JABAR A.

SABDULLAH
EH 406
S.Y. 2017-2018

UNIVERSITY OF SAN CARLOS

SCHOOL OF LAW AND GOVERNANCE
CEBU CITY

LABOR RELATIONS LAW

CASE BRIEFS
VOLUME I
(S. Y. 2017-2018)

SUBMITTED BY:
SABDULLAH, JABAR A.
EH 406

SUBMITTED TO:
ATTY. JEFFERSON M. MARQUEZ

JANUARY 8, 2017

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 JABAR A. SABDULLAH
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TABLE OF CONTENTS

1. THE APPLICABLE LAWS

2. GENERAL PRINCIPLES
CASES:
1. Singer Sewing Machine vs. NLRC, 193 SCRA 271
2. Manila Golf Club vs. IAC, 237 SCRA 207
3. Encyclopedia Britanica vs. NLRC, 264 SCRA 4 [96]
4. Carungcong vs. Sunlife, 283 SCRA 319
5. Ramos vs. CA, 380 SCRA 467
6. Sonza vs. ABS-CBN, G.R. No. 138051, June 10, 2004
7. Lazaro vs. Social Security Commission, 435 SCRA 472 [2004]
8. Phil. Global Communication vs. De Vera, 459 SCRA 260 [2005]
9. ABS-CBN vs. Nazareno, G.R. No. 164156, Sept. 26, 2006
10. Francisco vs. NLRC, 500 SCRA 690 [2006]
11. Nogales et al., vs. Capitol Medical Center et al., G.R. No. 142625, December 19,
2006
12. Coca-Cola Bottlers Phils., vs. Dr. Climaco, G.R. No. 146881, February 15, 2007
13. Calamba Medical Center vs. NLRC et al., G.R. No. 176484, Nov. 25, 2008
14. Escasinas et al., vs. Shangri-la Mactan Island Resort et al., G.R. No. 178827, March 4,
2009
15. Tongko vs. Manufacturer Life Insurance Co. (Phils), Inc., et al., G.R. No. 167622,
January 25, 2011
16. Atok Big Wedge Company vs. Gison, G.R. No. 169510, August 8, 2011
17. Semblante et al., vs. Court of Appeals, et al., G.R. No. 196426, August 15, 2011
18. Bernarte vs. Phil. Basketball Association et al., G.R. No. 192084, September 14, 2011
19. Lirio vs. Genovia, G.R. No. 169757, November 23, 2011
20. Jao vs. BCC Products Sales Inc. G.R. No. 163700, April 18, 2012
21. Legend Hotel (Manila) vs. Realuyo G.R. No. 153511, July 18, 2012
22. The New Philippine Skylanders, Inc., vs. Dakila, G.r. No. 199547, Sept. 24, 2012
23. Tesoro et al., vs. Metro Manila Retreaders Inc., et al., GR No. 171482, March 12, 2014
24. Royale Homes Marketing Corp., vs. Alcantara, GR No. 195190, July 28, 2014
25. Cabaobas vs. Pepsicola GR No. 176908, March 25, 2015
26. Century Properties Inc. vs. Babiano, et al., GR No. 220978, July 5, 2016
27. Lu vs. Enopia, GR No. 197899, March 6, 2017
28. Reyes et al., vs. Doctolero, et al., GR No. 185597, August 2, 2017

3. RIGHT TO SECURITY OF TENURE

CASES:

1. ALU-TUCP vs. NLRC, 234 SCRA 678 [1994]

2. Cosmos Bottling Corp., vs. NLRC, 255 SCRA 358 [1996]
3. Purefoods vs. NLRC, 283 SCRA 136 [1997]
4. Phil. Fruit & Vegetable Industries vs. NLRC, 310 SCRA 680 [1999]
5. Philips Semiconductor vs. Fardiquela, G.R. No. 141717, April 14, 2004
6. Alcira vs. NLRC, G.R. No. 149859, June 9, 2004

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7. Mitsubishi Motors Phils vs. Chrysler Phil Labor Union G.R. No. 148738, June 29, 2004
8. Pangilinan vs. General Milling Co., G.R. No. 149329, July 2, 2004
9. Hacienda Bino/Hortencia Stark vs. Cuenca, G.R. No. 150478, April 15, 2005, citing 2003
Hacienda Fatima
10. Phil. Global Communication vs. De Vera, G.R. No. 157214, June 7, 2005
11. Lacuesta vs. Ateneo De Manila, G.R. No. 152777, December 9, 2005
12. Poseidon Fishing/Terry De Jesus vs. NLRC, G.R. No. 168052, February 20, 2006
13. Cebu Metal Corp., vs. Saliling, G.R. No. 154463, September 5, 2006
14. Liganza vs. RBL Shipyard Corp., G.R. No. 159862, October 17, 2006 citing Maraguinot
15. Fabeza vs. San Miguel Corp., G.R. No. 150658, February 9, 2007 citing Brent School
16. Soriano vs. NLRC, G.R. No. 165594, April 23, 2007, citing 2005 Filipina Pre-Frabricated
Bldg. System (Filsystem)
17. Caseres vs. Universal Robina Sugar Milling Corp., et al., G.R. No. 159343, September
28, 2007
18. Pier 8 Arrastre & Stevedoring Services Inc., vs. Boclot, G.R. No. 173849, September 28,
2007
19. Pacquing vs. Coca-Cola Bottlers Phils., Inc. G.R. No. 157966, January 31, 2008, citing
2003 Magsalin
20. Agusan Del Norte Electric Cooperative vs. Cagampang, G.R. No. 167627, October
10, 2008
21. William Uy Construction Corp et al., vs. Trinidad G.R. No. 183250, March 10, 2010
22. Dacuital et al., vs. L.M. Camus Engineering Corp. GR No. 176748, Sept. 1, 2010
23. Millennium Erectors Corp. vs. Magallanes, GR No. 184362, Nov. 15, 2010
24. Exodus International Construction Corp., vs. Biscocho, et al., G.R. No. 166109, Feb,
23, 2011
25. Leyte Geothermal Power Progressive Employees Union vs. Phil National Oil Company
G.R. No. 170351, March 30, 2011
26. St. Paul College Quezon City vs. Ancheta II, G.R. No. 169905, September 7, 2011
27. Lynvil Fishing Enterprises vs. Ariola, et al., G.R. No. 181974, February 1, 2012
28. D.M. Consunji Inc vs. Jamin, G.R. No. 192514, April 18, 2012, citing Maraguinot
29. Gapayao vs. Fulo et al., G.R. No. 193493, June 13, 2013
30. Concrete Solutions Inc. et al., vs. Cabusas, G.R. No. 177812, June 19, 2013
31. D.M. Consunji vs. Bello, G.R. No. 159371, July 29, 2013
32. Colegio Del Santisimo Rosario et al., vs. Rojo, G.R. No. 170388, Sept. 4, 2013
33. Herrera-Manaois vs. St. Scholasticas College, GR No. 188914, December 11, 2013
34. Universal Robina Sugar Milling Corp., vs. Acibo et al., GR No. 186439, January 15,
2014
35. Noblejas vs. Italian Maritime Academy Phils GR No. 207888, June 9, 2014
36. Omni hauling Services Inc. et al., vs. Tortoles, GR No. 199388, Sept. 3, 2014
37. Hacienda Ledd vs. Villegas, GR No. 179654, Sept. 22, 2014
38. FVR Skills & Services Exponents Inc. et al., vs. Seva, et al., GR No. 200857, Oct. 22,
2014
39. Manalo vs.TNS Phils, Inc. GR No. 208567, Nov. 26, 2014
40. Fuji Television Network vs Espiritu, GR no. 204944-45, December 3, 2014
41. Gadia vs. Sykes, GR No. 209499, January 28, 2015
42. Basan vs. Coca-Cola Bottlers Phils., GR No. 174365, Feb. 4, 2015
43. Hacienda Cataywa vs. Lorezo, GR No. 179640, March 18, 2015

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44. OKS Designtech Inc vs. Caccam, GR No. 211263, Aug 5, 2015
45. Enchanted Kingdom Inc vs. Verzo, GR No. 209559, Dec 9, 2015
46. Olympia Housing Inc. Vs. Lapastora, GR No. 187691, Jan. 13, 2016
47. Samonte vs. La Salle Greenhills GR No. 199683, Feb 10, 2016
48. Fallarme vs. San Juan de Dios Educational Foundation, GR No. 190015, September
14, 2016
49. Oyster Plaza Hotel vs. Melivo, GR No. 217455, Oct. 5, 2016
50. Quebral et al., vs. Angbus Construction Inc. GR No. 221897, Nov. 7, 2016
51. E. Ganzon Inc. vs. Ando, Jr. GR No. 214183, Feb. 20, 2017
52. Herma Shipyard Inc. vs. Oliveros, et al., GR No. 208936, April 17, 2017
53. University of Sto. Tomas vs. Samahang Manggagawa ng UST, GR No. 184262, April
24, 2017

4. MANAGEMENT PREROGATIVE
CASES:
1. Dosch vs. NLRC, 123 SCRA 296 [1983]
2. PT&T vs. Court of Appeals, G.R. No. 152057, September 29, 2003
3. Mendoza vs. Rural Bank of Lucban, G.R. No. 155421, July 7, 2004
4. Duncan Association of Detailman vs. Glaxo Wellcome Phils., G.R. No. 162994, Sept. 17,
2004
5. PLDT vs. Paquio, G.R. No. 152689, October 12, 2005
6. Star Paper Corp., vs. Simbol, G.R. No. 164774, April 12, 2006
7. Rivera vs. Solidbank, G.R. No. 163269, April 19, 2006
8. Tiu vs. Platinum Plans, Inc. G.R. No. 163512, February 28, 2007
9. Duldulao vs. Court of Appeals, G.R. No. 164893, March 1, 2007
10. Almario vs. Phil Airlines, G.R. No. 170928, September 11, 2007
11. Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008
12. Manila Electric Co. et al., vs. Lim, GR No. 184769, Oct. 5, 2010
13. Bello vs. Bonifacio Security Services G.R. No. 188086, Aug. 3, 2011
14. Alert Security and Investigation Agency vs. Pasawilan, G.R. No. 182397, September
14, 2011
15. Manila Pavilion Hotel vs. Delada, G.r. No. 189947, January 25, 2012
16. Barba vs. Liceo De Cagayan University, G.R. No. 193857, November 28, 2012
17. Best Wear Garments vs. De Lemos, G.R. No. 191281, December 5, 2012
18. Royal Plant Workers Union vs. Coca-Cola Bottlers Phils Inc. -Cebu Plant, G.R. No.
198783, April 15, 2013
19. Peckson vs. Robinsons Supermarket Corp. G.R. No. 198534, July 3, 2013
20. ICT Marketing Services vs. Sales, GR No. 202090, Sept 9, 2015
21. Radar Security & Watchman Agency vs. Castro, GR No. 211210, Dec. 2, 2015
22. Divine Word College of Laoag vs. Mina, GR No. 195155, April 13, 2016
23. Chateau Royale Sports & Country Club vs. Balba, et al., GR No. 197492, January 18,
2017

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5. TERMINATION OF EMPLOYMENT
CASES:
1. Leus vs. St. Scholasticas College vs. Westgrove, GR No. 187226, January 28, 2015
2. St. Lukes Medical Center vs. Sanchez, GR No. 212054, March 11, 2015
3. Naguit vs. SMC, GR No. 188839, June 22, 2015
4. VECO Employees Union-ALU TUCP vs. VECO, GR No. 205575, July 22, 2015
5. Copy Central Digital Copy Solution vs. Domrique, GR No. 193219, July 27, 2015
6. Central Azucarera De Bais vs.Siason, GR No.215555, July 29, 2015
7. Raza vs. Daikoku Electronics Phils Inc GR No. 188464, July 29, 2015
8. Rivera vs. Genesis Transport Service,GR No. 215568, Aug.3, 2015
9. Tri-C GeneralServices vs.Matuto GR No. 194686, Sept 23, 2015
10. Nightowl Watchman & Security Agency, GR No. 212096, Oct 14, 2015
11. Ocean East Agency Corp vs. Lopez, GR No. 194410, Oct 14, 2015
12. Rivera vs. Allied Banking Corp GR No.196597, Oct 31, 2015
13. Oikonomos Intl Resources Corp (Hilton Cebu Resort & Spa) vs. Navaja, Jr. GR No.
214915, Dec 7, 2015
14. Smart Communications Inc. vs. Solidum, GR No. 197763, Dec 7, 2015
15. Solidbank Corp vs. CA, GR No. 166581, Dec 7, 2015
16. Capin-Cadiz vs. Brent Hospital, GR No. 187417, Feb. 24, 2016, citing 2015 Leus/St.
Scholasticas College
17. Universal Robina Sugar Milling Corp., vs. Ablay, GR No. 218172, March 16, 2016
18. PNCC Skyway Corp., vs. Sec/DOLE, GR No. 213299, April 19, 2016
19. Valenzuela vs. Alexandra Mining & Oil Ventures Inc. GR No. 222419, Oct. 5, 2016
20. Publico vs. Hospital Managers Inc., GR No. 209086, Oct. 17, 2016
21. Wesleyan University Philippines vs. Maglaya Sr., GR No. 212774, January 23, 2017
22. Maula vs. Ximex Delivery Express GR No. 207838, January 25, 2017
23. Sumifru Corp., vs. Baya, GR No. 188269, April 17, 2017
24. Manggagawa ng Komunikasyon sa Pilipinas vs. Phil Long Distance telephone
Company Inc., Gr No. 190389, April 19, 2017
25. Javines vs. Xlibris, GR No. 214301, June 7, 2017
26. Bravo vs. Urios College, GR No. 198066, June 7, 2017
27. Panaligan vs. Phyvita Enterprises GR No. 202086, June 21, 2017
28. Claudia Kitchen Inc. vs. Tanguin GR No. 221096, June 28, 2017
29. Arco Aluminum Inc. vs. Pinon, Jr. GR No. 2158741, July 5, 2017
30. Sterling Paper Products Enterprises vs. KMM-Katipunan, GR No. 221493, August 2,
2017
31. Distribution & Control Products Inc. vs. Santos, GR No. 212616, July 10, 2017
32. Valmores vs. Dr. Achacoso, GR No. 217453, July 19, 2017
33. Cosue vs. Ferritz Integrated Development Corp., GR No. 230664, July 24, 2017
34. Alaska Milk Corp.,/Estate of Wilfred Uytengsu, GR No. 228412 & 2284389, July 26, 2017
35. Evic Human Resource Management Inc. vs. Panahon, GR No. 206890, July 31, 2017
36. Read-Rite Phils vs. Francisco, et al., GR No. 195457, August 16, 2017
37. Transglobal Maritime Agency vs. Chua, GR No. 222430, August 30, 2017

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6. SUSPENSION OF BUSINESS OPERATIONS
CASES:
1. Mindanao Terminal & Brokerage Service Inc et al., vs. Nagkahiusang Mamumuo sa
Minterbro-Southern Phils Federation of Labor, G.R. No. 174300, December 5, 2012
2. Leopard Security and Investigation Agency vs. Quitoy et al., G.R. No. 186344,
February 28, 2013
3. SKM Art Craft Corp., vs. Bauca, et al., GR No. 171282, November 27, 2013
4. Navotas Shipyard Corp., vs. Montallana et al., GR No. 190053, March 24, 2014
5. Emeritus Security & Maintenance Systems Inc., vs. Dailig, GR No. 204761, April 2, 2014
6. Lopez vs. Irvine Construction Corp. GR No. 207253, August 20, 2014
7. Exocet Security & Allied Services Corp., vs. Serrano, GR No. 198538, Sept. 29, 2014
8. Pasig Agricultural Devt and Industrial Supply Corp vs. Nievarez, GR No. 197852, Oct
19, 2015
9. Quillopa vs. Quality Guards Services & Investigation Agency, GR No. 213814, Dec. 2,
2015
10. Spectrum Security Services Inc, vs. Grave et al., GR No. 196650, June 7, 2017
11. Ibon vs. Genghis Khan Security Services Inc. GR No. 221085, June 19, 2017

7. DISEASE AS GROUND FOR TERMINATION

CASES:
1. Sy vs. Court of Appeals, G.R. No. 142293, February 27, 2003
2. Manly Express vs. Payong, G.R. No. 167462, October 25, 2005
3. Duterte vs. Kingswood Trading Co., G.R. No. 160325, October 4, 2007
4. Villaruel vs. Yeo Han Guan G.R. No. 169191, June 1, 2011

8. OTHER CAUSES OF SEVERANCE OF EMPLOYMENT RELATION

CASES:
1. Pantranco North Express vs. NLRC, 259 SCRA 161 [1996]
2. Cainta Catholic School vs. Cainta Catholic School Employees Union, G.R. No. 151021,
May 4, 2006 citing 1996 Pantrano North Express
3. Jaculbe vs. Silliman University, G.R. No. 156934, March 16, 2007
4. Globe Telecom vs. Crisologo, G.R. No. 17644, August 10, 2007
5. BMG Records Phils et al., vs. Aparecio, et al., G.R. No. 153290, September 5, 2007,
citing Phil Today vs. NLRC, 267 SCRA 202 [1996]
6. Cercado vs. Uniprom Inc. GR No. 188154, Oct. 13, 2010
7. Skippers United Pacific vs. Doza et al., G.R. No. 175558, February 8, 2012
8. Auza, Jr. et al., vs. Mol Phils Inc. G.R. No. 175481, November 21, 2012
9. Gan vs. Galderma Philippines, Inc. G.R. No. 177167, January 17, 2013
10. Padillo vs. Rural bank of Nabunturan Inc. G.R. No. 199338, January 21, 2013
11. Intel Technology Phils Inc. vs. NLRC et al., GR No. 200575, February 5, 2014
12. Sutherland & Global Services Phils Inc., vs. Labrador, GR No. 193107, March 24, 2014
13. Chiang Kai Shek College et al., vs. Torres, GR No. 189456, April 2, 2014
14. Goodyear Philippines Inc. vs. Angus, GR No. 185449, November 12, 2014
15. Lagahit vs. Pacific Concord Container Lines, GR No. 177680, Jan. 13, 2016

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16. Blue Eagle Management vs. Naval, GR No. 192488, April 19, 2016
17. Catotocan vs. Lourdes School of Quezon City et al., Gr No. 213486, April 26, 2017
18. Philippine Airlines vs. Hassaram, GR No. 217730, June 5, 2017

9. PRESCRIPTION OF CLAIMS
CASES:
1. Ludo & Luym vs. Saornido, G.R. No. 140960, January 20, 2003
2. Degamo vs. Avant Lard Shipping Lines, G.R. No. 154460, November 22, 2005
3. Intercontinental Broadcasting Corp., vs. Panganiban, G.R. No. 151407, February 6,
2007
4. Far East Agricultural Supply vs. Lebatigue, G.R. No. 162813, February 12, 2007
5. Victory Liner vs. Race, G.R. No. 164820, March 28, 2007
6. J.K Mercado & Sons Agricultural Enterprises vs. Hon. Sto. Tomas, G.R. No. 158084, Aug.
29, 2008
7. Reyes vs. NLRC, CCBPI, G.R. No. 180551, Feb. 10, 2009
8. LWV Construction Corp., vs. Dupo, GR No. 172342, July 13, 2009
9. PLDT vs. Pingol, GR No. 182622, Sept. 8, 2010
10. Medline Management Inc. vs. Roslinda, GR No. 168715, Sept. 15, 2010
11. University of East vs. University of East Employees Asso. G.R. No. 179593, September
14, 2011

10. JURISDICTION OF THE LABOR ARBITER

CASES:
1. Tolosa vs. NLRC, G.R. No. 149578, April 10, 2003
2. Austria vs. NLRC, 312 SCRA 413
3. Eviota vs. Court of Appeals, 407 SCRA 394
4. Dynamic Signmaker Outdoor Advertising Services vs. Potongan, G.R. No. 156589,
June 27, 2005
5. Metromedia Times Corp., vs. Pastorin, G.R. No. 154295, July 29, 2005
6. Yusen Air & Sea Service Phils vs. Villamor, G.R. No. 154942, August 16, 2005
7. Duty Free Phils., vs. Mojica, G.R. No. 166365, September 30, 2005
8. Easycall Communication Phils., vs. King, G.R. No. 145901, December 15, 2005
9. San Miguel Foods Inc., vs. San Miguel Corp Employees Union-PTGWO, G.R. No.
168569, October 5, 2007
10. Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU, G.R. No.
1577745, October 19, 2007
11. Atty Garcia vs. Eastern Telecommunications Phils., et al., GR No. 173115 & 173163-64,
April 16, 2009
12. Halaguena et al., vs. Phil Airlines GR No. 172013, Oct 2, 2009
13. Okol vs. Slimmer’s World International, et al., G.R. No. 160146, December 11, 2009
14. Hugo et al., vs. Light Rail Transit Authority, G.R. No. 181866, March 18, 2010
15. Matling Industrial and Commercial Corp et al., vs. Coros, GR No. 157802, Oct. 13,
2010
16. Manila Electric Co. et al., vs. Lim, GR No. 184769, Oct. 5, 2010
17. Hongkong and Shanghai Banking Corp., vs. Sps. Broqueza, GR No. 178610, Nov. 17,

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2010
18. Real vs. Sangu Phils., Inc., et al., G.R. No. 168757, January 19, 2011
19. Portillo vs. Rudolf Lietz, Inc. et al., G.R. No. 196539, October 10, 2012
20. Ace Navigation Co. Inc. et al., vs. Fernandez, G.R. No. 197309, October 10, 2012
21. Cosare vs. Broadcom Asia, Inc. GR No. 201298, February 5, 2014, citing 2010 Matling
Industrial and Commercial Corp et al., vs. Coros, GR No. 157802 and 2011 Real vs.
Sangu Phils., Inc., et al., G.R. No. 168757
22. Amecos Innovators Inc. vs. Lopez, GR no. 178055, July 2, 2014
23. Indophil Textile Mills Inc. vs. Engr. Adviento, GR No. 171212, August 4, 2014
24. Honda Car Phils vs. Honda cars Technical Specialist & Supervisors Union GR No.
204142, Nov. 19 2014
25. Montero vs. Times Transportation GR No. 1980828, March 16, 2015

11. 2011 NLRC RULES OF PROCEDURE

CASES:
1. McBurnie vs. Ganzon et al., GR Nol. 178034 & 178117 & 186984-85, Oct. 17, 2013, En
banc
2. Loon et al., vs. Power Master Inc. et al., GR No. 189404, December 11, 2013
3. Lepanto Consolidated Mining Corp., vs. Icao, GR No. 196047, January 15, 2014
4. Building Care Corp. vs. Macaraeg, G.R. No. 198357, December 10, 2012
5. Co Say Coco Products Phils Inc., vs. Baltasar, et al., GR No. 188828, March 5, 2014
6. Olores vs. Manila Doctors College et al., GR No. 201663, March 31, 2014
7. Bergonio et al., vs. South east Asian Airlines, GR No. 195227,.April 21, 2014
8. Arabit et al., vs. Jardine Pacific Finance Inc. GR No. 181719, April 21, 2014
9. Mirant (Phils) Corp., vs. Caro, GR No. 181490, April 23, 2014
10. Castro Jr. vs. Ateneo de Naga University et al., GR No. 175293, July 23, 2014
11. Phil. Touristers Inc et al., vs. Mas Transit Workers Union-ANGLO-KMU GR No. 201237,
Sept. 3, 2014
12. Azuelo vs. Zameco II Electric Cooperative, Inc. GR No. 192573, October 22, 2014
13. University of Pangasinan vs. Fernandez, GR No. 211228, Nov. 12, 2014
14. Metroguards Secuirty Agency vs. Hilongo, GR No. 215630, March 9, 2015
15. Seacrest Maritime management vs. Picar, GR No. 209383, March 11, 2015
16. Waterfront Cebu City Casino Hotel vs. Ledesma, GR No. 197556, March 25, 2015
17. Manila Mining Corp vs. Amor, GR No. 182800, April 20, 2015
18. Dela Rosa Liner Inc et vs. Borela et GR No. 207286, July 29, 2016
19. Toyota Alabang Inc vs. Games, GR No. 206612, Aug 17, 2015
20. Rosales et vs. New ANJH Enterprises, et GR No. 203355, Aug 18, 2015, En Banc
21. Phil. Air Lines vs. Bichara, GR No. 213729, Sept 2, 2015
26. Continental Micronesia vs. Basso, GR No. 178382-83, Sept 23, 2015
27. Ilaw Buklod ng Manggagawa Nestle Phils Chapter vs. Nestle Phils, GR No. 198675,
Sept 23, 2015
28. Quantum Foods Inc vs. Esloyo, GR No. 213696, Dec 9, 2015
29. De Ocampo vs. RPN-9/Radio Phils Network, GR No. 192947, Dec 9, 2015
30. Guillermo vs. Uson, GR No. 198967, March 7, 2016
31. Fontana Development Corp., vs. Vukasinovic, GR No. 222424, Sept. 21, 2016
32. Manila Doctors College vs. Olomores, GR No. 225044, Oct. 3, 2016
33. Dee Jay’s Inn & Café vs. Raneses, GR No. 191823, Oct. 5, 2016

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34. Buenaflor Car Services vs. Cezar Durumpili David GR No. 222730, Nov. 7, 2016
35. C.I.C.M Mission Seminaries School of Theology Inc. vs. Perez, GR No. 220506, January
18, 2017
36. Turks Shawarma Company vs. Pajaron, et al., GR No. 207156, January 16, 2017
37. Dutch Movers Inc. vs. Lequin, et al., GR No. 210032, April 25, 2017
38. Doble, Jr. vs. ABB Inc. GR No. 215627, June 5, 2017
39. Philtranco Services Enterprises Inc. vs. Cual, et al., GR No. 207684, July 17, 2017
40. Genpact Services Inc. vs. Santos-Falceso, GR No. 227695, July 31, 2017

I. THE APPLICABLE LAWS

II. GENERAL PRINCIPLES

Singer Sewing Machine vs. NLRC

G.R. No. 91307 January 24, 1991

FACTS:
Singer Machine Collectors Union-Baguio (SIMACUBA), the respondent union, filed a
petition for direct certification as the sole and exclusive bargaining agent of all
collectors of the Singer Sewing Machine Company, Baguio City branch (hereinafter
referred to as "the Company").
The Company opposed the petition mainly on the ground that the union members are
actually not employees but are independent contractors as evidenced by the
collection agency agreement which they signed. The respondent Med-Arbiter, finding
that there exists an employer-employee relationship between the union members and
the Company, granted the petition for certification election. On appeal, Secretary of
Labor Franklin M. Drilon affirmed it.

ISSUE:
Whether or not there exists an employee-employer relationship between the parties.

RULING:
SC ruled in favor of petitioner. Private respondents are independent contractors, not
employees. As such, they cannot enter into a collective bargaining agreement with the
petitioner.
The present case mainly calls for the application of the control test, which if not
satisfied, would lead us to conclude that no employer-employee relationship exists.
Hence, if the union members are not employees, no right to organize for purposes of
bargaining, nor to be certified as such bargaining agent can ever be recognized. The

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following elements are generally considered in the determination of the employer-
employee relationship; "(1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the
employee's conduct — although the latter is the most important element".
The nature of the relationship between a company and its collecting agents depends
on the circumstances of each particular relationship. Not all collecting agents are
employees and neither are all collecting agents independent contractors. The
collectors could fall under either category depending on the facts of each case.
A thorough examination of the facts of the case leads us to the conclusion that the
existence of an employer-employee relationship between the Company and the
collection agents cannot be sustained. The plain language of the agreement reveals
that the designation as collection agent does not create an employment relationship
and that the applicant is to be considered at all times as an independent contractor.
The Court finds that since private respondents are not employees of the Company, they
are not entitled to the constitutional right to join or form a labor organization for
purposes of collective bargaining. Accordingly, there is no constitutional and legal basis
for their "union" to be granted their petition for direct certification.

Manila Golf Club vs. IAC

G.R. No. 64948 September 27, 1994

FACTS:
This is originally filed with the Social Security Commission (SSC) via petition of 17 persons
who styled themselves as “ Caddies of Manila Golf and Country Club-PTCCEA” for the
coverage and availment of benefits of the Social Security Act as amended, PTCCEA
(Philippine Technical, Clerical, Commercial Employees Association) a labor organization
where which they claim for membership.
The same time two other proceedings were filed and pending. These are certification
election case filed by PTCCEA on behalf of the same caddies of Manila Golf and
Country club which was in favor of the caddies and compulsory arbitration case
involving PTCCEA and Manila Golf and Country Club which was dismissed and ruled
that there was no employer-employee relationship between the caddies and the club.

ISSUE:
Whether or not persons rendering caddying services for members of golf clubs and their
guests in said clubs' courses or premises are the employees of such clubs and therefore
within the compulsory coverage of the Social Security System (SSS).

RULING:
SC ruled in favor of the petitioner. Llamar is not an employee of the Manila Golf and
Country Club, Inc. The club is under no obligation to report him for compulsory
coverage to the SSS.

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In the very nature of things, caddies must submit to some supervision of their conduct
while enjoying the privilege of pursuing their occupation within the premises and
grounds of whatever club they do work in. They work for the club to which they attach
themselves on sufferance but, on the other hand, also without having to observe any
working hours, free to leave anytime they please, to stay away for as long they like.
These considerations clash frontally with the concept of employment. It can happen
that a caddy who has rendered services to a player on one day may still find sufficient
time to work elsewhere. Under such circumstances, the caddy may leave the premises
and to go to such other place of work that he wishes. These are things beyond the
control of the petitioner.

Encyclopedia Britanica vs. NLRC

G.R. No. 87098 November 4, 1996

FACTS:
Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner
Encyclopaedia Britannica and was in charge of selling petitioner's products through
some sales representatives. As compensation, private respondent received
commissions from the products sold by his agents. He was also allowed to use
petitioner's name, goodwill and logo. It was, however, agreed upon that office
expenses would be deducted from private respondent's commissions. Petitioner would
also be informed about appointments, promotions, and transfers of employees in
private respondent's district.
Limjoco resigned from office to pursue his private business. Then on October 30, 1975,
he filed a complaint against petitioner Encyclopaedia Britannica with the Department
of Labor and Employment, claiming for non-payment of separation pay and other
benefits, and also illegal deduction from his sales commissions.

ISSUE:
Whether or not there exists an employer-employee relationship between the parties.

RULING:
SC ruled that Limjoco was not an employee of the petitioner company. He was merely
an agent or an independent dealer of the petitioner.
The records of the case at bar showed that there was no such relationship. He was free
to conduct his work and he was free to engage in other means of livelihood. At the
time he was connected with the petitioner company, private respondent was also a
director and later the president of the Farmers' Rural Bank. Had he been an employee
of the company, he could not be employed elsewhere and he would be required to
devote full time for petitioner. If private respondent was indeed an employee, it was
rather unusual for him to wait for more than a year from his separation from work before
he decided to file his claims.

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Carungcong vs. Sunlife

G.R. No. 118086 December 15, 1997

FACTS:
Susan Carungcong began her career in the insurance industry in 1974 as an agent of
Sun Life Assurance Company of Canada. She signed an Agent Agreement with Sun
Life. In virtue of which she was designated the latter’s agent to solicit applications for its
insurance and annuity policies.
This contract was superseded some five years later when she signed two (2) new
agreements. The first, denominated Career Agent’s or Unit Manager’s Agreement,
dealt with such matters as the agent’s commissions, his obligations, limitations on his
authority, and termination of the agreement by death, or by written notice with or
without cause. The second was titled, Manager’s Supplementary Agreement. It
explicitly described as a “further agreement”. Carungcong and Sun Life executed
another Agreement named New Business Manager with the function generally to
manage a New Business Office established. This latest Agreement stressed that the New
Business Manager in performance of his duties defined herein, shall be considered an
independent contractor and not an employee of Sun Life, and that under no
circumstance shall the New Business Manager and/or his employees be considered
employees of Sun Life.
Ms. Eleizer Sibayan, Manager of Sun Life’s Internal Audit Department, commenced an
inquiry into the special fund availments of Carungcong and other New Business
Managers. Respondent Lance Kemp, had been receiving reports of anomalies in
relation thereto from unit managers and agents. Thereafter, on January 1990,
Carungcong was confronted with and asked to explain the discrepancies set out in
Sibayan’s report. She was given a letter signed by Metron V. Deveza, CLU, Director,
Marketing, which advised of the termination of her relationship with Sun Life.
Carungcong promptly instituted proceedings for vindication in the Arbitration Branch of
the National Labor Relations Commissions on January 16, 1990. There she succeeded in
obtaining a favorable judgment. Labor Arbiter found that there existed an employer-
employee relationship between her and Sun Life. On appeal, the National Labor
Relations Commission reversed the Arbiter’s judgment. It affirmed that no employment
relationship existed between Carungcong and Sun Life.

ISSUE:
Whether or not there exists an employer-employee relationship between the parties.

RULING:
SC held that Carungcong is not an employee of Sun Life Co. She was an independent
contractor.
Noteworthy is that this last agreement which emphasized, like the “Career Agent’s or
Unit Manager’s Agreement” first signed by her, that in performance of her duties
defined herein. Carungcong would be considered an independent contractor and
not an employee of Sun Life, and that under no circumstance shall the New Business

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Manager and/or his employees be considered employees of Sun Life.
Carungcong is an independent contractor. It was indicated in the very face of the
contract. The rules and regulations of the company is not sufficient to establish an
employer-employee relationship. It does not necessarily create any employer-
employee relationship where the employers’ controls have to interfere in the methods
and means by which employee would like employ to arrive at the desired results.
Carungcong admitted that she was free to work as she pleases, at the place and time
she felt convenient for her to do so. She was not paid to a fixed salary and was mainly
paid by commissions depending on the volume of her performance.

Ramos vs. CA
G.R. No. 124354; April 11, 2002

FACTS:
Petitioner Erlinda Ramos, after seeking professional medical help, was advised to
undergo an operation for the removal of a stone in her gall bladder
(cholecystectomy). She was referred to Dr. Hosaka, a surgeon, who agreed to
perform the operation on her. The operation was scheduled for June 17, 1985 at
9:00 in the morning at private respondent De Los Santos Medical Center (DLSMC).
Since neither petitioner Erlinda nor her husband, petitioner Rogelio, knew of any
anesthesiologist, Dr. Hosaka recommended to them the services of Dr. Gutierrez. On
the following day, she was ready for operation as early as 7:30 am. Around 9:30, Dr.
Hosaka has not yet arrived. By 10 am, Rogelio wanted to pull out his wife from the
operating room. Dr. Hosaka finally arrived at 12:10 pm more than 3 hours of the
scheduled operation.
Dr. Guiterres tried to intubate Erlinda. The nail beds of Erlinda were bluish
discoloration in her left hand. At 3 pm, Erlinda was being wheeled to the Intensive
care Unit and stayed there for a month. Since the ill-fated operation, Erlinda
remained in comatose condition until she died.
The family of Ramos sued them for damages.

ISSUE:
Whether or not there exists an employer-employee relationship between the medical
center and Drs. Hosaka and Guiterrez.

RULING:
SC ruled that there was no employee-employer relationship between de Los Santos
Medical Center and Drs. Hosaka and Gutierrez.
After a careful consideration of the arguments raised by DLSMC, the Court finds that
respondent hospital’s position on this issue is meritorious. There is no employer-employee
relationship between DLSMC and Drs. Gutierrez and Hosaka which would hold DLSMC
solidarily liable for the injury suffered by petitioner Erlinda under Article 2180 of the Civil
Code.

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As explained by respondent hospital, that the admission of a physician to membership
in DLSMC’s medical staff as active or visiting consultant is first decided upon by the
Credentials Committee. Neither is there any showing that it is DLSMC which pays any of
its consultants for medical services rendered by the latter to their respective patients.
Moreover, the contract between the consultant in respondent hospital and his patient
is separate and distinct from the contract between respondent hospital and said
patient. The first has for its object the rendition of medical services by the consultant to
the patient, while the second concerns the provision by the hospital of facilities and
services by its staff such as nurses and laboratory personnel necessary for the proper
treatment of the patient.
The hospital does not hire consultants but it accredits and grants him the privilege of
maintaining a clinic and/or admitting patients. It is the patient who pays the
consultants. The hospital cannot dismiss the consultant but he may lose his privileges
granted by the hospital. The hospital’s obligation is limited to providing the patient with
the preferred room accommodation and other things that will ensure that the doctor’s
orders are carried out.

Sonza vs. ABS-CBN

G.R. No. 138051; June 10, 2004

FACTS:
Respondent ABS-CBN Broadcasting Corporation ("ABS-CBN") signed an Agreement
("Agreement") with the Mel and Jay Management and Development Corporation
("MJMDC"). ABS-CBN was represented by its corporate officers while MJMDC was
represented by SONZA, as President and General Manager, and Carmela Tiangco
("TIANGCO"), as EVP and Treasurer. Referred to in the Agreement as "AGENT," MJMDC
agreed to provide SONZA’s services exclusively to ABS-CBN as talent for radio and
television.
ABS-CBN agreed to pay for SONZA’s services a monthly talent fee of P310,000 for the
first year and P317,000 for the second and third year of the Agreement. ABS-CBN would
pay the talent fees on the 10th and 25th days of the month. SONZA filed a complaint
against ABS-CBN before the Department of Labor and Employment, National Capital
Region in Quezon City. SONZA complained that ABS-CBN did not pay his salaries,
separation pay, service incentive leave pay, 13th month pay, signing bonus, travel
allowance and amounts due under the Employees Stock Option Plan ("ESOP").

ISSUE:
Whether Jay Sonza is an employee of ABS-CBN or an independent contractor.

RULING:
SC ruled that Sonza is an independent contractor.
Selection and Engagement of Employees. Independent contractors often present
themselves to possess unique skills, expertise or talent to distinguish them from ordinary

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employees. The specific selection and hiring of SONZA, because of his unique skills,
talent and celebrity status not possessed by ordinary employees, is a circumstance
indicative, but not conclusive, of an independent contractual relationship. If SONZA did
not possess such unique skills, talent and celebrity status, ABS-CBN would not have
entered into the Agreement with SONZA but would have hired him through its personnel
department just like any other employee.
Payment of Wages. All the talent fees and benefits paid to SONZA were the result of
negotiations that led to the Agreement. If SONZA were ABS-CBN’s employee, there
would be no need for the parties to stipulate on benefits such as "SSS, Medicare, x x x
and 13th month pay"20 which the law automatically incorporates into every employer-
employee contract. Whatever benefits SONZA enjoyed arose from contract and not
because of an employer-employee relationship. SONZA’s talent fees, amounting to
P317,000 monthly in the second and third year, are so huge and out of the ordinary that
they indicate more an independent contractual relationship rather than an employer-
employee relationship.
Power of Dismissal. During the life of the Agreement, ABS-CBN agreed to pay SONZA’s
talent fees as long as "AGENT and Jay Sonza shall faithfully and completely perform
each condition of this Agreement."24 Even if it suffered severe business losses, ABS-CBN
could not retrench SONZA because ABS-CBN remained obligated to pay SONZA’s
talent fees during the life of the Agreement. This circumstance indicates an
independent contractual relationship between SONZA and ABS-CBN.
Power of Control. Applying the control test to the present case, we find that SONZA is
not an employee but an independent contractor. The control test is the most important
test our courts apply in distinguishing an employee from an independent contractor.29
This test is based on the extent of control the hirer exercises over a worker. The greater
the supervision and control the hirer exercises, the more likely the worker is deemed an
employee. The converse holds true as well – the less control the hirer exercises, the more
likely the worker is considered an independent contractor.30

Lazaro vs. Social Security Commission

G.R. No. 138254; July 30, 2004

FACTS:
Private respondent Rosalina M. Laudato ("Laudato") filed a petition before the SSC for
social security coverage and remittance of unpaid monthly social security contributions
against her three (3) employers. Among the respondents was herein petitioner Angelito
L. Lazaro ("Lazaro"), proprietor of Royal Star Marketing ("Royal Star"), which is engaged
in the business of selling home appliances. Laudato alleged that despite her
employment as sales supervisor of the sales agents for Royal Star from April of 1979 to
March of 1986, Lazaro had failed during the said period, to report her to the SSC for
compulsory coverage or remit Laudato's social security contributions.

ISSUE:

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Whether or not there exists an employee-employer relationship between Laudato and
Royal Star Marketing.

RULING:
SC ruled that there exists such relationship between the parties.
It is an accepted doctrine that for the purposes of coverage under the Social Security
Act, the determination of employer-employee relationship warrants the application of
the "control test," that is, whether the employer controls or has reserved the right to
control the employee, not only as to the result of the work done, but also as to the
means and methods by which the same is accomplished.
Suffice it to say, the fact that Laudato was paid by way of commission does not
preclude the establishment of an employer-employee relationship. The relevant factor
remains, as stated earlier, whether the "employer" controls or has reserved the right to
control the "employee" not only as to the result of the work to be done but also as to
the means and methods by which the same is to be accomplished.

Phil. Global Comm. vs. De Vera

G.R. No. 157214; June 7, 2005

FACTS:
Philippine Global Communications inc. is a corporation engaged in the business of
communication services and allied activities while Ricardo de Vera is a physician by
profession whom petitioner enlisted to attend to the medical needs of its employees.
The controversy rose when petitioner terminated his engagement.
In 1981, Dr. de Vera offered his services to petitioner. The parties agreed and formalized
the respondent’s proposal in a document denominated as retainership contract which
will be for a period of one year, subject to renewal and clearly stated that respondent
will cover the retainership the company previously with Dr. Eulau. The agreement went
until 1994, in the years 1995-1996, it was renewed verbally. The turning point of the
parties’ relationship was when petitioner, thru a letter bearing the subject TERMINATION
– RETAINERSHIP CONTRACT, informed Dr. de Vera of its decision to discontinue the
latter’s retainer contract because the management has decided that it would be more
practical to provide medical services to its employees through accredited hospitals
near the company premises.
On January 1997, de Vera fileda complaint for illegal dismissal before the NLRC,
alleging that he had been actually employed by the company as its company
physician since 1991. The commission rendered decision in favor of Philcom and
dismissed the complaint saying that de Vera was an independent contractor. On
appeal to NLRC, it reversed the decision of the Labor Arbiter stating that de Vera is a
regular employee and directed the company to reinstate him. Philcom appealed to
the CA where it rendered decision deleting the award but reinstating de Vera. Philcom
filed this petition involving the difference of a job contracting agreements from
employee-employer relationship.

ISSUE:

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Whether or not there exists an employee-employer relationship between the parties.

RULING:
SC ruled that there was no such relationship existing between Dr. de Vera and Phil.
Com.
The elements of an employer-employee relationship are wanting in this case. The
record are replete with evidence showing that respondent had to bill petitioner for his
monthly professional fees. It simply runs against the grain of common experience to
imagine that an ordinary employee has yet to bill his employer to receive his salary.
The power to terminate the parties’ relationship was mutually vested on both. Either
may terminate the arrangement at will, with or without cause.
Remarkably absent is the element of control whereby the employer has reserved the
right to control the employee not only as to the result of the work done but also as to
the means and methods by which the same is to be accomplished.
Petitioner had no control over the means and methods by which respondent went
about performing his work at the company premises. In fine, the parties themselves
practically agreed on every terms and conditions of the engagement, which thereby
negates the element of control in their relationship.

ABS-CBN vs. Nazareno

G.R. No. 164156; September 26, 2006

FACTS:
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the
broadcasting business and owns a network of television and radio stations, whose
operations revolve around the broadcast, transmission, and relay of
telecommunication signals. It sells and deals in or otherwise utilizes the airtime it
generates from its radio and television operations. It has a franchise as a broadcasting
company, and was likewise issued a license and authority to operate by the National
Telecommunications Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as
production assistants (PAs) on different dates. They were assigned at the news and
public affairs, for various radio programs in the Cebu Broadcasting Station. On
December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a
Collective Bargaining Agreement (CBA) to be effective during the period from
December 11, 1996 to December 11, 1999. However, since petitioner refused to
recognize PAs as part of the bargaining unit, respondents were not included to the
CBA.
In October 2000, respondents filed a Complaint for Recognition of Regular Employment
Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive
Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before
the NLRC. The Labor Arbiter rendered judgment in favor of the respondents, and
declared that they were regular employees of petitioner as such, they were awarded

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monetary benefits. NLRC affirmed the decision of the Labor Arbiter. Petitioner filed a
motion for reconsideration but CA dismissed it.

ISSUE:
Whether or not the respondents were considered regular employees of ABS-CBN.

RULING:
SC ruled that Production Assistants (Pas) are regular workers. Thus, they are entitled to
the benefits in the CBA between ABS-CBN and its rank-and-file employees.
It was held that where a person has rendered at least one year of service, regardless of
the nature of the activity performed, or where the work is continuous or intermittent, the
employment is considered regular as long as the activity exists, the reason being that a
customary appointment is not indispensable before one may be formally declared as
having attained regular status.
The Court states that the primary standard, therefore, of determining regular
employment is the reasonable connection between the particular activity performed
by the employee in relation to the usual trade or business of the employer. The test is
whether the former is usually necessary or desirable in the usual business or trade of the
employer. The connection can be determined by considering the nature of work
performed and its relation to the scheme of the particular business or trade in its
entirety. Also, if the employee has been performing the job for at least a year, even if
the performance is not continuous and merely intermittent, the law deems repeated
and continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is considered
regular, but only with respect to such activity and while such activity exists.
Additionally, respondents cannot be considered as project or program employees
because no evidence was presented to show that the duration and scope of the
project were determined or specified at the time of their engagement. In the case at
bar, however, the employer-employee relationship between petitioner and
respondents has been proven. In the selection and engagement of respondents, no
peculiar or unique skill, talent or celebrity status was required from them because they
were merely hired through petitioner’s personnel department just like any ordinary
employee. Respondents did not have the power to bargain for huge talent fees, a
circumstance negating independent contractual relationship. Respondents are highly
dependent on the petitioner for continued work. The degree of control and supervision
exercised by petitioner over respondents through its supervisors negates the allegation
that respondents are independent contractors.
The presumption is that when the work done is an integral part of the regular business of
the employer and when the worker, relative to the employer, does not furnish an
independent business or professional service, such work is a regular employment of
such employee and not an independent contractor. As regular employees,
respondents are entitled to the benefits granted to all other regular employees of
petitioner under the CBA . Besides, only talent-artists were excluded from the CBA and
not production assistants who are regular employees of the respondents. Moreover,

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under Article 1702 of the New Civil Code: “In case of doubt, all labor legislation and all
labor contracts shall be construed in favor of the safety and decent living of the
laborer.”

Francisco vs. NLRC

G.R. No. 170087; August 31, 2006

FACTS:
Angelina Francisco was hired by Kasei Corporation during the incorporation stage. She
was designated as accountant and corporate secretary and was assigned to handle
all the accounting needs of the company. She was also designated as Liason Officer to
the City of Manila to secure permits for the operation of the company.
In 1996, Petitioner was designated as Acting Manager. She was assigned to handle
recruitment of all employees and perform management administration functions. In
2001, she was replaced by Liza Fuentes as Manager. Kasei Corporation reduced her
salary to P2,500 per month which was until September. She asked for her salary but was
informed that she was no longer connected to the company. She did not anymore
report to work since she was not paid for her salary. She filed an action for constructive
dismissal with the Labor Arbiter.

ISSUE:
Whether or not there was an employer-employee relationship.

RULING:
SC held that there was such relationship. Francisco was constructively dismissed. To
ascertain if such relationship exists, the Court used two-tiered test—control test and
economic reality test.
The court held that in this jurisdiction, there has been no uniform test to determine the
existence of an employer-employee relation. Generally, courts have relied on the so-
called right of control test where the person for whom the services are performed
reserves a right to control not only the end to be achieved but also the means to be
used in reaching such end. In addition to the standard of right-of-control, the existing
economic conditions prevailing between the parties, like the inclusion of the employee
in the payrolls, can help in determining the existence of an employer-employee
relationship.
The better approach would therefore be to adopt a two-tiered test involving: (1) the
putative employer’s power to control the employee with respect to the means and
methods by which the work is to be accomplished; and (2) the underlying economic
realities of the activity or relationship.
The court observed the need to consider the existing economic conditions prevailing
between the parties, in addition to the standard of right-of-control like the inclusion of

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the employee in the payrolls, to give a clearer picture in determining the existence of
an employer-employee relationship based on an analysis of the totality of economic
circumstances of the worker.
Thus, the determination of the relationship between employer and employee depends
upon the circumstances of the whole economic activity, such as: (1) the extent to
which the services performed are an integral part of the employer’s business; (2) the
extent of the worker’s investment in equipment and facilities; (3) the nature and degree
of control exercised by the employer; (4) the worker’s opportunity for profit and loss; (5)
the amount of initiative, skill, judgment or foresight required for the success of the
claimed independent enterprise; (6) the permanency and duration of the relationship
between the worker and the employer; and (7) the degree of dependency of the
worker upon the employer for his continued employment in that line of business. The
proper standard of economic dependence is whether the worker is dependent on the
alleged employer for his continued employment in that line of business.
By applying the control test, there is no doubt that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji Kamura,
the corporation’s Technical Consultant. It is therefore apparent that petitioner is
economically dependent on respondent corporation for her continued employment in
the latter’s line of business.
There can be no other conclusion that petitioner is an employee of respondent Kasei
Corporation. She was selected and engaged by the company for compensation, and
is economically dependent upon respondent for her continued employment in that line
of business. Her main job function involved accounting and tax services rendered to
Respondent Corporation on a regular basis over an indefinite period of engagement.
Respondent Corporation hired and engaged petitioner for compensation, with the
power to dismiss her for cause. More importantly, Respondent Corporation had the
power to control petitioner with the means and methods by which the work is to be
accomplished.

Nogales et. al. vs. Capitol Medical Center et. al.

G.R. No. 142625; December 19, 2006

FACTS:
Pregnant with her fourth child, Corazon Nogales ("Corazon"), who was then 37 years
old, was under the exclusive prenatal care of Dr. Oscar Estrada ("Dr. Estrada")
beginning on her fourth month of pregnancy or as early as December 1975. Around
midnight of 25 May 1976, Corazon started to experience mild labor pains prompting
Corazon and Rogelio Nogales ("Spouses Nogales") to see Dr. Estrada at his home. After
examining Corazon, Dr. Estrada advised her immediate admission to the Capitol
Medical Center ("CMC"). t 6:13 a.m., Corazon started to experience convulsionsAt 6:22
a.m., Dr. Estrada, assisted by Dr. Villaflor, applied low forceps to extract Corazon's baby.
In the process, a 1.0 x 2.5 cm. piece of cervical tissue was allegedly torn.At 6:27 a.m.,
Corazon began to manifest moderate vaginal bleeding which rapidly became profuse.
Corazon died at 9:15 a.m. The cause of death was "hemorrhage, post partum.

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ISSUE:
Whether or not the Capitol Medical Center is solidarily liable.

RULING:
SC held CMC solidarily liable together with Dr. Estrada. The “doctrine of apparent
authority” was used to make CMC vicariously liable even if Dr. Estrada is an
independent contractor.
Private hospitals, hire, fire and exercise real control over their attending and visiting
"consultant" staff. The basis for holding an employer solidarily responsible for the
negligence of its employee is found in Article 2180 of the Civil Code which considers a
person accountable not only for his own acts but also for those of others based on the
former's responsibility under a relationship of patria potestas.
In general, a hospital is not liable for the negligence of an independent contractor-
physician. There is, however, an exception to this principle. The hospital may be liable if
the physician is the "ostensible" agent of the hospital. This exception is also known as the
"doctrine of apparent authority”.
For a hospital to be liable under the doctrine of apparent authority, a plaintiff must
show that: (1) the hospital, or its agent, acted in a manner that would lead a
reasonable person to conclude that the individual who was alleged to be negligent
was an employee or agent of the hospital; (2) where the acts of the agent create the
appearance of authority, the plaintiff must also prove that the hospital had knowledge
of and acquiesced in them; and (3) the plaintiff acted in reliance upon the conduct of
the hospital or its agent, consistent with ordinary care and prudence. In the instant
case, CMC impliedly held out Dr. Estrada as a member of its medical staff. Through
CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby leading the
Spouses Nogales to believe that Dr. Estrada was an employee or agent of CMC.

Coca-Cola Bottlers Phils. vs. Dr. Climaco

G.R. No. 146881; February 5, 2007

FACTS:
Dr. Climaco is a medical doctor who was hired by the petitioner by virtue of retainer
agreement. The agreement states that there is no employer-employee relationship
between the parties. The retainer agreement was renewed annually. The last one
expired on Dec. 31, 1993. Despite of the non-renewal of the agreement, respondent
continued to perform his functions as company doctor until he received a letter in
March 1995 concluding their retainer agreement.
Respondent filed a complaint before the NLRC seeking recognition as a regular
employee of the petitioner company and prayed for the payment of all benefits of a
regular employee. In the decision of the Labor Arbiter, the company lacked control
over the respondent’s performance of his duties. Respondent appealed where it
rendered that no employer-employee relationship existed between the parties.

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The CA ruled that an employer-employee relationship existed.

ISSUE:
Whether or not there exists an employer-employee relationship between the parties.

RULING:
SC ruled that there is no such relationship between the parties.
The Court, in determining the existence of an employer-employee relationship, has
invariably adhered to the four-fold test: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to
control the employee’s conduct, or the so-called “control test,” considered to be the
most important element.
The Court agrees with the finding of the Labor Arbiter and the NLRC that the
circumstances of this case show that no employer-employee relationship exists
between the parties. The Comprehensive Medical Plan, provided guidelines merely to
ensure that the end result was achieved, but did not control the means and methods
by which respondent performed his assigned tasks. In addition, the Court finds that the
schedule of work and the requirement to be on call for emergency cases do not
amount to such control, but are necessary incidents to the Retainership Agreement.
Considering that there is no employer-employee relationship between the parties, the
termination of the Retainership Agreement, which is in accordance with the provisions
of the Agreement, does not constitute illegal dismissal of respondent.

Calamba Medical Center vs. NLRC et. al.

G.R. No. 176484; November 25, 2008

FACTS:
The Calamba Medical Center (petitioner), a privately-owned hospital, engaged the
services of medical doctors-spouses Ronaldo Lanzanas (Dr. Lanzanas) and Merceditha
Lanzanas (Dr. Merceditha) in March 1992 and August 1995, respectively, as part of its
team of resident physicians. Reporting at the hospital twice-a-week on twenty-four-hour
shifts, respondents were paid a monthly "retainer" of P4,800.00 each. It appears that
resident physicians were also given a percentage share out of fees charged for out-
patient treatments, operating room assistance and discharge billings, in addition to
their fixed monthly retainer.
The work schedules of the members of the team of resident physicians were fixed by
petitioner's medical director Dr. Raul Desipeda (Dr. Desipeda). And they were issued
identification cards by petitioner and were enrolled in the Social Security System (SSS).
Income taxes were withheld from them.
Dr. Meluz Trinidad (Dr. Trinidad), also a resident physician at the hospital, inadvertently
overheard a telephone conversation of respondent Dr. Lanzanas with a fellow
employee, Diosdado Miscala, through an extension telephone line. Apparently, Dr.

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Lanzanas and Miscala were discussing the low "census" or admission of patients to the
hospital.
Dr. Trinidad issued to Dr. Lanzanas a memorandum asking her to explain within 24 hours
why no disciplinary action should be taken against him. Pending investigation, he was
placed under a 30-day preventive suspension.
Inexplicably, petitioner did not give respondent Dr. Merceditha, who was not involved
in the said incident, any work schedule after sending her husband Dr. Lanzanas the
memorandum, nor inform her the reason therefor, albeit she was later informed by the
Human Resource Department (HRD) officer that that was part of petitioner's cost-
cutting measures.
Dr. Lanzanas filed a complaint for illegal suspension before the National Labor Relations
Commission (NLRC)-Regional Arbitration Board (RAB) IV. Dr. Merceditha subsequently
filed a complaint for illegal dismissal.

ISSUE:
Whether or not there exists an employer-employee relationship between
petitioner and the spouses-respondents.
Whether or not the spouses-respondents were legally dismissed.

RULING:
SC held that there exists such relationship. The spouses-respondents were illegally
dismissed.
On the first issue
Under the "control test," an employment relationship exists between a physician and a
hospital if the hospital controls both the means and the details of the process by which
the physician is to accomplish his task.
As priorly stated, private respondents maintained specific work-schedules, as
determined by petitioner through its medical director, which consisted of 24-hour shifts
totaling forty-eight hours each week and which were strictly to be observed under pain
of administrative sanctions.
That petitioner exercised control over respondents gains light from the undisputed fact
that in the emergency room, the operating room, or any department or ward for that
matter, respondents' work is monitored through its nursing supervisors, charge nurses
and orderlies. Without the approval or consent of petitioner or its medical director, no
operations can be undertaken in those areas. For control test to apply, it is not essential
for the employer to actually supervise the performance of duties of the employee, it
being enough that it has the right to wield the power.
On the second issue
Petitioner thus failed to observe the two requirements,before dismissal can be effected
─ notice and hearing ─ which constitute essential elements of the statutory process; the
first to apprise the employee of the particular acts or omissions for which his dismissal is
sought, and the second to inform the employee of the employer's decision to dismiss
him. Non-observance of these requirements runs afoul of the procedural mandate.

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The termination notice sent to and received by Dr. Lanzanas on April 25, 1998 was the
first and only time that he was apprised of the reason for his dismissal. He was not
afforded, however, even the slightest opportunity to explain his side. His was a
"termination upon receipt" situation. While he was priorly made to explain on his
telephone conversation with Miscala, he was not with respect to his supposed
participation in the strike and failure to heed the return-to-work order.
As for the case of Dr. Merceditha, her dismissal was worse, it having been effected
without any just or authorized cause and without observance of due process. In fact,
petitioner never proferred any valid cause for her dismissal except its view that "her
marriage to [Dr. Lanzanas] has given rise to the presumption that her sympath[y] [is]
with her husband; [and that when [Dr. Lanzanas] declared that he was going to
boycott the scheduling of their workload by the medical doctor, he was presumed to
be speaking for himself [and] for his wife Merceditha."

Escasinas et. al. vs. Shangri-la

G.R. No. 178827; March 4, 2009

FACTS:
Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were
engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent
doctor) to work in her clinic at respondent Shangri-la’s Mactan Island Resort (Shangri-la)
in Cebu of which she was a retained physician.
In late 2002, petitioners filed with the NLRC a complaint for regularization,
underpayment of wages, non-payment of holiday pay, night shift differential and 13th
month pay differential against respondents, claiming that they are regular employees
of Shangri-la. Shangri-la claimed, however, that petitioners were not its employees but
of respondent doctor whom it retained via Memorandum of Agreement (MOA)
pursuant to Article 157 of the Labor Code, as amended. Respondent doctor for her
part claimed that petitioners were already working for the previous retained physicians
of Shangri-la before she was retained by Shangri-la; and that she maintained
petitioners’ services upon their request.

ISSUE:
Whether or not there was an employee-employer relationship between Shangri-La and
the petitioners.
Whether or not Dr. Pepito is an independent contractor

RULING:
SC ruled that there no such relationship. The petitioners are under the direct supervision
of Dr. Pepito, an independent contractor.
On the first issue
The resolution of the case hinges, in the main, on the correct interpretation of Art. 157
vis a vis Art. 280 and the provisions on permissible job contracting of the Labor Code, as

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amended. Under the foregoing provision, Shangri-la, which employs more than 200
workers, is mandated to “furnish” its employees with the services of a full-time
registered nurse, a part-time physician and dentist, and an emergency clinic which
means that it should provide or make available such medical and allied services to its
employees, not necessarily to hire or employ a service provider. The term “full-time” in
Art. 157 cannot be construed as referring to the type of employment of the person
engaged to provide the services, for Article 157 must not be read alongside Art. 280[9]
in order to vest employer-employee relationship on the employer and the person so
engaged. The phrase “services of a full-time registered nurse” should thus be taken to
refer to the kind of services that the nurse will render in the company’s premises and to
its employees, not the manner of his engagement.
On the second issue
The existence of an independent and permissible contractor relationship is generally
established by considering the following determinants: whether the contractor is
carrying on an independent business; the nature and extent of the work; the skill
required; the term and duration of the relationship; the right to assign the performance
of a specified piece of work; the control and supervision of the work to another; the
employer's power with respect to the hiring, firing and payment of the contractor's
workers; the control of the premises; the duty to supply the premises, tools, appliances,
materials and labor; and the mode, manner and terms of payment.
Against the above-listed determinants, the Court holds that respondent doctor is a
legitimate independent contractor. That Shangri-la provides the clinic premises and
medical supplies for use of its employees and guests do not necessarily prove that
respondent doctor lacks substantial capital and investment. Besides, the maintenance
of a clinic and provision of medical services to its employees is required under Art. 157,
which are not directly related to Shangri-la’s principal business – operation of hotels and
restaurants.

Tongko vs. The Manufacturer’s Life Insurance Co., Inc. November 7, 2008
G.R. No. 167622, November 07, 2008

FACTS:
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation
engaged in life insurance business.Renato A. Vergel De Dios was, during the period
material, its President and Chief Executive Officer. Gregorio V. Tongko started his
professional relationship with Manulife on July 1, 1977 by virtue of a Career Agent's
Agreement (Agreement) he executed with Manulife. In the Agreement, it is provided
that: It is understood and agreed that the Agent is an independent contractor and
nothing contained herein shall be construed or interpreted as creating an employer-
employee relationship between the Company and the Agent. The Company may
terminate this Agreement for any breach or violation of any of the provisions hereof by
the Agent by giving written notice to the Agent within fifteen (15) days from the time of
the discovery of the breach. No waiver, extinguishment, abandonment, withdrawal or
cancellation of the right to terminate this Agreement by the Company shall be

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construed for any previous failure to exercise its right under any provision of this
Agreement.
Either of the parties hereto may likewise terminate his Agreement at any time without
cause, by giving to the other party fifteen (15) days notice in writing. In
1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In
1990, he became a Branch Manager. As the CA found, Tongko's gross earnings from his
work at Manulife, consisting of commissions, persistency income, and management
overrides. The problem started sometime in 2001, when Manulife instituted manpower
development programs in the regional sales management level. Relative thereto, De
Dios addressed a letter dated November 6, 2001 to Tongko regarding an October 18,
2001 Metro North Sales Managers Meeting. Stating that Tongko’s Region was the lowest
performer (on a per Manager basis) in terms of recruiting in 2000 and, as of today,
continues to remain one of the laggards in this area.
Other issues were:"Some Managers are unhappy with their earnings and would want to
revert to the position of agents." And "Sales Managers are doing what the company
asks them to do but, in the process, they earn less." Tongko was then terminated.
Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against
Manulife for illegal dismissal in the Complaint. In a Decision dated April 15, 2004, Labor
Arbiter dismissed the complaint for lack of an employer-employee relationship. The
NLRC's First Division, while finding an employer-employee relationship between Manulife
and Tongko applying the four-fold test, held Manulife liable for illegal dismissal. Thus,
Manulife filed an appeal with the CA. Thereafter, the CA issued the assailed Decision
dated March 29, 2005, finding the absence of an employer-employee relationship
between the parties and deeming the NLRC with no jurisdiction over the
case.Hence, Tongko filed this petition.

ISSUES:
1.WON Tongko was an employee of Manulife
2.WON Tongko was illegally dismissed.

RULING:
1. Yes
In the instant case, Manulife had the power of control over Tongko that would make
him its employee. Several factors contribute to this conclusion. In the Agreement dated
July 1, 1977 executed between Tongko and Manulife, it is provided that: The Agent
hereby agrees to comply with all regulations and requirements of the Company as
herein provided as well as maintain a standard of knowledge and competency in the
sale of the Company's products which satisfies those set by the Company and
sufficiently meets the volume of new business required of Production Club
membership.Under this provision, an agent of Manulife must comply with three (3)
requirements: (1) compliance with the regulations and requirements of the company;
(2) maintenance of a level of knowledge of the company's products that is satisfactory
to the company; and (3) compliance with a quota of new businesses. Among the
company regulations of Manulife are the different codes of conduct such as the Agent
Code of Conduct, Manulife Financial Code of Conduct, and Manulife Financial Code

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of Conduct Agreement, which demonstrate the power of control exercised by the
company over Tongko. The fact that Tongko was obliged to obey and comply with the
codes of conduct was not disowned by respondents. Thus, with the company
regulations and requirements alone, the fact that Tongko was an employee of Manulife
may already be established. Certainly, these requirements controlled the means and
methods by which Tongko was to achieve the company's goals.
More importantly, Manulife's evidence establishes the fact that Tongko was tasked to
perform administrative duties that establishes his employment with Manulife.
Additionally, it must be pointed out that the fact that Tongko was tasked with recruiting
a certain number of agents, in addition to his other administrative functions, leads to no
other conclusion that he was an employee of Manulife.
2. Yes
In its Petition for Certiorari dated January 7, 2005[26] filed before the CA, Manulife
argued that even if Tongko is considered as its employee, his employment was validly
terminated on the ground of gross and habitual neglect of duties, inefficiency, as well
as willful disobedience of the lawful orders of Manulife. Manulife stated: In the instant
case, private respondent, despite the written reminder from Mr. De Dios refused to
shape up and altogether disregarded the latter's advice resulting in his laggard
performance clearly indicative of his willful disobedience of the lawful orders of his
superior. As private respondent has patently failed to perform a very fundamental duty,
and that is to yield obedience to all reasonable rules, orders and instructions of the
Company, as well as gross failure to reach at least minimum quota, the termination of
his engagement from Manulife is highly warranted and therefore, there is no illegal
dismissal to speak of. It is readily evident from the above-quoted portions of Manulife's
petition that it failed to cite a single iota of evidence to support its claims. Manulife did
not even point out which order or rule that Tongko disobeyed. More importantly,
Manulife did not point out the specific acts that Tongko was guilty of that would
constitute gross and habitual neglect of duty or disobedience. Manulife merely
cited Tongko's alleged "laggard performance," without substantiating such claim, and
equated the same to disobedience and neglect of duty. Apropos thereto, Art. 277, par.
(b), of the Labor Code mandates in explicit terms that the burden of proving the
validity of the termination of employment rests on the employer. Failure to discharge
this evidential burden would necessarily mean that the dismissal was not justified, and,
therefore, illegal. The Labor Code provides that an employer may terminate the
services of an employee for just cause and this must be supported by substantial
evidence. The settled rule in administrative and quasi-judicial proceedings is that proof
beyond reasonable doubt is not required in determining the legality of an employer's
dismissal of an employee, and not even a preponderance of evidence is necessary as
substantial evidence is considered sufficient. Substantial evidence is more than a mere
scintilla of evidence or relevant evidence as a reasonable mind might accept as
adequate to support a conclusion, even if other minds, equally reasonable, might
conceivably opine otherwise. Here, Manulife failed to overcome such burden of proof.
It must be reiterated that Manulife even failed to identify the specific acts by
which Tongko's employment was terminated much less support the same with
substantial evidence.To repeat, mere conjectures cannot work to deprive employees
of their means of livelihood. Thus, it must be concluded that Tongko was illegally
dismissed. Moreover, as to Manulife's failure to comply with the twin notice rule, it

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reasons that Tongko not being its employee is not entitled to such notices. Since we
have ruled that Tongko is its employee, however, Manulife clearly failed to
afford Tongko said notices. Thus, on this ground too, Manulife is guilty of illegal dismissal.

Atok Big Wedge Company vs. Gison

G.R. No. 169510 August 8, 2011

FACTS:
Sometime in February 1992, respondent Jesus P. Gison was engaged as part-time
consultant on retainer basis by petitioner Atok Big Wedge Company, Inc. through its
then Asst. Vice-President and Acting Resident Manager, Rutillo A. Torres. As a consultant
on retainer basis, respondent assisted petitioner's retained legal counsel with matters
pertaining to the prosecution of cases against illegal surface occupants within the area
covered by the company's mineral claims. Respondent was likewise tasked to perform
liaison work with several government agencies, which he said was his expertise.
Sometime thereafter, since respondent was getting old, he requested that petitioner
cause his registration with the Social Security System (SSS), but petitioner did not
accede to his request. He later reiterated his request but it was ignored by respondent
considering that he was only a retainer/consultant. On February 4, 2003, respondent
filed a Complaint with the SSS against petitioner for the latter's refusal to cause his
registration with the SSS.
On the same date, Mario D. Cera, in his capacity as resident manager of petitioner,
issued a Memorandum advising respondent that within 30 days from receipt thereof,
petitioner is terminating his retainer contract with the company since his services are no
longer necessary.
On September 26, 2003, after the parties have submitted their respective pleadings,
Labor Arbiter Rolando D. Gambito rendered a Decision ruling in favor of the petitioner.
Finding no employer-employee relationship between petitioner and respondent, the
Labor Arbiter dismissed the complaint for lack of merit.
On July 30, 2004, the NLRC, Second Division, issued a Resolution affirming the decision of
the Labor Arbiter. Respondent filed a Motion for Reconsideration, but it was denied in
the Resolution dated September 30, 2004.

ISSUES:
Whether or not there was an employer-employee relationship.

HELD:
To ascertain the existence of an employer-employee relationship jurisprudence has
invariably adhered to the four-fold test, to wit: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to
control the employee's conduct, or the so-called "control test." Of these four, the last
one is the most important. The so-called "control test" is commonly regarded as the
most crucial and determinative indicator of the presence or absence of an employer-
employee relationship. Under the control test, an employer-employee relationship exists

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where the person for whom the services are performed reserves the right to control not
only the end achieved, but also the manner and means to be used in reaching that
end.
Applying the aforementioned test, an employer-employee relationship is apparently
absent in the case at bar. Among other things, respondent was not required to report
everyday during regular office hours of petitioner. Respondent's monthly retainer fees
were paid to him either at his residence or a local restaurant. More importantly,
petitioner did not prescribe the manner in which respondent would accomplish any of
the tasks in which his expertise as a liaison officer was needed; respondent was left
alone and given the freedom to accomplish the tasks using his own means and
method. Respondent was assigned tasks to perform, but petitioner did not control the
manner and methods by which respondent performed these tasks. Verily, the absence
of the element of control on the part of the petitioner engenders a conclusion that he is
not an employee of the petitioner.
Contrary to the conclusion of the CA, respondent is not an employee, much more a
regular employee of petitioner. The appellate court's premise that regular employees
are those who perform activities which are desirable and necessary for the business of
the employer is not determinative in this case. In fact, any agreement may provide that
one party shall render services for and in behalf of another, no matter how necessary
for the latter's business, even without being hired as an employee. Hence, respondent's
length of service and petitioner's repeated act of assigning respondent some tasks to
be performed did not result to respondent's entitlement to the rights and privileges of a
regular employee.
Furthermore, despite the fact that petitioner made use of the services of respondent for
eleven years, he still cannot be considered as a regular employee of petitioner. Article
280 of the Labor Code, in which the lower court used to buttress its findings that
respondent became a regular employee of the petitioner, is not applicable in the case
at bar. Indeed, the Court has ruled that said provision is not the yardstick for
determining the existence of an employment relationship because it merely
distinguishes between two kinds of employees, i.e., regular employees and casual
employees, for purposes of determining the right of an employee to certain benefits, to
join or form a union, or to security of tenure; it does not apply where the existence of an
employment relationship is in dispute. It is, therefore, erroneous on the part of the Court
of Appeals to rely on Article 280 in determining whether an employer-employee
relationship exists between respondent and the petitioner.
Considering that there is no employer-employee relationship between the parties, the
termination of respondent's services by the petitioner after due notice did not constitute
illegal dismissal warranting his reinstatement and the payment of full backwages,
allowances and other benefits.

Semblante et al., vs. Court of Appeals, et al.

G.R. No. 196426 August 15, 2011

FACTS:

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Petitioners Marticio Semblante (Semblante) and Dubrick Pilar (Pilar) assert that they
were hired by respondents-spouses Vicente and Maria Luisa Loot, the owners of Gallera
de Mandaue (the cockpit), as the official masiador and sentenciador, respectively, of
the cockpit sometime in 1993.
As the masiador, Semblante calls and takes the bets from the gamecock owners and
other bettors and orders the start of the cockfight. He also distributes the winnings after
deducting the arriba, or the commission for the cockpit. Meanwhile, as the
sentenciador, Pilar oversees the proper gaffing of fighting cocks, determines the
fighting cocks' physical condition and capabilities to continue the cockfight, and
eventually declares the result of the cockfight.
They work every Tuesday, Wednesday, Saturday, and Sunday every week, excluding
monthly derbies and cockfights held on special holidays. Their working days start at 1:00
p.m. and last until 12:00 midnight, or until the early hours of the morning depending on
the needs of the cockpit. Petitioners had both been issued employees' identification
cards that they wear every time they report for duty. They alleged never having
incurred any infraction and/or violation of the cockpit rules and regulations.
On November 14, 2003, however, petitioners were denied entry into the cockpit upon
the instructions of respondents, and were informed of the termination of their services
effective that date. This prompted petitioners to file a complaint for illegal dismissal
against respondents.
Labor Arbiter Julie C. Rendoque found petitioners to be regular employees of
respondents as they performed work that was necessary and indispensable to the usual
trade or business of respondents for a number of years. The Labor Arbiter also ruled that
petitioners were illegally dismissed, and so ordered respondents to pay petitioners their
backwages and separation pay.
The respondents filed an Appeal during the 10-day appeal period but was unable to
post a cash or surety bond. Thus for an unperfected appeal the NLRC dismissed the
same. It was only on October 11, 2006 they were able to post bond dated October 6,
2006. The NLRC ruled on the Motion for Reconsideration although there was belated
filing of the cash or surety bond. The NLRC held in its Resolution of October 18, 2006 that
there was no employer-employee relationship between petitioners and respondents,
respondents having no part in the selection and engagement of petitioners, and that
no separate individual contract with respondents was ever executed by petitioners.

ISSUES:
1. Whether or not the Appeal has been perfected even after a belated filing of the
cash or surety bond.
2. Whether or not there was an employer-employee relationship between the
petitioner and respondent.

HELD:
Time and again, however, this Court, considering the substantial merits of the case, has
relaxed this rule on, and excused the late posting of, the appeal bond when there are
strong and compelling reasons for the liberality, such as the prevention of miscarriage
of justice extant in the case or the special circumstances in the case combined with its

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legal merits or the amount and the issue involved. After all, technical rules cannot
prevent courts from exercising their duties to determine and settle, equitably and
completely, the rights and obligations of the parties. This is one case where the
exception to the general rule lies.
While respondents had failed to post their bond within the 10-day period provided
above, it is evident, on the other hand, that petitioners are NOT employees of
respondents, since their relationship fails to pass muster the four-fold test of employment
We have repeatedly mentioned in countless decisions: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal;
and (4) the power to control the employee's conduct, which is the most important
element.
As found by both the NLRC and the CA, respondents had no part in petitioners'
selection and management; petitioners' compensation was paid out of the arriba
(which is a percentage deducted from the total bets), not by petitioners; and
petitioners performed their functions as masiador and sentenciador free from the
direction and control of respondents. In the conduct of their work, petitioners relied
mainly on their "expertise that is characteristic of the cockfight gambling," and were
never given by respondents any tool needed for the performance of their work.
Respondents, therefore, could never have been illegally dismissed since they are not
employees of the respondents.

Jose Mel Bernarte vs. Philippine Basketball Association (PBA), Jose Emmanuel Eala, and
Perry Martinez
G.R. No. 192084. September 14, 2011

FACTS:
Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were invited to
join the PBA as referees. During the term of Commissioner Eala, however, changes were
made on the terms of their employment. Bernarte, for instance, was not made to sign a
contract during the first conference of the All-Filipino Cup which was from February 23,
2003 to June 2003. It was only during the second conference when he was made to
sign a one and a half month contract for the period July 1 to August 5, 2003. On
January 15, 2004, Bernarte received a letter from the Office of the Commissioner
advising him that his contract would not be renewed citing his unsatisfactory
performance on and off the court. On the other hand, complainant Guevarra alleges
that he was invited to join the PBA pool of referees in February 2001, and signed a
contract as a trainee on March 1, 2001. Beginning 2002, he signed a yearly contract as
Regular Class C referee. On May 6, 2003, respondent Martinez issued a memorandum
to Guevarra expressing dissatisfaction over his questioning on the assignment of
referees officiating out-of-town games. Beginning February 2004, he was no longer
made to sign a contract.
Respondents aver that complainants were not illegally dismissed because they were
not employees of the PBA.

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31 March 2005 Decision, the Labor Arbiter declared petitioner an employee whose
dismissal by respondents was illegal, ordering reinstatement of petitioner and the
payment of backwages, moral and exemplary damages, and attorney’s fees.
28 January 2008 Decision, the NLRC affirmed the Labor Arbiter's judgment. The Court of
Appeals found petitioner an independent contractor since respondents did not
exercise any form of control over the means and methods by which petitioner
performed his work as a basketball referee.

ISSUES:
Whether petitioner is an employee of respondents, which in turn determines whether
petitioner was illegally dismissed;
Whether the Labor Arbiter's decision has become final and executory for failure of
respondents to appeal with the NLRC within the reglementary period

RULING:
SC affirmed CA’s decision.
Petitioner failed to present any concrete proof as to how, when and to whom the
delivery and receipt of the three notices issued by the post office was made. The
issuance of the notices by the post office is not equivalent to delivery to and receipt by
the addressee of the registered mail. There is no conclusive evidence showing that the
post office notices were actually received by respondents, negating petitioner's claim
of constructive service of the Labor Arbiter's decision on respondents. The Postmaster's
Certification does not sufficiently prove that the three notices were delivered to and
received by respondents; it only indicates that the post office issued the three notices.
The ends of justice will be better served if we resolve the instant case on the merits
rather than allowing the substantial issue of whether petitioner is an independent
contractor or an employee linger and remain unsettled due to procedural
technicalities.
We agree with respondents that once in the playing court, the referees exercise their
own independent judgment, based on the rules of the game, as to when and how a
call or decision is to be made. Respondents or any of the PBA officers cannot and do
not determine which calls to make or not to make and cannot control the referee
when he blows the whistle because such authority exclusively belongs to the referees.
Petitioner is required to report for work only when PBA games are scheduled or three
times a week at two hours per game. In addition, there are no deductions for
contributions to the Social Security System, Philhealth or Pag-Ibig, which are the usual
deductions from employees' salaries. These undisputed circumstances buttress the fact
that petitioner is an independent contractor, and not an employee of respondents. For
a hired party to be considered an employee, the hiring party must have control over
the means and methods by which the hired party is to perform his work, which is absent
in this case. The continuous rehiring by PBA of petitioner simply signifies the renewal of
the contract between PBA and petitioner, and highlights the satisfactory services
rendered by petitioner warranting such contract renewal. The non-renewal of the
contract between the parties does not constitute illegal dismissal of petitioner by
respondents.

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Cesar Lirio vs. Wilmer Genovia

G.R. No. 169757. November 23, 2011

FACTS:
July 9, 2002, respondent Wilmer D. Genovia filed a complaint against petitioner Cesar
Lirio and/or Celkor Ad Sonicmix Recording Studio for illegal dismissal, non-payment of
commission and award of moral and exemplary damages. He was employed to
manage and operate Celkor and to promote and sell the recording studio's services to
music enthusiasts and other prospective clients. He received a monthly salary of
P7,000.00. They also agreed that he was entitled to an additional commission of P100.00
per hour as recording technician whenever a client uses the studio for recording,
editing or any related work. He was made to report for work from Monday to Friday
from 9:00 a.m. to 6 p.m. On Saturdays, he was required to work half-day only, but most
of the time, he still rendered eight hours of work or more.
Respondent stated that a few days after he started working as a studio manager,
petitioner approached him and told him about his project to produce an album for his
15-year-old daughter. Petitioner asked respondent to compose and arrange songs for
Celine and promised that he (Lirio) would draft a contract to assure respondent of his
compensation for such services. Petitioner later informed respondent that he was only
entitled to the 20% of the net profit and that the salaries he received would be
deducted from the said 20% net profit share. Respondent objected then petitioner
verbally terminated the former’s services and instructed the same not to report for work.
On October 31, 2003, Labor Arbiter Renaldo O. Hernandez rendered a decision, finding
that an employer-employee relationship existed between petitioner and respondent,
and that respondent was illegally dismissed.
In a Resolution dated October 14, 2004, the NLRC reversed and set aside the decision
of the Labor Arbiter. NLRC held that respondent failed to proved with substantial
evidence that he was selected and engaged by petitioner, that petitioner had the
power to dismiss him, and that they had the power to control him not only as to the
result of his work, but also as to the means and methods of accomplishing his work.
On August 4, 2005, the Court of Appeals rendered a decision reversing and setting
aside the resolution of the NLRC, and reinstating the decision of the Labor Arbiter, with
modification in regard to the award of commission and damages. The Court of Appeals
deleted the award of commission and moral and exemplary damages as the same
were not substantiated.

ISSUE:
Whether there existed an employer-employee relationship between petitioner and
respondent, and whether dismissal of respondent is illegal.

RULING:
SC affirmed CA’s decision.

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It is settled that no particular form of evidence is required to prove the existence of an
employer-employee relationship. Any competent and relevant evidence to prove the
relationship may be admitted. In this case, the documentary evidence presented by
respondent to prove that he was an employee of petitioner are as follows: (a) a
document denominated as "payroll" (dated July 31, 2001 to March 15, 2002) certified
correct by petitioner, which showed that respondent received a monthly salary of
P7,000.00 (P3,500.00 every 15th of the month and another P3,500.00 every 30th of the
month) with the corresponding deductions due to absences incurred by respondent;
and (2) copies of petty cash vouchers, showing the amounts he received and signed
for in the payrolls. Petitioner failed to prove that his relationship with respondent was
one of partnership. Such claim was not supported by any written agreement.
The Court agrees with the Court of Appeals that the evidence presented by the parties
showed that an employer-employee relationship existed between petitioner and
respondent.
In termination cases, the burden is upon the employer to show by substantial evidence
that the termination was for lawful cause and validly made. Article 277 (b) of the Labor
Code puts the burden of proving that the dismissal of an employee was for a valid or
authorized cause on the employer, without distinction whether the employer admits or
does not admit the dismissal. For an employee's dismissal to be valid, (a) the dismissal
must be for a valid cause, and (b) the employee must be afforded due process.
Procedural due process requires the employer to furnish an employee with two written
notices before the latter is dismissed: (1) the notice to apprise the employee of the
particular acts or omissions for which his dismissal is sought, which is the equivalent of a
charge; 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.
Petitioner failed to comply with these legal requirements; hence, the Court of Appeals
correctly affirmed the Labor Arbiter's finding that respondent was illegally dismissed.

Charlie Jao vs BBC Products Sales Inc.

G.R. No. 163700, April 18, 2012

FACTS:
Petitioner offered the following: (a) BCC Identification Card (ID) issued to him stating his
name and his position as “comptroller,” and bearing his picture, his signature, and the
signature of Ty; (b) a payroll of BCC for the period of October 1-15, 1996 that petitioner
approved as comptroller; (c) various bills and receipts related to expenditures of BCC

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bearing the signature of petitioner; (d) various checks carrying the signatures of
petitioner and Ty, and, in some checks, the signature of petitioner alone; (e) a court
order showing that the issuing court considered petitioner’s ID as proof of his
employment with BCC; (f) a letter of petitioner dated March 1, 1997 to the Department
of Justice on his filing of a criminal case for estafa against Ty for non-payment of wages;
(g) affidavits of some employees of BCC attesting that petitioner was their co-
employee in BCC; and (h) a notice of raffle dated December 5, 1995 showing that
petitioner, being an employee of BCC, received the notice of raffle in behalf of BCC.
But respondent countered the evidences presented by the petitioner by proving that
Charlie Jao is not their employee, as SFC had installed petitioner as its comptroller in
BCC to oversee and supervise SFC’s collections and the account of BCC to protect
SFC’s interest; that their issuance of the ID to petitioner was only for the purpose of
facilitating his entry into the BCC premises in relation to his work of overseeing the
financial operations of BCC for SFC; that the ID should not be considered as evidence
of petitioner’s employment in BCC; that petitioner executed an affidavit in March 1996,
stating, among others, that he is a CPA presently employed at SFC.

ISSUE:
WON there exist an employee-employer relationship between the petitioner and
respondent.

HELD:
The Supreme Court held that there exist no employee-employer relationship between
the two based on the affidavits made by the petitioner that he is an employee of SFC
to oversee and supervise SFC's collection.
Moreover, in determining the presence or absence of an employer-employee
relationship, the Court has consistently looked for the following incidents, to wit: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power
of dismissal; and (d) the employer’s power to control the employee on the means and
methods by which the work is accomplished. The last element, the so-called control
test, is the most important element.
It can be deduced from the March 1996 affidavit of petitioner that respondents
challenged his authority to deliver some 158 checks to SFC. Considering that he
contested respondents’ challenge by pointing to the existing arrangements between
BCC and SFC, it should be clear that respondents did not exercise the power of control
over him, because he thereby acted for the benefit and in the interest of SFC more
than of BCC.
In addition, petitioner presented no document setting forth the terms of his employment
by BCC. The failure to present such agreement on terms of employment may be
understandable and expected if he was a common or ordinary laborer who would not
jeopardize his employment by demanding such document from the employer, but may
not square well with his actual status as a highly educated professional.

Legend Hotel (Manila) vs. Realuyo

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GR. No. 153511, July 18, 2012

FACTS:
Respondent was employed in Petitioner’s hotel from September 1992 to August
9, 1999 as a pianist. On July 9, 1999, Respondent was informed that his services would
no longer be needed as a cost cutting measure of the company. Respondent filed a
complaint for alleged unfair labor practice, constructive illegal dismissal, and the
underpayment/nonpayment of his premium pay for holidays, separation pay, service
incentive leave pay, and 13th month pay. He prayed for attorney's fees, moral
damages off P100,000.00 and exemplary damages for P100,000.00. Petitioner contends
that there was no employee-employer relationship therefore it does not fall under the
ambit of the Labour Code.
The labour arbiter dismissed Respondent’s complaint agreeing with Petitioner
that there was no employee-employer relationship. Respondent appealed with the
NLRC which in turn affirmed the labor arbiter’s decision. Respondent filed a motion for
certiorari in the Court of Appeals which reversed the decision of the NLRC and granted
respondent’s petition.

ISSUES:
Whether or not there was employee-employer relationship?
And if there was, was there a valid dismissal?

HELD:
a. Yes there was employee-employer relationship. All four requisites for the
existence of employee- employer relationship exist in this case. The petitioner
selects the employee and paid him wages denominated as talent fees and most
importantly exercised control over what he wore and the songs he could play.
He also had the power to dismiss as shown in the memorandum given to the
employee.
b. Retrenchment is one of the authorized causes for the dismissal of employees
recognized by the Labor Code. It is a management prerogative resorted to by
employers to avoid or to minimize business losses. The Court has laid down the
following standards that an employer should meet to justify retrenchment and to
foil abuse, namely:

(a) The expected losses should be substantial and not merely de

minimis in extent;
(b) The substantial losses apprehended must be reasonably imminent;
(c) The retrenchment must be reasonably necessary and likely to
effectively prevent the expected losses; and
(d) The alleged losses, if already incurred, and the expected imminent
losses sought to be forestalled must be proved by sufficient and
convincing evidence

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In termination cases, the burden of proving that the dismissal was for a
valid or authorized cause rests upon the employer. The petitioner did not submit
evidence of the losses to its business operations and the economic havoc it
would thereby imminently sustain. It only claimed that respondent’s termination
was due to its “present business/financial condition”. This bare statement fell
short of the norm to show a valid retrenchment. Indeed, not every loss incurred
or expected to be incurred by an employer can justify retrenchment. The
employer must prove, among others, that the losses are substantial and that the
retrenchment is reasonably necessary to avert such losses. Thus, by its failure to
present sufficient and convincing evidence to prove that retrenchment was
necessary, respondent’s termination due to retrenchment is not allowed.

The New Philippine Skylanders, Inc. vs. Dakila

G.R. No. 199547; September 24, 2012

Facts:
Respondent Dakila was employed by petitioner corporation as early as 1987 and
terminated for cause in April 1997 when the corporation was sold. In May 1997, he was
rehired as consultant by the petitioners under a Contract for Consultancy
Services dated April 30, 1997.

Thereafter, in a letter dated April 19, 2007, respondent Dakila informed petitioners of his
compulsory retirement effective May 2, 2007 and sought for the payment of his
retirement benefits pursuant to the Collective Bargaining Agreement. His request,
however, was not acted upon. Instead, he was terminated from service effective May
1, 2007.

Consequently, respondent Dakila filed a complaint for constructive illegal dismissal,

non-payment of retirement benefits, under/non-payment of wages and other benefits
of a regular employee, and damages against petitioners.

On the other hand, petitioners, in their position paper, asserted that respondent Dakila
was a consultant and not their regular employee. The latter was not included in
petitioners' payroll and paid a fixed amount under the consultancy contract. He was
not required to observe regular working hours and was free to adopt means and
methods to accomplish his task except as to the results of the work required of him.
Hence, no employer-employee relationship existed between them.

The Labor Arbiter declared respondent Dakila to be a regular employee on the basis of
the unrebutted documentary evidence showing that he was under the petitioners'
direct control and supervision and performed tasks that were either incidental or usually
desirable and necessary in the trade or business of petitioner corporation for a period of
ten years.

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Issue:
WON there was a valid dismissal.

Held:
The issue of illegal dismissal is premised on the existence of an employer-employee
relationship between the parties herein.Records reveal that both the LA and the NLRC,
as affirmed by the CA, have found substantial evidence to show that respondent
Dakila was a regular employee who was dismissed without cause.

Following Article 279 of the Labor Code, an employee who is unjustly dismissed from
work is entitled to reinstatement without loss of seniority rights and other privileges and
to his full backwages computed from the time he was illegally dismissed. However,
considering that respondent Dakila was terminated on May 1, 2007, or one (1) day prior
to his compulsory retirement on May 2, 2007, his reinstatement is no longer feasible.
Accordingly, the NLRC correctly held him entitled to the payment of his retirement
benefits pursuant to the CBA. On the other hand, his backwages should be computed
only for days prior to his compulsory retirement which in this case is only a day.

Tesoro et al. vs. Metro Manila Retreaders, Inc. et al.

G.R. No. 171482; March 12, 2014

Facts:
Petitioners used to work as salesmen for respondents Metro Manila Retreaders, Inc.,
Northern Luzon Retreaders, Inc., or Power Tire and Rubber Corporation, apparently sister
companies, collectively called “Bandag.” Bandag offered repair and retread services
for used tires. Bandag developed a franchising scheme that would enable others to
operate tire and retreading businesses using its trade name and service system.

Petitioners quit their jobs as salesmen and entered into separate Service Franchise
Agreements (SFAs) with Bandag for the operation of their respective franchises. Under
the SFAs, Bandag would provide funding support to the petitioners subject to a regular
or periodic liquidation of their revolving funds. The expenses out of these funds would
be deducted from petitioners’ sales to determine their incomes.

At first, petitioners managed and operated their respective franchises without any
problem. However, they began to default on their obligations to submit periodic
liquidations of their operational expenses in relation to the revolving funds Bandag
provided them. Consequently, Bandag terminated their respective SFA.

Aggrieved, petitioners filed a complaint for constructive dismissal, non–payment of

wages, incentive pay, 13th month pay and damages against Bandag with the National
Labor Relations Commission (NLRC). Petitioners contend that, notwithstanding the
execution of the SFAs, they remained to be Bandag’s employees, the SFAs being but a
circumvention of their status as regular employees.

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For its part, Bandag pointed out that petitioners freely resigned from their employment
and decided to avail themselves of the opportunity to be independent entrepreneurs
under the franchise scheme that Bandag had. Thus, no employer–employee
relationship existed between petitioners and Bandag.

Issue: WON petitioners remained to be Bandag’s salesmen under the franchise scheme
it entered into with them.

Held:
No.
When petitioners agreed to operate Bandag’s franchise branches in different parts of
the country, they knew that this substantially changed their former relationships. They
were to cease working as Bandag’s salesmen, the positions they occupied before they
ventured into running separate Bandag branches.

The tests for determining employer–employee relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal;
and (d) the employer’s power to control the employee with respect to the means and
methods by which the work is to be accomplished. The last is called the “control test,”
the most important element.

It is pointed out that Bandag continued, like an employer, to exercise control over
petitioners’ work. It points out that Bandag: (a) retained the right to adjust the price
rates of products and services; (b) imposed minimum processed tire requirement (MPR);
(c) reviewed and regulated credit applications; and (d) retained the power to suspend
petitioners’ services for failure to meet service standards.

But uniformity in prices, quality of services, and good business practices are the essence
of all franchises. These business constraints are needed to maintain collective
responsibility for faultless and reliable service to the same class of customers for the
same prices.

This is not the “control” contemplated in employer–employee relationships. Control in

such relationships addresses the details of day to day work like assigning the particular
task that has to be done, monitoring the way tasks are done and their results, and
determining the time during which the employee must report for work or accomplish his
assigned task.

Franchising involves the use of an established business expertise, trademark,

knowledge, and training. As such, the franchisee is required to follow a certain
established system. Accordingly, the franchisors may impose guidelines that somehow
restrict the petitioners’ conduct which do not necessarily indicate “control.” The
important factor to consider is still the element of control over how the work itself is
done, not just its end result.

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Royale Homes Marketing Corporation vs. Fidel Alcantara
G.R. No. 195190, July 28, 2014(PSO)

Facts:
Respondent works as Marketing Director of the petitioner-corporation who is engaged
in a real estate business. In 2003, respondent filed a complaint for illegal dismissal with
the Labor Arbiter. He alleged that he is a regular employee and had been illegally
dismissed without any valid or just cause and prayed for reinstatement without loss of
seniority right with payment of backwages and damages. Petitioner on the other hand
denied the allegations and averred that respondent Alcantara is not an employee but
merely an independent contractor as evidenced by a contract entered between
Royal Homes and Alcantara.

Issue:
Whether respondent is an independent contractor or an employee of Royal Homes?

Held:
Respondent is an independent contractor. The terms of the contract are clear and
leave no doubt as to the intention of the parties. Applying the four-fold test in
determining the existence of employer-employee relationship, the power of control test
is lacking. This test among the four, is the most determinative factor that the other
requisites may even be disregarded. Not every form of control is indicative of employer-
employee relationship. A person who performs work for another and is subjected to its
rules, regulations and code of ethics does not necessarily become an employee. As
long as the level of control does not interfere with the means and methods of
accomplishing the task, the rules imposed by the hiring party on the hired party does
not amount to the labor law concept of control that is indicative of employer-
employee relationship.

Cabaobas vs. Pepsicola

GR No. 176908, March 25, 2015

Facts: Respondent Pepsi-Cola Products Philippines, Inc. (PCPPI) is a domestic

corporation engaged in the manufacturing, bottling and distribution of soft drink
products, which operates plants all over the country, one of which is the Tanauan Plant
in Tanauan, Leyte.

In 1999, PCPPI’s Tanauan Plant allegedly incurred business losses in the total amount of
Twenty-Nine Million One Hundred Sixty-Seven Thousand and Three Hundred Ninety
(P29,167,390.00) Pesos.
To avert further losses, PCPPI implemented a company-wide retrenchment program
denominated as Corporate-wide Rightsizing Program (CRP) from 1999 to 2000, and

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retrenched forty-seven (47) employees of its Tanauan Plant on July 31, 1999.

On September 24, 1999, twenty-seven (27) of said employees,5 led by Anecito Molon
(Molon, et al.), filed complaints for illegal dismissal before the NLRC which were
docketed as NLRC RAB Cases Nos. VIII-9-0432-99 to 9-0458-99, entitled “Molon, et al. v.
Pepsi-Cola Products, Philippines, Inc.”

On January 15, 2000, petitioners, who are permanent and regular employees of the
Tanauan Plant, received their respective letters, informing them of the cessation of their
employment on February 15, 2000, pursuant to PCPPI's CRP. Petitioners then filed their
respective complaints for illegal dismissal before the National Labor Relations
Commission Regional Arbitration Branch No. VIII in Tacloban City. Said complaints were
docketed as NLRC RAB VIII-03-0246-00 to 03-0259-00, entitled “Kempis, et al. v. Pepsi-
Cola Products, Philippines, Inc.”

In their Consolidated Position Paper,6 petitioners alleged that PCPPI was not facing
serious financial losses because after their termination, it regularized four (4) employees
and hired replacements for the forty-seven (47) previously dismissed employees. They
also alleged that PCPPI's CRP was just designed to prevent their union, Leyte Pepsi-Cola
Employees Union-Associated Labor Union (LEPCEU-ALU), from becoming the certified
bargaining agent of PCPPI's rank-and-file employees.

In its Position Paper,7 PCPPI countered that petitioners were dismissed pursuant to its
CRP to save the company from total bankruptcy and collapse; thus, it sent notices of
termination to them and to the Department of Labor and Employment. In support of its
argument that its CRP is a valid exercise of management prerogative, PCPPI submitted
audited financial statements showing that it suffered financial reverses in 1998 in the
total amount of SEVEN HUNDRED MILLION (P700,000,000.00) PESOS, TWENTY- SEVEN
MILLION (P27,000,000.00) PESOS of which was allegedly incurred in the Tanauan Plant in
1999.

Aggrieved party appealed and filed it with NLRC. NLRC rendered a decision:

(5) Nullifying, in NLRC Consolidated Case No. V-000071-01 (RAB VIII cases nos. 3-0246-
2000 to 3-0258-2000; Kempis, et al. vs. PCPPI), the Executive Labor Arbiter's Decisions
dated December 15, 2000, and DISMISSING the complaints for illegal dismissal, and in its
stead DECLARING the retrenchment program of Pepsi Cola Products Phils., Inc.
pursuant to its CRP, a valid exercise of management prerogatives; Further, ORDERING
Pepsi Cola Products Philippines, Inc. to pay the following complainants their package

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separation benefits of 1 & ½ months salary for every year of service, plus commutation
of all vacation and sick leave credits in the respective amounts hereunder indicated
opposite their names:
1. ARTEMIO S. KEMPIS – P167,486.80

2. EXUPERIO C. MOLINA 168,196.38

–

3. GILBERTO V. OPINION 31,799.74

–

4. PURISIMO M. 165,466.09
CABAOBAS –

5. VICENTE P. LAURON – 167,325.86

6. RAMON M. DE PAZ, 109,652.98

JR. -

7. ZACARIAS E. CARBO 160,376.47

–

8. JULITO C. 161,366.44
ABARRACOSO –

9. DOMINGO B. GLORIA 26,119.26

–

10. FRANCISCO P. 165,204.41

CUMPIO –

Aggrieved, petitioners come before the Court in this petition for review
on certiorari assailing the CA 18thDivision Decision dated July 31, 2006, and its Resolution
dated February 21, 2007.

Issue: Whether or not the dismissal was legal pursuant to PCPPI's retrenchment program.

Held: The petition has no merit.

On the issue of whether the retrenchment of the petitioner’s former co-employee was in
accord with the law, the Court ruled that PCPPI had validly implemented its
retrenchment program.
In the present action, the NLRC held that PEPSI-COLA’s financial statements are
substantial evidence which carry great credibility and reliability viewed in light of the

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financial crisis that hit the country which saw multinational corporations closing shops
and walking away, or adapting [sic] their own corporate rightsizing program.

(2) Records also show that the respondents had already been paid the requisite
separation pay as evidenced by the September 1999 quitclaims signed by them.
Effectively, the said quitclaims serve inter alia the purpose of acknowledging receipt of
their respective separation pays. Appositely, respondents never questioned that
separation pay arising from their retrenchment was indeed paid by Pepsi to them. As
such, the foregoing fact is now deemed conclusive.

In fact, it is apropos to mention that Pepsi and its employees entered into a collective
bargaining agreement on October 17, 1995 which contained a union shop clause
requiring membership in LEPCEU-UOEF#49, the incumbent bargaining union, as a
condition for continued employment. In this regard, Pepsi had all the reasons to assume
that all employees in the bargaining unit were all members of LEPCEU-UOEF#49;
otherwise, the latter would have already lost their employment.

The Court sustains PCPPI's contention. The principle of stare decisis et non quieta
movere (to adhere to precedents and not to unsettle things which are established) is
well entrenched in Article 8 of the New Civil Code which states that judicial decisions
applying or interpreting the laws or the Constitution shall form part of the legal system of
the Philippines.

Century Properties Inc. vs Babiano, et al.

GR No. 220978, July 5, 2016

Facts:

On October 2, 2002, Babiano was hired by CPI as Director of Sales, and was
eventually appointed as Vice President for Sale. As CPFs Vice President for Sales,
Babiano was remunerated with, inter alia, the following benefits: (a) monthly salary of
P70,000.00; (b) allowance of P50,000.00; and (c) 0.5% override commission for
completed sales. His employment contract also contained a "Confidentiality of
Documents and Non-Compete Clause" which, among others, barred him from
disclosing confidential information, and from working in any business enterprise that is in
direct competition with CPI "while [he is] employed and for a period of one year from
date of resignation or termination from [CPI]." Should Babiano breach any of the terms
thereof, his "forms of compensation, including commissions and incentives will be
forfeited."robleslaw

During the same period, Concepcion was initially hired as Sales Agent by CPI and was
eventually promoted as Project Director on September 1, 2007. As such, she signed an
employment agreement, denominated as "Contract of Agency for Project

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Director" which provided, among others, that she would directly report to Babiano, and
receive, a monthly subsidy of P60,000.00, 0.5% commission, and cash incentives. On
March 31, 2008, Concepcion executed a similar contract anew with CPI in which she
would receive a monthly subsidy of P50,000.00, 0.5% commission, and cash incentives
as per company policy. Notably, it was stipulated in both contracts that no employer-
employee relationship exists between Concepcion and CPI.

After receiving reports that Babiano provided a competitor with information regarding
CPFs marketing strategies, spread false information regarding CPI and its projects,
recruited CPI's personnel to join the competitor, and for being absent without official
leave (AWOL) for five (5) days, CPI, through its Executive Vice President for Marketing
and Development, Jose Marco R. Antonio (Antonio), sent Babiano a Notice to Explain,
directing him to explain why he should not be charged with disloyalty, conflict of
interest, and breach of trust and confidence for his actuations.anrobleslaw

On February 25, 2009, Babiano tendered his resignation and revealed that he had been
accepted as Vice President of First Global BYO Development Corporation (First Global),
a competitor of CPI. On March 3, 2009, Babiano was served a Notice of Termination for:
(a) incurring AWOL; (b) violating the "Confidentiality of Documents and Non-Compete
Clause" when he joined a competitor enterprise while still working for CPI and provided
such competitor enterprise information regarding CPFs marketing strategies; and (c)
recruiting CPI personnel to join a competitor.chanrobleslaw

On the other hand, Concepcion resigned as CPFs Project Director through a letter
dated February 23, 2009, effective immediately.

On August 8, 2011, respondents filed a complaint for non-payment of commissions and

damages against CPI and Antonio before the NLRC, docketed as NLRC Case No. NCR-
08-12029-11, claiming that their repeated demands for the payment and release of
their commissions remained unheeded.anrobleslaw

For its part, CPI maintainedcrala that Babiano is merely its agent tasked with selling its
projects. Nonetheless, he was afforded due process in the termination of his
employment which was based on just causes. It also claimed to have validly withheld
Babiano's commissions, considering that they were deemed forfeited for violating the
"Confidentiality of Documents and Non-Compete Clause." On Concepcion's money
claims, CPI asserted that the NLRC had no jurisdiction to hear the same because there
was no employer-employee relations between them, and thus, she should have
litigated the same in an ordinary civil action.obleslaw

Issue:

The core issue for the Court's resolution is whether or not the CA erred in denying CPI's
petition for certiorari, thereby holding it liable for the unpaid commissions of
respondents.

Held:

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The petition is partly meritorious. Article 1370 of the Civil Code provides that "[i]f the
terms of a contract are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulations shall control. In the case at bar, CPI
primarily invoked the "Confidentiality of Documents and Non-Compete Clause" found in
Babiano's employment contract55 to justify the forfeiture of his commissions,

Here, the contracting parties - namely Babiano on one side, and CPI as represented by
its COO-Vertical, John Victor R. Antonio, and Director for Planning and Controls, Jose
Carlo R. Antonio, on the other -indisputably wanted the said clause to be effective
even during the existence of the employer-employee relationship between Babiano
and CPI, thereby indicating their intention to be bound by such clause by affixing their
respective signatures to the employment contract. More significantly, as CPFs Vice
President for Sales, Babiano held a highly sensitive and confidential managerial position
as he "was tasked, among others, to guarantee the achievement of agreed sales
targets for a project and to ensure that his team has qualified and competent
manpower resources by conducting recruitment activities, training sessions, sales rallies,
motivational activities, and evaluation programs." Hence, to allow Babiano to freely
move to direct competitors during and soon after his employment with CPI would make
the latter's trade secrets vulnerable to exposure, especially in a highly competitive
marketing environment. As such, it is only reasonable that CPI and Babiano agree on
such stipulation in the latter's employment contract in order to afford a fair and
reasonable protection to CPI. Indubitably, obligations arising from contracts, including
employment contracts, have the force of law between the contracting parties and
should be complied with in good faith. Corollary thereto, parties are bound by the
stipulations, clauses, terms, and conditions they have agreed to, provided that these
stipulations, clauses, terms, and conditions are not contrary to law, morals, public order
or public policy, as in this case.

Here, the contracting parties - namely Babiano on one side, and CPI as represented by
its COO-Vertical, John Victor R. Antonio, and Director for Planning and Controls, Jose
Carlo R. Antonio, on the other -indisputably wanted the said clause to be effective
even during the existence of the employer-employee relationship between Babiano
and CPI, thereby indicating their intention to be bound by such clause by affixing their
respective signatures to the employment contract. More significantly, as CPFs Vice
President for Sales, Babiano held a highly sensitive and confidential managerial position
as he "was tasked, among others, to guarantee the achievement of agreed sales
targets for a project and to ensure that his team has a qualified and competent
manpower resources by conducting recruitment activities, training sessions, sales rallies,
motivational activities, and evaluation programs.” Hence, to allow Babiano to freely
move to direct competitors during and soon after his employment with CPI would make
the latter's trade secrets vulnerable to exposure, especially in a highly competitive
marketing environment. As such, it is only reasonable that CPI and Babiano agree on
such stipulation in the latter's employment contract in order to afford a fair and
reasonable protection to CPI. Indubitably, obligations arising from contracts, including
employment contracts, have the force of law between the contracting parties and

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should be complied with in good faith.59 Corollary thereto, parties are bound by the
stipulations, clauses, terms, and conditions they have agreed to, provided that these

stipulations, clauses, terms, and conditions are not contrary to law, morals, public order
or public policy,as in this case.

A judicious review of the records reveals that in his resignation letter 61 dated February
25, 2009, Babiano categorically admitted to CPI Chairman Jose Antonio that on
February 12, 2009, he sought employment from First Global, and five (5) days later, was
admitted thereto as vice president. From the foregoing, it is evidently clear that when
he sought and eventually accepted the said position with First Global, he was still
employed by CPI as he has not formally resigned at that time. Irrefragably, this is a
glaring violation of the "Confidentiality of Documents and Non-Compete Clause" in his
employment contract with CPI, thus, justifying the forfeiture of his unpaid commissions.

Lu vs. Enopia
GR No. 197899, March 6, 2017

Facts:

Respondents were hired from January 20, 1994 to March 20, 1996 as crew members of
the fishing mother boat F/B MG-28 owned by respondent Joaquin "Jake" Lu (herein
petitioner Lu) who is the sole proprietor of Mommy Gina Tuna Resources [MGTR] based
in General Santos City. Petitioners and Lu had an income-sharing arrangement wherein
55% goes to Lu, 45% to the crew members, with an additional 4% as "backing incentive."
They also equally share the expenses for the maintenance and repair of the mother
boat, and for the purchase of nets, ropes and payaos.

Sometime in August 1997, Lu proposed the signing of a Joint Venture Fishing Agreement
between them, but petitioners refused to sign the same as they opposed the one-year
term provided in the agreement. According to petitioners, during their dialogue on
August 18, 1997, Lu terminated their services right there and then because of their
refusal to sign the agreement.

On August 25, 1997, petitioners filed their complaint for illegal dismissal, monetary claims
and damages. Petitioners alleged that their refusal to sign the Joint Venture Fishing
Agreement is not a just cause for their termination.

On the other hand, Lu denied having dismissed petitioners, claiming that their
relationship was one of joint venture where he provided the vessel and other fishing
paraphernalia, while petitioners, as industrial partners, provided labor by fishing in the
high seas. Lu alleged that there was no employer-employee relationship as its elements
were not present

Issue:

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Whether or not an employer-employee relationship existed between petitioner Lu and
respondents, Enopia et al.

Ruling:

Yes, there is an employer-employee relationship.

In determining the existence of an employer-employee relationship, the following

elements are considered: (1) the selection and engagement of the workers; (2) the
power to control the worker's conduct; (3) the payment of wages by whatever means;
and (4) the power of dismissal. We find all these elements present in this case.

It is settled that no particular form of evidence is required to prove the existence of an

employer-employee relationship. Any competent and relevant evidence to prove the
relationship may be admitted.

In this case, petitioner contends that it was the piado who hired respondents, however,
it was shown by the latter's evidence that the employer stated in their Social Security
System (SSS) online inquiry system printouts was MGTR, which is owned by petitioner.
Printouts of their individual sss contribution sheet that the date of the SSS remitted
contributions coincided with the date of respondents' employment with petitioner.
Petitioner failed to rebut such evidence. Thus, the fact that petitioner had registered the
respondents with SSS is proof that they were indeed his employees. The coverage of the
Social Security Law is predicated on the existence of an employer-employee
relationship. Moreover, the records show that these fishermen obtain vale or cash
advance from petitioner and not from the piado who allegedly hired and had control
over them.

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.

The private respondent (petitioner) controls the entire fishing operations. Petitioner
assigned a master fisherman (pi ado) and assistant master fisherman (assistant pi ado)
for each mother fishing boat, who every now and then supervise the fishing operations.
Private respondent also assigned checkers based on the office to monitor and contact
every now and then the crew at sea through radio. The checkers advise the private
respondent of the condition and the latter, through radio, will then instruct the "piado"
how to conduct the fishing operations.

The payment of respondents' wages based on the percentage share of the fish catch
falls within the scope and meaning of the term “wage” as defined under Article 97(f) of
the Labor Code

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Petitioner wielded the power of dismissal over respondents when he dismissed them
after they refused to sign the joint fishing venture agreement.

The primary standard for determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual
trade or business of the employer.

There is a direct linkage or causal connection between the nature of petitioners' (now
respondents) work visa- vis MGTR's line of business. In fact, MGTR's line of business could
not possibly exist, let alone flourish without people like the fishermen crew members of
its fishing vessels who actually undertook the fishing activities in the high seas.

Considering that respondents were petitioner's regular employees, the latter's act of
asking them to sign the joint fishing venture agreement which provides that the venture
shall be for a period of one year from the date of the agreement, subject to renewal
upon mutual agreement of the parties, and may be pre-terminated by any of the
parties before the expiration of the one-year period, is violative of the former's security
of tenure. And respondents' termination based on their refusal to sign the same, not
being shown to be one of those just causes for termination under Article 282, is,
therefore, illegal.

Reyes et al., vs Doctolero, et.al

GR No. 185597

Facts:

The case arose from an altercation between respondent Orico Doctolero (Doctolero),
a security guard of respondent Grandeur Security and Services Corporation (Grandeur)
and petitioners John E.R. Reyes (John) and Mervin Joseph Reyes (Mervin) in the parking
area of respondent Makati Cinema Square (MCS).

On January 26, 1996, between 4:30 to 5:00 P.M., John was driving a Toyota Tamaraw
with plate no. PCL-349. As he was approaching the entrance of the basement parking
of MCS, Doctolero stopped him to give way to outgoing cars. After a few minutes,
Doctolero gave John a signal to proceed but afterwards stopped him to allow the
opposite car to move to the right side. The third time that Doctolero gave John the
signal to proceed, only to stop him again to allow a car on the opposite side to
advance to his right, it almost caused a collision. John then told Doctolero of the latter's
mistake in giving him signals to proceed, then stopping him only to allow cars from the
opposite side to move to his side. Infuriated, Doctolero shouted "PUTANG INA MO A" at
John. Then, as John was about to disembark from his vehicle, he saw Doctolero

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pointing his gun at him. Sensing that Doctolero was about to pull the trigger, John tried
to run towards Doctolero to tackle him. Unfortunately, Doctolero was able to pull the
trigger before John reached him, hitting the latter's left leg in the process. Doctolero
also shot at petitioner Mervin when he rushed to John's rescue. When he missed, Mervin
caught Doctolero and pushed him down but was unable to control his speed. As a
result, Mervin went inside MCS, where he was shot in the stomach by another security
guard, respondent Romeo Avila (Avila).

Petitioners filed with the Regional Trial Court (RTC) of Makati a complaint for damages
against respondents Doctolero and Avila and their employer Grandeur, charging the
latter with negligence in the selection and supervision of its employees. They likewise
impleaded MCS on the ground that it was negligent in getting Grandeur's services. In
their complaint, petitioners prayed that respondents be ordered, jointly and severally, to
pay them actual, moral, and exemplary damages, attorney's fees and litigation costs.

Respondents Doctolero and Avila failed to file an answer despite service of summons
upon them. Thus, they were declared in default in an Order dated December 12, 1997.

For its part, Grandeur asserted that it exercised the required diligence in the selection
and supervision of its employees. It likewise averred that the shooting incident was
caused by the unlawful aggression of petitioners who took advantage of their "martial
arts" skills.

On the other hand, MCS contends that it cannot be held liable for damages simply
because of its ownership of the premises where the shooting incident occurred. It
argued that the injuries sustained by petitioners were caused by the acts of
respondents Doctolero and Avila, for whom respondent Grandeur should be solely
responsible. It further argued that the carpark was, at that time, being managed by
Park Asia Philippines and MCS had no control over the carpark when the shooting
incident occurred on January 26, 1996. It likewise denied liability for the items lost in
petitioners' vehicle.

On January 18, 1999, the RTC rendered judgment[12] against respondents Doctolero
and Avila, finding them responsible for the injuries sustained by petitioners. On
September 19, 2005, upon Grandeur's motion for reconsideration, the RTC issued an
Order modifying its April 15, 2005 Decision, the Court renders judgment in favor of
plaintiffs finding defendants Orico Doctolero and Romeo Avila liable for negligence
and to pay plaintiffs.

The Court, however, orders the DISMISSAL of the complaint filed against defendants
Grandeur Security and Services Corporation and [MCS]. It is likewise ordered the

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Dismissal of both the Counterclaims filed by defendants Grandeur Security and Services
Corp., and [MCS] for the right to litigate is the price we pay in a civil society.

Issue:
The sole issue for the consideration of this Court is whether Grandeur and MCS may be
held vicariously liable for the damages caused by respondents Doctolero and Avila to
petitioners John and Mervin Reyes.

Held:

We deny the petition. Petitioner contends that MCS should be held liable for the
negligence of respondents Avila and Doctolero. According to petitioners, since the act
or omission complained of took place in the vicinity of MCS, it is liable for all damages
which are the natural and probable consequences of the act or omission complained
of. They reasoned that MCS hired the services of Grandeur, whose employees (the
security guards), in turn, committed harmful acts that caused the damages suffered by
petitioners. MCS should thus be declared as a joint tortfeasor with Grandeur and
respondent security guards.

We cannot agree. MCS is not liable to petitioners.As a general rule, one is only
responsible for his own act or omission. This general rule is laid down in Article 2176 of
the Civil Code. The law, however, provides for exceptions when it makes certain
persons liable for the act or omission of another. One exception is an employer who is
made vicariously liable for the tort committed by his employee under paragraph 5 of
Article 2180. Here, although the employer is not the actual tortfeasor, the law makes
him vicariously liable on the basis of the civil law principle of pater familias for failure to
exercise due care and vigilance over the acts of one's subordinates to prevent
damage to another.

It must be stressed, however, that the above rule is applicable only if there is an
employer-employee relationship. This employer-employee relationship cannot be
presumed but must be sufficiently proven by the plaintiff. The plaintiff must also show
that the employee was acting within the scope of his assigned task when the tort
complained of was committed. It is only then that the defendant, as employer, may
find it necessary to interpose the defense of due diligence in the selection and
supervision of employees.

Similarly, we find no employer-employee relationship between MCS and respondent

guards. The guards were merely assigned by Grandeur to secure MCS' premises
pursuant to their Contract of Guard Services. Thus, MCS cannot be held vicariously
liable for damages caused by these guards' acts or omissions.

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Neither can it be said that a principal-agency relationship existed between MCS and
Grandeur.

On the other hand, paragraph 5 of Article 2180 of the Civil Code may be applicable to
Grandeur, it being undisputed that respondent guards were its employees. When the
employee causes damage due to his own negligence while performing his own duties,
there arises the juris tantum presumption that the employer is negligent, rebuttable only
by proof of observance of the diligence of a good father of a family. The "diligence of
a good father" referred to in the last paragraph of Article 2180 means diligence in the
selection and supervision of employees.

To rebut the presumption of negligence, Grandeur must prove two things: first, that it
had exercised due diligence in the selection of respondents Doctolero and Avila, and
second, that after hiring Doctolero and Avila, Grandeur had exercised due diligence
in supervising them.

The question of diligent supervision, however, depends on the circumstances of

employment. Ordinarily, evidence demonstrating that the employer has exercised
diligent supervision of its employee during the performance of the latter's assigned tasks
would be enough to relieve him of the liability imposed by Article 2180 in relation to
Article 2176 of the Civil Code.

Here, Grandeur's HRD head, Ungui, likewise testified on Grandeur's standard

operational procedures, showing the means by which Grandeur conducts close and
regular supervision over the security guards assigned to their various clients. Grandeur
also submitted as evidence certificates of attendance to various seminars and the
memoranda both those commending respondents for their good works and
reprimanding them for violations of various company policies. We agree with the CA
that these may be considered, as they are related to the documents and testimonies
adduced during trial to show Grandeur's diligence in the supervision of the actual work
performance of its employees.

Considering all the evidence borne by the records, we find that Grandeur has
sufficiently exercised the diligence of a good father of a family in the selection and
supervision of its employees. Hence, having successfully overcome the legal
presumption of negligence, it is relieved of liability from the negligent acts of its
employees, respondents Doctolero and Avila.

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III. RIGHT TO SECURITY OF TENURE

ALU-TUCP vs. NLRC

234 SCRA 678 [1994]

Facts:
National Steel Corporation (NSC) employed petitioners in connection with its Five Year
Expansion Program. It undertook this program with the end in view of expanding the
volume and increasing the kinds of products that it may offer for sale to the public.
Petitioners were then terminated. They filed a complaint for unfair labor practice,
regularization and monetary benefits. Their contention was that they should be
considered regular employees because their jobs are necessary, desirable and work
related to NSC’s main business which is steel making and that they have rendered
service for more than six years.

Issue: Whether or not petitioners were properly characterized as regular employees

rather than project employees.

Held:
Petitioners are project employees.
Project employees are those employed for a fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of the
engagement of the employee. On the other hand, regular employees are legally
entitled to remain in the service of their employer until that service is terminated by one
or another of the recognized modes or termination of service under the Labor Code.
The principal test for determining whether an employee is properly characterized as
project employees is whether or not the project employees were carrying out a specific
project or undertaking, the duration and the scope of which were specified at the time
the employees were engaged for that project.

There are two types of project activities. First is that a project could refer to a particular
job or undertaking that is within the regular or usual business of the employer company,
but which is distinct and separate and identifiable as such, from the other undertakings
of the company. Such job or undertaking begins and ends at determined or
determinable times. Second is a particular job or undertaking that is not within the
regular business of the corporation. Such a job or undertaking must also be identifiably
separate and distinct from the ordinary or regular business operations of the employer.
It must also begin and end at determined or determinable times.

The case at bar falls on the second type of project activity. The carrying out of the Five
Year Expansion Program constitutes a distinct undertaking identifiable from the ordinary
business and activity of NSC. Each component project, of course, begins and ends at
specified times which had already been determined by the time petitioners were
engaged. During the time petitioners rendered services to NSC, their work was limited to

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one or another of the specific component projects which made up the Five Year
Expansion Program. They were not hired or assigned to any other purpose.

The services of these project employees may be lawfully terminated at the completion
of the project. It is dependent and coterminous with the completion or termination of
the specific undertaking or activity for which the employee was hired which has been
pre-determined at the time of the engagement. Furthermore, the length of service of a
project employee is not the controlling test of employment of tenure. The simple fact
that the employment of petitioners as project employees had gone beyond one year
does not detract from or legally dissolve their status as project employees. Whichever
type of project employment is found in a particular case, a common basic requisite is
that the designation of named employees as "project employees" and their assignment
to a specific project, are effected and implemented in good faith, and not merely as a
means of evading otherwise applicable requirements of labor laws.

Private respondent NSC was not in the business of constructing buildings and installing
plant machinery for the general business community, i.e., for unrelated, third party,
corporations. NSC did not hold itself out to the public as a construction company or as
an engineering corporation.
The present case therefore strictly falls under definition of 'project employees' on
paragraph one of Article 280 of the Labor Code, as amended. Moreover, it has been
held that the length of service of a project employee is not the controlling test of
employment tenure but whether or not 'the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee'.

Cosmos Bottling Corp., vs NLRC

255 SCRA 358 [1996]

Facts:
Gil C. Castro was employed by Cosmos Bottling Corporation for a specific period.
Having satisfactorily served the company for two (2) terms, Castro was recommended
for reemployment with the company’s Maintenance Team for the Davao Project, he
was re-hired and assigned to the Maintenance Division of the Davao Project tasked to
install the private respondent’s annex plant machines in its Davao plant. Castro’s
employment was terminated due to the completion of the special project. Cosmos
Bottling Corporation in valid exercise of its management prerogative terminated the
services of some 228 regular employees by reason of retrenchment. For obvious
reasons, Castro was not among the list of those regular employees whose services were
terminated by reason of retrenchment or those who voluntarily resigned. Castro filed a
complaint for illegal dismissal against Cosmos Bottling Corporation with the Labor
Arbiter contending that being a regular employee, he could not be dismissed without a
just and valid cause. The company alleged that Castro was a mere project employee
whose employment was co-terminous with the project for which he was hired.

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Issue: WON Castro is a regular employee or was a mere project employee of petitioner
Cosmos Bottling Corporation.

Held:
After a careful examination of the records of the case, we find merit in the petition and
hold that respondent NLRC gravely abused its discretion when it rendered the
challenged decision finding private respondent a regular employee. Article 280 of the
Labor Code which defines regular, project and casual employment is applicable here.
The same reads in full:

Article 280. Regular and Casual Employment. — The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged
to perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of
service whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such actually exists.

The case at bar presents what appears, to our mind, as a typical example of the first
type. Petitioner Cosmos Bottling Corporation is a duly organized corporation engaged
in the manufacture, production, bottling, sale and distribution of beverage. In the
course of its business, it undertakes distinct identifiable projects as it did in the instant
case when it formed special teams assigned to install and dismantle its annex plant
machines in various plants all over the country. These projects are distinct and separate,
and are identifiable as such, from its usual business of bottling beverage.

Their duration and scope are made known prior to their undertaking and their specified
goal and purpose are fulfilled once the projects are completed. When private
respondent was initially hired for a period of one month and re-hired for another five
months, and then subsequently re-hired for another five months, he was assigned to the
petitioner's Maintenance Division tasked with the- installation and dismantling of its
annex plant machines. Evidently, these projects or undertakings, the duration and
scope of which had been determined and made known to private respondent at the
time of his employment, can properly be treated as "projects" within the meaning of the
"first" kind. Considered as such, the services rendered by private respondent hired
therein for the duration of the projects may lawfully be terminated at the end or
completion of the same.

Clearly, therefore, private respondent being a project employee, or to use the correct
term, seasonal employee, considering that his employment was limited to the

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installation and dismantling of petitioners annex plant machines after which there was
no more work to do, his employment legally ended upon completion of the project.
Pure Foods Corporation vs. NLRC
G.R. No. 122653. December 12, 1997

Facts:
Pure Foods Corporation hired workers numbering 906 (private respondents) to work for
a fixed period of five months at its tuna cannery plant. Their work consisted in the
receiving, skinning, loining, packing, and casing-up of tuna fish which were then
exported by Pure Foods. Their services were terminated after the expiration of their
respective contracts of employment. They filed before the NLRC a complaint for illegal
dismissal against the petitioner.

Labor Arbiter dismissed the complaint on the ground that the private respondents were
mere contractual workers, and not regular employees; hence, they could not avail of
the law on security of tenure. The termination of their services by reason of the
expiration of their contracts of employment was, therefore, justified. The private
respondents appealed from the decision to the NLRC. The NLRC rendered a decision
holding that the private respondents and their co-complainants were regular
employees.

Issue: WON the employees hired for a definite period (five-month basis) and whose
services are necessary and desirable in the usual business or trade of the employer
considered regular employees

Held:
YES.
They are regular employees because they performed work usually necessary or
desirable in petitioner's business or trade.

The private respondents could not be regarded as having been hired for a specific
project or undertaking. The term "specific project or undertaking" under Article 280 of
the Labor Code contemplates an activity which is not commonly or habitually
performed or such type of work which is not done on a daily basis but only for a specific
duration of time or until completion; the services employed are then necessary and
desirable in the employer's usual business only for the period of time it takes to
complete the project.

The fact that the petitioner repeatedly and continuously hired workers to do the same
kind of work as that performed by those whose contracts had expired negates
petitioner's contention that those workers were hired for a specific project or
undertaking only.

On the validity of private respondents' five-month contracts of employment. In the

leading case of Brent School, Inc. v. Zamora, which was reaffirmed in numerous
subsequent cases, this Court has upheld the legality of fixed-term employment. It ruled
that the decisive determinant in term employment should not be the activities that the

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employee is called upon to perform but the day certain agreed upon by the parties for
the commencement and termination of their employment relationship. But, this Court
went on to say 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 or disregarded as contrary to public policy and morals.

Brent also laid down the criteria under which term employment cannot be said to be in
circumvention of the law on security of tenure:

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.

None of these criteria had been met in the present case. It was really the practice of
the company to hire workers on a uniformly fixed contract basis and replace them
upon the expiration of their contracts with other workers on the same employment
duration.

This scheme of the petitioner was apparently designed to prevent the private
respondents and the other "casual" employees from attaining the status of a regular
employee. It was a clear circumvention of the employees' right to security of tenure
and to other benefits like minimum wage, cost-of-living allowance, sick leave, holiday
pay, and 13th month pay. Indeed, the petitioner succeeded in evading the application
of labor laws. Also, it saved itself from the trouble or burden of establishing a just cause
for terminating employees by the simple expedient of refusing to renew the
employment contracts.

The five-month period specified in private respondents' employment contracts having

been imposed precisely to circumvent the constitutional guarantee on security of
tenure should, therefore, be struck down or disregarded as contrary to public policy or
morals . To uphold the contractual arrangement between the petitioner and the
private respondents would, in effect, permit the former to avoid hiring permanent or
regular employees by simply hiring them on a temporary or casual basis, thereby
violating the employees' security of tenure in their jobs.

Phil. Fruit & Vegetable Industries vs. NLRC

310 SCRA 680

Facts:
Private respondent Philippine Fruit and Vegetable Workers Union-Tupas Local Chapter,
for and in behalf of 127 of its members, filed a complaint for unfair labor practice
and/or illegal dismissal with damages against petitioner corporation. Private
respondent alleged that many of its complaining members started working for San

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Carlos Fruits Corporation which later incorporated into PFVII in January or February 1983
until their dismissal on different dates in 1985, 1986, 1987 and 1988. They further alleged
that the dismissals were due to complainants' involvement in union activities and were
without just cause.

Petitioners argue that PFVII operates on a seasonal basis and the complainants who are
members of respondent union are seasonal workers because they work only during the
period that the company is in operation. According to petitioners, its operation starts
only in February with the processing of tomatoes into tomato paste and ceases by the
end of the same month when the supply is consumed. It then resumes operations at
the end of April or early May, depending on the availability of supply with the
processing of mangoes into purees and ceases operation in June. The severance of
complainants' employment from petitioner corporation was a necessary consequence
of the nature of seasonal employment; and since complainants are seasonal workers as
defined by the Labor Code, they cannot invoke any tenurial benefit.

Issue: Whether or not complaining members of the union are regular employees or are
seasonal workers whose employment ceased during the off-season due to the non-
availability of work.

Held:
Yes.
The complaining members of respondent union are regular employees of PFVII having
performed functions which are necessary and desirable in the usual business of PFVII as
provided under the first paragraph of Art. 280 of the Labor Code.

Article 280 of the Labor Code provides:

Regular and Casual Employment.- The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the
employers, except where the employment has been fixed for a specific project.

An employment shall be deemed to be casual if it is not covered by the preceeding

paragraph; provided, that, any employee who has rendered at least one year of
service whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such actually exists.

Under above provision, an employment shall be deemed regular where the

employee: a) has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer; or b) has rendered at least one
year of service, whether such service is continuous or broken, with respect to the
activity in which he is employed.

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In the case at bar, the work of complainants as seeders, operators, sorters, slicers,
janitors, drivers, truck helpers, mechanics and office personnel is without doubt
necessary in the usual business of a food processing company like petitioner PFVII.
Complainants' employment has not been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of their
appointment or hiring. Neither is their employment seasonal in nature. While it may be
true that some phases of petitioner company's processing operations is dependent on
the supply of fruits for a particular season, the other equally important aspects of its
business, such as manufacturing and marketing are not seasonal. The fact is that large-
scale food processing companies such as petitioner company continue to operate and
do business throughout the year even if the availability of fruits and vegetables is
seasonal.

Having determined that private respondents are regular employees under the first
paragraph, we need not dwell on the question of whether or not they had rendered
one year of service. This Court has clearly stated in Mercado, Sr. vs. NLRC, that:
The second paragraph of Article 280 demarcates as “casual” employees, all other
employees who do not fall under the definition of the preceding paragraph. The
proviso, in said second paragraph, deems as regular employees those “casual”
employees who have rendered at least one year of service regardless of the fact that
such service may be continuous or broken. Hence, the proviso is applicable only to the
employees who are deemed “casuals” but not to the “project” employees nor the
regular employees treated in paragraph one of Art. 280.

Philips Semiconductor vs. Fardiquela

G.R. No. 141717, April 14, 2004

Facts:
Aside from contractual employees, the petitioner employs 1,029 regular workers. The
employees were subjected to periodic performance appraisal based on output,
quality, attendance and work attitude. One was required to obtain a performance
rating of at least 3.0 for the period covered by the performance appraisal to maintain
good standing as an employee.

On May 8, 1992, respondent Eloisa Fadriquela executed a Contract of Employment with

the petitioner in which she was hired as a production operator with a daily salary of
P118. Her initial contract was for a period of three months up to August 8, 1992, but was
extended for two months when she garnered a performance rating of 3.15. Her
contract was again renewed for two months or up to December 16, 1992, when she
received a performance rating of 3.8.After the expiration of her third contract, it was
extended anew, for three months, that is, from January 4, 1993 to April 4, 1993. After
garnering a performance rating of 3.4, the respondent’s contract was extended for
another three months, that is, from April 5, 1993 to June 4, 1993. She, however, incurred
five absences in the month of April, three absences in the month of May and four
absences in the month of June. Line supervisor Shirley F. Velayo asked the respondent
why she incurred the said absences, but the latter failed to explain her side.

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The respondent was warned that if she offered no valid justification for her absences,
Velayo would have no other recourse but to recommend the non-renewal of her
contract. The respondent still failed to respond, as a consequence of which her
performance rating declined to 2.8. Velayo recommended to the petitioner that the
respondent’s employment be terminated due to habitual absenteeism, in accordance
with the Company Rules and Regulations. Thus, the respondent’s contract of
employment was no longer renewed.

Issue: Whether or not the respondent was still a contractual employee of the petitioner
as of June 4, 1993.

Held:
The two kinds of regular employees under the law are (1) those engaged to perform
activities which are necessary or desirable in the usual business or trade of the
employer; and (2) those casual employees who have rendered at least one year of
service, whether continuous or broken, with respect to the activities in which they are
employed.

The primary standard to determine a regular employment is the reasonable connection

between the particular activity performed by the employee in relation to the business
or trade of the employer. The test is whether the former is usually necessary or desirable
in the usual business or trade of the employer. If the employee has been performing the
job for at least one year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for its performance as
sufficient evidence of the necessity, if not indispensability of that activity to the business
of the employer. Hence, the employment is also considered regular, but only with
respect to such activity and while such activity exists.

The law does not provide the qualification that the employee must first be issued a
regular appointment or must be declared as such before he can acquire a regular
employee status.In this case, the respondent was employed by the petitioner on May 8,
1992 as production operator. She was assigned to wirebuilding at the transistor division.
There is no dispute that the work of the respondent was necessary or desirable in the
business or trade of the petitioner. She remained under the employ of the petitioner
without any interruption since May 8, 1992 to June 4, 1993 or for one (1) year and
twenty-eight (28) days. The original contract of employment had been extended or
renewed for four times, to the same position, with the same chores.

Such a continuing need for the services of the respondent is sufficient evidence of the
necessity and indispensability of her services to the petitioner’s business. By operation of
law, then, the respondent had attained the regular status of her employment with the
petitioner, and is thus entitled to security of tenure as provided for in Article 279 of the
Labor Code which reads:

Alcira vs. NLRC

G.R. No. 149859, June 9, 2004

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Facts:
Middleby Philippines Corp. hired petitioner as engineering support services supervisor on
a probationary basis for six months. On 20 November 1996, a senior officer of Middleby
withheld his time card and did not allow him to work. Alcira filed with the NLRC a
complaint for illegal dismissal on the contention that he had become a regular
employee when he was illegally dismissed. In their defense, respondents claim that,
during petitioner’s probationary employment, he showed poor performance in his
assigned tasks, incurred ten absences, was late several times and violated company
rules on the wearing of uniform. Since he failed to meet company standards,
petitioner’s application to become a regular employee was disapproved and his
employment was terminated.

Issue: Whether petitioner was allowed to work beyond his probationary period and was
therefore already a regular employee at the time of his alleged dismissal.

Held:
Petitioner insists that he already attained the status of a regular employee when he was
dismissed on November 20, 1996 because, having started work on May 20, 1996, the six-
month probationary period ended on November 16, 1996. According to petitioner’s
computation, since Article 13 of the Civil Code provides that one month is composed of
thirty days, six months total one hundred eighty days. As the appointment provided that
petitioner’s status was “probationary (6 mos.)” without any specific date of termination,
the 180th day fell on November 16, 1996. Thus, when he was dismissed on November 20,
1996, he was already a regular employee. Petitioner’s contention is incorrect. Our
computation of the 6-month probationary period is reckoned from the date of
appointment up to the same calendar date of the 6th month following. In short, since
the number of days in each particular month was irrelevant, petitioner was still a
probationary employee when respondent Middleby opted not to “regularize” him on
November 20, 1996.

In the instant case, petitioner cannot successfully say that he was never informed by
private respondent of the standards that he must satisfy in order to be converted into
regular status. This runs counter to the agreement between the parties that after five
months of service the petitioner’s performance would be evaluated. It is only but
natural that the evaluation should be made vis-à-vis the performance standards for the
job. Private respondent Trifona Mamaradlo speaks of such standard in her affidavit
referring to the fact that petitioner did not perform well in his assigned work and his
attitude was below par compared to the company’s standard required of him.

However, even if probationary employees do not enjoy permanent status, they are
accorded the constitutional protection of security of tenure. This means they may only
be terminated for just cause or when they otherwise fail to qualify as regular employees
in accordance with reasonable standards made known to them by the employer at
the time of their engagement. But this constitutional protection ends on the expiration
of the probationary period. On that date, the parties are free to either renew or
terminate their contract of employment. This development has rendered moot the

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question of whether there was a just cause for the dismissal of the petitioners. Middleby
exercised its option not to renew the contract when it informed petitioner on the last
day of his probationary employment that it did not intend to grant him a regular status.

Although we can regard petitioner’s severance from work as dismissal, the same
cannot be deemed illegal. As found by the labor arbiter, the NLRC and the Court of
Appeals, petitioner (1) incurred ten absences (2) was tardy several times (3) failed to
wear the proper uniform many times and (4) showed inferior supervisory skills. Petitioner
failed to satisfactorily refute these substantiated allegations. Taking all this in its entirety,
respondent Middleby was clearly justified to end its employment relationship with
petitioner.

