LABOR LAW REVIEW CASE DIGESTS

First Semester, A.Y. 2018-2019

School of Law and Governance
University of San Carlos

Submitted to:
Atty. Jefferson M. Marquez

Submitted By:
Royce Nikko Cesante
 1.THE APPLICABLE LAWS
2.BASIC PRINCIPLES

CASES:
1. Century Properties Inc. vs. Babiano, et al., GR No. 220978, July 5, 2016

Doctrine: Four – Fold Test: The presence of the following elements evince the existence
of an employer- employee relationship: (a) the power to hire, i.e., the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and
(d) the employer‘s power to control the employee‘s conduct, or the so called ― control
test.
The control test is commonly regarded as the most important indicator of the presence or
absence of an employer-employee relationship. Under this 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.

Facts: Concepcion was initially hired as a sales agent by Century Properties, Inc. (CPI)
and was eventually promoted as project director on September 1, 2007 and again on,
March 31, 2008. As such, she signed an employment agreement, denominated as
―Contract of Agency for Project Director, which provided, among others, that she would
directly report to Edwin J. Babiano and receive a monthly subsidy of P60, 000.00, 0.5
percent commission, and cash incentives.
It was stipulated in both contracts that no employer-employee relationship exists between
her and CPI.
She resigned as CPI‘s project director through a letter dated Feb. 23, 2009, effective
immediately. She and Babiano then filed a complaint before the NLRC for non-payment
of commissions and damages against CPI claiming that their repeated demands for
payment remained unheeded. CPI invoked the defense that the NLRC had no jurisdiction
to hear the complaint because there was no employer-employee a relationship between
them.
Issue: Whether or not employer-employee relationship exists?
Ruling: Yes, the presence of the following elements evince the existence of an employer-
employee relationship: (a) the power to hire, i.e., the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer‘s
power to control the employee‘s conduct, or the so called ―control test.
The control test is commonly regarded as the most important indicator of the presence or
absence of an employer-employee relationship. Under this 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. Guided by these parameters, the Court found that Concepcion was an
employee of CPI considering that:
. (a) CPI continuously hired and promoted Concepcion from October 2002 until her

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 resignation on February 23, 2009, thus, showing that CPI exercised the power of
selection and engagement over her person and that she performed functions that
were necessary and desirable to the business of CPI;

. (b) the monthly subsidy and cash incentives that Concepcion was receiving from CPI
are actually remuneration in the concept of wages as it was regularly given to her
on a monthly basis without any qualification, save for the ―complete submission
of documents on what is a sale policy;

. (c) CPI had the power to discipline or even dismiss Concepcion as her engagement
contract with CPI expressly conferred upon the latter the right to discontinue her
service anytime during the period of engagement should she fail to meet the
performance standards, among others, and that CPI actually exercised such power
to dismiss when it accepted and approved Concepcion‘s resignation letter; and
most importantly,

. (d) Furthermore, CPI possessed the power of control over Concepcion because in the
performance of her duties as Project Director - particularly in the conduct of
recruitment activities, training sessions, and skills development of Sales Directors
- she did not exercise independent discretion thereon, but was still subject to the
direct supervision of CPI, acting through Babiano. Besides, while the employment
agreement of Concepcion was denominated as a Contract of Agency for Project
Director, it should be stressed that the existence of employer-employee relations
could not be negated by the mere expedient of repudiating it in a contract. 


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

Doctrine: Four - Fold Test; (Mentioned in passing: The control test merely calls for the
existence of the right to control and not necessarily the exercise thereof, meaning it is
enough that the employer has the right to wield the power.)
Facts: Enopia and others were hired from January 20, 1994 to March 20, 1996 as crew
members of the mother fishing boat FIB MG-28 owned by Joaquin Lu, the sole proprietor
of Mommy Gina Tuna Resources [MGTR].
Parties had an income-sharing arrangement, they would also equally share the expenses
for the maintenance and repair of the mother boat, and for the purchase of nets, ropes
and payaos along with payment of a backing incentive fee. On August 1997, Lu proposed
the signing of a Joint Venture Fishing Agreement between them, but complainants
refused to sign the same (a number of times) as they opposed the one-year term provided
in the agreement, they also decided to return the mother fishing boat.
Complainants claim that Lu terminated their services because of their refusal to sign the
agreement. Lu claimed that he did not terminate them, as their relationship was one of
joint venture.
The complainants filed their complaint for illegal dismissal, monetary claims and
damages. The LA found that there was no employer-employee relationship existing
between petitioner and the respondents but a joint venture.

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Issues: Whether or not there was employer-employee relationship between the parties?
Ruling: In determining the existence of an employer-employee relationship, the following
elements are considered:
(1) The selection and engagement of the workers – The fishermen were hired to perform
functions which were necessary and desirable for the business of the employer
(Lu/MGTR)
(2) The power to control the worker‘s conduct – In this case, it was found that the Lu had
the power of control over the workers and would in fact supervise their operations by
checking up on them through the radio and by the presence of a master fisherman and
an assistant along with a checker and assistant checker based in their company office
who would supervise and coordinate with each other.
(3) The payment of wages by whatever means – although they received compensation
on a percentage basis, such does not negate the employer and employee relationship
between them (read definition of wages in the LC.), furthermore, they received their
wages from MGTR and MGTR took up SSS policies for the fishermen;
(4) The power of dismissal – Petitioner wielded the power of dismissal over the
respondents when he dismissed them after they refused to sign the joint fishing venture
agreement.

3. Reyes et al., vs. Doctolero, et al., GR No. 185597, August 2, 2017

Doctrine: (Torts case on vicarious liability in relation to Er-E relationship) The principal is
not liable for the acts of the contractor’s employees. There is no employer – employee
relationship between the principal and the security guards.

As a general rule, one is only responsible for his own act or omission. (Article 2176 of the
Civil Code) The law provides for exceptions when it makes certain persons liable for the
act or omission of another. One exception is an employer who is made vicariously liable
for the tort committed by his employee under paragraph 5 of Article 2180.

Facts:

In this case, two security guards, of Grandeur Security and Services Corp., got into an
altercation with petitioners in Makati Cinema Square’s (MCS) parking lot. This resulted
in one security guard accidentally shooting one of the petitioners while another security
guard shot another petitioner. This resulted in the two petitioners sustaining injuries, one
on his leg while the other on his stomach.

Petitioners insist that MCS and Grandeur are liable for damages, they rely on the vicarious
liability of employers.

Issue: Whether Grandeur and MCS may be held vicariously liable for damages caused
by their security guards to petitioners John and Mervin Reyes?
Ruling: With respect to MCS, the court ruled that they are not liable for the acts of the
security guards. There is no employer – employee relationship. The guards were merely

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assigned by Grandeur to secure MCS' premises pursuant to their Contract of Guard
Services. Thus, MCS cannot be held vicariously liable for damages caused by these
guards' acts or omissions.
The rule on vicarious liability applies only if there is an employer – employee relationship.
This employer-employee relationship cannot be presumed but must be sufficiently proven
by the plaintiff. Neither can it be said that a principal-agency relationship existed between
MCS and Grandeur, as their contract stated otherwise.
With respect to Grandeur, the court here ruled that they managed to overcome the
presumption of negligence.

4. The Provincial Bus Operators Association of the Philippines et al vs. DOLE,

et a., GR No. 202275, July 17, 2018, En Banc

Doctrine: (1) Laws requiring the payment of minimum wage, security of tenure and traffic
safety have been declared as not violative of due process for being valid police power
legislations. When administrative agencies exercise quasi legislative power, notice and
hearing are not required.

(2) Not all contracts are protected by the non-impairment clause of the constitution.
Contracts whose subject matters are so related to the public welfare are subject to the
police power of the state. (Like Er-E rel which is imbued with public interest) Likewise,
contracts which related to rights that are not considered property, such as franchises and
permits, are also not protected by the non- impairment clause.

(3) Equal protection clause; a valid classification (a) substantial distinctions which make
real differences; (b) the classification must be germane to the purpose of the law; (c) It
must not be limited to existing conditions only; (d) It must apply to each member of the
class.

Facts: The Provincial Bus Operators Association of the Philippines questions DOLE DO
118-12 otherwise known as “Rules and Regulations Governing the Employment and
Working Conditions of Drivers and Conductors in the Public Utility Bus Transport Industry”
and it’s IRR, while LTFRB issued memorandum circular no. 118-12 which provides that
PUB companies are required to get a Labor Standards Compliance Certificate from
DOLE, failure to do so shall be considered a ground for the immediate cancellation or
revocation of their franchises (Certificate of Public Convenience)

DO 118-12 provides a new compensation scheme for drivers and conductors which
ensure that the risk taking behaviors of drivers are addressed. The new compensation
scheme has to components: a fixed rate and a performance based rate/ part fixed and
part performance based.

“SECTION 3. Hours of Work and Hours of Rest. — The normal hours of work of a driver
and conductor shall not exceed eight (8) hours a day. If the driver/conductor is required

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to work overtime, the maximum hours of work shall not exceed twelve (12) hours in any
24-hour period, subject to the overriding safety and operational conditions of the public
utility bus.
Drivers and conductors shall be entitled to rest periods of at least one (1) hour, exclusive
of meal breaks, within a 12-hour shift.”
“SECTION 2. Method of Determining Compensation. — Bus owners and/or operators, in
consultation with their drivers and conductors shall determine the following:
[a]) The fixed component shall be based on an amount mutually agreed upon by the
owner/operator and the driver/conductor, which shall in no case be lower than the
applicable minimum wage for work during normal hours/days. They shall also be entitled
to wage[-]related benefits such as overtime pay, premium pay and holiday pay, among
others.
[b]) The performance-based component shall be based on safety performance, business
performance and other related parameters.”
NWPC Guidelines:
SECTION 2. Fixed Wage Component. —
a) The fixed wage component shall be an amount mutually agreed upon by the
owner/operator and the driver/conductor and shall be paid in legal tender. It shall in no
case be lower than the applicable minimum wage (basic wage + COLA) for work
performed during normal hours/days. It shall include wage[-]related bene ts such as
overtime pay, nightshift differential, service incentive leave and premium pay among
others. The payment of 13th month pay, holiday and service incentive leave may be
integrated into the daily wage of drivers and conductors, upon agreement of both
owners/operators and drivers and conductors.
b.) The fixed wage may be based on a time unit of work (e.g., hourly, daily or monthly). It
may also be based on a per trip or per kilometer basis where the drivers/conductors and
operators may consider the minimum number of trips or kilometres/distance travelled
within an 8-hour period, as basis for determining regular/normal workload for an 8-hour
period. The fixed wage may be computed as follows:
Fixed Wage (Time Rate) = (Basic Wage + Wage – Related Benefits) OR
 Fixed Wage (Trip
Basis) = Rate per Trip x No. of Trips per Day
SECTION 3. Performance-Based Wage Component. —
a) The performance-based wage component shall be based on business performance,
safety performance and other relevant parameters. Business performance shall consider
revenue/ridership. Safety performance shall consider safety records such as the
incidence of road accident and tra c violation. The performance- based wage may be
computed as follows:
Reference Amount of Performance Incentive = (Current Average Daily Earnings – Fixed
Wage) x Y%
Where: Current average daily earnings shall be estimated based on average daily
earnings for 2011 and/or prior years, as may be agreed upon.

Y — range of values (in percent) that correspond to various levels of safety performance,
such that: The lower the incidence of traffic violations and road accidents, the higher will
be the value of Y and the performance incentive

The higher the incidence of traffic violations and road accidents, the lower will be the

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value of Y and the performance incentive
 Bus operators/owners and drivers/conductors
may modify or use other formula for their compensation scheme provided it is in
accordance with the part- fixed[-] part-performance[-]based compensation scheme as
provided herein.

Petitioners claim that the issuance violates the PUB Company’s due process; they also
claim that the non-impairment of contractual relations clause of the constitution was
breached since they agreed with drivers and conductors that the boundary system (based
on number of trips) was their system of compensation.
Issue: (1) Whether or not the DOLE Department Order No. 118-12 and the LTFRB
Memorandum Circular No. 2012-001 deprive public utility bus operators of their right to
due process of law?
(2) Whether or not the DOLE Department Order No. 118-12 and the LTFRB Memorandum
Circular No. 2012-001 impair public utility bus operators' right to non- impairment of
obligation of contracts?
(3) Whether or not the DOLE Department Order No. 118-12 and the LTFRB Memorandum
Circular No. 2012-001 deny public utility bus operators of their right to equal protection of
the laws?
Ruling:
The court dismissed the petition for petitioners’ failure to respect the doctrine of hierarchy
of courts by directly invoking this Court's jurisdiction without any special reason.
Furthermore, petitioners also failed to present any actual controversy ripe for adjudication
and do not even have the requisite standing to the case. They also failed to show the
unconstitutionality of the DOLE Department Order No. 118- 12 and the LTFRB
Memorandum Circular No. 2012-001.
(1) Laws requiring the payment of minimum wage, security of tenure and traffic safety
have been declared as not violative of due process for being valid police power
legislations. When administrative agencies exercise quasi legislative power, notice
and hearing are not required.
Social legislations to enhance the status of bus drovers and conductors and to
promote the general welfare of the riding public. They are reasonable and are not
violative of due process.
(2) The non-impairment clause: Section 10, Article III: No law impairing the obligation
of contracts shall be passed. – the provision is meant to encourage purely private
agreements from state interference. There is an impairment when, either by statute
or any administrative rule issued by an agency exercising quasi legislative power,
the terms of a contract is changed either in respect to the time or mode of
performance of the obligation.

Not all contracts are protected by the non-impairment clause of the constitution.
Contracts whose subject matters are so related to the public welfare are subject to
the police power of the state. (Like Er-E rel which is imbued with public interest)
Likewise, contracts which related to rights that are not considered property, such
as franchises and permits, are also not protected by the non- impairment clause.

(3) Petitioners failed to show how the equal protection clause was violated.
Furthermore, the qual protection clause does not prevent the legislature from

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 making classifications for as long as there is: (a) substantial distinctions which
make real differences; (b) the classification must be germane to the purpose of the
law; (c) It must not be limited to existing conditions only; (d) It must apply to each
member of the class.

3.RIGHT TO HIRE
4.WAGES & WAGE RATIONALIZATION ACT
5.VIOLATION OF WAGE ORDERS
6.WAGE ENFORCEMENT AND RECOVERY
7.WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING WAGES
8.PAYMENT OF WAGES
9.CONDITIONS OF EMPLOYMENT
10.MINIMUM LABOR STANDARD BENEFITS
CASES:

1. Dasco et al., vs. Philtranco Service Enterprise, GR No. 211141, June 29, 2016

Doctrine: Field personnel are those whose performance of their job/service is not
supervised by the employer or his representative, the workplace being away from the
principal office and whose hours and days of work cannot be determined with reasonable
certainty. They are paid specific amount for rendering specific service or performing
specific work. If required to be at specific places at specific times, employees including
drivers cannot be said to be field personnel despite the fact that they are performing work
away from the principal office of the employee.
Public bus drivers are NOT field personnel.
Facts: This case stems from a decision rendered by the Court of Appeals which declared
petitioners, who were dismissed drivers and conductors of PHILTRANCO (Respondents).
They allege that they are qualified for regular employment status as they have worked for
the respondent for 2 years, they also claim to have been paid below minimum wage (P404
for two of days work, round trip) without overtime pay and service incentive leave.
Respondents claim that the petitioners are merely field personnel who are not entitled to
overtime pay, SIL because their time time outside the company premises cannot be
determined with reasonable certainty since they ply provincial routes and are left alone in
the field unsupervised. They also assert that petitioners are seasonal employees.
Issue: Whether or not petitioners are entitled to SIL pay and overtime pay?
Ruling: Yes, drivers and conductors of public transportation companies are not field
employees and they are entitled to SIL pay and overtime pay.
Field personnel are those whose performance of their job/service is not supervised by the
employer or his representative, the workplace being away from the principal office and
whose hours and days of work cannot be determined with reasonable certainty. They are
paid specific amount for rendering specific service or performing specific work.
In order to conclude whether an employee is a field employee, it is also necessary to
ascertain if actual hours of work in the field can be determined with reasonable certainty
by the employer.
The court ruled that the petitioners are regular employees who perform tasks usually

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necessary and desirable to the respondents' business. The petitioners are not field
personnel as: (1) the petitioners, as bus drivers and/or conductors, are directed to
transport their passengers at a specified time and place; (2) they are not given the
discretion to select and contract with prospective passengers; (3) their actual work hours
could be determined with reasonable certainty, as well as their average trips per month;
and (4) the respondents (employers) supervised their time and performance of duties.

2. Galang et al., vs. Boie Takeda Chemicals Inc. et al., GR No. 183934, July 20,
2016

Facts: Ernesto Galang and Jasmin Chan worked for Boie Takeda Chemicals Inc. (BTCI).
Through the years they rose through the ranks and became Regional Sales Managers in
2000. In 2003, their new general manager, Nomura asked them to apply for the position
of National Sales Director. However, BTCI promoted Villanueva, who was from the
marketing department of BTCI. Petitioners would then resign and avail of early retirement,
they also received their early retirement benefits.

Petitioners aver that (1) the promotion of Villanueva and the threat from Nomura that he
would dismiss them if they failed to perform well under their newly appointed boss,
Villanueva, was tantamount to constructive dismissal, (2) they also claim that they were
discriminated against with respect to their retirement benefits as they received lower
benefits than other employees who retired (Petitioners only received 120%). They site
employees Sarmiento, Ducay and other employees who retired in 2001 and having
received 150% plus 120% of monthly salary of every year of service.

Issue: Whether or not petitioners are entitled to a higher retirement package?

Ruling: No, petitioners were not discriminated against in terms of their retirement
package. Retirement benefits must be granted under:
a) Existing laws;
b) A collective baragaining agreement;
c) Employment contract; or
d) An established employer policy.

Petitioners are not covered by any of the abovementioned agreements. There is also no
dispute that they received more than what was mandated by Article 287 of the labor code
and CBA. Retirement packages were given in accordance with the CBA between
employees and employer which generally, managers are not entitled to, yet BTCI
extended nevertheless.

Petitioners cannot rely on company practice – this is when the giving of a benefit is done
over a long period of time and that it has been made deliberately and consistently
(employer agreed to continue giving the benefits knowing fully well that the employees
are not covered by any provision of the law or agreement requiring payment thereof.

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). The burden to prove such is with the employee, which in this case they failed to prove.
Employees must prove company practice through substantial evidence.

Petitioners failed to prove company practice as the cases they cited, of employees
receiving the 150%, were of employees who were not similarly situated in terms of rank
and that the 150% benefit was only given to retirees in 2001 (given only within a one -
year period) and was not based on merit or in company practice/policy. Retirement
packages varied based on rank.

3. HSY Marketing Ltd., Villatique, GR No. 219569, August 17, 2016

Doctrine: Company drivers who are under the control and supervision of management
of officers are regular employees entitled to benefits including service incentive leave pay.
Service incentive leave is a right which accrues to every employee who has served 'within
12 months, whether continuous or broken reckoned from the date the employee started
working, including authorized absences and paid regular holidays unless the working
days in the establishment as a matter of practice or policy, or that provided in the
employment contracts, is less than 12 months, in which case said period shall be
considered as one (1) year.' It is also commutable to its money equivalent if not used or
exhausted at the end of the year.
Facts: Respondent worked as a field driver for Fabulous Jeans & Shirt &
Merchandise/HSY Marketing, he was tasked to deliver items for a daily compensation.
Respondent got into an accident using the service vehicle where he hit a pedestrian, Fab.
Jeans shouldered the expenses but required respondent to sign a resignation letter.
When respondent attempted to collect his wages, he was informed it was withheld until
he signs the resignation letter. Respondent assumed he was illegally dismissed and filed
a case with the RAB of the NLRC.
Petitioner (Fab. Jeans) alleges that after they paid for Dorataryo's hospitalization and
medical expenses, respondent went on absence without leave, presumably to evade
liability for his recklessness. They further assert that respondent was the one who refused
to report for work, he should be considered as having voluntarily severed his own
employment.
LA, NLRC and CA awarded separation pay and SIL pay to the respondents.
Issue: Whether or not respondent voluntarily resigned from work and is he entitled to
separation pay? Whether or not respondent is a regular employee and therefore entitled
to service incentive leave pay?
Held:
(1) There was no voluntary resignation as HSL failed to prove such, furthermore,
respondents are not entitled to separation pay since there was no illegal dismissal
and reinstatement to speak of. Petitioner was ordered by the court to return to
work.
(2) Yes. Company drivers who are under the control and supervision of management
of officers are regular employees entitled to benefits including service incentive
leave pay. Respondent is directed to deliver the goods at a specified time and

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 place and he is not given the discretion to solicit, select, and contact prospective
clients. He was required to report for work from 8:00 a.m. to 8:00 p.m. at the
company's store located at Velez-Gomez Street, Cagayan de Oro City.
Respondent is clearly under the control and supervision of petitioners. The court
ruled that the respondent is a regular employee whose task is usually necessary
and desirable to the usual trade and business of the company. Thus, he is entitled
to service incentive leave pay and other benefits.

4. A. N. Casket Maker et al., vs. Arango, et al., GR No. 192282, October 5, 2016

Doctrine: In determining whether workers engaged on "pakyaw" or "task basis" is

entitled to holiday and SIL pay, the presence (or absence) of employer supervision as
regards the worker's time and performance is the key: if the worker is simply engaged on
"pakyaw" or task basis, then the general rule is that he is entitled to a holiday pay and SIL
pay unless exempted from the exceptions specifically provided under Article 94 (holiday
pay) and Article 95 (SIL pay) of the Labor Code. However, if the worker engaged on
pakyaw or task basis also falls within the meaning of "field personnel" under the law, then
he is not entitled to these monetary benefits.
Holiday pay, SIL pay, and 13th month pay are benefits that cover all employees; an
employee must be one of those expressly enumerated to be exempted.
Section 3 of the Rules and Regulations Implementing P.D. No. 851 enumerates the
exemptions from the coverage of 13th month pay benefits, pakyaw worker are listed as
such.
Facts: Petitioners employed respondents as “stay in” pakyaw workers, who are paid per
job order, on various dates. They worked carpenters, mascilladors and painters in their
casket-making business from 1998 until their alleged termination in March 2007.
Petitioners offered respondents an employment agreement to convert the employment
set up into one that is contractual instead, so that they can avail of certain benefits like
sick leave, vacation leave and the like.
Respondents allege that they worked from from 7:00 a.m. to 10:00 p.m., with no overtime
pay and any monetary benefits despite having claimed for such. Furthermore, the
Contract of Employment that petitioner wanted them to sign had the following terms and
conditions: “(1) they shall be working on contractual basis for a period of five months…
(6) they shall not be eligible to avail of sick leave or vacation leave, nor receive 13th month
pay and/or bonuses, or any other bene ts given to a regular employee.” Respondents
refused to sign and due to such, the petitioner told them that they were terminated.
Respondents filed a complaint for illegal dismissal and non- payment of separation pay,
underpayment of wages, non-payment of overtime pay, holiday pay, 5-day service
incentive leave pay and 13th month pay.
Issue: Whether or not pakyaw employees are entitled to SIL pay, overtime pay, holiday
pay and 13th month pay or are they like field personnel who are not entitled to such?
Ruling: They are entitled to all benefits prayed for except 13th month pay.
Workers engaged on pakyaw or "task basis" are entitled to holiday and service incentive
leave pay provided they are NOT field personnel. The general rule is that he is entitled to
a holiday pay and SIL pay unless exempted from the exceptions specifically provided
under Article 94 (holiday pay) and Article 95 (SIL pay) of the Labor Code. However, if the

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worker engaged on pakyaw or task basis also falls within the meaning of "field personnel"
under the law, then he is not entitled to these monetary benefits.
Respondents do not fall under the definition of "field personnel." First, respondents
regularly performed their duties at petitioners' place of business; second, their actual
hours of work could be determined with reasonable certainty; and, third, petitioners
supervised their time and performance of their duties.
Holiday pay, SIL pay and 13th month pay are benefits that cover all employees; an
employee must be one of those expressly enumerated to be exempted.
The exception is found in Section 3 of the Rules and Regulations Implementing P.D. No.
851 enumerates the exemptions from the coverage of 13th month pay bene ts. Under
Section 3(e), "employers of those who are paid on . . . task basis, and those who are paid
a fixed amount for performing a specific work, irrespective of the time consumed in the
performance thereof" are exempted.
5. Toyota Pasig Inc vs. De Peralta, GR No. 213488, Nov 7, 2016

Doctrine: Commissions are considered as wages. While commissions are, indeed,

incentives or forms of encouragement to inspire employees to put a little more industry
on the jobs particularly assigned to them, still, these commissions are direct
remunerations for services rendered.
Facts: De Peralta filed a case for illegal dismissal, illegal deduction, unpaid commission,
annual profit sharing, damages and atty’s fees against the petitioner. Peralta worked as
a distinguished insurances sales executive for Toyota Pasig from 2007- 2012. However,
things changed for her when her husband was elected as president of Toyota Shaw-
Pasig Workers Untion –AIWA. Her husband along with several other union officers were
fired. Petitioner allegedly started harassing respondent for her husband's active
involvement in TSPWU-AIWA, which resulted to the issuance of a Notice to Explain dated
January 3, 2012 accusing her of "having committed various acts" relative to the
processing of insurance of three (3) units as "outside transactions" and claiming
commissions therefor, instead of considering the said transactions as "new business
accounts" under the dealership's marketing department. She was subsequently let go in
accordance with the procedure laid out in the labor code.
CA: Dismissal is valid BUT petitioner is liable to respondent in the amount of P617,248.08
representing her unpaid commissions, tax rebate for achieved monthly targets, salary
deductions, salary for the month of January 2012, and success share/profit sharing.
Issue: Whether or not the CA erred in it’s decision?
Ruling: No, the CA ruled correctly. The dismissal was valid but the respondent is entitled
to her commission as such is considered as her wage.
“ART. 97.Definitions. — As used in this Title: xxx xxx xxx
(f)"Wage" paid to any employee shall mean the remuneration of earnings, however
designated, capable of being expressed in terms of money, whether xed or ascertained
on a time, task, piece, or commission basis,”
Commissions have been defined as recompense, compensation or reward of an agent,
salesman, executor, trustee, receiver, factor, broker or bailee, when the same is
calculated as a percentage on the amount of his transactions or on the profit to the
principal. The nature of the work of a salesman and the reason for such type of
remuneration for services rendered demonstrate clearly that commissions are part of a
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salesman's wage or salary.
Peralta’s monetary claims are given to her as incentives or forms of encouragement in
order for her to put extra effort in performing her duties as an insurance sales executive.
Clearly, such claims fall within the ambit of the general term "commissions".
Additional info: burden of proof - Once the employee stipulates in his/her complaint,
position paper, affidavits and other documents, that the employer failed to pay labor
standard benefits, it becomes the employer's burden to prove that it has paid these money
claims. One who pleads payment has the burden of proving it, and even where the
employees must allege non-payment, the general rule is that the burden rests on the
employer to prove payment, rather than on the employees to prove non-payment. In this
case, Toyota Pasig failed to prove payment of wages and other benefits.
6. Soriano et al., vs. Secretary of Finance, G.R. Nos. 184450, 184508, 184538,
185234, January 24, 2017, En Banc

Doctrine: Tax case; An administrative agency may not enlarge, alter or restrict a
provision of law. It cannot add to the requirements provided by law

Facts: Petitioners question several provisions of Revenue Regulation No. 10-2008

implementing Republic Act No. (R.A.) 9504. They allege that the RR is an unauthorized
departure from RA 9504 - The law grants, among others, income tax exemption for
minimum wage earners (MWEs), as well as an increase in personal and additional
exemptions for individual taxpayers.
Two of the assailed provisions are: Sections 1 and 3 of the RR which disqualify MWEs
(minimum wage earners) who earn purely compensation income from the privilege of the
MWE exemption in case they receive bonuses and other compensation-related benefits
(13th month pay, hazard pay, SIL and the like) exceeding the statutory ceiling of P30,000
found in the NIRC.

Issue: Whether or not the sections of the RR are valid?

Held: No, they are not. An administrative agency may not enlarge, alter or restrict a
provision of law. It cannot add to the requirements provided by law. The court here
clarified that benefits (NOT STATUTORY BENEFITS) not beyond P30,000 were
exempted; wages not beyond the SMW (Statutory Minimum Wage) and de minimis
benefits are exempted as well. Conversely, benefits in excess of P30,000 are subject to
tax and, wages in excess of the SMW are still subject to tax.
What the law exempts is the MWE's minimum wage and other forms of statutory
compensation like holiday pay, overtime pay, night shift differential pay, CBA benefits
(productivity incentives) and hazard pay. These are not bonuses or other benefits; these
are wages. (Read definition of wages) Regarding other forms of income like commissions,
if it exceeds the threshold then the amount that exceeds such shall be taxed.
Thus, the RR exceeds that provided for by the law as benefits that exceed P30,00 cannot
operate to disenfranchise the MWE from enjoying the exemption explicitly granted by
R.A. 9504.

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7. Dela Salle Araneta University vs. Bernardo, GR No. 190809, February 13, 2017
Doctrine: Part-time employees are entitled to retirement benefits.
Facts: Bernardo taught as a part-time professional lecturer at DLS-AU since 1974. DLS-
AU informed him that he could not teach anymore due to the retirement age limit.
Bernardo was 75 years old at the time. DOLE informed him that he was entitled to receive
benefits under RA 7641, also known as the "New Retirement Law.” When the school
refused to pay, Bernardo filed a complaint for non-payment of retirement benefits and
damages. DLS- AU argued that Bernardo was not covered by the law since he was a
part-time employee. The school further averred that Bernardo’s employment bond was
severed when he reached the mandatory retirement age of 65. 10 years have passed
since then. His claim for retirement benefits should have prescribed, because under
Article 291 of the Labor Code, all money claims shall be filed within three years from the
time the cause of action accrues.
NLRC: The Labor Arbiter dismissed Bernardo’s complaint on the ground of prescription.
This was reversed by the NLRC. It held that the school is estopped from claiming
prescription because it permitted Bernardo to work beyond the mandatory retirement
age. Furthermore, part-time employees are covered under RA 7641.
CA: The CA affirmed the NLRC’s judgment.
Issues: Whether or not part-time employees receive retirement benefits despite a lack
of CBA?
Ruling: YES. Based on RA 7641, its Implementing Rules, and the October 24, 1996
Labor Advisory, the only employees exempted from retirement pay are: (1) those of the
National Government and its political subdivisions, including government-owned and/or
controlled corporations, if they are covered by the Civil Service Law and its regulations;
and (2) those of retail, service and agricultural establishments or operations regularly
employing not more than 10 employees. Since part-time employees are not among those
specifically exempted, Bernardo is entitled to receive retirement benefits.

8. Abuda et al., vs. L. Natividad Poultry Farms, GR No. 200712, July 4, 2018

Doctrine: “A pakyaw or task basis arrangement defines the manner of payment of wages
and not the relationship between the parties.”
“In illegal dismissal cases, it is incumbent upon the employees to first establish the fact
of their dismissal before the burden is shifted to the employer to prove that the dismissal
was legal…It is settled that in the absence of proof of dismissal, the remedy is
reinstatement without backwages.”
Facts: Petitioners are a group of employees who allege that they were illegally dismissed
by L. Natividad Poultry Farms. The workers were poultry/feed mixers and maintenance
workers who occasionally performed work on the livestock and poultry houses in the farm.
Petitioners in this case question the decision of the Court of Appeals insofar at it upheld
the NLRC’s finding that the workers were hired as maintenance personnel by San Mateo
and Del Remedios (who represented the employer as supervisors) on pakyaw basis to
perform specific services for L. Natividad, they are not regular employees.
The Court of Appeals also sustained the ruling of the NLRC that San Mateo and Del

Page | 13
Remedios were labor-only contractors, and as such, they must be considered as L.
Natividad's agents. With respect to the livestock and poultry feed mixers, they were
declared as regular as they performed tasks which were necessary and desirable to L.
Natividad's business. Respondent alleged that they engaged San Mateo and Rodolfo for
their services as contractors.
Issue: (1) Whether or not the employees who performed maintenance work on the farm
are considered as regular workers? (2) Was there illegal dismissal in this case? (3)
Whether or not the employer is engaged in labor-only contracting?
Ruling: (1) Yes, a pakyaw or task basis arrangement defines the manner of payment of
wages and not the relationship between the parties. Payment through pakyaw or task
basis is provided for in Articles 97 and 101 of the Labor Code.
(2) In relation to the allegation of illegal dismissal, petitioners failed to prove the fact of
dismissal. The burden is on the employee to prove the fact of dismissal, otherwise they
would not be entitled to backwages or damages. It is not enough that they were dismissed
without due process. Additional acts of the employers must also be pleaded and proved
to show that their dismissal was tainted with bad faith or fraud, was oppressive to labor,
or was done in a manner contrary to morals, good customs, or public policy. Petitioners
failed to allege any acts by respondents which would justify the award of moral or
exemplary damages.
(3) L. Natividad is petitioners' real employer, in light of the labor-only contracting
arrangement between respondents, San Mateo, and petitioner Del Remedios. The
alleged contractor did NOT have any substantial investment in the form of tools,
equipment and even work premises, nor were the services performed by their workers,
i.e. carpentry and masonry works, directly related to and usually necessary and desirable
in the main business of livestock and poultry production showed that they were merely
engaged in "labor-only" contracting.
Furthermore, applying the four-fold test, it can be proven that indeed the respondent
exercised control over the employees, which indicates that there is labor only contracting.
“Most importantly though, they controlled petitioners and their work output by maintaining
an attendance sheet and by giving them specific tasks and assignments”

9. Societe Internationale De Telecommunications vs. Hulinganga, GR No. 215504,

August 20, 2018

Doctrine: “To be considered a company practice or policy, the act of extending benefits
of the CBA to managerial employees must have been practiced for a long period of time
and must be shown to be consistent and deliberate.
Factual findings of labor officials who are deemed to have acquired expertise in matters
within their respective jurisdictions are generally accorded not only respect, but even
finality, and are binding on the courts.”

Facts: Huliganga is a Country Operating Officer for petitioner Societe Internationale De

Telecommunications (SITA), the highest accountable officer of SITA in the Philippines.
He retired on December 31, 2008 and received his retirement benefits computed at 1.5
months of basic pay for each year of service, or the total amount of P7,495,102.84 in
Page | 14
retirement and other benefits.
Huliganga filed a case for unfair labor practices, underpayment of wages, moral and
exemplary damages, attorney's fees, underpayment of sick and vacation leave and
retirement benefits. He alleges that the coefficient/payment factor that applies to him
should be 2 months and not 1.5 months for every year of service in accordance with the
2005-2010 Collective Bargaining Agreement and that it has become a well-established
company practice of SITA to adopt, update and apply the new and/or additional economic
benefits arising from the CBA as amendments to the Employee Regulations manual.

Issue: Whether or not respondent is entitled to retirement benefits using the co-efficient
of 2 months as stated in the CBA?

Ruling: The court reaffirmed the findings of the LA and NLRC which the CA disagreed
with - Huliganga is undeniably a managerial employee. As such, he is not entitled to the
retirement benefits exclusively granted to rank and file employees by the CBA. Article
245 of the Labor Code provides that managerial employees are not eligible to join, assist
or form any labor organization. Thus, he is not entitled to the use of the coefficient of 2
months in computing his retirement benefits.
The exception is when managerial employees are given such benefits through a
stipulation in the CBA or that it has become company practice.

Huliganga, failed to substantially establish that there is an established company practice

of extending CBA concessions to managerial employees. Again, to be considered a
company practice or policy, the act of extending benefits of the CBA to managerial
employees must have been practiced for a long period of time and must be shown to be
consistent and deliberate.

11.OTHER SPECIAL BENEFITS

CASES:

1. Perez vs. Camparts Industries Inc. GR No. 197557, October 5, 2016

Doctrine: “A Retirement Plan in a company partakes the nature of a contract, with the
employer and the employee as the contracting parties. It creates a contractual obligation
in which the promise to pay retirement benefits is made in consideration of the continued
faithful service of the employee for the requisite period. Being a contract, the employer
and employee may establish such stipulations, clauses, terms and conditions as they may
deem convenient.”
Facts: Perez worked as a marketing manager for CII (Respondent). After having worked
for CII for 15 years, Perez decided to avail of CII’s optional early retirement plan, since
she intended to migrate to the US and take a job there. She applied for early retirement
several times but was denied by respondent due to business reverses caused by the
Asian financial crisis. She now alleges that she is entitled to retirement benefits or
separation pay as a matter of right, since she met the required years of service to qualify

Page | 15
for early retirement.
Respondent alleges Perez is not entitled to such benefits because, the early retirement
plan provides that consent of CII is needed before one can avail of optional early
retirement.
Issue: Whether or not Perez is entitled to early retirement benefits as a matter of right?
Ruling: No, she is not entitled to retirement benefits despite having met the years of
service required. The Labor Code provides that if a retirement plan exists in a company,
then it shall be the primary basis for retirement benefits, in the absence of such, the
provisions of the labor code shall apply. (note: provided that benefits in the retirement
plan are not lesser than those provided for by law, although employer may provide a
lesser retirement age.)
An employee is not entitled to optional early retirement as a matter of right by simply
meeting the required years of service or early retirement age, if management reserves
the right to decide whether or not an employee shall receive the benefits, otherwise it
would be contrary to the very nature of the word “optional” and to management’s
prerogative. In this case, the retirement plan had a stipulation which states that to avail of
optional early retirement an employee must (1) meet the years of service required and (2)
get the consent/ approval of the employer.
Perez further alleges that she is entitled to the said benefits since it is company practice,
she also cites isolated instances when other managerial employee availed of ERB. The
court did not agree. To be considered a company practice, the test or rational of this rule
on long practice requires an indubitable showing that the employer agreed to continue
giving the benefits knowing fully well that said employees are not covered by the law
requiring payment thereof.

2. Dela Salle Araneta University vs. Bernardo, GR No. 190908, February 13, 2017

Doctrine: A part-time fixed employee is entitled to retirement benefits despite the

existence of a CBA or retirement benefit plan which provides that they are not entitled to
retirement benefits.

Facts: Bernardo is a part-time professional lecturer at DLS-AU, he taught for 27 years

on a per semester and summer term basis. However, DLS-AU informed Bernardo that
he could not teach at the school anymore as the school was implementing the retirement
age limit for its faculty members. As he was already 75 years old, Bernardo had no choice
but to retire. Bernard sought the opinion of DOLE which informed him that he was entitled
to receive benefits under Republic Act No. 7641 and its Implementing Rules and
Regulations.

Petitioner alleges that Bernardo was not entitled to any kind of separation pay or benefits.
DLS-AU's policy and CBA provides that only full-time permanent faculty for at least five
years immediately preceding the termination of their employment, can avail of retirement
benefits. As a part-time faculty member, Bernardo did not acquire permanent employment
under the Manual of Regulations for Private Schools which require that a full-time teacher
is one that has rendered three consecutive years of service and such service must have
been satisfactory.
Page | 16
Issue: Whether or not a part-time employee is entitled to retirement benefits?
Ruling: The Retirement Benefits Law is a curative social legislation. It intends to provide
minimum retirement benefits to employees who are not entitled to the same under
collective bargaining and other agreements. It also applies to establishments with existing
collective bargaining or other agreements or voluntary retirement plans whose benefits
are less than those prescribed in said law.
Republic Act No. 7641 states that "any employee may be retired upon reaching the
retirement age x x x;" and "[i]n case of retirement, the employee shall be entitled to receive
such retirement benefits as he may have earned under existing laws and any collective
bargaining agreement and other agreements." The Implementing Rules provide that
Republic Act No. 7641 applies to "all employees in the private sector, regardless of their
position, designation or status and irrespective of the method by which their wages are
paid, except to those specifically exempted x x x." And Secretary Quisumbing's Labor
Advisory further clarifies that the employees covered by Republic Act No. 7641 shall
"include part-time employees, employees of service and other job contractors and
domestic helpers or persons in the personal service of another."
Bernardo's claim for retirement benefits cannot be denied on the ground that he was a
part-time employee, since part-time employees are NOT among those specifically
exempted under Republic Act No. 7641(Retirement Benefits Law) or its Implementing
Rules.
DLS-AU also alleged that the case had already prescribed since money claims prescribe
after 3 years. The court said that the case was filed within 3 years since the cause of
action arose after he was informed by DLS – AU that they would no longer renew
Bernard’s contract.

3. Catotocan vs. Lourdes School of Quezon City Gr No. 213486, April 26, 2017,
citing 1996 Pantranco North Express

Doctrine: “…acceptance by the employees of an early retirement age option must be

explicit, voluntary, free, and uncompelled. While an employer may unilaterally retire an
employee earlier than the legally permissible ages under the Labor Code, this prerogative
must be exercised pursuant to a mutually instituted early retirement plan. In other words,
only the implementation and execution of the option may be unilateral, but not the
adoption and institution of the retirement plan containing such option.”

Facts: Editha Catotocan(Catotocan) worked for respondent, Lourdes School of Quezon

City(LSQC) as a music teacher. By the school year 2005- 2006, she had already served
for thirty-five (35) years. LSQC has a retirement plan providing for retirement at sixty (60)
years old, or separation pay depending on the number of years of service. LSQC issued
Administrative Order No. 2003-004 for all employees which is an addendum on its
retirement policy: “NORMAL RETIREMENT:
1. An employee may apply for retirement or be retired by the school when he/she reaches
the age of sixty (60) years or when he/she completes thirty (30) years of service,
whichever comes first;”
Catotocan along with other faculty members consistently opposed the amendment to the
retirement plan. Year later, after being notified that she was being retired from service by
Page | 17
LSQC, she opened a savings account with BDO; she accepted all the proceeds of her
retirement package: the lump sum and all the monthly payments credited to her account
until June 2009; upon acceptance of the retirement benefits, there was no notation that
she is accepting the retirement benefits under protest or without prejudice to the filing of
an illegal dismissal case. She then filed a case for illegal dismissal against respondent.
Issue: Whether or not Catotocan receipt of retirement benefits will prevent her from filing
a case for illegal dismissal against respondents? Whether or not the addendum on the
retirement plan is valid despite stipulating a retirement age lower than that provided for
by the labor code?
Held: She is estopped from filing a case for illegal dismissal. Catotocan may have initially
opposed to the idea of her retirement at an age below 60 years, but her subsequent
actions after her "retirement" are tantamount to her consent to the addendum to the
LSQC's retirement policy of retiring an employee from service upon serving the school for
at least thirty (30) continuous years.
Retirement is the result of a bilateral act of the parties, a voluntary agreement between
the employer and the employee whereby the latter, after reaching a certain age, agrees
to sever his or her employment with the former.
By express language, the Labor Code permits employers and employees to fix the
applicable retirement age at 60 years or below, provided that the employees' retirement
benefits under any CBA and other agreements shall not be less than those provided by
law. Only in the absence of such an agreement shall the retirement age be fixed by the
LC apply, which provides for a compulsory retirement age at 65 years, while the minimum
age for optional retirement is set at 60 years. Therefore, the addendum is valid.
4. Philippine Airlines vs. Hassaram, GR. No. 217730, June 5, 2017

Doctrine: Interpreting Art. 287 (Retirement) of the Labor Code: “It can be clearly inferred
from the language of the foregoing provision that it is applicable only to a situation where
(1) there is no CBA or other applicable employment contract providing for retirement
benefits for an employee, or (2) there is a CBA or other applicable employment contract
providing for retirement benefits for an employee, but it is below the requirement set by
law.”

Facts: The CA ruled that respondent, a former PAL pilot, was entitled to receive
retirement benefits from PAL under Article 287 of the Labor Code, notwithstanding his
earlier receipt of P4,456,817.75 under the PAL Pilots' Retirement Benefit Plan.
Hassaram filed a case against PAL for illegal dismissal and the payment of retirement
benefits, damages, and attorney's fees. He admitted that he received P4,456,817.75
under one of PAL’s two retirement plans, he maintained that his receipt of that sum did
not preclude him from claiming retirement benefits from PAL, since that amount
represented only a return of his share in a distinct and separate provident fund established
for PAL pilots. The CA declared that the funds received under the Plan were not the
retirement benefits contemplated by law. It ruled that Hassaram was still entitled to
receive retirement benefits in the amount of P2,111,984.60 pursuant to Article 287 of the
Labor Code. Since such was higher than that provided for in PAL’s retirement plans.
Issue: 1. Whether the amount received by Hassaram under the retirement plan be
deemed part of his retirement pay?

Page | 18
2. Whether Hassaram is entitled to receive retirement benefits under Article 287 of the
Labor Code?

Ruling: (1) The amount received by Hassaram under the PAL Pilots' Retirement Benefit
Plan must be considered part of his retirement pay. PAL financed and set up the
retirement plan for their pilots.
(Since the issues of this case were already settled by the SC in two other cases, they
cited their rulings there.)
It is clear from the provisions of the Plan that it is the company that contributes to a
"retirement fund" for the account of the pilots. The contributions comprise the benefits
received by the pilots upon retirement, separation from service, or disability. The SC cited
the case Philippine Airlines, Inc. v. Airline Pilots Association of the Phils., regarding the
retirement plan in question where they explained:
“PAL Pilots' Retirement Benefit Plan is a retirement fund raised from contributions
exclusively from [PAL] of amounts equivalent to 20% of each pilot's gross monthly pay.”
In Elegir v. Philippine Airlines, Inc., the SC ruled:
Consistent with the purpose of the law, the CA correctly ruled for the computation of the
petitioner's retirement benefits based on the two (2) PAL retirement plans because it is
under the same that he will reap the most benefits.
(2) Hassaram's retirement pay should be computed on the basis of the retirement plans
provided by PAL. Hassaram is a member of ALPAP (Union) and as such, is entitled to
benefits from both the retirement plans under the 1967 PAL-ALPAP CBA and the Plan.
Since the benefits found under those plans are more than that provided for by the Labor
Code.

