beloy vs. Marlyn Cuavas, G.R. No.
169523, June 16, 2010.
Dismissal; mere negligence or carelessness not sufficient ground for loss of confidence. Respondents negligence
or carelessness in her duties, however, are not justifiable grounds for petitioners loss of trust and confidence in
her, especially in the absence of any malicious intent or fraud on respondents part. Loss of trust and confidence
stems from a breach of trust founded on a dishonest, deceitful or fraudulent act. In the case at bar, respondent
did not commit any act which was dishonest or deceitful. She did not use her authority as the Finance and
Administration Manager to misappropriate company property nor did she abuse the trust reposed in her by
petitioners with respect to her responsibility to implement company rules. The most that can be attributed to
respondent is that she was remiss in the performance of her duties. This, though, does not constitute dishonest
or deceitful conduct which would justify the conclusion of loss of trust and confidence. Lima Land, Inc.,
Leandro Javier, Sylvia Duque and Premy Ann Beloy vs. Marlyn Cuavas, G.R. No. 169523, June 16, 2010.
Dismissal for just cause, separation pay allowed in exceptional cases. While 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, the Court has allowed in numerous cases the grant of separation pay or some other financial
assistance to an employee dismissed for just causes on the basis of equity.
In the leading case of Philippine Long Distance Telephone Co. v. NLRC [164 SCRA 671] the Court stated that
separation pay shall be allowed as a measure of social justice only in those instances where the employee is
validly dismissed for causes other than serious misconduct or those reflecting on his moral character. In granting
separation pay to respondent, the NLRC and Court of Appeals both adhered to this jurisprudential precept and
cleared respondent of bad faith. Bank of the Philippine Islands and BPI Family Bank vs. Hon. National Labor
Relations Commission (1st Division) and Ma. Rosario N. Arambulo, G.R. No. 179801, June 18, 2010.
Employee benefit; total disability construed. It has been held that disability is intimately related to ones earning
capacity. It should be understood less on its medical significance but more on the loss of earning capacity. Total
disability does not mean absolute helplessness. In disability compensation, it is not the injury, which is
compensated, but rather the incapacity to work resulting in the impairment of ones earning capacity. Thus,
permanent disability is the inability of a worker to perform his job for more than 120 days, regardless of whether
or not he loses the use of any part of his body. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No.
186289, June 29, 2010.
Employer-Employee Relationship; agents of insurance companies; exception to the Insular case; Our ruling in
the first Insular case [Insular Insurance v. NLRC, 179 SCRA 459] case did not foreclose the possibility of an
insurance agent becoming an employee of an insurance company; if evidence exists showing that the company
promulgated rules or regulations that effectively controlled or restricted an insurance agents choice of methods
or the methods themselves in selling insurance, an employer-employee relationship would be present. The
existence of an employer-employee relationship is thus determined on a case-to-case basis depending on the
evidence on record. Gregorio V. Tongko v. The Manufacturers Life Insurance Co. (Phils) and Renato A. Vergel
De Dios, G.R. No. 167622, June 29, 2010.
Nature of employer; privatization; entitlement to benefits. Although the transformation of the PNB from a
government-owned corporation to a private one did not result in a break in its life as juridical person, the same
idea of continuity cannot be said of its employees. Section 27 of Presidential Proclamation 50 provided for the
automatic termination of employer-employee relationship upon privatization of a government-owned and
controlled corporation. Further, such privatization cannot deprive the government employees involved of their
accrued benefits or compensation.
As for possible benefits accruing after privatization, the same should be deemed governed by the Labor Code
since the PNB that rehired the employee has become a private corporation. Under the Omnibus Rules
Implementing the Labor Code, Book VI, Rule I, Section 7, the employees separation from work for a just cause
does not entitle her to termination pay. Luzviminda A. Ang vs. Philippine National Bank, G.R. No. 178762, June
16, 2010.
Nature of employer; privatization no defense; continuity of offense. The offense for which petitioner was
removed took place when the government still owned PNB and she was then a government employee. But while
PNB began as a government corporation, it did not mean that its corporate being ceased and was subsequently
reestablished when it was privatized. It remained the same corporate entity before, during, and after the change
over with no break in its life as a corporation. Consequently, the offenses that were committed against the bank
before its privatization continued to be offenses against the bank after the privatization. Luzviminda A. Ang vs.
Philippine National Bank, G.R. No. 178762, June 16, 2010.
Prescription of labor claims; overseas contract workers. The employment of seafarers, including claims for death
benefits, is governed by the contracts they sign every time they are hired or rehired; and as long as the stipulations
therein are not contrary to law, morals, public order or public policy, they have the force of law between the
parties.
In Cadalin v. POEAs Administrator [238 SCRA 721, 764] we held that Article 291 of the Labor Code covers
all money claims from employer-employee relationship. It is not limited to money claims recoverable under
the Labor Code, but applies also to claims of overseas contract workers.
Article 291 of the Labor Code is the law governing prescription of money claims of seafarers, a class of overseas
contract workers. This law prevails over Section 28 of the Standard Employment Contract for Seafarers, which
provides for claims to be brought only within one year from the date of the seafarers return to the point of
hire. Thus, for the guidance of all, Section 28 of the Standard Employment Contract for Seafarers, insofar as it
limits the prescriptive period for the filing of money claims by seafarers, is hereby declared null and void. The
applicable provision is Article 291 of the Labor Code, it being more favorable to the seafarers and more in accord
with the States declared policy to afford full protection to labor, which provides for a three-year prescriptive
period. Southeastern Shipping, Southeastern Shipping Group, Ltd. vs. Federico U. Navarra, Jr., G.R. No.
167678, June 22, 2010.
Quitclaims; general rule; requirements for validity; instances when it was annulled. As a rule, quitclaims,
waivers, or releases are looked upon with disfavor and are largely ineffective to bar claims for the measure of a
workers legal rights. To be valid, a Deed of Release, Waiver and/or Quitclaim must meet the following
requirements: (1) that there was no fraud or deceit on the part of any of the parties; (2) that the consideration for
the quitclaim is credible and reasonable; and (3) that the contract is not contrary to law, public order, public
policy, morals or good customs, or prejudicial to a third person with a right recognized by law.
Courts have stepped in to annul questionable transactions, especially where there is clear proof that a waiver, for
instance, was obtained from an unsuspecting or a gullible person; or where the agreement or settlement was
unconscionable on its face. A quitclaim is ineffective in barring recovery of the full measure of a workers rights,
and the acceptance of benefits therefrom does not amount to estoppel. Moreover, a quitclaim in which the
consideration is scandalously low and inequitable cannot be an obstacle to the pursuit of a workers legitimate
claim. Interorient Maritime Enterprises, Inc. et al. v. Leonora S. Remo, G.R. No. 181112, June 29, 2010.
Retirement benefits; does not include allowances. Executive Order No. 756 temporary measure; statutory
construction. Section 6 of Executive Order No. 756 (E.O. 756), which provides for the computation of
retirement proceeds including allowances, does not provide for a permanent retirement plan, as against the
prohibition of Section 28, Subsection (b) of Commonwealth Act No. 186 (C.A. 186), as amended. The E.O.
756 should be read adjunct to its mandate of reorganizing the Philippine International Trading Corporation. The
increased benefit under E.O. 756 was clearly meant as an incentive for employees who retire, resign or are
separated from service during or as a consequence of the reorganization. As a temporary measure, it cannot be
interpreted as an exception to the general prohibition against separate or supplementary insurance and/or
retirement or pension plans under C.A. 186, as amended.
In reconciling E.O. 756 with C.A.186, as amended, uppermost in the mind of the Court is the fact that the best
method of interpretation is that which makes laws consistent with other laws which are to be harmonized rather
than having one considered repealed in favor of the other. Philippine International Trading Corporation vs.
Commission on Audit, G.R. No. 183517, June 22, 2010.
Resignation; burden of proof. The rule in termination cases is that the employer bears the burden of proving that
he dismissed his employee for a just cause. And, when the employer claims that the employee resigned from
work, the burden is on the employer to prove that he did so willingly. Whether that is the case would largely
depend on the circumstances surrounding such alleged resignation. Those circumstances must be consistent with
the employees intent to give up work. Elsa S. Mali-on v. Equitable General Services Inc., G.R. No. 185269,
June 29, 2010.
Solidary liability of employers; proof of bad faith. Based on MAM Realty Development Corporation v.
NLRC [244 SCRA 797], for corporate officers to be held solidarily liable in labor disputes there must be evidence
of bad faith or malice. Querubin L. Alba and Rizalinda D. De Guzman vs. Robert L. Yupangco, G.R. No. 188233,
June 29, 2010.
Labor Procedure
Judgment; amendment of final order; solidary liability. The Labor Arbiter cannot modify a final and executory
judgment, even if the modification is meant to correct erroneous conclusions of fact and law, whether it be made
by the court that rendered it or by the highest court in the land. The only recognized exceptions are the corrections
of clerical errors or the making of so-called nunc pro tunc entries which cause no prejudice to any party and in
cases where the judgment is void. Said exceptions do not apply in the present case. Querubin L. Alba and
Rizalinda D. De Guzman vs. Robert L. Yupangco, G.R. No. 188233, June 29, 2010.
Judgment; law of the case; definition and application. Law of the case has been defined as the opinion delivered
on a former appealit is a term applied to an established rule that when an appellate court passes on a question
and remands the case to the lower court for further proceedings, the question there settled becomes the law of
the case upon subsequent appeal. OSCIs application of the law of the case principle to the instant case, as
regards the remand of the case to the Labor Arbiter for clarificatory hearings, is misplaced. The only matter
settled in the July 30, 1999 NLRC Decision, which can be regarded as law of the case, was the undisputed fact
that Bastol was suffering from a heart ailment. As it is, the issue on the degree of disability of Bastols heart
ailment and his entitlement to disability indemnity, as viewed by the NLRC through said decision, has yet to be
resolved. For this reason, the NLRC remanded the case to Labor Arbiter Mayor, Jr. for conduct of further
appropriate proceedings and to terminate the same with dispatch. Oriental Ship Management Co., Inc. vs. Romy
B. Bastol, G.R. No. 186289, June 29, 2010.
Judgment; res judicata; nature and applicability. The nature of res judicata, as now embodied in Sec. 47, Rule
39 of the Rules of Court, has two concepts, which are (i) bar by former judgment and (ii) conclusiveness of
judgment. These concepts of the doctrine of res judicata are applicable to second actions involving substantially
the same parties, the same subject matter, and cause or causes of action. In the instant case, there is no second
action to speak of. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289, June 29, 2010.
Procedure; certificate of non-forum shopping; pro-forma complaints. For the expeditious and inexpensive filing
of complaints by employees, the Regional Arbitration Branch (RAB) of the NLRC provides pro-forma
complaint forms. This is to facilitate the exercise and protection of employees rights by the convenient assertion
of their claims against employers untrammeled by procedural rules and complexities. To comply with the
certification against forum shopping requirement, a simple question embodied in the Complaint form answerable
by yes or no suffices. Employee-complainants are not even required to have a counsel before they can file
their complaint. An officer of the RAB, duly authorized to administer oaths, is readily available to facilitate the
execution of the required subscription or jurat of the complaint. Oriental Ship Management Co., Inc. vs. Romy
B. Bastol, G.R. No. 186289, June 29, 2010.
Procedure; conduct of hearings; discretionary; exemptions. Although, the NLRC, while having appellate
jurisdiction over decisions and resolutions of the Labor Arbiter, may not dictate to the latter how to conduct the
labor case before it. Sec. 9 of Rule V of the then prevailing NLRC Rules of Procedure, issued on December 10,
1999, provided for the nature of proceedings before the Labor Arbiter as non-litigious in nature. Hence, the
Labor Arbiter is given full discretion to determine, motu proprio, on whether to conduct hearings or not.
Consequently, a hearing cannot be demanded by either party as a matter of right. The parties are required to file
their corresponding position papers and all the documentary evidence and affidavits to prove their cause of action
and defenses. The rationale behind this is to avoid delay and curtail the pernicious practice of withholding of
evidence.

The Court, however, has recognized specific instances of the impracticality for the Labor Arbiter to follow the
position paper method of disposing cases; thus, formal or clarificatory hearings must be had in cases of
termination of employment: such as, (i) when claims are not properly ventilated for lack of proper determination
whether complainant employee was a rank-and-file or a managerial employee, (ii) that the Labor Arbiter cannot
rely solely on the parties bare allegations when the affidavits submitted presented conflicting factual issues, and
(iii) considering the dearth of evidence presented by complainants the Labor Arbiter should have set the case for
hearing. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289, June 29, 2010.
Procedure; verification by counsel sufficient. The counsels verification in a Position Paper substantially
complies with the rule on verification. The second paragraph of Sec. 4, Rule 7 of the Rules of Court
provides: A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations
therein are true and correct of his personal knowledge or based on authentic records. On the other hand, the
actual verification of counsel states: That I am the counsel of record for the complainant in the above-entitled
case; that I caused the preparation of the foregoing Position Paper; that I have read and understood the contents
thereof; and that I confirm that all the allegations therein contained are true and correct based on recorded
evidence. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No. 186289, June 29, 2010.
Procedure; late filing of position paper, and filing of prohibited pleading. The relaxation of rules of technical
procedure in the hearing of labor disputes shall not be applicable in case counsel fails to file a position paper
before the Labor Arbiter not just once but twice. His situation was compounded when he filed a motion to recall
order of dismissal, a prohibited pleading, albeit gratuitously glossed over by the Labor Arbiter, which treated it
as an appeal; and when he belatedly paid the appeal fee.
Moreover, not having learned his lesson, petitioners counsel filed a motion for reconsideration of the NLRC
dismissal of his appeal, which is also prohibited, instead of interposing an appeal before the Court of Appeals.
Said motion for reconsideration not having tolled the running of the reglementary period for the filing of a
petition for certiorari under Rule 65, petitioners petition before the appellate court was filed out of time three
months late. Luis M. Rivera vs. Parents-Teachers Community Association and Easter Yase, G.R. No. 181532,
June 29, 2010.
Procedure; late submission of documentary evidence allowed. The nature of the proceedings before the Labor
Arbiter is not only non-litigious and summary, but the Labor Arbiter is also given great leeway to resolve the
case; thus, he may avail himself of all reasonable means to ascertain the facts of the controversy. The belated
submission of additional documentary evidence by respondent after the case was already submitted for decision
did not make the proceedings before the Labor Arbiter improper. The basic reason is that technical rules of
procedure are not binding in labor cases. Oriental Ship Management Co., Inc. vs. Romy B. Bastol, G.R. No.
186289, June 29, 2010.
Procedure; quantum of evidence on appeal; substantial evidence. In administrative proceedings, the quantum of
proof required is substantial evidence, which is more than a mere scintilla of evidence, but such amount of
relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. The Court of
Appeals may review the factual findings of the NLRC and reverse its ruling if it finds that the decision of the
NLRC lacks substantial basis. Estrella Velasco vs. Transit Automotive Supply, Inc. and Antonio de Dios, G.R.
No. 171327, June 18, 2010.

May 2010 Philippine Supreme Court Decisions

on Labor Law and Procedure
Posted on June 22, 2010 by Leslie C. Dy Posted in Labor Law Tagged backwages, illegal dismissal, judgment
Here are selected May 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor law
Illegal dismissal; backwages. The basis for the payment of backwages is different from that for the award of
separation pay. Separation pay is granted where reinstatement is no longer advisable because of strained
relations between the employee and the employer. Backwages represent compensation that should have been
earned but were not collected because of the unjust dismissal. The basis for computing backwages is usually the
length of the employees service while that for separation pay is the actual period when the employee was
unlawfully prevented from working.
As to how both awards should be computed, Macasero v. Southern Industrial Gases Philippines [G.R. No.
178524, January 30, 2009] instructs that the award of separation pay is inconsistent with a finding that there
was no illegal dismissal, for under Article 279 of the Labor Code and as held in a catena of cases, an employee
who is dismissed without just cause and without due process is entitled to backwages and reinstatement or
payment of separation pay in lieu thereof. Thus, an illegally dismissed employee is entitled to two reliefs:
backwages and reinstatement. The two reliefs provided are separate and distinct. Golden Ace Builders
and Arnold U. Azur vs. Jose A. Talde, G.R. No. 187200, May 5, 2010.
Illegal dismissal; doctrine of strained relations. 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.
Strained relations must be demonstrated as a fact, however, to be adequately supported by evidence substantial
evidence to show that the relationship between the employer and the employee is indeed strained as a necessary
consequence of the judicial controversy.
In the present case, the Labor Arbiter found that actual animosity existed between petitioner Azul and respondent
as a result of the filing of the illegal dismissal case. Such finding, especially when affirmed by the appellate
court as in the case at bar, is binding upon the Court, consistent with the prevailing rules that the Court will not
try facts anew and that findings of facts of quasi-judicial bodies are accorded great respect, even finality. Golden
Ace Builders and Arnold U. Azul vs. Jose A. Talde, G.R. No. 187200, May 5, 2010.
Illegal dismissal; separation pay. 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 respondents illegal 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.
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. Golden Ace Builders and ArnoldU. Azur vs. Jose A. Talde, G.R. No.
187200, May 5, 2010.
Labor procedure
Judgment; final and executory. The Labor Arbiters decision has long become final and executory and it can no
longer be reversed or modified. Nothing is more settled in law than when a final judgment becomes executory,
it thereby becomes immutable and unalterable. The judgment may no longer be modified in any respect, even
if the modification is meant to correct what is perceived to be an erroneous conclusion of law or fact, and
regardless of whether the modification is attempted to be made by the court rendering it or by the highest court
of the land. The only recognized exception are the correction of clerical errors or the making of so-called nunc
pro tunc entries which cause no injury to any party, and, of course, where the judgment is void.
Once a judgment becomes final and executory, the prevailing party should not be denied the fruits of his victory
by some subterfuge devised by the losing party. Final and executory judgments can neither be amended nor
altered except for correction of clerical errors, even if the purpose is to correct erroneous conclusions of fact or
of law. Trial and execution proceedings constitute one whole action or suit such that a case in which execution
has been issued is regarded as still pending so that all proceedings in the execution are proceedings in the suit.

It is no longer legally feasible to modify the final ruling in this case through the expediency of a petition
questioning the order of execution. Judgments of courts should attain finality at some point lest there be no end
in litigation. The final judgment in this case may no longer be reviewed, or in any way modified directly or
indirectly, by a higher court, not even by the Supreme Court. The reason for this is that, litigation must end and
terminate sometime and somewhere, and it is essential to an effective and efficient administration of justice that,
once a judgment has become final, the winning party be not deprived of the fruits of the verdict. Courts must
guard against any scheme calculated to bring about that result and must frown upon any attempt to prolong
controversies. Marmosy Trading, Inc. and Victor Morales vs. Court of Appeals, et al., G.R. No. 170515, May 6,
2010.

April 2010 Philippine Supreme Court Decisions

on Labor Law and Procedure
Posted on May 19, 2010 by Leslie C. Dy Posted in Labor Law Tagged backwages, certiorari, dishonesty, due process, illegal
dismissal, loss of trust and confidence, misconduct, reinstatement, res judicata, resignation, retrenchment, serious
misconduct, suspension, waiver

Here are selected April 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor Law
Dismissal; backwages. Article 279 of the Labor Code provides that an employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his
full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from
the time his compensation was withheld from him up to the time of his actual reinstatement.
Thus, a number of cases holds that an illegally dismissed employee is entitled to two reliefs: backwages and
reinstatement. The two reliefs 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 respondents illegal 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 the payment of backwages.

Since reinstatement is no longer feasible in the present case, the award of separation pay in lieu of reinstatement
is in order. Petitioners prayer for the award of backwages is meritorious, it, and the award of separation pay
not being mutually exclusive. Ferdinand A. Pangilinan vs. Wellmade Manufacturing Corporation, G.R. No.
187005, April 7, 2010.
Dismissal; backwages. Reprimand being the appropriate imposable penalty for respondents actuations from the
very beginning, the Court finds that respondent was unfairly denied from reporting for work and earning his
keep, thus, entitling him to the payment of backwages.
The Court is not unmindful of our previous pronouncements in similar cases involving suspension or dismissal
from service, wherein the penalty imposed was reduced, but the award of backwages was denied.

Given the circumstances of the case, however, where the proper penalty should only be a reprimand, the Court
finds the aforementioned cases to be inapplicable herein. On this note, the Court deems it proper to distinguish
between the penalties of dismissal or suspension and reprimand and their respective effects on the grant or award
of backwages. When an employee is dismissed or suspended it is but logical that since he is barred from reporting
to work the same negates his right to be paid backwages. He has no opportunity to work during the period he
was dismissed or suspended and, therefore, he has no salary to expect. However, the same does not hold true for
an employee who is reprimanded. A reprimand usually carries a warning that a repetition of the same or similar
act will be dealt with more severely. Under normal circumstances, an employee who is reprimanded is never
prevented from reporting to work. He continues to work despite the warning. Thus, in the case at bar, since
respondents penalty should only be a reprimand, the Court deems it proper and equitable to affirm the Court of
Appeals (CAs) award of backwages.

In two instances, the Court granted the award of backwages during the period the employees were prevented
from reporting to work despite concluding that the employee concerned violated reasonable office rules and
regulations and imposing the penalty of reprimand.

In Jacinto v. Court of Appeals [G.R. No. 124540, November 14, 1997, 281 SCRA 657], the Court awarded
petitioner Jacinto backwages after finding that she was only culpable of violating reasonable office rules and
regulations for not having asked permission from school authorities to leave the school premises and seek
medical attention and for not filing an application for sick leave for approval by the school authorities.
Also, in Bangalisan v. Court of Appeals [G.R. 124678, July 31, 1997, 276 SCRA 619, 633], after affirming the
findings that one of the petitioners, Rodolfo Mariano, is only liable for his violation of reasonable office rules
and regulations for attending the wake and internment of his grandmother without the benefit of an approved
leave of absence and the imposition of the penalty of reprimand, the Court still granted him backwages.
Consistent with the Courts rulings in Bangalisan and Jacinto, the grant of backwages to respondent is but
proper. It is to be stressed that when imposing penalties, it must not only be made within the parameters of the
law, but it should also satisfy the basic tenets of equity, justice, and fairplay. National Power Corporation vs.
Alan Olandesca, G.R. No. 171434, April 23, 2010.
Dismissal; dishonesty. In Philippine Amusement and Gaming Corporation v. Rilloroza [G.R. No. 141141, June
25, 2001], dishonesty is defined as the disposition to lie, cheat, deceive, or defraud; untrustworthiness; lack of
integrity; lack of honesty, probity or integrity in principle; lack of fairness and straightforwardness; disposition
to defraud, deceive or betray.
It is not disputed that respondent took several materials and supplies from petitioners warehouse without the
approved WRS. However, this should not be construed as dishonesty on the part of respondent that would
warrant his dismissal from the service for the following reasons: First, the withdrawals of the supplies were duly
recorded in the security guards logbook. If respondent intended to defraud petitioner, he could have easily taken
items from the warehouse without having them recorded as he was then the Supervising Property Officer who
had free access to the supplies. Second, right after withdrawing the items, respondent replaced them on his own
initiative, without anyone instructing him to do so. This act negates his intent to defraud petitioner. Third, there
is no clear showing that respondent misappropriated or converted the items for his own personal use or
benefit. Fourth, the Graft Investigation Officer of the Office of the Ombudsman, in its Resolution dated February
5, 1999, in OMB-1-98-2011, dismissed a complaint for qualified theft filed by Teodulo V. Largo, Section Chief,
Power Generation Group of petitioner against respondent as there was no competent and sufficient evidence on
record to show that there was intent to gain on the part of the respondent, considering that the materials and
supplies taken by him were used in fencing the watershed and reservation area of petitioner company. Likewise,
there was no basis to charge him for malversation of public property as there was no misappropriation of the
supplies for his personal use and that the same were for general purpose and not for any specific use.

Nonetheless, although the respondent did not commit an overt act of dishonesty, he is not exonerated from
liability. It was an established company procedure that before materials can be taken out from the warehouse,
the issuance of a WRS is an indispensable requirement. In fact, there was even a warning posted at the door of
the property office that states:
BAWAL MAGLABAS NG GAMIT O MAGKARGA NG GASOLINA NG WALANG APRUBADONG W
RS. Being the Supervising Property Officer, respondent knows fully well that taking items from the warehouse
without the required WRS is against the company rules and regulations. It is the paramount duty of respondent
to protect the properties in the warehouse and to ensure that none shall be taken away without proper
documentation.

The Machiavellian principle that the end justifies the means has no place in government service, which thrives
on the rule of law, consistency and stability. Respondent, by taking the said properties without the
approved WRS, violated reasonable office rules and regulations as provided in Section 52 (C), (3), Rule IV of
Civil Service Commission Memorandum Circular No. 19, series of 1999 (Uniform Rules on Administrative
Cases in the Civil Service). Since this is respondents first offense in his more than 16 years of service, the
appropriate penalty to be imposed against him is reprimand. National Power Corporation vs.
Alan Olandesca, G.R. No. 171434, April 23, 2010.
Dismissal; lost of trust and confidence. To terminate the services of an employee for loss of trust and confidence,
two requisites must concur: (1) the employee concerned must be holding a position of trust and confidence and
(2) there must be an act that would justify the loss of trust and confidence.
In the present case, respondent failed to justify its loss of trust and confidence on Consolacion even as it imputed
to him, via Notice of Formal Investigation of April 14, 2003, non-compliance with (a) established non-written
procedures and standards; (b) established written procedures and standards, and (c) verbal orders and/or
instructions. These alleged acts of non-compliance are too general and can encompass just about any
malfeasance. Nowhere in the Notice was there a detailed narration of the facts and circumstances that would
serve as bases to terminate Consolacion, thus leaving to surmise what those procedures, standards and orders
were. Anabel Benjamin, et al. vs. Amellar Corporation., G.R. No. 183383, April 5, 2010.
Dismissal; management prerogative. Respondents right of management prerogative was exercised in good faith.
Respondent presented evidence of the low volume of sales and orders for the production of industrial paper in
1999, which inevitably resulted to the companys decision to streamline its operations. This fact was
corroborated by respondents VP-Tissue Manufacturing Director and was not disputed by petitioner. Exercising
its management prerogative and sound business judgment, respondent decided to cut down on operational costs
by shutting down one of its paper mill. As held in International Harvester Macleod, Inc. v. Intermediate
Appellate Court [233 Phil. 655,655-666 (1987)] the determination of the need to phase out a particular
department and consequent reduction of personnel and reorganization as a labor and cost saving device is a
recognized management prerogative which the courts will not generally interfere with.
In this case, shutting down Paper Mill No. 4 was undoubtedly a business judgment arrived at in the face of the
low demand for the production of industrial paper at the time. Despite an apparent reason to implement a
retrenchment program as a cost-cutting measure, respondent, did not dismiss the workers affected by the closure
of Paper Mill No. 4 outright but gave them an option to be transferred to posts of equal rank and pay.
Retrenchment was given only as an option in case the affected employee did not want to be transferred. The
Court viewed this as an indication of good faith on respondents part since it exhausted other possible measures
before retrenchment. Besides, the employers prerogative to bring down labor costs by retrenchment must be
exercised essentially as a measure of last resort, after less drastic means have been tried and found
wanting. Giving the workers an option to be transferred without any diminution in rank and pay belie petitioners
allegation that the streamlining scheme was implemented as a ploy to ease out employees. Apparently,
respondent implemented its streamlining or reorganization plan in good faith, not in an arbitrary manner and
without violating the tenurial rights of its employees. Dannie M. Pantoja vs. SCA Hygiene Products
Corporation, G.R. No. 163554, April 23, 2010.
Dismissal; retrenchment. The CA committed no reversible error in affirming the NLRC ruling that Talam was
validly dismissed on the ground of retrenchment. The Supreme Court came to this conclusion based on the
following considerations:
First, the decision to retrench had a basis; it was not simulated nor resorted to for the purpose of getting rid of
employees. The decision was upon the recommendation of the companys external auditor. Second, the cost-
cutting measure recommended involved reduction of TSFIs payroll expense account which, as the auditor
found, makes up 41% of the companys total operating expenses. Third, Talam was dismissed due to a cause
authorized by law retrenchment to prevent losses. At the time of Talams dismissal, TSFIs financial condition,
as found by the external auditor, showed that it was not just expecting losses, it already suffered a net income
loss of P2,474,418.00 and retained earnings deficit of P7,424,250.00 for the period ending December 31, 2002.
Fourth, TSFI resorted to other measures to abate its losses. It claimed that during the crises period, it used as an
office a small-room (a mere cubicle) with only a two-person support staff in the persons of Grapilon and Hermle;
it reduced the salaries of its employees by as much as 30%. This submission by the company is substantiated
by the schedule of Operating Expenses for the year ended December 31, 2002 and September 30, 2002. A quick
glance at the schedule readily shows a reduction of TSFIs operating expenses across the board. The schedule
indicates a substantial decrease in operating expenses, from P5,733,735.00 in September 2002 to P1,698,552.36
as of the end of December 2002. Francis Ray Talam vs. National Labor Relations Commission, 4th Division,
Cebu City, et al., G.R. No. 175040, April 6, 2010.
Dismissal; serious misconduct. The findings of the CA and National Labor Relations Commission (NLRC)
establish the following: (1) Agads request for withdrawal of the 190 cylinders of LPG as stated in a
Memorandum dated 12 February 1992 cannot be given credence since the Memorandum pertains to the
replacement of the scrap materials due to Boy Bato consisting of 3,000 kilograms of black iron plates and not to
the subject LPG cylinders; (2) Agad did not observe Caltexs rules and regulations when he transferred the said
cylinders to Millanes compound without the RMRD form as required under Caltexs Field Accounting Manual;
(3) Agad gave specific instructions to Millanes to sell the cylinders without bidding to third parties in violation
of company rules; (4) Agad failed to submit the periodic inventory report of the LPG cylinders to the accounting
department; (5) Agad did not remit the proceeds of the sale of the LPG cylinders; and (6) even if considered as
scrap materials, the LPG cylinders still had monetary value which Agad cannot appropriate for himself
without Caltexs consent.
Considering these findings, it is clear that Agad committed a serious infraction amounting to theft of company
property. This act is akin to serious misconduct or willful disobedience by the employee of the lawful orders of
his employer in connection with his work, a just cause for termination of employment recognized under Article
282(a) of the Labor Code.

Misconduct has been defined as a 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. To be
serious, the misconduct must be of such grave and aggravated character. Caltex (Philippines), Inc., et. al. vs.
Hermie G. Abad, et. al., G.R. No. 163554, April 23, 2010.
Due Process; termination. The records belie Amulars claim of denial of procedural due process. He chose not
to present his side at the administrative hearing. In fact, he avoided the investigation into the charges against
him by filing his illegal dismissal complaint ahead of the scheduled investigation. These facts show that the
employee was given the opportunity to be heard and he cannot now come to the Court protesting that he was
denied this opportunity. To belabor a point the Court has repeatedly made in employee dismissal cases, the
essence of due process is simply an opportunity to be heard; it is the denial of this opportunity that constitutes
violation of due process of law. Technol Eight Philippines Corporation vs. National Labor Relations
Commission, et al., G.R. No. 187605. April 13, 2010.
Employer employee relationship. The elements to determine the existence of an employment relationship are:
(1) selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
employers power to control the employees conduct. In filing a complaint for illegal dismissal, it is incumbent
upon Abueva to prove the relationship by substantial evidence.
In this regard, Abueva claims that he has worked with respondent hacienda for more than a year already and that
he was allowed to stay inside the hacienda. As such, he is a regular employee entitled to monetary
claims. However, petitioners have not presented competent proof that respondents engaged the services
of Abueva; that respondents paid his wages or that respondents could dictate what his conduct should be while
at work. In other words, Abuevas allegations did not establish that his relationship with respondents had the
attributes of an employer-employee relationship based on the four-fold test. Abueva was not able to discharge
the burden of proving the existence of an employer-employee relationship. Moreover, Abueva was not able to
refute respondents assertion that he hires other men to perform weeding job in the hacienda and that he is not
exclusively working for respondents. Romeo Basay, et al. vs. Hacienda Consolation, et al., G.R. No. 175532,
April 19, 2010.
Illegal dismissal. Contrary to the CAs perception, the Court finds a work-connection in Amulars and Ducays
assault on Mendoza. As the CA itself noted, the underlying reason why Amular and Ducay confronted Mendoza
was to question him about his report to De Leon Technols PCD assistant supervisor regarding the duos
questionable work behavior. The motivation behind the confrontation was rooted on workplace dynamics as
Mendoza, Amular and Ducay interacted with one another in the performance of their duties.
Under these circumstances, Amular undoubtedly committed misconduct or exhibited improper behavior that
constituted a valid cause for his dismissal under the law and jurisprudential standards. The circumstances of his
misdeed rendered him unfit to continue working for Technol. Thus, Amular was not illegally dismissed; he was
dismissed for cause. Technol Eight Philippines Corporation vs. National Labor Relations
Commission, et al., G.R. No. 187605. April 13, 2010.
Illegal Dismissal. If the school were to apply the probationary standards (as in fact it says it did in the present
case), these standards must not only be reasonable but must have also been communicated to the teachers at the
start of the probationary period, or at the very least, at the start of the period of application of the said
standards. These terms, in addition to those expressly provided by the Labor Code, would serve as the just cause
for the termination of the probationary contract. As explained above, the details of this finding of just cause
must be communicated to the affected teachers as a matter of due process.
AMACC, by its submissions, admits that it did not renew the petitioners contracts because they failed to pass
the Performance Appraisal System for Teachers (PAST) and other requirements for regularization that the school
implements to maintain its high academic standards. The evidence is unclear on the exact terms of the standards,
although the school also admits that these were standards under the Guidelines on the Implementation
of AMACC Faculty Plantilla put in place at the start of school year 2000-2001.