Mitsubishi Motors Phils. vs. Chrysler Phil Labor Union

G.R. No. 148738, June 29, 2004

Facts:
Nelson Paras first worked for Mitsubishi Motors Philippines Corporation (MMPC) as a
shuttle bus driver from March 19, 1976 to June 16, 1982, when he resigned to work
abroad. After working in Saudi Arabia, he was re-hired as a welder-fabricator at the
MMPC tooling shop from October 3, 1994 to October 31, 1994. On October 29, 1994, his
contract was renewed from November 1, 1994 up to March 3, 1995.

Sometime in May of 1996, Paras was re-hired on a probationary basis as a

manufacturing trainee at the Plant Engineering Maintenance Department. He and the
new and re-hired employees were given an orientation on May 15, 1996 by Emma P.
Aninipot, respecting the company's history, corporate philosophy, organizational
structure, and company rules and regulations, including the company standards for
regularization, code of conduct and company-provided benefits.

Paras started reporting for work on May 27, 1996. He was assigned at the paint ovens,
air make-up and conveyors. As part of the MMPC's policy, Paras was evaluated by his
immediate supervisors Lito R. Lacambacal and Wilfredo J. Lopez after six (6) months,
and received an average rating. Later, Lacambacal informed Paras that based on his
performance rating, he would be regularized.

However, the Department and Division Managers reviewed the performance

evaluation made on Paras. They unanimously agreed, along with Paras' immediate
supervisors, that the performance of Paras was unsatisfactory. As a consequence, Paras
was not considered for regularization. On November 26, 1996, he received a Notice of
Termination dated November 25, 1996, informing him that his services were terminated
effective the said date since he failed to meet the required company standards for
regularization.

Issue: Whether or not Paras was already a regular employee when he was terminated.

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Held:
Yes.
Indeed, an employer, in the exercise of its management prerogative, may hire an
employee on a probationary basis in order to determine his fitness to perform work.
Under Article 281 of the Labor Code, the employer must inform the employee of the
standards for which his employment may be considered for regularization. Such
probationary period, unless covered by an apprenticeship agreement, shall not
exceed six (6) months from the date the employee started working. The employee’s
services may be terminated for just cause or for his failure to qualify as a regular
employee based on reasonable standards made known to him. Respondent Paras was
employed as a management trainee on a probationary basis. During the orientation
conducted on May 15, 1996, he was apprised of the standards upon which his
regularization would be based. He reported for work on May 27, 1996. As per the
company’s policy, the probationary period was from three (3) months to a maximum of
six (6) months.

Applying Article 13 of the Civil Code, the probationary period of six (6) months consists
of one hundred eighty (180) days.This is in conformity with paragraph one, Article 13 of
the Civil Code, which provides that the months which are not designated by their
names shall be understood as consisting of thirty (30) days each. The number of months
in the probationary period, six (6), should then be multiplied by the number of days
within a month, thirty (30); hence, the period of one hundred eighty (180) days.

As clearly provided for in the last paragraph of Article 13, in computing a period, the
first day shall be excluded and the last day included. Thus, the one hundred eighty
(180) days commenced on May 27, 1996, and ended on November 23, 1996. The
termination letter dated November 25, 1996 was served on respondent Paras only at
3:00 a.m. of November 26, 1996. He was, by then, already a regular employee of the
petitioner under Article 281 of the Labor Code.

The basis for which respondent Paras' services were terminated was his alleged
unsatisfactory rating arising from poor performance. It is a settled doctrine that the
employer has the burden of proving the lawfulness of his employee's dismissal. The
validity of the charge must be clearly established in a manner consistent with due
process.

Under Article 282 of the Labor Code, an unsatisfactory rating can be a just cause for
dismissal only if it amounts to gross and habitual neglect of duties. Gross negligence has
been defined to be the want or absence of even slight care or diligence as to amount
to a reckless disregard of the safety of person or property. It evinces a thoughtless
disregard of consequences without exerting any effort to avoid them. A careful perusal
of the records of this case does not show that respondent Paras was grossly negligent in
the performance of his duties.

In the present case, the immediate supervisor of respondent Paras gave him an
average performance rating and found him fit for regularization. Thereafter, his
immediate supervisor and the department head reviewed the said rating, which was

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duly noted by the personnel manager. However, in a complete turn around, the
petitioner made it appear that after the performance evaluation of respondent Paras
was reviewed by the department and division heads, it was unanimously agreed that
the respondent's performance rating was unsatisfactory, making him unfit for
regularization.

There is no showing that respondent Paras was informed of the basis for the volte face
of the management group tasked to review his performance rating. His immediate
supervisor even told him that he had garnered a satisfactory rating and was qualified
for regularization, only to later receive a letter notifying him that his employment was
being terminated.

Considering that respondent Paras was not dismissed for a just or authorized cause, his
dismissal from employment was illegal. Furthermore, the petitioner's failure to inform him
of any charges against him deprived him of due process. Clearly, the termination of his
employment based on his alleged unsatisfactory performance rating was effected
merely to cover up and "deodorize" the illegality of his dismissal.

Pangilinan vs. General Milling Co.

G.R. No. 149329, July 2, 2004

Facts:
General Milling Corporation is a domestic corporation engaged in the production and
sale of livestock and poultry. It is, likewise, the distributor of dressed chicken to various
restaurants and establishments nationwide. As such, it employs hundreds of employees,
some on a regular basis and others on a casual basis, as "emergency workers."

The petitioners were employed by the respondent on different dates as emergency

workers at its poultry plant under separate "temporary/casual contracts of employment"
for a period of five months. Most of them worked as chicken dressers, while the others
served as packers or helpers. Upon the expiration of their respective contracts, their
services were terminated. They later filed separate complaints for illegal dismissal and
non-payment of holiday pay, 13th month pay, night-shift differential and service
incentive leave pay against the respondent.

The petitioners alleged that their work as chicken dressers was necessary and desirable
in the usual business of the respondent. They stressed that based on the nature of their
work, they were regular employees of the respondent; hence, could not be dismissed
from their employment unless for just cause and after due notice.

Issue: Whether or not petitioners are regular employees and, thus, cannot be dismissed
without just cause and the required due process.

Held:
Article 280 of the Labor Code comprehends three kinds of employees: (a) regular
employees or those whose work is necessary or desirable to the usual business of the

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employer; (b) project employees or those whose employment has been fixed for a
specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the duration
of the season; and, (c) casual employees or those who are neither regular nor project
employees. A regular employee is one who is engaged to perform activities which are
necessary and desirable in the usual business or trade of the employer as against those
which are undertaken for a specific project or are seasonal. There are two separate
instances whereby it can be determined that an employment is regular: (1) if the
particular activity performed by the employee is necessary or desirable in the usual
business or trade of the employer; and, (2) if the employee has been performing the job
for at least a year.

In the case of St. Theresa’s School of Novaliches Foundation vs. NLRC, 43 we held that
Article 280 of the Labor Code does not proscribe or prohibit an employment contract
with a fixed period. We furthered that it does not necessarily follow that where the
duties of the employee consist of activities usually necessary or desirable in the usual
business of the employer, the parties are forbidden from agreeing on a period of time
for the performance of such activities. There is thus nothing essentially contradictory
between a definite period of employment and the nature of the employee’s duties.

Indeed, in the leading case of Brent School Inc. v. Zamora, 44 we laid down the
guideline before a contract of employment may be held as valid, to wit:

. . . [S]tipulations in employment contracts providing for term employment or fixed

period employment are valid when the period were agreed upon knowingly and
voluntarily by the parties without force, duress or improper pressure, being brought to
bear upon the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with each other
on more or less equal terms with no moral dominance whatever being exercised by the
former over the latter.

The records reveal that the stipulations in the employment contracts were knowingly
and voluntarily agreed to by the petitioners without force, duress or improper pressure,
or any circumstances that vitiated their consent. Similarly, nothing therein shows that
these contracts were used as a subterfuge by the respondent GMC to evade the
provisions of Articles 279 and 280 of the Labor Code. The petitioners were hired as
"emergency workers" and assigned as chicken dressers, packers and helpers at the
Cainta Processing Plant. The respondent GMC is a domestic corporation engaged in
the production and sale of livestock and poultry, and is a distributor of dressed chicken.
While the petitioners' employment as chicken dressers is necessary and desirable in the
usual business of the respondent, they were employed on a mere temporary basis,
since their employment was limited to a fixed period. As such, they cannot be said to
be regular employees, but are merely "contractual employees." Consequently, there
was no illegal dismissal when the petitioners' services were terminated by reason of the
expiration of their contracts. Lack of notice of termination is of no consequence,
because when the contract specifies the period of its duration, it terminates on the

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expiration of such period. A contract for employment for a definite period terminates
by its own term at the end of such period.

Hacienda Bino/Hortencia Stark vs. Cuenca

G.R. No. 150478, April 15, 2005, citing 2003 Hacienda Fatima

Facts:
Hortencia L. Starke, herein petitioner, is the owner and operator of the Hacienda Bino.
During the off milling season of 1996 he issued an Order or Notice which stated, that all
Hacienda Employees who signed in favor of CARP are expressing their desire to get out
of employment on their own volition and wherefore, only those who did not sign for
CARP will be given employment by the hacienda.

Herein respondents are employees of the hacienda performing various works, such as
cultivation, planting of cane points, fertilization, watering, weeding, harvesting and
loading of harvested sugarcanes to cargo trucks are those who signed in favor of
CARP. They allege that they are regular and permanent workers of the hacienda and
that they were dismissed without just and lawful cause. They further alleged that they
were dismissed because they applied as beneficiaries under the Comprehensive
Agrarian Reform Program (CARP) over the land owned by petitioner Starke. Petitioner
Starke alleged that in there was little work in the plantation as it was off-season; and so,
on account of the seasonal nature of the work, she issued the order giving preference
to those who supported the re-classification. She pointed out that when the milling
season began, the work was plentiful again and she issued notices to all workers,
including the respondents, informing them of the availability of work. However, the
respondents refused to report back to work.

Issue: Whether or not the respondents are regular employee

Held:
Petitioner Starke contends that the established doctrine that seasonal employees are
regular employees had been overturned and abandoned by Mercado, Sr. v. NLRC. 18
She stresses that in that case, the Court held that petitioners therein who were sugar
workers, are seasonal employees and their employment legally ends upon completion
of the project or the season.

On the substantial issue of whether the respondents are regular or seasonal employees,
the petitioners contend that the CA violated the doctrine of stare decisis by not
applying the ruling in the Mercado case that sugar workers are seasonal employees.
We hold otherwise. Under the doctrine of stare decisis, when a court has laid down a
principle of law as applicable to a certain state of facts, it will adhere to that principle
and apply it to all future cases in which the facts are substantially the same. 22 Where
the facts are essentially different, however, stare decisis does not apply, for a perfectly
sound principle as applied to one set of facts might be entirely inappropriate when a
factual variance is introduced.

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The disparity in facts between the Mercado case and the instant case is best
exemplified by the fact that the former decision ruled on the status of employment of
farm laborers, who, as found by the labor arbiter, work only for a definite period for a
farm worker, after which they offer their services to other farm owners, considering the
area in question being comparatively small, comprising of seventeen and a half (17
1/2) hectares of land, such that the planting of rice and sugar cane thereon could not
possibly entail a whole year operation. The herein case presents a different factual
condition as the enormity of the size of the sugar hacienda of petitioner, with an area
of two hundred thirty-six (236) hectares, simply do not allow for private respondents to
render work only for a definite period.
Indeed, in a number of cases, the Court has recognized the peculiar facts attendant in
the Mercado case.

Primary standard for determining regular employment is the reasonable connection

between the particular activity performed by the employee in relation to the usual
trade or business of the employer. 28 There is no doubt that the respondents were
performing work necessary and desirable in the usual trade or business of an employer.
Hence, they can properly be classified as regular employees.

For respondents to be excluded from those classified as regular employees, it is not

enough that they perform work or services that are seasonal in nature. They must have
been employed only for the duration of one season. 29 While the records sufficiently
show that the respondents' work in the hacienda was seasonal in nature, there was,
however, no proof that they were hired for the duration of one season only. In fact, the
payrolls, 30 submitted in evidence by the petitioners, show that they availed the
services of the respondents since 1991. Absent any proof to the contrary, the general
rule of regular employment should, therefore, stand. It bears stressing that the employer
has the burden of proving the lawfulness of his employee's dismissal.

Philippine Global Communications Inc. vs. De Vera

G.R. No. 157214, June 7, 2005

Facts:
Ricardo De Vera is a physician by profession whom petitioner enlisted to attend to the
medical needs of its employees. At the crux of the controversy is Dr. De Vera's status vis
a vis petitioner when the latter terminated his engagement.

It appears that on 15 May 1981, De Vera, via a letter dated 15 May 1981, 3 offered his
services to the petitioner, therein proposing his plan of works required of a practitioner in
industrial medicine, to include the following:
1. Application of preventive medicine including periodic check-up of employees;
2. Holding of clinic hours in the morning and afternoon for a total of five (5) hours
daily for consultation services to employees;
3. Management and treatment of employees that may necessitate hospitalization
including emergency cases and accidents;

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4. Conduct pre-employment physical check-up of prospective employees with no
additional medical fee;
5. Conduct home visits whenever necessary;
6. Attend to certain medical administrative function such as accomplishing
medical forms, evaluating conditions of employees applying for sick leave of
absence and subsequently issuing proper certification, and all matters referred
which are medical in nature.

The parties agreed and formalized respondent's proposal in a document denominated

as RETAINERSHIP CONTRACT 4 which will be for a period of one year subject to renewal,
it being made clear therein that respondent will cover "the retainership the Company
previously had with Dr. K. Eulau" and that respondent's "retainer fee" will be at P4,000.00
a month. Said contract was renewed yearly. 5 The retainership arrangement went on
from 1981 to 1994 with changes in the retainer's fee. However, for the years 1995 and
1996, renewal of the contract was only made verbally. However, in December 1996
when Philcom, thru a letter bearing on the subject boldly written as "TERMINATION —
RETAINERSHIP CONTRACT", informed De Vera of its decision to discontinue the latter's
"retainer's contract with the Company effective at the close of business hours of
December 31, 1996" because management has decided that it would be more
practical to provide medical services to its employees through accredited hospitals
near the company premises.

Issue: WON an employer-employee relationship exists between petitioner and

respondent

Held:
Applying the four-fold test to this case, we initially find that it was respondent himself
who sets the parameters of what his duties would be in offering his services to petitioner.
We note, too, that the power to terminate the parties' relationship was mutually vested
on both. Either may terminate the arrangement at will, with or without cause.

The tenor of this letter indicates that the complainant was proposing to extend his time
with the respondent and seeking additional compensation for said extension. This shows
that the respondent PHILCOM did not have control over the schedule of the
complainant as it [is] the complainant who is proposing his own schedule and asking to
be paid for the same. This is proof that the complainant understood that his relationship
with the respondent PHILCOM was a retained physician and not as an employee. If he
were an employee he could not negotiate as to his hours of work.

The labor arbiter added the indicia, not disputed by respondent, that from the time he
started to work with petitioner, he never was included in its payroll; was never deducted
any contribution for remittance to the Social Security System (SSS); and was in fact
subjected by petitioner to the ten (10%) percent withholding tax for his professional fee,
in accordance with the National Internal Revenue Code, matters which are simply
inconsistent with an employer-employee relationship. Clearly, the elements of an
employer-employee relationship are wanting in this case. We may add that the records
are replete with evidence showing that respondent had to bill petitioner for his monthly

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professional fees. 19 It simply runs against the grain of common experience to imagine
that an ordinary employee has yet to bill his employer to receive his salary.

Finally, remarkably absent from the parties' arrangement is the element of control,
whereby the employer has reserved the right to control the employee not only as to the
result of the work done but also as to the means and methods by which the same is to
be accomplished. Here, petitioner had no control over the means and methods by
which respondent went about performing his work at the company premises. He could
even embark in the private practice of his profession, not to mention the fact that
respondent's work hours and the additional compensation therefor were negotiated
upon by the parties.

Article 280 of the Labor Code, quoted by the appellate court, is not the yardstick for
determining the existence of an employment relationship. As it is, the provision merely
distinguishes between two (2) kinds of employees, i.e., regular and casual. It does not
apply where, as here, the very existence of an employment relationship is in dispute.

Lacuesta vs. Ateneo de Manila

G.R. No. 152777, December 9, 2005

Facts:
Respondent Ateneo de Manila University (Ateneo) hired, on a contractual basis,
petitioner Lolita R. Lacuesta as a part-time lecturer in its English Department for the
second semester of school year 1988-1989. She was re-hired, still on a contractual basis,
for the first and second semesters of school year 1989-1990. On July 13, 1990, the
petitioner was first appointed as full-time instructor on probation, in the same
department effective June 1, 1990 until March 31, 1991. Thereafter, her contract as
faculty on probation was renewed effective April 1, 1991 until March 31, 1992. She was
again hired for a third year effective April 1, 1992 until March 31, 1993. During these
three years she was on probation status. Respondent Dr. Leovino Ma. Garcia, Dean of
Ateneo’s Graduate School and College of Arts and Sciences, notified petitioner that
her contract would no longer be renewed because she did not integrate well with the
English Department.Petitioner filed a complaint for illegal dismissal with prayer for
reinstatement, back wages, and moral and exemplary damages. She contends that
Articles 280 and 281 of the Labor Code, not the Manual of Regulations for Private
Schools, is the applicable law to determine whether or not an employee in an
educational institution has acquired regular or permanent status. She argues that (1)
under Article 281, probationary employment shall not exceed six (6) months from date
of employment unless a longer period had been stipulated by an apprenticeship
agreement; (2) under Article 280, if the apprenticeship agreement stipulates a period
longer than one year and the employee rendered at least one year of service, whether
continuous or broken, the employee shall be considered as regular employee with
respect to the activity in which he is employed while such activity exists; and (3) it is with
more reason that petitioner be made regular since she had rendered services as part-
time and full-time English teacher for four and a half years, services which are necessary
and desirable to the usual business of Ateneo.

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Issue:
(1) Whether or not the Court of Appeals erred in ruling that it is the Manual of
Regulations For Private Schools, not the Labor Code, that determines the acquisition of
regular or permanent status of faculty members in an educational institution;
(2) Whether or not after completing the three-year probation with an above-average
performance, petitioner already acquired permanent status.

Held:
(1) The Manual of Regulations for Private Schools, and not the Labor Code,
determines whether or not a faculty member in an educational institution has attained
regular or permanent status. Under Policy Instructions No. 11 issued by the Department
of Labor and Employment, “the probationary employment of professors, instructors and
teachers shall be subject to the standards established by the Department of Education
and Culture.”

Section 93 of the 1992 Manual of Regulations for Private Schools provides that full-time
teachers who have satisfactorily completed their probationary period shall be
considered regular or permanent. Moreover, for those teaching in the tertiary level, the
probationary period shall not be more than six consecutive regular semesters of
satisfactory service.The requisites to acquire permanent employment, or security of
tenure, are
(1) the teacher is a full-time teacher;
(2) the teacher must have rendered three consecutive years of service; and
(3) such service must have been satisfactory.

(2) A part-time teacher cannot acquire permanent status.

Only when one has served as a full-time teacher can he acquire permanent or regular
status. The petitioner was a part-time lecturer before she was appointed as a full-time
instructor on probation. As a part-time lecturer, her employment as such had ended
when her contract expired. Thus, the three semesters she served as part-time lecturer
could not be credited to her in computing the number of years she has served to
qualify her for permanent status. And completing the probation period does not
automatically qualify her to become a permanent employee of the
university. Petitioner could only qualify to become a permanent employee upon
fulfilling the reasonable standards for permanent employment as faculty member.

Consistent with academic freedom and constitutional autonomy, an institution of

higher learning has the prerogative to provide standards for its teachers and determine
whether these standards have been met.At the end of the probation period, the
decision to re-hire an employee on probation, belongs to the university as the employer
alone.

Posedion Fishing/Terry De Jesus vs. NLRC

G.R. No. 168052, February 20, 2006

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Facts:
Private respondent was employed by Poseidon Fishing in January 1988 as Chief Mate.
After five years, he was promoted to Boat Captain. In 1999, petitioners, without reason,
demoted respondent from Boat Captain to Radio Operator of petitioner Poseidon. 4 As
a Radio Operator, he monitored the daily activities in their office and recorded in the
duty logbook the names of the callers and time of their calls.
On 3 July 2000, private respondent failed to record a 7:25 a.m. call in one of the
logbooks. However, he was able to record the same in the other logbook.
Consequently, when he reviewed the two logbooks, he noticed that he was not able to
record the said call in one of the logbooks so he immediately recorded the 7:25 a.m.
call after the 7:30 a.m. entry. Around 9:00 o'clock in the morning of 4 July 2000,
petitioner Terry de Jesus detected the error in the entry in the logbook. Subsequently,
she asked private respondent to prepare an incident report to explain the reason for
the said oversight. At around 2:00 o'clock in the afternoon of that same day, petitioner
Poseidon's secretary, namely Nenita Laderas, summoned private respondent to get his
separation pay amounting to Fifty-Five Thousand Pesos (P55,000.00). However, he
refused to accept the amount as he believed that he did nothing illegal to warrant his
immediate discharge from work.

Rising to the occasion, private respondent filed a complaint for illegal dismissal on 11
July 2000

Issue:
WON respondent was a contractual or regular employee at the time he was
terminated

Held:
In the case under consideration, the agreement has such an objective — to frustrate
the security of tenure of private respondent- and fittingly, must be nullified. In this case,
petitioners' intent to evade the application of Article 280 of the Labor Code is
unmistakable. In a span of 12 years, private respondent worked for petitioner company
first as a Chief Mate, then Boat Captain, and later as Radio Operator. His job was
directly related to the deep-sea fishing business of petitioner Poseidon. His work was,
therefore, necessary and important to the business of his employer. Such being the
scenario involved, private respondent is considered a regular employee of petitioner
under Article 280 of the Labor Code.

Ostensibly, in the case at bar, at different times, private respondent occupied the
position of Chief Mate, Boat Captain, and Radio Operator. In petitioners' interpretation,
however, this act of hiring and re-hiring actually highlight private respondent's
contractual status saying that for every engagement, a fresh contract was entered into
by the parties at the outset as the conditions of employment changed when the
private respondent filled in a different position. But to this Court, the act of hiring and re-
hiring in various capacities is a mere gambit employed by petitioner to thwart the
tenurial protection of private respondent. Such pattern of re-hiring and the recurring

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need for his services are testament to the necessity and indispensability of such services
to petitioners' business or trade.

Petitioners next assert that deep-sea fishing is a seasonal industry because catching of
fish could only be undertaken for a limited duration or seasonal within a given year.
Thus, according to petitioners, private respondent was a seasonal or project employee.

As correctly pointed out by the Court of Appeals, the "activity of catching fish is a
continuous process and could hardly be considered as seasonal in nature." In Philex
Mining Corp. v. National Labor Relations Commission, 34 we defined project employees
as those workers hired (1) for a specific project or undertaking, and (2) the completion
or termination of such project has been determined at the time of the engagement of
the employee. The principal test for determining whether particular employees are
"project employees" as distinguished from "regular employees," is whether or not the
"project employees" were assigned to carry out a "specific project or undertaking," the
duration and scope of which were specified at the time the employees were engaged
for that project. In this case, petitioners have not shown that private respondent was
informed that he will be assigned to a "specific project or undertaking." As earlier noted,
neither has it been established that he was informed of the duration and scope of such
project or undertaking at the time of their engagement.

More to the point, in Maraguinot, Jr. v. National Labor Relations Commission, 35 we

ruled that once a project or work pool
employee has been: (1) continuously, as opposed to intermittently, re-hired by the
same employer for the same tasks or nature of tasks; and (2) these tasks are vital,
necessary and indispensable to the usual business or trade of the employer, then the
employee must be deemed a regular employee.

Cebu Metal Corp., vs. Saliling

G.R. No. 154463, September 5, 2006

Facts:
Cebu Metal Corporation is a corporation engaged in buying and selling of scrap iron. In
the Bacolod branch it has (3) regular employees holding such positions as Officer-in-
Charge, a scaler, and a yardman, whose salaries are paid directly by its main office in
Cebu. The complainants, Gregorio Saliling, Elias Bolido, Manuel Alquiza, Benjie
Amparado are the one who undertakes pakiao work in the unloading of scrap iron. The
Bacolod buying station is mainly a stockyard where scrap metal delivered by its
suppliers are stockpiled. The supply of scrap metal is not steady as it depends upon
many factors, such as availability of supplies, price, competition and demand among
others. There are weeks were there are no delivery while there are weeks were quite a
number of trucks are delivered to the stockyard. The arrivals of these trucks and the
deliveries of scrap metal iron are not regular and the schedules of deliveries to the
stockyard are not known before hand by the respondent Cebu Metal Corporation.
These trucks have their own driver and truck boys employed by the different suppliers.
Sometimes, these trucks do not have any truck boys, and in these instances, the

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corporation hires the services of people for the unloading of the scrap metal from these
trucks. It is for this reason that the unloaders hired by the respondent to unload are
basically seasonal workers. They are hired whenever there are trucks of suppliers do not
have any accompanying truck boys. Whoever is available and whoever are willing to
help unload on a particular occasion are hired to unload. Usually, there is a leader for a
particular group who is tasked to unload the scrap metal from a particular truck. It is this
leader who distributes the individual takes of each member of the particular group
unloading the scrap metal from a particular work The complainants maintained that
they are hired by Cebu Metal Corparation as employees and filed on January 10, 1997
a complaint with the regional arbitration in Bacolod City for underpayment of wages
and non-payment of the following benefits 1. 13th month pay; 2. holiday pay; 3. service
incentive leave pay. On March 6, 1998 includes the claim for illegal dismissal because
they were dismissed after the filing of the complaint. The Labor Arbiter rendered a
decision in favor of the complainants. Aggrieved, Cebu Metal Corporation filed an
appeal with the NLRC. The NLRC reversed and set aside the decision of the Labor
Arbiter and held that the complainants were not regular employees, thus, they could
not have been illegally dismissed. The order of the reversal was based on the
Commission’s finding that the petty cash vouchers submitted by Cebu Metal
Corporation confirmed the fact that unloaders were paid on “pakiao” or task basis at
Php 15.00 per metric ton. The Commission further rationalized that with the irregular
nature of the work involved in the stoppage and resumption of which depended solely
on the availability or supply of scrap metal, it necessarily follows that after the job of
unloading was completed and unloaders are paid the contract price, the latter’s
working relationship with Cebu Metal Corporation legally ended. They were then free to
offer their services to others.

The complainants challenged the decision of the NLRC with the Court of Appeals, and
it rendered the decision annulling the decision of the NLRC and reinstated the decision
made by the Labor Arbiter. Hence, this petition.

Issue: Whether or not the complainant respondents are regular employees.

Held:
The above findings validate respondent's position as to the nature of complainants'
work. Their services are needed only when scrap metals are delivered which occurs
only one or twice a week or sometimes no delivery at all in a given week. The irregular
nature of work, stoppage of work and then work again depending on the supply of
scrap metal has not been denied by complainants. On the contrary they even
admitted the same in their Reply to respondent's Appeal. . . . . Indeed, it would be
unjust to require respondent to maintain complainants in the payroll even if there is no
more work to be done. To do so would make complainants privileged retainers who
collect payment from their employer for work not done. This is extremely unfair and
amount to cuddling of labor at the expense of management.

The Supreme Court ruled there can be no illegal dismissal to speak of. Besides, the
complainants cannot claim regularity in the hiring every time a truck comes loaded
with scrap metal. This is confirmed in the Petty Cash Vouchers which are in the names of

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different leaders who are apportion the amount earned among its members. And,
quite telling is the fact that not every truck delivery of scrap metal requires the services
of respondent complainants when particular truck is accompanied by its own unloader.
And whenever required, respondent complainants were not always the ones
contracted to undertake the unloading of the trucks since the work was offered to
whomever were available at a given time. It should be remembered that the Philippine
Constitution, while inexorably committed towards the protection of the working class
from exploitation and unfair treatment, nevertheless mandates the policy of social
justice so as to strike a balance between an avowed predilection for labor, on the one
hand, and the maintenance of the legal rights of capital, the proverbial hen that lays
the golden egg, on the other. Indeed we should not be mindful of the legal norm that
justice is in every case for the deserving, to be dispensed with in the light of established
facts, the applicable law, an existing jurisprudence.

Hermonias L. Liganza vs. RBL Shipyard Corporation

G.R. NO. 159862, October 17, 2006

Facts:
After working as a carpenter for respondent since August 1991, petitioner's employment
was terminated on 30 October 1999. This prompted petitioner to file a complaint for
illegal dismissal, alleging that on said date he was verbally informed that he was
already terminated from employment and barred from entering the premises. On the
same occasion, he was told to look for another job. Thus, he claimed that he was
unceremoniously terminated from employment without any valid or authorized cause.
On the other hand, respondent insisted that petitioner was a mere project employee
who was terminated upon completion of the project for which he was hired.

Issue: WON petitioner is a project employee and whether his termination was illegal.

Held:
Before an employee hired on a per project basis can be dismissed, a report must be
made to the nearest employment office of the termination of the services of the
workers every time it completed a project, pursuant to Policy Instruction No. 20.

Petitioner claims he is a regular employee since he worked for respondent continuously

and without interruption from 13 August 1991 up to 30 October 1999 and that his work
as a carpenter was necessary and desirable to the latter's usual business of shipbuilding
and repair. He asserts that when he was hired by respondent in 1991, there was no
employment contract fixing a definite period or duration of his engagement, and save
for the contract covering the period 20 September 1999 to 19 March 2000, respondent
had been unable to show the other project employment contracts ever since petitioner
started working for the company. Furthermore, respondent failed to file as many
termination reports as there are completed projects involving petitioner, he adds.

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On the other hand, respondent insists that petitioner is a project employee as
evidenced by the project employment contracts it signed with him and employee
termination reports it submitted to the DOLE.

In the instant case, respondent seeks to prove the status of petitioner's employment
through four (4) employment contracts covering a period of only two (2) years to
declare petitioner as a project employee.

Respondent failed to present the contracts purportedly covering petitioner's

employment from 1991 to July 1997, spanning six (6) years of the total eight (8) years of
his employment. To explain its failure in this regard, respondent claims that the records
and contracts covering said period were destroyed by rains and flashfloods that hit the
company's office.

The four employment contracts are not sufficient to reach the conclusion that petitioner
was, and has been, a project employee earlier since 1991. The Court is not satisfied with
the explanation that the other employment contracts were destroyed by floods and
rains. Respondent could have used other evidence to prove project employment, but it
did not do so, seemingly content with the convenient excuse of "destroyed
documents."

This Court has held that an employment ceases to be co-terminous with specific
projects when the employee is continuously rehired due to the demands of employer's
business and re-engaged for many more projects without interruption. In Maraguinot, Jr.
v. NLRC (Second Division), 21 the Court ruled that "once a project or work pool
employee has been: (1) continuously, as opposed to intermittently, rehired by the same
employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary
and indispensable to the usual business or trade of the employer, then the employee
must be deemed a regular employee, pursuant to Article 280 of the Labor Code and
jurisprudence."

All considered, there are serious doubts in the evidence on record that petitioner is a
project employee, or that he was terminated for just cause. These doubts shall be
resolved in favor of petitioner, in line with the policy of the law to afford protection to
labor and construe doubts in favor of labor.

It is well-settled that the employer must affirmatively show rationally adequate

evidence that the dismissal was for a justifiable cause. When there is no showing of a
clear, valid and legal cause for the termination of employment, the law considers the
matter a case of illegal dismissal and the burden is on the employer to prove that the
termination was for a valid or authorized cause. For failure to prove otherwise, the Court
has no recourse but to grant the petition.

Fabeza vs. San Miguel Corporation

G.R. No. 150658, February 9, 2007

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Facts:
Petitioners, along with Joselito de Lara and John Alovera, were hired by respondent San
Miguel Corporation (SMC) as "Relief Salesmen" for the Greater Manila Area (GMA)
under separate but almost similarly worded "Contracts of Employment With Fixed
Period." After having entered into successive contracts of the same nature with SMC,
the services of petitioners, as well as de Lara and Alovera, were terminated after SMC
no longer agreed to forge another contract with them.

Respondent SMC and its co-respondent Arman Hicarte, who was its Human Resources
Manager, claimed that the hiring of petitioners was not intended to be permanent, as
the same was merely occasioned by the need to fill in a vacuum arising from SMC's
gradual transition to a new system of selling and delivering its products. Claiming that
they were illegally dismissed, petitioners, as well as de Lara and Alovera, filed separate
complaints for illegal dismissal against respondents.

Issue: Whether they were hired for a fixed period, as claimed by respondents, or as
regular employees who may not be dismissed except for just or authorized causes.

Held:
An employment shall be deemed to be casual if it is not covered by the preceding
paragraph: Provided, That any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such activity actually exists.

Although Article 280 does not expressly recognize employment for a fixed period, which
is distinct from employment which has been fixed for a specific project or undertaking,
Brent School, Inc. v. Zamora 11 has clarified that employment for a fixed period is not in
itself illegal.

Thus, even if the duties of an employee consist of activities usually necessary or

desirable in the usual business of the employer, it does not necessarily follow that the
parties are forbidden from agreeing on a period of time for the performance of such
activities through a contract of employment for a fixed term.

Albeit the Court of Appeals ruled in respondents' favor on the basis of a finding that
petitioners were validly hired as project employees, respondents deny that petitioners
were project employees, asserting that they were hired only as fixed-term employees.

Since respondents attribute the termination of petitioners' employment to the expiration

of their respective contracts, a determination of whether petitioners were hired as
project or seasonal employees, or as fixed-term employees without any force, duress or
improper pressure having been exerted against them is in order. If petitioners fall under
any of these categories, then indeed their termination follows from the expiration of
their contracts.

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Since, as earlier stated, respondents themselves deny that petitioners were project
employees, and they do not allege that they were seasonal employees, what remains
for determination is whether petitioners were fixed-term employees under the Brent
doctrine.

Significantly, both the Labor Arbiter and the NLRC found that petitioners were all regular
employees. The NLRC even explicitly stated that the periods stated in petitioners'
contracts were fixed not because of temporary exigencies but because of a scheme
to preclude petitioners from acquiring tenurial security.

Brent instructs that a contract of employment stipulating a fixed-term, even if clear as

regards the existence of a period, is invalid if it can be shown that the same was
executed with the intention of circumventing security of tenure, and should thus be
ignored.

Indeed, substantial evidence exists in the present case showing that the subject
contracts were utilized to deprive petitioners of their security of tenure.

As Brent pronounces, a fixed-term employment is valid only under certain

circumstances, such as when the employee himself insists upon the period, or where the
nature of the engagement is such that, without being seasonal or for a specific project,
a definite date of termination is a sine qua non.

Soriano vs. NLRC

G.R. No. 165594, April 23, 2007 citing 2005 Filipina Pre-fabricated Bldg. System
(Filisystem)

Facts:
Petitioner and certain individuals namely Sergio Benjamin (Benjamin), Maximino
Gonzales (Gonzales), and Noel Apostol (Apostol) were employed by the respondent as
Switchman Helpers in its Tondo Exchange Office (TEO). After participating in several
trainings and seminars, petitioner, Benjamin, and Gonzales were promoted as
Switchmen. Apostol, on the other hand, was elevated to the position of Frameman.
One of their duties as Switchmen and Frameman was the manual operation and
maintenance of the Electronic Mechanical Device (EMD) of the TEO.

In November 1995, respondent PLDT implemented a company-wide redundancy

program. Subsequently, the respondent PLDT gave separate letters dated 15 July 1996
to petitioner, Benjamin, Gonzales, and Apostol informing them that their respective
positions were deemed redundant due to the above-cited reasons and that their
services will be terminated on 16 August 1996. They requested the respondent PLDT for

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transfer to some vacant positions but their requests were denied since all positions were
already filled up. Hence, on 16 August 1996, respondent PLDT dismissed the four from
employment.

Held:
Redundancy exists when the service capability of the workforce is in excess of what is
reasonably needed to meet the demands of the business 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, decrease in volume of
business, or dropping a particular product line or service activity previously
manufactured or undertaken by the enterprise.

The records show that respondent PLDT had sufficiently established the existence of
redundancy in the position of Switchman.

Generally, deeds of release, waiver or quitclaims cannot bar employees from

demanding benefits to which they are legally entitled or from contesting the legality of
their dismissal since quitclaims are looked upon with disfavor and are frowned upon as
contrary to public policy. Where, however, the person making the waiver has done so
voluntarily, with a full understanding thereof, and the consideration for the quitclaim is
credible and reasonable, the transaction must be recognized as being a valid and
binding undertaking.

The requisites for a valid quitclaim are: 1) that there was no fraud or deceit on the part
of any of the parties; 2) that the consideration for the quitclaim is credible and
reasonable; and 3) that the contract is not contrary to law, public order, public policy,
morals or good customs or prejudicial to a third person with a right recognized by law.

It cannot be gainfully said that the petitioner did not fully understand the
consequences of signing the "Receipt, Release, and Quitclaim" dated 15 August 1996.
Petitioner is not an illiterate person who needs special protection. He held responsible
positions in the office of the respondent PLDT and had attended and passed various
training courses for his position. It is thus assumed that he comprehended the contents
of the "Receipt, Release, and Quitclaim" which he signed on 15 August 1996. There is
also no showing that the execution thereof was tainted with deceit or coercion.

Given the foregoing circumstances, the "Receipt, Release, and Quitclaim" dated 15
August 1996 should be considered as legal and binding on petitioner. It is settled that a
legitimate waiver which represents a voluntary and reasonable settlement of a worker's
claim should be respected as the law between the parties.

Caseres vs. Universal Robina Sugar Milling Corp.

G.R. No. 159343, September 28, 2007

Facts:

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Universal Robina Sugar Milling Corporation (respondent) is a corporation engaged in
the cane sugar milling business. Pedy Caseres (petitioner Caseres) started working for
respondent in 1989, while Andito Pael (petitioner Pael) in 1993. At the start of their
respective employments, they were made to sign a Contract of Employment for
Specific Project or Undertaking. Petitioners' contracts were renewed from time to time;
until May 1999 when they were informed that their contracts will not be renewed
anymore. Petitioners filed a complaint for illegal dismissal, regularization, incentive leave
pay, 13th month pay, damages and attorney’s fees.

Issue: Whether or not the petitioners are seasonal/project/term employees and not
regular employees of respondents

Held:
Article 280 of the Labor Code provides:

ART. 280. Regular and Casual Employees. – The provision of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged
to perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such actually exists.

The foregoing provision provides for three kinds of employees: (a) regular employees or
those who have been “engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer”; (b) project employees or those
“whose employment has been fixed for a specific project or undertaking, the
completion or termination of which has been determined at the time of the
engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season”; and (c)
casual employees or those who are neither regular nor project employees.

The principal test for determining whether an employee is a project employee or a

regular employee is whether the employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time
of the engagement of the employee. 10 A project employee is one whose
employment has been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the engagement of the
employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season. A true project employee should be

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assigned to a project which begins and ends at determined or determinable times, and
be informed thereof at the time of hiring.

In the case at bar, We note that complainants never bothered to deny that they
voluntarily, knowingly and willfully executed the contracts of employment. Neither was
there any showing that respondents exercised moral dominance on the
complainants, . . . it is clear that the contracts of employment are valid and binding on
the complainants.

The execution of these contracts in the case at bar is necessitated by the peculiar
nature of the work in the sugar industry which has an off milling season. The very nature
of the terms and conditions of complainants' hiring reveals that they were required to
perform phases of special projects for a definite period after, their services are available
to other farm owners. This is so because the planting of sugar does not entail a whole
year operation, and utility works are comparatively small during the off-milling season.

The fact that petitioners were constantly re-hired does not ipso facto establish that they
became regular employees. Their respective contracts with respondent show that there
were intervals in their employment. In petitioner Caseres's case, while his employment
lasted from August 1989 to May 1999, the duration of his employment ranged from one
day to several months at a time, and such successive employments were not
continuous. With regard to petitioner Pael, his employment never lasted for more than a
month at a time. These support the conclusion that they were indeed project
employees, and since their work depended on the availability of such contracts or
projects, necessarily the employment of respondent's work force was not permanent
but co-terminous with the projects to which they were assigned and from whose
payrolls they were paid.

Accordingly, petitioners cannot complain of illegal dismissal inasmuch as the

completion of the contract or phase thereof for which they have been engaged
automatically terminates their employment.

Pier 8 Arrastre & Stevedoring Services, Inc. vs Boclot

G.R. No. 173849, September 28, 2007

Facts:
Petitioner Pier 8 Arrastre and Stevedoring Services, Inc. (PASSI) is a domestic corporation
engaged in the business of providing arrastre and stevedoring services[5] at Pier 8 in the
Manila North Harbor. PASSI has been rendering arrastre and stevedoring services at the
port area since 1974 and employs stevedores who assist in the loading and unloading
of cargoes to and from the vessels. Petitioner Eliodoro C. Cruz is its Vice-President and
General Manager. Respondent Jeff B. Boclot was hired by PASSI to perform the
functions of a stevedore starting 20 September 1999.

On 15 April 2000, the Philippine Ports Authority (PPA) seized the facilities and took over
the operations of PASSI through its Special Takeover Unit, absorbing PASSI workers as

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well as their relievers. By virtue of a Decision dated 9 January 2001 of the Court of
Appeals, petitioners were able to regain control of their arrastre and stevedoring
operations at Pier 8 on 12 March 2001.

On 9 May 2003, respondent filed a Complaint with the Labor Arbiter of the NLRC,
claiming regularization; payment of service incentive leave and 13th month pays;
moral, exemplary and actual damages; and attorney's fees. Respondent alleged that
he was hired by PASSI in October 1999 and was issued company ID No. 304, 8 a PPA
Pass and SSS documents. In fact, respondent contended that he became a regular
employee by April 2000, since it was his sixth continuous month in service in PASSI's
regular course of business. He argued on the basis of Articles 280 9 and 281 10 of the
Labor Code. He maintains that under paragraph 2 of Article 280, he should be deemed
a regular employee having rendered at least one year of service with the company. In
opposition thereto, petitioners alleged that respondent was hired as a mere "reliever"
stevedore and could thus not become a regular employee

Held:
Under the 1987 Philippine Constitution, the State affords full protection to labor, local
and overseas, organized and unorganized; and the promotion of full employment and
equality of employment opportunities for all. The State affirms labor as a primary social
economic force and guarantees that it shall protect the rights of workers and promote
their welfare.

The Labor Code, which implements the foregoing Constitutional mandate, draws a fine
line between regular and casual employees to protect the interests of labor. 19 "Its
language evidently manifests the intent to safeguard the tenurial interest of the worker
who may be denied the rights and benefits due a regular employee by virtue of
lopsided agreements with the economically powerful employer who can maneuver to
keep an employee on a casual status for as long as convenient." Thus, the standards for
determining whether an employee is a regular employee or a casual or project
employee have been delineated in Article 280 of the Labor Code.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such actually exist.

Under the foregoing provision, a regular employee is (1) one who is either engaged to
perform activities that are necessary or desirable in the usual trade or business of the
employer except for project 21 or seasonal employees; or (2) a casual employee who
has rendered at least one year of service, whether continuous or broken, with respect
to the activity in which he is employed. 22 Additionally, Article 281 of the Labor Code
further considers a regular employee as one who is allowed to work after a
probationary period. Based on the aforementioned, although performing activities that
are necessary or desirable in the usual trade or business of the employer, an employee
such as a project or seasonal employee is not necessarily a regular employee. The

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situation of respondent is similar to that of a project or seasonal employee, albeit on a
daily basis.

Under the second paragraph of the same provision, all other employees who do not fall
under the definition of the preceding paragraph are casual employees. However, the
second paragraph also provides that it deems as regular employees those casual
employees who have rendered at least one year of service regardless of the fact that
such service may be continuous or broken.

The primary standard, therefore, of determining a regular employment is the

reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer. The test is whether the former is
usually necessary or desirable in the usual business or trade of the employer. The
connection can be determined by considering the nature of the work performed and
its relation to the scheme of the particular business or trade in its entirety. Also, if the
employee has been performing the job for at least one year, even if the performance is
not continuous or merely intermittent, the law deems the repeated and continuing
need for its performance as sufficient evidence of the necessity if not indispensability of
that activity to the business. Hence, the employment is also considered regular, but only
with respect to such activity and while such activity exists. (Emphasis supplied.)

PASSI is engaged in providing stevedoring and arrastre services in the port area in
Manila. Stevedoring, dock and arrastre operations include, but are not limited to, the
opening and closing of a vessel's hatches; discharging of cargoes from ship to truck or
dock, lighters and barges, and vice-versa; movement of cargoes inside vessels,
warehouses, terminals and docks; and other related work. In line with this, petitioners
hire stevedores who assist in the loading and unloading of cargoes to and from the
vessels.

Based on the circumstances of the instant case, this Court agrees. It takes judicial
notice 24 that it is an industry practice in port services to hire "reliever" stevedores in
order to ensure smooth-flowing 24-hour stevedoring and arrastre operations in the port
area. No doubt, serving as a stevedore, respondent performs tasks necessary or
desirable to the usual business of petitioners. However, it should be deemed part of the
nature of his work that he can only work as a stevedore in the absence of the
employee regularly employed for the very same function. Bearing in mind that
respondent performed services from September 1999 until June 2003 for a period of
only 228.5 days in 36 months, or roughly an average of 6.34 days a month; while a
regular stevedore working for petitioners, on the other hand, renders service for an
average of 16 days a month, demonstrates that respondent's employment is subject to
the availability of work, depending on the absences of the regular stevedores.
Moreover, respondent does not contest that he was well aware that he would only be
given work when there are absent or unavailable employees. Respondent also does
not allege, nor is there any showing, that he was disallowed or prevented from offering
his services to other cargo handlers in the other piers at the North Harbor other than
petitioners. As aforestated, the situation of respondent is akin to that of a seasonal or
project or term employee, albeit on a daily basis

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The second paragraph thereof stipulates in unequivocal terms that all other employees
who do not fall under the definitions in the first paragraph of regular, project and
seasonal employees, are deemed casual employees. 25 Not qualifying under any of
the kinds of employees covered by the first paragraph of Article 280 of the Labor Code,
then respondent is a casual employee under the second paragraph of the same
provision.

The same provision, however, provides that a casual employee can be considered as
regular employee if said casual employee has rendered at least one year of service
regardless of the fact that such service may be continuous or broken. Section 3, Rule V,
Book II of the Implementing Rules and Regulations of the Labor Code clearly defines the
term "at least one year of service" to mean service within 12 months, whether
continuous or broken, reckoned from the date the employee started working, including
authorized absences and paid regular holidays, unless the working days in the
establishment as a matter of practice or policy, or that provided in the employment
contract, is less than 12 months, in which case said period shall be considered one year.
26 If the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the repeated and
continuing need for its performance as sufficient evidence of the necessity, if not
indispensability, of that activity to the business of the employer. 27 Applying the
foregoing, respondent, who has performed actual stevedoring services for petitioners
only for an accumulated period of 228.5 days does not fall under the classification of a
casual turned regular employee after rendering at least one year of service, whether
continuous or intermittent.

Where from the circumstances it is apparent that periods have been imposed to
preclude acquisition of tenurial security by an employee, such imposition should be
struck down or disregarded as contrary to public policy and morals. 30 However, we
take this occasion to emphasize that the law, while protecting the rights of the
employees, authorizes neither the oppression nor the destruction of the employer.
When the law tilts the scale of justice in favor of labor, the scale should never be so
tilted if the result would be an injustice to the employer. Thus, this Court cannot be
compelled to declare respondent as a regular employee when by the nature of
respondent's work as a reliever stevedore and his accumulated length of service of only
eight months do not qualify him to be declared as such under the provisions of the
Labor Code alone.

In light of the foregoing, petitioners must accord respondent the status of a regular
employee.

Pacquing vs. Coca-Cola Bottlers Phils., Inc.;

G.R. No. 157966, January 31, 2008
citing Magsalin vs. National Organization of Workingmen, G.R. No. 148492, May 9, 2003

Facts:

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Eddie Pacquing, Roderick Centeno, Juanito M. Guerra, Claro Dupilad, Jr., Louie
Centeno, David Reblora, Raymundo Andrade (petitioners) were sales route helpers or
cargadores-pahinantes of Coca-Cola Bottlers Philippines, Inc.

Petitioners were part of a complement of three personnel comprised of a driver, a

salesman and a regular route helper, for every delivery truck. They worked exclusively
at respondent's plants, sales offices, and company premises. On October 22, 1996,
petitioners filed a Complaint against respondent for unfair labor practice and illegal
dismissal with claims for regularization, recovery of benefits under the Collective
Bargaining Agreement (CBA), moral and exemplary damages, and attorney's fees. In
their Position Paper, petitioners alleged that they should be declared regular
employees of respondent since the nature of their work as cargadores-pahinantes was
necessary or desirable to respondent's usual business and was directly related to
respondent's business and trade. In its Position Paper, respondent denied liability to
petitioners and countered that petitioners were temporary workers who were engaged
for a five-month period to act as substitutes for an absent regular employee.

Held:
WON the respondent's sales route helpers or cargadores or pahinantes are regular
workers of respondent has already been resolved in Magsalin v. National Organization
of Working Men.

The basic law on the case is Article 280 of the Labor Code.

In determining whether an employment should be considered regular or non-regular,

the applicable test is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the
employer. The standard, supplied by the law itself, is whether the work undertaken is
necessary or desirable in the usual business or trade of the employer, a fact that can be
assessed by looking into the nature of the services rendered and its relation to the
general scheme under which the business or trade is pursued in the usual course. It is
distinguished from a specific undertaking that is divorced from the normal activities
required in carrying on the particular business or trade. But, although the work to be
performed is only for a specific project or seasonal, where a person thus engaged has
been performing the job for at least one year, even if the performance is not
continuous or is merely intermittent, the law deems the repeated and continuing need
for its performance as being sufficient to indicate the necessity or desirability of that
activity to the business or trade of the employer. The employment of such person is also
then deemed to be regular with respect to such activity and while such activity exists.

The argument of petitioner that its usual business or trade is softdrink manufacturing and
that the work assigned to respondent workers as sales route helpers so involves merely
“post production activities, one which is not indispensable in the manufacture of its
products, scarcely can be persuasive. If, as so argued by petitioner company, only
those whose work are directly involved in the production of softdrinks may be held
performing functions necessary and desirable in its usual business or trade, there would
have then been no need for it to even maintain regular truck sales route helpers. The

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nature of the work performed must be viewed from a perspective of the business or
trade in its entirety and not on a confined scope.

The repeated rehiring of respondent workers and the continuing need for their services
clearly attest to the necessity or desirability of their services in the regular conduct of
the business or trade of petitioner company. The Court of Appeals has found each of
respondents to have worked for at least one year with petitioner company. While this
Court, in Brent School, Inc. vs. Zamora,has upheld the legality of a fixed-term
employment, it has done so, however, with a stern admonition that where from the
circumstances it is apparent that the period has been imposed to preclude the
acquisition of tenurial security by the employee, then it should be struck down as being
contrary to law, morals, good customs, public order and public policy. The pernicious
practice of having employees, workers and laborers, engaged for a fixed period of few
months, short of the normal six-month probationary period of employment, and,
thereafter, to be hired on a day-to-day basis, mocks the law. Any obvious
circumvention of the law cannot be countenanced. The fact that respondent workers
have agreed to be employed on such basis and to forego the protection given to
them on their security of tenure, demonstrate nothing more than the serious problem of
impoverishment of so many of our people and the resulting unevenness between labor
and capital. A contract of employment is impressed with public interest. The 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.

Agusan Del Norte Electronic vs. Cagampang

G.R. No. 167627, October 10, 2008

Facts:
Respondents Joel Cagampang and Glenn Garzon started working as linemen for
petitioner Agusan del Norte Electric Cooperative, Inc. (ANECO) on October 1, 1990,
under an employment contract which was for a period not exceeding three months.

When the contract expired, the two were laid-off for one to five days and then ordered
to report back to work but on the basis of job orders. After several renewals of their job
contracts in the form of job orders for similar employment periods of about three
months each, the said contracts eventually expired on April 31, 1998 and July 30, 1999.
Respondents' contracts were no longer renewed, resulting in their loss of employment.

Thus, on January 11, 2001, respondents filed an illegal dismissal case against petitioners

Issue: WON the respondents were illegally dismissed.

Held:
After considering the facts and the submissions of the parties, we are in agreement that
respondents were illegally dismissed, and that the petition by the employer lacks merit.

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There is no dispute that the respondents' work as linemen was necessary or desirable in
the usual business of ANECO. Additionally, the respondents have been performing the
job for at least one year. The law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity, if not indispensability, of that
activity to the business.

The test to determine whether employment is regular or not is the reasonable

connection between the particular activity performed by the employee in relation to
the usual business or trade of the employer. Also, if the employee has been performing
the job for at least one year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing need for its performance as
sufficient evidence of the necessity, if not indispensability of that activity to the business.
Thus, we held that where the employment of project employees is extended long after
the supposed project has been finished, the employees are removed from the scope of
project employees and are considered regular employees.

While length of time may not be the controlling test for project employment, it is vital in
determining if the employee was hired for a specific undertaking or tasked to perform
functions vital, necessary and indispensable to the usual business or trade of the
employer. Here, private respondent had been a project employee several times over.
His employment ceased to be coterminous with specific projects when he was
repeatedly re-hired due to the demands of petitioner's business. Where from the
circumstances it is apparent that periods have been imposed to preclude the
acquisition of tenurial security by the employee, they should be struck down as contrary
to public policy, morals, good customs or public order.

Respondents in the present case being regular employees, ANECO as the employer
had the burden of proof to show that the respondents' termination was for a just cause.
Unfortunately, however, what petitioners did was merely to refuse, without justifiable
reason, to renew respondents' work contracts for the performance of what would
otherwise be regular jobs in relation to the trade or business of the former. 13 Such
conduct dismally falls short of the requirements of our labor laws regarding dismissals.
No twin notices of termination were issued to the employees, hence the employer did
not observe due process in dismissing them from their employment. Their dismissals were
patently illegal.

In termination cases, the burden of proof rests upon the employer to show that the
dismissal is for just and valid cause; failure to do so would necessarily mean that the
dismissal was illegal. The employer's case succeeds or fails on the strength of its
evidence and not on the weakness of the employee's defense. If doubt exists between
the evidence presented by the employer and the employee, the scales of justice must
be tilted in favor of the latter. Moreover, the quantum of proof required in determining
the legality of an employee's dismissal is only substantial evidence. Substantial evidence
is more than a mere scintilla of evidence or relevant evidence as a reasonable mind
might accept as adequate to support a conclusion, even if other minds, equally
reasonable, might conceivably opine otherwise.

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William Uy Construction et. al vs. Trinidad

GR No. 183250, March 10, 2010

Facts:
Jorge R. Trinidad filed a complaint for illegal dismissal and unpaid benefits against
petitioner William Uy Construction Corporation. Trinidad claimed that he had been
working with the latter company for 16 years since 1988 as driver of its service vehicle,
dump truck, and transit mixer. He had signed several employment contracts with the
company that identified him as a project employee although he had always been
assigned to work on one project after another with some intervals. Respondent Trinidad
further alleged that petitioner company terminated him from work after it shut down
operations because of lack of projects. He learned later, however, that although it
opened up a project in Batangas, it did not hire him back for that project.

Petitioner company countered that it was in the construction business. By the nature of
such business, it had to hire and engage the services of project construction workers,
including respondent Trinidad, whose employments had to be co-terminous with the
completion of specific company projects. For this reason, every time the company
employed Trinidad, he had to execute an employment contract with it, called
Appointment as Project Worker. Petitioner company stressed that employment intervals
or gaps were inherent in the construction business. In compliance with labor rules, the
company submitted an establishment termination report to the Department of Labor
and Employment (DOLE).

The Labor Arbiter rendered a decision, dismissing respondent Trinidad’s complaint for
unjust dismissal. The Labor Arbiter, however, ordered petitioner company to pay
Trinidad P1,500.00 in unpaid service incentive leave, taking into consideration the three-
year prescriptive period for money claims. The Labor Arbiter held that, since Trinidad
was a project employee and since his company submitted the appropriate
establishment termination report to DOLE, his loss of work cannot be regarded as unjust
dismissal.

Issue: Whether or not petitioner company’s repeated rehiring of respondent Trinidad

over several years as project employee for its various projects automatically entitled
him to the status of a regular employee.

Held:
The test for distinguishing a “project employee” from a “regular employee” is whether
or not he has been assigned to carry out a “specific project or undertaking,” with the
duration and scope of his engagement specified at the time his service is contracted.

Here, it is not disputed that petitioner company contracted respondent Trinidad’s

service by specific projects with the duration of his work clearly set out in his
employment contracts. He remained a project employee regardless of the number of
years and the various projects he worked for the company.

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Generally, length of service provides a fair yardstick for determining when an employee
initially hired on a temporary basis becomes a permanent one, entitled to the security
and benefits of regularization. But this standard will not be fair, if applied to the
construction industry, simply because construction firms cannot guarantee work and
funding for its payrolls beyond the life of each project. And getting projects is not a
matter of course.

Construction companies have no control over the decisions and resources of project
proponents or owners. There is no construction company that does not wish it has such
control but the reality, understood by construction workers, is that work depended on
decisions and developments over which construction companies have no
say. Respondent Trinidad’s series of employments with petitioner company were co-
terminous with its projects. When its Boni Serrano-Katipunan Interchange Project was
finished, Trinidad’s employment ended with it. He was not dismissed. His employment
contract simply ended with the project for which he had signed up.

His employment history belies the claim that he continuously worked for the
company. Intervals or gaps separated one contract from another. Petitioner company
needed only to show the last status of Trinidad’s employment, namely, that of a project
employee under a contract that had ended and the company’s compliance with the
reporting requirement for the termination of that employment. Indeed, both the Labor
Arbiter and the NLRC were satisfied that the fact of petitioner company’s compliance
with DOLE Order 19 had been proved in this case.

Dacuital et al, Vs. L.M. Camus Engineering Corp.

G.R. No. 176748, September 1, 2010

Facts:
Petitioners (LMCEC Employees) filed a complaint for illegal dismissal and non-payment
of monetary benefits against respondent LM Camus Engineering Corp. before the
National Labor Relations Commission (NLRC). The employees alleged that they were
illegally dismissed from employment and that their employer failed to pay them their
holiday pay, premium pay for holiday, rest day, service incentive leave pay, and 13th
month pay during the existence and duration of their employment. They also averred
that they were not provided with sick and vacation leaves.

Respondents denied that petitioners were illegally dismissed from employment. They
claimed that petitioners were project employees and, upon the completion of each
project, they were served notices of project completion. They clarified that the
termination of petitioners’ employment was due to the completion of the projects for
which they were hired. Petitioners, however, countered that they were regular
employees as they had been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of LMCEC. They denied that they
were project or contractual employees because their employment was continuous and
uninterrupted for more than one (1) year. Finally, they maintained that they were part
of a work pool from which LMCEC drew its workers for its various projects.

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The Labor Arbiter rendered a decision declaring the dismissal of the complainant-
employees as ILLEGAL and the complainants are entitled to reinstatement without back
wages. The NLRC modified the decision of the Labor Arbiter and ordered the
reinstatement of the complainants with limited backwages. The respondents appealed
the decision to the Court of Appeals and the appellate court held that the
complainants are PROJECT EMPLOYEES and hence, there was no illegal dismissal.

Issue: WON petitioners are PROJECT EMPLOYEES and that their dismissal from
employment was legal.

Held:
No.
Article 280 of the Labor Code distinguishes a "project employee" from a "regular
employee" in this wise:

Article 280. Regular and casual employment.—The provisions of written agreement to

the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged
to perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of the
season...xxx

The principal test used to determine whether employees are project employees is
whether or not the employees were assigned to carry out a specific project or
undertaking, the duration or scope of which was specified at the time the employees
were engaged for that project.

Even though the absence of a written contract does not by itself grant regular status to
petitioners, such a contract is evidence that petitioners were informed of the duration
and scope of their work and their status as project employees. In this case, where no
other evidence was offered, the absence of the employment contracts raises a serious
question of whether the employees were properly informed at the onset of their
employment of their status as project employees.

While it is true that respondents presented the employment contract of Dacuital, the
contract does not show that he was informed of the nature, as well as the duration of
his employment. In fact, the duration of the project for which he was allegedly hired
was not specified in the contract.

Hence, the Dismissal of the petitioners are declared ILLEGAL.

Millennium Erectors Corporation vs. Magallanes

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G.R. No. G.R. No. 184362, November 15, 2010

Facts:
Respondent Virgilio Magallanes started working in 1988 as a utility man for Laurencito Tiu
(Tiu), Chief Executive Officer of Millennium Erectors Corporation (petitioner), Tiu's family,
and Kenneth Construction Corporation. He was assigned to different construction
projects undertaken by petitioner in Metro Manila, the last of which was for a building in
Libis, Quezon City. In July of 2004 he was told not to report for work anymore allegedly
due to old age, prompting him to file on August 6, 2004 an illegal dismissal complaint 1
before the Labor Arbiter.

Issue: Whether or not Magallanes’ dismissal violates security of tenure.

Arguments:
MEC
1.) Respondent was a project employee whom it hired for a building project in Libis
on January 30 and which was in near completion on August 3, 2004, when
services were terminated. Said all DOLE requirements were complied.
2.) Petitioner moved for reconsideration of the NLRC decision, contending that
respondent's motion for reconsideration which it treated as an appeal was not
perfected, it having been belatedly filed; that there was no statement of the
date of receipt of the appealed decision; and that it lacked verification and
copies thereof were not furnished the adverse parties

Held:
1. A project employee is one whose "employment has been fixed for a specific
project or undertaking, the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the season."

As the Court has consistently held, the service of project employees are coterminus [sic]
with the project and may be terminated upon the end or completion of that project or
project phase for which they were hired. Regular employees, in contrast, enjoy security
of tenure and are entitled to hold on to their work or position until their services are
terminated by any of the modes recognized under the Labor Code.
Assuming arguendo that petitioner hired respondent initially on a per project basis, his
continued rehiring, as shown by the sample payrolls converted his status to that of a
regular employee

2. In labor cases, rules of procedure should not be applied in a very rigid and
technical sense. Technicalities should not be permitted to stand in the way of equitably
and completely resolving the rights and obligations of the parties. Where the ends of
substantial justice shall be better served, the application of technical rules of procedure
may be relaxed.

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As to the defective verification in the appeal memorandum before the NLRC, the same
liberality applies. After all, the requirement regarding verification of a pleading is formal,
not jurisdictional.

Exodus International Construction Corp. vs. Biscocho et. Al

G.R. No. 166109, February 23, 2011

Facts:
Exodus International Construction Corporation obtained a contract from Dutch Boy
Philippines, Inc. for the painting of the Imperial Sky Garden located in Binondo, Manila.
Dutch Boy awarded another contract to Exodus for the painting of Pacific Plaza, Towers
in Fort Bonifacio, Taguig City. In the furtherance of its business, Exodus hired respondents
as painters on different dates.

On November 27, 2000, respondents filed a complaint for illegal dismissal and non-
payment of holiday pay, service incentive leave pay, 13th month pay and night-shift
differential pay.

Petitioners denied respondents' allegations. As regards Gregorio, petitioners averred

that he absented himself from work and applied as a painter with SAEI-EEI which is the
general building contractor of Pacific Plaza Towers. Since then, he never reported back
to work.

Guillermo absented himself from work without leave. When he reported for work the
following day, he was reprimanded so he worked only half-day and thereafter was
unheard of until the filing of the instant complaint.

Fernando, Ferdinand, and Miguel were caught eating during working hours for which
they were reprimanded by their foreman. Since then they no longer reported for work.
The Labor Arbiter exonerated Exodus from the charge of illegal dismissal as respondents
chose not to report for work. Since there is neither illegal dismissal nor abandonment of
job, respondents were ordered be reinstated but without any backwages.

Issues: WON respondents were illegally dismissed for abandonment of work

WON they are regular employees, thus entitled to reinstatement

Held:
(1) No. There was no dismissal, much less illegal, and there was also no
abandonment of job to speak of.
As found by the Labor Arbiter, there was no evidence that respondents were dismissed
nor were they prevented from returning to their work. It was only respondents'
unsubstantiated conclusion that they were dismissed. As a matter of fact, respondents
could not name the particular person who effected their dismissal and under what
particular circumstances. Absent any showing of an overt or positive act proving that
petitioners had dismissed respondents, the latters' claim of illegal dismissal cannot be

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sustained. Indeed, a cursory examination of the records reveal no illegal dismissal to
speak of.

The Labor Arbiter is also correct in ruling that there was no abandonment on the part of
respondents that would justify their dismissal from their employment.

Abandonment is the deliberate and unjustified refusal of an employee to resume his

employment. It is a settled rule that mere absence or failure to report for work is not
enough to amount to abandonment of work. To constitute abandonment of work, two
elements must concur:
1. the employee must have failed to report for work or must have been absent
without valid or justifiable reason and
2. there must have been a clear intention on the part of the employee to sever the
employer-employee relationship manifested by some overt act.

It is the employer who has the burden of proof to show a deliberate and unjustified
refusal of the employee to resume his employment without any intention of returning." It
is therefore incumbent upon petitioners to ascertain the respondents' interest or non-
interest in the continuance of their employment. However, petitioners failed to do so.

Petitioners posit that the reinstatement of respondents to their former positions, which
were no longer existing, is impossible, highly unfair and unjust. The project was already
completed by petitioners, having completed their tasks, their positions automatically
ceased to exist. Consequently, there were no more positions where they can be
reinstated as painters.

(2) Respondents are regular employees of petitioners.

It is clear from the records that when one project is completed, respondents were
automatically transferred to the next project awarded to petitioners. There was no
employment agreement given to respondents which clearly spelled out the duration of
their employment, the specific work to be performed and that such is made clear to
them at the time of hiring. It is now too late for petitioners to claim that respondents are
project employees whose employment is coterminous with each project or phase of
the project to which they are assigned.

Nonetheless, assuming that respondents were initially hired as project employees, a

project employee may acquire the status of a regular employee.

The evidence on record shows that respondents were employed and assigned
continuously to the various projects of petitioners. As painters, they performed activities
which were necessary and desirable in the usual business of petitioners, who are
engaged in subcontracting jobs for painting of residential units, condominium and
commercial buildings. As regular employees, respondents are entitled to be reinstated
without loss of seniority rights.

Respondents are also entitled to their money claims such as the payment of holiday
pay, service incentive leave pay, and 13th month pay. However, they cannot be

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entitled to backwages. In cases where there is no evidence of dismissal, the remedy is
reinstatement but without backwages.

Leyte Geothermal Power Progressive Employees Union vs. Phil National Oil Co.
G.R. No. 176351, March 30, 2011

Facts:
Respondent Philippine National Oil Corporation-Energy Development Corporation
[PNOC-EDC] is a government-owned and controlled corporation engaged in
exploration, development, utilization, generation and distribution of energy resources
like geothermal energy. Petitioner is a legitimate labor organization, duly registered with
the Department of Labor and Employment (DOLE) Regional Office No. VIII, Tacloban
City. Among [respondent's] geothermal projects is the Leyte Geothermal Power Project
located at the Greater Tongonan Geothermal Reservation in Leyte. The said Project is
composed of the Tongonan 1 Geothermal Project (T1GP) and the Leyte Geothermal
Production Field Project (LGPF) which provide the power and electricity needed not
only in the provinces and cities of Central and Eastern Visayas (Region VII and VIII), but
also in the island of Luzon as well. Thus, the [respondent] hired and employed hundreds
of employees on a contractual basis, whereby, their employment was only good up to
the completion or termination of the project and would automatically expire upon the
completion of such project. Majority of the employees hired by [respondent] in its Leyte
Geothermal Power Projects had become members of petitioner. In view of that
circumstance, the petitioner demands from the [respondent] for recognition of it as the
collective bargaining agent of said employees and for a CBA negotiation with it.
However, the [respondent] did not heed such demands of the petitioner. Sometime in
1998 when the project was about to be completed, the [respondent] proceeded to
serve Notices of Termination of Employment upon the employees who are members of
the petitioner. On December 28, 1998, the petitioner filed a Notice of Strike with DOLE
against the [respondent] on the ground of purported commission by the latter of unfair
labor practice for "refusal to bargain collectively, union busting and mass termination."
On the same day, the petitioner declared a strike and staged such strike. To avert any
work stoppage, then Secretary of Labor Bienvenido E. Laguesma intervened and issued
the Order, dated January 4, 1999, certifying the labor dispute to the NLRC for
compulsory arbitration. Accordingly, all the striking workers were directed to return to
work within twelve (12) hours from receipt of the Order and for the [respondent] to
accept them back under the same terms and conditions of employment prior to the
strike. Further, the parties were directed to cease and desist from committing any act
that would exacerbate the situation. However, despite earnest efforts on the part of the
Secretary of Labor and Employment to settle the dispute amicably, the petitioner
remained adamant and unreasonable in its position, causing the failure of the
negotiation towards a peaceful compromise. In effect, the petitioner did not abide by
[the] assumption order issued by the Secretary of Labor. Consequently, on January 15,
1999, the [respondent] filed a Complaint for Strike Illegality, Declaration of Loss of
Employment and Damages at the NLRC-RAB VIII in Tacloban City and at the same time,
filed a Petition for Cancellation of Petitioner's Certificate of Registration with DOLE,
Regional Office No. VIII. The two cases were later on consolidated pursuant to the New

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NLRC Rules of Procedure. The consolidated case was docketed as NLRC Certified Case
No. V-02-99 (NCMB-RAB VIII-NS-12-0190-98; RAB Case No. VIII-1-0019-99). The said
certified case was indorsed to the NLRC 4th Division in Cebu City on June 21, 1999 for
the proper disposition thereof.

Issues:
1. Whether the officers and members of petitioner Union are project employees of
respondent; and
2. Whether the officers and members of petitioner Union engaged in an illegal
strike.

Held:
On the first issue, petitioner Union contends that its officers and members performed
activities that were usually necessary and desirable to respondent's usual business. In
fact, petitioner Union reiterates that its officers and members were assigned to the
Construction Department of respondent as carpenters and masons, and to other jobs
pursuant to civil works, which are usually necessary and desirable to the department.
Petitioner Union likewise points out that there was no interval in the employment
contract of its officers and members, who were all employees of respondent, which
lack of interval, for petitioner Union, "manifests that the `undertaking' is usually necessary
and desirable to the usual trade or business of the employer."

The distinction between a regular and a project employment is provided in Article 280,
paragraph 1, of the Labor Code:

ART. 280. Regular and Casual Employment.-- The provisions of written agreement to the
contrary
notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such actually exists.

The foregoing contemplates four (4) kinds of employees: (a) regular employees or those
who have been "engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer"; (b) project employees or those "whose
employment has been fixed for a specific project or undertaking[,] the completion or
termination of which has been determined at the time of the engagement of the
employee"; (c) seasonal employees or those who work or perform services which are

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seasonal in nature, and the employment is for the duration of the season; and
(d) casual employees or those who are not regular, project, or seasonal employees.
Jurisprudence has added a fifth kind-- a fixed-term employee.

Article 280 of the Labor Code, as worded, establishes that the nature of the
employment is determined by law, regardless of any contract expressing otherwise. The
supremacy of the law over the nomenclature of the contract and the stipulations
contained therein is to bring to life the policy enshrined in the Constitution to "afford full
protection to labor." Thus, labor contracts are placed on a higher plane than ordinary
contracts; these are imbued with public interest and therefore subject to the police
power of the State.

However, notwithstanding the foregoing iterations, project employment contracts

which fix the employment for a specific project or undertaking remain valid under the
law: x x x By entering into such a contract, an employee is deemed to understand that
his employment is coterminous with the project. He may not expect to be employed
continuously beyond the completion of the project. It is of judicial notice that project
employees engaged for manual services or those for special skills like those of
carpenters or masons, are, as a rule, unschooled. However, this fact alone is not a valid
reason for bestowing special treatment on them or for invalidating a contract of
employment. Project employment contracts are not lopsided agreements in favor of
only one party thereto. The employer's interest is equally important as that of the
employee[s'] for theirs is the interest that propels economic activity. While it may be true
that it is the employer who drafts project employment contracts with its business interest
as overriding consideration, such contracts do not, of necessity, prejudice the
employee. Neither is the employee left helpless by a prejudicial employment contract.
After all, under the law, the interest of the worker is paramount.

In the case at bar, the records reveal that the officers and the members of petitioner
Union signed employment contracts indicating the specific project or phase of work for
which they were hired, with a fixed period of employment. The NLRC correctly disposed
of this issue: A deeper examination also shows that [the individual members of petitioner
Union] indeed signed and accepted the [employment contracts] freely and voluntarily.
No evidence was presented by [petitioner] Union to prove improper pressure or undue
influence when they entered, perfected and consummated [the employment]
contracts. In fact, it was clearly established in the course of the trial of this case, as
explained by no less than the President of [petitioner] Union, that the contracts of
employment were read, comprehended, and voluntarily accepted by them. x x x.

As clearly shown by [petitioner] Union's own admission, both parties had executed the
contracts freely and voluntarily without force, duress or acts tending to vitiate the
worker[s'] consent. Thus, we see no reason not to honor and give effect to the terms
and conditions stipulated therein. x x x.
Thus, we are hard pressed to find cause to disturb the findings of the NLRC which are
supported by substantial evidence.

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It is well-settled in jurisprudence that factual findings of administrative or quasi-judicial
bodies, which are deemed to have acquired expertise in matters within their respective
jurisdictions, are generally accorded not only respect but even finality, and bind the
Court when supported by substantial evidence. Rule 133, Section 5 defines substantial
evidence as "that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion."

Consistent therewith is the doctrine that this Court is not a trier of facts, and this is strictly
adhered to in labor cases. We may take cognizance of and resolve factual issues, only
when the findings of fact and conclusions of law of the Labor Arbiter or the NLRC are
inconsistent with those of the CA.
In the case at bar, both the NLRC and the CA were one in the conclusion that the
officers and the members of petitioner Union were project employees. Nonetheless,
petitioner Union insists that they were regular employees since they performed work
which was usually necessary or desirable to the usual business or trade of the
Construction Department of respondent.

Policy Instruction No. 12 of the Department of Labor and Employment discloses that the
concept of regular and casual employees was designed to put an end to casual
employment in regular jobs, which has been abused by many employers to prevent so -
called casuals from enjoying the benefits of regular employees or to prevent casuals
from joining unions. The same instructions show that the proviso in the second
paragraph of Art. 280 was not designed to stifle small-scale businesses nor to oppress
agricultural land owners to further the interests of laborers, whether agricultural or
industrial. What it seeks to eliminate are abuses of employers against their employees
and not, as petitioners would have us believe, to prevent small-scale businesses from
engaging in legitimate methods to realize profit. Hence, the proviso is applicable only
to the employees who are deemed "casuals" but not to the "project" employees nor the
regular employees treated in paragraph one of Art. 280.

Clearly, therefore, petitioners being project employees, or, to use the correct
term, seasonal employees, their employment legally ends upon completion of the
project or the [end of the] season. The termination of their employment cannot and
should not constitute an illegal dismissal.

St. Paul College Quezon City vs. Spouses Ancheta

G.R. No. 169905, September 7, 2011

Facts:
Remigio Michael Ancheta was a full-time probationary teacher in the School Year 1996-
1997 which was renewed in the following SY 1997-1998. His wife, Cynthia was hired as a
part time teacher of the Mass Communication Department in the second semester of
SY 1996-1997 and her appointment was renewed for SY 1997-1998.

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On February 13, 1998, respondents signified their intentions to renew their contracts for
SY 1998-1999. They were later sent two letters informing them that the school is
extending to them new contracts for SY 1998-1999.

Thereafter, a letter was written to Remigio Michael, enumerating the departmental and
instructional policies that spouses failed to comply with, such as the late submission of
final grades, failure to submit final test questions to the Program Coordinator, the giving
of tests in the essay form instead of the multiple choice format as mandated by the
school, failure to report to work on time; the high number of students with failing grades
in the classes that they handled, and not being open to suggestions to improve
themselves as teachers, among others.

Thereafter, Sr. Bernadette (Department Coordinator) endorsed the immediate

termination of the teaching services of the spouses. Respondent spouses were given an
opportunity to comment on the letter-recommendation. Subsequently however, they
received their respective letters of termination. Thus, spouses filed a Complaint for illegal
dismissal.

St. Paul contends that it did not extend the contracts of respondent spouses. Although,
it has sent letters to the spouses informing them that the school is extending to them
new contracts for the coming school year, the letters do not constitute as actual
employment contracts but merely offers to teach on the said school year.

Issues: WON respondents were considered regular employees

WON they were illegally dismissed

Held:
(1) Employment on probationary status of teaching personnel is that they are not
governed purely by the Labor Code. The Labor Code is supplemented with respect to
the period of probation by special rules found in the Manual of Regulations for Private
Schools. On the matter of probationary period, Section 92 of these regulations provides:

Section 92.Probationary Period. — Subject in all instances to compliance with the

Department and school requirements, the probationary period for academic personnel
shall not be more than three (3) consecutive years of satisfactory service for those in the
elementary and secondary levels, six (6) consecutive regular semesters of satisfactory
service for those in the tertiary level, and nine (9) consecutive trimesters of satisfactory
service for those in the tertiary level where collegiate courses are offered on a trimester
basis.

A probationary employee or probationer is one who is on trial for an employer, during

which the latter determines whether or not he is qualified for permanent employment.
The probationary employment is intended to afford the employer an opportunity to
observe the fitness of a probationary employee while at work, and to ascertain whether
he will become an efficient and productive employee. While the employer observes
the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified

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for permanent employment, the probationer, on the other hand, seeks to prove to the
employer that he has the qualifications to meet the reasonable standards for
permanent employment. Thus, the word probationary, as used to describe the period
of employment, implies the purpose of the term or period, not its length.

The common practice is for the employer and the teacher to enter into a contract,
effective for one school year. At the end of the school year, the employer has the
option not to renew the contract, particularly considering the teacher's performance. If
the contract is not renewed, the employment relationship terminates. If the contract is
renewed, usually for another school year, the probationary employment continues.
Again, at the end of that period, the parties may opt to renew or not to renew the
contract. If renewed, this second renewal of the contract for another school year
would then be the last year — since it would be the third school year — of probationary
employment. At the end of this third year, the employer may now decide whether to
extend a permanent appointment to the employee, primarily on the basis of the
employee having met the reasonable standards of competence and efficiency set by
the employer. For the entire duration of this three-year period, the teacher remains
under probation. Upon the expiration of his contract of employment, being simply on
probation, he cannot automatically claim security of tenure and compel the employer
to renew his employment contract.

(2) No.
Section 91 of the Manual of Regulations for Private Schools, states that:

Section 91.Employment Contract. — Every contract of employment shall specify the

designation, qualification, salary rate, the period and nature of service and its date of
effectivity, and such other terms and condition of employment as may be consistent
with laws and rules, regulations and standards of the school. A copy of the contract
shall be furnished the personnel concerned.

It is important that the contract of probationary employment specify the period or term
of its effectivity. The failure to stipulate its precise duration could lead to the inference
that the contract is binding for the full three-year probationary period. Therefore, the
letters sent by petitioner Sr. Bernadette, which were void of any specifics cannot be
considered as contracts. The closest they can resemble to are that of informal
correspondence among the said individuals. As such, petitioner school has the right not
to renew the contracts of the respondents, the old ones having been expired at the
end of their terms.

Assuming, arguendo, that the employment contracts between the school and the
spouses were renewed, this Court finds that there was a valid and just cause for their
dismissal. The Labor Code commands that before an employer may legally dismiss an
employee from the service, the requirement of substantial and procedural due process
must be complied with. Under the requirement of substantial due process, the grounds
for termination of employment must be based on just or authorized causes.

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Of the charges against Remigio Michael, his spouse also shared the same defenses and
admissions as to the charges against her.

The plain admissions of the charges against them were the considerations taken into
account by the petitioner school in their decision not to renew the respondent spouses'
employment contracts. This is a right of the school that is mandated by law and
jurisprudence. It is the prerogative of the school to set high standards of efficiency for its
teachers since quality education is a mandate of the Constitution. As long as the
standards fixed are reasonable and not arbitrary, courts are not at liberty to set them
aside. Schools cannot be required to adopt standards which barely satisfy criteria set
for government recognition. The same academic freedom grants the school the
autonomy to decide for itself the terms and conditions for hiring its teacher, subject of
course to the overarching limitations under the Labor Code. The authority to hire is
likewise covered and protected by its management prerogative — the right of an
employer to regulate all aspects of employment, such as hiring, the freedom to
prescribe work assignments, working methods, process to be followed, regulation
regarding transfer of employees, supervision of their work, lay-off and discipline, and
dismissal and recall of workers.

Lanvyl Fishing Enterprises, Inc. vs. Ariola et. al.

G.R. No. 181974, February 1, 2012

Facts:
Petitioner Lynvil Fishing Enterprises, Inc. (Lynvil) is engaged in deep-sea fishing.
Respondents’ services were engaged in various capacities: Andres G. Ariola, captain;
Jessie D. Alcovendas, chief mate; Jimmy B. Calinao, chief engineer; Ismael G. Nubla,
cook; Elorde Bañez, oiler; and Leopoldo G. Sebullen, bodegero.

On Aug. 1, 1998, Lynvil received a report from Ramonito Clarido, one of its employees,
that on July 31, 1998, he witnessed that while on board the company vessel Analyn VIII,
respondents conspired with one another and stole eight tubs of “pampano” and
“tangigue” fish and delivered them to another vessel.

Petitioner filed a criminal complaint against respondents before the office of the City
Prosecutor of Malabon City which found probable cause for indictment of respondents
for the crime of qualified theft. Relying on the finding and Nasipit Lumber Company v.
NLRC, 257 Phil. 937 (1989), Lynvil asserted there was sufficient basis for valid termination
of employment of respondents based on serious misconduct and/or loss of trust and
confidence.

Issues: Whether a finding of the city prosecutor of probable cause to indict employees
of qualified theft is sufficient basis for valid termination for serious misconduct and/or loss
of trust or confidence

Whether the employees were validly terminated

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Held:
On the first issue, the Supreme Court ruled in the negative. We ruled that proof beyond
reasonable doubt of an employee’s misconduct is not required when loss of
confidence is the ground for dismissal. It is sufficient if the employer has “some basis” to
lose confidence or that the employer has reasonable ground to believe or to entertain
the moral conviction that the employee concerned is responsible for the misconduct
and that the nature of his participation therein rendered him absolutely unworthy of the
trust and confidence demanded by his position.

Lynvil cannot argue that since the Office of the Prosecutor found probable cause for
theft the Labor Arbiter must follow the finding as a valid reason for the termination of
respondents’ employment. The proof required for purposes that differ from one and the
other are likewise different.

(2) On the second question, the Court stated that nonetheless, even without
reliance on the prosecutor’s finding, we find that there was valid cause for respondents’
dismissal.

Just cause is required for a valid dismissal. The Labor Code provides that an employer
may terminate an employment based on fraud or willful breach of the trust reposed on
the employee. Such breach is considered willful if it is done intentionally, knowingly,
and purposely, without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. It must also be based on substantial evidence
and not on the employer’s whims or caprices or suspicions otherwise, the employee
would eternally remain at the mercy of the employer. Loss of confidence must not be
indiscriminately used as a shield by the employer against a claim that the dismissal of
an employee was arbitrary. And, in order to constitute a just cause for dismissal, the act
complained of must be work-related and shows that the employee concerned is unfit
to continue working for the employer. In addition, loss of confidence as a just cause for
termination of employment is premised on the fact that the employee concerned holds
a position of responsibility, trust and confidence or that the employee concerned is
entrusted with confidence with respect to delicate matters, such as the handling or
care and protection of the property and assets of the employer. The betrayal of this
trust is the essence of the offense for which an employee is penalized. Breach of trust is
present in this case.

However, Lynvil contends that it cannot be guilty of illegal dismissal because the private
respondents were employed under a fixed-term contract which expired at the end of
the voyage. Contrarily, the private respondents (employees) contend that they
became regular employees by reason of their continuous hiring and performance of
tasks necessary and desirable in the usual trade and business of Lynvil.

Jurisprudence, laid two conditions for the validity of a fixed-contract agreement

between the employer and employee: first, the fixed period of employment was
knowingly and voluntarily agreed upon by the parties without any force, duress, or
improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or second, it satisfactorily appears that the

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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.

In the context of the facts that: (1) the respondents were doing tasks necessarily to
Lynvil’s fishing business with positions ranging from captain of the vessel to bodegero;
(2) after the end of a trip, they will again be hired for another trip with new contracts;
and (3) this arrangement continued for more than ten years, the clear intention is to go
around the security of tenure of the respondents as regular employees. And
respondents are so by the express provisions of the second paragraph of Article 280,
thus: xxx Provided, That any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such activity exists.

Having found that respondents are regular employees who may be, however,
dismissed for cause as we have so found in this case, there is a need to look into the
procedural requirement of due process in Section 2, Rule XXIII, Book V of the Rules
Implementing the Labor Code. It is required that the employer furnish the employee
with two written notices: (1) a written notice served on the employee specifying the
ground or grounds for termination, and giving to said employee reasonable opportunity
within which to explain his side; and (2) a written notice of termination served on the
employee indicating that upon due consideration of all the circumstances, grounds
have been established to justify his termination. In this case, it is clear that the
employees were not given the final written notices of dismissal.

The Court ruled that since employees were dismissed for just cause, they were not
entitle to separation pay and backwages. However, they were to be granted nominal
damages for failure of the employer to comply with statutory due process.

D.M. Consunji, Inc. vs. Jasmin

GR NO 912594, April 18, 2012

Facts:
On December 17, 1968, petitioner D.M. Consunji, Inc. (DMCI), a construction company,
hired respondent Estelito L. Jamin as a laborer. Sometime in 1975, Jamin became a
helper carpenter. Since his initial hiring, Jamin’s employment contract had been
renewed a number of times. On March 20, 1999, his work at DMCI was terminated due
to the completion of the SM Manila project. This termination marked the end of his
employment with DMCI as he was not rehired again.

On April 5, 1999, Jamin filed a complaint for illegal dismissal, with several money claims
(including attorney’s fees), against DMCI and its President/General Manager, David M.
Consunji. Jamin alleged that DMCI terminated his employment without a just and
authorized cause at a time when he was already 55 years old and had no independent
source of livelihood. He claimed that he rendered service to DMCI continuously for
almost 31 years. In addition to the schedule of projects (where he was assigned)

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submitted by DMCI to the labor arbiter, he alleged that he worked for three other DMCI
projects: Twin Towers, Ritz Towers, from July 29, 1980 to June 12, 1982; New Istana
Project, B.S.B. Brunei, from June 23, 1982 to February 16, 1984; and New Istana Project,
B.S.B. Brunei, from January 24, 1986 to May 25, 1986.

DMCI denied liability. It argued that it hired Jamin on a project-to-project basis, from
the start of his engagement in 1968 until the completion of its SM Manila project on
March 20, 1999 where Jamin last worked. With the completion of the project, it
terminated Jamin’s employment. It alleged that it submitted a report to the
Department of Labor and Employment (DOLE) everytime it terminated Jamin’s services.

Issue: Whether there was violation of security of tenure.

Held:
Jamin worked for DMCI for almost 31 years, initially as a laborer and, for the most part,
as a carpenter. Through all those years, DMCI treated him as a project employee, so
that he never obtained tenure. On the surface and at first glance, DMCI appears to be
correct. Jamin entered into a contract of employment (actually an appointment paper
to which he signified his conformity) with DMCI either as a field worker, a temporary
worker, a casual employee, or a project employee everytime DMCI needed his services
and a termination of employment paper was served on him upon completion of every
project or phase of the project where he worked.

The CA pierced the cover of Jamin’s project employment contract and declared him a
regular employee who had been dismissed without cause and without notice. To
reiterate, the CA’s findings were based on: (1) Jamin’s repeated and successive
engagements in DMCI’s construction projects, and (2) Jamin’s performance of activities
necessary or desirable in DMCI’s usual trade or business.

We agree with the CA. In Liganza v. RBL Shipyard Corporation, the Court held that
"[a]ssuming, without granting[,] that [the] petitioner was initially hired for specific
projects or undertakings, the repeated re-hiring and continuing need for his services for
over eight (8) years have undeniably made him a regular employee." We find the
Liganza ruling squarely applicable to this case, considering that for almost 31 years,
DMCI had repeatedly, continuously and successively engaged Jamin’s services since
he was hired on December 17, 1968 or for a total of 38 times — 35 as shown by the
schedule of projects submitted by DMCI to the labor arbiter and three more projects or
engagements added by Jamin, which he claimed DMCI intentionally did not include in
its schedule so as to make it appear that there were wide gaps in his engagements.

We reviewed Jamin’s employment contracts as the CA did and we noted that while
the contracts indeed show that Jamin had been engaged as a project employee,
there was an almost unbroken string of Jamin’s rehiring from December 17, 1968 up to
the termination of his employment on March 20, 1999. While the history of Jamin’s
employment (schedule of projects) relied upon by DMCI shows a gap of almost four
years in his employment for the period between July 28, 1980 (the supposed completion

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date of the Midtown Plaza project) and June 13, 1984 (the start of the IRRI Dorm IV
project), the gap was caused by the company’s omission of the three projects.

For not disclosing that there had been other projects where DMCI engaged his services,
Jamin accuses the company of suppressing vital evidence that supports his contention
that he rendered service in the company’s construction projects continuously and
repeatedly for more than three decades. The non-disclosure might not have
constituted suppression of evidence — it could just have been overlooked by the
company — but the oversight is unfair to Jamin as the non-inclusion of the three
projects gives the impression that there were substantial gaps not only of several
months but years in his employment with DMCI.

To reiterate, Jamin’s employment history with DMCI stands out for his continuous,
repeated and successive rehiring in the company’s construction projects. In all the 38
projects where DMCI engaged Jamin’s services, the tasks he performed as a carpenter
were indisputably necessary and desirable in DMCI’s construction business. He might
not have been a member of a work pool as DMCI insisted that it does not maintain a
work pool, but his continuous rehiring and the nature of his work unmistakably made
him a regular employee. In Maraguinot, Jr. v. NLRC, the Court held that once a project
or work pool employee has been: (1) continuously, as opposed to intermittently, rehired
by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital,
necessary and indispensable to the usual business or trade of the employer, then the
employee must be deemed a regular employee.

Further, as we stressed in Liganza, "[r]espondent capitalizes on our ruling in D.M.

Consunji, Inc. v. NLRC which reiterates the rule that the length of service of a project
employee is not the controlling test of employment tenure but whether or not ‘the
employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the
employee.’"

"Surely, length of time is not the controlling test for project employment. Nevertheless, it
is vital in determining if the employee was hired for a specific undertaking or tasked to
perform functions vital, necessary and indispensable to the usual business or trade of
the employer. Here, [private] respondent had been a project employee several times
over. His employment ceased to be coterminous with specific projects when he was
repeatedly re-hired due to the demands of petitioner’s business." Without doubt,
Jamin’s case fits squarely into the employment situation just quoted.

Gapayao vs. Fulo

G.R. No. 193493; June 13, 2013

Facts:
Jaime Fulo (deceased) died of "acute renal failure secondary to 1st degree burn 70%
secondary electrocution"5 while doing repairs at the residence and business
establishment of petitioner.

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Thereafter, private respondent filed a claim for social security benefits with the Social
Security System (SSS)–Sorosogon Branch.8 However, upon verification and evaluation, it
was discovered that the deceased was not a registered member of the SSS.

respondent filed a Petition before the SSC on 17 February 2003. In her Petition, she
sought social security coverage and payment of contributions in order to avail herself of
the benefits accruing from the death of her husband.

On 6 May 2003, petitioner filed an Answer disclaiming any liability on the premise that
the deceased was not the former’s employee, but was rather an independent
contractor whose tasks were not subject to petitioner’s control and supervision.

Issue: Won there exists between the deceased Jaime Fulo and petitioner an employer-
employee relationship that would merit an award of benefits in favor of private
respondent under social security laws.

Held:
In asserting the existence of an employer-employee relationship, private respondent
alleges that her late husband had been in the employ of petitioner for 14 years, from
1983 to 1997. During that period, he was made to work as a laborer in the agricultural
landholdings, a harvester in the abaca plantation, and a repairman/utility worker in
several business establishments owned by petitioner.
Lastly, petitioner alleges that the deceased is a freelance worker. Since he was
engaged on a pakyaw basis and worked for a short period of time, in the nature of a
farm worker every season, he was not precluded from working with other persons and
in fact worked for them. Under Article 280 of the Labor Code, seasonal employees are
not covered by the definitions of regular and casual employees.

Farm workers may be considered regular seasonal employees.

Jurisprudence has identified the three types of employees mentioned in the provision:
(1) regular employees or those who have been engaged to perform activities that are
usually necessary or desirable in the usual business or trade of the employer; (2) project
employees or those whose employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at the time
of their engagement, or those whose work or service is seasonal in nature and is
performed for the duration of the season; and (3) casual employees or those who are
neither regular nor project employees.

Farm workers generally fall under the definition of seasonal employees.

We have consistently held that seasonal employees may be considered as regular
employees.

Regular seasonal employees are those called to work from time to time.
For regular employees to be considered as such, the primary standard used is the
reasonable connection between the particular activity they perform and the usual
trade or business of the employer.

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Hence, the employment is also considered regular, but only with respect to such
activity and while such activity exists.

A reading of the records reveals that the deceased was indeed a farm worker who was
in the regular employ of petitioner. From year to year, starting January 1983 up until his
death, the deceased had been working on petitioner’s land by harvesting abaca and
coconut, processing copra, and clearing weeds. His employment was continuous in the
sense that it was done for more than one harvesting season. Moreover, no amount of
reasoning could detract from the fact that these tasks were necessary or desirable in
the usual business of petitioner.

Pakyaw workers are considered employees for as long as their employers exercise
control over them

Concrete Solutions, Inc. et al. vs. Cabusas

G.R. No. 177812; June 19, 2013

Facts:
Respondent Arthur Cabusas (respondent) was hired by petitioner Primary Structures
Corporation (PSC) as transit mixer driver for petitioner Concrete Solutions Inc. (CSI) –
Batching Plant Project.
The appointment letter stated:

xxx the status of his employment was that of a project employee and, as such, his
employment was co-terminus with the completion of the project or any phase thereof;
that upon completion of the particular project or phase, he was free to seek other
employment of his choice; xxxx

He was accused of theft in the company, investigations were conducted, he sought

assistance of counsel.

On June 12, 2001, petitioners, thru Manager Ardiente, sent respondent a termination
letter15 reading as follows:

Starting on May 6, 2001, you were absent from work without filing a Leave of Absence.
A Notice of Abandonment was sent to you on May 25, 2001 via telegram. Likewise, you
were required to report or notify the company as soon as possible. However, two weeks
already elapsed from the time the notice was sent to you but you continued defying
said request. Due to this, we are constrained to TERMINATE your services effective on
the date you abandoned your work with a strong belief that you are no longer
interested to come back to your work anymore.

Issue: WON there was valid termination.

Held:

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It is well settled that in termination cases, the burden of proof rests upon the employer
to show that the dismissal was for a just and valid cause, and failure to discharge the
same would mean that the dismissal is not justified and, therefore, illegal

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

Respondent explained that his absence from work was due to the fact that he and his
counsel had asked and were waiting for a copy of result of the investigation on his
alleged act of theft or dishonesty conducted on May 4, 2001 but were not given at all.
We find his absence from work not sufficient to establish that he already had intention
of abandoning his job. Besides, settled is the rule that mere absence or failure to report
for work is not tantamount to abandonment of work.

Reinstatement and backwages.

Petitioners contend that respondent was a project employee and the project to which
he was hired was already completed, thus he could not be reinstated anymore.

Considering that respondent was dismissed prior to the expiration of the duration of his
employment and without a valid or just cause, his termination was therefore illegal.

However, respondent could no longer be reinstated since the project he was assigned
to was already completely finished. However, we find that he is entitled to the salary
corresponding to the unexpired portion of his employment.

D.M. Consunji vs. Bello

G.R. No. 159371; July 19, 2013

Facts:
Bello brought a complaint for illegal dismissal and damages against DMCI and/or
Rachel Consunji. He claimed that DMCI had employed him as a mason without any
interruption from February 1, 1990 until October 10, 1997 at an hourly rate of P25.081;
that he had been diagnosed to be suffering from pulmonary tuberculosis, thereby
necessitating his leave of absence; that upon his recovery, he had reported back to
work, but DMCI had refused to accept him and had instead handed to him a
termination paper that the cause had not been explained to him.

DMCI’s projects had not yet been completed.

DMCI contended that Bello had only been a project employee, as borne out by his
contract of employment and appointment papersand that although his last project
employment contract had been set to expire on October 7, 1997, he had tendered his
voluntary resignation on October 4, 1997 for health reasons that had rendered him
incapable of performing his job, per his resignation letter.

Issues:

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1. WHETHER OR NOT PRIVATE RESPONDENT WAS A REGULAR EMPLOYEE; AND
2. WHETHER OR NOT PRIVATE RESPONDENT WAS DISMISSED OR VOLUNTARILY
RESIGNED.

Held:
In the context of the law, Bello was a project employee of DMCI at the beginning of
their employer-employee relationship. The project employment contract they then
entered into clearly gave notice to him at the time of his engagement about his
employment being for a specific project or phase of work. He was also thereby notified
of the duration of the project, and the determinable completion date of the project.

However, the history of Bello’s appointment and employment showed that he

performed his tasks as a mason in DMCI’s various constructions projects, Tthus, Bello
acquired in time the status of a regular employee by virtue of his continuous work as a
mason of DMCI.

It is settled that the extension of the employment of a project employee long after the
supposed project has been completed removes the employee from the scope of a
project employee and makes him a regular employee. In this regard, the length of time
of the employee’s service, while not a controlling determinant of project employment,
is a strong factor in determining whether he was hired for a specific undertaking or in
fact tasked to perform functions vital, necessary and indispensable to the usual business
or trade of the employer.1

Voluntary resignation
Yet, even had the letter been actually signed by him, the voluntariness of the
resignation could not be assumed from such fact alone. His claim that he had been led
to believe that the letter would serve only as the means of extending his sick leave from
work should have alerted DMCI to the task of proving the voluntariness of the
resignation.
Under the circumstances, DMCI became burdened with the obligation to prove the
due execution and genuineness of the document as a letter of resignation, which it
failed to prove.

Colegio del Santisimo Rosario et al. vs. Rojo

G.R. No. 170388; September 4, 2013

Facts:
Petitioner Colegio del Santisimo Rosario (CSR) hired respondent as a high school
teacher on probationary basis for the school years 1992-1993, 1993-19947 and 1994-
1995. On April 5, 1995, CSR, through petitioner Sr. Zenaida S. Mofada, OP (Mofada),
decided not to renew respondent’s services.

Respondent filed a Complaint for illegal dismissal. He alleged that since he had served
three consecutive school years which is the maximum number of terms allowed for
probationary employment, he should be extended permanent employment. Citing

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paragraph 75 of the 1970 Manual of Regulations for Private Schools (1970 Manual),
respondent asserted that "full- time teachers who have rendered three (3) consecutive
years of satisfactory services shall be considered permanent."

Petitioners maintain that upon the expiration of the probationary period, both the
school and the respondent were free to renew the contract or let it lapse. Petitioners
insist that a teacher hired for three consecutive years as a probationary employee does
not automatically become a regular employee upon completion of his third year of
probation. It is the positive act of the school – the hiring of the teacher who has just
completed three consecutive years of employment on probation for the next school
year – that makes the teacher a regular employee of the school.

Held:
In Mercado v. AMA Computer College-Parañaque City, Inc., we had occasion to rule
that cases dealing with employment on probationary status of teaching personnel are
not governed solely by the Labor Code as the law is supplemented, with respect to the
period of probation, by special rules found in the Manual of Regulations for Private
Schools (the Manual).

With regard to the probationary period, Section 92 of the 1992 Manual provides:

Section 92. Probationary Period. – Subject in all instances to compliance with the
Department and school requirements, the probationary period for academic personnel
shall not be more than three (3) consecutive years of satisfactory service for those in the
elementary and secondary levels, six (6) consecutive regular semesters of satisfactory
service for those in the tertiary level, and nine (9) consecutive trimesters of satisfactory
service for those in the tertiary level where collegiate courses are offered on a trimester
basis.

In this case, petitioners’ teachers who were on probationary employment were made
to enter into a contract effective for one school year. Thereafter, it may be renewed for
another school year, and the probationary employment continues. At the end of the
second fixed period of probationary employment, the contract may again be renewed
for the last time.

Such employment for fixed terms during the teachers’ probationary period is an
accepted practice in the teaching profession.

That teachers on probationary employment also enjoy the protection afforded by

Article 281 of the Labor Code is supported by Section 93 of the 1992 Manual which
provides:

Sec. 93. Regular or Permanent Status. - Those who have served the probationary period
shall be made regular or permanent. Full-time teachers who have satisfactorily
completed their probationary period shall be considered regular or permanent.

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The above provision clearly provides that full-time teachers become regular or
permanent employees once they have satisfactorily completed the probationary
period of three school years. The use of the term satisfactorily necessarily connotes the
requirement for schools to set reasonable standards to be followed by teachers on
probationary employment. For how else can one determine if probationary teachers
have satisfactorily completed the probationary period if standards therefor are not
provided?
As such, "no vested right to a permanent appointment shall accrue until the employee
has completed the prerequisite three-year period necessary for the acquisition of a
permanent status. [However, it must be emphasized that] mere rendition of service for
three consecutive years does not automatically ripen into a permanent appointment. It
is also necessary that the employee be a full-time teacher, and that the services he
rendered are satisfactory.

However, for teachers on probationary employment, in which case a fixed term

contract is not specifically used for the fixed term it offers, it is incumbent upon the
school to have not only set reasonable standards to be followed by said teachers in
determining qualification for regular employment, the same must have also been
communicated to the teachers at the start of the probationary period, or at the very
least, at the start of the period when they were to be applied. These terms, in addition
to those expressly provided by the Labor Code, would serve as the just cause for the
termination of the probationary contract.

In this case, glaringly absent from petitioners’ evidence are the reasonable standards
that respondent was expected to meet that could have served as proper guidelines for
purposes of evaluating his performance. Nowhere in the Teacher’s Contract could such
standards be found. Neither was it mentioned that the same were ever conveyed to
respondent. Even assuming that respondent failed to meet the standards set forth by
CSR and made known to the former at the time he was engaged as a teacher on
probationary status, still, the termination was flawed for failure to give the required
notice to respondent.

Herrera-Manaois vs. St. Scholasticas College

G.R. No. 188914; December 11, 2013

Facts:
SSC, situated in the City of Manila, is a private educational institution offering
elementary, secondary, and tertiary education. Manaois graduated from SSC in
October 1992 with a degree in Bachelor of Arts in English. In 1994, she returned to her
alma mater as a part-time English teacher. After taking a leave of absence for one
year, she was again rehired by SSC for the same position. Four years into the service,
she was later on recommended by her Department Chairperson to become a full-time
faculty member of the English Department.

Manaois thus applied for a position as full-time instructor for school year 2000-2001.

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She mentioned in her application letter that she had been taking the course Master of
Arts in English Studies, Major in Creative Writing, at the University of the Philippines,
Diliman (UP); that she was completing her master's thesis; and that her oral defense was
scheduled for June 2000. In a reply letter 4 dated 17 April 2000, the Dean of Arts and
Sciences informed her of the SSC Administrative Council's approval of her application.
SSC hired her as a probationary full-time faculty member with the assigned task of
instructor for the school year 2000-2001. Her probationary employment continued for a
total of three consecutive years.
Because of the forthcoming completion of her third year of probationary employment,
Manaois wrote the Dean of Arts and Sciences requesting an extension of her teaching
load for the school year 2003-2004. Manaois eventually received a letter from the Dean
of College and Chairperson of the Promotions and Permanency Board officially
informing her of the board's decision not to renew her contract.

Issue: Whether the completion of a master's degree is required in order for a tertiary
level educator to earn the status of permanency in a private educational institution.

Held:
Probationary employment refers to the trial stage or period during which the employer
examines the competency and qualifications of job applicants, and determines
whether they are qualified to be extended permanent employment status. Such an
arrangement affords an employer the opportunity — before the full force of the
guarantee of security of tenure comes into play — to fully scrutinize and observe the
fitness and worth of probationers while on the job and to determine whether they
would become proper and efficient employees. It also gives the probationers the
chance to prove to the employer that they possess the necessary qualities and
qualifications to meet reasonable standards for permanent employment.

Viewed next to the statements and actions of Manaois — i.e., the references to
obtaining a master's degree in her application letter, in the subsequent
correspondences between her and SSC, and in the letter seeking the extension of a
teaching load for the school year 2003-2004; and her submission of certifications from
UP and from her thesis adviser — we find that there is indeed substantial evidence
proving that she knew about the necessary academic qualifications to obtain the
status of permanency.

At this juncture, we reiterate the rule that mere completion of the three-year probation,
even with an above-average performance, does not guarantee that the employee will
automatically acquire a permanent employment status. It is settled jurisprudence that
the probationer can only qualify upon fulfillment of the reasonable standards set for
permanent employment as a member of the teaching personnel.

Thus, pursuant to the 1992 Manual, private educational institutions in the tertiary level
may extend "full-time faculty" status only to those who possess, inter alia, a master's
degree in the field of study that will be taught. This minimum requirement is neither
subject to the prerogative of the school nor to the agreement between the parties. For
all intents and purposes, this qualification must be deemed impliedly written in the

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employment contracts between private educational institutions and prospective
faculty members. The issue of whether probationers were informed of this academic
requirement before they were engaged as probationary employees is thus no longer
material, as those who are seeking to be educators are presumed to know these
mandated qualifications. In the light of the failure of Manaois to satisfy the academic
requirements for the position, she may only be considered as a part-time instructor
pursuant to Section 45 of the 1992 Manual.

Universal Robina Sugar Milling Corp. vs. Acibo et al.

G.R No. 186439; January 15, 2014

Facts:
URSUMCO is a domestic corporation engaged in the sugar cane milling business;
Cabati is URSUMCO's Business Unit General Manager. The complainants were
employees of URSUMCO. They were hired on various dates (between February 1988
and April 1996) and on different capacities, 8 i.e., drivers, crane operators, bucket
hookers, welders, mechanics, laboratory attendants and aides, steel workers, laborers,
carpenters and masons, among others. At the start of their respective engagements,
the complainants signed contracts of employment for a period of one (1) month or for
a given season. URSUMCO repeatedly hired the complainants to perform the same
duties and, for every engagement, required the latter to sign new employment
contracts for the same duration of one month or a given season.
The complainants filed before the LA complaints for regularization, entitlement to the
benefits under the existing Collective Bargaining Agreement (CBA), and attorney's fees.

Issue: Whether or not respondents are regular employees of URSUMCO

Held:
We find the respondents to be regular seasonal employees of URSUMCO.
Seasonal employment operates much in the same way as project employment, albeit it
involves work or service that is seasonal in nature or lasting for the duration of the
season. As with project employment, although the seasonal employment arrangement
involves work that is seasonal or periodic in nature, the employment itself is not
automatically considered seasonal so as to prevent the employee from attaining
regular status. To exclude the asserted "seasonal" employee from those classified as
regular employees, the employer must show that: (1) the employee must be performing
work or services that are seasonal in nature; and (2) he had been employed for the
duration of the season. Hence, when the "seasonal" workers are continuously and
repeatedly hired to perform the same tasks or activities for several seasons or even after
the cessation of the season, this length of time may likewise serve as badge of regular
employment. In fact, even though denominated as "seasonal workers," if these workers
are called to work from time to time and are only temporarily laid off during the off-
season, the law does not consider them separated from the service during the off-
season period. The law simply considers these seasonal workers on leave until re-
employed.

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The nature of the employment depends on the nature of the activities to be performed
by the employee, considering the nature of the employer's business, the duration and
scope to be done, and, in some cases, even the length of time of the performance
and its continued existence. In light of the above legal parameters laid down by the
law and applicable jurisprudence, the respondents are neither project, seasonal nor
fixed-term employees, but regular seasonal workers of URSUMCO.

(1) The respondents were made to perform various tasks that did not at all pertain to
any specific phase of URSUMCO's strict milling operations that would ultimately
cease upon completion of a particular phase in the milling of sugar; rather, they
were tasked to perform duties regularly and habitually needed in URSUMCO's
operations during the milling season.
(2) The respondents were regularly and repeatedly hired to perform the same tasks
year after year.

Noblejas v. IMAPI
G.R. No. 207888, June 09, 2014

Facts:

A. The Parties to the Case

Petitioner Dionarto Q. Noblejas (Noblejas) filed a complaint for illegal dismissal,

tax refund, moral and exemplary damages, non-payment of 13th month pay,
food, gasoline and schooling allowances, health insurance, monetized leave,
and attorney’s fees, against Italian Maritime Academy Phils., Inc. (IMAPI), Capt.
Nicolo S. Terrei (Capt. Terrei), Raceli S. Ferrez (Ferrez), and Ma. Teresa R. Mendoza
(Mendoza).

IMAPI was a training center for seamen and an assessment center for
determination of the qualifications and competency of seamen and officers for
possible promotion. Capt. Terrei was the Managing Director of IMAPI while Ferrez
was his secretary. Mendoza was the company’s Administrative Manager.

B. The Conflict

Record shows that Procerfina SA. Terrei, IMAPI President, wrote a letter 3 to
Noblejas informing him that he had been appointed as training
instructor/assessor of the company on a contractual basis for a period of three
(3) months effective May 20, 2009, with a monthly salary of 75,000.00 inclusive of
tax. After the expiration of the 3-month period, IMAPI hired Noblejas anew as
training instructor/assessor with the same salary rate, but no written contract was
drawn for his rehiring.4

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The absence of a written contract to cover the renewal of his employment
became Noblejas’ major concern. To address all his apprehensions, he wrote
Capt. Terrei a letter, dated March 9, 2010, requesting that a new contract be
executed to reflect the following provisions that they had allegedly agreed upon
during their conversation on May 19, 2009, to wit: 1] that his monthly salary would
be ?75,000.00, tax excluded, and that 50% of his SSS premium would be
shouldered by the company; and 2] that after the completion of his 3-month
contract, he would be given the option to choose either - a) to be regularly
employed as an instructor of IMAPI; or b) to go on board a vessel with the
company extending him financial aid for the processing of pertinent documents,
which amount would be later on deducted from his salary. Likewise in the same
letter, Noblejas intimated that he was electing to continue working for the
company as its regular instructor.

Noblejas averred that the company did not act on his letter-request, so he
sought an audience with Capt. Terrei on March 16, 2010. During the meeting, an
altercation between them ensued. He claimed that after that incident, Capt.
Terrei instructed Ferrez to dismiss him from employment. He claimed that when
he asked from Ferrez for a copy of his old contract, she allegedly replied, “No,
you better pack up all your things now and go, you are now dismissed and you
are no longer part in this office – clearly, you are terminated from this day on.”5

Issues:

A. WON he was a regular employee

B. WON he was illegally dismissed

HELD:

1. Yes, Noblejas is a regular employee of IMAPI.

Pursuant to Article 280 of the Labor Code, there are two kinds of regular employees,
namely:

(1) those who are engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer; and

(2) those who have rendered at least one year of service, whether
continuous or broken, with respect to the activities in which they are
employed.13

Regular employees are further classified into:

(1) regular employees - by nature of work and

(2) regular employees - by years of service.14

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The regular employees by nature of work refers to those employees who
perform a particular function which is necessary or desirable in the usual business
or trade of the employer, regardless of their length of service; while regular
employees by years of service refers to those employees who have been
performing the job, regardless of its nature thereof, for at least a year.15

In the case at bench, Noblejas was employed by IMAPI as a training

instructor/assessor for a period of three (3) months effective May 20, 2009. After
the end of the 3-month period, he was rehired by IMAPI for the same position
and continued to work as such until March 16, 2010. There is no dispute that the
work of Noblejas was necessary or desirable in the business or trade of IMAPI, a
training and assessment center for seamen and officers of vessels. Moreover,
such continuing need for his services is sufficient evidence of the necessity and
indispensability of his services to IMAPI’s business. Taken in this light, Noblejas had
indeed attained the status of a regular employee at the time he ceased to
report for work on March 17, 2010.

2. No illegal dismissal because no substantial evidence was furnished by the

employee.

Fair evidentiary rule dictates that before employers are burdened to prove that they
did not commit illegal dismissal, it is incumbent upon the employee to first establish
by substantial evidence the fact of his or her dismissal.16

Aside from his mere assertion, no corroborative and competent evidence was
adduced by Noblejas to substantiate his claim that he was dismissed from
employment. The record is bereft of any indication that he was prevented from
returning to work or otherwise deprived of any work assignment. It is also noted that
no evidence was submitted to show that respondent Ferrez, the secretary of Capt.
Terrei, was actually authorized by IMAPI to terminate the employment of the
company’s employees or that Ferrez was indeed instructed by Capt. Terrei to dismiss
him from employment.

The Court finds it odd that, instead of clarifying from Capt. Terrei what he heard from
Ferrez, Noblejas immediately instituted an illegal dismissal case against the
respondents the day following the alleged incident and never reported back for
work since then.

Respondents’ refusal to grant complainant’s demands does not constitute an overt act
of dismissal.
Let it be underscored that the fact of dismissal must be established by positive and overt
acts of an employer indicating the intention to dismiss.21 Indeed, a party alleging a
critical fact must support his allegation with substantial evidence, for any decision

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based on unsubstantiated allegation cannot stand without offending due process.22
Here, there is no sufficient proof showing that Noblejas was actually laid off from work.
In any event, his filing of a complaint for illegal dismissal, irrespective of whether
reinstatement or separation pay was prayed for, could not by itself be the sole
consideration in determining whether he has been illegally dismissed. All circumstances
surrounding the alleged termination should also be taken into account.

Omni Hauling Services v. Tortoles

GR No. 199388, Sept. 3, 2014

Facts: Petitioner Omni Hauling Services, was awarded a one (1) year service contract
by the local government of Quezon City to provide garbage hauling services for the
period July 1, 2002 to June 30, 2003. For this purpose, Omni hired respondents as
garbage truck drivers who were then paid on a per trip basis.

When the service contract was renewed for another year, July 1, 2003 to June 30, 2004,
petitioners required each of the respondents to sign employment contracts which
provided that they will be “re-hired” only for the duration of the same period. However,
respondents refused to sign the employment contracts, claiming that they were regular
employees since they were engaged to perform activities which were necessary and
desirable to Omni’s usual business or trade. For this reason, Omni terminated the
employment of respondents which, in turn, resulted in the filing of cases for illegal
dismissal, nonpayment of Emergency Cost of Living Allowance (ECOLA) and 13th
month pay, and actual, moral, and exemplary damages.

During the mandatory conference before the Labor Arbiter (LA), Omni offered to re-
employ respondents on the condition that they sign the employment contracts but
respondents refused such offer.

Issue: Whether or not respondents were project employees?

Held: No, respondents are not project employees, but regular employees. Employers
claiming that their workers are project employees should not only prove that the
duration and scope of the employment was specified at the time they were engaged,
but also that there was indeed a project. Respondents were not clearly and knowingly
informed of their employment status as mere project employees, with the duration and
scope of the project specified at the time they were engaged. As such, the
presumption of regular employment should be accorded in their favor pursuant to
Article 280 of the Labor
Code which provides that “[employees] who have rendered at least one year of
service, whether such service is continuous or broken shall be considered as [regular
employees with respect to the activity in which they are employed and their
employment shall continue while such activity actually exists.”.

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HACIENDA LEDDY/RICARDO GAMBOA, JR., v. PAQUITO VILLEGAS

FACTS:
Villegas is an employee at the Hacienda Leddy as early as 1960, when it was still named
Hacienda Teresa. Later on named Hacienda Leddy owned by Ricardo Gamboa Sr.,
the same was succeeded by his son Ricardo Gamboa, Jr. During his employment up to
the time of his dismissal, Villegas performed sugar farming job 8 hours a day, 6 days a
week work, continuously for not less than 302 days a year, and for which services he
was paid P45.00 per day. He likewise worked in petitioner's coconut lumber business
where he was paid P34.00 a day for 8 hours work.

On June 9, 1993, Gamboa went to Villegas' house and told him that his services were
no longer needed without prior notice or valid reason. Hence, Villegas filed the instant
complaint for illegal dismissal.
ISSUE:
Whether or not herein respondent classified as regular employee and thus entitled to
security of tenure under Article 279?
RULING:
Respondent is a regular employee entitled to security of tenure.
The Labor Code draws a fine line between regular and casual employees to protect
the interests of labor.
Villegas is entitled to security of tenure under Article 279 of the Labor Code and can
only be removed for cause. We found no valid cause attending to his dismissal and
found also that his dismissal was without due process. Article 277(b) of the Labor Code
provides that: 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.
The failure of the petitioner to comply with these procedural guidelines renders its
dismissal of Villegas illegal. An illegally dismissed employee should be entitled to either
reinstatement if viable, or separation pay if reinstatement is no longer viable, plus
backwages in either instance. Considering that reinstatement is no longer feasible
because of strained relations between the employee and the employer, separation
pay should be granted.

FVR Skills & Services Exponents Inc. et al., vs. Seva, et al., GR No. 200857,
Oct. 22, 2014

Facts: RESPONDENT Jovert R. Seva and 27 others were employed by petitioner FVR Skills and Services
Exponents, Inc., an independent contractor engaged in the business of providing janitorial and other
manpower services to clients. As early as 1998 some of the respondents had already been under the
petitioner’s employ.

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On April 21, 2008, the petitioner entered into a contract of janitorial service with Robinsons Land
Corporation (Robinsons). Both agreed that the petitioner shall supply janitorial, manpower and
sanitation services to Robinsons Place Ermita Mall for a periodof one year from January 1, 2008 to
December 31, 2008. Pursuant to this, the respondents were deployed to Robinsons. Halfway through
the service contract, the petitioner asked the respondents to execute individual contracts which
stipulated that their respective employments shall end on December 31, 2008, unless earlier
terminated.

The petitioner and Robinsons no longer extended their contract of janitorial services. Consequently, the
petitioner dismissed the respondents as they were project employeeswhose duration of employment
was dependent on the petitioner’s service contract with Robinsons. Respondents filed a complaint for
illegal dismissal arguing that they were not project but regular employees who may only be dismissed
for just or authorized causes.

Issue: WON there was illegal dismissal on the ground that they are regular employees who may only be
dismissed on just or authorized cause.

Held: Yes.
The primary standard in determining regular employment is the reasonable connection between the
particular activity performed by the employee and the employer’s business or trade. This connection
can be ascertained by considering the nature of the work performed and its relation to the scheme of
the particular business, or the trade in its entirety.

Guided by this test, we conclude that the respondents’ work as janitors, service crews and sanitation
aides, are necessary or desirable to the petitioner’s business of providing janitorial and manpower
services to its clients as an independent contractor. Also, the respondents had already been working for
the petitioner as early as 1998. Even before the service contract with Robinsons, the respondents were
already under the petitioner’s employ. They had been doing the same type of work and occupying the
same positions from the time they were hired and until they were dismissed in January 2009. The
petitioner did not present any evidence to refute the respondents’ claim that from the time of their
hiring until the time of their dismissal, there was no gap in between the projects where they were
assigned to. The petitioner continuously availed of their services by constantly deploying them to its
clients.

Lastly, under Department Order (DO) 18-02, the applicable labor issuance to the petitioner’s case, the
contractor or subcontractor is considered as the employer of the contractual employee for purposes of
enforcing the provisions of the Labor Code and other social legislation.DO 18-02 grants contractual
employees all the rights and privileges due a regular employee, including the following: (a) safe and

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healthful working conditions; (b) labor standards such as service incentive leave, rest days, overtime
pay, holiday pay, 13th month pay and separation pay; (c) social security and welfare benefits; (d) self-
organization, collective bargaining and peaceful concerted action; and (e) security of tenure. In this light,
we thus conclude that although the respondents were assigned as contractual employees to the
petitioner’s various clients, under the law, they remain to be the petitioner’s regular employees, who
are entitled to all the rights and benefits of regular employment.

Manalo vs.TNS Phils, Inc. GR No. 208567, Nov. 26, 2014

Facts: Jeannette, Vilma, Lourdes and Leila were hired by TNS, a company engaged in market research for
businesses, as filed personnel on various dates starting 1996. They were made to sign project-to-project
employment contracts, at the end of which, TNS would file the corresponding reports with the DOLE
Regional Office. Aside from their work in the filed, they were also assigned office-based tasks where
they were required to be in the office from 9 in the morning to 6 in the evening; most of the time they
were required to work beyond 6pm but they did not receive the corresponding overtime pay. In August,
2008, the Field Interviewers were called to the office by TNS’ filed manager. They were told that they
will be pulled out from tracking projects and replaced with new interviewers hired from an agency. This
prompted the complainant s to file a complaint for regularisation with the Labor Arbiter. On October 21,
2008, a days after they were required to file their position papers, TNS advised them not to report for
work anymore because they were being pulled out from their current assignments and not lined up
other continuing or incoming projects because their services would no longer be required by the
company. Thus, they filed a complaint for illegal dismissal before the NLRC, which was consolidated with
the regularisation case.

The Labor Arbiter ruled them not illegally dismissed, because, as project employees, the employer-
employee relationship was terminated upon completion of the project for which they were hired. As
filed personnel, they are also not entitled to overtime pay. The employees knew beforehand the nature
of their positions at the time of their engagement. On appeal to the NLRC, however, the latter reversed
and set aside the LA decision, noting that the last termination report TNS filed with DOLE was on
November 30, 2007, yet the employees continued to work at TNS. No evidence was presented to show
their employment contracts, thus, the employees were regular employees whose dismissal was illegal
because TNS failed to show how and why they were dismissed.
TNS elevated the case to the Court of Appeals. The latter reversed the NLRC ruling and reinitiated the LA
Decision. It affirmed the project employment of the employees, asseverating that the mere fact that the
project employment lasted more than one year did not convert their employment into regular ones. The
employees then filed this appeal before the Supreme Court under Rule 45.

Issue: WON employees are for project or regular employment?

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Held: At the outset, it must be stressed that the Court is not a trier of facts. In petitions for review
under Rule 45, the Court only resolves pure questions of law and is precluded from reviewing factual
findings of the lower tribunals,subject to certain exceptions.This case is an exception as “this Court may
review factual conclusions of the CA when they are contrary to those of the NLRC or of the Labor
Arbiter.”[1]

Upon review of the records, the evidence failed to clearly, accurately, consistently, and convincingly
show that petitioners were still project employees of TNS.

Article 280 of the Labor Code, as amended, clearly defined a project employee as one whose
employment has been fixed for a specific project or undertaking the completion or termination of which
has been determined at the time of the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the season.Additionally, a
project employee is one whose termination of his employment contract is reported to the DOLE
everytime the project for which he was engaged has been completed.

In their Commen[2]t, the respondents stressed that the NLRC decision was mainly anchored upon the
supposed lack of compliance with the termination report requirement under the applicable DOLE
Department Orders. The NLRC ruled that petitioners were regular employees for having been allowed to
continue working after the last submitted termination report. Thus, TNS submitted, albeit belatedly, the
termination reports from November 2007 up to the last termination report filed on November 18, 2008,
by attaching it to the motion for reconsideration filed before the NLRC.[3]

Although TNS belatedly submitted the supposed lacking termination reports, it failed to show the
corresponding project employment contracts of petitioners covering the period indicated in the said
termination reports.TNS itself stated in its motion for reconsideration[4] before the NLRC that the
project employee status of the employee could be proved by the employment contracts signed
voluntarily by the employees and by the termination report filed with the DOLE after the completion of
every project.[5] Yet, no project employment contracts were shown. It is well-settled that rules of
evidence shall be liberally applied in labor cases, but this does not detract from the principle that
piecemeal presentation of evidence is simply not in accord with orderly justice.[6] The NLRC was correct
in saying that in the absence of proof that the subsequent employment of petitioners continued to be
on a project-to-project basis under a contract of employment, petitioners were considered to have
become regular employees.[7]

TNS contended that the repeated and successive rehiring of project employees does not qualify
petitioners as regular employees, as length of service is not the controlling determinant of the
employment tenure of a project employee, but whether the employment has been fixed for a specific
project or undertaking and its completion has been determined at the time of the engagement of the

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employee. The repeated rehiring was only a natural consequence of the experience gained from past
service rendered in other projects.[8]
In Maraguinot, Jr. v. NLRC[9], the Court held that once a project or work pool employee has been: (1)
continuously, as opposed to intermittently, rehired by the same employer for the same tasks or nature
of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the
employer, then the employee must be deemed a regular employee

Although it is true that the length of time of the employee’s service is not a controlling determinant of
project employment, it is vital in determining whether he was hired for a specific undertaking or in fact
tasked to perform functions vital, necessary and indispensable to the usual business or trade of the
employer.[10] Petitioners’ successive re-engagement in order to perform the same kind of work firmly
manifested the necessity and desirability of their work in the usual business of TNS as a market research
facility.[11] Undisputed also is the fact that the petitioners were assigned office-based tasks from 9:00
o’clock in the morning up to 6:00 o’clock in the evening, at the earliest, without any corresponding
remuneration.

The project employment scheme used by TNS easily circumvented the law and precluded its employees
from attaining regular employment status in the subtlest way possible. Petitioners were rehired not
intermittently, but continuously, contract after contract, month after month, involving the very same
tasks. They practically performed exactly the same functions over several years. Ultimately, without a
doubt, the functions they performed were indeed vital and necessary to the very business or trade of
TNS.

Granting arguendo that petitioners were rehired intermittently, a careful review of the project
employment contracts of petitioners reveals some other vague provisions.

For said reason, at the outset, the supposed project employment contract was highly doubtful. In
determining the true nature of an employment, the entirety of the contract, not merely its designation
or by which it was denominated, is controlling. Though there is a rule that conflicting provisions in a
contract should be harmonized to give effect to all[12], in this case, however, harmonization is
impossible because project employment and probationary employment are distinct from one another
and cannot co-exist with each other.Hence, should there be ambiguity in the provisions of the contract,
the rule is that all doubts, uncertainties, ambiguities and insufficiencies should be resolved in favor of
labor.[13] This is in consonance with the constitutional policy of providing full protection to labor.

In sum, petitioners are deemed to have become regular employees. As such, the burden of proving the
legality of their dismissal rests upon TNS.Having failed to discharge such burden of proving a just or
authorized cause, TNS is liable for illegal dismissal.

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Accordingly, as correctly ruled by the NLRC, each petitioner is entitled to backwages from the time of
their dismissal up to the finality of this decision plus separation pay.

Finally, nowhere in the NLRC resolution denying TNS’ motion for reconsideration can it be found it
outrightly denied the said motion for belatedly submitting the lacking termination reports. In resolving
the motion, the NLRC also took into consideration the records of the case, meaning, including those
belatedly submitted, and despite review of these records, it still found the evidence insufficient to
overturn its decision against TNS.

To reiterate, the technical rules of evidence are not binding on labor tribunals. Such a rule, however, is
not a license for parties to a case to be remiss in their duty to present every and all proofs, at the
earliest opportunity, that will best support their claim and help the courts to fully, exhaustively and
speedily resolve the controversy.
Petition granted.

Fuji Television Network vs Espiritu, GR no. 204944-45, December 3, 2014

Facts: Arlene S. Espiritu (Arlene) was engaged by Fuji Television Network, Inc. (Fuji) as a news
correspondent/producer tasked to report Philippine news to Fuji through its Manila Bureau field office.
The employment contract was initially for one year, but was successively renewed on a yearly basis with
salary adjustments upon every renewal.

In January 2009, Arlene was diagnosed with lung cancer. She informed Fuji about her condition, and the
Chief of News Agency of Fuji, Yoshiki Aoki, informed the former that the company had a problem with
renewing her contract considering her condition. Arlene insisted she was still fit to work as certified by
her attending physician.
After a series of verbal and written communications, Arlene and Fuji signed a non-renewal contract. In
consideration thereof, Arlene acknowledged the receipt of the total amount of her salary from March-
May 2009, year-end bonus, mid-year bonus and separation pay. However, Arlene executed the non-
renewal contract under protest.

Arlene filed a complaint for illegal dismissal with the NCR Arbitration Branch of the NLRC, alleging that
she was forced to sign the non-renewal contract after Fuji came to know of her illness. She also alleged
that Fuji withheld her salaries and other benefits when she refused to sign, and that she was left with no
other recourse but to sign the non-renewal contract to get her salaries.

ISSUES:
1. Was Arlene an independent contractor?
2. Was Arlene a regular employee?

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3. Was Arlene illegally dismissed? (discussion on security of tenure)
4. Did the Court of Appeals correctly awarded reinstatement, damages and
attorney’s fees?

Held:
1. Arlene was not an independent contractor.

Fuji alleged that Arlene was an independent contractor citing the Sonza case. She was hired because of
her skills. Her salary was higher than the normal rate. She had the power to bargain with her employer.
Her contract was for a fixed term. It also stated that Arlene was not forced to sign the non-renewal
agreement, considering that she sent an email with another version of her non-renewal agreement.

Arlene argued (1) that she was a regular employee because Fuji had control and supervision over her
work; (2) that she based her work on instructions from Fuji; (3) that the successive renewal of her
contracts for four years indicated that her work was necessary and desirable; (4) that the payment of
separation pay indicated that she was a regular employee; (5) that the Sonza case is not applicable
because she was a plain reporter for Fuji; (6) that her illness was not a ground for her dismissal; (7) that
she signed the non-renewal agreement because she was not in a position to reject the same.

Distinctions among fixed-term employees, independent contractors, and regular employees

I. Fixed Term Employment

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.
These indications, which must be read together, make the Brent doctrine applicable only in a few special
cases wherein the employer and employee are on more or less in equal footing in entering into the
contract. The reason for this is evident: when a prospective employee, on account of special skills or
market forces, is in a position to make demands upon the prospective employer, such prospective
employee needs less protection than the ordinary worker. Lesser limitations on the parties’ freedom of
contract are thus required for the protection of the employee.155 (Citations omitted)

For as long as the guidelines laid down in Brent are satisfied, this court will recognize the validity of the
fixed-term contract. (GMA Network, Inc. vs. Pabriga)

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II. Independent Contractor

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.

No employer-employee relationship exists between the independent contractors and their principals.

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

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

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

Department Order No. 18-A, Series of 2011, Section 3

© . . . an arrangement whereby a principal agrees to put out or farm out with a contractor the
performance or completion of a specific job, work or service within a definite or predetermined period,
regardless of whether such job, work or service is to be performed or completed within or outside the
premises of the principal.

This department order also states that there is a trilateral relationship in legitimate job contracting and
subcontracting arrangements among the principal, contractor, and employees of the contractor. There
is no employer-employee relationship between the contractor and principal who engages the

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contractor’s services, but there is an employer-employee relationship between the contractor and
workers hired to accomplish the work for the principal.162chanRoblesvirtualLawlibrary

Jurisprudence has recognized another kind of independent contractor: individuals with unique skills and
talents that set them apart from ordinary employees. There is no trilateral relationship in this case
because the independent contractor himself or herself performs the work for the principal. In other
words, the relationship is bilateral.

XXX
There are different kinds of independent contractors: those engaged in legitimate job contracting and
those who have unique skills and talents that set them apart from ordinary employees.

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.

III. Regular Employees

Contracts of employment are different and have a higher level of regulation because they are impressed
with public interest. Article 13, Section 3 of the 1987 Constitution provides full protection to labor.

Apart from the Constitutional guarantee, Article 1700 of the Civil Code states that: The relations
between capital and labor are not merely contractual. They are so impressed with public interest that
labor contracts must yield to the common good. Therefore, such contracts are subject to the special
laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions,
hours of labor and similar subjects.

The level of protection to labor should vary from case to caese. When a prospective employee, on
account of special skills or market forces, is in a position to make demands upon the prospective
employer, such prospective employee needs less protection than the ordinary worker.

The level of protection to labor must be determined on the basis of the nature of the work,
qualifications of the employee, and other relevant circumstances such as but not limited to educational
attainment and other special qualifications.

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
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

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commencement and termination of the employment relationship.” For regular employees, the necessity
and desirability of their work in the usual course of the employer’s business are the determining factors.
On the other hand, independent contractors do not have employer-employee relationships with their
principals.

To determine the status of employment, the existence of employer-employee relationship must first be
settled with the use of the four-fold test, especially the qualifications for the power to control.

The distinction is in this guise:

Rules that merely serve as guidelines towards the achievement of a mutually desired result without
dictating the means or methods to be employed creates no employer-employee relationship; whereas
those that control or fix the methodology and bind or restrict the party hired to the use of such means
creates the relationship.

In appliacation, Arlene was hired by Fuji as a news producer, but there was no evidence that she was
hired for her unique skills that would distinguish her from ordinary employees. Her monthly salary
appeared to be a substantial sum. Fuji had the power to dismiss Arlene, as provided for in her
employment contract. The contract also indicated that Fuji had control over her work as she was rquired
to report for 8 hours from Monday to Friday. Fuji gave her instructions on what to report and even her
mode of transportation in carrying out her functions was controlled.

Therefore, Arlene could not be an independent contractor.

2. Arlene was a regular employee with a fixed-term contract.

In determining whether an employment should be considered regular or non-regular, the applicable test
is the reasonable connection between the particular activity performed by the employee in relation to
the usual business or trade of the employer. The standard, supplied by the law itself, is whether the
work undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can
be assessed by looking into the nature of the services rendered and its relation to the general scheme
under which the business or trade is pursued in the usual course.
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.

Fuji’s Manila Bureau Office is a small unit213 and has a few employees. Arlene had to do all activities
related to news gathering.

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The successive renewals of her contract indicated the necessity and desirability of her work in the usual
course of Fuji’s business. Because of this, Arlene had become a regular employee with the right to
security of tenure.

Arlene’s contract indicating a fixed term did not automatically mean that she could never be a regular
employee. For as long as it was the employee who requested, or bargained, that the contract have a
“definite date of termination,” or that the fixed-term contract be freely entered into by the employer
and the employee, then the validity of the fixed-term contract will be upheld.

3. Arlene was illegally dismissed.

As a regular employee, Arlene was entitled to security of tenure under Article 279 of the Labor Code and
could be dismissed only for just or authorized causaes and after observance of due process.

The expiration of the contract does not negate the finding of illegal dismissal. The manner by which Fuji
informed Arlene of non-renewal through email a month after she informed Fuji of her illness is
tantamount to constructive dismissal. Further, Arlene was asked to sign a letter of resignation prepared
by Fuji. The existence of a fixed-term contract should not mean that there can be no illegal dismissal.
Due process must still be observed.

Moreoever, disease as a ground for termination under Article 284 of the Labor Code and Book VI, Rule 1,
Section 8 of the Omnibus Rules Implementing the Labor Code require two requirements to be complied
with: (1) the employee’s disease cannot be cured within six months and his continued employment is
prohibited by law or prejudicial to his health as well as to the health of his co-employees; and (2)
certification issued by a competent public health authority that even with proper medical treatment, the
disease cannot be cured within six months. The burden of proving compliance with these requisites is on
the employer. Non-compliance leads to illegal dismissal. blesvirtualLawlibrary

Arlene was not 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. Neither did it suggest for her to take a leave. It did not
present any certificate from a competent public health authority.

Gadia vs. Sykes, GR No. 209499, January 28, 2015

Facts: On September 3, 2003, Alitel Communications Inc., a US-based telecommunications company

hired Sykes Asia, a corporation engaged in Business Process Outsourcing (BPO), to handle its (Alitel)
clients’ needs and demands for its prepaid and postpaid services. Thus, on different dates, Sykes Asia
hired the petitioners herein, who commenced work until the services of Sykes Asia were terminated by

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Alitel sometime in 2009. In view of this development, Sykes Asia sent end-of-life notices to the
petitioners, informing them of their dismissal due to the termination of the Alitel project. The
petitioners thereafter filed separate complaints for illegal dismissal, with prayer for reinstatement, and
other monetary benefits against the company and several of its officers. In their defense, the
respondents averred that the petitioners were “project-based employees, not regular employees, as
such the termination of the Alitel project served as a valid ground for their dismissal. They were in fact
furnished notices of termination at least 30 days prior to their dates of dismissal.

The Labor Arbiter ruled in favour of Sykes Asia, holding the employees as project-based employees, thus
the termination of the Alitel project necessitated their termination from employment. The NLRC
however disagreed with the LA ruling, holding that while it was known to the petitioners that their
employment would be co-terminus to the Alitel project, it was never made known to them when the
project will be terminated; since the employees were performing work necessary or desirable in Sykes
Asia’s business, they are regular employees. Despite this, the termination of the Alitel project made
their employment redundant, hence they were legally dismissed and only entitled to separation pay.
The respondents appealed to the CA, which reinstated the LA ruling. According to the CA, a perusal of
the contracts of employment would show that they were specifically hired for the Alitel project, hence
the termination of the Alitel project also terminated their employment. Their employment contract
need not state the enid of their employment; it is enough that it is determinable. The petitioners thus
elevated their case to the Supreme Court.

