EUGENE S. ARABIT, EDGARDO C. SADSAD, LOWELL C.
FUNTANOZ,
GERARDO F. PUNZALAN, FREDDIE M. MENDOZA, EMILIO B. BELEN,
VIOLETA C. DIUMANO and MB FINANCE EMPLOYEES ASSOCIATION
FFW CHAPTER (FEDERATION OF FREE WORKERS), Petitioners,
vs.
JARDINE PACIFIC FINANCE, INC. (FORMERLY MB FINANCE),
Respondent.
[G.R. No. 181719, April 21, 2014]
PRINCIPLE:
**Redundancy and Retrenchment distinguished:
The clear distinction between these two concepts was
discussed in Andrada, et al., v. NLRC, 51 citing the case of Sebuguero v.
NLRC, 52 where this Court clarified:
Redundancy exists where the services of an employee are in excess of
what is reasonably demanded by the actual requirements of the
enterprise. A position is redundant where it is superfluous, and
superfluity of a position or positions may be the outcome of a number
of factors, such as over hiring of workers, decreased volume of
business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise.
Retrenchment, on the other hand, is used interchangeably with the
term "lay-off." It is the termination of employment initiated by the
employer through no fault of the employee’s and without prejudice to
the latter, resorted to by management 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.
TN: Guidelines in implementing redundancy (SEE BELOW)
FACTS:
 Petitioners were former regular employees of respondent
Jardine Pacific Finance, Inc. (formerly MB Finance). Who were
also officers and members of MB Finance Employees
Association-FFW Chapter (the Union) ---- a legitimate labor
union and the sole exclusive bargaining agent of the employees
of Jardine.
 Due to financial losses, Jardine decided to reorganize and
implement a redundancy program among its employees. The
petitioners were among those affected by the redundancy
program. Jardine thereafter hired contractual employees to
undertake the functions these employees used to perform.
 The Union filed a notice of strike with the National Conciliation
and Mediation Board (NCMB), questioning the termination of
employment of the petitioners who were also union officers.
The Union alleged unfair labor practice on the part of Jardine,
as well as discrimination in the dismissal of its officers and
members.
 There was negotiation between Union and Jardine under
NCMB, and parties reached an amicable settlement. In the
settlement, the petitioners accepted their redundancy pay
without prejudice to their right to question the legality of their
dismissal with the NLRC.
 Jardine paid the petitioners a separation package composed of
their severance pay, plus their grossed up transportation
allowance.
 On June 1, 1999, the petitioners and the Union filed a complaint
against Jardine with the NLRC for illegal dismissal and unfair
labor practice.
1
**Labor Arbiter - LA ruled in Union’s favor. In its decision, they held
that the hiring of contractual employees to replace the petitioners
directly contradicts the concept of redundancy which involves the
trimming down of the workforce because a task is being carried out by
too many people. LA explained that the company’s action was a
circumvention of the right of the petitioners to security of tenure.
- it was error for Jardine to simply lump together the seven
petitioners as employees whose positions have become redundant
without explaining why their respective positions became superfluous
in relation to the other positions and employees of the company.
**NLRC - dismissed the appeals and affirmed the LA’s decision in its
entirety
**CA - CA reversed the LA’s and the NLRC’s rulings, and granted
Jardine’s petition for certiorari.
- CA found that Jardine’s act of hiring contractual employees in
replacement of the petitioners does not run counter to the argument
that their positions are already superfluous. According to the CA, the
hiring of contractual employees is a management prerogative that
Jardine has the right to exercise. In the absence of any showing of
malice or arbitrariness on the part of Jardine in implementing its
redundancy program, the courts must not interfere with the
company’s exercise of a bona fide management decision.
- CA further held that Jardine successfully established that for
the years 1996 to 1998, the company incurred serious losses. The
appellate court also observed that the reduction in the number of
workers, made necessary by the introduction of the services of an
independent contractor, is justified when undertaken to implement
more economic and efficient methods of production.
ISSUE:
 WON CA correctly rule that the NLRC committed grave abuse
of discretion when it found that Jardine validly terminated the
petitioners’ employment because of redundancy
RULING:
SC Granted the petition. it stated that: We cannot accept
Jardine’s shallow understanding of the concepts of redundancy and
retrenchment in determining the validity of the severance of an
employer-employee relationship. The fact that they are found together
in just one provision does not necessarily give rise to the conclusion
that the difference between them is immaterial.
Redundancy exists where the services of an employee are in
excess of what is reasonably demanded by the actual requirements of
the enterprise. A position is redundant where it is superfluous, and
superfluity of a position or positions may be the outcome of a number
of factors, such as over hiring of workers, decreased volume of
business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise.
Retrenchment, on the other hand, is used interchangeably with
the term "lay-off." It is the termination of employment initiated by the
employer through no fault of the employee’s and without prejudice to
the latter, resorted to by management 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.
Simply put, 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, a right
consistently recognized and affirmed by this Court.
2
 In the case at bench, respondents did not dispute that after
laying-off complainants herein, they engaged the services of an
agency to perform the tasks use (sic) to be done by complainants. This
is [in direct] contradiction to the concept of redundancy which
precisely requires the trimming down of the [workforce] because a
task is being carried out by just too many people. The subsequent
contracting out to an agency the functions or duties that used to be
the domain of individual complainants herein is a circumvention of
their constitutional rights to security of tenure, and therefore illegal.
** Aside from the guidelines for the selection of employees who will
be terminated, the Court, in Asian Alcohol Corp. v. NLRC, the
Guidelines in implementing redundancy are as follows:
For the implementation of a redundancy program to be valid,
the employer must comply with the following requisites:
(1) written notice served on both the employees and the Department
of Labor and Employment at least one month prior to the intended
date of retrenchment;
(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 positions; and
(4) fair and reasonable criteria in ascertaining what positions are to be
declared redundant and accordingly abolished.
SPI TechnologiesInc.v. Mapua
G.R. No. 191154
April 7, 2014
Reyes,J
Case Doctrine:
It is not the job title but the actual work that the employee
performs. Also, change in the job title is not synonymous to a change
in the functions. A position cannot be abolished by a mere change of
job title. In cases of redundancy, the management should adduce
evidence and prove that a position which was created in place of a
previous one should pertain to functions which are dissimilar and
incongruous to the abolished office.
Facts:
Victoria K. Mapua (Mapua) was the Corporate Development’s
Research/Business Intelligence Unit Head and Manager InSPI
Technologies,Ic. (SPI). Sometime in October 2006, the hard disk on
Mapua’s laptop crashed, causing her to lose files and data. Mapua
informed Nolan,her supervisor and her colleagues that she was
working on recovering the lost data and asked for their patience for
any possible delay on her part in meeting deadlines. On November 13,
2006 Mapua retrieved the lost data with the assistance of National
Bureau of Investigation Anti-Fraud and Computer Crimes Division. Yet,
Nolan informed Mapua that she was realigning Mapua’s position to
become a subordinate of co-manager Sameer Raina (Raina) due to her
missing a work deadline.
On February 28, 2007, Mapua allegedly saw the new table of
organization of the Corporate Development Division which would be
renamed as the Marketing Division. The new structure showed that
Mapua’s level will be again downgraded because a new manager will
be hired and positioned between her rank and Raina’s. On March 21,
2007, Raina informed Mapua over the phone that her position was
considered redundant and that she is terminated from employment
effective immediately. Villanueva notified Mapua that she should
cease reporting for work the next day. Her laptop computer and
company mobile phone were taken right away and her office phone
ceased to function.
In her Reply and Rejoinder, Mapua submitted an affidavit and alleged
that on July 16, 2007, Prime Manpower Resources Development
(Prime Manpower) posted an advertisement on the website of
Jobstreet Philippines for the employment of a Corporate Development
3
Manager in an unnamed Business Process Outsourcing (BPO) company
located in Parañaque City. Mapua suspected that this advertisement
was for SPI because the writing style used was similar to Raina’s. She
also claimed that SPI is the only BPO office in Parañaque City at that
time. Thereafter, she applied for the position under the pseudonym of
"Jeanne Tesoro". On the day of her interview with Prime Manpower’s
consultant, Ms. Portia Dimatulac (Dimatulac), the latter allegedly
revealed to Mapua that SPI contracted Prime Manpower’s services to
search for applicants for the Corporate Development Manager
position. Because of these developments, Mapua was convinced that
her former position is not redundant.
The Labor arbiter rendered a decision stating that there was illegal
dismissal. But the NLRC reversed the said decision. While the CA on the
other hand, reinstated LA’s decision and set aside the NLRC’s decision.
Thus, SPI filed a petition for certiorari regarding the said decision.
Issue:
Whether or not Mapua was validly separated from service on the
ground of redundancy?
Ruling:
No. ART. 283. Closure of establishment and reduction of personnel. –
The employer may also terminate the employment of any employee
due to installation of labor-saving devices, redundancy, retrenchment
to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice
on the worker and the Department of Labor and Employment at least
one (1) month before the intended date thereof. In case of termination
due to installation of labor-saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at
least one (1) month pay or to at least one (1) month pay for every year
of service, whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses and
financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months shall
be considered as one (1) whole year. (Emphasis ours)
Anent the first requirement which is written notice served on both the
employee and the DOLE at least one month prior to the intended date
of termination, SPI had discharged the burden of proving that it
submitted a notice to the DOLE on March 21, 2007, stating therein that
the effective date of termination is on April 21, 2007. It is, however,
quite peculiar that two kinds of notices were served to Mapua. One
termination letter stated that its date of effectivity is on the same day,
March 21, 2007. The other termination letter sent through mail to
Mapua’s residence stated that the effective date of her termination is
on April 21, 2007. Explaining the discrepancy, SPI alleged that the
company served a notice to Mapua on March 21, 2007, which stated
that the effective date of termination is on April 21, 2007. However she
refused to acknowledge or accept the letter. Later on, Mapua
requested for a copy of the said letter but due to inadvertence and
oversight, a draft of the termination letter bearing a wrong effectivity
date was given to her. To correct the oversight, a copy of the original
letter was sent to her through mail. Our question is, after Mapua
initially refused to accept the letter, why did SPI make a new letter
instead of just giving her the first one – which the Court notes was
already signed and witnessed by other employees? Curiously, there
was neither allegation nor proof that the original letter was misplaced
or lost which would necessitate the drafting of a new one. SPI did not
even explain in the second letter that the same was being sent in lieu
of the one given to her. Hence, SPI must shoulder the consequence of
causing the confusion brought by the variations of termination letters
given to Mapua.
On the matter of separation pay, there is no question that SPI indeed
offered separation pay to Mapua, but the offer must be accompanied
with good faith in the abolishment of the redundant position and fair
4
and reasonable criteria in ascertaining the redundant position. It is
insignificant that the amount offered to Mapua is higher than what the
law requires because the Court has previously noted that "a job is more EMERITUS SECURITY AND MAINTENANCE SYSTEMS, INC., Petitioner,
than the salary that it carries. There is a psychological effect or a stigma v. JANRIE C. DAILIG, Respondent.
in immediately finding one’s self laid off from work."
CARPIO, J.:
As to the evidence negating redundancy was SPI’s publication of job
vacancies after Mapua was terminated from employment. SPI FACTS:
maintained that the CA erred when it considered Mapua’s self-serving
affidavit as regards the Prime Manpower advertisement because the In August 2000, petitioner hired respondent as one of its security
allegations therein were based on Mapua’s unfounded suspicions. guards. During his employment, respondent was assigned to
Also, the failure of Mapua to present a sworn statement of Dimatulac petitioner's various clients, the last of which was Panasonic in Calamba,
renders the former’s statements hearsay. Even if we disregard Laguna starting 16 December 2004.
Mapua’s affidavit as regards the Prime Manpower advertisement, SPI
admitted that it caused the Inquirer advertisement for a Marketing On 10 December 2005, respondent was relieved from his post.
Communications Manager position. Mapua alleged that this
advertisement belied the claim of SPI that her position is redundant On 27 January 2006, respondent filed a complaint for underpayment
because the Corporate Development division was only renamed to of wages, non-payment of legal and special holiday pay, premium pay
Marketing division. Instead of explaining how the functions of a for rest day and underpayment of ECOLA before the Department of
Marketing Communications Manager differ from a Corporate Labor and Employment, National Capital Region. The hearing officer
Development Manager, SPI hardly disputed Mapua when it stated that, recommended the dismissal of the complaint since the claims were
"judging from the titles or designation of the positions, it is obvious already paid.
that the functions of one are entirely different from that of the
other." SPI, being the employer, has possession of valuable On 16 June 2006, respondent filed a complaint for illegal dismissal and
information concerning the functions of the offices within its payment of separation pay against petitioner before the Conciliation
organization. Nevertheless, it did not even bother to differentiate the and Mediation Center of the NLRC. On 14 July 2006, respondent filed
two positions. another complaint for illegal dismissal, underpayment of salaries and
non-payment of full backwages before the NLRC.
It is not the job title but the actual work that the employee
performs. Also, change in the job title is not synonymous to a change Respondent claimed that on various dates in December 2005 and from
in the functions. A position cannot be abolished by a mere change of January to May 2006, he went to petitioners office to follow-up his next
job title. In cases of redundancy, the management should adduce assignment. After more than six months since his last assignment, still
evidence and prove that a position which was created in place of a respondent was not given a new assignment. Respondent argued that
previous one should pertain to functions which are dissimilar and if an employee is on floating status for more than six months, such
incongruous to the abolished office. #GANGAN employee is deemed illegally dismissed.

5

Petitioner denied dismissing respondent. Petitioner admitted that it
relieved respondent from his last assignment on 10 December 2005;
however, petitioner required respondent to report to the head office
within 48 hours from receipt of the order of relief. Respondent
allegedly failed to comply. Petitioner claimed that on 27 January 2006
it sent respondent a notice to his last known address requiring him to
report to the head office within 72 hours from receipt of the said
notice. Petitioner further alleged that it had informed respondent that
he had been absent without official leave for the month of January
2006, and that his failure to report within 72 hours from receipt of the
notice would mean that he was no longer interested to continue his
employment.
Petitioner also claimed that there was no showing that respondent was
prevented from returning to his work and that it had consistently
manifested its willingness to reinstate him to his former position. In
addition, the fact that there was no termination letter sent to
respondent purportedly proved that respondent was not dismissed.
On 5 December 2007, the Labor Arbiter rendered a Decision, declaring
respondent to have been illegally dismissed.
Petitioner appealed before the NLRC, which dismissed the appeal for
lack of merit. Petitioner moved for reconsideration, which the NLRC
denied. The NLRC, however, pointed out that the computation of
respondents award of full backwages should be reckoned from 10 June
2006 and not 10 December 2005.
On appeal with the Court of Appeals, petitioner argued that there was
abandonment on respondents part when he refused to report for work
despite notice. Thus, there was no illegal dismissal to speak of.
ISSUES:
1) whether respondent was illegally dismissed by respondent and
2) if he was, whether respondent is entitled to separation pay, instead
of reinstatement.
HELD: The Court affirms the finding of illegal dismissal of the Labor
Arbiter, NLRC, and Court of Appeals. However, the Court sets aside
the Court of Appeals award of separation pay in favor of respondent,
and reinstates the Labor Arbiters reinstatement order.
LABOR LAW: illegal dismissal
Petitioner admits relieving respondent from his post as security guard
on 10 December 2005. There is also no dispute that respondent
remained on floating status at the time he filed his complaint for illegal
dismissal on 16 June 2006. In other words, respondent was on floating
status from 10 December 2005 to 16 June 2006 or more than six
months. Petitioners allegation of sending respondent a notice
sometime in January 2006, requiring him to report for work, is
unsubstantiated, and thus, self-serving.
The Court agrees with the ruling of the Labor Arbiter, NLRC and Court
of Appeals that a floating status of a security guard, such as
respondent, for more than six months constitutes constructive
dismissal. In Nationwide Security and Allied Services, Inc. v. Valderama,
the Court held:
x x x the temporary inactivity or floating status of security guards
should continue only for six months. Otherwise, the security agency
concerned could be liable for constructive dismissal. The failure of
petitioner to give respondent a work assignment beyond the
reasonable six-month period makes it liable for constructive dismissal.
x x x
Further, the Court notes that the Labor Arbiter, NLRC, and Court of
Appeals unanimously found that respondent was illegally dismissed by
petitioner. Factual findings of quasi-judicial bodies like the NLRC, if
supported by substantial evidence, are accorded respect and even
6
finality by this 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. The Court finds no reason
to depart from the foregoing rule.
LABOR LAW: separation pay
Article 279 of the Labor Code of the Philippines mandates the
reinstatement of an illegally dismissed employee, to wit:
Security of Tenure. - 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 back wages, 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, reinstatement is the general rule, while the award of separation
pay is the exception. The circumstances warranting the grant of
separation pay, in lieu of reinstatement, are laid down by the Court in
Globe-Mackay Cable and Radio Corporation v. National Labor Relations
Commission, thus:
Over time, the following reasons have been advanced by the Court for
denying reinstatement under the facts of the case and the law
applicable thereto; that reinstatement can no longer be effected in
view of the long passage of time (22 years of litigation) or because of
the realities of the situation; or that it would be inimical to the
employers interest; or that reinstatement may no longer be feasible;
or, that it will not serve the best interests of the parties involved; or
that the company would be prejudiced by the workers continued
employment; or that it will not serve any prudent purpose as when
supervening facts have transpired which make execution on that score
unjust or inequitable or, to an increasing extent, due to the resultant
atmosphere of antipathy and antagonism or strained relations or
irretrievable estrangement between the employer and the employee.
In this case, petitioner claims that it complied with the reinstatement
order of the Labor Arbiter. On 23 January 2008, petitioner sent
respondent a notice informing him of the Labor Arbiters decision to
reinstate him. Accordingly, in February 2008, respondent was assigned
by petitioner to Canlubang Sugar Estate, Inc. in Canlubang, Laguna, and
to various posts thereafter. At the time of the filing of the petition,
respondent was assigned by petitioner to MD Distripark Manila, Inc. in
Binian, Laguna.
Respondent admits receiving a reinstatement notice from petitioner.
Thereafter, respondent was assigned to one of petitioner's clients.
However, respondent points out that he was not reinstated by
petitioner Emeritus Security and Maintenance Systems, Inc. but was
employed by another company, Emme Security and Maintenance
Systems, Inc. (Emme). Thus, according to respondent, he was not
reinstated at all.
Petitioner counters that Emeritus and Emme are sister companies with
the same Board of Directors and officers, arguing that Emeritus and
Emme are in effect one and the same corporation.
Considering petitioner's undisputed claim that Emeritus and Emme are
one and the same, there is no basis in respondent's allegation that he
was not reinstated to his previous employment. Besides, respondent
assails the corporate personalities of Emeritus and Emme only in his
Comment filed before this Court. Further, respondent did not appeal
the Labor Arbiter's reinstatement order.
Contrary to the Court of Appeals' ruling, there is nothing in the records
showing any strained relations between the parties to warrant the
award of separation pay. There is neither allegation nor proof that such
animosity existed between petitioner and respondent. In fact,
petitioner complied with the Labor Arbiter's reinstatement order.
7

