Labor Law Case Digest Summary

LABOR LAW
CASE DIGESTS
ARELLANO UNIVERSITY EMPLOYEES AND WORKERS UNION, et al. v. COURT OF
APPEALS, et al. 502 SCRA 219 (2006), THIRD DIVISION (Carpio Morales, J.)
An ordinary striking worker may not be declared to have lost his employment status by mere participation in an illegal strike.
The Arellano University Employees and Workers Union (the Union), the exclusive bargaining representative
of about 380 rank-and-file employees of Arellano University, Inc. (the University), filed with the National
Conciliation and Mediation Board (NCMB) a Notice of Strike charging the University with Unfair Labor
Practice (ULP). After several controversies and petitions, a strike was staged.
Upon the lifting of the strike, the University filed a Petition to Declare the Strike Illegal before the National
Labor Relations Commission (NLRC). The NLRC issued a Resolution holding that the University was not
guilty of ULP. Consequently, the strike was declared illegal. All the employees who participated in the illegal
strike were thereafter declared to have lost their employment status.
ISSUE:
Whether or not an employee is deemed to have lost his employment by mere participation in an illegal strike
HELD:
Under Article 264 of the Labor Code, an ordinary striking worker may not be declared to have lost his
employment status by mere participation in an illegal strike. There must be proof that he knowingly participated
in the commission of illegal acts during the strike. While the University adduced photographs showing strikers
picketing outside the university premises, it failed to identify who they were. It thus failed to meet the
―substantiality of evidence test‖ applicable in dismissal cases.
With respect to the union officers, as already discussed, their mere participation in the illegal strike warrants
their dismissal.
ASIA PACIFIC CHARTERING (PHILS.) INC. v. MARIA LINDA R. FAROLAN

393 SCRA 454 (2002), THIRD DIVISION (Carpio Morales, J.)
The termination of a managerial employee on the ground of “loss of confidence” should have a basis and the determination of the
same cannot be left entirely to the employer.
Petitioner Asia Pacific Chartering (Phils.) Inc. (Asia) is tasked with the selling of passenger and cargo spaces
for Scandinavian Airlines System. Petitioner Asia, through its Vice President Catalino Bondoc (Bondoc),
offered Respondent Maria Linda R. Farolan (Farolan) the sales manager position to which Farolan accepted.
Upon Vice President Bondoc’s request, Farolan submitted a detailed report attributing the drop of sales
revenue to market forces beyond her control. Consequently, Asia directed Roberto Zozobrado (Zozobrado)
to implement solutions. Zozobrado informally took over Farolan’s marketing and sales responsibilities but she
continued to receive her salary. Asia claims that the increase in sales revenue was due to Zozobrado’s
management.
Asia then sent a letter of termination to Farolan on the ground of ―loss of confidence‖, forcing Farolan to file
a complaint for illegal dismissal. The Labor Arbiter found that the dismissal was illegal for lack of just cause,
however, such decision was reversed by the National Labor Relations Commission (NLRC) stating that the
termination of employment due to loss of confidence is within management prerogative. On appeal, the Court
of Appeals upheld the labor arbiter’s decision. Hence, the filing of this petition.
ISSUE:
Whether or not Respondent Farolan’s dismissal was illegal
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HELD:
A statement of the requisites for a valid dismissal of an employee is thus in order, to wit: (a) the employee must
be afforded due process, i.e., he must be given opportunity to be heard and to defend himself; and (b) dismissal
must be for a valid cause. The manner by which Respondent Farolan was dismissed violated the basic precepts
of fairness and due process - Respondent Farolan was dismissed, without being afforded the opportunity to
be heard and to present evidence in her defense. She was never given a written notice stating the particular acts
or omission constituting the grounds for her dismissal as required by law.
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. Loss of
trust and confidence to be a valid ground for an employee’s dismissal 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.
It is not disputed that Farolan’s job description, and the terms and conditions of her employment, with the
exception of her salary and allowances, were never reduced to writing. Even assuming, however, that Farolan
was a managerial employee, the stated ground (in the letter of termination) for her dismissal, ―loss of
confidence,‖ should have a basis and determination thereof cannot be left entirely to the employer.
BACOLOD-TALISAY REALTY AND DEVELOPMENT CORPORATION, et al. v. ROMEO

DELA CRUZ 587 SCRA 304 (2009), SECOND DIVISION (Carpio Morales, J.)
The twin notice requirement provided by law should be observed in order for a dismissal to be valid.
Romeo dela Cruz (respondent) is an employee of Bacolod-Talisay Realty Development Corporation (Bacolod-
Talisay) as an overseer. He was suspended for 30 days for payroll paddling, selling canepoints without the
knowledge and consent of management and misappropriating the proceeds thereof, and renting out tractor for
use in another farm. After 30 days, he received a letter informing him that he was dismissed from his work.
Respondent dela Cruz and Bacolod-Talisay had a confrontation before the barangay council but they did not
reach any settlement. A case for illegal dismissal was filed by dela Cruz, and it was dismissed by the Labor
Arbiter as well as the NLRC. On the other hand, the Court of Appeals reversed the decision of the NLRC
finding that the Bacolor-Dalisay did not comply with the guidelines for the dismissal of an employee.
ISSUE:
Whether or not petitioner, Bacolod-Talisay observed due process in dismissing Romeo dela Cruz
HELD:
The Court of Appeals correctly held though that Bacolod-Talisay did not comply with the proper procedure
in dismissing respondent. In other words, Bacolod-Talisay failed to afford dela Cruz due process by failing to
comply with the twin notice requirement in dismissing him, viz: 1) a first notice to apprise him of his fault, and
2) a second notice to him that his employment is being terminated.
The letter dated June 3, 1997 sent to dela Cruz was a letter of suspension. It did not comply with the required
first notice, the purpose of which is to apprise the employee of the cause for termination and to give him
reasonable opportunity to explain his side.
In fine, while the dismissal of dela Cruz was for a just cause, the procedure in effecting the same was not
observed.
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BILFLEX PHIL. INC. LABOR UNION et al. v. FILFLEX INDUSTRIAL AND
MANUFACTURING CORPORATION AND BILFLEX (PHILS.), INC.
Any union officer who knowingly participates in an illegal strike and any worker or union who knowingly participates in the
commission of illegal acts during a strike may be declared to have lost his employment status.
Biflex Philippines Inc. Labor Union and Filflex Industrial and Manufacturing Labor Union are the respective
collective bargaining agents of the employees of the sister companies Biflex and Filflex which are engaged in
the garment business. They are situated in one big compound and they have a common entrance.
On October 24, 1990, the labor sector staged a welga ng bayan to protest against oil price hike; the unions staged
a work stoppage which lasted for several days, prompting the companies to file a petition to declare the work
stoppage illegal for failure to comply with procedural requirements.
The Labor Arbiter held that the strike is illegal and declared the officers of the union to have lost their
employment status.
ISSUE:
Whether or not the staged strike is illegal and a ground for the lost of employment status of the union officers
HELD:
Article 264 (a) of the Labor Code states that any union officer who knowingly participates in an illegal strike
and any worker or union who knowingly participates in the commission of illegal acts during a strike may be
declared to have lost his employment status.
Thus, a union officer may be declared to have lost his employment status if he knowingly participates in an
illegal strike and in this case, the strike is declared illegal by the court because the means employed by the union
are illegal.
Here, the unions blocked the egress and ingress of the company premises thus, a violation of Article 264 (e)
of the Labor Code which would affect the strike as illegal even if assuming arguendo that the unions had
complied with legal formalities and thus, the termination of the employees was valid.
The court said that the legality of a strike is determined not only by compliance with its legal formalities but
also by means by which it is carried out.
CABALEN MANAGEMENT CO., INC., et al. v. JESUS P. QUIAMBAO, et al.

528 SCRA 153 (2007), SECOND DIVISION (Carpio Morales, J.)
It is a well-established rule that the employer has the burden of proving a valid dismissal of an employee, for which it must be for
a just or authorized cause and with due process.
Jesus Quiambao, et al. were charged of tip pocketing and swapping of dining order slips with bar order slips,
among others. They were dismissed from employment due to said acts. They filed a case against Cabalen
Management Co., Inc. (Cabalen) for illegal dismissal but the decision of the Labor Arbiter and the National
Labor Relations Commission was in favor of Cabalen. Quiambao, et al. elevated the case to the Court of
Appeals and the CA ruled otherwise. Cabalen sought to set aside the decision of the CA which reversed the
earlier rulings provided for by the Labor Arbiter and the NLRC. They also questioned the Resolution given by
CA which denied their Motion for Reconsideration.
The assailed CA decision held that except for respondents Vizier Inocencio and Vincent Edward Mapa whose
petitions were dismissed pursuant to Section 5, Rule 7 of the Rules of the Rules of Court and Section 4 (a) of
the Rules of Procedure of the NLRC, herein Quiambao, et al. were illegally dismissed from their employment.
The Supreme Court affirmed the CA decision, hence, Cabalen’s Motion for Reconsideration became subject
of this Resolution. To the Motion, Quiambao, et al. filed their Opposition.
ISSUES:
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Whether or not Quiambao, et al. were illegally dismissed
HELD:
It is a well-established rule that the employer has the burden of proving a valid dismissal of an employee, for
which two requisites must concur: (a) the dismissal must be for any of the causes expressed in the Labor Code;
and (b) the employee must be accorded due process, basic of which is the opportunity to be heard and to
defend himself.
To establish a just or authorized cause for dismissal, substantial evidence or "such amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion" is required. Further required is that
an employee sought to be dismissed must be served two written notices before the termination of his
employment. The first notice must appraise him of the particular acts or omissions upon which his dismissal
is grounded; the second, to inform him of the employer’s decision to terminate his employment. While the
failure of the employer to comply with these notice requirements does not make the dismissal illegal as long as
a just or authorized cause has been proved, it renders the employer liable for payment of damages because of
the violation of the worker’s right to statutory due process.
In the instant case, only photocopies of the statements of Balen and Malana form part of the records despite
Cabalen’s reliance thereon to prove respondents’ purported transgressions. Jarcia Machine Shop and Auto
Supply, Inc. v. NLRC held that the unsigned photocopies of daily time records (DTRs), which were presented
by the therein employer to show that its employee was neglectful of his duties, were of "doubtful or dubious
probative value."
Cabalen, et al. did not even heed their own procedures on disciplinary actions. The only facts extant in the
records are that respondents were issued above-said Corrective Action Report (CARE) Forms asking them to
explain their alleged infractions within 48 hours; and they subsequently received notices of dismissal after they
submitted their written explanations. There is, however, nothing to show that before their dismissal, Quimbao,
et al. were informed of their immediate supervisors’ decision to terminate their services, or that they were
thereafter invited to an administrative investigation before the HRD manager or officer who is tasked to
conduct the investigation in the presence of the employees’ immediate supervisor/s and the witnesses, if
necessary, as provided under Section IV of the company’s Code of Conduct.
No record of any administrative investigation proceeding, which under the company’s rules was to be
"minuted," had also been presented. Hence, only Cabalen’s allegation that the statements of the witnesses were
taken as part of the administrative investigation is before this Court. Allegations without proof do not deserve
consideration.
Finally, on the dismissal of Quiambao allegedly on the ground of business losses, it was incumbent upon Cabe
to len, et al. to prove it by substantial evidence. It did not, however. In fact, Quiambao presented documents
to disprove the validity of his retrenchment on that ground. For petitioners’ failure to discharge its burden
then, this Court is constrained to hold that Quiambao’s dismissal was not valid.
CAPITOL WIRELESS, INC. v. CARLOS ANTONIO BALAGOT

Double job per se is not illegal according to Labor Code.
Capitol Wireless, Inc. (Capwire) hired Carlos Antonio Balagot (Balagot) as collector on September 16, 1987.
Carlos is required to work outside the office and Capwire assigned to him a motorcycle as a service vehicle, for
which it shouldered expenses for gasoline and maintenance.
Balagot was discovered to have been rendering services to China Bank and that since 1992, Carlos had been
concurrently employed with Contractual Concepts, Inc. (CCI), a local manpower company, which assigned
him to render messengerial services to China Bank in the same year.
Capwire terminated his services on the ground of grave misconduct and willful breach of trust and confidence.
Capwire contends that the time of work of Balagot to other companies overlaps with his work at Capwire.
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Balagot admitted the charge but he filed a complaint for illegal dismissal against Capwire and its President
Epifanio Marquez.
ISSUE:
Whether or not Balagot was illegally dismissed
HELD:
Verily, jurisprudence recognizes as a valid ground for dismissal of an employee’s unauthorized use of company
time. And from the evidence presented, Balagot used the company vehicle in pursuing his own interests, on
company time and deviating from his authorized route without permission.
Capwire has all the right and reason to cry foul as this is a clear case of moonlighting and using the company’s
time, money, and equipment to render service to another company.
The court said that there is no denying that taking on double job per se is not illegal according to the Labor
Code, as extra income would go a long way for an ordinary worker like Balagot. The only limitation is where
one job overlaps with the other in terms of time and/or poses a clear case of conflict of interest as to the
nature of business of complainant’s two employers.
The contention of Balagot that he is working for China Bank after 5:00 pm is untenable because he was sighted
by the HR director within the premises of the bank at 3:35 pm and as general knowledge, the banking industry
follows the ordinary working hours from 8:00 am to 5:00 pm and a bank has no use for an employee who can
only be of service to it after 5:00 pm.
CHUAYUCO STEEL MANUFACTURING CORPORATION AND/OR EDWIN CHUA v.

BUKLOD NG MANGGAGAWA SA CHUAYUCO STEEL MANUFACTURING CORPORATION
513 SCRA 621 (2007), SECOND DIVISION, (Carpio Morales, J.)
A union officer who knowingly participates in an illegal strike and a worker who knowingly participates in the commission of an
illegal strike are deemed to have lost their employment status.
Buklod ng Manggagawa sa Chuayuco Steel Manufacturing Corporation (the union), a legitimate labor
organization, is the recognized bargaining agent of Chuayuco Steel Manufacturing Corporation (the
corporation) of which its co-petitioner Edwin Chua is the President.
In the election of the union officers, Camilo Lenizo (Lenizo) emerged as President. The corporation however
refused to recognize the newly elected officers for the reason that there is an intra-union conflict between the
factions of Lenizo and Romeo Ibanez, the former acting union president.
The union staged a strike which causes illegal acts that intimidated and harassed the corporation and non-
striking employees. The strikers use physical violence and harass those employees who are not on their side by
shouting and threatening them not to go to work anymore. The Labor Arbiter declared the strike illegal and
thus, some of the members who participated in the mass action lost their employment status.
ISSUE:
Whether or not some of the employees who participated in the strike should be reinstated without loss of
seniority rights
HELD:
Article 264 (a) of the Labor Code states that any union officer who knowingly participates in an illegal strike
and any worker or union who knowingly participates in the commission of illegal acts during a strike may be
declared to have lost his employment status.
Thus, a union officer may be declared to have lost his employment status if he knowingly participates in an
illegal strike and in this case, the strike is declared illegal by the court because the means employed by the union
are illegal.
CITIBANK N.A. v. NATIONAL LABOR RELATIONS COMMISSION and

ROSITA TAN PARAGAS 563 SCRA 87 (2008), SECOND DIVISION, (Carpio Morales, J.)
5
The general prayer of “other reliefs” is applicable only to such other reliefs warranted by law and facts.
Rosita Tan Paragas (Paragas) worked as a filing clerk of Citibank, N.A. (Citibank) for eighteen (18) years. She
was terminated by Citibank for serious misconduct, willful disobedience, gross and habitual neglect of duties
and gross inefficiency. Paragas filed a complaint for illegal dismissal which was dismissed for lack of merit,
finding that the dismissal on the ground of work inefficiency was valid. The National Labor Relations
Commission (NLRC) affirmed the decision of the Labor Arbiter with the modification that Paragas should be
paid separation pay as a form of equitable relief in view of her length of service with Citibank.
Paragas filed a Motion for Partial Reconsideration of the NLRC Resolution. She no longer challenged her
dismissal on the ground of work inefficiency, but prayed that Citibank be ordered to pay her the Provident
Fund benefits under its retirement plan for which she claimed to be qualified pursuant to Citibank’s Working
Together Manual. The said manual provides that an employee discharged for reasons other the misconduct
will be paid a percentage of her share in the Fund.
Finding that Paragas’ dismissal was for causes other than misconduct, the NLRC granted Paragas’ Motion. On
appeal, the Court of Appeals dismissed the petition for lack of merit and affirmed in toto the challenged NLRC
Resolution.
ISSUE:
Whether or not the CA erred in affirming the NLRC’s decision despite the latter’s lack of authority to pass
upon and resolve issues and grant claims not pleaded and proved before the Labor Arbiter
HELD:
Paragas indeed prayed for "other just and equitable relief," but the same may not be interpreted so broadly as
to include even those which are not warranted by the factual premises alleged by a party. Thus the January 24,
2003 Decision of the Court of Appeals correctly stated: "It has been ruled in this jurisdiction that the general
prayer for 'other reliefs' is applicable to such other reliefs which are warranted by the law and facts alleged by
the respondent in her basic pleadings and not on a newly created issue."
Paragas’ assertion that she mentioned the matter regarding the Provident Fund even prior to her Motion for
Partial Reconsideration — on page 14 of her position paper and again on pages 2 and 7 of her "Notice of
Appeal and Appeal Memorandum" — is unavailing.
Her "Notice of Appeal and Appeal Memorandum" was filed after she had already submitted her position paper.
Thus, any mention of the Provident Fund therein would fail to adhere to the above-ruling in Mañebo, the
thrust of which was precisely that all facts, evidence, and causes of action should already be proffered in the
position papers and the supporting documents thereto, not in any later pleading.
As to Paragas’ position paper, there was only the mere mention of "Provident A & C," with the corresponding
amount of P1,086,335.43, among the actual damages that she was allegedly suffering from her continued
severance from employment. Paragas made no attempt to define what this "Provident A & C" was, nor offer
any substantiation for including it to be among her actual damages. She did not even hint how "Provident A
& C" had a bearing on retirement benefits. Thus, while Paragas did refer to the Provident Fund in her position
paper, such reference was too vague to be a basis for any court or administrative body to grant her retirement
benefits.
Paragas justifies her failure to claim for retirement benefits before the labor arbiter by alleging that it would be
inconsistent with her prayer for reinstatement. Paragas, however, could have easily claimed such benefits as an
alternative relief.
In any event, Paragas is not entitled to retirement benefits as this Court finds that she was validly dismissed for
serious misconduct and not merely for work inefficiency.
DYNO NOBEL PHILIPPINES, INC. v. DWPI SUPERVISORY UNION

535 SCRA 466 (2007), SECOND DIVISION (CARPIO MORALES, J.)
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When a Collective Bargaining Agreement provides for a mandated increase in salary, which was voluntarily agreed upon by the
parties, the same shall be complied with.
Edgar Ausejo (Ausejo) was hired by Dyno Noble Philippines, Inc. (DYNO-NOBEL) as a Store Clerk. Having
joined the DWPI Union (DWPIU) of the rank and file, his salary was increased by P500 per month effective
January 1, 1996. Ausejo was then promoted to the position of General Stores Supervisor. As per company and
union regulations Ausejo ceased to be a member of the rank and file union and joined the DWPI Supervisory
Union (DWPSU). At the same time, DYNO-NOBEL started its Salary Scaling Program which was intended
to structure and align the salary scales of its employees. Ausejo was evaluated to have no increase as per union
regulations.
Ausejo and his former union filed a request for increase in salary to DYNO-NOBEL. Ausejo and DWPIU
invoked the provisions of the Collective Bargaining Agreement (CBA), contending that he is entitled to a
mandated increase of P1,150. In its reply, DYNO-NOBEL denied the motion contending that Ausejo is not
anymore a member of the rank and file union. DYNO-NOBEL also contended that the increase in salary of
Ausejo was reflected in his higher salary as a General Stores Supervisor.
ISSUES:
Whether or not the mandated increase of P1,150 under the CBA forged by DWPIU was already integrated
into the salary of Ausejo when he assumed the position of General Stores Supervisor
HELD:
An examination of Ausejo’s Position Paper shows that he, just like the two other supervisors, received the
same monthly salary for the year 1997 and 1998. Logically, in accordance with the 1996 CBA, for the year
1997, an increase of P1,050 was added to the salary of each of the three, to thereby amount to a total salary.
Clearly, the Salary Scaling Program implemented by DYNO-NOBEL was primarily intended "to restructure
and align the salary scales of the employees on the basis of fairness and reasonable classification of jobs.
It is hard to believe that, considering the closeness in the time between the implementation of the Salary Scaling
Program and the execution of the CBA — a difference of eighteen days — the negotiating panel of the Union
would not have known the rather substantial benefits and advantages accruing to the Supervisors under the
Salary Scaling Program. The purpose of the Salary Scaling Program was intended to structure the salary scales
of the employees on the basis of fairness and reasonable classification of jobs. There is every reason to uphold
the Program, and, to uphold the claim of Ausejo that he is entitled to the [P]1,150.00 mandated increase for
1996 upon his appointment.
EAGLE STAR SECURITY SERVICES, INC. v. BONOFACIO L. MIRANDO

