1
01 CALS POULTRY SUPPLY CORPORATION and
DANILO YAP vs. ALFREDO ROCO and
CANDELARIA ROCO
FACTS:
CALS Poultry Supply Corporation is engaged in
the business of selling dressed chicken
and other related products and managed by
Danilo Yap. CALS hired Alfredo Roco as its driver
and Edna Roco, Alfredos sister, as a helper in
the dressing room of CALS. On May 16, 1995, it
hired Candelaria Roco, another sister, as helper,
also at its chicken dressing plant on a
probationary basis. On March 5, 1996, Alfredo
Roco and Candelaria Roco filed a complaint for
illegal dismissal against CALS and Danilo Yap
alleging that Alfredo and Candelaria were
illegally
dismissed on January 20, 1996 and November 5,
1996, respectively. According to Candelaria
Roco, she was terminated without cause from
her job as helper after serving more than six (6)
months as probationary employee. The Labor
Arbiter on April 16, 1998, issued a decision
dismissing the complaints for illegal dismissal
for lack of merit. In the case of Candelaria Roco,
the Labor Arbiter upheld CALS decision not to
continue with her probationary employment
having been found her unsuited for the work for
which her services were engaged. She was
hired on May 16, 1995 and her services were
terminated on November 15, 1995.
ISSUE:
WON Candelaria has attained the status of a
regular employee.
appointment paper showing that he was hired
on May 20, 1996, consequently, his dismissal on
November 20, 1996 was illegal because at that
time, he wa s already a regular employee since
the 6-month probationary period ended on
November 16, 1996.
The respondent, on the other hand, asserted
that during the petitioner’s probationary
period, he showed poor performance on his
assigned tasks, was late couple of times and
violated the company’s rule. Thus, the
petitioner was terminated and his application to
of the Labor Arbiter. The Court of Appeals
affirmed the decision of NLRC. Hence, the
present
recourse.
ISSUE:
Whether the petitioner was already a regular
employee in respondent’s company at the
time of his dismissal from the service.
HELD:
The Supreme Court ruled in the negative. The
status of the petitioner at the time of his
HELD:
NO. We agree with CALS contention as upheld
by both the Labor Arbiter and the NLRC
that Candelarias services was terminated within
and not beyond the 6-month probationary
period. In Cebu Royal v. Deputy Minister of
Labor, our computation of the 6-month
probationary period is reckoned from the date
of appointment up to the same calendar date of
the 6th month following.
02 ALCIRA vs. NLRC
FACTS:
The petitioner, Radin Alcira, was hired by the
respondent Middle by Philippines
Corporation as engineering support services
supervisor under probationary status for 6
months.
Afterwards, the service of the petitioner was
terminated by the respondent on the ground
that
the latter was not satisfied on the performance
of the former. As a result, the petitioner filed a
complaint foe illegal dismissal in the National
Labor Relations Commission (NLRC) against the
respondent.
Petitioner contended that his termination in the
service tantamount to illegal dismissal
since he attained the status of a regular
employee as of the time of dismissal. He
presented the
become
a regular employment was disapproved. The
respondent also insisted that the removal of the
petitioner from office was within the
probationary period.
The Labor Arbiter dismissed the complaint on
the ground that the dismissal of the
petitioner was done before his regularization
because the 6- month probationary period,
counting from May 20, 1996 shall end on
November 20, 1996. The NLRC affirmed the
decision
termination was still probationary. His dismissal
on November 20, 1996 was within the 6-
month probationary period. Article 13 of the
Civil Code provides that when the law speaks of
years, months, and days and nights, it shall be
understood that years are of 365 days, months
of
30 days, days of 24 hours and nights are from
sunset to sunrise. Since, one month is
composed
of 30 days, then, 6 months shall be understood
to be composed of 180 days. And
the computation of the 6- month period is

reckoned from the date of appointment up to
the
same calendar date of the 6th month following.
Since, the number of days of a particular month
is irrelevant, petitioner was still a probation ary
employee at the time of his dismissal.
Wherefore, the petition is dismissed.
03 MITSUBISHI MOTORS PHILIPPINES
CORPORATION vs CHRYSLER PHILIPPINES LABOR
UNION
and NELSON PARAS
FACTS:
Nelson Paras was hired on a probationary basis
as a manufacturing trainee at the Plant
Engineering Maintenance Department of
Mitsubishi Motors Philippines Corporation
(MMPC).
He and the new and re-hired employees were
given an orientation respecting the company’s
history, corporate philosophy, organizational
structure, and company rules and regulations,
including the company standards for
regularization, code of conduct and company-
provided
benefits. Paras started reporting for work on
May 27, 1996. As part of the MMPC’s policy,
Paras
was evaluated by his immediate supervisors Lito
R. Lacambacal and Wilfredo J. Lopez7 after six
(6) months, and received an average rating.
Later, Lacambacal informed Paras that based on
his
performance rating, he would be regularized.
However, the Department and Division
Managers
reviewed the performance evaluation made on
Paras. They unanimously agreed, along with
Paras’ immediate supervisors, that the
performance of Paras was unsatisfactory. 11 As
a employee for 5 months. She was hired as a
consequence, Paras was not considered for
regularization. On November 26, 1996, he
received
a Notice of Termination dated November 25,
1996, informing him that his services were
terminated effective the said date since he
failed to meet the required company standards
for
regularization.
ISSUE:
WON Paras, who continued to be employed
even after the 180th day, had become a
regular employee
HELD:
YES. Paras was employed as a management
trainee on a probationary basis. During the
orientation conducted on May 15, 1996, he was
2
apprised of the standards upon which his
regularization would be based. He reported for
work on May 27, 1996. As per the company’s
policy, the probationary period was from three
(3) months to a maximum of six (6) months.
Applying Article 13 of the Civil Code, 31 the
probationary period of six (6) months consists
of
one hundred eighty (180) days.32 This is in
conformity with paragraph one, Article 13 of
the
Civil Code, which provides that the months
which are not designated by their names shall
be
understood as consisting of thirty (30) days
each. The number of months in the proba
tionary
period, six (6), should then be multiplied by the
number of days within a month, thirty (30);
hence, the period of one hundred eighty (180)
days. As clearly provided for in the last
paragraph of Article 13, in computing a period,
the first day shall be excluded and the last day
included. Thus, the one hundred eighty (180)
days commenced on May 27, 1996, and ended
on
November 23, 1996. The termination letter
dated November 25, 1996 was served on
respondent Paras only at 3:00 a.m. of
November 26, 1996. He was, by then, already a
regular
employee of the petitioner under Article 281 of
the Labor Code.
04 ROBINSONS GALLERIA/ROBINSONS
SUPERMARKET CORPORATION and/or JESS
MANUEL, petitioners, vs. IRENE R. RANCHEZ,
respondents.
FACTS:
Respondent Ranchez was a probationary
cashier by Robinsons sometime within that
period. Two weeks after she was hired, she
reported the loss of cash which she had placed
in the company locker. She offered to pay for
the lost amount but the Operations Manager of
Robinsons had her strip-searched then reported
her to the police even though they found
nothing on her person. An information for
Qualified Theft was filed with the Quezon City
Regional Trial Court. She was detained for 2
weeks for failure to immediately post bail.
Weeks later, respondent Ranchez filed a
complaint for illegal dismissal and damages. A
year later, Robinsons sent to respondent by
mail a notice of termination and/or notice of
expiration of probationary employment.
The Labor Arbiter dismissed the complaint for
illegal dismissal, alleging that at the time of
filing respondent Ranchez had not yet been

terminated. She was merely investigated.
However, the NLRC reversed this ruling, stating
that Ranchez was illegally dismissed and that
Robinson's should reinstate her. It held that
Ranchez was deprived of due process when she
was strip-searched and sent to jail for two
weeks because such amounted to constructive
dismissal, making it impossible for the
respondent to continue under the employment.
Even though she was merely a probationary
employee, the lapse of the probationary
contract did not amount to a valid dismissal
because there was already an unwarranted
constructive dismissal beforehand.
The NLRC denied Robinson's motion for
reconsideration. The CA affirmed the decision
of the NLRC.
ISSUE:
Whether respondent was illegally terminated
from employment by petitioners.
HELD:
The petition is unmeritorious.
LABOR LAW: Probationary employees;
termination of employment
There is probationary employment when the
employee upon his engagement is made to
undergo a trial period during which the
employer determines his fitness to qualify for
regular employment based on reasonable
standards made known to him at the time of
engagement.
A probationary employee, like a regular
employee, enjoys security of tenure.However,
in cases of probationary employment, aside
from just or authorized causes of termination,
an additional ground is provided under Article
281 of the Labor Code,i.e., the probationary
employee may also be terminated for failure to
qualify as a regular employee in accordance
with reasonable standards made known by the
employer to the employee at the time of the
engagement.Thus, the services of an employee
who has been engaged on probationary basis
may be terminated for any of the following:
(1) a just or
(2) an authorized cause; and
(3) when he fails to qualify as a regular
employee in accordance with reasonable
standards prescribed by the employer.
Article 277(b) of the Labor Code mandates that
the employer shall furnish the worker, whose
employment is sought to be terminated, a
written notice containing a statement of the
causes of termination, and shall afford the latter
ample opportunity to be heard and to defend
himself with the assistance of a representative
if he so desires, in accordance with company
rules and regulations pursuant to the guidelines
set by the Department of Labor and
Employment.
3
In the instant case, based on the facts on
record, petitioners failed to accord respondent
substantive and procedural due process.The
haphazard manner in the investigation of the
missing cash, which was left to the
determination of the police authorities and the
Prosecutor's Office, left respondent with no
choice but to cry foul.Administrative
investigation was not conducted by petitioner
Supermarket.On the same day that the missing
money was reported by respondent to her
immediate superior, the company already pre-
judged her guilt without proper investigation,
and instantly reported her to the police as the
suspected thief, which resulted in her
languishing in jail for two weeks.
The due process requirements under the Labor
Code are mandatory and may not be replaced
with police investigation or court proceedings.
An illegally or constructively dismissed
employee, respondent is entitled to: (1) either
reinstatement, if viable, or separation pay, if
reinstatement is no longer viable; and (2)
backwages. These two reliefs are separate and
distinct from each other and are awarded
conjunctively.
In this case, since respondent was a
probationary employee at the time she was
constructively dismissed by petitioners, she is
entitled to separation pay and backwages.
Reinstatement of respondent is no longer viable
considering the circumstances.
DENIED
05 ST. PAUL COLLEGE QUEZON CITY, SR. LILIA
THERESE TOLENTINO, SPC, SR. BERNADETTE
RACADIO, SPC, and SR. SARAH MANAPOL,
Petitioners, v. REMIGIO MICHAEL A. ANCHETA II
and CYNTHIA A. ANCHETA, Respondent.
FACTS:
Remigio Michael was hired by the St. Paul
College (SPCQC) as a teacher in the Gen.
Education Dept. with a probationary rank in SY
1996-1997 which was renewed the following
year. His wife, Cynthia was was also hired as a
part time teacher of the Mass Comm Dept in
the 2nd Sem SY 1996-1997 and her
appointment was renewed for SY 1997-1998.
February 1998, the spouses both wrote a letter
addressed to Sr. Lilia asking for their contract to
be renewed which was indeed granted by the
College Council as evidenced by a letter sent by
petitioner.
April 22,1998, a letter, whose signatures
includes that of the respondents, was sent to Sr.
Bernadette. The said letter contain teachers
sentiments regarding school policies. However,
April 21, 1998, a letter written by the latter was
shown, reiterating the conversation of Sr.
Bernadette and Remigio regarding the non

compliance of respondent to instructional
school policies. Accordingly, Sr. Bernadette
wrote a letter endorsing the termination of the
spouses. Respondents submitted their
comments however they were still terminated
and their letter for reconsideration denied thus
the filling of a complaint for illegal dismissal
which was dismissed by both NLRC and LA but
was granted by the CA. Petitioners MR was
denied hence the present petition.
ISSUE:
Whether or not the spouses were illegally
dismissed.
HELD:.
LABOR LAW
The Court finds that there was a valid and just
cause for dismissal. The Labor Code commands
that before an employer may legally dismiss an
employee from the service, the requirement of
substantial and procedural due process must be
complied with. Under the requirement of
substantial due process, the grounds for
termination of employment must be based on
just or authorized causes. Petitioner school
charged respondent Remigio Michael of non-
compliance with a school policy regarding the
submission of final test questions to his
program coordinator for checking or comment
which was admitted by the respondent in his
letter. Respondent Remigio Michael's spouse
shared the same defenses and admissions as to
the charges against her. The plain admissions of
the charges against them were the
considerations taken into account by the
petitioner school in their decision not to renew
the respondent spouses' employment contracts.
This is a right of the school that is mandated by
law and jurisprudence. It is the prerogative of
the school to set high standards of efficiency for
its teachers since quality education is a
mandate of the Constitution. Schools cannot be
required to adopt standards which barely satisfy
criteria set for government recognition. The
same academic freedom grants the school the
autonomy to decide for itself the terms and
conditions for hiring its teacher, subject of
course to the overarching limitations under the
Labor Code.
LABOR LAW
A probationary employee or probationer is one
who is on trial for an employer, during which
the latter determines whether or not he is
qualified for permanent employment. The
probationary employment is intended to afford
the employer an opportunity to observe the
fitness of a probationary employee while at
work, and to ascertain whether he will become
an efficient and productive employee. The word
probationary, as used to describe the period of
4
employment, implies the purpose of the term or
period, not its length. It is important that the
contract of probationary employment specify
the period or term of its effectivity. The failure
to stipulate its precise duration could lead to
the inference that the contract is binding for the
full three-year probationary period. Therefore,
the letters sent by petitioner, which were void
of any specifics cannot be considered as
contracts. The closest they can resemble to are
that of informal correspondence among the
said individuals. As such, petitioner school has
the right not to renew the contracts of the
respondents, the old ones having been expired
at the end of their terms.
GRANTED
06 TAMSONS ENTERPRISES, INC., NELSON LEE,
LILIBETH ONG and JOHNSON NG v. COURT OF
APPEALS and ROSEMARIE L. SY
FACTS:
It appears that on September 1, 2006, Sy was
hired by Tamsons as Assistant to the President.
On February 24, 2007, four days before she
completed her sixth month of working in
Tamsons, Ng, Sy was informed that her services
would be terminated due to inefficiency.
Sy claimed that the remarks of her superiors
about her alleged inefficiency were ill-
motivated and made without any basis. She had
been rendering services for almost six (6)
months before she was arbitrarily and
summarily dismissed.The petitioners did not
show her any evaluation or appraisal report
regarding her alleged inefficient performance.
Petitioners asserted that before Sy was hired,
she was apprised that she was being hired as a
probationary employee for six months, subject
to extension as a regular employee conditioned
on her meeting the standards of permanent
employment set by the company. Her work
performance was thereafter monitored and
evaluated. On February 1, 2007, she was
formally informed that her employment would
end because she failed to meet the company's
standards.
Sy filed a case for illegal dismissal.
The ELA rendered a decision in favor of Sy,
stating that a termination, notwithstanding the
probationary status, must be for a just cause.
Dissatisfied, the petitioners appealed to the
NLRC. The NLRC reversed the ELAs finding. The
NLRC reasoned out that failure to qualify for
regular employment is in itself a just cause for
termination of probationary employment.
The MR having been denied, Sy elevated her
case to the CA via a petition for certiorari under
Rule 65.

On February 26, 2010, the CA reversed the
NLRC. The petitioners sought reconsideration
but it was denied.
Hence, the present petition before this Court.
ISSUE:
Was the termination of Sy, a probationary
employee, valid?
HELD:
Even if probationary employees do not enjoy
permanent status, they are accorded the
constitutional protection of security of tenure.
They may only be terminated for a just cause or
when they otherwise fail to qualify as regular
employees in accordance with reasonable
standards made known to them by the
employer at the time of their engagement.
***
One of the conditions before an employer can
terminate a probationary employee is
dissatisfaction on the part of the employer
which must be real and in good faith, not
feigned so as to circumvent the contract or the
law. Here, absent any proof showing that the
work performance of petitioner was
unsatisfactory, We cannot conclude that
petitioner failed to meet the standards. This
absence of proof leads Us to infer that their
dissatisfaction with her work performance was
contrived so as not to regularize her
employment.
The power of the employer to terminate an
employee on probation is not without
limitations. Here, the petitioners failed to
convey to Sy the standards upon which she
should measure up to be considered for
regularization and how the standards had been
applied in her case. Petitioners dissatisfaction
was at best self-serving and dubious as they
could not present concrete and competent
evidence establishing her alleged
incompetence. Failure on the part of the
petitioners to discharge the burden of proof is
indicative that the dismissal was not justified.
***
The law is clear that in all cases of probationary
employment, the employer shall make known
to the employee the standards under which he
will qualify as a regular employee at the time of
his engagement. Where no standards are made
known to the employee at that time, he shall be
deemed a regular employee. The standards
under which she would qualify as a regular
employee not having been communicated to
her at the start of her probationary period, Sy
qualified as a regular employee
Assuming that Sy failed to meet the standards
that was made known to her, the termination
was still flawed flawed for failure to give the
required notice to Sy. In this case, the
5
petitioners failed to comply with the
requirement of a written notice. Notably, Sy
was merely verbally informed that her
employment would be terminated as admitted
by the petitioners. Considering that the
petitioners failed to observe due process in
dismissing her, the dismissal had no legal
sanction. It bears stressing that a workers
employment is property in the constitutional
sense.
07 Manila Electric Co. vs. Gala, G.R. No. 191288
& 191304, March 7, 2012
Facts:
Respondent Jan Carlo Gala was hired by
petitioner Meralco as a probationary lineman
on March 2, 2006. On July 27, 2006, barely four
months on the job, Gala was dismissed for
alleged complicity in pilferages of Meralco’s
electrical supplies, particularly, for the incident
which took place on May 25, 2006. On that day,
Gala and other Meralco workers were
instructed to replace a worn-out electrical pole
at the Pacheco Subdivision in Valenzuela City.
While the Meralco crew was at work, one
Noberto Llanes, a non-Meralco employee,
arrived. He appeared to be known to the
Meralco foremen as they were seen conversing
with him. Llanes boarded the trucks, without
being stopped, and took out what were later
found as electrical supplies. Aside from Gala,
the foremen and the other linemen who were
at the worksite when the pilferage happened
were later charged with misconduct and
dishonesty for their involvement in the incident.
Unknown to them, a Meralco surveillance task
force was monitoring their activities and
recording everything with a video camera.
Gala denied involvement in the pilferage,
contending that even if his superiors might have
committed a wrongdoing, he had no
participation in what they did. He claimed that:
(1) he was at some distance away from the
trucks when the pilferage happened; (2) he did
not have an inkling that an illegal activity was
taking place since his supervisors were
conversing with Llanes, giving him the
impression that they knew him; (3) he did not
call the attention of his superiors because he
was not in a position to do so as he was a mere
lineman; and (4) he was just following
instructions in connection with his work and
had no control in the disposition of company
supplies and materials. He maintained that his
mere presence at the scene of the incident was
not sufficient to hold him liable as a conspirator.
Despite Gala’s explanation, Meralco terminated
his employment. Gala responded by filing an
illegal dismissal complaint against Meralco. The
Labor Arbiter dismissed the complaint for lack

of merit. She held that Gala’s participation in
the pilferage of Meralco’s property rendered
him unqualified to become a regular employee.
On appeal, the NLRC reversed the labor
arbiter’s ruling. It found that Gala had been
illegally dismissed, since there was “no concrete
showing of complicity with the alleged
misconduct/dishonesty. The CA denied
Meralco’s petition for lack of merit and partially
granted Gala’s petition. It concurred with the
NLRC that Gala had been illegally dismissed. It
opined that nothing in the records show Gala’s
knowledge of or complicity in the pilferage.
Issue:
Whether or not Gala was illegally dismissed.
Held:
We find merit in the petition. Contrary to the
conclusions of the CA and the NLRC, there is
substantial evidence supporting Meralco’s
position that Gala had become unfit to continue
his employment with the company. Gala was
found, after an administrative investigation, to
have failed to meet the standards expected of
him to become a regular employee and this
failure was mainly due to his “undeniable
knowledge, if not participation, in the pilferage
activities done by their group, all to the
prejudice of the Company’s interests.”
As probationary employee, his overall job
performance and his behavior were being
monitored and measured in accordance with
the standards (i.e., the terms and conditions)
laid down in his probationary employment
agreement. Under paragraph 8 of the
agreement, he was subject to strict compliance
with, and non-violation of the Company Code
on Employee Discipline, Safety Code, rules and
regulations and existing policies. Paragraph 10
required him to observe at all times the highest
degree of transparency, selflessness and
integrity in the performance of his duties and
responsibilities, free from any form of conflict
or contradicting with his own personal interest.
On the whole, the totality of the circumstances
obtaining in the case convinces us that Gala
could not but have knowledge of the pilferage
of company electrical supplies on May 25, 2006;
he was complicit in its commission, if not by
direct participation, certainly, by his inaction
while it was being perpetrated and by not
reporting the incident to company authorities.
Thus, we find substantial evidence to support
the conclusion that Gala does not deserve to
remain in Meralco’s employ as a regular
employee. He violated his probationary
employment agreement, especially the
requirement for him “to observe at all times the
highest degree of transparency, selflessness and
integrity in the performance of their duties and
6
responsibilities.” He failed to qualify as a regular
employee.
08-09 Armando Ailing vs. Jose B. Feliciano
The Facts
Via a letter dated June 2, 2004, 6 respondent
Wide Wide World Express Corporation
(WWWEC) offered to employ petitioner
Armando Aliling (Aliling) as Account Executive
(Seafreight Sales), with the following
compensation package: a monthly salary of PhP
13,000, transportation allowance of PhP 3,000,
clothing allowance of PhP 800, cost of living
allowance of PhP 500, each payable on a per
month basis and a 14 th month pay depending
on the profitability and availability of financial
resources of the company. The offer came with
a
six (6)-month probation period condition with
this express caveat: Performance during [sic]
probationary period shall be made as basis for
confirmation to Regular or Permanent Status.
On June 11, 2004, Aliling and WWWEC inked an
Employment Contract7 under the following
terms, among others:
 Conversion to regular status shall be
determined on the basis of work performance;
and
 Employment services may, at any time, be
terminated for just cause or in accordance with
the standards defined at the time of
engagement. 8
Training then started. However, instead of a
Seafreight Sale assignment, WWWEC asked
Aliling to handle Ground Express (GX), a new
company product launched on June 18, 2004
involving domestic cargo forwarding service for
Luzon. Marketing this product and finding daily
contracts for it formed the core of Alilings new
assignment.
Barely a month after, Manuel F. San Mateo III
(San Mateo), WWWEC Sales and Marketing
Director, emailed Aliling9 to express
dissatisfaction with the latters performance,
thus:
Armand, My expectations is [sic] that GX
Shuttles should be 80% full by the 3 rd week
(August 5) after launch (July 15). Pls. make that
happen. It has been more than a month since
you came in. I am expecting sales to be
pumping in by now. Thanks.
Nonong
Thereafter, in a letter of September 25, 2004,
10 Joseph R. Lariosa (Lariosa), Human Resources
Manager of WWWEC, asked Aliling to report to
the Human Resources Department to explain
his absence taken without leave from
September 20, 2004.
Aliling responded two days later. He denied
being absent on the days in question, attaching

to his reply-letter 11 a copy of his timesheet12
which showed that he worked from September
20 to 24, 2004. Alilings explanation came with a
query regarding the withholding of his salary
corresponding to September 11 to 25, 2004.
In a separate letter dated September 27, 2004,
13 Aliling wrote San Mateo stating: Pursuant to
your instruction on September 20, 2004, I
hereby tender my resignation effective October
15, 2004. While WWWEC took no action on his
tender, Aliling nonetheless demanded
reinstatement and a written apology, claiming
in a subsequent letter dated October 1, 200414
to management that San Mateo had forced him
to resign.
Lariosas response-letter of October 1, 2004, 15
informed Aliling that his case was still in the
process of being evaluated. On October 6, 2004,
16 Lariosa again wrote, this time to advise
Aliling of the termination of his services
effective as of that date owing to his non-
satisfactory performance during his
probationary period.
Records show that Aliling, for the period
indicated, was paid his outstanding salary which
consisted of:
PhP 4,988.18 (salary for the September 25,
2004 payroll)
1,987.28 (salary for 4 days in October 2004)
PhP 6,975.46 Total
Earlier, however, or on October 4, 2004, Aliling
filed a Complaint 17 for illegal dismissal due to
forced resignation, nonpayment of salaries as
well as damages with the NLRC against
WWWEC. Appended to the complaint was
Alilings Affidavit dated November 12, 2004, 18
in which he stated: 5. At the time of my
engagement, respondents did not make known
to me the standards under which I will qualify as
a regular employee.
Refuting Alilings basic posture, WWWEC stated
in its Position Paper dated November 22, 2004
19 that, in addition to the letter-offer and
employment contract adverted to, WWWEC
and Aliling have signed a letter of
appointment20 on June 11, 2004 containing the
following terms of engagement:
Additionally, upon the effectivity of your
probation, you and your immediate superior are
required to jointly define your objectives
compared with the job requirements of the
position. Based on the pre-agreed objectives,
your performance shall be reviewed on the 3rd
month to assess your competence and work
attitude. The 5 th month Performance Appraisal
shall be the basis in elevating or confirming your
employment status from Probationary to
Regular.
Failure to meet the job requirements during the
probation stage means that your services may
be terminated without prior notice and without
recourse to separation pay.
7
WWWEC also attached to its Position Paper a
memo dated September 20, 2004 21 in which
San Mateo asked Aliling to explain why he
should not be terminated for failure to meet the
expected job performance, considering that the
load factor for the GX Shuttles for the period
July to September was only 0.18% as opposed
to the allegedly agreed upon load of 80%
targeted for August 5, 2004. According to
WWWEC, Aliling, instead of explaining himself,
simply submitted a resignation letter.
In a Reply-Affidavit dated December 13, 2004,
22 Aliling denied having received a copy of San
Mateos September 20, 2004 letter.
Issues having been joined, the Labor Arbiter
issued on April 25, 2006 23 a Decision declaring
Alilings termination as unjustified. In its
pertinent parts, the decision reads:
The grounds upon which complainants dismissal
was based did not conform not only the
standard but also the compliance required
under Article 281 of the Labor Code,
Necessarily, complainants termination is not
justified for failure to comply with the mandate
the law
requires. Respondents should be ordered to pay
salaries corresponding to the unexpired
portion of the contract of employment and all
other benefits amounting to a total of THIRTY
FIVE THOUSAND EIGHT HUNDRED ELEVEN
PESOS (P35,811.00) covering the period from
October 6 to December 7, 2004, computed as
follows:
Unexpired Portion of the Contract:
Basic Salary P13,000.00
Transportation 3,000.00
Clothing Allowance 800.00
ECOLA 500.00
P17,300.00
10/06/04 12/07/04
P17,300.00 x 2.7 mos. = P35,811.00
Complainants 13th month pay proportionately
for 2004 was not shown to have been paid to
complainant, respondent be made liable to him
therefore computed at SIX THOUSAND FIVE
HUNDRED THIRTY TWO PESOS AND 50/100
(P6,532.50).
For engaging the services of counsel to protect
his interest, complainant is likewise
entitled to a 10% attorneys fees of the
judgment amount. Such other claims for lack of
basis
sufficient to support for their grant are
unwarranted.
WHEREFORE, judgment is hereby rendered
ordering respondent company to pay
complainant Armando Aliling the sum of THIRTY
FIVE THOUSAND EIGHT HUNDRED ELEVEN
PESOS (P35,811.00) representing his salaries
and other benefits as discussed above.
Respondent company is likewise ordered to pay
said complainant the amount of TEN

THOUSAND SEVEN HUNDRED SIXTY SIX PESOS
AND 85/100 ONLY (10.766.85) representing his
proportionate 13 th month pay for 2004 plus
10% of the total judgment as and by way of
attorneys fees.
Other claims are hereby denied for lack of
merit. (Emphasis supplied.)
The labor arbiter gave credence to Alilings
allegation about not receiving and, therefore,
not bound by,
San Mateos purported September 20, 2004
memo. The memo, to reiterate, supposedly
apprised Aliling of the sales quota he was, but
failed, to meet. Pushing the point, the labor
arbiter explained that Aliling cannot be validly
terminated for non-compliance with the quota
threshold absent a prior advisory of the
reasonable standards upon which his
performance would be evaluated.
Both parties appealed the above decision to the
NLRC, which affirmed the Decision in toto in its
Resolution dated May 31, 2007. The separate
motions for reconsideration were also denied
by the NLRC in its Resolution dated August 31,
2007.
Therefrom, Aliling went on certiorari to the CA,
which eventually rendered the assailed
Decision, the dispositive portion of which reads:
WHEREFORE, the petition is PARTLY GRANTED.
The assailed Resolutions of respondent (Third
Division) National Labor Relations Commission
are AFFIRMED, with the following
MODIFICATION/CLARIFICATION: Respondents
Wide Wide World Express Corp. and its officers,
Jose B. Feliciano, Manuel F. San Mateo III and
Joseph R. Lariosa, are jointly and severally liable
to pay petitioner Armando Aliling: (A) the sum
of Forty Two Thousand Three Hundred Thirty
Three & 50/100 (P42,333.50) as the total money
judgment, (B) the sum of Four Thousand Two
Hundred Thirty Three & 35/100 (P4,233.35) as
attorneys fees, and (C) the additional sum
equivalent to one-half (1/2) month of
petitioners salary as separation pay.
SO ORDERED. 24 (Emphasis supplied.)
The CA anchored its assailed action on the
strength of the following premises: (a)
respondents failed to prove that Alilings dismal
performance constituted gross and habitual
neglect necessary to justify his dismissal; (b) not
having been informed at the time of his
engagement of the reasonable standards under
which he will qualify as a regular employee,
Aliling was deemed to have been hired from day
one as a regular employee; and (c) the strained
relationship existing between the parties argues
against the propriety of reinstatement.
Alilings motion for reconsideration was rejected
by the CA through the assailed Resolution dated
December 15, 2008.
Hence, the instant petition.
8
The Issues
Aliling raises the following issues for
consideration:
A. The failure of the Court of Appeals to order
reinstatement (despite its finding that
petitioner was illegally dismissed from
employment) is contrary to law and applicable
jurisprudence.
B. The failure of the Court of Appeals to award
backwages (even if it did not order
reinstatement) is contrary to law and applicable
jurisprudence.
C. The failure of the Court of Appeals to award
moral and exemplary damages (despite its
finding that petitioner was dismissed to prevent
the acquisition of his regular status)
is contrary to law and applicable jurisprudence.
25
In their Comment, 26 respondents reiterated
their position that WWWEC hired petitioner on
a probationary basis and fired him before he
became a regular employee.
The Courts Ruling
The petition is partly meritorious.
Petitioner is a regular employee On a
procedural matter, petitioner Aliling argues that
WWWEC, not having appealed from the
judgment of CA which declared Aliling as a
regular employee from the time he signed the
employment contract, is now precluded from
questioning the appellate courts determination
as to the nature of his employment.
Petitioner errs. The Court has, when a case is on
appeal, the authority to review matters not
specifically raised or assigned as error if their
consideration is necessary in reaching a just
conclusion of the case. We said as much in
Sociedad Europea de Financiacion, SA v. Court of
Appeals,27 It is axiomatic that an appeal, once
accepted by this Court, throws the entire case
open to review, and that this Court has the
authority to review matters not specifically
raised or assigned as error by the parties, if
their consideration is necessary in arriving at a
just resolution of the case.
The issue of whether or not petitioner was,
during the period material, a probationary or
regular employee is of pivotal import. Its
resolution is doubtless necessary at arriving at a
fair and just disposition of the controversy.
The Labor Arbiter cryptically held in his decision
dated April 25, 2006 that:
Be that as it may, there appears no showing
that indeed the said September 20, 2004
Memorandum addressed to complainant was
received by him. Moreover, complainants
tasked
where he was assigned was a new developed
service. In this regard, it is noted:
Due process dictates that an employee be
apprised beforehand of the conditions

of his employment and of the terms of
advancement therein. Precisely, implicit in
Article
281 of the Labor Code is the requirement that
reasonable standards be previously made
known by the employer to the employee at the
time of his engagement (Ibid, citing
Sameer Overseas Placement Agency, Inc. vs.
NLRC, G.R. No. 132564, October 20,
1999).28
From our review, it appears that the labor
arbiter, and later the NLRC, considered Aliling a
probationary employee despite finding that he
was not informed of the reasonable standards
by which his probationary employment was to
be judged.
The CA, on the other hand, citing Cielo v.
National Labor Relations Commission,29 ruled
that petitioner was a regular employee from the
outset inasmuch as he was not informed of the
standards by which his probationary
employment would be measured. The CA
wrote:
Petitioner was regularized from the time of the
execution of the employment contract on June
11, 2004, although respondent company had
arbitrarily shortened his tenure. As pointed out,
respondent company did not make known the
reasonable standards under
which he will qualify as a regular employee at
the time of his engagement. Hence,
he was deemed to have been hired from day
one as a regular employee.30 (Emphasis
supplied.)
WWWEC, however, excepts on the argument
that it put Aliling on notice that he would be
evaluated on the 3rd and 5th months of his
probationary employment. To WWWEC, its
efforts translate to sufficient compliance with
the requirement that a probationary worker be
apprised of the reasonable standards for his
regularization. WWWEC invokes the ensuing
holding in Alcira v. National Labor Relations
Commission31 to support its case:
Conversely, an employer is deemed to
substantially comply with the rule on
notification
of standards if he apprises the employee that he
will be subjected to a performance evaluation
on a particular date after his hiring. We agree
with the labor arbiter when he ruled that:
In the instant case, petitioner cannot
successfully say that he was never informed by
private respondent of the standards that he
must satisfy in order to be converted into
regular status. This rans (sic) counter to the
agreement between the parties that after five
months of service the petitioners performance
would be evaluated. It is only but natural that
the evaluation should be made vis--vis the
performance standards for the job. Private
respondent Trifona Mamaradlo speaks of such
9
standard in her affidavit referring to the fact
that petitioner did not perform well in his
assigned work and his attitude was below par
compared to the companys standard required
of him. (Emphasis supplied.)
WWWECs contention is untenable.
Alcira is cast under a different factual setting.
There, the labor arbiter, the NLRC, the CA, and
even finally this Court were one in their findings
that the employee concerned knew, having
been duly informed during his engagement, of
the standards for becoming a regular employee.
This is in stark contrast to the instant case
where the element of being informed of the
regularizing standards does not obtain. As such,
Alcira cannot be made to apply to the instant
case.
To note, the June 2, 2004 letter-offer itself
states that the regularization standards or the
performance norms to be used are still to be
agreed upon by Aliling and his supervisor.
WWWEC has failed to prove that an agreement
as regards thereto has been reached. Clearly
then, there were actually no performance
standards to speak of. And lest it be overlooked,
Aliling was assigned to GX trucking sales, an
activity entirely different to the Seafreight Sales
he was originally hired and trained for. Thus, at
the time of his engagement, the standards
relative to his assignment with GX sales could
not have plausibly been communicated to him
as
he was under Seafreight Sales. Even for this
reason alone, the conclusion reached in Alcira is
of little relevant to the instant case.
Based on the facts established in this case in
light of extant jurisprudence, the CAs holding as
to the kind of employment petitioner enjoyed is
correct. So was the NLRC ruling, affirmatory of
that of the labor arbiter. In the final analysis,
one common thread runs through the holding
of the labor arbiter, the NLRC and the CA, i.e.,
petitioner Aliling, albeit hired from
managements standpoint as a probationary
employee, was deemed a regular employee by
force of the following self-explanatory
provisions:
Article 281 of the Labor Code ART. 281.
Probationary employment. - Probationary
employment shall not exceed six (6) months
from the date the employee started working,
unless it is covered by an apprenticeship
agreement stipulating a longer period. The
services of an employee who has been engaged
on a probationary basis may be terminated for a
just cause or when he fails to qualify as a
regular employee in accordance with
reasonable standards made known by the
employer to the employee at the time of his
engagement. An employee who is allowed to
work after a probationary period shall be

considered a regular employee. (Emphasis
supplied.)
Section 6(d) of the Implementing Rules of Book
VI, Rule VIII-A of the Labor Code Sec. 6.
Probationary employment. There is
probationary employment where the employee,
upon his engagement, is made to undergo a
trial period where the employee determines his
fitness to qualify for regular employment, based
on reasonable standards made known to him at
the time of engagement.
Probationary employment shall be governed by
the following rules:
xxxx
(d) In all cases of probationary employment, the
employer shall make known to the employee
the standards under which he will qualify as a
regular employee at the time of his
engagement. Where no standards are made
known to the employee at that time, he shall be
deemed a regular employee. (Emphasis
supplied.)
To repeat, the labor arbiter, NLRC and the CA
are agreed, on the basis of documentary
evidence adduced, that respondent WWWEC
did not inform petitioner Aliling of the
reasonable standards by which his probation
would be measured against at the time of his
engagement. The Court is loathed to interfere
with this factual determination. As We have
held:
Settled is the rule that the findings of the Labor
Arbiter, when affirmed by the NLRC and the
Court of Appeals, are binding on the Supreme
Court, unless patently erroneous. It is not the
function of the Supreme Court to analyze or
weigh all over again the evidence already
considered in the proceedings below. The
jurisdiction of this Court in a petition for review
on certiorari is limited to reviewing only errors
of law, not of fact, unless the factual findings
being assailed are not supported by evidence on
record or the impugned judgment is based on a
misapprehension of facts. 32 The more recent
Peafrancia Tours and Travel Transport, Inc., v.
Sarmiento 33 has reaffirmed the above ruling,
to wit:
Finally, the CA affirmed the ruling of the NLRC
and adopted as its own the latter's
factual findings. Long-established is the doctrine
that findings of fact of quasi-judicial bodies x x
x are accorded respect, even finality, if
supported by substantial evidence. When
passed upon
and upheld by the CA, they are binding and
conclusive upon this Court and will not normally
be
disturbed. Though this doctrine is not without
exceptions, the Court finds that none are
applicable to the present case.
WWWEC also cannot validly argue that the
factual findings being assailed are not
10
supported by evidence on record or the
impugned judgment is based on a
misapprehension of facts . Its very own letter-
offer of employment argues against its above
posture. Excerpts of the letter-offer:
Additionally, upon the effectivity of your
probation, you and your immediate
superior are required to jointly define your
objectives compared with the job requirements
of the position. Based on the pre-agreed
objectives, your performance shall be reviewed
on the 3rd month to assess your competence
and work attitude. The 5th month Performance
Appraisal shall be the basis in elevating or
confirming your employment status from
Probationary to Regular.
Failure to meet the job requirements during the
probation stage means that your services may
be terminated without prior notice and without
recourse to separation pay. (Emphasis
supplied.)
Respondents further allege that San Mateos
email dated July 16, 2004 shows that the
standards for his regularization were made
known to petitioner Aliling at the time of his
engagement. To recall, in that email message,
San Mateo reminded Aliling of the sales quota
he ought to meet as a condition for his
continued employment, i.e., that the GX trucks
should already be 80% full by August 5, 2004.
Contrary to respondents contention, San
Mateos email cannot support their allegation on
Aliling being informed of the standards for his
continued employment, such as the sales quota,
at the time of his engagement. As it were, the
email message was sent to Aliling more than a
month after he signed his employment contract
with WWWEC. The aforequoted Section 6 of the
Implementing Rules of Book VI, Rule VIII-A of
the Code specifically requires the employer to
inform the probationary employee of such
reasonable standards at the time of his
engagement, not at any time later; else, the
latter shall be considered a regular employee.
Thus, pursuant to the explicit provision of
Article 281 of the Labor Code, Section 6(d) of
the Implementing Rules of Book VI, Rule VIII-A
of the Labor Code and settled jurisprudence,
petitioner Aliling is deemed a regular employee
as of June 11, 2004, the date of his employment
contract.
Petitioner was illegally dismissed To justify fully
the dismissal of an employee, the employer
must, as a rule, prove that the dismissal was for
a just cause and that the employee was
afforded due process prior to dismissal. As a
complementary principle, the employer has the
onus of proving with clear, accurate, consistent,
and convincing evidence the
validity of the dismissal. 34 WWWEC had failed
to discharge its twin burden in the instant case.

First off, the attendant circumstances in the
instant case aptly show that the issue of
petitioners alleged failure to achieve his quota,
as a ground for terminating employment,
strikes the Court as a mere afterthought on the
part of WWWEC. Consider: Lariosas letter of
September 25, 2004 already betrayed
managements intention to dismiss the
petitioner for alleged unauthorized absences.
Aliling was in fact made to explain and he did so
satisfactorily. But, lo and behold, WWWEC
nonetheless proceeded with its plan to dismiss
the petitioner
for non-satisfactory performance, although the
corresponding termination letter dated October
6, 2004 did not even specifically state Alilings
non-satisfactory performance, or that Alilings
termination was by reason of his failure to
achieve his set quota.
What WWWEC considered as the evidence
purportedly showing it gave Aliling the chance
to explain his inability to reach his quota was a
purported September 20, 2004 memo of San
Mateo addressed to the latter.
However, Aliling denies having received such
letter and WWWEC has failed to refute his
contention of non receipt. In net effect,
WWWEC was at a loss to explain the exact just
reason for dismissing Aliling.
At any event, assuming for argument that the
petitioner indeed failed to achieve his sales
quota, his termination from employment on
that ground would still be unjustified.
Article 282 of the Labor Code considers any of
the following acts or omission on the part of the
employee as just cause or ground for
terminating employment:
(a) Serious misconduct or willful disobedience
by the employee of the lawful orders of his
employer or representative in connection with
his work;
(b) Gross and habitual neglect by the employee
of his duties;
(c) Fraud or willful breach by the employee of
the trust reposed in him by his employer
or duly authorized representative;
(d) Commission of a crime or offense by the
employee against the person of his employer or
any immediate member of his family or his duly
authorized representatives; and
(e) Other causes analogous to the foregoing.
(Emphasis supplied)
In Lim v. National Labor Relations
Commission,35 the Court considered
inefficiency as an analogous just cause for
termination of employment under Article 282 of
the Labor Code:
We cannot but agree with PEPSI that gross
inefficiency falls within the purview of other
causes analogous to the foregoing, this
constitutes, therefore, just cause to terminate
an employee under Article 282 of the Labor
11
Code. One is analogous to another if it is
susceptible of comparison with the latter either
in general or in some specific detail; or has a
close relationship with the latter. Gross
inefficiency is closely related to gross neglect,
for both involve specific acts of omission on the
part of the employee resulting in damage to the
employer or to his business. In Buiser vs.
Leogardo, this Court ruled that failure to
observed prescribed standards to inefficiency
may constitute just cause for dismissal.
(Emphasis supplied.)
It did so anew in Leonardo v. National Labor
Relations Commission36 on the following
rationale:
An employer is entitled to impose productivity
standards for its workers, and in fact, non
compliance may be visited with a penalty even
more severe than demotion. Thus, [t]he
practice of a company in laying off workers
because they failed to make the work quota has
been recognized in this jurisdiction. (Philippine
American Embroideries vs. Embroidery and
Garment Workers, 26 SCRA 634, 639). In the
case at bar, the petitioners' failure to meet the
sales quota assigned to each of them constitute
a just cause of their dismissal, regardless of the
permanent or probationary status of their
employment. 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. This
management prerogative of requiring standards
may be availed of so long as they are exercised
in good faith for the advancement of the
employer's interest.
(Emphasis supplied.)
In fine, an employees failure to meet sales or
work quotas falls under the concept of gross
inefficiency, which in turn is analogous to gross
neglect of duty that is a just cause for dismissal
under Article 282 of the Code. However, in
order for the quota imposed to be considered a
valid productivity standard and thereby validate
a dismissal, managements prerogative of fixing
the quota must be exercised in good faith for
the advancement of its interest. The duty to
prove good faith, however, rests with WWWEC
as part of its burden to
show that the dismissal was for a just cause.
WWWEC must show that such quota was
imposed in good faith.
This WWWEC failed to do, perceptibly because
it could not. The fact of the matter is that the
alleged imposition of the quota was a desperate
attempt to lend a semblance of validity to
Alilings illegal dismissal. It must be stressed that
even WWWECs sales manager, Eve Amador

(Amador), in an internal e-mail to San Mateo,
hedged on whether petitioner performed below
or above expectation:
Could not quantify level of performance as he
as was tasked to handle a new product (GX).
Revenue report is not yet administered by IT on
a month-to-month basis. Moreover, this in a
way is an experimental activity. Practically you
have a close monitoring with Armand with
regards to his performance. Your assessment of
him would be more accurate.
Being an experimental activity and having been
launched for the first time, the sales of GX
services could not be reasonably quantified.
This would explain why Amador implied in her
email that other bases besides sales figures will
be used to determine Alilings performance. And
yet, despite such a neutral observation, Aliling
was still dismissed for his dismal sales of GX
services. In any event, WWWEC failed to
demonstrate the reasonableness and the bona
fides on the quota imposition.
Employees must be reminded that while
probationary employees do not enjoy
permanent status, they enjoy the constitutional
protection of security of tenure. They can only
be terminated for cause or when they
otherwise fail to meet the reasonable standards
made known to them by the employer at the
time of their engagement. 37 Respondent
WWWEC miserably failed to prove the
termination of petitioner was for a just cause
nor was there substantial evidence to
demonstrate the standards were made known
to the latter at the time of his engagement.
Hence, petitioners right to security of tenure
was breached. Alilings right to procedural due
process was violated As earlier stated, to effect
a legal dismissal, the employer must show not
only a valid ground therefor, but also that
procedural due process has properly been
observed. When the Labor Code speaks of
procedural due process, the reference is usually
to the two (2)-written notice rule envisaged in
Section 2 (III), Rule XXIII, Book V of the Omnibus
Rules Implementing the Labor Code, which
provides:
Section 2. Standard of due process:
requirements of notice. In all cases of
termination of
employment, the following standards of due
process shall be substantially observed.
I. For termination of employment based on just
causes as defined in Article 282 of the
Code:
(a) A written notice served on the employee
specifying the ground or grounds for
termination, and giving to said employee
reasonable opportunity within which to explain
his side;
(b) A hearing or conference during which the
employee concerned, with the assistance of
12
counsel if the employee so desires, is given
opportunity to respond to the charge, present
his evidence or rebut the evidence presented
against him; and
(c) A written notice [of] termination served on
the employee indicating that upon due
consideration of all the circumstance, grounds
have been established to justify his termination.
In case of termination, the foregoing notices
shall be served on the employees last known
address.
MGG Marine Services, Inc. v. NLRC38 tersely
described the mechanics of what may be
considered a two-part due process requirement
which includes the two-notice rule, x x x one, of
the intention to dismiss, indicating therein his
acts or omissions complained against, and two,
notice of the decision to dismiss; and an
opportunity to answer and rebut the charges
against him, in between such notices.
King of Kings Transport, Inc. v. Mamac39
expounded on this procedural requirement in
this manner:
(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
calendar days from receipt of the notice xxxx
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. 288 [of the Labor Code] is
being charged against the employees
(2) After serving the first notice, the employees
should schedule and conduct a hearing
or conference wherein the employees will be
given the opportunity to (1) explain and clarify
their defenses to the charge against them; (2)
present evidence in support of their defenses;
and
(3) rebut the evidence presented against them
by the management. During the hearing or
conference, the employees are given the
chance to defend themselves personally, with
the
assistance of a representative or counsel of
their choice x x x.
(3) After determining that termination is
justified, the employer shall serve the

employees a written notice of termination
indicating that: (1) all the circumstances
involving the charge against the employees
have been considered; and (2) grounds have
been
established to justify the severance of their
employment. (Emphasis in the original.)
Here, the first and second notice requirements
have not been properly observed, thus tainting
petitioners dismissal with illegality.
The adverted memo dated September 20, 2004
of WWWEC supposedly informing Aliling of the
likelihood of his termination and directing him
to account for his failure to meet the expected
job performance would have had constituted
the charge sheet, sufficient to answer for the
first notice requirement, but for the fact that
there is no proof such letter had been sent to
and received by him. In fact, in his December
13, 2004 Complainants Reply Affidavit, Aliling
goes on to tag such letter/memorandum as
fabrication. WWWEC did not adduce proof to
show that a copy of the letter was duly served
upon Aliling. Clearly enough, WWWEC did not
comply with the first notice requirement.
Neither was there compliance with the
imperatives of a hearing or conference. The
Court need not dwell at length on this particular
breach of the due procedural requirement.
Suffice it to point out that the record is devoid
of any showing of a hearing or conference
having been conducted. On the contrary, in its
October 1, 2004 letter to Aliling, or barely five
(5) days after it served the notice of
termination, WWWEC acknowledged that it was
still evaluating his case. And the written notice
of termination itself did not indicate all the
circumstances involving the charge to justify
severance of employment.
Aliling is entitled to backwages and separation
pay in lieu of reinstatement As may be noted,
the CA found Alilings dismissal as having been
illegally effected, but nonetheless
concluded that his employment ceased at the
end of the probationary period. Thus, the
appellate court merely affirmed the monetary
award made by the NLRC, which consisted of
the payment of that amount corresponding to
the unserved portion of the contract of
employment.
The case disposition on the award is erroneous.
As earlier explained, Aliling cannot be rightfully
considered as a mere probationary employee.
Accordingly, the probationary period set in the
contract of employment dated June 11, 2004
was of no moment. In net effect, as of that date
June 11, 2004, Aliling became part of the
WWWEC organization as a regula employee of
the company without a fixed term of
employment. Thus, he is entitled to backwages
reckoned fro the time he was illegally dismissed
on October 6, 2004, with a PhP 17,300.00
13
monthly salary, until the finality of this Decision.
This disposition hews with the Courts ensuing
holding in Javellana v. Belen: 40 Article 279 of
the Labor Code, as amended by Section 34 of
Republic Act 6715 instructs:
Art. 279. Security of Tenure. - In cases of regular
employment, the employer shall
not terminate the services of an employee
except for a just cause or when authorized by
this Title. An employee who is unjustly
dismissed from work shall be entitled to
reinstatement without loss of seniority rights
and other privileges and to his full backwages,
inclusive of allowances, and to his other
benefits or their monetary equivalent computed
from the time his compensation was withheld
from him up to the time of his actual
reinstatement. (Emphasis
supplied)
Clearly, the law intends the award of backwages
and similar benefits to accumulate past
the date of the Labor Arbiters decision until the
dismissed employee is actually reinstated. But
if, as in this case, reinstatement is no longer
possible, this Court has consistently ruled
that backwages shall be computed from the
time of illegal dismissal until the date
the decision becomes final. (Emphasis supplied.)
Additionally, Aliling is entitled to separation pay
in lieu of reinstatement on the ground of
strained relationship.
In Golden Ace Builders v. Talde,41 the Court
ruled:
The basis for the payment of backwages is
different from that for the award of separation
pay. Separation pay is granted where
reinstatement is no longer advisable because of
strained relations between the employee and
the employer. Backwages represent
compensation that should have been earned
but were not collected because of the unjust
dismissal. The basis for computing backwages is
usually the length of the employee's service
while that for separation pay is the actual
period when the employee was unlawfully
prevented from working.
As to how both awards should be computed,
Macasero v. Southern Industrial Gases
Philippines instructs:
[T]he award of separation pay is inconsistent
with a finding that there was no
illegal dismissal, for under Article 279 of the
Labor Code and as held in a catena of cases,
an employee who is dismissed without just
cause and without due process is entitled to
backwages and reinstatement or payment of
separation pay in lieu thereof:
Thus, an illegally dismissed employee is entitled
to two reliefs: backwages and reinstatement.
The two reliefs provided are separate and
distinct. In instances where reinstatement is no
longer feasible because of strained relations

between the employee and the employer,
separation pay is granted. In effect, an illegally
dismissed employee is entitled to either
reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and
backwages.
The normal consequences of respondents illegal
dismissal, then, are reinstatement without loss
of seniority rights, and payment of backwages
computed from the time compensation was
withheld up to the date of actual reinstatement.
Where reinstatement is no longer viable as an
option, separation pay equivalent to one (1)
month salary for every year of service should be
awarded as an alternative. The payment of
separation pay is in addition to
payment of backwages. x x x
Velasco v. National Labor Relations Commission
emphasizes:
The accepted doctrine is that separation pay
may avail in lieu of reinstatement if
reinstatement is no longer practical or in the
best interest of the parties. Separation pay
in lieu of reinstatement may likewise be
awarded if the employee decides not to be
reinstated. (emphasis in the original; italics
supplied)
Under the doctrine of strained relations, the
payment of separation pay is considered an
acceptable alternative to reinstatement when
the latter option is no longer desirable or viable.
On one hand, such payment liberates the
employee from what could be a highly
oppressive work environment. On the other
hand, it releases the employer from the grossly
unpalatable obligation of maintaining in its
employ a worker it could no longer trust.
Strained relations must be demonstrated as a
fact, however, to be adequately
supported by evidence substantial evidence to
show that the relationship between the
employer and the employee is indeed strained
as a necessary consequence of the judicial
controversy.
In the present case, the Labor Arbiter found
that actual animosity existed between
petitioner Azul and respondent as a result of
the filing of the illegal dismissal case. Such
finding, especially when affirmed by the
appellate court as in the case at bar, is binding
upon the Court, consistent with the prevailing
rules that this Court will not try facts anew and
that findings of facts of quasi-judicial bodies are
accorded great respect, even finality. (Emphasis
supplied.)
As the CA correctly observed, To reinstate
petitioner [Aliling] would only create an
atmosphere of antagonism and distrust, more
so that he had only a short stint with
respondent company. 42 The Court need not
belabor the fact that the patent animosity that
had developed between employer and
14
employee generated what may be considered
as the arbitrary dismissal of the petitioner.
Following the pronouncements of this Court
Sagales v. Rustans Commercial Corporation,43
the computation of separation pay in lieu of
reinstatement includes the period for which
backwages were awarded:
Thus, in lieu of reinstatement, it is but proper to
award petitioner separation pay
computed at one-month salary for every year of
service, a fraction of at least six (6)
months considered as one whole year. In the
computation of separation pay, the
period where backwages are awarded must be
included. (Emphasis supplied.)
Thus, Aliling is entitled to both backwages and
separation pay (in lieu of reinstatement) in the
amount of one (1) months salary for every year
of service, that is, from June 11, 2004 (date of
employment contract) until the finality of this
decision with a fraction of a year of at least six
(6) months to be considered as one (1) whole
year. As determined by the labor arbiter, the
basis for the computation of backwages and
separation pay will be Alilings monthly salary at
PhP 17,300.
Finally, Aliling is entitled to an award of PhP
30,000 as nominal damages in consonance with
prevailing jurisprudence44 for violation of due
process.
Petitioner is not entitled to moral and
exemplary damages
In Nazareno v. City of Dumaguete,45 the Court
expounded on the requisite elements for a
litigants entitlement to moral damages, thus:
Moral damages are awarded if the following
elements exist in the case: (1) an injury
clearly sustained by the claimant; (2) a culpable
act or omission factually established; (3) a
wrongful act or omission by the defendant as
the proximate cause of the injury sustained by
the claimant; and (4) the award of damages
predicated on any of the cases stated Article
2219 of the Civil Code. In addition, the person
claiming moral damages must prove the
existence of bad faith by clear and convincing
evidence for the law always presumes good
faith. It is not enough that one merely suffered
sleepless nights, mental anguish, and serious
anxiety as the result of the actuations of the
other party. Invariably such action must be
shown to have been willfully done in bad faith
or with ill motive. Bad faith, under the law, does
not simply connote
bad judgment or negligence. It imports a
dishonest purpose or some moral obliquity and
conscious doing of a wrong, a breach of a
known duty through some motive or interest or
ill will that partakes of the nature of fraud.
(Emphasis supplied.)
In alleging that WWWEC acted in bad faith,
Aliling has the burden of proof to present

evidence in support of his claim, as ruled in
Culili v. Eastern Telecommunications Philippines,
Inc.: 46 According to jurisprudence, basic is the
principle that good faith is presumed and he
who alleges bad faith has the duty to prove the
same. By imputing bad faith to the actuations of
ETPI, Culili has the burden of proof to present
substantial evidence to support the allegation
of unfair labor practice. Culili failed to discharge
this burden and his bare allegations deserve no
credit.
This was reiterated in United Claimants
Association of NEA (UNICAN) v. National
Electrification Administration (NEA),47 in this
wise:
It must be noted that the burden of proving bad
faith rests on the one alleging it. As the
Court ruled in Culili v. Eastern
Telecommunications, Inc., According to
jurisprudence, basic is
the principle that good faith is presumed and he
who alleges bad faith has the duty to prove the
same. Moreover, in Spouses Palada v. Solidbank
Corporation, the Court stated, Allegations of
bad faith and fraud must be proved by clear and
convincing evidence.
Similarly, Aliling has failed to overcome such
burden to prove bad faith on the part of
WWWEC. Aliling has not presented any clear
and convincing evidence to show bad faith. The
fact that he was illegally dismissed is insufficient
to prove bad faith. Thus, the CA correctly ruled
that [t]here was no sufficient showing of bad
faith or abuse of management prerogatives in
the personal action taken against petitioner. 48
In Lambert Pawnbrokers and Jewelry
Corporation v. Binamira,49 the Court ruled:
A dismissal may be contrary to law but by itself
alone, it does not establish bad faith to
entitle the dismissed employee to moral
damages. The award of moral and exemplary
damages
cannot be justified solely upon the premise that
the employer dismissed his employee without
authorized cause and due process.
The officers of WWWEC cannot be held jointly
and severally liable with the company
The CA held the president of WWWEC, Jose B.
Feliciano, San Mateo and Lariosa jointly and
severally liable for the monetary awards of
Aliling on the ground that the officers are
considered employers acting in the interest of
the corporation. The CA cited NYK International
Knitwear Corporation Philippines (NYK) v.
National Labor Relations Commission50 in
support of its argument. Notably, NYK in turn
cited A.C. Ransom Labor Union-CCLU v. NLRC.51
Such ruling has been reversed by the Court in
Alba v. Yupangco,52 where the Court ruled:
By Order of September 5, 2007, the Labor
Arbiter denied respondents motion to quash
the 3rd alias writ. Brushing aside respondents
15
contention that his liability is merely joint, the
Labor Arbiter ruled:
Such issue regarding the personal liability of the
officers of a corporation for the
payment of wages and money claims to its
employees, as in the instant case, has long been
resolved by the Supreme Court in a long list of
cases [A.C. Ransom Labor Union-CLU vs. NLRC
(142 SCRA 269) and reiterated in the cases of
Chua vs. NLRC (182 SCRA 353), Gudez vs. NLRC
(183 SCRA 644)]. In the aforementioned cases,
the Supreme Court has expressly held that the
irresponsible officer of the corporation (e.g.
President) is liable for the corporations
obligations
to its workers. Thus, respondent Yupangco,
being the president of the respondent YL Land
and
Ultra Motors Corp., is properly jointly and
severally liable with the defendant corporations
for
the labor claims of Complainants Alba and De
Guzman. x x x
xxxx
As reflected above, the Labor Arbiter held that
respondents liability is solidary.
There is solidary liability when the obligation
expressly so states, when the law so
provides, or when the nature of the obligation
so requires. MAM Realty Development
Corporation v. NLRC, on solidary liability of
corporate officers in labor disputes, enlightens:
x x x 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. True solidary
liabilities may at times be incurred but only
when exceptional circumstances warrant such
as, generally, in the following cases:
1. When directors and trustees or, in
appropriate cases, the officers of a corporation:
(a) vote for or assent to patently unlawful acts
of the corporation;
(b) act in bad faith or with gross negligence in
directing the corporate
affairs;
xxxx
In labor cases, for instance, the Court has held
corporate directors and officers solidarily
liable with the corporation for the termination
of employment of employees done with malice
or in bad faith.
A review of the facts of the case does not reveal
ample and satisfactory proof that respondent
officers of WWEC acted in bad faith or with
malice in effecting the termination of petitioner
Aliling. Even assuming arguendo that the
actions of WWWEC are ill-conceived and
erroneous, respondent officers cannot be held
jointly and solidarily with it. Hence, the ruling

on the joint and solidary liability of individual
respondents must be recalled.
Aliling is entitled to Attorneys Fees and Legal
Interest Petitioner Aliling is also entitled to
attorneys fees in the amount of ten percent
(10%) of his total monetary award, having been
forced to litigate in order to seek redress of his
grievances, pursuant to Article 111 of the Labor
Code and following our ruling in Exodus
International Construction Corporation v.
Biscocho,53 to wit:
In Rutaquio v. National Labor Relations
Commission, this Court held that:
It is settled that in actions for recovery of wages
or where an employee was forced to litigate
and, thus, incur expenses to protect his rights
and interest, the award of attorneys fees is
legally and morally justifiable.
In Producers Bank of the Philippines v. Court of
Appeals this Court ruled that: Attorneys fees
may be awarded when a party is compelled to
litigate or to incur expenses to protect his
interest by reason of an unjustified act of the
other party.
While in Lambert Pawnbrokers and Jewelry
Corporation,54 the Court specifically ruled:
However, the award of attorneys fee is
warranted pursuant to Article 111 of the Labor
Code. Ten (10%) percent of the total award is
usually the reasonable amount of attorneys fees
awarded. It is settled that where an employee
was forced to litigate and, thus, incur expenses
to protect his rights and interest, the award of
attorneys fees is legally and morally justifiable.
Finally, legal interest shall be imposed on the
monetary awards herein granted at the rate of
6% per annum from October 6, 2004 (date of
termination) until fully paid.
WHEREFORE, the petition is PARTIALLY
GRANTED. The July 3, 2008 Decision of the
Court of Appeals in CA-G.R. SP No. 101309 is
hereby MODIFIED to read:
WHEREFORE, the petition is PARTIALLY
GRANTED. The assailed Resolutions of
respondent (Third Division) National Labor
Relations Commission are AFFIRMED, with the
following MODIFICATION/CLARIFICATION:
Respondent Wide Wide World Express Corp. is
liable to pay Armando Aliling the following: (a)
backwages reckoned from October 6, 2004 up
to the finality of this Decision based on a salary
of PhP 17,300 a month, with interest at 6% per
annum on the principal amount from October 6,
2004 until fully paid; (b) the additional sum
equivalent to one (1) month salary for every
year of service, with a fraction of at least six (6)
months considered as one whole year based on
the period from June 11, 2004 (date of
employment contract) until the finality of this
Decision, as separation pay; (c) PhP 30,000 as
nominal damages; and (d) Attorneys Fees
equivalent to 10% of the total award.
16
SO ORDERED.
10 Mylene Carvajal vs. Luzon Development Bank
and/or Oscar Ramirez
FACTS:
Carvajal was employed as a trainee-teller by
Luzon Development Bank (Bank) under a six-
month probationary employment
contract. Ramirez is the President and CEO of
the Bank. A month into her employment, she
was send a Memorandum directing her to
explain in writing why she should not be
subjected to disciplinary action for her eight
tardiness on November 2003. A second
Memorandum was sent to her on January for
her again chronic tardiness on December
2003. She submitted her written explanations
for both events and manifested her acceptance
of the consequences of her actions. She was
terminated for three days effective 21 January
2004. However, on 22 January, her termination
was lifted but at the same time, her services
were terminated. In the respondents’ position
paper to the LA, they explained that the reasons
for her absence are chronic tardiness,
absenteeism and failure to perform
satisfactorily as a probationary employee.
LA Decision: The petitioner was illegally
dismissed because she was not afforded the
notice in writing informing her of what the Bank
would like to bring out to her for the latter to
answer in writing.
NLRC Decision: NLRC affirmed the decision of
the LA.
CA Decision: The CA found that the petitioner
was not entitled to backwages because she was
rightfully dismissed for failure to meet the
employment standards.
ISSUE:
Whether the petitioner can be considered a
regular employee at the time of her dismissal.
HELD:
No. Carvajal’s appointment letter reads that
“Possible extension of this contract will depend
on the job requirements of the Bank and your
overall performance. Performance review will
be conducted before possible renewal can take
effect.” Therefore, petitioner knew, at the time
of her engagement, that she must comply with
the standards set forth by respondent and
perform satisfactorily in order to attain regular
status. Even the NLRC upheld the petitoner’s
probationary status, stating that reinstatement
is not synonymous to regularization.
Although probationary employees also enjoy
security of tenure, he may still be terminated
because of just and authorized causes of
termination and the additional ground under

Article 281 of the Labor Code, i.e. the
probationary employee may also be terminated
for failure to qualify as a regular employee in
accordance to the reasonable standards set by
the employer. Punctuality is a reasonable
standard imposed on every employee, whether
in government or private sector. This, together
with absenteeism, underperformance and
mistake in clearing a check are infractions that
cannot be tantamount to satisfactory standards.
In addition to the abovementioned, it has been
previously held in PDI vs. Magtibay, Jr., that the
second requirement under Article 281 does not
require notice and hearing. Due process of law
for this second ground consists of making the
reasonable standards expected of the employee
during his probationary period known to him at
the time of his engagement. By the very nature
of probationary employment, the employee
knows from the very start that he will be under
close observation and continuous scrutiny by
his supervisors. If termination is for cause, it
may be done at anytime during the probation.
11 ATLANTA INDUSTRIES, INC. G.R. No. 187320
and/or ROBERT CHAN, VS APRILITO R.
SEBOLINO, KHIM V. COSTALES, January 26, 2011
ALVIN V. ALMOITE, and JOSEPH S. SAGUN,
FACTS:
The complainants filed a case against Atlanta
Industries Inc. for non-regularization,
underpayment, nonpayment of wages and
other money claims, as well as claims for moral
and exemplary damages and attorney’s fees
against the petitioners Atlanta Industries, Inc.
They alleged that they had attained regular
status as they were allowed to work with
Atlanta for more than six (6) months from the
start of a purported apprenticeship agreement
between them and the company. They claimed
that they were illegally dismissed when the
apprenticeship agreement expired. Atlanta Inc.
argued that the workers were not entitled to
regularization and to their money claims
because they were engaged as apprentices
under a government-approved apprenticeship
program. The company offered to hire them as
regular employees in the event vacancies for
regular positions occur in the section of the
plant where they had trained. Then the labor
arbiter dismiss the complain but the CA
reversed it.
ISSUE:
Whether complainants are employees of
Atlanta and entitled to be payed.
HOLDING:
Yes, Even if we recognize the company’s need
to train its employees through apprenticeship,
17
we can only consider the first apprenticeship
agreement for the purpose. With the expiration
of the first agreement and the retention of the
employees,Atlanta had, to all intents and
purposes, recognized the completion of their
training and their acquisition of a regular
employee status. To foist upon them the second
apprenticeship agreement for a second skill
which was not even mentioned in the
agreement itself, is a violation of the Labor
Code’s implementing rules and is an act
manifestly unfair to the employees, to say the
least.On the supposed apprenticeship
agreements they entered into, Costales,
Almoite, Sebolino and Sagun refuse to accept
the agreements’ validity, contending that the
company’s apprenticeship program is merely a
ploy “to continually deprive [them] of their
rightful wages and benefits which are due them
as regular employees.” The petition is denied.
12 GREGORIO V. TONGKO v. THE
MANUFACTURERS LIFE INSURANCE CO. (PHILS.),
INC. and RENATO A. VERGEL DE DIOS
FACTS:
Taking from the November 2008 decision, the
facts are as follows:
Manufacturers Life Insurance, Co. is a domestic
corporation engaged in life insurance business.
De Dios was its President and Chief Executive
Officer. Petitioner Tongko started his
relationship with Manulife in 1977 by virtue of a
Career Agent's Agreement.
Pertinent provisions of the agreement state
that:
It is understood and agreed that the Agent is an
independent contractor and nothing contained
herein shall be construed or interpreted as
creating an employer-employee relationship
between the Company and the Agent.
a) The Agent shall canvass for applications for
Life Insurance, Annuities, Group policies and
other products offered by the Company, and
collect, in exchange for provisional receipts
issued by the Agent, money due or to become
due to the Company in respect of applications
or policies obtained by or through the Agent or
from policyholders allotted by the Company to
the Agent for servicing, subject to subsequent
confirmation of receipt of payment by the
Company as evidenced by an Official Receipt
issued by the Company directly to the
policyholder.
b) The Company may terminate this Agreement
for any breach or violation of any of the
provisions hereof by the Agent by giving written
notice to the Agent within fifteen (15) days
from the time of the discovery of the breach.
No waiver, extinguishment, abandonment,
withdrawal or cancellation of the right to

terminate this Agreement by the Company shall
be construed for any previous failure to exercise
its right under any provision of this Agreement.
c) Either of the parties hereto may likewise
terminate his Agreement at any time without
cause, by giving to the other party fifteen (15)
days notice in writing.
Sometime in 2001, De Dios addressed a letter to
Tongko, then one of the Metro North
Managers, regarding meetings wherein De Dios
found Tongko's views and comments to be
unaligned with the directions the company was
taking. De Dios also expressed his concern
regarding the Metro North Managers'
interpretation of the company's goals. He
maintains that Tongko's allegations are
unfounded. Some allegations state that some
Managers are unhappy with their earnings, that
they're earning less than what they deserve and
that these are the reasons why Tonko's division
is unable to meet agency development
objectives. However, not a single Manager
came forth to confirm these allegations. Finally,
De Dios related his worries about Tongko's
inability to push for company development and
growth.
De Dios subsequently sent Tongko a letter of
termination in accordance with Tongko's Agents
Contract. Tongko filed a complaint with the
NLRC against Manulife for illegal dismissal,
alleging that he had an employer-employee
relationship with De Dios instead of a revocable
agency by pointing out that the latter exercised
control over him through directives regarding
how to manage his area of responsibility and
setting objectives for him relating to the
business. Tongko also claimed that his dismissal
was without basis and he was not afforded due
process. The NLRC ruled that there was an
employer-employee relationship as evidenced
by De Dios's letter which contained the manner
and means by which Tongko should do his work.
The NLRC ruled in favor of Tongko, affirming the
existence of the employer-employee
relationship.
The Court of Appeals, however, set aside the
NLRC's ruling. It applied the four-fold test for
determining control and found the elements in
this case to be lacking, basing its decision on the
same facts used by the NLRC. It found that
Manulife did not exert control over Tongko,
there was no employer-employee relationship
and thus the NLRC did not have jurisdiction over
the case.
The Supreme Court reversed the ruling of the
Court of Appeals and ruled in favor of Tongko.
However, the Supreme Court issued another
Resolution dated June 29, 2010, reversing its
decision. Tongko filed a motion for
reconsideration, which is now the subject of the
instant case.
18
ISSUE:
Did the Supreme Court err in issuing the June
29, 2010 resolution, reversing its earlier
decision that an employer-employee
relationship existed?
HELD:
The Supreme Court finds no reason to reverse
the June 29, 2010 decision. Control over the
performance of the task of one providing
service both with respect to the means and
manner, and the results of the service is the
primary element in determining whether an
employment relationship exists. The Supreme
Court ruled petitioners Motion against his favor
since he failed to show that the control
Manulife exercised over him was the control
required to exist in an employer-employee
relationship; Manulifes control fell short of this
norm and carried only the characteristic of the
relationship between an insurance company
and its agents, as defined by the Insurance Code
and by the law of agency under the Civil Code.
In the Supreme Courts June 29, 2010
Resolution, they noted that there are built-in
elements of control specific to an insurance
agency, which do not amount to the elements
of control that characterize an employment
relationship governed by the Labor Code.The
Insurance Code provides definite parameters in
the way an agent negotiates for the sale of the
companys insurance products, his collection
activities and his delivery of the insurance
contract or policy. They do not reach the level
of control into the means and manner of doing
an assigned task that invariably characterizes an
employment relationship as defined by labor
law.
To reiterate, guidelines indicative of labor law
"control" do not merely relate to the mutually
desirable result intended by the contractual
relationship; they must have the nature of
dictating the means and methods to be
employed in attaining the result. Tested by this
norm, Manulifes instructions regarding the
objectives and sales targets, in connection with
the training and engagement of other agents,
are among the directives that the principal may
impose on the agent to achieve the assigned
tasks.They are targeted results that Manulife
wishes to attain through its agents. Manulifes
codes of conduct, likewise, do not necessarily
intrude into the insurance agents means and
manner of conducting their sales. Codes of
conduct are norms or standards of behavior
rather than employer directives into how
specific tasks are to be done.
In sum, the Supreme Court found absolutely no
evidence of labor law control.
DENIED

13 PHILIPPINE CHARITY SWEEPSTAKES OFFICE
BOARD OF DIRECTORS and REYNALDO P.
MARTIN v. MARIE JEAN C. LAPID
FACTS:
An administrative complaint was filed against
the Respondent for allegedly confronting,
badmouthing and shouting invectives at Mr.
Guemo, in the presence of other employees and
seeking assistance from the PSCO. The PCSO
Board of Directors found her guilty of
discourtesy in the course of official duties and
grave misconduct and imposed on her the
penalty of dismissal from service.
On appeal with the CSC, the Commission
dismissed the respondent’s appeal for being
moot and academic. Moreover, they ruled that
the respondent is a casual employee which
means that she is not entitled to security of
tenure. However, the CA reversed the decision
of the Commission by reinstating the
respondent in the service until the expiration of
her casual employment.
ISSUE:
Did the CA gravely err in granting the
respondent’s petition, in effect, reversing the
CSC’s resolutions.
HELD:
A new ruling recognizes that casual employees
are covered by the security of tenure and
cannot be terminated within the period of his
employment except for cause. Despite this new
ruling, it is not the intention of the Court to
make the status of a casual employee at par
with that of a regular employee, who enjoys
permanence of employment. The rule is still
that casual employment will cease
automatically at the end of the period unless
renewed as stated in the Plantilla of Casual
Employment. Casual employees may also be
terminated anytime though subject to certain
conditions or qualifications. Thus, they may be
laid-off anytime before the expiration of the
employment period provided any of the
following occurs:(1) when their services are no
longer needed; (2) funds are no longer
available; (3) the project has already been
completed/finished; or (4) their performance
are below par.
Equally important, they are entitled to due
process especially if they are to be removed for
more serious causes or for causes other than
the reasons mentioned in CSC Form No. 001.
The reason for this is that their termination
from the service could carry a penalty affecting
their rights and future employment in the
government.
In the case at bench, the CSC itself found that
Lapid was denied due process as she was never
19
formally charged with the administrative
offenses of Discourtesy in the Course of Official
Duties and Grave Misconduct, for which she
was dismissed from the service. To somehow
remedy the situation, the petitioners
mentioned in their Memorandum before the CA
that there was no reason anymore to pursue
the administrative charge against Lapid and to
investigate further as this was superseded by
Memorandum dated September 14, 2005
recommending the termination of respondent
Lapid’s casual employment. They pointed out
that this was precisely the reason why no
Formal Charge was issued. Clearly, the action of
petitioners clearly violated Lapid’s basic rights
as a casual employee.
Therefore, the petition is denied and the
respondent is allowed to continue rendering
services as teller of PCSO and is also entitled to
payment of backwages.
DENIED.
14 EXODUS INTERNATIONAL CONSTRUCTION
CORPORATION and ANTONIO P. JAVALERA,
Petitioners, v.GUILLERMO BISCOCHO,
FERNANDO PEREDA, FERDINAND MARIANO,
GREGORIO BELLITA and MIGUEL BOBILLO,
Respondent.
FACTS:
Petitioner Exodus International Construction
Corporation (Exodus) is a duly licensed labor
contractor for the painting of residential
houses, condominium units and commercial
buildings.
In the furtherance of its business, Exodus hired
respondents as painters on different dates.
Guillermo, Fernando, Ferdinand, and Miguel
filed a complaint for illegal dismissal and non-
payment of holiday pay, service incentive leave
pay, 13th month pay and night-shift differential
pay.
The Labor Arbiter rendered a Decision
exonerating petitioners from the charge of
illegal dismissal as respondents chose not to
report for work. However, she allowed the
claims for holiday pay, service incentive leave
pay and 13th month pay. The Decision was
affirmed by the NLRC and the CA. They opined
that in a situation where the employer has
complete control over the records and could
thus easily rebut any monetary claims against it
but opted not to lift any finger, the burden is on
the employer and not on the complainants.
ISSUE:
Whether or not the CA erred and committed
grave abuse of discretion in ordering the
reinstatement of respondents to their former

positions and affirming the award granted by
the lower tribunals.
HELD:
The petition is partly meritorious.
LABOR LAW: Illegal dismissal
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.
Here, there was no evidence that respondents
were dismissed nor were they prevented from
returning to their work. It was only
respondents’ unsubstantiated conclusion that
they were dismissed.
Clearly therefore, there was no dismissal, much
less illegal, and there was also no abandonment
of job to speak of. The Labor Arbiter is therefore
correct in ordering that respondents be
reinstated but without any backwages.
However, petitioners are of the position that
the reinstatement of respondents to their
former positions, which were no longer existing,
is impossible, highly unfair and unjust.
Petitioners are misguided. They forgot that
there are two types of employees in the
construction industry. The first is referred to as
project employees or those employed in
connection with a particular construction
project or phase thereof and such employment
is coterminous with each project or phase of
the project to which they are assigned. The
second is known as non-project employees or
those employed without reference to any
particular construction project or phase of a
project. The second category is where
respondents are classified.
Petition is PARTLY GRANTED.
15 D.M. CONSUNJI, INC. and/or DAVID M.
CONSUNJI, Petitioners, v. ESTELITO L. JAMIN,
Respondent.
FACTS:
Petitioner D.M. Consunji, Inc. (DMCI), a
construction company, hired respondent
Estelito L. Jamin as a laborer. Sometime in 1975,
Jamin became a helper carpenter. Since his
initial hiring, Jamins employment contract had
been renewed a number of times. On March 20,
1999, his work at DMCI was terminated due to
the completion of the SM Manila project. This
termination marked the end of his employment
with DMCI as he was not rehired again.
Jamin filed a complaintfor illegal dismissal, with
several money claims (including attorneys fees),
against DMCI and its President/General
Manager, David M. Consunji. Jamin alleged that
DMCI terminated his employment without a
just and authorized cause at a time when he
was already 55 years old and had no
20
independent source of livelihood. He claimed
that he rendered service to DMCI continuously
for almost 31 years.
DMCI denied liability. It argued that it hired
Jamin on a project-to-project basis, from the
start of his engagement in 1968 until the
completion of its SM Manila project on March
20, 1999 where Jamin last worked. With the
completion of the project, it terminated Jamins
employment.
The LA dismissed the complaint for lack of
merit. On appeal, the NLRC affirmed the
decision of the LA. On further appeal, the CA
reversed the NLRC decision and ruled that
Jamin was a regular employee. Hence, DMCI
seeks a reversal of the CA rulings on the ground
that the appellate court committed a grave
error in annulling the decisions of the labor
arbiter and the NLRC.
ISSUE:
Whether or not Jamin is a regular employee
HELD:
Yes. CA Decision Affirmed.
Labor Law
Once a project or work pool employee has
been: (1) continuously, as opposed to
intermittently, rehired by the same employer
for the same tasks or nature of tasks; and (2)
these tasks are vital, necessary and
indispensable to the usual business or trade of
the employer, then the employee must be
deemed a regular employee.
While the contracts indeed show that Jamin had
been engaged as a project employee, there was
an almost unbroken string of Jamins rehiring
from December 17, 1968 up to the termination
of his employment on March 20, 1999. While
the history of Jamins employment (schedule of
projects) relied upon by DMCI shows a gap of
almost four years in his employment for the
period between July 28, 1980 (the supposed
completion date of the Midtown Plaza project)
and June 13, 1984 (the start of the IRRI Dorm IV
project), the gap was caused by the companys
omission of the three projects above
mentioned.
To reiterate, Jamins employment history with
DMCI stands out for his continuous, repeated
and successive rehiring in the companys
construction projects. In all the 38 projects
where DMCI engaged Jamins services, the tasks
he performed as a carpenter were indisputably
necessary and desirable in DMCIs construction
business. He might not have been a member of
a work pool as DMCI insisted that it does not
maintain a work pool, but his continuous
rehiring and the nature of his work
unmistakably made him a regular employee.
Further, as we stressed in Liganza, respondent
capitalizes on our ruling in D.M. Consunji, Inc. v.

NLRC which reiterates the rule that the length
of service of a project employee is not the
controlling test of employment tenure but
whether or not the employment has been fixed
for a specific project or undertaking the
completion or termination of which has been
determined at the time of the engagement of
the employee."
"Surely, length of time is not the controlling test
for project employment. Nevertheless, it is vital
in determining if the employee was hired fora
specific undertaking or tasked to perform
functions vital, necessary and indispensable to
the usual business or trade of the employer.
Here, private respondent had been a project
employee several times over. His employment
ceased to be coterminous with specific projects
when he was repeatedly re-hired due to the
demands of petitioners business.Without
doubt, Jamins case fits squarely into the
employment situation just quoted.
PETITION DENIED
16 UNIVERSAL ROBINA SUGAR MILLING
CORPORATION and RENE CABATI, Petitioners, v.
FERDINAND ACIBO, ROBERTO AGUILAR, EDDIE
BALDOZA, RENE ABELLAR, DIOMEDES ALICOS,
MIGUEL ALICOS, ROGELIO AMAHIT, LARRY
AMASCO, FELIPE BALANSAG, ROMEO
BALANSAG, MANUEL BANGOT, ANDY BANJAO,
DIONISIO BENDIJO, JR., JOVENTINO BROCE,
ENRICO LITERAL, RODGER RAMIREZ,
BIENVENIDO RODRIGUEZ, DIOCITO PALAGTIW,
ERNIE SABLAN, RICHARD PANCHO, RODRIGO
ESTRABELA, DANNY KADUSALE and ALLYROBYL
OLPUS, Respondents.
FACTS:
URSUMCO is a domestic corporation engaged in
the sugarcane milling business; Cabati is
URSUMCOs Business Unit General Manager.
The complainants were employees of
URSUMCO, and were hired on various dates
between 1988 and 1996, and on different
capacities, i.e., drivers, crane operators, bucket
hookers, welders, mechanics, laboratory
attendants and aides, steel workers, carpenters,
among others. The complainants signed
contracts of employment for a period of 1
month or for a given season, and were
repeatedly hired to perform the same duties
and, for every engagement, were required to
sign new employment contracts for the same
duration of one month or given season.
On August 23, 2002, the complainants filed
before the Labor Arbiter complaints for
regularization, entitlement to the benefits
under the existing Collective Bargaining
Agreement (CBA), and attorneys fees. The Labor
Arbiter dismissed the complaint in the decision
dated October 9, 2002, for lack of merit. The
21
Labor Arbiter pointed out that the complainants
were required to perform several projects that
were not at all directly related to URSUMCOs
main operations, and that they were project
employees, they could not be regularized since
their respective employments end upon the
completion of each project. Also, complainants
were not entitled to the benefits granted under
the CBA that, as provided, covered only the
regular employees of URSUMCO.
7, out of the 22 original complainants, appealed
the Labor Arbiters ruling before the NLRC. NLRC
reversed the Labor Arbiter's ruling; it declared
the complainants are regular URSUMCO
employees because they performed activities
which were usually necessary and desirable in
the usual trade or business of URSUMCO, and
granted their monetary claims under the CBA.
NLRC denied petitioners motion for
reconsideration.
Petitioners elevated the case to the Court of
Appeals (CA) via a petition for certiorari.
The CA granted in part the petition. It pointed
out that the primary standard for determining
regular employment is the reasonable
connection between a particular activity
performed by the employee vis-vis the usual
trade or business of the employer. As the
complainants have been performing their
respective tasks for at least one year, these
same tasks, regardless of whether the
performance was continuous or intermittent,
constitutes sufficient evidence of the necessity,
if not indispensability, of the activity to
URSUMCOs business. On the claim for CBA
benefits, however, the CA ruled that the
complainants were not entitled to receive them.
CA pointed out that the CBA covered regular
employees of URSUMCO performing tasks
needed by the latter for the entire year with no
regard to the changing sugar milling season. For
collective bargaining purposes, they constitute a
bargaining unit separate and distinct from the
regular employees.
The petitioner filed a petition for review on
certiorari after the CA denied their motion for
partial reconsideration.
ISSUE:
Whether or not the respondents are regular
employees of URSUMCO?
HELD:
The respondents are regular seasonal
employees of URSUMCO
LABOR LAW : regular seasonal employees
Article 280 of the Labor Code provides for three
kinds of employment arrangements, namely:
regular, project/seasonal and casual.
Regular employment refers to that arrangement
whereby the employee has been engaged to
perform activities which are usually necessary

or desirable in the usual business or trade of the
employer. By way of an exception, paragraph 2,
Article 280 of the Labor Code also considers
regular a casual employment arrangement
when the casual employees engagement has
lasted for at least one year, regardless of the
engagements continuity. The controlling test in
this arrangement is the length of time during
which the employee is engaged.
Project employment, on the other hand,
contemplates on arrangement whereby the
employment has been fixed for a specific
project or undertaking whose completion or
termination has been determined at the time of
the engagement of the employee. The services
of the project employees are legally and
automatically terminated upon the end or
completion of the project as the employees
services are coterminous with the project.
Seasonal employment operates much in the
same way as project employment, albeit it
involves work or service that is seasonal in
nature or lasting for the duration of the season.
To exclude the asserted seasonal employee
from those classified as regular employees, the
employer must show that: (1) the employee
must be performing work or services that are
seasonal in nature; and (2) he had been
employed for the duration of the season.
Hence, when the seasonal workers are
continuously and repeatedly hired to perform
the same tasks or activities for several seasons
or even after the cessation of the season, this
length of time may likewise serve as badge of
regular employment.
Casual employment refers to any other
employment arrangement that does not fall
under any of the first two categories.
In the case at bar, the respondents were made
to perform various tasks that did not at all
pertain to any specific phase of URSUMCO's
strict milling operations that would ultimately
cease upon completion of a particular phase in
the milling of sugar; rather, they were tasked to
perform duties regularly and habitually needed
in URSUMCO's operations during the milling
season. The respondents duties as loader
operators, hookers, crane operators and drivers
were necessary to haul and transport the
sugarcane from the plantation to the mill;
laboratory attendants, workers and laborers to
mill the sugar; and welders, carpenters and
utility workers to ensure the smooth and
continuous operation of the mill for the
duration of the milling season, as distinguished
from the production of the sugarcane which
involves the planting and raising of the
sugarcane until it ripens for milling. They
perform activities that are necessary and
desirable in sugarcane production. Also, the
respondents were regularly and repeatedly
hired to perform the same tasks year after year.
22
This regular and repeated hiring of the same
workers (two different sets) for two separate
seasons has put in place, principally through
jurisprudence, the system of regular seasonal
employment in the sugar industry and other
industries with a similar nature of operations.
Therefore, the nature of the employment does
not depend solely on the will or word of the
employer or on the procedure for hiring and the
manner of designating the employee. Rather,
the nature of the employment depends on the
nature of the activities to be performed by the
employee, considering the nature of the
employers business, the duration and scope to
be done, and, in some cases, even the length of
time of the performance and its continued
existence.
The NLRC acted in grave abuse of discretion
when it declared the respondents regular
employees of URSUMCO without qualification
and that they were entitled to the benefits
granted under the CBA, to URSUMCO's regular
employees. We also find that the CA grossly
misread the NLRC ruling and missed the
implications of the respondents regularization.
To reiterate, the respondents are regular
seasonal employees, as the CA itself opined
when it declared that private respondents who
are regular workers with respect to their
seasonal tasks or activities and while such
activities exist, cannot automatically be
governed by the CBA between petitioner
URSUMCO and the authorized bargaining
representative of the regular and permanent
employees.
Petition for review on certiorari is partially
granted.
17 JOSE Y. SONZA vs. ABS-CBN BROADCASTING
CORPORATION
FACTS:
ABS-CBN Broadcasting Corporation (ABS-CBN)
signed an Agreement (Agreement) with
the Mel and Jay Management and Development
Corporation (MJMDC). ABS-CBN was
represented by its corporate officers while
MJMDC was represented by SONZA, as
President
and General Manager, and Carmela Tiangco
(TIANGCO), as EVP and Treasurer. Referred to in
the Agreement as AGENT, MJMDC agreed to
provide SONZAs services exclusively to ABS-CBN
as
talent for radio and television. ABS-CBN agreed
to pay for SONZAs services a monthly talent fee
of P310,000 for the first year and P317,000 for
the second and third year of the Agreement.