While the Court can grant that the standards were duly communicated to the petitioners and could be applied
beginning the 1st trimester of the school year 2000-2001, glaring and very basic gaps in the schools evidence
still exist. The exact terms of the standards were never introduced as evidence; neither does the evidence show
how these standards were applied to the petitioners. Without these pieces of evidence (effectively, the finding of
just cause for the non-renewal of the petitioners contracts), the Court has nothing to consider and pass upon as
valid or invalid for each of the petitioners. Inevitably, the non-renewal (or effectively, the termination of
employment of employees on probationary status) lacks the supporting finding of just cause that the law requires
and, hence, is illegal. Yolanda M. Mercado, et al. vs. Ama Computer College, Paraaque City, G.R. No. 183572,
April 13, 2010.
Illegal dismissal. The Court is not unmindful of the rule in labor cases that the employer has the burden of
proving that the termination was for a valid or authorized cause; however, it is likewise incumbent upon the
employees that they should first establish by competent evidence the fact of their dismissal from employment.
The one who alleges a fact has the burden of proving it and the proof should be clear, positive and convincing.
In this case, aside from mere allegations, no evidence was proffered by the petitioners that they were dismissed
from employment. The records are bereft of any indication that petitioners were prevented from returning to
work or otherwise deprived of any work assignment by respondents.
In Abad v. Roselle Cinema [G.R. No. 141371, March 24, 2006, 485 SCRA 262, 272], the Court ruled that the
substantial evidence proffered by the employer that it had not terminated the employee should not be ignored on
the pretext that the employee would not have filed the complaint for illegal dismissal if he had not really been
dismissed. The Court held that such non sequitur reasoning cannot take the place of the evidence of both the
employer and the employee. Romeo Basay, et al. vs. Hacienda Consolation, et al., G.R. No. 175532, April 19,
2010.
Illegal Dismissal. The Court views with approval the observation of the CA and the NLRC that the employer
cannot justify the defense of abandonment as it failed to prove that indeed the employee had abandoned her
work. It did not even bother to send a letter to her last known address requiring her to report for work and explain
her alleged continued absences.
The ratiocination of the NLRC on this score merits the Courts imprimatur, viz: The law clearly spells out the
manner by which an unjustified refusal to return to work by an employee may be established. Thus, respondent
should have given complainant a notice with warning concerning her alleged absences (Section 2, Rule XIV,
Book V, Implementing Rules and Regulations of the Labor Code). The notice requirement actually consists of
two parts to be separately served on the employee to wit: (1) notice to apprise the employee of his absences with
a warning concerning a possible severance of employment in the event of an unjustified excuse therefor, and (2)
subsequent notice of the decision to dismiss in the event of an employees refusal to pay heed to such
warning. Only after complying with those requirements can it be reasonably concluded that the employee
actually abandoned his job. In the present case, more than two (2) months had already lapsed since the employee
allegedly started to absent herself when she instituted her action for illegal dismissal. During the said period of
time, no action was taken by the company regarding the employees alleged absences, something which is quite
peculiar had her employment not been severed at all. Accordingly, the Court found no merit in the companys
defense of abandonment in view of an utter lack of evidence to support the same. Hence, the employees charge
of illegal dismissal stands uncontroverted. Diversified Security, Inc. vs. Alicia V. Bautista. G.R. No. 152234,
April 15, 2010.
Preventive Suspension; Process. What the Rules require is that the employer act on the suspended workers
status of employment within the 30-day period by concluding the investigation either by absolving him of the
charges, or meting the corresponding penalty if liable, or ultimately dismissing him. If the suspension exceeds
the 30-day period without any corresponding action on the part of the employer, the employer must reinstate the
employee or extend the period of suspension, provided the employees wages and benefits are paid in the interim.
In the present case, petitioner company had until May 20, 2002 to act on Taroys case. It did by terminating him
through a notice dated May 10, 2002, hence, the 30-day requirement was not violated even if the termination
notice was received only on June 4, 2002, absent any showing that the delayed service of the notice on Taroy was
attributable to Genesis Transport. Genesis Transport Service, Inc. et al.
vs. Unyon ng Malayang Manggagawa ng Genesis (UMMGT), et al., G.R. No. 182114, April 5, 2010.
Reinstatement. Given the period that has lapsed and the inevitable change of circumstances that must have taken
place in the interim in the academic world and at AMACC, which changes inevitably affect current school
operations, the Court holds that in lieu of reinstatement the petitioners should be paid separation pay
computed on a trimestral basis from the time of separation from service up to the end of the complete trimester
preceding the finality of this Decision. The separation pay shall be in addition to the other awards, properly
recomputed, that the LA originally decreed. Yolanda M. Mercado, et al. vs. Ama Computer
College, Paraaque City, G.R. No. 183572, April 13, 2010.
Release, Waiver and Quitclaim. Talam was not an unlettered employee; he was an information technology
consultant and must have been fully aware of the consequences of what he was entering into. The quitclaim was
a voluntary act as there is no showing that he was coerced into executing the instrument; he received a valuable
consideration for his less than two years of service with the company. Thus, from all indications, the release and
quitclaim was a valid and binding undertaking that should have been recognized by the labor authorities and the
CA.
While the law frowns upon releases and quitclaims executed by employees who are inveigled or pressured into
signing them by unscrupulous employers seeking to evade their legal responsibilities, a legitimate waiver
representing a voluntary settlement of a laborers claims should be respected by the courts as the law between
the parties. In the Courts view, Talams release and quitclaim fall into the category of legitimate waivers as
defined by the Court.

With Talams voluntary execution of the release and quitclaim, the Court found the filing of the illegal dismissal
case tainted with bad faith. Neither can TSFI be made to answer for failure to afford Talam procedural due
process. The release and quitclaim, in the Courts mind, erased whatever infirmities there might have been in
the notice of termination as Talam had already voluntarily accepted his dismissal through the release and
quitclaim. As such, the written notice became academic; the notice, after all, is merely a protective measure put
in place by law and serves no useful purpose after protection has been assured. The Court thus finds no basis
for the conclusion that TSFI violated procedural due process and should pay nominal damages. Francis
Ray Talam vs. National Labor Relations Commission, 4th Division, Cebu City, et al., G.R. No. 175040, April 6,
2010.
Resignation of Employee. While the letter states that Peaflors resignation was irrevocable, it does not
necessarily signify that it was also voluntarily executed. Precisely because of the attendant hostile and
discriminatory working environment, Peaflor decided to permanently sever his ties with Outdoor
Clothing. This falls squarely within the concept of constructive dismissal that jurisprudence defines, among
others, as involuntarily resignation due to the harsh, hostile, and unfavorable conditions set by the employer. It
arises when a clear discrimination, insensibility, or disdain by an employer exists and has become unbearable to
the employee. The gauge for constructive dismissal is whether a reasonable person in the employees position
would feel compelled to give up his employment under the prevailing circumstances. With the appointment
of Buenaobra to the position he then still occupied, Peaflor felt that he was being eased out and this perception
made him decide to leave the company.
The fact of filing a resignation letter alone does not shift the burden of proving that the employees dismissal
was for a just and valid cause from the employer to the employee. In Mora v. Avesco [G.R. No. 177414,
November 14, 2008, 571 SCRA 226], the Court ruled that should the employer interpose the defense of
resignation, it is still incumbent upon the employer to prove that the employee voluntarily resigned. Manolo
A. Peaflor vs. Outdoor Clothing Manufacturing Corp., et al., G.R. No. 177114, April 13, 2010.
Labor Procedure
Certiorari; questions of law. TSFI asks the Court to dismiss the present petition on the ground that it is
procedurally defective as, allegedly, it raises only questions of fact, in contravention of the requirement under
Rule 45 of the Rules of Court that an appeal by certiorari shall raise only questions of law. While the petition
indeed poses factual issues i.e., whether the company was suffering from substantial losses to justify a
retrenchment measure, whether it observed fair and reasonable standards in implementing a retrenchment, and
whether Talam deserved to be retrenched the Court deems it proper to examine the facts itself in view of the
conflicting factual findings among the Labor Arbiter, the NLRC and the CA. Francis Ray Talam vs. National
Labor Relations Commission, 4th Division, Cebu City, et al., G.R. No. 175040, April 6, 2010.
Finding of facts. Findings of facts of quasi-judicial bodies like the NLRC, and affirmed by the CA in due course,
are conclusive on the Supreme Court, which is not a trier of facts.
Findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because
their jurisdiction is confined to specific matters, are generally accorded not only respect, but finality when
affirmed by the CA. Such findings deserve full respect and, without justifiable reason, ought not to be altered,
modified or reversed. Diversified Security, Inc. vs. Alicia V. Bautista. G.R. No. 152234, April 15, 2010
Res Judicata. On the issue of refund of underpayment, petitioners aver that cases of similar import involving
also the respondent union have been decided with finality in their favor by the NLRC, viz: UMMGT v. Genesis
Transport Service, Inc. (NLRC RAB III Case No. 04-518-03) and Reyes v. Genesis Transport Service, Inc.
(NLRC CA No. 04862-04); and Santos v. Genesis Transport Service, Inc. (NLRC CA No. 041869-
04). Petitioners thus pray that the Court accord respect to the rulings of the NLRC in the above-cited cases and
apply the principle of res judicata vis--vis the present case. The Supreme Court held, however that, absent proof
that the NLRC cases cited by petitioners have attained finality, the Court may not consider them to constitute res
judicata on petitioners claim for refund of the underpayment due. Genesis Transport Service, Inc. et al.
vs. Unyon ng Malayang Manggagawa ng Genesis (UMMGT), et al., G.R. No. 182114, April 5, 2010

March 2010 Philippine Supreme Court Decisions

on Labor Law and Procedure
Posted on April 26, 2010 by Leslie C. Dy Posted in Labor Law Tagged compensable illness, constructive
dismissal, estoppel, illegal dismissal, jurisdiction, labor-only contracting, parties, POEA, project employee

Here are selected March 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor law
Cancellation of union registration. Art. 234(c) of the Labor Code requires the mandatory minimum 20%
membership of rank-and-file employees in the employees union. Twenty percent (20%) of 112 rank-and-file
employees in Eagle Ridge would require a union membership of at least 22 employees (112 x 205 = 22.4). When
the EREU filed its application for registration on December 19, 2005, there were clearly 30 union
members. Thus, when the certificate of registration was granted, there is no dispute that the Union complied
with the mandatory 20% membership requirement. Accordingly, the retraction of six union members who later
severed and withdrew their union membership cannot cause the cancellation of the unions registration.
Besides, it cannot be argued that the affidavits of retraction retroacted to the time of the application for union
registration or even way back to the organizational meeting. Before their withdrawal, the six employees in
question were bona fide union members. They never disputed affixing their signatures beside their handwritten
names during the organizational meetings. While they alleged that they did not know what they were signing,
their affidavits of retraction were not re-affirmed during the hearings of the instant case rendering them of little,
if any, evidentiary value. In any case, even with the withdrawal of six union members, the union would still be
compliant with the mandatory membership requirement under Art. 234(c) since the remaining 24 union members
constitute more than the 20% membership requirement of 22 employees. Eagle Ridge Gold & Country Club vs.
Court of Appeals, et al., G.R. No. 178989, March 18, 2010.
Cessation of operations; financial assistance. Based on Article 283, in case of cessation of operations, the
employer is only required to pay his employees a separation pay of one month pay or at least one-half month
pay for every year of service, whichever is higher. That is all that the law requires.
In the case at bar, petitioner paid respondents the following: (a) separation pay computed at 150% of their gross
monthly pay per year of service; and (b) cash equivalent of earned and accrued vacation and sick leaves. Clearly,
petitioner had gone over and above the requirements of the law. Despite this, however, the Labor Arbiter ordered
petitioner to pay respondents an additional amount, equivalent to one months salary, as a form of financial
assistance.

The award of financial assistance is bereft of legal basis and serves to penalize petitioner who had complied with
the requirements of the law. The Court also point out that petitioner may, as it has done, grant on a voluntary
and ex gratia basis, any amount more than what is required by the law, but to insist that more financial assistance
be given is certainly something that the Court cannot countenance. Moreover, any award of additional financial
assistance to respondents would put them at an advantage and in a better position than the rest of their co-
employees who similarly lost their employment because of petitioners decision to cease its
operations. SolidBank Corporation vs. National Labor Relations Commission, et al., G.R. No. 165951, March
30, 2010.
Cost of living allowance. COLA is not in the nature of an allowance intended to reimburse expenses incurred by
officials and employees of the government in the performance of their official functions. It is not payment in
consideration of the fulfillment of official duty. As defined, cost of living refers to the level of prices relating
to a range of everyday items or the cost of purchasing those goods and services which are included in an
accepted standard level of consumption. Based on this premise, COLA is a benefit intended to cover increases
in the cost of living. Thus, it is and should be integrated into the standardized salary rates.
In the present case, the Court is not persuaded that the continued grant of COLA to the uniformed personnel to
the exclusion of other national government officials run afoul the equal protection clause of the
Constitution. The fundamental right of equal protection of the laws is not absolute, but is subject to reasonable
classification. If the groupings are characterized by substantial distinctions that make real differences, one class
may be treated and regulated differently from another. The classification must also be germane to the purpose
of the law and must apply to all those belonging to the same class.

The Court found valid reasons to treat the uniformed personnel differently from other national government
officials. Being in charge of the actual defense of the State and the maintenance of internal peace and order,
they are expected to be stationed virtually anywhere in the country. They are likely to be assigned to a variety
of low, moderate, and high-cost areas. Since their basic pay does not vary based on location, the continued grant
of COLA is intended to help them offset the effects of living in higher cost areas. Victoria C. Gutierrez, et al.
vs. Department of Budget and Management, et al./Estrellita C. Amponin, et al. vs. Commission on Audit, et
al./Augusto R. Nieves, et al. vs. Department of Budget and Management, et al./Kapisanan ng mga Manggagawa
sa Bureau of Agricultural Statistic (KMB), et al. vs. Department of Budget and Management, et al./National
Housing Authority vs. Epifanio P. Recana, et al./ Insurance Commission Officers and Employees, et al. vs.
Department of Budget and Management, et al./Fiber Industry Development Authority Employees Association
(FIDAEA),et al. vs. Department of Budget and Management, et al./Bureau of Animal Industry Employees
Association (BAIEA), et al. vs. Department of Budget and Management, et al./Re: Request of Sandiganbayan for
authority to use their savings to pay their Cola Differential from July 1, 1989 to March 16, 1999, G.R. No.
153266/G.R. No. 159007/G.R. No. 159029/G.R. No. 170084/G.R. No. 172713/G.R. No. 173119/G.R. No.
176477/G.R. No. 177990/A.M. No. 06-4-02-SB. March 18, 2010.
Compensable illness. Jurisprudence provides that to establish compensability of a non-occupational disease,
reasonable proof of work-connection and not direct causal relation is required. Probability, not the ultimate
degree of certainty, is the test of proof in compensation proceedings.
In this case, the Court sustained the Labor Arbiter and the NLRC in granting total and permanent disability
benefits in favor of Villamater, as it was sufficiently shown that his having contracted colon cancer was, at the
very least, aggravated by his working conditions, taking into consideration his dietary provisions on board, his
age, and his job as Chief Engineer, who was primarily in charge of the technical and mechanical operations of
the vessels to ensure voyage safety. Leonis Navigation Co., Inc. and World Marine Panama, S.A. vs. Catalino
U. Villamater, et al., G.R. No. 179169, March 3, 2010.
Compensable illness; entitlement. For disability to be compensable under Section 20 (B) of the 2000 POEA-
SEC, two elements must concur: (1) the injury or illness must be work-related; and (2) the work-related injury
or illness must have existed during the term of the seafarers employment contract. In other words, to be entitled
to compensation and benefits under this provision, it is not sufficient to establish that the seafarers illness or
injury has rendered him permanently or partially disabled; it must also be shown that there is a causal connection
between the seafarers illness or injury and the work for which he had been contracted.
The 2000 POEA-SEC defines work-related injury as injury(ies) resulting in disability or death arising out of
and in the course of employment and work-related illness as any sickness resulting to disability or death as
a result of an occupational disease listed under Section 32-A of this contract with the conditions set therein
satisfied.

Under Section 20 (B), paragraphs (2) and (3) of the 2000 POEA-SEC, it is the company-designated physician
who is entrusted with the task of assessing the seamans disability.

While it is true that medical reports issued by the company-designated physicians do not bind the courts, the
Courts examination of Dr. Ong-Salvadors Initial Medical Report have led it to agree with her findings. Dr.
Ong-Salvador was able to sufficiently explain her basis in concluding that the respondents illness was not work-
related: she found the respondent not to have been exposed to any carcinogenic fumes, or to any viral infection
in his workplace. Her findings were arrived at after the respondent was made to undergo a physical, neurological
and laboratory examination, taking into consideration his past medical history, family history, and social
history. In addition, the respondent was evaluated by a specialist, a surgeon and an oncologist. The series of
tests and evaluations show that Dr. Ong-Salvadors findings were not arrived at arbitrarily; neither were they
biased in the companys favor.

The respondent, on the other hand, did not adduce proof to show a reasonable connection between his work as
an assistant housekeeping manager and his lymphoma. There was no showing how the demands and nature of
his job vis--vis the ships working conditions increased the risk of contracting lymphoma. The non-work
relatedness of the respondents illness is reinforced by the fact that under the Implementing Rules and
Regulations of the Labor Code (ECC Rules), lymphoma is considered occupational only when contracted by
operating room personnel due to exposure to anesthetics. The records do not show that the respondents work as
an assistant housekeeping manager exposed him to anesthetics.

Accordingly, the Court held that the respondent is not entitled to total and permanent disability benefits on
account of his failure to refute the company-designated physicians findings that: (1) his illness was not work-
related; and (2) he was fit to resume sea duties. Magsaysay Maritime Corporation and/or Cruise Ships Catering
Services International N.V. vs. National Labor Relations Commissions, et al., G.R. No. 186180, March 22, 2010.
Constructive dismissal. In constructive dismissal cases, the employer has the burden of proving that its conduct
and action or the transfer of an employee are for valid and legitimate grounds such as genuine business
necessity. Particularly, for a transfer not to be considered a constructive dismissal, the employer must be able
to show that such transfer is not unreasonable, inconvenient, or prejudicial to the employee. Failure of the
employer to overcome this burden of proof taints the employees transfer as a constructive dismissal.
In the present case, the employer failed to discharge this burden. The combination of harsh actions taken by the
bank rendered the employment condition of the employee hostile and unbearable for the following reasons: First,
there is no showing of any urgency or genuine business necessity to transfer the employee to the Makati Head
Office. The banks stated reason that the employee had to undergo branch head training because of his gross
inefficiency was not supported by any proof that the employee had a record of gross inefficiency. Second, the
employees transfer from Dumaguete to Makati City is clearly unreasonable, inconvenient and oppressive, since
the respondent and his family are residents of Dumaguete City. Third, the employer failed to present any valid
reason why it had to require the employee to go to the Makati Head Office to undergo branch head training when
it could have just easily required the latter to undertake the same training in the VISMIN area. Finally, there
was nothing in the order of transfer indicating the position which the employee would occupy after his training;
thus, the employee was effectively placed in a floating status. The banks contention that the employee was
assigned to a sensitive position in the DUHO Task Force is suspect when considered with the fact that he was
made to undergo branch head training which is totally different from a position that entails reconciling book
entries of all branches of the former. Reconciling book entries is essentially an accounting task.

The test of constructive dismissal is whether a reasonable person in the employees position would have felt
compelled to give up his position under the circumstances. Based on the factual considerations in the present
case, the Court held that the hostile and unreasonable working conditions of the bank justified the finding of the
NLRC and the CA that the employee was constructively dismissed. Philippine Veterans Bank vs. National
Labor Relations Commission, et al., G.R. No. 188882, March 30, 2010.
Disability benefits; entitlement. The seafarer, upon sign-off from his vessel, must report to the company-
designated physician within three working days from arrival for diagnosis and treatment. Applying Section
20(B), paragraph (3) of the 2000 Amended Standard Terms and Conditions Governing the Employment of
Filipino Seafarers on Board Ocean-Going Vessels, petitioner is required to undergo post-employment medical
examination by a company-designated physician within three working days from arrival, except when he is
physically incapacitated to do so, in which case, a written notice to the agency within the same period would
suffice. In Maunlad Transport, Inc. v. Manigo, Jr., [G.R. No.161416, 13 June 2008, 554 SCRA 446, 459] this
Court explicitly declared that it is mandatory for a claimant to be examined by a company-designated physician
within three days from his repatriation. The unexplained omission of this requirement will bar the filing of a
claim for disability benefits. Alex C. Cootauco vs. MMS Phil. Maritime Services, Inc. Ms. Mary C. Maquilan,
and/or MMS Co. Ltd., G.R. No. 184722, March 15, 2010.
Dismissal; damages. Moral and exemplary damages are recoverable where the dismissal of an employee was
attended by bad faith or fraud or constituted an act oppressive to labor or was done in a manner contrary to
morals, good customs or public policy. With regard to the employees of Promm-Gem, there being no evidence
of bad faith, fraud or any oppressive act on the part of the latter, the Court found no support for the award of
damages.
As for P&G, the records show that it dismissed its employees through SAPS in a manner oppressive to labor.
The sudden and peremptory barring of the employees from work, and from admission to the work place, after
just a one-day verbal notice, and for no valid cause, bellows oppression and utter disregard of the right to due
process of the concerned petitioners. Hence, an award of moral damages is called for. Joeb Aliviado, et al. vs.
Procter & Gamble Philippines, Inc., et al., G.R. No. 160506, March 9, 2010.
Dismissal; fraud and serious misconduct. In this case, the Court found that Pastoril was as actively involved as
Escoto and Omela in the sale of the Toyota Town Ace that resulted in a loss to the company. All three
participated in making the company believe that Aquino bought the Toyota Town Ace for P190,000.00 when in
fact, Aquino paid P200,000.00 for the vehicle. Thus, Pastoril acted in concert with Escoto and Omela in the
transaction that defrauded their employer in the amount of P10,000.00. Pastoril prepared and issued the deed of
sale indicating that the vehicle was sold for P190,000.00, although she knew that the buyer was being charged
P200,000.00 for the vehicle. Escoto, Omela and Pastoril helped themselves to the price difference and tried to
silence Rodriguez (who got wind of the anomaly) by giving him P1,000.00 and passing the P10,000.00 price
difference off as the approved discount Aquino asked for. The Court held that there was a conspiracy between
and among the three employees, where every participant had made significant contributory acts. White Diamond
Trading Corporation and/or Jerry Uy vs. National Labor Relations Commission, et al., G.R. No. 186019. March
29, 2010.
Dismissal; just cause; loss of trust and confidence. Loss of trust and confidence, as a cause for termination of
employment, is premised on the fact that the employee concerned holds a position of responsibility or of trust
and confidence. As such, he must be invested with confidence on delicate matters, such as custody, handling or
care and protection of the property and assets of the employer. And, in order to constitute a just cause for
dismissal, the act complained of must be work-related and must show that the employee is unfit to continue to
work for the employer. In the instant case, the petitioners-employees of Promm-Gem have not been shown to
be occupying positions of responsibility or of trust and confidence. Neither is there any evidence to show that
they are unfit to continue to work as merchandisers for Promm-Gem. Joeb Aliviado, et al. vs. Procter & Gamble
Philippines, Inc., et al., G.R. No. 160506, March 9, 2010.
Dismissal; just cause; misconduct. Misconduct has been defined as improper or wrong conduct; the
transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, unlawful in
character implying wrongful intent and not mere error of judgment. The misconduct to be serious must be of
such grave and aggravated character and not merely trivial and unimportant. To be a just cause for dismissal,
such misconduct (a) must be serious; (b) must relate to the performance of the employees duties; and (c) must
show that the employee has become unfit to continue working for the employer. In other words, in order to
constitute serious misconduct which will warrant the dismissal of an employee under paragraph (a) of Article
282 of the Labor Code, it is not sufficient that the act or conduct complained of has violated some established
rules or policies. It is equally important and required that the act or conduct must have been performed with
wrongful intent. In the instant case, petitioners-employees of Promm-Gem may have committed an error of
judgment in claiming to be employees of P&G, but it cannot be said that they were motivated by any wrongful
intent in doing so. As such, the Court found them guilty of simple misconduct only, for assailing the integrity
of Promm-Gem as a legitimate and independent promotion firm. A misconduct which is not serious or grave,
as that existing in the instant case, cannot be a valid basis for dismissing an employee. Joeb Aliviado, et al. vs.
Procter & Gamble Philippines, Inc., et al., G.R. No. 160506, March 9, 2010.
Dismissal; just cause; union security clause. In terminating the employment of an employee by enforcing the
union security clause, the employer is required only to determine and prove that: (1) the union security clause is
applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and (3)
there is sufficient evidence to support the decision of the union to expel the employee from the union. These
requisites constitute just cause for terminating an employee based on the union security provision of the CBA.
It is the third requisite that appears to be lacking in this case. It is apparent from the identical termination letters
that GMC terminated Casio, et al., by relying upon the resolutions of the union, which made no mention at all
of the evidence supporting the decision of the union to expel Casio, et al. from the union. GMC never alleged
nor attempted to prove that the company actually looked into the evidence of the union for expelling Casio, et
al. and made a determination on the sufficiency thereof. Without such a determination, GMC cannot claim that
it had terminated the employment of Casio, et al. for just cause. The failure of GMC to make a determination of
the sufficiency of evidence supporting the decision of the union constitutes non-observance by GMC of
procedural due process in the dismissal of employees. General Milling Corporation vs. Ernesto Casio, et al.
and Virgilio Pino, et al., G.R. No. 149552, March 10, 2010.
Dismissal pursuant to union security clause; separate notice and haring required. GMC illegally dismissed
Casio, et al. because not only did GMC fail to make a determination of the sufficiency of evidence to support
the unions decision to expel Casio, et al., it also failed to accord the expelled union members procedural due
process, i.e., notice and hearing, prior to the termination of their employment.
GMC, by its own admission, did not conduct a separate and independent investigation to determine the
sufficiency of the evidence supporting the unions expulsion of Casio, et al. It simply acceded to the unions
demand. Consequently, GMC cannot insist that it has no liability for the payment of backwages and damages
to Casio, et al., and that the liability for such payment should fall only upon the union officers and board members
who expelled Casio, et al. GMC completely missed the point that the expulsion of Casio, et al. by the union and
the termination of employment of the same employees by GMC, although related, are two separate and distinct
acts. Despite a closed shop provision in the CBA, law and jurisprudence impose upon GMC the obligation to
accord Casio, et al. substantive and procedural due process before complying with the unions demand to dismiss
the expelled union members from service. The failure of GMC to carry out this obligation makes it liable for
illegal dismissal of Casio, et al. General Milling Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et
al., G.R. No. 149552, March 10, 2010.
Employee benefit; bonus. By definition, a bonus is a gratuity or act of liberality of the giver. It is something
given in addition to what is ordinarily received by or strictly due the recipient. A bonus is granted and paid to an
employee for his industry and loyalty which contributed to the success of the employers business and made
possible the realization of profits. A bonus is also granted by an enlightened employer to spur the employee to
greater efforts for the success of the business and realization of bigger profits.
Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be enforceable, it must have
been promised by the employer and expressly agreed upon by the parties. Given that the bonus in this case is
integrated in the CBA, the same partakes the nature of a demandable obligation. Verily, by virtue of its
incorporation in the CBA, the Christmas bonus due to respondent Association has become more than just an act
of generosity on the part of the petitioner but a contractual obligation it has undertaken.

All given, business losses are a feeble ground for petitioner to repudiate its obligation under the CBA. The rule
is settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished,
discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the
constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full
protection. Hence, absent any proof that the employers consent was vitiated by fraud, mistake or duress, it is
presumed that it entered into the CBA voluntarily and had full knowledge of the contents thereof and was aware
of its commitments under the contract. Lepanto Ceramics, Inc. vs. Lepanto Ceramics Employees
Association, G.R. No. 180866, March 2, 2010.
Employee; monetary award. The law and the rules are consistent in stating that the employment permit must be
acquired prior to employment. The Labor Code states: Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign employer who desires to engage an alien for employment in
the Philippines shall obtain an employment permit from the Department of Labor. Section 4, Rule XIV, Book
1 of the Implementing Rules and Regulations provides: No alien seeking employment, whether as a resident or
non-resident, may enter the Philippines without first securing an employment permit from the Ministry. If an
alien enters the country under a non-working visa and wishes to be employed thereafter, he may only be allowed
to be employed upon presentation of a duly approved employment permit.
Galera worked in the Philippines without a proper work permit but now wants to claim employees benefits
under Philippine labor laws. She cannot come to this Court with unclean hands. To grant Galeras prayer is to
sanction the violation of the Philippine labor laws requiring aliens to secure work permits before their
employment. WPP Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M. Galera Vs. WPP
Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25, 2010.
Employee vs. corporate officer. Corporate officers are given such character either by the Corporation Code or
by the corporations by-laws. Under Section 25 of the Corporation Code, the corporate officers are the president,
secretary, treasurer and such other officers as may be provided in the by-laws. Other officers are sometimes
created by the charter or by-laws of a corporation, or the board of directors may be empowered under the by-
laws of a corporation to create additional offices as may be necessary.
An examination of WPPs by-laws resulted in a finding that Galeras appointment as a corporate officer (Vice-
President with the operational title of Managing Director of Mindshare) during a special meeting of WPPs
Board of Directors is an appointment to a non-existent corporate office. WPPs by-laws provided for only one
Vice-President. At the time of Galeras appointment on 31 December 1999, WPP already had one Vice-
President in the person of Webster. Galera cannot be said to be a director of WPP also because all five
directorship positions provided in the by-laws are already occupied. Finally, WPP cannot rely on its Amended
By-Laws to support its argument that Galera is a corporate officer. The Amended By-Laws provided for more
than one Vice-President and for two additional directors. Even though WPPs stockholders voted for the
amendment on 31 May 2000, the SEC approved the amendments only on 16 February 2001. Galera was
dismissed on 14 December 2000. WPP, Steedman, Webster, and Lansang did not present any evidence that
Galeras dismissal took effect with the action of WPPs Board of Directors.

Additionally, the following provisions in her employment contract are convincing indicators that Galera was an
employee and not a corporate officer: (1) it mandates where and how often she is to perform her work; (2) the
wages she receives are completely controlled by WPP; (3) she is subject to the regular disciplinary procedures
of WPP; (4) section 14 thereof clearly states that she is a permanent employee not a Vice-President or a
member of the Board of Directors; (5) the intellectual property rights created or discovered by petitioner during
her employment shall automatically belong to private respondent WPP [Under the Intellectual Property Code,
this condition prevails if the creator of the work subject to the laws of patent or copyright is an employee of the
one entitled to the patent or copyright]; and (6) the disciplinary procedure states that her right of redress is
through Mindshares Chief Executive Officer for the Asia-Pacific. This last circumstance implies that she was
not even under the disciplinary control of WPPs Board of Directors, and therefore, she could not have been a
WPP corporate officer as only the WPP Board of Directors could appoint and terminate its own corporate
officer. WPP Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M. Galera vs. WPP
Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25, 2010.
Illegal dismissal. Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full
backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time
their actual compensation was withheld from them up to the time of their actual reinstatement but if reinstatement
is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality
of the decision.
The employees in this case are entitled to backwages and separation pay, considering that reinstatement is no
longer possible because the positions they previously occupied are no longer existing. General Milling
Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et al., G.R. No. 149552, March 10, 2010.
Illegal dismissal. WPPs dismissal of Galera lacked both substantive and procedural due process. Apart from
Steedmans letter dated 15 December 2000 to Galera, WPP failed to prove any just or authorized cause for
Galeras dismissal. The law also requires that the employer must furnish the worker sought to be dismissed with
two written notices before termination of employment can be legally effected: (1) notice which apprises the
employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice
which informs the employee of the employers decision to dismiss him. Failure to comply with these
requirements taints the dismissal with illegality. WPPs acts clearly show that Galeras dismissal did not comply
with the two-notice rule. WPP Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M. Galera
Vs. WPP Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25, 2010.
Illegal dismissal; abandonment. Petitioner was, for five times, notified in writing by respondent to resume
teaching for the second semester of school year 2003-2004 following the service of her suspension during the
first semester. She was advised that a teaching load had already been prepared for her. Respondent never replied
to those notices. Petitioners justification for her failure to respond to the notices was that her acceptance of the
offer could be construed as a waiver of her claims. The Court held that petitioners justification is not a valid
excuse.
Petitioner contends that her filing of a complaint for illegal dismissal was a manifestation of her desire to return
to her job and negated any intention to sever the employer-employee relationship. Petitioner forgets that her
complaint for illegal dismissal which she filed on June 5, 2003 sprang, not from her dismissal on December
6, 2003 due to abandonment, but from her suspension during the first semester of school year 2003-2004. While
the filing of a complaint with a prayer for reinstatement negates an intention to sever the employer-employee
relationship, the same contemplates an action taken subsequent to dismissal and not after an employee, by all
indications, abandoned her job. Evangeline C. Cobarrubias vs. Saint Louis University, Inc., G.R. No. 176717,
March 17, 2010.
Illegal dismissal; monetary awards. Clearly, the law intends the award of backwages and similar benefits to
accumulate past the date of the Labor Arbiters decision until the dismissed employee is actually reinstated. But
if, as in this case, reinstatement is no longer possible, this Court has consistently ruled that backwages shall be
computed from the time of illegal dismissal until the date the decision becomes final.
Separation pay, on the other hand, is equivalent to one month pay for every year of service, a fraction of six
months to be considered as one whole year. Here that would begin from January 31, 1994 when petitioner Belen
began his service. Technically the computation of his separation pay would end on the day he was dismissed on
August 20, 1999 when he supposedly ceased to render service and his wages ended. But, since Belen was
entitled to collect backwages until the judgment for illegal dismissal in his favor became final, here on September
22, 2008, the computation of his separation pay should also end on that date.

Further, since the monetary awards remained unpaid even after it became final on September 22, 2008 because
of issues raised respecting the correct computation of such awards, it is but fair that respondent Javellana be
required to pay 12% interest per annum on those awards from September 22, 2008 until they are paid. The 12%
interest is proper because the Court treats monetary claims in labor cases the equivalent of a forbearance of
credit. It matters not that the amounts of the claims were still in question on September 22, 2008. What is
decisive is that the order to pay the monetary awards had long become final. Daniel P. Javellana, Jr. vs. Albino
Belen/Albino Belen Vs. Daniel P. Javellana, Jr. and Javellana Farms, Inc., G.R. No. 181913/G.R. No. 182158,
March 5, 2010.
Labor only contracting. Indeed, it is management prerogative to farm out any of its activities, regardless of
whether such activity is peripheral or core in nature. However, in order for such outsourcing to be valid, it must
be made to an independent contractor because the current labor rules expressly prohibit labor-only
contracting. There is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or
places workers to perform a job, work or service for a principal, and any of the following elements are present:
(i) the contractor or subcontractor does not have substantial capital or investment which relates to the job, work
or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor
are performing activities which are directly related to the main business of the principal; or (ii) the contractor
does not exercise the right to control over the performance of the work of the contractual employee.
In the instant case, the financial statements of Promm-Gem show 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. It also has long term assets
worth P432,895.28 and current assets of P719,042.32. Promm-Gem has also proven that it maintained its own
warehouse and office space with a floor area of 870 square meters. It also had under its name three registered
vehicles, which were used for its promotional/merchandising business. Promm-Gem also has other clients aside
from P&G. Under the circumstances, we find that Promm-Gem has substantial investment, which relates to the
work to be performed. Under these circumstances, Promm-Gem cannot be considered a labor-only contractor.

On the other hand, the Articles of Incorporation of SAPS show that it has a paid-in capital of only
P31,250.00. There is no other evidence to prove how much its working capital and assets are. Furthermore,
there is no showing of substantial investment in tools, equipment or other assets.

SAPS lack of substantial capital is highlighted by the records which show that its payroll for its merchandisers
alone for one month would already total P44,561.00. It had 6-month contracts with P&G. Yet SAPS failed to
show that it could complete the 6-month contracts using its own capital and investment. Its capital is not even
sufficient for one months payroll. SAPS failed to show that its paid-in capital of P31,250.00 is sufficient for the
period required for it to generate revenues to sustain its operations independently. Substantial capital refers to
capitalization used in the performance or completion of the job, work or service contracted out. In the present
case, SAPS has failed to show substantial capital.