Considering that (1) petitioner reinstated respondent in compliance
with the Labor Arbiter's decision, and (2) there is no ground,
particularly strained relations between the parties, to justify the grant
of separation pay, the Court of Appeals erred in ordering the payment
thereof, in lieu of reinstatement.
WHEREFORE, the Court DENIES the petition and REINSTATES the 5
December 2007 Decision of the Labor Arbiter.
EXOCET SECURITY AND ALLIED SERVICES CORPORATION AND/OR MA.
TERESA MARCELO, PETITIONER, VS. ARMANDO D. SERRANO,
RESPONDENT.
Facts:
Petitioner Exocet Security and Allied Services Corporation (Exocet) is
engaged in the provision of security personnel to its various clients or
principals. By virtue of its contract with JG Summit Holdings Inc. (JG
Summit), Exocet assigned respondent Armando D. Serrano (Serrano)
as “close-in”security personnel for one of JG Summit’s corporate
officers, Johnson Robert L. Go. After eight years, Serrano was re-
assigned as close-in security for Lance Gokongwei, and then to his wife,
Mary Joyce Gokongwei. As close-in security, records show that Serrano
was receiving a monthly salary of P11, 274. 30.
On August 15, 2006, Serrano was relieved by JG Summit from his
duties. For more than six months after he reported back to Exocet,
Serrano was without any reassignment. On March 15, 2007, Serrano
filed a complaint for illegal dismissal against Exocet with the NLRC.
For its defense, Exocet denied dismissing Serrano alleging that, after
August 15, 2006, Serrano no longer reported for duty assignment as
VIP security for JG Summit, and that on September 2006, he was
demanding for VIP Security detail to another client. However, since, at
that time, Exocet did not have clients in need of VIP security
assignment, Serrano was temporarily assigned to general security
service. Exocet maintained that it was Serrano who declined the
assignment on the ground that he is not used to being a regular
security guard. Serrano, Exocet added, even refused to report for
immediate duty, as he was not given a VIP security assignment.
Issue:
Whether or not Serrano was constructively dismissed.
The Court’s Ruling:
The petition has merit.
While there is no specific provision in the Labor Code which governs
the “floating status” or temporary “off-detail” of security guards
employed by private security agencies, this situation was considered
by this Court in several cases as a form of temporary retrenchment or
lay-off. The concept has been defined as that period of time when
security guards are in between assignments or when they are made to
wait after being relieved from a previous post until they are transferred
to a new one.
As the circumstance is generally outside the control of the security
agency or the employer, the Court has ruled that when a security guard
is placed on a “floating status,” he or she does not receive any salary
or financial benefit provided by law. Pido v. National Labor Relations
Commission explains why:
When a security guard is placed on a “floating status,” he does not
receive any salary or financial benefit provided by law. Due to the grim
economic consequences to the employee, the employer should bear
the burden of proving that there are no posts available to which the
employee temporarily out of work can be assigned.”
It must be emphasized, however, that although placing a security guard
on “floating status” or a temporary “off-detail” is considered a
8
temporary retrenchment measure, there is similarly no provision in the
Labor Code which treats of a temporary retrenchment or lay-off.
Neither is there any provision which provides for its requisites or its
duration. Nevertheless, since an employee cannot be laid-off
indefinitely, the Court has applied Article 292 (previously Article 286)
of the Labor Code by analogy to set the specific period of temporary
lay-off to a maximum of six (6) months. The said provision states:
ART. 292. When employment not deemed terminated. - The bona-fide
suspension of the operation of a business or undertaking for a period
not exceeding six (6) months, or the fulfillment by the employee of a
military or civic duty shall not terminate employment. In all such cases,
the employer shall reinstate the employee to his former position
without loss of seniority rights if he indicates his desire to resume his
work not later than one (1) month from the resumption of operations
of his employer or from his relief from the military or civic duty.
Thus, this Court has held, citing Sebuguero v. NLRC that the placement
of the employee on a floating status should not last for more than six
months. After six months, the employee should be recalled for work,
or for a new assignment; otherwise, he is deemed terminated.
If after the period of 6 months, the security agency/employer cannot
provide work or give assignment to the reserved security guard, the
latter can be dismissed from service and shall be entitled to separation
pay.
Security guards on reserved status who accept employment in other
security agencies or employers before the end of the above six-month
period may not be given separation pay.
In the controversy now before the Court, there is no question that the
security guard, Serrano, was placed on floating status after his relief
from his post as a VIP security by his security agency’s client. Yet, there
is no showing that his security agency, petitioner Exocet, acted in bad
faith when it placed Serrano on such floating status. What is more, the
present case is not a situation where Exocet did not recall Serrano to
work within the six-month period as required by law and
jurisprudence. Exocet did, in fact, make an offer to Serrano to go back
to work. It is just that the assignment—although it does not involve a
demotion in rank or diminution in salary, pay, benefits or privileges—
was not the security detail desired by Serrano.
Clearly, Serrano’s lack of assignment for more than six months cannot
be attributed to petitioner Exocet.
In fact, even during the meeting with the Labor Arbiter, Exocet offered
a position in the general security only to be rebuffed by Serrano. It was
as if Serrano obliged Exocet to look for a client in need of a VIP
security—the availability of which is obviously not within Exocet’s
control, and by nature, difficult to procure as these contracts depend
on the trust and confidence of the client or principal on the security
guard.
To repeat for emphasis, the security guard’s right to security of tenure
does not give him a vested right to the position as would deprive the
company of its prerogative to change the assignment of, or transfer the
security guard to, a station where his services would be most beneficial
to the client. Indeed, an employer has the right to transfer or assign its
employees from one office or area of operation to another, or 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.
Thus, it is manifestly unfair and unacceptable to immediately declare
the mere lapse of the six-month period of floating status as a case of
constructive dismissal, without looking into the peculiar circumstances
that resulted in the security guard’s failure to assume another post.
This is especially true in the present case where the security guard’s
own refusal to accept a non-VIP detail was the reason that he was not
9
given an assignment within the six-month period. The security agency, MARLO A. DEOFERIO, PETITIONER, VS. INTEL TECHNOLOGY
Exocet, should not then be held liable. PHILIPPINES, INC. AND/OR MIKE WENTLING, RESPONDENTS.

Indeed, from the facts presented, Serrano was guilty of willful DECISION
disobedience to a lawful order of his employer in connection with his BRION, J.:
work, which is a just cause for his termination under Art.288
We resolve the petition for review on certiorari[1] filed by petitioner
(previously Art. 282) of the Labor Code. Nonetheless, Exocet did not
Marlo A. Deoferio to challenge the February 24, 2012 decision[2]and
take Serrano’s willful disobedience against him. Hence, Exocet is
the August 2, 2012 resolution[3] of the Court of Appeals (CA) in CA-G.R.
considered to have waived its right to terminate Serrano on such
SP No. 115708.
ground.

Petitioner is hereby ORDERED to look for a security assignment for

The Factual Antecedents
respondent within a period of thirty (30) days from finality of
judgment. If one is available, petitioner is ordered to notify respondent
On February 1, 1996, respondent Intel Technology Philippines, Inc.
Armando D. Serrano to report to such available guard position within
(Intel) employed Deoferio as a product quality and reliability engineer
ten (10) days from notice. If respondent fails to report for work within
with a monthly salary of P9,000.00. In July 2001, Intel assigned him to
said time period, he shall be deemed to have abandoned his
the United States as a validation engineer for an agreed period of two
employment with petitioner. In such case, respondent Serrano is not
years and with a monthly salary of US$3,000.00. On January 27, 2002,
entitled to any back wages, separation pay, or similar benefits.
Deoferio was repatriated to the Philippines after being confined at
Providence St. Vincent Medical Center for major depression with
If no security assignment is available for respondent within a period of
psychosis.[4] In the Philippines, he worked as a product engineer with a
thirty (30) days from finality of judgment, petitioner Exocet should
monthly salary of P23,000.00.[5]
comply with the requirements of DOLE Department Order No. 14,
Series of 2001, in relation to Art. 289 of the Labor Code, and serve a
Deoferio underwent a series of medical and psychiatric treatment at
written notice on respondent Serrano and the DOLE one (1) month
Intel's expense after his confinement in the United States. In 2002, Dr.
before the intended date of termination; and pay Serrano separation
Elizabeth Rondain of Makati Medical Center diagnosed him to be
pay equivalent to half month pay for every year of his service.
suffering from mood disorder, major depression, and auditory
hallucination.[6] He was also referred to Dr. Norieta Balderrama, Intel's
SO ORDERED.
forensic psychologist, and to a certain Dr. Cynthia Leynes who both
confirmed his mental condition.[7] On August 8, 2005, Dr. Paul Lee, a
consultant psychiatrist of the Philippine General Hospital, concluded
that Deoferio was suffering from schizophrenia. After several
consultations, Dr. Lee issued a psychiatric report dated January 17,
[ G.R. No. 202996, June 18, 2014 ]
2006 concluding and stating that Deoferio's psychotic symptoms are
not curable within a period of six months and "will negatively affect his
10
work and social relation with his co-worker[s]."[8] Pursuant to these
findings, Intel issued Deoferio a notice of termination on March 10,
2006.[9]
Deoferio responded to his termination of employment by filing a
complaint for illegal dismissal with prayer for money claims against
respondents Intel and Mike Wentling (respondents). He denied that he
ever had mental illness and insisted that he satisfactorily performed his
duties as a product engineer. He argued that Intel violated his statutory
right to procedural due process when it summarily issued a notice of
termination. He further claimed that he was entitled to a salary
differential equivalent to the pre-terminated period of his assignment
in the United States minus the base pay that he had already received.
Deoferio also prayed for backwages, separation pay, moral and
exemplary damages, as well as attorney's fees.[10]
In defense, the respondents argued that Deoferio's dismissal was
based on Dr. Lee's certification that: (1) his schizophrenia was not
curable within a period of six months even with proper medical
treatment; and (2) his continued employment would be prejudicial to
his and to the other employees' health.[11] The respondents also
insisted that Deoferio's presence at Intel's premises would pose an
actual harm to his co-employees as shown by his previous acts. On May
8, 2003, Deoferio emailed an Intel employee with this message: "All
soul's day back to work Monday WW45.1." On January 18, 2005, he cut
the mouse cables, stepped on the keyboards, and disarranged the
desks of his co-employees.[12] The respondents also highlighted that
Deoferio incurred numerous absences from work due to his mental
condition, specifically, from January 31, 2002 until February 28,
2002,[13] from August 2002 until September 2002,[14] and from May
2003 until July 2003.[15] Deoferio also took an administrative leave with
pay from January 2005 until December 2005.[16]
The respondents further asserted that the twin-notice requirement in
dismissals does not apply to terminations under Article 284 of the
Labor Code.[17] They emphasized that the Labor Code's implementing
rules (IRR) only requires a competent public health authority's
certification to effectively terminate the services of an
employee.[18] They insisted that Deoferio's separation and retirement
payments for P247,517.35 were offset by his company car loan which
amounted to P448,132.43.[19] He was likewise not entitled to moral
and exemplary damages, as well as attorney's fees, because the
respondents faithfully relied on Dr. Lee's certification that he was not
fit to work as a product engineer.[20]
The Labor Arbitration Ruling
In a decision[21] dated March 6, 2008, the Labor Arbiter (LA) ruled that
Deoferio had been validly dismissed. The LA gave weight to Dr. Lee's
certification that Deoferio had been suffering from schizophrenia and
was not fit for employment. The evidence on record shows that
Deoferio's continued employment at Intel would pose a threat to the
health of his co-employees. The LA further held that the Labor Code
and its IRR do not require the employer to comply with the twin-notice
requirement in dismissals due to disease. The LA also found
unmeritorious Deoferio's money claims against Intel.[22]
On appeal by Deoferio, the National Labor Relations Commission
(NLRC) wholly affirmed the LA's ruling.[23] The NLRC also
denied[24] Deoferio's motion for reconsideration,[25] prompting him to
seek relief from the CA through a petition for certiorari under Rule 65
of the Rules of Court.
The CA's Ruling
On February 24, 2012, the CA affirmed the NLRC decision. It agreed
with the lower tribunals' findings that Deoferio was suffering from
schizophrenia and that his continued employment at Intel would be
11
prejudicial to his health and to those of his co-employees. It ruled that
the only procedural requirement under the IRR is the certification by a
competent public health authority on the non-curability of the disease
within a period of six months even with proper medical treatment. It
also concurred with the lower tribunals that Intel was justified in not
paying Deoferio separation pay as required by Article 284 of the Labor
Code because this obligation had already been offset by the matured
car loan that Deoferio owed Intel.[26]
Deoferio filed the present petition after the CA denied his motion for
reconsideration.[27]
The Petition
In the present petition before the Court, Deoferio argues that the
uniform finding that he was suffering from schizophrenia is belied by
his subsequent employment at Maxim Philippines Operating Corp. and
Philips Semiconductors Corp., which both offered him higher
compensations. He also asserts that the Labor Code does not exempt
the employer from complying with the twin-notice requirement in
terminations due to disease.[28]
The Respondents' Position
In their Comment,[29] the respondents posit that the petition raises
purely questions of fact which a petition for review on certioraridoes
not allow. They submit that Deoferio's arguments have been fully
passed upon and found unmeritorious by the lower tribunals and by
the CA. They additionally argue that Deoferio's subsequent
employment in other corporations is irrelevant in determining the
validity of his dismissal; the law merely requires the non-curability of
the disease within a period of six months even with proper medical
treatment.
The respondents also maintain that Deoferio's claim for salary
differential is already barred by prescription under Article 291 of the
Labor Code.[30] Even assuming that the claim for salary differential has
been timely filed, the respondents assert that the parties expressly
agreed in the International Assignment Relocation Agreement that
"the assignment length is only an estimate and not a guarantee of
employment for any particular length of time."[31] Moreover, his
assignment in the United States was merely temporary and did not
change his salary base, an amount which he already received.
The Issues
This case presents to us the following issues:
Whether Deoferio was suffering from schizophrenia and whether
(1) his continued employment was prejudicial to his health, as well as
to the health of his co-employees;
Whether the twin-notice requirement in dismissals applies to
(2)
terminations due to disease; and
As part of the second issue, the following issues are raised:
Whether Deoferio is entitled to nominal damages for violation
(a)
of his right to statutory procedural due process; and
Whether the respondents are solidarily liable to Deoferio for
(b)
nominal damages.
Whether Deoferio is entitled to salary differential, backwages,
(3) separation pay, moral and exemplary damages, as well as
attorney's fees.
12