Issue: Whether or not the petitioners are project-based employees.

Held: The petition is without merit.

At the outset, it must be stressed that to justify the grant of the extraordinary remedy of certiorari,
petitioners must satisfactorily show that the court or quasi-judicial authority gravely abused the
discretion conferred upon it. Grave abuse of discretion connotes judgment exercised in a capricious and
whimsical manner that is tantamount to lack of jurisdiction. To be considered “grave,” discretion must
be exercised in a despotic manner by reason of passion or personal hostility, and must be so patent and
gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by
or to act at all in contemplation of law.

In labor disputes, grave abuse of discretion may be ascribed to the NLRC when, inter alia, its findings and
the conclusions reached thereby are not supported by substantial evidence. This requirement of
substantial evidence is clearly expressed in Section 5, Rule 133 of the Rules of Court which provides that
“in cases filed before administrative or quasi-judicial bodies, a fact may be deemed established if it is
supported by substantial evidence, or that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.”

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Tested against these considerations, the Court finds that the CA correctly granted respondents’
certiorari petition before it, since the NLRC gravely abused its discretion in ruling that petitioners were
regular employees of Sykes Asia when the latter had established by substantial evidence that they were
merely project-based.

Article 294 of the Labor Code,⁠ 4 as amended, distinguishes a project-based employee from a regular
employee as follows:

Art. 294. Regular and casual employment.—The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed
for a specific project or undertaking the completion or termination of which has been determined at the
time of the engagement of the employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season.

x x x x (Emphasis and underscoring supplied)

In Omni Hauling Services, Inc. v. Bon, the Court extensively discussed how to determine whether an
employee may be properly deemed project-based or regular, to wit:
A project employee is assigned to a project which begins and ends at determined or determinable times.
Unlike regular employees who may only be dismissed for just and/or authorized causes under the Labor
Code, the services of employees who are hired as “project[-based] employees” may be lawfully
terminated at the completion of the project.

According to jurisprudence, the principal test for determining whether particular employees are
properly characterised as “project[-based] employees” as distinguished from “regular employees,” is
whether or not the employees were assigned to carry out a “specific project or undertaking,” the
duration (and scope) of which were specified at the time they were engaged for that project. The
project could either be (1) a particular job or undertaking that is within the regular or usual business of
the employer company, but which is distinct and separate, and identifiable as such, from the other
undertakings of the company; or (2) a particular job or undertaking that is not within the regular
business of the corporation. In order to safeguard the rights of workers against the arbitrary use of the
word “project” to prevent employees from attaining a regular status, employers claiming that their
workers are project[-based] employees should not only prove that the duration and scope of the
employment was specified at the time they were engaged, but also, that there was indeed a project.
(Emphases and underscoring supplied)

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Verily, for an employee to be considered project-based, the employer must show compliance with two
(2) requisites, namely that: (a) the employee was assigned to carry out a specific project or undertaking;
and (b) the duration and scope of which were specified at the time they were engaged for such project.

In this case, records reveal that Sykes Asia adequately informed petitioners of their employment status
at the time of their engagement, as evidenced by the latter’s employment contracts which similarly
provide that they were hired in connection with the Alltel Project, and that their positions were
“project-based and as such is co-terminus to the project.” In this light, the CA correctly ruled that
petitioners were indeed project-based employees, considering that: (a) they were hired to carry out a
specific undertaking, i.e., the Alltel Project; and (b) the duration and scope of such project were made
known to them at the time of their engagement, i.e., “co-terminus with the project.”

As regards the second requisite, the CA correctly stressed that “[t]he law and jurisprudence dictate that
‘the duration of the undertaking begins and ends at determined or determinable times’” while clarifying
that “[t]he phrase ‘determinable times’ simply means capable of being determined or fixed.” In this
case, Sykes Asia substantially complied with this requisite when it expressly indicated in petitioners’
employment contracts that their positions were “co-terminus with the project.” To the mind of the
Court, this caveat sufficiently apprised petitioners that their security of tenure with Sykes Asia would
only last as long as the Alltel Project was subsisting. In other words, when the Alltel Project was
terminated, petitioners no longer had any project to work on, and hence, Sykes Asia may validly
terminate them from employment.

Further, the Court likewise notes the fact that Sykes Asia duly submitted an Establishment Employment
Report and an Establishment Termination Report⁠ 9 to the Department of Labor and Employment
Makati-Pasay Field Office regarding the cessation of the Alltel Project and the list of employees that
would be affected by such cessation. As correctly pointed out by the CA, case law deems such
submission as an indication that the employment was indeed project-based⁠ 10.

In sum, respondents have shown by substantial evidence that petitioners were merely project-based
employees, and as such, their services were lawfully terminated upon the cessation of the Alltel Project.

Basan vs. Coca-Cola Bottlers Phils., GR No. 174365, Feb. 4, 2015

Facts: On February 18, 1997, petitioners Romeo Basanfiled a complaint for illegal
dismissal with money claims against respondent Coca-Cola Bottlers Philippines,
alleging that respondent dismissed them without just cause and prior written notice
required by law.

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Respondent corporation, however, countered that it hired petitioners as temporary
route helpers to act as substitutes for its absent regular route helpers merely for a
fixed period in anticipation of the high volume of work in its plants or sales offices.6
As such, petitioners’ claims have no basis for they knew that their assignment as
route helpers was temporary in duration

1998, the Labor Arbiter ruled in favor of petitioners and found that since they were
performing activities necessary and desirable to the usual business of petitioner for
more than the period for regularization, petitioners are considered as regular
employees, and thus, their dismissal was done contrary to law in the absence of
just cause and prior written notice.7 Thus, it ordered respondent to reinstate
petitioners with full backwages from the time their salaries were withheld until their
actual reinstatement and to pay their lump sum increase extended to them in their
collective bargaining agreement, their accrued vacation and sick leave benefits, as
well as monetary awards and attorney’s fees.

In 2003, the NLRC affirmed the Labor Arbiter’s decision and rejected respondent’s
contention that petitioners were merely employed for a specific project or
undertaking the completion or termination of which has been determined at the
time of their engagement. Nowhere in the records of the case was it shown that
petitioners were hired as project or seasonal employees, respondent having failed
to submit any contract of project or other similar proof thereof.9 It also noted that
neither can petitioners be considered as probationary employees for the fact that
they had performed their services for more than six (6) months.

Issue: WON the petitioner are not regular employees

Held: The petition is impressed with merit.

As for the primordial issue in this case, it must be noted that the same has already
been resolved in Magsalin v. National Organization of Working Men, 20 wherein this
Court has categorically declared that the nature of work of route helpers hired by
Coca Cola Bottlers Philippines, Inc. is necessary and desirable in its usual business
or trade thereby qualifying them as regular employees

Coca-Cola Bottlers Phils., Inc., is one of the leading and largest manufacturers of
softdrinks in the country. Respondent workers have long been in the service of
petitioner company. Respondent workers, when hired, would go with route
salesmen on board delivery trucks and undertake the laborious task of loading and
unloading softdrink products of petitioner company to its various delivery points.
Even while the language of law might have been more definitive, the clarity of its
spirit and intent, i.e., to ensure a "regular" worker's security of tenure, however,
can hardly be doubted. In determining whether an employment should be
considered regular or non-regular, the applicable test is the reasonable connection
between the particular activity performed by the employee in relation to the usual

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business or trade of the employer. The standard, supplied by the law itself, is
whether the work undertaken is necessary or desirable in the usual business or
trade of the employer, a fact that can be assessed by looking into the nature of the
services rendered and its relation to the general scheme under which the business
or trade is pursued in the usual course.

Here, respondent, in its position paper, expressly admitted that petitioners were
employed as route helpers in anticipation of the high volume of work in its plants
and sales offices.23 As such, respondent’s contention that petitioners could not
have attained regular employment status for they merely rendered services for
periods of less than a year cannot be sustained in view of the Magsalin doctrine
previously cited. Indeed, the “pernicious practice” of engaging employees for a
fixed period short of the six-month probationary period of employment, and again,
on a day-to-day basis thereafter, mocks the law. At this point, it is worth recalling
that Article 280 of the Labor Code, as amended, provides: ART. 280. REGULAR AND
CASUAL EMPLOYMENT. - The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged
to perform activities which are usually necessary or desirable in the usual business
or trade of the employer, except where the employment has been fixed for a
specific project or undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or
services to be performed is seasonal in nature and the employment is for the
duration of the season.

preceding paragraph: Provided, That, any employee who has rendered at least one
year of service, whether such service is continuous or broken, shall be considered a
regular employee with respect to the activity in which he is employed and his
employment shall continue while such activity exists. Thus, pursuant to the Article
quoted above, there are two kinds of regular employees, namely:

(1)those who are engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer; and
(2) those who have rendered at least one year of service, whether continuous or
broken, with respect to the activities in which they are employed.

Simply stated, regular employees are classified into:

(1)regular employees by nature of work; and
(2) regular employees by years of service.

The former refers to those employees who perform a particular activity which is
necessary or desirable in the usual business or trade of the employer, regardless of
their length of service; while the latter refers to those employees who have been
performing the job, regardless of the nature thereof, for at least a year.25
Petitioners, in this case, fall under the first kind of regular employee above.

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As route helpers who are engaged in the service of loading and unloading softdrink
products of respondent company to its various delivery points, which is necessary
or desirable in its usual business or trade, petitioners are considered as regular
employees. That they merely rendered services for periods of less than a year is of
no moment since for as long as they were performing activities necessary to the
business of respondent, they are deemed as regular employees under the Labor
Code, irrespective of the length of their service.

Hacienda Cataywa vs. Lorezo, GR No. 179640, March 18, 2015

Facts:
The complaint:

Villegas is an employee at the Hacienda Leddy as early as 1960. During his employment up to the time of
his dismissal, Villegas performed sugar farming job 8 hours a day, 6 days a week work, continuously for
not less than 302 days a year, and for which services he was paid P45.00 per day. He likewise worked in
petitioner's coconut lumber business where he was paid P34.00 a day for 8 hours work.
On June 9, 1993, Gamboa went to Villegas' house and told him that his services were no longer needed
without prior notice or valid reason. Hence, Villegas filed the instant complaint for illegal dismissal.

The defense:

There is no employer-employee relationship between them because respondent was paid on a piece-
rate basis without supervision. Since his job was not necessary or desirable in the usual business or
trade of the hacienda, he cannot be considered as a regular employee. In fact, it was Villegas who has
stopped working in the hacienda and that he was not dismissed.
Issues:
(1) Whether or not Villegas is a regular worker
(2) Whether or not there was an illegal dismissal

Held:
1. Villegas is a regular worker.
Respondent have been employed in the Hacienda while the same was still being managed by
petitioner's father until the latter's death in 1993. The length of time that Villegas had worked with the
Gamboas had been more than 20 years of service. Indeed, petitioner's length of service is an indication
of the regularity of his employment. Even assuming that he was doing odd jobs around the farm, such
long period of doing said odd jobs is indicative that the same was either necessary or desirable to
petitioner's trade or business. Thus, by his length of service alone, Villegas became a regular employee,
by operation of law, one year after he was employed.

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Article 280 of the Labor Code, describes a regular employee as one who is either (1) engaged to perform
activities which are necessary or desirable in the usual business or trade of the employer; and (2) those
casual employees who have rendered at least one year of service, whether continuous or broken, with
respect to the activity in which he is employed.

In Integrated Contractor and Plumbing Works, Inc. v. National Labor Relations Commission, we held that
the test to determine whether employment is regular or not is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer.
If the employee has been performing the job for at least one year, even if the performance is not
continuous or merely intermittent, the law deems the repeated and continuing need for its performance
as sufficient evidence of the necessity. Clearly, with more than 20 years of service, Villegas, without
doubt, passed this test to attain employment regularity.
Gamboa likewise argued that Villegas was paid on a piece-rate basis.However, payment on a piece-rate
basis does not negate regular employment. "The term 'wage' is broadly defined in Article 97 of the Labor
Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or
ascertained on a time, task, piece or commission basis. Payment by the piece is just a method of
compensation and does not define the essence of the relations."

The Labor Code draws a fine line between regular and casual employees to protect the interests of
labor. Thus, notwithstanding any agreements to the contrary, what determines whether a certain
employment is regular or casual is not the will and word of the employer, to which the desperate worker
often accedes, much less the procedure of hiring the employee or the manner of paying his salary. It is
the nature of the activities performed in relation to the particular business or trades considering all
circumstances, and in some cases the length of time of its performance and its continued existence.

2. There is an illegal dismissal.

As a regular worker, Villegas is entitled to security of tenure under Article 279 of the Labor Code and can
only be removed for cause. We found no valid cause attending to his dismissal and found also that his
dismissal was without due process.

The failure of the petitioner to comply with the procedural guidelines set forth in the Labor Code
renders its dismissal of Villegas illegal. An illegally dismissed employee should be entitled to either
reinstatement — if viable, or separation pay if reinstatement is no longer viable, plus backwages in
either instance.Considering that reinstatement is no longer feasible because of strained relations
between the employee and the employer, separation pay should be granted.

OKS Designtech Inc vs. Caccam, GR No. 211263, Aug 5, 2015

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Facts: Petitioner OKS DesignTech, Inc. hired respondent, Mary Jayne L. Caccam as an accountant under a
Contract of Employment for a Fixed Period from January 21, 2008 to June 21, 2008. Thereafter, the
contract was renewed for the period June 22, 2008 to June 21, 2009.

On June 8, 2009, Mary Jayne received a letter dated June 6, 2009 signed by the Company Manager,
Engr. Pongad, informing her of the expiration of her contract on June 21, 2009. She was also given the
option to consume her 19 days of unused leave credits until the end of her contract with the balance, if
any, to be converted to cash and released together with her last salary and 13th month pay on or before
June 30, 2009

Claiming to have been summarily dismissed by virtue of the letter and not paid her earned salary and
benefits as promised, respondent filed on July 2, 2009, a complaint for illegal dismissal, nonpayment of
salaries (for the period May 21, 2009 to June 20, 2009), 13th month pay, allowances, service incentive
leave pay, damages and attorney’s fees, with prayer for reinstatement, against petitioner

OK DesignTech’s contention: denied that Mary Jayne was illegally dismissed. Instead, they claimed that
it was respondent who requested Pongad to sign the notice of end contract dated June 6, 2009, and the
certificate of employment which were to be used in her legal action for correction of her first name in
her birth certificate.

Mary Jayne’s contention: She claims that she was a regular employee, arguing that the nature of her
work was necessary and desirable in the usual business of petitioner, and that she was merely imposed
a fixed-term employment with an understanding that her contract would just be renewed upon its
expiration. Hence, in view of her regular status, and petitioner’s failure to afford her the opportunity to
be heard before terminating her employment, she asserted that she was illegally dismissed.

While she admitted having secured the Certificate of Employment from Pongad, she denied having
caused him to issue and sign the notice of end contract. She further admitted that she opted not to
report for work after she received the notice of end of contract on June 8, 2009 since she was allowed to
use her 19 days unused leave credits, as stated in the June 6, 2009 letter
LA Ruling: LA declared respondent to have been illegally dismissed. The LA ruled that since the latter
signed the first contract only on April 21, 2008 and not on January 21, 2008, the date she was hired, the
said contract was deemed a probationary contract, and that by extending it for another year, she
attained the status of a regular employee who may be dismissed only for just or authorized cause

NLRC Ruling: the NLRC reversed and set aside the LA’s decision and instead, dismissed the complaint,
ratiocinating that there was no factual basis to support the conclusion that the first contract was a
contract for probationary employment. It observed that none of the parties assailed the fixed period
employment, adding that the nature of respondent’s work, even if necessary and desirable in the usual

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trade or business of petitioner, and the fact that the period of her employment extended for more than
one year were not decisive indicators for regularity of employment in a fixed period employment.

CA Ruling: the CA reversed and set aside the NLRC’s April 29, 2011 Decision and reinstated the LA’s April
23, 2010 Decision insofar as it declared respondent’s termination from work to be illegal. It concurred
with the LA that respondent was a regular employee, despite the existence of a fixed-term contract of
employment, since said contract, despite purportedly beginning on January 21, 2008, was actually
executed only on April 21, 2008, and extended for another year, during which respondent was
performing tasks that were usually necessary and desirable in the usual trade or business of petitioner.

Issue: WON the employee was hired for a fixed period or is a regular employee who may not be
dismissed except for a just and authorized cause

Held: The employee entered into a valid fixed-term employment.

Under Art. 294 of the Labor code, regular employment exists when the employee is: (a) one engaged to
perform activities that are necessary or desirable in the usual trade or business of the employer; or (b) a
casual employee who has rendered at least one year of service, whether continuous or broken, with
respect to the activity in which he is employed.

Meanwhile, an employee is said to be under a fixed-term employment when he is hired under a contract
which specifies that the employment will last only for a definite period.

In the landmark case of Brent School, Inc. v. Zamora, this Court sustained the validity of fixed-term
employment contracts. In light of the said case, the Court laid down the following indicators under
which fixed-term employment could not be construed as a circumvention of the law on security of
tenure:
(a) 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
(b) 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.

An examination of the contracts entered into by respondent reveals that her employment was clearly
limited to a fixed period and did not go beyond such period. She, however, asserted that she is deemed
a regular employee in view of the nature of her employment as an accountant, an activity that is
necessary and desirable in the usual business or trade of the company. This notwithstanding, case law
dictates that even if an employee is engaged to perform activities that are necessary or desirable in the
usual trade or business of the employer, the same does not preclude the fixing of employment for a

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definite period. There is nothing essentially contradictory between a definite period of employment and
the nature of the employee’s duties.

In fact, the Court, in Brent, had already pronounced that the decisive determinant in fixed-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.

Here, respondent undisputedly executed a first employment contract which clearly states on its face
that it was for a fixed period of five (5) months beginning from January 21, 2008 to June 21, 2008. While
it appears that the said contract was actually signed only on April 21, 2008, the fact remains that
respondent was made well-aware of the fixed period undertaking from the time of her engagement on
January 21, 2008. Otherwise, she would not have agreed to the contract’s signing. Significantly, nothing
on record shows that respondent’s consent thereto was vitiated or that force, duress, or improper
pressure was exerted on her, or that petitioner exercised moral dominance over her. The same holds
true for the second fixed-term contract covering the period from June 22, 2008 until June 21, 2009
which she voluntarily signed on June 21, 2008.
That respondent was made to believe that her contract will just be renewed every time it expires was
not supported by substantial evidence.

The crucial factor to it all is that there is no showing that the subject contracts were used as subterfuge
to deny respondent of her security of tenure. Contrary to the findings of the CA, there was no ambiguity
in the said contracts when it stipulated that the employee may be terminated if he “fails to meet the
reasonable standards made known to him.” While such provision would commonly appear in a
probationary contract pursuant to Article 295 of the Labor Code, its inclusion in the fixed-period
contracts in this case never gave rise to an implied probationary employment status, for which she was
to be evaluated by the company under certain regularization standards during a specified trial period,
simply because respondent was never employed on a probationary basis.

Further, it would not be amiss to point out that while respondent had presented a Certificate of
Employment dated June 6, 2009 which showed that she was supposedly “terminated” on June 5, 2009,
the same cannot be considered as evidence of her premature termination from the company but
instead, evidence to show that respondent had chosen to avail of her 19 days unused leave credits, as
allowed by the company per its June 6, 2009 letter. Upon her own request, she was issued this
certification to clear her of all her outstanding liabilities since she, as admitted,would not anymore
report for work in view of her leave availment.

For all the foregoing reasons, the Court upholds the finding that respondent was a fixed-term employee
and not a regular one whose employment may be validly terminated upon the expiration of her
contract.To reiterate, contracts of employment for a fixed period are not per se unlawful. What is

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objectionable is the practice of some unscrupulous employers who try to circumvent the law protecting
the workers from the capricious termination of employment
In fine, having been hired under a valid fixed-period employment contract, respondent's employment
was lawfully terminated upon its expiration on June 21, 2009 without need of any further notice.

Enchanted Kingdom Inc vs. Verzo, GR No. 209559, Dec 9, 2015

Facts: On August 19, 2009, Verzo was hired by Enchanted to work as Section Head – Mechanical &
Instrumentation Maintenance (SH-MIM) for its theme park in Sta. Rosa City, Laguna, for a period of six
(6) months on probationary status. He was tasked to conduct “mechanical and structural system
assessments,” as well as to inspect and evaluate the “conditions, operations and maintenance
requirements of rides, facilities and buildings to ensure compliance with applicable codes, regulations
and standards.” He was also provided with a detailed list of responsibilities that he should fulfill.

During the probationary period, Enchanted assessed Verzo’s performance as not up to par. On January
26, 2010, Schoefield, one of Verzo’s fellow section heads, made his recommendation to Velesrubio,
Verzo’s immediate supervisor, that he should not be considered for regularization. In his
memorandum,Schoefield noted the following: Verzo failed to take action to replace the faucets in the
lavatories of the park and to ensure that the proximity brackets of one of the rides were properly
installed; he mishandled the operation of the park’s submersible pump, which resulted in the overflow
of the sludge from Enchanted’s sewage treatment plant towards the parking entrance; he once reported
that the ZORB Ball pond had sufficient water for its operation, but the following day, one of Enchanted’s
patrons got injured due to the pond’s low water level; and he often used company time browsing the
internet for his personal use. Schoefield’s evaluation was shared by another section head, Jun
Montemayor (Montemayor).
On February 15, 2010, Enchanted formally informed Verzo that he did not qualify for regularization
because his work performance for the past five (5) months “did not meet the requirements of the
position of Section Head for Mechanical and Instrumentation Maintenance, xxx.

Believing that he was arbitrarily deprived of his employment, Verzo filed a complaint for illegal dismissal,
damages and attorney’s fees before the LA.

In his complaint, Verzo claimed that it was only after he was formally hired by Enchanted that he was
informed of his probationary status. And even after despite being placed on a probationary status, he
was not advised as to the standards required for his regularization

The Decision of the LA : the LA rendered its decision dismissing Verzo’s complaint for lack of merit. The
LA explained that his status being probationary, his employment was only temporary and, thus, could be
terminated at any time. The LA stated that as long as the termination was made before the end of the

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six-month probationary period, Enchanted was well within its rights to sever the employer-employee
relationship with Verzo.

The Decision of the NLRC: the NLRC issued a resolution denying Verzo’s appeal for lack of merit.
According to the NLRC, his contention that he was not furnished or shown a probationary contract so
that he could have been advised of the standards for regularization was belied by the fact that he
himself attached to his position paper his signed contract of employment informing him of his
probationary status and the job description of his position at Enchanted.

The Decision of the CA: The CA, in the assailed decision, reversed the findings of the NLRC and the LA. It
was of the view that the probationary contract between the parties failed to set the standards that
would gauge Verzo’s fitness and qualification for regular employment.
Essentially, Enchanted questions the finding of the CA that it illegally dismissed Verzo, considering that it
was simply exercising its prerogative to dismiss a probationary employee for failing to meet the
reasonable standards it set at the time he was hired.
Verzo, on the other hand, contends that he was a regular employee of Enchanted because he was not
apprised of his probationary status at the start of his employment and was not informed of the
reasonable standards for his regularization. As a regular employee, Verzo claims that he could only be
dismissed for cause and only after the twin requirements of notice and hearing had been complied with.

Issue: WON Verzo was illegally dismissed

Held: No, Verzo was not illegally dismissed.

A probationary employee is one who, for a given period of time, is being observed and evaluated to
determine whether or not he is qualified for permanent employment. A probationary appointment
affords the employer an opportunity to observe the skill, competence and attitude of a probationer.A
probationary employee, like a regular employee, enjoys security of tenure. A probationary employee
may be terminated for any of the following: (a) a just; or (b) an authorized cause; and (c) when he fails
to qualify as a regular employee in accordance with the reasonable standards prescribed by the
employer

Section 6(d), Rule I, Book VI of the Implementing Rules of the Labor Code provides that if the employer
fails to inform the probationary employee of the reasonable standards on which his regularization would
be based at the time of the engagement, then the said employee shall be deemed a regular employee.
In Abbott Laboratories v. Alcaraz, the Court stated that when dealing with a probationary employee, the
employer is made to comply with two (2) requirements: first, the employer must communicate the
regularization standards to the probationary employee; and second, the employer must make such
communication at the time of the probationary employee’s engagement. If the employer fails to comply

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with either, the employee is deemed as a regular and not a probationary employee. An exception to this
rule is when the job is self-descriptive, as in the case of maids, cooks, drivers, or messengers.

In the case at bench, the evidence is clear that when Verzo was first hired by Enchanted, he was placed
on a probationary status. The letter, dated August 26, 2009, clearly reflects not only the agreement of
both parties as to the probationary status of the employment and its duration, but also the fact that
Enchanted informed Verzo of the standards for his regularization.

Verzo makes much noise of the fact that the letter was not served upon him immediately at the very
start of his employment on August 19, 2009. While it may be argued that ideally employers should
immediately inform a probationary employee of the standards for his regularization from day one, strict
compliance thereof is not required. The true test of compliance with the requirements of the law is, of
course, one of reasonableness. As long as the probationary employee is given a reasonable time and
opportunity to be made fully aware of what is expected of him during the early phases of the
probationary period, the requirement of the law has been satisfied.

At any rate, contrary to the findings of the CA, the Court finds that Enchanted had basis when it decided
not to continue with the services of Verzo as SH-MIM based on reports detailing the reasons why Verzo
failed to meet the standards set by Enchanted and compromised the safety of its patrons.

On punctuality, in the recent case of Carvajal v. Luzon Development Bank,the Court has emphasized
that:
Punctuality is a reasonable standard imposed on every employee, whether in government or private
sector. As a matter of fact, habitual tardiness is a serious offense that may very well constitute gross or
habitual neglect of duty, a just cause to dismiss a regular employee.

Notice and Hearing Not Required

Whether or not Verzo was afforded the opportunity to explain his side is of no consequence. Under
Section 2 Rule I, Book VI of the Implementing Rules of the Labor Code: “If the termination is brought
about by the completion of a contract or phase thereof, or by failure of an employee to meet the
standards of the employer in the case of probationary employment, it shall be sufficient that a written
notice is served the employee, within a reasonable time from the effective date of termination.
[Emphasis Supplied]”

In Philippine Daily Inquirer v. Magtibay, the Court stressed that notice and hearing are not required in
case a probationary employee is not retained for failure to comply with the reasonable standards set by
his employer.

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Considering that Verzo failed to meet the reasonable standards set out by it, Enchanted cannot be
compelled to regularize Verzo. Enchanted, being engaged in the business of providing entertainment
and amusement with mechanical rides and facilities, is not duty-bound to retain an employee who is
clearly unfit. With his attitude, inefficiency and incompetency, it is most likely that an accident would
occur for which Enchanted, an amusement enterprise which caters mostly to children, could be sued for
damages

Olympia Housing Inc. Vs. Lapastora, GR No. 187691, Jan. 13, 2016
Facts: The instant case stemmed from a complaint for illegal dismissal, payment of backwages and other
benefits, and regularization of employment filed by Allan Lapastora (Lapastora) and Irene Ubalubao
(Ubalubao) against Olympic Housing, Inc. (OHI), the entity engaged in the management of the Olympia
Executive Residences (OER), a condominium hotel building situated in Makati City, owned by a
Philippine-registered corporation known as the Olympia Condominium Corporation (OCC)

Lapastora and Ubalubao alleged that they worked as room attendants of OHI from March 1995 and June
1997, respectively, until they were placed on floating status on February 24, 2000, through a
memorandum sent by Fast Manpower

To establish employer-employee relationship with OHI, Lapastora and Ubalubao alleged that they were
directly hired by the company and received salaries directly from its operations clerk, Myrna Jaylo
(Jaylo). They also claimed that OHI exercised control over them as they were issued time cards,
disciplinary action reports and checklists of room assignments. It was also OHI which terminated their
employment after they petitioned for regularization. Prior to their dismissal, they were subjected to
investigations for their alleged involvement in the theft of personal items and cash belonging to hotel
guests and were summarily dismissed by OHI despite lack of evidence.

OHI and Limcaoco alleged that Lapastora and Ubalubao were not employees of the company but of Fast
Manpower, with which it had a contract of services, particularly, for the provision of room attendants.
They claimed that Fast Manpower is an independent contractor as it (1) renders janitorial services to
various establishments in Metro Manila, with 500 janitors under its employ; (2) maintains an office
where janitors assemble before they are dispatched to their assignments; (3) exercises the right to
select, refuse or change personnel assigned to OHI; and (4) supervises and pays the wages of its
employees.

Reinforcing OHI’s claims, Fast Manpower reiterated that it is a legitimate manpower agency and that it
had a valid contract of services with OHI, pursuant to which Lapastora and Ubalubao were deployed as
room attendants. Lapastora and Ubalubao were, however, found to have violated house rules and
regulations and were reprimanded accordingly. It denied the employees’ claim that they were
dismissed and maintained they were only placed on floating status for lack of available work
assignments

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Subsequently, on August 22, 2000, a memorandum of agreement was executed, stipulating the transfer
of management of the OER from OHI to HSAI-Raintree, Inc. (HSAI-Raintree). Thereafter, OHI informed
the Department of Labor and Employment (DOLE) of its cessation of operations due to the said change
of management and issued notices of termination to all its employees. This occurrence prompted some
union officers and members to file a separate complaint for illegal dismissal and unfair labor practice
against OHI, OCC and HSAI-Raintree

LA DECISION: Lapastora and Ubalubao were regular employees of OHI and that they were illegally
dismissed.

NLRC DECISION: dismissed the appeal for lack of merit.The NLRC held that OHI is the employer of
Lapastora and Ubalubao since Fast Manpower failed to establish the fact that it is an independent
contractor. Further, it ruled that the memorandum of agreement between OCC and HSAI-Raintree did
not render the reinstatement of Lapastora and Ubalubao impossible since a change in the management
does not automatically result in a change of personnel especially when the memorandum itself did not
include a provision on that matter. The NLRC then likewise upheld the validity of the closure of business
and the consequent termination of employees in favor of OHI, holding that the measures taken by the
company were proper exercises of management prerogative.

Ubalubao, on her own behalf, filed a Motion to Dismiss/Withdraw Complaint and Waiver,29 stating that
she has decided to accept the financial assistance in the amount of ₱50,000.00 offered by OHI, in lieu of
all the monetary claims she has against the company, as full and complete satisfaction of any judgment
that may be subsequently rendered in her favor. She likewise informed the Court that she had willingly
and knowingly executed a quitclaim and waiver agreement, releasing OHI from any liability. She thus
prayed for the dismissal of the complaint she filed against OHI. The Court granted Ubalubao’s motion
and considered the case closed and terminated as to her part, leaving Lapastora as the lone respondent
in the present petition.

Issue:WON Lapastora was illegally dismissed

Held: Yes,Lapastora was illegally dismissed.

Indisputably, Lapastora was a regular employee of OHI. As found by the LA, he has been under the
continuous employ of OHI since March 3, 1995 until he was placed on floating status in February 2000.
His uninterrupted employment by OHI, lasting for more than a year, manifests the continuing need and
desirability of his services, which characterize regular employment.

Based on records, OHI is engaged in the business of managing residential and commercial condominium
units at the OER. By the nature of its business, it is imperative that it maintains a pool of housekeeping

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staff to ensure that the premises remain an uncluttered place of comfort for the occupants. It is no
wonder why Lapastora, among several others, was continuously employed by OHI precisely because of
the indispensability of their services to its business. The fact alone that Lapastora was allowed to work
for an unbroken period of almost five years is all the same a reason to consider him a regular employee.

The attainment of a regular status of employment guarantees the employee’s security of tenure that he
cannot be unceremoniously terminated from employment. “To justify fully the dismissal of an
employee, the employer must, as a rule, prove that the dismissal was for a just cause and that the
employee was afforded due process prior to dismissal. As a complementary principle, the employer has
the onus of proving with clear, accurate, consistent, and convincing evidence the validity of the
dismissal.”

OHI miserably failed to discharge its burdens thus making Lapastora’s termination illegal.

On the substantive aspect, it appears that OHI failed to prove that Lapastora’s dismissal was grounded
on a just or authorized cause. While it claims that it had called Lapastora’s attention several times for
tardiness, unexplained absences and loitering, it does not appear from the records that the latter had
been notified of the company’s dissatisfaction over his performance and that he was made to explain his
supposed infractions. It does not even show from the records that Lapastora was ever disciplined
because of his alleged tardiness. In the same manner, allegations regarding Lapastora’s involvement in
the theft of personal items and cash belonging to hotel guests remained unfounded suspicions as they
were not proven despite OHI’s probe into the incidents.

On the procedural aspect, OHI admittedly failed to observe the twin notice rule in termination cases. As
a rule, the employer is required to furnish the concerned employee two written notices: (1) a written
notice served on the employee specifying the ground or grounds for termination, and giving to said
employee reasonable opportunity within which to explain his side; and (2) a written notice of
termination served on the employee indicating that upon due consideration of all the circumstances,
grounds have been established to justify his termination. In the present case, Lapastora was not
informed of the charges against him and was denied the opportunity to disprove the same. He was
summarily terminated from employment.
That there is an existing contract of services between OHI and Fast Manpower where both parties
acknowledged the latter as the employer of the housekeeping staff, including Lapastora, did not alter
established facts proving the contrary. The parties cannot evade the application of labor laws by mere
expedient of a contract considering that labor and employment are matters imbued with public interest.
It cannot be subjected to the agreement of the parties but rather on existing laws designed specifically
for the protection of labor.The Court finds no compelling reason to deviate from the findings of the LA
and NLRC, especially in this case when the same was affirmed by the CA.

Samonte vs. La Salle Greenhills GR No. 199683, Feb 10, 2016

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Facts: From 1989 (for 15 years) La Salle contracted the services of medical professionals (pedia, dentists
and a physician) to compromise its Health Service Team (HST). Petitioners, along with other members of
the HST signed uniform contracts of retainer for the period of a specific academic calendar beginning in
June 1989 and the succeeding 15 years and terminating in March of the following year when the school
year ends. The retainer states that it shall be temporary in character and shall be solely limited to the
project/undertaking assigned to the retainer within the said project. The retainer without need of notice
automatically ceases on the expiration date of the said project. And that La Salle may, upon prior notice,
terminate the contract should the retainer fail in any way to perform his assign task.

After 15 consecutive years of renewal, La Salle informed the petitioners that their
contract will no longer be renewed for the following school year by reason that they
will hire 2 full time doctors and dentists. When petitioners requested for payment of
separation pay, they were denied, thus they filed a complaint for illegal dismissal.
Petitioners alleged that they were regular employees who could only be dismissed
for just and authorized causes. That they received up to the time of their
termination regular monthly pay, annual 13th month pay, automatic yearly increase
to their monthly salary, and a performance bonus. That they served an average of
9 hrs a week and they were on call for any medical exigencies beyond their duty
hours. They attended staff meeting and participated in various gatherings and
activities sponsored by respondent school. They also participated in medical/dental
missions in the name of the respondent. Formulation of health services unit
manual, participated in the collation of evaluation of services rendered. Participated
in the yearly evaluation of complaints which is a function of a regular employee.

On the other hand, La Salle denied that petitioners were regular employees, instead
they were independent contractors who were retained by La Salle by reason of their
medical skills and expertise to provide ancillary medical and dental services to both
its students and faculty. That petitioners were on retainer basis paid monthly
retainer fees and not regular salaries. And that La Salle had no power to impose
disciplinary measure upon them including dismissal from employment. And that La
Salle had no power of control over how petitioners actually performed their
services.

Labor Arbiter dismissed the petitioners and ruled that they were independent
contractors under retainership contracts who never became regular employees
based on the absence of control by La Salle over them. The services provided by
petitioners were not necessary to La Salle’s business; the pay slips are not salaries
but professional fees; issuance of ids and requirement to log are not indicia of La
Salle’s power of control over them and were only imposed for security reasons.
Petitioners were also not required to attend or participate in school sponsored
activities and did not enjoy benefits. Their schedule were also only for 2-3 days a
well for 3 hrs a day, for a maximum of 9 hrs. Regardless, Labor Arbiter still
awarded them separation pay at a rate of ½ month salary for every year of service
on the ground of compassionate social justice.

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NLRC ruled that petitioners were fixed period employees whose terms of
employment were subject to agreement for a specific duration.

CA ruled against petitioner’s claim of regular employment.

Issues:
(1) WON petitioners were fixed period employees or regular employees.
(2) WON they were illegally dismissed.

Held:
ART. 280 LC classifies employees into regular, project, seasonal, and casual.
It states that:

The provisions of written agreement to the contrary notwithstanding and regardless

of the oral agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where
the employment has been fixed for a specific project or undertaking the completion
or termination of which has been determined at the time of the engagement of the
employee or where the work or service to be performed is seasonal in nature and
the employment is for the duration of the season.

An employment shall be deemed casual if it is not covered by the preceding

paragraph: provided that any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such activity exist.
The provision classifies regular employees into 2 kinds: (1) those engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer; and (1) casual employees who have rendered at least 1 year
of service, whether continuous or broken.

NLRC correctly identified the existence of an er-ee relationship between petitioners

and La Salle and not a bilateral independent contractor relationship.

NLRC relied on Brent Case ruling. There are employment contracts where a fixed
term is an essential and natural appurtenance such as overseas employment
contracts and officers in educational institutions. The determinant in the terms of
employment contract 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. Art. 280’s purpose is to prevent
circumvention of the employee’s right to be secure in his tenure. However this
should have no application where a fixed period of employment was agreed upon

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knowingly and voluntarily 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 where it is satisfactorily appears that the
employee and employer dealt with each other or more or less equal terms with no
moral dominance whatever being exercised by the former over the latter.

Thus, a fixed term employment is allowable under the LC only if it was voluntarily
and knowingly entered into by the parties who must have dealt with each other on
equal terms not one exercising moral dominance over the other. Further, the
nomenclature of contracts, especially employment contracts, does not define the
employment status of a person. Rather it is defined and prescribed by law and not
by what the parties say it should be. Also important to consider is that a contract of
employment is impressed with public interest such that labor contracts must yield
to the common good.

Also a fixed term contract is an employment contract which the repeated renewals
thereof make for a regular employment. Employees under fixed term contract can’t
be independent contractors because in fixed term, an employer-employee
relationship exists. In this court the CA disregarded the repeated renewals of the
contracts of retainers. Also the contracts of retainer were prepared by La Salle
alone. Petitioners were still not on equal footing with La Salle as they did not want
to lose their jobs that they had stayed in for 15 yrs. There were no terms and
conditions in the contracts that would indicate that petitioners were on equal
footing in negotiation it. And without specifying what the task assigned to
petitioners are, La Salle may upon prior notice terminate the contract should
retainer fail in any way to perform his assigned task.

Also, the contact shows that La Salle has power of control over the
petitioners. Power of control being referred to as the existence of power and not
necessarily to the actual exercise. Given that there was repeated renewals for
15 yrs, the necessity of work performed by the petitioners, the existence of La
Salle’s power of control over the means and method pursued by petitioners in the
performance of their job.

Petitioners attained regular employment and is entitled to security tenure who could
only be dismissed for just and authorized cases.

Fallarme vs. San Juan de Dios Educational Foundation, GR No. 190015,

September 14, 2016

Facts: Fallarme and Gacos were hired by San Juan de Dios Educational Foundation
(respondent) for full time teaching positions. Both of their appointments were
signified by a memorandum issued by the school informing them that they had
been hired. Memorandum did not specify whether petitioners were being employed
on a regular or probationary status. Fallarme was also appointed to perform

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administrative work for the school as personnel officer and to serve as head of the
Human Devt. Counselling Services. Despite hacing served as a faculty member
since 2003-2004, she was only asked to sign and submit to respondent a written
contract on the nature of her employment and corresponding obligations in 2006.
This contract specified that the status of Fallarme was a probationary faculty
member. After the expiration of the contract she was informed that her contract
would not be renewed and that it was the school’s administrative prerogative.

Gacos has the same circumstances with Fallarme. She taught since 2003-2004 and
was only later in 2006 when she was made to sign and submit a written contract on
the nature of her employment and corresponding obligations. Her status was
likewise probationary. And later she was also informed that her contract would not
be renewed. Petitioners questioned the nonrenewal and was not satisfied with the
reply proceeded to file a complaint against respondents for illegal dismissal.

Respondents claim that petitioners had been remiss in their duties. That both
petitioners sold computerized final exam sheets to their students without school
approval.

Labor Arbiter ruled that petitioners were regular employees who were entitled to
security of tenure. Cited 1992 Manual Regulations for Private Schools
which provides that regularization must be given to a teacher who is employed as a
full-time teacher; has rendered 2 consecutive yrs of service; and has performed
satisfactorily within that period.
NLRLC reversed the Labor Arbiter and held that petitioners failed to meet the
3rd requirement, they had not served respondent college satisfactorily. CA affirmed
NLRC.

Issues: WON petitioners are regular respondents. WON there was illegal dismissal
of the petitioners.

Held: Petitioners are regular employees of the respondent college however they
were dismissed for a valid cause.

Petitioners were considered regular employees since day1 of their employment.

While the LC provides general rules as to probationary employment, these rules are
supplemented by the Manual Regulations for Private Schools with respect to the
period of probationary employment of private school teachers. That a teacher must
satisfy the following requisites to be entitled to a regular faculty status: (1) must be
a full time teacher; (2) rendered 3 yrs of service;(3) service must have been
satisfactory. The first 2 requisites was realized however the parties disagree on the
fulfillment of the 3rd requisites whether petitioner’s performance within the
probationary period was satisfactory.

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As to the determination whether the performance of probationary teaching
personnel has been sufficiently satisfactory as to warrant their regularization lies in
the hands of the school. Academic freedom gives the school the discretion and
prerogative to impose standards on its teachers and to determine whether these
have been met upon the conclusion of probationary period. The schools exercise of
administrative prerogative in this respect is not plenary and it is still subject to the
limitations imposed by the C and jurisprudence on valid probationary employment.

Valid probationary requirement under Art. 281 presupposes the concurrence of 2

requirements: the employer must have made known to the probationary employee
the reasonable standard that the latter must comply with to qualify as regular
employee; and the employer must have informed the probationary employee of the
applicable performance standard at the time of the latter’s engagement.

With respect to the regularization of probationary teachers, they must have

rendered satisfactory service. Satisfactory connotes the requirement for schools to
set reasonable standards to be followed by teachers on probationary employment.
The records lack evidence that respondent college clearly and directly
communicated to petitioners, at the time they were hired, what reasonable
standards they must meet for the school to consider their performance satisfactory
and for it to grant them regularization. Memorandum also did not indicate their
status as probationary employees, the specific period of affectivity of their status as
such, and reasonable standards they need to comply with to be granted regular
status. Failure to inform about them of these matters is in violation of the
requirements of valid probationary employment. Every contract must specify the
designation, qualification, salary rate, period and nature of service and its date of
affectivity.

However, the dismissals of petitioners is valid. Dismissals have two facetes: the
legality of the act of dismissal. With respect to substantive due process,
insubordination or willful disobedience is one of the just causes of dismissal. Under
Art 282 LC for there to be valid cause, the employee’s assailed conduct must have
been willful; the order violated must have been reasonable m lawful, made know to
the employee and pertinent to the duties that the employee has been engage to
discharge.

The infractions committed by both petitioners were selling computerized final

examination sheets to students without rep and colleges permission. Petitioner’s act
of collecting money from their students fails under one of the valid id cards for
termination under 1992. And also both sold textbooks. Gaco’s act of out of campus
activities without consent of respondent college.

Thus although the dismissal was for a valid cause, we nevertheless find that rep
college failed to comply with the proper procedure for their dismissal in violation of
procedural due process. And for termination based on a just cause, the law requires
2 written notices before the termination of employment: (1) a written notice served

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by the employer on the employee specifying the ground for termination and giving
reasonable opportunity for that employee to explain thee latters side; (2) written
notice of termination served by the employer on the employee indicating that upon
die considerations of all circumstances, grounds have been established to justify the
latter’s termination.

However, if the dismissal was for a valid cause, failure to comply with the proper
procedural requirements shall not nullify the dismissal, but shall only warrant the
payment of indemnity in the form of nominal damages

Oyster Plaza Hotel vs. Melivo, GR No. 217455, Oct. 5, 2016

Facts:
Respondent Errol O. Melivo (Melivo) filed before the NLRC a Complaint for illegal
dismissal with prayers for reinstatement and payment of back wages, holiday pay,
overtime pay, service incentive leave, and, 13th month pay against petitioners Oyster
Plaza Hotel (Oyster Plaza), Rolito Go (Go), and Jennifer Ampel (Ampel).

The Summons, dated October 26, 2009, together with a copy of the complaint, was
served on the petitioners thru registered mail. The said summons ordered the petitioners
to appear before the Labor Arbiter (LA) for mandatory conciliation/mediation
conferences on November 23, 2009 and December 1, 2009. The registry return
receipt dated November 27, 2009, showed that the summons and the copy of the
complaint were duly served. The petitioners, however, failed to appear during the
scheduled conferences. Thereafter, the case was set for formal hearing on January 14,
2010 and a notice of hearing was sent to the petitioners, requiring them to appear
before the LA and file their position paper, with a warning that failure to appear therein
would be construed as a waiver of the opportunity to be heard. The notice, however,
was returned unserved as there was no one to receive the same. The formal hearing
was, thus, reset to February 17, 2010, and a notice of hearing was again sent to the
petitioners, wherein they were reminded to file their position paper. The registry return
receipt showed that the said notice was received by a certain Charlie
Miraña (Miraña) on January 25, 2010. At the February 17, 2010 hearing, however, only
Melivo appeared.

On even date, Melivo filed his Position Paper, alleging the following: that Oyster Plaza
was a business entity engaged in the business of hotel operation, under the
ownership/management of Go and Ampel; that in August 2008, Oyster Plaza hired him
as a trainee room boy; that in November 2008, Oyster Plaza hired him as a probationary
room boy and he was made to sign an employment contract but he was not furnished
a copy, that the said contract expired in March 2009 and his work ended; that on April
7, 2009, Oyster Plaza hired him again as a room boy, but without any employment

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contract or document; and that in September 2009, his supervisor Ampel verbally told
him that his contract was expiring, thus, he must stop reporting for work.

For the last time, another notice of hearing for the March 24, 2010, was again sent to
the petitioners with a directive to file their position paper, but it was again returned
unserved. Hence, the case was submitted for decision ex parte

LA ruled that respondent was illegaly dismissed. NLRC affirmed the ruling.

Issue:
I
WHETHER OR NOT THE PETITIONERS WERE DEPRIVED OF THEIR RIGHT TO DUE PROCESS OF
LAW AS THEY WERE NOT PROPERLY SERVED WITH SUMMONS

II
WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING THAT MELIVO WAS
ILLEGALLY DISMISSED

Held:

The petition is partly meritorious.

Petitioners were Not Deprived of their

Right to Due Process

In quasi-judicial proceedings before the NLRC and its arbitration branch, procedural
rules governing service of summons are not strictly construed. Substantial compliance
thereof is sufficient. The constitutional requirement of due process with respect to
service of summons only exacts that the service of summons be such as may
reasonably be expected to give the notice desired. Once the service provided by the
rules reasonably accomplishes that end, the requirement of justice is answered, the
traditional notion of fair play is satisfied, and due process is served.

In Scenarios, Inc. vs. Vinluan, the Court considered as substantial compliance the
service of summons by registered mail at the respondent's place of business. The Court
explained therein that technical rules of procedure were not strictly applied in quasi-
judicial proceedings and only substantial compliance was required; and that the
notation in the registry receipt that "a registered article must not be delivered to
anyone but the addressee, or upon the addressee's written order" creates the
presumption that the persons who received the summons and notice were presumably
able to present a written authorization to receive them and, therefore, the notices were
presumed to be duly received in the ordinary course of events.

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Similarly, in this case, the summons and notices were served by registered mail at the
petitioners' place of business. Thus, the person who received the same was presumed
authorized to do so. Consequently, the summons and notices were presumed to be
duly served. The burden of proving the irregularity in the service of summons and
notices, if any, is on the part of the petitioners. In this case, the petitioners clearly failed
to discharge that burden.

The Court concurs with the CA that the failure to implead MDC in the proceedings
before the LA and the NLRC was merely a procedural error which did not divest the
labor tribunals of their jurisdiction.

By the petitioners' own admission, Oyster Plaza was owned and operated by MDC. This
was further underscored in the petitioners' Verification/Certification,[30] dated
December 8, 2011, attached to their petition before the CA. It was stated therein that
"Elsa Go is the authorized representative of petitioner Oyster Plaza Hotel/Martyniuk
Development Corporation." Applying the pronouncement in Pison-Arceo, the failure to
include MDC's corporate name in the complaint did not necessarily result in the loss of
the labor tribunals' jurisdiction over the former. The said failure was but a procedural
blunder which did not render the labor proceedings void, so long as the dictates of
justice were substantially complied with.

The Court notes that even though the petitioners failed to participate in the
proceedings before the LA, they were able to argue their case before the NLRC. The
petitioners, through their pleadings, were able to argue their position and submit
evidence in support of their position that they did not receive the summons and notices
from the LA; and that Melivo was not illegally dismissed.

Evidently, the petitioners' contention that they were denied due process is devoid of
any merit.

Melivo was Illegally Dismissed

Anent the issue of illegal dismissal, the CA correctly affirmed the ruling of the NLRC.

Probation is the period during which the employer may determine if the employee is
qualified for possible inclusion in the regular force.[32] The employer has the right or is at
liberty to choose who will be hired and who will be denied employment. In that sense, it
is within the exercise of the right to select his employees that the employer may set or fix
a probationary period within which the latter may test and observe the conduct of the
former before hiring him permanently. An employee allowed to work beyond the

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probationary period is deemed a regular employee.

In Holiday Inn Manila vs. NLRC (Holiday Inn), the Court considered therein complainant's
3-week on-the-job training (OJT) period as her probationary employment period. The
Court explained that the complainant was certainly under observation during her 3-
week OJT such that if her services proved unsatisfactory, she could have been dropped
anytime during said period. On the other hand, when her services were continued after
her training, the employer in effect recognized that she had passed probation and was
qualified to be a regular employee. Thus, the Court ruled that the complainant therein
attained regular employment status when she was formally placed under probation
after her OJT.

The present case involves substantially the same factual considerations as that of
Holiday Inn. In this case, Melivo was first hired as a trainee in August 2008. His training
lasted for three (3) months. As a room boy, his performance was certainly under
observation. Thus, it can be reasonably deduced that Melivo's probationary
employment actually started in August 2008, at the same time he started working as a
trainee. Therefore, when he was re-hired as room boy after his training period sometime
in November 2008 he attained regular employment status.

Assuming arguendo that the 3-month training period could be considered a

probationary period, the conclusion would still be the same. It should be remembered
that Melivo was again employed as a room boy in November 2008 under probationary
status for five (5) months or until March 2009. Records would show that Melivo had
completed his probationary employment. Thus, when Oyster Plaza re-hired him for the
third time on April 7, 2009, he became its regular employee thereof.

As a regular employee, Melivo could only be dismissed for just or authorized causes
after affording him the procedural requirement of notice and hearing. The petitioners
failed to adduce evidence that Melivo's dismissal was for a just or authorized cause, or
that he was sufficiently notified and given opportunity to be heard why his employment
should not be terminated. Hence, Melivo's dismissal was illegal.

Quebral et al., vs. Angbus Construction Inc. GR No. 221897, Nov. 7, 2016

Facts:

Petitioners, Isidro Quebral and eight others filed a complaint for illegal dismissal with
prayer for reinstatement and money claims against respondents Angbus Construction

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Inc. (Angbus) and Angelo Bustamante. They claimed that they were regular employees
engaged to perform tasks necessary and desirable to the business and have rendered
services to the latter’s construction business for several years. Respondents maintained
that petitioners were first employed by Angelfe Management and Consultancy
(Angelfe) for one project only. Two or three years after the completion of the Angelfe
project, they were then hired by respondents, which is a separate and distinct entity
from the former. They were hired only for two project employment contracts – one
each with Angelfe and Angbus. A long period between the first project employment
and the other intervened, which meant that petitioners were not rehired repeatedly
and continuously. What is the status of petitioners’ employment?

Ruling: Regular employees. To safeguard the rights of workers against the arbitrary use
of the word “project”, jurisprudence provides that employers claiming that their workers
are project-based employees have the burden to prove that these two requisites
concur: the employees were assigned to carry out a specific project or undertaking;
and the duration and scope of which were specified at the time they were engaged
for such project.

In this case, Angbus did not state the specific project or undertaking assigned to
petitioners. As to the second requisite, not only was Angbus unable to produce
petitioners’ employment contracts, it also failed to present other evidence to show that
it informed petitioners of the duration and scope of their work. The Court previously
ruled that although the absence of a written contract does not grant regular status to
the employees, it is evidence that they were informed of the duration and scope of
their work and their status as project employees at the start of their engagement. When
no other evidence is offered, the absence of employment contracts raises a serious
question of whether the employees were sufficiently apprised at the start of their
employment of their status as project employees. Absent such proof, it is presumed that
they are regular employees and can only be dismissed for just or authorized causes
upon compliance with procedural due process.

x x x The Court further observes that the CA placed unwarranted emphasis on the
DOLE Reports or termination reports submitted by Angbus as basis to rule that petitioners
were project employees. x x x It is clear that the submission of the termination report to
the Dole “may be considered” only as an indicator of project employment. By the
provision’s tenor, the submission of this report, by and of itself, is not conclusive to
confirm the status of the terminated employees as project employees, especially when
there is a glaring absence of evidence to prove that petitioners were assigned to carry
out a specific project or undertaking, and that they were informed of the duration and
scope of their supposed project engagement. Since Angbus failed to prove that

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petitioners were project employees, the NLRC correctly ruled that they should be
considered regular employees. The termination of employment should have been for a
just or authorized cause, the lack of which amounts to illegal dismissal.

(Perlas-Bernabe, J., SC 1st Division, Isidro Quebral et.al. vs. Angbus Construction, Inc.
And Angelo Bustamante, G.R. No. 221897, November 07, 2016).

E. Ganzon Inc. vs. Ando, Jr. GR No. 214183, Feb. 20, 2017

Facts:

Respondent Fortunato B. Ando, Jr. (Ando) filed a complaint against his employer
EGI and its president E. Ganzon for illegal dismissal and money claims for:
underpayment of salary, overtime pay, and 13th month pay; non-payment of holiday
pay and service incentive leave; illegal deduction; and attorney's fees. He alleged that
he was a regular employee working as a finishing carpenter in the construction business
of EGI; he was repeatedly hired from January 21, 2010 until April 30, 2011 when he was
terminated without prior notice and hearing; his daily salary of P292.00 was below the
amount required by law; and wage deductions were made without his consent, such
as rent for the barracks located in the job site and payment for insurance premium. EGI
countered that, as proven by the three (3) project employment contract, Ando was
engaged as a project worker (Formworker-2) in Bahay Pamulinawen Project in Laoag,
Ilocos Norte from June 1, 2010 to September 30, 2010 7 and from January 3, 2011 to
February 28, 2011 as well as in EGI-West Insula Project in Quezon City, Metro Manila from
February 22, 2011 to March 31, 2011; he was paid the correct salary based on the
Wage Order applicable in the region; he already received the 13th month pay for 2010
but the claim for 2011 was not yet processed at the time the complaint was filed; and
he voluntarily agreed to pay P500.00 monthly for the cost of the barracks, beds, water,
electricity, and other expenses of his stay at the job site. The Labor Arbiter declared
Ando as a project employee of EGI but granted some of his money claims. Both of the
parties went to the NLRC. The NLRC affirmed the Labor Arbiter’s ruling. Ando’s motion
for reconsideration was denied. The CA declared that Ando was illegally dismissed from
work and that EGI must pay backwages from the date of dismissal to the finality of the
decision and separation pay equivalent to one month salary.

Issue:

Whether Ando is a regular or a project employee of EGI

Ruling:

Ando is still a project employee even if records showed that Ando’s contracts for
Bahay Pamulinawen Project were extended until December 31, 2010 (from the original
stated date of September 30, 2010) and shortened to February 15, 2011 (from the

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original stated date of February 28, 2011) while his services in West Insula Project was
extended until April 30, 2011 (from the original stated date of March 31, 2011). The Court
has upheld the validity of a project-based contract of employment provided that the
period was agreed upon knowingly and voluntarily 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 where it satisfactorily appears that the
employer and employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter; and it is
apparent from the circumstances that the period was not imposed to preclude the
acquisition of tenurial security by the employee. Otherwise, such contract should be
struck down as contrary to public policy, morals, good custom or public order.

Ando was adequately notified of his employment status at the time his services were
engaged by EGI for the Bahay Pamulinawen and the West Insula Projects.

The contracts he signed consistently stipulated that his services as a project

worker were being sought. There was an informed consent to be engaged as such. His
consent was not vitiated. As a matter of fact, Ando did not even allege that force,
duress or improper pressure were used against him in order to agree. His being
a carpenter does not suffice.

There was no attempt to frustrate Ando's security of tenure.

His employment was for a specific project or undertaking because the nature of
EGI's business is one which will not allow it to employ workers for an indefinite period. As
a corporation engaged in construction and residential projects, EGI depends for its
business on the contracts it is able to obtain. Since work depends on the availability of
such contracts, necessarily the duration of the employment of its work force is not
permanent but coterminous with the projects to which they are assigned and from
whose payrolls they are paid. It would be extremely burdensome for EGI as an
employer if it would have to carry them as permanent employees and pay them wages
even if there are no projects for them to work on.

The decisive determinant in project employment is the activity that the employee is
called upon to perform and not the day certain agreed upon by the parties for
the commencement and termination of the employment relationship.

Indeed, in Filsystems, Inc. v. Puente , We even ruled that an employment

contract that does not mention particular dates that establish the specific duration of
the project does not preclude one's classification as a project employee. In this case,

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the duration of the specific/identified undertaking for which Ando was engaged was
reasonably determinable. Although the employment contract provided that the stated
date may be “extended or shortened depending on the work phasing," it specified the
termination of the parties' employment relationship on a "day certain,” which is "upon
completion of the phase of work for which [he was] hired for."

The fact that Ando was required to render services necessary or desirable in the
operation of EGI's business for more than
ayear does not in any way impair the validity of his project

employment contracts.

Time and again, We have held that the length of service through repeated and
successive rehiring is not the controlling determinant of the employment tenure of a
project employee. The rehiring of construction workers on a project-to-project basis
does not confer upon them regular employment status as it is only dictated by the
practical consideration that experienced

construction workers are more preferred. In Ando's case, he was rehired precisely
because of his previous experience working with the other phases of the project. The
foregoing considered, EGI did not violate any requirement of procedural due process
by failing to give Ando advance notice of his termination. Prior notice of termination is
not part of procedural due process if the termination is brought about by the
completion of the contract or phase thereof for which the project employee was
engaged. Such completion automatically terminates the employment and the
employer is, under the law, only required to render a report to the Department of Labor
and Employment (DOLE) on the termination of employment. 49 In this case, it is
undisputed that EGI submitted the required Establishment Employment Reports to DOLE-
NCR Makati/Pasay Field Office regarding Ando's "temporary lay-off” effective February
16, 2011 and "permanent termination" effective May 2, 2011.

Herma Shipyard Inc. vs. Oliveros, et al., GR No. 208936, April 17, 2017

Facts

Herma Shipyard is a domestic corporation engaged in the business

of shipbuilding and repair. The respondents were its employees occupying various
positions such as welder, leadman, pipe fitter, laborer, helper, etc. Respondents filed a
complaint for illegal dismissal, regularization, and non-payment of service incentive
leave pay with prayer for the payment of full backwages and attorney' fees against

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petitioners. They alleged that they were regular employees who have been
continuously performing tasks usually necessary and desirable in its business. On various
dates, however, petitioners dismissed them from employment. Respondents further
alleged that as condition to their continuous and uninterrupted employment,
petitioners made them sign employment contracts for a fixed period ranging from one
to four months to make it appear that they were project-based employees. They
alleged that there was never a time when they ceased working for Herma Shipyard
due to expiration of project-based employment contracts. According to them, no
report to DOLE of the completion of the project was made. For their defense, petitioners
argued that respondents were its project-based employees in its shipbuilding projects
and that the specific project for which they were hired had already been completed.
Herma Shipyard presented contracts of employment, some of which are written in the
vernacular and denominated as Kasunduang Paglilingkod (Pang-Proyektong Kawani).
The Labor Arbiter ruled that they were project-based employees. This was affirmed in
toto by the NLRC. The respondent employees filed a Petition for Certiorari at the Court
of Appeals and the latter set aside the labor tribunal’s decision and declared that the
respondents were regular employees who were illegally dismissed.

Issue

Whether or not the respondents were regular employees

Ruling

The CA erred in disregarding the project employment contracts and in

concluding that respondents have become regular employees because they were
performing tasks necessary and desirable to the business of Herma Shipyard and were
repeatedly rehired. The records of this case reveal that for each and every project
respondents were hired, they were adequately informed of their employment status as
project-based employees at least at the time they signed their employment contract.
They were fully apprised of the nature and scope of their work whenever they a fixed
their signature to their employment contract. Their contracts of employment (mostly
written in the vernacular) provide in no uncertain terms that they were hired as project-
based employees whose services are coterminous with the completion of the specific
task indicated therein. All their contract of employment state clearly the date of the
commencement of the specific task and the expected completion date thereof. They
also contain a provision expressly stating that respondents' employment shall end upon
the arrival of the target completion date or upon the completion of such project.

There is no indication that respondents were coerced into signing their employment
contract or that they a fixed their signature thereto against their will. While they claim

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that they signed the said contracts in order to secure continuous employment, they
have not, however, presented sufficient evidence to support the same other than their
bare allegations. It is settled that "contracts for project employment are valid under the
law."

By voluntarily entering into the aforementioned project employment contracts,

respondents are deemed to have understood that their employment is coterminous
with the particular project indicated therein. It is settled, however, that project-based
employees may or may not be performing tasks usually necessary or desirable in the
usual business or trade of the employer. The fact that the job is usually necessary or
desirable in the business operation of the employer does not automatically imply
regular employment; neither does it impair the validity of the project employment
contract stipulating a fixed duration of employment.

While the tasks assigned to the respondents were indeed necessary and
desirable in the usual business of Herma Shipyard, the same were distinct, separate,
and identifiable from the other projects or contract services.

(employee’s summary of their names, positions, projects and durations lifted from
their employment contract were presented)

Repeated rehiring of project employees to different projects does not ipso facto
make them regular employees.

Length of service (through rehiring) is not the controlling determinant of the

employment tenure [of project-based employees but, as earlier mentioned], whether
the employment has been fixed for a specific project or undertaking, with its
completion having been determined at the time of [their] engagement.” Indeed, if we
consider the nature of Herma Shipyard's business, it is clear that Herma Shipyard only
hires workers when it has existing contracts for shipbuilding and repair. It is not engaged
in the business of building vessels for sale which would require it to continuously
construct vessels for its inventory and consequently hire a number of permanent
employees. Hence, Herma Shipyard should be allowed "to reduce [its] work force into a
number suited for the remaining work to be done upon the completion or proximate
accomplishment of [each particular] project." As for respondents, since they were
assigned to a project or a phase thereof which begins and ends at determined or
determinable times, their services were lawfullyterminated upon the completion of such
project or phase thereof. Moreover, our examination of the records revealed other
circumstances that convince us that respondents were and remained project-based
employees, albeit repeatedly rehired.

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Contrary to their claim, respondents' employment were neither continuous and
uninterrupted nor for a uniform period of one month; they were intermittent with varying
durations, as well as gaps ranging from a few days to several weeks or months. These
gaps coincide with the completion of a particular project and the start of a new
specific and distinct project for which they were individually rehired.

And for each completed project, petitioners submitted the required

Establishment Employment Records to the DOLE which is a clear indicator of project
employment. The records also show that respondents' employment had never been
extended beyond the completion of each project or phase thereof for which they had
been engaged.

As to the requirement that the completion or termination of the specific project

or undertaking for which respondents were hired should be determined at the time of
their engagement, we rule and so hold that it is enough that Herma Shipyard gave the
approximate or target completion date in the project employment contract. Given the
nature of its business and the scope of its projects which take months or even years to
finish, we cannot expect Herma Shipyard to give a definite and exact completion date.
It can only approximate or estimate the completion date.

What is important is that the respondents were apprised at the time of their
engagement that their employment is coterminous with the specific project and that
should their employment be extended by virtue of paragraph the purpose of the
extension is only to complete the same specific project, and not to keep them
employed even after the completion thereof.

Put differently, paragraph 10 does not allow the parties to extend the period of
respondents' employment after the completion of the specific project for which they
were hired. Their employment can only be extended if that particular project, to
which their employment depends, remains unfinished.

UNIVERSITY OF SANTO TOMAS v. SAMAHANG MANGGAGAWA NG UST

FACTS:

The case stemmed from a complaint for regularization and illegal dismissal filed
by respondents Samahang Manggagawa ng UST and Pontesor, et al. (respondents)
against petitioner before the NLRC. Respondents alleged that on various periods
spanning the years 1990-1999, petitioner repeatedly hired Pontesor, et al. to perform
various maintenance duties within its campus, i.e., as laborer, mason, tinsmith, painter,

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electrician, welder, carpenter. Essentially, respondents insisted that in view of
Pontesor, et al.'s performance of such maintenance tasks throughout the years, they
should be deemed regular employees of petitioner. Respondents further argued that
for as long as petitioner continues to operate and exist as an educational institution,
with rooms, buildings, and facilities to maintain, the latter could not dispense with
Pontesor, et al.'s services which are necessary and desirable to the business of
petitioner.

On the other hand, while petitioner admitted that it repeatedly hired Pontesor, et al. in
different capacities throughout the aforesaid years, it nevertheless maintained that
they were merely hired on a per-project basis, as evidenced by numerous Contractual
Employee Appointments (CEAs) signed by them. In this regard, petitioner pointed out
that each of the CEAs that Pontesor, et al. signed defined the nature and term of the
project to which they are assigned, and that each contract was renewable in the
event the project remained unfinished upon the expiration of the specified term. In
accordance with the express provisions of said CEAs, Pontesor, et al.'s project
employment were automatically terminated: (a) upon the expiration of the specific
term specified in the CEA; (b) when the project is completed ahead of such expiration;
or (c) in cases when their employment was extended due to the non-completion of the
specific project for which they were hired, upon the completion of the said project. As
such, the termination of Pontesor, et al.'s employment with petitioner was validly made
due to the completion of the specific projects for which they were hired.

The LA Ruling

LA ruled in Pontesor, et al.'s favor and, accordingly, ordered petitioner to

reinstate them to their former jobs with full backwages and without loss of seniority
rights.The LA found that Pontesor, et al. should be deemed as petitioner's regular
employees, considering that: (a) they have rendered at least one (1) year of service to
petitioner as its employees; (b) the activities for which they were hired for are vital or
inherently indispensable to the maintenance of the buildings or classrooms where
petitioner's classes were held; and (c) their CEAs were contrived to preclude them from
obtaining security of tenure. In this light and in the absence of any valid cause for
termination, the LA concluded that Pontesor, et al. were illegally dismissed by petitioner.

Aggrieved, petitioner appealed to the NLRC.

The NLRC Ruling

In a Resolution the NLRC vacated the LA ruling and, entered a new one
dismissing respondents' complaint for lack of merit. Contrary to the LA's findings, the
NLRC found that Pontesor, et al. cannot be considered regular employees as they
knowingly and voluntarily entered into fixed term contracts of employment with

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petitioner. As such, they could not have been illegally dismissed upon the expiration of
their respective last valid and binding fixed term employment contracts with petitioner.
This notwithstanding, the NLRC rejected petitioner's contention that Pontesor, et
al. should be deemed project employees, ratiocinating that their work were not usually
necessary and desirable to petitioner's main business or trade, which is to provide
elementary, secondary, tertiary, and post-graduate education. As such, the NLRC
classified Pontesor, et al. as mere fixed term casual employees.

The CA Ruling

CA reversed and set aside the NLRC ruling and, accordingly, reinstated that of
the LA. It held that Pontesor, et al. cannot be considered as merely fixed term or project
employees, considering that: (a) they performed work that is necessary and desirable
to petitioner's business, as evidenced by their repeated rehiring and petitioner's
continuous need for their services; and (b) the specific undertaking or project for which
they were employed were not clear as the project description set forth in their
respective CEAs were either too general or too broad. Thus, the CA classified
Pontesor, et al. as regular employees, who are entitled to security of tenure and cannot
be terminated without any just or authorized cause.

ISSUE:

Whether or not the CA correctly ruled that Pontesor, et al. are regular employees
and, consequently, were illegally dismissed by petitioner.

RULING:

The petition is without merit.

Article 295 of the Labor Code, as amended, distinguishes project employment

from regular employment. The primary standard of determining regular employment is
the reasonable connection between the particular activity performed by the
employee in relation to the usual trade or business of the employer. The test is whether
the former is usually necessary or desirable in the usual business or trade of the
employer. The connection can be determined by considering the nature of work
performed and its relation to the scheme of the particular business or trade in its
entirety. Also, if the emplovee has been performing the iob for at least a year, even if
the performance is not continuous and merely intermittent, the law deems repeated
and continuing need for its performance as sufficient evidence of the necessitv if not

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indispensability of that activity to the business. Hence, the employment is considered
regular, but only with respect to such activity and while such activity exists.

In the case at bar, a review of Pontesor, et al.'s respective CEA reveal that petitioner
repeatedly rehired them for various positions in the nature of maintenance workers,
such as laborer, mason, painter, tinsmith, electrician, carpenter, and welder, for various
periods spanning the years 1990-1999. Akin to the situation of the employees
in Kimberly, Pontesor, et al.'s nature of work are not necessary and desirable to
petitioner's usual business as an educational institution; hence, removing them from the
ambit of the first category of regular employees under Article 295 of the Labor Code.
Nonetheless, it is clear that their respective cumulative periods of employment as per
their respective CEAs each exceed one (1) year. Thus, Pontesor, et al. fall under the
second category of regular employees under Article 295 of the Labor Code.
Accordingly, they should be deemed as regular employees but only with respect to the
activities for which they were hired and for as long as such activities exist.

In this relation, the Court clarifies that Pontesor, et al. were not project employees of
petitioner, who were validly terminated upon the completion of their respective
projects/undertakings. In Gadia v. Sykes Asia, Inc.,the Court discussed the requisites for
a valid project employment, to wit:

A project employee is assigned to a project which begins and ends at determined or

determinable times. Unlike regular employees who may only be dismissed for just
and/or authorized causes under the Labor Code, the services of employees who are
hired as "project[-based] employees" may be lawfully terminated at the completion of
the project.

According to jurisprudence, the principal test for determining whether particular

employees are properly characterized as "project[-based] employees" as distinguished
from "regular employees," is whether or not the employees were assigned to carry out a
"specific project or undertaking," the duration (and scope) of which were specified at
the time they were engaged for that project. The project could either be (1) a
particular job or undertaking that is within the regular or usual business of the employer
company, but which is distinct and separate, and identifiable as such, from the other
undertakings of the company; or (2) a particular job or undertaking that is not within the
regular business of the corporation. In order to safeguard the rights of workers against
the arbitrary use of the word "project" to prevent employees from attaining a regular
status, employers claiming that their workers are project[-based] employees should not
only prove that the duration and scope of the employment was specified at the time

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they were engaged, but also, that there was indeed a project. (Emphases and
underscoring supplied)

As aptly held by the CA, Pontesor, et al. could not be considered as project employees
because the specific undertakings or projects for which they were employed were not
clearly delineated. This is evidenced by the vagueness of the project descriptions set
forth in their respective CEAs,which states that they were tasked "to assist" in various
carpentry, electrical, and masonry work. In fact, when the aforesaid CEAs are pieced
together, it appears that during the years 1990 to 1999, Pontesor, et al. were each
engaged to perform all-around maintenance services throughout the various
facilities/installations in petitioner's campus. Thus, it seems that petitioner, through the
CEAs, merely attempted to compartmentalize Pontesor, et al.'s various tasks into
purported "projects" so as to make it appear that they were hired on a per-project
basis. Verily, the Court cannot countenance this practice as to do so would effectively
permit petitioners to avoid hiring permanent or regular employees by simply hiring them
on a temporary or casual basis, thereby violating the employees' security of tenure
relative to their jobs.

Lest it be misunderstood, there are instances when the validity of project or fixed term
employments were upheld on the ground that it was "agreed upon knowingly and
voluntarily 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 where it satisfactorily appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever being exercised
by the former over the latter." However, if it is apparent from the circumstances of the
case "that periods have been imposed to preclude acquisition of tenurial security by
the employee," such project or fixed term contracts are disregarded for being contrary
to public policy, as in this case.

In view of the foregoing, Pontesor, et al. should, as discussed earlier, be

considered regularized casual employees who enjoy, inter alia, security of tenure.
Accordingly, they cannot be terminated from employment without any just and/or
authorized cause, which unfortunately, petitioner was guilty of doing in this case.
Hence, Pontesor, et al. must be reinstated to their former or equivalent positions, with full
backwages and without loss of seniority rights. As pointed out by the LA, the NLRC
Computation & Examination Unit should be directed to compute the monetary awards
that petitioner should be ordered to pay Pontesor, et al. as a consequence of this
ruling.

WHEREFORE, the petition is DENIED.

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IV. MANAGEMENT PREROGATIVE

Dosch vs. NLRC

G.R. No. L-51182. July 5, 1983

Facts:
Helmut Dosch, an American citizen, married to a Filipina, was the resident Manager of
Northwest Airlines, Inc. in the Philippines. He has to his credit 11 years of continuous
service with the company, including 9 years as Northwest Manager with station at
Manila. He received an inter-office communication from R.C. Jenkins, Northwest's Vice
President for Orient Region based in Tokyo, promoting him to the position of Director of
International Sales and transferring him to Northwest's General Office in Minneapolis,
U.S.A., effective immediately.

Dosch in his letter, expressed appreciation for the promotion and at the same time
regretted that "for personal reasons and reasons involving his family, he is unable to
accept a transfer from the Philippines and that he would, therefore, prefer to remain in
his position, of Manager-Philippines until such time that his services in that capacity are
no longer required by the company. Petitioner tried to resume his duties as Manager
after an authorized vacation but the Vice-President for the Orient Region of Northwest
advised petitioner that in view of his letter, his status as an employee of the company
ceased on the close of business and the company therefore considers his letter to be a
resignation without notice.

Issue: Whether or not the employer’s letter constitute a transfer as a valid exercise of a
management prerogative.

Held:

No. The Supreme Court treats the Jenkins letter as directing the promotion of the
petitioner from his position as Philippine manager to Director of International Sales in
Minneapolis, U.S.A. It is not merely a transfer order but "it is more in the nature of a
promotion that a transfer, the latter being merely incidental to such promotion." The
inter-office communication of Vice President Jenkins is captioned "Transfer" but it is
basically and essentially a promotion for the nature of an instrument is characterized
not by the title given to it but by its body and contents. The communication informed
the petitioner that effective August 18, 1975, he was to be promoted to the position of
Director of International Sales, and his compensation would be upgraded and the
payroll accordingly adjusted. Petitioner was, therefore, advanced to a higher position
and rank and his salary was increased and that is a promotion.

There is no law that compels an employee to accept a promotion, as a promotion is in

the nature of a gift or a reward, which a person has a right to refuse. When petitioner

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refused to accept his promotion to Director of International Sales, he was exercising a
right and he cannot be punished for it as qui jure suo utitur neminem laedit. He who
uses his own legal right injures no one. While it may be true that the right to transfer or
reassign an employee is an employer's exclusive right and the prerogative of
management, such right is not absolute. The right of an employer to freely select or
discharge his employee is limited by the paramount police power for the relations
between capital and labor are not merely contractual but impressed with public
interest (Article 1700, New Civil Code). And neither capital nor labor shall act
oppressively against each other. The Court did not agree to Northwest's submission that
petitioner was guilty of disobedience and insubordination which respondent
Commission sustained. Petitioners acknowledgment of his promotion and the way he
expressed his desire to remain in his position in the Philippines for reasons involving his
family, the Court could not discern even the slightest hint of defiance, much less imply
insubordination on the part of petitioner.

The Court emphasized the long and faithful years of service that petitioner had
rendered to respondent company, eleven good years, nine of which as Manager with
station at Manila. It is plainly abusive of the company and oppressive to the petitioner
that the latter is peremptorily dismissed on the shallow claim of "resignation without
notice,". The Court ordered petitioner's reinstatement to his former position with full
backwages for three (3) years without loss of seniority rights and other benefits
recognized by law, including attorney's fees equivalent to 10% of the total monetary
benefits which the petitioner may recover, and ordered petitioners reinstatement.

PT&T vs. Court of Appeals

G.R. No. 152057. September 29, 2003

Facts:
PT&T is a domestic corporation engaged in the business of providing telegraph and
communication services thru its branches all over the country. Sometime in 1997, after
conducting several studies, PT and T came up with a Relocation and Restructuring
Program that aimed to (a) sustain its retail operations (b) decongest surplus workforce in
some branches, to promote efficiency and productivity; (c) lower expenses incidental
to hiring and training new personnel; and (d) avoid retrenchment of employees
occupying redundant positions. The company offered relocation benefits/allowances
to employees who would agree to be transferred to new PT and T branches in the
provinces. Moreover, employees who would agree to the transfer would be considered
promoted.

In line with the petitioner’s program, seven employees were directed by the company
to “relocate” to their new PT&T branches. The seven employees however rejected the
petitioner company’s offer on the reason that the said transfers involved distant places
which would require their separation from their families.
Due to the employee’s refusal, the company dismissed the seven employees on the
ground that their refusal amounted to insubordination and willful disobedience to a
lawful order. As the seven employees were all members of a registered labor union,

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their union in behalf of them, filed with the Labor Arbiter a complaint for unfair labor
practice and illegal dismissal against PT&T.
The petitioner company’s defense was that the transfers were valid exercise of
management prerogative. The Labor Arbiter dismissed the complaint and upheld the
company, but on appeal, the National Labor Relations Commission declared the
employee’s dismissal as illegal. The Court of Appeals affirmed the NLRC’s ruling.

Issue:
(1) Whether or not the transfers initiated by petitioner PT and T to its employees were in
the nature of a promotion.
(2) Whether or not the dismissal of the employees was valid on the ground that there
was insubordination and willful disobedience to a lawful order.

Held:
(1) The employee’s transfers are promotions in nature even if they were not
accompanied by an increase in salary.

It was petitioner company itself that admitted to this fact as was stated in their position
paper submitted to the Labor Arbiter. With or without a corresponding increase in
salary, the respective transfers of the private respondents were in fact promotions,
following the ruling enunciated in Homeowners Savings and Loan Association, Inc. v.
NLRC:

… [P]romotion, as we defined in Millares v, Subido, is “the advancement from one

position to another with an increase in duties and responsibilities as authorized by law,
and usually accompanied by an increase in salary.” Apparently, the indispensable
element for there to be a promotion is that there must be“advancement from one
position to another” or an upward vertical movement of the employee’s rank or
position. Any increase in salary should only be considered incidental but never
determinative of whether or not a promotion is bestowed upon an employee.

(2) An employee cannot be promoted, even if merely as a result of transfer, without his
consent. A transfer that results in promotion or demotion, advancement or reduction or
a transfer that aims to ‘lure the employee away from his permanent position cannot be
done without the employees’ consent.
There is no law that compels an employee to accept a promotion for the reason that a
promotion is in the nature of a gift or reward, which a person has a right to refuse.
Hence, the exercise by the private respondents of their right cannot be considered in
law as insubordination, or willful disobedience of a lawful order of the employer. As
such, there was no valid cause for the private respondents’ dismissal.
As the questioned dismissal is not based on any of the just or valid grounds under Article
282 of the Labor Code, the NLRC correctly ordered the private respondents’
reinstatement without loss of seniority rights and the payment of back wages from the
time of their dismissal up to their actual reinstatement.

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Mendoza vs. Rural Bank of Lucban
G.R. No. 155421, July 7, 2004

Facts:
On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board
Resolution Nos. 99-52 and 99-53, ordering the reshuffling of its and employees in line with
the policy of the bank to familiarize bank employees with the various phases of bank
operations and further strengthen the existing internal control system.

In that Board resolution, Mendoza was assigned to Clerk-Meralco collection from the
position of Appraiser. Petitioner in an undated letter to the Bank’s Board Chairman
stated that the transfer was in effect a demotion on his part without legal basis and is a
blatant harassment on from the employer as a prelude petitioners termination in due
time. That it resulted to unfair labor practice.

The Board’s Chairman in his reply, only reiterated that the reason behind the resolution
on the reshuffling of its employees was merely familiarize bank employees with the
various phases of bank operations and further strengthen the existing internal control
system.

On June 7, 2009, petitioner in a letter applied for leave of absence due to an ailment
good for ten days, and another was submitted for 30 days. Within this period, petitioner
filed a complaint before Arbitration Branch No. IV of the National Labor Relations
Commission against the Rural Bank of Lucban for illegal dismissal, underpayment,
separation pay and damages. The Labor Arbiter upheld petitioner’s claims but then it
was reversed by the NLRC on appeal. The Court of Appeals also found no grave abuse
of discretion on the part of the NLRC.

Issue: Whether or not the reshuffling or transfer is deemed to be a demotion on

petitioner’s position.

Held:
Constructive dismissal is defined as an involuntary resignation resorted to when
continued employment is rendered impossible, unreasonable or unlikely; when there is
a demotion in rank or a diminution of pay; or when a clear discrimination, insensibility or
disdain by an employer becomes unbearable to the employee.

In the pursuit of its legitimate business interest, management has the prerogative to
transfer or assign employees from one office or area of operation to another —
provided there is no demotion in rank or diminution of salary, benefits, and other
privileges; and the action is not motivated by discrimination, made in bad faith, or
effected as a form of punishment or demotion without sufficient cause. This privilege is
inherent in the right of employers to control and manage their enterprise effectively.
The right of employees to security of tenure does not give them vested rights to their
positions to the extent of depriving management of its prerogative to change their
assignments or to transfer them. Managerial prerogatives, however, are subject to

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limitations provided by law, collective bargaining agreements, and general principles
of fair play and justice.

Management Prerogative to Transfer Employees. Jurisprudence recognizes the exercise

of management prerogatives. For this reason, courts often decline to interfere in
legitimate business decisions of employers. Indeed, labor laws discourage interference
in employers’ judgments concerning the conduct of their business. The law must protect
not only the welfare of employees, but also the right of employers. In the pursuit of its
legitimate business interest, management has the prerogative to transfer or assign
employees from one office or area of operation to another -- provided there is no
demotion in rank or diminution of salary, benefits, and other privileges; and the action is
not motivated by discrimination, made in bad faith, or effected as a form of
punishment or demotion without sufficient cause. This privilege is inherent in the right of
employers to control and manage their enterprise effectively. The right of employees to
security of tenure does not give them vested rights to their positions to the extent of
depriving management of its prerogative to change their assignments or to transfer
them.

Petitioner’s Transfer Lawful. Petitioner’s transfer was made in pursuit of respondent’s

policy to “familiarize bank employees with the various phases of bank operations and
further strengthen the existing internal control system” of all officers and employees. We
have previously held that employees may be transferred -- based on their
qualifications, aptitudes and competencies -- to positions in which they can function
with maximum benefit to the company. There appears no justification for denying an
employer the right to transfer employees to expand their competence and maximize
their full potential for the advancement of the establishment. Petitioner was not singled
out; other employees were also reassigned without their express consent. Neither was
there any demotion in the rank of petitioner; or any diminution of his salary, privileges
and other benefits. This fact is clear in respondent’s Board Resolutions, the April 30, 1999
letter of Bank President Daya to Branch Manager Cada, and the May 10, 1999 letter of
Daya to petitioner.

Duncan Association of Detailman vs. Glaxo Wellcome Phils.

G.R. 162994, September 17, 2004

Facts:
Petitioner Tecson was hired by respondent Glaxo Wellcome Phils. as a medical
representative. Tecson signed a contract of employment, which stipulates among
others, that he agrees to disclose existing or future relationship with co-employees and
employees of competing companies that should such relationship poses a conflict of
interest, to resign from the company. Despite repeated warnings, Tecson and Bettsy, an
employee of a competing company, got married. Glaxo transferred Tecson to Butuan,
but he defied such orders and continued acting as medical representative in
Camarines area. The National Conciliation and Mediation board rendered as valid the
policy and the right to transfer.

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Issue: Whether or not the policy constitutes a prohibition against marriage.

Held:
No.

Glaxo’s policy prohibiting an employee from having a relationship is a valid exercise of

management prerogatives as relationships of that nature might compromise the
interests of the company. Glaxo has a right to guard its trade secrets, manufacturing
formulas, marketing strategies and other confidential programs and information for
competitors.

The right to protect its economic interests is recognized by the constitution which
recognizes the right of enterprises to adopt and enforce such a policy to protect its
right to reasonable returns on investments and for expansion and growth. Indeed, while
our laws endeavor to give life to the constitutional policy on social justice and the
protection of labor, it does not mean that every labor dispute will be decided in favor
of the workers.

The law also recognized that management has rights which are also entitled to respect
and enforcement in the interest of fair play. The challenged company policy does not
violate the equal protection clause of the constitution as such clause is addressed only
to the state or those acting under color of its authority.

The policy being questioned is not a policy against marriage. An employee of the
company remains free to marry anyone of his or her choosing. The policy is aimed at
restricting a personal prerogative that belongs only to the individual. However, an
employee’s personal decision does not detract the employer from exercising
management prerogatives to ensure maximum profit and business success.

PLDT vs. Paquio

G.R. No. 152689, October 12, 2005

Facts:
In 1994, PLDT assessed the performance of the 27 Exchanges comprising the GMM
Network. Upon receipt of the ratings, Alfredo Paguio, Head of the Garnet Exchange,
sent a letter to his immediate supervisor and Asst. VP criticizing the PLDT criteria for
performance rating as unfair because they depended on manpower after receiving its
appraisal rating. He also suggested that the criteria failed to recognize that exchanges
with new plants could easily meet the objectives of GMM compared to those with old
plants.

Despite Paguio’s criticism, Garnet Exchange, the oldest plant in GMM, obtained the top
rating in the GMM. Nevertheless, Paguio reiterated his letter to Santos and objected to
the performance rating as it was based only on the attainment of objectives, without
considering other relevant factors. Two years later on June 1996, PLDT rebalanced the
manpower of the East Center. Paguio wrote Santos and requested reconsideration of

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the manpower rebalancing, claiming it was unfair to Garnet Exchange because as the
oldest exchange in the East Center, it was disallowed to use contractors for new
installations and was not made beneficiary of the cut-over bonus.

He was then was reassigned as Head for Special Assignment at the Office of the GMM
East Center and asked to turn over his functions as Garnet Exchange Head to Tessie Go.
Believing that his transfer was a disciplinary action, Paguio requested the first VP for a
formal hearing of the charges against him and asked that his reassignment be
deferred. He also filed a complaint against his supervisor for grave abuse of authority
and manipulation of the East Center performance. Findings were that the memo was in
order as it was based on the finding that Paguio was not a team player and cannot
accept decisions of management, which is short of insubordination. He was then
advised to transfer to any group in the company that may avail of his services.
Likewise, another memo informed Paguio that his transfer was not in the nature of a
disciplinary action that required investigation and that he agreed with the reasons of
the transfer. Aggrieved, Paguio files a complaint for illegal dismissal with prayer for
reinstatement and damages which was later amended to illegal demotion with prayer
for reversion to old position, damages and attorney’s fees.

Issue: Whether or not the transfer of Paguio is legal.

Held:
PLDT alleges that the NLRC ruling would allow a change of cause of action since the
complaint alleged “illegal demotion” while the decision involved “illegal transfer.”
Prefatorily, we note from the records that there has been no change of cause of action
from “illegal demotion” to “illegal transfer.” Illegal demotion is a type of illegal transfer.
Moreover, it is familiar and fundamental doctrine that it is not the title of the action but
the allegations in the pleading that determines the nature of the action. An employer is
free to regulate, according to his own discretion and judgment, all aspects of
employment, including the transfer of employees. It is the employer’s prerogative,
based on its assessment and perception of its employees’ qualifications, aptitudes, and
competence, to deploy its employees in the various areas of its business operations in
order to ascertain where they will function with maximum benefit to the company. An
employee’s right to security of tenure does not give him such a vested right in his
position as would deprive the company of its prerogative to change his assignment or
transfer him where he will be most useful.

Nonetheless, there are limits to the management prerogative. While it may be

conceded that management is in the best position to know its operational needs, the
exercise of management prerogative cannot be utilized to circumvent the law and
public policy on labor and social justice. That prerogative accorded management
should not defeat the very purpose for which our labor laws exist: to balance the
conflicting interests of labor and management. By its very nature, management
prerogative must be exercised always with the principles of fair play and justice. In
particular, the employer must be able to show that the transfer is not unreasonable,
inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a

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diminution of his salaries, privileges and other benefits. The employer bears the burden
of proving that the transfer of the employee has complied with the foregoing test.

In the present case, we see no credible reason for Paguio’s transfer except his criticisms
of the company’s performance evaluation methods. Based on the undisputed facts,
Garnet Exchange was doing well and excelled in the performance rating. In the same
way, Paguio’s performance was consistently rated as outstanding. There was also no
proof that Paguio refused to comply with any management policy. Patently, his
transfer could not be due to poor performance. Neither was it because he was
needed in the new post for the new assignment was functionless and it was nothing but
a title. Paguio’s transfer could only be caused by the management’s negative
reception of his comments. It is prejudicial to Paguio because it left him out for a
possible promotion as he was assigned to a functionless position with neither office nor
staff.

Hence, transfer was not valid.

Star Paper Corp., vs. Simbol

G.R. No. 164774, April 12, 2006

Facts:
Petitioner Star Paper Corporation is a corporation engaged in trading, principally of
paper products. Josephine Ongsitco is its Manager of the Personnel and Administration
Department while Sebastian Chua is its Managing Director.

Respondents Ronaldo D. Simbol (Simbol), Wilfreda N. Comia (Comia) and Lorna E.

Estrella (Estrella) were all regular employees of the company. Simbol was employed by
the company on October 1993 and met Alma Dayrit, also an employee of the
company, whom he married on June 1998. Prior to the marriage, Ongsitco advised the
couple that should they decide to get married, one of them should resign pursuant to a
company policy. Simbol resigned on June 20, 1998 pursuant to the company policy.

Comia was hired by the company on February 1997. She met Howard Comia, a co-
employee, whom she married on June 1, 2000. Ongsitco likewise reminded them that
pursuant to company policy, one must resign should they decide to get married.
Comia resigned on June 30, 2000.

Estrella was hired on July 29, 1994. She met Luisito Zuñiga (Zuñiga), also a co-worker.
Petitioners stated that Zuñiga, a married man, got Estrella pregnant. The company
allegedly could have terminated her services due to immorality but she opted to resign
on December 21, 1999.

The respondents signed a Release and Confirmation Agreement and stated therein
that they have no money and property accountabilities in the company. Respondents
offer a different version of their dismissal. Respondents later filed a complaint for unfair
labor practice, constructive dismissal, separation pay and attorney’s fees. They averred

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that the aforementioned company policy is illegal and contravenes Article 136 of the
Labor Code.

Labor Arbiter dismissed the complaint and states that the company policy was
decreed pursuant to what the respondent corporation perceived as management
prerogative. On appeal to the NLRC, the Commission affirmed the decision of the
Labor Arbiter. In its assailed Decision dated August 3, 2004, the Court of Appeals
reversed the NLRC decision.

Issue: Whether such company policy violates the Labor Code.

Held:
Such policy violates the fundamental right of an employee. Art 136 of the Labor Code
provides:

Art. 136. It shall be unlawful for an employer to require as a condition of employment or

continuation of employment that a woman employee shall not get married, or to
stipulate expressly or tacitly that upon getting married a woman employee shall be
deemed resigned or separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of her marriage.

With more women entering the workforce, employers are also enacting employment
policies specifically prohibiting spouses from working for the same company. We note
that two types of employment policies involve spouses: policies banning only spouses
from working in the same company (no-spouse employment policies), and those
banning all immediate family members, including spouses, from working in the same
company (anti-nepotism employment policies).

It utilizes two theories of employment discrimination: the disparate treatment and the
disparate impact. Under the disparate treatment analysis, the plaintiff must prove that
an employment policy is discriminatory on its face. No-spouse employment policies
requiring an employee of a particular sex to either quit, transfer, or be fired are facially
discriminatory. On the other hand, to establish disparate impact, the complainants must
prove that a facially neutral policy has a disproportionate effect on a particular class.

Rivera vs. Solidbank

G.R. No. 163269, April 19, 2006

Facts:
Rivera started working with Solidbank Corporation as an audit clerk since July 1, 1977.
Then he was promoted as credit investigator, senior clerk, assistant accountant, and
finally as assistant manager. Prior to his retirement, he became the Manager of the
bank’s Credit Investigation and Appraisal Division of the Consumer's Banking Group. In
the meantime, Rivera and his brother-in-law put up a poultry business in Cavite.

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In December 1994, Solidbank offered two retirement programs to its employees: (a) the
Ordinary Retirement Program (ORP), under which an employee would receive 85% of
his monthly basic salary multiplied by the number of years in service; and (b) the Special
Retirement Program (SRP), under which a retiring employee would receive 250% of the
gross monthly salary multiplied by the number of years in service. Rivera decided to
devote his time and attention to his poultry business in Cavite and applied for
retirement under the SRP. Solidbank approved the application and confirmed his
separation from Solidbank on February 25, 1995. However, Solidbank required Rivera to
sign an undated Release, Waiver and Quitclaim, which was notarized on March 1, 1995.
He acknowledged receipt of the net proceeds of his separation and retirement
benefits and promised that "he would not, at any time, in any manner whatsoever,
directly or indirectly engage in any unlawful activity prejudicial to the interest of
Solidbank, its parent, affiliate or subsidiary companies, their stockholders, officers,
directors, agents or employees, and their successors-in-interest and will not disclose any
information concerning the business of Solidbank, its manner or operation, its plans,
processes, or data of any kind." He also signed in an Undertaking upon which he
promised that "not to seek employment with a competitor bank or financial institution
within one (1) year from February 28, 1995, and that any breach of the Undertaking or
the provisions of the Release, Waiver and Quitclaim would entitle Solidbank to a cause
of action against him before the appropriate courts of law”.

But on May 1, 1995, Rivera got employed with Equitable Banking Corporation
(Equitable) as Manager of its Credit Investigation and Appraisal Division of its
Consumers' Banking Group. Upon learning this, Solidbank wrote a letter dated May 18,
1995, informing Rivera that he had violated the Undertaking and demanded the return
of all the monetary benefits he received in consideration of the SRP within five (5) days
from receipt; otherwise, appropriate legal action would be taken against him.

Issue: Whether the employment ban incorporated in the Undertaking which petitioner
executed upon his retirement is unreasonable, oppressive, hence, contrary to public
policy.

Held:
The SC held that Article 1306 of the New Civil Code provides that the contracting
parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order
or public policy. The freedom of contract is both a constitutional and statutory right. A
contract is the law between the parties and courts have no choice but to enforce such
contract as long as it is not contrary to law, morals, good customs and against public
policy. The well-entrenched doctrine is that the law does not relieve a party from the
effects of an unwise, foolish or disastrous contract, entered into with full awareness of
what he was doing and entered into and carried out in good faith. Such a contract will
not be discarded even if there was a mistake of law or fact. Courts have no jurisdiction
to look into the wisdom of the contract entered into by and between the parties or to
render a decision different therefrom. They have no power to relieve parties from
obligation voluntarily assailed, simply because their contracts turned out to be
disastrous deals.

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In the present case, there is no factual basis to agree with the contention of the
respondent bank. On the face of the Undertaking, the post-retirement competitive
employment ban is unreasonable because it has no geographical limits; respondent is
barred from accepting any kind of employment in any competitive bank within the
proscribed period. Although the period of one year may appear reasonable, the
matter of whether the restriction is reasonable or unreasonable cannot be ascertained
with finality solely from the terms and conditions of the Undertaking, or even in tandem
with the Release, Waiver and Quitclaim.

Undeniably, petitioner retired under the SRP and received P963,619.28 from respondent.
However, petitioner is not proscribed, by waiver or estoppel, from assailing the post-
retirement competitive employment ban since under Article 1409 of the New Civil
Code, those contracts whose cause, object or purpose is contrary to law, morals, good
customs, public order or public policy are inexistent or void from the beginning.

Respondent, as employer, is burdened to establish that a restrictive covenant barring

an employee from accepting a competitive employment after retirement or
resignation is not an unreasonable or oppressive, or in undue or unreasonable restraint
of trade, thus, unenforceable for being repugnant to public policy. There are two
principal grounds on which the doctrine is founded that a contract in restraint of trade
is void as against public policy. One is, the injury to the public by being deprived of the
restricted party’s industry; and the other is, the injury to the party himself by being
precluded from pursuing his occupation, and thus being prevented from supporting
himself and his family.

In cases where an employee assails a contract containing a provision prohibiting him or

her from accepting competitive employment as against public policy, the employer
has to adduce evidence to prove that the restriction is reasonable and not greater
than necessary to protect the employer’s legitimate business interests. The restraint
may not be unduly harsh or oppressive in curtailing the employee’s legitimate efforts to
earn a livelihood and must be reasonable in light of sound public policy.
Courts should carefully scrutinize all contracts limiting a man’s natural right to follow
any trade or profession anywhere he pleases and in any lawful manner. But it is just as
important to protect the enjoyment of an establishment in trade or profession, which its
employer has built up by his own honest application to every day duty and the faithful
performance of the tasks which every day imposes upon the ordinary man. What one
creates by his own labor is his. Freedom to contract must not be unreasonably
abridged. Neither must the right to protect by reasonable restrictions that which a man
by industry, skill and good judgment has built up, be denied.

The Court reiterates that the determination of reasonableness is made on the particular
facts and circumstances of each case. The question of reasonableness of a restraint
requires a thorough consideration of surrounding circumstances, including the subject
matter of the contract, the purpose to be served, the determination of the parties, the
extent of the restraint and the specialization of the business of the employer. The court
has to consider whether its enforcement will be injurious to the public or cause undue

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hardships to the employee, and whether the restraint imposed is greater than
necessary to protect the employer.
Consideration must be given to the employee’s right to earn a living and to his ability to
determine with certainty the area within which his employment ban is restituted. A
provision on territorial limitation is necessary to guide an employee of what constitutes
as violation of a restrictive covenant and whether the geographic scope is co-
extensive with that in which the employer is doing business. In considering a territorial
restriction, the facts and circumstances surrounding the case must be considered.

Thus, in determining whether the contract is reasonable or not, the trial court should
consider the following factors: (a) whether the covenant protects a legitimate business
interest of the employer; (b) whether the covenant creates an undue burden on the
employee; (c) whether the covenant is injurious to the public welfare; (d) whether the
time and territorial limitations contained in the covenant are reasonable; and (e)
whether the restraint is reasonable from the standpoint of public policy.

We are not impervious of the distinction between restrictive covenants barring an

employee to accept a post-employment competitive employment or restraint on trade
in employment contracts and restraints on post-retirement competitive employment in
pension and retirement plans either incorporated in employment contracts or in
collective bargaining agreements between the employer and the union of employees,
or separate from said contracts or collective bargaining agreements which provide
that an employee who accepts post retirement competitive employment will forfeit
retirement and other benefits or will be obliged to restitute the same to the employer.
The strong weight of authority is that forfeitures for engaging in subsequent competitive
employment included in pension and retirement plans are valid even though
unrestricted in time or geography.

A post-retirement competitive employment restriction is designed to protect the

employer against competition by former employees who may retire and obtain
retirement or pension benefits and, at the same time, engage in competitive
employment.

Daisy B. Tiu vs.Platinum Plans Phil., Inc.

G.R. No. 163512 February 28, 2007

Facts:
Tiu was a division marketing director of Platinum plans, a domestic corp. engaged in
the pre need- industry. Tiu was then rehired as senior vice president and territorial
operations head in charge of Hongkong and ASEAN operations. Respondent and
petitioner agreed on and executed a five year contract of employment, on of the
salient features thereof being a non- involvement provision to the effect that during the
employee’s engagement, and two years after separation form the company, the
employee will not engage in or be involved with any corporation or entity whether
directly or indirectly, which is engaged in the same business or belongs to the same pre-

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need industry as the employee. Any breach of this provision by the employee will
render him liable to the employer for liquidated damages in the sum of P100.000.

On September 16 1995, petitioner stopped working for respondent. In November 1995,

she became the Vice- president for sales of another company engaged in the pre –
need industry, the Professional Pension’s Plans, Inc. So, respondent filed a complaint for
damages against petitioner before the RTC of Pasig for violation of non- involvement
clause in the contract of employment.

In response, petitioner argued that the non- involvement clause was unenforceable for
being against public order and public policy because first, it is a restraint much greater
than what is necessary to afford respondent a fair and reasonable protection; Second,
respondent did not invest in petitioners training and improvement as at the time she
was hired she already possessed the knowledge and expertise required in the industry
and respondent benefited tremendously from it; third, a strict application of the clause
would deprive her of the right to engage in the only work she knew.

Issue: Whether or not the said clause is valid.

Held:
As early as 1916, we already had the occasion to discuss the validity of a non-
involvement clause. In Ferrazzini v. Gsell, we said that such clause was unreasonable
restraint of trade and therefore against public policy. InFerrazzini, the employee was
prohibited from engaging in any business or occupation in the Philippines for a period
of five years after the termination of his employment contract and must first get the
written permission of his employer if he were to do so. The Court ruled that while the
stipulation was indeed limited as to time and space, it was not limited as to trade. Such
prohibition, in effect, forces an employee to leave the Philippines to work should his
employer refuse to give a written permission.
In G. Martini, Ltd. v. Glaiserman, we also declared a similar stipulation as void for being
an unreasonable restraint of trade. There, the employee was prohibited from engaging
in any business similar to that of his employer for a period of one year. Since the
employee was employed only in connection with the purchase and export of abaca,
among the many businesses of the employer, the Court considered the restraint too
broad since it effectively prevented the employee from working in any other business
similar to his employer even if his employment was limited only to one of its multifarious
business activities.
However, in Del Castillo v. Richmond, we upheld a similar stipulation as legal,
reasonable, and not contrary to public policy. In the said case, the employee was
restricted from opening, owning or having any connection with any other drugstore
within a radius of four miles from the employer’s place of business during the time the
employer was operating his drugstore. We said that a contract in restraint of trade is
valid provided there is a limitation upon either time or place and the restraint upon one
party is not greater than the protection the other party requires.

Finally, in Consulta v. Court of Appeals, we considered a non-involvement clause in

accordance with Article 1306 of the Civil Code. While the complainant in that case was

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an independent agent and not an employee, she was prohibited for one year from
engaging directly or indirectly in activities of other companies that compete with the
business of her principal. We noted therein that the restriction did not prohibit the agent
from engaging in any other business, or from being connected with any other
company, for as long as the business or company did not compete with the principal’s
business. Further, the prohibition applied only for one year after the termination of the
agent’s contract and was therefore a reasonable restriction designed to prevent acts
prejudicial to the employer.

Conformably then with the aforementioned pronouncements, a non-involvement

clause is not necessarily void for being in restraint of trade as long as there are
reasonable limitations as to time, trade, and place.

In this case, the non-involvement clause has a time limit: two years from the time
petitioner’s employment with respondent ends. It is also limited as to trade, since it only
prohibits petitioner from engaging in any pre-need business akin to respondent’s.

More significantly, since petitioner was the Senior Assistant Vice-President and Territorial
Operations Head in charge of respondent’s Hongkong and Asean operations, she had
been privy to confidential and highly sensitive marketing strategies of respondent’s
business. To allow her to engage in a rival business soon after she leaves would make
respondent’s trade secrets vulnerable especially in a highly competitive marketing
environment. In sum, we find the non-involvement clause not contrary to public welfare
and not greater than is necessary to afford a fair and reasonable protection to
respondent.

In any event, Article 1306 of the Civil Code provides that parties to a contract may
establish such stipulations, clauses, terms and conditions as they may deem convenient,
provided they are not contrary to law, morals, good customs, public order, or public
policy. Article 1159 of the same Code also provides that obligations arising from
contracts have the force of law between the contracting parties and should be
complied with in good faith. Courts cannot stipulate for the parties nor amend their
agreement where the same does not contravene law, morals, good customs, public
order or public policy, for to do so would be to alter the real intent of the parties, and
would run contrary to the function of the courts to give force and effect thereto.15 Not
being contrary to public policy, the non-involvement clause, which petitioner and
respondent freely agreed upon, has the force of law between them, and thus, should
be complied with in good faith.

Duldulao vs. Court of Appeals

G.R. No. 164893, March 1, 2007

Facts:
Constancia P. Duldulao was hired by respondent Baguio Colleges Foundation (BCF) as
secretary/clerk-typist and assigned to the College of Law sometime in June of 1987.

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In August 1996, a certain law student filed a complaint against petitioner for alleged
irregularities in the performance of her work. Petitioner was told to submit her answer to
the complaint and given several extensions within which to do so. Despite the
extensions, she failed to submit her answer. On 1 October 1996, Dean Honorato V.
Aquino of the College of Law informed respondent’s President, Atty. Edilberto B.
Tenefrancia, of petitioner’s failure to file her answer and recommended the assignment
of petitioner outside the College of Law, not only because of such failure to answer but
also her having admitted fraternizing with students of the College. On the same day,
respondent’s Vice President for Administration, Leonardo S. dela Cruz, issued a
Department Order to Mrs. Duldulao informing her of her transfer to the Office of the
Principals of the High School and Elementary Departments.

On 21 January 1997, the Administrative Investigating Committee found the Department

Order appropriate since it was intended to prevent the controversy between petitioner
and the complaining student from adversely affecting a harmonious relationship within
the College of Law among all its constituents. On 17 February 1997, petitioner filed a
complaint for constructive dismissal with prayer for moral and exemplary damages and
attorney’s fees before the NLRC Regional Arbitration Branch-Cordillera Administrative
Region. She stated that aside from being tainted with procedural lapses in violation of
her right to due process, the transfer also amounted to her demotion in rank. The NLRC
dismissed the complaint for lack of merit which decision was affirmed by the Court of
Appeals.

Issue:
Whether petitioner’s transfer as secretary/clerk-typist from the College of Law to the
High School and Elementary Departments amounts to constructive dismissal.

Held:
There was no constructive dismissal.

The SC held that there is constructive dismissal if an act of clear discrimination,

insensibility, or disdain by an employer becomes so unbearable on the part of the
employee that it would foreclose any choice by him except to forego his continued
employment. It exists where there is cessation of work because “continued employment
is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in
rank and a diminution in pay.”

The factual milieu in this case is different. It is the employer’s prerogative, based on its
assessment and perception of its employees’ qualifications, aptitudes, and
competence, to move them around in the various areas of its business operations in
order to ascertain where they will function with maximum benefit to the company. An
employee’s right to security of tenure does not give him such a vested right in his
position as would deprive the company of its prerogative to change his assignment or
transfer him where he will be most useful.

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When his transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it
does not involve a demotion in rank or a diminution of his salaries, benefits, and other
privileges, the employee may not complain that it amounts to a constructive dismissal.
The transfer of petitioner does not amount to a demotion in rank and status.

At the onset, it must be stressed that petitioner has no vested right to the position of
secretary/clerk-typist of the College of Law that may operate to deprive respondent of
its prerogative to change or transfer her assignment to another department where
she will be most useful in its judgment. After all, petitioner was employed by respondent
which is the BCF system itself, not the College of Law only, which is but a component
part of the system. Thus, to respondent belongs the prerogative to reassign petitioner to
any of its departments as it sees fit, provided that such reassignment is made in good
faith.

Petitioner was a secretary/clerk-typist of the College of Law. As such secretary/clerk-

typist, she would only have to perform the same duties in the Office of the Principals of
the High School and Elementary Departments. Petitioner was not denied due process.
Reassignments made by management pending investigation of irregularities allegedly
committed by an employee fall within the ambit of management prerogative. The
transfer, while incidental to the pending charges against petitioner, was not meant to
be a penalty, but rather a preventive measure to avoid further damage to the College
of Law. The purpose of reassignments is no different from that of preventive suspension
which management could validly impose as a measure of protection of the company’s
property pending investigation of any malfeasance or misfeasance committed by the
employee.

Almario vs. Philippine Airlines

G.R. No. 170928, September 11, 2007

Facts:
This is a complaint for reimbursement of training costs filed by PAL against its
pilot, Almario.
Almario was initially hired as a Boeing 747 Systems Engineer. Later on, he successfully bid
for the higher position of Airbus 300 First Officer, for which he was given
additional training at PAL’s expense. After completing the course,Almario served as A-
300 First Officer of PAL but after eight months of service, he tendered his resignation for
“personal reasons.”

PAL then wrote him a letter, stating that they invested heavily on his
professional training on the basis that he continue to serve the Company for a definite
period of time which is approximately 3 yrs. In short, PAL wanted Almario to reconsider
his resignation, otherwise they would be compelled to ask reimbursement for
the training costs from him. Despite this,Almario pushed through with his resignation.
Hence, a reimbursement case was filed.

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In the lower court, PAL invoked the existence of an innominate contract of do ut
facias (I give that you may do) withAlmario in that by spending for his training, he would
render service to it until the costs of training were recovered in at least 3 yrs. They based
the period of “3 yrs” to a decision of the Secretary of Labor concerning PAL’s CBA with
its employee-union.

For his part, Almario denied the existence of any agreement with PAL that he would
render service to it for three years after his training, failing which he would reimburse
the training costs. The lower court ruled in favor of Almario. On appeal, CA
found Almario liable under the CBA and under Article 22 of the Civil Code.

Issue: Whether or not Almario is obliged to reimburse the costs incurred by PAL for
his training

Held:
The petition fails.

The rationale of the three-year period is the prohibitive training costs. At an earlier time,
when the CBA between PAL and its employees were still negotiated, the Secretary of
Labor basically ruled that PAL should be allowed a return on investment for their
pilots’ training expenses. Thus, the provisions that pilots 57 years of age shall be frozen
and pilots less than 57, provided they have previously qualified in any company’s turbo-
jet aircraft, shall be permitted to occupy anyposition in the company’s turbo-jet fleet,
were incorporated in later incarnations of the CBA.

When Almario took the training course, he was about 39 yrs old, 21 yrs away from
the retirement age of 60. Hence, with the maturity, expertise and experience he gained
from the training course, he was expected to serve PAL for at least three yrs to offset
“the prohibitive costs” thereof.

Article 22 of the Civil Code applies. This provision on unjust enrichment recognizes the
principle that one may not enrich himself at the expense of another.

Enrichment of the defendant consists in every patrimonial, physical, or moral

advantage, so long as it is appreciable in money. It may consist of some positive
pecuniary value incorporated into the patrimony of the defendant, such as: (1) the
enjoyment of a thing belonging to the plaintiff; (2) the benefits from service rendered
by the plaintiff to the defendant; (3) the acquisition of a right, whether real or personal;
(4) the increase of value of property of the defendant; (5) the improvement of a right
of the defendant, such as the acquisition of a right of preference; (6) the recognition of
the existence of a right in the defendant; and (7) the improvement of the conditions of
life of the defendant.

The enrichment of the defendant must have a correlative prejudice, disadvantage, or

injury to the plaintiff. This prejudice may consist, not only of the loss of property or the
deprivation of its enjoyment, but also of non-payment of compensation for a prestation
or service rendered to the defendant without intent to donate on the part of the

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plaintiff, or the failure to acquire something which the latter would have obtained. The
injury to the plaintiff, however, need not be the cause of the enrichment of the
defendant. It is enough that there be some relation between them, that
theenrichment of the defendant would not have been produced had it not been for
the fact from which the injury to the plaintiff is derived.

In the present case, PAL invested for the training of Almario on the expectation that
they may recover by availing ofAlmario’s services for at least three years. This
expectation was not fully realized, however, due to Almario’s resignation after only
eight months of service following the completion of his training course. He cannot,
therefore, refuse to reimburse the costs of training without violating the principle of
unjust enrichment.

Bisig Manggagawa sa Tryco vs. NLRC

G.R. No. 151309, Oct. 15, 2008

Facts:
Petitioners are employees of Tryco Pharmaceuticals Corporation, maker of veterinary
medicines and products. Tryco and the petitioners signed a Memorandum of
Agreement (MOA), providing for a compressed workweek schedule to be implemented
in the company effective May 20, 1996. The MOA was entered into pursuant to
Department of Labor and Employment Department Order (D.O.) No. 21, Series of
1990, Guidelines on the Implementation of Compressed Workweek.

As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be
considered as the regular working hours, and no overtime pay shall be due and
payable to the employee for work rendered during those hours. The MOA specifically
stated that the employee waives the right to claim overtime pay for work rendered
after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the compressed
workweek schedule is adopted in lieu of the regular workweek schedule which also
consists of 46 hours. However, should an employee be permitted or required to work
beyond 6:12 p.m., such employee shall be entitled to overtime pay. Tryco informed the
Bureau of Working Conditions of the Department of Labor and Employment of the
implementation of a compressed workweek in the company. In January 1997, BMT and
Tryco negotiated for the renewal of their collective bargaining agreement (CBA) but
failed to arrive at a new agreement. Meantime, Tryco received the Letter dated March
26, 1997 from the Bureau of Animal Industry of the Department of Agriculture reminding
it that its production should be conducted in San Rafael, Bulacan, not in Caloocan City
since its operating permit was licensed there. Accordingly, Tryco issued a
Memorandum dated April 7, 1997 which directed petitioners to report to the company's
plant site in Bulacan. BMT opposed the transfer of its members to San Rafael, Bulacan,
contending that it constitutes unfair labor practice. In protest, BMT declared a strike on
May 26, 1997. Petitioners then filed their complaints to the labor arbiter alleging that
Tryco negotiated in bad faith and unfair labor practice of Tryco by transferring the
members of the union in order to paralyze it and that therefore it amounted to
constructive dismissal.

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Issue: WON there was constructive dismissal due to the transfer of the petitioners from
Caloocan City to San Rafael Bulacan

Held:
The petition has no merit.

Tryco's decision to transfer its production activities to San Rafael, Bulacan, regardless of
whether it was made pursuant to the letter of the Bureau of Animal Industry, was within
the scope of its inherent right to control and manage its enterprise effectively. While the
law is solicitous of the welfare of employees, it must also protect the right of an
employer to exercise what are clearly management prerogatives. The free will of
management to conduct its own business affairs to achieve its purpose cannot be
denied.

This prerogative extends to the management's right to regulate, according to its own
discretion and judgment, all aspects of employment, including the freedom to transfer
and reassign employees according to the requirements of its business.Management's
prerogative of transferring and reassigning employees from one area of operation to
another in order to meet the requirements of the business is, therefore, generally not
constitutive of constructive dismissal. Thus, the consequent transfer of Tryco's personnel,
assigned to the Production Department was well within the scope of its management
prerogative.

When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee,

and it does not involve a demotion in rank or diminution of salaries, benefits, and other
privileges, the employee may not complain that it amounts to a constructive dismissal.
However, the employer has the burden of proving that the transfer of an employee is
for valid and legitimate grounds. The employer must show that the transfer is not
unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a
demotion in rank or a diminution of his salaries, privileges and other benefits.

Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or
diminution of salaries, benefits and other privileges of the petitioners. Petitioners,
therefore, anchor their objection solely on the ground that it would cause them great
inconvenience since they are all residents of Metro Manila and they would incur
additional expenses to travel daily from Manila to Bulacan.

The Court has previously declared that mere incidental inconvenience is not sufficient
to warrant a claim of constructive dismissal. Objection to a transfer that is grounded
solely upon the personal inconvenience or hardship that will be caused to the
employee by reason of the transfer is not a valid reason to disobey an order of transfer.

Manila Electric Co. vs. Lim

G.R. No. 184769; October 5, 2010

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Facts:
Rosario G. Lim (respondent), also known as Cherry Lim, is an administrative clerk at the
Manila Electric Company (MERALCO). On June 4, 2008, an anonymous letter was
posted at the door of the Metering Office of the Administration building of MERALCO
Plaridel, Bulacan Sector, at which respondent is assigned, denouncing respondent. The
letter reads:

Cherry Lim:
MATAPOS MONG LAMUNIN LAHAT NG BIYAYA NG MERALCO, NGAYON NAMAN AY
GUSTO MONG PALAMON ANG BUONG KUMPANYA SA MGA BUWAYA NG GOBYERNO.
KAPAL NG MUKHA MO, LUMAYAS KA RITO, WALANG UTANG NA LOOB

Resource Staffing, directed the transfer of respondent to MERALCO's Alabang Sector in

Muntinlupa as "A/F OTMS Clerk," effective July 18, 2008 in light of the receipt of ". . .
reports that there were accusations and threats directed against her from unknown
individuals and which could possibly compromise her safety and security."

Respondent, by letter of July 10, 2008 addressed to petitioner Ruben A. Sapitula, Vice-
President and Head of MERALCO's Human Resource Administration, appealed her
transfer and requested for a dialogue so she could voice her concerns and misgivings
on the matter, claiming that the "punitive" nature of the transfer amounted to a denial
of due process. Citing the grueling travel from her residence in Pampanga to Alabang
and back entails, and violation of the provisions on job security of their Collective
Bargaining Agreement (CBA).
Respondent filed a petition for the issuance of a writ of habeas data against petitioners
before the Regional Trial Court (RTC) of Bulacan. By respondent's allegation,
petitioners' unlawful act and omission consisting of their continued failure and refusal to
provide her with details or information about the alleged report which MERALCO
purportedly received concerning threats to her safety and security amount to a
violation of her right to privacy in life, liberty and security, correctible by habeas data.

Respondent is essentially questioning the transfer of her place of work by her

employer and the terms and conditions of her employment which arise from an
employer-employee relationship over which the NLRC and the Labor Arbiters under
Article 217 of the Labor Code have jurisdiction.

Petitioners moved for the dismissal of the petition and recall of the TRO on the grounds
that, inter alia, resort to a petition for writ of habeas data was not in order; and the RTC
lacked jurisdiction over the case which properly belongs to the NLRC.

Issue: Whether or not, RTC has jurisdiction.

Held:

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Respondent's plea that she be spared from complying with MERALCO's Memorandum
directing her reassignment to the Alabang Sector, under the guise of a quest for
information or data allegedly in possession of petitioners, does not fall within the
province of a writ of habeas data.

It is evident that respondent's reservations on the real reasons for her transfer — a
legitimate concern respecting the terms and conditions of one's employment — are
what prompted her to adopt the extraordinary remedy of habeas data. Jurisdiction
over such concerns is inarguably lodged by law with the NLRC and the Labor Arbiters.

Bello vs. Bonifacio Security Services, Inc.

G.R. No. 188086; August 3, 2011

Facts:
Respondent Bonifacio Security Services, Inc. (BSSI) is a domestic private corporation
engaged in the business of providing security services. In July 2001, the BSSI hired Bello
as a roving traffic marshal to manage traffic and to conduct security and safety-related
operations in the Bonifacio Global City (BGC). In August 2001, Bello was posted at the
Negros Navigation Company in Pier 2, North Harbor, to supervise sectoral operations. In
November 2001, he was assigned at BGC as assistant detachment commander. After a
week, he was transferred to Pacific Plaza Towers as assistant detachment commander
and later as detachment commander. In June 2002, he was assigned at Pier 2, North
Harbor as assistant detachment commander, but later reassigned to BGC. In August
2002, the BSSI hired a new operations manager, resulting in the reorganization of posts.
In October 2002, Bello was assigned as roving traffic marshal at the BGC. On October
25, 2002, he filed an indefinite leave of absence when his new assignment took effect.

On November 5, 2002, Bello filed a complaint against the BSSI and its General Manager,
respondent Samuel Tomas, with the National Labor Relations
Commission (NLRC), claiming that he had been constructively dismissed when he was
demoted from a detachment commander to a mere traffic marshal. He alleged that
he received a series of promotions from 2001 to 2002, from traffic marshal to supervisor,
to assistant detachment commander, and to detachment commander.

The BSSI denied Bello's claim of constructive dismissal, arguing that no promotion took
place; Bello's designation as assistant detachment commander or detachment
commander was not an employment position but a duty-related assignment; Bello
abandoned his job when he went on an indefinite leave of absence and did not report
for work.

Labor Arbiter Cresencio G. Ramos, Jr. found that Bello was illegally dismissed, noting
that the BSSI failed to adduce evidence that Bello abandoned his employment.

In its March 26, 2008 resolution, the NLRC affirmed the labor arbiter's decision, finding
that Bello had been constructively dismissed when he was demoted to the rank-and-file

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position of traffic marshal after occupying the supervisory position of assistant
detachment commander and detachment commander.
The CA nullified the NLRC resolutions, finding the records bereft of evidence
substantiating the labor arbiter's and the NLRC's conclusions that Bello had been
constructively dismissed. It noted that Bello offered no evidence to prove that there
was a series of promotions that would justify his claim of subsequent demotion. The CA
denied the BSSI's motion for reconsideration, paving the way for the present petition.

Issue: Whether or not, Bello was illegally dismissed.

Held:
We find no reason to disturb the CA conclusion that there was no constructive dismissal.
Case law defines constructive dismissal as a cessation of work because continued
employment has been rendered impossible, unreasonable, or unlikely, as when there is
a demotion in rank or diminution in pay, or both, or when a clear discrimination,
insensibility, or disdain by an employer becomes unbearable to the employee.
Other than his bare and self-serving allegations, Bello has not offered any evidence that
he was promoted in a span of four months since his employment as traffic marshal in
July 2001 to a detachment commander in November 2001. During his six-month
probationary period of employment, it is highly improbable that Bello would be
promoted after just a month of employment, from a traffic marshal in July 2001 to
supervisor in August 2001, and three months later to assistant detachment commander
and to detachment commander in November 2001. At most, the BSSI merely changed
his assignment or transferred him to the post where his service would be most beneficial
to its clients. The management's prerogative of transferring and reassigning employees
from one area of operation to another in order to meet the requirements of the business
is generally not constitutive of constructive dismissal. We see this to be the case in the
present dispute so that the consequent reassignment of Bello to a traffic marshal post
was well within the scope of the BSSI's management prerogative.

Alert Security vs. Pasawilan

G.R. No. 182397, September 14, 2011

Facts:
Respondents Saidali Pasawilan, Wilfredo Verceles and Melchor Bulusan were all
employed by petitioner Alert Security and Investigation Agency, Inc. (Alert Security) as
security guards beginning March 31, 1996, January 14, 1997, and January 24, 1997,
respectively. They were paid 165.00 pesos a day as regular employees, and assigned at
the Department of Science and Technology (DOST) pursuant to a security service
contract between the DOST and Alert Security.

Respondents aver that because they were underpaid, they filed a complaint for money
claims against Alert Security and its president and general manager, petitioner Manuel
D. Dasig, before Labor Arbiter Ariel C. Santos. As a result of their complaint, they were
relieved from their posts in the DOST and were not given new assignments despite the

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lapse of six months. On January 26, 1999, they filed a joint complaint for illegal dismissal
against petitioners.

Petitioners, on the other hand, deny that they dismissed the respondents. Petitioners
presented "Duty Detail Orders" that Alert Security issued to show that respondents were
in fact assigned to LRTA. Respondents, however, failed to report at the LRTA and
instead kept loitering at the DOST and tried to convince other security guards to file
complaints against Alert Security. Thus, on August 3, 1998, Alert Security filed a
"termination report" with the Department of Labor and Employment relative to the
termination of the respondents.

Issue: Whether respondents were illegally dismissed

Held:
We rule in the affirmative.

As a rule, employment cannot be terminated by an employer without any just or

authorized cause. No less than the 1987 Constitution in Section 3, Article 13 guarantees
security of tenure for workers and because of this, an employee may only be
terminated for just or authorized causes that must comply with the due process
requirements mandated by law. Hence, employers are barred from arbitrarily removing
their workers whenever and however they want. The law sets the valid grounds for
termination as well as the proper procedure to take when terminating the services of an
employee.

Although we recognize the right of employers to shape their own work force, this
management prerogative must not curtail the basic right of employees to security of
tenure. There must be a valid and lawful reason for terminating the employment of a
worker. Otherwise, it is illegal and would be dealt with by the courts accordingly.

The Labor Code, as amended, enumerates several just and authorized causes for a
valid termination of employment. An employee asserting his right and asking for
minimum wage is not among those causes. Dismissing an employee on this ground
amounts to retaliation by management for an employee’s legitimate grievance without
due process. Such stroke of retribution has no place in Philippine Labor Laws.

On the element of the failure of the employee to report for work, we also cannot
accept the allegations of petitioners that respondents unjustifiably refused to report for
duty in their new posts. A careful review of the records reveals that there is no showing
that respondents were notified of their new assignments. Granting that the "Duty Detail
Orders" were indeed issued, they served no purpose unless the intended recipients of
the orders are informed of such.

The employer cannot simply conclude that an employee is ipso facto notified of a
transfer when there is no evidence to indicate that the employee had knowledge of
the transfer order. Hence, the failure of an employee to report for work at the new
location cannot be taken against him as an element of abandonment.

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We acknowledge and recognize the right of an employer to transfer employees in the
interest of the service. This exercise is a management prerogative which is a lawful right
of an employer. However, like all rights, there are limitations to the right to transfer
employees. As ruled in the case of Blue Dairy Corporation v. NLRC:

x x x The managerial prerogative to transfer personnel must be exercised without grave

abuse of discretion, bearing in mind the basic elements of justice and fair play. Having
the right should not be confused with the manner in which that right is exercised. Thus, it
cannot be used as a subterfuge by the employer to rid himself of an undesirable
worker. In particular, the employer must be able to show that the transfer is not
unreasonable, inconvenient or prejudicial to the employee; nor does it involve a
demotion in rank or a diminution of his salaries, privileges and other benefits. x x x

In addition to these tests for a valid transfer, there should be proper and effective
notice to the employee concerned. It is the employer’s burden to show that the
employee was duly notified of the transfer. Verily, an employer cannot reasonably
expect an employee to report for work in a new location without first informing said
employee of the transfer. Petitioners’ insistence on the sufficiency of mere issuance of
the transfer order is indicative of bad faith on their part.

Manila Pavilion Hotel vs. Delada

G.R. No. 189947, January 25, 2011

Facts:
Delada was the Union President of the Manila Pavilion Supervisors Association at MPH.
He was originally assigned as Head Waiter of Rotisserie, a fine-dining restaurant
operated by petitioner. Pursuant to a supervisory personnel reorganization program,
MPH reassigned him as Head Waiter of Seasons Coffee Shop, another restaurant
operated by petitioner at the same hotel. Respondent declined the inter-outlet transfer
and instead asked for a 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.

MPH replied and told respondent to report to his new assignment for the time being,
without prejudice to the resolution of the grievance involving the transfer. He
adamantly refused to assume his new post at the Seasons Coffee Shop and instead
continued to report to his previous assignment at Rotisserie. Thus, MPH sent him several
memoranda on various dates, requiring him to explain in writing why he should not be
penalized for the following offenses: serious misconduct; willful disobedience of the
lawful orders of the employer; gross insubordination; gross and habitual neglect of
duties; and willful breach of trust. Despite the notices from MPH, Delada persistently
rebuffed orders for him to report to his new assignment. According to him, since the
grievance machinery under their CBA had already been initiated, his transfer must be
held in abeyance. Thus, on 9 May 2007, MPH initiated administrative proceedings
against him.

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Issue: WON MPH retained the authority to continue with the administrative case against
Delada for insubordination and willful disobedience of the transfer order.

Held:
MPH did not lose its authority to discipline respondent for his continued refusal to report
to his new assignment.

In Allied Banking Corporation, employer Allied Bank reassigned respondent Galanida

from its Cebu City branch to its Bacolod and Tagbilaran branches. He refused to follow
the transfer order and instead filed a Complaint before the Labor Arbiter for
constructive dismissal. While the case was pending, Allied Bank insisted that he report to
his new assignment. When he continued to refuse, it directed him to explain in writing
why no disciplinary action should be meted out to him. Due to his continued refusal to
report to his new assignment, Allied Bank eventually terminated his services. When the
issue of whether he could validly refuse to obey the transfer orders was brought before
this Court, we ruled thus:
The refusal to obey a valid transfer order constitutes willful disobedience of a lawful
order of an employer.1âwphi1 Employees may object to, negotiate and seek redress
against employers for rules or orders that they regard as unjust or illegal. However, until
and unless these rules or orders are declared illegal or improper by competent
authority, the employees ignore or disobey them at their peril. For Galanida’s continued
refusal to obey Allied Bank's transfer orders, we hold that the bank dismissed Galanida
for just cause in accordance with Article 282(a) of the Labor Code. Galanida is thus not
entitled to reinstatement or to separation pay.

It is important to note what the PVA said on Delada’s defiance of the transfer order:

In fact, Delada cannot hide under the legal cloak of the grievance machinery of the
CBA or the voluntary arbitration proceedings to disobey a valid order of transfer from
the management of the hotel. While it is true that Delada’s transfer to Seasons is the
subject of the grievance machinery in accordance with the provisions of their CBA,
Delada is expected to comply first with the said lawful directive while awaiting the
results of the decision in the grievance proceedings. This issue falls squarely in the case
of Allied Banking Corporation vs. Court of Appeals x x x.

Pursuant to Allied Banking, unless the order of MPH is rendered invalid, there is a
presumption of the validity of that order. Since the PVA eventually ruled that the
transfer order was a valid exercise of management prerogative, we hereby reverse the
Decision and the Resolution of the CA affirming the Decision of the PVA in this respect.
MPH had the authority to continue with the administrative proceedings for
insubordination and willful disobedience against Delada and to impose on him the
penalty of suspension. As a consequence, petitioner is not liable to pay back wages
and other benefits for the period corresponding to the penalty of 90-day suspension.

Barba vs. Liceo de Cagayan University

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G.R. No. 193857; November 28, 2012

Facts:
Petitioner started working for respondent on July 8, 1993 as medical officer/school
physician for a period of one school year or until March 31, 1994and she was chosen by
respondent to be the recipient of a scholarship grant to pursue a three-year residency
training in Rehabilitation Medicine at the Veterans Memorial Medical Center (VMMC)
provided that after the duration of her study and training the petitioner shall serve the
SCHOOL in whatever position the SCHOOL desires related to the SCHOLAR's studies for
a period of not less than ten (10) years;

After completing her residency training with VMMC in June 1997, petitioner returned to
continue working for respondent until she was appointed as Dean of Physical Therapy
effective July 1, 2002 for a period of three (3) years unless sooner revoked for a valid
cause.

Due to the low number of enrollees, respondent decided to freeze the operation of the
College of Physical Therapy indefinitely thus, respondent's President Dr. Rafaelita Pelaez-
Golez wrote petitioner a letter dated March 16, 2005 informing her that her services as
dean of the said college will end at the close of the school year. Thereafter, the
College of Physical Therapy ceased operations on March 31, 2005, and petitioner went
on leave without pay starting on April 9, 2005.

Subsequently, respondent’s Executive Vice President, Dr. Marian M. Lerin, through Dr.
Glory S. Magdale, respondent's Vice President for Academic Affairs repeatedly sent
letters to the petitioner directing her to report to the College of Nursing for her teaching
load to wit:

 Letter dated April 27, 2005 instructing petitioner to return to work on June 1, 2005
wherein the latter responded that she has not committed to teach in the
College of Nursing and that as far as she can recall, her employment is not
dependent on any teaching load.
 Letter dated June 21, 2005, directing petitioner to report for work and to teach
her assigned subjects on or before June 23, 2005, otherwise, she will be dismissed
from employment on the ground of abandonment wherein the latter replied
through counsel, that teaching in the College of Nursing is in no way related to
her scholarship and training in the field of rehabilitation medicine. Petitioner
added that coercing her to become a faculty member from her position as
College Dean is a great demotion which amounts to constructive dismissal.
 Letter dated June 24, 2005 ordering her to report for work as she was still bound
by the Scholarship Contract to serve respondent for two more years which
petitioner refused to heed.

On June 22, 2005, , petitioner filed a complaint before the Labor Arbiter for illegal
dismissal, payment of separation pay and retirement benefits against respondent, Dr.
Magdale and Dr. Golez. She alleged that her transfer to the College of Nursing as a
faculty member is a demotion amounting to constructive dismissal.

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June 28, 2005, Dr. Magdale sent petitioner a notice terminating her services on the
ground of abandonment.

Issue: Whether or not the petitioner’s transfer to the College of Nursing as faculty
member is a demotion amounting to constructive dismissal

Held:
In constructive dismissal cases, the employer has the burden of proving that its conduct
and action or the transfer of an employee are for valid and legitimate grounds such as
genuine business necessity. Particularly, for a transfer not to be considered a
constructive dismissal, the employer must be able to show that such transfer is not
unreasonable, inconvenient, or prejudicial to the employee. In this case, petitioner's
transfer was not unreasonable, inconvenient or prejudicial to her. On the contrary, the
assignment of a teaching load in the College of Nursing was undertaken by respondent
to accommodate petitioner following the closure of the College of Physical Therapy.
Respondent further considered the fact that petitioner still has two years to serve the
university under the Scholarship Contract.

Petitioner's subsequent transfer to another department or college is not tantamount to

demotion as it was a valid transfer. There is therefore no constructive dismissal to speak
of. That petitioner ceased to enjoy the compensation, privileges and benefits as
College Dean was but a logical consequence of the valid revocation or termination of
such fixed-term position. Indeed, it would be absurd and unjust for respondent to
maintain a deanship position in a college or department that has ceased to exist.
Under the circumstances, giving petitioner a teaching load in another
College/Department that is related to Physical Therapy — thus enabling her to serve
and complete her remaining two years under the Scholarship Contract — is a valid
exercise of management prerogative on the part of respondent.

Best Wear Garments vs. De Lemos

G.R. no. 191281; December 5, 2012

Facts:
Petitioner Best Wear Garments is a sole proprietorship represented by its General
Manager Alex Sitosta. Respondents Cecile M. Ocubillo and Adelaida B. De Lemos were
hired as sewers on piece-rate basis by petitioners on October 27, 1993 and July 12, 1994,
respectively.

De Lemos claimed that after two months in her new assignment, she was able to adjust
but Sitosta again transferred her to a "different operation where she could not earn
much as before because by-products require long period of time to finish." She averred
that the reason for her transfer was her refusal "to render [overtime work] up to 7:00
p.m."

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On her part, Ocubillo alleged that her transfer was precipitated by her having "incurred
excessive absences since 2001." Her absences were due to the fact that her father
became very sick since 2001 until his untimely demise on November 9, 2003; aside from
this, she herself became very sickly. She claimed that from September to October 2003,
Sitosta assigned her to different machines "whichever is available" and that "there were
times, she could not earn for a day because there was no available machine to use."

On May 20, 2004, De Lemos filed a complaint for illegal dismissal with prayer for
backwages and other accrued benefits, separation pay, service incentive leave pay
and attorney's fees. A similar complaint was filed by Ocubillo on June 10, 2004. Both
alleged in their position paper that in August 2003, Sitosta arbitrarily transferred them to
other areas of operation of petitioner's garments company, which they said amounted
to constructive dismissal as it resulted in less earnings for them.

Respondent company points out that it is engaged in the business of garments

manufacturing as a sub-contractor. That, the kind of work it performs is dependent into
with its client which specifies the work it has to perform. And, that corollary thereto, the
work to be performed by its employees will depend on the work specifications in the
contract. Thus, if complainants have been assigned to different operations, it was
pursuant to the requirements of its contracts. As to the allegation of respondents that
the reason for their transfer was their refusal to render overtime work until 7:00 p.m.,
petitioners asserted that respondents are piece-rate workers and hence they are not
paid according to the number of hours worked.

Issue: Whether or not deployment of sewers to work on different types of garments as is

arbitrary and constitute constructive dismissal

Held:
The right of employees to security of tenure does not give them vested rights to their
positions to the extent of depriving management of its prerogative to change their
assignments or to transfer them. Thus, an employer may transfer or assign employees
from one office or area of operation to another, provided there is no demotion in rank
or diminution of salary, benefits, and other privileges, and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion
without sufficient cause.