For “off-detail” to be valid, the employer must show and prove that there was lack of available posts.
Bonifacio Mirando was hired by Eagle Star Security Services, Inc. (Eagle Star) as a security guard. When he
reported for work, he was told by the detachment commander not to report for duty as instructed by the head
office. Mirando called the head office and was told that he was removed from duty by Eagle Star’s operations
manager Ernesto Agodilla. As Mirando was thereafter no longer asked to report for duty, he filed a complaint
for illegal dismissal against Eagle Star before the National Labor Relations Commission (NLRC).
Eagle Star alleged that Mirando went on absence without official leave (AWOL) and had not thereafter
reported for work drawing it to send him a notice to explain his absence but Mirando failed to respond. It
further alleged that in a Memorandum sent to Agodilla, the detachment commander reported that Mirando
pulled out his uniform and that according to him, he ―would render voluntary resignation.‖
The labor arbiter found that Mirando was illegally dismissed. On appeal, the NLRC affirmed the labor arbiter’s
decision. On appeals, the CA affirmed the judgment of the NLRC.
ISSUES:
Whether or not the Court of Appeals erred in holding the dismissal illegal
7
HELD:
The persistence of Mirando to resume his duties, not to mention his immediate filing of the illegal dismissal
complaint, should dissipate any doubt that he did not abandon his job.
Clutching at straws, Eagle Star argues that Mirando was on temporary ―off-detail,‖ the period of time a security
guard is made to wait until he is transferred or assigned to a new post or client; and since Eagle Star’s business
is primarily dependent on contracts entered into with third parties, the temporary ―off-detail‖ of Mirando does
not amount to dismissal as long as the period does not exceed 6 months, following Art. 286 of the Labor Code.
Eagle Star’s citation of Article 286 of the Labor Code is misplaced. In the present case, there is no showing
that there was lack of available posts at Eagle Star’s clients or that there was a request from the client-bank,
where Mirando was last posted and which continued to hire Eagle Star’s services, to replace Mirando with
another. Eagle Star suddenly prevented him from reporting on his tour of duty at the bank on December 15,
2001 and had not thereafter asked him to report for duty.
ABELARDO P. ABEL v. PHILEX MINING CORPORATION

Loss of trust and confidence, to be a valid ground for dismissal, must be based on willful breach of trust and must be founded on
clearly established facts.
Abelardo P. Abel, an employee of the Philex Mining Corporation, was implicated in an irregularity occurring
in the subsidence area of Philex’s mine site. An investigation was promptly launched by the corporation’s
officers by conducting several fact-finding meetings. Philex found Abel guilty of (1) fraud resulting in loss of
trust and confidence and (2) gross neglect of duty, and was meted out the penalty of dismissal from
employment. Abel thus filed a complaint for illegal dismissal with the National Labor Relations Commission
(NLRC) with claims for annual vacation leave pay.
The Labor Arbiter ruled that Abel was dismissed illegally. He found that Philex failed to prove by substantial
evidence the alleged fraud committed by Abel, explaining that the suggestively incriminating telephone
conversations would not suffice to lay the basis for Philex’s loss of trust and confidence. On the charge of
gross negligence, the Labor Arbiter held that no negligence was present as Philex itself admitted that Abel
reported the underloading to Tabogader, who was then in charge of the subsidence area where the alleged
anomaly was happening.
The NLRC reversed the decision of the Labor Arbiter finding that Abel was guilty of gross and habitual neglect
of duty as he approved the operations even with the gross underloading; and that he did not act on Lupega’s
report concerning certain irregularities. Abel’s failure to perform his duty of inspecting ANSECA’s operations
and vacillation on certain matters during the company investigation, among other things, constituted sufficient
basis for Philex’s loss of trust and confidence. Abel appealed to the Court of Appeals via certiorari which
dismissed the motion. Hence, this petition.
ISSUE:
Whether or not the dismissal of Abel is valid
HELD:
The law mandates that the burden of proving the validity of the termination of employment rests with the
employer. Failure to discharge this evidentiary burden would necessarily mean that the dismissal was not
justified and, therefore, illegal. Unsubstantiated suspicions, accusations, and conclusions of employers do not
provide legal justification for dismissing employees. In case of doubt, such cases should be resolved in favor
of labor pursuant to the social justice policy of labor laws and the Constitution.
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The first requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned
must be holding a position of trust and confidence. Verily, the Court must first determine if Abel holds such
a position.
The second requisite is that there must be an act that would justify the loss of trust and confidence. Loss of
trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust and founded
on clearly established facts. The basis for the dismissal must be clearly and convincingly established but proof
beyond reasonable doubt is not necessary. Philex Mining Corporation’s evidence against Abel fails to meet this
standard. The Labor Arbiter correctly found that the alleged telephone conversations between Abel and Didith
Caballero of ANSECA would not suffice to lay the basis for Philex Mining Corporation’s loss of trust and
confidence in Abel.
ALABANG COUNTRY CLUB, et al. v. NATIONAL LABOR

RELATIONS COMMISSION, et al. 466 SCRA 329 (2005), THIRD DIVISION, (Carpio Morales, J.)
The court cannot interfere with management’s prerogative to close or cease its business operation just because the business is not
suffering from any loss or because of the desire to provide the workers continued employment.
Petitioner Alabang Country Club, Inc. (ACCI) requested its Internal Auditor Irene Campos-Ugalde to conduct
a study on the profitability of its Food and Beverage Department (F & B Department). Irene found out that
the business had been incurring substantial losses. Consequently, the management decided to transfer the
operation of the department to La Tasca Restaurant Inc. (La Tasca). ACCI then sent its F & B Department
employees individual letters informing them that their services were being terminated and that they would
receive separation pay.
The private respondent Alabang Country Club Independent Employees Union (Union) filed before the
National Labor Relations Commission (NLRC) a complaint for illegal dismissal, unfair labor practice,
regularization and damages with prayer for the issuance of a writ of preliminary injunction against ACCI.
The Labor Arbiter (LA) dismissed the complaint for illegal dismissal which was upheld by the NLRC. The
Court of Appeals (CA) reversed the decisions of the LA and NLRC.
ISSUE:
Whether or not the ACCI can terminate its business operation
HELD:
One of the prerogatives of management is the decision to close the entire establishment or to close or abolish
a department or section thereof for economic reasons, such as to minimize expenses and reduce capitalization.
While the Labor Code provides for the payment of separation package in case of retrenchment to prevent
losses, it does not obligate the employer for the payment thereof if there is closure of business due to serious
losses.
As in the case of retrenchment, however, for the closure of a business or a department due to serious business
losses to be regarded as an authorized cause for terminating employees, it must be proven that the losses
incurred are substantial and actual or reasonably imminent; that the same increased through a period of time;
and that the condition of the company is not likely to improve in the near future.
The closure of operation of an establishment or undertaking not due to serious business losses or financial
reverses includes both the complete cessation of operations and the cessation of only part of a company’s
activities.
For any bona fide reason, an employer can lawfully close shop anytime. Just as no law forces anyone to go into
business, no law can compel anybody to continue the same. It would be stretching the intent and spirit of the
law if a court interferes with management’s prerogative to close or cease its business operations just because
the business is not suffering from any loss or because of the desire to provide the workers continued
employment.
JERRY E. ACEDERA, et al. v. INTERNATIONAL

9
CONTAINER TERMINAL SERVICES INC.
Ordinarily, a person whose interests are already represented will not be permitted to do the same except when there is a suggestion
of fraud or collusion or that the representative will not act in good faith.
Jerry Acedera, et al. are employees of International Container Terminal Services, Inc. (ICTSI) and are members
of Associated Port Checkers & Workers Union-International Container Terminal Services, Inc. (APCWU-
ICTSI), a duly registered labor organization. ICTSI entered into a five-year Collective Bargaining Agreement
(CBA) with APCWU which reduced the employees’ work days from 304 to 250 days a year.
The Wage Board decreed wage increases in NCR which affected ICTSI. Upon the request of APCWU to
compute the actual monthly increase in the employee’s salary by multiplying the mandated increase by 365 days
and dividing by 12 months, ICTSI stopped using 304 days as divisor and started using 365 days to determine
the daily wage.
Later on, ICTSI entered into a retrenchment program which prompted APCWU to file a complaint before the
Labor Arbiter (LA) for ICTSI’s use of 365 days, instead of 250 days, as divisor in the computation of wages.
Acedera et al. filed a Motion to Intervene which was denied by the LA. On appeal, National Labor Relations
Commission (NLRC) affirmed LA’s decision. Acedera et al. filed a petition for certiorari to the Court of Appeals
(CA) which was dismissed.
ISSUE:
Whether or not Acedera et al. have no legal right to intervene in the case as their intervention was a superfluity
HELD:
Acedera et al. stress that they have complied with the requisites for intervention because (1) they are the ones
who stand to gain or lose by the direct legal operation and effect of any judgment that may be rendered in this
case, (2) no undue delay or prejudice would result from their intervention since their Complaint-in-Intervention
with Motion for Intervention was filed while the Labor Arbiter was still hearing the case and before any
decision thereon was rendered, and (3) it was not possible for them to file a separate case as they would be
guilty of forum shopping because the only forum available for them was the Labor Arbiter.
Acedera et al., however, failed to consider, in addition to the rule on intervention, the rule on representation.
A labor union is one such party authorized to represent its members under Article 242(a) of the Labor Code
which provides that a union may act as the representative of its members for the purpose of collective
bargaining. This authority includes the power to represent its members for the purpose of enforcing the
provisions of the CBA. That APCWU acted in a representative capacity "for and in behalf of its Union
members and other employees similarly situated, the title of the case filed by it at the Labor Arbiter’s Office
so expressly states.
While a party acting in a representative capacity, such as a union, may be permitted to intervene in a case,
ordinarily, a person whose interests are already represented will not be permitted to do the same except when
there is a suggestion of fraud or collusion or that the representative will not act in good faith for the protection
of all interests represented by him.
Acedera et al. cite the dismissal of the case filed by ICTSI, first by the Labor Arbiter, and later by the Court of
Appeals. The dismissal of the case does not, however, by itself show the existence of fraud or collusion or a
lack of good faith on the part of APCWU. There must be clear and convincing evidence of fraud or collusion
or lack of good faith independently of the dismissal. This, Acedera et al. failed to proffer.
Acedera et al. likewise express their fear that APCWU would not prosecute the case diligently because of its
"sweetheart relationship" with ICTSI. There is nothing on record, however, to support this alleged relationship
which allegation surfaces as a mere afterthought because it was never raised early on. It was raised only in
petitioners-appellants’ reply to ICTSI’s comment in the petition at bar, the last pleading submitted to this
Court, which was filed on June 20, 2001 or more than 42 months after petitioners-appellants filed their
Complaint-in-Intervention with Motion to Intervene with the Labor Arbiter.
10
To reiterate, for a member of a class to be permitted to intervene in a representative action, fraud or collusion
or lack of good faith on the part of the representative must be proven. It must be based on facts borne on
record. Mere assertions, as what petitioners-appellants proffer, do not suffice.
ALDEGUER & CO., INC. /LOALDE BOUTIQUE v. HONEYLINE TOMBOC

Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative is a just cause
for his dismissal from employment.
Petitioner Aldeguer and Co., Inc./Loalde Boutique promoted respondent Honeyline Tomboc (Tomboc) as
Officer-in-Charge (OIC) of its Loalde Ayala Boutique (Loalde Ayala) in the Ayala Center, Cebu City. After
conducting an audit of sales, Loalde Boutique concluded that Tomboc misappropriated certain amount which
is a just cause for termination. Consequently, Tombo was notified of the termination of her services.
Tomboc subsequently filed a complaint in the National Labor Relations Commission (NLRC) for illegal
dismissal, illegal salary deductions, underpayment of wages, non-payment of 13th month pay and damages.
The Labor Arbiter dismissed the complaint which was upheld by the NLRC. On appeal, the Court of Appeals
reversed the NLRC decision and ordered her reinstatement with full payment of back wages and without loss
of seniority rights. The CA held Tomboc was illegally dismissed and was denied of due process as she was not
afforded a chance to refute the charge of misappropriation against her.
ISSUES:
Whether or not the termination of Tomboc was for just cause
HELD:
Aldeguer and Co., Inc./Loalde Boutique has shown just cause for the termination of Tomboc’s employment
under Art. 282 of the Labor Code on the ground of ―fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized representative.‖
The claim of Jinky, a cashier, in her affidavit that it was Tomboc who turned over the deposits to the bank
representative on May 13, 1997 was corroborated by Kay, the branch head of the Solidbank-Gorordo Branch
who personally picked up the deposits from Loalde Ayala on May 13 and 14, 1997. Aldeguer and Co.,
Inc./Loalde Boutique in fact presented deposit slips showing that, contrary to its policy, cash sales for the
day were on several occasions not deposited on the next banking day.
Tomboc’s contention that the Labor Arbiter and the NLRC ignored the Memorandum issued by Aldeguer and
Co., Inc./Loalde Boutique on February 29, 1997 indicating her duties and responsibilities which do not include
handling cash collection of sales and making deposits with the bank does not lie. It has been established that
while a boutique-in-charge is ordinarily not allowed to handle cashiering, she may do so, however, if the need
arises. At any rate, Jinky and some of the affiants stated in their affidavits that Tomboc interfered with
cashiering tasks, in violation of company policy
CORAZON ALMIREZ v. INFINITE LOOP TECHNOLOGY CORPORATION, et al.

Under the control test, an employer-employee relationship exists 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.
Petitioner Corazon Almirez was hired by respondent Infinite Loop Technology Corporation (Infinite Loop)
to be a Refinery Senior Process Design Engineer for a specific project starting October 18, 1999 with a guaranty
of 12 continuous months of service or until a mutually agreed date. However, Almirez was later on suspended.
Hence, she filed an action before the National Labor Relations Commission (NLRC) against Infinite Loop and
its General Manager/President/co-petitioner Edwin R. Rabino on the ground of breach of contract of
employment.
11
Both the Labor Arbiter and the NLRC ruled that there is an existing employer-employee relationship between
Almirez and Infinite Loop since the latter exercises control over the means and methods used by Almirez in
the performance of her duties.
The Court of Appeals ruled that there was no existing employer-employee relationship between the parties
since Almirez was hired to render her professional service only for a specific project.
ISSUE:
Whether or not there is employee-employer relationship between Almirez and Infinite Loop
HELD:
To ascertain the existence of an employer-employee relationship, jurisprudence has invariably applied the four-
fold test, to wit: (1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or
absence of the power of dismissal; and (4) the presence or absence of the power of control. Of these four, the
last one, 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 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.
From the earlier-quoted scope of Almirez’ professional services, there is no showing of a power of control
over petitioner. The services to be performed by her specified what she needed to achieve but not on how she
was to go about it.
Contrary to the finding of the Labor Arbiter, as affirmed by the NLRC, paragraph No. 6 of the "Scope of
[Almirez’] Professional Services" requiring her to "[m]ake reports and recommendations to the company
management team regarding work progress, revisions and improvement of process design on a regular basis
as required by company management team" does not "show that the company’s management team exercises
control over the means and methods in the performance of her duties as Refinery Process Design Engineer."
Having hired Almirez’ professional services on account of her "expertise and qualifications" as Almirez herself
proffers in her Position Paper, the company naturally expected to be updated regularly of her "work progress,"
if any, on the project for which she was specifically hired.
The deduction from Almirez’ remuneration of amounts representing SSS premiums, Philhealth contributions
and withholding tax, was made in the only pay slip issued to Almirez, that for the period of January 16-31,
2000, the other amounts of remuneration having been documented by cash vouchers. Such pay slip cannot
prove the existence of an employer-employee relationship between the parties.
As for the designation of the payments to Almirez as "salaries," it is not determinative of the existence of an
employer-employee relationship. "Salary" is a general term defined as "a remuneration for services given." It is
the above-quoted contract of engagement of services-letter dated September 30, 1999, together with its
attachments, which is the law between the parties. Even Almirez concedes rendering service "based on the
contract," which, as reflected earlier, is bereft of a showing of power of control, the most crucial and
determinative indicator of the presence of an employer-employee relationship.
SPOUSES PONCIANO AYA-AY, SR. and CLEMENCIA AYA-AY v. ARPAPHIL SHIPPING

CORP., and MAGNA MARINE INC.
Death benefits shall be awarded only when the cause of death of the employee was proved by substantial evidence to be reasonably
connected with his work or his working conditions.
Ponciano Aya-ay Jr. is a seaman engaged by Arpaphil Shipping Corporation to work under an 11-month
contract of employment for co-respondent Magna Marine Inc. On board the vessel and while performing his
work, Aya-ay met an eye injury thereby requiring him to undergo a corneal transplant. Upon mutual consent
of Magna Marine and Aya-ay, Aya-ay was repatriated to Manila. While waiting for an eye donor, Aya-ay died.
12
The death certificate indicates that the immediate cause of his death is cerebro-vascular accident (CVA)
commonly known as stroke.
Petitioners Ponciano Aya-ay Sr. and Clemencia Aya-ay, parents of Aya-ay, now claims for death compensation
benefits from Arpaphil and Magna Marine, which the latter rejected.
Both the National Labor Relations Commission (NLRC) and the Court of Appeals (CA) denied their claims.
Hence, this appeal.
ISSUE:
Whether or not the heirs of Aya-ay are entitled to claim death benefits under POEA Standard Employment
Contract
HELD:
Part II, Section C, Nos. 1 and 3 of the POEA Standard Employment Contract Governing the Employment of
All Filipino Seamen on Board Ocean-Going Vessels provide, among other things that compensation and
benefits may be availed of by the worker provided he/she dies during the term of the contract or he/she has
died as a result of injury or illness during the term of the employment.
Upon mutual consent of Aya-ay and Arpaphil and Magna Marine, he was on July 5, 1995 repatriated on account
of his eye injury. Thus his employment had been effectively terminated on that particular date. At all events,
under the October 15, 1994 Contract of Employment, Aya-ay ceased to be an employee on September 26,
1995, hence, he was no longer an employee when he died on December 1, 1995.
It is, therefore, crucial to determine whether Aya-ay died as a result of, or in relation to, the eye injury he
suffered during the term of his employment. If the injury is the proximate cause, or at least increased the risk,
of his death for which compensation is sought, recovery may be had for said death.
Unless there is substantial evidence showing that: (a) the cause of Aya-ay’s death was reasonably connected
with his work; or (b) the sickness/ailment for which he died is an accepted occupational disease; or (c) his
working conditions increased the risk of contracting the disease for which he died, death compensation benefits
cannot be awarded.
ARLYN D. BAGO v. NATIONAL LABOR RELATIONS COMMISSION and STANDARD

INSURANCE CO. INC. AND/OR ERNESTO ECHAUS
520 SCRA 644 (2007), SECOND DIVISION (Carpio-Morales, J.)
As a general rule, employers are given a wide latitude of discretion in terminating the employment of managerial personnel or those
who, while not of similar rank, perform functions which by their nature require the employer’s full trust and confidence.
Arlyn Bago (Bago) and five other employees were dismissed by Celia P. Abordo (Abordo), head of the
Tuguegarao Branch of Standard Insurance Company Incorporated (SICI) for manipulating the company funds
and spreading damaging rumors. Bago, the auditor of the company, and the five other employees apologized
for spreading the rumors. Abordo issued a memo to the employees requiring an explanation for the charges.
Thinking that Abordo had already forgiven them, the employees did not respond to the memo.
Not receiving any reply, the Human Resource Department of SICI proceeded with their investigation and
found all the employees guilty and dismissed them for loss of confidence and serious misconduct. Bago filed
a complaint for illegal dismissal. She contended that there was no due process in the investigation and that
dismissal is a severe penalty for the offenses charged.
The Labor Arbiter found that Bago was illegally dismissed but the National Labor Relations Commission
(NLRC), reversed the Labor Arbiter's decision and declared valid the termination of Arlyn’s services on the
grounds of loss of trust and confidence and dishonesty.
ISSUE:
Whether or not Bago was illegally dismissed by Standard Insurance Company Incorporated
13
HELD:
As a general rule, employers are allowed a wide latitude of discretion in terminating the employment of
managerial personnel or those who, while not of similar rank, perform functions which by their nature require
the employer’s full trust and confidence. Proof beyond reasonable doubt is not required. It is sufficient that
there is some basis for loss of confidence, such as when the employer has reasonable ground to believe that
the employee concerned is responsible for the purported misconduct, and the nature of his participation therein
renders him unworthy of the trust and confidence demanded by his position.
This must be distinguished from the case of ordinary rank-and-file employees, whose termination on the basis
of these same grounds requires a higher proof of involvement in the events in question; mere uncorroborated
assertions and accusations by the employer will not suffice.
Even assuming that Arlyn may be considered a rank and file employee, sufficient evidence of her involvement
in the dishonest scheme of SICI’s accountant and cashier who were also charged and found guilty exists. Not
only was her participation established by the internal audit conducted; the cashier identified her as part of the
scheme, and she herself admitted her involvement.
CALAMBA MEDICAL CENTER v. NATIONAL LABOR RELATIONS COMMISSION,et al.