The Court's Ruling
We find the petition partly meritorious.
Intel had an authorized cause to dismiss Deoferio from employment
Concomitant to the employer's right to freely select and engage an
employee is the employer's right to discharge the employee for just
and/or authorized causes. To validly effect terminations of
employment, the discharge must be for a valid cause in the manner
required by law. The purpose of these two-pronged qualifications is to
protect the working class from the employer's arbitrary and
unreasonable exercise of its right to dismiss. Thus, in termination
cases, the law places the burden of proof upon the employer to show
by substantial evidence that the termination was for a lawful cause and
in the manner required by law.
In concrete terms, these qualifications embody the due process
requirement in labor cases - substantive and procedural due process.
Substantive due process means that the termination must be based on
just and/or authorized causes of dismissal. On the other hand,
procedural due process requires the employer to effect the dismissal
in a manner specified in the Labor Code and its IRR.[32]
The present case involves termination due to disease an authorized
cause for dismissal under Article 284 of the Labor Code. As substantive
requirements, the Labor Code and its IRR[33] require the presence of
the following elements:
(1) An employer has been found to be suffering from any disease.
His continued employment is prohibited by law or prejudicial to his
(2)
health, as well as to the health of his co-employees.
A competent public health authority certifies that the disease is of
such nature or at such a stage that it cannot be cured within a
(3)
period of six months even with proper medical treatment.
With respect to the first and second elements, the Court liberally
construed the phrase "prejudicial to his health as well as to the health
of his co-employees" to mean "prejudicial to his health or to the health
of his co-employees." We did not limit the scope of this phrase to
contagious diseases for the reason that this phrase is preceded by the
phrase "any disease" under Article 284 of the Labor Code, to wit:
Art. 284. Disease as ground for termination. 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: Provided, That he is paid separation pay
equivalent to at least one (1) month salary or to one-half (1/2) month
salary for every year of service, whichever is greater, a fraction of at
least six (6) months being considered as one (1) whole year.
[underscores, italics and emphases ours]
Consistent with this construction, we applied this provision in resolving
illegal dismissal cases due to non-contagious diseases such as stroke,
heart attack, osteoarthritis, and eye cataract, among others. In Baby
Bus, Inc. v. Minister of Labor,[34] we upheld the labor arbitration's
finding that Jacinto Mangalino's continued employment after he
suffered several strokes would be prejudicial to his health. In Duterte
v. Kingswood Trading Co., Inc.,[35] we recognized the applicability of
Article 284 of the Labor Code to heart attacks. In that case, we held
that the employer-company's failure to present a certification from a
public health authority rendered Roque Duterte's termination due to a
heart attack illegal. We also applied this provision in Sy v. Court of
Appeals[36] to determine whether Jaime Sahot was illegally dismissed
due to various ailments such as presleyopia, hypertensive retinopathy,
osteoarthritis, and heart enlargement, among others. In Manly
13
Express, Inc. v. Payong, Jr.,[37] we ruled that the employer-company's
non-presentment of a certification from a public health authority with
respect to Romualdo Payong Jr.'s eye cataract was fatal to its defense.
The third element substantiates the contention that the employee has
indeed been suffering from a disease that: (1) is prejudicial to his health
as well as to the health of his co-employees; and (2) cannot be cured
within a period of six months even with proper medical treatment.
Without the medical certificate, there can be no authorized cause for
the employee's dismissal. The absence of this element thus renders the
dismissal void and illegal.
Simply stated, this requirement is not merely a procedural
requirement, but a substantive one. The certification from a
competent public health authority is precisely the substantial
evidence required by law to prove the existence of the disease itself,
its non-curability within a period of six months even with proper
medical treatment, and the prejudice that it would cause to the health
of the sick employee and to those of his co-employees.
In the current case, we agree with the CA that Dr. Lee's psychiatric
report substantially proves that Deoferio was suffering from
schizophrenia, that his disease was not curable within a period of six
months even with proper medical treatment, and that his continued
employment would be prejudicial to his mental health. This conclusion
is further substantiated by the unusual and bizarre acts that Deoferio
committed while at Intel's employ.
The twin-notice requirement applies to terminations under Article
284 of the Labor Code
The Labor Code and its IRR are silent on the procedural due
process required in terminations due to disease. Despite the seeming
gap in the law, Section 2, Rule 1, Book VI of the IRR expressly states
that the employee should be afforded procedural due process
in allcases of dismissals.[38]
In Sy v. Court of Appeals[39] and Manly Express, Inc. v. Payong,
Jr.,[40] promulgated in 2003 and 2005, respectively, the Court finally
pronounced the rule that the employer must furnish the employee two
written notices in terminations due to disease, namely: (1) the notice
to apprise the employee of the ground for which his dismissal is sought;
and (2) the notice informing the employee of his dismissal, to be issued
after the employee has been given reasonable opportunity to answer
and to be heard on his defense. These rulings reinforce the State policy
of protecting the workers from being terminated without cause and
without affording them the opportunity to explain their side of the
controversy.
From these perspectives, the CA erred in not finding that the NLRC
gravely abused its discretion when it ruled that the twin-notice
requirement does not apply to Article 284 of the Labor Code. This
conclusion is totally devoid of any legal basis; its ruling is wholly
unsupported by law and jurisprudence. In other words, the NLRC's
unprecedented, whimsical and arbitrary ruling, which the CA
erroneously affirmed, amounted to a jurisdictional error.
Deoferio is entitled to nominal damages for violation of his right to
statutory procedural due process
Intel's violation of Deoferio's right to statutory procedural due process
warrants the payment of indemnity in the form of nominal damages.
In Jaka Food Processing Corp. v. Pacot,[41] we distinguished between
terminations based on Article 282 of the Labor Code[42] and dismissals
under Article 283 of the Labor Code.[43] We then pegged the nominal
damages at P30,000.00 if the dismissal is based on a just cause but the
employer failed to comply with the twin-notice requirement. On the
other hand, we fixed the nominal damages at P50,000.00 if the
dismissal is due to an authorized cause under Article 283 of the Labor
Code but the employer failed to comply with the notice requirement.
14
The reason is that dismissals for just cause imply that the employee has
committed a violation against the employer, while terminations under
Article 283 of the Labor Code are initiated by the employer in the
exercise of his management prerogative.
With respect to Article 284 of the Labor Code, terminations due to
disease do not entail any wrongdoing on the part of the employee. It
also does not purely involve the employer's willful and voluntary
exercise of management prerogative a function associated with the
employer's inherent right to control and effectively manage its
enterprise.[44] Rather, terminations due to disease are occasioned by
matters generally beyond the worker and the employer's control.
In fixing the amount of nominal damages whose determination is
addressed to our sound discretion, the Court should take into account
several factors surrounding the case, such as: (1) the employer's
financial, medical, and/or moral assistance to the sick employee; (2)
the flexibility and leeway that the employer allowed the sick employee
in performing his duties while attending to his medical needs; (3) the
employer's grant of other termination benefits in favor of the
employee; and (4) whether there was a bona fide attempt on the part
of the employer to comply with the twin-notice requirement as
opposed to giving no notice at all.
We award Deoferio the sum of P30,000.00 as nominal damages for
violation of his statutory right to procedural due process. In so ruling,
we take into account Intel's faithful compliance with Article 284 of the
Labor Code and Section 8, Rule 1, Book 6 of the IRR. We also note that
Deoferio's separation pay equivalent to one-half month salary for
every year of service[45] was validly offset by his matured car loan.
Under Article 1278 of the Civil Code, in relation to Article 1706 of the
Civil Code[46] and Article 113(c) of the Labor Code,[47] compensation
shall take place when two persons are creditors and debtors of each
other in their own right. We likewise consider the fact that Intel
exhibited real concern to Deoferio when it financed his medical
expenses for more than four years. Furthermore, prior to his
termination, Intel liberally allowed Deoferio to take lengthy leave of
absences to allow him to attend to his medical needs.
Wentling is not personally liable for the satisfaction of nominal
damages in favor of Deoferio
Intel shall be solely liable to Deoferio for the satisfaction of nominal
damages. Wentling, as 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. There is also no ground for piercing the veil of corporate
fiction because Wentling acted in good faith and merely relied on Dr.
Lee's psychiatric report in carrying out the dismissal.[48]
Deoferio is not entitled to salary differential, backwages, separation
pay, moral and exemplary damages, as well as attorney's fees
Deoferio's claim for salary differential is already barred by prescription.
Under Article 291 of the Labor Code, all money claims arising from
employer-employee relations shall be filed within three years from the
time the cause of action accrued. In the current case, more than four
years have elapsed from the pre-termination of his assignment to the
United States until the filing of his complaint against the respondents.
We thus see no point in further discussing this matter. His claim for
backwages, separation pay, moral and exemplary damages, as well as
attorney's fees must also necessarily fail as a consequence of our
finding that his dismissal was for an authorized cause and that the
respondents acted in good faith when they terminated his services.
WHEREFORE, premises considered, we partially grant the petition; the
assailed February 24, 2012 decision and the August 2, 2012 resolution
of the Court of Appeals stand but respondent Intel Technology
Philippines, Inc. is ordered to pay petitioner Marlo A. Deoferio nominal
damages in the amount of P30,000.00. We totally deny the petition
15
with respect to respondent Mike Wentling.
SO ORDERED.
FUJI TELEVISION NETWORK vs. ESPIRITU
Facts:
Arlene S. Espiritu ("Arlene") was engaged by Fuji Television Network,
Inc. ("Fuji") as a news correspondent/producer[4] "tasked to report
Philippine news to Fuji through its Manila Bureau field office."[5]
Arlene's employment... contract initially provided for a term of one (1)
year but was successively renewed on a yearly basis with salary
adjustment upon every renewal.[6]
Arlene was diagnosed with lung cancer.[7] She informed Fuji about her
condition. In turn, the Chief of News Agency of Fuji, Yoshiki Aoki,
informed Arlene "that the company will have a problem renewing her
contract"[8] since it would be difficult for her to perform her job.[9]
She "insisted that she was still fit to work as certified by her attending
physician.
Arlene and Fuji signed a non-renewal contract... the day after Arlene
signed the non-renewal contract, she filed a complaint for illegal
dismissal
She alleged that she was forced to sign the... non-renewal contract
when Fuji came to know of her illness and that Fuji withheld her
salaries and other benefits
Labor Arbiter Corazon C. Borbolla dismissed Arlene's complaint... rlene
appealed before the National Labor Relations Commission.
the National Labor Relations Commission reversed the Labor Arbiter's
decision.[21] It held that Arlene was a regular employee with respect
to the activities... for which she was employed since she continuously
rendered services that were deemed necessary and desirable to Fuji's
business.
n the assailed decision, the Court of Appeals affirmed the National
Labor Relations Commission with the modification that Fuji
immediately reinstate Arlene to her position as News Producer without
loss of seniority rights,
Issues:
Whether the Court of Appeals correctly determined that no grave
abuse of discretion was committed by the National Labor Relations
Commission when it ruled that Arlene was a regular employee, not an
independent contractor, and that she was illegally dismissed; and
Whether the Court of Appeals properly modified the National Labor
Relations Commission's decision by awarding reinstatement, damages,
and attorney's fees
Ruling:
Whether the Court of Appeals correctly affirmed the National Labor
Relations Commission's finding that Arlene was a regular employee
Fuji alleges that Arlene was an independent contractor, citing Sonza v.
ABS-CBN and relying on the following facts: (1) she was hired because
of her skills; (2) her salary was US$1,900.00, which is higher than the
normal rate; (3) she had the power to bargain with her... employer; and
(4) her contract was for a fixed term.
Arlene argues that she was a regular employee because Fuji had
control and supervision over her work. The news events that she
covered were all based on the instructions of Fuji.[142] She maintains
that the successive renewal of her employment contracts for... four (4)
years indicates that her work was necessary and desirable.
On her illness, Arlene points out that it was not a ground for her
dismissal because her attending physician certified that she was fit to
work.[147]
Fuji's argument that Arlene was an independent contractor under a
fixed-term contract is contradictory. Employees under fixed-term
contracts cannot be independent contractors because in fixed-term
16
contracts, an employer-employee relationship exists. The test in this
kind of... contract is not the necessity and desirability of the
employee's activities, "but the day certain agreed upon by the parties
for the commencement and termination of the employment
relationship."[179] For regular employees, the necessity and
desirability of... their work in the usual course of the employer's
business are the determining fac... tors. On the other hand,
independent contractors do not have employer-employee
relationships with their principals.
Arlene was hired by Fuji as a news producer, but there was no showing
that she... was hired because of unique skills that would distinguish her
from ordinary employees. Neither was there any showing that she had
a celebrity status. Her monthly salary amounting to US$1,900.00
appears to be a substantial sum, especially if compared to her salary
when she was... still connected with GMA.[199] Indeed, wages may
indicate whether one is an independent contractor. Wages may also
indicate that an employee is able to bargain with the employer for
better pay. However, wages should not be the conclusive factor in...
determining whether one is an employee or an independent
contractor.
Fuji had the power to dismiss Arlene, as provided for in paragraph 5 of
her professional employment contract.[200] Her contract also
indicated that Fuji had control over her work because she was required
to work for eight (8) hours from Monday to Friday,... although on
flexible time.[201] Sonza was not required to work for eight (8) hours,
while Dumpit-Murillo had to be in ABC to do both on-air and off-air
tasks.
The expiration of Arlene's contract does not negate the finding of
illegal dismissal by Fuji. The manner by which Fuji informed Arlene that
her contract would no longer be renewed is tantamount to
constructive dismissal. To make matters worse, Arlene was asked to
sign a letter... of resignation prepared by Fuji.[235] The existence of a
fixed-term contract should not mean that there can be no illegal
dismissal. Due process must still be observed in the pre-termination of
fixed-term contracts of employment.
There is no evidence showing that Arlene was accorded due process.
After informing her employer of her lung cancer, she was not given the
chance to present medical certificates. Fuji immediately concluded
that Arlene could no longer perform her duties because of
chemotherapy. It... did not ask her how her condition would affect her
work. Neither did it suggest for her to take a leave, even though she
was entitled to sick leaves. Worse, it did not present any certificate
from a competent public health authority. What Fuji did was to inform
her that her... contract would no longer be renewed, and when she did
not agree, her salary was withheld.
ell-entrenched is the rule that an illegally dismissed employee is
entitled to reinstatement as a matter of right. . . .
To protect labor's security of tenure, we emphasize that the doctrine
of "strained relations" should be strictly applied so as not to deprive an
illegally dismissed employee of his right to reinstatement. Every labor
dispute almost always results in "strained relations" and the... phrase
cannot be given an overarching interpretation, otherwise, an unjustly
dismissed employee can never be reinstated.[245] (Citations omitted)
The Court of Appeals reasoned that strained relations are a question
of fact that must be supported by evidence.[246] No evidence was
presented by Fuji to prove that reinstatement was no longer feasible.
Fuji did not allege that it ceased operations or that
Arlene's position was no longer available. Nothing in the records shows
that Arlene's reinstatement would cause an atmosphere of antagonism
in the workplace. Arlene filed her complaint in 2009. Five (5) years are
not yet a substantial period[247] to bar... reinstatement.
Principles:
It is the burden of the employer to prove that a person whose services
it pays for is an independent contractor rather than a regular employee
with or without a fixed term. That a person has a disease does not per
17
se entitle the employer to terminate his or... her services. Termination
is the last resort. At the very least, a competent public health authority
must certify that the disease cannot be cured within six (6) months,
even with appropriate treatment.
A petition for certiorari under Rule 65 is an original action where the
issue is limited to grave abuse of discretion. As an original action, it
cannot be considered as a continuation of the proceedings of the labor
tribunals.
On the other hand, a petition for review on certiorari under Rule 45 is
a mode of appeal where the issue is limited to questions of law. In labor
cases, a Rule 45 petition is limited to reviewing whether the Court of
Appeals correctly determined the presence or absence of grave...
abuse of discretion and deciding other jurisdictional errors of the
National Labor Relations Commission.
Another classification of employees, i.e., employees with fixed-term
contracts, was recognized in Brent School, Inc. v. Zamora[150] where
this court discussed that:
Logically, the decisive determinant in the term employment should not
be the activities that the employee is called upon to perform, but the
day certain agreed upon by the parties for the commencement and
termination of their employment relationship, a day... certain being
understood to be "that which must necessarily come, although it may
not be known when."[151] (Emphasis in the original)
GMA Network, Inc. v. Pabriga[154] expounded the doctrine on fixed-
term contracts laid down in Brent in the following manner:
Cognizant of the possibility of abuse in the utilization of fixed-term
employment contracts, we emphasized in Brent that where from the
circumstances it is apparent that the periods have been imposed to
preclude acquisition of tenurial security by the employee, they...
should be struck down as contrary to public policy or morals. We thus
laid down indications or criteria under which "term employment"
cannot be said to be in circumvention of the law on security of tenure,
namely:
1. The fixed period of employment was knowingly and voluntarily
agreed upon by the parties without any force, duress, or
improper pressure being brought to bear upon the employee
and absent any other circumstances vitiating his consent; or
2. It satisfactorily appears that the employer and the employee
dealt with each other on more or less equal terms with no
moral dominance exercised by the former or the latter.
On the other hand, an independent contractor is defined as:
. . . one who carries on a distinct and independent business and
undertakes to perform the job, work, or service on its own account and
under one's own responsibility according to one's own manner and
method, 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.[
Orozco v. Court of Appeals,[163] Wilhelmina Orozco was a columnist
for the Philippine Daily Inquirer. This court ruled that she was an
independent contractor because of her "talent, skill, experience, and
her unique viewpoint as a feminist... advocate."[164] In addition, the
Philippine Daily Inquirer did not have the power of control over Orozco,
and she worked at her own pleasure.[165]
Semblante v. Court of Appeals[166] involved a masiador[167] and a
sentenciador.[168] This court ruled that "petitioners performed their
functions as masiador and sentenciador... free from the direction and
control of respondents"[169] and that the masiador and sentenciador
"relied mainly on their 'expertise that is characteristic of the cockfight
gambling.'"[170] Hence, no employer-employee... relationship existed.
Bernarte v. Philippine Basketball Association[171] involved a basketball
referee. This court ruled that "a referee is an independent contractor,
whose special skills and independent judgment are required
18
specifically for such position and cannot... possibly be controlled by the
hiring party."[172]
In these cases, the workers were found to be independent contractors
because of their unique skills and talents and the lack of control over
the means and methods in the performance of their work.
Since no employer-employee relationship exists between independent
contractors and their principals, their contracts are governed by the
Civil Code provisions on contracts and other applicable laws.
However, there may be a situation where an employee's work is
necessary but is not always desirable in the usual course of business of
the employer. In this situation, there is no regular employment.
San Miguel Corporation v. National Labor Relations Commission,[206]
Francisco de Guzman was hired to repair furnaces at San Miguel
Corporation's Manila glass plant. He had a separate contract for every
furnace that he repaired. He filed a... complaint for illegal dismissal
three (3) years after the end of his last contract.[207] In ruling that de
Guzman did not attain the status of a regular employee, this court
explained:
The process of manufacturing glass requires a furnace, which has a...
limited operating life. Petitioner resorted to hiring project or fixed term
employees in having said furnaces repaired since said activity is not
regularly performed. Said furnaces are to be repaired or overhauled
only in case of need and after being used continuously for a... varying
period of five (5) to ten (10) years.
s stated in Price, et al. v. Innodata Corp., et al.:[228]
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.
Thus, 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.[
INDOPHIL TEXTILE vs. ADVIENTO
INDOPHIL TEXTILE MILLS, INC.,v. ENGR. SALVADOR ADVIENTO. G.R. No.
171212, 20 August 2014, THIRD DIVISION, (Peralta, J.)
Regular courts have jurisdiction over the negligent act of an
employerwho failed to provide a safe and healthy working
environment. The Court formulated the “reasonable causal connection
rule,” wherein if there is a reasonable causal connection between the
claim asserted and the employer-employee relations, then the case is
within the jurisdiction of the labor courts; and in the absence thereof,
it is the regular courts that have jurisdiction.
Engr. Salvador Adviento was hired by Indophil Textile Mills, Inc.
(Indophil) to maintain its thread manufacturing business in Bulacan.
Adviento alleged that there were no adequate safety measures
introduced by Indophil when he conducted a maintenance check on
the dye house area.The workplace is very hot and emits foul chemical
odor. According to Adviento, the air washer dampers and all roof
exhaust vests are blown into open air, carrying dust thereto. He
recommended to management to place roof insulation but such was
turned down by management due to high cost. Twelve years later,
Adviento experienced weakness and dizziness, and was thereafter
diagnosed with Chronic Poly Sinusitis and Allergic Rhinitis.
Adviento filed a complaint with the Regional Trial Court, alleging that
he contracted such occupational disease by reason of the gross
negligence of petitioner to provide him with a safe, healthy and
workable environment. Indophil argued that the RTC has no
jurisdiction over the subject matter of the complaint because the same
falls under the original and exclusive jurisdiction of the Labor
19
Arbiter.RTC sustained its jurisdiction on the ground that the case is a
quasi-delict, that Indophil's failure to provide its employees with a safe,
healthy and workable environment is an act of negligence.
ISSUE:
Does RTC have jurisdiction over a negligent employerwhofailed to
provide a safe and healthy working environment?
RULING:
Yes, the jurisdiction rests on the regular courts.According to the Court,
not all claims involving employees can be resolved solely by labor
courts, specifically when the law provides otherwise.
The Court formulated the “reasonable causal connection rule,”
wherein if there is a reasonable causal connection between the claim
asserted and the employer-employee relations, then the case is within
the jurisdiction of the labor courts; and in the absence thereof, it is the
regular courts that have jurisdiction.
UST Law Review, Vol. LIX, No. 1, May 2015
In the case at bar, Adviento's claim for damages is specifically grounded
on Indophil's gross negligence to provide a safe, healthy and workable
environment for its employees –a case of quasi-delict. The Court
ascertained this from reading the complaint, which enumerated the
acts and/or omissions of Indophil relative to the conditions in the
workplace.
It is a basic tenet that jurisdiction over the subject matter is determined
upon the allegations made in the complaint, irrespective of whether or
not the plaintiff is entitled to recover upon the claim asserted therein,
which is a matter resolved only after and as a result of a trial.Neither
can jurisdiction of a court be made to depend upon the defenses made
by a defendant in his answer or motion to dismiss. In this case, a
perusal of the complaint would reveal that the subject matter is one of
claim for damages arising from quasi-delict, which is within the ambit
of the regular court's jurisdiction.
Adviento alleges that due to the continued and prolonged exposure to
textile dust seriously inimical to his health, he suffered work-
contracted disease which is now irreversible and incurable, and
deprived him of job opportunities.Clearly, injury and damages were
allegedly suffered by respondent, an element of quasi-delict.
It also bears stressing that respondent is not praying for any relief
under the Labor Code of the Philippines. He neither claims for
reinstatement nor backwages or separation pay resulting from an
illegal termination. The cause of action herein pertains to the
consequence of petitioner’s omission which led to a work-related
disease suffered by respondent, causing harm or damage to his person.
Such cause of action is within the realm of Civil Law, and jurisdiction
over the controversy belongs to the regular courts.
Where the resolution of the dispute requires expertise, not in labor
management relations nor in wage structures and other terms and
conditions of employment, but rather in the application of the general
civil law, such claim falls outside the area of competence of expertise
ordinarily ascribed to the LA and the NLRC.The RTC has jurisdiction
over the subject matter of respondent’s complaint praying for moral
damages, exemplary damages, compensatory damages, anchored on
petitioner’s alleged gross negligence in failing to provide a safe and
healthy working environment for respondent.
MANILA PAVILLION HOTEL, etc. vs. HENRY DELADA
Facts:
Delada was the Union President of the Manila Pavilion Supervisors
Association at MPH originally assigned as Head Waiter of Rotisserie
then reassigned him as Head Waiter of Seasons Coffee Shop but
respondent declined the inter-outlet transfer and instead asked for a
20
grievance meeting on the matter, pursuant to their Collective
Bargaining Agreement (CBA). He also requested his retention as Head
Waiter of Rotisserie while the grievance procedure was ongoing. The
Mgt. denied the request and he kept on reporting to Rotisserie.
MPH sent him several memoranda requiring him to explain in writing
why he should not be penalized for the following offenses gross
insubordination etc. Delada persistently rebuffed orders for him to
report to his new assignment.
While respondent’s Complaint is pending MPH citing security and
safety reasons, placed respondent on a 30-day preventive suspension.
Thereafter found Delada guilty imposing the penalty of 90-day
suspension.
Issue:
W/N MP retained the authority to continue with the administrative
case against Delada for insubordination and willful disobedience of the
transfer order.
Held:
We rule that petitioner Manila Pavilion Hotel 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. Consequently, petitioner is not liable to pay back wages
and other benefits for the period corresponding to the penalty of 90-
day suspension.
First, it must be pointed out that the basis of the 30-day preventive
suspension imposed on Delada was different from that of the 90-day
penalty of suspension. The 30-day preventive suspension was imposed
by MPH on the assertion that Delada might sabotage hotel operations
if preventive suspension would not be imposed on him. On the other
hand,
the penalty of 90-day suspension was imposed on respondent as a
form of disciplinary action. It was the outcome of the administrative
proceedings conducted against him.
Preventive suspension is a disciplinary measure resorted to by the
employer pending investigation of an alleged malfeasance or
misfeasance committed by an employee.[7] 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.
the penalty of suspension refers to the disciplinary action imposed on
the employee after an official investigation or administrative hearing is
conducted.[9] The employer exercises its right to discipline erring
employees pursuant to company rules and regulations.[10] Thus, a
finding of validity of the penalty of 90-day suspension will not embrace
the issue of the validity of the 30-day preventive suspension. In any
event, petitioner no longer assails the ruling of the CA on the illegality
of the 30-day preventive suspension.
WUERTH PHILS. INC. vs. RODANTE YUSON
G.R. No. 175932; February 15, 2012
FACTS:
Petitioner Wuerth Philippines, Inc., a subsidiary of Wuerth Germany,
hired respondent Rodante Ynson, as its National Sales Manager (NSM)
for Automotive. As NSM, respondent was required to travel to
different parts of the country so as to supervise the sales activities of
the company’s sales managers, make a schedule of activities geared
towards increasing the sales of petitioner’s products, and submit said
schedule to Marlon Ricanor, Chief Executive Officer of petitioner
company.
Respondent was not able to follow his sales target coverage plan
starting January 26, 2003, as he failed to report to work since then. It
turned out that he suffered a stroke, and on the succeeding days, he
was confined at the Davao Doctor’s Hospital. He immediately
informed petitioner about his ailment.
Dr. Daniel de la Paz, a Neurologist-Electroencephalographer in Davao
City, issued a Certification stating that respondent has been under his
21
care since January 24, 2003 and was confined in the hospital from
January 24 to February 3, 2003 due to sudden weakness on the left side
of his body. Dr. De la Paz also certified that respondent may return to
work, but advised him to continue with his rehabilitation regimen for
another month and a half. Dr. Bernard S. Chiew, a specialist on Adult
Cardiology, also issued Medical Certificate stating that he examined
respondent who was diagnosed with primary hypertension, diabetes
mellitus II, S/P stroke and recommended that the latter should
continue with his physical rehabilitation until July 2003.
Ricanor sent a letter to respondent, directing him to appear before the
former’s office in Manila for an investigation, relative to the following
violations which carry the penalty of suspension and/or dismissal: (1)
absences without leave; (2) abandonment of work, (3) gross
inefficiency. Respondent replied that his attending physician advised
him to refrain from traveling, in order not to disrupt his daily schedule
for therapy and medication.
In a letter, Ricanor informed respondent of the decision of petitioner’s
management to terminate his employment, effective upon date of
receipt, on the ground of continued absences without filing a leave of
absence.
Respondent filed a Complaint against petitioner and Ricanor for illegal
dismissal and non-payment of allowances, with claim for moral and
exemplary damages and attorney’s fees, in the NLRC, Regional
Arbitration Branch- Davao. LA favored respondent. Petitioner and
Ricanor appealed to the NLRC which affirmed with modification the
Decision of the LA. Petitioner and Ricanor filed their MR. NLRC
modified its Decision. Petitioner and Ricanor filed before the CA a
Petition for Certiorari with Application for the Issuance of a TROrder
and Preliminary Injunction. CA found the petition partly meritorious.
Petitioner filed MR, it was denied. Thus, petitioner filed this present
Petition for Review on Certiorari.
ISSUE:
Whether the termination on the ground of disease of respondent was
valid.
RULING:
In order to validly terminate employment on the ground that employee
is suffering from any disease, Section 8, Rule I, Book VI of the Omnibus
Rules Implementing the Labor Code requires that:
Section 8. Disease as a ground for dismissal. — Where the employee
suffers from a disease and his continued employment is prohibited by
law or prejudicial to his health or to the health of his co-employees, the
employer shall not terminate his employment 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. 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.
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 employee’s illness and, thus, defeat the public policy
on the protection of labor. In the present case, there was no showing
that prior to terminating respondent’s employment, petitioner
secured the required certification from a competent public health
authority that the disease he suffered was of such nature or at such a
stage that it cannot be cured within six months despite proper medical
treatment.
The medical certificate issued by the attending physician of respondent