Furthermore, the employees in this case performed merchandising and promotion of the products of P&G, which
are activities that the Court has considered directly related to the manufacturing business of P&G. 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, we find that SAPS is engaged in labor-only
contracting. Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et al., G.R. No. 160506, March 9,
2010.
Project employee. The test for distinguishing a project employee from a regular employee is whether or not
he has been assigned to carry out a specific project or undertaking, with the duration and scope of his
engagement specified at the time his service is contracted. Here, it is not disputed that petitioner company
contracted respondent Trinidads service by specific projects with the duration of his work clearly set out in his
employment contracts. He remained a project employee regardless of the number of years and the various
projects he worked for the company.
Generally, length of service provides a fair yardstick for determining when an employee initially hired on a
temporary basis becomes a permanent one, entitled to the security and benefits of regularization. But this
standard will not be fair, if applied to the construction industry, simply because construction firms cannot
guarantee work and funding for its payrolls beyond the life of each project. And getting projects is not a matter
of course. Construction companies have no control over the decisions and resources of project proponents or
owners. There is no construction company that does not wish it has such control but the reality, understood by
construction workers, is that work depended on decisions and developments over which construction companies
have no say.
In this case, respondent Trinidads series of employments with petitioner company were co-terminous with its
projects. When its Boni Serrano-Katipunan Interchange Project was finished in December 2004, Trinidads
employment ended with it. He was not dismissed. His employment contract simply ended with the project for
which he had signed up. His employment history belies the claim that he continuously worked for the
company. Intervals or gaps separated one contract from another. William Construction Corp. and/or Teresita
Uy and William Uy vs. Jorge R. Trinidad, G.R. No. 183250, March 12, 2010.
Reinstatement; reimbursement. An employee cannot be compelled to reimburse the salaries and wages he
received during the pendency of his appeal, notwithstanding the reversal by the NLRC of the LAs order of
reinstatement. The pertinent law on the matter is not concerned with the wisdom or propriety of the LAs order
of reinstatement, for if it was, then it should have provided that the pendency of an appeal should stay its
execution. After all, a decision cannot be deemed irrefragable unless it attains finality. College of the
Immaculate Concepcion vs. National Labor Relations Commission and Atty. Marius F. Carlos, Ph.D, G.R. No.
167563, March 22, 2010.
Representation and Transportation Allowance; entitlement. Statutory law, as implemented by administrative
issuances and interpreted in decisions, has consistently treated RATA as distinct from salary. Unlike salary,
which is paid for services rendered, RATA belongs to a basket of allowances to defray expenses deemed
unavoidable in the discharge of office. Hence, RATA is paid only to certain officials who, by the nature of their
offices, incur representation and transportation expenses.
At any rate, the denial of RATA must be grounded on relevant and specific provision of law. By insisting that,
as requisite for her receipt of RATA, respondent must discharge her office as Bacnotans treasurer while on
reassignment at the La Union treasurers office, the DBM effectively punishes respondent for acceding to her
reassignment. Surely, the law could not have intended to place local government officials like respondent in the
difficult position of having to choose between disobeying a reassignment order or keeping an
allowance. Department of Budget and Management (DBM) vs. Olivia D. Leones, G.R. No. 169726, March 18,
2010.
Separation pay; termination for cause. Separation pay is only warranted when the cause for termination is not
attributable to the employees fault, such as those provided in Articles 283 and 284 of the Labor Code, as well
as in cases of illegal dismissal in which reinstatement is no longer feasible. It is not allowed when an employee
is dismissed for just cause, such as serious misconduct.
Jurisprudence has classified theft of company property as a serious misconduct and denied the award of
separation pay to the erring employee. In this case, the Court saw no reason why this same rule should not be
similarly applied in the case of Capor. She attempted to steal the property of her long-time employer. For
committing such misconduct, she is definitely not entitled to an award of separation pay.

Capors argument that despite the finding of theft, she should still be granted separation pay in light of her long
years of service with the Company did not persuade the Court. Indeed, length of service and a previously clean
employment record cannot simply erase the gravity of the betrayal exhibited by a malfeasant employee. Length
of service is not a bargaining chip that can simply be stacked against the employer. After all, an employer-
employee relationship is symbiotic where both parties benefit from mutual loyalty and dedicated service. If an
employer had treated his employee well, has accorded him fairness and adequate compensation as determined
by law, it is only fair to expect a long-time employee to return such fairness with at least some respect and
honesty. Thus, it may be said that betrayal by a long-time employee is more insulting and odious for a fair
employer. While we sympathize with Capors plight, being of retirement age and having served petitioners for
39 years, we cannot award any financial assistance in her favor because it is not only against the law but also a
retrogressive public policy. Reno Foods, Inc., and/or Vicente Khu vs. Nagkakaisang Lakas ng Manggagawa
(NLM) Katipunan on behalf of its member, Nenita Capor, G.R. No. 164016, March 15, 2010.
Termination of employment; conviction in criminal case. Conviction in a criminal case is not necessary to find
just cause for termination of employment. Criminal cases require proof beyond reasonable doubt while labor
disputes require only substantial evidence, which means such relevant evidence as a reasonable mind might
accept as adequate to justify a conclusion. The evidence in this case was reviewed by the appellate court and
two labor tribunals endowed with expertise on the matter the Labor Arbiter and the NLRC. They all found
substantial evidence to conclude that Capor had been validly dismissed for dishonesty or serious
misconduct. Reno Foods, Inc., and/or Vicente Khu vs. Nagkakaisang Lakas ng Manggagawa (NLM)
Katipunan on behalf of its member, Nenita Capor, G.R. No. 164016, March 15, 2010.
Labor Procedure
Court; findings of fact (labor). A petition for review on certiorari under Rule 45 of the Rules of Court should
include only questions of law questions of fact are not reviewable. A question of law exists when the doubt
centers on what the law is on a certain set of facts, while a question of fact exists when the doubt centers on the
truth or falsity of the alleged facts. There is a question of law if the issue raised is capable of being resolved
without need of reviewing the probative value of the evidence. Once the issue invites a review of the evidence,
the question is one of fact.
Whether YEU committed fraud and misrepresentation in failing to remove Pinedas signature from the list of
employees who supported YEUs application for registration and whether YEU conducted an election of its
officers are questions of fact. They are not reviewable.

Factual findings of the Court of Appeals are binding on the Court. Absent grave abuse of discretion, the Court
will not disturb the Court of Appeals factual findings. In Encarnacion v. Court of Appeals (G.R. No. 101292,
8 June 1993), the Court held that, unless there is a clearly grave or whimsical abuse on its part, findings of fact
of the appellate court will not be disturbed. The Supreme Court will only exercise its power of review in known
exceptions such as gross misappreciation of evidence or a total void of evidence. YTPI failed to show that the
Court of Appeals gravely abused its discretion. Yokohama Tire Philippines, Inc. vs. Yokohama Employees
Union, G.R. No. 163532, March 12, 2010.
Court; questions of fact (labor). The petition essentially raises questions of fact. While as a rule, factual findings
of the CA are binding on the Court, the Court exercised its discretionary review authority to review the facts of
this case in view of the conflict in the findings of facts of the labor arbiter, on the one hand, and the NLRC and
the CA, on the other. White Diamond Trading Corporation and/or Jerry Uy vs. National LaborRelations
Commission, et al., G.R. No. 186019. March 29, 2010.
Indispensable party. Rule 3, Section 7 of the Rules of Court defines indispensable parties as those who are
parties in interest without whom there can be no final determination of an action. They are those parties who
possess such an interest in the controversy that a final decree would necessarily affect their rights, so that the
courts cannot proceed without their presence. A party is indispensable if his interest in the subject matter of the
suit and in the relief sought is inextricably intertwined with the other parties interest.
Unquestionably, Villamaters widow stands as an indispensable party to this complaint for payment of
permanent and total disability benefits, reimbursement of medical and hospitalization expenses, moral and
exemplary damages, and attorneys fees. Leonis Navigation Co., Inc. and World Marine Panama, S.A. vs.
Catalino U. Villamater, et al., G.R. No. 179169, March 3, 2010.
Jurisdiction; estoppel. Petitioner is already estopped from belatedly raising the issue of lack of jurisdiction since
it has actively participated in the proceedings before the LA and NLRC. We have consistently held that while
jurisdiction may be assailed at any stage, a partys active participation in the proceedings before a court without
jurisdiction will estop such party from assailing such lack of it. It is an undesirable practice of a party
participating in the proceedings and submitting his case for decision and then accepting the judgment, only if
favorable, and attacking it for lack of jurisdiction, when adverse. Philippine Veterans Bank vs. National Labor
Relations Commission, et al., G.R. No. 188882, March 30, 2010.
Jurisdiction; labor arbiter. Petitioners clearly and consistently questioned the legality of RGMIs adoption of
the new salary scheme (i.e., piece-rate basis), asserting that such action, among others, violated the existing
CBA. Indeed, the controversy was not a simple case of illegal dismissal but a labor dispute involving the manner
of ascertaining employees salaries, a matter which was governed by the existing CBA.
With regard to the question of jurisdiction over the subject matter, Article 217(c) of the Labor Code requires
labor arbiters to refer cases involving the implementation of CBAs to the grievance machinery provided therein
and to voluntary arbitration. Moreover, Article 260 of the Labor Code clarifies that such disputes must be
referred first to the grievance machinery and, if unresolved within seven days, they shall automatically be
referred to voluntary arbitration. Under this provision, voluntary arbitrators have original and exclusive
jurisdiction over matters which have not been resolved by the grievance machinery.
Pursuant to Articles 217 in relation to Articles 260 and 261 of the Labor Code, the labor arbiter should have
referred the matter to the grievance machinery provided in the CBA. Miguela Santuyo, et al. vs. Remerco
Garments Manufacturing, Inc. and/or Victoria Reyes, G.R. No. 174420, March 22, 2010.
Jurisdiction; labor case. Article 217 of the Labor Code provides that the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide cases involving termination disputes. The NLRC shall have exclusive
appellate jurisdiction over all cases decided by Labor Arbiters. Galera being an employee, the Labor Arbiter
and the NLRC have jurisdiction over the present case. WPP Marketing Communications, Inc. et al. vs. Jocelyn
M. Galera/Jocelyn M. Galera vs. WPP Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No.
169239, March 25, 2010.
Jurisdiction; NLRC. The Labor Arbiter and the NLRC do not have jurisdiction over LRTA. Petitioners
themselves admitted in their complaint that LRTA is a government agency organized and existing pursuant to
an original charter (Executive Order No. 603), and that they are employees of METRO.
Light Rail Transit Authority v. Venus, Jr. (G.R. Nos. 163782 & 163881, March 24, 2006), which has a similar
factual backdrop, holds that LRTA, being a government-owned or controlled corporation created by an original
charter, is beyond the reach of the Department of Labor and Employment which has jurisdiction over workers
in the private sector, Employees of petitioner METRO cannot be considered as employees of petitioner LRTA.
The employees hired by METRO are covered by the Labor Code and are under the jurisdiction of the Department
of Labor and Employment, whereas the employees of petitioner LRTA, a government-owned and controlled
corporation with original charter, are covered by civil service rules. Herein private respondent workers cannot
have the best of two worlds, e.g., be considered government employees of petitioner LRTA, yet allowed to strike
as private employees under our labor laws.
In fine, the Labor Arbiters decision against LRTA was rendered without jurisdiction, hence, it is void. Thus, it
was improper for the appellate court to order the remand of the case to the NLRC, and for it (NLRC) to give due
course to LRTAs appeal. Emmanuel S. Hugo, et al. vs. Light Rail Transit Authority, G.R. No. 181866, March
18, 2010.
NLRC; final decision. Petitioners received the June 15, 2004 resolution of the NLRC, denying their motion for
reconsideration, on June 16, 2004. They filed their petition for certiorari before the CA on August 9, 2004, or
54 calendar days from the date of notice of the June 15, 2004 resolution. By reason of the finality of the June 15,
2004 NLRC resolution, the Labor Arbiter issued on July 29, 2004 a Writ of Execution. Petitioners never moved
for a reconsideration of this Order regarding the voluntariness of their payment to Sonia, as well as the dismissal
with prejudice and the concomitant termination of the case.
However, petitioners argued that the finality of the case did not render the petition for certiorari before the CA
moot and academic. On this point, we agree with petitioners.

In the landmark case of St. Martin Funeral Home v. NLRC (G.R. No. 130866, September 16, 1998), we ruled
that judicial review of decisions of the NLRC is sought via a petition for certiorari under Rule 65 of the Rules
of Court, and the petition should be filed before the CA, following the strict observance of the hierarchy of
courts. Under Rule 65, Section 4, petitioners are allowed sixty (60) days from notice of the assailed order or
resolution within which to file the petition.
Simply put, the execution of the final and executory decision or resolution of the NLRC shall proceed despite
the pendency of a petition for certiorari, unless it is restrained by the proper court. Leonis Navigation Co., Inc.
and World Marine Panama, S.A. vs. Catalino U. Villamater, et al., G.R. No. 179169, March 3, 2010.
POEA; factual findings. As a general rule, factual findings of administrative and quasi-judicial agencies
specializing in their respective fields, especially when affirmed by the CA, must be accorded high respect, if not
finality. However, we are not bound to adhere to the general rule if we find that the factual findings do not
conform to the evidence on record or are not supported by substantial evidence, as in the instant case.
The self-serving and unsubstantiated allegations of respondent cannot defeat the concrete evidence submitted by
petitioner. We note that respondent did not deny the due execution of the withdrawal form as well as the
genuineness of his signature and thumb mark affixed therein. On the contrary, he admitted signing the same.
When he voluntarily signed the document, respondent is bound by the terms stipulated therein. LNS
International Manpower Services vs. Armando Padua, Jr., G.R. No. 179792, March 5, 2010.
February 2010 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on March 10, 2010 by Leslie C. Dy Posted in Labor Law Tagged agency, appeal, backwages, compensable illness, due
process, employer-employee relationship, execution, illegal dismissal, judgment, jurisdiction, loss of trust and confidence, serious
misconduct, suspension

Here are selected February 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor Law
Agency; principle of apparent authority. There is ample evidence that the hospital held out to the patient that the
doctor was its agent. The two factors that determined apparent authority in this case were: first, the hospitals
implied manifestation to the patient which led the latter to conclude that the doctor was the hospitals agent; and
second, the patients reliance upon the conduct of the hospital and the doctor, consistent with ordinary care and
prudence.
It is of record that the hospital required a consent for hospital care to be signed preparatory to the surgery of
the patient. The form reads: Permission is hereby given to the medical, nursing and laboratory staff of the
Medical City General Hospital to perform such diagnostic procedures and to administer such medications and
treatments as may be deemed necessary or advisable by the physicians of this hospital for and during the
confinement of xxx.
By such statement, the hospital virtually reinforced the public impression that the doctor was a physician of its
hospital, rather than one independently practicing in it; that the medications and treatments he prescribed were
necessary and desirable; and that the hospital staff was prepared to carry them out. Professional Services, Inc.
vs. The Court of Appeals, et al./Natividad (substituted by her children Marcelino Agana III, Enrique Agana, Jr.
Emma Agana-Andaya, Jesus Agana and Raymund Agana and Errique Agana) vs. The Court of Appeals and
Juan Fuentes Miguel Ampil vs. Natividad and Enrique Agana, G.R. Nos. 126297/G.R. No. 126467/G.R. No.
127590, February 2, 2010.
Compensable illness. Since cholecystolithiasis or gallstone has been excluded as a compensable illness under
the applicable standard contract for Filipino seafarers that binds the seafarer and the vessels foreign owner, it
was an error for the CA to treat such illness as work-related and, therefore, compensable. The standard
contract precisely did not consider gallstone as compensable illness because the parties agreed, presumably based
on medical science, that such affliction is not caused by working on board ocean-going vessels.
Nor is there any evidence to prove that the nature of the seafarers work on board a ship aggravated his
illness. No one knows if he had gallstone at the time he boarded the vessel. By the nature of this illness, it is
highly probable that he already had it when he boarded his assigned ship although it went undiagnosed because
he had yet to experience its symptoms. Bandila Shipping, Inc. et al. vs. Marcos C. Abalos, G.R. No. 177100,
February 22, 2010.
Compensable illness; work related. Melanoma is not listed as an occupational disease under Annex A of the
Rules on Employees Compensation. Hence, respondent has the burden of proving, by substantial evidence, the
causal relationship between her illness and her working conditions.Substantial evidence means such relevant
evidence as a reasonable mind might accept to support a conclusion.
The Court in this case agreed with the petitioner and the ECC that respondent was not able to positively prove
that her ailment was caused by her employment and that the risk of contracting the disease was increased by her
working conditions. While the law requires only a reasonable work-connection and not a direct causal
relation, respondent still failed to show that her illness was really brought about by the wound she sustained
during the supervised gardening activity in school. The CA accepted the allegation that the mole appeared right
on the spot where respondent sustained the injury without any further proof that the mole appeared because of
the injury. The CA further ruled that the risk of acquiring the said ailment increased by the nature of
[respondents] work in going to school and in returning to her residence during school days x x x. However,
the CA failed to consider that in a tropical country like the Philippines, exposure to sunlight is common. Unlike
farmers, fishermen or lifeguards, it was not shown that respondent had chronic long-term exposure to the sun
considered necessary for the development of melanoma. Thus, the Court did not find the risk of contracting the
disease to have been heightened by respondents exposure to sunlight in going to work and returning to her
residence. Government Service Insurance System vs. Rosalinda A. Bernadas, G.R. No. 164731, February 11,
2010
Dismissal; due process. The essence of due process is the opportunity to be heard; it is the denial of this
opportunity that constitutes violation of due process of law. The employee was given the opportunity to be heard
when a proper notice of investigation was sent to him, although the notice did not reach him for reasons outside
the employers control. The employee was not also totally unheard on the matter as he was able to explain his
side through the two (2) explanation letters he submitted. These letters are clear indications that he intimately
knew of the matter for which he was being investigated. If he was denied due process at all, the denial was with
respect to the charges of extortion, tardiness and absenteeism, which are grounds invoked separately from loss
of trust and confidence. These grounds were not serious considerations in the dismissal that followed, and
therefore, were not considered by the Court as material to the present case. Bibiana Farms and Mills, Inc. vs.
Arturo Lado, G.R. No. 157861, February 2, 2010.
Dismissal; due process. In an unlawful dismissal case, the employer has the burden of proving the lawful cause
sustaining the dismissal of the employee. The employer must affirmatively show rationally adequate evidence
that the dismissal was for a justifiable cause. The employees behavior constituted just cause. However, the
company cannot deny that it failed to observe due process. The law requires that the employer must furnish the
worker sought to be dismissed with two written notices before termination of employment can be legally
effected: (1) notice which apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) the subsequent notice which informs the employee of the employers decision to dismiss
him. Violation of the employees right to statutory due process, even if the dismissal was for a just cause,
warrants the payment of indemnity in the form of nominal damages. This indemnity is not intended to penalize
the employer but to vindicate or recognize the employees right to statutory due process, which was violated by
the employer in the present case. Hilton Heavy Equipment Corporation and Peter Lim vs. Ananias Dy, G.R. No.
164860, February 2, 2010.
Dismissal; due process. Failure to observe due process in the termination of employment for a just cause does
not invalidate the dismissal but makes the company liable for non-compliance with the procedural requirements
of due process. The violation of the employees right to statutory due process warrants the payment of nominal
damages, the amount of which is addressed to the sound discretion of the court, taking into account the relevant
circumstances. In the instant case, considering that the company already suffered financially because of poor
sales performance under the employees watch, it is proper to reduce the amount of nominal damages awarded
to petitioner to Thirty Thousand Pesos (P30,000.00). The amount of nominal damages awarded is not intended
to enrich the employee, but to deter employers from future violations of the statutory due process rights of
employees. Rolando P. Ancheta vs. Destiny Financial Plans, Inc. and Arsenio Bartolome, G.R. No.
179702,February 16, 2010
Dismissal; due process. In the dismissal of employees, it has been consistently held that the twin requirements
of notice and hearing are essential elements of due process. The employer must furnish the worker with two
written notices before termination of employment can be legally effected: (1) a notice apprising the employee of
the particular acts or omissions for which his dismissal is sought, and (2) a subsequent notice informing the
employee of the employers decision to dismiss him. With regard to the requirement of a hearing, the essence
of due process lies simply in an opportunity to be heard, and not that an actual hearing should always and
indispensably be held.
Likewise, there is no requirement that the notices of dismissal themselves be couched in the form and language
of judicial or quasi-judicial decisions. What is required is for the employer to conduct a formal investigation
process, with notices duly served on the employees informing them of the fact of investigation, and subsequently,
if warranted, a separate notice of dismissal. Through the formal investigatory process, the employee must be
accorded the right to present his or her side, which must be considered and weighed by the employer. The
employee must be sufficiently apprised of the nature of the charge, so as to be able to intelligently defend himself
or herself against the charge. Wilfredo M. Baron, et al. vs. National Labor Relations Commission, et al., G.R.
No. 182299, February 22, 2010.
Dismissal; gross neglect of duties. Article 282 (b) imposes a stringent condition before an employer may
terminate an employment due to gross and habitual neglect by the employee of his duties. To sustain a
termination of employment based on this provision of law, the negligence must not only be gross but also
habitual.
In the present case, the employer asserts that the employees failed to regularly undertake a monthly physical
inventory of the outlets merchandise. The Court was not persuaded as it found that inventory preparation and
reporting did not fall on the employees shoulders since they were to assist the [stock] clerk only. Kulas Ideas
& Creations, et al. vs. Juliet Alcoseba, et al., G.R. No. 180123, February 18, 2010.
Dismissal; loss of trust and confidence. In Fungo v. Lourdes School of Mandaluyong, we restated the guidelines
for the application of loss of trust and confidence as a just cause for dismissal of an employee from the service,
thus: a) loss of confidence should not be simulated; b) it should not be used as subterfuge for causes which are
improper, illegal or unjustified; c) it may not be arbitrarily asserted in the face of overwhelming evidence to the
contrary; and d) it must be genuine, not a mere afterthought to justify earlier action taken in bad faith. In the
present case, the employee, who was a warehouseman, held a position of trust and confidence and was given
access to and authority over company property with clear tasks and guidelines laid down very early in his
employment. Like any business entity, the company has every right to protect itself from actual threats to the
viability of its operations. The employee, caught red-handed in a scheme to spirit off unpaid company sacks,
not only violated his fiduciary duty as custodian of company property resulting in the companys loss of trust
and confidence in him; he had also become a threat to the viability of company operations. To rule that he should
be reinstated would be oppressive to the company. The law, in protecting the rights of the employee, authorizes
neither the oppression nor the self-destruction of the employer. Bibiana Farms and Mills, Inc. vs. Arturo
Lado, G.R. No. 157861, February 2, 2010.
Dismissal; loss of trust and confidence. The doctrine of loss of confidence requires the concurrence of the
following: (1) loss of confidence should not be simulated; (2) it should not be used as a subterfuge for causes
which are improper, illegal, or unjustified; (3) it may not be arbitrarily asserted in the face of overwhelming
evidence to the contrary; (4) it must be genuine, not a mere afterthought to justify an earlier action taken in bad
faith; and (5) the employee involved holds a position of trust and confidence. Loss of confidence, as a just cause
for termination of employment, is premised on the fact that the employee concerned holds a position of
responsibility, trust and confidence. He must be invested with confidence on delicate matters, such as the
custody, handling, care, and protection of the employers property and/or funds. In order to constitute a just
cause for dismissal, the act complained of must be work-related such as would show the employee concerned
to be unfit to continue working for the employer.
The subject employee in this case is a managerial employee holding a highly sensitive position. Being the Head
of the Marketing Group of the company, he was in charge, among others, of the over-all production and sales
performance of the company. Thus, as aptly pointed out by the CA, his performance was practically the lifeblood
of the corporation, because its earnings depended on the sales of the marketing group, which he used to head.
The position held by the employee required the highest degree of trust and confidence of his employer in the
formers exercise of managerial discretion insofar as the conduct of the latters business was concerned. The
employees inability to perform the functions of his office to the satisfaction of his employer and the formers
poor judgment as marketing head caused the company huge financial losses. If these were not timely addressed
and corrected, the company could have collapsed, to the detriment of its policy holders, stockholders, employees,
and the public in general. Rolando P. Ancheta vs. Destiny Financial Plans, Inc. and Arsenio Bartolome, G.R.
No. 179702, February 16, 2010
Dismissal; loss of trust and confidence. The Court found convincing evidence that a pattern of concealment and
dishonesty marred the purchase of paper materials for the Womens Journals special project, with the employee
playing the principal and most active role. There is no question that the employee failed to make a reasonable
canvass of the prices of the paper materials required by a companys special project, resulting in substantial
losses to the company. That a rush job was involved, is no excuse as canvassing could be done even in a days
time as shown by the audit departments canvass. That the employee was responsible for concealment and
omissions also appears clear to us; he failed, under dubious circumstances, to seasonably disclose to his employer
material information with financial impact on the purchase transaction.
Thus, the Court cannot but conclude that substantial evidence exists justifying the employees dismissal for a
just cause loss of trust and confidence. For loss of trust and confidence to be a ground for dismissal, the law
requires only that there be at least some basis to justify the dismissal.The fact that the employee had been with
the company for 25 years cannot change the conclusion that he had become a liability to the company whose
interests he miserably failed to protect. Philippine Journalist, Inc. vs. Leozar Dela Cruz y Balobal, G.R. No.
187120, February 16, 2010.
Dismissal; requirements. Under the Labor Code, the requirements for the lawful dismissal of an employee are
two-fold, consisting of substantive and procedural aspects. Not only must the dismissal be for a just or
authorized cause; the basic requirements of procedural due process notice and hearing must likewise be
observed before an employee may be dismissed. The burden of proof rests on the employer to show that the
employees dismissal has met these due process requirements. The case of the employer must stand or fall on its
own merits and not on the weakness of the employees defense. Bibiana Farms and Mills, Inc. vs. Arturo
Lado, G.R. No. 157861, February 2, 2010.
Dismissal; separation pay. Under Article 279 of the Labor Code, an illegally dismissed employee shall be
entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive
of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement. In addition to full backwages, the Court has
also repeatedly ruled that in cases where reinstatement is no longer feasible due to strained relations, then
separation pay may be awarded instead of reinstatement. In Mt. Carmel College v. Resuena, the Court reiterated
that the separation pay, as an alternative to reinstatement, should be equivalent to one (1) month salary for every
year of service.Sargasso Construction and Development Corporation vs. National Labor Relations Commission
(4th Division) and Gorgonio Mongcal, G.R. No. 164118, February 9, 2010.
Dismissal; serious misconduct. Misconduct has been defined as improper or wrong conduct. It is the
transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error of judgment. The misconduct to be serious must be
of such grave and aggravated character and not merely trivial and unimportant. Such misconduct, however
serious, must nevertheless be in connection with the employees work to constitute just cause for his separation.
In the present case, the Court found substantial evidence to prove that a serious misconduct has been committed
to justify termination from employment. The Certified Public Accountant and Corporate Finance Manager of
the company submitted a report dated February 19, 2000 stating that in spite of managements memorandum,
the keys to the office and filing cabinets were not surrendered. It was likewise stated in the report that petitioner
Wilfredo Baron pulled out some records without allowing a representative from the internal audit team to inspect
them. He noticed Wilfredo Baron deleting some files from the computer, which could no longer be
retrieved. Moreover, a member of the audit team saw Cynthia Junatas (another petitioner) carrying some
documents, including a Daily Collection Report. When asked to present the documents for inspection, Junatas
refused and tore the document.

In addition, the audit team discovered that MSI incurred an inventory shortage of One Million Thirty Thousand
Two Hundred Fifty-Eight Pesos and Twenty-One Centavos (P1,030,258.21). It found that Wilfredo Baron, the
operations manager, in conspiracy with the other petitioners, orchestrated massive irregularities and grand scale
fraud, which could no longer be documented because of theft of company documents and deletion of computer
files. Unmistakably, the unauthorized taking of company documents and files, failure to pay unremitted
collections, failure to surrender keys to the filing cabinets despite earlier instructions, concealment of shortages,
and failure to record inventory transactions pursuant to a fraudulent scheme are acts of grave misconduct, which
are sufficient causes for dismissal from employment. Wilfredo M. Baron, et al. vs. National Labor Relations
Commission, et al., G.R. No. 182299, February 22, 2010.
Dismissal; theft; degree of evidence. The long-standing rule is that the existence of a conspiracy must be proved
by clear, direct and convincing evidence. In Fernandez v. National Labor Relations Commission,The Court
expounded on the degree of evidence required to establish the existence of a conspiracy in this wise: While it
is true that in conspiracy, direct proof is not essential, it must however, be shown that it exists as clearly as the
commission of the offense itself. There must at least be adequate proof that the malefactors had come to an
agreement concerning the commission of a felony and decided to commit it. x x x For conspiracy to exist, it is
essential that there must be conscious design to commit an offense. Conspiracy is not the product of negligence
but of intentionality on the part of the cohorts.
Verily, there was a dearth of evidence directly linking the employee to the commission of the crime of theft, as
his mere act of loading the dump truck with aggregates did not show that he knew of the other persons plan to
deliver the load to a place other than the companys construction site. The only conclusion, therefore, is that the
company had illegally dismissed the employee in the present case. Sargasso Construction and Development
Corporation vs. National Labor Relations Commission (4th Division) and Gorgonio Mongcal, G.R. No. 164118,
February 9, 2010.
Employee; recovery of personal contributions. May a government employee, dismissed from the service for
cause, be allowed to recover the personal contributions he paid to the Government Service Insurance System
(GSIS)? The answer is yes.
Section 11(d) of Commonwealth Act No. 186, as amended, provides: Upon dismissal for cause or on voluntary
separation, he shall be entitled only to his own premiums and voluntary deposits, if any, plus interest of three
per centum per annum, compounded monthly. This provision continues to govern cases of employees dismissed
for cause and their claims for the return of their personal contributions.