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.
Petitioner Calamba Medical Center (CMC), engaged the services of medical doctors-spouses Ronaldo Lanzanas
(Dr. Ronaldo) and Merceditha Lanzanas (Dr. Merceditha) as part of its team of resident physicians. They were
given, among others, identification cards and work schedules; and were paid a monthly retainer. They were
likewise enrolled in the Social Security System (SSS). Subsequently, CMC’s medical director issued a
Memorandum to Dr. Ronaldo after a resident physician overheard Dr. Ronaldo and a fellow employee
discussing the low admission in the hospital. After the incident involving her husband, Dr. Merceditha was no
longer given any work assignments.
Afterwards, the rank and file employees union of Calamba Medical Center went on a strike. Dr. Ronaldo and
Dr. Merceditha meanwhile filed a complaint for illegal suspension and illegal dismissal, respectively before the
National Labor Relations Commission Regional Arbitration Board (NLRC-RAB). Consequently, the
Department of Labor and Employment (DOLE) issued a return to work order. Dr. Ronaldo, on the other
hand, received a notice of termination indicating his failure to return for work. Dr. Ronaldo thus amended his
complaint to illegal dismissal. The CMC contends that the doctors-spouses are not employees of the same, so
that they cannot be illegally dismissed.
ISSUES:
Whether or not an employee-employer relationship does not exist between Calamba Medical Center and the
doctors-spouses Lanzanas
HELD:
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.
Where a person who works for another does so more or less at his own pleasure and is not subject to definite
hours or conditions of work, and is compensated according to the result of his efforts and not the amount
thereof, the element of control is absent.
As priorly stated, the spouses-doctors 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 CMC exercised control over spouses-doctors gains light from the undisputed fact that in the emergency
room, the operating room, or any department or ward for that matter, spouses-doctors’ work is monitored
14
through its nursing supervisors, charge nurses and orderlies. Without the approval or consent of CMC 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. With respect to spouses-doctors sharing in some hospital fees, this scheme does
not sever the employment tie between them and CMC as this merely mirrors additional form or another form
of compensation or incentive similar to what commission-based employees receive as contemplated in Article
97 (f) of the Labor Code.
The spouses-doctors were in fact made subject to petitioner-hospital’s Code of Ethics, the provisions of which
cover administrative and disciplinary measures on negligence of duties, personnel conduct and behavior, and
offenses against persons, property and the hospital’s interest.
More importantly, the CMC itself provided incontrovertible proof of the employment status of respondents,
namely, the identification cards it issued them, the payslips and BIR W-2 (now 2316) Forms which reflect their
status as employees, and the classification as ―salary‖ of their remuneration. Moreover, it enrolled respondents
in the SSS and Medicare (Philhealth) program. It bears noting at this juncture that mandatory coverage under
the SSS Law is premised on the existence of an employer-employee relationship,[35] except in cases of
compulsory coverage of the self-employed. It would be preposterous for an employer to report certain persons
as employees and pay their SSS premiums as well as their wages if they are not its employees.
And if the spouses-doctors were not CMC’s employees, how does it account for its issuance of the earlier-
quoted March 7, 1998 memorandum explicitly stating that respondent is ―employed‖ in it and of the
subsequent termination letter indicating Dr. Ronaldo’s employment status.
Finally, under Section 15, Rule X of Book III of the Implementing Rules of the Labor Code, an employer-
employee relationship exists between the resident physicians and the training hospitals, unless there is a training
agreement between them, and the training program is duly accredited or approved by the appropriate
government agency. In the spouses-doctors’ case, they were not undergoing any specialization training. They
were considered non-training general practitioners, assigned at the emergency rooms and ward sections.
CLARION PRINTING HOUSE, INC. et al. v. NATIONAL LABOR RELATIONS COMMISSION

et al.
Retrenchment is a valid ground for the dismissal of an employee.
Clarion Printing House (Clarion), a company owned by EYCO Group of Companies (EYCO) hired Michelle
Miclat (Miclat) as marketing assistant on a probationary basis. During that time, she was not informed of the
standards that she should meet to qualify as a regular employee.
EYCO subsequently filed a petition for petition for suspension of payment as well as an appointment of a
rehabilitation receivership committee before SEC on the ground that they are suffering financial difficulty.
Pursuant to this, a retrenchment occurred, thus terminating Miclat.
Conversely, Miclat filed a complaint for illegal dismissal before the NLRC. Miclat contends that assuming her
termination is necessary, it was not done in a proper manner; there was no notice that was given to her. On
the other hand, Clarion contends that they are not liable for retrenching some employees because EYCO is
being placed under receivership, and a memorandum was given to employees, hence they substantially
complied with the notice requirement. NLRC rendered its decision in favor of Miclat and found that she was
illegally dismissed. On appeal, the Court of Appeals held that Clarion failed to prove its ground for
retrenchment as well as compliance with the mandated procedure. It further ruled that Miclat should be
reinstated and paid backwages. Hence, this petition.
Issue:
Whether or not Miclat was illegally dismissed
Held:
15
It is likewise well-settled that for retrenchment to be justified, any claim of actual or potential business losses
must satisfy the following standards: (1) the losses are substantial and not de minimis; (2) the losses are actual or
reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective in preventing
expected losses; and (4) the alleged losses, if already incurred, or the expected imminent losses sought to be
forestalled, are proven by sufficient and convincing evidence.
From the provisions of P.D. No. 902-A, as amended, the appointment of a receiver or management committee
by the SEC presupposes a finding that, inter alia, a company possesses sufficient property to cover all its debts
but "foresees the impossibility of meeting them when they respectively fall due" and "there is imminent danger
of dissipation, loss, wastage or destruction of assets of other properties or paralization of business operations."
That the SEC, mandated by law to have regulatory functions over corporations, partnerships or associations,
appointed an interim receiver for the EYCO Group of Companies on its petition in light of, as quoted above,
the therein enumerated "factors beyond the control and anticipation of the management" rendering it unable
to meet its obligation as they fall due, and thus resulting to "complications and problems . . . to arise that would
impair and affect [its] operations . . ." shows that CLARION, together with the other member-companies of
the EYCO Group of Companies, was suffering business reverses justifying, among other things, the
retrenchment of its employees.
ERIC DELA CRUZ et al. v. COCA-COLA BOTTLERS PHILS. INC.

Acts by employees which are inimical to the employer’s interest are deemed willful breach of the trust and confidence reposed in
them.
Raymund Sales, a salesman of Coca-Cola Bottlers Phils. Inc (Coca-Cola), figured an accident while driving a
vehicle he was not authorized to use. Sales was hospitalized and was observed that he was under the influence
of liquor at the time of the accident and was included in the police blotter.
Respondent Coca-Cola discovered that Sales’ co-employees secured a police report and medical certificate
which omitted the fact that Sales was under the influence of alcohol. Coca-Cola required Sales’ Supervisors
John Espina, Raul M. Lacuata (Lacuata), and Eric dela Cruz (dela Cruz), to explain why no disciplinary action
be taken against them. Espina denied the fact that he altered the documents. Petitioner Dela Cruz said that he
just asked for a copy of the police report one Melvin Asuncion. And lastly, Petitioner Lacuata said that he has
no participation in the alleged alteration because he only picked-up the medical certificate from the Hospital.
Further investigation shows that they conspired to alter the medical certificate and the police report. After such
finding they were dismissed from employment. Espina, Lacuata and dela Cruz filed separate complaints for
illegal dismissal with the contention that the alleged altering of documents is work related and is a willful breach
of confidence.
The Labor Arbiter dismissed Espina’s complaint for lack of merit. Dela Cruz was found to be illegally
dismissed. Lacuata was found to be at fault for doing nothing to stop Espina from obtaining false police and
medical reports. The respondent Coca-Cola was ordered to reinstate dela Cruz and pay both petitioners dela
Cruz and Lacuata their respective back wages, 13th month pay and separation pay. On appeal, the National
Labor Relations Commission (NLRC) affirmed the Labor Arbiter’s decision but deleted the award of moral
damages in favor of dela Cruz. Its motion for reconsideration having been denied, respondent filed a Petition
for Certiorari before the Court of Appeals (CA). The CA set aside the NLRC decision and held that petitioners
Lacuata and dela Cruz were validly dismissed.
ISSUE:
Whether or not Lacuata and dela Cruz were validly dismissed on the grounds of altering the medical certificate
and police report of Sales
HELD:
Dela Cruz et al. contend, however, that for loss of trust and confidence to be a ground for termination of
employment, it must be willful and must be connected with the employee’s work.
16
By obtaining an altered police report and medical certificate, Dela Cruz et al. deliberately attempted to cover
up the fact that Sales was under the influence of liquor at the time the accident took place. In so doing, they
committed acts inimical to respondent’s interests. They thus committed a work-related willful breach of the
trust and confidence reposed in them.
PHILIPPINE DIAMOND HOTEL AND RESORT, INC. (MANILA DIAMOND HOTEL) v.

MANILA DIAMOND HOTEL EMPLOYEES UNION
An ordinary striking worker cannot be dismissed for mere participation in an illegal strike unless there be a proof that he committed
illegal acts during a strike.
The Diamond Hotel Employee's Union (the union) filed a petition for Certification Election before the
DOLE-National Capital Region (NCR) seeking certification as the exclusive bargaining representative of its
members. The DOLE-NCR denied said petition as it failed to comply with the legal requirements.
The Union later notified petitioner hotel of its intention to negotiate for collective bargaining agreement (CBA).
The Human Resource Department of Diamond Hotel rejected the notice and advised the union since it was
not certified by the DOLE as the exclusive bargaining agent, it could not be recognized as such. Since there
was a failure to settle the dispute regarding the bargaining capability of the union, the union went on to file a
notice of strike due to unfair labor pracritce (ULP) in that the hotel refused to bargain with it and the rank-
and-file employees were being harassed and prevented from joining it. In the meantime, Kimpo filed a
complaint for ULP against petitioner hotel.
After several conferences, the union suddenly went on strike. The following day, the National Union of
Workers in the Hotel, Restaurant and Allied Industries (NUWHRAIN) joined the strike and openly extended
its support to the union. The some of the entrances were blocked by the striking employees. The National
Labour Relations Commission (NLRC) representative who conducted an ocular inspection of the Hotel
premises confirmed in his Report that the strikers obstructed the free ingress to and egress from the Hotel.
The NLRC thus issued a Temporary Restraining Order (TRO) directing the strikers to immediately "cease and
desist from obstructing the free ingress and egress from the Hotel premises. During the implementation of the
order, the striking employees resisted and some of the guards tasked to remove the barricades were injured.
The NLRC declared that the strike was illegal and that the union officers and members who participated were
terminated on the grounds of participating in an illegal strike.
The union contended that the strike was premised on valid ground and that it had the capacity to negotiate the
CBA as the representatives of the employees of Diamond Hotel. The union contended that their dismissal is
tantamount to an unfair labour practice and union busting.
On appeal, the Court of Appeals affirmed the NLRC Resolution dismissing the complaints of Mary Grace,
Agustin and Rowena and of the union. It modified the NLRC Resolution, however, by ordering the
reinstatement with back wages of union members.
ISSUE:
Whether or not the dismissal of the union members is valid on the grounds of participating in an illegal strike
HELD:
Even if the purpose of a strike is valid, the strike may still be held illegal where the means employed are illegal.
Thus, the employment of violence, intimidation, restraint or coercion in carrying out concerted activities which
are injurious to the rights to property renders a strike illegal. And so is picketing or the obstruction to the free
use of property or the comfortable enjoyment of life or property, when accompanied by intimidation, threats,
violence, and coercion as to constitute nuisance.
As the appellate court correctly held, the union officers should be dismissed for staging and participating in
the illegal strike, following paragraph 3, Article 264(a) of the Labor Code which provides that ". . .any union
officer who knowingly participates in an illegal strike and any worker or union officer who knowingly
17
participates in the commission of illegal acts during strike may be declared to have lost his employment status
. . ."
An ordinary striking worker cannot, thus be dismissed for mere participation in an illegal strike. There must
be proof that he committed illegal acts during a strike, unlike a union officer who may be dismissed by mere
knowingly participating in an illegal strike and/or committing an illegal act during a strike.
DIGITEL TELECOMMUNICATIONS PHILIPPINES, INC.,

et al. v. MARIQUIT SORIANO
Forced resignation must be sufficiently established by substantial, concrete and credible evidence.
Mariquit Soriano (Soriano) was hired as Director of Marketing by Digitel Telecommunications Philippines,
Inc. (Digitel). Soriano worked under Vice President for Business Division Eric J. Severino (Severino) and
Senior Executive Vice President Johnson Robert L. Go (Go). Following a professional dispute against Severino
and Go, Soriano filed a resignation letter which was accepted by her superiors.
After her resignation, Soriano filed a suit for illegal termination alleging that she was forced to resign due to
professional and sexual harassment. She alleged that her superiors are preventing her former colleagues in
testifying to the sexual harassment. She produced an affidavit by one of the persons involved with Digitel
stating that the employees of the company were being forced not to testify against Go and Severino. In defense,
Go and Severino provided witnesses that testified that the acts alleged by Soriano din not happen.
The Labor Arbiter held that Mariquit voluntarily resigned, thus dismissing the complaint. On appeal, the NLRC
affirmed the findings of the Labor Arbiter. The Court of Appeals reversed the decision of NLRC. Hence,this
petition.
ISSUE:
Whether or not the Soriano was forced to resign, due to professional and sexual harassment, thus amounting
to constructive dismissal.
HELD:
Soriano's own allegation, although they are so detailed, appear incredible if not downright puny. An analysis of
her statements shows that her own conclusion that she was being sexually and professionally harassed was on
the basis of her own suppositions, conjectures, and surmises.
She could not satisfactorily explain her allegation that she was consistently professionally harassed by
respondent Severino. The latter's alleged words: "How come you claim you know so much yet nothing ever
gets done in your department?" do not jurisprudentially constitute nor clearly establish "professional
harassment." Aside from these words, the complainant could only venture to allege instances in general and
vague terms. As to the facts allegedly constituting "sexual harassment" advanced by Go and Severino, after an
objective analysis over their assertions as stated in their respective counter-affidavits and further considering
the other supporting documents attached to the respondents' pleadings, it is found that these far out weigh the
Soriano's own evidence
A reading of the affidavit of the witness, who was never an employee nor present at the party of Digitel, reveals,
however, that she merely "concluded" that the employees of Digitel were instructed or harassed not to testify
in favor of Soriano when they failed to meet one Matet Ruiz, a Digitel employee "who kept avoiding to meet
With such tendency to threaten resignation everytime higher management would refuse her demand to transfer
subordinates who had administrative differences with her, we therefore have no doubt that complainant
voluntarily resigned when respondent Severino refused to heed her demand that Ms. Arnedo and Ms.
Inductivo, her subordinates, be transferred to other departments. We also have no doubt that such resignation
does not constitute constructive dismissal, much less an illegal one.
18
DE LA SALLE UNIVERSITY and DR. CARMELITA I. QUEBENGCO v. DE LA SALLE
UNIVERSITY EMPLOYEES ASSOCIATION (DLSU-NAFTEU)
It is axiomatic in labor relations that a Collective Bargaining Agreement entered into by a legitimate labor organization and an
employer becomes the law between the parties, compliance with which is mandated by express policy of the law.
In 2001, a splinter group of the De La Salle University Employees Association (DLSU-NAFTEU) led by one
Belen Aliazas (Aliazas group) filed a petition for conduct of elections with the Department of Labor and
Employment (DOLE), alleging that the then incumbent officers of DLSU-NAFTEU had failed to call for a
regular election since 1985. DOLE-NCR held that the holdover authority of DLSU-NAFTEU’s incumbent
set of officers had been extinguished by virtue of the execution of the CBA. It accordingly ordered the conduct
of elections to be placed under the control and supervision of its Labor Relations Division and subject to pre-
election conferences. Even with the conditions for the conduct of election imposed by the DOLE-NCR,
DLSU-NAFTEU called for a regular election without prior notice to the DOLE and without the conduct of
pre-election conference. The incident prompted the Aliazas group to file an Urgent Motion for Intervention
with the Bureau of Labor Relations (BLR) of the DOLE. The BLR granted the Aliazas group’s motion for
intervention three days before the intended date of election.
The Aliazas group requested the University ―to escrow all union dues/agency fees and whatever money
considerations deducted from salaries of concerned co-academic personnel until such time that an election of
union officials has been scheduled and subsequent elections has been held.‖ DLSU and Quebengco’s move
prompted DLSU-NAFTEU to file a complaint for Unfair Labor Practice (ULP complaint), claiming that they
unduly interfered with its internal affairs and discriminated against its members.
The Labor Arbiter dismissed DLSU-NAFTEU’s ULP complaint. The Court of Appeals reversed the said
Order of the NLRC with respect to the ―subsuming‖ of ULP’s complaint under the certified case, the ULP
complaint having been, at the time the NLRC Third Division Order was issued, ―already disposed of‖ by the
Arbiter and was in fact pending appeal before the NLRC Second Division.
ISSUE:
Whether or not DLSU and Quebengco is guilty of unfair labor practice
HELD:
On the other matter raised by DLSU and Quebengco – that their acts of withholding union and agency dues
and suspension of normal relations with respondent’s incumbent set of officers pending the intra-union dispute
did not constitute interference, the Court finds for DLSU-NAFTEU.
Pending the final resolution of the intra-union dispute, DLSU-NAFTEU’s officers remained duly authorized
to conduct union affairs. It bears noting that at the time DLSU and Quebengco’s questioned moves were
adopted, a valid and existing CBA had been entered between the parties. It thus behooved DLSU to observe
the terms and conditions thereof bearing on union dues and representation. It is axiomatic in labor relations
that a CBA entered into by a legitimate labor organization and an employer becomes the law between the
parties, compliance with which is mandated by express policy of the law. Respecting the issue of damages,
DLSU-NAFTEU, in its Position Paper before the Labor Arbiter, prayed for the award of exemplary damages,
nominal damages, and attorney’s fees.
Exemplary or corrective damages are imposed by way of example or correction for the public good in addition
to the moral, temperate, liquidated or compensatory damages. While the amount of exemplary damages need
not be proved, respondent must show proof of entitlement to moral, temperate or compensatory damages
before the Court may consider awarding exemplary damages. No such damages were prayed for, however,
hence, the Court finds no basis to grant the prayer for exemplary damages.
CARMEN B. DY-DUMALASA v. DOMINGO SABADO S. FERNANDEZ, et al.

593 SCRA 656, (2009), SECOND DIVISION (Carpio Morales, J.)
Procedural rules governing service of summons, in quasi-judicial proceedings, are not strictly construed.
19
Domingo Fernandez, et al., former employees of Helios Manufacturing Corporation (HELIOS), filed a
complaint for illegal dismissal or illegal closure of business, non-payment of salaries and other money claims
against HELIOS. The Labor Arbiter found that the closure of the Muntinlupa office/plant was a sham, as
HELIOS simply relocated its operations to a new plant in Carmona, Cavite under the new name of ―Pat &
Suzara,‖ in response to the newly-established local union. HELIOS and it Board of Directors and stockholders
were held liable.
The NLRC modified the Labor Arbiter’s Order, holding that Dumalasa is not jointly and severally liable with
HELIOS for Fernandez, et al.’s claim, there being no showing that she acted in bad faith nor that HELIOS
cannot pay its obligations. Dumalasa moved for reconsideration, but this was denied, hence, she appealed to
the Court of Appeals.
The appellate court reversed and set aside the NLRC Resolution, holding that what the NLRC, in effect,
modified was not the Order denying the Motion to Quash the Writ of Execution, but the Labor Arbiter’s
Decision itself. This is an impermissible act since the Decision has become final and executor; hence, it could
no longer be reversed or modified.
Respecting NLRC’s pronouncement that Dumalasa was not jointly and severally liable, the appellate court held
that the same is a superfluity since there was no statement, either in the main case or in the Writ, that the
liability is solidary. Therefore, Dumalasa is merely jointly liable for the judgment award. Dumalasa moved for
reconsideration of the appellate court’s Decision, which was denied. Hence, this petition.
ISSUES:
1.) Whether or not the Labor Arbiter acquired jurisdiction over Dumalasa
2.) Whether or not Dumalasa is solidarily liable with HELIOS for the judgment award
HELD:
Contrary to Dumalasa’s contention, the Labor Arbiter acquired jurisdiction over her person regardless of the
fact that there was allegedly no valid service of summons. It bears noting that, in quasi-judicial proceedings,
procedural rules governing service of summons are not strictly construed. Substantial compliance therewith is
sufficient. In the cases at bar, Dumalasa, her husband and three other relatives, were all individually impleaded
in the complaint. The Labor Arbiter furnished her with notices of the scheduled hearings and other processes.
It is undisputed that HELIOS, of which she and her therein co-respondents in the subject cases were the
stockholders and managers, was in fact heard, proof of which is the attendance of her husband, President-
General Manager of HELIOS, together with counsel in one such scheduled hearing and the Labor Arbiter’s
consideration of their position paper in arriving at the Decision, albeit the same position paper was belatedly
filed.
Clearly, Dumalasa was adequately represented in the proceedings conducted by the Labor Arbiter by the lawyer
retained by HELIOS.
Taking into account the peculiar circumstances of the cases, HELIOS’ knowledge of the pendency thereof and
its efforts to resist them are deemed to be knowledge and action of petitioner. That Dumalasa and her fellow
members of the Board refused to heed the summons and avail of the opportunity to defend themselves as they
instead opted to hide behind the corporate veil does not shield them from the application of labor laws.
Dumalasa cannot now thus question the implementation of the Writ of Execution on her on the pretext that
jurisdiction was not validly acquired over her person or that HELIOS has a separate and distinct personality
as a corporate entity. To apply the normal precepts on corporate fiction and the technical rules on service of
summons would be to overturn the bias of the Constitution and the laws in favor of labor.
On Carmen’s liability
A perusal of the Labor Arbiter’s Decision readily shows that, notwithstanding the finding of bad faith on the
part of the management, the dispositive portion did not expressly mention the solidary liability of the officers
and Board members, including Dumalasa.
20
Ineluctably, absent a clear and convincing showing of the bad faith in effecting the closure of HELIOS that
can be individually attributed to petitioner as an officer thereof, and without the pronouncement in the
Decision that she is being held solidarily liable, petitioner is only jointly liable.
The Court in fact finds that the present action is actually a last-ditch attempt on the part of Dumalasa to wriggle
its way out of her share in the judgment obligation and to discuss the defenses which she failed to interpose
when given the opportunity. Even as Dumalasa avers that she is not questioning the final and executory
Decision of the Labor Arbiter and admits liability, albeit only joint, still, she proceeds to interpose the defenses
that jurisdiction was not acquired over her person and that HELIOS has a separate juridical personality.
As for Dumalasa’s questioning the levy upon her house and lot, she conveniently omits to mention that the
same are actually conjugal property belonging to her and her husband. Whether petitioner is jointly or solidarily
liable for the judgment obligation, the levied property is not fully absolved from any lien except if it be shown
that it is exempt from execution.
DYNAMIC SIGNMAKER OUTDOOR ADVERTISING SERVICES, INC., et al. v. FRANCISCO