In Blue Dairy Corporation v. NLRC, we held that:

The managerial prerogative to transfer personnel must be exercised without grave

abuse of discretion, bearing in mind the basic elements of justice and fair play. Having
the right should not be confused with the manner in which that right is exercised. Thus, it
cannot be used as a subterfuge by the employer to rid himself of an undesirable
worker. In particular, the employer must be able to show that the transfer is not
unreasonable, inconvenient or prejudicial to the employee; nor does it involve a
demotion in rank or a diminution of his salaries, privileges and other benefits. Should the
employer fail to overcome this burden of proof, the employee's transfer shall be
tantamount to constructive dismissal, which has been defined as a quitting because

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continued employment is rendered impossible, unreasonable or unlikely; as an offer
involving a demotion in rank and diminution in pay. Likewise, constructive dismissal exists
when an act of clear discrimination, insensibility or disdain by an employer has become
so unbearable to the employee leaving him with no option but to forego with his
continued employment.

Being piece-rate workers assigned to individual sewing machines, respondents' earnings

depended on the quality and quantity of finished products. That their work output
might have been affected by the change in their specific work assignments does not
necessarily imply that any resulting reduction in pay is tantamount to constructive
dismissal. Workers under piece-rate employment have no fixed salaries and their
compensation is computed on the basis of accomplished tasks. As admitted by
respondent De Lemos, some garments or by-products took a longer time to finish so
they could not earn as much as before. Also, the type of sewing jobs available would
depend on the specifications made by the clients of petitioner company. Under these
circumstances, it cannot be said that the transfer was unreasonable, inconvenient or
prejudicial to the respondents. Such deployment of sewers to work on different types of
garments as dictated by present business necessity is within the ambit of management
prerogative which, in the absence of bad faith, ill motive or discrimination, should not
be interfered with by the courts.

Royal Plant Workers Union vs. Coca-Cola Bottlers Phils., Inc. -Cebu Plant
G.R. No. 198783, April 15, 2013

Facts:
Under the employ of each bottling plant are bottling operators. In the case of the plant
in Cebu City, there are 20 bottling operators who work for its Bottling Line 1 while there
are 12-14 bottling operators who man its Bottling Line 2. All of them are male and they
are members of herein respondent Royal Plant Workers Union (ROPWU).

The bottling operators work in two shifts. The first shift is from 8 a.m. to 5 p.m. and the
second shift is from 5 p.m. up to the time production operations is finished. Thus, the
second shift varies and may end beyond eight (8) hours. However, the bottling
operators are compensated with overtime pay if the shift extends beyond eight (8)
hours. For Bottling Line 1, 10 bottling operators work for each shift while 6 to 7 bottling
operators work for each shift for Bottling Line 2.

Each shift has rotations of work time and break time. Prior to September 2008, the
rotation is this: after two and a half (2 1/2) hours of work, the bottling operators are
given a 30-minute break and this goes on until the shift ends. In September 2008 and up
to the present, the rotation has changed and bottling operators are now given a 30-
minute break after one and one half (1 1/2) hours of work.
In 1974, the bottling operators of then Bottling Line 2 were provided with chairs upon
their request. In 1988, the bottling operators of then Bottling Line 1 followed suit and
asked to be provided also with chairs. Their request was likewise granted. Sometime in
September 2008, the chairs provided for the operators were removed pursuant to a

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national directive of petitioner. With this task of moving constantly to check on the
machinery and equipment assigned to him, a bottling operator does not need a chair
anymore, hence, petitioner's directive to remove them. Furthermore, CCBPI rationalized
that the removal of the chairs is implemented so that the bottling operators will avoid
sleeping, thus, prevent injuries to their persons.
The bottling operators took issue with the removal of the chairs.
Issue: Whether or not the removal of the bottling operators' chairs from CCBPI's
production/manufacturing lines a valid exercise of a management prerogative

Held:
Yes.
The Court has held that management is free to regulate, according to its own discretion
and judgment, all aspects of employment, including hiring, work assignments, working
methods, time, place, and manner of work, processes to be followed, supervision of
workers, working regulations, transfer of employees, work supervision, lay-off of workers,
and discipline, dismissal and recall of workers. The exercise of management
prerogative, however, is not absolute as it must be exercised in good faith and with due
regard to the rights of labor.

In the present controversy, it cannot be denied that CCBPI removed the operators'
chairs pursuant to a national directive and in line with its "I Operate, I Maintain, I Clean"
program, launched to enable the Union to perform their duties and responsibilities more
efficiently. The chairs were not removed indiscriminately. They were carefully studied
with due regard to the welfare of the members of the Union. The removal of the chairs
was compensated by: a) a reduction of the operating hours of the bottling operators
from a two-and-one-half (2 1/2)-hour rotation period to a one-and-a-half (1 1/2) hour
rotation period; and b) anincrease of the break period from 15 to 30 minutes between
rotations.

Apparently, the decision to remove the chairs was done with good intentions as CCBPI
wanted to avoid instances of operators sleeping on the job while in the performance of
their duties and responsibilities and because of the fact that the chairs were not
necessary considering that the operators constantly move about while working. In short,
the removal of the chairs was designed to increase work efficiency. Hence, CCBPI's
exercise of its management prerogative was made in good faith without doing any
harm to the workers' rights.

The rights of the Union under any labor law were not violated. There is no law that
requires employers to provide chairs for bottling operators. Further, The operators' chairs
cannot be considered as one of the employee benefits covered in Article 100 of the
Labor Code. In the Court's view, the term "benefits" mentioned in the non-diminution
rule refers to monetary benefits or privileges given to the employee with monetary
equivalents. Such benefits or privileges form part of the employees' wage, salary or
compensation making them enforceable obligations

Peckson vs. Robinsons Supermarket Corp.

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G.R. No. 198534, July 3, 2013

Facts:
The petitioner first joined the Robinsons Supermarket Corporation (RSC) as a Sales Clerk
on November 3, 1987. On October 26, 2006, she was holding the position of Category
Buyer when respondent Roena Sarte (Sarte), RSC's Assistant Vice-President for
Merchandising, reassigned her to the position of Provincial Coordinator, effective
November 1, 2006. Claiming that her new assignment was a demotion because it was
non-supervisory and clerical in nature, the petitioner refused to turn over her
responsibilities to the new Category Buyer, or to accept her new responsibilities as
Provincial Coordinator.

Issue: Whether or not petitioner’s lateral transfer from Category Buyer to Provincial
Coordinator is considered a demotion amounting to constructive dismissal

Held:
Under the doctrine of management prerogative, every employer has the inherent right
to regulate, according to his own discretion and judgment, all aspects of employment,
including hiring, work assignments, working methods, the time, place and manner of
work, work supervision, transfer of employees, lay-off of workers, and discipline,
dismissal, and recall of employees. The only limitations to the exercise of this prerogative
are those imposed by labor laws and the principles of equity and substantial justice.

Concerning the transfer of employees, these are the following jurisprudential guidelines:
(a) a transfer is a movement from one position to another of equivalent rank, level or
salary without break in the service or a lateral movement from one position to another
of equivalent rank or salary; (b) the employer has the inherent right to transfer or
reassign an employee for legitimate business purposes; (c) a transfer becomes unlawful
where it is motivated by discrimination or bad faith or is effected as a form of
punishment or is a demotion without sufficient cause; (d) the employer must be able to
show that the transfer is not unreasonable, inconvenient, or prejudicial to the
employee.

If the transfer of an employee is not unreasonable, or inconvenient, or prejudicial to

him, and it does not involve a demotion in rank or a diminution of his salaries,
benefits and other privileges, the employee may not complain that it amounts to a
constructive dismissal.
The respondents had the burden of proof that the transfer of the petitioner was not
tantamount to constructive dismissal. The respondents have discharged the burden of
proof that the transfer of the petitioner was not tantamount to constructive dismissal.

In the case at bar, we agree with the appellate court that there is substantial showing
that the transfer of the petitioner from Category Buyer to Provincial Coordinator was not
unreasonable, inconvenient, or prejudicial to her. The petitioner failed to dispute that
the job classifications of Category Buyer and Provincial Coordinator are similar, or that
they command a similar salary structure and responsibilities. We agree with the NLRC
that the Provincial Coordinator's position does not involve mere clerical functions but

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requires the exercise of discretion from time to time, as well as independent judgment,
since the Provincial Coordinator gives appropriate recommendations to management
and ensures the faithful implementation of policies and programs of the company. It
even has influence over a Category Buyer because of its recommendatory function
that enables the Category Buyer to make right decisions on assortment, price and
quantity of the items to be sold by the store.

ICT Marketing Services vs. Sales, GR No. 202090, Sept 9, 2015

Facts: ICT is a duly registered domestic corporation engaged in the business of

providing outsourced customer relations management and business process
outsourcing solutions to various clients in government and in the financial services,
insurance, telecommunications, health care, information technology, media,
energy, and hospitality industries.

ICT hired respondent Mariphil L. Sales as its Customer Service Representative

(CSR) or Telephone Service Representative (TSR), and assigned her to its Capital
One account. Mariphil became a regular employee, and her monthly base salary
was increased to P16,350.00 and she was given monthly transportation and meal
allowances.

She was then assigned to the Washington Mutual account, where she was awarded
with a certificate for being the "Top Converter/Seller (Second Place.

She wrote to Glen Odom (Odom) - ICT's Vice President - complaining about
supposed irregularities in the handling of funds entrusted to ICT by Washington
Mutual which were intended for distribution to outstanding Washington Mutual CSRs
and TSRs as prizes and incentives. However, no action appears to have been taken
on her complaint.

Mariphil was then transferred to the Bank of America. Without prior notice
to Mariphil, ICT scheduled her for training on the very same day of her transfer. On
the third day of training, Mariphil was unable to attend. When she reported for
training the next day, she was informed that she could not be certified to handle
calls for Bank of America due to her failure to complete the training. From then
on, she was placed on "floating status" and was not given any work assignment.
Then Mariphil eventually resigned.

Issue: WON respondent's transfer to another account was done as a valid exercise
of management prerogative

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Held: NO. Under the doctrine of management prerogative, every employer has the
inherent right to regulate, according to his own discretion and judgment, all aspects
of employment, including hiring, work assignments, working methods, the time,
place and manner of work, work supervision, transfer of employees, lay-off of
workers, and discipline, dismissal, and recall of employees. The only limitations
to the exercise of this prerogative are those imposed by labor laws and the
principles of equity and substantial justice.

While the law imposes many obligations upon the employer, nonetheless, it also
protects the employer's right to expect from its employees not only good
performance, adequate work, and diligence, but also good conduct and loyalty, hi
fact, the Labor Code does not excuse employees from complying with valid
company policies and reasonable regulations for their governance and guidance.

Concerning the transfer of employees, these are the following jurisprudential

guidelines: (a) a transfer is a movement from one position to another of equivalent
rank, level or salary without break in the service or a lateral movement from one
position to another of equivalent rank or salary; (b) the employer has the inherent
right to transfer or reassign an employee for legitimate business purposes; (c) a
transfer becomes unlawful where it is motivated by discrimination or bad faith or is
effected as a form of punishment or is a demotion without sufficient cause; (d) the
employer must be able to show that the transfer is not unreasonable, inconvenient,
or prejudicial to the employee.42chanrobleslaw

While the prerogative to transfer respondent to another account belonged

to petitioner, it wielded the same unfairly.  The evidence suggests that at the
time  respondent was transferred from the Washington Mutual account to the Bank
of America program, petitioner was hiring additional CSRs/TSRs.43 This simply
means that if it was then hiring new CSRs/TSRs, then there should be no need to
transfer respondent to the Bank of America program; it could simply train new hires
for that program.

The only conceivable reason why petitioner transferred respondent to another

account is the fact that she openly and bravely complained about the supposed
anomalies in the Washington Mutual account; it is not her "derogatory record" or
her "attendance and punctuality issues", which are insignificant and thus irrelevant
to her overall performance in the Washington Mutual account. Thus, in causing
respondent's transfer, petitioner clearly acted in bad faith and with discrimination,
insensibility and disdain; the transfer was effected as a form of punishment for her
raising a valid grievance related to her work. Furthermore, said transfer was
obviously unreasonable, not to mention contrary to experience, logic, and good
business sense. This being the case, the transfer amounted to constructive
dismissal.

The managerial prerogative to transfer personnel must be exercised

without grave abuse of discretion, bearing in mind the basic elements of
justice and fair play. Having the right should not be confused with the manner in

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which that right is exercised. Thus, it cannot be used as a subterfuge by the
employer to rid himself of an undesirable worker. In particular, the
employer must be able to show that the transfer is not unreasonable,
inconvenient or prejudicial to the employee; nor does it involve a demotion
in rank or a diminution of his salaries, privileges and other benefits. Should
the employer fail to overcome this burden of proof, the employee's transfer
shall be tantamount to constructive dismissal, which has been defined as a
quitting because continued employment is rendered impossible, unreasonable or
unlikely; as an offer involving a demotion in rank and diminution in pay. Likewise,
constructive dismissal exists when an act of clear discrimination,
insensibility or disdain by an employer has become so unbearable to the
employee leaving him with no option but to forego with his continued
employment45 (Emphasis and underscoring supplied)

The instant case can be compared to the situation in Veterans Security Agency, Inc.
v. Gonzalvo, Jr.,46where the employee concerned - a security guard who was brave
enough to complain about his employer's failure to remit its employees' Social
Security System premiums - was "tossed around" and finally placed on floating
status for no valid reason. Taking the poor employee's side, this
Court declared:cralawlawlibrary

True, it is the inherent prerogative of an employer to transfer and reassign its

employees to meet the requirements of its business. Be that as it may, the
prerogative of the management to transfer its employees must be exercised
without grave abuse of discretion. The exercise of the prerogative should not defeat
an employee's right to security of tenure. The employer's privilege to transfer its
employees to different workstations cannot be used as a subterfuge to rid itself of
an undesirable worker.

Pecuniary Awards

Award of indemnity in favor of respondent should be forthcoming. In case of

constructive dismissal, the employee is entitled to full backwages, inclusive of
allowances, and other benefits or their monetary equivalent, as well as separation
pay in lieu of reinstatement.

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

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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.

WHEREFORE, the Petition is DENIED.

The appropriate Computation Division of the National Labor Relations Commission is hereby ordered
to COMPUTE and UPDATE the award as herein determined WITH DISPATCH.

Radar Security & Watchman Agency vs. Castro, GR No. 211210, Dec. 2,
2015

Facts: Jose D.Castro was employed by Radar Security & Watchman Agency, Inc. to work as a security
guard. Since then, covered by various detail orders, he was assigned to watch and secure various
branches of petitioner's client, Planters Development Bank, until his alleged dismissal. Castro
subsequently received a letter Vice-President for Operations assigning him to render duty work at Banco
De Oro branch in GMA, Cavite, but allegedly without any corresponding detail order. Thus, respondent
filed a complaint against petitioner alleging that he was illegally dismissed without just cause and due
process, with claims for the payment of his separation pay, backwages, and other money claims.

On the other hand, Security Watchman countered that there was actually no dismissal and further
explained that the dispute arose when a verbal altercation ensued between the respondent and his
immediate superior regarding a complaint from the Senior Manager of Planters Development Bank. An
investigation thereafter followed which resulted in his order of transfer with which respondent allegedly
refused to comply.3

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Issue: Whether or not the CA erred in affirming the decisions of the LA and NLRC that there was indeed
no constructive dismissal, but with the modification that respondent is instead entitled to separation
pay, backwages, 13th month pay, holiday pay, and service incentive leave pay.

Held: No. CA did not err in affirming the decisions of the LA and NLRC that there was indeed NO
constructive dismissal since it was shown that petitioner issued detail orders in favor of respondent for
his new assignments. Hence, there was no intention on its part to dismiss respondent, legally or
otherwise.

In Abad v. Roselle Cinema,11 we found it well settled that in labor cases, the employer has the burden of
proving that the employee was not dismissed or if dismissed, that the dismissal was not illegal, and
failure to discharge the same would mean that the dismissal is not justified and therefore illegal.12 Thus:
x xx The Court ruled in Great Southern Maritime Services Corp. v. Acuña, to wit:

Time and again we have ruled that in illegal dismissal cases like the present one, the onus of proving
that the employee was not dismissed or if dismissed, that the dismissal was not illegal, rests on the
employer and failure to discharge the same would mean that the dismissal is not justified and
therefore illegal. Thus, petitioners must not only rely on the weakness of respondents' evidence but
must stand on the merits of their own defense. A party alleging a critical fact must support his allegation
with substantial evidence for any decision based on unsubstantiated allegation cannot stand as it will
offend due process. x x x13(Emphasis supplied)

It must be noted, however, that in the employment of personnel, the employer has management
prerogatives subject only to limitations imposed by law. The transfer of an employee would only
amount to constructive dismissal when such is unreasonable, inconvenient, or prejudicial to the
employee, and when it involves a demotion in rank or diminution of salaries, benefits and other
privileges.

In the case at bench, it appears that the transfer or re-assignment was done in good faith and in the best
interest of the business enterprise. This is the factual finding of the LA, and such finding was affirmed by
the NLRC and the C A. Without any showing of unfairness and arbitrariness, this Court will not disturb
the affirmance, especially when the petition assailing the findings raises no new arguments but merely
reiterates those already raised in the proceedings below.

An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement." Undoubtedly, there being no dismissal of respondent
in the present case, the appellate court has no legal basis to award respondent separation pay and

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backwages.

In our jurisdiction, an employee has a right to security of tenure, but this does not give him such a vested
right in his position as would deprive petitioner of its prerogative to change his assignment or transfer
him where his service, as security guard, will be most beneficial to the client.

Neither is respondent entitled to the award of money claims for underpayment, absent evidence to
substantiate the same.14

Worthy of emphasis is that the award of separation pay is likewise inconsistent with a finding that
there was no illegal dismissal. Separation pay becomes due if an employee is dismissed without just
cause and without due process and is therefore entitled to backwages and reinstatement. And, in
instances where reinstatement is no longer feasible because of strained relations between the
employee and the employer, separation pay is granted in lieu thereof. An illegally dismissed employee
is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer
viable.15 Notably, 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. However, strained relations must be demonstrated as a fact to be adequately supported by
evidence-substantial evidence to show that the relationship between the employer and the employee
is indeed strained as a necessary consequence of the judicial controversy. 16

However, the undisputed factual finding is that there was no dismissal to speak of, and therefore, we
cannot find the legal basis of his entitlement to such separation pay and backwages.

In a case where the employee's failure to work was occasioned neither by his abandonment nor by a
termination, the burden of economic loss is not rightfully shifted to the employer; each party must
bear his own loss.17 Hence, based on the circumstances of this case, the employer should not be made
to suffer the consequences of the employee's failure to report for duty. There was no allegation much
less proof that the employer intentionally made vague the notices sent to the employee. There was,
therefore, no fault on the part of the employer even if it were true that respondent misunderstood the
letter which prompted him to believe that he was being demoted. The supposed "misunderstanding"
cannot be an excuse for not reporting for work. Indeed there were subsequent notices of his
assignment/detail orders. There can be no justification for his claim for separation pay and backwages.

Divine Word College of Laoag vs. Mina, GR No. 195155, April 13, 2016

Facts: DWCL is a non-stock educational institution offering catholic education to the public. It is run by
the Society of Divine Word (SVD), a congregation of Catholic priests that maintains several other
member educational institutions throughout the country.

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Society of Divine Word Educational Association (DWEA) established a Retirement Plan to provide
retirement benefits for qualified employees of DWEA’s member institutions, offices and congregations.
The DWEA Retirement Plan6 contains a clause about the portability of benefits, to wit:

When a member who resigns or is separated from employment from one Participating Employer and
who is employed by another Participating Employer, the member will carry the credit he earned under his
former Participating Employer to his new Employer and the length of service in both will be taken into
consideration in determining his total years of continuous service on the following conditions:
a. The transfer is approved by both the Participating Employer whose service he is leaving and the new
Participating Employer;
b. The Retirement Board is notified of the transfer; and
c. The member is employed by another Participating Employer on the next working day after his
resignation.

Mina was first as a high school teacher, and later on a high school principal, at the Academy of St.
Joseph (ASJ), a school run by the SVD. He transferred to DWCL and was accorded a permanent status
after a year of probationary status. He was subsequently transferred to DWCL’s college department as
an Associate Professor III. Thereafter, Mina was assigned as the College Laboratory Custodian of the
School of Nursing and was divested of his teaching load, subject to automatic termination and without
need for any further notification. He was the only one among several teachers transferred to the college
department who was divested of teaching load.

Mina was offered early retirement by Professor Noreen dela Rosa, Officer-in-Charge of DWCL’s School of
Nursing. He initially declined the offer because of his family’s dependence on him for support. He later
received a Memorandum from the Office of the Dean enumerating specific acts of gross or habitual
negligence, insubordination, and reporting for work under the influence of alcohol. Sensing, however,
that it was pointless to continue employment with DWCL, he requested that his retirement date be
adjusted to enable him to avail of the 25-year benefits. He also requested for the inclusion of his eight
years of service in ASJ, to make his total years of service to 33 years pursuant to the portability clause of
the retirement plan, which was denied by DWCL. Instead, he was paid ₱275,513.10 as retirement pay. It
was made to appear that his services were terminated by reason of redundancy to avoid any tax
implications. Mina was also made to sign a deed of waiver and quitclaim stating that he no longer has
any claim against DWCL with respect to any matter arising from his employment in the school.

He filed a case for illegal dismissal and recovery of separation pay and other monetary claims. Pending
resolution of his case, Mina passed away on June 18, 2005.

Issue: WON Mina was illegally dismissed

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Held: Yes. Mina’s transfer clearly amounted to a constructive dismissal.

The Constitution and the Labor Code mandate that employees be accorded security of tenure. The right
of employees to security of tenure, however, does not give the employees vested rights to their
positions to the extent of depriving management of its prerogative to change their assignments or to
transfer them. In cases of transfer of an employee, the employer is charged with the burden of proving
that its conduct and action are for valid and legitimate grounds such as genuine business necessity and
that the transfer is not unreasonable, inconvenient or prejudicial to the employee. If the employer
cannot overcome this burden of proof, the employee’s transfer shall be tantamount to unlawful
constructive dismissal.

Constructive dismissal is a dismissal in disguise. There is cessation of work in constructive dismissal

because ‘"continued employment is rendered impossible, unreasonable or unlikely, as an offer involving
a demotion in rank or a diminution in pay’ and other benefits." To be considered as such, an act must be
a display of utter discrimination or insensibility on the part of the employer so intense that it becomes
unbearable for the employee to continue with his employment. The law recognizes and resolves this
situation in favor of employees in order to protect their rights and interests from the coercive acts of the
employer.

Also, the CA correctly ruled that Mina’s appointment as laboratory custodian was a demotion. There is
demotion when an employee occupying a highly technical position requiring the use of one’s mental
faculty is transferred to another position, where the employee performed mere mechanical work –
virtually a transfer from a position of dignity to a servile or menial job. The assessment whether Mina’s
transfer amounted to a demotion must be done in relation to his previous position, that is, from an
associate college professor, he was made a keeper and inventory-taker of laboratory materials. Clearly,
Mina’s new duties as laboratory custodian were merely perfunctory and a far cry from his previous
teaching job, which involved the use of his mental faculties. And while there was no proof adduced
showing that his salaries and benefits were diminished, there was clearly a demotion in rank. As was
stated in Blue Dairy Corporation v. NLRC, "[i]t was virtually a transfer from a position of dignity to a
servile or menial job."

Given the finding of constructive dismissal, Mina, therefore, is entitled to reinstatement without loss of
seniority rights, and payment of backwages computed from the time compensation was withheld up to
the date of actual reinstatement. The Court notes that aside from full compulsory retirement pay, the
NLRC awarded full backwages and separation pay, in lieu of reinstatement.

The Court has repeatedly stressed that the basis for the payment of backwages is different from that of
the award of separation pay. "The basis for computing separation pay is usually the length of the
employee’s past service, while that for backwages is the actual period when the employee was

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unlawfully prevented from working. Thus, the Court explained in Bani Rural Bank, Inc. v. De Guzman
that:

[U]nder Article 279 of the Labor Code and as held in a catena of cases, an employee who is dismissed
without just cause and without due process is entitled to backwages and reinstatement or payment of
separation pay in lieu thereof:
x xxx

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.53 (Emphasis and underscoring
deleted, and italics ours)
Thus, the computation of Mina’s backwages should be from the time he was constructively dismissed on
June 1, 2003.

The period for the computation of separation pay Mina is entitled to shall therefore begin to run from
June 1, 1979, when he was transferred to DWCL from ASJ, until his death on June 18, 2005, or for a
period of 26 years.

Chateau Royale Sports & Country Club vs. Balba, et al., GR No. 197492, January 18, 2017

Facts:
On August 28, 2004, the petitioner, a domestic corporation operating a resort complex
in Nasugbu, Batangas, hired the respondents as Account Executives on probationary
status. On June 28, 2005, the respondents were promoted to Account Managers
effective July 1, 2005, with the monthly salary rate of P9,000.00 plus allowances totaling
to P5,500. As part of their duties as Account Managers, they were instructed by the
Director of Sales and Marketing to forward all proposals, event orders and contracts for
an orderly and systematic bookings in the operation of the petitioner's business.
However, they failed to comply with the directive. Accordingly, a notice to explain was
served on them, to which they promptly responded.

On October 4, 2005, the management served notices of administrative hearing, on the

respondents. Thereupon, they sent a letter of said date asking for a postponement of
the hearing.[9] Their request was, however, denied by the letter dated October 7, 2005,
and at the same time informed them that the petitioner's Corporate Infractions
Committee had found them to have committed acts of insubordination, and that they

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were being suspended for seven days from October 10 to 17, 2005, inclusive.

The suspension order was lifted even before its implementation on October 10, 2005.

On October 10, 2005, the respondents filed a complaint for illegal suspension and non-
payment of allowances and commissions.]

On December 1, 2005, the respondents amended their complaint to include

constructive dismissal as one of their causes of action based on their information from
the Chief Financial Officer of the petitioner on the latter's plan to transfer them to the
Manila Office.[13] The proposed transfer was prompted by the shortage of personnel at
the Manila Office as a result of the resignation of three account managers and the
director of sales and marketing. Despite attempts to convince them to accept the
transfer to Manila, they declined because their families were living in Nasugbu,
Batangas.

The respondents received the notice of transfer dated December 13, 2005 on
December 28, 2005 directing them to report to work at the Manila Office effective
January 9, 2006. They responded by letter addressed to Mr. Rowell David, the Human
Resource Consultant of the petitioner, explaining their reasons for declining the order of
transfer. Consequently, another request for incident report was served on them
regarding their failure to comply with the directive to report at the Manila office.
Following respondents' respective responses,[18] the petitioner sent a notice imposing
on them the sanction of written reprimand for their failure to abide by the order of
transfer.

Issue:

THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN CONCLUDING THAT THE

SHORTAGE OF PERSONNEL IN THE MANILA OFFICE IS A MERE SUBTERFUGE RATHER THAN
AN EXIGENCY IN THE BUSINESS THEREBY TREATING THE TRANSFER OF RESPONDENTS AS
UNREASONABLE

Held:

We find merit in the appeal.

In the resolution of whether the transfer of the respondents from one area of operation to another was
valid, finding a balance between the scope and limitation of the exercise of management prerogative
and the employees' right to security of tenure is necessary. We have to weigh and consider, on the one
hand, that management has a wide discretion to regulate all aspects of employment, including the
transfer and re-assignment of employees according to the exigencies of the business; and, on the other,

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that the transfer constitutes constructive dismissal when it is unreasonable, inconvenient or prejudicial
to the employee, or involves a demotion in rank or diminution of salaries, benefits and other privileges,
or when the acts of discrimination, insensibility or disdain on the part of the employer become
unbearable for the employee, forcing him to forego her employment.

In this case of constructive dismissal, the burden of proof lies in the petitioner as the employer to prove
that the transfer of the employee from one area of operation to another was for a valid and legitimate
ground, like genuine business necessity. We are satisfied that the petitioner duly discharged its burden,
and thus established that, contrary to the claim of the respondents that they had been constructively
dismissed, their transfer had been an exercise of the petitioner's legitimate management prerogative.

To start with, the resignations of the account managers and the director of sales and marketing in the
Manila office brought about the immediate need for their replacements with personnel having
commensurate experiences and skills. With the positions held by the resigned sales personnel being
undoubtedly crucial to the operations and business of the petitioner, the resignations gave rise to an
urgent and genuine business necessity that fully warranted the transfer from the Nasugbu, Batangas
office to the main office in Manila of the respondents, undoubtedly the best suited to perform the tasks
assigned to the resigned employees because of their being themselves account managers who had
recently attended seminars and trainings as such. The transfer could not be validly assailed as a form of
constructive dismissal, for, as held in Benguet Electric Cooperative v. Fianza, management had the
prerogative to determine the place where the employee is best qualified to serve the interests of the
business given the qualifications, training and performance of the affected employee.

Secondly, although the respondents' transfer to Manila might be potentially inconvenient for them
because it would entail additional expenses on their part aside from their being forced to be away from
their families, it was neither unreasonable nor oppressive. The petitioner rightly points out that the
transfer would be without demotion in rank, or without diminution of benefits and salaries. Instead, the
transfer would open the way for their eventual career growth, with the corresponding increases in pay.
It is noted that their prompt and repeated opposition to the transfer effectively stalled the possibility of
any agreement between the parties regarding benefits or salary adjustments.

Thirdly, the respondents did not show by substantial evidence that the petitioner was acting in bad faith
or had ill-motive in ordering their transfer. In contrast, the urgency and genuine business necessity
justifying the transfer negated bad faith on the part of the petitioner.

Lastly, the respondents, by having voluntarily affixed their signatures on their respective letters of
appointment, acceded to the terms and conditions of employment incorporated therein. One of the
terms and conditions thus incorporated was the prerogative of management to transfer and re-assign its
employees from one job to another "as it may deem necessary or advisable," to wit:

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The company reserves the right to transfer you to any assignment from one job to another, or from one
department/section to another, as it may deem necessary or advisable.

Having expressly consented to the foregoing, the respondents had no basis for objecting to their
transfer. According to Abbot Laboratories (Phils.), Inc. v. National Labor Relations Commission, the
employee who has consented to the company's policy of hiring sales staff willing to be assigned
anywhere in the Philippines as demanded by the employer's business has no reason to disobey the
transfer order of management. Verily, the right of the employee to security of tenure does not give her
a vested right to her position as to deprive management of its authority to transfer or re-assign her
where she will be most useful.

In view of the foregoing, the NLRC properly appreciated the evidence and merits of the case in reversing
the decision of the Labor Arbiter. As such, the CA gravely erred in declaring that the NLRC had gravely
abused its discretion amounting to lack or excess of jurisdiction.

V. TERMINATION OF EMPLOYMENT

1. Leus vs. St. Scholasticas College vs. Westgrove, GR No. 187226,

January 28, 2015

Facts: St. Scholastica’s College Westgrove SSCW a Catholic educational institution

hired the petitioner as an Assistant to SSCWs Director. Petitioner and her boyfriend
conceived a child out of wedlock. When SSCW learned of the petitioners pregnancy,
they advised her to file a resignation. The petitioner refused to resign her
employment just because she got pregnant without the benefit of marriage.

Respondent formally directed the petitioner to explain in writing why she should not
be dismissed. Later on, being unsatisfied with petitioner’s explanation, her
employment with SSCW was terminated on the ground of serious misconduct.

In her letter, she averred that she is unaware of any school policy stating that
being pregnant out of wedlock is considered as a serious misconduct and, thus, a
ground for dismissal.

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Petitioner filed a complaint for illegal dismissal. She maintained that her pregnancy
out of wedlock cannot be considered as serious misconduct since the same is a
purely private affair and not connected in any way with her duties as an employee
of SSCW. Further, the petitioner averred that she and her boyfriend eventually got
married even prior to her dismissal.

Respondent on the other hand claimed that there was just cause to terminate the
petitioner and that it was a valid exercise of management prerogative. They
maintained that engaging in pre-marital sex, and getting pregnant amounts to a
disgraceful or immoral conduct, which is a ground for the dismissal of an employee
under the 1992 MRPS(Manual of Regulation for Private School)

The CA and the labor tribunals affirmed the validity of the petitioner’s dismissal
pursuant to Section 94(e) of the 1992 MRPS which provides:

Sec. 94. Causes of Terminating Employment – In addition to the just causes

enumerated in the Labor Code, the employment of school personnel, including
faculty, may be terminated for any of the following causes xxx

e. Disgraceful or immoral conduct; xxx

The labor tribunals concluded that the petitioner‟s pregnancy out of wedlock, per
se, is “disgraceful and immoral” considering that she is employed in a Catholic
educational institution.

Issues:

(1) Whether the CA committed reversible error in ruling that it is the 1992 MRPS
and not the Labor Code that governs the termination of employment of
teaching and non-teaching personnel of private schools
(2) Whether the petitioners pregnancy out of wedlock constitutes a valid ground
to terminate her employment

Held:

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First Issue: Applicability of the Manual of Regulation for Private
Schools(MRPS)

THE MRPS is applicable.

MRPS, the regulation in force at the time of the instant controversy, was issued by
the Secretary of Education pursuant to BP 232 which empowers the Department of
Education to promulgate rules and regulations necessary for the administration,
supervision and regulation of the educational system. The qualifications of teaching
and non-teaching personnel of private schools, as well as the causes for the
termination of their employment, are an integral aspect of the educational system
of private schools.

It is thus within the authority of the Secretary of Education to issue a rule, which
provides for the dismissal of teaching and non-teaching personnel of private schools
based on their incompetence, inefficiency, or some other disqualification.

Second Issue: Validity of the Petitioner’s Dismissal of whether pregnancy

out of wedlock by an employee of a catholic educational institution is a
cause for the termination of her employment.

No. The fact of the petitioners pregnancy out
enough to characterize the petitioners conduct
must be substantial evidence to establish that
consequently, pregnancy out of wedlock, are
immoral.
of wedlock, without more, is not
as disgraceful or immoral. There
pre-marital sexual relations and,
indeed considered disgraceful or

The determination of whether a conduct is disgraceful or immoral involves a two-

step process:

first, a consideration of the totality of the circumstances surrounding the conduct;

and

second, an assessment of the said circumstances vis-à-vis the prevailing norms of

conduct, i.e., what the society generally considers moral and respectable.

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The morality referred to in the law is public and necessarily secular, not religious.
Otherwise, if government relies upon religious beliefs in formulating public policies
and morals, the resulting policies and morals would require conformity to what
some might regard as religious programs or agenda.

For a particular conduct to constitute “disgraceful and immoral” behavior under civil
service laws, it must be regulated on account of the concerns of public and secular
morality. It cannot be judged based on personal bias, specifically those colored by
particular mores. Nor should it be grounded on “cultural” values not convincingly
demonstrated to have been recognized in the realm of public policy expressed in
the Constitution and the laws.

The petitioner’s dismissal is not a valid exercise of SSCW’s management

prerogative. SSCW, as employer, undeniably has the right to discipline its
employees and, if need be, dismiss them if there is a valid cause to do so.
However, there is no cause to dismiss the petitioner. Her conduct is not
considered by law as disgraceful or immoral. Further, the respondents
themselves have admitted that SSCW, at the time of the controversy, does
not have any policy or rule against an employee who engages in pre-
marital sexual relations and conceives a child as a result thereof. There
being no valid basis in law or even in SSCW‟s policy and rules, SSCW‟s
dismissal of the petitioner is not a valid exercise of management
prerogative.

In sum, the Court finds that the petitioner was illegally dismissed as there was no
just cause for the termination of her employment. SSCW failed to adduce
substantial evidence to establish that the petitioners conduct in engaging in pre-
marital sexual relations and conceiving a child out of wedlock as considered
disgraceful or immoral.

99. St. Lukes Medical Center vs. Sanchez, GR No. 212054, March 11,
2015

Facts: Maria Theresa Sanchez (respondent), employed by the St. Luke’s Medical Center as a Staff Nurse,
passed thru the SMLC Centralization Entrance/Exit, manned by the security guard on duty, SG Jaime
Manzanade at the end of her shift.

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As part of standard operating procedure, she was subjected to inspection, where it was found out that
her bag contained a pouch that held an assortment of medical stocks; Maria Theresa asked SG
Manzanade if she could just return the items, however, she was not allowed to do so; instead, she was
brought to the In-House Security Department where she was directed to write an incident report to
explain her possession of the medical stocks. She complied, at the same time submitting her
handwritten apology.

The matter was brought to the attention of SMLC, and its Division of Nursing then required Maria
Theresa to explain. In her explanation, Maria Theresa pointed out that the items were left behind in the
drawers of patients who were already discharged. As similarly practiced by other staff, she saved these
items in her pouch, which she then uses for use in immediate procedures when stocks run out. She
however failed to return the pouch inside the medication drawer; instead she placed it in her bag and
forgot about it, until she was inspected by the guard on duty.

She was placed on preventive suspension, and eventually terminated by management for violation
of SLMC’s Code of Discipline, particularly Section 1, Rule 1 on Acts of Dishonesty, i.e., Robbery, Theft,
Pilferage, and Misappropriation of Funds. Maria Theresa filed a complaint for illegal dismissal with the
NLRC, averring that her bringing out of the medical stocks was due to inadvertence and not out of intent
to gain, hence she was innocent of the charges that brought about her termination, as shown by the fact
that SMLC did not file a criminal case against her. She was unassisted by counsel when she executed the
handwritten admission, thus it was inadmissible for being unconstitutional. On the other hand, the
company argued she was validly dismissed for theft of company property in violation of the SMLC Code
of Discipline.

The Labor Arbiter ruled that Sanchez was validly dismissed, but the NLRC ruled otherwise. The NLRC
noted the usual practice of “hoarding” among nurses in the Pediatric Unit which was tolerated by SMLC
for a long time. While Sanchez admitted her remorse for hoarding, she was not motivated by ill-will
when she hoarded the items, as she intented to use it for replenishment of stocks in case their supplies
are depleted. At any rate, the penalty of dismissal was too harsh, and a one-month suspensions should
have sufficed. Thus, it ordered SMLC to reinstate Sanchez.

The CA affirmed the NLRC’s decision. It ruled that Sanchez’s offence cannot be classified as a serious
misconduct since:
(a) the questioned items found in her possession were not SLMC property since said items were
paid for by discharged patients, thus discounting any material or economic damage on SLMC’s part;
(b) the retention of excess medical supplies was an admitted practice amongst nurses in the
Pediatric Unit which was tolerated by SLMC;
(c) it was illogical for Sanchez to leave the pouch in her bag since she would be subjected to a
routine inspection;

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(d) Sanchez’s lack of intention to bring out the pouch was manifested by her composed
demeanor upon apprehension and offer to return the pouch to the treatment room; and (e) had SLMC
honestly believed that Sanchez committed theft or pilferage, it should have filed the appropriate
criminal case, but failed to do so. It held that dismissal was not commensurate to Sanchez’s offence,
given that she was not motivated by self-interest or an unlawful objective when she did it. SLMC
appealed to the Supreme Court.

Issue: Whether or not Sanchez was validly dismissed.

Held: The petition is meritorious.

The right of an employer to regulate all aspects of employment, aptly called “management prerogative,”
gives employers the freedom to regulate, according to their discretion and best judgment, all aspects of
employment, including work assignment, working methods, processes to be followed, working
regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and
recall of workers.

Among the employer’s management prerogatives is the right to prescribe reasonable rules and
regulations necessary or proper for the conduct of its business or concern, to provide certain disciplinary
measures to implement said rules and to assure that the same would be complied with. At the same
time, the employee has the corollary duty to obey all reasonable rules, orders, and instructions of the
employer; and willful or intentional disobedience thereto, as a general rule, justifies termination of the
contract of service and the dismissal of the employee.Article 296 (formerly Article 282) of the Labor
Code provides

Article 296. Termination by Employer. – An employer may terminate an employment for any of
the following causes:
(a) Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or his representative in connection with his work;x x
xx
For an employee to be validly dismissed on this ground, the employer’s orders, regulations, or
instructions must be:
(1) reasonable and lawful,
(2) sufficiently known to the employee, and
(3) in connection with the duties which the employee has been engaged to discharge.”⁠ 5

Tested against the foregoing, the Court finds that Sanchez was validly dismissed by SLMC for her willful
disregard and disobedience of Section 1, Rule I of the SLMC Code of Discipline, which reasonably
punishes acts of dishonesty, i.e., “theft, pilferage of hospital or co-employee property, x x x or its
attempt in any form or manner from the hospital, co-employees, doctors, visitors, [and] customers

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(external and internal)” with termination from employment. Such act is obviously connected with
Sanchez’s work, who, as a staff nurse, is tasked with the proper stewardship of medical supplies.

It is apt to clarify that SLMC cannot be faulted in construing the taking of the questioned items as an act
of dishonesty (particularly, as theft, pilferage, or its attempt in any form or manner) considering that the
intent to gain may be reasonably presumed from the furtive taking of useful property appertaining to
another.

Section 1, Rule 1 of the SLMC Code of Discipline is further supplemented by the company policy
requiring the turn-over of excess medical supplies/items for proper handling and providing a restriction
on taking and bringing such items out of the SLMC premises without the proper authorization or “pass”
from the official concerned, which Sanchez was equally aware thereof.
The fact that no one was caught and/or sanctioned for transgressing the prohibition therefor does not
mean that the so-called “hoarding” practice was tolerated by SLMC. Besides, whatever maybe the
justification behind the violation of the company rules regarding excess medical supplies is immaterial
since it has been established that an infraction was deliberately committed. Doubtless, the deliberate
disregard or disobedience of rules by the employee cannot be countenanced as it may encourage him or
her to do even worse and will render a mockery of the rules of discipline that employees are required to
observe.

Finally, the Court finds it inconsequential that SLMC has not suffered any actual damage. While damage
aggravates the charge, its absence does not mitigate nor negate the employee’s liability. Neither is
SLMC’s non-filing of the appropriate criminal charges relevant to this analysis. An employee’s guilt or
innocence in a criminal case is not determinative of the existence of a just or authorized cause for his or
her dismissal. It is well-settled that conviction in a criminal case is not necessary to find just cause for
termination of employment,as in this case. Criminal and labor cases involving an employee arising from
the same infraction are separate and distinct proceedings which should not arrest any judgment from
one to the other.

As it stands, the Court thus holds that the dismissal of Sanchez was for a just cause, supported by
substantial evidence, and is therefore in order. By declaring otherwise, bereft of any substantial bases,
the NLRC issued a patently and grossly erroneous ruling tantamount to grave abuse of discretion, which,
in turn, means that the CA erred when it affirmed the same. In consequence, the grant of the present
petition is warranted.

100. Naguit vs. SMC, GR No. 188839, June 22, 2015

Facts: Petitioner was employed as a machine operator of San Miguel Corporation Metal Closure and
Lithography Plant, a division of herein respondent. Sometime in the afternoon of September 23, 2002,

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petitioner and one Renato Regala (Regala), also an employee of respondent got involved in an
altercation in respondent’s Canlubang Plant. In his Position Paper, petitioner claimed that Regala went
to the Canlubang Plant to distribute antiunion materials that are libellous and defamatory and that, as
union steward, petitioner confronted Regala, which confrontation developed to a heated exchange of
words. Petitioner then elbowed Regala, hitting him in the face, causing him to lose his balance and fall to
the ground.

As a consequence, Regala filed a complaint with respondent’s HR Department. Respondent then

conducted an administrative investigation giving both parties the opportunity to defend themselves.
However, petitioner opted to remain silent and did not address the charges against him. The company
designated investigator submitted his report and recommendation finding petitioner guilty of wilful
injury to another employee within company premises, which is an infraction of the company's rules and
regulations. Respondent then served upon petitioner a letter informing him of the termination of his
employment on the basis of the findings and recommendation of the investigator. Petitioner then filed a
complaint for illegal dismissal against respondent.
LA: dismissed the case for lack of merit.

NLRC: affirmed the decision of LA

CA: CA promulgated a Resolution denying petitioner's Motion for Extension of Time to File Petition for
Certiorari. Citing the amended provisions of Section 4, Rule 65 of the Rules of Court, the CA held that the
60-day period to file a petition for certiorari is non-extendible.

Issue: Whether or not petitioner is illegally dismissed.

Held: No, there was a just cause for termination. The settled rule is that fighting within company
premises is a valid ground for the dismissal of an employee. Moreover, the act of assaulting another
employee is serious misconduct which justifies the termination of employment.

As noted by both the LA and the NLRC, substantial evidence exists to show that petitioner committed
acts which are tantamount to serious misconduct and wilful disobedience of company rules and
regulations. Also, the Court agrees with respondent's contention that if petitioner's long years of service
would be regarded as a justification for moderating the penalty of dismissal, it will actually become a
prize for disloyalty, perverting the meaning of social justice and undermining the efforts of labor to
cleanse its ranks of all undesirables. In addition, where the totality of the evidence was sufficient to
warrant the dismissal of the employees, the law warrants their dismissal without making any distinction
between a first offender and a habitual delinquent.

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101. VECO Employees Union-ALU TUCP vs. VECO, GR No. 205575, July 22,
2015

Facts: The union members marched on the streets of Cebu City to protest VECO's
refusal to comply with the political and economic provisions of the CBA. Following
said incident, Mahilum was allegedly demoted as warehouse staff to isolate him and
restrict his movements. Other union officers were transferred to positions that will
keep them away from the general union membership.

Mahilum was issued a Notice to Explain why he should not be terminated from
service due to loss of trust and confidence, as well as in violating the Company
Code of Discipline, for causing the publication of what VECO deemed as a libelous
article.

Issue: Whether the “libelous article” published amounted to loss of trust and
confidence to result his termination from VECO.

Held: The Court has consistently held that ". . . loss of trust and confidence must
be based on willful breach of the trust reposed in the employee by his employer.
Such breach is willful if it is done intentionally, knowingly, and purposely, without
justifiable excuse, as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently. Moreover, it must be based on substantial evidence
and not on the employer's whims or caprices or suspicions, otherwise, the
employee would eternally remain at the mercy of the employer. . . . . And, in order
to constitute a just cause for dismissal, the act complained of must be work-related
and show that the employee concerned is unfit to continue working for the
employer. In addition, loss of confidence . . . is premised on the fact that the
employee concerned holds a position of responsibility, trust, and confidence or that
the employee concerned is entrusted with confidence with respect to delicate
matters, such as handling or care and protection of the property and assets of the
employer. The betrayal of this trust is the essence of the offense for which an
employee is penalized."

Mahilum's attempt to rationalize his act as part of his "moral, legal or social duty . .
. to make known his legitimate perception" against VECO does not, in any way,
detract from the indubitable fact that he intentionally, knowingly, and purposely

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caused the aforequoted "disparaging publication." Neither can he hide behind the
claim that the press release was simply "an expression of a valid grievance."

Moreover, the Court is unmoved by Mahilum's insistence that there was nothing in
his position which called for management's trust and confidence in him. The NLRC,
whose findings of facts and conclusions are generally accorded not only great
weight and respect but even with finality, correctly held that, as Customer Service
Representative, Mahilum occupied a position of responsibility especially in dealing
with VECO's clients. His duties and responsibilities included: (1) accepting pertinent
documents and processing electrical service applications; (2) verifying authenticity
of documents submitted; (3) interviewing customer-applicant on applications,
complaints, and requests; (4) preparing job assignment of service inspectors; (5)
filing all service orders of inspectors; (6) assessing and accepting bill deposits; (7)
preparing and facilitating signing of Metered Service Contract; (8) issuing service
order for meter-related activities; (9) verifying existing account of customer-
applicant and approving account clearances; (10) accepting payment of bills from
customer-applicant for account clearances; and (11) processing payment
arrangements of customers. His performance was measured according to how he:
(1) handled customers' transactions; (2) made decisions in processing customers'
applications and payment arrangements; and (3) maintained posture at all times in
handling customers' transactions even with angry customers.

It is clear from the foregoing that Mahilum was not an ordinary rank-and-file
employee. His job entailed the observance of proper company procedures relating
to processing and determination of electrical service applications culminating in the
signing of service contracts, which constitutes the very lifeblood of VECO's
existence. He was further entrusted with handling the accounts of customers and
accepting payments from them. Not only that, it was his duty to address customer
complaints and requests. Being a frontliner of VECO, with the most consistent and
direct interaction with customers, Mahilum's job involved a high degree of
responsibility requiring a substantial amount of trust and confidence on the part of
his employer, i.e., VECO.

However, with the derogatory statements issued by Mahilum that were intended to
incite, not just public condemnation of VECO, but antagonism and obstruction
against rate increases in electricity that it may be allowed, by law, to fix, there can
be no dispute that VECO, indeed, had lost its trust and confidence in Mahilum and
his ability to perform his tasks with utmost efficiency and loyalty expected of an
employee entrusted to handle customers and funds. Settled is the rule that an
employer cannot be compelled to retain an employee who is guilty of acts inimical
to the interests of the employer. A company has the right to dismiss its employee if
only as a measure of self-protection.

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Thus, Mahilum was terminated for a just and valid cause. Moreover, as declared by
the NLRC, VECO complied with the procedural due process requirements of
furnishing Mahilum with two written notices before the termination of employment
can be effected.

As a final word, while it is the state's responsibility to afford protection to labor, this
policy should not be used as an instrument to oppress management and capital. In
resolving disputes between labor and capital, fairness and justice should always
prevail. Social justice does not mandate that every dispute should be automatically
decided in favor of labor. Justice is to be granted to the deserving and dispensed in
the light of the established facts and the applicable law and doctrine.

WHEREFORE, the instant petition is hereby DENIED.

102. Copy Central Digital Copy Solution vs. Domrique, GR No. 193219, July
27, 2015

Facts: Domrique and Leaño started working for petitioners as photocopy machine
operators on February 21, 1993 and January 1996, respectively. On November 2,
2005, Susana Montano, the manager of the establishment ordered an audit of their
branch in Laoag City. It was claimed that after the said audit of the meter readings,
it was discovered that there were discrepancies in the reading reports that were
submitted byDomrique and Leaño. Susana Montano then concluded that the
respondents conspired with each other to cheat on the meter readings in order to
pocket the difference [between] their ending report and the actual meter reading.
Susana Montano issued a termination letter to Domrique.

Issue: Whether Domrique was illegally dismissed.

Held: Nothing would prove that respondents admitted having committed theft
against petitioners and that, as a consequence of such theft, they have made
partial restitution of the amount they allegedly embezzled. On the contrary,
respondents simply promised to return the amounts stated in the document which
they have acknowledged as having been entrusted to them by petitioners, without

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admitting that they took the same. There was neither any admission by
respondents of any wrongdoing which they have allegedly committed in 2001.

Neither were the subsequent payments made by respondents sufficient evidence to

prove that they are guilty of theft. Moreover, the fact that the Assistant City
Prosecutor of Laoag found probable cause to indict respondents for the crime of
qualified theft does not necessarily mean that there exists a valid ground for their
termination from employment.

In the instant case, petitioners cannot argue that, since the Assistant City
Prosecutor found probable cause for qualified theft and subsequently filed criminal
information against respondents, the LA must follow the finding as a valid reason
for their termination from employment. The proof required for purposes that differ
from one and the other are likewise different.

Hence, aside from the allegation of theft which was not substantiated, absent any
other ground for petitioners to lose trust and confidence in respondents, the Court
agrees with the LA and the CA that respondents' termination from employment is
illegal.

As to the procedural aspect of the case, the Court likewise agrees with the findings
of both the LA and the CA that petitioners failed to observe the proper procedure in
terminating respondents' services.

In the present case, how could petitioners' claim that they afforded respondents
their right to procedural due process when records show that petitioners' letters,
dated November 4, 2005, which apprised respondents of the charges against them,
were the same letters which informed them of their dismissal from
employment. Moreover, petitioners allege that, in the same letters, they gave
respondents the opportunity to explain their side. On the contrary, the letter merely
stated the conclusions already drawn by petitioners after their alleged investigation
of the supposed infractions committed by respondents. Neither was there any other
evidence to prove that respondents were, in fact, given the opportunity to be
heard.

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WHEREFORE, The Decision of the Court of Appeals, dated February 16, 2010 and
its Resolution dated July 20, 2010 in CA-G.R. SP No. 110614, are AFFIRMED.

103. Central Azucarera De Bais vs.Siason, GR No.215555, July 29, 2015

Facts: Siason alleged that sometime in July 1988, petitioners hired her as a Purchasing Assistant, and
eventually, promoted her to the position of Purchasing Officer. Chan confronted her on the propriety of
the delivery of a machine part via air freight in lieu of a previously approved sea freight. Later that day,
Siason received a letter signed by Chan informing her that she had been committing various purchasing
policy violations over the past 12 months which are very unfavorable to CABI, and that the management
could no longer turn a blind eye on such violations; as such, she should tender her immediate
resignation from CABI, "rather than [to] force [his] hand." Consequently, Siason wrote a resignation
letter, stating that she was tendering her resignation because Chan told her to do so.

Issue: Whether Siason was constructively dismissed by petitioners.

Held: Resignation is the formal pronouncement or relinquishment of a position or

office. It is the voluntary act of an employee who is in a situation where he believes
that personal reasons cannot be sacrificed in favor of the exigency of the service,
and he has then no other choice but to disassociate himself from employment. In
contrast, constructive dismissal exists where there is cessation of work because
continued employment is rendered impossible, unreasonable or unlikely, as an offer
involving a demotion in rank or a diminution in pay and other benefits. Aptly called
a dismissal in disguise or an act amounting to dismissal but made to appear as if it
were not, constructive dismissal may, likewise, exist if an act of clear
discrimination, insensibility, or disdain by an employer becomes so unbearable on
the part of the employee that it could foreclose any choice by him except to forego
his continued employment. It must be noted, however, that bare allegations of
constructive dismissal, when uncorroborated by the evidence on record, cannot be
given credence.

Guided by the foregoing considerations, the Court finds that the CA erred in
affirming the NLRC ruling, which found Siason to have been constructively
dismissed by petitioners.

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A judicious review of the records reveals that CABI's accounting department indeed
made an audit of the purchases made by the company through its Purchasing
Officer, Siason. This resulted in the discovery of a number of questionable
discrepancies in several purchasing transactions undertaken by Siason, consisting
in different price quotations for identical items contained in various purchase
documents prepared by Siason herself. The foregoing facts belie Siason's argument
that petitioners constructively dismissed her. These circumstances show that she
was given the option to voluntarily resign from CABI, instead of dealing with an
investigation which might result in her dismissal. Verily, Chan's decision to give
Siason a graceful exit rather than to file an action for redress is perfectly within the
discretion of the former; as it is not uncommon that an employee is permitted to
resign to avoid the humiliation and embarrassment of being terminated for just
cause after the exposure of her malfeasance. It is settled that there is nothing
reprehensible or illegal when the employer grants the employee a chance to resign
and save face rather than smear the latter's employment record, as in this case.

In sum, petitioners did not constructively dismiss Siason; but rather, the latter
voluntarily resigned from her job in order to avoid a full-blown administrative trial
regarding her misdeeds which could potentially result in her termination for just
cause.

104. Raza vs. Daikoku Electronics Phils Inc GR No. 188464, July 29, 2015

Facts: Petitioner Alberto J. Raza (Raza) was hired as a driver by respondent Daikoku Electronics Phils.,
Inc. (Daikoku) on January 11, 1999. Eventually, he was assigned to drive for the other respondent, the
company president Mamoru Ono (Ono).

On the evening of July 21, 2003, Raza dropped Ono off at the latter's residence called the Pacific Plaza
Condominium in Makati City. But Raza, instead of parking the company vehicle at the condominium
building's parking area, drove the vehicle to his home and parked it there overnight. The next morning,
as Raza was about to fetch Ono, the latter confronted him and asked why the vehicle was not at the
condominium parking lot. Raza replied with a lie, telling Ono that he parked the car at the condominium
building but in the wrong slot. Three (3) days later, on July 24, 2003, Raza was served a company Notice
of Violation of the Code of Conduct for Dishonesty. On July 25, 2003, Raza submitted his written
explanation wherein he admitted bringing the car to his home without permission and lying about it to
Ono.

Thereafter, the company's General Affairs Manager Gerardo Gaytano sent a letter terminating Raza's
services for dishonesty. Thus, Raza filed his Complaint for illegal dismissal with claims for damages and
attorney's fees.

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Labor Arbiter Lita V. Alibut rendered a Decision in favor of Raza as complainant.

The NLRC set aside the findings of the Labor Arbiter and ruled in favor of respondents. It held that Raza
was not illegally dismissed since the infractions he committed were a just cause for dismissal. Such
infractions include the taking of the company vehicle without authority, which the NLRC described as a
"recurring act," and the uttering of falsehood towards company president Ono, which it believed was a
show of disrespect.

Issues:
1. Whether petitioner Raza's numerous acts of taking the company car home
overnight and lying about one of the incidents to the company president
legally deserve the supreme penalty of dismissal from the company.
2. Is Raza correct in arguing that the dismissal is too harsh in relation to the
acts committed?
3.
Held:
1. Raza was validly dismissed within the confines of a just cause for
termination as provided for in the Labor Code.

In termination cases, the burden of proof rests upon the employer to show that the dismissal is for a just
and valid cause and failure to do so would necessarily mean that the dismissal was illegal.
Upon this Court's assessment, however, it finds that this burden has been discharged by respondents
and this Court agrees with the latter that petitioner Raza's acts amounted to serious misconduct which
falls under the valid grounds for termination of the services of an employee.
In the case at bar, it must be noted that Raza's termination came not as a result of a singular incident on
July 21, 2003 of driving home the company car, keeping it overnight and then lying about such act to the
company president the next day. It came because such incident launched a company investigation
during which it was found out that the July 21, 2003 incident was preceded by thirty-one (31) other
instances in the previous two and a half (2-1/2) months (or from May 1, 2003 to July 20, 2003) in which
Raza similarly did not park the car in the assigned area but took it home overnight without permission.
Thus, the termination letter against Raza mentioned a "recurring act of taking the subject vehicle
without authority," as a ground for his separation from service. This Court finds and agrees with
respondents that the above acts constitute serious misconduct which rendered Raza's termination valid.

2. No, Raza is not correct. It is long established that an employer is

given a wide latitude of discretion in managing its own affairs, and in
the promulgation of policies, rules and regulations on work-related
activities of its employees.

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The broad discretion includes the implementation of company rules and regulations and the imposition
of disciplinary measures on its workers. But for the management prerogative to be upheld, the exercise
of disciplining employees and imposing appropriate penalties on erring workers must be practiced in
good faith for the advancement of the employer's interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid agreements.

In the case at bar, the infractions of Raza were numerous enough that they already amount to an
unlawful taking of company resources and that they may be subsumed under the charge of serious
misconduct leveled against him. It has been held that "although as a rule this Court leans over
backwards to help workers and employees continue with their employment or to mitigate the penalties
imposed on them, acts of dishonesty in the handling of company property are a different matter." Such
may be penalized with dismissal.

Final Disposition: The petition is denied.

105. Rivera vs. Genesis Transport Service,GR No. 215568, Aug.3, 2015

Facts: Rivera was employed by respondent Genesis Transport Service, Inc. (Genesis) beginning June
2002 as a bus conductor, assigned to the Cubao-Baler, Aurora route.

In his Position Paper before the Labor Arbiter, Rivera acknowledged that he was dismissed by Genesis on
account of a discrepancy in the amount he declared on bus ticket receipts. He alleged that on June 10,
2010, he received a Memorandum 8 giving him twenty-four (24) hours to explain why he should not be
sanctioned for reporting and remitting the amount of P198.00 instead of the admittedly correct amount
of P394.00 worth of bus ticket receipts. He responded that it was an honest mistake, which he was
unable to correct "because the bus encountered mechanical problems.”

The discrepancy between the reported and remitted amount as against the correct amount was detailed
in the "Irregularity Report". According to Villaseran (Genesis' Inspector), on May 25, 2010, he conducted
a "man to man" inspection on the tickets held by the passengers on board. In the course of his
inspection, he noticed that Ticket No. 723374 VA had a written corrected amount of P394.00. However,
the amount marked by perforations made on the ticket, which was the amount originally indicated by
the bus conductor, was only P198.00. Upon inquiring with the passenger holding the ticket, Villaseran
found out that the passenger paid P500.00 to Rivera who gave her change in the amount of P106.00.

Thereafter, Genesis served on Rivera a written notice informing him that a hearing of his case was set on
July 23, 2010. Despite his explanations, Rivera's services were terminated through a written notice dated

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July 30, 2010. 14 Contending that this termination was arbitrary and not based on just causes for
terminating employment, he led the Complaint for illegal dismissal.
For their defense, Genesis and Riza A. Moises claimed that Rivera's misdeclaration of the amount in the
bus ticket receipts and failure to remit the correct amount clearly violated Genesis' policies and
amounted to serious misconduct, fraud, and willful breach of trust; thereby justifying his dismissal.

The Labor Arbiter dismissed Rivera’s complaint. The National Labor Relations Commission Second
Division affirmed the Decision of Labor Arbiter. The Court of Appeals Fifth Division sustained the rulings
of Labor Arbiter and the National Labor Relations Commission. Hence, the present petition.

Issue: Whether petitioner Richard N. Rivera's employment was terminated for just cause by respondent
Genesis Transport, Inc.

Held: No, Rivera’s employment was illegally and unjustly terminated.

For serious misconduct to justify dismissal, the following requisites must be present: (a) it must be
serious; (b) it must relate to the performance of the employee's duties; and (c) it must show that the
employee has become unfit to continue working for the employer1. On the other hand, the employer's
loss of trust and confidence in its employee is among the just causes for termination. But certain
requirements must be complied with, namely: (1) the employee concerned must be holding a position2
of trust and confidence and (2) there must be an act that would justify the loss of trust and confidence.
These instances for just dismissal are absent in the case at bar.

Concededly, bus conductors handle money. To this extent, their work may be analogous to that of
tellers, cashiers, and other similarly situated rank-and-file employees who occupy positions of trust and
confidence. However, even granting that the first requisite for termination of employment on account of
willful breach of trust has been satisfied, the Court finds it improper to sustain the validity of the
termination of petitioner's employment.

Bus conductors receive, exchange, and keep money paid by passengers by way of transportation fare.
They keep track of payments and make computations down to the last centavo, literally on their feet
while a bus is in transit. Thus, while they do handle money, their circumstances are not at all the same
as those of regular cashiers. They have to think quickly, literally on their feet. Regular cashiers, on the

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other hand, have the time and comfort to deliberately and carefully examine the transactions of their
employer.

To reiterate, what is involved is a paltry amount of P196.00. All that has been proven is the existence of
a discrepancy. No proof has been adduced of ill-motive or even of gross negligence. From all indications,
petitioner stood charged with a lone, isolated instance of apparent wrongdoing. The records are bereft
of evidence showing a pattern of discrepancies chargeable against petitioner. Seen in the context of his
many years of service to his employer and in the absence of clear proof showing otherwise, the
presumption should be that he has performed his functions faithfully and regularly.

Absent any other supporting evidence, the error in a single ticket issued by petitioner can hardly be used
to justify the inference that he has committed serious misconduct or has acted in a manner that runs
afoul of his employer's trust. More so, petitioner cannot be taken to have engaged in a series of acts
evincing a pattern or a design to defraud his employer. Terminating his employment on these
unfounded reasons is manifestly unjust.

Final Disposition: The case is remanded to the Labor Arbiter to make a detailed computation of the
amounts due to petitioner, which respondents should pay without delay.

106. Tri-C GeneralServices vs.Matuto GR No. 194686, Sept 23, 2015

Facts: Petitioner Tri-C General Services, Inc. is a manpower agency engaged in the business of supplying
services to all PLDT Business Offices in Laguna. Respondents Nolasco Matuto (Matuto), Romeo Magno
(Magno) and Elvira Laviña (Laviña) were hired by petitioner as janitors/janitress assigned at the PLDT
Business Office in Calamba City.

On November 3, 2004, Matuto and Laviña were barred from their work place in PLDT Calamba, while
Magno was denied entry on November 26, 2004. 9 Thus, respondents filed an illegal dismissal case
against petitioner on December 15, 2004.

In its defense, petitioner denied dismissing respondents. Sometime in October 2004, PLDT-Laguna
informed petitioner that it would implement cost-cutting measures and that it would discontinue, after
careful assessment, the services of respondents. Petitioner further claimed that it had no other recourse
but to temporarily put the respondents on "floating status" upon termination of client's contract since
their work was entirely dependent on the need for janitorial services of its clients. It alleged that the
complaint for illegal dismissal was premature since the six months legal period for placing an employee
on a "floating status" has not yet lapsed. It insisted that it was a legitimate exercise of its management
prerogative.

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The Labor Arbiter dismissed the respondents’ complaint for illegal dismissal. The NLRC sustained the
ruling of the LA. The Court of Appeals declared that respondents were illegally dismissed, and ordered
their reinstatement and payment of full backwages. It found that there was nothing to support
petitioner's allegation aside from its bare assertion that its client PLDT-Laguna requested for
discontinuance of its services. There was also no showing that there was lack of available posts to which
the respondents might be assigned after they were relieved from their last assignment. Hence, the
present petition.

Issue: Whether the Court of Appeals correctly ruled that respondents are illegally dismissed by the
petitioner.

Held: After a judicious study of the records of the case, the Court deems it proper to disregard the
findings of the Court of Appeals.

The Court is not unmindful of the rule in labor cases that the employer has the burden of proving that
the termination was for a valid or authorized cause. However, it is likewise incumbent upon the
employees that they should first establish by competent evidence the fact of their dismissal from
employment. As an allegation is not evidence, it is elementary that a party alleging a critical fact must
support his allegation with substantial evidence. It was also stressed that the evidence to prove the fact
of dismissal must be clear, positive and convincing.

In the present case, the facts and the evidence do not establish a prima facie case that respondents
were dismissed from employment. Aside from their mere assertion and joint affidavit, respondents
failed to adduce corroborative and competent evidence to substantiate their conclusion that they were
dismissed from employment. Respondents did not even present the alleged notice of termination of
their employment. Therefore, in the absence of any showing of an overt or positive act proving that
petitioner had dismissed respondents, the latter's claim of illegal dismissal cannot be sustained as the
same would be self-serving, conjectural and of no probative value.

The records are devoid of any indication that they were barred from petitioner's premises or were
otherwise deprived of any work assignment after the discontinuance of their work in PLDT-Calamba. It
was also not shown that respondents reported or even tried to report to petitioner's office and
requested for another work assignment after being dismissed from PLDT-Calamba. On the contrary, the
evidence presented by petitioner showed that they were repeatedly summoned to report to its main
office and did not even bother to show despite several notices. Moreover, the rule that the employer
bears the burden of proof in illegal dismissal cases finds no application in a case, like the present
petition, where the employer denied having dismissed the employees.

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Petitioner alleged that the CA erred in ruling that respondents were entitled to reinstatement, payment
of backwages and other monetary benefits. Petitioner believed that respondents are not entitled to the
awards since they were not illegally dismissed.

Under Article 279 38 of the Labor Code and as settled in jurisprudence, an employee who is dismissed
without just cause and without due process is entitled to backwages and reinstatement or payment of
separation pay in lieu thereof. While we agree with the rulings of the LA and the NLRC that respondents
were not illegally dismissed and not guilty of abandonment, we do not agree with their decisions to
dismiss the case for lack of merit. Instead, we find that respondents are entitled to reinstatement
without payment of backwages and other monetary benefits.

Respondents were not illegally dismissed from employment and their wages were not withheld without
valid and legal basis. Therefore, they are not entitled to receive attorney's fees.

As all circumstances surrounding the alleged termination are taken into account, petitioner should
accept respondents back and reinstate them to their former positions. However, under the principle of
"no work, no pay," there should be no payment of backwages. In a case where the employee's failure to
work was occasioned neither by his abandonment nor by a termination, the burden of economic loss is
not rightfully shifted to the employer; each party must bear his own loss. Absent any showing that there
is strained relationship between petitioner and respondents, the order of reinstatement3 shall stand.

Final Disposition: The instant petition is granted. Accordingly, the Decision of the Court of Appeals is
reversed and set aside.

107. Nightowl Watchman & Security Agency, GR No. 212096, Oct 14, 2015

Facts: Sometime in December 1996, Nightowl hired Nestor P. Lumahan (Lumahan) as a security guard.
Lumahan's last assignment was at the Steelworld Manufacturing Corporation (Steelworld).

On January 2000, Lumahan filed before the labor arbiter a complaint for illegal dismissal; underpayment
of wages; nonpayment of overtime pay, premium pay for holiday and rest day, holiday pay, and service
incentive leave; separation pay; damages and attorney’s fees against Nightowl. He then amended the
complaint to include non-payment of 13th month pay and illegal suspension. He also corrected the date
of dismissal from May 1999 to June 1999.

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Lumahan admitted in his pleadings that he did not report for work from May 16, 1999 to June 8, 1999,
but claimed in defense that he had to go to Iloilo to attend to his dying grandfather. He alleged that
when he asked for permission to go on leave, Nightowl refused to give its consent. Steelworld, however,
gave him permission to leave for Iloilo. When he reported back to work, Nightowl did not allow him to
return to duty.

Nightowl, on the other hand, claimed that on April 22, 1999, Lumahan left his post at Steelworld and
failed to report back to work since then. It argued that it never dismissed Lumahan and that he only
resurfaced when he filed the present complaint.
 Labor Arbiter Espiritu: dismissed the complaint- Lumahan had not been
dismissed to begin with; nevertheless Lumahan was entitled to his money
claims because Nightowl failed to rebut them
 NLRC: remanded the case to the Labor Arbiter – there were factual matters
that needed to be considered
 Labor Arbiter Demaisip: declared that Lumahan had been illegally dismissed
and order Nightowl to pay backwages and separation pay – LA also held no
abandonment of work took place because Nightowl failed to establish
Lumahan’s intention to abandon
 NLRC: dismissed the complaint for illegal dismissal- no evidence to show that
Lumahan had been dismissed

CA: granted Lumahan’s certiorari petition after finding grave abuse of discretion in NLRC’s (above)
decision; The fact that Lumahan did not receive any notice whatsoever sufficiently shows that Nightowl
had no valid cause to terminate Lumahan’s employment; hence, Lumahan was illegally dismissed. (CA
gave more weight to the finding of LA Demaisip)
Issue: Whether or not Lumahan was illegally dismissed.

Nightowl’s argument: there was no clear and convincing evidence showing that
Lumahan had really been dismissed
Lumahan: emphasized and reiterated that Nightowl failed to send him a report-to-
work notice. This oversight caused him to be constructively dismissed

Held: SC resolved to partly GRANT the petition

In every employee dismissal case, the employer bears the burden of proving the validity of the
employee’s dismissal, i.e., the existence of just or authorized cause for the dismissal and the observance
of the due process requirements. The employer’s burden of proof, however, presupposes that the
employee had in fact been dismissed, with the burden to prove the fact of dismissal resting on the
employee. CA should have first considered whether there had been a dismissal in the first place.

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SC declared that Lumahan failed to substantiate his claim that he was constructively dismissed when
Nightowl allegedly refused to accept him back when he allegedly reported for work from April 22, 1999
to June 9, 1999. In short, Lumahan did not present any evidence to prove that he had, in fact, reported
back to work. Lumahan was not even sure of the actual date of his alleged dismissal.

Note the following in this respect: he initially indicated in his complaint that he was dismissed in May
1999. Then, in his amended complaint, he changed the date from May 1999 to June 1999. However, in
his position paper, he claimed that he was made to wait for six (6) months until he was finally told in
December 1999 to look for another job. Thus, the NLRC concluded, because of Lumahan’s uncertainty,
that he had not actually been dismissed.

As no dismissal was carried out in this case, any consideration of abandonment – as a defense raised by
an employer in dismissal situations – was clearly misplaced. To our mind, the CA again committed a
reversible error in considering that Nightowl raised abandonment as a defense.

Abandonment, as understood under our labor laws, refers to the deliberate and unjustified refusal of an
employee to resume his employment. It is a form of neglect of duty that constitutes just cause for the
employer to dismiss the employee. Abandonment is a defense available against the employee who
alleges a dismissal- employer bears the burden of proving the employee’s unjustified refusal to resume
employment. This burden, of course, proceeds from the general rule that places the burden on the
employer to prove the validity of the dismissal.

We find it clear, however, that Nightowl did not dismiss Lumahan; hence, it never raised the defense of
abandonment. Besides, Nightowl did not say that Lumahan “abandoned his work”; rather, Nightowl
stated that Lumahan “abandoned his post” at Steelwork.

Finally, failure to send notices to Lumahan to report back to work should not be taken against Nightowl
despite the fact that it would have been prudent, given the circumstance, had it done so. Report-to-
work notices are required, as an aspect of procedural due process, only in situations involving the
dismissal, or the possibility of dismissal, of the employee- again no dismissal took place.

In cases where no dismissal took place, the proper award is reinstatement, without backwages, not as a
relief for any illegal dismissal but on equitable grounds. When, however, reinstatement of the employee
is rendered impossible, as when the employee had been out for a long period of time, the award of
separation pay is proper.

Here, considering that more than ten years has already passed from the time Lumahan stopped
reporting for work on April 22, 1999, up to this date, it is no longer possible and reasonable for Nightowl
to reinstate Lumahan in its service. Thus, in lieu of reinstatement, we find it just and equitable to award

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Lumahan separation pay in an amount equivalent to one (1) month pay for every year of service
computed up to the time he stopped working.

WHEREFORE, we GRANT IN PART the petition; we REVERSE and SET ASIDE the resolution of CA.

108. Ocean East Agency Corp vs. Lopez, GR No. 194410, Oct 14, 2015

Facts: Petitioner Ocean East Agency Corporation (Ocean East) is a manning agency engaged in
recruitment and deployment of Filipino seamen for overseas principals.

Respondent Allan I. Lopez was employed as Documentation Officer assigned to Ocean East's Operations
Department. Prior to his employment, Ocean East had already engaged the services of one Grace
Reynolds as Documentation Clerk. Sometime in 1996, it hired one Ma. Corazon P. Hing also as
Documentation Clerk.
In a letter, Ocean East served notice to Lopez that effective thirty (3 0) days later, or on March 6, 2001,
his services will be terminated on the ground of redundancy, as his position as Documentation Officer is
but a duplication of those occupied by its two (2) other personnel who were also exercising similar
duties and functions. Lopez received his separation pay and was issued a Certificate of Service.

Lopez filed an Amended Complaint for illegal dismissal. Despite conciliation efforts, the parties failed to
agree to an amicable settlement, so they were required by the Labor Arbiter to submit their respective
Position Papers and other pleadings.

Labor Arbiter: rendered a Decision dismissing the illegal dismissal complaint for lack of merit; Citing the
employer's management prerogative to abolish a position which it deems no longer necessary, the
Labor Arbiter held that it would be unfair to compel Ocean East to retain Lopez' position whose duties
and functions are likewise being performed by its 2 other employees- there also was no showing that
the streamlining of Ocean East’s workforce was attended by malice and ill-will.

NLRC: dismissed Lopez' appeal for lack of merit. It stressed that much leeway is granted to the employer
in the implementation of business decisions, such as streamlining of workforce resulting in displacement
of certain personnel. It found that no malice or ill-will was shown to have been committed by Ocean
East in the exercise of its management prerogatives, which included whom to separate and what
positions to abolish.

It noted that Lopez' being a polio victim is merely incidental, as the fact remains that there was a
duplication in the functions of a Documentation Officer. It also pointed out that what took place was a
reduction of personnel due to redundancy, not retrenchment.

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CA: granted Lopez’ petition and ruled that he was illegally dismissed; It noted, however, that since he
was dismissed on the ground of redundancy, reinstatement would no longer serve any prudent purpose.
It added that since he was already paid a separation pay at the time of his dismissal, he was entitled only
to payment of backwages.
Oceaneast committed a fatal en-or when it failed to give written notice to the Department of
Labor and Employment (DOLE) as required under Article 283 of the Labor Code. Both the Labor
Arbiter and the NLRC found the absence of written notice of termination to the DOLE but opined
that there was substantial compliance on the notice requirement as Lopez himself was duly
informed and consented to his termination by receiving his separation pay.
When the law requires that there must be a written notice of termination one month prior to the
date of the termination itself, it specifically stated such notice must be given to both the
employee concerned and the DOLE. The purpose of the written notice to the DOLE is to give it the
opportunity to ascertain the verity of the alleged authorized cause of termination. Thus,
Oceaneast's failure to show an authorized cause for Lopez' termination is sufficient to declare his
dismissal illegal.

Oceaneast’s arguments:
 They have clearly established that the functions of Lopez as a Documentation
Officer is virtually a duplication of the duties and responsibilities performed
by Ocean East's two (2) other Documentation Clerks
 They have complied with the four (4) requisites for the valid implementation
of a redundancy program. As to the first and second requisites, petitioner~
state that Ocean East duly served a written notice to Lopez thirty (30) days
prior to the intended date of termination, and paid his separation pay
equivalent to one ( 1) month pay for every year of service.
 To justify their failure to serve a similar notice to the DOLE, petitioners cite
the cases of International Hardware, Inc. v. NLRC and Dole Philippines, Inc.
v. NLRC where it was held that the required previous notice to the DOLE is
not necessary when the employee acknowledged the existence of a valid
cause for termination of his employment.
 Citing Talam v. NLRC they further claim that Lopez' acceptance of a
considerable sum as separation pay and his certificate of service without
protest, clearly indicates consent to his dismissal, which effectively released
them from their obligations.
 With respect to the third requisite, petitioners submit that having been
actuated by the exigencies of service and requirements of its business,
Ocean East acted in good faith in abolishing the redundant position of Lopez.
(Financial difficulties)
 Anent the fourth requisite, petitioners aver that fair and reasonable criteria,
i.e., seniority and efficiency, were used by Ocean East in ascertaining what
positions were to be declared redundant. Invoking the employer's
management prerogative, they assert that it would be more efficient in
Ocean East's business operations if it would abolish the position of

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Documentation Officer, and retain Reynolds who was more senior than
Lopez.

Issue: Whether or not Ocean East was able to establish that Lopez was validly terminated on the ground
of redundancy, the Court is called upon to re-examine the facts and evidence on record

Held: Petition lacks merit.

Redundancy exists when the service capability of the workforce is in excess of what is reasonably
needed to meet the demands of the enterprise. A redundant position is one rendered superfluous by
any number of factors, such as over hiring of workers, decreased volume of business, dropping of a
particular product line previously manufactured by the company, or phasing out of a service activity
previously undertaken by the business.

Under these factors, the employer has no legal obligation to keep in its payroll more employees than are
necessary for the operation of its business. Even if a business is doing well, an employer can still validly
dismiss an employee from the service due to redundancy if that employee's position has already
become in excess of what the employer's enterprise requires.

As an authorized cause for termination of employment, redundancy may be implemented subject only
to strict requirements spelled out in Article 283 of the Labor Code.

For the implementation of a redundancy program to be valid, the employer must comply with these
requisites: (1) written notice served on both the employee 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.

The Court found that Oceaneast failed to establish compliance with the first, third and fourth requisites
for a valid implementation of a redundancy program, thereby making Ocean East liable for illegal
dismissal.
(1): It is undisputed that Ocean East failed to comply with the first requisite of service of a
written notice of termination to the DOLE.

The statements in the cases cited by Oceaneast (International Hardware and DOLE) are mere obiter
dictum which cannot be invoked as a doctrinal declaration of the Court.
 Notably, International Hardware, Inc. neither involves an employee
who consented to or voluntarily applied for his retrenchment due to
authorized causes for termination. Nor does it contain a discussion on

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the lack of termination notice to the DOLE and the dispensability of
such notice when an employee acknowledged the validity of the cause
for his termination.
 In Dole Philippines, Inc., the private respondent employees filled up
application forms for the redundancy program and thus acknowledged
that the existence of their services were redundant.

Reliance on Talam v NLRC is also misplaced as there was no indication that Lopez executed a waiver and
quitclaim which estops him from questioning the validity of the dismissal.

Above all, there is no merit in petitioners' contention that notice to the DOLE may already be
dispensed with since there was no more useful purpose for it, and he was already adequately
compensated as required by law. Indeed, to dispense with such notice would not only disregard a clear
labor law provision that affords protection to an employee, but also defeats its very purpose which is to
give the DOLE the opportunity to ascertain the veracity of the alleged authorized cause of termination.
(3) and (4) : With regard to petitioners' failure to establish the third and fourth requisites for a valid
implementation of a redundancy program, the Court stresses the importance of having fair and
reasonable criteria, such as but not limited to (a) less preferred status, e.g., temporary employee; (b)
efficiency; and ( c) seniority. 34 The presence of such criteria used by the employer shows good faith on
its part and is evidence that the implementation of redundancy was painstakingly done by the employer
in order to properly justify the termination from the service of its employees.

While it is true that the characterization of an employee's services as superfluous or no longer necessary
and, therefore, properly terminable, is an exercise of business judgment on the part of the employer,
the exercise of such judgment must not violate the law, and must not be arbitrary or malicious.

To dispel any suspicion of bad faith on the part of the employer, it must present adequate proof of the
redundancy, as well as the criteria in the selection of the employees affected. The following evidence
may be proffered to substantiate redundancy, to wit: the new staffing pattern, feasibility
studies/proposal on the viability of the newly-created positions, job description and the approval by the
management of the restructuring.

However, Oceaneast failed to prove by substantial evidence their observance of the fair and reasonable
criteria of seniority and efficiency in ascertaining the redundancy of the position of Documentation
Officer, as well as good faith on their part in abolishing such position. Petitioners were unable to justify
why it was more efficient to terminate Lopez rather than its two other Documentation Clerks, Reynolds
and Hing. Also, while Reynolds was supposedly retained for being more senior than Lopez, petitioners
were silent on why they chose to retain Hing who was hired in 1996, instead of Lopez who was hired
about eight (8) years earlier in 1988.

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For petitioners' failure to prove that Ocean East served the DOLE a written notice of termination as
required under Article 283 of the Labor Code, and to show that it was in good faith in implementing a
redundancy program, and that it adopted a fair and reasonable criteria in ascertaining what positions
are to be declared redundant, the CA correctly found the company liable for illegal dismissal.

Settled is the rule that an employee who was illegally dismissed from work is entitled to reinstatement
without loss of seniority rights, and other privileges, as well as to full backwages, inclusive of allowances,
and to other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement. Since reinstatement is no longer feasible
as Lopez' former position no longer exists, his backwages shall be computed from the time of illegal
dismissal up to the finality of the decision.
Backwages include the whole amount of salaries plus all other benefits and bonuses and general
increases to which he would have been normally entitled had he not been illegally dismissed,
such as the legally mandated Emergency Cost of Living Allowance (ECOLA) and thirteenth (13th)
month pay, and the meal and transportation allowances prayed for by Lopez.

Finally, the Court sustains the CA in holding Lopez entitled to attorney's fees in the amount of ten
percent ( 10%) of the total monetary award pursuant to Article 111 of the Labor Code forced to litigate
and incur expenses to protect his rights and interest, the award of such fees is legally and morally
justifiable.

Consistent with the prevailing jurisprudence, however, the legal interest imposed on the monetary
awards at the rate of twelve percent (12%) per annum (p.a.) should be reduced to six percent (6%) p.a.,
computed from the finality of this Decision until full payment. WHEREFORE, the petition is DENIED.

109. Rivera vs. Allied Banking Corp GR No.196597, Oct 31, 2015

Facts: Petitioner Modesto W. Rivera started working for respondent Allied Banking Corporation
("Bank") as a junior officer (Accountant). He rose to the position of Branch Head with rank of Assistant
Manager.
Rivera received an Inter-Office Communication6 (IOC) from respondent Antonio H. Santos, the Bank’s
Vice-President, directing him to explain in writing within 48 hours why no disciplinary action should be
taken against him for misconduct, dishonesty, fraud or willful breach of the trust reposed on him by the
Bank. A bank client Ms. Sta. Cruz had entrusted big sums of money to petitioner for rediscounting of
foreign currency checks which were then deposited into her savings accounts.

Rivera denied having enticed Ms. Sta. Cruz who was already engaged in rediscounting transactions long
before she opened an account at his branch. He explained that the arrangement with Ms. Sta. Cruz
regarding the opening of joint accounts for her foreign currency check deposits was merely an

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accommodation service to a bank client, which was done in good faith and in accordance with the
Bank’s policies.

Another letter-complaint was sent to the Bank’s Legal Department – the letter stated that Globe Life
and Accident Insurance Co. of Oklahoma City, U.S.A. had issued checks representing life insurance
benefits to the heirs of Hector Palalay. It turned out that one of these payable to Alexa Palalay was
deposited by a certain “Nena Soriano Sta. Cruz” with the Bank on July 31, 2007. The Bank’s crediting of
this check was fraudulent because Alexa Palalay could not have signed the check as she was then barely
two years old. Again, petitioner was directed to submit his written explanation as to why he should not
be subjected to disciplinary action for his violation of the Bank’s policy against accepting for deposit or
encashment second-endorsed US Dollar-denominated currency checks. Rivera admitted that the
negotiated check of Alexa Palalay was among those second-endorsed checks from Ms. Sta. Cruz who
was engaged in the rediscounting business.

After the conclusion of an investigation, Rivera was immediately terminated through a communication
which declared that Rivera’s acts constitute non-compliance with the Bank’s policies and rules, which
likewise breached the trust and confidence reposed on him by the Bank.

Rivera filed a complaint for illegal dismissal.

He claimed his termination was illegal because he was never informed of its true reasons despite making
repeated requests to be furnished a copy of the Bank’s audit findings. He surmised that respondents
already decided to dismiss him when the Bank’s management met with Ms. Sta. Cruz and, relying
completely on her complaint, considered him guilty of committing irregularities in his branch. Even
assuming he was indeed guilty, petitioner believes the penalty of warning for the first offense and not
dismissal should have been imposed, as provided in the Bank’s Employee Discipline Policies and
Procedures (EDPP).

Bank’s counter-argument:
Rivera’s acceptance of second-endorsed foreign currency checks was not an isolated transaction but
repeated infractions throughout his tenure as Branch Head. They claimed that the most damning
evidence against petitioner was his own admission that he received commissions in exchange for
acceptance of the secondendorsed foreign currency checks from Ms. Sta. Cruz.

Labor Arbiter: Rivera was illegally dismissed

NLRC: reversed the Labor Arbiter’s ruling but ordered respondent Allied Banking Corporation to pay the
complainant vacation and sick leave credits; refund of contributions to the Employment Investment

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Savings Plan and Manual Savings plan with legal interest; later NLRC modified its resolution and deleted
the award for accumulated vacation and sick leave credits

CA: sustained the ruling of NLRC; CA held that the requirement that there be some basis or reasonable
ground to believe that petitioner was responsible for the breach of the Bank’s standard operating
procedure was satisfied in this case
Rivera elevated the case to SC reiterating the lack of a valid ground for his termination because the Bank
failed to fully apprise him of the complaint against him and the findings in the audit report which was
disclosed to him only during the investigation

Issue: Whether or not the Bank validly dismissed Rivera.

Held: Petition has no merit.

ART. 282. Termination by employer. – An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work; (b) Gross and habitual neglect by the
employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative; (d) Commission of a crime or offense by the
employee against the person of his employer or any immediate member of his family or his duly
authorized representative; and (e) Other causes analogous to the foregoing.

Under Article 282(c) of the Labor Code, as amended, an employer may dismiss the employee either for
(1) fraud; or (2) willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative.

Law and jurisprudence have long recognized the right of employers to dismiss employees by reason of
loss of trust and confidence. More so, in the case of supervisors or personnel occupying positions of
responsibility, loss of trust justifies termination. Loss of confidence as a just cause for dismissal is
premised on the fact that an employee concerned holds a position of trust and confidence.

While it is true that loss of trust and confidence is one of the just causes for termination, such loss of
trust and confidence must, however, have some basis. Proof beyond reasonable doubt is not required.
Loss of trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust
and founded on clearly established facts.

The bank did not just rely on the allegations of Ms. Sta Cruz, the audit on petitioner’s branch revealed
that several US Dollar denominated currency checks were returned due to forged or unauthorized

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endorsements. The practice of accepting for deposit second-endorsed US Dollar denominated checks is
strictly prohibited under the Bank’s established policies, and may be allowed only in certain exceptional
cases.

The Bank’s rules provide (Bank’s OM No. 03-367) that second-endorsed US Dollar checks may be
accepted at the discretion of the Branch Head (BH)/Officer-in- Charge (OIC) who shall be personally
accountable/responsible therefore. The Bank’s investigation on the transactions involving foreign
currency checks during petitioner’s tenure as Branch Head disclosed that Rivera deliberately disregarded
the foregoing rules when he accepted for deposit several US Dollar denominated checks from Ms. Sta.
Cruz.
We find substantial evidence of petitioner’s misconduct that justified respondents’ loss of confidence in
petitioner whose repeated violations of OM 03-367 resulted in huge losses to the Bank. Petitioner knew
of the risky and questionable rediscounting business of Ms. Sta. Cruz and yet allowed her to deposit
second-endorsed US Dollar denominated checks in substantial amounts even if these were sourced only
from her various “contacts” or agents.

Rivera contends that respondents failed to observe due process as they only gave him the termination
notice which included numerous alleged infractions without giving him reasonable opportunity to be
heard and present his case.

However, records showed that he submitted a letter dated September 25, 2007 to the Chairman of the
Investigating Committee where he gave his comments to the committee’s findings as relayed to him
during the hearing conducted on September 13, 2007. The contents of this letter confirm that petitioner
was fully apprised of the charges against him as in fact he reiterated his previous written replies to the
RBG on each incident of fraudulently endorsed check.
An employer cannot be compelled to retain an employee who is guilty of acts inimical to the interests of
the employer. A company has the right to dismiss its employees as a measure of protection, more so in
the case of supervisors or personnel occupying positions of responsibility. Indeed, it would be
oppressive and unjust to order the respondents to take petitioner back, for the law, in protecting the
rights of the employee, authorizes neither oppression nor self-destruction of the employer.

Having been dismissed for cause, the penalty of dismissal imposed on petitioner carried with it the
forfeiture of his leave credits and their monetary equivalent. WHEREFORE, the petition is DENIED for
lack of merit

110. Oikonomos Intl Resources Corp (Hilton Cebu Resort & Spa) vs.
Navaja, Jr. GR No. 214915, Dec 7, 2015

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Facts: Oikonomos hired Navaja as a room attendant. Navaja performed housekeeping and cleaning
duties in the hotel and reported for a graveyard shift from 11:00 o'clock in the evening up to 7:00
o'clock in the morning.

Navaja: On August 25, 2010, at around 6:00 o'clock in the morning, the front office ordered Navaja to
check the minibar in Room 1202 after the guests checked out early. He went and checked Room 1202.
At around 6:50 o'clock in the morning, after checking another room, he went back to Room 1202 to
double check if the Sebu Fish Mascot was still there. It was then that he saw a white Nike jacket left in
the room.

Navaja was served a memorandum by Oikonomos notifying him that he was being preventively
suspended for suspicion of theft, and that he had to explain in writing why he should not be dismissed
from service and to attend the administrative hearing scheduled on September 6, 2010. He then
submitted his written explanation and appeared at the Human Resources Department for the
administrative hearing of his case. Thereafter, Navaja received the memorandum from Oikonomos
dismissing him from the service after he was found guilty of theft and dishonesty which were
violations of company rules and regulations.

Oikonomos: it has established with substantial evidence that Navaja committed serious misconduct
under Article 282 (a) of the Labor Code. Navaja had several opportunities to report the missing white
jacket but he knowingly failed to do so; that he issued inconsistent statements regard the missing jacket;
that he tucked the jacket at the back of his pants and later placed it in a black plastic bag to intentionally
conceal the same; that his co-employees could not even see that he was carrying a white jacket; and
that the CA failed to consider his past infractions. Navaja had several opportunities to disclose that he
found the missing item, but he opted not to.

Navaja’s counter-argument: asserted that the issues raised by Oikonomos were factual in nature and
could not be subject of an appeal before the Court; that there was no substantial evidence that he
committed theft; that his co-employees attested that they saw him with the white jacket in plain sight,
thus, he was not hiding it; that the CCTV snapshots were arbitrarily isolated by Oikonomos and these did
not convey the real events that transpired; and that he refuted the minutes of the administrative
hearing conducted by Oikonomos.

LA: Navaja was validly dismissed because he committed an act of theft or dishonesty. The CCTV footage
and his deliberate failure to report the missing item showed his intention to appropriate the jacket. His
defense of simple forgetfulness was not a credible excuse to refute the evidence presented by
Oikonomos. In deciding against Navaja, the LA also considered his past infractions.

Nevertheless, the LA awarded Navaja with his corresponding 13th month pay and service incentive leave
pay because Oikonomos failed to show proof of payment.

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NLRC: There was a valid dismissal. The labor tribunal recognized the employer's right to dismiss an
employee for violating company rules.

CA: Navaja was illegally dismissed. Navaja, based on the statements of his co-employees, did not
intentionally conceal it. The Court did not give credence to the CCTV footage. As such, he is ENTITLED
to reinstatement and full backwages, inclusive of allowances and other benefits, or their monetary
equivalent computed from the time the compensation was not paid up to the time of actual
reinstatement.

Issue: WHETHER THE DISMISSAL OF NAVAJA BASED ON A JUST CAUSE OF SERIOUS MISCONDUCT WAS
PROVEN BY OIKONOMOS WITH SUBSTANTIAL EVIDENCE.
Held:

Serious misconduct was proven with substantial evidence

The just causes for dismissing an employee are provided under Article 282 of the Labor Code. In Article
282 (a), serious misconduct by the employee justifies the employer in terminating his or her
employment.

Misconduct is defined as improper and wrongful conduct. It is the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful
intent and not mere error in judgment. Ordinary misconduct would not justify the termination of the
services of an employee as the law is explicit that the misconduct should be serious. It is settled that in
order for the misconduct to be considered serious, it must be of such grave and aggravated character
and not merely trivial or unimportant. As amplified by jurisprudence, the misconduct must (1) be
serious; (2) relate to the performance of the employee's duties; and (3) show that the employee has
become unfit to continue working for the employer.

Where there is no showing of a clear, valid and legal cause for termination of employment, however,
the law considers the case a matter of illegal dismissal. If doubt exists in the appreciation of the
evidence presented by the employer as against that of the employee, the scales of justice must be tilted
in favor of the latter. The employer must affirmatively show substantial evidence that the dismissal was
for a justifiable cause. Substantial evidence is more than a mere scintilla of evidence or relevant
evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds,
equally reasonable, might conceivably opine otherwise.

The Court finds that Oikonomos was able to establish with substantial evidence by the following
circumstances:

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1. Navaja took the jacket from Room 1202 on August 25, 2010. From the time he obtained the said
item, he began to perform certain acts to willfully conceal the same. Upon his discovery of the jacket, it
was strange that he placed it at the back of his pants. His flimsy explanation that he needed to free both
his hands to carry the wine crate was simply incredible considering that there were various and more
convenient ways to carry the jacket in a conspicuous manner.

The CCTV footages would also show that Navaja acted strangely outside the elevator.
Further, the statements of his co-employees did not prove that there was no intent to hide the item.
Their statements did not categorically indicate that they actually saw Navaja carrying a jacket at the
back of his pants.

2. Navaja had several opportunities to report the missing item to the management. The first instance
was when Navaja accomplished his daily report at the housekeeping office before he went home.
Considering that the black plastic bag containing the jacket was in the same room where he wrote his
report, it was unbelievable that he still failed to recall and indicate the lost item in the said report. And
another instance was during his next shift when he was made to answer a Q&A form by the security
department. He admitted that he remembered the missing jacket as he already had the feeling that the
questioning was about the jacket that he found, but still failed to disclose.

3. Navaja violated company policy regarding their lost and found procedure when it failed to
immediately report lost and found items to the security or front office. To recapitulate, Navaja had
several encounters with the security and front office before he belatedly reported the jacket.

The company policy that Navaja violated was "[R]ule C-1 DISHONESTY: Theft, attempting theft or
removing from Company premises, any food, beverage, material, equipment, tools or any other
property of the Company, another colleague or customer.” Apparently, even attempted theft could be
considered as a violation of Oikonomos' policy warranting disciplinary measures.

Based on the foregoing, the misconduct of Navaja, coupled with his conscious concealment of the
missing item, was serious in character and constituted a violation of company policy.

Previous infractions, on the other hand, may be used as justification for an employee's dismissal from
work in connection with a subsequent similar offense. In the case at bench, some of the past violations
committed by Navaja were (1) failing to return lost and found items, (2) acts of inefficiency and (3)
insubordination. Navaja recognized these, however, despite the warnings on his prior infractions and
Oikonomos' forbearance, Navaja unfortunately continued his transgressions.

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After all those infractions, the Court understands Oikonomos' position that it could not anymore accept
Navaja as one of its trusted employees.

"While it is true that compassion and human consideration should guide the disposition of cases
involving termination of employment, since that it affects one's source or means of livelihood, it should
not be overlooked that the benefits accorded to labor do not include compelling an employer to retain
the services of an employee who has been shown to be a gross liability to the employer. The law, in
protecting the rights of the employees, authorizes neither oppression nor self-destruction of the
employer. It should be made clear that when the law tilts the scale of justice in favor of labor, it is but a
recognition of the inherent economic inequality between labor and management. The petition is
granted.

111. Smart Communications Inc. vs. Solidum, GR No. 197763, Dec 7, 2015

Facts: Communications, Inc. (Smart) hired Jose Leni Solidum (Solidum) as

Department Head of Smart Prepaid/Buddy Activations under the Product Marketing
Group as evidenced by an employment contract. Existing company procedures
provide that a department head shall approve project proposals coming from his
marketing assistants and product managers/officers. Once approved, a finance
officer will assign a reference number to the project with a stated budget allocation.
If the Company decides to engage the services of a duly accredited creative
agency, the department head will coordinate with it to discuss the details of the
project. The implementation details and total amount of the project will then be
included in a Cost Estimate (CE) submitted to the Company, routed for approval,
and returned to the selected agency for implementation. After the project is carried
out, the agency will bill the Company by sending the CE with attached invoices and
other supporting documents.

Solidum received a Notice to Explain to the Company charging him with acts of
dishonesty and breach of trust and confidence. In summary, he was charged with
violating "various company policies by misrepresenting and using his position and
influence in his grant plot to defraud Smart by conceptualizing fictitious marketing
events, appointing fictitious advertising agencies to supposedly carry out marketing
events and submitting fictitious documents to make it appear that the marketing
events transpired." Solidum received a copy of the Notice on the same date.
Pending administrative investigation, Solidum was placed under preventive
suspension without pay for a period of thirty (30) days.

Solidum denied the charges and claimed that he never defrauded nor deceived the
Company in his transactions. Continued audit investigation, however, revealed that
Solidum approved/noted several CEs covering activities for which payments were
made but did not actually carried out. Unaccredited third parties were also engaged

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in the implementation of the projects. Thus, the Company issued another Notice to
Explain to Solidum. Solidum was again preventively suspended for another ten (10)
days.

Solidum then sent a letter to the Company requesting copies of the pertinent
documents so he can prepare an intelligible explanation. Thereafter, the Company
issued a letter alleging that Solidum refused to accept the documents that he had
requested. Using this allegation, the Company imposed an additional preventive
suspension often (10) days on Solidum. And eventually, Solidum was dismissed.
Aggrieved, Solidum filed a complaint for illegal suspension and dismissal with
money claims before the Arbitration Branch of the NLRC claiming that his extended
suspension and subsequent termination were without just cause and due process.

LA: the extended period of suspension without pay was illegal and that Solidum was
unjustly dismissed from work without observance of procedural due process. He
was ordered reinstated and was awarded backwages and monetary claims. The
ground of breach of trust and confidence is restricted to managerial employees;
however, no substantial evidence was presented to prove that Solidum has the
prerogatives akin to a manager other than his titular designation as department
head.

NLRC and CA: the seriousness of Solidum's infractions justified the additional period
of suspension. Overwhelming evidence showed that Solidum holds a position of
trust and has violated various company policies. Finally, the NLRC found that
Solidum was accorded procedural due process.

Issues:
(1) Whether or not Solidum is a fiduciary employee and is therefore covered by
the trust and confidence rule to a wider latitude.
(2) Whether or not Solidum is a managerial employee. (3) Whether or not the
2nd preventive suspension of Solidum is valid.

Held: Solidum's 2nd preventive suspension is valid

Smart: the respondent was validly placed under second preventive suspension for
the reason that pending investigation of separate and distinct set of offenses
committed by the respondent as contained in the second Notice to Explain dated 21
October 2005 (Annex F hereof), his continued presence in the company premises
during the investigation poses serious and imminent threat to the life or property of
the employer and co-workers.

Solidum: that his preventive suspension of 20 days is an extension of his initial 30-
day suspension and, hence, illegal and constitutes constructive dismissal.

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Smart's position is impressed with merit.

The relevant provisions regarding preventive suspensions are found in Sections 8

and 9 of Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code
(Omnibus Rules), as amended by Department Order No. 9, Series of 1997, which
read as follows:

Section 8. Preventive suspension. The employer may place the worker concerned
under preventive suspension only if his continued employment poses a serious and
imminent threat to the life or property of the employer or of his co-workers.

Section 9. Period of suspension. No preventive suspension shall last longer than

thirty (30) days. The employer shall thereafter reinstate the worker in his former or
in a substantially equivalent position or the employer may extend the period of
suspension provided that during the period of extension, he pays the wages and
other benefits due to the worker. In such case, the worker shall not be bound to
reimburse the amount paid to him during the extension if the employer decides,
after completion of the hearing, to dismiss the worker,

In this case, the petitioner was acting well within its rights when it imposed a 10-
day preventive suspension on Esteban. While it may be that the acts complained of
were committed by Esteban almost a year before the investigation was conducted,
still, it should be pointed out that Esteban was performing functions that involve
handling of the petitioner's property and funds, and the petitioner had every right
to protect its assets and operations pending Esteban's investigation.

While the Omnibus Rules limits the period of preventive suspension to thirty (30)
days, such time frame pertains only to one offense by the employee. For an
offense, it cannot go beyond 30 days. However, if the employee is charged with
another offense, then the employer is entitled to impose a preventive suspension
not to exceed 30 days specifically for the new infraction.

As in this case, Smart was able to uncover other wrongdoings committed by

Solidum during the investigation for the initial charges against him. These newly
discovered transgressions would, thus, require an additional period to investigate.

Smart, however, issued another notice to explain to Solidum this time involving
additional CEs: 2005-416, 2005-480, 2005-481, 2005-479, 2005-512, and 2005-
513. Solidum was again preventively suspended for twenty (20) days. The
preventive suspension of 20 days is not an extension of the suspension issued in
relation to the September 21, 2005 Notice to Explain but is a totally separate
preventive suspension for the October 21, 2005 Notice to Explain. As earlier pointed
out, the transactions covered by the 30-day preventive suspension are different
from that covered by the 20-day preventive suspension.

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Solidum is not entitled to reinstatement

Next, Solidum claims that due to the extension of his period of preventive
suspension, he must be considered as having been constructively dismissed and
entitled to reinstatement and backwages. To support his claim, Solidum
cites Maricalum Mining Corporation v. Decorion22 Such case, however, is not
factually on all fours with the instant case. In Maricalum, the Court ruled that
Decorion was illegally constructively dismissed, which is why he was entitled to
reinstatement. Here, Solidum was validly dismissed for loss of trust and confidence.
Thus, his reliance on Maricalum is misplaced and will not justify his reinstatement.

Solidum was a managerial employee of Smart

Article 212(m) of the Labor Code defines a Managerial Employee as:

(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire, transfer, suspend, lay-off
recall, discharged, assign or discipline employees. x x x

Solidum was a managerial employee in this wise:

The complainant occupied the position of Department Mead and held the same with
trust and confidence as required him under his employment contract. As
Department Head of the Smart Buddy Activations and Usage Group, complainant
led and directed his subordinates composed of product managers, product officers,
and senior marketing assistants to achieving the company's marketing
goals. Moreover, complainant appears to have the authority to devise, implement
and control strategic and operational policies of the Department he was then
heading. Likewise, it cannot be denied that complainant's Department has a budget
of millions of pesos over which he exercises the power to allocate to different
marketing projects conceptualized by him and/or his subordinates. The records
would also show that for complainant's services, he received a monthly salary in
the hefty amount of P233,910.00, monthly allowance of P19,000.00, and bonuses
and incentives of more than P7 Million.

Under the foregoing facts, complainant's duties and responsibilities, coupled with
the amount of salaries he is receiving and other benefits he is entitled to, certainly
show that his position of Department Head is managerial in nature. Thus, the NLRC
and the CA correctly found that Solidum was a managerial employee. As such, he
may be validly dismissed for loss of trust and confidence.

112. Solidbank Corp vs. CA, GR No. 166581, Dec 7, 2015

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Facts: Lazaro joined respondent Solidbank Corporation. He became later on its Vice President, Head of
the Branch Banking Group, Region 6 (Southern Luzon branches).

Imus branch, one of the bank's branches under Lazaro, was audited for the first time by the bank's
internal auditors. The audit uncovered certain irregularities committed by the branch manager and the
accountant involving loan releases without proper documentation and approval of the Region Head and
other appropriate approving bodies. Respondent bank was allegedly defrauded in the amount of P43
million through the fraudulent acts and/or activities allegedly committed by some officers of the said
branch office, in connivance with some individual borrowers.

Lazaro immediately tendered his resignation when his name was dragged by the controversy alleging
"that he has given blanket authority to all the Branch Managers in his region to commit loans up to P1
Million subject to his confirmation." However, his resignation was not accepted by respondent bank
president Vistan who categorically cleared him of any liability on the Imus case with the assurance that
he (Vistan) personally does not believe that Lazaro has anything to do with the said irregularity.
Respondent Vistan persuaded Lazaro to stay and help resolve the Imus case. Thus was then assigned in a
special project attached to the office of the legal counsel. And he accepted Vistan’s offer.

Petitioner's Christmas bonus was ordered reversed by a debit memo from respondent's bank Human
Resource Department (HRD). Aggrieved, Lazaro wrote a letter to respondent Vistan seeking clarification.
There was no response from respondent Vistan.

Lazaro was told by Ed Buenaventura of the Motorpool Section to surrender his service car. Later, Lazaro
found out that his payroll for December 1-15, 1996 was not credited to his payroll account. He thus
wrote another letter to respondent Vistan reiterating his earlier request for clarification. Again, there
was no answer.

Lazaro requested for a meeting with respondent Vistan. They met together with respondent SVP
Jazmines at the latter's office. Ten (10) months and twenty two (22) days after Lazaro was assigned to
special projects, respondent bank president Vistan verbally dismissed petitioner Lazaro upon the
recommendation of and after consultation with respondent Senior Vice President Jazmines because
his (Lazaro's) continued presence "might be used as a basis to accuse the bank of abetting a senior
officer who has been implicated by a "customer" in a case of public inquiry." The dismissal was made
retroactive November 30, 1996, more that [sic] a month before he was informed of his dismissal.

Lazaro filed a complaint for illegal dismissal, non-payment of earned wages and bonus, reinstatement,
backwages including moral and exemplary damages and attorney's fees.

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LA: Lazaro’s complaint is dismissed. Absent any evidence that Lazaro was still performing the functions
of a banker is tantamount to the bank's implied acceptance of his voluntary and irrevocable resignation.
However, considering that he was "reasonably made to believe that his job would be given back to him
by virtue of his earnest effort to recover whatever losses that respondent bank may have incurred as a
result of the alleged scam," and in view of the cessation of the bank's operation, Lazaro was awarded
separation pay (431,701.12), compensatory benefit (1,133,215.40), 1996 Christmas bonus (53, 962), and
damages.

NLRC: Only modified the monetary award by deleting the award of damages.

CA: The reassignment does not sever the tie between the employer and the employee. The fact that
Solidbank still exercised control over Lazaro and assigned him to tasks that was deemed necessary for
the bank indicates that there was no severance of the employer-employee relationship. Therefore, he
was illegally dismissed. Nonetheless, considering the cessation of the bank's operation, the appellate
court was constrained to award Lazaro separation pay, backwages and other amounts due him. The
amount of separation pay was corrected, as well as backwages and unpaid salary for December 1996, as
follows:
[Separation pay] Petitioner is no longer entitled to an increase in the original award for separation pay
given by the NLRC considering that petitioner did not question the same in his petition.

[Backwages] He was illegally dismissed and is therefore entitled to backwages. This Court multiplied his
monthly salary of P53,962.64 by 6 years instead of 43 months, thus awarding only P323,775.84. To
arrive at the correct amount of petitioner's backwages, we have to multiply his monthly salary by 43
months, viz: P53,962.64 x 43 = P2,320,993.52less P40,375.10 = P2,280,018.42.

[On the unpaid salary for December 1996] This Court also noticed a typographical error in encoding the
amount of petitioner's unpaid salary for December 1996 as P53,962.64 when it should only
be P40,375.10representing his basic salary, as prayed for in the petitioner before Us.

xxxxx

Petitioner correctly argues that in the computation of the separation pay and backwages, the whole
amount of his salaries plus benefits, bonuses and general increases to which he would have been
entitled shall be included. However, the record is bereft of any evidence showing the other monthly
benefits, bonuses, etc., aside from his monthly salary of P53,962.64 which is not contested by both
parties.

With respect to the 150% gross monthly salary pay for every year of service as separation pay based on

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the Solidbank-MetroBank Merger Agreement, We believe that the petitioner is not entitled to such
benefit. He did not apply for the same and he was not offered said separation benefits by the
respondent bank.

The computation of the separation pay should be based on the petitioner's proven monthly salary
(P53,962.64) from December 21, 1992 up to the promulgation of this resolution or for such additional
years upon final execution. Likewise, petitioner's backwages should be computed based on petitioner's
proven monthly salary (P53,962.64) from the time of his illegal dismissal on November 30, 1996 up to
the promulgation of this resolution.

Lazaro: there is sufficient evidence on record to prove that all the allowances and benefits (e.g. accruing
vacation leave, profit sharing, car benefits) he prays for have been consistently given to him, and thus
forms part of his salary. Thus, he asserts that the monetary awards must be based on his gross monthly
pay of P75,912.00 (basic salary with cost of living allowance, inclusive of all benefits and
allowances) instead of only P53,962.64 (basic salary with cost of living allowance). He further insists that
his separation pay must include other benefits in the total amount of P3,270,491.00.

Issues:
(1) Whether or not the appellate court erred in computing Lazaro's gross
monthly pay;
(2) Whether or not the CA rightly awarded damages and attorney's fees to
respondent.

Held:
Separation pay and backwages must include the gross monthly salary of the dismissed employee,
inclusive of all the allowances and benefits or their monetary equivalent, subject to evidentiary proof.

As regards the alleged erroneous computation of Lazaro's monthly pay, it has been settled that if
reinstatement is not possible, an illegally dismissed employee is entitled to separation pay and
backwages, computed using his gross monthly pay, inclusive of allowances and other benefits or their
monetary equivalent.23 Such amounts however must be duly proved before it may be granted by the
Court.

We are, however, compelled to deny Lazaro's prayer to include in his gross monthly salary the
allowances and benefits outlined in his petition. The records are bereft of evidence to serve as a
backbone for the allowances and benefits he desires. We therefore retain the amount of P53,962.64 as
his gross monthly pay, which remains uncontested by both parties.24

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a. Separation pay

Consequently, separation pay must be duly awarded to Lazaro because reinstatement is no longer
feasible. However, the Court has consistently ruled that the same must be computed only up to the
time the employer ceased operations. It cannot be held liable to pay separation pay beyond such
closure of business because even if the illegally dismissed employees would be reinstated, they could
not possibly work beyond the time of the cessation of its operation. This is especially true when the
closure was "due to legitimate business reasons and not merely an attempt to defeat the order of
reinstatement."

Considering that Solidbank ceased operations in 2000, Lazaro may then rightfully be considered as
covered by the Solidbank-Metrobank Merger-Integration Agreement. The agreement dictates that
separation pay will be given to Solidbank employees not absorbed by Metrobank, with the gross
monthly pay increased by 150%.

We disagree with the CA that Lazaro is not covered by the Merger-Integration Agreement because he
did not apply for the same and was not offered separation pay.29 The argument behooves logic, for how
can Metrobank offer him the agreement when he was illegally dismissed as early as November 1996 and
the merger only took place in June 2000. Following the premise that an illegal dismissal is a void
dismissal, then Lazaro is still considered to have been employed until the merger took place. He may
therefore be considered as not having received any offer from Metrobank to join the new company.

We thus compute Lazaro's separation pay from the time of his employment in 21 December 1992 up to
the cessation of Solidbank's business in 31 July 2000 or 7.64 years, multiplied by his gross monthly pay
increased by 150%.

b. Backwages

On the other hand, backwages are computed from the time of dismissal until the finality of the decision
ordering separation pay, and not merely until promulgation of the Court's decision.30 However,
considering that Solidbank ceased operations in 31 July 2000, we must compute backwages only up to
the time of such cessation. To compute "backwages beyond the date of the cessation of business would
not only be unjust, but confiscatory, as well as violative of the Constitution depriving the employer of his
property rights."

Using this yardstick, we therefore compute Lazaro's backwages from the time of his illegal dismissal on
21 December 1992 up to the time when Solidbank ceased operations on 31 July 2000, or 91.67 months,
multiplied by his gross monthly pay earlier determined.

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Damages and attorney's fees may only be awarded when the employee is illegally dismissed in bad
faith and compelled to litigate to protect his rights by reason of the unjustified acts of the employer.

We have said that while "dismissal may be contrary to law but by itself alone, it does not establish bad
faith to entitle the dismissed employee to moral damages." We must note that "bad faith does not
simply connote bad judgment or negligence - it imports a dishonest purpose or some moral obliquity
and conscious doing of wrong. It means a breach of a known duty through some motive or interest or ill-
will that partakes of the nature of fraud."33 The award of moral and exemplary damages thus cannot be
justified solely upon the premise that the employer dismissed his employee without authorized cause
and due process."

On the matter of attorney's fees, attorney's fees may be awarded only when the employee is illegally
dismissed in bad faith and is compelled to litigate or incur expenses to protect his rights by reason of the
unjustified acts of his employer." However, "[t]here must always be a factual basis for the award of
attorney's fees. This is consistent with the policy that no premium should be placed on the right to
litigate."36

After reviewing the records, we see no evidence that Lazaro's dismissal was tainted with bad faith nor is
there any basis for the award of attorney's fees. We therefore delete the award of damages and
attorney's fees.

We will no longer touch upon the award of 1996 Christmas bonus and compensatory benefit as these
were not appealed by both parties.

113. Capin-Cadiz vs. Brent Hospital, GR No. 187417, Feb. 24, 2016, citing
2015 Leus/St. Scholasticas College

Facts: Cadiz was the Human Resource Officer of respondent Brent Hospital and
Colleges, Inc. (Brent) at the time of her indefinite suspension from employment in
2006. The cause of suspension was Cadiz's “Unprofessionalism and Unethical
Behavior Resulting to Unwed Pregnancy.” It appears that Cadiz became pregnant
out of wedlock, and Brent imposed the suspension until such time that she marries
her boyfriend in accordance with law.

Issue: Whether or not Cadiz was illegally dismissed?

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Held: Yes. The Court made reference to the recently promulgated case of Cheryll
Santos Lens v. St. Scholastica 's College Westgrove and/or Sr. Edna Quiambao,
OSB in deciding the case.

“Immorality test”

Leus involved the same personal circumstances as the case at bench (with just a
little difference in facts). Leus was dismissed from employment by the school for
having borne a child out of wedlock.

The Court ruled in Leus that the determination of whether a conduct is disgraceful
or immoral involves a two-step process: first, a consideration of the totality of the
circumstances surrounding the conduct; and second, an assessment of the said
circumstances vis-a-vis the prevailing norms of conduct, i.e., what the society
generally considers moral and respectable.

Standard of morality: secular not religious

In the case at bar, the surrounding facts leading to Cadiz's dismissal are
straightforward - she was employed as a human resources officer in an educational
and medical institution of the Episcopal Church of the Philippines; she and her
boyfriend at that time were both single; they engaged in premarital sexual
relations, which resulted into pregnancy. The labor tribunals characterized these as
constituting disgraceful or immoral conduct. They also sweepingly concluded that as
Human Resource Officer, Cadiz should have been the epitome of proper conduct
and her indiscretion "surely scandalized the Brent community."

The foregoing circumstances, however, do not readily equate to disgraceful and

immoral conduct. Brent's Policy Manual and Employee's Manual of Policies do not
define what constitutes immorality; it simply stated immorality as a ground for
disciplinary action. Instead, Brent erroneously relied on the standard dictionary
definition of fornication as a form of illicit relation and proceeded to conclude that
Cadiz's acts fell under such classification, thus constituting immorality.

Jurisprudence has already set the standard of morality with which an act should be
gauged - it is public and secular, not religious. Whether a conduct is considered

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disgraceful or immoral should be made in accordance with the prevailing norms of
conduct, which, as stated in Leus, refer to those conducts which are proscribed
because they are detrimental to conditions upon which depend the existence and
progress of human society. The fact that a particular act does not conform to the
traditional moral views of a certain sectarian institution is not sufficient reason to
qualify such act as immoral unless it, likewise, does not conform to public and
secular standards.

The totality of the circumstances of this case does not justify the conclusion that
Cadiz committed acts of immorality. Similar to Leus, Cadiz and her boyfriend were
both single and had no legal impediment to marry at the time she committed the
alleged immoral conduct. In fact, they eventually married on April 15, 2008.

On marriage as Brent’s condition for reinstatement

The doctrine of management prerogative gives an employer the right to "regulate,

according to his own discretion and judgment, all aspects of employment, including
hiring, work assignments, working methods, the time, place and manner of work,
work supervision, transfer of employees, lay-off of workers, and discipline,
dismissal, and recall of employees." In this case, Brent imposed on Cadiz the
condition that she subsequently contract marriage with her then boyfriend for her
to be reinstated. According to Brent, this is "in consonance with the policy against
encouraging illicit or common-law.

Statutory law is replete with legislation protecting labor and promoting equal
opportunity in employment. With particular regard to women, Republic Act No.
9710 or the Magna Carta of Women protects women against discrimination in all
matters relating to marriage and family relations, including the right to choose
freely a spouse and to enter into marriage only with their free and full
consent.

Weighed against these safeguards, it becomes apparent that Brent's condition is

coercive, oppressive and discriminatory. There is no rhyme or reason for it. It
forces Cadiz to marry for economic reasons and deprives her of the freedom to
choose her status, which is a privilege that inheres in her as an intangible and
inalienable right. While a marriage or no-marriage qualification may be justified as
a "bona fide occupational qualification," Brent must prove two factors
necessitating its imposition, viz: (1) that the employment qualification is
reasonably related to the essential operation of the job involved; and (2) that there
is a factual basis for believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of the job. Brent has

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not shown the presence of neither of these factors. Perforce, the Court cannot
uphold the validity of said condition.

WHEREFORE, the petition is GRANTED. The Resolutions dated July 22, 2008 and
February 24, 2009 of the Court of Appeals in CA-G.R. SP No. 02373-M1N are
REVERSED and SET ASIDE, and a NEW ONE ENTERED finding petitioner Christine
Joy Capin-Cadiz to have been dismissed without just cause

114. Universal Robina Sugar Milling Corp., vs. Ablay, GR No. 218172,
March 16, 2016

Facts: Respondents Ablay et al. alleged that sometime in 1997, the Union filed a
complaint against petitioner for non-compliance with Wage Order No. 3. After due
proceedings, the DOLE found petitioner liable to the members of the Union in the
total amount of P210,217.54 and, consequently, issued a Writ of Execution to
enforce the said ruling.

Sheriff Calinawan went to petitioner's premises in an attempt to serve the writ of

execution, seeking the help of the Union Officers, including respondents, in its
enforcement. Despite the personnel manager’s refusal to receive the writ, Sheriff
Calinawan and respondents still effected a levy on one of petitioner's forklifts, took
it outside the company premises, and deposited it at the municipal hall for
safekeeping.

Due to the foregoing incidents, Universal Robina Sugar Milling Corp. (Universal
Robina) issued a Notice of Offense to each of the respondents, charging them,
among others, of stealing company property and requiring them to explain in
writing why no disciplinary action should be taken against them. After due
investigation, Universal Robina found Ablay et al guilty and accordingly dismissed
them.

Labor Arbiter and NLRC ruling

The LA found that respondents' participation in the execution of the writ by Sheriff
Calinawan, while legal, was tainted with arrogance and lawlessness, considering
that the same was effected with the use of force and intimidation. The LA

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highlighted the fact that their act of assisting Sheriff Calinawan in an intimidating
mob-like manner to divest the company of its property was inimical to the interest
of petitioner company.The NLRC agreed with the LA that the manner in which
respondents assisted in the execution of the writ was arrogant and unlawful and,
thus, deemed the legality of their termination as valid.

Court of Appeals ruling

While the CA agrees with the finding that respondents violated company rules in the
manner by which they assisted Sheriff Calinawan in enforcing the writ of execution,
it ruled that dismissal is too severe a penalty for the infraction. Finding that: (a)
respondent's act of bringing the forklift out of the company premises was not
tantamount to robbery or theft as they did not do so with intent to gain, but were
merely motivated by their strong desire to collect what is due them as a matter of
right; (b) they were mere equipment operators, technicians, and electricians, and
thus, not occupying managerial nor confidential positions; and (c) it was their first
offense in their 14-15 years of service, the CA concluded that the penalty of
suspension would have sufficed as a penalty.

Issue: Whether or not Ablay et al. were illegally dismissed.

Held: Yes, but petition is still partly granted.

Serious misconduct requirements not satisfied

For serious misconduct to be a just cause for dismissal, the concurrence of the following elements is
required: (a) the misconduct must be serious; (b) it must relate to the performance of the employee's
duties showing that the employee has become unfit to continue working for the employer; and (c) it
must have been performed with wrongful intent.

Clearly, respondents committed some form of misconduct when they assisted Sheriff Calinawan in
effecting the levy on the forklift and depositing the same to the municipal hall for safekeeping as they
operated the forklift and took it out of company premises, all without the authority and consent from
petitioner or any of its officers. However, as correctly pointed out by the CA, respondents did not
perform the said acts with intent to gain or with wrongful intent. Rather, they were impelled by their
belief - albeit misplaced - that they were merely facilitating the enforcement of a favorable decision in a
labor standards case in order to finally collect what is due them as a matter of right, which is the balance
of their unpaid benefits. In light of the foregoing, the Court upholds the right of petitioner to take the

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appropriate disciplinary action against respondents, but nevertheless, holds that respondents should
not have been dismissed from service as a less punitive sanction, i.e., suspension, would have sufficed;
especially considering the fact that respondents were mere equipment operators, technicians, and
electricians, and thus, not occupying managerial nor confidential positions, and that the incident
concerning the forklift was only their first offense in their 14-15 years of service. Hence, respondents
could not be validly dismissed by petitioner.

Reinstatement without backwages

As a general rule, an illegally dismissed employee is entitled to reinstatement (or separation pay, if
reinstatement is not viable) and payment of full backwages. In certain cases, however, the Court has
carved out an exception to the foregoing rule and thereby ordered the reinstatement of the employee
without backwages on account of the following: (a) the fact that the dismissal of the employee would be
too harsh a penalty; and (b) that the employer was in good faith in terminating the employee.

To reiterate, respondents were indeed guilty of some form of misconduct and, as such, petitioner was
justified in exercising disciplinary action against them. Absent any evidence to the contrary, petitioner's
resort to disciplinary proceedings should be presumed to have been done in good faith. Thus, perceiving
that petitioner had ample ground to proceed with its disciplinary action against respondents, and that
the disciplinary proceedings appear to have been conducted in good faith, the Court finds it proper to
apply the exception to the rule on backwages, and consequently, direct the deletion of backwages in
favor of respondents.
Dispositive portion: WHEREFORE, the petition is PARTLY GRANTED. The Decision dated June 28, 2013
and the Amended Decision dated April 30, 2015 of the Court of Appeals in CA-G.R. SP No. 02078 are
hereby MODIFIED, directing the DELETION of the award of backwages in favor of respondents Elmer
Ablay, Ildefonso Clavecillas, Stanley Blaza, Vincent Villavicencio, Roberto Cacas, and Eleazar Cadayuna.
The rest of the decision STANDS.

PNCC Skyway Corp., vs. Sec/DOLE, GR No. 213299, April 19, 2016

Facts: The Republic of the Philippines and the Philippine National Construction Corporation (PNCC)
entered into a Toll Operation Agreement for the latter's operation and maintenance of the South Metro
Manila Skyway (Skyway). PNCC retained the right to operate and maintain the toll facilities, and for such
purpose, undertook to incorporate a subsidiary company, PNCC Skyway Corp. (PSC), that would assume
its rights and obligations. Thus, on December 15, 1998, PSC was incorporated as a subsidiary of PNCC to
operate the Skyway on PNCC's behalf and was tasked to maintain the toll facilities, ensure traffic safety,
and collect toll fees at the Skyway.

On July 2007, an Amended STOA (ASTOA) by the parties. The operation and management of the Skyway
would be transferred from PSC to a new Replacement Operator, which turned out to be the Skyway O &
M Corporation (SOMCO). A transition period of 5 1/2 months was provided commencing on the date of

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signing of the ASTOA until December 31, 2007, during which period, PSC continued to operate the
Skyway.

In line with the above-mentioned transfer, PSC, on December 28, 2007, issued
termination letters to its employees and filed a notice of closure with the DOLE-
National Capital Region, advising them that it shall cease to operate and maintain
the Skyway, and that the services of the employees would be consequently
terminated effective January 31, 2008.

On the same date, the PSC Employees Union (PSCEU) filed a Notice of Strike on
the ground of unfair labor practice resulting in union busting and dismissal of
workers. On December 31, 2007, the DOLE Secretary intervened and assumed
jurisdiction over the labor incident.

DOLE Secretary’s ruling

The DOLE Secretary held that while there was a valid and sufficient legal basis for
PSC's closure — as it was a mere consequence of the termination of its contract to
operate and maintain the Skyway in view of the amendment of the STOA — PSC,
nonetheless, failed to comply with the thirty (30)-day procedural notice
requirement in terminating its employees, as provided under Article 283 (now,
Article 298) of the Labor Code.

It was observed that while PSC stated in the notices of termination to the
employees (as well as in the notice to the DOLE) that the dismissal of the
employees would take effect on January 31, 2008, it admitted that it actually
ceased to operate and maintain the Skyway upon its turnover to SOMCO on
December 31, 2007. As such, PSC fixed the termination date at January 31, 2008
only to make it appear that it was complying with the one-month notice
requirement. The DOLE Secretary ordered PSC to pay each of its terminated
employees P30,000.00 as indemnity.

CA Ruling

The CA affirmed the DOLE Secretary's ruling after observing that PSC held
inconsistent and conflicting positions with regard to the date of termination of its
employees' services. The CA pointed out that in the termination report it

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submitted to the DOLE, PSC stated that it shall close or shut down its operations
effective January 31, 2008. However, in its Position Paper submitted to the
DOLE, PSC stated that it "ceased to operate and maintain the [Skyway] upon its
turnover to SOMCO effective December 31, 2007." According to the CA, the
apparent inconsistency as to the date of effectivity of the dismissal of the PSC
employees must be resolved in favor of the employees who must then be deemed
to have been terminated on December 31, 2007, consistent with Article 4 of
the Labor Code which states that all doubts shall be resolved in favor of labor.

Issue: Whether or not the CA erred in affirming the DOLE Secretary's ruling that PSC failed to comply
with the 30-day notice requirement under Article 298 (formerly, Article 283) of the Labor Code, as
amended

Held: No, there is no basis to award any indemnity in favor of PSC's terminated employees. PSC
complied with the 30-day notice requirement.

As admitted by both parties, the PSC employees and the DOLE were notified on December 28, 2007 that
PSC intended to cease operations on January 31, 2008. The PSC employees and the DOLE were,
therefore, notified 34 days ahead of the impending closure of PSC. Clearly, the mere fact that PSC
turned over the operation and management of the Skyway to SOMCO and ceased business operations
on December 31, 2007, should not be taken to mean that the PSC employees were ipso
facto terminated on the same date. The employees were notified that despite the cessation of its
operations on December 31, 2007 — which, as a consequence thereof, would result in the needlessness
of their services — the effective date of their termination from employment would be on January 31,
2008.

That the effectivity of the PSC employees' termination is on January 31, 2008, and not on December 31,
2007, is lucidly evinced by the unrefuted fact that they were still paid their salaries and benefits for the
whole month of January 2008. On top of that, it deserves mentioning that PSC undisputedly paid its
dismissed employees separation pay in amounts more than that required by law. As the records show,
PSC's separation package to its employees was a generous one consisting of no less than 250% of the
basic monthly pay per year of service, a gratuity pay of P40,000.00, rice subsidy, cash conversion of
vacation and sick leaves and medical reimbursement.

Surely, it would go against the stream of practical business logic to retain employees on payroll a month
after they had already been terminated. Case law teaches that an employer may opt not to require the
dismissed employees to report for work during the 30-day notice period.

In addition, the reason for the notice requirement is to give the employee some time to prepare for the
eventual loss of his or her job. Since the employees were not reporting for work although retained on

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payroll, they had, in fact, more free time to look for job opportunities elsewhere after December 31,
2007 up until January 31, 2008.

Dispositive Portion: WHEREFORE, the petition is GRANTED. The Decision dated September 30, 2013 and
the Resolution dated June 11, 2014 of the Court of Appeals in CA-G.R. SP No. 111201 are hereby
REVERSED and SET ASIDE

RAMIL R. VALENZUELA v. ALEXANDRA MINING AND OIL VENTURES, INC.

GR No. 222419, Oct. 5, 2016

FACTS:

Valenzuela alleged that he was hired as a company driver of the respondent corporation and
after five years and five months of service, he was told that he can no longer continue to work as there
were no forthcoming funds to pay for his salary. However, the respondents alleged that Valenzuela was
actually hired as a family driver of the Deteras and it was the petitioner who failed to report to work and
later on informed them of his resignation. Furthermore, the respondents averred that there can be no
illegal dismissal on the part of the company because the petitioner is a family driver and not a
company’s employee.

ISSUE:

Whether or not there is illegal dismissal

HELD:

Yes, the company is solidarily liable to pay the monetary awards due to the dismissed employee.
As a rule, a corporate officer is not personally liable for the money claims of discharged corporate
employees unless he acted with evident malice and bad faith in terminating their employment. In the
case at bar, bad faith was manifested by his persistent assertion that Valenzuela was merely a family
driver in order to justify his unceremonious dismissal. He repeatedly insisted that as a family driver or
member of the household service, Valenzuela maybe terminated at will, which was exactly what he did.
He unreasonably sent Valenzuela home when the latter reported for work, the latter unaware of what
he had done to merit such an abrupt termination. Cesar's admission on the reckless manner of
Valenzuela's dismissal justifies holding him solidarity liable with AMOVI. Alexandra Mining and Oil
Ventures, Inc. and Cesar Detera are hereby held liable for illegal dismissal; and the award of full
backwages by the National Labor Relations Commission (Fourth Division) in its Decision promulgated on
March 27, 2014 is hereby restored. The respondents are solidarity held liable for the payment of the
monetary awards, subject to a recomputation of separation pay which shall be one (1) month for every
year of service and full backwages from the time of illegal dismissal up to the finality of this decision.

Publico vs. Hospital Managers Inc., GR No. 209086, Oct. 17, 2016

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FACTS:

Publico was employed to work at CSMC in 1989, and was the hospital’s Chief of Blood Bank
Section, Laboratory Department when he was dismissed from employment by HMI in 2008. The
dismissal was founded on Publico’s gross and/or habitual negligence, as penalized under the following
provisions of the HMTs Code of Discipline for employees. Prior to Publico’s dismissal, HMI discovered
incidents of unauthorized sale of blood and apheresis units by laboratory personnel, who also issued
fake receipts and failed to remit payments to the hospital. When asked to explain his side on the issue,
Publico denied any participation in the anomalous transactions. He claimed to have known of the
incidents of unauthorized sale only when he was asked to participate in the investigation. Further
investigations conducted by HMTs Management Investigation Committee eventually led to Publico’s
dismissal. Feeling aggrieved, Publico charged the respondents with illegal dismissal before the Labor
Arbiter.

The LA ruled in favor of Publico. He was declared illegally dismissed from employment, but only RCAM
and CSMC were declared liable for the monetary claims. The LA believed that Publico was employed by
CSMC in 1986, or prior to the effectivity of the Agreement for Joint Apostolate with HMI. The change in
the hospital’s operator could not have affected Publico’s status as an employee of RCAM.

Dissatisfied, RCAM appealed to the National Labor Relations Commission (NLRC). The NLRC rendered its
Decision favoring RCAM. The NLRC found Publico employed in 1989, instead of 1986 as mentioned by
the LA in its decision. HMI was declared the employer of Publico, and as such was solely liable for the
illegal dismissal. Per its agreement with RCAM, HMI became the employer of Publico when it became
the operator of CSMC.

CA on the other hand rendered its decision reversing the NLRC. For the appellate court, Publico was
validly dismissed for gross and habitual neglect of duties. Given his position in the hospital, Publico could
have prevented, or at least discovered and reported, the anomalous transactions of his personnel. His
failure to do so evidenced the neglect.

Besides the just cause, the requirement of procedural due process was satisfied through the opportunity
given to Publico to explain his side prior to his dismissal, as well as the chance to seek a reconsideration
of the action or ruling complained of. Given its ruling on the legality of the dismissal, the CA found it
unnecessary to rule on the entity that should be declared liable for Publico’s monetary claims. Hence,
this petition.

ISSUE:

Whether or not the CA committed a reversible error in declaring Publico validly dismissed from
employment.

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HELD:

The Court denies the petition. There is no cogent reason to reverse the CA’s dismissal of Publico’s
complaint for illegal dismissal and monetary claims.

Under Article 282(b) of the Labor Code, an employer may terminate an employment on the ground of
“[g]ross and habitual neglect by the employee of his duties.” In the instant case, Publico was entrusted
by HMI to take on the role of Chief, Blood Bank Section of the Laboratory Department, and with this
carried the reasonable expectation that he would assiduously perform the demands of his position.

The anomalous transactions in the Blood Bank Section were found to have persisted for almost two
years. Had Publico been not negligent in the performance of his duties, the wrongful dealings could have
been prevented, or immediately discovered and rectified.

Publico cannot escape liability by merely claiming that he has no knowledge of the alleged anomalies or
that the staff involved in the illegal transactions were not under his watch. As head of the Pathology and
Laboratory Section, it is his job to monitor all the properties and supplies under his custody and
maintain accurate records of the same. Besides, as correctly pointed out by HMI, his duties and
responsibilities as chief of the Pathology and Laboratory Department is not only limited to the
supervision of staff during the time that he reports to work, which is during the morning shift. His job
description did not say so that he is only in charge of the personnel in the morning shift

Additionally, it should be emphasized that the offense and liability of Publico were for neglect of duties,
which allowed the repeated commission of anomalous transactions in his department. Contrary to the
LA’s and NLRC’s reasons in finding insufficient ground to support dismissal from employment, the
liability of Publico did not depend on his knowledge or direct participation in the wrongful sale of blood
and apheresis units. Even as the Court considers the inter-office memo sent by HMI to inform Publico of
the charges, references were on negligence and non-observance of operating policies and procedures.
The accusations pertained to his failure to perform his duties as a supervisor, rather than his own
participation in the unlawful sales.

Wesleyan University Philippines vs. Maglaya Sr., GR No. 212774, January 23, 2017

FACTS:

WUP is a non-stock, non-profit, non-sectarian educational corporation duly organized and

existing under the Philippine laws. Respondent Atty. Guillermo T. Maglaya, Sr. (Maglaya) was appointed
as a corporate member and was elected as a member of the Board of Trustees, both for a period of five
(5) years. On May 25, 2005, he was elected as President of the University for a five-year term. He was re-
elected as a trustee on May 25, 2007. In a Memorandum dated November 28, 2008, the incumbent
Bishops of the United Methodist Church (Bishops) apprised all the corporate members of the expiration
of their tenns on December 31, 2008, unless renewed by the former. The said members, including

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Maglaya, sought the renewal of their membership in the WUP's Board, and signified their willingness to
serve the corporation. However, the Bishops, through a formal notice to all the officers, deans, staff, and
employees of WUP, introduced the new corporate members, trustees, and officers. In the said notice, it
was indicated that the new Board met, organized, and elected the new set of officers on April 20, 2009.
Manuel Palomo (Palomo), the new Chairman of the Board, informed Maglaya of the termination of his
services and authority as the President of the University on April 27, 2009. 10

Thereafter, Maglaya filed the present illegal dismissal case against WUP, Palomo, Bishop Lito C.
Tangonan (Tangonan), and Bishop Leo A. Soriano (Soriano ). Maglaya claimed that he was
unceremoniously dismissed in a wanton, reckless, oppressive and malevolent manner and Tangonan and
Soriano acted in evident bad faith when they disregarded his five-year term of office and delegated their
protege Palomo as the new university president.