5. Laya vs. Court of Appeals, GR No. 205813, January 10, 2018, En banc

Doctrine: An employee in the private sector who did not expressly agree to the terms of
an early retirement plan cannot be separated from the service before he reaches the age
of 65 years. The employer who retires the employee prematurely is guilty of illegal
dismissal, and is liable to pay his backwages and to reinstate him without loss of seniority
and other benefits, unless the employee has meanwhile reached the mandatory
retirement age under the Labor Code, in which case he is entitled to separation pay
pursuant to the terms of the plan, with legal interest on the backwages and separation
pay reckoned from the finality of the decision. H

Facts: Laya, Jr. was hired by Philippine Veterans Bank as its Chief Legal Counsel with a
rank of Vice President. The terms and conditions of his appointment are as follows:
"3. As a Senior Officer of the Bank, you are entitled to the following executive ben[e]fits:
“• Membership in the Provident Fund Program/Retirement Program.”
Respondent informed Laya that he was retired effective on July 14, 2007, pursuant to the
company’s retirement plan, since he was already 60. Laya then wrote to respondent
bank, requesting for an extension of his tenure for two (2) more years pursuant to the
Bank's Retirement Plan (Late Retirement).
Respondent directed the petitioner to continue to discharge his official duties and

Page | 19
functions as chief legal counsel pending his request. However, petitioner’s request and
MR for an extension of tenure was denied by respondent.
Petitioner now alleges that (1) PVB is a government owned bank and therefore he is
covered by civil service laws (retirement being at age 65 and that he could not be retired
before then) and (2) he was made aware of the retirement plan of respondent only after
he had long been employed and was shown a photocopy of the Retirement Plan Rules
and Regulations. Respondent alleges that petitioner had agreed to the retirement plan
since he signed the terms and conditions of employment.
Issue: Whether or not Laya was validly retired at age 60?
Ruling: He was not validly retired, he was illegally dismissed. The court ruled that
Philippine Veterans Bank is not a government owned bank but a private one pursuant to
their ruling in the case of Philippine Veterans Bank Employees Union-NUBE v. The
Philippine Veterans Bank. The retirement of employees in the private sector is governed
by Article 287 of the Labor Code.
Acceptance by the employees of an early retirement age option must be explicit,
voluntary, free, and uncompelled. The mere mention of the retirement plan in the letter of
appointment did not sufficiently inform the petitioner of the contents or details of the
retirement program. Implied knowledge, regardless of duration, does not equate to the
voluntary acceptance required by law in granting an early retirement age option to the
employee. A passive acquiescence on the part of the employee, considering that his early
retirement age option involved conceding the constitutional right to security of tenure, is
not enough.
Company retirement plans must not only comply with the standards set by the prevailing
labor laws but must also be accepted by the employees as commensurate to their faithful
services to the employer within the requisite period. Although the employer could be free
to impose a retirement age lower than 65 years for as long its employees consented, the
retirement of the employee whose intent to retire was not clearly established, or whose
retirement was involuntary is to be treated as an illegal dismissal. PVB is guilty of illegal
dismissal.
6. Maria De Leon Transportation Inc., et al., vs. Macuray, GR No. 214940, June 6,
2018

Doctrine: Article 2208 (7) and (11) of the Civil Code provides that attorney's fees and
expenses of litigation, other than judicial costs, may be recovered "in actions for the
recovery of wages of household helpers, laborers and skilled workers."

Facts: Macuray was employed as a bus driver by petitioner for 18 years, petitioner is a
company engaged in paid public transportation. Respondent alleges that on Nov. 2009,
he was no longer assigned a bus to drive and later on, his dispatcher informed him that
he was already considered as AWOL. Despite this, Macuray alleges that he continuously
followed up management for a bus to drive but to no avail. He was already 62 years old
when he was “dismissed”.
Petitioner alleges that top management never met with the respondent, while the bus
dispatchers denied meeting with respondent as well. They declared in a joint affidavit that
respondent never approached them to follow up. Petitioner claims that respondent left his
post as a bus driver to work for his family's trucking business; and that he was seen driving
Page | 20
the family truck on public roads and highways. Petitioner, however, admits that allowing
drivers to take time off/ months off from driving is normal in the transportation industry.
The CA agreed with respondent and awarded him: 1) separation pay; 2) backwages; 3)
retirement pay; 4) service incentive leave; 5) moral damages; 6) exemplary damages; 7)
nominal damages; and 8) attorney's fees.
Issue: Whether or not Macuray is entitled to the abovementioned monetary benefits?
Ruling: No, he is not. Respondent failed to prove his allegations; he was not illegally
dismissed nor did he abandon his work. The court agreed with all of the petitioner’s
allegations.
Petitioner sanctioned the practice of allowing its drivers to take breaks from work.
Therefore, Macuray (Respondent) availed of petitioner's company practice and unwritten
policy — of allowing its bus drivers to take needed breaks or sabbaticals to enable them
to recover from the monotony of driving the same route for long periods — and obtained
work elsewhere. (company-sanctioned sabbatical) Hence, there was no dismissal.
The court ruled that since Macuray was never dismissed from work, either for cause or
by resignation or abandonment, he is entitled to retirement benefits. In the absence of a
retirement plan or agreement in Maria De Leon Transportation, Inc., the provisions of the
Labor Code apply. Macuray is entitled to one month's salary for every year of service.
Regarding atty’s fees: Article 2208 (7) and (11) of the Civil Code provides that attorney's
fees and expenses of litigation, other than judicial costs, may be recovered "in actions for
the recovery of wages of household helpers, laborers and skilled workers".

7. The Provincial Bus Operators Association of the Philippines et al vs. DOLE, et

a., GR No. 202275, July 17, 2018, En Banc.
Ibid.

12. RIGHT TO SECURITY OF TENURE

CASES:

1. Oyster Plaza Hotel vs. Melivo, GR No. 217455, Oct. 5, 2016

Doctrine: Probation is the period during which the employer may determine if the
employee is qualified for possible inclusion in the regular force. The employer has the
right or is at liberty to choose who will be hired and who will be denied employment. In
that sense, it is within the exercise of the right to select his employees that the employer
may set or fix a probationary period within which the latter may test and observe the
conduct of the former before hiring him permanently.

Facts: Errol O. Melivo filed a complaint for illegal dismissal with money claims before the
NLRC against petitioners Oyster Plaza Hotel, Rolito Go, and Jennifer Ampel. He alleged
that in August 2008, Oyster Plaza Hotel hired him as a trainee room boy; that in November

Page | 21
2008, the hotel hired him again as a probationary room boy and he was made to sign an
employment contract but was not furnished a copy; that the contract expired in March
2009 and his work ended; that on Aug. 7, 2009, the hotel hired him again as a room boy,
but without any employment contract or document; and that in September 2009, his
supervisor Ampel verbally told him that since his contract was expiring, he should not
report to work anymore.

On the other hand, petitioners invoked the defense that Melivo was not illegally dismissed
because his employment was covered by a contract of employment for a fixed term, which
already expired.

Issue: Is the contention of the petitioner correct?

Ruling: No. Probation is the period during which the employer may determine if the
employee is qualified for possible inclusion in the regular force. The employer has the
right or is at liberty to choose who will be hired and who will be denied employment. In
that sense, it is within the exercise of the right to select his employees that the employer
may set or fix a probationary period within which the latter may test and observe the
conduct of the former before hiring him permanently. An employee allowed to work
beyond the probationary period is deemed a regular employee.
In Holiday Inn Manila vs. NLRC, the Court considered the complainant’s three-week on-
the-job training (OJT) period as her probationary employment period. The Court explained
that the complainant was certainly under observation during her three-week OJT, such
that if her services proved unsatisfactory, she could have been dropped anytime. On the
other hand, when her services were continued after her training, the employer, in effect,
recognized that she had passed probation and was qualified to be a regular employee.
The Court ruled that the complainant attained regular employment status when she was
formally placed under probation after her OJT.

This case involves substantially the same factual considerations as that of Holiday Inn. In
this case, Melivo was first hired as a trainee in August 2008. His training lasted for three
months. As a room boy, his performance was certainly under observation. Thus, it can be
reasonably deduced that Melivo’s probationary employment actually started in August
2008, at the same time he started working as a trainee. Therefore, when he was re-hired
as room boy after his training period sometime in November 2008 he attained regular
employment status.

Assuming arguendo that the three-month training period could be considered a

probationary period, the conclusion would still be the same. It should be remembered that
Melivo was again employed as a room boy in November 2008 under probationary status
for five months or until March 2009. Records would show that Melivo had completed his
probationary employment. Thus, when Oyster Plaza re-hired him for the third time on April
7, 2009, he became its regular employee.

The petitioners’ contention that Melivo was hired as a project employee is untenable.
Under Article 280 of the Labor Code, as amended, a project employee is one whose
Page | 22
employment has been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the engagement of the employee.
Here, the contract of employment failed to indicate the specific project or undertaking for
which Oyster Plaza sought Melivo’s services. Moreover, the petitioners failed to submit a
report of Melivo’s termination to the nearest public employment office, as required under
Section 2 of D.O. No. 19.

2. Quebral et al., vs. Angbus Construction Inc. GR No. 221897, Nov. 7, 2016

Doctrine: Although the absence of a written contract does not by itself grant regular
status to the employees, it is evidence that they were informed of the duration and scope
of their work and their status as project employees at the start of their engagement.
Absent such proof, it is presumed that they are regular employees, thus, can only be
dismissed for just or authorized causes upon compliance with procedural due process.

Facts: Quebral and 8 others allege that Angbus employed them as construction workers
on various dates from 2008 to 2011. They claimed tobe regular employees since they
were engaged to perform tasks which are necessary and desirable to the usual business
of Angbus (construction business) and have rendered services for several years. They
were summarily dismissed from work on June 28, 2012 and July 14, 2012 without any
just or authorized cause and dueprocess. Thus, they filed consolidated cases for illegal
dismissal against Angbus.

Angbus, however, claimed that Quebral et al. were first employed by Angelfe
Management and Consultancy for a one-time project only. Two or three years after the
completion of the Angelfe project, they were then hired by Angbus, which is a separate
and distinct business entity from the former. Thus, it was alleged that they were hired only
for two project employment contracts - one each with Angelfe and Angbus. They also
claim that a long period of time between the first project employment and the other
intervened, which meant that QUEBEAL were not re-hired repeatedly and continuously.

However, respondents failed to present petitioners' employment contracts, payrolls, and

job application documents either at Angelfe or Angbus, averring that these documents
were completely damaged by the flood caused by the "habagat" on August 6 to 12, 2012,
as evinced by a Certification issued by the Chairman of Barangay Rosario, Pasig City,
where Angelfe and later, Angbus purportedly held offices.

Issue: Whether Quebral et al. are project or regular employees.

Ruling: Quebral at al. are regular employees.

Article 295 of the Labor Code distinguishes a project employee from a regularemployee
- A project-based employee is assigned to a project which begins and ends at determined
or determinable times and may be lawfully terminated at the completion of the project,
unlike regular employees.To safeguard the rights of workers against the arbitrary use of

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the word "project", jurisprudence provides that employers claiming that their workers
are project-based employees have the burden toprove that these two requisites
concur:
(a) the employees were assigned to carry out a specific project or undertaking; and
(b) the duration and scope of which were specified at the time they were engaged
for such project.

Angbus failed to discharge this burden. Angbus did not state the specific project or
undertakingassigned to petitioners. As to the second requisite, not only was Angbus
unable to produce petitioners' employment contracts, it also failed to present other
evidence to show that it informed petitioners of the duration and scope of their work. The
Court previously ruled that although the absence of a written contract does not by itself
grant regular status to the employees, it is evidence that they were informed of the
duration and scope of their work and their status as project employees at the start of their
engagement. When no other evidence is offered, the absence of employment
contractraises a serious question of whether the employees were sufficiently
apprised at the start of their employment of their status as project employees.

Absent such proof, it is presumed that they are regular employees, thus, can only be
dismissed forjust or authorized causes upon compliance with procedural due process.

3. E. Ganzon Inc. vs. Ando, Jr. GR No. 214183, Feb. 20, 2017

Doctrine: The fact that Ando was required to render services necessary or desirable in
the operation of EGI's business for more than a year is immaterial. The activities of project
employees may or may not be necessary or desirable to the usual busines of the
employer

Facts: Ando was hired by E. Ganzon Inc., (EGI) as finishing carpenter for its construction
business. His employment was under three different project employment contracts
corresponding to three successive construction projects. He was repeatedly hired until
the termination of his third contract, wherein he was no longer renewed by EGI without
prior notice. The total duration of Ando’s employment exceeded one (1) year and the
services he rendered were necessary or desirable to the operation of EGI's business.

Issue: (1) Is Ando a regular employee?

(2) Is EGI liable for failing to give Ando a notice of termination?

Ruling: No, Ando is not a regular employee. Rather, he is a project-based employee as

shown by his corresponding employment contracts for each project.

The fact that Ando was required to render services necessary or desirable in the operation
of EGI's business for more than a year is immaterial. The activities of project employees

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may or may not be necessary or desirable to the usual busines of the employer. Moreover,
the 2nd paragraph of Article 280, stating that an employee who has rendered service for
at least one (1) year shall be considered a regular employee, is applicable only to casual
employees and not to project employees.

No, EGI is not liable. Prior notice of termination is not part of procedural due process if
the termination is brought about by the completion of the contract for which the project
employee was engaged. Such completion automatically terminates the employment and
the employer is only required by law to render a report of the termination to DOLE.

4. Herma Shipyard Inc. vs. Oliveros, et al., GR No. 208936, April 17, 2017, citing
ALU-TUCP

Doctrine: In this case, the Court really scrutinized the employment contract. The
employees knowingly and voluntarily entered into and signed the project based
employment contracts. Further, performance by project-based employees of tasks
necessary and desirable to the usual business operation of the employer will not
automatically result in their regularization. Repeated rehiring of project employees to
different projects does not ipso facto make them regular employees.

Facts:

Respondents were employees of Herma Shipyard, a domestic corporation

engaged in the business of shipbuilding and repair. Respondents alleged that they are
Herma Shipyard’s regular employees who have been continuously performing tasks
usually necessary and desirable in its business. However, petitioners dismissed them
from employment. Moreover, the respondents alleged that they were made to sign
employment contracts for a fixed period ranging from 1 to 4 months to make it appear
that they were project-based employees. CA rendered judgment in favor of the
respondents and setting aside the labor tribunals’ decisions.

Issue: Were the respondents deemed regular employees?

Ruling: No. Under Art. 294 of the Labor Code, a project employee is one whose
employment has been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the engagement of the employee.

The principal test in determining whether employees were engaged in project-

based or regular employees, is whether they were assigned to carry out a specific project
or undertaking, the duration and scope of which was specified at, and made known to
them, at the time of engagement. In the present case, respondents were adequately
informed of their employment status as embodied in the KASUNDUAN NG
PAGLILINGOD. Second, the tasks assigned to the respondents were indeed necessary
and desirable in the usual business of petitioner, but the same were distinct, separate,
and identifiable from the other projects or contract services. Third, the repeated and

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successive rehiring did not by and of itself, qualify them as regular employees. As ruled
in Villa v NLRC, the rule that employees initially hired on a temporary basis may become
permanent employees by reason of their length of service is not applicable to project-
based employees.

5. University of Sto. Tomas vs. Samahang Manggagawa ng UST, GR No. 184262,

April 24, 2017

Doctrine:
If the employee has been performing the job for at least a year, even if the performance
is not continuous and merely intermittent, the law deems repeated and continuing need
for its performance as sufficient evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is considered regular but only with
respect to such
activity and while such activity exists.

Facts:
Pontesor and others were repeatedly hired as all-around maintenance workers over the
years and as such, should be deemed regular employees of UST. Also, as long as UST
continues to operate, Pontesor and others’ services are necessary and desirable to the
business of UST. UST posited that they were hired on a per-project basis wherein upon
completion of the specific project, their employment is deemed terminated as provided
for in their employment agreements.

Issue:
a) Were they considered regular employees?
b) Were they illegally dismissed?

Ruling: a) Yes. Art. 295 of Labor Code provides for two (2) types of regular employees,
namely: (a) those who are engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer; and (b) those who have rendered
at least one year of service, whether continuous or broken, with respect to the activity in
which they are employed. Although their work as maintenance workers are not necessary
or desirable to the business of UST as an educational institution, Pontesor, et al. are still
deemed regular employees, as they fall under the second category, but only with respect
to the activities for which they were hired and for as long as such activities exist. It is clear
that the UST has only imposed the periods to preclude acquisition of tenurial security.
The specific projects and the supposed terms are not clearly outlined in the agreements.
Such that, they are not project employees.

b) Yes, they were illegally dismissed. Since they are regularized casual employees who
enjoy security of tenure, then they cannot be terminated from employment without any
just and/or authorized cause.

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6. Innodata Knowledge Services vs. Inting et al., GR No. 211892, December 6, 2017

Doctrine: .In light of the well-entrenched rule that the burden to prove the validity and
legality of the termination of employment falls on the employer, IKSI should have
established the bonafide suspension of its business operations or undertaking that could
legitimately lead to the temporary lay-off of its employees for a period not exceeding six
(6) months, in accordance with Article 301.

Facts:
Computer Technologies (ACT) hired IKSI to review various litigation documents. To carry
out the job, IKSI hired lawyers and law graduates to carry out the ACT project. They were
also engaged to work on other projects such as the Bloomberg project without making
them sign new contracts. For this purpose, IKSI engaged the services of the respondents
(Inting, et al.) as senior and junior reviewers with a contract duration of five (5) years.
However, the respondents received a Notice of Forced Leave from IKSI effective that
same day due to changes in business conditions. Hence, respondents filed a complaint
for illegal dismissal, other benefits, and damages against IKSI. IKSI the sent notices to
respondents terminating their services due to the unavailability of new work related to the
product stream.

Issues:
Are respondents project employees? Is there a just or authorized cause for their
termination?

Ruling: No. The fact is IKSI actually hired respondents to work, not only on the ACT
Project, but on other similar projects such as the Bloomberg project. When respondents
were required to work on the Bloomberg project, without signing a new contract for that
purpose, it was already outside of the scope of the particular undertaking for which they
were hired; it was beyond the scope of their employment contracts. This act by IKSI
indubitably brought respondents outside the realm of the project employees category.

No. While IKSI cited Article 301 to support the temporary lay-off of its employees, it never
really proved the alleged lay-off. It merely indicated changes in business conditions to
justify its forced leave/lay-off. In light of the well-entrenched rule that the burden to prove
the validity and legality of the termination of employment falls on the employer, IKSI
should have established the bonafide suspension of its business operations or
undertaking that could legitimately lead to the temporary lay-off of its employees for a
period not exceeding six (6) months, in accordance with Article 301.

7. Expedition Construction Corp., vs. Africa, GR No. 228671, December 14, 2017
Doctrine: Respondents were neither independent contractors nor project employees.
There was no showing that respondents have substantial capital or investment and that
they were performing activities which were not directly related to Expedition's business to

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be qualified as independent contractors. There was likewise no written contract that can
prove that respondents were project employees and that the duration and scope of such
employment were specified at the time respondents were engaged. Therefore,
respondents should be accorded the presumption of regular employment pursuant to
Article 280 of the Labor Code which provides that "employees who have rendered at least
one year of service, whether such service is continuous or broken x x x shall be
considered [as] regular employees with respect to the activity in which they are employed
and their employment shall continue while such activity exists."

In illegal dismissal cases, the employer has the burden of proving that the termination
was for a valid or authorized cause. However, it is likewise incumbent upon an employee
to first establish by substantial evidence the fact of his dismissal from employment 36 by
positive and overt acts of an employer indicating the intention to dismiss. 37 It must also
be stressed that the evidence must be clear, positive and convincing. 38 Mere allegation
is not proof or evidence.

Facts: PETITIONER Expedition Construction Corp. (Expedition) is engaged in garbage

collection and hauling.

It engaged the services of respondents Alexander M. Africa and 14 others as garbage

truck drivers to collect garbage from different cities and transport the same to the
designated dumping site.

Respondents filed separate cases against Expedition for illegal dismissal, asking for
separation pay, labor standard benefits, damages and attorney’s fees.

Expedition invoked the defense that respondents were not its employees. It claimed that
respondents were not part of the company’s payroll but were being paid on a per trip
basis. They were not under Expedition’s direct control and supervision as they worked on
their own, were not subjected to company rules nor were required to observe regular/fixed
working hours and that they hired and paid their respective garbage collectors.

Issues:
(1) Whether there exists an employer-employee relationship between petitioner and
respondents?

(2) Whether there is illegal dismissal.

Ruling (1): Yes. First, as clearly admitted, respondents were engaged/hired by Expedition
as garbage truck drivers. Second, it is undeniable that respondents received
compensation from Expedition for the services that they rendered to the latter. The fact
that respondents were paid on a per trip basis is irrelevant in determining the existence
of an employer-employee relationship because this was merely the method of computing
the proper compensation due to respondents. Third, Expedition’s power to dismiss was
apparent when work was withheld from respondents as a result of the termination of the

Page | 28
contracts with Quezon City and Caloocan City. Finally, Expedition has the power of
control over respondents in the performance of their work. It was held that “the power of
control refers merely to the existence of the power and not to the actual exercise thereof.”

As aptly observed by the CA, the agreements for the collection of garbage were between
Expedition and the various LGUs, and respondents needed the instruction and
supervision of Expedition to effectively perform their work in accordance with the
stipulations of the agreements.

Moreover, the trucks driven by respondents were owned by Expedition. There was an
express instruction that these trucks were to be exclusively used to collect and transport
garbage. Respondents were mandated to return the trucks to the premises of Expedition
after the collection of garbage. Expedition determined the clients to be served, the
location where the garbage is to be collected and when it is to be collected.

Indeed, Expedition determined how, where, and when respondents would perform their
tasks.
Ruling (2):

No, there was no illegal dismissal.

In illegal dismissal cases, the employer has the burden of proving that the termination
was for a valid or authorized cause. However, it is likewise incumbent upon an employee
to first establish by substantial evidence the fact of his dismissal from employment by
positive and overt acts of an employer indicating the intention to dismiss. It must also be
stressed that the evidence must be clear, positive and convincing.

There was no positive or direct evidence to substantiate respondents' claim that they were
dismissed from employment. Also, the record is bereft of any indication that respondents
were barred from Expedition's premises. If at all, the evidence on record showed that
Expedition intended to give respondents new assignments as a result of the termination
of the garbage hauling contracts with Quezon City and Caloocan City where respondents
were regularly dispatched. However, instead of returning and waiting for their next
assignments, respondents instituted an illegal dismissal case against Expedition. In fact,
Expedition manifested its willingness to accept respondents back to work. Unfortunately,
it was respondents who no longer wanted to return to work. In fact, in their complaints,
respondents prayed for the payment of separation pay instead of reinstatement.

8. Umali vs. Hobbywing Solutions Inc., GR No. 221356, March 14, 2018

Doctrine:
Facts: Umali alleges that she attained the status of regular employment after she was
suffered to work for Hobbywing, an online casino gaming establishment, as a supervisor,
for more than six months of probationary employment. She was only asked to sign two

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employment contracts after she had rendered seven months of service. She claims that
she was terminated without cause when she was informed that the period of her
probationary employment had already ended. Meanwhile, Hobbywing maintains that
there was a contract of probationary employment signed at the beginning of Umali’s
service and another one which extended the probationary period to give Umali a chance
to improve her performance and qualify for regular employment.

Issue: Was there illegal dismissal?

Ruling: Yes. Is elementary in the law on labor relations that a probationary employee
engaged to work beyond the probationary period of six months, as provided Article 281
of the Labor Code, or for any length of time set forth by the employer, shall be considered
a regular employee. However, there may be a valid extension of the probationary period
for another three months, to give the employee a chance to improve his performance and
qualify for regular employment, upon agreement of the parties. The exception, however,
finds no application in the instant case for: (1) there was no evaluation upon the expiration
of the period of probationary employment; and (2) the supposed extension of the
probationary period was made after the lapse of the original period agreed by the parties.
In this case, Umali commenced working for Hobbywing on June 19, 2012 until February
18, 2013. By that time, however, she has already become a regular employee, a status
which accorded her protection from arbitrary termination.

9. Son et al., vs. University of Sto. Tomas, GR No. 211273, April 18, 2018
Facts: Son was a full time professor and a member of the UST Faculty Union, with which
UST had a Collective Bargaining Agreement executed in 2006. Under the CBA’s tenure
provision, and in line with the DECS’ 1992 Revised Manual of Regulations for Private
Schools and CHED’s Memorandum Order No. 40-08, a Master’s degree for faculty
members of undergraduate programs was made an entry requirement. Son did not
possess a Master’s degree but was nonetheless hired by UST on the condition that he
obtain one within 5 semesters, which he failed to do. In spite of this, Son was retained by
UST. In 2010, CHED issued a Memorandum directing the strict implementation of the
Master’s degree requirement and, acting on the same, UST terminated Son, who thought
that he had been vested tenure under the CBA for his continued employment despite
failure to obtain the required Master’s degree.

Issue: Was Son illegally dismissed?

Facts: No. When the CBA was executed between the parties in 2006, they had no right
to include therein the tenure by default provision because it was violative of the 1992
Revised Manual that was in effect at the time. As such, the said provision is null and void.
It cannot be said, either, that by agreeing to the same, UST is deemed to have waived
the application of the DECS Revised Manual and the CHED Memorandum as such a
waiver is contrary to law.

Furthermore, both parties are in pari delicto: UST for maintaining professors without the
mandated Master’s degrees, and Son for agreeing to be employed despite knowledge of
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his lack of the necessary qualifications. Under the pari delicto doctrine, the equally
culpable parties shall have no action against each other, and the law shall leave them
where it finds them.

10. Geraldo vs. The Bill Sender Corp., GR No. 222219, October 3, 2018

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

Facts: Geraldo was hired by the respondent corporation to deliver the bills to its client
PLDT. He was paid on a per-piece basis. Geraldo filed a complaint for illegal dismissal
alleging that his employment was terminated because he failed to deliver certain bills. He
claimed that it was illegal because there was no due process observed in his termination.

The company countered that he was not a full-time employee but only a piece-rate worker
as was the usual practice for messengers. Further the company claimed that it was
Geraldo who abandoned his job by not reporting to work.

According to the NLRC, the company failed to discharge the burden of proving a
deliberate and unjustified refusal of Geraldo to resume his employment without any
intention of returning as well as to observe the twin-notice requirement to insure that due·
process has been accorded to him. The CA reversed the decision of the NLRC stating
that since Geraldo was paid on a per piece basis, he was hired on a per-result basis, and
as such, he was not an employee of the company.

Issue: Whether Geraldo was illegally dismissed being a regular employee entitled to
security of tenure.

Ruling: The issue of whether Geraldo was, indeed, illegally dismissed depends upon the
nature of his relationship with the company. Article 280 of the Labor Code describes a
regular employee as one who is either (1) engaged to perform activities which are
necessary or desirable in the usual business or trade of the employer; and (2) those
casual employees who have rendered at least one year of service, whether continuous
or broken, with respect to the activity in which he is employed.

The company cannot deny the fact that Geraldo was performing activities necessary or
desirable in its usual business or trade for without his services, its fundamental purpose
of delivering bills cannot be accomplished. On this basis alone, the law deems Geraldo
as a regular employee. But even considering that he is not a full time employee as the
company insists, the law still deems his employment as regular due to the fact that he
had been performing the activities for more than one year.

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Having established that Geraldo was a regular employee, the burden shifts to the
employer that he was not illegally dismissed. Upon showing on the records, it appears
that the due process requirement, the twin notice rule was not observed.

13. MANAGEMENT PREROGATIVE

CASES

1. Chateau Royale Sports & Country Club vs. Balba, et al., GR No. 197492, January
18, 2017

Doctrine: The employee who has consented to the company's policy of hiring sales staff
willing to be assigned anywhere in the Philippines as demanded by the employer's
business has no reason to disobey the transfer order of management. Verily, the right of
the employee to security of tenure does not give her a vested right to her position as to
deprive management of its authority to transfer or reassign her where she will be most
useful.

Facts: Petitioner operates a resort complex in Batangas. Respondents were account

managers. They have the duty to forward all proposals, event orders and contracts for an
orderly and systematic booking.

However, respondents failed to comply with the directive. A notice to explain was served
on them, to which they responded. Thereafter, notices of administrative hearing were
served on respondents. They were also suspended but the same was lifted even before
its implementation.

Later, Petitioner ordered respondents to transfer to the Manila office due to the
resignations of the account managers and the director of sales and marketing, which
caused serious disruptions in the operations of the office, thereby making the immediate
transfer crucial and indispensable.

However, the respondents counter that there was no valid cause for their transfer. They
were forced to transfer to the Manila office without consideration of the proximity of the
place and without improvements in the employment package.

Issue: Whether the respondents were constructively dismissed.

Ruling: No. Petitioner was able to discharge its burden to prove that the transfer of the
employee from one area of operation to another was for a valid and legitimate ground,
like genuine business necessity.

First, the resignations of the account managers and the director of sales and marketing
in the Manila office brought about the immediate need for their replacements with

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personnel having commensurate experiences and skills. The transfer could not be validly
assailed as a form of constructive dismissal, for, management had the prerogative to
determine the place where the employee is best qualified to serve the interests of the
business given the qualifications, training and performance of the affected employee.

Second, the transfer was neither unreasonable nor oppressive. The petitioner rightly
points out that the transfer would be without demotion in rank, or without diminution of
benefits and salaries. Instead, the transfer would open the way for their eventual career
growth, with the corresponding increases in pay.

Third, respondents did not show by substantial evidence that the petitioner was acting in
bad faith or had ill-motive in ordering their transfer. In contrast, the urgency and genuine
business necessity justifying the transfer negated bad faith on the part of the petitioner.

Lastly, respondents, by having voluntarily affixed their signatures on their respective

letters of appointment, acceded to the terms and conditions of employment incorporated
therein. One of the terms and conditions thus incorporated was the prerogative of
management to transfer and re-assign its employees from one job to another “as it may
deem necessary or advisable.”

14. TERMINATION OF EMPLOYMENT

CASES:

1. Intec Cebu Inc et al., vs. Court of Appeals, GR No. 189851, June 22, 2016
Doctrine: To constitute abandonment, there must be clear proof of deliberate and
unjustified intent to sever the employer-employee relationship. Clearly, the operative act
is still the employee's ultimate act of putting an end to his employment. Furthermore, it is
a settled doctrine that the filing of a complaint for illegal dismissal is inconsistent with
abandonment of employment

Facts:
Petitioner Intec is engaged in the manufacture and assembly of mechanical system
and printed circuit board for cassette tape recorder, CD and CD ROM player while private
respondents were hired by Intec in as production workers.
In 2005, respondents’ working days were reduced from 6 to 2-4 days due to what
petitioner claimed as lack of job orders. However, respondents discovered that Intec hired
around 188 contractual employees tasked to perform tasks which respondents were
regularly doing.
In May 2006, respondents claimed that they were effectively terminated from
employment as shown in the Establishment Termination Report submitted to DOLE. Two
(2) days later, respondents filed a complaint for illegal dismissal. Intec claimed that the
reduced work week policy was implemented to forestall business losses and it insisted
that the 188 workers they hired were on-the-job trainees and they were already employed
prior to the implementation of the reduced working days policy. Intec also claimed that

Page | 33
respondents voluntarily resigned or abandoned their work when they filed their application
for leave following the issuance of the second memorandum extending the
implementation of the reduced number of working days.

Issue: 1.) Was there constructive dismissal? 2.) Was there abandonment of work on the
part of the respondents?

Ruling:
1.) YES. 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. Intec's unilateral and
arbitrary reduction of the work day scheme had significantly greatly reduced respondents'
salaries thereby rendering it liable for constructive dismissal.

The exercise of management prerogative is not absolute as it must be exercised in good

faith and with due regard to the rights of labor. Intec failed to prove that the implementation
of the reduced working days is valid and done in good faith. There is no indication in the
financial statements, much less an observation made by the independent auditor, that a
reduction in demand would necessitate a reduction in the employees' work days. In
addition, the hiring of 188 workers, whether they be trainees or casual employees,
necessarily incurred cost to the company. No proof was submitted that these newly-hired
employees were performing work different from the regular workers. In sum, there is no
reason to implement a cost-cutting measure in the form of reducing the employees'
working days.

2.) NO. To constitute abandonment, there must be clear proof of deliberate and unjustified
intent to sever the employer-employee relationship. Clearly, the operative act is still the
employee's ultimate act of putting an end to his employment. Furthermore, it is a settled
doctrine that the filing of a complaint for illegal dismissal is inconsistent with abandonment
of employment. An employee who takes steps to protest his dismissal cannot logically be
said to have abandoned his work. The filing of such complaint is proof enough of his
desire to return to work, thus negating any suggestion of abandonment.

2. Puncia vs. Toyota Shaw, GR No. 214399, June 28, 2016

Doctrine: (1) Failure to observe prescribed standards of work, or to fulfill reasonable work
assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency
is understood to mean failure to attain work goals or work quotas, either by failing to
complete the same within the allotted reasonable period, or by producing unsatisfactory
results.
(2) While Toyota afforded Puncia the opportunity to refute the charge of gross inefficiency
against him, the latter was completely deprived of the same when he was dismissed for
gross insubordination - a completely different ground from what was stated in the Notice
to Explain. As such, Puncia's right to procedural due process was violated.

Page | 34
Facts: Puncia worked as a Marketing Professional tasked to sell seven vehicles as
monthly quota. However, he consistently failed to meet the required quota, Toyota
lowered the quota to as low as three cars a month and he still failed to do so. Toyota sent
him a notice to explain his failure to meet the quota. Puncia was absent during his admin
hearing and was then issued a notice of termination for his unjustified absence for his
hearing.

Issue: Whether or not Puncia was illegally dismissed considering that the administrative
proceeding against him was due to his failure to meet his monthly sales quota, but he
was dismissed on the ground of gross insubordination?

Ruling: No, for a dismissal to be valid, the employer must comply with both substantive
and procedural due process requirements. Substantive due process requires that the
dismissal must be pursuant to either a just or an authorized cause under Articles 297,
298 or 299 of the Labor Code. Procedural due process, on the other hand, mandates that
the employer must observe the twin requirements of notice and hearing before a dismissal
can be effected.

Puncia's repeated failure to perform his duties for such a period of time and despite the
fact that the employer lowered his quota, falls under the concept of gross inefficiency.
“Gross inefficiency" is analogous to "gross neglect of duty," a just cause of dismissal
under Article 297 of the Labor Code, for both involve specific acts of omission on the part
of the employee resulting in damage to the employer or to his business.

Unilever Philippines, Inc. v. Rivera the court ruled:

“To clarify, the following should be considered in terminating the services of employees
for just causes:

(1) The first written notice to be served on the employees should contain the
specific causes or grounds for termination against them, and a directive that the
employees are given the opportunity to submit their written explanation within a
reasonable period. "Reasonable opportunity" under the Omnibus Rules means every kind
of assistance that management must accord to the employees to enable them to prepare
adequately for their defense. This should be construed as a period of at least five (5)
calendar days from receipt of the notice to give the employees an opportunity to study the
accusation against them, consult a union official or lawyer, gather data and evidence, and
decide on the defenses they will raise against the complaint. Moreover, in order to
enable the employees to intelligently prepare their explanation and defenses, the
notice should contain a detailed narration of the facts and circumstances that will
serve as basis for the charge against the employees. A general description of the
charge will not suffice. Lastly, the notice should specifically mention which company
rules, if any, are violated and/or which among the grounds under Art. 282 is being charged
against the employees.

(2) After serving the first notice, the employers should schedule and conduct a hearing or
conference wherein the employees will be given the opportunity to: (1) explain and clarify

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their defenses to the charge against them; (2) present evidence in support of their
defenses; and (3) rebut the evidence presented against them by the management. During
the hearing or conference, the employees are given the chance to defend themselves
personally, with the assistance of a representative or counsel of their choice. Moreover,
this conference or hearing could be used by the parties as an opportunity to come to an
amicable settlement.

(3) After determining that termination of employment is justified, the employers

shall serve the employees a written notice of termination indicating that: (1) all
circumstances involving the charge against the employees have been considered;
and (2) grounds have been established to justify the severance of their
employment.”

In this case Toyota failed to comply with procedural due process: In the Notice to Explain,
Puncia was made to explain why no disciplinary action should be imposed upon him for
repeatedly failing to reach his monthly sales quota, while the Notice of Termination shows
that Puncia was dismissed not for the ground stated in the Notice to Explain, but for gross
insubordination on account of his non-appearance in the scheduled October 17, 2011
hearing without justifiable reason. While Toyota afforded Puncia the opportunity to refute
the charge of gross inefficiency against him, the latter was completely deprived of the
same when he was dismissed for gross insubordination - a completely different ground
from what was stated in the Notice to Explain. As such, Puncia's right to procedural due
process was violated.

3. Century Properties Inc. vs. Babiano, GR No. 220978, July 5, 2016

Facts: Babiano was the Vice President for Sales of Century Properties, Inc. (CPI).
Concepcion was the Project Director, she signed an employment agreement
denominated as “Contract of Agency for Project Director” that instructed her to directly
report to Babiano and stipulated that no employer-employee relationship exists between
Concepcion and CPI.

Issue: Was Concepcion an employee of CPI?

Ruling: Yes. The elements of employer-employee relationship (four-fold test): (a) the
power to hire; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's
power to control the employee's conduct, "control test." Concepcion was an employee of
CPI because: (a) CPI continuously hired Concepcion until her resignation; (b) the monthly
"subsidy" that Concepcion was receiving from CPI are the concept of wages as it was
regularly given to her without any qualification; (c) CPI had the power to discipline or
dismiss Concepcion as CPI expressly conferred upon the latter "the right to discontinue
[her] service should [she] fail to meet the performance standards," that CPI actually
exercised such power to dismiss when it approved Concepcion's resignation; (d) CPI
possessed the power of control over Concepcion because in the performance of her
duties she did not exercise independent discretion but was still subject to the supervision

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of CPI through Babiano. Moreover, employment status is not defined by what the parties
say it should be, but is defined by law. The four-fold test shall apply.

4. Holcim Phils., vs. Obra, GR No. 220998, August 8, 2016

Doctrine: “….infractions committed by an employee should merit only corresponding
penalty demanded by the circumstance. Penalty must be commensurate with the act,
conduct or omission imputed by the employee.”

Facts: Obra was employed by Holcim as packhouse operator for 19 years. When he was
about to exit from the plant, guard ask him to submit himself for inspection to which he
refused, instead admitted that he has a scrap electrical wire in the bag and asked guard
not to tell management as he is willing to return it if not possible. Guard did not agree
which prompted Obra to return the wire but another security guard directed him to go to
the office and make a statement regarding incident. Obra averred that as far as he knows,
only scrap materials taken out of the company in bulk require a gate pass. He was placed
under preventive suspension and was later on dismissed. Obra filed for illegal dismissal
averring that penalty imposed was too harsh and that he acted in good faith considering
that the contractor who removed it led him to believe it was for disposal.

Issue: Was Obra illegally dismissed?

Ruling: Yes. Court has held that infractions committed by an employee should merit only
corresponding penalty demanded by the circumstance. Penalty must be commensurate
with the act, conduct or omission imputed by the employee. First, Obra deserves
compassion and understanding considering he had been employed for 19 yrs and this is
the first time he had been involved in taking company property which is practically of no
value as it is a scrap. Secondly, Obra did not occupy a position of trust and confidence.
Third, it cannot be said that he committed a serious misconduct as there was no
ill/wrongful intent as he voluntarily said scrap was in his bag and offered to return it if it is
not possible to be brought outside.

5. Valenzuela vs. Alexandra Mining & Oil Ventures Inc. GR No. 222419, Oct. 5, 2016
Doctrine: A company employee is entitled to substantive and procedural due process.
Dismissing him without sufficient ground and notice is considered illegal.

Facts:
Petitioner Ramil R. Valenzuela filed a complaint for illegal dismissal and money claims
against respondents Alexandra Mining and Oil Ventures, Inc. (AMOVI) and its owner and
president, Cesar E. Detera.

He alleged that he was hired as a company driver of AMOVI on Jan. 12, 2008, with an
eight-hour work shift from 8 a.m. to 5 p.m. and with a monthly salary of P12,000.

On June 15, 2013, he was told that he can no longer continue to work, as there were no
forthcoming funds to pay for his salary.

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Upon the other hand, respondents avered that petitioner was actually hired as a family
driver of the Deteras. They denied having dismissed petitioner from the service.
The Labor Arbiter (LA) dismissed respondents’ claim that petitioner was a family driver.
She found him illegally dismissed and awarded him full backwages, separation pay and
attorney’s fees. The National Labor Relations Commission (NLRC) affirmed the decision
of the LA.
The Court of Appeals (CA) affirmed the decision of the NLRC with modification deleting
the award of backwages.
In justification, the CA ruled that there was no clear evidence that petitioner was dismissed
and, on the other hand, there was an equal lack of proof of abandonment of work on his
part.

Issue: Did the CA err in deleting the award of backwages?

Ruling: Yes. The CA, however, erred in holding that there was no evidence of dismissal,
as it is clear from Cesar’s own admission that Valenzuela was unceremoniously
dismissed from service. In all his pleadings, while claiming to be the real employer of
Valenzuela, Cesar impliedly admitted dismissing him from employment by repeatedly
invoking Article 150 of the Labor Code to justify his action. The provision reads as follows:
Art. 150. Service of termination notice. If the duration of the household service is not
determined either in stipulation or by nature of the service, the employer or the
househelper may give notice to put an end to the relationship five (5) days before the
intended termination of the service.

On the basis of the foregoing provision, Cesar asseverated that as a family driver,
Valenzuela’s service may be terminated at will by his employer. Thus, there is implied
admission that he indeed terminated Valenzuela out of his own volition, without sufficient
ground and notice.

Unfortunately for Cesar, the labor tribunals and the CA all agreed that Valenzuela was a
company employee and his admission on the fact of the latter’s dismissal only established
that it was done without regard to substantive and procedural due process.
Consistent with the finding that Valenzuela had been illegally dismissed, he is, therefore,
entitled to reinstatement and full backwages. In view, however, of the strained relations
between the parties, the award of separation pay in lieu of reinstatement is a more
feasible alternative.

6. Publico vs. Hospital Managers Inc., GR No. 209086, Oct. 17, 2016

Doctrine: An employer may terminate an employment on the ground of gross and

habitual neglect by the employee of his duties.

Facts:

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 Publico was employed to work at Cardinal Santos Medical Center (CSMC) in 1989,
and was the hospital's Chief of Blood Bank Section, Laboratory Department when he was
dismissed from employment by Hospital Manager’s Inc. (HMI) in 2008. The dismissal was
founded on Publico's gross and/or habitual negligence, as penalized under the following
provisions of the HMI's Code of Discipline for employees.
Prior to Publico's dismissal, HMI discovered incidents of unauthorized sale of
blood and apheresis units by laboratory personnel, who also issued fake receipts and
failed to remit payments to the hospital. When asked to explain his side on the issue,
Publico denied any participation in the anomalous transactions. He claimed to have
known of the incidents of unauthorized sale only when he was asked to participate in
the investigation. He further evaded any responsibility by claiming that while five
employees were investigated for the scheme, only one of them was under his
supervision in the blood bank section. He was also tasked to supervise only
personnel assigned in the morning shift, while the supposed unauthorized transactions
happened during the night shift.
Further investigations conducted by HMI's Management Investigation Committee
eventually led them to discover that the unauthorized sale of blood and apheresis units
during the time that Publico was Section Chief of the Pathology and Laboratory
Services. The illegal transactions went on for three years, leading to the dismissal of
five employees who participated therein. HMI insisted that the wrongful scheme
persisted because of Publico's failure to properly supervise, monitor and adopt
preventive measures within his section to Publico's dismissal, through a Notice of
Termination served upon him. Feeling aggrieved, Publico charged the respondents with
illegal dismissal.

Issue:
Whether or not Publico was illegally dismissed?

Ruling:
YES. Under Article 282 (b) of the Labor Code, an employer may terminate an
employment on the ground of "[g]ross and habitual neglect by the employee of his
duties." "Gross negligence connotes want of care in the performance of one's duties.
Habitual neglect implies repeated failure to perform one's duties for a period of time,
depending upon the circumstances."||| In the instant case, Publico was entrusted by
HMI to take on the role of Chief, Blood Bank Section of the Laboratory Department, and
with this carried the reasonable expectation that he would assiduously perform the
demands of his position.
The anomalous transactions in the Blood Bank Section were found to have
persisted for almost two years. Had Publico been not negligent in the performance
of his duties, the wrongful dealings could have been prevented, or immediately
discovered and rectified. The excuses advanced by Publico to evade any liability for
the acts of his personnel only reinforce HMI's finding that he was negligent in the
performance of his responsibilities as Section Chief. The accusations pertained to his
failure to perform his duties as a supervisor, rather than his own participation in the
unlawful sales.||| |||

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7. Wesleyan University Philippines vs. Maglaya Sr., GR No. 212774, January 23,
2017

Doctrine: The National Labor Relations Commission has no jurisdiction over intra-
corporate controversy.