Also, it should be remembered that the GSIS laws are in the nature of social legislation, to be liberally construed
in favor of the government employees. The money, subject of the employees request, consists of personal
contributions made by him, premiums paid in anticipation of benefits expected upon retirement. The occurrence
of a contingency, i.e., his dismissal from the service prior to reaching retirement age, should not deprive him of
the money that belongs to him from the outset. To allow forfeiture of these personal contributions in favor of the
GSIS would condone undue enrichment. Carmelita Lledo vs. Atty. Cesar V. Lledo, Branch Clerk of Court,
Regional Trial Court, Branch 94, Quezon City, A.M. No. P-95-1167, February 9, 2010.
Employee expenses; in-service training. In the present case, Article XXI, Section 6 of the CBA provides that
All expenses of security guards in securing /renewing their licenses shall be for their personal account. A
reading of the provision would reveal that it encompasses all possible expenses a security guard would pay or
incur in order to secure or renew his license. In-service training being a requirement for the renewal of a security
guards license, expenses incurred therefore are claimed to be for the security guards personal account.
However, the 1994 Revised Rules and Regulations Implementing the Private Security Agency Law (Republic
Act No. 5487) provides that it shall be the primary responsibility of the operators of private security agency and
company security forces to maintain and upgrade the standards of efficiency, discipline, performance and
competence of their personnel. It further provides that [T]o maintain and/or upgrade the standard of efficiency,
discipline and competence of security guards and detectives, company security force and private security
agencies upon prior authority shall conduct-in-service training The cost of training shall be pro-rated among
the participating agencies/private companies.
Since it is the primary responsibility of operators of company security forces to maintain and upgrade the
standards of efficiency, discipline, performance and competence of their personnel, it follows that the expenses
to be incurred therein shall be for the account of the company. Further, the intent of the law to impose upon the
employer the obligation to pay for the cost of its employees training is manifested in the aforementioned
provision of law. While the law mandates pro-rating of expenses because it would be impracticable and unfair
to impose the burden of expenses suffered by all participants on only one participating agency or company, if
there is no centralization, there can be no pro-rating, and therefore, the company that has its own security forces
must shoulder the entire cost for such training. If the intent of the law were to impose upon individual employees
the cost of training, the provision on the pro-rating of expenses would not have found print in the law. Prior to
the signing of the CBA, it was the company providing for the in-service training of the guards. Thus, implicit
from the companys actuations was its acknowledgment of its legally mandated responsibility to shoulder the
expenses for in-service training. PNCC Skyway Traffic Management and Security Division Workers
Organization (PSTMSWDO), represented by its President, Rene Soriano vs. PNCC Skyway Corporation), G.R.
No. 171231, February 17, 2010
Employer-employee relationship; control test. This Court still employs the control test to determine the
existence of an employer-employee relationship between hospital and doctor. In Calamba Medical Center, Inc.
v. National Labor Relations Commission, et al., the Court held that: Under the control test, an employment
relationship exists between a physician and a hospital if the hospital controls both the means and the details of
the process by which the physician is to accomplish his task. x x x That petitioner exercised control over
respondents gains light from the undisputed fact that in the emergency room, the operating room, or any
department or ward for that matter, the doctors work is monitored through the hospitals nursing supervisors,
charge nurses and orderlies. Without the approval or consent of the hospital or its medical director, no operations
can be undertaken in those areas. For the control test to apply, it is not essential for the employer to actually
supervise the performance by the employee of his duties, it being enough that it has the right to wield the
power. Professional Services, Inc. vs. The Court of Appeals, et al./Natividad (substituted by her children
Marcelino Agana III, Enrique Agana, Jr. Emma Agana-Andaya, Jesus Agana and Raymund Agana and Errique
Agana) vs. The Court of Appeals and Juan Fuentes Miguel Ampil vs. Natividad and Enrique Agana, G.R. Nos.
126297/G.R. No. 126467/G.R. No. 127590, February 2, 2010.
Management prerogatives; contract of perpetual employment. The Court cannot countenance the employees
claim that a contract of perpetual employment was ever constituted. While the Constitution recognizes the
primacy of labor, it also recognizes the critical role of private enterprise in nation-building and the prerogatives
of management. A contract of perpetual employment deprives management of its prerogative to decide whom to
hire, fire and promote, and renders inutile the basic precepts of labor relations. While management may validly
waive it prerogatives, such waiver should not be contrary to law, public order, public policy, morals or good
customs. An absolute and unqualified employment for life in the mold of petitioners concept of perpetual
employment is contrary to public policy and good customs, as it unjustly forbids the employer from terminating
the services of an employee despite the existence of a just or valid cause. It likewise compels the employer to
retain an employee despite the attainment of the statutory retirement age, even if the employee has became a
non-performing asset or, worse, a liability to the employer. Ronilo Sorreda vs. Cambridge Electronics
Corporation, G.R. No. 172927, February 11, 2010.
Suspension; leave without prior authority. While it is true that the union and its members have been granted
union leave privileges under the CBA, the grant cannot be considered separately from the other provisions of
the CBA, particularly the provision on management prerogatives where the CBA reserved for the company the
full and complete authority in managing and running its business. The Court, in the present case, saw nothing in
the language of the union leave provision that removes from the company the right to prescribe reasonable rules
and regulations to govern the manner of availing of union leaves, particularly the prerogative to require its prior
approval. In fact, prior notice is expressly required under the CBA so that the company can appropriately
respond to the request for leave. In this sense, the rule requiring prior approval only made express what is
implied from the terms of the CBA.
Despite managements disapproval of his requested leave, the employee still went on leave, in open disregard of
his superiors orders. This rendered the employee open to the charge of insubordination, separately from his
absence without official leave. Malayan Employees Association-FFW and Rodolfo Mangalino vs. Malayan
Insurance Company, Inc., G.R. No. 181357, February 2, 2010.
Quitclaim; elements. It is true that the law looks with disfavor on quitclaims and releases by employees who
have been inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal
responsibilities and frustrate just claims of employees. In certain cases, however, the Court has given effect to
quitclaims executed by employees if the employer is able to prove the following requisites, to wit: (1) the
employee executes a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties;
(3) the consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary to law,
public order, public policy, morals or good customs, or prejudicial to a third person with a right recognized by
law. Goodrich Manufacturing Corporation & Mr. Nilo Chua Goy vs. Emerlina Ativo, et al., G.R. No. 188002,
February 1, 2010.
Quitclaim; validity. In the case at bar, both the Labor Arbiter and the NLRC ruled that the employees executed
their quitclaims without any coercion from the company following their voluntary resignation from the
company. The contents of the quitclaim documents are simple, clear and unequivocal. The records of the case
are bereft of any substantial evidence to show that the employees did not know that they were relinquishing their
right short of what they had expected to receive and contrary to what they have so declared. Put differently, at
the time they were signing their quitclaims, respondents honestly believed that the amounts received by them
were fair and reasonable settlements of the amounts, which they would have received had they refused to
voluntarily resign from the said company. Goodrich Manufacturing Corporation & Mr. Nilo Chua Goy vs.
Emerlina Ativo, et al., G.R. No. 188002, February 1, 2010.
Vacation leave; scheduling. Although the preferred vacation leave schedule of employees should be given
priority, they cannot demand, as a matter of right, for their request to be automatically granted by the company.
If the employees were given the exclusive right to schedule their vacation leave then said right should have been
incorporated in the CBA. In the absence of such right and in view of the mandatory provision in the CBA giving
the company the right to schedule the vacation leave of its employees, the CBA prevails.
In the grant of vacation leave privileges to an employee, the employer is given the leeway to impose conditions
on the entitlement to and commutation of the same, as the grant of vacation leave is not a standard of law, but a
prerogative of management. It is a mere concession or act of grace of the employer and not a matter of right on
the part of the employee. It is, therefore, well within the power and authority of an employer to impose certain
conditions, as it deems fit, on the grant of vacation leaves, such as having the option to schedule the same. PNCC
Skyway Traffic Management and Security Division Workers Organization (PSTMSWDO), represented by its
President, Rene Soriano vs. PNCC Skyway Corporation), G.R. No. 171231, February 17, 2010
Labor Procedure
Appeal; question of fact. While as a rule, a petition for review on certiorari shall raise only questions of law, we
deem it appropriate to examine the facts in this review, given the conflicting factual findings between the Labor
Arbiter, on the one hand and, the NLRC and the CA, on the other. The Labor Arbiter sustained Riveras dismissal
with the finding that he committed acts of dishonesty or fraud against his employer. The NLRC and the CA held
that no substantial evidence existed to support Riveras dismissal. Philippine Journalist, Inc. vs. Leozar Dela
Cruz y Balobal, G.R. No. 187120, February 16, 2010.
Execution of judgments; separation pay/backwages; computation. In concrete terms, the question is whether a
re-computation in the course of execution, of the labor arbiters original computation of the awards made pegged
as of the time the decision was rendered and confirmed with modification by a final CA decision, is legally
proper.
The Court held that under the terms of the decision under execution, no essential change is made by a re-
computation as this step is a necessary consequence that flows from the nature of the illegality of dismissal
declared in that decision. A re-computation (or an original computation, if no previous computation has been
made) is a part of the law specifically, Article 279 of the Labor Code and the established jurisprudence on this
provision that is read into the decision. By the nature of an illegal dismissal case, the reliefs continue to add
on until full satisfaction, as expressed under Article 279 of the Labor Code. The re-computation of the
consequences of illegal dismissal upon execution of the decision does not constitute an alteration or amendment
of the final decision being implemented. The illegal dismissal ruling stands; only the computation of the
monetary consequences of this dismissal is affected and this is not a violation of the principle of immutability of
final judgments. Session Delights Ice Cream and Fast Foods vs. The Hon. Court of Appeals (Sixth Division),
Hon. National Labor Relations Commission (Second Division) and Adonis Armenio M. Flora, G.R. No. 172149,
February 8, 2010.
Jurisdiction; absence of employer-employee relationship. Jurisdiction over the subject matter of a complaint is
determined by the allegations of the complaint. In Pioneer Concrete Philippines, Inc. v. Todaro, the Court
reiterated that where no employer-employee relationship exists between the parties, and the Labor Code or any
labor statute or collective bargaining agreement is not needed to resolve any issue raised by them, it is the
Regional Trial Court which has jurisdiction. Thus it has been consistently held that the determination of the
existence of a contract as well as the payment of damages is inherently civil in nature. A labor arbiter may only
take cognizance of a case and award damages where the claim for such damages arises out of an employer-
employee relationship.
In the present case, the employee, from the period May 8, 1999 to October 8, 1999, was clearly a project
employee of the company. There is, therefore, an employer-employee relationship. Consequently, questions or
disputes arising out of this relationship fell under the jurisdiction of the labor arbiter. However, based on
petitioners allegations in his position paper, his cause of action was based on an alleged second contract of
employment separate and distinct from his project employment contract. While there existed an employer-
employee relationship between the parties while the project contract of employment existed, the present dispute
is neither rooted in the aforestated contract nor is it one inherently linked to it. Petitioner insists on a right to be
employed again in respondent company and seeks a determination of the existence of a new and separate contract
that established that right. As such, his case is within the jurisdiction, not of the labor arbiter, but of the regular
courts. The NLRC and the CA were therefore correct in ruling that the labor arbiter erroneously took cognizance
of the case. Ronilo Sorreda vs. Cambridge Electronics Corporation, G.R. No. 172927, February 11, 2010.
Jurisdiction; void judgment. The company admits that it failed to appeal the January 29, 2003 Order within the
period prescribed by law. It likewise admits that the case was already in the execution process when it resorted
to a belated appeal to the DOLE Secretary. The company sought to excuse itself from the effects of the finality
of the Order by arguing that it was allegedly issued without jurisdiction. As such, it may be assailed at any time.
While it is true that orders issued without jurisdiction are considered null and void and, as a general rule, may
be assailed at any time, the fact of the matter is that, in this case, it was well within the jurisdiction of Director
Manalo to issue the Order. Under Article 128(b) of the Labor Code, as amended by Republic Act (RA) No.
7730, the DOLE Secretary and her representatives, the regional directors, have jurisdiction over labor standards
violations based on findings made in the course of inspection of an employers premises. The said jurisdiction
is not affected by the amount of claim involved, as RA 7730 had effectively removed the jurisdictional
limitations found in Articles 129 and 217 of the Labor Code insofar as inspection cases, pursuant to the visitorial
and enforcement powers of the DOLE Secretary, are concerned. The last sentence of Article 128(b) of the Labor
Code recognizes an exception to the jurisdiction of the DOLE Secretary and her representatives, but such
exception is neither an issue nor applicable here. Tiger Construction and Development Corporation vs.
Reynaldo, et al., G.R. No. 164141,February 26, 2010.
Labor Appeal; cash bond. Article 223 of the Labor Code provides that an appeal by the employer to the NLRC
from a judgment of a labor arbiter which involves a monetary award may be perfected only upon the posting of
a cash or surety bond issued by a reputable bonding company duly accredited by the NLRC, in an amount
equivalent to the monetary award in the judgment appealed from. Cash, means a sum of money; cash bail (the
sense in which the term cash bond is used) is a sum of money posted by a criminal defendant to ensure his
presence in court, used in place of a surety bond and real estate.
To comply with the appeal bond requirement, the company deposited the amount of P71,909.77 with the United
Coconut Planters Bank and surrendered to the NLRC the passbook covering the deposit, along with a Deed of
Assignment it executed assigning the proceeds of the deposit in favor of the employee and authorizing the NLRC
to release the same in the event that the Labor Arbiters Decision becomes final and executory. Such Deed of
Assignment, as well as the passbook, is neither a cash bond nor a surety bond. The companys appeal to the
NLRC was thus not duly perfected, thereby rendering the Labor Arbiters Decision final and
executory. Mindanao Times Corporation vs. Mitchel R. Confesor, G.R. No. 183417, February 5, 2010.

January 2010 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on February 8, 2010 by Leslie C. Dy Posted in Labor Law Tagged appeal, burden of proof, CBA, employee
benefits, illegal dismissal

Here are selected January 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:

Labor Law
CBA; coverage. As regular employees, petitioners fall within the coverage of the bargaining unit and are
therefore entitled to CBA benefits as a matter of law and contract. Under the terms of the CBA, petitioners are
members of the appropriate bargaining unit because they are regular rank-and-file employees and do not belong
to any of the excluded categories. Most importantly, the labor arbiters decision of January 17, 2002 affirmed
all the way to the CA ruled against the companys submission that they are independent contractors. Thus, as
regular rank-and-file employees, they fall within the CBA coverage. And, under the CBAs express terms,
they are entitled to its benefits.
CBA coverage is not only a question of fact, but of law and contract. The factual issue is whether the petitioners
are regular rank-and-file employees of the company. The tribunals below uniformly answered this question in
the affirmative. From this factual finding flows legal effects touching on the terms and conditions of the
petitioners regular employment. Farley Fulache, et al. vs. ABS-CBN Broadcasting Corporation, G.R. No.
183810, January 21, 2010.
Employee benefits; permanent disability benefits. In accordance with the avowed policy of the State to give
maximum aid and full protection to labor, the Court applied the Labor Code concept of permanent total disability
to Filipino seafarers. The Court held that the notion of disability is intimately related to the workers capacity to
earn. What is compensated is not the employees injury or illness but his inability to work resulting in the
impairment of his earning capacity; hence, disability should be understood less on its medical significance but
more on the loss of earning capacity.
In the present case, petitioner was able to secure a fit to work certification from a doctor only after more than
five months from the time he was medically repatriated due to a finding that his disability is considered
permanent and total. Significantly, petitioner remained unemployed even after he filed on February 26, 2002
his complaint to recover permanent total disability compensation and despite the August 31, 2005 Decision of
the NLRC which was affirmed by the Court of Appeals, ordering respondents to allow complainant to resume
sea duty.

That petitioner was not likely to fully recover from his disability is mirrored by the Labor Arbiters finding that
his illness would possibly recur once he resumes his sea duties. This could very well be the reason why petitioner
was not re-deployed by respondents. Petitioners disability being then permanent and total, he is entitled to
100% compensation, i.e., US$80,000 for officers, as stipulated in par. 20.1.7 of the parties CBA. Rizaldy M.
Quitoriano vs. Jebsens Maritime, Inc./Ma. Theresa Gutay and/or Atle Jebsens Management A/S, G.R. No.
179868, January 21, 2010.

Labor Code; interpretation. Another basic principle is that expressed in Article 4 of the Labor Code that all
doubts in the interpretation and implementation of the Labor Code should be interpreted in favor of the
workingman. This principle has been extended by jurisprudence to cover doubts in the evidence presented by
the employer and the employee. The petitioner has, at very least, shown serious doubts about the merits of the
companys case, particularly in the appreciation of the clinching evidence on which the NLRC and CA decisions
were based. In such contest of evidence, the Court applied Article 4 as basis to rule in favor of the employee. In
this case, the Court held that petitioner was constructively dismissed given the hostile and discriminatory
working environment he found himself in, particularly evidenced by the escalating acts of unfairness against
him that culminated in the appointment of another HRD manager without any prior notice to him. Where no
less than the companys chief corporate officer was against him, petitioner had no alternative but to resign from
his employment.
The Court also gave significance to the fact that petitioner sought almost immediate official recourse to contest
his separation from service through a complaint for illegal dismissal, and held that this is not the act of one who
voluntarily resigned; his immediate filing of a complaint characterizes him as one who deeply felt that he had
been wronged. Manolo A. Peaflor vs. Outdoor Clothing Manufacturing Corporation, et al., G.R. No. 177114,
January 21, 2010.

Labor Procedure
Appeal; illegal dismissal. In the present case, the company terminated the services of four drivers who were
declared by the labor arbiter to be regular employees of the company in an initial complaint filed by said drivers
for regularization. Pending the companys appeal of the labor arbiters decision, the company terminated the
employment of said drivers on the ground of redundancy, which action, the Court viewed as an implied
admission of the regular employment status of the drivers. The Court held that by implementing the dismissal
action at the time the labor arbiters ruling was under review, the company unilaterally negated the effects of the
labor arbiters ruling while at the same time appealing the same ruling to the NLRC. This unilateral move is a
direct affront to the NLRCs authority and an abuse of the appeal process. All these go to show
that company acted with patent bad faith. Farley Fulache, et al. vs. ABS-CBN Broadcasting Corporation, G.R.
No. 183810, January 21, 2010.
Appeal; questions of fact. The rule that a Rule 45 petition deals only with legal issues is not an absolute rule; it
admits of exceptions. In the labor law setting, the Court may look into factual issues when there is a conflict in
the factual findings of the labor arbiter, the NLRC, and the CA as in the present case where the labor arbiter
found facts supporting the conclusion that there had been constructive dismissal, while the NLRCs and the CAs
factual findings contradicted the labor arbiters findings. The conflicting factual findings are not binding on the
Court. The Court held that it retains the authority to pass upon the evidence presented and draw conclusions
therefrom. Manolo A. Peaflor vs. Outdoor Clothing Manufacturing Corporation, et al., G.R. No. 177114,
January 21, 2010.
Appeal under Rule 45; questions of law vs. questions of fact. Petitioners in the present case do not question the
findings of facts in the assailed decisions. They question the misapplication of the law and jurisprudence on the
facts recognized by the decisions. For example, they question as contrary to law their exclusion from the CBA
after they were recognized as regular rank-and-file employees of the company. They also question the basis in
law for the dismissal of four drivers and the legal propriety of the redundancy action taken against them.
The Court reiterated the established distinctions between questions of law and questions of fact by quoting its
rulings in New Rural Bank of Guimba (N.E.) Inc. v. Fermina S. Abad and Rafael Susan [G.R. No. 161818, August
20, 2008, 562 SCRA 503]: A question of law exists when the doubt or controversy concerns the correct
application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination
of the probative value of the evidence presented, the truth or falsehood of the facts being admitted. A question
of fact exists when a doubt or difference arises as to the truth or falsehood of facts or when the query invites
calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy
of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability
of the situation. Farley Fulache, et al. vs. ABS-CBN Broadcasting Corporation, G.R. No. 183810, January 21,
2010.
Dismissal; burden of proof. It is a settled rule that in employee termination disputes, the employer bears the
burden of proving that the employees dismissal was for just and valid cause. That petitioner did indeed file a
letter of resignation does not help the companys case as, other than the fact of resignation, the company must
still prove that the employee voluntarily resigned. There can be no valid resignation where the act was made
under compulsion or under circumstances approximating compulsion, such as when an employees act of
handing in his resignation was a reaction to circumstances leaving him no alternative but to resign. In this case,
the Court held that petitioner had been constructively dismissed as his resignation was a response to the
unacceptable appointment of another person to a position he still occupied. In sum, the evidence does not
support the existence of voluntariness in petitioners resignation. Manolo A. Peaflor vs. Outdoor Clothing
Manufacturing Corporation, et al., G.R. No. 177114, January 21, 2010.

December 2009 Philippine Supreme Court

Decisions on Labor Law and Procedure
Posted on January 22, 2010 by Leslie C. Dy Posted in Labor Law Tagged abandonment, appeal, attorney's fees, compensable
illness, constructive dismissal, due process, employer-employee relationship, illegal dismissal, labor-only
contracting, reinstatement, reorganization

Here are selected December 2009 rulings of the Supreme Court of the Philippines on labor law and
procedure:

Labor Law
Attorneys fees; actions for indemnity under employer liability laws. The claim for attorneys fees is granted
following Article 2208 of the New Civil Code which allows its recovery in actions for recovery of wages
of laborers and actions for indemnity under the employers liability laws. The same fees are also
recoverable when the defendants act or omission has compelled the plaintiff to incur expenses to
protect his interest as in the present case following the refusal by the employer to settle the employees
claims. Pursuant to prevailing jurisprudence, petitioner is entitled to attorneys fees of ten percent
(10%) of the monetary award. Leopoldo Abante vs. KJGS Fleet Management Manila and/or Guy Domingo
A. Macapayag, Kristian Gerhard Jebsens Skipsrenderi A/S, G.R. No. 182430, December 4, 2009.
Compensability of death; requirements. To be entitled to compensation, a claimant must show that the
sickness is either: (1) a result of an occupational disease listed under Annex A of the Amended Rules
on Employees Compensation under the conditions Annex A sets forth; or (2) if not so listed, that
the risk of contracting the disease is increased by the working conditions.
Based on Franciscos death certificate, the immediate cause of his death was cardiac arrest; the
antecedent cause was acute massive hemorrhage, and the underlying cause was bleeding peptic ulcer
disease.
In determining the compensability of an illness, the workers employment need not be the sole factor
in the growth, development, or acceleration of a claimants illness to entitle him to the benefits
provided for. It is enough that his employment contributed, even if only in a small degree, to the
development of the disease.

P.D. 626 is a social legislation whose primordial purpose is to provide meaningful protection to the
working class against the hazards of disability, illness, and other contingencies resulting in loss of
income. In employee compensation, persons charged by law to carry out the Constitutions social
justice objectives should adopt a liberal attitude in deciding compensability claims and should not
hesitate to grant compensability where a reasonable measure of work-connection can be inferred.
Only this kind of interpretation can give meaning and substance to the laws compassionate spirit as
expressed in Article 4 of the Labor Code that all doubts in the implementation and interpretation of
the provisions of the Labor Code, including their implementing rules and regulations, should be
resolved in favor of labor. Government Service Insurance System vs. Jean E. Raoet, G.R. No. 157038,
December 23, 2009.
Compensable injury; requirement. Section 20(B) of the POEA Standard Employment Contract provides
for the liabilities of the employer only when the seafarer suffers from a work-related injury or illness
during the term of his employment.
Petitioner claims to have reported his illness to an officer once on board the vessel during the course
of his employment. The records are bereft, however, of any documentary proof that he had indeed
referred his illness to a nurse or doctor in order to avail of proper treatment. It thus becomes apparent
that he was repatriated to the Philippines, not on account of any illness or injury, but in view of the
completion of his contract.

But even assuming that petitioner was repatriated for medical reasons, he failed to submit himself to
the company-designated doctor in accordance with the post-employment medical examination
requirement under the above-quoted paragraph 3 of Section 20(B) of the POEA Standard Employment
Contract. Failure to comply with this requirement which is a sine qua non bars the filing of a claim for
disability benefits. Dionisio M. Musnit vs. Sea Star Shipping Corporation and Sea Star Shipping Corporation,
Ltd., G.R. No. 182623, December 4, 2009.
Compensable injury; loss of earning capacity. The Court has applied the Labor Code concept of permanent
total disability to Filipino seafarers in keeping with the avowed policy of the State to give maximum
aid and full protection to labor, it holding that the notion of disability is intimately related to the
workers capacity to earn, what is compensated being not his injury or illness but his inability to work
resulting in the impairment of his earning capacity, hence, disability should be understood less on its
medical significance but more on the loss of earning capacity. Joelson O. Iloreta vs. Philippine
Transmarine Carriers, Inc. and Norbulk Shipping U.K. Ltd., G.R. No. 183908, December 4, 2009.
Dismissal; constructive dismissal. Case law defines constructive dismissal as a cessation of work because
continued employment has been rendered impossible, unreasonable, or unlikely, as when there is a
demotion in rank or diminution in pay or both or when a clear discrimination, insensibility, or disdain
by an employer becomes unbearable to the employee.
The test of constructive dismissal is whether a reasonable person in the employees position would
have felt compelled to give up his position under the circumstances. It is an act amounting to dismissal
but is made to appear as if it were not. In fact, the employee who is constructively dismissed might
have been allowed to keep coming to work. Constructive dismissal is therefore a dismissal in disguise.
The law recognizes and resolves this situation in favor of employees in order to protect their rights
and interests from the coercive acts of the employer.

In the present case, the employer ceased verbally communicating with the employee and giving him
work assignment after suspecting that he had forged purchase receipts. In this situation, the employee
was forced to leave the employers compound with his family and to transfer to a nearby place. The
employees act of leaving his employers premises was in reality not his choice but a situation created
by the employer. CRC Agricultural Trading and Rolando B. Catindig vs. National Labor Relations
Commission and Roberto Obias, G.R. No. 177664, December 23, 2009.
Dismissal; constructive dismissal. Constructive dismissal exists when an act of clear discrimination,
insensibility or disdain by an employer has become so unbearable to the employee leaving him with
no option but to forego with his continued employment.
In this case, the employee, while still employed with the company, was compelled to resign and forced
to go on leave. He was not allowed to participate in the activities of the company. His salary was no
longer remitted to him. His subordinates were directed not to report to him and the company directed
one of its district managers to take over his position and do his functions without prior notice to him.

These discriminatory acts were calculated to make the employee feel that he is no longer welcome
nor needed in the company short of sending him an actual notice of termination. The Court held that
the employer constructively dismissed the employee from service. Ramon B. Formantes vs. Duncan
Pharmaceuticals, Phils., Inc., G.R. No. 170661, December 4, 2009.
Dismissal; corporate officer; jurisdiction. From the documents submitted by the company, petitioner was
a director and officer of Slimmers World. The charges of illegal suspension, illegal dismissal, unpaid
commissions, reinstatement and back wages imputed by petitioner against the company fall squarely
within the ambit of intra-corporate disputes. In a number of cases, the Court has held that a corporate
officers dismissal is always a corporate act, or an intra-corporate controversy which arises between a
stockholder and a corporation. The question of remuneration involving a stockholder and officer, not
a mere employee, is not a simple labor problem but a matter that comes within the area of corporate
affairs and management and is a corporate controversy in contemplation of the Corporation Code.
It is a settled rule that jurisdiction over the subject matter is conferred by law. The determination of
the rights of a director and corporate officer dismissed from his employment as well as the
corresponding liability of a corporation, if any, is an intra-corporate dispute subject to the jurisdiction
of the regular courts. Thus, the appellate court correctly ruled that it is not the NLRC but the regular
courts which have jurisdiction over the present case. Leslie Okol vs. Slimmers World International, et
al., G.R. No. 160146, December 11, 2009.
Dismissal; due process; opportunity to be heard. Although the employee, during some parts of the trial
proceedings before the Labor Arbiter was not represented by a member of the bar, he was given
reasonable opportunity to be heard and submit evidence to support his arguments, through the
medium of pleadings filed in the labor tribunals. He was also able to present his version of the Magat
incident during his direct examination conducted by his lawyer Atty. Jannette Inez. Thus, he cannot
claim that he was denied due process. Ramon B. Formantes vs. Duncan Pharmaceuticals, Phils., Inc., G.R.
No. 170661, December 4, 2009.
Dismissal; just cause; separation pay. The liberality of the law can never be extended to the unworthy
and undeserving. In several instances, the policy of social justice has compelled this Court to accord
financial assistance in the form of separation pay to a legally terminated employee. This liberality,
however, is not without limitations. Thus, when the manner and circumstances by which the employee
committed the act constituting the ground for his dismissal show his perversity or depravity, no
sympathy or mercy of the law can be invoked.
We have examined the records which indeed show that the employees unauthorized absences as well
as tardiness are habitual despite having been penalized for past infractions. In Gustilo v. Wyeth
Philippines, Inc. [483 Phil. 69, 78 (2004)], we held that a series of irregularities when put together may
constitute serious misconduct. We also held that gross neglect of duty becomes serious in character
due to frequency of instances. Serious misconduct is said to be a transgression of some established
and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and indicative of
wrongful intent and not mere error of judgment. Oddly, the employee never advanced any valid reason
to justify his absences. The employees intentional and willful violation of company rules shows his
utter disregard of his work and his employers interest. Indeed, there can be no good faith in
intentionally and habitually incurring inexcusable absences. Hence, he is not entitled to severance
pay. Arsenio S. Quiambao vs. Manila Electric Company, G.R. No. 171023, December 18, 2009.
Dismissal; just cause; sexual abuse. As a manager, the employee enjoyed the full trust and confidence of
the company and his subordinates. By committing sexual abuse against his subordinate, he clearly
demonstrated his lack of fitness to continue working as a managerial employee and deserves the
punishment of dismissal from the service. Ramon B. Formantes vs. Duncan Pharmaceuticals, Phils.,
Inc., G.R. No. 170661, December 4, 2009.
Dismissal; separation pay in lieu of reinstatement. Under Article 279 of the Labor Code, the illegally
dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges
and to his full backwages, inclusive of allowances and other benefits or their monetary equivalent,
computed from the time his compensation was withheld from him up to the time of his actual
reinstatement. Thus, an illegally dismissed employee is entitled to two reliefs: backwages and
reinstatement. Where reinstatement is no longer viable as an option, backwages shall be computed
from the time of the illegal termination up to the finality of the decision. Separation pay equivalent to
one month salary for every year of service should likewise be awarded as an alternative in case
reinstatement in not possible.
In the present case, reinstatement is no longer feasible because of the strained relations between the
employee and the employer. Time and again, the Court has recognized that strained relations between
the employer and employee is an exception to the rule requiring actual reinstatement for illegally
dismissed employees for the practical reason that the already existing antagonism will only fester and
deteriorate, and will only worsen with possible adverse effects on the parties, if we shall compel
reinstatement; thus, the use of a viable substitute that protects the interests of both parties while
ensuring that the law is respected.

The payment of separation pay is the better alternative as it liberates the employee from what could
be a highly hostile work environment, while releasing the employer from the grossly unpalatable
obligation of maintaining in their employ a worker they could no longer trust. CRC Agricultural Trading
and Rolando B. Catindig vs. National Labor Relations Commission and Roberto Obias, G.R. No. 177664,
December 23, 2009.
Dismissal; twin requirements. Well settled is the dictum that the twin requirements of notice and hearing
constitute the essential elements of due process in the dismissal of employees. It is a cardinal rule in
our jurisdiction that the employer must furnish the employee with two written notices before the
termination of employment can be affected: (a) the first apprises the employee of the particular acts
or omissions for which his dismissal is sought; and (b) the second informs the employee of the
employers decision to dismiss him.
The barrage of letters sent to petitioner, starting from a letter dated April 22, 1994 until his termination
on May 19, 1994, was belatedly made and apparently done in an effort to show that petitioner was
accorded the notices required by law in dismissing an employee. As observed by the Labor Arbiter in
her decision, prior to those letters, the employee was already constructively dismissed.

Since the dismissal, although for a valid cause, was done without due process of law, the employer
should indemnify the employee with nominal damages in the amount of P30,000.00.Ramon B.
Formantes vs. Duncan Pharmaceuticals, Phils., Inc., G.R. No. 170661, December 4, 2009.
Dismissal; two-notice requirement. To justify the dismissal of an employee for a just cause, the employer
must furnish the worker with two written notices. The first is the notice to apprise the employee of
the particular acts or omissions for which his dismissal is sought. This may be loosely considered as
the charge against the employee. The second is the notice informing the employee of the employers
decision to dismiss him. This decision, however, must come only after the employee is given a
reasonable period from receipt of the first notice within which to answer the charge, and ample
opportunity to be heard and defend himself with the assistance of his representative, if he so desires.
The requirement of notice is not a mere technicality, but a requirement of due process to which every
employee is entitled.
The employer clearly failed to comply with the two-notice requirement. Nothing in the records shows
that the company ever sent the employee a written notice informing him of the ground for which his
dismissal was sought. It does not also appear that the company held a hearing where the employee
was given the opportunity to answer the charges of abandonment. Neither did the company send a
written notice to the employee informing him that his service had been terminated and the reasons
for the termination of his employment. Under these facts, the respondents dismissal was illegal. CRC
Agricultural Trading and Rolando B. Catindig vs. National Labor Relations Commission and Roberto
Obias, G.R. No. 177664, December 23, 2009.
Drug testing for employees; employers duty. It was Plantation Bays responsibility to ensure that the drug
tests would be properly administered, the results thereof being the bases in terminating the
employees services.
The employer failed to indubitably prove that the employees were guilty of drug use in contravention
of its drug-free workplace policy amounting to serious misconduct. The employees are therefore
deemed to have been illegally dismissed. Plantation Bay Resort & Spa and Efren Belarmino vs. Romel S.
Dubrico, et al., G.R. No. 182216, December 4, 2009.
Employee disability benefits. Permanent disability refers to the inability of a worker to perform his job
for more than 120 days, regardless of whether he loses the use of any part of his body. What
determines the employees entitlement to permanent disability benefits is his inability to work for more
than 120 days. In the case at bar, it was only on February 20, 2001 that the Certificate of Fitness for
Work was issued by Dr. Lim, more than 6 months from the time he was initially evaluated by the
doctor on July 24, 2000 and after he underwent operation on August 18, 2000.
It is gathered from the documents emanating from the Office of Dr. Lim that the employee was seen
by him from July 24, 2000 up to February 20, 2001 or a total of 13 times; and except for the medical
reports dated February 5, 2001 and February 20, 2001 (when the doctor finally pronounced petitioner
fit to work), Dr. Lim consistently recommended that the employee continue his physical
rehabilitation/therapy and revisit clinic on specific dates for re-evaluation, thereby implying that the
employee was not yet fit to work.

Given a seafarers entitlement to permanent disability benefits when he is unable to work for more
than 120 days, the failure of the company-designated physician to pronounce the employee fit to work
within the 120-day period entitles him to permanent total disability benefit in the amount of
US$60,000.00. Leopoldo Abante vs. KJGS Fleet Management Manila and/or Guy Domingo A. Macapayag,
Kristian Gerhard Jebsens Skipsrenderi A/S, G.R. No. 182430, December 4, 2009.
Existence of employer-employee relationship. The elements to determine the existence of an employment
relationship are: (1) the selection and engagement of the employee; (2) the payment of wages; (3)
the power of dismissal; and (4) the employers power to control the employees conduct. The most
important element is the employers control of the employees conduct, not only as to the result of
the work to be done, but also as to the means and methods to accomplish it. All the four elements
are present in this case.
First, the company engaged the services of the worker in 1995. Second, the company paid the worker
a daily wage of P175.00, with allowances ranging from P140.00 to P200.00 per day. The fact that the
worker was paid under a no work no pay scheme, assuming this claim to be true, is not significant.
The no work no pay scheme is merely a method of computing compensation, not a basis for
determining the existence or absence of employer-employee relationship. Third, the companys power
to dismiss the worker was inherent in the fact that it engaged the services of the worker as a
driver. Finally, a careful review of the record shows that the worker performed his work as driver
under the petitioners supervision and control. The company determined how, where, and when the
worker performed his task. They, in fact, requested the worker to live inside their compound so he
(the worker) could be readily available when the company needed his services. Undoubtedly, the
company exercised control over the means and methods by which the worker accomplished his work
as a driver. CRC Agricultural Trading and Rolando B. Catindig vs. National Labor Relations Commission and
Roberto Obias, G.R. No. 177664, December 23, 2009.
Labor-only contracting. The contract between the principal and the contractor is not the final word on
how the contracted workers relate to the principal and the purported contractor; the relationships
must be tested on the basis of how they actually operate.
The legitimate job contractor must have the capitalization and equipment to undertake the sale and
distribution of the manufacturers products, and must do it on its own using its own means and selling
methods.

Even before going into the realities of workplace operations, the Court of Appeals found that the
service contracts themselves provide ample leads into the relationship between the company, on the
one hand, and Peerless and Excellent, on the other. The Court of Appeals noted that both the Peerless
and the Excellent contracts show that their obligation was solely to provide the company with the
services of contractual employees, and nothing more. These contracted services were for the handling
and delivery of the companys products and allied services. Following D.O. 18-02 and the contracts
that spoke purely of the supply of labor, the Court of Appeals concluded that Peerless and Excellent
were labor-only contractors unless they could prove that they had the required capitalization and the
right of control over their contracted workers.

The contractors were not independently selling and distributing company products, using their own
equipment, means and methods of selling and distribution; they only supplied the manpower that
helped the company in the handing of products for sale and distribution. In the context of D.O. 18-
02, the contracting for sale and distribution as an independent and self-contained operation is a
legitimate contract, but the pure supply of manpower with the task of assisting in sales and distribution
controlled by a principal falls within prohibited labor-only contracting. Coca Cola Bottlers Philippines,
Inc. vs. Ricky E. Dela Cruz, et al., G.R. No. 184977, December 7, 2009.
Outsourcing. The employer was within its right in entering the forwarding agreements with the
forwarders as an exercise of its management prerogative. The employers declared objective for the
arrangement is to achieve greater economy and efficiency in its operations a universally accepted
business objective and standard that the union has never questioned. In Meralco v. Quisumbing,[G.R.
No. 127598, January 27, 1999] the Court joined this universal recognition of outsourcing as a legitimate
activity when it held that a company can determine in its best judgment whether it should contract
out a part of its work for as long as the employer is motivated by good faith; the contracting is not
for purposes of circumventing the law; and does not involve or be the result of malicious or arbitrary
action. Temic Automotive Philippines, Inc. vs. Temic Automotive Philippines, Inc. Employees Union-FFW, G.R.
No. 186965, December 23, 2009.
Regulations; retroactivity of POEA Circular. Respecting the appellate courts ruling that it is POEA Memo
Circular No. 55, series of 1996 which is applicable and not Memo Circular No. 9, series of 2000, apropos
is the ruling in Seagull Maritime Corporation v. Dee [G.R. No. 165156, April 2, 2007] involving employment
contract entered into in 1999, before the promulgation of POEA Memo Circular No. 9, series of 2000
or the use of the new POEA Standard Employment Contract, like that involved in the present case. In
said case, the Court applied the 2000 Circular in holding that while it is the company-designated
physician who must declare that the seaman suffered permanent disability during employment, it does
not deprive the seafarer of his right to seek a second opinion which can then be used by the labor
tribunals in awarding disability claims. Leopoldo Abante vs. KJGS Fleet Management Manila and/or Guy
Domingo A. Macapayag, Kristian Gerhard Jebsens Skipsrenderi A/S, G.R. No. 182430, December 4, 2009.
Termination; abandonment. Abandonment of work, or the deliberate and unjustified refusal of an
employee to resume his employment, is a just cause for employment termination under paragraph
(b) of Article 282 of the Labor Code, since it constitutes neglect of duty. The jurisprudential rule is
that abandonment is a matter of intention that cannot be lightly presumed from equivocal acts. To
constitute abandonment, two elements must concur: (1) the failure to report for work or absence
without valid or justifiable reason, and (2) a clear intent, manifested through overt acts, to sever the
employer-employee relationship. The employer bears the burden of showing a deliberate and
unjustified refusal by the employee to resume his employment without any intention of returning.
In the present case, the employer did not adduce any proof to show that the employee clearly and
unequivocally intended to abandon his job or to sever the employer-employee relationship. Moreover,
the filing of the complaint for illegal dismissal on June 22, 2004 strongly speaks against the employers
charge of abandonment; it is illogical for an employee to abandon his employment and, thereafter,
file a complaint for illegal dismissal. CRC Agricultural Trading and Rolando B. Catindig vs. National Labor
Relations Commission and Roberto Obias, G.R. No. 177664, December 23, 2009.
Termination; reorganization. Absent explicit statutory authority, the Court cannot sustain the grant of
separation pay and retirement benefits from one single act of involuntary separation from the service,
lest there be duplication of purpose and depletion of government resources. Within the context of
government reorganization, separation pay and retirement benefits arising from the same cause, are
in consideration of the same services and granted for the same purpose. Whether denominated as
separation pay or retirement benefits, these financial benefits reward government service and provide
monetary assistance to employees involuntarily separated due to bona fide reorganization. Efren M.
Herrera, et al. vs. National Power Corporation, et al., G.R. No. 166570, December 18, 2009.
Termination; reorganization. The grant of retirement benefits to the employees in addition to the
separation pay they have already received effectively amounts to additional compensation for the
same services. Unless specifically authorized by law, such additional compensation is not allowed
under Section 8, Article IX-B of the Constitution.
There is only one act of exit from the service and only one service to exit from. Employees who chose
separation from the service under the NPCs restructuring plan never really exercised the right to
optionally retire; the earlier termination of their employment denied them the opportunity to optionally
retire. Consequently, no retirement pay ever accrued in their favor.

This means, in concrete terms, that the employees who opted to be separated from the service under
the NPC restructuring plan and who have received separation pay under RA 9136, cannot also be
considered to have separately exited from the same service through optional retirement under CA
186, entitling them to separate retirement benefits under this law. RA 9136 provides for separation
benefits in the alternative and does not offer both.