ISSUE:

Whether or not Malaya was illegally dismissed by WUP.

HELD:

No. The alleged "appointment" of Maglaya instead of "election" as provided by the by-laws
neither convert the president of university as a mere employee, nor amend its nature as a corporate
officer. A corporate officer's dismissal is always a corporate act, or an intracorporate controversy which
arises between a stockholder and a corporation, and the nature is not altered by the reason or wisdom
with which the Board of Directors may have in taking such action. The issue of the alleged termination
involving a corporate officer, not a mere employee, is not a simple labor problem but a matter that
comes within the area of corporate affairs and management and is a corporate controversy in
contemplation of the Corporation Code. The said issue revolves around the question on whether
Maglaya is a corporate officer or a mere employee. For purposes of identifying an intracorporate
controversy, We have defined corporate officers, thus:

"Corporate officers" in the context of Presidential Decree No. 902- A are those officers of the
corporation who are given that character by the Corporation Code or by the corporation's by-laws.
There are three specific officers whom a corporation must have under Section 25 of the Corporation
Code. These are the president, secretary and the treasurer. The number of officers is not limited to
these three. A corporation may have such other officers as may be provided for by its by-laws like, but
not limited to, the vice-president, cashier, auditor or general manager. The number of corporate officers
is thus limited by law and by the corporation's by-laws.

It is apparent from the By-laws of WUP that the president was one of the officers of the corporation,
and was an honorary member of the Board. He was appointed by the Board and not by a managing

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officer of the corporation. We held that one who is included in the by-laws of a corporation in its roster
of corporate officers is an officer of said corporation and not a mere employee.

Respondent Atty. Guillermo T. Maglaya, Sr. is hereby ordered by the court to reimburse the petitioner
the amount of ₱2,505,208.75 awarded by the National Labor Relations Commission.

Maula vs. Ximex Delivery Express GR No. 207838, January 25, 2017

Facts:
Petitioner was hired by the respondent as Operation Staff on March 23, 2002. As
Operation Staff, he performed a variety of duties such as but not limited to
documentation, checker, dispatcher or airfreight coordinator. He [was] on call
anytime of the day or night. He was rendering night duty which [started] at 6:00 p.m.
More often it went beyond the normal eight-hour schedule such that he normally
rendered duty until 6:00 or 7:00 the following morning. This [was] without payment of
the corresponding night shift differential and overtime pay.

Petitioner's employment was uneventful until came February 18, 2009 when the
[respondent's] HRD required him and some other employees to sign a form sub-titled
"Personal Data for New Hires." When he inquired about it he was told it was nothing
but merely for the twenty-peso increase which the company owner allegedly wanted
to see. He could not help but entertain doubts on the scheme as they were hurriedly
made to sign the same. It also [appeared] from the form that the designated
salary/wage [was] daily instead of on a monthly basis.

On March 4, 2009, petitioner filed a complaint before the National Conciliation and
Mediation Board.

There he was served with the memorandum suspending him from work for thirty (30)
days effective April 4, 2009 for alleged "Serious misconduct and willful disobedience
by the employee of the lawful orders of his employer or representative in connection
with his work." His apprehension was thus confirmed.

PETITIONERS’ ARGUMENTS:

On May 12, 2009, petitioner Leo T. Maula filed a complaint against respondent Ximex
Delivery Express, Inc. and its officers (Jerome Ibañez, Lilibeth Gorospe, and Amador
Cabrera) for illegal dismissal, underpayment of salary/wages, nonpayment/
underpayment of overtime pay, underpayment of holiday premium, underpayment
of 13th month pay, non-payment of ECOLA, non-payment/underpayment of night
shift differential, illegal deduction, illegal suspension, regularization, harassment, under

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remittance of SSS premiums, deduction of tax without tax identification number, moral
and exemplary damages, and attorney's fees.

RESPONDENT’S ARGUMENT:

Respondent countered that: it is a duly registered domestic corporation engaged in the

business of cargo forwarding and truck-hauling; petitioner and several other employees
misinterpreted the use of its old form "For New Hires," that they were relegated to the
status of new employees when in fact they have been employed for quite some time
already

ISSUE/S:
Whether or not the petitioner was illegally dismissed.

RULING:
The petition is meritorious.

Termination of Employment:

While an employer is given a wide latitude of discretion in managing its own affairs, in
the promulgation of policies, rules and regulations on work-related activities of its
employees, and in the imposition of disciplinary measures on them, the exercise of
disciplining and imposing appropriate penalties on erring employees must be
practiced in good faith and for the advancement of the employer's interest and not for
the purpose of defeating or circumventing the rights of employees under special laws
or under valid agreements.

The reason being that — Security of tenure of workers is not only statutorily protected, it
is also a constitutionally guaranteed right. Thus, any deprivation of this right must be
attended by due process of law. This means that any disciplinary action which affects
employment must pass due process scrutiny in both its substantive and procedural
aspects.

Dismissal from employment have two facets:

First, the legality of the act of dismissal, which constitutes substantive due process; and,

Second, the legality of the manner of dismissal, which constitutes procedural due
process.

The burden of proof rests upon the employer to show that the disciplinary action was
made for lawful cause or that the termination of employment was valid. In
administrative and quasi-judicial proceedings, the quantum of evidence required is

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substantial evidence or "such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion."

Thus, unsubstantiated suspicions, accusations, and conclusions of the employer do not

provide legal justification for dismissing the employee. When in doubt, the case should
be resolved in favor of labor pursuant to the social justice policy of our labor laws and
the 1987 Constitution.

Act of Dismissal:

Respondent manifestly failed to prove that petitioner's alleged act constitutes serious
misconduct.

Misconduct is improper or wrong conduct; it is the transgression of some established

and definite rule of action, a forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not mere error in judgment. The misconduct, to be
serious within the meaning of the Labor Code, must be of such a grave and
aggravated character and not merely trivial or unimportant.

Thus, for misconduct or improper behavior to be a just cause for dismissal,

(a) it must be serious;

(b) it must relate to the performance of the employee's duties; and

(c) it must show that the employee has become unfit to continue working for the
employer.

We agree with the labor arbiter and the NLRC that the on-the-spur-of-the-moment
outburst of petitioner, he having reached his breaking point, was due to what he
perceived as successive retaliatory and orchestrated actions of respondent. Indeed,
there was only lapse in judgment rather than a premeditated defiance of authority.

Even if a just cause exists, the employer still has the discretion whether to dismiss the
employee, impose a lighter penalty, or condone the offense committed.

In making such decision, the employee's past offenses may be taken into consideration.

While it may be true that petitioner was penalized for his previous infractions, this does
not and should not mean that his employment record would be wiped clean of his
infractions. After all, the record of an employee is a relevant consideration in
determining the penalty that should be meted out since an employee's past
misconduct and present behavior must be taken together in determining the proper
imposable penalty[.] Despite the sanctions imposed upon petitioner, he continued to

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commit misconduct and exhibit undesirable behavior on board. Indeed, the employer
cannot be compelled to retain a misbehaving employee, or one who is guilty of acts
inimical to its interests.

In this case, respondent contends that aside from petitioner's disrespectful remark
against Gorospe, he also committed several prior intentional misconduct, to wit:
erroneous packaging of a cargo of respondent's client, abandoning work after logging
in, failing to teach the rudiments of his job to the new employees assigned to his group
despite orders from his superior, and refusing to accept the management's order on the
transfer of assignment. After evaluating the gravity of the charges and the number of
infractions, respondent decided to dismiss petitioner from his employment.

We do not agree. Respondent cannot invoke the principle of totality of infractions

considering that petitioner's alleged previous acts of misconduct were not established
in accordance with the requirements of procedural due process.

In fact, respondent conceded that he "was not even censured for any infraction in the
past." It admitted that "[the] March 25, 2009 incident that [petitioner] was referring to
could not be construed as laying the predicate for his dismissal, because [he] was not
penalized for the misrouting incident when he had adequately and satisfactorily
explained his side. Neither was he penalized for the other [memoranda] previously or
subsequently issued to him."

This Court finds the penalty of dismissal too harsh. Not every case of insubordination or
willful disobedience by an employee reasonably deserves the penalty of dismissal
because the penalty to be imposed on an erring employee must be commensurate
with the gravity of his or her offense. Petitioner's termination from employment is also
inappropriate considering that he had been with respondent company for seven (7)
years and he had no previous derogatory record.

It is settled that notwithstanding the existence of a just cause, dismissal should not be
imposed, as it is too severe a penalty, if the employee had been employed for a
considerable length of time in the service of his or her employer, and such employment
is untainted by any kind of dishonesty and irregularity.

Manner of Dismissal:

The procedural due process requirement was not complied with.

King of Kings Transport, Inc. v. Mamac, provided for the following rules in terminating the
services of employees:

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(1) The first written notice to be served on the employees should contain the specific
causes or grounds for termination against them, and a directive that the employees are
given the opportunity to submit their written explanation within a reasonable period.
"Reasonable opportunity" under the Omnibus Rules means every kind of assistance that
management must accord to the employees to enable them to prepare adequately
for their defense. This should be construed as a period of at least five (5) calendar days
from receipt of the notice to give the employees an opportunity to study the
accusation against them, consult a union official or lawyer, gather data and evidence,
and decide on the defenses they will raise against the complaint. Moreover, in order to
enable the employees to intelligently prepare their explanation and defenses, the
notice should contain a detailed narration of the facts and circumstances that will
serve as basis for the charge against the employees. A general description of the
charge will not suffice. Lastly, the notice should specifically mention which company
rules, if any, are violated and/or which among the grounds under Art. 282 is being
charged against the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing
or conference wherein the employees will be given the opportunity to:

(i.) explain and clarify their defenses to the charge against them;

(ii.) present evidence in support of their defenses; and

(iii.) rebut the evidence presented against them by the management. During the
hearing or conference, the employees are given the chance to defend
themselves personally, with the assistance of a representative or counsel of their
choice. Moreover, this conference or hearing could be used by the parties as an
opportunity to come to an amicable settlement.

(3) After determining that termination of employment is justified, the employers shall
serve the employees a written notice of termination indicating that:

(i.) all circumstances involving the charge against the employees have been
considered; and

(ii.) grounds have been established to justify the severance of their employment.

Later, Perez, et al. v. Phil. Telegraph and Telephone Co. et al., clarified that an actual or
formal hearing is not an absolute requirement. The Court en banc held: Article 277 (b)
of the Labor Code provides that, in cases of termination for a just cause, an employee
must be given "ample opportunity to be heard and to defend himself." Thus, the
opportunity to be heard afforded by law to the employee is qualified by the word
"ample" which ordinarily means "considerably more than adequate or sufficient."

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In this regard, the phrase "ample opportunity to be heard" can be reasonably
interpreted as extensive enough to cover actual hearing or conference. To this extent,
Section 2 (d), Rule I of the Implementing Rules of Book VI of the Labor Code is in
conformity with Article 277 (b). Nonetheless, Section 2 (d), Rule I of the Implementing
Rules of Book VI of the Labor Code should not be taken to mean that holding an actual
hearing or conference is a condition sine qua non for compliance with the due process
requirement in termination of employment.

The test for the fair procedure guaranteed under Article 277 (b) cannot be whether
there has been a formal pretermination confrontation between the employer and the
employee. The "ample opportunity to be heard" standard is neither synonymous nor
similar to a formal hearing. To confine the employee's right to be heard to a solitary
form narrows down that right. It deprives him of other equally effective forms of
adducing evidence in his defense. Certainly, such an exclusivist and absolutist
interpretation is overly restrictive. The "very nature of due process negates any concept
of inflexible procedures universally applicable to every imaginable situation."

A hearing means that a party should be given a chance to adduce his evidence to
support his side of the case and that the evidence should be taken into account in the
adjudication of the controversy. "To be heard" does not mean verbal argumentation
alone inasmuch as one may be heard just as effectively through written explanations,
submissions or pleadings. Therefore, while the phrase "ample opportunity to be heard"
may in fact include an actual hearing, it is not limited to a formal hearing only. In other
words, the existence of an actual, formal "trial-type" hearing, although preferred, is not
absolutely necessary to satisfy the employee's right to be heard.

[T]he employer may provide an employee with ample opportunity to be heard and
defend himself with the assistance of a representative or counsel in ways other than a
formal hearing. The employee can be fully afforded a chance to respond to the
charges against him, adduce his evidence or rebut the evidence against him through a
wide array of methods, verbal or written. After receiving the first notice apprising him of
the charges against him, the employee may submit a written explanation (which may
be in the form of a letter, memorandum, affidavit or position paper) and offer evidence
in support thereof, like relevant company records (such as his 201 file and daily time
records) and the sworn statements of his witnesses. He may also ask the employer to
provide him copy of records material to his defense. His written explanation may also
include a request that a formal hearing or conference be held.

In such a case, the conduct of a formal hearing or conference becomes mandatory,

just as it is where there exist substantial evidentiary disputes or where company rules or
practice requires an actual hearing as part of employment pretermination procedure.
To this extent, we refine the decisions we have rendered so far on this point of law.

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This interpretation of Section 2 (d), Rule I of the Implementing Rules of Book VI of the
Labor Code reasonably implements the "ample opportunity to be heard" standard
under Article 277 (b) of the Labor Code without unduly restricting the language of the
law or excessively burdening the employer. This not only respects the power vested in
the Secretary of Labor and Employment to promulgate rules and regulations that will
lay down the guidelines for the implementation of Article 277 (b). More importantly, this
is faithful to the mandate of Article 4 of the Labor Code that "[a]ll doubts in the
implementation and interpretation of the provisions of [the Labor Code], including it
implementing rules and regulations shall be resolved in favor of labor."

In sum, the following are the guiding principles in connection with the hearing
requirement in dismissal cases:

(a) "ample opportunity to be heard" means any meaningful opportunity (verbal or

written) given to the employee to answer the charges against him and submit
evidence in support of his defense, whether in a hearing, conference or some other fair,
just and reasonable way.

(b) a formal hearing or conference becomes mandatory only when requested by the
employee in writing or substantial evidentiary disputes exist or a company rule or
practice requires it, or when similar circumstances justify it.

(c) the "ample opportunity to be heard" standard in the Labor Code prevails over the
"hearing or conference" requirement in the implementing rules and regulations.

Memorandum dated April 3, 2009 does not contain the following: a detailed narration
of facts and circumstances for petitioner to intelligently prepare his explanation and
defenses, the specific company rule violated and the corresponding penalty therefor,
and a directive giving him at least five (5) calendar days to submit a written
explanation. No ample opportunity to be heard was also accorded to petitioner.

Instead of devising a just way to get the side of petitioner through testimonial and/or
documentary evidence, respondent took advantage of his "refusal" to file a written
explanation. This should not be so. An employer is duty-bound to exert earnest efforts to
arrive at a settlement of its differences with the employee. While a full adversarial
hearing or conference is not required, there must be a fair and reasonable opportunity
for the employee to explain the controversy at hand.

Finally, the termination letter issued by respondent miserably failed to satisfy the
requisite contents of a valid notice of termination. Instead of discussing the facts and
circumstances to support the violation of the alleged company rule that imposed a

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penalty of dismissal, the letter merely repeats the self-serving accusations stated in
Memorandum dated April 3, 2009.

Preventive Suspension:

Similar to a case, no hearing or conference was called with respect to petitioner's

alleged misconduct. Instead, he was immediately placed under preventive suspension
for thirty (30) days and was dismissed while he was still serving his suspension. According
to respondent, it is proper to suspend him pending investigation because his continued
employment poses serious and imminent threat to the life of the company officials and
also endanger the operation of the business of respondent, which is a common carrier
duty-bound to observe extra ordinary diligence.

Preventive suspension may be legally imposed against an employee whose alleged

violation is the subject of an investigation. The purpose of suspension is to prevent harm
or injury to the company as well as to fellow employees.

As succinctly stated above, preventive suspension is justified where the employee's

continued employment poses a serious and imminent threat to the life or property of the
employer or of the employee's co-workers. Without this kind of threat, preventive
suspension is not proper. Here, it cannot be said that petitioner posed a danger on the
lives of the officers or employees of respondent or their properties.

Being one of the Operation Staff, which was a rank and file position, he could not and
would not be able to sabotage the operations of respondent. The difficulty of finding a
logical and reasonable connection between his assigned tasks and the necessity of his
preventive suspension is apparent from the fact that even respondent was not able to
present concrete evidence to support its general allegation.

Sumifru Corp., vs. Baya, GR No. 188269, April 17, 2017

Facts:

The instant case stemmed from a complaint for, inter alia, illegal/constructive dismissal
filed by Baya against AMSFC and DFC before the NLRC. Baya alleged that he had
been employed by AMSFC since February 5, 1985, and from then on, worked his way
to a supervisory rank. As a supervisor, Baya joined the union of supervisors, and
eventually, formed AMS Kapalong Agrarian Reform Beneficiaries Multipurpose
Cooperative (AMSKARBEMCO), the basic agrarian reform organization of the regular
employees of AMSFC.

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In June 1999, Baya was reassigned to a series of supervisory positions in AMSFC's sister
company, DFC, where he also became a member of the latter's supervisory union
while at the same time, remaining active at AMSKARBEMCO. Later on and upon
AMSKARBEMCO's petition before the Department of Agrarian Reform (DAR), some 220
hectares of AMSFC's 513-hectare banana plantation were covered by the
Comprehensive Agrarian Reform Law. Eventually, said portion was transferred to
AMSFC's regular employees as Agrarian Reform Beneficiaries (ARBs), including Baya.

Thereafter, the ARBs explored a possible agribusiness venture agreement with AMSFC,
but the talks broke down, prompting the Provincial Agrarian Reform Officer to
terminate negotiations and, consequently, give AMSKARBEMCO freedom to enter
into similar agreement with other parties.

In October 2001, the ARBs held a referendum in order to choose as to which group
between AMSKARBEMCO or SAFFPAI, an association of pro-company beneficiaries,
they wanted to belong. 280 went to AMSKARBEMCO while 85 joined SAFFPAI.

When AMSFC learned that AMSKARBEMCO entered into an export agreement with
another company, it summoned AMSKARBEMCO officers, including Baya, to lash out
at them and even threatened them that the ARBs' takeover of the lands would not
push through. Thereafter, Baya was again summoned, this time by a DFC manager,
who told the former that he would be putting himself in a "difficult situation" if he will
not shift his loyalty to SAFFPAI; this notwithstanding, Baya politely refused to betray his
cooperative.

A few days later, Baya received a letter stating that his secondment with DFC has
ended, thus, ordering his return to AMSFC. However, upon Baya's return to AMSFC on
August 30, 2002, he was informed that there were no supervisory positions available;
thus, he was assigned to different rank-and-file positions instead.

On September 20, 2002, Baya's written request to be restored to a supervisory position

was denied, prompting him to file the instant complaint. On even date, the DAR went
to the farms of AMSFC to effect the ARBs' takeover of their awarded lands. The
following day, all the members of AMSKARBEMCO were no longer allowed to work for
AMSFC "as they have been replaced by newly-hired contract workers"; on the other
hand, the SAFFPAI members were still allowed to do so.

Meanwhile and during the pendency of the CA proceedings, petitioner Sumifru

(Philippines) Corporation (Sumifru) acquired DFC via merger sometime in 2008.
According to Sumifru, it only learned of the pendency of the CA proceedings on June
15, 2009, or after the issuance of the CA's Resolution dated May 20, 2009. Thus, Sumifru
was the one who filed the instant petition on behalf of DFC.

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PETITIONERS’ ARGUMENTS:

AMSFC and DFC maintained that they did not illegally/constructively dismiss Baya,
considering that his termination from employment was the direct result of the ARBs'
takeover of AMSFC's banana plantation through the government's agrarian reform
program. They even shifted the blame to Baya himself, arguing that he was the one
who formed AMSKARBEMCO and, eventually, caused the ARBs' aforesaid takeover.

RESPONDENT’S ARGUMENT:

That he was illegally/constructively dismissed by AMSFC and DFC.

ISSUE/S:
(i.) Whether or not the CA correctly ruled that the NLRC grave abused its discretion,
and consequently, held that AMSFC and DFC constructively dismissed Baya;
(ii.) Whether or not AMSFC and DFC are liable to Baya for separation pay, moral
damages, and attorney's fees; and
(iii.) Whether or not Sumifru should be held solidarily liable with AMSFC's for Baya's
monetary awards.

RULING:

The petition is without merit.

"In labor disputes, grave abuse of discretion may be ascribed to the NLRC when, inter
alia, its findings and conclusions are not supported by substantial evidence, or that
amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion."

Guided by the foregoing considerations, the Court finds that the CA correctly ascribed
grave abuse of discretion on the part of the NLRC in reversing the LA ruling, as the LA's
finding that Baya was constructively dismissed from employment is supported by
substantial evidence.

"Constructive dismissal exists where there is cessation of work, because 'continued

employment is rendered impossible, unreasonable or unlikely, as an offer involving a
demotion in rank or a diminution in pay' and other benefits.

Aptly called a dismissal in disguise or an act amounting to dismissal but made to

appear as if it were not, constructive dismissal may, likewise, exist if an act of clear
discrimination, insensibility, or disdain by an employer becomes so unbearable on the
part of the employee that it could foreclose any choice by him except to forego his
continued employment."

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In Peckson v. Robinsons Supermarket Corp., the Court held that the burden is on the
employer to prove that the transfer or demotion of an employee was a valid exercise of
management prerogative and was not a mere subterfuge to get rid of an employee;
failing in which, the employer will be found liable for constructive dismissal, viz.:

In case of a constructive dismissal, the employer has the burden of proving that
the transfer and demotion of an employee are for valid and legitimate grounds
such as genuine business necessity. Particularly, for a transfer not to be
considered a constructive dismissal, the employer must be able to show that
such transfer is not unreasonable, inconvenient, or prejudicial to the employee;
nor does it involve a demotion in rank or a diminution of his salaries, privileges
and other benefits.

Failure of the employer to overcome this burden of proof, the employee's

demotion shall no doubt be tantamount to unlawful constructive dismissal.

In this case, a judicious review of the records reveals that the top management of both
AMSFC and DFC, which were sister companies at the time, were well-aware of the lack
of supervisory positions in AMSFC.

This notwithstanding, they still proceeded to order Baya's return therein, thus, forcing him
to accept rank and-file positions. Notably, AMSFC and DFC failed to refute the
allegation that Baya's "end of secondment with DFC" only occurred after: (a) he and
the rest of AMSKARBEMCO officials and members were subjected to harassment and
cooperative busting tactics employed by AMSFC and DFC; and (b) he refused to
switch loyalties from AMSKARBEMCO to SAFFPAI, the pro-company cooperative.

In this relation, the Court cannot lend credence to the contention that Baya's
termination was due to the ARBs' takeover of the banana plantation, because the said
takeover only occurred on September 20, 2002, while the acts constitutive of
constructive dismissal were performed as early as August 30, 2002, when Baya returned
to AMSFC. Thus, AMSFC and DFC are guilty of constructively dismissing Baya.

However, in light of the underlying circumstances which led to Baya's constructive

dismissal, it is clear that an atmosphere of animosity and antagonism now exists
between Baya on the one hand, and AMSFC and DFC on the other, which therefore
calls for the application of the DOCTRINE OF STRAINED RELATIONS.

"Under the doctrine of strained relations, the payment of separation pay is considered
an acceptable alternative to reinstatement when the latter option is no longer desirable

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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." Thus, it is more prudent that Baya be awarded separation pay, instead of
being reinstated, as computed by the CA.

Further, and as aptly pointed out by both the LA and the CA, the acts constitutive of
Baya's constructive dismissal are clearly tainted with bad faith as they were done to
punish him for the actions of his cooperative, AMSKARBEMCO, and for not switching his
loyalty to the pro-company cooperative, SAFFPAI. This prompted Baya to litigate in
order to protect his interest and to recover what is properly due him. Hence, the award
of moral damages and attorney's fees are warranted.

Finally, Sumifru's contention that it should only be held liable for the period when Baya
stayed with DFC as it only merged with the latter and not with AMSFC is untenable.
Section 80 of the Corporation Code of the Philippines clearly states that one of the
effects of a merger is that the surviving company shall inherit not only the assets, but
also the liabilities of the corporation it merged with.

In this case, it is worthy to stress that both AMSFC and DFC are guilty of acts constitutive
of constructive dismissal performed against Baya. As such, they should be deemed as
solidarily liable for the monetary awards in favor of Baya. Meanwhile, Sumifru, as the
surviving entity in its merger with DFC, must be held answerable for the latter's liabilities,
including its solidary liability with AMSFC arising herein.

Verily, jurisprudence states that "in the merger of two existing corporations, one of the
corporations survives and continues the business, while the other is dissolved and all its
rights, properties and liabilities are acquired by the surviving corporation," as in this case.

Manggagawa ng Komunikasyon sa Pilipinas vs. Phil Long Distance telephone Company

Inc., Gr No. 190389, April 19, 2017

Facts:

On June 27, 2002, the labor organization Manggagawa ng Komunikasyon sa Pilipinas

(MKP), which represented the employees of Philippine Long Distance Telephone
Company (PLDT Co.), filed a notice of strike with the National Conciliation and
Mediation Board (NCMB). MKP charged PLDT Co. with unfair labor practice "for
transferring several employees of its Provisioning Support Division to Bicutan, Taguig."

On December 23, 2002, MKP went on strike. On December 31, 2002, PLDT declared
only 323 employees as redundant as it was able to redeploy 180 of the 503 affected
employees to other positions. On January 2, 2003, the Secretary of Labor and
Employment certified the labor dispute for compulsory arbitration.

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MKP filed a Petition for Certiorari before the Court of Appeals, challenging the
Secretary of Labor and Employment's Order insofar as it created a distinction among
the striking workers in the return-to-work order.

On November 25, 2003, the Court of Appeals granted the Petition for Certiorari,
setting aside and nullifying the Secretary of Labor and Employment's assailed Order.
The PLDT Co. appealed the Court of Appeals' Decision to this Court.

On July 14, 2005, this Court upheld the Court of Appeals' Decision, and directed PLDT
Co. to readmit all striking workers under the same terms and conditions prevailing
before the strike.

This Court held: As Article 263(g) is clear and unequivocal in stating that ALL striking or
locked out employees shall immediately return to work and the employer shall
immediately resume operations and readmit ALL workers under the same terms and
conditions prevailing before the strike or lockout, then the unmistakable mandate
must be followed by the Secretary.

On October 28, 2005, the National Labor Relations Commission (NLRC) dismissed
MKP’s charges of unfair labor practices against PLDT Co.

The redundancy program was due to the decline of subscribers for long distance calls
and to fixed line services produced by technological advances in the
communications industry. The NLRC ruled that the termination of employment of PLDT
Co.’s employees due to redundancy was legal.

For CA-G.R. SP No. 94365, the Court of Appeals ruled that the NLRC did not commit
grave abuse of discretion when it found that PLDT Co.’s declaration of redundancy
was justified and valid, as the redundancy program was based on substantial
evidence.

The Court of Appeals also found that PLDT Co.’s 2002 declaration of redundancy "was
not attended by [unfair labor practice]. . . [because it was] transparent and forthright
in its implementation of the redundancy program." PLDT Co. also successfully
redeployed 180 of the 503 affected employees to other positions.

As for CA-G.R. SP No. 98975, the Court of Appeals confirmed that its assailed order of
reinstatement indicated that all employees, even those declared separated effective
December 31, 2002, should be reinstated pendente lite. However, the Court of
Appeals stated that the order of reinstatement became moot due to the NLRC’s
October 28, 2005 Decision, which upheld the validity of the dismissal of the employees
affected by the redundancy program.

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In its Petition for Review on Certiorari, MKP states that employees in the Provisioning
Support Division and in the Operator Services Section had their positions declared
redundant in 2002. MKP asserts that the total number of rank-and-file positions actually
declared redundant was 538, or 35 positions in the Provisioning Support Division and
503 positions in the Operator Services Section.

MKP maintains that PLDT failed to submit evidence in support of its declaration of
redundancy of the 35 rank-and-file employees in the Provisioning Support Division. It
claimed that "[PLDT] only notified [the Department of Labor and Employment] of the
'closure of traffic operations at Regional Operator Services affecting three hundred
ninety-two (392) employees and the restructuring of [Greater Metropolitan Manila]
Operator Services affecting one hundred eleven (111) employees.'"

MKP asserts that there was no notice given regarding the closure of PLDT Co.’s
Provisioning Support Division, and the termination of employment due to redundancy
of the affected rank-and-file employees. It points out that the justifications for the
redundancy put forth by PLDT "only pertained to the affected operator services
positions and not the affected [Provisioning Support Division] positions."

MKP also maintains that the NLRC committed grave abuse of discretion when it
disallowed the written interrogatories that MKP submitted. As for the issue of
reinstatement pendente lite, MKP cites Garcia v. Philippine Airlines, Inc. to bolster its
stand. It holds that an employee is entitled to reinstatement or backwages pending
appeal if the Labor Arbiter's finding of illegal dismissal is later on reversed by the NLRC.

PETITIONERS’ ARGUMENTS:

MKP accused PLDT Co. of the following unfair labor practices: UNFAIR LABOR
PRACTICES, to wit: 1. PLDT's abolition of the Provisioning Support Division (PSD). Such
action, together with the consequent redundancy of PSD employees and the farming
out of the jobs to casuals and contractuals, violates the duty to bargain collectively
with MKP in good faith.

2. PLDT's unreasonable refusal to honor its commitment before this Honorable Office
that it will provide MKP its comprehensive plan/s with respect to personnel
downsizing/reorganization and closure of exchanges. Such refusal violates its duty to
bargain collectively with MKP in good faith.

3. PLDT's continued hiring of "contractual," "temporary," "project," and "casual"

employees for regular jobs performed by union members, resulting in the decimation
of the union membership and in the denial of the right to self-organization to the
concerned employees.

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On November 11, 2002, while the first notice of strike was pending, MKP filed another
notice of strike. UNFAIR LABOR PRACTICES, to wit:

1. PLDT's alleged restructuring of its [Greater Metropolitan Manila] Operation Services

December 31, 2002 and its closure of traffic operations at the Batangas, Calamba,
Davao, Iloilo, Lucena, Malolos and Tarlac Regional Operator Services effective
December 31, 2002. These twin moves unjustly imperil the job security of 503 of MKP's
members and will substantially decimate the parties' bargaining unit. And in the light
of PLDT's previous commitment before this Honorable Office that it will provide MKP its
comprehensive plan/s with respect to personnel downsizing/reorganization and
closure of exchanges and of its more recent declaration that the Davao operator
services will not be closed, these moves are treacherous and are thus violative of
PLDT's duty to bargain collectively with MKP in good faith. That these moves were
effected with PLDT paying only lip service to its duties under Art. III, Section 8 of the
parties' CBA do [sic] signifies PLDT's gross violation of said CBA.

RESPONDENT’S ARGUMENT:

PLDT Co. claims that the validity of redundancy of the affected Provisioning Support
Division employees was only raised by MKP for the first time on appeal. PLDT Co. asserts
that the real issue in that case was whether PLDT Co. was obligated to transfer the
affected Provisioning Support Division employees, and not whether their redundancies
were valid.

PLDT Co. maintains that the affected Provisioning Support Division personnel were given
the opportunity to apply for another division, yet they chose not to. PLDT Co. states that
neither the Court of Appeals nor the Supreme Court ordered the reinstatement of MKP’s
members, since their decisions set aside Secretary of Labor and Employment's January
2, 2003 Order.

The order enjoined the striking workers to return to work, except those who were
terminated due to redundancy. PLDT Co. asserts that "what controls execution is the
dispositive or decretal statement of the [d]ecision sought to be executed."

Furthermore, PLDT Co. maintains that the Court of Appeals correctly ruled that the
reinstatement of the excluded employees was rendered moot when the National Labor
Relations Commission upheld its redundancy program.

ISSUE/S:
(i.) Whether or not the Court of Appeals committed grave abuse of discretion in
upholding the validity of PLDT Co.’s 2002 redundancy program; and
(ii.) Whether or not the return-to-work order of the Secretary of Labor and
Employment was rendered moot when the NLRC upheld the validity of the
redundancy program.

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RULING:

The petition is partly meritorious.

I.

A petition for review on certiorari under Rule 45 is a mode of appeal where the issue is
limited only to questions of law. In labor cases, a Rule 45 petition "can prosper only if the
Court of Appeals . . . fails to correctly determine whether the NLRC committed grave
abuse of discretion."

A court or tribunal is said to have acted with grave abuse of discretion when it
capriciously acts or whimsically exercises judgment to be "equivalent to lack of
jurisdiction." Furthermore, the abuse of discretion must be so flagrant to amount to a
refusal to perform a duty or to act as provided by law.

II.

Redundancy is one of the authorized causes for the termination of employment

provided for in Article 298 of the Labor Code, as amended:

Article 298. Closure of Establishment and Reduction of Personnel. —

The employer may also terminate the employment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent losses or the
closing or cessation of operation of the establishment or undertaking unless the closing
is for the purpose of circumventing the provisions of this Title, by serving a written notice
on the workers and the Ministry of Labor and Employment at least one (1) month before
the intended date thereof. In case of termination due to the installation of labor-saving
devices or redundancy, the worker affected thereby shall be entitled to a separation
pay equivalent to at least his 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 or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at least one-
half (1/2) month pay for every year of service, whichever is higher. A fraction of at least
six (6) months shall be considered one (1) whole year.

Wiltshire File Co., Inc. v. NLRC has explained that redundancy exists when "the services
of an employee are in excess of what is reasonably demanded by the actual
requirements of the enterprise."

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While a declaration of redundancy is ultimately a management decision in exercising
its business judgment, and the employer is not obligated to keep in its payroll more
employees than are needed for its day-to-day operations, management must not
violate the law nor declare redundancy without sufficient basis.

Asian Alcohol Corporation v. NLRC listed down the elements for the valid
implementation of a redundancy program: 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.

To establish good faith, the company must provide substantial proof that the services of
the employees are in excess of what is required of the company, and that fair and
reasonable criteria were used to determine the redundant positions.

PLDT’s declaration of redundancy was backed by substantial evidence showing a

consistent decline for operator-assisted calls for both local and international calls
because of cheaper alternatives like direct dialing services, and the growth of wireless
communication. Thus, the NLRC did not commit grave abuse of discretion when it
upheld the validity of PLDT's redundancy program.

Redundancy is ultimately a management prerogative, and the wisdom or soundness of

such business judgment is not subject to discretionary review by labor tribunals or even
this Court, as long as the law was followed and malicious or arbitrary action was not
shown.

III.

Nonetheless, there is a need to review the redundancy package awarded to the

employees terminated due to redundancy. For either redundancy or retrenchment, the
law requires that the employer give separation pay equivalent to at least one (1) month
pay of the affected employee, or at least one (1) month pay for every year of service,
whichever is higher.

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The employer must also serve a written notice on both the employees and the
Department of Labor and Employment at least one (1) month before the effective date
of termination due to redundancy or retrenchment.

PLDT Co. claims that most employees who were declared redundant received a very
generous separation package. However, the records belie its claims as shown by the
notice of termination of employment received by the workers affected by the
redundancy program.

When an employer declares redundancy, Article 298 of the Labor Code requires that
the employer provides a separation pay equivalent to at least one (1) month pay of the
affected employee, or at least one (1) month pay for every year of service, whichever
is higher.

In this case, PLDT Co. claims that the terminated workers received a generous
separation package of about 2.75 months' worth of salary for every year of service. But
it seems that the retirement benefits of the terminated workers were added to the
separation pay due them, hence the large payout. This should not be the case.

Aquino v. NLRC differentiated between separation pay and retirement benefits:

Separation pay is required in the cases enumerated in Articles 283 and 284 of the Labor
Code, which include retrenchment, and is computed at at least one month salary or at
the rate of one-half month salary for every month of service, whichever is higher. We
have held that it is a statutory right designed toprovide the employee with the
wherewithal during the period that he is looking for another employment.

Retirement benefits, where not mandated by law, may be granted by agreement of the
employees and their employer or as a voluntary act on the part of the employer.
Retirement benefits are intended to help the employee enjoy the remaining years of his
life, lessening the burden of worrying for his financial support, and are a form of reward
for his loyalty and service to the employer.

Separation pay brought about by redundancy is a statutory right, and it is irrelevant

that the retirement benefits together with the separation pay given to the terminated
workers resulted in a total amount that appeared to be more than what is required by
the law.

The facts show that instead of the legally required one (1) month salary for every year of
service rendered, the terminated workers who were with PLDT for more than 15 years
received a separation pay of only 75% of their basic pay for every year of service,
despite the clear wording of the law. The workers, who were terminated from

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employment as a result of redundancy, are entitled to the separation pay due them
under the law.

IV.

Department of Labor and Employment Secretary Patricia A. Sto. Tomas (Secretary Sto.
Tomas) assumed jurisdiction over the labor dispute between MKP and PLDT Co.
pursuant to Article 278 (g) of the Labor Code. She certified the case to the NLRC for
compulsory arbitration.

This return-to-work order from the Secretary of Labor and Employment (SOLE) aims to
preserve the status quo ante while the validity of the redundancy program is being
threshed out in the proper forum.

In Philippine Long Distance Telephone Co., Inc. v. Manggagawa ng Komunikasyon

sa Pilipinas, which was promulgated on July 14, 2005, this Court struck down the return-
to-work order dated January 2, 2003 issued by Secretary Sto. Tomas for being tainted
with grave abuse of discretion. We ruled that the return-to-work order should have
included all striking workers, and should not have excluded the workers affected by the
redundancy program.

However, barely three (3) months after Philippine Long Distance Telephone Co., Inc. 's
promulgation, the NLRC in its October 28, 2005 Resolution upheld the validity of PLDT
Co.’s redundancy program. This resolution also dismissed the charges of unfair labor
practice, and illegal dismissal against PLDT Co.

When petitioner filed its Motion for Execution on January 17, 2006 pursuant to this Court's
ruling in Philippine Long Distance Telephone Co., Inc. , there was no longer any existing
basis for the return-to work order. This was because the SOLE’s return-to-work order had
been superseded by the NLRC’s Resolution. Hence, the SOLE did not err in dismissing the
motion for execution on the ground of mootness.

Petitioner cites Garcia v. Philippine Airlines to support its claim that the affected and
striking workers are entitled to reinstatement and backwages from January 2, 2003,
when Secretary Sto. Tomas directed the striking workers to return to work, up to April 29,
2006, when the NLRC’s Resolution upholding PLDT Co.’s redundancy program became
final and executory. Petitioner is mistaken.

Garcia upholds the prevailing doctrine that even if a Labor Arbiter's order of
reinstatement is reversed on appeal, the employer is obligated "to reinstate and pay
the wages of the dismissed employee during the period of appeal until reversal by the
higher court."

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There is no order of reinstatement from a Labor Arbiter in the case at bar, instead, what
is at issue is the return-to-work order from the Secretary of Labor and Employment. An
order of reinstatement is different from a return-to-work order.

The award of reinstatement, including backwages, is awarded by a Labor Arbiter to an

illegally dismissed employee pursuant to Article 294 of the Labor Code:

Article 294. Security of Tenure. —

In cases of regular employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority
rights and other privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement.

If actual reinstatement is no longer possible, the employee becomes entitled to

separation pay in lieu of reinstatement.

On the other hand, a return-to-work order is issued by the SOLE when he or she assumes
jurisdiction over a labor dispute in an industry that is considered indispensable to the
national interest.

Article 278 (g) of the Labor Code provides that the assumption and certification of the
SOLE shall automatically enjoin the intended or impending strike. When a strike has
already taken place at the time the Secretary of Labor and Employment assumes
jurisdiction over the labor dispute, all striking employees shall immediately return to
work. Moreover, the employer shall immediately resume operations, and readmit all
workers under the same terms and conditions prevailing before the strike.

Return-to-work and reinstatement orders are both immediately executory.

However, a return-to-work order is interlocutory in nature, and is merely meant to

maintain status quo while the main issue is being threshed out in the proper forum.

In contrast, an order of reinstatement is a judgment on the merits handed down by the

Labor Arbiter pursuant to the original and exclusive jurisdiction provided for under
Article 224 (a) of the Labor Code.

Clearly, Garcia is not applicable in the case at bar, and there is no basis to reinstate the
employees who were terminated as a result of redundancy.

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Private respondent Philippine Long Distance Telephone Company, Inc. is DIRECTED to
pay the workers affected by its 2002 redundancy program and who had been
employed for more than fifteen (15) years prior to their dismissal, the balance of the
separation pay due them or a sum equivalent to twenty-five percent (25%) of their
basic monthly pay for every year of service with Philippine Long Distance Telephone
Company, Inc.

A legal interest of 6% per annum shall be imposed on the total judgment award from
the finality of this Decision until its full satisfaction.

Javines v. Xlibris G.R. No. 214301. June 7, 2017

Facts:
Javines, an Operations Manager in Xlibris, was terminated for falsifying or tampering 3
meal receipts.
The falsification was discovered when Javines submitted the meal receipts for
reimbursement to the finance department. A Notice to Explain was issued to him for
allegedly violating some provisions of the Employee's Code of Conduct and charging
him with dishonesty. Xlibris obtained certified copies of the meal receipts and notified
Javines that some receipts were tampered.

Subsequently, Javines submitted his written explanation, denying having tampered the
receipts. He explained that it is the supervisors who submit the receipts to him and for
which, he prepares a reimbursement request; that while he prepares the request for
reimbursement, he has no knowledge or part in the tampered receipts.

An administrative hearing then was held in which, Javines failed to explain why and
how the incident transpired. Consequently, on the same day, notices to explain were
sent to the supervisors under Javines. The supervisors then denied participation in the
tampered receipts.

Xlibris terminated Javines' employment through an "end of employment notice." Javines

then filed a complaint for illegal dismissal.

LA Ruling: case dismissed; finding that the dismissal was for just cause and with due
process.

NLRC Ruling: decision modified; finding that, while Javines was dismissed for just cause,
he was not afforded procedural due process.

CA Ruling: partially granted the appeal by Xlibris. The CA reduced the award of
nominal damages from P10,000 to PhP1,000.

Issue:
Whether Javines was dismissed for a just cause

Ruling:
Yes, Javines was legally dismissed for a just cause.

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The Labor Arbiter and the NLRC uniformly held that Javines' employment was
terminated for just cause under Article 297 of the Labor Code. Due to failure to move
for reconsideration, the NLRC decision finding Javines to have been dismissed for just
cause became final.

Javines' insistence that the petition filed by Xlibris to CA throws open the entire case for
review such that the issue of whether he was dismissed for just cause should have been
addressed by the CA is entirely misplaced. The CA cannot be faulted for no longer
discussing such an issue absent any instances that would grant him the authority to
consider errors not assigned in the appeal.

Evidently, in the petition filed before the CA, Xlibris only questioned the award of
nominal damages for failure to comply with procedural due process. Emphatically,
neither Xlibris nor Javines further questioned the CA's award on this point. As such, the
issue as to whether the requirements of procedural due process to constitute a valid
dismissal were complied with has been resolved with finality.

Bravo v. Urios College G.R. No. 198066. June 7, 2017

Facts:
Bravo was employed as a part-time teacher by Urios College. In addition to his duties as
a part-time teacher, he was designated as the school's comptroller from June 1, 2002 to
May 31, 2002.

Urios College organized a committee to formulate a new "ranking system for non-
academic employees for school year 2001-2002." The proposed ranking system was
presented to Bravo for comments. Bravo recommended that the position of
Comptroller should be classified as a middle management position because it was
informally merged with the position of Vice-President for Finance. He suggested that
since he assumed the duties of Comptroller and Vice-President for Finance, his salary
scale be upgraded.

The committee allegedly agreed with Bravo and accepted his recommendations.

The new ranking system was then implemented which was opposed by several
individuals within the school. The adopted ranking system was however continued up
until school year 2002-2003 which showed that the position of Comptroller was classified
as middle management.

Later on, Urios College organized a committee to review the ranking system
implemented during school year 2001-2002. In its report, the committee found that the
said ranking system caused salary distortions among several employees. The committee
discovered that the Comptroller's Office solely prepared and implemented the salary
adjustment schedule without prior approval from the HR Department. The committee
recommended, among others, that Bravo be administratively charged for serious
misconduct or willful breach of trust under Article 297 of the Labor Code. Bravo
allegedly misclassified several positions and miscomputed his and other employees'
salaries.

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Bravo received a show cause memo requiring him to explain in writing why his services
should not be terminated for his alleged acts of serious misconduct. In his answer, Bravo
alleged that he did not prepare the ranking system for school year 2001-2002 and that it
was the ranking committee which categorized the position of Comptroller as middle
management.

A committee was organized to investigate the matter. Hearings were then conducted
and the committee found that Bravo floated the idea of his salary adjustment, which
Urios College never formally approved. It further found that when the ranking system for
school year 2001-2002 was implemented, the Comptroller's Office prepared its own
summary table, which should have been prepared by the HR department. The
summary table did not indicate each employee's rank or bear the signature of the
Human Resources Department Head.

Bravo was found guilty of serious misconduct for which he was ordered to return the
sum representing overpayment of his monthly salary. Later, he received a copy of the
investigation committee's decision.

Consequently, Urios College notified Bravo of its decision to terminate his services for
serious misconduct and loss of trust and confidence. Upon receipt of the termination
letter, Bravo immediately filed before the Labor Arbiter a complaint for illegal dismissal.

Issues:
1. Whether petitioner's employment was terminated for a just cause;
2. Whether petitioner was deprived of procedural due process; and
3. Whether petitioner is entitled to the payment of separation pay, backwages,
and attorney's fees.

Ruling:

I. Yes, petitioner’s employment was terminated for a just cause

Article 297 of the Labor Code says:

Article 297. Termination by Employer. — An employer may terminate an

employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work; XXX
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative; XXX

To warrant the dismissal from service of a rank-and-file employee under Article 297 (a)
of the Labor Code, the misconduct (1) must be serious, (2) should "relate to the
performance of the employee's duties," (3) should render the employee "unfit to
continue working for the employer," and (4) should "have been performed with
wrongful intent."

There is no evidence that the position of Comptroller was officially reclassified as middle
management by respondent. Petitioner's employment ranking slip, if at all, only
constituted proof of petitioner's evaluation score. It hardly represented the formal act of

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respondent in reclassifying the position of Comptroller. Hence, petitioner could not
summarily assign to himself a higher salary rate without rendering himself unfit to
continue working for respondent.

However, it appears that petitioner was neither induced nor motivated by any wrongful
intent. He believed in good faith that respondent had accepted and approved his
recommendations on the proposed ranking scale for school year 2001-2002.

Nevertheless, due to the nature of his occupation, petitioner's employment may be

terminated for willful breach of trust under Article 297 (c), not Article 297 (a), of the
Labor Code.

A dismissal based on willful breach of trust or loss of trust and confidence under Article
297 of the Labor Code entails the concurrence of two conditions: (1) the employee
whose services are to be terminated must occupy a position of trust and confidence
and (2) the presence of some basis for the loss of trust and confidence.

The first condition refer to two types of positions in which trust and confidence are
reposed by the employer, namely, managerial employees and fiduciary rank-and-file
employees. Managerial employees are considered to occupy positions of trust and
confidence because they are "entrusted with confidential and delicate matters." On
the other hand, fiduciary rank-and-file employees refer to those employees, who, "in
the normal and routine exercise of their functions, regularly handle significant amounts
of the employer's money or property." It must be emphasized, however, that the nature
and scope of work and not the job title or designation determine whether an employee
holds a position of trust and confidence.

The second condition means that the employer must establish the existence of an act
justifying the loss of trust and confidence. In determining the existence of loss of trust
and confidence, managerial employees are treated differently than fiduciary rank-
and-file employees. In one of the cases decided by this court, it ruled that: With respect
to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal
requires proof of involvement in the alleged events in question, and that mere
uncorroborated assertions and accusations by the employer will not be sufficient. But,
as regards a managerial employee, mere existence of a basis for believing that such
employee has breached the trust of his employer would suffice for his dismissal. Hence,
in the case of managerial employees, proof beyond reasonable doubt is not required,
it being sufficient that there is some basis for such loss of confidence.

Set against these parameters, this Court holds that petitioner was validly dismissed
based on loss of trust and confidence. Petitioner was not an ordinary rank-and-file
employee. His position of responsibility on delicate financial matters entailed a
substantial amount of trust from respondent.

Petitioner's act in assigning to himself a higher salary rate without proper authorization is
a clear breach of the trust and confidence reposed in him. In addition, there was no
reason for the Comptroller's Office to prepare its own summary table because this was
a function that is exclusively lodged in the HR Department. Petitioner offered no

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explanation about the Comptroller's Office's deviation from company procedure and
the discrepancies in the computation of other employees' salaries.

II. No, petitioner was not deprived of procedural due process

In termination based on just causes, the employer must comply with procedural due
process by furnishing the employee a written notice containing the specific grounds or
causes for dismissal. The notice must also direct the employee to submit his written
explanation within a reasonable period from the receipt of the notice. Afterwards, the
employer must give the employee ample opportunity to be heard and defend himself.
A hearing, however, is not a condition sine qua non. A formal hearing is only
mandatory in cases when so required under company rules or when the employee
requests for it.

… "To be heard" does not mean verbal argumentation alone inasmuch as one may be
heard just as effectively through written explanations, submissions or pleadings.
Therefore, while the phrase "ample opportunity to be heard" may in fact include an
actual hearing, it is not limited to a formal hearing only. In other words, the existence of
an actual, formal "trial-type" hearing, although preferred, is not absolutely necessary to
satisfy the employee's right to be heard. Finally, the employer must serve a notice
informing the employee of his or her dismissal from employment.

In this case, respondent complied with all the requirements of procedural due process
in terminating petitioner's employment. Respondent furnished petitioner a show cause
memo stating the specific grounds for dismissal. The show cause memo also required
petitioner to answer the charges and even informed him that he may avail the services
of counsel. Respondent then conducted a thorough investigation. Three (3) hearings
were conducted on separate occasions. The findings of the investigation committee
were then sent to petitioner. Lastly, petitioner was given a notice of termination
containing respondent's final decision.

III. No, petitioner is entitled to the payment of separation pay, backwages, and
attorney's fees

Under Article 294 of the Labor Code, the reliefs of an illegally dismissed employee are
reinstatement and full backwages. Backwages is a form of relief that restores the
income that was lost by reason of the employee's dismissal" from employment. It is
"computed from the time that the employee's compensation was withheld until his
actual reinstatement." However, when reinstatement is no longer feasible, separation
pay is awarded. Considering that there was a just cause for terminating petitioner from
employment, there is no basis to award him separation pay and backwages.

Panaligan v. Phyvita Enterprises G.R. No. 202086. June 21, 2017

Facts:

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Phyvita Enterprises Corporation is engaged in the business of health club massage
parlor, spa and other related services under the name and style of Starfleet Reflex Zone.
Petitioners were the employees of Phyvita assigned as Roomboys at Starfleet.

Enriquez, the Finance Assistant of Phyvita, discovered that the amount of P180,000
representing their sales was missing including receipts, payrolls, credit card receipts and
sales invoices. She immediately reported the same to her immediate superior Rafols
and together, they made it known to their VP for Operations Henry Ting.

As advised by Phyvita's Legal Officer Joy Ting, they reported the alleged theft incident
to the Parañaque City Police Station to conduct an investigation. However, the
Parañaque Police were not able to gather sufficient information that would lead them
to know who committed the said theft.

While the police investigation was pending, Petitioners together with other employees
filed a complaint before the DOLE-National Capital Region (NCR) against Starfleet. Their
complaint was based on the alleged underpayment of wages. Acting on the
complaint, an inspection was conducted by DOLE-NCR.

In the interim, individual Office Memoranda were issued by Rafols against Petitioners
directing them to explain in writing why no disciplinary action shall be imposed against
them for alleged violation of Starfleet's rules and regulations, particularly any act of
dishonesty. Petitioners were, likewise, placed on preventive suspension pending the
investigation of the said alleged theft they committed.

The scheduled administrative hearing arrived, yet Petitioners failed to attend the same.
Having failed to participate in the proceedings, Memoranda were issued against
Petitioners informing them that they are terminated on the ground that they violated
the company's rules and regulations by stealing company documents and cash.

Later, Phyvita, as represented by Enriquez, filed a criminal complaint for theft against
Petitioners before the Office of the City Prosecutor of Parañaque. However, the criminal
complaint was dismissed by 3rd Assistant City Prosecutor Antonietta Pablo-Medina
there being no sufficient evidence.

Meanwhile, Petitioners filed the complaint with the NLRC alleging, inter alia, illegal
dismissal and reinstatement and payment of full backwages. Conciliation failed, thus,
the parties submitted their respective Position Papers and Reply.

The Labor Arbiter declared that PANALIGAN, et al., were legally terminated from
employment on the ground of loss of trust and confidence. Upon appeal, the
aforementioned ruling was reversed and set aside by the NLRC. The appellate court
reversed the NLRC decision and reinstated the Decision of the LA. Hence this petition by
the petitioners.

Issue:

Whether or not there exists just and valid cause for the termination of Panaligan, et al.'s,
employment by Phyvita.

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Ruling:

No, Panaligan et. al were not terminated for a just and valid cause

The applicable provision of law to this case is Article 297 of the Labor Code, as
amended, which states:

ARTICLE 297. Termination by Employer. — An employer may terminate an

employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders
of his employer or representative in connection with his work; XXX
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative; XXX

In one of the cases decided by the Court, it was ruled that “misconduct” is improper or
wrong conduct; it is the transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and
not mere error in judgment. For misconduct or improper behavior to be a just cause for
dismissal, (a) it must be serious; (b) it must relate to the performance of the employee's
duties; and (c) it must show that the employee has become unfit to continue working
for the employer.

On the other hand, loss of trust and confidence, as a just cause for termination of
employment, is premised on the fact that an employee concerned holds a position
where greater trust is placed by management and from whom greater fidelity to duty is
correspondingly expected. Loss of trust and confidence to be a valid cause for
dismissal must be work related that would show the employee concerned is unfit to
continue working for the employer and it must be based on a willful breach of trust and
founded on clearly established facts. Such breach is willful if it is done intentionally,
knowingly, and purposely.

Willful breach of trust, as just cause for the termination of employment, is founded on
the fact that the employee concerned: (1) holds a position of trust and confidence,
i.e.,managerial personnel; or (2) is routinely charged with the care and custody of the
employer's money or property.

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

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In termination cases, the burden of proof rests on the employer to show that the
dismissal is for a just cause. In the case at bar, PHYVITA failed to adduce substantial
evidence that would clearly demonstrate that Panalingan, et al., have committed
serious misconduct or have performed actions that would warrant the loss of trust and
confidence reposed upon them by their employer. Contrary to the findings of the CA
and the LA, no substantial evidence supports the allegation of theft. Considering the
chronology of events, it is evident that respondent company had charged and
terminated Panaligan, et. al., before it had even obtained its supposed "proof" of their
misdeed.

Further, there is no question that Panaligan, et al., occupied positions that are reposed
with trust and confidence. Jurisprudence states that the job of a roomboy or
chambermaid in a hotel is clearly of such a nature as to require a substantial amount of
trust and confidence on the part of the employer. There is merit as well in Phyvita's
assertion that the dismissal of its criminal complaint does not necessarily exonerate
Panaligan, et al., from a charge of loss of trust and confidence. However, even with the
lower burden of proof in labor cases, there is a dearth of substantial evidence to
support a finding that Panaligan, et al., were indeed guilty of a willful breach of trust.
We are constrained to conclude that there is no just and valid cause to terminate the
employment of Panaligan, et al., for loss of trust and confidence or even for serious
misconduct.

Therefore, we uphold the NLRC in finding that Panaligan, et al., were illegally dismissed
from employment by Phyvita and, thus, are entitled to separation pay, in lieu of
reinstatement, and full backwages.

Claudia Kitchen Inc. vs. Tanguin GR No. 221096, June 28, 2017

The grant of separation pay presupposes that the employee was dismissed from
employment whether legally or illegally. If the employee was not dismissed from
employment, separation pay cannot be awarded as a rule.

Facts: Respondent Tanguin was employed by petitioners as a billing supervisor in 2001.

Around October 2010, petitioners received a report from respondent’s co-employees
alleging that the respondent was forcing them to buy silver jewelries from her during
office hours within the company premises. Respondent was placed under preventive
suspension. Petitioners sent several notices to the respondent requiring her to explain
why she should not be dismissed, but the latter failed to answer. Petitioners later asked
her to return to work because she was still an employee. But all the notices were
ignored. The investigation was still on going when respondent filed a complaint for
illegal dismissal and prayed for her reinstatement. Respondent argued that petitioners
illegally dismissed her when a security guard barred her from entering the company
premises. And, the notices were only sent to her after she filed the complaint negating
any intention from the petitioners to actually let her go back to work. On the other
hand, petitioners argued that respondent abandoned her work when she failed to
comply with the notices asking her to report back to work.

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The labor arbiter ruled that the respondent was not illegally dismissed, and ordered the
petitioners to pay her unpaid salary. On appeal, the NLRC ordered her reinstatement
without backwages because respondent did not abandon her work. It ruled that
respondent’s filing of complaint negated the claim of abandonment. Aggrieved by the
decision, Petitioners filed a petition for certiorari before the CA. The CA ruled that the
order for reinstatement was not proper because accordingly reinstatement is
applicable only to illegally dismissed employees. Here, respondent was not illegally
dismissed. Instead of reinstatement, CA ordered petitioners to pay respondent
separation pay applying the doctrine on strained relations. Petitioners elevated the
case to the SC on the ground that respondents should not be awarded a separation
pay in the absence of any of the authorized cause for termination of employment.

Issues: Whether the respondent was illegally dismissed; Whether the respondent
abandoned her work; Whether separation pay may be awarded in lieu of
reinstatement to an employee who was not illegally dismissed.

Ruling:

1. No. The complaint for illegal dismissal was premature. In case of illegal dismissal,
the employer bears the burden to prove that the employee was dismissed for a valid or
authorized cause. But before this, the respondent must prove first that she was illegally
dismissed by substantial evidence. SC ruled that respondent failed to prove her claim.
The respondent simply alleged that she was barred from entering the company
premises without offering any evidence to prove such claim. And granting her claim
was true, there was a lawful basis on the part of the petitioners for not allowing her to
enter the companay premises. Respondent was still under preventive suspension.

2. No. Respondent did not abandon her work. To constitute abandonment, there
must be a clear and deliberate intent to discontinue one’s employment without any
intention of returning. Two elements must concur: (1) failure to report for work or
absence without valid reason; and (2) clear intention to sevr the employer-employee
relationship which can be manifested by some over acts. According to the case, the
filing of the complaint for illegal dismissal with a claim for reinstatement negated the
claim of abandonment. Moreover, the mere fact that the employee failed to report for
work despite notice is not sufficient to constitute abandonment.

3. No. Separation pay is warranted only in the following cases: (1) in case of closure
(Art. 298); (2) in case of termination due to sickness or disease (Art. 299); (3) as a
measure of social justice like where the employee is validly dismissed for causes other
than serious misconduct or those reflection on his moral character; (4) the dismissed
employee’s position is no longer available; (5) doctrine of strained relations like when
reinstatement is no longer feasible; or (6) when the employee opted not to be
reinstated, or the payment of separation pay is of the best interest of the parties
involved. In all these instances, the grant of separation pay presupposes that the
employee was dismissed from employment whether legally or illegally. If the employee
was not dismissed from employment, separation pay cannot be awarded as a rule.
And if indeed the employee was neither found to have been dismissed nor to have

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abandoned the work, the court should dismiss the case, and direct the employee to
report back to work. SC cited a previous case wherein the court awarded separation
pay in lieu of reinstatement despite the fact that the employee was neither found to
have been dismissed nor to have abandoned the work. The employee in the cited
case stopped reporting for work for more than 10 years. But SC ruled that the
circumstances in the present case does not warrant the application of the exception.
Hence, the court directed the respondent to report for work without prejudice to the
ongoing investigation by the petitioners.

Arco Aluminum Inc. vs. Pinon, Jr. GR No. 215874, July 5, 2017

When a quitclaim or waiver is declared invalid, the one who received the
compensation must return or offset the compensation given.

Facts: Petitioner Arco Aluminum was contracted by Eton Properties to supply and install
aluminum glazing works for Eton Residence project. Petitioner subcontracted EMP
Glazing and one of the latter’s employee was the respondent’s son Vic. While aboard a
gondola which was used to install glass and aluminum, Respondent’s son died including
9 more co-employees when the gondola crashed from the 32nd floor of the Eton
Residence project. Petitioner and Eton Properties extended financial assistance to the
families of the deceased employees in the amount of 150, 000 each family, and funeral
expenses. Then, they were made to sign a deed of release, waiver and quitclaim.

Later, respondent filed before the labor arbiter in behalf of his deceased son a
complaint for underpayment of wages, overtime pay, 13th month pay, non-payment of
holiday pay, holiday premium, rest day premium, SIL pay, separation pay, night shift
differential, and other claims for damages and death benefits . Respondent argued
that he signed the deed of release only on the belief that said deed was only for
financial assistance and nothing more. On the other hand, petitioner argued that all
the labor claims of the respondent had been satisfied, and that the deed of release,
waiver and quitclaim was valid. And granting that the said waiver was not valid, the
amount of 150, 000 should be returned to them or have it set off with the monetary
claims.

The labor arbiter absolved the respondent from any liability and ruled that EMP Glazing
was the one ultimately liable because of the existence of employer-employee
relationship between EMP glazing and the respondent’s son. But since EMP glazing
failed to show the payroll, the labor arbiter awarded underpaid wages, SIL pay and 13 th
month pay in the amount of P145, 276.22. On appeal, the NLRC modified the decision.
Article 106 of the labor code provides that in the event that the subcontractor fails to
pay the wages of its employees, the employer shall be jointly and severally liable to said
employees to the extent of the work performed under the contract. Hence, petitioner
and Eton Properties should be solidarily liable. The CA affirmed the decision. Then,
Petitioner elevated the case to the SC.

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Issue: Whether the deed of release, waiver and quitclaim is valid; If it is invalid, whether
the consideration of the deed may be returned to the respondent or have it set off to
the respondent’s monetary claims

Ruling:

1. Yes. For a waiver or quitclaim to be valid, the following requirements must be met: (1)
there was no fraud or deceit on the part of any of the parties; (2) the consideration is
sufficient and reasonable; and (3) the contract is not contrary to law, public order,
public policy, morals or good customs, or prejudicial to a third person with a right
recognized by law. If the waiver or quitclaim is not valid, it will not bar the recovery of
the full measure of the worker’s right. But where it is shown that the waiver or quitclaim
was voluntarily signed with full understanding of the consequence, and the
consideration is sufficient and reasonable, then the waiver shall be valid and binding.

In the present case, the SC ruled that the deed of release, waiver and quitclaim is valid.
First, there was sufficient consideration to cover all the labor claims.. The amount of 150,
000 already satisfied the monetary award. Second, there was no fraud or deceit on the
part of the respondent. SC said that the even if the respondent was in dire economic
needs when he signed the waiver, it will not invalidate the waiver on this basis alone in
the absence of a finding that the respondent was forced to sign it.

2. Yes. When a quitclaim or waiver is invalid, the one who received the compensation
must return or offset the compensation given. And since respondent already received
150, 000 and such amount was more than the total monetary awards as determined by
the labor arbiter, the respondent already satisfied the unpaid wages and other labor
benefits concerned.

Sterling Paper Products Enterprises vs. KMM-Katipunan, GR No. 221493, August 2, 2017

Serious misconduct by the employee is a valid ground in terminating his employment.

Facts: Respondent Esponga, a machine operator, was served a notice to explain by

petitioner Sterling. Petitioner alleged that respondent committed serious misconduct
when he showed disrespect and uttered insulting or offensive words against his
supervisor Vinoya. Respondent also gave her supervisor a dirty finger sign. The incident
happened when supervisor Vinoya prohibited respondent from taking a nap on the
sheeter machine for safety reasons. Several notices were sent to respondent but the
latter still failed to respond and attend the administrative hearing. Then, petitioner sent
a termination notice having found the respondent guilty of serious misconduct. This
prompted respondent Esponga and KMM-Katipunana to file a complain for illegal
dismissal. Respondents argued that petitioner failed to establish that the dismissal was
valid. The labor arbiter ruled that respondent was illegally dismissed and ordered the
petitioner to reinstate him with full backwages. On appeal, the NLRC set aside the
decision, and ruled that respondent was validly dismissed. But on a petition for certiorari
filed by the respondents, the CA reinstated the Labor arbiter ruling.

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Issue: Whether the cause of respondent’s dismissal amounts to a serious misconduct

Ruling: Yes. Under Article 282(a) of the labor code, serious misconduct by the employee
is a valid ground in terminating his employment. To constitute serious misconduct, the
elements must concur: (1) the misconduct must be serious, not merely trivial or
unimportant; (2) it must relate to the performance of the employee’s duties showing
that the employee has become unfit to continue working for the employer; and (3) it
must have been performed with wrongful intent.
In the present case, the petitioner was able to establish serious misconduct. First, the
incident where the respondent insulted and disrespected supervisor Vinoya was duly
proven. The testimony made by respondent’s co-employee Pesimo corroborated the
allegations made by supervisor vinoya. Although Pesimo recanted his testimony, it does
not necessarily cancel the previous statement. The court ruled that the previous
statement was more credible because the same was not made under intimidation.
And Pesimo’s recantation was later made after respondent Esponga met him. Second,
accusatory and inflammatory language by an employee towards his employer or
superior can be a ground for dismissal. Third, Espinosa’s assailed conduct was related to
his work. Respondent was only reminded not to sleep on the sheeter machine and that
he was not prohibited from taking a nap. Respondent also left his work later that day,
and he just talked to his co-employees. These acts of the respondent reflect an
unwillingness to obey with reasonable management directives. Lastly, respondent was
motivated with wrongful intent. The inflammatory language and the dirty finger signed
were committed by the respondent in front of the other employees. SC explained in the
case that if indeed respondent was not motivated by wrongful intent, he should have
said his frustrations directly to his supervisor or otherwise ask other officer who can
mediate and discuss the problem.
The SC reinstated the decision of the NLRC.

Distribution & Control Products Inc. vs. Santos, GR No. 212616, July 10, 2017
FACTS:
On July 25, 2011, herein respondent filed against herein petitioners a complaint for
constructive illegal dismissal and payment of separation pay.

Respondent contended that: on December 16, 2010, he received a notice that he

was being placed under preventive suspension for thirty (30) days because he was
one of the employees suspected of having participated in the unlawful taking of
circuit breakers and electrical products of petitioners.

On their part, petitioners claimed that: on February 19, 2010, petitioner corporation,
through its hired auditors, conducted an inventory and it was found out that a
number of electrical materials and products with an estimated value of P457,394.35,

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were missing; herein respondent and the company warehouseman were the only
persons who had complete access to the company warehouse as they were
entrusted with the handling of all products from the company's suppliers; considering
the size and weight of the missing items, they can only be carried by no less than two
(2) persons; petitioners demanded an explanation from respondent and the
warehouseman, but they failed to make an account as to how these products had
gone missing from the warehouse and office building; as such, petitioners filed a
criminal complaint for qualified theft and, thereafter, they suspended herein
respondent; and after the lapse of his suspension, respondent no longer returned to
work.
LA, the NLRC and the CA again uniformly ruled that respondent was dismissed sans
procedural due process. (the case did not elaborate on the reason)
ISSUE:
WON Respondent was illegally dismissed.
RULING:
[How to determine validity of dismissal]
In determining whether an employee's dismissal had been legal, the inquiry focuses on
whether the dismissal violated his right to substantial and procedural due process.

The violation of either the substantial due process right or the procedural due process
right of an employee produces different results. Termination without a just or
authorized cause renders the dismissal invalid, and entitles the employee to
reinstatement without loss of seniority rights and other privileges and full backwages,
inclusive of allowances, and other benefits or their monetary equivalent computed
from the time the compensation was not paid up to the time of actual reinstatement.

An employee's removal for just or authorized cause but without complying with the
proper procedure, on the other hand, does not invalidate the dismissal. It obligates
the erring employer to pay nominal damages to the employee, as penalty for not
complying with the procedural requirements of due process. AIDSTE
[Substantive due process – Loss of trust and confidence; proof required]
In termination cases, the burden of proof rests upon the employer to show that the
dismissal is for just and valid cause; failure to do so would necessarily mean that the

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dismissal was illegal. Moreover, the quantum of proof required in determining the
legality of an employee's dismissal is only substantial evidence. Substantial evidence is
more than a mere scintilla of evidence or relevant evidence as a reasonable mind
might accept as adequate to support a conclusion, even if other minds, equally
reasonable, might conceivably opine otherwise.
Loss of trust and confidence is a just cause. However, in order for the employer to
properly invoke this ground, the employer must satisfy two conditions.

First, the employer must show that the employee concerned holds a position
of trust and confidence. Jurisprudence provides for TWO CLASSES OF POSITIONS OF
TRUST. The first class consists of managerial employees, or those who, by the nature
of their position, are entrusted with confidential and delicate matters and from
whom greater fidelity to duty is correspondingly expected. The second class
includes "cashiers, auditors, property custodians, or those who, in the normal and
routine exercise of their functions, regularly handle significant amounts of [the
employer's] money or property."

Second, the employer must establish the existence of an act justifying the loss
of trust and confidence. To be a valid cause for dismissal, the act that betrays the
employer's trust must be real, i.e.,founded on clearly established facts, and the
employee's breach of the trust must be willful, i.e.,it was done intentionally,
knowingly and purposely, without justifiable excuse. Moreover, with respect to rank-
and-file personnel, loss of trust and confidence, as ground for valid dismissal, requires
proof of involvement in the alleged events in question, and that mere
uncorroborated assertions and accusations by the employer will not be sufficient.
It is true that respondent may indeed be considered as one who occupies a position of
trust and confidence as he is one of those who were entrusted with the handling of a
significant amount or portion of petitioners' products for sale. However, even a quick
perusal of the records at hand would show that petitioners failed to present substantial
evidence to support their allegations that respondent had, in any way, participated in
the theft of the company's stolen items and that after his preventive suspension he no
longer reported for work. In other words, petitioners were not able to establish the
existence of an act justifying their alleged loss of trust and confidence in respondent.

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[Procedural due process –2 notices and hearing]
Procedural due process consists of the twin requirements of notice and hearing.
(1) The first written notice to be served on the employees should
contain the specific causes or grounds for termination against them,
and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period.
"Reasonable opportunity" under the Omnibus Rules means every kind
of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be
construed as a period of at least five (5) calendar days from receipt of
the notice to give the employees an opportunity to study the
accusation against them, consult a union official or lawyer, gather
data and evidence, and decide on the defenses they will raise
against the complaint. Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should
contain a detailed narration of the facts and circumstances that will
serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should
specifically mention which company rules, if any, are violated and/or
which among the grounds under Art. 282 is being charged against the
employees.
(2) After serving the first notice, the employers should schedule and
conduct a hearing or conference wherein the employees will be given
the opportunity to: (1) explain and clarify their defenses to the charge
against them; (2) present evidence in support of their defenses; and
(3) rebut the evidence presented against them by the management.
During the hearing or conference, the employees are given the
chance to defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, this conference or
hearing could be used by the parties as an opportunity to come to an
amicable settlement.

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(3) After determining that termination of employment is justified, the
employers shall serve the employees a written notice of
termination indicating that: (1) all circumstances involving the charge
against the employees have been considered; and (2) grounds have
been established to justify the severance of their employment.
The only notice given by petitioners to respondent was the notice of his 30-day
preventive suspension and, as found by the LA, nothing therein indicated that he was
required nor was given the opportunity to explain his side, considering that he was
being implicated in the theft of the subject circuit breakers and other electrical
products. It is true that petitioners conducted their own investigation but the same was
made without the participation of respondent.

Valmores vs. Dr. Achacoso, GR No. 217453, July 19, 2017

FACTS:

Petitioner Denmark S. Valmores (Valmores) is a member of the Seventh-day

Adventist Church, whose fundamental beliefs include the strict observance of the
Sabbath as a sacred day. As such, petitioner Valmores joins the faithful in worshipping
and resting on Saturday, the seventh day of the week, and refrains from non-religious
undertakings from sunset of Friday to sunset of Saturday.

Between the months of June to August 2014, some of petitioner Valmores'

classes and examinations were moved from weekdays to Saturdays. In one instance,
petitioner Valmores was unable to take his Histo-Pathology laboratory examination
held on September 13, 2015, a Saturday. Respondent Cabildo was his professor for the
said subject. Despite his request for exemption, no accommodation was given by
either of the respondents. As a result, petitioner Valmores received a failing grade of 5
for that particular module and was considered ineligible to retake the exam.

On September 19, 2014, petitioner Valmores again wrote a letter to

respondent Achacoso to seek reconsideration regarding his situation. Despite the
foregoing communications, petitioner Valmores' requests fell on deaf ears.
Hence, aggrieved by respondents' lack of consideration, petitioner Valmores
elevated the matter before the CHED. CHED referred the matter directly to the

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President of MSU as well as respondent Achacoso and requested that the office be
advised of the action thus taken. In response, Dr. Macapado Abaton Muslim (Dr.
Muslim), President of MSU, instructed respondent Achacoso to enforce the 2010 CHED
Memorandum. Despite the foregoing correspondence, petitioner Valmores' request still
went unheeded.

Hence, the present Petition for mandamus.

Petitioner Valmores brings his cause before the Court based on his constitutional right to
freedom of religion
Respondents, on the other hand, chiefly base their defense on the fact that MSU had
other students who were able to graduate from their College of Medicine despite
being members of the Seventh-day Adventist Church.

ISSUE:
1. WON immediate relief to SC is allowed
2. WON the religious belief of petitioner must be respected.
3. WON mandamus lies to compel respondents to enforce the 2010 CHED
Memorandum

RULING:
1. Yes. The Court held therein that a direct resort is allowed in the following
instances, inter alia: (i) when there are genuine issues of constitutionality that
must be addressed at the most immediate time; (ii) when the questions involved
are dictated by public welfare and the advancement of public policy, or
demanded by the broader interest of justice; and (iii) when the circumstances
require an urgent resolution. The above exceptions are all availing in this case.
2. The Bill of Rights guarantees citizens the freedom to act on their individual beliefs
and proscribes government intervention unless necessary to protect its citizens
from injury or when public safety, peace, comfort, or convenience requires it.
Thus, as faculty members of the MSU-College of Medicine, respondents herein
were duty-bound to protect and preserve petitioner Valmores' religious freedom.
3.

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Every person is free to tread the far territories of their conscience, no matter
where they may lead — for the freedom to believe and act on one's own
convictions and the protection of such freedom extends to all people, from the
theistic to the godless. The State must, as a matter of duty rather than
consequence, guarantee that such pursuit remains unfettered.

As representatives of the State, educational institutions are bound to safeguard

the religious freedom of their students. Thus, to such end, our schools carry the
responsibility to restrict its own academic liberties, should they collide with
constitutionally preferred rights.

Yes. MSU is an HEI created by legislative charter under Republic Act No. 1387, as
amended, and was established "to better implement the policy of the Government in
the intensification of the education of the Filipino youth, especially among the Muslims
and others belonging to the national minorities." 52 Thus, respondents herein, as faculty
members of MSU, fall under the policy-making authority of the CHED and therefore
bound to observe the issuances promulgated by the latter.

Cosue vs. Ferritz Integrated Development Corp., GR No. 230664, July 24, 2017
FACTS:
On October 9, 2014, Petitioner filed a Complaint against Respondent, for actual illegal
dismissal and underpayment of salaries, with prayer for moral and exemplary damages
and attorney's fees. Respondent was summoned by Germino, Head of FIDC, who
verbally informed him that he was suspended from July 16, 2014 to August 13, 2014 on
suspicion that he stole the electrical wires. Beginning July 16, 2014 until August 13, 2014,
he was no longer allowed to work.

Respondents alleged that petitioner was suspended for twenty-five (25) days from July
16, 2014 to August 13, 2014, pending further investigation (for stealing electric wires).
Petitioner returned to FIDC on August 13, 2014, but was told to come back as Germino
was on leave. When petitioner came back on August 27, 2014, he was able to speak to

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Germino and they agreed that he would voluntarily resign. However, petitioner did not
file his resignation, and eventually instituted his Complaint for illegal dismissal.

LA – dismissed the complaint for lack of evidence. The LA held that other than
petitioner's general assertion that he was dismissed, no evidence was presented to
support such claim. Petitioner was admittedly suspended from July 16, 2014 to August
13, 2014. Thus, as of July 27, 2014, the date of dismissal as averred in petitioner's
Complaint, he was still serving his preventive suspension. In fact, he was not barred from
the premises or categorically informed that he was already dismissed from work. NLRC
and CA agreed with LA.

ISSUE:
1. WON Petitioner was constructively dismissed.
2. WON the rule that the employer bears the burden of proof in illegal dismissal
cases applies in this case
3. WON petitioner's insistence that he had been unjustifiably dismissed for
abandonment of his job, without the benefit of due process is tenable

RULING:
1. No. Bare allegations of constructive dismissal, when uncorroborated by the
evidence on record, as in this case, cannot be given credence.

Petitioner himself alleged that he was suspended from July 16, 2014 to August 13, 2014
pending further investigation of the pilferage of electrical wires. Thus, on July 27, 2014,
the date of dismissal alleged in his Complaint, petitioner was still serving his suspension;
his employment was not terminated.
Petitioner's claim that he was not allowed to report for work after his suspension was
unsubstantiated. Petitioner has not shown by any evidence that he was barred from the
premises. Furthermore, an entry in the FIDC security logbook for August 27, 2014, which
petitioner had not challenged, showed him informing security personnel that he came
to FIDC because he was asked to report to the office.

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2. The rule is that one who alleges a fact has the burden of proving it; thus,
petitioner was burdened to prove his allegation that respondents dismissed him
from his employment. It must be stressed that the evidence to prove this fact
must be clear, positive and convincing. The rule that the employer bears the
burden of proof in illegal dismissal cases finds no application here because the
respondents deny having dismissed the petitioner. In illegal dismissal cases, while
the employer bears the burden to prove that the termination was for a valid or
authorized cause, the employee must first establish by substantial evidence the
fact of dismissal from service.

3. No. It should first be considered whether there had been a dismissal in the first
place. As no dismissal was carried out in this case, any consideration of
abandonment — as a defense raised by an employer in dismissal situations —
was clearly misplaced.

Since there was neither dismissal nor abandonment, the CA correctly sustained the LA
and the NLRC's decision to order petitioner's reinstatement but without backwages.

Alaska Milk Corp.,/Estate of Wilfred Uytengsu, GR No. 228412 & 2284389, July 26, 2017

Facts:

AMC's President, Uytengsu, Jr., witnessed Ponce's (employee) abrasive behavior and
was constrained to remind him to be courteous to his colleagues. Not long after,
Uytengsu, Sr. received a copy of an e-mail that Ponce sent to 12 of his colleagues in
connection with his "Receipted Allowance" for business-related expenses. In the said e-
mail, Ponce solicited official receipts from his colleagues in exchange for a five percent
(5%) rebate on the value of the receipts submitted to him.

Issues: WON there is just cause to terminate Ponce

Ruling:

Yes.

First, Loss of trust and confidence must be based on willful breach. The opening
sentence of Ponce's R/A e-mail readily exposes the attendant willfulness in his act. It
reads: "Dear Neighbors and Friends, Do you want to earn extra from your own

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expenses?" The "rules" were intelligibly crafted with the end view of achieving a
purpose, and the inciting tenor of the opening statement evinces premeditation.

Second, the act of soliciting receipts from colleagues constitutes dishonesty, inimical to
AMC's interests, for the simple reason that Ponce would be collecting receipted
allowance from expenses he did not actually incur. It has long been settled that an
employer cannot be compelled to retain an employee who is guilty of acts inimical to
his interests.

Third, the R/A e-mail betrays a truly sinister purpose which AMC had a right to guard
against. The solicitation involved therein was not a simple and perfunctory act of asking
receipts from colleagues. The wordings of the R/A e-mail convey a well-calculated
methodology. The "rules" constitute a mechanism by which AMC will be misled to
reimburse items of expense that did not actually come out of Ponce's pocket.
Note: Ponce held the position of Director for Engineering Services. Hence, he belongs to
the first class of employees who occupy a position of trust and confidence.

Evic Human Resource Management Inc. vs. Panahon, GR No. 206890, July 31, 2017

Facts:

Petitioners EVIC and Free Bulkers, hired respondent as Chief Mate on board its vessel.
Respondent was repatriated to the Philippines without completing the contracted
period of employment. According to the Crew Behavior Report prepared by the
Captain, respondent was grossly negligent; displayed arrogance towards his co-
employees on board; and was caught intoxicated.
Respondent filed for illegal dismissal. Petitioners averred that respondent was dismissed
for just cause.

Issues: WON respondent was properly dismissed

Ruling:

No.

The Court finds the foregoing Crew Behavior Report sorely inadequate in meeting the
required quantum of proof to discharge petitioners' burden. For one, the statements
contained therein were uncorroborated and self-serving. No other evidence was
presented to support the statements of the Captain.

As again aptly observed by the CA, petitioners failed to show that respondent willfully or
deliberately caused the alleged accident during the mooring operations or that
respondent repeatedly committed mistakes or repeatedly failed to perform his duties.
The single unverified incident on respondent's supposed negligence is surely insufficient
to warrant a finding of just cause for termination.

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As regards the charge of intoxication, Section 33(6) of the POEA- SEC provides that
drunkenness must be committed while on duty to merit dismissal from employment.
Here, respondent was admittedly off duty when he was allegedly caught by the master
drinking on board. The penalty of dismissal from employment was therefore
unwarranted.

Read-Rite Phils vs. Francisco, et al., GR No. 195457, August 16, 2017

Facts:

Read-Rite began implementing a retrenchment program, providing involuntary

separation benefits or voluntary separation benefits, due to serious business losses.
About 200 employees were terminated and they were each given involuntary
separation benefits. However, there were eight employees that received, through
mistake, additional voluntary separation benefits.
Respondents, among the retrenched employees, sought the payment of additional
voluntary separation benefits. They argued that Read-Rite discriminated against them
by not granting the aforesaid benefits, the award of which had since become a
company policy.

Issues: May an employer, forced to undergo retrenchment, be required to pay

Voluntary Separation Benefit simply because it had earlier mistakenly paid some
retrenched employees additional Voluntary Separation Benefit?

Ruling:

No. As respondents' termination was involuntary in nature (i.e., by virtue of a

retrenchment program undertaken by Read-Rite), they are only entitled to receive
involuntary separation benefits under the express provisions of the company's
Compensation and Benefits Manual and the Retirement Plan.
The Court is more inclined to believe that the payment of additional voluntary
separation benefits, on top of involuntary separation benefits, to eight retrenched
employees of Read-Rite was only a mistake.

Transglobal Maritime Agency vs. Chua, GR No. 222430, August 30, 2017

Principle: To constitute insubordination or willful disobedience as a just cause for the

dismissal of the employee, there must be a reasonable proportionality between the will
full disobedience by the employee and the penalty imposed. Further, as required by
POEA-SEC, for dismissal against SEAMEN, they must be served with a written notice of
the charge against him and an opportunity must be given to explain himself.

Facts: Petitioner hired respondent as an able seaman and boarded MT WAWASAN

RUBY on October 12, 2011. The contract was supposed to be for 9 months with the first 3

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months as a probationary period and the 6 months was dependent subject to the
respondent’s satisfactory performance. While on the port of Taiwan, respondent and
companions left the ship for shore leave from 7-10 pm. However, respondent was able
to return around 11:40 p.m. The ship captain was then infuriated. Respondent and
companions were served with a written reprimand however, respondent refused to sign
and acknowledge the receipt of the reprimand.

Respondent after disembarking the ship, filed a complaint for illegal dismissal against
petitioner. Petitioner contends that respondent was not illegally dismissed since the
dismissal was justified on the ground of insubordination for their refusal to sign the written
reprimand and disrespect for superior officers and for failure to return at the ship after
the expiration of their shore leave.

Issue: WON respondent was legally dismissed?

Ruling: NO. The respondent was not legally dismissed.

Petitioner was not able to prove that respondent was guilty of disrespecting their
superior officers and thus not guilty of insubordination.
To constitute insubordination or willful disobedience as a just cause for the dismissal of
the employee, two requisites must concur: 1. The employee’s assailed conduct must
have been willful, that is, characterized by a wrongful and perverse attitude; and 2. The
order violated must have been reasonable, lawful, made known to the employee, and
must pertain to his duties which he had been engaged to discharge.
Moreover, a willful or intentional disobedience of such rule, order or instruction justifies
dismissal only where such rule, order, or instruction is 1. Reasonable and lawful, 2.
Sufficiently known to the employee, and 3. Connected with the duties which the
employee had been engaged to discharged. Respondent was bound to the lawful
commands of the ship’s captain but as long as these pertain to his duties. The order
made to the respondent to sign the documents was no relevance with respondent’s
duties as a seaman. Moreover, the refusal was not characterized was not characterized
as wrongful and perverse mental attitude and thus no subordination. Petitioner
contended that his refusal was caused by the falsehoods alleged in the written report.

Article 282 (a) refers to “serious misconduct or willful disobedience”. There must be a
reasonable proportionality between the will full disobedience by the employee and the
penalty imposed. Further, to amount a valid dismissal under POEA-SEC, the erring
seafarer must be handed a written notice to the charge against him with the
opportunity to explain himself to which the respondent was not able to do so

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VI. SUSPENSION OF BUSINESS OPERATIONS

MINDANAO TERMINAL & BROKERAGE SERVICE, INC. VS. NAGKAHIUSANG MAMUMUO SA

MINTERBRO-SOUTHERN PHILS. FEDERATION OF LABOR
G.R. No. 174300; December 5, 2012

Facts:

It was alleged that the union members/employees were deprived of gainful

employment on April 14, 1997 after the last vessel was serviced prior to the repair of the
pier or on August 1, 1997 when repair works on the pier were commenced.

Minterbro is a domestic corporation and is engaged in the business of providing arrastre

and stevedoring services to its clientele at Port Area, Sasa, Davao City. It has a
Contract for Use of Pier with Del Monte Philippines, Inc. (Del Monte), which provides for
the exclusive use by Del Monte of the Minterbro pier. Thus, at the time relevant to this
controversy, Del Monte was Minterbro's only client.

The docking of vessels at the piers in Davao City, including that of Minterbro, is being
carried out by the Davao Pilots' Association, Inc. (DPAI). In a letter dated January 6,
1996, DPAI requested Minterbro to waive any claim of liability against it for any damage
to the pier or vessel. DPAI alleged that Minterbro's pier vibrates everytime a ship docks
due to weak posts at the underwater portion.

In a letter dated January 15, 1997, Minterbro denied the request explaining that DPAI's
observation had no basis as any damage to the pier was actually caused by a vessel
under the control of DPAI which bumped the pier on December 28, 1996. DPAI replied
in a letter dated January 23, 1997 informing Minterbro of its intention to refrain from
docking vessels at Minterbro's pier for security and safety reasons, until such time as
Minterbro shall have caused the restoration of the original independent fenders of the
said pier. cHAaCE
Minterbro decided to rehabilitate the pier on August 1, 1997 and, on the same day,
sent a letter to the Department of Labor and Employment (DOLE) to inform DOLE of
Minterbro's intention to temporarily suspend arrastre and stevedoring operations.
Minterbro alleged that, despite the condition of the pier, it was able to service 16
vessels from January 1997 to April 13, 1997 and it was ready and awaiting vessels to
dock at the pier from April 14, 1997 to July 31, 1997 during which Minterbro's office,
motor pool, and field personnel continued operations.

On November 4, 1997, respondent Nagkahiusang Mamumuo sa Minterbro-Southern

Philippines Federation of Labor composed of respondents Manuel Abellana, et al.,
employees of Minterbro working on a rotation basis and employed for arrastre and
stevedoring work depending on the actual requirements of the vessels serviced by
Minterbro, filed a complaint for payment of separation pay against Minterbro and De

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Castro in the Regional Arbitration Branch No. XI at Davao City of the National Labor
Relations Commission (NLRC).

At the initial hearing before the Labor Arbiter on December 10, 1997, Minterbro and De
Castro informed the union and its members that the rehabilitation of the pier had been
completed and that they were just awaiting clearance to operate from the PPA. In a
manifestation dated December 12, 1997, the union and its members stated, among
others, that "they . . . are not anymore amenable to going back to work with [the]
company, for the reason that the latter has not been operating for more than six (6)
months, even if it resumes operation at a later date and would just demand that they be
given Retirement or Separation Pay, as the case may be."

Issue: WON respondents are entitled to separation pay

Ruling:

Lay-off is essentially retrenchment and under Article 283 of the Labor Code a
retrenched employee is entitled to separation pay equivalent to one (1) month salary
or one-half (1/2) month salary per year of service, whichever is higher.

The union members/employees were not given work starting April 14, 1997 and that
more than six months have elapsed after the union members were laid off when the
next vessel was serviced at the Minterbro pier on December 22 to 28, 1997.

Petitioners' inaction on what they allege to be the unexplained abandonment by Del

Monte of its obligations under the Contract for the Use of Pier coupled with petitioners'
belated action on the damaged condition of the pier caused the absence of
available work for the union members. As petitioners were responsible for the lack of
work at the pier and, consequently, the layoff of the union members, they are liable for
the separation from employment of the union members on a ground similar to
retrenchment.

When petitioners failed to make work available to the union members for a period of
more than six months starting April 14, 1997 by failing to call the attention of Del Monte
on the latter's obligations under the Contract of Use of Pier and to undertake a timely
rehabilitation of the pier, they are deemed to have constructively dismissed the union
members.

LEOPARD SECURITY AND INVESTIGATION AGENCY VS. QUITOY

G.R. No. 186344; February 28, 2013

Facts:

Respondents were hired as security guards by Petitioner (LSIA). They were assigned by
the petitioner to the different branches of Union Bank in Cebu city. On April 1, 2005,
Union Bank served notice to LSIA terminating the security service contract effective at

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the end of business hours of April 30, 2005. However, the respondents were only
informed of the termination of the contract with Union Bank on April 29, 2005. The
respondents went to union bank on April 30, 2005 for the turnover of their service
firearms to Cortes, Union Bank Chief security officer. Respondents filed a complaint for
illegal dismissal against LSIA. CA sustained the award of separation pay of NLRC to
respondents on the ground that the parties' relationship had already been strained.

Issues:
WON there was illegal dismissal.
WON the award of separation pay was proper.

Ruling:

NO. Applying Article 286 of the Labor Code of the Philippines by analogy, this Court has
repeatedly recognized that security guards may be temporarily sidelined by their
security agency as their assignments primarily depend on the contracts entered into by
the latter with third parties. Temporary "off-detail" or "floating status" is the period of time
when security guards are in between assignments or when they are made to wait after
being relieved from a previous post until they are transferred to a new one. It takes
place when, as here, the security agency's clients decide not to renew their contracts
with the agency, resulting in a situation where the available posts under its existing
contracts are less than the number of guards in its roster. For as long as such temporary
inactivity does not continue for a period exceeding six months, it has been ruled that
placing an employee on temporary "off-detail" or "floating status" is not equivalent to
dismissal.

Considering that a security guard is only considered illegally dismissed from service
when he is sidelined from duty for a period exceeding six months, respondents were not
illegally dismissed by LSIA. Under Article 279 of the Labor Code, an illegally
dismissed employee is entitled to the twin reliefs of full backwages and reinstatement
without loss of seniority rights. Aside from the instances provided under Articles 283 and
284 of the Labor Code, separation pay is, however, granted when reinstatement is no
longer feasible because of strained relations between the employer and the employee.
In cases of illegal dismissal, the accepted doctrine is that separation pay is available in
lieu of reinstatement when the latter recourse is no longer practical or in the best
interest of the parties.

As a relief granted in lieu of reinstatement, however, it consequently goes without

saying that an award of separation pay is inconsistent with a finding that there was no
illegal dismissal. Even in cases of illegal dismissal, the doctrine of strained relations is not
applied indiscriminately as to bar reinstatement, especially when the employee has not
indicated an aversion to returning to work or does not occupy a position of trust and
confidence in or has no say in the operation of the employer's business. Although
litigation may also engender a certain degree of hostility, it has likewise been ruled that
the understandable strain in the parties' relations would not necessarily rule out
reinstatement which would, otherwise, become the rule rather than the exception in
illegal dismissal cases.

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Our perusal of the position paper they filed a quo shows that, despite erroneously
believing themselves to have been illegally dismissed, respondents had alleged no
circumstance indicating the strained relations between them and LSIA and had even
alternatively prayed for reinstatement alongside the payment of separation pay. Since
application of the doctrine of strained relations presupposes a question of fact which
must be demonstrated and adequately supported by evidence, the CA clearly erred
in ruling that the parties' relations had already soured and that an award of separation
pay in favor of respondents is proper.

SKM ART CRAFT CORP. VS. BAUCA

G.R. No. 171282; November 27, 2013

Facts:

RESPONDENTS Efren Bauca and 22 others were employed by petitioner SKM Art Craft
Corp. Last Oct. 18, 2000, a fire occurred in the inspection and receiving, repair and
packing area of petitioner’s premises in Intramuros, Manila. The fire investigation report
stated that the structure and the beach rubber building were destroyed. Also burned
were four cargo containers and a trailer truck. The estimated damage was P22 million.

Last May 8, 2000, petitioner informed respondents that it will suspend its operations for six
months, effective May 9, 2000. Last May 16, 2000, only eight days after receiving notice
of the suspension of petitioner’s operations, the 23 respondents (and other co-workers)
filed a complaint for illegal dismissal. They alleged that there was discrimination in
choosing the workers to be laid off.

Issue: Was there valid suspension of operations?

Ruling:

Yes.
We agree with the National Labor Relations Commission (NLRC) that petitioner’s
suspension of operations is valid because the fire caused substantial losses to petitioner
and damaged its factory. On this point, we disagree with the Court of Appeals (CA)
that petitioner failed to prove that its suspension of operations is bona fide. The list of
materials burned was not the only evidence submitted by petitioner.

It was corroborated by pictures and the fire investigation report, and they constitute
substantial evidence of petitioner’s losses.

Under Article 286 of the Labor Code, the bona fide suspension of the operations of a
business or undertaking for a period not exceeding six months shall not terminate
employment.
Article 286 provides, “When employment not deemed terminated. The bona fide
suspension of the operations of a business or undertaking for a period not exceeding six

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(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 month from the resumption of operations of his employer or
from his relief from the military or civic duty.”

The NLRC correctly noted that the complaint for illegal dismissal filed by respondents
was premature since it was filed only eight days after petitioner announced that it will
suspend its operations for six months. In Nippon Housing Phil., Inc. v. Leynes, G.R. No.
177816, August 3, 2011, 655 SCRA 77, 88, we said that a complaint for illegal dismissal
filed prior to the lapse of said six months is generally considered as prematurely filed.

NAVOTAS SHIPYARD CORP. VS. MONTALLANA

G.R No. 190053; March 24, 2014

Facts:

The case arose when respondents Montellana, et al filed a complaint for illegal
(constructive) dismissal, with money claims against petitioners, Navotas Shipyard
Corporation and its President/General Manager, Jesus Villafolor.

According to respondents, on Ocober 20, 2003, the company’s employees were

called to a meeting where Villaflor told them that he intends to close the business and
that he will just pay them separation pay since he cannot pay them their salary since he
still had many debts to pay. Since then, they were not allowed to report for work but
Villaflor’s promise to give them separation pay never materialized despite persistent
demands.

The petitioners argue that the company is suffering financial reverses due to the
seasonal lack of fish caught and uncollected receivables. It was thus constrained to
temporarily cease operations but they projected that the company could resume
operations before the end of six months. The company had reported the temporary
shutdown to the DOLE-NCR and filed an Establishment Termination Report.

Under Compulsory Arbitration the respondents’ complaint was dismissed for lack
of merit, but they were awarded 13th month pay and service incentive leave pay for
2003. The LA considered the temporary shutdown as a suspension of the employment
relationship between the parties. The respondents appealed the ruling and argued
before the NLRC that since they were not given work assignments for more than six
months, they should have been considered constructively dismissed and granted
backwages as well as separation pay. The NLRC dismissed the appeal for lack of merit.

When the case was brought before the Court of Appeals, the CA held that the
company’s shutdown was not temporary, but permanent. It set aside the challenged
NLRC decision and granted the respondents' claims for service incentive leave pay,

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13th month pay, separation pay and backwages. Thus Petitioner now brings the case
up to the Supreme Court.
Issues:
1. Whether or not the respondents were illegally dismissed
2. Whether or not they are entitled to backwages, separation pay, incentive leave
pay and 13th month pay.

Ruling:

The Court found the petition to be partially meritorious.

1. On illegal dismissal

Under the circumstances, we cannot say that the company's employees were
illegally dismissed; rather, they lost their employment because the company ceased
operations after failing to recover from their financial reverses.

The respondents' verbal account of what happened during the meeting,

particularly the company's imminent closure, to our mind, confirmed the company's
dire situation. The temporary shutdown, it appears, was a last ditch effort on the part of
Villaflor to make the company's operations viable but, as it turned out, the effort proved
futile. The shutdown became permanent as the CA itself acknowledged. The CA
misappreciated the facts when it opined that the respondents were illegally dismissed
because they were not reinstated by the petitioners after the lapse of the company's
temporary shutdown. It lost sight of the fact that the company did not resume
operations anymore, a situation the CA itself recognized. The respondents, therefore,
had no more jobs to go back to; hence, their non-reinstatement.
In these lights, the CA was not only incorrect from the point of law; it likewise
disregarded, or at the very least, grossly misappreciated the evidence on record — that
the petitioner was in distress and had temporarily suspended its operations, and duly
reflected these circumstances to the DOLE. From this perspective, there was no grave
abuse of discretion to justify the CA's reversal of the NLRC's findings and conclusions.

2. On backwages/nominal damages

Since there was no illegal dismissal, the respondents are not entitled to
backwages. The term "backwages" presupposes illegal termination of employment. It is
restitution of earnings unduly withheld from the employee because of illegal
termination. Hence, where there is no illegal termination, there is no basis for claim or
award of backwages.

The lack of basis for backwages notwithstanding, we note that the respondents
claimed that they were not given individual written notices of the company's temporary
shutdown or of its closure.. Pursuant to existing jurisprudence, if the dismissal is by virtue
of a just or authorized cause, but without due process, the dismissed workers are
entitled to an indemnity in the form of nominal damages

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In the present case, the evidence on hand substantially shows that the company
closed down due to serious business reverses, an authorized cause for termination of
employment. The failure to notify the respondents in writing of the closure of the
company will not invalidate the termination of their employment, but the company has
to pay them nominal damages for the violation of their right to procedural due process.
This amount is addressed to the sound discretion of the court, taking into account the
relevant circumstances, as the Court explained in Agabon v. NLRC.

In Jaka Food Processing Corp. v. Pacot, the Court made a distinction between
"just" and "authorized" cause in relation to the award of nominal damages. Thus, the
Court said: "if the dismissal is based on a just cause under Article 282 but the employer
failed to comply with the notice requirement, the sanction to be imposed upon him
should be tempered because the dismissal process was, in effect, initiated by an act
imputable to the employee; and (2) if the dismissal is based on an authorized cause
under Article 283 but the employer failed to comply with the notice requirement, the
sanction should be stiffer because the dismissal process was initiated by the employer's
exercise of his management prerogative." The Court awarded P50,000.00 nominal
damages in Jaka.
Although the respondents were not individually served written notice of the
termination of their employment, the company, nonetheless, filed an Establishment
Termination Report which included the names of the respondents. The filing of the
report indicates that the company made the bona fide effort to comply with the notice
requirement under the law and the rules. Given the circumstances surrounding the
company's closure and guided by the ruling in Industrial Timber, we find it reasonable to
award the respondents P10,000.00 in nominal damages.
3. On the award of separation pay,
service incentive leave pay and
13th month pay

Considering that the company's closure was due to serious financial reverses, it is
not legally bound to give the separated employees separation pay. In Reahs
Corporation v. NLRC, the Court explained that "[t]he grant of separation pay, as an
incidence of termination of employment under Article 283, is a statutory obligation on
the part of the employer and a demandable right on the part of the employee, except
only where the closure or cessation of operations was due to serious business losses or
financial reverses and there is sufficient proof of this fact or condition."
We note, however, that in his meeting with the employees, including the
respondents, on October 20, 2003, Villaflor told them that he would be giving them
separation pay as a consequence of the company's closure. He should now honor his
undertaking to the respondents and grant them separation pay. Except for the
petitioners' claim that "they gave the separation pays of their employees," they failed to
present proof of actual payment. In this light, Villaflor's grant of separation pay to the
respondents has still to be fulfilled.
Finally, the petitioners did not appeal the LA's award of service incentive leave
pay and 13th month pay for the year 2003 to the respondents. Accordingly, the award
stands.

EMERITUS SECURITY & MAINTENANCE SYSTEMS, INC. VS. DAILIG

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G.R. No. 204761; April 2, 2014

Facts:
Respondent Dailig is one of the security guards employed by Petitioner Emeritus
Security & Maintenance. During his employment, respondent was assigned to
petitioner's various clients, the last of which was Panasonic in Calamba, Laguna starting
16 December 2004.
On December 10, 2005, he was relieved from his post.
On 16 June 2006, respondent filed a complaint for illegal dismissal and payment
of separation pay against petitioner before the Conciliation and Mediation Center of
the NLRC. On 14 July 2006, respondent filed another complaint for illegal dismissal,
underpayment of salaries and non-payment of full backwages before the NLRC
Respondent claimed that on various dates in December 2005 and from January
to May 2006, he went to petitioner's office to follow-up his next assignment. After more
than six months since his last assignment, still respondent was not given a new
assignment. Respondent argued that if an employee is on floating status for more than
six months, such employee is deemed illegally dismissed.
Petitioner admits it relieved respondent from his last assignment on December 10
2005, but it required respondent to report to the head office within 48 hours from
receipts of the order of relief. Petitioner claims that respondent allegedly failed to
comply with this notice as well as a second notice sent to his last known address
requiring him to report to the office within 72 hours or else he would be deemed to be
no longer interested to continue his employment. In addition, petitioner claims that
there was no termination letter sent to respondent purportedly proved that respondent
was not dismissed.
The Labor Arbiter held that respondent was illegally dismissed and is thus entitled
to reinstatement along with backwages, and his claim for underpayment is denied for
lack of merit. Petitioner appealed before the NLRC but was dismissed, and its motion for
reconsideration was denied. The Court of Appeals affirmed the finding of the Labor
Arbiter and the NLRC but it set aside the reinstatement order and ordered the payment
of separation pay, invoking the doctrine of strained relations between the parties. The
petition thus brought the case before the Supreme Court.
Issues:
1.Whether or not respondent was illegally dismissed by respondent
2. Whether or not respondent is entitled to separation pay, instead of reimbursement.

Ruling:
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 Arbiter's reinstatement
order.
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. Petitioner's allegation of sending respondent a notice sometime in January
2006, requiring him to report for work, is unsubstantiated, and thus, self-serving

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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:
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.

On the issue of separation pay:

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 employer's 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.
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.
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.

CRISPIN B. LOPEZ, Petitioner, v. IRVINE CONSTRUCTION CORP. AND TOMAS SY

SANTOS,Respondents.

FACTS:

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Irvine Construction Corp. (Irvine) is a construction firm with office address at San
Juan, Manila.6 It initially hired Lopez as laborer in November 1994 and, thereafter,
designated him as a guard at its warehouse in Dasmarifias. On December 18, 2005,
Lopez was purportedly terminated from his employment.

Respondent denied the said claims and contended that Lopez was employed
only as a laborer who, however, sometimes doubled as a guard. LA concluded that
the dismissal of Lopez went beyond the six-month period fixed by Article 286 of the
Labor Code and was therefore deemed to be a permanent one effectuated without a
valid cause and due process.

ISSUE:

Whether Lopez was a project or a regular employee, and whether or not there
was a valid cause for the termination

RULING:

CA Resolution denied and reinstated.

Case law states that the principal test for determining whether particular
employees are properly characterized as "project employees" as distinguished from
"regular employees," is whether or not the "project employees" were assigned to carry
out a "specific project or undertaking," the duration and scope of which were specified
at the time the employees were engaged for that project. The project could either be
(1) a particular job or undertaking that is within the regular or usual business of the
employer company, but which is distinct and separate, and identifiable as such, from
the other undertakings of the company; or (2) a particular job or undertaking that is not
within the regular business of the corporation.

NLRC found that no substantial evidence had been presented by Irvine to show
that Lopez had been assigned to carry out a "specific project or undertaking," with its
duration and scope specified at the time of engagement. In view of the weight
accorded by the courts to factual findings of labor tribunals such as the NLRC, the
Court, absent any cogent reason to hold otherwise, concurs with its ruling that Lopez
was not a project but a regular employee.

In this case, Irvine failed to prove compliance with the parameters of Article 286 of the
Labor Code. As the records would show, it merely completed one of its numerous

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construction projects which does not, by and of itself, amount to a bona fide
suspension of business operations or undertaking. In invoking Article 286 of the Labor
Code, the paramount consideration should be the dire exigency of the business of the
employer that compels it to put some of its employees temporarily out of work.51 This
means that the employer should be able to prove that it is faced with a clear and
compelling economic reason which reasonably forces it to temporarily shut down its
business operations or a particular undertaking, incidentally resulting to the temporary
lay-off of its employees.

EXOCET SECURITY AND ALLIED SERVICES CORPORATION

and/or MA. TERESA MARCELO, VS ARMANDO D. SERRANO
GR NO 198538, Sept. 29, 2014

FACTS:
Exocet assigned respondent Armando D. Serrano (Serrano) on September 24, 1994 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.

Apparently Serrano was relieved by JG Summit from his duties. Upon his returned into
service, there has been reassignment for more than six (6) months. This resulted to his
filing of a complaint for illegal dismissal against Exocet with the NLRC.

Exocet in its defense said that Serreno after being relieved failed to report as VIP
security nd was even demanding for VIP security detail to another client. However
since Exocet did not have clients in need of
VIP security assignment, Serrano was temporarily assigned to general security service
which Serreno refused to take.

ISSUE: WHETHER OR NOT Serreno was constructively dismissed

HELD:
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,
Jurisprudence considered such case 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. It takes place when the security
agency's clients decide not to renew their contracts with the agency, resulting in a
situation where the available posts under its existing contracts are less than the number
of guards in its roster. It also happens in instances where contracts for security services
stipulate that the client may request the agency for the replacement of the guards
assigned to it, even for want of cause, such that the replaced security guard may be
placed on temporary "off-detail" if there are no available posts under the agency's
existing contracts.

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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.

As provided for in COLE Department Order No 14, Series of 2001. 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 as described in subsection 6.5. 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 also be given separation pay.

While the Court has recognized the security guards' right to security of tenure under the
"floating status" rule, the Court has similarly acknowledged the management
prerogative of security agencies to transfer security guards when necessary in
conducting its business, provided it is done in good faith.

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. 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.

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.

Pasig Agricultural Devt and Industrial Supply Corp vs. Nievarez, GR No. 197852, Oct 19,
2015

FACTS:

Petitioner Pasig Agricultural Development and Industrial Supply Corporation

(PADISCOR) is a domestic corporation organized and existing under the Philippine laws.
Petitioner Celestino E. Damian is the general manager of PADISCOR.

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Respondents Wilson Nievarez, Alberto Halina, Glory Vic Nuevo, Ricky Torres and
Cornelio Balle are regular employees of PADISCOR. They were hired as machinist, tool
keeper/timer, helper, welder, and maintenance worker with a daily wage of P350.00.

PADISCOR, through its administrative officer, sent notices to Nievarez, Torres and Nuevo
informing them that they were temporarily laid off from employment for a period of six
(6) months from July 30, 2006 to January 30, 2007. It cited that it can no longer pay their
wages and other benefits due to financial losses and lack of capital. It also mentioned
other factors which further burdened its efforts, such as undesirable personnel
misconduct like unauthorized absences, habitual tardiness, negligence, dishonesty and
others.

In a Memorandum dated June 24, 2006, PADISCOR required Nievarez to submit a

written explanation why a disciplinary action should not be imposed against him for his
unjustified refusal to perform assigned tasks. The following day, June 25, 2006, Nievarez
submitted his explanation expounding on his need to receive a memorandum before
he be assigned to a task as protection from unfounded accusations, and demanded
an additional wage.

PADISCOR dismissed the explanations and demands of Nievarez for being ridiculous
and baseless. PADISCOR denied that Nievarez was transferred to another place of work
or was demoted to a lesser job category. It also rejected his presumption that he was
promoted. Hence, it suspended Nievarez from work for fifteen (15) days for
insubordination.

On September 5, 2006, Balle and Halina received notices similar from the other
respondents informing them of their temporary lay-off from employment from October
7, 2006 to April 6, 2007.

Consequently, respondents filed complaints for illegal suspension, illegal lay-off, non-
payment of service incentive leave and paternity leave, damages and attorney's fees
against PADISCOR and Damian.

PADISCOR maintained that the six (6) months temporary lay-off of respondents was
valid due to economic reasons. It also alleged that it gave one-month prior notice to
respondents regarding the temporary retrenchment and filed Establishment Termination
Reports on June 20, 2006 and September 5, 2006 with the Department of Labor and
Employment (DOLE). It averred that there was no dismissal since the lay-off was merely
temporary, thus, respondents are not entitled to separation pay.

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PADISCOR alleged that the claim for paternity benefit by Nievarez and Nuevo has
already prescribed since the youngest son of Nievarez was born in 1993 while Nuevo's
youngest child was born in 2001. There was no record that they claimed or filed for the
said benefit.

In the Decision dated November 30, 2006, the Labor Arbiter (LA) dismissed the
complaint for illegal lay-off and illegal suspension for lack of merit but awarded the
payment of service incentive leave in favor of respondents. NLRC affirmed the said
decision.

When appealed to CA, it ruled that the LA and the NLRC committed grave abuse of
discretion in sustaining respondents' temporary suspension from work.

ISSUE:

WON THE HONORABLE COURT OF APPEALS ERRED IN ISSUING THE DECISION DATED 25
JANUARY 2011 AND THE RESOLUTION DATED 21 JULY 2011, IN HOLDING THAT
PETITIONERS' EXERCISE OF ITS MANAGEMENT PREROGATIVE TO TEMPORARILY LAY-OFF
EMPLOYEES IS ILLEGAL IN VIEW OF ITS FAILURE TO PRESENT FINANCIAL STATEMENTS TO
EVIDENCE ITS FINANCIAL LOSSES. CONTRARY TO PREVAILING JURISPRUDENCE THAT
PRESENTATION OF FINANCIAL STATEMENTS IS NOT A REQUISITE FOR A VALID TEMPORARY
LAY-OFF.

HELD:

This Court finds the present petition without merit.

Petitioners alleged that the CA gravely erred in ruling that the proof of losses is a
condition sine qua nonto a valid temporary lay-off. They insisted that the respondents
were temporarily laid off for a period of six (6) months in accordance with Article
286 (now Article 301) of the Labor Code; thus, the requirements for retrenchment laid
down in Article 283 (now Article 298) cannot be applied in the present case.
Furthermore, petitioners averred that they acted in good faith when they implemented
the temporary lay-off of respondents and that it was due to economic and non-
economic reasons and not because of anti-unionism acts.

The case of Industrial Timber Corporation v. NLRC is instructive to the nature of lay-off,
even a temporary one, as a management prerogative, to wit:

Closure or cessation of operations for economic reasons is, therefore, recognized as a

valid exercise of management prerogative. The determination to cease operations is a
prerogative of management which the State does not usually interfere with, as no
business or undertaking must be required to continue operating at a loss simply

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because it has to maintain its workers in employment. Such an act would be
tantamount to a taking of property without due process of
law.ChanRoblesVirtualawlibrary
There is no specific provision of law which treats of a temporary retrenchment or lay-off
and provides for the requisites in effecting it or a period or duration therefor. These
employees cannot forever be temporarily laid-off. To remedy this situation or fill the
hiatus, Article 286 (now Article 301) of the Labor Code may be applied but only by
analogy to set a specific period that employees may remain temporarily laid-off or in
floating status.

Pursuant to Article 286 (now Article 301), the suspension of the operation of business or
undertaking in a temporary lay-off situation must not exceed six (6) months. Within this
six-month period, the employee should either be recalled or permanently retrenched.
Otherwise, the employee would be deemed to have been dismissed, and the
employee held liable therefor.

In the case at bar, PADISCOR asserts that respondents were temporarily laid-off from
work on July 30, 2006 and October 7, 2006 for a period of six months since it can no
longer pay their wages and other benefits due to financial losses and lack of capital. To
support its claim, it presented the following pieces of evidence: (a) Notices of
temporary layoff to respondents, dated June 17, 2006 and September 5, 2006, and (b)
Copies of Establishment Termination Report on June 20, 2006 and September 5, 2006
evidencing the respondents' lay-off.

As allegation is not evidence, it is settled that the burden of evidence lies with the party
who asserts the affirmative of an issue. This Court is not impressed with petitioners' bare
claim of financial losses to justify the temporary lay-off of respondents. The documents
they presented are scant to substantiate its claim. While the law and jurisprudence
acknowledge that the closure or suspension of operations of employers due to
economic reasons is a valid exercise of management prerogative, it does not exempt
employers from complying with the requirements laid down by the law.

Jurisprudence, in both a permanent and a temporary lay-off, dictates that the one-
month notice rule to both the DOLE and the employee under Article 283 (now Article
298) is mandatory. Also, in both cases, the layoff, as an exercise of the employer's
management prerogative, must be exercised in good faith - that is, one which is
intended for the advancement of employers' interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws or under
valid agreements.

In light of the well-entrenched rule that the burden to prove the validity and legality of
the termination of employment falls on the employer and the requisites provided by

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Article 286 (now Article 301) of the Labor Code, PADISCOR should have established
the bona fide suspension of its business operations or undertaking that would have
resulted in the temporary lay-off of the respondents for a period not exceeding six (6)
months in accordance with the Labor Code.

In the present case, PADISCOR failed to prove its compliance with the said requisites. In
invoking such article in the Labor Code, the paramount consideration should be the
dire exigency of the business of the employer that compels it to put some of its
employees temporarily out of work.45 This means that the employer should be able to
prove that it is faced with a clear and compelling economic reason which reasonably
forces it to temporarily shut down its business operations or a particular undertaking,
incidentally resulting to the temporary lay-off of its employees.

Therefore, we rule that although PADISCOR complied with the one-month notice rule to
the DOLE and the employees, it failed to prove that such temporary lay-off, as exercise
of its management prerogative, was made in good faith. Due to the grim
consequences to the employee such that he or she does not receive any salary or
financial benefit provided by law during the period of temporary lay-off, this Court holds
that the employer should have sufficiently proven through clear and convincing
evidence the existence of the dire exigency of its business that compels it to put some
of its employees temporarily out of work before a temporary layoff be considered as
valid.

Verily, PADISCOR cannot conveniently suspend the work of any of its employees in the
guise of a temporary lay-off when it has failed to show compliance with the legal
parameters under Article 286 (now Article 301) of the Labor Code. With PADISCOR
being unsuccessful to prove such compliance, the resulting legal conclusion is that
respondents had been constructively dismissed; however, we note that the
respondents, with the exception of Balle who had already found another employment,
have already resumed employment with PADISCOR. Therefore, respondents are
entitled to payment of full backwages and other benefits for the period that they were
laid-off from employment.

Quillopa vs. Quality Guards Services & Investigation Agency, GR No. 213814, Dec. 2,
2015

FACTS:

QGSIA hired petitioner as a security guard and gave him various assignments, the last of
which was at the West Burnham Place Condominium in Baguio City. The deputy
manager of QGSIA, Rhegan Basabica, visited petitioner at his post and told the latter

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that he would be placed on a floating status, but was assured that he would be given
a new assignment. At the same time, petitioner was ordered to report to the QGSIA
Office the next day for further instructions. Despite such assurance and his repeated
trips for follow up to the QGSIA Office, petitioner was not given any new assignment as
there was allegedly no vacancy yet. Hence, he remained on floating status.

Petitioner filed a complaint for money claims such as wages, overtime pay, premium
pay for holidays and rest days, night shift differentials, 13th month pay, and service
incentive leave pay against respondents before the NLRC, docketed as NLRC RAB-CAR
Case No. 11-0542-10 (First Complaint). However, the parties were able to amicably
settle the controversy, as evidenced by a Waiver/Quitclaim and Release dated
February 3, 2011, which provides, among others, that petitioner is withdrawing his
complaint against respondents and that he received a total of P10,000.00 from
respondents "for and [in] consideration of the settlement of all [petitioner's] claims
which might have arisen as consequence of [petitioner's] employment." On even date,
the Labor Arbiter (LA) issued an Order approving and granting the amicable settlement
and ordering the dismissal of the First Complaint with prejudice.

However, on September 14, 2011, petitioner filed another complaint, this time, for illegal
dismissal with prayer for payment of full backwages, separation pay, and attorney's
fees, against respondents before the NLRC, docketed as NLRC RAB-CAR Case No. 09-
0346-11 (Second Complaint).In his Position Paper, petitioner alleged that after the
settlement of the First Complaint, he waited for a new posting or assignment, but to no
avail. In this relation, petitioner contended that respondents' continued failure to
reinstate him to his previous assignment or to give him a new one should be construed
as a termination of his employment, considering that he had been on floating status for
almost one (1) year.

In their defense, respondents essentially countered that the Waiver/Quitclaim and

Release already terminated the employer-employee relationship between them and
petitioner, and thus, the latter had no more ground to file the Second Complaint.

The LA ruled in favor of petitioner. The NLRC affirmed the LA ruling. The CA Reversed
and set aside the NLRC ruling and dismissed the complaint.

Issue:

WON the CA correctly ruled that the Waiver/Quitclaim and Release precluded
petitioner from filing the Second Complaint for illegal dismissal against respondents.

Held:

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The petition is meritorious.

The Court finds that the CA erred in ascribing grave abuse of discretion on the part of
the NLRC when it ruled that petitioner was constructively dismissed by respondents,
considering that the same is supported by substantial evidence and in accord with
prevailing law and jurisprudence, as will be explained hereunder.

A judicious review of the records reveals the following timeline: (a) on September 28,
2010, petitioner was placed on floating status by respondents; (b) on November 11,
2010, petitioner filed the First Complaint for money claims such as wages, overtime pay,
premium pay for holidays and rest days, night shift differentials, 13th month pay, and
service incentive leave pay, against respondents; (c) on February 3, 2011, petitioner
executed a Waiver/Quitclaim and Release in settlement of the First Complaint; and (d)
on September 14, 2011, or more than 11 months from the time petitioner was placed on
floating status, he filed the Second Complaint, this time for illegal dismissal, against
respondents.

It cannot be pretended that the foregoing Waiver/Quitclaim and Release only

pertained to the First Complaint, which had for its causes of action the following: (a)
underpayment of wages; (b) non-payment of overtime pay, holiday pay, rest day pay,
night shift differentials, 13th month pay, and service incentive leave pay; and (c) refund
of cash bond. Hence, the res judicata effect of this settlement agreement should only
pertam to the aforementioned causes of action and not to any other unrelated
cause/s of action accruing in petitioner's favor after the execution of such settlement,
i.e., illegal dismissal. Further, the Waiver/Quitclaim and Release cannot be construed to
sever the employer-employee relationship between respondents and petitioner, as the
CA would put it, simply because there is nothing therein that would operate as such.
Perforce, the CA erred in dismissing the Second Complaint on the ground that there is
no more employer-employee relationship between respondents and petitioner upon
the filing of the same.

On the issue of constructive dismissal, the LA and the NLRC correctly ruled in favor of
the petitioner.

Case law provides that the concept of temporary "off-detail" or "floating status" of
security guards employed by private security agencies - a form of a temporary
retrenchment or lay-off - relates to the period of time when security guards are in
between assignments or when they are made to wait after being relieved from a
previous post until they are transferred to a new one. This takes place when the security
agency's clients decide not to renew their contracts with the agency, resulting in a
situation where the available posts under its existing contracts are less than the number
of guards in its roster. It also happens in instances where contracts for security services
stipulate that the client may request the agency for the replacement of the guards
assigned to it, even for want of cause, such that the replaced security guard may be
placed on temporary "off-detail" if there are no available posts under the agency's
existing contracts. As the circumstance is generally outside the control of the security
agency or employer, the Court has ruled that when a security guard is placed on a

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"floating status," he or she does not receive any salary or financial benefit provided by
law.

To clarify, placing a security guard in temporary "off-detail" or "floating status" is part of

management prerogative of the employer-security agency and does not, per se,
constitute a severance of the employer-employee relationship. However, being an
exercise of management prerogative, it must be exercised in good faith - that is, one
which is intended for the advancement of the employer's interest and not for the
purpose of defeating or circumventing the rights of the employees under special laws
or under valid agreements. Moreover, due to the grim economic consequences to the
security guard in which he does not receive any salary while in temporary "off-detail" or
"floating status," the employer-security agency should bear the burden of proving that
there are no posts available to which the security guard temporarily out of work can be
assigned. Furthermore, the security guard must not remain in such status for a period of
more than six (6) months; otherwise, he is deemed terminated. The Court's ruling
in Nationwide Security and Allied Services, Inc. v. Valderama43 is instructive on this
matter, to wit:

In cases involving security guards, a relief and transfer order in itself does not sever
employment relationship between a security guard and his agency. An employee has
the right to security of tenure, but this does not give him a vested right to his position as
would deprive the company of its prerogative to change his assignment or transfer him
where his service, as security guard, will be most beneficial to the client. Temporary off-
detail or the period of time security guards are made to wait until they are transferred or
assigned to a new post or client does not constitute constructive dismissal, so long as
such status does not continue beyond six months.

The onus of proving that there is no post available to which the security guard can be
assigned rests on the employer x x x. (Emphases and underscoring supplied)
In the case at bar, it is undisputed that from September 28, 2010 until he filed the
Second Complaint on September 14, 2011, or a total of more than 11 months, petitioner
was placed on a temporary "off-detail" or "floating status" without any salary or benefits
whatsoever. In fact, despite repeated follow-ups at the QGSIA Office, he failed to get a
new post or assignment from respondents purportedly for lack of vacancy. However,
records are bereft of any indication or proof that there was indeed no posts available
to which petitioner may be assigned. Therefore, in view of their unjustified failure to
place petitioner back in active duty within the allowable six (6)-month period and to
discharge the burden placed upon it by prevailing jurisprudence, the Court is
constrained to hold respondents liable for petitioner's constructive dismissal.

SPECTRUM SECURITY SERVICES, INC. VS. DAVID GRAVE, ET. AL. G.R. NO. 196650. JUNE 7,
2017

Principle:

A security guard placed on reserved or off-detail status is deemed constructively

dismissed only if the status should last more than six months.
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Facts:

The controversy started when the petitioner implemented an action plan as part of its
operational and manpower supervision enhancement program geared towards the
gradual replacement of security guards at Ibiden. Pursuant to the action plan, it issued
separate "Notice(s) to Return to Unit" to the respondents in July and August 2008
directing them to report to its head office and to update their documents for re-
assignment.

the respondents filled their complaint against the petitioner for constructive dismissal in
Regional Arbitration Branch No. IV of the NLRC, claiming that the implementation of the
action plan was a retaliatory measure against them for bringing several complaints
along with other employees of the petitioner to recover unpaid holiday pay and 13th
month pay.

The Labor Arbiter dismissed the complaint for constructive dismissal opining that a
security guard could be considered as having been constructively dismissed only when
he had been placed on floating status for a period of more than six months.

The respondents appealed to the NLRC. The NLRC reversed the Labor Arbiter's dismissal,
and ordered the petitioner to reinstate the respondents with back wages. The ruling of
the NLRC was affirmed by the CA.

Issue:
W/N the CA erred in finding that the petitioner was guilty of illegally dismissing the
respondents.

Held:

No. the respondents are not illegally dismissed.

After the period of six months, the employers should either recall the affected security
guards to work or consider them permanently retrenched pursuant to the requirements
of the law; otherwise, the employers would be held to have dismissed them, and would
be liable for such dismissals.

Of specific relevance is that Subsection 9.3 of DOLE Department Order No. 014-01
constitutes guidelines to be followed when the security guards are placed on reserved
status, to wit:

9.3 Reserved Status — A security guard or similar personnel may be placed in a

workpool or on reserved status due to lack of service assignments after expiration
or termination of the service contract with the principal where he/she is
assigned, or due to the temporary suspension of agency operations. No security
guard or personnel can be placed in a workpool or on reserved status in any of
the following situations: a) after expiration of a service contract if there are other
principals where he/she can be assigned; b) as a measure to constructively

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dismiss the security guard; and c) as an act of retaliation for filing complaints
against the employer on violations of labor laws, among others.

If, after a period of 6 months, the security agency/employer cannot provide

work or give an assignment to the reserved security guard, the latter can be
dismissed from service and shall be entitled to separation pay as prescribed on
subsection 5.6.

Security guards on reserved status who accept employment in other security

agencies or employers

SPECTRUM SECURITY SERVICES, INC. VS. DAVID GRAVE, ET. AL.

G.R. NO. 196650. JUNE 7, 2017

Principle:

A security guard placed on reserved or off-detail status is deemed constructively

dismissed only if the status should last more than six months.

Facts:

The controversy started when the petitioner implemented an action plan as part of its
operational and manpower supervision enhancement program geared towards the
gradual replacement of security guards at Ibiden. Pursuant to the action plan, it issued
separate "Notice(s) to Return to Unit" to the respondents in July and August 2008
directing them to report to its head office and to update their documents for re-
assignment.

the respondents filled their complaint against the petitioner for constructive dismissal in
Regional Arbitration Branch No. IV of the NLRC, claiming that the implementation of the
action plan was a retaliatory measure against them for bringing several complaints
along with other employees of the petitioner to recover unpaid holiday pay and 13th
month pay.

The Labor Arbiter dismissed the complaint for constructive dismissal opining that a
security guard could be considered as having been constructively dismissed only when
he had been placed on floating status for a period of more than six months.

The respondents appealed to the NLRC. The NLRC reversed the Labor Arbiter's dismissal,
and ordered the petitioner to reinstate the respondents with back wages. The ruling of
the NLRC was affirmed by the CA.

Issue:
W/N the CA erred in finding that the petitioner was guilty of illegally dismissing the
respondents.

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Held:

No. the respondents are not illegally dismissed.

After the period of six months, the employers should either recall the affected security
guards to work or consider them permanently retrenched pursuant to the requirements
of the law; otherwise, the employers would be held to have dismissed them, and would
be liable for such dismissals.

Of specific relevance is that Subsection 9.3 of DOLE Department Order No. 014-01
constitutes guidelines to be followed when the security guards are placed on reserved
status, to wit:

9.3 Reserved Status — A security guard or similar personnel may be placed in a

workpool or on reserved status due to lack of service assignments after expiration
or termination of the service contract with the principal where he/she is
assigned, or due to the temporary suspension of agency operations. No security
guard or personnel can be placed in a workpool or on reserved status in any of
the following situations: a) after expiration of a service contract if there are other
principals where he/she can be assigned; b) as a measure to constructively
dismiss the security guard; and c) as an act of retaliation for filing complaints
against the employer on violations of labor laws, among others.

If, after a period of 6 months, the security agency/employer cannot provide

work or give an assignment to the reserved security guard, the latter can be
dismissed from service and shall be entitled to separation pay as prescribed on
subsection 5.6.

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.

The respondents insist that they were constructively dismissed when they were relieved
from their posts at Ibiden. However, the Labor Arbiter found that such insistence was
unsupported by any factual foundation because there was no evidence showing that
they had been dismissed. The finding of the Labor Arbiter is correct. The notices sent to
them contained nothing from which to justly infer their having been terminated from
their employment. Moreover, their complaint for illegal dismissal was even prematurely
filed on August 14, 2008 because the notices were sent to each of them only in the
period from July 3, 2008 to August 2, 2008.

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VII. DISEASE AS A GROUND FOR TERMINATION

SY VS. COURT OF APPEALS

G.R. No. 142293; February 27, 2003

Facts:
Jaime Sahot started working as a truck helper for petitioners’ family-owned trucking
business named Vicente Sy Trucking. In 1965, he became a truck driver of the same
family business. Throughout the changes in names and for 36 years, private respondent
continuously served the trucking business of petitioners.

Sahot was already 59 years old. He had been incurring absences as he was suffering
from various ailments. Sahot had filed a week-long leave to be medically examined
and treated for EOR, presleyopia, hypertensive retinopathy G II HPM, UTI, Osteoarthritis
and heart enlargement. On said grounds, Belen Paulino of the SBT Trucking Service
management told him to file a formal request for extension of his leave. At the end of
his week-long absence, Sahot applied for extension of his leave for the whole month of
June, 1994. It was at this time when petitioners allegedly threatened to terminate his
employment should he refuse to go back to work. Ultimately, petitioners carried out
their threat and dismissed him from work. He ended up sick, jobless and penniless.

Sahot filed with the NLRC NCR Arbitration Branch, a complaint for illegal dismissal, He
prayed for the recovery of separation pay and attorneys fees against herein petitioners.

Petitioners contended that Sahot was not illegally dismissed as a driver because he was
in fact petitioner’s industrial partner and that due to Sahot’s refusal to work after the
expiration of his authorized leave of absence, he should be deemed to have voluntarily
resigned from his work. The NLRC NCR Arbitration Branch, ruled that there was no illegal
dismissal in Sahot’s case. Private respondent had failed to report to work. Moreover,
said the Labor Arbiter, petitioners and private respondent were industrial partners. On
appeal, the NLRC declared that private respondent was an employee, not an industrial
partner, since the start. In its decision the appellate court affirmed with modification the
judgment of the NLRC. It held that private respondent was indeed an employee of
petitioners since 1958.

Issues:
Whether or not an employer-employee relationship existed between petitioners and
respondent Sahot;
Whether or not there was valid dismissal; and Whether or not respondent Sahot is
entitled to separation pay.

Held:
Private respondent Jaime Sahot was not an industrial partner but an employee of
petitioners from 1958 to 1994.

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In termination cases, the burden is upon the employer to show by substantial evidence
that the termination was for lawful cause and validly made. Article 277(b) of the Labor
Code puts the burden of proving that the dismissal of an employee was for a valid or
authorized cause on the employer, without distinction whether the employer admits or
does not admit the dismissal. For an employee’s dismissal to be valid, (a) the dismissal
must be for a valid cause and (b) the employee must be afforded due process.

In order to validly terminate employment under Article 284 of the Labor Code on the
ground of a disease, Book VI, Rule I, Section 8 of the Omnibus Implementing Rules of the
Labor Code requires:
Sec. 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 competent public health authority that the disease is of such
nature or at such a stage that it cannot be cured within a period of six (6) months even
with proper medical treatment. If the disease or ailment can be cured within the
period, the employer shall not terminate the employee but shall ask the employee to
take a leave. The employer shall reinstate such employee to his former position
immediately upon the restoration of his normal health.

In the case at bar, the employer clearly did not comply with the medical certificate
requirement before Sahot’s dismissal was effected. From the records, it clearly appears
that procedural due process was not observed in the separation of private respondent
by the management of the trucking company. The employer is required to furnish an
employee with two written notices before the latter is dismissed: (1) the notice to
apprise the employee of the particular acts or omissions for which his dismissal is sought,
which is the equivalent of a charge; 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, the petitioners failed to do, even only for
record purposes. What management did was to threaten the employee with dismissal,
then actually implement the threat when the occasion presented itself because of
private respondent’s painful left thigh.
All told, both the substantive and procedural aspects of due process were violated.
Clearly, therefore, Sahot’s dismissal is tainted with invalidity.

On the last issue, respondent Jaime Sahot is entitled to separation pay. An employee
who is terminated because of disease is entitled to "separation pay equivalent to at
least one month salary or to one-half month salary for every year of service, whichever
is greater.

MANLY EXPRESS, INC. VS. PAYONG

G.R. No. 167462; October 25, 2005

Facts:
Romualdo Payong, Jr. was employed as a welder by petitioner. Sometime in December
1999, he was complaining of eyesight problems. Brought to an eye specialist by private

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respondent Ching, he was diagnosed to be suffering from eye cataract. Despite
having the cataract removed in January of 2000, he was disallowed to return to his
work by Ching. Much later, on August 1, 2000, he was given a letter of termination of
employment.

Thus, a complaint for illegal dismissal with money claims was filed against Manly.

The Labor Arbiter rendered a judgment ordering the respondent company to pay
complainant Payong, the total amount of SEVENTY-FIVE THOUSAND NINE HUNDRED
PESOS (P75, 900.00).

The appellate court observed that considering that the termination was based on his
alleged partial blindness, Manly should have presented a certification by a competent
public health authority that Payong was suffering from such a disease and his
continued employment is prejudicial to his health and that of his co-
employees. Without the certification, the dismissal was illegal.

Issue:
Whether or not there was a valid termination.

Held:
The petition lacks merit.

Article 284 of the Labor Code authorizes an employer to terminate an employee on the
ground of disease, thus:
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: ….

The rule is explicit. For a dismissal on the ground of disease to be considered valid, two
requisites must concur: (a) the employee suffers from a disease which cannot be cured
within six months and his continued employment is prohibited by law or prejudicial to his
health or to the health of his co-employees, and (b) a certification to that effect must
be issued by a competent public health authority.

In the present case, there was no proof that Payong’s continued employment was
prohibited by law or prejudicial to his health and that of his co-employees. No medical
certificate by a competent public health authority was submitted that Payong was
suffering from a disease that cannot be cured within a period of six months. In the
absence of such certification, Payong’s dismissal must necessarily be declared illegal.

The burden of proving the validity of the dismissal rests on the employer. As such, the
employer must prove that the requisites for a valid dismissal due to a disease have
been complied with. In the absence of the required certification by a competent
public health authority, this Court has ruled against the validity of the employee’s
dismissal.

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We also note that Manly failed to comply with the procedure for terminating an
employee. In dismissing an employee, the employer has the burden of proving that the
employee 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. The first notice must state that dismissal is sought for
the act or omission charged against the employee, otherwise, the notice cannot be
considered sufficient compliance with the rules.

All told, Payong’s dismissal did not comply with both the substantive and procedural
aspects of due process. Clearly, his dismissal is tainted with invalidity.

DUTERTE VS. KINGSWOOD TRADING CO.

G.R. No. 160325; October 4, 2007

Facts:
Roque Duterte was hired as truck/trailer driver by respondent Kingswood Trading
Company, Inc., of which co-respondent Filemon Lim is the President.

On November 8, 1998, petitioner had his first heart attack and was confined for two
weeks at the Philippine Heart Center. This was confirmed by respondent KTC which
admitted that petitioner was declared on sick leave with corresponding notification.

A month later, petitioner returned to work armed with a medical certificate signed by
his attending physician at the PHC, attesting to petitioner’s fitness to work. However,
said certificate was not honored by the respondents who refused to allow petitioner to
work.

Respondents refused to declare petitioner fit to work unless physically examined by the
company physician. Respondents’ promise to pay petitioner his separation pay turned
out to be an empty one. Instead, petitioner was presented, for his signature, a
document as proof of his receipt of the amount of P14,375.00 as first installment of his
Social Security System (SSS) benefits. Having received no such amount, petitioner
refused to affix his signature thereon and instead requested for the necessary
documents from respondents to enable him to claim his SSS benefits, but the latter did
not heed his request.

Petitioner filed against his employer a complaint for illegal dismissal and damages.

Issue: Whether or not there was legality of the termination.

Held:
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

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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.

Corollarily, in order to validly terminate employment on the basis of disease, Book VI,
Rule I, Section 8 of the Omnibus Implementing Rules of the Labor Code requires:

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. (Book VI, Rule 1, Sec. 8 of the Implementing Rules)

The law is unequivocal: the employer, before it can legally dismiss its employee on the
ground of disease, must adduce a certification from a competent public authority that
the disease of which its employee is suffering is of such nature or at such a stage that it
cannot be cured within a period of six months even with proper treatment.

Here, the record does not contain the required certification. And when the respondents
asked the petitioner to look for another job because he was unfit to work, such
unilateral declaration, even if backed up by the findings of its company doctors, did
not meet the quantum requirement mandated by the law, i.e., there must be a
certification by a competent public authority.

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.