POTONGAN
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.
Respondent Francisco Potongan (Potongan) worked for Dynamic Signmaker Outdoor Advertising Services
(Corporation) as a Production Supervisor. The union of rank-and-file employees of corporation declared a
strike on the ground that the corporation replaced all its supervisors. Subsequently Potongan did not receive
his salary and he was advised to take an indefinite leave of absence. Then Potongan was being charge by the
company for the alleged burning of corporation’s main building and for the disruption of work. However,
Potangan denied all allegations. Potongan then filed a complaint for illegal dismissal with NLRC against
corporation.
The Labor Arbiter dismissed the case on the ground that the action was barred by prior judgment regarding
the strike of union. Potongan then appealed, contending that the Labor Arbiter did not acquire jurisdiction
over him because he was not even a member of the union. The NLRC set aside the Labor Arbiter’s decision
and directed respondent Potongan to go back to work.
The Labor Arbiter eventually dismissed Potongan’s complaint for lack of merit, holding that, inter alia,
Potongan should have reported back to work and/or inquired into the results of the investigation of the
charges against him; and that the belated filing of his complaint partakes of a "fishing expedition."
On appeal, the NLRC affirmed the decision of the Labor Arbiter. The Court of Appeals (CA) however,
reversed the decision of NLRC holding that Potongan was denied due process and was dismissed without
cause.
ISSUE:
Whether or not the dismissal of Potongan was a valid exercise of management prerogatives
HELD:
The Supreme 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.
The Supreme Court finds it difficult, however, to attribute good faith on the part of Dynamic. Potongan was
instructed to go on indefinite leave. He was asked to return to work only after more than three years from the
21
time he was instructed to go on indefinite leave during which period his salaries were withheld, and only after
the NLRC promulgated its decision of May 21, 1998 reversing the labor arbiter’s dismissal of his complaint.
ARNULFO O. ENDICO v. QUANTUM DISTRIBUTION CENTER

577 SCRA 299 (2009), FIRST DIVISION (Carpio Morales, J.)
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.
Quantum Foods Center hired Arnulfo O. Endico (Endico) as Field Supervisor of Davao City. He was later on
transferred in Cebu. Due to Endico’s achievements and contributions to Quantum Foods, he was promoted
as Area Manager of Cebu. However, after fruitful years of employment, Quantum Foods was adversely affected
by economic slowdown, which compelled it to streamline its operations through the reduction of the
company’s contractual merchandisers to save on operation cost. Thereafter, for some misfortunate events,
Endico was immediately relieved from service. Endico thereafter filed a complaint for constructive illegal
dismissal.
The Labor Arbiter rendered a decision in Endico’s favor. Quantum Foods appealed to the National Labor
Relations Commission (NLRC) which affirmed the Labor Arbiter’s decision with modification. Quantum
Foods then filed a Petition for Certiorari before the Court of Appeals (CA) who ruled in favor of Quantum
Foods. The Court of Appeals ruled that Quantum Foods had yet to decide on the administrative case when
Endico immediately filed the complaint for constructive dismissal. The CA concluded that Endico filed the
complaint in anticipation of what he perceived to be the final outcome of the administrative investigation.
Hence, this petition.
ISSUE:
Whether or not Endico was constructively dismissed
HELD:
Jurisprudence recognizes the exercise of management prerogatives. Labor laws also discourage interference
with an employer’s judgment in the conduct of its business. For this reason, the Court often declines to
interfere in legitimate business decisions of employers. The law must protect not only the welfare of employees,
but also the right of employers.
In the pursuit of its legitimate business interests, especially during adverse business conditions, 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, 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 enterprises 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 limitations provided by law, collective bargaining agreements,
and general principles of fair play and justice.
In this case, the Court finds no reason to disturb the conclusion of the CA that there was no constructive
dismissal. Reassignments made by management pending investigation of violations of company policies and
procedures allegedly committed by an employee fall within the ambit of management prerogative. The decision
of Quantum Foods to transfer Endico pending investigation was a valid exercise of management prerogative
to discipline its employees. The transfer, while incidental to the charges against Endico, was not meant as a
penalty, but rather as a preventive measure to avoid further loss of sales and the destruction of Quantum
Foods’ image and goodwill. It was not designed to be the culmination of the then on-going administrative
investigation against Endico.
Neither was there any demotion in rank or any diminution of Endico’s salary, privileges and other benefits.
Endico was being transferred to the head office as area sales manager, the same position
Endico held in Cebu. There was also no proof that the transfer involved a diminution of Endico’s salary,
privileges and other benefits.
22
On the alleged inconvenience on Endico and his family because of the transfer from Cebu to the head office
in Parañaque, the Court rules that the transfer is valid, there being no showing that there was bad faith on the
part of Quantum Foods. Moreover, the Court finds that Quantum Foods, considering the declining sales and
the loss of a major account in Cebu, was acting in the legitimate pursuit of what it considered its best interest
in deciding to transfer Endico to the head office.
FE LA ROSA, et al. v. AMBASSADOR HOTEL

Case law holds that constructive dismissal occurs when there is cessation of work because continued employment is rendered
impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear discrimination,
insensibility, or disdain by an employer becomes unbearable to the employee.
Petitioners Fe La Rosa, Ofelia Velez, Cely Domingo, Jona Natividad and Edgar De Leon (La Rosa, et al.), were
employees of respondent Ambassador Hotel. La Rosa, et al. filed before the National Labor Relations
Commission (NLRC) several complaints for illegal dismissal, illegal suspension, and illegal deductions against
the hotel and its manager. La Rosa, et al. alleged that after filing their complaints with the Department of Labor,
the latter inspected the hotel’s premises. The hotel was thereafter found to have been violating labor standards
laws. Consequently, after such incident, the management of the hotel retaliated by suspending and/or
constructively dismissing them by drastically reducing their work days through the adoption of a work
reduction/rotation scheme. The hotel however countered that such reduction/rotation scheme was an exercise
of its management prerogative due to business losses.
The labor arbiter found the hotel and its manager guilty of illegal dismissal. The hotel appealed to the NLRC
but the latter affirmed the labor arbiter’s ruling with modification. The hotel appealed and prayed for the
issuance of an injunctive writ before the Court of Appeals. The appellate court reversed the NLRC decision
and dismissed the petitioners’ complaints, stating that there was no constructive dismissal.
ISSUES:
Whether or not La Rosa et al. were constructively dismissed
HELD:
The records fail, however, to show any documentary proof that the work reduction scheme was adopted due
to Ambassador’s business reverses. The hotel’s memorandum dated April 5, 2000 (sic, should be 2002)
informing La Rosa et al. of the adoption of a two-day work scheme effective April 5, 2002 made no mention
why such scheme was being adopted. Neither do the records show any documentary proof that the hotel
suffered financial losses to justify its adoption of the said scheme to stabilize its operations.
What is undisputed, as found by both the labor arbiter and the NLRC and admitted by respondent itself, is
that the complaints for violation of labor standards laws were filed by La Rosa et al. against Ambassador Hotel
at the DOLE-NCR, some of which complaints were partially settled; and that almost immediately after the
partial settlement of the said complaints, the work reduction/rotation scheme was implemented.
Case law holds that constructive dismissal occurs when there is cessation of work because continued
employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution
in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to
the employee. The hotel’s sudden, arbitrary and unfounded adoption of the two-day work scheme which greatly
reduced La Rosa, et al.’s salaries renders it liable for constructive dismissal. Upon the other hand, La Rosa et
al.’s immediate filing of complaints for illegal suspension and illegal dismissal after the implementation of the
questioned work scheme, which scheme was adopted soon after petitioners’ complaints against respondent for
violation of labor standards laws were found meritorious, negates respondent’s claim of abandonment. An
employee who takes steps to protest his dismissal cannot by logic be said to have abandoned his work.
ADELINO FELIX v. NATIONAL LABOR RELATIONS COMMISSION and

REPUBLIC ASAHI GLASS CORPORATION
23
Substantial evidence must support the dismissal of an employee on the ground of “loss of trust and confidence”.
Petitioner Adelino Felix was hired by the Republic Asahi Glass Corporation as a Cadet Engineer. Sometime in
1992, Felix was offered a chance to train and qualify for the position of Assistant Manager but he declined and
waived the opportunity to the one who was next-in-line. By Felix's claim, he was asked by certain officers of
the company to resign and accept a separation package, failing which he would be terminated for loss of
confidence.
Felix, however, refused to resign and accept separation benefits, drawing the officers of the company to, by
his claim, start harassing him. Thus, he was not given work and another employee, Mr. Elmer Tacata, was
assigned to take over his post and function. Unable to withstand the manner by which he was being treated by
the company, Felix, through his lawyer, warned the Republic Asahi Glass Corporation about the illegality of
its actions. Felix attributed the company's harassment against him to his being a member of the supervisory
union then being formed. The Republic Asahi Glass Corporation subsequently terminated Felix’x services for
loss of trust and confidence.
Felix thus lodged a complaint for illegal dismissal. The Labor Arbiter dismissed Felix's complaint. On appeal,
the National Labor Relations Commission (NLRC) dismissed Felix's complaint for lack of merit. The Court
of Appeals likewise dismissed the complaint.
ISSUE:
Whether or not the company’s loss of trust and confidence is founded on facts established by substantial and
competent evidence
HELD:
The rule is that high respect is accorded to the findings of fact of quasi-judicial agencies, more so in the case
at bar where both the Labor Arbiter and the NLRC share the same findings. The rule is not however, without
exceptions one of which is when the findings of fact of the labor officials on which the conclusion was based
are not supported by substantial evidence. The same is true when it is perceived that far too much is concluded,
inferred or deducted from bare facts adduced in evidence.
The employer’s evidence, although not required to be of such degree as that required in criminal cases i.e.
proof beyond reasonable doubt, must be substantial – it must clearly and convincingly establish the facts upon
which loss of confidence in the employee may be made to rest. In the case at bar, the company failed to
discharge this burden.
Felix was hastily dismissed by ASAHI as the former was not given adequate time to prepare for his defense
but was preemptorily dismissed even without any formal investigation or hearing. It is settled that where the
employee denies the charges against him, a hearing is necessary to thresh out any doubt. The failure of the
company to give petitioner, who denied the charges against him, the benefit of a hearing and an investigation
before his termination constitutes an infringement of his constitutional right to due process.
It bears emphasis that the matter of determining whether the cause for dismissal is justified on the ground of
loss of confidence cannot be left entirely to the employer. Impartial tribunals do not only rely on the statement
made by the employer that there is ―loss of confidence‖ unless duly proved or sufficiently substantiated. At all
events, even if all the allegations are true, they are not of such nature to merit the penalty of dismissal given
the 14 years in service of Felix. Dismissal is unduly harsh and grossly disproportionate to the charges. This rule
on proportionality – that the penalty imposed should commensurate to the gravity of the offense – has been
observed in a number of cases.
There being no basis in law or in fact justifying Felix’s dismissal on the basis of loss of trust and confidence,
his dismissal was illegal.
G & M (PHIL.), INC., v. WILLIE BATOMALAQUE

24
The burden of proving payment of monetary claims rests on the employer.
Abdul Aziz Abdullah Al Muhaimid Najad Car Maintenance Association (Abdul Aziz) hired Willie Batomalaque
as car painter through a recruiter and agent petitioner G & M Phil., Inc. (G&M). Their contract is for 2 years.
Batomalaque started working on March 10, 1992, but on June 7, 1994, he was repatriated. He then filed a
complaint against G&M, Abdul Aziz and Country Empire Insurance Company for non-payment and
underpayment of salaries and damages with the Philippine Overseas Employment Administration (POEA).
The Labor Arbiter (LA) credited Batomalaque’s complaint for underpayment of salaries during the first year
of his contract but denied his other claims, and ordered G&M and other defendants to pay Batomalaque. On
appeal, the National Labor Relations Commission affirmed the decision of the LA.
ISSUE:
Whether or not G&M has the obligation to prove that Batomalaque was paid his salaries in full
HELD:
Specifically with respect to labor cases, the burden of proving payment of monetary claims rests on the
employer, the rationale being that the pertinent personnel files, payrolls, records, remittances and other similar
documents — which will show that overtime, differentials, service incentive leave and other claims of workers
have been paid — are not in the possession of the worker but in the custody and absolute control of the
employer.
Aside, however, from its bare allegation that its principal Abdul Aziz had fully paid Batomalaque’s salaries,
G&M did not present any evidence, e.g., payroll or payslips, to support its defense of payment. G&M thus
failed to discharge the onus probandi. G&M, as the recruiter and agent of Abdul Aziz, is thus solidarily liable with
the latter for the unpaid wages of Batomalaque.
On repeated occasions, the Court ruled that the debtor has the burden of showing with legal certainty that the
obligation has been discharged by payment. To discharge means to extinguish an obligation, and in contract
law discharge occurs either when the parties have performed their obligations in the contract, or when an event
the conduct of the parties, or the operation of law releases the parties from performing. Thus, a party who
alleges that an obligation has been extinguished must prove facts or acts giving rise to the extinction.
The fact of underpayment does not shift the burden of evidence to Batomalaque because partial payment does
not extinguish the obligation. Only when the debtor introduces evidence that the obligation has been
extinguished does the burden of evidence shift to the creditor who is then under a duty of producing evidence
to show why payment does not extinguish the obligation.
LUNESA O. LANSANGAN AND ROCITA CENDAÑA v. AMKOR TECHNOLOGY

PHILIPPINES
Payment of backwages and other benefits is justified only if the employee was unjustly dismissed.
An email was sent to Amkor Technology Philippines (Amkor) through their General Manager alleging that the
Lunesa Lansangan (Lansangan) and Rocita Cendana (Cendana) stole company time. Lansangan and Cendana
admitted to the wrongdoing and were terminated for ―extremely serious offenses‖. The two then filed a case
of illegal dismissal against Amkor. The Labor Arbiter (LA) ordered for their reinstatement to their former
positions without backwages, but dismissed the complaint on basis of Lansangan and Cendana’s guilt. The two
did not appeal the finding that they were guilty, and moved for the writ of execution. Amkor appealed the
decision to the National Labor Relations Commissions (NLRC) and was subsequently granted. The NLRC
deleted the grant for reinstatement of the LA.
The Court of Appeals affirmed the decision of the NLRC that Lansangan and Cendana are guilty and should
not be reinstated but modified in so far as backwages are concerned that it must be paid in full.
ISSUE:
25
Whether or not Lansangan and Cendana are entitled to backwages and reinstatement
HELD:
The Arbiter found Lansangan and Cendana’s dismissal to be valid. Such finding had, as stated earlier, become
final, they not having appealed it. Lansangan and Cendana’s are not entitled to full backwages as their dismissal
was not found to be illegal. Agabon v. NLRC so states –– payment of backwages and other benefits is justified
only if the employee was unjustly dismissed.
PANFILO MACASERO v. SOUTHERN INDUSTRIAL GASES PHILIPPINES

and/or NEIL LINDSAY
An illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. In instances where reinstatement is no longer
feasible, separation pay is granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or if not,
separation pay and backwages.
Panfilo Macasero works as Carbon Dioxide Bulk Tank Escort for Southern Industrial Gases, Philippines
(SIGP). He was severed from his job for the reason that his services were no longer needed. Macasero filed a
case of illegal dismissal against SIGP before the Labor Arbiter (LA) who ruled that he is considered a regular
employee but was not illegally dismissed and that he is entitled to separation pay equivalent to 1 month for
every year of service plus 13th month pay.
The National Labor Relations Commission (NLRC) affirmed the decision of the LA but modified the
computation for the separation pay. The Court of Appeals (CA) also affirmed the decision of the NLRC.
ISSUE:
Whether or not Macasero is illegally dismissed and is entitled to separation pay
HELD:
While both labor tribunals and the appellate court held that Macasero failed to prove the fact of his dismissal,
they oddly ordered the award of separation pay in lieu of reinstatement in light of SIGP company’s "firm stance
that Macasero was not its employee vis a vis the unflinching assertion of Macasero that he was which does not
create a fertile ground for reinstatement." It goes without saying that the award of separation pay is inconsistent
with a finding that there was no illegal dismissal, for under Article 279 of the Labor Code and as held in a
catena of cases, an employee who is dismissed without just cause and without due process is entitled to
backwages and reinstatement or payment of separation pay in lieu thereof.
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs
provided are separate and distinct. 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 accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no longer
practical or in the best interest of the parties. Separation pay in lieu of reinstatement may likewise be awarded
if the employee decides not to be reinstated.
26
Reynaldo Madrigalejos v. Geminilou Trucking Service Liberty Galotera et al.
G. R. No. 179174, 24 December 2008, SECOND DIVISION (Carpio-Morales, J.)
The test of constructive dismissal is whether a reasonable person in the employee's position would have felt compelled to give up his
job under the circumstances.
Reynaldo Madrigalejos was hired by Geminilou Trucking Service Liberty Galotera as a truck driver to haul and
deliver products of San Miguel Pure Foods Company, Inc. Madrigalejos claimed that he was requested by
Geminilou Trucking Service Liberty Galotera et al. to sign a contract entitled “Kasunduan Sa Pag-Upa ng Serbisyo”
which he refused as he found it to alter his status as a regular employee to merely contractual, and it contained
a waiver of benefits that had accrued since he started working for respondents.
Claiming that he was terminated by not signing the Kasunduan, Madrigalejos filed with the National Labor
Relations Commission (NRLC) a complaint for constructive dismissal against Geminilou Trucking Service
Liberty Galotera et al.
Geminilou Trucking Service Liberty Galotera et al. denied dismissing Madrigalejos from his employment,
explaining that he unilaterally decided to stop reporting for work, following the filing by a fellow driver of a
complaint against him for allegedly attacking his fellow driver with a knife.
The Labor Arbiter declared that Madrigalejos had been illegally dismissed. The NLRC reversed the Decision
ruling that there was no termination of employment. The appellate court denied petitioner’s appeal finding that
even assuming that Madrigalejos was required but refused to sign the Kasunduan, his refusal does not per se
adequately support the charge of dismissal. The appellate court added that while technical rules on evidence
are not strictly followed in the NLRC, a charge of dismissal must still be supported by substantial evidence at
the very least, or such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.
ISSUE:
Whether or not the employer bears the burden of proof to show that there was unjustified refusal to report
for work
HELD:
The Court's examination of the records reveals that the factual findings of the NLRC, as affirmed by the
appellate court, are supported by substantial evidence, hence, there is no cogent reason for the Court to modify
or reverse the same.
Constructive dismissal is a cessation of work because continued employment is rendered impossible,

unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear
discrimination, insensibility, or disdain by an employer becomes unbearable to the employee. The test of
constructive dismissal is whether a reasonable person in the employee's position would have felt compelled to
give up his job under the circumstances.
In the present case, the records on hand show that the lone piece of evidence submitted by petitioner to
substantiate his claim of constructive dismissal is an unsigned copy of the Kasunduan. This falls way short of
the required quantum of proof which, as the appellate court pointed out, is substantial evidence, or such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion.
Under the circumstances, the Court finds that the appellate court did not err in sustaining Geminilou Trucking
Service Liberty Galotera et al’s claim that Madrigalejos was not dismissed, but that he simply failed to report
for work after an altercation with a fellow driver, which incident was the subject of conciliation proceedings
before the Sangguniang Barangay.
27
MAJURINE L. MAURICIO v. NATIONAL LABOR RELATIONS COMMISSION, et al.
475 SCRA 323 (2005), THIRD DIVISION (Carpio Morales J.)
One of the inherent powers of courts which should apply in equal force to quasi-judicial bodies is to amend and control its processes
so as to make them conformable to law and justice. This includes the right to reverse itself, especially when in its opinion it has
committed an error or mistake in judgment and adherence to its decision would cause injustice.
Majurine L. Mauricio (Majurine) started working as an Administrative Assistant in the Legal Department of
the Manila Banking Corporation as a probationary employee. As a pre-employment requirement, the bank
directed the submission by Mauricio of some required documents. However, she failed to do so. She was
advised that the processing of her regularization as employee would be held in abeyance. The bank gave her
extension dates twice with information that her failure to do so would cause the termination of her
employment. Despite the deadline given her, she still failed to comply with the requirements.
Mauricio, informed the bank that she could not secure a clearance from her previous employer, the Manila
Bankers Life Insurance Corporation (MBLIC), a sister company of the bank, as she had a pending case with
it. She requested that any action relative to her employment be held in abeyance as she was still following up
the early resolution of the case. In response, the bank denied her request. Thus, she filed a complaint for illegal
dismissal, unpaid salary, and moral and exemplary damages against the bank before the Labor Arbiter, but such
was dismissed.
On Mauricio’s appeal, the National Labor Relations Commission (NLRC), reversed the decision of the Labor
Arbiter (LA). On the bank’s Motion for Reconsideration, however, the NLRC, reinstated in toto the Decision
of the LA. Mauricio thereupon challenged via Certiorari under Rule 65 before the Court of Appeals (CA). The
CA affirmed the NLRC decision.
ISSUE
Whether or not NLRC committed grave abuse of discretion when it reversed its original Decision and
reinstated in toto Decision of the Labor Arbiter
HELD
There is nothing ―radical and highly questionable‖ with the NLRC reversing its original decision if supported
with substantial evidence. Respecting Mauricio’s contention that in its earlier Decision, the NLRC already
passed upon the arguments raised by respondents in their Motion for Reconsideration before it, Mauricio
herself provides the answer when she quotes in her present petition what she terms as ―the trenchant
observation of the High Court‖.
In her petition, while Mauricio quotes at length the September 24, 2001 original decision of the NLRC, she
fails to explain why the NLRC should not have reversed it and why the Court of Appeals should not have
sustained the reversal. And what error of law should be reviewed by this Court, Mauricio likewise fails to point
out.
One of the inherent powers of courts which should apply in equal force to quasi-judicial bodies is to amend
and control its processes so as to make them conformable to law and justice. This includes the right to
reverse itself, especially when in its opinion it has committed an error or mistake in judgment and adherence
to its decision would cause injustice. This, the NLRC exercised which bore the imprimatur of the CA. Mauricio
has, however, failed to advance any meritorious ground why the Court should disturb such exercise.
MCDONALD’S (KATIPUNAN BRANCH), et al. v. MA. DULCE ALBA

Violation of established rules and policies, to be considered serious misconduct, should be performed with wrongful intent.
Ma. Dulce Alba (Alba) was hired as part of the service crew of McDonald’s Katipunan Branch. During the
orientation of newly hired employees, McDonald’s provided Alba with a copy of the Crew Employee
Handbook on rules and regulations including its meal policies, which state that an employee was not permitted
to eat inside the crew room while on duty, and that doing so would result in summary dismissal.
28
Rizza Santiago (Santiago), another crew member, reported to the store manager Kit Alvarez (Alvarez) that she
witnessed Alba eating inside the crew room during her duty. McDonald’s thus suspended Alba for five days
because of the incident. When asked about it, Alba explained that she did indeed ate inside the crew room but
that it was only because she was had a stomach ache due to hunger. Nevertheless, McDonald’s found Alba
guilty of flouting company regulations and immediately terminated her services. Alba thus lodged a complaint
against McDonald’s before the National Labor Relations Commission (NLRC) which dismissed it without
prejudice.
Alba re-filed her complaint, and after submission of the parties’ respective position papers and responsive
pleadings, Labor Arbiter Pablo Espiritu Jr. found in favor of Alba, holding that while she violated the meal
policy of McDonald’s, dismissal was too harsh a penalty, and suspension without pay would have sufficed.
McDonald’s appealed the finding of the Labor Arbiter to the NLRC, which denied the same.
ISSUE:
Whether or not the violation of the meal policy amounts to serious or willful misconduct which would justify
dismissal
HELD:
There is no dispute that Alba violated McDonald’s meal policy. The only issue is whether such violation
amounts to or borders on "serious or willful" misconduct or willful disobedience, as petitioners posit, to call
for respondent’s dismissal. By any measure, the Supreme Court holds not.
With respect to serious misconduct, it is not sufficient that the act or the conduct complained of must have
violated some established rules or policies. It must have been performed with wrongful intent.
McDonald’s, on which the onus of proving lawful cause in sustaining the dismissal of Alba lies, failed to prove
that her misconduct was induced by a perverse and wrongful intent, they having merely anchored their claim
that she was on her knowledge of the meal policy.
While McDonald’s wields a wide latitude of discretion in the promulgation of policies, rules and regulations
on work-related activities of its employees, these must, however, be fair and reasonable at all times, and the
corresponding sanctions for violations thereof, when prescribed, must be commensurate thereto as well as to
the degree of the infraction. Given Alba’s claim that she was having stomach pains due to hunger, which is not
implausible, the same should have been properly taken into account in the imposition of the appropriate
penalty for violation of the meal policy. McDonald’s suspension for five days sufficed. With that penalty, the
necessity of cautioning other employees who may be wont to violate the same policy was not compromised.
Moreover, McDonald’s likewise failed to prove any resultant material damage or prejudice on their part as a
consequence of respondent's questioned act. Their claim that the act would cause "irremediable harm to the
company’s business" is too vague to merit consideration.
MILAGROS PANUNCILLO v. CAP PHILIPPINES, INC.