Optional retirement clearly is a mere expectancy until availed of by those who are qualified to exercise
the option to retire. If not taken because the employee chose the separation package under RA 9136,
then optional retirement under CA 186 simply remained an expectancy that never materialized and is
now forever lost. To put it differently, given one and the same exit from the one and the same service
for which only one separation benefit is provided, there can be no actual retirement under CA 186
after exit via the RA 9136 route has been taken; optional retirement under CA 186 has then become
the road not taken. Efren M. Herrera, et al. vs. National Power Corporation, et al., Separate Concurring
Opinion of J. Brion, G.R. No. 166570, December 18, 2009.
Termination; retrenchment. Retrenchment is the termination of employment initiated by the employer
through no fault of and without prejudice to the employees, it is resorted to during periods of business
recession, industrial depression, or seasonal fluctuations or during lulls occasioned by lack of orders,
shortage of materials, conversion of the plant for a new production program or the introduction of
new methods or more efficient machinery or of automation. It is a management prerogative resorted
to, to avoid or minimize business losses.
To effect a valid retrenchment, the following elements must be present: (1) the retrenchment is
reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de
minimis, but substantial, serious, and real, or only if expected, are reasonably imminent as perceived
objectively and in good faith by the employer; (2) the employer serves written notice both to the
employee/s concerned and the Department of Labor and Employment at least a month before the
intended date of retrenchment; (3) the employer pays the retrenched employee separation pay in an
amount prescribed by the Code; (4) the employer exercises its prerogative to retrench in good faith;
and (5) the employer uses fair and reasonable criteria in ascertaining who would be retrenched or
retained.
The losses must be supported by sufficient and convincing evidence. The normal method of
discharging this burden of proof is the submission of financial statements duly audited by independent
external auditors. For failure of Asiakonstrukt to clearly and satisfactorily substantiate its financial
losses, the dismissal of the employee on account of retrenchment is unjustified. Virgilio G. Anabe vs.
Asian Construction (ASIAKONSTRUKT), et al., G.R. No. 183233, December 23, 2009.
Union; cancellation of union registration; grounds. For the purpose of de-certifying a union, it must be
shown that there was misrepresentation, false statement or fraud in connection with the adoption or
ratification of the constitution and by-laws or amendments thereto; the minutes of ratification; or, in
connection with the election of officers, the minutes of the election of officers, the list of voters, or
failure to submit these documents together with the list of the newly elected-appointed officers and
their postal addresses to the Bureau of Labor Relations.
The bare fact that two signatures appeared twice on the list of those who participated in the
organizational meeting would not provide a valid reason to cancel the unions certificate of registration.
The cancellation of a unions registration doubtless has an impairing dimension on the right of labor
to self-organization. For fraud and misrepresentation to be grounds for cancellation of union
registration under the Labor Code, the nature of the fraud and misrepresentation must be grave and
compelling enough to vitiate the consent of a majority of union members. Mariwasa Siam Ceramics,
Inc. vs. The Secretary of the Department of Labor and Employment, et al., G.R. No. 183317, December 21, 2009.
Union; membership requirement. While it is true that the withdrawal of support may be considered as a
resignation from the union, the fact remains that at the time of the unions application for registration,
the affiants were members of the union and they comprised more than the required 20% membership
for purposes of registration as a labor union. Article 234 of the Labor Code merely requires a 20%
minimum membership during the application for union registration. It does not mandate that a union
must maintain the 20% minimum membership requirement all throughout its existence. Mariwasa
Siam Ceramics, Inc. vs. The Secretary of the Department of Labor and Employment, et al., G.R. No. 183317,
December 21, 2009.

Labor Procedure
Appeal; appeal bond a jurisdictional requirement. The Court has always stressed that Article 223, which
prescribes the appeal bond requirement, is a rule of jurisdiction and not of procedure. There is little
leeway for condoning a liberal interpretation thereof, and certainly none premised on the ground that
its requirements are mere technicalities. It must be emphasized that there is no inherent right to an
appeal in a labor case, as it arises solely from grant of statute, namely, the Labor Code.
For the same reason, the Court has repeatedly emphasized that the requirement for posting the surety
bond is not merely procedural but jurisdictional and cannot be trifled with. Non-compliance with such
legal requirements is fatal and has the effect of rendering the judgment final and executory. Hilario
S. Ramirez vs. Hon. Court of Appeals, et al., G.R. No. 182626, December 4, 2009.
Appeal; appeal bond reduction. It is daylight-clear from the foregoing that while the bond may be
reduced upon motion by the employer, this is subject to the conditions that (1) the motion to reduce
the bond shall be based on meritorious grounds; and (2) a reasonable amount in relation to the
monetary award is posted by the appellant; otherwise, the filing of the motion to reduce bond shall
not stop the running of the period to perfect an appeal. The qualification effectively requires that
unless the NLRC grants the reduction of the cash bond within the 10-day reglementary period, the
employer is still expected to post the cash or surety bond securing the full amount within the said 10-
day period. Hilario S. Ramirez vs. Hon. Court of Appeals, et al., G.R. No. 182626, December 4, 2009.
Appeal; issues raised first time on appeal; exceptions. While it is a well-settled rule, also applicable in labor
cases, that issues not raised in proceedings below cannot be raised for the first time on appeal, there
are exceptions thereto, among which are, for reasons of public policy or interest.
The NLRC did not err in considering the issue of the veracity of the confirmatory tests even if the
same was raised only in the employees Motion for Reconsideration of the NLRC Decision, it being
crucial in determining the validity of the employees dismissal from service.

Technical rules of procedure are not strictly adhered to in labor cases. In the interest of substantial
justice, new or additional evidence may be introduced on appeal before the NLRC. Such move is
proper, provided due process is observed, as was the case here, by giving the opposing party sufficient
opportunity to meet and rebut the new or additional evidence introduced.

The Constitution no less directs the State to afford full protection to labor. To achieve this goal,
technical rules of procedure shall be liberally construed in favor of the working class in accordance
with the demands of substantial justice. Plantation Bay Resort & Spa and Efren Belarmino vs. Romel S.
Dubrico, et al., G.R. No. 182216, December 4, 2009.
Appeal; perfection. Under the Rules, appeals involving monetary awards are perfected only upon
compliance with the following mandatory requisites, namely: (1) payment of the appeal fees; (2) filing
of the memorandum of appeal; and (3) payment of the required cash or surety bond.
The posting of a bond is indispensable to the perfection of an appeal in cases involving monetary
awards from the decision of the Labor Arbiter. The intention of the lawmakers to make the bond a
mandatory requisite for the perfection of an appeal by the employer is clearly expressed in the
provision that an appeal by the employer may be perfected only upon the posting of a cash or surety
bond. The word only in Articles 223 of the Labor Code makes it unmistakably plain that the
lawmakers intended the posting of a cash or surety bond by the employer to be the essential and
exclusive means by which an employers appeal may be perfected. The word may refers to the
perfection of an appeal as optional on the part of the defeated party, but not to the compulsory
posting of an appeal bond, if he desires to appeal. The meaning and the intention of the legislature
in enacting a statute must be determined from the language employed; and where there is no
ambiguity in the words used, then there is no room for construction.

Clearly, the filing of the bond is not only mandatory but also a jurisdictional requirement that must be
complied with in order to confer jurisdiction upon the NLRC. Non-compliance with the requirement
renders the decision of the Labor Arbiter final and executory. This requirement is intended to assure
the workers that if they prevail in the case, they will receive the money judgment in their favor upon
the dismissal of the employers appeal. Hilario S. Ramirez vs. Hon. Court of Appeals, et al., G.R. No. 182626,
December 4, 2009.
Illegal dismissal and rehabilitation proceedings. The term claim, as contemplated in Section 6 (c), refers
to debts or demands of a pecuniary nature. It is the assertion of rights for the payment of money.
Here, petitioners have pecuniary claimsthe payment of separation pay and moral and exemplary
damages.
In Rubberworld (Phils.), Inc. v. NLRC [365 Phil. 273 (1999)], we held that a labor claim is a claim within
the contemplation of PD 902-A, as amended. This is consistent with the Interim Rules of Procedure
on Corporate Rehabilitation which came out in 2000. Thus, labor claims are included among the actions
suspended upon the placing under rehabilitation of employer-corporations.
The suspensive effect of the stay order is not time-bound. As we held in Rubberworld, it continues to
be in effect as long as reasonably necessary to accomplish its purpose. Gina M. Tiangco and Salvacion
Jenny Manego vs. Uniwide Sales Warehouse Club, Inc. and Jimmy Gow, G.R. No. 168697, December 14, 2009.
NCMB appeal. Rule 43 of the Rules of Court under which petitioners filed their petition before the
Court of Appeals applies to awards, judgments, final orders or resolutions of or authorized by any
quasi-judicial agency in the exercise of its quasi-judicial functions. Given NCMBs functions, it cannot
be considered a quasi-judicial agency. Hence, its decisions or that of its authorized officer cannot be
appealed either through a petition for review under Rule 43 or under Rule 65 of the Revised Rules of
Court. Juanito Tabigue, et al. vs. International Copra Export Corporation (INTERCO), G.R. No. 183335,
December 23, 2009.
Strikes and lockouts; assumption and certification order; mandatory ands immediately executory. Articles 263
(g) and 264 of the Labor Code have been enacted pursuant to the police power of the State. The
grant of plenary powers to the Secretary of Labor makes it incumbent upon him to bring about
soonest, a fair and just solution to the differences between theramiemployer and the employees, so
that the damage such labor dispute might cause upon the national interest may be minimized as much
as possible, if not totally averted, by avoiding stoppage of work or any lag in the activities of the
industry or the possibility of those contingencies that might cause detriment to the national interest.
In order to effectively achieve such end, the assumption or certification order shall have the effect of
automatically enjoining the intended or impending strike or lockout. Moreover, if one has already
taken place, all striking workers shall immediately return to work, and the employer shall immediately
resume operations and readmit all workers under the same terms and conditions prevailing before the
strike or lockout.

Assumption and certification orders are executory in character and are to be strictly complied with by
the parties, even during the pendency of any petition questioning their validity. Regardless therefore
of its motives, or of the validity of its claims, YSS Laboratories must readmit all striking employees
and give them back their respective jobs. Accepting back the workers in this case is not a matter of
option, but of obligation mandated by law for YSS Laboratories to faithfully comply with. Its
compulsory character is mandated, not to cater to a narrow segment of society, or to favor labor at
the expense of management, but to serve the greater interest of society by maintaining the economic
equilibrium.

Certainly, the determination of who among the strikers could be admitted back to work cannot be
made to depend upon the discretion of employer, lest the certification or assumption-of-jurisdiction
orders are stripped of their coercive power that is necessary for attaining their laudable objective. The
return-to-work order does not interfere with the managements prerogative, but merely regulates it
when, in the exercise of such right, national interests will be affected. The rights granted by the
Constitution are not absolute. They are still subject to control and limitation to ensure that they are
not exercised arbitrarily. The interests of both the employers and employees are intended to be
protected and not one of them is given undue preference. YSS Employees Union-Philippine Transport
and General Organization vs. YSS Laboratories, Inc., G.R. No. 155125, December 4, 2009.

November 2009 Philippine Supreme Court

Decisions on Labor Law
Posted on December 7, 2009 by Hector M. de Leon Jr. Posted in Labor Law Tagged attorney's fees, CBA, illegal
dismissal, misconduct, reinstatement

Here are selected November 2009 Philippine Supreme Court decisions on labor law:
Collective bargaining agreement; exclusive bargaining status. While the parties may agree to extend the CBAs
original five-year term together with all other CBA provisions, any such amendment or term in excess of five
years will not carry with it a change in the unions exclusive collective bargaining status. By express provision
of the above-quoted Article 253-A, the exclusive bargaining status cannot go beyond five years and the
representation status is a legal matter not for the workplace parties to agree upon. In other words, despite an
agreement for a CBA with a life of more than five years, either as an original provision or by amendment, the
bargaining unions exclusive bargaining status is effective only for five years and can be challenged within sixty
(60) days prior to the expiration of the CBAs first five years.
In the present case, the CBA was originally signed for a period of five years, i.e., from February 1, 1998 to
January 30, 2003, with a provision for the renegotiation of the CBAs other provisions at the end of the 3rd year
of the five-year CBA term. Thus, prior to January 30, 2001 the workplace parties sat down for renegotiation but
instead of confining themselves to the economic and non-economic CBA provisions, also extended the life of
the CBA for another four months, i.e., from the original expiry date on January 30, 2003 to May 30, 2003.

As discussed above, this negotiated extension of the CBA term has no legal effect on the FVCLU-PTGWOs
exclusive bargaining representation status which remained effective only for five years ending on the original
expiry date of January 30, 2003. Thus, sixty days prior to this date, or starting December 2, 2002, SANAMA-
SIGLO could properly file a petition for certification election. Its petition, filed on January 21, 2003 or nine (9)
days before the expiration of the CBA and of FVCLU-PTGWOs exclusive bargaining status, was seasonably
filed.

We thus find no error in the appellate courts ruling reinstating the DOLE order for the conduct of a certification
election. FVC Labor Union-Philippine Transport and General Workers Organization (FVCLU-PTGWO) Vs.
Sama-samang Nagkakaisang Manggagawa sa FVC-Solidarity of Independet and General Labor Organization
(SANAMA-FVC-SIGLO), G.R. No. 176249, November 27, 2009.
Dismissal; attorneys fees. In San Miguel Corporation v. Aballa, thr Court held that in actions for recovery of
wages or where an employee was forced to litigate and thus incur expenses to protect his rights and interests, a
maximum of 10% of the total monetary award by way of attorneys fees is justifiable under Article 111 of the
Labor Code; Section 8, Rule VIII of Book III of the Omnibus Rules Implementing the Labor Code; and paragraph
7, Article 2208 of the Civil Code. The award of attorneys fees is proper and there need not be any showing that
the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that
the lawful wages were not paid accordingly. Philippine Long Distance Telephone Company vs. Inocencio B.
Berbano, Jr., G.R. No. 165199, November 27, 2009.
Dismissal; misconduct. Misconduct has been defined as improper or wrong conduct. It is the transgression of
some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error of judgment. Ordinary misconduct would not justify the termination
of services of the employee as the Labor Code is explicit that the misconduct must be serious. To be serious, the
misconduct must be of such grave and aggravated character and not merely trivial and unimportant. Such
misconduct, however serious, must nevertheless be in connection with the employees work to constitute just
cause for his separation. As amplified by jurisprudence, misconduct, to be a just cause for dismissal, must (a) be
serious; (b) relate to the performance of the employees duties; and (c) show that the employee has become unfit
to continue working for the employer. Moreover, in National Labor Relations Commission v. Salgarino, this
Court stressed that [i]n order to constitute serious misconduct which will warrant the dismissal of an employee
under paragraph (a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct complained of
has violated some established rules or policies. It is equally important and required that the act or conduct must
have been performed with wrongful intent.
We believe that the misconduct of respondent is not of serious nature as to warrant respondents dismissal from
service. The records of this case are bereft of any showing that the alleged misconduct was performed by
respondent with wrongful intent. On the contrary, respondent readily admitted having installed the service
features in his brother-in-laws telephone line for purposes of study and research which could have benefited
petitioner. Philippine Long Distance Telephone Company vs. Inocencio B. Berbano, Jr., G.R. No. 165199,
November 27, 2009.
Dismissal; misconduct. Article 282(a) of the Labor Code states that the employer may terminate an employment
for serious misconduct. Drug use in the premises of the employer constitutes serious misconduct. Noel B. Bagtas
vs. Hon. Ruth C. Santos, etc. et al., G.R. No. 166682, November 27, 2009.
Dismissal; notice. Dismissal from service of an employee is valid if the following requirements are complied
with: (a) substantive due process which requires that the ground for dismissal is one of the just or authorized
causes enumerated in the Labor Code, and (b) procedural due process which requires that the employee be given
an opportunity to be heard and defend himself. The employee must be furnished two written notices the first
notice apprises the employee of the particular act or omission for which his dismissal is sought, and the second
notice informs the employee of the employers decision to dismiss him. Philippine Long Distance Telephone
Company vs. Inocencio B. Berbano, Jr., G.R. No. 165199, November 27, 2009.
Dismissal; relief. An illegally dismissed employee is entitled to the twin reliefs of (a) either reinstatement or
separation pay, if reinstatement is no longer viable, and (b) backwages. These reliefs are given to alleviate the
economic damage suffered by the illegally dismissed employee. Philippine Long Distance Telephone Company
vs. Inocencio B. Berbano, Jr., G.R. No. 165199, November 27, 2009.
Reinstatement; strained relations. Under the law and prevailing jurisprudence, an illegally dismissed employee
is entitled to reinstatement as a matter of right. However, if reinstatement would only exacerbate the tension and
strained relations between the parties, or where the relationship between the employer and the employee has
been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed
employee held a managerial or key position in the company, it would be more prudent to order payment of
separation pay instead of reinstatement.
In order for the doctrine of strained relations to apply, it should be proved that the employee concerned occupies
a position where he enjoys the trust and confidence of his employer and that it is likely that if reinstated, an
atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity
of the employee concerned.

This Court is of the opinion that both the LA and the CA based their conclusions on impression alone. It bears
to stress that reinstatement is the rule and, for the exception of strained relations to apply, it should be proved
that it is likely that if reinstated, an atmosphere of antipathy and antagonism would be generated as to adversely
affect the efficiency and productivity of the employee concerned. However, both the LA and the CA failed to
state the basis for their finding that a strained relationship exists.

Based on the foregoing, this Court upholds the ruling of the NLRC finding the doctrine of strained relations
inapplicable to the factual circumstances of the case at bar. Reynaldo G. Cabigting vs. San Miguel Foods,
Inc., G.R. No. 167706, November 5, 2009.

October 2009 Philippine Supreme Court

Decisions on Labor Law
Posted on November 20, 2009 by Hector M. de Leon Jr. Posted in Labor Law Tagged abandonment, attorney's fees, burden of
proof, damages, employer-employee relationship, illegal dismissal, loss of confidence, retirement, retrenchment, serious
misconduct, union

Here are selected October 2009 Supreme Court decisions on labor law:

Dismissal; abandonment. To constitute abandonment, there must be a clear and deliberate intent to discontinue
ones employment without any intention of returning. Two elements must concur: (1) failure to report for work
or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee
relationship, with the second element as the more determinative factor and being manifested by some overt acts.
It is the employer who has the burden of proof to show a deliberate and unjustified refusal of the employee to
resume his employment without any intention of returning.
In the instant case, petitioners failed to prove that it was Bolanos who refused to report for work despite being
asked to return to work. Petitioners merely presented the affidavits of the officers of Henlin Panay narrating their
version of the facts. These affidavits, however, are not only insufficient but also undeserving of credit as they
are self-serving. Petitioners failed to present memoranda or show-cause letters served on Bolanos at her last
known address requiring her to report for work or to explain her absence, with a warning that her failure to report
would be construed as abandonment of work. Also, if indeed Bolanos abandoned her work, petitioners should
have served her a notice of termination as required by law. Petitioners failure to comply with said requirement
bolsters Bolanoss claim that she did not abandon her work but was dismissed.

Moreover, if Bolanos had indeed forsaken her job, she would not have bothered to file a complaint for illegal
dismissal. It is well settled that the filing by an employee of a complaint for illegal dismissal is proof of her
desire to return to work, thus negating the employers charge of abandonment. Henlin Panay Company and/or
Edwin Francisco/Angel Lazaro III vs. National Labor Relations Commission and Nory A. Bolanos, G.R. No.
180718, October 23, 2009.
Dismissal; attorneys fees. It is settled that in actions for recovery of wages or when the employee is illegally
dismissed in bad faith or where an employee was forced to litigate and incur expenses to protect his rights and
interests by reason of the unjustified acts of his employer, he is entitled to an award of attorneys fees. This
award is justifiable under Article 111 of the Labor Code, Section 8, Rule VIII, Book III of its Implementing
Rules; and paragraph 7, Article 2208 of the Civil Code.
Moreover, in cases for recovery of wages, the award of attorneys fees is proper and there need not be any
showing that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a
showing that the lawful wages were not paid accordingly. Baron Republic Theatrical Major Cinema, et al.
vs. Normita P. Peralta and Edilberto H. Aguilar, G.R. No. 170525, October 2, 2009.
Dismissal; burden of proof. It is a basic principle that in illegal dismissal cases, the burden of proof rests upon
the employer to show that the dismissal of the employee is for a just cause and failure to do so would necessarily
mean that the dismissal is not justified. In addition, in claims of abandonment by an employee, the settled rule
is that the employer bears the burden of showing a deliberate and unjustified refusal by the employee to resume
his employment without any intention of returning. Moreover, in evaluating a charge of abandonment, the
jurisprudential rule is that abandonment is a matter of intention that cannot be lightly presumed from equivocal
acts. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without
valid or justifiable reason, and (2) a clear intent, manifested through overt acts, to sever the employer-employee
relationship.
In the present case, petitioner Pascual consistently denies that Aguilar was terminated from his employment and
that, instead, he abandoned his work and never returned after his request for salary increase was rejected.
However, denial, in this case, does not suffice; it should be coupled with evidence to support it. In the instant
case, the Court finds no error in the ruling of the CA that petitioners failed to adduce evidence to prove
abandonment and rebut Aguilars claim of dismissal.

Contrary to petitioners asseveration that Aguilar is guilty of abandoning his job, the Court finds no error in the
finding of the Labor Arbiter, as affirmed by the CA, that there was no clear intention on Aguilars part to sever
the employer-employee relationship. Considering that intention is a mental state, petitioners must show that
respondent Aguilars overt acts point unerringly to his intent not to work anymore. In this regard, petitioners
failed. Baron Republic Theatrical Major Cinema, et al. vs. Normita P. Peralta and Edilberto H. Aguilar, G.R.
No. 170525, October 2, 2009.
Dismissal; burden of proof. In termination cases, the burden of proof rests upon the employer to show that the
dismissal is for a just and valid cause and failure to do so would necessarily mean that the dismissal was illegal.
Following this principle, it is incumbent upon the respondents to prove by substantial evidence that petitioner
abandoned her job. For abandonment to exist, it must be shown that (1) the employee has failed to report for
work or must have been absent without valid or justifiable reason; and (2) that there must have been a clear
intention to sever the employer-employee relationship as manifested by some overt acts.
Respondents failed to discharge this burden. Mere absence of petitioner is not sufficient to establish the allegation
of abandonment. The prolonged absence of petitioner was not without justifiable reason because it was
established that her failure to report for work was due to the injury she suffered in the course of her employment
and with sufficient notice to respondents. Petitioner also presented herself for work on the date stated in the
medical certificate which stated that she is fit to resume work.

Above all, the intention to sever the employer-employee relationship was not duly established by respondents.
The prior submission of a medical certificate that petitioner is fit to resume work negates the claim of respondents
that the former demanded for separation pay on account of her failing health. Certainly, petitioner cannot demand
for separation benefits on the ground of illness while at the same time presenting a certification that she is fit to
work. Respondents could have denied petitioners demand at that instance and ordered her to return to work had
it not been their intention to sever petitioner from their employ. Hence, we find the allegation that petitioner
presented herself for work but was refused by respondents more credible. Concepcion Faeldonia vs. Tong Yak
Groceries, et al., G.R. No. 182499, October 2, 2009.
Dismissal; burden of proof. In an unlawful dismissal case, the employer has the burden of proving the lawful
cause sustaining the dismissal of the employee. The employer must affirmatively show rationally adequate
evidence that the dismissal was for a justifiable cause. Apart from its self-serving allegations, Metro failed to
prove that it sustained serious business losses. To justify retrenchment, the employer must prove serious business
losses, and not just any kind or amount of loss. Metro should have produced its books of accounts, profit and
loss statements, and even its accountant to competently amplify its financial position. Metro Construction, Inc.
and Dr. John Lai vs. Rogelio Aman, G.R. No. 168324, October 12, 2009.
Dismissal; loss of confidence. Espaderos position as a cashier is one that requires a high degree of trust and
confidence, and that her infraction reasonably taints such trust and confidence reposed upon her by her employer.
A position of trust and confidence has been defined as one where a person is entrusted with confidence on
delicate matters, or with the custody, handling, or care and protection of the employers property and/or funds.
One such position is that of a cashier. A cashier is a highly sensitive position which requires absolute trust and
honesty on the part of the employee. It is for this reason that the Court has sustained the dismissal of cashiers
who have been found to have breached the trust and confidence of their employers. In one case, the Court upheld
the validity of the dismissal of a school cashier despite her 19 years of service after evidence showed that there
was a discrepancy in the amount she was entrusted to deposit with a bank.

The rule, therefore, is that if there is sufficient evidence to show that the employee occupying a position of trust
and confidence is guilty of a breach of trust, or that his employer has ample reason to distrust him, the labor
tribunal cannot justly deny the employer the authority to dismiss such employee.

In the instant case, petitioners cannot be faulted for losing their trust in Espadero. As an employee occupying a
job which requires utmost fidelity to her employers, she failed to report to her immediate supervisor the
tampering of her time card. Whether her failure was deliberate or due to sheer negligence, and whether Espadero
was or was not in cahoots with a co-worker, the fact remains that the tampering was not promptly reported and
could, very likely, not have been known by petitioners, or, at least, could have been discovered at a much later
period, if it had not been reported by Espaderos supervisor to the personnel manager. Petitioners, therefore,
cannot be blamed for losing their trust in Espadero. Eats-Cetera Food Services Outlet and/or Serafin Remirez
vs. Myrna B. Letran, et al., G.R. No. 179507, October 2, 2009.
Dismisssal; nominal damages. Where an employee was terminated for cause, but the employer failed to comply
with the notice requirement, the employee is entitled to the payment of nominal damages pursuant to our ruling
in Agabon v. National Labor Relations Commission and Jaka Food Processing Corporation v. Pacot.
In Agabon, we found the dismissal of the employees therein to be valid and for a just cause, since abandonment
was duly established. However, we held the employer liable, because procedural due process was not observed.
We ordered the employer to pay, in lieu of backwages, indemnity in the form of nominal damage. The Agabon
ruling was qualified in Jaka which declared the dismissal of the employees valid as it was due to an authorized
cause under Article 283 of the Labor Code, i.e., retrenchment, as it was proven that Jaka was suffering from
serious business losses at the time it terminated respondents employment. However, Jaka failed to comply with
the notice requirement under the same rule.
Nominal damages are adjudicated in order that a right of the plaintiff that has been violated or invaded by the
defendant may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him. Considering the circumstances in this case, we find no error committed by the CA in fixing the
award of nominal damages in the amount of P50,000.00 for each respondent as indemnity for the violation of
the latters statutory rights.

Petitioners reliance on Viernes v. National Labor Relations Commission to support its claim for the reduction
of the award of nominal damages is misplaced. The factual circumstances are different. Viernes is an illegal
dismissal case, since there was no authorized cause for the dismissal of the employees; and the employer was
ordered to pay backwages inclusive of allowances and other benefits, computed from the time the compensation
was withheld up to the actual reinstatement. In addition, since the dismissal was done without due process, the
nominal damages awarded was only P2,590.00 equivalent to one-month salary of the employee. In this case, the
dismissal was valid, as it was due to an authorized cause, but without the observance of procedural due process,
and the only award given was nominal damages. Celebes Japan Foods Corp. (etc.) vs. Susan Yermo, et al., G.R.
No. 175855, October 2, 2009.
Dismissal; serious misconduct. An employee who fails to account for and deliver the funds entrusted to him is
liable for misappropriating the same and is consequently guilty of serious misconduct. Petitioner therefore
validly dismissed respondent. Superlines Transportation Company, Inc. vs. Eduardo Pinera, G.R. No. 188742,
October 13, 2009.
Employee benefits; bereavement leave. Bereavement leave and other death benefits are granted to an employee
to give aid to, and if possible, lessen the grief of, the said employee and his family who suffered the loss of a
loved one. It cannot be said that the parents grief and sense of loss arising from the death of their unborn child,
who, in this case, had a gestational life of 38-39 weeks but died during delivery, is any less than that of parents
whose child was born alive but died subsequently.
Being for the benefit of the employee, CBA provisions on bereavement leave and other death benefits should be
interpreted liberally to give life to the intentions thereof. Time and again, the Labor Code is specific in
enunciating that in case of doubt in the interpretation of any law or provision affecting labor, such should be
interpreted in favor of labor. In the same way, the CBA and CBA provisions should be interpreted in favor of
labor. Continental Steel Manufacturing Corporation vs. Hon. Accredited Voluntary Arbitrator Allan S.
Montano, et al., G.R. No. 182836, October 13, 2009.
Employee benefits; partial disability benefits. This Court reiterates its order for petitioner to pay respondent
permanent partial disability benefits for the maximum period of twenty-five (25) months, computed on the basis
of Section 2 of Republic Act No. 8291. Government Service Insurance System vs. Jaime Ibarra, G.R. No.
172925, October 30, 2009.
Employee benefits; retirement. The age of retirement is primarily determined by the existing agreement or
employment contract. In the absence of such agreement, the retirement age shall be fixed by law. Under the
aforecited law, the mandated compulsory retirement age is set at 65 years, while the minimum age for optional
retirement is set at 60 years.
Under Paragraph B of the retirement plan, a shipboard employee, upon his written request, may retire from
service if he has reached the eligibility age of 60 years. In this case, the option to retire lies with the employee.

Records show that respondent was only 41 years old when he applied for optional retirement, which was 19
years short of the required eligibility age. Thus, he cannot claim optional retirement benefits as a matter of
right. Eastern Shipping Lines, Inc. vs. Ferrer D. Antonio, G.R. No. 171587, October 13, 2009.
Employees; fixed term contracts. Respondent is a regular employee of SMC. Consequently, the employment
contract with a fixed period which SMC had respondent execute was meant only to circumvent respondents
right to security of tenure and is, therefore, invalid.
While this Court recognizes the validity of fixed-term employment contracts, it has consistently held that this is
the exception rather than the general rule. Verily, a fixed-term contract is valid only under certain circumstances.
In the oft-cited case of Brent School, Inc. v. Zamora, this Court made it clear that a contract of employment
stipulating a fixed term, even if clear as regards the existence of a period, is invalid if it can be shown that the
same was executed with the intention of circumventing an employees right to security of tenure, and should
thus be ignored. Moreover, in that same case, this Court issued a stern admonition that where from the
circumstances, it is apparent that the period was imposed to preclude the acquisition of tenurial security by the
employee, then it should be struck down as being contrary to law, morals, good customs, public order and public
policy.

Since respondent was already a regular employee months before the execution of the Employment with a Fixed
Period contract, its execution was merely a ploy on SMCs part to deprive respondent of his tenurial security.
Hence, no valid fixed-term contract was executed. The employment status of a person is defined and prescribed
by law and not by what the parties say it should be. Equally important to consider is that a contract of employment
is impressed with public interest such that labor contracts must yield to the common good. Provisions of
applicable statutes are deemed written into the contract, and the parties are not at liberty to insulate themselves
and their relationships from the impact of labor laws and regulations by simply contracting with each other. San
Miguel Corporation vs. Eduardo L. Teodosio, G.R. No. 163033, October 2, 2009.
Employees; types of regular employees. There there are two kinds of regular employees, namely: (1) those who
are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the
employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with
respect to the activity in which they are employed. Simply stated, regular employees are classified into (1) regular
employees by nature of work and (2) regular employees by years of service. The former refers to those
employees who perform a particular activity which is necessary or desirable in the usual business or trade of the
employer, regardless of their length of service; while the latter refers to those employees who have been
performing the job, regardless of the nature thereof, for at least a year. If the employee has been performing the
job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability,
of that activity to the business.
Based on the circumstances surrounding respondents employment by SMC, this Court is convinced that he has
attained the status of a regular employee long before he executed the employment contract with a fixed period.
Although respondent was initially hired by SMC as a casual employee, respondent has attained the status of a
regular employee. Respondent was initially hired by SMC on September 5, 1991 until March 1992. He was
rehired for the same position in April 1992 which lasted for five to six months. After three weeks, he was again
rehired as a forklift operator and he continued to work as such until August 1993. Thus, at the time he signed the
Employment with a Fixed Period contract, respondent had already been in the employ of SMC for at least twenty-
three (23) months.

The Labor Code provides that a casual employee can be considered as a regular employee if said casual employee
has rendered at least one year of service regardless of the fact that such service may be continuous or broken.
Section 3, Rule V, Book II of the Implementing Rules and Regulations of the Labor Code clearly defines the
term at least one year of service to mean service within 12 months, whether continuous or broken, reckoned
from the date the employee started working, including authorized absences and paid regular holidays, unless the
working days in the establishment, as a matter of practice or policy, or as provided in the employment contract,
is less than 12 months, in which case said period shall be considered one year. If the employee has been
performing the job for at least one year, even if the performance is not continuous or merely intermittent, the
law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not
indispensability, of that activity to the business of the employer. San Miguel Corporation vs. Eduardo L.
Teodosio, G.R. No. 163033, October 2, 2009.
Employees; regular employees. To reiterate, while respondent and SSCP no longer had any legal relationship
with the termination of the Agreement, petitioners remained at their post securing the premises of respondent
while receiving their salaries, allegedly from SSCP. Clearly, such a situation makes no sense, and the denials
proffered by respondent do not shed any light to the situation. It is but reasonable to conclude that, with the
behest and, presumably, directive of respondent, petitioners continued with their services. Evidently, such are
indicia of control that respondent exercised over petitioners.
Such power of control has been explained as the right to control not only the end to be achieved but also the
means to be used in reaching such end. With the conclusion that respondent directed petitioners to remain at
their posts and continue with their duties, it is clear that respondent exercised the power of control over them;
thus, the existence of an employer-employee relationship. Raul G. Locsin and Eddie B. Tomaquin vs. Philippine
Long Distance Telephone Company, G.R. No. 185251, October 2, 2009.Retrenchment; elements. In order for a
retrenchment scheme to be valid, all of the following elements under Article 283 of the Labor Code must concur
or be present.
In the absence of one element, the retrenchment scheme becomes an irregular exercise of management
prerogative. The employers obligation to exhaust all other means to avoid further losses without retrenching its
employees is a component of the first element as enumerated above. To impart operational meaning to the
constitutional policy of providing full protection to labor, the employers prerogative to bring down labor costs
by retrenching must be exercised essentially as a measure of last resort, after less drastic means have been tried
and found wanting. Flight Attendants and Stewards Association of the Philippines (FASAP) vs. Philippine
Airlines, Inc., G.R. No. 178083, October 2, 2009.
Union; registration. The charge that a labor organization committed fraud and misrepresentation in securing its
registration is a serious charge and deserves close scrutiny. It is serious because once such charge is proved, the
labor union acquires none of the rights accorded to registered organizations. Consequently, charges of this nature
should be clearly established by evidence and the surrounding circumstances.
Here, the discrepancies in the number of union members or employees stated in the various supporting
documents that respondent PIGLAS union submitted to labor authorities can be explained. While it appears in
the minutes of the December 10, 2003 organizational meeting that only 90 employees responded to the roll call
at the beginning, it cannot be assumed that such number could not grow to 128 as reflected on the signature sheet
for attendance. The meeting lasted 12 hours from 11:00 a.m. to 11:00 p.m. There is no evidence that the meeting
hall was locked up to exclude late attendees.

There is also nothing essentially mysterious or irregular about the fact that only 127 members ratified the unions
constitution and by-laws when 128 signed the attendance sheet. It cannot be assumed that all those who attended
approved of the constitution and by-laws. Any member had the right to hold out and refrain from ratifying those
documents or to simply ignore the process.

At any rate, the Labor Code and its implementing rules do not require that the number of members appearing on
the documents in question should completely dovetail. For as long as the documents and signatures are shown
to be genuine and regular and the constitution and by-laws democratically ratified, the union is deemed to have
complied with registration requirements. The Heritage Hotel Manila (Owned and operated by Grand Plaza
Hotel Corp.) vs. Pinag-isang galing and lakas ng mga manggagawa sa Heritage Manila (Piglas-Heritage), G.R.
No. 177024, October 30, 2009.