showed that he would have been capable of returning to
work. However, despite notices sent by the petitioner requiring
respondent to attend an investigation and hearing respondent refused
to report to his office, either to resume work or attend the
investigations set by the petitioner. Even considering the directive of
respondent’s doctor to continue with his present regimen for at least
another month and a half, it could be safely deduced that, counted
from June 4, 2003, respondent’s rehabilitation regimen ended on July
22
19, 2003. Despite the completion of his treatment, respondent failed
to attend the investigations set on July 25, 2003 and August 18,
2003. Thus, his unexplained absence in the proceedings should be
construed as waiver of his right to be present therein in order to
adduce evidence that would have justified his continued absence from
work.
Respondent failed to provide competent proof that he was actually
undergoing therapy and medications (eg official receipts showing the
medical expenses incurred and physician’s professional fees paid by
reason of such treatment). This casts serious doubt on the true
condition of the respondent during the prolonged period he was
absent from work and investigations. Since there is no more hindrance
for him to return to work and attend the investigations set by
petitioner, respondent’s failure to do so was without any valid or
justifiable reason. Respondent’s conduct shows his indifference and
utter disregard of his work and his employer’s interest, and displays his
clear, deliberate, and gross dereliction of duties.
As a managerial employee, respondent was tasked to perform
important and crucial functions and, thus, bound by more exacting
work ethic. He should have realized that such sensitive position
required the full trust and confidence of his employer in every exercise
of managerial discretion insofar as the conduct of the latter’s business
is concerned. The power to dismiss an employee is a recognized
prerogative inherent in the employer’s 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 worker’s 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. An
irresponsible employee like respondent does not deserve a place in the
workplace, and it is petitioner’s management prerogative to terminate
his employment.
To condone such conduct will certainly erode the discipline that an
employer should uniformly apply so that it can expect compliance with
the same rules and regulations by its other employees. Otherwise, the
rules necessary and proper for the operation of its business would be
gradually rendered ineffectual, ignored, and eventually become
meaningless. As applied to the present case, it would be the height of
unfairness and injustice if the employer would be left hanging in the
dark as to when respondent could report to work or be available for
the scheduled hearings, which becomes detrimental to the orderly
daily operations of petitioner’s business.
Petition is PARTLY GRANTED.
GENUINO vs. NLRC
Facts:
Genuino was employed by Citibank sometime in January 1992 as
Treasury Sales Division Head with the rank of Assistant Vice-President.
She received a monthly compensation of PhP 60,487.96, exclusive of
benefits and privileges. On August 23, 1993, Citibank sent Genuino a
letter charging her with “knowledge and/or involvement” in
transactions “which were irregular or even fraudulent.” In the same
letter, Genuino was informed she was under preventive suspension.
Genuino’s counsel replied through a letter dated September 17, 1993,
demanding for a bill of particulars regarding the charges against
Genuino.
On September 27, 1993, Citibank informed Genuino of the result of
their investigation. It found that Genuino with Santos used “facilities of
Genuino’s family corporation, namely, Global Pacific, personally and
actively participated in the diversion of bank clients’ funds to products
of other companies that yielded interests higher than what Citibank
products offered, and that Genuino and Santos realized substantial
financial gains, all in violation of existing company policy and the
Corporation Code, which for your information, carries a penal
sanction.”
23
Genuino’s employment was terminated by Citibank on grounds of (1)
serious misconduct, (2) willful breach of the trust reposed upon her by
the bank, and (3) commission of a crime against the bank
Labor Arbiter - the dismissal of the complainant Marilou S. Genuino to
be without just cause and in violation of her right to due process,
NLRC- reversed the Labor Arbiter’s decision CA- with just cause but w/o
due process P5,000.00 nominal charges
Issue:
Whether the dismissal is for a just cause and with the observance of
due process.
Held:
Genuino was dismissed for just cause but without the observance of
due process. he Labor Arbiter found that Citibank failed to adequately
notify Genuino of the charges against her. On the contrary, the NLRC
held that “the function of a ‘notice to explain’ is only to state the basic
facts of the employer’s charges
In Agabon, we explained:
The violation of the petitioners’ right to statutory due process by the
private respondent warrants the payment of indemnity in the form of
nominal damages. The amount of such damages is addressed to the
sound discretion of the court, taking into account the relevant
circumstances. Considering the prevailing circumstances in the case at
bar, we deem it proper to fix it at P30,000.00. We believe this form of
damages would serve to deter employers from future violations of the
statutory due process rights of employees. At the very least, it provides
a vindication or recognition of this fundamental right granted to the
latter under the Labor Code and its Implementing Rules. Thus, the
award of PhP 5,000 to Genuino as indemnity for non-observance of
due process under the CA’s March 31, 2000Resolution in CA-G.R. SP
No. 51532 is increased to PhP 30,000.
GARCIA, et. Al. vs. PAL
Facts:
Petitioners Alberto J. Dumago and Juanito A. Garcia were employed by
respondent Philippine Airlines, Inc. (PAL) as Aircraft Furnishers Master
"C" and Aircraft Inspector, respectively.
On July 24, 1995, a combined team of the PAL Security and National
Bureau of Investigation (NBI) Narcotics Operatives raided the
Toolroom Section - Plant Equipment Maintenance Division (PEMD) of
the PAL Technical Center. They found petitioners, with four others,
near the said... section at that time. When the PAL Security searched
the section, they found shabu paraphernalia inside the company-
issued locker of Ronaldo Broas who was also within the vicinity. The six
employees were later brought to the NBI for booking and proper
investigation.
On July 26, 1995, a Notice of Administrative Charge[4] was served on
petitioners. They were allegedly "caught in the act of sniffing shabu
inside the Toolroom Section," then placed under preventive
suspension
Petitioners vehemently denied the allegations and challenged PAL to
show proof that they were indeed "caught in the act of sniffing shabu."
Dumago claimed that he was in the Toolroom Section to request for an
allen wrench to fix the needles of the sewing and zigzagger machines.
Garcia averred he was in the Toolroom Section to inquire where he
could take the Trackster's tire for vulcanizing.
On October 9, 1995, petitioners were dismissed
Both simultaneously filed... a case for illegal dismissal and damages.
In the meantime, the Securities and Exchange Commission (SEC) placed
PAL under an Interim Rehabilitation Receiver due to severe financial
losses.
24
On January 11, 1999, the Labor Arbiter rendered a decision[6] in
petitioners' favor
Meanwhile, the SEC replaced the Interim Rehabilitation Receiver with
a Permanent Rehabilitation Receiver.
On appeal, the NLRC reversed the Labor Arbiter's decision and
dismissed the case for lack of merit.
On October 5, 2000, the Labor Arbiter issued a Writ of Execution[10]
commanding the sheriff to proceed:
To the Office of respondent... and cause reinstatement of
complainants to their former position and to cause the collection of
the amount of [P]549,309.60 from respondent PAL... representing the
backwages of said complainants on the reinstatement aspect;
In case you cannot collect from respondent PAL for any reason, you
shall levy on the office equipment and other movables and garnish its
deposits with any bank in the Philippines
Although PAL filed an Urgent Motion to Quash Writ of Execution, the
Labor Arbiter issued a Notice of Garnishment[12] addressed to the
President/Manager of the Allied Bank Head Office in Makati City for
the amount of P549,309.60.
PAL moved to lift the Notice of Garnishment while petitioners moved
for the release of the garnished amount.
the NLRC resolved as follows:
WHEREFORE, premises considered, the Petition is partially GRANTED.
Accordingly, the Writ of Execution dated October 5, 2000 and related
[N]otice of Garnishment [dated October 25, 2000] are DECLARED valid.
However, the instant action is SUSPENDED and REFERRED to the
Receiver of Petitioner PAL for appropriate action.
PAL appealed to the Court of Appeals
The appellate court ruled that the Labor Arbiter issued the writ of
execution and the notice of garnishment without jurisdiction. Hence,
the NLRC erred in upholding its validity. Since PAL was under
receivership, it could not have possibly reinstated petitioners due to...
retrenchment and cash-flow constraints. The appellate court declared
that a stay of execution may be warranted by the fact that PAL was
under rehabilitation receivership.
Issues:
(1) Are petitioners entitled to their wages during the pendency of PAL's
appeal to the NLRC? and (2) In the light of new developments
concerning PAL's rehabilitation, are petitioners entitled to execution
of... the Labor Arbiter's order of reinstatement even if PAL is under
receivership?
Ruling:
We note that during the pendency of this case, PAL was placed by the
SEC first, under an Interim Rehabilitation Receiver and finally, under a
Permanent Rehabilitation Receiver.
Worth stressing, upon appointment by the SEC of a rehabilitation
receiver, all actions for claims against the corporation pending before
any court, tribunal or board shall ipso jure be suspended.
More importantly, the suspension of all actions for claims against the
corporation embraces all phases of the suit, be it before the trial court
or any tribunal or before this Court.
Furthermore, the actions that are suspended cover all claims against
the corporation whether for damages founded on a breach of contract
of carriage, labor cases, collection suits or any other claims of a
pecuniary nature.
Since petitioners' claim against PAL is a money claim for their wages
during the pendency of PAL's appeal to the NLRC, the same should have
been suspended pending the rehabilitation proceedings. The Labor
Arbiter, the NLRC, as well as the Court of Appeals should have
25
abstained... from resolving petitioners' case for illegal dismissal and
should instead have directed them to lodge their claim before PAL's
receiver.
AGABON vs. NLRC
GR 158693
Facts:
Private respondent Riviera Home Improvements, Inc. is engaged in the
business of selling and installing ornamental and construction
materials. It employed petitioners Virgilio Agabon and Jenny Agabon
as gypsum board and cornice installers on January 2, 1992 until
February 23, 1999 when they were dismissed for abandonment of
work. Thus, Petitioners then filed a complaint for illegal dismissal and
payment of money claims
Petitioners also claim that private respondent did not comply with the
twin requirements of notice and hearing. Private respondent, on the
other hand, maintained that petitioners were not dismissed but had
abandoned their work.
Issue: WON petitioners were illegally dismissed.
Held:
Accordingly, petitioners’ dismissal was for a just cause. They had
abandoned their employment and were already working for another
employer.
To dismiss an employee, the law requires not only the existence of a
just and valid cause but also enjoins the employer to give the employee
the opportunity to be heard and to defend himself.
Abandonment is the deliberate and unjustified refusal of an employee
to resume his employment. It is a form of neglect of duty, hence, a just
cause for termination of employment by the employer.
After establishing that the terminations were for a just and valid cause,
we now determine if the procedures for dismissal were observed.
The procedure for terminating an employee is found in Book VI, Rule I,
Section 2(d) of the Omnibus Rules Implementing the Labor Code:
Standards of due process: requirements of notice. – In all cases of
termination of employment, 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 Code:
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;
1. A hearing or conference during which the employee concerned,
with the assistance of counsel if the employee so desires, is given
opportunity to respond to the charge, present his evidence or
rebut the evidence presented against him; and
(c) A written notice of termination served on the employee indicating
that upon due consideration of all the circumstances, grounds have
been established to justify his termination.
In case of termination, the foregoing notices shall be served on the
employee’s last known address.
Procedurally, (1) if the dismissal is based on a just cause under Article
282, the employer must give the employee two written notices and a
hearing or opportunity to be heard if requested by the employee
before terminating the employment: a notice specifying the grounds
for which dismissal is sought a hearing or an opportunity to be heard
and after hearing or opportunity to be heard, a notice of the decision
to dismiss; and (2) if the dismissal is based on authorized causes under
Articles 283 and 284, the employer must give the employee and the
Department of Labor and Employment written notices 30 days prior to
the effectivity of his separation.
From the foregoing rules four possible situations may be derived: (1)
the dismissal is for a just cause under Article 282 of the Labor Code, for
an authorized cause under Article 283, or for health reasons under
Article 284, and due process was observed; (2) the dismissal is without
just or authorized cause but due process was observed; (3) the
dismissal is without just or authorized cause and there was no due
26
process; and (4) the dismissal is for just or authorized cause but due
process was not observed.
The present case squarely falls under the fourth situation. The
dismissal should be upheld because it was established that the
petitioners abandoned their jobs to work for another company. Private
respondent, however, did not follow the notice requirements and
instead argued that sending notices to the last known addresses would
have been useless because they did not reside there anymore.
Unfortunately for the private respondent, this is not a valid excuse
because the law mandates the twin notice requirements to the
employee’s last known address. Thus, it should be held liable for non-
compliance with the procedural requirements of due process.
Petition denied. CA affirmed with modifications.
SUPERSONIC SERVICES, INC. vs. MARIA LOURDES C. DE JESUS
G.R. No. 164662 February 18, 2013
Facts: On February 20, 2002, petitioner Ma. Lourdes De Jesus (De Jesus
for brevity) filed with the Labor Arbiter a complaint for illegal dismissal
against private respondents Supersonic Services Inc., (Supersonic for
brevity), Pakistan Airlines, Gil Puyat, Jr. and Divina Abad Santos praying
for the payment of separation pay, full backwages, moral and
exemplary damages, etc. As Sales Promotion Officer, De Jesus was fully
authorized to solicit clients and receive payments for and in its behalf,
and as such, she occupied a highly confidential and financially sensitive
position in the company; De Jesus was able to solicit several ticket
purchases for Pakistan International Airlines (PIA) routed from Manila
to various destinations abroad and received all payments for the PIA
tickets in its behalf. Two memorandum were issued to De Jesus
reminding her of her collectibles and her obligation to remit it to
Supersonic. Despite the demands, De Jesus still failed to comply
causing Supersonic to file a criminal case for Estafa which was
countered by the petitioner by filing an illegal dismissal case.
Issues: Whether or not the dismissal of De Jesus is valid.
Whether or not Supersonic complied with the two notice rule required
by law.
Held: Yes. Article 282 of the Labor Code enumerates the causes by
which the employer may validly terminate the employment of the
employee, viz:
Article 282.Termination by employer. – An employer may terminate an
employment for any of the following causes:
1. Serious misconduct or willful disobedience by the employee of
the lawful orders of his employer or representative in
connection with his work;
2. Gross and habitual neglect by the employee of his duties;
3. Fraud or willful breach by the employee of the trust reposed in
him by his employer or duly authorized representative;
4. 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 representatives; and
5. Other causes analogous to the foregoing.
The CA observed that De Jesus had not disputed her failure to remit
and account for some of her collections, for, in fact, she herself had
expressly admitted her failure to do so through her letters dated April
5, 2001 and May 15, 2001 sent to Supersonic’s general manager.
Thereby, the CA concluded, she defrauded her employer or willfully
violated the trust reposed in her by Supersonic. In that regard, the CA
rightly observed that proof beyond reasonable doubt of her violation
of the trust was not required, for it was sufficient that the employer
had “reasonable grounds to believe that the employee concerned is
responsible for the misconduct as to be unworthy of the trust and
confidence demanded by [her] position.”
27
No. A careful consideration of the records persuades us to affirm the
decision of the CA holding that Supersonic had not complied with the
two-written notice rule.
It ought to be without dispute that the betrayal of the trust the
employer reposed in De Jesus was the essence of the offense for which
she was to be validly penalized with the supreme penalty of dismissal.
Nevertheless, she was still entitled to due process in order to
effectively safeguard her security of tenure. The law affording to her
due process as an employee imposed on Supersonic as the employer
the obligation to send to her two written notices before finally
dismissing her. This requirement of two written notices is enunciated
in Article 277of the Labor Code, as amended, which relevantly states:
Article 277. Miscellaneous provisions.–xxx x x x x
(b) Subject to the constitutional right of workers to security of tenure
and their right to be protected against dismissal except for a just and
authorized cause and without prejudice to the requirement of notice
under Article 283 of this Code, the employer shall furnish the worker
whose employment is sought to be terminated a written notice
containing a statement of the causes for termination and shall afford
the latter ample opportunity to be heard and to defend himself with the
assistance of his representative if he so desires in accordance with
company rules and regulations promulgated pursuant to guidelines set
by the Department of Labor and Employment. Any decision taken by
the employer shall be without prejudice to the right of the worker to
contest the validity or legality of his dismissal by filing a complaint with
the regional branch of the National Labor Relations Commission. The
burden of proving that the termination was for a valid or authorized
cause shall rest on the employer. The Secretary of the Department of
Labor and Employment may suspend the effects of the termination
pending resolution of the dispute in the event of a prima facie finding
by the appropriate official of the Department of Labor and Employment
before whom such dispute is pending that the termination may cause a
serious labor dispute or is in implementation of a mass lay-off.
xxxx
and in Section 2 and Section 7, Rule I, Book VI of the Implementing
Rules of the Labor Code. The first written notice would inform her of
the particular acts or omissions for which her dismissal was being
sought. The second written notice would notify her of the employer’s
decision to dismiss her. But the second written notice must not be
made until after she was given a reasonable period after receiving the
first written notice within which to answer the charge, and after she
was given the ample opportunity to be heard and to defend herself
with the assistance of her representative, if she so desired. The
requirement was mandatory.
PHILIPPINE TRANSMARINE CARRIERS, INC. vs. LEANDRO LEGASPI
G.R. No. 202791 June 10, 2013
FACTS:
Respondent Leandro Legaspi was employed as Utility Pastry on board
the vessel "Azamara Journey" under the employment of petitioner
Philippine Transmarine Carriers, Inc. Respondent’s employment was
covered by a Collective Bargaining Agreement (CBA) wherein it was
agreed that the company shall pay a maximum disability compensation
of up to US$60,000.00 only.
While on board the vessel, respondent suffered "Cardiac Arrest S/P ICD
Insertation." He was checked by the ship’s doctor and was prescribed
medications. On November 14, 2008, respondent was repatriated to
receive further medical treatment and examination. On May 23, 2009,
the company-designated physician assessed his condition to be
Disability Grade 2.
28
Not satisfied, respondent filed a complaint for full and permanent
disability compensation against petitioner before the Labor Arbiter
(LA). During the hearing on the motion for execution before the NLRC,
petitioner agreed to pay respondent US$ 81,320.00. The terms and
conditions of said payment were embodied in the Receipt of Judgment
Award with Undertaking, wherein respondent acknowledged receipt of
the said amount and undertook to return it to petitioner in the event
the latter’s petition for certiorari would be granted, without prejudice
to respondent’s right to appeal
ISSUE:
Whether the Receipt of Judgment Award with Undertaking shall be
binding between two parties.
HELD:
As the agreement was voluntarily entered into and represented a
reasonable settlement, it is binding on the parties and may not later be
disowned simply because of a change of mind. Respondent agreed to
the stipulation that he would return the amount paid to him in the
event that the petition for certiorari would be granted. Since the
petition was indeed granted by the CA, albeit partially, respondent
must comply with the condition to return the excess amount.
RADIO MINDANAO NETWORK, INC. AND ERIC S. CANOY vs.
DOMINGO Z.YBAROLA, JR. AND ALFONSO E. RIVERA, JR.
FACTS:
Respondents Domingo Z. Ybarola, jr. and Alfonso E. Rivera, jr. were
hired on June 15, 1977 and June 1, 1983, respectively, by Radio
Mindanao Network. They eventually beame managers, soliciting
advertisements and servicing various clients of RMN.
On September 15, 2002,tbhe respondents’ services were terminated
as a result of RMN’s reorganization/ restructuring; they were given
their separation pay – P631,250.00 for Ybarola, and P481,250.00 for
Rivera. Sometime in December 2002, they executed release/ quitclaim
affidavits.
Dissatisfied with their separation pay, the respondents filed separate
complaints (which were later consolidated) against RMN and its
Presidents, Eric S. Canoy, for illegal dismissal with several money
claims, including attorney’s fees. They indicated that their monthly
salary rates wered P60,000.00 for Ybarola and P40,000.00 for Rivera.
ISSUE:
Whether the amounts the respondents received represented a fair and
reasonable settlements of their claims
RULING:
The petitioners insist that the respondents’ commissions were not part
of their salaries, because they failed to present proof that they earned
the commission due to actual market transactions attributable to
them. They submit that the commissions are profit-sharing payments
which do not form part of their salaries. If there commissions had been
really profit-sharing bonuses to the respondents, they should have
received the same amounts, yet, as the NLRC itself noted, Ybarola and
Rivera received P372,173.11 and P586,998.50 commissions,
respectively, in 2002. The variance in amounts the respondents
received as commissions supports the CA’s finding that the salary
structure of the respondents was such that they only received a
minimal amount as guaranteed wage; a greater part of their income
was derived from the commissions they get from soliciting
advertisements; these advertisements are the “products” they sell. As
the CA aptly noted, this kind of salary structure does not detract from
the character of the commissions being part of the salary or wage paid
to the employees for services rendered to the company, as the Court
held in Philippine Duplicators, Inc. v. NLRC.
The petitioners’ reliance on our ruling in Talam v. National Labor
Relations Commission, regarding the “proper appreciation of
29
quitclaims,” as they put it, is misplaced. While Talam, in the cited case,
and Ybarola and Rivera, in this case, are not unlettered employees,
their situations differ in all other respects.
In Talam, the employee received a valuable consideration for his less
than two years of service with the company; he was not shortchanged
and no essential unfairness took place. In this case, as the CA noted,
the separation pat the respondents each received was deficient by at
least P40,000.00; thus, they were given only half of the amount they
were legally entitled to. 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 yrs for Rivera. The CA
was correct when it opined that the respondents were in dire straits
when they executed the release/ quitclaim affidavits. Without jobs and
with families to support, they dallied in executing the quitclaim
instrument, but were eventually forced to sign given their
circumstances.
PERT/ CPM MANPOWER EXPORT 6, INC. vs. ARMANDO A. VINUYA,
ET. AL.
FACTS:
On March 5, 2008, respondent Vinuya et al. filed a complaint for illegal
dismissal against the petitioner Pert/CPM and its President with labor
arbiter alleging among others that the agency deployed them to work
as aluminium fabricator/installer for the agency’s principal, Modern
Metal in Dubai, United Arab Emirates for a two-year employment
whose contracts were approved by the POEA providing for nine-hours
working day, salary of 1,350 AED with overtime pay, food allowance,
free and suitable housing (four to a room), free transportation, free
laundry and free medical and dental services. However, on April 2,
2007, Modern Metal gave respondents, except Era, appointment
letters different from that of originally signed, increasing their
employment terms and reducing their salaries and allowances and
removing certain benefits. Further, the working conditions were not as
promised and they repeatedly complained with their agency about
their predicament but to no avail. Respondents resigned from their job
citing personal/family problems for their resignation except for Era
who mentioned the real reason which is due to the company policy.
After several weeks, petitioner repatriated the respondent to the
Philippines who shouldered their own airfare except for Ordovez and
Enjambre. The agency countered that the respondents were not
illegally dismissed alleging that the respondents voluntarily resigned
from their employment to seek a better paying job. The agency
furthered alleged that the respondents even voluntarily signed
affidavits of quitclaim and release.
Labor Arbiter dismissed the complaint finding that the respondent
voluntarily resigned from their job. Respondent appealed to the NLRC
which reversed the decision of the Labor Arbiter and found that the
respondents were illegally dismissed. NLRC also pointed out that the
signing of a different employment contract in Dubai is illegal.
Consequently NLRC ordered the agency and the principal to pay, jointly
and severally the respondents salary, placement fee, and exemplary
damages. The petitioner filed a motion for reconsideration which was
denied by the NLRC but modified their judgment adjusting the awards
particularly the payment of their salaries in the light of the Court’s
ruling in Serrano striking down the clause in Section 10, paragraph 5 of
the RA 8042 which limits the entitlement of illegally dismissed OFW.
The agency again moved for reconsideration reiterating its earlier
argument and questioned the applicability of the Serrano ruling
because it is not yet final and effective but was denied by the NLRC.
Petitioner appealed with CA which upheld the decision of the NLRC
finding the resignation letter as dubious.
ISSUE:
Whether or not the Serrano ruling which declared the subject Section
10 of RA 8042 unconstitutional can be given retroactive application in
the present case
Whether or not RA 10022, which was enacted on March 8, 2010
restoring the subject clause in Section 10 of RA 8042 being amendatory
in nature can be applied retroactively
RULING:
30
The SC held that the Serrano ruling can be given retroactive application
as resolved in Yap vs. Thenamaris Ship’s Management in the interest
of equity and that the Serrano ruling is an exemption to the doctrine
of operative fact. Moreover, the SC held that the amendment
introduced by R.A. 10022 cannot be given retroactive effect not only
because there is no express declaration of retroactivity of the law, but
because the retroactive application will result in an impairment of right
that had accrued to the respondents by virtue of the Serrano Ruling.
The SC reiterated that all statutes are to be construed as having only a
prospective application, unless the purpose and intention of the
legislature to give them retrospective effect are expressly declared or
are necessarily implied from the language used.
HELD: The petition is DENIED. The assailed decision and resolution
were AFFIRMED.
JAIME N. GAPAYAO vs. ROSARIO FULO, SSS ETC.
Jaime Fulo had been working in a farm owned by Jaime Gapayao since
1983. In November 1997, Jaime Fulo was electrocuted while working
in the said farm. Jaime Fulo died. Thereafter, Rosario Fulo, the widow
of Jaime Fulo, filed a claim for death benefits before the SSS (Social
Security System). It turned out however that Jaime Fulo was never
registered with the SSS. Eventually, SSS ordered Gapayao, as the
employer, to pay the SSS contributions due with penalty.
Gapayao averred he cannot be made liable to pay the SSS contributions
because according to him there was no employer-employee
relationship between him and Jaime Fulo. He argued, among others,
that Jaime Fulo was not his employee because:
1. he did not work regular hours as he was only called when needed
and that Fulo can even look for other jobs elsewhere if he wanted to.
In fact, Fulo also worked for some other people;
2. he was only an “extra” in the farm;
3. Gapayao had no control over him (lack of control);
ISSUE: Whether or not Jaime Fulo was an employee of Jaime Gapayao.
HELD: Yes. Fulo was a regular employee and was thus entitled to
receive SSS benefits, among others. The Supreme Court agreed with
the Court of Appeals in ruling that it “does not follow that a person who
does not observe normal hours of work cannot be deemed an
employee.” It is also not material that Gapayao never supervised Fulo.
In this case, the number of hours worked is not material. Gapayao is
considered a pakyaw worker. Pakyaw workers are considered regular
employees for as long as their employers have control over them. 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.” It should be
remembered that the control test merely calls for the existence of the
right to control, and not necessarily the exercise thereof. It is not
essential that the employer actually supervises the performance of
duties by the employee. It is enough that the former has a right to
wield the power.
RADIO MINDANAO NETWORK, INC. vs. AMURAO III
G.R. No. 167225, 22 October 2014, FIRST DIVISION, (Bersamin, J.)
Where the party has voluntarily made the waiver, with a full
understanding of its terms as well as its consequences, and the
consideration for the quitclaim is credible and reasonable, the
transaction must be recognized as a valid and binding undertaking, and
may not later be disowned simply because of a change of mind. A
waiver is essentially contractual.
Radio Mindanao Network, Inc. (RMN) hired Michael Maximo R.
Amurao III (Amurao) as a radio broadcaster for its DWKC-FM station
and production manager for its metropolitan radio operations. To
meet the demand of the broadcasting industry, RMN decided to
31
reformat and restructure the programming of its DWKC-FM station.
Amurao and other personnel were advised that their employment
would necessarily be affected because of the reformatting. RMN
furnished Amurao a letter informing the latter that his services are
deemed terminated and he is entitled to a settlement pay of
P311,922.00.
Amurao accepted the offer of RMN and executed an affidavit of
release/quitclaim containing declarations that he has no more claims,
right or action of whatever nature against RMN, that the latter is
released and discharged from any and all claims and demands that
maybe due to him and that he read and understood the terms of his
release and quitclaim and consented to such. After 5 months from the
execution of the quitclaim, Amurao filed a complaint against RMN for
illegal dismissal with money claims before the NLRC. Both the Labor
Arbiter and NLRC held that the quitclaim is void for it was not
voluntarily executed. The Court of Appeals affirmed their decision.
ISSUE:
RULING:
Yes. The requisites for the validity of Michael’s quitclaim were satisfied.
Amurao acknowledged in his quitclaim that he had read and
thoroughly understood the terms of his quitclaim and signed it of his
own volition.
The settlement pay of P311,922.00 was credible and reasonable
considering that Michael did not even assail such amount as
unconscionably low, or even state that he was entitled to a higher
amount. Amurao was required to sign the quitclaim as a condition to
the release of the settlement pay did not prove that its execution was
coerced. Having agreed to part with a substantial amount of money,
RMN took steps to protect its interest and obtain its release from all
obligations once it paid Michael his settlement pay, which it did in this
case.
Was the quitclaim executed by Amurao valid and binding?
Not all quitclaims are per se invalid or against public policy. Where the
party has voluntarily made the waiver, with a full understanding of its
terms as well as its consequences, and the consideration for the
quitclaim is credible and reasonable, the transaction must be
recognized as a valid and binding undertaking, and may not later be
disowned simply because of a change of mind.
DOLORES ESGUERRA vs. VALLE VERDE COUNTRY CLUB, ET AL.
FACTS:
Valle Verde hired Esguerra as Head Food Checker and was promoted
to Cost Control Supervisor. The Management found out that proceeds
had been remitted to the accounting department for an event were l
acking. There were also unauthorized charges of food on one of the p
articipants. To resolve the issue, Valle Verde conducted an investigati
on; the employees who were assigned in that event were summoned
and made to explain, in writing, what had transpired. A memorandum
was sent to Esguerra requiring her to show cause as to why no discipl
inary action should be taken against her for the non-
remittance of the Ballroom’s sales. Esguerra was placed under preven
tive suspension with pay, pending investigation. Unsatisfied with the
explanation, Esguerra was terminated.
Petitioner said that she couldn’t be dismissed on the ground of loss of
trust and confidence for she was only a regular employee and did not
occupy a supervisory position vested with trust and confidence. Esgu
erra also questions the manner of dismissal since the notice was insuf
ficient since it failed to contain any intention to terminate her.
32