Facts:
Wesleyan University- Philippines (WUP) is a non-stock, non-profit, non-sectarian
educational corporation duly organized and existing under the Philippine laws.
Respondent Atty. Guillermo T. Maglaya, Sr. was appointed as a corporate member and
was elected as a member of the Board of Trustees, both for a period of five (5) years. He
was elected as President of the University for a five-year term. He was re-elected as a
trustee.
In a Memorandum, the incumbent Bishops of the United Methodist Church
apprised all the corporate members of the expiration of their tenns on December 31, 2008,
unless renewed by the former. The said members, including Maglaya, sought the renewal
of their membership in the WUP's Board, and signified their willingness to serve the
corporation.
Dr. Dominador Cabasal, Chairman of the Board, informed the Bishops of the
cessation of corporate terms of some of the members and/or trustees since the by-laws
provided that the vacancy shall only be filled by the Bishops upon the recommendation
of the Board. Maglaya learned that the Bishops created an Ad Hoc Committee to plan the
efficient and orderly turnover of the administration of the WUP in view of the alleged
"gentleman's agreement", and that the Bishops have appointed the incoming corporate
members and trustees. He clarified that there was no agreement and any discussion of
the turnover because the corporate members still have valid and existing corporate terms.
In this case, the Bishops, through a formal notice to all the officers, deans, staff,
and employees of WUP, introduced the new corporate members, trustees, and officers.
In the said notice, it was indicated that the new Board met, organized, and elected the
new set of officers. Manuel Palomo, the new Chairman of the Board, informed Maglaya
of the termination of his services and authority as the President of the University.
Thereafter, Maglaya and other fonner members of the Board filed a Complaint for
Injunction and Damages before the Regional Trial Court of Cabanatuan City.The RTC
dismissed the case declaring the same as a nuisance or harassment suit prohibited under
Section l(b), Rule 1 of the Interim Rules for Intra-Corporate Controversies. The RTC
observed that it is clear from the by-laws of WUP that insofar as membership in the
corporation is concerned, which can only be given by the College of Bishops of the United
Methodist Church, it is a precondition to a seat in the WUP Board. Consequently, the
expiration of the terms of the plaintiffs, including Maglaya, as corporate members carried
with it their termination as members of the Board. Moreover, their continued stay in their
office beyond their terms was only in hold-over capacities, which ceased when the
Bishops appointed new members of the corporation and the Board.
The CA affirmed the decision of the RTC, and dismissed the petition for certiorari
filed by the plaintiffs for being the improper remedy.

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 Thereafter, Maglaya filed the present illegal dismissal case against WUP, Palomo,
Bishop Lito C. Tangonan and Bishop Leo A. Soriano. He claimed that he was
unceremoniously dismissed in a wanton, reckless, oppressive and malevolent manner.
The Labor Arbiter ruled in favor of WUP. But on appeal, the National Labor
Relations Commission reversed and set aside the Decision of the LA ruling. Thereafter,
the NLRC denied the motion for reconsideration filed by WUP and the CA dismissed the
petition for certiorari filed by WUP. The CA noted that the decision and resolution of the
NLRC became final and executor.

Issue:
Whether the Court of Appeals committed an error of law when it summarily
dismissed the special civil action for certiorari raising lack of jurisdiction of the NLRC filed
by [WUP] where it was very clear that the NLRC had no jurisdiction over the case involving
a corporate officer and where the nature of the controversy is an intra-corporate dispute.

Ruling:
The Court find the instant petition impressed with merit.
WUP alleges that while the NLRC decision became final and executory, it did not
mean that the said decision had become immutable and unalterable as the CA ruled.
WUP maintains that the remedy of the aggrieved party against a final and executory
decision of the NLRC is the filing of the petition for certiorari under Rule 65 of the Rules
of Court. As such, it was able to meet the conditions set forth in filing the said remedy
before the CA.
"Corporate officers" in the context of Presidential Decree No. 902- A are those
officers of the corporation who are given that character by the Corporation Code or by the
corporation's by-laws. There are three specific officers whom a corporation must have
under Section 25 of the Corporation Code. These are the president, secretary and the
treasurer. The number of officers is not limited to these three. A corporation may have
such other officers as may be provided for by its by-laws like, but not limited to, the vice-
president, cashier, auditor or general manager. The number of corporate officers is thus
limited by law and by the corporation's by-laws.
Since this Court is now reversing the challenged decision of the CA and affirming
the decision of the LA in dismissing the case for want of jurisdiction, Maglaya is not
entitled to collect the amount of ₱2,505,208.75 awarded from the time the NLRC decision
became final and executory up to the time the CA dismissed WUP's petition for certiorari.
In sum, this Court finds that the NLRC erred in assuming jurisdiction over, and thereafter
in failing to dismiss, Maglaya's complaint for illegal dismissal against WUP, since the
subject matter of the instant case is an intra-corporate controversy which the NLRC has
no jurisdiction.
8. Maula vs. Ximex Delivery Express GR No. 207838, January 25, 2017

Doctrine: “Preventive Suspension is justified where the employee’s continued

employment poses a serious and imminent threat to the life or property of the employer
or of the employee’s co-worker.”

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Facts: In a span of one week, Maula, an Operation Staff in Ximex, received three
memoranda requiring him to explain three different offenses.
For the series of willful disobedience, a memorandum was personally served to
him by Gorospe (HR Manager), but he adamantly refused and howled at her, “Seguro na
abnormal ang utak mo!” without any provocation from the HR manager. Ultimately, he
was suspended for 30 days and was subsequently dismissed from employment through
a notice of dismissal sent via registered mail on the ground of serious misconduct.
Issue: Was the dismissal on the ground of serious misconduct proper?
Ruling: No. Under the Labor Code, for misconduct or improper behavior to be a just
cause for dismissal, (a) it must be serious; (b) it must relate to the performance of the
employee’s duties; and (c) it must show that the employee has become unfit to continue
working for the employee.
In the present case, the outburst of Maula was due to what he perceived as
successive retaliatory and orchestrated actions of Ximex.
Is the principle of totality of infractions applicable in this case?
No, Ximex cannot invoke the principle considering that Maula’s alleged previous
acts of misconduct were not established in accordance with the requirements of
procedural due process.
Was the manner of dismissal proper?
No, the procedural due process requirement was not complied with. The
memorandum regarding his dismissal did not contain the following:
1. A detailed narration of facts and circumstances for Maula to prepare his
explanation;
2. A directive giving him at least 5 calendar days to submit a written explanation.
3. No ample opportunity was also accorded to him.

9. Sumifru Corp., vs. Baya, GR No. 188269, April 17, 2017

Doctrine: “Constructive dismissal exists where there is cessation of work, because

continued employment is rendered impossible, unreasonable or unlikely, as an offer
involving a demotion in rank or a diminution in pay' and other benefits”

Facts: Baya, an employee of AMSFC, had worked his way to a supervisory rank and
eventually formed AMSKARBEMCO, the agrarian reform organization of the regular
employees of AMSFC. Some 220 hectares of AMSFC’s banana plantation, covered by
CARL, was eventually transferred to its regular employees as Agrarian Reform
Beneficiaries (ARBs). They explored a possible agribusiness venture with AMSFC, but
the talks broke down. The ARBs then held a referendum to choose as to which group
between AMSKARBEMCO and SAFFPAI they wanted to belong. 280 went to
AMSKARBEMCO while 85 joined SAFFPAI.

When AMSFC learned of this, it summoned AMSKARBEMCO officer, including

Baya, threatening them that the ARB’s takeover of lands would not push through. A few
days after, Baya was informed that his secondment with DFC, AMSFC’s sister company,

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has ended. Upon his return to AMSFC, he found out that there were no supervisory
positions available. He was then assigned to different rank-and-file positions instead.

Issue: Was Baya illegally/constructively dismissed by AMSFC and DFC (later acquired
by Sumifru?

Ruling: Yes. Both AMSFC and DFC were aware of the lack of supervisory positions in
AMSFC yet they still proceeded to order Baya’s return thus forcing him to accept rank-
and-file positions. Constructive dismissal exists where there is cessation of work, because
'continued employment is rendered impossible, unreasonable or unlikely, as an offer
involving a demotion in rank or a diminution in pay' and other benefits. Under the doctrine
of strained relations, the payment of separation pay is considered an acceptable
alternative to reinstatement when the latter option is no longer desirable or viable. Thus,
given the clear atmosphere of animosity and antagonism, it is more prudent that Baya be
awarded separation pay, instead of being reinstated.

10. Manggagawa ng Komunikasyon sa Pilipinas vs. Phil Long Distance telephone

Company Inc., Gr No. 190389, April 19, 2017

Doctrine: “A Rule 45 petition can only prosper if CA fails to correctly determine whether
NLRC committed grave abuse of discretion”

Facts: Petitioner represents PLDT‘s employees and filed a notice of strike with the
National Conciliation and Mediation Board (NCMB). Petitioner charged PLDT with unfair
labor practice for transferring employees to Taguig and for hiring contractual employees
for regular jobs occupied by union members. While the notice was pending, petitioner
filed another strike. Petitioner went on a strike. PLDT then declared 323 employees as
redundant and redeployed 180 of the 503 affected to other positions. SOLE later on
certified the labor dispute for compulsory arbitration. Petitioner filed a Petition for
Certiorari before CA challenging SOLE‘s order as it distinguished the striking workers in
the return-to-work order. CA granted the petition and nullified SOLE‘s order. Also, SC
directed PLDT to readmit all striking workers. NLRC also dismissed petitioner‘s charges
of ULP against PLDT as the redundancy program was justified due to technological
advances. Petitioner filed a Petition for Certiorari with CA. However, the petition was
dismissed. It also rendered moot the order of reinstatement due to NLRC‘s order
upholding the program and the dismissal.

Issue: When can a Rule 45 petition be availed of in labor cases?

Ruling: A Rule 45 petition can only prosper if CA fails to correctly determine whether
NLRC committed grave abuse of discretion. A court or tribunal acted with grave abuse of
discretion when it capriciously acts or whimsically exercises judgment to be equivalent to
lack of jurisdiction. The abuse must be so flagrant to amount to a refusal to perform a duty
or to act as provided by law. If the NLRC ruling has basis in the evidence and
jurisprudence, then no grave abuse of discretion exists and CA should dismiss the

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petition. If grave abuse of discretion exists, then CA must grant the petition and nullify the
NLRC ruling, entering at the same time the ruling that is justified under the evidence and
the governing law, rules and jurisprudence.

11. Javines vs. Xlibris, GR No. 214301, June 7, 2017

Doctrine: “Although appeal is an essential part of judicial process, the right thereto is not
a natural right or a part of due process but is merely a statutory privilege.”
Facts: Javines was hired by Xlibris as Operations Manager. Approximately 10 months
after, Javines was terminated for falsifying/tampering three meal receipts.
The falsification was discovered when Javines submitted the meal receipts for
reimbursement to the finance department. Consequently, a Notice to Explain was issued
to Javines for alleged violation of the Employee's Code of Conduct and charging him with
acts constituting dishonesty.
In his written explanation, Javines denied having tampered the receipts. He explained
that as Operations Manager, he is responsible for securing reimbursement for expenses
incurred by the supervisors under him. However, the supervisors denied participation in
the tampered receipts.
An administrative hearing was held. Javines failed to explain why and how the incident
transpired. Instead, Javines requested for further investigation since, at that time, he
allegedly could not recall who submitted the receipts to him.
Xlibris terminated Javines' employment through an "end of employment notice."
Javines then filed a complaint for illegal dismissal. The complaint was, however,
dismissed by the Labor Arbiter who found that Javines' dismissal was for just cause and
with due process.
On appeal, the NLRC found that while Javines was dismissed for just cause, he was not
afforded procedural due process. The NLRC noticed that no other hearing was called to
afford Javines the opportunity to confront the witnesses (supervisors) against him before
he was dismissed. As such, the NLRC awarded nominal damages in the amount of
Pl0,000 in Javines' favor.
Javines failed to move for reconsideration of the NLRC's decision. Only Xlibris elevated
the case to the CA on certiorari on the sole issue that the NLRC gravely abused its
discretion in holding that it failed to comply with the requirements of procedural due
process.
Issue: Whether or not Javines was dismissed for a just cause
Ruling: Yes, Javines was dismissed for a just cause.
The Labor Arbiter and the NLRC uniformly held that Javines' employment was terminated
for just cause under Article 297 of the Labor Code. It is undisputed that from this
unanimous finding, Javines failed to move for reconsideration nor challenged said ruling
before the CA. Consequently, the NLRC decision finding Javines to have been dismissed
for just cause became final. For failure to file the requisite petition before the CA, the
NLRC decision had attained finality and had been placed beyond the appellate court's
power of review. Although appeal is an essential part of judicial process, the right thereto
is not a natural right or a part of due process but is merely a statutory privilege. Settled
are the rules that a decision becomes final as against a party who does not appeal the

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same and an appellee who has not himself appealed cannot obtain from the appellate
court any affirmative relief other than those granted in the decision of the court below.
Hence, the finding that Javines was dismissed for just cause must be upheld.

12. Bravo vs. Urios College, GR No. 198066, June 7, 2017

Doctrine: “He was not an ordinary rank-and-file employee. His position of responsibility
on delicate financial matters entailed a substantial amount of trust from respondent. Not
only does the payroll involve the company's finances, it also affects the welfare of all other
employees who rely on their monthly salaries.”

Facts: Bravo was designated as the school's comptroller in Urios College whose function
included, among others, the preparation of payroll. The committee organized to review
the ranking system discovered the Comptroller's Office’s deviation from company
procedure and the discrepancies in the computation of his and other employees'
salaries. After receipt of a show cause memo and subsequent hearings, Bravo was found
guilty and was notified of his termination.

Issue: Was the termination valid?

Yes. Due to the nature of his occupation, Bravo's employment may be terminated
for willful breach of trust under Article 297 (c) of the Labor Code. The employer must
adduce proof of actual involvement in the alleged misconduct for loss of trust and
confidence to warrant the dismissal of fiduciary rank-and-file employees. However, "mere
existence of a basis for believing that the employee has breached the trust and confidence
of the employer" is sufficient for managerial employees.

He was not an ordinary rank-and-file employee. His position of responsibility

on delicate financial matters entailed a substantial amount of trust from respondent.
Not only does the payroll involve the company's finances, it also affects the welfare of
all other employees who rely on their monthly salaries. It was reasonable that he
should be held liable on the basis of command responsibility.

Furthermore, the employer complied with all the requirements of procedural

due process in terminating his employment. Any meaningful opportunity for the
employee to present evidence and address the charges against him or her satisfies
the requirement of ample opportunity to be heard.

Finally, considering that there was a just cause for terminating petitioner from
employment, there is no basis to award him separation pay, backwages and attorney's
fees.

13. Panaligan vs. Phyvita Enterprises GR No. 202086, June 21, 2017

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Doctrine: In termination cases, the burden of proof rests on the employer to show that
the dismissal is for a just cause. In order to dismiss an employee on the ground of loss of
trust and confidence, the employee must be guilty of an actual and willful breach of duty
duly supported by substantial evidence. Substantial evidence is that amount of evidence,
which a reasonable mind might accept as adequate to support a conclusion.

Facts

Panaligan, et al., employees of Phyvita, were assigned as Roomboys at “Starfleet”, which

was engaged in the business of health club massage parlor, spa and other related
services. Phyvita reported an alleged theft incident to the Police Station but the latter were
not able to gather sufficient information that would lead them as to who committed said
theft. While the police investigation was pending, Panaligan, et al., together with other
employees, filed a complaint against Starfleet for underpayment of wages.

Subsequently, Starfleet’s Assistant Operations Manager issued individual Office

Memoranda against them, directing them to explain in writing for the alleged violation of
Starfleet's rules and regulations, particularly any act of dishonesty, more specifically their
alleged involvement in a theft wherein important documents and papers including cash
were lost which happened. Memoranda were issued against them informing them of their
termination from employment on the ground that they violated the company’s rules and
regulations by stealing company documents and cash.

Phyvita filed a criminal complaint against Panaligan, et al. for theft. However, such
complaint was dismissed by the City Prosecutor there being no sufficient evidence to
warrant the finding of the crime of theft against them. Subsequently, Panaligan, et al. file
a complaint with the NLRC for illegal dismissal and payment of separation pay.

Issue
Whether there exists a just and valid cause for the termination of Panaligan, et al.

Ruling
No. In order to dismiss an employee on the ground of loss of trust and confidence, the
employee must be guilty of an actual and willful breach of duty duly supported by
substantial evidence. Substantial evidence is that amount of evidence, which a
reasonable mind might accept as adequate to support a conclusion.

In termination cases, the burden of proof rests on the employer to show that the dismissal
is for a just cause. In the case at bar, Phyvita failed to adduce substantial evidence that
would clearly demonstrate that Panaligan, et al., have committed serious misconduct or
have performed actions that would warrant the loss of trust and confidence reposed upon
them by their employer. Contrary to the findings of the Court of Appeals and the Labor
Arbiter, no substantial evidence supports the allegation of theft leveled by Phyvita against
Panaligan, et al. - the said criminal act being the underlying reason for the dismissal of
the latter from being employees of the former.

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14. Claudia Kitchen Inc. vs. Tanguin GR No. 221096, June 28, 2017

Doctrine: While the burden of proof rests with the employer to show that there was no
illegal dismissal, it is incumbent upon the employee to first prove that she was dismissed.

Facts: Tanguin, an employee of Claudia’s Kitchen, was preventively suspended while an

investigation is being conducted against her for reports that she was forcing some
employees to buy silver jewelry from her during office hours and inside company
premises. She then filed a complaint for illegal dismissal. Claudia’s Kitchen denied having
dismissed Tanguin and presented notices they sent to Tanguin requiring her to answer
the charges and one notice reminding her that she was still an employee and directing
her to report back to work.

Issue: Was respondent illegally dismissed?

Ruling: No. While the burden of proof rests with the employer to show that there was no
illegal dismissal, it is incumbent upon the employee to first prove that she was dismissed.
In this regard, Tanguin failed to discharge. She simply alleged that she was barred from
entering the premises but no evidence was presented to prove the same. And even if she
was indeed barred, there was lawful basis since she was placed under preventive
suspension. While there was no abandonment of work, the filing of complaint for illegal
dismissal with prayer for reinstatement negates any intention to abandon employment.
Since there is no illegal dismissal, separation pay and reinstatement cannot be awarded
to an employee whose employment was never terminated. Separation pay and
reinstatement are exclusive remedies and even if there are instances when both are
awarded, it will only apply when there is termination. In a case where the employee was
neither found to have been dismissed nor to have abandoned work, the general course
of action is for the Court to dismiss the complaint, direct the employee to return to work,
and order employer to accept employee.

15. Arco Aluminum Inc. vs. Pinon, Jr. GR No. 2158741, July 5, 2017

Doctrine: To be valid, a deed of release, waiver or quitclaim must meet the following
requirements: (1) that there was no fraud or deceit on the part of any of the parties; (2)
that the consideration for the quitclaim is sufficient and reasonable; and (3) that the
contract is not contrary to law, public order, public policy, morals or good customs, or
prejudicial to a third person with a right recognized by law.

Facts: Eton Properties contracted with Arlo Aluminum, a duly registered corporation, for
the supply and installation of aluminum and glass. In turn, Arlo Aluminum engaged the
services of E.M. Glazing through subcontracting. But then, an unfortunate incident
occurred at work that resulted to the demise of Vic Edward and 9 other employees of E.M.
Glazing. Companies Arlo and Eton extended P150,000 financial assistance to the families

Page | 47
of the victims. In return, the families signed a Deed of Release, Waiver and Quitclaim
which provides that the amount received is enough to cover all labor claims. Now, Vicente
(father of Vic Edward) filed a complaint claiming that the Deed was invalid because the
consideration was insufficient to cover all the liabilities of Arlo Aluminum.

Issue: Is the Deed of Release, Waiver and Quitclaim valid?

Ruling: Yes. To be valid, a deed of release, waiver or quitclaim must meet the following
requirements: (1) that there was no fraud or deceit on the part of any of the parties; (2)
that the consideration for the quitclaim is sufficient and reasonable; and (3) that the
contract is not contrary to law, public order, public policy, morals or good customs, or
prejudicial to a third person with a right recognized by law. The consideration given to
Vicente in the amount of P150,000 was reasonable and sufficient to cover the labor
claims. As such, where it is shown that the person making the waiver did so voluntarily,
with full understanding of what he was doing, and the consideration for the quitclaim is
sufficient and reasonable, the transaction must be recognized as a valid and binding
undertaking.

16. Sterling Paper Products Enterprises vs. KMM-Katipunan, GR No. 221493,

August 2, 2017
Doctrine: To summarize, for misconduct or improper behavior to be a just cause for
dismissal, the following elements must concur: (a) the misconduct must be serious; (b) it
must relate to the performance of the employee's duties showing that the employee has
become unfit to continue working for the employer; and (c) it must have been performed
with wrongful intent
Facts:
Sterling hired Esponga as machine operator.
On June 26, 2010, the supervisor of Sterling, Mercy Vinoya found Esponga and his co-
employees about to take a nap on the sheeter machine. She called their attention and
prohibited them from taking a nap thereon for safety reasons. Esponga and his co-
employees then transferred to the mango tree near the staff house and was heard by
Vinoya utter, "Huwag maingay, puro bawal. " She then confronted Esponga, who
responded in a loud and disrespectful tone, "Pura kayo bawal, bakit bawal ba
magpahinga.?”When Vinoya turned away, Esponga gave her the "dirty finger" sign in front
of his co-employees and said "Wala ka pala eh, puro ka dakdak. Baka pag ako nagsalita
hindi mo kayanin. " Later that day, Esponga was found to have been not working as the
machine assigned to him was not running from 2:20 to 4:30 in the afternoon. Additionally,
he failed to submit his daily report from June 21 to June 29, 2010.
After administrative proceedings were conducted, Sterling terminated Esponga on the
ground of gross and serious misconduct, gross disrespect to superior and habitual
negligence, This prompted Esponga and KMMKatipunan to file a complaint for illegal
dismissal.
Issue:

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Whether or not Esponga is guilty of Serious Misconduct.
Ruling:
YES, Esponga is guilty of Serious Misconduct. As such, his dismissal was valid.
Under Article 282 (a) of the Labor Code, serious misconduct by the employee justifies the
employer in terminating his or her employment.
Misconduct is defined as an improper or wrong conduct. It is a transgression of some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment. To constitute a
valid cause for the dismissal within the text and meaning of Article 282 of the Labor Code,
the employee's misconduct must be serious, i.e.,of such grave and aggravated character
and not merely trivial or unimportant.
Additionally, the misconduct must be related to the performance of the employee's duties
showing him to be unfit to continue working for the employer. Further, and equally
important and required, the act or conduct must have been performed with wrongful
intent.
To summarize, for misconduct or improper behavior to be a just cause for dismissal, the
following elements must concur: (a) the misconduct must be serious; (b) it must relate to
the performance of the employee's duties showing that the employee has become unfit
to continue working for the employer; and (c) it must have been performed with wrongful
intent.
In the case at bench, the charge of serious misconduct is duly substantiated by the
evidence on record.
Primarily, in a number of cases, the Court has consistently ruled that the utterance of
obscene, insulting or offensive words against a superior is not only destructive of the
morale of his co-employees and a violation of the company rules and regulations, but also
constitutes gross misconduct which is a ground for dismissal or termination.
Then, Esponga's assailed conduct was related to his work. Vinoya did not prohibit him
from taking a nap. She merely reminded him that he could not do so on the sheeter
machine for safety reasons. Esponga's acts reflect an unwillingness to comply with
reasonable management directives.
Finally, contrary to the CA' s pronouncement, the Court finds that Esponga was motivated
by wrongful intent. To reiterate, Vinoya prohibited Esponga from sleeping on the sheeter
machine. Later on, when Vinoya was passing by, Esponga uttered "Huwag main gay, puro
bawal. " When she confronted him, he retorted "Pura kayo bawal, bakit bawal ba
magpahinga?" Not contented, Esponga gave her supervisor the "dirty finger" sign and
said. Wala ka pala eh, puro ka dakdak. Baka pag ako nagsalita hindi mo kayanin. " It
must be noted that he committed all these acts in front of his co-employees, which
evidently showed that he intended to disrespect and humiliate his supervisor.
"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 the employee dislikes his 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 baleful pen.”
17. Distribution & Control Products Inc. vs. Santos, GR No. 212616, July 10, 2017
Page | 49
Doctrine: Loss of trust and confidence is a just cause for dismissal under Article 282(c)
of the Labor Code, and in order for the employer to properly invoke this ground, the
employer must satisfy two conditions.
First, the employer must show that the employee concerned holds a position of trust and
confidence. Jurisprudence provides for two classes of positions of trust.
Second, the employer must establish the existence of an act justifying the loss of trust
and confidence.
Facts: Santos, was employed as company driver by Distribution & Control Products, Inc.
with Mr. Tiamsic as its president. After more than 5 years, Santos received a notice
informing him that he was being placed under preventive suspension for a period of 30
days for allegedly having participated in the unlawful taking of circuit breakers and
electrical products of the company; a criminal complaint was filed against him and several
other persons. He was never given the opportunity to explain his side before he was
suspended; and after the lapse of his 30-day suspension he was no longer allowed to
return to work without any justification for such disallowance. Thus, he filed a complaint
for constructive illegal dismissal and payment of separation pay
The company, on the other hand, contend that they lost trust and confidence in Santos.
Prior the preventive suspension, it was found out that a number of electrical materials and
products with an estimated value big amounts; Santos and the company warehouseman
were the only persons who had complete access to the company warehouse as they were
entrusted with the handling of all products from the company's suppliers. considering the
size and weight of the missing items, they can only be carried by no less than 2 persons.
The company demanded an explanation from Santos and the warehouseman, but they
failed to make an account as to how these products had gone missing from the warehouse
and office building; as such, petitioners filed a criminal complaint for qualified theft and,
thereafter, they suspended herein respondent; and after the lapse of his suspension,
Santos no longer returned to work.
LA: Found Santos to be illegally terminated from his employment, thus, ordering his
reinstatement and payment of his full backwages. LA held that the company had the
burden of proving that Santos’ dismissal was valid and their failure to discharge this
burden only means that the dismissal was not justified and, therefore, illegal.
NLRC: Dismissed the company’s appeal and affirmed, with modification, the decision of
the LA. In addition to the payment of backwages, the NLRC ordered the company to pay
Santos his separation pay equivalent to one (1) month for every year of service, instead
of reinstatement.
CA: Denied the certiorari petition and affirmed the questioned NLRC Decision and
Resolution.
Issue: Was the loss and confidence of the employer in this case a valid ground for
termination?
Ruling: NO. Loss of trust and confidence is a just cause for dismissal under Article 282(c)
of the Labor Code, and in order for the employer to properly invoke this ground, the
employer must satisfy two conditions.
First, the employer must show that the employee concerned holds a position of trust and
confidence. Jurisprudence provides for two classes of positions of trust. The first class
consists of managerial employees, or those who, by the nature of their position, are
entrusted with confidential and delicate matters and from whom greater fidelity to duty is

Page | 50
correspondingly expected. The second class includes "cashiers, auditors, property
custodians, or those who, in the normal and routine exercise of their functions, regularly
handle significant amounts of the employer's money or property."
Second, the employer must establish the existence of an act justifying the loss of trust
and confidence. To be a valid cause for dismissal, the act that betrays the employer's
trust must be real. Proof beyond reasonable doubt is not needed to justify the loss as long
as the employer has reasonable ground to believe that the employee is unworthy of the
trust and confidence demanded of his position.
Nonetheless, when the breach of trust or loss of confidence alleged is not borne by clearly
established facts, as in this case, such dismissal on the cited grounds cannot be allowed.
Applied to the present case, the LA, NLRC and the CA are unanimous in their finding that
petitioners were not able to discharge their burden of proving that their termination of
respondent's employment was for a just and valid cause. This is a question of fact and it
is settled that findings of fact of quasi-judicial agencies are accorded great respect, even
finality, by this Court.
It is true that respondent may indeed be considered as one who occupies a position of
trust and confidence. However, the company failed to present substantial evidence to
support their allegations. In other words, petitioners were not able to establish the
existence of an act justifying their alleged loss of trust and confidence in respondent.
18. Valmores vs. Dr. Achacoso, GR No. 217453, July 19, 2017
FACTS:
Petitioner Denmark S. Valmores (Valmores) is a member of the Seventh-day Adventist
Church, whose fundamental beliefs include the strict observance of the Sabbath as a
sacred day.As such, petitioner Valmores joins the faithful in worshipping and resting on
Saturday, the seventh day of the week, and refrains from non-religious undertakings from
sunset of Friday to sunset of Saturday.
Prior to the instant controversy, Valmores was enrolled as a first-year student at the MSU-
College of Medicine. To avoid potential conflict between his academic schedule and his
church's Saturday worship, petitioner Valmores wrote a letter to Achacoso, requesting
that he be excused from attending his classes in the event that a regular weekday session
is rescheduled to a Saturday. At the same time, petitioner Valmores expressed his
willingness to make up for any missed activity or session due to his absence.
In one instance, petitioner Valmores was unable to take his Risto-Pathology laboratory
examination held on a Saturday. Cabildo was his professor for the said subject. Despite
his request for exemption, no accommodation was given by either of the respondents. As
a result, petitioner Valmores received a failing grade of 5 for that particular module and
was considered ineligible to retake the exam.
Even though Valmores wrote several letters asking Cabildo to reconsider his decision,
such efforts proved futile. As such, Valmores elevated the matter before the CHED. In
connection therewith, the CHED Regional Office, as well as the President of MSU,
instructed respondent Achacoso to enforce the 2010 CHED Memorandum (Guidelines to
Higher Education Institution, for the exemption of teachers, personnel, and students from
participating in school or related activities due to compliance with religious obligations).
However, no action was taken by Achacoso.
ISSUES:
1. Whether or not respondents can be compelled by mandamus to enforce the 2010
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 CHED Memorandum.
2. Whether or not respondents violated Valmores’ right to freedom of religion.
RULING:
1. YES, respondents can be compelled to enforce the 2010 CHED Memorandum
through Mandamus.
After nalyzing the 2010 CHED Memorandum, the following are derived:
(i) HEIs are enjoined to excuse students from attending or participating in
school or related activities, if such schedule conflicts with the students'
exercise of their religious obligations;
(ii) (ii) to compensate for absences, students may be allowed to do remedial
work, which in turn should be within the bounds of school rules and
regulations and without affecting their grades; and
(iii) (iii) to be entitled to exemption, affected students must submit a certification
of attendance duly signed by their respective minister.
At once, a plain reading of the memorandum reveals the ministerial nature of the
duty imposed upon HEIs. Its policy is crystal clear: a student's religious obligations
takes precedence over his academic responsibilities, consonant with the
constitutional guarantee of free exercise and enjoyment of religious worship.
Accordingly, the CHED imposed a positive duty on all HEIs to exempt students, as
well as faculty members, from academic activities in case such activities interfere
with their religious obligations.
Although the said memorandum contains the phrase "within the bounds of school
rules and regulations," the same relates only to the requirement of remedial work,
which, based on the language used, is merely optional on the part of the HEI.
Neither can such phrase be said to have conferred discretion as the use of the
words "shall be enjoined" and "strict compliance" denote a mandatory duty on the
part of the HEI to excuse its students upon submission of the certification
prescribed in the same memorandum.
Clearly, under the 2010 CHED Memorandum, HEIs do not possess absolute
discretion to grant or deny requests for exemption of affected students. Instead,
the memorandum only imposes minimum standards should HEIs decide to require
remedial work, i.e., that the same is within the bounds of school rules and
regulations and that the grades of the students will not be affected.
As a condition for exemption, the 2010 CHED Memorandum simply requires the
submission of "a certification or proof of attendance/participation duly signed by
their pastor, priest, minister or religious leader for periods of absence from classes,
work or school activities."
Thus, to recapitulate, once the required certification or proof is submitted, the
concerned HEI is enjoined to exempt the affected student from attending or
participating in school-related activities if such activities are in conflict with their
religious obligations. As to whether HEIs will require remedial work or not, the
Court finds the same to be already within their discretion, so long as the remedial
work required is within the bounds of school rules and regulations and that the
same will not affect the grades of the concerned students.
For these reasons, the Court finds that respondents were duty bound to enforce
the 2010 CHED Memorandum insofar as it requires the exemption of petitioner
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 Valmores from academic responsibilities that conflict with the schedule of his
Saturday worship. Their failure to do so is therefore correctible by mandamus.
2. YES, respondents violated Valmores’ right to freedom of religion.
The importance of education cannot be overstated. The Court has, on many
occasions, ruled that institutions of higher learning are bound to afford its students
a fair opportunity to complete the course they seek to pursue, barring any violation
of school rules by the students concerned.
Here, in seeking relief, petitioner Valmores argues that he is bound by his religious
convictions to refrain from all secular activities on Saturdays, a day that is deemed
holy by his church.
On the other hand, respondents' refusal to excuse petitioner Valmores from
Saturday classes and examinations fundamentally rests only on the fact that there
were other Seventh-day Adventists who had successfully completed their studies
at the MSU-College of Medicine. Respondents, in their Comment, stated thus:
14. That there are many successful doctors who are members of the
Seventh day Adventist and surely they have sacrificed before they
succeeded in their calling as many Filipinos who shone in their
respective fields of study.
15. That we ask ourselves, is the case of Mr. Valmores unique in (sic)
its own? Certainly it is not because we have had students who are
member (sic) of the Seventh-Day Adventist and our College did not
have a problem with them. x x x
Without more, respondents' bare arguments crumble against constitutional
standards. As discussed above, the Bill of Rights guarantees citizens the freedom
to act on their individual beliefs and proscribes government intervention unless
necessary to protect its citizens from injury or when public safety, peace, comfort,
or convenience requires it.66 Thus, as faculty members of the MSU-College of
Medicine, respondents herein were duty-bound to protect and preserve petitioner
Valmores' religious freedom.
Even worse, respondents suggest that the "sacrifices" of other students of the
common faith justified their refusal to give petitioner Valmores exceptional
treatment. This is non-sequitur. Respondents brush aside petitioner Valmores'
religious beliefs as if it were subject of compromise; one man's convictions and
another man's transgressions are theirs alone to bear. That other fellow believers
have chosen to violate their creed is irrelevant to the case at hand, for in religious
discipline, adherence is always the general rule, and compromise, the exception.
While in some cases the Court has sustained government regulation of religious
rights, the Court fails to see in the present case how public order and safety will be
served by the denial of petitioner Valmores' request for exemption. Neither is there
any showing that petitioner Valmores' absence from Saturday classes would be
injurious to the rights of others. Precisely, the 2010 CHED Memorandum was
issued to address such conflicts and prescribes the action to be taken by HEIs
should such circumstance arise.
What is certain, as gathered from the foregoing, is that respondents' concerted
refusal to accommodate petitioner Valmores rests mainly on extralegal grounds,
which cannot, by no stretch of legal verbiage, defeat the latter's constitutionally-

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 enshrined rights. That petitioner Valmores is being made by respondents to
choose between honoring his religious obligations and finishing his education is a
patent infringement of his religious freedoms. As the final bulwark of fundamental
rights, this Court will not allow such violation to perpetuate any further.

19. Cosue vs. Ferritz Integrated Development Corp., GR No. 230664, July 24, 2017
Doctrine: The rule that the employer bears the burden of proof in illegal dismissal cases
finds no application here because the respondents deny having dismissed the petitioner.
In illegal dismissal cases, while the employer bears the burden to prove that the
termination was valid or authorized, the employee must first establish by substantial
evidence the fact of dismissal from service

Facts: Petitioner worked as a janitor for FIDC and he was suspended from July 16, 2014
to August 13, 2014 for suspicion that he stole the electrical wires from the company’s
electrical room. Beginning July 16, 2014 to August 13, 2014, petitioner was no longer
allowed to work, thus he filed a complaint against FIDC for illegal dismissal and
underpayment of salaries. Respondent on the other hand had alleged that Cosue was
suspended from July 16 to August 13 for obtaining keys to the electrical room and entering
it without permission, and for leaving his post and joining another employee in the
electrical room. Petitioner had returned to FIDC on August 27 and it was agreed that he
would voluntarily resigned. However, he did not file his resignation, and eventually
instituted his complaint for illegal dismissal. Respondents argued that there was no illegal
dismissal as there was an agreement between FIDC and petitioner that the latter would
just resign.
The Labor Arbiter and NLRC had ruled that petitioner was not dismissed because as
averred in his complaint, he was dismissed on July 27, a date within the suspension
period.

Issue: Was petitioner illegally dismissed?

Ruling: No. In illegal dismissal cases, while the employer bears the burden to prove that
the termination was valid or authorized, the employee must first establish by substantial
evidence the fact of dismissal from service. Petitioner himself alleged that he was
suspended from July 16, 2014 to August 13, 2014 pending the investigation of the
pilferage of electrical wires. Thus, on July 27, the date of dismissal alleged in his
complaint, petitioner was still serving his suspension; his employment was not terminated.
Petitioner also claimed he was not allowed to report for work after his suspension but this
was not unsubstantiated. The respondent was able to present entries from the FIDC
security logbook that petitioner was able to enter the premises on August 27 and such
evidence was not challenged by petitioner. Bare allegations of constructive dismissal,
when uncorroborated by the evidence on record, as in this case, cannot be given
credence.

In this case, records do not show any demotion in rank or a diminution in pay made
against petitioner. Neither was there any act of clear discrimination, insensibility or disdain

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committed by respondents against petitioner which would justify or force him to terminate
his employment from the company.

Respondents' decision to give petitioner a graceful exit is perfectly within their discretion.
It is settled that there is nothing reprehensible or illegal when the employer grants the
employee a chance to resign and save face rather than smear the latter's employment
record.

20. Alaska Milk Corp.,/Estate of Wilfred Uytengsu, GR No. 228412 & 2284389, July
26, 2017
Doctrines:
(a) Under Article 297 (b) of the Labor Code, an employer may terminate an employee for
gross and habitual neglect of duties. Neglect of duty, to be a ground for dismissal,
must be both gross and habitual.
(b) Loss of Trust and Confidence, a ground for termination of employment -- For
managerial employees, the mere existence of a basis for believing that such employee
has breached the trust of his employer would suffice for his dismissal. In the case of
managerial employees, proof beyond reasonable doubt is not required, it being sufficient
that there is some basis for such loss of confidence, such as when the employer has
reasonable ground to believe that the employee concerned is responsible for the
purported misconduct, and the nature of his participation therein renders him unworthy of
the trust and confidence demanded by his position.
Facts:
On April 1, 2008, Alaska Milk Corporation (AMC) hired Ernesto L. Ponce (Ponce), a
licensed mechanical engineer, as Manager for Engineering Services of its Milk Powder
Plant (MPP) and Ultra High Temperature Plant (UHT). He was then promoted as Director
for Engineering Services. He held the position until his termination from employment on
February 25, 2010.
AMC and Uytengsu, Sr. averred that sometime in April 2009, AMC's President and Chief
Executive Officer, Wilfred Steven Uytengsu, Jr. (Uytengsu, Jr.), witnessed Ponce's
abrasive behavior and was constrained to remind him to be courteous to his colleagues.
On January 21, 2010, Uytengsu, Sr. sent an e-mail to Ponce calling his attention to his
failure to provide updates on several engineering works and problems involving his areas
of concern.
In February 2010, Uytengsu, Sr. received a copy of an e-mail that Ponce sent to 12 of his
colleagues in connection with his "Receipted Allowance" (R/A) for business-related
expenses. In the said e-mail (R/A e-mail), Ponce solicited official receipts from his
colleagues in exchange for a five percent (5%) rebate on the value of the receipts
submitted to him.
On February 16, 2010, Uytengsu, Sr. issued the First Performance Evaluation
Memorandum, directing Ponce to explain why his services should not be terminated for
gross and habitual neglect of duties and other analogous causes under Article 282 of the
Labor Code.

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After finding Ponce's explanation unsatisfactory, AMC issued the Second Performance
Evaluation Memorandum and terminated Ponce's employment effective February 25,
2010 for:
(1) Failure to provide updates on ongoing and planned engineering works;
(2) Emailing 12 colleagues requesting for official receipts in exchange for a 5% rebate to
be used in liquidating his receipted allowance/fraudulently submitting official receipts of
expenses which he did not incur;
(3) Disrespectful manner towards the AMC's President and CEO who called Ponce's
attention regarding his violation of AMC's company policy;
(4) Continued abrasive attitude towards his fellow officers and specially to his
subordinates and other rank-and-file workers of AMC, whom Ponce allegedly subjected
to unjust treatment and abusive language resulting in death threats being hurdled against
Ponce and the filing of several complaints against AMC by its employees;
Ponce filed a complaint for illegal dismissal with prayer for reinstatement, payment of
backwages and damages against AMC, the estate of Uytengsu, Sr., AMWU, and its
president Ferdinand Bautista.
The LA Ruling
The LA ruled that Ponce was illegally dismissed. In resolving the issue on gross and
habitual neglect of duties, the LA held that the instances cited by AMC were hardly gross
enough to warrant dismissal. While delay in the completion of Ponce's assigned tasks
was unacceptable, the same could not be equated with negligence.
As for Ponce's act of soliciting receipts for his R/A, the LA noted that AMC did not issue
any warning or admonition against him during the period covering May 5, 2009, the day
after Ponce sent the R/A e-mail, up to February 15, 2010, the day before the First
Performance Evaluation was issued. It pointed out that AMC never claimed, much less
proved, that Ponce had presented for reimbursement representation expenses covered
by an official receipt belonging to any one of his co-employees. Hence, the LA concluded
that AMC condoned Ponce's act because it was unbelievable for AMC to have taken more
than nine (9) months before it informed Ponce that solicitation of receipts was a violation
of company rules.
AMC elevated an appeal before the NLRC.
The NLRC Ruling
The NLRC reversed and set aside the LA's ruling. It ruled that the act of soliciting official
receipts in exchange for a 5% rebate was an act of dishonesty inimical to the interest of
AMC, as Ponce would be collecting receipted allowance from expenses which he did not
actually incur. The NLRC rejected the LA's theory that AMC condoned the act because it
did not warn or admonish Ponce prior to the issuance of the First Performance Evaluation
Memorandum. It pointed out that Ponce's R/A e-mail came to the knowledge of Uytengsu,
Sr. only in February 2010. Accordingly, it ruled that there was sufficient evidence to
sustain Ponce's dismissal on the ground of loss of trust and confidence.
Ponce filed a petition for certiorari with the CA.
The CA Ruling
The CA reversed and set aside the NLRC ruling. It held that no substantial evidence was
presented to prove the cause of Ponce's dismissal.

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The CA opined that Ponce's dismissal on the ground of loss of trust and confidence was
a mere afterthought. It found that the First Performance Evaluation Memorandum did not
mention Ponce's acts which resulted in AMC's loss of trust and confidence; and that there
was neither any explanation nor discussion of his alleged sensitive and delicate position
requiring AMC's utmost trust. Moreover, it was only in the Second Performance
Evaluation Memorandum (termination letter) that AMC invoked loss of trust and
confidence as a ground for dismissal.
The CA further held that the penalty of dismissal was too harsh. It observed that AMC
failed to issue any warning during the period after the sending of the R/A e-mail up to the
day prior to the issuance of the First Performance Evaluation Memorandum. Also, the CA
noted that Ponce had no previous disciplinary record in his almost two (2) years of service;
and that his promotion attested to his competence and diligence in the performance of
his duties.
Issue: (1) WHETHER THERE IS JUST CAUSE TO TERMINATE PONCE'S
EMPLOYMENT DUE TO GROSS AND HABITUAL NEGLECT OF DUTIES;
(2) WHETHER THERE IS JUST CAUSE TO TERMINATE PONCE'S EMPLOYMENT
DUE TO LOSS OF TRUST AND CONFIDENCE.
Ruling:
As a rule, the Court does not review questions of fact, but only questions of law in an
appeal by certiorari under Rule 45 of the Rules of Court. The rule, however, is not absolute
as the Court may review the facts in labor cases where the findings of the CA and of the
labor tribunals are contradictory.
In the case at bench, the factual findings of the LA and the CA differ from those of the
NLRC. This divergence of positions constrains the Court to review and evaluate
assiduously the evidence on record.
(1) No. AMC failed to show by substantial evidence that Ponce was guilty of
gross and habitual neglect of duties
Under Article 297 (b) [formerly Article 282 (b)] of the Labor Code, an employer may
terminate an employee for gross and habitual neglect of duties. Neglect of duty, to be a
ground for dismissal, must be both gross and habitual. Gross negligence implies a want
or absence of or failure to exercise even slight care or diligence, or the entire absence of
care. It evinces a thoughtless disregard of consequences without exerting any effort to
avoid them. Habitual neglect implies repeated failure to perform one's duties for a period
of time, depending upon the circumstances.
Ponce's termination from employment based on gross and habitual neglect of duties is
unwarranted.
Aside from enumerating the projects/improvements which Ponce purportedly failed to
implement, AMC adduced no other evidence to substantiate its charges. As allegation is
not evidence, the rule has always been to the effect that a party alleging a critical fact
must support his allegation with substantial evidence which has been construed to mean
such relevant evidence as a reasonable mind will accept as adequate to support a
conclusion. Records show that AMC proffered nothing beyond bare allegations to prove
that failure to implement the projects/improvements was occasioned by gross neglect on
the part of Ponce.

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The fact that Ponce admitted to having been delayed in some of the tasks assigned to
him does not establish gross and habitual neglect of duties.
(2) Yes. The records point to the existence of a just cause for termination — Loss
of Trust and Confidence
Among the just causes for termination is the employer's loss of trust and confidence in its
employee. Article 297 (c) [formerly Article 282 (c)] of the Labor Code provides that an
employer may terminate the services of an employee for fraud or willful breach of the trust
reposed in him. In order for the said cause to be properly invoked, however, certain
requirements must be complied with, namely: (1) the employee concerned must be
holding a position of trust and confidence; and (2) there must be an act that would justify
the loss of trust and confidence.
There are two classes of positions of trust: (1) managerial employees whose primary duty
consists of the management of the establishment in which they are employed or of a
department or a subdivision thereof, and to other officers or members of the managerial
staff; and (2) fiduciary rank-and-file employees, such as cashiers, auditors, property
custodians, or those who, in the normal exercise of their functions, regularly handle
significant amounts of money or property. These employees, though rank-and-file, are
routinely charged with the care and custody of the employer's money or property, and
are, thus, classified as occupying positions of trust and confidence.
As regards a managerial employee, the mere existence of a basis for believing that such
employee has breached the trust of his employer would suffice for his dismissal. Hence,
in the case of managerial employees, proof beyond reasonable doubt is not required, it
being sufficient that there is some basis for such loss of confidence, such as when the
employer has reasonable ground to believe that the employee concerned is responsible
for the purported misconduct, and the nature of his participation therein renders him
unworthy of the trust and confidence demanded by his position.
Ponce held the position of Director for Engineering Services. He was in charge of
managing AMC's Engineering Department. Hence, he belongs to the managerial class of
employees who occupy a position of trust and confidence.
AMC and Uytengsu, Sr. argue that the sending of the R/A e-mail soliciting official receipts
in exchange for a 5% cash rebate is an act inimical to the company's interests because
Ponce will be reimbursed for expenses he did not incur. They consider such act a
fraudulent representation sufficient to erode its trust and confidence.
The act of soliciting receipts from colleagues constitutes dishonesty, inimical to AMC's
interests, for the simple reason that Ponce would be collecting receipted allowance from
expenses he did not actually incur. It has long been settled that an employer cannot be
compelled to retain an employee who is guilty of acts inimical to his interests. This is all
the more true in the case of supervisors or personnel occupying positions of responsibility.
Whether Ponce was actually able to gather and submit receipts to AMC for
reimbursement is immaterial. The sending of the R/A e-mail already discloses a dishonest
motive unbecoming of a director for engineering services, and the existence of that e-mail
in the records is sufficient basis to justify Ponce's dismissal on the ground of loss of trust
and confidence. Ponce ought to be reminded of his own words.