September 2009 Philippine Supreme Court

Decisions on Labor Law
Posted on October 13, 2009 by Hector M. de Leon Jr. Posted in Labor Law Tagged abandonment, burden of proof, due
process, employer-employee relationship, illegal
dismissal, misconduct, redundancy, resignation, retirement, retrenchment, waiver

Here are selected September 2009 Philippine Supreme Court decisions on labor law:

Dismissal; abandonment. Abandonment is a form of neglect of duty, one of the just causes for an employer to
terminate an employee. It is a hornbook precept that in illegal dismissal cases, the employer bears the burden of
proof. For a valid termination of employment on the ground of abandonment, Lucinario must prove, by
substantial evidence, the concurrence of petitioners failure to report for work for no valid reason and his
categorical intention to discontinue employment.
Lucinario, however, failed to establish any overt act on the part of petitioner to show his intention to abandon
employment. Petitioner, after being informed of his alleged shortages in collections and despite his relegation to
that of company custodian, still reported for work. He later applied for a 4-day leave of absence. On his return,
he discovered that his name was erased from the logbook, was refused entry into the company premises, and
learned that his application for a 4-day leave was not approved. He thereupon exerted efforts to communicate
with Lucinario on the status of his employment, but to no avail. These circumstances do not indicate
abandonment.

That petitioner immediately filed the illegal dismissal complaint with prayer for reinstatement should dissipate
any doubts that he wanted to return to work.

What thus surfaces is that petitioner was constructively dismissed. No actual dismissal might have occurred in
the sense that petitioner was not served with a notice of termination, but there was constructive dismissal,
petitioner having been placed in a position where continued employment was rendered impossible and
unreasonable by the circumstances indicated above. Odilon L. Martinez vs. B&B Fish Broker and/or Norberto
M. Lucinario, G.R. No. 179985, September 18, 2009.
Dismissal; burden of proof. While the employer bears the burden in illegal dismissal cases to prove that the
termination was for valid or authorized cause, the employee must first establish by substantial evidence the fact
of dismissal from service. This petitioner failed to discharge. He, in fact, failed to refute respondents claim that
it sent him a Violation Memorandum, which was duly received by him on April 15, 2003, and a subsequent
Memorandum via registered mail, requiring him to explain his habitual tardiness on the therein indicated dates
but that he failed to comply therewith.
Constructive dismissal contemplates, among other things, quitting because continued employment is rendered
impossible, unreasonable or unlikely, or a demotion in rank or a diminution of pay. It clearly exists when an act
of clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee, leaving
him with no option but to forego his continued employment. Not any of these circumstances exists to call for a
ruling that petitioner was constructively dismissed. Romero Montederamos vs. Tri-Union International
Corporation, G.R. No. 1767000, September 4, 2009.
Dismissal; burden of proof. It is well-settled that in termination cases, the burden of proof rests upon the
employer to show that the dismissal was for a just and valid cause and failure to discharge the same would mean
that the dismissal is not justified and therefore illegal. Hence, in arguing that Sabulao abandoned his work, it is
incumbent upon the petitioners to prove: (1) that the employee failed to report for work or had been absent
without valid or justifiable reason; and (2) that there must have been a clear intention to sever the employer-
employee relationship as manifested by some overt acts. Clearly, jurisprudence dictates that the burden of proof
to show that there was unjustified refusal to go back to work rests on the employer.
The NLRC, as affirmed by the Court of Appeals, correctly found that petitioners failed to substantiate its claim
that Sabulao abandoned his work. No evidence was presented to prove that Sabulao clearly intended to sever the
employer-employee relationship as manifested by some overt acts. As regards petitioners allegation
that Sabulao is a field personnel and therefore not entitled to the money claims awarded by the NLRC, suffice it
to state that the issue was raised only before the Court of Appeals in contravention to the rule that questions not
raised before the tribunals a quo cannot be raised for the first time on appeal. As such, it deserves no
consideration by this Court. Tacloban Far East Marketing Corporation, et al. vs. The Court of
Appeals, et al., G.R. No. 182320, September 11, 2009.
Dismissal; due process. The essence of due process is simply an opportunity to be heard or, as applied to
administrative proceedings, an opportunity to explain ones side or an opportunity to seek a reconsideration of
the action or ruling complained of. What the law prohibits is absolute absence of the opportunity to be heard,
hence, a party cannot feign denial of due process where he had been afforded the opportunity to present his side.
A formal or trial type hearing is not at all times and in all instances essential to due process, the requirements of
which are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of the
controversy.
In the present case, petitioners were, among other things, given several written invitations to submit themselves
to PLDTs Investigation Unit to explain their side, but they failed to heed them. A hearing, which petitioners
attended along with their union MKP representatives, was conducted on June 25, 2001 during which the
principal witnesses to the incident were presented. Petitioners were thus afforded the opportunity to confront
those witnesses and present evidence in their behalf, but they failed to do so. Rolando Placido and
Edgardo Caragay vs. National Labor Relations Commission and Philippine Long Distance Telephone
Company, Incorporated, G.R. No. 180888, September 18, 2009.
Dismissal; misconduct. By sleeping on the job and leaving his work area without prior authorization, Tomada did
not merely disregard company rules. Tomada, in effect, issued an open invitation for others to violate those same
company rules. Indeed, considering the presence of trainees in the building and Tomadas acts, Tomada failed
to live up to his companys reasonable expectations. Tomadas offenses cannot be excused upon a plea of being
a first offense, or have not resulted in prejudice to the company in any way. No employer may rationally be
expected to continue in employment a person whose lack of morals, respect and loyalty to his employer, regard
for his employers rules, and appreciation of the dignity and responsibility of his office, has so plainly and
completely been bared.
Misconduct is improper or wrong conduct. It is the transgression of some established and definite rule of action,
a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of
judgment. The misconduct to be serious must be of grave and aggravated character and not merely trivial or
unimportant. Such misconduct, however serious, must nevertheless be in connection with the employees work
to constitute just cause for his separation. Thus, for misconduct or improper behavior to be a just cause for
dismissal, (1) it must be serious; (2) it must relate to the performance of the employees duties; and (3) it must
show that the employee has become unfit to continue working for the employer. Indeed, an employer may not
be compelled to continue to employ such person whose continuance in the service would be patently inimical to
his employers interest. Eduardo M. Tomada, Sr. vs. RFM Corporation-Bakery Flour Division, et al., G.R. No.
163270, September 11, 2009.
Dismissal; redundancy. The separation of the petitioner by reason of redundancy was supported by the evidence
on record. She was separated from the service after the respondents reorganization where her position as
Administrator was declared redundant. She was served notice within the statutory period of thirty (30) days and
so was the DOLE-NCR. The petitioner was assured of all the benefits under the law.
The petitioner imputes bad faith and malice on the respondent in declaring her position as Administrator
redundant, but failed to present convincing proof that the respondent abused its prerogative in terminating her
employment or that it was motivated by ill-will in doing so. It was a business decision arrived at in the face of
financial losses being suffered by the company at the time. Miriam B. Elleccion vda. De Lecciones vs. National
Labor Relations Commission, et al., G.R. No. 184735, September 17, 2009.
Dismissal; retrenchment. The burden of proving the validity of retrenchment is on the petitioner. Evidence does
not sufficiently establish that petitioner had incurred losses that would justify retrenchment to prevent further
losses. The Comparative Income Statement for the year 1996 and for the months of February to June 1997 which
petitioner submitted did not conclusively show that petitioner had suffered financial losses. In fact, records show
that from January to July 1997, petitioner hired a total of 114 new employees assigned in the petitioners stores
located in the different places of the country. Emcor, Incorporated vs. Ma. Lourdes D. Sienes, G.R. No. 152101,
September 8, 2009.
Dismissal; retrenchment. Retrenchment to avoid or minimize business losses is a justified ground to dismiss
employees under Article 283 of the Labor Code. The employer, however, bears the burden to prove such ground
with clear and satisfactory evidence, failing which the dismissal on such ground is unjustified. Bio Quest
Marketing Inc. and/or Jose L. Co vs. Edmund Rey, G.R. No. 181503, September 18, 2009.
Employee benefits; retirement. It is settled that entitlement of employees to retirement benefits must specifically
be granted under existing laws, a collective bargaining agreement or employment contract, or an established
employer policy. No law or collective bargaining agreement or other applicable contract, or an established
company policy was existing during respondents employment entitling them to the P200,000 lump-sum
retirement pay. Petitioner was not thus obliged to grant them such pay. Kimberly-Clark Philippines, Inc.
vs. Nora Dimayuga, et al. G.R. No. 177705, September 18, 2009.
Employee benefits; suicide. The general rule is that the employer is liable to pay the heirs of the deceased seafarer
for death benefits once it is established that he died during the effectivity of his employment contract. However,
the employer may be exempted from liability if he can successfully prove that the seafarers death was caused
by an injury directly attributable to his deliberate or willful act. In sum, respondents entitlement to any death
benefits depends on whether the evidence of the petitioners suffices to prove that the deceased committed
suicide; the burden of proof rests on his employer. Great Southern Maritime Services Corp., et al.
vs. Leonila Surigao, et al., G.R. No. 183646, September 18, 2009.
Employer-employee relationship; existence. The Contract between the Cooperative and DFI, far from being a
job contracting arrangement, is in essence a business partnership that partakes of the nature of a joint venture.
The rules on job contracting are, therefore, inapposite. The Court may not alter the intention of the contracting
parties as gleaned from their stipulations without violating the autonomy of contracts principle under Article
1306 of the Civil Code which gives the contracting parties the utmost liberality and freedom to establish such
stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law,
morals, good custom, public order or public policy.
Petitioners claim of employment relationship with the Cooperatives herein co-respondents must be assessed
on the basis of four standards, viz: (a) the manner of their selection and engagement; (b) the mode of payment
of their wages; (c) the presence or absence of the power of dismissal; and (d) the presence or absence of control
over their conduct. Most determinative among these factors is the so-called control test.

There is nothing in the records which indicates the presence of any of the foregoing elements of an employer-
employee relationship.

There being no employer-employee relationship between petitioners and the Cooperatives co-respondents, the
latter are not solidarily liable with the Cooperative for petitioners illegal dismissal and money
claims. Oldarico S. Traveo, et al. vs. Bobongon Banana Growers Multi-Purpose Cooperative, et al., G.R. No.
164205, September 3, 2009.
Resignation. Resignation as the voluntary act of employees who are compelled by personal reasons to
disassociate themselves from their employment. It must be done with the intention of relinquishing an office,
accompanied by the act of abandonment. In this case, the evidence on record suggests that respondent did not
voluntarily resign. The more logical conclusion, based on the evidence, is that respondent was then being forced
or pressured to resign, which is tantamount to illegal dismissal. Casa Cebuana Incoporada, et al.
vs. Ireneo P. Leuterio, G.R. No. 176040, September 4, 2009.
Retirement. The line between voluntary and involuntary retirement is thin but it is one which this Court has
drawn. Voluntary retirement cuts employment ties leaving no residual employer liability; involuntary retirement
amounts to a discharge, rendering the employer liable for termination without cause. The employees intent is
the focal point of analysis. In determining such intent, the fairness of the process governing the retirement
decision, the payment of stipulated benefits, and the absence of badges of intimidation or coercion are relevant
parameters.
Nothing in the records offends any of these criteria. Arsenio F. Quevedo, et al. vs. Benguet Electric Cooperative
Incorporated, et al., G.R. No. 168927, September 11, 2009.
Waiver; binding effect. Petitioners bound themselves, in individually signed contracts, to forever release, waive
and quitclaim all causes of action or claims arising from or as a consequence of their early retirement. Petitioners
concede that this blanket stipulation bars this suit. However, they seek to avoid compliance by again pleading
vitiated consent. Although contracts executed in the context of employment are imbued with public interest,
triggering closer scrutiny, they remain contracts binding the parties to their terms.
To excuse petitioners from complying with the terms of their waivers, they must locate their case within any of
three narrow grounds: (1) the employer used fraud or deceit in obtaining the waivers; (2) the consideration the
employer paid is incredible and unreasonable; or (3) the terms of the waiver are contrary to law, public order,
public policy, morals or good customs or prejudicial to a third person with a right recognized by law. The
preceding discussion on the voluntariness of petitioners retirement from service effectively removes these
grounds beyond petitioners argumentative reach. Accordingly, petitioners, by the terms of their waivers, are
barred from filing this suit. Arsenio F. Quevedo, et al. vs. Benguet Electric Cooperative
Incorporated, et al., G.R. No. 168927, September 11, 2009.
Waiver; binding effect. While quitclaims executed by employees are commonly frowned upon as being contrary
to public policy and are ineffective to bar claims for the full measure of their legal rights, where the person
making the waiver has done so voluntarily, with a full understanding thereof, and the consideration for the
quitclaim is credible and reasonable, the transaction must be recognized as being a valid and binding undertaking.
In the case at bar, Nora and Rosemarie are Accounting graduates. They have not alleged having been compelled
to sign the quitclaims, nor that the considerations thereof (P1,024,113.73 for Nora and P682,721.24 for
Rosemarie) are unconscionable. Kimberly-Clark Philippines, Inc. vs. Nora Dimayuga, et al. G.R. No. 177705,
September 18, 2009
Waiver; union members. Going now to the question of whether respondents members individual acceptance
of the award and the resulting payments made by petitioner operate as a ratification of the DOLE Secretarys
award which renders CA-G.R. SP No. 72965 moot, we find that such do not operate as a ratification of the DOLE
Secretarys award; nor a waiver of their right to receive further benefits, or what they may be entitled to under
the law. The appellate court correctly ruled that the respondents members were merely constrained to accept
payment at the time. Christmas was then just around the corner, and the union members were in no position to
resist the temptation to accept much-needed cash for use during the most auspicious occasion of the year. Time
and again, we have held that necessitous men are not, truly speaking, free men; but to answer a present
emergency, will submit to any terms that the crafty may impose upon them.
Besides, as individual components of a union possessed of a distinct and separate corporate personality,
respondents members should realize that in joining the organization, they have surrendered a portion of their
individual freedom for the benefit of all the other members; they submit to the will of the majority of the members
in order that they may derive the advantages to be gained from the concerted action of all. Since the will of the
members is personified by its board of directors or trustees, the decisions it makes should accordingly bind them.
Precisely, a labor union exists in whole or in part for the purpose of collective bargaining or of dealing with
employers concerning terms and conditions of employment. What the individual employee may not do alone, as
for example obtain more favorable terms and conditions of work, the labor organization, through persuasive and
coercive power gained as a group, can accomplish better. Univeristy of Santo Tomas
vs. Samahang Manggagawa ng UST (SM-UST), G.R. No. 169940, September 18, 2009.

August 2009 Philippine Supreme Court

Decisions on Commercial Law, Tax Law and
Labor Law
Posted on September 14, 2009 by Hector M. de Leon Jr. Posted in Commercial Law, Labor Law, Tax Law
Tagged amnesty, backwages, illegal dismissal, illegal
strike, insurance, jurisdiction, misconduct, negligence, redundancy, resignation, stamp tax, tax, union

Here are selected August 2009 Philippine Supreme Court decisions on commercial law, tax law and labor law:

Labor Law
Benefits; backwages. The issue on the proper computation of Mutucs backwages has been rendered moot by
our decision that Mutuc was validly dismissed. Backwages is a relief given to an illegally dismissed employee.
Since Mutucs dismissal is for an authorized cause, she is not entitled to backwages. Lowe, Inc., et al. vs. Court
of Appeals and Irma Mutuc, G.R. Nos. 164813 & G.R. No. 174590, August 14, 2009.
Benefits; service charge. Since Dusit Hotel is explicitly mandated by the Article 96 of the Labor Code to pay its
employees and management their respective shares in the service charges collected, the hotel cannot claim that
payment thereof to its 82 employees constitute substantial compliance with the payment
of ECOLA under WO No. 9. Undoubtedly, the hotel employees right to their shares in the service charges
collected by Dusit Hotel is distinct and separate from their right to ECOLA; gratification by the hotel of one
does not result in the satisfaction of the other. Philippine Hoteliers, Inc./Dusit Hotel Nikko-Manila vs. National
Union of Workers in Hotel, Restaurant, and Allied Industries (NUWHARAIN-APL-
IUF) Dusit Hotel Nikko Chapter, G.R. No. 181972, August 25, 2009.
Dismissal; illegal strike. A perusal of the Labor Arbiters Decision, which was affirmed in toto by the NLRC,
shows that on account of the staging of the illegal strike, individual respondents were all deemed to have lost
their employment, without distinction as to their respective participation.
Of the participants in the illegal strike, whether they knowingly participated in the illegal strike in the case of
union officers or knowingly participated in the commission of violent acts during the illegal strike in the case of
union members, the records do not indicate. While respondent Julius Vargas was identified to be a union officer,
there is no indication if he knowingly participated in the illegal strike. The Court not being a trier of facts, the
remand of the case to the NLRC is in order only for the purpose of determining the status in the Union of
individual respondents and their respective liability, if any. A. Soriano Aviation vs. Employees Association of
A. Soriano Aviation, et al., G.R. No. 166879, August 14, 2009.
Dismissal; misconduct. In its 14 February 2000 decision, PNBs Administrative Adjudication Panel
found Maralit guilty of serious misconduct, gross violation of bank rules and regulations, and conduct prejudicial
to the best interest of the bank. Maralit violated bank policies which resulted in the return of unfunded checks
amounting to P54,950,000. Accordingly, PNB dismissed Maralit from the service with forfeiture of her
retirement benefits effective at the close of business hours on 31 December 1998.
PNB may rightfully terminate Maralits services for a just cause, including serious misconduct. Serious
misconduct is improper conduct, a transgression of some established and definite rule of action, a forbidden act,
or a dereliction of duty. Having been dismissed for a just cause, Maralit is not entitled to her retirement
benefits. Ester B. Maralit vs. Philippine National Bank, G.R. No. 163788, August 24, 2009.
Dismissal; negligence. Gross negligence connotes want or absence of or failure to exercise even slight care or
diligence, or the total absence of care. It evinces a thoughtless disregard of consequences without exerting any
effort to avoid them. To warrant removal from service, the negligence should not merely be gross, but also
habitual. A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee.
In JGB and Associates, Inc. v. National Labor Relations Commission, the Court further declared that gross
negligence connotes want of care in the performance of ones duties. Habitual neglect implies repeated failure
to perform ones duties for a period of time, depending upon the circumstances. Fraud and willful neglect of
duties imply bad faith of the employee in failing to perform his job, to the detriment of the employer and
the latters business. Chona Estacio and Leopoldo Manliclic vs. Pampanga I, Electric Cooperative, Inc.
and Loliano E. Allas, G.R. No. 183196. August 19, 2009
Dismissal; negligence. Under Article 282 (b) of the Labor Code, negligence must be both gross and habitual to
justify the dismissal of an employee. Gross negligence is characterized by want of even slight care, acting or
omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally with a
conscious indifference to consequences insofar as other persons may be affected.
In the present case, petitioner, as respondents Accounting Manager, failed to discharge her important duty of
remitting SSS/PhilHealth contributions not once but quadruple times, resulting in respondents incurring of
penalties totaling P18,580.41, not to mention the employees/members contributions being unupdated. Eden
Llamas vs. Ocean Gateway Maritime and Management, Inc., G.R. No. 179293, August 14, 2009.
Dismissal; redundancy. Redundancy exists when the service of an employee is in excess of what is reasonably
demanded by the actual requirements of the business. A redundant position is one rendered superfluous by any
number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular product
line previously manufactured by the company or phasing out of a service activity formerly undertaken by the
enterprise.
For a valid implementation of a redundancy program, the employer must comply with the following requisites:
(1) written notice served on both the employee and the DOLE at least one month prior to the intended date of
termination; (2) payment of separation pay equivalent to at least one month pay or at least one month pay for
every year of service, whichever is higher; (3) good faith in abolishing the redundant position; and (4) fair and
reasonable criteria in ascertaining what positions are to be declared redundant. Lowe, Inc., et al. vs. Court of
Appeals and Irma Mutuc, G.R. Nos. 164813 & G.R. No. 174590, August 14, 2009.
Dismissal; redundancy. We agree with the Labor Arbiter that Lowe employed fair and reasonable criteria in
declaring Mutucs position redundant. Mutuc, who was hired only on 23 June 2000, did not deny that she was
the most junior of all the executives of Lowe. Mutuc also did not present contrary evidence to disprove that she
was the least efficient and least competent among all the Creative Directors.
The determination of the continuing necessity of a particular officer or position in a business corporation is a
management prerogative, and the courts will not interfere unless arbitrary or malicious action on the part of
management is shown. It is also within the exclusive prerogative of management to determine the qualification
and fitness of an employee for hiring and firing, promotion or reassignment. Indeed, an employer has no legal
obligation to keep more employees than are necessary for the operation of its business. Lowe, Inc., et al. vs.
Court of Appeals and Irma Mutuc, G.R. Nos. 164813 & G.R. No. 174590, August 14, 2009.
Dismissal; resignation. In termination cases, it is incumbent upon the employer to prove either the non-existence
or the validity of dismissal. Inasmuch as respondents alleged petitioners resignation as the cause of his
separation from work, respondents had the burden to prove the same. The case of the employer must stand or
fall on its own merits and not on the weakness of the employees defense.
Resignation is the voluntary act of an employee who is in a situation where one believes that personal reasons
cannot be sacrificed in favor of the exigency of the service, and one who has no other choice but to dissociate
oneself from employment. It is a formal pronouncement or relinquishment of an office, with the intention of
relinquishing the office accompanied by the act of relinquishment. As the intent to relinquish must concur with
the overt act of relinquishment, the acts of the employee before and after the alleged resignation must be
considered in determining whether, in fact, he intended to sever his employment.

In this case, we find no overt act on the part of petitioner that he was ready to sever his employment
ties. Baltazar L. Payno vs. Orizon Trading Corp./ Orata Trading and Flordeliza Legaspi, G.R. No. 175345,
August 19, 2009.
Dismissal; transfer. ATIs transfer of Bismark IVs base from Manila to Bataan was, contrary
to Aguanzas assertions, a valid exercise of management prerogative. The transfer of employees has been
traditionally among the acts identified as a management prerogative subject only to limitations found in law,
collective bargaining agreement, and general principles of fair play and justice. Even as the law is solicitous of
the welfare of employees, it must also protect the right of an employer to exercise what are clearly management
prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be
denied.
On the other hand, the transfer of an employee may constitute constructive dismissal when continued
employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank and/or a
diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable
to the employee.

Aguanzas continued employment was not impossible, unreasonable or unlikely; neither was there a clear
discrimination against him. Among the employees assigned to Bismark IV, it was only Aguanza who did not
report for work in Bataan. Aguanzas assertion that he was not allowed to time in in Manila should be taken
on its face: Aguanza reported for work in Manila, where he wanted to work, and not in Bataan, where he was
supposed to work. There was no demotion in rank, as Aguanza would continue his work as Crane
Operator. Furthermore, despite Aguanzas assertions, there was no diminution in pay. Gualberto Aguanza vs.
Asian Terminal, Inc., et al., G.R. No. 163505, August 14, 2009.
Jurisdiction; Secretary of Labor. In the case at bar, the Secretary of Labor correctly assumed jurisdiction over
the case as it does not come under the exception clause in Art. 128(b) of the Labor Code. While petitioner Jethro
appealed the inspection results and there is a need to examine evidentiary matters to resolve the issues raised,
the payrolls presented by it were considered in the ordinary course of inspection. While the employment records
of the employees could not be expected to be found in Yakults premises in Calamba, as Jethros offices are in
Quezon City, the records show that Jethro was given ample opportunity to present its payrolls and other pertinent
documents during the hearings and to rectify the violations noted during the ocular inspection. It, however, failed
to do so, more particularly to submit competent proof that it was giving its security guards the wages and benefits
mandated by law.
Jethros failure to keep payrolls and daily time records in Yakults premises was not the only labor standard
violation found to have been committed by it; it likewise failed to register as a service contractor with the DOLE,
pursuant to Department Order No. 18-02 and, as earlier stated, to pay the wages and benefits in accordance with
the rates prescribed by law. Jethro Intelligence & Security Corporation and Yakult, Inc. vs.. The Hon. Secretary
of Labor and Employment, et al., G.R. No. 172537, August 14, 2009.
Labor organization. Article 212(g) of the Labor Code defines a labor organization as any union or association
of employees which exists in whole or in part for the purpose of collective bargaining or of dealing with
employers concerning terms and conditions of employment. Upon compliance with all the documentary
requirements, the Regional Office or Bureau shall issue in favor of the applicant labor organization a certificate
indicating that it is included in the roster of legitimate labor organizations. Any applicant labor organization shall
acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor
organizations upon issuance of the certificate of registration. Sta. Lucia East Commercial Corporation vs. Hon.
Secretary of Labor and Employment, et al., G.R. No. 162355, August 14, 2009.
Labor organization; bargaining unit. A bargaining unit is a group of employees of a given employer, comprised
of all or less than all of the entire body of employees, consistent with equity to the employer, indicated to be the
best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of
the law. The fundamental factors in determining the appropriate collective bargaining unit are: (1) the will of
the employees (Globe Doctrine); (2) affinity and unity of the employees interest, such as substantial similarity
of work and duties, or similarity of compensation and working conditions (Substantial Mutual Interests Rule);
(3) prior collective bargaining history; and (4) similarity of employment status. Sta. Lucia East Commercial
Corporation vs. Hon. Secretary of Labor and Employment, et al., G.R. No. 162355, August 14, 2009.
Strike; illegal strike. It is hornbook principle that the exercise of the right of private sector employees to strike
is not absolute (see Section 3 of Article XIII of the Constitution).
Indeed, even if the purpose of a strike is valid, the strike may still be held illegal where the means employed are
illegal. Thus, the employment of violence, intimidation, restraint or coercion in carrying out concerted activities
which are injurious to the right to property renders a strike illegal. And so is picketing or the obstruction to the
free use of property or the comfortable enjoyment of life or property, when accompanied by intimidation, threats,
violence, and coercion as to constitute nuisance.

Here, the Union members repeated name-calling, harassment and threats of bodily harm directed against
company officers and non-striking employees and, more significantly, the putting up of placards, banners and
streamers with vulgar statements imputing criminal negligence to the company, which put to doubt reliability of
its operations, come within the purview of illegal acts under Art. 264 of the Labor Code and
jurisprudence. A. Soriano Aviation vs. Employees Association of A. Soriano Aviation, et al., G.R. No. 166879,
August 14, 2009.

July 2009 Philippine Supreme Court Decisions

on Commercial, Tax and Labor Laws
Posted on August 10, 2009 by Hector M. de Leon Jr. Posted in Commercial Law, Labor Law, Tax Law Tagged check-
off, compensable illness, customs duties, franchise tax, illegal dismissal, illegal strike, jurisdiction, loss of confidence, minimum
corporate income tax, probationary employment, project employee, real property tax, retirement, tax credit

Labor Law
Dismissal; loss of confidence. Loss of confidence applies only to cases involving employees who occupy
positions of trust and confidence, or to those situations where the employee is routinely charged with the care
and custody of the employers money or property. To be a valid ground for an employees dismissal, loss of trust
and confidence must be based on a willful breach. A breach is willful if it is done intentionally, knowingly and
purposely, without justifiable excuse.
In dismissing an employee on the ground of loss of confidence, it is sufficient that the employer has a reasonable
ground to believe, based on clearly established facts, that the employee is responsible for the misconduct and the
nature of his participation renders him unworthy of the trust and confidence demanded by his position. If the
employer has ample reason to distrust the employee, the labor tribunal cannot justly deny the former the authority
to dismiss the latter. Renita Del Rosario, et al. vs. Makati Cinema Square Corporation, G.R. No. 170014. July
3, 2009.

Dismissal; loss of confidence. To be a valid ground for dismissal, loss of trust and confidence must be based on
a willful breach of trust and founded on clearly established facts. A breach is willful if it is done intentionally,
knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently. It must rest on substantial grounds and not on the employers arbitrariness, whims,
caprices or suspicion; otherwise, the employee would eternally remain at the mercy of the employer. Such ground
of dismissal has never been intended to afford an occasion for abuse because of its subjective nature. Davao
Contractors Development Cooperative (DACODECO), represented by Chairman of the Board Engr. L. Chavez
vs. Marilyn A. Pasawa, G.R. No. 172174, July 9, 2009.
Dismissal; probationary employee. Under Article 281 of the Labor Code, a probationary employee can be legally
dismissed either: (1) for a just cause; or (2) when he fails to qualify as a regular employee in accordance with
the reasonable standards made known to him by the employer at the start of the employment. Nonetheless, the
power of the employer to terminate the services of an employee on probation is not without limitations. First,
this power must be exercised in accordance with the specific requirements of the contract. Second, the
dissatisfaction on the part of the employer must be real and in good faith, not feigned so as to circumvent the
contract or the law. Third, there must be no unlawful discrimination in the dismissal. In termination cases, the
burden of proving just or valid cause for dismissing an employee rests on the employer.
Here, petitioner did not present proof that respondent was duly notified, at the time of her employment, of the
reasonable standards she needed to comply with for her continued employment. Davao Contractors
Development Cooperative (DACODECO), represented by Chairman of the Board Engr. L. Chavez vs. Marilyn
A. Pasawa, G.R. No. 172174, July 9, 2009.
Employee benefits; compensable illness. In any determination of compensability, the nature and characteristics
of the job are as important as raw medical findings and a claimants personal and social history. This is a basic
legal reality in workers compensation law.
What the law requires is a reasonable work connection and not direct causal relation. Probability, not the ultimate
degree of certainty, is the test of proof in compensation proceedings. For, in interpreting and carrying out the
provisions of the Labor Code and its Implementing Rules and Regulations, the primordial and paramount
consideration is the employees welfare. To safeguard the workers rights, any doubt on the proper interpretation
and application must be resolved in favor of labor. Government Service Insurance System vs. Salvador A. De
Castro, G.R. No. 185035, July 15, 2009.
Employee benefits; retirement. Retirement is the result of a bilateral act of the parties, a voluntary agreement
between the employer and the employee whereby the latter, after reaching a certain age, agrees to sever his or
her employment with the former. Retirement is provided for under Article 287 of the Labor Code, as amended
by Republic Act No. 7641, or is determined by an existing agreement between the employer and the employee.
In this case, respondent offered the Special Separation Incentive Program (SSIP) to overhaul the bank structure
and to allow it to effectively compete with local peer and foreign banks. SSIP was not compulsory on employees.
Employees who wished to avail of the SSIP were required to accomplish a form for availment of separation
benefits under the SSIP and to submit the accomplished form to the Personnel Administration and Industrial
Relations Division (PAIRD) for approval.

Petitioner voluntarily availed of the SSIP. Marcelino A. Magdadaro vs. Philippine National Bank, G.R. No.
166198, July 17, 2009.
Employee benefits; salary increase. It is a familiar and fundamental doctrine in labor law that the collective
bargaining agreement (CBA) is the law between the parties and they are obliged to comply with its provisions.
If the terms of a contract, in this case the CBA, are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of their stipulations shall control.
A reading of the above-quoted provision of the CBA shows that the parties agreed that 80% of the TIP or at the
least the amount of P1,500 is to be allocated for individual salary increases.

The CBA does not speak of any other benefits or increases which would be covered by the employees share in
the TIP, except salary increases. University of San Agustin, Inc. vs. University of San Agustin Employees Union-
FFW, G.R. No. 177594, July 23, 2009.
Employee benefits; seamen. The terms and conditions of a seafarers employment is governed by the provisions
of the contract he signs at the time he is hired. But unlike that of others, deemed written in the seafarers contract
is a set of standard provisions set and implemented by the POEA, called the Standard Terms and Conditions
Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels, which are considered to be
the minimum requirements acceptable to the government for the employment of Filipino seafarers on board
foreign ocean-going vessels. Thus, the issue of whether petitioner Nisda can legally demand and claim disability
benefits from respondents Sea Serve and ADAMS for an illness suffered is best addressed by the provisions of
his POEA-SEC, which incorporated the Standard Terms and Conditions Governing the Employment of Filipino
Seafarers on Board Ocean-Going Vessels. When petitioner Nisda was employed on 7 August 2001, it was the
2000 Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board
Ocean-Going Vessels (hereinafter referred to simply as Amended Standard Terms and Conditions for brevity)
that applied and were deemed written in or appended to his POEA-SEC. Carlos N. Nisda vs. Sea Serve Maritime
Agency, et al., G.R. No. 179177, July 23, 2009.
Employee benefits; service award. Respondents service award under Article 87 of the Saudi Labor Law has
already been paid. The severance pay received by respondent was his service award. LWV Construction
Corporation vs. Marcelo B. Dupo, G.R. No. 172342, July 13, 2009.
Employees; project employee. The principal test for determining whether a particular employee is a project
employee or a regular employee is whether the project employee was assigned to carry out a specific project or
undertaking, the duration and scope of which were specified at the time the employee is engaged for the project.
Project may refer to a particular job or undertaking that is within the regular or usual business of the employer,
but which is distinct and separate and identifiable as such from the undertakings of the company. Such job or
undertaking begins and ends at determined or determinable times.
Here, the specific projects for which respondent was hired and the periods of employment were specified in his
employment contracts. The services he rendered, the duration and scope of each employment are clear
indications that respondent was hired as a project employee. Alcatel Philippines, Inc. vs. Rene R. Relos, G.R.
No. 164315, July 3, 2009.
Jurisdiction; Regional Director. Respondent contested the findings of the labor inspector during and after the
inspection and raised issues the resolution of which necessitated the examination of evidentiary matters not
verifiable in the normal course of inspection. Hence, the Regional Director was divested of jurisdiction and
should have endorsed the case to the appropriate Arbitration Branch of the NLRC. Considering, however, that
an illegal dismissal case had been filed by petitioners wherein the existence or absence of an employer-employee
relationship was also raised, the CA correctly ruled that such endorsement was no longer
necessary. Victor Meteoro, et al. vs. Creative Creatures, Inc., G.R. No. 171275. July 13, 2009
Labor claim; deed of release. As a rule, deeds of release or quitclaim cannot bar employees from demanding
benefits to which they are legally entitled or from contesting the legality of their dismissal. The acceptance of
those benefits would not amount to estoppel. Furthermore, there is a gross disparity between the amount actually
received by petitioner as compared to the amount owing him as initially computed by VA Calipay. The amount
of the settlement is indubitably unconscionable; hence, ineffective to bar petitioner from claiming the full
measure of his legal rights. In any event, the Supreme Court deemed it appropriate that the amount he received
as consideration for signing the quitclaim be deducted from his monetary award. Rafael Rondina vs. Court of
Appeals former special 19th Division, Unicraft Industries International Corp., Inc. Robert Dino, Cristina Dino,
Michael Lloyd Dino, Allan Dino and Mylene June Dino, G.R. No. 172212, July 9, 2009.
Labor claim; liability of corporate officers. To hold a director personally liable for the debts of the corporation,
and thus pierce the veil of corporate fiction, the bad faith or wrongdoing of the director must be established
clearly and convincingly. Bad faith is never presumed. Bad faith does not connote bad judgment or negligence.
Bad faith imports a dishonest purpose. Bad faith means breach of a known duty through some ill motive or
interest. Bad faith partakes of the nature of fraud. Rafael Rondina vs. Court of Appeals former special
19th Division, Unicraft Industries International Corp., Inc. Robert Dino, Cristina Dino, Michael Lloyd Dino,
Allan Dino and Mylene June Dino, G.R. No. 172212, July 9, 2009.
Strike; illegal strike. It is undisputed that the notice of strike was filed by the union without attaching the counter-
proposal of the company. This, according to petitioners and the labor arbiter, made the ensuing strike of
respondents illegal because the notice of strike of the union was defective.
The Implementing Rules use the words as far as practicable. In this case, attaching the counter-proposal of the
company to the notice of strike of the union was not practicable. It was absurd to expect the union to produce
the companys counter-proposal which it did not have. One cannot give what one does not have. Indeed,
compliance with the requirement was impossible because no counter-proposal existed at the time the union filed
a notice of strike. The law does not exact compliance with the impossible. Nemo tenetur ad impossibile.
Another error committed by the labor arbiter was his declaration that respondents, as union officers,
automatically severed their employment with the company due to the alleged illegal strike. In the first place,
there was no illegal strike. Moreover, it is hornbook doctrine that a mere finding of the illegality of the strike
should not be automatically followed by the wholesale dismissal of the strikers from employment. Club Filipino,
Inc. and Atty. Roberto F. De Leon vs. Benjamin Bautista, et al., G.R. No. 168406, July 13, 2009.
Union; check-off. Article 222(b) of the Labor Code, as amended, prohibits the payment of attorneys fees only
when it is effected through forced contributions from the employees from their own funds as distinguished from
union funds. Hence, the general rule is that attorneys fees, negotiation fees, and other similar charges may only
be collected from union funds, not from the amounts that pertain to individual union members. As an exception
to the general rule, special assessments or other extraordinary fees may be levied upon or checked off from any
amount due an employee for as long as there is proper authorization by the employee.
A check-off is a process or device whereby the employer, on agreement with the Union, recognized as the proper
bargaining representative, or on prior authorization from the employees, deducts union dues or agency fees from
the latters wages and remits them directly to the Union. Its desirability in a labor organization is quite evident.
The Union is assured thereby of continuous funding. The system of check-off is primarily for the benefit of the
Union and, only indirectly, for the individual employees.