The protection of the rights of the laborers does not authorize the oppression or self-destruction of the employer.
Milagros Panuncillo was hired as Office Senior Clerk by CAP Philippines Inc. In order to secure the education
of her son, Panuncillo procured an educational plan which she had fully paid but which she later sold to Josefina
Pernes for P37,000. Before the actual transfer of the plan could be effected, however, Panuncillo pledged it
for P50,000 to John Chua who, however, sold it to Benito Bonghanoy. Bonghanoy in turn sold the plan to
Gaudioso R. Uy for P60,000.
Having gotten wind of the transactions subsequent to her purchase of the plan, Josefina informed CAP
Philippines Inc. that Panuncillo had "swindled" her but that she was willing to settle the case amicably as long
as Panuncillo will pay the amount involved and the interest.
CAP Philippines Inc. terminated the services of Panuncillo. Panuncillo sought reconsideration of her dismissal.
Acting on Panuncillo’s motion for reconsideration, CAP Philippines Inc. denied the same. Panuncillo thus
29
filed a complaint for illegal dismissal, 13th month pay, service incentive leave pay, damages and attorney’s fees
against CAP Philippines Inc.
The Labor Arbiter, while finding that the dismissal was for a valid cause, found the same too harsh. He thus
ordered the reinstatement of Panuncillo to a position one rank lower than her previous position. On appeal,
the National Labor Relations Commission (NLRC) reversed the decision of the Labor Arbiter. It held that
Panuncillo’s dismissal was illegal and accordingly ordered her reinstatement to her former position.
CAP Philippines Inc. challenged the NLRC Decision before the appellate court via Petition for Certiorari. The
appellate court reversed the NLRC Decision and held that the dismissal was valid and that CAP Philippines
Inc. complied with the procedural requirements of due process. Hence, the present petition.
ISSUE:
Whether or not Milagros has been illegally dismissed
HELD:
Panuncillo’s repeated violation of Section 8.4 of CAP Philippines Inc’s Code of Discipline, she violated the
trust and confidence of CAP Philippines Inc. and its customers. To allow her to continue with her employment
puts CAP Philippines Inc. under the risk of being embroiled in unnecessary lawsuits from customers similarly
situated as Josefina, et al. Clearly, CAP Philippines Inc. exercised its management prerogative when it dismissed
Panuncillo.
Under the Labor Code, the employer may terminate an employment on the ground of serious misconduct or
willful disobedience by the employee of the lawful orders of his employer or representative in connection with
his work. Infractions of company rules and regulations have been declared to belong to this category and thus
are valid causes for termination of employment by the employer.
The employer cannot be compelled to continue the employment of a person who was found guilty of
maliciously committing acts which are detrimental to his interests. It will be highly prejudicial to the interests
of the employer to impose on him the charges that warranted his dismissal from employment. Indeed, it will
demoralize the rank and file if the undeserving, if not undesirable, remain in the service. It may encourage him
to do even worse and will render a mockery of the rules of discipline that employees are required to observe.
This Court was more emphatic in holding that in protecting the rights of the laborer, it cannot authorize the
oppression or self-destruction of the employer.
There can thus be no doubt that Panuncillo was given ample opportunity to explain her side. Parenthetically,
when an employee admits the acts complained of, as in Panuncillo’s case, no formal hearing is even necessary.
NOEL E. MORA v. AVESCO MARKETING CORPORATION

Voluntary resignations being unconditional in nature, both the intent and the overt act of relinquishment should concur.
Noel E. Mora (Mora) was hired as a sales engineer at herein respondent, Avesco Marketing Corporation
(Avesco). He tendered a letter of resignation after being confronted for selling competitors’ products to the
prejudice and detriment of Avesco and was given the option of either immediately resigning or face
administrative charges. He consequently changed his mind and withdrew his letter of resignation on the same
day. The following day, Avesco’s personnel manager issued a notice of disciplinary action. Mora has not heard
anything from the Avesco and thereafter learned from third party sources that his employment had been
terminated.
Mora filed a complaint for illegal dismissal before the National Labor Relations Commission (NLRC) but was
dismissed for lack of jurisdiction since the dispute falls within the province of the grievance procedure provided
for by the Collective Bargaining Agreement between Avesco and the workers’ union. The case was thus
referred to National Conciliation and Mediation Board for voluntary arbitration which dismissed Mora's
complaint upon the ground that he had voluntarily resigned prompting him to file a petition for certiorari
30
before the Court of Appeals which denied the same, it similarly finding him to have voluntarily resigned from
his job.
ISSUE:
Whether or not Mora was voluntarily resigned from his job
HELD:
Voluntary resignations being unconditional in nature, both the intent and the overt act of relinquishment
should concur. If the employer introduces evidence purportedly executed by an employee as proof of voluntary
resignation yet the employee specifically denies such evidence, as in Mora's case, the employer is burdened to
prove the due execution and genuineness of such evidence. Avesco in this case failed to discharge such burden.
For a resignation tendered by an employee to take effect, it should first be accepted or approved by the
employer. Mora’s receipt by Avesco’s personnel department of his resignation letter is not equivalent to
approval. Since Mora requested that his resignation was to be effective a month later or on April 25, 2003,
Avesco’s approval was a fortiori necessary. That Avesco issued the ―show cause‖ letter a day after Mora filed
the controversial letter of resignation could only mean that it did not accept the same.
While selling of Avesco’s competitors’ products is a valid ground for termination of employment, an employer
cannot just hurl generalized accusations but should at least cite specific instances and proof in support thereof.
Avesco relied on a ―report by [Mora’s] superiors‖ in faulting Mora. What this alleged ―report‖ was and what
it contained, no testimonial or documentary proof thereof was proffered. And while Avesco gave the
impression that it conducted or was going to conduct an investigation on the basis of the ―report,‖ there is no
showing that one such was conducted and, if there was, what the result was.
ANICETO W. NAGUIT JR. v. NATIONAL LABOR

RELATIONS COMMISSION, et al.
In order for affidavits to be admissible as evidence, the Labor Code provides that the adverse party should be given opportunity to
cross-examine the affiants.
Petitioner Aniceto Naguit was employed as an administrative officer of the Manila Electric Company
(MERALCO). Naguit rendered overtime work 8am to 12pm. Upon the preparation of his timesheet, it was
reflected that he worked until 5pm instead of 12pm. Naguit did not inform the timekeeper of this fact.
Furthermore, Naguit being the custodian of petty cash, released to Fidel Cabuhat the amount representing
meal allowance and rental for a jeep covering his alleged overtime work. Two years later, he was charged with
violating company policy because of said incident. In the administrative hearing, MERALCO’s evidence
consisted primarily of the sworn statements of Cabuhat alleging that he was induced by Naguit to falsify the
time cards. Naguit was dismissed after 32 years of service.
Naguit appealed his dismissal. The Labor Arbiter rendered decision in favor of Naguit. On appeal, the National
Labor Relations Commission (NLRC) reversed the decision of the Labor Arbiter. The Court of Appeals
affirmed the NLRC’s decision.
Issue:
Whether or not the NLRC erred in giving full credence to the affidavit of Cabuhat
Held:
In fine, the Court credits that Naguit was in good faith when he did not correct the entry in the Notice of
Overtime and Timesheet reflecting that he worked up to 5:00 p.m. on June 6, 1987. The charge of falsification
against him does not thus lie.
In labor cases, the Court has consistently held that where the adverse party is deprived of opportunity to cross-
examine the affiants, affidavits are generally rejected for being hearsay, unless the affiant themselves are placed
on the witness stand to testify thereon. Thusly, such affidavits of Cabuhat are inadmissible as evidence against
Naguit.
31
Naguit contends that the NLRC committed grave abuse of discretion in giving full credence to the affidavits
of Cabuhat claiming that he was induced by Naguit to claim overtime pay despite Cabuhat's failure to affirm
them during the arbitral proceedings, he having failed to show up, thus making them inadmissible under the
hearsay rule.
NEW SUNRISE METAL CONSTRUCTION, et al. v. VICTOR PIA, et al.

Unsatisfactory performance, under the Labor Code, must be gross and habitual to constitute just cause for dismissal.
Victor Pia, et al. were hired by New Sunrise under separate 6-month contracts but their services were
subsequently terminated even before the expiration of said contract due to alleged poor performance. Pia, et
al. filed a complainant for illegal dismissal and underpayment of wages as well as non-payment of other benefits
before the Labor Arbiter. The Labor Arbiter ruled in favor of Pia, et al New Sunrise was ordered to pay Pia, et
al. their proportionate 13th month pay and corresponding salaries for the unexpired portion.
New sunrise appealed to the National Labor and Relations Commission (NLRC) but NLRC dismissed the
appeal. A motion for reconsideration was filed. The NLRC reversed its resolution finding the dismissal to be
based on just cause. On appeal, the Court of Appeals affirmed the Labor Arbiter’s decision. Hence, this
petition.
ISSUE:
Whether or not incompetence or poor performance, not amounting to gross and habitual neglect of duties,
can be a valid cause for termination of employment
HELD:
The Supreme Court upheld the decision of the Labor Arbiter positing that ―at all events, unsatisfactory
performance cannot be considered a just cause for dismissal under the Labor Code if it does not amount to
gross and habitual neglect of duties. On this score, New Sunrise failed to prove that the alleged inefficiency of
the 12 respondents amounted to gross and habitual neglect of duties.‖
There is no denying that the unsatisfactory performance of the employees were proven in the report provided
by New Sunrise but sad to say, it is not enough proof that it amounted to gross and habitual neglect of duties.
Further, New Sunrise failed to establish that they were informed, at the time of hiring, of the standards they
were expected to meet, i.e., that they were supposed to reach certain quotas. This is not to mention that New
Sunrise failed to present proof that respondents were apprised of their poor or below average performance
after each evaluation period to at least give them the opportunity to improve their performance.
RONALDO NICOL et al. v. FOOT JOY INDUSTRIAL CORP. et al.

The New Rules of Procedure of the NLRC, as amended, allows the reduction of the appeal bond.
News of a temporary shutdown of respondent Foot Joy Industrial Corp. came about on February 2, 2001.
Two days after, a fire razed the company and its premises. Subsequently, the employees filed with the National
Labor Relations Commission (NLRC) two separate complaints for illegal closure resulting to illegal dismissal
and nonpayment of wage increase. The company declared the total closure and cessation of its business
operations allegedly because of severe losses and notified the employees that they shall be terminated from
employment. The Labor Arbiter (LA) found Ronaldo Nicol, et al. were constructively dismissed and awarded
them separation pay.
Foot Joy filed a Motion to Reduce Bond with their appeal to the NLRC but the Motion was denied. As Foot
Joy failed to post the additional bond the NLRC dismissed Foot Joy’s appeal for non-perfection thereof.
On appeal, the Court of Appeals (CA) reversed the NLRC.
ISSUE:
32
Whether or not a motion to reduce the appeal bond can be given due course even if it is not accompanied by
a bond in a reasonable amount
HELD:
It is provided in Article 223 of the Labor Code that 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.
Also, Sections 4(a) of Rule VI of the New Rules of Procedure of the NLRC the states that one of the requisites
for perfection of appeal is that it shall be filed with proof of payment of the required appeal fee and surety
bond as provided in Section 6 of the Rule. Section 6 provides that 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 cash or surety bond. The appeal bond shall either be in cash or surety in an amount equivalent to
the monetary award, exclusive of damages and attorney’s fees.
The necessary import of the foregoing provisions is that in the case of an employer appealing the labor arbiter’s
decision to the NLRC, the posting of a cash or surety bond to perfect an appeal of a monetary judgment is not
only mandatory but also jurisdictional, non-compliance with which has the effect of rendering the judgment
final and executory.
As stressed in Ong v. Court of Appeals, it is the intention of the lawmakers to make the bond an indispensable
requisite for the perfection of an appeal by the employer.
Be that as it may, Section 6 of Rule VI of the New Rules of Procedure of the NLRC, as amended, allows the
reduction of the appeal bond. This practice-evolved rule has been made explicit by Resolution 01-02, series of
2002, subject to the conditions that (1) the motion to reduce the bond shall be based on meritorious grounds;
and (2) a reasonable amount in relation to the monetary award is posted by the appellant, otherwise the filing
of the motion to reduce bond shall not stop the running of the period to perfect an appeal. There is no dispute
that respondents filed a Notice of Appeal and complied with the other requirements for perfecting an appeal,
save for the posting of the full amount of the bond, on December 20, 2001 or nine days after receipt of the
labor arbiter’s decision. And admittedly, respondents’ Motion to Reduce Bond was accompanied by an actual
tender of a P10 million surety bond executed by the Security Pacific Assurance Corporation.
PHILIPPINE AIRLINES, INC. v. ENRIQUE LIGAN, et al.

G.R. No. 146408, 30 April 2009, SPECIAL SECOND DIVISION (Carpio Morales, J.)
It must be stressed that respondents, having been declared to be regular employees, had acquired security of tenure. As such, they
could only be dismissed by the real employer, on the basis of just or authorized cause, and with observance of procedural due process.
Enrique Ligan, et al. and the other respondents were employees of Synergy Services Corporation (Synergy)
which provides manpower for Philippine Airlines. It was later discovered that Synergy is a labor-only
contractor. They were dismissed by Philippine Airlines on several grounds, one of which is in the guise of
retrenchment. The legality of the dismissal of the Ligan, et al. has been pending before the Court of Appeals.
Philippine Airlines paid the wages of the Ligan, et al. but contested the employment status of Roque Pilapil for
he is already terminated and Benedicto Auxtero who signed the ―Release and Quitclaim and Waiver‖.
Philippine Airlines therefore pleads to the court to reconsider its first Decision on the payment of wages and
benefits.
ISSUE:
Whether or not the Supreme Court shall overrule its first decision regarding the grant of wages and benefits to
Ligan, et al.
HELD:
In light of these recent manifestations-informations of the parties, the Court finds that a modification of the
Decision is in order, the claims with respect to Pilapil and Auxtero having been deemed extinguished even
before the promulgation of the Decision. That Pilapil was a regular employee yields to the final finding of a
33
valid dismissal in the supervening case involving his own misconduct, while Auxtero’s attempt at forum-
shopping should not be countenanced.
IN ALL OTHER RESPECTS, the Court finds no sufficient reason to deviate from its Decision, but proceeds,
nonetheless, to clarify a few points. While this Court’s Decision ruled on the regular status of Ligan, et al., it
must be deemed to be without prejudice to the resolution of the issue of illegal dismissal in the proper case.
Notably, subject of the Decision was Ligan, et al.’s complaints for regularization and under-/non-payment of
benefits. The Court did not and could not take cognizance of the validity of the eventual dismissal of Ligan, et
al. because the matter of just or authorized cause is beyond the issues of the case. That is why the Court did
not order reinstatement for such relief presupposes a finding of illegal dismissal in the proper case which, as
the parties now manifest, pends before the appellate court.
All told, the pending illegal dismissal case in CA-G.R. SP No. 00922 may now take its course. The Court’s
finding that Ligan, et al. are regular employees of PAL neither frustrates nor preempts the appellate court’s
proceedings in resolving the issue of retrenchment as an authorized cause for termination. If an authorized
cause for dismissal is later found to exist, PAL would still have to pay Ligan, et al. their corresponding benefits
and salary differential up to June 30, 1998. Otherwise, if there is a finding of illegal dismissal, an order for
reinstatement with full backwages does not conflict with the Court’s declaration of the regular employee status
of Ligan, et al.
LORNA DISING PUNZAL v. ETSI TECHNOLOGIES, INC., et al.

No matter how much the employee dislikes the employer professionally, he cannot afford to be disrespectful.
Petitioner Lorna Dising Punzal (Punzal) had been working for respondent ETSI Technologies, Inc. (ETSI) as
Department Secretary. Punzal sent an e-mail message to her officemates announcing the holding of a
Halloween Party that was to be held in the office. Her immediate superior, respondent Carmelo Remudaro
advised her to first secure the approval of the SVP, respondent Werner Geisert. When Geisert did not approve
of the plan, Punzal then sent a second e-mail to her officemates that states ―Geisert was so unfair . . . para bang
palagi siyang iniisahan sa trabaho. . . Anyway, solohin na lang niya bukas ang office."
Punzal’s superiors required her to explain her actions which found such as unacceptable. She was then
dismissed from employment due to improper conduct or act of discourtesy or disrespect and making malicious
statements concerning company officer. Punzal filed before the National Labor Relations Commission
(NLRC) a complaint for illegal dismissal against ETSI, Geisert, and Remudaro.
The complaint was dismissed by the Labor Arbiter. On appeal, the NLRC found that while she was indeed
guilty of misconduct, the penalty of dismissal was disproportionate to her infraction. The Court of Appeals
held that Punzal’s dismissal was in order.
ISSUE:
Whether or not there was a valid cause to dismiss Punzal
HELD:
A cordial or, at the very least, civil attitude, according due deference to one’s superiors, is still observed,
especially among high-ranking management officers. The Court takes judicial notice of the Filipino values of
pakikisama and paggalang which are not only prevalent among members of a family and community but within
organizations as well, including work sites. An employee is expected to extend due respect to management, the
employer being the "proverbial hen that lays the golden egg," so to speak. An aggrieved employee who wants
to unburden himself of his disappointments and frustrations in his job or relations with his immediate superior
would normally approach said superior directly or otherwise ask some other officer possibly to mediate and
discuss the problem with the end in view of settling their differences without causing ferocious conflicts. No
matter how much the employee dislikes the employer professionally, and even if he is in a confrontational
disposition, he cannot afford to be disrespectful and dare to talk with an unguarded tongue and/or with a
bileful pen.
34
Punzal sent the e-mail message in reaction to Geisert’s decision which he had all the right to make. That it has
been a tradition in ETSI to celebrate occasions such as Christmas, birthdays, Halloween, and others does not
remove Geisert’s prerogative to approve or disapprove plans to hold such celebrations in office premises and
during company time. Given the reasonableness of Geisert’s decision that provoked Punzal to send the second
e-mail message, the observations of the Court of Appeals that "the message x x x resounds of subversion and
undermines the authority and credibility of management" and that petitioner "displayed a tendency to act
without management’s approval, and even against management’s will" are well taken.
RFM CORPORATION-FLOUR DIVISION and SFI FEEDS DIVISION v.