ISSUE:
 Whether or not intention to terminate should be included in the notic
e of informing of charges against an employee.
 Whether or not Cost Control Supervisor can be dismissed on the grou
nd of loss of trust and confidence.
HELD:
1.) No. The law does not require that an intention to terminate one’s
employment should be included in the first notice. It is enough that e
mployees are properly apprised of the charges brought against them
so they can properly prepare their defenses; it is only during the seco
nd notice that the intention to terminate one’s employment should b
e explicitly stated.
The existence of an actual, formal “trial-
type” hearing, although preferred, is not absolutely necessary to satis
fy the employee’s right to be heard. Esguerra was able to present her
defenses; and only upon proper consideration of it did Valle Verde se
nd the second memorandum terminating her employment. Since Vall
e Verde complied with the two-
notice requirement, no procedural defect exists in Esguerra’s termina
tion.
2.) Esguerra held the position of Cost Control Supervisor and had the
duty to remit to the accounting department the cash sales proceeds f
rom every transaction she was assigned to. This is not a routine task t
hat a regular employee may perform; it is related to the handling of b
usiness expenditures or finances. For this reason, Esguerra occupies a
position of trust and confidence – a position enumerated in the secon
d class of positions of trust(first is for the managerial employees). Any
breach of the trust imposed upon her can be a valid cause for dismiss
al.
PRUDENTIAL GUARANTEE AND ASSURANCE EMPLOYEES UNION AND
SANDY VALLOTA, vs. NLRC
FACTS:
Vallota was a Junior Programmer hired by PGAI. In one inspection, a fi
le of the company was found on his computer. He received a memora
ndum directing him to explain within 72 hours why highly confidential
files were stored in his computer.
Vallota requested for an administrative hearing but was denied witho
ut reason by PGAI. Days after he submitted his reply-
memorandum, he was terminated on the ground of loss of trust and c
onfidence.
ISSUE:
33
 Whether or not a Junior Programmer is a position of trust and confide
nce.
 Whether or not an employee is denied due process when the employ
er denied to conduct administrative hearing on despite his request to
have the same.
HELD:
1.) Yes. Vallota’s position as Junior Programmer is analogous to the se
cond class of positions of trust and confidence(first is the managerial
employees). 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 fou
nd not printed on paper but stored on hard drives and servers, an em
ployee who handles or has access to data in electronic form naturally
becomes the unwilling recipient of confidential information.
To be a valid ground for dismissal, loss of trust and confidence must b
e based on a willful breach of trust and founded on clearly established
facts. A breach is willful if it is done intentionally, knowingly and purp
osely, without justifiable excuse, as distinguished from an act done ca
relessly, thoughtlessly, heedlessly or inadvertently.
Furthermore, the files found in Vallota’s computer, the prospectus an
d corporate profile, are not sensitive corporate documents. These are
documents routinely made available to the public, and serve as mean
s to inform the public about the company and to disseminate informa
tion about the products it sells or the services it provides, in order tha
t potential clients may make a sound and informed decision whether
or not to purchase or avail of such goods and services.
2.) Yes. According to the Supreme Court, the following are the guiding
principles in connection with the hearing requirement in dismissal ca
ses: (a) “ample opportunity to be heard” means any meaningful oppo
rtunity (verbal or written) given to the employee to answer the charg
es against him. (b) a formal hearing or conference becomes mandator
y only when requested by the employee in writing or substantial evid
entiary disputes exist or a company rule or practice requires it, or wh
en similar circumstances justify it. (c) the “ample opportunity to be he
ard” standard in the Labor Code prevails over the “hearing or confere
nce” requirement in the implementing rules and regulations. After PG
AI failed to affirmatively respond to such request, it follows that the h
earing requirement was not complied with and, therefore, Vallota wa
s denied his right to procedural due process.
FLORDELIZA MARIA REYES-RAYEL vs. PHILIPPINE LUEN THAI
HOLDINGS CORPORATION G.R. No. 174893; July 11, 2012
“ The law is fair and just to both labor and management. Thus, while
the
Constitution accords an employee security or tenure, it abhors
oppression to an
employer who cannot be compelled to retain an employee whose
continued
employment would he patently inimical to its interest.”
FACTS: PLTHC hired Flordeliza as Corporate Human Resources (CHR)
Director for
Manufacturing for its subsidiary/affiliate company, L&T. In the
employment
contract, Flordeliza was tasked to perform functions in relation to
administration,
recruitment, benefits, audit/compliance, policy development/
structure, project
34
plan, and such other works as may be assigned by her immediate
superior, Frank
Sauceda (Sauceda), PLTHC’s Corporate Director for Human Resources.
Flordeliza received a Prerequisite Noticefrom Sauceda and the
Corporate Legal
Counsel of PLTHC, Ma. Lorelie T. Edles (Edles) a termination of her
employment
due to failure to perform in accordance with management directives in
various
instances, which collectively have resulted in loss of confidence in your
capability
to promote the interests of the Company. She explained that her
alleged failure to perform management directives could be attributed
to the lack of effective communication with her superiors due to
malfunctioning email system. This caused her to miss certain directives
coming from her superiors and likewise, for her superiors to overlook
the reports she was submitting.
ISSUE:
Whether or not Flordeliza was deprived of her due process when the
company dismissed her.
RULING:
She was accorded due process. The Prerequisite Notice contrary to her
assertion, find the same to be free from any ambiguity. The said notice
properly advised Flordeliza to explain through a written response her
failure to perform in accordance with management directives, which
deficiency resulted in the company’s loss of confidence in her
capability to promote its interest. Neither can there be any denial of
due process due to the absence of a hearing or investigation at the
company level. It has been held in a plethora of cases that due process
requirement is met when there is simply an opportunity to be heard
and to explain one’s side even if no hearing is conducted.
In this case, her 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 violation of company policies, is of no moment
since the
records 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 Flordeliza. As she was served with a
notice apprising her of the changes against her and also a subsequent
notice informing her of the management's decision to terminate her
services alter respondents found her written response to the first
notice unsatisfactory, petitioner was clearly afforded her right to due
process.
ALEX Q. NARANJO ET. AL. vs. BIOMEDIA HEALTH CARE, INC. ET. AL.
GR NO. 193789, 2012-09-19 Facts:
1. Respondent Biomedica Health Care, Inc. (Biomedica) was engaged in
the distribution of medical equipment. Respondent Carina "Karen" J.
Motol (Motol) was then its President.
2. Petitioners were former employees of Biomedica. Petitioners
with two (2) other employees, Alberto Angeles (Angeles) and
Rodolfo Casimiro (Casimiro) were all absent for various personal
reasons. Notably, these are the same employees who filed a letter-
complaint against Biomedica for lack of salary increases, failure to
remit Social Security System and Pag-IBIG contributions, and violation
35
of the minimum wage law, among other grievances. Per available
records, the complaint has not been acted upon.
3. Later that day, petitioners reported for work after receiving
text messages for them to proceed to Biomedica. They were,
however, refused entry and told to start looking for another
workplace.
4. Biomedica issued a notice of preventive suspension and notices
to explain within 24 hours. In the Notices, Biomedica accused
the petitioners of having conducted an illegal strike and
were accordingly directed to explain why they should not be held guilty
of and dismissed for violating the company policy against illegal
strikes.
5. Petitioners filed a complaint with the NLRC for
constructive dismissal and nonpayment of salaries, overtime, 13th
month pay as well as non-remittance of SSS, Pag-IBIG and Philhealth
contributions as well as loan payments.
6. Thereafter, Biomedica served Notices of Termination on petitioners
7. The Labor Arbiter found that, indeed, petitioners engaged in a mass
leave akin to a strike. He added that, assuming that petitioners were
not aware of the company policies on illegal strikes, such mass leave
can sufficiently be deemed as serious misconduct under Art. 282 of the
Labor Code. Thus, the Labor Arbiter concluded that petitioners were
validly dismissed.
8. Petitioners filed a Complaint with the NLRC for
constructive dismissal and nonpayment of salaries, overtime pay, 13th
month pay as well as non-remittance of SSS, Pag-IBIG and
Philhealth contributions as well as loan payments. The NLRC found and
so declared petitioners to have been illegally dismissed
9. From the Decision and Resolution of the NLRC, Biomedica appealed
the case to the CA. The appellate court reinstated the decision of LA
Issues:
(1) Whether or not CA gravely erred in ruling that grave abuse
of discretion was committed by the NLRC and by reason of the same,
it upheld the Decision of the Labor Arbiter stating that petitioners were
not illegally dismissed.
(2) Whether or not CA gravely erred in ruling that grave abuse
of discretion was committed by the NLRC and by reason of the same,
it upheld the Decision of the Labor Arbiter in relation to
petitioners money claims.
Ruling:
This petition is meritorious.
PETITIONERS WERE ILLEGALLY DISMISSED
1. ”It bears pointing out that in the dismissal of an employee, the law
requires that due process be observed. Such due process requirement
is two-fold, procedural and substantive, that is, "the termination of
employment must be based on a just or authorized cause of dismissal
and the dismissal must be effected after due notice and hearing."
In the instant case, petitioners were not afforded both
procedural and substantive due process. Petitioners were not
afforded procedural due process
2. Rule XIII, Book V, Sec. 2 I (a) of the Implementing Rules
and Regulations of the Labor Code states: SEC. 2. Standards of due
process; requirements of notice. In all cases of termination of
employment, the following standards of due process shall be
substantially observed: I. For termination of employment based on just
causes as defined in Article 282 of the Code: (a) 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. (b) 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. (c) 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. (Emphasis supplied.) Thus, the
Court elaborated in King of Kings Transport, Inc. v. Mamac that a
36
mere general description of the charges against an employee by the
employer is insufficient to comply with the above provisions of the
law:
... x x x 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. We observe from the irregularity reports against
respondent for his other offenses that such contained merely a general
description of the charges against him. The reports did not even state
a company rule or policy that the employee had allegedly violated.
3. 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.
4. 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.
The notice is bare of such description of the company
policies. Moreover, it is incumbent upon respondent company to show
that petitioners were duly informed of said company policies at the
time of their employment and were given copies of these policies.
No such proof was presented by respondents.
5. 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
. King of Kings Transport, Inc. elucidates in this wise: To clarify, the
following should be considered in terminating the services of
employees: (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.[30] (Emphasis supplied.)... n
addition, Biomedica did not set the charges against petitioners for
hearing or conference in accordance with Sec. 2, Book V, Rule XIII
of the Implementing Rules and Regulations of the Labor Code and in
line with ruling in King of Kings Transport, Inc.
PETITIONERS WERE DENIED SUBSTANTIVE DUE PROCESS
Clearly, 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 establish that
petitioners indeed violated company rules, failing to even present a
copy of the rules and to prove that petitioners were made aware of
such regulations.
37
PETITIONERS DID NOT STAGE A MASS LEAVE It is undeniable that
going on leave or absenting one's self from work for personal reasons
when they have leave benefits available is an employee's right.
In the factual milieu at bar, Biomedica did not submit a copy of the CBA
or a company memorandum or circular showing the authorized sick or
vacation leaves which petitioners can avail of. Neither is there any
document to show the procedure by which such leaves can be
enjoyed. Absent such pertinent documentary evidence, the Court can
only conclude that the availment of petitioners of their respective
leaves on November 7, 2006 was authorized, valid and in accordance
with the company or CBA rules on entitlement to and availment of such
leaves. The contention of Biomedica that the enjoyment of said leaves
is in reality an illegal strike does not hold water in the absence of strong
controverting proof to overturn the presumption that "a person is
innocent of x x x wrong." Thus, the individual leaves of absence taken
by the petitioners are not such absences that can be regarded as an
illegal mass action.
Moreover, a mass leave involves a large number of people or in this
case, workers. PETITIONERS DID NOT GO ON STRIKE
Biomedica has failed to adduce substantial evidence to prove
that petitioners' dismissal from their employment was for a just
or authorized cause. The conclusion is inescapable that
petitioners were illegally dismissed.
Dismissal is not the proper penalty "An ordinary striking worker
cannot be terminated for mere participation in an illegal strike. There
must be proof that he committed illegal acts during a strike."
WHEREFORE, the Decision dated June 25, 2010 and the
Resolution dated September 20, 2010 of the CA in CA-G.R. SP No.
108205 are hereby REVERSED and SET ASIDE
Principles:
1. Art. 212(o) of the Labor Code defines a strike as "any
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. Petitioners were in different places on November 7, 2006 to
attend to their personal needs or affairs. They did not go to the
company premises to petition Biomedica for their grievance. To
demonstrate their good faith in availing their leaves, petitions
reported for work and were at the company premises in the afternoon
after they received text messages asking them to do so. This shows
that there was NO intent to go on strike. Unfortunately, they were
barred from entering the premises and were told to look for
new jobs. Surely the absence of petitioners in the morning of
November 7, 2006 cannot in any way be construed as a concerted
action, as their absences are presumed to be for valid causes, in good
faith, and in the exercise of their right to avail themselves of CBA or
company benefits. Moreover, Biomedica did not prove that the
individual absences can be considered as "temporary stoppage of
work." Biomedica's allegation that the mass leave "paralyzed the
company operation on that day" has remained unproved. It is
erroneous, therefore, to liken the alleged mass leave to an illegal strike
much less to terminate petitioners'services for it.
2. 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.
3. STRAINED RELATIONS
38
 must be demonstrated as a fact, however, to be adequately supported
SUMMARY: Dr Maquiling is dismissed by PTS and now claiming for damages. However the cou
by evidence substantial evidence to show that the relationshipout that he was dismissed for just cause but his right to procedural due process was violat
between the employer and the employee is indeed strained as a
Doctrine)
necessary consequence of the judicial controversy.
DOCTRINE: Violation of an employee’s right to statutory (procedural) due process warra
payment of indemnity in the form of nominal damages. Actual compensatory damages are not a
MAQUILING vs. PHILIPPINE TUBERCULOSIS SOCIETY, INC. as a matter of right to an employee dismissed for just cause but denied of statutory (procedu
process.
January 24, 2014 | Benjamin, J. | Certiorari | Criminal Charges
NER: Dr. Ernesto I. Maquiling Actual or compensatory damages are not available as a matter of right to an employee dismi
DENTS: Philippine Tuberculosis Society, Inc. just cause but denied statutory due process. The award must be based on clear factual and leg
and correspond to such pecuniary loss suffered by the employee as duly proven.