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21. Evic Human Resource Management Inc. vs. Panahon, GR No. 206890, July 31,
2017

Doctrine: For dismissal to be valid, the employer must show that (1) the dismissal was
for a just or authorized cause; and (2) the dismissed employee was afforded due process
of law.

Facts: Rogelio Panahon was hired by EVIC as Chief Mate on board the vessel of Free
Bulkers (EVIC’s foreign principal) for a period of 6 months. His contract was not finished
as he was repatriated in the Philippines for gross negligence and intoxication. An
unnotarized Crew Behavior Report was the basis. It was also alleged by Panahon that
there was no notice of dismissal.

Respondent filed a Complaint for illegal dismissal. In his Position Paper, he claimed that
since his initial deployment, he has diligently performed all his duties and responsibilities
and has never been disciplined or dismissed.

Respondent averred that on September 7, 2010, he took a sip from the small flask of
whisky given to him by one of the stevedores he dealt with and went to bed; but Captain
Buton had him awakened and ordered him to make a report on some damages in the
railings of the ship caused by the stevedores. When he submitted the report to Captain
Buton, the latter allegedly smelled a faint odor of whisky and asked respondent if he had
been drinking, to which he replied that he drank a little whisky and was willing to take an
alcohol test.

Respondent claimed that Captain Buton shrugged off his offer to take an alcohol test; but
as soon as he left respondent, Captain Buton made a logbook entry dated September 7,
2010, recommending respondent's immediate replacement.

Issue: Was the dismissal proper considering that the only basis for the dismissal was
the unnotarized Crew Behavior Report? Is it still proper to dismiss employee without
notice of dismissal?

Ruling: Settled rule in labor cases that the employer has the burden of proving that the
dismissal of an employee was for a just or authorized cause, and failure to show this
would mean that the dismissal was unjustified and illegal. The employer must prove that
1) the dismissal was for a just and authorized cause; and 2) the dismissed employee was
afforded due process of law.

Substantive
The SC ruled that the Report was uncorroborated and self-serving. No other
evidence was presented by the employer. Thus, no just cause was proven.
Incompetence is understood to mean the failure to attain work goals or work
quotas, either by failing to complete the same within the allotted reasonable period, or by
producing unsatisfactory results. Neglect of duty must be both gross and habitual. Gross

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negligence implies a lack of or failure to exercise slight care or diligence, or the total
absence of care in the performance of duty. Petitioner failed to prove these.

Procedural
Furthermore, the POEA Rules provide the requirement on the two-notice rule to
afford the employee due process. An erring seaman is given a written notice of charge
against him and is afforded an opportunity to explain or defend himself. Should sanctions
be imposed, then a written notice of penalty and the reason for it shall be furnished. It is
only in the exceptional case of clear and existing danger to the safety of the crew or vessel
that the required notices are dispensed with.

22. Read-Rite Phils vs. Francisco, et al., GR No. 195457, August 16, 2017

Doctrine: Given the diametrical nature of an involuntary and a voluntary separation from
service, one necessarily excludes the other.

Facts:
In 1999, Read-Rite began implementing a retrenchment program due to serious business
losses and about 200 employees were terminated. From the first batch of retrenched
employees, however, there were eight employees that apparently received additional
voluntary separation benefits.
Meanwhile, respondents only received involuntary separation benefits in accordance with
the Compensation and Benefits Manual and Retirement Plan of the company.
Respondents filed complaints against Read-Rite alleging that they are also entitled
payment of additional voluntary benefits like the first eight employees.
Read-rite claimed that the additional payments to the first eight employees was made
only by mistake.

Issue: Are the Respondents entitled to the additional voluntary benefits?

Ruling:
No. Given the diametrical nature of an involuntary and a voluntary separation from
service, one necessarily excludes the other. As respondents' termination was involuntary
in nature, i.e., by virtue of a retrenchment program, they are only entitled to receive
involuntary separation benefits under the express provisions of the company's
Compensation and Benefits Manual and the Retirement Plan. The Court is more inclined
to believe that the payment of additional voluntary separation benefits on top of
involuntary separation benefits to eight retrenched employees was indeed a mistake
since it was not in accordance to the company’s Compensation and Benefits Manual and
its Retirement Plan. In any event, whether said payment of additional voluntary benefits
to was a mistake or otherwise, respondents cannot use the same to bolster their own
claim of entitlement to additional voluntary

23. Transglobal Maritime Agency vs. Chua, GR No. 222430, August 30, 2017

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Doctrine:
To constitute insubordination or willful disobedience as a just cause for the dismissal of
the employee, two requisites must concur: 1. The employee’s assailed conduct must have
been willful, that is, characterized by a wrongful and perverse attitude 2. The order
violated must have been reasonable, lawful, made known to the employee, and must
pertain to his duties which he had been engaged to discharge.

Facts:
Petitioner hired respondent as seaman and the contract was supposed to be for 9 months
with the 3 months as a probationary period. While on the port of Taiwan, respondent and
companions left the ship for shore leave from 7-10 pm. However, respondent was able to
return around 11:40 p.m.

Respondent and companions were served with a written reprimand however, respondent
refused to sign and acknowledge the receipt of the reprimand. Upon disembarking the
ship, respondent filed a complaint for illegal dismissal. Petitioner contends that
respondent was not illegally dismissed since the dismissal was justified on the ground of
insubordination for their refusal to sign the written reprimand and disrespect for officers
and for failure to return at the ship after the expiration of their shore leave.

Issue:
Whether respondent was legally dismissed?

Ruling:
No. To constitute insubordination or willful disobedience as a just cause for the dismissal
of the employee, two requisites must concur: 1. The employee’s assailed conduct must
have been willful, that is, characterized by a wrongful and perverse attitude 2. The order
violated must have been reasonable, lawful, made known to the employee, and must
pertain to his duties which he had been engaged to discharge. The order made to the
respondent to sign the documents was no relevance with respondent’s duties as a
seaman. Moreover, the refusal was not characterized was not characterized as wrongful
and perverse mental attitude and thus no subordination.

Petitioner contended that his refusal was caused by the falsehoods alleged in the written
report. There must be a reasonable proportionality between the will full disobedience by
the employee and the penalty imposed. Further, as required by POEA-SEC, for dismissal
against SEAMEN, they must be served with a written notice of the charge against him
and an opportunity must be given to explain himself.

24. Aluag vs. BIR Multi-Purpose cooperative, GR No. 228499, December 6, 2017
Doctrine:
"[t]here are two (2) classes of positions of trust: first, managerial employees whose
primary duty consists of the management of the establishment in which they are

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employed or of a department or a subdivision thereof, and to other officers or members
of the managerial staff; and second, fiduciary rank-and-file employees, such as cashiers,
auditors, property custodians, or those who, in the normal exercise of their functions,
regularly handle significant amounts of money or property.”

Facts:
Petitioner filed a case for illegal dismissal against BIRMPC and its officers, respondents
Norma Lipana and Estelita Datu. She was employed as a cashier from November 16,
1994 until her termination on October 31, 2013. Her duties, among others, were to receive
remittances and payments, deposit all collections daily, record fixed deposits, determine
cash positions, issue checks for loans, collect cash receipts, and perform such other
duties that the general manager may assign to her.
Respondents on the other hand argue that Aluag was legally dismissed on the ground of
loss of trust and confidence.

Issue:
WHETHER OR NOT RESPONDENT HAD JUST CAUSE TO TERMINATE
PETITIONER’S EMPLOYMENT

Held:

Yes. In the present case, BIRMPC alleged that Aluag's employment was terminated on
the ground of loss of trust and confidence under Article 297 (c) (formerly Article 282 [c])
of theLabor Code. The requisites for the existence of such ground are as follows: (a) the
employee concerned holds a position of trust and confidence; and (b) he performs an act
that would justify such loss of trust and confidence.

Anent the first requisite, case law instructs that "[t]here are two (2) classes of
positions of trust: first, managerial employees whose primary duty consists of the
management of the establishment in which they are employed or of a department or a
subdivision thereof, and to other officers or members of the managerial staff; and second,
fiduciary rank-and-file employees, such as cashiers, auditors, property custodians, or
those who, in the normal exercise of their functions, regularly handle significant amounts
of money or property. These employees, though rank-and-fille, are routinely charged with
the care and custody of the employer's money or property, and are thus classified as
occupying positions of trust and confidence. Being a cashier charged with the collection
of remittances and payments, Aluag undoubtedly occupied a position of trust and
confidence. As regards the second requisite, the employee's act causing the loss of
confidence must be directly related to her duties rendering her woefully unfit to continue
working for the employer.

Verily, her failure to deposit the checks on their due dates means that she failed to deliver
on her task to safeguard BIRMPC's finances. It is also well to note that she was not given
any discretion to determine whether or not to deposit the checks. Under these

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circumstances, BIRMPC had ample reason to lose the trust and confidence it reposed
upon her and thereby, terminate her employment.

Indeed, it would be most unfair to require an employer to continue employing a cashier

whole it reasonably believes is no longer capable of giving full and wholehearted
trustworthiness in the stewardship of company funds, as in this case. In fine, BIRMP C
had just cause for Aluag's dismissal.

25. Mehitabel Inc., vs. Alcuizar, GR No. 228701-02, December 13, 2017
Doctrine: Filing a complaint for illegal dismissal does not ipso fact foreclose the possibility
of abandonment. It is not the sole indicator in determining whether or not there was
desertion
FACTS: Respondent was employed by petitioner as its Purchasing Manager tasked in
overseeing the production and delivery of the latter’s goods. The case stemmed when
respondent's dismal work performance resulted in delays in the production and delivery
of the company's goods which prompted respondent’s immediate supervisor to counsel
the former to improve her work performance, otherwise, she may be forced to initiate
disciplinary proceedings against him for gross inefficiency.
It was because of this that respondent gave the word that he was quitting his job.
When respondent was furnished a notice of violation, he responded by filing a labor
dispute case against petitioner for illegal dismissal.
Issue: Whether respondent was illegally dismissed.
Ruling: The court ruled in favor of the petitioner.
The Court held the established rule that in illegal termination cases, the fact of
dismissal must be established by positive and overt acts of an employer indicating the
intention to dismiss before the burden is shifted to the employer that the dismissal was
legal.
In this case, the records do not show any proof of respondent’s termination. His
asseveration that Arcenas instructed him to turnover his functions to Enriquez remains
to be a naked claim. Apart from respondent’s bare self-serving allegation, nothing in the
records even hints of him being severed from employment by petitioner. The publication
of the purported vacancy for Purchasing Manager does not bolster respondent's claim
of dismissal because it was clearly made through sheer inadvertence.
Anent the issue of abandonment, the same is bolstered by the fact that petitioner
issued a Return to Work order to respondent, which the latter received through
registered mail and disregarded without any response. Respondent cannot harp on the
fact that he filed a complaint for illegal dismissal in proving that he did not abandon his
post, for the filing of the said complaint does not ipso facto foreclose the possibility of
abandonment. It is not the sole indicator in determining on whether or not there was
desertion, and to declare as an absolute that the employee would have not filed a
complaint for illegal dismissal if he or she had not really been dismissed is non sequitur.
In turn, it is beyond quibbling that a slothful work attitude squarely falls within the
ambit of gross and habitual neglect of duty which is one of the grounds for termination
and that respondent’s departure was merely a precursor to his scheme to turn the table
against petitioner.

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26. Philippine Pan Asia Carriers Corp., vs. Pelayo, GR No. 212003, February 28,
2018

Doctrine: “The Court has, however, been careful to qualify that not every inconvenience,
disruption, difficulty, or disadvantage that an employee must endure sustains a finding of
constructive dismissal. It is an employer's right to investigate acts of wrongdoing by
employees. Employees involved in such investigations cannot ipso facto claim that
employers are out to get them. Their involvement in investigations will naturally entail
some inconvenience, stress, and difficulty”

Facts:

Pelayo was employed by Sulpicio Lines as an accounting clerk at its Davao City branch
office. However, Sulpicio Lines uncovered several anomalous transactions in its Davao
City branch office which include double disbursements, altered checks and some other
discrepancies.

Sulpicio Lines' Cebu-based management team went to Davao to investigate. He was also
asked to go to Cebu for the continuation of the investigation. In the midst of a panel
interview, Pelayo walked out. She later claimed that she was being coerced to admit
complicity. Pelayo then returned to Davao City, where she was admitted to a hospital
"because of depression and a nervous breakdown." She eventually filed for leave of
absence and ultimately stopped reporting for work.

Asked to return, Pelayo was served with a memo requiring her to submit a written
explanation and was placed under preventive suspension for 30 days. Sulpicio Lines also
sought assistance from the NBI but, instead of responding or appearing, Pelayo filed a
case for constructive dismissal.

Issue:
Whether there is constructive dismissal.

Ruling: No. Though it is held that there is constructive dismissal when an employer's act
of clear discrimination, insensibility or disdain becomes so unbearable on the part of the
employee so as to foreclose any choice on his part except to resign from such
employment, the Court has, however, been careful to qualify that not every
inconvenience, disruption, difficulty, or disadvantage that an employee must endure
sustains a finding of constructive dismissal. It is an employer's right to investigate acts of
wrongdoing by employees. Employees involved in such investigations cannot ipso
facto claim that employers are out to get them. Their involvement in investigations will
naturally entail some inconvenience, stress, and difficulty. However, even if they might be
burdened — and, in some cases, rather heavily so — it does not necessarily mean that
an employer has embarked on their constructive dismissal.

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27. Flight Attendants and Stewards Association of the Phils., vs. Phil. Airlines Inc.,
GR No. 178083, March 13, 2018, En Banc, Reversing July 22, 2018 and October 2,
2009 Decisions

Doctrine: Accordingly, the employer may resort to retrenchment in order to avert serious
business losses. To justify such retrenchment, the following conditions must be present,
namely:
(1) The retrenchment must be reasonably necessary and likely to prevent business
losses;
(2) The losses, if already incurred, are not merely de minimis, but substantial, serious,
actual and real, or if only expected, are reasonably imminent;
(3) The expected or actual losses must be proved by sufficient and convincing
evidence;
(4) The retrenchment must be in good faith for the advancement of its interest and not
to defeat or circumvent the employees’ right to security of tenure; and
(5) There must be fair and reasonable criteria in ascertaining who would be dismissed
and who would be retained among the employees, such as status, efficiency,
seniority, physical fitness, age, and financial hardship for certain workers.

Facts:

The Third Division disbelieved the veracity of PAL’s claim of severe financial losses, and
concluded that PAL had not established its severe financial losses because of its non-
presentation of audited financial statements. It further concluded that PAL had
implemented the retrenchment program in bad faith, and had not used fair and reasonable
criteria in selecting the employees to be retrenched.

Upon conclusion of the oral arguments, the Court directed the parties to explore a
possible settlement and to submit their respective memoranda. Unfortunately, the parties
did not reach any settlement; hence, the Court, through the Special Third Division,
resolved the issues on the merits through the resolution of October 2, 2009 denying PAL’s
motion for reconsideration.

The Special Third Division was unconvinced by PAL’s change of theory in urging the June
1998 Association of Airline Pilots of the Philippines (ALPAP) pilots’ strike as the reason
behind the immediate retrenchment, and observed that the strike was a temporary
occurrence that did not require the immediate and sweeping retrenchment of around
1,400 cabin crew.

Issues:

(1) Did PAL lawfully retrench the 1,400 cabin crew personnel?
(2) Assuming that PAL validly implemented its retrenchment program, did the
retrenched employees sign valid quitclaims?

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Ruling:

(1) YES, PAL IMPLEMENTED A VALID RETRENCHMENT PROGRAM.

Retrenchment or downsizing is a mode of terminating employment initiated by the

employer through no fault of the employee and without prejudice to the latter, resorted to
by management during periods of business recession, industrial depression or seasonal
fluctuations or during lulls over shortage of materials. It is a reduction in manpower, a
measure utilized by an employer to minimize business losses incurred in the operation of
its business.

Accordingly, the employer may resort to retrenchment in order to avert serious business
losses. To justify such retrenchment, the following conditions must be present, namely:
(6) The retrenchment must be reasonably necessary and likely to prevent business
losses;
(7) The losses, if already incurred, are not merely de minimis, but substantial, serious,
actual and real, or if only expected, are reasonably imminent;
(8) The expected or actual losses must be proved by sufficient and convincing
evidence;
(9) The retrenchment must be in good faith for the advancement of its interest and not
to defeat or circumvent the employees’ right to security of tenure; and
(10) There must be fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status,
efficiency, seniority, physical fitness, age, and financial hardship for certain
workers.

Upon critical review of the records, we are convinced that PAL had met all the standards
in effecting a valid retrenchment.

The July 22, 2008 decision recognized that PAL underwent corporate rehabilitation.
Indeed, a company that undergoes rehabilitation sufficiently indicates its fragile financial
condition.

After having placed under corporate rehabilitation and its rehabilitation plan having been
proved by the SEC on June 23, 2008, PAL’s dire financial predicament could not be
doubted. Incidentally, the SEC’s order of approval came a week after PAL had sent out
notices of termination to the affected employees.

Moreover, the fact that airline operations were capital intensive but earnings were volatile
because of their vulnerability to economic recession, among others. The Asian financial
crisis in 1997 had wrought havoc among the air carries, PAL included. The peculiarities
existing in the airline business made it easier to believe that at the time of the Asian
financial crisis, PAL incurred liabilities amounting to P90,642,933,919.00, which were way
beyond the value of its assets that then only stood at P85,109,075,351.

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PAL retrenched in good faith.

The employer is burdened to observe good faith in implementing a retrenchment program.

Good faith on its part exists when the retrenchment is intended for the advancement of
its interest and is not for the purpose of defeating or circumventing the rights of the
employee under special laws or under valid agreements.

PAL could not have been motivated by ill will or bad faith when it decided to terminate
FASAP’s affected members. On the contrary, good faith could be justly inferred from
PAL’s conduct before, during, and after the implementation of retrenchment plan.

Notable in this respect was PAL’s candor towards FASAP regarding its plan to implement
the retrenchment program. Records also show that the parties met on several occasions
to explore cost-cutting measures, including the implementation of the retrenchment
program. PAL likewise manifested that the retrenchment plan was temporarily shelved
while it implemented other measures (like termination of probationary cabin attendant,
and work-rotations).

Given PAL’s dire financial predicament, it becomes understandable that PAL was
constrained to finally implement the retrenchment program when the ALPAP pilots strike
crippled a major part of PAL’s operations. As between maintaining the number of its flight
crew and PAL’s survival, it was reasonable for PAL to choose the latter alternative. This
Court cannot legitimately force PAL as a distressed employer to maintain its manpower
despite its dire financial condition. To be sure, the right of PAL as the employer to
reasonable returns on its investments and to expansion and growth is also enshrined in
the 1987 Constitution. Thus, although labor is entitled to the right to security of tenure,
the State will not interfere with the employer’s valid exercise of its management
prerogative.

PAL used fair and reasonable criteria in selecting the employees to be retrenched
pursuant to the CBA.

In selecting the employees to be dismissed, the employer is required to adopt fair and
reasonable criteria, taking into considerable factors, like:
(a) Preferred status;
(b) Efficiency;
(c) Seniority, among others.

The requirement of fair and reasonable criteria is imposed on the employer to preclude
the occurrence of arbitrary selection of employees to be retrenched. Absent any showing
of bad faith, the choice of who should be retrenched must be conceded to the employer
for as long as the basis for the retrenchment exists.

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In fine, the Court will only strike down the retrenchment of an employer as capricious,
whimsical, arbitrary and prejudicial in the absence of a clear-cut and uniform guideline
followed by the employer in selecting him or her from the work pool. Following this
standard, PAL validly implemented its retrenchment program.

PAL resorted to both efficiency rating and inverse seniority in selecting the employees to
be subject of termination.

(2) YES, THE RETRENCHED EMPLOYEES SIGNED VALID QUITCLAIMS.

In EDI Staffbuilders International, Inc. vs. National Labor Relations Commission, we laid
down the basic contents of valid and effective quitclaims and waivers, to wit:
(a) A fixed amount as full and compromise settlement;
(b) The benefits of the employees if possible with the corresponding amounts, which
the employees are giving up in consideration of the fixed compromise amount;
(c) A statement that the employer has clearly explained to the employee in English,
Filipino, or in the dialect known to the employees – that by signing the waiver or
quitclaim, they are forfeiting or relinquishing their rights to receive the benefits
which are due them under the law; and
(d) A statement that the employees signed and executed the document voluntarily,
and had fully understood the consents of the document and that their consent was
freely given without any threat, violence, duress, intimidation, or undue influence
exerted on their person.

The release and quitclaim signed by the affected employees substantially satisfied the
aforestated requirements. The consideration was clearly indicated in the document in the
English language, including the benefits that the employee would be relinquishing in
exchange for the amounts to be received. There is no question that the employees who
had occupied the position of flight crew knew and understood the English language.
Hence, they fully comprehended the terms used in the release and quitclaim that they
signed.

28. La Consolacion College of Manila, et al., vs. Pascua, GR No. 214744, March 14,
2018
Doctrine: “Labor code recognizes retrenchment as an authorized cause for terminating
employment. It is an option validly available to an employer to address “losses in the
operation of the enterprise, lack of work, or considerable reduction on the volume of
business”.

Facts: Pascua’s services as school physician were engaged by La Consolacion on

January 2000. She started working part-time before becoming full-time on 2008. On
September 2011, she was invited to attend a meeting at the office of La Consolacion’s
President, Sr. Mora. In that meeting, she was handed a termination of employment letter
where it explain the reason and terms of her dismissal. In that letter the reason for her
dismissal was because the school was forced to downsize the health services and

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eliminate her position due to the decrease in enrolment. She complained that why was
she terminated when in fact there was a part time employee to be terminated. She then
filed a complaint for illegal dismissal.

Issue: Whether there was an authorized cause for the termination? Whether there was
compliance with the substantive requirement of using fair and reasonable criteria in
terminating employees?

Ruling:

Yes. Labor code recognizes retrenchment as an authorized cause for terminating

employment. It is an option validly available to an employer to address “losses in the
operation of the enterprise, lack of work, or considerable reduction on the volume of
business”.
In this case, the records indicate that La Consolacion suffered serious business
reverses or an aberrant drop in its revenue and income thus compelling it to retrench
employees. This shows that La Consolacion proceeded with a modicum of good faith and
not with a stratagem specifically intended to undermine certain employees’ security of
tenure.
No. There is not dispute that Pascua was already a full-time physician. La
Consolacio had another physician who served as part-tim but it was Pascua who was
terminated. La Consolacion’s disregard of respondent’s seniority and preferred status
relative to a part-time employee indicates to an unfair and unreasonable criterion for
retrenchment.

29. University of East vs. Masangkay, et al., GR No. 226727, April 15, 2018

Doctrine: “Within the context of a termination dispute, waivers are generally looked upon
with disfavor and are commonly frowned upon as contrary to public policy and ineffective
to bar claims for the measure of a worker's legal rights. If (a) there is clear proof that the
waiver was wangled from an unsuspecting or gullible person; or (b) the terms of the
settlement are unconscionable, and on their face invalid, such quitclaims must be struck
down as invalid.”

Facts: Respondents were regular faculty members of petitioner University prior to their
dismissal on November 26, 2007. They submitted three manuals to be used as
instructional materials and openly certifying under oath that the said manuals are entirely
original and free from plagiarism.
Thereafter, petitioners received two complaint-letters that respondents did acts of
plagiarism. After a thorough investigation, UE dismissed respondents. Respondents,
however, did not appeal the decision terminating them and instead opted to claim their
benefits due to them.
Almost three years after having been dismissed from service and after collecting
their accrued benefits, respondents then filed a complaint for illegal dismissal on July 20,
2010. The Labor Arbiter held that respondents were illegally dismissed and ordered their

Page | 69
reinstatement. NLRC reversed the decision but the CA upheld the decision of the Labor
Arbiter.
Issue: Were the respondents illegally dismissed?
Ruling:
No. There is sufficient basis for dismissing respondents from service, considering
the highest integrity and morality which the profession requires from its teachers.
Based on their actuations subsequent to their termination, it is clear that they were
amenable to UE's decision of terminating their services on the ground of academic
dishonesty. Within the context of a termination dispute, waivers are generally looked upon
with disfavor and are commonly frowned upon as contrary to public policy and ineffective
to bar claims for the measure of a worker's legal rights. If (a) there is clear proof that the
waiver was wangled from an unsuspecting or gullible person; or (b) the terms of the
settlement are unconscionable, and on their face invalid, such quitclaims must be struck
down as invalid.
There is no sign of coercion nor intimidation, which could have forced them to simply
accept said decision and there is no showing that respondents did not receive less than
what is legally due them in said termination.

30. Son et al., vs. University of Sto. Tomas, et al., GR No. 211273, April 18, 2018
Facts: Son was a full time professor and a member of the UST Faculty Union, with
which UST had a Collective Bargaining Agreement (CBA) executed in 2006. Under the
CBA’s tenure provision, and in line with the DECS’ 1992 Revised Manual of Regulations
for Private Schools and CHED’s Memorandum Order No. 40-08, a Master’s degree for
faculty members of undergraduate programs was made an entry requirement. Son did
not possess a Master’s degree but was nonetheless hired by UST on the condition that
he obtain one within 5 semesters, which he failed to do. In spite of this, Son was retained
by UST. In 2010, CHED issued a Memorandum directing the strict implementation of
the Master’s degree requirement and, acting on the same, UST terminated Son, who
thought that he had been vested tenure under the CBA for his continued employment
despite failure to obtain the required Master’s degree.

Issue: Was Son illegally dismissed?

Ruling: No. When the CBA was executed between the parties in 2006, they had no
right to include therein the tenure by default provision because it is violative of the 1992
Revised Manual that was in effect at the time. As such, the said provision is null and
void. It cannot be said, either, that by agreeing to the same, UST is deemed to have
waived the application of the DECS Revised Manual and the CHED Memorandum as
such a waiver is contrary to law.

Furthermore, both parties are in pari delicto: UST for maintaining professors without the
mandated Master’s degrees, and Son for agreeing to be employed despite knowledge
of his lack of the necessary qualifications. Under the pari delicto doctrine, the equally
culpable parties shall have no action against each other, and the law shall leave them
where it finds them.

Page | 70
31. Maria Del Leon Transportation vs. Macuray, GR No. 214940, June 6, 2018
Doctrine: There is no illegal dismissal when a dispatcher informed a bus driver that the
latter was on AWOL, as a mere bus dispatcher does not possess the power to fire a bus
driver from work. However, when an employee avails a company’s practice and unwritten
policy—of allowing its bus drivers to take needed breaks or sabbaticals to enable them to
recover from the monotony of driving the same route for long periods and obtained work
elsewhere—he does not abandon his employment.

Facts:
Respondent Macuray filed a Complaint for illegal dismissal against petitioner Maria
De Leon Transportation, Inc. before the Regional Arbitration Branch San Fernando City,
La Union. He contended that after having served as bus driver of petitioner’s company
for 18 years, the latter’s bus dispatcher informed him that he was already considered
AWOL (absent without leave), without giving him any reason. Respondent inquired of his
employment status but the company failed to give him any notice or explanation. During
that time, he was already 62 years old, but he received no benefits for his service. He
also claimed that petitioner owed him three months' salary for the year 2009.

On the other hand, petitioner claimed that respondent permanently abandoned his
employment, after he failed to report for work; that it received information later on that
respondent was already engaged in driving his family truck and was seen doing so at
public roads and highways; that respondent's claim of illegal dismissal was not true, as
there was no dismissal or termination of his services.

Labor Arbiter dismissed the case for respondent’s failure to state with certainty the
date and time of his dismissal. The NLRC modified the Labor Arbiter's judgment by
awarding in favor of respondent the amount of P 50,000.00 as financial assistance. Court
of Appeals upheld the NLRC’s ruling.

In the present case, petitioner argues that the CA erred in entertaining

respondent's Petition for Certiorari as it was belatedly filed and defective in form and since
there was no illegal dismissal, respondent was not entitled to his money claims, including
retirement pay and damages, as there was no bad faith on petitioner's part.

Issues and Ruling:

Was respondent illegally dismissed from work?

No, respondent left his work as bus driver to work for his family's trucking business.
There is no truth to the allegation that respondent was dismissed, actually or
constructively. He claims that the dispatcher informed him that he was AWOL; however,
a mere bus dispatcher does not possess the power to fire him from work—this is a
prerogative belonging to management. Respondent did not show that he met with
management to inquire on his employment status. Since respondent was not dismissed
from work, petitioner may not be held liable for his (respondent's) monetary claims, except
those that were actually owing to him by way of unpaid salary/commission, and retirement

Page | 71
benefits, which are due to him for the reason that he reached the age of retirement while
under petitioner's employ.

Did respondent abandon his employment?

No, it cannot be said that respondent abandoned his employment. Petitioner itself
admitted that it sanctioned the practice of allowing its drivers to take breaks from work in
order to afford them the opportunity to recover from the stresses of driving the same long
and monotonous bus routes by accepting jobs elsewhere. Hence, respondent only
availed of petitioner's company practice and unwritten policy.

Is the reward of retirement benefits proper?

Yes. Since reinstatement is no longer feasible, the reward of retirement benefits is
proper. As for retirement benefits, respondent is entitled to them considering that he was
never dismissed from work, either for cause or by resignation or abandonment. As far as
petitioner is concerned, respondent merely went on a company sanctioned sabbatical. It
just so happened that during this sabbatical, respondent reached the retirement age of
60; by this time, he is already 67 years old. By filing the labor case, he may have pre-
empted the payment of his retirement benefits; but it is a clear demand for retirement
benefits nonetheless.

In the absence of a retirement plan or agreement in Maria De Leon Transportation,

Inc., the Supreme Court hereby declares that respondent is entitled to one month's salary
for every year of service, that is:
Pl0,000.00 x 18 years = P180,000.00

Retirement compensation equivalent to one month's salary for every year of

service is more equitable and just than the CA's pronouncement of one-half month's
salary per year of service, which the Court finds insufficient. This is considering that
petitioner has been paying its drivers commission equivalent to less than the minimum
wage for the latter's work, and in respondent's case, it has delayed payment of the latter's
compensation for three months. On the other hand, petitioner's lax policies regarding the
coming and going of its drivers, as well as the fact that respondent's layovers are
considerable - it appears that throughout his employment, respondent spends a good
number of days each month not driving for petitioner, which thus allows him to accept
other work outside—makes up for deficiencies in the parties' compensation arrangement.

Should the petition be dismissed outright for being tardy and for being
procedurally defective?
No. As against petitioner's claim of procedural infirmities, the Court must uphold
and protect respondent's substantive rights. Procedure cannot prevail over substantive
rights in this case. The Court takes into consideration the fact that respondent is entitled
to part of his monetary claims and that the NLRC judgment failed to appreciate that
respondent remained an employee of petitioner.

Is respondent entitled for attorney’s fees?

Page | 72
 Yes. Under paragraphs 7 and 11, respectively, of Article 2208 of the Civil Code,
attorney's fees and expenses of litigation, other than judicial costs, may be recovered "in
actions for the recovery of wages of household helpers, laborers and skilled workers" and
"in any other case where the court deems it just and equitable that attorney's fees and
expenses of litigation should be recovered." The CA award of P20, 000.00 is thus
reasonable and just under the circumstances.

32. Lingat vs. Coca-Cola Bottlers Phils, Inc. GR No. 205688, July 4, 2018
Doctrine: “a regular employee is a) one that has been engaged to perform tasks usually
necessary or desirable in the employer's usual business or trade — without falling within
the category of either a fixed or a project or a seasonal employee; or b) one that has been
engaged for a least one year, whether his or her service is continuous or not, with respect
to such activity he or she is engaged, and the work of the employee remains while such
activity exists. To ascertain if one is a regular employee, it is primordial to determine the
reasonable connection between the activity he or she performs and its relation to the
trade or business of the supposed employer.”

Facts:
Petitioners filed a Complaint for illegal dismissal against Coca-Cola Bottlers Phils.,
Inc. (CCBPI), Monte Dapples Trading Corp. (MDTC), and David Lyons (Lyons)
(respondents).|||

Petitioners averred that CCBPI employed Lingat and Altoveros as plant driver and
forklift operator, and segregator/mixer respectively. They had continually worked for
CCBPI until their illegal dismissal in April 2005 (Lingat) and December 2005 (Altoveros).
They alleged that they were regular employees of CCBPI because it engaged them to
perform tasks necessary and desirable in its business or trade. They asserted that their
work was the link between CCBPI and its sales force since without them its products
would not reach its clients. ||

Petitioners alleged that CCBPI engaged Lingat primarily as a plant driver but he
also worked as forklift operator. He drove CCBPI's truck loaded with softdrinks and its
other products, and thereafter, returned the empty bottles as well as the unsold softdrinks
back to the plant of CCBPI. On the other hand, as segregator/mixer of softdrinks,
Altoveros was required to segregate softdrinks based on the orders of the customers.
Petitioners further stated, that after becoming regular employees (as they had been
employed for more than a year), and by way of a modus operandi, CCBPI transferred
them from one agency to another. These agencies included Lipercon Services, Inc.,
People Services, Inc., Interserve Management and Manpower Resources, Inc. The latest
agency to where they were transferred was MDTC. They claimed that such transfer was
a scheme to avoid their regularization in CCBPI.

Page | 73
 Petitioners stressed that the aforesaid agencies were labor-only contractors which
did not have any equipment, machinery, and work premises for warehousing purposes.
They insisted that CCBPI owned the warehouse where they worked; the supervisors
thereat were CCBPI's employees; and, petitioners themselves worked for CCBPI, not for
any agency.

In fine, they maintained that they were regular employees of CCBPI because while
at work, petitioners were under the direction, control and supervision of respondent Coca-
Cola's regular employees. Finally, petitioners argued that CCBPI dismissed them after it
found out that they were "overstaying." As such, they posited that they were illegally
dismissed as their termination was without cause and due process of law.

CCBPI and Lyons, its President/Chief Executive Officer, countered that this case
must be dismissed because the Labor Arbiter (LA) lacked jurisdiction, there being no
employer-employee relationship between the parties. CCBPI and Lyons declared that
CCBPI was engaged in the business of manufacturing, distributing, and marketing of
softdrinks and other beverage products. By reason of its business, CCBPI entered into a
Warehousing Management Agreement with MDTC for the latter to perform warehousing
and inventory functions for the former.

CCBPI and Lyons insisted that MDTC was a legitimate and independent
contractor, which only assigned petitioners at CCBPI's plant in Otis, Manila. They posited
that MDTC carried on a distinct and independent business; catered to other clients, aside
from CCBPI; and possessed sufficient capital and investment in machinery and
equipment for the conduct of its business as well as an office building.
CCBPI and Lyons averred that when the Warehousing Management Agreement
between CCBPI and MDTC expired, the parties no longer renewed the same.
Consequently, it came as a surprise to CCBPI that petitioners filed this complaint
considering that CCBPI was not their employer, but MDTC.

Issues:
1. Whether or not there exists [an] employer-employ[ee] relationship between
Petitioners and Respondent CCBPI;
2. Whether or not Petitioners were dismissed without cause and due process;

Ruling:
Pursuant to Article 295 of the Labor Code a regular employee is a) one that has
been engaged to perform tasks usually necessary or desirable in the employer's usual
business or trade — without falling within the category of either a fixed or a project or a
seasonal employee; or b) one that has been engaged for a least one year, whether his or
her service is continuous or not, with respect to such activity he or she is engaged, and
the work of the employee remains while such activity exists. To ascertain if one is a
regular employee, it is primordial to determine the reasonable connection between the
activity he or she performs and its relation to the trade or business of the supposed
employer.

Page | 74
 Relating petitioners' tasks to the nature of the business of CCBPI — which involved
the manufacture, distribution, and sale of soft drinks and other beverages — it cannot be
denied that mixing and segregating as well as loading and bringing of CCBPI's products
to its customers involved distribution and sale of these items. Simply put, petitioners'
duties were reasonably connected to the very business of CCBPI. They were
indispensable to such business because without them the products of CCBPI would not
reach its customers.

Petitioners have worked for CCBPI since 1993 (Lingat) and 1996 (Altoveros) until
the non-renewal of their contracts in 2005. Aside from the fact that their work involved the
distribution and sale of the products of CCBPI, they remained to be working for CCBPI
despite having been transferred from one agency to another. Hence, such repeated re-
hiring of petitioners, and the performance of the same tasks for CCBPI established the
necessity and the indispensability of their activities in its business.

Labor only-contracting

CCBPI and Lyons' contention that MDTC was a legitimate labor contractor and
was the actual employer of petitioners does not hold water.

A labor-only contractor is one who enters into an agreement with the principal
employer to act as the agent in the recruitment, supply, or placement of workers for the
latter. A labor-only contractor 1) does not have substantial capital or investment in tools,
equipment, work premises, among others, AND the recruited employees perform tasks
necessary to the main business of the principal; or 2) does not exercise any right of control
anent the performance of the contractual employee. In such case, where a labor-only
contracting exists, the principal shall be deemed the employer of the contractual
employee; and the principal and the labor-only contractor shall be solidarily liable for any
violation of the Labor Code.

On the other hand, a legitimate job contractor enters into an agreement with the
employer for the supply of workers for the latter but the "employer-employee relationship
between the employer and the contractor's employees [is] only for a limited purpose, i.e.,
to ensure that the employees are paid their wages."

Here, based on their Warehousing Management Agreement, CCBPI hired MDTC

to perform warehousing management services, which it claimed did not directly relate to
its (CCBPI's) manufacturing operations. However, it must be stressed that CCBPI's
business not only involved the manufacture of its products but also included their
distribution and sale. Thus, CCBPI's argument that petitioners were employees of MDTC
because they performed tasks directly related to "warehousing management services,"
lacks merit. The records show that petitioners were performing tasks directly related to
CCBPI's distribution and sale aspects of its business.

Page | 75
 To reiterate, CCBPI is engaged in the manufacture, distribution, and sale of its
products; in turn, as plant driver and segregator/mixer of soft drinks, petitioners were
engaged to perform tasks relevant to the distribution and sale of CCBPI's products, which
relate to the core business of CCBPI, not to the supposed warehousing service being
rendered by MDTC to CCBPI. Petitioners' work were directly connected to the
achievement of the purposes for which CCBPI was incorporated. Certainly, they were
regular employees of CCBPI.

As regular employees, petitioners may be dismissed only for cause and with due
process. These requirements were not complied with here.

33 Mamaril vs. Red System Company, GR No. 229920, July 4, 2018

Doctrine: “An employee's tenurial security shall not be used as a shield to force the hand
of an employer to maintain a recalcitrant employee, whose continued employment is
patently inimical to the employer's interest. Accordingly, an employee who is found to be
willfully disobedient of the employer's lawful and reasonable rules and regulations may
be dismissed from service.”

Facts:
Red System is a company engaged in the business of transporting Coca Cola
Products from Coca-Cola warehouses to its various customers. Red System owns and
operates several delivery trucks. Red System employed Mamaril as a delivery service
representative. Mamaril was assigned in Davao and was tasked to transport goods from
various depots to the end users. Prior to his employment as a delivery service
representative, Mamaril was required to undergo seminars to orient him on the rules and
regulations of Red System. During the orientation, drivers like Mamaril, were reminded to
always observe the following safety rules, namely, to put a tire choke (kalso), engage the
hand brake, and shift the transmission to first gear, before leaving the parked vehicle.
These safeguards were necessary to prevent the movement of the truck while pushed by
a forklift during loading and unloading operations.

Three days after Mamaril's employment, he failed to put a tire choke, and worse,
shifted the gear to neutral after parking the truck he was driving. This caused the truck to
move, which caused damage to Coca-Cola products valued at Php14,556.00. Mamaril
did not report the incident, and even concealed the matter.

Upon discovering Mamaril's mishap, Red System immediately re-assigned the

former as a warehouse yard driver. As a yard driver, he was involved in yet another
accident. Mamaril parked a truck without again putting a tire choke and engaging the hand
break. As a result, the parked truck moved and hit another vehicle, causing damage
amounting to Php25,500.00. Mamaril again concealed the incident.

Red System sent Mamaril a Notice to Explain. Mamaril submitted his written
explanation, where he admitted that he violated the safety rules, which caused damage
to the truck.

Page | 76
 Meanwhile, during the pendency of the administrative hearing against Mamaril,
Red Systems' officers noticed that the former encountered several near-accident misses
and exhibited a lack of concern towards his work. Consequently, Mamaril was advised to
be more focused on his duties. However, the advice remained unheeded. Thus, to protect
the safety of the company personnel and equipment, Red System placed Mamaril under
preventive suspension for a period of one month.

Subsequently, prior to the expiration of the 30-day preventive suspension and after
the completion of the administrative investigation, Red System found Mamaril guilty of
violating the Company Code of Conduct, particularly, Article 4 or Unacceptable Conduct
and Behavior, as well as Rule 5, Section 2, pertaining to "Other Offenses or Other Acts
of Negligence, Inefficiency in the Performance of Duties or in the Care, Custody/or Use
of Company Property, Funds or Equipment Where the Amount of Loss or Damage to the
company amounted to more than Php25,000.00." Accordingly, Mamaril was terminated
for willful disobedience and willful breach of trust as provided under Article 297 of
the Labor Code.

Aggrieved, Mamaril filed a Complaint for illegal dismissal, he asserted that his
termination from employment was too harsh as it was manifestly disproportionate to his
infractions. Moreover, he claims that he was even subjected to a double penalty that was
harsh and excessive, as he was initially placed under suspension and thereafter
dismissed, based on the same infraction.

Issues:
1. Whether or not Mamaril was illegally dismissed by Red System, and is
consequently entitled to reinstatement and full backwages; and
2. Whether or not Red System was guilty of imposing a double penalty against
Mamaril.

Ruling:

Mamaril was validly dismissed on

account of his willful disobedience of
the lawful orders of Red System.

Article 297 of the Labor Code affirms the right of an employer to dismiss a miscreant
employee on account of the latter's willful disobedience. For an employee to be validly
dismissed on the ground of willful disobedience, the employer must prove by substantial
evidence that: (1) the employee's assailed conduct must have been willful or intentional,
the willfulness being characterized by a wrongful and perverse attitude; and (2) the order
violated must have been reasonable, lawful, made known to the employee and must
pertain to the duties which he had been engaged to discharge.

Page | 77
 In the case at bar, the lifeblood of Red System's business is the safe transport and
delivery of Coca-Cola products from the warehouse to the customers. As such, drivers
were repeatedly reminded to place a tire choke, shift the engine to first gear, and pull the
hand brake, upon parking the truck. Compliance with these safety measures was
essential to prevent the sudden movement of the truck while parked and pushed by a
forklift during loading and unloading operations.

Red System was not remiss in reminding its drivers of the importance of abiding
by their safety regulations.

Notably, Mamaril violated Red System's safety rules twice, and caused damage
amounting to over Php40,000.00. To make matters worse, he even deliberately and
willfully concealed his transgressions. Such flagrant violation of the rules, coupled with
the perversity of concealing the incidents, patently show a wrongful and perverse mental
attitude rendering Mamaril's acts inconsistent with proper subordination. Indubitably, this
shows that Mamaril was indeed guilty of willful disobedience of Red System's lawful
orders.

Clearly, Mamaril's acts constituted a violation of Red System's company policy.

Rule 5, Section 2 (b) (3) of Red System's Code of Conduct penalizes other acts of
negligence or inefficiency in the performance of duties or in the care, custody and/or use
of company property, funds and/or equipment. A violation of such rule warrants a penalty
of dismissal.

Mamaril's preventive suspension and

subsequent dismissal from the
service do not partake of a double
penalty; neither may his dismissal be
regarded as harsh and excessive

Mamaril's initial suspension was a preventive suspension that was necessary to

protect Red System's equipment and personnel.

Preventive suspension is a measure allowed by law and afforded to the employer

if an employee's continued employment poses a serious and imminent threat to the
employer's life or property or of his co-workers." An employee may be placed under
preventive suspension during the pendency of an investigation against him.

In fact, the employer's right to place an employee under preventive suspension is

recognized in Sections 8 and 9 of Rule XXIII, Book V of the Omnibus Rules Implementing
the Labor Code.

In the case at bar, Mamaril was placed under preventive suspension considering
that during the pendency of the administrative hearings, he was noticed to have several

Page | 78
near-accident misses and he had exhibited a lack of concern for his work. His
inattentiveness posed a serious threat to the safety of the company equipment and
personnel. This is especially true considering that he was driving trucks loaded with fragile
products.

Even if the errant employee committed the acts complained of almost a year before the
investigation was conducted, the employer shall not be estopped from placing the former
under preventive suspension, if the employee still performs functions that involve handling
the employer's property and funds. The employer still has every right to protect its assets
and operations pending the employee's investigation. Red System's decision to place
Mamaril on preventive suspension does not in any way render the said decision
questionable. What matters is that Mamaril's continued employment posed a threat to the
company's properties and personnel. It would be at the height of inequity to prevent Red
System from enacting measures to protect its own equipment pending the administrative
investigation.