KASAPIAN NG MANGGA-GAWANG PINAGKAISA-RFM (KAMPI-NAFLU-KMU) and
SANDIGAN AT UGNAYAN NG MANGGAGAWANG PINAGKAISA-SFI (SUMAPI-NAFLU-
KMU) 578 SCRA 34 (2009), SECOND DIVISION (Carpio Morales, J.)
If the terms of the Collective Bargaining Agreement are clear and leave no doubt upon the intention of the contracting parties, its
literal meaning shall prevail.
Petitioner RFM Corporation, a domestic corporation entered into collective bargaining agreements (CBAs)
with the Kasapian ng Manggagawang Pinagkaisa-RFM (KAMPI-NAFLU-KMU) and Sandigan at Ugnayan ng
Manggagawang Pinagkaisa-SFI (SUMAPI-NAFLU-KMU).
Under the CBA, RFM agreed to make payment to all daily paid employees on Black Saturday, November 1
and December 31 if declared as special holidays by the national government.
During the first year of the effectivity of the CBAs in 2000, December 31 which fell on a Sunday was declared
by the national government as a special holiday. Respondent unions thus claimed payment of their members’
salaries, invoking the CBA provision. RFM refused the claims for payment, averring that December 31, 2000
was not compensable as it was a rest day. The controversy resulted in a deadlock, drawing the parties to submit
the same for voluntary arbitration.
The Voluntary Arbitrator (VA) declared that the provision of the CBA is clear, ruling in favor of KAMPI-
NAFLU-KMU and SUMAPI-NAFLU-KMU and ordered RFM to pay their salaries. The Court of Appeals
(CA) affirmed the decision.
ISSUE:
Whether or not the employees are entitled to the questioned salary according to the provision of the CBA
HELD:
If the terms of a CBA are clear and have no doubt upon the intention of the contracting parties, as in the
herein questioned provision, the literal meaning thereof shall prevail. That is settled. As such, the daily-paid
employees must be paid their regular salaries on the holidays which are so declared by the national government,
regardless of whether they fall on rest days.
Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford
protection to labor. Its purpose is not merely "to prevent diminution of the monthly income of the workers
on account of work interruptions. In other words, although the worker is forced to take a rest, he earns what
he should earn, that is, his holiday pay."
The CBA is the law between the parties, hence, they are obliged to comply with its provisions. Indeed, if
petitioner and respondents intended the provision in question to cover payment only during holidays falling
on work or weekdays, it should have been so incorporated therein.
RFM maintains, however, that the parties failed to foresee a situation where the special holiday would fall on
a rest day. The Court is not persuaded. The Labor Code specifically enjoins that in case of doubt in the
interpretation of any law or provision affecting labor, it should be interpreted in favor of labor.
ROSA C. RODOLFO v. PEOPLE OF THE PHILIPPINES

35
“Promises or offers for a fee employment” is sufficient to warrant conviction for illegal recruitment.
Petitioner Rosa C. Rodolfo approached private complainants Necitas Ferre and Narciso Corpus individually
and invited them to apply for overseas employment in Dubai. Rodolfo, being their neighbor, Ferre and Corpus
agreed and went to the former’s office. The office bore the business name ―Bayside Manpower Export
Specialist‖. In that office, Ferre gave P1,000.00 as processing fee and another P4,000.00. Likewise, Corpus gave
Rodolfo P7,000.00. Rodolfo then told Ferre and Corpus that they were scheduled to leave for Dubai. However,
private complainants and all the other applicants were not able to depart on the scheduled date as their
employer allegedly did not arrive. Thus, their departure was rescheduled, but the result was the same.
Suspecting that they were being hoodwinked, Ferre and Corpus demanded of Rodolfo to return their money.
Except for the refund of P1,000.00 to Ferre, Rodolfo was not able to return Ferre’s and Corpus’ money. Ferre,
Corpus and three others then filed a case for illegal recruitment in large scale with the Regional Trial Court
(RTC) against Rodolfo.
The RTC rendered judgement against Rodolfo but in imposing the penalty, the RTC took note of the fact that
while the information reflected the commission of illegal recruitment in large scale, only the complaint of two
(Ferre and Corpus) of the five complainants was proven. Rodolfo appealed to the Court of Appeals (CA). The
CA dismissed the petition but modified the penalty imposed by the trial court. The CA also dismissed Rodolfo’s
Motion for Reconsideration.
ISSUE:
Whether or not Rodolfo is guilty of illegal recruitment in large scale
HELD:
The elements of the offense of illegal recruitment, which must concur, are: (1) that the offender has no valid
license or authority required by law to lawfully engage in recruitment and placement of workers; and (2) that
the offender undertakes any activity within the meaning of recruitment and placement under Article 13(b), or
any prohibited practices enumerated under Article 34 of the Labor Code. If another element is present that
the accused commits the act against three or more persons, individually or as a group, it becomes an illegal
recruitment in a large scale.
Article 13 (b) of the Labor Code defines ―recruitment and placement‖ as ―[a]ny act of canvassing, enlisting,
contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services,
promising or advertising for employment, locally or abroad, whether for profit or not.‖
That the first element is present in the case at bar, there is no doubt. Jose Valeriano, Senior Overseas
Employment Officer of the Philippine Overseas Employment Administration, testified that the records of the
POEA do not show that Rodolfo is authorized to recruit workers for overseas employment. A Certification to
that effect was in fact issued by Hermogenes C. Mateo, Chief of the Licensing Division of POEA.
The second element is doubtless also present. The act of referral, which is included in recruitment, is ―the act
of passing along or forwarding of an applicant for employment after an initial interview of a selected applicant
for employment to a selected employer, placement officer or bureau.‖ Rodolfo’s admission that she brought
private complainants to the agency whose owner she knows and her acceptance of fees including those for
processing betrays her guilt.
Rodolfo issued provisional receipts indicating that the amounts she received from the private complainants
were turned over to Luzviminda Marcos and Florante Hinahon does not free her from liability. For the act of
recruitment may be ―for profit or not.‖ It is sufficient that the accused ―promises or offers for a fee
employment‖ to warrant conviction for illegal recruitment. Parenthetically, why Rodolfo accepted the payment
of fees from the private complainants when, in light of her claim that she merely brought them to the agency,
she could have advised them to directly pay the same to the agency, she proferred no explanation.
On Rodolfo’s reliance on Señoron, true, the Court held that issuance of receipts for placement fees does not
make a case for illegal recruitment. But it went on to state that it is ―rather the undertaking of recruitment
activities without the necessary license or authority‖ that makes a case for illegal recruitment.
36
SAN MIGUEL CORPORATION v. PROSPERO A. ABALLA et al.
The language of a contract disavowing the existence of an employer-employee relationship is not determinative of the parties’
relationship. It is the totality of the facts and surrounding circumstances of the case.
Petitioner San Miguel Corporation (SMC) and Sunflower Multi-Purpose Cooperative (Sunflower) entered into
a one-year Contract of Service and such contract is renewed on a monthly basis until terminated. Pursuant to
this, respondent Prospero Aballa et al. rendered services to SMC.
After one year of rendering service, Aballa et al., filed a complaint before National Labor Relations Commission
(NLRC) praying that they be declared as regular employees of SMC. On the other hand, SMC filed before the
Department of Labor and Employment (DOLE) a Notice of Closure due to serious business losses. Hence,
the labor arbiter dismissed the complaint and ruled in favor of SMC. Aballa et al. then appealed before the
NLRC. The NLRC dismissed the appeal finding that Sunflower is an independent contractor.
On appeal, the Court of Appeals reversed NLRC’s decision on the ground that the agreement between SMC
and Sunflower showed a clear intent to abstain from establishing an employer-employee relationship.
ISSUE:
Whether or not Aballa et al. are employees of SMC
HELD:
The test to determine the existence of independent contractorship is whether one claiming to be an
independent contractor has contracted to do the work according to his own methods and without being subject
to the control of the employer, except only as to the results of the work.
In legitimate labor contracting, the law creates an employer-employee relationship for a limited purpose, i.e.,
to ensure that the employees are paid their wages. The principal employer becomes jointly and severally liable
with the job contractor, only for the payment of the employees’ wages whenever the contractor fails to pay the
same. Other than that, the principal employer is not responsible for any claim made by the employees.
In labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose:
to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal
employer and the latter is responsible to the employees of the labor-only contractor as if such employees had
been directly employed by the principal employer.
The Contract of Services between SMC and Sunflower shows that the parties clearly disavowed the existence
of an employer-employee relationship between SMC and private respondents. The language of a contract is
not, however, determinative of the parties’ relationship; rather it is the totality of the facts and surrounding
circumstances of the case. A party cannot dictate, by the mere expedient of a unilateral declaration in a contract,
the character of its business, i.e., whether as labor-only contractor or job contractor, it being crucial that its
character be measured in terms of and determined by the criteria set by statute. What appears is that Sunflower
does not have substantial capitalization or investment in the form of tools, equipment, machineries, work
premises and other materials to qualify it as an independent contractor. On the other hand, it is gathered that
the lot, building, machineries and all other working tools utilized by Aballa et al. in carrying out their tasks were
owned and provided by SMC.
And from the job description provided by SMC itself, the work assigned to Aballa et al. was directly related to the
aquaculture operations of SMC. As for janitorial and messengerial services, that they are considered directly
related to the principal business of the employer has been jurisprudentially recognized.
Furthermore, Sunflower did not carry on an independent business or undertake the performance of its service
contract according to its own manner and method, free from the control and supervision of its principal, SMC,
its apparent role having been merely to recruit persons to work for SMC.
All the foregoing considerations affirm by more than substantial evidence the existence of an employer-
employee relationship between SMC and Aballa et al. Since Aballa et al. who were engaged in shrimp processing
performed tasks usually necessary or desirable in the aquaculture business of SMC, they should be deemed
regular employees of the latter and as such are entitled to all the benefits and rights appurtenant to regular
37
employment. They should thus be awarded differential pay corresponding to the difference between the wages
and benefits given them and those accorded SMC’s other regular employees.
SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC. v. NATIONAL LABOR

RELATIONS COMMISSION et al.
There is an implied revocation of an agency relationship when after the termination of the original employment contract, the foreign
principal directly negotiated with the employee and entered into a new and separate employment contract.
Respondent Divina Montehermozo is a domestic helper deployed to Taiwan by Sunace International

Management Services (Sunace) under a 12-month contract. Such employment was made with the assistance of
Taiwanese broker Edmund Wang. After the expiration of the contract, Montehermozo continued her
employment with her Taiwanese employer for another 2 years.
When Montehermozo returned to the Philippines, she filed a complaint against Sunace, Wang, and her
Taiwanese employer before the National Labor Relations Commission (NLRC). She alleges that she was
underpaid and was jailed for three months in Taiwan. She further alleges that the 2-year extension of her
employment contract was with the consent and knowledge of Sunace. Sunace, on the other hand, denied all
the allegations.
The Labor Arbiter ruled in favor of Montehermozo and found Sunace liable thereof. The National Labor
Relations Commission and Court of Appeals affirmed the labor arbiter’s decision. Hence, the filing of this
appeal.
ISSUE:
Whether or not the 2-year extension of Montehermozo’s employment was made with the knowledge and
consent of Sunace
HELD:
Contrary to the Court of Appeals finding, the alleged continuous communication was with the Taiwanese
broker Wang, not with the foreign employer.
The finding of the Court of Appeals solely on the basis of the telefax message written by Wang to Sunace,
that Sunace continually communicated with the foreign "principal" (sic) and therefore was aware of and had
consented to the execution of the extension of the contract is misplaced. The message does not provide
evidence that Sunace was privy to the new contract executed after the expiration on February 1, 1998 of the
original contract. That Sunace and the Taiwanese broker communicated regarding Montehermozo’s allegedly
withheld savings does not necessarily mean that Sunace ratified the extension of the contract.
As can be seen from that letter communication, it was just an information given to Sunace that Montehermozo
had taken already her savings from her foreign employer and that no deduction was made on her salary. It
contains nothing about the extension or Sunace’s consent thereto.
Parenthetically, since the telefax message is dated February 21, 2000, it is safe to assume that it was sent to
enlighten Sunace who had been directed, by Summons issued on February 15, 2000, to appear on February 28,
2000 for a mandatory conference following Montehermozo’s filing of the complaint on February 14, 2000.
Respecting the decision of Court of Appeals following as agent of its foreign principal, [Sunace] cannot profess
ignorance of such an extension as obviously, the act of its principal extending [Montehermozo’s] employment
contract necessarily bound it, it too is a misapplication, a misapplication of the theory of imputed knowledge.
The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal, employer, not
the other way around. The knowledge of the principal-foreign employer cannot, therefore, be imputed to its
agent Sunace.
38
There being no substantial proof that Sunace knew of and consented to be bound under the 2-year employment
contract extension, it cannot be said to be privy thereto. As such, it and its "owner" cannot be held solidarily
liable for any of Montehermozo’s claims arising from the 2-year employment extension. As the New Civil
Code provides, Contracts take effect only between the parties, their assigns, and heirs, except in case where
the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or
by provision of law. Furthermore, as Sunace correctly points out, there was an implied revocation of its agency
relationship with its foreign principal when, after the termination of the original employment contract, the
foreign principal directly negotiated with Montehermozo and entered into a new and separate employment
contract in Taiwan. Article 1924 of the New Civil Code states that the agency is revoked if the principal directly
manages the business entrusted to the agent, dealing directly with third persons.
TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB INCORPORATED v. TAGAYTAY

HIGHLANDS EMPLOYEES UNION-PGTWO
After a certificate of registration is issued to a union, its legal personality cannot be subject to collateral attack and may be questioned
only in an independent petition for cancellation.
Respondent Tagaytay Highlands Employees Union (THEU)-Philippine Transport and General Workers
Organization (PTGWO), a legitimate labor organization representing majority of the rank-and-file employees
of petitioner Tagaytay Highlands International Golf Club Inc. (THIGCI), filed a petition for certification
election before the DOLE Mediation-Arbitration Unit.
THIGCI opposed the petition of THEU on the ground that out of 192 signatories to the petition, only 71
were actual rank-and-file employees of THIGCI. The others were supervisors, resigned, terminated, AWOL
and employees, while some others are employees from a different corporation.
The DOLE Med-Arbiter issued an order to the hold the certification election among the rank-and-file
employees of THIGCI. On appeal, Department of Labor and Employment (DOLE) Undersecretary and the
Court of Appeals (CA) affirmed Med Arbiter’s decision and ordered that supervisory employees and non-
employees could simply be removed from the roster of rank-and-file membership.
ISSUE:
Whether or not the CA erred in holding that supervisory employees and non-employees could simply be
removed from THEU’s roster of rank-and-file membership instead of resolving the legitimacy of union’s status
HELD:
After a certificate of registration is issued to a union, its legal personality cannot be subject to collateral attack.
It may be questioned only in an independent petition for cancellation.
The grounds for cancellation of union registration are provided for under Article 239 of the Labor Code, two
of the grounds are 1.) Misrepresentation, false statement or fraud in connection with the adoption or
ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of
members who took part in the ratification; 2.) Misrepresentation, false statements or fraud in connection
with the election of officers, minutes of the election of officers, the list of voters, or failure to subject these
documents together with the list of the newly elected/appointed officers and their postal addresses within
thirty (30) days from election;
The inclusion in a union of disqualified employees is not among the grounds for cancellation, unless such
inclusion is due to misrepresentation, false statement or fraud under the circumstances enumerated in
Sections (a) and (c) of Article 239 of above-quoted Article 239 of the Labor Code.
THEU, having been validly issued a certificate of registration, should be considered to have already acquired
juridical personality which may not be assailed collaterally.
U-BIX CORPORATION and EDILBERTO B. BRAVO v. VALERIE ANNE H. HOLLERO

39
An employer who seeks to dismiss an employee must afford the latter ample opportunity to be heard and to defend himself with the
assistance of his representative if he so desires.
Valerie Anne H. Hollero was hired as a management trainee and was eventually promoted to facilities manager
by U-Bix Corporation (U-Bix). Hollero and three other employees were later sent to the United States for two
months of training for a newly acquired franchise. Before she left, she signed a contract with U-Bix which
reads that ―VALERIE ANNE H. HOLLERO shall remain in the employ of U-BIX CORPORATION for a
period of five (5) years from completion of her U.S. Training otherwise she shall reimburse U-BIX
CORPORATION for all costs (prorated) and expenses which U-BIX CORPORATION incurred for her
(Hollero's) training in the U.S‖
U-Bix, citing Hollero’s supposed ―pattern of tardiness, absences, neglect of duties and lack of interest,‖
terminated her employment for loss of trust and confidence. U-Bix then filed against Hollero before the Labor
Arbiter for the reimbursement of training expenses and damages. Subsequently, Hollero also filed a complaint
against U-Bix for illegal dismissal.
The Labor Arbiter (LA) rendered a decision declaring that the dismissal of Hollero is valid and legal and
ordered her to pay U-Bix the reimbursement of her training. It dismissed Hollero’s complaint for lack of merit.
On appeal before the National Labor Relations Commission (NLRC), the NLRC reversed the LA’s decision.
A Motion for Reconsideration was filed but subsequently denied by NLRC. The Court of Appeals affirmed
the lower court’s decision.
ISSUES:
Whether or not Hollero was illegally dismissed by U-Bix
HELD:
U-Bix failed to discharge the burden of proof that Hollero’s dismissal is for a valid and just cause
In termination cases, the employer has the burden of proving that the dismissal is for a valid and just cause.
While an employer enjoys a wider latitude of discretion in terminating the employment of managerial
employees, managerial employees are also entitled to security of tenure and cannot be arbitrarily dismissed at
any time and without cause as reasonably established in an appropriate investigation.
In the case at bar, U-Bix failed to substantiate their allegations of Hollero’s habitual absenteeism, habitual
tardiness, neglect of duties, and lack of interest. Daily time records, attendance records, or other documentary
evidence attesting to these grounds could have readily been presented to support the allegations but none was.
The merits of a complaint for illegal dismissal do not depend on its prayer but on whether the employer
discharges its burden of proving that the dismissal is valid.
U-Bix failed to comply with the procedural due process of dismissing an employee In another vein, the
Court finds that U-Bix and Bravo failed to comply with the procedural requirements for a valid dismissal.
Hollero being a manager did not excuse them from observing such procedural requirements.
The notice does not inform outright the employee that an investigation will be conducted on the charges
particularized therein which, if proven, will result to her dismissal. It does not contain a plain statement of the
charges of malfeasance or misfeasance nor categorically state the effect on her employment if the charges are
proven to be true. It does not apprise Hollero of possible dismissal should her explanation prove unsatisfactory.
Besides, the U-Bix and Bravo did not even establish that Hollero received the memorandum.
Neither did U-Bix and Bravo show that they conducted a hearing or conference during which Hollero, with
the assistance of counsel if she so desired, had opportunity to respond to the charge, present her evidence, or
rebut the evidence presented against her. The meeting with Hollero on December 23, 1996 did not satisfy the
hearing requirement, for Hollero was not given the opportunity to avail herself of counsel.
Article 277(b) of the Labor Code mandates that an employer who seeks to dismiss an employee must ―afford
the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he
so desires.‖ Expounding on this provision, the Court held that ―'[a]mple opportunity' connotes every kind of
assistance that management must accord the employee to enable him to prepare adequately for his defense
including legal representation‖.
40
UNIVERSITY OF SAN AGUSTIN, INC. v. UNIVERSITY OF SAN AGUSTIN
EMPLOYEES UNION-FFW
593 SCRA 663 (2009), Carpio Morales, J.
A collective bargaining agreement, when voluntarily entered into by the parties, becomes the law between them.
In the Collective Bargaining Agreement (CBA) between University of San Agustin and its Employees Union,
the parties agreed to include a provision on salary increases based on the incremental tuition fee increases or
tuition incremental proceeds (TIP). However, the parties disagreed whether or not the term ―salary increases‖
includes other increases in benefits received by the employee.
The Voluntary Arbiter held that the salary increase shall be paid out of 80% of the TIP, should it be higher
than P1,500. Moreover, scholarship grants and tuition fee discounts given by the university should not be
deducted from the TIP. The appellate court sustained the interpretation of the CBA but revised TIP
computation. The present petition questions only the interpretation of the CBA provision by the appellate
court.
ISSUES:
Whether or not the provisions of the CBA should be applied
HELD:
It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they are
obliged to comply with its provisions. If the terms of a contract, in this case the CBA, are clear and leave no
doubt upon the intention of the contracting parties, the literal meaning of their stipulations shall control.
A reading of the provisions of the CBA shows that the parties agreed that 80% of the TIP or at the least the
amount of P1,500 is to be allocated for individual salary increases.
The CBA does not speak of any other benefits or increases which would be covered by the employees’ share
in the TIP, except salary increases. The CBA reflects the incorporation of different provisions to cover other
benefits such as Christmas bonus (Art. VIII, Sec. 1), service award (Art. VIII, Sec.5), leaves (Article IX),
educational benefits (Sec.2, Art. X), medical and hospitalization benefits (Secs. 3, 4 and 5, Art. 10), bereavement
assistance (Sec. 6, Art. X), and signing bonus (Sec. 8, Art. VIII), without mentioning that these will likewise be
sourced from the TIP. Thus, the university’s belated claim that the 80% TIP should be taken to mean as
covering ALL increases and not merely the salary increases as categorically stated in Sec. 3, Art. VIII of the
CBA does not lie.
In the present case, the university could have, during the CBA negotiations, opposed the inclusion of or
renegotiated the provision allotting 80% of the TIP to salary increases alone, as it was and is not under any
obligation to accept respondent’s demands hook, line and sinker. Art. 252 of the Labor Code is clear on the
matter.
The records are thus bereft of any showing that the university had made it clear during the CBA negotiations
that it intended to source not only the salary increases but also the increases in other employee benefits from
the 80% of the TIP. Absent any proof that the university’s consent was vitiated by fraud, mistake or duress, it
is presumed that it entered into the CBA voluntarily, had full knowledge of the contents thereof, and was aware
of its commitments under the contract.
It is axiomatic that labor laws setting employee benefits only mandate the minimum that an employer must
comply with, but the latter is not proscribed from granting higher or additional benefits if it so desires, whether
as an act of generosity or by virtue of company policy or a CBA, as it would appear in this case. While, in
following to the letter the subject CBA provision the petitioner will, in effect, be giving more than 80% of the
TIP as its personnel’s share in the tuition fee increase, the university’s remedy lies not in the Court’s invalidating
the provision, but in the parties’ clarifying the same in their subsequent CBA negotiations.
PLACIDO O. URBANES, JR. v. SECRETARY OF LABOR AND EMPLOYMENT