ABS-CBN would pay the talent fees on the 10th
and 25th days of the month. On 1 April 1996,
SONZA wrote a letter to ABS-CBNs President
regarding the resignation of Mr. Jose Sonza,
consequently serving notice of rescission of said
Agreement. SONZA filed a complaint against
ABS-CBN before the Department of Labor and
Employment, National Capital Region in Quezon
City. SONZA complained that ABS-CBN did not
pay his salaries, separation pay, service
incentive
leave pay, 13th month pay, signing bonus, travel
allowance and amounts due under the
Employees Stock Option Plan (ESOP). ABS-CBN
filed a Motion to Dismiss on the ground that no
employer-employee relationship existed
between the parties. The Labor Arbiter
rendered his
Decision dismissing the complaint for lack of
jurisdiction, and that Sonza cannot be
considered
as an employee by reason of the peculiar
circumstances surrounding the engagement of
his
services. That he was engaged by respondent by
reason of his peculiar skills and talent as a TV
host and a radio broadcaster. Unlike an ordinary
employee, he was free to perform the services
he undertook to render in accordance with his
own style. Whatever benefits complainant
enjoyed arose from specific agreement by the
parties and not by reason of employer-
employee
relationship. The fact that complainant was
made subject to respondents Rules and
Regulations, likewise, does not detract from the
absence of employer-employee relationship.
ISSUE:
WON employer-employee relationship existed
between Sonza and ABS-CBN.
HELD:
NO. Independent contractors often present
themselves to possess unique skills,
expertise or talent to distinguish them from
ordinary employees. The specific selection and
hiring of SONZA, because of his unique skills,
talent and celebrity status not possessed by
ordinary employees, is a circumstance
indicative, but not conclusive, of an
independent
contractual relationship.If SONZA did not
possess such unique skills, talent and celebrity
status,
ABS-CBN would not have entered into the
Agreement with SONZA but would have hired
him
through its personnel department just like any
other employee. In any event, the method of
selecting and engaging SONZA does not
conclusively determine his status. We must
23
consider all
the circumstances of the relationship, with the
control test being the most important element.
17.1 FARLEY FULACHE, ET. AL. vs. ABS-CBN
BROADCASTING CORPORATION
FACTS:
Farley Fulache, Manolo Jabonero, David Castillo,
Jeffrey Lagunzad, Magdalena Maligon
Bigno, Francisco Cabas, Jr., Harvey Ponce and
Alan C. Almendras and Cresente Atinen (Atinen)
filed two separate complaints for regularization,
unfair labor practice and several money claims
(regularization case) against ABS-CBN
Broadcasting Corporation-Cebu. Fulache and
Castillo
were drivers/cameramen; Atinen, Lagunzad and
Jabonero were drivers; Ponce and Almendras
were cameramen/editors; Bigno was a
PA/Teleprompter Operator-Editing, and Cabas
was a
VTR man/editor. They alleged that ABS-CBN and
the ABS-CBN Rank-and-File Employees Union
(Union) executed a collective bargaining
agreement (CBA) where they learned that they
had
been excluded from its coverage as ABS-CBN
considered them temporary and not regular
employees, in violation of the Labor Code. They
claimed they had already rendered more than a
year of service in the company and, therefore,
should have been recognized as regular
employees entitled to security of tenure and to
the privileges and benefits enjoyed by regular
employees. ABS-CBN explained the nature of
the petitioners employment within the
framework
of its operations. It further claimed that to cope
with fluctuating business conditions, it
contracts on a caseto-case basis the services of
persons who possess the necessary talent, skills,
training, expertise or qualifications to meet the
requirements of its programs and productions.
These contracted persons are called talents and
are considered independent contractors who
offer their services to broadcasting companies.
ABS-CBN alleged that the petitioners services
were contracted on various dates by its Cebu
station as independent contractors/off camera
talents, and they were not entitled to
regularization in these capacities.
ISSUE:
WON they are ABS-CBNs regular employees
entitled to the benefits and privileges of
regular employees.
HELD:
They are ABS-CBNs regular employees entitled
to the benefits and privileges of regular
employees. These benefits and privileges arise

from entitlements under the law (specifically,
the Labor Code and its related laws), and from
their employment contract as regular ABS-CBN
employees, part of which is the CBA if they fall
within the coverage of this agreement. Thus,
what only needs to be resolved as an issue for
purposes of implementation of the decision is
whether the petitioners fall within CBA
coverage. The parties 1999-2002 CBA provided
in its
Article I (Scope of the Agreement) that: Section
1. APPROPRIATE BARGAINING UNIT. The parties
agree that the appropriate bargaining unit shall
be regular rank-and-file employees of ABS-CBN
BROADCASTING CORPORATION but shall not
include: a) Personnel classified as Supervisor
and
Confidential employees; b) Personnel who are
on casual or probationary status as defined in
Section 2 hereof; c) Personnel who are on
contract status or who are paid for specified
units of
work such as writer-producers, talent-artists,
and singers. The inclusion or exclusion of new
job
classifications into the bargaining unit shall be
subject of discussion between the COMPANY
and
the UNION. [emphasis supplied] Under these
terms, the petitioners are members of the
appropriate bargaining unit because they are
regular rank-and-file employees and do not
belong to any of the excluded categories.
Specifically, nothing in the records shows that
they
are supervisory or confidential employees;
neither are they casual nor probationary
employees.
Most importantly, the labor arbiters decision of
January 17, 2002 affirmed all the way up to the
CA level ruled against ABS-CBNs submission that
they are independent contractors. Thus, as
regular rank-and-file employees, they fall within
CBA coverage under the CBAs express terms
and are entitled to its benefits.
18 UERMMMC-RDU VS. LAGUESMA
FACTS:
The resident physicians formed a union called
the UERMMC-Resident Doctors Union and
filed the petition for certification so that it will
be recognized as the exclusive bargaining agent
of all the resident physicians in the hospital for
purposes of collective bargaining.
The petition for certification was dismissed by
the Undersecretary, acting under the
authority of the Secretary of Labor, on the
ground that there exist no employer-employee
relationship between the resident doctors and
the hospital.
24
ISSUE:
WON resident doctors are employees of the
hospital.
HELD:
The resident doctors are not employees of the
hospital. It is clear that physicians
undergo residency training in order to hone
their skills and develop or improve their
knowledge
in a specialized medical field or discipline.
Hence, residency is basically and simply a
continuation of their medical course. However,
they are not required or mandated under any
law to further undergo a residence training
program. Having passed the medical board
examinations, they are already licensed
physicians and could very well engage in the
general
practice of medicine. It is for the practice of
highly specialized medical disciplines which
necessitates further on-the-job training
thereon.
Viewed from this perspective, residency training
clearly amounts to a pursuit of further
education on a specific discipline. Thus, the
relationship between the teaching/training
hospital
and the resident doctor is not one of employer-
employee. The training/teaching hospital may
simply be likened to a medical
school/university, but in this instance, the
emphasis is on the
practical application and training of its students,
the resident doctors.
19 Calamba Medical Center, Inc. vs National
Labor Relations Commission
FACTS:
Ronaldo Lanzanas and Merceditha Lanzanas are
doctors employed by Calamba Medical
Center, Inc. They are given a retainer’s fee by
the hospital as well as shares from fees
obtained
from patients. One time, Ronaldo was
overheard by Dr. Trinidad talking to another
doctor
about how low the admission rate to the
hospital is. That conversation was reported to
Dr.
Desipeda who was then the Medical Director of
the hospital.
Eventually Ronaldo was suspended. Ronaldo
filed a case for Illegal Suspension in March
1998. In the same month, the rank and file
employees organized a strike against the
hospital for
unfair labor practices. Desipeda eventually fired

Ronaldo for his alleged participation in the
strike, which is not allowed under the Labor
Code for he is a managerial employee. Desipeda
also fired Merceditha on the ground that she is
the wife of Ronaldo who naturally sympathize s
with him.
The Labor Arbiter ruled that there was no Illegal
Suspension for there was no employeremployee
relationship because the hospital has no control
over Ronaldo as he is a doctor who even gets
shares from the hospitals earnings.
The National Labor Relations Commission as
well as the Court of Appeals reversed the
LA.
ISSUE:
Whether or not there is an employer-employee
relationship?
HELD:
Yes. Under the control test, an employment
relationship exists between a physician and
a hospital if the hospital controls both the
means and the details of the process by which
the
physician is to accomplish his task. There is
control in this case because of the fact that
Desipeda schedules the hours of work for
Ronaldo and his wife.
The doctors are also registered by the hospital
under the SSS which is premised on an
employer-employee relationship.
There is Illegal Dismissal committed against
Rolando for there was no notice and hearing
held. It was never shown that Rolando joined
the strike. But even if he did, he has the right to
do so for he is not a part of the managerial or
supervisory employees. As a doctor, their
decisions are still subject to revocation or
revision by Desipeda.
There is Illegal Dismissal committed against
Merceditha for the ground therefor was not
mentioned in Article 282 of the Labor Code.
When is Control (One of the Four Tests of
Employer-Employee Relationship) Absent?
Where a person who works for another does so
more or less at his own pleasure and is
not subject to definite hours or conditions of
work, and is compensated according to the
result
of his efforts and not the amount thereof, the
element of control is absent.
20 Ramos vs Court of Appeals
FACTS:
Plaintiff Erlinda Ramos was, until the afternoon
of June 17, 1985 a 47-year old robust
woman. Except for occasional complaints of
discomfort due to pains allegedly caused by
presence of a stone in her gall bladder, she was
as normal as any other woman. Married to
25
Rogelio Ramos, an executive of Philippine Long
Distance Telephone Company (PLDT), she has
three children whose names are Rommel, Roy
Roderick, and Ron Raymond. Because of the
discomforts somehow interfered with her
normal ways, she sough t professional advice.
She
was told to undergo an operation for the
removal of a stone in her gall bladder. She
underwent
series of examination which revealed that she
was fit for the said surgery.
Through the intercession of a mutual friend, she
and her husband met Dr. Osaka for the
first time and she was advised by Dr. Osaka to
go under the operation called cholecystectomy
and the same was agreed to be scheduled on
June 17,1985 at 9:00am at the Delos Santos
Medical Center. Rogelio asked Dr. Osaka to look
for a good anesthesiologist to which the latter
agreed to. A day before the scheduled
operation, she was admitted at the hospital and
on the
day of the operation, Erlinda’s sister was with
her insider the operating room. Dr. Osaka
arrived
at the hospital late, Dr. Guttierez, the
anesthesiologist, started to intubate Erlina
when
Herminda heard her say that intubating Erlinda
is quite difficult and there were complications.
This prompt Dr. Osaka to order a call to another
anesthesiologist, Dr. Caldron who successfully
intubated Erlina. The patient’s nails became
bluish and the patient was placed in a
trendelenburg position. After the operation,
Erlina was diagnosed to be suffering from
diffuse
cerebral parenchymal damage and that the
petitioner alleged that this was due to lack of
oxygen supply to Erlinda’s brain which resulted
from the intubation.
ISSUE:
Whether or not the doctors and the hospital are
liable for damages against petitioner
for the result to Erlinda of the said operation.
HELD:
Yes. The private respondents were unable to
disprove the presumption of negligence on
their part in the care of Erlinda and their
negligence was the proximate case of her
piteous
condition.
Nevertheless, despite the fact that the scope of
res ipsa liquitor has been measurably
enlarged, it does not automatically follow that it
apply to all cases of medical negligence as to
mechanically shift the burden of proof to the
defendant to show that he is not guilty of the
ascribed negligence. Res ipsa liquitor is not a

rigid or ordinary doctrine to be perfunctorily
used
but a rule to be cautiously applied, dependin g
upon the circumstances of each case. It is
generally restricted to situations in malpractice
cases where a layman is able to say, as a matter
of common knowledge and observation, that
the consequences of professional care were not
as such as would ordinarily have followed if due
care had been exercised. A distinction must be
made between the failure to secure results, and
the occurrence of something more unusual
and not ordinarily found if the service or
treatment rendered followed the usual
procedure of
those skilled in that particular practice. It must
be conceded that the doctrine of res ipsa
liquitor can have no application in a suit against
a physician or surgeon which involves the
merits of a diagnosis or of a scientific
treatment.
Scientific studies point out that intubation
problems are responsible for 1/3 of deaths
and serious injuries associated with anesthesia.
Nevertheless, 98% or the vast majority of
difficult intubation may be anticipated by
performing a thorough evaluation of the
patient’s
airway prior to the operation. As stated
beforehand, respondent, Dra. Guttierez failed
to
observe the proper pre-operative protocol
which could have prevented this unfortunate
incident. Had appropriate diligence and
reasonable care been used in the pre -operative
evaluation, respondent physician could have
been more prepared to meet the contingency
brought about by the perceived atomic
variations in the patient’s neck and oral area;
defects
which could have been easily overcome by a
prior knowledge of those va riations together
with
a change in technique. In other words, an
experienced anesthesiologist, adequately
alerted by a
thorough pre-operative evaluation, would have
had little difficulty going around the short neck
and potruding teeth. Having failed to observe
common medical standards in pre-operative
management and intubation, respondent Dra.
Guttierez negligence resulted in cerebral anoxia
and eventual coma of Erlinda.
21 Professional Services, Inc. vs. CA
FACTS:
April 4, 1984: Natividad Agana was rushed to
the Medical City General Hospital because
of difficulty of bowel movement and bloody
anal discharge. Dr. Miguel Ampil diagnosed her
26
to
be suffering from cancer of the sigmoid.
April 11, 1984: Dr. Ampil performed an anterior
resection surgery on Natividad and
found that the malignancy in her sigmoid area
had spread on her left ovary, necessitating the
removal of certain portions of it Dr. Ampil
obtained the consent of Natividad’s husband,
Enrique Agana to perform hysterectomy.
After a couple of days, Natividad consulted both
Dr. Ampil and Dr. Fuentes about
the excruciating pain in her anal region. Dr.
Ampil recommended that she consult an
oncologist.
May 9, 1984: The Aganas went to the United
States to seek further treatment and was
told she was FREE from cancer.
August 31, 1984: Natividad's daughter found a
piece of gauze protruding from her
vagina. Dr. Ampil proceeded to her house and
extracted by hand a piece of gauze measuring
1.5 inches in width and assuring that the pain
will vanish.
When the pain intensified, Nativided went to
Polymedic General Hospital where Dr.
Ramon Gutierrez found a foul-smelling gauze
measuring 1.5 inches in width which badly
infected her vaginal vault which formed a recto-
vaginal fistula forcign her stool to excrete
through the vagina.
October 1984: Natividad underwent another
surgery to remedy the damage
February 16, 1986: Natividad died so she was
substituted by her children
RTC: PSI solidarily liable with Dr. Ampil and Dr.
Fuentes for damages for negligence and
malpractice
CA: absolved Dr. Fuentes upon the same advise
from the PRC Board of Medicine for
failure to show that he placed the guages or
concealed the fact from Natividad.
ISSUE:
W/N Dr. Fuentes may be held liable under the
principle of res ipso loquitor
HELD:
NO. CA affirmed Dr. Ampil as the negligent
party surgeons used gauzes as sponges to
control the bleeding of the patient during the
surgical operation immediately after the
operation, the nurses who assisted in the
surgery noted in their report 2 sponges lacking
2
gauzes were extracted from the same spot of
the body of Mrs. Agana element 3 "control and
management of the thing which caused the
injury" to be wanting Dr. Fuentes performed the
surgery and thereafter reported and showed his
work to Dr. Ampil who allowed Dr. Fuentes to
leave the operating room Under the "Captain of
the Ship" rule, the operating surgeon is the

person in complete charge of the surgery room
and all personnel connected with the operation
res ipsa loquitur not a rule of substantive law,
hence, does not per se create or constitute an
independent or separate ground of liability,
being a mere evidentiary rule mere invocation
and
application of the doctrine does not dispense
with the requirement of proof of negligence
Art. 2176. Whoever by act or omission causes
damage to another, there being fault or
negligence, is obliged to pay for the damage
done. Such fault or negligence, if there is no
preexisting contractual relation between the
parties, is called a quasi-delict and is governed
by the provisions of this Chapter.
ART. 2180. The obligation imposed by Article
2176 is demandable not only for one’s
own acts or omissions, but also for those of
persons for whom one is responsible.
The owners and managers of an establishment
or enterprise are likewise responsible for
damages caused by their employees in the
service of the branches in which the latter are
employed or on the occasion of their functions.
Employers shall be liable for the damages
caused by their employees and household
helpers acting within the scope of their assigned
tasks even though the former are not engaged
in any business or industry.
xxxxxx
The responsibility treated of in this article shall
cease when the persons herein
mentioned prove that they observed all the
diligence of a good father of a family to prevent
damage. failed to adduce evidence showing
that it exercised the diligence of a good father
of a
family in the accreditation and supervision
private hospitals, hire, fire and exercise real
control
over their attending and visiting ‘consultant’
staff control test is determining for the purpose
of allocating responsibility in medical negligence
cases, an employer-employee relationship in
effect exists between hospitals and their
attending and visiting physicians
ART. 1869. Agency may be express, or implied
from the acts of the principal, from his
silence or lack of action, or his failure to
repudiate the agency, knowing that another
person is
acting on his behalf without authority.
By accrediting Dr. Ampil and Dr. Fuentes and
publicly advertising their qualifications, the
hospital created the impression that they were
its agents, authorized to perform medical or
surgical services for its patients doctrine of
corporate negligence or corporate responsibility
knowledge of any of the staff of Medical City
Hospital constitutes knowledge of PSI
It is worthy to note that Dr. Ampil and Dr.
27
Fuentes operated on Natividad with the
assistance of the Medical City Hospital’s staff,
composed of resident doctors, nurses, and
interns
22 BISIG MANGGAGAWA SA TRYCO and/or
FRANCISCO SIQUIG, as Union President,
JOSELITO
LARIÑO, VIVENCIO B. BARTE, SATURNINO
EGERA and SIMPLICIO AYA-AY vs. NATIONAL
LABOR RELATIONS COMMISSION, TRYCO
PHARMA CORPORATION, and/or WILFREDO C.
RIVERA
FACTS:
Tryco Pharma Corporation (Tryco) is a
manufacturer of veterinary medicines and its
principal office is located in Caloocan City.
Joselito Lariño, Vivencio Barte, Saturnino Egera
an d
Simplicio Aya-ay are its regular employees,
occupying the positions of helper, shipment
helper
and factory workers, respectively, assigned to
the Production Department. They are members
of Bisig Manggagawa sa Tryco (BMT), the
exclusive bargaining representative of the rank-
andfile employees. Tryco received a Letter from
the Bureau of Animal Industry of the
Department of Agriculture reminding it that its
production should be conducted in San Rafael,
Bulacan, not in Caloocan City, hence, Tryco
issued a Memorandum dericting petitioner Aya-
ay to report to the company's plant site in
Bulacan. When petitioner Aya -ay refused to
obey, Tryco reiterated the order. Subsequently,
through a Memorandum, Tryco also directed
petitioners Egera, Lariño and Barte to report to
the company's plant site in Bulacan. Petitioners
then filed their separate complaints for illegal
dismissal, underpayment of wages,
nonpayment of overtime pay and service
incentive leave. The alleged that the
management transferred petitioners Lariño,
Barte, Egera and Aya-ay from Caloocan to San
Rafael, Bulacan to paralyze the union. In their
defense, respondents averred that the
petitioners were not dismissed but they refused
to comply with the management's directive for
them to report to the company's plant in San
Rafael, Bulacan.
ISSUE:
WON management’s prerogative of transferring
and reassigning employees from one
area of operation to another in order to meet
the requirements of the business constitutes
constructive dismissal.

HELD:
NO. Management’s prerogative of transferring
and reassigning employees from one
area of operation to another in order to meet
the requirements of the business is, generally
not
constitutive of constructive dismissal. This
prerogative extends to the management's right
to
regulate, according to its own discretion and
judgment, all aspects of employment, including
the freedom to transfer and reassign employees
according to the requirements of its business.
Management's prerogative of transferring and
reassigning employees from one area of
operation to another in order to meet the
requirements of the business is, therefore,
generally
not constitutive of constructive dismissal. Thus,
the consequent transfer of Tryco's personnel,
assigned to the Production Department was
well within the scope of its management
prerogative.
23 MANILA JOCKEY CLUB EMPLOYEES LABOR
UNIONPTGWO vs MANILA JOCKEY CLUB, INC.
FACTS:
Manila Jockey Club Employees Labor Union-
PTGWO and respondent Manila Jockey Club,
Inc., a corporation with a legislative franchise to
conduct, operate and maintain horse races,
entered into a Collective Bargaining Agreement
(CBA). The CBA governed the economic rights
and obligations of respondents regular monthly
paid rank-and-file employees. In the CBA, the
parties agreed to a 7-hour work schedule from
9:00 a.m. to 12:00noon and from 1:00 p.m. to
5:00 p.m. on a work week of Monday to
Saturday. Respondent issued an inter-office
memorandum declaring that, effective April 20,
1999, the hours of work of regular monthlypaid
employees shall be from 1:00 p.m. to 8:00 p.m.
when horse races are held, that is, every
Tuesday and Thursday. The memorandum,
however, maintained the 9:00 a.m. to 5:00 p.m.
schedule for non-race days. Petitioner and
respondent entered into an Amended and
Supplemental CBA retaining Section 1 of Article
IV and Section 2 of Article XI, supra, and
clarified that any conflict arising therefrom shall
be referred to a voluntary arbitrator for
resolution. Subsequently, before a panel of
voluntary arbitrators of the N ational
Conciliation
and Mediation Board (NCMB), petitioner
questioned the above office memorandum as
violative
of the prohibition against non-diminution of
wages and benefits guaranteed under Section 1,
28
Article IV, of the CBA which specified the work
schedule of respondent's employees to be from
9:00 a.m. to 5:00 p.m. Petitioner claimed that as
a result of the memorandum, the employees
are precluded from rendering their usual
overtime work from 5:00 p.m. to 9:00 p.m.
ISSUE:
WON MJCI relinquish part of its management
prerogative when it stipulated a work
schedule in the CBA.
HELD:
NO. MJCI did not relinquish part of its
management prerogative when it stipulated a
work schedule in the CBA. Every business
enterprise endeavors to increase profits. As it is,
the
Court will not interfere with the business
judgment of an employer in the exercise of its
prerogative to devise means to improve its
operation, provided that it does not violate the
law,
CBAs, and the general principles of justice and
fair play. We ha ve thus held that management
is
free to regulate, according to its own discretion
and judgment, all aspects of employment,
including hiring, work assignments, working
methods, time, place and manner of work,
processes to be followed, supervision of
workers, working regulations, transfer of
employees,
work supervision, layoff of workers and
discipline, dismissal, and recall of workers.
24 CAPITOL MEDICAL CENTER, INC. and DR.
THELMA NAVARETTE-CLEMENTE vs CESAR
MERIS
FACTS:
Capitol Medical Center, Inc. (Capitol) hired Dr.
Cesar Meris (Dr. Meris), one of its
stockholders, as in charge of its Industrial
Service Unit (ISU) at a monthly salary of
P10,270.00.
Until the closure of the ISU, Dr. Meris
performed dual functions of providing medical
services to
Capitols more than 500 employees and health
workers as well as to employees and workers of
companies having retainer contracts with it. Dr.
Meris received from Capitols president and
chairman of the board, Dr. Thelma
NavaretteClemente (Dr. Clemente), a notice
advising him of
the managements decision to close or abolish
the ISU and the consequent termination of his
services as Chief thereof. Dr. Meris, doubting
the reason behind the managements decision

to
close the ISU and believing that the ISU was not
in fact a bolished as it continued to operate and
offer services to the client companies with Dr.
Clemente as its head and the notice of closure
was a mere ploy for his ouster in view of his
refusal to retire despite Dr. Clementes previous
prodding for him to do so, sought his
reinstatement but it was unheeded. Dr. Meris
thus filed a
complaint against Capitol and Dr. Clemente for
illegal dismissal and reinstatement with claims
for backwages, moral and exemplary damages,
plus attorneys fees.
ISSUE:
WON the abolition of the industrial service unit
(ISU) constitutes a valid exercise of
management prerogative
HELD:
No. Capitol failed to sufficiently prove its good
faith in closing the ISU. Employers are
also accorded rights and privileges to assure
their self-determination and independence and
reasonable return of capital. This mass of
privileges comprises the so-called management
prerogatives. Although they may be broad and
unlimited in scope, the State has the right to
determine whether an employers privilege is
exercised in a manner that complies with the
legal
requirements and does not offend the
protected rights of labor. One of the rights
accorded an
employer is the right to close an establishment
or undertaking. The right to close the operation
of an establishment or undertaking is explicitly
recognized under the Labor Code as one of the
authorized causes in terminating employment
of workers, the only limitation being that the
closure must not be for the purpose of
circumventing the provisions on termination of
employment embodied in the Labor Code.
25 SAN MIGUEL CORPORATION, et.al, vs.
NUMERIANO LAYOC, JR., et.al.
FACTS:
Respondents were among the Supervisory
Security Guards of the Beer Division of the
San Miguel Corporation with offices at No. 40
San Miguel venue, Mandaluyong City. They
started working as guards assigned to the Beer
Division on different dates until such time that
they were promoted as supervising security
guards. From the commencement of their
employment, the private respondents were
required to punch their time cards for purposes
of
determining the time they would come in and
29
out of the companys work place. Corollary, the
private respondents were availing the benefits
for overtime, holiday and night premium duty
through time card punching. However, in the
early 1990s, the San Miguel Corporation
embarked on a Decentralization Program aimed
at enabling the separate divisions of the San
Miguel Corporation to pursue a more efficient
and effective management of their respective
operations. As a result of the Decentralization
Program, the Beer Division of the San Miguel
Corporation implemented a no time card policy
whereby the Supervisory I and II composing of
the supervising security guards of the Beer
Division were no longer required to punch their
time
cards. Consequently, without prior consultation
with the private respondents, the time cards
were ordered confiscated and the latter were
no longer allowed to render overtime work.
However, in lieu of the overtime pay and the
premium pay, the personn el of the Beer
Division
affected by the No Time Card Policy were given
a 10% across-the-board increase on their basic
pay while the supervisors who were assigned in
the night shift (6:00 p.m. to 6:00 a.m.) were
given night shift allowance ranging from
P2,000.00 to P2,500.00 a month. Respondents
filed a
complaint for unfair labor practice, violation of
Article 100 of the Labor Code of the Philippines,
and violation of the equal protection clause and
due process of law in relation to paragraphs 6
and 8 of Article 32 of the New Civil Code of the
Philippines SMC maintained that respondents
were supervisory security guards who were
exempt from the provisions of the Labor Code
on
hours of work, weekly rest periods, and rest
days. The no time card policy did not ju st
prevent
respondents from punching their time cards,
but it also granted respondents an across-the
board increase of 10% of basic salary and either
a P2,000 or P2,500 night shift allowance on top
of their yearly merit increase. They further
asserted that the no time card policy was a valid
exercise of management prerogative and that
all supervisors in the Beer Division were
covered
by the no time card policy, which classification
was distinct and separate from the other
divisions within SMC.
ISSUE:
Whether the implementation of the no time
card policy was a valid exercise of
management prerogative.
HELD:

Yes. Given the discretion granted to the various
divisions of SMC in the management
and operation of their respective businesses
and in the formulation and implementation of
policies affecting their operations and their
personnel, the no time card policy affecting all
of
the supervisory employees of the Beer Division
is a valid exercise of management prerogative.
The no time card policy undoubtedly caused
pecuniary loss to respondents. However,
petitioners granted to respondents and other
supervisory employees a 10% across-the-board
increase in pay and night shift allowance, in
addition to their yearly merit increase in basic
salary, to cushion the impact of the loss. So long
as a companys management prerogatives are
exercised in good faith for the advancement of
the employers interest and not for the
purpose of defeating or circumventing the
rights of the employees under special laws or
under valid agreements, this Court will uphold
them.
26 PHILIPPINE AIRLINES, INC. (PAL) vs. NLRC
FACTS:
Philippine Airlines, Inc. (PAL) completely revised
its 1966 Code of Discipline. The Code
was circulated among the employees and was
immediately implemented, and some
employees
were forthwith subjected to the disciplinary
measures embodied therein. Thus, the
Philippine
Airlines Employees Association (PALEA) filed a
complaint before the National Labor Relations
Commission (NLRC) for unfair labor practice
with the following remarks: "ULP with arbitrary
implementation of PAL's Code of Discipline
without notice and prior discussion with Union
by
Management". In its position paper, PALEA
contended that PAL, by its unilateral
implementation of the Code, was guilty of
unfair l abor practice. PALEA alleged that copies
of
the Code had been circulated in limited
numbers; that being penal in nature the Code
must
conform with the requirements of sufficient
publication, and that the Code was arbitrary,
oppressive, and prejudicial to the rights of the
employees. PAL filed a motion to dismiss the
complaint, asserting its prerogative as an
employer to prescibe rules and regulations
regarding
employees' conduct in carrying out their duties
and functions, and alleging that by
implementing the Code, it had not violated the
30
collective bargaining agreement (CBA) or any
provision of the Labor Code
ISSUE:
Whether the management may be compelled to
share with the union or its employees
its prerogative of formulating a code of
discipline.
HELD:
YES. PAL asserts that when it revised its Code on
March 15, 1985, there was no law
which mandated the sharing of responsibility
therefor between employer and employee.
Indeed, it was only on March 2, 1989, with the
approval of Republic Act No. 6715, amend ing
Article 211 of the Labor Code, that the law
explicitly considered it a State policy "(t)o
ensure the
participation of workers in decision and policy-
making processes affecting the rights, duties
and
welfare." However, even in the absence of said
clear provision of law, the exercise of
management prerogatives was never
considered boundless. Thus, in Cruz vs. Medina
(177 SCRA
565 [1989]) it was held that management's
prerogatives must be without abuse of
discretion.
In San Miguel Brewery Sales Force Union
(PTGWO) vs. Ople (170 SCRA 25 [1989]), we
upheld
the company's right to implement a new system
of distributing its products, but gave the
following caveat: So long as a company's
management prerogatives are exercised in good
faith
for the advancement of the employer's interest
and not for the purpose of defeating or
circumventing the rights of the employees under
special laws or under valid agreements, this
Court will uphold the.
All this points to the conclusion that the
exercise of managerial prerogatives is not
unlimited. It is circumscribed by limitations
found in law, a collective bargaining agreement,
or the general principles of fair play and justice
(University of Sto. Tomas vs. NLRC, 190 SCRA
758 [1990]). Moreover, as enunciated in Abbott
Laboratories (Phil.), vs. NLRC (154 713 [1987]),
it must be duly established that the prerogative
being invoked is clearly a managerial one.
27 WILTSHIRE FILE CO., INC., vs. NLRC and
VICENTE T. ONG
FACTS:
Vicente T. Ong was the Sales Manager of
Wiltshire File Co., Inc. ("Wiltshire"). As such, he
received a monthly salary excluding

commissions from sales. He also enjoyed
vacation leave
with pay, as well as hospitalization privileges
per year. Upon private respondent's return
from a
business and pleasure trip abroad, he was
informed by the President of Wiltshire that his
services were being terminated. Ong maintains
that he tried to get an explanation from
management of his dismissal but to no avail.
When private respondent again tried to speak
with the President of Wiltshire, the company's
security guard handed him a letter which
formally informed him that his services were
being terminated upon the ground of
redundancy.
Ong filed a complaint before the Labor Arbiter
for illegal dismissal alleging that his position
could not possibly be redundant because
nobody (save himself) in the company was then
performing the same duties. He further
contended that retrenching him could not
prevent
further losses because it was in fact through his
remarkable performance as Sales Manager that
the Company had an unprecedented increase in
domestic market share the preceding year. For
that accomplishment, he continued, he was
promoted to Marketing Manager and was
authorized by the President to hire four (4)
Sales Executives five (5) months prior to his
termination. Wiltshire alleged that the
termination of Ong's services was a cost-cutting
measure: that the company had experienced an
unusually low volume of orders: and that it was
in fact forced to rotate its employees in order to
save the company. Despite the rotation of
employees, it continued to experience financial
losses and Ong's position, Sales Manager of the
company, became redundant. During the
proceedings before the Labor Arbiter, Wiltshire
notified the DOLE that it would close its doors
permanently due to substantial business losses.
HIRING ISSUE:
It is of no legal moment that the financial
troubles of the company were not of Ong's
making. Ong cannot insist on the retention of
his position upon the ground that he had not
contributed to the financial problems of
Wiltshire. The characterization of private
respondent's
services as no longer necessary or sustainable,
and therefore properly terminable, was an
exercise of business judgment on the part of
petitioner company. The wi sdom or soundness
of
such characterization or decision was not
subject to discretionary review on the part of
the
Labor Arbiter nor of the NLRC so long, of course,
31
as violation of law or merely arbitrary and
malicious action is not shown.
The determination of the continuing necessity
of a particular officer or position in a
business corporation is management's
prerogative, and the courts will not interfere
with the
exercise of such so long as no abuse of
discretion or merely arbitrary or malicious
action on the
part of management is shown.
REDUNDANCY ISSUE:
Redundancy in an employer's personnel force
does not necessarily or even ordinarily
refers to duplication of work. That no other
person was holding the same position that
private
respondent held prior to the termination of his
services, does not show that his position had
not become redundant. Indeed, in any well-
organized business enterprise, it would be
surprising to find duplication of work and two
(2) or more people doing the work of one
person.
Redundancy exists where the services of an
employee are in excess of what is reasonably
demanded by the actual requirements of the
enterprise. Succinctly put, a position is
redundant
where it is superfluous, and superfluity of a
position or positions may be the outcome of a
number of factors, such as overhiring of
workers, decreased volume of business, or
dropping of
a particular product line or service activity
previously manufactured or undertaken by the
enterprise. The employer has no legal obligation
to keep in its payroll more employees than are
necessarily for the operation of its business.
28 FARLE P. ALMODIEL vs. NLRC & RAYTHEON
PHILS., INC.
FACTS:
Farle P. Almodiel is a certified public accountant
who was as Cost Accounting Manager
of Raytheon Philippines, Inc. through a
reputable placement firm, John Clements
Consultants,
Inc. He started as a probationary or temporary
employee. After a few months, he was given a
regularization increase. Not long thereafter, his
salary was also increased. Almodiel
recommended and submitted a Cost
Accounting/Finance Reorganization, affecting
the whole
finance group but the same was disapproved by
the Controller. However, he was assured by the

Controller that should his position or
department which was apparently a one-man
department
with no staff becomes untenable or unable to
deliver the needed service due to manpower
constraint, he would be given a three (3) year
advance notice. In the meantime, the standard
cost accounting system was installed and used
at the Raytheon plants and subsidiaries
worldwide. Almodiel was summoned by his
immediate boss and in the presence of IRD
Manager, Mr. Rolando Estrada, was told of the
abolition of his position on the ground of
redundancy. He pleaded with management to
defer its action or transfer him to another
department, but he was told that the decision
of management was final and that the same has
been conveyed to the Department of Labor and
Employment. Thus, he was constrained to file
the complaint for illegal dismissal. Petitioner
claims that the functions of his position were
absorbed by the Payroll/Mis/Finance
Department under the management of Danny
Ang Tan
Chai, a resident alien without any working
permit from the Department of Labor and
Employment as required by law. And granting
that his department has to be declared
redundant, he claims that he should have been
the Manager of the Payroll/Mis/Finance
Department which handled general accounting,
payroll and encoding. As a B. S. Accounting
graduate, a CPA with M.B.A. units, 21 years of
work experience, and a natural born Filipino, he
claims that he is better qualified than Ang Tan
Chai, a B.S. Industrial Engineer, hired merely as
a the jeepneys if they did notremit the full
Systems Analyst Programmer or its equivalent
in early 1987, promoted as MIS Manager only
during the middle part of 1988 and a resident
alien. Petitioner also assails Raytheon's choice
of
Ang Tan Chai to head the Payroll/Mis/Finance
Department, claiming that he is better qualified
for the position.
HELD:
It has been consistently held that an objection
founded on the ground that one has
better credentials over the appointee is
frowned upon so long as the latter possesses
the
minimum qualifications for the position. In the
case at bar, since petitioner does not allege that
Ang Tan Chai does not qualify for the position,
the Court cannot substitute its discretion and
judgment for that which is clearly and
exclusively management prerogative. To do so
would
take away from the employer what rightly
belongs to him as aptly explained in National
Federation of Labor Unions v. NLRC:
32
It is a well-settled rule that labor laws do not
authorize interference with the employer's
judgment in the conduct of his business. The
determination of the qualification and fitness of
workers for hiring and firing, promotion or
reassignment are exclusive prerogatives of
management. The Labor Code and its
implementing Rules do not vest in the Labor
Arbiters nor
in the different Divisions of the NLRC (nor in the
courts) managerial authority. The employer is
free to determine, using his own discretion and
business judgment, all elements of employment,
"from hiring to firing" except in cases of
unlawful discrimination or those which may be
provided
by law. There is none in the instant case.
29 PRIMO E. CAONG, JR., ALEXANDER
J. TRESQUIO, and LORIANOD. DALUYON,
Petitioners,- versus - AVELINO
REGUALOS, Respondent
Facts:
Petitioners Primo E. Caong, Jr. (Caong),
Alexander J. Tresquio(Tresquio), and Loriano D.
Daluyon (Daluyon) were employed by
respondent Avelino Regualos under a
boundary agreement, as drivers of his brand
new jeepneys. On November 4, 2001 a meeting
was conducted by respondent.During the said
meeting, respondent informed his employees,
includingpetitioners, to strictly comply with the
policy regarding remittances and warnedthem
that they would not be allowed to take out
amount of the boundary. Despite the said
reminder given by therespondent, Daluyon,
Tresquio and Caong failed to remit the entire
amount ofboundary on November 7, 8, 9, 2001,
respectively, and when they returnedfor work
after their rest day, respondent barred them
from driving because ofthe deficiency in the
boundary payment. They pleaded with the
respondent toallow them to drive but to no
avail. Thus, they filed an illegal dismissal
caseagainst the respondent. During the
mandatory conference, respondentmanifested
that petitioners were not dismissed and that
they could drivehis jeepneys once they paid
their arrears. Petitioners, however, refused to
doso. On March 31, 2003, the Labor Arbiter
decided the case in favor ofrespondent.
Petitioners appealed the decision to the
National Labor RelationsCommission (NLRC). In
its resolution] dated March 31, 2004, the
NLRCagreed with the Labor Arbiter and
dismissed the appeal. It also denied petitioners’
motion for reconsideration.
Forthwith, petitioners filed a petition for
certiorari with the CA.In its Decision dated

December 14, 2006, the CA found no
graveabuse of discretion on the part of the
NLRC. According to the CA, theemployer-
employee relationship of the parties has not
been severed, butmerely suspended when
respondent refused to allow petitioners to
drivethe jeepneys while there were unpaid
boundary obligations. The CA pointedout that
the fact that it was within the power of
petitioners to return to work isproof that
there was no termination of employment. The
condition thatpetitioners should first pay their
arrears only for the period of November 5-
9,2001 before they can be readmitted to work is
neither impossible norunreasonable if their
total unpaid boundary obligations and the need
to sustain the financial viability of the
employer’s enterprise—which wouldultimately
redound to the benefit of the employees—are
taken intoconsideration.The CA went on to rule
that petitioners were not denied their right
todue process. It pointed out that the case does
not involve a termination ofemployment;
hence, the strict application of the twin-notice
rule is notwarranted. According to the CA, what
is important is that petitioners weregiven the
opportunity to be heard. The meeting
conducted by respondent onNovember 4, 2001
served as sufficient notice to petitioners. During
the saidmeeting, respondent informed his
employees, including petitioners, to
strictlycomply with the policy regarding
remittances and warned them that theywould
not be allowed to take out the jeepneys if they
did not remit the fullamount of the boundary.
Issue:
Whether or not the petitioners were illegally
dismissed by the respondent andthat such
dismissal was made in violation of the due
process requirements ofthe law.
Held:
The petition is without merit.The Labor Arbiter,
the NLRC, and the CA uniformly declared that
petitionerswere not dismissed from
employment but merely suspended
pendingpayment of their arrears. We have no
reason to deviate from suchfindings.
Indeed, petitioners’ suspension cannot be
categorized as dismissal, considering that there
was no intent on the part of respondent to
sever theemployer-employee relationship
between him and petitioners. In fact, it
wasmade clear that petitioners could put an
end to the suspension if they only paytheir
recent arrears. As it was, the suspension
dragged on for years because of petitioners’
stubborn refusal to pay. It is acknowledged that
an employerhas free rein and enjoys wide
latitude of discretion to regulate allaspects of
employment, including the prerogative to instil
33
discipline onhis employees and to impose
penalties, including dismissal, ifwarranted, upon
erring employees.
This is a management prerogative. Indeed, the
manner in which management conducts its own
affairs to achieve its purpose is within the
management’s discretion.
The only limitation on theexercise
of management prerogative is that the
policies, rules, andregulations on work-related
activities of the employees must always be
fairand reasonable, and the corresponding
penalties, when prescribed,commensurate to
the offense involved and to the degree of
the infraction.
Petitioners’ concern relates to the
implementation of the policy, which is another
matter. A company policy must be implemented
in such manner aswill accord social justice and
compassion to the employee. In case
ofnoncompliance with the company policy, the
employer must consider thesurrounding
circumstances and the reasons why the
employee failed tocomply. When the
circumstances merit the relaxation of the
application of thepolicy, then its noncompliance
must be excused.In the case at bench, private
respondent, upon finding thatpetitioners had
consistently failed to remit the full amount of
theboundary, conducted a meeting on
November 4, 2001 informingthem to strictly
comply with the policy regarding their
remittancesand warned them to discontinue
driving if they still failed to remitthe full amount
of the boundary.
WHEREFORE, premises considered, the petition
is DENIED. TheCourt of Appeals Decision dated
December 14, 2006 and Resolution datedJuly
16, 2007 are AFFIRMED
30 PHILIPPINE TELEGRAPH AND TELEPHONE
CORPORATION vs. ALICIA LAPLANA, ET.AL
FACTS:
Alicia Laplana was the cashier of the Baguio City
Branch Office of the Philippine
Telegraph and Telephone Corporation. PT & T's
treasurer, Mrs. Alicia A. Arogo, directed Laplana
to transfer to the company's branch office at
Laoag City. Laplana refused the reassignment
and
proposed instead that qualified clerks in the
Baguio Branch be trained for the purpose. She
set
out her reasons therefor in her letter to Mrs.
Arogo. Mrs. Arogo reiterated her directive for
Laplana's transfer to the Laoag Branch, this time
in the form of a written Memorandum,
informing Laplana that she will be reassigned to
Laoag branch assuming the same position of
branch cashier and ordering her "to turn over

her accountabilities and files to Rose Ca ysido
who will be in charge of cashiering in Baguio."
Apparently Laplana was not allowed to resume
her work as Cashier of the Baguio Branch when
the time came. She thereupon wrote again to
Mrs. Arogo advising that the directed transfer
was unacceptable, reiterating the reasons
already given by her in her first letter. Laplana
later received a telegram from Mrs. Arogo
requiring her to report to Manila for a new job
assignment, that failure to report shall
constitute abandonment of her job, which
might constrain them to impose disciplinary
actions against her. Laplana in turn sent a telex
message to Mrs. Arogo refusing the job offer in
Manila and requested that she be retrenched
instead. Termination of Laplana's employment
on account of retrenchment thereupon
followed. Laplana then filed a complaint against
PT & T its "Baguio Northwestern Luzon Branch,
Baguio City," and Paraluman Bautista, Area
Manager. In her complaint, she set forth
substantially the facts just narrated, and
alleged, as right of action, that "when she
insisted on her right of refusing to be
transferred, the Defendants made good its
warning by terminating her services on May 16,
1984 on alleged ground of "retrenchment,"
although the truth is, she was forced to be
terminated and that there was n o ground at all
for
the retrenchment;" that the company's "act of
transferring is not only without any valid ground
but also arbitrary and without any purpose but
to harass and force . . . (her) to eventually
resign." In answer, the defendants alleged that
Laplana "was being transferred to Laoag City
because of ncrease in sales due to the
additional installations of vodex line and the
company
"was exercising management prerogatives in
transferring complainant . . . and there is no
showing that this exercise was arbitrarily and
whimsically done;"
ISSUE:
WON Laplana was illegally dismissed.
HELD:
NO. In this case, the employee (Laplana) had to
all intents and purposes resigned from
her position. She had unequivocally asked that
she be considered dismissed, herself suggesting
the reason therefor –– retrenchment. When so
dismissed, she accepted separation pay. On the
other hand, the employer has not been shown
to be acting otherwise than in good faith, and in
the legitimate pursuit of what it considered its
best interests, in deciding to transfer her to
another office. There is no showing whatever
34
that the employer was transferring Laplana to
another work place, not because she would be
more useful there, but merely "as a subterfuge
to rid . . . (itself) of an undesirable worker," or
"to penalize an employee for . . . union
activities.
. . ." The employer was moreover not unmindful
of Laplana's initial plea for reconsideration of
the directive for her transfer to Laoag; in fact, in
response to that plea not to be moved to the
Laoag Office, the employer opted instead to
transfer her to Manila, the main office, offering
at
the same time the normal benefits attendant
upon transfers from an office to another. The
situation here presented is of an employer
transferring an employee to another office in
the
exercise of what it took to be sound business
judgment and in accordance with pre-
determined
and established office policy and practice, and
of the latter having what was believed to be
legitimate reasons for declining that transfer,
rooted in considerations of personal
convenience
and difficulties for the family. Under these
circumstances, the solution proposed by the
employee herself, of her voluntary termination
of her employment and the delivery to her of
corresponding separation pay, would appear to
be the most equitable. Certainly, the Court
cannot accept the proposition that when an
employee opposes his employer's decision to
transfer him to another work place, there being
no bad faith or underhanded motives on the
part of either party, it is the employee's wishes
that should be made to prevail. In adopting that
proposition by way of resolving the controversy,
the respondent NLRC gravely abused its
discretion.
31 BLUE DAIRY CORPORATION vs. NLRC and
ELVIRA R. RECALDE
FACTS:
BLUE DAIRY CORPORATION, engaged in the
processing of dairy and chocolate products,
juices and vegetables, hired Elvira R. Recalde as
a food technologist in its laboratory. Recalde
accompanied Production Manager Editha N.
Nicolas in conductin g a sensory evaluation of
vanilla syrup in one of the outlets of a client.
While on their way back to the office a post fell
on
the company vehicle they were riding due to a
raging typhoon damaging the vehicle's
windshield and side mirror. Later, Recalde was
transferred from the laboratory to the
vegetable
processing section where she cored lettuce,

minced and repacked garlic and performed
similar
work, and was restricted from entering the
laboratory. She was unhappy. She considered
her
new job humiliating and menial. She later
stopped reporting for work. The following day
she
sent a letter to Blue Dairy Corporation that she
will no longer report for work because of their
drastic and oppressive action. Recalde then filed
a complaint against Blue Dairy Corporation for
constructive dismissal and non-payment of
premium pay. Petitioners contended that
Recalde
was given a less sensitive assignment outside of
the laboratory on account of her dishonesty
which resulted in loss of trust and confidence.
They seriously took into account the result of
the
investigation that Recalde was actually scouting
for a new residence using company vehicle
without prior permission from the General
Manager and during office hours, in violation of
par.
IV, subpars. B and G, of the company's General
Rules and Regulation, to that effect such act of
dishonesty could even have merited dismissal
from employment had they adhered simply to
jurisprudential rule but took into account
instead the spirit of the approaching Christmas
season. The Labor Arbiter rule that petitioners
were guilty of constructive dismissal as he
found
the justification for Recaldes transfer
unreasonable. Petitioners insist that the
transfer of
Recalde from the laboratory to the vegetable
processing section was effected i n the exercise
of
management prerogative.
ISSUE:
WON Recaldes transfer was unreasonable.
HELD:
YES. It is the prerogative of management to
transfer an employee from one office to
another within the business establishment
based on its assessment and perception of the
employees qualifications, aptitudes and
competence, and in order to ascertain where he
can
function with maximum benefit to the
company. This is a privilege inherent in the
employers
right to control and manage his enterprise
effectively. Th e freedom of management to
conduct
its business operations to achieve its purpose
cannot be denied. But, like other rights, there
are
35
limits thereto. The managerial prerogative to
transfer personnel must be exercised without
grave abuse of discretion, bearing in mind the
basic elements of justice and fair play. Having
the
right should not be confused with the manner in
which that right is exercised. Thus, it cannot be
used as a subterfuge by the employer to rid
himself of an undesirable worker. In particula r,
the
employer must be able to show that the
transfer is not unreasonable, inconvenient or
prejudicial to the employee; nor does it involve
a demotion in rank or a diminution of his
salaries, privileges and other benefits. Should
the employer fail to overcome this burden of
proof, the employees transfer shall be
tantamount to constructive dismissal, which has
been
defined as a quitting because continued
employment is rendered impossible,
unreasonable or
unlikely; as an offer involving a demotion in
rank and diminution in pay. Likewise,
constructive
dismissal exists when an act of clear
discrimination, insensibility or disdain by an
employer has
become so unbearable to the employee leaving
him with no option but to forego with his
continued employment In the present case,
petitioners failed to justify Recaldes transfer
from
the position of food technologist in the
laboratory to a worker in the vegetable
processing
section. In petitioners view, she was dishonest
such that they lost their trust and confidence i n
her. Yet, it does not appear that Recalde was
provided an opportunity to refute the reason
for
the transfer. Nor was Recalde notified in
advance of her impending transfer which was,
as we
shall elucidate later, a demotion in rank. In Gaco
v. NLRC we noted - While due process required
by law is applied in dismissals, the same is also
applicable to demotions as demotions likewise
affect the employment of a worker whose right
to continued employment, under the same
terms and conditions, is also protected by law.
Moreover, considering that demotion is, like
dismissal, also a punitive action, the employee
being demoted should, as in cases of dismissals,
be given a chance to contest the same.
32 PHARMACIA and UPJOHN, INC. vs. RICARDO
P. ALBAYDA, JR
FACTS:

Ricardo P. Albayda, Jr. was an employee of
Upjohn, Inc. in 1978 and continued working
there until 1996 when a merger between
Pharmacia and Upjohn was created. After the
merger,
Abayda was designated by Pharmacia and
Upjohn (Pharmacia) as District Sales Manager
assigned to District XI in the Western Visayas
area, where respondent settled in Bacolod City.
A ISSUE:
district meeting was held in Makati City wherein
one of the topics discussed was the district
territorial configuration for the new marketing
and sales direction. Later, Abayda received a
Memorandum announcing the sales force
structure and that he was reassigned as District
Sales
Manager to District XII in the Northern
Mindanao area. Abayda questioned his transfer
from
District XI to District XII, that he has always been
assigned to the Western Visayas area and that
he felt that he could not improve the sales of
products if he was assigned to an unfamiliar
territory. He then concluded that his transfer
might be a way for his managers to dismiss him
from employment. He added that he could not
possibly accept his new assignment in Cagayan
de Oro City because he will be dislocated from
his family; his wife runs an established business
in Bacolod City; his eleven- year-old daughter is
studying in Bacolod City; and his two-year-old
son is under his and his wifes direct care.
Petitioner then deny the request of Abayda to
be
reassigned to the Western Visayas area. It
explained that the factors used in determining
assignments of managers are to maximize
business opportunities and growth and
development
of personnel. Abayda likened his transfer to
Mindanao as a form of punishment. He argued
that
Chu failed to face and address the issues he
raised regarding the loss of his family income,
the
additional cost of housing and other additional
expenses he will incur in Mindanao. Abayda was
then given an option to be assigned in Metro
Manila and is entitled to Relocation Benefits
and
Allowance pursuant to the companys Benefits
Manual and was then directed to report for
work
in Manila . However, Abayda did not replied to
their last memorandum and was warned that
the same would be a final notice for him to
report for work in Manila within 5 working days
from receipt of the memo; otherwise, his
services will be terminated on the basi s of
being
absent without official leave (AWOL). A
36
memorandum was then sent notifying Abayda
of the
company’s decision to terminate his services
after he repeatedly refused to report for work
despite due notice, Abayda filed a Complaint for
constructive di smissal but was later dismissed.
WON Abayda’s reassignment was a valid
exercise of petitioners management
prerogative.
HELD:
YES. Jurisprudence recognizes the exercise of
management prerogative to transfer or
assign employees from one office or area of
operation to another, provided there is no
demotion in rank or diminution of salary,
benefits, and other privileges, and the action is
not
motivated by discrimination, made in bad faith,
or effected as a form of punishment or
demotion without sufficient cause. To
determine the validity of the transfer of
employees, the
employer must show that the transfer is not
unreasonable, inconvenient, or prejudicial to
the
employee; nor does it involve a demotion in
rank or a diminution of his salaries, privile ges
and
other benefits. Should the employer fail to
overcome this burden of proof, the employee's
transfer shall be tantamount to constructive
dismissal. Petitioners posture that the transfer
of
respondent was a valid exercise of a legitimate
management prerogative to maximize business
opportunities, growth and development of
personnel and that the expertise of respondent
was
needed to build the companys business in
Cagayan de Oro City which dismally performed
in
1999, that the reassignment of respondent was
not a demotion as he will also be assigned as a
District Sales Manager in Mindanao or in Metro
Manila and that the notice of his transfer did
not indicate that his emoluments will be
reduced. He was even entitled to Relocation
Benefits
and Allowance in accordance with petitioners
Benefits Manual. The allegation of complainant
that his income will be affected because his wife
who is doing business in Bacolod City and
earns P50,000.00, should not be taken in
consideration of his transfer. What is
contemplated
here is the diminution of the salary of the
complainant but not his wife. Besides, even if

complainant may accept his new assignment in
Cagayan de Oro or in Metro Manila, his wife
may still continue to do her business in Bacolod
City. Anyway, Bacolod Ci ty and Manila is just
one (1) hour travel by plane. Lastly, in
respondents contract of employment, he
agreed to be
assigned to any work or workplace as may be
determined by the company whenever the
operations require such assignment.
33 ZEL T. ZAFRA, vs. CA, PLDT
FACTS:
Zel T. Zafra was hired by PLDT as Operations
Analyst II while Edwin B. Ecarma was hired
as Junior Operations Analyst I. Both were
regular rank-and-file employees assigned at the
Regional Operations and Maintenance Control
Center (ROMCC) of PLDTs Cebu Provincial
Division. Petitioners were chosen for the OMC
Specialist and System Software Acceptance
Training Program in Germany. They left for
Germany and while they were in Germany, a
certain
Mr. R. Relucio, SwitchNet Division Manager,
requested advice, through an inter-office
memorandum, from the Cebu and Davao
Provincial Managers if any of the training
participants
were interested to transfer to the Sampaloc
ROMCC to address the operational
requirements
therein. Upon petitioners return from Germany,
they were informed about the memorandum.
They balked at the idea, but PLDT, through an
inter-office memorandum proceeded to
transfer
petitioners to the Sampaloc ROMCC. Petitioners
left Cebu for Manila to air their grievance to
PLDT and to seek assistance from their union
head office in Mandaluyong. PLDT ordered
petitioners to report for work but they asked for
a deferment to February 1, 1996. Petitioners
reported for work at the Sampaloc office on
January 29, 1996. Meanwhile PLDT moved the
effectivity date of their transfer to March 1,
1996. On March 13, 1996, petitioners again
appealed to PLDT to no avail. And, because all
their appeals fell on deaf ears, petitioners, while
in Manila, tendered their resignation letters.
Petitioners then filed a com plaint for alleged
constructive dismissal and non-payment of
benefits under the Collective Bargaining
Agreement
PLDT averred that petitioners agreed to accept
any assignment within PLDT in their application
for employment and also in the undertaking
they executed prior to their training in
Germany.
37
ISSUE:
WON Petitioners transfer was a valid exercise of
management prerogative.
HELD:
NO. The fact that petitioners, in their
application for employment agreed to be
transferred or assigned to any branch should
not be taken in isolation, but rather in
conjunction
with the established company practice in PLDT.
The standard operating procedure in PLDT is to
inform personnel regarding the nature and
location of their future assignments after
training
abroad. This prevailing company practice is
evidenced by the inter-office memorandum.
Under
these circumstances, the need for the
dissemination of notice of transfer to
employees before
sending them abroad for training should be
deemed necessary and later to have ripened
into a
company practice or policy that could no longer
be peremptorily withdrawn, discontinued, or
eliminated by the employer. Fairness at the
workplace and settled expectations among
employees require that we honor this practice
and commend this policy. Needless to say, had
they known about their pre-planned
reassignments, petitioners could have declined
the foreign
training intended for personnel assigned to the
Manila office. The lure of a foreign trip is
fleeting while a reassignment from Cebu to
Manila entails major and permanent
readjustments
for petitioners and their families. The transfer of
an employee ordinarily lies within the ambit of
management prerogatives. However, a transfer
amounts to constructive dismissal when the
transfer is unreasonable, inconvenient, or
prejudicial to the employee, and involves a
demotion in rank or diminution of salaries,
benefits, and other privileges. In the present
case,
petitioners were unceremoniously transferred,
necessitating their families relocation from
Cebu to Manila. This act of management
appears to be arbitrary without the usual notice
that
should have been done even prior to their
training abroad. From the employees viewpoint,
such action affecting their families are
burdensome, economically and emotionally. It
is no
exaggeration to say that their forced transfer is
not only unreasonable, inconvenient, and
prejudicial, but to our mind, also in defiance of

basic due process and fair play in employment
relations.
34 PHILIPPINE TELEGRAPH & TELEPHONE
CORPORATION vs. CA, NLRC, et.al
FACTS:
The petitioner is a domestic corporation
engaged in the business of providing telegraph
and communication services thru its branches
all over the country. After conducting a series of
studies regarding the profitability of its retail
operations, it came up with a Relocation and
Restructuring Program designed to (a) sustain
its (PT&Ts) retail operations; (b) decongest
surplus workforce in some branches, to
promote efficiency and productivity; (c) lower
expenses
incidental to hiring and training new personnel;
and (d) avoid retrenchment of employees
occupying redundant positions. Cristina Rodiel,
Jesus Paracale, Romeo Tee, Benjamin
Lakandula, Avelino Acha, Ignacio Dela Cerna and
Guillermo Demigillo received separate letters
from the petitioner, giving them the option to
choose the branch to which they could be
transferred. Thereafter they were directed to
relocate to their new PT&T Branches. They were
directed to report to their respective relocation
assignments. Meanwhile, the petitioner offered
benefits/allowances to those employees who
would agree to be transferred under its new
program. Moreover, the employees who would
agree to the transfers would be considered
promoted. However, private respondents
rejected the petitioners offer. Petitioner sent
letters
to the private respondents requiring them to
explain in writing why no disciplinary action
should be taken against them for their refusal
to be transferred/relocated. Private
respondents
explained that: the transfers imposed by the
management would cause enormous difficulties
on the individual complainants. For one, their
new assignment involve distant places which
would require their separation from their
respective families. Dissatisfied with this
explanation,
the petitioner considered the private
respondents refusal as insubordination and
willful
disobedience to a lawful order; hence, the
private respondents were dismissed from work.
Respondents then filed their respective
complaints against the petitioner declaring that
their
refusal to transfer could not possibly give rise to
a valid dismissal on the ground of willful
disobedience, as their transfer was prejudicial
and inconvenient; thus unreasonable. Petitioner
38
alleged that the transfers were made in the
lawful exercise of its management prerogative
and
were done in good faith. The transfers were
aimed at decongesting surplus employees and
detailing them to a more demanding branch.
ISSUE:
WON private respondents transfers were made
in the lawful exercise of its management
prerogative. WON it was transfer or promotion.
HELD:
NO. The increase in the respondents
responsibility can be ascertained from the scalar
ascent of their job grades. With or without a
corresponding increase in salary, the respective
transfer of the private respondents were in fact
promotions, following the ruling enunciated in
Homeowners Savings and Loan Association, Inc.
v. NLRC: [P]romotion, as we defined in Millares
v, Subido, is the advancement from one position
to another with an increase in du ties and
responsibilities as authorized by law, and
usually accompanied by an increase in salary.
Apparently, the indispensable element for there
to be a promotion is that there must be an
advancement from one position to another or
an upward vertical movement of the employees
rank or position. Any increase in salary should
only be considered incidental but never
determinative of whether or not a promotion is
bestowed upon an employee. This can be
likened to the upgrading of salaries of
government employees without conferring
upon the, the
concomitant elevation to the higher positions. ]
An employee cannot be promoted, even if
merely as a result of a transfer, without his
consent. A transfer that results in promotion or
demotion, advancement or reduction or a
transfer that aims to lure the employee away
from
his permanent position cannot be done without
the employees consent. There is no law that
compels an employee to accept a promotion for
the reason that a promotion is in the nature of
a gift or reward, which a person has a right to
refuse. Hence, the exercise by the private
respondents of their right cannot be considered
in law as insubordination, or willful
disobedience of a lawful order of the employer.
As such, there was no valid cause for the
private respondents dismissal.
35 PHILIPPINE INDUSTRIAL SECURITY AGENCY
CORPORATION vs. VIRGILIO DAPITON & NLRC
FACTS:

Petitioner hired Dapiton as a security guard. His
initial assignment was at PCIBank in
Caloocan City. During his tour of duty at
PCIBank, Dapiton had a heated argument with
his
fellow security guard. The incident almost led to
a shootout. Respondent was suspended from
work for seven (7) days. Petitioner alleged that
respondent did not serve his suspension and
instead went on a leave of absence.
Nonetheless, he was assigned at the BPI Family
Bank in
Navotas when he reported back for duty.
Allegedly, respondent refused to accept his
assignment. Respondent was assigned at Sevilla
Candle Factory in Malabon. Three (3) weeks
later, he abandoned his post and went on
absence without leave (AWOL). Respondent
was
given another assignment at Security Bank and
Trust Company. He was required to report for
an interview and to undergo a neurological
examination. Respondent refused and allegedly
again went on AWOL. Petitioner sent a telegram
to respondent to report to its office for a
conference. Respondent did not show up.
Instead, on April 22, 1994, respondent filed the
present illegal dismissal case. Respondent
denied petitioners allegations. He claimed that
after
he served his suspension, he was assigned at
BPI Family Bank in Navotas. He accepted the
new
post. However, after a short period, he was
relieved and was transferred to the Mercury
Drugstore in Grand Central, Kalookan City.
Again, after a brief tour of duty, he was
relieved. He
was posted at Sevilla Candle Factory. While on
duty, he witnessed some shabu dealers doing
their illegal trade. Fearful for his life, he left his
post and requested petitioner to transfer him to
another post. He admitted that his assignment
at Security Bank did not materialize for he failed
to take the neurological test. He explained he
could not pay the examination fee in the
amount
of P250.00. He asked petitioner to pay the said
amount but it refused. Respondent alleged that
thereafter, he was reduced to a mere reliever of
absent security guards and was frequently
transferred from one post to another. His last
assignment was at the Philippine Savings Bank
(PSB) in Makati. It lasted for only one (1) day.
Since April 13, 1994, he was not given any
assignment. He reported to petitioners office
regularly for his posting but to no avail.
Consequently, on April 22, 1994, he sued
petitioner for illegal dismissal and asked for
separation pay.
ISSUE:
39
WON petitioner was constructively dismissed.
HELD:
YES. Constructive dismissal is defined as a
quitting because continued employment is
rendered impossible, unreasonable or unlikely;
as an offer involving a demotion in rank and
diminution in pay. On the other hand,
abandonment of work means a clear, deliberate
and
unjustified refusal of an employee to resume his
employment and a clear intention to sever the
employer-employee relationship. Abandonment
is incompatible with constructive dismissal.
In the case at bar, we hold that there was no d
eliberate intent on the part of the respondent
to
abandon his employment with petitioner. The
clear evidence that respondent did not wish to
be separated from work is that, after his last
assignment he reported to petitioners office
regularly for a new posting but to no avail. He
then lost no time in filing the illegal dismissal
case. An employee who forthwith takes steps to
protest his layoff cannot by any logic be said to
have abandoned his work. Moreover,
respondent's failure to assume his posts in Sevi
lla Candle
Factory and the Security Bank and Trust
Company is not without reason. He explained
that he
requested for a transfer of assignment from
Sevilla Candle Factory because he feared for his
life
after he witnessed shabu dealers doing their
business in his workstation. As regards the
Security Bank assignment, he failed to take the
neurological test for lack of money to pay for
the examination fee. Petitioner cannot
overinflate the significance of the fact that
respondent
often absented himself from work without an
approved leave. It is a settled rule that mere
absence or failure to report for work is not
tantamount to abandonment of work. Even the
failure to report for work after a notice to
return to work has been served does not
necessarily
constitute abandonment nor does it bar
reinstatement. The burden of proving that
respondent
has abandoned his job rests with petitioner.
However, petitioner failed miserably to
discharge
the burden. The records show no memoranda
concerning respondents alleged unauth orized
absences and refusal to work. Even the
telegram petitioner sent to respondent after he
allegedly went on AWOL merely required
respondent to report to its office for a
conference but
did not mention anything about his absences.

We find it incredible that petitioner did not
even
write respondent on his alleged refusal to
accept the posts assigned to him and the
abandonment of his posts considering that such
acts constitute willful disobedience and gross
neglect of duty which are valid grounds for
dismissal.
36 CONSOLIDATED FOOD
CORPORATION/PRESIDENT JOHN GOKONGWEI,
et.al. vs. NLRC AND
WILFREDO M. BARON
FACTS:
Consolidated Food Corporation (CFC) is a
domestic corporation engaged in the sale of
food products. Wilfredo M. Baron was a Bonded
Merchandiser at CFC, was thereafter assigned
as Acting Section Manager for Northern Luzon
(NL) — 2 Area covering Baguio City, La Trinidad
and Benguet. He was tasked, among others, to
deliver for sale CFC Presto Ice Cream Products
to
stores and outlets in Baguio City, make
inventories thereof, replace or retrieve bad
orders or
damaged ice cream stocks, and to handle funds
in relation to his functions. A killer earthquake
hit Baguio City causing severe damage in the
area. Power lines were cut off and the roads to
and from the city became impassable. Hence,
the Presto ice cream products in the possession
of customers and sales outlets in Baguio were
damaged and became bad orders. Unit Mgr.
Abalos issued an Action Plan which provided
among others the cut-off audit of Wilfredo M.
Baron to determine accountabilities that should
be liquidated on account of non -sales
operations. The Field Audit Group of CFC
conducted an audit on the accountabilities of
Baron
that reflected a shortage of P1,985.12 in the
cash purchase fund and expense allowance
fund.
Unit Mgr. Abalos requested a field audit of the
area to further evaluate private respondent's
exposure, particularly on sales account, freezer
and bad orders stocks. Baron was then directed
to temporarily stop routing in his assigned areas
until such time that the complete audit of the
customers' bad orders stocks within the area
had been finished and was ordered to turnover
his accountabilities Calura, who is to take over
the route operation of Baguio City as Baron’s
presence would be required in the audit being
conducted on bad orders stocks caused by the
earthquake. A memorandum was sent to Baron
informing him of the discrepancies appearing in
the audit of accountabilities and giving him
opportunity to explain his side in writing.
40
Meanwhile, his normal sales route was
temporarily suspended until further notice but
he was
instructed to report daily to the head office in
Pasig City. Baron submitted his answer. Private
respondent was required to submit his written
explanation on the poi nts indicated within a
period of seven (7) days from receipt of the
memorandum and was also requested to
explain
why no additional action should be taken
against him for his continued absence.
Petitioners
sent notice to private respondent requiring him
to explain within ten (10) days why he should
not be dismissed from the service for having
been absent without leave (AWOL). Baron sent
a
letter to petitioners stating that he was advised
by his doctor not to report for work because he
was sick and would have to take his medication.
Baron then filed a complaint with the Labor
Arbiter for constructive dismissal, non-payment
of salaries, commissions, service incentive
leave pay and allowances.
HELD:
A valid exercise of management prerogative is
one which covers hiring, work
assignment, working methods, time, place and
manner of work, tools to be used, processes to
be followed, supervision of workers, working
regulations, transfer of employees, work
supervision, lay-off of workers and the
discipline, dismissal and recall of workers.
Except as
provided for or limited by special laws,
employers are free to regulate, according to
their own
discretion and judgment, all aspects of
employment. Re-assignments made by
management
pending investigation of irregularities allegedly
committed by an employee fall within the ambit
of management prerogative. The purpose of
reassignments is no different from that of
preventive suspension which management could
validly impose as a disciplinary measure for the
protection of the company's property pending
investigation of any alleged malfeasance or
misfeasance committed by the employee. The
audit result also showed that Baron failed to
account for his expense allowance fund.
Although Baron had given his written
explanation,
petitioners found it unsatisfactory and his
defense inexcusable. While there may be no
direct
evidence to prove that Baron actually and
deliberately committed fraud or
misappropriation of
Company funds, there was substantial proof of

the existence of irregularities committed by him
in the use of the funds. We have ruled that
substantial proof, and not clear and convincing
evidence or proof beyond reasonable doubt, is
sufficient as basis for the imposition of any
disciplinary action upon the employee. The
standard of substantial evidence is satisfied
where
the employer has reasonable ground to believe
that the employee is responsible for the
misconduct and his participation therein
renders him unworthy of the trust and
confidence
demanded by his position.
We find that petitioners' acts of conducting
audits and investigation on the alleged
irregularities committed by private respondent
and in reassigning him to another place of work
pending the results of the investigation were
based on valid and legitimate grounds. As such,
these acts of management cannot amount to
constructive dismissal. It is worthy to note that
petitioners gave Baron every opportunity to
raise his defense and fully explain the
discrepancies in the funds in his possession. In
fact private respondent i nformed petitioners
that he would be returning for work on 5 March
1991 after his sick leave. But instead of doing
so, he filed a complaint for constructive
dismissal before the Labor Arbiter.
37 Josephine Ruiz vs Wendel Osaka Realty
Facts:
Petitioner was hired as secretary to respondent
(Delfin), the president of DMWAI there after
appointed as executive assistant to the
president of respondent WORC. Sometime in
2002, the BIR informed Delfin of the tax
deficiency allegations against his companies. On
November 2002, he discovered that “various
very important files”11 of DMWAI were missing.
He required the employees to answer a
questionnaire but the petitioner failed to
comply. ThusDelfin sent a letter17 to petitioner
informing her that she would be placed under a
30-day preventive suspension and another 15
days with pay. After 45 day period, she reported
back to work and was transferred to the Cavite
city branch. Thereafter, petitioner amended her
Complaint for illegal suspension to include
constructive illegal dismissal.
CA ruled, that the transfer of petitioner was
justified, considering the gravity of the offense
she was being charged with.41
Issue:
w/n the transfer is valid.
Held:
41
Yes. An employer has the inherent right to
transfer or assign an employee in pursuance of
its legitimate business interest, subject only to
the condition that the move be not motivated
by bad faith. Having lost his trust and
confidence in petitioner, respondent Delfin had
the right to transfer her to ensure that she
would no longer have access to the companies’
confidential files. Although it is true that
petitioner has yet to be proven guilty,
respondents had the authority to reassign her,
pending investigation.
38 WENIFREDO FARROL vs. CA and RCPI
FACTS:
Wenifredo Farrol was employed as station
cashier at RCPIs Cotabato City station. RCPIs
district manager in Cotabato City informed their
main office that "Peragram funds"[ from said
branch were used for the payment of
retirement benefits of five employees. Farrol
verified as
correct RCPIs Field Auditors report that there
was a shortage of P50,985.37 in their branchs
Peragram, Petty and General Cash Funds.
Consequently, petitioner was required by the
Field
Auditor to explain the cash shortage within 24
hours from notice. The next day, petitioner paid
to RCPI P25,000.00 of the cash shortage. RCPI
required petitioner to explain why he should
not
be dismissed from employment. Two days
thereafter, petitioner wrote a letter to the Field
Auditor stating that the missing funds were
used for the payment of the retirement benefits
earlier referred to by the branch manager and
that he had already paid P25,000.00 to RCPI.
After making two more payments of the cash
shortage to RCPI, petitioner was informed by
the
district manager that he is being placed under
preventive suspension. Thereafter, he again
paid
two more sums on different dates to RCPI
leaving a balance of P6,995.37 of the shortage.
RCPI
claims that it sent a letter to petitioner
informing him of the termination of his services
on the
ground that the position of Station Cashier is
one which requires utmost trust and
confidence.
Unaware of the termination letter, Farrol
requested that he be reinstated considering
that the
period of his preventive suspension had
expired. He likewise manifested to RCPI his
willingness
to settle his case provided he is given his

retirement benefits. However, RCPI informed
petitioner that his employment had already
been terminated earlier
HELD:
In cases involving the illegal termination of
employmen t, it is fundamental that the
employer must observe the mandate of the
Labor Code, i.e., the employer has the burden
of
proving that the dismissal is for a cause
provided by the law[ and that it afforded the
employee
an opportunity to be heard and to defen d
himself The employer must comply with the
twin
requirements of two notices and hearing. The
first notice is that which apprises the employee
of the particular acts or omissions for which his
dismissal is sought, and after affording the
employee an opportunity to be heard, a
subsequent notice informing the latter of the
employers decision to dismiss him from work.
As regards the first notice, RCPI simply required
petitioner to "explain in writing why he failed to
account" for the shortage and demanded that
he restitute the same. On the assumption that
the foregoing statement satisfies the first
notice,
the second notice sent by RCPI to petitioner
does not "clearly" cite the reasons for the
dismissal,
contrary to the requirements set by the above-
quoted Section 6 of Book V, Rule XIV of the
Omnibus Rules. RCPIs dismissal notice reveals
that it merely stated a conclusion to the effect
that the withholding was deliberately done to
hide alleged malversation or misappropriation
without, however, stating the facts and
circumstances in support thereof. It further
mentioned
that the position of cashier requires utmost
trust and confidence but failed to allege the
breach
of trust on the part of petitioner and how the
alleged breach was committed. On the
assumption that there was indeed a breach,
there is no evidence that petitioner was a
managerial employee of respondent RCPI. It
should be noted that the term "trust and
confidence" is restricted to managerial
employees. It may not even be presumed that
when
there is a shortage, there is also a
corresponding breach of trust. Cash shortages
in a cashiers
work may happen, and when there is no proof
that the same was deliberately done for a
fraudulent or wrongful purpose, it cannot
constitute breach of trust so as to render the
dismissal from work invalid. Assuming further
that there was breach of trust and confidence, it
42
appears that this is the first infraction
committed by petitioner. Although the
employer has the
prerogative to discipline or dismiss its employee,
such prerogative cannot be exercised
wantonly, but must be controlled by substantive
due process and tempered by the fundamental
policy of protection to labor enshrined in the
Constitution. Infractions committed by an
employee should merit only the corresponding
sanction demanded by the circumstances. The
penalty must be commensurate with the act,
conduct or omission imputed to the employee
and
imposed in connection with the employers
disciplinary authority. RCPI alleged that under
its
rules, petitioners infraction is punishable by
dismissal. Petitioner has no previous record in
his
twenty-four long years of service - this would
have been his first offense. The Court thus holds
that the dismissal imposed on petitioner is
unduly harsh and grossly disproporti onate to
the
infraction which led to the termination of his
services. A lighter penalty would have been
more
just, if not humane. In any case, petitioner paid
back the cash shortage in his accounts.
Considering, however, that the latter is about to
retire or may have retired from work, it would
no longer be practical to order his
reinstatement.
39 MANILA WATER COMPANY, Petitioner,vs.
CARLITO DEL ROSARIO, Respondent.
PRINCIPLE:
The grant of separation pay to a dismissed
employee is determined by the cause of the
dismissal. The years of service may determine
how much separation pay may be awarded. It
is, however, not the reason why such pay
should be granted at all.
FACTS:
 Del Rosario was employed as Instrument
Technician by Metropolitan Waterworks and
Sewerage System (MWSS). MWSS was
reorganized pursuant to Republic Act No. 8041
or the National Water Crisis Act of 1995, and its
implementing guidelines − Executive Order No.
286.
 Because of the reorganization, Manila Water
absorbed some employees of MWSS including
Del Rosario.
 Manila Water discovered that 24 water
meters were missing in its stockroom. Upon
initial investigation, it appeared that Del Rosario
and his co-employee, Danilo Manguera, were

involved in the pilferage and the sale of water
meters to the company’s contractor.
 When Del Rosario was directed to explain, he
confessed his involvement in the act charged
and pleaded for forgiveness, promising not to
commit similar acts in the future.
 During the formal investigation Del Rosario
was found responsible for the loss of the water
meters and therefore liable for violating Section
11.1 of the Company’s Code of Conduct. Hence,
the dismissal of Del Rosario from employment.
 This prompted Del Rosario to fie an action for
illegal dismissal claiming that his severance
from employment is without just cause. Del
Rosario averred in his position paper that his
admission to the misconduct charged was not
voluntary but was coerced by the company.
Such admission therefore, made without the
assistance of a counsel, could not be made basis
in terminating his employment.
 Manila Water answered and pointed out that
he was involved in the taking of the water
meters from the company’s stock room and of
selling these to a private contractor for personal
gain. Invoking Section 11.1 of the Company’s
Code of Conduct, Manila Water averred that
such act of stealing the company’s property is
punishable by dismissal. They further averred
that Del Rosario himself confessed his
involvement to the loss of the water meters not
only in his letter-explanation, but also during
the formal investigation, and in both instances,
pleaded for his employer’s forgiveness.
**Labor Arbiter - dismissing for lack of merit the
complaint fied by Del Rosario
who was, however, awarded separation pay.
According to the Labor Arbiter, Del
Rosario’s length of service for 21 years, without
previous derogatory record,
warrants the award of separation pay.
----------- **Separation pay equivalent to one-
half (1/2) month’s salary for every year of
service based on his basic salary Php 11,244.00
at the time of his dismissal. This shall be
computed from [1 August 1997] up to June
2000, the total amount of which is Php
118,062.00.
**Manila Waters fied a MR to NLRC however, it
is denied.
**CA – affied the granting of Separation Pay by
the Labor Arbiter
ISSUE:
WON Respondent Del Rosario is entitled for
Separation Pay
RULING:
No. “As a general rule, an employee who has
been dismissed for any of the just causes
enumerated under Article 282 of the Labor
Code is not entitled to a separation pay.”
However, in exceptional cases, separation pay
43
has been granted to a legally dismissed
employee as an act of “social justice” or on
“equitable grounds.” In either case, “it is
required that the dismissal (1) was not for
serious misconduct; and (2) did not reflct on the
moral character of the employee.”
Citing the leading case of PLDT v. NLRC (247
Phil. 641, 1988), the Supreme Court laid down
the rule “that separation pay shall be allowed as
a measure of social justice only in the instances
where the employee is validly dismissed for
causes other than serious misconduct reflcting
his moral character…”
In subsequent cases, the high tribunal
“expanded the exclusions and elucidated that
separation pay shall be allowed as a measure of
social justice only in instances where the
employee is validly dismissed for causes other
than serious misconduct, willful disobedience,
gross and habituals neglect of duty, fraud or
willful breach of trust, commission of a crime
against the employer or his family, or those
reflcting on his moral character…”
Although long years of service might generally
be considered for the award of separation
benefis or some form of fiancial assistance to
mitigate the effcts of termination, this case is
not the appropriate instance for generosity
under the Labor Code nor under our prior
decisions. The fact that private respondent
served petitioner for more than twenty years
with no negative record prior to his dismissal, in
our view of this case, does not call for such
award of
benefis, since his violation reflcts a regrettable
lack of loyalty and worse, betrayal of the
company. If an employee's length of service is
to be regarded as a justifiation for moderating
the penalty of dismissal, such gesture will
actually become a prize for disloyalty, distorting
the meaning of social justice and undermining
the effrts of labor to cleanse its ranks of
undesirables.
The grant of separation pay to a dismissed
employee is determined by the cause of the
dismissal. The years of service may determine
how much separation pay may be awarded. It
is, however, not the reason why such pay
should be granted at all.
In sum, we hold that the award of separation
pay or any other kind of fiancial assistance to
Del Rosario, under the nomenclature of
compassionate justice, is not warranted in the
instant case. A contrary rule would have the
effct of rewarding rather than punishing an
erring employee, disturbing the noble concept
of social justice.
40 Salvador O. Mojar vs Agro Commercial
Security Service Agency
Facts:

Petitioners were employed as security guards
by respondent and assigned to the various
branches of the Bank of Commerce in
Pangasinan, La Union and Ilocos Sur. Petitioners
were relieved from their respective posts and
directed to report to their new assignments in
Metro Manila. They, however, failed to report
for duty in their new assignments. On 15
February 2005, petitioners filed a Complaint for
illegal dismissal against respondent and the
Bank of Commerce, Dagupan Branch.
Petitioners claimed, among others, that their
reassignment was a scheme to sever the
employer-employee relationship and was done
in retaliation for pressing their claim for salary
differential, which they had earlier filed against
respondent and the Bank of Commerce before
the NLRC. They also contended that the transfer
to Manila was inconvenient and prejudicial,
since they would incur additional expenses for
board and lodging. The Labor Arbiter rendered
a Decision finding that petitioners were illegally
dismissed and ordered respondents to reinstate
all the complainants to their former assignment
in Pangasinan with full backwages and if
reinstatement is no longer possible, to pay
separation pay of one month for every year of
service each of the seven complainant security
guards. On appeal, the NLRC affirmed the LA’s
ruling, with the modification that the Complaint
against the Bank of Commerce was dismissed.
The CA found the Orders transferring
petitioners to Manila to be a valid exercise of
management prerogative. The CA further ruled
that the records were bereft of any showing
that the subject transfer involved a diminution
of rank or salaries. Further, there was no
showing of bad faith or ill motive on the part of
the employer. Thus, petitioners’ refusal to
comply with the transfer orders constituted
willful disobedience of a lawful order of an
employer and abandonment, which were just
causes for termination under the Labor Code.
However, respondent failed to observe the due
process requirements in terminating them.
Issue:
Whether or not an employee may be
considered to have been constructively
dismissed if his floating status lasts for more
than six months.
Ruling:
The Petition is DENIED and the court AFFIRMED
the Court of Appeals decision. Petitioners argue
that they were illegally dismissed, based on the
1989 case Agro Commercial Security Services
Agency, Inc. v. NLRC., which holds that when
the floating status of employees lasts for more
than six (6) months, they may be considered to
have been illegally dismissed from the service.
Unfortunately, the above-mentioned case is not
44
applicable here. In Agro, the service contracts of
the security agency therein with various
corporations and government agencies – to
which the security guards were previously
assigned – were terminated, generally due to
the sequestration of the said offices.
Accordingly, many of the security guards were
placed on floating status. “Floating status”
means an indefinite period of time when one
does not receive any salary or financial benefit
provided by law. In this case, petitioners were
actually reassigned to new posts, albeit in a
different location from where they resided.
Thus, there can be no floating status or
indefinite period to speak of. Instead,
petitioners were the ones who refused to
report for work in their new assignment. In
cases involving security guards, a relief and
transfer order in itself does not sever the
employment relationship between the security
guards and their agency. Employees have the
right to security of tenure, but this does not give
them such a vested right to their positions as
would deprive the company of its prerogative to
change their assignment or transfer them
where their services, as security guards, will be
most beneficial to the client. An employer has
the right to transfer or assign its employees
from one office or area of operation to another
in pursuit of its legitimate business interest,
provided there is no demotion in rank or
diminution of salary, benefits, and other
privileges; and the transfer is not motivated by
discrimination or bad faith, or effected as a
form of punishment or demotion without
sufficient cause. While petitioners may claim
that their transfer to Manila will cause added
expenses and inconvenience, the court agree
with the CA that, absent any showing of bad
faith or ill motive on the part of the employer,
the transfer remains valid.
41 PHILBAG INDUSTRIAL MANUFACTURING
CORPORATION, Petitioner, v. PHILBAG
WORKERS UNION-LAKAS AT GABAY NG
MANGGAGAWANG NAGKAKAISA, Respondent.
FACTS:
Edwin Mauricio and Zharralyn Camacho were
employees of the petitioner, Philbag Industrial
Manufacturing Corporation (company), until
their dismissal in the second half of 2004.
Mauricio and Camacho protested their
dismissal, prompting the union and the
company to convene the CBAs grievance
machinery in an effort to resolve the matter at
plant level. Unable to reach a settlement, they
agreed to have the dispute resolved through
voluntary arbitration.
To avoid liability, the company maintained that
both Mauricio and Camacho violated company

rules on employee discipline, thereby incurring
demerit points that justified their separation
from the service. It pointed out that Mauricio
was observed idling and wasting company time
for two hours on May 24, 2004 as reported by
Reinoso who witnessed the incident. With
respect to Camacho, the company stressed that
she failed (1) to follow the procedure in taking a
leave of absence (filing the required form) or
getting permission from or notifying
management that she could not report for work
from March 15 to 21, 2004 and (2) to have her
medical certificate countersigned by the
company doctor.
VA Ancheta declared Mauricio and Camachos
dismissal valid. With the ruling, VA Ancheta
upheld the companys prerogative to impose
disciplinary action on its employees who violate
company rules and regulations. The union
sought relief from the CA through a petition for
review under Rule 43 of the Rules of Court.
CA granted the petition and reversed VA
Anchetas ruling. It found "no plausible reason
for [the company] to [impose] demerit points
on Mauricio and Camacho as a result of the
subject incidents.
The CA thus ruled that Mauricio and Camacho
were illegally dismissed. The company moved
for reconsideration, which was denied by the
CA.
ISSUE:
Whether or not Mauricio and Camacho were
illegally dismissed?
HELD:
Court of Appeals decision is sustained.
LABOR LAW
Under the law, the burden of proving that the
termination of employment was for a valid or
authorized cause rests on the employer. Failure
to discharge this burden would result in an
unjust or illegal dismissal, as aptly pointed out
by the CA. We find such a failure on the part of
the employer in this case.
It is obvious that the company overstepped the
bounds of its management prerogative in the
dismissal of Mauricio and Camacho. It lost sight
of the principle that management prerogative
must be exercised in good faith and with due
regard to the rights of the workers in the spirit
of fairness and with justice in mind.
In sum, we find Mauricio and Camachos
dismissal without a valid cause and, therefore,
illegal.
DENIED.
42 JEAN C. AURELIO vs. NATIONAL LABOR
RELATIONS COMMISSION
FACTS:
45
Jean Aurelio started as clinical instructor of the
College of Nursing of Northwestern
College (NWC). Later, she was appointed as
Dean of the College of Nursing. Again,
petitioner
was promoted to College Administrator or Vice-
President for Administration, retaining
concurrently her position of Dean of the College
of Nursing, with an increased salary. She was
later promoted to Executive Vice-President. This
new management unleashed a series of
reorganization affecting the petitioner . Without
prior notice, petitioner's office was stripped of
its facilities, her salary was reduced from
P7,500.00 to P5,000.00 then to P2,500.00 a
month,
and while petitioner was absent because of
influenza, respondents assigned her office room
to
the Chairman on Management and Planning;
the Nursing conference room was assigned as
the
lounge room of the members of the Board of
Directors. Because of the indignities and
humiliation suffered by the petitioner, she
wrote a letter informing the President of
Northwestern College that she was going on an
indefinite leave. Petitioner sent a copy of the
letter to the Secretary of DECS for assistance.
The matter of petitioner's resumption of her
position as Dean of the College of Nursing was
addressed by the DECS to the attention of
respondents but it did not answer. They refused
to accept petitioner. Hence, petitioner filed
her complaint for illegal dismissal against
private respondents. NWC, on its part, was
compelled
to abolish the administrative positions held by
petitioner, which she did not contest, because
they realized after a study of the realignment of
the positions that the fu nctions and duties of
Administrator/Vice President for Administration
were being performed by the President.
Consequently, the former positions had become
redundant.
ISSUE:
WON the Management is at liberty to abolish
positions no longer necessary.
HELD:
YES. The Board of Directors, composed of the
individual private respondents herein, has
the power granted by the Corporation Code to
implement a reorganization of respondent
college's offices, including the abolition of
various positions, since it is imp lied or
incidental to
its power to conduct the regular business affairs
of the corporation. The prerogative of
management to conduct its own business affairs
to achieve its purposes cannot be denied.