FACTS: for illegal dismissal. LA decided for the reinstatement of Dr.

1. . Dr. Maquiling was employes as Deputy Executive Director of PTS
for 23 years.
2. He received a memo from PTS OIC-Executive Director directing
him to submit within 5 days from notice a written explanation on
the following matters (however there’s no warning that Dr.
Maquiling will face dismissal if violations are proven true and
under what ground he’ll be dismissed for.)
a. Delayed GSIS remittances
b. Deficit of P7.3million in the 1990 financial statement
c. P3.7million miscellaneious expenses
d. Renewing contract with ULTRA (a service contractor)
3. Dr. Maquiling submitted his explanatory letter. He also had a 30
minutes conversation with the OIC Director concerning his acts. It
was eventually decided that Dr. Maquiling will be dismissed
immediately without any retirement benefits with letter-notice.
4. Despite this, Dr. Maquiling manifested in a letter to the OIC
Director his intention to continue performing his work. He
continued to report for work. He also brought the matter to the
President of PTS but he got no response.
5. Dr. Maquiling stopped reporting for work and filed his complaint
Maquiling and pay backwages. It was likewised ordered that PTS
pay for moral damages, exemplary damages, and attorney’s
fees.NLRC affirmed
6. CA reversed but ordered the payment for damages or indemnity
for the violation of right to procedural process and to pay for
separation pay.
7. DR MAGUILING argues that the Serrano v NLRC ruling be applied.
That he should have full back wages and separation pay plus 13 th
month pay, sick leave, vacation leave and all monetary benefits
including moral damages and attorney’s fees.
ISSUE:WoN Dr. Maquiling is entiled to damages — YES, but only for
nominal damages
RULING: Decisions Modified.
RATIO:
1. PTS argues that Dr. Maquiling was dismissed for loss of trust and
confidence. His job description shows that he holds a position of trust
since he is a high officer serving directly under the Executive Director,
39
and among his duties is: “directing, supervising, coordinating, and
controlling the general administrative, finance and regional operations
of PTS.
2. Aside from the fiscal matters, one of the basis of his dismissal is the
renewal of contract with ULTRA CLEAN for janitorial services when
there was no approval from the Board of Directors for such renewal.
By the reason of the new contract, PTS was dragged into a labor
controversy for illegal dismissal which eventually made it liable for
backwages and differentials to the employees of ULTRA CLEAN.
3. THe court finds that Dr. Maquiling was dismissed for just cause.
However, PTS was remised in its duty to observe procedural due
process in effecting the dismissal of Dr. Maquiling. The notices required
before an employee are: (1) a written notice served on the employee
specifying the grounds for termination and giving the employee
reasonable opportunity to explain his/her side (2) a hearing or
conference wherein the employee, with the assistance of counsel if so
desired, (3) written notice of termination served on the employee
indicating that upon die consideration of all the circumstances,
grounds have been established to justify termination. CLEARLY, the
requirement of notive is intended to inform the employee concerned
of the employer’s intent to dismiss and the reason for the proposed
dismissal. The first notice mush inform outright the employee that an
inversigation will be conducted on the charges particularized therein,
and if proven true will result to his dismissal. These factors are lacking
in the notice of PTS, thus violating Dr. Maquiling’s right to procedural
due process.
4. In Maquiling’s argument using the Serrano ruling, the court held that
Agabon v NLRC modified the Serrano ruling. The Agabon doctrine
enunciates the rule that if the dismissal is for just cause but statutory
(procedural) due process was not observed, the dismissal should be
upheld. HOWEVER, the employer should be liable for non-compliance
with the procedural requirements of due process. The indemnity to be
imposed should be stiffer to discourage the practice of “dismiss now,
pay later” that the Serrano ruling soughts to aver. The sanction should
be in the nature of indemnification or penalty and should depend on
the facts of each case, taking into consideration the gravity of the due
process violation of the employer. The court, considering the
circumstances of this case, ordered to fix the nominal damage at
P30,000.
5. Actual or compensatory damages are not available as a matter of
right to an employee dismissed for just cause but denied statutory due
process. The award must be based on clear factual and legal bases and
correspond to such pecuniary loss suffered by the employee as duly
proven. However the records fail to show that Dr. Maquiling suffered
pecuniary loss by reason of his dismissal from service.He was dismissed
for just cause, and such dismissal did not automatically result to any
pecuniary loss. Besides, the twin notice rule was not at all disregarded
although is was observed defectively by PTS. Thus actual damages may
not be awarded.
6. For exemplary damages, it can only be availed of if the dismissal was
affected in a wanton, oppressive or malevolent manner to warrant an
award for exemplary damages. No bad faith was found in the dismissal
of Dr. Maquiling thus no basis to award exemplary damages.
7. Although length of service may be considered in reaching a decision
in employment termination cases, the same alone is not controlling for
other considerations must be taken into accound such as the nature of
the position he was holding, performance of an employee, quality of
work, character and work attitude. The crucial nature of his position in
PTS is exacting as to such qualification which cannot be outweighed by
any legth of service he earned.
40
ELECTRO SYSTEM INDUSTRIES CORPORATION vs. NLRC
Facts: On March 17, 1994, Noel Sumaculub was employed as
driver of Electrosystem with a monthly salary of P5,700.00.
During said employment, he figured in three vehicular
accidents by reason of negligence-while driving a company car
on April 18, 1997, he hit a motorcross bike driven by Gilbert
Peña; on December 13, 1997, he bumped the rear portion of a
Toyota Corolla car driven by Amelia Flores; and on August 7,
1998, he crashed into a Kalayaan Flyover post in Makati, Metro
Manila. Petitioner thus incurred expenses in settling the
damages caused by said mishaps. On August 10, 1998, he was
dismissed for repeated violation of company rules against
reckless driving of company vehicles. He then filed an illegal
termination case before the Labor Arbiter which declared that
the dismissal of private respondent is invalid. Said decision was
affirmed by the National Labor Relations Commission
(NLRC). On appeal, the Court of Appeals ruled that the
termination of Sumaculub is valid because there exists a just
cause to dismiss him from employment. However, it declared
that petitioner failed to comply with the requisite statutory due
process in terminating private respondent. Hence,
Electrosystem was ordered to pay backwages from the date of
the dismissal until finality of the decision. Electro filed a motion
for reconsideration, only to be denied.
Issue: Whether or not there was an observance of the 2- notice
rule in the dismissal of Sumaculub
Held: NO. In dismissing an employee, the employer has the
burden of proving that the former worker has been served two
notices: (1) one to apprise him of the particular acts or
omissions for which his dismissal is sought, and (2) the other to
inform him of his employer's decision to dismiss him. In the
case at bar, the first notice issued by Electrosystem fell short of
the requirement of the law because it merely referred to the
section of the company rule allegedly violated by Sumaculub.
The notice failed to specify the penalty for the charges which is
dismissal, and to indicate the precise act or omission which
constituted as the ground for which dismissal is sought. There
is no showing that Sumaculub was actually served with the
required two notices. The first notice did not bear the signature
of private respondent. In the second notice, there was a
notation that private respondent refused to sign. This notation
is not sufficient proof that petitioner attempted to serve the
second notice to private respondent. Electrosytem's bare
assertions that Sumaculub was furnished with copies of the
notices and that he attended the hearing on the charges, it
presented no other proof to establish the same. It was not able
to discharge the burden of proving compliance with the
employee's right to statutory due process in termination
proceedings. However, it should not be made to pay
Sumaculub’s backwages but it is obligated to indemnify
Sumaculub for the violation of his statutory rights.
TIMOTEO SARONA vs. NLRC
G.R. No. 185280, January 18, 2012
Corporation Law Case Digest by John Paul C. Ladiao (15 March
2016)
(Topic: Doctrine of Piercing the Veil of Corporate Fiction)
FACTS:
41
On June 20, 2003, the petitioner, who was hired by Sceptre as
a security guard sometime in April 1976, was asked by Karen
Therese Tan (Karen), Sceptre’s Operation Manager, to submit a
resignation letter as the same was supposedly required for
applying for a position at Royale. The petitioner was also asked
to fill up Royale’s employment application form, which was
handed to him by Royale’s General Manager, respondent Cesar
Antonio Tan II (Cesar).
After several weeks of being in floating status, Royale’s Security
Officer, Martin Gono (Martin), assigned the petitioner at
Highlight Metal Craft, Inc. (Highlight Metal) from July 29, 2003
to August 8, 2003. Thereafter, the petitioner was transferred
and assigned to Wide Wide World Express, Inc. (WWWE, Inc.).
On September 17, 2003, the petitioner was informed that his
assignment at WWWE, Inc. had been withdrawn because
Royale had allegedly been replaced by another security agency.
The petitioner, however, shortly discovered thereafter that
Royale was never replaced as WWWE, Inc.’s security agency.
When he placed a call at WWWE, Inc., he learned that his fellow
security guard was not relieved from his post.
On September 21, 2003, the petitioner was once again assigned
at Highlight Metal, albeit for a short period from September 22,
2003 to September 30, 2003. Subsequently, when the
petitioner reported at Royale’s office on October 1, 2003,
Martin informed him that he would no longer be given any
assignment per the instructions of Aida Sabalones-Tan (Aida),
general manager of Sceptre. This prompted him to file a
complaint for illegal dismissal on October 4, 2003.
ISSUE:
Whether or not Royale’s corporate fiction should be pierced for
the purpose of compelling it to recognize the petitioner’s length
of service with Sceptre and for holding it liable for the benefits
that have accrued to him arising from his employment with
Sceptre?
RULING:
Yes.
The doctrine of piercing the corporate veil applies in 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.
The respondents’ scheme reeks of bad faith and fraud and
compassionate justice dictates that Royale and Sceptre be
merged as a single entity, compelling Royale to credit and
recognize the petitioner’s length of service with Sceptre. The
respondents cannot use the legal fiction of a separate
corporate personality for ends subversive of the policy and
purpose behind its creation53 or which could not have been
intended by law to which it owed its being.
Also, Sceptre and Royale have the same principal place of
business. As early as October 14, 1994, Aida and Wilfredo
42
became the owners of the property used by Sceptre as its
principal place of business by virtue of a Deed of Absolute Sale
they executed with Roso.57 Royale, shortly after its
incorporation, started to hold office in the same property.
These, the respondents failed to dispute.
Royale also claimed a right to the cash bond which the
petitioner posted when he was still with Sceptre. If Sceptre and
Royale are indeed separate entities, Sceptre should have
released the petitioner’s cash bond when he resigned and
Royale would have required the petitioner to post a new cash
bond in its favor.
However, the manner by which the petitioner was made to
resign from Sceptre and how he became an employee of Royale
suggest the perverted use of the legal fiction of the separate
corporate personality.
Royale is a continuation or successor of Sceptre.
VENANCIO S. REYES vs. RP GUARDIAN SECURITY AGENCY INC.
The Facts:
Petitioners Venancio S. Reyes, Edgardo C. Dabbay, Walter A.
Vigilia, Nemesio M. Calanno, Rogelio A. Supe, Jr., Roland R.
Trinidad, and Aurelio A. Duldulao (petitioners) were hired by
respondent RP Guardians Security Agency, Inc. (respondent) as
security guards. They were deployed to various clients of
respondent, the last of which were the different branches of
Banco Filipino Savings and Mortgage Bank (Banco Filipino).
In September 2006, respondent's security contract with Banco
Filipino was terminated. In separate letters,petitioners were
individually informed of the termination of the security
contract with Banco de Oro. In two (2) memoranda, dated
September 21, 2006 and September 29, 2006, petitioners were
directed to turnover their duties and responsibilities to the
incoming security agency and were advised that they would be
placed on floating status while waiting for available post.
Petitioners waited for their next assignment, but several
months lapsed and they were not given new assignments.
Consequently, on April 10, 2007, petitioners filed a
complaint for constructive dismissal.
In its position paper, respondent claimed that there was no
dismissal, of petitioners, constructive or otherwise, and
asserted that their termination was due to the expiration of the
service contract which was coterminus with their contract of
employment.
On August 20, 2007, the Labor Arbiter (LA) rendered a
decision in favor of petitioners ordering respondent to pay
petitioners separation pay, backwages, refund of trust fund,
moral and exemplary damages, and attorneys fees.
Aggrieved, respondent appealed to the NLRC.
On April 9, 2008, the NLRC promulgated its decision sustaining
43
the finding of constructive dismissal by the LA, and the awards decisions of the Supreme Court concerning the Petitioner's
she made in the decision. The award of moral and exemplary basic right to fair play, justice and due process, with more
damages, however, were deleted. reason that a conclusion of law cannot be made in the
motion for reconsideration.
Upon denial of its motion for reconsideration, respondent filed The first decision promulgated by the Court of Appeals on
a petition for certiorari before the CA. February 26, 2010 affirming the decision of the NLRC
8.1 awarding both backwages and separation pay of one month
On February 26, 2010, the CA rendered a decision dismissing pay for every year of service can only be set aside upon
the petition and affirming the assailed NLRC decision and proof of grave abuse of discretion, fraud or error of law.
resolution. Petitioners are entitled to backwages for the period
covered from the time the Labor Arbiter rendered the
On motion for reconsideration, the CA issued the Amended 8.2 decision in their favor on August 20, 2007 until said decision
Decision dated May 18, 2010, modifying its earlier decision. was reversed by the Court of Appeals in its Amended
Citing Section 6.5 (4) of Department Order No. 14 of the Decision promulgated on May 18, 2010.
Department of Labor and Employment (DOLE D.O. No. 14),
otherwise known as Guidelines Governing the Employment and There is no doubt that petitioners were constructively
Working Conditions of Security Guards and Similar Personnel in dismissed. The LA, the NLRC and the CA were one in their
the Private Security Industry, the CA reduced the computation conclusion that respondent was guilty of illegal dismissal when
of the separation pay from one month pay per year of service it placed petitioners on floating status beyond the reasonable
to one-half month pay for every year of service; reduced the six-month period after the termination of their service contract
refund of trust fund contribution from Sixty (P60.00) Pesos to with Banco de Oro. Temporary displacement or temporary off-
Thirty (P30.00)Pesos; and deleted the award of backwages and detail of security guard is, generally, allowed in a situation
attorney's fees. where a security agency's client decided not to renew their
service contract with the agency and no post is available for the
Hence, this petition anchored on the following: relieved security guard. Such situation does not normally result
in a constructive dismissal. Nonetheless, when the floating
status lasts for more than six (6) months, the employee may be
GROUNDS FOR THE PETITION considered to have been constructively dismissed. No less than
the Constitution guarantees the right of workers to security of
The Court of Appeals has decided a question of substance tenure, thus, employees can only be dismissed for just or
8.0
in a way that is not in accord with law and with applicable authorized causes and after they have been afforded the due