41
When the relief sought is not under the Labor Code but for payment of a sum of money and damages on a breach of contract, it is
within the realm of civil law and jurisdiction belongs to the regular courts.
Petitioner Placido O. Urbanes agreed to provide security services to Social Security Systems (SSS). During the
pendency of their agreement, Urbanes requested SSS for an upward adjustment of their contract rate in
compliance with the mandated wage increases.
SSS ignored the request which led Urbanes to pull out his agency’s services and to subsequently file a complaint
against SSS for the implementation of the wage increase. The Regional Director of the DOLE-NCR issued an
order in favor of Urbanes. SSS filed an appeal to the Secretary of Labor who later on set aside the order of the
Regional Director.
Urbanes filed an appeal by certiorari to the Supreme Court stating that the Secretary of Labor does not have
jurisdiction to review appeals from decisions of the Regional Director over complaints for recovery of wages
when it should have been appealed to the National Labor Relations Commission. SSS, on the other hand,
contends that Art. 128, not Art. 129 of the Labor Code should be applied.
ISSUE:
Whether or not the DOLE Secretary can exercise jurisdiction over decisions of Regional Directors involving
complaints for recovery of wages
HELD:
Neither the Ubanes’ contention nor the SSS’ is impressed with merit. Lapanday Agricultural Development
Corporation v. Court of Appeals instructs so. In that case, the security agency filed a complaint before the Regional
Trial Court (RTC) against the principal or client Lapanday for the upward adjustment of the contract rate in
accordance with Wage Order Nos. 5 and 6. Lapanday argued that it is the National Labor Relations
Commission, not the civil courts, which has jurisdiction to resolve the issue in the case, it involving the
enforcement of wage adjustment and other benefits due the agency’s security guards as mandated by several
wage orders.
The Court ruled in Lapanday that the RTC has jurisdiction over the subject matter of the present case. It is well
settled in law and jurisprudence that where no employer-employee relationship exists between the parties and
no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any
collective bargaining agreement, it is the Regional Trial Court that has jurisdiction. In its complaint, private
respondent is not seeking any relief under the Labor Code but seeks payment of a sum of money and damages
on account of petitioner's alleged breach of its obligation under their Guard Service Contract. The action is
within the realm of civil law hence jurisdiction over the case belongs to the regular courts. While the resolution
of the issue involves the application of labor laws, reference to the labor code was only for the determination
of the solidary liability of the petitioner to the respondent where no employer-employee relation exists.
In the case at bar, even if Urbanes filed the complaint on his and also on behalf of the security guards, the
relief sought has to do with the enforcement of the contract between him and the SSS which was deemed
amended by virtue of Wage Order No. NCR-03. The controversy subject of the case at bar is thus a civil
dispute, the proper forum for the resolution of which is the civil courts.
But even assuming arguendo that Urbanes’ complaint were filed with the proper forum, for lack of cause of
action it must be dismissed. In fine, the liability of the SSS to reimburse Urbanes’ arises only if and when
Urbanes pays his employee-security guards ―the increases‖ mandated by Wage Order No. NCR-03. The Court
in Lapanday Agricultural Development Corporation v. Court of Appeals held that: ―It is only when the contractor pays
the increases mandated that it can claim an adjustment from the principal to cover the increases payable to the
security guards.‖
The records do not show that Urbanes’ has paid the mandated increases to the security guards. The security
guards in fact have filed a complaint with the NLRC against Urbanes’ relative to, among other things,
underpayment of wages.
42
GALAXIE STEEL WORKERS UNION (GSWU-NAFLU-KMU), et al. v. NATIONAL LABOR
RELATIONS COMMISSION, GALAXIE STEEL CORPORATION and RICARDO CHENG 504
SCRA 692 (2006), THIRD DIVISION, (Carpio Morales, J.)
The requirement of the Labor Code that notice shall be served on the workers is not complied with by the mere posting of the notice
on the bulletin board.
On account of serious business losses which occurred in 1997 up to mid-1999 totaling around P127,000,000.00,
Galaxie Steel Workers Union decided to close down its business operations. It thereafter filed a written notice
with the Department of Labor and Employment (DOLE) informing the latter of its intended closure and the
consequent termination of its employees effective August 31, 1999. It posted the notice of closure on the
corporate bulletin board.
On September 8, 1999, Galaxie Steel Workers Union and Galaxie employees filed a complaint for illegal
dismissal, unfair labor practice, and money claims against Galaxie. The Labor Arbiter, NLRC and the Court of
Appeals were unanimous in ruling that Galaxie’s closure or cessation of business operations was due to serious
business losses or financial reverses, and not because of any alleged anti-union position.
The workers’ union and employees contend that Galaxie did not serve written notices of the closure of business
operations upon them, it having merely posted a notice on the company bulletin board.
ISSUE:
Whether or not the written notice posted by [Galaxie] on the company bulletin board sufficiently complies
with the notice requirement under Article 283 of the Labor Code.
HELD:
The mere posting on the company bulletin board does not meet the requirement under Article 283 of ―serving
a written notice on the workers.‖ The purpose of the written notice is to inform the employees of the specific
date of termination or closure of business operations, and must be served upon them at least one month before
the date of effectivity to give them sufficient time to make the necessary arrangements. In order to meet the
foregoing purpose, service of the written notice must be made individually upon each and every employee of
the company.
RAMY GALLEGO v. BAYER PHILIPPINES INC., et al.

In distinguishing between permissible job contracting and prohibited labor-only contracting, the totality of the facts and the
surrounding circumstances of the case are to be considered, each case to be determined by its own facts, and all the features of the
relationship assessed.
Petitioner Ramy Gallego was contracted by Bayer Philippines Inc. (BAYER) as crop protection technician.
When Gallego’s employment came to a halt, BAYER reemployed Gallego through Product Image and
Marketing Services, Inc. (PRODUCT IMAGE) performing the same tasks as that of a crop protection
technician.
After a few years, Gallego claims that he was directed to submit a resignation latter, but he refused. He was
later on transferred to Luzon; moreover, his co-workers allegedly spread rumors there that he was not anymore
connected with BAYER. Believing himself to be illegally dismissed, he filed with the National Labor Relations
Commission (NLRC) claiming he is entitled for reinstatement, backwages, and etc. BAYER denied that
existence of an employer-employee relationship between BAYER and Gallego since Gallego was actually under
the control and supervision of PRODUCT IMAGE, an independent contractor.
The Labor Arbiter found BAYER, et al. guilty of illegal dismissal and ordered the reinstatement of Gallego.
The NLRC reversed the decision of the Labor Arbiter. Gallego then appealed to the Court of Appeals via
Certiorari, which was dismissed. Hence, this petition.
ISSUES:
43
Whether or not PRODUCT IMAGE is a labor-only contractor and BAYER should be deemed Gallego’s
principal employer
HELD:
Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to farm out
with a contractor or subcontractor the performance 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. Under this arrangement, the following conditions must be met: (a) the
contractor carries on a distinct and independent business and undertakes the contract work on his account
under his own responsibility according to his own manner and method, free from the control and direction of
his employer or principal in all matters connected with the performance of his work except as to the results
thereof; (b) the contractor has substantial capital or investment; and (c) the agreement between the principal
and contractor or subcontractor assures the contractual employees’ entitlement to all labor and occupational
safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare
benefits.
In distinguishing between permissible job contracting and prohibited labor-only contracting, the totality of the
facts and the surrounding circumstances of the case are to be considered, each case to be determined by its
own facts, and all the features of the relationship assessed.
In the case at bar, the Court finds substantial evidence to support the finding of the NLRC that PRODUCT
IMAGE is a legitimate job contractor.
The Court notes that PRODUCT IMAGE was issued by the Department of Labor and Employment (DOLE)
Certificate of Registration Numbered NCR-8-0602-176. The DOLE certificate having been issued by a public
officer, it carries with it the presumption that it was issued in the regular performance of official duty.Gallego’s
bare assertions fail to rebut this presumption. Further, since the DOLE is the agency primarily responsible for
regulating the business of independent job contractors, the Court can presume, in the absence of evidence to
the contrary, that it had thoroughly evaluated the requirements submitted by PRODUCT IMAGE before
issuing the Certificate of Registration.
Independently of the DOLE’s Certification, among the circumstances that establish the status of PRODUCT
IMAGE as a legitimate job contractor are: (1) PRODUCT IMAGE had, during the period in question, a
contract with BAYER for the promotion and marketing of BAYER products; (2) PRODUCT IMAGE has an
independent business and provides services nationwide to big companies such as Ajinomoto Philippines and
Procter and Gamble Corporation; and (3) PRODUCT IMAGE’s total assets from 1998 to 2000 amounted to
P405,639, P559,897, and P644,728, respectively. PRODUCT IMAGE also posted a bond in the amount of
P100,000 to answer for any claim of its employees for unpaid wages and other benefits that may arise out of
the implementation of its contract with BAYER.
PRODUCT IMAGE cannot thus be considered a labor-only contractor.
GLORIA ARTIAGA v. SILIMAN UNIVERSITY MEDICAL CENTER/ SILIMAN UNIVERSITY

MEDICAL CENTER FOUNDATION, INC.
Constructive dismissal does not exist when an employee furnished the employer a letter signifying his resignation.
Petitioner Gloria Artiaga was hired by respondent Siliman University Medical Center (SUMC) as Credit and
Collection officer. Artiaga sent a letter to SUMC stating her wish to resign from said post. Subsequently, three
years after she sent such letter, Artiaga filed a Complaint for constructive dismissal against SU, SUMC and the
Foundation.
SUMC alleged that there was no constructive dismissal. It found that there were discrepancies in the
transactions under Artiaga’s control and supervision. It was shown that SUMC wrote Artiaga requiring her to
explain in writing why no disciplinary action should be taken against her, she was also preventively suspended
for 30 days and requested to turn over all monies, files, and records within her control. Artiaga complied with
SUMC’s request by giving such letter of explanation and at the same time tendered her resignation, in which
SUMC accepted.
44
The Labor Arbiter dismissed the complaint for lack of legal and factual basis. On appeal, the National Labor
Relations Commission (NLRC) set aside the Labor Arbiter’s Decision, finding that Artiaga was constructively
dismissed. SUMC then filed a Petition before the Court of Appeals. The CA reversed the NLRC decision and
reinstated the Labor Arbiter’s decision.
ISSUES:
Whether or not Artiaga was constructively dismissed
HELD:
In reversing the Labor Arbiter’s decision, the NLRC upheld Artiaga’s version and found her to have been
constructively dismissed. Artiaga presented no evidence to substantiate her claim, however.
On the other hand, SUMC’s evidence of Artiaga’s irregular acts is documented. And it sent Artiaga a Notice
requiring her to explain her side and placing her under preventive suspension. Artiaga’s letter-explanation cum
resignation is self-explanatory.
Against the documentary evidence of SUMC, Artiaga’s claim thus fails.

Artiaga’s claim that SMUC’s pieces of evidence were fabricated does not persuade. Artiaga’s explanation-
resignation letter unquestionably shows that she received the notices referred to, otherwise, to what matters
she was explaining therein?
J-PHIL MARINE, INC. and/or JESUS CANDAVA and NORMAN SHIPPING SERVICES v.
NATIONAL LABOR COMMISSION and WARLITO E. DUMALAOG
A compromise agreement is valid as long as the consideration is reasonable and the employee signed the waiver voluntarily, with a
full understanding of what he was entering into.
Worked as a cook on aboard vessels plying overseas, Warlito E. Dumalaog was employed as a cook on board
vessels plying overseas. He filed a pro-forma complaint on March 4,2002 before the National Labor Relations
Commission (NLRC) against J-Phil Marine, Inc., its then president Jesus Candava, and its foreign principal
Norman Shipping Services.
The Labor Arbiter dismissed the complaint for lack of merit. On appeal, the NLRC reversed the decision of
the Labor Arbiter. The Court of Appeals affirmed the dismissal for failure to attach to the petition all material
documents and for defective verification and certification. Consequently, a petition was filed before the Court
of Appeals.
While the case was pending in the Supreme Court, the respondent entered into a compromise agreement and
signed Quitclaims and Release. The same has been subscribed and sworn to before the Labor Arbiter.
Accordingly, the case was dismissed.
ISSUES:
Whether or not the compromise agreement entered into by the respondent, without his counsel, is valid
HELD:
A compromise agreement is valid as long as the consideration is reasonable and the employee signed the waiver
voluntarily, with a full understanding of what he was entering into. All that is required for the compromise to
be deemed voluntarily entered into is personal and specific individual consent. Thus, contrary to Dumalaoag's
contention, the employee's counsel need not be present at the time of the signing of the compromise
agreement.
The relation of attorney and client is in many respects one of agency, and the general rules of agency apply to
such relation. The acts of an agent are deemed the acts of the principal only if the agent acts within the scope
of his authority. The circumstances of this case indicate that Dumalaoag's counsel is acting beyond the scope
of his authority in questioning the compromise agreement.
45
JEROMIE D. ESCASINAS and EVAN RIGOR SINGCO v. SHANGRI-LA’S MACTAN ISLAND
RESORT and DR. JESSICA J.R. PEPITO
The requirements for the existence of an employer-employee relationship are different from the requisites for the existence of an
independent and permissible contractor relationship.
Jeromie D. Escasinas and Evan Rigor Singco were registered nurses, engaged by respondent Dr. Jessica Joyce
R. Pepito to work in her clinic at respondent Shangri-La’s Mactan Island Resort (Shangri-La). Escasinas and
Singco filed with the National Labor Relations Commission (NLRC) a complaint for regularization,
underpayment of wages, non-payment of holiday pay, night shift differential and 13th month pay against
Shangrila et al., claiming that they are regular employees of Shangri-La.
Shangri-la claimed that Escasinas and Singco were not its employees but of Dr. Pepito, whom it retained via
Memorandum of Agreement (MOA) pursuant to Article 157 of the Labor Code. Dr. Pepito for her part
claimed that Escasinas and Singco were already working for the previous retained physicians of Shangri-la
before she was retained. Escasinas and Singco, however, insist that under Article 157 of the Labor Code,
Shangri-la is required to hire full-time registered nurse, hence their engagement should be deemed as regular
employment. They maintain that Dr. Pepito is a labor-only contractor for she has no license or business permit
and no business name registration as mandated by Sec. 19 and 20 of the Implementing Rules and Regulations
of the Labor Code.
The labor arbiter declared Escasinas and Singco to be regular employees of Shangri-la. The National Labor
Relations Commission, on the other hand, granted Shangri-la’s and Dr. Pepito’s appeal and dismissed Escasinas
and Singco complaint for lack of merit, finding that no employer-employee relationship exists between Shangri-
la and petitioners.
ISSUES:
Whether or not Escasinas and Singco are regular employees of Shangri-la and Dr. Pepito
HELD:
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.
On the other hand, existence of an employer- employee relationship is established by the presence of the
following determinants: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the
payment of wages by whatever means; and (4) the power to control the worker's conduct, with the latter
assuming primacy in the overall consideration.
Against the above-listed determinants, the Court holds that Dr. Pepito 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.
As to payment of wages, Dr. Pepito is the one who underwrites the following: salaries, SSS contributions and
other benefits of the staff; group life, group personal accident insurance and life/death insurance for the staff
with minimum benefit payable at 12 times the employee’s last drawn salary, as well as value added taxes and
withholding taxes, sourced from her P60,000.00 monthly retainer fee and 70% share of the service charges
from Shangri-la’s guests who avail of the clinic services. It is unlikely that Dr. Pepito would report Escasinas
and Singco as workers, pay their SSS premium as well as their wages if they were not indeed her employees.
With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a document,
―Clinic Policies and Employee Manual‖ claimed to have been prepared by Dr. Pepito exists, to which Escasinas
46
and Singco gave their conformity and in which they acknowledged their co-terminus employment status. It is
thus presumed that said document, and not the employee manual being followed by Shangri-la’s regular
workers, governs how they perform their respective tasks and responsibilities.
Contrary to Escasinas and Singco contention, the various office directives issued by Shangri-la’s officers do
not imply that it is Shangri-la’s management and not Dr. Pepito who exercises control over them or that
Shangri-la has control over how the doctor and the nurses perform their work.
In fine, as Shangri-la does not control how the work should be performed by Escasinas and Singco, it is not
Escasinas and Singco’s employer.
LILIA P. LABADAN v. FOREST HILLS ACADEMY et al.

While in cases of illegal dismissal, the employer bears the burden of proving that the dismissal is for a valid or authorized cause,
the employee must first establish by substantial evidence the fact of dismissal.
Lilian L. Labadan (Labadan) was hired by Forest Hills Mission Academy (Forest Hills) as an elementary school
teacher in 1989. After one year of employment, she was made registrar and secondary school teacher. In 2003,
Labadan filed a complaint against Forest Hills for illegal dismissal, non-payment of overtime pay, holiday pay,
allowances, 13th month pay, service incentive leave, illegal deductions, and damages. She alleged that she was
allowed to go on leave, and albeit she had exceeded her approved leave period, its extension was impliedly
approved by the school principal because Labadan received no warning or reprimand, and was in fact retained
in the payroll. Labadan further alleged that since 1990, tithes to the Seventh Day Adventist church, of which
she was a member, have been illegally deducted from her salary; and she was not paid overtime pay for overtime
service, 13th month pay, five days service incentive leave pay, and holiday pay; and that her SSS contributions
have not been remitted.
Forest Hills claims that Labadan was permitted to go on leave for two weeks but did not return for work after
the expiration of the period granted. Because of Labadan’s failure to report to work despite promises to do so,
Forest Hills hired a temporary employee to accomplish the needed reports. When Labadan did return for work,
classes for the school year were already underway. With regard to the charge for illegal deduction, Forest Hills
claimed that the Seventh Day Adventist church requires its members to pay tithes equivalent to 10% of their
salaries, and that Labadan never questioned the deduction of the tithe from her salary. As regards the non-
payment of overtime pay, holiday pay, and allowances, Forest Hills noted that petitioner proffered no evidence
to support the same.
The Labor Arbiter decided in favor of Labadan, and found that she was illegally dismissed, and dismissed her
claims for overtime pay, holiday pay, allowances, 13th month pay, service incentive leave. The National Labor
Relations Commission (NLRC) reversed and set aside the Labor Arbiter’s decision with regard to the finding
of illegal dismissal. Labadan then filed a Petition for Certiorari with the Court of Appeals, which was dismissed
by the same. Hence, this Petition for Review on Certiorari.
ISSUES:
Whether or not Labadan was illegally dismissed by Forest Hills
HELD:
While in cases of illegal dismissal, the employer bears the burden of proving that the dismissal is for a valid or
authorized cause, the employee must first establish by substantial evidence the fact of dismissal.
The records do not show that petitioner was dismissed from the service. They in fact show that despite
petitioner’s absence from July 2001 to March 2002 which, by her own admission, exceeded her approved leave,
she was still considered a member of the Forest Hills faculty which retained her in its payroll.
Labadan argues, however, that she was constructively dismissed when Forest Hills merged her class with
another "so much that when she reported back to work, she has no more claims to hold and no more work to
do." Labadan, however, failed to refute Forest Hills’ claim that when she expressed her intention to resume
teaching, classes were already ongoing for School Year 2002-2003. It bears noting that petitioner
47
simultaneously held the positions of secondary school teacher and registrar and, as the NLRC noted, she could
have resumed her work as registrar had she really wanted to continue working with Forest Hills.
Labadan’s affidavit and those of her former colleagues, which she attached to her Position Paper, merely
attested that she was dismissed from her job without valid cause, but gave no particulars on when and how she
was dismissed.
BERNARDINO S. MANIOSO v. GOVERNMENT SERVICE INSURANCE SYSTEM

Benefits due an employee due to work-related sickness shall be provided until he becomes gainfully employed, or until his recovery
or death.
Bernardino Manioso is an Accounting Clerk I who started working at the Budget Commission on July 13,
1959. He was transferred to the Bureau of Forestry with the same position on August 10, 1959. He was
promoted to the position of Senior Bookkepeer of the Department of Environment and Natural Resources,
Region IV, Manila. It was in 1978 when Manioso was found to be suffering from Hypertensive Vascular
Disease. Since then, Manioso was already in and out the hospital for the purpose of having tests conducted on
him and to be hospitalized on several instances. From January 11, 1995 up to May 15,1995 when Manioso
compulsory retired from the government service on reaching 65 years of age and after serving almost 36 years,
he no longer reported for work. His sick leave covering the said period was duly approved.
Manioso filed with the GSIS for additional benefits claiming that the ailments for which he was hospitalized
several times in 1997 developed from his work related illnesses.The GSIS disapproved petitioner’s request
upon the ground that he was already paid the maximum monthly income benefit for eight (8) months covering
the period from May 15, 1995 to January 14, 1996 commensuarate to the degree of his disability at the time of
his retirement. On appeal, the GSIS’s ruling was also affirmed. Hence, this petition.
ISSUE:
Whether or not the Manioso is entitled to Permanent Total Disability Benefits
HELD:
Under Article 192 (a) of the Labor Code, any employee who contacts sickness or sustains an injury resulting
in PTD shall, for each month until his death, be paid by the [GSIS] during such disability, an amount equivalent
to the monthly income benefit, plus ten percent thereof for each dependent child, but not exceeding five. And
under Article 192 (b) of the same Code, the only time the income benefits, which are guaranteed for five years,
shall be suspended is if the employee becomes gainfully employed, or recovers from his PTD or fails to be
present for examination at least once a year upon notice by the GSIS.
As Manioso's medical records show that the ailments that he suffered in 1997 are complications that resulted
from his work-related ailments, 'the right to compensation extends to disability due to disease supervening
upon and proximately and naturally resulting from compensable injury.
Manioso's retirement from the service does not prevent him from availing of the PTD benefits to which he is
entitled. For as stated earlier, benefits due an employee due to work-related sickness shall be provided until he
becomes gainfully employed, or until his recovery or death. None of these is present in Manioso's case.
It would be an affront to justice if Manioso, a government employee who had served for thirty six (36) years,
is deprived of the benefits due him for work-related ailments that resulted in his Permanent Total Disability.
MOTOROLA PHILIPPINES, INC., et al. v. IMELDA B. AMBROCIO, et al.