Management is at liberty, absent any malice on
its part, to abolish positions which it deems no
longer necessary. Thus, when petitioner was
stripped by the Board of her positions as
Executive
Vice President and Vice President for
Administration, with a corresponding reduction
in salary,
the Board did not act in a capricious, whimsical,
and arbitrary manner, thus negating malice and
bad faith.
43 GOLDEN THREAD KNITTING INDUSTRIES,
INC., GEORGE NG and WILFREDO BICO vs.
NATIONAL LABOR RELATIONS COMMISSION,
GEORGE MACASPAC, MARY ANN MACASPAC,
ROMULO ALBASIN, MELCHOR CACHUCHA,
GILBERT RIVERA and FLORA BALBINO,
respondents.
FACTS:
The complainants alleged that in the first week
of May 1992 they organized a labor
union. On 22 May 1992 Cristina Balingit, wife of
the union Chairman, was dismissed from
emyloyment as sewer. In the last week of May
union Chairman Deogracias Balingit himself
was,
suspended from work as knitting operator. On 1
June 1992 petitioners shortened the number
of working days of the union officers and
members from six (6) to three (3) days a week.
Petitioners contended that they resorted to
rotation of work, which affected practically
all employees, because of the low demand for
their towels and shirts. Petitioners also avowed
that they validly dismissed five (5) of the
complainants. According to petitioners, some
slashed
several bundles of towels on 3 July 1992, while
the positions of some became redundant. One
of them threatened the Personnel Manager and
violated company rules by removing her time
card from the rack, while another one was not
dismissed but abandoned his employment on 7
July 1992.
LABOR ARBITER ruled that they were validly
dismissed, while the reduction of working
days and suspension or dismissal of union
officers or members were not shown to have
been
done in retaliation to the complainants’ act of
organizing a union.
NLRC reversed the ruling for a number of the
complainants, holding that they were
illegally dismissed.
ISSUE:
WON they were validly dismissed
HELD:
46
(SA MGA NAG SLASH NG TOWELS) We find that
petitioners were unable to substantiate
the charge of serious misconduct against the
ones who slashed the towels. They were
likewise denied procedural due process. As
correctly observed by respondent NLRC,
petitioners
failed to afford Macaspac and Albasin the
benefit of hearing and investigation before
termination. It is also our observation that
neither did petitioners comply with the
requirement
on notices. An established rule of long standing
is that to effect a completely valid and
unassailable dismissal, an employer must show
not only sufficient ground therefor but must
also prove that procedural due process has
been observed by giving the employee two (2)
notices: one, of the intention to dismiss,
indicating therein his acts or omissions
complained
against, and two, notice of the decision to
dismiss.
(SA MGA NATANGGAL FOR REDUNDANCY) The
characterization of an employee’s
services as no longer necessary or sustainable,
and therefore properly terminable, is an
exercise
of business judgment on the part of the
employer. (Management Prerogative)
HOWEVER, SC
questioned petitioners’ exercise of
management prerogative because it was not
shown that
Rivera and Macaspac’s positions were indeed
unnecessary, much less was petitioners’ claim
supported by any evidence. It is not enough for
a company to merely declare that it has
become overmanned. It must produce
adequate proof that such is the actual situation
in
order to justify the dismissal of the affected
employees for redundancy.
Furthermore, we have laid down the principle
that in selecting the employees to be
dismissed, a fair and reasonable criteria must be
used, such as but not limited to:
(a) less preferred status (e.g., temporary
employee),
(b) efficiency, and
(c) seniority.
However, no criteria whatsoever was used by
the employer in this case.
Another procedural lapse committed by
petitioners is the lack of written notice to the
DOLE required under Art. 283 of the Labor
Code. The purpose of such notice is to ascertain
the
verity of the cause of termination of
employment.
(DUN SA NANG THREATEN NG MANAGER) The
utterances by an employee of obscene,

insulting or offensive words against a superior
justify his dismissal for gross misconduct. The
scornful attitude is also destructive of his co-
employees’ morale. However, the dismissal will
not be upheld where it appears, as in this case,
that the employee’s act of disrespect
was provoked by the employer. Balbino hurled
invectives at petitioner Bico because she was
provoked by the baseless suspension imposed
on her. Under the circumstances, we believe
that
dismissal was a harsh penalty; one (1) week
suspension would have sufficed.
(DUN SA NAG ABANDON NG WORK) It is
essential that:
(1) the employee must have failed to report for
work or must have been absent without
valid or justifiable reason; and,
(2) there must have been a clear intention to
sever the employer-employee relationship
manifested by some overt acts.
The circumstance that Cachucha lost no time in
filing a complaint for illegal dismissal
against petitioners on 16 July 1992 is
incompatible with the charge of abandonment
and
confirms in fact that he was refused entry into
the company premises on 6 July 1992.
44 Pantranco North Express, Inc., vs. NLRC &
Urbano Suñiga
FACTS:
Private respondent was hired by petitioner in
1964 as a bus conductor. He eventually
joined the Pantranco Employees Association-
PTGWO. He continued in petitioner's employ
until
August 12, 1989, when he was retired at the
age of fifty-two (52) after having rendered
twenty
five years' service. The basis of his retirement
was the compulsory retirement provision of the
collective bargaining agreement between the
petitioner and the aforenamed union. On
February 1990, private respondent filed a
complaint for illegal dismissal against petitioner
with
NLRC. The complaint was consolidated with two
other cases of illegal dismissal having similar
facts and issues, filed by other employees, non -
union members.
Labor Arbiter rendered his decision finding that
the three complainants were illegally
and unjustly dismissed and order the
respondent to reinstate them to their former or
substantially equivalent positions without loss
of seniority rights with full back wages and
other
benefits. Petitioner appealed to public
respondent, which issued the questioned
47
Resolution
affirming the labor arbiter's decision in toto.
ISSUE:
Whether or not the CBA stipulation on
compulsory retirement after twenty-five years
of
service is legal and enforceable.
RULING:
The Court rules that the CBA stipulation is legal
and enforceable.
The bone of contention in this case is the
provision on compulsory retirement after 25
years of service.
Article XI, Section 1 (e) (5) of the May 2, 1989
Collective Bargaining Agreement 8 between
petitioner company and the union states:
Section 1. The COMPANY shall formulate a
retirement plan with the following main
features:
(e) The COMPANY agrees to grant the
retirement benefits herein provided to regular
employees who may be separated from the
COMPANY for any of the following reasons:
(5) Upon reaching the age of sixty (60) years or
upon completing twenty-five (25) years of
service to the COMPANY, whichever comes first,
and the employee shall be compulsory retired
and paid the retirement benefits herein
provided."
The said Code provides: Art. 287. Retirement. —
Any employee may be retired upon
reaching the retirement age established in the
Collective Bargaining Agreement or other
applicable employment contract. In case of
retirement, the employee shall be entitled to
receive such retirement benefits as he may
have earned under existing laws and any
collective
bargaining or other agreement."
The Court agrees with petitioner and the
Solicitor General. Art. 287 of the Labor Code as
worded permits employers and employees to fix
the applicable retirement age at below 60
years. Moreover, providing for early retirement
does not constitute diminution of benefits. In
almost all countries today, early retirement, i.e.,
before age 60, is considered a reward for
services rendered since it enables an employee
to reap the fruits of his labor — particularly
retirement benefits, whether lump-sum or
otherwise — at an earlier age, when said
employee,
in presumably better physical and mental
condition, can enjoy them better and longer.
As a matter of fact, one of the advantages of
early retirement is that the corresponding
retirement benefits, usually consisting of a
substantial cash windfall, can early on be put to
productive and profitable uses by way of
income-generating investments, thereby

affording a
more significant measure of financial security
and independence for the retiree who, up till
then, had to contend with life's vicissitudes
within the parameters of his fortnightly or
weekly
wages. Thus we are now seeing many CBAs with
such early retirement provisions. And the same
cannot be considered a diminution of
employment benefits.
Being a product of negotiation, the CBA
between the petitioner and the union intended
the provision on compulsory retirement to be
beneficial to the employees-union members,
including herein private respondent. When
private respondent ratified the CBA with the
union,
he not only agreed to the CBA but also agreed
to conform to and abide by its provisions. Thus,
it cannot be said that he was illegally dismissed
when the CBA provision on compulsory
retirement was applied to his case.
Incidentally, we call attention to Republic Act
No. 7641, known as "The Retirement Pay
Law", which went into effect on January 7,
1993. Although passed many years after the
compulsory retirement of herein private
respondent, nevertheless, the said statute
sheds light
on the present discussion when it amended
Art. 287 of the Labor Code, to make it read as
follows: Retirement. — Any employee
may be retired upon reaching the retirement
age establish in the collective bargaining
agreement or other applicable employment
contract.
In the absence of a retirement plan or
agreement providing for retirement benefits of
employees in the establishment, an employee
upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years
which is hereby declared the compulsory
retirement
age, who has served at least five (5) years in the
said establishment may retire . . ."
The aforequoted provision makes clear the
intention and spirit of the law to give
employers and employees a free hand to
determine and agree upon the terms and
conditions
of retirement. Providing in a CBA for
compulsory retirement of employees after
twenty-five (25)
years of service is legal and enforceable so long
as the parties agree to be governed by such
CBA. The law presumes that employees know
what they want and what is good for them
absent any showing that fraud or intimidation
was employed to secure their consent thereto.
45 Pantoja v. SCA Hygiene
48
FACTS:
Respondent employed petitioner as a utility
man on March 15, 1987. Petitioner was
eventually assigned at respondent's Paper Mill
No. 4, the section which manufactures the
company's industrial paper products, as a back
tender in charge of the proper operation of the
sections machineries. In a Notice of Transfer
dated March 27, 1999, respondent informed
petitioner of its reorganization plan and offered
him a position at Paper Mill No. 5 under the
same terms and conditions of employment in
anticipation of the eventual closure and
permanent shutdown of Paper Mill No. 4
effective May 5, 1999.The closure and
concomitant
reorganization is in line with respondents
decision to streamline and phase out the
company's
industrial paper manufacturing operations due
to financial difficulties brought about by the low
volume of sales and orders for industrial paper
products. However, petitioner rejected
respondents offer for his transfer. Thus, a notice
of termination of employment effective May
5, 1999 was sent to petitioner as his position
was declared redundant by the closure of Paper
Mill No. 4.He then received his separation pay
and thereafter executed a release and quitclaim
in favor of respondent. On April 5, 1999,
respondent informed the Dep artment of Labor
and
Employment (DOLE) of its reorganization and
partial closure by submitting with the said office
an Establishment Termination Report together
with the list of 31 terminated employees.
Petitioner filed a complaint for illegal dismissal
against respondent assailing his termination as
without any valid cause.He averred that the
alleged redundancy never occurred as there
was
no permanent shutdown of Paper Mill No. 4
due to its continuous operation since his
termination.A co-employee, Nestor Agtang,
confirmed this fact and further attested that
several contractual workers were employed to
operate Paper Mill No. 4. Petitioner also
presented in evidence documents pertaining to
the actual and continuous operation of Paper
Mill No. 4 such as the Paper Mill Personnel
Schedule for July 2-8, 2000 and 23-29, 2000 and
Paper Machine No. 4 Production Report and
Operating Data dated April 28, 2000 and May
18,
2000. In its defense, respondent refuted
petitioners claim of illegal dismissal.It argued
that
petitioner has voluntarily separated himself
from service by opting to avail of the separation
benefits of the company instead of accepting
reassignment/transfer to another position of

equal rank and pay. According to respondent,
petitioners discussion on the alleged
resumption
of operation of Paper Mill No. 4 is rendered
moot by the fact of petitioner's voluntary
separation.
The Labor Arbiter rendered a Decision
dismissing petitioners complaint for lack of
merit.Upon appeal by petitioner, the NLRC
reversed the Labor Arbiters Decision by finding
petitioners separation from employment
illegal.Aggrieved, respondent filed a petition for
certiorari with the CA. The CA reversed the
NLRC's Decision and reinstated the Labor
Arbiters
Decision dismissing the complaint.
ISSUE:
Whether or not respondent is guilty of illegal
dismissal.
HELD:
LABOR LAW
Respondent presented evidence of the low
volume of sales and orders for the
production of industrial paper in 1999 which
inevitably resulted to the company's decision to
streamline its operations. This fact was
corroborated by respondents VP-Tissue
Manufacturing
Director and was not disputed by petitioner.
Exercising its management prerogative and
sound
business judgment, respondent decided to cut
down on operational costs by shutting down
one
of its paper mill. The determination of the need
to phase out a particular department and
consequent reduction of personnel and
reorganization as a labor and cost saving device
is a
recognized management prerogative which the
courts will not generally interfere with. In this
case, the abolishment of Paper Mill No. 4 was
undoubtedly a business judgment arrived at in
the face of the low demand for the production
of industrial paper at the time.Despite an
apparent reason to implement a retrenchment
program as a cost-cutting measure, respondent,
however, did not outrightly dismiss the workers
affected by the closure of Paper Mill No. 4 but
gave them an option to be transferred to posts
of equal rank and pay.As can be seen,
retrenchment was utilized by respondent only
as an available option in case the affected
employee would not want to be
transferred.Respondent did not proceed
directly to
retrench.This is an indication of good faith on
respondents part as it exhausted other possible
measures other than retrenchment.Besides, the
employers prerogative to bring down labor
49
costs by retrenching must be exercised
essentially as a measure of last resort, after less
drastic
means have been tried and found
wanting.Giving the workers an option to be
transferred
without any diminution in rank and pay
specifically belie petitioners allegation that the
alleged
streamlining scheme was implemented as a
ploy to ease out employees, thus, the absence
of
bad faith. Apparently, respondent implemented
its streamlinin g or reorganization plan with
good faith, not in an arbitrary manner and
without prejudicing the tenurial rights of its
employees.
DENIED
46 JONATHAN V. MORALES, Petitioner, v.
HARBOUR CENTRE PORT TERMINAL, INC.
Respondent.
FACTS:
Regularized on 17 November 2000, Morales was
promoted to Division Manager of the
Accounting Department, for which he was
compensated a monthly salary of P33,700.00,
plus allowances starting 1 July 2002.
Subsequent to HCPTIs transfer to its new offices
at Vitas, Tondo, Manila on 2 January 2003,
Morales received an inter-office memorandum
dated 27 March 2003, reassigning him to
Operations Cost Accounting, tasked with the
duty of "monitoring and evaluating all
consumables requests, gears and equipment"
related to the corporations operations and of
interacting with its sub-contractor, Bulk Fleet
Marine Corporation.
Morales wrote Singson, protesting that his
reassignment was a clear demotion since the
position to which he was transferred was not
even included in HCPTIs plantilla. Singson, the
Administration Manager, answered by stating
that the transfer was a management
prerogative.
For the whole of the ensuing month Morales
was absent from work and/or tardy. Singson
issued to Morales a 29 April 2003 inter-office
memorandum denominated as a First Warning.
In view of the absences Morales continued to
incur, HCPTI issued a Second Warning.
In the meantime, Morales filed a complaint
dated 25 April 2003 against HCPTI, Filart and
Singson, for constructive dismissal, moral and
exemplary damages as well as attorneys fees.
LA dismissed the complaint for lack of merit. It
ruled that Morales reassignment was a valid
exercise of HCPTIs management prerogative
which cannot be construed as constructive
dismissal absent showing that the same was
done in bad faith and resulted in the diminution

of his salary and benefits. The NLRC however,
reversed the decision. Its subsequent denial of
HCPTIs motion for reconsideration prompted
the latter to file a petition for certiorari before
the CA. The CA reversed the findings of the
NLRC. Hence, this petition.
ISSUE:
Whether or not petitioner was constructively
dismissed
HELD:
Yes. CA Decision reversed and set aside
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.
In cases of a transfer of an employee, the rule is
settled that the employer is charged with the
burden of proving that its conduct and action
are for valid and legitimate grounds such as
genuine business necessity and that the transfer
is not unreasonable, inconvenient or prejudicial
to the employee. If the employer cannot
overcome this burden of proof, the employees
transfer shall be tantamount to unlawful
constructive dismissal.
Record shows that HCPTI miserably failed to
discharge the foregoing onus. While there was a
lack of showing that the transfer or
reassignment entailed a diminution of salary
and benefits, one fact that must not be lost
sight of was that Morales was already occupying
the position of Division Manager at HCPTIs
Accounting Department as a consequence of his
promotion to said position on 22 October 2002.
Concurrently appointed as member of HCPTIs
Management Committee (MANCOM) on 2
December 2002, Morales was subsequently
reassigned by HCPTI "from managerial
accounting to Operations Cost Accounting" on
27 March 2003, without any mention of the
position to which he was actually being
transferred. That the reassignment was a
demotion is, however, evident from Morales
new duties which, far from being managerial in
nature, were very simply and vaguely described
as inclusive of "monitoring and evaluating all
consumables requests, gears and equipments
related to HCPTIs operations" as well as "close
interaction with its sub-contractor Bulk Fleet
Marine Corporation."
Admittedly, the right of employees to security
of tenure does not give them vested rights to
their positions to the extent of depriving
management of its prerogative to change their
assignments or to transfer them. By
management prerogative is meant the right of
an employer to regulate all aspects of
employment, such as the freedom to prescribe
50
work assignments, working methods, processes
to be followed, regulation regarding transfer of
employees, supervision of their work, lay-off
and discipline, and dismissal and recall of
workers.
Although jurisprudence recognizes said
management prerogative, it has been ruled that
the exercise thereof, while ordinarily not
interfered with, is not absolute and is subject to
limitations imposed by law, collective
bargaining agreement, and general principles of
fair play and justice. Thus, an employer may
transfer or assign employees from one office or
area of operation to another, provided there is
no demotion in rank or diminution of salary,
benefits, and other privileges, and the action is
not motivated by discrimination, made in bad
faith, or effected as a form of punishment or
demotion without sufficient cause. Indeed,
having the right should not be confused with
the manner in which that right is exercised.
GRANTED
47 STAR PAPER CORPORATION vs. RONALDO D.
SIMBOL, ET.AL.
FACTS:
Josephine Ongsitco is the Manager of the
Personnel and Administration Department
while Sebastian Chua is its Managing Director of
Star Paper Corporation. Meanwhile, Ronaldo
D. Simbol (Simbol), Wilfreda N. Comia (Comia)
and Lorna E. Estrella (Estrella) were all regular
employees of the company. Simbol was
employed by the company where he met Alma
Dayrit,
also an employee of the company, whom he
also married. Prior to the marriage, Ongsitco
advised the couple that should they decide to
get married, one of them should resign
pursuant
to a company policy. Simbol then resigned
pursuant to the company policy. Comia was
hired by
the company where she met Howard Comia, a
co-employee, and whom she later married.
Ongsitco likewise reminded them that pursuant
to company policy, one must resign should
they decide to get married. Comia then
resigned later on. Estrella was hired by the
company,
and there she met Luisito Zuiga (Zuiga), also a
co-worker. Petitioners stated that Zuiga, a
married man, got Estrella pregnant. The
company allegedly could have terminated her
servi ces
due to immorality but she opted to resign.
However, Simbol and Comia allege that they did
not
resign voluntarily; they were compelled to
resign in view of an illegal company policy. As to

respondent Estrella, she alleges that she had a
relationship with co-worker Zuiga who
misrepresented himself as a married but
separated man. After he got her pregnant, she
discovered that he was not separated. Thus, she
severed her relationship with him to avoid
dismissal due to the company policy. Estrella
met an accident and when she returned to work
she found out that she was being dismissed for
immoral conduct. She refused to sign the
memorandum because she was on leave for
twenty-one (21) days and has not been given a
chance to explain. The management asked her
to write an explanation. But she was
nonetheless dismissed by the company. Due to
her urgent need for money, she later submitted
a letter of resignation in exchange for her
thirteenth month pay.
ISSUE:
WON Respondents company policy is illegal and
contraven es Article 136 of the Labor
Code/ Whether the policy of the employer
banning spouses from working in the same
company
violates the rights of the employee under the
Constitution and the Labor Code or is a valid
exercise of management prerogative.
HELD:
YES. It is true that the policy of petitioners
prohibiting close relatives from working in
the same company takes the nature of an anti-
nepotism employment policy. Companies adopt
these policies to prevent the hiring of
unqualified persons based on their sta tus as a
relative,
rather than upon their ability. With more
women entering the workforce, employers are
also
enacting employment policies specifically
prohibiting spouses from working for the same
company. Two types of employment policies
involve spouses: policies banning only spouses
from working in the same company (no-spouse
employment policies), and those banning all
immediate family members, including spouses,
from working in the same company
(antinepotism employment policies). The courts
that have broadly construed the term marital
status rule that it encompassed the identity,
occupation and employment of one's spouse.
They
strike down the no-spouse employment policies
based on the broad legislative intent of the
state statute. They reason that the no-spouse
employment policy violate the marital status
provision because it arbitrarily discriminates
against all spouses of present employees
without
regard to the actual effect on the individual's
qualifications or work performance. These
51
courts
also find the no-spouse employment policy
invalid for failure of the employer to present
any
evidence of business necessity other than the
general perception that spouses in the same
workplace might adversely affect the business.
They hold that the absence of such a bona fide
occupational qualification invalidates a rule
denying employment to one spouse due to the
current employment of the other spouse in the
same office. Thus, they rule that unless the
employer can prove that the reasonable
demands of the business require a distinction
based on
marital status and there is no better available or
acceptable policy which would better
accomplish the business purpose, an employer
may not discriminate against an employee
based
on the identity of the employees spouse. This is
known as the bona fide occupational
qualification exception. We note that since the
finding of a bona fide occupational qualification
justifies an employers no-spouse rule, the
exception is interpreted strictly and narrowly by
these state courts. There must be a compelling
business necessity for which no alternative
exists other than the discriminatory practice. To
justify a bona fide occupational qualification,
the employer must prove two factors: (1) that
the employment qualification is reasonably
related to the essential operation of the job
involved; and, (2) that there is a factual basis for
believing that all or substantially all persons
meeting the qualification would be unable to
properly perform the duties of the job. We do
not find a reasonable business necessity in the
case at bar. Petitioners sole contention that the
company did not just want to have two (2) or
more of its employees related between the
third degree by affinity and/or consanguinity is
lame. That the second paragraph was meant to
give teeth to the first paragraph of the
questioned rule is evidently not the valid
reasonable business necessity required by the
law. It
is significant to note that in the case at bar,
respondents were hired after they were found
fit
for the job, but were asked to resign when they
married a co-employee. Petitioners failed to
show how the marriage of Simbol, then a
Sheeting Machine Operator, to Alma Dayrit,
then an
employee of the Repacking Section, could be
detrimental to its business operations. Neither
did
petitioners explain how this detriment will
happen in the case of Wilfreda Comia, then a
Production Helper in the Selecting Department,
who married Howard Comia, then a helper in

the cutter-machine. The policy is premised on
the mere fear that employees married to each
other will be less efficient. If we uphold the
questioned rule without valid justification, the
employer can create policies based on an
unproven presumption of a perceived danger at
the
expense of an employees right to security of
tenure. Petitioners contend that their policy will
apply only when one employee marries a co-
employee, but they are free to marry persons
other than co-employees. The questioned policy
may not facially violate Article 136 of the
Labor Code but it creates a disproportionate
effect and under the disparate impact theory,
the
only way it could pass judicial scrutiny is a
showing that it is reasonable despite the
discriminatory, albeit disproportionate, effect.
The failure of petitioners to prove a legitimate
business concern in imposing the questioned
policy cannot prejudice the employees right to
be
free from arbitrary discrimination based upon
stereotypes of married persons working
together
in one company. Thus, for failure of petitioners
to present undisputed proof of a reasonable
business necessity, we rule that the questioned
policy is an invalid exercise of management
prerogative.
48 DUNCAN ASSOCIATION OF DETAILMAN-
PTGWO and PEDRO A. TECSON vs. GLAXO
WELLCOME PHILIPPINES, INC.
FACTS:
Pedro A. Tecson (Tecson) was hired by
respondent Glaxo Wellcome Philippines, Inc.
(Glaxo) as medical representative. Tecson
signed a contract of employment which
stipulates,
among others, that he agrees to study and
abide by existing company rules; to disclose to
management any existing or future relationship
by consanguinity or affinity with co-employees
or employees of competing drug companies and
should management find that such
relationship poses a possible conflict of interest,
to resign from the company. Tecson was
initially assigned to market Glaxos products in
the Camarines Sur-Camarines Norte sales area.
Subsequently, Tecson entered into a romantic
relationship with Bettsy, an employee of Astra
Pharmaceuticals (Astra), a competitor of Glaxo.
Bettsy was Astras Bra nch Coordinator in Albay.
She supervised the district managers and
medical representatives of her company and
prepared marketing strategies for Astra in that
area. Even before they got married, Tecson
52
received several reminders from his District
Manager regarding the conflict of interest
which his
relationship with Bettsy might engender. Still,
Tecson married Bettsy. Tecsons superiors
informed him that his marriage to Bettsy gave
rise to a conflict of interest. Tecson requested
for
time to comply with the company policy against
entering into a relationship with an employee
of a competitor company. Later Tecson applied
for a transfer in Glaxos milk division, thinking
that since Astra did not have a milk division, the
potential conflict of interest would be
eliminated. However, his application was
denied. Thus, Glaxo transferred Tecson to the
Butuan
City Surigao City-Agusan del Sur sales area.
Tecson asked Glaxo to reconsider its decision,
but
his request was denied. Tecson defied the
transfer order and continu ed acting as medical
representative in the Camarines Sur-Camarines
Norte sales area.
ISSUE:
WON Glaxos policy prohibiting its employees
from having personal relationships with
employees of competitor companies is a valid
exercise of its management prerogatives.
HELD:
YES. Glaxo has a right to guard its trade secrets,
manufacturing formulas, marketing
strategies and other confidential programs and
information from competitors, especially so
that it and Astra are rival companies in the
highly competitive pharmaceutical industry. The
prohibition against personal or marital
relationships with employees of competitor
companies
upon Glaxos employees is reasonable under the
circumstances because relationships of that
nature might compromise the interests of the
company. In laying down the assailed company
policy, Glaxo only aims to protect its interests
against the possibility that a competitor
company
will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its
economic interests cannot be denied. No less
than the Constitution recognizes the right of
enterprises to adopt and enforce such a policy
to protect its right to reasonable returns on
investments and to expansion and growth.
Indeed, while our laws endeavor to give life to
the
constitutional policy on social justice and the
protection of labor, it does not mean that every
labor dispute will be decided in favor of the
workers. The law also recognizes that
management

has rights which are also entitled to respect and
enforcemen t in the interest of fair play.
49 ARMANDO G. YRASUEGUI, petitioners vs.
PHILIPPINE AIRLINES, INC., respondents.
FACTS:
THIS case portrays the peculiar story of an
international flight steward who was
dismissed because of his failure to adhere to
the weight standards of the airline company.
The proper weight for a man of his height and
body structure is from 147 to 166 pounds,
the ideal weight being 166 pounds, as
mandated by the Cabin and Crew
Administration Manual
of PAL.
In 1984, the weight problem started, which
prompted PAL to send him to an extended
vacation until November 1985. He was allowed
to return to work once he lost all the excess
weight. But the problem recurred. He again
went on leave without pay from October 17,
1988
to February 1989.
Despite the lapse of a ninety-day period given
him to reach his ideal weight, petitioner
remained overweight. On January 3, 1990, he
was informed of the PAL decision for him to
remain grounded until such time that he
satisfactorily complies with the weight
standards.
Again, he was directed to report every two
weeks for weight checks, which he failed to
comply
with.
On April 17, 1990, petitioner was formally
warned that a repeated refusal to report for
weight check would be dealt with accordingly.
He was given another set of weight check dates,
which he did not report to.
On November 13, 1992, PAL finally served
petitioner a Notice of Administrative Charge
for violation of company standards on weight
requirements. Petitioner insists that he is being
discriminated as those similarly situated were
not treated the same.
On June 15, 1993, petitioner was formally
informed by PAL that due to his inability to
attain his ideal weight, “and considering the
utmost leniency” extended to him “which
spanned
a period covering a total of almost five (5)
years,” his services were considered terminated
“effective immediately.”
LABOR ARBITER: held that the weight standards
of PAL are reasonable in view of the
nature of the job of petitioner. However, the
weight standards need not be complied with
under pain of dismissal since his weight did not
53
hamper the performance of his duties.
NLRC affirmed.
CA: the weight standards of PAL are reasonable.
Thus, petitioner was legally dismissed
because he repeatedly failed to meet the
prescribed weight standards. It is obvious that
the
issue of discrimination was only invoked by
petitioner for purposes of escaping the result of
his
dismissal for being overweight.
ISSUE:
WON he was validly dismissed.
HELD:
YES. A reading of the weight standards of PAL
would lead to no other conclusion than
that they constitute a continuing qualification of
an employee in order to keep the job. The
dismissal of the employee would thus fall under
Article 282(e) of the Labor Code.
In the case at bar, the evidence on record
militates against petitioner’s claims that
obesity is a disease. That he was able to reduce
his weight from 1984 to 1992 clearly shows that
it is possible for him to lose weight given the
proper attitude, determination, and self-
discipline.
Indeed, during the clarificatory hearing on
December 8, 1992, petitioner himself claimed
that
“*t+he issue is could I bring my weight down to
ideal weight which is 172, then the answer is
yes. I can do it now.”
Petitioner has only himself to blame. He could
ha ve easily availed the assistance of the
company physician, per the advice of PAL.
In fine, We hold that the obesity of petitioner,
when placed in the context of his work as
flight attendant, becomes an analogous cause
under Article 282(e) of the Labor Code that
justifies his dismissal from the service. His
obesity may not be unintended, but is
nonetheless
voluntary. As the CA correctly puts it,
“*v+oluntariness basically means that the just
cause is
solely attributable to the employee without any
external force influencing or controlling his
actions. This element runs through all just
causes under Article 282, whether they be in
the
nature of a wrongful action or omission. Gross
and habitual neglect, a recognized just cause, is
considered voluntary although it lacks the
element of intent found in Article 282(a), (c),
and
(d).”
NOTES:
The dismissal of petitioner can be predicated on
the bona fide occupational qualification

defense. Employment in particular jobs may not
be limited to persons of a particular se x,
religion, or national origin unless the employer
can show that sex, religion, or national origin is
an actual qualification for performing the job.
The qualification is called a bona fide
occupational qualification (BFOQ). In short, the
test of reasonableness of the company policy is
used because it is parallel to BFOQ. BFOQ is
valid “provided it reflects an inherent quality
reasonably necessary for satisfactory job
performance.”
The business of PAL is air transportation. As
such, it has committed itself to safely
transport its passengers. In order to achieve
this, it must necessarily rely on its employees,
most
particularly the cabin flight deck crew who are
on board the aircraft. The weight standards of
PAL should be viewed as imposing strict norms
of discipline upon its employees.
The primary objective of PAL in the imposition
of the weight standards for cabin crew is
flight safety.
Separation pay, however, should be awarded in
favor of the employee as an act of social
justice or based on equity. This is so because his
dismissal is not for serious misconduct. Neither
is it reflective of his moral character.
50 AVON vs. LUNA
THE CASE:
Before us is a Petition for Review on Certiorari
under Rule 45 of the Rules of Court, seeking to
reverse and set aside the Decision dated 20
May 2002 of the Court of Appeals in CAG.R. CV
No. 52550, which affirmed in toto the Decision
dated 26 January 1996 of the Regional Trial
Court (RTC) of Makati City, Branch 138, in Civil
Case No. 88-2595, in favor of herein respondent
Leticia H. Luna (Luna), rendered by the
Honorable Ed Vicente S. Albano, designated as
the "assisting judge" pursuant to Supreme Court
Administrative Order No. 70-94, dated 16 June
1994.
FACTS:
The facts of the case are not in dispute. As
culled from the records, they are as follows:
The present petition stemmed from a complaint
dated 1 December 1988, filed by herein
respondent Luna alleging, inter alia, that she
began working for Beautifont, Inc. in 1972, first
as
a franchise dealer and then a year later, as a
Supervisor.
Sometime in 1978, Avon Cosmetics, Inc. (Avon),
herein petitioner, acquired and took
54
over the management and operations of
Beautifont, Inc. Nonetheless, respondent Luna
continued working for said successor company.
Aside from her work as a supervisor,
respondent Luna also acted as a make-up artist
of
petitioner Avon's Theatrical Promotion's Group,
for which she received a per diem for each
theatrical performance.
On 5 November 1985, petitioner Avon and
respondent Luna entered into an agreement,
entitled Supervisor's Agreement, whereby said
parties contracted in the manner quoted below:
The Company agrees:
xxxx
1) To allow the Supervisor to purchase at
wholesale the products of the Company.
xxxx
The Supervisor agrees:
1) To purchase products from the Company
exclusively for resale and to be responsible
for obtaining all permits and licenses required
to sell the products on retail.
xxxx
The Company and the Supervisor mutually
agree:
xxxx
2) That this agreement in no way makes the
Supervisor an employee or agent of the
Company, therefore, the Supervisor has no
authority to bind the Company in any contracts
with other parties.
3) That the Supervisor is an independent
retailer/dealer insofar as the Company is
concerned, and shall have the sole discretion to
determine where and how products purchased
from the Company will be sold. However, the
Supervisor shall not sell such products to stores,
supermarkets or to any entity or person who
sells things at a fixed place of business.
4) That this agreement supersedes any
agreement/s between the Company and the
Supervisor.
5) That the Supervisor shall sell or offer to sell,
display or promote only and exclusively
products sold by the Company.
6) Either party may terminate this agreement at
will, with or without cause, at any time
upon notice to the other.
xxxx
By virtue of the execution of the aforequoted
Supervisor's Agreement, respondent Luna
became part of the independent sales force of
petitioner Avon.
Sometime in the latter part of 1988, respondent
Luna was invited by a former Avon employee
who was then currently a Sales Manager of
Sandré Philippines, Inc., a domestic corporation
engaged in direct selling of vitamins and other
food supplements, to sell said
products. Respondent Luna apparently
accepted the invitation as she then became a

Group Franchise Director of Sandré Philippines,
Inc. concurrently with being a Group Supervisor
of petitioner Avon. As Group Franchise Director,
respondent Luna began selling and/or
promoting Sandré products to other Avon
employees and friends. On 23 September 1988,
she requested a law firm to render a legal
opinion as to the legal consequence of the
Supervisor's Agreement she executed with
petitioner Avon. In response to her query, a
lawyer of the firm op ined that the Supervisor's
Agreement was "contrary to law and public
policy."
Wanting to share the legal opinion she obtained
from her legal counsel, respondent Luna wrote
a letter to her colleagues and attached
mimeographed copies of the opinion and then
circulated them. The full text of her letter reads:
We all love our work as independent dealers
and we all love to continue in this livelihood.
Because my livelihood is important to me, I
have asked the legal opinion of a leading Makati
law office regarding my status as an
independent dealer, I am sharing this opinion
with you.
I have asked their advice on three specific
things:
1) May the company legally change the
conditions of the existing "Supervisor's
Agreement" without the Supervisor's consent?
If I should refuse to sign the new Agreement,
may the company terminate my dealership?
On the first issue, my lawyers said that the
company cannot change the existing
"Agreement" without my consent, and that it
would be illegal if the company will compel me
to sign the new agreement.
2) Is Section 5 of the "Supervisor's Agreement"
which says that a dealer may only sell
products sold by the company, legal?
My lawyers said that Section 5 of the
Supervisors Agreement is NOT valid because it
is
contrary to public policy, being an unreasonable
restraint of trade.
3) Is Section 6 of the "Supervisor's Agreement"
which authorizes the company to
terminate the contract at any time, with or
without cause, legal?
My lawyer said Section 6 is NOT valid because it
is contrary to law and public policy. The
company cannot terminate the "Supervisor's
Agreement" without a valid cause.
Therefore, I can conclude that I don't violate
Section 5 if I sell any product which is not
in direct competition with the company's
products, and there is no valid reason for the
company to terminate my dealership contract if
I sell a non -competitive product.
Dear co-supervisor[s], let us all support the
reasonable and legal policies of the
company. However, we must all be conscious of
55
our legal rights and be ready to protect
ourselves if they are trampled upon.
I hope we will all stay together selling Avon
products for a long time and at the same
time increase our earning opportunity by
engaging in other businesses without being
afraid to
do so.
In a letter dated 11 October 1988, petitioner
Avon, through its President and General
Manager, Jose Mari Franco, notified respondent
Luna of the termination or cancellation of her
Supervisor's Agreement with petitioner Avon.
Said letter reads in part:
In September, (sic) 1988, you brought to our
attention that you signed up as Group
Franchise Director of another company, Sandré
Philippines, Inc. (SPI).
Not only that. You have also sold and promoted
products of SPI (please refer for
example to SPI Invoice No. 1695 dated Sept. 30,
1988). Worse, you promoted/sold SPI products
even to several employees of our company
including Mary Arlene Nolasco, Regina Porter,
Emelisa Aguilar, Hermie Esteller and Emma
Ticsay.
To compound your violation of the above-
quoted provision, you have written letters to
other members of the Avon salesforce inducing
them to violate their own contracts with our
company.
x x x.
For violating paragraph 5
x x x,
The Company, pursuant to paragraph 6 of the
same Agreement, is terminating and
canceling its Supervisor's Agreement with you
effective upon your receipt of this notice. We
regret having to do this, but your repeated
disregard of the Agreement, despite warnings,
leaves (sic) the Company no other choice.
xxxx
Aggrieved, respondent Luna filed a complaint
for damages before the RTC of Makati
City, Branch 138. The complaint was docketed
as Civil Case No. 88-2595. On 26 January 1996,
after trial on the merits, the RTC rendered
judgment in favor of respondent Luna stating
that:
WHEREFORE, in view of the foregoing premises,
judgment is hereby rendered in favor of
the plaintiff, and against defendant, Avon,
ordering the latter:
1) to pay moral damages to the plaintiff in the
amount of P100,000.00 with interest
from the date of this judgment up to the time of
complete payment;
2) to pay attorney's fees in the amount of
P20,000.00;
3) to pay the costs.
On 8 February 1996, petitioner Avon filed a
Notice of Appeal dated the same day. In

an Order dated 15 February 1996, the RTC gave
due course to the appeal and directed its
Branch Clerk of Court to transmit the entire
records of the case to the Court of Appeals,
which
docketed the appeal as CA G.R. CV No. 52550.
On 20 May 2002, the Court of Appeals
promulgated the assailed Decision, the
dispositive part of which states thus:
WHEREFORE, the foregoing premises
considered, the decision appealed from is
hereby
AFFIRMED in toto.
ISSUES:
In predictable displeasure with the conclusions
reached by the appellate court,
petitioner Avon now implores this Court to
review, viaa petition for review on certiorari
under
Rule 45 of the Revised Rules of Court, the
former's decision and to resolve the following
assigned errors:
I. THE COURT OF APPEALS COMMITTED
SERIOUS ERROR IN DECLARING THAT THE
SUPERVISOR'S AGREEMENT EXECUTED
BETWEEN AVON AND RESPONDENT LUNA AS
NULL AND
VOID FOR BEING AGAINST PUBLIC POLICY;
II. THE COURT OF APPEALS COMMITTED
SERIOUS ERROR IN HOLDING THAT AVON HAD
NO RIGHT TO TERMINATE OR CANCEL THE
SUPERVIOSR'S AGREEMENT;
III. THE COURT OF APPEALS COMMITTED
SERIOUS ERROR IN UPHOLDING THE AWARD OF
MORAL DAMAGES AND ATTORNEY'S FEES IN
FAVOR OF RESPONDENT LUNA; and
IV. THE COURT OF APPEALS COMMITTED
SERIOUS ERROR IN NOT AWARDING
ATTORNEY'S FEES AND LITIGATION EXPENSES IN
FAVOR OF PETITIONER.
HELD:
A priori, respondent Luna objects to the
presentation, and eventual resolution, of the
issues raised herein as they allegedly involve
questions of facts.
To be sure, questions of law are those that
involve doubts or controversies on what the
law is on certain state of facts; and questions of
fact, on the other hand, are those in which
there is doubt or difference as to the truth or
falsehood of the alleged facts. One test, it has
been held, is whether the appellate court can
determine the issue raised without reviewing or
evaluating the evidence, in which case it is a
question of law, otherwise it will be a question
of
fact.
In the present case, the threshold issues are a)
whether or not paragraph 5 of the
Supervisor's Agreement is void for being
56
violative of law and publ ic policy; and b)
whether or
not paragraph 6 of the Supervisor's Agreement
which authorizes petitioner Avon to terminate
or cancel the agreement at will is void for being
contrary to law and public policy. Certainly, it is
quite obvious that the foregoing issues are
questions of law.
In affirming the decision of the RTC declaring
the subject contract null and void for being
against public policy, the Court of Appeals ruled
that the exclusivity clause, which states that:
The Company and the Supervisor mutually
agree:
xxxx
5) That the Supervisor shall sell or offer to sell,
display or promote only and
exclusively products sold by the Company.
[Emphasis supplied.]
should be interpreted to apply solely to those
products directly in competition with
those of petitioner Avon's, i.e., cosmetics
and/or beauty supplies and lingerie products. Its
declaration is anchored on the fact that Avon
products, at that time, were not in any way
similar to the products sold by Sandré
Philippines, Inc. At that time, the latter was
merely
selling vitamin products. Put simply, the
products of the two companies do not compete
with
each other. The appellate court ratiocinated
that:
xxx
If the agreement were interpreted otherwise,
so as to include products that do not
directly compete with the products of
defendant-appellant Avon, such would result in
absurdity. x x x [A]greements which prohibit a
person from engaging in any enterprise
whether
similar or not to the enterprise of the employer
constitute an unreasonable restraint of trade,
thus, it is void as against public policy.
Petitioner Avon disputes the abovestated
conclusion reached by the Court of Appeals. It
argues that the latter went beyond the literal
and obvious intent of the parties to the subject
contract when it interpreted the abovequoted
clause to apply only to those products that do
not compete with that of petitioner Avon's; and
that the words "only and exclusively" need no
other interpretation other than the literal
meaning that "THE SUPERVISORS CANNOT SELL
THE
PRODUCTS OF OTHER COMPANIES WHETHER
OR NOT THEY ARE COMPETING PRODUCTS."
Moreover, petitioner Avon reasons that:
The exclusivity clause was directed against the
supervisors selling other
products utilizing their training and experience,
and capitalizing on Avon's existing network for

the promotion and sale of the said products.
The exclusivity clause was meant to protect
Avon
from other companies, whether competitors or
not, who would exploit the sales and
promotions network already established by
Avon at great expense and effort.
xxxx
Obviously, Sandre Phils., Inc. did not have the
(sic) its own trained personnel and
network to sell and promote its products. It was
precisely why Sandre simply invited, and then
and there hired Luna and other Avon
supervisors and dealers to sell and promote its
products.
They had the training and experience, they also
had a ready market for the other products the
customers to whom they had been selling the
Avon products. It was easy to entice the
supervisors to sign up. The supervisors could
continue to sell Avon products, and at the same
time earn additional income by selling other
products.
This is most unfair to Avon. The other
companies cannot ride on and exploit the
training
and experience of the Avon sales force to sell
and promote their own products. [Emphasis
supplied.] On the other hand, in her
Memorandum, respondent Luna counters that
"there is no
allegation nor any finding by the trial court or
the Court of Appeals of an 'existing nationwide
sales and promotions network established by
Avon' or 'Avon's existing sales promotions
network' or 'Avon's tried and tested sales and
promotions network' nor the alleged damage
caused to such system caused by other
companies." Further, well worth noting is the
opinion of
respondent Luna's counsel which started the set
off the series of events which culminated to
the termination or cancellation of the
Supervisor's Agreement. In response to the
queryletter of respondent Luna, the latter's
legal counsel opined that, as allegedly hel d in
the case
of Ferrazzini v. Gsell, paragraph 5 of the subject
Supervisor's Agreement "not only prohibits the
supervisor from selling products which compete
with the company's product but restricts
likewise the supervisor from engaging in any
industry wh ich involves sales in general." Said
counsel thereafter concluded that the subject
provision in the Supervisor's Agreement
constitutes an unreasonable restraint of trade
and, therefore, void for being contrary to public
policy.
At the crux of the first issue is the validity of
paragraph 5 of the Supervisor's Agreement, viz:
The Company and the Supervisor mutually
agree:
57
xxxx
5) That the Supervisor shall sell or offer to sell,
display or promote only and
exclusively products sold by the Company.
[Emphasis supplied.]
In business parlance, this is commonly termed
as the "exclusivity clause." This is defined
as agreements which prohibit the obligor from
engaging in "business" in competition with the
obligee.
This exclusivity clause is more often the subject
of critical scrutiny when it is perceived
to collide with the Constitutional proscription
against "reasonable restraint of trade or
occupation." The pertinent provision of the
Constitution is quoted hereunder. Section 19 of
Article XII of the 1987 Constitution on the
National Economy and Patrimony states that:
SEC. 19. The State shall regulate or prohibit
monopolies when the public interest so
requires. No combinations in restraint of trade
or unfair competition shall be allowed.
First off, restraint of trade or occupation
embraces acts, contracts, agreements or
combinations which restrict competition or
obstruct due course of trade.
Now to the basics. From the wordings of the
Constitution, truly then, what is brought
about to lay the test on whether a given
agreement constitutes an unlawful machination
or
combination in restraint of trade is whether
under the particular circumstances of the case
and
the nature of the particular contract involved,
such contract is, or is not, against public
interest.
Thus, restrictions upon trade may be upheld
when not contrary to public welfare and
not greater than is necessary to afford a fair and
reasonable protection to the party in whose
favor it is imposed. Even contracts which
prohibit an employee from engaging in business
in
competition with the employer are not
necessarily void for being in restraint of trade.
In sum, contracts requiring exclusivity are not
per se void. Each contract must be
viewed vis-á-vis all the circumstances
surrounding such agreement in deciding
whether a
restrictive practice should be prohibited as
imposing an unreasonable restraint on
competition.
The question that now crops up is this, when is
a restraint in trade unreasonable?
Authorities are one in declaring that a restraint
in trade is unreasonable when it is contrary to
public policy or public welfare. As far back as
1916, in the case of Ferrazzini v. Gsell, this Court
has had the occasion to declare that:

[T]here is no difference in principle between the
public policy (orden público) in the in
the two jurisdictions (United States and the
Philippine Islands) as determined by the
Constitution, laws, and judicial decisions.
In the United States it is well settled that
contracts in undue or unreasonable restraint
of trade are unenforcible because they are
repugnant to the established public policy in
that
country. Such contracts are illegal in the sense
that the law will not enforce them. The
Supreme
Court in the United States, in Oregon Steam
Navigation Co. vs. Winsor )20 Will., 64), quoted
with approval in Gibbs v. Consolidated gas Co.
of Baltimore (130 U.S., 396), said:
"Cases must be judged according to their
circumstances, and can only be rightly judged
when reason and grounds of the rule are
carefully considered. There are two principle
groun ds
on which the doctrine is founded that a contract
in restraint of trade is void as against public
policy. One is, the injury to the public by being
deprived of the restricted party's industry; and
the other is, the injury to the party himself by
being precluded from pursuing his occupation,
and thus being prevented from supporting
himself and his family."
And what is public policy? In the words of the
eminent Spanish jurist, Don Jose Maria
Manresa, in his commentaries of the Codigo
Civil, public policy (orden público):
[R]epresents in the law of persons the public,
social and legal interest, that which is
permanent and essential of the institutions,
that which, even if favoring an individual in
whom
the right lies, cannot be left to his own will. It is
an idea which, in cases of the waiver of any
right, is manifested with clearness and force.
As applied to agreements, Quintus Mucius
Scaevola, another distinguished civilist gives
the term "public policy" a more defined
meaning:
Agreements in violation of orden público must
be considered as those which conflict
with law, whether properly, strictly and wholly a
public law (derecho) or whether a law of the
person, but law which in certain respects affects
the interest of society.
Plainly put, public policy is that principle of the
law which holds that no subject or citizen
can lawfully do that which has a tendency to be
injurious to the public or against the public
good. As applied to contracts, in the absence of
express legislation or constitutional prohibition,
a court, in order to declare a contract void as
against public policy, must find that the contract
as to the consideration or thing to be done, has
a tendency to injure the public, is against the
58
public good, or contravenes some established
interests of society, or is inconsistent with
sound
policy and good morals, or tends clearly to
undermine the security of individual rights,
whether
of personal liability or of private property.
From another perspective, the main objection
to exclusive dealing is its tendency to
foreclose existing competitors or new entrants
from competition in the covered portion of the
relevant market during the term of the
agreement. Only those arrangements whose
probable
effect is to foreclose competition in a
substantial share of th e line of commerce
affected can be
considered as void for being against public
policy. The foreclosure effect, if any, depends
on the
market share involved. The relevant market for
this purpose includes the full range of selling
opportunities reasonably open to rivals, namely,
all the product and geographic sales they may
readily compete for, using easily convertible
plants and marketing organizations.
Applying the preceding principles to the case at
bar, there is nothing invalid or contrary
to public policy either in the objectives sought
to be attained by paragraph 5, i.e.,
the exclusivity clause, in prohibiting respondent
Luna, and all other Avon supervisors, from
selling products other than those manufactured
by petitioner Avon. We quote with approval
the determination of the U.S. Supreme Court in
the case of Board of Trade of Chicago v.
U.S. that "the question to be determined is
whether the restraint imposed is such as merely
regulates and perhaps thereby promotes
competition, or whether it is such as m ay
suppress or
even destroy competition."
Such prohibition is neither directed to eliminate
the competition like Sandré Phils., Inc.
nor foreclose new entrants to the market. In its
Memorandum, it admits that the reason for
such exclusion is to safeguard the network that
it has cultivated through the years. Admittedly,
both companies employ the direct selling
method in order to peddle their products. By
direct
selling, petitioner Avon and Sandre, the
manufacturer, forego the use of a middleman in
selling
their products, thus, controlling the price by
which they are to be sold. The limitation does
not
affect the public at all. It is only a means by
which petitioner Avon is able to protect its
investment.
It was not by chance that Sandré Philippines,
Inc. made respondent Luna one of its

Group Franchise Directors. It doesn't take a
genius to realize that by making her an
important
part of its distribution arm, Sandré Philippines,
Inc., a newly formed direct-selling business,
would be saving time, effort and money as it
will no longer have to recruit, train and
motivate
supervisors and dealers. Respondent Luna, who
learned the tricks of the trade from petitioner
Avon, will do it for them. This is tantamount to
unjust enrichment. Worse, the goodwill
established by petitioner Avon among its loyal
customers will be taken advantaged of by
Sandre
Philippines, Inc. It is not so hard to imagine the
scenario wherein the sale of Sandré products by
Avon dealers will engender a belief in the minds
of loyal Avon customers that the product that
they are buying had been manufactured by
Avon. In other words, they will be misled into
thinking that the Sandré products are in fact
Avon products. From the foregoing, it cannot be
said that the purpose of the subject exclusivity
clause is to foreclose the competition, that is,
the entrance of Sandré products in to the
market. Therefore, it cannot be considered void
for
being against public policy. How can the
protection of one's property be violative of
public
policy? Sandré Philippines, Inc. is still very much
free to distribute its products in the market but
it must do so at its own expense. The exclusivity
clause does not in any way limit its selling
opportunities, just the undue use of the
resources of petitioner Avon.
It has been argued that the Supervisor's
Agreement is in the nature of a contract of
adhesion; but just because it is does not
necessarily mean that it is void. A contract of
adhesion
is so-called because its terms are prepared by
only one party while the other party merely
affixes his signature signifying his adhesion
thereto. [27] Such contract is just as binding as
ordinary contracts. "It is true that we have, on
occasion, struck down such contracts as void
when the weaker party is imposed upon in
dealing with the dominant bargaining party and
is
reduced to the alternative of taking it or leaving
it, completely deprived of the opportunity to
bargain on equal footing. Nevertheless,
contracts of adhesion are not invalid per se and
they
are not entirely prohibited. The one who
adheres to the contract is in reality free to
reject it
entirely, if he adheres, he gives his consent."
[28] In the case at bar, there was no indication
that respondent Luna was forced to sign the
59
subject agreement. Being of age, financially
stable and with vast business experience, she is
presumed to have acted with due care and to
have signed the assailed contract with full
knowledge of its import. Under the premises, it
would be difficult to assume that she was
morally abused. She was free to reject the
agreement if she wanted to.
Accordingly, a contract duly executed is the law
between the parties, and they are
obliged to comply fully and not selectively with
its terms. A contract of adhesion is no
exception. The foregoing premises noted, the
Court of Appeals, therefore, committed
reversible error in interpreting the subject
exclusivity clause to apply merely to those
products in direct competition to those
manufactured and sold by petitioner Avon.
When the terms of the agreement are clear and
explicit, that they do not justify an attempt to
read into any alleged intention of the parties,
the terms are to be understood literally just as
they appear on the face of the contract. Thus, in
order to judge the intention of the contracting
parties, "the
circumstances under which it was made,
including the situation of the subject thereof
and of
the parties to it, may be shown, so that the
judge may be placed in the position of those
whose
language he is to interpret." It has been held
that once this intention of the parties has been
ascertained, it becomes an integral part of the
contract as though it has been originally
expressed therein in unequivocal terms.
Having held that the "exclusivity clause" as
embodied in paragraph 5 of the Supervisor's
Agreement is valid and not against public policy,
we now pass to a consideration of respondent
Luna's objections to the validity of her
termination as provided for under paragraph 6
of the
Supervisor's Agreement giving petitioner Avon
the right to terminate or cancel such contract.
The paragraph 6 or the "termination clause"
therein expressly provides that:
The Company and the Supervisor mutually
agree:
xxxx
6) Either party may terminate this agreement at
will, with or without cause, at any time
upon notice to the other. [Emphasis supplied.]
In the case of Petrophil Corporation v. Court of
Appeals, this Court already had the
opportunity to opine that termination or
cancellation clauses such as that subject of the
case at
bar are legitimate if exercised in good faith. The
facts of said case likewise involved a
termination or cancellation clause that clearly
provided for two ways of terminating the

contract, i.e., with or without cause. The
utilization of one mode will not preclude the
use of
the other. Therein, we stated that the finding
that the termination of the contract was "for
cause," is immaterial. When petitioner
terminated the contract "without cause," it was
required
only to give x x x a 30-day prior written notice,
which it did.
In the case at bar, the termination clause of the
Supervisor's Agreement clearly provides
for two ways of terminating and/or canceling
the contract. One mode does not exclude the
other. The contract provided that it can be
terminated or cancelled for cause, it also stated
that
it can be terminated without cause, both at any
time and after written notice. Thus, whether or
not the termination or cancellation of the
Supervisor's Agreement was "for cause," is
immaterial. The only requirement is that of
notice to the other party. When petitioner Avon
chose to terminate the contract, for cause,
respondent Luna was duly notified thereof.
Worth stressing is that the right to unilaterally
terminate or cancel the Supervisor's
Agreement with or without cause is equally
available to respondent Luna, subject to the
same
notice requirement. Obviously, no advantage is
taken against each other by the contracting
parties.
WHEREFORE, in view of the foregoing, the
instant petition is GRANTED. The Decision dated
20 May 2002 rendered by the Court of Appeals
in CA-G.R. CV No. 52550,
affirming the judgment of the RTC of Makati
City, Branch 138, in Civil Case No. 88-2595, are
hereby REVERSED and SET ASIDE. Accordingly,
let a new one be entered dismissing the
complaint for damages. Costs against
respondent Leticia Luna.
SO ORDERED.
51 ST. LUKE’S MEDICAL CENTER
EMPLOYEE’S ASSOCIATION-AFW (SLMCEA-
AFW) AND
MARIBEL S. SANTOS vs. NATIONAL LABOR
RELATIONS COMMISSION
FACTS:
Maribel S. Santos was hired as X-Ray
Technician in the Radiology department of
private
respondent St. Lukes Medical Center, Inc.
(SLMC). Congress passed and enacted
60
Republic Act
No. 7431 known as the Radiologic
Technology Act of 1992. Said law requires
that no person
shall practice or offer to practice as a
radiology and/or x-ray technologist in the
Philippines
without having obtained the proper
certificate of registration from the Board of
Radiologic
Technology. SLMC issued a final notice to all
practitioners of Radiologic Technology to
comply
with the requirement of Republic Act No.
7431 otherwise, the unlicensed employee
will be
transferred to an area which does not
require a license to practice if a slot is
available. Later, a
final notice was issued to Maribel S. Santos
requiring the latter to comply by taking and
passing
the forthcoming examination otherwise,
SLMC may be compelled to retire her from
employment should there be no other
position available where she may be
absorbed. She was
likewise advised that only a license can
assure her of her continued employment at
the Institute
of Radiology of the SLMC. otherwise, private
respondent SLMC shall be constrained to
take
action which may include her separation
from employment. Later, a notice was issued
to
Maribel S. Santos informing the latter that
the management of private respondent
SLMC has
approved her retirement in lieu of
separation pay, but Santos refused to accept
SLMCs offer for
early retirement. SLMC again issued a Notice
of Separation from the Company to
petitioner
Maribel S. Santos after the latter failed to
present/ submit her appeal for rechecking to
the
Professional Regulation Commission (PRC) of

the recent board examination which she
took and
failed. Maribel S. Santos filed a complaint
against private respondent SLMC for illegal
dismissal.
ISSUE:
Whether petitioner Santos was
illegally dismissed by private respondent
SLMC on the
basis of her inability to secure a certificate of
registration from the Board of Radiologic
Technology.
HELD:
NO. While the right of workers to
security of tenure is guaranteed by the
Constitution,
its exercise may be reasonably regulated
pursuant to the police power of the State to
safeguard
health, morals, peace, education, order,
safety, and the general welfare of the
people.
Consequently, persons who desire to engage
in the learned professions requiring scientific
or
technical knowledge may be required to take
an examination as a prerequisite to engaging
in
their chosen careers. The most concrete
example of this would be in the field of
medicine, the
practice of which in all its branches has been
closely regulated by the State. It has long
been
recognized that the regulation of this field is
a reasonable method of protecting the
health and
safety of the public to protect the public
from the potentially deadly effects of
incompetence
and ignorance among those who would
practice medicine. The same rationale
applies in the
regulation of the practice of radiologic and x-
ray technology. No malice or ill-will can be
imputed upon private respondent as the
separation of petitioner Santos was
61
undertaken by it
conformably to an existing statute. It is
undeniable that her continued employment
without the
required Board certification exposed the
hospital to possible sanctions and even to a
revocation
of its license to operate. Certainly, private
respondent could not be expected to retain
petitioner Santos despite the inimical threat
posed by the latter to its business. This
notwithstanding, the records bear out the
fact that petitioner Santos was given ample
opportunity to qualify for the position and
was sufficiently warned that her failure to do
so
would result in her separation from work in
the event there were no other vacant
positions to
which she could be transferred. Despite
these warnings, petitioner Santos was still
unable to
comply and pass the required exam. To
reiterate, the requirement for Board
certification was
set by statute. Justice, fairness and due
process demand that an employer should
not be
penalized for situations where it had no
participation or control. It would be
unreasonable to
compel private respondent to wait until its
license is cancelled and it is materially
injured
before removing the cause of the impending
evil. Neither can the courts step in to force
private
respondent to reassign or transfer petitioner
Santos under these circumstances.
Petitioner
Santos is not in the position to demand that
she be given a different work assignment
when
what necessitated her transfer in the first
place was her own fault or failing. The
prerogative to
determine the place or station where an
employee is best qualified to serve the
interests of the

company on the basis of the his or her
qualifications, training and performance
belongs solely
to the employer.[14] The Labor Code and its
implementing Rules do not vest in the Labor
Arbiters nor in the different Divisions of the
NLRC (nor in the courts) managerial
authority.
52 DANILO LEONARDO, petitioner, vs.
NATIONAL LABOR RELATIONS
COMMISSION, ET.AL.
FACTS:
AURELIO FUERTE was originally
employed by REYNALDOS MARKETING
CORPORATION as
a muffler specialist. He alleges that he was
instructed to report at private respondents
main
office where he was informed by the
companys personnel manager that he would
be
transferred to its Sucat plant due to his
failure to meet his sales quota, and for that
reason, his
supervisors allowance would be withdrawn.
For a short time, FUERTE reported for work
at the
Sucat plant; however, he protested his
transfer, subsequently filing a complaint for
illegal
termination. Private respondent contends
that it never terminated petitioners services.
In
FUERTEs case, they claimed that the latter
was demoted pursuant to a company policy
intended to foster competition among its
employees. Under this scheme, private
respondents
employees are required to comply with a
monthly sales quota. Should a supervisor
such as
FUERTE fail to meet his quota for a certain
number of consecutive months, he will be
demoted,
whereupon his supervisors allowance will be
withdrawn and be given to the individual
62
who
takes his place. When the employee
concerned succeeds in meeting the quota
again, he is reappointed supervisor and his
allowance is restored.
ISSUE:
WON the right to demote an
employee falls within the category of
management
prerogatives.
HELD:
YES. This arrangement appears to us
to be an allowable exercise of company
rights. An
employer is entitled to impose productivity
standards for its workers, and in fact, non
compliance may be visited with a penalty
even more severe than demotion. Thus,
[t]he practice
of a company in laying off workers because
they failed to make the work quota has been
recognized in this jurisdiction. In the case at
bar, the petitioners failure to meet the sales
quota
assigned to each of them constitute a just
cause of their dismissal, regardless of the
permanent
or probationary status of their employment.
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 q
uotas,
either by failing to complete the same within
the allotted reasonable period, or by
producing
unsatisfactory results. This management
prerogative of requiring standards may be
availed of
so long as they are exercised in good faith for
the advancemen t of the employers interest.
53 RODOLFO LUNA, Petitioner, v.
ALLADO CONSTRUCTION CO., INC., and/or
RAMON ALLADO, Respondents.

FACTS:
Sometime in the afternoon of
November 24, 2001, petitioner alleges that
he was given a travel order dated to proceed
to respondents main office in Davao City for
reassignment. Upon arrival at the office, he
was asked to sign several sets of "Contract of
Project Employment". He refused. Thus, he
was not given a reassignment or any other
work. These incidents prompted him to file
the complaint.
Respondents, on the other hand,
alleged that petitioner applied for a leave of
absence which was granted. Upon expiration
of his leave, he was advised to report to the
companys project in Sarangani Province.
However, he refused and claimed instead
that he had been dismissed illegally.
Finding that petitioner is deemed
resigned, the Labor Arbiter (LA) dismissed
petitioners complaint for illegal dismissal,
but ordered respondent to pay the former
the amount ofP18,000.00 by way of financial
assistance.
Respondents appealed with the
National Labor Relations Commission (NLRC)
which reversed the decision of the LA,
declared respondents guilty of illegal
dismissal, and ordered them to pay
petitioner one-month salary for every year
of service as separation pay. Respondents
moved for reconsideration but their motion
was denied.
Respondents elevated their cause to
the CAviaa petition forcertiorariunder Rule
65. The CA granted respondents petition
forcertiorariand deleted the award of
financial assistance. Further, the CA held
that it was grave abuse of discretion for the
NLRC to rule on the issue of illegal dismissal
when such issue was not raised on appeal.
Petitioner filed an MR but this was
denied by the CA.
ISSUE:
(1) Whether the NLRC could still
review issues not brought during the appeal,
63
(2) Whether the CA exercised grave
abuse of discretion in disregarding the
findings of fact by the NLRC, the principle of
social justice, and jurisprudence with respect
to the award of financial assistance, and
(3) Whether the CA exhibited bias and
partiality when it rendered the decision and
resolution considering the hasty and
improvident issuance of a writ of preliminary
injunction to frustrate petitioner in
implementing the final and executor
judgment of the NLRC favouring petitioner.
HELD:
The petition is PARTLY
GRANTED.The award of financial assistance
is REINSTATED.
I. The 2002 Rules of Procedure of the
NLRC, which was in effect at the time
respondents appealed the Labor Arbiters
decision, provided that the NLRC shall limit
itself only to the specific issues that were
elevated for review. Here, the NLRC passed
upon the issue of illegal dismissal although
this was not brought up in the appeal.
Therefore, by considering the arguments
and issues in the reply/opposition to appeal
which were not properly raised by timely
appeal nor comprehended within the scope
of the issue raised in petitioners appeal,
public respondent committed grave abuse of
discretion amounting to excess of
jurisdiction.
II. As shown by the records,
inconsistent with his claim that he was
actually dismissed petitioner applied for and
was granted a week long leave. Petitioner
did not deny this. He merely claimed that he
went on leave since he was not given any
work assignment by the Company.However,
the leave application form which bore his
signature clearly stated that his reason for
going on leave was "to settle [his] personal
problem." Indeed, the NLRC gravely abused
its discretion in reversing the Labor Arbiters
decision on mere conjectures and
insubstantial grounds.
III. We are not unmindful of the rule
that financial assistance is allowed only in

instances where the employee is validly
dismissed for causes other than serious
misconduct or those reflecting on his moral
character. But we must stress that this Court
did allow the grant of financial assistance as
a measure of social justice and exceptional
circumstances, and as an equitable
concession.There appears to be no reason
why petitioner, who has served respondent
corporation for more than eight years
without committing any infraction, cannot
be extended the reasonable financial
assistance of P18,000.00 as awarded by the
Labor Arbiter on equity considerations.
IV. Granting of a TRO by a justice of
the CA even without the concurrence of the
other associate justices in the division, is
allowed in cases of extreme urgency. Here,
the records of this case would attest to the
urgency of the situation. When the TRO was
issued, the NLRC Regional Arbitration Branch
No. XI was already in the process of
enforcing the assailed Resolution of the
NLRC dated May 9, 2003 as evidenced by its
issuance of a Notice of Hearingfor a pre-
execution conference which was impelled by
a motion made by petitioner. The pre-
execution conference was conducted as
scheduled, thus, respondents filed with the
Court of Appeals an Urgent Motion for the
Issuance of a Temporary Restraining Order
and/or Writ of Preliminary Injunction.
54 ERNESTO G. YMBONG VS. ABS-CBN
BROADCASTING CORPORATION,
VENERANDA SY AND DANTE LUZON,
VILLARAMA, JR., J.:
Before us is a Rule 45 Petition seeking
to set aside the August 22, 2007 Decision
1[1] and September 18, 2008 Resolution2[2]
of the Court of Appeals (CA) in CA-G.R. SP No.
86206 declaring petitioner to have resigned
from work and not illegally dismissed.
The antecedent facts follow:
Petitioner Ernesto G. Ymbong started
working for ABS-CBN Broadcasting
64
Corporation (ABS-CBN) in 1993 at its regional
station in Cebu as a television talent, co-
anchoring Hoy Gising and TV Patrol Cebu. His
stint in ABS-CBN later extended to radio
when ABS-CBN Cebu launched its AM station
DYAB in 1995 where he worked as drama
and voice talent, spinner, scriptwriter and
public affairs program anchor. Like Ymbong,
Leandro Patalinghug also worked for ABS-
CBN Cebu. Starting 1995, he worked as
talent, director and scriptwriter for various
radio programs aired over DYAB. On January
1, 1996, the ABS-CBN Head Office in Manila
issued Policy No. HR-ER-016 or the “Policy on
Employees Seeking Public Office.”
The pertinent portions read:
1. Any employee who intends to run
for any public office position, must file
his/her letter of resignation, at least thirty
(30) days prior to the official filing of the
certificate of candidacy either for national or
local election.
xxxx 3. Further, any employee who
intends to join a political group/party or
even with no political affiliation but who
intends to openly and aggressively campaign
for a candidate or group of candidates (e.g.
publicly speaking/endorsing candidate,
recruiting campaign workers, etc.) must file
a request for leave of absence subject to
management’s approval.
For this particular reason, the
employee should file the leave request at
least thirty (30) days prior to the start of the
planned leave period. x x x x3[3] [Emphasis
and underscoring supplied.]
Because of the impending May 1998
elections and based on his immediate
recollection of the policy at that time, Dante
Luzon, Assistant Station Manager of DYAB
issued the following memorandum:
TO : ALL CONCERNED FROM : DANTE
LUZON DATE : MARCH 25, 1998 SUBJECT : AS
STATED Please be informed that per
company policy, any employee/talent who
wants to run for any position in the coming
election will have to file a leave of absence
the moment he/she files his/her certificate
of candidacy. The services rendered by the

concerned employee/talent to this company
will then be temporarily suspended for the
entire campaign/election period. For strict
compliance.4[4] [Emphasis and
underscoring supplied.]
Luzon, however, admitted that upon
double-checking of the exact text of the
policy and subsequent confirmation with the
ABS-CBN Head Office, he saw that the policy
actually required suspension for those who
intend to campaign for a political party or
candidate and resignation for those who will
actually run in the elections.5[5]
After the issuance of the March 25,
1998 Memorandum, Ymbong got in touch
with Luzon. Luzon claims that Ymbong
approached him and told him that he would
leave radio for a couple of months because
he will campaign for the administration
ticket. It was only after the elections that
they found out that Ymbong actually ran for
public office himself at the eleventh hour.
Ymbong, on the other hand, claims
that in accordance with the March 25, 1998
Memorandum, he informed Luzon through a
letter that he would take a few months leave
of absence from March 8, 1998 to May 18,
1998 since he was running for councilor of
Lapu-Lapu City. As regards Patalinghug,
Patalinghug approached Luzon and advised
him that he will run as councilor for Naga,
Cebu.
According to Luzon, he clarified to
Patalinghug that he will be considered
resigned and not just on leave once he files a
certificate of candidacy. Thus, Patalinghug
wrote Luzon the following letter on April 13,
1998: Dear Mr. Luzon, I’m submitting to you
my letter of resignation as your Drama
Production Chief and Talent due to your
company’s policy that every person
connected to ABS-CBN that should seek an
elected position in the government will be
forced to resigned (sic) from his position. So
herewith I’m submitting my resignation with
a hard heart. But I’m still hoping to be
connected again with your prestigious
company after the election[s] should you
65
feel that I’m still an asset to your drama
production department.
I’m looking forward to that day and
I’m very happy and proud that I have served
for two and a half years the most stable and
the most prestigious Radio and TV Network
in the Philippines. As a friend[,] wish me luck
and Pray for me. Thank you. 1 2 3 4 5
Very Truly Yours, (Sgd.) Leandro
“Boy” Patalinghug6[6]
Unfortunately, both Ymbong and
Patalinghug lost in the May 1998 elections.
Later, Ymbong and Patalinghug both tried to
come back to ABS-CBN Cebu.
According to Luzon, he informed
them that they cannot work there anymore
because of company policy. This was
stressed even in subsequent meetings and
they were told that the company was not
allowing any exceptions. ABS-CBN, however,
agreed out of pure liberality to give them a
chance to wind up their participation in the
radio drama, Nagbabagang Langit, since it
was rating well and to avoid an abrupt
ending. The agreed winding-up, however,
dragged on for so long prompting Luzon to
issue to Ymbong the following memorandum
dated September 14, 1998:
TO : NESTOR YMBONG FROM :
DANTE LUZON SUBJECT : AS STATED DATE :
14 SEPT. 1998 Please be reminded that your
services as drama talent had already been
automatically terminated when you ran for a
local government position last election. The
Management however gave you more than
enough time to end your drama
participation and other involvement with
the drama department. It has been decided
therefore that all your drama participation
shall be terminated effective immediately.
However, your involvement as drama
spinner/narrator of the drama
“NAGBA[BA]GANG LANGIT” continues until
its writer/director Mr. Leandro Patalinghug
wraps it up one week upon receipt of a
separate memo issued to him.7[7]
Ymbong in contrast contended that
after the expiration of his leave of absence,
he reported back to work as a regular talent

and in fact continued to receive his salary.
On September 14, 1998, he received a
memorandum stating that his services are
being terminated immediately, much to his
surprise. Thus, he filed an illegal dismissal
complaint 8[8] against ABS-CBN, Luzon and
DYAB Station Manager Veneranda Sy. He
argued that the ground cited by ABS-CBN for
his dismissal was not among those
enumerated in the Labor Code, as amended.
And even granting without admitting the
existence of the company policy supposed to
have been violated, Ymbong averred that it
was necessary that the company policy meet
certain requirements before willful
disobedience of the policy may constitute a
just cause for termination.
Ymbong further argued that the
company policy violates his constitutional
right to suffrage.9[9] Patalinghug likewise
filed an illegal dismissal complaint10[10]
against ABS-CBN. ABS-CBN prayed for the
dismissal of the complaints arguing that
there is no employer-employee relationship
between the company and Ymbong and
Patalinghug. ABS-CBN contended that they
are not employees but talents as evidenced
by their talent contracts. However,
notwithstanding their status, ABS-CBN has a
standing policy on persons connected with
the company whenever they will run for
public office.11[11]
Issues:
(1) whether Ymbong, by seeking an
elective post, is deemed to have resigned
and not dismissed by ABS-CBN.
Held:
Ymbong is deemed resigned when he
ran for councilor. As Policy No. HR-ER-016 is
the subsisting company policy and not
Luzon’s March 25, 1998 Memorandum,
Ymbong is deemed resigned when he ran for
councilor.
We find no merit in Ymbong’s
argument that “[his] automatic termination
x x x was a blatant [disregard] of [his] right to
due process” as he was “never asked to
66
explain why he did not tender his resignation
before he ran for public office as mandated
by [the subject company policy].”12[37]
Ymbong’s overt act of running for councilor
of Lapu-Lapu City is tantamount to
resignation on his part. He was separated
from ABS-CBN not because he was dismissed
but because he resigned. Since there was no
termination to speak of, the requirement of
due process in dismissal cases cannot be
applied to Ymbong. Thus, ABS-CBN is not
duty-bound to ask him to explain why he did
not tender his resignation before he ran for
public office as mandated by the subject
company policy. In addition, we do not
subscribe to Ymbong’s claim that he was not
in a position to know which of the two
issuances was correct. Ymbong most likely
than not, is fully aware that the subsisting
policy is Policy No. HR-ER-016 and not the
March 25, 1998 Memorandum and it was for
this reason that, as stated by Luzon in his
Sworn Statement, he only told the latter that
he will only campaign for the administration
ticket and not actually run for an elective
post. Ymbong claims he had fully apprised
Luzon by letter of his plan to run and even
filed a leave of absence but records are
bereft of any proof of said claim. Y
Ymbong claims that the letter stating
his intention to go on leave to run in the
election is attached to his Position Paper as
Annex “A,” a perusal of said pleading
attached to his petition before this Court,
however, show that Annex “A” was not his
letter to Luzon but the September 14, 1998
Memorandum informing Ymbong that his
services had been automatically terminated
when he ran for a local government position.
Moreover, as pointed out by ABS-
CBN, had Ymbong been truthful to his
superiors, they would have been able to
clarify to him the prevailing company policy
and inform him of the consequences of his
decision in case he decides to run, as Luzon
did in Patalinghug’s case. WHEREFORE, the
petition for review on certiorari is DENIED
for lack of merit. With costs against
petitioner. SO ORDERED

55 PRODUCERS BANK OF THE PHILIPPINES
vs. NATIONAL LABOR RELATIONS
COMMISSION
and PRODUCERS BANK EMPLOYEES
ASSOCIATION
FACTS:
Private respondent argues that the
mid-year and Christmas bonuses, by reason
of their
having been given for thirteen consecutive
years, have ripened into a vested right and,
as such,
can no longer be unilaterally withdrawn by
petitioner without violating Article 100 of
Presidential Decree No. 442 which prohibits
the diminution or elimination of benefits
already
being enjoyed by the employees. Although
private respondent concedes that the grant
of a except when it is made part of the wage,
bonus is discretionary on the part of the
employer, it argues that, by reason of its long
and
regular concession, it may become part of
the employees regular compensation. On
the other
hand, Petitioner asserts that it cannot be
compelled to pay the alleged bonus
differentials due
to its depressed financial condition, as
evidenced by the fact that in 1984 it was
placed under
conservatorship by the Monetary Board.
Moreover, the collective bargaining
agreement of the
parties does not provide for the payment of
any mid -year or Christmas bonus. On the
contrary,
in the CBA it states that any other benefits or
privileges which are not expressly provided,
even
if now accorded or hereafter accorded to the
employees, shall be deemed purely acts of
grace
dependent upon the sole judgment and
67
discretion of the BANK to grant, modify or
withdraw.
HELD:
A bonus is an amount granted and
paid to an employee for his industry and
loyalty
which contributed to the success of the
employers business and made possible the
realization
of profits. It is an act of generosity granted
by an enlightened employer to spur the
employee to
greater efforts for the success of the
business and realization of bigger profits.
The granting of a
bonus is a management prerogative,
something given in addition to what is
ordinarily received
by or strictly due the recipient. Thus, a bonus
is not a demandable and enforceable
obligation,
salary or compensation of the employee.
However, an
employer cannot be forced to distribute
bonuses which it can no longer afford to pay.
To hold
otherwise would be to penalize the
employer for his past generosity.
56 LEPANTO CERAMICS, INC. vs. LEPANTO
CERAMICS EMPLOYEES ASSOCIATION
FACTS:
Lepanto Ceramics Employees
Association is a legitimate labor organization
duly
registered with the Department of Labor and
Employment. It is the sole and exclusive
bargaining agent of Lepanto Ceramics,
Incorporated. In December 1998, Petitioner
gave a
P3,000.00 bonus to its employees.
Subsequently, in September 1999, petitioner
and
respondent Association entered into a CBA
which provides for, among others, the grant

of a the same partakes the nature of a
Christmas gift package/bonus to the
members of the respondent Association. The
Christmas
bonus was one of the enumerated existing
benefit, practice of traditional rights which
shall
remain in full force and effect. In the
succeeding years, the bonus was not in cash.
Instead,
petitioner gave each of the members of
respondent Association Tile Redemption
Certificates
equivalent to P3,000.00. On 2002, Petitioner
gave a yearend cash benefit of Six Hundred
Pesos
(P600.00) and offered a cash advance to
interested employees equivalent to one (1)
month
salary payable in one year. The respondent
Association objected to the P600.00 cash
benefit
and argued that this was in violation of the
CBA it executed with the petitioner.
HELD:
By definition, a bonus is a gratuity or
act of liberality of the giver. It is something
given in
addition to what is ordinarily received by or
strictly due the recipient. A bonus is granted
and
paid to an employee for his industry and
loyalty which contributed to the success of
the
employers business and made possible the
realization of profits. A bonus is also granted
by an
enlightened employer to spur the employee
to greater efforts for the success of the
business
and realization of bigger profits. Generally, a
bonus is not a demandable and enforceable
obligation. For a bonus to be enforceable, it
must have been promised by the employer
and
expressly agreed upon by the parties. Given
that the bonus in this case is integrated in
the CBA,
68
demandable obligation. Verily, by virtue of
its incorporation
in the CBA, the Christmas bonus due to
respondent Association has become more
than just an
act of generosity on the part of the
petitioner but a contractual obligation it has
undertaken.
57 INTERPHIL LABORATORIES EMPLOYEES
UNION-FFW, ENRICO GONZALES and MA.
THERESA
MONTEJO vs. INTERPHIL LABORATORIES,
INC.,
FACTS:
Interphil Laboratories Employees
Union-FFW is the sole and exclusive
bargaining agent
of the rank-and-file employees of Interphil
Laboratories, Inc., a company engaged in the
business of manufacturing and packaging
pharmaceutical products. They had a
Collective
Bargaining Agreement (CBA). On 16 April
1993, all the rank-and-file employees of the
company
refused to follow their regular two-shift
work schedule of from 6:00 a.m. to 6:00
p.m., and from
6:00 p.m. to 6:00 a.m. At 2:00 p.m. and 2:00
a.m., respectively, the employees stopped
working
and left their workplace without sealing the
containers and securing the raw materials
they
were working on. When Salazar inquired
about the reason for their refusal to follow
their
normal work schedule, the employees told
him to "ask the union officers." To minimize
the
damage the overtime boycott was causing
the company, Salazar immediately asked for
a
meeting with the union officers. In the
meeting, Enrico Gonzales, a union director,
 69

told Salazar 58 MALAYAN EMPLOYEES ASSOCIATION-

that the employees would only return to FFW and RODOLFO MANGALINO vs.
their normal work schedule if the company MALAYAN
would INSURANCE COMPANY, INC.
agree to their demands as to the effectivity
and duration of the new CBA. Salazar again FACTS:
told the The union is the exclusive bargaining
union officers that the matter could be agent of the rank-and-file employees of the
better discussed during the formal company. A provision in the unions collective
renegotiations of the bargaining agreement (CBA) with the
CBA. company
allows union officials to avail of union leaves
HELD: with pay for a total of ninety-man days per
It is evident from the foregoing year
provision that the working hours may be for the purpose of attending grievance
changed, at the meetings, Labor-Management Committee
discretion of the company, should such meetings,
change be necessary for its operations, and annual National Labor Management
that the Conferences, labor education programs and
employees shall observe such rules as have seminars, and
been laid down by the company. In the case other union activities. The company issued a
before rule in November 2002 requiring not only
us, Labor Arbiter Caday found that the prior
respondent company had to adopt a notice that the CBA expressly requires, but
continuous 24-hour prior approval by the department head
work daily schedule by reason of the nature before the
of its business and the demands of its clients. union and its members can avail of union
It leaves. The rule was placed into effect in
was established that the employees adhered November
to the said work schedule since 1988. The 2002 without any objection from the union
employees are deemed to have waived the until a union officer, Mangalino, filed union
eight-hour schedule since they followed, leave
without applications in January and February, 2004.
any question or complaint, the twoshift His department head disapproved the
schedu le while their CBA was still in force applications
and even because the department was undermanned
prior thereto. The two-shift schedule at that time. Despite the disapproval,
effectively changed the working hours Mangalino
stipulated in the proceeded to take the union leave. He said
CBA. As the employees assented by practice he believed in good faith that he had
to this arrangement, they cannot now be complied with
heard to the existing company practice and with the
claim that the overtime boycott is justified procedure set forth in the CBA. The company
because they were not obliged to work responded by suspending him for one week
beyond eight and, thereafter, for a month, for his second
hours. offense
in February 2004.

ISSUE:
 70

WON regulation of the use of union charge, of

leaves is within the companys management course, can no longer prosper even if laid
prerogative today, given the lapse of time that has since
transpired.