15. SUSPENSION OF BUSINESS OPERATIONS

CASES

34. Spectrum Security Services Inc, vs. Grave et al., GR No. 196650, June 7, 2017

Doctrine: A security guard placed on reserved or off-detail status is deemed

constructively dismissed only if the status should last more than six months. Any claim of
constructive dismissal must be established by clear and positive evidence.

Facts: Spectrum Security Services, Inc. (petitioner), a domestic corporation engaged in

the business of providing security services, employed and posted the respondents at the
premises of Ibiden Philippines, Inc. (Ibiden). When the petitioner implemented an action
plan as part of its operational and manpower supervision enhancement program geared
towards the gradual replacement of security guards at Ibiden, it issued separate
"Notice(s) to Return to Unit" to the respondents in July and August 2008 directing them
to report to its head office and to update their documents for re-assignment.
However, On August 14, 2008, the respondents filed their complaint against the
petitioner for constructive dismissal in the Regional Arbitration Branch No. IV of the
NLRC, claiming that the implementation of the action plan was a retaliatory measure
against them for bringing several complaints along with other employees of the petitioner
to recover unpaid holiday pay and 13th month pay. The Labor Arbiter dismissed the
complaint for constructive dismissal upon finding that there was no evidence adduced by
complainants in the form of a termination letter and the like to substantiate their claim that
they were indeed unceremoniously terminated by petitioner. On appeal to the NLRC, the
latter reversed the ruling of the Labor Arbiter and noted that had the petitioner really
intended to re-assign the respondents to new posts, the petitioner should have indicated

Page | 79
in the notices the new postings or re-assignments. Such ruling was affirmed by the Court
of Appeals via a petition for Certiorari under Rule 65.

Issue: Whether the petitioner was guilty of illegally dismissing the respondents.

Ruling: NO. The Supreme Court held that while security guards are entitled to security
of tenure, their situation should be differentiated from that of other employees or workers.
Their security of tenure, though it shields them from demotions in rank or diminutions of
salaries, benefits and other privileges, does not vest them with the right to their positions
or assignments that will prevent their transfers or re-assignments (unless the transfers or
re-assignments are motivated by discrimination or bad faith, or effected as a form of
punishment or demotion without sufficient cause). Such peculiar conditions of their
employment render inevitable that some of them just have to undergo periods of reserved
or off-detail status that should not by any means equate to their dismissal. Only when the
period of their reserved or off-detail status exceeds the reasonable period of six months
without re-assignment should the affected security guards be regarded as dismissed.
In illegal dismissal cases, the general rule is that the employer has the burden of
proving that the dismissal was legal. To discharge this burden, the employee must first
prove, by substantial evidence, that he had been dismissed from employment. In this
case, the notices sent to the respondents contained nothing from which to justly infer their
having been terminated from their employment. Furthermore, the six-month period had
not yet lapsed.
Contrary to the findings of the CA, the respondents intended to sever their
employer-employee relationship with the petitioner because they applied for and obtained
employment with other security agencies while they were on reserved status. Their having
done so constituted a clear and unequivocal intent to abandon and sever their
employment with the petitioner. Thereby, the filing of their complaint for illegal dismissal
was inconsistent with the established fact of their abandonment.

35. Ibon vs. Genghis Khan Security Services Inc. GR No. 221085, June 19, 2017
Doctrine: General Rule: “[1] an employer must assign the security guard to another
posting within six (6) months from his last deployment, otherwise, he would be considered
constructively dismissed; and [2] the security guard must be assigned to a specific or
particular client. A general return-to-work order does not suffice.
Exception: In Exocet Security and Allied Services Corporation v. Serrano (Exocet
Security), the Court absolved the employer even if the security guard was on a floating
status for more than six (6) months because the latter refused the reassignment to
another client”

Facts: Ravengar G. Ibon was employed as a security guard by Genghis Khan Security
Services (respondent). He was initially assigned to a certain Mr. Solis in New Manila,
Quezon City. In July 2008, he was transferred to the 5th Avenue Condominium in Fort
Bonifacio, Taguig City, in September 2008 and was posted there until May 2009. In June
2009, petitioner was transferred to the Aspen Tower Condominium until his last duty on
October 4, 2010. Thereafter, respondent promised to provide him a new assignment,
which, however, did not happen.
Page | 80
Petitioner asserts that he has been illegally dismissed as he was put on floating status
without any assignment to new work, while respondent here claims that they had actually
suspended petitioner for sleeping on the job. Further, they assert that they sent letters to
petitioner requiring him to report back to work and that it offered reinstatement during the
proceedings before the LA, which petitioner turned down

Issue: Whether or not petitioner was constructively dismissed?

Ruling: Temporary displacement or temporary off-detail of security guard is, generally
allowed in a situation where a security agency's client decided not to renew their service
contract with the agency and no post is available for the relieved security guard. Such
situation does not normally result in a constructive dismissal. Nonetheless, when the
floating status lasts for more than six (6) months, the employee may be considered to
have been constructively dismissed.
Security guard on floating status must be assigned to a specific posting
Petitioner was last deployed on October 4, 2010. Thus, it was incumbent upon respondent
to show that he was redeployed within six (6) months from the said date. Otherwise,
petitioner would be deemed to have been constructively dismissed.
A holistic analysis of the Court's disposition in JFLP Investigation reveals that: [1] an
employer must assign the security guard to another posting within six (6) months from his
last deployment, otherwise, he would be considered constructively dismissed; and [2] the
security guard must be assigned to a specific or particular client. A general return-to-work
order does not suffice.
In Exocet Security and Allied Services Corporation v. Serrano (Exocet Security), the
Court absolved the employer even if the security guard was on a floating status for more
than six (6) months because the latter refused the reassignment to another client, to wit:
Respondent should have deployed petitioner to a specific client within six (6) months
from his last assignment. The correspondence allegedly sent to petitioner merely
required him to explain why he did not report to work. He was never assigned to a
particular client. Thus, even if petitioner actually received the letters of respondent, he
was still constructively dismissed because none of these letters indicated his
reassignment to another client.

16. DISEASE AS GROUND FOR TERMINATION

17. OTHER CAUSES OF SEVERANCE OF EMPLOYMENT RELATION

CASES
1. Catotocan vs. Lourdes School of Quezon City et al., Gr No. 213486, April 26, 2017,
Ibid.
2. Philippine Airlines vs. Hassaram, GR No. 217730, June 5, 2017, Ibid.
3. Laya vs. Court of Appeals, GR No. 205813, January 10, 2018, Ibid.

18. PRESCRIPTION OF CLAIMS

19. JURISDICTION OF THE LABOR ARBITER

Page | 81
1. Cacho et al., vs. Balagtas, GR No. 202974, February 7, 2018
Doctrine: Intra-corporate controversies are within the jurisdiction of the regular courts, by
contrast to ordinary labor disputes that are within the jurisdiction of the Labor Arbiter.

Facts: Balagtas sued Cacho, President of North Star company, for constructive
dismissal. Balagtas was a Chief Executive Officer of North Star. Pursuant to a board
resolution, she was placed under preventive suspension for some alleged questionable
transactions, and was later prevented from reassuming her position.

Issue: Was the case an ordinary labor dispute that the Labor Arbiter may take
cognizance?

Ruling: No. It is an intra-corporate controversy as it passed the Two-Tier Test: (1)

Relationship Test; (2) Nature of the Controversy Test.

A dispute is considered an intra-corporate controversy under the relationship test when

the relationship between or among the disagreeing parties is any one of the following: (a)
between the corporation, partnership, or association and the public; (b) between the
corporation, partnership, or association and its stockholders, partners, members, or
officers; (c) between the corporation, partnership, or association and the State as far as
its franchise, permit or license to operate is concerned; and (d) among the stockholders,
partners, or associates themselves.

In order to determine whether Balagtas was a corporate officer, two conditions must be
met: (1) the position occupied was created by charter/by-laws, and (2) the officer was
elected (or appointed) by the corporation's board of directors to occupy said position. In
the instant case, Balagtas’ position is one of the corporate offices in the By-Laws of North
Star. She was appointed by the board. Hence, she was a corporate officer. There is an
intra-corporate relationship between the parties.

The second tier is the Nature of the Controversy Test that contemplates disagreement
not only rooted in the existence of an intra-corporate relationship, but also pertain to the
enforcement of the parties' correlative rights and obligations under the Corporation Code
and the internal and intra-corporate regulatory rules of the corporation. If the relationship
and its incidents are merely incidental to the controversy or if there will still be conflict
even if the relationship does not exist, then no intra-corporate controversy exists. To be
considered an intra-corporate controversy, the dismissal of a corporate officer must have
something to do with the duties and responsibilities attached to his/her corporate office
or performed in his/her official capacity.

Because the transactions (misappropriations) were alleged to have been committed by

Balagtas as a corporate officer that breached North Star’s trust and confidence reposed
in her, her dismissal is not a mere labor dispute. Consequently, this case is outside the
Labor Arbiter’s jurisdiction.

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2. Philippine Airlines Inc., vs. Airline Pilots Association of the Phils., et al., GR No.
200088, February 26, 2018

Doctrine: The LA and the NLRC have jurisdiction over actions for damages arising from
employer-employee relations. However, when the SOLE assumes jurisdiction over a
labor dispute, a claim for damages should be asserted with the main case before the
SOLE.
Facts: ALPAP filed with the DOLE a notice of strike alleging that PAL committed unfair
labor practice. The SOLE assumed jurisdiction and prohibited the strike. Despite the
prohibition, the strike was conducted. It was declared by the SOLE to be illegal and such
resolution had attained its finality. After 8 months, PAL filed before the LA a complaint for
damages against ALPAP and some of its officers and members. PAL alleged that its
striking pilots abandoned 3 PAL aircrafts causing it to incur liability for violation of its
contract of carriage with its passengers.
Issue: Whether or not the Labor Arbiter and NLRC have jurisdiction over actions for
damages arising from a labor strike?
Ruling:
 Yes. Under Art. 224, par. 4 of the Labor Code, as amended, the LA and the NLRC
have jurisdiction over claims for actual, moral, exemplary and other forms of damages
arising from employer-employee relations. To determine whether such damages are
cognizable by the Labor Arbiter, jurisprudence has evolved the “reasonable connection
rule” where the claims for damages must have reasonable causal connection with any of
the claims provided for in that article.
Applying the said rule, PAL’s claim for damages has reasonable connection with its
employer-employee relationship with ALPAP. PAL’s cause of action is not grounded on
mere acts of quasi-delict but arose from the illegal strike and acts committed during the
same which were in turn closely related and intertwined with ALPAP’s allegations of unfair
labor practices against PAL.

However, PAL is no longer entitled to an award of damages. The issue on damages is a

controversy which arose from the labor dispute between the parties. Consequently, when
the SOLE assumed jurisdiction over the labor dispute, the claim for damages was
deemed included therein. Thus, the issue on damages was also deemed resolved when
the SOLE decided the main controversy declaring the strike to be illegal. To award
damages to PAL would be to sanction a relitigation of the issue of damages separately
from the main issue of the legality of the strike from which it is intertwined. This runs
counter to the proscription against split jurisdiction. Likewise, PAL’s claim for damages is
barred under the doctrine of immutability of final judgment. PAL should have asserted its
claim for damages before the SOLE and to elevate the case to the CA when the SOLE
failed to rule on the matter of damages.

3. Ellao y Dela vega vs. Batangas Electric Cooperative Inc., GR No. 209166, July 9,
2018
Doctrine: (1) Illegal dismissal of an officer or other employee of a private employer is
cognizable by labor arbiter under the Labor Code (Art.217-a-2), as amended, except
when the complaint involves corporate officer in which the the jurisdiction belongs to RTC.

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(2) Registration with SEC is not an operative factor in determining the jurisdiction as it is
relevant only when a non-stock cooperative decides to convert into a stock corporation.

Facts: Ellao was a general manager of an electric cooperative. He alleged that he was
illegally dismissed by the cooperative and that since it’s not a corporation registered with
SEC, the jurisdiction belongs to labor tribunals.

Issue: What court has jurisdiction?

Ruling: RTC. Registration with SEC is not an operative factor in determining the
jurisdiction as it is relevant only when a non-stock cooperative decides to convert into a
stock corporation. Thus, even without choosing to convert into a stock corporation,
cooperatives already are vested by law with juridical personality enjoying corporate
powers.

Only officers of a corporation were those given that character either by the Corporation
Code or by the By-Laws so much so that the rest of the corporate officers could be
considered only as employees or subordinate officials.

General manager is a position expressly provided under the cooperative’s by-laws: the
functions of the office of the General Manager, i.e., management of the Cooperative and
to keep the Board fully informed of all aspects of the operations and activities of the
Cooperative are specifically laid down under BATELEC I's By-laws itself. It is therefore
beyond cavil that Ellao's position as General Manager is a cooperative office. Accordingly,
his complaint for illegal dismissal partakes of the nature of an intra-cooperative
controversy; it involves a dispute between a cooperative officer on one hand, and the
Board of Directors, on the other.

20. 2011 NLRC RULES OF PROCEDURE OF THE NLRC

CASES:

1. Fontana Development Corp., vs. Vukasinovic, GR No. 222424, Sept. 21, 2016

Doctrine: “There is forum shopping when a party repetitively avails of several judicial
remedies in different courts, simultaneously or successively, all substantially founded on
the same transactions and the same essential facts and circumstances, and all raising
substantially the same issues either pending in or already resolved adversely by some
other court.”

Facts: Sascha Vukasinovic was the Director for Business Development of FDC for one
year. He allegedly received a text message from Mallari informing him that Nestor
Dischoso and Chief Hotel Engineer Jaime Villareal both officers of petitioner FDC, were
receiving commissions from company transactions. Respondent met with Mallari and
offered her money in exchange for evidence that will support her allegations. Respondent

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then reported the alleged corruption of the engineer to the head of the FDC. However,
upon investigation by FDC, Mallari denied that Engr. Villareal asked for commissions from
her and revealed that she merely fabricated the story against Engr. Villareal so that she
can ask money from respondent. Villareal then filed a case against respondent. FDC
terminated respondent's employment after finding him guilty of acts of dishonesty.

When the case was elevated to NLRC, the Commission noted that respondent had
previously filed another complaint, G.R SP No. 126225, before the same branch of the
NLRC in San Fernando, Pampanga, involving the same facts, issues, and prayer. This
previous case has been dismissed by Labor Arbiter Reynaldo Abdon on the ground of
forum shopping. Such decision has become final.

Petitioners filed this petition contending that the CA erred in not dismissing outright
respondent's petition in CA G.R. SP No. 125945. They claim that given the final decision
in CA-G.R. SP No. 126225, wherein all the elements of litis pendentia were found, the CA
should have refused to take cognizance of the case.

Issue: Whether the CA gravely erred in not dismissing the petition in CA-G.R. SP No.
125945 for deliberate forum shopping.

Ruling: Yes. There is forum shopping when a party repetitively avails of several judicial
remedies in different courts, simultaneously or successively, all substantially founded on
the same transactions and the same essential facts and circumstances, and all raising
substantially the same issues either pending in or already resolved adversely by some
other court. Rule 7, Sec. 5 of the Rules of Court states that the plaintiff or principal party
shall certify under oath in the complaint or other initiatory pleading asserting a claim for
relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a)
that he has not theretofore commenced any action or filed any claim involving the same
issues in any court, tribunal or quasi judicial agency and, to the best of his knowledge, no
such other action or claim is pending therein; (b) if there is such other pending action or
claim, a complete statement of the present status thereof; and (c) if he should thereafter
learn that the same or similar action or claim has been filed or is pending, he shall report
that fact within five (5) days therefrom to the court wherein his aforesaid complaint or
initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere
amendment of the complaint or other initiatory pleading, but shall be a cause for the
dismissal of the case without prejudice, unless otherwise provided, upon motion and after
hearing. The submission of a false certification of or non-compliance with any of the
undertakings therein shall constitute indirect contempt of court, without prejudice to the
corresponding administrative and criminal actions. If the acts of the party or his counsel
clearly constitute willful and deliberate forum shopping, the same shall be a ground for
summary dismissal with prejudice and shall constitute direct contempt, as well as a cause
for administrative sanctions.
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In this case, respondent filed two labor complaints: first, NLRC Case No. RAB III-11-
16967-10-P; and second, NLRC Case No. RAB III-09-18113-11. The causes of action in
the respective complaints in the two (2) cases stemmed from the adverse decision in the
administrative case filed against respondent that resulted to his dismissal from
employment.

Once there is a finding of forum shopping, the penalty is summary dismissal not only of
the petition pending before this Court, but also of the other case that is pending in a lower
court. This is so because twin dismissal is the punitive measure to those who trifle with
the orderly administration of justice.

Furthermore, Rule 7, Section 5 of the Rules of Court mandates that a willful and deliberate
forum shopping shall be a ground for summary dismissal of a case with prejudice.
Consequently, the CA should have dismissed the case outright without rendering a
decision on the merits of the case. Respondent should be penalized for willfully and
deliberately trifling with court processes. The purpose of the law will be defeated if
respondent will be granted the relief prayed for despite his act of deliberately committing
forum shopping.

2. Manila Doctors College vs. Olomores, GR No. 225044, Oct. 3, 2016

Doctrine: "the decision of the LA reinstating a dismissed or separated employee, insofar

as the reinstatement aspect is concerned, shall immediately be executory, even pending
appeal. The employee shall either be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation or, at the option of the employer,
merely reinstated in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement." Verily, the employer is duty-bound to reinstate the
employee, failing which, the employer is liable instead to pay the dismissed employee's
salary.”

Facts: Olores was a faculty member of petitioner Manila Doctors College (MDC) assigned
at the Humanities Department of the College of Arts and Sciences. He was dismissed for
Grave Misconduct after being found guilty of employing a grading system that was not in
accordance with the guidelines set by MDC. Thus, he filed a case for illegal dismissal

The LA ruled in his favor in its decision dated December 8, 2010 which ordered the
reinstatement of Olores as faculty member under the same terms and conditions of his
employment, without loss of seniority rights but without backwages and an alternative
option to instead receive separation pay in lieu of reinstatement. MDC appealed this
ruling.

Meanwhile, while the case was pending appeal, Olores filed a motion for the issuance of
a writ of execution which was eventually granted by the LA in an Order. Aggrieved, MDC
sought a TRO before the NLRC which granted the same.

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When the case reached the CA, the said court ruled that LA's order of reinstatement is
immediately executory; thus, the employer has to either re-admit the employee to work
under the same terms and conditions prevailing prior to his dismissal, or to reinstate him
in the payroll; and that even if such order of reinstatement is reversed on appeal, the
employer is still obliged to reinstate and pay the wages of the employee during the period
of appeal until reversal by a higher court or tribunal

Issue: Whether the CA’s ruling is correct?

Ruling: Yes. Under Article 223 (now Article 229) of the Labor Code, "the decision of the
LA reinstating a dismissed or separated employee, insofar as the reinstatement aspect is
concerned, shall immediately be executory, even pending appeal. The employee shall
either be admitted back to work under the same terms and conditions prevailing prior to
his dismissal or separation or, at the option of the employer, merely reinstated in the
payroll. The posting of a bond by the employer shall not stay the execution for
reinstatement." Verily, the employer is duty-bound to reinstate the employee, failing
which, the employer is liable instead to pay the dismissed employee's salary.

However, in the event that the LA's decision is reversed by a higher tribunal, the
employer's duty to reinstate the dismissed employee is effectively terminated. This means
that an employer is no longer obliged to keep the employee in the actual service or in the
payroll. The employee, in turn, is not required to return the wages that he had received
prior to the reversal of the LA's decision. Notwithstanding the reversal of the finding of
illegal dismissal, an employer, who, despite the LA's order of reinstatement, did not
reinstate the employee during the pendency of the appeal up to the reversal by a higher
tribunal may still be held liable for the accrued wages of the employee, i.e., the unpaid
salary accruing up to the time of the reversal.

Thus, while herein respondent may have been given an alternative option to instead
receive separation pay in lieu of reinstatement, there is no denying that, based on the
provisions of the Labor Code and as attributed in jurisprudence, it is his employer who
should have first discharged its duty to reinstate him.

3. Dee Jay’s Inn & Café vs. Raneses, GR No. 191823, Oct. 5, 2016

Doctrine: A petitioner’s cause of action should be ascertained not from a reading of his
complaint alone but also from a consideration and evaluation of both his complaint and
position paper.

Facts:
Petitioner hired respondent as a cashier/receptionist in its café with a salary of P
3,000/month. The controversy arose when respondent filed a complaint against petitioner
before the Social Security System for non-remittance of SSS contributions and before the

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NLRC Arbitration Unit for non-payment of wages, overtime pay, holiday pay, service
incentive leave, 13th month pay, and moral and exemplary damages.

According to respondent, she was illegally terminated by petitioner because she

filed a complaint against the latter. On the other hand, petitioner denied the illegal
dismissal and argued that it was respondent who merely walked out and refused to
account for the missing money in their custody.

The Labor Arbiter rendered a decision dismissing the case for illegal dismissal on
two grounds:

a.) that there was no positive or unequivocal act on petitioner’s part to support the
allegation of illegal dismissal; and
b.) respondent’s allegation of illegal dismissal was not even pleaded in her verified
complaint in violation of the NLRC Rules of Procedure.

Subsequently, the NLRC affirmed the decision of the Labor Arbiter.

However, on appeal, the Court of Appeals reversed the decision of the NLRC and
held that the respondent was illegally dismissed and by averring facts constituting her
alleged dismissal in her position paper, she, in fact, had properly pleaded a cause of
action for illegal dismissal.

Issue:
WON respondent’s cause of action for illegal dismissal which was belatedly included in
the position paper and not originally pleaded in the complaint can still be given cognizance

Ruling:
Yes. Under Section 4, Rule V of the 2002 NLRC Rules of Procedure, the verified
position papers to be submitted to the NLRC shall cover only those claims and causes of
action raised in the complaint excluding those that may have been amicably settled, and
shall be accompanied by all supporting documents including the affidavits of their
respective witnesses which shall take the place of the latter’s direct testimony. The parties
shall thereafter not be allowed to allege fats, or present evidence to prove facts, not
referred to and any cause or causes of action not in included in the complaint or position
papers, affidavits and other documents.

Stated differently, the parties could allege and present evidence to prove any
causes of action included, not only in the complaint, but in the position paper as well. As
further reiterate in Samar-Med v. NLRC, a petitioner’s cause of action should be
ascertained not from a reading of his complaint alone but also from a consideration and
evaluation of both his complaint and position paper.

4. Buenaflor Car Services vs. Cezar Durumpili David GR No. 222730, Nov. 7, 2016

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Doctrine: “NLRC is not bound by the technical rules of procedure as it is allowed to be
liberal in the application of its rules in deciding labor cases.”
Facts: David was emplyod as Service Manager by Buenaflor Car Services, Inc.
(company) where he was in charge of the overall day-to-day operations. A company
policy was implemented with respect to the purchase and delivery of automotive parts
and products. The preparation of the purchase order is submitted for review and approval
of David. Also, it was a company policy that all checks should be issued in the name of
the specific supplied and not in "cash".
After some time, a call was received by the company from the bank informing the
former that several checks were cleared bearing the words "OR CASH" indicated after
the payee's name. An investigation by the company was then conducted and the
accounting assistant, Del Rosario, confessed that it was David's instruction to insert the
word after same has been signed by all the authorized signatories. After investigation and
submission of written explanation, David and his co-workers were terminated on the
ground of serious misconduct and willful breach of trust.
Issue: Was David illegally dismissed?
Ruling: Yes. The claim for misconduct and/or willful breach of trust hinged on David's
alleged directive to insert the word "or cash" in the check payable to the company's
supplier/s. David's defense that he has no control of the finance and billing, while it may
be true, is still highly unlikely that he did not participate in the scheme to defraud the
company since the checks would not have been issued if there weren't any spurious
purchase orders. Being the approving authority of the spurious purchase orders, David
cannot disclaim any culpability in the resultant issuance of the questioned checks.
Therefore, there was a valid ground to dismiss David.

Was the confession of Del Rosario, directly implicating David, inadmissible in

evidence on account of res inter alios acta rule?

No. Under Section 30, Rule 130 of the Rules of Court, rights of the party cannot
be prejudiced by an act, declaration, or omission of another, consequently, and
extrajudicial confession is binding only on the confessant and is not admissible against
his/her co-accused because it is considered as a hearsay against them.

However, NLRC is not bound by the technical rules of procedure as it is allowed

to be liberal in the application of its rules in deciding labor cases. In any case, even if it is
assumed that the rule on res inter alios acta were to apply in illegal dismissal cases, the
treatment of the extrajudicial confession as hearsay is bound by the exception on
independently relevant statements. Verily, Del Rosario's extrajudicial confession is
independently relevant to prove the participation of David in the scheme considering his
vital role in the company's procurement process.

5. C.I.C.M Mission Seminaries School of Theology Inc. vs. Perez, GR No. 220506,
January 18, 2017

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Doctrine: “In the event the aspect of reinstatement is disputed, backwages, including
separation pay, shall be computed from the time of dismissal until the finality of the
decision ordering the separation pay.”

Facts: In an illegal dismissal case, the LA recognized Perez’s right to receive backwages
and separation pay in lieu of reinstatement. The decision became final and executory on
Oct. 4, 2012. Perez moved for the issuance of a writ of execution but opposed by CICM
alleging that their obligation has been satisfied by the release of the cash bond. LA ruled
that the cash bond was insufficient. NLRC and CA affirmed the decision. CICM argues
that if the employer caused the delay in satisfying the judgment award, the computation
should be up to the finality of the case. If it were the employee's fault, as in this case, the
computation should only run until the time actual reinstatement is no longer possible nor
practicable.

Issue: What should be the legal basis for the computation of the backwages and
separation pay of an illegally dismissed employee in a case where reinstatement was not
ordered?

Ruling: In the event the aspect of reinstatement is disputed, backwages, including

separation pay, shall be computed from the time of dismissal until the finality of the
decision ordering the separation pay. The reason for this is when there is an order of
separation pay, the employment relationship is terminated only upon the finality of the
decision.

Plainly, it does not matter if the delay caused by an appeal was brought about by
the employer or by the employee.

Perez remained an employee pending her partial appeal. Accordingly she is

entitled to have her backwages and separation pay computed until October 4, 2012, the
date when the judgement became final and executory.

6. Turks Shawarma Company vs. Pajaron, et al., GR No. 207156, January 16, 2017

Doctrine: “The posting of cash or surety bond is therefore mandatory and jurisdictional;
failure to comply with this requirement renders the decision of the Labor Arbiter final and
executory. This indispensable requisite for the perfection of an appeal”
Facts: Pajaron and Carbonilla claimed that there was no just or authorized cause for their
dismissal and petitioners failed to comply with the requirements of due process. On April
15, 2010, they filed their respective Complaints.

The Labor Arbiter found credible Pajaron and Carbonilla's version and held them
constructively and illegally dismissed. Then, petitioners appealed before the NLRC.
However, they failed to post in full the required appeal bond. Thus, petitioners' appeal
was dismissed by the NLRC for non-perfection. It was likewise, dismissed by the CA for
the same reason.

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Issue: Is the appeal bond a mandatory jurisdictional requirement for appeal?

Ruling: YES. It is clear from both the Labor Code (Article 223) and the NLRC Rules of
Procedure (Sections 4 and 6 of Rule VI) that there is legislative and administrative intent
to strictly apply the appeal bond requirement, and the Court should give utmost regard to
this intention.

The posting of cash or surety bond is therefore mandatory and jurisdictional; failure
to comply with this requirement renders the decision of the Labor Arbiter final and
executory. This indispensable requisite for the perfection of an appeal ''is to assure the
workers that if they finally prevail in the case[,] the monetary award will be given to them
upon the dismissal of the employer's appeal [and] is further meant to discourage
employers from using the appeal to delay or evade payment of their obligations to the
employees.

7. Dutch Movers Inc. vs. Lequin, et al., GR No. 210032, April 25, 2017

Doctrine: A basic principle that a corporation has a separate and distinct personality from
its stockholders however, such personality may be disregarded or the veil of corporate
fiction may be pierced if it is used to defeat public convenience, justify wrong, protect
fraud or defend crime or is used as a device to defeat labor laws.

Facts:

DMI, a domestic corporation engaged in hauling liquefied petroleum gas,

employed Lequin as truck driver and the rest of respondents as helpers; on December
28, 2004, Cesar Lee, through the Supervisor Nazario Furio, informed them that DMI
would cease its hauling operation for no reason; as such, they requested DMI to issue a
formal notice regarding the matter but to no avail. Later, upon respondents' request, the
DOLE NCR issued a certification revealing that DMI did not file any notice of business
closure. Thus, respondents argued that they were illegally dismissed as their termination
was without cause and only on the pretext of closure.

The Labor Arbiter ruled that there was lack of cause of action. But the NLRC
reversed the decision. It ruled that respondents were illegally dismissed because DMI
simply placed them on standby, and no longer provide them with work. The decision of
the NLRC became final and executory. Respondents filed a motion for writ of execution.
Pending resolution on the motion, DMI ceased its operations without filing a notice of
business closure.

Issue:

Can the NLRC decision be altered or modified after it became final and executory?

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Ruling:

Yes, the principle of immutability of judgment is not absolute. A judgment that has
become final and executor may be altered or modified when there is a supervening event
occurring after the judgment becomes final and executory which renders the decision
unenforceable.

The supervening event in this case was the fact that DMI ceased its operations
after the decision had become final and executory.

To note, a supervening event refers to facts that transpired after a judgment has
become final and executory, or to new situation that developed after the same attained
finality. Supervening events include matters that the parties were unaware of before or
during trial as they were not yet existing during that time.

In Valderrama, the supervening event was the closure of Commodex, the company
therein, after the decision became final and executory, and without any showing that it
filed any proceeding for bankruptcy. The Court held that therein petitioner, the owner of
Commodex, was personally liable for the judgment awards because she controlled the
company.

8. Doble, Jr. vs. ABB Inc. GR No. 215627, June 5, 2017

Doctrine: “While as a general rule, only errors of law are reviewed by the Court in
petitions for review under Rule 45, one of the well-recognized exceptions to this rule is
when the factual findings of the NLRC contradict those of the labor arbiter.”

Facts:

This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to
reverse and set aside the minute Resolution dated November 29, 2013 and Resolution
dated November 28, 2014 issued by the Court of Appeals, and to reinstate with
modification the Decision dated November 29, 2012 of the Labor Arbiter in NLRC-Case
No. NCR-03-04889-12.

Petitioner Luis S. Doble, Jr., a duly licensed engineer, was hired by respondent ABB, Inc.
as Junior Design Engineer on March 29, 1993.

During almost nineteen (19) years of his employment with the respondent ABB, Inc. prior
to his disputed termination, Doble rose through the ranks and was promoted. On March
2, 2012, Doble was called by respondent ABB, Inc. Country Manager and President Nitin
Desai, and was informed that his performance rating for 2011 is one (1) which is
equivalent to unsatisfactory performance. Desai then raised the option for Doble to resign
as Local Division Manager of the PS Division. Thereafter, HR Manager Miranda told

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Doble that he would be paid separation pay equivalent to 75% of his monthly salary for
every year of service, provided he would submit a letter of resignation, and gave him until
12:45 p.m. within which to decide.

On 23 March 2012, HR Manager Miranda and Mr. Doble met at McDonald's Alabang
Town Center wherein he received his check for his resignation benefit and signed all the
pertinent documents, including a Release and Quitclaim. On March 26, 2012, Doble filed
a Complaint for illegal dismissal with prayer for reinstatement and payment of backwages,
other monetary claims and damages. In a Decision dated November 29, 2012, the Labor
Arbiter held that Doble was illegally dismissed because his resignation was involuntary,
and ordered ABB, Inc. and Desai to pay his backwages and separation pay, since
reinstatement is no longer feasible.

Aggrieved by the Decision of the Labor Arbiter, ABB, Inc. and Desai filed an appeal,
whereas Doble filed a partial appeal from the dismissal of his monetary claims. In a
Decision dated June 26, 2013, the two (2) Commissioners of the NLRC Sixth Division
voted to grant the appeal filed by ABB, Inc. and Desai, and to dismiss the partial appeal
of Doble. They found that the resignation of Doble being voluntary, there can be no illegal
dismissal and no basis for the award of other monetary claims, damages and attorney's
fees.

Issue:

WON the NLRC committed grave abuse of discretion for dismissing his complaint for
illegal dismissal

Ruling:
The petition is partly impressed with merit on procedural grounds, but still devoid of
substantive merit.

While as a general rule, only errors of law are reviewed by the Court in petitions for review
under Rule 45, one of the well-recognized exceptions to this rule is when the factual
findings of the NLRC contradict those of the labor arbiter. On the substantive issue of
whether Doble was illegally dismissed, the Court holds that he voluntarily resigned, and
was not constructively dismissed. The test of constructive dismissal is whether a
reasonable person in the employee's position would have felt compelled to give up his
employment/position under the circumstances.

Guided by these principles, the Court agrees with the NLRC that ABB, Inc. and Desai
were able to prove by substantial evidence that Doble voluntarily resigned, as shown by
the following documents (1) the affidavit of ABB, Inc.'s HR Manager Miranda; (2) the
resignation letter; the letter of intent to purchase service vehicle; and ABB, Inc.'s
acceptance letter, all dated March 13, 2012, (3) the Employee Clearance Sheet; (4) the
Certificate of Employment dated March 23, 2012; (5) photocopy of Bank of the Philippine
Islands manager's check in the amount of P2,009,822.72, representing the separation

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benefit; (6) Employee Final Pay Computation, showing payment of leave credits, rice
subsidy and bonuses, amounting to P805,399.35; and (7) the Receipt, Release and
Quitclaim for a consideration of the total sum of P2,815,222.07.

After a careful review of the records, the Court finds that the NLRC has exhaustively
discussed that Doble was not coerced into submitting a resignation letter. Finally, since
the Decision of the NLRC finding Doble to have voluntarily resigned is supported by
substantial evidence and in accord with law and prevailing jurisprudence, no grave abuse
of discretion, amounting to lack or excess of jurisdiction may be imputed against the
NLRC for having dismissed his complaint for illegal dismissal against ABB, Inc. and
Desai.

9. Philtranco Services Enterprises Inc. vs. Cual, et al., GR No. 207684, July 17, 2017

Doctrine:
Audited Financial Statements is the best proof to show that company is suffering business
losses and must be shown and proved during the trial not after. Hiring of new employees
is an indication of bad faith in retrenchment, thus, employer can be liable for illegal
dismissal.

Facts:
Respondents were all included in a retrenchment program embarked by Philtranco in
2006-2007 on the ground that it was suffering business losses. Consequently, they filed
a labor complaint for illegal dismissal alleging that they were not absorbed by Philtranco
despite the fact that the company was hiring new employees. LA only found Olivar to
have been illegally dismissed because of the failure of the other respondents to sign the
verification and certification of non-forum shopping of the complaint and position paper.
Respondents then filed a second NLRC case. LA found respondents to have been
illegally dismissed stating that the first NLRC case is binding upon Philtranco. NLRC
reversed LA’s decision but CA reinstated LA’s decision.

Issue:
Whether or not CA is correct in reinstating LA’s decision that the first NLRC case is
binding upon Philtranco.

Ruling:
The second NLRC case is not a continuation of the first from which other respondents
were excluded. The matter of whether or not Philtranco sufficiently proved its alleged
business losses when it embarked on its retrenchment program is a question of fact.
While both cases are separate, it does not mean that previously decided cases has no
bearing on the second NLRC case. SC held that the LA’s decision in the first NLRC case,
finding Philtranco’s retrenchment program to be illegal, constitutes res judicata in the

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concept of collateral estoppel or issue preclusion wherein it is defined as preclusion of
relitigation of a particular fact of issue in another action between the same parties on a
different claim or cause of action. Conclusiveness of judgment finds application when a
fact or question has been squarely put in issue, judicially passed upon and adjudged in a
former suit by a court of competent jurisdiction. The dictum laid down in the earlier final
judgment or order becomes conclusive and continues to be binding between the same
parties. The invalidity of the retrenchment in the first case has attained finality. Moreover,
records show that the decision was adjudicated on the merits. Absolute identity of parties
Is not required, shared identity of interest is sufficient to invoke the coverage of this
principle. In both cases, the issue of WON complainant were illegally dismissed is hinged
on the validity of Philtranco’s retrenchment program. Without a doubt, the interests of all
the complainants are intertwined on that factual question. The submission of Philtranco
of its audited financial statements for 2006 and 2007 in the second case cannot be
considered supervening event. At the time retrenchment program was effected in 2007,
Philtranco had no basis and was unaware of the true state of its finances. The records
annexed to the case showing that Philtranco hired new employees were taken to belie
Philtranco’s claim that it is exercised the retrenchment of respondents in good faith.

10. Genpact Services Inc. vs. Santos-Falceso, GR No. 227695, July 31, 2017

Doctrine: “A petition for certiorari under Rule 65 of the Rules of Court is a special civil
action that may be resorted to only in the absence of appeal qr any plain, speedy, and
adequate remedy in the ordinary course of law”

Facts:
Genpact is engaged in business process outsourcing, particularly servicing various
multinational clients, including Allstate Insurance Company (Allstate). On different dates
spanning the years 2007 to 2011, Genpact hired respondents Maria Katrina Santos-
Falceso, Janice Ann M. Mendoza, and Jeffrey S. Mariano (respondents) to various
positions to service its Allstate account. However, on April 19, 2012, Allstate ended its
account with Genpact, resulting in respondents being placed on floating status, and
eventually, terminated from service. This prompted respondents to file a complaint before
the National Labor Relations Commission (NLRC).

Respondents alleged that after Allstate terminated its contract with Genpact, they were
initially placed on "benching" status with pay, and after five (5) months, Genpact gave
them the option to either "voluntarily resign" or to "be involuntarily terminated on the
ground of redundancy" with severance pay of one-half (1/2) month basic salary for every
year of service, in either case. Left without the option to continue their employment with
Genpact, respondents chose the latter option and were made to sign quitclaims as a
condition for receiving any and all forms of monetary benefits. In this light, respondents
argued that the termination of Genpact and Allstate's agreement neither amounted to a
closure of business nor justified their retrenchment. Respondents further contended that
Genpact failed to observe the requirements of procedural due process as there was no
showing that the latter served proper notice to the Department of Labor and Employment

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(DOLE) thirty (30) days before they were terminated from service, and that they were not
accorded the chance to seek other employment opportunities

Petitioners justified respondents' termination of employment on the ground of closure or

cessation of Allstate's account with Genpact as part of the former's "[g]lobal [d]ownsizing
due to heavy losses caused by declining sales in North America." Petitioners pointed out
that respondents were properly given separation pay, as well as unpaid allowances and
13th month pay, thus, rendering the latter's monetary claims bereft of merit.

LA Ruling: dismissed respondents' complaint for lack of merit; termination from service
was due to the untimely cessation of the operations of Genpact's client, Allstate, wherein
respondents were assigned

NLRC Ruling: affirmed the LA ruling;

CA: dismissed outright the petition for certiorari purely on procedural grounds; failure to
file a motion for reconsideration before the NLRC prior to elevating the case to the CA is
a fatal infirmity which rendered their petition for certiorari before the latter court
dismissible;

Issue:
Whether or not the CA correctly dismissed outright the certiorari petition filed by
petitioners before it on procedural grounds? NO

Ruling:
A petition for certiorari under Rule 65 of the Rules of Court is a special civil action that
may be resorted to only in the absence of appeal qr any plain, speedy, and adequate
remedy in the ordinary course of law. This notwithstanding, the foregoing rule admits of
well-defined exceptions.

A judicious review of the records reveals that the exceptions in items (d- where, under the
circumstances, a motion for reconsideration would be useless) and (e where petitioner
was deprived of due process and there is extreme urgency for relief-) are attendant in this
case.

Section 15, Rule VII [37] of the 2011 NLRC Rules of Procedure, as amended, provides,
among others, that the remedy of filing a motion for reconsideration may be availed of
once by each party. In this case, only respondents had filed a motion for reconsideration
before the NLRC. Applying the foregoing provision, petitioners also had an opportunity to
file such motion in this case, should they wish to do so. However, the tenor of such
warning effectively deprived petitioners of such opportunity, thus, constituting a violation
of their right to due process.

All told, petitioners were completely justified in pursuing a direct recourse to the CA
through a petition for certiorari under Rule 65 of the Rules of Court. To rule otherwise

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would be clearly antithetical to the tenets of fair play, not to mention the undue prejudice
to petitioners' rights. Thus, in light of the fact that the CA dismissed outright the petition
for certiorari before it solely on procedural grounds, a remand of the case for a resolution
on the merits is warranted

11. Jolo’s Kiddie Carts vs. Caballa, GR No. 230682, November 29, 2017

Facts:
Caballa and Bautista were staff members of JKC’s business. They claimed that they were
never paid the monetary value of their unused service incentive leaves, 13th month pay,
overtime pay, and premium pay for work during holidays. They alleged further that after
JKC found out that they were inquiring from DOLE about the prevailing minimum wage,
they were prohibited from reporting to their work assignment without any justification.
Hence, they argued that they were illegally dismissed.

JKC, for its part, interposed the defense of abandonment. The LA ruled in favor of
respondents awarding all the monetary benefits demanded. The NLRC, however,
modified the ruling by only awarding wage differential and 13th month pay, deleting all
others. Petitioners directly filed a petition for certiorari before the CA without moving for
reconsideration before the NLRC. CA denied the petition due to petitioner’s failure to file
motion for reconsideration.

Issues:
1. Was the CA correct in dismissing the petition?
2. Should the Petition be granted?
3. Were respondents illegally dismissed? Did they abandon their work?

Ruling:
1. No. Generally, the filing of a motion for reconsideration is a condition sine qua non to
the filing of a petition for certiorari. However, there are several recognized exceptions
to the rule, one of which is when the order is a patent nullity.

In this case, the amounts pertaining to the backwages, wage differentials, and 13th month
pay which were then included in the Computation of Monetary Award attached to the
NLRC ruling, were no longer reflected in the NLRC computation. Clearly, such is a patent
nullity as it is bereft of any factual and/or legal basis.

2. Yes. JKC must satisfactorily show that the court or quasi-judicial authority gravely
abused the discretion conferred upon it to justify the grant of the extraordinary remedy
of certiorari.

In labor cases, grave abuse of discretion may be ascribed to the NLRC when its findings
and conclusions are not supported by substantial evidence. The NLRC committed grave
abuse of discretion amounting to lack or excess of jurisdiction when it awarded
respondents increased monetary benefits without any factual and/or legal bases.

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3. No, in both instances. In cases of illegal dismissal, the employer bears the burden of
proof to prove that the termination was for a valid or authorized cause. However, the
employees must first establish by substantial evidence that indeed they were
dismissed.

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

In this case, Caballa and Bautista failed to prove their allegation that JKC dismissed them
from work, as there was no indication as to how the latter prevented them from reporting
to their work stations; nor did JKC perform any overt act that would suggest that they
indeed terminated both Caballa and Bautista’s employment. In the same vein, JKC failed
to prove that Caballa and Bautista committed unequivocal acts that would clearly
constitute intent to abandon their employment. Therefore, the JKC must reinstate the both
Caballa and Bautista.

12. Bugaoisan vs. Owi Group et al., GR No. 226208, February 7, 2018

Doctrine: The findings of fact of the LA, as affirmed by the NLRC, are final and
conclusive, in the absence of proof that the latter acted without, in excess of or with grave
abuse of discretion amounting to lack or excess of jurisdiction.

Facts:
Petitioner was offered full time employment for a term of 1 year as a chef in Australia but
it was modified upon arrival to a term of 2 years. She was tasked to prepare breakfast
buffet for 600 mining employees all by herself. As a result, she was diagnosed to be
suffering from Carpal Tunnel Syndrome (CTS) and was declared unfit to work. Since she
had no other means to support her daily sustenance and the required medication, she
decided to tender her resignation letter and left for the Philippines.

Thus, a complaint for constructive illegal dismissal and payment of salary for the
unexpired portion of the employment period, moral and exemplary damages, and
attorney's fees was filed against respondents, OWI and Morris, before the NLRC.

The Labor Arbiter (LA) ruled that the petitioner was illegally dismissed from employment.
It was found that the respondents committed gross misrepresentation and bad faith in
inducing petitioner to work for them. Petitioner's Carpal Tunnel Syndrome (CTS) was
caused or at least aggravated by respondents' oppressive acts. Furthermore, the tenor of
her resignation letter and the immediate filing of the labor complaint evinced that she did
not voluntarily tender her resignation.

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The NLRC sustained the findings of the LA with regard to the existence of constructive
dismissal, the solidary liability of the respondents, and the award of petitioner's salary for
the unexpired portion of her two-year employment contract.

In resolving the Petition for Certiorari under Rule 65, the CA affirmed the findings of the
NLRC, ruling that no grave abuse of discretion could be attributed to the latter. However,
it modified the decision by reducing the award of unpaid salaries due the petitioner on the
ground that the basis should be the first contract of employment which had a duration of
only one (1) year.

Issue:
Whether or not the CA is correct in modifying the award of unpaid salaries?

Ruling:
No. The supervisory jurisdiction of the CA under Rule 65 was confined only to the
determination of whether or not the NLRC committed grave abuse of discretion in its
appreciation of factual issues presented before it by any parties. The CA is not given
unbridled discretion to modify factual findings of the NLRC and LA, especially when such
matters have not been assigned as errors nor raised in the pleadings.

There being no finding of grave abuse of discretion, the CA erred when it ruled that
petitioner's employment contract with Morris was for only one (1) year.

The Court is precluded from doing an independent review of this factual matter since it
has already been decided by the labor tribunals, unless the CA, in the certiorari petition,
ascertains that the NLRC acted with grave abuse of discretion. Absent such
determination, factual findings of the NLRC are deemed conclusive and binding even on
this Court.