Here, the requisites for a valid levy and check-off of special assessments, laid down by Article 241(n) and (o),
respectively, of the Labor Code, as amended, have not been complied with in the case at bar. To recall, these
requisites are: (1) an authorization by a written resolution of the majority of all the union members at the general
membership meeting duly called for the purpose; (2) secretarys record of the minutes of the meeting; and (3)
individual written authorization for check-off duly signed by the employee concerned. Eduardo J. Mario,
Jr. et al. vs. Gil Y. Gamilla, et al., G.R. No. 149763, July 7, 2009.

June 2009 Philippine Supreme Court Decisions

on Commercial, Tax and Labor Laws
Posted on July 13, 2009 by Hector M. de Leon Jr. Posted in Commercial Law, Labor Law, Tax Law
Tagged abandonment, attorney's fees, compensable illness, derivative suit, diminution of benefits, employer-employee
relationship, illegal dismissal, illegal strike, loss of trust and confidence, misconduct, moral
damages, negligence, redemption, reinstatement, retrenchment, stamp tax, union, willful disobedience

Labor Law
Diminution of benefits; company practice. To be considered a company practice, the giving of the benefits
should have been done over a long period of time, and must be shown to have been consistent and deliberate.
The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to
continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment
thereof.
With regard to the length of time the company practice should have been exercised to constitute voluntary
employer practice which cannot be unilaterally withdrawn by the employer, jurisprudence has not laid down any
hard and fast rule. In the case of Davao Fruits Corporation v. Associated Labor Unions, the company practice of
including in the computation of the 13th-month pay the maternity leave pay and cash equivalent of unused
vacation and sick leave lasted for six (6) years. In another case, Tiangco v. Leogardo, Jr., the employer carried
on the practice of giving a fixed monthly emergency allowance from November 1976 to February 1980, or three
(3) years and four (4) months. While in Sevilla Trading v. Semana, the employer kept the practice of including
non-basic benefits such as paid leaves for unused sick leave and vacation leave in the computation of their 13th-
month pay for at least two (2) years. In all these cases, the Supreme Court held that the grant of these benefits
has ripened into company practice or policy which cannot be peremptorily withdrawn. The common
denominator in these cases appears to be the regularity and deliberateness of the grant of benefits over a
significant period of time. Metropolitan Bank and Trust Company vs. National Labor Relations Commission,
Felipe A. Patag and Bienvenido C. Flora, G.R. No. 152928, June 18, 2009.
Compensable illness. A government employee, who suffers complete and permanent loss of sight in one eye, is
entitled to income benefit from the GSIS beginning the first month of said employees disability, but no longer
than the maximum period of 25 months. Government Service Insurance System vs. Jaime K. Ibarra, G.R. No.
172925, June 18, 2009.
Compensable illness. Although the Court commiserates with petitioners sufferings, the Court cannot close its
eyes to the need to ensure that the workmens trust fund is protected from depletion due to claims for illnesses
which may not be truly work-related. Rodolfo B. Arceo Vs. Government Service Insurance System, G.R. No.
162374, June 18, 2009.
Downsizing. Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed to cut
down costs for operation particularly on salaries and wages. Redundancy, on the other hand, exists where the
number of employees is in excess of what is reasonably demanded by the actual requirements of the enterprise.
Both are forms of downsizing and are often resorted to by the employer during periods of business recession,
industrial depression, or seasonal fluctuations, and during lulls in production occasioned by lack of orders,
shortage of materials, conversion of the plant for a new production program, or introduction of new methods or
more efficient machinery or automation. Retrenchment and redundancy are valid management prerogatives,
provided they are done in good faith and the employer faithfully complies with the substantive and
procedural requirements laid down by law and jurisprudence.
For a valid retrenchment, the following requisites must be complied with: (1) the retrenchment is necessary to
prevent losses and such losses are proven; (2) written notice to the employees and to the DOLE at least one
month prior to the intended date of retrenchment; and (3) payment of separation pay equivalent to one-month
pay or at least one-half month pay for every year of service, whichever is higher.

In case of redundancy, the employer must prove that: (1) a written notice was served on both the employees and
the DOLE at least one month prior to the intended date of retrenchment; (2) separation pay equivalent to at least
one month pay or at least one month pay for every year of service, whichever is higher, has been paid; (3) good
faith in abolishing the redundant positions; and (4) adoption of fair and reasonable criteria in ascertaining which
positions are to be declared redundant and accordingly abolished.

It is the employer who bears the onus of proving compliance with these requirements, retrenchment and
redundancy being in the nature of affirmative defenses. Otherwise, the dismissal is not justified. Hotel
Enterprises of the Philippines, Inc., etc. vs. Samahan ng mga Manggagawa sa Hyatt-National Union of Workers
in the Hotel Restaurant, etc., G.R. No. 165756, June 5, 2009.
Employer-employee relationship. There existed no employer-employee relationship between the parties.
De Raedt is an independent contractor, who was engaged by SGV to render services to SGVs client TMI, and
ultimately to DA on the CECAP project, regarding matters in the field of her special knowledge and training for
a specific period of time. Unlike an ordinary employee, De Raedt received retainer fees and benefits such as
housing and subsistence allowances and medical insurance. De Raedts services could be terminated on the
ground of end of contract between the DA and TMI, and not on grounds under labor laws. Though the end of
the contract between the DA and TMI was not the ground for the withdrawal of De Raedt from the CECAP,
De Raedt was disengaged from the project upon the instruction of SGVs client, TMI. Most important of
all, SGV did not exercise control over the means and methods by which De Raedt performed her duties as
Sociologist. SGV did impose rules on De Raedt, but these were necessary to ensure SGVs faithful compliance
with the terms and conditions of the Sub-Consultancy Agreement it entered into
with TMI. Sycip, Gorres, Velayo, & Company vs. Carol De Raedt, G.R. No. 161366, June 16, 2009.
Ground for dismissal; abandonment. The rule is that the burden of proof lies with the employer to show that the
dismissal was for a just cause. In the present case, the petitioner claims that there was no illegal dismissal since
the respondent abandoned his job. The petitioner points out that it wrote the respondent
various memoranda requiring him to explain why he incurred absences without leave, and requiring him as well
to report for work; the respondent, however, never bothered to reply in writing.
In evaluating a charge of abandonment, the jurisprudential rule is that abandonment is a matter of intention that
cannot be lightly presumed from equivocal acts. To constitute abandonment, two elements must concur: (1) the
failure to report for work or absence without valid or justifiable reason, and (2) a clear intent,manifested through
overt acts, to sever the employer-employee relationship. The employer bears the burden of showing a deliberate
and unjustified refusal by the employee to resume his employment without any intention of returning. We agree
with the CA that the petitioner failed to prove the charge of abandonment. Pentagon Steel Corporation vs. Court
of Appeals, et al., G.R. No. 174141, June 26, 2009.
Ground for dismissal; gross negligence. Respondents actions, at their worse, reveal his negligence, but said
negligence can hardly be deemed gross and habitual, as to constitute a just ground for his dismissal under Article
282(b) of the Labor Code.
Gross negligence under Article 282 of the Labor Code connotes want of care in the performance of ones duties,
while habitual neglect implies repeated failure to perform ones duties for a period of time, depending upon
the circumstances. Gross negligence has been defined as the want or absence of even slight care or diligence as
to amount to a reckless disregard of the safety of person or property. It evinces a thoughtless disregard
of consequences without exerting any effort to avoid them. To constitute a just cause for termination of
employment, the neglect of duties must not only be gross but habitual as well. The single or isolated act of
negligence does not constitute a just cause for the dismissal of the employee. AMA Computer College-East
Rizal, et al. vs. Allan Raymond R. Ignacio, G.R. No. 178520. June 23, 2009.
Ground for dismissal; gross negligence. Gross negligence is characterized by want of even slight care, acting or
omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally with a
conscious indifference to consequences insofar as other persons may be affected.
Mateo was undisputedly negligent when he left the motorcycle along Burke Street in Escolta, Manila without
locking it despite clear, specific instructions to do so. His argument that he stayed inside the LBC office for only
three to five minutes was of no moment. On the contrary, it only proved that he did not exercise even the slightest
degree of care during that very short time. Mateo deliberately did not heed the employers very
important precautionary measure to ensure the safety of company property. Regardless of the reasons advanced,
the exact evil sought to be prevented by LBC (in repeatedly directing its customer associates to lock their
motorcycles) occurred, resulting in a substantial loss to LBC. LBC Express Metro Manila, Inc. and Lorenzo
A. Nio vs. James Mateo, G.R. No. 168215, June 9, 2009.
Ground for dismissal; lost of confidence. Recent decisions of this Court have distinguished the treatment of
managerial employees from that of the rank-and-file personnel,insofar as the application of the doctrine of loss
of trust and confidence is concerned. Thus, with respect to rank-and-file personnel, loss of trust and confidence,
as ground for valid dismissal, requires proof of involvement in the alleged events in question, and that
mere uncorroborated assertions and accusations by the employer will not be sufficient. But as regards a
managerial employee, the mere existence of a basis for believing that such employee has breached the trust of
his employer would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond
reasonable doubt is not required. It is sufficient that there is some basis for the employers loss of trust and
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. Nonetheless, the evidence must be substantial and must establish
clearly and convincingly the facts on which the loss of confidence rests and not on the employers arbitrariness,
whims, and caprices or suspicion. Triumph International (PHILS.), Inc., vs. Ramon L. Apostol, et al., G.R. No.
164423, June 16, 2009.
Ground for dismissal; loss of confidence. To be a valid ground for dismissal, loss of trust and confidence must
be based on a willful breach of trust and founded on clearly established facts. A breach is willful if it is
done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly or inadvertently. It must rest on substantial grounds and not on the
employers arbitrariness, whims, caprices or suspicion; otherwise, the employee would eternally remain at the
mercy of the employer. Further, the act complained of must be work-related and must show that the employee
concerned is unfit to continue working for the employer. Sarabia Optical and Vivian Sarabia-Orn vs. Jeanet B.
Camacho, G.R. No. 155502, June 18, 2009.
Ground for dismissal; loss of confidence. Nissan failed to prove that Tagulao and Serrano were responsible for
the loss of two rolls of tint. The records of the case show that there was a discrepancy between the dates of pick
up and delivery as alleged by Nissan and as alleged by Tagulao and Serrano. Even Catudio, Nissans employee,
stated that she changed the dates on the delivery receipt of the two rolls of tint on the instruction of her boss.
Loss of trust and confidence, to be a valid ground for an employees dismissal, must be based on a willful breach
and founded on clearly established facts. The burden of proof of dismissal rests entirely upon the employer. In
the present case, Nissan illegally dismissed Tagulao and Serrano because Nissan failed to prove that Tagulao and
Serrano were terminated for a valid cause. Tagulao and Serrano are thus entitled to reinstatement and to
receive backwages. Nissan North Edsa Balintawak, Quezon City vs. Angelito Serrano, Jr. and
Edwin Tagulao, G.R. No. 162538, June 4, 2009
Ground for dismissal; loss of confidence. 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.
The second requisite of terminating an employee for loss of trust and confidence is that there must be an act that
would justify the loss of trust and confidence. To be a valid cause for dismissal, the loss of confidence must be
based on a willful breach of trust and founded on clearly established facts.

We find that it was not established that respondent used her authority to influence her subordinates to stage a
no work day; and assuming that she performed this act as alleged by petitioners, it does not satisfy the
jurisprudential requirements for valid termination due to loss of trust and confidence.

Loss of trust and confidence stems from a breach of trust founded on a dishonest, deceitful or fraudulent act. In
the case at bar, respondent did not commit any act which was dishonest or deceitful. She did not use her authority
as the Administration Manager to misappropriate company property nor did she abuse the trust reposed in her
by petitioners with respect to her responsibility to implement company rules. The most that can be attributed to
respondent is that she influenced a single subordinate, without exerting any force or making any threats, not to
report to work. This does not constitute dishonest or deceitful conduct which would justify the conclusion of
loss of trust and confidence. M+W Zander Philippines, Inc. and Rolf Wiltschek vs. Trinidad M. Enriquez, G.R.
No. 169173, June 5, 2009.
Grounds for dismissal; serious misconduct. Under the circumstances, our conclusion can only be for Salons
dismissal for two counts of valid causes i.e., for serious violation of TIPs Memorandum No. P-66, for
unauthorized selling of examination papers, and for serious misconduct, for falsifying Manalos grade and
violating the grading rules under the Manual of Regulations for Private Schools. Technological Institute of the
Philippines Teachers and Employees Organization and its member Magdalena T. Salon vs. the Honorable Court
of Appeals, et al., G.R. No. 158703, June 26, 2009.
Ground for dismissal; willful disobedience. Willful disobedience of the employers lawful orders, as a just cause
for dismissal of an employee, requires the concurrence of two (2) elements: (1) the employees assailed conduct
must have been willful, i.e., characterized by a wrongful and perverse attitude; and (2) the order violated must
have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been
engaged to discharge.
Gilles resignation from CBI and sudden departure from India was not approved by SKI. When he asked the
companys permission to return to Manila, the management instructed him to stay in India until a suitable
replacement was found. He knew of the critical stage of the Project due to the accelerated period of its
completion. Thus, when he left the Project, despite the clear and lawful instructions of the management for him
to stay, his act constituted willful disobedience and gross neglect of duty under Article 282 of the Labor Code.

Gilles departure from India, despite the instruction of SKI for him to stay, was impelled by the
financial difficulties he encountered thereat. The money given to him before he left for India was already spent.
Rickie Sarque, the Chief Accountant of SKI, admitted on the witness stand that Gilles was paid his salaries for
the 3 months when he was already back in Manila. Added to this were the problems he encountered due to
the acceleration of the job completion period, the obligations he had to meet at home for his aged mother at that
time, now deceased, and the relatives who needed his financial support. Clearly, Gilles had a valid reason to
leave India.

SKIs failure to pay Gilles salary on time was intolerable. For neglecting its duties as an employer, SKI may,
thus, be considered to have acted in bad faith. It may be deemed as utter disregard by SKI of the welfare and
well-being of its employee, especially at a time when he was far away from home.

We, therefore, find that Gilles was constructively dismissed from employment. Constructive dismissal exists
when the employee involuntarily resigns due to the harsh, hostile, and unfavorable conditions set by the
employer. It arises when there is clear discrimination, insensibility, or disdain by an employer and this becomes
unbearable to the employee.

Invariably, the law recognizes and resolves such a situation in favor of the employees in order to protect their
rights from the coercive acts of the employer. Resignation contemplates a voluntary act; thus, an employee who
is forced to relinquish his position due to the employers unfair or unreasonable treatment is deemed to have
been illegally terminated or discharged. The test of constructive dismissal is whether a reasonable person in the
employees position would have felt compelled to give up his position under the circumstances. Bienvenido C.
Gilles vs. Court of Appeals, Schema Konsult and Edgardo Abores, G.R. No. 149273, June 5, 2009.
Illegal dismissal; attorneys fees. aAtorneys fees may be awarded only when the employee is illegally dismissed
in bad faith and is compelled to litigate or incur expenses to protect his rights by reason of the unjustified acts
of his employer. In the case at bar, respondents unjustified and unwarranted dismissal prompted her to engage
the professional services of a counsel and she is thus entitled to an award of attorneys
fees. M+W Zander Philippines, Inc. and Rolf Wiltschek vs. Trinidad M. Enriquez, G.R. No. 169173, June 5,
2009.
Illegal dismissal; moral damages. There is sufficient basis to award moral damages and attorneys fees to
respondent. We have consistently ruled that in illegal dismissal cases, moral damages are recoverable only where
the dismissal of the employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or
was done in a manner contrary to morals, good customs or public policy. Such an award cannot be justified
solely upon the premise that the employer fired his employee without just cause or due process. Additional facts
must be pleaded and proven to warrant the grant of moral damages under the Civil Code, i.e., that the act of
dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner
contrary to morals, good customs or public policy; and, of course, that social humiliation, wounded feelings,
grave anxiety, and similar injury resulted therefrom.
In previous cases where moral damages and attorneys fees were awarded, the manner of termination was done
in a humiliating and insulting manner, such as in the case of Balayan Colleges v. National Labor Relations
Commission where the employer posted copies of its letters of termination to the teachers inside the school
campus and it also furnished copies to the town mayor and Parish Priest of their community for the purpose of
maligning the teachers reputation. So also in the case of Chiang Kai Shek School v. Court of Appeals, this Court
awarded moral damages to a teacher who was flatly, and without warning or a formal notice, told that she was
dismissed.

In the case at bar, we see it fit to award moral damages to respondent because the manner in which respondent
was treated upon petitioners suspicion of her involvement in drafting and in circulating the letter of appeal and
the alleged staging of the no work day is contrary to good morals because it caused unnecessary humiliation
to respondent. M+W Zander Philippines, Inc. and Rolf Wiltschek vs.Trinidad M. Enriquez, G.R. No. 169173,
June 5, 2009.
Illegal dismissal; liability of corporate officer. The general manager of a corporation should not be made
personally answerable for the payment of an illegally dismissed employees monetary claims arising from the
dismissal unless he had acted maliciously or in bad faith in terminating the services of the employee. The
employer corporation has a separate and distinct personality from its officers who merely act as its agents.
The exception noted is where the official had acted maliciously or in bad faith, in which event he may be made
personally liable for his own act. That exception is not applicable in the case at bar, because it has not been
proven that Wiltschek was impleaded in his capacity as General Manager of petitioner corporation and there
appears to be no evidence on record that he acted maliciously or in bad faith in terminating the services of
respondent. His act, therefore, was within the scope of his authority and was a corporate act for which he should
not be held personally liable for. M+W Zander Philippines, Inc. and Rolf Wiltschek vs. Trinidad
M. Enriquez, G.R. No. 169173, June 5, 2009; see also Bienvenido C. Gilles vs. Court of Appeals,
Schema Konsult and Edgardo Abores, G.R. No. 149273, June 5, 2009.
Illegal dismissal; procedural due process. Procedural due process in the dismissal of employees requires notice
and hearing. The employer must furnish the employee two written notices before termination may be effected.
The first notice apprises the employee of the particular acts or omissions for which his dismissal is sought, while
the second notice informs the employee of the employers decision to dismiss him. The requirement of a hearing,
on the other hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an
actual hearing was conducted. Herminigildo Inguillom, et al. vs. First Philippine Scales, Inc., et al., G.R. No.
165407, June 5, 2009.
Illegal dismissal; reinstatement. The respondents illegal dismissal carries the legal consequence defined under
Article 279 of the Labor Code: the illegally dismissed employee is entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances and other benefits or their
monetary equivalent, computed from the time his compensation was withheld from him up to the time of his
actual reinstatement. The imposition of this legal consequence is a matter of law that allows no discretion on the
part of the decision maker, except only to the extent recognized by the law itself as expressed
in jurisprudence. Pentagon Steel Corporation vs. Court of Appeals, et al., G.R. No. 174141, June 26, 2009.
Reinstatement; union shop steward. A shop steward leads to the conclusion that it is a position within the union,
and not within the company. A shop steward is appointed by the union in a shop, department, or plant and serves
as representative of the union, charged with negotiating and adjustment of grievances of employees with the
supervisor of the employer. He is the representative of the union members in a building or other workplace.
Blacks Law Dictionary defines a shop steward as a union official elected to represent members in a plant or
particular department. His duties include collection of dues, recruitment of new members and
initial negotiations for the settlement of grievances.
A judgment of reinstatement of the petitioner to the position of union Shop Steward would have no practical
legal effect since it cannot be enforced. Based on the requirements imposed by law and the APCWU-ATI CBA,
and in the nature of things, the subsequent separation of the petitioner from employment with respondent ATI has
made his reinstatement to union Shop Steward incapable of being enforced. Teodoro S. Miranda, Jr. vs. Asian
Terminals, Inc. and Court of Appeals, G.R. No. 174316, June 23, 2009.
Resignation; separation pay. No provision in the Labor Code grants separation pay to voluntarily resigning
employees. Separation pay may be awarded only in cases when the termination of employment is due to
(a) installation of labor-saving devices, (b) redundancy, (c) retrenchment, (d) closing or cessation of business
operations, (e) disease of an employee and his continued employment is prejudicial to himself or his co-
employees, or (f) when an employee is illegally dismissed but reinstatement is no longer feasible. In fact, the
rule is that an employee who voluntarily resigns from employment is not entitled to separation pay, except when
it is stipulated in the employment contract or collective bargaining agreement (CBA), or it is sanctioned by
established employer practice or policy.
Here, the primary consideration that impelled respondent to tender his resignation letter was the assurance that
he would be paid his separation pay. It is thus unlikely for someone to just leave his employer for whom he has
worked for twelve (12) years without any expectation of financial assistance. Hence, the former employee is
entitled to receive separation pay. J Marketing Corporation, represented by its Branch
Manager Elmundo Dador, G.R. No. 163924, June 18, 2009.
Strike; requisites for validity. The requisites for a valid strike are: (a) a notice of strike filed with the DOLE 30
days before the intended date thereof or 15 days in case of ULP; (b) a strike vote approved by a majority of the
total union membership in the bargaining unit concerned obtained by secret ballot in a meeting called for that
purpose; and (c) a notice to the DOLE of the results of the voting at least seven (7) days before the intended
strike. The requirements are mandatory and failure of a union to comply therewith renders the strike
illegal. Hotel Enterprises of the Philippines, Inc., etc. vs. Samahan ng mga Manggagawa sa Hyatt-National
Union of Workers in the Hotel Restaurant, etc., G.R. No. 165756, June 5, 2009.
Union security. Union security is a generic term, which is applied to and comprehends closed shop, union
shop, maintenance of membership or any other form of agreement which imposes upon employees the
obligation to acquire or retain union membership as a condition affecting employment. There is union shop when
all new regular employees are required to join the union within a certain period as a condition for their continued
employment. There is maintenance of membership shop when employees, who are union members as of the
effective date of the agreement, or who thereafter become members, must maintain union membership as a
condition for continued employment until they are promoted or transferred out of the bargaining unit or the
agreement is terminated. A closed-shop, on the other hand, may be defined as an enterprise in which, by
agreement between the employer and his employees or their representatives, no person may be employed in any
or certain agreed departments of the enterprise unless he or she is, becomes, and, for the duration of the
agreement, remains a member in good standing of a union entirely comprised of or of which the employees in
interest are a part.
In terminating the employment of an employee by enforcing the Union Security Clause, the employer needs only
to determine and prove that: (1) the union security clause is applicable; (2) the union is requesting for the
enforcement of the union security provision in the CBA; and (3) there is sufficient evidence to support the
unions decision to expel the employee from the union or company.Herminigildo Inguillom, et al. vs. First
Philippine Scales, Inc., et al., G.R. No. 165407, June 5, 2009.

May 2009 Decisions on Commercial, Tax and

Labor Laws
Posted on June 8, 2009 by Hector M. de Leon Jr. Posted in Commercial Law, Labor Law, Tax Law
Tagged abandonment, appeal, compensable illness, due process, employer-employee relationship, independent contractor, intra-
corporate controversy, loss of trust and confidence, negotiable instruments, serious misconduct, tax evasion

Labor Law
Abandonment. It is well settled that abandonment as a just and valid ground for dismissal requires the deliberate
and unjustified refusal of the employee to return for work. Two elements must be present, namely: (1) the failure
to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-
employee relationship. The second element is more determinative of the intent and must be evinced by overt
acts. Mere absence, not being sufficient, the burden of proof rests upon the employer to show that the employee
clearly and deliberately intended to discontinue her employment without any intention of returning. In Samarca
v. Arc-Men Industries, Inc, the Supreme Court held that abandonment is a matter of intention and cannot lightly
be presumed from certain equivocal acts.
To constitute abandonment, there must be clear proof of deliberate and unjustified intent to sever the employer-
employee relationship. Clearly, the operative act is still the employees ultimate act of putting an end to his
employment. However, an employee who takes steps to protest her layoff cannot be said to have abandoned her
work because a charge of abandonment is totally inconsistent with the immediate filing of a complaint for illegal
dismissal, more so when it includes a prayer for reinstatement. When Eleonor filed the illegal dismissal
complaint, it totally negated petitioners theory of abandonment.

Also, to effectively dismiss an employee for abandonment, the employer must comply with the due process
requirement of sending notices to the employee. In Brahm Industries, Inc. vs. NLRC, the Supreme Court ruled
that this requirement is not a mere formality that may be dispensed with at will. Its disregard is a matter of serious
concern since it constitutes a safeguard of the highest order in response to mans innate sense of
justice. Petitioner was not able to send the necessary notice requirement to Eleonor. Petitioners belated claim
that it was not able to send the notice of infraction prior to the filing of the illegal dismissal case cannot simply
unacceptable. Based on the foregoing, Eleonor did not abandon her work. South Davao Development Company,
Inc., et al. vs. Sergio L. Gamo, et al., G.R. No. 171814, May 8, 2009.
Appeal to DOLE Secretary; appeal bond. The purpose of an appeal bond is to ensure, during the period of appeal,
against any occurrence that would defeat or diminish recovery by the aggrieved employees under the judgment
if subsequently affirmed. The Deed of Assignment in the instant case, like a cash or surety bond, serves the same
purpose. First, the Deed of Assignment constitutes not just a partial amount, but rather the entire award in the
appealed Order. Second, it is clear from the Deed of Assignment that the entire amount is under the full control
of the bank, and not of petitioner, and is in fact payable to the DOLE Regional Office, to be withdrawn by the
same office after it had issued a writ of execution. For all intents and purposes, the Deed of Assignment in
tandem with the Letter Agreement and Cash Voucher is as good as cash. Third, the execution of the Deed of
Assignment, the Letter Agreement and the Cash Voucher were made in good faith, and constituted clear
manifestation of petitioners willingness to pay the judgment amount. Peoples Broadcasting vs. The Secretary
of the Department of Labor and Employment, et al., G.R. No. 179652, May 8, 2009.
Appeal; private carrier. In this case, petitioner availed of the services of LBC, a private carrier, to deliver its
notice of appeal to the NLRC. Had petitioner sent its notice of appeal by registered mail, the date of mailing
would have been deemed the date of filing with the NLRC. But petitioner, for reasons of its own, chose to send
its notice of appeal through a private letter-forwarding agency. Therefore, the date of actual receipt by the NLRC
of the notice of appeal, and not the date of delivery to LBC, is deemed to be the date of the filing of the notice
of appeal. Since the NLRC received petitioners notice of appeal on 26 February 2001, the appeal was clearly
filed out of time. Petitioner had thus lost its right to appeal from the decision of the Labor Arbiter and the NLRC
should have dismissed its notice of appeal. Charter Chemical and Coating Corporation vs. Herbert Tan and
Amalia Sonsing, G.R. No. 163891, May 21, 2009.
Compensable illness; definition. P.D. No. 626, as amended, defines compensable sickness as any illness
definitely accepted as an occupational disease listed by the Commission, or any illness caused by employment
subject to proof by the employee that the risk of contracting the same is increased by the working conditions.
Under Section 1 (b), Rule III, of the Amended Rules on Employees Compensation, for the sickness and the
resulting disability or death to be compensable, the same must be an occupational disease included in the list
provided (Annex A), with the conditions set therein satisfied; otherwise, the claimant must show proof that
the risk of contracting it is increased by the working conditions. Otherwise stated, for sickness and the resulting
death of an employee to be compensable, the claimant must show either: (1) that it is a result of an occupational
disease listed under Annex A of the Amended Rules on Employees Compensation with the conditions set
therein satisfied; or (2) if not so listed, that the risk of contracting the disease is increased by the working
conditions.
Here, the CA correctly considered Cardiopulmonary Arrest T/C Fatal Arrythmia in this case a cardiovascular
disease a listed disease under Annex A of the Amended Rules on Employees Compensation. The Death
Certificate of Judge Vicencio clearly indicates that the cause of his death is Cardiopulmonary Arrest T/C Fatal
Arrythmia. Whether, however, the same was a mere complication of his lung cancer as contended by petitioner
GSIS or related to an underlying cardiovascular disease is not established by the records of this case and, thus,
remains uncertain. The Supreme Court held that Cardiopulmonary Arrest T/C Fatal Arrythmia, the cause of
death stated in Judge Vicencios Death Certificate, should be considered as a cardiovascular disease a listed
disease under Annex A of the Amended Rules on Employees Compensation. Government Service Insurance
System vs. Marian T. Vicencio, G.R. No. 176832, May 21, 2009.
Compensable illness; evidence. The degree of proof required under P.D. No. 626 is merely substantial evidence,
or such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. The Supreme
Court hasrepeatedly held that to prove compensability, the claimant must adequately show that the development
of the disease is brought largely by the conditions present in the nature of the job. What the law requires is a
reasonable work-connection and not a direct causal relation. It is enough that the hypothesis on which the
workmens claim is based is probable. Medical opinion to the contrary can be disregarded especially where there
is some basis in the facts for inferring a work-connection. Probability, not certainty, is the
touchstone. Government Service Insurance System (GSIS) vs. Teresita S. De Guzman, G.R. No. 173049, May
21, 2009.
Due process. Respondent was given ample opportunity to explain and rebut the evidence against him. A full
adversarial hearing was not required. The essence of due process is simply the opportunity to be heard. As
applied in administrative proceedings, it is merely an opportunity to explain ones side or an opportunity to seek
a reconsideration of the action or ruling complained of.
Petitioners complied with the twin-notice requirement. The notice dated October 17, 2000 served on respondent
was the written notice specifying the charges against him. The subsequent notice dated February 7, 2001 (notice
of adjudication specifying therein the causes for respondents termination and the decision to dismiss him) served
as the written notice of termination. In view of respondents valid dismissal due to serious misconduct and loss
of trust and confidence, respondent is not entitled to separation pay. Telecommunications Distributors
Specialist, Inc., et al. vs. Raymund Garriel, G.R. No. 174981, May 25, 2009.
Employer-employee relationship; evidence. It has long been established that in administrative and quasi-judicial
proceedings, substantial evidence is sufficient as a basis for judgment on the existence of employer-employee
relationship. 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. No particular form
of evidence is required to prove the existence of such employer-employee relationship. Any competent and
relevant evidence to prove the relationship may be admitted. Hence, while no particular form of evidence is
required, a finding that such relationship exists must still rest on some substantial evidence. Moreover, the
substantiality of the evidence depends on its quantitative as well as its qualitative aspects.
In the instant case, save for respondents self-serving allegations and self-defeating evidence, there is no
substantial basis to warrant the Regional Directors finding that respondent is an employee of
petitioner. Peoples Broadcasting vs. The Secretary of the Department of Labor and Employment, et al., G.R.
No. 179652, May 8, 2009.
Employer-employee relationship; existence. In order to determine the existence of an employer-employee
relationship, the Court has frequently applied the four-fold test: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees
conduct, or the so called control test, which is considered the most important element.
From the time they were hired by petitioner corporation up to the time that they were reassigned to work under
Gamos supervision, their status as petitioner corporations employees did not cease. Likewise, payment of their
wages was merely coursed through Gamo. As to the most determinative testthe power of control, it is sufficient
that the power to control the manner of doing the work exists, it does not require the actual exercise of such
power. In this case, it was in the exercise of its power of control when petitioner corporation transferred the
copra workers from their previous assignments to work as copraceros. It was also in the exercise of the same
power that petitioner corporation put Gamo in charge of the copra workers although under a different payment
scheme. Thus, it is clear that an employer-employee relationship has existed between petitioner corporation and
respondents since the beginning and such relationship did not cease despite their reassignments and the change
of payment scheme. South Davao Development Company, Inc., et al. vs. Sergio L. Gamo, et al., G.R. No.
171814, May 8, 2009.
Employer-employee relationship; power of DOLE to determine. The DOLE in the exercise of its visitorial and
enforcement power somehow has to make a determination of the existence of an employer-employee
relationship. Such prerogatival determination, however, cannot be coextensive with the visitorial and
enforcement power itself. Indeed, such determination is merely preliminary, incidental and collateral to the
DOLEs primary function of enforcing labor standards provisions. The determination of the existence of
employer-employee relationship is still primarily lodged with the NLRC. This is the meaning of the clause in
cases where the relationship of employer-employee still exists in Art. 128 (b).
Thus, before the DOLE may exercise its powers under Article 128, two important questions must be resolved:
(1) Does the employer-employee relationship still exist, or alternatively, was there ever an employer-employee
relationship to speak of; and (2) Are there violations of the Labor Code or of any labor law? The existence of
an employer-employee relationship is a statutory prerequisite to and a limitation on the power of the Secretary
of Labor, one which the legislative branch is entitled to impose.

The rationale underlying this limitation is to eliminate the prospect of competing conclusions of the Secretary of
Labor and the NLRC, on a matter fraught with questions of fact and law, which is best resolved by the quasi-
judicial body, which is the NRLC, rather than an administrative official of the executive branch of the
government. If the Secretary of Labor proceeds to exercise his visitorial and enforcement powers absent the first
requisite, as the dissent proposes, his office confers jurisdiction on itself which it cannot otherwise
acquire. Peoples Broadcasting vs. The Secretary of the Department of Labor and Employment, et al., G.R. No.
179652, May 8, 2009.
Independent contractor. There is permissible job contracting when a principal agrees to put out or farm out with
a contractor or a subcontractor the performance or completion of a specific job, work or service within a definite
or predetermined period, regardless of whether such job or work service is to be performed within or outside the
premises of the principal. To establish the existence of an independent contractor, we apply the following
conditions: first, the contractor carries on an independent business and undertakes the contract work on his own
account under his own responsibility according to his own manner and method, free from the control and
direction of his employer or principal in all matters connected with the performance of the work except to the
result thereof; and second, the contractor has substantial capital or investments in the form of tools, equipment,
machineries, work premises and other materials which are necessary in the conduct of his business.
The Implementing Rules and Regulation of the Labor Code defines investmentas tools, equipment,
implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the
performance or completion of the job, work, or service contracted out. The investment must be sufficient to carry
out the job at hand.