HELD:
YES. While it is true that the union
and its members have been granted union
leave
privileges under the CBA, the grant cannot
be considered separately from the other
provisions
of the CBA, particularly the provision on
management prerogatives where the CBA
reserved for
the company the full and complete authority
in managing and running its business. We
see
nothing in the wordings of the union leave
provision that removes from the company
the right
to prescribe reasonable rules and
regulations to govern the manner of availing
of union leaves,
particularly the prerogative to require prior
approval. Precisely, prior notice is expressly
required under the CBA so that the company
can appropriately respond to the request for
leave. In this sense, the rule requiring prior
approval only made express what is implied
in the
terms of the CBA. The prior approval policy
fully supported the validity of the
suspensions the
company imposed on Mangalino. We point
out additiona lly that as an employee,
Mangalino
had the clear obligation to comply with the
management disapproval of his requested
leave
while at the same time registering his
objection to the company regulation and
action. That he
still went on leave, in open disregard of his
superiors orders, rendered Mangalino open
to the
charge of insubordination, separately from
his absence without official leave. This

59 Negros Slashers, Inc., et al. v. Alvin L. Teng
Facts:
Respondent Alvin Teng is a
professional basketball player who started
his career as such in the Philippine Basketball
Association and then later on played in the
Metropolitan Basketball Association (MBA).
Some time in one of his games,
particularly Game Number 4 of the MBA
Championship Round for the year 2000
season, Teng had a below-par playing
performance. Because of this, the coaching
staff decided to pull him out of the
game. Teng then sat on the bench, untied
his shoelaces and donned his practice
jersey. On the following game, Game
Number 5 of the Championship Round, Teng
called-in sick and did not play.
On March 16, 2001, because of what
happened, the management of Negros
Slashers came up with a decision, and
through its General Manager, petitioner
Rodolfo Alvarez, wrote Teng informing him
of his termination from the team.
Issue:
Whether or not Teng’s dismissal from
the Negros Slashers Team was unjustified
and too harsh considering his misconduct.
Ruling:
YES.
As ruled in Sagales v. Rustan’s Commercial
Corporation, while the employer has the
inherent right to discipline, including that of
dismissing its employees, this prerogative is
subject to the regulation by the State in the
exercise of its police power.
In this regard, it is a hornbook
doctrine that infractions committed by an
employee should merit only the
corresponding penalty demanded by the
circumstance. The penalty must
be commensurate with the act, conduct or
omission imputed to the employee and must
be imposed in connection with the
disciplinary authority of the employer.
In the case at bar, the penalty handed
out by the petitioners was the ultimate
71
penalty of dismissal. There was no warning
or admonition for respondent’s violation of
team rules, only outright termination of his
services for an act which could have been
punished appropriately with a severe
reprimand or suspension.
60 VILLARUEL VS. YEO HAN GUAN
FACTS:
Villaruel filed with the NLRC NCR-
Quezon City a Complaint for payment of
separation pay against Yuhans Enterprises.
Petitioner alleged that in June 1963,
he was employed as a machine operator by
Ribonette Manufacturing Company, an
enterprise engaged in the business of
manufacturing and selling PVC pipes and is
owned and managed by herein respondent
Yeo Han Guan.Petitioner further alleged that
in October 1998, he got sick and was
confined in a hospital; In December 1998, he
reported for work but was no longer
permitted to go back because of his illness;
he asked that respondent allow him to
continue working but be assigned a lighter
kind of work but his request was denied;
instead, he was offered a sum of P15,000.00
as his separation pay; however, the said
amount corresponds only to the period
between 1993 and 1999; petitioner prayed
that he be granted separation pay computed
from his first day of employment in June
1963, but respondent refused.
On the other hand, respondent
averred that petitioner was hired as machine
operator from March 1993 until he stopped
working sometime in February 1999 on the
ground that he was suffering from illness;
after his recovery, petitioner was directed to
report for work, but he never showed
up. Respondent was later caught by surprise
when petitioner filed the instant case for
recovery of separation pay. Respondent
claimed that he never terminated the
services of petitioner and that during their
mandatory conference, he even told the
latter that he could go back to work anytime
but petitioner clearly manifested that he was

no longer interested in returning to work and
instead asked for separation pay.
ISSUE:
is Villaruel entitled to separation
pay?
HELD:
YES, but only financial assistance as a
measure of social justice Article 284 of the
Labor Code reads:
An employer may terminate the
services of an employee who has been found
to be suffering from any disease and whose
continued employment is prohibited by law
or is prejudicial to his health as well as to the
health of his co-employees: Provided, That
he is paid separation pay equivalent to at
least 1 month salary or to ½ month salary for
every year of service whichever is greater, a
fraction of at least six months being
considered as 1 whole year.
A plain reading of the abovequoted provision
clearly presupposes that it is the employer
who terminates the services of the employee
found to be suffering from any disease and
whose continued employment is prohibited
by law or is prejudicial to his health as well
as to the health of his co-employees. It does
not contemplate a situation where it is the
employee who severs his or her employment
ties.
The Court agrees with the CA in its
observation of the following circumstances
as proof that respondent did not terminate
Villaruel’s employment: first, the only cause
of action in petitioner’s original complaint is
that he was “offered a very low separation
pay”; second, there was no allegation of
illegal dismissal, both in petitioner’s original
and amended complaints and position
paper; and, third, there was no prayer for
reinstatement. This is tantamount to
resignation.
Resignation is defined as the
voluntary act of an employee who finds
himself in a situation where he believes that
personal reasons cannot be sacrificed in
favor of the exigency of the service and he
72
has no other choice but to disassociate
himself from his employment
However, there is no provision in the
Labor Code which grants separation pay to
voluntarily resigning employees. In fact, the
rule is that an employee who voluntarily
resigns from employment is not entitled to
separation pay, except when it is stipulated
in the employment contract or CBA, or it is
sanctioned by established employer practice
or policy.
Since petitioner was not terminated
from his employment and, instead, is
deemed to have resigned therefrom, he
is not entitled to separation pay under the
provisions of the Labor Code.
**
It may not be amiss to point out at
this juncture that aside from Article 284 of
the Labor Code, the award of separation pay
is also authorized in the situations dealt with
in Article 283 of the same Code and under
Section 4 (b), Rule I, Book VI of the IRR of the
said Code where there is illegal dismissal and
reinstatement is no longer feasible. By way
of exception, this Court has allowed grants of
separation pay to stand as “a measure of
social justice” where the employee is validly
dismissed for causes other than serious
misconduct or those reflecting on his moral
character.
This Court, in a number of cases, has
granted financial assistance to separated
employees as a measure of social and
compassionate justice and as an equitable
concession. Taking into consideration the
factual circumstances obtaining in the
present case, the Court finds that petitioner
is entitled to this kind of assistance. The
Court notes that there is no evidence on
record to show that petitioner has any
derogatory record during his long years of
service with respondent and that his
employment was severed not by reason of
any infraction on his part but because of his
failing physical condition. Based on the
foregoing, the Court finds that the award of
financial assistance is deemed equitable
under the circumstances.

61 The University of Immaculate
Conception vs National Labor and
Relations Commission
FACTS:
Teodora Axalan is a regular faculty
member in the University of the Immaculate
Conception holding the position of Associate
Professor II. Aside from being a regular
faculty member, Axalan is the elected
President of the Employees' Union from 18
November to 22 November 2002. Axalan
attended a seminar in Quezon City on
website development. Axalan then received
a memorandum from Dean Maria Rosa
Celestial asking her to explain in writing why
she should not be dismissed for having been
absent without official leave. Axalan claimed
that she held online classes while attending
the seminar. She explained that she was
under the impression that faculty members
would not be marked absent even if they
were not physically present in the classroom
as long as they conducted online classes.
From 28 January to 3 February 2003, Axalan
attended a second seminar in Baguio City on
advanced paralegal training on which dates
Axalan was absent. An Ad Hoc Grievance
Committee was created, and upon its
recommendation Axalan was suspended for
a year for her AWOLcharges. On 1 December
2003, Axalan filed a complaint against the
University for illegal suspension and
constructive dismissal in the Labor Arbiter.
The University moved to dismiss on the
ground that the Labor Arbiter had no
jurisdiction over the subject matter of the
complaint. The university maintained that
jurisdiction lay in the voluntary arbitrator.
ISSUE:
Whether or not the labor arbiter has
jurisdiction in the case at bar
RULING:
No. Although Article 217 of the Labor
Code states that unfair labor practices and
termination disputes fall within the original
and exclusive jurisdiction of the
73
Labor Arbiter. Article 262 of the same Code
provides the exception. For the exception to
apply, there must be an agreement between
the parties clearly conferring jurisdiction to
the voluntary arbitrator. Such agreement
may be stipulated in a collective
bargaining agreement. However, in the
absence of a collective
bargaining agreement, it is enough that
there is evidence on record showing that the
parties have agreed to resort to
voluntary arbitration. As can be gleaned
from the transcript of stenographic notes of
the administrative hearing held on 20
February 2003, the parties in this case clearly
agreed to resort to voluntary arbitration.
62 NATIONWIDE SECURITY AND ALLIED
SERVICES, INC., Petitioner, v. RONALD P.
VALDERAMA, Respondent.
FACTS:
Respondent was hired by petitioner
as security guard. Almost 4 years after, he
was relieved from service and was not given
any assignment thereafter. He filed a
complaint for constructive dismissal and
nonpayment of 13th month pay. Petitioner
presented a different version. It alleged that
respondent was not constructively or
illegally dismissed, but had voluntarily
resigned.
The LA declared respondent to have
been constructively dismissed. On appeal,
the NLRC modified the LA decision. It
declared that respondent was neither
constructively terminated nor did he
voluntarily resign. As such, respondent
remained an employee of petitioner. The
NLRC thus ordered respondent to
immediately report to petitioner and
assume his duty. The CA set aside the
resolutions of the NLRC and reinstated that
of the LA. The CA sustained respondent’s
claim of constructive dismissal and pointed
out that respondent remained on floating
status for more than six (6) months, and
petitioner offered no credible explanation

why it failed to provide a new assignment to
respondent
ISSUE:
Whether or not the CA erred in
sustaining respondent’s claim of constructive
dismissal.
HELD:
The petition lacks merit.
LABOR LAW: Floating status
In cases involving security guards, a
relief and transfer order in itself does not
sever employment relationship between a
security guard and his agency. An employee
has the right to security of tenure, but this
does not give him a vested right to his
position as would deprive the company of its
prerogative to change his assignment or
transfer him where his service, as security
guard, will be most beneficial to the client.
Jurisprudence is trite with
pronouncements that the temporary
inactivity or “floating status” of security
guards should continue only for six months.
Otherwise, the security agency concerned
could be liable for constructive dismissal. In
this case, respondent remained on “floating
status” for more than six months. He was
relieved on January 30, 2006, and was not
given a new assignment at the time he filed
the complaint on August 2, 2006.
Petition is DENIED.
62.1 William Barroga vs Data Center
College et al
FACTS:
In November 1991, William Barroga was
hired as an instructor by Data Center College in
its Laoag City, Ilocos Norte campus. In June 1992,
Barroga was re-assigned to Vigan, Ilocos Sur. Part
of the deal for his re-assignment was that
Barroga will receive a monthly allowance of
P1,200.00 for board and lodging while
performing his job in Vigan. However, Data
Center made it clear in writing that Barroga is
only entitled to the additional allowance while
assigned in Vigan and such allowance may be
74
changed or forfeited if he will be re-assigned
somewhere. In 1994, he was recalled to Laoag.
Later, Barroga was also assigned as the
temporary Head of Education; he was also given
a scholarship grant to support his post-graduate
studies. In 2003, Barroga was advised that he will
be transferred to Bangued, Abra. Barroga
refused because his father was sick and second,
he found out that there will be no additional
allowance this time and that he will be working
there as an instructor and not as a Head of
Education. In the same year, he filed a labor case
against Data College for constructive dismissal.
Barroga alleged that the real purpose of his
transfer is to demote him to the rank of an
instructor from being the Head for Education
performing administrative functions and that his
re-assignment will entail an indirect reduction of
his salary or diminution of pay considering that
no additional allowance will be given to cover for
board and lodging expenses. He claims that such
additional allowance was given in the past and
therefore cannot be discontinued and
withdrawn without violating the prohibition
against non-diminution of benefits.
ISSUE:
Whether or not the absence of
additional allowance in Barroga’s supposed
re-assignment constitutes a diminution of
benefits.
HELD:
No. It is true that as a general rule,
benefits and perks enjoyed by employees
cannot be reduced and discontinued or
diminished. But this rule is only applicable to
grants or benefits which are founded on an
express policy or has ripened into a practice
over a long period which is consistent and
deliberate. In the case at bar, Barroga’s
additional allowance while in Vigan is not
permanent. In fact, Data College made clear
that such allowance is only applicable while
Barroga is in Vigan and such allowance is no
longer applicable if he is going to be assigned
somewhere. Further, Data College showed
that it is experiencing financial difficulties
hence the need to withdraw the scholarship
previously granted to Barroga. On the issue
of his removal as Head for Education, the

same is valid. Barroga was merely assigned
in a temporary capacity, such designation is
terminable at the pleasure of Data College
which made such appointment.
63 NIPPON HOUSING PHIL. INC., and/or
TADASHI OTA, HOROSHI TAKADA,
YUSUHIRO KAWATA, MR. NOBOYUSHI and
JOEL REYES,Petitioners, v. MAIAH ANGELA
LEYNES, Respondent.
FACTS:
Nippon Housing Philippines, Inc.
(NPHI) hired respondent Maiah Angela
Leyneson 26 March 2001 for the position of
Property Manager.
On 6 February 2002, Leynes had a
misunderstanding with Engr. Honesto
Cantuba, the Building Engineer assigned at
Bay Gardens Condominium Project (the
Project), regarding the extension of the
latter working hours. Aside from instructing
the security guards to bar Engr. Cantuba
from entry into the Project and to tell him to
report to the NHPI main office in Makati,
Leynes also sent a letter dated 8 February
2002 by telefax to Joel Reyes, NHPI HR Head,
apprising the latter of Cantuba supposed
insubordination and disrespectful conduct.
With Engr. Cantuba submission of a reply in
turn accusing Leynes of pride, conceit and
poor managerial skills, Hiroshi Takada, NHPI
VP, went on to issue the 12 February 2002
memorandum, attributing the incident to
"simple personal differences" and directing
Leynes to allow Engr. Cantuba to report back
for work.
Disappointed with the foregoing
management decision, Leynes submitted to
a letter asking for an emergency leave of
absence for the supposed purpose of
coordinating with her lawyer regarding her
resignation letter. While NHPI offered the
Property Manager position to Engr. Carlos
Jose on 13 February 2002 as a consequence
Leynessignification of her intention to
resign, it also appears that Leynes sent
another letter to Reyes by telefax on the
75
same day, expressing her intention to return
to work on 15 February 2002 and to call off
her planned resignation upon the advice of
her lawyer. On 22 February 2002, Leynes was
further served with a letter and
memorandum relieving her from her
position and directing her to report to NHPI
main office while she was on floating status.
Aggrieved, Leynes lost no time in
filing against NHPI and its above-named
officers a complaint for illegal dismissal,
unpaid salaries, benefits, damages and
attorney fees before the NLRC. NHPI and its
officers asserted that the management
exercise of the prerogative to put an
employee on floating status for a period not
exceeding six months was justified in view of
her threatened resignation from her position
and BGCC request for her
replacement.During the pendency of the
case, however, Reyes eventually served the
DOLE and Leynes with a notice terminating
her services effective 22 August 2002, on the
ground of redundancy or lack of a posting
commensurate to her position at the
Project.Leynes was offered by NHPI the sum
ofP28,188.16 representing her unpaid
wages, proportionate 13th month pay, tax
refund and service incentive leave pay (SILP).
The LA found that NHPI act of putting
Leynes on floating status was equivalent to
termination from employment without just
cause and compliance with the twin
requirements of notice and hearing.
On appeal, the NLRC reversed the LA
decision. Leynes elevated the case to the CA
on a Rule 65 petition for certiorari and the
CA reversed the NLRC decision.
ISSUE:
Whether or not the CA erred in
finding that Leynes was constructively
dismissed when she was placed on floating
status prior to her termination from
employment on the ground of redundancy?
HELD:
Although the CA correctly found that
the record is bereft of any showing that
Leynes was unacceptable to BGCC, the

evidence the parties adduced a quo clearly
indicates that petitioners were not in bad
faith when they placed the former under
floating status. Disgruntled by NHPI
countermanding of her decision to bar Engr.
Cantuba from the Project, Leynes twice
signified her intention to resign from her
position. In her application letter for an
immediate emergency leave, Leynes also
distinctly expressed her dissatisfaction over
NHPI resolution of her dispute with Engr.
Cantuba and announced her plan of
coordinating with her lawyer regarding her
resignation letter.
In view of the sensitive nature of
Leynes position and the critical stage of the
Project business development, NHPI was
constrained to relay the situation to BGCC
which, in turn, requested the immediate
adoption of remedial measures from Takada,
including the appointment of a new Property
Manager for the Project. Upon BGCC
recommendation, NHPI consequently hired
Engr. Jose on 13 February 2002 as Leynes
replacement. Far from being the indication
of bad faith the CA construed the same to be,
these factual antecedents suggest that NHPI
immediate hiring of Engr. Jose as the new
Property Manager for the Project was
brought about by Leynesown rash
announcement of her intention to resign
from her position. Although she
subsequently changed her mind and sent
Reyes a letter by telefax on 13 February 2002
announcing the reconsideration of her
planned resignation and her intention to
return to work on 15 February 2002, Leynes
evidently had only herself to blame for
precipitately setting in motion the events
which led to NHPI hiring of her own
replacement.
The record, moreover, shows that
NHPI simply placed her on floating status
"until such time that another project could
be secured" for her. Traditionally invoked by
security agencies when guards are
temporarily sidelined from duty while
waiting to be transferred or assigned to a
new post or client, Article 286 of the Labor
76
Code has been applied to other industries
when, as a consequence of the bona fide
suspension of the operation of a business or
undertaking, an employer is constrained to
put employees on floating status for a period
not exceeding six months.
Considering that even labor laws
discourage intrusion in the employer's
judgment concerning the conduct of their
business, courts often decline to interfere in
their legitimate business decisions,absent
showing of illegality, bad faith or
arbitrariness. Indeed, the right of employees
to security of tenure does not give them
vested rights to their positions to the extent
of depriving management of its prerogative
to change their assignments or to transfer
them.The record shows that Leynes filed the
complaint for actual illegal dismissal from
which the case originated on 22 February
2002 or immediately upon being placed on
floating status as a consequence of NHPI
hiring of a new Property Manager for the
Project. The rule is settled, however, that
"off-detailing" is not equivalent to dismissal,
so long as such status does not continue
beyond a reasonable time and that it is only
when such a "floating status" lasts for more
than six months that the employee may be
considered to have been constructively
dismissed. A complaint for illegal dismissal
filed prior to the lapse of said six-month
and/or the actual dismissal of the employee
is generally considered as prematurely filed.
Viewed in the light of the foregoing
factual antecedents, the Court finds that the
CA reversibly erred in holding petitioners
liable for constructively dismissing Leynes
from her employment. There is said to be
constructive dismissal when an act of clear
discrimination, insensitivity or disdain on the
part of the employer has become so
unbearable as to leave an employee with no
choice but to forego continued employment.
Constructive dismissal exists where there is
cessation of work because continued
employment is rendered impossible,
unreasonable or unlikely, as an offer
involving a demotion in rank and a

diminution in pay. Stated otherwise, it is a
dismissal in disguise or an act amounting to
dismissal but made to appear as if it were
not.
With no other client aside from BGCC
for the building management side of its
business, the Court finds that NHPI was
acting well within its prerogatives when it
eventually terminated Leynesservices on the
ground of redundancy. One of the
recognized authorized causes for the
termination of employment, redundancy
exists when the service capability of the
workforce is in excess of what is reasonably
needed to meet the demands of the business
enterprise. A redundant position is one
rendered superfluous by any number of
factors, such as overhiring of workers,
decreased volume of business, dropping of a
particular product line previously
manufactured by the company or phasing
out of service activity priorly undertaken by
the business.It has been held that the
exercise of business judgment to
characterize an employee service as no
longer necessary or sustainable is not
subject to discretionary review where, as
here, it is exercised there is no showing of
violation of the law or arbitrariness or malice
on the part of the employer.
Having been validly terminated on
the ground of redundancy, Leynes is entitled
to separation pay equivalent to one-month
salary for every year of service but not to the
backwages adjudicated in her favor by the
Labor Arbiter.
GRANTED
64 Francis Bello vs Bonifacio Security
Services
The Factual Background
Respondent Bonifacio Security
Services, Inc. (BSSI) is a domestic private
corporation engaged in the business of
providing security services. In July 2001, the
BSSI hired Bello as a roving traffic marshal to
manage traffic and to conduct security and
77
safety-related operations in the Bonifacio
Global City (BGC). In August 2001, Bello was
posted at the Negros Navigation Company in
Pier 2, North Harbor, to supervise sectoral
operations. In November 2001, he was
assigned at BGC as assistant detachment
commander. After a week, he was
transferred to Pacific Plaza Towers as
assistant detachment commander and later
as detachment commander. In June 2002, he
was assigned at Pier 2, North Harbor as
assistant detachment commander, but later
reassigned to BGC. In August 2002, the BSSI
hired a new operations manager, resulting in
the reorganization of posts. In October 2002,
Bello was assigned as roving traffic marshal
at the BGC. On October 25, 2002, he filed an
indefinite leave of absence when his new
assignment took effect.
On November 5, 2002, Bello filed a
complaint against the BSSI and its General
Manager, respondent Samuel Tomas, with
the National Labor Relations Commission
(NLRC),[5] claiming that he had been
constructively dismissed when he was
demoted from a detachment commander to
a mere traffic marshal. He alleged that he
received a series of promotions from 2001 to
2002, from traffic marshal to supervisor, to
assistant detachment commander, and to
detachment commander.[6]
The BSSI denied Bello’s claim of
constructive dismissal, arguing that no
promotion took place; Bello’s designation as
assistant detachment commander or
detachment commander was not an
employment position but a duty-related
assignment; Bello abandoned his job when
he went on an indefinite leave of absence
and did not report for work.[7]
The Labor Arbiter’s Ruling
In his December 29, 2005 decision,[8]
Labor Arbiter Cresencio G. Ramos, Jr. found
that Bello was illegally dismissed, noting that
the BSSI failed to adduce evidence that Bello
abandoned his employment. Thus, he
ordered Bello’s reinstatement and awarded
him backwages amounting to P391,474.25.

After the NLRC dismissed the BSSI’s
belated appeal and subsequent motion for
reconsideration,[9] the latter filed a petition
for certiorari with the CA. The CA granted the
petition,[10] thus reinstating BSSI’s appeal
with the NLRC.
In its March 26, 2008 resolution, the
NLRC affirmed the labor arbiter’s decision,
finding that Bello had been constructively
dismissed when he was demoted to the
rank-and-file position of traffic marshal after
occupying the supervisory position of
assistant detachment commander and
detachment commander.[11] The denial of
BSSI’s subsequent motion for
reconsideration led it back to the CA on a
petition for certiorari under Rule 65 of the
Rules of Court.[12]
The CA Ruling
The CA nullified the NLRC
resolutions, finding the records bereft of
evidence substantiating the labor arbiter’s
and the NLRC’s conclusions that Bello had
been constructively dismissed.[13] It noted
that Bello offered no evidence to prove that
there was a series of promotions that would
justify his claim of subsequent
demotion. The CA denied the BSSI’s motion
for reconsideration,[14] paving the way for
the present petition.
The Petition
Bello insists that he was
constructively dismissed when he was
demoted to a mere traffic marshal after
having been promoted to the positions of
supervisor, assistant detachment
commander, and detachment commander.
The Case for the BSSI
The BSSI prays for the petition’s
outright dismissal due to a defective
verification, arguing that the special power
of attorney (SPA) of Bello’s attorney-in-fact,
Geraldine Bello-Ona, was limited to
representing him in the NLRC case only and
78
not to the present petition; and that Bello-
Ona has no personal knowledge of the
allegations in the petition. On the merits of
the case, the BSSI contends that the CA
correctly ruled that there was no evidence to
substantiate the NLRC’s finding of
constructive dismissal.
The Issues
The core issues boil down to:
whether the petition should be dismissed
outright for defective verification; and
whether the CA erred in annulling the NLRC’s
resolutions.
The Court’s Ruling
The petition lacks merit.
Verification of a pleading is a formal,
not jurisdictional, requirement intended to
secure the assurance that the matters
alleged in a pleading are true and
correct.[15] Thus, the court may simply
order the correction of unverified pleadings
or act on them and waive strict compliance
with the rules.[16] It is deemed substantially
complied with when one who has ample
knowledge to swear to the truth of the
allegations in the complaint or petition signs
the verification, and when matters alleged in
the petition have been made in good faith or
are true and correct.[17]
In this case, we find that the
petition’s verification substantially complied
with the requirements of the rules. The SPA
authorized Bello-Ona to represent Bello in
the case entitled “Francis Bello v. Bonifacio
Security Services, Inc. and/or Samuel Tomas,
(CA) Case No. 047829-06; NLRC-N[CR] Case
No. 00-11-09529-2002”[18] – the case from
which the present petition originated. As the
daughter of Bello, Bello-Ona is deemed to
have sufficient knowledge to swear to the
truth of the allegations in the petition, which
are matters of record in the tribunals and the
appellate court below.
On the merits of the case, we find no
reason to disturb the CA conclusion that
there was no constructive dismissal. Case
law defines constructive dismissal as a

cessation of work because continued
employment has been rendered impossible,
unreasonable, or unlikely, as when there is a
demotion in rank or diminution in pay, or
both, or when a clear discrimination,
insensibility, or disdain by an employer
becomes unbearable to the employee.[19]
We note that, other than his bare and
self-serving allegations, Bello has not offered
any evidence that he was promoted in a span
of four months since his employment as
traffic marshal in July 2001 to a detachment
commander in November 2001. During his
six-month probationary period of
employment,[20] it is highly improbable that
Bello would be promoted after just a month
of employment, from a traffic marshal in July
2001 to supervisor in August 2001, and three
months later to assistant detachment
commander and to detachment commander
in November 2001. At most, the BSSI merely
changed his assignment or transferred him
to the post where his service would be most
beneficial to its clients. The management's
prerogative of transferring and reassigning
employees from one area of operation to
another in order to meet the requirements
of the business is generally not constitutive
of constructive dismissal.[21] We see this to
be the case in the present dispute so that the
consequent reassignment of Bello to a traffic
marshal post was well within the scope of
the BSSI’s management prerogative.
WHEREFORE, we hereby DENY the
petition and AFFIRM the assailed CA decision
and resolution in CA-G.R. SP. No. 105402.
Costs against the petitioner.
SO ORDERED.
65 United Laboratories, Inc., Petitioner, v.
Jaime Domingo Substituted by his spouse
Carmencita Punzalan Domingo, et al.
FACTS:
Sometime in 2001, under a Physical
Distribution Master Plan (PDMP), Unilab
consolidated its finished goods inventories
and logistics activities (warehousing, order
79
processing and shipping) into one
distribution center located in Metro Manila.
As a result, Unilab closed down its sixteen
(16) provincial depots. The job functions of
the employees working thereat were
declared redundant and their positions were
abolished. Unilab gave the redundant
employees a separation package of two and
a half (2 1/2) months' pay for every year of
service.IaHDA
In the succeeding year, on 7 January
2002, respondents wrote Unilab requesting
for their separation or retirement from
service under a separation package similar or
equivalent to that of the redundant
employees in the provincial depots.
Respondents referred to this separation
package as theagong Sibolrogram./span>
On 9 April 2002, respondents'
counsel, on their behalf, wrote Unilab
reiterating respondents' previous request to
be separated from service under Unilab's
purportedagong SibolProgram. Particularly,
respondents were keen on retiring and
receiving 2 1/2 months' pay for every year of
service, and all the other benefits which
Unilab had extended to the redundant
employees in the provincial depots. The
message and sentiment were that "they
should likewise be retired under the same
redundancy plan or retirement scheme
[because] their positions are similarly
situated [to] the 'retired employees' of
[Unilab's] distribution centers under the
principle that 'things that are alike should be
treated alike' since they also hold the
position of 'distribution personnel.'"
ISSUE:
Is constructive dismissal applicable
to the respondents?
HELD:
Constructive dismissal is a derivative
of dismissal without cause; an involuntary
resignation, nay, a dismissal in disguise.It
occurs when there isessation of workecause
continued employment is rendered

impossible, unreasonable, or unlikely as
when there is a demotion in rank or
diminution in pay or when a clear
discrimination, insensibility, or disdain by an
employer becomes unbearable to the
employee leaving the latter withother
option but to quit. In turn, dismissal without
cause is prohibited because of the
Constitutional security of tenure of workers.
Thus, it is stated in Article XIII,
Section 3 of the Constitution that: [Workers]
shall be entitled to security of tenure,
humane conditions of work, and a living
wage.
From the start, respondents insisted
that Unilab has unjustifiably refused to grant
them the same separation package granted
to the redundant employees in the provincial
depots. Respondents demanded that this
higher separation package be applied for
their retirement as they are "similarly
situated" with the redundant employees.
Respondents wished for the cessation of
their employment, specifying, however,
their availment of retirement benefits
equivalent to the separation package of the
redundant employees. Effectively,
respondents were exercising their right to
terminate their employment, invoking a
hodgepodge of provisions from the Unilab
Retirement Plan, Unilab's purported Bagong
Sibol Program, and the Labor Code.
***
The Labor Code describes as basic
policy the worker's security of tenure. Thus:
ART. 3. Declaration of basic policy.
The State shall afford protection to labor,
promote full employment, ensure equal
work opportunities regardless of sex, race or
creed, and regulate the relations between
worker and employers.he State shall assure
the rights of workerso self-organization,
collective bargaining,ecurity of tenure, and
humane conditions of work.
ART. 279. Security of Tenure. In cases
of regular employment, the employer shall
not terminate the services of an employee
except for a just cause or when authorized
by this Title. An employee who is unjustly
80
dismissed from work shall be entitled to
reinstatement without loss of seniority
rights and other privileges and to his full
backwages, inclusive of allowances, and to
his other benefits or their monetary
equivalent computed from the time his
compensation was withheld from him up to
the time of his actual reinstatement.
Simply put, security of tenure from
which springs the concept of constructive
dismissal is not an absolute right. It cannot
be pleaded to avoid the transfer or
assignment of employees according to the
requirements of the employer's business.
Such transfer or assignment becomes
objectionable only when it is not for
"reasonable returns on investments," and
for "expansion and growth" which are
constitutionally recognized employer's
rights, but is sought merely as a convenient
cover for oppression.
GRANTED
66 JONATHAN V. MORALES, Petitioner, v.
HARBOUR CENTRE PORT TERMINAL, INC.
Respondent.
FACTS:
Regularized on 17 November 2000,
Morales was promoted to Division Manager
of the Accounting Department, for which he
was compensated a monthly salary of
P33,700.00, plus allowances starting 1 July
2002. Subsequent to HCPTIs transfer to its
new offices at Vitas, Tondo, Manila on 2
January 2003, Morales received an inter-
office memorandum dated 27 March 2003,
reassigning him to Operations Cost
Accounting, tasked with the duty of
"monitoring and evaluating all consumables
requests, gears and equipment" related to
the corporations operations and of
interacting with its sub-contractor, Bulk
Fleet Marine Corporation.
Morales wrote Singson, protesting
that his reassignment was a clear demotion
since the position to which he was
transferred was not even included in HCPTIs
plantilla. Singson, the Administration

Manager, answered by stating that the
transfer was a management prerogative.
For the whole of the ensuing month
Morales was absent from work and/or tardy.
Singson issued to Morales a 29 April 2003
inter-office memorandum denominated as a
First Warning. In view of the absences
Morales continued to incur, HCPTI issued a
Second Warning.
In the meantime, Morales filed a
complaint dated 25 April 2003 against HCPTI,
Filart and Singson, for constructive dismissal,
moral and exemplary damages as well as
attorneys fees.
LA dismissed the complaint for lack of
merit. It ruled that Morales reassignment
was a valid exercise of HCPTIs management
prerogative which cannot be construed as
constructive dismissal absent showing that
the same was done in bad faith and resulted
in the diminution of his salary and benefits.
The NLRC however, reversed the decision. Its
subsequent denial of HCPTIs motion for
reconsideration prompted the latter to file a
petition for certiorari before the CA. The CA
reversed the findings of the NLRC. Hence,
this petition.
ISSUE:
Whether or not petitioner was
constructively dismissed
HELD:
Yes. CA Decision reversed and set
aside
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.
In cases of a transfer of an employee,
the rule is settled that the employer is
charged with the burden of proving that its
conduct and action are for valid and
legitimate grounds such as genuine business
necessity and that the transfer is not
unreasonable, inconvenient or prejudicial to
the employee. If the employer cannot
81
overcome this burden of proof, the
employees transfer shall be tantamount to
unlawful constructive dismissal.
Record shows that HCPTI miserably
failed to discharge the foregoing onus. While
there was a lack of showing that the transfer
or reassignment entailed a diminution of
salary and benefits, one fact that must not
be lost sight of was that Morales was already
occupying the position of Division Manager
at HCPTIs Accounting Department as a
consequence of his promotion to said
position on 22 October 2002.
Concurrently appointed as member
of HCPTIs Management Committee
(MANCOM) on 2 December 2002, Morales
was subsequently reassigned by HCPTI "from
managerial accounting to Operations Cost
Accounting" on 27 March 2003, without any
mention of the position to which he was
actually being transferred. That the
reassignment was a demotion is, however,
evident from Morales new duties which, far
from being managerial in nature, were very
simply and vaguely described as inclusive of
"monitoring and evaluating all consumables
requests, gears and equipments related to
HCPTIs operations" as well as "close
interaction with its sub-contractor Bulk Fleet
Marine Corporation."
Admittedly, the right of employees to
security of tenure does not give them vested
rights to their positions to the extent of
depriving management of its prerogative to
change their assignments or to transfer
them. By management prerogative is meant
the right of an employer to regulate all
aspects of employment, such as the freedom
to prescribe work assignments, working
methods, processes to be followed,
regulation regarding transfer of employees,
supervision of their work, lay-off and
discipline, and dismissal and recall of
workers.
Although jurisprudence recognizes
said management prerogative, it has been
ruled that the exercise thereof, while
ordinarily not interfered with, is not absolute
and is subject to limitations imposed by law,

collective bargaining agreement, and
general principles of fair play and justice.
Thus, an employer may transfer or assign
employees from one office or area of
operation to another, provided there is no
demotion in rank or diminution of salary,
benefits, and other privileges, and the action
is not motivated by discrimination, made in
bad faith, or effected as a form of
punishment or demotion without sufficient
cause. Indeed, having the right should not be
confused with the manner in which that right
is exercised.
GRANTED
66.1 ROBINSONS GALLERIA/ROBINSONS
SUPERMARKET CORPORATION and/or JESS
MANUEL, petitioners, vs. IRENE R.
RANCHEZ, respondents
FACTS:
Respondent Ranchez was a LABOR
probationary employee for 5 months. She
was hired as a cashier by Robinsons
sometime within that period. Two weeks
after she was hired, she reported the loss of
cash which she had placed in the company
locker. She offered to pay for the lost
amount but the Operations Manager of
Robinsons had her strip-searched then
reported her to the police even though they
found nothing on her person. An information
for Qualified Theft was filed with the Quezon
City Regional Trial Court. She was detained
for 2 weeks for failure to immediately post
bail. Weeks later, respondent Ranchez filed
a complaint for illegal dismissal and
damages. A year later, Robinsons sent to
respondent by mail a notice of termination
and/or notice of expiration of probationary
employment.
The Labor Arbiter dismissed the
complaint for illegal dismissal, alleging that
at the time of filing respondent Ranchez had
not yet been terminated. She was merely
investigated. However, the NLRC reversed
this ruling, stating that Ranchez was illegally
dismissed and that Robinson's should
82
reinstate her. It held that Ranchez was
deprived of due process when she was strip-
searched and sent to jail for two weeks
because such amounted to constructive
dismissal, making it impossible for the
respondent to continue under the
employment. Even though she was merely a
probationary employee, the lapse of the
probationary contract did not amount to a
valid dismissal because there was already an
unwarranted constructive dismissal
beforehand.
The NLRC denied Robinson's motion
for reconsideration. The CA affirmed the
decision of the NLRC.
ISSUE:
Whether respondent was illegally
terminated from employment by petitioners.
HELD:
The petition is unmeritorious.
LAW: Probationary
employees; termination of employment
There is probationary employment
when the employee upon his engagement is
made to undergo a trial period during which
the employer determines his fitness to
qualify for regular employment based on
reasonable standards made known to him at
the time of engagement.
A probationary employee, like a
regular employee, enjoys security of
tenure.However, in cases of probationary
employment, aside from just or authorized
causes of termination, an additional ground
is provided under Article 281 of the Labor
Code,i.e., the probationary employee may
also be terminated for failure to qualify as a
regular employee in accordance with
reasonable standards made known by the
employer to the employee at the time of the
engagement.Thus, the services of an
employee who has been engaged on
probationary basis may be terminated for
any of the following:
(1) a just or
(2) an authorized cause; and

(3) when he fails to qualify as a
regular employee in accordance with
reasonable standards prescribed by the
employer.
Article 277(b) of the Labor Code
mandates that the employer shall furnish the
worker, whose employment is sought to be
terminated, a written notice containing a
statement of the causes of termination, and
shall afford the latter ample opportunity to
be heard and to defend himself with the
assistance of a representative if he so
desires, in accordance with company rules
and regulations pursuant to the guidelines
set by the Department of Labor and
Employment.
In the instant case, based on the facts
on record, petitioners failed to accord
respondent substantive and procedural due
process.The haphazard manner in the
investigation of the missing cash, which was
left to the determination of the police
authorities and the Prosecutor's Office, left
respondent with no choice but to cry
foul.Administrative investigation was not
conducted by petitioner Supermarket.On
the same day that the missing money was
reported by respondent to her immediate
superior, the company already pre-judged
her guilt without proper investigation, and
instantly reported her to the police as the
suspected thief, which resulted in her
languishing in jail for two weeks.
The due process requirements under
the Labor Code are mandatory and may not
be replaced with police investigation or
court proceedings. An illegally or
constructively dismissed employee,
respondent is entitled to: (1) either
reinstatement, if viable, or separation pay, if
reinstatement is no longer viable; and (2)
backwages. These two reliefs are separate
and distinct from each other and are
awarded conjunctively.
In this case, since respondent was a
probationary employee at the time she was
constructively dismissed by petitioners, she
is entitled to separation pay and backwages.
83
Reinstatement of respondent is no longer
viable considering the circumstances.
DENIED
67 PASTOR DIONISIO V. AUSTRIA vs. HON.
NATIONAL LABOR RELATIONS
COMMISSION
FACTS:
Petitioner had worked with the
private respondent Seventh Day Adventists
(SDA) for 28
years before he was terminated. Prior to said
termination, petitioner was asked to ad mit
accountability for the church offerings
collected by his wife in the amount of
P15,078.10.
Petitioner refused since it was private
respondents Pastor Buhat and Eufronio
Ibesate who
authorized his wife to collect. Thereafter
petitioner requested Pastor Buhat to
convene the
Executive Committee to settle the dispute
between him and Pastor Rodrigo, but the
latter
denied the same, and heated arguments
between the two ensued until petitioner
banged the
attaché case of Pastor Buhat on the table,
scattered the books and threw the phone.
Later, an
Executive Committee meeting was held
where the non-remittance of church
collections and the
events that transpired were discussed.
Subsequently, petitioner received a letter of
dismissal
citing therein grounds for the termination of
his services. Petitioner then filed a complaint
for
illegal dismissal and a decision was rendered
in his favor.
ISSUE:
Whether or not Austria’s termination
was valid.

HELD:
NO. Misconduct has been defined as
improper or wrong conduct. It is the
transgression
of some established and definite rule of
action, a forbidden act, a dereliction of duty,
willful in
character, and implies wrongful intent and
not mere error in judgment. For misconduct
to be
considered serious it must be of such grave
and aggravated character and not merely
trivial or
unimportant. Based on this standard, we
believe that the act of petitioner in banging
the
attache case on the table, throwing the
telephone and scattering the books in the
office of
Pastor Buhat, although improper, cannot be
considered as grave enough to be
considered as
serious misconduct. After all, though
petitioner committed damage to property,
records show
that he did not physically assault Pastor
Buhat or any other pastor present during the
incident.Hence, there is no basis for the
allegation that petitioners act constituted
serious
misconduct or that the same was an offense
against the person of the employers duly
authorized representative.As such, the cited
actuation of petitioner does not justify the
ultimate penalty of dismissal from
employment. While the Constitution does
not condone
wrongdoing by the employee, it
nevertheless urges a moderation of the
sanctions that may be
applied to him in light of the many
disadvantages that weigh heavily on hi m like
an albatross on his neck. Where a penalty
less punitive would suffice, whatever
missteps may have been
committed by the worker ought not be
visited with a consequence so severe such as
dismissal
84
from employment. For the foregoing
reasons, we believe that the minor infraction
committed
by petitioner does not merit the ultimate
penalty of dismissal.
68 PHILIPPINE LONG DISTANCE TELEPHONE
COMPANY vs. NLRC and MARILYN ABUCAY
FACTS:
Marilyn Abucay, a traffic operator of
the Philippine Long Distance Tel ephone
Company,
was accused by two complainants of having
demanded and received from them the total
amount of P3,800.00 in consideration of her
promise to facilitate approval of their
applications
for telephone installation. Investigated and
heard, she was found guilty as charged and
accordingly separated from the service. She
went to the Ministry of Labor and
Employment
claiming she had been illegally removed. The
case was dismissed but she was granted with
a
separation pay.
ISSUE:
WON Abuca is entitled to separation
pay.
HELD:
NO. The rule embodied in the Labor
Code is that a person dismissed for cause as
defined
therein is not entitled to separation pay.
Separation pay shall be allowed as a measure
of social
justice only in those instances where the
employee is validly dismissed for causes
other than
serious misconduct or those reflecting on his
moral character. Where the reason for the
valid
dismissal is, for example, habitual
intoxication or an offense involving moral
turpitude, like theft

or illicit sexual relations with a fellow worker,
the employer may not be required to give
the
dismissed employee separation pay, or
financial assistance, or whatever other name
it is called,
on the ground of social justice. In the case at
bar, the grant of separation pay in the case
at bar
is unjustified. Abuca has been dismissed for
dishonesty and as she herself has impliedly
admitted. The fact that she has worked with
the PLDT for more than a decade, if it is to be
considered at all, should be taken against her
as it reflects a regrettable lack of loyalty that
she
should have strengthened instead of
betraying during all of her 10 years of service
with the
company. If regarded as a justification for
moderating the penalty of dismissal, it will
actually
become a prize for disloyalty, perverting the
meaning of social justice and undermining
the
efforts of labor to cleanse its ranks of all
undesirables.
69 NLRC, ST. JUDE CATHOLIC SCHOOL,
et.al., vs MA. BERNADETTE S. SALGARINO
FACTS:
Maria Bernadette A. Salgarino was
employed by St. Jude Catholic School as
Mathematics
teacher. She was directed to submit herself
to a panel of investigators and explain why
she had
allegedly tampered school records, violated
school policies and committed misconduct.
Respondent was investigated for her act of
increasing the grades of her students while
she was
on maternity leave. The investigating panel
reached the conclusion that respondent
altered her
students grades while she was on leave,
which is, according to them, a case of ed
85
ucation
malpractice or grave misconduct and grossly
prejudicial to the good name of the
petitioner
school. On these bases, the members of the
investigating committee ruled to terminate
respondents services. Respondent filed a
Complaint for illegal dismissa l.
ISSUE:
WON respondents act of giving
failing students higher grades than what
they actually
earned is tantamount to serious misconduct
which justified her dismissal.
HELD:
NO. Respondent had committed a
misconduct. However, such misconduct is
not serious
enough to warrant her dismissal from
employment under paragraph (a) of Article
282 of the
Labor Code. Misconduct is defined as
improper or wrong conduct. It is the
transgression of
some established and definite rule of action,
a forbidden act, a dereliction of duty, willful
in
character and implies wrongful intent and
not mere error of judgment. The
misconduct to be
serious within the meaning of the act must
be of such a grave and aggravated character
and not
merely trivial or unimportant. Such
misconduct, however serious, must
nevertheless be in
connection with the work of the employee to
constitute just cause from his separation. In
order
to constitute serious misconduct which will
warrant the dismissal of an employee under
paragraph (a) of Article 282 of the Labor
Code, it is not sufficient that the act or
conduct
complained of has violated some established
rules or policies. It is equally important and
required that the act or conduct must have
 86

been performed with wrongful intent. allegedly suffering from hypertension,

There is no hence, she
evidence to show that there was ulterior was again unable to remit the contributions.
motive on the part of the respondent when On February 26, 2002 Mary Anne sent a
she memorandum to petitioner charging her
decided to pass her students. Also, it was not with gross and habitual neglect of duty
shown that respondent received immoral and/or
consideration when she did the same. misconduct or willful disobedience and
Respondent has maintained her stand that insubordination, detailing therein the bases
her decisio n of the
to pass the concerned students was done charges, and requiring her to submit a
out of humanitarian consideration. It is written explanation why she should not be
settled that a penalized or
misconduct, which is not serious or grave, dismissed from employment. Complying
cannot be a valid basis for dismissing an with the show cause order, petitioner
employee. claimed that the
delay was due to the fact that she was
overloaded with work and undermanned.
70 EDEN LLAMAS vs OCEAN GATEWAY On account of
MARITIME AND MANAGEMENT, INC. the delay in the remittance of those
contributions, respondent was penalized in
FACTS: the amount of
Ocean Gateway Maritime and P18,580.41 which it charged to petitioner via
Management, Inc. hired Eden Llamas as an salary deductions. Later, the company sent
accounting Llamas
manager. Mary Anne T. Macaraig, notice of termination from employment
respondents Chief Executive Officer, called anchored on gross and habitual neglect of
Llamas’s duty and/or
attention to her failure, despite repeated serious misconduct or willful
demands, to accomplish the long overdue disobedience/insubordination
monthly
and annual company financial reports and to HELD:
remit the companys contributions to the On petitioners declaration that I
Social believe that I did something good for our
Security System (SSS) and PhilHealth for office when
November and December 2001. our declaration of gross income submitted to
Subsequently or on City Hall for the renewal of our municipal
February 20, 2002, Mary Anne again license
instructed petitioner to remit on that day or was lower than our actual gross income for
until the which the office had paid a lowe r amount,
following day the companys contributions to the
the SSS and PhilHealth for January 2002. By Court finds the same as betraying a streak of
petitioners claim, she failed to comply with dishonesty in her. It partakes of serious
the instruction as money for the purpose misconduct.
was not, xxx
as of February 20, 2002, credited to the Misconduct has been defined as
companys account at the bank. The improper or wrong conduct. It is the
following day, transgression of
petitioner did not report for work as she was some established and definite rule of

action, a forbidden act, a dereliction of
duty, willful in
character, and implies wrongful intent and
not mere error of judgment. The
misconduct to be
serious must be of such grave and
aggravated character and not merely trivial
and
unimportant. Such misconduct, however
serious, must nevertheless be in connection
with the
employees work to constitute just cause for
his separation. Thus, for misconduct or
improper
behavior to be a just cause for dismissal, (a)
it must be serious; (b) must relate to the
performance of the employees duties; and
(c) must show that the employee has
become unfit
to continue working for the employer.
Indeed, an employer may not be compelled
to continue
to employ such person whose continuance
in the service would be patently inimical to
his
employers interest. (Emphasis supplied) For
her act of understating the companys profits
or
financial position was willful and not a mere
error of judgment, committed as it was in
order to
save costs, which to her warped mind, was
supposed to benefit responden t. It was not
merely a violation of company policy, but of
the law itself, and put respondent at risk of
being made
legally liable. Verily, it warrants her dismissal
from employment as respondents
Accounting
Manager, for as correctly ruled by the
appellate court, an employer cannot be
compelled to
retain in its employ someone whose services
is inimical to its interests.
71 Aliviado vs. Procter and Gamble
Facts:
87
Petitioners worked as merchandisers
of P&G. They all individually signed
employment contracts with either Promm-
Gem or SAPS. They were assigned at
different outlets, supermarkets and stores
where they handled all the products of P&G.
They received their wages from Promm-Gem
or SAPS.
SAPS and Promm-Gem imposed
disciplinary measures on erring
merchandisers for reasons such as habitual
absenteeism, dishonesty or changing day-off
without prior notice.
To enhance consumer awareness
and acceptance of the products, P&G
entered into contracts with Promm-Gem
and SAPS for the promotion and
merchandising of its products.
In December 1991, petitioners filed a
complaint against P&G for regularization,
service incentive leave pay and other
benefits with damages.
Issue:
WON P&G is the employer of
petitioners.
Held:
In order to resolve the issue of
whether P&G is the employer of petitioners,
it is necessary to first determine whether
Promm-Gem and SAPS are labor-only
contractors or legitimate job contractors.
Clearly, the law and its implementing
rules allow contracting arrangements for the
performance of specific jobs, works or
services. However, in order for such
outsourcing to be valid, it must be made to
an independent contractorbecause the
current labor rules expressly prohibit labor-
only contracting.
To emphasize, there is labor-only
contracting when the contractor or sub-
contractor merely recruits, supplies or places
workers to perform a job, work or service for
a principal and any of the following
elements are present:
1. i) The contractor or subcontractor does
not have substantial capital or

investment which relates to the job,
work or service to be performed andthe
employees recruited, supplied or placed
by such contractor or subcontractor are
performing activities which are directly
related to the main business of the
principal; or
1. ii) The contractor does not exercise the
right to control over the performance of
the work of the contractual
Under the circumstances, Promm-Gem
cannot be considered as a labor-only
contractor. We find that it is a legitimate
independent contractor.
Considering that SAPS has no substantial
capital or investment and the workers it
recruited are performing activities which are
directly related to the principal business of
P&G, we find that the former is engaged in
“labor-only contracting”.
Where labor-only contracting exists, the
Labor Code itself establishes an employer-
employee relationship between the
employer and the employees of the labor-
only contractor. The statute establishes this
relationship for a comprehensive purpose:
to prevent a circumvention of labor laws.
The contractor is considered merely an
agent of the principal employer and the
latter is responsible to the employees of the
labor-only contractor as if such employees
had been directly employed by the principal
employer.
Petition Granted
NOTE:
1. Respondent filed MR, which was denied.
2. In its resolution, the Court upheld its
decision declaring SAPS has no
substantial capital, therefore, labor-only
contractor.
72 NORMAN YABUT, Petitioner, v. MANILA
ELECTRIC COMPANY AND MANUEL M.
LOPEZ, Respondents.
FACTS:
This case stems from a complaint for
illegal dismissal and monetary claims filed by
88
herein petitioner Norman Yabut (Yabut)
against respondents Manila Electric
Company (Meralco) and Meralco officer
Manuel M. Lopez (Lopez).
The petitioner had worked with
Meralco from February 1989 until his
dismissal from employment on February 5,
2004. Meralco's Inspection Office issued a
memorandum informing it of an illegal
service connection at the petitioner's
residence. Given this report, Meralco's Head
of Investigation-Litigation Office issued to
the petitioner a notice of investigation.
Meralcos Litigation Investigation
Office summarized the results of Meralco's
findings in a memorandum which indicated
that Yabuts electric service was
disconnected for account delinquency.
Notwithstanding the disconnection and the
fact that Meralcos service had not been
reconnected, Yabut's meter registered
electric consumption. In view of these
findings, respondent Meralco, issued a
notice of dismissaladdressed to the
petitioner. The notice cites violation of
Section 7, paragraph 3 of Meralco's
Company Code on Employee Discipline and
Article 282 (a), (c), (d) and (e) of the Labor
Code of the Philippines as bases for the
dismissal.
Aggrieved by the decision of the
management, Yabut filed with the National
Labor Relations Commission (NLRC) a
complaintfor illegal dismissal and money
claims against Meralco and Lopez.
Labor Arbiter Antonio R. Macam
rendered his Decision,declaring the
petitioner illegally dismissed from the
service and hence, entitled to reinstatement
plus backwages and attorney's fees.
NLRC rendered its
Resolutiondismissing the herein
respondents' appeal for lack of merit.
CA rendered the now assailed
Decisionreversing the rulings of the NLRC. In
finding the petitioner's dismissal lawful, the
appellate court attributed unto Yabut
authorship of the meter tampering and

illegal use of electricity acts which it
regarded as serious misconduct.
ISSUE:
Whether or not petitioners dismissal
is illegal?
HELD:
Court of Appeals decision is
sustained.
LABOR LAW
Article 279 of the Labor Code of the
Philippines provides that (i)n cases of regular
employment, the employer shall not
terminate the services of an employee
except for a just cause or when authorized
by this Title. x x x The just causes are
enumerated in Article 282, which provides:
Article 282.Termination by employer.
- An employer may terminate an
employment for any of the following causes:
(a) Serious misconduct or willful
disobedience by the employee of the lawful
orders of his employer or representative in
connection with his work;
(b) Gross and habitual neglect by the
employee of his duties;
(c) Fraud or willful breach by the
employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense
by the employee against the person of his
employer or any immediate member of his
family or his duly authorized representative;
and
(e) Other causes analogous to the
foregoing.
Significantly, tampering with electric
meters or metering installations of the
Company or the installation of any device,
with the purpose of defrauding the Company
is classified as an act of dishonesty from
Meralco employees, expressly prohibited
under company rules. It is reasonable that its
commission is classified as a severe act of
dishonesty, punishable by dismissal even on
its first commission, given the nature and
gravity of the offense and the fact that it is a
89
grave wrong directed against their
employer.
Article 282 (a) provides that an
employer may terminate an employment
because of an employee's serious
misconduct, a cause that was present in this
case in view of the petitioner's violation of
his employer's code of conduct. Misconduct
is defined as the transgression of some
established and definite rule of action, a
forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and
not mere error in judgment. For serious
misconduct to justify dismissal, the following
requisites must be present:
(a) it must be serious;
(b) it must relate to the performance
of the employee's duties; and
(c) it must show that the employee
has become unfit to continue working for
the employer.
The dismissal is also justified as the
act imputed upon the petitioner qualifies as
fraud or willful breach by the employee of
the trust reposed in him by his employer or
duly authorized representative under Article
282 (c) of the Labor Code. While the
petitioner contests this ground by denying
that his position is one of trust and
confidence, it is undisputed that at the time
of his dismissal, he was holding a supervisory
position after he rose from the ranks since
commencement of his employment with
Meralco. As a supervisor with duty and
power that included testing of service
meters and investigation of violations of
contract of customers, his position can be
treated as one of trust and confidence,
requiring a high degree of honesty as
compared with ordinary rank-and-file
employees.
We emphasize that dismissal of a
dishonest employee is to the best interest
not only of the management but also of
labor. As a measure of self-protection
against acts inimical to its interest, a
company has the right to dismiss its erring
employees. An employer cannot be
compelled to continue employing an

employee guilty of acts inimical to the
employer's interest, justifying loss of
confidence in him.
DENIED
73 GOLD CITY INTEGRATED PORT
SERVICES, INC. (INPORT) vs. NLRC
FACTS:
Jose Bacalso was employed as an
admeasurer by the Gold City Integrated Port
Services,
Inc.. He was suspected by management of
under measuring cargo. One time, the cargo
control
officer ordered two (2) other admeasurers to
re-measure three (3) pallets of bananas
which
had already been measured by private
respondent. The re-measurement revealed
that
respondent had under-measured the
bananas. Bacalso felt insulted by the re-
measurement and
so the next day he confronted Nigel
Mabalacad, one who had re-checked his
work. Bacalso
quarreled with Mabalacad in the presence of
their immediate superior Gunacao. Guanaco
directed Bacalso to stop provoking
Mabalacad and told both that being in his
office, they should
behave properly but a fistfight erupted then
and there between him and Mabalacad.
Bacalso
was then charged with assaulting a
coemployee and falsifying reports and
records of the
company relative to the performance of his
duties, and was preventively suspended
pending
investigation of his case by the union-
management grievance committee. Bacalso
later received
a notice of termination of services upon the
grounds of assaulting a co-employee and of
insubordination for failure to heed
Guangco's order to stop provoking
90
Mabalacad constituted
insubordination or disrespect towards a
superior officer punishable by dismissal
under the
Schedule of disciplinary sanctions and norms
of conduct, incorporated in the existing
Collective
Bargaining Agreement ("CBA") with the
union.
ISSUE:
Whether private respondent was
dismissed for a just cause.
HELD:
NO. Wilful disobedience of the
employer's lawful orders, as a just cause for
the
dismissal of an employee, envisages the
concurrence of at least two (2) requisites:
the
employee's assailed conduct must have
been wilful or intentional, the wilfulness
being
characterized by a "wrongful and perverse
attitude"; and the order violated must have
been
reasonable, lawful, made known to the
employee and must pertain to the duties
which he had
been engaged to discharge. Both requisites
are present in the instant case. By private
respondent Bacalso's own admission, he felt
insulted by the re-measurement of the cargo
he
had already measured. He was apparently
much offended by the implication he
perceived that
management was uncertain either about his
honesty or his competence or possibly both.
He
determined to lose his temper, became very
angry and picked a fight with one of the
coworkers who had been instructed by their
common superior to carry out the re-
measurement
of private respondent's pallets of bananas. In
the process, Bacalso completely disregard ed
the

courtesy and respect due from a subordinate
to his superior. Indeed, he may have been,
consciously or otherwise, precisely sending a
signal to his superior officer in whose
presence he
provoked and then engaged in physical
violence with his co-worker. Prior to the
fistfight,
Guangco had warned Bacalso to desist from
further provoking his co-worker with
insulting
language. This warning constituted an order
from private respondent's immediate
superior not
to breach the peace and order of the
Surveyors'(Admeasurers') Division; Guangco
was
obviously attempting to maintain basic
employee discipline in the workplace. It does
not follow,
however, that private respondent Bacalso's
services were lawfully terminated either
under
Article 282 (a) of the Labor Code or under the
CBA Schedule of penalties. We believe that
not
every case of insubordination or wilful
disobedience by an employee of a lawful
workconnected order of the employer or its
representative is reasonably penalized with
dismissal.
For one thing, Article 282 (a) refers to
"serious misconduct or wilful disobedience".
There must
be reasonable proportionality between, on
the one hand, the wilful disobedience by the
employee and, on the other hand, the
penalty imposed therefor. Examination of
the
circumstances surrounding private
respondent's assault upon his co-employee
shows that no
serious or substantial danger had been
posed by that fistfight to the well -being of
his other coemployees or of the general
public doing business with petitioner
employer; and neither did
such behavior threaten substantial prejudice
for the business of his employer. The fistfight
91
occurred inside the offices of the Surveyors'
Division, more particularly, Mr. Guangco's
office,
away from the view of petitioner's
customers or of the general public.
Considering that private
respondent Bacalso's unruly temper did not
become an effective threat to his co-workers
or the
safety of the customers dealing with his
employer, or to the goodwill of his employer,
and
considering further that he had been quite
candid in admitting that he had been at fault
as
soon as the investigation began in the
company level, we agree with the NLRC that
termination
of his services was a disproportionately
heavy penalty. We believe that suspension
without p ay
for three (3) months would be an adequate
penalty for the assault on a co-worker and
act of
insubordination that private respondent
Bacalso actually committed.
74 PERMEX INC. vs NLRC
FACTS:
Permex initially hired Emmanuel
Filoteo on October 1, 1990, as a mechanic.
Eventually,
Filoteo was promoted to water treatment
operator, a position he held until his
termination on
August 29, 1994. As water treatment
operator, Filoteo did not have a fixed
working schedule.
His hours of work were dependent upon the
company's shifting production schedules. N
One
evening he inquire if "butchering" of fish
would be done so they could start operating
the
boiler. They were advised to wait from 9:30
p.m. to 10:00 p.m. for confirmation. At or
about

10:00 p.m., Filoteo they were informed that
there would be no "butchering" of tuna that
night.
Filoteo then sought permission to go home,
which was granted. Filoteo then hurriedly
got his
things and dashed off to the exit gate to
catch the service jeep provided by Permex.
The next
day, Filoteo reported for work as usual. He
then remembered that he had to make a re-
entry in
his daily time record for the previous day. He
proceeded to the Office of the Personnel
Manager
to retime his DTR entry. Later, he received a
memorandum from th e Assistant Personnel
Officer asking him to explain, in writing, the
entry he made in his DTR. Filoteo complied
and submitted his written explanation that
same evening. Filoteo was suspended
indefinitely. His explanation was found
unsatisfactory. Thereafter, he was dismissed
from employment for allegedly violating
Article 2 of the company rules and
regulations. The offense charged was
entering in his DTR that he had worked from
8:45 p.m. of July 31, 1994 to 7:00 a.m. of
August 1,1994, when in fact he had worked
only up to 10:00 p.m.
ISSUE:
Whether or not private respondent
was illegally terminated from his
employment.
HELD:
YES. To constitute a valid dismissal
from employment, two requisites must
concur: (a)
the dismissal must be for any of the causes
provided for in Article 282 of the Labor Code;
and
(b) the employee must be afforded an
opportunity to be heard and defend himself.
This means
that an employer can terminate the services
of an employee for just and valid causes,
which
92
must be supported by clear and convincing
evidence. It also means that, procedurally,
the
employee must be given notice, with
adequate opportunity to be heard, before he
is notified
of his actual dismissal for cause. In the
present case, the NLRC found that the two-
fold
requirements for a valid dismissal were not
satisfied by the petitioners. First, petitioner's
charge
of serious misconduct of falsification or
deliberate misrepresentation was not
supported by the
evidence on the record. Such dismissal was
too harsh a penalty for an unintentional
infraction,
not to mention that it was his first offense
committed without malice, and committed
also by
others who were not equally penalized. It is
clear that the alleged false entry in private
respondent's DTR was actually the result of
having logged his scheduled time-out in
advance on
July 31, 1994. But it appears that when he
timed in, he had no idea that his work
schedule
(night shift) would be cancelled. When it was
confirmed at 10:00 p.m. that there was no
"butchering" of tuna to be done, those who
reported for work were allowed to go home,
including private respondent. In fact, Filoteo
even obtained permission to leave from the
Assistant Production Manager. Considering
the factory practice which management
tolerated,
we are persuaded that Filoteo, in his rush to
catch the service vehicle, merely forgot to
correct
his initial time-out entry. Nothing is shown to
prove he deliberately falsified his daily time
record to deceive the company. The NLRC
found that even management's own evi
dence
reflected that a certain Felix Pelayo, a co-
worker of private respondent, was also
allowed to go
 93

home that night and like private respondent control procedures resulting in company
logged in advance 7:00 a.m. as his time-out. damages.
This
supports Filoteo's claim that it was common
practice among night-shift workers to log in ISSUE:
their Whether or not the infraction
usual time-out in advance in the daily time committed by petitioner warrants the
record. penalty of dismissal
despite the fact that it was his first offense
during his eighteen (18) long years of
75 ROLANDO APARENTE, SR. vs. NLRC and satisfactory
COCA-COLA BOTTLERS PHILIPPINES, INC. and unblemished service.

FACTS: HELD:
Rolando Aparante, Sr. was first YES. Article 282 (a) of the Labor Code
employed by private respondent Coca -Cola of the Philippines sanctions termination by
Bottlers the
Phils., Inc. (CCBPI), General Santos City Plant employer of the employees services for
as assistant mechanic in April 1970. He rose serious misconduct or willful disobedience
through the ranks to eventually hold the by the
position of advertising foreman until his employee of the lawful orders of his
termination employer or representative in connection
on May 12, 1988 for alleged violation of with his work. In
company rules and regulations. One day, he the instant case, petitioner Aparente was
met an terminated from service after having been
accident wherein he sideswiped a kid. He found
reported the incident to private respondent guilty of driving without a valid drivers
then license, which is a clear violation of the
submitted himself to the police authorities companys rules
at Polomolok, South Cotabato for and regulations. In order that an employer
investigation may dismiss an employee on the ground of
where it was discovered that petitioner had willful
no drivers license at the time of the accident. disobedience, there must be concurrence of
In at least two requisites: The employees
view thereof, an insurer of private assailed
respondents vehicles, did not reimburse the conduct must have been willful or
latter for the intentional, the willfulness being
expenses it incurred in connection with the characterized by a wrongful
kid hospitalization. Private respondent and perverse attitude; and the order
conducted violated must have been reasonable, lawful,
an investigation of the incident where made known
petitioner was given the opportunity to to the employee and must pertain to the
explain his side duties which he had been engaged to
and to defend himself but eventually private discharge. We
respondent dismissed petitioner from have found these requisites to be present in
employment for having violated the the case at bar. The extant evidence on
company rules and regulations particularly record
Sec. 12 of Rule clearly reveals the willful act of petitioner
005-85 for blatant disregard of established Aparente in driving without a valid drivers

license, a magmaneho." Nuez was then required to
fact that he even tried to conceal during the
investigation conducted by private
respondent.
Such misconduct should not be rewarded
with re-employment and backwages, for to
do
so would wreak havoc on the disciplinary
rules that employees are required to
observe. The law
warrants the dismissal of an employee
without making any distinction between a
first offen der
and a habitual delinquent where the totality
of the evidence was sufficient to warrant his
dismissal. In protecting the rights of the
laborer, the law authorizes neither
oppression nor selfdestruction of the
employer.
76 FEDERICO NUEZ vs. NLRC, PHILIPPINE
OVERSEAS TELECOMMUNICATIONS
CORPORATION
(PHILCOMSAT), ET.AL.
FACTS:
Nuez was a driver of PHILCOMSAT
assigned to its station in Baras, Antipolo,
Rizal, from
seven-thirty in the morning to three-thirty in
the afternoon. At one-thirty that afternoon,
Engr.
Jeremias Sevilla, the officer in charge and the
highest ranking official of the station, asked
Nuez
to drive the employees to the Makati head
office to collect their profit shares. Nuez
declined
saying that he had an important personal
appointment right after office hours. At two-
thirty
that same afternoon, he also declined a
similar order given on the phone by his
vehicle
supervisor, Pedro Sibal, reasoning that
"Ayaw kong magmaneho dahil may bibilhin
ako sa
Lagundi. Kung gusto mo yong 'loyalist' ang
94
explain
why he should not be administratively dealt
with for disobeying an order of their most
senior
officer. In his written reply Nuez mentioned
a personal appointment in justification for
his
refusal to render "overtime" service and that
"ferrying employees . . . was not a kind of
emergency that . . . warrants (the) charge of
disobedience." Later, the company
terminated
Nuez for insubordination.
ISSUE:
WON Nuez was illegally terminated.
HELD:
NO. It is the discretion of the
employer to regulate all aspects of
employment as well as
the corresponding obligation of the workers
to obey company rules and regulations.
Deliberate
disregard or disobedience of the rules
cannot be countenanced and any
justification for th e
violation is deemed inconsequential. In fact,
this is one ground the Labor Code provides
for
termination of employment since an
employer cannot be compelled to continue
retaining a
worker found guilty of maliciously
committing acts detrimental to its interests.
A contrary rule
would render a mockery of the regulations
the employees are required to observe. The
existence of an emergency situation is
irrelevant to the charge of willful
disobedience; an
opposite principle would allow a worker to
shield himself under his self-designed
concept of
"nonemergency situation" to deliberately
defy the directive of the employer. Neither is
the
resulting damage vital. The heart of the

charge is the crooked and anarchic attitude
of the
employee towards his employer. Damage
aggravates the charge but its absence does
not
mitigate nor negate the employee's liability.
The fact that a replacement driver was able
to
perform the task could neither alter the
gravity of the charge, this responsibility
being personal
to the perpetrator. The length of service
rendered by the employee is also
inconsequential for it
does not lessen a bit the rebellious temper
of the employee object of the charge. We
thus find
no grave abuse of discretion in the finding of
the NLRC that there is a just ground for the
termination of petitioner from the services.
77 LORES REALTY ENTERPRISES, INC.,
LORENZO Y. SUMULONG III, Petitioners, v.
VIRGINIA E. PACIA,Respondent.
FACTS:
Respondent Virginia E.
Pacia(Pacia)was hired by Lores Realty
Enterprises, Inc.(LREI). LREI's acting general
manager, petitioner Sumulong, on two
occasions, directed Pacia to prepare checks
as partial payment for LREI's outstanding
obligation to the Bank of the Philippine
Islands. Pacia was slow in obeying the
order.When asked to explain for her refusal
to immediately follow the directive, Pacia
reasoned out that the funds in LREI's account
were not sufficient to cover the amounts to
be indicated in the checks and that she only
wanted to protect LREI from liability under
the Bouncing Checks Law. Pacia received a
notice of termination stating that she was
being dismissed because of her willful
disobedience and their loss of trust and
confidence in her.Pacia then filed a
Complaint for illegal dismissal. The Labor
Arbiter (LA) rendered a decision finding that
the dismissal of Pacia was for a just and valid
95
cause.On appeal, the NLRC reversed the LA's
Decision. The CA affirmed the decision of the
NLRC. It held that LREI and Sumulong failed
to establish with substantial evidence that
the dismissal of Pacia was for a just cause.It
found that Pacias initial reluctance to obey
the orders of her superiors was for a good
reason.
ISSUE:
Whether or not Pacia was illegally
dismissed.
HELD:
Court of Appeals decision is
affirmed.
LABOR LAW
The offense of willful disobedience
requires the concurrence of two (2)
requisites:
(1) the employee's assailed conduct
must have been willful, that is characterized
by a wrongful and perverse attitude; and
(2) the order violated must have
been reasonable, lawful, made known to the
employee and must pertain to the duties
which he had been engaged to discharge.
There is nothing unlawful in the
directive of Sumulong to prepare checks in
payment of LREI's obligations. The
availability or unavailability of sufficient
funds to cover the check is immaterial in the
physical preparation of the checks. Pacias
initial reluctance to prepare the checks,
however, which was seemingly an act of
disrespect and defiance, was for honest and
well intentioned reasons. Protecting LREI
and Sumulong from liability under the
Bouncing Checks Lawwas foremost in her
mind.It was not wrongful or willful. Neither
can it be considered an obstinate defiance of
company authority.The Court takes into
consideration that Pacia, despite her initial
reluctance, eventually did prepare the
checks on the same day she was tasked to do
it.
DENIED

78 Realda vs New Age Graphics Inc
Facts:
Petitioner Billy Realda was the
former machine operator of respondent
New Age
Graphics Inc.
The company dismissed him on the
ground of repeated violations of company’s
rules
and regulations, namely: insubordination,
deliberate slowdown of work, habitual
tardiness, absence without official leave and
inefficiency.
Furthermore, private respondent’s
refusal to render overtime work when
required upon
him, contributed to losses incurred by the
petitioner.
Nonetheless, while the CA
recognized the existence of just causes for
petitioner’s
dismissal, it found that the petitioner is
entitled to nominal damages due to
Graphics,
Inc.’s failure to observe the procedural
requirements of due process.
Issue:
Whether or not the petitioner
exhibited willful disobedience to a
reasonable order from his employer thus
making his dismissal valid
Held:
Yes, the dismissal is valid but there is
a lack of due process.
Ratio:
In the present case, the company’s
business is a printing press whose
production schedule is sometimes flexible
and varying. It is only reasonable that
workers are sometimes asked to render
overtime work in order to meet production
deadlines.
The petitioner’s arbitrary defiance to
Graphics, Inc.’s order for him to render
96
overtime
work constitutes willful disobedience.
Security of tenure is guaranteed by
the Constitution but it is not an absolute rule
and
cannot be used as a legal shield by an
employee who has exhibited habitual
tardiness
and absenteeism, and willful disobedience.
In Merin v. National Labor Relations
Commission, this Court expounded on the
principle
of totality of infractions as follows:
The totality of infractions or the
number of violations committed during the
period
of employment shall be considered in
determining the penalty to be imposed upon
an erring employee. The offenses committed
by petitioner should not be taken singly and
separately. Fitness for continued
employment cannot be compartmentalized
into tight little cubicles of aspects of
character, conduct and ability separate and
independent of each other. While it may be
true that petitioner was penalized for his
previous infractions, this does not and should
not
mean that his employment record would be
wiped clean of his infractions. After all, the
record of an employee is a relevant
consideration in determining the penalty
that should be meted out since an
employee's past misconduct and present
behavior must be taken together in
determining the proper imposable penalty.
But, the employer, is not exempt
from observing due process for every
infraction. The
Supreme Court found the memorandum
asking for a written explanation within 24
hours
to be unreasonable.
Also, there is no indication that
Graphics, Inc. issued a second notice,
informing the
petitioner of his dismissal. The respondents
admit that Graphics, Inc. decided to
terminate the petitioner’s employment after

he ceased reporting for work from the time
he received the memorandum requiring him
to explain and subsequent to his failure to
submit a written explanation. However,
there is nothing on record showing that
Graphics, Inc. placed its decision to dismiss
in writing and that a copy thereof was sent
to the petitioner. Dispositive: The petition is
DENIED. The Decision of the Court of Appeals
in CA-G.R. SP No. 106928 is AFFIRMED with
MODIFICATION in that respondent New Age
Graphics, Inc. is hereby ordered to pay
petitioner Billy M. Realda nominal damages
in the amount of Thirty Thousand Pesos
(P30,000.00) because such dismissal was for
a just cause but there is a lack of due process.
79 Kakampi and Its Members Panuelos vs.
Kingspoint Express & Logistics
Facts:
Petitioners were former drivers of
the respondent Kingspoint Express, a sole
proprietorship under the name of Co which
is engaged in the business of transporting
goods. T They were dismissed from
service on January 20, 2006 on the grounds
of serious misconduct, dishonesty, loss of
trust and confidence and commission of acts
inimical to the interest of Kingspoint Express.
Kingspoint Express issued separate
notices to explain to the individual
petitioners on January 16, 2006 the charges
of dishonesty, serious misconduct and loss of
confidence by filing with the NLRC false,
malicious and fabricated cases against the
company, and their allegedly unwarranted
refusal to undergo drug testing. They were
required to submit their answer to the
charges within forty-eight (48) hours from
receipt of the notices with a warning that
failure to do so would mean waiver of their
answer. They were also placed under
preventive suspension in the meantime.
Petitioners failed to submit their
written explanation within the stated period.
Subsequently, Kingspoint Express issued to
them separate yet uniformly worded notices
97
on January 20, 2006, informing them of their
dismissal for the abovementioned charges
based on the following acts: fabrication of
baseless money claims against the company,
misleading fellow co-workers to sign the
malicious complaint for money claims
against the company, refusal to undergo the
company's general drug test, and extorting
money from co-workers to fund activities
that they were never fully informed of. Also,
petitioner Dacara was dismissed for
consummating his sexual relations with Co’s
helper inside her residence and thus
impregnating the help.
A complaint for illegal dismissal was
subsequently filed, alleging that the charges
against them were fabricated and that their
dismissal was prompted by Kingspoint
Express' aversion to their union activities.
The Labor Arbiter ruled in favor of the
petitioners as the charges are purportedly
mere unsubstantiated allegations. This was
affirmed by the NLRC on appeal but the
latter reversed itself on a subsequent MR
filed by Kingspoint. The CA initially reversed
the NLRC’s ruling but on an MR, they too
reversed their earlier ruling and favored
Kingspoint. Thus, this petition for certiorari
before the SC.
Issue:
WON the dismissal was valid.
Ruling:
Yes, the dismissal was valid. It is
fundamental that in order to validly dismiss
an employee, the employer is required to
observe both substantive and procedural
due process — the termination of
employment must be based on a just or
authorized cause and the dismissal must be
effected after due notice and hearing.
As to the substantive requirements
of due process, the employees' refusal to
submit themselves to drug test is a just cause
for their dismissal.

An employer may terminate an
employment on the ground of serious
misconduct or willful disobedience by the
employee of the lawful orders of his
employer or representative in connection
with his work. Willful disobedience requires
the concurrence of two elements:
(1) the employee's assailed conduct
must have been willful, that is, characterized
by a wrongful and perverse attitude; and, (2)
the order violated must have been
reasonable, lawful, made known to the
employee, and must pertain to the duties
which he had been engaged to discharge.
Both elements are present in this case.
As to the first element, the dismissed
employees did not deny their refusal to
undergo drug testing nor did they explain
their refusal. The utter lack of reason or
justification for their insubordination
indicates that it was prompted by mere
obstinacy, hence, willful and warranting of
dismissal. As to the second element, the
subject order is relevant in the performance
of their functions as drivers of Kingspoint
Express. As the NLRC correctly pointed out,
drivers are indispensable to Kingspoint
Express' primary business of rendering door-
to-door delivery services. It is common
knowledge that the use of dangerous drugs
has adverse effects on driving abilities that
may render the dismissed employees
incapable of performing their duties to
Kingspoint Express and acting against its
interests, in addition to the threat they pose
to the public.
The existence of a single just cause is
enough to order their dismissal and it is now
inconsequential if the other charges against
them do not merit their dismissal from
service. Nonetheless, while Kingspoint
Express had reason to sever their
employment relations, this Court finds its
supposed observance of the requirements of
procedural due process pretentious. While
Kingspoint Express required the dismissed
employees to explain their refusal to submit
to a drug test, the two (2) days afforded to
them to do so cannot qualify as "reasonable
98
opportunity", which the Court construed in
King of Kings Transport, Inc. v. Mamacas a
period of at least five (5) calendar days from
receipt of the notice.
Thus, even if Kingspoint Express'
defective attempt to comply with procedural
due process does not negate the existence of
a just cause for their dismissal, Kingspoint
Express is still liable to indemnify the
dismissed employees, with the exception of
Panuelos, Dizon and Dimabayao, who did
not appeal the dismissal of their complaints,
with nominal damages in the amount of
P30,000.00.
80 EVELYN J. GARCIA vs. NLRC, HOLY
TRINITY ACADEMY
FACTS:
Petitioner served as school cashier
for private respondent Holy Trinity Academy
(the
school) from June 1974 until her dismissal on
October 5, 1993 for alleged loss of
confidence,
gross negligence of duty, gross inefficiency
and dishonesty. As school cashier, she was
the
custodian of all school funds, including
tuition fees, the petty cash and canteen cash
receipts. In
her position paper, she alleged that her
termination was brought about by an
incident which
occurred on June 15, 1993. There appeared
to be a discrepancy in one of the deposits
she made
where the amount indicated in the deposit
slip and the money actually received by the
ba nk did not tally. A sum of P50, 000.00 was
missing and such loss was blamed exclusively
on her by the private respondents, after
considering the separate reports of the
National Bureau of
Investigation and the Diaz Murillo Dalupan
Auditing Firm. Prior to her dismissal,
petitioner was
suspended for a total of 90 days. Two
months after, she then filed a complaint for
 99

illegal On
dismissal. March 1, 1999, she again failed to properly
count the bundle of socks assigned to her.
ISSUE: Thus, on
WON petitioner was validly March 2, 1999, petitioner terminated her
dismissed for gross negligence and for loss of services on grounds of habitual absenteeism
trust and without
confidence prior leave, tardiness and neglect of work.
ISSUE:
HELD: WON Buguat was validly terminated.
YES. Bearing in mind that the position
of cashier is a highly sensitive position, HELD:
requiring YES. One of the just causes for
as it does the attributes of absolute trust and terminating an employment under Article
honesty because of the temptations 282 of the
attendant to Labor Code is gross and habitual neglect by
the daily handling of money, petitioner's acts the employee of her duties. This cause
could not help but sow mistrust an d loss of includes
confidence on the part of respondent gross inefficiency, negligence and
employer. The Court agrees with the carelessness. Such just causes is derived
Commission that from the right of the
the resulting breach of trust constitutes a employer to select and engage his
valid cause for the dismissal of petitioner. employees. In the instant case, there is no
doubt that Buguat
was habitually absent, tardy and neglectful
81 CHALLENGE SOCKS CORPORATION vs. of her duties. Habitual neglect implies
COURT OF APPEALS repeated
failure to perform ones duties for a period of
FACTS: time. Buguats repeated acts of absences
Elvie Buguat was hired by petitioner without
Challenge Socks Corporation as knitting leave and her frequent tardiness reflect her
operator. In indifferen t attitude to and lack of motivation
the course of her employment, she incurred in her
absences and tardiness without prior work. Her repeated and habitual infractions,
approval and committed despite several warnings,
had been neglectful of her duties. On May constitute
25, 1998, she failed to check the socks she gross misconduct. Habitual absenteeism
was without leave constitute gross negligence
working on causing excess use of yarn and and is
damage to the socks design. She was sufficient to justify termination of an
suspended for employee. We find the penalty of dismissal
five days and warned that a repetition of the from the
same act would mean dismissal from the service reasonable and appropriate to
service. Buguats infraction. Her repeated negligence
On February 2, 1999, she committed the is not
same infraction and was given a warning. tolerable; neither should it merit the penalty
Despite the of suspension only. The record of an
previous warnings, Buguat continued to be employee is a
habitually absent and inattentive to her task. relevant consideration in determining the

penalty that should be meted out. Buguat
committed
several infractions in the past and despite
the warnings and suspension, she continued
to
display a neglectful attitude towards her
work. An employees past misconduct and p
resent
behavior must be taken together in
determining the proper imposable penalty.
The totality of
infractions or the number of violations
committed during the period of employment
shall be
considered in determining the penalty to be
imposed upon an errin g employee. The
offenses
committed by him should not be taken singly
and separately but in their totality. Fitness
for
continued employment cannot be
compartmentalized into tight little cubicles
of aspects of
character, conduct, and ability separate and
in dependent of each other. It is the totality,
not
the compartmentalization, of such company
infractions that Buguat had consistently
committed which justified her dismissal.
82 HOSPITAL MANAGEMENT SERVICES,
INC.MEDICAL CENTER MANILA, petitioner,
vs. HOSPITAL MANAGEMENT SERVICES,
INC.MEDICAL CENTER MANILA EMPLOYEES
ASSOCIATION-AFW and EDNA R. DE
CASTRO, respondents.
FACTS:
Respondent De Castro was a staff
nurse at Medical Center Manila. Calixijan,
HRD Officer of Medical Center Manila issued
a notice of termination upon respondent De
Castro for alleged (1) negligence to follow
company policy on what to do with patient
RufinaCausaren who fell from a hospital bed;
(2) failure to record and refer the incident to
the physician-on-duty allowing a significant
lapse of time before reporting the incident;
100
(3) deliberately instructing the staff to follow
her version of the incident in order to cover
up the lapse; and (4) negligence and
carelessness in carrying out her duty as staff
nurse-on-duty when the incident happened.
Respondent De Castro, with the
assistance of Medical Center Manila
Employees Association-AFW, filed a
Complaint for illegal dismissal against
petitioners with prayer for reinstatement
and payment of full backwages without loss
of seniority rights, P20,000.00 moral
damages, P10,000.00 exemplary damages,
and 10% of the total monetary award as
attorney's fees.
The Labor Arbiter ruled in favor of
respondent De Castro, stating that although
De Castro committed the act complained of,
being her first offense, the penalty to be
meted should not be dismissal from service,
but merely 7 to 14 days suspension as the
same was classified as a less serious offense
under the Employee's Handbook.
The NLRC reversed the decision of
the Labor Arbiter, stating that respondent
De Castro lacked diligence and prudence in
carrying out her duty when, instead of
personally checking on the condition of
patient Causaren after she fell from the bed,
she merely sent ward-clerk orientee
Guillergan to do the same in her behalf and
for influencing her staff to conceal the
incident.
The CA reversed the NLRC's ruling
and reinstated the Labor Arbiter's ruling.
ISSUE:
Whether the CA erred in affirming the
illegal dismissal of respondent De Castro.
HELD:
The petition is unmeritorious.
LABOR LAW - Illegal dismissals;
negligence
Article 282 (b) of the Labor Code
provides that an employer may terminate an
employment for gross and habitual neglect
by the employee of his duties. The CA ruled
that per the Employees Handbook of

petitioner hospital, respondent De Castros
infraction is classified as a less serious
offense for "commission of negligent acts
during working time" as set forth in
subparagraph 11, paragraph 3 (B) of Chapter
XI[10] thereof. Petitioners anchor
respondent De Castros termination of
employment on the ground of serious
misconduct for failure to personally attend
to patient Causaren who fell from the bed as
she was trying to reach for the bedpan.
Based on her evaluation of the situation,
respondent De Castro saw no necessity to
record in the chart of patient Causarenthe
fact that she fell from the bed as the patient
did not suffer any injury and her vital signs
were normal. She surmised that the incident
was not of a magnitude that would require
medical intervention as even the patient and
her niece did not press charges against her
by reason of the subject incident.
Neglect of duty, to be a ground for
dismissal, must be both gross and habitual.
Gross negligence connotes want of care in
the performance of one's duties. Habitual
neglect implies repeated failure to perform
one's duties for a period of time, depending
upon the circumstances. A single or isolated
act of negligence does not constitute a just
cause for the dismissal of the employee.
Negligence is defined as the failure to
exercise the standard of care that a
reasonably prudent person would have
exercised in a similar situation. The Court
emphasizes that the nature of the business
of a hospital requires a higher degree of
caution and exacting standard of diligence in
patient management and health care as
what is involved are lives of patients who
seek urgent medical assistance. An act or
omission that falls short of the required
degree of care and diligence amounts to
serious misconduct which constitutes a
sufficient ground for dismissal.
However, in some cases, the Court
had ruled that sanctioning an erring
employee with suspension would suffice as
the extreme penalty of dismissal would be
too harsh. Considering that this was the first
101
offense of respondent De Castro in her nine
(9) years of employment with petitioner
hospital as a staff nurse without any previous
derogatory record and, further, as her lapse
was not characterized by any wrongful
motive or deceitful conduct, the Court
deems it appropriate that, instead of the
harsh penalty of dismissal, she would be
suspended for a period of six (6) months
without pay, inclusive of the suspension for
a period of 14 days which she had earlier
served. Thereafter, petitioner hospital
should reinstate respondent Edna R. De
Castro to her former position without loss of
seniority rights, full backwages, inclusive of
allowances and other benefits, or their
monetary equivalent, computed from the
expiration of her suspension of six (6)
months up to the time of actual
reinstatement.
Petition is DENIED.
83
NISSAN MOTORS PHILS., INC. vs. VICTORIN
O ANGELO
G.R. No. 164181, 14 September 2011
FACTS:
Angelo was employed by Nissan as o
ne of its payroll staff. His sick leave and vac
ation leave resulted in the non-
preparation of the payroll for that particular
period.
He then received a Memorandum inf
orming him that the company is considering
his dismissal from employment on the grou
nds of serious misconduct, willful disobedie
nce and gross neglect of duties. He was the
n placed on preventive suspension effective
immediately. Unsatisfied with his answer, t
hey then issued a Notice of Termination.
ISSUE:
Whether or not an employee dismiss
ed on just cause may be entitled to separati
on pay.
RULING:

Yes. Although the dismissal was legal
, respondent is still entitled to a separation
pay as a measure of financial assistance, co
nsidering his length of service and his poor
physical condition which was one of the rea
sons he filed a leave of absence. As a genera
l rule, an employee who has been dismissed
for any of the just causes enumerated unde
r Article 282 of the Labor Code is not entitle
d to separation pay. Although by way of exc
eption, the grant of separation pay or some
other financial assistance may be allowed to
an employee dismissed for just causes on t
he basis of equity, inspired by compassionat
e and social justice.
84 PHILIPPINE NATIONAL BANK, Petitioner,
v. DAN PADAO, Respondent.
FACTS:
On August 21, 1981, Padao was hired
by PNB as a clerk at its Dipolog City Branch.
He was later designated as a credit
investigator in an acting capacity on
November 9, 1993. He was ultimately
promoted to the position of Loan and Credit
Officer IV.
In 1994, PNB became embroiled in a
scandal involving "behest loans" as
anomalous loans were being granted by its
officers. In line with this, Padao was
administratively charged with Dishonesty,
Grave Misconduct, Gross Neglect of Duty,
Conduct Prejudicial to the Best Interest of
the Service, and violation of R.A. No. 3019
(Anti-Graft and Corrupt Practices Act). The
case against Padao was grounded on his
having allegedly presented a deceptively
positive status of the business, credit
standing/rating and financial capability of 13
loan applicants. After due investigation, PNB
found Padao guilty of gross and habitual
neglect of duty and ordered him dismissed
from the bank. Padao appealed to the banks
Board of Directors. Velasco, Padaos
colleague, was also held guilty of the
offenses charged, and was similarly meted
the penalty of dismissal. Her motion for
reconsideration, however, was later granted
102
by the bank, and she was reinstated.
ISSUES
I. Whether the position of a credit
investigator is one imbued with the trust and
confidence of the employer
II. Whether the act of falsifying the
credit and appraisal reports and that of
affixing ones signature in a false report by
another is one and the same degree of
misconduct which warrants the same
penalty
HELD:
While it is an employers basic right
to freely select or discharge its employees,
if only as a measure of self-protection
against acts inimical to its interest, the law
sets the valid grounds for termination as
well as the proper procedure to be followed
when terminating the services of an
employee.
Thus, in cases of regular
employment, the employer is prohibited
from terminating the services of an
employee except for a just or authorized
cause. Such just causes for which an
employer may terminate an employee are
enumerated in Article 282 of the Labor Code:
(a) serious misconduct or willful
disobedience by the employee of the lawful
orders of his employer or representative in
connection with his work; (b) Gross and
habitual neglect by the employee of his
duties; (c) Fraud or willful breach by the
employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense by the
employee against the person of his employer
or any immediate family member of his
family or his duly authorized representative;
and (e) Other causes analogous to the
foregoing. Further, due process requires that
employers follow the procedure set by the
Labor Code. Under Art. 277, workers may be
dismissed only for a just cause and enjoy the
right of due process which includes notice
and the ample opportunity to be heard and
to defend his or her side.