13. Gabriel vs. Petron Corp. et al., GR No. 194575, April 11, 2018

Doctrine: Motion for Extension to File Pleadings under Rule 65

Facts: Gabriel worked for Petron and claimed he had been constructively dismissed. The
LA decided in his favor but was thereafter reversed by the NLRC. Aggrieved, Gabriel
turns to the CA.

Before he could file his petition for certiorari, Gabriel filed a motion for extension three (3)
days before the lapse of the 60-day reglementary period. Gabriel cites time and distance
constraints in his attempt to secure an authentication from the Philippine Consular Office
in Australia. The CA denied this motion. Hence, this case.

Issue: Did the CA commit a reversible error when it denied Gabriel’s motion for
extension?

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Ruling: No. The general rule in Section 4, Rule 65 of the ROC, is that a petition for
certiorari must be filed within 60 days from notice of the judgment. In case of non-
compliance, there should be an effort on the part of the party invoking liberality to advance
a reasonable or meritorious explanation for his/her failure to comply with the rules.

The Court did not find Gabriel's reason to meet the deadline compelling enough to relax
the rule for filing a petition for certiorari under Rule 65. Here, his counsel should have
anticipated that Gabriel needed to take his oath before the Philippine Consular Office. By
giving Gabriel only one week to comply, his lawyer did not give him much time. On the
other hand, Gabriel, assuming he really wanted to pursue his case against Petron, could
have easily visited the Philippine Consular Office as soon as possible. Instead, he opted
to wait for a few days thinking that time was not of the essence.

14. Malcaba et al., vs. Prohealth Pharma Phils., GR No. 209085, June 6, 2018

Doctrine: In appeals of illegal dismissal cases, employers are strictly mandated to file an
appeal bond to perfect their appeals. Substantial compliance, however, may merit
liberality in its application.

Facts: Petitioners Malcaba, Adona, Nepomuceno, and Palit-Ang were employed as the
President, Marketing Manager, Business Manager, and Finance Officer of ProHealth
respectively. The petitioners filed complaints for illegal dismissal, nonpayment of salaries
and 13th month pay, damages, and attorney's fees.

The LA and NLRC ruled in favor of the petitioners. ProHealth moved for reconsideration
before the NLRC but the same was denied. ProHealth then filed a Petition for Certiorari
before the CA. The CA reversed the NLRC’ decision. Petitioners argue that the CA should
have dismissed outright the Petition for Certiorari since respondents failed to post a
genuine appeal bond before the NLRC as the bond the filed did not appear in the records
of Alpha Insurance.

Issue: Whether or not ProHealth failed to perfect their appeal when it was discovered
that their appeal bond was not genuine

Ruling: ProHealth substantially complied with the requirement of an appeal bond. In this
instance, the NLRC certified that ProHealth filed a security deposit in the amount of
P6,512,524.84 under Security Bank check no. 45245 showing that the premium for the
appeal bond was duly paid and that there was willingness to post it. Respondents likewise
attached documents proving that Alpha Insurance was a legitimate and accredited
bonding company.

Despite petitioners’ failure to collect on the appeal bond, they do not deny that they were
eventually able to garnish the amount from respondents' bank deposits. This fulfills the

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purpose of the bond, that is, to guarantee the payment of valid and legal claims against
the employer. Thus, respondents are considered to have substantially complied with the
requirements on the posting of an appeal bond.

While the procedural rules strictly require the employer to submit a genuine bond, an
appeal could still be perfected if there was substantial compliance with the requirement.

15. Consolidated Distillers of far East vs. Zaragosa, GR No. 229302, June 20, 2018
Doctrine: Backwages is computed from the time of dismissal until the finality of the
decision ordering separation pay.

Facts:

This case is an offshoot of the petition entitled Consolidated Distillers of the Far
East, Inc. v. Rogel N. Zaragoza and docketed as G.R. No. 196038 (Illegal Dismissal
Case). The Decision in G.R. No. 196038 became final and executory on March 30, 2012.
As modified, the Decision awarded backwages and directed Condis to reinstate Rogel.
The LA ruled in favor of Rogel and directed Condis to pay backwages/reinstatement
salaries, including allowances, from December 3, 2007, the date of Rogel's illegal
dismissal, up to August 3, 2013, the date of the LA resolution. However, Condis argues
that it should only be liable for backwages and separation pay until the year 2007. It claims
that the execution of the Asset Purchase Agreement and the termination of the
subsequent Service Agreement with EDI was the reason for its failure to reinstate
Rogel. It claims that the foregoing were supervening events that made Rogel's position
inexistent as of 2007 and argued that backwages should be computed only until the
finality of the Court's Resolution in the Illegal Dismissal Case on March 30, 2012.12

Issue:
Whether backwages should be counted until the finality of the decision awarding
separation pay?

Ruling:

Yes. The Supreme Court held therein that when there is a supervening event that
renders reinstatement impossible, backwages is computed from the time of dismissal until
the finality of the decision ordering separation pay, thus:

x x x when separation pay is ordered after the finality of the decision ordering the
reinstatement by reason of a supervening event that makes the award of
reinstatement no longer possible, backwages is computed from the time of
dismissal until the finality of the decision ordering separation pay.

The Court explained that "when there is an order of separation pay the employment
relationship is terminated only upon the finality of the decision ordering the separation

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pay. The finality of the decision cuts-off the employment relationship and represents the
final settlement of the rights and obligations of the parties against each other."22

Here, the award of separation pay in lieu of reinstatement, which Condis does not
question, was made subsequent to the finality of the Decision in the Illegal Dismissal Case
(G.R. No. 196038). Condis cannot therefore evade its liability to Rogel for backwages and
separation pay computed until the finality of this Decision which affirms the order granting
separation pay.

16. Maricalum mining Corp., vs. Florentino et al, GR No. 221831, July 23, 2018

Doctrine: “Employees of a corporation have no cause of action for labor-related claims

against another unaffiliated corporation, which does not exercise control over them.”

Facts:
G Holding bought 90% of Maricalum Mining's shares and financial claims in the form of
company notes. Concomitantly, G Holdings also assumed Maricalum Mining's liabilities
in the form of company notes.
Upon the signing of the PSA and paying the stipulated down payment, G Holdings
immediately took physical possession of Maricalum Mining's Sipalay Mining Complex, as
well as its facilities, and took full control of the latter's management and operations.
On June 1, 2001, Maricalum Mining's Vice President and Resident Manager Bermejo
wrote a Memorandum informing that Maricalum Mining has decided to stop
its mining and milling operations effective July 1, 2001 in order to avert continuing losses
brought about by the low metal prices and high cost of production.
On September 23, 2010, some of Maricalum Mining's workers, including complainants,
filed a Complaint with the LA against G Holdings, its president, and officer-in-charge for
illegal dismissal, underpayment and nonpayment of salaries as well as damages.
Based on these factual claims, complainants posited that: the manpower cooperatives
were mere alter egos of G Holdings organized to subvert the "tenurial rights" of the
complainants;

Issue:
1. What is the nature of a review on certiorari under Rule 45 and appeal by certiorari
under Rule 65 in a labor case?
2. May G Holdings be made liable labor-related claims against Maricalum Mining due to
fraud?
Ruling:
1. It is basic that only pure questions of law should be raised in petitions for review
on certiorari under Rule 45 of the Rules of Court. It will not entertain questions of fact as
the factual findings of appellate courts are final, binding or conclusive on the parties and
upon this court when supported by substantial evidence. In labor cases, however, the
Court has to examine the CA's Decision from the prism of whether the latter had correctly
determined the presence or absence of grave abuse of discretion in the NLRC's
Decision.

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In this case, the principle that this Court is not a trier of facts applies with greater force in
labor cases. Grave abuse must have attended the evaluation of the facts and evidence
presented by the parties. This Court is keenly aware that the CA undertook a Rule 65
review — not a review on appeal — of the NLRC decision challenged before it. It follows
that this Court will not re-examine conflicting evidence, reevaluate the credibility of
witnesses, or substitute the findings of fact of the NLRC, an administrative body that has
expertise in its specialized field. It may only examine the facts only for the purpose of
resolving allegations and determining the existence of grave abuse of discretion.a

2. The corporate veil may be lifted only if it has been used to shield fraud, defend crime,
justify a wrong, defeat public convenience, insulate bad faith or perpetuate injustice.
In this case, G Holdings cannot be held liable for the satisfaction of labor-related claims
against Maricalum Mining under the fraud test for the following reasons:
First, the transfer of some Maricalum Mining's assets in favor G Holdings was by virtue of
the PSA as part of an official measure to dispose of the government's non-performing
assets — not to evade its monetary obligations to the complainants.
Settled is the rule that where one corporation sells or otherwise transfers all its assets to
another corporation for value, the latter is not, by that fact alone, liable for the debts and
liabilities of the transferor. In other words, control or ownership of substantially all of a
subsidiary's assets is not by itself an indication of a holding company's fraudulent intent
to alienate these assets in evading labor-related claims or liabilities. Although there was
proof that G Holdings has an office in Maricalum Mining's premises and that that some of
their assets have been commingled due to the PSA's unavoidable consequences, there
was no fraudulent diversion of corporate assets to another corporation for the sole
purpose of evading complainants' claim.
No clear and convincing evidence was presented by the complainants to conclusively
prove the presence of fraud on the part of G Holdings. Although the quantum of evidence
needed to establish a claim for illegal dismissal in labor cases is substantial evidence, the
quantum need to establish the presence of fraud is clear and convincing evidence. Thus,
to disregard the separate juridical personality of a corporation, the wrongdoing must be
established clearly and convincingly — it cannot be presumed.
Here, the complainants did not satisfy the requisite quantum of evidence to prove fraud
on the part of G Holdings. They merely offered allegations and suppositions that,
since Maricalum Mining's assets appear to be continuously depleting and that the same
corporation is a subsidiary, G Holdings could have been guilty of fraud. As emphasized
earlier, bare allegations do not prove anything. There must be proof that fraud — not
the inevitable effects of a previously executed and valid contract such as the PSA — was
the cause of the latter's total asset depletion. To be clear, the presence of control per
se is not enough to justify the piercing of the corporate veil.

21. RIGHT TO SELF-ORGANIZATION

22 RIGHTS OF LEGITIMATE LABOR ORGANIZATION

CASES:

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1. Ramirez et al., vs. Polyson Industries Inc. GR No. 207898, Oct. 19, 2016
Doctrine: Strike, the most preeminent economic weapon of the workers exert some
disquieting effects not only on the relationship between labor and management, but also
on the general peace and progress of society and economic well-being of the State. This
weapon is so critical that the law imposes the supreme penalty of dismissal on union
officers who irresponsibly participate in an illegal strike and union members who commit
unlawful acts during a strike. The responsibility of the union officers, as main players in
an illegal strike, is greater than that of the members as the union officers have the duty to
guide their members to respect the law.

The grave penalty of dismissal imposed on the guilty parties is a natural consequence,
considering the interest of public welfare,

Facts: Petitioners were employees of Polyson and were officers of Obrero Pilipino
(Obrero), the union of the employees of Polyson. Respondent Polyson Industries, Inc.
(Polyson) is a domestic corporation primarily engaged in the business of manufacturing
plastic bags for supermarkets, department stores and the like.

On April 28, 2011, Polyson received a notice of hearing from the DOLE regarding a
petition for certification election filed by Obrero. Then, on May 31, 2011, Polyson met with
the officers of Obrero. The latter asked that it be voluntarily recognized by Polyson as the
exclusive bargaining agent of the rank-and-file employees of Polyson, but the latter
refused and opted for a certification election; furious at such refusal, the Obrero officers
threatened the management that the union will show its collective strength.

On June 7, 2011, Polyson received a rush order. The management informed the
operators of its Cutting Section that they would be needing workers to work overtime. The
next day, five operators indicated their desire to work overtime; however, after their
regular shift, three of the five workers did not work overtime which resulted in the delay in
delivery of the client's order and eventually resulted in the cancellation of the said order
by reason of such delay.

Polyson asked the workers the reason for their failure to do so. The three workers gave
the same reason, to wit: "Ayaw nila/ng iba na mag-OT [overtime] ako”. The former
conducted an investigation and found out that petitioners were the ones who pressured
him to desist from rendering overtime work.

Issue: Whether petitioners are guilty of an illegal act and, if so, whether such act is a valid
ground for their termination from employment.

Ruling:

Yes.

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In its Resolution, the NLRC ruled that "the evidence on record clearly establishes that
herein petitioners resorted to an illicit activity. The act of inducing and/or threatening
workers not to render overtime work, given the circumstances surrounding the instant
case, was undoubtedly a calculated effort amounting to 'overtime boycott' or 'work
slowdown.' Petitioners unduly caused [Polyson] significant losses in the aggregate
amount of PhP290,000.00."

A review of the records at hand shows that the evidence presented by Polyson has proven
that petitioners are indeed guilty of instigating two employees to abstain from working
overtime. In the Administrative Hearing, Visca identified petitioners as the persons who
pressured them not to work overtime. In the same manner, Tuting, in his written
statement, also pointed to petitioners as the ones who told him not to work overtime.

The Supreme Court agrees with both the NLRC and the CA that petitioners are guilty of
instigating their co-employees to commit slowdown, an inherently and essentially illegal
activity even in the absence of a no-strike clause in a collective bargaining contract, or
statute or rule.

Jurisprudence defines a slowdown as follows:

. . . a "strike on the installment plan;" as a willful reduction in the rate of work by

concerted action of workers for the purpose of restricting the output of the employer, in
relation to a labor dispute; as an activity by which workers, without a complete stoppage
of work, retard production or their performance of duties and functions to compel
management to grant their demands. The Court also agrees that such a slowdown is
generally condemned as inherently illicit and unjustifiable, because while the employees
"continue to work and remain at their positions and accept the wages paid to them," they
at the same time "select what part of their allotted tasks they care to perform of their own
volition or refuse openly or secretly, to the employer's damage, to do other work;" in other
words, they "work on their own terms."

As to petitioners' liability, the second paragraph of Article 264 (a) of the Labor
Code provides:
xxx xxx xxx
. . . Any union officer who knowingly participates in an illegal
strike and any worker or union officer who knowingly participates
in the commission of illegal acts during a strike may be declared to
have lost his employment status: Provided, That mere participation of
a worker in a lawful strike shall not constitute sufficient ground for
termination of his employment, even if a replacement had been hired by
the employer during such lawful strike.

2. Erson Ang Lee Doing Business as Super Lamination Services vs. Samahang
Manggagawa ng Super Lamination, GR No. 193816, Nov. 21, 2016

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Doctrine: “The basic test for determining the appropriate bargaining unit is the application
of a standard whereby a unit is deemed appropriate if it affects a grouping of employees
who have substantial, mutual interests in wages, hours, working conditions, and other
subjects of collective bargaining.”
Facts: Super Lamination, Express Lamination, and Express Coat were sister companies
and were engaged in a work-pooling scheme wherein they had a common human
resource department responsible for hiring and disciplining the employees of the three
companies which also gave the employees daily instructions on how to go about their
work and where to report for work. It also found that the three companies involved
constantly rotated their workers, and that the latter’s identification cards had only one
signatory. Unions A, B, and C each filed a Petition for Certification Election to represent
the rank-and-file employees of Super Lamination, Express Lamination, and Express Coat
respectively. DOLE applied the concept of multi-employer bargaining under Sections 5
and 6 of DOLE Department Order 40-03, Series of 2003, creating a single bargaining unit
for the rank-and-file employees of all three companies.

Petitioner argues that there is no showing that the rank-and-file employees of the
three companies would constitute an appropriate bargaining unit on account of the latter's
different geographical locations.

Issue: Whether the rank-and-file employees of Super Lamination, Express Lamination,

and Express Coat constitute an appropriate bargaining unit.

Ruling: Yes. The basic test for determining the appropriate bargaining unit is the
application of a standard whereby a unit is deemed appropriate if it affects a grouping of
employees who have substantial, mutual interests in wages, hours, working conditions,
and other subjects of collective bargaining. Geographical location can be completely
disregarded if the communal or mutual interests of the employees are not sacrificed. In
the present case, there was communal interest among the rank-and-file employees of the
three companies based on the finding that they were constantly rotated to all three
companies, and that they performed the same or similar duties whenever rotated.
Therefore, aside from geographical location, their employment status and working
conditions were so substantially similar as to justify a conclusion that they shared a
community of interest.

3. Peninsula Employees Union vs. Esquivel GR No. 218454, Dec. 1, 2016

Facts: PEU’s Board of Directors passed a resolution authorizing the affiliation of PEU
with NUWHRAIN, and the direct membership of its individual members thereto. PEU-
NUWHRAIN later sought to increase the union dues/agency fees from 1% to 2% of the
rank and􀁃file employees' monthly salaries, brought about by PEU's affiliation with
NUWHRAIN, which supposedly requires its affiliates to remit to it two percent (2%) of their
monthly salaries.

PEU-NUWHRAIN requested OSEC for Administrative Intervention for Dispute

Avoidance in relation to the issue of its entitlement to collect increased agency fees from
the non-PEU members. The non-PEU objected the increase arguing that: (a) the new
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CBA is unenforceable since no written CBA has been formally signed and executed by
PEU-NUWHRAIN and the Hotel; (b) 2% agency fee is exorbitant and unreasonable; and
(c) PEU-NUWHRAIN failed to comply with the mandatory requirements for such increase.

OSEC upheld the right to collect fees from the non-PEU members in accordance
with the previous CBA which was still in full force at that time but only at the rate of 1%.
However, upon reconsideration, OSEC approved the 2% agency fees from the non-PEU
members.

Issue: Was OSEC correct in its second decision?

Ruling: NO. Article 250 of the Labor Code mandates the submission of three
documentary requisites in order to justify a valid levy of increased union dues.
(a)authorization by a written resolution of the majority of all the members at the general
membership meeting duly called for the purpose;
(b) the secretary's record of the minutes of the meeting, which shall include the list of all
members present, the votes cast, the purpose of the special assessment or fees and the
recipient of such assessment or fees;
(c) individual written authorizations for check-off duly signed by the employees
concerned.

However, PEU-NUWHRAIN failed to show compliance with the foregoing requirements

such as there was no sufficient showing that the same had been duly deliberated and
approved.

4. Asian Institute of Management vs. Asian Institute of Management Faculty

Association, GR No. 207971, January 23, 2017

Doctrine: "[i]n case of alleged inclusion of disqualified employees in a union, the proper
procedure for an employer like petitioner is to directly file a petition for cancellation of the
union's certificate of registration due to misrepresentation, false statement or fraud under
the circumstances enumerated in Article 239 of the Labor Code, as amended."

Facts: Petitioner Asian Institute of Management (AIM) is a duly registered non-stock, non-
profit educational institution. Respondent Asian Institute of Management Faculty
Association (AFA) is a labor organization composed of members of the AIM faculty.

Respondent filed a petition for certification election seeking to represent a

bargaining unit in AIM consisting of forty (40) faculty members. Petitioner opposed the
petition, claiming that respondent's members are neither rank-and-file nor supervisory,
but rather, managerial employees.

The Med-Arbiter denied the petition for certification on the ground that AIM' s
faculty members are managerial employees but the DOLE reversed the decision.
Meanwhile, relative to DOLE Case No. NCR-OD-0707-001-LRD or petitioner AIM's

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petition for cancellation of respondent's certificate of registration, petitioner filed on May
24, 20l0 a Petition for Certiorari before the CA, questioning the BLR's December 29, 2009
decision and March 18, 2010 resolution. The petition alleged that the BLR committed
grave abuse of discretion in granting respondent's appeal and affirming its certificate of
registration notwithstanding that its members are managerial employees who may not
join, assist, or form a labor union or organization. The CA denied hence the petition.

Issue: Whether or not the CA seriously erred in affirming the dispositions of the BLR and
thus validating the respondent's certificate of registration notwithstanding the fact that its
members are all managerial employees who are disqualified from joining, assisting, or
forming a labor organization?

Ruling:
In Holy Child Catholic School v. Hon. Sto. Tomas, this Court declared that "[i]n
case of alleged inclusion of disqualified employees in a union, the proper procedure for
an employer like petitioner is to directly file a petition for cancellation of the union's
certificate of registration due to misrepresentation, false statement or fraud under the
circumstances enumerated in Article 239 of the Labor Code, as amended."

On the basis of the ruling in the above-cited case, it can be said that petitioner was
correct in filing a petition for cancellation of respondent's certificate of registration.
Petitioner's sole ground for seeking cancellation of respondent's certificate of registration
- that its members are managerial employees and for this reason, its registration is thus
a patent nullity for being an absolute violation of Article 245 of the Labor Code which
declares that managerial employees are ineligible to join any labor organization --- is, in
a sense, an accusation that respondent is guilty of misrepresentation for registering under
the claim that its members are not managerial employees.

5. Sumifru (Phils) Corp vs. Nagkahiusang Mamumuo sa Suyapa Farm. GR No.

202091, June 7, 2017

Doctrine: “Employer-employee relationship is a requisite for a petition for certification

election.”

“Findings of fact of quasi-judicial agencies are entitled to great respect when they are
supported by substantial evidence and, in the absence of any showing of a whimsical or
capricious exercise of judgment,”

Facts: Petitioner Sumifru is the surviving corporation after its merger with Fresh Banana
Agricultural Corporation (FBAC). Respondent is a legitimate labor organization affiliated
with the National Federation of Labor Unions and Kilusang Maayo Uno.

Respondent filed a petition for certification election before the DOLE to represent the
rank-and-file employees of packing plant 90 (PP 90) of then FBAC. The corporation

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opposed the petition alleging that there exists no employer-employee relationship
between FBAC and the workers involved. Before the resolution of the case, FBAC was
merged with Sumifru.

Later, the DOLE Med-Arbiter granted the petition for certification election of respondent
and declared that Sumifru is the employer of the worker’s concerned. In ruling so, the
Med-Arbiter stated that the “four-fold test” will show that FBAC is the employer of
respondent’s members. Sumifru appealed to the DOLE Secretary, but the latter still
affirmed the decision of the Med-Arbiter ruling that Sumifru exercised control over the
workers in PP 90. The Court of Appeals found that the DOLE Secretary did not commit
grave abuse of discretion because the ruling was anchored on substantial evidence.

Issue: Whether the Court of Appeals is correct in affirming the DOLE Secretary’s
decision that the workers have employer-employee relationship with Sumifru.

Ruling: Yes. The Supreme Court ruled that did the CA not commit any whimsical or
capricious exercise of judgment when it found substantial evidence to support the DOLE
Secretary's ruling that Sumifru was the employer of the members of respondent.

As defined, substantial evidence is "that amount of relevant evidence as a reasonable

mind might accept as adequate to support a conclusion, even if other minds, equally
reasonable, might conceivably opine otherwise."

First, the Med-Arbiter found, based on documents submitted by the parties, that Sumifru
gave instructions to the workers on how to go about their work, what time they were
supposed to report for work, required monitoring sheets as they went about their jobs,
and provided the materials used in the packing plant.

Then, the DOLE Secretary relied on documents submitted by the parties and ascertained
that Sumifru indeed exercised control over the workers in PP 90, such that petitioners
required monitoring sheets and imposed disciplinary actions for non-compliance with
personnel policy.

In turn, the CA, even as it recognized that the findings of facts of the DOLE Secretary and
the Med-Arbiter were binding on it because they were supported by substantial evidence,
even went further and itself reviewed the records — to arrive, as it did arrive, at the same
conclusion reached by the DOLE Secretary and Med-Arbiter: that is, that Sumifru
exercised control over the workers in PP 90.

Finally, in a petition for review on certiorari, the Court is limited to only questions of law.
The Court cannot re-calibrate the factual bases of the Med-Arbiter, DOLE Secretary and
the CA, contrary

6. United Polyresins, Inc. vs. Pinuela, GR No. 209555, July 31, 2017

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Doctrine: “Respondent's expulsion from PORFA is grounded on misappropriation which
is found on Article XV of the PORFA’s Constitution. However, these provisions refer to
impeachment and recall of union officers, and not expulsion from union membership. In
short, any officer found guilty of violating these provisions shall simply be removed,
impeached or recalled, from office, but not expelled or stripped of union membership.”
Facts:
Respondent Pinuela was employed by petitioner UPI in 1987. He became a
member of Polyresins Rank and File Association (PORFA), and was later on elected
President thereof. In the existing CBA between UPI and PORFA, it provided that UPI will
loan 300k to the latter, as its capital for establishing a cooperative and it shall be payable
at the same date the said CBA expires. The CBA likewise contained a union security
clause which provided that employees who cease to be PORFA members shall not be
retained in the employ of UPI. Several days before the 300k loan became due, both
parties met to discuss the proposed new CBA. However, petitioners declined and told
respondent to pay the 300k loan first.
Because of the recurring threat of failed CBA negotiations and salary deductions,
union members accused respondent of mismanagement and demanded the holding of
special election of union officers. A new set of officers were elected and they proceeded
to investigate the fact that the union had no funds remaining in its bank account. They
have found out that respondent is guilty of misappropriation of union funds and property
which under the union’s constitution is a ground for the impeachment and recall of union
officers. PORFA then expelled respondent from the union, and was later on terminated
by UPI pursuant to the union security clause.
Issue: Did respondent’s misappropriation constitute a just cause for his expulsion from
the union? (substantive due process)
Ruling:
Respondent's expulsion from PORFA is grounded on misappropriation which is
found on Article XV of the PORFA’s Constitution. However, these provisions refer to
impeachment and recall of union officers, and not expulsion from union membership. In
short, any officer found guilty of violating these provisions shall simply be removed,
impeached or recalled, from office, but not expelled or stripped of union membership. It
was therefore error on the part of PORFA and petitioners to terminate respondent's
employment based on Article XV.
The matter of respondent's alleged failure to return petitioners' 300k may not be
used as a ground to terminate respondent's employment as well; It is found in Art. 248
par. (d) of the Labor Code that it prohibits employers to assist or interfere with any labor
organization, including the giving of financial or other support to its organizers. Hence,
such contribution is illegal and constitutes unfair labor practice.

7. Hongkong Bank Independent Labor Union vs. Hongkong and Shanghai Banking
Corp., GR No. 218390, February 28, 2018

Doctrine: (1) It is the constitutional right of employees to participate in matters affecting

their benefits and the sanctity of the CBA.

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(2) Unilateral amendments to the CBA violate Article 253 of the Labor Code

Facts: In 2001, the Bangko Sentral ng Pilipinas (BSP) issued the Manual of Regulations
for Banks (MoRB). Relevant to the instant case is Section X338 thereof reads:

Banks may provide financial assistance to their officers and employees, as part of their
fringe benefits program, to meet housing, transportation, household and personal needs
of their officers and employees. Financing plans and amendments thereto shall be
with prior approval of the BSP.

Hongkong and Shanghai Banking Corporation Limited (HSBC), submitted its Financial
Assistance Plan (Plan) to the BSP for approval. The Plan allegedly contained a credit
checking proviso stating that "repayment defaults on existing loans and adverse
information on outside loans will be considered in the evaluation of loan applications."
The BSP approved the Plan on May 5, 2003. The Plan was amended thrice, all of which
amendments were approved by the BSP.

Petitioner Hongkong Bank Independent Labor Union (HBILU), the incumbent bargaining
agent of HSBC's rank-and-file employees, entered into a CBA with the bank covering the
period from April 1, 2010 to March 31, 2012. Pertinent to the instant petition is Article XI
thereof, which reads:

Article XI: Salary Loans, “Section 4. Credit Ratio. The availment of any of the foregoing
loans shall be subject to the BANK's credit ratio policy.”

When the CBA was about to expire, the parties started negotiations for a new one. During
the negotiations, HSBC proposed amendments to the above quoted Article XI allegedly
to align the wordings of the CBA with its BSP approved Plan. Particularly, HSBC proposed
the deletion of Article XI, Section 4 (Credit Ratio) of the CBA, and the amendment of
Sections 1 to 3.

HBILU vigorously objected to the proposed amendments, claiming that their insertions
would curtail its members' availment of salary loans and that they were not privy to the
Plan. Thereafter, HBILU member Vince Mananghaya (Mananghaya) applied for a loan
under the provisions of Article XI of the CBA. His first loan application was approved, but
adverse findings from the external checks on his credit background resulted in the denial
of his September application. HSBC denied his claim due to the external credit check
conducted in line with Mananghaya's loan application, they were merely implementing
the BSP-approved Plan. However, no proof was offered that the Plan had been
disseminated to the employees prior to an e-mail blast.

Issue: Whether or not HSBC could validly enforce the credit-checking requirement under
its BSP-approved Plan in processing the salary loan applications of covered employees
even when the said requirement is not recognized under the CBA?

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Ruling: (1) It is the constitutional right of employees to participate in matters
affecting
their benefits and the sanctity of the CBA, no less than the basic law of the land
guarantees the rights of workers to collective bargaining and negotiations as well as to
participate in policy and decision-making processes affecting their rights and benefits.

Although jurisprudence recognizes the validity of the exercise by an employer of its

management prerogative and will ordinarily not interfere with such, this prerogative is not
absolute and is subject to limitations imposed by law, collective bargaining
agreement, and general principles of fair play and justice.

Indeed, being a product of said constitutionally-guaranteed right to participate, the CBA

is, therefore, the law between the parties and they are obliged to comply with its
provisions.

(2) Unilateral amendments to the CBA violate Article 253 of the Labor Code

Where the CBA is clear and unambiguous, it becomes the law between the parties and
compliance therewith is mandated by the express policy of the law. The provisions of
the CBA must be respected since its terms and conditions constitute the law
between the parties. And until a new CBA is executed by and between the parties,
they are duty-bound to keep the status quo and to continue in full force and effect
the terms and conditions of the existing agreement. This finds basis under Article 253
of the Labor Code.

It is clear that the Plan was never made part of the CBA. HBILU vehemently rejected the
Plan's incorporation into the agreement. Due to this lack of consensus, the bank withdrew
its proposal and agreed to the retention of the original provisions of the CBA.

HSBC's conduct is tantamount to allowing a blatant circumvention of Article 253 of the

Labor Code. It would contravene the express prohibition against the unilateral
modification of a CBA during its subsistence and even thereafter until a new agreement
is reached. It would unduly license HSBC to add, modify, and ultimately further
restrict the grant of Salary Loans beyond the terms of the CBA by simply adding
stringent requirements in its Plan, and having the said Plan approved by BSP in
the guise of compliance with the MoRB. Further, the bank failed to submit in evidence
the very Plan that was supposedly approved by the BSP in 2003.

ADDITIONAL INFORMATION: (3) On interpretation of CBAs

In United Kimberly-Clark Employees Union Philippine Transport General Workers

Organization (UKCEU-PTGWO) v. Kimberly-Clark Philippines, Inc., this Court
emphasized that: “An arbitrator is confined to the interpretation and application of the
collective bargaining agreement. He does not sit to dispense his own brand of industrial
justice: his award is legitimate only in so far as it draws its essence from the
CBA, i.e., when there is a rational nexus between the award and the CBA under

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consideration. It is said that an arbitral award does not draw its essence from the CBA;
there is an unauthorized amendment or alteration thereof, if:
1. It is so unfounded in reason and fact;
2. It is so unconnected with the working and purpose of the agreement;
3. It is without factual support in view of its language, its context, and
any other indicia of the parties' intention;
4. It ignores or abandons the plain language of the contract;
5. It is mistakenly based on a crucial assumption which concededly is a
nonfact;
6. It is unlawful, arbitrary or capricious; and
7. It is contrary to public policy.

If the terms of a CBA are clear and leave no doubt upon the intention of the contracting
parties, the literal meaning of its stipulation shall prevail. However, if in a CBA, the parties
stipulate that the hires must be presumed of employment qualification standards but fail
to state such qualification standards in said CBA, the VA may resort to evidence
extrinsic of the CBA to determine the full agreement intended by the parties. When
a CBA may be expected to speak on a matter, but does not, its sentence imports
ambiguity on that subject. The VA is not merely to rely on the cold and cryptic
words on the face of the CBA but is mandated to discover the intention of the
parties.
Recognizing the inability of the parties to anticipate or address all future problems, gaps
may be left to be filled in by reference to the practices of the industry, and the step which
is equally a part of the CBA although not expressed in it. In order to ascertain the
intention of the contracting parties, their contemporaneous and subsequent acts
shall be principally considered The VA may also consider and rely upon
negotiating and contractual history of the parties, evidence of past practices
interpreting ambiguous provisions. The VA has to examine such practices to
determine the scope of their agreement, as where the provision of the CBA has
been loosely formulated. Moreover, the CBA must be construed liberally rather than
narrowly and technically and the Court must place a practical and realistic construction
upon it.

In resolving issues concerning CBAs, the foremost consideration is upholding the

intention of both parties as stated in the agreement itself, or based on their negotiations.
Should it appear that a proposition or provision has clearly been rejected by one party,
and said provision was ultimately not included in the signed CBA, then We should not
simply disregard this fact.”

23. REVISED GUIDELINES OF THE NCMB FOR THE CONDUCT OF VOLUNTARY

ARBITRATION PROCEEDINGS

CASES:

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 1. Coca-Cola FEMSA Phils vs. Bacolod Sales Force Union, GR No. 220605, Sept.
21, 2016
Doctrine: “In the context of labor law, arbitration is the reference of a labor dispute to an
impartial third person for determination on the basis of evidence and arguments presented
by such parties who have bound themselves to accept the decision of the arbitrator as
final and binding.”

Facts: Respondent, the recognized collective bargaining agent of the rank-and-file sales
personnel of petitioner's Bacolod Plant submitted their concern to the grievance machinery
demanding that: (a) the salary rates of the Cosmos integrees be readjusted to equal to
that of the newly-hired ADs' salary rates; (b) the conversion of the P550.00 monthly
deduction from the salaries of the Bacolod Plant sales personnel into a 45-kg. rice
provision be declared as a violation of the non-diminution rule under Article 100 of the
Labor Code, as amended; and (c) the employees concerned be reimbursed for the
amounts illegally deducted. The grievance failed thus it was submitted for VA.
On February 3, 2012, VA resolved the case in favor of the respondents. Petitioner
moved for reconsideration, but was denied in a Resolution dated April 25, 2012. Petitioner
received notice of the Resolution on May 21, 2012 and filed its petition for review under
Rule 43 of the Rules of Court (Rules) before the CA on June 5, 2012.
On December 22, 2014, the CA denied the petition on the ground that the VA
Decision had attained finality pursuant to Section 5, Article 5 of the CBA, which explicitly
provides that "[t]he decision of the Arbitration Committee shall be final and binding upon
the COMPANY and the UNION, and the employees and may be enforced in any court of
competent jurisdiction."

Issue: Was CA correct?

Ruling: NO. In the context of labor law, arbitration is the reference of a labor dispute to
an impartial third person for determination on the basis of evidence and arguments
presented by such parties who have bound themselves to accept the decision of the
arbitrator as final and binding. However, in view of the nature of their functions, voluntary
arbitrators act in a quasi-judicial capacity; hence, their judgments or final orders which are
declared final by law are not so exempt from judicial review when so warranted.
"Any agreement stipulating that 'the decision of the arbitrator shall be final and
unappealable' and 'that no further judicial recourse if either party disagrees with the whole
or any part of the arbitrator's award may be availed of' cannot be held to preclude in proper
cases the power of judicial review which is inherent in courts."
Moreover, the CA ought to determine the proper application of the "equal pay for
equal work" principle vis-a-vis the business decision of an employer to adopt a more
competitive compensation scheme in light of the demands in human resource. Courts
should not shirk from exercising their power to review, where under applicable laws and
jurisprudence, such power may be rightfully exercised.

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2. Guagua National Colleges Vs. Court of Appeals, GR No. 188493, August 28, 2018,
En Banc

Doctrine:The 10-day period under Art. 274 of the Labor Code is the time set for the
aggrieved party in a decision of the Voluntary Arbitrator to file a motion for
reconsideration. Only after the resolution of such motion will an appeal to the CA by the
aggrieved party through petition for review under Rule 43 of the Rules of Court be filed
within 15 days from notice pursuant to Sec. 4, Rule 43, ROC.

Facts:
Pursuant to Sec. 5 (2) of RA 6728 (Government Assistance to Students and Teachers in
Private Education Act)’s mandate that 70% of the increase in tuition fees shall go to the
payment of salaries, wages, allowances and other benefits of the teaching and non-
teaching personnel, petitioner GNC imposed a 7% increase of its tuition fees for school
year 2006-2007. Shortly thereafter, its Board of Trustees approved the funding of the
retirement program out of the 70% net incremental proceeds arising from the tuition fee
increases, in order to save the depleting funds of GNC’s Retirement Plan.
The respondents GNC- Faculty Labor Union and GNC Non-Teaching Maintenance Labor
Union challenged the petitioner’s unilateral decision by claiming that the increase violated
Sec. 5 (2) of RA 6728. The parties thereafter referred the matter to voluntary arbitration.
The Voluntary Arbitrator decided in favor of GNC, holding that the retirement benefits fell
within the category of “other benefits” that could be charged against the 70% net
incremental proceeds. The respondents filed an Urgent Motion for Extension praying that
the CA grant them an extension of 15 days to file their petition for review. The CA granted
the same.
The respondents then filed their petition for review on the on the said 15th day.
Subsequently, the petitioners filed a Motion to Dismiss claiming that the decision of the
VA was already final and executory. However, CA denied the motion.
Issue: Whether the petition for review shall be filed within 15 days pursuant to Sec. 4,
Rule 43 of the Rules of Court or within 10 days under Art. 274 of the Labor Code.

Held:
It must be clarified that the 10-day period set in Art. 276 of the Labor Code should be
understood as the period within which the party adversely affected by the ruling of the
Voluntary Arbitrators or Panel of Arbitrators may file a motion for reconsideration. Only
after the resolution of the motion for reconsideration may the aggrieved party appeal to
the CA by filing the petition for review under Rule 43 of the Rules of Court within 15 days
from notice pursuant to Sec. 4 of Rule 43.

24. UNFAIR LABOR PRACTICE

CASES:

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1. Phil Electric Corp., vs. Court of Appeals, GR No. 168612, Dec. 10, 2014
Doctrine: (THIS CASE HAS BEEN REVERSED)
“The proper remedy to reverse or modify a Voluntary Arbitrator's or a panel of Voluntary
Arbitrators' decision or award is to appeal the award or decision before the Court of
Appeals under Rule 43 of the Rules of Court.”

“Article 262-A of the Labor Code provides that the award or decision of the Voluntary
Arbitrator "shall be final and executory after ten (10) calendar days from receipt of the
copy of the award or decision by the parties. Although Rule 43, Section 4 of the Rules of
Court provides for a 15-day reglementary period for filing an appeal, the Statute shall
prevail, appeal being a statutory privilege which may be exercised only in the manner and
in accordance with the provisions of the law”

(The petition for review shall be filed within 15 days pursuant to Section 4, Rules 43 of
the Rules of Court;
the 10-day period under Article 276 of the Labor Code refers to the filing of a motion for
reconsideration
vis-à-vis the Voluntary Arbitrator's decision or award||| (Guagua National Colleges v.
Court of Appeals, G.R. No. 188492, [August 28, 2018])

Facts:

Philippine Electric Corporation (PHILEC) is a domestic corporation engaged in the

manufacture and repairs of high voltage transformers. PHILEC Workers' Union (PWU) is
a legitimate labor organization and the exclusive bargaining representative of PHILEC's
rank-and-file employees. Among its rank-and file employees were Eleodoro V. Lipio
(Lipio) and Emerlito C. Ignacio, Sr. (Ignacio), former members of the PWU.

PHILEC and its rank-and-file employees were governed by collective bargaining

agreements (CBA) from June 1, 1989 to May 31, 1997. Said CBA provided for the step
increases in an employee's basic salary in case of promotion.

On August 18, 1997, PHILEC selected Lipio for promotion from Machinist to Foreman I.
Ignacio, then DT-Assembler was likewise selected for training for the position of Foreman
I. Both their training agreements contained a schedule of allowance for their 4 months
training.

On September 17, 1997, PHILEC and PWU entered into a new CBA, effective
retroactively on June 1, 1997 and expiring on May 31, 1999. The new CBA contained a
new step increase schedule as well as a provision for training allowance.

Claiming that the schedule of training allowance stated in the memoranda served on Lipio
and Ignacio did not conform to Article X, Section 4 of the June 1, 1997 collective
bargaining agreement, PWU submitted the grievance to the grievance machinery.

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PWU and PHILEC failed to amicably settle their grievance. Thus, on December 21, 1998,
the parties filed a submission agreement with the National Conciliation and Mediation
Board (NCMB).

For PHILEC's failure to apply the schedule of step increases under Article X of the June
1, 1997 collective bargaining agreement, PWU argued that PHILEC committed an unfair
labor practice under Article 248 of the Labor Code.

PHILEC emphasized that it promoted Lipio and Ignacio while it was still negotiating a new
collective bargaining agreement with PWU. Since PHILEC and PWU had not yet
negotiated a new collective bargaining agreement when PHILEC selected Lipio and
Ignacio for training, PHILEC applied the "Modified SGV" pay grade scale in computing
Lipio's and Ignacio's training allowance.

This "Modified SGV" pay grade scale, which PHILEC and PWU allegedly agreed to
implement beginning on May 9, 1997, covered both rank-and-file and supervisory
employees. To preserve the hierarchical wage structure within PHILEC's enterprise,
PHILEC and PWU allegedly agreed to implement the uniform pay grade scale under the
"Modified SGV" pay grade system.

Voluntary Arbitrator Ramon T. Jimenez held in the decision dated August 13, 1999, that
PHILEC violated its collective bargaining agreement with PWU. The provisions of the
collective bargaining agreement being the law between the parties, PHILEC should have
computed Lipio's and Ignacio’s training allowance based on Article X, Section 4 of the
June 1, 1997 collective bargaining agreement.

As to PHILEC's claim that applying Article X, Section 4 would result in salary distortion
within PHILEC's enterprise, Voluntary Arbitrator Jimenez ruled that this was "a concern
that PHILEC could have anticipated and could have taken corrective action" before
signing the collective bargaining agreement.

However, he dismissed PWU's claim of unfair labor practice. According to him, PHILEC's
acts "cannot be considered a gross violation of the CBA nor a flagrant and/or malicious
refusal to comply with the economic provisions of the agreement."

PHILEC received a copy of Voluntary Arbitrator Jimenez's decision on August 16, 1999.
On August 26, 1999, it filed a motion for partial reconsideration of Voluntary Arbitrator
Jimenez's decision.

In the resolution dated July 7, 2000, Voluntary Arbitrator Jimenez denied PHILEC's
motion for partial reconsideration for lack of merit. PHILEC received a copy of the July 7,
2000 resolution on August 11, 2000.

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It was on August 29, 2000, PHILEC filed a petition for certiorari before the Court of
Appeals (CA), alleging that Voluntary Arbitrator Jimenez gravely abused his discretion in
rendering his decision. The CA affirmed Voluntary Arbitrator Jimenez's decision and
dismissed PHILEC's petition for certiorari for lack of merit. The CA also denied PHILEC’s
motion for reconsideration in the resolution dated June 23, 2005.

On August 3, 2005, PHILEC filed its petition for review on certiorari before the Supreme
Court (SC).

Issues:
1. Was the petition for certiorari under Rule 65 of the Rules of Court filed by PHILEC
the proper remedy?
2. Was PHILEC correct in implementing the Modified SGV pay grade scale?

Ruling:

1. The petition for certiorari under Rule 65 of the Rules of Court was not the proper
remedy

The proper remedy to reverse or modify a Voluntary Arbitrator's or a panel of Voluntary

Arbitrators' decision or award is to appeal the award or decision before the Court of
Appeals under Rule 43 of the Rules of Court.

As to the period to appeal, the Court ruled that the Voluntary Arbitrator's decision must
be appealed before the Court of Appeals within 10 calendar days from receipt of the
decision as provided in the Labor Code.

Article 262-A of the Labor Code provides that the award or decision of the Voluntary
Arbitrator "shall be final and executory after ten (10) calendar days from receipt of the
copy of the award or decision by the parties. Although Rule 43, Section 4 of the Rules of
Court provides for a 15-day reglementary period for filing an appeal, the Statute shall
prevail, appeal being a statutory privilege which may be exercised only in the manner and
in accordance with the provisions of the law.

Furthermore, under Article VIII, Section 5(5) of the Constitution, this court "shall not
diminish, increase, or modify substantive rights" in promulgating rules of procedure in
courts. The 10-day period to appeal under the Labor Code being a substantive right, this
period cannot be diminished, increased, or modified through the Rules of Court.

A petition for certiorari is a special civil action "adopted to correct errors of jurisdiction
committed by the lower court or quasi-judicial agency, or when there is grave abuse of
discretion on the part of such court or agency amounting to lack or excess of jurisdiction”
An extraordinary remedy, a petition for certiorari may be filed only if appeal is not

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available. If appeal is available, an appeal must be taken even if the ground relied upon
is grave abuse of discretion.

There being no appeal seasonably filed in this case, Voluntary Arbitrator Jimenez's
decision became final and executory after 10 calendar days from PHILEC's receipt of the
resolution denying its motion for partial reconsideration

2. No, PHILEC should have computed the training allowance based on the June 1,
1997 CBA.

A collective bargaining agreement is "a contract executed upon the request of either the
employer or the exclusive bargaining representative of the employees incorporating the
agreement reached after negotiations with respect to wages, hours of work and all other
terms and conditions of employment, including proposals for adjusting any grievances or
questions arising under such agreement."

PHILEC allegedly applied the "Modified SGV" pay grade scale to prevent any salary
distortion within PHILEC's enterprise. This, however, does not justify PHILEC's non-
compliance with the June 1, 1997 collective bargaining agreement. This pay grade scale
is not provided in the collective bargaining agreement.

Had PHILEC wanted the "Modified SGV" pay grade scale applied within its enterprise, "it
could have requested or demanded that the 'Modified SGV' scale be incorporated in the
collective bargaining agreement." PHILEC had "the means under the law to compel PWU
to incorporate this specific economic proposal in the collective bargaining agreement."

It must be noted that Lipio and Ignacio remained rank-and-file employees and were not
transferred out of the bargaining unit when they were selected for training. Their selection
for training was done during the effectivity of the June 1, 1997 rank-and-file collective
bargaining agreement. PHILEC cannot choose when and to whom to apply the provisions
of its collective bargaining agreement. The provisions of a collective bargaining
agreement must be applied uniformly and complied with in good faith.