44
process of law.
Settled is the rule that 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 up to the time of actual
reinstatement. If reinstatement is not possible, however, the
award of separation pay is proper.
Backwages and reinstatement are separate and distinct reliefs
given to an illegally dismissed employee in order to alleviate the
economic damage brought about by the employee's
dismissal. "Reinstatement is a restoration to a state from which
one has been removed or separated" while "the payment of
backwages is a form of relief that restores the income that was
lost by reason of the unlawful dismissal." Therefore, the award
of one does not bar the other.
In the case of Aliling v. Feliciano, citing Golden Ace Builders v.
Talde, the Court explained:
Thus, an illegally dismissed employee is entitled to two reliefs:
backwages and reinstatement. The two reliefs provided are
separate and distinct. In instances where reinstatement is no
longer feasible because of strained relations between the
employee and the employer, separation pay is granted. In
effect, an illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if reinstatement is no
longer viable, and backwages.
The normal consequences of 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. [Emphasis Supplied]
Furthermore, the entitlement of the dismissed employee to
separation pay of one month for every year of service should
not be confused with Section 6.5 (4) of DOLE D.O. No. 14 which
grants a separation pay of one-half month for every year
service, to wit:
6.5 Other Mandatory Benefits. In appropriate cases, security
guards/similar personnel are entitled to the mandatory
benefits as listed below, although the same may not be
included in the monthly cost distribution in the contracts,
except the required premiums for their coverage:
a. Maternity benefit as provided under the SSS Law;
b. Separation pay if the termination of employment is for
authorized cause as provided by law and as enumerated below:
Half-Month Pay Per Year of Service, but in no case less than One
45
Month Pay, if separation is due to: As to their claim of attorney's fees, petitioners were compelled
to file an action for the recovery of their lawful wages and other
1. Retrenchment or reduction of personnel effected by benefits and, in the process, incurred expenses. Hence,
management to prevent serious losses; petitioners are entitled to attorney's fees equivalent to ten
percent (10%) of the monetary award.
2. Closure or cessation of operation of an establishment not
due to serious losses or financial reverses; Finally, as to the refund of the trust fund contribution, a perusal
of the records shows that the amount deducted for the trust
3. Illness or disease not curable within a period of 6 months and fund contribution from each petitioner varies. Some
continued employment is prohibited by law or prejudicial to the petitioners were deducted the amount of P15.00 every payday
employee's health or that of co-employees; or while others were deducted P30.00 every payday. Thus, the
Court deems it proper to refer the computation of the same to
4. Lack of service assignment for a continuous period of 6 the LA.
months.
WHEREFORE, the petition is GRANTED. The May 18, 2010
The said provision contemplates a situation where a security Amended Decision and the September 13, 2010 Resolution of
guard is removed for authorized causes such as when the the Court of Appeals in CA-G.R. SP No. 106643
security agency experiences a surplus of security guards are REVERSED and SET ASIDE. The April 9, 2008 Decision of the
brought about by lack of clients. In such a case, the security National Labor Relations Commission, modifying the August 20,
agency has the option to resort to retrenchment upon 2007 Decision of the Labor Arbiter, is REINSTATED.
compliance with the procedural requirements of "two-notice
rule" set forth in the Labor Code and to pay separation pay of The case is REMANDED to the Labor Arbiter for further
one-half month for every year of service. proceedings to make a detailed computation of the exact
amount of monetary benefits due petitioners.
In this case, respondent would have been liable for
reinstatement and payment of backwages. Reinstatement, SO ORDERED.
however, was no longer feasible because, as found by the LA,
respondent had already ceased operation of its business. Thus,
backwages and separation pay, in the amount of one month for LEO GONZALES vs. SOLID CEMENT CORPORATION
every year of service, should be paid in lieu of reinstatement.
The current petition arose from the execution