In this case, Padao was dismissed by
PNB for gross and habitual neglect of duties
under Article 282 (b) of the Labor Code.
Gross negligence connotes want of care in
the performance of ones duties, while
habitual neglect implies repeated failure to
perform ones duties for a period of time,
depending on the circumstances. Padao was
accused of having presented a fraudulently
positive evaluation of the business, credit
standing/rating and financial capability 13
loan applicants.
The role that a credit investigator
plays in the conduct of a banks business
cannot be overestimated. The amount of
loans to be extended by a bank depends
upon the report of the credit investigator on
the collateral being offered. If a loan is not
fairly secured, the bank is at the mercy of the
borrower who may just opt to have the
collateral foreclosed. If the scheme is
repeated a hundredfold, it may lead to the
collapse of the bank.
Padao's repeated failure to discharge
his duties as a credit investigator of the bank
amounted to gross and habitual neglect of
duties under Article 282 (b) of the Labor
Code. He not only failed to perform what he
was employed to do, but also did so
repetitively and habitually, causing millions
of pesos in damage to PNB. Thus, PNB acted
within the bounds of the law by meting out
the penalty of dismissal, which it deemed
appropriate given the circumstances.
The CA was correct in stating that
when the violation of company policy or
breach of company rules and regulations is
tolerated by management, it cannot serve as
a basis for termination. Such ruling,
however, does not apply here. The principle
only applies when the breach or violation is
one which neither amounts to nor involves
fraud or illegal activities. In such a case, one
cannot evade liability or culpability based on
obedience to the corporate chain of
command.
Padao, in affixing his signature on the
fraudulent reports, attested to the
falsehoods contained therein. Moreover, by
103
doing so, he repeatedly failed to perform his
duties as a credit investigator.
85 MANSION PRINTING CENTER and
CLEMENT CHENG, Petitioners, v.
DIOSDADO BITARA, JR., Respondent.
FACTS:
Petitioners engaged the services of
respondent as a helper (kargador).
Respondent was later promoted as the
companys sole driver tasked to pick-up raw
materials for the printing business, collect
account receivables and deliver the products
to the clients within the delivery schedules.
Petitioners aver that the timely
delivery of the products to the clients is one
of the foremost considerations material to
the operation of the business.It being so,
they closely monitored the attendance of
respondent. They noted his habitual
tardiness and absenteeism.
Thus, petitioners issued a
Memorandumrequiring respondent to
submit a written explanation why no
administrative sanction should be imposed
on him for his habitual tardiness.
Despite respondents undertaking to
report on time, however, he continued to
disregard attendance policies.
Consequently, Davis Cheng, General
Manager of the company and son of
petitioner Cheng, issued another
Memorandum(Notice to Explain) requiring
respondent to explain why his services
should not be terminated. He personally
handed the Notice to Explain to respondent
but the latter, after reading the directive,
refused to acknowledge receipt thereof.He
did not submit any explanation and,
thereafter, never reported for work.
Davis Cheng personally served
another Memorandum(Notice of
Termination) upon him informing him that
the company found him grossly negligent of
his duties, for which reason, his services
were terminated.

On even date, respondent met with
the management requesting for
reconsideration of his termination from the
service. However, after hearing his position,
the management decided to implement the
Memorandum. Nevertheless, the
management, out of generosity, offered
respondent financial assistance in the
amount ofP6,110.00 equivalent to his one
month salary. Respondent demanded that
he be given the amount equivalent to two (2)
months salary but the management declined
as it believed it would, in effect, reward
respondent for being negligent of his duties.
Respondent filed a complaintfor
illegal dismissal against the petitioners
before the Labor Arbiter.
Labor Arbiter dismissed the
complaint for lack of merit.
On appeal to the National Labor
Relations Commission, the findings of the
Labor Arbiter was AFFIRMEDen toto.
Before the Court of Appeals,
respondent sought the annulment of the
Commissions Resolution on the ground that
they were rendered with grave abuse of
discretion and/or without or in excess of
jurisdiction.
The Court of Appeals found for the
respondent and reversed the findings of the
Commission.
ISSUE:
Whether or not respondent is illegally
dismissed?
HELD:
NLRC's decision is reinstated.
LABOR LAW
In order to validly dismiss an
employee, the employer is required to
observe both substantive and procedural
aspects the termination of employment
must be based on a just or authorized cause
of dismissal and the dismissal must be
effected after due notice and hearing.
We, therefore, agree with the Labor Arbiters
findings, to wit:
104
The imputed absence and tardiness
of the complainant are documented. He
faltered on his attendance 38 times of the 66
working days. His last absences on 11, 13, 14,
15 and 16 March 2000 were undertaken
without even notice/permission from
management. These attendance
delinquencies may be characterized as
habitual and are sufficient justifications to
terminate the complainants employment.
On this score,Valiao v. Court of
Appealsis instructive:
xxx It bears stressing that petitioners
absences and tardiness were not isolated
incidents but manifested a pattern of
habituality. xxx The totality of infractions or
the number of violations committed during
the period of employment shall be
considered in determining the penalty to be
imposed upon an erring employee. The
offenses committed by him should not be
taken singly and separately but in their
totality. Fitness for continued employment
cannot be compartmentalized into tight little
cubicles of aspects of character, conduct,
and ability separate and independent of
each other.
InValiao,we definedgross
negligenceas want of care in the
performance of ones dutiesandhabitual
neglectas repeated failure to perform ones
duties for a period of time, depending upon
the circumstances.51 These are not overly
technical terms, which, in the first place, are
expressly sanctioned by the Labor Code of
the Philippines, to wit:
ART. 282.Termination by employer.-
An employer may terminate an employment
for any of the following causes:
(a) xxx
(b)Gross and habitual neglect by the
employee of his duties;
Xxx
Clearly, even in the absence of a
written company rule defining gross and
habitual neglect of duties, respondents
omissions qualify as such warranting his
dismissal from the service.
 105

We cannot simply tolerate injustice falsification of the entries for February 19

to employers if only to protect the welfare of and 20, 1983 in their time cards,
undeserving employees. As aptly put by then complainant Mi solas was caught redhanded
Associate Justice Leonardo A. Quisumbing: by Security Guard Romeo Martin at 7:45
Needless to say, so irresponsible an A.M. on March 2, 1983
employee like petitioner does not deserve a punching in not only his own time card but
place in the workplace, and it is within the also the time cards of Delen and Querubin (p.
managements prerogative xxx to terminate 51,
his employment. Even as the law is solicitous Rollo). Seeing Misolas in a tight fix, Querubin
of the welfare of employees, it must also rushed to the bundy clock a nd punched in a
protect the rights of an employer to exercise time
what are clearly management prerogatives. card (which turned out to be the card of one
As long as the companys exercise of those Rodrigo de Castro) to save Misolas and to
rights and prerogative is in good faith to make it
advance its interest and not for the purpose appear to Martin that he (Querubin),
of defeating or circumventing the rights of punched in his own time card. Hence, he was
employees under the laws or valid dismissed.
agreements, such exercise will be upheld.
Procedural due process entails ISSUE:
compliance with the two-notice rule in WON complainants were validly
dismissing an employee, to wit: (1) the terminated.
employer must inform the employee of the
specific acts or omissions for which his HELD:
dismissal is sought; and (2) after the YES. The falsification and fraud which
employee has been given the opportunity to the private respondents committed against
be heard, the employer must inform him of their
the decision to terminate his employment. employer were inexcusable. Major
REMANDED Asaytuno's initials on the false entries in
their time cards did
not purge the documents of their falsity.
86 SAN MIGUEL CORPORATION vs. Their acts constituted dishonesty and
NLRC serious
misconduct, lawful grounds for their
FACTS: dismissal under Art. 282, sub-pars. (a) and
The complainants were former (c), of the Labor
security guards of the petitioner which Code, which provides: ART. 282. Termination
dismissed them by employer. An employer may terminate an
for falsification of their lame cards. They employment for any of the following just
made false entries in their time cards causes: (a) Serious misconduct or willful
showing that disobedience
they reported for work on February 19 and by the employee of the lawful orders of his
20, 1983 when the truth was that they went employer or representative in connection
on a with his
hunting tap to San Juan, Batangas, with their work. xxx xxx xxx (c) Fraud or willful breach
chief Major Martin Asaytuno, then head of by the employee of the trust reposed in him
the by his
Administrative Services Department of the employer or duly authorized representative.
Security Directorate of the petitioner.
Besides the

87 NATIONAL SUGAR REFINERIES
CORPORATION (NASUREFCO) vs. NLRC and
SUSAN PABIONA
FACTS:
Pabiona was appointed as Sugar
Accountant-Bookkeeper. She was tasked to
maintain
records of all transactions pertaining to the
Raw and Refined Sugar Exchange Program,
validate
Raw Sugar Quedans submitted by Exchange
participants prior to issuance of the Refined
Sugar
Delivery Orders and prepare and issue
Refined Sugar Delivery Orders only after
validation
procedures have been properly complied
with. When the books of NASUREFCO were
audited in
1990 anomalous and irregular transactions
were uncovered in the Raw Sugar Movement
Report. NASUREFCO found Pabionas written
explanation flawed, unsatisfactory. Hence,
NASUREFCO charged Pabiona with several
violations of accounting policies. A formal
investigation was conducted thereafter,
NASUREFCO terminated the services of
Pabiona for
willful violation of company policies, gross
and habitual neglect of duties, and willful
breach of
trust. Complainant herself admits that she
may be negligent yet it was not gross and
habitual;
that her acts in violating company policies as
basis for her dismissal may be viewed by
respondent as breach of trust, yet the same
is not wilful.
ISSUE:
WON the dismissal of Pabiona was
for a just and valid cause
HELD:
YES. The preparation and validation
of documents for purposes of withdrawing
refined
sugar from NASUREFCO's warehouse involve
106
trust and confidence. It is only through the
issuance by Pabiona of a Refined Sugar
Delivery Order that the planters could avail
of the
refined sugar of NASUREFCO. The rule is
settled that if the employee is guilty of
breach of trust
or that his employer has justifiable reason to
distrust him, the labor tribunal cannot justly
deny
the freedom and authority to dismiss his
employee. The basic premise for dismissal
on the
ground of loss of confidence is that the
employee concerned holds a position of
trust and
confidence. It is the breach of this trust that
results in the employers loss of confidence in
the
employee. Under Art. 282 of the Labor Code,
as amended, loss of confidence would be the
result of fraud or willful breach by the
employee of the trust reposed in him by his
employer or
duly authorized representative, a just cause
for termination. It cannot be gainsaid that
the
breach of trust must be related to the
performance of the employee's functions.
The infractions
committed by Pabiona were directly within
the purview of her job description. It was
only
through her active participation and
involvement in the illicit infringement of the
companys
accounting procedures that some clients of
NASUREFCO were able to withdraw refined
sugar in
larger quantities to the prejudice of the
latter.
88 ALEX A. FALGUERA vs. NLRC, PHILIPPINE
REFINING CO. (PRC) or UNILEVER-PRC, and
JESUS
JAVELONA
FACTS:

Falguera was an employee of
Philippine Refining Co., Inc., now known as
Unilever
Philippines (PRC), Inc. One day, the assistant
soapery engineer of the Company observed
an
unusual increase in the reported requisitions
by the soapery department of Parker packing
materials for the month of June. Upon his
examination of the green copies of the MRs
of the
soapery department, he discovered that
P27,025.00 worth of Parker packing
materials
chargeable to his department could not be
accounted for and were not reflected in the
said
copies. He therefore sought the original
white copies of the MRs from the accounting
department. A meticulous scrutiny disclosed
that while the original MRs contained entries
of
the packing items worth P27,050.00, they,
however, showed alterations,
superimpositions, and
erasures. Pending investigation, the
petitioner was placed under preventive
suspension
pending the investigation of the anomaly.
Upon investigation, it found that eight
original MRs
were tampered by two engineering
storemen, in particular, Falguera and Felipe
Viado. The
latter admitted having tampered one MR
and offered to testify against the petitioner.
Thereafter, Falguera received a letter signed
by Javelona informing him that the Company
was
terminating his employment for loss of
confidence and breach of trust, effective as
of the time
he was placed under preventive suspension.
ISSUE:
WON Falguera’s termination was
valid.
HELD:
107
YES. It is not disputed that the
petitioner is a rank-and-file employee.
Ordinarily, a
rankand-file employee is not reposed with a
high degree of trust and confidence
expected of a
supervisory or managerial employee. It
must, however, be noted that the petitioner
served as a
warehouseman and was in charge of the
custody, safekeeping, and release of the
Company's
materials. The nature of his work and the
scope and special character of his duties,
therefore,
involved utmost trust and confidence.
Among the just causes or valid grounds for
termina tion
of employment by the employer is "fraud or
willful breach by the employee of the trust
reposed
in him by his employer or duly authorized
representative." Ordinary breach will not
suffice; it
must be willful and without justifiable
excuse; there must be basis therefor, and it
must be
supported by substantial evidence and not
merely by the whims or caprice of the
employer. In
the instant case, we find no difficulty in
agreeing with the public respondents that
the
petitioner committed willful breach of the
trust and confidence reposed in him by the
Company.
89 JAMES BEN L. JERUSALEM, Petitioner, v.
KEPPEL MONTE BANK, HOE ENG HOCK,
SUNNY YAP and JOSEFINA PICART,
Respondents.
FACTS:
James Ben L. Jerusalem (James) was
employed by Keppel Monte Bank (Keppel) as
Assistant Vice-President and was later was
assigned as Head of the newly created VISA
Credit Card Department. The bank

subsequently re-organized the said
Department and reduced it to a mere unit.
Afterwards, James, carrying the same rank,
was reassigned as Head of the Marketing
and Operations of the Jewelry Department.
James received from Jorge Javier
(Jorge) a sealed envelope said to be
containing VISA Card application forms.
Jorge is a Keppel Visa Card Holder since
December 1998. James immediately handed
over the envelope with accomplished
application forms to the VISA Credit Card
Unit. All in all, the VISA credit card
applications referred by Jorge which James
forwarded to the VISA Credit Card Unit
numbered 67, all of which were
subsequently approved. As it turned out, all
the accounts under these approved
applications became past due.
James received a Notice to Explain
why no disciplinary action should be taken
against him for referring/endorsing fictitious
VISA card applicants. He explained that he
had no participation in the processing of the
VISA card applications since he was no
longer connected with the VISA Credit Card
Unit at the time of such transactions. He
explained that he can only endorse the
applications referred by Jorge to the VISA
Credit Card Unit because he was already
transferred to Jewelry Department, as Head.
However, he was issued a a Notice of
Termination informing him that he was
found guilty of breach of trust and
confidence for knowingly and maliciously
referring, endorsing and vouching for VISA
card applicants who later turned out to be
impostors resulting in financial loss to
Keppel. Thus, the filing o a complaint foe
illegal dismissal.
The LA found Keppel guilty of illegal
dismissal and ordered the payment of
backwages from the time of his illegal
termination and in lieu of reinstatement, a
separation pay should be given. The NLRC
affirmed the LA’s decision. However, the CA
reversed and set aside the said decision and
dismissed the complaint.
108
ISSUE:
Whether Keppel legally terminated
James’s employment on the ground of willful
breach of trust and confidence.
HELD:
The Petition is granted.
LABOR LAW : Termination of
Employment
Article 282(c) of the Labor Code
prescribes two separate and distinct grounds
for termination of employment, namely: (1)
fraud; or (2) willful breach by the employee
of the trust reposed in him by his employer
or duly authorized representative. In order
to constitute a just cause for dismissal, the
act complained of must be ‘work-related’
such as would show the employee
concerned to be unfit to continue working
for the employer.
There are 2 requisites for dismissal
on the ground of loss of trust and
confidence, these are: 1) employee
concerned must be holding a position of
trust and confidence; and 2) there must be
an act that would justify the loss of trust and
confidence. In the case at hand, the first
requisite is present for James held a a
position of trust and confidence as Assistant
Vice-President of the Jewelry Department.
As for the second requisite, the court ruled
that Keppel’s evidence against James fails to
clearly and convincingly establish a willful
breach of trust.
From the findings of both the Labor
Arbiter and the NLRC it is clear that James did
nothing wrong when he handed over to
Marciana, the unit head, the envelope
containing the applications of persons under
the referred accounts of Jorge who were
later found to be fictitious. As the records
now stand, James was no longer connected
with the VISA Credit Card Unit when the 67
applications for VISA card were approved. At
such time, he was already the Head of the
Marketing and Operations of the Jewelry
Department. His act therefore of forwarding
the already accomplished applications to the

VISA Credit Card Unit is proper as he is not in
any position to act on them. The processing
and verification of the identities of the
applicants would have been done by the
proper department, which is the VISA Credit
Card Unit. Therefore, it is incumbent upon
Marciana as Unit Head to have performed
her duties. As correctly observed by the
Labor Arbiter, Keppel had gone too far in
blaming James for the shortcomings and
imprudence of Marciana. The invocation of
Keppel of the loss of trust and confidence as
ground for James’s termination has
therefore no basis at all. Thus, the Court
declared that such dismissal based on the
ground of loss of trust and confidence was
illegal.
Therefore, the petition is denied.
90 Elmer Lopez vs Keppel Bank Philippines,
Inc.
The Antecedents
The facts, as set out in the assailed CA
decision, are summarized below.
Petitioner Elmer Lopez was the
Branch Manager of the respondent Keppel
Bank Philippines, Inc. (bank) in Iloilo City.
Allegedly, through his efforts, Hertz
Exclusive Cars, Inc. (Hertz) became a client of
the bank.
By notice dated August 12,
[4]
2003, the bank asked Lopez to explain in
writing why he should not be disciplined for
issuing, without authority, two purchase
orders (POs) for the Hertz account
amounting to a total of P6,493,000.00,
representing the purchase price of 13 Suzuki
Bravo and two Nissan Exalta vehicles.
Lopez submitted his written
explanation on the same day,[5] but the bank
refused to give it credit. Through
respondents Manuel Bosano III (Vice-
President and Head of Retail Banking
Division/Consumer Banking Division) and
Stefan Tong Wai Mun (Vice-
President/Comptroller), the bank
109
terminated Lopez's employment effective
immediately.[6]
Lopez asked the bank for
reconsideration.[7] In response, the bank,
through the respondent officers, met with
Lopez at its headquarters in Cubao, Quezon
City on September 25, 2003. Lopez came
with his lawyer (Atty. Edmundo V.
Buensuceso) and a military man (one Col.
Flordeliza). After the meeting, the bank
found no reason to reconsider and
reiterated its decision to dismiss Lopez.[8]
Lopez filed a complaint for illegal
dismissal and money claims against the
bank, Bosano and Tong.
The Compulsory Arbitration Proceedings
Lopez alleged before the labor
arbiter that he issued the POs as part of his
strategy to enhance the bank's business, in
line with his duty as branch manager to
promote the growth of the bank. He claimed
that the bank honored the first PO for P1.8M
from which the bank derived an income of
P142,000.00. He added that the second PO
did not materialize because Mr. James Puyat
Concepcion, a Hertz incorporator and
director who opened the Hertz account,
stopped depositing with the bank because of
the negative credit rating he received from
the bank's credit committee. Allegedly, the
committee discovered that James Puyat
Concepcion had several pending court cases.
For its part, the bank denied
approving the first PO, arguing that Lopez
did not have the authority to issue the POs
for the Hertz account as there was a standing
advice that no Hertz loan application was to
be approved. It stressed that Lopez
committed a serious violation of company
rules when he issued the POs.
In a decision dated April 28,
[9]
2004, Labor Arbiter Cesar D. Sideño ruled
that Lopez was illegally dismissed.
Accordingly, the labor arbiter ordered
Lopez's immediate reinstatement, and
awarded him backwages of P392,000.00,
moral and exemplary damages of P8M, and
P550,000.00 -- the purchase price of a

Toyota Revo which Lopez allegedly brought
over from his stint with Global Bank (now
Metrobank). The labor arbiter found that
contrary to the bank's claim, the evidence
showed that Lopez had been issuing POs
which the bank had paid, including the first
of the two POs that led to his dismissal.[10]
On appeal by the bank, the National
Labor Relations Commission (NLRC)
rendered a decision on October 11,
2005[11] reversing the labor arbiter's ruling. It
dismissed the complaint for lack of merit.
The NLRC found merit in the bank's
submission that by issuing the questioned
POs without authority and against the bank's
express orders, Lopez thereby committed a
willful disobedience against his superiors -- a
sufficient basis for the bank to lose its trust
and confidence in him as branch manager. It
thus found that Lopez had been dismissed
for cause after the observance of due
process. Lopez moved for reconsideration,
but the NLRC denied the motion in its
resolution of January 25, 2006.[12] Lopez
sought relief from the CA through a petition
for certiorari, charging the NLRC with grave
abuse of discretion for setting aside the labor
arbiter's decision.
The CA Decision
On December 19, 2006, the CA
rendered its now assailed
decision,[13]denying the petition and
affirming the October 11, 2005 decision of
the NLRC. It fully agreed with the NLRC
finding that Lopez had not been illegally
dismissed.
Lopez moved for, but failed to obtain,
a reconsideration of the CA decision. The CA
denied the motion on February 7, 2007.[14]
The Case for Lopez
Through the present petition,[15] the
reply to the bank's comment dated February
11, 2008,[16] and the memorandum dated
September 22, 2008,[17] Lopez entreats the
Court to nullify the CA decision, contending
that the CA erred in: (1) not ruling that the
bank's appeal with the NLRC should have
110
been dismissed on the ground of non-
perfection; and (2) affirming the decision of
the NLRC that he was dismissed for a just
cause (loss of trust and confidence) and that
he was afforded due process.
Lopez argues, with respect to the first
assignment of error, that the bank failed to
comply with Sections 4 and 6, Rule VI, of the
2002 Rules of Procedure of the NLRC.[18] He
points out that the bank did not file a notice
of appeal together with its memorandum of
appeal, which in turn was not supported by
a certificate of non-forum shopping; and
neither did the bank furnish him, as appellee,
a certified copy of the appeal bond.
On the substantive aspect of the
case, Lopez posits that the bank failed to
justify his dismissal on the ground of loss of
trust and confidence. He insists that, as
branch manager, he had the authority to
issue POs as in fact he issued several of them
in the past, which POs were honored and
paid by the bank. The labor arbiter properly
relied on the past transactions in his
decision. These included, he reiterates, the
first PO for the Hertz account which was paid
by the bank on July 18, 2003, a transaction
where the bank even earned a substantial
income (P142,000.00). He maintains that the
bank failed to substantiate its position that
he was not authorized to issue the POs. He
adds that the bank's claim that his issuance
of the POs exposed the bank to financial loss
is a lame excuse to justify the termination of
his employment.
Lopez argues that his dismissal was a
mere afterthought on the part of the bank
management, particularly Bosano, to cover
up its embarrassment when he (Lopez) made
inquiries and discovered that Hertz's James
Puyat Concepcion had no pending court
cases and was therefore credit worthy. He
adds that assuming that he did not have the
authority to issue POs, still, he cannot be
held guilty of willful disobedience; even if he
had been guilty, dismissal was a very harsh
penalty.
Finally, Lopez submits that the bank
failed to accord him due process because the

bank did not give him the opportunity to
prepare for his defense. He points out that
his written explanation (dated August 12,
2003)[19] preceded the bank's letter (of the
same date)[20] that required him to explain
why he issued the POs in question. Lopez
contends in this regard that on August 12,
2003, he went to Bosano's office in Quezon
City all the way from Iloilo City and there, he
was cornered by Bosano who verbally
instructed him to immediately write down
his explanation even before he was served
with the bank's August 12, 2003 letter. He
maintains that Bosano's preemptive move
deprived him of the opportunity to secure
the services of a counsel.
While Lopez believes his dismissal to
be illegal, he does not seek reinstatement
due to the antagonism that has developed
between him, and the bank and its officers,
due to the present case. He only asks for
separation pay of one month pay for every
year of service, full backwages, allowances
and other benefits. Additionally, he prays for
moral and exemplary damages, as well as
attorney's fees, to compensate him for a
dismissal that was attended by bad faith and
effected in a wanton, oppressive and
malevolent manner.
The Case for the Bank and its Officers,
Through its comment to the
petition[21] and memorandum,[22] the bank
submits that the CA committed no reversible
error in denying Lopez's petition
for certiorari, and in affirming the ruling of
the NLRC that Lopez was dismissed for a just
cause and after due process.
The bank is puzzled why Lopez is
standing firm on his position that he did
nothing wrong when he issued the
questioned POs despite the express directive
not to proceed with the Hertz loan
application unless its adverse credit
investigation report is explained to the
bank's credit committee. It posits that no
bank would gamble to maintain as branch
manager a person who dares to supplant a
major decision of the bank's top leadership
111
with his personal decision. It argues that in
this situation, the law (Labor Code) provides
protection to the employer through its
management prerogative rights and the
right to dismiss employees on just and valid
grounds.
The bank refutes Lopez's contention
that there was no willful disobedience that
warranted his dismissal. It points out that
there was an order for him not to proceed
with the Hertz loan application. The order
was very reasonable as it is the standard
policy of every bank to conduct an
investigation on the credit worthiness of any
loan applicant. Since it appeared from the
investigation of its credit committee that
James Puyat Concepcion of Hertz had
various court cases, it was only proper for
the bank to put on hold the loan application
of Hertz until the adverse finding could be
cleared. It insists that Lopez willfully and
knowingly disobeyed this order.
Further, the bank questions Lopez's
submission, through a supplemental
addendum to his position paper, of evidence
that it honored and paid POs issued by Lopez
in the past. It maintains that it was not
furnished a copy of this submission; hence, it
was unable to controvert this evidence.
On the procedural due process issue,
the bank denies Lopez's allegation that he
was not given the opportunity to defend
himself. It points out that both the NLRC and
the CA confirmed that Lopez was not
deprived the opportunity to be heard; the
opportunity commenced with: (1) the notice
for him to explain his side regarding his
unauthorized issuance of POs; (2) the notice
of his termination from employment; and (3)
the hearing called in response to his motion
for reconsideration where he was assisted by
his lawyer and his soldier friend.
The Court's Ruling
The procedural issue
Lopez faults the CA for not ruling that
the bank's appeal to the NLRC should have
been dismissed for non-perfection. He

argues that no notice of appeal accompanied
the memorandum of appeal; neither was
there a certificate of non-forum shopping
nor any copy furnished to him of the certified
true copy of the appeal bond.
The procedural question is a non-
issue. Lopez did not raise it before the CA; in
fact, he challenged the NLRC decision of
October 11, 2005[23] on its merits and not on
its form. We, therefore, see no need to
further discuss this argument.
The merits of the case
On the substantive aspect of the
case, we note that Lopez was dismissed from
the service by reason of loss of trust and
confidence, a just cause for an employee's
dismissal under the law.[24] Lopez insists
though that the act which triggered the
dismissal action does not justify his
separation from the service.
Is Lopez liable for loss of trust and
confidence for issuing the two disputed
POs?
The right of an employer to freely
select or discharge his employee is a
recognized prerogative of management; an
employer cannot be compelled to continue
employing one who has been guilty of acts
inimical to its interests. When this happens,
the employer can dismiss the employee for
loss of confidence.[25]
At the same time, loss of confidence
as a just cause of dismissal was never
intended to provide employers with a blank
check for terminating employment. Loss of
confidence should ideally apply only (1) to
cases involving employees occupying
positions of trust and confidence, or (2) to
situations where the employee is routinely
charged with the care and custody of the
employer's money or property. To the first
class belong managerial
employees, i.e., those vested with the
powers and prerogatives to lay down
management polices and/or to hire,
transfer, suspend, lay-off, recall, discharge,
assign or discipline employees, or effectively
112
recommend such managerial actions. To the
second class belong cashiers, auditors,
property custodians, or those who, in the
normal and routine exercise of their
functions, regularly handle significant
amounts of money or property.[26]
As branch manager, Lopez clearly
occupies a "position of trust." His hold on his
position and his stay in the service depend
on the employer's trust and confidence in
him and on his managerial
services. [27] According to the bank, Lopez
betrayed this trust and confidence when he
issued the subject POs without authority and
despite the express directive to put the
client's application on hold. In response,
Lopez insists that he had sufficient authority
to act as he did, as this authority is inherent
in his position as bank manager. He points
to his record in the past when he issued POs
which were honored and paid by the bank
and which constituted the arbiter's
"overwhelming evidence"[28] in support of
the finding that "complainant's dismissal
from work was without just cause, hence,
illegal."[29]
We disagree with Lopez's
contention. Despite evidence of his past
exercise of authority (as found by the labor
arbiter), we cannot disregard evidence
showing that in August 2003, the bank
specifically instructed Lopez not to proceed
with the Hertz loan application because of
the negative credit rating issued by the
bank's credit committee. We find it
undisputed that Lopez processed the loan
despite the adverse credit rating. In fact, he
admitted that he overlooked the "control
aspects" of the transaction as far as the bank
was concerned because of his eagerness to
get a bigger share of the market.[30]
Lopez's good intentions, assuming
them to be true, are beside the point for,
ultimately, what comes out is his defiance of
a direct order of the bank on a matter of
business judgment. He went over the heads
of the bank officers, including the credit
committee, when, based on inquiries he
made on his own regarding the credit

worthiness of James Puyat Concepcion, he
simply proceeded to act on the basis of his
own judgment. Evident in his written
explanation[31] was his failure to inform the
credit committee of his own efforts to check
on the committee's adverse findings against
Hertz and his independent action based
solely on his own authority.
As a bank official, the petitioner must
have been aware that it is basic in every
sound management that people under one's
supervision and direction are bound to
follow instructions or to inform their
superior of what is going on in their
respective areas of concern, especially
regarding matters of vital interest to the
enterprise. Under these facts, we find it
undisputed that Lopez disobeyed the bank's
directive to put the Hertz loan application on
hold, and did not wait until its negative credit
rating was cleared before proceeding to act.
That he might have been proven right is
immaterial. Neither does the submission
that the bank honored and paid the first PO
and even realized a profit from the
transaction, mitigate the gravity of Lopez's
defiance of the directive of higher authority
on a business judgment. What appears clear
is that the bank cannot in the future trust the
petitioner as a manager who would follow
directives from higher authorities on
business policy and directions. The bank can
be placed at risk if this kind of managerial
attitude will be repeated, especially if it
becomes an accepted rule among lower
managers.
In Nokom v. NLRC,[32] we reiterated
the guidelines for the application of loss of
confidence as follows: (1) loss of confidence,
should not be simulated; (2) it should not be
used as a subterfuge for causes which are
improper, illegal or unjustified; (3) it may not
be arbitrarily asserted in the face of
overwhelming evidence to the contrary; and
(4) it must be genuine, not a mere
afterthought to justify an earlier action taken
in bad faith.
Under the circumstances of this case,
we are convinced that the bank was justified
113
in terminating Lopez's employment by
reason of loss of trust and confidence. He
admitted issuing the two POs, claiming
merely that he had the requisite authority.
He could not present any proof in this
regard, however, except to say that it was
part of his inherent duty as bank manager.
He also claimed that the bank acquiesced to
the issuance of the POs as it paid the first PO
and the POs he issued in the past. This
submission flies in the face of the bank's
directive for him not to proceed unless
matters are cleared with the bank's credit
committee. The bank had a genuine concern
over the issue as it found through its credit
committee that Hertz was a credit risk.
Whether the credit committee was correct
or not is immaterial as the bank's direct
order left Lopez without any authority to
clear the loan application on his own. After
this defiance, we cannot blame the bank for
losing its confidence in Lopez and in
separating him from the service.
The due process issue
As the NLRC and the CA did, we find
Lopez to have been afforded due process
when he was dismissed. He was given the
required notices. More importantly, he was
actually given the opportunity to be heard;
when he moved for reconsideration of the
bank's decision to terminate his
employment, it scheduled a hearing where
he appeared together with his lawyer and a
military man. This was an opportunity to be
heard that the law recognizes.
In fine, we find no merit in the
petition.
WHEREFORE, premises considered,
we hereby DENY the petition for lack of
merit. The assailed decision and resolution
of the Court of Appeals are AFFIRMED. Costs
against petitioner Elmer Lopez.
SO ORDERED.

91 Jumuad vs. Hi-Flyer Food, G.R. No.
187887, September 7, 2011
Facts:
Petitioner Pamela Florentina P.
Jumuad began her employment with
respondent Hi-Flyer Food, Inc. as
management trainee. Based on her
performance through the years, Jumuad
received several promotions until she
became the area manager for the entire
Visayas-Mindanao 1 region. Sometime on
October 2004, Hi-Flyer conducted a food
safety, service and sanitation audit and
revealed several sanitation violations, such
as the presence of rodents and the use of a
defective chiller for the storage of food.
When asked to explain, Jumuad first pointed
out that she had already taken steps to
prevent the further infestation of the
branch. As to why the branch became
infested with rodents, Jumuad faulted
management's decision to terminate the
services of the branch's pest control
program and to rely solely on the pest
control program of the mall.
Hi-Flyer audited the account of one
of its branches and found out irregularities of
cash shortages. Another sanitation audit was
made and signs of rodent
gnawing/infestation were found. This time,
Jumuad explained to management that she
had been busy conducting management
team meetings and that, at the date the
audit was conducted, she had no scheduled
visit. Hi-Flyer sent Jumuad an Irregularities
Report and Notice of Charges. Jumuad
submitted her written explanation. Hi-Flyer
held an administrative hearing where
Jumuad appeared with counsel. Apparently
not satisfied with her explanations, Hi-Flyer
served her a Notice of Dismissal. This
prompted Jumuad to file a complaint against
Hi-Flyer for illegal
dismissal.
Issue:
Whether Jumuad was illegally
dismissed
114
HELD:
The Court is convinced that Jumuad
cannot be dismissed on the ground of gross
and habitual neglect of duty. The Court notes
the apparent neglect of Jumuad of her duty
in ensuring that her subordinates were
properly monitored and that she had
dutifully done all that was expected of her to
ensure the safety of the consuming public.
The nature of the anomalies uncovered were
each of a different nature, the Court finds
that her acts or lack of action in the
performance of her duties is not born of
habit.
Despite saying this, it cannot be
denied that Jumuad willfully breached her
duties as to be unworthy of the trust and
confidence of Hi-Flyer.
Based on established facts, the mere
existence of the grounds for the loss of trust
and confidence justifies petitioner's
dismissal. In the present case, the reports of
Hi-Flyer show that there were anomalies
committed in the branches managed by
Jumuad. On the principle of respondeat
superior or command responsibility alone,
Jumuad may be held liable for negligence in
the performance of her managerial duties.
She may not have been directly involved in
causing the cash shortages but her
involvement in not performing her duty
monitoring and supporting the day to day
operations of the branches and ensure that
all the facilities and equipment at the
restaurant were properly maintained and
serviced, could
have truly prevented the whole debacle
from ever occurring. Moreover, it is
observed that rather than taking proactive
steps to prevent the anomalies at her
branches, Jumuad merely effected remedial
measures. In the restaurant business where
the health and well-being of the
consuming public is at stake, this does not
suffice. Thus, there is reasonable basis for Hi-
Flyer to withdraw its trust in her and
dismissing her from its service.

92 JOEB M. ALIVIADO, et al., Petitioners, v.
PROCTER & GAMBLE PHILS., INC., and
PROMM-GEM INC., Respondents.
FACTS:
Petitioners worked as merchandisers
of P&G from various dates, allegedly starting
as early as 1982 or as late as June 1991, to
either May 5, 1992orMarch 11, 1993.
They all individually signed
employment contracts with either Promm-
Gem or SAPS for periods of more or less five
months at a time.They were assigned at
different outlets, supermarkets and stores
where they handled all the products of
P&G.They received their wages from
Promm-Gem or SAPS.
SAPS and Promm-Gem imposed
disciplinary measures on erring
merchandisers for reasons such as habitual
absenteeism, dishonesty or changing day-off
without prior notice.
P&G is principally engaged in the
manufacture and production of different
consumer and health products, which it sells
on a wholesale basis to various
supermarkets and distributors. To enhance
consumer awareness and acceptance of the
products, P&G entered into contracts with
Promm-Gem and SAPS for the promotion
and merchandising of its products.
In December 1991, petitioners filed a
complaint against P&G for regularization,
service incentive leave pay and other
benefits with damages.The complaint was
later amendedto include the matter of their
subsequent dismissal.
OnNovember 29, 1996, the Labor
Arbiter dismissed the complaint for lack of
merit and ruled that there was no employer-
employee relationship between petitioners
and P&G.He found that the selection and
engagement of the petitioners, the payment
of their wages, the power of dismissal and
control with respect to the means and
methods by which their work was
accomplished, were all done and exercised
by Promm-Gem/SAPS.He further found that
115
Promm-Gem and SAPS were legitimate
independent job contractors. On appeal, the
NLRC dismissed the same. Petitioners filed a
motion for reconsideration but the motion
was denied in theNovember 19,
1998Resolution.
Petitioners likewise failed to have a
favrable decision in the CA hence, this
petition.
ISSUE:
Whether or not Promm-Gem and
SAPS are labor-only contractors or legitimate
job contractors?
HELD:
The petition is granted.
LABOR LAW
Article 106 of the Labor Code and its
implementing rules allow contracting
arrangements for the performance of
specific jobs, works or services.Indeed, it is
management prerogative to farm out any of
its activities, regardless of whether such
activity is peripheral or core in
nature.However, in order for such
outsourcing to be valid, it must be made to
anindependent contractorbecause the
current labor rules expressly prohibit labor-
only contracting.
To emphasize, there is labor-only
contracting when the contractor or sub-
contractor merely recruits, supplies or places
workers to perform a job, work or service for
a principalandanyof the following elements
are present: (i) The contractor or
subcontractor does not have substantial
capital or investment which relates to the
job, work or service to be performedandthe
employees recruited, supplied or placed by
such contractor or subcontractor are
performing activities which are directly
related to the main business of the
principal;or (ii) The contractor does not
exercise the right to control over the
performance of the work of
thecontractualemployee.
In the instant
case,thefinancialstatementsof Promm-Gem
show that it has authorized capital stock

ofP1 million and a paid-in capital, or capital
available for operations, ofP500,000.00 as of
1990. It also has long term assets
worthP432,895.28 and current assets
ofP719,042.32.Promm-Gem has also proven
that it maintained its own warehouse and
office space with a floor area of 870 square
meters. It also had under its name three
registered vehicles which were used for its
promotional/merchandising
business.Promm-Gem also has other
clientsaside from P&G. Under the
circumstances, Promm-Gem has substantial
investment which relates to the work to be
performed.These factors negate the
existence of the element specified in Section
5(i) of DOLE Department Order No. 18-02.
The records also show that Promm-
Gem supplied its complainant-workers with
the relevant materials, such as markers,
tapes, liners and cutters, necessary for them
to perform their work.Promm-Gem also
issued uniforms to them. It is also relevant to
mention that Promm-Gem already
considered the complainants working under
it as its regular, not merely contractual or
project, employees.This circumstance
negates the existence of element (ii) as
stated in Section 5 of DOLE Department
Order No. 18-02, which speaks of contractual
employees. This, furthermore, negates on
the part of Promm-Gem bad faith and intent
to circumvent labor laws which factors have
often been tipping points that lead the Court
to strike down the employment practice or
agreement concerned as contrary to public
policy, morals, good customs or public order.
Under the circumstances, Promm-
Gem cannot be considered as a labor-only
contractor. Thus, it is a legitimate
independent contractor.
On the other hand, the Articles of
Incorporation of SAPS shows that it has a
paid-in capital of onlyP31,250.00.There is no
other evidence presented to show how
much its working capital and assets
are.Furthermore, there is no showing of
substantial investment in tools, equipment
or other assets.
116
It is clear that SAPS having a paid-in
capital of onlyP31,250 - has no substantial
capital.SAPS lack of substantial capital is
underlined by the records which show that
its payroll for its merchandisers alone for
one month would already totalP44,561.00.It
had 6-month contracts withP&G.Yet SAPS
failed to show that it could complete the 6-
month contracts using its own capital and
investment.Its capital is not even sufficient
for one months payroll. SAPS failed to show
that its paid-in capital ofP31,250.00 is
sufficient for the period required for it to
generate its needed revenue to sustain its
operations independently.Substantial
capital refers to capitalization used in
theperformance or completionof the job,
work or service contracted out.In the
present case, SAPS has failed to show
substantial capital.
Furthermore, the petitioners have
been charged with the merchandising and
promotion of the products of P&G, an
activity that has already been considered by
the Court as doubtlessly directly related to
the manufacturing business, which is the
principal business of P&G.Considering that
SAPS has no substantial capital or
investment and the workers it recruited are
performing activities which are directly
related to the principal business of P&G, we
find that the former is engaged in labor-only
contracting.
Where labor-only contracting exists,
the Labor Code itself establishes an
employer-employee relationship between
the employer and the employees of the
labor-only contractor. The statute
establishes this relationship for a
comprehensive purpose: to prevent a
circumvention of labor laws. The contractor
is considered merely an agent of the
principal employer and the latter is
responsible to the employees of the labor-
only contractor as if such employees had
been directly employed by the principal
employer.
LABOR LAW

In cases of regular employment, the
employer shall not terminate the services of
an employee except for a justor authorized
cause.
In the instant case, the termination
letters given by Promm-Gem to its
employees uniformly specified the cause of
dismissal as grave misconduct and breach of
trust.
Misconduct has been defined as
improper or wrong conduct; the
transgression of some established and
definite rule of action, a forbidden act, a
dereliction of duty, unlawful in character
implying wrongful intent and not mere error
of judgment.The misconduct to be serious
must be of such grave and aggravated
character and not merely trivial and
unimportant.To be a just cause for dismissal,
such misconduct (a) must be serious; (b)
must relate to the performance of the
employees duties; and (c) must show that
the employee has become unfit to continue
working for the employer.
In the instant case, petitioners-
employees of Promm-Gem may have
committed an error of judgment in claiming
to be employees of P&G, but it cannot be
said that they were motivated by any
wrongful intent in doing so.As such, they are
only found them guilty of only simple
misconduct for assailing the integrity of
Promm-Gem as a legitimate and
independent promotion firm.A misconduct
which is not serious or grave, as that existing
in the instant case, cannot be a valid basis for
dismissing an employee.
Meanwhile, loss of trust and
confidence, as a ground for dismissal, must
be based on the willful breach of the trust
reposed in the employee by his
employer.Ordinary breach will not suffice.A
breach of trust is willful if it is done
intentionally, knowingly and purposely,
without justifiable excuse, as distinguished
from an act done carelessly, thoughtlessly,
heedlessly or inadvertently.
Loss of trust and confidence, as a
cause for termination of employment, is
117
premised on the fact that the employee
concerned holds a position of responsibility
or of trust and confidence.As such, he must
be invested with confidence on delicate
matters, such as custody, handling or care
and protection of the property and assets of
the employer.And, in order to constitute a
just cause for dismissal, the act complained
of must be work-related and must show that
the employee is unfit to continue to work for
the employer. In the instant case, the
petitioners-employees of Promm-Gem have
not been shown to be occupying positions of
responsibility or of trust and confidence.
Neither is there any evidence to show that
they are unfit to continue to work as
merchandisers for Promm-Gem. Thus, there
was no valid cause for the dismissal of
petitioners-employees of Promm-Gem.
While Promm-Gem had complied
with the procedural aspect of due process in
terminating the employment of petitioners-
employees,i.e., giving two notices and in
between such notices, an opportunity for
the employees to answer and rebut the
charges against them, it failed to comply
with the substantive aspect of due process
as the acts complained of neither constitute
serious misconduct nor breach of
trust.Hence, the dismissal is illegal.
With regard to the petitioners placed
with P&G by SAPS, they were given no
written notice of dismissal.The records show
that upon receipt by SAPS of P&Gs letter
terminating their Merchandising Services
Contact effective March 11, 1993, they in
turn verbally informed the concerned
petitioners not to report for work anymore.
Neither SAPS nor P&G dispute the
existence of these
circumstances.Parenthetically, unlike
Promm-Gem which dismissed its employees
for grave misconduct and breach of trust due
to disloyalty, SAPS dismissed its employees
upon the initiation of P&G.It is evident that
SAPS does not carry on its own business
because the termination of its contract with
P&G automatically meant for it also the
termination of its employees services.It is

obvious from its act that SAPS had no other
clients and had no intention of seeking other
clients in order to further its merchandising
business.From all indications SAPS, existed
to cater solely to the need of P&G for the
supply of employees in the latters
merchandising concerns only.Under the
circumstances prevailing in the instant case,
we cannot consider SAPS as anindependent
contractor.
In termination cases, the burden of
proof rests upon the employer to show that
the dismissal is for just and valid cause. In the
instant case, P&G failed to discharge the
burden of proving the legality and validity of
the dismissals of those petitioners who are
considered its employees. Hence, the
dismissals necessarily were not justified and
are therefore illegal.
CIVIL LAW
Moral and exemplary damages are
recoverable where the dismissal of an
employee was attended by bad faith or fraud
or constituted an act oppressive to labor or
were done in a manner contrary to morals,
good customs or public policy.
With regard to the employees of
Promm-Gem, there being no evidence of bad
faith, fraud or any oppressive act on the part
of the latter, we find no support for the
award of damages.
As for P&G, the records show that it
dismissed its employees through SAPS in a
manner oppressive to labor. The sudden and
peremptory barring of the concerned
petitioners from work, and from admission
to the work place, after just a one-day verbal
notice,andfor no valid cause bellows
oppression and utter disregard of the right to
due process of the concerned
petitioners.Hence, an award of moral
damages is called for.
Attorneys fees may likewise be
awarded to the concerned petitioners who
wereillegallydismissedinbadfaithandwereco
mpelledtolitigateorincur expenses to protect
their rights by reason of the oppressive act
of P&G.
LABOR LAW
118
Lastly, under Article 279 of the Labor
Code, an employee who is unjustly dismissed
from work shall be entitled to reinstatement
without loss of seniority rights and other
privileges, inclusive of allowances, and other
benefits or their monetary equivalent from
the time the compensation was withheld up
to the time of actual reinstatement. Hence,
all the petitioners, having been illegally
dismissed are entitled to reinstatement
without loss of seniority rights and with full
back wages and other benefits from the time
of their illegal dismissal up to the time of
their actual reinstatement.
The decision and resolution of the
Court of Appeals are reversed and set aside.
The case is remanded to the NLRC.
93 Grand Asian Shipping Lines v. Galvez
Facts:
 Petitioner Grand Asian Shipping
Lines, Inc (GASLI) is a domestic corporation
engaged in transporting liquified petroleum
gas (LPG) from Petron’s refinery in Bataan to
Pasig and Cavite.
 Respondents are crewmembers of
one of GASLI’s vessels, M/T Dorothy Uno.
 On January 2000, Richard Abis
(vessel’s oiler) reported to GASLI an alleged
illegal activity being committed by
respondent who would misdeclare the
consume fuel in the Engineer’s Voyage
Reports and the save fuel oil were sold to
other vessel out at sea (at nighttime). Profits
would be divided amongst themselves.
 After investigation, from the period
of June 30, 1999 to Feb 15, 2000 the fuel it
consumption was overrate by 6,954.3 liters
amounting to 74,737.86.
 Acting upon the anomaly, GASLI
placed respondents under preventive
suspension and after conducting
administrative hearings decided to
terminate them for breach of trust,
commission of crime against employer.
 Respondents filed with the NLRC
separate complaint for illegal suspension

and dismissal, underpayment/nonpayment
of salaries/wages, overtime pay, premium
pay for holiday and rest day, service
incentive pay, tax refunds and indemnities
for damages and attorney’s fees against
petitioner.
 On August 30, 2001, the Labor
Arbiter rendered decision finding the
dismissal of 21 complainants to be illegal.
 Petitioner then filed a Notice of
Appeal with Motion to Reduce Bond before
the NLRC citing economic depression,
legality of termination, and compliance with
labor standards. NLRC denied petitioner’s
motion to reduce bond and directed an
additional bond.
 Despite petitioner’s failure the pay
the bond, NLRC found the appeal
meritorious and ruled for petitioners. Stating
that the dismissal was valid with the
exception of Sales.
 NLRC struck down the monetary
awards given by the Labor Arbiter as they
were based on computations made by
respondents.
 On appeal to the CA, the court
ruled in favor of respondent stating that the
NLRC’s decision had jurisdictional error since
petitioner did not comply with the additional
bond.
LABOR LAW
Issue:
I. WON the CA erred in holding that
respondents were illegally dismissed
II. WON the CA erred when it
concluded petitioner were not able to
perfect the appeal of the Labor Arbitrer’s
decision
Held/Ratio:
I. No, the CA did not commit any
error in finding that respondent’s were
illegally dismissed. According to the
termination notice, respondents were
dismissed based on the grounds of (a)
serious misconduct (b) engaging in pilferage
wile navigating at sea (c) willful breach of the
trust reposed by the company (d)
119
commission of a crime against their
employer.
After examination of the evidence,
the court finds that petitioners failed to
substantiate the charges of pilferage against
respondents. The quantum of proof that
should be presented is substantial evidence.
Mere filing of formal charge does not
automatically make dismissal valid. The
affidavit executed simply contained
accusations while allegations remained
uncorroborated. Also there is no sufficient
evidence to show respondents participation
in the commission of the crime.
Respondent’s termination due to loss
of trust and confidence should have a
distinction between managerial and rank
and file employees. Rank-and-file employees
require proof of involvement while
managerial employees mere existence of a
basis for belief is sufficient. Given that Galvez
and Gruta have managerial positions there is
some basis for the loss of employer’s
confidence—regarding the overstatement of
fuel consumption without any evidence to
the contrary. While the others, who are
ordinary rank and file employees, were not
proven to have any involvement in the loss
of the vessel’s fuel. Rendering their
dismissals illegal. The employer bears the
burden of proof in illegal dismissal cases thus
the employer must first establish by
substantial evidence the fact of dismissal.
With regard to the contention of the
Labor Arbiter’s Authority to impose the
penalty of double indemnity for violations of
the Minimum Wage Law. Petitioner’s
contention is untenable since there is no
provision in RA 6727 or RA 8188 that
precludes that labor from imposing the
penalty of double indemnity against
employers. Article 217 of the Labor Code
gives the labor arbiter jurisdiction over cases
of termination disputes and those cases
accompanied with a claim of reinstatement.
The Labor arbiter erred in awarding
damages by lumping, moral, actual, and
exemplary damages. These should rest on

different jural foundations and must
independently identified and justified.
Glaze and Gruta, as managerial
employees, are not entitled to claims for
holiday
pay, service incentive leave pay and
premium pay for holiday and restday—
according to
Art. 82 of the Labor Code. The same way the
other rank-and-file employees cannot be
classified as field personnel under Article 82
of the Labor Code. According to Article 82,
“non-agricultural employees who regularly
perform their duties away from the principal
place of business or branch office of the
employer and whose actual hours of work in
the field cannot be determined with
reasonable certainty.” Here, respondents
remain
inside a vessel and were constantly
supervised under effective control of a ship
captain.
Also they cannot claim to be entitled of these
because they have already been paid all
the days of the month, which include
benefits. As for the overtime pay and
premium pay
for holiday and rest day, no evidence was
presented to prove that they worked in
excess of the regular working hours. For their
claim of service incentive leave pay,
respondents did not specify what year they
were not paid—in accordance with Art. 95.
II. Yes, the CA erred in holding that there was
no compliance on the part of petitioner
regarding the appeal bonds. According to
Art. 223 of the Labor Code, the posting of a
bond, either in cash or surety, must be in the
amount equivalent to them entry award.
Nonetheless, the court held that rules should
not be applied in a very rigid and strict
sense—the same in labor cases were
substantial merits serve the interest of
justice. In
this case, the petitioner appeals from the
awarding of 7,104,483.84 to respondents
and
only complied with the posting of 500,000
120
PHP. We find this to be in substantial
compliance with the Labor Code.
94 Concepcion vs. Minex Import Corp., G.R.
No. 153569, January 24, 2012
Facts:
Respondent is engaged in the retail
of semi-precious stones, selling them in
kiosks or stalls installed in various shopping
centers. It employed the petitioner initially
as a salesgirl then later on as supervisor.
Working under her supervision were
salesgirls Cristina Calung and Lida Baquilar.
One day the petitioner and her
salesgirls had sales of crystal items totaling
P39,194.50. At the close of business that
day, they conducted a cashcount of their
sales proceeds, including those from the
previous two days and determined their
total for the three days to be P50,912.00.
The petitioner wrapped the amount in a
plastic bag and deposited it in the drawer of
the locked wooden cabinet of the kiosk.
The following day petitioner phoned
respondent Vina Mariano to report that the
P50,912.00 was missing, explaining how she
and her salesgirls had placed the wrapped
amount at the bottom of the cabinet the
night before, and how she had found upon
reporting to work that morning that the
contents of the cabinet were in disarray and
the money.
Later, while the petitioner was giving
a detailed statement on the theft to the
security investigator of Harrison Plaza, Vina
and Sylvia Mariano, her superiors, arrived
with a policeman who immediately placed
the petitioner under arrest and brought her
to a police station where she was
investigated her and detained for a day.
Subsequently petitioner filed a case
for illegal dismissal against respondent and
two days later respondent filed a criminal
case for qualified theft against petitioner.
The petitioner insisted on her innocence,
reiterating that on the time the alleged crime
took place she, together with her two

salesgirls, had first counted the cash before
placing it in a plastic bag that she deposited
inside the drawer of the cabinet with the
knowledge of the other salesgirls. One of the
salesgirls however averred that she had left
the petitioner alone because the latter had
still to change her clothes; and that that was
the first time that the petitioner had ever
asked to be left behind, for they had
previously left the kiosk together.
Respondent Vina declared that the
petitioner did not call the office of Minex for
the pick-up of the P39,194.50 cash sales on
that faithful day in violation of the standard
operating procedure (SOP) requiring cash
proceeds exceeding P10,000.00 to be
reported for pick-up if the amount could not
be deposited in the bank. After the
preliminary investigation, the fiscal rendered
a resolution finding probable cause for
qualified theft and recommending the filing
of an information against the petitioner.
Thus, she was charged with qualified theft
before the Regional Trial Court. The
petitioner argued that there was no
evidence at all upon which Minex could
validly dismiss her considering that she had
not yet been found guilty beyond reasonable
doubt of the crime of qualified theft.
Issues:
Whether or not there was valid
ground to terminate the petitioner.
Ruling:
The petitioner’s argument is not
novel. It has been raised and rejected many
times before on the basis that neither
conviction beyond reasonable doubt for a
crime against the employer nor acquittal
after criminal prosecution was
indispensable. Nor was a formal charge in
court for the acts prejudicial to the interest
of the employer a pre-requisite for a valid
dismissal. The criminal charges initiated by
the company against private respondents
and the finding after preliminary
investigation of their prima facieguilt of the
offense charged constitute substantial
121
evidence sufficient to warrant a finding by
the Labor Tribunal of the existence of a just
cause for their termination based on loss of
trust and confidence.
The Labor Tribunal need not have
gone further as to require private
respondent’s conviction of the crime
charged, or inferred innocence on their part
from their release from detention, which
was mainly due to their posting of bail.
While there is a valid ground to
terminate petitioner, respondent however
failed to comply with the requirements of
due process prior to the termination under
the implementing rules and regulations of
the Labor Code.
In all cases of termination of
employment, the following standards of due
process shall be substantially observed. For
termination of employment based on just
causes as defined in Article 282 of the Labor
Code:
(i) A written notice served on the
employee specifying the ground or grounds
for termination, and giving said employee
reasonable opportunity within which to
explain his side.
(ii) A hearing or conference during
which the employee concerned, with the
assistance of counsel if he so desires is given
opportunity to respond to the charge,
present his evidence, or rebut the evidence
presented against him.
(iii) A written notice of termination
served on the employee, indicating that
upon due consideration of all the
circumstances, grounds have been
established to justify his termination
In this case the respondents immediately
had her arrested and investigated by the
police authorities for qualified theft which
constitutes a denial of her right to due
process of law, consisting in the opportunity
to be heard and to defend herself. In fact,
their decision to dismiss her was already final
even before the police authority
commenced an investigation of the theft,
the finality being confirmed by no less than
Sylvia Mariano herself telling the petitioner

during their phone conversation following
the latter’s release from police custody that
she (Sylvia) “no longer wanted to see” her.
The fact that the petitioner was the
only person suspected of being responsible
for the theft aggravated the denial of due
process.
95 Blue Sky Trading Co. vs. Blas, G.R. No.
190559, March 7, 2012
Facts:
Petitioner Blue Sky Trading
Company, Inc. (Blue Sky) is a duly registered
domestic corporation engaged in the
importation and sale of medical supplies and
equipment. The respondents Arlene P. Blas
(Arlene) and Joseph D. Silvano (Joseph) were
regular employees of Blue Sky and they
respectively held the positions of stock clerk
and warehouse helper before they were
dismissed from service on February 5, 2005.
An incident occurred where six pairs
of intensifying screens were missing. On
February 3, 2005, Jean B. De La Paz (Jean),
Human Resource Department Head issued
notices to explain/preventive suspension to
Arlene, Joseph, delivery personnel Jayde
Tano-an (Jayde) and
maintenance personnel/driver Wilfredo
Fasonilao (Wilfredo). The notices informed
them that they were being accused of gross
dishonesty in connection with their alleged
participation in and conspiracy with other
employees in committing theft against
company property, specifically relative to
the loss of the six intensifying screens.
On February 5, 2005, Jean issued to
Arlene, Joseph, Jayde and Wilfredo notices
of dismissal for cause stating therein that
evidence that they had conspired with each
other to commit theft against company
property was too glaring to ignore. Blue Sky
had lost its trust and confidence on them and
as an act of self-preservation, their
termination from service was in order.
On February 8, 2005, Arlene, Joseph,
Helario, Jayde and Wilfredo filed with the
122
National Labor Relations Commission (NLRC)
a complaint for illegal dismissal and
suspension, underpayment of overtime pay,
and non-payment of emergency cost of
living allowance (ECOLA), with prayers for
reinstatement and payment of full
backwages.
Meanwhile, an entrapment
operation was conducted by the police
during which Jayde and Helario were caught
allegedly attempting to sell to an operative
an ultrasound probe worth around
P400,000.00 belonging to Blue Sky. Though
eventually, Jayde and Helario executed
affidavits of desistance stating that their
dismissal was for cause.
The Labor Arbiter denied the claims
of the respondents of illegal suspension and
dismissal since they failed in their duties to
exercise utmost protection, care, or custody
of respondent's property. Hence, their
dismissal from the service is warranted.
The first decision of the NLRC ruled
that respondents were not holding positions
of trust and must therefore be reinstated
and be paid their backwages. Their second
decision on the other hand reversed the
previous one which in turn reinstated the
Labor Arbiter’s dismissal of the complaint
saying that respondents were holding
positions of trust and that the loss of the
company’s property are substantially
proven. The CA on the other hand found
merit on their claims, though found
respondents to have positions of trust and
confidence, petitioner in this case failed to
sufficiently establish the charge against
respondents which was the basis for its loss
of trust and confidence that warranted their
dismissal.
Issue:
Whether or not respondents Blas and
Silvano committed a breach of trust
Ruling:
The rule is long and well settled that,
in illegal dismissal cases like the one at
bench, the burden of proof is upon the

employer to show that the employee's
termination from service is for a just and
valid cause. The employer's case succeeds or
fails on the strength of its evidence and not
on the weakness of that adduced by the
employee, in keeping with the principle that
the scales of justice should be tilted in favor
of the latter in case of doubt in the evidence
presented by them. Often described as more
than a mere scintilla, the quantum of proof
is substantial evidence which is understood
as such relevant evidence as a reasonable
mind might accept as adequate to support a
conclusion, even if other equally reasonable
minds might conceivably opine otherwise.
Failure of the employer to discharge the
foregoing onus would mean that the
dismissal is not justified and therefore illegal.
We find no error in the CA's findings
that the petitioners had not adequately
proven by substantial evidence that Arlene
and Joseph indeed participated or
cooperated in the commission of theft
relative to the six missing intensifying
screens so as to justify the latter's
termination from employment on the
ground of loss of trust and confidence.
We note that the parties disagree as
to what tasks were actually and regularly
performed by Arlene and Joseph. They are at
odds as to the issue of whether or not Arlene
and Joseph had custody of the missing
screens. We observe though that neither of
the parties presented any documentary
evidence, such as employment contracts, to
establish their claims relative to the actual
nature of Arlene and Joseph's daily tasks.
The petitioners also argue that if
Arlene and Joseph had not been grossly
negligent in the performance of their duties,
Blue Sky would not have incurred the loss.
We observe though that in the notices sent
to Arlene and Joseph, first charging them
with theft, and later, informing them of their
dismissal from service, gross negligence was
not stated therein as a ground. Hence,
Arlene and Joseph could not have defended
themselves against the charge of gross
negligence. They cannot be dismissed on
123
that ground lest due process be violated.
Other Matters: (For Discussion Purposes)
Impropriety of the Preventive
Suspension
The purpose of the suspension is to
prevent an employee from causing harm or
injury to his colleagues and to the employer.
The maximum period of suspension is 30
days, beyond which the employee should
either be reinstated or be paid wages and
benefits due to him.
While we do not agree with Blue Sky's
subsequent decision to terminate them from
service, we find no impropriety in its act of
imposing preventive suspension upon the
respondents since the period did not exceed
the maximum imposed by law and there was
a valid purpose for
the same.
In lieu of reinstatement, separation
pay If reinstatement proves impracticable,
and hardly in the best interest of the parties,
perhaps due to the lapse of time since the
employee's
dismissal, or if the employee decides not to
be reinstated, the latter should be awarded
separation pay in lieu of reinstatement.
In the case at bar, Arlene and Joseph
were dismissed from service on February 5,
2005. We find that the lapse of more than
seven years already renders their
reinstatement impracticable. Further, from
the stubborn stances of the parties, to wit,
the petitioners' insistence that dismissal was
valid on one hand, and the respondents'
express prayer for the payment of
separation pay on the other, we find that
reinstatement would no longer be in the
best interest of the contending parties.
Liability of Corporate Officers
As a general rule, a corporate officer
cannot be held liable for acts done in his
official capacity because a corporation, by
legal fiction, has a personality separate and
distinct from its officers, stockholders, and
members. In illegal dismissal cases,
corporate officers may only be held solidarily
liable with the corporation if the termination
was done with malice or bad faith. We find

that the aforementioned circumstance did
not obtain in the case of Jose (vice-
president) and Linda (secretary) relative to
Arlene and Joseph's dismissal from service.
96 Manila Electric Co. vs. Beltran, G.R. No.
173774, January 30, 2012
Facts:
Beltran was employed by MERALCO
and at the time material to this case, she was
holding the position of Senior Branch Clerk at
MERALCO’s Pasig branch. While rendering
overtime work on September 28, 1996, a
Saturday, Beltran accepted P15,164.48 from
Collection Route Supervisor Berlin Marcos
(Marcos), which the latter received from
customer Andy Chang (Chang). The cash
payment was being made in lieu of a
returned check earlier
issued as payment for Chang’s electric
bill.Beltran received the payment and issued
Auxiliary Receipt No. 87964 which she dated
September 30, 1996, a Monday, instead of
September 28, 1996. This was done to show
that it was an accommodation, an accepted
practice in the office. She thereafter placed
the money and the original auxiliary receipt
and other documents pertinent to the
returned check underneath her other files
inside the drawer of her table.
Beltran, however, was only able to
remit Chang’s payment on January 13, 1997.
Thus, in a Memorandum dated January 16,
1997, she was placed under preventive
suspension effective January 20, 1997
pending completion of an investigation.
MERALCO considered as misappropriation or
withholding of company funds her failure to
immediately remit said payment in violation
of its Code on Employee Discipline.
Garcia, the Administrative Supervisor
of MERALCO’s Pasig branch, on the other
hand, testified that while doing an
accounting of all outstanding returned
checks sometime in December 1996, she
noticed that Chang’s returned check was
missing. Upon further inquiry, she
124
discovered that Chang had already
redeemed the returned check after paying
P15,164.48 to Beltran, who in turn issued an
Auxiliary Receipt dated September 30, 1996.
It was also discovered that the payment has
not yet been remitted. This prompted her to
inquire from Beltran on January 7, 1997
about the supposed payment and
immediately ordered the remittance of the
same. Beltran, however, failed to do so on
that day and even on the next day when she
reported for work. Beltran subsequently
went on leave of absence on January 9 and
10, 1997. It was only on January 13, 1997
that the money with the pertinent
documents was handed over. In a
memorandum dated February 25, 1997, the
investigator found Beltran guilty of
misappropriating and withholding Chang’s
payment of P15,164.48 and recommended
her dismissal from service.
Beltran filed a complaint for illegal
dismissal against MERALCO. She argued that
she had no intention to withhold company
funds. Besides, it was not her customary
duty to collect and remit payments from
customers. She claimed good faith, believing
that her acceptance of Chang’s payment is
considered goodwill in favor of both
MERALCO and its customer. If at all, her only
violation was a simple delay in remitting the
payment, which caused no considerable
harm to the company.
In a Decision of the Labor Arbiter
regarded the penalty of dismissal as not
commensurate to the degree of infraction
committed as there was no adequate proof
of misappropriation on the part of Beltran. If
there was delay in Beltran’s remittance of
Chang’s payment, it was unintentional and
same cannot serve as sufficient basis to
conclude that there was misappropriation of
company funds. In fact, Beltran did not even
attempt to deny possession of, or refuse to
hand in, the money.
The Labor Arbiter thus gave
compassionate consideration for the neglect
to remit the money promptly, stating that it

is excusable for Beltran to commit lapses in
her work due to serious family difficulties.
Upon appeal, the NLRC reversed the
Labor Arbiter’s Decision and dismissed
Beltran’s complaint against MERALCO in its
Decision. It found that Beltran withheld
company funds by failing to remit it for
almost four months. The NLRC thus ruled
that MERALCO validly dismissed Beltran
from the service in the exercise of its
inherent right to discipline its employees.
When Beltran brought the case to
the CA the NLRC’s ruling was reversed. The
CA instead agreed with the findings of the
Labor Arbiter that there were no serious
grounds to warrant Beltran’s dismissal. The
CA held that the penalty of dismissal is harsh
considering the infraction committed and
Beltran’s nine years of unblemished service
with MERALCO.
Issue:
Whether or not Beltran dismissal is
valid finding that she is guilty of withholding
company funds.
Ruling:
Supreme Court support the CA’s
finding that there are no sufficient grounds
to warrant Beltran’s dismissal. For loss of
trust and confidence to be a valid ground for
dismissal, it must be based on a willful
breach of trust and founded on clearly
established facts. A breach is willful if it is
done intentionally, knowingly and
purposely, without justifiable excuse, as
distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. In
addition, loss of trust and confidence must
rest on substantial grounds and not on the
employer’s arbitrariness, whims, caprices or
suspicion.
In the case at bench, Beltran
attributed her delay in turning over Chang’s
payment to her difficult family situation as
she and her husband were having marital
problems and her child was suffering from
an illness. Admittedly, she was reminded of
Chang’s payment by her supervisor on
125
January 7, 1997 but denied having been
ordered to remit the money on that day. She
then reasoned that her continued delay was
caused by an inevitable need to take a leave
of absence for her to attend to the needs of
her child who was suffering from asthma.
MERALCO cannot claim or conclude that
Beltran misappropriated the money based
on mere suspicion. And even if Beltran
delayed handing over the funds to the
company, MERALCO still has the burden of
proof to show clearly that such act of
negligence is sufficient to justify termination
from employment. Beltran was remiss in her
duties for her failure to immediately turn
over Chang’s payment to the company. Such
negligence, however, is not sufficient to
warrant separation from employment. To
justify removal from service, the negligence
should be gross and habitual. “Gross
negligence x x x is the want of even slight
care, acting or omitting to act in a situation
where there is duty to act, not inadvertently
but willfully and intentionally, with a
conscious indifference to consequences
insofar as other persons may be affected.”
Habitual neglect, on the other hand,
connotes repeated failure to perform one’s
duties for a period of time, depending upon
the circumstances. No concrete evidence
was presented by MERALCO to show that
Beltran’s delay in remitting the funds was
done intentionally. Neither was it shown
that same is willful, unlawful and felonious
contrary to MERALCO’s finging as stated in
the letter of termination it sent to Beltran.
Surely, Beltran’s single and isolated act of
negligence cannot justify her dismissal from
service.
97DOLORES T. ESGUERRA vs. VALLE VERDE
COUNTRY CLUB, INC.
FACTS:
Valle Verde hired Esguerra as Head F
ood Checker and was promoted to Cost Co
ntrol Supervisor. The Management found o
ut that proceeds had been remitted to the a
ccounting department for an event were lac

king. There were also unauthorized charges
of food on one of the participants. To resolv
e the issue, Valle Verde conducted an invest
igation; the employees who were assigned i
n that event were summoned and made to
explain, in writing, what had transpired. A m
emorandum was sent to Esguerra requiring
her to show cause as to why no disciplinary
action should be taken against her for the n
onremittance of the Ballroom’s sales. Esgue
rra was placed under preventive suspension
with pay, pending investigation. Unsatisfied
with the explanation, Esguerra was termina
ted.
Petitioner said that she couldn’t be d
ismissed on the ground of loss of trust and c
onfidence for she was only a regular employ
ee and did not occupy a supervisory positio
n vested with trust and confidence. Esguerr
a also questions the manner of dismissal sin
ce the notice was insufficient since it failed t
o contain any intention to terminate her.
ISSUE:
 Whether or not intention to terminate s
hould be included in the notice of inform
ing of charges against an employee.
 Whether or not Cost Control Supervisor
can be dismissed on the ground of loss of
trust and confidence.
HELD:
1.) No. The law does not require that
an intention to terminate one’s employme
nt should be included in the first notice. It is
enough that employees are properly appris
ed of the charges brought against them so t
hey can properly prepare their defenses; it i
s only during the second notice that the inte
ntion to terminate one’s employment shoul
d be explicitly stated.
The existence of an actual, formal “t
rialtype” hearing, although preferred, is not
absolutely necessary to satisfy the employe
e’s right to be heard. Esguerra was able to p
resent her defenses; and only upon proper c
onsideration of it did Valle Verde send the s
econd memorandum terminating her emplo
yment. Since Valle Verde complied with the
126
twonotice requirement, no procedural defe
ct exists in Esguerra’s termination.
2.) Esguerra held the position of Cos
t Control Supervisor and had the duty to re
mit to the accounting department the cash
sales proceeds from every transaction she
was assigned to. This is not a routine task th
at a regular employee may perform; it is rel
ated to the handling of business expenditur
es or finances. For this reason, Esguerra occ
upies a position of trust and confidence a p
osition enumerated in the second class of p
ositions of trust(first is for the managerial e
mployees). Any breach of the trust imposed
upon her can be a valid cause for dismissal.
98
MANILA ELECTRIC COMPANY (MERALCO) v
s. HERMINIGILDO H. DEJAN
FACTS:
Dejan was then Meralco’s branch re
presentative in its San Pedro, Laguna branc
h. His work consisted of accepting payments
of the required fees from applicants for ele
ctric service installation and issuing the corr
esponding meter sockets/bases after payme
nt of a deposit, preceded by an inspection o
f the premises to be energized by a Meralco
field personnel.
One afternoon, 20 pieces of meter s
ockets take out from the branch and was in
possession of a Meralco field representative
. Dejan was asked to explain the incident.
Dejan received a letter charging him
with the unauthorized taking of 20 meter so
ckets, in violation of Section 7, paragraphs 4
and 11 of the Company Code of Employee
Discipline, in relation to Article 282 of the La
bor Code. In the Formal investigation, Dejan
alleged that he released the items even wit
hout authorization as it had been the accept
ed practice in the office, provided the depos
it fee had been paid. Unconvinced, his empl
oyment was terminated. NLRC and CA both
ordered his reinstatement.

ISSUE:
Whether or not an employee dismiss
ed on the ground of loss of trust and confid
ence should be reinstated as judicially order
ed.
RULING:
No. Meralco cannot be blamed for lo
sing its trust and confidence in Dejan. He is
no ordinary employee. As branch represent
ative, “he was principally charged with the f
unction and responsibility to accept paymen
t of fees required for the installation of elec
tric service and facilitate issuance of meter s
ockets.” The duties of his position require hi
m to always act with the highest degree of h
onesty, integrity and sincerity, as the compa
ny puts it. In light of his fraudulent act, Mer
alco, an enterprise imbued with public inter
est, cannot be compelled to continue Dejan’
s employment, as it would be inimical to its
interest. Needless to say, “the law, in protec
ting the rights of the laborer, authorizes nei
ther oppression nor selfdestruction of the e
mployer.” For sure, Dejan was validly dismis
sed for serious misconduct, and loss of trust
and confidence.
99ROMEO E. PAULINO vs. NLRC and PHILIP
PINE LONG DISTANCE TELEPHONE COMPA
NY, INCORPORATED
FACTS:
Members of the PNP, armed with a s
earch warrant, searched the house of Paulin
o, Cable Splicer III of PLDT, found items belo
nging to PLDT which was in there for 1 mont
h and 11 days
Petitioner did not present any docu
ments or requisition slips that would justify
his possession of the materials. Consequent
ly, PLDT caused the filing of an Information f
or qualified theft against him. PLDT then re
ceived a security report stating that petition
er had engaged in the illicit disposal of its pl
ant materials, which were recovered during
the search conducted at his residence. He w
as then terminated.Three years later, after t
127
he criminal case for qualified theft had been
terminated for failure of the prosecution to
prove his guilt beyond reasonable doubt, p
etitioner filed a Complaint for Illegal Dismiss
al which the Labor Arbiter .
ISSUE:
Whether or not an employee acquitt
ed of the criminal charge arising from the sa
me incident which caused his dismissal, can
be reinstated.
RULING:
No. The LA, the NLRC and the CA all
acknowledged that, notwithstanding petitio
ner’s acquittal in the criminal case for qualifi
ed theft, respondent PLDT had adequately e
stablished the basis for the company’s loss
of confidence as a just cause to terminate p
etitioner. Since proof beyond reasonable do
ubt of an employee’s misconduct is not req
uired in dismissing an employee. Rather, as
opposed to the “proof beyond reasonable d
oubt” standard of evidence required incrimi
nal cases, labor suits require only substantia
l evidence to prove the validity of the dismis
sal
However, assuming that he lawfully
possessed the materials, PLDT still had ampl
e reason or basis to already distrust petition
er. For more than a month, he did not even
inform PLDT of the whereabouts of the plan
t materials. Instead, he stocked these mater
ials at his residence even if they were neede
d in the daily operations of the company. In
keeping with the honesty and integrity dem
anded by his position, he should have turne
d over these materials to the plant’s wareho
use.
It would have been unfair for PLDT t
o keep petitioner in its employ. Petitioner di
splayed actions that made him untrustwort
hy. Thus, as a measure of selfprotection, PL
DT validly terminated his services for seriou
s misconduct and loss of confidence.
 128

100
VICENTE VILLANUEVA, JR. vs. NLRC THIRD
DIVISION, MANILA ELECTRIC COMPANY

FACTS:
There was a report regarding “unusu
al contract modifications” in the transaction
s handled by Villanueva. There are discrepa
ncies not covered by any receipt. Pursuant t
o the complaints, a field investigation was c
onducted by the companydesignated investi
gator who was able to obtain sworn statem
ents from nine (9) out of twenty four (24) co
mplaining customers that it was Villanueva
whom they have transacted with.
Meralco denied the request of Villan
ueva’s counsel to crossexamine the witness
es (complaining customers) who were not
Meralco employees. He was then served a n
otice of termination.

ISSUE:

Whether or not there is violation of

procedural due process when the request t
o cross-examine the affiants was denied.

RULING:
No. As the NLRC and the CA found, V
illanueva was afforded due process when h
e was given the required notices. More imp
ortantly, he was actually given the opportun
ity to be heard. On the date of the schedule
d hearing, Villanueva was assisted by couns
el who requested for time within which to s
ubmit a counteraffidavit. He was able to sub
mit it, where he denied the charges against
him. Undoubtedly, Villanueva was afforded
procedural due process even if the crossexa
mination of the witnesses was not permitte
d by Meralco. Where a party is given the op
portunity to explain his side of the case, the
right to due process is deemed recognized f
or what is frowned upon is the denial of the
right to be heard.

101 CARLOS G. LIBRES vs. NLRC &
NATIONAL STEEL CORPORATION
FACTS:
Carlos G. Libres, an electrical
engineer, was holding a manageri al position
with National
SteelCorporation (NSC) as Assistant
Manager. One day, he received a Notice of
Investigation
from his immediate superior, requesting him
to submit a written explanation relative to
the
charge of sexual harassment made by Susan
D. Capiral, Hynsons secretary, allegedly
committed
by Libres, and subsequently to answer
clarificatory questions on the matter. The
notice also
warned him that failure to file his written
explanation would be construed as a waiver
of his
right to be heard. Libres submitted his
written explanation denying the accusation
against him
and offering to submit himself for
clarificatory interrogation.
After deliberation, it was concluded
that the charges against petitioner
constituted a such moral perversity is perpetrated against
violation of Item 2, Table V, of the Plants
Rules and Regulations. It opined that
touching a for his dismissal for lack of trust and
female subordinates hand and shoulder,
caressing her nape and telling other people
that
Capiral was the one who hugged and kissed
or that she responded to the sexual
advances are
unauthorized acts that damaged her honor.
Referring to the Manual of the Philippine
Daily
Inquirer in defining sexual harassment, the
MEC finally concluded that petitioners acts
clearly
constituted sexual harassment as charged
and recommended petitioners suspension
for thirty
(30) days without pay. Libres filed a
129
complaint for illegal suspension and unjust
discrimination
against respondent NSC
ISSUE:
WON Libres was illegally suspended.
HELD:
NO. His suspension was both fitting
and appropriate since it singularly addressed
the
issue of a managerial employee committing
sexual harassment on a subordinate. It even
invited
the attention of the Court to focus on sexual
harassment as a just and valid cause for
termination.
Whereas petitioner Libres was only
meted a 30-day suspension by the NLRC,
Villarama,
in the other case was penalized with
termination. As Mr. Justice Puno elucidated,
As a
managerial employee, petitioner is bound by
more exacting work ethics. He failed to live
up to
his higher standard of responsibility when he
succumbed to his moral perversity. And
when
his subordinate, he provides a justifiable
ground
confidence. It is the right, nay, the duty of
every employer
to protect its employees from oversexed
superiors. Public respondent therefore is
correct in its
observation that the Labor Arbiter was in
fact lenient in his application of the law and
jurisprudence for which petitioner must be
grateful and not gripe against.
102 DELFIN G. VILLARAMA vs. NLRC AND
GOLDEN DONUTS, INC.
FACTS:

VILLARAMA was employed by
GOLDEN DONUTS, INC., as its Materials
Manager.
Villarama was charged with sexual
harassment by Divina Gonzaga, a clerk-typist
assigned in his
department. The humiliating experience
compelled her to resign from work. The
letter
prompted the President of Golden Donuts,
Inc., Prieto, to call Villarama to a meeting.
Villarama
was then required to explain the letter
against him. It appears that petitioner
agreed to tender
his resignation. Private respondent moved
swiftly to separate petitioner. Thus, private
respondent approved petitioner's
application for leave of absence with pay
from August 5-28,
1989. It also issued an inter-office
memorandum advising "all concerned" that
petitioner was
no longer connected with the company. Mr.
Prieto sent a l etter to petitioner confirming
their
agreement that petitioner would be officially
separated from the private respondent.
However, Villarama had a change of mind.
He sought reconsideration of the
management's decision to terminate him.
For his failure to tender his resignation,
petitioner
was dismissed by private respondent.
Feeling aggrieved, petitioner filed an illegal
dismissal case
against private respondent.
ISSUE:
WON the cause of dismissal of
complainant was valid.
HELD:
YES. The records show that petitioner
was confronted with the charge against him.
Initially, he voluntarily agreed to be
separated from the company. He took a
leave of absence
preparatory to this separation. This
130
agreement was confirmed by the letter to
him by Mr. Prieto
dated August 7, 1989. A few days after,
petitioner reneged on the agreement. He
refused to be
terminated on the ground that the
seriousness of his offense would not warrant
his separation
from service. So he alleged in his letter to Mr.
Prieto dated August 16, 1989. But even in
this
letter, petitioner admitted his "error" vis-a-
vis Miss Gonzaga. As a manager, Petitioner
should
know the evidentiary value of his
admissions. Needless to stress, he cannot
complain there was
no valid cause for his separation.
Moreover, loss of trust and
confidence is a good ground for dismissing a
managerial
employee. It can be proved by substantial
evidence which is present in the case at
bench.
As a managerial employee, petitioner is
bound by a more exacting work ethics. He
failed
to live up to this higher standard of
responsibility when he succumbed to his
moral perversity.
And when such moral perversity is
perpetrated against his subordinate, he
provides justifiable
ground for his dismissal for lack of trust and
confidence. It is the right, nay, the duty of
every
employer to protect its employees from over
sexed superiors.
To be sure, employers are given
wider latitude of discretion in terminating
the
employment of managerial employees on
the ground of lack of trust and confidence.
103 ATTY. GRACE M. VELOSO & MA.
JOEYLYNN B. QUIONES vs JUDGE
ANACLETO M.
CAMINADE

FACTS:
Atty. Veloso, a lawyer of the Public le
discussing the case, she was stunned when
Judge
Caminade suddenly placed his hand on her
right thigh and squeezed it. He then took her
hand
and kissed it. She immediately stood up and
headed towards the door leading to the staff
room. He, however, caught up with her and
placed his hand on her shoulder. Before she
could
open the door, Judge Caminade told her Kiss
ko bi (Let me kiss you). Atty. Veloso, who was
so
shocked, retorted Kalo-od nimo Judge uy
(You are so disgusting, Judge). She then
opened the
door and went out of his chambers. Justice
Morales found Judge Caminade guilty of
violating
Canon 2 and Rule 2.01 of the Code of Judicial
Conduct and Canon 3 of the Canons of
Judicial
Ethics and recommended that respondent
be suspended for six months without pay.
ISSUE:
WON the suspension was proper.
HELD:
YES. Judge Caminades behavior must
be sanctioned. We are neither amused by hi
s violation of the Canons of Judicial Ethics and
claims of innocent playfulness nor impressed
by his excessive display of congeniality. He
acted
beyond the bounds of decency, morality and
propriety. He failed to meet the standard of
conduct embodied in the Code of Judicial
Conduct.
His abusive and distasteful acts
unmistakably constituted sexual harassment
because
they resulted in an intimidating, hostile, or
offensive environment for his female
subordinates.
Section 8 of Rule 140 of the Rules of Court,
131
as amended, considers a violation of the
Code of Judicial Conduct as a serious offense.
A respondent found guilty of a serious
charge
may be meted the penalty of:
(1) dismissal from the service,
forfeiture of all or part of the benefits as the
Court may
determine, and disqualification from
reinstatement or appointment to any public
office,
including government-owned or controlled
corporations, provided, that the forfeiture of
benefits shall in no case include accrued
leave credits;
(2) suspension from office without
salary and other benefits for more than
three but not
exceeding six months; or
(3) a fine of more than P20,000 but
not exceeding P40,000.
104 ATTY. SUSAN M. AQUINO vs. HON.
ERNESTO D. ACOSTA
FACTS:
Atty. Susan M. Aquino, Chief of the
Legal and Technical Staff of the Court of Tax
Appeals
(CTA), filed a complaint against Judge
Ernesto Acosta, Presiding Judge of the same
court, with
sexual harassment under R.A. 7877 and
Code of
Professional Responsibility. Aquino alleged
several instances when respondent judge
sexually
harassed her. Respondent judge denied
complainants allegation that he sexually
harassed her
six times. He claimed that he has always
treated her with respect, being the head of
the CTA
Legal Staff. In fact, there is no strain in their
professional relationship.
HELD:
 132

The court found no convincing or classifying the employee which in anyway

evidence to sustain complainants charges. would
What we discriminate, deprive or diminish
perceive to have been committed by employment opportunities or otherwise
respondent judge are casual gestures of adversely affect said
friendship and employees;
camaraderie, nothing more, nothing less. In 2) The above acts would impair the
kissing complainant, we find no indication employee's right or privileges under existing
that l abor
respondent was motivated by malice or lewd laws; or
design. Evidently, she misunderstood his 3) The above acts would result in an
actuations and construed them as work- intimidating, hostile, or offensive
related sexual harassment under R.A. 7877. environment for
"A mere casual buss on the cheek is not a the employee.
sexual conduct or favor and does not fall "Clearly, under the foregoing
within the purview of sexual harassment provisions, the elements of sexual
under R.A. No. 7877. Section 3 (a) thereof harassment are as
provides, to follows:
wit: 1) The employer, employee,
Sec 3. Work, Education or Training - manager, supervisor, agent of the employer,
related Sexual Harassment Defined. - Work, teacher,
education or training-related sexual instructor, professor, coach, trainor, or any
harassment is committed by an employer, other person has authority, influence or
employee, moral
manager, supervisor, agent of the employer, ascendancy over another;
teacher, instructor, professor, coach, 2) The authority, influence or moral
trainor, or ascendancy exists in a working environment;
any other person who, having authority, 3) The employer, employee,
influence or moral ascendancy over another manager, supervisor, agent of the employer,
in a work Indeed, from the records on hand,
or training or education environment, there is no showing that respondent judge
demands, requests or otherwise requires demanded, requested or required any sexual
any sexual favor from complainant in exchange for
favor from the other, regardless of whether favorable
the demand, request or requirement for compensation, terms, conditions, promotion
submission is accepted by the object of said or privileges specified under Section 3 of R.A.
Act. 7877. Nor did he, by his actuations, violate
a) In a work-related or employment the Canons of Judicial Ethics or the Code of
environment, sexual harassment is Professional Responsibility.
committed
when:
1) The sexual favor is made as a 105 Paiste v Mamenta, Jr.
condition in the hiring or in the employment,
re employment or continued employment of FACTS:
said individual, or in granting said individual In an affidavit-complaint filed with
favorable compensation, terms, conditions, the Office of the Chief Justice, dated August
promotions or privileges; or the refusal to 1 0, 2001
grant , complainant Joanne S. Goltiao charged him
sexual favor results in limiting, segregating with gambling and drinking liquor during

office
hours, sexual harassment, arrogance and
acts unbecoming of a government official. In
another
affidavitcomplaint filed with the Office of the
Court Administrator, dated August 28, 2001
, the
other complainant Jocelyn C. Paiste charged
him with conduct unbecoming of a public
officer
and with violation of the AntiGraft and
Corrupt Practices Act for his failure to issue
official
receipt.
The evidence shows that
complainant Goltiao is a Stenographer I of
the MCTC of TayugSan Nicolas since 1 997.
She testified that on August 7, 2000, at about
3:00 p.m., a sometimes
representative from the Plaridel Insurance
Co. came to their office seeking clearance.
She
immediately prepared the necessary form
and, together with the representative, went
to see
respondent in the courtroom to obtain his
signature. When she asked him to sign the
document, respondent, who was at that
time playing tong-its (a card game) at the
lawyers table
with unnamed individuals, got angry and
threw his cards. He shouted at her: Why did
you bring
them with you? Did you like them to bring
me to the Supreme Court? She responded
that such
was not her intention and reminded him of
his requirement that he must first see the
applicants before he sign their clearance. He
did not sign the clearance, sent then out and
shouted Bullshit ka! at her thrice. They all
then went out of the courtroom and
proceeded back
to the staff room. She went to her table and
buried her face in her hands, crying.
Respondent
followed her and continued uttering
unsavory remarks: Bullshit ka! Vulva of your
mother! Why
133
did you take the client there and even raised
your voice? (Bullshit ka! Okinnam nga babai!
Apay ta innalam dagita kliyente idiay sanak
to rinayawan!) She replied that her parents
taught
them not to answer back at older people. He
still shouted: Vulva of your mother! I wish
you will
die now! Whom are you bragging of? We will
try each other. (Okinnam nga babai! Matay
ka
koma itattan! Apay sinno aya ti paglaslastog
mo? Sige, agpipinnadas tayo. ) Thereafter,
he
asked the utility aide to buy him four bottles
of beer.
Goltiao declared that her working
relationship with the respondent is
good
and sometimes bad because of his ill temper.
He easily gets mad at her even for small,
trivial
mistakes. This situation started, according to
her, when she told him to stop courting and
sending her love notes as she is already a
married woman. She related an incident
which
happened early one morning when he asked
her to see him inside the judges chamber. At
that
time, the designated judge was not around.
Once inside, she was told to sit in one of the
chairs
in front of the judges table. The respondent,
who was sitting at the judges chair, then
extended
his hand to her, as if he wanted to shake her
hands. She reciprocated by extending her
hands
and jokingly put his hands on her forehead
(agmanmano). She afterwards tried to free
her
hands off his but he would no let her.
Instead, he told her, Wait for a while, I would
just like to
tell you something. I love you, is that okay?
Tell me that you love me too. No strings
attached.
She retorted, As if you are my father.