In the case at bar, Gamo and the copra workers did not exercise independent judgment in the performance of
their tasks. The tools used by Gamo and his copra workers like the karit, bolo, pangbunot, panglugit and
pangtapok are not sufficient to enable them to complete the job. Reliance on these primitive tools is not enough.
In fact, the accomplishment of their task required more expensive machineries and equipment, like the trucks to
haul the harvests and the drying facility, which petitioner corporation owns. South Davao Development
Company, Inc., et al. vs. Sergio L. Gamo, et al., G.R. No. 171814, May 8, 2009.
Loss of trust and confidence. Petitioner cites Article 282 of the Labor Code, specifically loss of trust and
confidence as the ground for validly dismissing respondent. Under the law, loss of confidence must be based on
fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative. In this regard, the Supreme Court has ruled that ordinary breach does not suffice. A breach of
trust is willful if it is done intentionally, knowingly and purposely, without any justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.
Here, respondent was investigated on and dismissed for misappropriation of company funds through falsification
of company documents, as shown in the termination letter. Records, nevertheless, neither showed nor convinced
us that there was misappropriation of funds that benefited anybody which warranted the dismissal of respondent
for the first offense. Respondent admittedly committed padding of accounts and/or paper renewal, which
respondent claims to be a practice among salesmen and such claim was not disputed by petitioner. The paper
renewal committed by respondent may be considered as falsification, but we agree with the Labor Arbiter and
the CA that such paper renewal did not amount to misappropriation that could justify outright dismissal for the
first offense, as what petitioner did to respondent. Otherwise, the company rules would not have separated these
two offenses under Rule Nos. 15 and 16. Besides, we agree with the CA that although petitioner did in fact
violate company Rule No. 15 by falsifying company records and documents through paper renewal, such
falsification has to be qualified. San Miguel Corporation vs. NLRC, et al., G.R. No. 153983, May 26, 2009.
Serious misconduct. Respondents acts of forging subscribers signatures, attempting to cover up his failure to
secure their signatures on the coverage waivers, selling a personally owned mobile phone to a company customer
(a defective one at that) and attempting to connive with other employees to cover up his illicit schemes were
serious acts of dishonesty. Respondents acts clearly constituted serious misconduct which is a ground for
termination of employment by an employer. Respondents acts were likewise grounds for loss of trust and
confidence, another valid cause for termination of employment. Only employees occupying positions of trust
and confidence or those who are routinely charged with the care and custody of the employers money or
property may be validly dismissed for this reason. Telecommunications Distributors Specialist, Inc., et al. vs.
Raymund Garriel, G.R. No. 174981, May 25, 2009.

April 2009 Decisions on Commercial, Labor and

Tax Laws
Posted on May 26, 2009 by Hector M. de Leon Jr. Posted in Commercial Law, Constitutional Law, Labor Law, Tax Law
Tagged abandonment, backwages, bidding, breach of trust, CBA, dividends, due process, equal protection, excise
tax, holdover, illegal dismissal, insurance, intra-corporate controversy, intra-union dispute, loss of confidence, non-stock
corporation, pawnshop, prescription, real property tax, resignation, security of tenure, SSS, stamp tax, unfair competition, unfair
labor practice, value added tax

Labor Law
Backwages. The Court agrees with the NLRCs conclusion that petitioner is not entitled to backwages. He never
bothered to redeem his drivers license at the soonest possible time when there was no showing that he was
unlawfully prevented by respondent from doing so. Thus, petitioner should not be paid for the time he was not
working. The Court has held that where the failure of employees to work was not due to the employers fault,
the burden of economic loss suffered by the employees should not be shifted to the employer. Each party must
bear his own loss. It would be unfair to allow petitioner to recover something he has not earned and could not
have earned, since he could not discharge his work as a driver without his drivers license. Respondent should
be exempted from the burden of paying backwages. Bernardino V. Navarro vs. P.V. Pajarillo Liner and
NLRC, G.R. No. 164681, April 24, 2009.
Breach of trust. The documentary evidence of petitioner indubitably establishes that respondent committed
payroll padding, sold canepoints without the knowledge and consent of management and misappropriated the
proceeds thereof, and rented tractor to another farm and misappropriated the rental payments therefor. These
acts constitute willful breach by the employee of the trust reposed in him by his employer a ground for
termination of employment. Bacolod-Talisay Realty and Development Corp., et al. vs. Romeo Dela Cruz, G.R.
No. 179563, April 30, 2009.
CBA. Just like any other contract, a CBA is the law between the contracting parties and compliance therewith
in good faith is required by law. HFS Phlippines, Inc., Ruben T. Del Rosario and IUM Ship Management
vs. Ronaldo R. Pilar, G.R. No. 168716, April 16, 2009.
Due process. The Court of Appeals correctly held that petitioners did not comply with the proper procedure in
dismissing respondent. In other words, petitioners failed to afford respondent due process by failing to comply
with the twin notice requirement in dismissing him, viz: (1) a first notice to apprise him of his fault, and (2) a
second notice to him that his employment is being terminated. The letter dated June 3, 1997 sent to respondent
was a letter of suspension. It did not comply with the required first notice, the purpose of which is to apprise the
employee of the cause for termination and to give him rasonable opportunity to explain his side. The
confrontation before the barangay council did not constitute the first notice to give the employee ample
opportunity to be heard with the assistance of counsel, if he so desires. Hearings before thebarangay council do
not afford the employee ample opportunity to be represented by counsel if he so desires because Section 415 of
the Local Government Code mandates that [i]n all katarungang pambarangay proceedings, the parties must
appear in person without the assistance of counsel or his representatives, except for minors and incompetents
who may be assisted by their next-of-kin who are not lawyers. The requirement of giving respondent the first
notice not having been complied with, discussions of whether the second notice was complied with is rendered
unnecessary. Bacolod-Talisay Realty and Development Corp., et al. vs. Romeo Dela Cruz, G.R. No.
179563, April 30, 2009.
Due process; lack of jurisdiction. The proceedings before the Labor Arbiter deprived David of due
process. MACLU and NAFLU filed their complaint against MAC on 12 August 1993. Arbiter Ortiguerras
decision shows that MACLU, NAFLU, and MAC were the only parties summoned to a conference for a possible
settlement. Because of MACs failure to appear, Arbiter Ortiguerra deemed the case submitted for
resolution. Davids resignation from MAC took effect on 15 October 1993. NAFLU and MACLU moved to
implead Carag and David for the first time only in their position paper dated 3 January 1994. David did not
receive any summons and had no knowledge of the decision against him. The records of the present case fail to
show any order from Arbiter Ortiguerra summoning David to attend the preliminary conference. Despite this
lack of summons, in her Decision dated 17 June 1994, Arbiter Ortiguerra not only granted MACLU and
NAFLUs motion to implead Carag and David, she also held Carag and David solidarily liable with
MAC. Armando David vs.. National Federation of Labor Union, et al, G.R. No. 148263 and 148271-72, April
21, 2009.
Hearing. The guiding principles in connection with the hearing requirement in dismissal cases are:
(a) ample opportunity to be heard means any meaningful opportunity (verbal or written) given to the
employee to answer the charges against him and submit evidence in support of his defense, whether in a hearing,
conference or some other fair, just and reasonable way;

(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 when similar circumstances
justify it;

(c) the ample opportunity to be heard standard in the Labor Code prevails over the hearing or conference
requirement in the implementing rules and regulations. Felix B. Perez, et al. Vs. Philippine Telegraph and
Telephone Company, G.R. No. 152048, April 7, 2009.
Illegal dismissal; abandonment. Petitioner insists that there cannot be any illegal dismissal because in the first
place, there was no dismissal to speak of, as it was respondent who abandoned his work, after finding out that
he was being investigated for theft. It is a basic principle that in the dismissal of employees, the burden of proof
rests upon the employer to show that the dismissal is for a just cause and failure to do so would necessarily mean
that the dismissal is not justified. Petitioner failed to discharge the burden of proof that complainant was guilty
of abandonment. It did not adduce any proof to show that petitioner clearly and unequivocally intended to
abandon his job. It has been repeatedly stressed that for abandonment to be a valid cause for dismissal there
must be a concurrence of intention to abandon and some overt act from which it may be inferred that the
employee had no more interest to continue working in his job. An employee who forthwith takes steps to protest
his layoff cannot by any logic be said to have abandoned his work. Otherwise stated, one could not possibly
abandon his work and shortly thereafter vigorously pursue his complaint for illegal dismissal. In the instant case,
save for the allegation that respondent did not submit him to the investigation and the latters failure to return to
work as instructed in the 8 February 1999 letter, petitioner was unable to present any evidence which tend to
show respondents intent to abandon his work. Neither is the Court convinced that the filing of the illegal
dismissal case was respondents way to avoid the charge of theft. On the contrary, the filing of the complaint a
few days after his alleged dismissal signified respondents desire to return to work, a factor which further
militates against petitioners theory of abandonment. Harbor View Restaurant vs. Reynaldo Labro, G.R. No.
168273, April 30, 2009.
Illegal dismissal; burden of proof. Under the Labor Code, as amended, the requirements for the lawful dismissal
of an employee are two-fold, the substantive and the procedural. Not only must the dismissal be for a valid or
authorized cause, the rudimentary requirements of due process notice and hearing must, likewise, be observed
before an employee may be dismissed. One does not suffice; without their concurrence, the termination would,
in the eyes of the law, be illegal.
As the employer, petitioner has the burden of proving that the dismissal of petitioner was for a cause allowed
under the law and that petitioner was afforded procedural due process. Petitioner failed to discharge this
burden. Indeed, it failed to show any valid or authorized cause under the Labor Code which allowed it to
terminate the services of individual respondents. Neither did petitioner show that individual respondents were
given ample opportunity to contest the legality of their dismissal. No notice of such impending termination was
ever given to them. Individual respondents were definitely denied due process. Having failed to establish
compliance with the requirements on termination of employment under the Labor Code, the dismissal of
individual respondents was tainted with illegality. Iligan Cement Corporation vs. Iliascor Employees and
Workers Union-Southern Philippines Federation of Labor, et al., G.R. No. 158956, April 24, 2009.
Illegal dismissal; penalty. The worst that respondent committed was an inadvertent infraction. For that, the
extreme penalty of dismissal imposed on him by petitioners was grossly disproportionate. Taking into account
the managerial position he held and the prior warning issued to him for failing to communicate with his superiors,
the penalty commensurate to the violation he committed should be suspension for three months. Gulf Air Jassim
Hindri Abdullah, et al. vs. NLRC, et al., G.R. No. 159687, April 24, 2009.
Intra-union dispute. Pending the final resolution of the intra-union dispute, respondents officers remained duly
authorized to conduct union affairs. De La Salle University, et al. vs. De La Salle University Employees
Association (DLSUEA-NAFTEU),G.R. No. 177283, April 7, 2009.
Labor only contracting. We are not convinced that Vedali is an independent contractor. Petitioner failed to
present any service contract with Vedali in the proceedings with the Labor Arbiter. There is nothing on record
that Vedali has a substantial capital or investment to actually perform the service under its own account and
responsibility. Petitioner is a mere labor-only contractor because it only supplied workers to petitioner to work
at its pier. In a labor-only contract, there are three parties involved: (1) the labor-only contractor; (2) the
employee who is ostensibly under the employ of the labor-only contractor; and (3) the principal who is deemed
the real employer. Under this scheme, the labor-only contractor is the agent of the principal. Iligan Cement
Corporation vs. Iliascor Employees and Workers Union-Southern Philippines Federation of Labor, et al., G.R.
No. 158956, April 24, 2009.
Liability of corporate officers. Article 212(e) of the Labor Code, by itself, does not make a corporate officer
personally liable for the debts of the corporation because Section 31 of the Corporation Code is still the governing
law on personal liability of officers for the debts of the corporation. There was no showing of David willingly
and knowingly voting for or assenting to patently unlawful acts of the corporation, or that David was guilty of
gross negligence or bad faith. Armando David vs. National Federation of Labor Union, et al, G.R. No. 148263
and 148271-72, April 21, 2009.
Loss of confidence. Loss of trust and confidence, as a valid ground for dismissal, 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. Elsewise stated, it must be based on substantial evidence and not on the employers whims or
caprices or suspicions; otherwise, the employee would eternally remain at the mercy of the employer. A
condemnation of dishonesty and disloyalty cannot arise from suspicion spawned by speculative
inferences. Adam B. Garcia vs. NLRC (Second Division) Legazpi Oil Company, Inc. Romeo F. Mercado and
Gus Zuluaga, G.R. No. 172854, April 16, 2009.
Loss of Confidence. Without undermining the importance of a shipping order or request, the respondents
evidence is insufficient to clearly and convincingly establish the facts from which the loss of confidence
resulted. Other than their bare allegations and the fact that such documents came into petitioners hands at some
point, respondents should have provided evidence of petitioners functions, the extent of their duties, the
procedure in the handling and approval of shipping requests and the fact that no personnel other than petitioners
were involved. There was, therefore, a patent paucity of proof connecting petitioners to the alleged tampering of
shipping documents. The alterations on the shipping documents could not reasonably be attributed to petitioners
because it was never proven that petitioners alone had control of or access to these documents. Unless duly
proved or sufficiently substantiated otherwise, impartial tribunals should not rely only on the statement of the
employer that it has lost confidence in its employee. Felix B. Perez, et al. vs. Philippine Telegraph and Telephone
Company,G.R. No. 152048, April 7, 2009.
Prescription. Articles 1139 to 1155 of the Civil Code provide the general law on prescription of actions. Under
Article 1139, actions prescribe by the mere lapse of time prescribed by law. That law may either be the Civil
Code or special laws as specifically mandated by Article 1148. In labor cases, the special law on prescription is
Article 291 of the Labor Code. The Labor Code has no specific provision on when a monetary claim
accrues. Thus, again the general law on prescription applies Article 1150 of the Civil Code. Juanaria A. Rivera
vs. United Laboratories, Inc., G.R. No. 155639, April 22, 2009.
Resignation. Resignation is defined as the voluntary act of an employee who finds himself in a situation
where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service and he has
no other choice but to disassociate himself from his employment. Respondents resignation can be gleaned from
the unambiguous terms of his letter to Captain Cristino. Respondents bare claim that he was forced to execute
his resignation letter deserves no merit. Bare allegations of threat or force do not constitute substantial evidence
to support a finding of forced resignation. That such claim was proferred a year later all the more renders his
contention bereft of merit. Virgen Shipping Corporation, et al. vs. Jesus B. Barraquio, G.R. No. 178127, April
16, 2009.
Resignation. Petitioner voluntarily resigned. Her employer cannot be held liable for constructive
dismissal. Gloria Artiaga vs. Siliman University and Siliman University Medical Center, G.R. No.
178453, April 16, 2009.
Security of Tenure. Security of tenure in the career executive service, which presupposes a permanent
appointment, takes place upon passing the CES examinations administered by the CES Board. It is that which
entitles the examinee to conferment of CES eligibility and the inclusion of his name in the roster of CES eligibles.
Under the rules and regulations promulgated by the CES Board, conferment of the CES eligibility is done by the
CES Board through a formal board resolution after an evaluation has been done of the examinees performance
in the four stages of the CES eligibility examinations. Upon conferment of CES eligibility and compliance with
the other requirements prescribed by the Board, an incumbent of a CES position may qualify for appointment to
a CES rank. Appointment to a CES rank is made by the President upon the Boards recommendation. It is this
process which completes the officials membership in the CES and confers on him security of tenure in the CES.
Petitioner does not seem to have gone through this definitive process.
At this juncture, what comes unmistakably clear is the fact that because petitioner lacked the proper CES
eligibility and therefore had not held the subject office in a permanent capacity, there could not have been any
violation of petitioners supposed right to security of tenure inasmuch as he had never been in possession of the
said right at least during his tenure as Deputy Director for Hospital Support Services. Hence, no challenge may
be offered against his separation from office even if it be for no cause and at a moments notice. Not even his
own self-serving claim that he was competent to continue serving as Deputy Director may actually and legally
give even the slightest semblance of authority to his thesis that he should remain in office. Be that as it may, it
bears emphasis that, in any case, the mere fact that an employee is a CES eligible does not automatically operate
to vest security of tenure on the appointee inasmuch as the security of tenure of employees in the career executive
service, except first and second-level employees, pertains only to rank and not to the office or position to which
they may be appointed. Jose Pepito M. Amores M.D. vs. Civil Service Commission, Board of Trustees of the
Lung Center of the Philippines as represented by Hon. Manuel M. Dayrit and Fernando A. Melendres,
M.D., G.R. No. 170093, April 29, 2009
SSS. The claim for funeral benefits under P.D. No. 626, as amended, which was filed after the lapse of 10 years
by the therein petitioner who had earlier filed a claim for death benefits, had not prescribed. Soledad Muos
Mesa vs. Social Security System, et al., G.R. No. 160467, April 7, 2009.
Transfer. Jurisprudence recognizes the exercise of management prerogative to transfer or assign employees from
one office or area of operation to another, provided there is no demotion in rank or diminution of salary, benefits,
and other privileges, and the action is not motivated by discrimination, made in bad faith, or effected as a form
of punishment or demotion without sufficient cause. To determine the validity of the transfer of employees, the
employer must show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does
it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the employer
fail to overcome this burden of proof, the employees transfer shall be tantamount to constructive dismissal.
We have long stated that the objection to the transfer being grounded solely upon the personal inconvenience or
hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order
of transfer. Such being the case, petitioner cannot adamantly refuse to abide by the order of transfer without
exposing herself to the risk of being dismissed. Hence, her dismissal was for just cause in accordance with
Article 282(a) of the Labor Code. Aileen G. Herida vs. F4C Pawnshop and Jewelry Store/Marcelino Florete,
Jr., G.R. No. 172601, April 16, 2009.
Unfair labor practice; burden of proof. Petitioner makes several allegations that UST committed ULP. The onus
probandi falls on the shoulders of petitioner to establish or substantiate such claims by the requisite quantum of
evidence. In labor cases as in other administrative proceedings, substantial evidence or such relevant evidence
as a reasonable mind might accept as sufficient to support a conclusion is required. In the petition at bar,
petitioner miserably failed to adduce substantial evidence as basis for the grant of relief. UST Faculty Union vs.
University of Sto. Tomas, Rev. Fr. Rolando De la Rosa, Rev Fr. Rodelio Aligan, Domingo Legaspi, and
Merecedes Hinayon, G.R. No. 180892, April 7, 2009.

March 2009 Decisions on Civil, Commercial and

Labor Laws
Posted on April 12, 2009 by Hector M. de Leon Jr. Posted in Civil Law, Commercial Law, Labor Law Tagged common
carrier, compensable illness, constructive dismissal, family home, illegal strike, mortgage, part-time employment, piercing
corporate veil, registered nurse

Labor Code
Compensable illness. Cordero has substantially proved her claim to compensability. Under Section 1(b), Rule
III implementing P.D. No. 626, sickness or death is compensable if the cause is included in the list of
occupational diseases annexed to the Rules. If not so listed, compensation may still be recovered if the illness is
caused or precipitated by factors inherent in the employees work and working conditions. Here, strict rules of
evidence are not applicable since the quantum of evidence required under P.D. No. 626 is merely substantial
evidence, which means such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion. What the law requires is a reasonable work-connection and not a direct causal relation. It is
sufficient that the hypothesis on which the workmens claim is based is probable since probability, not certainty,
is the touchstone. Government Service Insurance System Vs. Maria Teresa S.A. Cordero/Employees
Compensation Commission Vs. Maria Teresa S.A. Cordero, G.R. No. 171378/G.R. No. 171388, March 17, 2009.
Constructive dismissal. Case law holds that constructive dismissal occurs when there is cessation of work
because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in
rank or diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an employer
becomes unbearable to the employee. Respondents sudden, arbitrary and unfounded adoption of the two-day
work scheme which greatly reduced petitioners salaries renders it liable for constructive dismissal. Fe la Rosa,
et al. Vs. Ambassador Hotel, G.R. No. 177059, March 13, 2009.
Declaration of illegality of strike. 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. Jackbilt Industries, Inc. Vs. Jackbilt Employees
Workers Union-Naflu-KMU, G.R. No. 171618-19, March 13, 2009.
Employment of registered nurse. Article 157 does not require the engagement of full-time nurses as regular
employees of a company. Under Article 157, Shangri-la, which employs more than 200 workers, is mandated to
furnish its employees with the services of a full-time registered nurse, a part-time physician and dentist, and
an emergency clinic which means that it should provide or make available such medical and allied services to
its employees, not necessarily to hire or employ a service provider. While it is true that the provision requires
employers to engage the services of medical practitioners in certain establishments depending on the number of
their employees, nothing is there in the law which says that medical practitioners so engaged be actually hired
as employees. The law only requires the employer to retain, not employ, a part-time physician who needed to
stay in the premises of the non-hazardous workplace for two (2) hours. The phrase services of a full-time
registered nurse should thus be taken to refer to the kind of services that the nurse will render in the companys
premises and to its employees, not the manner of his engagement. Jerome D. Escasinas, et al. Vs. Shangri-las
Mactan Island Resort, et al., G.R. No. 178827, March 4, 2009.
Part-time employment. For a private school teacher to acquire permanent status in employment, the following
requisites must concur: (1) the teacher is a full-time teacher; (2) the teacher must have rendered three consecutive
years of service; and (3) such service must have been satisfactory. The burden is on petitioners to prove their
affirmative allegation that they are permanent teaching personnel. However, there is not enough evidence on
record to show that their total working day is devoted to the school. There is no showing of what the regular
work schedule of a regular teacher in respondent school is. What is clear in the records is that Evelyn and Alwyn
spent two hours and four hours, respectively, but not the entire working day, at the respondent school. They do
not meet requirement c of Section 45 of the Manual. Hence, we sustain the findings of the Court of Appeals
that the petitioners are part-time teachers. Being part-time teachers,they cannot acquire permanent
status. Spouses Alwyn Ong Lim and Evelyn Lukang Lim Vs. Legazpi Hope Christian School, et al., G.R. No.
172818, March 31, 2009.

February 2009 Decisions on Tax and Labor Laws

Posted on April 4, 2009 by Hector M. de Leon Jr. Posted in Labor Law, Tax Law Tagged importation, labor-only
contracting, lending investor, local tax, probationary employment

Labor Code
Probationary employment; acting appointment; resignation. The Supreme Court ruled that: (a) the employment
of the respondent as teacher was probationary in character, as she has not completed the requisite three-year
period of probationary employment for teachers: (b) the respondents appointment as acting principal was merely
temporary, or one that is good until another appointment is made to take its place; as such, the appointment is
revocable at will; and (c) the resignation of the respondent is not valid, not only because there was no express
acceptance thereof by the employer, but because there is a cloud of doubt as to the voluntariness of respondents
resignation. According to the Supreme Court, resignation is inconsistent with the filing of a complaint for illegal
dismissal. To be valid, the resignation must be unconditional, with the intent to operate as such; there must be a
clear intention to relinquish the position. In this case, respondent actively pursued her illegal dismissal case
against petitioner, such that she cannot be said to have voluntarily resigned from her job. Magis Young
Achievers Learning Center/Mrs. Violeta T. Carino Vs. Adelaida P. Manalo,G.R. No. 178835, February 13,
2009.
Labor-only contracting. The law clearly establishes an employer-employee relationship between the principal
employer and the contractors employee upon a finding that the contractor is engaged in labor-only
contracting. Article 106 of the Labor Code categorically states: There is labor-only contracting where the
person supplying workers to an employee 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 persons
are performing activities which are directly related to the principal business of such employer. Thus, performing
activities directly related to the principal business of the employer is only one of the two indicators that labor-
only contracting exists; the other is lack of substantial capital or investment. Coca-Cola Bottlers Phils., Inc.
Vs. Alan M. Agito Regolo S. Oca III, et al, G.R. No. 179546, February 13, 2009.

Piercing the Corporate Veil for Labor Claims

Posted on March 29, 2009 by Hector M. de Leon Jr. Posted in Commercial Law, Labor Law Tagged piercing corporate veil

Pantranco Employees Asso., et al. vs. NLRC, et al./Philippine National Bank Vs. Pantranco Employees
Association Inc., et al., G.R. No. 170689/G.R. No. 170705, March 17, 2009, is an interesting case wherein
former employees of a company sought to satisfy their unpaid labor claims against another company that
eventually acquired, and then sold, the employer company.
The Gonzales family owned two corporations, namely, the Pantranco North Express, Inc. (PNEI) and Macris
Realty Corporation (Macris). PNEI provided transportation services to the public, and had its bus terminal at the
corner of Quezon and Roosevelt Avenues in Quezon City. The terminal stood on four valuable pieces of real
estate (known as Pantranco properties) registered under the name of Macris. The Gonzales family later incurred
huge financial losses despite attempts of rehabilitation and loan infusion. In March 1975, their creditors took
over the management of PNEI and Macris. By 1978, full ownership was transferred to one of their creditors, the
National Investment Development Corporation (NIDC), a subsidiary of the PNB.

Macris was later renamed as the National Realty Development Corporation (Naredeco) and eventually merged
with the National Warehousing Corporation (Nawaco) to form the new PNB subsidiary, the PNB-Madecor.

In 1985, NIDC sold PNEI to North Express Transport, Inc. (NETI), a company owned by Gregorio Araneta III.
In 1986, PNEI was among the several companies placed under sequestration by the Presidential Commission on
Good Government (PCGG) shortly after the historic events in EDSA. In January 1988, PCGG lifted the
sequestration order to pave the way for the sale of PNEI back to the private sector through the Asset Privatization
Trust (APT). APT thus took over the management of PNEI.

In 1992, PNEI applied with the Securities and Exchange Commission (SEC) for suspension of payments. A
management committee was thereafter created which recommended to the SEC the sale of the company through
privatization. As a cost-saving measure, the committee likewise suggested the retrenchment of several PNEI
employees. Eventually, PNEI ceased its operation. Along with the cessation of business came the various labor
claims commenced by the former employees of PNEI where the latter obtained favorable decisions.

On July 5, 2002, the Labor Arbiter issued the Sixth Alias Writ of Execution commanding the National Labor
Relations Commission (NLRC) sheriffs to levy on the assets of PNEI in order to satisfy the P722,727,150.22
due its former employees, as full and final satisfaction of the judgment awards in the labor cases. The sheriffs
were likewise instructed to proceed against PNB, PNB-Madecor and Mega Prime. In implementing the writ, the
sheriffs levied upon the four valuable pieces of real estate located at the corner of Quezon and Roosevelt
Avenues, on which the former Pantranco Bus Terminal stood. These properties were covered by Transfer
Certificate of Title (TCT) Nos. 87881-87884, registered under the name of PNB-Madecor. Subsequently, Notice
of Sale of the foregoing real properties was published in the newspaper and the sale was set on July 31, 2002.

Having been notified of the auction sale, motions to quash the writ were separately filed by PNB-Madecor and
Mega Prime, and PNB. They likewise filed their Third-Party Claims. PNB-Madecor anchored its motion on its
right as the registered owner of the Pantranco properties, and Mega Prime as the successor-in-interest. For its
part, PNB sought the nullification of the writ on the ground that it was not a party to the labor case. In its Third-
Party Claim, PNB alleged that PNB-Madecor was indebted to the former and that the Pantranco properties would
answer for such debt.

On September 10, 2002, the Labor Arbiter declared that the subject Pantranco properties were owned by PNB-
Madecor. It being a corporation with a distinct and separate personality, its assets could not answer for the
liabilities of PNEI. Considering, however, that PNB-Madecor executed a promissory note in favor of PNEI for
P7,884,000.00, the writ of execution to the extent of the said amount was concerned was considered valid. PNBs
third-party claim to nullify the writ on the ground that it has an interest in the Pantranco properties being a
creditor of PNB-Madecor, on the other hand, was denied because it only had an inchoate interest in the
properties.

The NLRC affirmed the Labor Arbiters decision. The CA also affirmed the NLRCs decision. The appellate
court pointed out that PNB, PNB-Madecor and Mega Prime are corporations with personalities separate and
distinct from PNEI. As such, there being no cogent reason to pierce the veil of corporate fiction, the separate
personalities of the above corporations should be maintained. The CA added that the Pantranco properties were
never owned by PNEI; rather, their titles were registered under the name of PNB-Madecor. If PNB and PNB-
Madecor could not answer for the liabilities of PNEI, with more reason should Mega Prime not be held liable
being a mere successor-in-interest of PNB-Madecor.

The former PNEI employees argued before the Supreme Court that PNB, through PNB-Madecor, directly
benefited from the operation of PNEI and had complete control over the funds of PNEI. Hence, they are solidarily
answerable with PNEI for the unpaid money claims of the employees. Citing A.C. Ransom Labor Union-CCLU
v. NLRC, the employees insist that where the employer corporation ceases to exist and is no longer able to satisfy
the judgment awards in favor of its employees, the owner of the employer corporation should be made jointly
and severally liable. The Supreme Court ruled that the former PNEI employees cannot attach the properties
(specifically the Pantranco properties) of PNB, PNB-Madecor and Mega Prime to satisfy their unpaid labor
claims against PNEI. According to the Supreme Court:

First, the subject property is not owned by the judgment debtor, that is, PNEI. Nowhere in the records was it
shown that PNEI owned the Pantranco properties. Petitioners, in fact, never alleged in any of their pleadings the
fact of such ownership. What was established, instead, in PNB MADECOR v. Uy and PNB v. Mega Prime
Realty and Holdings Corporation/Mega Prime Realty and Holdings Corporation v. PNB was that the properties
were owned by Macris, the predecessor of PNB-Madecor. Hence, they cannot be pursued against by the creditors
of PNEI. We would like to stress the settled rule that the power of the court in executing judgments extends only
to properties unquestionably belonging to the judgment debtor alone. To be sure, one mans goods shall not be
sold for another mans debts. A sheriff is not authorized to attach or levy on property not belonging to the
judgment debtor, and even incurs liability if he wrongfully levies upon the property of a third person.

Second, PNB, PNB-Madecor and Mega Prime are corporations with personalities separate and distinct from that
of PNEI. PNB is sought to be held liable because it acquired PNEI through NIDC at the time when PNEI was
suffering financial reverses. PNB-Madecor is being made to answer for petitioners labor claims as the owner of
the subject Pantranco properties and as a subsidiary of PNB. Mega Prime is also included for having acquired
PNBs shares over PNB-Madecor.

The general rule is that a corporation has a personality separate and distinct from those of its stockholders and
other corporations to which it may be connected. This is a fiction created by law for convenience and to prevent
injustice. Obviously, PNB, PNB-Madecor, Mega Prime, and PNEI are corporations with their own personalities.
The separate personalities of the first three corporations had been recognized by this Court in PNB v. Mega
Prime Realty and Holdings Corporation/Mega Prime Realty and Holdings Corporation v. PNB where we stated
that PNB was only a stockholder of PNB-Madecor which later sold its shares to Mega Prime; and that PNB-
Madecor was the owner of the Pantranco properties. Moreover, these corporations are registered as separate
entities and, absent any valid reason, we maintain their separate identities and we cannot treat them as one.

Neither can we merge the personality of PNEI with PNB simply because the latter acquired the former. Settled
is the rule that where one corporation sells or otherwise transfers all its assets to another corporation for value,
the latter is not, by that fact alone, liable for the debts and liabilities of the transferor.

Lastly, while we recognize that there are peculiar circumstances or valid grounds that may exist to warrant the
piercing of the corporate veil, none applies in the present case whether between PNB and PNEI; or PNB and
PNB-Madecor.

Under the doctrine of piercing the veil of corporate fiction, the court looks at the corporation as a mere
collection of individuals or an aggregation of persons undertaking business as a group, disregarding the separate
juridical personality of the corporation unifying the group. Another formulation of this doctrine is that when two
business enterprises are owned, conducted and controlled by the same parties, both law and equity will, when
necessary to protect the rights of third parties, disregard the legal fiction that two corporations are distinct entities
and treat them as identical or as one and the same.

Whether the separate personality of the corporation should be pierced hinges on obtaining facts appropriately
pleaded or proved. However, any piercing of the corporate veil has to be done with caution, albeit the Court will
not hesitate to disregard the corporate veil when it is misused or when necessary in the interest of justice. After
all, the concept of corporate entity was not meant to promote unfair objectives.

As between PNB and PNEI, petitioners want us to disregard their separate personalities, and insist that because
the company, PNEI, has already ceased operations and there is no other way by which the judgment in favor of
the employees can be satisfied, corporate officers can be held jointly and severally liable with the company.
Petitioners rely on the pronouncement of this Court in A.C. Ransom Labor Union-CCLU v. NLRC and
subsequent cases.

This reliance fails to persuade. We find the aforesaid decisions inapplicable to the instant case.

For one, in the said cases, the persons made liable after the companys cessation of operations were the officers
and agents of the corporation. The rationale is that, since the corporation is an artificial person, it must have an
officer who can be presumed to be the employer, being the person acting in the interest of the employer. The
corporation, only in the technical sense, is the employer. In the instant case, what is being made liable is another
corporation (PNB) which acquired the debtor corporation (PNEI).

Moreover, in the recent cases Carag v. National Labor Relations Commission and McLeod v. National Labor
Relations Commission, the Court explained the doctrine laid down in AC Ransom relative to the personal
liability of the officers and agents of the employer for the debts of the latter. In AC Ransom, the Court imputed
liability to the officers of the corporation on the strength of the definition of an employer in Article 212(c) (now
Article 212[e]) of the Labor Code. Under the said provision, employer includes any person acting in the interest
of an employer, directly or indirectly, but does not include any labor organization or any of its officers or agents
except when acting as employer. It was clarified in Carag and McLeod that Article 212(e) of the Labor Code,
by itself, does not make a corporate officer personally liable for the debts of the corporation. It added that the
governing law on personal liability of directors or officers for debts of the corporation is still Section 31 of the
Corporation Code.
More importantly, as aptly observed by this Court in AC Ransom, it appears that Ransom, foreseeing the
possibility or probability of payment of backwages to its employees, organized Rosario to replace Ransom, with
the latter to be eventually phased out if the strikers win their case. The execution could not be implemented
against Ransom because of the disposition posthaste of its leviable assets evidently in order to evade its just and
due obligations. Hence, the Court sustained the piercing of the corporate veil and made the officers of Ransom
personally liable for the debts of the latter.

Clearly, what can be inferred from the earlier cases is that the doctrine of piercing the corporate veil applies only
in three (3) basic areas, namely: 1) defeat of public convenience as when the corporate fiction is used as a vehicle
for the evasion of an existing obligation; 2) fraud cases or when the corporate entity is used to justify a wrong,
protect fraud, or defend a crime; or 3) alter ego cases, where a corporation is merely a farce since it is a mere
alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs
are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation. In
the absence of malice, bad faith, or a specific provision of law making a corporate officer liable, such corporate
officer cannot be made personally liable for corporate liabilities.

The Court ruled that assuming, for the sake of argument, that PNB may be held liable for the debts of PNEI,
petitioners still cannot proceed against the Pantranco properties, the same being owned by PNB-Madecor,
notwithstanding the fact that PNB-Madecor was a subsidiary of PNB. The general rule remains that PNB-
Madecor has a personality separate and distinct from PNB. The mere fact that a corporation owns all of the
stocks of another corporation, taken alone, is not sufficient to justify their being treated as one entity. If used to
perform legitimate functions, a subsidiarys separate existence shall be respected, and the liability of the parent
corporation as well as the subsidiary will be confined to those arising in their respective businesses.