When a company provides a Redundancy Program in favor of the dismissed employees, the latter already received what was due
them under the law.
Sometime in 1997, Motorola Philippines, Inc. (MPI) decided to close its Parañaque plant in order to consolidate
its operations. It thus offered to its affected employees a redundancy/separation package consisting of
separation pay equivalent to two months’ salary per year of service, insurance policies, etc. After availing the
48
separation package, 236 employees filed complaints against MPI for payment of retirement pay equivalent to
one-month salary per year of service. MPI, on the other hand, insisted that Ambrocio, et al. had already received
such one-month pay, the same having been included in the cash component of the separation/redundancy
package paid to them.
The Labor Arbiter found MPI liable to Ambrocio et al. for the payment of "retirement pay service benefits"
since retirement pay is separate and distinct from separation pay. The NLRC, however, granted MPI’s appeal
and dismissed the complaint of Ambrocio, et al. holding that the benefits received by Ambrocio, et al. for
involuntary separation under MPI’s retirement plan included the service pay benefits, which both grant one
month’s pay for every year of service. Ambrocio, et al. appealed to the Court of Appeals (CA) which ruled In
favor of Ambrocio et al. Hence, the filing of this appeal.
ISSUES:
Whether or not Ambrocio’s, et al. were entitled to additional retirement benefits
HELD:
Separation pay has been defined as the amount that an employee receives at the time of his severance and is
designed to provide the employee with the wherewithal during the period he is looking for another
employment, and is recoverable only in the instances enumerated under Articles 283 and 284 of the Labor
Code, as amended, or in illegal dismissal cases when reinstatement is no longer possible.
Retirement pay, on the other hand, presupposes that the employee entitled to it has reached the compulsory
retirement age or has rendered the required number of years as provided for in the collective bargaining
agreement (CBA), the employment contract or company policy, or in the absence thereof, in Republic Act No.
7641 or the Retirement Law.
It is admitted that Ambrocio were terminated pursuant to a redundancy, and not due to retirement program,
hence, they were entitled to a separation pay of one-month salary per year of service.
As correctly ruled by the NLRC, by whatever version of MPI’s Retirement Plan would be made applicable, of
Ambrocio, et al. are entitled to a separation pay of one-month salary per year of service. Under Sec. III-B of
the Plan on which of Ambrocio, et al. rely, "[i]n case of involuntary separation with the company due to
retrenchment/redundancy, the employee shall be given a service benefit equivalent to one month per year of
service." On the other hand, based on Policy 1215 on which MPI relies, under the same circumstances, the
company shall provide its employee a separation pay equivalent to one (1) month’s pay per year of service,
inclusive of any service benefit eligibility under the Retirement Plan.
Thus, when of Ambrocio, et al. were paid a separation pay of two months’ salary for every year of service under
the Redundancy Package, they already received what was due them under the law and in accordance with MPI’s
plan.
IBARRA P. ORTEGA v. SOCIAL SECURITY COMMISSION and SOCIAL SECURITY SYSTEM

Claims under the Labor Code for compensation and under the Social Security Law for benefits are not the same as to their nature
and purpose.
Petitioner Ibarra Ortega, member of respondent Social Security System (SSS) filed claims for partial permanent
disability benefits on account of his illness with SSS, which the latter granted for total of 23 months. After the
expiration of his pension, Ortega then applied for total permanent disability benefits but such application was
denied by SSS. SSS observed that Ibarra was already granted benefits under the same illness and his physical
examination showed no progression of his illness. Accordingly, Ortega filed before Social Security Commission
(SSC) a petition alleging that SSS ignored the fact that his attending physician diagnosed him of progressed
illness. After exhausting administrative remedies, SSC took cognizance of the petition and after hearing on the
merits, it denied Ortega’s claim for entitlement to total permanent disability.
On appeal, the Court of Appeals affirmed in toto the SSC order.
49
ISSUE:
Whether or not Ibarra can claim under Social Security Law for work connected disability claims insofar as it
relates to a demonstration of disability to perform his trade and profession
HELD:
The conclusion that Ibarra is not entitled to total permanent disability benefits under the Social Security Law
was reached after petitioner was examined not just by one but four SSS physicians, namely, Dr. Juanillo
Descalzo III, Dr. Carlota A. Cruz-Tutaan, Dr. Jesus S. Tan and Dr. Rebecca Sison.
The initial physical examination and interview revealed that Ibarra had slight limitation of grasping movement
for both hands. According to Dr. Descalzo, this finding was not enough to grant an extension of benefit since
Ibarra had already received benefits equivalent to 30% of the body. Responding to the allegation that the April
2000 physical examination was performed in a short period of time, the doctor credibly explained that
petitioner's movements were already being monitored and evaluated from a distance as part of the examination
of his extremities in order to minimize malingering and overacting. 45
Indeed, the evidence indicates that petitioner's condition at the time material to the case does not fall under
the enumeration in the above-quoted provisions of the Social Security Law. Moreover, as correctly held by the
appellate court, the proviso of such provisions on the percentage degree of disability applies when there is a
related deterioration of the illness previously considered as partial permanent disability. In this case, there is
dearth of evidence on the proposition that petitioner's array of illnesses is related to Generalized Arthritis and
Partial Ankylosis of the specific body parts.
Ibarra's reliance on jurisprudence on work-connected disability claims insofar as it relates to a demonstration

of disability to perform his trade and profession is misplaced.
Claims under the Labor Code for compensation and under the Social Security Law for benefits are not the
same as to their nature and purpose. On the one hand, the pertinent provisions of the Labor Code govern
compensability of work-related disabilities or when there is loss of income due to work-connected or work-
aggravated injury or illness. On the other hand, the benefits under the Social Security Law are intended to
provide insurance or protection against the hazards or risks of disability, sickness, old age or death, inter alia,
irrespective of whether they arose from or in the course of the employment. And unlike under the Social
Security Law, a disability is total and permanent under the Labor Code if as a result of the injury or sickness
the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days
regardless of whether he loses the use of any of his body parts.
SAN MIGUEL FOODS INC. v. SAN MIGUEL CORPORATION EMPLOYEES

UNION-PTWGO
535 SCRA 133 (2007), SECOND DIVISION, (Carpio Morales, J)
Gross or flagrant violation of the seniority rule under the CBA is an unfair labor practice which the Labor Arbiter has jurisdiction.
Some employees of San Miguel Foods Inc. (SMFI) brought grievance against Finance Manager Gideo Montesa
for discrimination, favouritism, unfair labor practice and harassment. SMFI failed to act on the complaint
which prompted San Miguel Corporation Employees Union PTWGO (the Union) to filea case with the
National Labor Relations Commission against SMFI, its President Amadeo Veloso and Montesa. 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.
SMFI filed a motion to dismiss on the alleged ground that the grievance issue should be resolved in the
grievance machinery provided in the collective bargaining. The Union opposed the motion to dismiss. The
NLRC dismissed the complaint. On appeal, the Court of Appeals affirmed the NLRC’s decision. Hence, this
petition.
50
ISSUE:
Whether or not complaints for violation of seniority rule under the CBA falls within the Labor Arbiter’s
jurisdiction
HELD:
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, provides that 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.
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.
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.
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 complaint and thus remanding it to the Labor Arbiter for continuation of proceedings thereon, the
appellate court said finding may be taken to have been made only for the purpose of determining jurisdiction.
STA. CATALINA COLLEGE, et al. v. NATIONAL LABOR RELATIONS COMMISION, et al.

For a valid finding of abandonment, two factors must be present: (1) the failure to report for work, or absence without valid or
justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second element as the more determinative
factor, being manifested by some overt acts.
Hilaria Tercero (Tercero) was hired as an elementary school teacher at the Sta. Catalina College (Sta. Catalina)
in June 1955. Fifteen years thereafter, on account of the illness of her mother, she applied for and was granted
a one year leave of absence without pay. After the expiration of her leave of absence, she had not been heard
from by petitioner school. In 1982, she applied anew at petitioner school which hired her. On March 1997,
Hilaria was awarded a Plaque of Appreciation for thirty years of service and a gratuity pay. On May 1997, she
reached the compulsory retirement age of 65. Tercero’s retirement benefits were computed on the basis of
fifteen years of service from 1982 to 1997 and her service from 1955 to 1970 was excluded in the computation.
Sta. Catalina asserted that she had, in 1971, abandoned her employment. From the retirement benefits was
deducted the amount representing reimbursement of the employer’s contribution to her retirement benefits
under the Private Education Retirement Annuity Association (PERAA) which Tercero had already received.
Deducted too was the gratuity pay which was given to her.
Tercero filed a complaint before the NLRC Regional Arbitration, against Sta. Catalina for non-payment of
retirement benefits. By Decision of October 30, 1998 , Labor Arbiter Pedro C. Ramos ruled in favor of the
petitioner school. On appeal, however, the NLRC, set aside the Labor Arbiter’s decision.
51
Sta. Catalina then brought the case on certiorari to the CA. The appellate court however, dismissed the petition,
holding that Sta. Catalina failed to prove that Tercero had abandoned her position in 1970, as Sta. Catalina
even gave her a Plaque of Appreciation for thirty years of service ―precisely because of her thirty year
continuous service,‖ and that Sta. Catalina never sent notice to her dismissing her, hence, the employer-
employee relationship was not severed and, therefore, her services for Sta. Catalina during the period from
1955-1970 should be credited in the computation of her retirement benefits
ISSUE:
Whether or not Tercero is entitled to the retirement benefits differential computed by the NLRC based on her
29 years of service when she merely rendered 15 continuous years of service prior to her retirement
HELD:
The Court is not unmindful of Tercero’s rendition of a total of thirty years of teaching in Sta. Catalina College
and should be accorded ample support in her twilight years. Sta. Catalina in fact acknowledges her dedicated
service to its students. She can, however, only be awarded with what she is rightfully entitled to under the law.
As a general rule, the factual findings and conclusion of quasi-judicial agencies such as the NLRC are, on
appeal, accorded great weight and respect and even finality as long as they are supported by substantial evidence
or that amount of relevant evidence which a reasonable man might accept as adequate to justify a conclusion.
Where as in the present case, the findings of the NLRC contradict those of the Labor Arbiter, the Court must
of necessity examine the records and the evidence presented to determine which finding should be preferred
as more conformable with evidentiary facts.
For a valid finding of abandonment, two factors must be present: (1) the failure to report for work, or absence
without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the
second element as the more determinative factor, being manifested by some overt acts.
To prove abandonment, the employer must show that the employee deliberately and unjustifiably refused to
resume his employment without any intention of returning.
Abandonment of work being a just cause for terminating the services of Hilaria, petitioner school was under
no obligation to serve a written notice to her.
ROSALINA TAGLE v. COURT OF APPEALS, et al.

When the provisions of the employment contract are clear and unambiguous, its literal meaning controls.
Wilfredo Tagle (Wilfredo), husband of petitioner Rosalina Tagle (Rosalina), was recruited by respondent Fast
International Corporation (FIC) to work as fisherman at Taiwan for its principal, respondent Kuo Tung Yu
Huang (Huang). They then executed an employment contract for one year, extendible for another year upon
mutual agreement of the parties.
During the duration of the contract, the fishing vessel boarded by Wilfredo in Taiwan collided with another
and thereafter sank. Despite efforts to look for Wilfredo’s corpus, the same proved futile. He was therefore
presumed dead. Rosalina thus filed a claim for death benefits with FIC. The claim was approved and Philippine
Prudential Life Insurance Co., Inc., (PPLICI) issued a check in the amount of P650,000.00. Upon receipt by
Rosalina of the check, she accomplished a Release, Waiver and Quitclaim stating that such would be an absolute
bar to any suit that either is now pending or may be henceforth prosecuted concerning claims, demands, causes
of action, etc. Rosalina, however, subsequently filed before the National Relations Commission (NLRC), a
complaint for additional ―labor insurance‖ in the amount of NT$300,000.00. On motion of FIC, the Labor
Arbiter dismissed the complaint of Rosalina on the ground that by her prior execution of the Release, Waiver
and Quitclaim she is barred from filing any subsequent action against FIC.
Rosalina appealed to the NLRC which affirmed the Labor Arbiter’s decision stating that nothing on record
would indicate that the P650,000.00 paid by PPLICI is separate and distinct from the obligation of the FIC
and its principal Huang arising from the employment contract and the release and quitclaim forever barred the
filing of any subsequent action against FIC. Upon Petition for Certiorari before the Court of Appeals (CA), it
52
approved the NLRC resolution finding ―no shred of capriciousness or arbitrariness on the part of the NLRC‖
in dismissing her appeal.
ISSUE:
Whether or not the Release, Waiver and Quitclaim executed by Rosalina included the additional labor insurance
she is entitled to as provided for in Section 10, Article II of her deceased husband’s employment contract
HELD:
Death could be a result of accident, but accident does not necessarily result to death.
Compensation benefits for illness, death, accident which does not result to death, and partial or total disability
are treated separately and differently in the 3-paragraph provision of Article II, Section 10 of the employment
contract. The said provision in the employment contract being clear and unambiguous, its literal meaning
controls.
To uphold Tagle’s claim for additional insurance for accident, assuming that one for the purpose was secured,
after receiving insurance benefits for death arising from accident, would violate the clear provision of Article
II, Section 10 of the employment contract, the law between the parties. And it would trifle with the Release,
Waiver and Quitclaim, another contract between the parties, barring Tagle from claiming other or additional
benefits arising from Tagle’s husband’s death-basis of the release of the insurance proceeds to her.
PATRICIA I. TIONGSON, et al. v. NATIONAL HOUSING AUTHORITY

558 SCRA 56 (2008), SECOND DIVISION, (Carpio Morales, J.)
In a situation where a government agency, in this case the National Housing Authority, took possession of properties belonging to
private individuals for purposes of expropriation and the laws by virtue of which such government agency expropriated the subject
properties were subsequently declared to be unconstitutional by the Supreme Court, the determination of just compensation should
be reckoned from the date of filing the complaint for expropriation and not from the time of actual taking of the properties.
Respondent National Housing Authority (NHA) took possession in 1978, for purposes of expropriation, of
properties belonging to petitioners Patricia L. Tiongson, et al. pursuant to P.D. Nos. 1669 and 1670. The two
P.D.’s were thereafter declared unconstitutional by the Supreme Court. On September 14, 1987, the NHA
filed before the Regional Trial Court (RTC) a complaint against Tiongson, et al. for expropriation of parcels
of land which were covered by P.D. Nos. 1669 and 1670.
The RTC held that the determination of just compensation of the properties should be reckoned from the date
of filing of NHA’s petition or on September 14, 1987. However, on appeal, the Court of Appeals reversed and
set aside the trial court’s orders and held that the just compensation should be based on the actual taking of
the property in 1978. Hence, this petition.
ISSUE:
Whether or not just compensation should be reckoned from the time of the taking of the property or on the
filing of the complaint
H ELD:
In declaring, in its challenged Decision, that the determination of just compensation should be reckoned from
NHA’s taking of the properties in 1978, the appellate court simply relied on Annex ―C‖ of NHA’s petition
before it, the Order dated June 15, 1988 of the then Presiding Judge of the trial court, and thus concluded that
―the parties admitted that [NHA] took possession of the subject properties as early as 1978.‖ The appellate
court reached that conclusion, despite its recital of the antecedents of the case including Tiongson, sustained
moves, even before the trial court, in maintaining that the reckoning of just compensation should be from
the date of filing of the petition for expropriation on September 14, 1987.
The earlier-quoted allegations of the body and prayer in NHA’s Petition for Expropriation filed before the
RTC constitute judicial admissions of NHA—that it possessed the subject properties until this Court’s
declaration, in its above-stated Decision in G.R. No. L-55166 promulgated on May 21, 1987, that P.D. No.
1669 pursuant to which NHA took possession of the properties of petitioners in 1978 was unconstitutional
53
and, therefore, null and void. These admissions, the appellate court either unwittingly failed to consider or
escaped its notice.
Tiongson, et al., even brought to the appellate court’s attention, in their Motion for Reconsideration of its
Decision of June 16, 1999, the fact that they had called the trial court’s attention to NHA’s allegation-
admissions in the body and prayer of its petition. But the appellate court, by resolution of October 7, 1999,
denied petitioners’ motion upon the ground that it raised substantially the same issues that were already
considered and passed upon in arriving at its decision. The appellate court’s June 16, 1999 decision glaringly
shows, however, that the matter of judicial admissions of NHA in the body and prayer in its petition were not
considered by it. Vis-a-vis the factual backdrop of the case, the just compensation of Tiongson, et al.’s properties
must be determined ―as of the date of . . . the filing of [NHA’s] complaint‖ on September 14, 1987.‖
UNITED PHILIPPINE LINES, INC. and/or HOLLAND AMERICA LINE, INC. v. FRANCISCO
BESERIL
The law does not require that the illness should be incurable, what is important is that he was unable to perform his customary
work for more than 120 days which constitutes permanent total disability, thus, an award of a total and permanent disability
benefit is in order.
Francisco Beseril (Francisco) was hired by United Philippine Line, Inc. (UPL) in behalf of its principal, Holland
America Line (HAL). He is usually rehired by UPL to serve as one of the seaman in HAL’s vessel as an assistant
cook. In the middle of his service he started to feel chest pain and was brought ashore and underwent Triple
Heart By-Pass. When he was brought to Manila he underwent several rehabilitation and physical therapy. One
of Francisco’s doctors found that he was unfit to work.
Relying on the findings of the doctor, Francisco and his counsel demanded for disability pay from his employer
UPL and/or HAL. UPL directed Francisco to undergo an examination with their company doctor. The
company doctor found that Francisco is in fact fit to work as a seaman. Francisco agreed to work again for
UPL but did not show up in their office.
Francisco filed a complaint in the NLRC against ULP and HAL claiming disability benefits, loss of earning
and capacity and damages. The Labor Arbiter awarded Francisco full amount of the benefits and damages. The
NLRC modified the decision of the Labor Arbiter and deleted the award for disability benefits. ULP and HAL
contended that there should be no grant of Disability Benefit because their company physician certified that
he is fit to go back to work. On appeal, the Court of Appeals reversed the decision of the Labor Arbiter and
ruled that the disability benefit should be awarded
Hence, this petition.
ISSUE:
Whether or not Disability Benefit should be awarded to Francisco Beseril
HELD:
That Francisco was found to be "fit to return to work" by Clinica Manila (where he underwent regular cardiac
rehabilitation program and physical therapy from January 15 to May 28, 1998 under UPL's account) on
September 22, 1998, or a few months after his rehabilitation does not matter.
UPL tried to contest the above findings by showing that respondent was able to work again as a chief mate in
March 2001. Nonetheless, this information does not alter the fact that as a result of his illness, respondent was
unable to work as a chief mate for almost three years. It is of no consequence that respondent was cured after
a couple of years.
The law does not require hat the illness should be incurable. What is important is that he was unable to perform
his customary work for more than 120 days which constitutes permanent total disability. An award of a total
and permanent disability benefit would be germane to the purpose of the benefit, which is to help the employee
in making ends meet at the time when he is unable to work
54
VIRGEN SHIPPING CORPORATION, et al. v. JESUS B. BARRAQUIO
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.
Odyssey Maritime, PTE. Ltd, through Virgen Shipping Corporation, hired Jesus Barraquio (Barraquio ) as chief
cook on board a vessel for a period of ten (10) months. While the vessel was docked in Korea, Barraquio
requested medical assistance and was diagnosed with suspected ischemic heart disease and hypertension.
Barraquios wrote a letter to the captain informing them that he has decided to quit his job and will be joining
the next disembarkation crew. He signed a Statement of Account acknowledging set-off of his vacation leave
pay from the cost of finding his replacement and the cost of repatriation.
A year later, respondent filed a complaint for non-payment of 120 days sickness allowance under Section 20
(B) paragraph 2 of the Standard Employment Contract for Seafarers, disability benefits, legal interest,
reimbursement of medical expenses, and damages. Barraquio alleged that due to constant verbal abuse from
the ship master, he suffered dizziness, chest pains, headaches and irregular sleep leading to hypertension.
Barraquio alleged that he was forced to execute the request for disembarkation for fear that his health would
worsen; and that medical findings that he was fit to sail is proof that his condition developed while on board.
The Labor Arbiter rendered judgment in favor of Barraquio finding the foreign principal and manning agency
liable to pay to complainant his money claims. On appeal, the National Labor Relations Commission (NLRC)
reversed the ruling of the Labor Arbiter and dismissed the complaint, finding Barraquio’s resignation voluntary;
The Court of Appeals reversed the NLRC Decision in light of the observation that Barraquio’s hypertension
probably developed while on board the vessel
ISSUES:
Whether or not Barraquio voluntarily resigned
HELD:
From a considered review, the Court finds that respondent’s resignation was voluntary.
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.
Barraquio’s resignation can be gleaned from the unambiguous terms of his letter to Captain Cristino.
Barraquio’s bare claim that he was forced to execute his resignation letter deserves no merit. Bare allegations
of threat or force do not constitute substantial evidence to support a finding of forced resignation. That such
claim was proferred a year later all the more renders his contention bereft of merit.
Ischemic heart disease cannot develop in a short span of time that Barraquio served as chief cook for
petitioners. In fact, as indicated above, the Gleneagles Maritime Medical Centre doctor who treated respondent
in May 2000 for abscess in his left hand had noted Barraquio’s ―[h]istory of hypertension for 3 years.‖
Moreover, the Korean physician did not make any recommendation as to Barraquio’s bill of health for
petitioners to assume that he was fit for repatriation.
55

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LABOR LAW

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PHILIPPINE DIAMOND HOTEL AND RESORT, INC. (MANILA DIAMOND HOTEL) v.

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ADELINO FELIX v. NATIONAL LABOR RELATIONS COMMISSION and

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LUNESA O. LANSANGAN AND ROCITA CENDAÑA v. AMKOR TECHNOLOGY

PANFILO MACASERO v. SOUTHERN INDUSTRIAL GASES PHILIPPINES

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MCDONALD’S (KATIPUNAN BRANCH), et al. v. MA. DULCE ALBA

MILAGROS PANUNCILLO v. CAP PHILIPPINES, INC.

NOEL E. MORA v. AVESCO MARKETING CORPORATION

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PHILIPPINE AIRLINES, INC. v. ENRIQUE LIGAN, et al.

LORNA DISING PUNZAL v. ETSI TECHNOLOGIES, INC., et al.

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