Spurned, he got mad. This kind of incident
happened at
least ten more times.
ISSUE:
Is he guilty of sexual harassment?
HELD:
Under the circumstances, we find
respondent guilty of sexual harassment. His
severely
outrageous acts, which are an affront to
women, constitute sexual harassment
because they
necessarily result in an intimidating, hostile,
and offensive working environment for his
female
subordinates. He abused the power and
authority he exercises over them, which is
the
gravamen of the offense in sexual
harassment.
Sexual harassment in the workplace
is not about a man taking advantage of a
woman by
reason of sexual desire it is about power
being exercised by a superior over his
women
subordinates. That power emanates from
the fact that he can remove them if they
refuse his
amorous advances.
There is likewise sufficient evidence
in A.M. No. P-03-1 697 to hold respondent
administratively liable for his failure to issue
official receipt after receiving court fees and
for
discourtesy. The testimony of complainant
Paiste is worthy of belief. We find her
categorical
and consistent declarations credible,
especially when viewed in the light of the
fact that no ill motive on her part was
established. Against her positive testimony,
supported by documentary
evidence based on official court records, the
mere uncorroborated denial of the
134
respondent
deserves scant considerations.
The evidence shows that on April 21 ,
2001 , complainant Paiste gave to the
respondent
the amount of two thousand four hundred
pesos (P2,400.00) as bail bond of the
accused in
Criminal Case No. 7461 . When she asked for
an official receipt, he told her to get it the
following Monday at the court. She sent an
office representative that Monday as told
but
respondent did not issue any receipt. Further
verification from the records of Criminal
Case No.
7461 reveals that no copy of the official
receipt appears on file indicating that no
receipt was
ever issued to complainant Paiste.
We also find the rude and boorish
manner respondent treated complainant
Paiste and
her client on April 3, 2001 uncalled for. His
demeanor bordered on arrogance. He made
them
wait for fifteen minutes before he attended
to their concern as they found him playing
cards
and gambling. He was very irritable the
whole time he was talking to them. After he
examined
the record, he slammed it an told them to go
to the court at Rosales. He then got annoyed
when they followed him. To be sure, this is
no way to treat court users. High strung and
belligerent behavior has no place in
government, especially in the judiciary,
where the
personnel are enjoined to act with self-
restraint and civility at all times, even when
confronted
with rudeness and insolence. They are
expected to extend prompt, courteous and
adequate
service to the people. Such conduct is
exacted from them so that they will earn and
keep
societys high regard for and confidence in
 135

the judicial service. Conduct violative of this
standard
quickly and surely corrodes respect for the
courts. It is the imperative a nd sacred duty
of
everyone charged with the dispensation of
justice, from the judge to the lowliest clerk,
to
uphold the courts good name and standing
as true temples of justice.
assignment at Pacific Plaza Towers however,
petitioners did
not report for work because they had
subcontracted to perform installation work
for another
company. Petitioners also demanded for an
increase in their wage to P280.00 per day.
When
this was not granted, petitioners stopped
reporting for work and filed the illegal
dismissal case.

ISSUE:
106 JENNY M. AGABON and VIRGILIO C. WON Agabon’s termination was
AGABON VS NLRC & RIVIERA HOME valid.
IMPROVEMENTS
HELD:
FACTS: YES. Abandonment is the deliberate
Riviera Home Improvements, Inc. is and unjustified refusal of an employee to
engaged in the business of selling and resume
installing his employment. It is a form of neglect of
ornamental and construction materials. It duty, hence, a just cause for termination of
employed petitioners Virgilio Agabon and employment by the employer. For a valid
Jenny finding of abandonment, these two factors
Agabon as gypsum board and cornice should be
installers until they were dismissed for present:
abandonment of (1) the failure to report for work or
work. absence without valid or justifiable reason;
Petitioners then filed a complaint for and
illegal dismissal and payment of money (2) a clear intention to sever
claims. employer-employee relationship, with the
They assert that they were dismissed second as the
because the private respondent refused to more determinative factor which is
give them manifested by overt acts from which it may
assignments unless they agreed to work on a be deduced
pakyaw basis when they reported for duty. that the employees has no more intention to
They work. The intent to discontinue the
did not agree on this arrangement because it employment
would mean losing benefits as Social Security must be shown by clear proof that it was
System (SSS) members. deliberate and unjustified.
Private respondent, on the other In this case, petitioners were
hand, maintained that petitioners were not frequently absent having subcontracted for
dismissed an installation
but had abandoned their work. In fact, work for another company. Subcontracting
private respondent sent two letters to the for another company clearly showed the
last known intention
addresses of the petitioners advising them to to sever the employer-employee
report for work. They even talked to Virgilio relationship with private respondent. This
Agabon to tell him about the new was not the first

time they did this. In January 1996, they did
not report for work because they were
working for
another company. Private respondent at
that time warned petitioners that they
would be
dismissed if this happened again. Petitioners
disregarded the warning and exhibited a
clear
intention to sever their employer-employee
relationship. The record of an employee is a
relevant consideration in determining the
penalty that should be meted out to him.
The law imposes many obligations on
the employer such as providing just
compensation
to workers, observance of the procedural
requirements of notice and hearing in the
termination of employment. On the other
hand, the law also recognizes the right of the
employer to expect from its workers not only
good performance, adequate work and
diligence,
but also good conduct[19] and loyalty. The
employer may not be compelled to continue
to
employ such persons whose continuance in
the service will patently be inimical to his
interests.
107 E.G & I. CONSTRUCTION
CORPORATION and EDSEL GALEOS,
Petitioners, v. ANANIAS P. SATO, NILO
BERDIN, ROMEO M. LACIDA, JR., and HEIRS
OF ANECITO S. PARANTAR, SR., namely:
YVONNE, KIMBERLY MAE, MARYKRIS,
ANECITO, JR., and JOHN BRYAN, all
surnamed PARANTAR, Respondents.
FACTS:
Respondent Ananias P. Sato was
hired by petitioner E.G. & I. Construction
Corporation as a grader operator, which is
considered as technical labor. He held the
position for more than thirteen (13) years. In
2004, Sato discovered that petitioner
corporation had not been remitting his
premium contributions to the Social Security
136
System (SSS). When Sato kept on telling
petitioners to update his premium
contributions, he was removed as a grader
operator and made to perform manual
labor, such as tilling the land in a private
cemetery and/or digging earthworks in
petitioner corporations construction
projects. Thereafter, an inspection team
from the SSS went to petitioner corporations
office to check its compliance with the SSS
law. Petitioners told Sato that they could no
longer afford to pay his wages, and he was
advised to look for employment in other
construction companies. Sato, however,
found difficulty in finding a job because he
had been blacklisted in other construction
companies and was prevented from entering
the project sites of petitioners.
Respondent Nilo Berdin was hired by
petitioners as a steelman/laborer;
respondent Anecito S. Parantar, Sr. hired as
a steelman; and respondent Romeo M.
Lacida, Jr. was as a laborer. At the start of
their employment, they were required by
petitioners to sign several documents
purporting to be employment contracts.
They immediately signed the documents
without verifying their contents for fear of
forfeiting their employment.
They were tasked to set up steel bars
used in the building foundation, to mix
cement, and to perform other tasks required
of them by petitioners.
The project engineer of respondents
Berdin, Parantar, and Lacida instructed them
to affix their signatures on various
documents. They refused to sign the
documents because they were written in
English, a language that they did not
understand. Irked by their disobedience, the
project engineer terminated their
employment. On the same date, they were
given their weekly wages. However, the
wages that were paid to them were short of
three (3) days worth of wages, as penalty for
their refusal to sign the documents. The
following day, they were not allowed to
enter the work premises.

Respondents filed their respective
complaints with the Regional Arbitration
Branch of Cebu City for illegal dismissal,
underpayment of wages (wage differentials),
holiday pay, thirteenth (13th) month pay,
and service incentive leave pay.
The Labor Arbiter held that the
respondents were illegally dismissed from
employment. In lieu of reinstatement, due to
the strained relations of the parties and as
prayed for by respondents, each of them was
granted separation pay equivalent to one (1)
month pay for every year of service. The
Labor Arbiter likewise awarded respondents
claim for wage differentials, 13th month pay,
holiday pay, and service incentive leave pay.
On appeal, the NLRC, reversed the
Labor Arbiters decision.
In reversing the decision of the Labor
Arbiter, the NLRC ratiocinated that, other
than respondents bare allegation that they
were dismissed, they failed to present a
written notice of dismissal, and that
respondents individual complaints opted for
the payment of separation pay instead of
reinstatement. The NLRC opined that illegal
dismissal was inconsistent with the prayer
for separation pay instead of reinstatement.
Respondents filed an MR but the same was
denied.
Aggrieved, respondents filed a
petition for certiorari under Rule 65 of the
Rules of Court before the CA.
The CA reinstated the decision of the
Labor Arbiter ruling that respondents were
illegally dismissed. Hence, this petition.
ISSUE:
Whether the CA erred in reinstating
the decision of the Labor Arbiter, declaring
that respondents were illegally terminated
from employment by petitioner corporation,
and that respondents are entitled to their
monetary claims.
HELD:
The decision of the Court of Appeals
is sustained.
LABOR LAW
137
Petitioner corporation failed to prove
that respondents were dismissed for just or
authorized cause. In an illegal dismissal case,
the onus probandi rests on the employer to
prove that the dismissal of an employee is
for a valid cause.
For abandonment to exist, it is
essential (a) that the employee must have
failed to report for work or must have been
absent without valid or justifiable reason;
and (b) that there must have been a clear
intention to sever the employer-employee
relationship manifested by some overt acts.
The employer has the burden of proof to
show the employee's deliberate and
unjustified refusal to resume his
employment without any intention of
returning. Mere absence is not sufficient.
There must be an unequivocal intent on the
part of the employee to discontinue his
employment. Uniwide Sales Warehouse
Club v. National Labor Relations
Commission, G.R. No. 154503, February 29,
2008
The reason why respondents failed
to report for work was because petitioner
corporation barred them from entering its
construction sites. It is a settled rule that
failure to report for work after a notice to
return to work has been served does not
necessarily constitute abandonment. The
intent to discontinue the employment must
be shown by clear proof that it was
deliberate and unjustified. Petitioner
corporation failed to show overt acts
committed by respondents from which it
may be deduced that they had no more
intention to work. Respondents filing of the
case for illegal dismissal barely four (4) days
from their alleged abandonment is totally
inconsistent with our known concept of
what constitutes abandonment.
LABOR LAW
Even as the employee must allege
non-payment, the general rule is that the
burden rests on the employer to prove
payment, rather than on the employee to
prove non-payment. The reason for the rule
is that the pertinent personnel files, payrolls,

records, remittances, and other similar
documents which will show that overtime,
differentials, service incentive leave, and
other claims of the worker have been paid
are not in the possession of the worker but
in the custody and absolute control of the
employer. Agabon v.NLRC, G.R. No. 158693,
November 17, 2004
In this case, the submission of
petitioner corporation of the time records
and payrolls of respondents only on their
appeal before the NLRC is contrary to
elementary precepts of justice and fair play.
Respondents were not given the opportunity
to check the authenticity and correctness of
the same. Thus, we sustain the ruling of the
CA in the grant of the monetary claims of
respondents.
DENIED.
108 HARPOON MARINE SERVICES, INC., ET
AL.., Petitioner, v. FERNAN H. FRANCISCO,
Respondents.
FACTS:
Harpoon Marine Services hired
Francisco as a Yard Supervisor. On June 15,
2001, Francisco averred that Harpoon
dismissed him from work but promised to
pay his separation pay and accrued
commissions. He continued reporting for
work, but was barred from entering the
premises. He thereafter tried to claim his
separation pay and commissions, but
Harpoon, through its president Rosit, denied
payment of his commissions. Refusing to
sign a quitclaim, Francisco demanded
payment of his commissions, then filed a
case before the Labor Arbiter for illegal
dismissal. He supported his claim for
commissions with two vouchers evincing
payments for vessel repairs, arguing that he
was paid P10,000 for each vessel he
repaired.
Harpoon averred that on June 15,
2001, Rosit merely met with Francisco to
warn him regarding his habitual absences
and tardiness. When Francisco continued to
138
be absent, Harpoon sent him memoranda
informing him of his absences, which were
filed with the DOLE on August 15, 2001.
Francisco was then terminated on July 30,
2001. With regard to the commissions
claimed, Harpoon averred that Francisco
was only a regular employee, with a regular
salary, and that the supposed "commissions"
were merely additional money recognizing
Franciscos efforts.
The Labor Arbiter ruled that
Francisco was legally dismissed and that due
process was served through the several
memoranda sent to him. It also ruled that
commissions were due Francisco, and gave
credence to the vouchers. The NLRC,
however, held that Francisco was illegally
dismissed, for his timecard for June 2001
only showed three absences, which could
hardly be called habitual and therefore
cannot be a ground for termination. It
upheld the Labor Arbiter with regard to the
commissions. The CA affirmed the NLRC, and
held that Harpoon president Rosit should be
solidarily liable with the company.
ISSUES:
1. Whether or not Francisco was
illegally dismissed
2. Whether or not he was entitled to
his commissions
3. Whether Rosit is solidarily liable
with Harpoon
HELD:
The petition is partly meritorious.
LABOR LAW: Termination of
employment; liability of corporate officers.
First issue: The SC held that the
termination was illegal. As stated by the
NLRC, Franciscos timecard only showed
three consecutive absences and no record of
tardiness, which hardly constitutes gross or
habitual absence/tardiness. Moreso, the
reasons for Franciscos three-day absence
were not contested by Harpoon before the
Labor Arbiter, and no other evidence was
presented before the Labor Arbiter to prove
such "habitual" tardiness/absence. The

argument that Francisco abandoned his
work and went AWOL also does not hold
water, since Harpoon failed to prove that the
two elements of work abandonment existed:
namely, that there is absence of failure to
report to work for no justifiable reason, and
that there is intent to sever the employee-
employer relationship. Here, Harpoon failed
to prove that it was respondent who
voluntarily refused to report back for work
by his defiance and refusal to accept the
memoranda and the notices of absences
sent to him.Harpoon failed to present
evidence that they sent these notices to
respondents last known address for the
purpose of warning him that his continued
failure to report would be construed as
abandonment of work. Verily, an absence of
three days does not constitute habitual
absence justifying a termination from work.
Second issue: The SC held that
Francisco was not entitled to the
commissions. The check vouchers contained
very scant details and did not state that they
were paid for the construction or repair of a
vessel. They did not state the purpose for
which the amounts were paid. Moreover,
the list of vessels presented with the
vouchers does not validate Franciscos
monetary claim for it only contains a list of
vessels, and nothing more. The vouchers
patent vagueness makes them unreliable as
a basis for Franciscos claim of commissions.
Entitlement to commissions cannot be
proved by vouchers which are silent as to the
purpose for which they are issued.
Third issue: The SC disagrees with the
Labor Arbiter and NLRC in according solidary
liability on Rosit and Harpoon for the illegal
dismissal. As held in the case ofMAM Realty
Development Corporation v. National Labor
Relations Commission, "obligations incurred
by [corporate officers], acting as such
corporate agents, are not theirs but the
direct accountabilities of the corporation
they represent." As such, they should not be
generally held jointly and solidarily liable
with the corporation. The Court, however,
cited circumstances when solidary liabilities
139
may be imposed, as when the officer acted
in bad faith or gross negligence in handling
corporate affairs. Here, the CA imposed
personal liability on Rosit based on bad faith,
even though there was no proof that Rosit
acted with bad faith or outside of his
authority as company president. At most, his
acts merely showed the absence of a just or
valid cause in terminating the employment
of Francisco.
Petition is PARTLY GRANTED.
109 Alert Security and Investigation
Agency vs. Pasawilan
Facts:
Respondents Saidali Pasawilan,
Wilfredo Verceles and Melchor Bulusan
were all employed by petitioner Alert
Security and Investigation Agency, Inc. (Alert
Security) as security guards beginning March
31, 1996, January 14, 1997, and January 24,
1997, respectively. They were paid 165.00
pesos a day as regular employees, and
assigned at the Department of Science and
Technology (DOST) pursuant to a security
service contract between the DOST and Alert
Security.
Respondents aver that because they
were underpaid, they filed a complaint for
money claims against Alert Security and its
president and general manager, petitioner
Manuel D. Dasig, before Labor Arbiter Ariel
C. Santos. As a result of their complaint, they
were relieved from their posts in the DOST
and were not given new assignments despite
the lapse of six months. On January 26, 1999,
they filed a joint complaint for illegal
dismissal against petitioners.
Petitioners, on the other hand, deny
that they dismissed the respondents.
Petitioners presented "Duty Detail Orders"
that Alert Security issued to show that
respondents were in fact assigned to LRTA.
Respondents, however, failed to report at
the LRTA and instead kept loitering at the
DOST and tried to convince other security
guards to file complaints against Alert

Security. Thus, on August 3, 1998, Alert
Security filed a "termination report" with the
Department of Labor and Employment
relative to the termination of the
respondents.
Issue:
Whether respondents were illegally
dismissed
Rulings:
We rule in the affirmative.
As a rule, employment cannot be
terminated by an employer without any just
or authorized cause. No less than the 1987
Constitution in Section 3, Article 13
guarantees security of tenure for workers
and because of this, an employee may only
be terminated for just or authorized causes
that must comply with the due process
requirements mandated by law. Hence,
employers are barred from arbitrarily
removing their workers whenever and
however they want. The law sets the valid
grounds for termination as well as the
proper procedure to take when terminating
the services of an employee.
Although we recognize the right of
employers to shape their own work force,
this management prerogative must not
curtail the basic right of employees to
security of tenure. There must be a valid and
lawful reason for terminating the
employment of a worker. Otherwise, it is
illegal and would be dealt with by the courts
accordingly.
The Labor Code, as amended,
enumerates several just and authorized
causes for a valid termination of
employment. An employee asserting his
right and asking for minimum wage is not
among those causes. Dismissing an
employee on this ground amounts to
retaliation by management for an
employee’s legitimate grievance without
due process. Such stroke of retribution has
no place in Philippine Labor Laws.
On the element of the failure of the
employee to report for work, we also cannot
140
accept the allegations of petitioners that
respondents unjustifiably refused to report
for duty in their new posts. A careful review
of the records reveals that there is no
showing that respondents were notified of
their new assignments. Granting that the
"Duty Detail Orders" were indeed issued,
they served no purpose unless the intended
recipients of the orders are informed of
such.
The employer cannot simply
conclude that an employee is ipso facto
notified of a transfer when there is no
evidence to indicate that the employee had
knowledge of the transfer order. Hence, the
failure of an employee to report for work at
the new location cannot be taken against
him as an element of abandonment.
We acknowledge and recognize the
right of an employer to transfer employees
in the interest of the service. This exercise is
a management prerogative which is a lawful
right of an employer. However, like all rights,
there are limitations to the right to transfer
employees. As ruled in the case of Blue Dairy
Corporation v. NLRC:
x x x The managerial prerogative to
transfer personnel must be exercised
without grave abuse of discretion, bearing in
mind the basic elements of justice and fair
play. Having the right should not be confused
with the manner in which that right is
exercised. Thus, it cannot be used as a
subterfuge by the employer to rid himself of
an undesirable worker. In particular, the
employer must be able to show that the
transfer is not unreasonable, inconvenient
or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of
his salaries, privileges and other benefits. x x
x
In addition to these tests for a valid
transfer, there should be proper and
effective notice to the employee concerned.
It is the employer’s burden to show that the
employee was duly notified of the transfer.
Verily, an employer cannot reasonably
expect an employee to report for work in a
new location without first informing said

employee of the transfer. Petitioners’
insistence on the sufficiency of mere
issuance of the transfer order is indicative of
bad faith on their part.
110 POLYFOAM-RGC INTERNATIONAL,
CORPORATION and PRECILLA A. GRAMAJE,
Petitioners, v.EDGARDO CONCEPCION,
Respondent.
FACTS:
In his February 08, 2000 complaint
for illegal dismissal against Polyfoam and
Natividad Cheng, Edgardo Concepcion
alleged that he was hired by Polyfoam as an
"all-around" factory worker and served as
such for almost six years. On January 14,
2000, he allegedly discovered that his time
card was not in the rack and was later
informed by the security guard that he could
no longer punch his time card. When he
protested to his supervisor, the latter
allegedly told him that the management
decided to dismiss him due to an infraction
of a company rule. Cheng, the company
manager, also refused to face him.
Respondent counsel later wrote a letter to
Polyfoam manager requesting that
respondent be re-admitted to work, but the
request remained unheeded prompting the
latter to file the complaint for illegal
dismissal.
On April 28, 2000, Gramaje filed a
Motion for Intervention claiming to be the
real employer of respondent. On the other
hand, Polyfoam and Cheng filed a Motion to
Dismiss on the grounds that the NLRC has no
jurisdiction over the case, because of the
absence of employer-employee relationship
between Polyfoam and respondent and that
the money claims had already prescribed.
On May 24, 2000, Labor Arbiter
Adolfo Babiano issued an Order granting
Gramaje motion for intervention, it
appearing that she is an indispensable party
and denying Polyfoam and Cheng motion to
dismiss as the lack of employer-employee
relationship is only a matter of defense.
141
In their Position Paper, Polyfoam and
Cheng insisted that the NLRC has no
jurisdiction over the case, because
respondent was not their employee. They
likewise contended that respondent money
claims had already prescribed. Finally, they
fault respondent for including Cheng as a
party-defendant, considering that she is not
even a director of the company.
In her Position Paper,Gramaje
claimed that P.A. Gramaje Employment
Services (PAGES) is a legitimate job
contractor who provided some manpower
needs of Polyfoam. It was alleged that
respondent was hired as "packer" and
assigned to Polyfoam, charged with packing
the latter finished foam products. She
argued, however, that respondent was not
dismissed from employment, rather, he
simply stopped reporting for work.
On December 14, 2001, Labor Arbiter
rendered a Decision finding respondent to
have been illegally dismissed from
employment and holding Polyfoam and
Gramaje/PAGES solidarily liable for
respondent money claims.
On appeal by petitioners, the NLRC
modified the LA decision by exonerating
Polyfoam from liability for respondent claim
for separation pay and deleting the awards
of backwages, 13th month pay, damages,
and attorney fees.
Aggrieved, respondent elevated the
case to the CA in a special civil action for
certiorari under Rule 65 of the Rules of
Court. On December 19, 2005, the appellate
court granted the petition. The CA agreed
with the LA conclusion that Gramaje is not a
legitimate job contractor but only a "labor-
only" contractor. The appellate court
affirmed the LA findings of illegal dismissal as
respondent was dismissed from the service
without cause and due
process.Consequently, separation pay in lieu
of reinstatement was awarded. The CA
quoted with approval the LA conclusions on
the award of respondent other money
claims.

ISSUES:
1. Whether or not Gramaje is an
independent job contractor?
2. Whether or not respondent was
illegally dismissed from employment?
HELD:
The decision of the Court of Appeals
is affirmed.
Gramaje is a Labor-Only Contractor -
Article 106 of the Labor Code explains the
relations which may arise between an
employer, a contractor, and the contractor
employees, thus:
ART. 106. Contractor or
subcontracting. − Whenever an employer
enters into a contract with another person
for the performance of the former work, the
employees of the contractor and of the latter
subcontractor, if any, shall be paid in
accordance with the provisions of this Code.
In the event that the contractor or
subcontractor fails to pay the wages of his
employees in accordance with this Code, the
employer shall be jointly and severally liable
with his contractor or subcontractor to such
employees to the extent of the work
performed under the contract, in the same
manner and extent that he is liable to
employees directly employed by him.
The Secretary of Labor and
Employment may, by appropriate
regulations, restrict or prohibit the
contracting out of labor to protect the rights
of workers established under the Code. In so
prohibiting or restricting, he may make
appropriate distinctions between labor-only
contracting and job contracting as well as
differentiations within these types of
contracting and determine who among the
parties involved shall be considered the
employer for purposes of this Code, to
prevent any violation or circumvention of
any provision of this Code.
There is labor-only contracting where
the person supplying workers to an
employer does not have substantial capital
or investment in the form of tools,
142
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.
The test of independent
contractorship is "whether one claiming to
be an independent contractor has
contracted to do the work according to his
own methods and without being subject to
the control of the employer, except only as
to the results of the work." In San Miguel
Corporation v. Semillano, the Court laid
down the criteria in determining the
existence of an independent and permissible
contractor relationship, to wit:
x x x [W]hether or not the contractor
is carrying on an independent business; the
nature and extent of the work; the skill
required; the term and duration of the
relationship; the right to assign the
performance of a specified piece of work;
the control and supervision of the work to
another; the employer power with respect
to the hiring, firing and payment of the
contractor workers; the control of the
premises; the duty to supply the premises,
tools, appliances, materials, and labor; and
the mode, manner and terms of payment.
Simply put, the totality of the facts
and the surrounding circumstances of the
case are to be considered. Each case must be
determined by its own facts and all the
features of the relationship are to be
considered.
Applying the foregoing tests, we
agree with the CA conclusion that Gramaje is
not an independent job contractor, but a
"labor-only" contractor.
First, Gramaje has no substantial
capital or investment. The presumption is
that a contractor is a labor-only contractor
unless he overcomes the burden of proving
that it has substantial capital, investment,

tools, and the like. The employee should not
be expected to prove the negative fact that
the contractor does not have substantial
capital, investment and tools to engage in
job-contracting.
Gramaje claimed that it has
substantial capital of its own as well as
investment in its office, equipment and
tools. She pointed out that she furnished the
plastic containers and carton boxes used in
carrying out the function of packing the
mattresses of Polyfoam. She added that she
had placed in Polyfoam workplace ten (10)
sealing machines, twenty (20) hand trucks,
and two (2) forklifts to enable respondent
and the other employees of Gramaje
assigned at Polyfoam to perform their job.
Finally, she explained that she had her own
office with her own staff. However, aside
from her own bare statement, neither
Gramaje nor Polyfoampresented evidence
showing Gramaje ownership of the
equipment and machineries used in the
performance of the alleged contracted job.
Considering that these machineries are
found in Polyfoam premises, there can be no
other logical conclusion but that the tools
and equipment utilized by Gramaje and her
"employees" are owned by Polyfoam.
Neither did Polyfoam nor Gramaje show that
the latter had clients other than the former.
Since petitioners failed to adduce evidence
that Gramaje had any substantial capital,
investment or assets to perform the work
contracted for, the presumption that
Gramaje is a labor-only contractor stands.
Second, Gramaje did not carry on an
independent business or undertake the
performance of its service contract
according to its own manner and method,
free from the control and supervision of its
principal,Polyfoam, its apparent role having
been merely to recruit persons to work for
Polyfoam.It is undisputed that respondent
had performed his task of packing Polyfoam
foam products in Polyfoam premises. As to
the recruitment of respondent, petitioners
were able to establish only that respondent
application was referred toGramaje, but that
143
is all. Prior to his termination, respondent
had been performing the same job in
Polyfoambusiness for almost six (6) years. He
was even furnished a copy of Polyfoam "Mga
Alituntunin at KarampatangParusa,"which
embodied Polyfoam rules on attendance,
the manner of performing the employee
duties, ethical standards, cleanliness, health,
safety, peace and order. These rules carried
with them the corresponding penalties in
case of violation.
While it is true that petitioners
submitted the Affidavit of Polyfoam
supervisor Victor Abadia, claiming that the
latter did not exercise supervision over
respondent because the latter was not
Polyfoam but Gramajeemployee, said
Affidavit is insufficient to prove such claim.
Petitioners should have presented the
person who they claim to have exercised
supervision over respondent and their
alleged other employees assigned
toPolyfoam. It was never established that
Gramaje took entire charge, control and
supervision of the work and service agreed
upon. And as aptly observed by the CA, "it is
likewise highly unusual and suspect as to the
absence of a written contract specifying the
performance of a specified service, the
nature and extent of the service or work to
be done and the term and duration of the
relationship."
A finding that a contractor is a "labor-
only" contractor, as opposed to permissible
job contracting, is equivalent to declaring
that there is an employer-employee
relationship between the principal and the
employees of the supposed contractor, and
the "labor-only" contractor is considered as
a mere agent of the principal, the real
employer.In this case, Polyfoam is the
principal employer and Gramaje is the labor-
only contractor. Polyfoam and Gramaje are,
therefore, solidarily liable for the rightful
claims of respondent.
Respondent was Illegally
DismissedFrom Employment - Respondent
stated that on January 14, 2000, his time
card was suddenly taken off the rack. His

supervisor later informed him that Polyfoam
management decided to dismiss him due to
infraction of company rule. In short,
respondent insisted that he was dismissed
from employment without just or lawful
cause and without due process. Polyfoam
did not offer any explanation of such
dismissal. It, instead, explained that
respondent real employer is Gramaje.
Gramaje, on the other hand, denied the
claim of illegal dismissal. She shifted the
blame on respondent claiming that the latter
in fact abandoned his work.
The LA gave credence to respondent
narration of the circumstances of the case.
Said conclusion was affirmed by the CA. We
find no reason to depart from such findings.
Abandonment cannot be inferred
from the actuations of respondent. When he
discovered that his time card was off the
rack, he immediately inquired from his
supervisor. He later sought the assistance of
his counsel, who wrote a letter addressed to
Polyfoam requesting that he be re-admitted
to work. When said request was not acted
upon, he filed the instant illegal dismissal
case. These circumstances clearly negate the
intention to abandon his work.
Petitioners failed to show any valid or
authorized cause under the Labor Code
which allowed it to terminate the services of
respondent. Neither was it shown that
respondent was given ample opportunity to
contest the legality of his dismissal. No
notice of termination was given to him.
Clearly, respondent was not afforded due
process. Having failed to establish
compliance with the requirements of
termination of employment under the Labor
Code, the dismissal of respondent was
tainted with illegality. Consequently,
respondent is entitled to reinstatement
without loss of seniority rights, and other
privileges and to his full backwages inclusive
of allowances and to his other benefits or
their monetary equivalent computed from
the time his compensation was withheld up
to the time of his actual reinstatement.
However, if reinstatement is no longer
144
feasible as in this case, separation pay
equivalent to one-month salary for every
year of service shall be awarded as an
alternative. Thus, the CA is correct in
affirming the LA award of separation pay
with full backwages and other monetary
benefits.
DENIED
111 GT PRINTERS and/or TRINIDAD G.
BARBA vs. NLRC and EDWIN RICARDO
FACTS:
Edwin Ricardo, was employed in
1968 as an apprentice of GT Printers. He was
promoted
to the position of production manager of GT
Printers and became general manager. In
February, 1985, Ricardo's wife established
Insta Printers, a rival printing press, with
Edwin
Ricardo himself as consultant and owner.
Since the establishment of Insta Printers,
Ricardo
became a habitual absentee from his job at
GT Printers. He neglected his duties and
responsibilities, and became lax in directing
and supervising the work force, resulting in
numerous major printing errors and failure
to meet printing specifications leading to the
rejection of several job orders from regular
customers. Mrs. Barba noticed that Ricardo
not only
used GT Printers' bookcloth and other
printing materials for his Insta Printers, but
he also gave
specific instructions to the production staff
to give priority to book and magazine job
orders for
Insta Printers. Eventually, the regular
customers of GT Printers were pirated by
Insta Printers.
Ricardo also manipulated price quotations
during the canvassing of bids to favor his
own outfit
instead of GT Printers. Because of those
irregularities, GT Printers suspended Ricardo
as general

manager for 30 days. Richard Barba was
designated to take his place. Contracts
concluded by
respondent Ricardo thereafter were no
longer honored. However, he continued to
be a sales
agent for GT Printers, hence, he continued to
receive commissions. He stopped reportin g
for
work and soon after filed a complaint for
illegal dismissal.
ISSUE:
WON Ricardo was lawfully dismissed
from employment.
HELD:
YES. The security of tenure accorded
to labor under the Constitution does not
embrace
infractions of accepted company rules
amounting to breach of trust and loss of
confidence. The
right of an employer to dismiss a managerial
employee for breach of trust and loss of
confidence, as in this case, cannot be
doubted. As a measure of self-preservation
against acts
inimical to its interests, an employer has the
right to dismiss an employee found
committing
acts of dishonesty and disloyalty. The
employer may not be compelled to continue
to employ
such a person whose continuance in the
service would patently be inimical to his
emplo yer's
interest. The dismissal of a dishonest
employee is in the best interest not only of
management
but also of labor for the law never intended
to impose an unjust situation on either labor
or
management. Reinstatement would be ill-
advised and incompatible with the labor
arbiter's
finding that "from those documentary
evidences presented by respondent, it can
be safely
145
conclude[d] that . . . there exist visible
conflict of interest amounting to willful
breach of trust
and confidence repose (sic) upon him by his
employer, . . . as well as (b) habitual neglect
of his
duties . . ."
112 DUNCAN ASSOCIATION OF
DETAILMAN-PTGWO and PEDRO A.
TECSON vs. GLAXO
WELLCOME PHILIPPINES, INC.
FACTS:
Pedro A. Tecson (Tecson) was hired
by respondent Glaxo Wellcome Philippi nes,
Inc.
(Glaxo) as medical representative. Tecson
signed a contract of employment which
stipulates,
among others, that he agrees to study and
abide by existing company rules; to disclose
to
management any existing or future
relationship by consanguinity or affinity with
co-employees
or employees of competing drug companies
and should management find that such
relationship poses a possible conflict of
interest, to resign from the company. Tecson
was
initially assigned to market Glaxos products
in the Camarines Sur-Camarines Norte sales
area.
Subsequently, Tecson entered into a
romantic relationship with Bettsy, an
employee of Astra
Pharmaceuticals (Astra), a competitor of
Glaxo. Bettsy was Astras Branch Coordinator
in Albay.
She supervised the district managers and
medical representatives of her company and
prepared marketing strategies for Astra in
that area. Even before they got married,
Tecson
received several reminders from his District
Manager regarding the conflict of interest
which his
 146

relationship with Bettsy might engender. and enforcement in the interest of fair play
Still, Tecson married Bettsy. Tecsons In the
superiors case at bar, the record shows that Glaxo gave
informed him that his marriage to Bettsy Tecson several chances to eliminate the
gave rise to a conflict of interest. conflict
of interest brought about by his relationship
HELD: with Bettsy. When their relationship was still
Glaxos policy prohibiting an in its
employee from having a relationship with an initial stage, Tecsons supervisors at Glaxo
employee of a constantly reminded him about its effects on
competitor company is a valid exercise of his
management prerogative. Glaxo has a right employment with the company and on the
to guard companys interests. After Tecson married
its trade secrets, manufacturing formulas, Bettsy,
marketing strategies and other confidential Glaxo gave him time to resolve the conflict
programs by either resigning from the company or
and information from competitors, asking his
especially so that it and Astra are rival wife to resign from Astra. Glaxo even
companies in the expressed its desire to retain Tecson in its
highly competitive pharmaceutical industry. employ
The prohibition against personal or marital because of his satisfactory performance and
relationships with employees of competitor suggested that he ask Bettsy to resign from
companies upon Glaxos employees is her
reasonable company instead. Glaxo likewise acceded to
under the circumstances because his repeated requests for more time to
relationships of that nature m ight resolve the
compromise the interests conflict of interest. When the problem could
of the company. Glaxo only aims to protect not be resolved after several years of
its interests against the possibility that a waiting,
competitor Glaxo was constrained to reassign Tecson to
company will gain access to its secrets and a sales area different from that handled by
procedures. Glaxo possesses the right to his wife
protect its for Astra. Notably, the Court did not
economic interests cannot be denied. No terminate Tecson from em ployment but
less than the Constitution recognizes the only reassigned
right of him to another area where his home
enterprises to adopt and enforce such a province, Agusan del Sur, was included. In
policy to protect its right to reasonable effecting
returns on Tecsons transfer, Glaxo even considered the
investments and to expansion and growth. welfare of Tecsons family. Clearly, the
Indeed, while our laws endeavor to give life foregoing
to the dispels any suspicion of unfairness and bad
constitutional policy on social justice and the faith on the part of Glaxo
protection of labor, it does not mean that
every
labor dispute will be decided in favor of the 113 EASTERN OVERSEAS EMPLOYMENT
workers. The law also recognizes that CENTER, INC. vs CECILIA BEA
management
has rights which are also entitled to respect FACTS:

Bea was hired as Senior Head Staff
Nurse by Elbualy Group/Su ltan Qaboos
University
Hospital (SQUH), the principal employer
through its placement agency in the
Philippines,
Eastern Overseas Employment Center, Inc.
(Eastern). Her contractual employment was
for two
(2) years. Beas placement with SQUH was
subject to a three-(3) month probationary
period
during said contractual employment.
Beas probationary status ended on
May 1992 but she still continued being in the
employ
of SQUH.
She, like all other employees of the
hospital, was also periodically subjected to
performance evaluation. After an alleged
poor evaluation of Beas performance as a
nurse, she
was transferred to the Neo-Natal Unit and
her performance was supposedly under
observation.
Later, the Director of Nursing Services
notified Bea that her contract would be
terminated.
Because of this, she wrote a letter requesting
for a reconsideration of the decision to
terminate
her. Beas contractual employment was
terminated and she was repatriated to the
Philippines
on the recommendation of the Department
of Nursing Services after three very poor
evaluations.
After her second poor evaluation,
she was given intensive management
assistance
through a specialized training plan but she
did not improve. She was unable to function
as a alleged poor performance in her duties as
Senior Head Staff Nurse on the Neonatal
Unit and therefore a recommendation was
made that
she should be terminated since she could not
fulfill her contractual obligations within
147
Nursing
Services.
Bea thereafter filed a case of illegal
dismissal against instant petition er before
the POEA
Adjudication Office.
HELD:
Beas termination was illegal for
failure of petitioner to prove the existence of
a just or
authorized cause for terminating her.
We take cognizance of the fact that
in any given workplace, not all of the
employees
perform in accordance with what is expected
of them. As such, it is not uncommon that an
employees work performance is found to be
unsatisfactory. As a general concept, poor
performance is equivalent to inefficiency
and incompetence in the performance of
official
duties. Under Article 282 of the Labor Code,
an unsatisfactory rating can be a just cause
for
dismissal only if it amounts to gross and
habitual neglect of duties. The fact that an
employees’
performance is found to be poor or
unsatisfactory does not necessarily mean
that the
employee is grossly and habitually negligent
of his duties. Gross negligence implies a want
or
absence of or failure to exercise slight care
or diligence, or the entire absence of care. It
evinces
a thoughtless disregard of consequences
without exerting any effort to avoid them.
In the present case, petitioner failed to
present substantial eviden ce to prove that
Beas
Senior Head Staff Nurse amounted to gross
and
habitual neglect. In the first place, the POEA
Adjudication Office found that aside from
the
Memorandum dated June 8, 1993 issued by

the Acting Director of Nursing Services of
Sultan
Qaboos University Hospital where Bea was
deployed, petitioner failed to present any
other
evidence to prove that Beas work
performance was indeed poor. Although
petitioner contends
that three separate evaluations of Beas work
performance were conducted; that after the
first
evaluation, Bea was notified about the poor
quality of her work; that following the
second
evaluation, she was given an intensive
management assistance through a render overtime work constitutes willful
specialized training
program; and, that only after the third
evaluation was made that Bea was advised
that her
employment would be terminated, we find
no error in the findings of the POEA and the
NLRC
that these claims of petitioner remain to be
allegations since no substantial evidence
was
presented to prove them.
In termination cases, the burden of
proving just and valid cause for dismissing an
employee from his employment rests upon
the employer, and the latter's failure to
discharge
that burden would result in a finding that the
dismissal is unjustified.
114 Realda vs. New Age Graphics Inc., G.R.
No. 192190, April 25, 2012
Facts:
Petitioner Realda was dismissed by
Respondent New Age Graphics Inc. for
unjustified refusal to render overtime work,
unexplained failure to observe prescribed
work standards, habitual tardiness and
chronic absenteeism despite warning and
non-compliance with the directive for him to
explain his numerous unauthorized
absences. The Court of Appeals recognized
148
the existence of just causes for petitioner’s
dismissal, however, the appellate court
found that the respondent failed to observe
the procedural requirements of due process
and, as a consequence, awarded the
petitioner P5,000.00 as Nominal Damages.
Issues:
WoN the dismissal based on the
grounds cited constituted just causes; and
WoN the amount awarded as Nominal
Damages of P5,000.00 was valid
Ruling:
First, the petitioner’s arbitrary
defiance to Graphics, Inc.’s order for him to
disobedience. Taking this in conjunction with
his inclination to absent himself and to
report late for work despite being previously
penalized, the CA correctly ruled that the
petitioner is indeed utterly defiant of the
lawful orders and the reasonable work
standards prescribed by his employer.
Second, the petitioner’s failure to
observe Graphics, Inc.’s work standards
constitutes inefficiency that is a valid cause
for dismissal. Failure to observe prescribed
standards of work, or to fulfill reasonable
work assignments due to inefficiency may
constitute just cause for dismissal. Such
inefficiency is understood to mean failure to
attain work goals or work quotas, either by
failing to complete the same within the
alloted reasonable period, or by producing
unsatisfactory results. As the operator of
Graphics, Inc.’s printer, he is mandated to
check whether the colors that would be
printed are in accordance with the client’s
specifications and for him to do so, he must
consult the General Manager and the color
guide used
by Graphics, Inc. before making a full run.
Unfortunately, he failed to observe this
simple procedure and proceeded to print
without making sure that the colors were at
par with the client’s demands. This resulted
to delays in the delivery of output, client
dissatisfaction, and additional costs on
Graphics, Inc.’s part.

While a penalty in the form of
suspension had already been imposed on
the petitioner for his habitual tardiness and
repeated absenteeism, the principle of
“totality of infractions” sanctions the act of
Graphics, Inc. of considering such previous
infractions in decreeing dismissal as the
proper penalty for his tardiness and
unauthorized absences incurred afterwards,
in addition to his refusal to render overtime
work and conform to the
prescribed work standards.
This Court cannot likewise agree to
the petitioner’s attempt to brush aside his
refusal to render overtime work as
inconsequential when Graphics, Inc.’s order
for him to do so is justified by Graphics, Inc.’s
contractual commitments to its clients. Such
an order is legal under Article 89 of the Labor
Code and the petitioner’s unexplained
refusal to obey is insubordination that merits
dismissal from service.
Nonetheless, while the CA finding
that the petitioner is entitled to nominal
damages as his right to procedural due
process was not respected despite the
presence of just causes for his dismissal is
affirmed, this Court finds the CA to have
erred in fixing the amount that the Company
is liable to pay. The CA should have taken
cognizance of the numerous cases decided
by this Court where the amount of nominal
damages was fixed at P30,000.00 if the
dismissal was for a just cause.
115 ALEJANDRO ROQUERO vs. PHILIPPINE
AIRLINES, INC.
FACTS:
Roquero, along with Rene Pabayo,
were ground equipment mechanics of
respondent
Philippine Airlines, Inc.. They were caught
red-handed possessing and using
Methampethamine
Hydrochloride or shabu in a raid conducted
by PAL security officers and NARCOM
personnel.
149
They alleged that they did not voluntarily
indulge in the said act but were instigated by
a certain
Jojie Alipato who was introduced to them by
Joseph Ocul, Manager of the Airport
Maintenance
Division of PAL. Inside the company
premises, they locked the door and Alipato
lost no time in
preparing the drugs to be used. When they
started the procedure of taking the drugs,
armed
men entered the room, arrested Roquero
and Pabayo and seized the drugs and the
paraphernalia used. Roquero and Pabayo
were subjected to a physical examination
where the
results showed that they were positive of
drugs. They were also brought to the
security office
of PAL where they executed written
confessions without the benefit of counsel.
Roquero and Pabayo then received a notice
of administrative charge] for violating the
PAL Code of Discipline. They were required
to answer the charges and were placed
under
preventive suspension.
Eventually, they were dismissed by
PAL. Thus, they filed a case for illegal
dismissal.
HELD:
Roquero is guilty of serious
misconduct for possessing and using shabu.
He violated
Chapter 2, Article VII, section 4 of the PAL
Code of Discipline which states: Any
employee who,
while on company premises or on duty, takes
or is under the influence of prohibited or
controlled drugs, or hallucinogenic
substances or narcotics shall be dismissed.
Serious misconduct is defined as the
transgression of some established and
definite rule
of action, a forbidden act, a dereliction of
duty, willful in character, and implies
wrongful intent

and not mere error in judgment. For serious
misconduct to warrant the dismissal of an
employee, it (1) must be serious; (2) must
relate to the performance of the employees
duty;
and (3) must show that the employee has
become unfit to continue working for the
employer.
It is of public knowledge that drugs can
damage the mental faculties of the user.
Roquero was
tasked with the repair and maintenance of
PALs airplan es. He cannot discharge that
duty if he is a drug user. His failure to do his
job can mean great loss of lives and
properties. Hence, even if he was instigated
to take drugs he has no right to be reinstated
to his position. He took the
drugs fully knowing that he was on duty and
more so that it is prohibited by company
rules.
Instigation is only a defense against
criminal liability. It cannot be used as a shield
against dismissal from employment
especially when the position involves the
safety of human lives.
116 Philippine sheet metal workers' union
vs the Court of Industrial Relations, Can
Companyand Liberal Labor Union
FACTS:
The respondent company filed a
motion, in the case pending in the court of
industrialrelations, asking for authority to lay
off at least 15 workers in its can department
on
the groundthat the installation and
operation of nine new labor-saving machines
in the said
department hadrendered the services of the
said workers unnecessary. Petitioner alleged
that
there was morethan sufficient work in the
company to keep all its workers busy.
ISSUE:
150
WON the laying off of the 15
employees valid
HELD:
Yes. There was justification for
reducing the number of workers in
respondent's
factoryby the introduction of machinery in
the manufacture of its products. There is no
question as tothe right of the manufacturer
to use new labor-saving devices with the
view to
effecting moreeconomy and efficiency in its
method of production. But the right to
reduce
personnel should notbe abused. It should
not be made a pretext for easing out laborers
on
account of their unionactivities. But neither
should it be denied when it is shown that
they are
not discharging theirduties in a manner
consistent with good discipline and efficient
operation
of an industrialenterprise.
117 EDGAR AGUSTILO vs. COURT OF
APPEALS, SAN MIGUEL CORPORATION
FACTS:
Edgar Agustilo was hired by San
Miguel Corporation (SMC) as a temporary
employee at
its Mandaue Brewery in Mandaue, Cebu. He
was made permanent and designated as a
safety
clerk and was later transferred to the
Engineering Department of the SMC
Mandaue Brewery as
an administrative secretary. SMC Mandaue
Brewery then adopted a policy that
managers
would no longer be assigned secretaries and
that only director level positions may be
given
secretaries. As a result, petitioner’s position
as administrative secretary was abolished
and he

was transferred to the companys Plant
Directors Office-Quality Improvement Team
(PDO-QIT).
Petitioner was informed that 584
employees, including him, would be
retrenched due to the
modernization program of the company and
that his services would be terminated and
that he
would be paid his benefits 30 days after he
was cleared of all accounta bilities. SMC
notified the
DOLE of its modernization program.
Petitioner was given separation pay
representing 175% of
his entitlements under the Labor Code.
Petitioner then filed a complaint
against respondents for unfair labor
practice, illegal
dismissal.
ISSUE:
Whether or not petitioner was
illegally dismissed.
HELD:
NO. Complainants termination was
justified and that respon dents adhered to
the
procedural requirements governing the
same. We have noted very clearly that
petitioners
separation from employment was brought
about by the installation of labor saving
devices and
machineries pursuant to the employers
reorganizational and expansion program.
The law in
this regard allows such a state of change. Art.
283 of the Labor Code allows the reduction
of
personnel with the installation of labor
saving devices. While we sympathize with
the
complainant recognizing the considerable
period of his employment of more than 11
years, yet
equally too, we recognize the respondents
judgment in the conduct of its business for
151
which
the laws do not authorize interference. As a
matter of fact, the Labor Code and its
Implementing Rules do not vest in the Labor
Arbiters nor in the different divisions of the
NLRC
managerial authority. The employer is free
to determine, using his own discretion and
business
judgment, all elements of employment from
hiring to firing (National Federation of Labor
Union
v. NLRC, 202 SCRA 346 (1991)). Moreover,
the freedom of management to conduct its
business
operations to achieve its purpose cannot be
denied (Yuco Chemical Industries v. Min. of
Labor,
185 SCRA 727 (1990)). For as we see in the
case at bench, complainant was not
discriminated
against. In the respondents program of
modernization, more than 500 others, to be
precise,
583 workers, were likewise affected. And we
cannot view this as a manifestation of bad
faith
and insincerity of respondents taking into
account the installation of machineries and
equipment pursuant to the program as a
means of streamlining the personnel
structure. In a
program like this, the eventuality of
personnel being removed cannot be
avoided. To contend
otherwise would be to intrude into the
conduct of an enterprise whose main reason
for being is
the profitability of its operations.
118 MAGNOLIA DAIRY PRODUCTS
CORPORATION vs. NLRC and JENNY A.
CALIBO
FACTS:
Petitioner entered into a contract of
service with Skillpower, Inc., a duly
organized

corporation engaged in the business of
offering and providing manpower services to
the public.
Skillpower, Inc., assigned Jenny A. Calibo to
petitioners Tetra Paster Division. When
petitioners
contract with Skillpower, Inc., expired,
Calibo applied with Lippercon Services, Inc.,
also a the herein petitioner, to terminate the
corporation engaged in providing manpower
services.
Lippercon Services, Inc., assigned her
to petitioners Tetra Paster Division as a
cleaning
aide. Later, Calibo was terminated from
service due to petitioners installation of
automated
machines prompting Calibo to institute a
complaint for illegal dismissal against
petitioner.
In answer thereto, petitioner averred that it
has no employer-employee relationship
with private respondent and that the
dismissal was prompted by the installation
of labor saving
devices - an authorized cause for dismissal
under the Labor Code, as amended.
ISSUE:
WON private respondent was legally
dismissed since the termination of her
employment was due to a cause expressly
authorized by the Labor Code
HELD:
YES. Article 283 of the Labor Code
provides in part that, the employer may also
terminate the employment of any employee
due to the installation of labor saving
devices, x x
x, by serving a written notice on the workers
and the Ministry of Labor and Employment
at least
one (1) month before the intended date
thereof. In case of termination due to the
installation
of labor saving devices or redundancy, the
worker affected thereby shall be entitled to
a
152
separation pay equivalent to at least his one
(1) month pay or to at least one (1) month
pay for
every year of service, whichever is higher. x
x x A fraction of at least six (6) months shall
be
considered one (1) whole year.
The law authorizes an employer, like
employment of any employee due to the
installation of labor saving devices. The
installation of
these devices is a management prerogative,
and the courts will not interfere with its
exercise in
the absence of abuse of discretion,
arbitrariness, or maliciousness on the part of
management,
as in this case. Nonetheless, this did not
excuse petitioner from complying with the
required
written notice to the employee and to the
Department of Labor and Employment
(DOLE) at
least one month before the intended date of
termination. This procedure enables an
employee
to contest the reality or good faith character
of the asserted ground for the termination of
his
services before the DOLE.
The failure of petitioner to serve the
written notice to private respondent and to
the
DOLE, however, does not ipso facto make
private respondents termination from
service illegal
so as to entitle her to reinstatement and
payment of backwages. If at all, her
termination from
service is merely defective because it was
not tainted with bad faith or arbitrariness
and was
due to a valid cause.
The well settled rule is that the
employer shall be sanctioned for non -
compliance with
the requirements of, or for failure to observe

due process in terminating from service its
employee.
119 WILTSHIRE FILE CO., INC. vs. THE
NATIONAL LABOR RELATIONS
COMMISSION and VICENTE T. ONG,
respondents.
FACTS:
Private respondent Vicente T. Ong
was the Sales Manager of petitioner
Wiltshire File
Co., Inc. On 13 June 1985, upon private
respondent’s return from a business and
pleasure trip
abroad, he was informed by the President of
petitioner Wiltshire that his services were
being
terminated. Private respondent maintains
that he tried to get an explanation from
management of his dismissal but to no avail.
On 18 June 1985, when private respondent
again
tried to speak with the President of
Wiltshire, the company’s security guard
handed him a letter
which formally informed him that his
services were being terminated upon the
ground of
redundancy.
Private respondent filed, on 21
October 1985, a complaint before the Labor
Arbiter for
illegal dismissal alleging that his position
could not possibly be redundant because
nobody (save
himself) in the company was then
performing the same duties.
Petitioner company alleged that the
termination of respondent’s services was a
costcutting measure: that in December
1984, the company had experienced an
unusually low
volume of orders: and that it was in fact
forced to rotate its employees in order to
153
save the
company. Despite the rotation of
employees, petitioner alleged; it continued
to experience
financial losses and private respondent’s
position, Sales Manager of the company,
became
redundant.
During pendency, petitioner closed
its business. LABOR ARBITER ruled that the
dismissal
was illegal. NLRC held that the termination
was attended by malice and bad faith on the
part of
petitioner, considering the manner of
private respondent was ordered by the
President to pack
up and remove his personal belongings from
the office.
ISSUE:
WON his dismissal was illegal.
HELD:
NO, his dismissal was VALID.
In the first place, we note that while
the letter informing private respondent of
the
termination of his services used the word
“redundant“, that letter also referred to the
company having “incur[red] financial losses
which [in] fact has compelled [it] to resort
to
retrenchment to prevent further losses”.
Thus, what the letter was in effect saying was
that
because of financial losses, retrenchment
was necessary, which retrenchment in turn
resulted
in the redundancy of private respondent’s
position.
In the second place, we do not
believe that redundancy in an employer’s
personnel
force necessarily or even ordinarily refers to
duplication of work. That no other person
was
holding the same position that private
respondent held prior to the termination of

his services,
does not show that his position had not
become redundant. Indeed, in any well-
organized
business enterprise, it would be surprising to
find duplication of work and two (2) or more
people doing the work of one person. We
believe that redundancy, for purposes of our
Labor
Code, exists where the services of an
employee are in excess of what is
reasonably demanded
by the actual requirements of the
enterprise. Succinctly put, a position is
redundant where it
is superfluous, and superfluity of a position
or positions may be the outcome of a
number of
factors, such as overhiring of workers,
decreased volume of business, or dropping
of a appropriate forum for such controversion
particular product line or service activity
previously manufactured or undertaken by
the
enterprise.
Wiltshire, in view of the contraction
of its volume of sales and in order to cut
down its
operating expenses, effected some changes
in its organization by abolishing some
positions and
thereby effecting a reduction of its
personnel. Thus, the position of Sales
Manager was
abolished and the duties previously
discharged by the Sales Manager simply
added to the
duties of the General Manager, to whom the
Sales Manager used to report.
In the instant case, the ground for
dismissal or termination of services does not
relate to
a blameworthy act or omission on the part of
the employee, there appears to us no need
for an
investigation and hearing to be conducted by
the employer who does not, to begin with,
allege
any malfeasance or non-feasance on the
154
part of the employee. In such case, there are
no
allegations which the employee should
refute and defend himself from. Thus, to
require
petitioner Wiltshire to hold a hearing, at
which private respondent would have had
the right to
be present, on the business and financial
circumstances compelling retrenchment and
resulting
in redundancy, would be to impose upon the
employer an unnecessary and inutile hearing
as a
condition for legality of termination.
This is not to say that the employee
may not contest the reality or good faith
character
of the retrenchment or redundancy asserted
as grounds for termination of services. The
would, however, be the Department of
Labor and
Employment and not an investigation or
hearing to be held by the employer itself. It
is precisely
for this reason that an employer seeking to
terminate services of an employee or
employees
because of “closure of establishment and
reduction of personnel”, is legally required
to give a
written notice not only to the employee but
also to the Department of Labor and
Employment
at least one month before effectivity date of
the termination. In the instant case, private
respondent did controvert before the
appropriate labor authorities the grounds
for termination
of services set out in petitioner’s letter to
him dated 17 June 1985.
NOTES:
Art. 283. Closure of establishment and
reduction of personnel. –– The employer
may also
terminate the employment of any employee
due to the installation of labor saving
devices,

redundancy, retrenchment to prevent losses
or the closing or cessation of operation of
the
establishment or undertaking unless the
closing is for the purpose of circumventing
the
provisions of this Title, by serving a written
notice on the workers and the Ministry of
Labor and
Employment at least one (1) month before
the intended date thereof. In case of
termination
due to the installation of labor saving devices
or redundancy, the worker affected thereby
shall
be entitled to a separation pay equivalent to
at least his one (1) month pay or to at least
one (1)
month pay for every year of service,
whichever is higher. In case of retrenchment
to prevent
losses and in cases of closures or cessation of
operations of establishment or undertaking
not
due to serious business losses or financial
reverses, the separation pay shall be
equivalent to
one (1) month pay or at least one-half (1/2)
month pay for every of service, whichever is
higher.
A fraction of at least six (6) months shall be
considered one (1) whole year.
120 COATS MANILA BAY, INC. vs PURITA
M. ORTEGA
FACTS:
Purita M. Ortega and Marina A.
Montero were both employed by petitioner
as Clerk
Analysts in the Industrial Engineering
Department. On 27 April 2000, petitioner
issued a respondents
memorandum announcing that a consultations with the Union Respondents
redundancy plan would be implemented. It
was stated that
the redundancy program was necessary to
prevent further losses. Petitioner assured its
155
employees that implementing a redundancy
program rather than a retrenchment
program
would result in better benefits to those
dismissed.
As a result of this redundancy
program, 135 employees were terminated,
including
respondents.
Respondents received their
respective separation payments and
thereafter executed
release waivers and quitclaims in favor of
petitioner. In the meantime, 11 of the
terminated
employees were rehired by petitioner to
different positions but with lower salaries.
On 8 June
2000, respondents filed a complaint for
illegal dismissal Respondents asserted in
their position
paper that despite their dismissal due to
redundancy, their functions were assigned
to other
workers.
Petitioner and Tanco claimed that
they had the management prerogative to
implement
a redundancy program as per Article 283 of
the Labor Code. They aver that both
respondents
were notified that they would be subject to
redundancy and that they never objected
thereto
as shown by the execution of their
respective waivers/quitclaims. It asserts that
the
implementation of its redundancy program
was not discriminatory, and that it
implemented
reasonable criteria in selecting employees to
be retrenched. Moreover, the decision to
dismiss
was reached after
contend that
petitioner cannot invoke redundancy since
there was no showing that the functions of
respondents are duplicitous or superfluous.

They also assert that petitioner failed to
show that
it was suffering from a serious downturn in
business that would warrant redundancy
given that
such serious business downturn was the
cause given by petitioner in the termination
letters
sent to respondents. They also assert that
their educational attainment is irrelevant
since the
compelling factor in their acceptance of
separation pay was the dire economic
necessity to be
caused by their impending loss of jobs.
ISSUE:
WON there’s propriety of the
redundancy program implemented by
petitioner;
HELD:
YES. Redundancy exists where the
services of an employee are in excess of
what is
reasonably demanded by the actual
requirements of the enterprise. Succinctly
put, a position is
redundant where it is superfluous, and
superfluity of a position or positions may be
the
outcome of a number of factors, such as over
hiring of workers, decreased volume of
business,
or dropping of a particular product line or
service activity previously manufactured or
undertaken by the enterprise. That no other
person was holding the same position prior
to the
termination of ones services, does not show
that his position had not become redundant.
Indeed, in any well-organized business
enterprise, it would be surprising to find
duplication of
work and two (2) or more people doing the
work of one person. Just like installation of
laborsaving devices, the ground of
156
redundancy does not require the exhibition
of proof of losses or imminent losses. In fact,
of all the statutory grounds provided in
Article 283 of the Labor Code, it is only
retrenchment which requires proof of losses
or possible losses as justification for
termination of employment.
It is well settled that the
characterization of an employee’s services
as no longer
necessary or sustainable, and, therefore,
properly terminable, is an exercise of
business
judgment on the part of the employer.
However, the wisdom or soundness of such
characterization or decision is not subject to
discretionary review provided, of course,
that
violation of law or arbitrary or malicious
action is not shown. In several instances, the
Court has
held that it is important for acompany to
have fair and reasonable criteria in
implementing its
redundancy program, such as but not limited
to, (a) preferred status, (b) efficiency and (c)
seniority.
Records shows that respondents
positions were abolished because there was
duplicity
of functions of clerk analysts in the Industrial
Engineering Section and finishing production
clerks in the Operations Department. Even
the union representatives agreed that
respondents
positions were redundant. Petitioner found
that it was more cost-efficient to maintain
only one
employee to handle the computation of
incentives of the production employees with
the use of
computers.
121 BONIFACIO ASUFRIN, JR vs SAN
MIGUEL CORPORATION
FACTS:

Asufrin is a Stock Clerk of Coca Cola
Plant, then a department of respondent San
Miguel
Beer Corporation. Sometime in 1984, the
sales office and operation s at the Sum-ag,
Bacolod
City Sales Office were reorganized. Several
positions were abolished including
petitioner’s
position as Stock Clerk. After reviewing
petitioner’s qualifications, he was
designated
warehouse checker at the Sum-ag Sales
Office. SMC implemented a new marketing
system
known as the "pre-selling scheme" at the
Sum-ag Beer Sales Office. As a consequence,
all
positions of route sales and warehouse
personnel were declared redundant.
Respondent
notified the DOLE Director. SMC thereafter
wrote a letter to petitioner informing him
that,
owing to the implementation of the "pre-
selling operations" scheme, all positions of
route and
warehouse personnel will be declared
redundant and the Sum-ag Sales Office will
be closed
thus petitioner reported to respondent’s
Personnel Department at the Sta. Fe
Brewery,
pursuant to a previous directive.
Thereafter, the employees of Sum-ag
sales force were informed that they can avail
of
respondent’s early retirement package
pursuant to the retrenchment program,
while those
who will not avail of early retirement would
be redeployed or absorbed at the Brewery or
other
sales offices. Petitioner opted to remain and
manifested his willingness to be assigned to
any
job, considering that he had three children in
college.
157
Petitioner was surprised when he
was informed by the Acting Personnel
Manager that
his name was included in the list of
employees who availed of the early
retirement package.
Petitioner’s request that he be given an
assignment in the company was ignored by
the Acting
Personnel Manager. Petitioner thus filed a
complaint for illegal dismissal
ISSUE:
Whether or not the dismissal of
petitioner is based on a just and authorized
cause.
HELD:
NO. The determination that
employee’s services are no longer necessa ry
or sustainable
and, therefore, properly terminable is an
exercise of business judgment of the
employer. The
wisdom or soundness of this judgment is not
subject to discretionary review of the Labor
Arbiter and the NLRC, provided there is no
violation of law and no showing that it was
prompted by an arbitrary or malicious act. In
other words, it is not enough for a company
to
merely declare that it has become
overmanned. It must produce adequate
proof that such is
the actual situation to justify the dismissal of
the affected employees for redundancy. It
bears
stressing that whether it be by redundancy
or retrenchment or any of the other
authorized
causes, no employee may be dismissed
without observance of the fundamentals of
good faith.
In selecting employees to be dismissed, a fair
and reasonable criteria must be used, such
as but not limited to (a) less preferred status,
e.g. temporary employee; (b) efficiency; and
(c)
seniority. In the case at bar, no criterion

whatsoever was adopted by respondent in
dism issing
petitioner. Furthermore, as correctly
observed by the NLRC, respondent "has not
shown how
the cessation of operations of the Sum-ag
Sales Office contributed to the ways and
means of
improving effectiveness of the organization
with the end in view of efficiency and cutting
distribution overhead and other related
costs. Respondent, thus, clearly resorted to
sweeping
generalization[s] in dismissing complainant."
It is not difficult for employers to
abolish positions in the guise of a cost-
cutting measure
and we should not be easily swayed by such
schemes which all too often reduce to near
nothing what is left of the rubble of rights of
our exploited workers. Given the nature of
petitioner’s job as a Warehouse Checker, it is
inconceivable that respondent could not
accommodate his services considering that
the warehousing operations at Sum -ag Sales
Office
has not shut down.
RUBEN SERRANO vs. NLRC and ISETANN
DEPARTMENT STORE
FACTS:
Petitioner was hired by
Isetann Department Store as a security
checker to apprehend
shoplifters and prevent pilferage of
merchandise. 1 Initially hired on contractual
basis but
eventually became a regular employee. He
then became head of the Security Checkers
Section.
As a cost-cutting measure, private
respondent decided to phase out its entire
security
section and engage the services of an
independent security agency. For this
reason, it wrote
sent the petition a notice that in view of
158
company’s retrenchment program, he is
notified for
his termination as Security Section Head. The
loss of his employment prompted petitioner
to
file a complaint for illegal dismissal.
Petitioner contends that abolition of private
respondent's
Security Checkers Section and the
employment of an independent security
agency do not fall
under any of the authorized causes for
dismissal under Art. 283 of the Labor Code.
ISSUE:
Whether or not there is a valid
ground for the dismissal of the complainant.
HELD:
Yes. Closure of establishment
and reduction of personnel. — The employer
may also terminate the employment of any
employee due to the installation of labor-
saving devices,
redundancy, retrenchment to prevent losses
or the closing or cessation of operations of
the
establishment or undertaking unless the
closing is for the purpose of circumventing
the
provisions of this Title, by serving a written
notice on the, workers and the Department
of Labor
and Employment at least one (1) month
before the intended date thereof.
In case of termination due to the installation
of labor-saving devices or redundancy, the
worker affected thereby shall be entitled to
a separation pay equivalent to at least one
(1)
month pay or to at least one (1) month pay
for every year of service, whichever is higher.
In case of retrenchment to prevent losses
and in cases of closure or cessation of
operations of establishment or undertaking
not due to serious business losses or
financial
reverses, the separation pay shall be
equivalent to at least one (1) month pay or

at least onehalf (1/2) month pay for every
year of service, whichever is higher. A
fraction of at least six (6)
months shall be considered as one (1) whole
year.
The "[management of a
company] cannot be denied the faculty of
promoting efficiency and attaining economy
by a study of what units are essential for its
operation. To it belongs the ultimate
determination of whether services should be
performed by its personnel or contracted to
outside agencies . . . [While there] should be
mutual consultation, eventually deference is
to be paid to what management decides."
Consequently, absent proof that
management acted in a malicious or
arbitrary manner, the Court will not interfere
with the exercise of judgment by an
employer.
In the case at bar, we have
only the bare assertion of petitioner that, in
abolishing the security section, private
respondent's real purpose was to avoid
payment to the security
checkers of the wage increases provided in
the collective bargaining agreement
approved in
1990. Such an assertion is not sufficient basis
for concluding that the termination of
petitioner's
employment was not a bona fide decision of
management to obtain reasonable return
from its
investment, which is a right guaranteed to
employers under the Constitution.
Indeed, that the phase-out of the security
section constituted a "legitimate business
decision" is a factual finding of an
administrative agency which must be
accorded respect and
even finality by this Court since nothing can
be found in the record which fairly detracts
from
such finding. Accordingly, the termination of
petitioner's services was for an authorized
cause,
i.e., redundancy.
159
122 CALTEX (PHILS.), INC. vs NLRC &
ROMEO T. STO. TOMAS
FACTS:
Romeo T. Sto Tomas was a
regular employee of Caltex. He was a Senior
Accounting Analyst.
Caltex informed the
Department of Labor and Employment
(DOLE) of its plan to
implement a redundancy program in its
Marketing Division and some departments in
its
Batangas Refinery. The letter alleged that
the redundancy program is a response to the
market
situation which constrained petitioner to
rationalize and simplify its business
processes; that
petitioner undertook a review, restructuring
and streamlining of its organization which
resulted
in consolidation, abolition and outsourcing
of certain functions and in the identification
of
certain redundant positions. The letter also
states that petitioner will provide the DOLE a
list of
affected employees as it implements each
phase of the redundancy program.
Petitioner, through a letter,
notified private respondent of his
termination due to the redundancy of his
position and awarded him a separation
package. Due to this, respondent
filed with the Labor Arbiter a complaint for
illegal dismissal.
Respondent alleged there was
no independent proof or evidence presented
by
petitioner to substantiate its claim of
redundancy. Petitioner on the other hand,
averred that private respondents dismissal
from the service was due to redundancy of
his position which was determined after
petitioners business process re-engineering
study and organization review, conducted
with private respondents knowledge; that

redundancy is an authorized cause to
terminate an employee which is a
management prerogative and cannot be
interfered with absent any abuse of
discretion; and that there is nothing in the
law that requires petitioner to conduct
impartial investigation or hearing to
terminate an employee due to redundancy
ISSUE:
Whether private respondents
termination on the ground of redundancy
was valid
HELD:
NO. There was no substantial
evidence presented by petitioner to justify
private
respondent's dismissal due to redundancy.
Petitioners evidence to show redundancy
merely
consisted of a copy of petitioners letter to
the DOLE informing the latter of its intention
to
implement a redundancy program and
nothing more. The letter which merely
stated that
petitioner undertook a review, restructuring
and streamlining of its organization which
resulted
in consolidation, abolition and outsourcing
of certain functions; and which resulted in
identified
and redundant positions instead of
simplifying its business process
restructuring, does not
satisfy the requirement of substantial
evidence, that is, the amount of evidence
which a rendered a decision finding ETPI guilty of
reasonable mind might accept as adequate
to justify a conclusion.
Petitioner failed to
demonstrate the superfluity of private
respondents position as there was nothing in
the records that would establish any
concrete and real factors recognized by law
and relevant jurisprudence, such as
overhiring of workers, decreased volume of
business, or dropping of a particular product
line or service activity previously
160
manufactured or undertaken by the
enterprise, which were adopted by
petitioner in implementing the redundancy
program.
Petitioner also failed to show
any fair and reasonable criteria in
ascertaining what
positions are redundant and how the
selection of employees to be dismissed was
made.
Petitioners failure to show an authorized
cause for private respondents termination is
sufficient
to declare the dismissal illegal.
Culili v. Eastern Telecommunications Phils.,
G.R. No. 165381, February 9, 2011
Facts:
Nelson Culili was employed by
Eastern Telecommunications a Senior
Technician. In 1998, due to business losses,
ETPI was compelled to implement a Right-
Sizing Program which consisted of two
phases: the first phase involved the
reduction of ETPI’s workforce to only those
employees that were necessary and which
ETPI could sustain; the second phase
entailed a company-wide reorganization
which would result in the transfer, merger,
absorption or abolition of certain
departments of ETPI. Among the
departments abolished was the Service
Quality Department. As a result, Culili’s
position was abolished due to redundancy.
Upon filing a complaint, the Labor Arbiter
illegal dismissal and unfair labor practice,
which was affirmed by the NLRC. However,
the Court of Appeals found that Culili’s
position was validly abolished due to
redundancy. It was highly unlikely that ETPI
would effect a company-wide reorganization
simply for the purpose of getting rid of Culili.
Also, ETPI cannot be held guilty of unfair
labor practice as mere contracting out of
services being performed by union members
does not per se amount to unfair labor

practice unless it interferes with the
employees’ right to self-organization.
Issue:
Whether or not there was an
illegal dismissal.
Ruling:
There was a valid dismissal on
the ground of redundancy. There is
redundancy when the service capability of
the workforce is greater than what is
reasonably required to meet the demands of
the business enterprise. A position becomes
redundant when it is rendered superfluous
by any number of factors such as over-hiring
of workers, decrease in volume of business,
or dropping a particular product line. Among
the requisites of a valid redundancy program
are: (1) the good faith of the employer in
abolishing the redundant position; and (2)
fair and reasonable criteria in ascertaining
what positions are to be declared
redundant such as but not limited to:
preferred status, efficiency, and seniority.
The records show that ETPI had sufficiently
established not only its need to reduce its
workforce and streamline its organization,
but also the existence of redundancy in the
position of a Senior Technician. It was
decided that, in the judgment of ETPI
management, the specialized functions of a
Senior Technician whose sole function was
essentially the repair and servicing of ETPI’s
telecommunications equipment was no
longer needed since the Business and
Consumer [Accounts] Department had to
remain economical and focused yet versatile
enough to meet all the multifarious needs of
its small and medium sized clients. It is
inconceivable that ETPI would effect a
company-wide reorganization of this
scale for the mere purpose of singling out
Culili and terminating him. What ETPI did
was to abolish the position itself for being
too specialized and limited.
SC finds Culili’s dismissal was
for a lawful cause and not an act of unfair
labor practice, ETPI, however, was remiss in
161
its duty to observe procedural due process in
effecting the termination of Culili. In Mayon
Hotel & Restaurant v.Adana, SC observed
that the requirement of law mandating the
giving of notices was intended: not only to
enable the employees to look for another
employment and therefore ease the impact
of the loss of their jobs and the
corresponding income, but more
importantly, to give the Department of Labor
and Employment (DOLE) the opportunity to
ascertain the verity of the alleged authorized
cause of termination.
With regard to the impleaded
corporate officers, they cannot be held liable
for acts done in his official capacity because
a corporation, by legal fiction, has a
personality separate and distinct from its
officers, stockholders, and members. To
pierce this fictional veil, it must be shown
that the corporate personality was used to
perpetuate fraud or an illegal act, or to evade
an existing obligation, or to confuse a
legitimate issue. In illegal
dismissal cases, corporate officers may be
held solidarily liable with the corporation if
the termination was done with malice or bad
faith.
Culili has failed to prove that
his dismissal was orchestrated by the
individual respondents herein for the mere
purpose of getting rid of him. Hence, the
dismissal is declared valid but Eastern
Telecommunications Philippines, Inc. is
ordered to pay petitioner Nelson A. Culili the
amount of P50,000.00 as nominal damages
for non-compliance with statutory due
process, in addition to the mandatory
separation pay required under Article 283 of
the Labor Code.
123 CECILE DE OCAMPO, et.al. vs NLRC
and BALIWAG MAHOGANY CORPORATION
FACTS:
Petitioners are employees of
Baliwag Mahogany Corporation. They are
either officers or members of the Baliwag

Mahogany Corporation Union -CFW, the
existing collective bargaining agent of the
rank and file employees in the company. In
1988, Baliwag Mahogany Corporation
(company) and Baliwag Mahogany
Corporation Union-CFW (union) entered into
a collective bargaining agreement
containing, among other things, provisions
on conversion into cash of unused vacation
and sick leaves; grievance machinery
procedure; and the right of the company to
schedule work on Sundays and holidays. The
union made several requests from the
company, one of which was the cash
conversion of unused vacation and sick leave
for 1987-
1988 and 1988-1989. The company ruled to
allow payment of unused vacation and sick
leaves
for the period of 1987-1988 but disallowed
cash conversion of the 1988-1989 unused
leaves.
The company issued suspension orders
affecting twenty (20) employees for failure
to render
overtime work on December 30, 1989.
The suspension was for a
period of three (3) days. On the same day,
the union filed a notice of strike on the
grounds of unfair labor practice particularly
the violation of the CBA provisions on non-
payment of unused leaves and illegal
dismissal of seven (7) employees. The
company then issued a notice of termination
to three (3) employees or union members,
namely, Cecile de Ocampo, Rene Villanueva
and Marcelo dela Cruz, of the machinery
department, allegedly to effect cost
reduction and redundancy.
Petitioners contend that the
company acted in bad faith when it
terminated the services of the three
mechanics because the positions held by
them were not at all abolished but merely
given to Gemac Machineries. On the
contrary, the company stresses that when it
contracted the services of Gemac
Machineries for the maintenance and repair
of its industrial machinery, it only adopted a
162
cost saving and cost-consciousness program
in order to improve production efficiency.
ISSUE:
Whether or not the dismissals
of petitioners Cecile de Ocampo, Rene
Villanueva, and Marcelo dela Cruz from their
positions by the company on the ground of
redundancy was done in good faith.
HELD:
YES. Petitioners' dismissal was
justified by redundancy due to superfluity
and hence legal.
We believe that redundancy,
for purposes of our Labor Code, exists where
the services of an employee are in excess of
what is reasonably demanded by the actual
requirement of the enterprise. Succinctly
put, a position is redundant where it is
superfluous, and superfluity of a position or
positions may be the outcome of a number
of factors, such as over hiring of workers,
decreased volume of business, or dropping
of a pa rticular product line or service activity
previously manufactured or undertaken by
the enterprise. The employer had no legal
obligation to keep in its payroll more
employees, than are necessary for the
operation of its business.
The reduction of the number
of workers in a company made necessary by
the
introduction of the services of Gemac
Machineries in the maintenance and repair
of its
industrial machinery is justified. There can
be no question as to the right of the
company to
contract the services of Gemac Machineries
to replace the services rendered by the
terminated
mechanics with a view to effecting more
economic and efficient methods of
production.
In the same case, We ruled that "(t)he
characterization of (petitioners') services as
no
longer necessary or sustainable, and

therefore properly terminable, was an
exercise of business
judgment on the part of (private
respondent) company. The wisdom or
soundness of such
characterization or decision was not subject
to discretionary review on the part of the
Labor
Arbiter nor of the NLRC so long, of course, as
violation of law or merely arbitrary and
malicious
action is not shown" (ibid, p. 673).
In contracting the services of
Gemac Machineries, as part of the
company's cost-saving program, the services
rendered by the mechanics became
redundant and superfluous, and therefore
properly terminable. The company merely
exercised its business judgment or
management prerogative. And in the
absence of any proof that the management
abused its
discretion or acted in a malicious or arbitrary
manner, the court will not interfere with the
exercise of such prerogative.
124 ALABANG COUNTRY CLUB INC. vs.
NLRC, ALABANG COUNTRY CLUB
INDEPENDENT
EMPLOYEES UNION
FACTS:
Francisco Ferrer, then President of
ACCI, requested its Internal Auditor, Irene
CamposUgalde, to conduct a study on the
profitability of ACCIs Food and Beverage
Department
(F & B Department). In her report, it showed
that F & B Department had been incurring
substantial losses. Realizing that it was no
longer profitable for ACCI to maintain its
own F & B losses, and concentrate on core businesses,
Department, the management decided to
cease from operating the department and to
open
the same to a contractor, such as a
concessionaire, which would be willing to
operate its own
163
food and beverage business within the club.
ACCI subsequently entered into an
agreement with
La Tasca Restaurant Inc. (La Tasca), for it to
operate the F & B Department.
Subsequently, ACCI
sent its F & B Department employees
individual letters informing them that their
services were
being terminated one month from the date
and that they would be paid separation pay
equivalent to one hundred twenty five
(125%) percent of their monthly salary for
every year of
service. ACCI also informed them that La
Tasca agreed to absorb all affected
employees
immediately with the status of regular
employees without need of undergoing a
probationary
period, and that all affected employees
would receive the same salary they were
receiving from
ACCI at the time of their termination. The
Union, with the authority of individual
respondents,
filed before the NLRC a complaint for illegal
dismissal. The Union and individual
respondents
alleged that the F & B Division had been
reporting gaining profits as shown by the
Statement of
Income and Deficit prepared by SGV&Co.
They thus argued that compliance with the
standards
for losses to justify their retrenchment was
not met by ACCI. ACCI averred, however,
that it may
exercise management prerogatives to adopt
a cost-saving and cost-consciousness
program to
improve efficiency in its operations, prevent
and to
lay-off workers and contract out their jobs.
ISSUE:
WON the respondents were
dismissed due to retrenchment.

HELD:
NO. Retrenchment on the ground of
serious business losses is allowed subject to
the
conditions that (1) the losses expected
should be substantial and not merely de
minimis in
extent; (2) the substantial losses
apprehended must be reasonably imminent
as such
imminence can be perceived objectively in
good faith by the employer; (3)
retrenchment must
be reasonably necessary and likely to
effectively prevent the expected losses; and
(4) the
alleged losses, if already realized and the
expected imminent losses sought to be
forestalled,
must be proven by sufficient and convincing
evidence. However, the case at bar is one in
volving closure of a business undertaking.
Retrenchment is the reduction of
personnel for the purpose of cutting down
on costs of
operations in terms of salaries and wages
resorted to by an employer because of losses
in
operation of a business occasioned by lack of
work and considerable reduction in the
volume of
business.
Closure of a business or undertaking
due to business losses is the reversal of
fortune of
the employer whereby there is a complete
cessation of business operations to prevent
further
financial drain upon an employer who
cannot pay anymore his employees since
business has
already stopped. One of the prerogatives of
management is the decision to close the
entire
establishment or to close or abolish a
department or section thereof for economi c
164
reasons,
such as to minimize expenses and reduce
capitalization. In the present case, when
petitioner
decided to cease operating its F & B
Department and open the same to a
concessionaire, it did
not reduce the number of personnel
assigned thereat. It terminated the
employment of ALL
personnel assigned at the department. As in
the case of retrenchment, however, for the
closure
of a business or a department due to serious
business losses to be regarded as an
authorized
cause for terminating employees, it must be
proven that the losses incurred are
substantial and
actual or reasonably imminent; that the
same increased through a period of time;
and that the
condition of the company is not likely to
improve in the near future. Petitioners
failure to prove
that the closure of its F & B Department was
due to substantial losses notwithstanding,
this
Court finds that individual respondents were
dismissed on the ground of closure or
cessation of
an undertaking not due to serious business
losses or financial reverses, which is allowed
under
Article 283 of the Labor Code.
125 LOPEZ SUGAR CORPORATION vs.
FEDERATION OF FREE WORKERS
FACTS:
Petitioner, allegedly to prevent
losses due to major economic problems, and
exercising
its privilege under their Collective Bargaining
Agreement ("CBA") entered into between
petitioner and Philippine Labor Union
Association ("PLUA-NACUSIP"), caused the
retrenchment

and retirement of a number of its
employees. Petitioner filed with DOLE a
combined report on
retirement and application for clearance to
retrench affecting eighty six (86) of its
employees in
order to prevent losses. Federation of Free
Workers ("FFW"), as the certified bargaining
agent
of the rank-and-file employees of petitioner,
filed a complaint for unfair labor practices
and
recovery of union.
FFW claimed that the terminations
undertaken by petitioner were violative of
the
security of tenure of its members and were
intended to "bust" the union and hence
constituted
an unfair labor practice. FFW claimed that
after the termination of the services of its
members,
petitioner advised 110 casuals to report to
its personnel office. FFW further argued that
to
justify retrenchment, serious business
reverses must be "actual, real and amply
supported by
sufficient and convincing evidence.
Petitioner denied having hired
casuals to replace those it had retired or
retrenched. It
explained that the announcement calling for
110 workers to report to its personnel office
was
only for the purpose of organizing a pool of
extra workers which could be tapped
whenever
there were temporary vacancies by reason
of leaves of absence of regular workers.
ISSUE:
WON the retrenchment was valid.
HELD:
NO. Article 283 of the Labor Code
provides:
Article 283. Closure of establishment
and reduction of personnel. — The employer
165
may
also terminate then employment of any
employee due to the installation of labor
saving devices,
redundancy, retrenchment to prevent losses
or the closing or cessation of operation of
the
establishment or undertaking unless the
closing is for the purpose of circumventing
the
provisions of this Title, by serving a written
notice on the workers and the Ministry of
Labor and
Employer at least one (1) month before the
intended date thereof. In case of
termination due
to the installation of labor saving devices or
redundancy, the worker affected thereby
shall be
entitled to a se pay equivalent to at least his
one (1) month pay or to at least one (1)
month pay
for every year of service, whichever is higher.
In case of retrenchment to prevent losses and
in
cases, of closures or cessation of operations
of establishment or undertaking not due to
serious
business losses or financial reverses, the
separation pay shall be equivalent to one (1)
month
pay or at least one half (1/2) month pay for
every year of service, whichever is higher. A
fraction
of at least six (6) months shall be considered
one (1) whole year.
(Emphasis supplied) The phrase "to
Prevent losses" means that retrenchment or
termination of the services of some
employees is authorized to be undertaken by
the employer
sometime before the losses anticipated are
actually sustained or realized. It is not, in
other
words, the intention of the lawmaker to
compel the employer to stay his hand and
keep all his
employees until sometime after losses shall
have in fact materialized.