VILLARUEL VS. YEO HAN GUAN

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

Facts:
Petitioner alleged that in June 1963, he was employed as a machine operator by
Ribonette Manufacturing Company, an enterprise engaged in the business of
manufacturing and selling PVC pipes and is owned and managed by herein
respondent Yeo Han Guan. Over a period of almost twenty (20) years, the company
changed its name four times. Starting in 1993 up to the time of the filing of petitioner's
complaint in 1999, the company was operating under the name of Yuhans
Enterprises. Despite the changes in the company's name, petitioner remained in the
employ of respondent. Petitioner further alleged that on October 5, 1998, he got sick
and was confined in a hospital; on December 12, 1998, he reported for work but was no

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longer permitted to go back because of his illness; he asked that respondent allow him
to continue working but be assigned a lighter kind of work but his request was denied;
instead, he was offered a sum of P15,000.00 as his separation pay; however, the said
amount corresponds only to the period between 1993 and 1999; petitioner prayed that
he be granted separation pay computed from his first day of employment in June 1963,
but respondent refused. Aside from separation pay, petitioner prayed for the payment
of service incentive leave for three years as well as attorney's fees.

The Labor Arbiter found for the respondent, granting him separation pay from the June
1963 up to the time of separation, and service incentive leave equivalent to 15 days.
The NLRC affirmed. On appeal, the CA reversed the NLRC on the issue of separation
pay.

Issue: WON petitioner is entitled to separation pay under the provisions of the Labor
Code, particularly Article 284

Held:
Article 284 of the Labor Code reads:

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 (½) month salary for every year of service whichever is
greater, a fraction of at least six months being considered as one (1) whole year.

A plain reading of the abovequoted provision clearly presupposes that it is the

employer who terminates the services of the employee found to be suffering from any
disease and whose continued employment is prohibited by law or is prejudicial to his
health as well as to the health of his co-employees. It does not contemplate a situation
where it is the employee who severs his or her employment ties. This is precisely the
reason why Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the Labor
Code, directs that an employer shall not terminate the services of the employee unless
there is a certification by a competent public health authority that the disease is of
such nature or at such a stage that it cannot be cured within a period of six (6) months
even with proper medical treatment.
On the other hand, the Court agrees with the CA in its observation of the following
circumstances as proof that respondent did not terminate petitioner's employment: first,
the only cause of action in petitioner's original complaint is that he was “offered a very
low separation pay”; second, there was no allegation of illegal dismissal, both in
petitioner's original and amended complaints and position paper; and, third, there was
no prayer for reinstatement.

In consonance with the above findings, the Court finds that petitioner was the one who
initiated the severance of his employment relations with respondent. It is evident from
the various pleadings filed by petitioner that he never intended to return to his
employment with respondent on the ground that his health is failing. Indeed, petitioner

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did not ask for reinstatement. In fact, he rejected respondent's offer for him to return to
work. This is tantamount to resignation.

Resignation is defined as the voluntary act of an employee who finds himself in a

situation where he believes that personal reasons cannot be sacrificed in favor of the
exigency of the service and he has no other choice but to disassociate himself from his
employment.

It may not be amiss to point out at this juncture that aside from Article 284 of the Labor
Code, the award of separation pay is also authorized in the situations dealt with in
Article 283 of the same Code and under Section 4 (b), Rule I, Book VI of the
Implementing Rules and Regulations of the said Code where there is illegal dismissal
and reinstatement is no longer feasible. By way of exception, this Court has allowed
grants of separation pay to stand as “a measure of social justice” where the employee
is validly dismissed for causes other than serious misconduct or those reflecting on his
moral character. However, there is no provision in the Labor Code which grants
separation pay to voluntarily resigning employees. In fact, the rule is that an employee
who voluntarily resigns from employment is not entitled to separation pay, except when
it is stipulated in the employment contract or CBA, or it is sanctioned by established
employer practice or policy. In the present case, neither the abovementioned
provisions of the Labor Code and its implementing rules and regulations nor the
exceptions apply because petitioner was not dismissed from his employment and there
is no evidence to show that payment of separation pay is stipulated in his employment
contract or sanctioned by established practice or policy of herein respondent, his
employer.

Since petitioner was not terminated from his employment and, instead, is deemed to
have resigned therefrom, he is not entitled to separation pay under the provisions of the
Labor Code.

The foregoing notwithstanding, this Court, in a number of cases, has granted financial
assistance to separated employees as a measure of social and compassionate justice
and as an equitable concession. Taking into consideration the factual circumstances
obtaining in the present case, the Court finds that petitioner is entitled to this kind of
assistance.

In this regard, the Court finds credence in petitioner's contention that he is in the
employ of respondent for more than 35 years. In the absence of a substantial refutation
on the part of respondent, the Court agrees with the findings of the Labor Arbiter and
the NLRC that respondent company is not distinct from its predecessors but, in fact,
merely continued the operation of the latter under the same owners and the same
business venture. The Court further notes that there is no evidence on record to show
that petitioner has any derogatory record during his long years of service with
respondent and that his employment was severed not by reason of any infraction on his
part but because of his failing physical condition. Add to this the willingness of
respondent to give him financial assistance. Hence, based on the foregoing, the Court

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finds that the award of P50,000.00 to petitioner as financial assistance is deemed
equitable under the circumstances.

VIII. OTHER CAUSES OF SEVERANCE OF EMPLOYMENT RELATION

Pantranco North Express vs. NLRC, 259 SCRA 161 [1996]

Facts: Private respondent was hired by petitioner in 1964 as a bus conductor. He

eventually joined the Pantranco Employees Association-PTGWO. He continued in
petitioner's employ until August 12, 1989, when he was retired at the age of fifty-two (52)
after having rendered twenty five years' service. The basis of his retirement was the
compulsory retirement provision of the collective bargaining agreement between the
petitioner and the aforenamed union. Private respondent received P49,300.00 as
retirement pay.

On February 15, 1990, private respondent filed a complaint for illegal dismissal against
petitioner with the Sub-Regional Arbitration Branch of the respondent Commission in
Dagupan City. The complaint was consolidated with two other cases of illegal dismissal
having similar facts and issues, filed by other employees, non-union members.

Issue: Whether the CBA stipulation on compulsory retirement after twenty-five years of
service is legal and enforceable.

Held: Art. 287 of the Labor Code as worded permits employers and employees to fix the
applicable retirement age at below 60 years. Moreover, providing for early retirement
does not constitute diminution of benefits. In almost all countries today, early
retirement, i.e., before age 60, is considered a reward for services rendered since it
enables an employee to reap the fruits of his labor — particularly retirement benefits,
whether lump-sum or otherwise — at an earlier age, when said employee, in
presumably better physical and mental condition, can enjoy them better and
longer. As a matter of fact, one of the advantages of early retirement is that the
corresponding retirement benefits, usually consisting of a substantial cash windfall, can
early on be put to productive and profitable uses by way of income-generating
investments, thereby affording a more significant measure of financial security and
independence for the retiree who, up till then, had to contend with life's vicissitudes
within the parameters of his fortnightly or weekly wages. Thus we are now seeing many
CBAs with such early retirement provisions. And the same cannot be considered a
diminution of employment benefits.

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Being a product of negotiation, the CBA between the petitioner and the union
intended the provision on compulsory retirement to be beneficial to the employees-
union members, including herein private respondent. When private respondent ratified
the CBA with the union, he not only agreed to the CBA but also agreed to conform to
and abide by its provisions. Thus, it cannot be said that he was illegally dismissed when
the CBA provision on compulsory retirement was applied to his case.

Incidentally, we call attention to Republic Act No. 7641, known as "The Retirement Pay
Law," which went into effect on January 7, 1993. Although passed many years after the
compulsory retirement of herein private respondent, nevertheless, the said statute sheds
light on the present discussion when it amended Art. 287 of the Labor Code, to make it
read as follows:

"ART. 7. Retirement. — Any employee may be retired upon reaching the

retirement age establish in the collective bargaining agreement or other applicable
employment contract.
In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years
or more, but not beyond sixty-five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in the said establishment may
retire x x x."

The aforequoted provision makes clear the intention and spirit of the law to give
employers and employees a free hand to determine and agree upon the terms and
conditions of retirement. Providing in a CBA for compulsory retirement of employees
after twenty-five (25) years of service is legal and enforceable so long as the parties
agree to be governed by such CBA. The law presumes that employees know what
they want and what is good for them absent any showing that fraud or intimidation was
employed to secure their consent thereto.

Cainta Catholic School vs. Cainta Catholic School Employees Union, G.R. No. 151021,
May 4, 2006 citing 1996 Pantrano North Express

Facts: On 6 March 1986, a Collective Bargaining Agreement (CBA) was entered into
between Cainta Catholic School (School) and the Cainta Catholic School Employees
Union (Union) effective 1 January 1986 to 31 May 1989. This CBA provided, among
others, that:

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This Collective Bargaining Agreement shall become effective and binding upon the
parties from January 1, 1986 up to May 31, 1989. At least sixty (60) days before the
expiration of this Agreement, the parties hereto shall submit written proposals which
shall be made the basis of negotiations for the execution of a new agreement.

If no new agreement is reached by the parties at the expiration of this agreement, all
the provisions of this Agreement shall remain full force and in effect, up to the time a
new Agreement shall be executed.

On 15 October 1993, the School retired Llagas and Javier, who had rendered more
than twenty (20) years of continuous service, pursuant to Section 2, Article X of the CBA,
to wit:

An employee may be retired, either upon application by the employee himself or by

the decision of the Director of the School, upon reaching the age of sixty (60) or after
having rendered at least twenty (20) years of service to the School the last three (3)
years of which must be continuous.

Issue: Whether the forced retirement of Llagas and Javier was a valid exercise of
management prerogative.

Held: ART. 287. Retirement. –

Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits
as he may have earned under existing laws and any collective bargaining agreement
and other agreements: Provided, however, That an employee’s retirement benefits
under any collective bargaining agreement and other agreements shall not be less
than those provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60) years
or more, but not beyond sixty-five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in the said establishment, may
retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6) months being considered as
one whole year.

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The CBA in the case at bar established 60 as the compulsory retirement age. However,
it is not alleged that either Javier or Llagas had reached the compulsory retirement age
of 60 years, but instead that they had rendered at least 20 years of service in the
School, the last three (3) years continuous. Clearly, the CBA provision allows the
employee to be retired by the School even before reaching the age of 60, provided
that he/she had rendered 20 years of service. Jurisprudence affirms the position of the
School.

We affirm the continued validity of Pantranco and its kindred cases, and thus reiterate
that under Article 287 of the Labor Code, a CBA may validly accord management the
prerogative to optionally retire an employee under the terms and conditions mutually
agreed upon by management and the bargaining union, even if such agreement
allows for retirement at an age lower than the optional retirement age or the
compulsory retirement age.

Jaculbe vs. Silliman University, G.R. No. 156934, March 16, 2007

Facts: Sometime in 1958, petitioner began working for respondent’s university medical
center as a nurse.
In a letter dated December 3, 1992, respondent, through its Human Resources
Development Office, informed petitioner that she was approaching her 35th year of
service with the university and was due for automatic retirement on November 18, 1993,
at which time she would be 57 years old. This was pursuant to respondent’s retirement
plan for its employees which provided that its members could be automatically retired
"upon reaching the age of 65 or after 35 years of uninterrupted service to the university."
Respondent required certain documents in connection with petitioner’s impending
retirement.

Petitioner emphatically insisted that the compulsory retirement under the plan was
tantamount to a dismissal and pleaded with respondent to be allowed to work until the
age of 60 because this was the minimum age at which she could qualify for suspension.
But respondent stood pat on its decision to retire her, citing "company policy."

Issue: Whether or not respondent commit illegal dismissal by retiring petitioner solely by
reason of such provision in its retirement plan?

Held: Retirement plans allowing employers to retire employees who are less than the
compulsory retirement age of 65 are not per se repugnant to the constitutional
guaranty of security of tenure. Article 287 of the Labor Code provides:

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ART. 287. Retirement - Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment
contract.
By its express language, the Labor Code permits employers and employees to fix the
applicable retirement age at below 60 years.
However, after reviewing the assailed decision together with the rules and regulations
of respondent’s retirement plan, we find that the plan runs afoul of the constitutional
guaranty of security of tenure contained in Article XIII, also known as the provision on
Social Justice and Human Rights.

Retirement is the result of a bilateral act of the parties, a voluntary agreement between
the employer and the employee whereby the latter, after reaching a certain age
agrees to sever his or her employment with the former.

The truth was that petitioner had no choice but to participate in the plan, given that
the only way she could refrain from doing so was to resign or lose her job. It is axiomatic
that employer and employee do not stand on equal footing, a situation which often
causes an employee to act out of need instead of any genuine acquiescence to the
employer. This was clearly just such an instance.

Not only was petitioner still a good eight years away from the compulsory retirement
age but she was also still fully capable of discharging her duties as shown by the fact
that respondent’s board of trustees seriously considered rehiring her after the affectivity
of her "compulsory retirement."

As already stated, an employer is free to impose a retirement age less than 65 for as
long as it has the employees’ consent. Stated conversely, employees are free to
accept the employer’s offer to lower the retirement age if they feel they can get a
better deal with the retirement plan presented by the employer. Thus, having
terminated petitioner solely on the basis of a provision of a retirement plan which was
not freely assented to by her, respondent was guilty of illegal dismissal.

Globe Telecom vs. Crisologo, G.R. No. 17644, August 10, 2007

Facts: Respondent Jenette Marie B. Crisologo, a lawyer, joined Globe Telecom (Globe)
on November 3, 1998 as a manager in its corporate legal services department. Her
tasks included negotiating, drafting and reviewing the company’s supply contracts.

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On April 5, 2002, respondent (who was then pregnant) was rushed to the Makati
Medical Center due to profuse bleeding. It was later diagnosed as a possible
miscarriage.

After a week-long absence, respondent reported back to work on April 12, 2002.On the
same day, she tendered her resignation letter explaining that she was advised by her
doctor to rest for the duration of her pregnancy. She also requested permission to
exhaust her unused leaves until the effective date of her resignation on May 30, 2002.
Globe accepted her resignation.

On April 30, 2002, respondent called on her immediate supervisor, petitioner Ma.
Caridad Gonzales. In the course of their conversation, petitioner Gonzales casually
informed respondent of an e-mail circulating within the company to the effect that she
(respondent) allegedly solicited money from one of the company’s suppliers. Because
the e-mail was not forwarded to her (being its subject), respondent requested a copy
and an opportunity to confront the person(s) responsible. Petitioner Gonzales declined
as there was no longer any reason to pursue the matter.

On May 2, 2002, respondent sent petitioner Gonzales a letter complaining of her "ill-
treatment" by the company after she submitted her resignation letter.She also confided
that she resigned only because the e-mail damaged her name and reputation. For that
reason, she requested petitioner Gonzales to issue a certification clearing her of "any
wrongdoing, misconduct or transgression."

Believing that Globe would not comply with her demands, respondent filed a
complaint for illegal dismissal against petitioners on July 3, 2002.According to
respondent, petitioners fired her on the basis of a rumor whose veracity was never
proven. She was neither furnished a copy of the e-mail nor allowed to confront the
person(s) who circulated it. Petitioner Gonzales immediately closed the matter with
finality without conducting any inquiry. Furthermore, petitioners failed not only to
adduce clear and substantial proof of loss of confidence but also to observe due
processas petitioner Gonzales summarily forced her to resign.
Petitioners, on the other hand, contended that respondent’s clear and unequivocal
resignation letter showed her unconditional desire to resign.

Issue: Whether or not respondent was illegally dismissed by petitioner.

Held: To support their contention that respondent voluntarily resigned, petitioners

presented her resignation letter dated April 12, 2002:

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This is to inform you that as per my doctor’s advice, I have to take a long rest due to a
very difficult pregnancy and other health reasons. I am therefore tendering my
resignation effective 30 May 2002 and would like to request that I be allowed to
exhaust all leaves due to me until such date. Furthermore, I hereby undertake to turn
over all my pending work to other lawyers until said effective date of my termination.

Thank you very much.

Respondent personally drafted her resignation letter in a clear, concise and categorical
language. Its content, as quoted above, confirmed her unequivocal intent to resign.

An employee of respondent’s accomplished educational background and professional

standing will not easily relinquish her legal rights unless she intends to. Respondent’s
resignation letter without doubt proved petitioners’ assertion that she voluntarily
resigned from her job.

Resignation is the voluntary act of an employee who finds herself in a situation where
shebelieves that personal reasons cannot be sacrificed in favor of the exigency of the
service and that she has no other choice but to disassociate herself from employment.

Employees resign for various reasons. A big salary is certainly no hindrance to a

voluntary cessation of employment. Human resource studies reveal that various factors
(in and out of the workplace) affect an employee’s employment decision. In this
instance, respondent would have suffered a miscarriage had she continued to work.
She obviously resigned for the sake of her child's well-being, motherhood clearly taking
precedence over her job.

Coercion exists when there is a reasonable or well-grounded fear of an imminent evil

upon a person or his property or upon the person or property of his spouse,
descendants or ascendants.No such situation existed in this case.

BMG Records Phils et al., vs. Aparecio, et al., G.R. No. 153290, September 5, 2007, citing
Phil Today vs. NLRC, 267 SCRA 202 [1996]

Facts: Petitioner BMG Records (Phils.), Inc. (BMG) is engaged in the business of selling
various audio records nationwide. On September 2, 1990, it hired private respondent
Aida C. Aparecio (Aparecio) as one of the promo girls in its Cebu branch. For working
from Monday to Sunday, she received a salary of P181.00 per day.

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On May 25, 1998, Aparecio filed a complaint against BMG and its Branch Manager,
Jose Yap, Jr., co-petitioner herein, for illegal dismissal and non-payment of overtime
pay, holiday pay, premium pay for rest day, 13th month pay, service incentive leave,
and separation pay.

Petitioners, however, proffer a different version of the facts. They narrate that Aparecio
was initially performing well as an employee but as years passed by she seemed to be
complacent in the performance of her job and had been comparing the salaries of
promo girls in other companies. It appeared that she was no longer interested in her
job. In April 1998, Aparecio and two other promo girls, Jovelina V. Soco and Veronica P.
Mutya, intimated to their supervisor that they were intending to resign and were
requesting for some financial assistance. BMG made it clear that, as a company policy,
an employee who resigns from service is not entitled to financial assistance, but
considering the length of their service and due to humanitarian consideration it would
accede to the request after they secure their respective clearances. Forthwith, the
three employees tendered their resignations, which were accepted. When they
processed the required individual clearance, it was found out that they had incurred
some shortages after inventory. Per agreement, said shortages were deducted from the
amounts due them. Thus, Soco and Mutya received their last salary, a proportion of the
13th month pay, tax refund and financial assistance less the deductions, and they
executed their releases and quitclaims. Except for the financial assistance, Aparecio
also obtained the same yet refused to sign the release and quitclaim, protesting the
amount of P9,170.12 deducted from the financial assistance. She was adamant but
BMG stood by the previous agreement.

Aparecio submits that fraud, undue influence, intimidation, and/or mistake were
attendant upon her resignation from BMG. As her consent was allegedly vitiated, the
act of resigning became involuntary; hence, petitioners are guilty of illegal dismissal.

Issue: Whether or not respondent voluntarily resigned or illegally dismissed.

Held: Resignation is the voluntary act of an employee who is in a situation where one
believes that personal reasons cannot be sacrificed in favor of the exigency of the
service, and one has no other choice but to dissociate oneself from employment. It is a
formal pronouncement or relinquishment of an office, with the intention of relinquishing
the office accompanied by the act of relinquishment. As the intent to relinquish must
concur with the overt act of relinquishment, the acts of the employee before and after
the alleged resignation must be considered in determining whether in fact, he or she
intended to sever from his or her employment.

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Thus, this Court agrees with petitioners' contention that the circumstances surrounding
Aparecio's resignation should be given due weight in determining whether she had
intended to resign. In this case, such intent is very evident:

First, Aparecio already communicated to other people that she was about to resign to
look for a better paying job since she had been complaining that employees like her in
other companies were earning much more;
Second, prior to the submission of her resignation letter, Aparecio and two other promo
girls, Soco and Mutya, approached their supervisor, intimated their desire to resign, and
requested that they be given financial assistance, which petitioners granted on the
condition that deductions would be made in case of shortage after inventory;

Third, Aparecio, Soco, and Mutya submitted their duly signed resignation letters, which
were accepted by petitioners; and

Fourth, Aparecio already initiated the processing of her clearance; thus, she was able
to receive her last salary, 13th month pay, and tax refund but refused to receive the
financial assistance less the deductions made.

The acceptance by petitioners of Aparecio's resignation rendered the same effective.

Upon such acceptance, it may not be unilaterally withdrawn without the consent of
petitioners. When the employee later signified the intention of continuing his or her
work, it was already up to the employer to accept the withdrawal of his or her
resignation. The mere fact that the withdrawal was not accepted does not constitute
illegal dismissal, the acceptance of the withdrawal of the resignation being the
employer's sole prerogative.

Certainly, what transpired here was caused by an employee's error of judgment and
not by the employer's application of means vitiating the consent to resign. It would be
utterly unfair to attribute to petitioners the commission of illegal dismissal and to impose
upon them the burden of accepting back Aparecio who unequivocally manifested her
intent and willingness to sever her employment ties.

Once an employee resigns and his resignation is accepted, he no longer has any right
to the job. If the employee later changes his mind, he must ask for approval of the
withdrawal of his resignation from his employer, as if he were re-applying for the job. It
will then be up to the employer to determine whether or not his service would be
continued. If the employer accepts said withdrawal, the employee retains his job. If the

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employer does not x x x the employee cannot claim illegal dismissal for the employer
has the right to determine who his employees will be. To say that an employee who has
resigned is illegally dismissed, is to encroach upon the right of employers to hire persons
who will be of service to them.

A resigned employee who desires to take his job back has to re-apply therefor, and he
shall have the status of a stranger who cannot unilaterally demand an appointment. He
cannot arrogate unto himself the same position which he earlier decided to leave. To
allow him to do so would be to deprive the employer of his basic right to choose whom
to employ. Such is tantamount to undue oppression of the employer. It has been held
that an employer is free to regulate, according to his own discretion and judgment, all
aspects of employment including hiring. The law, in protecting the rights of the laborer,
impels neither the oppression nor self-destruction of the employer.

Cercado vs. Uniprom Inc. GR No. 188154, Oct. 13, 2010

Facts: Petitioner Lourdes A. Cercado (Cercado) started working for respondent

UNIPROM, Inc. (UNIPROM) on December 15, 1978 as a ticket seller assigned at Fiesta
Carnival, Araneta Center, Quezon City. Later on, she was promoted as cashier and
then as clerk typist.

On April 1, 1980, UNIPROM instituted an Employees Non-Contributory Retirement Plan

which provides that any participant with twenty (20) years of service, regardless of age,
may be retired at his option or at the option of the company. The retirement plan was
later on amended on January 1, 2001 wherein UNIPROM reserved the option to retire
employees who were qualified to retire under the program.

Respondent implemented a company-wide early retirement program in 2000 for 41

employees, including petitioner who was 47 years old at that time with 22 years of
continuous service to the company. UNIPROM exercised its option under the retirement
plan, and decided to retire Cercado effective at the end of business hours on February
15, 2001. She rejected the early retirement package offered to her and also refused to
accept the check issued to her representing her benefits from the regular retirement
package. Cercado filed a complaint with the Labor Arbiter for illegal dismissal alleging
that UNIPROM does not have a bona fide retirement plan, and even if there was, she
did not consent thereto.

Issue: WON UNIPROM has a bona fide retirement plan; and whether petitioner was
validly retired pursuant thereto.

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Held: Article 287 of the Labor Code, as amended by R.A. No. 7641, pegs the age for
compulsory retirement at 65 years, while the minimum age for optional retirement is set
at 60 years. An employer is, however, free to impose a retirement age earlier than the
foregoing mandates. This has been upheld in numerous cases as a valid exercise of
management prerogative.

In this case, petitioner was retired by UNIPROM at the age of 47, after having served the
company for 22 years, pursuant to UNIPROMs Employees Non-Contributory Retirement
Plan, which provides that employees who have rendered at least 20 years of service
may be retired at the option of the company. At first blush, respondents retirement plan
can be expediently stamped with validity and justified under the all encompassing
phrase "management prerogative," which is what the CA did. But the attendant
circumstances in this case, vis-à-vis the factual milieu of the string of jurisprudence on
this matter, impel us to take a deeper look.

It is axiomatic that a retirement plan giving the employer the option to retire its
employees below the ages provided by law must be assented to and accepted by the
latter, otherwise, its adhesive imposition will amount to a deprivation of property without
due process of law.

The assailed retirement plan of UNIPROM is not embodied in a CBA or in any

employment contract or agreement assented to by petitioner and her co-employees.
On the contrary, UNIPROMs Employees NonContributory Retirement Plan was
unilaterally and compulsorily imposed on them. Verily, petitioner was forced to
participate in the plan, and the only way she could have rejected the same was to
resign or lose her job. The assailed CA Decision did not really make a finding that
petitioner actually accepted and consented to the plan. The CA simply declared that
petitioner was deemed aware of the retirement plan on account of the length of her
employment with respondent. Implied knowledge, regardless of duration, cannot
equate to the voluntary acceptance required by law in granting an early retirement
age option to an employer. The law demands more than a passive acquiescence on
the part of employees, considering that an employers early retirement age option
involves a concession of the formers constitutional right to security of tenure.

We reiterate the well-established meaning of retirement in this jurisdiction: Retirement is

the result of a bilateral act of the parties, a voluntary agreement between the
employer and the employee whereby the latter, after reaching a certain age, agrees
to sever his or her employment with the former. Acceptance by the employees of an
early retirement age option must be explicit, voluntary, free, and uncompelled. While

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an employer may unilaterally retire an employee earlier than the legally permissible
ages under the Labor Code, this prerogative must be exercised pursuant to a mutually
instituted early retirement plan. In other words, only the implementation and execution
of the option may be unilateral, but not the adoption and institution of the retirement
plan containing such option. For the option to be valid, the retirement plan containing
it must be voluntarily assented to by the employees or at least by a majority of them
through a bargaining representative.

Hence, consistent with the Courts ruling in Jaculbe, having terminated petitioner merely
on the basis of a provision in the retirement plan which was not freely assented to by
her, UNIPROM is guilty of illegal dismissal. Petitioner is thus entitled to reinstatement
without loss of seniority rights and to full backwages computed from the time of her
illegal dismissal in February 16, 2001 until the actual date of her reinstatement. If
reinstatement is no longer possible because the position that petitioner held no longer
exists, UNIPROM shall pay backwages as computed above, plus, in lieu of
reinstatement, separation pay equivalent to one-month pay for every year of service.
This is consistent with the preponderance of jurisprudence relative to the award of
separation pay in case reinstatement is no longer feasible.

Skippers United Pacific vs. Doza et al., G.R. No. 175558, February 8, 2012

Facts: Petitioner deployed De Gracia, Lata and Aprosta to work on board the vessel
MV Wisdom Star.
On December 3 1998, Skippers alleges that De Garcia smelling strongly of alcohol, went
to the cabin of Gabriel Oleszek, MV Wisdom Stars’ Master. Skippers claims that he was
rude and shouted noisily to the master. De Gracia left the master’s cabin after a few
minutes and was heard shouting very loudly somewhere down the corridors. The
incident was evidenced by the Captain’s Report sent on said date.

Furthermore, Skippers also claim that on January 22, 1999, Aprosta, De Gracia, Lata and
Daza arrived in the master’s cabin and demanded immediate repatriation because
they were not satisfied with the ship. De Gracia, et al. threatened that they may
become crazy any moment and demanded for all outstanding payments due to them.
The incident is evidenced by a telex of Cosmoship MV Wisdom to skippers but had
conflicting dates.

De Gracia claims that Skippers failed to remit their respective allotments, compelling
them to vent their grievances with the Romanian Seafarers Union. On January 28, 1999,
the Filipino seafarers were unceremoniously discharged and immediately repatriated.
Upon arrival in the Philippines, they filed a complaint for illegal dismissal with the LA.

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The LA dismissed the seafarers’ complaint as the seafarers’ demand for immediate
repatriation due to the dissatisfaction with the ship is considered a voluntary pre-
termination of employment. Such act was deemed akin to resignation recognized
under Article 285 of the LC. The LA gave credence to the telex of the master’s report
that the seafarers indeed demanded immediate repatriation.

The NLRC agreed with the LA’s decision.

The CA however reversed the LA’s and the NLRC’s decision. The Court deemed the
telex message as a self-serving document that does not satisfy the requirement of
substantial evidence, or that amount of relevant evidence which a reasonable mind
might accept as adequate to justify the conclusion that petitioners indeed voluntarily
demanded their immediate repatriation.
Aggrieved, Skippers appeals the case with the Supreme Court.

Issue: WON the seafarer’s demand for immediate repatriation can be considered an
act of voluntary resignation.

Held: For a worker's dismissal to be considered valid, it must comply with both
procedural and substantive due process. The legality of the manner of dismissal
constitutes procedural due process, while the legality of the act of dismissal constitutes
substantive due process.

Procedural due process in dismissal cases consists of the twin requirements of notice
and hearing. The employer must furnish the employee with two written notices before
the termination of employment can be effected: (1) the first notice apprises the
employee of the particular acts or omissions for which his dismissal is sought; and (2) the
second notice informs the employee of the employer's decision to dismiss him. Before
the issuance of the second notice, the requirement of a hearing must be complied with
by giving the worker an opportunity to be heard. It is not necessary that an actual
hearing be conducted.

Substantive due process, on the other hand, requires that dismissal by the employer be
made under a just or authorized cause under Articles 282 to 284 of the Labor Code.

In this case, there was no written notice furnished to De Gracia, et al., regarding the
cause of their dismissal. Cosmoship furnished a written notice (telex) to Skippers, the
local manning agency, claiming that De Gracia, et al., were repatriated because the

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latter voluntarily pre-terminated their contracts. This telex was given credibility and
weight by the Labor Arbiter and NLRC in deciding that there was pre-termination of the
employment contract "akin to resignation" and no illegal dismissal. However, as
correctly ruled by the CA, the telex message is "a biased and self-serving document
that does not satisfy the requirement of substantial evidence." If, indeed, De Gracia, et
al., voluntarily pre-terminated their contracts, then De Gracia, et al., should have
submitted their written resignations.
Article 285 of the Labor Code recognizes termination by the employee of the
employment contract by "serving written notice on the employer at least one (1) month
in advance." Given that provision, the law contemplates the requirement of a written
notice of resignation. In the absence of a written resignation, it is safe to presume that
the employer terminated the seafarers. In addition, the telex message relied upon by
the Labor Arbiter and NLRC bore conflicting dates of 22 January 1998 and 22 January
1999, giving doubt to the veracity and authenticity of the document. In 22 January
1998, De Gracia, et al., were not even employed yet by the foreign principal.

Auza, Jr. et al., vs. Mol Phils Inc. G.R. No. 175481, November 21, 2012

Facts: Petitioners were employees of MOL Phils., a common carrier engaged in

transporting cargoes to and from the different parts of the world. Petitioners tendered
their resignation, and they received their separation pay and monetary value of their
leave credits, 13th month pay, and other benefits. After which, they executed a Release
and Quitclaims and then issued a separation clearance. However, 15 months after the
severance of their employment, petitioners filed a complaint for illegal dismissal. They
alleged that their consent to resign was not voluntarily given but was instead obtained
through mistake and fraud. They claimed that they were led to believe that MOL's
Cebu branch would be downsized into a mere skeletal force due to alleged low
productivity and profitability volume. Pressured into resigning prior to the branch's
closure as they might be denied separation pay, petitioners were constrained to resign.
Later, they discovered that the planned downsizing of the Cebu branch was a mere
malicious scheme to oust them and to accommodate Tiutan's own people. This is
because after they were duped to resign, additional employees were hired by the
management as their replacement; they moved to a bigger office; and more
telephone lines were installed.

Issue: WON there was illegal dismissal.

Held: NO. "Resignation is the formal pronouncement or relinquishment of an office." The

overt act of relinquishment should be coupled with intent to relinquish, which intent
could be inferred from the acts of the employee before and after the alleged

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resignation. It appears that petitioners, on their own volition, decided to resign from
their positions after being informed of the management's decision that the Cebu
branch would eventually be manned by a mere skeletal force. As proven by the email
correspondences presented, petitioners were fully aware and had, in fact,
acknowledged that Cebu branch has been incurring losses and was already
unprofitable to operate. Note that there was evidence produced to prove that indeed
the Cebu branch's productivity had deteriorated as shown in a Profit and Loss
Statement for the years 2001 and 2002. As aptly observed by the CA, no element of
force can be deduced from their letters of resignation as the same even contained
expressions of gratitude and thus contradicting their allegations that same were
prepared by their employer. Petitioners aver that right after receiving their separation
pay, they found out that the Cebu branch was not closed but merely transferred to a
bigger office and staffed by newly hired employees. Notably, however, despite such
knowledge, petitioners did not immediately contest their resignations but waited for
more than a year or nearly 15 months before contesting them. This negates their claim
that they were victims of deceit.

Gan vs. Galderma Philippines, Inc. G.R. No. 177167, January 17, 2013

Facts: Galderma is engaged in the business of selling, marketing, and distribution of

Cetaphil Brand Product Lines (CBPL) that include Cetaphil liquid and bar cleansers, and
pharmaceutical products, such as Locetar, Benzac and other prescription drugs. Nelson
Gan was hired by Galderma as Product Manager for its Customer Products Division to
handle the marketing of CBPL. Gan received a Fully Effective rating for his Overall
performance for the first year. Galderma surpassed their forecasted sales to the extent
that it almost reached a 100 percent increase. The increase was due to the excellent
performance of Gan specifically on its marketing skills. The management gave Gan
additional product management responsibilities in which it provided Gan with product
knowledge training on Benzac and Locetar brands in December 2001. However, on
April 11, 2002, Gan tendered his resignation letter which was accepted by the
management. Three months after the severance of his employment, Gan filed a
complaint for illegal constructive dismissal against Galderma. He alleged that, he was
unfairly and falsely accused of being remiss in his duties as Product Manager. That he
was lambasted by the General Manager Veneracion for his alleged negative work
behavior and for his poor performance, and that he was required to voluntarily resign
by Veneracion, and that his incentive scheme was revised which lowered its benifits.
On the other hand, Galderma on its side alleged that Veneracion did not lambast him
or insinuate that Gan should resign from Galderma. It was alleged also that Gan had a
change of attitude from the time the management decided to include the Benzac
and Locetar brands under his responsibility. Despite the fact that the company
provided [Gan] with product knowledge training on the said brands, he initially refused

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to accept the additional assignment. Labor arbiter and NLRC ruled in favor of
Galderma.

Issue: WON there was illegal dismissal.

Held: NO. To begin with, constructive dismissal is defined as quitting or cessation of work
because continued employment is rendered impossible, unreasonable or unlikely; when
there is a demotion in rank or a diminution of pay and other benefits. It exists if an act of
clear discrimination, insensibility, or disdain by an employer becomes so unbearable on
the part of the employee that it could foreclose any choice by him except to forego his
continued employment. There is involuntary resignation due to the harsh, hostile, and
unfavorable conditions set by the employer. The test of constructive dismissal is
whether a reasonable person in the employee's position would have felt compelled to
give up his employment/position under the circumstances. On the other hand,
"[r]esignation is the voluntary act of an employee who is in a situation where one
believes that personal reasons cannot be sacrificed in favor of the exigency of the
service, and one has no other choice but to dissociate oneself from employment. It is a
formal pronouncement or relinquishment of an office, with the intention of relinquishing
the office accompanied by the act of relinquishment. As the intent to relinquish must
concur with the overt act of relinquishment, the acts of the employee before and after
the alleged resignation must be considered in determining whether he or she, in fact,
intended to sever his or her employment."

Since Gan submitted a resignation letter, it is incumbent upon him to prove with clear,
positive, and convincing evidence that his resignation was not voluntary but was
actually a case of constructive dismissal; that it is a product of coercion or
intimidation. He has to prove his allegations with particularity. What the records of this
case reveal is that Gan deliberately wrote and filed a resignation letter that is couched
in a clear, concise, and categorical language. Its content confirmed his unmistakable
intent to resign. The resignation letter indicates that he was resigning "to pursue the
establishment of [his] own business or explore opportunities with other companies." The
reasons stated for relinquishing his position are but logical options for a person of his
experience and standing. The instances of "harassment" alleged by Gan are more
apparent than real. Aside from the need to treat his accusations with caution for being
self-serving due to lack of substantial documentary or testimonial evidence to
corroborate the same, the acts of "harassment," if true, do not suffice to be considered
as "peculiar circumstances" material to the execution of the subject resignation letter.
First, the words allegedly uttered by Veneracion which asked Gan to "reconsider his
stay," "make [his] move," or that "[Galderma] will be better off without him,"are
ambivalent and susceptible of varying interpretations depending on one's feelings,

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bias, and emotional threshold. All these are subjective and highly speculative or even
presumptuous. Second, Gan repeatedly boasts of his "excellent performance" in
and "immense contribution" to Galderma's success. If that is the case, his proper
mindset towards Veneracion's attacks on his purported work ethics (such as "slow,"
"lacking in initiative," "uncooperative," "negative attitude," "remiss in duties as product
manager," "negative work behaviour," "poor performance," "incompetence,"
"distraction/liability in Galderma") should have been to simply brush them aside and
continue doing what he is supposed to do as the product manager of CBPL, Locetar
and Benzac brands. His oversensitivity, which is rather surprising for an experienced sales
and marketing manager who should have been so used to customer rejection or
indifference and to superior's assertive or temperamental side due to constant pressure
of keeping up and beating market competition, would not help him make a case.
Third, the revision of Gan's 2002 incentive scheme cannot be considered as a form of
harassment. The change is not a diminution of benefits, since Gan would have also
received the same sum if he achieved the desired targets for the Locetar and Benzac
brands, the two new products which were added under his watch. Lastly, he also
appears to have a good professional track record that highlights his marketability. At
the time he resigned, he had more than a decade of experience in sales and
marketing with expertise in product management. Indeed, it would be absurd to
assume that he did not understand the full import of the words he used in his resignation
letter and the consequences of executing the same.

Padillo vs. Rural bank of Nabunturan Inc. G.R. No. 199338, January 21, 2013

Facts: Padillo was employed by respondent bank as SA bookkeeper. The bank took out
insurance plans with Philam life for all its employees in anticipation of its possible closure
and the concomitant severance of its personnel. On October 14, 2004, Mark Oropeza,
President of the Bank, bought majority shares of stocks of the bank and took over its
management brought about its gradual rehabilitation. The bank’s liquidity was
eventually regained. During 2007, Padillo suffered a mild stroke due to hypertension
which consequently impaired his ability to effectively pursue his work. On September 10,
2007, he wrote a letter addressed to respondent Oropeza expressing his intention to
avail of an early retirement package. Despite several follow-ups, his request remained
unheeded. Padillo resigned, at the age of fifty-five due to his poor and failing health.
He did not received his claimed retirement benefits, thus he filed a complaint for the
recovery of the unpaid retirement benefits. He asserted, among others, that the Bank
had adopted a policy of granting its aging employees early retirement packages,
pointing out that one of his co-employees, Nenita Lusan (Lusan), was accorded
retirement benefits in the amount of P348,672.72 when she retired at the age of only
fifty-three (53).

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Issue: WON Padillo is entitled to retirement benefits.

Held: NO. The Labor Code provision on termination on the ground of disease under
Article 297 does not apply in this case, considering that it was the petitioner and not the
Bank who severed the employment relations. As borne from the records, the clear
import of Padillo's September 10, 2007 letter and the fact that he stopped working
before the foregoing date and never reported for work even thereafter show that it
was Padillo who voluntarily retired and that he was not terminated by the Bank. Art.
300.Retirement. — Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment
contract. In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared
the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at least
one-half (1/2) month salary for every year of service, a fraction of at least six (6) months
being considered as one whole year. Simply stated, in the absence of any applicable
agreement, an employee must (1) retire when he is at least sixty (60) years of age and
(2) serve at least (5) years in the company to entitle him/her to a retirement benefit of
at least one-half (1/2) month salary for every year of service, with a fraction of at least
six (6) months being considered as one whole year. Notably, these age and tenure
requirements are cumulative and non-compliance with one negates the employee's
entitlement to the retirement benefits under Article 300 of the Labor Code altogether.

In this case, it is undisputed that there exists no retirement plan, collective bargaining
agreement or any other equivalent contract between the parties which set out the
terms and condition for the retirement of employees, with the sole exception of the
Philam Life Plan which premiums had already been paid by the Bank. Neither was it
proven that there exists an established company policy of giving early retirement
packages to the Bank's aging employees. In the case of Metropolitan Bank and Trust
Company v. National Labor Relations Commission, it has been pronounced that to be
considered a company practice, the giving of the benefits should have been done
over a long period of time, and must be shown to have been consistent and
deliberate. Unfortunately, while Padillo was able to comply with the five (5) year tenure
requirement — as he served for twenty-nine (29) years — he, however, fell short with
respect to the sixty (60) year age requirement given that he was only fifty-five (55) years
old when he retired. Therefore, without prejudice to the proceeds due under the Philam
Life Plan, petitioners' claim for retirement benefits must be denied.

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Intel Technology Phils Inc. vs. NLRC et al., GR No. 200575, February 5, 2014

Facts: Private respondent Jeremias Cabiles (Cabiles) was hired by petitioner Intel
Technology Philippines, Inc. (Intel Phil) in April 16, 1997. Throgh the years, Cabiles was
promoted several times and was also assigned to Intel Arizona and Intel Chengdu. He
later applied for a position in Intel Hong Kong (Intel HK). In December of 2006, Cabiles
received an offer by Intel HK for the position of Finance Manager. Before accepting
such offer, Cabiles inquired with Intel Phil through an email as to the consequences of
him accepting the offer, specifically on his retirement benefits from Intel Phil. Intel Phil,
through Penny Gabronino, replied to Cabiles that he is not yet eligible for the retirement
plan as he has not reached the minimum 10 years of service with them (just over 9 years
of service) and such counting of the period will be suspended if he does indeed transfer
to Intel HK but will be continued if he decides to work for Intel Phil again in the future.
Despite such, Cabiles signed the job offer on January 31, 2007.

On March 8, 2007, Intel Phil issued his “Intel Final Pay Separation Voucher” to which he
accepted and executed a Waiver and Quitclaim in favor of Intel Phil. On September8,
2007, after 7 months of employment in Intel HK, he resigned. About 2 years after, or on
August 18, 2009, he filed a Complaint for non-payment of retirement benefits against
Intel Phil before the NLRC RAB-IV.

The LA ordered Intel Phil to pay the retirement pay to Cabiles holding that he did not
sever his employment with Intel Phil when he moved to Intel HK, similar to when he was
assigned at Intel Arizona and Intel Chengdu. The NLRC affirmed the LA decision. The CA
affirmed the findings of the NLRC.

Issue: Whether or not the transfer of Cabiles to Intel HK was tantamount to resignation
from Intel Phil.

Held:
The petition is granted and the decision of the CA is reversed and set aside and
Cabiles is ordered to restitute to petitioner whatever amount he has received.

Resignation is the formal relinquishment of an office, the overt act of which is coupled
with an intent to renounce. This intent could be inferred from the acts of the employee
before and after the alleged resignation.

In this case, Cabiles, while still on a temporary assignment in Intel Chengdu, was offered
by Intel HK the job of a Finance Manager. The words he used in his inquiry email — local

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hire, close, clearance — denote nothing but his firm resolve to voluntarily disassociate
himself from Intel Phil. and take on new responsibilities with Intel HK. Despite a non-
favorable reply as to his retirement concerns, Cabiles still accepted the offer of Intel HK.
His acceptance of the offer meant letting go of the retirement benefits he now claims
as he was informed through email correspondence that his 9.5 years of service with Intel
Phil. would not be rounded off in his favor.

The continuity, existence or termination of an employer-employee relationship in a

typical secondment contract or any employment contract for that matter is measured
by the following yardsticks: 1. the selection and engagement of the employee; 2. the
payment of wages; 3. the power of dismissal; and 4.the employer's power to control the
employee's conduct.

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

Although in various instances, his move to Hong Kong was referred to as an

"assignment," it bears stressing that it was categorized as a "permanent transfer." In Sta.
Maria v. Lopez, the Court held that "no permanent transfer can take place unless the
officer or employee is first removed from the position held, and then appointed to
another position." Undoubtedly, Cabiles' decision to move to Hong Kong required the
abandonment of his permanent position with Intel Phil. in order for him to assume a
position in an entirely different company. Clearly, the "transfer" was more than just an
assignment. It constituted a severance of Cabiles' relationship with Intel Phil., for the
assumption of a position with a different employer, rank, compensation and benefits.

Sutherland & Global Services Phils Inc., vs. Labrador, GR No. 193107, March 24, 2014

Facts: In August 2006, Sutherland hired Labrador as one of its call center agents with the
main responsibility of answering carious queries and complaints through phoned-in
calls. In his two years of working at Sutherland, Labrador committed several infractions.
But it was only on June 17, 2008 that Labrador was finally charged with violation for
transgressing the "Non-Compliance Sale Attribute" policy clause stated in the Employee
Handbook. Labrador created a second account for a customer which charged the
same customer twice by using the credit card number given supposedly only for
verification purposes.

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Under Sutherland's Employee Handbook, Labrador's action is classified as an act of
dishonesty or fraud. On May 24, 2008, Sutherland sent Labrador a Notice to Explain in
writing why he should not be held administratively liable. On May 28, 2008, an
administrative hearing was conducted that took into consideration Labrador's past
infractions. After investigation, a recommendation was issued finding Labrador guilty of
violating the Employee Handbook due to gross or habitual neglect of duty.

On June 17, 2008, Labrador submitted his resignation letter. On October 27, 2008,
Labrador filed a complaint for constructive/illegal dismissal before the NLRC.

On February 27, 2009, the LA dismissed the complaint for lack of merit. The LA found just
cause to terminate Labrador's employment, and that his resignation letter had been
voluntarily executed. The NLRC reversed the LA's ruling on May 21, 2009.

The CA affirmed the NLRC’s finding of illegal dismissal. It ruled that Sutherland's decision
to terminate Labrador's services was the proximate cause of his resignation; the
resignation letter was submitted solely for the purpose of avoiding any derogatory
record that would adversely affect his future employment. In effect, he cannot be
deemed to have voluntarily resigned because he was forced to relinquish his position in
order to avoid the inevitable termination of employment.

Issue: Whether or not Labrador’s resignation was a valid termination of his employment.

Held: The appeal is granted and the decision of the CA is reversed and set aside and
the complaint for illegal dismissal is dismissed.

In the evidence leading to Labrador's dismissal — evidence that Labrador had

acknowledged to have received, thus binding him to its terms — no dispute exists that
Labrador committed several infractions. In fact, the final infraction that brought on his
termination was actually a repetition of the first offense.

The first offense (committed on September 24, 2007) already gave rise to a "Last Written
Warning" with the statement that it was a serious offense, constituting neglect of duty
for deviating from the program/department's standard operating procedures. Under
this clear warning, a second similar offense would necessarily lead to his dismissal;
otherwise the purpose of a "Last Written Warning" would have been negated.

The failure to faithfully comply with the company rules and regulations is considered to
be a just cause in terminating one's employment, depending on the nature, severity

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and circumstances of non-compliance. "An employer 'has the right to regulate,
according to its discretion and best judgment, all aspects of employment, including
work assignment, working methods, processes to be followed, working regulations,
transfer of employees, work supervision, lay-off of workers and the discipline, dismissal
and recall of workers.'"

It was within Sutherland's prerogative to terminate Labrador's employment when he

committed a serious infraction and, despite a previous warning, repeated it. To
Sutherland's credit, it duly complied with the procedural requirement in dismissing an
employee; it clearly observed both substantive and procedural due process. Its action
was based on a just and authorized cause, and the dismissal was effected after due
notice and hearing. But before Sutherland could finally pronounce its verdict, Labrador
submitted his resignation letter, impelled no doubt, as Sutherland alleged, by the need
to protect his reputation and his future employment chances.

The issue of whether the resignation letter was voluntarily executed is now moot. Even if
Labrador had not submitted his resignation letter, Sutherland could still not be held
liable for constructive dismissal given the existing just cause to terminate Labrador's
employment.

Chiang Kai Shek College et al., vs. Torres, GR No. 189456, April 2, 2014

Facts: Respondent had been employed as a grade school teacher of the school from
July 1970 until 31 May 2003. She was accused of leaking a copy of a special quiz given
to Grade 5 students in HEKASI (Heograpiya, Kasaysayan at Sibika (Geography, History
and Civics)). Ms. Benabese narrated that after giving a special quiz, she borrowed the
book of one of her students, Aileen Regine M. Anduyan (Aileen), for the purpose of
making an answer key. When she opened Aileen's book, a piece of paper fell. Said
paper turned out to be a copy of the same quiz she had just given and the same
already contained answers.

Ms. Benabese informed the school's Assistant Supervisor Mrs. Gloria Caneda (Mrs.
Caneda) about the incident. Mrs. Caneda conferred with Assistant Supervisor
Encarnacion Koo (Mrs. Koo), who was in charge of the HEKASI area, and Supervisor
Luningning Tibi (Ms. Tibi). Mrs. Koo confronted respondent, who had initially denied
leaking the test paper but later on admitted that she gave the test paper to Mrs.
Teresita Anduyan (Mrs. Anduyan), her co-teacher and the mother of Aileen.
Respondent and Mrs. Anduyan were both directed to submit their written statement on
the incident.

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On 5 August 2002, Mrs. Koo, Mrs. Caneda and Ms. Tibi executed a written statement
stating that when confronted by Mrs. Koo, respondent initially denied leaking a copy of
the quiz but later on admitted to doing the same. An administrative hearing was
conducted on 28 August 2002 wherein respondent and Mrs. Anduyan were asked
questions by the Investigating Committee relative to the leakage of test paper. On 30
August 2002, the Investigating Committee held a meeting and found respondent and
Mrs. Anduyan guilty of committing a grave offense of the school policies by leaking a
special quiz. As shown in the Minutes of the Meeting on 30 August 2002, the Committee
decided to impose the penalty of one-month suspension without pay on respondent
and forfeiture of all the benefits scheduled to be given on Teacher's Day.

The Investigating Committee had actually decided to terminate respondent and had in
fact prepared a memorandum of termination, but respondent allegedly pleaded for a
change of punishment in a short letter dated 5 September 2002, to wit: “Request for
change of punishment from termination to suspension and I am resigning at the end of
the school year. - Mrs. Rosalinda M. Torres” Petitioners acceded to the request and
suspended respondent and Mrs. Anduyan effective 16 September to October 2002. The
duo was directed to report to work on 4 November 2002. Respondent continued her
employment from 4 November 2002 until the end of the school year on 26 March 2003.

However, respondent filed on February 14, 2003 a complaint with the tenor of accusing
petitioner school of constructive dismissal alleging that she was forced and pressured to
submit the written request for a change of penalty and commitment to resign at the
end of the school year.

The LA dismissed the complaint for lack of merit. The LA deemed respondent's
suspension coupled with petitioner's allowance of respondent's resignation at the end
of the school year as generous acts considering the offense committed. The LA held
that there was no constructive dismissal because respondent was not coerced nor
pressured to write her resignation letter. The NLRC affirmed the LA's findings but ordering
petitioners to pay respondent separation pay equivalent to one-half (1/2) month salary
for every year of service on the grounds of equity and social justice.

The CA reversed the NLRC decision and held that respondent was constructively
dismissed as there was no voluntary resignation.

Issue: Whether or not the school's act of imposing the penalty of suspension instead of
immediate dismissal from service at the request of the erring employee, in exchange for
the employee's resignation at the end of the school year, constitutes constructive
dismissal.

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Held: Petition is granted and the decision of the CA is reversed and set aside and the
NLRC decision reinstated.

Resignation is the voluntary act of an employee who is in a situation where one believes
that personal reasons cannot be sacrificed for the favor of employment, and opts to
leave rather than stay employed. It is a formal pronouncement or relinquishment of an
office, with the intention of relinquishing the office accompanied by the act of
relinquishment. As the intent to relinquish must concur with the overt act of
relinquishment, the acts of the employee before and after the alleged resignation must
be considered in determining whether, he or she, in fact, intended to sever his or her
employment.

Respondent had admitted to leaking a copy of the HEKASI 5 special quiz. On 30 August
2002, the Investigating Committee found respondent guilty of leaking a copy of the
special quiz. Based on this infraction alone, Chiang Kai Shek College would have been
justified to validly terminate respondent from service. Before the Investigating
Committee could formalize respondent's dismissal, respondent handwrote a letter
requesting that the penalty be lowered from dismissal to suspension in exchange for
respondent's resignation at the end of the school year.

There is nothing irregular with respondent's handwritten letter. The letter came about
because respondent was faced with an imminent dismissal and opted for an honorable
severance from employment. That respondent voluntarily resigned is a logical
conclusion.

Given the indications of voluntary resignation, therefore there is no constructive

dismissal in this case. There was here no discrimination committed by petitioners. While
respondent did not tender her resignation wholeheartedly, circumstances of her own
making did not give her any other option. With due process, she was found to have
committed the grave offense of leaking test questions. Dismissal from employment was
the justified equivalent penalty. Having realized that, she asked for, and was granted,
not just a deferred imposition of, but also an acceptable cover for the penalty.

Respondent should not be rewarded for reneging on her promise to resign at the end of
the school year. Otherwise, employers placed in similar situations would no longer
extend compassion to employees. Compromise agreements, like that in the instant
case, which lean towards desired liberality that favor labor, would be discouraged.

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Goodyear Philippines Inc. vs. Angus, GR No. 185449, November 12, 2014

“In the absence of an express or implied prohibition against it, collection of both
retirement benefits and separation pay upon severance from employment is allowed.
This is grounded on the social justice policy that doubts should always be resolved in
favor of labor rights.”

Facts: Marina L. Angus filed a labor complaint against her previous employer Goodyear
Philippines, Inc. and its Human Resource Director Remigio M. Ramos. “In order to
maintain the viability of its operations in the midst of economic reversals, Goodyear
implemented cost-saving measures which included the streamlining of its workforce.”
Angus received from (Goodyear) Ramos a letter stating that her position as Secretary to
the Manager of Quality and Technology “is already redundant or is no longer necessary
for its effective operation and is to be abolished effective today.” After 30 days, Angus
would be terminated.

The letter further stated: “As Company practice, termination due to redundancy or
retrenchment is paid at 45 days’ pay per year of service. Considering, that you have
rendered 34.92 years of service to the Company as of October 18, 2001, and have
reached the required minimum age of 55 to qualify for early retirement, Management
has decided to grant you early retirement benefit at 47 days’ per year of service.”

On the day she received the letter, Angus replied thereto accepting the
management’s decision but protesting on the terms. She wrote: “… I accept
Management decision to avail early retirement benefit. However, I do not agree on the
terms stated therein. I suggest I be given a premium of additional 3 days for every year
of service which is only 6.3% or a total of 50 days. I gathered it is Philippine industry’s
practice to give premium to encourage employees to avail of the early retirement
benefit… Acceptance of this proposal will make my separation from Goodyear
pleasant.”

Meanwhile, (Goodyear) Goodyear submitted an Establishment Termination Report with

DOLE in connection with Angus’s termination.

Subsequently, Angus accepted the checks which covered payment of her retirement
benefits computed at 47 days’ pay per year of service and other company benefits.
However, she made an annotation in the acknowledgment receipt: “Received under
protest – amount is not acceptable. Acceptance is on condition that I will be given a

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premium of 3 days for every year of service.” This time she also asked for separatin pay.
“Since my service was terminated due to redundancy, I now claim my separation pay
as mandated by law. This is a separate claim from my early retirement benefit.”

It is claimed that the check were taken back due to the annotation and Angus’s refusal
to sign a Release and Quitclaim. Through another letter, (Goodyear) Ramos explained
that “the company has already offered her the most favorable separation benefits due
to redundancy, that is, 47 days’ pay per year of service instead of the applicable rate
of 45 days’ pay per year of service. And based on the Retirement Plan under the
Collective Bargaining Agreement (CBA) and the parties’ Employment Contract, Angus
is entitled to only one of the following kinds of separation pay: (1) normal retirement
which is payable at 47 days’ pay per year of service; (2) early retirement at a maximum
of 47 days’ pay per year of service; (3) retrenchment, redundancy, closure of
establishment at 45 days’ pay per year of service; (4) medical disability at 45 days’ pay
per year of service; or (5) resignation at 20 days’ pay per year of service. Because of
these, [(Goodyear)] Ramos informed [Angus] that the company cannot anymore
entertain any of her additional claims.”

Angus replied to the last letter reiterating her claims adding the following demands:
that she be furnished a copies of the Notice of Redundancy filed with DOLE, specific
provisions in the Retirement Plan, CBA and Employment Contract “which could justify
the prohibition against the grant of both to a separated employee as asserted by
[(Goodyear)s].” However, her last letter was merely brushed aside and instead she was
simply reminded to claim her checks.

As a result, Angus finally accepted a check in the amount of P1,958,927.89 which

supposedly includes all termination benefits computed at 47 days’ pay per year of
service. Then, she executed a Release and Quitclaim in favor of (Goodyear) Goodyear.

Notwithstanding, Angus initiated a labor complaint for illegal dismissal with claims for
separation pay, damages and attorney’s fees, against (Goodyear)s.

The Labor Arbiter upheld the validity of Angus’s termination. However, her claim for
both separation pay and retirement benefit were denied holding that such was not
allowed under the Retirement Plan/CBA. On appeal, NLRC affirmed the Labor Arbiter.
On Petition for Certiorari, the Court of Appeals partially granted Angus’s claims. While
the appellate court upheld the dismissal, it ruled that she was entitled to both
separation pay and retirement benefits “in view of the absence of any provision in the
CBA prohibiting the payment of both.” Further, it was observed that Angus did not
voluntarily sign the Release and Quitclaim as that would result in her receiving less than

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what she was legally entitled to receive. She was granted moral damages and
attorney’s fees. On motion for reconsideration by respondents/(Goodyear)s, the
appellate court denied the same.

Issue: Whether or not Angus is entitled to both separation and retirement pay.

Held: (Goodyear)s were made liable. Angus is entitled to both separation pay and early
retirement benefit as there is no express and specific provision in the CBA that prohibits
recovering for both. Citing earlier jurisprudence, “an employee is entitled to recover
both separation pay and retirement benefits in the absence of a specific prohibition in
the Retirement Plan or CBA. Concomitantly, the Court ruled that an employee’s right to
receive separation pay in addition to retirement benefits depends upon the provisions
of the company’s Retirement Plan and/or CBA.”

Retirement benefits and separation pay are not mutually exclusive. “Retirement
benefits are a form of reward for an employee’s loyalty and service to an employer
and are earned under existing laws, CBAs, employment contracts and company
policies. On the other hand, separation pay is that amount which an employee
receives at the time of his severance from employment, designed to provide the
employee with the wherewithal during the period that he is looking for another
employment and is recoverable only in instances enumerated under Articles 283 and
284 of the Labor Code or in illegal dismissal cases when reinstatement is not feasible. In
the case at bar, Article 283 clearly entitles [Angus] to separation pay apart from the
retirement benefits she received from petitioners.”

The release and quitclaim is invalid. The Supreme Court concurred with the appellate
court that “the terms of the quitclaim authorizes Angus to receive less than what she is
legally entitled to.” This is contrary to prevailing jurisprudence holding that “a quitclaim
cannot bar an employee from demanding benefits to which he is legally entitled.” Such
quitclaim was held to be “ineffective in barring claims for the full measure of the
worker’s rights and the acceptance of benefits therefrom does not amount to
estoppel”. Further, “release and quitclaims are often looked upon with disfavor when
the waiver was not done voluntarily by employees who were pressured into signing
them by unscrupulous employers seeking to evade their obligations.”

Angus was entitled to moral damages and attorney’s fees. “Moral damages is
awarded when fraud and bad faith have been established, as in this case.
[(Goodyear)s’] false contention over what has been paid to Angus suggests an
attempt to feign compliance with their legal obligation to grant their employee all the
benefits provided for by agreement and law. Their bad faith is evident in the intent to

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circumvent this legal mandate. And as [Angus] was then forced to litigate her just
claims when [(Goodyear)s] refused to heed her demands for the payment of
separation pay, the award of attorney’s fees equivalent to 10% of the amount of
separation pay is also in order.”

Lagahit vs. Pacific Concord Container Lines, GR No. 177680, Jan. 13, 2016

Facts: In February 2000, respondent Pacific Concord Container Lines (Pacific Concord),
a domestic corporation engaged in cargo forwarding, hired the petitioner as an
Account Executive/Marketing Assistant. In January 2002, Pacific Concord promoted her
as a sales manager with the monthly salary rate of P25,000.00, and provided her with a
brand new Toyota Altis plus gasoline allowance. On November 8, 2002, she reported for
work at 9:00 a.m. and left the company premises at around 10:30 a.m. to make client
calls. At 1:14 p.m. of that day, she received a text message from respondent Monette
Cuenca, informing her that she is no longer connected to the corporation.

On November 26, 2002, the petitioner filed her complaint for constructive dismissal in
the Regional Arbitration Branch of the National Labor Relations Commission (NLRC) in
Cebu City.

In their position paper, the respondents denied having terminated the petitioner despite
the fact that there were valid grounds to do so. They insisted that the petitioner had
betrayed the trust and confidence reposed in her when she: (a) used the company-
issued vehicle for her own personal interest; (b) failed to achieve her sales quota, and
to enhance and develop the Sales Department; (c) enticed her marketing assistant, Jo
Ann Otrera, to resign and join her in transferring to another forwarding company; (d)
applied for other employment during office hours and using company resources; (e)
solicited and offered the services of Seajet International, Inc. during her employment
with Pacific Concord; (f) received a personal commission from Wesport Line, Inc. for
container shipments; and (g) illegally manipulated and diverted several containers
to Seajet International

Labor Arbiter Julie C. Rendoque rendered a decision, declaring that the respondents
were not able to prove that the petitioner had committed acts constituting betrayal of
trust; that they had not informed her prior to her dismissal of the offenses she had
supposedly committed. The NLRC affirmed the ruling of the Labor Arbiter. On May 10,
2006, the CA promulgated its decision granting the respondents’ petition for certiorari,
and annulling the decision of the NLRC. It pronounced that there were sufficient
justifications to terminate the petitioner’s services for disloyalty and willful breach of
trust. The CA denied the petitioner’s motion for reconsideration on March 30,
2007. Hence, this appeal.

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Issues:

1. Whether of not petitioner resign from her employment.

2. Whether or not petitioner was validly dismissed on the ground of loss of trust and
confidence.

Held:

1. No, petitioner did not resign from her employment.

Before the employer is expected to discharge its burden of proving that the dismissal
was legal, the employee must first establish by substantial evidence the fact of her
dismissal from employment. In this case, the petitioner proved the overt acts committed
by the respondents in abruptly terminating her employment through the text messages
sent by Cuenca to the petitioner and her husband, as well as the notices distributed to
the clients and published in the Sun Star. It is notable that the respondents did not deny
or controvert her evidence on the matter

On the other hand, the respondents’ insistence that the petitioner had resigned was
bereft of factual support. As a rule, the employer who interposes the resignation of the
employee as a defense should prove that the employee voluntarily resigned.

A valid resignation is the voluntary act of an employee who finds herself in a situation
where she believes that personal reasons cannot be sacrificed in favor of the exigency
of the service and that she has no other choice but to disassociate herself from
employment. The resignation must be unconditional and with a clear intention to
relinquish the position. Consequently, the circumstances surrounding the alleged
resignation must be consistent with the employee’s intent to give up the
employment. In this connection, the acts of the employee before and after the
resignation are considered to determine whether or not she intended, in fact, to
relinquish the employment.

The facts and circumstances before and after the petitioner’s severance from her
employment on November 8, 2002 did not show her resolute intention to relinquish her
job. Indeed, it would be unfounded to infer the intention to relinquish from her
November 13, 2002 letter, which, to us, was not a resignation letter due to the absence
therefrom of anything evincing her desire to sever the employer-employee relationship.

2. Lagahit did not breach her employer’s trust; her dismissal was, therefore, illegal.

To justify the dismissal of an employee, the employer must, as a rule, prove that the
dismissal was for a just cause, and that the employee was afforded due process prior to
dismissal. The employer’s case succeeds or fails on the strength of its evidence, not on

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the weakness of that adduced by the employee, in keeping with the principle that the
scales of justice should be tilted in favor of the latter in case of doubt in the evidence
presented by them.

In its decision, the CA recognized the wide latitude of discretion given to the
management in terminating managers for breach of trust and confidence. It declared
Pacific Concord to have justifiably resorted to terminating the petitioner’s employment
as a measure of self-preservation in view of her repeated acts of disloyalty that were
prejudicial to its interest.

The CA was thereby gravely mistaken. Article 282(c) of the Labor Code authorizes an

employer to dismiss an employee for committing fraud, or for willful breach of the trust
reposed by the employer. However, loss of confidence is never intended to provide the
employer with a blank check for terminating its employee. For this to be a valid ground
for the termination of the employee, the employer must establish that: (1) the employee
must be holding a position of trust and confidence; and (2) the act complained against
would justify the loss of trust and confidence

There are two classes of employees vested with trust and confidence. To the first class
belong the managerial employees or those vested with the powers or prerogatives to
lay down management policies and to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees or effectively recommend such managerial actions. The
second class includes those who in the normal and routine exercise of their functions
regularly handle significant amounts of money or property. Cashiers, auditors, and
property custodians are some of the employees in the second class.

Her position as sales manager did not immediately make the petitioner a managerial
employee. The actual work that she performed, not her job title, determined whether
she was a managerial employee vested with trust and confidence. Her employment as
sales manager was directly related with the sales of cargo forwarding services of Pacific
Concord, and had nothing to do with the implementation of the management’s rules
and policies. As such, the position of sales manager came under the second class of
employees vested with trust and confidence. Therein was the flaw in the CA’s assailed
decision. Although the mere existence of the basis for believing that the managerial
employee breached the trust reposed by the employer would normally suffice to justify
a dismissal, we should desist from applying this norm against the petitioner who was not
a managerial employee.

We stress that although her supposedly frantic search for gainful employment
opportunities elsewhere should be considered as inappropriate for being made during
office hours, the same did not constitute willful breach of trust and confidence of the
employer. The loss of trust and confidence contemplated under Article 282(c) of

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the Labor Code is not ordinary but willful breach of trust. Verily, the breach of trust is
willful if it is intentional, knowing, deliberate and without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently. Most importantly, the cause of the loss of trust must be work-related as to
expose the employee as unfit to continue working for the employer.

Considering that the petitioner’s duties related to the sales of forwarding services
offered by Pacific Concord, her calling other forwarding companies to inquire for
vacant positions did not breach the trust reposed in her as sales manager. Such act,
being at worst a simple act of indiscretion, did not constitute the betrayal of trust that
merited the extreme penalty of dismissal from employment. We remind that dismissal is
a penalty of last resort, to be meted only after having appreciated and evaluated all
the relevant circumstances with the goal of ensuring that the ground for dismissal was
not only serious but true.

Blue Eagle Management vs. Naval, GR No. 192488, April 19, 2016

Facts:

Petitioners' Account

Petitioner BEMI is a domestic corporation registered with the Philippine Securities and
Exchange Commission in 2004, with the primary purpose of establishing, owning,
operating, or managing a sports complex, and performing any and all acts necessary
and incidental to carrying out the same.

By virtue of a Memorandum of Agreement (MOA), Ateneo de Manila University

(ADMU), owner of the Moro Lorenzo Sports Center (MLSC) located within the ADMU
compound, gave petitioner BEMI the authority to manage and operate the
following businesses at MLSC: (a) sports clinic; (b) fitness gym; (c) coffee shop; and ( d)
lease of basketball courts, badminton courts, locker rooms/storage facilities, weight
training room, track oval, martial arts deck, and office spaces.

Petitioners Bonoan and Dela Rama were then the General Manager and Human
Resources (HR) Manager, respectively, of petitioner BEMI. Respondent was hired on
January 15, 2005 by petitioner BEMI as a member of its maintenance staff.

BEMI suffered financial losses and in an attempt to reduce its financial loses, the
Management of BEMI resolved sometime in January 2006 to decrease the operational
expenses of the company. Since the gross income of petitioner BEMI was not even
enough to cover the costs of the salaries, wages, and other benefits of its employees,
one of the measures the Management intended to implement was the downsizing of its
workforce.

Pursuant to such decision of the Management,

petitioners Bonoan and Dela Rama evaluated and identified several employees who

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could be the subject of retrenchment proceedings, taking into consideration
the employees' positions and tenures at petitioner BEMI. After their evaluation,
petitioners Bonoan and Dela Rama identified five employees for retrenchment.
Respondent was included in the list because she was one of the employees with the
shortest tenures.

Before commencing the retrenchment proceeding, Dela Rama met with each of the 5
employees mentioned and presented them an option of resigning instead. The
employees who would choose to resign would no longer be required to report for work
after their resignation but would still be paid their full salary for February 2006 and
their pro-rated 13th month pay, plus financial assistance in the amount of one month
salary for every year of service at petitioner BEMI. Just several hours after the meeting,
Naval returned to Dela Rama’s office and informed the latter that she would voluntarily
resign.

Since all the five employees identified for retrenchment decided to voluntarily resign
instead and avail for themselves the financial package offered by petitioner BEMI,
there was no more need for the company to initiate retrenchment proceedings.

Naval appeared at petitioner Bonoan's office. Because respondent was finding it

difficult to find new employment, she asked if it was possible for her to return to work for
petitioner BEMI. However, petitioner Bonoan replied that respondent's resignation had
long been approved and that petitioner BEMI would not be able to rehire respondent
given the difficult financial position of the company. Naval filed a complaint for illegal
dismissal before the NLRC.

Respondent’s account

Naval believed that after angering a customer, Dr. Florendo (who told
Naval “Ipapatanggal kita!” ), Dela Rama and Tiongson informed Naval that BEMI
needed to reduce the manpower as part of the cost-cutting measure of the company
and she (Naval) was a candidate for termination. Respondent Naval was then required
to submit a handwritten resignation letter. Petitioner Dela Rama gave respondent a
piece of paper and dictated to the latter the contents of her resignation letter, but
respondent had her resignation letter typed on a computer and printed.

Labor Arbiter: Naval was illegally dismissed; BEMI was not able to prove that they were
suffering from serious business losses that would have justified the retrenchment of its
employees.

Respondent's resignation letter also did not deserve much weight. The resignation letter
of respondent had uniform content as those of her four other co-employees. The
assurances of payment of salaries, separation pay, and 13th month pay at a given
date were words obviously coming from an employer. It was more of a quitclaim rather
than a resignation letter.

NLRC: reversed the decision of LA and found merit in BEMI’s appeal; this prompted
respondent to file a Petition for Certiorari with the CA, averring grave abuse of

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discretion on the part of the NLRC when it reversed the Labor Arbiter's Decision and
declared that respondent voluntarily resigned.

CA: favoured Naval; according to CA, Naval had no intention to resign from office had
she not been made to choose to resign or be one of the candidates for the planned
retrenchment program of the company; Also, the fact that the [respondent] was
forced to prepare a handwritten resignation letter, with the words having been
dictated to her by the HR Manager, casts doubt on the voluntariness of the resignation.

BEMI now comes before SC via the instant Petition for Review on Certiorari.

Issue: Whether or not Naval was illegally dismissed which depends on

w/n Naval’s resignation was voluntary.

Held: BEMI was able to present sufficient evidence to establish that Naval’s resignation
was voluntary.

The Court defined "resignation" in Chiang Kai Shek College v. Torres, thus:

Resignation is the voluntary act of an employee who is in a situation where one

believes that personal reasons cannot be sacrificed for the favor of employment,
and opts to leave rather than stay employed. It is a formal pronouncement or
relinquishment of an office, with the intention of relinquishing the office
accompanied by the act of relinquishment. As the intent to relinquish must
concur with the overt act of relinquishment, the acts of the employee before
and after the alleged resignation must be considered in determining whether, he
or she, in fact, intended to sever his or her employment.

For the resignation of an employee to be a viable defense in an action for illegal

dismissal, an employer must prove that the resignation was voluntary, and its evidence
thereon must be clear, positive, and convincing.

In this case, petitioners, as employers, were able to present sufficient evidence to

establish that respondent's resignation was voluntary.

As borne out by the Financial Statements for 2005 of petitioner BEMI, there was ground
for the company to implement a retrenchment of its employees at the time respondent
resigned. Under Article 28322 the Labor Code of the Philippines, as amended,
retrenchment is one of the authorized causes for termination of employment which
the law accords an employer who is not making good in its operations in order to cut
back on expenses for salaries and wages by laying off some employees. The purpose of
retrenchment is to save a financially ailing business establishment from eventually
collapsing.

Requirements for a valid retrenchment as laid down in in Asian Alcohol Corporation v.

National Labor Relations:

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The requirements for valid retrenchment which must be proved by clear and
convincing evidence are:

(1) that the retrenchment is reasonably necessary and likely to prevent business
losses which, if already incurred, are not merely de minimis, but
substantial, serious, actual and real, or if only expected, are reasonably
imminent as perceived objectively and in good faith by the employer;

(2) that the employer served written notice both to the employees and to the
Department of Labor and Employment at least one month prior to the intended
date of retrenchment;

(3) that the employer pays the retrenched employees separation pay equivalent
to one month pay or at least 1/2 month pay for every year of service,
whichever is higher;

(4) that the employer exercises its prerogative to retrench employees in good
faith for the advancement of its interest and not to defeat or circumvent the
employees' right to security of tenure; and

(5) that the employer used fair and reasonable criteria in ascertaining
who would be dismissed and who would be retained among the
employees, such as status (i.e., whether they are temporary, casual, regular
or managerial employees), efficiency, seniority, physical fitness, age,
and financial hardship for certain workers.

Ina number of jurisprudence, the Court has affirmed the credence and weight
accorded to audited financial statements as proof of the financial standing of a
corporation. The financial statements of BEMI were audited by a CPA and independent
auditor whose credibility was never questioned.

While financial statements for previous years may be material in establishing the
financial trend for an employer, these are not indispensable in all cases of
retrenchment. The evidence required for each case of retrenchment will still depend on
its particular circumstances. In fact, in Revidad v. National Labor Relations Commission,
the Court declared that "proof of actual financial losses incurred by the company is not
a condition sine qua non for retrenchment," and retrenchment may be undertaken by
the employer to prevent even future losses.

Petitioner BEMI had to act swiftly and decisively to avert its loss since its MOA with ADMU
for the conduct of its business at MLSC was for a period of only a little over three years.
The retrenchment of employees appears to be a practical course of action for
petitioner BEMI to prevent more losses. The evaluation and identification of the
employees to be retrenched were jointly undertaken by
petitioners Bonoan and Dela Rama, as the General Manager and HR Manager,
respectively, of petitioner BEMI, based on fair and reasonable criteria, i.e., the
employees' positions and tenures at the company.

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Because the five employees to be retrenched opted to voluntarily resign instead and
avail themselves of the financial package offered, there was no more need for
petitioner BEMI to comply with the notice requirement to the Department of Labor and
Employment.

Said five employees were to receive more benefits than what the law prescribed
in case of retrenchment, particularly: (a) full salary for February 2006 although they were
no longer required to report to work after submission of their resignation letters in mid-
February 2006; (b) pro-rated 13th month pay; and ( c) financial assistance equivalent to
one-month salary for every year of service.

The foregoing circumstances persuade the Court that no fraud or deception was
employed upon respondent to resign because petitioner BEMI was indeed about to
implement in good faith a retrenchment of its employees in order to advance its
interest and not merely to defeat or circumvent the respondent's right to security of
tenure. Petitioners, moreover, were able to present respondent's resignation letter,
written and signed in her own hand.

Naval’s actions were more consistent with an intentional relinquishment of her position
pursuant to an agreement reached with petitioners. After respondent submitted her
resignation letter, she no longer reported for work. There is no showing that
respondent made any attempt to contest her resignation, or to report for work but was
prevented from doing so by petitioners. Naval appeared at the premises of
petitioner when her salary for February 2006 and other benefits would have already
been available for release. Respondent, unable to find new employment, merely took
the chance of requesting to be rehired by petitioner BEMI and when she was refused,
belatedly decried illegal dismissal.

It is inconsequential that the contents of respondent's resignation letter was dictated by

petitioner Dela Rama and, per the Labor Arbiter's observation, reads more of a
quitclaim rather than a resignation letter, for as long as respondent wrote down and
signed said letter by her own volition.

In Samaniego v. National Labor Relations Commission, the Court accorded weight to

the resignation letters of the employees because although said letters were prepared
by the company, the employees signed the same voluntarily. Granted that the
employees in Samaniego were managerial employees, while Naval in the present case
was a rank and file employee, the financial situation of petitioner BEMI, the need
for retrenchment, and the option to voluntarily resign and the financial package which
respondent could avail herself of were duly explained to respondent during the
meeting and respondent's resignation letter was in Filipino, using simple terms which
could be easily understood.

Withal, the law, in protecting the rights of the laborers, authorizes neither oppression nor
self-destruction of the employer. While the Constitution is committed to the policy of
social justice and the protection of the working class, it should not be supposed that
every labor dispute will be automatically decided in favor of labor.

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Wherefore, premises considered, the Petition for review on Certiorari is granted.

Catotocan vs. Lourdes School of Quezon City et al.

FACTS: In 1971, Editha Catotocan (Catotocan) started her employment in Lourdes

School of Quezon City (LSQC) as music teacher. By the school year 2005-2006, she had
already served for thirty-five (35) years.

LSQC has a retirement plan providing for retirement at 60 years old, or separation
pay depending on the number of years of service.

On November 25, 2003, LSQC issued an Administrative Order for all employees
which is an addendum on its retirement policy. The portion on Normal Retirement reads,
as follows: “An employee may apply for retirement or be retired by the school when he
/she reaches the age of 60 years or when he/she completes 30 years of service,
whichever comes first”

In a Letter, Catotocan and seven other co-employees wrote to LSQC and

appealed for the deferment of the implementation of the November 25, 2003
Addendum to the retirement plan, particularly the provision that normal retirement will
commence after completing "30 years of service" to the school.

Later, in a Letter, LSQC Rector Fr. Acuin notified Catotocan that she will be
retired by the end of the school year for having served at least 30 years with
accompanying computation of her retirement pay in the total amount of P1M+. LSQC
retired Catotocan sometime in June 2006 after completing 35 years of service. Full
retirement benefits were given to her.

Catotocan's retirement was communicated to her on January 27, 2006. In the

same letter, Catotocan was told that if she desires, she may signify in writing her intent
to continue serving the school on a contractual basis. She responded by submitting a
letter of intent.

LSQC appointed Catotocan as a Grade School Guidance Counselor for the

school year 2006-2007 under a contractual status. Her contract was continuously
renewed until April of 2009 when LSQC no longer considered her application for the
position. Thus, she filed a complaint for illegal dismissal against LSQC.

The LA dismissed the complaint for lack of merit. This was affirmed by the NLRC
and the CA hence the case at bar.

ISSUE: WON petitioner was illegally dismissed (In a nutshell, Catotocan asserts that her
receipt of her retirement benefits will not stop her from pursuing an illegal dismissal
complaint against LSQC)

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RULING: NO. Petitioner was not illegally dismissed as she validly retired from service.
Retirement is the result of a bilateral act of the parties, a voluntary agreement between
the employer and the employee whereby the latter, after reaching a certain age,
agrees to sever his or her employment with the former.

Retirement age is primarily determined by the existing agreement or

employment contract. Only in the absence of such an agreement shall the retirement
age be fixed by law, which provides for a compulsory retirement age at 65 years, while
the minimum age for optional retirement is set at 60 years.

Jurisprudence is replete with cases discussing the employer's prerogative to

lower the compulsory retirement age subject to the consent of its employees.

Thus, retirement plans, as in LSQC's retirement plan, allowing employers to retire

employees who have not yet reached the compulsory retirement age of 65 years are
not per se repugnant to the constitutional guaranty of security of tenure.

By its express language, the LC permits employers and employees to fix the applicable
retirement age at 60 years or below, provided that the employees' retirement benefits
under any CBA and other agreements shall not be less than those provided therein.

Indeed, acceptance by the employees of an early retirement age option must be

explicit. In this case, while it may be true that Catotocan was initially opposed to the
idea of her retirement at an age below 60 years, it must be stressed that
Catotocan's subsequent actions after her "retirement" are actually tantamount to her
consent to the addendum to the LSQC's retirement policy (she accepted all the
proceeds of her retirement package)

We, likewise, quote the NLRC's finding that Catotocan's subsequent actions after
LSQC implemented the retirement program as to negate her allegation of illegal
dismissal: “In view of her voluntary acts and enjoyment of the monetary benefits in
accordance with the school's new retirement plan, We cannot consider her to have
been forced to retire or illegally dismissed.”

Indeed, the most telling detail indicative of Catotocan's voluntary assent to LSQC's
retirement policy was her correspondence with the latter following her "retirement."
Catotocan availed of the privilege of being re-hired after retirement by virtue of the
"'Contractual Employment of “Retired employees” provision of LSQC's retirement policy.

It must be emphasized that the re-hiring was exclusive only for those employees who
has availed of the retirement benefits or who has been retired by the school but who
has not yet reached 65 years of age.

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Thus, since Catotocan has availed of this contractual employment which is exclusively
offered only to LSQC's qualified retirees for three (3) consecutive years following her
retirement, she can no longer dispute that she has indeed legitimately retired from
employment, and was not illegally dismissed.

In sum, Catotocan's repeated application and availment of the re-hiring program of

LSQC for qualified retirees for 3 consecutive years is a supervening event that would
reveal that she has already voluntarily and freely signified her consent to the retirement
policy despite her initial opposition to it.

PHILIPPINE AIRLINES, INC vs ARJAN T. HASSARAM [G.R. No. 217730, June 5, 2017]

Doctrine: If DOLE Secretary issued a return-to-work Order, failing to comply with which is
punishable by dismissal or loss of employment status. This is another cause of severance
of employment relation.

Facts:
Hassaram filed a complaint for illegal dismissal against Philippine Airlines (PAL) and
sought recovery of retirement benefits, damages and attorney’s fees. He claimed that
he had applied for retirement from PAL in August 2000 after rendering 24 years of
service as a pilot, but that his application was denied. Instead, PAL informed him that
he had lost his employment in the company as of 9 June 1998, in view of his failure to
comply with the Return to Work Order issued by the Secretary of Labor against
members of the Airline Pilots Association of the Philippines (ALPAP) on 7 June 1998.

Hassaram claims that he is not covered by the Return to Work order by the Secretary
thus PAL has no valid ground for terminating him. PAL contends, among others, that if
admitted that he was entitled to retirement benefits, he is only entitled of 5,000 pesos
for every year of service pursuant to the CBA between PAL and Airline Pilots Association
of the Philippines (ALPAP) from which Hassaram is a member of.

LA: awarded the full retirement benefits and attorney’s fees; Hassaram did not defy the
Return to Work order by the Secretary
NLRC: In favor of PAL. It ruled that the receipt of 4,456,817.75 pesos by Hassaram was
pursuant to the PAL Plan thus the claim of retirement benefits is extinguished
CA: Reversed NLRC ruling; declared that the 4Million cash received by Hassaram from
the PAL Plan was not the retirement benefit contemplated by law hence, Hassaram
should be awarded 2,111,984.60 as retirement pay pursuant to Art 287 of LC

ISSUE:
Whether or not Hassaram is entitled to retirement benefit under Article 287 despite
availment of benefit under the company’s retirement plan? NO

HELD:
SC ruled in favor of PAL.

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The court concluded that the amount received by Hassaram from the PAL Plan formed
part of the retirement pay. The Plan, according to the court’s ruling in a previous case, is
a retirement benefit plan raised from the contributions exclusively from PAL of amounts
equivalent to 20% of each pilot’s gross monthly pay. Article 287 is applies only if there is
no CBA or other applicable employment contract or there is a CBA but is below the
requirements set by law.

Hassaram, being a member of ALPAP, is entitled for the benefits both from PAL Plan and
PAL-ALPAP CBA. Since he already received the benefits from the PAL Plan (4,456,817.75
pesos) he is now only entitled to claim only the remaining benefits under the CBA
equivalent to 120,000 pesos (24 years x 5,000) for his 24 years of service in the company.

IX. PRESCRIPTION OF CLAIMS

LUDO & LUYM VS. SAORNIDO

G.R. No. 140960; January 20, 2003

Facts:
Petitioner LUDO & LUYM CORPORATION (LUDO for brevity) is a domestic corporation
engaged in the manufacture of coconut oil, corn starch, glucose and related
products. It operates a manufacturing plant located at Tupas Street, Cebu City and a
wharf where raw materials and finished products are shipped out.

In the course of its business operations, LUDO engaged the arrastre services of
Cresencio Lu Arrastre Services (CLAS) for the loading and unloading of its finished
products at the wharf. Accordingly, several arrastre workers were deployed by CLAS to
perform the services needed by LUDO.

These arrastre workers were subsequently hired, on different dates, as regular rank-and-
file employees of LUDO every time the latter needed additional manpower
services. Said employees thereafter joined respondent union, the LUDO Employees
Union (LEU), which acted as the exclusive bargaining agent of the rank-and-file
employees.

Respondent union entered into a collective bargaining agreement with LUDO which
provides certain benefits to the employees, the amount of which vary according to the
length of service rendered by the availing employee.

Thereafter, the union requested LUDO to include in its members’ period of service the
time during which they rendered arrastre services to LUDO through the CLAS so that
they could get higher benefits. LUDO failed to act on the request. Thus, the matter was
submitted for voluntary arbitration.

The parties accordingly executed a submission agreement raising the sole issue of the
date of regularization of the workers for resolution by the Voluntary Arbitrator.

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Voluntary Arbitrator ruled that: (1) the respondent employees were engaged in
activities necessary and desirable to the business of petitioner, and (2) CLAS is a labor-
only contractor of petitioner.

Court of Appeals affirmed in toto the decision of the Voluntary Arbitrator.

Issue: Whether or not petitioners are considered regular employees from the moment
they started working for private respondents thru CLAS.

Held:
Supreme Court upheld the decision of the voluntary arbitrator affirmed by the Court of
Appeals that the 214 complainants shall be considered regular employees of the
respondents six (6) months from the first day of service at CLAS. Consequently, the said
complainants, being entitled to the CBA benefits during the regular employment, are
awarded sick leave, vacation leave & annual wage and salary increases during such
period in the amount of FIVE MILLION SEVEN HUNDRED SEVEN THOUSAND TWO
HUNDRED SIXTY ONE PESOS AND SIXTY ONE CENTAVOS (P5,707,261.61).

The issue of regularization should be viewed as two-tiered issue. While the submission
agreement mentioned only the determination of the date or regularization, law and
jurisprudence give the voluntary arbitrator enough leeway of authority as well as
adequate prerogative to accomplish the reason for which the law on voluntary
arbitration was created – speedy labor justice. It bears stressing that the underlying
reason why this case arose is to settle, once and for all, the ultimate question of whether
respondent employees are entitled to higher benefits. To require them to file another
action for payment of such benefits would certainly undermine labor proceedings and
contravene the constitutional mandate providing full protection to labor.

DEGAMO VS. AVANT LARD SHIPPING LINES

G.R. No. 154460; November 22, 2005

Facts:
Avantgarde, acting in behalf of its foreign principal, Sembawang Johnson
Management, Pte., Ltd. (Sembawang), hired Lauro C. Degamo as Oiler of the vessel for
a period of ten months. While working in the vessel's engine room, a spanner dropped
and hit petitioner on his right thigh. He was hospitalized and was repatriated to the
Philippines on March 4, 1995.

Upon his arrival, petitioner reported to respondent Avantgarde's office, but there was
no one to assist him, so he went to Cebu for operation. Avantgarde paid all his hospital
bills and promised to work out his sickness benefit with Sembawang as soon as he was
declared fit to work. Petitioner was treated until early 1997. Thereafter, petitioner was
declared fit to work.

On December 24, 1997, Demago asked Avantgarde to pay his sickness benefits. On
January 6, 1998, Avantgarde replied that it could no longer act on petitioner's claim as

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he had deviated from the legal procedure. Petitioner wrote a letter to Sembawang
regarding his claim but the latter did not reply.

Petitioner filed a complaint for payment of disability benefits and other money claims
against the respondents with the RAB. The labor arbiter dismissed the case without
prejudice, stating that the action had already prescribed. On appeal, the NLRC likewise
ruled that petitioner's cause of action had prescribed as a mere letter of demand
would not toll the prescriptive period for filing the complaint. Hence this petition.

Issue:Whether petitioner's cause of action had already prescribed.

Held:
YES. Petitioner’s cause of action has already prescribed.

Petitioner, citing Article 1155 of the New Civil Code, contends that his cause of action
had not prescribed as the running of the prescriptive period was tolled by his
extrajudicial demand for unpaid sickness benefits on Dec. 24, 1997.

Respondents counter that the Civil Code provision on extinctive prescription applies
only to obligations that are intrinsically civil in nature and is inapplicable to labor cases.
Respondents assert that that petitioner's demand was made more than one year from
his date of arrival in the Philippines, contrary to what is prescribed in Sec. 28 of the POEA
Memorandum Circular No. 55, Series of 1996. They add that the institution of the action
was beyond the three-year period prescribed in Article 291 of the Labor Code as his
employment with the respondents' ended on March 4, 1995 but the complaint was filed
only on March 2, 2001.

POEA Circular No. 55, Series of 1996 became effective only on January 1, 1997 while the
employment contract between the parties was entered earlier on November 8, 1994.
The earlier standard employment contract issued by the POEA did not have a provision
on prescription of claims. Hence, the applicable provision in this case is Article 291 of
the Labor Code.

In Cadalin v. POEA's Administrator, we held that Article 291 covers all money claims
from employer-employee relationship and is broader in scope than claims arising from
a specific law. It is not limited to money claims recoverable under the Labor Code, but
applies also to claims of overseas contract workers.

Article 291 provides that all money claims arising from employer-employee relations
shall be filed within three years from the time the cause of action accrued, otherwise,
these shall be forever barred. A cause of action accrues upon the categorical denial of
claim. Petitioner's cause of action accrued only on January 6, 1998, when Avantgarde
denied his claim and so breached its obligation to petitioner. Petitioner could not have
a cause of action prior to this because his earlier requests were warded off by indefinite
promises. The complaint filed on March 2, 2001 is beyond the three-year period
mandated by the Labor Code.

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INTERCONTINENTAL BROADCASTING CORP., VS. PANGANIBAN

G.R. No. 151407; February 6, 2007

Facts:
Ireneo Panganiban was employed as Assistant General Manager of the petitioner
Intercontinental Broadcasting Corporation from May 1986 until his preventive
suspension on August 26, 1988. Respondent resigned from his employment on
September 2, 1988. On April 12, 1989, respondent filed with the trial court a case against
the members of the Board of Administrators (BOA) of petitioner alleging, among others,
non-payment of his unpaid commissions.

A motion to dismiss was filed by Joselito Santiago, one of the defendants, on the
ground of lack of jurisdiction, as respondent's claim was a labor money claim, but this
was denied by the RTC.
Thus, Santiago filed a petition for certiorari with the CA, which granted Santiago's
petition for lack of jurisdiction and set aside the RTC's Orders. Thereafter, respondent
was elected by the BOA as Vice-President for Marketing in July 1992. He resigned in
April 1993.

On July 24, 1996, respondent filed against petitioner a complaint for illegal dismissal,
separation pay, retirement benefits, unpaid commissions, and damages.

Issue: Whether or not respondent's claim for unpaid commissions has already
prescribed.

Held:
Yes.
The applicable law in this case is Article 291 of the Labor Code which provides that "all
money claims arising from employer-employee relations accruing during the effectivity
of this Code shall be filed within three (3) years from the time the cause of action
accrued; otherwise they shall be forever barred." The term "money claims" covers all
money claims arising from an employer-employee relation.

Like other causes of action, the prescriptive period for money claims is subject to
interruption, and in the absence of an equivalent Labor Code provision for determining
whether the said period may be interrupted, Article 1155 of the Civil Code may be
applied.

Thus, the prescription of an action is interrupted by (a) the filing of an action, (b) a
written extrajudicial demand by the creditor, and (c) a written acknowledgment of the
debt by the debtor. On this point, the Court ruled that although the commencement of
a civil action stops the running of the statute of prescription or limitations, its dismissal or
voluntary abandonment by plaintiff leaves the parties in exactly the same position as
though no action had been commenced at all.

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Hence, while the filing of the civil could have interrupted the running of the three-year
prescriptive period, its consequent dismissal by the CA due to lack of jurisdiction
effectively canceled the tolling of the prescriptive period within which to file his money
claim, leaving respondent in exactly the same position as though no civil case had
been filed at all. The running of the three-year prescriptive period not having been
interrupted by the filing of the civil case, respondent's cause of action had already
prescribed on September 2, 1991, three years after his cessation of employment on
September 2, 1988. Consequently, when respondent filed his complaint for illegal
dismissal, separation pay, retirement benefits, and damages in July 24, 1996, his claim,
clearly, had already been barred by prescription.

FAR EAST AGRICULTURAL SUPPLY, INC. VS. LEBATIQUE

G.R. No. 162813; February 12, 2007

Facts:
Petitioner Far East Agricultural Supply, Inc. (Far East) hired private respondent Jimmy
Lebatique as truck driver with a daily wage of P223.50. He delivered animal feeds to
the company’s clients.

Lebatique complained of nonpayment of overtime work particularly on January 22,

2000, when he was required to make a second delivery in Novaliches, Quezon
City. That same day, Manuel Uy, brother of Far East’s General Manager and petitioner
Alexander Uy, suspended Lebatique apparently for illegal use of company
vehicle. Even so, Lebatique reported for work the next day but he was prohibited from
entering the company premises.

Lebatique sought the assistance of the Department of Labor and Employment (DOLE)
Public Assistance and Complaints Unit concerning the nonpayment of his overtime
pay. According to Lebatique, two days later, he received a telegram from petitioners
requiring him to report for work. When he did the next day, January 29, 2000, Alexander
asked him why he was claiming overtime pay. Lebatique explained that he had never
been paid for overtime work since he started working for the company. He also told
Alexander that Manuel had fired him. After talking to Manuel, Alexander terminated
Lebatique and told him to look for another job.
On March 20, 2000, Lebatique filed a complaint for illegal dismissal and nonpayment of
overtime pay. The Labor Arbiter found that Lebatique was illegally dismissed, and
ordered his reinstatement and the payment of his full back wages, 13th month pay,
service incentive leave pay, and overtime pay.

Petitioners contend that, (1) Lebatique was not dismissed from service but merely
suspended for a day due to violation of company rules; (2) Lebatique was not barred
from entering the company premises since he never reported back to work; and (3)
Lebatique is estopped from claiming that he was illegally dismissed since his complaint
before the DOLE was only on the nonpayment of his overtime pay.

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Also, petitioners maintain that Lebatique, as a driver, is not entitled to overtime pay
since he is a field personnel whose time outside the company premises cannot be
determined with reasonable certainty. According to petitioners, the drivers do not
observe regular working hours unlike the other office employees. The drivers may report
early in the morning to make their deliveries or in the afternoon, depending on the
production of animal feeds and the traffic conditions. Petitioners also aver that
Lebatique worked for less than eight hours a day.

Issue: Whether or not Respondent is Illegally Dismiss and/or was not paid an Overtime
pay.

Held:
Even petitioners admit that the drivers can report early in the morning, to make their
deliveries, or in the afternoon, depending on the production of animal feeds. Drivers,
like Lebatique, are under the control and supervision of management
officers. Lebatique, therefore, is a regular employee whose tasks are usually necessary
and desirable to the usual trade and business of the company. Thus, he is entitled to
the benefits accorded to regular employees of Far East, including overtime pay and
service incentive leave pay.

The Decision dated September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196
and its Resolution dated March 15, 2004 are AFFIRMED with MODIFICATION to the effect
that the case is hereby REMANDED to the Labor Arbiter for further proceedings to
determine the exact amount of overtime pay and other monetary benefits due Jimmy
Lebatique which herein petitioners should pay without further delay.

VICTORY LINER VS. RACE; G.R. NO. 164820

March 28, 2007

Facts:
Race was employed by Victory Liner, Inc. as a bus driver. On August 24, 1994, while he
was driving his route, he met an accident. As a result, he suffered a fractured leg and
was rushed to the hospital. His confinement lasted for a month. On January 1998, Race
reported for work but he was informed that he was considered resigned from his job. He
then filed a complaint for illegal dismissal. Victory Liner contend that respondent’s
action had already prescribed because when he instituted the complaint on
September 1, 1999, more than five years had already lapsed from the accrual his cause
of action on August 24, 1994.

Issue: Whether or not the respondent’s cause of action had already prescribed.

Held:
Respondent’s cause of action had not yet prescribed.

In illegal dismissal cases, the employee concerned is given a period of four years from
the time of his dismissal within which to institute a complaint. This is based on Article

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1146 of the New Civil Code which states that actions based upon an injury to the rights
of the plaintiff must be brought within four years.

The four-year prescriptive period shall commence to run only upon the accrual of a
cause of action of the worker. It is settled that in illegal dismissal cases, the cause of
action accrues from the time the employment of the worker was unjustly terminated.
Thus, the four-year prescriptive period shall be counted and computed from the date
of the employee’s dismissal up to the date of the filing of complaint for unlawful
termination of employment.

Proceeding therefrom, we shall now discuss and determine when the respondent’s
cause of action accrued in order to ascertain whether the same had already
prescribed.

It is error to conclude that the employment of the respondent was unjustly terminated
on 10 November 1994 because he was, at that time, still confined at the Specialist
Group Hospital, Dagupan City, for further treatment of his fractured left leg. He must be
considered as merely on sick leave at such time. Likewise, the respondent cannot also
be deemed as illegally dismissed from work upon his release from the said hospital in
December 1994 up to December 1997 since the records show that the respondent still
reported for work to the petitioner and was granted sick and disability leave by the
petitioner during the same period.
The respondent must be considered as unjustly terminated from work in January 1998
since this was the first time he was informed by the petitioner that he was deemed
resigned from his work. During that same occasion, the petitioner, in fact, tried to
convince the respondent to accept an amount of P50,000.00 as a consolation for his
dismissal but the latter rejected it. Thus, it was only at this time that the respondent’s
cause of action accrued. Consequently, the respondent’s filing of complaint for illegal
dismissal on 1 September 1999 was well within the four-year prescriptive period.

It is also significant to note that from 10 November 1994 up to December 1997, the
petitioner never formally informed the respondent of the fact of his dismissal either
through a written notice or hearing. Indeed, it cannot be gainfully said that respondent
was unlawfully dismissed on 10 November 1994 and that the cause of action accrued
on that date.

J.K. MERCADO & SONS AGRICULTURAL ENTERPRISES VS. HON. STO. TOMAS
G.R. No. 158084; August 29, 2008

Facts:
On December 3, 1993, the Regional Tripartite Wages and Productivity Board, Region XI,
issued a wage order, granting a Cost of Living Allowance (COLA) to covered workers.
Notwithstanding the said order, private respondents were not given the benefits due
them under the wage order. On July 10, 1998, private respondents filed a motion for writ
of execution and writ of garnishment.

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On October 7, 1998, the OIC-Regional Director, Region XI, issued a writ of execution for
the enforcement of the Order dated April 11, 1994 of the Regional Tripartite Wages and
Productivity Board. On November 17, 1998 and November 23, 1998, respectively,
petitioner filed a motion to quash the writ of execution and a supplemental motion to
the motion to quash. Petitioner argued that herein private respondents' right had
already prescribed due to their failure to move for the execution of the April 11, 1994
Order within the period provided under Article 291 of the Labor Code, as amended, or
within three (3) years from the finality of the said order.

Ruling that the benefits which remained unpaid have not prescribed and that the
private respondents need not file a claim to be entitled thereto, the Regional Director
denied the motion to quash in an Order dated January 7, 1999.

Petitioner argued that the Regional Director abused his discretion in issuing the writ of
execution in the absence of any motion filed by private respondents. Petitioner claimed
that since more than three (3) years have already elapsed from the time of the finality
of the order dated April 11, 1994, the right of private respondents to claim the benefits
under the same had already prescribed.

Issue: Whether a money claim must be filed first by private respondents against
petitioner for the latter's refusal to pay the COLA granted under the wage order.

Held:
It must be emphasized that the order dated April 11, 1994 had long become final and
executory. Petitioner did not appeal the said order. Having failed to avail of the remedy
of appeal of the said order, petitioner cannot belatedly avoid its duty to comply with
the said order by insisting that a money claim must first be filed by herein private
respondents. A contrary ruling would result to absurdity and would even unjustly benefit
petitioner who for quite some time had exerted every effort to avoid the obligation of
giving the wage differential or COLA granted under the wage order.

Art. 291 of the Labor Code applies to money claims in general and provides for a 3-year
prescriptive period to file them.

On the other hand, respondent employees' money claims in this case had been
reduced to a judgment, in the form of a Wage Order, which has become final and
executory. The prescription applicable, therefore, is not the general one that applies to
money claims, but the specific one applying to judgments. Thus, the right to enforce
the judgment, having been exercised within five years, has not yet prescribed.

Stated otherwise, a claimant has three years to press a money claim. Once judgment is
rendered in her favor, she has five years to ask for execution of the judgment, counted
from its finality. This is consistent with the rule on statutory construction that a general
provision should yield to a specific one and with the mandate of social justice that
doubts should be resolved in favor of labor.

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REYES VS. NLRC, CCBPI

G.R. No. 180551; February 10, 2009

Facts:
The present Petition arose from a Complaint for illegal dismissal with claims for moral
and exemplary damages and attorney’s fees filed by petitioner against respondents
Coca Cola Bottlers Philippines (CCBP) and Rotaida Taguibao (Taguibao) before the
Labor Arbiter on 14 June 2004. Respondent CCBP is a corporation engaged in the
business of production and distribution of carbonated drinks, and Taguibao is its Human
Resource Manager.

In his Complaint, petitioner alleged that he was first employed by respondent CCBP,
through Interserve Manpower Agency (Interserve), as a Leadman in February
1988. Petitioner was initially assigned to the Mendiola Sales Office of respondent
CCBP. Petitioner’s employment contract was renewed every five months and he was
assigned a different task every time. Such an arrangement continued until petitioner
was directly hired by respondent CCBP as a Route Salesman on 15 September
2000. Exactly one year from the time of petitioner’s employment as a Route Salesman,
respondent CCBP, thru Taguibao, terminated his services on 15 September 2001. Since
he already acquired the status of a regular employee, petitioner asserted that his
dismissal from employment without the benefit of due process was unlawful.

Issue:
Whether or not respondent’s claim for backwages has already prescribed.

Held:
The Court was more emphatic in Philippine Industrial Security Agency Corporation v.
Dapiton, when it ruled that backwages had to be paid by the employer as part of the
price or penalty he had to pay for illegally dismissing his employee. It was to be
computed from the time of the employee’s illegal dismissal (or from the time his
compensation was withheld from him) up to the time of his reinstatement.

One of the natural consequences of a finding that an employee has been illegally
dismissed is the payment of backwages corresponding to the period from his dismissal
up to actual reinstatement. The statutory intent of this matter is clearly discernible. The
payment of backwages allows the employee to recover from the employer that which
he has lost by way of wages as a result of his dismissal. Logically, it must be computed
from the date of petitioner’s illegal dismissal up to the time of actual
reinstatement. There can be no gap or interruption, lest we defeat the very reason of
the law in granting the same. That petitioner did not immediately file his Complaint
should not affect or diminish his right to backwages, for it is a right clearly granted to
him by law -- should he be found to have been illegally dismissed -- and for as long as
his cause of action has not been barred by prescription.

The law fixes the period of time within which petitioner could seek remedy for his illegal
dismissal and for as long as he filed his Complaint within the prescriptive period, he shall

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be entitled to the full protection of his right to backwages. In illegal dismissal cases, the
employee concerned is given a period of four years from the time of his illegal dismissal
within which to institute the complaint. This is based on Article 1146 of the New Civil
Code which states that actions based upon an injury to the rights of the plaintiff must
be brought within four years. The four-year prescriptive period shall commence to run
only upon the accrual of a cause of action of the worker. Here, petitioner was
dismissed from service on 15 September 2001. He filed his complaint for illegal dismissal
on 14 June 2004.

Clearly, then, the instant case was filed within the prescriptive period.

LWV CONSTRUCTION CORP. VS. DUPO

G.R. No. 172342; July 13, 2009

Facts:
Petitioner, a domestic corporation which recruits Filipino workers, hired respondent
Marcelo Dupo as Civil Structural Superintendent to work in Saudi Arabia for its principal,
Mohammad Al-Mojil Group/Establishment (MMG). On February 26, 1992, respondent
signed his first overseas employment contract, renewable after one year. It was
renewed five times on the following dates: May 10, 1993, November 16, 1994, January
22, 1996, April 14, 1997, and March 26, 1998. All were fixed-period contracts for one
year. The sixth and last contract stated that respondent’s employment starts upon
reporting to work and ends when he leaves the work site. Respondent left Saudi Arabia
on April 30, 1999 and arrived in the Philippines on May 1, 1999. Respondent then has
signed 6 overseas contracts and worked for seven years in Saudi Arabia.

On July 6, 1999, respondent through a letter resigned from his work and asked MMG to
give him his ‘long service award’ in accordance with the Article 87 of Saudi Law which
states that;

Article 87.
Where the term of a labor contract concluded for a specified period comes to
an end or where the employer cancels a contract of unspecified period, the
employer shall pay to the workman an award for the period of his service to be
computed on the basis of half a month’s pay for each of the first five years and
one month’s pay for each of the subsequent years. The last rate of pay shall be
taken as basis for the computation of the award. For fractions of a year, the
workman shall be entitled to an award which is proportionate to his service
period during that year. Furthermore, the workman shall be entitled to the
service award provided for at the beginning of this article in the following cases:
A. If he is called to military service.
B. If a workman resigns because of marriage or childbirth.
C. If the workman is leaving the work as a result of a force majeure beyond
his control. (Emphasis supplied.)

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However, MMG did not reply to the letter of the respondent Dupo which led to the filing
of the case before the labor arbiter for the payment of the long service award in the
amount of US$12,640.33.

On the other hand, petitioner presented two defenses namely payment and
prescription. Firstly, petitioner said the long service award has already been paid every
time each of the contracts of employment of the respondent comes to an end, since,
the contract is for a fixed period of time. In effect, the severance pay received by the
respondent every time each of the 6 contracts of employment comes to an end, is also
the longevity service award. Petitioner claimed that long service award is the same with
severance pay. Secondly, petitioner insists that prescription barred respondent’s claim
for long service award because under Article 13 of the Saudi Labor Law it provides that
no case or claim relating to any of the rights provided for under said law shall be heard
after the lapse of 12 months from the date of the termination of the contract.
Respondent’s sixth contract ended on April 30, 1999 the date he left his work which was
also in effect the date of the termination of his contract, and he filed the case on
December 11, 2000 which is 1 year and seven months from the date of the termination
of his contract.

Issue:
(1) Whether or not CA erred in ruling that respondent is entitled to long service pay
which is different from severance pay.
(2) Whether or not the cause of action has prescribed.

Held:
SC said that CA has committed an error in ruling that the long service pay is different
from severance pay. According to SC the severance pay received by the respondent
at the end of each of the six contracts of employment is equivalent to the long service
pay. This is the reason why the formula in computing the severance pay is the same
with the computation of the long service award. Moreover, SC said that respondent’s
employment contracts expressly stated that his employment ended upon his departure
from work. Each year he departed from work and successively new contracts were
executed before he reported for work anew. His service was not cumulative.
Pertinently, in Brent School, Inc. v. Zamora, we said that “a fixed term is an essential and
natural appurtenance” of overseas employment contracts as in this case. We also said
in that case that under American law, “[w]here a contract specifies the period of its
duration, it terminates on the expiration of such period. A contract of employment for
a definite period terminates by its own terms at the end of such period.” As it is, Article
72 of the Saudi Labor Law is also of similar import. It reads:

A labor contract concluded for a specified period shall terminate upon the expiry of its
term. If both parties continue to enforce the contract, thereafter, it shall be considered
renewed for an unspecified period.

(2) SC ruled that the claim has not yet prescribed because the law that should be
applied on prescription is not the Saudi Law which grants 12 months period of time to
file the claim from the time of the termination of contract but it should be the Labor

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Code particularly ART. 291. Money claims. — All money claims arising from employer-
employee relations accruing during the effectivity of this Code shall be filed within three
(3) years from the time the cause of action accrued; otherwise they shall be forever
barred. The reason is because prescription is a procedural law and under the conflict of
laws rules of the Philippines the procedural law of the lex fori or law of the forum (law of
the place where the case is filed) must be applied. However, an argument can be
raised that even if the conflict of laws rule provides that the procedural law of the lex
fori must be followed, Sec. 48 of our Code of Civil Procedure which is a borrowing
statute provides that “If by the laws of the state or country where the cause of action
arose, the action is barred, it is also barred in the Philippine Islands.” Section 48 has not
been repealed or amended by the Civil Code of the Philippines. Article 2270 of said
Code repealed only those provisions of the Code of Civil Procedure as to which were
inconsistent with it. There is no provision in the Civil Code of the Philippines, which is
inconsistent with or contradictory to Section 48 of the Code of Civil Procedure (Paras,
Philippine Conflict of Laws, 104 [7th ed.]).
In the light of the 1987 Constitution, however, Section 48 [of the Code of Civil
Procedure] cannot be enforced ex proprio vigore insofar as it ordains the application in
this jurisdiction of [Article] 156 of the Amiri Decree No. 23 of 1976.

The courts of the forum will not enforce any foreign claim obnoxious to the
forum’s public policy. To enforce the one-year prescriptive period of the Saudi
Law as regards the claims in question would contravene the public policy on the
protection to labor.

Respondent’s complaint was filed well within the three-year prescriptive period under
Article 291 of our Labor Code. This point, however, has already been mooted by SC’s
finding that respondent’s service award had been paid, albeit the payroll termed such
payment as severance pay. Petition is Granted.

PLDT VS. ROBERTO R. PINGOL

G.R. No. 182622; September 8, 2010

Facts:
In 1979, respondent Roberto R. Pingol (Pingol) was hired by petitioner PLDT as a
maintenance technician.
From September 16, 1999 to December 31, 1999, Pingol was absent from work without
official leave. According to PLDT, notices were sent to him with a stern warning that he
would be dismissed from employment if he continued to be absent without official
leave "pursuant to PLDT Systems Practice A-007 which provides that ‘Absence without
authorized leaves for seven (7) consecutive days is subject to termination from the
service.’" Despite the warning, he failed to show up for work. On January 1, 2000, PLDT
terminated his services on the grounds of unauthorized absences and abandonment of
office.
On March 29, 2004, four years later, Pingol filed a Complaint for Constructive Dismissal
and Monetary Claims against PLDT. In his complaint, he alleged that he was hastily
dismissed from his employment

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on January 1, 2000.

In response, PLDT filed a motion to dismiss claiming, among others, that respondent’s
cause of action had already prescribed as the complaint was filed four (4) years and
three (3) months after his dismissal.

Issue: Whether or not respondent Pingol filed his complaint for constructive dismissal
and money claims within the prescriptive period of four (4) years as provided in Article
1146 of the Civil Code and three (3) years as provided in Article 291 of the Labor
Code, respectively.

Held:
Parties apparently do not dispute the applicable prescriptive period. Article 1146 of the
New Civil Code provides:

Art. 1146. The following actions must be instituted within four years:
(1) Upon an injury to the rights of the plaintiff;
x xx x xx x xx

As this Court stated in Callanta v. Carnation, when one is arbitrarily and unjustly
deprived of his job or means of livelihood, the action instituted to contest the legality of
one's dismissal from employment constitutes, in essence, an action predicated "upon
an injury to the rights of the plaintiff," as contemplated under Art. 1146 of the New Civil
Code, which must be brought within four (4) years.

With regard to the prescriptive period for money claims, Article 291 of the Labor Code
states:
Article 291. Money Claims. – All money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three (3) years from the
time the cause of action accrued; otherwise they shall be barred forever.

The pivotal question in resolving the issues is the date when the cause of action of
respondent Pingol accrued.
It is a settled jurisprudence that a cause of action has three (3) elements, to wit: (1) a
right in favor of the plaintiff by whatever means and under whatever law it arises or is
created; (2) an obligation on the part of the named defendant to respect or not to
violate such right; and (3) an act or omission on the part of such defendant violative of
the right of the plaintiff or constituting a breach of the obligation of the defendant to
the plaintiff.

In the case at bench, Pingol himself alleged the date January 1, 2000 as the date of his
dismissal in his complaint filed on March 29, 2004, exactly four (4) years and three (3)
months later. Respondent never denied making such admission or raised palpable
mistake as the reason therefor. Thus, the petitioner correctly relied on such allegation in
the complaint to move for the dismissal of the case on the ground of prescription.

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The Labor Code has no specific provision on when a claim for illegal dismissal or a
monetary claim accrues. Thus, the general law on prescription applies. Article 1150 of
the Civil Code states:
Article 1150. The time for prescription for all kinds of actions, when there is no special
provision which ordains otherwise, shall be counted from the day they may be brought

The day the action may be brought is the day a claim starts as a legal possibility. In the
present case, January 1, 2000 was the date that respondent Pingol was not allowed to
perform his usual and regular job as a maintenance technician. Respondent Pingol
cited the same date of dismissal in his complaint before the LA. As, thus, correctly ruled
by the LA, the complaint filed had already prescribed.

Like other causes of action, the prescriptive period for money claims is subject to
interruption, and in the absence of an equivalent Labor Code provision for determining
whether the said period may be interrupted, Article 1155 of the Civil Code may be
applied, to wit:

ART. 1155. The prescription of actions is interrupted when they are filed before
the Court, when there is a written extrajudicial demand by the creditors, and
when there is any written acknowledgment of the debt by the debtor.

Thus, the prescription of an action is interrupted by (a) the filing of an action, (b) a
written extrajudicial demand by the creditor, and (c) a written acknowledgment of the
debt by the debtor.
In this case, respondent Pingol never made any written extrajudicial demand. Neither
did petitioner make any written acknowledgment of its alleged obligation. Thus, the
claimed "follow-ups" could not have validly tolled the running of the prescriptive period.
It is worthy to note that respondent never presented any proof to substantiate his
allegation of follow-ups.

MEDLINE MANAGEMENT, INC. VS. ROSLINDA

G.R. No. 1687151; Spetember 15, 2010

Facts:
Medline Management, Inc. (MMI), on behalf of its foreign principal, petitioner
Grecomar Shipping Agency (GSA), hired Juliano Roslinda (Juliano) to work on board
the vessel MV "Victory." Juliano was previously employed by the petitioners under two
successive separate employment contracts of varying durations. His latest contract was
approved by the POEA on September 9, 1998 for a duration of nine months. In
accordance with which, he boarded the vessel MV "Victory" on October 25, 1998 as an
oiler and, after several months of extension, was discharged on January 20, 2000.

Months after his repatriation, or on March 6, 2000, Juliano consulted Dr. Pamela R.
Lloren (Dr. Lloren) of Metropolitan Hospital. He complained about abdominal distention
which is the medical term for a patient who vomits previously ingested foods. From
March 8 to August 24, 2000, Juliano has undergone Hemodialysis, a method of

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removing waste products such as creatinine and urea, as well as freeing water from the
blood, when the kidneys are in renal failure.

On August 27, 2001, Juliano died. On September 4, 2003, his wife Gliceria Roslinda and
son Ariel Roslinda, respondents herein, filed a complaint against MMI and GSA for
payment of death compensation, reimbursement of medical expenses, damages, and
attorney's fees before the Labor Arbitration Branch of the NLRC.

Instead of filing an answer, they filed a Motion to Dismiss on the grounds of prescription,
lack of jurisdiction and prematurity. Petitioners contended that the action has already
prescribed because it was filed three years, seven months and 22 days from the time
the deceased seafarer reached the point of hire.

Issue: Whether or not the claim is not yet barred by prescription despite the fact that it
was filed beyond the one-year prescriptive period provided by the POEA Standard
Employment Contract.

Held:
The employment contract signed by Juliano stated that "Upon approval, the same shall
be deemed an integral part of the Standard Employment Contract (SEC) for
seafarers." Section 28 of the POEA SEC states:

SECTION 28.JURISDICTION
XXX
Recognizing the peculiar nature of overseas shipboard employment, the
employer and the seafarer agree that all claims arising from this contract shall be
made within one (1) year from the date of the seafarer's return to the point of
hire. (Emphasis supplied)

On the other hand, the Labor Code states:

ART. 291.Money claims. — All money claims arising from employer-employee
relations accruing during the effectivity of this Code shall be filed within three (3)
years from the time the cause of action accrued; otherwise they shall forever be
barred.

In Southeastern Shipping v. Navarra, Jr., we ruled that "Article 291 is the law governing
the prescription of money claims of seafarers, a class of overseas contract workers. This
law prevails over Section 28 of the Standard Employment Contract for Seafarers which
provides for claims to be brought only within one year from the date of the seafarer's
return to the point of hire." We further declared that "for the guidance of all, Section 28
of the Standard Employment Contract for Seafarers, insofar as it limits the prescriptive
period within which the seafarers may file their money claims, is hereby declared null
and void. The applicable provision is Article 291 of the Labor Code, it being more
favorable to the seafarers and more in accord with the State's declared policy to afford
full protection to labor. The prescriptive period in the present case is thus three years
from the time the cause of action accrues."

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In the present case, the cause of action accrued on August 27, 2001 when Juliano
died. Hence, the claim has not yet prescribed, since the complaint was filed with the
arbitration branch of the NLRC on September 4, 2003.

UNIVERSITY OF THE EAST VS. UNIVERSITY OF THE EAST EMPLOYEES' ASSOCIATION

G.R. No. 179593; September 14, 2011

Facts:
Petitioner University of the East (UE) is an educational institution duly organized and
existing under Philippine laws. On the other hand, respondent University of the East
Employees' Association (UEEA) is a duly registered labor union of the rank-and-file
employees of UE.

It appears from the records that prior to school year (SY) 1983-1984, the 70%
incremental proceeds from tuition fee increases as mandated by Presidential Decree
No. 451 (P.D. No. 451), as amended, was distributed by UE in proportion to the average
number of academic and non-academic personnel. The distribution scheme became
the subject of an Agreement dated October 18, 1983 signed by the management,
faculty association and respondent. Starting SY 1994-1995, however, the 70%
incremental proceeds from the tuition fee increase was distributed by UE to its covered
employees based on a new formula of percentage of salary.
On June 19, 1995, a tripartite meeting was held among the representatives of
management, faculty union and UEEA. In the said meeting, it was agreed that the
distribution of the incremental proceeds would now be based on percentage of salary,
and not anymore on the average number of personnel. The Minutes of the June 19,
1995 meeting was signed and attested to by UEEA officers who attended.

On April 27, 1999, UEEA filed a complaint before the NLRC for non-
payment/underpayment of the rank-and-file employees' share of the tuition fee
increases against UE pursuant to P.D. No. 451, as amended, and Republic Act (R.A.) No.
6728 otherwise known as Government Assistance to Students and Teachers in Private
Education Act.

UE asserted that the claim of the UEEA was already barred since it was filed three (3)
years from the time its supposed cause of action accrued.

Issue: Whether or not prescription has already set in.

Held:
The Court agrees with UE and holds that UEEA's right to question the distribution of the
incremental proceeds for SY 1994-1995 has already prescribed. Article 291 of the Labor
Code provides that money claims arising from an employer-employee relationship must
be filed within three (3) years from the time the cause of action accrued. In the present
case, the cause of action accrued when the distribution of the incremental proceeds
based on percentage of salary of the covered employees was discussed in the

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tripartite meeting held on June 19, 1995. UEEA did not question the manner of its
distribution and only on April 27, 1999 did it file an action based therein. Hence,
prescription had set in.

X. JURISDICTION OF THE LABOR ARBITER

TOLOSA VS. NLRC;

G.R. No. 149578; April 10, 2003

Facts:
Evelyn Tolosa is the widow of Captain Virgilio Tolosa who was hired by Qwana-Kaiun,
through its manning agent, Asia Bulk Transport Phils. Inc., to be the master of the vessel
named M/V Lady Dona.Capt. Tolosa died while performing his duties during their
voyage from Japan to Long Beach California. Because of her husband’s death, Evelyn
filed a complaint before the POEA against Qwana-Kaiun, through its resident-agent, Mr.
Fumio Nakagawa, Asia Bulk, Pedro Garate and Mario Asis (Lady Dona’s Chief Mate
and Second mate in-charge of the primary medical care of the crew and who took
care of Capt. Tolosa while he was sick). The case was transferred to the NLRC and the
Labor Arbiter held the respondents solidarily liable and granted all the damages as
prayed for by petitioner including lost income, moral and exemplary damages,
attorney’s fees plus interest. On appeal, NLRC dismissed the case for lack of jurisdiction
over the subject matter of the action pursuant to the provision of the Labor Code.
Sustaining the NLRC, the CA ruled that the labor commission had no jurisdiction over the
subject matter of the action filed by petitioner. Her cause did not arise from an
employer-employee relation, but from a quasi delict or tort. Further, there is no
reasonable causal connection between her suit for damages and her claim under
Article 217 (a)(4) of the Labor Code, which allows an award of damages incident to an
employer-employee relation.

Issue:
Whether the labor arbiter and the NLRC had jurisdiction over petitioner's action

Held:
The NLRC and the labor arbiter had no jurisdiction over petitioner's claim for damages,
because that ruling was based on a quasi delict or tort per Article 2176 of the Civil
Code. The allegations in her complaint are in the nature of an action based on a quasi
delict or tort. It is evident that she sued Pedro Garate and Mario Asis for gross
negligence. Petitioner's complaint/position paper refers to and extensively discusses the
negligent acts of shipmates Garate and Asis, who had no employer-employee relation
with Captain Tolosa.

The pivotal question is whether the Labor Code has any relevance to the relief sought
by petitioner. From her paper, it is evident that the primary reliefs she seeks are as
follows: (a) loss of earning capacity denominated therein as "actual damages" or "lost

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income" and (b) blacklisting. The loss she claims does not refer to the actual earnings of
the deceased, but to his earning capacity based on a life expectancy of 65 years. This
amount is recoverable if the action is based on a quasi delict as provided for in Article
2206 of the Civil Code, but not in the Labor Code.

While it is true that labor arbiters and the NLRC have jurisdiction to award not only reliefs
provided by labor laws, but also damages governed by the Civil Code, these reliefs
must still he based on an action that has a reasonable causal connection with the
Labor Code, other labor statutes, or collective bargaining agreements. It must be
noted that a worker's loss of earning capacity and blacklisting are not to be equated
with wages, overtime compensation or separation pay, and other labor benefits that
are generally cognized in labor disputes. The loss of earning capacity is a relief or claim
resulting from a quasi delict or a similar cause within the realm of civil law. Claims for
damages under paragraph 4 of Article 217 must have a reasonable causal connection
with any of the claims provided for in the article in order to be cognizable by the labor
arbiter. Only if there is such a connection with the other claims can the claim for
damages be considered as arising from employer-employee relations." In the present
case, petitioner's claim for damages is not related to any other claim under Article 217,
other labor statutes, or collective bargaining agreements.

Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code,
which does not grant or specify a claim or relief. This provision is only a safety and
health standard under Book IV of the same Code. The enforcement of this labor
standard rests with the labor secretary. Thus, claims for an employer's violation thereof
are beyond the jurisdiction of the labor arbiter. In other words, petitioner cannot
enforce the labor standard provided for in Article 161 by suing for damages before the
labor arbiter.

It is not the NLRC but the regular courts that have jurisdiction over actions for damages,
in which the employer-employee relation is merely incidental, and in which the cause
of action proceeds from a different source of obligation such as a tort. Since petitioner's
claim for damages is predicated on a quasi delict or tort that has no reasonable causal
connection with any of the claims provided for in Article 217, other labor statutes, or
collective bargaining agreements, jurisdiction over the action lies with the regular
courts -- not with the NLRC or the labor arbiters.

AUSTRIA VS. NLRC;

312 SCRA 413

Facts:
Pastor Dionisio V. Austria worked with the SDA for twenty eight (28) years from 1963 to
1991.He held the position of district pastor until his services were terminated on 31
October 1991.

On various occasions from August up to October, 1991, petitioner received several

communications from Mr. Eufronio Ibesate, the treasurer of the Negros Mission asking

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him to admit accountability and responsibility for the church tithes and offerings
collected by his wife, Mrs. Thelma Austria, in his district which amounted to P15,078.10,
and to remit the same to the Negros Mission.

On 16 October 1991, at around 7:30 a.m., petitioner went to the office of Pastor Buhat,
the president of the Negros Mission. During said call, petitioner tried to persuade Pastor
Buhat to convene the Executive Committee for the purpose of settling the dispute
between him and the private respondent, Pastor David Rodrigo. The dispute between
Pastor Rodrigo and petitioner arose from an incident in which petitioner assisted his
friend, Danny Diamada, to collect from Pastor Rodrigo the unpaid balance for the
repair of the latter's motor vehicle which he failed to pay to Diamada. Due to the
assistance of petitioner in collecting Pastor Rodrigo's debt, the latter harbored ill-feelings
against petitioner. When news reached petitioner that Pastor Rodrigo was about to file
a complaint against him with the Negros Mission, he immediately proceeded to the
office of Pastor Buhat and asked the latter to convene the Executive Committee. Pastor
Buhat denied the request of petitioner since some committee members were out of
town and there was no quorum. Thereafter, the two exchanged heated arguments.
Petitioner then left the office of Pastor Buhat. While on his way out, petitioner overheard
Pastor Buhat saying, "Pastor daw inisog na ina iya (Pador you are talking tough)." Irked
by such remark, petitioner returned to the office of Pastor Buhat, and tried to overturn
the latter's table, though unsuccessfully, since it was heavy. Thereafter, petitioner
banged the attaché case of Pastor Buhat on the table, scattered the books in his
office, and threw the phone.

Thereafter, petitioner received a letter inviting him and his wife to attend the Executive
Committee meeting at the Negros Mission Conference Room on 21 October 1991, at
nine in the morning. To be discussed in the meeting were the non-remittance of church
collection and the events that transpired on 16 October 1991. Subsequently, petitioner
received a letter of dismissal citing misappropriation of denominational funds, willful
breach of trust, serious misconduct, gross and habitual neglect of duties, and
commission of an offense against the person of employer's duly authorized
representative, as grounds for the termination of his services.

Issues:
1. Whether or not the termination of the services of petitioner is an ecclesiastical
affair, and, as such, involves the separation of church and state and as such, the
Labor Arbiter/NLRC has no jurisdiction to try and decide the case
2. Whether or not the dismissal was valid
3. Whether or not there was breach of trust
4. Whether or not there was serious misconduct.

Held:
1. The principle of separation of church and state finds no application in this case.

An ecclesiastical affair is "one that concerns doctrine, creed, or form of worship of the
church, or the adoption and enforcement within a religious association of needful laws
and regulations for the government of the membership, and the power of excluding

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from such associations those deemed unworthy of membership. Based on this definition,
an ecclesiastical affair involves the relationship between the church and its members
and relate to matters of faith, religious doctrines, worship and governance of the
congregation. While the matter at hand relates to the church and its religious minister it
does not ipso facto give the case a religious significance. Simply stated, what is
involved here is the relationship of the church as an employer and the minister as an
employee. It is purely secular and has no relation whatsoever with the practice of faith,
worship or doctrines of the church.

Under the Labor Code, the provision which governs the dismissal of employees, is
comprehensive enough to include religious corporations, such as the SDA, in its
coverage. Article 278 of the Labor Code on post-employment states that "the provisions
of this Title shall apply to all establishments or undertakings, whether for profit or not."
Obviously, the cited article does not make any exception in favor of a religious
corporation. This is made more evident by the fact that the Rules Implementing the
Labor Code, particularly, Section 1, Rule 1, Book VI on the Termination of Employment
and Retirement, categorically includes religious institutions in the coverage of the law,
to wit:
Sec. 1. Coverage. — This Rule shall apply to all establishments and undertakings,
whether operated for profit or not, including educational, medical, charitable and
religious institutions and organizations, in cases of regular employment with the
exception of the Government and its political subdivisions including government-
owned or controlled corporations.

2. The issue being the legality of petitioner's dismissal, the same must be measured
against the requisites for a valid dismissal, namely: (a) the employee must be afforded
due process, i.e., he must be given an opportunity to be heard and to defend himself,
and; (b) the dismissal must be for a valid cause as provided in Article 282 of the Labor
Code. Without the concurrence of this twin requirements, the termination would, in the
eyes of the law, be illegal.

Before the services of an employee can be validly terminated, Article 277 (b) of the
Labor Code and Section 2, Rule XXIII, Book V of the Rules Implementing the Labor Code
further require the employer to furnish the employee with two (2) written notices, to wit:
(a) a written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to
explain his side; and, (b) a written notice of termination served on the employee
indicating that upon due consideration of all the circumstances, grounds have been
established to justify his termination.

The first notice, which may be considered as the proper charge, serves to apprise the
employee of the particular acts or omissions for which his dismissal is sought. The second
notice on the other hand seeks to inform the employee of the employer's decision to
dismiss him. This decision, however, must come only after the employee is given a
reasonable period from receipt of the first notice within which to answer the charge
and ample opportunity to be heard and defend himself with the assistance of a
representative, if he so desires. Private respondent failed to substantially comply with

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the above requirements. With regard to the first notice, the letter, dated 17 October
1991, which notified petitioner and his wife to attend the meeting on 21 October 1991,
cannot be construed as the written charge required by law. It never categorically
stated the particular acts or omissions on which petitioner's impending termination was
grounded. In fact, the letter never even mentioned that petitioner would be subject to
investigation. The letter merely mentioned that petitioner and his wife were invited to a
meeting wherein what would be discussed were the alleged unremitted church tithes
and the events that transpired on 16 October 1991. The alleged grounds for the
dismissal of petitioner from the service were only revealed to him when the actual letter
of dismissal was finally issued. For this reason, it cannot be said that petitioner was given
enough opportunity to properly prepare for his defense. While admittedly, private
respondents complied with the second requirement, the notice of termination, this does
not cure the initial defect of lack of the proper written charge required by law.

3. The validity of dismissal cannot be sustained based on the ground of breach of trust.
Private respondents allege that they have lost their confidence in petitioner for his
failure, despite demands, to remit the tithes and offerings amounting to P15,078.10,
which were collected in his district. Settled is the rule that under Article 282 (c) of the
Labor Code, the breach of trust must be willful. A breach is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse, as distinguished from
an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must rest on
substantial grounds and not on the employer's arbitrariness, whims, caprices or
suspicion; otherwise the employee would eternally remain at the mercy of the
employer.39 It should be genuine and not simulated. In fact, as admitted by their own
witness, Naomi Geniebla, petitioner remitted the amounts which he collected to the
Negros Mission for which corresponding receipts were issued to him. Thus, the
allegations of private respondents that petitioner breached their trust have no leg to
stand on.

4. No. and, as such, do not warrant petitioner's dismissal from the service.

Misconduct has been defined as improper or wrong conduct. It is the transgression of

some established and definite rule of action, a forbidden act, a dereliction of duty,
willful in character, and implies wrongful intent and not mere error in judgment.For
misconduct to be considered serious it must be of such grave and aggravated
character and not merely trivial or unimportant. Based on this standard, we believe that
the act of petitioner in banging the attaché case on the table, throwing the telephone
and scattering the books in the office of Pastor Buhat, although improper, cannot be
considered as grave enough to be considered as serious misconduct. After all, as
correctly observed by the Labor Arbiter, though petitioner committed damage to
property, he did not physically assault Pastor Buhat or any other pastor present during
the incident. In fact, the alleged offense committed upon the person of the employer's
representatives was never really established or proven by private respondents. Hence,
there is no basis for the allegation that petitioner's act constituted serious misconduct or
that the same was an offense against the person of the employer's duly authorized
representative. As such, the cited actuation of petitioner does not justify the ultimate
penalty of dismissal from employment.

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EVIOTA VS. COURT OF APPEALS;

407 SCRA 394

Facts:
Standard Chartered Bank and petitioner Eduardo G. Eviota executed a contract of
employment under which the petitioner was employed by the respondent bank as
Compensation and Benefits Manager, VP (M21). However, the petitioner abruptly
resigned from the respondent bank barely a month after his employment and rejoined
his former employer.

Standard Charter Bank filed with the Regional Trial court of Makati a complaint against
Eviota’s acts which it claimed constitute a clear violation of Articles 19, 20 and 21 of
Republic Act No. 386, as amended (the "Civil Code") and that Eviota not only violated
Presidential Decree No. 442, as amended (the Labor Code), wherein it states that an
employee may terminate without just cause the employer-employee relationship by
serving written notice on the employer at least one (1) month in advance But he also
violated, Section 13 of the his Employment Contract specifically provides that: "Your
[i.e., Eviota's] employment may be terminated by either party giving notice of at least
one month.

According to the bank Eviota is liable for damages. For in good faith the Bank has
complied with its part of the agreement, among them were the purchase of a CRV for
Evita’s use, making traveling arrangement for him to join a Conference in Singapore for
the bank, and furnishing him with a new office. Aside form Eviota’s sudden resignation
he also took a diskette with him containing and other papers and documents
containing confidential information on employee compensation and other Bank
matters

Although Eviota has already returned his singing bonus and he has paid for the
expenses of the CRV but he had induced the Bank to believe that he was committed
to fulfilling his obligations under the Employment Contract. As a result, the Bank incurred
expenses in carrying out its part of the contract. Thus the bank is asking not only for
actual damages, but also moral and exemplary damages.

The petitioner filed a motion to dismiss the complaint on the ground that the action for
damages of the respondent bank was within the exclusive jurisdiction of the Labor
Arbiter under paragraph 4, Article 217 of the Labor Code of the Philippines, as
amended, which states that the Labor Arbiter and Commission has jurisdiction over
claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations.

The petitioner averred that the respondent bank's claim for damages arose out of or
were in connection with his employer-employee relationship with the respondent bank
or some aspect or incident of such relationship.

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Issue:
Whether or not the Regional Trial Court has jurisdiction

Held:
The action was for breach of a contractual obligation, which is intrinsically a civil
dispute. While seemingly the cause of action arose from employer-employee relations,
the employer's claim for damages is grounded on "wanton failure and refusal" without
just cause to report to duty coupled with the averment that the employee "maliciously
and with bad faith" violated the terms and conditions of the contract to the damage of
the employer. Such averments removed the controversy from the coverage of the
Labor Code of the Philippines and brought it within the purview of the Civil Law.

Jurisprudence has evolved the rule that claims for damages under paragraph 4 of
Article 217, to be cognizable by the Labor Arbiter, must have a reasonable causal
connection with any of the claims provided for in that article. Only if there is such a
connection with the other claims can the claim for damages be considered as arising
from employer-employee relations.

Petitioner does not ask for any relief under the Labor Code of the Philippines. It seeks to
recover damages agreed upon in the contract as redress for private respondent's
breach of his contractual obligation to its "damage and prejudice". Such cause of
action is within the realm of Civil Law, and jurisdiction over the controversy belongs to
the regular courts. More so when we consider that the stipulation refers to the post-
employment relations of the parties.

In this case, the private respondent's first cause of action for damages is anchored on
the petitioner's employment of deceit and of making the private respondent believe
that he would fulfill his obligation under the employment contract with assiduousness
and earnestness. The petitioner volte face when, without the requisite thirty-day notice
under the contract and the Labor Code of the Philippines, as amended, he
abandoned his office and rejoined his former employer; thus, forcing the private
respondent to hire a replacement. The private respondent was left in a lurch, and its
corporate plans and program in jeopardy and disarray. Moreover, the petitioner took
off with the private respondent's computer diskette, papers and documents containing
confidential information on employee compensation and other bank matters. On its
second cause of action, the petitioner simply walked away from his employment with
the private respondent sans any written notice, to the prejudice of the private
respondent, its banking operations and the conduct of its business. Anent its third cause
of action, the petitioner made false and derogatory statements that the private
respondent reneged on its obligations under their contract of employment; thus,
depicting the private respondent as unworthy of trust.

It is evident that the causes of action of the private respondent against the petitioner
do not involve the provisions of the Labor Code of the Philippines and other labor laws
but the New Civil Code. Thus, the said causes of action are intrinsically civil. There is no
causal relationship between the causes of action of the private respondent's causes of
action against the petitioner and their employer-employee relationship. The fact that

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the private respondent was the erstwhile employer of the petitioner under an existing
employment contract before the latter abandoned his employment is merely
incidental. In fact, the petitioner had already been replaced by the private respondent
before the action was filed against the petitioner. The Petition is DENIED.

DYNAMIC SIGNMAKER OUTDOOR ADVERTISING SERVICES VS. POTONGAN;

G.R. No. 156589; June 27, 2005

Facts:
Respondent started working for Dynamic Signmaker as a Production Supervisor. In early
February 1996, the union of rank and file employees of petitioner corporation, declared
a strike on account of which petitioner corporation replaced all its supervisors and
designated, by letter memorandum, certain persons to take over the operations of the
corporation including Rufino Hornilla who took over respondent’s functions.