46
of the final and executory judgment in the parties’ illegal
dismissal dispute
(referred to as "original case," docketed in this Court as G.R. No.
165330 and entitled Solid Cement Corporation, et al. v. Leo
Gonzales). The Labor Arbiter (LA) resolved the case at his level
on December 12, 2000. Since the LA found that an illegal
dismissal took place, the company reinstated petitioner
Gonzales in the payroll on January 22, 2001.
In the meanwhile, the parties continued to pursue the original
case on the merits. The case was appealed to the National
Labor Relations Commission (NLRC) and from there to the Court
of Appeals (CA) on a petition for certiorari under Rule 65 of
the Rules of Court. The LA’s ruling of illegal dismissal was largely
left undisturbed in these subsequent recourses.
The original case eventually came to this Court. In our
Resolutions of March 9, 200
and June 8, 2005
we denied the petition of respondent Solid Cement
Corporation (Solid Cement) for lack of merit. Our ruling became
final and entry of judgment took place on July 12, 2005.Soon
after its finality, the original case was remanded to the LA for
execution. The LA decision dated December 12,2000 declared
the respondents guilty of illegal dismissal and ordered the
reinstatement of Gonzales to his former position" with full back
wages and without loss of seniority rights and other benefits.”
Under this ruling, as modified by the NLRC ruling on appeal,
Gonzales was awarded the following:(1) Back wages in the
amount of P636,633.33;(2) Food and Transportation Allowance
in the amount of P18,080.00;(3) Moral damages in the amount
of P100,000.00;(4) Exemplary damages in the amount of
P 50,000.00; and
(5) Ten percent (10%) of all sums owing to the petitioner as
attorney’s fees.
Actual reinstatement and return to work for Gonzales (who
had been on payroll reinstatement since January 22, 2001)
came on July 15, 2008.
When Gonzales moved for the issuance of an alias writ of
execution on August 4, 2008, he included several items as
components in computing the amount of his back wages. Acting
on the motion, the LA added P57,900.00 as rice allowance and
P14,675.00 as medical reimbursement (with the company’s
apparent conformity). Under the LA’s execution order dated
August 18, 2009, Gonzales was entitled to a total of
P965,014.15.
The NLRC, in its decision dated February 19, 2010 and
resolution dated May 18, 2010, modified the LA’s execution
order. The NLRC differed from the LA on the actual details of
implementation and modified the latter’s ruling by including :
Additional back wages from Dec. 13, 2000 to Jan. 21, 2001 P 50,
800.00
Salary differentials from year 2000 until August 2008
617,517.48
13th month pay differential 51,459.79
13th month pay for years 2000 and 2001 80,000.00
12% interest from July 12, 2005 878,183.42
47

This ruling increased Gonzales’ entitlement to P2,805,698.04
(from P965,014.15). On a petition for certiorari under Rule 65
of the Rules of Court, the CA set aside the NLRC’s decision and
reinstated the LA’s order, prompting Gonzales to come to the
Court via a petition for review on certiorari (docketed as G.R.
No. 198423) under Rule 45 of the Rules of Court. In our Minute
Resolutions, we denied Gonzales’ Rule 45 petition. At this point
came the two motions now under consideration.
ISSUE: Whether the CA correctly determined the absence or presence of
grave abuse of discretion by the NLRC.
Re-computation of awards during execution of an illegal
dismissal decision.
On the execution aspect of an illegal dismissal decision, the case
of Session Delights Ice Cream and Fast Foods v. Court of Appeals (Sixth
Division) despite its lack of a complete factual congruence with
the present case, serves as a good guide on how to approach
the execution of an illegal dismissal decision that contains a
monetary award. There the SC held the CA was not in error in
confirming that a re-computation is necessary as it essentially
considered the labor arbiter’s original decision in accordance
with its basic component. The SC further ratiocinated that:
xxx 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 in
to 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 monetary consequences
of this dismissal is affected and this is not a violation of the principle of
immutability of final judgments. Xxx
The re-computation of the amounts still due took off from the LA’s
decision that contained the itemized and
computed dispositive portion as of the time the LA rendered his judgment.
It was necessary because time
transpired between the LA’s decision and the final termination
of the case on appeal, during which time the illegally dismissed
employee should have been paid his salary and benefit entitlements.
The current petition only generally involves a determination of
the scope of the awards that include the back wages.
The components of the back wages:
a. Salary and 13th month differential due after dismissal
In the case of BPI Employees Union – Metro Manila and Zenaida
Uy v. Bank of the Philippine Islands
And Bank of the Philippine Islands v. BPI Employees Union –
Metro Manila and Zenaida Uy the Court ruled that in computing back
wages, salary increases from the time of dismissal until actual
reinstatement, and benefits not yet granted at the time of
dismissal are excluded. Hence, we cannot fault the CA for
finding that the NLRC committed grave abuse of discretion in
awarding the salary differential amounting to P617,517.48 and
the 13th month pay differentials amounting to P51,459.48 that
accrued subsequent to Gonzales’ dismissal.
48

b. Legal interest of 12% on total judgment
However, based on the same BPI case, Gonzales is entitled to
12% interest on the total unpaid judgment amount, from the
time the Court’s decision (on the merits in the original case)
became final. When the CA reversed the NLRC and reinstated
the LA’s ruling (which did not order payment of interest), the
CA overstepped the due bounds of its jurisdiction under a
certiorari petition as it acted on the basis of wrong
considerations and outside the contemplation of the law on the
legal interests that final orders and rulings on forbearance of
money should bear.
SC found no reason to disturb the findings of respondent NLRC
that the entire amount of commissions was not paid, this by
reason of the evident failure of herein petitioners to present
evidence that full payment thereof has been made. It is a basic
rule in evidence that each party must prove his affirmative
allegations. These amounts are not excluded from the concept
of back wages as the salaries fell due after Gonzales should
have been reinstated, while the 13th month pay fell due for the
same period by legal mandate. These are entitlements that
cannot now be glossed over if the final decision on the merits
in this case were to be respected.

c. Additional back wages and 13th month pay

We reach the same conclusion on the other deletions the CA
made, particularly on the deletion of the 13th month pay
for2000-2001, amounting to P80,000.00, and the additional
back wages for the period of December 13, 2000 to January 21,
2001,amounting to P50,800.00. We note in this regard that the
execution proceedings were conducted before the LA issued an
Order requiring the payment of P965,014.15 in Gonzales’ favor.
An appeal of this computation to the NLRC to question the LA’s
determination of the amount due throws the
LA’s determination wide open for the NLRC’s review. In
granting these monetary reliefs, the NLRC reasoned that –

Since there is no showing that complainant was paid his salaries from the
time when he should have been immediately reinstated until his payroll
reinstatement, he is entitled thereto. (emphasis ours)

49
50
51