Voluntary Arbitrator Jimenez's decision having become final and executory on August 22,
2000, PHILEC is liable for legal interest equal to 12% per annum from finality of the
decision until full payment as this court.

25. OTHER IMPORTANT LABOR PROVISIONS

CONTRACTING ARRANGEMENT

CASES

1. Philippine Airlines vs. Ligan et al., GR No. 203932, June 8, 2016

Facts:

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PAL and Synergy Services Corporation (Synergy) entered into a station services
agreement and a janitorial services agreement whereby Synergy provided janitors and
station attendants to PAL at Mactan airport. Ligan was one of the personnel of Synergy
posted at PAL to carry out the contracted tasks. Claiming to be performing duties directly
desirable and necessary to the business of PAL, the respondent, along with other co-
employees, filed complaints against PAL and Synergy for regularization of their status as
employees of PAL, underpayment of salaries and non-payment of premium pay and other
benefits. Labor Arbiter (LA) ruled that Synergy was an independent contractor and
dismissed the complaint for regularization, but granted the complainants' money claims.

Issue: Is Synergy a labor-only contractor or a legitimate contractor?

Ruling:
Synergy was a labor-only contractor. PAL has always known that the issue in the previous
case with G.R. No.146408 in which PAL was a party thereto, was whether Synergy was
a labor-only contractor or a legitimate contractor; that the respondents were adjudged as
regular employees of PAL entitled to all the benefits of its regular employees. In the
present case, the court reiterated that the respondents were regular employees of PAL
since Synergy was only considered as an agent of PAL, Synergy being a labor-only
contractor. CA correctly ruled that they cannot be whimsically terminated by PAL without
just or authorized cause.

2. Cagayan Electric Power & Light Company Inc., vs. Cepalco Employees Labor
union-ALU TUCP, Gr. No. 211015, 213835, June 20, 2016

Doctrine:
Labor-only contracting is considered as a form of ULP when the same is devised by the
employer to "interfere with, restrain or coerce employees in the exercise of their rights to
self-organization."

Facts:
Respondent is the duly certified bargaining representative of CEPALCO's regular rank-
and-file employees. CEPALCO and CESCO (petitioners) entered into a Contract for
Meter Reading Work where CESCO undertook to perform CEPALCO's meter-reading
activities. As a result, several employees and union members of CEPALCO were relieved,
assigned in floating positions, and replaced with CESCO workers, prompting respondent
to file a complaint for ULP against petitioners.
Respondent alleged that when CEPALCO engaged CESCO to perform its meter-reading
activities, its intention was to evade its responsibilities under the CBA and labor laws, and
that it would ultimately result in the dissipation of respondent's membership in CEPALCO.
Thus, respondent claimed that CEPALCO’s act of contracting out services, which used
to be part of the normal functions of the union members, is violative of the provision of
article 259(c) of the Labor Code, as amended governing the ULP of employers. It further
averred that for engaging in labor only contracting, the workers placed by CESCO must

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be deemed regular rank and file employees of CEPALCO, and the contract for Meter
Reading Work be declared null and void.

In its defense, petitioners averred that CESCO is an independent job contractor and that
the contracting out of the meter-reading services did not interfere with CEPALCO's
regular workers' right to self- organize, denying that none of respondent's members was
put on floating status. They argued that the case is only a labor standards issue, and that
respondent is not the proper party to raise the issue regarding the status of CESCO's
employees and, hence, cannot seek that the latter be declared as CEPALCO's regular
employees.

Issue: Whether there is labor only contracting.

Ruling:
CESCO is a labor-only contractor
Labor-only contracting is considered as a form of ULP when the same is devised by the
employer to "interfere with, restrain or coerce employees in the exercise of their rights to
self-organization."
In these cases, the Court agrees with the CA that CEPALCO was engaged in labor-only
contracting as its Contract for Meter-Reading Work and Contract of Service To Perform
Warehousing Works with CESCO fit the criteria provided for in Section 5 of DO 18-02, to
be specific, petitioners failed to show that CESCO has substantial capital or investment
which relates to the job, work or service to be performed.
It is also evident that meter-reading is a job that is directly related to the main business of
CEPALCO, considering that the latter is an electric distribution utility, which is necessarily
tasked with the evaluation and appraisal of meters in order to bill its clients. Similarly,
warehousing works is directly related to CEPALCO's electric distribution business, which
involves logistics, inventories, accounting, billing services, and other related operations.
Records are devoid of evidence to prove that the work undertaken in· furtherance of the
meter-reading contract was made under the sole control and supervision of CESCO.
Instead, as noted by the CA, it was CEPALCO that established the working procedure
and methods and supervised CESCO's workers in their tasks. No evidence has been
offered to establish that CESCO exercised control with respect to the manner and
methods of achieving the warehousing works, or that it supervised the workers assigned
to perform the same.

3. Quintanar et al., vs. Coca-Cola Bottlers Phils GR No. 210565, June 28, 2016

Doctrine: “The possession of substantial capital is only one element. Labor-only

contracting exists when any of the two elements is present, that is, such employees are
performing activities directly related to the principal business of the employer, and lack of
substantial capital or investment.”

Facts:

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Complainants were former employees of Coca-Cola (CC) as regular Route Helpers, they
were direct hires of the company during the period of 1984 to 2000. After sometime, the
complainants were transferred successively as agency workers to the different manpower
agencies, the latest being respondent Interserve Management and Manpower
Resources, Inc.
When DOLE conducted an inspection to determine if labor standards were being
complied with, they were declared to be regular employees and that respondent is liable
to pay. Petitioners were thereafter dismissed on various dates, and their claims settled
later. However, the settlement did not include the issues on reinstatement and payment
of CBA benefits. Hence, petitioners filed a complaint for illegal dismissal.
A case for illegal dismissal was filed by complainants against Coca-Cola who denied the
existence of an employer-employee relationship with the complainants. Coca Cola
maintained that respondent Interserve was the employer of the complainants with whom
it has a service agreement.
LA and NLRC were consistent in holding that ER-EE relationship exists and,
consequently, that complainants were illegally dismissed. CA, however, overturned.

Issues:
(1) W/N an employment relationship exist between the route helpers and Coca-Cola even
if during the course of their employment they were transferred to a labor contractor?
(2)Can a contractor be considered engaged in labor only contracting despite its
registration with the DOLE as an independent contractor and possession of substantial
capital?
(3) Was there a valid termination and thereby a valid severance of employment
relationship when complainants were transferred to manpower agencies?

Ruling:
1. Yes. In this case, the SC, guided by stare decisis, applied its position in prior cases
involving the Routine Helpers and CC. The Court ruled that that an employment
relationship existed between the parties for the following reasons:
• Routine Helpers perform functions necessary and desirable, even
indispensable, in the usual business or trade of Coca- Cola Philippines, Inc;
• SC pronouncements in prior cases that Interserve is a labor-only
contractor;**
• the employees performed work which was directly related to the principal
business of petitioner; and
• in the service agreements between CC and the manpower agencies, CC
still exercised the right of control over the employees.

2. Yes. The possession of substantial capital is only one element. Labor-only contracting
exists when any of the two elements is present, that is, such employees are performing
activities directly related to the principal business of the employer, and lack of substantial
capital or investment. Thus, even if the Court would indulge Coca-Cola and admit that
Interserve had more than sufficient capital or investment in the form of tools, equipment,
machineries, work premises, still, it cannot be denied that the petitioners were performing

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activities which were directly related to the principal business of such employer. Also, it
has been ruled that no absolute figure is set for what is considered 'substantial capital'
because the same is measured against the type of work which the contractor is obligated
to perform for the principal.

3. No. Even granting that the petitioners were last employed by Interserve, the record is
bereft of any evidence that would show that the petitioners voluntarily resigned from their
employment with Coca-Cola only to be later hired by Interserve. It is highly inconceivable
for the petitioners, who were already enjoying a stable job at a multi-national company,
to leave and become mere agency workers.
Other than insisting that the petitioners were last employed by Interserve, Coca-Cola
failed not only to show by convincing evidence how it severed its employer relationship
with the petitioners, but also to prove that the termination of its relationship with them was
made through any of the grounds sanctioned by law.

4. Soliman Security Services Inc. et al., vs. Sarmiento et al., GR No. 194649, August
10, 2016

Doctrine: Failure to reassign security off-detailed guards after the lapse of six months
amounts to constructive dismissal.

Facts: Respondent security guards were allegedly terminated by the petitioner Siliman
Security Services Inc. after trying to discuss the non-payment of their benefits.
On the other hand, petitioner agency alleges that the respondents were merely
placed on floating status.
The NLRC observed that the memoranda received by the respondents were only
sent to them after the case for the illegal dismissal was filed.

Issue:
Whether or not complainants were validly placed on floating status and whether
constructive dismissal had set in.

Ruling:
Though respondents were not per se dismissed on 20 January 2007 when they
were ordered relieved from their posts, we find that they were constructively dismissed
when they were not given new assignments. As previously mentioned, placing security
guards under floating status or temporary off-detail has been an established industry
practice. It must be emphasized, however, that they cannot be placed under floating
status indefinitely; thus, the Court has applied Article 292 of the Labor Code by analogy
to set the specific period of temporary off-detail to a maximum of six (6) months. Placing
employees on floating status requires the dire exigency of the employer's bona fide
suspension of operation. In security services, this happens when there is a surplus of
security guards over available assignments as when the clients that do not renew their
contracts with the security agency are more than those clients that do.

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The crux of the controversy lies in the consequences of the lapse of a significant period
of time without respondents having been reassigned. Petitioner agency faults the
respondents for their repeated failure to comply with the directives to report to the office
for their new assignments. We rule that such notices were mere afterthoughts. The
notices were allegedly sent to respondents on 24 and 26 April 24 2007, a month after the
hearing before the Executive Labor Arbiter. By the time the notices were sent, a complaint
for illegal dismissal with a prayer for reinstatement was already filed.

5. De Castro et al., vs. Court of Appeals, GR No. 204261, October 5, 2016

Doctrine: “…Failure to register shall give rise to the presumption that the contractor is
engaged in labor-only contracting.”

Facts:
Sometime in 2007, Martinez recruited petitioner Edward de Castro (De Castro), a
sales and marketing professional in the field of real estate, to handle its sales and
marketing operations, including the hiring and supervision of the sales and marketing
personnel. To formalize this undertaking, De Castro was made to sign a Memorandum of
Agreement (MOA), denominated as Shareholders Agreement, wherein Martinez
proposed to create a new corporation, through which the latter's compensation, benefits
and commissions, including those of other sales personnel, would be coursed.
In a Letter, dated December 12, 2008 and signed by Bienvenida, Nuvoland
terminated the SMA on the ground that Silvericon personnel committed an unauthorized
walkout and abandonment of the Nuvo City Showroom for two (2) days.
After the issuance of the said termination letter, De Castro and all the sales and
marketing personnel of Silvericon were barred from entering the office premises.
Aggrieved, De Castro and Platon filed a complaint for illegal dismissal before the
LA, demanding the payment of their unpaid wages, commissions and other benefits with
prayer for the payment of moral and exemplary damages and attorney's fees against
Silvericon, Nuvoland, Martinez, Bienvenida, and the Board of Directors of Nuvoland.
Nuvoland and its directors and officers denied a direct contractual relationship with
De Castro and Platon, and contended that if there was any dispute at all, it was merely
between the complainants and Silvericon.
LA ruled that Silvericon was a labor-only contractor; 2) the case did not involve an
intra-corporate dispute; and 3) Martinez and Bienvenida were solidarity liable for illegal
dismissal.
NLRC reversed the LA decision, finding that Silvericon was an independent
contractor, thus, the direct employer of De Castro and Platon.
CA affirmed the findings of the NLRC, pointing out that what was terminated was
the SMA. As such, the employment of the forty (40) personnel hired by Silvericon, as well
as the petitioners' employment, was not affected. Considering that there was no
employer-employee relationship between the petitioners and Nuvoland, the CA deemed
that the latter could not be held liable for the claim of illegal dismissal.
Issue: Whether or not the CA erred in it’s decision?
Ruling:

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DO 18-A: "Substantial capital or investment" refers to capital stocks and
subscribed capitalization in the case of corporations, tools or equipment,
implements, machineries and work premises, actually and directly used by the
contractor or subcontractor in the performance or completion of the job, work or
service contracted out.

The "right to control" shall refer to the right reserved to the person for whom the services
of the contractual parties are performed to determine, not only the end to be achieved,
but also the manner and means to be used in reaching that end.

chanrobleslaw
At the outset it should be rioted that a real estate company like Nuvoland may opt to
advertise and; sell its real estate assets on its own, or allow an independent contractor to
market these developments in a manner that does not violate aforesaid regulations.
Basically, a legitimate job contractor complies with the requirements on sufficient
capitalization and equipment to undertake the needs of its client. Although this is not the
sole determining factor of legitimate contracting, independent contractors are
likewise required to register with the DOLE. This is required by D.O. 18-02.
Thus:chanRoblesvirtualLawlibrary

“…Failure to register shall give rise to the presumption that the contractor is
engaged in labor-only contracting. [Emphasis and underscorings supplied]
chanrobleslaw

In the present case, the Court is hounded by nagging doubts in its review of the assailed
decision. Several factors showing that Silvericon was not an independent contractor
were, conveniently brushed aside resulting in an unjust outcome. Silvercon did not
register nor did they have substantial capital. Furthermore, Nuovaland and Silvercon had
the same employees and officers.

There is "labor-only" contracting where the person supplying workers to an

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

A corporation, being a juridical entity, may act only through its directors, officers and
employees. Obligations incurred by them, acting as such corporate agents, are not theirs
but the direct accountabilities of the corporation they represent. Pursuant to this principle,
a director, officer or employee of a corporation is generally not held personally liable for
obligations incurred by the corporation; it is only in exceptional circumstances that
solidary liability will attach to them Thus, in labor cases, the Court has held that corporate
directors and officers are solidarity liable with the corporation for the employee's
termination only when the same is done with malice or in bad faith.

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"Xxx. Bad faith is never presumed. Bad faith does not simply connote bad judgment or
negligence - it imports a dishonest purpose or some moral obliquity and conscious doing
of wrong. It means a breach of a known duty through some motive or interest or ill will
that partakes of the nature of fraud."

The records are bereft of any evidence at all that respondents Martinez and Bienvenida
acted with malice, ill will or bad faith when the SMA was terminated. Hence, the said
individual officers cannot be held solidarity liable for the money claims due the petitioners.

6. Nestle Philippines Inc. vs. Puedan, Jr. GR No. 220617, January 30, 2017

Doctrine: “The imposition of minimum standards concerning sales, marketing, finance

and operations are nothing more than an exercise of sound business practice to increase
sales and maximize profits. This do not operate to control or fix the methodology on how
ODSI should do its business as a distributor.”

Facts :
On July 6, 2012, the respondents filed a complaint against the petitioner for illegal
dismissal and demanding for separation pay, nominal damages and attorney’s fees. The
respondents alleged that Ocho de Setiembre Inc. (ODSI) and Nestle Philippines Inc. (NPI)
hired them to sell various products of NPI in the assigned covered area. After sometime,
the respondents demanded that they be considered regular employees of NPI but they
were directed to sign contracts of employment with ODSI instead. However, the
respondents refused to comply with such directives resulting from their dismissal from
their position. The contention of the respondents is that ODSI is a labor-only contractor
and, thus, they should be deemed regular employees of NPI and there was no just or
authorized cause for their dismissal. The ODSI averred that it is a company engaged in
the business of buying, selling, distributing, and marketing of goods and commodities of
every kind and it enters into all kinds of contracts for the acquisition thereof. According to
ODSI the respondents were hired as its employees to execute the Distributorship
Agreement with the NPI. Unfortunately, the business relationship between the NPI and
ODSI turned sour and eventually NPI downsized its marketing and promotional support
from ODSI and termination of the Distributorship Agreement. Meanwhile, ODSI argues
with the respondents that they were not dismissed but merely on floating status. However,
the NPI did not file any position paper or appear in the scheduled conferences.
The Labor Arbiter concluded that all the impleaded respondents therein (i.e.
including NPI) should be held liable for the payment of nominal damages plus attorney’s
fees.
The aggrieved respondents appealed to National Labor Relation Commission
(NLRC) and the NLRC reversed and set aside the Labor Arbiter ruling. The NLRC ordered
ODSI and NPI to pay each of the respondents and entitled to separation pay and to
nominal damages. The respondents moved for a partial reconsideration arguing since it
was ODSI that closed down operations and not the NPI, therefore NPI should reinstate
them. However, the NLRC denied the motion.

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 Moreover, the NPI was dissatisfied hence filed a petition for certiorari before the
Court of Appeals (CA) which the CA affirmed the NLRC ruling.

Issue:
Whether or not Nestle Philippines Inc. (NPI) and Ocho de Setiembre Inc. (ODSI)
are deemed jointly and severely liable for the respondent’s monetary claims.

Ruling:
No. A closer examination of the Distributorship Agreement reveals that the
relationship of NPI and ODSI is not that of a principal and a contractor (regardless of
whether labor-only or independent), but that of a seller and a buyer/re-seller.
As stipulated in the Distributorship Agreement, NPI agreed to sell its products to
ODSI at discounted prices, which in turn will be re-sold to identified customers, ensuring
in the process the integrity and quality of the said products based on the standards agreed
upon by the parties. As aptly explained by NPI, the goods it manufactures are distributed
to the market through various distributors, e.g., ODSI, that in tum, re-sell the same to
designated outlets through its own employees such as the respondents. Therefore, the
reselling activities allegedly performed by the respondents properly pertain to ODSI,
whose principal business consists of the “buying, selling, distributing, and marketing
goods and commodities of every kind” and “[entering] into all kinds of contracts for the
acquisition of such goods [and commodities].”
Thus, contrary to the CA’s findings, the aforementioned stipulations in the
Distributorship Agreement hardly demonstrate control on the part of NPI over the means
and methods by which ODSI performs its business, nor were they intended to dictate how
ODSI shall conduct its business as a distributor. Otherwise stated, the stipulations in the
Distributorship Agreement do not operate to control or fix the methodology on how ODSI
should do its business as a distributor of NPI products, but merely provide rules of conduct
or guidelines towards the achievement of a mutually desired result -which in this case is
the sale of NPI products to the end consumer. In Steelcase, Inc. v. Design International
Selections, Inc., the Court held that the imposition of minimum standards concerning
sales, marketing, finance and operations are nothing more than an exercise of sound
business practice to increase sales and maximize profits.
Verily, it was only reasonable for NPI -it being a local arm of one of the largest
manufacturers of foods and grocery products worldwide -to require its distributors, such
as ODSI, to meet various conditions for the grant and continuation of a distributorship
agreement for as long as these conditions do not control the means and methods on how
ODSI does its distributorship business, as shown in this case. This is to ensure the
integrity and quality of the products which will ultimately fall into the hands of the end
consumer.
Thus, the foregoing circumstances show that ODSI was not a labor only contractor
of NPI; hence, the latter cannot be deemed the true employer of respondents. As a
consequence, NPI cannot be held jointly and severally liable to ODSI’ s monetary
obligations towards respondents.
7. Valencia vs. Classique Vinyl Products Corp., GR No. 206390, January 30, 2017
Doctrine: “In labor-only contracting, the statute creates an employer-employee
relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The
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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 principal employer therefore becomes
solidarily liable with the labor-only contractor for all the rightful claims of the employees.”|

Facts: Valencia applied for work with Classique Vinyl through the intervention of CMS, a
local manpower agency. He contended that he worked for respondent for four years until
his dismissal. Hence, by operation of law, he had already attained the status of a regular
employee of Classique Vinyl. On the other hand, Classique Vinyl asserted that there was
no employer-employee relationship, it insisted that Valencia’s true employer was CMS.

Issue: Is Valencia an employee of respondent?

Ruling: No. The burden of proof rests upon the party who asserts the affirmative of an
issue. Since Valencia is claiming to be an employee of Classique Vinyl, it is thus
incumbent upon him to proffer evidence to prove the existence of employer-employee
relationship between them. He needs to show by substantial evidence that he was indeed
an employee of the company against which he claims illegal dismissal. In order to
determine the existence of an employer-employee relationship, the following elements
had been consistently applied: (1) the selection and engagement; (2) payment of wages;
(3) power of dismissal and; (4) the power of control. The burden to prove such elements
lies upon Valencia, which in this case, he failed to prove.

Valencia failed to present competent evidence, documentary or otherwise, to

support his claimed employer-employee relationship between him and Classique Vinyl.
Also, the employment contract which Valencia signed with CMS categorically states that
the latter possessed not only the power of control but also of dismissal over him.

8. Mago et al., vs. Sunpower Manufacturing Ltd., GR No. 210961, January 24, 2018

Doctrine: “In order to become a legitimate contractor, the contractor must have
substantial capital or investment, and must carry a distinct and independent business free
from the control of the principal.”|

Facts: Jobcrest and Sunpower entered into a Service Contract Agreement, in which
Jobcrest undertook to provide business process services for Sunpower. Jobcrest then
trained its employees, including petitioners, for purposes of their engagement in
Sunpower. After the completion of their training, they were assigned to Sunpowers plant
in Laguna. Years later, Sunpower decided to terminate the Coinstacking/Material
Handling segment and the Visual Inspection segment, the departments where petitioners
were respectively assigned to. Both filed an illegal dismissal complaint with the NLRC.
When Jobcrest insisted that petitioners were not dismissed and that it would accept

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petitioners should they wish to go back to work. However, petitioners argued that they
were employees of Sunpower and that Jobcrest was engaged in labor-only contracting.

Issue: Is Jobcrest engaged in labor-only contracting? Are petitioners employees of

Jobcrest?

Ruling: No. Article 106 of the Labor Code defines labor-only contracting as a situation
where the person supplying workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises, among others,
and the workers recruited and placed by such person are performing activities which are
directly related to the principal business of such employer. In other words, the contractor
must not have substantial capital or investment, and workers must not be free from the
control of the principal.

In this case, first, Jobcrest has substantial capital. Substantial capital refers to paid-
up capital stocks/shares of at least Php3,000,000.00 in the case of corporations. For the
year ended December 31, 2011, the paid-up capital of Jobcrest increased to
Php8,000,000.00, notably more than the required capital under DOLE DO No. 18-A.
Second, Jobcrest exercised control over petitioners because they conducted training and
certification program for the latter before they were assigned to Sunpower. Their
attendance and punctuality were also monitored by Jobcrest. They also filed their leave
applications before it.

Yes. The four-fold test to establish an employee-employer relationship are the

following: power to control; hire; pay wages; and dismiss. In this case, the contractor hired
the workers; paid their wages, SSS, Pag-ibig, and others; and dimissed the petitioners as
evidence by Notice to Explain issued by Jobcrest to the petitioners.

9. Abuda et al., vs. L. Natividad Poultry Farms, GR No. 200712, July 4, 2018

Doctrine: “The necessity or desirability of the work performed by an employee can be

inferred from the length of time that an employee has been performing this work. If an
employee has been employed for at least one (1) year, he or she is considered regular
employee by operation of law.”

Facts: Petitioners were working as a maintenance personnels, they repaired and

maintained L. Natividad Poultry Farm’s livestock houses, facilities, and sales outlets. They
filed illegal dismissal against Natividad Poultry Farms. Natividad Poultry Farms on the
other hand argues that the petitioners are not their employees since they are independent
contractors and that the carpentry and masonry work cannot be considered necessary or
desirable in their business of livestock and poultry production.

Issue: Whether petitioners are regular employees of Natividad Poultry Farms?

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Ruling:
Yes. San Mateo and Del Remedios were not independent contractors but labor-
only contractors since they did not have substantial investment in the form of tools,
equipments, or work premises. Resort to the four (4) fold test will show that the employees
are Natividad’s employees. Natividad hired petitioners directly or through Del Remedios,
a supervisor at Natividad’s farm. They likewise paid petitioner’s wages. They had the
power of dismissal inherent in their power to select and engage their employees. Most
importantly though, they controlled petitioners and their work output by maintaining an
attendance sheet and by giving them specific task and assignments.
De Leon v. National Labor Relations Commission instructs that "[t]he primary
standard, therefore, of determining a regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual
business or trade of the employer." The connection is determined by considering the
nature of the work performed vis-à-vis the entirety of the business or trade. Likewise, if
an employee has been on the job for at least one (1) year, even if the performance of the
job is intermittent, the repeated and continuous need for the employee's services is
sufficient evidence of the indispensability of his or her services to the employer's
business.
As maintenance personnel, petitioners performed "repair works and maintenance
services such as livestock and poultry houses and facilities as well as doing construction
activities within the premises of [L. Natividad's] farms and other sales outlets for an
uninterrupted period of three (3) to seventeen (17) years." Respondents had several
farms and places in Quezon City and Montalban, including Patiis Farm, where petitioners
were regularly deployed to perform repair and maintenance work.
Being regular employees, petitioners, who were maintenance personnel, enjoyed
security of tenure and the termination of their services without just cause entitles them to
reinstatement and full backwages, inclusive of allowances and other benefits.

B. WORKER'S PREFERENCE
C. ATTORNEY'S FEES & APPEARANCE OF LAWYERS

26. MISCELLANEOUS PROVISIONS

A. SPECIAL TYPES OF WORKERS

B. EMPLOYMENT OF WOMEN
C. EMPLOYMENT OF CHILDREN
D. EMPLOYMENT OF HOUSEHELPER
E. EMPLOYMENT OF HOMEWORKERS
F. EMPLOYMENT OF NON-RESIDENT ALIENS
G. EMPLOYMENT OF STUDENTS & WORKING SCHOLAR
H. EMPLOYMENT OF ACADEMIC/NON-ACADEMIC PERSONNEL IN PRIVATE
EDUCATIONAL INSTITUTION
I. MEDICAL, DENTAL AND OCCUPATIONAL SAFETY
J. MIGRANT WORKER'S ACT/RECRUITMENT AND PLACEMENT

Page | 130
CASES

1. Dagasdas vs. Grand Placement & General Services Corp. GR No. 20527, January
18, 2017
Facts: GPGS and Aramco are recruitment agencies. While ITM is the principal of GPGS,
a company existing in Saudi Arabia.

GPGS, on behalf of ITM, employed Dagasdas as Network Technician and to be

deployed in Saudi Arabia. Dagasdas contended that although his position under his
contract was a Network Technician, he actually applied for and was engaged as a Civil
Engineer.

When Dagasdas arrived in Saudi Arabia, he signed an employment contract which it

stipulated that he shall be placed under a three-month probationary period.

Dagasdas reported to the work site. However, he was given tasks suited for
Mechanical Engineer which were foreign to him. So he reported the matter to his
supervisor. But later on, his employment was severed with ITM.

Dagasdas returned to the Philippines and filed for an illegal dismissal. GPGS, ITM
and Aramco countered that under the employment contract, ITM has the right to terminate
any employee within the three-month probationary period. Furthermore, the performance
of Dagasdas was so poor.

Issue: Was Dagasdas validly dismissed?

Ruling: No. Filipinos working abroad are entitled with security of tenure. However,
ITM violated this right by not affording Dagasdas procedural due process. In order for a
probationary employee to be validly dismissed, it must be for a valid cause or a reason to
conclude that the employee fails to qualify as regular employee pursuant to reasonable
standards made known to the employee at the time of engagement.

Not only ITM failed to prove that it informed Dagasdas of such standards, it dismissed
him without complying the twin notice requirement by only giving him a notice of
termination.

2. Princess Talent Center Production Inc., et vs. Masagca, GR No. 191310, April 11,
2018
Doctrine: “The burden of proof lies to the one who pleads payment.”
Facts: An employment contract was executed between Masagca and PTCPI—as agent
of SAENCO, Korean principal. She signed 2 contracts but failed to read them, and relied
on Pres. Moldes’ (PTCPI) representations. While in South Korea for 9 months, SAENCO
did not pay her. When Moldes demanded payment for a fictitious loan, she sought counsel
in PH. They obtained her contract, which states that her employment is 6 months, and

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her salary is US$200 more. Moldes paid others except her, gave her a loan document,
and demanded termination of her counsel, which Masagca refused. Then, SAENCO
President humiliated her. She got deported, and found out her visa was not renewed.
Masagca filed for illegal dismissal against PTCPI and SAENCO.

PTCPI alleged Masagca signed and read one contract, and was briefed before the PH
labor office in SK. Also, Masagca completed her term, and was paid fully. Masagca herself
extended her employment with SAENCO. She violated club policies, so she was
repatriated. Lastly, PTCPI lent her money for personal expenses. LA dismissed. NLRC
on MR, reinstated LA’s decision. CA reversed. PTCPI filed under Rule 45.

Issue: (1) Is Rule 45, the proper remedy? (2) Was Masagca illegally dismissed? (3)
Is PTCPI liable? (4) Is she entitled to her unpaid salaries?

Ruling: Yes. This is an exception wherein factual issues maybe reviewed even if
exercising of judicial review under Rule 45—when the findings of the LA, NLRC, and/or
the CA are conflicting.

Yes. Masagca was illegally dismissed as there was no valid cause, and twin-notice rule
was not complied with.

The contract, executed in the PH, is governed by the PH Constitution and labor laws,
which provides that the dismissal must be for a just or authorized cause coupled with due
process of notice and hearing.

When Masagca was repatriated, SAENCO already extended Masagca’s contract for
another 6 months. As such, both SAENCO and PTCPI are responsible for renewing her
visa. Also, PTCPI cannot feign ignorance of the extension as Moldes went to South Korea,
showing they were aware Masagca continued working with SAENCO. Also, there was no
proof Masagca knew club policies exists. Had Masagca violated any policies, SAENCO
would not have extended her employment.

SAENCO likewise failed to comply Art. 227 Labor Code, which provides the employer
shall give two notices to the employee: first, the opportunity of the employee to be heard,
and second, the decision if the employee is dismissed.

Yes but only equivalent to the unexpired term of her extended contract plus legal interest,
and attorney’s fees, and reimbursement of her placement fee.

The burden of proof lies to the one who pleads payment. The vouchers presented
containing Masagca’s signatures, which were found to be genuine, proved PTCPI paid
Masagca. Had Masagca not been paid since the beginning, then she would not have
extended her employment with SAENCO.

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Yes. PTCPI, a recruitment/placement agency, is solidarily liable with SAENCO,
principal/employer, for the money claims and damages of Masagca, an Overseas Filipino
Worker as provided under Sec. 10 RA 8042.

27. SOCIAL LEGISLATION

CASES

1. SSS et al., vs. Alba, G.R. No. 165482, July 23, 2008
Doctrine: A hacienda administrator, acts as the legal representative of the employer and
is thus an employer within the meaning of the law liable to pay the SS contributions.

Facts:: Petitioner (Apolonio Lamboso) worked in Hda. La Roca (owned by Far Alba) from
1960 to 1973 as ‘cabo’, in Hda. Alibasao from 1973 to 1979 as overseer and in Hda.
Kamandag from 1979 to 1984. The latter 2 haciendas are both owned by Ramon S.
Benedicto. When Lamboso filed a claim for retirement pension benefit with the SSS,
however, the same was denied on the ground that he had 39 monthly contributions to his
credit and so he could not qualify for monthly pension under R.A. No. 1161 ( the Social
Security Act of 1954). Lamboso appealed the denial of his claim by filing a petition before
the Commission wherein he alleged that he should be entitled to monthly retirement
pension. He prayed for the adjustment of the date of his Social Security (SS) coverage
and for the remittance of his delinquent monthly contribution.

Private respondent Ramon S. Benedicto alleged that he was only a lessee of Hdas.
Albasao and Kamandag. When he took over as lessee thereof, there was no available
records to support the petitioner’s claim of employment. He also avers that the petitioner
was employed by him from 1973 to 1984 (1973 to 1979 in Hda. Alibasao and from 1979
to 1984 in Hda. Kamandag) and all of his employment records were already destroyed
and damaged by termites. He prays that the petition be dismissed for lack of cause of
action. Respondent Far Alba (Hda. La Roca) was motu propio declared in default for
failure to file his answer.
The Commission ordered Far Alba to pay to the SSS the delinquent monthly
contributions of Apolonio Lamboso from June 18, 1960 to April; and Respondent Ramon
Benedicto to pay to SSS the delinquent monthly contributions due the petitioner for the
period May 1973 to 1984. The SSS, on the other hand, is ordered to pay Apolonio
Lamboso his retirement benefit upon the filing of the claim therefore.
Far Alba moved for reconsideration of the Commission’s resolution. The
Commission denied the motion. Alba filed a Petition for Review before the CA. CA
reversed and set aside both the resolution and the order of the Commission. It held that
Far Alba cannot be considered as an employer of Lamboso prior to 1970 because as
administrator of the family-owned hacienda, he is not an employer under Section 8 (c) of
the Social Security Act of 1954; and that that since it was Arturo Alba, Sr., Far Alba’s
father, who had failed to remit the SS contributions prior to 1970, Lamboso should have
asserted his claim before the estate proceedings of his deceased employer

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Issue: Whether an administrator could be considered an employer within the scope of
the Social Security Act of 1954.

Ruling: YES. Section 8 (c), Social Security Act of 1954 (amended by P.D. No. 1202 and
P.D. No. 1636) defines an employer as “any person, natural or juridical, domestic or
foreign, who carries on in the Philippines any trade or business, industry, undertaking, or
activity of any kind and uses the services of another person who is under his orders as
regards the employment, except the Government and any of its political subdivisions,
branches or instrumentalities, including corporations owned or controlled by the
Government.” Section 8 (d) defines an employee as “any person who performs services
for an employer in which either or both mental and physical efforts are used and who
receives compensation for such services where there is an employer-employee
relationship.”

Based on the testimony of Lamboso and his witness it is evidently that Far Alba
had indeed served as Lamboso’s employer from 1965 to 1970 or, at the very least, he
had served as the hacienda’s administrator before 1970. Far Alba was no ordinary
administrator. He was no less than the son of the hacienda’s owner and as such he was
an owner-in-waiting prior to his father’s death. He was a member of the owner’s family
assigned to actively manage the operations of the hacienda. Far Alba and the owner’s
interests in the business where plainly and inextricably linked by filial bond. He more than
just acted in the interests of his father as employer, and could himself pass off as the
employer, the one carrying on the undertaking.

Applying the control test which is used to determine the existence of employer-
employee relationship for purposes of compulsory coverage under the SSS law, Far Alba
is technically Lamboso’s employer. The essential elements of an employer-employee
relationship are: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the power of control with regard to the means
and methods by which the work is to be accomplished, with the power of control being
the most determinative factor.
Lamboso testified that he was selected and his services were engaged by Far Alba
himself. Far Alba held the prerogative of terminating Lamboso’s employment. Lamboso
also testified in a direct manner that he had been paid his wages by Far Alba. This
testimony was seconded by Lamboso’s co-worker, Rodolfo Sales. It is not essential for
the employer to actually supervise the performance of duties of the employee, it is
sufficient that the former has a right to wield the power (Power of Control).
Article 167(f) of the Labor Code which deals with employees’ compensation and
state insurance fund defines and employer as ” any person, natural or juridical, employing
the services of the employee.” It also defines a person as “any individual, partnership,
firm, association, trust, corporation or legal representative thereof.” Plainly, Far Alba, as
the hacienda administrator, acts as the legal representative of the employer and is thus
an employer within the meaning of the law liable to pay the SS contributions.
Section 8 (c) of the Social Security Act of 1954 is broad enough to include those
persons acting directly or indirectly in the interest of the employer. If under Article 212 (e),
persons acting in the interest of the employer, directly or indirectly, are obliged to follow

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the government labor relations policy, it could be reasonably concluded that such persons
may likewise be held liable for the remittance of SS contributions which is an obligation
created by law and an is employee’s right protected by law.
Far Alba’s is accountable to the SSS for Lamboso’s unremitted contributions form
1960 to 1970. In any event, the Court sustains the jurisdiction of the Commission over
disputes under the Social Security Act “with respect to coverage, benefits, contributions
and penalties thereon or any other matter related thereto.

2. Rodrin vs. GSIS et al., G.R. No. 162837, July 28, 2008
Doctrine: Members of the police force can claim compensation benefit even if their job
was not covered by the Letter-Orders. The nature of work of a police officer who is an
intelligence operative does not confine him to specific places and hours, more so with
respect to a police officer involved in intelligence work.

Facts:

Marlene L. Rodrin filed a claim for compensation benefits under Presidential Decree 626,
as amended, relative to the death of her husband SPO1 Felixberto M. Rodrin before the
GSIS but was denied on the ground that the death of SPO1 Felixberto M. Rodrin did not
arise out nor was it in the course of his employment. It appeared that Felixberto Rodrin,
who was then conducting an intelligence mission, was shot to death by a subdivision
security guard after a heated altercation. The wife questioned the denial of the claim
considering that she was able to submit various documents evidencing that her husband
died in the line of duty or that his death arose from or happened during the course of his
employment.

Issue

WON the compensation benefit claim is meritorious

Ruling

YES. For the compensability of an injury to an employee which results in his disability or
death, Section 1 (a), Rule III of the Amended Rules on Employees' Compensation
imposes the following conditions:

1. The employee must have been injured at the place where his work required him
to be;
2. The employee must have been performing his official functions; and
3. If the injury was sustained elsewhere, the employee must have been executing
an order of the employer.

The conditions have been met since members of the national police, unless they are on
official leave, are, by the nature of their functions, technically on duty 24 hours a day,
because policemen are subject to call at any time and may be asked by their superiors
or by any distressed citizen to assist in maintaining the peace and security of the
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community. Being specifically assigned to conduct intelligence work in Carmona and
Biñan, SPO1 Rodrin is presumed to have been performing his official duty when he was
shot to death by a security guard while trying to pass though the Las Villas de Manila
subdivision in Brgy. San Francisco, Biñan, Laguna.

With respect to the contention that San Pedro, Laguna was a place which was not covered
by the subject Letter-Orders, the Court takes cognizance of the fact that the nature of
work of a police officer who is an intelligence operative does not confine him to specific
places and hours, more so with respect to a police officer involved in intelligence work.
His actions may not be compartmentalized, as they depend to a large extent on the
exigencies of the assignment given him. Thus, in the absence of contrary evidence, SPO1
Rodrin is presumed to be in the performance of his official duties at the time of his death.

3. GSIS vs. Casco, G.R. No. 173430, July 28, 2008

Doctrine: Total disability does not require that the employee be absolutely disabled, or
totally paralyzed. What is necessary is that the injury must be such that he cannot pursue
his usual work and earn therefrom.

Facts
Casco, employed as a teacher, was diagnosed to be hypertensive and was admitted in
the hospital. He suffered another attack and was confined in the hospital. This forced him
to retire from government service at an early age. Casco then applied for disability
benefits under PD 626 in which petitioner GSIS granted him 38 months of permanent
partial disability(PPD).

The latest physical examination of Casco reveals that he still experiences chest pain,
limping accompanied by lapse of memory and vertigo. Thus, he requested GSIS to
convert his permanent partial disability to permanent total disability(PTD), but the same
was denied.

Issue
WON Casco’s claim for conversion of his PPD benefits to PTD benefits should be granted.

Ruling
YES. There is nothing in the law which prohibits the conversion of PPD benefit to PTD
benefit if it is shown that the employee's ailment qualifies as such.

Disability should be understood not singly through its medical significance but, more
importantly, in terms of a person's loss of earning capacity. Total disability does not
require that the employee be absolutely disabled, or totally paralyzed. What is necessary
is that the injury must be such that he cannot pursue his usual work and earn therefrom.

By denying respondent, who had rendered more than 21 years of service but was forced
to retire due to his ailment, the PTD benefits to which he is indisputably entitled would be

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contrary to the spirit of P.D. No. 626 and the social justice principle enshrined in our
Constitution.

4. SSS vs. Delos Santos, GR No. 164790, Aug 29, 2008, citing Aguas and 2005
Dycaico
Doctrine: An estranged wife who was not dependent upon her deceased husband for
support is not qualified to be his beneficiary.

Facts

Antonio de los Santos and Gloria de los Santos, both Filipinos, were married in 1964.
Less than a year after, Gloria left Antonio and contracted another marriage with a certain
Domingo Talens. A year later, Gloria went back to Antonio and lived with him, and they
had three children. In 1983, Gloria left Antonio again and went to the US to file for divorce
against the latter, which was granted. Later, Antonio married Cirila de los Santos and
produced one child, May-ann. On her part, Gloria married an American citizen in the US.

Antonio amended his records at the SSS and changed his beneficiaries. Antonio retired
from employment and began receiving monthly pension. Upon his death because of
respiratory failure, Cirila applied for and began receiving his SSS pension benefit. Gloria
filed a claim for Antonio’s death benefits with the SSS but was denied because she was
not a qualified beneficiary of Antonio.

Upon appeal, the SSC deemed that Gloria abandoned Antonio when she obtained a
divorce against him abroad and subsequently married another man, thus, she failed to
satisfy the requirement of dependency required of primary beneficiaries under the law.
Further, the divorce obtained by Gloria against the deceased Antonio was not binding in
this jurisdiction, thus, it did not sever her marriage ties with Antonio. The SSC added that
since the marriage of Antonio to Cirila was void, the latter was likewise not a qualified
beneficiary.

Issue

Who between respondent Gloria, the first wife who divorced Antonio in the US, or Cirila,
the second wife, is his primary beneficiary entitled to claim death benefits from the SSS?

Ruling

The Court recalled that in Dycaico v. Social Security System, it ruled that the proviso "as
of the date of retirement" in Section 12-B (d) of Republic Act No. 8282, which qualifies
the term "primary beneficiaries", is unconstitutional for it violates the due process and
equal protection clauses. It held that death benefits should not be denied to the wife who
was married to the deceased retiree only after the latter's retirement. The reckoning point
in determining the beneficiaries of the deceased Antonio should be the time of his death.

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On the main issue, although Gloria was the legal spouse of the deceased, the Court found
that she is still disqualified to be his primary beneficiary under the SS Law, as she fails to
fulfill the requirement of dependency upon her deceased husband Antonio.

The SS law specifically defines beneficiaries as “the dependent spouse, until he or she
remarries, the dependent legitimate, legitimated or legally adopted and illegitimate
children who shall be the primary beneficiary…” In SSS v. Aguas, the Court ruled that
although a husband and wife are obliged to support each other, whether one is actually
dependent for support upon the other cannot be presumed from the fact of marriage
alone. It was pointed out by the Court that a wife who left her family until her husband
died and lived with other men, was not dependent upon her husband for support, financial
or otherwise, during the entire period.

Here, Gloria herself admits that she left the conjugal abode on two (2) separate occasions,
to live with two different men. These uncontroverted facts remove her from qualifying as
a primary beneficiary of her deceased husband.

5. Becmen Service Exporter and Promotion Inc. vs. Cuaresma, GR No. 182978-79,
April 7, 2009
Doctrine: The relations between capital and labor are so impressed with public interest,
and neither shall act oppressively against the other, or impair the interest or convenience
of the public. In case of doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living for the laborer.

Facts: On January 6, 1997, Jasmin Cuaresma (Jasmin) was deployed by Becmen

Service Exporter and Promotion, Inc. (Becmen) to serve as assistant nurse in Al-Birk
Hospital in the Kingdom of Saudi Arabia (KSA), for a contract duration of three years, with
a corresponding salary of US$247.00 per month. Over a year later, she died. Jessie
Fajardo, a co-worker of Jasmin, narrated that on June 21, 1998, Jasmin was found dead
by a female cleaner lying on the floor inside her dormitory room with her mouth foaming
and smelling of poison.

Based on the police report and the medical report of the examining physician of the Al-
Birk Hospital, who conducted an autopsy of Jasmin’s body, the likely cause of her death
was poisoning.

Jasmin’s body was repatriated to Manila on September 3, 1998. The following day, the
City Health Officer of Cabanatuan City conducted an autopsy and the resulting medical
report indicated that Jasmin died under violent circumstances, and not poisoning as
originally found by the KSA examining physician. The toxicology report of the NBI,
however, tested negative for non-volatile, metallic poison and insecticides.

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Simplicio and Mila Cuaresma (the Cuaresmas), Jasmin’s parents and her surviving heirs,
received from the Overseas Workers Welfare Administration (OWWA) the following
amounts: P50,000.00 for death benefits; P50,000.00 for loss of life; P20,000.00 for funeral
expenses; and P10,000.00 for medical reimbursement.

On November 22, 1999, the Cuaresmas filed a complaint against Becmen and its
principal in the KSA, Rajab & Silsilah Company (Rajab), claiming death and insurance
benefits, as well as moral and exemplary damages for Jasmin’s death, Jasmin’s death
was work-related, having occurred at the employer’s premises; that under Jasmin’s
contract with Becmen, she is entitled to “iqama insurance” coverage; that Jasmin is
entitled to compensatory damages in the amount of US$103,740.00, which is the sum
total of her monthly salary of US$247.00 per month under her employment contract,
multiplied by 35 years (or the remaining years of her productive life had death not
supervened at age 25, assuming that she lived and would have retired at age 60).

In their position paper, Becmen and Rajab insist that Jasmin committed suicide, citing a
prior unsuccessful suicide attempt sometime in March or April 1998 and relying on the
medical report of the examining physician of the Al-Birk Hospital. They likewise deny
liability because the Cuaresmas already recovered death and other benefits totaling
P130,000.00 from the OWWA. They insist that the Cuaresmas are not entitled to “iqama
insurance” because this refers to the “issuance” – not insurance – of iqama, or
residency/work permit required in the KSA. On the issue of moral and exemplary
damages, they claim that the Cuaresmas are not entitled to the same because they have
not acted with fraud, nor have they been in bad faith in handling Jasmin’s case.

While the case was pending, Becmen filed a manifestation and motion for substitution
alleging that Rajab terminated their agency relationship and had appointed White Falcon
Services, Inc. (White Falcon) as its new recruitment agent in the Philippines. Thus, White
Falcon was impleaded as respondent as well, and it adopted and reiterated Becmen’s
arguments in the position paper it subsequently filed.