Potongan’s salary was withheld and was advised to take a leave of absence until
further notice and later received a letter from petitioner Hernandez, President/General
Manager of the corporation, “inviting” him to answer the following charges:
1.) that he entered the company fabrication shop where he was assigned as
supervisor and caused to create fire by secretly switching ‘on’ the idle plastic
oven and grounded the 2 electric machine welders while the ‘strike’ was on-
going outside the premises.
2.) that he allegedly on several occasions, urged strongly contractors led by Mr.
Luis Mimay, working on some left over jobs at the factory, to slow down work or
not to work at all in sympathy to the ‘strikers’ who are in the ranking files.

Potongan, through counsel, denied the charges against him and insisted that those
were only fabricated to justify his termination due to suspicions that he was a strike-
sympathizer. He later on filed a complaint of illegal dismissal against the corporation
contending that although he was not sent a formal notice of termination, he was
effectively dismissed from employment because after he was asked to take a leave of
absence, he was not instructed nor allowed to return to work, nor paid his salaries. On
the other hand, petitioners insisted that respondent was not illegally dismissed as the
“management [having] merely opted to reorganize.” The Labor Arbiter dismissed the
complaint on the ground that respondent’s cause of action was barred by prior
judgment that was rendered on June 24, 1996 by Labor Arbiter Nieves V. De Castro
which found respondent among those guilty of committing prohibited acts and whose
employment was consequently declared lost.

Respondent appealed to the NLRC and argued that the Labor Arbiter did not acquire
jurisdiction over his person in the above-said consolidated cases since service of
summons to the therein respondents President of the union, of which he is not a
member, cannot be considered proper service to him. Respondent thus concluded
that a void judgment such as one rendered without jurisdiction over the person of the
party maybe assailed at any time, either directly or collaterally.

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Issues:
1. Whether or not respondent was illegally or constructively dismissed.
2. Whether or not the Labor Arbiter in the prior consolidated cases was able to take
jurisdiction over the person of respondent.

Held:
1. A letter sent by petitioner to respondent confirmed that respondent’s employment
was terminated as early as February 21, 1996 (when he was instructed to go on
indefinite leave and his salary was since then withheld), not for any of the just or
authorized causes under the Labor Code, but on account of the filing against him by
petitioner corporation of a labor case and a criminal case.

Surely, this Court recognizes that management has wide latitude to regulate, according
to its own discretion and judgment, all aspects of employment, including the freedom
to transfer and reassign employees according to the requirements of its business. The
scope and limits of the exercise of management prerogatives, must, however, be
balanced against the security of tenure given to labor.

If exercised in good faith for the purpose of advancing business interests, not of
defeating or circumventing the rights of employees, the managerial prerogative to
transfer personnel from one area of operation to another is justified.

This Court finds it difficult, however, to attribute good faith on the part of petitioners
because reespondent was instructed to go on indefinite leave and was asked to return
to work only after more than three years during which period his salaries were withheld,
and only after the NLRC promulgated its decision.

2. Petitioners fault the appellate court for failure to recognize the final and executory
nature of the NLRC Decision rendered in the consolidated cases and for affirming the
nullification of said decision, with respect to respondent, which could be attacked only
by direct action.

Contrary to petitioners’ position, the validity of a judgment or order of a court or quasi-

judicial tribunal which has become final and executory may be attacked when the
records show that it lacked jurisdiction to render the judgment. For a judgment
rendered against one in a case where jurisdiction over his person was not acquired is
void, and a void judgment maybe assailed or impugned at any time either directly or
collaterally by means of a petition filed in the same or separate case, or by resisting
such judgment in any action or proceeding wherein it is invoked.

Petitioners in fact do not even dispute respondent’s claim that no summons was ever
issued and served on him either personally or through registered mail as required under
Rule III, Sections 3 and 6 of the Rules of Procedure of the NLRC, as amended by
Resolution No. 01-02, Series of 2002:

SEC. 3. Issuance of Summons. Within two (2) days from receipt of a case, the Labor
Arbiter shall issue the required summons, attaching thereto a copy of the

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complaint/petition and supporting documents, if any. The summons, together with a
copy of the complaint, shall specify the date, time and place of the conciliation and
mediation conference in two (2) settings.

SEC. 6. Service of Notices and Resolutions. a) Notices or summonses and copies of

orders, shall be served on the parties to the case personally by the bailiff or duly
authorized public officer within three (3) days from receipt thereof or by registered mail,
provided that in special circumstances, service of summons may be effected in
accordance with the pertinent provisions of the Rules of Court; xxx

Supplementary or applied by analogy to these provisions are the provisions and

prevailing jurisprudence in Civil Procedure. Where there is then no service of summons
on or a voluntary general appearance by the defendant, the court acquires no
jurisdiction to pronounce a judgment in the cause.

At all events, even if administrative tribunals exercising quasi-judicial powers are not
strictly bound by procedural requirements, they are still bound by law and equity to
observe the fundamental requirements of due process.

METROMEDIA TIMES CORP. VS. PASTORIN;

G.R. No. 154295; July 29, 2005

Facts:
Pastorin was employed by Metromedia Times Corporation (Petitioner) as a Field
Representative/Collector. His task entailed the periodic collection of receivables from
dealers of petitioner's newspapers. Prior to the subject incident, respondent claimed to
have received a termination letter dated 7 May 1998 from management terminating his
services for tardiness effective 16 June 1988. Respondent, member of Metro Media
Times Employees Union, was not dismissed due to the intervention of the labor union,
the collective bargaining agent in the company.

In May 1998, he obtained a loan from one of the dealers whom he dealt with, De
Manuel, amounting to P9,000.00. After paying P1,125.00, respondent reneged on the
balance of his loan. De Manuel wrote a letter to petitioner, and seeking assistance for
collection on the remainder of the loan. She claimed that when respondent became
remissed on his personal obligation, he stopped collecting periodically the outstanding
dues of De Manuel.

Petitioner sent a letter addressed to respondent, requiring an explanation for the

transaction with De Manuel, as well as for his failure to pay back the loan according to
the conditions agreed upon. In his reply letter, respondent admitted having incurred
the loan, but offered no definitive explanation for his failure to repay the same.

Petitioner, through a Memorandum, imposed the penalty of suspension on respondent

for 4 days for violating Company Policy and ordered his transfer to the Administration
Department. Respondent wrote a letter to petitioner, stating that he wanted to sign a

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transfer memo before assuming his new position. Later, he was handed the Payroll
Change Advice indicating his new assignment to the Traffic and Order Department of
Metromedia. Nonetheless, respondent stopped reporting for work. Respondent sent a
letter to petitioner communicating his refusal to accept the transfer. Respondent duly
filed a complaint for constructive dismissal, non-payment of back wages and other
money claims with the Labor Arbiter.

Issue:
Whether or not Metromedia is estopped from questioning the jurisdiction of the Labor
Arbiter over the subject matter of the case for the first time only in their appeal before
the NLRC.

Held:
Applying the general rule that estoppel does not confer jurisdiction, petitioner is not
estopped from assailing the jurisdiction of the labor arbiter before the NLRC on appeal.

Respondent relied solely on estoppel to oppose petitioner’s claim of lack of jurisdiction

on the part of the labor arbiter. He adduced no other legal ground in support of his
contention that the Labor Arbiter had jurisdiction over the case. Thus, his claim falls flat
in light of our pronouncement, and more so considering the NLRC’s correct observation
that jurisdiction over grievance Issue, such as the propriety of the reassignment of a
union member falls under the jurisdiction of the voluntary arbitrator.

YUSEN AIR & SEA SERVICE PHILS VS. VILLAMOR;

G.R. No. 154942; August 16, 2005

Facts:
Petitioner is engaged in the business of freight forwarding. As such, it is contracted by
clients to pick-up, unpack, consolidate, deliver, transport and distribute all kinds of
cargoes, acts as cargo or freight accommodation and enters into charter parties for
the carriage of all kinds of cargoes or freight. On August 16, 1993, petitioner
hired respondent as branch manager in its Cebu Office. Later, petitioner reclassified
respondent’s position to that of Division Manager, which position respondent held until
his resignation on February 1, 2002. Immediately after his resignation, respondent
started working for Aspac International, a corporation engaged in the same line of
business as that of petitioner. On February 11, 2002, in the Regional Trial Court at
Parañaque City, petitioner filed against respondent a complaint for injunction and
damages with prayer for a temporary restraining order. The complaint alleged that
[respondent] duly signed an undertaking to abide by the policies of the [Petitioner]
which includes the provision on the employees’ responsibility and obligation in cases of
conflict of interest, which reads:
No employee may engage in any business or undertaking that is directly or
indirectly in competition with that of the company and its affiliates or
engage directly or indirectly in any undertaking or activity prejudicial to the
interests of the company or to the performance of his/her job or work

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assignments. The same provision will be implemented for a period of two (2)
years from the date of an employee’s resignation, termination or separation from
the company.

That in clear violation and breach of his undertaking and agreement with the policies of
[petitioner], [respondent] joined Aspac International, within two years from [his] date of
resignation, whose business is directly in conflict with that of [petitioner].

Petitioner thus prayed for a judgment enjoining respondent from “further pursuing his
work at Aspac International”, and awarding it P2,000,000 as actual damages; P300,000
as exemplary damages; and another P300,000 as attorney’s fees. On March 4, 2002,
apparently not to be outdone, respondent filed against petitioner a case for illegal
dismissal before the National Labor Relations Commission. Meanwhile, instead of filing
his answer in the civil case, respondent filed a Motion to Dismiss, arguing that the RTC
has no jurisdiction over the subject matter of said case because an employer-
employee relationship is involved. On March 20, 2002, the trial court issued the herein
first assailed order dismissing petitioner’s complaint for lack of jurisdiction over the
subject matter thereof on the ground that the action was for damages arising from
employer-employee relations. Citing Article 217 of the Labor Code, the trial court ruled
that it is the labor arbiter which had jurisdiction over petitioner’s complaint. In time,
petitioner moved for a reconsideration but its motion was denied by the trial court in its
subsequent order of June 21, 2002.

Issue:
Whether or not the petitioner’s cause of action arises from employer-employee relations
even if the claim therein is based on a provision in its handbook.

Held:
No, the petitioner’s cause of action does not arises from employer-employee relations,
because, petitioner does not ask for any relief under the Labor Code of the
Philippines. It seeks to recover damages agreed upon in the contract as redress for
private respondent’s breach of his contractual obligation to its “damage and
prejudice”. Such cause of action is within the realm of Civil Law, and jurisdiction over
the controversy belongs to the regular courts. More so when we consider that the
stipulation refers to the post-employment relations of the parties.

While seemingly the cause of action arose from employer-employee relations, the
employer’s claim for damages is grounded on wanton failure and refusal without just
cause to report to duty coupled with the averment that the employee maliciously and
with bad faith violated the terms and conditions of the contract to the damage of the
employer. Such averments removed the controversy from the coverage of the Labor
Code of the Philippines and brought it within the purview of Civil Law.

Indeed, jurisprudence has evolved the rule that claims for damages under paragraph 4
of Article 217, to be cognizable by the Labor Arbiter, must have a reasonable causal
connection with any of the claims provided for in that article. Only if there is such a

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connection with the other claims can a claim for damages be considered as arising
from employer-employee relations.

Article 217, as amended by Section 9 of RA 6715, provides:

Art. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) Except as
otherwise provided under this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after
the submission of the case by the parties for decision without extension, even in
the absence of stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:
xxx xxx xxx
4. Claims for actual, moral, exemplary and other forms of damages arising from
the employer-employee relations;"
xxx xxx xxx

In San Miguel Corporation vs. National Labor Relations Commission, we had occasion to
construe Article 217, as amended by B.P. Blg. 227. Article 217 then provided that the
Labor Arbiter had jurisdiction over all money claims of workers, but the phrase ‘arising
from employer-employee relation’ was deleted. We ruled thus:

While paragraph 3 above refers to “all money claims of workers,” it is not necessary to
suppose that the entire universe of money claims that might be asserted by workers
against their employers has been absorbed into the original and exclusive jurisdiction of
Labor Arbiters. In the first place, paragraph 3 should be read not in isolation from but
rather within the context formed by paragraph 1 (relating to unfair labor practices),
paragraph 2 (relating to claims concerning terms and conditions of employment),
paragraph 4 (claims relating to household services, a particular species of employer-
employee relations), and paragraph 5 (relating to certain activities prohibited to
employees or employers). It is evident that there is a unifying element which runs
through paragraph 1 to 5 and that is, that they all refer to cases or disputes arising out
of or in connection with an employer-employee relationship. This is, in other words, a
situation where the rule of noscitur a sociis may be usefully invoked in clarifying the
scope of paragraph 3, and any other paragraph of Article 217 of the Labor Code, as
amended. We reach the above conclusion from an examination of the terms
themselves of Article 217, as last amended by B.P. Blg 227, and even though earlier
versions of Article 217 of the Labor Code expressly brought within the jurisdiction of the
Labor Arbiters and the NLRC “cases arising from employer-employee relations,” which
clause was not expressly carried over, in printer’s ink, in Article 217 as it exists today. For
it cannot be presumed that money claims of workers which do not arise out of or in
connection with their employer-employee relationship, and which would therefore fall
within the general jurisdiction of regular courts of justice, were intended by the
legislative authority to be taken away from the jurisdiction of the courts and lodged
with Labor Arbiters on an exclusive basis. The Court, therefore, believes and so holds
that the “money claims of workers” referred to in paragraph 3 of Article 217 embraces
money claims which arise out of or in connection with the employer-employee
relationship, or some aspect or incident of such relationship. Put a little differently, that
money claims of workers which now fall within the original and exclusive jurisdiction of

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Labor Arbiters are those money claims which have some reasonable causal connection
with the employer-employee relationship.

When, as here, the cause of action is based on a quasi-delict or tort, which has no
reasonable causal connection with any of the claims provided for in Article 217,
jurisdiction over the action is with the regular courts.

It is basic 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. If such were the rule, the question of
jurisdiction would depend almost entirely upon the defendant.

DUTY FREE PHILIPPINES VS. MOJICA;

G.R. No. 166365; September 30, 2005

Facts:
The Discipline Committee of Duty Free Philippines (DFP) on November 28, 2007 found
Stock Clerk Rossano A. Mojica guilty of Neglect of Duty by causing considerable
damage to or loss of materials, assets and property of DFP. Thus, Mojica was
considered forcibly resigned from the service with forfeiture of all benefits except his
salary and the monetary value of the accrued leave credits. He was formally informed
of his forced resignation on January 14, 1998. Thereupon, he filed a complaint for illegal
dismissal with prayer for reinstatement, payment of full back wages, damages, and
attorney’s fees, against DFP before the National Labor Relations Commission (NLRC).

The Labor Arbiter rendered a decision finding that Mojica was illegally dismissed. The
NLRC later reversed the ruling of the arbiter. The CA sustained the ruling of the arbiter.

Issue:
WON the Labor Arbiter and the NLRC had jurisdiction to decide the case

Held:
NO. Mojica is a civil service employee; therefore, jurisdiction is lodged not with the
NLRC, but with the Civil Service Commission.

DFP was created under Executive Order (EO) No. 46 on September 4, 1986 primarily to
augment the service facilities for tourists and to generate foreign exchange and
revenue for the government. In order for the government to exercise direct and
effective control and regulation over the tax and duty free shops, their establishment
and operation was vested in the Ministry, now Department of Tourism (DOT), through its
implementing arm, the Philippine Tourism Authority (PTA). All the net profits from the
merchandising operations of the shops accrued to the DOT.

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As provided under Presidential Decree (PD) No. 564, PTA is a corporate body attached
to the DOT. As an attached agency, the recruitment, transfer, promotion and dismissal
of all its personnel was governed by a merit system established in accordance with the
civil service rules. In fact, all PTA officials and employees are subject to the Civil Service
rules and regulations.

Accordingly, since DFP is under the exclusive authority of the PTA, it follows that its
officials and employees are likewise subject to the Civil Service rules and
regulations. Clearly then, Mojica’s recourse to the Labor Arbiter was not proper. He
should have followed the procedure laid down in DFP’s merit system and the Civil
Service rules and regulations.

In sum, the labor arbiter and the NLRC erred in taking cognizance of the complaint as
jurisdiction over the complaint for illegal dismissal is lodged with the Civil Service
Commission. The Court of Appeals likewise erred in sustaining the labor arbiter.

EASYCALL COMMUNICATION PHILS. VS. KING;

G.R. No. 145901; December 15, 2005

Facts:
Easycall Communications Phils., Inc. was a domestic corporation primarily engaged in
the business of message handling. Petitioner, through its general manager, Roberto B.
Malonzo, hired the services of respondent as assistant to the general manager which
became vice-president for nationwide expansion.

Malonzo reviewed the sales performance of respondent. He also scrutinized the status
of petitioner’s Nationwide Expansion Program (NEP) which was under respondent’s
responsibility. He found that respondent’s actual sales for the period October 1992–
March 1993 was 78% of his sales commitment and 70% of his sales target.

Malonzo also checked the frequency and duration of the provincial sales development
visits made by respondent for the same period to expansion areas under his jurisdiction.
He discovered that the latter spent around 40% of the total number of working days for
that period in the field.

Rockwell Gohu, petitioner’s deputy general manager, talked to respondent to discuss

his sales performance. In the course of the conversation, Gohu informed respondent
that Malonzo wanted his resignation. This prompted respondent to write a
memorandum to Malonzo. In his memorandum, he inquired whether Malonzo really
wanted him to resign. He emphasized that his work performance had yet to be
evaluated. He also stated that, based on the approved budget for fiscal year ending in
June 1993, he was within the budget and targets set forth by petitioner. He further
declared that he had no intention of resigning from his position.

Respondent received a notice of termination signed by Malonzo.

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Issue:
Whether the termination was valid or not.

Held:
While loss of confidence is a valid ground for dismissing an employee, it should not be
simulated. It must not be indiscriminately used as a shield by the employer against a
claim that the dismissal of an employee was arbitrary.

To be a valid ground for an employee’s dismissal, loss of trust and confidence must be
based on a willful breach and founded on clearly established facts. A breach is willful if
it is done intentionally, knowingly and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.
Thus, a willful breach cannot be a breach resulting from mere carelessness.

In this case, the labor arbiter’s finding, affirmed by the NLRC, was that the sales record
of respondent and the time he spent in the field were “clear indications of
complainant’s inefficiency and/or negligence.” Inefficiency implies negligence,
incompetence, ignorance and carelessness. Negligence is the want or lack of care
required by the circumstances.

The grounds cited by petitioner, i.e., respondent’s alleged poor sales performance and
the allegedly excessive time he spent in the field, were not sufficient to support a claim
of loss of confidence as a ground for dismissal.

Furthermore, the alleged loss of confidence was not founded on clearly established
facts. First, petitioner included the sales performance of respondent for the period
covering October 1992 to December 1992 in arriving at the conclusion that his sales
record was dismal. However, as the CA correctly pointed out, petitioner previously
recognized that respondent’s performance for that period “was not merely
satisfactory” but “more than extra-ordinary that it merited his promotion not only to the
position of assistant vice president, to which he was recommended by his supervisor,
but to the even higher position of vice president.” This self-contradictory position of
petitioner negates its claim of loss of confidence in repondent.
Moreover, the promotion of an employee negates the employer’s claim that it has lost
its trust and confidence in the employee. Hence, petitioner’s claim of loss of
confidence crumbles in the light of respondent’s promotion not only to assistant vice-
president but to the even higher position of vice- president.

Second, the sales record of respondent for the period October 1992–December 1992
was recognized as so exemplary that it merited his promotion. Later, however, this very
same record was suddenly deemed poor and dismal to justify loss of confidence. Thus,
petitioner interpreted one and the same sales record as proof of respondent’s
simultaneous efficiency and inefficiency. This could only mean that there was no
sufficient standard with which to measure the performance of respondent, an
indication of the arbitrariness of petitioner.

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Finally, during the hearing of this case before the labor arbiter, Malonzo stated that the
percentage of the time spent by respondent in his sales area was actually “not below
par.” This admission of petitioner’s general manager only proves all the more the lack of
sufficient standard for determining respondent’s performance.
The lack of just cause in respondent’s dismissal was aggravated by the absence of due
process.
The twin requirements of notice and hearing constitute the essential elements of due
process. The law requires the employer to furnish the employee sought to be dismissed
with two written notices before termination of employment can be legally effected: (1)
a written notice apprising the employee of the particular acts or omissions for which his
dismissal is sought in order to afford him an opportunity to be heard and to defend
himself with the assistance of counsel, if he desires, and (2) a subsequent notice
informing the employee of the employer’s decision to dismiss him. This procedure is
mandatory and its absence taints the dismissal with illegality.

In this case, respondent was served with one notice only ― the notice of his termination.
The series of dialogues between petitioner’s management and respondent was not
enough as it failed to show that the latter was apprised of the cause of his dismissal.
These dialogues or consultations could not validly substitute for the actual observance
of notice and hearing.

SAN MIGUEL FOODS INC. VS. SAN MIGUEL CORP EMPLOYEES UNION – PTGWO;
G.R. No. 168569; October 5, 2007

Facts:
San Miguel Corporation Employees Union – PTWGO (the Union), was the sole bargaining
agent of all the monthly paid employees of petitioner San Miguel Foods, Incorporated
(SMFI). On November 9, 1992, some employees of SMFI’s Finance Department, through
the Union represented by Edgar Moraleda, brought a grievance against Finance
Manager Gideon Montesa (Montesa), for “discrimination, favoritism, unfair labor
practices, not flexible [sic], harassment, promoting divisiveness and sectarianism,
etc.,”before SMFI Plant Operations Manager George Nava in accordance with Step 1
of the grievance machinery adopted in the Collective Bargaining Agreement (CBA)
forged by SMFI and the Union.

The Union sought the “1. review, evaluat[ion] & upgrad[ing of] all Finance staff and 2.
promot[ion of] G.Q. Montesa to other SMC affiliate[s] & subsidiaries.”

At the grievance meeting held on January 14, 1993, SMFI informed the Union that it
planned to address the grievance through a “work management review” which would
be completed by March 1993, hence, it asked the finance personnel to give it their
attention and cooperation. The “work management review” was not completed by
March 1993, however, prompting the Union to, on March 26, 1993, elevate the
grievance to Step 2。

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Almost nine months after the grievance meeting was held or on October 6, 1993, SMFI
rendered a “Decision on Step 1 Grievance” stating that it was still in the process of
completing the “work management review,”[4] hence, the Union’s requests could not
be granted.

The Union thereupon filed a complaint on October 20, 1993 before the National Labor
Relations Commission (NLRC), Arbitration Branch, against SMFI,[5] its President Amadeo
P. Veloso, and its Finance Manager Montesa for “unfair labor practice, [and] unjust
discrimination in matters of promotion . . . ” It prayed that SMFI et al. be ordered to
promote the therein named employees “with the corresponding pay increases or
adjustment including payment of salary differentials plus attorney’s fees[,] and to cease
and desist from committing the same unjust discrimination in matters of promotion.”

Instead of filing a position paper as required by the Labor Arbiter, SMFI et al. filed a
motion to dismiss, contending that the Issue raised in the complaint were grievance
Issue and, therefore, “should be resolved in the grievance machinery provided in [the]
collective bargaining agreements [sic] of the parties or in the mandated provision of
voluntary arbitration which is also provided in the CBA.”[9] The Union opposed the
motion to dismiss.

In its Position Paper, the Union specified acts of ULP of SMFI et al. under Article 248,
paragraphs (e) and (i) of the Labor Code[10] which Article reads:
Art. 248. Unfair labor practices of employers. – It shall be unlawful for an employer
to commit any of the following unfair labor practices:
xxxx
(e) To discriminate in regard to wages, hours of work, and other terms and
conditions of employment in order to encourage or discourage membership in
any labor organization. x x x
xxxx
(i) To violate a collective bargaining agreement.
xxxx

Held:
The jurisdiction of Labor Arbiters, enumerated in Article 217 of the Labor Code, includes
complaints for ULP.

As stated above, the Union, in its Position Paper, mentioned the particular acts of ULP
and the ultimate facts in support thereof.
1. large scale and wanton unjust discrimination in matters of promotion,
particularly upon the following members of complainant: Ellen Ventura, Julie
Geronimo, Ronnie Cruz, Rita Calasin, Romy de Peralta, Malou Alano, And E. M.
Moraleda, all assigned with the Finance Department or respondent SMFI.

2. gross and blatant violations by respondent SMFI of Section 5, Article III (Job
Security) and Section 4, Article VIII (Grievance Machinery) of the current
collective bargaining agreement (CBA) between complainant and respondent

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SMFI, which provisions of said CBA are hereunder quoted for easy reference.
(Emphasis and underscoring supplied)

On the questioned promotions, the Union did not allege that they were done to
encourage or discourage membership in a labor organization. In fact, those promoted
were members of the complaining Union. The promotions do not thus amount to ULP
under Article 248(e) of the Labor Code.

As for the alleged ULP committed under Article 248(i), for violation of a CBA, this Article
is qualified by Article 261 of the Labor Code, the pertinent portion of which latter Article
reads:
x x x violations of a Collective Bargaining Agreement, except those which are gross in
character, shall no longer be treated as unfair labor practice and shall be resolved as
grievances under the Collective Bargaining Agreement. For purposes of this article,
gross violations of Collective Bargaining Agreement shall mean flagrant and/or
malicious refusal to comply with the economic provisions of such agreement. (Emphasis
and underscoring supplied)

Silva v. NLRC instructs that for a ULP case to be cognizable by the Labor Arbiter, and
the NLRC to exercise its appellate jurisdiction, the allegations in the complaint should
show prima facie the concurrence of two things, namely: (1) gross violation of the CBA;
AND (2) the violation pertains to the economic provisions of the CBA.[17] (Emphasis
and underscoring supplied)

As reflected in the above-quoted allegations of the Union in its Position Paper, the Union
charges SMFI to have violated the grievance machinery provision in the CBA. The
grievance machinery provision in the CBA is not an economic provision, however,
hence, the second requirement for a Labor Arbiter to exercise jurisdiction of a ULP is not
present.

The Union likewise charges SMFI, however, to have violated the Job Security provision in
the CBA, specifically the seniority rule, in that SMFI “appointed less senior employees to
positions at its Finance Department, consequently intentionally by-passing more senior
employees who are deserving of said appointment.”

Article 4 of the Labor Code provides that “All doubts in the implementation and
interpretation of the provisions of this Code, including implementing rules and
regulations, shall be resolved in favor of labor.” Since the seniority rule in the promotion
of employees has a bearing on salary and benefits, it may, following a liberal
construction of Article 261 of the Labor Code, be considered an “economic provision”
of the CBA.

As above-stated, the Union charges SMFI to have promoted less senior employees, thus
bypassing others who were more senior and equally or more qualified. It may not be
seriously disputed that this charge is a gross or flagrant violation of the seniority rule
under the CBA, a ULP over which the Labor Arbiter has jurisdiction.

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SMFI, at all events, questions why the Court of Appeals came out with a finding that it
(SMFI) disregarded the seniority rule under the CBA when its petition before said court
merely raised a question of jurisdiction. The Court of Appeals having affirmed the NLRC
decision finding that the Labor Arbiter has jurisdiction over the Union’s complaint and
thus remanding it to the Labor Arbiter for continuation of proceedings thereon, the
appellate court’s said finding may be taken to have been made only for the purpose
of determining jurisdiction.

LEYTE IV ELECTRIC COOPERATIVE, INC. VS. LEYECO IV EMPLOYEES UNION-ALU;

G.R. No. 157745; October 19, 2007

Facts:
On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV
Employees Union-ALU (respondent) entered into a CBAS covering petitioner rank-and-
file employees, for a period of five (5) years effective January 1, 1998.

On June 7, 2000, respondent, through its Regional Vice-President, Vicente P. Casilan,

sent a letter to petitioner demanding holiday pay for all employees, as provided for in
the CBA.

On June 20, 2000, petitioner, through its legal counsel, sent a letter-reply to Casilan,
explaining that after perusing all available pay slips, it found that it had paid all
employees all the holiday pays enumerated in the CBA.

After exhausting the procedures of the grievance machinery, the parties agreed to
submit the Issue of the interpretation and implementation of Section 2, Article VIII of the
CBA on the payment of holiday pay, for arbitration of the National Conciliation and
Mediation Board (NCMB), Regional Office No. VIII in Tacloban City.[6] The parties were
required to submit their respective position papers, after which the dispute was
submitted for decision.

While admitting in its Position Paper[7] that the employees were paid all of the days of
the month even if there was no work, respondent alleged that it is not prevented from
making separate demands for the payment of regular holidays concomitant with the
provisions of the CBA, with its supporting documents consisting of a letter demanding
payment of holiday pay, petitioner's reply thereto and respondent's rejoinder, a
computation in the amount of P1,054,393.07 for the unpaid legal holidays, and several
pay slips.

Petitioner, on the other hand, in its Position Paper,[8] insisted payment of the holiday
pay in compliance with the CBA provisions, stating that payment was presumed since
the formula used in determining the daily rate of pay of the covered employees is Basic
Monthly Salary divided by 30 days or Basic Monthly Salary multiplied by 12 divided by
360 days, thus with said formula, the employees are already paid their regular and
special days, the days when no work is done, the 51 un-worked Sundays and the 51 un-
worked Saturdays.

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On March 1, 2001, Voluntary Arbitrator Antonio C. Lopez, Jr. rendered a Decision[9] in

favor of respondent, holding petitioner liable for payment of unpaid holidays from 1998
to 2000 in the sum of P1,054,393.07. He reasoned that petitioner miserably failed to
show that it complied with the CBA mandate that holiday pay be “reflected during any
payroll period of occurrence” since the payroll slips did not reflect any payment of the
paid holidays. He found unacceptable not only petitioner's presumption of payment of
holiday pay based on a formula used in determining and computing the daily rate of
each covered employee, but also petitioner's further submission that the rate of its
employees is not less than the statutory minimum wage multiplied by 365 days and
divided by twelve.

On April 11, 2001, petitioner filed a Motion for Reconsideration[10] but it was denied by
the Voluntary Arbitrator in a Resolution、dated June 17, 2002. Petitioner received said
Resolution on June 27, 2002.[12]

Thirty days later, or on July 27, 2002 petitioner filed a Petition for Certiorariin the CA,
ascribing grave abuse of discretion amounting to lack of jurisdiction to the Voluntary
Arbitrator: (a) for ignoring that in said company the divisor for computing the
applicable daily rate of rank-and-file employees is 360 days which already includes
payment of 13 un-worked regular holidays under Section 2, Article VIII of the CBA; and
(b) for holding the petitioner liable for the unpaid holidays just because the payroll slips
submitted as evidence did not show any payment for the regular holidays. In a
Resolution dated September 4, 2002, the CA dismissed outright petitioner's Petition for
Certiorari for adopting a wrong mode of appeal. It reasoned:

Considering that what is assailed in the present recourse is a Decision of a Voluntary

Arbitrator, the proper remedy is a petition for review under Rule 43 of the 1997 Rules of
Civil Procedure; hence, the present petition for certiorari under Rule 65 filed on August
15, 2002, should be rejected, as such a petition cannot be a substitute for a lost appeal.
And in this case, the period for appeal via a petition for review has already lapsed since
the petitioner received a copy of the Resolution denying its motion for reconsideration
on June 27, 2002, so that its last day to appeal lapsed on July 12, 2002.

Held:
It has long been settled in the landmark case Luzon Development Bank that a voluntary
arbitrator, whether acting solely or in a panel, enjoys in law the status of a quasi-judicial
agency; hence, his decisions and awards are appealable to the CA. This is so because
the awards of voluntary arbitrators become final and executory upon the lapse of the
period to appeal;[27] and since their awards determine the rights of parties, their
decisions have the same effect as judgments of a court. Therefore, the proper remedy
from an award of a voluntary arbitrator is a petition for review to the CA, following
Revised Administrative Circular No. 1-95, which provided for a uniform procedure for
appellate review of all adjudications of quasi-judicial entities, which is now embodied in
Section 1, Rule 43 of the 1997 Rules of Civil Procedure, which reads:

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SECTION 1. Scope. — This Rule shall apply to appeals from judgments or final
orders of the Court of Tax Appeals and from awards, judgments, final orders or
resolutions of or authorized by any quasi-judicial agency in the exercise of its
quasi-judicial functions. Among these agencies are the Civil Service Commission,
Central Board of Assessment Appeals, Securities and Exchange Commission,
Office of the President, Land Registration Authority, Social Security Commission,
Civil Aeronautics Board, Bureau of Patents, Trademarks and Technology Transfer,
National Electrification Administration, Energy Regulatory Board, National
Telecommunications Commission, Department of Agrarian Reform under
Republic Act No. 6657, Government Service Insurance System, Employees
Compensation Commission, Agricultural Inventions Board, Insurance Commission,
Philippine Atomic Energy Commission, Board of Investments, Construction
Industry Arbitration Commission, and voluntary arbitrators authorized by law.[28]
(Emphasis supplied)

Section 2, Rule 43 of the 1997 Rules of Civil Procedure which provides that:

SEC. 2. Cases not covered. - This Rule shall not apply to judgments or final orders
issued under the Labor Code of the Philippines.

It did not alter the Court's ruling in Luzon Development Bank. Section 2, Rule 42 of the
1997 Rules of Civil Procedure, is nothing more than a reiteration of the exception to the
exclusive appellate jurisdiction of the CA,[29] as provided for in Section 9, Batas
Pambansa Blg. 129,[30] as amended by Republic Act No. 7902:[31]

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders
or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards
or commissions, including the Securities and Exchange Commission, the Employees’
Compensation Commission and the Civil Service Commission, except those falling
within the appellate jurisdiction of the Supreme Court in accordance with the
Constitution, the Labor Code of the Philippines under Presidential Decree No. 442, as
amended, the provisions of this Act and of subparagraph (1) of the third paragraph
and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of
1948.

The Court took into account this exception in Luzon Development Bank but,
nevertheless, held that the decisions of voluntary arbitrators issued pursuant to the
Labor Code do not come within its ambit, thus:

x x x. The fact that [the voluntary arbitrator’s] functions and powers are provided
for in the Labor Code does not place him within the exceptions to said Sec. 9
since he is a quasi-judicial instrumentality as contemplated therein. It will be
noted that, although the Employees’ Compensation Commission is also provided
for in the Labor Code, Circular No. 1-91, which is the forerunner of the present
Revised Administrative Circular No. 1-95, laid down the procedure for the
appealability of its decisions to the Court of Appeals under the foregoing

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rationalization, and this was later adopted by Republic Act No. 7902 in
amending Sec. 9 of B.P. 129.

A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should
likewise be appealable to the Court of Appeals, in line with the procedure outlined in
Revised Administrative Circular No. 1-95, just like those of the quasi-judicial agencies,
boards and commissions enumerated therein.

This would be in furtherance of, and consistent with, the original purpose of Circular No.
1-91 to provide a uniform procedure for the appellate review of adjudications of all
quasi-judicial entities not expressly excepted from the coverage of Sec. 9 of B.P. 129 by
either the Constitution or another statute. Nor will it run counter to the legislative
intendment that decisions of the NLRC be reviewable directly by the Supreme Court
since, precisely, the cases within the adjudicative competence of the voluntary
arbitrator are excluded from the jurisdiction of the NLRC or the labor arbiter.[32]

This ruling has been repeatedly reiterated in subsequent cases[33] and continues to be
the controlling doctrine. Thus, the general rule is that the proper remedy from decisions
of voluntary arbitrators is a petition for review under Rule 43 of the Rules of Court.

Nonetheless, a special civil action for certiorari under Rule 65 of the Rules of Court is the
proper remedy for one who complains that the tribunal, board or officer exercising
judicial or quasi-judicial functions acted in total disregard of evidence material to or
decisive of the controversy.[34] As this Court elucidated in Garcia v. National Labor
Relations Commission[35] -

[I]n Ong v. People, we ruled that certiorari can be properly resorted to where the
factual findings complained of are not supported by the evidence on record. Earlier, in
Gutib v. Court of Appeals, we emphasized thus:

[I]t has been said that a wide breadth of discretion is granted a court of justice in
certiorari proceedings. The cases in which certiorari will issue cannot be defined,
because to do so would be to destroy its comprehensiveness and usefulness. So wide is
the discretion of the court that authority is not wanting to show that certiorari is more
discretionary than either prohibition or mandamus. In the exercise of our superintending
control over inferior courts, we are to be guided by all the circumstances of each
particular case “as the ends of justice may require.” So it is that the writ will be granted
where necessary to prevent a substantial wrong or to do substantial justice.

In addition, while the settled rule is that an independent action for certiorari may be
availed of only when there is no appeal or any plain, speedy and adequate remedy in
the ordinary course of law[37] and certiorari is not a substitute for the lapsed remedy of
appeal,[38] there are a few significant exceptions when the extraordinary remedy of
certiorari may be resorted to despite the availability of an appeal, namely: (a) when
public welfare and the advancement of public policy dictate; (b) when the broader
interests of justice so require; (c) when the writs issued are null; and (d) when the
questioned order amounts to an oppressive exercise of judicial authority.

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In this case, while the petition was filed on July 27, 2002,[40] 15 days after July 12, 2002,
the expiration of the 15-day reglementary period for filing an appeal under Rule 43, the
broader interests of justice warrant relaxation of the rules on procedure. Besides,
petitioner alleges that the Voluntary Arbitrator’s conclusions have no basis in fact and in
law; hence, the petition should not be dismissed on procedural grounds.

The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal
interpretation of the CBA provisions that the holiday pay be reflected in the payroll slips.
Such literal interpretation ignores the admission of respondent in its Position Paper[41]
that the employees were paid all the days of the month even if not worked. In light of
such admission, petitioner's submission of its 360 divisor in the computation of
employees’ salaries gains significance.

In this case, the employees are required to work only from Monday to Friday. Thus, the
minimum allowable divisor is 263, which is arrived at by deducting 51 un-worked
Sundays and 51 un-worked Saturdays from 365 days. Considering that petitioner used
the 360-day divisor, which is clearly above the minimum, indubitably, petitioner's
employees are being given their holiday pay.

Thus, the Voluntary Arbitrator should not have simply brushed aside petitioner's divisor
formula. In granting respondent's claim of non-payment of holiday pay, a “double
burden” was imposed upon petitioner because it was being made to pay twice for its
employees' holiday pay when payment thereof had already been included in the
computation of their monthly salaries. Moreover, it is absurd to grant respondent's claim
of non-payment when they in fact admitted that they were being paid all of the days
of the month even if not worked. By granting respondent's claim, the Voluntary
Arbitrator sanctioned unjust enrichment in favor of the respondent and caused unjust
financial burden to the petitioner. Obviously, the Court cannot allow this.

ATTY. GARCIA VS. EASTERN TELECOMMUNICATIONS PHILS., ET AL.;

G.R. No. 173115 & 173163-64; April 16, 2009

Facts:
Atty. Virgilio R. Garcia was the Vice President and Head of Business Support Services
and Human Resource Departments of the Eastern Telecommunications Philippines, Inc.
(ETPI). Atty. Garcia was placed under preventive suspension based on three complaints
for sexual harassment filed by Atty. Maria Larrie Alinsunurin, former manager of ETPIs
Office of the Legal Counsel; Ms. Emma Valeros-Cruz, Assistant Vice President of ETPI and
former secretary of Atty. Garcia; and Dr. Mercedita M. Macalintal, medical
retainer/company physician of ETPI. In response to the complaints, the Human
Resources Department constituted a Committee on Decorum to investigate the
complaints. By reason of said complaints, Atty. Garcia was placed in preventive
suspension. The committee conducted an investigation where Atty. Garcia was given
copies of affidavits of the witnesses against him and a chance to defend himself and to
submit affidavits of his witnesses. The Committee submitted a report which

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recommended his dismissal. In a letter dated 14 April 2000, Atty. Hizon advised Atty.
Garcia that his employment with ETPI was, per recommendation of the Committee,
terminated effective 16 April 2000.

The Labor Arbiter Reyes found the preventive suspension and subsequent dismissal of
Atty. Garcia illegal. On 21 March 2003, the NLRC rendered its decision in NLRC NCR CA
Case No. 028901-01 reversing the decision of Labor Arbiter Reyes and dismissing the
case for lack of jurisdiction. The decretal portion of the decision reads: The Commission
ruled that the dismissal of Atty. Garcia, being ETPIs Vice President, partook of the nature
of an intra-corporate dispute cognizable by Regional Trial Courts and not by Labor
Arbiters. It added that ETPI and Atty. Hizon were not barred by estoppel from
challenging the jurisdiction of the Labor Arbiter over the instant case.

Atty. Garcia moved for the reconsideration of the decision, which ETPI and Atty. Hizon
opposed.In a resolution dated 16 December 2003, the motion for reconsideration was
denied for lack of merit. On 3 April 2003, the NLRC made permanent the TRO it issued
pursuant to its ruling in NLRC NCR CA Case No. 028901-01, that since the Labor Arbiter
had no jurisdiction over the case, the decision of the Labor Arbiter dated 30 September
2002 was void. On 6 March 2004, the resolution dated 16 December 2003 became
final and executory. Consequently, on 14 June 2004, an entry of judgment was made
recording said resolution in the Book of Entries of Judgments.

The CA ruled that Atty. Garcia, being the Vice President for Business Support Services
and Human Resource Departments of ETPI, was a corporate officer at the time he was
removed. Being a corporate officer, his removal was a corporate act and/or an intra-
corporate controversy, the jurisdiction of which rested with the Securities and Exchange
Commission (now with the Regional Trial Court), and not the Labor Arbiter and the
NLRC. It added that ETPI and Atty. Hizon were not estopped from questioning the
jurisdiction of the Labor Arbiter before the NLRC on appeal, inasmuch as said issue was
seasonably raised by ETPI and Atty. Hizon in their reply memorandum before the Labor
Arbiter. On 18 April 2006, Atty. Garcia filed his Motion for Reconsideration. On 20 April
2006, ETPI and Atty. Hizon filed a Motion for Partial Reconsideration.The parties filed their
respective comments thereon. On 14 June 2006, the Court of Appeals denied the
motions for reconsideration.
Atty. Garcia is now before us via a Petition for Review, which he filed on 3 August
2006.The petition was docketed as G.R. No. 173115. On 8 August 2006, he filed an
Amended Petition for Review.He prays that the decision of the NLRC dated 21 March
2003 and its resolution dated 16 December 2003, and the decision of the Court of
Appeals dated 24 March 2006 and its resolution dated 14 June 2006, be reconsidered
and set aside and that the decision of the Labor Arbiter dated 30 September 2002 be
affirmed and reinstated.

Issue:
WHETHER THE QUESTION OF LEGALITY OR ILLEGALITY OF THE REMOVAL OR TERMINATION
OF EMPLOYMENT OF AN OFFICER OF A CORPORATION IS AN INTRA-CORPORATE
CONTROVERSY THAT FALLS UNDER THE ORIGINAL EXCLUSIVE JURISDICTION OF THE
REGIONAL TRIAL COURTS?

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Held:
The issue raised by Atty. Garcia whether the termination or removal of an officer of a
corporation is an intra-corporate controversy that falls under the original exclusive
jurisdiction of the regional trial courts is not novel. The Supreme Court, in a long line of
cases, has decreed that a corporate officers dismissal or removal is always a corporate
act and/or an intra-corporate controversy, over which the Securities and Exchange
Commission [SEC] (now the Regional Trial Court) has original and exclusive jurisdiction.

We have ruled that an intra-corporate controversy is one which pertains to any of the
following relationships: (1) between the corporation, partnership or association and the
public; (2) between the corporation, partnership or association and the State insofar as
the formers franchise, permit or license to operate is concerned; (3) between the
corporation, partnership or association and its stockholders, partners, members or
officers; and (4) among the stockholders, partners or associates themselves.In Lozon v.
National Labor Relations Commission, we declared that Presidential Decree No. 902-A
confers on the SEC original and exclusive jurisdiction to hear and decide controversies
and cases involving intra-corporate and partnership relations between or among the
corporation, officers and stockholders and partners, including their elections or
appointments x x x. c

Before a dismissal or removal could properly fall within the jurisdiction of the SEC, it has
to be first established that the person removed or dismissed was a corporate officer.
Corporate officers in the context of Presidential Decree No. 902-A are those officers of
the corporation who are given that character by the Corporation Code or by the
corporations by-laws.There are three specific officers whom a corporation must have
under Section 25 of the Corporation Code.These are the president, secretary and the
treasurer. The number of officers is not limited to these three. A corporation may have
such other officers as may be provided for by its by-laws like, but not limited to, the
vice-president, cashier, auditor or general manager. The number of corporate officers is
thus limited by law and by the corporations by-laws.

In the case before us, the by-laws of ETPI provide:

ARTICLE V
Officers。 Section 1. Number. The officers of the Company shall be a
Chairman of the Board, a President, one or more Vice-Presidents, a Treasurer, a
Secretary, an Assistant Secretary, and such other officers as may be from time to
time be elected or appointed by the Board of Directors. One person may hold
any two compatible offices.

Atty. Garcia tries to deny he is an officer of ETPI. Not being a corporate officer, he
argues that the Labor Arbiter has jurisdiction over the case. One of the corporate
officers provided for in the by-laws of ETPI is the Vice-President. It can be gathered from
Atty. Garcias complaint-affidavit that he was Vice President for Business Support
Services and Human Resource Departments of ETPI when his employment was

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terminated effective 16 April 2000. It is therefore clear from the by-laws and from Atty.
Garcia himself that he is a corporate officer. One who is included in the by-laws of a
corporation in its roster of corporate officers is an officer of said corporation and not a
mere employee.Being a corporate officer, his removal is deemed to be an intra-
corporate dispute cognizable by the SEC and not by the Labor Arbiter.

We agree with both the NLRC and the Court of Appeals that Atty. Garcias ouster as
Vice-President, who is a corporate officer of ETPI, partakes of the nature of an intra-
corporate controversy, jurisdiction over which is vested in the SEC (now the RTC). The
Labor Arbiter thus erred in assuming jurisdiction over the case filed by Atty. Garcia,
because he had no jurisdiction over the subject matter of the controversy.
Having ruled which body has jurisdiction over the instant case, we find it unnecessary,
due to mootness, to further discuss and rule on the Issue raised by ETPI and Atty. Hizon
regarding the NLRC order dated 23 August 2004 granting Atty. Garcias Motion to Set
Aside Finality of Judgment with Opposition to Motion to Discharge Appeal Bond, and its
resolution dated 10 January 2005 denying their motion for reconsideration thereon. The
decision of the Labor Arbiter, who had jurisdiction over the case, was properly dismissed
by the NLRC. Consequently, Supersedeas Bond No. JCL (15) 00823 SICI Bond No. 75069
dated 18 November 2002, posted by ETPI as a requirement for the filing of an appeal
before the NLRC, is ordered discharged.

HALAGUENA ET AL., VS. PHIL AIRLINES;

G.R. No. 172013; October 2, 2009

Facts:
Petitioners were employed as female flight attendants of respondent Philippine Airlines
(PAL) on different dates prior to November 22, 1996. They are members of the Flight
Attendants and Stewards Association of the Philippines (FASAP), a labor organization
certified as the sole and exclusive bargaining representative of the flight attendants,
flight stewards and pursers of respondent.

On July 11, 2001, respondent and FASAP entered into a Collective Bargaining
Agreement[3] incorporating the terms and conditions of their agreement for the years
2000 to 2005. Section 144, Part A of the PAL-FASAP CBA, provides that:

A. For the Cabin Attendants hired before 22 November 1996:

xxxx
3. Compulsory Retirement

Subject to the grooming standards provisions of this Agreement, compulsory retirement

shall be fifty-five (55) for females and sixty (60) for males. x x x.

Petitioners and several female cabin crews manifested that the aforementioned CBA
provision on compulsory retirement is discriminatory, and demanded for an equal
treatment with their male counterparts. Hence, they filed a case with the RTC.

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On August 9, 2004, the RTC issued an Order upholding its jurisdiction over the present
case. The RTC reasoned that:
In the instant case, the thrust of the Petition is Sec. 144 of the subject CBA which
is allegedly discriminatory as it discriminates against female flight attendants, in
violation of the Constitution, the Labor Code, and the CEDAW. The allegations in
the Petition do not make out a labor dispute arising from employer-employee
relationship as none is shown to exist. This case is not directed specifically against
respondent arising from any act of the latter, nor does it involve a claim against
the respondent. Rather, this case seeks a declaration of the nullity of the
questioned provision of the CBA, which is within the Court's competence, with
the allegations in the Petition constituting the bases for such relief sought.

Upon appeal, The CA rendered a Decision, dated August 31, 2005, granting the
respondent's petition, and ruled that the RTC is by us declared to have NO
JURISDICTION OVER THE CASE BELOW and, consequently, all the proceedings, orders
and processes it has so far issued therein are ANNULED and SET ASIDE.

Issue:
Whether the RTC has jurisdiction over the petitioners' action challenging the legality or
constitutionality of the provisions on the compulsory retirement age contained in the
CBA between respondent PAL and FASAP.

Held:
The petition is meritorious. Jurisdiction of the court is determined on the basis of the
material allegations of the complaint and the character of the relief prayed for
irrespective of whether plaintiff is entitled to such relief.

In the case at bar, the allegations in the petition for declaratory relief plainly show that
petitioners' cause of action is the annulment of Section 144, Part A of the PAL-FASAP
CBA.

From the petitioners' allegations and relief prayed for in its petition, it is clear that the
issue raised is whether Section 144, Part A of the PAL-FASAP CBA is unlawful and
unconstitutional. Here, the petitioners' primary relief in Civil Case No. 04-886 is the
annulment of Section 144, Part A of the PAL-FASAP CBA, which allegedly discriminates
against them for being female flight attendants. The subject of litigation is incapable of
pecuniary estimation, exclusively cognizable by the RTC, pursuant to Section 19 (1) of
Batas Pambansa Blg. 129, as amended. Being an ordinary civil action, the same is
beyond the jurisdiction of labor tribunals.

The said issue cannot be resolved solely by applying the Labor Code. Rather, it requires
the application of the Constitution, labor statutes, law on contracts and the Convention
on the Elimination of All Forms of Discrimination Against Women, and the power to
apply and interpret the constitution and CEDAW is within the jurisdiction of trial courts, a
court of general jurisdiction.

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In Georg Grotjahn GMBH & Co. v. Isnani, this Court held that not every dispute between
an employer and employee involves matters that only labor arbiters and the NLRC can
resolve in the exercise of their adjudicatory or quasi-judicial powers. The jurisdiction of
labor arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes
arising from an employer-employee relationship which can only be resolved by
reference to the Labor Code, other labor statutes, or their collective bargaining
agreement.

In Eviota v. Court of Appeals, Not every controversy or money claim by an employee

against the employer or vice-versa is within the exclusive jurisdiction of the labor arbiter.
Actions between employees and employer where the employer-employee relationship
is merely incidental and the cause of action precedes from a different source of
obligation is within the exclusive jurisdiction of the regular court. Here, the employer-
employee relationship between the parties is merely incidental and the cause of action
ultimately arose from different sources of obligation, i.e., the Constitution and CEDAW.

Thus, where the principal relief sought is to be resolved not by reference to the Labor
Code or other labor relations statute or a collective bargaining agreement but by the
general civil law, the jurisdiction over the dispute belongs to the regular courts of justice
and not to the labor arbiter and the NLRC. In such situations, 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. Clearly, such claims fall outside the area of competence or expertise ordinarily
ascribed to labor arbiters and the NLRC and the rationale for granting jurisdiction over
such claims to these agencies disappears.

If we divest the regular courts of jurisdiction over the case, then which tribunal or forum
shall determine the constitutionality or legality of the assailed CBA provision?

This Court holds that the grievance machinery and voluntary arbitrators do not have
the power to determine and settle the Issue at hand. They have no jurisdiction and
competence to decide constitutional Issue relative to the questioned compulsory
retirement age. Their exercise of jurisdiction is futile, as it is like vesting power to
someone who cannot wield it.

In Saura v. Saura, Jr., this Court emphasized the primacy of the regular court's judicial
power enshrined in the Constitution that is true that the trend is towards vesting
administrative bodies like the SEC with the power to adjudicate matters coming under
their particular specialization, to insure a more knowledgeable solution of the problems
submitted to them. This would also relieve the regular courts of a substantial number of
cases that would otherwise swell their already clogged dockets. But as expedient as
this policy may be, it should not deprive the courts of justice of their power to decide
ordinary cases in accordance with the general laws that do not require any particular
expertise or training to interpret and apply. Otherwise, the creeping take-over by the
administrative agencies of the judicial power vested in the courts would render the
judiciary virtually impotent in the discharge of the duties assigned to it by the
Constitution.

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To be sure, in Rivera v. Espiritu, after Philippine Airlines (PAL) and PAL Employees
Association (PALEA) entered into an agreement, which includes the provision to
suspend the PAL-PALEA CBA for 10 years, several employees questioned its validity via a
petition for certiorari directly to the Supreme Court. They said that the suspension was
unconstitutional and contrary to public policy. Petitioners submit that the suspension
was inordinately long, way beyond the maximum statutory life of 5 years for a CBA
provided for in Article 253-A of the Labor Code. By agreeing to a 10-year suspension,
PALEA, in effect, abdicated the workers' constitutional right to bargain for another CBA
at the mandated time. In that case, this Court denied the petition for certiorari, ruling
that there is available to petitioners a plain, speedy, and adequate remedy in the
ordinary course of law. The Court said that while the petition was denominated as one
for certiorari and prohibition, its object was actually the nullification of the PAL-PALEA
agreement. As such, petitioners' proper remedy is an ordinary civil action for annulment
of contract, an action which properly falls under the jurisdiction of the regional trial
courts.

The trial court in this case is not asked to interpret Section 144, Part A of the PAL-FASAP
CBA. Interpretation, as defined in Black's Law Dictionary, is the art of or process of
discovering and ascertaining the meaning of a statute, will, contract, or other written
document. The provision regarding the compulsory retirement of flight attendants is not
ambiguous and does not require interpretation. Neither is there any question regarding
the implementation of the subject CBA provision, because the manner of implementing
the same is clear in itself. The only controversy lies in its intrinsic validity.
The rule is settled that pure questions of fact may not be the proper subject of an
appeal by certiorari under Rule 45 of the Revised Rules of Court. This mode of appeal is
generally limited only to questions of law which must be distinctly set forth in the
petition. The Supreme Court is not a trier of facts.

The question as to whether said Section 114, Part A of the PAL-FASAP CBA is
discriminatory or not is a question of fact. A full-blown trial is necessary, which jurisdiction
to hear the same is properly lodged with the the RTC. Therefore, a remand of this case
to the RTC for the proper determination of the merits of the petition for declaratory relief
is just and proper

OKOL VS. SLIMMER’S WORLD INTERNATIONAL ET AL.;

G.R. No. 160146; December 11, 2009

Facts:
Slimmers World International employed Leslie Okol as a management trainee on 15
June 1992. She rose up the ranks to become Head Office Manager and then Director
and Vice President from 1996 until her dismissal on 22 September 1999. Prior to Okol’s
dismissal, Slimmers World preventively suspended Okol because the seizure by the
Bureau of Customs of equipments belonging to or consigned to Slimmers World. The
shipment of the equipment was placed under the names of Okol for being
undervalued. Okol filed her written explanation, however, Slimmers World found it to be

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unsatisfactory. Through a letter dated 22 September 1999 signed by its president
Ronald Joseph Moy, Slimmers World terminated Okol’s employment.

Okol filed a complaint with the Arbitration branch of the NLRC against Slimmers World,
Behavior Modifications, Inc. and Moy (collectively called respondents) for illegal
suspension, illegal dismissal, unpaid commissions, damages and attorney’s fees, with
prayer for reinstatement and payment of backwages. Respondents asserted that the
NLRC had no jurisdiction over the subject matter of the complaint.The labor arbiter
granted the motion to dismiss. The labor arbiter ruled that Okol was the vice-president
of Slimmers World at the time of her dismissal. Since it involved a corporate officer, the
dispute was an intra-corporate controversy falling outside the jurisdiction of the
Arbitration branch.

Okol filed an appeal with the NLRC, which reversed and set aside the labor arbiter’s
order. Respondents contended that the relief prayed for was confined only to the
question of jurisdiction. The NLRC denied the motion for lack of merit. The appellate
court set aside the NLRC’s Resolution and affirmed the labor arbiter’s Order. It ruled
that the case, being an intra-corporate dispute, falls within the jurisdiction of the regular
courts pursuant to Republic Act No. 8799 and that the NLRC had acted without
jurisdiction in giving due course to the complaint and deprived respondents of their
right to due process in deciding the case on the merits.

Issue:
Whether or not the NLRC has jurisdiction over the illegal dismissal case filed by petitioner
(whether or not the petitioner was an employee or a corporate officer of Slimmers
World)

Held:
The petition lacks merit. Petitioner insists that the Court of Appeals erred in ruling that
she was a corporate officer and that the case is an intra-corporate dispute falling within
the jurisdiction of the regular courts. Petitioner asserts that even as vice-president, the
work that she performed conforms to that of an employee rather than a corporate
officer. Mere title or designation in a corporation will not, by itself, determine the
existence of an employer-employee relationship. It is the “four-fold” test, namely (1) the
power to hire, (2) the payment of wages, (3) the power to dismiss, and (4) the power to
control, which must be applied.

Petitioner enumerated the instances that she was under the power and control of Moy,
Slimmers World’s president: (1) petitioner received salary evidenced by pay slips, (2)
Moy deducted Medicare and SSS benefits from petitioner’s salary, and (3) petitioner
was dismissed from employment not through a board resolution but by virtue of a letter
from Moy. Thus, having shown that an employer-employee relationship exists, the
jurisdiction to hear and decide the case is vested with the labor arbiter and the NLRC.

Respondents maintain that petitioner was a corporate officer at the time of her
dismissal from Slimmers World as supported by the General Information Sheet and
Director’s Affidavit attesting that petitioner was an officer. Also, the factors cited by

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petitioner that she was a mere employee do not prove that she was not an officer of
Slimmers World. Even the alleged absence of any resolution of the Board of Directors
approving petitioner’s termination does not constitute proof that petitioner was not an
officer. Respondents assert that petitioner was not only an officer but also a stockholder
and director; which facts provide further basis that petitioner’s separation from Slimmers
World does not come under the NLRC’s jurisdiction.

The issue is whether petitioner was an employee or a corporate officer of Slimmers

World. Section 25 of the Corporation Code enumerates corporate officers as the
president, secretary, treasurer and such other officers as may be provided for in the by-
laws. In Tabang v. NLRC, we held that an “office” is created by the charter of the
corporation and the officer is elected by the directors or stockholders. On the other
hand, an “employee” usually occupies no office and generally is employed not by
action of the directors or stockholders but by the managing officer of the corporation
who also determines the compensation to be paid to such employee.

The respondents, in their motion to dismiss filed before the labor arbiter, questioned the
jurisdiction of the NLRC in taking cognizance of petitioner’s complaint. In the motion,
respondents attached the General Information Sheet (GIS), Minutes of the meeting of
the Board of Directors and Secretary’s Certificate, and the Amended By-Lawsof
Slimmers World as submitted to the SEC to show that petitioner was a corporate officer
whose rights do not fall within the NLRC’s jurisdiction. The GIS and minutes of the
meeting of the board of directors indicated that petitioner was a member of the board
of directors, holding one subscribed share of the capital stock, and an elected
corporate officer.

Petitioner was a director and officer of Slimmers World. The charges of illegal
suspension, illegal dismissal, unpaid commissions, reinstatement and back wages
imputed by petitioner against respondents fall squarely within the ambit of intra-
corporate disputes. A corporate officer’s dismissal is always a corporate act, or an
intra-corporate controversy which arises between a stockholder and a
corporation. The question of remuneration involving a stockholder and officer, not a
mere employee, is not a simple labor problem but a matter that comes within the area
of corporate affairs and management and is a corporate controversy in contemplation
of the Corporation Code.

Prior to its amendment, Section 5(c) PD 902-A provided that intra-corporate disputes fall
within the jurisdiction of the Securities and Exchange Commission (SEC). However,
Subsection 5.2, Section 5 of Republic Act No. 8799, which took effect on 8 August 2000,
transferred to regional trial courts the SEC’s jurisdiction over all cases listed in Section 5
of PD 902-A:

5.2. The Commission’s jurisdiction over all cases enumerated under Section 5 of
Presidential Decree No. 902-A is hereby transferred to the Courts of general
jurisdiction or the appropriate Regional Trial Court. x x x

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Jurisdiction over the subject matter is conferred by law. The determination of the rights
of a director and corporate officer dismissed from his employment as well as the
corresponding liability of a corporation, if any, is an intra-corporate dispute subject to
the jurisdiction of the regular courts. Thus, the appellate court correctly ruled that it is
not the NLRC but the regular courts which have jurisdiction over the present case.

HUGO ET AL. VS. LIGHT RAIL TRANSIT AUTHORITY;

G.R. No. 181866; March 18, 2010

Facts:
Respondent Light Rail Transit Authority (LRTA), a government-owned and controlled
corporation, constructed a light rail transit system which traverses from Baclaran in
Parañaque City to Monumento in Kalookan City, Metro Manila pursuant to its mandate
under its charter.

To effectively carry out its mandate, LRTA entered into a ten-year Agreement for the
Management and Operation of the Metro Manila Light Rail Transit System (the
Agreement) from June 8, 1984 until June 8, 1994 with Metro Transit Organization, Inc.
(METRO). One of the stipulations in the Agreement was:
“METRO shall be free to employ such employees and officers as it shall deem necessary
in order to carry out the requirements of the Agreement. Such employees and officers
shall be the employees of METRO and not of LRTA. METRO shall prepare a
compensation schedule for the salaries and fringe benefits of its personnel”
METRO thus hired its own employees including herein petitioners-members of the Pinag-
isang Lakas ng Manggagawa sa METRO, Inc.-National Federation of Labor, otherwise
known as PIGLAS-METRO, INC.-NFL-KMU (the Union), the certified exclusive collective
bargaining representative of METRO’s rank-and-file employees.

LRTA later purchased the shares of stocks of METRO via Deed of Sale of June 9, 1989.
The two entities, however, continued with their distinct and separate juridical
personalities such that when the ten-year Agreement expired on June 8, 1994, they
renewed the same. On July 25, 2000, on account of a deadlock in the negotiation for
the forging of a new collective bargaining agreement between METRO and the Union,
petitioners filed a Notice of Strike before the National Conciliation and Mediation
Board, National Capital Region (NCR). On even date, the Union went on strike,
completely paralyzing the operations of the light rail transit system.

Then Secretary of Labor Bienvenido E. Laguesma assumed jurisdiction over the conflict
and directed the striking employees including herein petitioners to immediately return
to work and METRO to accept them back under the same terms and conditions of
employment prevailing prior to the strike.
By LRTA’s claim, the striking employees including petitioners defied the return-to-work
order. Contradicting such claim, petitioners alleged that upon learning of the order,
they attempted to comply with it but the security guards of METRO barred them from
entering their workplace for security reasons, the latter being afraid that they (the

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striking employees) might sabotage the vital machineries and equipment of the light rail
transit system.

When the Agreement expired on July 31, 2000, LRTA did not renew it. It instead took
over the management and operations of the light rail transit system, hiring new
personnel for the purpose. METRO thus considered the employment of all its personnel
terminated effective September 30, 2000. Petitioners filed a complaint for illegal
dismissal and unfair labor practice with prayer for reinstatement and damages against
METRO and LRTA before the NCR Arbitration Branch, National Labor Relations
Commission (NLRC).

In impleading LRTA in their complaint, petitioners alleged that the "non-renewal of the
[Agreement] is but an ingenious, albeit unlawful, scheme carried out by the
respondents to get rid of personnel they perceived as activists and troublemakers, thus,
terminating the complainants without any just or lawful cause."
LRTA filed a motion to dismiss the complaint on the ground that the Labor Arbiter and
the NLRC have no jurisdiction over it, for, by petitioners’ own admission, there was no
employer-employee relationship between it and petitioners.

Issue:
Whether or not Labor Arbiter and the NLRC have jurisdiction over LRTA?

Held:
The Labor Arbiter and the NLRC do not have jurisdiction over LRTA. Petitioners
themselves admitted in their complaint that LRTA "is a government agency organized
and existing pursuant to an original charter (Executive Order No. 603)," and that they
are employees of METRO.

Light Rail Transit Authority v. Venus, Jr., which has a similar factual backdrop, holds that
LRTA, being a government-owned or controlled corporation created by an original
charter, is beyond the reach of the Department of Labor and Employment which has
jurisdiction over workers in the private sector, viz:

. . . [E]mployees of petitioner METRO cannot be considered as employees of petitioner

LRTA. The employees hired by METRO are covered by the Labor Code and are under
the jurisdiction of the Department of Labor and Employment, whereas the employees
of petitioner LRTA, a government-owned and controlled corporation with original
charter, are covered by civil service rules. Herein private respondent workers cannot
have the best of two worlds, e.g., be considered government employees of petitioner
LRTA, yet allowed to strike as private employees under our labor laws.

In sum, petitioner LRTA cannot be held liable to the employees of petitioner METRO.

MATLING INDUSTRIAL AND COMMERCIAL CORPORATION ET. AL. VS. COROS;

G.R. No. 157802; October 13, 2010

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Facts:
After his dismissal by Matling as its Vice President for Finance and Administration, the
respondent filed on August 10, 2000 a complaint for illegal suspension and illegal
dismissal against Matling and some of its corporate officers (petitioners) in the NLRC,
Sub-Regional Arbitration Branch XII, Iligan City.

The petitioners moved to dismiss the complaint, raising the ground, among others, that
the complaint pertained to the jurisdiction of the Securities and Exchange Commission
(SEC) due to the controversy being intra-corporate inasmuch as the respondent was a
member of Matling’s Board of Directors aside from being its Vice-President for Finance
and Administration prior to his termination.

The petitioners contend that the position of Vice President for Finance and
Administration was a corporate office, having been created by Matling’s President
pursuant to By-Law No. V, as amended

In justification, they cite Tabang v. National Labor Relations Commission, which held
that "other offices are sometimes created by the charter or by-laws of a corporation, or
the board of directors may be empowered under the by-laws of a corporation to
create additional officers as may be necessary."

The respondent counters that Matling’s By-Laws did not list his position as Vice President
for Finance and Administration as one of the corporate offices; that Matling’s By-Law
No. III listed only four corporate officers, namely: President, Executive Vice President,
Secretary, and Treasurer; that the corporate offices contemplated in the phrase "and
such other officers as may be provided for in the by-laws" found in Section 25 of the
Corporation Code should be clearly and expressly stated in the By-Laws;

Issue:
Whether the respondent was a corporate officer of Matling or not. That whether the LA
or the RTC had jurisdiction over his complaint for illegal dismissal.

Held:
As a rule, the illegal dismissal of an officer or other employee of a private employer is
properly cognizable by the LA. This is pursuant to Article 217 (a) 2 of the Labor Code, as
amended, which provides as follows:
Article 217. Jurisdiction of the Labor Arbiters and the Commission. - (a) Except as
otherwise provided under this Code, the Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide, within thirty (30) calendar days after the submission of
the case by the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers, whether agricultural or
non-agricultural:
2. Termination disputes;
Where the complaint for illegal dismissal concerns a corporate officer, however, the
controversy falls under the jurisdiction of the Securities and Exchange Commission (SEC),
because the controversy arises out of intra-corporate or partnership relations between

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and among stockholders, members, or associates, or between any or all of them and
the corporation, partnership, or association of which they are stockholders, members, or
associates, respectively; and between such corporation, partnership, or association
and the State insofar as the controversy concerns their individual franchise or right to
exist as such entity; or because the controversy involves the election or appointment of
a director, trustee, officer, or manager of such corporation, partnership, or
association.14 Such controversy, among others, is known as an intra-corporate dispute.

Effective on August 8, 2000, upon the passage of Republic Act No. 8799,15 otherwise
known as The Securities Regulation Code, the SEC’s jurisdiction over all intra-corporate
disputes was transferred to the RTC, pursuant to Section 5.2 of RA No. 8799.

Issue:
Whether or not the respondent is a corporate officer

Held:
We agree with respondent. Section 25 of the Corporation Code provides:

Section 25. Corporate officers, quorum.--Immediately after their election, the directors
of a corporation must formally organize by the election of a president, who shall be a
director, a treasurer who may or may not be a director, a secretary who shall be a
resident and citizen of the Philippines, and such other officers as may be provided for in
the by-laws. Any two (2) or more positions may be held concurrently by the same
person, except that no one shall act as president and secretary or as president and
treasurer at the same time.

Conformably with Section 25, a position must be expressly mentioned in the By-Laws in
order to be considered as a corporate office. Thus, the creation of an office pursuant to
or under a By-Law enabling provision is not enough to make a position a corporate
office. Guerrea v. Lezama, the first ruling on the matter, held that the only officers of a
corporation were those given that character either by the Corporation Code or by the
By-Laws; the rest of the corporate officers could be considered only as employees or
subordinate officials.

Thus, it was held in Easycall Communications Phils., Inc. v. King:

An "office" is created by the charter of the corporation and the officer is elected by the
directors or stockholders. On the other hand, an employee occupies no office and
generally is employed not by the action of the directors or stockholders but by the
managing officer of the corporation who also determines the compensation to be paid
to such employee.

In this case, respondent was appointed vice president for nationwide expansion by
Malonzo, petitioner’'s general manager, not by the board of directors of petitioner. It
was also Malonzo who determined the compensation package of respondent. Thus,
respondent was an employee, not a "corporate officer." The CA was therefore correct
in ruling that jurisdiction over the case was properly with the NLRC, not the SEC (now the
RTC).

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This interpretation is the correct application of Section 25 of the Corporation Code,

which plainly states that the corporate officers are the President, Secretary, Treasurer
and such other officers as may be provided for in the By-Laws. Accordingly, the
corporate officers in the context of PD No. 902-A are exclusively those who are given
that character either by the Corporation Code or by the corporation’s By-Laws.

Thus, pursuant to the above provision (Section 25 of the Corporation Code), whoever
are the corporate officers enumerated in the by-laws are the exclusive Officers of the
corporation and the Board has no power to create other Offices without amending first
the corporate By-laws. However, the Board may create appointive positions other than
the positions of corporate Officers, but the persons occupying such positions are not
considered as corporate officers within the meaning of Section 25 of the Corporation
Code and are not empowered to exercise the functions of the corporate Officers,
except those functions lawfully delegated to them. Their functions and duties are to be
determined by the Board of Directors/Trustees.

In Nacpil v. Intercontinental Broadcasting Corporation, which may be the more

appropriate ruling, the position subject of the controversy was not expressly mentioned
in the By-Laws, but was created pursuant to a By-Law enabling provision authorizing the
Board of Directors to create other offices that the Board of Directors might see fit to
create. The Court held there that the position was a corporate office, relying on
the obiter dictum in Tabang.

MANILA ELECTRIC COMPANY ET. AL. VS. ROSARIO GOPEZ LIM;

G.R. No. 184769; October 5, 2010

Facts:
Rosario G. Lim (respondent), also known as Cherry Lim, is an administrative clerk at the
Manila Electric Company (MERALCO). On June 4, 2008, an anonymous letter was
posted at the door of the Metering Office of the Administration building of MERALCO
Plaridel, Bulacan Sector, at which respondent is assigned, denouncing respondent

By Memorandum dated July 4, 2008, petitioner Alexander Deyto, Head of MERALCO’s

Human Resource Staffing, directed the transfer of respondent to MERALCO’s Alabang
Sector in Muntinlupa as "A/F OTMS Clerk," effective July 18, 2008 in light of the receipt of
"… reports that there were accusations and threats directed against [her] from
unknown individuals and which could possibly compromise [her] safety and security."

Respondent addressed to petitioner Ruben A. Sapitula, Vice-President and Head of

MERALCO’s Human Resource Administration, appealed her transfer and requested for
a dialogue so she could voice her concerns and misgivings on the matter, claiming that
the "punitive" nature of the transfer amounted to a denial of due process. No response
to her request having been received, respondent filed a petition for the issuance of a
writ of habeas data against petitioners before the Regional Trial Court (RTC) of Bulacan.

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By respondent’s allegation, petitioners’ unlawful act and omission consisting of their
continued failure and refusalto provide her with details or information about the
alleged report which MERALCO purportedly receivedconcerning threats to her safety
and security amount to a violation of her right to privacy in life, liberty and
security, correctible by habeas data. Respondent thus prayed for the issuance of a writ
commanding petitioners to file a written return containing the following:

a) a full disclosure of the data or information about respondent in relation to the report
purportedly received by petitioners on the alleged threat to her safety and security; the
nature of such data and the purpose for its collection;
b) the measures taken by petitioners to ensure the confidentiality of such data or
information; and
c) the currency and accuracy of such data or information obtained.

Additionally, respondent prayed for the issuance of a Temporary Restraining Order

(TRO) enjoining petitioners from effecting her transfer to the MERALCO Alabang Sector.

Maintaining that the RTC has no jurisdiction over what they contend is clearly a labor
dispute, petitioners argue that "although ingeniously crafted as a petition for habeas
data, respondent is essentially questioning the transfer of her place of work by her
employer" and the terms and conditions of her employment which arise from an
employer-employee relationship over which the NLRC and the Labor Arbiters under
Article 217 of the Labor Code have jurisdiction.

Issue:
Whether or not RTC has jurisdiction

Held:
No. Section 1. Habeas Data. – The writ of habeas data is a remedy available to any
person whose right to privacy in life, liberty or security is violated or threatened by an
unlawful act or omission of a public official or employee or of a private individual or
entity engaged in the gathering, collecting or storing of data or information regarding
the person, family, home and correspondence of the aggrieved party.
Castillo v. Cruz underscores the emphasis laid down in Tapuz v. del Rosario that the writs
of amparo and habeas data will NOT issue to protect purely property or commercial
concerns nor when the grounds invoked in support of the petitions therefor are vague
or doubtful. Employment constitutes a property right under the context of the due
process clause of the Constitution. It is evident that respondent’s reservations on the
real reasons for her transfer - a legitimate concern respecting the terms and conditions
of one’s employment - are what prompted her to adopt the extraordinary remedy of
habeas data. Jurisdiction over such concerns is inarguably lodged by law with the
NLRC and the Labor Arbiters.

In another vein, there is no showing from the facts presented that petitioners committed
any unjustifiable or unlawful violation of respondent’s right to privacy vis-a-vis the right
to life, liberty or security. To argue that petitioners’ refusal to disclose the contents of

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reports allegedly received on the threats to respondent’s safety amounts to a violation
of her right to privacy is at best speculative.

HONGKONG AND SHANGHAI BANKING CORP. VS. SPS. BROQUEZA;

G.R. No. 178610; November 17, 2010

Facts:
Sps. Broqueza are employees of Hongkong and Shanghai Banking Corporation (HSBC).
They are also members of respondent Hongkong Shanghai Banking Corporation, Ltd.
Staff Retirement Plan (HSBCL-SRP, plaintiff below). The HSBCL-SRP is a retirement plan
established by HSBC through its Board of Trustees for the benefit of the employees.

Petitioner [Editha] Broqueza obtained a car loan in the amount of Php175,000.00. On

December 12, 1991, she again applied and was granted an appliance loan in the
amount of Php24,000.00. On the other hand, petitioner Gerong applied and was
granted an emergency loan in the amount of Php35,780.00. These loans are paid
through automatic salary deduction.

A labor dispute arose between HSBC and its employees. Majority of HSBC’s employees
were terminated, among whom are petitioners Editha Broqueza and Fe Gerong. The
employees then filed an illegal dismissal case before the National Labor Relations
Commission (NLRC) against HSBC. The legality or illegality of such termination is now
pending before the supreme Court in CA G.R. CV No. 56797, entitled Hongkong
Shanghai Banking Corp. Employees Union, et al. vs. National Labor Relations
Commission, et al.
Because of their dismissal, petitioners were not able to pay the monthly amortizations of
their respective loans. Thus, respondent HSBCL-SRP considered the accounts of
petitioners delinquent. Demands to pay the respective obligations were made upon
petitioners, but they failed to pay HSBCL-SRP, acting through its Board of Trustees and
represented by Alejandro L. Custodio, filed Civil Case No. 52400 against the spouses
Broqueza on 31 July 1996. On 19 September 1996, HSBCL-SRP filed Civil Case No. 52911
against Gerong. Both suits were civil actions for recovery and collection of sums of
money.

Held:
The RTC is correct in ruling that since the Promissory Notes do not contain a period,
HSBCL-SRP has the right to demand immediate payment.

Article 1179 of the Civil Code applies. The spouses Broqueza’s obligation to pay HSBCL-
SRP is a pure obligation. The fact that HSBCL-SRP was content with the prior monthly
check-off from Editha Broqueza’s salary is of no moment. Once Editha Broqueza
defaulted in her monthly payment, HSBCL-SRP made a demand to enforce a pure
obligation.
In their Answer, the spouses Broqueza admitted that prior to Editha Broqueza’s dismissal
from HSBC in December 1993, she "religiously paid the loan amortizations, which HSBC
collected through payroll check-off."16 A definite amount is paid to HSBCL-SRP on a

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specific date. Editha Broqueza authorized HSBCL-SRP to make deductions from her
payroll until her loans are fully paid. Editha Broqueza, however, defaulted in her monthly
loan payment due to her dismissal. Despite the spouses Broqueza’s protestations, the
payroll deduction is merely a convenient mode of payment and not the sole source of
payment for the loans. HSBCL-SRP never agreed that the loans will be paid only through
salary deductions. Neither did HSBCL-SRP agree that if Editha Broqueza ceases to be an
employee of HSBC, her obligation to pay the loans will be suspended. HSBCL-SRP can
immediately demand payment of the loans at anytime because the obligation to pay
has no period. Moreover, the spouses Broqueza have already incurred in default in
paying the monthly installments.
Finally, the enforcement of a loan agreement involves "debtor-creditor relations
founded on contract and does not in any way concern employee relations. As such it
should be enforced through a separate civil action in the regular courts and not before
the Labor Arbiter."

REAL VS. SANGU PHILS, INC. ET. AL;

G.R. No. 168757; January 19, 2011

Facts:
Petitioner Renato Real was the Manager of respondent corporation Sangu Philippines,
Inc., a corporation engaged in the business of providing manpower for general
services, like janitors, janitresses and other maintenance personnel, to various clients. In
2001, petitioner, together with 29 others, filed their respective Complaints for illegal
dismissal against the latter and respondent Kiichi Abe, the corporation’s Vice-President
and General Manager.

With regard to petitioner, he was removed from his position as Manager through Board
Resolution 2001-03 adopted by respondent corporation Board of Directors. Petitioner
complained that he was neither notified of the Board Meeting during which said board
resolution was passed nor formally charged with any infraction. He just received from
respondents a letter dated March 26, 2001 stating that he has been terminated from
service effective March 25, 2001 for the following reasons: (1) continuous absences at
his post at Ogino Philippines Inc. for several months which was detrimental to the
corporation’s operation; (2) loss of trust and confidence; and, (3) to cut down
operational expenses to reduce further losses being experienced by respondent
corporation.

Respondents raised as one of the Issue the lack of jurisdiction of the Labor Arbiter over
petitioner’s complaint. Respondents claimed that petitioner is both a stockholder and a
corporate officer of respondent corporation, hence, his action against respondents is
an intra-corporate controversy over which the Labor Arbiter has no jurisdiction.

Petitioner continues to insist that he is not a corporate officer. He argues that a

corporate officer is one who holds an elective position as provided in the Articles of
Incorporation or one who is appointed to such other positions by the Board of Directors
as specifically authorized by its By-Laws.

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He believes that his action against the respondents does not arise from intra-corporate
relations but rather from employer-employee relations. This, according to him, was even
impliedly recognized by respondents as shown by the earlier quoted portion of the
termination letter they sent to him.

Issue:
Whether petitioner’s complaint for illegal dismissal constitutes an intra-corporate
controversy and thus, beyond the jurisdiction of the Labor Arbiter.

Held:
Two-tier test in determining the existence of intra-corporate controversy

It is worthy to note, however, that before the promulgation of the Tabang case, the
Court provided in Mainland Construction Co., Inc. v. Movilla a "better policy" in
determining which between the Securities and Exchange Commission (SEC) and the
Labor Arbiter has jurisdiction over termination disputes, or similarly, whether they are
intra-corporate or not

The fact that the parties involved in the controversy are all stockholders or that the
parties involved are the stockholders and the corporation does not necessarily place
the dispute within the ambit of the jurisdiction of the SEC (now the Regional Trial
Court). The better policy to be followed in determining jurisdiction over a case should
be to consider concurrent factors such as the status or relationship of the parties or the
nature of the question that is subject of their controversy. In the absence of any one of
these factors, the SEC will not have jurisdiction. Furthermore, it does not necessarily
follow that every conflict between the corporation and its stockholders would involve
such corporate matters as only SEC (now the Regional Trial Court) can resolve in the
exercise of its adjudicatory or quasi-judicial powers

And, while Tabang was promulgated later than Mainland Construction Co., Inc., the
"better policy" enunciated in the latter appears to have developed into a standard
approach in classifying what constitutes an intra-corporate controversy. This is
explained lengthily in Reyes v. Regional Trial Court of Makati,

Intra-Corporate Controversy
A review of relevant jurisprudence shows a development in the Court’s approach in
classifying what constitutes an intra-corporate controversy. Initially, the main
consideration in determining whether a dispute constitutes an intra-corporate
controversy was limited to a consideration of the intra-corporate relationship existing
between or among the parties. The types of relationships embraced under Section 5(b)
x x x were as follows:
a) between the corporation, partnership or association and the public;
b) between the corporation, partnership or association and its stockholders, partners,
members or officers;
c) between the corporation, partnership or association and the State as far as its
franchise, permit or license to operate is concerned; and
d) among the stockholders, partners or associates themselves.

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The existence of any of the above intra-corporate relations was sufficient to confer
jurisdiction to the SEC (now the RTC), regardless of the subject matter of the dispute. This
came to be known as the relationship test.

However, in the 1984 case of DMRC Enterprises v. Esta del Sol Mountain Reserve,
Inc., the Court introduced the nature of the controversy test. We declared in this case
that it is not the mere existence of an intra-corporate relationship that gives rise to an
intra-corporate controversy; to rely on the relationship test alone will divest the regular
courts of their jurisdiction for the sole reason that the dispute involves a corporation, its
directors, officers, or stockholders. We saw that there is no legal sense in disregarding or
minimizing the value of the nature of the transactions which gives rise to the dispute.

Under the nature of the controversy test, the incidents of that relationship must also be
considered for the purpose of ascertaining whether the controversy itself is intra-
corporate. The controversy must not only be rooted in the existence of an intra-
corporate relationship, but must as well pertain to the enforcement of the parties’
correlative rights and obligations under the Corporation Code and the internal and
intra-corporate regulatory rules of the corporation. If the relationship and its incidents
are merely incidental to the controversy or if there will still be conflict even if the
relationship does not exist, then no intra-corporate controversy exists.

The Court then combined the two tests and declared that jurisdiction should be
determined by considering not only the status or relationship of the parties, but also the
nature of the question under controversy. This two-tier test was adopted in the recent
case of Speed Distribution Inc. v. Court of Appeals:
‘To determine whether a case involves an intra-corporate controversy, and is to be
heard and decided by the branches of the RTC specifically designated by the Court to
try and decide such cases, two elements must concur: (a) the status or relationship of
the parties, and (2) the nature of the question that is the subject of their controversy.

The first element requires that the controversy must arise out of intra-corporate or
partnership relations between any or all of the parties and the corporation, partnership,
or association of which they are not stockholders, members or associates, between any
or all of them and the corporation, partnership or association of which they are
stockholders, members or associates, respectively; and between such corporation,
partnership, or association and the State insofar as it concerns the individual franchises.
The second element requires that the dispute among the parties be intrinsically
connected with the regulation of the corporation. If the nature of the controversy
involves matters that are purely civil in character, necessarily, the case does not involve
an intra-corporate controversy.’

Guided by this recent jurisprudence, we thus find no merit in respondents’ contention

that the fact alone that petitioner is a stockholder and director of respondent
corporation automatically classifies this case as an intra-corporate controversy. To
reiterate, not all conflicts between the stockholders and the corporation are classified

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as intra-corporate. There are other factors to consider in determining whether the
dispute involves corporate matters as to consider them as intra-corporate controversies.

Corporate officers’ in the context of Presidential Decree No. 902-A are those officers of
the corporation who are given that character by the Corporation Code or by the
corporation’s by-laws. There are three specific officers whom a corporation must have
under Section 25 of the Corporation Code. These are the president, secretary and the
treasurer. The number of officers is not limited to these three. A corporation may have
such other officers as may be provided for by its by-laws like, but not limited to, the
vice-president, cashier, auditor or general manager. The number of corporate officers is
thus limited by law and by the corporation’s by-laws.
With the elements of intra-corporate controversy being absent in this case, we thus hold
that petitioner’s complaint for illegal dismissal against respondents is not intra-
corporate. Rather, it is a termination dispute and, consequently, falls under the
jurisdiction of the Labor Arbiter pursuant to Section 2173 of the Labor Code.

PORTILLO VS. RUDOLF LIETZ, INC. ET AL.;

G.R. No. 196539; October 10, 2012

Facts:
Marietta Portillo was hired by Rudolf Lietz, Inc.. After ten years of service, she was
promoted to Sales Representative. In this regard, Portillo signed a letter agreement
containing a "Goodwill Clause” which provides that on the termination of his
employment by act of either him or respondent, and for a period of three (3) years
thereafter, she shall not engage directly or indirectly as employee, manager, proprietor,
or solicitor for himself or others in a similar or competitive business or the same character
of work which he was employed by Lietz, Inc. to do and perform. Should she breach
such clause, she shall pay as liquidated damages the amount of 100% of her gross
compensation over the last 12 months, it being agreed that this sum is reasonable and
just.

Three years thereafter, Portillo resigned from Rudolf Lietz, Inc., and subsequently, they
learned that Portillo had been hired by Ed Keller Philippines, Limited to head its Pharma
Raw Material Department. Ed Keller Limited is purportedly a direct competitor of Lietz,
Inc.

Meanwhile, Portillo's demands from the respondents for the payment of her remaining
salaries and commissions went unheeded. Respondents gave Portillo the run around, on
the pretext that her salaries and commissions were still being computed.

It was then that Portillo filed a complaint with NLRC for non-payment of 1 1/2 months'
salary, two (2) months' commission, 13th month pay, plus moral, exemplary and actual
damages and attorney's fees.
Lietz, Inc. admitted liability for Portillo's money claims. However, Lietz, Inc. raised the
defense of legal compensation that Portillo's money claims should be offset against her
liability to Lietz, Inc. for liquidated damages for Portillo's alleged breach of the "Goodwill

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Clause" in the employment contract when she became employed with Ed Keller
Philippines, Limited.

The Labor Arbiter Daniel J. Cajilig granted Portillo's complaint ordering respondents
Rudolf Lietz, Inc. to pay complainant Marietta N. Portillo the amount representing her
salary and commissions, including 13th month pay.

On appeal by respondents, the NLRC, through its Second Division, affirmed the ruling of
Labor Arbiter. On motion for reconsideration, the NLRC stood pat on its ruling.

Expectedly, respondents filed a petition for certiorari before the Court of Appeals,
alleging grave abuse of discretion in the labor tribunals' rulings. CA denied the
respondents petition but modified its previous decision on respondents motion for
reconsideration allowing the legal compensation or set-off invoked by the respondents.

Issue:
Whether or not, Portillo's money claims for unpaid salaries may be offset against
respondents' claim for liquidated damages?

Held:
No. It cannot be offset.

Paragraph 4 of Article 217 of the Labor Code to wit:

Art. 217. Jurisdiction of Labor Arbiters and the Commission. — (a) Except as
otherwise provided under this code, the Arbiters shall have original and exclusive
jurisdiction to hear and decide, within thirty (30) calendar days after the
submission of the case by the parties for decision without extension, even in the
absence of stenographic notes, the following case involving all workers, whether
agricultural or non-agricultural:
xxx xxx xxx
4.Claims for actual, moral, exemplary and other forms of damages arising from
the employer-employee relations;

The Court of Appeals was convinced that the claim for liquidated damages emanates
from the "Goodwill Clause” of the employment contract and, therefore, is a claim for
damages arising from the employer-employee relations.
But, as early as Singapore Airlines Limited v. Paño, it has already been established that
not all disputes between an employer and his employee(s) fall within the jurisdiction of
the labor tribunals.
In the case at bar, there is no causal connection between the petitioner employees'
claim for unpaid wages and the respondent employers' claim for damages for the
alleged "Goodwill Clause" violation. Portillo's claim for unpaid salaries did not have
anything to do with her alleged violation of the employment contract as, in fact, her
separation from employment is not "rooted" in the alleged contractual violation. She
resigned from her employment. She was not dismissed. The alleged contractual

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violation did not arise during the existence of the employer-employee relationship. It
was a post-employment matter, a post-employment violation.
The cause of action is based on a quasi-delict or tort, which has no reasonable causal
connection with any of the claims provided for in Article 217, jurisdiction over the action
is with the regular courts. As it is, petitioner does not ask for any relief under the Labor
Code, rather, merely seeks to recover damages based on the parties' contract of
employment as redress for respondent's breach thereof. Such cause of action is within
the realm of Civil Law, and jurisdiction over the controversy belongs to the regular
courts. More so must this be in the present case, what with the reality that the stipulation
refers to the post-employment relations of the parties. Thus, the original decision of the
appellate court, the right ruling, should not have been reconsidered.

ACE NAVIGATION CO., INC. ET AL. VS. FERNANDEZ;

G.R. No. 197309; October 10, 2012

Facts:
Seaman Teodorico Fernandez, assisted by his wife, Glenita Fernandez, filed with the
NLRC a complaint for disability benefits, with prayer for moral and exemplary damages,
plus attorney's fees, against Ace Navigation Co., Inc., Vela International Marine Ltd.,
and/or Rodolfo Pamintuan.

The petitioners moved to dismiss the complaint, contending that the labor arbiter had
no jurisdiction over the dispute. They argued that exclusive original jurisdiction is with the
voluntary arbitrator or panel of voluntary arbitrators, pursuant to Section 29 of the POEA
Standard Employment Contract (POEA-SEC), since the parties are covered by the
AMOSUP-TCC or AMOSUP-VELA collective bargaining agreement (CBA). Under Section
14 of the CBA, a dispute between a seafarer and the company shall be settled through
the grievance machinery and mandatory voluntary arbitration. Fernandez opposed the
motion. He argued that inasmuch as his complaint involves a money claim, original and
exclusive jurisdiction over the case is vested with the labor arbiter.

Issue:
Whether or not, the labor arbiter has the original and exclusive jurisdiction over
Fernandez's disability claim under Section 10 of R.A. No. 8042?

Held:
No. It is not within the original and exclusive jurisdiction of the Labor Arbiter but rather
with the voluntary arbitrators.

The POEA-SEC, which governs the employment of Filipino seafarers, provides that in
cases of claims and disputes arising from this employment, the parties covered by a
collective bargaining agreement shall submit the claim or dispute to the original and
exclusive jurisdiction of the voluntary arbitrator or panel of voluntary arbitrators.

The voluntary arbitrator or panel of voluntary arbitrators has original and exclusive
jurisdiction over Fernandez's disability claim. There is no dispute that the claim arose out

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of Fernandez's employment with the petitioners and that their relationship is covered by
a CBA — the AMOSUP/TCC or the AMOSUP-VELA CBA. The CBA provides for a
grievance procedure for the resolution of grievances or disputes which occur during
the employment relationship and, like the grievance machinery created under Article
261 of the Labor Code, it is a two-tiered mechanism, with voluntary arbitration as the
last step.

What might have caused the CA to miss the clear intent of the parties in prescribing a
grievance procedure in their CBA is, as the petitioners' have intimated, the use of the
auxiliary verb "may" in Article 14.7 (a) of the CBA which, to reiterate, provides that "[i]f
by reason of the nature of the Dispute, the parties are unable to amicably settle the
dispute, either party may refer the case to a MANDATORY ARBITRATION COMMITTEE."

It is reasonable to conclude that it viewed as optional the referral of a dispute to the

mandatory arbitration committee when the parties are unable to amicably settle the
dispute.
It bears stressing at this point that we are upholding the jurisdiction of the voluntary
arbitrator or panel of voluntary arbitrators over the present dispute, not only because of
the clear language of the parties' CBA on the matter; more importantly, we so uphold
the voluntary arbitrator's jurisdiction, in recognition of the State's express preference for
voluntary modes of dispute settlement, such as conciliation and voluntary arbitration as
expressed in the Constitution, the law and the rules.
It is settled that when the parties have validly agreed on a procedure for resolving
grievances and to submit a dispute to voluntary arbitration then that procedure should
be strictly observed.

COSARE VS. BROADCOM ASIA, INC.

GR No. 201298; February 5, 2014

Facts:
Cosare was employed as a salesman by Broadcom. Several years later, he was named
as an incorporator of the said company having been assigned 100 shares of stocks. He
was also promoted to the position of Assistant Vice President for Sales (AVP for Sales)

Cosare accused his immediate superior (Alex Abiog) for committing some irregularities
in his office. Instead of acting the accusation thrown against Abiog, it was Cosare who
was asked by the employer to tender his resignation and offered him financial
assistance. Cosare refused. He was charged of serious misconduct and willful breach of
trust, and according to the employer (Broadcom) it was him (Cosare) who committed
some irregularities and anomalies in his office. In line with that, Cosare was suspended
and precluded from entering the work premises.

A complaint was filed for illegal dismissal was filed against Broadcom before the Labor
Arbiter. The latter moved for the dismissal of the case on the ground that Cosare was a
corporate officer which means that the controversy is an intra-corporate dispute that
falls within the jurisdiction of the RTC.

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Issue:
Whether or not the controversy is an intra-corporate dispute which would be beyond
the jurisdiction of the Labor Arbiter.

Held:
The LA had the original jurisdiction over the complaint for illegal dismissal because
Cosare, although an officer of Broadcom for being its AVP for Sales, was not a
"corporate officer" as the term is defined by law. “‘Corporate officers’ in the context of
Presidential Decree No. 902-A are those officers of the corporation who are given that
character by the Corporation Code or by the corporation’s by-laws. There are three
specific officers whom a corporation must have under Section 25 of the Corporation
Code. These are the president, secretary and the treasurer. The number of officers is not
limited to these three. A corporation may have such other officers as may be provided
for by its by-laws like, but not limited to, the vice-president, cashier, auditor or general
manager. The number of corporate officers is thus limited by law and by the
corporation’s by-laws."

It has been held that an "office" is created by the charter of the corporation and the
officer is elected by the directors and stockholders. On the other hand, an "employee"
usually occupies no office and generally is employed not by action of the directors or
stockholders but by the managing officer of the corporation who also determines the
compensation to be paid to such employee.

Nowhere in the Broadcom’s by-laws that an AVP for Sales is a corporate officer neither
is there any indication that Cosare was appointed by the Board of Directors. Broadcom
failed to sufficiently establish that the position of AVP for Sales was created by virtue of
an act of Broadcom’s board, and that Cosare was specifically elected or appointed to
such position by the directors.

Hence, in line with the above findings, the said controversy falls within the jurisdiction of
the Labor Arbiter and not with the RTC.

MATLING INDUSTRIAL AND COMMERCIAL CORP ET AL., VS. COROS,

GR No. 157802

Facts:
Coros as Vice President for Finance and Administration filed a complaint against
Matling Industrial for illegal dismissal before the Labor Arbiter.

Matling Industrial moved for dismissal of the complaint on the ground that the
controversy is an intra-corporate dispute. Matling contended that aside of being a VP
for Finance and Administration, Coros is also a Board of Director and a stockholder of
Matling Industry. The latter relied on a court ruling that “if the controversy pertains
between the stockholder and the corporation such matter is considered as an intra-
corporate dispute”

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Issues:
1. Whether or not Coros is a corporate officer
2. Whether or not Coros’ status as a stockholder converted the controversy into an
intra-
corporate dispute

Held:
Section 25 of the Corporation Code plainly states that the corporate officers are the
President, Secretary and Treasurer and such other officers as may be provided for in the
by-laws. The corporate officers in the context of PD # 902 are exclusively those who are
given that character under the Corporation Code or by the Corporation’s by-laws.
Additionally, in order to create a corporate office, the appointment of which is
exclusively vested in the Board of Directors.

Coros’ position was not expressly provided in the Matling’s Constitution and by-laws. In
fact, it was the President of the corporation who designated him as VP for Finance and
Administration contrary to the above ruling that an officer to be considered as a
corporate officer, he must be appointed and elected by the Board of Directors.

The mere fact that Coros is a stockholder such controversy will not necessarily convert it
into an intra-corporate dispute. Applying the controversy and relationship test, in order
to determine whether the conflict is intra-corporate or not two factors must
concurrently determine, to wit: a.) the status and the relationship of the parties; and b.)
the nature of the question that is the subject of their controversy.

In this case, he was terminated by reason of his obligations as a VP for Finance and
Administration and not as a stockholder. The said controversy is not an intra-corporate
dispute. It would be different if such termination was due to his being a stockholder.

Hence, jurisdiction lies within the Labor Arbiter.

Amecos vs Lopez

FACTS:
Petitioner Amecos Innovations, Inc. (Amecos) is a corporation duly incorporated under
Philippine laws engaged in the business of selling assorted products created by its
President and herein co-petitioner, Antonio F. Mateo (Mateo). Social Security System
(SSS) filed a complaint for alleged delinquency in the remittance of SSS contributions
and penalty liabilities in violation of Section 22 (a) and 22 (d) in relation to Section 28 (e)
of the SSS law, as amended. Amecos attributed the failure to remit to respondent
Lopez. But Amecos settled its obligation with the SSS. Subsequently, Amecos filed a
demand against Lopez for her share in the SSS contributions and also claimed for
actual, moral, and exemplary damages, attorney’s fee, and costs of the suit.
Respondent claimed that she is a former employee of Amecos prior to her alleged

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illegal dismissal and she moved for dismissal alleging that the regular courts do not have
jurisdiction because the claim arose out of their employer-employee relationship.

The MeTC dismissed the petition for lack of jurisdiction. On appeal, the RTC affirmed
MeTC’s ruling. The Court of Appeals reaffirmed the rulings of the lower courts. Thus this
petition. The petitioner argue that their Complaint is one for recovery of a sum of money
and damages based on Articles 19, 27 22, 28 and 2154 29 of the Civil Code; that their
cause of action is based on solutio indebiti or unjust enrichment, which arose from
respondent's misrepresentation that there was no need to enroll her with the SSS as she
was concurrently employed by another outfit, Triple A Glass and Aluminum Company,
and that she was self-employed as well. They argue that the employer-employee
relationship between Amecos and respondent is merely incidental, and does not
necessarily place their dispute within the exclusive jurisdiction of the labor tribunals.
Respondent, on the other hand, maintains that jurisdiction over petitioners' case lies
with the Labor Arbiter, as their cause of action remains necessarily connected to and
arose from their employer-employee relationship.

Issues:
(1) Whether the regular civil court and not the labor arbiter or . . . The national labor
relations commission has jurisdiction over claim[s] for reimbursement arising from
employer-employee relations.
(2) Whether the regular civil court and not the labor arbiter or . . . The national labor
relations commission has jurisdiction over claim[s] for damages for misrepresentation
arising from employer-employee relations.

RULING:
This Court holds that as between the parties, Article 217 (a) (4) of the Labor Code is
applicable. Said provision bestows upon the Labor Arbiter original and exclusive
jurisdiction over claims for damages arising from employer-employee relations. The
observation that the matter of SSS contributions necessarily flowed from the employer-
employee relationship between the parties — shared by the lower courts and the CA —
is correct; thus, petitioners' claims should have been referred to the labor tribunals. In
this connection, it is noteworthy to state that "the Labor Arbiter has jurisdiction to award
not only the reliefs provided by labor laws, but also damages governed by the Civil
Code."

Indophil Textile Mills Inc. vs. Engr. Adviento, GR No. 171212, August 4, 2014

Facts: Regular courts have jurisdiction over the negligent act of an employer who 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

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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 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?

Held: 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.

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.

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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.

Honda Car Phils vs. Honda cars Technical Specialist & Supervisors Union GR No. 204142,
Nov. 19 2014

Facts: Honda Cars Inc., and the company’s supervisors and technical specialists’ union,
Honda Cars Technical Specialists and Supervisory Union entered into a collective
bargaining agreement for the period April 1, 2006 to March 31, 2011. Prior to the
execution of the CBA, the union members were receiving P3,300.00 a month as
transportation allowance; on September3, 2005, they entered into a Memorandum of
Agreement converting the transportation allowance into a monthly gasoline allowance
at 125 liters each for official business purposes and travel from home to office. Claiming
that the gasoline allowance is similar to the company policy for manages and assistant
vice-presidents that “in the event the gas allowance is not fully consumed, the gasoline
not used may be converted to cash, subject to whatever tax is applicable”, the
company deducted from union members withholding tax corresponding to the
conversion to cash of their unused gasoline allowance, since the company considered
it as part of compensation subject to income tax. The union on the other hand claimed
that the gasoline allowance is a “negotiated item” under Article XV Section 15 of the
new CBA on fringe benefits, thus it resulted to a grievance which was not resolved by
the CBA grievance procedure. They submitted the issue to a panel of voluntary
arbitrators as required by the CBA.

The Panel of Voluntary Arbitrators then rendered a decision declaring that the cash
conversion of the unused gasoline allowance is a fringe benefit subject to the fringe
benefit tax, not to income tax, thus the deductions made by the company shall be
considered as advances subject to refund in future remittances of withholding tax.
On appeal, the CA Eight Division denied the appeal and affirmed with modification the
Voluntary Arbitrators’ decision. While the CA agreed that the cash conversion is a
fringe benefit, it does not necessarily mean that it is subject to the fringe benefit tax, as
it explained that Section 33 (A) of the National Internal Revenue Code (NIRC) of 1997
imposed a fringe benefit tax, effective January 1, 2000 and thereafter, on the grossed-
up monetary value of fringe benefit furnished or granted to the employee (except rank-

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and-file employees) by the employer (unless the fringe benefit is required by the nature
of, or necessary to the trade, business or profession of the employer, or when the fringe
benefit is for the convenience or advantage of the employer). Since the gasoline
allowance was mainly for the benefit of the company, it is not subject to fringe benefit
tax.

The company elevated the case to the Supreme Court. It assails the finding of both the
arbitrators and the CA that the cash conversion of the unused portion of gasoline
allowance is a fringe benefit, not a part of compensation income. Even assuming the
same is a fringe benefit, the union has no cause of action for the refund of tax withheld
and paid to the BIR. Citing Section 204 of the NIRC, the company contends that an
action for the refund of an erroneous withholding and payment of taxes should be in
the nature of a tax refund claim with the BIR. It further contends that when it withheld
the income tax due from the cash conversion of the unused gasoline allowance of the
union members, it was simply acting as an agent of the government for the collection
and payment of taxes due from the members.

Issue: Whether or not the union has a cause of action for refund to tax withheld by the
company on the cash conversion of the unused portion of the gasoline allowance of its
members.

Held: We partly grant the petition.

The Voluntary Arbitrator has no jurisdiction to settle tax matters

The Labor Code vests the Voluntary Arbitrator original and exclusive jurisdiction to hear
and decide all unresolved grievances arising from the interpretation or implementation
of the Collective Bargaining Agreement and those arising from the interpretation or
enforcement of company personnel policies[ LABOR CODE, Article 261.]. Upon
agreement of the parties, the Voluntary Arbitrator shall also hear and decide all other
labor disputes, including unfair labor practices and bargaining deadlocks.

In short, the Voluntary Arbitrator’s jurisdiction is limited to labor disputes. Labor dispute
means “any controversy or matter concerning terms and conditions of employment or
the association or representation of persons in negotiating, fixing, maintaining,
changing, or arranging the terms and conditions of employment, regardless of whether
the disputants stand in the proximate relation of employer and employee.”

The issues raised before the Panel of Voluntary Arbitrators are: (1) whether the cash
conversion of the gasoline allowance shall be subject to fringe benefit tax or the
graduated income tax rate on compensation; and (2) whether the company
wrongfully withheld income tax on the converted gas allowance.

The Voluntary Arbitrator has no competence to rule on the taxability of the gas
allowance and on the propriety of the withholding of tax. These issues are clearly tax
matters, and do not involve labor disputes. To be exact, they involve tax issues within a
labor relations setting as they pertain to questions of law on the application of Section
33 (A) of the NIRC. They do not require the application of the Labor Code or the

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interpretation of the MOA and/or company personnel policies. Furthermore, the
company and the union cannot agree or compromise on the taxability of the gas
allowance. Taxation is the State’s inherent power; its imposition cannot be subject to
the will of the parties.
Under paragraph 1, Section 4 of the NIRC, the CIR shall have the exclusive and original
jurisdiction to interpret the provisions of the NIRC and other tax laws, subject to review
by the Secretary of Finance. Consequently, if the company and/or the union desire/s to
seek clarification of these issues, it/they should have requested for a tax ruling⁠3 from
the Bureau of Internal Revenue (BIR). Any revocation, modification or reversal of the
CIR’s ruling shall not be given retroactive application if the revocation, modification or
reversal will be prejudicial to the taxpayers, except in the following cases:

(a) Where the taxpayer deliberately misstates or omits material facts from his return
or any document required of him by the BIR;

(b) Where the facts subsequently gathered by the BIR are materially different from
the facts on which the ruling is based; or

(c) Where the taxpayer acted in bad faith.⁠4

On the other hand, if the union disputes the withholding of tax and desires a refund of
the withheld tax, it should have filed an administrative claim for refund with the CIR.
Paragraph 2, Section 4 of the NIRC expressly vests the CIR original jurisdiction over
refunds of internal revenue taxes, fees or other charges, penalties imposed in relation
thereto, or other tax matters.

The union has no cause of action against the company.

Under the withholding tax system, the employer as the withholding agent acts as both
the government and the taxpayer’s agent. Except in the case of a minimum wage
earner, every employer has the duty to deduct and withhold upon the employee’s
wages a tax determined in accordance with the rules and regulations to be prescribed
by the Secretary of Finance, upon the CIR’s recommendation.⁠5 As the Government’s
agent, the employer collects tax and serves as the payee by fiction of law.⁠6 As the
employee’s agent, the employer files the necessary income tax return and remits the
tax to the Government.

Based on these considerations, we hold that the union has no cause of action against
the company. The company merely performed its statutory duty to withhold tax based
on its interpretation of the NIRC, albeit that interpretation may later be found to be
erroneous. The employer did not violate the employee’s right by the mere act of
withholding the tax that may be due the government.

Moreover, the NIRC only holds the withholding agent personally liable for the tax arising
from the breach of his legal duty to withhold, as distinguished from his duty to pay
tax.⁠9 Under Section 79 (B) of the NIRC, if the tax required to be deducted and
withheld is not collected from the employer, the employer shall not be relieved from
liability for any penalty or addition to the unwithheld tax.

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Thus, if the BIR illegally or erroneously collected tax, the recourse of the taxpayer, and in
proper cases, the withholding agent, is against the BIR, and not against the withholding
agent⁠10. The union’s cause of action for the refund or non-withholding of tax is
against the taxing authority, and not against the employer. Section 229 of the NIRC
provides:

Sec. 229. Recovery of Tax Erroneously or Illegally Collected. – No suit or proceeding shall
be maintained in any court for the recovery of any national internal revenue tax
hereafter alleged to have been erroneously or illegally assessed or collected, or of any
penalty claimed to have been collected without authority, or of any sum alleged to
have been excessively or in any manner wrongfully collected, until a claim for refund or
credit has been duly filed with the Commissioner; but such suit or proceeding may be
maintained, whether or not such tax, penalty, or sum has been paid under protest or
duress.
WHEREFORE, premises considered, we PARTLY GRANT the petition for review on
certiorari filed by Honda Cars Philippines, Inc. We REVERSE AND SET ASIDE the March 30,
2012 decision and the October 25, 2012 resolution of the Court of Appeals in CA-G.R. SP
No. 109297. We declare NULL AND VOID the February 6, 2009 decision and June 3, 2009
resolution of the Panel of Voluntary Arbitrators. No costs.
SO ORDERED

Montero vs. Times Transportation GR No. 1980828, March 16, 2015

Facts: Respondent Times Transportation Co., Inc., (TTCI) is a company engaged in the
business of land transportation for passengers and goods serving the Ilocos Region to
Metro Manila route. TTCI employed the herein 21 petitioners as bus drivers, conductors,
mechanics, welders, security guards and utility personnel.

Sometime in 1995, the rank-and-file employees of TTCI formed a union named as Times
Employees Union (TEU) which was later certified as the sole and exclusive bargaining
unit within TTCI.8

In March 1997, members of TEU went on strike; but when former Labor Secretary
Leonardo A. Quisimbing assumed jurisdiction over the labor dispute and certified the
same for compulsory arbitration, a return-to-work Order dated March 10, 1997 was
issued which ended the strike and enjoined the parties from committing any other act
that may intensify the situation.9
TTCI gradually dispose the assets of the TTCI as a result of its unabated increase of the
cost of operations and losses for the last two years. It also adopted a company-wide
retrenchment program.

For a second time, TEU declared a strike against TTCI, but the latter merely reiterated
the earlier return-to-work order of the Labor Secretary. For disregarding the said return-
to-work order, two notices of termination were issued 119 employees , for participating
in the illegal strike.
On December 4, 1997, Santiago served to the Department of Labor and Employment

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Regional Office I a notice that TTCI would be closing its operations due to heavy
business losses.15

Thereafter, petitioners fled several complaints. However, these cases was withdrawn.

Four years later, several complaints for unfair labor practice, illegal dismissal with money
claims, damages and attorney’s fees were filed against TTCI.

In response, TTCI asserted that the petitioners’ cause of action had already been
barred by prescription because the complaints were filed only in June 2002 or after
almost five years from the date of their dismissal.

LA: Dismissed the petitioners’ claim for unfair labor practice and money claims on the
ground of prescription. However, with regard to the issue of illegal dismissal, only the
complaints of Montero, Ravina, Cabello, Genaro, Madera, Gaano, Arsenio Donato and
Estilong were dismissed for having been barred by prescription.20

The LA found that petitioners Estrañero, Pajarillo, Aganon, Padre, Dulay, Cuenta,
Canaria, Yago, Avila and Avila, Jr. were illegally dismissed and were awarded their
separation pay and backwages. According to the LA, the complaints of these 10
petitioners were timely filed in June 2002 because the eight-month period during which
their cases were pending should be excluded from the four-year prescriptive period.21

NLRC: Vacated and set aside the findings of the LA, upon finding that the petitioners’
complaints had already been barred by prescription.

The NLRC observed that the LA had ignored the rule on prescription, and chose to be
selective in awarding relief to the 10 complainants by stating in his decision that the
period during which the labor cases were pending should be deducted from the
period of prescription.

It have thoroughly examined the records and find no justification for the [LA] to rule that
the pendency of the cases has worked in favor of the complainants to whom he
awarded separation pay and backwages. The [LA] has not at all indicated in his
decision when the eight (8)[-]month period of pendency he alluded to commenced
and when it ended. As a matter of fact, these cases took almost three (3) years from
filing of the complaints to the rendition of the appealed decision.24

The NLRC added that the application of the principle of prescription should not be
done on a selective basis, especially when the dates of accrual of the causes of action
and the filing of the complaints readily show that prescription has set in.25

CA: On appeal, CA sustained the decision of the NLRC.

The illegal dismissal case was filed only in June 2002 or for more than four (4) years and
seven (7) months from the time petitioners received the notices of their dismissal in

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November and October 1997. Clearly, the four-year prescriptive period has already
elapsed.

Moreover, there is likewise no merit in petitioners’ contention that the period when they
filed a complaint on May 14, 1998 but withdrawn on March 30, 1998 should be
excluded from the computation of the four-year prescriptive [period] for illegal dismissal
cases. The prescriptive period continues even after the withdrawal of the case as
though no action has been filed at all. This was clarified in the case of Intercontinental
Broadcasting Corporation vs. Panganiban, where the Supreme Court held that
although the commencement of an action stops the running of the statute of
prescription or limitations, its dismissal or voluntary abandonment by plaintiff leaves the
parties in exactly the same position as though no action had been commenced at all. x
x x.30
Aggrieved by the foregoing disquisition, the petitioners moved for reconsideration31 but
it was denied by the CA.32 Hence, the present petition for review on certiorari.33

Issue: Whether or not the petitioners’ complaints for illegal dismissal have already
prescribed.

Held: In the case at bar, October 26, 1997 and November 24, 1997 appear on record to
be the dates when the petitioners’ employment were terminated by TTCI. The
antecedent facts that gave rise to the petitioners’ dismissal from employment are not
disputed in this case. There is no question about the fact that the petitioners’
complaints for unfair labor practice and money claims have already prescribed. The
petitioners however argue that their complaints for illegal dismissal were duly filed within
the four-year prescriptive period since the period during which their cases were
pending should be deducted from the period of prescription. On the other hand, the
respondents insist that said complaints have already prescribed. Hence, the pivotal
question in resolving the issues hinges on the resolution of whether the period during
which the petitioners’ cases were pending should be excluded from the period of
prescription.

Settled is the rule that when one is arbitrarily and unjustly deprived of his job or means of
livelihood, the action instituted to contest the legality of one’s dismissal from
employment constitutes, in essence, an action predicated upon an injury to the rights
of the plaintiff, as contemplated under Article 114635 of the New Civil Code, which must
be brought within four years.36

The petitioners contend that the period when they filed a labor case on May 14, 1998
but withdrawn on March 22, 1999 should be excluded from the computation of the
four-year prescriptive period for illegal dismissal cases. However, the Court had already
ruled that the prescriptive period continues even after the withdrawal of the case as
though no action has been filed at all. The applicability of Article 1155 37of the Civil
Code in labor cases was upheld in the case of Intercontinental Broadcasting

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Corporation v. Panganiban38 where the Court held that “although the commencement
of a civil action stops the running of the statute of prescription or limitations, its dismissal
or voluntary abandonment by plaintiff leaves the parties in exactly the same position as
though no action had been commenced at all.”39

In like manner, while the filing of the complaint for illegal dismissal before the LA
interrupted the running of the prescriptive period, its voluntary withdrawal left the
petitioners in exactly the same position as though no complaint had been filed at all.
The withdrawal of their complaint effectively erased the tolling of the reglementary
period.

A prudent review of the antecedents of the claim reveals that it has in fact prescribed
due to the petitioners’ withdrawal of their labor case docketed as NLRC RAB-I-01-
1007.40 Hence, while the filing of the said case could have interrupted the running of the
four-year prescriptive period, the voluntary withdrawal of the petitioners effectively
cancelled the tolling of the prescriptive period within which to file their illegal dismissal
case, leaving them in exactly the same position as though no labor case had been
filed at all. The running of the four-year prescriptive period not having been interrupted
by the filing of NLRC RAB-I-01-1007, the petitioners’ cause of action had already
prescribed in four years after their cessation of employment on October 26, 1997 and
November 24, 1997. Consequently, when the petitioners filed their complaint for illegal
dismissal, separation pay, retirement benefits, and damages in 2002, their claim, clearly,
had already been barred by prescription.41

Sadly, the petitioners have no one but themselves to blame for their own predicament.
By their own allegations in their respective complaints, they have barred their remedy
and extinguished their right of action. Although the Constitution is committed to the
policy of social justice and the protection of the working class, it does not necessary
follow that every labor dispute will be automatically decided in favor of labor. The
management also has its own rights. Out of concern for the less privileged in life, this
Court, has more often than not inclined, to uphold the cause of the worker in his
conflict with the employer. Such leaning, however, does not blind the Court to the rule
that justice is in every case for the deserving, to be dispensed in the light of the
established facts and applicable law and doctrine.

XI. 2011 NLRC RULES OF PROCEDURE

McBurnie vs. Ganzon et al., GR Nol. 178034 & 178117 & 186984-85, Oct. 17, 2013, En
banc

Facts: McBurnie , an Australian national, signed a five-year employment agreement5

with the company EGI as an Executive Vice-President who shall oversee the
management of the company’s hotels and resorts within the Philippines. He met an
accident in the Philippines, so he left for Australia for a medical treatment. At that time
when he left for Australia, he had not yet obtained a work permit. He sued EGI

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company for illegal dismissal. Respondents opposed the complaint, contending that
their agreement with McBurnie was to jointly invest in and establish a company for the
management of hotels. They did not intend to create an employer-employee
relationship, and the execution of the employment contract that was being invoked by
McBurnie was solely for the purpose of allowing McBurnie to obtain an alien work permit
in the Philippines.

The Labor Arbiter declared him to be illegally dismissed.and thus entitled to receive
salary and bene benefits for the unexpired term of their employment contract, moral
and exemplary damages, and (c) attorney’s fees.

Feeling aggrieved, the respondents appealed the LA’s Decision to the NLRC.However,
it was denied. It was only granted in CA that the bond would be reduced to P10,000.

Issues:
I. WON the appeal to reduce bond is proper.
II. WON EGI is responsible to McBurnie for illegal dismissal.

Held:
1.The bond requirement in appeals involving monetary awards has been and may be
relaxed in meritorious cases, including instances in which (1) there was substantial
compliance with the Rules, (2) surrounding facts and circumstances constitute
meritorious grounds to reduce the bond, (3) a liberal interpretation of the requirement
of an appeal bond would serve the desired objective of resolving controversies on the
merits, or (4) the appellants, at the very least, exhibited their willingness and/or good
faith by posting a partial bond during the reglementary period

2. In finding merit in the respondents’ motion for reconsideration, we also take into
account the unwarranted results that will arise from an implementation of the Court’s
Decision dated September 18, 2009. We emphasize, moreover, that although a remand
and an order upon the NLRC to give due course to the appeal would have been the
usual course after a finding that the conditions for the reduction of an appeal bond
were duly satisfied by the respondents, given such results, the Court finds it necessary to
modify the CA’s order of remand, and instead rule on the dismissal of the complaint
against the respondents.

Without the reversal of the Court’s Decision and the dismissal of the complaint against
the respondents, McBurnie would be allowed to claim benefits under our labor laws
despite his failure to comply with a settled requirement for foreign nationals.

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Considering that McBurnie, an Australian, alleged illegal dismissal and sought to claim
under our labor laws, it was necessary for him to establish, first and foremost, that he
was qualified and duly authorized to obtain employment within our jurisdiction. A
requirement for foreigners who intend to work within the country is an employment
permit, as provided under Article 40, Title II of the Labor Code which reads:

Art. 40. Employment permit for non-resident aliens. Any alien seeking admission to the
Philippines for employment purposes and any domestic or foreign employer who desires
to engage an alien for employment in the Philippines shall obtain an employment
permit from the Department of Labor.
In this case, the Supreme Court admitted that it made a very big mistake in deciding on
an illegal dismissal case. It completely reversed its own decision which became final in
2009, or more than 4 years ago, and spared a Filipino businessman from paying P60
million worth of backwages and damages to an Australian who worked for him for only
45days

Absent an employment permit, any employment relationship that McBurnie

contemplated with the respondents was void for being contrary to law. A void or
inexistent contract, in turn, has no force and effect from the beginning as if it had never
been entered into. Thus, without an Alien Employment Permit, the "Employment
Agreement" is void and could not be the source of a right or obligation.

Loon et al., vs. Power Master Inc. et al., GR No. 189404, December 11, 2013

Facts: Respondents Power Master, Inc. and Tri-C General Services employed and
assigned the petitioners as janitors and leadsmen in various Philippine Long Distance
Telephone Company (PLDT) offices in Metro Manila area. Subsequently, the petitioners
filed a complaint for money claims against Power Master, Inc., Tri-C General Services
and their officers, the spouses Homer and Carina Alumisin (collectively, the
respondents). The petitioners alleged in their complaint that they were not paid
minimum wages, overtime, holiday, premium, service incentive leave, and thirteenth
month pays. They further averred that the respondents made them sign blank payroll
sheets. On June 11, 2001, the petitioners amended their complaint and included illegal
dismissal as their cause of action. They claimed that the respondents relieved them
from service in retaliation for the filing of their original complaint. Notably, the
respondents did not participate in the proceedings before the Labor Arbiter except on
April 19, 2001 and May 21, 2001 when Mr. Romulo Pacia, Jr. appeared on the
respondents' behalf. The respondents' counsel also appeared in a preliminary
mandatory conference on July 5, 2001. However, the respondents neither filed any

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position paper nor proffered pieces of evidence in their defense despite their
knowledge of the pendency of the case.

In a decision dated March 15, 2002, Labor Arbiter (LA) Elias H. Salinas partially ruled in
favor of the petitioners. The LA awarded the petitioners salary differential, service
incentive leave, and thirteenth month pays. In awarding these claims, the LA stated
that the burden of proving the payment of these money claims rests with the employer.
The LA also awarded attorney's fees in favor of the petitioners, pursuant to Article 111 of
the Labor Code.

However, the LA denied the petitioners' claims for backwages, overtime, holiday, and
premium pays. The LA observed that the petitioners failed to show that they rendered
overtime work and worked on holidays and rest days without compensation. The LA
further concluded that the petitioners cannot be declared to have been dismissed
from employment because they did not show any notice of termination of
employment. They were also not barred from entering the respondents' premises.

Both parties appealed the LA's ruling with the National Labor Relations Commission. The
petitioners disputed the LA's denial of their claim for backwages, overtime, holiday and
premium pays. Meanwhile, the respondents questioned the LA's ruling on the ground
that the LA did not acquire jurisdiction over their persons.

The respondents insisted that they were not personally served with summons and other
processes. They also claimed that they paid the petitioners minimum wages, service
incentive leave and thirteenth month pays. As proofs, they attached photocopied and
computerized copies of payroll sheets to their memorandum on appeal. They further
maintained that the petitioners were validly dismissed. They argued that the petitioners'
repeated defiance to their transfer to different workplaces and their violations of the
company rules and regulations constituted serious misconduct and willful
disobedience.

On January 3, 2003, the respondents filed an unverified supplemental appeal. They

attached photocopied and computerized copies of list of employees with automated
teller machine (ATM) cards to the supplemental appeal. This list also showed the
amounts allegedly deposited in the employees' ATM cards. 11 They also attached
documentary evidence showing that the petitioners were dismissed for cause and had
been accorded due process.

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On January 22, 2003, the petitioners filed an Urgent Manifestation and Motion where
they asked for the deletion of the supplemental appeal from the records because it
allegedly suffered from infirmities. First, the supplemental appeal was not verified.
Second, it was belatedly filed six months from the filing of the respondents' notice of
appeal with memorandum on appeal. The petitioners pointed out that they only
agreed to the respondents' filing of a responsive pleading until December 18, 2002.
Third, the attached documentary evidence on the supplemental appeal bore the
petitioners' forged signatures.

They reiterated these allegations in an Urgent Motion to Resolve Manifestation and

Motion (To Expunge from the Records Respondents' Supplemental Appeal, Reply and/or
Rejoinder) dated January 31, 2003. Subsequently, the petitioners filed an Urgent
Manifestation with Reiterating Motion to Strike-Off the Record Supplemental
Appeal/Reply, Quitclaims and Spurious Documents Attached to Respondents' Appeal
dated August 7, 2003. The petitioners argued in this last motion that the payrolls should
not be given probative value because they were the respondents' fabrications. They
reiterated that the genuine payrolls bore their signatures, unlike the respondents'
photocopies of the payrolls. They also maintained that their signatures in the
respondents' documents (which showed their receipt of thirteenth month pay) had
been forged.

In a resolution dated November 27, 2003, the NLRC partially ruled in favor of the
respondents. The NLRC affirmed the LA's awards of holiday pay and attorney's fees. It
also maintained that the LA acquired jurisdiction over the persons of the respondents
through their voluntary appearance.

However, it allowed the respondents to submit pieces of evidence for the first time on
appeal on the ground that they had been deprived of due process. It found that the
respondents did not actually receive the LA's processes. It also admitted the
respondents' unverified supplemental appeal on the ground that technicalities may be
disregarded to serve the greater interest of substantial due process. Furthermore, the
Rules of Court do not require the verification of a supplemental pleading.

The NLRC also vacated the LA's awards of salary differential, thirteenth month and
service incentive leave pays. In so ruling, it gave weight to the pieces of evidence
attached to the memorandum on appeal and the supplemental appeal. It maintained
that the absence of the petitioners' signatures in the payrolls was not an indispensable
factor for their authenticity. It pointed out that the payment of money claims was
further evidenced by the list of employees with ATM cards. It also found that the

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petitioners' signatures were not forged. It took judicial notice that many people use at
least two or more different signatures.

The NLRC further ruled that the petitioners were lawfully dismissed on grounds of serious
misconduct and willful disobedience. It found that the petitioners failed to comply with
various memoranda directing them to transfer to other workplaces and to attend
training seminars for the intended reorganization and reshuffling.

The NLRC denied the petitioners' motion for reconsideration in a resolution dated April
28, 2006. 17 Aggrieved, the petitioners filed a petition for certiorari under Rule 65 of the
Rules of Court before the CA.

The CA affirmed the NLRC's ruling. The CA held that the petitioners were afforded
substantive and procedural due process. Accordingly, the petitioners deliberately did
not explain their side. Instead, they continuously resisted their transfer to other PLDT
offices and violated company rules and regulations. It also upheld the NLRC's findings
on the petitioners' monetary claims.

The CA denied the petitioners' motion for reconsideration in a resolution dated August
28, 2009, prompting the petitioners to file the present petition.

Issues:
1. Whether the respondents perfected their appeal before the NLRC;
2. Whether the CA erred when it did not find that the NLRC committed grave
abuse of discretion in giving due course to the respondents' appeal;
3. Whether the respondents were estopped from submitting pieces of evidence for
the first time on appeal
4. Whether the petitioners were illegally dismissed and are thus entitled to
backwages

Held:
(1) The respondents perfected their
appeal with the NLRC because the
revocation of the bonding company's
authority has a prospective
application

Paragraph 2, Article 223 of the Labor Code provides that "[i]n case of a judgment
involving a monetary award, an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable bonding company duly

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accredited by the Commission in the amount equivalent to the monetary award in the
judgment appealed from."

Contrary to the respondents' claim, the issue of the appeal bond's validity may be
raised for the first time on appeal since its proper filing is a jurisdictional requirement. The
requirement that the appeal bond should be issued by an accredited bonding
company is mandatory and jurisdictional. The rationale of requiring an appeal bond is
to discourage the employers from using an appeal to delay or evade the employees'
just and lawful claims. It is intended to assure the workers that they will receive the
money judgment in their favor upon the dismissal of the employer's appeal.

In the present case, the respondents filed a surety bond issued by Security Pacific
Assurance Corporation (Security Pacific) on June 28, 2002. At that time, Security Pacific
was still an accredited bonding company. However, the NLRC revoked its accreditation
on February 16, 2003. Nonetheless, this subsequent revocation should not prejudice the
respondents who relied on its then subsisting accreditation in good faith. A bonding
company's revocation of authority is prospective in application.

However, the respondents should post a new bond issued by an accredited bonding
company in compliance with paragraph 4, Section 6, Rule 6 of the NLRC Rules of
Procedure. This provision states that "[a] cash or surety bond shall be valid and effective
from the date of deposit or posting, until the case is finally decided, resolved or
terminated or the award satisfied."

(2) The CA correctly ruled that the

NLRC properly gave due course to
the respondents' supplemental
appeal

The CA also correctly ruled that the NLRC properly gave due course to the respondents'
supplemental appeal. Neither the laws nor the rules require the verification of the
supplemental appeal. Furthermore, verification is a formal, not a jurisdictional,
requirement. It is mainly intended for the assurance that the matters alleged in the
pleading are true and correct and not of mere speculation. 27 Also, a supplemental
appeal is merely an addendum to the verified memorandum on appeal that was
earlier filed in the present case; hence, the requirement for verification has substantially
been complied with.
The respondents also timely filed their supplemental appeal on January 3, 2003. The
records of the case show that the petitioners themselves agreed that the pleading shall
be filed until December 18, 2002. The NLRC further extended the filing of the

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supplemental pleading until January 3, 2003 upon the respondents' motion for
extension.

(3) A party may only adduce evidence

for the first time on appeal if he
adequately explains his delay in the
submission of evidence and he
sufficiently proves the allegations
sought to be proven

In labor cases, strict adherence to the technical rules of procedure is not required. Time
and again, we have allowed evidence to be submitted for the first time on appeal with
the NLRC in the interest of substantial justice. Thus, we have consistently supported the
rule that labor officials should use all reasonable means to ascertain the facts in each
case speedily and objectively, without regard to technicalities of law or procedure, in
the interest of due process.

However, this liberal policy should still be subject to rules of reason and fairplay.
The liberality of procedural rules is qualified by two requirements:
(1) a party should adequately explain any delay in the submission of evidence;
and
(2) a party should sufficiently prove the allegations sought to be proven.

Guided by these principles, the CA grossly erred in ruling that the NLRC did not commit
grave abuse of discretion in arbitrarily admitting and giving weight to the respondents'
pieces of evidence for the first time on appeal.

A.The respondents failed to

adequately explain their delay
in the submission of evidence
We cannot accept the respondents' cavalier attitude in blatantly disregarding the
NLRC Rules of Procedure. The CA gravely erred when it overlooked that the NLRC
blindly admitted and arbitrarily gave probative value to the respondents' evidence
despite their failure to adequately explain their delay in the submission of evidence.
Notably, the respondents' delay was anchored on their assertion that they were
oblivious of the proceedings before the LA. However, the respondents did not dispute
the LA's finding that Mr. Romulo Pacia, Jr. appeared on their behalf on April 19, 2001
and May 21, 2001. The respondents also failed to contest the petitioners' assertion that
the respondents' counsel appeared in a preliminary mandatory conference on July 5,
2001.

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Indeed, the NLRC capriciously and whimsically admitted and gave weight to the
respondents' evidence despite its finding that they voluntarily appeared in the
compulsory arbitration proceedings. The NLRC blatantly disregarded the fact that the
respondents voluntarily opted not to participate, to adduce evidence in their defense
and to file a position paper despite their knowledge of the pendency of the
proceedings before the LA. The respondents were also grossly negligent in not informing
the LA of the specific building unit where the respondents were conducting their
business and their counsel's address despite their knowledge of their non-receipt of the
processes.

B.The respondents failed to

sufficiently prove the
allegations sought to be
proven
Furthermore, the respondents failed to sufficiently prove the allegations sought to be
proven. Why the respondents' photocopied and computerized copies of documentary
evidence were not presented at the earliest opportunity is a serious question that lends
credence to the petitioners' claim that the respondents fabricated the evidence for
purposes of appeal. While we generally admit in evidence and give probative value to
photocopied documents in administrative proceedings, allegations of forgery and
fabrication should prompt the adverse party to present the original documents for
inspection. It was incumbent upon the respondents to present the originals, especially in
this case where the petitioners had submitted their specimen signatures. Instead, the
respondents effectively deprived the petitioners of the opportunity to examine and
controvert the alleged spurious evidence by not adducing the originals. This Court is
thus left with no option but to rule that the respondents' failure to present the originals
raises the presumption that evidence willfully suppressed would be adverse if
produced.

It was also gross error for the CA to affirm the NLRC's proposition that "[i]t is of common
knowledge that there are many people who use at least two or more different
signatures." 37 The NLRC cannot take judicial notice that many people use at least two
signatures, especially in this case where the petitioners themselves disown the signatures
in the respondents' assailed documentary evidence. The NLRC's position is unwarranted
and is patently unsupported by the law and jurisprudence.

(4) the petitioners are entitled to

backwages

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In termination cases, the burden of proving just and valid cause for dismissing an
employee from his employment rests upon the employer. The employer's failure to
discharge this burden results in the finding that the dismissal is unjustified. 40 This is
exactly what happened in the present case.

The petitioners are entitled to salary

differential, service incentive,
holiday, and thirteenth month pays
As in illegal dismissal cases, the general rule is that the burden rests on the defendant to
prove payment rather than on the plaintiff to prove non-payment of these money
claims. The rationale for this rule is that the pertinent personnel files, payrolls, records,
remittances and other similar documents — which will show that differentials, service
incentive leave and other claims of workers have been paid — are not in the possession
of the worker but are in the custody and control of the employer. 42

The petitioners are not entitled to

overtime and premium pays
The burden of proving entitlement to overtime pay and premium pay for holidays and
rest days rests on the employee because these are not incurred in the normal course of
business. 43 In the present case, the petitioners failed to adduce any evidence that
would show that they actually rendered service in excess of the regular eight working
hours a day, and that they in fact worked on holidays and rest days.
The petitioners are entitled to
attorney's fees
The award of attorney's fees is also warranted under the circumstances of this case. An
employee is entitled to an award of attorney's fees equivalent to ten percent (10%) of
the amount of the wages in actions for unlawful withholding of wages.

As a final note, we observe that Kodelito Ayala, Winelito Ojel, Renato Rodrego and
Welito Loon are also named as petitioners in this case. However, we deny their petition
for the reason that they were not part of the proceedings before the CA. Their failure to
timely seek redress before the CA precludes this Court from awarding them monetary
claims.

WHEREFORE, based on these premises, we REVERSE and SET ASIDE the decision dated
June 5, 2009, and the resolution dated August 28, 2009 of the Court of Appeals in CA-
G.R. SP No. 95182. This case is REMANDED to the Labor Arbiter for the sole purpose of
computing petitioners' full backwages (computed from the date of their respective
dismissals up to the finality of this decision) and their salary differential, service incentive

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leave, holiday, thirteenth month pays, and attorney's fees equivalent to ten percent
(10%) of the withheld wages.

Lepanto Consolidated Mining Corp., vs. Icao, GR No. 196047, January 15, 2014

Facts: The instant petition stemmed from a complaint for illegal dismissal and damages
filed by private respondent Belio C. Icao [Icao] against petitioners Lepanto
Consolidated Mining Company (LCMC) and its Chief Executive Officer [CEO] Felipe U.
Yap [Yap] before the Arbitration Branch of the NLRC.
Private respondent claimed that his dismissal from work was without just or authorized
cause since petitioners failed to prove by ample and sufficient evidence that he stole
gold bearing highgrade ores from the company premises. If private respondent was
really placing a wrapped object inside his boots, he should have been sitting or
bending down to insert the same, instead of just standing on a muckpile as alleged by
petitioners. Moreover, it is beyond imagination that a person, knowing fully well that he
was being chased for allegedly placing wrapped ore inside his boots, will transfer it to
his skullguard. The tendency in such situation is to throw the object away. As such,
private respondent prayed that petitioners be held liable for illegal dismissal, to
reinstate him to his former position without loss of seniority rights and benefits, and to
pay his full backwages, damages and attorney's fees.

For their defense, petitioners averred that SG Bulwayan saw private respondent
standing on a muckpile and inserting a wrapped object inside his right rubber boot.
SG Bulwayan immediately ran towards private respondent, but the latter ran away to
escape. He tried to chase private respondent but failed to capture him. Thereafter,
while SG Bulwayan was on his way to see his co-guard SG Papsa-ao, he saw private
respondent moving out of a stope. He then shouted at SG Papsa-ao to intercept him.
When private respondent was apprehended, SG Bulwayan ordered him to remove his
skullguard for inspection and saw a wrapped object placed inside the helmet. SG
Bulwayan grabbed it, but the harness of the skullguard was also detached causing the
object to fall on the ground. Immediately, SG Bulwayan recovered and inspected the
same which turned out to be pieces of stone ores. Private respondent and the stone
ores were later turned over to the Mankayan Philippine National Police where he was
given a written notice of the charge against him. On January 9, 2008, a hearing was
held where private respondent, together with the officers of his union as well as the
apprehending guards appeared. On February 4, 2008, private respondent received a
copy of the resolution of the company informing him of his dismissal from employment
due to breach of trust and confidence and the act of highgrading.
On 30 September 2008, the labor arbiter rendered a Decision holding petitioner and its
CEO liable for illegal dismissal and ordering them to pay respondent Icao P345,879.45,

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representing his full backwages and separation pay. 3 The alleged highgrading
attributed by LCMC's security guards was found to have been fabricated;
consequently, there was no just cause for the dismissal of respondent. The labor arbiter
concluded that the claim of the security guards that Icao had inserted ores in his boots
while in a standing position was not in accord with normal human physiological
functioning.

The labor arbiter also noted that it was inconsistent with normal human behavior for a
man, who knew that he was being chased for allegedly placing wrapped ore inside his
boots, to then transfer the ore to his skullguard, where it could be found once he was
apprehended. 5 To further support the improbability of the allegation of highgrading,
the labor arbiter noted that throughout the 21 years of service of Icao to LCMC, he had
never been accused of or penalized for highgrading or any other infraction involving
moral turpitude — until this alleged incident.