We consider it may be useful to
sketch the general standards in terms of
which the acts
of petitioner employer must be appraised.
Firstly, the losses expected should be
substantial and
not merely de minimis in extent. If the loss
purportedly sought to be forestalled by
retrenchment is clearly shown to be
insubstantial and inconsequential in
character, the bona
fide nature of the retrenchment would
appear to be seriously in question. Secondly,
the
substantial loss apprehended must be
reasonably imminent, as such imminence
can be
perceived objectively and in good faith by
the employer. There should, in other words,
be a employees.
certain degree of urgency for the
retrenchment, which is after all a drastic
recourse with
serious consequences for the livelihood of
the employees retired or otherwise laid-off.
Because
of the consequential nature of
retrenchment, it must, thirdly, be reasonably
necessary and
likely to effectively prevent the expected
losses. The employer should have taken
other
measures prior or parallel to retrenchment
to forestall losses, i.e., cut other costs than
labor
costs. An employer who, for instance, lays
off substantial numbers of workers while
continuing
to dispense fat executive bonuses and
perquisites or so-called "golden parachutes",
can
scarcely claim to be retrenching in good faith
to avoid losses. To impart operational
meaning to
the constitutional policy of providing "full
protection" to labor, the employer's
prerogative to
bring down labor costs by retrenching must
be exercised essentially as a measure of last
166
resort,
after less drastic means — e.g., reduction of
both management and rank-and-file
bonuses and
salaries, going on reduced time, improving
manufacturing efficiencies, trimming of
marketing
and advertising costs, etc. — have been tried
and found wanting.
Lastly, but certainly not the least important,
alleged if already real ized, and the expected
imminent losses sought to be forestalled,
must be proved by sufficient and convincing
evidence. The reason for requiring this
quantum of proof is readily apparent: any
less exacting
standard of proof would render too easy the
abuse of this ground for termination of
services of
In this case, there was no proof of
actual declining gross and net revenues
submitted.
No audited financial statements showing the
financial condition of petitioner corporation
during the above mentioned crop years were
submitted. Since financial statements
audited by
independent external auditors constitute
the normal method of proof of the profit and
loss
performance of a company, it is not easy to
understand why petitioner should have
failed to
submit such financial statements. Petitioner
made passing reference to cost reduction
measures it had allegedly undertaken, it was,
once more, a fairly conspicuous failure to
specify
the cost-reduction measures actually
undertaken in good faith before resorting to
retrenchment.
126 EDGE APPAREL, INC. vs NLRC
FACTS:
Pursuing its retrenchment program,
petitioner Edge Apparel, Inc., dismissed
 167

private must be due to

respondents Josephine Antipuesto, Norina business losses or reverses which are
Ando, Juliet Baguio, Apolinaria Velonta, serious, actual and real. Not every loss
Corazon incurred or
Pino and Josephine Cañete from expected to be incurred by the employer will
employment effective 03 September 1992. justify retrenchment, since, in the nature of
Feeling aggrieved, things, the possibility of incurring losses is
Antipuesto, et al., consulted with the constantly present, in greater or lesser
Regional Director of the Department of degree, in
Labor and carrying on the business operations.
Employment ("DOLE") who opined that it Retrenchment is normally resorted
would be best for them to receive the to by management during periods of
separation pay business
being offered by the corporation. His advice reverses and economic difficulties
was heeded. occasioned by such events as recession,
The subsequent receipt of their industrial
separation pay benefits, nevertheless, did n depression, or seasonal fluctuations. It is an
ot deter act of the employer of reducing the work
Antipuesto, et al., from later going through force
with their complaint for illegal dismissal because of losses in the operation of the
against the enterprise, lack of work, or considerable
corporation. The charge averred that the reduction on
retrenchment program was a mere the volume of business. Retrenchment is, in
subterfuge used many ways, a measure of last resort when
by Edge Apparel to give a semblance of other
regularity and validity to the dismissal of the less drastic means have been tried and found
complainants. to be inadequate. A lull caused by lack of
Edge Apparel countered that its orders
financial obligations, amounting to about P8 or shortage of materials must be of such
Million, nature as would severely affect the
had begun to eat up most of its capital outlay continued business
and resulted in unabated losses of operations of the employer to the detriment
P681,280.00 in of all and sundry if not properly addressed.
1989, P262,741.00 in 1990, P162,170.00 in The
1991 and P749,294.00 in 1992, constraining institution of "new methods or more
the efficient machinery, or of automation" is
company to adopt and implement a technically a
retrenchment program. ground for termination of employment by
reason of installation of labor-saving devices
ISSUE: but
WON there was a valid where the introduction of these methods is
retrenchment. resorted to not merely to effect greater
efficiency
HELD: in the operations of the business but
YES. Retrenchment is an economic principally because of serious business
ground to reduce the number of employees. reverses and to
In order avert further losses, the device could then
to be justified, the termination of verily be considered one of retrenchment.
employment by reason of retrenchment In this case, the Labor Arbiter and the NLRC
 168

both concluded that there had been a valid underpayment of

ground for the retrenchment of private
respondents. The documents presented in
evidence
were found to "conclusively show that
(petitioner) suffered serious financial
losses." The
general standards or elements needed for
the retrenchment to be valid — i.e., that the
losses
expected are substantial and not merely de
minimis in extent; that the expected losses
are
reasonably imminent such as can be
perceived objectively and in good faith by
the employer;
that the retrenchment is reasonably
necessary and likely to effectively prevent
the expected
losses; and that the imminent losses sought
to be forestalled are substantiated — were
adequately shown in the present case.
127 FE S. SEBUGUERO vs NLRC and G.T.I.
SPORTSWEAR CORPORATION
FACTS:
Petitioners were among the thirty-
eight (38) regular employees of private
respondent
GTI Sportswear Corporation, who were given
"temporary lay-off" notices by the latter due
to
alleged lack of work and heavy losses caused
by the cancellation of orders from abroad
and by
the garments embargo of 1 990.
Believing that their "temporary lay-
off" was a ploy to dismiss them, resorted to
because
of their union activities and was in violation
of their right to security of tenure since there
was
no valid ground therefor, the 38 laid-off
employees filed with the Labor Arbiter's
office in the
National Capital Region complaints for illegal
dismissal, unfair labor practice,
wages under Wage Orders Nos. 01 and 02,
and non -payment of overtime pay and 13th
month
pay.
GTI denied the claim of illegal
dismissal and asserted that it was its
prerogative to lay-off
its employees temporarily for a period not
exceeding six months to prevent losses due
to lack
of work or job orders from abroad, and that
the lay-off affected both union and non-
union
members. It justified its failure to recall the
38 laid-off employees after the lapse of six
months
because of the subsequent cancellations of
job orders made by its foreign principals, a
fact
which was communicated to the petitioners
and the other complainants who were all
offered
severance pay
ISSUE:
WON there was a valid
retrenchment.
HELD:
YES but it is defective due to lack of
procedural notice. Retrenchment, on the
other
hand, is used interchangeably with the term
"lay-off." It is the termination of
employment
initiated by the employer through no fault of
the employee's and without prejudice to the
latter, resorted to by management during
periods of business recession, industrial
depression,
or seasonal fluctuations, or during lulls
occasioned by lack of orders, shortage of
materials,
conversion of the plant for a new production
program or the introduction of new methods
or
more efficient machinery, or of automation.

Simply put, it is an act of the
employer of dismissing employees because
of losses in the
operation of a business, lack of work, and
considerable reduction on the volume of his
business,
a right consistently recognized and affirmed
by this Court.
To determine, therefore, whether
the petitioners were validly retrenched or
were
illegally dismissed, we must determine
whether there was compliance with the law
regarding a notice should have been given to them is not
valid retrenchment at anytime within the six
month-period that they were temporarily
laid-off.
Under the aforequoted Article 283 of the
Labor Code, there are three basic requisites
for a valid retrenchment:
(1) the retrenchment is necessary to
prevent losses and such losses are proven;
(2) written notice to the employees
and to the Department of Labor and
Employment at
least one month prior to the intended date
of retrenchment; and
(3) payment of separation pay
equivalent to one month pay or at least 1/2
month pay
for every year of service, whichever is higher.
The requirement of notice to both
the employees concerned and the
Department of
Labor and Employment (DOLE) is mandatory
and must be written and given at least one
month before the intended date of
retrenchment. In this case, it is undisputed
that the
petitioners were given notice of the
temporary layoff. There is, however, no
evidence that any
written notice to permanently retrench
them was given at least one month prior to
the date of
the intended retrenchment. The NLRC found
that GTI conveyed to the petitioners the
impossibility of recalling them due to the
continued unavailability of work. But what
169
the law
requires is a written notice to the employees
concerned and that requirement is
mandatory.
The notice must also be given at least one
month in advance of the intended date of
retrenchment to enable the employees to
look for other means of employment and
therefore
to ease the impact of the loss of their jobs
and the corresponding income. That they
were
already on temporary lay-off at the time
an
excuse to forego the one-month written
notice because by this time, their lay-off is to
become
permanent and they were definitely losing
their employment.
The lack of written notice to the
petitioners and to the DOLE does not,
however, make
the petitioners' retrenchment illegal such
that they are entitled to the payment of back
wages
and separation pay in lieu of reinstatement
as they contend. Their retrenchment, for not
having
been effected with the required notices, is
merely defective. In those cases where we
found the
retrenchment to be illegal and ordered the
employees' reinstatement and the payment
of back
wages, the validity of the cause for
retrenchment, that is the existence of
imminent or actual
serious or substantial losses, was not proven.
But here, such a cause is present as found by
both
the Labor Arbiter and the NLRC. There is only
a violation by GTI of the procedure
prescribed in
Article 283 of the Labor Code in effecting the
retrenchment of the petitioners.
It is now settled that where the dismissal of
an employee is in fact for a just and valid
cause and is so proven to be but he is not

accorded his right to due process, i.e., he was
not
furnished the twin requirements of notice
and the opportunity to be heard, the
dismissal shall
be upheld but the employer must be
sanctioned for non-compliance with the
requirements of
or for failure to observe due process.
128 Plastimer Industrial Corp. v. Gopo, G.R.
No. 183390, February 16, 2011
Facts:
The Personnel and Administration
Manager of Plastimer issued a service.
Memorandum informing all its employees of
the decision of the Board of Directors to
downsize and reorganize its business
operations due to withdrawal of
investments and shares of stocks which
resulted in the change of its corporate
structure. On 14 May 2004, the employees
of Plastimer, including respondent Gopo and
other employees were served written
notices of their termination effective 13 June
2004. Plastimer and Plastimer Industrial
Corporation Christian Brotherhood (PICCB),
the incumbent sole and exclusive collective
bargaining representative of all rank and file
employees, entered into a Memorandum of
Agreement (MOA) relative to the terms and
conditions that would govern the
retrenchment of the affected employees. On
26 May 2004, Plastimer submitted to the
DOLE an Establishment Termination Report
containing the list of the employees affected
by the reorganization and downsizing. The
affected employees, including respondents,
signed individual “Release Waiver and
Quitclaim.”
Thereafter, respondents filed a
complaint against Plastimer and its President
Teo Kee Bin (petitioners) before the Labor
Arbiter for illegal dismissal with prayer for
reinstatement and full backwages,
underpayment of separation pay, moral and
exemplary damages and attorney’s fees.
170
Respondents alleged that they did
not voluntarily relinquish their jobs and that
they were required to sign the waivers and
quitclaims without giving them an
opportunity to read them and without
explaining their contents; and that Plastimer
failed to establish the causes/valid reasons
for the retrenchment and to comply with the
one-month notice to the DOLE as well as the
standard prescribed under the Collective
Bargaining Agreement between Plastimer
and the employees. Petitioners countered
that the retrenchment was a management
prerogative and that respondents got their
retrenchment or separation pay even before
the effective date of their separation from
The Labor Arbiter ruled in favor of
petitioners. It held that petitioners were able
to prove that there was a substantial
withdrawal of stocks that led to the
downsizing of the workforce; that notice to
the affected employees were given on 14
May 2004, 30 days before its effective date
on 14 June 2004, and it was only the notice
to the DOLE that was filed short of the 30-
day period; that respondents claimed their
separation pay in accordance with the MOA;
and that respondents could not claim
ignorance of the contents of the waivers and
quitclaims because they were assisted by the
union President and their counsel in signing
them.
On appeal, the NLRC affirmed the
Labor Arbiter’s decision.
The Court of Appeals reversed the
NLRC decision and found that petitioners
have been illegally dismissed.
The Court of Appeals ruled that there
was no valid cause for retrenchment; that
while Plastimer claimed financial losses from
2001 to 2004, records showed an
improvement of its finances in 2003; that
Plastimer failed to use a reasonable and fair
standard or criteria in ascertaining who
would be dismissed and who would be
retained among its employees; that the MOA
between Plastimer and PICCB only
recognized the need for partial

retrenchment and the computation of
retrenchment pay without disclosing the
criteria in the selection of the employees to
be retrenched; and that the union President
and the PICCB’s counsel were not present
when the retrenched employees were made
to sign the waivers and quitclaims.
Hence, the petition before this Court.
Issue:
WON respondents were illegally
retrenched by petitioners.
Ruling:
The petition has merit.
This Court is not precluded from
reviewing the factual issues when there are
conflicting findings by the Labor Arbiter, the
NLRC and the Court of Appeals. In this case,
we find that the findings of the Labor Arbiter
and the NLRC are more in accord with the
evidence on record.
One-Month Notice of Termination of
Employment Article 283 of the Labor Code
provides:
ART. 283. Closure of establishment
and reduction of personnel. - The employer
may also terminate the employment of any
employee due to the installation of labor-
saving devices, redundancy, retrenchment
to prevent losses or the closing or cessation
of operation of the establishment or
undertaking unless the closing is for the
purpose of circumventing the provisions of
this Title, by serving a written notice on the
workers and the Department of Labor and
Employment at least one (1) month before
the intended date thereof. xxx
In this case, Plastimer submitted the notice
of termination of employment to the DOLE
on 26 May 2004. However, notice to the
affected employees were given to them on
14 May 2004 or 30 days before the
effectivity of their termination from
employment on 13 June 2004. While
notice to the DOLE was short of the one-
month notice requirement, the affected
employees were sufficiently informed of
their retrenchment 30 days before its
171
effectivity. Petitioners’ failure to comply
with the one-month notice to the DOLE is
only a procedural infirmity and does not
render the retrenchment illegal. In Agabon v.
NLRC, we ruled that when the dismissal is for
a just cause, the absence of proper notice
should not nullify the dismissal or render it
illegal or ineffectual. Instead, the employer
should indemnify the employee for the
violation of his statutory rights. Here, the
failure to fully comply with the one-month
notice of termination of employment did not
render the retrenchment illegal but it
entitles respondents to nominal damages.
Validity of Retrenchment
The fact that there was a net income
in 2003 does not justify the Court of Appeals’
ruling that there was no valid reason for the
retrenchment.
Records showed that the net income
of P6,185,707.05 for 2003 was not even
enough for petitioners to recover from the
P52,904,297.88 loss in 2002. Article 283 of
the Labor Code recognizes retrenchment to
prevent losses as a right of the management
to meet clear and continuing economic
threats or during periods of economic
recession to prevent losses. There is no need
for the employer to wait for substantial
losses to materialize before exercising
ultimate and drastic option to prevent such
losses.
Validity of Waivers and Quitclaims
The Court has ruled that a waiver or
quitclaim is a valid and binding agreement
between the parties, provided that it
constitutes a credible and reasonable
settlement, and that the one accomplishing
it has done so voluntarily and with a full
understanding of its import. We agree with
the Labor Arbiter and the NLRC that
respondents were sufficiently apprised of
their rights under the waivers and quitclaims
that they signed. Each document contained
the signatures of Marcaida, PICCB President,
and Atty. Diwa, the counsel for the union,
which proved that respondents were duly
assisted when they signed the waivers and
quitclaims. Further, Marcaida’s letter to Teo

Kee Bin, dated 28 May 2004, proved that
proper assistance was extended upon
respondents. Hence, we rule that the
waivers and quitclaims that respondents
signed were valid.
WHEREFORE, we SET ASIDE the
Decision and Resolution of the Court of
Appeals, and hereby REINSTATE the Decision
of the Labor Arbiter and the Resolution of
the NLRC upholding the validity of
respondents’ retrenchment with
MODIFICATION that petitioners pay each of
the
respondents the amount of P30,000 as
nominal damages for non-compliance with
statutory due process.
129-130 Internation management Services
vs. Logarta, G.R. No. 163657, April 18, 2012
Facts:
Recruitment agency, International
Management Services (IMS), owned and
operated by Marilyn C. Pascual, deployed
respondent Roel P. Logarta to work for
Petrocon Arabia Limited (Petrocon) in
Alkhobar, Kingdom of Saudi Arabia, in
connection with general engineering
services of Petrocon for the Saudi Arabian Oil
Company (Saudi Aramco). Respondent was
employed for a period of two (2) years,
commencing on October 2, 1997, with a
monthly salary of eight hundred US Dollars
(US$800.00).
On April 29, 1998, Saudi Aramco
notified Petrocon that due to changes in the
general engineering services work forecast
for 1998, the manhours that were formerly
allotted to Petrocon is going to be reduced
by 40% which constrained Petrocon to
reduce its personnel.
Thus, on June 1, 1998, Petrocon gave
respondent a written notice informing the
latter that due to the lack of project works
related to his expertise, he is given a 30-day
172
notice of termination, and that his last day of
work with Petrocon will be on July 1, 1998.
Petrocon also informed
respondent that all due benefits in
accordance with the terms and conditions of
his employment contract will be paid to
respondent, including his ticket back to the
Philippines.
Before his departure from Saudi Arabia,
respondent received his final paycheck from
Petrocon amounting SR7,488.57.
Upon his return, respondent filed a
complaint with the Regional Arbitration
Branch VII, National Labor Relations
Commission (NLRC), Cebu City, against
petitioner as the recruitment agency which
employed him for employment abroad. In
filing the complaint, respondent sought to
recover his unearned salaries covering the
unexpired portion of his employment
contract with Petrocon on the ground that
he was illegally dismissed.
The Labor Arbiter rendered
judgment in favor of the respondent and
ordered petitioner to pay the peso
equivalent of US$5,600.00 based on the rate
at the time of actual payment, as payment of
his wages for the unexpired portion of his
contract of employment. The NLRC on
appeal affirmed the Labor Arbiter’s decision
but reduced the award to only US$4,800.00
or its peso equivalent at the time of
payment. The CA likewise dismissed the
petition and affirmed the NLRC decision.
Issue:
Whether or not respondents
dismissal through retrenchment illegal.
Ruling:
No. Retrenchment is the reduction of
work personnel usually due to poor financial
returns, aimed to cut down costs for
operation particularly on salaries and wages.
It is one of the economic grounds to dismiss
employees and is resorted by an employer
primarily to avoid or minimize business
losses.

Retrenchment programs are purely
business decisions within the purview of a
valid and reasonable exercise of
management prerogative. It is one way of
downsizing an employer's workforce and is
often resorted to by the employer during
periods of business recession, industrial
depression, or seasonal fluctuations, and
during lulls in production occasioned by lack
of orders, shortage of materials, conversion
of the plant for a new production program,
or introduction of new methods or more
efficient machinery or automation. It is a
valid management prerogative, provided it is
done in good faith and the employer
faithfully complies with the substantive and
procedural requirements laid down by law
and jurisprudence.
Philippine Law recognizes
retrenchment as a valid cause for the
dismissal of a migrant or overseas Filipino
worker under Article 283 of the Labor Code.
Thus, retrenchment is a valid exercise
of management prerogative subject to the
strict requirements set by jurisprudence, to
wit:
(1)That the retrenchment is
reasonably necessary and likely to prevent
business losses which, if already incurred,
are not merely de minimis, but substantial,
serious, actual and real, or if only expected,
are reasonably imminent as perceived
objectively and in good faith by the
employer;
(2)That the employer served written
notice both to the employees and to the
Department of Labor and Employment at
least one month prior to the intended date
of retrenchment;
(3)That the employer pays the
retrenched employees separation pay
equivalent to one month pay or at least 1/2
month pay for every year of service,
whichever is higher;
(4)That the employer exercises its
prerogative to retrench employees in good
faith for the advancement of its interest and
not to defeat or circumvent the employees'
right to security of tenure; and
173
(5)That the employer used fair and
reasonable criteria in ascertaining who
would be dismissed and who would be
retained among the employees, such as
status,…efficiency, seniority, physical fitness,
age, and financial hardship for certain
workers. 28 Applying the above-stated
requisites for a valid retrenchment in the
case at bar, it is apparent that the first,
fourth and fifth requirements were complied
with by respondent's employer. However,
the second and third requisites were absent
when Petrocon terminated the services of
respondent.
As aptly found by the NLRC and justly
sustained by the CA, Petrocon exercised its
prerogative to retrench its employees in
good faith and the considerable reduction of
work allotments of Petrocon by Saudi
Aramco was sufficient basis for Petrocon to
reduce the number of its personnel.
As for the notice requirement,
however, contrary to petitioner's
contention, proper notice to the DOLE within
30 days prior to the intended date of
retrenchment is necessary and must be
complied with despite the fact that
respondent is an overseas Filipino worker. In
the present case, although respondent was
duly notified of his termination by Petrocon
30 days before its effectivity, no allegation or
proof was advanced by petitioner to
establish that Petrocon ever sent a notice to
the DOLE 30 days before the respondent was
terminated. Thus, this requirement of the
law was not complied with.
In the case at bar, despite the fact
that respondent was employed by Petrocon
as an OFW in Saudi Arabia, still both he and
his employer are subject to the provisions of
the Labor Code when applicable. The basic
policy in this jurisdiction is that all Filipino
workers, whether employed locally or
overseas, enjoy the protective mantle of
Philippine labor and social legislations.
Also, respondent is entitled to the
payment of his separation pay. However,
this Court disagrees with the conclusion of
the Labor Arbiter, the NLRC and the CA, that

respondent should be paid his separation
pay in accordance with the provision of
Section 10 of R.A. No. 8042. A plain reading
of the said provision clearly reveals that it
applies only to an illegally dismissed
overseas contract worker or a worker
dismissed from overseas employment
without just, valid or authorized cause.
In the case at bar, notwithstanding
the fact that respondent's termination from
his employment was procedurally infirm,
having not complied with the notice
requirement, nevertheless the same
remains to be for a just, valid and authorized
cause, i.e., retrenchment as a valid exercise
of management prerogative. To stress,
despite the employer's failure to comply
with the one-month notice to the DOLE prior
to respondent's termination, it is only a
procedural infirmity which does not render
the retrenchment illegal. In Agabon v. NLRC,
this Court ruled that when the dismissal is for
a just cause, the absence of proper notice
should not nullify the dismissal or render it
illegal or ineffectual. Instead, the employer
should indemnify the employee for violation
of his statutory rights. Consequently, it is
Article 283 of the Labor Code and not Section
10 of R.A. No. 8042 that is controlling. Thus,
respondent is entitled to payment of
separation pay equivalent to one (1) month
pay, or at least one-half (1/2) month pay for
every year of service, whichever is higher.
Considering that respondent was employed
by Petrocon for a period of eight (8) months,
he is entitled to receive one (1) month pay as
separation pay. In addition, pursuant to
current jurisprudence, for failure to fully
comply with the statutory due process of
sufficient notice, respondent is entitled to
nominal damages in the amount P50,000.00.
131 WATERFRONT CEBU CITY HOTEL,
Petitioner, v. MA. MELANIE P. JIMENEZ,
JACQUELINE C. BAGUIO, LOVELLA V.
CARILLO, and MAILA G. ROBLE,
Respondents.
174
FACTS:
Herein respondents were hired for
Club Waterfront, a division under petitioner
Waterfront Cebu City Hotel which catered to
foreign high stakes gamblers for different
positions.
On 12 May 2003, respondents, along
with 41 other employees, received identical
letters of termination from petitioner
Director of Human Resources informing
them of the temporary suspension of
business of the Club.
The following day, petitioner served
the notice of suspension of business with the
DOLE). The dismissed employees were
offered separation pay equivalent to half-
month pay for every year of service. The Club
closure took effect on 15 June 2003.
On 26 June 2003, respondents filed a
complaint before the Labor Arbiter for illegal
dismissal, illegal suspension, and non-
payment of salaries and other monetary
benefits. They likewise prayed for damages
and attorney fees.
Respondents maintained that they
are employees of petitioner assigned to the
Club, hence they should have been allowed
to work in other departments of the hotel.
Oppositely, petitioner averred that
since April 2002, the Club has been incurring
losses that it had to temporarily cease its
operations effective 15 June 2003. To
support the allegations of losses, petitioner
presented financial statements of
Waterfront Promotion, Ltd. Petitioner
argued that pursuant to Article 286 of the
Labor Code, the temporary suspension of
business operations does not terminate
employment. Thus, respondents have no
cause of action against them.
On 12 December 2003, the labor
arbiter ruled in favor of petitioner and
upheld the closure of the Club business
operations as a management prerogative.
The petitioner was, however, directed to
comply with Article 283 of the Labor Code
and to pay complainants their separation
pay equivalent to one-half month pay for

every year of service, a fraction of at least 6
months being considered as one year.
Respondents appealed to the NLRC
which issued a Decision affirming the ruling
of the Labor Arbiter. After the denial of
respondentsmotion for reconsideration,
they elevated the case to the Court of
Appeals.
Respondents argued that the NLRC
should have considered the financial
statements of the petitioner Hotel and not
merely of the Club, which is only a division of
the Hotel. According to respondents, the
permanent closure of the Club resulted in
retrenchment but petitioner failed to prove
that it complied with the standards for
retrenchment. On 5 July 2006, the Court of
Appeals rendered a Decision reversing the
findings and conclusions of the NLRC.
The appellate court found that
petitioner Hotel is the actual employer of
respondents, thus the evidence of losses and
closure of the Club is immaterial and
irrelevant.
Petitioner filed a motion for
reconsideration but it was denied in a
Resolution dated 15 August 2006. Hence,
this petition for review on certiorari.
ISSUE:
Whether or not the evidence of losses
and closure of Club Waterfront is immaterial
and irrelevant to the termination of
petitioners?
HELD:
The ruling of the Court of Appeals is
reversed and set aside.
At the outset, it should be stated that
the respondents cannot be accommodated
in other departments of the Hotel. The
duties and functions they perform are
peculiar to the positions they hold in the
Club. It is likewise undisputed that the Club
remained closed and there is no other
department in the Hotel similar to the Club
and which catered to foreign high stakes
gamblers. Verily, reinstatement cannot be
175
and could not have been an option for
petitioner Hotel.
For the purpose of proving financial
losses, petitioner presented the financial
statements of Waterfront Promotion, Ltd.
which petitioner describes as the company
which promotes, markets and finances the
Club.
A review of the corporate structure
of the Club as contained in the financial
statements submitted by petitioner reveals
that it is actually a wholly-owned subsidiary
of Waterfront Promotion, Ltd. Strictly
speaking, the Club is not related to petitioner
except to say that they are two different
subsidiaries of one parent corporation, i.e.,
Waterfront Philippines. Petitioner, then,
could have right at the beginning avoided
the conflict with respondents by setting itself
apart from them. Petitioner could have
invoked the separateness from the Hotel of
the Club which employed respondents.
Petitioner did not do so. Instead, and at the
outset, it formally presented itself as the
respondentsemployer when, through its
Director of Human Resources, it informed
respondents about the temporary
suspension of the business of the Club and
forthwith served the notices of suspension
of business on DOLE.
The consolidated financial
statements that were prepared in the name
of Waterfront Promotion refer to the casino
operations of the Club. A consolidated
financial statement is usually prepared for a
parent company and its subsidiaries, the
purpose of which is to provide an overview
of the financial condition of the group of
companies as a single entity. The Club, being
a wholly-owned subsidiary of Waterfront
Promotion, Ltd. operates under the
management, supervision and control of
Waterfront Promotion, Ltd. The relationship
between these two companies is so
intertwined that the Club is practically
considered a department or division of
Waterfront Promotion, Ltd.
A review of the consolidated financial
statement proves petitioner assertion that

the losses there reflected refer to the losses
of the Club. The consolidated financial
statement and the corporate relationships it
indicates, cannot, however, be relied upon
by petitioner to avoid this particular labor
dispute because, as already stated,
petitioner itself has been claiming from the
very beginning that the Club is only a
division/department of the hotel.
Verily, retrenchment and not closure
was effected to warrant the valid dismissal of
respondents. Petitioner has not totally
ceased its operations. It merely closed down
a department.
Retrenchment is the termination of
employment initiated by the employer
through no fault of and without prejudice to
the employees. It is resorted to during
periods of business recession, industrial
depression, or seasonal fluctuations or
during lulls occasioned by lack of orders,
shortage of materials, conversion of the
plant for a new production program or the
introduction of new methods or more
efficient machinery or of automation.It is an
act of the employer of dismissing employees
because of losses in the operation of a
business, lack of work, and considerable
reduction on the volume of his business.
In case of retrenchment, proof of
financial losses becomes the determining
factor in proving its legitimacy. In
establishing a unilateral claim of actual or
potential losses, financial statements
audited by independent external auditors
constitute the normal method of proof of
profit and loss performance of a company.
The condition of business losses justifying
retrenchment is normally shown by audited
financial documents like yearly balance
sheets and profit and loss statements as well
as annual income tax returns.
Retrenchment is subject to faithful
compliance with the substantative and
procedural requirements laid down by law
and jurisprudence. For a valid retrenchment,
the following elements must be present:
(1) That retrenchment is reasonably
necessary and likely to prevent business
176
losses which, if already incurred, are not
merely de minimis, but substantial, serious,
actual and real, or if only expected, are
reasonably imminent as perceived
objectively and in good faith by the
employer;
(2) That the employer served written
notice both to the employees and to the
Department of Labor and Employment at
least one month prior to the intended date
of retrenchment;
(3) That the employer pays the
retrenched employees separation pay
equivalent to one
(1) month pay or at least ½ month pay for
every year of service, whichever is higher;
(4) That the employer exercises its
prerogative to retrench employees in good
faith for the advancement of its interest and
not to defeat or circumvent the employees
right to security of tenure; and
(5) That the employer used fair and
reasonable criteria in ascertaining who
would be dismissed and who would be
retained among the employees, such as
status, efficiency, seniority, physical fitness,
age, and financial hardship for certain
workers.
All these elements were successfully
proven by petitioner. First, the huge losses
suffered by the Club for the past two years
had forced petitioner to close it down to
avert further losses which would eventually
affect the operations of petitioner. Second,
all 45 employees working under the Club
were served with notice of termination. The
corresponding notice was likewise served to
the DOLE one month prior to retrenchment.
Third, the employees were offered
separation pay, most of whom have
accepted and opted not to join in this
complaint. Fourth, cessation of or
withdrawal from business operations was
bona fide in character and not impelled by a
motive to defeat or circumvent the tenurial
rights of employees. Neither is there a
showing that petitioner carried out the
closure of the business in bad faith. No labor
dispute existed between management and

the employees when the latter were
terminated.
GRANTED
132 Legend Hotel (Manila) vs Realuyo AKA
Roa
Facts:
Respondent averred that he had
worked as a pianist at the Legend Hotel’s
Tanglaw Restaurant from September 1992
with an initial rate of P400.00/night that was
given to him after each night’s performance;
that his rate had increased to P750.00/night;
and that during his employment, he could
not choose the time of performance, which
had been fixed from 7:00 pm to 10:00 pm for
three to six times/week. He added that the
Legend Hotel’s restaurant manager had
required him to conform with the venue’s
motif; that he had been subjected to the
rules on employees’ representation checks
and chits, a privilege granted to other
employees; that on July 9, 1999, the
management had notified him that as a cost-
cutting measure his services as a pianist
would no longer be required effective July
30, 1999; that he disputed the excuse,
insisting that Legend Hotel had been
lucratively operating as of the filing of his
complaint; and that the loss of his
employment made him bring his complaint.
Issues:
1. Whether or not petition for
certiorari to the CA is proper.
2. Whether or not there is ER-EE
relationship.
3. Whether or not retrenchment as a
ground for respondent’s dismissal is valid.
Held:
YES. There is no longer any doubt
that a petition for certiorari brought to assail
the decision of the NLRC may raise factual
issues, and the CA may then review the
decision of the NLRC and pass upon such
factual issues in the process.8 The power of
177
the CA to review factual issues in the
exercise of its original jurisdiction to issue
writs of certiorari is based on Section 9 of
Batas Pambansa Blg. 129, which pertinently
provides that the CA “shall have the power
to try cases and conduct hearings, receive
evidence and perform any and all acts
necessary to resolve factual issues raised in
cases falling within its original and appellate
jurisdiction, including the power to grant and
conduct new trials or further proceedings.”
YES. Petitioner actually wielded the
power of selection at the time it entered into
the service contract dated September 1,
1992 with respondent. This is true,
notwithstanding petitioner’s insistence that
respondent had only offered his services to
provide live music at petitioner’s Tanglaw
Restaurant, and despite petitioner’s position
that what had really transpired was a
negotiation of his rate and time of
availability. The power of selection was
firmly evidenced by, among others, the
express written recommendation dated
January 12, 1998 by Christine Velazco,
petitioner’s restaurant manager, for the
increase of his remuneration.
Respondent’s remuneration, albeit
denominated as talent fees, was still
considered as included in the term wage in
the sense and context of the Labor Code,
regardless of how petitioner chose to
designate the remuneration. Anent this,
Article 97(f) of the Labor Code clearly states:
xxx wage paid to any employee shall
mean the remuneration or earnings,
however designated, capable of being
expressed in terms of money, whether fixed
or ascertained on a time, task, piece, or
commission basis, or other method of
calculating the same, which is payable by an
employer to an employee under a written or
unwritten contract of employment for work
done or to be done, or for services rendered
or to be rendered, and includes the fair and
reasonable value, as determined by the
Secretary of Labor, of board, lodging, or
other facilities customarily furnished by the
employer to the employee.

That respondent worked for less than
eight hours/day was of no consequence and
did not detract from the CA’s finding on the
existence of the employer-employee
relationship. In providing that the “normal
hours of work of any employee shall not
exceed eight (8) hours a day,” Article 83 of
the Labor Code only set a maximum of
number of hours as “normal hours of work”
but did not prohibit work of less than eight
hours.
The power of the employer to control
the work of the employee is considered the
most significant determinant of the
existence of an employer-employee
relationship. This is the so-called control
test, and is premised on whether the person
for whom the services are performed
reserves the right to control both the end
achieved and the manner and means used to
achieve that end.
A review of the records shows,
however, that respondent performed his
work as a pianist under petitioner’s
supervision and control. Specifically,
petitioner’s control of both the end achieved
and the manner and means used to achieve
that end was demonstrated by the following,
to wit: a. He could not choose the time of his
performance, which petitioners had fixed
from 7:00 pm to 10:00 pm, three to six times
a week; b. He could not choose the place of
his performance; c. The restaurant’s
manager required him at certain times to
perform only Tagalog songs or music, or to
wear barong Tagalog to conform to the
Filipiniana motif; and d. He was subjected to
the rules on employees’ representation
check and chits, a privilege granted to other
employees. Relevantly, it is worth
remembering that the employer need not
actually supervise the performance of duties
by the employee, for it sufficed that the
employer has the right to wield that power.
NO. Retrenchment is one of the
authorized causes for the dismissal of
employees recognized by the Labor Code. It
is a management prerogative resorted to by
employers to avoid or to minimize business
178
losses. On this matter, Article 283 of the
Labor Code.
The Court has laid down the
following standards that an employer should
meet to justify retrenchment and to foil
abuse, namely: (a) The expected losses
should be substantial and not merely de
minimis in extent; (b) The substantial losses
apprehended must be reasonably imminent;
(c) The retrenchment must be reasonably
necessary and likely to effectively prevent
the expected losses; and (d) The alleged
losses, if already incurred, and the expected
imminent losses sought to be forestalled
must be proved by sufficient and convincing
evidence.
Anent the last standard of sufficient
and convincing evidence, it ought to be
pointed out that a less exacting standard of
proof would render too easy the abuse of
retrenchment as a ground for termination of
services of employees.
In termination cases, the burden of
proving that the dismissal was for a valid or
authorized cause rests upon the employer.
Here, petitioner did not submit evidence of
the losses to its business operations and the
economic havoc it would thereby
imminently sustain. It only claimed that
respondent’s termination was due to its
“present business/financial condition.” This
bare statement fell short of the norm to
show a valid retrenchment. Hence, we hold
that there was no valid cause for the
retrenchment of respondent.
133 DIGITAL TELECOMMUNIC ATIONS PHIL.
, INC. VS. DIGITEL E MPLOYEES UNION
FACTS:
By virtue of a certification election,
Digitel Employees Union (Union) became the
exclusive bargaining agent of all rank and file
employees of Digitel in 1994. The Union and
Digitel then commenced collective
bargaining negotiations which resulted in a
bargaining deadlock. The Union threatened
to go on strike, but then the Labor Secretary

assumed jurisdiction over the dispute and
eventually directed the parties to execute a
CBA. 2 However, no CBA was forged
between Digitel and the Union. Some Union
members abandoned their employment
with Digitel. The Union later became
dormant.
Ten (10) years thereafter or on 28
September 2004, Digitel received from
Esplana, who was President of the Union, a
letter containing the list of officers, CBA
proposals and ground rules. 3 Digitel was
reluctant to negotiate with the Union and
demanded that the latter Union show
compliance with the provisions of the
Union’s Constitution and By-laws on union
membership and election of officers.
On 4 November 2004, Esplana and
his group filed a case for Preventive
Mediation before the National Conciliation
and Mediation Board based on Digitel’s
violation of the duty to bargain. On 25
November 2004, Esplana filed a notice of
strike. On 10 March 2005, the then Labor
Secretary issued an Order4 assuming
jurisdiction over the labor dispute.
During the pendency of the controversy,
Digitel Service, Inc. (Digiserv), a non-profit
enterprise engaged in call center servicing,
filed with the DOLE an Establishment
Termination Report stating that it will cease
its business operation. The closure affected
at least 100 employees, 42 of whom are
members of the herein respondent Union.
Alleging that the affected employees are its
members and in reaction to Digiserv’s
action, Esplana and his group filed
another Notice of Strike for union busting,
illegal lock-out, and violation of the
assumption order. On 23 May 2005, the
Labor Secretary ordered the second notice
of strike subsumed by the previous
Assumption Order.5 Meanwhile, on 14
March 2005, Digitel filed a petition with the
Bureau of Labor Relations (BLR) seeking
cancellation of the Union’s registration. In a
Decision dated 11 May 2005, the Regional
Director of the DOLE dismissed the petition
for
179
cancellation of union registration for lack of
merit. The appeal filed by Digitel with the
BLR was eventually dismissed for lack of
merit in a Resolution dated 9 March 2007.
In an Order dated 13 July 2005, the
Secretary of Labor directed Digitel to
commence the CBA negotiation with the
Union and certified for compulsory
arbitration before the NLRC the issue of
unfair labor practice. In accordance with the
13 July 2005 Order of the Secretary of Labor,
the unfair labor practice issue was certified
for compulsory arbitration before the NLRC.
On 31 January 2006, NLRC rendered a
Decision dismissing the unfair labor practice
charge against Digitel but declaring the
dismissal of the 13 employees of Digiserv as
illegal and ordering their reinstatement. 10
The Union manifested that out of 42
employees, only 13 remained, as most had
already accepted separation pay.
In view of this unfavorable decision,
Digitel filed a petition on 9 June 2006 before
the Court of Appeals, challenging the above
NLRC Decision and Resolution and arguing
mainly that Digiserv employees are not
employees of Digitel.
On 18 June 2008, CA partially granted
the case for ULP, thus modifying the assailed
NLRC dispositions. The CA likewise sustained
the finding that Digiserv is engaged in labor-
only contracting and that its employees are
actually employees of Digitel.
Digitel filed a motion for
reconsideration but was denied in a
Resolution dated 9 October 2008. Hence,
this petition for review on certiorari.
ISSUES:
1) Whether Digiserv is a legitimate
contractor; and
2) Whether there was a valid
dismissal.
RULING:
Digiserv is a labor-only contractor.
Labor-only contracting is expressly
prohibited by our labor laws. After an

exhaustive review of the records, there is no
showing that first, Digiserv has substantial
investment in the form of capital, equipment
or tools. The NLRC, as echoed by the CA, did
not find substantial Digiserv’s authorized
capital stock of P 1,000,000.00. It pointed
out that only P 250,000.00 of the authorized
capital stock had been subscribed and only P
62,500.00 had been paid up. There was no
increase in capitalization for the last 10
years. 19
Moreover, in the Amended Articles of
Incorporation, as well as in the General
Information Sheets for the years 1994, 2001
and 2005, the primary purpose of Digiserv is
to provide manpower services. In PCI
Automation Center, Inc. v. National Labor
Relations Commission,20 the Court made the
following distinction: "the legitimate job
contractor provides services while
the labor-only contractor provides only
manpower. The legitimate job contractor
undertakes to perform a specific job for the
principal employer while the labor-only
contractor merely provides the personnel to
work for the principal employer." The
services provided by employees of Digiserv
are directly related to the business of Digitel.
It is undisputed that as
early as March 1994, the affected
employees, except for two, were already
performing their job as Traffic Operator
which was later renamed as Customer
Service Representative (CSR). It is equally
undisputed that all throughout their
employment, their function as CSR remains
the same until they were terminated
effective May 30, 2005. Their long period of
employment as such is an indication that
their job is directly related to the main
business of DIGITEL which is
telecommunications.
Furthermore, Digiserv does not
exercise control over the affected
employees. Digiserv shared the same Human
Resources, Accounting, Audit and Legal
Departments with Digitel which manifested
that it was Digitel who exercised control over
the performance of the affected employees.
180
The NLRC also relied on the letters of
commendation, plaques of appreciation and
certification issued by Digitel to the
Customer Service Representatives as
evidence of control.
Considering that Digiserv has been
found to be engaged in labor-only
contracting, the dismissed employees are
deemed employees of Digitel.
The affected employees were
illegally dismissed. In addition to finding
that Digiserv is a labor-only contractor,
records teem with proof that its dismissed
employees are in fact employees of Digitel.
The NLRC enumerated these pieces of
evidence, thus:
 The remaining affected employees,
except for two (2), were already hired by
DIGITEL even before the existence of
DIGISERV. Likewise, the remaining affected
employees continuously held the position of
Customer Service Representative, which was
earlier known as Traffic Operator, from the
time they were appointed on March 1, 1994
until they were terminated on May 30, 2005.
 Further, the Certificates issued to
Customer Service Representative likewise
show that they are employees of DIGITEL,
Take for example the "Service Award" issued
to Ma. Loretta C. Esen, one of the remaining
affected employees. The "Service Award"
was signed by the officers of DIGITEL – the
VP-Customer Services Division, the
VPHuman Resources Division and the Group
Head-Human Resources Division. It cannot
be gainsaid that it is only the employer that
issues service award to its employees. 22 As
an alternative argument, Digitel maintains
that the affected employees were validly
dismissed on the grounds of closure of
Digiserv, a department within Digitel.
In the recent case of Waterfront Cebu
City Hotel v. Jimenez, 23 we referred to the
closure of a department or division of a
company as retrenchment. For a valid
retrenchment, the following elements must
be present:
(1) That retrenchment is reasonably
necessary and likely to prevent business

losses which, if already incurred, are not
merely de minimis, but substantial, serious,
actual and real, or if only expected, are
reasonably imminent as perceived
objectively and in good faith by the
employer;
(2) That the employer served written
notice both to the employees and to the
Department of Labor and Employment at
least one month prior to the intended date
of retrenchment;
(3) That the employer pays the
retrenched employees separation pay
equivalent to one (1) month pay or at least ½
month pay for every year of service,
whichever is higher;
(4) That the employer exercises its
prerogative to retrench employees in good
faith for the advancement of its interest and
not to defeat or circumvent the employees’
right to security of tenure; and
(5) That the employer used fair and
reasonable criteria in ascertaining who
would be dismissed and who would be
retained among the employees, such as
status, efficiency, seniority, physical fitness,
age, and financial hardship for certain
workers.24 Only the first 3 elements of a
valid retrenchment had been here satisfied.
Indeed, it is management prerogative to
close a department of the company. Digitel’s
decision to outsource the call center
operation of the company is a valid reason to
close down the operations of a department
under which the affected employees were
employed. The fifth element regarding the
criteria to be observed by Digitel clearly does
not apply because all employees under
Digiserv were dismissed.
The instant case is all about the
fourth element, that is, whether or not the
affected employees were dismissed in good
faith. We find that there was no good faith in
the retrenchment. Prior to the cessation of
Digiserv’s operations, the Secretary of Labor
had issued the first and second assumption
order. The effects of the assumption order
issued by the Secretary of Labor are two-
fold. It enjoins an impending strike on the
181
part of the employees and orders the
employer to maintain the status quo.
There is no doubt that Digitel defied
the assumption order by abruptly closing
down Digiserv. The closure of a department
is not illegal per se. What makes it unlawful
is when the closure is undertaken in bad
faith. In St. John Colleges, Inc. v. St. John
Academy Faculty and Employees Union,26
bad faith was evidenced by the timing of and
reasons for the closure and
the timing of and reasons for the subsequent
opening.
134 J.A.T. GENERAL SERVICES & JESUSA
ADLAWAN TOROBU vs. NLRC & JOSE F.
MASCARINAS
FACTS:
Jesusa Adlawan Trading & General
Services (JAT) hired Jose F. Mascarinas as
helper
tasked to coordinate with the cleaning and
delivery of the heavy equipment sold to
customers.
Initially, private respondent was
hired as a probationary employee and was
paid P165 per day that was increased to
P180 in July 1997 and P185 in January 1998.
In October 1997, the sales of heavy
equipment declined because of the Asian
currency
crisis. Consequently, JAT temporarily
suspended its operations. It a dvised its
employees,
including private respondent, not to report
for work starting on the first week of March
1998.
JAT indefinitely closed shop effective
May 1998.
A few days after, private respondent
filed a case for illegal dismissal and
underpayment
of wages against petitioners before the
NLRC. On December 14, 1998, JAT filed an
Establishment Termination Report with the
Department of Labor and Employment
(DOLE),

notifying the latter of its decision to close its
business operations due to business losses
and
financial reverses.
ISSUE:
Whether or not private respondent
was illegally dismissed from employment
due to
closure of petitioners business
HELD:
NO. Closure of business, is the
reversal of fortune of the employer whereby
there is a business not due to losses, thus implying that
complete cessation of business operations
and/or an actual locking-up of the doors of
establishment, usually due to financial
losses. Closure of business as an authorized
cause for
termination of employment aims to prevent
further financial drain upon an employer
who
cannot pay anymore his employees since
business has already stopped.
ART. 283. Closure of establishment
and reduction of personnel. The employer
may also
terminate the employment of any employee
due to the installation of labor-saving
devices,
redundancy, retrenchment to prevent losses
or the closing or cessation of operation of
the
establishment or undertaking unless the
closing is for the purpose of circumventing
the
provisions of this Title, by serving a written
notice on the workers and the Department
of Labor
and Employment at least one (1) month
before the intended date thereof. In case of
retrenchment to prevent losses and in cases
of closures or cessation of operations of
establishment or undertaking not due to
serious business losses or financial reverses,
the
separation pay shall be equivalent to one (1)
month pay or to at least one-half (1/2)
182
month pay
for every year of service, whichever is higher.
A fraction of at least six (6) months shall be
considered one (1) whole year.
Article 283 of the Labor Code shows
that closure or cessation of business
operation as a
valid and authorized ground of terminating
employment is not limited to those resulting
from
business losses or reverses. Said provision in
fact provides for the payment of separation
pay to
employees terminated because of closure of
termination of employees other than closure
of business due to losses may be valid.
In the present case, while petitioners did not
sufficiently establish substantial losses to
justify closure of the business, its income
statement shows declining sales prompting
the
petitioners to suspend its business
operations, eventually leading to its
permanent closure. On
this score, we agree that undue interference
with an employers judgment in the conduct
of his
business is uncalled for. Even as the law is
solicitous of the welfare of employees, it
must also
protect the right of an employer to exercise
what is clearly a management prerogatives.
As long
as the companys exercise of the same is in
good faith to advance its interest and not for
the
purpose of defeating or circumventing the
rights of employees under the law or a valid
agreement such exercise will be upheld.
In the event, under Article 283 of the
Labor Code, three requirements are
necessary for
a valid cessation of business operations,
namely: (a) service of a written notice to the
employees and to the DOLE at least one (1)
month before the intended date thereof; (b)
the
cessation of business must be bona fide in

character; and (c) payment to the employees
of
termination pay amounting to at least one-
half (1/2) month pay for every year of
service, or
one (1) month pay, whichever is higher.
The closure of business operation by
petitioners, in our view, is not tainted with
bad
faith or other circumstance that arouses
undue suspicion of malicious intent. The
decision to
permanently close business operations was
arrived at after a suspension of operation for
several months precipitated by a slowdown
in sales without any prospects of improving.
There
were no indications that an impending strike
or any labor related union activities
precipitated
the sudden closure of business.
135 LA UNION CEMENT WORKERS UNION
& ARNULFO ALMOITE vs NLRC &
BACNOTAN
CEMENT CORPORATION (now HOLCIM
PHILIPPINES, INC.)
FACTS:
Bacnotan Cement Corporation had
been utilizing the wet process technology in
its
operations. It then later introduced the dry
process technology as part of its
modernization
program. When the new dry process
technology became fully operational, the
company
discovered that the dry process technology
or the dry line proved to be more efficient
than the
wet process technology. Thus, after studying
the situation, the company concluded that it
would be uncompetitive and impractical to
operate the wet line and decided to close it
down.
To implement the closure of the wet line, the
company and La Union Cement Workers
183
Union
entered into a Memorandum of Agreement
whereby the company committed to grant
separation pay equivalent to 150% of the
monthly basic pay for every year of service
plus the
additional fixed amount of P27,000.00 to
employees who would be terminated as a
result of
the closure of the wet line. In a letter, Senior
Executive Vice President, notified the
employees
of the its decision to mothball the wet line
and the termination of those whose
employment
would become unnecessary as a result of the
closure. The company sent a letter to the
Department of Labor and Employment
(DOLE), informing him about the companys
decision to
shut down the wet line and furnishing him
the list of affected employees. The company
then
sent notices of termination to more or less
200 employees including petitioner Almoite.
Upon
the receipt of the separation pay, a number
of the affected employees signed individual
Release Waiver and Quitclaim. However,
some 80 of its members including Almoite
filed
complaints for unfair labor practice, illegal
lay-off and illegal dismissal. They alleged that
while
the closure affected only the wet line, among
the employees terminated were operating
the
dry line or performing support services for
both wet and dry lines. They further alleged
that
after the closure of the wet line, the
company contracted out the services
performed by the
employees who were terminated.
ISSUE:
Whether the termination was valid.
HELD:

YES. Petitioner Almoites work as an
oiler for both the wet line and dry line has
become
redundant or superfluous following the
closure of the wet line. By and large, the
determination
of whether to maintain or phase out an
entire department or section or to reduce
personnel
lies with the management. Thus, his
termination on the ground of redundancy is
an authorized
cause for termination under Article 283 of
the Labor Code.
As concluded by the NLRC:
xxx
There is no dispute as to the fact that
there was a partial closure or cessation of
operations with the mothballing of the old
wet-process production line of the company
a
situation which falls among the authorized
causes for termination allowed under Article
283 of
the Labor Code.
xxx
Neither is there any dispute that the
logical and consequence [sic] of such partial
cessation of operations was to render
certain employees redundant. Obviously
enough, since
there was a curtailment in operations,
certain activities were rendered either
excess or no
longer necessary, hence, redundant.
xxxx
The only ostensible argument
presented by appellant is the bare allegation
that most of
them were not exclusively assigned to the
wet process line but were performing
support
services for both the wet line and the dry
line. Therefore, they argue that they could
not be
declared redundant by virtue of the closure
of the wet line alone. This line of argument is
non
sequitur, fallacious and totally untenable. It
184
proceeds from the erroneous premise that
only
those exclusively assigned to the wet line can
be declared redundant. The mere fact that
an
employee was performing support services
for both the wet and the dry line does not in
any
way exclude him from being declared as
redundant. On the contrary, with the closure
of the
wet line and the consequent scaling down of
activities requiring support services, it stands
to
reason that there was already an excess of
employees performing support services.
Respondent
had therefore all the reason to include such
employees among those whom it considered
redundant.
136 MAYA FARMS EMPLOYEES
ORGANIZATION,,et.al. vs. NLRC, MAYA
REALTY & LIVESTOCK,
INC., MAYA FARMS, INC., and LIBERTY
FLOUR MILLS, INC.
FACTS:
Maya Farms, Inc. and Maya Realty
and Livestock Corporation belong to the
Liberty Mills
group of companies whose undertakings
include the operation of a meat processing
plant
which produces ham, bacon, cold cuts,
sausages and other meat and poultry
products.
Petitioners, on the other hand, are its
exclusive bargaining agents of the
employees. Private
respondents announced the adoption of an
early retirement program as a cost-cutting
measure
considering that their business operations
suffered major setbacks over the years. The
program
was voluntary and could be availed of
originally only by employees with at least

eight (8) years
of service but was reduced to five (5) years.
But the response to the program was nil.
Thus, the early retirement program was
converted into a special redundancy
program
intended to reduce the work force to an
optimum number so as to make operations
more
viable. A total of sixty-nine (69) employees
from the two companies availed of the
special
redundancy program. Later, the two
companies sent letters to sixty-six (66)
employees
informing them that their respective
positions had been declared redundant. The
notices
likewise stated that their services would be
terminated effective thirty (30) days from
receipt
thereof.
Separation benefits, including the
conversion of all earned leave credits and
other benefits due under existing CBAs were
thereafter paid to those affected.
Petitioners accused private
respondents, among others, of unfair labor
practice, violation of CBA and discrimination.
They averred that in the dismissal of sixty-six
(66) union
officers and members on the ground of
redundancy, private respondents
circumvented the
provisions in their CBA, which states that “In
all cases of lay-off or retrenchment resulting
in
termination of employment in the line of
work, the Last-In-First-Out (LIFO) Rule must
always be
strictly observed.” They also alleged that the
companies' claim that they were in
economic crisis
was fabricated because in 1990, a net
income of over 83 million pesos was realized
by Liberty
Flour Mills Group of Companies.
Private respondents contend that
their decision to implement a special
185
redundancy
program was an exercise of management
prerogative which could not be interfered
with unless
it is shown to be tainted with bad faith and
ill motive. Private respondents explained
that they
had no choice but to reduce their work force,
otherwise, they would suffer more losses.
ISSUE:
WON their termination was valid.
HELD:
YES. The court sustained the
companies' prerogative to adopt the alleged
redundancy/retrenchment program to
minimize if not, to avert losses in the
conduct of its
operations. However, the companies'
decision on this matter is not absolute. The
basis for such
an action must be far from being whimsical
and the same must be proved by substantia
l
evidence. In addition, the implementation of
such a decision or policy must be in
accordance
with existing laws, rules and procedure and
provisions of the CBA between the parties, if
there
be any. Short of any of these conditions,
management policy to pu rsue and
terminate its
employees allegedly to avert losses, must
fail.
In subject case, the 66 complaining
employees were separated from service as a
result
of the decision of management to limit its
operations and streamline positions and
personnel
requirements.
A close examination of the positions
retained by management show that said
positions
such as egg sorter, debonner were but the
minimal positions required to sustain the
limited

functions/operations of the meat processing
department. In the absence of any evidence
to
prove bad faith on the part of management
in arriving at such decision, which records on
hand
failed to show in instant case, the rationality
of the act of management in this regard must
be
sustained. While it may be true that the
Liberty Flour Mills Group of Companies as a
whole
posted a net income of P83.3 Million, it is
admitted that with respect to operations of
the meat
processing and livestock which were
undertaken by herein companies sustained
losses in the
sum of P2,257,649.88 (Exh. "3"). This is the
reason, as advanced by management, for its
decision to streamline positions resulting in
the reduction of manpower compliment.
137 MAC ADAMS METAL ENGINEERING
WORKERS UNION-INDEPENDENT vs vs.
MAC ADAMS
METAL ENGINEERING and/or LYDIA SISON,
et.al.
FACTS:
MAMEWU charged private
respondents MAME and GBS with unfair
labor practices
(ULP) committed through union busting and
illegal closure, and illegal dismissal. They
insisting
that the closure of MAME and GBS was
illegal as it was calculated to bust their
union, claiming
that MAME and GBS continued doing
business under new business names, i.e.,
MBS Machine
and Industrial Supply (MBS) and MVS Heavy
Equipment Rental and Builders (MVS).
Private
respondent spouses Geronimo and Lydia V.
Sison, proprietors of GBS and MAME
respectively,
denied the allegations explaining the closure
of MAME and GBS, because Lydia V. Sison
186
decided
to retire from business when she became
sickly, when her health did not improve
despite
proper medical attention she announced her
plan to close the shop. The announcement in
advance was intended to give the workers
ample time to look for alternative
employment.
Accordingly, she declined to accept new
projects and proceeded with the winding up
of her
business. Geronimo B. Sison admitted being
a part-owner of MBS which, he maintained,
was an
entirely separate and distinct business
enterprise from MAME and GBS. MBS was
engaged in
manufacturing carton boxes and other allied
products. On the other hand, MAME and
GBS
were both engaged in the businesses of
machine shop operations, fabrication and
construction.
ISSUE:
WoN the cessation and closure of
business was lawful
HELD:
YES. Closure or cessation of business
operations is allowed even if the business is
not
undergoing economic losses. The owner, for
any bona fide reason, can lawfully close shop
at
anytime. Just as no law forces anyone to go
into business, no law can compel anybody to
continue in it. It would indeed be stretching
the intent and spirit of the law if we were to
unjustly interfere with the managements
prerogative to close or cease its business
operations
just because said business operation or
undertaking is not suffering from any loss or
simply to
provide the workers continued employment.
The employer need only comply with
the following requirements for a valid

cessation of
business operations. (a) service of a written
notice to the employees and to the DOLE at
least
one month before the intended date
thereof; (b) the cessation of or withdrawal
from business
operations must be bona fide in character
and (c) payment of termination pay
equivalent to at
least one-half month pay for each year of
service, or one month pay, whichever is
higher.
The records reveal that private respondents
complied with the aforecited requirements.
MAMEs employees were adequately
informed of the intended business closure
and a written
notice to the Regional Director of the
Department of Labor and Employment
(DOLE) was filed
by private respondents, informing the DOLE
that except for winding-up operations,
MAME will
be closed effective March 8, 1993. Similar
notices were served by Lydia V. Sison to the
Social
Security System (SSS), Bureau of Internal
Revenue (BIR), Department of Trade and
Industry
(DTI) and the Municipal Licensing Division of
Antipolo, Rizal. Thus, the licenses and
registration
of respondent MAME with the SSS, the
Municipality of Antipolo, Rizal and the DTI
were
subsequently canceled and/or withdrawn.
Further, private respondents closure
of business was bona fide and that private
respondents did not engage in the operation
of run-away shops. Finally, since private
respondents cessation and closure of
business was lawful, there was no illegal
dismissal to
speak of.
138 Apacible vs. Multimed Industries Inc.,
G.R. No. 178903, May 30, 2011
187
Facts:
Petitioner Juliet Apacible was hired
sometime in 1994 by respondent. She rose
from the ranks to become Assistant Area
Sales Manager for Cebu Operations, the
position she held at the time she was
separated from the service in 2003.
On August 4, 2003, petitioner was
informed by respondent Marlene Orozco
(Marlene), her immediate superior, that she
would be transferred to the company's main
office in Pasig City on account of the ongoing
reorganization. Petitioner requested that
her transfer be made effective in October or
November 2003 and that she be given time
to discuss it with her husband and daughter.
A week later, however, or on August
11, 2003, petitioner was informed that her
transfer would be effective August 18, 2003.
On even date, she was placed under
investigation for the delayed released of
BCRs (cash budget for customer
representation in sealed envelopes which
are given to loyal clients) which she received
for distribution earlier in July 2003.
Finding that the delay in releasing the
BCRs amounted to loss of trust and
confidence, petitioner claims that in a
meeting with the respondents, she was
given four options: resignation, termination,
availment of an early retirement package
worth P40,000, or transfer to Pasig City.
Without availing of any option, petitioner
took a leave of absence on August 28, 29 and
September 1, 2003.
On September 3, 2003, respondent
company sent petitioner a memorandum-
directive for her to immediately report to the
head office in Pasig City and to return the
company vehicle assigned to her to the Cebu
Office within 24 hours. Petitioner did not
heed the directive, however. She instead
filed an application for sick leave until
September 11, 2003, and another until
September 27, 2003.
On October 6, 2003, petitioner
requested that she be given her daily work
assignment in Cebu, which request was later

to be denied by Olga by letter dated October
8, 2003. On October 7, 2003, petitioner was
given a show cause notice for her to explain
in writing why she should not be sanctioned
for insubordination for failure to comply
with the transfer order.
On November 4, 2002, respondent company
sent petitioner a notice of termination
effective November 7, 2003 for
insubordination, prompting petitioner to file
a complaint for illegal dismissal, non-
payment of overtime pay, 13th month pay,
service incentive leave pay, separation pay,
damages and attorney's fees before the
Labor Arbiter.
The Court of Appeals ruled that
petitioner was not entitled to separation pay
because, contrary to the NLRC's finding, she
"lacked good faith." It noted that petitioner,
from the start, knew and accepted the
company policy on transfers whenever so
required, and could not thus refuse "another
valid reassignment by treating it as an
imposition and burden."
ISSUE:
Whether petitioner is entitled
separation pay by way of financial
assistance.
RULING:
NO. Reno Foods, Inc. v. Nagkakaisang
Lakas ng Manggagawa (NLM)-Katipunan 16
explains the propriety of granting separation
pay in termination cases in this wise:
The law is clear. Separation pay is
only warranted when the cause for
termination is not attributable to the
employee's fault, such as those provided in
Articles 283 and 284 of the Labor Code, as
well as in cases of illegal dismissal in which
reinstatement is no longer feasible. It is not
allowed when an employee is dismissed for
just cause, such as serious misconduct.
xxx xxx xxx
It is true that there have been
instances when the Court awarded financial
assistance to employees who were
terminated for just causes, on grounds of
188
equity and social justice. The same, however,
has been curbed and rationalized in
Philippine Long Distance Telephone
Company v. National Labor Relations
Commission. In that case, we recognized the
harsh realities faced by employees that
forced them, despite their good intentions,
to violate company policies, for which the
employer can rightly terminate their
employment. For these instances, the award
of financial assistance was allowed. But, in
clear and unmistakable language, we also
held that the award of financial assistance
shall not be given to validly
terminated employees, whose offenses are
iniquitous or reflective of some depravity in
their moral character. When the employee
commits an act of dishonesty, depravity, or
iniquity, the grant of financial assistance is
misplaced compassion. It is tantamount not
only to condoning a
patently illegal or dishonest act, but an
endorsement thereof. It will be an insult to
all the laborers who despite their economic
difficulties, strive to maintain good values
and moral conduct.
In fact, in the recent case of Toyota
Motors Philippines, Corp. Workers
Association (TMPCWA) v. National Labor
Relations Commission, we ruled that
separation pay shall not be granted to all
employees who are dismissed on any of the
four grounds provided in Article 282 of the
Labor Code. Such ruling was reiterated and
further explained in Central Philippines
Bandag Retreaders, Inc. v. Diasnes:
To reiterate our ruling in Toyota,
labor adjudicatory officials and the CA must
demur the award of separation pay based on
social justice when an employee's dismissal
is based on serious misconduct or wilful
disobedience; gross and habitual neglect of
duty; fraud or wilful breach of trust; or
commission of a crime against the person of
the employer or his immediate family —
grounds under Art. 282 of the Labor Code
that sanction dismissals of employees. They
must be most judicious and circumspect in
awarding separation pay or financial

assistance as the constitutional policy to
provide full protection to labor is not meant
to be an instrument to oppress the
employers. The commitment of the Court to
the cause of labor should not embarrass us
from sustaining the employers when they
are right, as assistance to the undeserving
and those who are unworthy of the liberality
of the law. (italics in the original, emphasis
and underscoring supplied) ASTIED
Petitioner was, it bears reiteration,
dismissed for wilfully disobeying the lawful
order of her employer to transfer from Cebu
to Pasig City. As
correctly noted by the appellate court,
petitioner knew and accepted respondent
company's policy on transfers when she was
hired and was in fact even transferred many
times from one area of operations to
another — Bacolod City, Iloilo City and Cebu.
Clearly, petitioner's adamant refusal
to transfer, coupled with her failure to heed
the order for her return the company vehicle
assigned to her and, more importantly,
allowing her counsel to write letters couched
in harsh language to her superiors
unquestionably show that she was guilty of
insubordination, hence, not entitled to the
award of separation pay
139 NORMAN YABUT, Petitioner, v.
MANILA ELECTRIC COMPANY AND
MANUEL M. LOPEZ, Respondents.
FACTS:
This case stems from a complaint for
illegal dismissal and monetary claims filed by
herein petitioner Norman Yabut (Yabut)
against respondents Manila Electric
Company (Meralco) and Meralco officer
Manuel M. Lopez (Lopez).
The petitioner had worked with
Meralco from February 1989 until his
dismissal from employment on February 5,
2004. Meralco's Inspection Office issued a
memorandum informing it of an illegal
service connection at the petitioner's
residence. Given this report, Meralco's Head
189
of Investigation-Litigation Office issued to
the petitioner a notice of investigation.
Meralcos Litigation Investigation
Office summarized the results of Meralco's
findings in a memorandum which indicated
that Yabuts electric service was
disconnected for account delinquency.
Notwithstanding the disconnection and the
fact that Meralcos service had not been
reconnected, Yabut's meter registered
electric consumption. In view of these
findings, respondent Meralco, issued a
notice of dismissaladdressed to the
petitioner. The notice cites violation of
Section 7, paragraph 3 of Meralco's
Company Code on Employee Discipline and
Article 282 (a), (c), (d) and (e) of the Labor
Code of the Philippines as bases for the
dismissal.
Aggrieved by the decision of the
management, Yabut filed with the National
Labor Relations Commission (NLRC) a
complaintfor illegal dismissal and money
claims against Meralco and Lopez.
Labor Arbiter Antonio R. Macam
rendered his Decision,declaring the
petitioner illegally dismissed from the
service and hence, entitled to reinstatement
plus backwages and attorney's fees. NLRC
rendered its Resolutiondismissing the herein
respondents' appeal for lack of merit.
CA rendered the now assailed
Decisionreversing the rulings of the NLRC. In
finding the petitioner's dismissal lawful, the
appellate court attributed unto Yabut
authorship of the meter tampering and
illegal use of electricity acts which it
regarded as serious misconduct.
ISSUE:
Whether or not petitioners dismissal
is illegal?
HELD:
Court of Appeals decision is
sustained.
LABOR LAW
Article 279 of the Labor Code of the
Philippines provides that (i)n cases of regular

employment, the employer shall not
terminate the services of an employee
except for a just cause or when authorized
by this Title. x x x The just causes are
enumerated in Article 282, which provides:
Article 282.Termination by employer.
- An employer may terminate an
employment for any of the following causes:
(a) Serious misconduct or willful
disobedience by the employee of the lawful
orders of his employer or representative in
connection with his work;
(b) Gross and habitual neglect by the
employee of his duties;
(c) Fraud or willful breach by the
employee of the trust reposed in him by his
employer or duly authorized representative;
(d) Commission of a crime or offense
by the employee against the person of his
employer or any immediate member of his
family or his duly authorized representative;
and
(e) Other causes analogous to the
foregoing.
Significantly, tampering with electric
meters or metering installations of the
Company or the installation of any device,
with the purpose of defrauding the Company
is classified as an act of dishonesty from
Meralco employees, expressly prohibited
under company rules. It is reasonable that its
commission is classified as a severe act of
dishonesty, punishable by dismissal even on
its first commission, given the nature and
gravity of the offense and the fact that it is a
grave wrong directed against their
employer.
Article 282 (a) provides that an
employer may terminate an employment
because of an employee's serious
misconduct, a cause that was present in this
case in view of the petitioner's violation of
his employer's code of conduct. Misconduct
is defined as the transgression of some
established and definite rule of action, a
forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and
not mere error in judgment. For serious
190
misconduct to justify dismissal, the following
requisites must be present:
(a) it must be serious;
(b) it must relate to the performance
of the employee's duties; and
(c) it must show that the employee
has become unfit to continue working for
the employer.
The dismissal is also justified as the
act imputed upon the petitioner qualifies as
fraud or willful breach by the employee of
the trust reposed in him by his employer or
duly authorized representative under Article
282 (c) of the Labor Code. While the
petitioner contests this ground by denying
that his position is one of trust and
confidence, it is undisputed that at the time
of his dismissal, he was holding a supervisory
position after he rose from the ranks since
commencement of his employment with
Meralco. As a supervisor with duty and
power that included testing of service
meters and investigation of violations of
contract of customers, his position can be
treated as one of trust and confidence,
requiring a high degree of honesty as
compared with ordinary rank-and-file
employees.
We emphasize that dismissal of a
dishonest employee is to the best interest
not only of the management but also of
labor. As a measure of self-protection
against acts inimical to its interest, a
company has the right to dismiss its erring
employees. An employer cannot be
compelled to continue employing an
employee guilty of acts inimical to the
employer's interest, justifying loss of
confidence in him.
DENIED
140 ROMEO A. GALANG, Petitioner, v.
CITYLAND SHAW TOWER, INC. and
VIRGILIO BALDEMOR, Respondents.
FACTS:
Romeo Galang was employed by
Gayren Maintenance Services as a janitor.

When his contract with the agency expired,
he was absorbed by Cityland Shaw Tower.
Galang alleged that he was absorbed
as a janitor by Cityland with a promise of
regular employment after the completion of
his six-month probation. He claimed that
even after the lapse of the period, he
continued working for Cityland although he
had no idea about his employment status.
He did not know his status for certain until
he was shown a document on May 21, 2002
informing him that his employment would
be terminated effective May 20, 2002. Thus,
he filed a complaint for illegal dismissal
against Cityland and its Building Manager,
Virgilio Baldemor.
Cityland countered that they
absorbed Galang as a casual employee after
the expiration of his contract with Gayren
Maintenance Services. They alleged that
during his employment with them, they
found him to be remiss in the performance
of his job and he failed, too, to conduct
himself as a good employee.
The respondents further alleged that
in the face of Galang negative work attitude
and job performance, Cityland charged him
with gross insubordination, harassment of
his co-employees and conduct unbecoming
an employee.
The respondents stressed that
Cityland Board of Directors terminated
Galang services, for gross insubordination,
effective May 20, 2002, after a
"comprehensive examination of the
accusation against complainant."
In a decision dated September 22,
2003, the Labor Arbiter found that Galang
had been illegally dismissed because
Cityland failed to present evidence to
support Galang dismissal for cause after
observance of due process. The LA observed
that the alleged board resolution dismissing
Galang was unsubstantiated and self-
serving, and carries no probative value. The
LA also noted that there was no proof that
Galang was notified of the charges against
him before he was dismissed.
191
On appeal, the National Labor
Relations Commission (NLRC) affirmed the
labor arbiter findings.
After reaching the CA, the appellate
court annulled the NLRC decision and
declared that Galang had been dismissed for
a just cause. The CA took exception to the
conclusion of both the labor arbiter and the
NLRC that the respondents failed to
discharge the burden of proving that Galang
had been dismissed for cause. It pointed out
that the records are replete with proof that
Galang committed acts justifying the
termination of his employment.
The CA stressed that prior to the
incidents leading to Galang dismissal, he had
already committed serious negligence in his
work. It referred to the flooding of the 32nd
floor of the condominium where he was
assigned, due to his failure to secure tightly
the valve filter room. The flooding severely
damaged the building elevator, resulting in
repair work amounting to P23,952.65. The
CA stressed that despite this act of gross
negligence, he still remained in employment
and it was only "on account of subsequent
events x x x that [the respondents] were
compelled to dismiss him."
While the CA had no doubt that
Galang dismissal was for cause, it
nonetheless believed that he was not
afforded procedural due process for lack of
notice. Consequently, it awarded Galang
nominal damages of P30,000.00, pursuant to
the Agabon doctrine.
ISSUE:
Whether or not there was a just cause
for Galang dismissal based on evidence not
presented before the labor arbiter and the
NLRC.
HELD:
Galang petition is unmeritorious.
There was just cause for the dismissal
- The CA committed no reversible error and
neither did it commit grave abuse of
discretion in declaring that Galang had been
dismissed for cause. Contrary to Galang

submission, there is substantial evidence
such relevant evidence that a reasonable
mind might accept as adequate to support a
conclusion supporting the CA decision.
The affidavits executed in 2005,
simply amplified the evidence Cityland
submitted in 2002, including documents,
which cited Galang serious negligence in
causing the flooding of his assigned
condominium floor, which resulted in a
costly repair of the buildingselevator.
Additionally, there was Tupasmemo to
Cityland President which "pertains to the
case of Romeo Galang xxx for harassment to
co-janitors, insubordination to Supervisor
and conduct unbecoming an employee."
Tupas made a report of an incident
where Galang took pictures of his co-janitors
whom he considered as suspects in the
alleged loss of money (P4,000.00) kept in his
locker. Tupas called a meeting to investigate
the matter. She asked Galang to surrender
the pictures, but he refused and harassed
the janitors and insulted Tupas in front of
everybody. Tupas also reported that on
several occasions, Galang disobeyed her
orders, often finding fault with his co-
employees, and was very hard to deal with.
She believed that Galang had been grossly
insubordinate and had committed acts of
harassment against his co-employees. Thus,
he was already a liability to the organization.
In light of the circumstances, the
Supreme Court found that Galang had
become unfit to continue in employment.
The evidence supports the view that he
continued to exhibit undesirable traits as an
employee and as a person, in relation to both
his co-workers and his superiors, particularly
Tupas, her immediate supervisor.
On the due process - The finding of a
just cause for Galang dismissal
notwithstanding, the Court concurs with the
CA conclusion that Cityland did not afford
Galang the required notice before he was
dismissed. As the CA noted, the investigation
conference Tupas called to look into the
janitorscomplaints against Galang, did not
constitute the written notice required by law
192
as he had no clear idea what the charges
were. Thus, the CA committed no error in
sustaining his dismissal and awarding him
nominal damages as indemnity.
As a final point, Galang posits that
vis--vis the matter of dismissal for just cause
without due process, the CA "was incorrect
when it retroactively applied the later ruling
of the High Court in Agabon v. NLRC,
considering that when this case was filed,
the applicable doctrine was Serrano."
The Supreme Court disagrees with
this position. As the respondents correctly
pointed out, the decision of the NLRC did not
attain finality as it was brought to the CA on
a petition for certiorari and was overturned.
Galang simply did not have the benefit of any
final arbiter or NLRC decision to which the
Serrano ruling could be applied. When the
CA ruled on the case, this Court had
abandoned the Serrano doctrine in favor of
Agabon. Thus, the CA committed no error in
applying Agabon to the case.
DENIED
141-142 Armando Ailing vs. Jose B.
Feliciano
The Facts
Via a letter dated June 2, 2004, 6
respondent Wide Wide World Express
Corporation (WWWEC) offered to employ
petitioner Armando Aliling (Aliling) as
Account Executive (Seafreight Sales), with
the following compensation package: a
monthly salary of PhP 13,000, transportation
allowance of PhP 3,000, clothing allowance
of PhP 800, cost of living allowance of PhP
500, each payable on a per month basis and
a 14 th month pay depending on the
profitability and availability of financial
resources of the company. The offer came
with a
six (6)-month probation period condition
with this express caveat: Performance during
[sic] probationary period shall be made as
basis for confirmation to Regular or
Permanent Status.

On June 11, 2004, Aliling and
WWWEC inked an Employment Contract7
under the following terms, among others:
 Conversion to regular status shall
be determined on the basis of work
performance; and
 Employment services may, at any
time, be terminated for just cause or in
accordance with the standards defined at
the time of engagement. 8
Training then started. However,
instead of a Seafreight Sale assignment,
WWWEC asked Aliling to handle Ground
Express (GX), a new company product
launched on June 18, 2004 involving
domestic cargo forwarding service for Luzon.
Marketing this product and finding daily
contracts for it formed the core of Alilings
new assignment.
Barely a month after, Manuel F. San
Mateo III (San Mateo), WWWEC Sales and
Marketing Director, emailed Aliling9 to
express dissatisfaction with the latters
performance, thus:
Armand,
My expectations is [sic] that GX
Shuttles should be 80% full by the 3 rd week
(August 5) after launch (July 15). Pls. make
that happen. It has been more than a month
since you came in. I am expecting sales to be
pumping in by now. Thanks. Nonong
Thereafter, in a letter of September
25, 2004, 10 Joseph R. Lariosa (Lariosa),
Human Resources Manager of WWWEC,
asked Aliling to report to the Human
Resources Department to explain his
absence taken without leave from
September 20, 2004.
Aliling responded two days later. He
denied being absent on the days in question,
attaching to his reply-letter 11 a copy of his
timesheet12 which showed that he worked
from September 20 to 24, 2004. Alilings
explanation came with a query regarding the
withholding of his salary corresponding to
September 11 to 25, 2004. In a separate
letter dated September 27, 2004, 13 Aliling
wrote San Mateo stating: Pursuant to your
instruction on September 20, 2004, I hereby
193
tender my resignation effective October 15,
2004. While WWWEC took no action on his
tender, Aliling nonetheless demanded
reinstatement and a written apology,
claiming in a subsequent letter dated
October 1, 200414 to management that San
Mateo had forced him to resign.
Lariosas response-letter of October
1, 2004, 15 informed Aliling that his case was
still in the process of being evaluated. On
October 6, 2004, 16 Lariosa again wrote, this
time to advise Aliling of the termination of
his services effective as of that date owing to
his non-satisfactory performance during his
probationary period. Records show that
Aliling, for the period indicated, was paid his
outstanding salary which consisted of:
PhP 4,988.18 (salary for the
September 25, 2004 payroll)
1,987.28 (salary for 4 days in October
2004)
PhP 6,975.46 Total
Earlier, however, or on October 4,
2004, Aliling filed a Complaint 17 for illegal
dismissal due to forced resignation,
nonpayment of salaries as well as damages
with the NLRC against WWWEC. Appended
to the complaint was Alilings Affidavit dated
November 12, 2004, 18 in which he stated:
5. At the time of my engagement,
respondents did not make known to me the
standards under which I will qualify as a
regular employee.
Refuting Alilings basic posture,
WWWEC stated in its Position Paper dated
November 22, 2004 19 that, in addition to
the letter-offer and employment contract
adverted to, WWWEC and Aliling have
signed a letter of appointment20 on June 11,
2004 containing the following terms of
engagement:
Additionally, upon the effectivity of
your probation, you and your immediate
superior are required to jointly define your
objectives compared with the job
requirements of the position. Based on the
pre-agreed objectives, your performance
shall be reviewed on the 3rd month to assess
your competence and work attitude. The 5

th month Performance Appraisal shall be the
basis in elevating or confirming your
employment status from Probationary to
Regular.
Failure to meet the job requirements
during the probation stage means that your
services may be terminated without prior
notice and without recourse to separation
pay.
WWWEC also attached to its Position
Paper a memo dated September 20, 2004 21
in which San Mateo asked Aliling to explain
why he should not be terminated for failure
to meet the expected job performance,
considering that the load factor for the GX
Shuttles for the period July to September
was only 0.18% as opposed to the allegedly
agreed upon load of 80% targeted for August
5, 2004. According to WWWEC, Aliling,
instead of explaining himself, simply
submitted a resignation letter.
In a Reply-Affidavit dated December
13, 2004, 22 Aliling denied having received a
copy of San Mateos September 20, 2004
letter.
Issues having been joined, the Labor
Arbiter issued on April 25, 2006 23 a Decision
declaring Alilings termination as unjustified.
In its pertinent parts, the decision reads:
The grounds upon which
complainants dismissal was based did not
conform not only the standard but also the
compliance required under Article 281 of the
Labor Code, Necessarily,
complainants termination is not justified for
failure to comply with the mandate the law
requires. Respondents should be ordered to
pay salaries corresponding to the unexpired
portion of the contract of employment and
all other benefits amounting to a total of
THIRTY FIVE THOUSAND EIGHT HUNDRED
ELEVEN PESOS (P35,811.00) covering the
period from October 6 to December 7, 2004,
computed as follows:
Unexpired Portion of the Contract:
Basic Salary P13,000.00
Transportation 3,000.00
Clothing Allowance 800.00
ECOLA 500.00
194
P17,300.00
10/06/04 12/07/04
P17,300.00 x 2.7 mos. = P35,811.00
Complainants 13th month pay
proportionately for 2004 was not shown to
have been paid to complainant, respondent
be made liable to him therefore computed at
SIX THOUSAND FIVE HUNDRED THIRTY TWO
PESOS AND 50/100 (P6,532.50).
For engaging the services of counsel
to protect his interest, complainant is
likewise
entitled to a 10% attorneys fees of the
judgment amount. Such other claims for lack
of basis
sufficient to support for their grant are
unwarranted.
WHEREFORE, judgment is hereby
rendered ordering respondent company to
pay
complainant Armando Aliling the sum of
THIRTY FIVE THOUSAND EIGHT HUNDRED
ELEVEN PESOS (P35,811.00) representing his
salaries and other benefits as discussed
above.
Respondent company is likewise
ordered to pay said complainant the amount
of TEN
THOUSAND SEVEN HUNDRED SIXTY SIX
PESOS AND 85/100 ONLY (10.766.85)
representing his proportionate 13 th month
pay for 2004 plus 10% of the total judgment
as and by way of attorneys fees.
Other claims are hereby denied for
lack of merit. (Emphasis supplied.)
The labor arbiter gave credence to
Alilings allegation about not receiving and,
therefore, not bound by, San Mateos
purported September 20, 2004 memo. The
memo, to reiterate, supposedly apprised
Aliling of the sales quota he was, but failed,
to meet. Pushing the point, the labor arbiter
explained that Aliling cannot be validly
terminated for non-compliance with the
quota threshold absent a prior advisory of
the reasonable standards upon which his
performance would be evaluated.
Both parties appealed the above
decision to the NLRC, which affirmed the

Decision in toto in its Resolution dated May
31, 2007. The separate motions for
reconsideration were also denied by the
NLRC in its Resolution dated August 31,
2007.
Therefrom, Aliling went on certiorari
to the CA, which eventually rendered the
assailed Decision, the dispositive portion of
which reads:
WHEREFORE, the petition is PARTLY
GRANTED. The assailed Resolutions of
respondent (Third Division) National Labor
Relations Commission are AFFIRMED, with
the following
MODIFICATION/CLARIFICATION:
Respondents Wide Wide World Express
Corp. and its officers, Jose B. Feliciano,
Manuel F. San Mateo III and Joseph R.
Lariosa, are jointly and severally liable to pay
petitioner Armando Aliling: (A) the sum of
Forty Two Thousand Three Hundred Thirty
Three & 50/100 (P42,333.50) as the total
money judgment, (B) the sum of Four
Thousand Two Hundred Thirty Three &
35/100 (P4,233.35) as attorneys fees, and (C)
the additional sum equivalent to one-half
(1/2) month of petitioners salary as
separation pay. SO ORDERED. 24 (Emphasis
supplied.)
The CA anchored its assailed action
on the strength of the following premises: (a)
respondents failed to prove that Alilings
dismal performance constituted gross and
habitual neglect necessary to justify his
dismissal; (b) not having been informed at
the time of his engagement of the
reasonable standards under which he will
qualify as a regular employee, Aliling was
deemed to have been hired from day one as
a regular employee; and (c) the strained
relationship existing between the parties
argues against the propriety of
reinstatement.
Alilings motion for reconsideration
was rejected by the CA through the assailed
Resolution dated December 15, 2008.
Hence, the instant petition.
The Issues
195
Aliling raises the following issues for
consideration:
A. The failure of the Court of Appeals
to order reinstatement (despite its finding
that petitioner was illegally dismissed from
employment) is contrary to law and
applicable jurisprudence.
B. The failure of the Court of Appeals
to award backwages (even if it did not order
reinstatement) is contrary to law and
applicable jurisprudence.
C. The failure of the Court of Appeals
to award moral and exemplary damages
(despite its finding that petitioner was
dismissed to prevent the acquisition of his
regular status) is contrary to law and
applicable jurisprudence. 25
In their Comment, 26 respondents
reiterated their position that WWWEC hired
petitioner on a probationary basis and fired
him before he became a regular employee.
The Courts Ruling
The petition is partly meritorious.
Petitioner is a regular employee
On a procedural matter, petitioner
Aliling argues that WWWEC, not having
appealed from the judgment of CA which
declared Aliling as a regular employee from
the time he signed the employment
contract, is now precluded from questioning
the appellate courts determination as to the
nature of his employment.
Petitioner errs. The Court has, when
a case is on appeal, the authority to review
matters not specifically raised or assigned as
error if their consideration is necessary in
reaching a just conclusion of the case. We
said as much in Sociedad Europea de
Financiacion, SA v. Court of Appeals,27 It is
axiomatic that an appeal, once accepted by
this Court, throws the entire case open to
review, and that this Court has the authority
to review matters not specifically raised or
assigned as error by the parties, if their
consideration is necessary in arriving at a just
resolution of the case.
The issue of whether or not
petitioner was, during the period material, a

probationary or regular employee is of
pivotal import. Its resolution is doubtless
necessary at arriving at a fair and just
disposition of the controversy.
The Labor Arbiter cryptically held in
his decision dated April 25, 2006 that:
Be that as it may, there appears no
showing that indeed the said September 20,
2004
Memorandum addressed to complainant
was received by him. Moreover,
complainants tasked
where he was assigned was a new developed
service. In this regard, it is noted:
Due process dictates that an
employee be apprised beforehand of the
conditions
of his employment and of the terms of
advancement therein. Precisely, implicit in
Article
281 of the Labor Code is the requirement
that reasonable standards be previously
made
known by the employer to the employee at
the time of his engagement (Ibid, citing
Sameer Overseas Placement Agency, Inc. vs.
NLRC, G.R. No. 132564, October 20,
1999).28
From our review, it appears that the
labor arbiter, and later the NLRC, considered
Aliling a probationary employee despite
finding that he was not informed of the
reasonable standards by which his
probationary employment was to be judged.
The CA, on the other hand, citing Cielo v.
National Labor Relations Commission,29
ruled that petitioner was a regular employee
from the outset inasmuch as he was not
informed of the standards by which his
probationary employment would be
measured. The CA wrote: Petitioner was
regularized from the time of the execution of
the employment contract on June 11, 2004,
although respondent company had
arbitrarily shortened his tenure. As pointed
out, respondent company did not make
known the reasonable standards under
which he will qualify as a regular employee
at the time of his engagement. Hence, he
196
was deemed to have been hired from day
one as a regular employee.30 (Emphasis
supplied.)
WWWEC, however, excepts on the
argument that it put Aliling on notice that he
would be evaluated on the 3rd and 5th
months of his probationary employment. To
WWWEC, its efforts translate to sufficient
compliance with the requirement that a
probationary worker be apprised of the
reasonable standards for his regularization.
WWWEC invokes the ensuing holding in
Alcira v. National Labor Relations
Commission31 to support its case:
Conversely, an employer is deemed
to substantially comply with the rule on
notification
of standards if he apprises the employee that
he will be subjected to a performance
evaluation
on a particular date after his hiring. We agree
with the labor arbiter when he ruled that:
In the instant case, petitioner cannot
successfully say that he was never informed
by private respondent of the standards that
he must satisfy in order to be converted into
regular status. This rans (sic) counter to the
agreement between the parties
that after five months of service the
petitioners performance would be
evaluated. It is only but natural that the
evaluation should be made vis--vis the
performance standards for the job. Private
respondent Trifona Mamaradlo speaks of
such standard in her affidavit referring to the
fact that petitioner did not perform well in
his assigned work and his attitude was below
par compared to the companys standard
required of him. (Emphasis supplied.)
WWWECs contention is untenable.
Alcira is cast under a different factual
setting. There, the labor arbiter, the NLRC,
the CA, and even finally this Court were one
in their findings that the employee
concerned knew, having been duly informed
during his engagement, of the standards for
becoming a regular employee. This is in stark
contrast to the instant case where the
element of being informed of the

regularizing standards does not obtain. As
such, Alcira cannot be made to apply to the
instant case.
To note, the June 2, 2004 letter-offer
itself states that the regularization standards
or the performance norms to be used are still
to be agreed upon by Aliling and his
supervisor. WWWEC has failed to prove that
an agreement as regards thereto has been
reached. Clearly then, there were actually no
performance standards to speak of. And lest
it be overlooked, Aliling was assigned to GX
trucking sales, an activity entirely different
to the Seafreight Sales he was originally
hired and trained for. Thus, at the time of his
engagement, the standards relative to his
assignment with GX sales could not have
plausibly been communicated to him as
he was under Seafreight Sales. Even for this
reason alone, the conclusion reached in
Alcira is of little relevan to the instant case.
Based on the facts established in this
case in light of extant jurisprudence, the CAs
holding as to the kind of employment
petitioner enjoyed is correct. So was the
NLRC ruling, affirmatory of that of the labor
arbiter. In the final analysis, one common
thread runs through the holding of the labor
arbiter, the NLRC and the CA, i.e., petitioner
Aliling, albeit hired from managements
standpoint as a probationary employee, was
deemed a regular employee by force of the
following self-explanatory provisions:
Article 281 of the Labor Code ART.
281. Probationary employment.
Probationary employment shall not exceed
six (6) months from the date the employee
started working, unless it is covered by an
apprenticeship agreement stipulating a
longer period. The services of an employee
who has been engaged on a probationary
basis may be terminated for a just cause or
when he fails to qualify as a regular
employee in accordance with reasonable
standards made known by the employer to
the employee at the time of his engagement.
An employee who is allowed to work after a
probationary period shall be considered a
regular employee. (Emphasis supplied.)
197
Section 6(d) of the Implementing
Rules of Book VI, Rule VIII-A of the Labor
Code
Sec. 6. Probationary employment. There is
probationary employment where the
employee, upon his engagement, is made to
undergo a trial period where the employee
determines his fitness to qualify for regular
employment, based on reasonable
standards made
known to him at the time of engagement.
Probationary employment shall be governed
by the following rules:
xxxx
(d) In all cases of probationary
employment, the employer shall make
known to
the employee the standards under which he
will qualify as a regular employee at the
time of his engagement. Where no standards
are made known to the employee at
that time, he shall be deemed a regular
employee. (Emphasis supplied.)
To repeat, the labor arbiter, NLRC
and the CA are agreed, on the basis of
documentary evidence adduced, that
respondent WWWEC did not inform
petitioner Aliling of the reasonable
standards by which his probation would be
measured against at the time of his
engagement. The Court is loathed to
interfere with this factual determination. As
We have held:
Settled is the rule that the findings of the
- Labor Arbiter, when affirmed by
the NLRC and the Court of Appeals, are
binding on the Supreme Court, unless
patently erroneous. It is not the function of
the Supreme Court to analyze or weigh all
over
again the evidence already considered in the
proceedings below. The jurisdiction of this
Court in a petition for review on certiorari is
limited to reviewing only errors of law, not of
fact, unless the factual findings being
assailed are not supported by evidence on
record or the impugned
judgment is based on a misapprehension of
facts. 32 The more recent Peafrancia Tours

and Travel Transport, Inc., v. Sarmiento 33
has reaffirmed the above ruling, to wit:
Finally, the CA affirmed the ruling of
the NLRC and adopted as its own the latter's
factual findings. Long-established is the
doctrine that findings of fact of quasi-judicial
bodies x x
x are accorded respect, even finality, if
supported by substantial evidence. When
passed upon
and upheld by the CA, they are binding and
conclusive upon this Court and will not
normally be
disturbed. Though this doctrine is not
without exceptions, the Court finds that
none are
applicable to the present case.
WWWEC also cannot validly argue
that the factual findings being assailed are
not supported by evidence on record or the
impugned judgment is based on a
misapprehension of facts . Its very own
letter-offer of employment argues against its
above posture. Excerpts of the letter-offer:
Additionally, upon the effectivity of
your probation, you and your immediate
superior are required to jointly define your
objectives compared with the job
requirements of the position. Based on the
pre-agreed objectives, your performance
shall
be reviewed on the 3rd month to assess your
competence and work attitude. The 5th
month Performance Appraisal shall be the
basis in elevating or confirming your
employment status
from Probationary to Regular.
Failure to meet the job requirements
during the probation stage means that your
services may be terminated without prior
notice and without recourse to separation
pay. (Emphasis supplied.)
Respondents further allege that San
Mateos email dated July 16, 2004 shows that
the standards for his regularization were
made known to petitioner Aliling at the time
of his engagement. To recall, in that email
message, San Mateo reminded Aliling of the
sales quota he ought to meet as a condition
198
for his continued employment, i.e., that the
GX trucks should already be 80% full by
August 5, 2004. Contrary to respondents
contention, San Mateos email cannot
support their allegation on Aliling being
informed of the standards for his
continued employment, such as the sales
quota, at the time of his engagement. As it
were, the email message was sent to Aliling
more than a month after he signed his
employment contract with WWWEC. The
aforequoted Section 6 of the Implementing
Rules of Book VI, Rule VIII-A of the Code
specifically requires the employer to inform
the probationary employee of such
reasonable standards at the time of his
engagement, not at any time later; else, the
latter shall be considered a regular
employee. Thus, pursuant to the explicit
provision of Article 281 of the Labor Code,
Section 6(d) of the Implementing Rules of
Book VI, Rule VIII-A of the Labor Code and
settled jurisprudence, petitioner Aliling is
deemed a regular employee as of June
11, 2004, the date of his employment
contract. Petitioner was illegally dismissed
To justify fully the dismissal of an employee,
the employer must, as a rule, prove that the
dismissal was for a just cause and that the
employee was afforded due process prior to
dismissal. As a complementary principle, the
employer has the onus of proving with clear,
accurate, consistent, and convincing
evidence the validity of the dismissal. 34
WWWEC had failed to discharge its twin
burden in the instant case. First off, the
attendant circumstances in the instant case
aptly show that the issue of petitioners
alleged
failure to achieve his quota, as a ground for
terminating employment, strikes the Court
as a mere afterthought on the part of
WWWEC. Consider: Lariosas letter of
September 25, 2004 already betrayed
management intention to dismiss the
petitioner for alleged unauthorized
absences. Aliling was in fact made to explain
and h did so satisfactorily. But, lo and
behold, WWWEC nonetheless proceeded

with its plan to dismiss the petitioner for
non-satisfactory performance, although the
corresponding termination letter dated
October 6, 2004 did not
even specifically state Alilings non-
satisfactory performance, or that Alilings
termination was by reason of his failure to
achieve his set quota.
What WWWEC considered as the
evidence purportedly showing it gave Aliling
the chance to explain his inability to reach
his quota was a purported September 20,
2004 memo of San Mateo addressed to the
latter. However, Aliling denies having
received such letter and WWWEC has failed
to refute his contention of non receipt. In net
effect, WWWEC was at a loss to explain the
exact just reason for dismissing Aliling. At
any event, assuming for argument that the
petitioner indeed failed to achieve his sales
quota, his termination from employment on
that ground would still be unjustified. Article
282 of the Labor Code considers any of the
following acts or omission on the part of the
employee as just cause or ground for
terminating employment:
(a) Serious misconduct or willful
disobedience by the employee of the lawful
orders of his employer or representative in
connection with his work;
(b) Gross and habitual neglect by the
employee of his duties;
(c) Fraud or willful breach by the
employee of the trust reposed in him by his
employer
or duly authorized representative;
(d) Commission of a crime or offense
by the employee against the person of his
employer or any immediate member of his
family or his duly authorized
representatives; and
(e) Other causes analogous to the
foregoing. (Emphasis supplied)
In Lim v. National Labor Relations
Commission,35 the Court considered
inefficiency as an analogous just cause for
termination of employment under Article
282 of the Labor Code:
199
We cannot but agree with PEPSI that
gross inefficiency falls within the purview of
other causes analogous to the foregoing, this
constitutes, therefore, just cause to
terminate an employee under Article 282 of
the Labor Code. One is analogous to another
if it is susceptible of comparison with the
latter either in general or in some specific
detail; or has a close relationship with the
latter. Gross inefficiency is closely related to
gross neglect, for both involve specific acts
of omission on the part of the employee
resulting in damage to the employer or to his
business. In Buiser vs. Leogardo, this Court
ruled that failure to observed prescribed
standards to inefficiency may constitute just
cause for dismissal. (Emphasis supplied.)
It did so anew in Leonardo v. National
Labor Relations Commission36 on the
following rationale:
An employer is entitled to impose
productivity standards for its workers, and in
fact, non compliance may be visited with a
penalty even more severe than demotion.
Thus,
[t]he practice of a company in laying off
workers because they failed to make the
work quota has been recognized in this
jurisdiction. (Philippine American
Embroideries vs. Embroidery and Garment
Workers, 26 SCRA 634, 639). In the case at
bar, the petitioners' failure to meet the sales
quota assigned to each of them constitute a
just cause of their dismissal, regardless of
the permanent or probationary status of
their employment. 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. This management
prerogative of requiring standards may be
availed of so long as they are
exercised in good faith for the advancement

of the employer's interest.
(Emphasis supplied.)
In fine, an employees failure to meet
sales or work quotas falls under the concept
of gross inefficiency, which in turn is
analogous to gross neglect of duty that is a
just cause for dismissal under Article 282 of
the Code. However, in order for the quota
imposed to be considered a valid
productivity standard and thereby validate a
dismissal, managements prerogative of
fixing the quota must be exercised in good
faith for the advancement of its interest. The
duty to prove good faith, however, rests with
WWWEC as part of its burden to
show that the dismissal was for a just cause.
WWWEC must show that such quota was
imposed in good faith.
This WWWEC failed to do,
perceptibly because it could not. The fact of
the matter is that the alleged imposition of
the quota was a desperate attempt to lend a
semblance of validity to Alilings illegal
dismissal. It must be stressed that even
WWWECs sales manager, Eve Amador
(Amador), in an internal e-mail to San
Mateo, hedged on whether petitioner
performed below or above expectation:
Could not quantify level of
performance as he as was tasked to handle a
new product (GX). Revenue report is not yet
administered by IT on a month-to-month
basis. Moreover, this in a way is an
experimental activity. Practically you have a
close monitoring with Armand with
regards to his performance. Your
assessment of him would be more accurate.
Being an experimental activity and
having been launched for the first time, the
sales of GX services could not be reasonably
quantified. This would explain why Amador
implied in her email that other bases besides
sales figures will be used to determine
Alilings performance. And yet, despite such a
neutral observation, Aliling was still
dismissed for his dismal sales of GX services.
In any event, WWWEC failed to demonstrate
the reasonableness and the bona fides on
the quota imposition.
200
Employees must be reminded that
while probationary employees do not enjoy
permanent status, they enjoy the
constitutional protection of security of
tenure. They can only be terminated for
cause or when they otherwise fail to meet
the reasonable standards made known to
them by the employer at the time of their
engagement. 37 Respondent WWWEC
miserably failed to prove the termination of
petitioner was for a just cause nor was there
substantial evidence to demonstrate the
standards were made known to the latter at
the time of his engagement. Hence,
petitioners right to security of tenure was
breached.
Alilings right to procedural due
process was violated As earlier stated, to
effect a legal dismissal, the employer must
show not only a valid ground therefor, but
also that procedural due process has
properly been observed. When the Labor
Code speaks of procedural
due process, the reference is usually to the
two (2)-written notice rule envisaged in
Section 2 (III), Rule XXIII, Book V of the
Omnibus Rules Implementing the Labor
Code, which provides:
Section 2. Standard of due process:
requirements of notice. In all cases of
termination of
employment, the following standards of due
process shall be substantially observed.
I. For termination of employment
based on just causes as defined in Article 282
of the
Code:
(a) A written notice served on the
employee specifying the ground or grounds
for
termination, and giving to said employee
reasonable opportunity within which to
explain
his side;
(b) A hearing or conference during
which the employee concerned, with the
assistance of counsel if the employee so
desires, is given opportunity to respond to
the

charge, present his evidence or rebut the
evidence presented against him; and
(c) A written notice [of] termination
served on the employee indicating that upon
due consideration of all the circumstance,
grounds have been established to justify his
termination.
In case of termination, the foregoing
notices shall be served on the employees last
known address.
MGG Marine Services, Inc. v. NLRC38
tersely described the mechanics of what may
be considered a two-part due process
requirement which includes the two-notice
rule, x x x one, of the intention to dismiss,
indicating therein his acts or omissions
complained against, and two, notice of the
decision to dismiss; and an opportunity to
answer and rebut the charges against him, in
between such notices.
King of Kings Transport, Inc. v.
Mamac39 expounded on this procedural
requirement in this manner:
(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 calendar days from receipt of the notice
xxxx 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.
201
288 [of the Labor Code] is being charged
against the employees
(2) After serving the first notice, the
employees should schedule and conduct a
hearing
or conference wherein the employees will be
given the opportunity to (1) explain and
clarify
their defenses to the charge against them;
(2) present evidence in support of their
defenses; and
(3) rebut the evidence presented
against them by the management. During
the hearing or conference, the employees
are given the chance to defend themselves
personally, with the
assistance of a representative or counsel of
their choice x x x. (3) After determining that
termination is justified, the employer shall
serve the employees a written notice of
termination indicating that: (1) all the
circumstances involving the charge against
the employees have been considered; and
(2) grounds have been established to justify
the severance of their employment.
(Emphasis in the original.)
Here, the first and second notice
requirements have not been properly
observed, thus tainting petitioners dismissal
with illegality.
The adverted memo dated
September 20, 2004 of WWWEC supposedly
informing Aliling of the likelihood of his
termination and directing him to account for
his failure to meet the expected job
performance would have had constituted
the charge sheet, sufficient to answer for the
first notice requirement, but for the fact that
there is no proof such letter had been sent
to and received by him. In fact, in his
December 13, 2004 Complainants Reply
Affidavit, Aliling goes on to tag such
letter/memorandum as fabrication.
WWWEC did not adduce proof to show that
a copy of the letter was duly served upon
Aliling. Clearly enough, WWWEC did not
comply with the first notice requirement.
Neither was there compliance with
the imperatives of a hearing or conference.