Issue: WON the Cuaresmas are entitled to monetary claims, by way of benefits and
damages, for the death of their daughter Jasmin.

Ruling: Article 19 of the Civil Code provides that every person must, in the exercise of
his rights and in the performance of his duties, act with justice, give everyone his due,
and observe honesty and good faith. Article 21 of the Code states that any person who
wilfully causes loss or injury to another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for the damage. And, lastly, Article
24 requires that in all contractual, property or other relations, when one of the parties is
at a disadvantage on account of his moral dependence, ignorance, indigence, mental
weakness, tender age or other handicap, the courts must be vigilant for his protection.

Clearly, Rajab, Becmen and White Falcon’s acts and omissions are against public policy
because they undermine and subvert the interest and general welfare of our OFWs
abroad, who are entitled to full protection under the law. They set an awful example of
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how foreign employers and recruitment agencies should treat and act with respect to their
distressed employees and workers abroad. Their shabby and callous treatment of
Jasmin’s case; their uncaring attitude; their unjustified failure and refusal to assist in the
determination of the true circumstances surrounding her mysterious death, and instead
finding satisfaction in the unreasonable insistence that she committed suicide just so they
can conveniently avoid pecuniary liability; placing their own corporate interests above of
the welfare of their employee’s – all these are contrary to morals, good customs and
public policy, and constitute taking advantage of the poor employee and her family’s
ignorance, helplessness, indigence and lack of power and resources to seek the truth
and obtain justice for the death of a loved one.

Giving in handily to the idea that Jasmin committed suicide, and adamantly insisting on it
just to protect Rajab and Becmen’s material interest – despite evidence to the contrary –
is against the moral law and runs contrary to the good custom of not denouncing one’s
fellowmen for alleged grave wrongdoings that undermine their good name and honor.

Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of
Philippine labor and social legislation, contract stipulations to the contrary
notwithstanding. This is in keeping with the basic public policy of the State to afford
protection to labor, promote full employment, ensure equal work opportunities regardless
of sex, race or creed, and regulate the relations between workers and employers. This
ruling is likewise rendered imperative by Article 17 of the Civil Code which states that
laws which have for their object public order, public policy and good customs shall not be
rendered ineffective by laws or judgments promulgated, or by determinations or
conventions agreed upon in a foreign country.

The relations between capital and labor are so impressed with public interest, and neither
shall act oppressively against the other, or impair the interest or convenience of the public.
In case of doubt, all labor legislation and all labor contracts shall be construed in favor of
the safety and decent living for the laborer.

The grant of moral damages to the employee by reason of misconduct on the part of the
employer is sanctioned by Article 2219 (10) of the Civil Code, which allows recovery of
such damages in actions referred to in Article 21.

Thus, in view of the foregoing, the Court holds that the Cuaresmas are entitled to moral
damages, which Becmen and White Falcon are jointly and solidarily liable to pay, together
with exemplary damages for wanton and oppressive behavior, and by way of example for
the public good.

6. GSIS vs. De Castro, GR No. 185035, July 15, 2009

Doctrine: “What the law requires is a reasonable work connection and not direct causal
relation. Probability, not the ultimate degree of certainty, is the test of proof in
compensation proceedings”

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Facts: De Castro rendered service in the Philippine Air Force. He was admitted at the V.
Luna General Hospital, AFP Medical Center due to chest pains. His full diagnosis
consisted of hypertensive cardiovascular disease and coronary artery disease (CAD).
De Castro retired from the service with a "Certificate of Disability Discharge. On this basis,
he filed a claim for permanent total disability benefits with the GSIS.
The GSIS denied De Castro’s claim based on the finding that De Castro's illnesses were
non-occupational. De Castro appealed to the Employees’ Compensation Commission
(ECC).
The ECC Board affirmed the GSIS ruling and dismissed De Castro's claim for lack of
merit. The ECC, however, also held that, CAD is a form of cardiovascular disease
included in the list of occupational diseases. The ECC still denied the claim despite this
observation because of "the presence of factors which are not work-related, such as
smoking and alcohol consumption." It likewise noted that manifestations of
Cardiomyopathy in De Castro’s 2-D echocardiography examination results could be
related to his drinking habits.
Issue: Whether an illness listed as an occupational disease under the ECC Rules
requires a proof of direct causal relation between the work and illness.
Ruling: We find it strange that both the ECC and the GSIS singled out the presence of
smoking and drinking as the factors that rendered De Castro’s ailments to be non-
compensable. To be sure, the causes of CAD and hypertension that the ECC listed and
explained in its decision cannot be denied; smoking and drinking are undeniably among
these causes. However, they are not the sole causes of CAD and hypertension.
ECC has apparently failed to consider other factors such as age and gender from among
those that the ECC itself listed as major and minor causes of atherosclerosis and,
ultimately, of CAD. While age and gender are characteristics inherent in the person (and
thereby may be considered non-work related factors), they also do affect a worker’s job
performance and may in this sense, together with stresses of the job, contribute to
illnesses such as CAD and hypertension.
De Castro’s service record and the medals, awards, and commendations he earned, all
attesting to 32 years of very active and productive service in the military. Thus, the CAD
and the hypertension came while he was engaged in these endeavors. His long years of
military service, with its attendant stresses and pressures, contributed in no small
measure to the ailments that led to his disability retirement. De Castro's "illness was
contracted during and by reason of his employment, and any non-work related factor that
contributed to its aggravation is immaterial."
What the law requires is a reasonable work connection and not direct causal relation.
Probability, not the ultimate degree of certainty, is the test of proof in compensation
proceedings. For, in interpreting and carrying out the provisions of the Labor Code and
its Implementing Rules and Regulations, the primordial and paramount consideration is
the employee's welfare. To safeguard the worker's rights, any doubt on the proper
interpretation and application must be resolved in favor of labor.

7. Sto. Tomas vs. Salac, GR No. 152642, Nov. 13, 2012, En Banc
Doctrine: “Sections 29 and 30 of R.A. 804, which commands the Department of Labor
and Employment (DOLE) to begin deregulating within one year of its passage the
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business of handling the recruitment and migration of overseas Filipino workers and
phase out within five years the regulatory functions of the Philippine Overseas
Employment Administration (POEA), HAS BEEN REPEALED.”

FACTS: In 2002, Rey Salac et al, who are recruiters deploying workers abroad, sought
to enjoin the Secretary of Labor, Patricia Sto. Tomas, the POEA, and TESDA, from
regulating the activities of private recruiters. Salac et al invoked Sections 29 and 30 of the
Republic Act 8042 or the Migrant Workers Act which provides that recruitment agency in
the Philippines shall be deregulated one year from the passage of the said law; that 5
years thereafter, recruitment should be fully deregulated. RA 8042 was passed in 1995,
hence, Salac et al insisted that as early as 2000, the aforementioned government
agencies should have stopped issuing memorandums and circulars regulating the
recruitment of workers abroad. Sto. Tomas then questioned the validity of Sections 29
and 30.

Issue: Whether or not Sections 29 and 30 are valid.

Ruling: The issue became moot and academic. It appears that during the pendency of
this case in 2007, RA 9422 (An Act to Strengthen the Regulatory Functions of the POEA)
was passed which repealed Sections 29 and 30 of RA 8042.

8. Great Southern Maritime Service Corp., et al., vs. Surigao, GR No. 183646, Sept.
18, 2009, citing 2009 Becmen Service Exporter & Promotions, Inc.
Doctrine: “The general rule is that the employer is liable to pay the heirs of the deceased
seafarer for death benefits once it is established that he died during the effectivity of his
employment contract. However, the employer may be exempted from liability if he can
successfully prove that the seafarers death was caused by an injury directly attributable
to his deliberate or willful act. In sum, respondents entitlement to any death benefits
depends on whether the evidence of the petitioners suffices to prove that the deceased
committed suicide; the burden of proof rests on his employer.”

Facts:
The late Salvador M. Surigao, husband of respondent Leonila Surigao, was hired as Fitter
by [petitioner] Great Southern Maritime Services Corporation, for and in behalf of [co-
petitioner] IMC Shipping Co. Pte., Ltd. (Singapore) for a period of ten (10) months. In his
pre-employment medical examination, he was found fit for sea duty. Thus, on April 29,
2001, he commenced his work aboard MV Selendang Nilam.
However, on August 22, 2001, as per Ship Masters advice, a doctor was sent on board
the vessel to medically attend to Salvador due to complaints of extensive neuro
dermatitis, neck region viral, aetiology, urticaria, maculo popular, rash extending to the
face, chest and abdomen. After examination, Salvador was advised to take a blood
test. His condition having worsened, he was confined at the Seven Hills Hospital. Not
long thereafter, the Ship Master decided to sign him off from the vessel on August 25,
2001 for treatment in the hospital and for repatriation upon certification of the doctor that
he was fit to travel.

Page | 142
Prior to his repatriation, though, or on August 26, 2001, at around seven oclock in the
morning, Salvador was found dead inside the bathroom of his hospital room. Later, his
body was transferred to a government hospital, the Ling George Hospital Mortuary Hall,
for post-mortem examination. The Post-Mortem Certificate issued by the Department of
Forensic Medicine, Visakhapatnam City, stated that the cause of death of Salvador was
asphyxia due to hanging.
As an heir of the deceased seaman, Leonila Surigao, for in behalf of her minor children,
filed for death compensation benefits under the terms of the standard employment
contract, but her claims were denied by Great Southern and IMC Shipping, claiming that
the deceased Salvador committed suicide, which disqualifies him from death benefits.
Issue:
Whether or not private respondent is entitled to death benefits for the death of her
husband under the POEA standard employment contract for seafarers.
Ruling:
NO, private respondents are not entitled to death benefits.
The pertinent provisions of the Standard Terms and Conditions Governing the
Employment of Filipino Seafarers On-Board Ocean-Going Vessels, or the POEA
Standard Employment Contract, which Salvador and the petitioners incorporated into
their contract, provide that:
SECTION 20. COMPENSATION AND BENEFITS
A. COMPENSATION AND BENEFITS FOR DEATH
1. In case of death of the seafarer during the term of his
contract, the employer shall pay his beneficiaries the
Philippine Currency equivalent to the amount of Fifty
Thousand US dollars (US$50,000) and an additional amount
of Seven Thousand US dollars (US$7,000) to each child
under the age of twenty-one (21) but not exceeding four (4)
children at the exchange rate prevailing during the time of
payment.
xxxx
D. No compensation and benefits shall be payable in respect of any injury,
incapacity, disability or death of the seafarer resulting from his willful or
criminal act or intentional breach of his duties, provided however, that the
employer can prove that such injury, incapacity, disability or death is directly
attributable to the seafarer.
The general rule is that the employer is liable to pay the heirs of the deceased seafarer
for death benefits once it is established that he died during the effectivity of his
employment contract. However, the employer may be exempted from liability if he can
successfully prove that the seafarers death was caused by an injury directly attributable
to his deliberate or willful act.[6] In sum, respondents entitlement to any death benefits
depends on whether the evidence of the petitioners suffices to prove that the deceased
committed suicide; the burden of proof rests on his employer.
Petitioners insist that respondents are not entitled to death benefits
because Salvador committed suicide. As proof, they presented the Death Certificate
issued by Dr. Butchi Raju stating that Salvador was suspected to have committed suicide;
the post-mortem examination results stating that the deceased appeared to have died of
Page | 143
ASPHYXIA DUE TO HANGING; the Indian Police Inquest Report also stating that he died
due to hanging; the affidavit of the nurse on duty of Seven Hills hospital, Ms. P. V.
Ramanamma, wherein she stated that as the entrance doors to the bathroom main room
was bolted from the inside and no other person was in the near physical vicinity of the
deceased, it was concluded that seafarer committed suicide; as well as photos taken
immediately after the discovery of the body with a belt around his neck.
The foregoing circumstances constitute substantial evidence supporting a conclusion
that Salvadors death was attributable to himself:
1. Salvador was last seen alive by the attending nurse in Room No.
1619 at about 4:00 a.m. of August 26, 2001;
2. At 6:30 a.m. of the same day, when no one answered to the
repeated knocks of the attending nurse, the hospital staff forcibly
opened the main door of the room;
3. Things inside the room were found in order;
4. The bathroom door was locked from inside and the hospital staff
gained entrance therein only through a closed door with a mesh
leading to the ceiling of the bathroom;
5. The window in the bathroom has grills;
6. Salvador was found dead inside with a belt tied around his neck;
7. A broken pipe and showerhead were found near the body; and
8. The post-mortem examination result stating an opinion on the
cause of death as Asphyxia due to hanging.
The post-mortem examination conclusively established that the true cause of death was
asphyxia or suffocation. The appellate courts ruling that while it may be consistent with
the theory that the deceased hanged himself but it does not rule out the possibility that
he might have died of other causes, does not persuade. Aside from being purely
speculative, we find it hard to believe that someone strangled Salvador inside the
bathroom then locked the door thereof on his way out undetected. As shown by the
evidence presented by the petitioners, the bathroom door was locked or bolted from the
inside and could not be opened from outside. In order to gain entrance, the hospital staff
had to pass through a closed door with a mess leading to the ceiling of the
bathroom. Entry could not likewise be effected through the bathroom window as it has
grills.
Indeed, we are not unaware of our ruling in Becmen Service Exporter and Promotion, Inc.
v. Cuaresma, where we held that Jasmin Cuaresma, also an overseas Filipino worker, did
not commit suicide; that Filipinos are resilient people, willing to take on sacrifices for the
good of their family; and that we do not easily succumb to hardships and
difficulties. Nevertheless, the circumstances prevailing in said case are totally different
from this case. In Becmen, the postmortem examination and the police report did not
state with specificity that poisoning or suicide was the cause of Jasmins death. In fact,
both reports mentioned that the cause of death of Jasmin was still under investigation. In
contrast, the postmortem examination and the police report in this case, categorically
mentioned that Salvador died of asphyxia due to hanging.It was also shown that no other
individual could have caused the death of Salvador because the bathroom door was
locked or bolted from the inside and could not be opened from outside.

Page | 144
It is true that the beneficent provisions of the Standard Employment Contract are liberally
construed in favor of Filipino seafarers and their dependents. We commiserate with
respondents for the unfortunate fate that befell their loved one; however, we find that the
factual circumstances in this case do not justify the grant of death benefits as prayed for
by them as beneficiaries of Salvador.

9. Kestrel Shipping Co. et al., vs. Munar, G.R. No. 198501, Jan. 30, 2013

Doctrine: Provisions of the Labor Code and AREC on disabilities are applicable to the
case of seafarers; If illness or injury prevents an empoyee from engaging in gainful
employment for more than 120 or 240 days, he shall be deemed totally and permanently
disabled.

Facts:

Francisco Munar, entered into a 6-month contract with Kestrel Shipping Co., in behalf of
its principal Atlantic Mannin, Ltd., as pump man for MV Southern Unity. One day, while
Munar assisted in manually lifting the ship’s anchor windlass motor that weighs about 350
kilograms, he started to limp and experience severe pain in his lumbar region. He was
hospitalized and subsequently repatriated to the Philippines for further treatment.
Meantime, Munar filed a complaint for total and permanent disability benefits. He
claimed that the mere fact that his medical condition, which incapacitated him to engage
in any gainful employment, persisted for more than 120 days automatically entitles him to
total and permanent disability benefits. Pursuant POEA-SEC provisions he was offered
by Krestel Shipping Co. disability benefits for Grade 8 disability as assessed by the
company designated doctor, contrary to the Grade 1 assessment of Dr. Chiu, an
independent orthopedic hired by Munar.
The LA awarded him with total and permanent disability benefits. This was affirmed by
the NLRC and later by the CA with modification as to the attorney’s fee, lowering it from
10% to 2%.

Issues:

1. Whether or not the Labor Code’s concept of permanent total disability applicable to the
case at bar?
2. Whether or not the award of total and permanent disability to Munar was proper?

Ruling:

1. Yes. It is settled that the provisions of the Labor Code and AREC on disabilities are
applicable to the case of seafarers such that the POEA-SEC is not the sole issuance that
governs their rights in the event of work-related death, injury or illness.

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 Art. 192 (c). The following disabilities shall be deemed total and permanent:
(1) Temporary total disability lasting continuously for more than one
hundred twenty days, except as otherwise provided in the Rules; x x x
Section 29 of the 1996 POEA SEC itself provides that "all rights and obligations of the
parties to the Contract, including the annexes thereof, shall be governed by the laws of
the Republic of the Philippines, international conventions, treaties and covenants where
the Philippines is a signatory." Even without this provision, a contract of labor is so
impressed with public interest that the New Civil Code expressly subjects it to "the special
laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages,
working conditions, hours of labor and similar subjects."
2. Yes. Under Section 32 of the POEA-SEC, only those injuries or disabilities that are
classified as Grade 1 may be considered as total and permanent. However, if those
injuries or disabilities with a disability grading from 2 to 14, hence, partial and permanent,
would incapacitate a seafarer from performing his usual sea duties for a period of more
than 120 or 240 days, depending on the need for further medical treatment, then he is,
under legal contemplation, totally and permanently disabled. In other words, an
impediment should be characterized as partial and permanent not only under the
Schedule of Disabilities found in Section 32 of the POEA-SEC but should be so under the
relevant provisions of the Labor Code and the Amended Rules on Employee
Compensation (AREC) implementing Title II, Book IV of the Labor Code. That while the
seafarer is partially injured or disabled, he is not precluded from earning doing the same
work he had before his injury or disability or that he is accustomed or trained to do.
Otherwise, if his illness or injury prevents him from engaging in gainful employment for
more than 120 or 240 days, as the case may be, he shall be deemed totally and
permanently disabled. Moreover, the company-designated physician is expected to arrive
at a definite assessment of the seafarer’s fitness to work or permanent disability within
the period of 120 or 240 days. That should he fail to do so and the seafarer’s medical
condition remains unresolved, the seafarer shall be deemed totally and permanently
disabled.

In this case, when Munar filed his complaint, Dr. Chua had not yet determined the nature
and extent of Munar’s disability. Also, Munar was still undergoing physical therapy and
his spine injury had yet been fully addressed. Furthermore, when Munar filed a claim for
total and permanent disability benefits, more than 120 days had gone by and the
prevailing rule then was that enunciated by this Court in Crystal Shipping, Inc. v. Natividad
that total and permanent disability refers to the seafarer’s incapacity to perform his
customary sea duties for more than 120 days.

10. Sy vs. Phil Transmarine Carriers Inc. G.R. No. 191740, Feb. 11, 2013
Doctrine: “The terms and conditions of a seafarer's employment is governed by the
provisions of the contract he signs with the employer at the time of his hiring, and deemed
integrated in his contract is a set of standard provisions set and implemented by the
POEA, called the Standard Terms and Conditions Governing the Employment of Filipino
Seafarers on Board Ocean-Going Vessels”
Facts:

Page | 146
Alfonso N. Sy was hired by respondent Philippine Transmarine Carriers Incorporated for
and in behalf of its foreign principal, co-respondent SSC Ship Management Pte. Ltd. In
their contract of employment Sy was assigned to work as Able Seaman (AB) on board
the vessel M/V Chekiang.

On October 1, 2005, while the vessel was at the Port of Jakarta, Indonesia, AB Sy went
on shore leave and left the vessel. Consequently, the vessel's agent received an advice
from the local police that one of the vessel's crew members died ashore. The cadaver
was confirmed to be that of AB Sy. A forensic pathologist certified that AB Sy's death was
an accident due to drowning, and that there was "alcohol 20mg%" in his urine.

AB Sy's body was repatriated to the Philippines. The Medico-Legal Officer of the NBI
conducted a post-mortem examination on AB Sy's body and certified that the cause of
death was Asphyxia by drowning.

Petitioner Susana R. Sy, widow of AB Sy, demanded from respondents payment of her
husband's death benefits and compensation. Respondents denied such claim, since AB
Sy's death occurred while he was on a shore leave, hence, his death was not work-related
and, therefore, not compensable. As her repeated demands were denied, petitioner filed,
on March 1, 2006, a complaint against respondents for death benefits, burial assistance,
moral and exemplary damages, and attorney's fees.

The Labor Arbiter rendered a Decision ordering respondent to pay complainant the
Philippine Currency equivalent of $50,000.00 as death benefit and S$1,000.00 as burial
expenses. The LA found that AB Sy was still under the respondents' employ at the time
he drowned although he was on shore leave; that while on shore leave, he was still under
the control and supervision of the master or captain of the vessel.

Issue:

WON petitioner is entitled to death compensation benefits from respondents.

Ruling:

Negative.

The terms and conditions of a seafarer's employment is governed by the provisions of the
contract he signs with the employer at the time of his hiring, and deemed integrated in his
contract is a set of standard provisions set and implemented by the POEA, called the
Standard Terms and Conditions Governing the Employment of Filipino Seafarers on
Board Ocean-Going Vessels, which provisions are considered to be the minimum
requirements acceptable to the government for the employment of Filipino seafarers on
board foreign ocean-going vessels. Section 20 (A) of the Contract provides:

Page | 147
SECTION 20. COMPENSATION AND BENEFITS
A. COMPENSATION AND BENEFITS FOR DEATH
1. In the case of work-related death of the seafarer during the term of his contract, the
employer shall pay his beneficiaries the Philippine Currency equivalent to the amount of
Fifty Thousand US dollars (US$50,000) and an additional amount of Seven Thousand US
dollars (US$7,000) to each child under the age of twenty-one (21) but not exceeding four
(4) children, at the exchange rate prevailing during the time of payment.

Clearly, to be entitled for death compensation benefits from the employer, the death of
the seafarer (1) must be work-related; and (2) must happen during the term of the
employment contract.

Under the 2000 POEA Amended Employment Contract, work-related injury is defined as
an injury(ies) resulting in disability or death arising out of and in the course of employment.
Thus, there is a need to show that the injury resulting to disability or death must arise (1)
out of employment, and (2) in the course of employment.

As a matter of general proposition, an injury or accident is said to arise "in the course of
employment" when it takes place within the period of the employment, at a place where
the employee reasonably may be, and while he is fulfilling his duties or is engaged in
doing something incidental thereto.

AB Sy was hired as a seaman on board M/V Chekiang on June 23, 2005 and was found
dead on October 1, 2005, with drowning as the cause of death. Notably, at the time of the
accident, AB Sy was on shore leave and there was no showing that he was doing an act
in relation to his duty as a seaman or engaged in the performance of any act incidental
thereto. It was not also established that, at the time of the accident, he was doing work
which was ordered by his superior ship officers to be done for the advancement of his
employer's interest. On the contrary, it was established that he was on shore leave when
he drowned and because of the 20% alcohol found in his urine upon autopsy of his body,
it can be safely presumed that he just came from a personal social function which was
not related at all to his job as a seaman. Consequently, his death could not be considered
work-related to be compensable.

Petitioner argues that AB Sy's death happened in the course of employment, because if
not for
his employment he could be somewhere else and was not on shore leave.

We are not persuaded. While AB Sy's employment relationship with respondents did not
stop but continues to be in force even when he was on shore leave, their contract clearly
provides that it is not enough that death occurred during the term of the employment
contract, but must be work-related to be compensable. There is a need to show the
connection of AB Sy's death with the performance of his duty as a seaman. As we found,
AB Sy was not in the performance of his duty as a seaman, but was doing an act for his

Page | 148
own personal benefit at the time of the accident. The cause of AB Sy’s death at the time
he was on shore leave which was drowning, was not brought about by a risk which was
only peculiar to his employment as a seaman.

WHERFORE, the petition is DENIED.

11. Nazareno vs. Maersk Filipinas Crewing Inc. et al., G.R. No. 168703, Feb. 26, 2013
En banc
Doctrine: “Under Section 20-B (3) of the 1996 POEA-SEC, it is mandatory for a claimant
to be examined by a company-designated physician within three days from his
repatriation. The unexplained omission of this requirement will bar the filing of a claim for
disability benefits. However, in submitting himself to examination by the company-
designated physician, a claimant does not automatically bind himself to the medical report
issued by the company-designated physician”

Facts:
Petitioner Ramon G. Nazareno was hired by Maersk Filipinas Crewing Inc. (MCI) as Chief
Officer for a period of six months.
On March 25, 2001,in Brazil , while petitioner was working, he suddenly lost his balance
and fell at a height of two (2) meters. He was later examined in the United States and was
considered not fit for work
On August 8, 2001, at South Korea, petitioner was brought to the hospital where he was
treated and given medication for his "frozen right shoulder”. Consequently, petitioner was
declared unfit to work and was recommended to be signed off from duty.
On August 10, 2001, petitioner was repatriated to Manila. He underwent a physical
therapy program.
On October 31, 2001, Dr. Campana issued a Medical Certificate stating that petitioner
has been under their medical care since August 13, 2001 and that after treatment and
physical therapy, petitioner was fit for work as of October 21, 2001.
On December 27, 2001, petitioner consulted Dr. Santiago a neurologist. Her Neurologic
Summary concluded that petitioner will no longer be able to function as in his previous
disease-free state and that his condition would hamper him from operating as chief officer
of a ship.
Meanwhile, petitioner was also examined by Dr. Vicaldo who diagnosed petitioner to be
suffering from Parkinson's disease and a frozen right shoulder (secondary), with an
"Impediment Grade VII (41.8%). He concluded that petitioner is unfit to work as a
seafarer.
On the basis of the findings of his doctors, petitioner sought payment of his disability
benefits and medical allowance from respondents, but was refused on the contention that
the disability of a seafarer can only be assessed by the company-designated physician
and not by the seafarer's own doctor.

Issue:
Whether or not, a seafarer can only be assessed by the company designated physician.

Page | 149
Ruling:
Yes. While it is the company-designated physician who must declare that the seaman
suffered a permanent disability during employment, it does not deprive the seafarer of his
right to seek a second opinion.
Under Section 20-B (3) of the 1996 POEA-SEC, it is mandatory for a claimant to be
examined by a company-designated physician within three days from his repatriation. The
unexplained omission of this requirement will bar the filing of a claim for disability benefits.
However, in submitting himself to examination by the company-designated physician, a
claimant does not automatically bind himself to the medical report issued by the company-
designated physician
The courts should be vigilant in their time-honored duty to protect labor, especially in
cases of disability or ailment. When applied to Filipino seamen, the perilous nature of their
work is considered in determining the proper benefits to be awarded. These benefits, at
the very least, should approximate the risks they brave on board the vessel every single
day.

12. Philippine Journalist Inc. vs. Journal Employees Union et al., G.R. No. 192601,
June 3, 2013
Doctrine: The civil status of the employee as either married or single is not the controlling
consideration in order that a person may qualify as the employee’s legal dependent. What
is rather decidedly controlling is the fact that the spouse, child, or parent is actually
dependent for support upon the employee.

Facts: Respondent Michael L. Alfante alleged that he started to work with Petitioner PIJ
as computer technician at Management Information System under manager Neri
Torrecampo on 16 May 2000; that on 15 July 2001, he was regularized receiving a
monthly salary of P9,070.00 plus other monetary benefits; that sometime in 2001, Rico
Pagkalinawan replaced Torrecampo, which was opposed by complainant and three other
co-employees; that Pagkalinawan took offense of their objection; that on 22 October
2002, complainant Alfante received a memorandum from Pagkalinawan regarding his
excessive tardiness; that on 10 June 2003, complainant Alfante received a memorandum
from Executive Vice-President Arnold Banares, requiring him to explain his side on the
evaluation of his performance submitted by manager Pagkalinawan; that one week after
complainant submitted his explanation, he was handed his notice of dismissal on the
ground of "poor performance"; and that complainant was dismissed effective 28 July
2003.

Respondent Alfante submitted that he was dismissed without just cause. He also had a
claim for the alleged non-adjustment of longevity pay and burial aid for the death of his
parent.

In case of Respondent Alfante, Petitioner averred in defense that complainant was

dismissed for "poor performance" after an evaluation by his superior, and after being
forewarned that complainant may be removed if there was no showing of improvement in
his skills and knowledge on current technology.

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With respect to the alleged non-adjustment of longevity pay and burial aid, Petitioner PJI
pointed out that it complies with the provisions of the CBA . Petitioner alleged that under
the CBA, if the employee was already married, his/her parent will not anymore be
considered as a "legal dependent" for the purpose of this benefit. Alfante is not entitled
to the burial aid because the legal dependent who died was his parent.

The Labor Arbiter and NLRC dismissed Alfante's Case for lack of Merit

Alfante went to CA and his petition was PARTLY GRANTED.

His dismissal was affirmed by CA. NLRC's decision was MODIFIED ONLY insofar as the
funeral or bereavement aid is concerned, which was GRANTED, but only after
submission of conclusive proofs that the deceased is a parent, either father or mother, of
the employees concerned, as well as the death certificate to establish the fact of death of
the deceased legal dependent.

PJI alleged that hi deceased parent is not covered by the term "legal dependent" under
the law because he was already married and that the persons covered by the term "legal
dependent" are only his spouse and children.

Issue: WON the term "legal dependent" in connection with the grant of funeral and
bereavement aid to a regular employee under the CBA should include the employee's
parents even if the said employee's civil status was married.

Ruling: The petition for review lacks merit.

The nature and force of a CBA are delineated in Honda Phils., Inc. v. Samahan ng
Malayang Manggagawa sa Honda,20 thuswise:

A collective bargaining agreement (or CBA) refers to the negotiated contract between a
legitimate labor organization and the employer concerning wages, hours of work and all
other terms and conditions of employment in a bargaining unit. As in all contracts, the
parties in a CBA may establish such stipulations, clauses, terms and conditions as they
may deem convenient provided these are not contrary to law, morals, good customs,
public order or public policy. Thus, where the CBA is clear and unambiguous, it becomes
the law between the parties and compliance therewith is mandated by the express policy
of the law.

Accordingly, the stipulations, clauses, terms and conditions of the CBA, being the law
between the parties, must be complied with by them. The literal meaning of the
stipulations of the CBA, as with every other contract, control if they are clear and leave
no doubt upon the intention of the contracting parties.22

Here, a conflict has arisen regarding the interpretation of the term legal dependent in

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connection with the grant of funeral and bereavement aid to a regular employee under
Section 4, Article XIII of the CBA,23 which stipulates as follows:

SECTION 4. Funeral/Bereavement Aid. The COMPANY agrees to grant a

funeral/bereavement aid in the following instances:

a. Death of a regular employee in line of duty – P50,000

b. Death of a regular employee not in line of duty – P40,000

c. Death of legal dependent of a regular employee – P15,000. (Emphasis supplied)

Petitioner insists that notwithstanding the silence of the CBA, the term legal dependent
should follow the definition of it under Republic Act (R.A.) No. 8282 (Social Security
Law),24 so that in the case of a married regular employee, his or her legal dependents
include only his or her spouse and children, and in the case of a single regular employee,
his or her legal dependents include only his or her parents and siblings, 18 years old and
below; and that the term dependents has the same meaning as beneficiaries as used in
Section 5, Article XIII of the CBA.

We cannot agree with petitioner’s insistence.

Social legislations contemporaneous with the execution of the CBA have given a meaning
to the term legal dependent. First of all, Section 8(e) of the Social Security Law provides
that a dependent shall be the following, namely: (a) the legal spouse entitled by law to
receive support from the member; (b) the legitimate, legitimated, or legally adopted, and
illegitimate child who is unmarried, not gainfully employed and has not reached 21 of age,
or, if over 21 years of age, is congenitally or while still a minor has been permanently
incapacitated and incapable of self-support, physically or mentally; and (c) the parent who
is receiving regular support from the member. Secondly, Section 4(f) of R.A. No. 7875,
as amended by R.A. No. 9241,25 enumerates who are the legal dependents, to wit: (a)
the legitimate spouse who is not a member; (b) the unmarried and unemployed legitimate,
legitimated, illegitimate, acknowledged children as appearing in the birth certificate;
legally adopted or step-children below 21 years of age; (c) children who are 21 years old
and order but suffering from congenital disability, either physical or mental, or any
disability acquired that renders them totally dependent on the member of our support; and
(d) the parents who are 60 years old or older whose monthly income is below an amount
to be determined by the Philippine Health Insurance Corporation in accordance with the
guiding principles set forth in Article I of R.A. No. 7875. And, thirdly, Section 2(f) of
Presidential Decree No. 1146, as amended by R.A. No. 8291,dependent for support upon
the member or pensioner; (b) the legitimate, legitimated, legally adopted child, including
the illegitimate child, who is unmarried, not gainfully employed, not over the age of
majority, or is over the age of majority but incapacitated and incapable of self-support due
to a mental or physical defect acquired prior to age of majority; and (c) the parents
dependent upon the member for support

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It is clear from the statutory definitions of dependent that the civil status of the employee
as either married or single is not the controlling consideration in order that a person may
qualify as the employee’s legal dependent. What is rather decidedly controlling is the fact
that the spouse, child, or parent is actually dependent for support upon the employee.

Considering that existing laws always form part of any contract, and are deemed
incorporated in each and every contract, the definition of legal dependents under the
aforecited social legislations applies herein in the absence of a contrary or different
definition mutually intended and adopted by the parties in the CBA. Accordingly, the
concurrence of a legitimate spouse does not disqualify a child or a parent of the employee
from being a legal dependent provided substantial evidence is adduced to prove the
actual dependency of the child or parent on the support of the employee.

The coverage of the term legal dependent as used in a stipulation in a collective

bargaining agreement (CBA) granting funeral or bereavement benefit to a regular
employee for the death of a legal dependent, if the CBA is silent about it, is to be construed
as similar to the meaning that contemporaneous social legislations have set. This is
because the terms of such social legislations are deemed incorporated in or adopted by
the CBA.

Pursuant to Article 100 of the Labor Code, petitioner as the employer could not reduce,
diminish, discontinue or eliminate any benefit and supplement being enjoyed by or
granted to its employees. This prohibition against the diminution of benefits is founded on
the constitutional mandate to protect the rights of workers and to promote their welfare
and to afford labor full protection.

13. Mitsubishi Motors Phils Salaried Employees Union vs. Mitsubishi Motors Phils
Corp., G.R. No. 175773, June 17, 2013
Doctrine:
“The CBA constitutes a contract between the parties; hence, should be strictly construed
for the purpose of limiting the amount of the employer’s liability.”

Facts:
The CBA of the parties provides that the company shall shoulder the hospitalization
expenses of the dependents of covered employees subject to certain limitations and
restrictions. The covered employees pay part of the insurance through a monthly
deduction. When some of the employees claimed for the benefits under the insurance,
the company only paid a portion refusing to pay the portion of hospital expenses already
shouldered by the dependent’s own health insurance hence, the petition.

Issue:
Are the covered employees entitled to the whole and undiminished amount of said
hospital expenses under the collateral source rule?

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Ruling:
No. The collateral source is applied so that the wrongdoer should not benefit from the
expenditures made by the injured party. It does not find application in no-fault insurances.
Here, the company is not a no- fault insurer hence, it cannot be obliged to pay the
hospitalization expenses of its dependents which had already been paid by separate
health insurance providers of said dependents. Further, the conditions set forth in the
CBA provision indicate an intention to limit the company’s liability to actual expenses
incurred by the employees’ dependents, that is, excluding the amounts paid by
dependent’s other health insurance providers as evidenced by a condition that payment
should be direct to the hospital and doctor. It is well to note at this point that the CBA
constitutes a contract between the parties and as such, it should be strictly construed for
the purpose of limiting the amount of the employer’s liability.

14. Philman Marine Agency Inc. et al., vs. Cabanban G.R. No. 186509, July 28, 2013
Doctrine: It is the company-designated physician who primarily assesses the degree of
the seafarer’s disability, however, he should make the declaration or determination within
120 days, otherwise, the law considers the seafarer’s disability as total and permanent
and the latter shall be entitled to disability benefits. Should the seafarer require further
medical treatment, the period granted to the company-designated physician to make the
declaration may be extended, but not to exceed 240 days.

Facts: Armando entered into a contract of employment with DOHLE, through its local
agent PTCI. Armando underwent the requisite pre-employment medical examination and
was found fit for sea service. While on board, Armando felt dizzy and complained of chest
pain. He was immediately brought to a port clinic, there he was diagnosed with
Microvascular Unstable Angina Class III B.

Armando was recommended for Repatriation on Medical ground. Upon his arrival in the
Philippines, he proceeded to PTCI’s company designated physician and was then
declared Armando “fit to work” after 92 days.

Despite the declaration, Armando demanded payment of permanent disability benefits

under the POEA-SEC. The petitioners did not heed Armando’s demand, prompting him
to file a claim for injury/illness compensation benefit under a disability grade of 7,
according to the POEA- SEC.

Issue: Whether or not Armando is entitled to total and permanent disability benefits on
account of his medical condition?

Ruling: No. Section 20-B of the POEA-SEC laid out two primary conditions which the
seafarer must meet in order for him to claim disability benefits – that the injury or illness
is work-related and that it occurred during the term of the contract. When read together
with Articles 191 to 193, of the Labor Code and Section 2, Rule X of the IRR, Section 20-
B of the POEA-SEC shows that it is the company-designated physician who primarily
assesses the degree of the seafarer’s disability. Upon the seafarer’s repatriation for

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medical treatment, and during the course of such treatment, the seafarer is under total
temporary disability and receives medical allowance until the company-designated
physician declares his fitness to work resumption or determines the degree of the
seafarer’s permanent disability. The company-designated physician should, however,
make the declaration or determination within 120 days, otherwise, the law considers the
seafarer’s disability as total and permanent and the latter shall be entitled to disability
benefits. Should the seafarer require further medical treatment, the period granted to the
company-designated physician to make the declaration may be extended, but not to
exceed 240 days. At anytime during this latter period, the company-designated physician
may make the declaration or determination: either the seafarer will no longer be entitled
to any sickness allowance as he is already declared fit to work, or he shall be entitled to
receive disability benefits depending on the degree of his permanent disability.

The petitioners’ designated physician declared Armando fit for sea service 92 days from
the time he disembarked from the vessel. While Armando was initially under temporary
total disability, he was declared him fit to work well within the 120-day mark.

15. Bartolome vs. Social Security System, GR No. 192531, November 12, 2014

Doctrines:
“Legitimate parents pertain to those who exercise parental authority over the
employee enrolled under the Employees Compensation Program.”

“Even though parental authority is severed by virtue of adoption, the ties between
the adoptee and the biological parents are not entirely eliminated.”

Facts:
John Colcol was employed as electrician by Scanmar Maritime Services on board
the vessel Maersk Danville since February 2008 so he was enrolled under the
government’s Employees Compensation Program (ECP).
On June 2, 2008, steel plates fell on John while on board causing his untimely
death the next day. Being unmarried, his biological mother Bernardita Bartolome, filed a
claim for death benefits under PD 626 with SSS in La Union. However, SSS La Union
denied the claim since she was not anymore considered as his parent since John was
legally adopted by Cornelio Colcol.
Upon appeal, the Employees’ Compensation Commission (ECC) affirmed the SSS
decision on the ground that she was no longer the primary beneficiary. The MR was
likewise denied.

Issue:
Are the biological parents of the covered, but legally adopted, employee
considered secondary beneficiaries and, thus, entitled, in appropriate cases, to receive
the benefits under the ECP?

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Ruling:
Petitioner qualifies as John’s dependent parent.

Nowhere in the law nor in the rules does it say that "legitimate parents" pertain
to those who exercise parental authority over the employee enrolled under the
ECP. It was only in the assailed Decision wherein such qualification was made.

When Cornelio died less than 3 years after the adoption decree, John was still a
minor (4 years old). In such case, parental authority should be deemed to have reverted
in favor of the biological parents. Even though parental authority is severed by virtue
of adoption, the ties between the adoptee and the biological parents are not entirely
eliminated.

Biological parents retain their rights of succession to the estate of their child
who was the subject of adoption. While the benefits arising from the death of an SSS
covered employee do not form part of the estate of the adopted child, the pertinent
provision on legal or intestate succession at least reveals the policy on the rights of the
biological parents and those by adoption vis-à-vis the right to receive benefits from the
adopted. Thus, Cornelio’s death at the time of John’s minority resulted in the restoration
of petitioner’s parental authority over the adopted child.

Moreover, John, in his SSS application, named petitioner as one of his

beneficiaries for his benefits. Since the parent by adoption already died, then the death
benefits under the Employees' Compensation Program shall accrue solely to herein
petitioner, John's sole remaining beneficiary.

16. Austria vs. Crystal Shipping GR No. 206256, Feb. 24, 2016
Doctrine: “For disabilities to be compensable under Section 20(B) of the POEA-SEC, two
elements must concur, namely: (1) the injury or illness must be work-related; and (2) the
work-related injury or illness must have existed during the term of the seafarer’s
employment contract.; The pre-existence of the illness does not irrevocably bar
compensability because the disability laws still grant the same provided seaferer’s
working conditions bear a causal connection with the employee’s illness.”

Facts: Crystal Shipping is a foreign company engaged in the maritime industry. Larvik on
the other hand is Crystal’s manning agent in the Philippines. Albert was employed as
Chief Cook aboard one of Crystal shipping’s vessles, M/V Yara Gas. The parties executed
a CBA covering Albert’s employment contract.

While on board the vessel, Albert experienced heavy coughs and recurring throat
irritations. He was eventually diagnosed with Bronchitis while at a stopover at Germany.
His symptoms however persisted. About a year later, he was diagnosed with Dilated
Cardiomypoathy, a congenital disease which weakens the heart. The report finds that the
harsh working conditions exacerbated said congenital disease. Due to this illness, Albert
was repatriated.
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Albert then claimed compensation under the CBA. He is claiming 110,000 USD plus
damages. The employers, for their part, argue that Albert is not entitled to disability
benefits under the CBA because his illness, Dilated Cardiomyopathy, is not work-related
since it is congenital in nature.

Both the LA and the NRLC ruled in favor of Albert and awarded him disability benefits.
The CA on appeal, however, reversed the NLRC’s decision and agreed with the
employers ruling that Albert’s illness cannot be considered “work-related” due to the fact
that it is congenital.

Issue: Whether or not Albert’s Dilated Cardiomyopathy, a congenital illness by nature,

may satisfy the requisite of “work-relatedness” thereby making it compensable.

Ruling: Yes, Albert’s illness satisfies the requisite of “work-relatedness”.

For disabilities to be compensable under Section 20(B) of the POEA-SEC, two elements
must concur, namely: (1) the injury or illness must be work-related; and (2) the work-
related injury or illness must have existed during the term of the seafarer’s employment
contract.

To this end, it is important to note that the pre-existence of the illness does not irrevocably
bar compensability because the disability laws still grant the same provided seaferer’s
working conditions bear a causal connection with the employee’s illness. Although the
employer is not the insurer of the health of his employees, he takes them as he finds them
and assumes the risk of liability.

In the present case, due to Albert’s employment as Chief Cook, he was constantly
exposed to heat naturally causing exhaustion, which in turn increased the burden on his
heart and interfered with the normal functioning of his cardio-vascular system. Since his
employment contributed

17. Dizon vs. Naess Shipping Phils GR No. 201834, June 1, 2016

Doctrine:
Entitlement of seamen on overseas work to disability benefits is a matter governed, not
only by medical findings, but by law and by contract

Facts:
Since 1976, respondents Naess Shipping Phils., Inc. and DOLE UK (Ltd.) hired
petitioner Andres L. Dizon as cook for its various vessels until the termination of his
contract in 2007.|Dizon disembarked after completing his contract on February 2007. He
underwent pre-employment medical examination in March 2007 and was declared unfit
for sea duties due to uncontrolled hypertension and coronary artery disease as certified
by the doctors of the Marine Medical and Laboratory Clinic (MMLC).

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||| Dizon filed a complaint against respondents for payment of total and permanent
disability benefits, sickness allowance, reimbursement of medical, hospital and
transportation expenses, moral damages, attorney's fees and interest before the Labor
Arbiter. He alleged that he incurred his illness while on board the respondents' vessel and
that his working conditions on board were characterized by stress, heavy work load, and
over fatigue. He also asserted that he disclosed his hypertension prior to his last contract
in 2006, but was certified fit for duty for the nine-month employment contract|||

Respondents disavowed liability for Dizon's illness maintaining that he finished and
completed his contract on board their vessel Dole Colombia without any incident, and that
his sickness was not work-related.

Issue: Whether or not Dizon is entitled to disability benefits.

Ruling:
No. Entitlement of seamen on overseas work to disability benefits is a matter
governed, not only by medical findings, but by law and by contract. For the seaman's
claim to prosper, however, it is mandatory that he should be examined by a company-
designated physician within three days from his repatriation. Failure to comply with this
mandatory reporting requirement without justifiable cause shall result in forfeiture of the
right to claim the compensation and disability benefits provided under the Philippine
Overseas Employment Administration-Standard Employment Contract(POEA-SEC).

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 Reporting the illness or injury within three days from repatriation fairly makes it easier
for a physician to determine the cause of the illness or injury. Ascertaining the real cause
of the illness or injury beyond the period may prove difficult. Furthermore, for disability to
be compensable under Section 20 (B) of the 2000 POEA-SEC, two elements must
concur: (1) the injury or illness must be work-related; and (2) the work-related injury or
illness must have existed during the term of the seafarer's employment contract.
POEA-SEC expressly considers Cardiovascular Disease as an occupational
disease if it was contracted under any of the following instances, to wit:
a. If the heart disease was known to have been present during employment,
there must proof that an acute exacerbation was clearly precipitated by the
unusual strain by reasons of the nature of his work.
b. The strain of work that brings about an acute attack must be sufficient severity
and must be followed within 24 hours by the clinical signs of cardiac insult to
constitute causal relationship.
c. If a person who was apparently asymptomatic before being subjected to strain
at work showed signs and symptoms of cardiac injury during the
performance of his work and such symptoms and signs persisted, it is
reasonable to claim a causal relationship.

As can be gleaned from the above provision, it is incumbent upon the seafarer to
show that he developed the cardiovascular disease under any of the three conditions to
constitute the same as an occupational disease for which a seafarer may claim
compensation. It is crucial that Dizon present concrete proof showing that he indeed
acquired or contracted the illness which resulted in his disability during the term of his
employment contract.

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