THE NLRC ORDER DISMISSING THE APPEAL

OF PETITIONER LCMC FOR FAILURE TO POST THE APPEAL BOND

On 8 December 2008, petitioner and its CEO filed an Appearance with Memorandum
of Appeal 7 before the NLRC. Instead of posting the required appeal bond in the form
of a cash bond or a surety bond in an amount equivalent to the monetary award of
P345,879.45 adjudged in favor of Icao, they filed a Consolidated Motion for Release of
Cash Bond and to Apply Bond Subject for Release As Payment for Appeal Bond
(Consolidated Motion). 8 They requested therein that the NLRC release the cash bond
of P401,610.84, which they had posted in the separate case Dangiw Siggaao v. LCMC,
9 and apply that same cash bond to their present appeal bond liability. They reasoned
that since this Court had already decided Dangiw Siggaao in their favor, and that the
ruling therein had become final and executory, the cash bond posted therein could
now be released. 10 They also cited financial difficulty as a reason for resorting to this
course of action and prayed that, in the interest of justice, the motion be granted.

In its Order dated 27 February 2009, the NLRC First Division dismissed the appeal of
petitioner and the latter's CEO for non-perfection. 11 It found that they had failed to
post the required appeal bond equivalent to the monetary award of P345,879.45.

THE CA RULING AFFIRMING THE ORDER OF THE NLRC

On 27 September 2010, the CA issued its assailed Decision 15 affirming the Order of the
NLRC First Division, which had dismissed the appeal of petitioner and the latter's CEO.

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According to the CA, they failed to comply with the requirements of law and
consequently lost the right to appeal. 16

Issue: whether or not petitioner complied with the appeal bond requirement under
the Labor Code and the NLRC Rules by filing a Consolidated Motion to release the
cash bond it posted in another case, which had been decided with finality in its
favor, with a view to applying the same cash bond to the present case.

Held: The Petition is meritorious. The Court finds that petitioner substantially complied
with the appeal bond requirement.

Before discussing its ruling, however, the Court finds it necessary to emphasize the well-
entrenched doctrine that an appeal is not a matter of right, but is a mere statutory
privilege. It may be availed of only in the manner provided by law and the rules. Thus, a
party who seeks to exercise the right to appeal must comply with the requirements of
the rules; otherwise, the privilege is lost. 20
In appeals from any decision or order of the labor arbiter, the posting of an appeal
bond is required under Article 223 of the Labor Code, which reads:
Article 223. APPEAL. — Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the Commission
by any or both parties within ten (10) calendar days from receipt of
such decisions, awards, or orders. Such appeal may be entertained
only on any of the following grounds:
xxx xxx xxx
In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from. (Emphasis and
underlining supplied)

The 2011 NLRC Rules of Procedure (NLRC Rules) incorporates this requirement in Rule VI,
Section 6, which provides:
SECTION 6. Bond. — In case the decision of the Labor Arbiter or
the Regional Director involves a monetary award, an appeal by
the employer may be perfected only upon the posting of a bond,
which shall either be in the form of cash deposit or surety bond
equivalent in amount to the monetary award, exclusive of

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damages and attorney's fees. (Emphases and underlining
supplied)

We now turn to the main question of whether petitioner's Consolidated Motion to

release the cash bond it posted in a previous case, for application to the present case,
constitutes compliance with the appeal bond requirement. While it is true that the
procedure undertaken by petitioner is not provided under the Labor Code or in the
NLRC Rules, we answer the question in the affirmative.

we rule that petitioner substantially complied with the mandatory requirement of

posting an appeal bond for the reasons explained below.

First, there is no question that the appeal was filed within the 10-day reglementary
period. Except for the alleged failure to post an appeal bond, the appeal to the NLRC
was therefore in order.

Second, it is also undisputed that petitioner has an unencumbered amount of money in

the form of cash in the custody of the NLRC. To reiterate, petitioner had posted a cash
bond of P401,610.84 in the separate case Dangiw Siggaao, which was earlier decided
in its favor.

Under the Rule VI, Section 6 of the 2005 NLRC Rules, "[a] cash or surety bond shall be
valid and effective from the date of deposit or posting, until the case is finally decided,
resolved or terminated, or the award satisfied." Hence, it is clear that a bond is
encumbered and bound to a case only for as long as 1) the case has not been finally
decided, resolved or terminated; or 2) the award has not been satisfied. Therefore,
once the appeal is finally decided and no award needs to be satisfied, the bond is
automatically released. Since the money is now unencumbered, the employer who
posted it should now have unrestricted access to the cash which he may now use as he
pleases — as appeal bond in another case, for instance. This is what petitioner simply
did.
Third, the cash bond in the amount of P401,610.84 posted in Dangiw Siggaao is more
than enough to cover the appeal bond in the amount of P345,879.45 required in the
present case.

Fourth, this ruling remains faithful to the spirit behind the appeal bond requirement
which is to ensure that workers will receive the money awarded in their favor when the
employer's appeal eventually fails. There was no showing at all of any attempt on the
part of petitioner to evade the posting of the appeal bond. On the contrary, petitioner's

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move showed a willingness to comply with the requirement. Hence, the welfare of Icao
is adequately protected.

Having complied with the appeal bond requirement, petitioner's appeal before the
NLRC must therefore be reinstated.

The Court will liberally apply the rules only in very highly exceptional cases such as this,
in keeping with the dictates of justice, reason and equity.

Building Care Corp. vs. Macaraeg, G.R. No. 198357, December 10, 2012

Facts: Petitioners are in the business of providing security services to their clients. They
hired respondent as a security guard beginning August 25, 1996, assigning her at
Genato Building in Caloocan City. However, on March 9, 2008, respondent was relieved
of her post. She was re-assigned to Bayview Park Hotel from March 9-13, 2008, but after
said period, she was allegedly no longer given any assignment. Thus, on September 9,
2008, respondent filed a complaint against petitioners for illegal dismissal,
underpayment of salaries, non-payment of separation pay and refund of cash bond.
Conciliation and mediation proceedings failed, so the parties were ordered to submit
their respective position papers.

Respondent claimed that petitioners failed to give her an assignment for more than
nine months, amounting to constructive dismissal, and this compelled her to file the
complaint for illegal dismissal.

On the other hand, petitioners alleged in their position paper that respondent was
relieved from her post as requested by the client because of her habitual tardiness,
persistent borrowing of money from employees and tenants of the client, and sleeping
on the job. Petitioners allegedly directed respondent to explain why she committed
such infractions, but respondent failed to heed such order. Respondent was
nevertheless temporarily assigned to Bayview Park Hotel from March 9-13, 2008, but she
also failed to meet said client's standards and her posting thereat was not extended.

Respondent then filed an administrative complaint for illegal dismissal with the PNP-
Security Agencies and Guard Supervision Division on June 18, 2008, but she did not
attend the conference hearings for said case. Petitioners brought to the conference
hearings a new assignment order detailing respondent at the Ateneo de Manila
University but, due to her absence, petitioners failed to personally serve respondent said
assignment order. Petitioners then sent respondent a letter ordering her to report to

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headquarters for work assignment, but respondent did not comply with said order.
Instead, respondent filed a complaint for illegal dismissal with the Labor Arbiter.

LA dismissed for lack of merit. NLRC dismissed the appeal for having been filed out of
time, thereby declaring that the Labor Arbiter's Decision had become final and
executor. CA the petition was granted.

Issue: Whether the CA erred in liberally applying the rules of procedure and ruling that
respondent's appeal should be allowed and resolved on the merits despite having
been filed out of time.

Held: GRANTED
While procedural rules may be relaxed in the interest of justice, it is well-settled that
these are tools designed to facilitate the adjudication of cases. The relaxation of
procedural rules in the interest of justice was never intended to be a license for erring
litigants to violate the rules with impunity. Liberality in the interpretation and application
of the rules can be invoked only in proper cases and under justifiable causes and
circumstances. While litigation is not a game of technicalities, every case must be
prosecuted in accordance with the prescribed procedure to ensure an orderly and
speedy administration of justice.

In this case, the justifications given by the CA for its liberality by choosing to overlook the
belated filing of the appeal are, the importance of the issue raised, i.e., whether
respondent was illegally dismissed; and the belief that respondent should be "afforded
the amplest opportunity for the proper and just determination of his cause, free from
the constraints of technicalities," considering that the belated filing of respondent's
appeal before the NLRC was the fault of respondent's former counsel. Note, however,
that neither respondent nor her former counsel gave any explanation or reason citing
extraordinary circumstances for her lawyer's failure to abide by the rules for filing an
appeal. Respondent merely insisted that she had not been remiss in following up her
case with said lawyer.

It is, however, an oft-repeated ruling that the negligence and mistakes of counsel bind
the client. A departure from this rule would bring about never-ending suits, so long as
lawyers could allege their own fault or negligence to support the client's case and
obtain remedies and reliefs already lost by the operation of law. 15 The only exception
would be, where the lawyer's gross negligence would result in the grave injustice of
depriving his client of the due process of law. 16 In this case, there was no such

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deprivation of due process. Respondent was able to fully present and argue her case
before the Labor Arbiter. She was accorded the opportunity to be heard. Her failure to
appeal the Labor Arbiter's Decision cannot, therefore, be deemed as a deprivation of
her right to due process.

Co Say Coco Products Phils Inc., vs. Baltasar, et al., GR No. 188828, March 5, 2014

Facts: Petitioner Co Say is a domestic corporation duly organized and existing under
Philippine laws and is the owner of a private port located in Bigaa, Legazpi City.
Tanawan Port on the other hand, is a single proprietorship owned and managed by
Salazar.

On 18 March 2002, Co Say, thru its President, Efren Co Say, entered into a Contract for
Cargo Handling Services with petitioner Tanawan Port, wherein the latter was given the
authority to manage and operate the arrastre and stevedoring services of its port.

To jumpstart the operation of its cargo handling services, Tanawan Port employed
respondents Benjamin Baltasar as Manager, Marvin Baltasar as Computer Operator,
Raymundo Botalon as Crane Operator, Nilo Bordeos, Jr. as Crane Helper, Cargo
Botalon as Crane Operator and Geronimo Bas as Fork Lift Operator.

Due to lack of clientele, the business venture of Tanawan Port failed to gain momentum
causing serious alarm to the company. A couple of months after respondents were
hired, Tanawan Port decided to cease operation by sending letters to the City Treasurer
of Legaspi City and the Revenue District Officer of the Bureau of Internal Revenue
informing them of its intention to close its business and to surrender its business
registration due to serious business losses. On 30 August 2002, the City Treasurer
approved the retirement from business of Tanawan Port. On the same day, Salazar
convened respondents to formally inform them of her intention to close Tanawan Port's
operation, but she was prevailed upon by the latter to hold it up while Baltasar is
looking for new clients that could help boost the company's revenue. Efforts to revive
the business, however, proved to be futile constraining the company to finally
discontinue its operation and close its business. As a result, respondents were
terminated from employment but were accordingly given their corresponding
separation pay and 13th month pay

Barely a month after they received their separation pay, respondents filed complaints
for illegal dismissal and non-payment of labor standard benefits against petitioners
Tanawan Port, Salazar, Co Say and Efren Co Say before the Labor Arbiter. In their

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Position Papers, respondents alleged that Tanawan Port was merely feigning losses in
order to ease out employees, pointing out the absence of evidence to prove business
reverses. Respondents also punctuated Tanawan Port's failure to comply with the
procedural requirement of sending notices to employees concerned and to the
Department of Labor and Employment (DOLE) one month before the intended date of
closure as required by law.

Tanawan Port, for its part, asserted that respondents' severance from employment was
brought about by closure or cessation of business operation which is an authorized
cause for termination of employment under the Labor Code. To dispute the allegation
of respondents that the closure was done in bad faith, Tanawan Port insisted that the
lack of clientele caused serious financial drain to the company leaving the
management with no other option but to shutdown its operations.

On 7 August 2003, the Labor Arbiter rendered a Joint Decision in favor of respondents
and held that petitioners are liable for illegal dismissal for failure to comply with the
procedural and substantive requirements of terminating employment due to closure of
business operations. It was found that while Tanawan Port claimed that it was suffering
from serious business losses, it failed to adduce its financial statements to prove that its
withdrawal from operation was bona fide in character. A similar failure to comply with
the notice requirement was likewise observed by the labor officer resulting in the
violation of respondents' right to due process of law. Finally, the Labor Arbiter declared
that Tanawan Port is engaged in labor-only contracting and is merely an extension of
the business personality of Co Say, which is thus, solidarily liable with the former, the
labor-only contractor, for the rightful claims of the employees.

Contradicting the Labor Arbiter Decision, the NLRC in its Decision dated 31 May 2004,
held that respondents' severance from employment was not illegal, as the company
where they were working closed due to business losses, and, the closure of business or
establishment is one of the authorized causes recognized by law in dismissing an
employee. The NLRC further ruled that there was sufficient compliance with the
substantive requirement in terminating employment and held that proof of business
losses is not necessary since cessation of business operation is a management
prerogative and should not be interfered with by courts or labor tribunals.

In a Decision 14 dated 20 April 2009, the Court of Appeals reversed the NLRC Decision
due to failure of petitioners to perfect their appeal and proceeded to affirm the Labor
Arbiter's Decision. Contrary to the ruling of the NLRC, the appellate court ruled that the
posting of the appeal bond after the period to perfect the appeal had expired,
resulted in the non-perfection of the appeal. Accordingly, the Court of Appeals ruled

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that the NLRC has no authority to alter, modify or reverse the Labor Arbiter decision
after the said decision became final and executory.

Issue: THE COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING
TO LACK OF JURISDICTION WHEN IT RULED THAT THE RESPONDENTS FAILED TO PERFECT
THEIR APPEAL ON TIME;
Held: The NLRC ruled that petitioners were able to post the surety bond and timely
perfect their appeal before the expiration of the 10-day reglementary period, while the
Court of Appeals oppositely ruled although both findings are based on the same pieces
of evidence available on record. According to the appellate court, the First
Certification issued by the RAB-NLRC on 2 October 2003 is telling of the petitioners'
failure to perfect an appeal. It appeared in the said certification that the appeal bond,
which is a mandatory requirement for perfecting an appeal, has not been posted as of
2 October 2003.

Three months after the said certification was issued, the RAB-NLRC issued a Second
Certification on 19 January 2004, indicating that petitioners posted a surety bond on 24
September 2003 although the said bond was received by the RAB-NLRC only on 28
October 2003.

It was on the basis of the Second Certification that the NLRC allowed the appeal. The
divergence of the findings of the NLRC on the one hand, and the Court of Appeals on
the other, necessitates a review of the records of this case to ascertain which
conclusion is supported by substantial evidence and, enough to remove the conclusion
away from the issue of grave abuse of discretion. Substantial evidence is such amount
of relevant evidence which a reasonable mind might accept as adequate to support a
conclusion.

The crucial issue in the resolution of the instant petition concerns the timely posting of
the appeal bond. The pertinent rule on the matter is Article 223 of the Labor Code, as
amended, which sets forth the rules on appeal from the Labor Arbiter's monetary
award:

ART. 223.Appeal. — Decisions, awards, or orders of the Labor

Arbiter are final and executory unless appealed to the Commission
by any or both parties within ten (10) calendar days from receipt of
such decisions, awards, or orders. . . . .
xxx xxx xxx

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In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from. (Emphasis ours).

Implementing the aforestated provisions of the Labor Code are the provisions of Rule VI
of the 2011 NLRC Rules of Procedure on perfection of appeals which read:

SECTION 1.PERIODS OF APPEAL. — Decisions, awards, or orders of the Labor

Arbiter shall be final and executory unless appealed to the Commission by any
or both parties within ten (10) calendar days from receipt thereof; and in case
of decisions or resolutions of the Regional Director of the Department of Labor
and Employment pursuant to Article 129 of the Labor Code, within five (5)
calendar days from receipt thereof. If the 10th or 5th day, as the case may be,
falls on a Saturday, Sunday or holiday, the last day to perfect the appeal shall
be the first working day following such Saturday, Sunday or holiday.

No motion or request for extension of the period within which to perfect an

appeal shall be allowed.

SECTION 2.GROUNDS. — The appeal may be entertained only on any of the

following grounds:

a)If there is prima facie evidence of abuse of discretion on the part of the
Labor Arbiter or Regional Director;
b)If the decision, award or order was secured through fraud or coercion,
including graft and corruption;
c)If made purely on questions of law; and/or
d)If serious errors in the findings of facts are raised which, if not corrected,
would cause grave or irreparable damage or injury to the appellant.

SECTION 3.WHERE FILED. — The appeal shall be filed with the Regional
Arbitration Branch or Regional Office where the case was heard and decided.
SECTION 4.REQUISITES FOR PERFECTION OF APPEAL. — a) The appeal shall be:
(1)filed within the reglementary period provided in Section 1 of this Rule;
(2)verified by the appellant himself/herself in accordance with Section 4, Rule
7 of the Rules of Court, as amended;

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(3)in the form of a memorandum of appeal which shall state the grounds
relied upon and the arguments in support thereof, the relief prayed for, and
with a statement of the date the appellant received the appealed decision,
award or order;
(4)in three (3) legibly typewritten or printed copies; and
(5)accompanied by: aEcTDI
i)proof of payment of the required appeal fee and legal research
fee;
ii)posting of a cash or surety bond as provided in Section 6 of this
Rule; and
iii)proof of service upon the other parties.
b)A mere notice of appeal without complying with the other
requisites aforestated shall not stop the running of the period for
perfecting an appeal.
c)The appellee may file with the Regional Arbitration Branch or
Regional Office where the appeal was filed, his/her answer or reply
to appellant's memorandum of appeal, not later than ten (10)
calendar days from receipt thereof. Failure on the part of the
appellee who was properly furnished with a copy of the appeal to
file his/her answer or reply within the said period may be construed
as a waiver on his/her part to file the same.

d)Subject to the provisions of Article 218 of the Labor Code,

once the appeal is perfected in accordance with these Rules,
the Commission shall limit itself to reviewing and deciding only
the specific issues that were elevated on appeal.

SECTION 5.APPEAL FEE. — The appellant shall pay the prevailing

appeal fee and legal research fee to the Regional Arbitration
Branch or Regional Office of origin, and the official receipt of such
payment shall form part of the records of the case.

SECTION 6.BOND. — In case the decision of the Labor Arbiter or the

Regional Director involves a monetary award, an appeal by the
employer may be perfected only upon the posting of a bond,
which shall either be in the form of cash deposit or surety bond
equivalent in amount to the monetary award, exclusive of
damages and attorney's fees.

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In case of surety bond, the same shall be issued by a reputable
bonding company duly accredited by the Commission or the
Supreme Court, and shall be accompanied by original or certified
true copies of the following:
a)a joint declaration under oath by the employer, his/her counsel,
and the bonding company, attesting that the bond posted is
genuine, and shall be in effect until final disposition of the case.
b)an indemnity agreement between the employer-appellant and
bonding company;
c)proof of security deposit or collateral securing the bond:
provided, that a check shall not be considered as an acceptable
security;
d)a certificate of authority from the Insurance Commission;
e)certificate of registration from the Securities and Exchange
Commission; THcaDA
f)certificate of accreditation and authority from the Supreme
Court; and
g)notarized board resolution or secretary's certificate from the
bonding company showing its authorized signatories and their
specimen signatures.

The Commission through the Chairman may on justifiable grounds

blacklist a bonding company, notwithstanding its accreditation by
the Supreme Court.

A cash or surety bond shall be valid and effective from the date of
deposit or posting, until the case is finally decided, resolved or
terminated, or the award satisfied.

This condition shall be deemed incorporated in the terms and

conditions of the surety bond, and shall be binding on the
appellants and the bonding company.

The appellant shall furnish the appellee with a certified true copy of
the said surety bond with all the above-mentioned supporting
documents. The appellee shall verify the regularity and
genuineness thereof and immediately report any irregularity to the
Commission.

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Upon verification by the Commission that the bond is irregular or
not genuine, the Commission shall cause the immediate dismissal
of the appeal, and censure the responsible parties and their
counsels, or subject them to reasonable fine or penalty, and the
bonding company may be blacklisted.

No motion to reduce bond shall be entertained except on

meritorious grounds, and only upon the posting of a bond in a
reasonable amount in relation to the monetary award.

The mere filing of a motion to reduce bond without complying with

the requisites in the preceding paragraphs shall not stop the
running of the period to perfect an appeal.

These statutory and regulatory provisions explicitly provide that an appeal from the
Labor Arbiter to the NLRC must be perfected within ten calendar days from receipt of
such decisions, awards or orders of the Labor Arbiter. In a judgment involving a
monetary award, the appeal shall be perfected only upon; (1) proof of payment of the
required appeal fee; (2) posting of a cash or surety bond issued by a reputable
bonding company; and (3) filing of a memorandum of appeal.

No appeal was perfected by the petitioners within the 10-day period under Article 223
of the Labor Code.
The petitioners received the 7 August 2003 Decision of the Labor Arbiter on 15
September 2003, hence, they had until 25 September 2003 to perfect their appeal. A
perusal of the records reveals an apparent contrariety on the date of the posting of the
appeal bond, a material fact decisive of the instant controversy. While the First
Certification indicated that no appeal bond has been posted as of 2 October 2003, the
Second Certification and the Transmittal Letter stated that a surety bond was posted on
24 September 2003.

The Second Certificate is not a document of timeliness of petitioners' appeal bond. It is

even confirmatory of the fact of tardiness that the First Certification stated doubtlessly.

That the posting of the surety bond requires as necessary addition the seven
enumerated documents is underscored by the provision that the appellant shall furnish
the appellee with a certified true copy of the said surety bond with all the above-
mentioned supporting documents. The appellee shall verify the regularity and
genuineness thereof and immediately report any irregularity to the Commission.

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The rule gives the appellee the authority and opportunity, even the duty, to verify the
regularity and genuineness not only of the surety bond but also of the seven
attachments. To reiterate, even if the issuance of the surety bond on 24 September
2003 is considered as the posting of the bond, the certification cannot furthermore be
considered as the posting of the other seven required documents.

Without a straight statement, the Second Certification seems to consider posting as

mailing such that the date 24 September 2003 should be the reckoning date that
determines timeliness and not the date 28 October 2003 which was the date of receipt
of the surety bond. Even such insinuation, strained and all, is unacceptable considering
the absence of proof of mailing, it being the fact that there was no mention at all in
any of the pleadings below that the surety bond was mailed.

The Court of Appeals therefore, correctly ruled that petitioners failed to perfect their
appeal on time. In holding so, the appellate court only applied the appeal bond
requirement as already well explained in our previous pronouncements that there is
legislative and administrative intent to strictly apply the appeal bond requirement, and
the Court should give utmost regard to this intention. 27 The clear intent of both
statutory and procedural law is to require the employer to post a cash or surety bond
securing the full amount of the monetary award within the ten 10-day reglementary
period. 28 Rules on perfection of an appeal, particularly in labor cases, must be strictly
construed because to extend the period of the appeal is to delay the case, a
circumstance which would give the employer a chance to wear out the efforts and
meager resources of the worker to the point that the latter is constrained to give up for
less than what is due him. 29 This is to assure the workers that if they finally prevail in the
case the monetary award will be given to them both upon dismissal of the employer's
appeal. It is further meant to discourage employers from using the appeal to delay or
evade payment of their obligations to the employees. 30 The appeal bond requirement
precisely aims to prevent empty or inconsequential victories secured by laborers in
consonance with the protection of labor clause ensconced and zealously guarded by
our Constitution.

It is entrenched in our jurisprudence that perfection of an appeal in a manner and

within the period prescribed by law is not only mandatory but jurisdictional, and failure
to perfect an appeal has the effect of making judgment final and executory. 32 While
dismissal of an appeal on technical grounds is frowned upon, Article 223 of the Labor
Code which prescribes the appeal bond requirement, however, is a rule of jurisdiction
and not of procedure. 33 Hence, there is a little leeway for condoning a liberal
interpretation thereof, and certainly none premised on the ground that its requirements

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are mere technicalities. 34 It is axiomatic that an appeal is only a statutory privilege and
it may only be exercised in the manner provided by law. 35 The timely perfection of an
appeal is a mandatory requirement, which cannot be trifled with a "mere technicality"
to suit the interest of party. 36 We cannot condone the practice of parties who, either
by their own or their counsel's inadvertence, have allowed the judgment to become
final and executory and, after the same had reached finality, seeks the shield of
substantial justice to assail it.

All considered then, the finding of the Labor Arbiter holding the petitioners liable for
illegal dismissal is binding on them. Not having been timely appealed, this issue is
already beyond our jurisdiction to resolve, and the finding of the Labor Arbiter can no
longer be disturbed without violating the fundamental principle that final judgment is
immutable and unalterable and may no longer be modified in any respect, even if the
modification is meant to correct erroneous conclusion of fact and law. 37

WHEREFORE, premises considered, the petition is DENIED. The assailed Decision and
Resolution of the Court of Appeals, reversing the NLRC Resolution and effectively
reinstating the Labor Arbiter Decision, are hereby AFFIRMED.

Olores vs. Manila Doctors College et al., GR No. 201663, March 31, 2014

Facts: Respondent is a private higher educational institution dedicated to providing

academic degrees and certificate courses related to Allied Medical Services and
Liberal Arts and Sciences. [Petitioner] was hired as a part-time faculty of respondent on
07 November 2005. Thereafter, he signed fixed term employment contracts as part-time
instructor. From 03 November 2008, [petitioner] signed fixed term employment
contracts, this time as a full-time instructor.

[Petitioner] submitted the final grades of his students to Mr. Jacinto Bernardo, Jr.
(Bernardo), the chair of the Humanities Area. On 13 April 2010, Bernardo charged
[petitioner] with gross misconduct and gross inefficiency in the performance of duty.
[Petitioner] was accused of employing a grading system not in accordance with the
system because he: a) added 50 pts to the final examination raw scores; b) added 50
pts to students who have not been attending classes; c) credited only 40% instead of
60% of the final examination; d) did not credit the essay questions; and e) added
further incentives (1-4 pts) aside from 50 pts. In so doing, [petitioner] gave grades not
based solely on scholastic records.

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On 14 April 2010, [petitioner] submitted his answer stating that he: a) did not add 50 pts
to the raw scores as verified by the dean and academic coordinator; b) made certain
adjustments to help students pass; c) did not credit the essay questions because these
have never been discussed in the meetings with Bernardo; and d) did have the
judgment to give an incentive for a task well done. Also on this date, [petitioner] wrote
a letter to respondent's Human Resources Manager asking that he should now be
granted a permanent status.

Acting on the report of Bernardo, respondent created the Manila Doctors Tribunal
(MDT) which was tasked to ascertain the truth. The MDT sent notices of hearing to
[petitioner]. During the administrative hearing, [petitioner] stood pat on his answer. He,
however, elucidated on his points by presenting slides.
On 31 May 2010, the MDT submitted its recommendation to the president of
respondent. The culpability of [petitioner] was established, hence, dismissal was
recommended. On 07 June 2010, respondent terminated the services of [petitioner]
for grave misconduct and gross inefficiency and incompetence.
dated December 8, 2010, the Labor Arbiter found merit in petitioner's charge for illegal
dismissal. However, it dismissed petitioner's claim for regularization.
Respondent appealed from the aforesaid decision to the NLRC. However, the same
was denied in a Resolution dated February 10, 2011. The NLRC reasoned that
respondent's appeal was not accompanied by neither a cash nor surety bond, thus,
no appeal was perfected from the decision of the Labor Arbiter.
September 30, 2011, the NLRC granted respondent's appeal and reversed its earlier
resolution.
Resultantly, petitioner filed a certiorari petition with the CA. In a Resolution dated
January 9, 2012, the CA held that since petitioner failed to file a motion for
reconsideration against the NLRC decision before seeking recourse to it via a certiorari
petition, the CA dismissed petitioner's special civil action for certiorari
Issue:
(1) whether respondent's appeal with the NLRC was perfected despite its failure to post
a bond; and
(2) whether the CA erred in dismissing petitioner's Rule 65 petition.

Held: There is merit in the petition.

At the outset, it must be emphasized that Article 223 of the Labor Code states that an
appeal by the employer to the NLRC from a judgment of a Labor Arbiter, which
involves a monetary award, may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly accredited by the NLRC, in
an amount equivalent to the monetary award in the judgment appealed from.

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Sections 4 (a) and 6 of Rule VI of the New Rules of Procedure of the NLRC, as amended,
reaffirm the explicit jurisdictional principle in Article 223.

SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. — (a) The appeal shall be:
1) filed within the reglementary period provided in Section 1 of this Rule;
2) verified by the appellant himself in accordance with Section 4, Rule 7 of the
Rules of Court, as amended;
3) in the form of a memorandum of appeal which shall state the grounds relied
upon and the arguments in support thereof, the relief prayed for, and with a
statement of the date the appellant received the appealed decision, resolution
or order;
4) in three (3) legibly type written or printed copies; and
5) accompanied by:
i) proof of payment of the required appeal fee;
ii) posting of a cash or surety bond as provided in Section 6 of this Rule;
iii) a certificate of non-forum shopping; and iv) proof of service upon the
other parties.

SECTION 6. BOND. — In case the decision of the Labor Arbiter or the Regional Director
involves a monetary award, an appeal by the employer may be perfected only upon
the posting of a bond, which shall either be in the form of cash deposit or surety bond
equivalent in the amount to the monetary award, exclusive of damages and attorney's
fees. 15

The posting of a bond is indispensable to the perfection of an appeal in cases involving

monetary awards from the decisions of the Labor Arbiter. Moreover, the filing of the
bond is not only mandatory, but a jurisdictional requirement as well, that must be
complied with in order to confer jurisdiction upon the NLRC. Non-compliance therewith
renders the decision of the Labor Arbiter final and executory. This requirement is
intended to assure the workers that if they prevail in the case, they will receive the
money judgment in their favor upon the dismissal of the employer's appeal. It is
intended to discourage employers from using an appeal to delay or evade their
obligation to satisfy their employees' just and lawful claims.

Here, it is undisputed that respondent's appeal was not accompanied by any appeal
bond despite the clear monetary obligation to pay petitioner his separation pay in the
amount of P100,000.00. Since the posting of a bond for the perfection of an appeal is
both mandatory and jurisdictional, the decision of the Labor Arbiter sought to be
appealed before the NLRC had already become final and executory. Therefore, the
NLRC had no authority to entertain the appeal, much less to reverse the decision of the
Labor Arbiter.

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Nevertheless, assuming that the NLRC has jurisdiction to take cognizance of the instant
case, this Court would still be inclined to favor petitioner because the instant case falls
under one of the recognized exceptions to the rule that a motion for reconsideration is
necessary prior to the filing of a certiorari petition.
The general rule is that a motion for reconsideration is indispensable before resort to the
special civil action for certiorari to afford the court or tribunal the opportunity to correct
its error, if any. The rule is well settled that the filing of a motion for reconsideration is an
indispensable condition to the filing of a special civil action for certiorari.

However, said rule is subject to several recognized exceptions:

(a) Where the order is a patent nullity, as where the court a quo has no jurisdiction;
(b) Where the questions raised in the certiorari proceedings have been duly raised
and passed upon by the lower court, or are the same as those raised and passed
upon in the lower court;
(c) Where there is an urgent necessity for the resolution of the question and any
further delay would prejudice the interests of the Government or of the petitioner
or the subject matter of the action is perishable;
(d) Where, under the circumstances, a motion for reconsideration would be useless;
(e) Where petitioner was deprived of due process and there is extreme urgency for
relief;
(f) Where, in a criminal case, relief from an order of arrest is urgent and the granting
of such relief by the trial court is improbable;
(g) Where the proceedings in the lower court are a nullity for lack of due process;
(h) Where the proceeding was ex parte or in which the petitioner had no
opportunity to object; and
(i) Where the issue raised is one purely of law or where public interest is involved. 19

In the instant case, the NLRC had all the opportunity to review its ruling and correct
itself.

The NLRC issued a ruling on February 10, 2011 in favor of petitioner dismissing
respondent's appeal on the ground that the latter failed to file an appeal bond.
However, upon a motion for reconsideration filed by respondent, the NLRC completely
reversed itself and set aside its earlier resolution dismissing the appeal. The NLRC had
more than enough opportunity to pass upon the issues raised by both parties on appeal
of the ruling of the Labor Arbiter and the subsequent motion for reconsideration of its
resolution disposing the appeal. Thus, another motion for reconsideration would have
been useless under the circumstances since the questions raised in the certiorari
proceedings have already been duly raised and passed upon by the NLRC.

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In a similar case, the Labor Arbiter rendered a decision dismissing petitioner's case for
lack of merit. On appeal, the NLRC rendered a decision reversing the decision of the
Labor Arbiter and ordered the respondent therein to pay petitioner full backwages,
separation pay, salary differentials, 13th month pay and allowances. Not satisfied,
respondent therein moved for reconsideration of the aforesaid NLRC resolution. The
NLRC, thereafter, granted respondent's motion and reversed its previous ruling. In a like
manner, the petitioner therein filed a certiorari petition without first filing a motion for
reconsideration with the NLRC.

All told, the petition is meritorious. However, since this Court is not a trier of facts, we
cannot rule on the substantive issue of the case, i.e., whether petitioner has attained
regular status, inasmuch as the CA has not yet passed upon the factual issues raised by
the parties.

WHEREFORE, premises considered, the instant petition is hereby GRANTED and the
Resolutions dated January 9, 2012 and April 27, 2012, respectively, of the Court of
Appeals in CA-G.R. SP No. 122596, are hereby REVERSED and SET ASIDE. The case is
REMANDED to the Court of Appeals for further proceedings.

Bergonio et al., vs. South east Asian Airlines, GR No. 195227,.April 21, 2014

Facts: On April 30, 2004, the petitioners filed before the LA a complaint for illegal
dismissal and illegal suspension with prayer for reinstatement against respondents
South East Asian Airlines (SEAIR) and Irene Dornier as SEAIR's President (collectively,
the respondents).

In a decision dated May 31, 2005, the LA found the petitioners illegally dismissed and
ordered the respondents, among others, to immediately reinstate the petitioners with
full backwages. The respondents received their copy of this decision on July 8, 2005. 6

On August 20, 2005, the petitioners filed before the LA a Motion for issuance of Writ of
Execution for their immediate reinstatement.

During the scheduled pre-execution conference held on September 14, 2005, the
respondents manifested their option to reinstate the petitioners in the payroll. The
payroll reinstatement, however, did not materialize. Thus, on September 22, 2005, the
petitioners filed before the LA a manifestation for their immediate reinstatement.

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On October 3, 2005, the respondents filed an opposition to the petitioners' motion for
execution. 7 They claimed that the relationship between them and the petitioners had
already been strained because of the petitioners' threatening text messages, thus
precluding the latter's reinstatement.

On October 7, 2005, the LA granted the petitioners' motion and issued a writ of
execution.
The respondents moved to quash the writ of execution with a prayer to hold in
abeyance the implementation of the reinstatement order. 9 They maintained that the
relationship between them and the petitioners had been so strained that reinstatement
was no longer possible.

The October 7, 2005 writ of execution was returned unsatisfied. In response, the
petitioners filed a motion for re-computation of accrued wages, and, on January 25,
2006, a motion for execution of the re-computed amount. On February 16, 2006, the LA
granted this motion and issued an alias writ of execution. 10

On February 21, 2006, the respondents issued a Memorandum 11 directing the

petitioners to report for work on February 24, 2006. The petitioners failed to report for
work on the appointed date. On February 28, 2006, the respondents moved before the
LA to suspend the order for the petitioners' reinstatement. 12

Meanwhile, the respondents appealed with the NLRC the May 31, 2005 illegal dismissal
ruling of the LA.
In an order dated August 15, 2006, 13 the NLRC dismissed the respondents' appeal for
non-perfection. The NLRC likewise denied the respondents' motion for reconsideration in
its November 29, 2006 resolution, prompting the respondents to file before the CA a
petition for certiorari.

The NLRC issued an Entry of Judgment on February 6, 2007 declaring its November 29,
2006 resolution final and executory. The petitioners forthwith filed with the LA another
motion for the issuance of a writ of execution, which the LA granted on April 24, 2007.
The LA also issued another writ of execution. 14 A Notice of Garnishment was thereafter
issued to the respondents' depositary bank — Metrobank-San Lorenzo Village Branch,
Makati City — in the amount of P1,900,000.00 on June 6, 2007.

On December 18, 2007, the CA rendered its decision (on the illegal dismissal ruling of
the LA) partly granting the respondents' petition. The CA declared the petitioners'

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dismissal valid and awarded them P30,000.00 as nominal damages for the respondents'
failure to observe due process.

The records show that the petitioners appealed the December 18, 2007 CA decision
with this Court. In a resolution dated August 4, 2008, the Court denied the petition. The
Court likewise denied the petitioners' subsequent motion for reconsideration, and
thereafter issued an Entry of Judgment certifying that its August 4, 2008 resolution had
become final and executory on March 9, 2009.

On January 31, 2008, the petitioners filed with the LA an Urgent Ex-Parte Motion for the
Immediate Release of the Garnished Amount.

In its March 13, 2008 order, 15 the LA granted the petitioners' motion; it directed
Metrobank-San Lorenzo to release the P1,900,000.00 garnished amount. The LA found
valid and meritorious the respondents' claim for accrued wages in view of the
respondents' refusal to reinstate the petitioners despite the final and executory nature
of the reinstatement aspect of its (LA's) May 31, 2005 decision. The LA noted that as of
the December 18, 2007 CA decision (that reversed the illegal dismissal findings of the
LA), the petitioners' accrued wages amounted to P3,078,366.33.
In its July 16, 2008 resolution, 16 the NLRC affirmed in toto the LA's

March 13, 2008 order. The NLRC afterwards denied the respondents' motion for
reconsideration for lack of merit. 17

The respondents assailed the July 16, 2008 decision and September 29, 2009 resolution
of the NLRC via a petition for certiorari filed with the CA.
The CA's ruling
The CA granted the respondents' petition. 18 It reversed and set aside the July 16, 2008
decision and the September 29, 2009 resolution of the NLRC and remanded the case to
the Computation and Examination Unit of the NLRC for the proper computation of the
petitioners' accrued wages, computed up to February 24, 2006.

The CA agreed that the reinstatement aspect of the LA's decision is immediately
executory even pending appeal, such that the employer is obliged to reinstate and
pay the wages of the dismissed employee during the period of appeal until the
decision (finding the employee illegally dismissed including the reinstatement order) is
reversed by a higher court. Applying this principle, the CA noted that the petitioners'
accrued wages could have been properly computed until December 18, 2007, the
date of the CA's decision finding the petitioners validly dismissed.

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The CA, however, pointed out that when the LA's decision is "reversed by a higher
tribunal, an employee may be barred from collecting the accrued wages if shown that
the delay in enforcing the reinstatement pending appeal was without fault" on the
employer's part. In this case, the CA declared that the delay in the execution of the
reinstatement order was not due to the respondents' unjustified act or omission. Rather,
the petitioners' refusal to comply with the February 21, 2006 return-to-work
Memorandum that the respondents issued and personally delivered to them (the
petitioners) prevented the enforcement of the reinstatement order.
Thus, the CA declared that, given this peculiar circumstance (of the petitioners' failure
to report for work), the petitioners' accrued wages should only be computed until
February 24, 2006 when they were supposed to report for work per the return-to-work
Memorandum. Accordingly, the CA reversed, for grave abuse of discretion, the NLRC's
July 16, 2008 decision that affirmed the LA's order to release the garnished amount.

Issues:
 The petitioners argue that the CA gravely erred when it ruled, contrary to Article
223, paragraph 3 of the Labor Code, that the computation of their accrued
wages stopped when they failed to report for work on February 24, 2006.
 Additionally, the petitioners direct the Court's attention to the several pleadings
that the respondents filed to prevent the execution of the reinstatement aspect
of the LA's May 31, 2005 decision, i.e., the Opposition to the Issuance of the Writ
of Execution, the Motion to Quash the Writ of Execution and the Motion to
Suspend the Order of Reinstatement. They also point out that in all these
pleadings, the respondents claimed that strained relationship barred their (the
petitioners') reinstatement, evidently confirming the respondents' lack of
intention to reinstate them.
 Finally, the petitioners point out that the February 21, 2006 Memorandum
directed them to report for work at Clark Field, Angeles, Pampanga instead of at
the NAIA-Domestic Airport in Pasay City where they had been assigned. They
argue that this directive to report for work at Clark Field violates Article 223,
paragraph 3 of the Labor Code that requires the employee's reinstatement to be
under the same terms and conditions prevailing prior to the dismissal.
 Thus, the petitioners claim that the delay in their reinstatement was in fact due to
the respondents' unjustified acts and that the respondents never really complied
with the LA's reinstatement order.

Held: We GRANT the petition.

Preliminary considerations: jurisdictional
limitations of the Court's Rule 45 review of
the CA's Rule 65 decision in labor cases

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In a Rule 45 petition for review on certiorari, what we review are the legal errors that the
CA may have committed in the assailed decision, in contrast with the review for
jurisdictional errors that we undertake in an original certiorari action. In reviewing the
legal correctness of the CA decision in a labor case taken under Rule 65 of the Rules of
Court, we examine the CA decision in the context that it determined the presence or
the absence of grave abuse of discretion in the NLRC decision before it and not on the
basis of whether the NLRC decision, on the merits of the case, was correct. Otherwise
stated, we proceed from the premise that the CA undertook a Rule 65 review, not a
review on appeal, of the NLRC decision challenged before it. Within this narrow scope
of our Rule 45 review, the question that we ask is: Did the CA correctly determine
whether the NLRC committed grave abuse of discretion in ruling on the case? 20
In addition, the Court's jurisdiction in a Rule 45 petition for review on certiorari is limited
to resolving only questions of law.

The present petition essentially raises the question — whether the petitioners may
recover the accrued wages prior to the CA's reversal of the LA's May 31, 2005 decision.
This is a question of law that falls well within the Court's power in a Rule 45 petition.

Resolution of this question of law, however, is inextricably linked with the largely factual
issue of whether the accrued wages should be computed until December 17, 2008
when the CA reversed the illegal dismissal findings of the LA or only until February 24,
2006 when the petitioners were supposed to report for work per the February 21, 2006
Memorandum. In either case, the determination of this factual issue presupposes
another factual issue, i.e., whether the delay in the execution of the reinstatement
order was due to the respondents' fault. As questions of fact, they are proscribed by our
Rule 45 jurisdiction; we generally cannot address these factual issues except to the
extent necessary to determine whether the CA correctly found the NLRC in grave
abuse of discretion in affirming the release of the garnished amount despite the
respondents' issuance of and the petitioners' failure to comply with the February 21,
2006 return-to-work Memorandum.

The jurisdictional limitations of our Rule 45 review of the CA's Rule 65 decision in labor
cases, notwithstanding, we resolve this petition's factual issues for we find legal errors in
the CA's decision. Our consideration of the facts taken within this narrow scope of our
factual review power convinced us, as our subsequent discussion will show, that no
grave abuse of discretion attended the NLRC decision.

Nature of the reinstatement aspect of the

LA's decision on a finding of illegal
dismissal

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Article 223 (now Article 229) 21 of the Labor Code governs appeals from, and the
execution of, the LA's decision. Pertinently, paragraph 3, Article 223 of the Labor Code
provides:
Article 223. APPEAL. —
xxx xxx xxx
In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the reinstatement
aspect is concerned, shall immediately be executory, pending
appeal. The employee shall either be admitted back to work under
the same terms and conditions prevailing prior to his dismissal or
separation or, at the option of the employer, merely reinstated in
the payroll. The posting of a bond by the employer shall not stay
the execution for reinstatement provided herein. [Emphasis and
underscoring supplied]

Under paragraph 3, Article 223 of the Labor Code, the LA's order for the reinstatement
of an employee found illegally dismissed is immediately executory even during
pendency of the employer's appeal from the decision. Under this provision, the
employer must reinstate the employee — either by physically admitting him under the
conditions prevailing prior to his dismissal, and paying his wages; or, at the employer's
option, merely reinstating the employee in the payroll until the decision is reversed by
the higher court. 22 Failure of the employer to comply with the reinstatement order, by
exercising the options in the alternative, renders him liable to pay the employee's
salaries. 23

Otherwise stated, a dismissed employee whose case was favorably decided by the LA
is entitled to receive wages pending appeal upon reinstatement, which reinstatement is
immediately executory. 24 Unless the appellate tribunal issues a restraining order, the LA
is duty bound to implement the order of reinstatement and the employer has no option
but to comply with it. 25

Moreover, and equally worth emphasizing, is that an order of reinstatement issued by

the LA is self-executory, i.e., the dismissed employee need not even apply for and the
LA need not even issue a writ of execution to trigger the employer's duty to reinstate the
dismissed employee. In Pioneer Texturizing Corp. v. NLRC, et al., 26 decided in 1997, the
Court clarified once and for all this self-executory nature of a reinstatement order. After
tracing back the various Court rulings interpreting the amendments introduced by
Republic Act No. 6715 27 on the reinstatement aspect of a labor decision under Article
223 of the Labor Code, the Court concluded that to otherwise "require the application
for and issuance of a writ of execution as prerequisites for the execution of a

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reinstatement award would certainly betray and run counter to the very object and
intent of Article 223, i.e., the immediate execution of a reinstatement order." 28

In short, therefore, with respect to decisions reinstating employees, the law itself has
determined a sufficiently overwhelming reason for its immediate and automatic
execution even pending appeal. 29 The employer is duty-bound to reinstate the
employee, failing which, the employer is liable instead to pay the dismissed employee's
salary. The Court's consistent and prevailing treatment and interpretation of the
reinstatement order as immediately enforceable, in fact, merely underscores the right
to security of tenure of employees that the Constitution 30 protects.

The employer is obliged to pay the

dismissed employee's salary if he
refuses to reinstate until actual
reinstatement or reversal by a higher
tribunal; circumstances that may bar an
employee from receiving the accrued wages
As we amply discussed above, an employer is obliged to immediately reinstate the
employee upon the LA's finding of illegal dismissal; if the employer fails, it is liable to pay
the salary of the dismissed employee. Of course, it is not always the case that the LA's
finding of illegal dismissal is, on appeal by the employer, upheld by the appellate court.
After the LA's decision is reversed by a higher tribunal, the employer's duty to reinstate
the dismissed employee is effectively terminated. This means that an employer is no
longer obliged to keep the employee in the actual service or in the payroll. The
employee, in turn, is not required to return the wages that he had received prior to the
reversal of the LA's decision. 31

The reversal by a higher tribunal of the LA's finding (of illegal dismissal), notwithstanding,
an employer, who, despite the LA's order of reinstatement, did not reinstate the
employee during the pendency of the appeal up to the reversal by a higher tribunal
may still be held liable for the accrued wages of the employee, i.e., the unpaid salary
accruing up to the time the higher tribunal reverses the decision. 32 The rule, therefore,
is that an employee may still recover the accrued wages up to and despite the reversal
by the higher tribunal. This entitlement of the employee to the accrued wages
proceeds from the immediate and self-executory nature of the reinstatement aspect of
the LA's decision.

By way of exception to the above rule, an employee may be barred from collecting
the accrued wages if shown that the delay in enforcing the reinstatement pending
appeal was without fault on the part of the employer. To determine whether an

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employee is thus barred, two tests must be satisfied: (1) actual delay or the fact that the
order of reinstatement pending appeal was not executed prior to its reversal; and (2)
the delay must not be due to the employer's unjustified act or omission. Note that under
the second test, the delay must be without the employer's fault. If the delay is due to
the employer's unjustified refusal, the employer may still be required to pay the salaries
notwithstanding the reversal of the LA's decision. 33

Application of the two-fold test; the

petitioners are entitled to receive their
accrued salaries until December 18, 2007
As we earlier pointed out, the core issue to be resolved is whether the petitioners may
recover the accrued wages until the CA's reversal of the LA's decision. An affirmative
answer to this question will lead us to reverse the assailed CA decision for legal errors
and reinstate the NLRC's decision affirming the release of the garnished amount.
Otherwise, we uphold the CA's decision to be legally correct. To resolve this question,
we apply the two-fold test.

First, the existence of delay — whether there was actual delay or whether the order of
reinstatement pending appeal was not executed prior to its reversal? We answer this
test in the affirmative.

To recall, on May 31, 2005, the LA rendered the decision finding the petitioners illegally
dismissed and ordering their immediate reinstatement. Per the records, the respondents
received copy of this decision on July 8, 2005. On August 20, 2005, the petitioners filed
before the LA a Motion for Issuance of Writ of Execution for their immediate
reinstatement. The LA issued the Writ of Execution on October 7, 2005. From the time the
respondents received copy of the LA's decision, and the issuance of the writ of
execution, until the CA reversed this decision on December 17, 2008, the respondents
had not reinstated the petitioners, either by actual reinstatement or in the payroll. This
continued non-execution of the reinstatement order in fact moved the LA to issue an
alias writ of execution on February 16, 2006 and another writ of execution on April 24,
2007.

From these facts and without doubt, there was actual delay in the execution of the
reinstatement aspect of the LA's May 31, 2005 decision before it was reversed in the
CA's decision.

Second, the cause of the delay — whether the delay was not due to the employer's
unjustified act or omission. We answer this test in the negative; we find that the delay in

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the execution of the reinstatement pending appeal was due to the respondents'
unjustified acts.

In reversing, for grave abuse of discretion, the NLRC's order affirming the release of the
garnished amount, the CA relied on the fact of the issuance of the February 21, 2006
Memorandum and of the petitioners' failure to comply with its return-to-work directive.
In other words, with the issuance of this Memorandum, the CA considered the
respondents as having sufficiently complied with their obligation to reinstate the
petitioners. And, the subsequent delay in or the non-execution of the reinstatement
order was no longer the respondents' fault, but rather of the petitioners who refused to
report back to work despite the directive.
Our careful consideration of the facts and the circumstances that surrounded the case
convinced us that the delay in the reinstatement pending appeal was due to the
respondents' fault. For one, the respondents filed several pleadings to suspend the
execution of the LA's reinstatement order, i.e., the opposition to the petitioners' motion
for execution filed on October 3, 2005; the motion to quash the October 7, 2005 writ of
execution with prayer to hold in abeyance the implementation of the reinstatement
order; and the motion to suspend the order for the petitioners' reinstatement filed on
February 28, 2006 after the LA issued the February 16, 2006 alias writ of execution. These
pleadings, to our mind, show a determined effort on the respondents' part to prevent or
suspend the execution of the reinstatement pending appeal.

Another reason is that the respondents, contrary to the CA's conclusion, did not
sufficiently notify the petitioners of their intent to actually reinstate them; neither did the
respondents give them ample opportunity to comply with the return-to-work directive.
We note that the respondents delivered the February 21, 2006 Memorandum (requiring
the petitioners to report for work on February 24, 2006) only in the afternoon of February
23, 2006. Worse, the respondents handed the notice to only one of the petitioners —
Pelaez — who did not act in representation of the others. Evidently, the petitioners
could not reasonably be expected to comply with a directive that they had no or
insufficient notice of.

Lastly, the petitioners continuously and actively pursued the execution of the
reinstatement aspect of the LA's decision, i.e., by filing several motions for execution of
the reinstatement order, and motion to cite the respondents in contempt and re-
computation of the accrued wages for the respondents' continued failure to reinstate
them.

These facts altogether show that the respondents were not at all sincere in reinstating
the petitioners. These facts — when taken together with the fact of delay — reveal the

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respondents' obstinate resolve and willful disregard of the immediate and self-executory
nature of the reinstatement aspect of the LA's decision.

A further and final point that we considered in concluding that the delay was due to
the respondents' fault is the fact that per the 2005 Revised Rules of Procedure of the
NLRC (2005 NLRC Rules), 34 employers are required to submit a report of compliance
within ten (10) calendar days from receipt of the LA's decision, noncompliance with
which signifies a clear refusal to reinstate. Arguably, the 2005 NLRC Rules took effect
only on January 7, 2006; hence, the respondents could not have been reasonably
expected to comply with this duty that was not yet in effect when the LA rendered its
decision (finding illegal dismissal) and issued the writ of execution in 2005. Nevertheless,
when the LA issued the February 16, 2006 alias writ of execution and the April 24, 2007
writ of execution, the 2005 NLRC Rules was already in place such that the respondents
had become duty-bound to submit the required compliance report; their
noncompliance with this rule all the more showed a clear and determined refusal to
reinstate.

All told, under the facts and the surrounding circumstances, the delay was due to the
acts of the respondents that we find were unjustified. We reiterate and emphasize,
Article 223, paragraph 3, of the Labor Code mandates the employer to immediately
reinstate the dismissed employee, either by actually reinstating him/her under the
conditions prevailing prior to the dismissal or, at the option of the employer, in the
payroll. The respondents' failure in this case to exercise either option rendered them
liable for the petitioners' accrued salary until the LA decision was reversed by the CA on
December 17, 2008. We, therefore, find that the NLRC, in affirming the release of the
garnished amount, merely implemented the mandate of Article 223; it simply
recognized as immediate and self-executory the reinstatement aspect of the LA's
decision.

Accordingly, we reverse for legal errors the CA decision. We find no grave abuse of
discretion attended the NLRC's July 16, 2008 resolution that affirmed the March 13, 2008
decision of the LA granting the release of the garnished amount.

Arabit et al., vs. Jardine Pacific Finance Inc. GR No. 181719, April 21, 2014

Facts: Petitioners were former regular employees of respondent Jardine Pacific Finance,
Inc. (formerly MB Finance) (Jardine). The petitioners 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. On the claim of
financial losses, Jardine decided to reorganize and implement a redundancy program

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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.
They reached a settlement but 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.

Issue: WON the petitioners was illegally dismissed because of the implementation of the
redundancy program
Held: Yes, 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. These rulings appropriately clarify that redundancy
does not need to be always triggered by a decline in the business. Primarily, employers
resort to redundancy when the functions of an employee have already become
superfluous or in excess of what the business requires. Thus, even if a business is doing
well, an employer can still validly dismiss an employee from the service due to
redundancy if that employee’s position has already become in excess of what the
employer’s enterprise requires.
From this perspective, it is illogical for Jardine to terminate the petitioners’ employment
and replace them with contractual employees. The replacement effectively belies
Jardine’s claim that the petitioners’ positions were abolished due to superfluity.
Redundancy could have been justified if the functions of the petitioners were
transferred to other existing employees of the company. To dismiss the petitioners and
hire new contractual employees as replacements necessarily give rise to the sound
conclusion that the petitioners’ services have not really become in excess of what
Jardine’s business requires.
Guidelines in implementing redundancy
this Court laid down the principle that the employer must use fair and reasonable
criteria in the selection of employees who will be dismissed from employment due to
redundancy. Such fair and reasonable criteria may include the following, but are not
limited to: (a) less preferred status (e.g. temporary employee); (b) efficiency; and (c)
seniority. The presence of these criteria used by the employer shows good faith on its
part and is evidence that the implementation of redundancy was painstakingly done
by the employer in order to properly justify the termination from the service of its

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employees (Golden Thread Knitting Industries vs NLRC). 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 (Asian Alcohol vs NLRC).
The first level, based on Asian Alcohol, is broader as the case recognized distinctions on
a per position basis. At this level, Jardine failed to explain why among all of the existing
positions in its organization, Jardine chose the petitioners’ posts as the ones which have
already become redundant and terminable.1âwphi1
The second level, derived from Golden Thread, is more specific. Here the distinction
narrows down to the particular employees occupying the same positions which were
already declared to be redundant. At this level, Jardine’s lapse is shown by its failure to
explain why among all of its employees whose positions were determined to be
redundant, the petitioners were the ones selected to be dismissed from the service.

Mirant (Phils) Corp., vs. Caro, GR No. 181490, April 23, 2014

Facts: Respondent was hired by Mirant Pagbilao on January 3, 1994 as its Logistics
Officer. In 2002, when Southern Company was sold to Mirant, respondent was already a
Supervisor of the Logistics and Purchasing Department of petitioner. At the time of the
severance of his employment, respondent was the Procurement Supervisor of Mirant
Pagbilao assigned at petitioner corporation’s corporate office. As Procurement
Supervisor, his main task was to serve as the link between the Materials Management
Department of petitioner corporation and its staff, and the suppliers and service
contractors in order to ensure that procurement is carried out in conformity with set
policies, procedures and practices. In addition, respondent was put incharge of
ensuring the timely, economical, safe and expeditious delivery of materials at the right
quality and quantity to petitioner corporation’s plant. Respondent was also responsible
for guiding and overseeing the welfare and training needs of the staff of the Materials
Management Department. Due to the nature of respondent’s functions, petitioner
corporation considers his position as confidential. On November 3, 2004, petitioner
corporation conducted a random drug test where respondent was randomly chosen
among its employees who would be tested for illegal drug use. Through an
Intracompany Correspondence,12 these employees were informed that they were
selected for random drug testing to be conducted on the same day that they received
the correspondence. Respondent was duly notified that he was scheduled to be tested

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after lunch on that day. His receipt of the notice was evidenced by his signature on the
correspondence.
There was phone call from his wife. She said there was a bombing incident near her
workplace in Tel Aviv. So he acted on and told the secretary of his department that
respondent that he will give preferential attention to the emergency phone call that he
just received. He also told Torres that he would be back at the office as soon as he has
resolved his predicament.

On that same day, at around 6:15 p.m., respondent returned to petitioner corporation’s
office. When he was finally able to charge his cellphone at the office, he received a
text message from Tina Cecilia (Cecilia), a member of the Drug Watch Committee that
conducted the drug test, informing him to participate in the said drug test. He
immediately called up Cecilia to explain the reasons for his failure to submit himself to
the random drug test that day. He also proposed that he would submit to a drug test
the following day at his own expense. Respondent never heard from Cecilia again.

On November 8, 2004, respondent received a Show Cause Notice15 from petitioner

corporation through Jaime Dulot (Dulot), his immediate supervisor, requiring him to
explain in writing why he should not be charged with "unjustified refusal to submit to
random drug testing." Respondent submitted his written explanation16 on November 11,
2004. Petitioner corporation further required respondent on December 14, 2004 to
submit additional pieces of supporting documents.
He was found guilty by the petitioner’s corporation Investigating panel of “unjustified
refusal of to submit random drug testing. and recommended a penalty of four working
weeks suspension without pay, instead of termination, due to the presence of mitigating
circumstances. petitioner corporation’s Asst. Vice President for Material Management
Department, George K. Lamela, Jr. (Lamela), recommended19 that respondent be
terminated from employment instead of merely being suspended.
Issue: WON respondent was validly terminated for his failure to take the mandatory
drug test

Held: No, We agree with the disposition of the appellate court that there was illegal
dismissal in the case at bar. While the adoption and enforcement by petitioner
corporation of its Anti-Drugs Policy is recognized as a valid exercise of its management
prerogative as an employer, such exercise is not absolute and unbridled. Managerial
prerogatives are subject to limitations provided by law, collective bargaining
agreements, and the general principles of fair play and justice.

Petitioner corporation’s subject Anti-Drugs Policy fell short of being fair and reasonable:

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First. The policy was not clear on what constitutes "unjustified refusal" when the subject
drug policy prescribed that an employee’s "unjustified refusal" to submit to a random
drug test shall be punishable by the penalty of termination for the first offense. To be
sure, the term "unjustified refusal" could not possibly cover all forms of "refusal" as the
employee’s resistance. The fact that petitioner corporation’s own personnel had to
dissect the intended meaning of "unjustified refusal" is further proof that it is not clear on
what context the term "unjustified refusal" applies to.

Second. The penalty of termination imposed by petitioner corporation upon

respondent fell short of being reasonable. Company policies and regulations are
generally valid and binding between the employer and the employee unless shown to
be grossly oppressive or contrary to law50 – as in the case at bar. Recognizing the
ambiguity in the subject policy, the CA was more inclined to adopt the
recommendation of petitioner corporation’s own Investigating Panel over that of
Sliman and the NLRC. Thus, We find that the recommended four (4) working weeks’
suspension without pay as the reasonable penalty to be imposed on [respondent] for
his disobedience but not the illegal termination of work.

Castro Jr. vs. Ateneo de Naga University et al., GR No. 175293, July 23, 2014

Facts: The petitioner started his employment with respondent Ateneo de Naga
University (University) in the first semester of school year 1960-1961. At the time of his
dismissal, he was a regular and full-time faculty member of the University's Accountancy
Department in the College of Commerce. Allegedly, he received on February 22, 2000
a letter from respondent Fr. Joel Tabora, SJ., the University President, informing him that
his contract (which was set to expire on May 31, 2000) would no longer be renewed.
After several attempts to discuss the matter with Fr. Tabora in person, and not having
been given any teaching load or other assignments effective June 2000, he brought his
complaint for illegal dismissal.

The University denied the allegation of illegal dismissal, and maintained that the
petitioner was a participant and regular contributor to the Ateneo de Naga Employees
Retirement Plan (Plan); that upon reaching the age of 60 years on June 26, 1999, he
was deemed automatically retired under the Plan; and that he had been allowed to
teach after his retirement only on contractual basis.

Labor Arbiter (LA) ruled in favor of the petitioner declaring the dismissal of complainant
to be illegal, ordering respondents to reinstate complainants to his former position
without loss of seniority rights or other privileges, or at respondents' option, payroll
reinstatement; payment of full backwages, damages and attorney’s fees.

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LA later on ordered the respondents to exercise the option of either actual or payroll
reinstatement of the petitioner.

On June 26, 2004, the petitioner executed a receipt and quitclaim in favor of the
University respecting his claim for the benefits under the Plan.

Meanwhile, the NLRC rendered a decision DISMISSING the complaint for lack of merit.

NLRC held that his execution of the receipt and quitclaim respecting his benefits under
the Plan estopped the petitioner from pursuing other claims arising from his employer-
employee relationship with the University.

Issues:
WON the petitioner's claim for the payment of accrued salaries and benefits for the
period that he was not reinstated was rendered moot and academic by:
(a) His receipt of the retirement benefits and execution of the corresponding receipt
and quitclaim in favor of the respondents; and
(b) The dismissal of his complaint for illegal dismissal by the NLRC

Held: Execution of the receipt and quitclaim was not a settlement of the petitioner's
claim for accrued salaries.

The NLRC held that the petitioner was estopped from pursuing his complaint for illegal
dismissal upon his receipt of the benefits and his execution of the receipt and quitclaim.
However, the payment the petitioner had received in protest pertained only to his
retirement benefits.

The text of the receipt and quitclaim was clear and straightforward, and it was to the
effect that the sum received by the petitioner represented ''full payment of benefits ...
pursuant to the Employee's retirement plan." The quitclaim related only to the
settlement of the retirement benefits, which benefits could not be confused with the
reliefs related to the complaint for illegal dismissal.
Worthy to stress is that retirement is of a different species from the reliefs awarded to an
illegally dismissed employee. Retirement is a form of reward for an employee's loyalty
and service to the employer, and is intended to help the employee enjoy the remaining
years of his life, and to lessen the burden of worrying about his financial support or
upkeep.

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In contrast, the reliefs awarded to an illegally dismissed employee are in recognition of
the continuing employer-employee relationship that has been severed by the employer
without just or authorized cause, or without compliance with due process.

Claim for accrued benefits should be sustained despite dismissal of the petitioner's
complaint.

Article 279 of the Labor Code, as amended, entitles an illegally dismissed employee to
reinstatement. Article 223 of the Labor Code requires the reinstatement to be
immediately executory even pending appeal. The law mandates the prompt
reinstatement of the dismissed or separated employee, without need of any writ of
execution. The provision of Article 223 is clear that an award for reinstatement shall be
immediately executory even pending appeal and the posting of a bond by the
employer shall not stay the execution for reinstatement. The legislative intent is quite
obvious, i.e., to make an award of reinstatement immediately enforceable, even
pending appeal. In ruling that an order or award for reinstatement does not require a
writ of execution, the Court is simply adhering and giving meaning to this rule.
Henceforth, we rule that an award or order for reinstatement is self-executory. After
receipt of the decision or resolution ordering the employee's reinstatement, the
employer has the right to choose whether to re-admit the employee to work under the
same terms and conditions prevailing prior to his dismissal or to reinstate the employee
in the payroll. In either instance, the employer has to inform the employee of his choice.
The notification is based on practical considerations for without notice, the employee
has no way of knowing if he has to report for work or not.

Hence, for as long as the employer continuously fails to actually implement the
reinstatement aspect of the decision of the LA, the employer's obligation to the
employee for his accrued backwages and other benefits continues to accumulate.
.
The Court holds that the order of reinstatement of the petitioner was not rendered moot
and academic. He remained entitled to accrued salaries from notice of the LA's order
of reinstatement until reversal thereof. The employee could be barred from claiming
accrued salaries only when the failure to reinstate him was without the fault of the
employer.

Considering that the respondents reinstated the petitioner only in November 2002, and
that their inability to reinstate him was without valid ground, they were liable to pay his
salaries accruing from the time of the decision of the LA (i.e., September 3, 2001) until
his reinstatement in November 2002. It did not matter that the respondents had yet to

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exercise their option to choose between actual or payroll reinstatement at that point
because the order of reinstatement was immediately executory.

Phil. Touristers Inc et al., vs. Mas Transit Workers Union-ANGLO-KMU GR No. 201237, Sept.
3, 2014

Facts: On June 14, 2000, Respondent Samahan ng Manggagawa sa Mas Transit-Anglo-

KMU (the Union) – a union organized through the affiliation of certain MTI bus
drivers/conductors with the Alliance of Nationalist and Genuine Labor Organizations –
filed a petition for certification election before the DOLE. The DOLE granted the Union’s
petition, prompting MTI to file a motion for reconsideration which was, however,
denied.

On September 15, 2000, MTI decided to sell its passenger buses together with its
Certificate of Public Convenience (CPC) issued by LTFRB to PTI. The sale of 50 passenger
buses together with MTI’s CPC was approved by the LTFRB. As such, PTI was issued a
new CPC authorizing it to operate using the passenger buses that were sold.

MTI then issued a "Patalastas" apprising all of its employees of the sale and transfer of its
operations to PTI, and the former’s intention to pay them separation benefits in
accordance with law and based on the resources available. The employees were also
advised to apply anew with PTI should they be interested to transfer. MTI sent each of
the individual respondents a Memorandum informing them of their termination from
work, effective on said date, in line with the cessation of its business operations caused
by the sale of the passenger buses to the new owners.

Claiming that the sale was intended to frustrate their right to self-organization and that
there was no actual transfer of ownership of the passenger buses as the stockholders of
MTI and PTI are one and the same, the Union, filed a complaint for illegal dismissal,
unfair labor practice, i.e., illegal lock out, and damages against MTI and/or Tomas
Alvarez (Alvarez), and PTI and Yague (petitioners), before the NLRC.

In their defense, MTI and Alvarez denied that the individual respondents were illegally
dismissed or locked out, contending that the closure of its business operations was valid
and justified. They claimed that the company was forced to sell its passenger buses to
PTI as it was already suffering from serious financial reverses; and that since there was
nothing more to operate, it had no choice but to cease operations. They further added
that the required Establishment Termination Report was submitted to the DOLE on
March 29, 2001, while several employees – including some of the individual respondents
– were paid their separation benefits. Hence, they contended that the claims for

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reinstatement and backwages were without factual and legal bases. Finally, they
sought the dismissal of the complaint against some of the respondents since they had
executed a "Sinumpaang Salaysay Para sa Pag-uurong ng Demanda" where they
categorically moved for the withdrawal of their complaint.

For their part, petitioners PTI denied any liability to the respondents considering that no
employer-employee relationship existed between them and that petitioners were
impleaded just because PTI happened to be the buyer of some of MTI’s passenger
buses. They further pointed out that PTI is not the predecessor-in-interest of MTI as the
sale involved the passenger buses only and did not include the latter’s other assets.

Issue: WON the CA erred in ascribing grave abuse of discretion on the part of the NLRC
when the latter gave due course to petitioners’ appeal and consequently issued a
modified Decision absolving petitioners from liability

Held: For an appeal from the LA’s ruling to the NLRC to be perfected, Article 223 (now
Article 229) of the Labor Code requires the posting of a cash or surety bond in an
amount equivalent to the monetary award in the judgment appealed from.

Petitioners filed an appeal memorandum and complied with the other requirements for
perfecting an appeal, save for the posting of the full amount equivalent to the
monetary award of P12,833,210.00. Instead, petitioners filed a motion to reduce bond
claiming that they were suffering from liquidity problems and, in support of their claim,
submitted PTI’s AFS which showed a deficit in income. Since this claim was not amply
controverted by respondents, and considering further the significance of petitioners’
argument raised in their appeal, i.e., that there exists no employer-employee
relationship between PTI and the individual respondents, on the basis of which lies their
non-liability, the Court deems that the NLRC did not gravely abuse its discretion in
deciding that these circumstances constitute meritorious grounds for the reduction of
the bond. The absence of grave abuse of discretion in this case is bolstered by the fact
that petitioners’ motion to reduce bond was accompanied by a P5,000,000.00 surety
bond which was seasonably posted within the reglementary period to appeal. In this
relation, it must be clarified that while the partial bond was initially tainted with defects,
i.e., that it was initially issued in favor of MTI and not PTI, and that the bonding company,
SSSICI, had no authority to transact business in all courts of the Philippines at that time,
these defects had already been cured by the petitioners’ posting of Supersede as
Bond, in the full amount of P12,833,000.00, issued on November 8, 2004 by the Far
Eastern Surety & Insurance Company, Inc., in timely compliance with the NLRC’s
September 30, 2004 Order. Verily, the subsequent completion of the bond, in addition

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to the reasons above-stated, behooves this Court to hold that the NLRC actually had
sound bases to take cognizance of petitioners’ appeal. As the Court sees it, the NLRC’s
reinstatement of petitioners’ appeal in this case was merely impelled by the doctrine
that letter-perfect rules must yield to the broader interest of substantial justice, as well as
the Labor Code’s mandate to "use every and all reasonable means to ascertain the
facts in each case speedily and objectively, without regard to technicalities of law or
procedure, all in the interest of due process." An act of a court or tribunal can only be
considered to be tainted with grave abuse of discretion when such act is done in a
capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction,
which clearly is not extant with respect to the NLRC’s cognizance of petitioners’ appeal
before it. Thus, the CA’s ruling granting the certiorari petition on this score must be
reversed and set aside. However, considering that there were other issues raised in the
said petition relating to the substantial merits of the case which were left undecided, a
remand of the case for the CA’s resolution of these substantive issues remains in order,
in line with the doctrine of hierarchy of courts as espoused in the St. Martin Funeral
Home v. NLRC ruling.

Azuelo vs. Zameco II Electric Cooperative, Inc. GR No. 192573, October 22, 2014

Facts: Padilla was a regular employee of Am-Phil, engaged in the restaurant business.
Sometime in March 2004, the latter’s officers informed Padilla that Am-Phil would be
implementing a retrenchment program that would be affecting 3 of its employee, with
him being one of them. The retrenchment program was allegedly on account of serious
and adverse business conditions. Padilla filed a complaint for illegal dismissal
questioning the choice to retrench him. Labor Arbiter (LA) Chuanico was assigned the
complaint. On May 9, 2005, LA Chuanico rendered the decision finding Padilla illegally
dismissed. Among others, he noted that Am-Phil failed to substantiate its claim of serious
business losses and that it failed to comply with the procedural requirement for a proper
retrenchment. Am-Phil filed a motion for leave to file supplemental rejoinder dated May
20, 2005 but filed only on May 31, 2005. Am-Phil filed an appeal with the NLRC claiming
that LA Chuanico was in error in deciding the case despite the pendency of its motion
for leave to file supplemental rejoinder. Through this supplemental rejoinder, Am-Phil
supposedly intended to submit its audited financial statements for the years 2001 to
2004 and, thereby, prove that it had suffered business losses.

The NLRC affirmed the decision of LA Chuanico. The Court of Appeals further affirmed
the decision dismissing the petition for certiorari filed before it.

Issues: WON it was proper for LA Chuanico to have ruled that Padilla was illegally
dismissed despite Am-Phil’s pending motion for leave to file supplemental rejoinder to
submit its audited financial statements for the years 2001 to 2004.

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Held: The motion for leave to file the supplemental order was filed after the
promulgated decision. Common sense dictates that as the motion for leave to file
supplemental rejoined was filed after the rendition of the decision, the decision could
not have possibly taken into consideration the motion. Giving consideration to a motion
filed after the promulgation of the decision is not only unreasonable, it is impossible.

Even if we were to ignore the curious fact that the motion was filed after the rendition
of the decision, LA Chuanico was under no obligation to admit the supplemental
rejoinder.

Rule V of the 2002 NLRC Rules of Procedure, then in effect, provides: xxx These verified
position papers to be submitted shall cover only those claims and causes of action
raised in the complaint excluding those that may have been amicably settled, and
shall be accompanied by all supporting documents including the affidavits of their
respective witnesses which shall take the place of the latter’s direct testimony. The
parties shall thereafter not be allowed to allege facts, or present evidence to prove
facts, not referred to and any cause or causes of action not included in the complaint
or position papers, affidavits and other documents. (Emphasis supplied)
From the provisions of the 2002 Rules, it is clear that a supplemental rejoinder, as
correctly ruled by the National Labor Relations Commission, is not a pleading which a
labor arbiter is duty-bound to accept. Even following changes to the National Labor
Relations Commission Rules of Procedure in 2005 and 2011, a rejoinder has not been
recognized as a pleading that labor arbiters must necessarily admit. The 2005 and 2011
National Labor Relations Commission Rules of Procedure only go so far as to recognize
that a reply “may” be filed by the parties.

Thus, LA Chuanico was under no obligation to grant Am-Phil’s motion for leave to admit
supplemental rejoinder and, thereby, consider the supplemental rejoinder’s averments
and annexes. That Am-Phil had to file a motion seeking permission to file its
supplemental rejoinder (i.e., motion for leave to file) is proof of its own recognition that
the labor arbiter is under no compulsion to accept any such pleading and that the
supplemental rejoinder’s admission rests on the labor arbiter’s discretion.

Am-Phil’s three (3) pleadings having been allowed, Am-Phil had no shortage of
opportunities to plead its claims and to adduce its evidence. It has no basis for
claiming that it was not “afforded [a] fair and reasonable opportunity to explain [its
side] of the controversy.” The filing of its motion for leave to admit supplemental
rejoinder represents nothing more than a belated and procedurally inutile attempt at
resuscitating its case.

University of Pangasinan vs. Fernandez, GR No. 211228, Nov. 12, 2014

Facts: Florentino and Nilda Fernandez (Fernandez) filed an illegal dismissal case against
University of Pangasinan Inc. (“UPI” for brevity) with Labor Arbiter Gambito (LA

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Gambito). LA Gambito ruled in favor of Fernandez and awarded them separation pay
in lieu of reinstatement, and backwages from May 9, 2000(date of illegal dismissal) up
to November 6, 2000, the promulgation of judgment. UPI appealed to the NLRC to no
avail however the NLRC reversed its decision in a Motion for Reconsideration filed by
UPI. Fernandez filed a Petition for Certiorari in the Court of Appeals (CA) assailing the
decision of the NLRC. The CA ruled in favor of Fernandez and reinstated LA Gambito’s
earlier decision. UPI appealed to the Supreme Court but denied and its Motion for
Reconsideration was likewise denied thus prompting the Supreme Court to issue an
Entry of Judgment making its resolution final and executory as of July 11, 2005.

Fernandez then moved for the re-computation of their award of backwages and other
benefits from the finality of LA Gambito’s decision up to July 11, 2005 and also prayed
for the issuance of a Motion for Execution. This was questioned by UPI. LA Flores issued a
Motion for Execution which included the re-computation prayed for by Fernandez. UPI
filed a Motion for Reconsideration but was denied by LA Flores being in violation of the
NLRC Rules of Procedure. UPI appealed the same to the NLRC which reversed the
decision of LA Flores. Fernandez then filed a Petition for Certiorari in the CA. The CA
ruled in favor of Fernandez.

Issue: WON re-computing the awards to include the period of time from LA Gambito’s
decision up to the finality of the Supreme Court’s decision (July 11, 2005) is violative of
the principle of immutability of a final and executory judgment.

Held: Updating the computation of awards to include as well backwages and

separation pay corresponding to the period after the rendition of LA Gambito's decision
on November 6, 2000 up to its finality on July 11, 2005 is not violative of the principle of
immutability of a final and executory judgment.

No essential change is made by a re-computation as this step is a necessary

consequence that flows from the nature of the illegality of dismissal declared in that
decision. A re-computation (or an original computation, if no previous computation has
been made) is a part of the law—specifically, Article 279 of the Labor Code and the
established jurisprudence on this provision—that is read into the decision. By the nature
of an illegal dismissal case, the reliefs continue to add on until full satisfaction, as
expressed under Article 279 of the Labor Code. The re-computation of the
consequences of illegal dismissal upon execution of the decision does not constitute an
alteration or amendment of the final decision being implemented. The illegal dismissal
ruling stands; only the computation of monetary consequences of this dismissal is
affected and this is not a violation of the principle of immutability of final judgments.

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That the amount the petitioner shall now pay has greatly increased is a consequence
that it cannot avoid as it is the risk that it ran when it continued to seek recourses
against the labor arbiter's decision. Article 279 provides for the consequences of illegal
dismissal in no uncertain terms, qualified only by jurisprudence in its interpretation of
when separation pay in lieu of reinstatement is allowed. When that happens, the finality
of the illegal dismissal decision becomes the reckoning point instead of the
reinstatement that the law decrees.

Metroguards Secuirty Agency vs. Hilongo, GR No. 215630, March 9, 2015

Facts: In his decision in April 30, 2010, the Labor Arbiter (LA) found that Hilongo was
illegally dismissed by petitioner. Petitioner was ordered to pay backwages from the
date of the illegal dismissal up to the date of said decision and also awarded him
separation pay. The computation of awards of the LA was P170,520. Petitioner
appealed to the NLRC who revered the decision. Hilongo filed a petition for certiorari
with the CA who ruled in favor of him. Petitioner filed a Motion for Reconsideration,
which was denied with finality in its Resolution dated March 26, 2013. Petitioners no
longer appealed the decision of the CA prompting Hilongo to file a motion for Entry of
Judgment and a motion for clarification of decision/resolution praying that the March
26, 2013 Resolution of the CA include the amount of the award as stated in the Labor
Arbiter’s Decision dated April 30, 2010 and additional award computed from May 1,
2010 to March 26, 2013.

In its Resolution dated June 11, 2013, the CA granted the motion for entry of judgment
and noted Hilongo’s motion for clarification of decision/resolution. The CA held that
when an appellate court affirms the Labor Arbiter’s ruling, it is understood that awards
due to the illegally dismissed employee shall be recomputed in order to account for the
period of time that has lapsed from the rendition of the Labor Arbiter’s decision up to its
finality. The case was then remanded to the Labor Arbiter which however ruled that the
computation in the April 30, 2010 prevails. Hilongo filed for extraordinary remedy with
the NLRC which was dismissed and his Motion for Reconsideration also being denied,
he filed a petition for certiorari with the CA. The CA granted Hilongo’s petition.

Issue: Whether the CA in re-computing the monetary awards in favor of Hilongo has
violated the principle of immutability of final and executory judgments.

Held: 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

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consequences of this dismissal is affected, and this is not a violation of the principle of
immutability of final judgments.

Said CA Decision dated September 7, 2012 became final and executory on April 26,
2013. Thus, the April 30, 2010 Decision of the Labor Arbiter which ordered the payment
of separation pay in lieu of reinstatement, effectively ended the employment
relationship of the parties on April 26, 2013, the date the CA decision became final.
Since the Labor Arbiter’s computation of Hilongo’s monetary award was up to the date
of his April 30, 2010 Decision only, the CA properly decreed the computation of
additional back wages and separation pay.

However, the CA incorrectly concluded that the April 30, 2010 Decision of the Labor
Arbiter became final on June 11, 2013, contrary to its own finding that it became final
and executory on April 26, 2013. This led to its erroneous computation of the additional
back wages and separation pay of Hilongo, as well as reckoning the date of the 12%
legal interest. Following the teaching of Nacar v. Gallery Frames that the computation
of the monetary consequences (back wages and separation pay) of the illegal
dismissal decision should be reckoned from its finality, the additional back wages and
separation pay of Hilongo should be computed from May 1, 2010 to April 26, 2013.
Further, the payment of legal interest of 12% per annum should also be from April 26,
2013 up to June 30, 2013. Thereafter, in accordance with Bangko Sentral ng Pilipinas
Monetary Board’s Circular No. 799, series of 2013, the legal interest computed from July
1, 2013 until the monetary awards were fully satisfied will be 6% per annum.

Seacrest Maritime management vs. Picar, GR No. 209383, March 11, 2015

Facts: Mauricio Picar, Jr. was employed by Sealion Shipping Limited-United Kingdom
through its local manning agent Seacrest Maritime Management, Inc., as Chief Cook
continuously for several contracts from April 2005 until his last employment contract in
2010, on board the vessel, “MV Toisa Paladin.” The last contract was for a fixed duration
of three (3) months which commenced on September 5, 2010 with a basic salary of
USD630.00 exclusive of overtime pay and other benefits.

On September 24, 2010, Picar experienced high fever, chilling, lumbar back pain, and
difficulty in urinating accompanied with blood. He was referred for medical treatment
to the Maritime Medical Center (MMC) in Singapore. He was diagnosed with Urinary
Tract Infection (UTI) and Renal Calculus. After his check-up, he was required to go back
to the vessel and take a rest. On September 28, 2010, he was brought back to MMC
where he was confined until October 1, 2010. On October 2, 2010, he was repatriated.

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Upon his arrival in Manila, Picar was referred to Dr. Alegre. He underwent sonography of
his kidney and urinary bladder, which showed “renal cyst on his right kidney; calyceal
lithiasis, right; and normal urinary bladder; slightly enlarged prostate gland was noted.”
Dr. Alegre repeatedly recommended that he undergo extracorporeal shockwave
lithotripsy for the dissolution of his right kidney stone.

On February 23, 2011, Picar consulted Dr. Vicaldo who also diagnosed him to be
suffering from Right Renal Calculus, Essential Hypertension. Dr. Vicaldo considered his
illness as work aggravated/related and declared him unfit to resume work as a seafarer
in any capacity.

Picar then filed a complaint for permanent disability compensation, balance of sick
wages, reimbursement of medical expenses, moral and exemplary damages, and
attorney’s fees.

The Labor Arbiter rendered judgment in favor of Picar. The LA found that his illness was
work-related and that the nature of his work as a chief cook contributed to the
aggravation of his condition.

On appeal, the NLRC affirmed in toto the decision of the LA. The NLRC ruled that Picar’s
disability was permanent as he was totally unable to perform his job for more than 120
days from his repatriation.

Petitioners elevated the matter to the CA, while Picar moved for the execution of the
LA decision. On July 3, 2012, the LA issued a Writ of Execution for the enforcement and
full satisfaction of its decisions. Consequently, petitioners paid the judgment award as
evidenced by the Satisfaction of Judgment pursuant to a Writ of Execution with
Acknowledgment Receipt executed by the NLRC-NCR Sheriff on August 31, 2012.

The CA, in its assailed decision, dated May 2, 2013, dismissed the petition. The CA, citing
Career Philippines Ship Management, Inc. vs. Madjus, ruled that the payment by
petitioners of the judgment award constituted an amicable settlement that had
rendered the petition moot and academic.
Issue: WON the petition for certiorari before the CA became moot and academic by
the satisfaction of the judgment award

Held: No. The petition for certiorari before the CA was not rendered moot and
academic by the petitioner’s satisfaction of the judgment award in compliance with
the writ of execution rendered by the Labor Arbiter.

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Petitioners were correct in contending that the settlement of the judgment award was
by virtue of a writ of execution duly issued and was effected specifically without
prejudice to further recourse before the CA. There was nothing voluntary about the
satisfaction of the judgment award made in strict and compulsory compliance with
Rule XI, Section 8 of the 2011 NLRC Rules of Procedure. The terms of the settlement were
fair to both the employer and employee.

The case cited by the Court of Appeals, Career Philippines vs. Madjus, finds no
application in the present case. In the said case, while petitioner employer had the
luxury of having other remedies available to it such as its petition for certiorari pending
before the CA and an eventual appeal to the SC, respondent seafarer could no longer
pursue other claims, including interests that may accrue during the pendency of the
case. Thus it was there held that the LA and the CA could not be faulted for interpreting
petitioner’s “conditional settlement” to be tantamount to an amicable settlement of
the case resulting in the mootness of the petition for certiorari.

In the present case, no such document was executed between the parties. The
payment of the judgment award without prejudice by petitioners required no
obligations whatsoever on the part of Picar.

Petitioners satisfied the judgment award in strict compliance with the duly issued writ of
execution and pursuant to terms fair to both parties. The equitable ruling in Career
Philippines vs. Madjus would certainly be unfair to petitioners in this case as they still
have a remedy under the rules. The CA, therefore, was in error in dismissing the petition
for being moot and academic.

Waterfront Cebu City Casino Hotel vs. Ledesma, GR No. 197556, March 25, 2015

Facts: Debrando Ledesma was employed as a House Detective at Waterfront. He was

dismissed on the basis of the complaints filed before Waterfront by Christe Mandal, a
supplier of a concessionaire of Waterfront, and Rosanna Lofranco, who was seeking a
job at the same hotel. It was found, based on the affidavits and testimonies of Mandal
and Lofranco during the administrative hearings conducted by Waterfront, that
Ledesma kissed and mashed the breasts of Mandal inside the hotel’s elevator, and
exhibited his penis and asked Lofranco to masturbate him at the conference room of
the hotel.

On August 12, 2008, Ledesma filed a complaint for illegal dismissal.

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The Labor Arbiter found that the allegations leveled against Ledesma are mere
concoctions, and concluded that Ledesma was illegally dismissed. The LA ordered the
Waterfront to reinstate him to his former position without loss of seniority right and with
full backwages reckoned from the date of the suspension up to actual reinstatement. It
further required the respondent to pay Ledesma his service incentive leave amounting
to 3,910.50.

On appeal, the NLRC reversed the ruling of the LA and held that Ledesma’s act of
sexual overtures to Christe Mandal and Rosanna Lofranco constituted grave
misconduct justifying his dismissal from employment.

The NLRC denied Ledesma’s motion for reconsideration in a Resolution dated February
22, 2010. A copy of such Resolution was received by Atty. Abellana, Ledesma’s counsel
of record, on March 15, 2010.

On May 17, 2010, or 63 days after Atty. Abellana received a copy of the NLRC’s
Resolution denying the motion for reconsideration, said counsel filed before the CA a
petition for certiorari under Rule 65 of the Rules of Court.

On August 5, 2010, Ledesma, now assisted by a new counsel, filed a motion for leave to
file amended petition, and sought the admission of his Amended Petition for Certiorari.
In the amended petition, he contended that his receipt on March 24, 2010 (and not the
receipt on March 15, 2010 by Atty. Abellana), is the reckoning date of the 60-day
reglementary period within which to file the petition. Hence, Ledesma claims that the
petition was timely filed on May 17, 2010.

Issue: WON the petition for certiorari was timely filed with the Court of Appeals

Held: The unjustified failure of Ledesma to file his petition for certiorari before the CA
within the 60-day period is a ground for the outright dismissal of said petition.

Atty. Abellana, Ledesma’s counsel, admittedly received a copy of the NLRC Resolution
denying the Motion for Reconsideration on March 15, 2010 while Ledesma received his
copy on March 24, 2010. The last day to file his petition for certiorari is on May 14, 2010,
a Friday. Ledesma therefore belatedly filed his petition on May 17, 2010. When a party
to a suit appears by counsel, service of every judgment and all orders of the court must
be sent to the counsel. This is so because notice to counsel is an effective notice to the

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client, while notice to the client and not his counsel is not notice in law. Receipt of
notice by the counsel of record is the reckoning point of the reglementary period.

The negligence of Atty. Abellana in the computation of the 60-day period, and
reckoning such period from the party’s receipt of the assailed resolution were similar
arguments rejected in Labao vs. Flores. In the Labao case, the respondents maintained
that they should not suffer the negligence of their counsel in the late filing of their
petition for certiorari, and the 60-day period be reckoned from their own notice of the
NLRC’s denial of their MR. The Supreme Court, however, said that the general rule is: a
client is bound by the acts, even mistakes, of his counsel in the realm of procedural
technique.

With the expiration of the 60-day period to file a petition for certiorari, a review of the
Resolution of the NLRC will be beyond the jurisdiction of any court. No longer assailable,
the NLRC Resolution could not be altered or modified. In Labao vs. Flores, the Supreme
Court has said that the NLRC’s resolution became final ten days after counsel’s receipt,
and the respondents’ failure to file the petition within the required 60-day period
rendered it impervious to any attack through a Rule 65 petition for certiorari. Thus, no
court can exercise jurisdiction to review the resolution.

The relaxation of procedural rules may be allowed only when there are exceptional
circumstances to justify the same. There should be an effort on the part of the party
invoking liberality to advance a reasonable or meritorious explanation for his/her failure
to comply with the rules.

Both in his petition and amended petition, Ledesma never invoked the liberality of the
CA nor endeavored to justify the belated filing of his petition. Absent valid and
compelling reasons for the procedural lapse, the desired leniency cannot be accorded
to him.

Assuming for a moment that the petition for certiorari was timely filed with the CA, said
recourse should suffer the same fate of dismissal for lack of merit. Otherwise stated,
there is no substantial justice that may be served here in disregarding the procedural
flaw committed by Ledesma because the NLRC correctly found him guilty of
misconduct or improper behavior in committing lascivious conduct and demanding
sexual favors from Christe Mandal and Rosanna Lofranco.

Manila Mining Corp vs. Amor, GR No. 182800, April 20, 2015

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Facts: Respondents were regular employees of petitioner Manila Mining Corporation.
Petitioner temporarily shut down its mining operations pending approval of its
application to increase said facility’s capacity by the DENR-EMB, Butuan City.

Petitioner served a notice, informing its employees and DOLE of the temporary
suspension of its operations for six months and the temporary lay-off of two-thirds of its
employees. After the lapse of said period, petitioner notified the DOLE on 11 December
2001 that it was extending the temporary shutdown of its operations for another six
months. Adversely affected by petitioner’s continued failure to resume its operations,
respondents filed the complaint for constructive dismissal and monetary claims before
the Regional Arbitration Branch No. XIII of the NLRC. On 25 October 2004, Executive
Labor Arbiter rendered a Decision holding petitioner liable for constructive dismissal in
view of the suspension of its operations beyond the six-month period allowed under
Article 286.

Aggrieved, petitioner filed its memorandum of appeal before the NLRC11 and moved
for the reduction of the appeal bond to P100,000.00, on the ground that its financial
losses in the preceding years had rendered it unable to put up one in cash and/or
surety equivalent to the monetary award. In opposition, respondents moved for the
dismissal of the appeal in view of the fact that, despite receipt of the appealed
decision on 24 November 2004, petitioner mailed their copy of the memorandum of
appeal only on 7 February 2005. Respondents also argued that the appeal bond
tendered by petitioner was so grossly disproportionate to monetary award for the same
to be considered substantial compliance with the requirements for the perfection of an
appeal from a Labor Arbiter’s decision. Without addressing the procedural issues raised
by respondents, however, the NLRC Fifth Division went on to render a Resolution
reversing the appealed decision and dismissing the complaint for lack of merit.

Respondents filed the Rule 65 petition for certiorari before the Mindanao Station of the
CA. Insisting that petitioner’s memorandum of appeal was filed 65 days after the lapse
of reglementary period for appeal, respondents called attention to the fact that, as
grossly inadequate as it already was vis-à-vis the P2,138,190.02 monetary award
adjudicated in their favor, the check in the sum of P100,000.00 deposited by petitioner
by way of appeal bond was dishonored upon presentment for payment.

CA then rendered decision granting respondents’ petition and nullifying the NLRC’s
Resolution. Petitioner’s motion for reconsideration of the foregoing decision was denied
for lack of merit. Hence, this Rule 45 petition for review on certiorari.

Issues:

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1. WON the petitioner’s appeal filed with the national labor relations commission was
fatally defective.
2. WON the bond posted was valid.

Held: Time and again, it has been held that the right to appeal is not a natural right or a
part of due process; it is merely a statutory privilege, and may be exercised only in the
manner and in accordance with the provisions of law.

Having received the Labor Arbiter’s Decision on 24 November 2004, petitioner had ten
(10) calendar days or until 4 December 2004 within which to perfect an appeal.
Considering that the latter date fell on a Saturday, petitioner had until the next working
day, 6 December 2004, within which to comply with the requirements for the perfection
of its appeal. Our perusal of the record shows that, despite bearing the date 3
December 2004, petitioner’s memorandum of appeal was subscribed before Notary
Public Ronald Rex Recidoro only on 6 December 2004. Without proof as to the actual
date of filing of said pleading being presented by both parties, the CA discounted the
timeliness of its filing in light of the established fact that the copy thereof intended for
respondents was only served by registered mail on 7 February 2005. Since proof of
service of the memorandum on appeal is required for the perfection of an appeal from
the decision of the Labor Arbiter, the CA ruled that "respondents filed its appeal not
earlier than 07 February 200[5], which is way beyond the ten-day reglementary period
to appeal."

As allegation is not evidence, however, the rule is settled that the burden of evidence
lies with the party who asserts the affirmative of an issue. As the parties claiming the
non-perfection of petitioner’s appeal, it was, therefore, respondents who had the
burden of proving that said memorandum of appeal was, indeed, filed out of time. By
and of itself, the fact that the copy of memorandum of appeal intended for
respondents was served upon them by registered mail only on 7 February 2005 does not
necessarily mean that petitioner’s appeal from the Labor Arbiter’s decision was filed out
of time. On the principle that justice should not be sacrificed for technicality, it has
been ruled that the failure of a party to serve a copy of the memorandum to the
opposing party is not a jurisdictional defect and does not bar the NLRC from
entertaining the appeal. Considering that such an omission is merely regarded as a
formal lapse or an excusable neglect, the CA reversibly erred in ruling that, under the
circumstances, petitioner could not have filed its appeal earlier than 7 February 2005.

Furthermore, on the matter of the filing and acceptance of motions to reduce appeal
bond, as provided in Section 6, Rule VI of the 2011 NLRC Rules of Procedure, the Court
hereby RESOLVES that henceforth, the following guidelines shall be observed:

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(a) The filing of a motion to reduce appeal bond shall be entertained by the NLRC
subject to the following conditions:
(1) there is meritorious ground; and
(2) a bond in a reasonable amount is posted;
(b) For purposes of compliance with condition no. (2), a motion shall be
accompanied by the posting of a provisional cash or surety bond equivalent to ten
percent (10), of the monetary award subject of the appeal, exclusive of damages
and attorney's fees;
(c) Compliance with the foregoing conditions shall suffice to suspend the running of
the 10-day reglementary period to perfect an appeal from the labor arbiter's
decision to the NLRC;
(d) The NLRC retains its authority and duty to resolve the motion to reduce bond and
determine the final amount of bond that shall be posted by the appellant, still in
accordance with the standards of meritorious grounds and reasonable amount;
and
(e) In the event that the NLRC denies the motion to reduce bond, or requires a bond
that exceeds the amount of the provisional bond, the appellant shall be given a
fresh period of ten (10) days from notice of the NLRC order within which to perfect
the appeal by posting the required appeal bond.39

In this case, we see that with no proof to substantiate its claim, petitioner moved for a
reduction of the appeal bond on the proffered basis of serious losses and reverses it
supposedly sustained in the years prior to the rendition of the Labor Arbiter's decision.

The first condition may be left for the nonce. As to the second condition, we may
consider that the amount of P100,000.00 supposedly posted was provisional bond
sufficient to suspend the running of the 10-day reglementary period to perfect an
appeal from the Labor Arbiter's decision. That would however not improve petitioner's
position one bit.

Respondent correctly called attention to the fact that the check submitted by
petitioner was dishonored upon presentment for payment, thereby rendering the
tender thereof ineffectual. Although the NLRC chose not to address the issue of the
perfection of the appeal as well as the reduction of the bond in its Resolution dated 25
April 2005, the record shows that petitioner only manifested its deposit of the funds for
the check 24 days before the resolution of its appeal or 116 days after its right to appeal
the Labor Arbiter’s decision had expired. Having filed its motion and memorandum on
the very last day of the reglementary period for appeal, moreover, petitioner had no
one but itself to blame for failing to post the full amount pending the NLRC’s action on

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its motion for reduction of the appeal bond. If redundancy be risked it must be
emphasized that the posting of a bond is indispensable to the perfection of an appeal
in cases involving monetary awards from the decision of the Labor Arbiter. Since it is the
posting of a cash or surety bond which confers jurisdiction upon the NLRC, the rule is
settled that non-compliance is fatal and has the effect of rendering the award final
and executory.

Dela Rosa Liner Inc et vs. Borela et GR No. 207286, July 29, 2016

Facts: Respondents Calixto Borela, bus driver, and Estelo Amarille, conductor, filed
separate complaints4 (later consolidated) against petitioners Dela Rosa Liner, Inc., a
public transport company, Rosauro Dela Rosa, Sr., and Nora Dela Rosa, for
underpayment/non-payment of salaries, holiday pay, overtime pay, service incentive
leave pay,13th month pay, sick leave and vacation leave, night shift differential, illegal
deductions, and violation of Wage Order Nos. 13, 14, 15 and 16.

In a motion dated October 26, 2011, the petitioners asked the labor arbiter to dismiss
the case for forum shopping. They alleged that on September 28, 2011, the CA 13th
Division disposed of a similar case between the parties (CA-G.R. SP No. 118038) after
they entered into a compromise agreement5 which covered all claims and causes of
action they had against each other in relation to the respondents' employment.

The respondents opposed the motion, contending that the causes of action in the
present case are different from the causes of action settled in the case the petitioners
cited.

The Rulings on Compulsory Arbitration

Labor Arbiter: Upheld the petitioners' position and dismissed the complaint on grounds
of forum shopping. Respondents appealed the LA's ruling.

National Labor Relations Commission (NLRC) 1st Division: Reversed LA’s dismissal order,
and reinstated the complaint. The NLRC held that the respondents could not have
committed forum shopping as there was no identity of causes of action between the
two cases, as follows:

1. First complaint, illegal dismissal and unfair labor practice;

2. Second complaint, nonpayment/underpayment of salaries and monetary
benefits, and violation of several wage orders.

The CA Decision

On appeal, CA found no grave abuse of discretion in the NLRC ruling that the
respondents did not commit forum shopping when they filed their second complaint.

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The NLRC likewise held that neither was the case barred by res judicata arising from the
CA judgment in the first case.

First case: The NLRC rendered a decision only awarding the respondents financial
assistance of P10,000.00 each, in consideration of their long years of service to the
company. The respondents sought relief from the CA through a petition for certiorari
(CA-G.R. SP No. 118038). Thereafter, the parties settled the case amicably through the
compromise agreement. Under the terms of this agreement, "(t)he parties has agreed
to terminate the case now pending before the Court of Appeals and that both parties
further agree that no further action based on the same grounds be brought against
each other, and this Agreement applies to all claims and damages or losses either
party may have against each other whether those damages or losses are known or
unknown, foreseen or unforeseen."

Based on this agreement, Borela and Amarille received from respondents P350,000.00
and P150,000.00, respectively, and executed a quitclaim. Consequently, CA rendered
judgment in accordance with the compromise agreement and ordered an entry of
judgmentIn this manner, the parties resolved the first case.

Second Case: CA upheld the NLRC's decision and ruled out the presence of forum
shopping and res judicata as bars to the respondents' subsequent money claims
against the petitioners.

The petitioners moved for reconsideration, but the CA denied the motion in its resolution
of May 21, 2013.

Issue: WON the 2nd cause of action is barred by forum shopping or res judicata.

Held: No, CA committed no reversible error when it affirmed the NLRC ruling that the
second complaint is not barred by the rule on forum shopping nor by the principle of res
judicata.

A money claim (2nd case), is not a "similar case" to the first complaint, thus, the filing of
the second complaint did not constitute forum shopping and the judgment in the first
case is not a res judicata ruling that bars the second complaint.

The elements of forum shopping are: (1) identity of parties; (2) identity of rights asserted
and relief prayed for, the relief being founded on the same facts; and (3) identity of the
two preceding particulars such that any judgment rendered in the other action will,
regardless of which party is successful, amount to res judicata in the action under
consideration.16

There is no identity of rights asserted and reliefs prayed for, and the judgment rendered
in the previous action will not amount to res judicata in the action now under
consideration. There is also no identity of causes of action in the first complaint and in
the second complaint.

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There is sufficient basis exists for the NLRC's and CA's conclusions that there is no identity
of causes of action between the respondents' two complaints against the
petitioners.1âwphi1 The first complaint involved illegal dismissal/suspension, unfair labor
practice with prayer for damages and attorney's fees; while the second complaint (the
subject of the present appeal) involves claims for labor standards benefits -the
petitioners' alleged violation of Wage Orders Nos. 13, 14, 15 and 16; nonpayment of
respondents' sick and vacation leave pays, 13thmonth pay, service incentive leave
benefit, overtime pay, and night shift differential.

We likewise cannot accept the compromise agreement's application "to all claims and
damages or losses either party may have against each other whether those damages
or losses are known or unknown, foreseen or unforeseen."20

This coverage is too sweeping and effectively excludes any claims by the respondents
against the petitioners, including those that by law and jurisprudence cannot be
waived without appropriate consideration such as nonpayment or underpayment of
overtime pay and wages.

In Pampanga Sugar Development, Co., Inc., v. Court of Industrial Relations, et al., 21 the
Court reminded the parties that while rights may be waived, the waiver must not be
contrary to law, public policy, morals, or good customs; or prejudicial to a third person
with a right recognized by law.22 In labor law, respondents' claim for 13th-month pay,
overtime pay, and statutory wages (under Wages Orders 13, 14, 15 and 16), among
others, cannot simply be generally waived as they are granted for workers' protection
and welfare; it takes more than a general waiver to give up workers' rights to these
legal entitlements.

Toyota Alabang Inc vs. Games, GR No. 206612, Aug 17, 2015

Facts: Edwin Games was a foreman of Toyota. The latter accused the former of stealing
it vehicle lubricants and charged him with qualified theft. Two years thereafter, Games
complained of illegal dismissal, nonpayment of benefits and damages against Toyota.
The latter failed to pass its position paper.

LA ruled in favor of Games ordering Toyota to pay separation pay, backwages, service
incentive leave pay and attorney's fees. When a Writ of Execution was issued by LA,
Toyota moved to quash the writ and prayed that the case may be reopened.

It appealed to NLRC but was denied for failure to show proof of its security deposit for
the appeal bond.

Issues:

1. WON an employer is required to post bind upon appel to NLRC from a decision of
LA?

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2. WON an appeal to the NLRC can still be allowed after the decision of LA has
become final and executory?

Held:

1. YES. Under Article 223 of the Labor Code and Sec. 6, Rule VI of the NLRC Rules of
Procedure, in case the ruling of the LA involves monetary award, an employer's appeal
may be perfected only upon the posting of a bond.

2. NO. An appeal is not a matter of right but a statutory privilege. It may be availed only
in the manner provided by law and the rules Thus, a party who seeks to elevate an
action must comply with the requirements of the 2011 NLRC rules of Procedure and it
prohibits appeals from final and executory decisions of the Labor Arbiter.

Rosales et vs. New ANJH Enterprises, et GR No. 203355, Aug 18, 2015, En Banc

Facts: New ANJH is a sole proprietorhip owned by Noel. The petitioners are it former
employees.

Noel wrote to DOLE notifying it about its impending cessation of operations and the sale
of its assets to NH Oil Mill. He also gave notices to his employees regarding the cessation
of operations of company.

The petitioner-employees recieved their separation pays. Thereafter, they filed a

complaint for illegal dismissal. They aleged that while NEW ANJH stopped its operations,
it resumed as NH OIL using the same machineriesand with the same owners and
management. They claim that the sale of the assets if New ANJH to New Oil was a
circumvention of their security of tenure.

The Labor Arbiter found that there had been illegal dismissal and ordered petitioners'
reinstatement and the payment of full backwages less the amount of separation pay.

New ANJH filed their Nnotice of Appeal with Memorandum along with a Verified
Motion to Reduce Bond with the NLRC. They posted 60% of the award ordered by the
LA.

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NLRC denied the Verified Motion to Reduce Bond or lack of merit and so the appeal
was dismissed for non-perfection.

Issue: Whether or not the appeal was perfected?

Held: Yes. Under Rule VI of the New Rules of Procedure of the NLRC, a motion to reduce
bond shall entertained "upon posting of a bond in a reaasonable amount in relation to
the monetary award. As to what the "reasonable amount" is, the NLRC has wide
discretion in determining the reasonableness of the bond for purposes of perfecting an
appeal.

The following guidelines shall be observed:

(a) The filing of a motion to reduce appeal bond shall be entertained by the NLRC
subject to the following conditions: (1) there is meritorious ground; and (2) a bond in a
reasonable amount is posted;

(b) For purposes of compliance with condition no. (2), a motion shall be accompanied
by the posting of a provisional cash or surety bond equivalent to ten percent (10%) of
the monetary award subject of the appeal, exclusive of damages and attorney's fees;

(c) Compliance with the foregoing conditions shall suffice to suspend the running of the
10-day reglementary period to perfect an appeal from the labor arbiter's decision to
the NLRC;

(d) The NLRC retains its authority and duty to resolve the motion to reduce bond and
determine the final amount of bond that shall be posted by the appellant, still in
accordance with the standards of eritorious grounds and reasonable amount; and

(e) In the event that the NLRC denies the motion to reduce bond, or requires a bond
that exceeds the amount of the provisional bond, the appellant shall be given a fresh
period of ten (10) days from notice of the NLRC order within which to perfect the
appeal by posting the required appeal bond.

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The 60% bond was reasonable given the merits of the justification provided in their
Motion to Reduce Bond, as supplemented by their Motion for Reconsideration with
Motion to Admit Additional Appeal Case Bond. Therefore, the appeal was perfected.

Phil. Air Lines vs. Bichara, GR No. 213729, Sept 2, 2015

Facts: In 1968, PAL hired Bichara as a flight attendant. Sometime in 1971, PAL
implemented a retrenchment program. By April of that year, Bichara voluntarily
resigned. In 1975, he was rehired.
In 1993, he was included in PAL's Purser Upgrading Program in which he graduated. As
flight purser, he was required to take 5 check rides for his performance evaluation and
earn at least an 85% rating for each ride. However, he failed in the 2 check rides with
ratings of 83.46% and 80.63%. Consequently, Bichara was demoted to the position of
flight steward.

Bichara appealed his demotion to PAL but no action was taken; hence, he filed a
complaint for illegal demotion against PAL before the NLRC-Regional Arbitration
Branch.

The Labor Arbiter declared Bichara's demotion as illegal, and accordingly, ordered PAL
to reinstate Bichara to his position as flight purser. PAL appead before the NLRC and the
CA but both upheld the Labor Arbiter's ruling. After that, PAL no longer appealed to the
Court, thus, it rendered the decision final and executory.

During the pendency of the illegal demotion case before the CA, PAL implemented
another retrenchment program that resulted in the termination of Bichara's
employment. This prompted him, along with more than 1,400 other retrenched flight
attendants, represented by the FASAP, to file a reinstatement and payment of salaries,
allowances, backwages and damages againt PAL. It appealed all the way to the
Supreme Court.

In 2005, Bichara reached the 60-year old compulsory retirement agae under the PAL-
FASAP CBA.

Bichara filed a motion for execution of the 1997 Decision which PAL opposed by
arguing that the 'Complaint for Illegal Demotion was overtaken by supervening events,
i.e. the retrenchment in 1998 and his having reached the compulsory retirement age in
2005'.

LABOR ARBITER's RULING:

The Labor Arbiter granted Bichara's motion for execution, thus, directing the issuance of
a writ of execution against PAL and/or a certain Jose Garcia to jointly and severally pay

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Bichara: (a) separation pay in lieu of reinstatement equivalent to one (1) month's pay
for every year of service counting from October 28, 1968 up to the present, excluding
the period from April 1, 1971 until May 15, 1975, or a period of 35 years; and (b)
attorney's fees in the amount of P20,000.00.

NLRC's RULING:

The NLRC reversed and set aside LA Macam's February 4, 2009 Order and denied the
motion for execution for being moot and academic, considering Bichara's compulsory
retirement in 2005, without prejudice to the latter's entitlement to backwages and
retirement benefits of a flight steward pursuant to this Court's final decision in the FASAP
case.

COURT OF APPEAL’s RULING:

the CA reversed and set aside the NLRC's ruling. It did not find LA Macam to have
exceeded his authority in ordering the payment of separation pay in lieu of
reinstatement since, in a long line of cases, this Court has consistently held that when
reinstatement is not possible due to over age, payment of separation pay is in place.
The CA, however, observed that since Bichara was one of the retrenched employees
involved in the FASAP case, this Court's Decision dated October 2, 2009, wherein it ruled
that the retrenchment was illegal and thereby stated that "[f]light attendants who have
reached their compulsory retirement age of retirement shall receive backwages up to
the date of their retirement only," should be made to apply. Thus, instead of separation
pay, Bichara is entitled to backwages from the time of his retrenchment up to the time
he reached the compulsory retirement age of 60. In addition, since the June 16, 1997
Decision, rendered in the illegal demotion case, had already become final and
executory, he is entitled to salary differentials of a flight purser from a flight attendant
from March 21, 1994, i.e., the date of his demotion, up to the time of his retrenchment in
July 1998. He is also entitled to retirement benefits in accordance with the existing CBA
at the time of his retirement.

Issue: Whether or not NLRC exceeded its authority in ordering the reinstatement of
Bichara

Held: YES.

A judgment should be implemented according to the terms of its dispositive portion is a

long and well-established rule. As such, where the writ of execution is not in harmony
with and exceeds the judgment which gives it life, the writ has pro tanto no validity.

A companion to this rule is the principle of immutability of final judgments, which states
that a final judgment may no longer be altered, amended or modified, even if the
alteration, amendment or modification is meant to correct what is perceived to be an
erroneous conclusion of fact or law and regardless of what court renders it. Any

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attempt to insert, change or add matters not clearly contemplated in the dispositive
portion violates the rule on immutability of judgments. But like any other rule, this
principle has exceptions, namely: (1) the correction of clerical errors; (2) the so-called
nunc pro tunc entries which cause no prejudice to any party; (3) void judgments; and
(4) whenever circumstances transpire after the finality of the decision rendering its
execution unjust and inequitable.

In this case, the final judgment sought to be executed is LA Nora's June 16, 1997
Decision, which was confined to the directive that PAL reinstate Bichara as a flight
purser in view of his illegal demotion to the position of flight attendant:

IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered declaring

the illegality of complainant's [Bichara] demotion/reversion to Flight
Steward and ordering the respondents [PAL] to reinstate the complainant
to his position as Flight Purser within ten (10) days from receipt of this
Decision.

The claim for damages is dismissed for lack of merit.

SO ORDERED.

Evidently, LA Macam went beyond the terms of the June 16, 1997 Decision when
he, in his February 4, 2009 Order, directed the issuance of a writ of execution
ordering the payment of separation pay in lieu of reinstatement.

Unlike the cases cited by the CA, which all involved illegal dismissal cases, it
would not be proper to accord such relief in this case since, in those cases, the
awards of separation pay in lieu of reinstatement were all hinged on the validity
of the employee's dismissal. Here, the validity of Bichara's termination is the
subject matter of a separate case, i.e., the FASAP case, which is still pending
before this Court, and is also beyond the ambit of the illegal demotion
proceedings. Hence, LA Macam exceeded his authority when he ruled on this
issue and directed PAL to pay Bichara separation pay in lieu of reinstatement.

Further, it should be pointed out that the principle of immutability of judgments,

from which the above-stated rule on writ of executions proceed, allow courts, as
an exception, to recognize circumstances that transpire after the finality of the
decision which would render its execution unjust and inequitable and act
accordingly. Thus, in view of the supervening events above-mentioned, this
Court deems the award of salary differential to be the just and equitable award
under the circumstances herein prevailing. Jurisprudence holds that courts may
modify or alter the judgment to harmonize the same with justice and the facts
when after judgment has been rendered and the latter has become final, facts
and circumstances transpire which render its execution impossible or unjust, as in
this case.

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Continental Micronesia vs. Basso, GR No. 178382-83, Sept 23, 2015

Facts: Petitioner Continental Micronesia, Inc. (CMI) is a foreign corporation coming from
the US while Respondent Basso is a US citizen residing in the Philippines prior to his death.

During his visit in Manila, Mr. Braden, Managing Director-Asia of Continental Airlines, Inc.,
offered him the position of General Manager of the Philippine Branch of Continental.
Basso accepted the offer.

2 years after, CMI took over the Philippine operations of Continental, with Basso
retaining his position as General Manager.

On December 20, 1995, Basso received a letter from Mr. Schulz, who was then CMI’s
Vice President of Marketing and Sales, informing him that he has agreed to work in CMI
as a consultant on “as needed basis” effective February 1, 1996 to July 31, 1996
February 1, 1996 to July 31, 1996. The letter also informed him the following:

1. He will not receive any monetary compensation but will continue being covered
by the insurance provided by CMI.

2. He will enjoy travel privileges.

3. CMI will advance P1,140,000.00 for the payment of housing lease for 12 months.

Basso wrote a counter-proposal to Mr. Schulz regarding his employment status in CMI.
He also wrote another letter addressed to Ms. Woodward of CMI’s Human Resources
Department inquiring about the status of his employment.

Ms. Woodward respondent that pursuant to the employment contract dated February
1, 1991, Basso could be terminated at will upon a thirty-day notice. The notice was
allegedly the letter he received from Mr. Schulz. She also informed him about the
rejection of CMI of his counter-proposal and that in lieu of that, CMI terminated his
employment effective January 31, 1996. CMI offered a severance pay, in consideration
of the P1,140,000.00 housing advance that CMI promised him.

Basso filed a Complaint for Illegal Dismissal with Moral and Exemplary Damages against.
Alleging the presence of foreign elements, CMI filed a Motion to Dismiss on the ground
of lack of jurisdiction over the person of CMI and the subject matter of the controversy.

The Labor Arbiter granted the Motion to Dismiss. Applying the doctrine of lex loci
contractus, the Labor Arbiter held that the terms and provisions of the employment
contract show that the parties did not intend to apply our Labor Code (Presidential
Decree No. 442). The Labor Arbiter also held that no employer-employee relationship
existed between Basso and the branch office of CMI in the Philippines, but between
Basso and the foreign corporation itself.

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On appeal, the NLRC remanded the case to the Labor Arbiter for the determination of
certain facts to settle the issue on jurisdiction. NLRC ruled that the issue on whether the
principle of lex loci contractus or lex loci celebrationis should apply has to be further
threshed out.

LABOR ARBITER'S RULING:

The Labor Arbiter dismissed the case for lack of merit and jurisdiction. It agreed with the
CMI that the employment contract was executed in the US "since the letter-offer was
under the Texas letterhead and the acceptance of Complainant was returned there."
Thus, applying the doctrine of lex loci celebrationis, US laws apply. Also, applying lex loci
contractus, the Labor Arbiter ruled that the parties did not intend to apply Philippine
laws, thus:

Although the contract does not state what law shall apply, it is obvious that Philippine
laws were not written into it. More specifically, the Philippine law on taxes and the Labor
Code were not intended by the parties to apply, otherwise Par. 7 on the payment by
Complainant U.S. Federal and Home State income taxes, and Pars. 22/23 on
termination by 30-day prior notice, will not be there. The contract was prepared in
contemplation of Texas or U.S. laws where Par. 7 is required and Pars. 22/23 is allowed.

The Labor Arbiter, however, found CMI to have voluntarily submitted to his office’s
jurisdiction. CMI participated in the proceedings, submitted evidence on the merits of
the case, and sought affirmative relief through a motion to dismiss.

NLRC's RULING:

The NLRC did not agree with the pronouncement of the Labor Arbiter that his office has
no jurisdiction over the controversy. It ruled that the Labor Arbiter acquired jurisdiction
over the case when CMI voluntarily submitted to his office’s jurisdiction by presenting
evidence, advancing arguments in support of the legality of its acts, and praying for
reliefs on the merits of the case.

COURT OF APPEALS's DECISION:

The Court of Appeals ruled that the Labor Arbiter and the NLRC had jurisdiction over the
subject matter of the case and over the parties. The Court of Appeals explained that
jurisdiction over the subject matter of the action is determined by the allegations of the
complaint and the law. Since the case filed by Basso is a termination dispute that is
"undoubtedly cognizable by the labor tribunals", the Labor Arbiter and the NLRC had
jurisdiction to rule on the merits of the case. On the issue of jurisdiction over the person
of the parties, who are foreigners, the Court of Appeals ruled that jurisdiction over the
person of Basso was acquired when he filed the complaint for illegal dismissal, while
jurisdiction over the person of CMI was acquired through coercive process of service of

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summons to its agent in the Philippines. The Court of Appeals also agreed that the
active participation of CMI in the case rendered moot the issue on jurisdiction.

Issue: Whether or not NLRC has jurisdiction over the case

Held: Yes.

Jurisdiction is defined as the power and authority of the courts to hear, try and decide
cases. Jurisdiction over the subject matter is conferred by the Constitution or by law
and by the material allegations in the complaint, regardless of whether or not the
plaintiff is entitled to recover all or some of the claims or reliefs sought therein. It cannot
be acquired through a waiver or enlarged by the omission of the parties or conferred
by the acquiescence of the court. That the employment contract of Basso was replete
with references to US laws, and that it originated from and was returned to the US, do
not automatically preclude our labor tribunals from exercising jurisdiction to hear and
try this case.

This case stemmed from an illegal dismissal complaint. The Labor Code, under Article
217, clearly vests original and exclusive jurisdiction to hear and decide cases involving
termination disputes to the Labor Arbiter.

Hence, the Labor Arbiter and the NLRC have jurisdiction over the subject matter of the
case.

As regards jurisdiction over the parties, we agree with the Court of Appeals that the
Labor Arbiter acquired jurisdiction over the person of Basso, notwithstanding his
citizenship, when he filed his complaint against CMI. On the other hand, jurisdiction over
the person of CMI was acquired through the coercive process of service of summons.
We note that CMI never denied that it was served with summons. CMI has, in fact,
voluntarily appeared and participated in the proceedings before the courts. Though a
foreign corporation, CMI is licensed to do business in the Philippines and has a local
business address here. The purpose of the law in requiring that foreign corporations
doing business in the country be licensed to do so, is to subject the foreign corporations
to the jurisdiction of our courts.

Considering that the Labor Arbiter and the NLRC have jurisdiction over the parties and
the subject matter of this case, these tribunals may proceed to try the case even if the
rules of conflict-of-laws or the convenience of the parties point to a foreign forum, this
being an exercise of sovereign prerogative of the country where the case is filed.

Ilaw Buklod ng Manggagawa Nestle Phils Chapter vs. Nestle Phils, GR No. 198675, Sept
23, 2015

Facts: On January 13, 1997, herein petitioner union staged a strike against herein
respondent company's Ice Cream and Chilled Products Division, citing, as grounds,

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respondent's alleged violation of the collective bargaining agreement (CBA), dismissal
of union officers and members, discrimination and other unfair labor practice (ULP)
acts.

As a consequence, respondent filed with the National Labor Relations Commission

(NLRC) a Petition for Injunction a temporary restraining order was issued by the NLRC.
Thereafter, on February 7, 1997, the NLRC issued a preliminary injunction.

On February 26, 1997, respondent filed a Petition to Declare Strike Illegal. Subsequently,
on April 2, 1997, then Department of Labor and Employment (DOLE) Acting Secretary,
issued an Order assuming jurisdiction over the strike and certifying the same to the
NLRC.

However, after a series of conciliation meetings and discussions between the parties,
they agreed to resolve their differences and came up with a compromise which was
embodied in a Memorandum of Agreement (MOA) dated August 4, 1998.

On August 6, 1998, the parties filed a Joint Motion to Dismiss stating that they are no
longer interested in pursuing the petition for injunction filed by respondent as a
consequence of the settlement of their dispute. On October 12, 1998, the NLRC issued
its Decision approving the parties' compromise agreement and granting their Joint
Motion to Dismiss.

On January 25, 2010, or after a lapse of more than eleven (11) years from the time of
execution of the subject MOA, petitioners filed with the NLRC a Motion for Writ of
Execution contending that they have not been paid the amounts they are entitled to in
accordance with the MOA.

Respondent filed its Opposition to the Motion for Writ of Execution contending that
petitioners' remedy is already barred by prescription because, under the 2005 Revised
Rules of the NLRC, a decision or order may be executed on motion within five (5) years
from the date it becomes final and executory and that the same decision or order may
only be enforced by independent action within a period of ten (10) years from the date
of its finality.

Issue: Whether or not the petitioners' claim is already barred by prescription

Held: It is wrong for petitioners' counsel to argue that since the NLRC Decision
approving the parties' compromise agreement was immediately executory, there was
no need to file a motion for execution. It is settled that when a compromise agreement
is given judicial approval, it becomes more than a contract binding upon the parties.
Having been sanctioned by the court, it is entered as a determination of a controversy
and has the force and effect of a judgment. It is immediately executory and not
appealable, except for vices of consent or forgery. The non-fulfillment of its terms and
conditions justifies the issuance of a writ of execution; in such an instance, execution

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becomes a ministerial duty of the court. Stated differently, a decision on a compromise
agreement is final and executory. Such agreement has the force of law and is
conclusive between the parties. It transcends its identity as a mere contract binding
only upon the parties thereto, as it becomes a judgment that is subject to execution in
accordance with the Rules.

The most relevant rule in the instant case is Section 8, Rule XI, 2005 Revised Rules of
Procedure of the NLRC which states that:

Section 8. Execution by Motion or by Independent Action. — A decision or order may

be executed on motion within five (5) years from the date it becomes final and
executory. After the lapse of such period, the judgment shall become dormant, and
may only be enforced by an independent action within a period of ten (10) years from
date of its finality.

In the same manner, pertinent portions of Sections 4 (a) and 6, Rule III, of the NLRC
Manual on Execution of Judgment, provide as follows:

Section 4. Issuance of a Writ. — Execution shall issue upon an order, resolution or

decision that finally disposes of the actions or proceedings and after the counsel of
record and the parties have been duly furnished with the copies of the same in
accordance with the NLRC Rules of Procedure, provided:

a) The Commission or Labor Arbiter shall, motu proprio or upon motion of any interested
party, issue a writ of execution on a judgment only within five (5) years from the date it
becomes final and executory. . . .

xxx xxx xxx

Section 6. Execution by Independent Action. — A judgment after the lapse of five (5)
years from the date it becomes final and executory and before it is barred by
prescription, may only be enforced by an independent action.

Article 1144 of the Civil Code may, likewise be applied, as it provides that an action
upon a written contract must be brought within ten years from the time the right of
action accrues.

It is clear from the above law and rules that a judgment may be executed on motion
within five years from the date of its entry or from the date it becomes final and
executory. After the lapse of such time, and before it is barred by the statute of
limitations, a judgment may be enforced by action. If the prevailing party fails to have
the decision enforced by a mere motion after the lapse of five years from the date of its
entry (or from the date it becomes final and executory), the said judgment is reduced
to a mere right of action in favor of the person whom it favors and must be enforced, as
are all ordinary actions, by the institution of a complaint in a regular form.

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In the present case, the five-and ten-year periods provided by law and the rules are
more than sufficient to enable petitioners to enforce their right under the subject MOA.
In this case, it is clear that the judgment of the NLRC, having been based on a
compromise embodied in a written contract, was immediately executory upon its
issuance on October 12, 1998. Thus, it could have been executed by motion within five
(5) years. It was not. Nonetheless, it could have been enforced by an independent
action within the next five (5) years, or within ten (10) years from the time the NLRC
Decision was promulgated. It was not. Therefore, petitioners' right to have the NLRC
judgment executed by mere motion as well as their right of action to enforce the same
judgment had prescribed by the time they filed their Motion for Writ of Execution on
January 25, 2010.

Quantum Foods Inc vs. Esloyo, GR No. 213696, Dec 9, 2015

Facts: Petitioner Quantum Foods, Inc. is a domestic corporation engaged in the

distribution and selling of food products nationwide. It hired Esloyo as Major Accounts
Representative and later on promoted to the position of Regional Sales Manager for
Visayas and Mindanao. On the other hand, it hired Magsila as Key Accounts
Representative for the Panay Area.

Quantum decided to reorganize its sales force nationwide following a drastic drop in its
net income, and Magsila was among those retrenched. However, Magsila’s final pay
and other benefits were not release due to alleged discovery of
unauthorized/undocumented deductions, which he purportedly failed to explain.

Esloyo was terminated from work on the ground of loss of trust and confidence due to
his numerous violations of the company rules and regulations.

Aggrieved, Esloyo and Magsila filed separate complaints for illegal dismissal with money
claims against Quantum. They also impleaded Dole Philippines, Inc. as party to the
case, claiming that said company required them to perform additional tasks that were
necessary and desirable for its operations, and that Dole, as well as its Executive
personnel had created and organized Quantum, and thus, should be held jointly and
solidarily liable with Quantum for respondent’s claims.

Quantum maintained that respondents’ dismissal were valid, hence, it is not liable for
their money claims. On the other hand, Dole deined any employer-employee
relationship with respondents.

The Labor Arbiter found respondents to have been illegally dismissed and ordered
Quantum to pay respondents a total monetary judgment of P1,817,856.71 but DOLE
was deleted as party to the case, upon a finding that it has no employer-employee
relationship with respondents. Dissatisfied, Quantum filed its Notice of Appeal and

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Memorandum of Appeal before the NLRC accompanied by a Motion to Reduce Bond
and a cash bond in the amount of P400,000 (partial bond).

Before the NLRC could act on the Motion to Reduce Bond, Quantum posted a surety
bond from an accredited insurance company fully covering the monetary judgment.

The NLRC gave due course to Quantum’s appeal holding that there was substantial
compliance with the bond requirement and held that respondents were not illegally
dismissed.

The Court of Appeals reversed and set aside the NLRC’s ruling and reinstated the LA’s
Decision. It ruled that Quantum’s failure to post the required bond in an amount
equivalent to the monetary judgment impeded the perfection of its appeal, and
rendered the LA’s Decision final and executory. Thus, the NLRC was bereft of jurisdiction
and abused its discretion in entertaining the appeal.

Issue: Whether the appeal bond posted accompanied by a motion to reduce bond is
reasonable in order to suspend the period to perfect an appeal.

Held: YES.

While it has been settled that the posting of a cash or surety bond is indispensable to
the perfection of an appeal in cases involving monetary awards from the decision of
the LA, in several cases, the Court has relaxed this stringent requirement whenever
justified. Thus, the Rules – specifically Section 6, Rule VI – thereof, allow the reduction of
the appeal bond upon a showing of: (a) the existence of a meritorious ground for
reduction, and (b) the posting of a bond in a reasonable amount in relation to the
monetary award.

In Nicol vs. Footjoy Industrial Corp., the Court summarized the guidelines under which
the NLRC must exercise its discretion in considering an appellant’s motion for reduction
of bond in this wise:

“The bond requirement on appeals involving monetary awards has been and may be
relaxed in meritorious cases. These cases include instances in which (1) there was
substantial compliance with the Rules, (2) surrounding facts and circumstances
constitute meritorious grounds to reduce the bond, (3) a liberal interpretation of the
requirement of an appeal bond would serve the desired objective of resolving
controversies on the merits, or (4) the appellants, at the very least, exhibited their
willingness and/or good faith by posting a partial bond during the reglementary period.

Here, Quantum posted a partial bond in the amount of P400,000, or more than twenty
percent (20%) of the monetary judgment, within the reglementary period to appeal,
together with the Motion to Reduce Bond anchored on its averred difficulty in raising
the amount of the bond and searching for an insurance company that can cover said

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amount within the short period of time to perfect its appeal. Before the NLRC could
even act on the Motion to Reduce Bond, Quantum posted a surety bond from an
accredited insurance company covering fully the judgment award.

As to what constitutes “a reasonable amount of bond” that must accompany the

motion to reduce bond in order to suspend the period to perfect an appeal, the Court,
in McBurnei vs. Ganzon, pronounce:

To reduce that the provisions of Section 6, Rule VI of the NLRC Rules of Procedure that
give parties the chance to seek a reduction of the appeal bond are effectively carried
out, without however defeating the benefits of the bond requirement in favor of a
winning litigant, all motions to reduce bond that are to be filed with the NLRC shall be
accompanied by the posting of a cash or surety bond equivalent to 10% of the
monetary award that is subject of the appeal, which shall provisionally be deemed the
reasonable amount of the bond in the meantime that an appellant’s motion is pending
resolution by the Commission. ..

Hence, the posting of a P400,000 cash bond equivalent to more than 20% of the
monetary judgment, together with Motion to Reduce Bond within the reglementary
period was sufficient to suspend the period to perfect the appeal. The posting of the
said partial bond coupled with the subsequent posting of a surety bond in an amount
equivalent to the monetary judgment also signified Quantum’s good faith and
willingness to recognize the final outcome of its appeal.

It should be emphasized that the NLRC has full discretion to grant or deny the motion to
reduce bond, and its ruling will not be disturbed unless tainted with grave abuse of
discretion. Verily, an act of a court of tribunal can only be considered to be tainted
with grave abuse of discretion when such act is done in a capricious or whimsical
exercise of judgment as is equivalent to lack of jurisdiction, which clearly is not extant
with respect to the NLRC’s cognizance of Quantum’s appeal. Far from having gravely
abused its discretion, the NLRC correctly preferred substantial justice over the rigid and
stringent application of procedural rules.

De Ocampo vs. RPN-9/Radio Phils Network, GR No. 192947, Dec 9, 2015

Facts: De Ocampo filed a case for illegal dismissal, unpaid salaries, damages, and
attorney's fees against respondent Radio Philippines Network, Inc. (RPN-9) and several
RPN-9 officers.

The Labor Arbiter rendered a Decision finding De Ocampo to have been illegally
dismissed. RPN-9 was ordered to pay her separation pay in lieu of reinstatement and full
backwages. The impleaded officers of RPN-9 were absolved from liability.

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RPN-9 filed an appeal. CA then issued a TRO preventing the NLRC from enforcing its
ruling for a period of 60 days. after the lapse of the 60-day period the ruling of the Labor
Arbiter, as affirmed by the NLRC, became final and executory.

Notwithstanding the satisfaction of the original award, De Ocampo filed a Motion to

Recompute the Monetary Award. She sought the increase of the monetary award.

The Labor Arbiter denied the motion on the ground that the first decision was already
final and executory.

Issue: WON petitioner Melanie De Ocampo may still seek a srecomputation of and an
increase in the monetary award given her.

Held: It is basic that a judgment can no longer be disturbed, altered, or modified as

soon as it becomes final and executory, "[n]othing is more settled in law."Once a case is
decided with finality, "the controversy is settled and the matter is laid to rest.” Basic
rationality dictates that there must be an end to litigation.

The only exceptions to the general rule are the correction of clerical errors, the so-
called nunc pro tunc entries which cause no prejudice to any party, void judgments,
and whenever circumstances transpire after the finality of the decision rendering its
execution unjust and inequitable. None of the four exceptions mentioned warrant a
modification of judgments that have attained finality is availing in this case.
What petitioner seeks is not a mere clerical correction. Rather, she seeks an overhaul of
Executive Labor Arbiter Manansala's Decision in order that it may award her a total
additional sum of P571,888.83 representing backwages, separation pay, 13th month
pay, and accrued interest. Petitioner does not merely seek an entry into the records of
acts done but not entered (i.e., nunc pro tunc entries). Petitioner does not claim that
Executive Labor Arbiter Manansala's Decision is void, only that its computation of
monetary awards is inadequate. Neither does petitioner allege that certain events
transpired after May 27, 2006 rendering Executive Labor Arbiter Manansala's Decision
unjust or inequitable.

Guillermo vs. Uson, GR No. 198967, March 7, 2016

Facts: Respondent Crisanto Uson was formerly an accounting supervisor in Royal Class
Venture Phils., Inc. (RCV) before being dismissed from employment on December 20,
2000. Upon alleged that he was dismissed by Jose Emmanuel Guillermo when Uson
exposed the practice of said President/General Manage of dictating and
undervaluing the shares of stock of the corporation.

He won an illegal dismissal case against RCV and was awarded backwages,
reinstatement, 13th month pay as well as moral and exemplary damages and
attorney’s fees. Royal Class Venture did not file an appeal but repeated issuances of
Writs of Execution against the same remained unsatisfied. Upon filed another motion for
Alias Writ of Execution (his fourth this time).

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Labor Arbiter granted the motion filed by Uson and held herein petitioner Guillermo, in
his personal capacity jointly and severally liable with the corporation stating that the
officers of a corporation are jointly and severally liable for the obligations of the
corporation (“piercing the veil of corporate fiction”) to the employees even if the said
officers were not parties to the case.

Guillermo filed a Motion for Reconsideration but the LA denied. He appealed to the
NLRC but it dismissed the case. He then filed a petition for certiorari before the CA but
the latter court upheld all the findings of NLRC.

Hence the instant petition. He contended that: Officers cannot be include as judgment
obligor in a labor case for the first time only after the decision of the LA had become
final and executor; He assails the so-called piercing the veil of corporate fiction which
allegedly discriminated against him when he alone was belatedly imploded despite
the existence of other officers in RCV; He claims that LA has no jurisdiction because the
case is one of an intra-corporate controversy, with the complainant Uson also claiming
to be a stockholder and director of RCV.

Issues:
1. Whether or not petitioner, as a corporate officer, may be included as judgment
obligor in a labor case for the first time only after the decision of the LA had become
final and executory
2. Whether or not the case is an intra-corporate controversy divesting the LA of his
jurisdiction

Held:
1. Yes. Veil of corporate fiction can be pierced and responsible corporate directors
and officers or even a separate but related corporation may be imploded and held
answerable solidarily in labor case, even after final judgment and on execution, so
long as it is established that such persons have deliberately used the corporate
vehicle to unjustly evade the judgment obligation, or have resorted to fraud, bad
faith or malice in doing so. The facts of the case show that Guillermo acted in bad
faith and malicious intent to evade the judgment obligation.

2. Nature of action and the jurisdiction of a tribunal are determined by the allegations
of the complaint at the time of its filing, irrespective of whether or not the plaintiff is
entitled to recover upon all or some of the claims asserted therein.

Although Uson is a stockholder, not all conflicts between a stockholder and the
corporation are intra-corporate. An examination of the complaint must be made on
whether the complainant is involved in his capacity as a stockholder or director, or as
an employee, If the complaint is made in the capacity of an employee, then the case
is a labor case cognizable by the NLRC and is not within the jurisdiction of any other
tribunal.

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To be an intra-corporate controversy, two elements must concur:(Speed Distribution,

Inc. vs CA)
3. The status or relationship of the parties - must arise out of intra-corporate or
partnership relations between any or all of the parties and the corporation,
partnership, or association of which they are stockholders, member or associates;
between any or all of them and the corporation, partnership, or association of
which they are stockholders, member or associates respectively; and between such
corporation, partnership, or association and the State insofar as it concerns their
individual franchise.

4. Nature of the question that is the subject of their controversy - dispute among the
parties be intrinsically connected with the regulation or the corporation. If the nature
of the controversy involves matters that are purely civil in character, necessarily, the
case does not involve an intra-corporate controversy.

Uson’s dismissal raised no intra-corporate relationship issues between him and the
corporation or Guillermo; neither did it raise any issue regarding the regulation of the
corporation. Uson’s complaint were entered alone on his dismissal as an employee. The
matter us clearly a labor dispute cognizable by the labor tribunals.

Fontana Development Corp., vs. Vukasinovic, GR No. 222424, Sept. 21, 2016
32. Manila Doctors College vs. Olomores, GR No. 225044, Oct. 3, 2016
33. Dee Jay’s Inn & Café vs. Raneses, GR No. 191823, Oct. 5, 2016
34. Buenaflor Car Services vs. Cezar Durumpili David GR No. 222730, Nov. 7, 2016
35. C.I.C.M Mission Seminaries School of Theology Inc. vs. Perez, GR No. 220506, January 18, 2017
36. Turks Shawarma Company vs. Pajaron, et al., GR No. 207156, January 16, 2017
37. Dutch Movers Inc. vs. Lequin, et al., GR No. 210032, April 25, 2017
38. Doble, Jr. vs. ABB Inc. GR No. 215627, June 5, 2017
39. Philtranco Services Enterprises Inc. vs. Cual, et al., GR No. 207684, July 17, 2017
40. Genpact Services Inc. vs. Santos-Falceso, GR No. 227695, July 31, 2017

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