The Court need not dwell at length on this
particular breach of the due procedural
requirement. Suffice it to point out that the
record is devoid of any showing of a hearing
or conference having been conducted. On
the contrary, in its October 1, 2004 letter to
Aliling, or barely five (5) days after it served
the notice of termination, WWWEC
acknowledged that it was still evaluating his
case. And the written notice of termination
itself did not indicate all the
circumstances involving the charge to justify
severance of employment.
Aliling is entitled to backwages and
separation pay in lieu of reinstatement
As may be noted, the CA found Alilings
dismissal as having been illegally effected,
but nonetheless concluded that his
employment ceased at the end of the
probationary period. Thus, the appellate
court merely affirmed the monetary award
made by the NLRC, which consisted of the
payment of that amount corresponding to
the unserved portion of the contract of
employment.
The case disposition on the award is
erroneous.
As earlier explained, Aliling cannot be
rightfully considered as a mere probationary
employee. Accordingly, the probationary
period set in the contract of employment
dated June 11, 2004 was of no moment.
In net effect, as of that date June 11,
2004, Aliling became part of the WWWEC
organization as a regular employee of the
company without a fixed term of
employment. Thus, he is entitled to
backwages reckoned from the time he was
illegally dismissed on October 6, 2004, with
a PhP 17,300.00 monthly salary, until the
finality of this Decision. This disposition hews
with the Courts ensuing holding in Javellana
v. Belen: 40 Article 279 of the Labor Code, as
amended by Section 34 of Republic Act 6715
instructs:
Art. 279. Security of Tenure. - In cases
of regular employment, the employer shall
not terminate the services of an employee
except for a just cause or when authorized
202
by
this Title. An employee who is unjustly
dismissed from work shall be entitled to
reinstatement without loss of seniority
rights and other privileges and to his full
backwages, inclusive of allowances, and to
his other benefits or their monetary
equivalent computed from the time his
compensation was withheld from him up to
the time of his actual reinstatement.
(Emphasis
supplied)
Clearly, the law intends the award of
backwages and similar benefits to
accumulate past
the date of the Labor Arbiters decision until
the dismissed employee is actually
reinstated. But
if, as in this case, reinstatement is no longer
possible, this Court has consistently ruled
that backwages shall be computed from the
time of illegal dismissal until the date
the decision becomes final. (Emphasis
supplied.)
Additionally, Aliling is entitled to
separation pay in lieu of reinstatement on
the ground of strained relationship.
In Golden Ace Builders v. Talde,41 the
Court ruled:
The basis for the payment of
backwages is different from that for the
award of separation pay. Separation pay is
granted where reinstatement is no longer
advisable because of strained relations
between the employee and the employer.
Backwages represent compensation that
should have been earned but were not
collected because of the unjust dismissal.
The basis for computing backwages is usually
the length of the employee's service while
that for separation pay is the actual period
when the employee was unlawfully
prevented from working.
As to how both awards should be
computed, Macasero v. Southern Industrial
Gases
Philippines instructs:
[T]he award of separation pay is
inconsistent with a finding that there was no

illegal dismissal, for under Article 279 of the
Labor Code and as held in a catena of cases
an employee who is dismissed without just
cause and without due process is entitled to
backwages and reinstatement or payment of
separation pay in lieu thereof:
Thus, an illegally dismissed employee
is entitled to two reliefs: backwages and
reinstatement. The two reliefs provided are
separate and distinct. In instances where
reinstatement is no longer feasible because
of strained relations between the employee
and the employer, separation pay is granted.
In effect, an illegally dismissed employee is
entitled to either reinstatement, if viable, or
separation pay if reinstatement is no longer
viable, and backwages.
The normal consequences of
respondents illegal dismissal, then, are
reinstatement without loss of seniority
rights, and payment of backwages computed
from the time compensation was withheld
up to the date of actual reinstatement.
Where reinstatement is no longer viable as
an option, separation
pay equivalent to one (1) month salary for
every year of service should b awarded as an
alternative. The payment of separation pay
is in addition to payment of backwages. x x x
Velasco v. National Labor Relations
Commission emphasizes:
The accepted doctrine is that
separation pay may avail in lieu of
reinstatement if reinstatement is no longer
practical or in the best interest of the parties.
Separation pay
in lieu of reinstatement may likewise be
awarded if the employee decides not to be
reinstated. (emphasis in the original; italics
supplied)
Under the doctrine of strained
relations, the payment of separation pay is
considered an acceptable alternative to
reinstatement when the latter option is no
longer desirable or viable. On one hand, such
payment liberates the employee from what
could be a highly oppressive work
environment. On the other hand, it releases
the employer
203
from the grossly unpalatable obligation of
maintaining in its employ a worker it could
no longer
trust.
Strained relations must be
demonstrated as a fact, however, to be
adequately
supported by evidence substantial evidence
to show that the relationship between the
employer and the employee is indeed
strained as a necessary consequence of the
judicial controversy.
In the present case, the Labor Arbiter
found that actual animosity existed
between petitioner Azul and respondent as
a result of the filing of the illegal
dismissal case. Such finding, especially when
affirmed by the appellate court as in
the case at bar, is binding upon the Court,
consistent with the prevailing rules that
this Court will not try facts anew and that
findings of facts of quasi-judicial bodies
are accorded great respect, even finality.
(Emphasis supplied.)
As the CA correctly observed, To
reinstate petitioner [Aliling] would only
create an atmosphere of antagonism and
distrust, more so that he had only a short
stint with respondent company. 42 The
Court need not belabor the fact that the
patent animosity that had developed
between employer and employee generated
what may be considered as the arbitrary
dismissal of the petitioner.
Following the pronouncements of
this Court Sagales v. Rustans Commercial
Corporation,43 the computation of
separation pay in lieu of reinstatement
includes the period for which backwages
were awarded:
Thus, in lieu of reinstatement, it is
but proper to award petitioner separation
pay
computed at one-month salary for every
year of service, a fraction of at least six (6)
months considered as one whole year. In the
computation of separation pay, the
period where backwages are awarded must
be included. (Emphasis supplied.)

Thus, Aliling is entitled to both
backwages and separation pay (in lieu of
reinstatement) in the amount of one (1)
months salary for every year of service, that
is, from June 11, 2004 (date of employment
contract) until the finality of this decision
with a fraction of a year of at least six (6)
months to be considered as one (1) whole
year. As determined by the labor arbiter, the
basis for the computation of backwages and
separation pay will be Alilings monthly salary
at PhP 17,300.
Finally, Aliling is entitled to an award
of PhP 30,000 as nominal damages in
consonance with prevailing jurisprudence44
for violation of due process. Petitioner is not
entitled to moral and exemplary damages In
Nazareno v. City of Dumaguete,45 the Court
expounded on the requisite elements for a
litigants entitlement to moral damages,
thus:
Moral damages are awarded if the
following elements exist in the case: (1) an
injury
clearly sustained by the claimant; (2) a
culpable act or omission factually
established; (3) a prove
wrongful act or omission by the defendant as
the proximate cause of the injury sustained
by the claimant; and (4) the award of
damages predicated on any of the cases
stated Article 2219 of the Civil Code. In
addition, the person claiming moral
damages must prove the existence of bad
faith by clear and convincing evidence for
the law always presumes good faith. It is not
enough that one merely suffered sleepless
nights, mental anguish, and serious anxiety
as the result of the actuations of the other
party. Invariably such action must be shown
to have been willfully done in bad faith or
with ill motive. Bad faith, under the law, does
not simply connote
bad judgment or negligence. It imports a
dishonest purpose or some moral obliquity
and conscious doing of a wrong, a breach of
a known duty through some motive or
interest or ill will that partakes of the nature
of fraud. (Emphasis supplied.)
204
In alleging that WWWEC acted in bad
faith, Aliling has the burden of proof to
present evidence in support of his claim, as
ruled in Culili v. Eastern Telecommunications
Philippines, Inc.: 46
According to jurisprudence, basic is
the principle that good faith is presumed and
he who alleges bad faith has the duty to
prove the same. By imputing bad faith to the
actuations of ETPI, Culili has the burden of
proof to present substantial evidence to
support the allegation of unfair labor
practice. Culili failed to discharge this burden
and his bare allegations deserve no credit.
This was reiterated in United
Claimants Association of NEA (UNICAN) v.
National Electrification Administration
(NEA),47 in this wise:
It must be noted that the burden of
proving bad faith rests on the one alleging it.
As the
Court ruled in Culili v. Eastern
Telecommunications, Inc., According to
jurisprudence, basic is
the principle that good faith is presumed and
he who alleges bad faith has the duty to
the
same. Moreover, in Spouses Palada v.
Solidbank Corporation, the Court stated,
Allegations of
bad faith and fraud must be proved by clear
and convincing evidence.
Similarly, Aliling has failed to
overcome such burden to prove bad faith on
the part of WWWEC. Aliling has not
presented any clear and convincing evidence
to show bad faith. The fact that he was
illegally dismissed is insufficient to prove bad
faith. Thus, the CA correctly ruled that
[t]here was no sufficient showing of bad faith
or abuse of management prerogatives in the
personal action taken against petitioner. 48
In Lambert Pawnbrokers and Jewelry
Corporation v. Binamira,49 the Court ruled:
A dismissal may be contrary to law
but by itself alone, it does not establish bad
faith to
entitle the dismissed employee to moral
damages. The award of moral and exemplary

damages
cannot be justified solely upon the premise
that the employer dismissed his employee
without
authorized cause and due process.
The officers of WWWEC cannot be
held jointly and severally liable with the
company
The CA held the president of WWWEC, Jose
B. Feliciano, San Mateo and Lariosa jointly
and severally liable for the monetary awards
of Aliling on the ground that the officers are
considered employers acting in the interest
of the corporation. The CA cited NYK
International Knitwear Corporation
Philippines (NYK) v. National Labor Relations
Commission50 in support of its argument.
Notably, NYK in turn cited A.C. Ransom Labor
Union-CCLU v. NLRC.51 Such ruling has been
reversed by the Court in Alba v. Yupangco,52
where the Court ruled:
By Order of September 5, 2007, the Labor
Arbiter denied respondents motion to quash
the 3rd alias writ. Brushing aside
respondents contention that his liability is
merely joint, the
Labor Arbiter ruled:
Such issue regarding the personal
liability of the officers of a corporation for
the
payment of wages and money claims to its
employees, as in the instant case, has long
been
resolved by the Supreme Court in a long list
of cases [A.C. Ransom Labor Union-CLU vs.
NLRC
(142 SCRA 269) and reiterated in the cases of
Chua vs. NLRC (182 SCRA 353), Gudez vs.
NLRC
(183 SCRA 644)]. In the aforementioned
cases, the Supreme Court has expressly held
that the
irresponsible officer of the corporation (e.g.
President) is liable for the corporations
obligations
to its workers. Thus, respondent Yupangco,
being the president of the respondent YL
Land and
Ultra Motors Corp., is properly jointly and
205
severally liable with the defendant
corporations for
the labor claims of Complainants Alba and
De Guzman. x x x
xxxx
As reflected above, the Labor Arbiter
held that respondents liability is solidary.
There is solidary liability when the obligation
expressly so states, when the law so
provides, or when the nature of the
obligation so requires. MAM Realty
Development
Corporation v. NLRC, on solidary liability of
corporate officers in labor disputes,
enlightens:
x x x 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. True
solidary liabilities may at times be incurred
but only when exceptional circumstances
warrant such as, generally, in the following
cases:
1. When directors and trustees or, in
appropriate cases, the officers of a
corporation:
(a) vote for or assent to patently
unlawful acts of the corporation;
(b) act in bad faith or with gross
negligence in directing the corporate
affairs;
xxxx
In labor cases, for instance, the Court
has held corporate directors and officers
solidarily
liable with the corporation for the
termination of employment of employees
done with malice or in bad faith.
A review of the facts of the case does
not reveal ample and satisfactory proof that
respondent officers of WWEC acted in bad
faith or with malice in effecting the
termination of petitioner Aliling. Even
assuming arguendo that the actions of
WWWEC are ill-conceived and erroneous,
respondent officers cannot be held jointly
and solidarily with it. Hence, the ruling on

the joint and solidary liability of individual
respondents must be recalled.
Aliling is entitled to Attorneys Fees
and Legal Interest Petitioner Aliling is also
entitled to attorneys fees in the amount of
ten percent (10%) of his total monetary
award, having been forced to litigate in order
to seek redress of his grievances, pursuant to
Article 111
of the Labor Code and following our ruling in
Exodus International Construction
Corporation v. Biscocho,53 to wit:
In Rutaquio v. National Labor
Relations Commission, this Court held that:
It is settled that in actions for recovery of
wages or where an employee was forced to
litigate and, thus, incur expenses to protect
his rights and interest, the award of
attorneys
fees is legally and morally justifiable.
In Producers Bank of the Philippines
v. Court of Appeals this Court ruled that:
Attorneys fees may be awarded when a
party is compelled to litigate or to incur
expenses
to protect his interest by reason of an
unjustified act of the other party.
While in Lambert Pawnbrokers and Jewelry
Corporation,54 the Court specifically ruled:
However, the award of attorneys fee is
warranted pursuant to Article 111 of the
Labor
Code. Ten (10%) percent of the total award
is usually the reasonable amount of
attorneys fees
awarded. It is settled that where an
employee was forced to litigate and, thus,
incur expenses to protect his rights and
interest, the award of attorneys fees is
legally and morally justifiable.
Finally, legal interest shall be
imposed on the monetary awards herein
granted at the rate of 6% per annum from
October 6, 2004 (date of termination) until
fully paid.
WHEREFORE, the petition is PARTIALLY
GRANTED. The July 3, 2008 Decision of the
Court of
206
Appeals in CA-G.R. SP No. 101309 is hereby
MODIFIED to read:
WHEREFORE, the petition is
PARTIALLY GRANTED. The assailed
Resolutions of
respondent (Third Division) National Labor
Relations Commission are AFFIRMED, with
the
following MODIFICATION/CLARIFICATION:
Respondent Wide Wide World Express Corp.
is liable to pay Armando Aliling the following:
(a) backwages reckoned from October 6,
2004 up
to the finality of this Decision based on a
salary of PhP 17,300 a month, with interest
at 6% per
annum on the principal amount from
October 6, 2004 until fully paid; (b) the
additional sum
equivalent to one (1) month salary for every
year of service, with a fraction of at least six
(6)
months considered as one whole year based
on the period from June 11, 2004 (date of
employment contract) until the finality of
this Decision, as separation pay; (c) PhP
30,000 as
nominal damages; and (d) Attorneys Fees
equivalent to 10% of the total award.
SO ORDERED.
143 Kakampi and Its Members Panuelos vs.
Kingspoint Express & Logistics
Facts:
Petitioners were former drivers of
the respondent Kingspoint Express, a sole
proprietorship under the name of Co which
is engaged in the business of transporting
goods.
They were dismissed from service on
January 20, 2006 on the grounds of serious
misconduct, dishonesty, loss of trust and
confidence and commission of acts inimical
to the interest of Kingspoint Express.
Kingspoint Express issued separate
notices to explain to the individual
petitioners on January 16, 2006 the charges

of dishonesty, serious misconduct and loss of
confidence by filing with the NLRC false,
malicious and fabricated cases against the
company, and their allegedly
unwarranted refusal to undergo drug
testing. They were required to submit their
answer to the charges within forty-eight (48)
hours from receipt of the notices with a
warning that failure to do so would mean
waiver of their answer. They were also
placed under preventive suspension in the
meantime.
Petitioners failed to submit their
written explanation within the stated period.
Subsequently, Kingspoint Express issued to
them separate yet uniformly worded notices
on January 20, 2006, informing them of their
dismissal for the abovementioned charges
based on the following acts: fabrication of
baseless money claims against the company,
misleading fellow co-workers to sign the
malicious complaint for money claims
against the company, refusal to undergo the
company's general drug test, and extorting
money from co-workers to fund activities
that they were never fully informed of. Also,
petitioner Dacara was dismissed for
consummating his sexual relations with Co’s
helper inside her residence and
thus impregnating the help.
A complaint for illegal dismissal was
subsequently filed, alleging that the charges
against them were fabricated and that their
dismissal was prompted by Kingspoint
Express' aversion to their union activities.
The Labor Arbiter ruled in favor of the
petitioners as the charges are
purportedly mere unsubstantiated
allegations. This was affirmed by the NLRC
on appeal but the latter reversed itself on a
subsequent MR filed by Kingspoint. The CA
initially reversed the NLRC’s ruling but on an
MR, they too reversed their earlier ruling and
favored Kingspoint. Thus, this petition for
certiorari before the SC.
Issue:
WON the dismissal was valid.
207
Ruling:
Yes, the dismissal was valid. It is
fundamental that in order to validly dismiss
an employee, the employer is required to
observe both substantive and procedural
due process — the termination of
employment must be based on a just or
authorized cause and the dismissal must be
effected after due notice and hearing.
As to the substantive requirements
of due process, the employees' refusal to
submit themselves to drug test is a just cause
for their dismissal.
An employer may terminate an
employment on the ground of serious
misconduct or willful disobedience by the
employee of the lawful orders of his
employer or representative in connection
with his work. Willful disobedience requires
the concurrence of two elements: (1) the
employee's assailed conduct must have
been willful, that is, characterized by a
wrongful and perverse attitude; and, (2) the
order violated must have been reasonable,
lawful, made known to the employee, and
must pertain to the duties which he had
been engaged to discharge. Both elements
are present in this case.
As to the first element, the dismissed
employees did not deny their refusal to
undergo drug testing nor did they explain
their refusal. The utter lack of reason or
justification for their insubordination
indicates that it was prompted by mere
obstinacy, hence, willful and warranting of
dismissal. As to the second element, the
subject order is relevant in the performance
of their functions as drivers of Kingspoint
Express. As the NLRC correctly pointed out,
drivers are indispensable to Kingspoint
Express' primary business of rendering door-
to-door delivery services. It is common
knowledge that the use of dangerous drugs
has adverse effects on driving abilities that
may render the dismissed employees
incapable
of performing their duties to Kingspoint
Express and acting against its interests, in

addition to the threat they pose to the
public.
The existence of a single just cause is
enough to order their dismissal and it is now
inconsequential if the other charges against
them do not merit their dismissal from
service. Nonetheless, while Kingspoint
Express had reason to sever their
employment relations, this Court finds its
supposed observance of the requirements of
procedural due process pretentious. While
Kingspoint Express required the dismissed
employees to explain their refusal to submit
to a drug test, the two (2) days afforded to
them to do so cannot qualify as "reasonable
opportunity", which the Court construed in
King of Kings Transport, Inc. v. Mamacas a
period of at least five (5) calendar days from
receipt of the notice.
Thus, even if Kingspoint Express'
defective attempt to comply with procedural
due process does not negate the existence of
a just cause for their dismissal, Kingspoint
Express is still liable to indemnify the
dismissed employees, with the exception of
Panuelos, Dizon and Dimabayao, who did
not appeal the dismissal of their complaints,
with nominal damages in the amount of
P30,000.00.
144 COSMOS BOTTLING CORP., Petitioner,
v. WILSON FERMIN, Respondent; WILSON
B. FERMIN,Petitioner, v. COSMOS
BOTTLING CORPORATION and CECILIA
BAUTISTA, Respondents.
FACTS:
Wilson B. Fermin (Fermin) was a
forklift operator at Cosmos Bottling
Corporation (COSMOS), where he started his
employment on 27 August 1976.On 16
December 2002, he was accused of stealing
the cellphone of his fellow employee, Luis
Braga (Braga). Fermin was then given a Show
Cause Memorandum, requiring him to
explain why the cellphone was found inside
his locker.In compliance therewith, he
submitted an affidavit the following day,
208
explaining that he only hid the phone as a
practical joke and had every intention of
returning it to Braga.
After conducting an investigation,
COSMOS found Fermin guilty of stealing
Bragas phone in violation of company rules
and regulations. Consequently, on 2 October
2003,the company terminated Fermin from
employment after 27 years of
service,effective on 6 October 2003.
Following the dismissal of Fermin
from employment, Braga executed an
affidavit, which stated the belief that the
former had merely pulled a prank without
any intention of stealing the cellphone, and
withdrew from COSMOS his complaint
against Fermin.
Meanwhile, Fermin filed a Complaint
for Illegal Dismissal, which the Labor Arbiter
(LA) dismissed for lack of merit on the
ground that the act of taking a fellow
employees cellphone amounted to gross
misconduct.Further, the LA likewise took
into consideration Fermins other infractions,
namely: (a) committing acts of disrespect to
a superior officer, and (b) sleeping on duty
and abandonment of duty.
Fermin filed an appeal with the
National Labor Relations Commission
(NLRC), which affirmed the ruling of the
LA[and denied Fermins subsequent Motion
for Reconsideration.
Thereafter, Fermin filed a Petition for
Certiorari with the Court of Appeals
(CA),which reversed the rulings of the LA and
the NLRC and awarded him his full
retirement benefits.Although the CA
accorded with finality the factual findings of
the lower tribunals as regards Fermins
commission of theft, it nevertheless held
that the penalty of dismissal from service
was improper on the ground that the said
violation did not amount to serious
misconduct or wilful disobedience.
COSMOS and Fermin moved for
reconsideration, but the CA likewise denied
their motions.Thus, both parties filed the
present Petitions for Review.

ISSUE:
Whether the imposition of the
penalty of dismissal was appropriate
HELD:
We rule in the affirmative.
LABOR LAW: theft against a co-
employee is analogous to serious
misconduct
Theft committed against a co-
employee is considered as a case analogous
to serious misconduct, for which the penalty
of dismissal from service may be meted out
to the erring employee,viz:
Article 282 of the Labor Code
provides:
Article 282. Termination by
Employer. - An employer may terminate an
employment for any of the following causes:
(a)Serious misconductor willful
disobendience by the employee of the lawful
orders of his employer or his
representativesin connection with his work;
xxxxxxxxx
(e) Other causes analogous to the
foregoing.
LABOR LAW: misconduct
Misconduct involves the
transgression of some established and
definite rule of action, forbidden act, a
dereliction of duty, willful in character, and
implies wrongful intent and not mere error
in judgment.For misconduct to be serious
and therefore a valid ground for dismissal, it
must be:
1. of grave and aggravated character
and not merely trivial or unimportant and
2. connected with the work of the
employee.
In this case, petitioner dismissed
respondent based on the NBI's finding that
the latter stole and used Yusecos credit
cards. Butsince the theft was not committed
against petitioner itself but against one of its
employees,respondent's misconduct was
not work-related and therefore, she could
not be dismissed for serious misconduct.
209
Nonetheless, Article 282(e) of the
Labor Code talks of other analogous causes
or those which are susceptible of
comparison to another in general or in
specific detail.For an employee to be validly
dismissed for a cause analogous to those
enumerated in Article 282, the cause must
involve a voluntary and/or willful act or
omission of the employee.
A cause analogous to serious
misconduct is a voluntary and/or willful act
or omission attesting to an employees moral
depravity.Theft committed by an employee
against a person other than his employer, if
proven by substantial evidence, is a cause
analogous to serious misconduct.
In this case, the LA has already made
a factual finding, which was affirmed by both
the NLRC and the CA, that Fermin had
committed theft when he took Bragas
cellphone. Thus, this act is deemed
analogous to serious misconduct, rendering
Fermins dismissal from service just and valid.
Further, the CA was correct in ruling
that previous infractions may be cited as
justification for dismissing an employee only
if they are related to the subsequent
offense. However, it must be noted that such
a discussion was unnecessary since the theft,
taken in isolation from Fermins other
violations, was in itself a valid cause for the
termination of his employment.
Finally, it must be emphasized that
the award of financial compensation or
assistance to an employee validly dismissed
from service has no basis in law. Therefore,
considering that Fermins act of taking the
cellphone of his co-employee is a case
analogous to serious misconduct, this Court
is constrained to reverse the CAs ruling as
regards the payment of his full retirement
benefits. In the same breath, neither can this
Court grant his prayer for backwages.
G.R. No. 194303 is DENIED.
G.R. No. 193676 is GRANTED.

145 ALEX Q. NARANJO, DONNALYN DE
GUZMAN, RONALD V. CRUZ, ROSEMARIE P.
PIMENTEL, and ROWENA B.
BARDAJE,Petitioners, v. BIOMEDICA
HEALTH CARE, INC. and CARINA "KAREN" J.
MOTOL, Respondents.
FACTS:
Petitioners Alex Naranjo (Naranjo),
Ronald Allan Cruz, Rowena Bardaje,
Donnalyn De Guzman and Rosemarie
Pimentel were all employees of Biomedica
Health Care, Inc. (Biomedica).
On November 7, 2006, Naranjo, et al.
were all absent for various personal reasons.
The next day, Naranjo, et al. came in for work
but were not allowed to enter the premises.
Carina Motol (Motol), Biomedicas president,
informed them using foul language, to just
find other employment.
Subsequently, Biomedica issued
notices to Naranjo, et al. accusing them of
having conducted an illegal strike and were
accordingly directed to explain within
twenty-four (24) hours to explain why they
should not be held guilty of and dismissed
for violating the company policy against
illegal strikes under Article XI, Category Four,
Sections 6, 8, 12, 18 and 25 of the Company
Policy.Biomedica, however, failed to furnish
them with the copy of the said company
policy.
Naranjo, et al. failed to submit their
written explanation. Thus, Biomedica served
Notices of Termination stating that Naranjo,
et al. engaged in illegal strike. Consequently,
Naranjo et al. filed a complaint for illegal
dismissal. The LA dismissed the complaint.
The NLRC reversed the LA. On appeal to the
CA, the CA reinstated the decision of the LA.
ISSUE:
Whether or not Naranjo, et al. were
illegally dismissed?
HELD:
The petition is meritorious.
210
LABOR LAW: illegal dismissal; mass
leave; strike
Petitioners were not afforded
procedural due process.Thus, the Court
elaborated in King of Kings Transport, Inc. v.
Mamac that a mere general description of
the charges against an employee by the
employer is insufficient to comply with the
above provisions of the law. Clearly,
petitioners were charged with conducting an
illegal strike, not a mass leave, without
specifying the exact acts that the company
considers as constituting an illegal strike or
violative of company policies.
Further, while Biomedica cites the
provisions of the company policy which
petitioners purportedly violated, it failed to
quote said provisions in the notice so
petitioners can be adequately informed of
the nature of the charges against them and
intelligently file their explanation and
defenses to said accusations.
Moreover, the period of 24 hours
allotted to petitioners to answer the notice
was severely insufficient and in violation of
the implementing rules of the Labor Code.
Under the implementing rule of Art. 277, an
employee should be given "reasonable
opportunity" to file a response to the notice.
King of Kings Transport, Inc. elucidates in this
wise: " 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."
In addition, Biomedica did not set the
charges against petitioners for hearing or
conference in accordance with Sec. 2, Book
V, Rule XIII of the Implementing Rules and
Regulations of the Labor Code and in line
with ruling in King of Kings Transport, Inc.,
where the Court explained: "After serving

the first notice, the employers should
schedule and conduct a hearing or
conference wherein the employees will be
given the opportunity to: (1) explain and
clarify their defenses to the charge against
them; (2) present evidence in support of
their defenses; and (3) rebut the evidence
presented against them by the
management."
Petitioners were denied substantive
due process. Clearly, to justify the dismissal
of an employee on the ground of serious
misconduct, the employer must first
establish that the employee is guilty of
improper conduct, that the employee
violated an existing and valid company rule
or regulation, or that the employee is guilty
of a wrongdoing. In the instant case,
Biomedica failed to even establish that
petitioners indeed violated company rules,
failing to even present a copy of the rules
and to prove that petitioners were made
aware of such regulations.
Petitioners did not stage a mass
leave. The term "Mass Leave" has been left
undefined by the Labor Code. Plainly, the
legislature intended that the terms ordinary
sense be used. "Mass" is defined as
"participated in, attended by, or affecting a
large number of individuals; having a large-
scale character." While the term "Leave" is
defined as "an authorized absence or
vacation from duty or employment usually
with pay." Thus, the phrase "mass leave"
may refer to a simultaneous availment of
authorized leave benefits by a large number
of employees in a company. It is undeniable
that going on leave or absenting ones self
from work for personal reasons when they
have leave benefits available is an
employees right. Here, the five (5)
petitioners were absent on November 7,
2006. The records are bereft of any evidence
to establish how many workers are
employed in Biomedica. There is no evidence
on record that 5 employees constitute a
substantial number of employees of
Biomedica.
211
Petitioners did not go on strike. Art.
212(o) of the Labor Code defines a strike as
"any temporary stoppage of work by the
concerted action of employees as a result of
any industrial or labor dispute." "Concerted"
is defined as "mutually contrived or
planned" or "performed in unison." In the
case at bar, the 5 petitioners went on leave
for various reasons.Petitioners were in
different places on November 7, 2006 to
attend to their personal needs or affairs.
They did not go to the company premises to
petition Biomedica for their grievance. This
shows that there was NO intent to go on
strike.
Dismissal is not the proper penalty.
But setting aside from the nonce the facts
established above, the most pivotal
argument against the dismissal of
petitioners is that the penalty of dismissal
from employment cannot be imposed even
if we assume that petitioners went on an
illegal strike. It has not been shown that
petitioners are officers of the Union. On this
issue, the NLRC correctly cited Gold City
Integrated Port Service, Inc. v. NLRC,
wherein We ruled that: "An ordinary striking
worker cannot be terminated for mere
participation in an illegal strike. There must
be proof that he committed illegal acts
during a strike."
The CA is REVERSED and SET ASIDE.
The NLRC is REINSTATED with
MODIFICATION.
146 3RD ALERT SECURITY AND DETECTIVE
SERVICES, INC., Petitioner, v. ROMUALDO
NAVIA, Respondent.
FACTS:
Romualdo Navia filed an illegal
dismissal case against 3rd Alert. In its
November 30, 2005 decision, the Labor
Arbiter issued a decision in favor or 3rd Alert.
The NLRC, after appeal, affirmed the ruling
of the Labor Arbiter and on October 19,
2008, it also denied 3rd Alert motion for
reconsideration.

From this ruling, 3rd Alert filed an
appeal with the CA (CA-G.R. SP No. 106963)
with a prayer for the issuance of a temporary
restraining order. The CA denied the appeal;
3rd Alert moved for a motion for
reconsideration but the motion was also
denied.
In the meantime, on January 29,
2009, the NLRC issued an Entry of Judgment
certifying that the NLRC resolution dated
October 19, 2008 has become final and
executory. Thus, Navia filed with the labor
arbiter an ex-parte motion for
recomputation of back wages and an ex-
parte motion for execution based on the
recomputed back wages.
On November 10, 2009, the labor
arbiter issued a writ of execution to enforce
the recomputed monetary awards. 3rd Alert
appealed the recomputed amount stated in
the writ of execution to the NLRC. 3rd Alert
also alleged that the writ was issued with
grave abuse of discretion since there was
already a notice of reinstatement sent to
Navia.
The NLRC dismissed the appeal,
ruling that 3rd Alert is guilty of bad faith
since there was no earnest effort to reinstate
Navia. The NLRC also ruled that there was no
notice or reinstatement sent to Navia
counsel. A motion for reconsideration was
filed, but it was likewise denied.
3rd Alert filed a petition for certiorari
with the CA which found the petition
without merit because Navia had not been
reinstated either physically or in the payroll.
The CA also denied the motion for
reconsideration filed by 3rd Alert; hence,
this petition.
ISSUE:
Did the Court of Appeals err in ruling
that the NLRC did not commit any grave
abuse of discretion?
HELD:
After a close examination of the
petition and the attached records where 3rd
Alert insists that a copy of the manifestation
212
on reinstatement had been sent to Navia
counsel and was received by a certain
"Biznar", the Supreme Court did not see any
grave abuse of discretion.
Since it was ruled that there had
been no notice of reinstatement sent to
Navia or his counsel, as also affirmed by the
CA, the Court cannot rule otherwise in the
absence of any compelling evidence. Time
and again, it has been held that this Court is
not a trier of facts. In the absence of any
attendant grave abuse of discretion, these
findings are entitled not only to respect, but
to our final recognition in this appellate
review.
Article 223 of the Labor Code
provides that in case there is an order of
reinstatement, the employer must admit the
dismissed employee under the same terms
and conditions, or merely reinstate the
employee in the payroll. The order shall be
immediately executory. Thus, 3rd Alert
cannot escape liability by simply invoking
that Navia did not report for work. The law
states that the employer must still reinstate
the employee in the payroll. Where
reinstatement is no longer viable as an
option, separation pay equivalent to one (1)
month salary for every year of service could
be awarded as an alternative.
Since the proceedings below indicate
that 3rd Alert failed to adduce additional
evidence to show that it tried to reinstate
Navia, either physically or in the payroll, it s
safe to conclude that there was no earnest
effort to reinstate Navia.
It is also noteworthy that 3rd Alert
resorted to legal tactics to frustrate the
execution of the labor arbiter order; for
about four (4) years, it evaded the obligation
to reinstate Navia. By so doing, 3rd Alert has
made a mockery of justice. It is thus proper
to impose treble costs against 3rd Alert for
its utter disregard to comply with the writ of
execution. To reiterate, no indication exists
showing that 3rd Alert exerted any efforts to
reinstate Navia; worse, 3rd Alert lame
excuse of having sent a notice of
reinstatement to a certain "Biznar" only

compounded the intent to mislead the
courts.
DENIED
147 THE NEW PHILIPPINE SKYLANDERS,
INC. and/or JENNIFER M. ENANO-BOTE,
Petitioners, v. FRANCISCO N. DAKILA,
Respondent.
FACTS:
Respondent Francisco Dakila (Dakila)
was employed by The New Philippine
Skylanders, Inc. (Skylanders) as early as 1987
and terminated for cause in April 1997 when
the latter was sold. In May 1997, he was
rehired as consultant by Skylanders under a
Contract for Consultancy Services.
Thereafter, in a letter dated April 19,
2007, Dakila informed Skylanders of his
compulsory retirement effective May 2,
2007 and sought for the payment of his
retirement benefits. His request, however,
was not acted upon. Instead, he was
terminated from service effective May 1,
2007.
Thus, Dakila filed a complaint for
constructive illegal dismissal. He averred
that the consultancy contract was a scheme
to deprive him of the benefits of
regularization, claiming to have assumed
tasks necessary and desirable in the trade or
business of Skylanders and under their direct
control and supervision. On the contrary,
Skylanders argued that Dakila was not their
regular employee as he was not required to
observe regular working hours and was free
to adopt means and methods to accomplish
his task except as to the results of the work
required of him. Hence, no employer-
employee relationship existed between
them.
Both the Labor Arbiter and the NLRC
ruled that Dakila was illegally dismissed. The
Court of Appeals affirmed the findings of the
Labor Arbiter and the NLRC.
ISSUE:
213
Whether or not Dakila was illegally
dismissed?
HELD:
The petition is partly granted.
The issue of illegal dismissal is
premised on the existence of an employer-
employee relationship between the parties
herein. Records reveal that both the LA and
the NLRC, as affirmed by the CA, have found
substantial evidence to show that
respondent Dakila was a regular employee
who was dismissed without cause.
Following Article 279 of the Labor
Code, an employee who is unjustly dismissed
from work is entitled to reinstatement
without loss of seniority rights and other
privileges and to his full backwages
computed from the time he was illegally
dismissed. However, considering that
respondent Dakila was terminated on May 1,
2007, or one (1) day prior to his compulsory
retirement on May 2, 2007, his
reinstatement is no longer feasible. His
backwages should be computed only for
days prior to his compulsory retirement
which in this case is only a day.
Petition is PARTLY GRANTED.
148 NORKIS TRADING CORPO RATION VS.
JOAQUIN B UENAVISTA, ET AL.
FACTS:
The respondents were hired by
Norkis Trading, a domestic corporation
engaged in the business of manufacturing
and marketing of Yamaha motorcycles and
multi-purpose vehicles, on separate dates
and for various positions as welders and
operators.
Although they worked for Norkis
Trading as skilled workers assigned in the
operation of industrial and welding
machines owned and used by Norkis Trading
for its business, they were not treated as
regular employees by Norkis Trading.
Instead, they were regarded by
Norkis Trading as members of Panaghiusa sa

Kauswagan Multi-Purpose Cooperative
(PASAKA) and deemed an independent
contractor that merely deployed the
respondents to render services for Norkis
Trading.4 The respondents nonetheless
believed that they were regular employees
of Norkis Trading citing various
circumstances in their position paper.
Hence, the respondents filed with the DOLE
a complaint against Norkis Trading and
PASAKA for labor-only contracting and non-
payment of minimum wage and overtime
pay.
The filing of the complaint for labor-
only contracting allegedly led to the
suspension of the respondents’ membership
with PASAKA. The suspension prompted the
respondents to file with the NLRC the
complaint for illegal suspension against
Norkis Trading and PASAKA. On October 13,
1999, the respondents were to report back
to work but during the hearing in their NLRC
case, they were informed by PASAKA that
they would be transferred to Norkis
Tradings’ sister company, Porta Coeli
Industrial Corporation (Porta Coeli), as
washers of Multicab vehicles. The
respondents opposed the transfer as it
would allegedly result
in a change of employers and that the
transfer would result in a demotion since
from being skilled workers in Norkis Trading;
they would be reduced to being utility
workers.
Labor Arbiter (LA) Gutierrez
dismissed the complaint for lack of merit. LA
directed complainants to report back to
PASAKA for work assignment. Likewise,
respondent PASAKA is directed to accept the
complainants back for work. In the
meantime (in a separate case) DOLE
Regional Director Balanag issued on August
22, 2000 his Order20 in LSED Case No.
RO700-9906-CI-CS-168. Regional Director
Balanag ruled that PASAKA was engaged in
labor-only contracting.21 It was found that:
(1) PASAKA had failed to prove that it had
substantial capital; 22 (2) the machineries,
equipment and supplies used by the
214
respondents in the performance of their
duties were all owned by Norkis Trading and
not by PASAKA; 23 (3) the
respondents’ membership with PASAKA as a
cooperative was inconsequential to their
employment with Norkis Trading; 24 (4)
Norkis Trading and PASAKA failed to prove
that their sub-contracting arrangements
were covered by any of the conditions set
forth in Section 6 of Department Order No.
10, Series of 1997; 25 (5) Norkis Trading and
PASAKA failed to dispute the respondents’
claim that their work was supervised by
leadmen and production supervisors of
Norkis Trading; 26 and (6) Norkis Trading and
PASAKA failed to dispute the respondents’
allegation that their salaries were paid by
employees of Norkis Trading.27 Norkis
Trading and PASAKA were then declared
solidarily liable for the monetary claims of
therein complainants.
Regional Director Balanag’s Order was later
affirmed by then DOLE Secretary Sto. Tomas.
When the rulings of the DOLE Secretary were
appealed before the CA via the petitions for
certiorari, the CA affirmed the Orders of the
DOLE Secretary.31 A motion for
reconsideration of the CA decision was
denied in a Resolution32. The two petitions
docketed as G.R. Nos. 180078-79, which
were brought before the SC to question the
CA’s rulings, were later denied with finality
by the SC. The respondents informed the
NLRC of Regional Director Balanag’s Order by
filing a Manifestation. However, the NLRC
rendered its Decision35 affirming with
modification the decision of LA Gutierrez. It
held that the respondents were not illegally
suspended from work. The NLRC declared
that the LA had no jurisdiction over the
dispute because the respondents
were not employees, but members of
PASAKA.
The respondents’ motion for
reconsideration was denied by the NLRC.
Undaunted, the respondents questioned the
NLRC’s rulings before the CA via a petition
for certiorari. Finding merit in the petition
for certiorari, the CA rendered its decision

reversing and setting aside the decision and
resolution of the NLRC. The CA considered
Regional Director Balanag’s finding in LSED
Case No. RO700-9906-CI-CS-168 that
PASAKA was engaged in labor-only
contracting. In ruling that the respondents
were illegally dismissed, the CA held that
Norkis Trading’s refusal to accept the
respondents back to their former positions,
offering them instead to accept a new
assignment as washers of vehicles in its sister
company, was a demotion that amounted to
a constructive dismissal. Norkis Trading’s
motion for reconsideration was denied by
the CA. Hence, this petition.
ISSUES:
(1) Whether the CA erred in revering
of LA Gutierrez’s and the NLRC’s rulings.
(2) Whether PASAKA is a labor-only
contractor.
(3) Whether the respondents were
illegally dismissed by Norkis Trading
RULING:
Factual findings of labor officials
may be examined by the courts when there
is a showing that they were arrived at
arbitrarily or in disregard of evidence on
record. Nonetheless, these findings are not
infallible. When there is a showing that they
were arrived at arbitrarily or in disregard of
the evidence on record, they may be
examined by the courts. The CA can then
grant a petition for certiorari if it finds that
the NLRC, in its assailed decision or
resolution, has made a factual finding that is
not supported by substantial evidence. It is
within the jurisdiction of the CA, whose
jurisdiction over labor cases has been
expanded to review the findings of the NLRC.
47 This case falls within the exception to the
general rule that findings of fact of labor
officials are to be accorded respect and
finality on appeal.
Norkis Trading is the principal
employer of the respondents, considering
that PASAKA is a mere labor-only
contractor. Labor-only contracting, a
215
prohibited act, is an arrangement where the
contractor or subcontractor merely recruits,
supplies, or places workers to perform a job,
work, or service for a principal. In labor-only
contracting, the following elements are
present: (a) the contractor or subcontractor
does not have substantial capital or
investment to actually perform the job,
work, or service under its own account and
responsibility; and (b) the employees
recruited, supplied or placed by such
contractor or subcontractor perform
activities which are directly related to the
main business of the principal. These
differentiate it from
permissible or legitimate job contracting or
subcontracting, which refers to an
arrangement whereby a principal agrees to
put out or farm out with the contractor or
subcontractor the performance or
completion of a specific job, work, or service
within a definite or predetermined period,
regardless of whether such job, work, or
service is to be performed or completed
within or outside the premises of the
principal. A person is considered engaged in
legitimate job contracting or subcontracting
if the following conditions concur: (a) the
contractor carries on a distinct and
independent business and partakes the
contract work
on his account under his own responsibility
according to his own manner and method,
free from the control and direction of his
employer or principal in all matters
connected with the performance of his work
except as to the results thereof; (b) the
contractor has substantial capital or
investment; and (c) the agreement between
the principal and the contractor or
subcontractor assures the contractual
employees’ entitlement to all labor and
occupational safety and health standards,
free exercise of the right to self-organization,
security of tenure, and social welfare
benefits. 49 SC emphasized that the
petitioner’s arguments against the
respondents’ claim that PASAKA is a labor-
only contractor, which is thus to be regarded

as a mere agent of Norkis Trading for which
the respondents rendered service, are
already
mooted by the finality of this SC’s
Resolutions in G.R. Nos. 180078-79, which
stems from the CA’s and the DOLE
Secretary’s review of the DOLE Regional
Director’s Order dated August 22, 2000 in
LSED Case No. RO700-9906-CI-CS-168.
Applying the doctrine of res judicata, all
matters that have been fully resolved with
finality by this Court’s dismissal of the appeal
that stemmed from Regional Director
Balanag’s Order in LSED Case No. RO700-
9906-CI-CS-168 are already
conclusive between the parties. The rule on
conclusiveness of judgment then now
precludes this Court from re-opening the
issues that were already settled with finality
in G.R. Nos. 180078-79, which effectively
affirmed the CA’s findings that PASAKA was
engaged in labor-only contracting, and that
Norkis Trading shall be treated as the
employer of the respondents.
Termination of an employment for
no just or authorized cause amounts to an
illegal dismissal. Where an entity is declared
to be a labor-only contractor, the employees
supplied by said contractor to the principal
employer become regular employees of the
latter. Having gained regular status, the
employees are entitled to security of tenure
and can only be
dismissed for just or authorized causes and
after they had been afforded due process. 66
Termination of employment without just or
authorized cause and without observing
procedural due process is illegal.
In claiming that they were illegally
dismissed from their employment, the
respondents alleged having been informed
by PASAKA that they would be transferred,
upon the behest of Norkis Trading, as
Multicab washers or utility workers to Porta
Coeli, a sister company of Norkis Trading.
Norkis. Where labor-only contracting exists,
the Labor Code itself establishes an
employer-employee relationship between
the employer and the employees of the
216
labor-only contractor. The statute
establishes this relationship for a
comprehensive purpose: to prevent a
circumvention of labor laws. The contractor
is considered merely an agent of the
principal employer and the latter is
responsible to the employees of the labor-
only
contractor as if such employees had been
directly employed by the principal employer.
149 EQUITABLE BANKING CORPORATION
(EQUITABLE PCI BANK) vs RICARDO SADAC
FACTS:
Sadac was appointed Vice President
of the Legal Department of PCI Bank and
subsequently General Counsel thereof. Nine
lawyers of PCI Banks Legal Department,
accused
Sadac of abusive conduct, inter alia, and
ultimately, petitioned for a change in
leadership of the
department. On the ground of lack of
confidence in Sadac, under the rules of client
and lawyer
relationship, PCI Bank instructed Sadac to
deliver all materials in his custody in all cases
in
which the latter was appearing as its counsel
of record. In reaction thereto, Sadac
requested for
a full hearing and formal investigation but
the same remained unheeded. Sadac filed a
complaint for illegal dismissal with damages
against PCI Bank and individual members of
the
Board of Directors thereof. After learning of
the filing of the complaint, PCI Bank
terminated the
services of Sadac. Finally, Sadac was
removed from his office and ordered
disentitled to any
compensation and other benefits. In this
case, the SC already decided that Sadacs
dismissal was
not grounded on any of the causes stated in
Article 282 of the Labor Code and that PCI
 217

Bank differentials is not allowed, the established

disregarded the procedural requirements in rule being
terminating respondent Sadacs that upon reinstatement, illegally dismissed
employment, thus employees are to be paid their backwages
Sadac was entitled to backwages from without
termination of employment until turning deduction and qualification as to any wage
sixty (60) years increases or other benefits that may have
of age (in 1995 ) xxx. However, in Sadacs been
computation, the total amount of the received by their co-workers who were not
monetary award dismissed or did not go on strike.
is P6,030,456.59, representing his
backwages and other benefits, including the ISSUE:
general Whether general salary increases
increases which he should have earned should be included in the base figure to be
during the period of his illegal termination. used in the
According to computation of backwages.
Sadac, the catena of cases uniformly holds
that it is the obligation of the employer to HELD:
pay an NO. Backwages in general are
illegally dismissed employee the whole granted on grounds of equity for earnings
amount of the salaries or wages, plus all which a worker
other benefits or employee has lost due to his illegal
and bonuses and general increases to which dismissal. [37] It is not private compensation
he would have been normally entitled had or damages
he not but is awarded in furtherance and
been dismissed; and therefore, salary effectuation of the public objective of the
increases should be deemed a component in Labor Code. Nor is
the it a redress of a private right but rather in the
computation of backwages. Moreover, nature of a command to the employer to
Sadac contended that his checkup benefit, make
clothing public reparation for dismissing an employee
allowance, and cash conversion of vacation either due to the formers unlawful act or bad
leaves must be included in the computation faith. Article 279 mandates that an
of his employees full backwages shall be inclusive
backwages. PCI Bank disputed respondent of allowances
Sadacs computation. Per its computation, and other benefits or their monetary
the equivalent. Contrary to the ruling of the
amount of monetary award due respondent Court of Appeals,
Sadac is P2,981,442.98 only, to the exclu sion we do not see that a salary increase can be
of the latters general salary increases and interpreted as either an allowance or a
other claimed benefits which, it maintained, benefit.
were Salary increases are not akin to allowances
unsubstantiated, that an unqualified award or benefits, and cannot be confused with
of backwages means that the employee is either. The
paid at term allowances is sometimes used
the wage rate at the time of his dismissal. synonymously with emoluments, as indirect
Furthermore, petitioner Bank argued before or contingent
the remuneration, which may or may not be
Labor Arbiter that the award of salary earned, but which is sometimes in the nature

of
compensation, and sometimes in the nature
of reimbursement. [47]Allowances and
benefits
are granted to the employee apart or
separate from, and in addition to the wage
or salary. In
contrast, salary increases are amounts which
are added to the employees salary as an
increment thereto for varied reasons
deemed appropriate by the employer. Salary
increases
are not separate grants by themselves but
once granted, they are deemed part of the
employees salary. To extend the coverage of
an allowance or a benefit to include salary
increases would be to strain both the
imagination of the Court and the language of
law. As aptly
observed by the NLRC, to otherwise give the
meaning other than what the law speaks for
by
itself, will open the floodgates to various
interpretations.[48] Indeed, if the intent
were to
include salary increases as basis in the
computation of backwages, the same should
have been
explicitly stated in the same manner that the
law used clear and unambiguous terms in
expressly providing for the inclusion of
allowances and other benefits.
150 Timoteo H. Sarona v. NLRC
FACTS:
The petitioner, who was hired by
Sceptre as a security guard, was asked by
Karen Therese Tan, Sceptre's Operations
Manager, to submit a resignation letter as
the same was supposedly required for
applying for a position at Royale.
Martin informed him that he would
no longer be given any assignment per the
instructions of Aida Sabalones-Tan, general
manager of Sceptre. This prompted him
to file a complaint for illegal dismissal. While
complainant is entitled to backwages, we are
218
aware that his stint with respondent Royale
lasted only for one (1) month and three (3)
days such that it is our considered view that
his backwages should be limited to only
three (3) months. The petitioner does not
deny that he has received the full amount of
his backwages and separation pay as
provided under the NLRC's November 2005
Decision. However, he claims that this does
not preclude this Court from modifying a
decision that is tainted with grave abuse of
discretion or issued without jurisdiction.
ISSUE:
Whether the petitioner's backwages
should be limited to his salary for three (3)
months
RULING:
No. In case separation pay is awarded
and reinstatement is no longer feasible,
backwages shall be computed from the time
of illegal dismissal up to the finality of the
decision should separation pay not be paid in
the meantime. It is the employee's actual
receipt of the full amount of his separation
pay that will effectively terminate the
employment of an illegaly dismissed
employee. Otherwise, the employer-
employee relationship subsists and
the illegally dismissed employee is entitled
to backwages, taking into account the
increases and other benefits, including the
13th month pay, that were received by his co-
employees who are not dismissed. It is the
obligation of the employer to pay
an illegallydismissed employee or worker
the whole amount of the salaries or wages,
plus all other benefits and bonuses and
general increases, to which he would have
been normally entitled had he not been
dismissed and had not stopped working.
151 ROBINSONS GALLERIA/ROBINSONS
SUPERMARKET CORPORATION and/or JESS

MANUEL, petitioners, vs. IRENE R.
RANCHEZ, respondents.
FACTS:
Respondent Ranchez was a
probationary employee for 5 months. She
was hired as a cashier by Robinsons
sometime within that period. Two weeks
after she was hired, she reported the loss of
cash which she had placed in the company
locker. She offered to pay for the lost
amount but the Operations Manager of
Robinsons had her strip-searched then
reported her to the police even though they
found nothing on her person. An information
for Qualified Theft was filed with the Quezon
City Regional Trial Court. She was detained
for 2 weeks for failure to immediately post
bail. Weeks later, respondent Ranchez filed
a complaint for illegal dismissal and
damages. A year later, Robinsons sent to
respondent by mail a notice of termination
and/or notice of expiration of probationary
employment.
The Labor Arbiter dismissed the
complaint for illegal dismissal, alleging that
at the time of filing respondent Ranchez had
not yet been terminated. She was merely
investigated. However, the NLRC reversed
this ruling, stating that Ranchez was illegally
dismissed and that Robinson's should
reinstate her. It held that Ranchez was
deprived of due process when she was strip-
searched and sent to jail for two weeks
because such amounted to constructive
dismissal, making it impossible for the
respondent to continue under the
employment. Even though she was merely a
probationary employee, the lapse of the
probationary contract did not amount to a
valid dismissal because there was already an
unwarranted constructive dismissal
beforehand.
The NLRC denied Robinson's motion
for reconsideration. The CA affirmed the
decision of the NLRC.
219
ISSUE:
Whether respondent was
illegally terminated from
employment by petitioners.
HELD:
The petition is unmeritorious.
LABOR LAW: Probationary
employees; termination of employment
There is probationary employment
when the employee upon his engagement is
made to undergo a trial period during which
the employer determines his fitness to
qualify for regular employment based on
reasonable standards made known to him at
the time of engagement.
A probationary employee, like a
regular employee, enjoys security of
tenure.However, in cases of probationary
employment, aside from just or authorized
causes of termination, an additional ground
is provided under Article 281 of the Labor
Code,i.e., the probationary employee may
also be terminated for failure to qualify as a
regular employee in accordance with
reasonable standards made known by the
employer to the employee at the time of the
engagement.Thus, the services of an
employee who has been engaged on
probationary basis may be terminated for
any of the following:
(1) a just or
(2) an authorized cause; and
(3) when he fails to qualify as a
regular employee in accordance with
reasonable standards prescribed by the
employer.
Article 277(b) of the Labor Code
mandates that the employer shall furnish the
worker, whose employment is sought to be
terminated, a written notice containing a
statement of the causes of termination, and
shall afford the latter ample opportunity to
be heard and to defend himself with the
assistance of a representative if he so
desires, in accordance with company rules
and regulations pursuant to the guidelines
set by the Department of Labor and
Employment.

In the instant case, based on the facts
on record, petitioners failed to accord
respondent substantive and procedural due
process.The haphazard manner in the
investigation of the missing cash, which was
left to the determination of the police
authorities and the Prosecutor's Office, left
respondent with no choice but to cry
foul.Administrative investigation was not
conducted by petitioner Supermarket.On
the same day that the missing money was
reported by respondent to her immediate
superior, the company already pre-judged
her guilt without proper investigation, and
instantly reported her to the police as the
suspected thief, which resulted in her
languishing in jail for two weeks.
The due process requirements under
the Labor Code are mandatory and may not
be replaced with police investigation or
court proceedings. An illegally or
constructively dismissed employee,
respondent is entitled to: (1) either
reinstatement, if viable, or separation pay, if
reinstatement is no longer viable; and (2)
backwages. These two reliefs are separate
and distinct from each other and are
awarded conjunctively.
In this case, since respondent was a
probationary employee at the time she was
constructively dismissed by petitioners, she
is entitled to separation pay and backwages.
Reinstatement of respondent is no longer
viable considering the circumstances.
DENIED
152 BERNADETH LONDONIO AND JOAN
CORCORO v. BIO RESEARCH, INC. AND
WILSON Y. ANG
FACTS:
Petitioners were employees of
respondent Bio Research. They were
subsequently dismissed from employment.
Bio Research claims that due to financial
difficulties, it was forced to retrench
petitioners in a move towards financial
efficiency. Petitioners were made to execute
220
a quitclaim as they were given their
separation pay. Petitioners still pursued a
complaint with the Labor Arbiter for illegal
dismissal. They also claim that the illegal
dismissal was done as retaliation for a sexual
harassment complaint they filed against one
of the company managers. The Labor Arbiter
found the dismissal to be illegal as the
financial difficulties of Bio Research were
unproven, and that no criteria was
established in selecting the employees to be
let go. The LA ordered for payment of
backwages and reinstatement, as well as the
subsidiary liability of respondent Ang, for
having acted in bad faith. The NLRC, on
appeal, affirmed the findings of the LA. Upon
appeal to the Court of Appeals, the appellate
court affirmed the finding of illegal dismissal,
but upheld the quitclaim executed by the
petitioners. In addition, the CA found that
since there was no proof of bad faith on the
part of Respondent Ang, he should not be
held subsidiarily liable. Petitioners question
these findings in the Supreme Court.
ISSUES:
Is the quitclaim is valid?
Is Respondent Ang subsidiarily liable
to petitioners?
HELD:
A quitclaim does not prevent an
illegally dismissed employee from instituting
an illegal dismissal case. And since the CA
affirmed the findings of illegal dismissal, Bio
Research is indeed liable. Petitioners are
ordered reinstated, with payment of
backwages. If not possible, then a payment
of separation pay of one-half month salary
for every year served.
The acts of corporate officers, done
in behalf of the corporation, are separate
from their personal acts. Absent a showing
of bad faith, the ruling of the CA is proper.
Respondent Ang should not have been held
liable for the corporate acts.

153 APO CHEMICAL MANUFACTURING
CORPORATION and MICHAEL CHENG,
Petitioners, v. RONALDO A. BIDES,
Respondent.
FACTS:
Ronaldo Bides (Bides) was an
employee of Apo Chemical Manufacturing
Corporation (ACMC) for eleven (11) years.
Matthew Cheng (Matthew), the plant
manager of ACMC, sent a written
memorandum requiring Bides to explain his
refusal to sign the disciplinary form in
connection with his alleged infractions of
loitering in the comfort room for about five
(5) to eight (8) minutes, two (2) to three (3)
times a day, on March 5, 6, 7, 8, 9 and 10,
2003 under pain of revocation of his housing
privileges. Bides explained that urinating, as
he was “nababalisawsaw” at the time, was
not an infraction.
Allegedly, Matthew confronted Bides
and prohibited him from working the
following day as he would be terminated
from the ACMC. Thus, Bides filed a complaint
for illegal dismissal against ACMC.
The LA ruled that Bides was illegally
dismissed. The NLRC reversed the LA’s
decision. The CA affirmed with modification
the NLRC’s decision. The CA ruled that there
was no illegal dismissal but ordered ACMC to
pay Bides separation pay in lieu of
reinstatement, taking into account the
strained relations between the parties.
ISSUE:
Whether strained relations exist
between ACMC and Bides to bar the latter’s
reinstatement and justify the award of
separation pay?
HELD:
The Court finds no merit in the
petition.
LABOR LAW: doctrine of strained
relations
The Court is well aware that
reinstatement is the rule and, for the
exception of “strained relations” to apply, it
221
should be proved that it is likely that, if
reinstated, an atmosphere of antipathy and
antagonism would be generated as to
adversely affect the efficiency and
productivity of the employee concerned.
Under the doctrine of strained
relations, the payment of separation pay is
considered an acceptable alternative to
reinstatement when the latter option is no
longer desirable or viable. On one hand, such
payment liberates the employee from what
could be a highly oppressive work
environment. On the other hand, it releases
the employer from the grossly unpalatable
obligation of maintaining in its employ a
worker it could no longer trust. Moreover,
the doctrine of strained relations has been
made applicable to cases where the
employee decides not to be reinstated and
demands for separation pay.
In the present case, Bides has
consistently maintained, from the
proceedings in the LA up to the CA, his
refusal to be reinstated due to his fear of
reprisal which he could experience as a
consequence of his return. By doing so, Bides
unequivocally foreclosed reinstatement as a
relief. DENIED.
154 WENPHIL CORPORATION, vs. NLRC
AND ROBERTO MALLARE
FACTS:
Mallare was hired by petitioner as a
crew member at its Cubao Branch. He
thereafter
became the assistant head of the Backroom
department of the same bran ch. Private
respondent had an altercation with a co-
employee, Job Barrameda, as a result of
which he and
Barrameda were suspended on the following
morning and in the afternoon of the same
day a
memorandum was issued by the Operations
Manager advising private respondent of his
dismissal from the service in accordance
with their Personnel Manual, prompting
private
respondent to file a complaint against

petitioner for unfair labor practice, illegal
suspension and
illegal dismissal.
ISSUE:
WON Mallare was afforded with due
process.
HELD:
NO. Under Section 1, Rule XIV of the
Implementing Regulations of the Labor
Code, it is
provided that "No worker shall be dismissed
except for just or authorized cause provided
by
law and after due process." Sections 2, 5, 6,
and 7 of the same rules require that before
an
employer may dismiss an employee the
latter must be given a written notice stating
the
particular act or omission constituting the
grounds thereof; that the employee may
answer the
allegations within a reasonable period; that
the employer shall afford him ample
opportunity to
be heard and to defend himself with the
assistance of his representative, if he so
desires; and
that it is only then that the employer may
dismiss the employee by notifying him of the
decision
in writing stating clearly the reasons
therefor. Such dismissal is without prejudice
to the right of
the employee to contest its validity in the
Regional Branch of the NLRC.
The failure of petitioner to give
private respondent the benefit of a hearing
before he
was dismissed constitutes an infringement
of his constitutional right to due process of
law and
equal protection of the laws. The standards
of due process in judicial as well as
administrative
proceedings have long been established. In
its bare minimum due process of law simply
222
means
giving notice and opportunity to be heard
before judgment is rendered. Hence, since
Petitioner
committed an infraction of the second
requirement. Thus, it must be imposed a
sanction for its
failure to give a formal notice and conduct an
investigation as required by law before
dismissing
petitioner from employment.
155 RUBEN SERRANO vs.NLRC and
ISETANN DEPARTMENT STORE
FACTS:
Serrano was hired by Isetann
Department Store as a security checker to
apprehend
shoplifters and prevent pilferage of
merchandise. Initially hired on contractual
basis and
eventually became a regular employee He
later became head of the Security Checkers
Section
of private respondent. As a cost-cutting
measure, private respondent decided to
phase out its
entire security section and engage the
services of an independent security agency.
For this
reason, the company sent Serrano of a
verbal notice of its termination In view of the
retrenchment program of the company. The
loss of his employment prompted petitioner
to file
complaint for illegal dismissal, illegal layoff,
unfair labor practice, underpayment of
wages, and
non-payment of salary and overtime pay.
The Labor Arbiter rendered a
decision finding petitioner to have been
illegally dismissed.
He ruled that private respondent failed to
establish that it had retrenched its security
section to
prevent or minimize losses to its business;
that private respondent failed to accord due

process
to petitioner; that private respondent failed
to use reasonable standards in selecting
employees
whose employment would be terminated;
that private respondent had not shown that
petitioner and other employees in the
security section were so inefficient so as to
justify their
replacement by a security agency, or that
"cost-saving devices [such as] secret video
cameras
(to monitor and prevent shoplifting) and
secret code tags on the merchandise" could
not have
been employed; instead, the day after
petitioner's dismissal, private respondent
employed a checkers of the wage increases provided in
safety and security supervisor with duties
and functions similar to those of petitioner.
Private respondent appealed to the NLRC
which, in its resolution of March 30, 1994;
reversed the decision of the Labor Arbiter
and ordered petitioner to be given
separation pay
equivalent to one month pay for every year
of service, unpaid salary, and proportionate
13th
month pay. Petitioner contends that
abolition of private respondent's Security
Checkers Section
and the employment of an independent
security agency do not fall under any of the
authorized
causes for dismissal under Art. 283 of the
Labor Code.
ISSUE:
WON the dismissal was for an
authorized cause.
HELD:
YES. The "[management of a
company] cannot be denied the faculty of
promoting
efficiency and attaining economy by a study
of what units are essential for its operation.
To it
belongs the ultimate determination of
223
whether services should be performed by its
personnel
or contracted to outside agencies . . . [While
there] should be mutual consultation,
eventually
deference is to be paid to what management
decides." Consequently, absent proof that
management acted in a malicious or
arbitrary manner, the Court will not interfere
with the
exercise of judgment by an employer.
In the case at bar, we have only the
bare assertion of petitioner that, in
abolishing the
security section, private respondent's real
purpose was to avoid payment to the
security
the collective bargaining agreement
approved in
1990. Such an assertion is not sufficient basis
for concluding that the termination of
petitioner's
employment was not a bona fide decision of
management to obtain reasonable return
from its
investment, which is a right guaranteed to
employers under the Constitution. Indeed,
that the
phase-out of the security section constituted
a "legitimate business decision" is a factual
finding
of an administrative agency which must be
accorded respect and even finality by this
Court
since nothing can be found in the record
which fairly detracts from such finding.
Accordingly, the termination of petitioner's
services was for an authorized cause, i.e.,
redundancy.
Hence, pursuant to Art. 283 of the
Labor Code, petitioner should be given
separation
pay at the rate of one month pay for every
year of service.
ISSUE:
WON the employer's failure to
comply with the notice requirement
 224

constitute a denial in the letter of an attorney has no legal

of due process. effect, and the vendee can make payment
even after
HELD: the due date since no valid notice of
NO. Art. 283 also provides that to rescission has been given.
terminate the employment of an employee Indeed, under the Labor Code, only
for any of the absence of a just cause for the
the authorized causes the employer must termination of
serve "a written notice on the workers and employment can make the dismissal of an
the employee illegal, that if in proceedings for
Department of Labor and Employment at reinstatement under Art. 283, it is shown
least one (1) month before the intended that the termination of employment was
date due to an
thereof." In the case at bar, petitioner was authorized cause, then the employee
given a notice of termination on October 11, concerned should not be ordered reinstated
1991. even though
On the same day, his services were there is failure to comply with the 30-day
terminated. He was thus denied his right to notice requirement. Instead, he must be
be given written granted
notice before the termination of his separation pay in accordance with Art. 283.
employment, and the question is the If the employee's separation is
appropriate sanction without cause, instead of being given
for the violation of petitioner's right. separation pay, he
The employer's failure to comply should be reinstated. In either case, whether
with the notice requirement does not he is reinstated or only granted separation
constitute a pay, he
denial of due process but a mere failure to should be paid full backwages if he has been
observe a procedure for the termination of laid off without written notice at least 30
employment which makes the termination days in
of employment merely ineffectual. It is advance.
similar to the On the other hand, with respect to
failure to observe the provisions of Art. dismissals for cause under Art. 282, if it is
1592, in relation to Art. 1191, of the Civil shown that
Code in the employee was dismissed for any of the
rescinding a contract for the sale of just causes mentioned in said Art. 282, then,
immovable property. Under these in
provisions, while the accordance with that article, he should not
power of a party to rescind a contract is be reinstated. However, he must be paid
implied in reciprocal obligations, backwages
nonetheless, in cases from the time his employment was
involving the sale of immovable property, terminated until it is determined that the
the vendor cannot exercise this power even termination of
though employment is for a just cause because the
the vendee defaults in the payment of the failure to hear him before he is dismissed
price, except by bringing an action in court or renders
giving the termination of his employment without
notice of rescission by means of a notarial legal effect.
demand. Consequently, a notice of
rescission given

156 JENNY M. AGABON and VIRGILIO C.
AGABON,vs NLRC & RIVIERA HOME
IMPROVEMENTS, INC.
FACTS:
Riviera Home Improvements, Inc.
employed petitioners Virgilio Agabon and
Jenny
Agabon as gypsum board and cornice
installers until they were dismissed for
abandonment of
work. Petitioners assert that they were
dismissed because the private respondent
refused to
give them assignments unless they agreed to
work on a pakyaw basis. They did not agree
on
this arrangement because it would mean
losing benefits as Social Security System
(SSS)
members. Petitioners also claim that private
respondent did not comply with the twin
requirements of notice and hearing. Private
respondent, on the other hand, maintained
that
petitioners were not dismissed but had
abandoned their work. In fact, private
respondent sent
two letters to the last known addresses of
the petitioners advising them to report for
work.
Private respondents manager even talked to
petitioner Virgilio Agabon by telephone
sometime
in June 1999 to tell him about the new
assignment at Pacific Plaza Towers involving
40,000
square meters of cornice installation work.
However, petitioners did not report for work
because they had subcontracted to perform
installation work for another company.
ISSUE:
WON the procedure for dismissal
were observed
HELD:
The procedure for terminating an
employee is found in Book VI, Rule I, Section
225
2(d) of
the Omnibus Rules Implementing the Labor
Code:
Standards of due process:
requirements of notice. In all cases of
termination of
employment, the following standards of due
process shall be substantially observed:
I. For termination of employment based on
just causes as defined in Article 282 of the
Code:
(a) A written notice served on the
employee specifying the ground or grounds
for
termination, and giving to said employee
reasonable opportunity within which to
explain h is
side;
(b) A hearing or conference during
which the employee concerned, with the
assistance
of counsel if the employee so desires, is
given opportunity to respond to the charge,
present his
evidence or rebut the evidence presented
against him; and
(c) A written notice of termination
served on the employee indicating that upon
due
consideration of all the circumstances,
grounds have been established to justify his
termination.
In case of termination, the foregoing notices
shall be served on the employees l ast
known address.
In this case, the dismissal should be
upheld because it was established that the
petitioners abandoned their jobs to work for
another company, a just cause under Art.
282.
Private respondent, however, did not follow
the notice requirements and instead argued
that
sending notices to the last known addresses
would have been useless because they did
not
reside there anymore. Unfortunately for the
private respondent, this is not a valid excuse
because the law mandates the twin notice

requirements to the employees last known
address.
Thus, it should be held liable for non-
compliance with the procedural
requirements of due
process.
The violation of petitioners right to
statutory due process by the private
respondent
warrants the payment of indemnity in the
form of nominal damages. The amount of
such
damages is addressed to the sound
discretion of the court, taking into account
the relevant
circumstances.
157 JAKA FOOD PROCESSING
CORPORATION vs. DARWIN PACOT, et.al
FACTS:
Respondents were earlier hired by JAKA
Foods Processing Corporation until the latter
terminated their employment because the
corporation was in dire financial straits. It is
not
disputed, however, that the termination was
effected without JAKA complying with the
requirement under Article 283 of the Labor
Code regarding the service of a written
notice upon
the employees and the Department of Labor
and Employment at least one (1) month
before
the intended date of termination.
Respondents separately filed complaints for
illegal dismissal
wherein after due proceedings, the Labor
Arbiter rendered a decision declaring the
termination
illegal and ordering JAKA and its HRD
Manager to reinstate respondents with full
backwages,
and separation pay if reinstatement is not
possible.
ISSUE:
226
What are the legal implications of a
situation where an empl oyee is dismissed
for cause
but such dismissal was effected without the
employers compliance with the notice
requirement
under the Labor Code.
HELD:
A dismissal for just cause under
Article 282 implies that the employee
concerned has
committed, or is guilty of, some violation
against the employer, i.e. the employee has
committed some serious misconduct, is
guilty of some fraud against the employer,
or, as in
Agabon, he has neglected his duties. Thus, it
can be said that the employee himself
initiated the
dismissal process.
On another breath, a dismissal for an
authorized cause under Article 283 does not
necessarily imply delinquency or culpability
on the part of the employee. Instead, the
dismissal
process is initiated by the employers
exercise of his management prerogative, i.e.
when the
employer opts to install labor saving devices,
when he decides to cease business
operations or
when, as in this case, he undertakes to
implement a retrenchment program.
In dismissal for just cause under Article 282,
the payment of separation pay, as a rule, is
not required and a dismissal for authorized
cause under Article 283, the law requires
payment
of separation pay.
Accordingly, it is wise to hold that: (1)
if the dismissal is based on a just cause under
Article 282 but the employer failed to
comply with the notice requirement, the
sanction to be
imposed upon him should be tempered
because the dismissal process was, in effect,

initiated
by an act imputable to the employee; and (2)
if the dismissal is based on an authorized
cause
under Article 283 but the employer failed to
comply with the notice requirement, the
sanction
should be stiffer because the dismissal
process was initiated by the employers
exercise of his
management prerogative.
In this case, JAKA was suffering from
serious business losses at the time it
terminated
respondents employment. It is, therefore,
established that there was ground for
respondents
dismissal, i.e., retrenchment, which is one of
the authorized causes enumerated under
Article
283 of the Labor Code. Likewise, it is
established that JAKA failed to comply with
the notice
requirement under the same Article.
Considering the factual circumstances in the
instant case
and the above ratiocination, we, therefore,
deem it proper to fix the indemnity at
P50,000.00.
In all cases of business closure or cessation
of operation or undertaking of the employer,
the
affected employee is entitled to separation
pay. This is consistent with the state policy of
treating labor as a primary social economic
force, affording full protection to its rights as
well as
its welfare. The exception is when the
closure of business or cessation of
operations is due to
serious business losses or financial
reverses; duly proved, in which case, the
right of affected
employees to separation pay is lost for
obvious reasons.
227
158 NELSON A. CULILI, Petitioner, v.
EASTERN TELECOMMUNICATIONS
PHILIPPINES, INC., SALVADOR HIZON
(President and Chief Executive Officer),
EMILIANO JURADO (Chairman of the
Board), VIRGILIO GARCIA (Vice President)
and STELLA GARCIA (Assistant Vice
President), Respondents.
FACTS:
Respondent Eastern
Telecommunications Philippines, Inc. (ETPI)
is a telecommunications company engaged
mainly in the business of establishing
commercial telecommunications systems
and leasing of international datalines or
circuits that pass through the international
gateway facility (IGF). The other respondents
are ETPIs officers.
Petitioner Nelson A. Culili was
employed by ETPI as a Technician in its Field
Operations Department in 1981. In 1996,
Culili was promoted to Senior Technician in
the Customer Premises Equipment
Management Unit of the Service Quality
Department.
As a telecommunications company
and an authorized IGF operator, ETPI was
required, under RA No. 7925 and EO No. 109,
to establish landlines in Metro Manila and
certain provinces. However, due to
interconnection problems with the PLDT,
poor subscription and cancellation of
subscriptions, and other business difficulties,
ETPI was forced to halt its roll out of 129,000
landlines already allocated to a number of its
employees.
In 1998, due to business troubles and
losses, ETPI was compelled to implement a
Right-Sizing Program which consisted of two
phases: the first phase involved the
reduction of ETPIs workforce to only those
employees that were necessary and which
ETPI could sustain; the second phase
entailed a company-wide reorganization
which would result in the transfer, merger,

absorption or abolition of certain
departments of ETPI.
As part of the first phase, ETPI
offered to its employees who had rendered
at least fifteen years of service, the Special
Retirement Program, which consisted of the
option to voluntarily retire at an earlier age
and a retirement package equivalent to two
and a half (2) months salary for every year of
service. This offer was initially rejected by
the Eastern Telecommunications Employees
Union (ETEU), ETPIs duly recognized
bargaining agent, which threatened to stage
a strike. ETPI explained to ETEU the exact
details of the Right-Sizing Program and the
Special Retirement Program and after
consultations with ETEUs members, ETEU
agreed to the implementation of both
programs. Thus, ETPI re-offered the Special
Retirement Program and the corresponding
retirement package to the one hundred two
(102) employees who qualified for the
program. Of all the employees who qualified
to avail of the program, only Culili rejected
the offer.
Among the departments abolished
was the Service Quality Department. The
functions of the Customer Premises
Equipment Management Unit, Culilis unit,
were absorbed by the Business and
Consumer Accounts Department. As a result,
Culilis position was abolished due to
redundancy and his functions were absorbed
by the Business and Consumer Accounts
Department.
ETPI, through its Assistant Vice
President Stella Garcia, informed Culili of his
termination from employment effective
April 8, 1999.
Culili alleged that neither he nor the
DOLE were formally notified of his
termination. Culili believed that ETPI had
already decided to dismiss him even prior to
the March 8, 1999 letter. Moreover, Culili
asserted that ETPI had contracted out the
services he used to perform to a labor-only
contractor which not only proved that his
functions had not become unnecessary, but
which also violated their Collective
228
Bargaining Agreement (CBA) and the Labor
Code. Aside from these, Culili also alleged
that he was discriminated against when ETPI
offered some of his co-employees an
additional benefit in the form of motorcycles
to induce them to avail of the Special
Retirement Program, while he was not.
ETPI denied singling Culili out for
termination. ETPI claimed that because
there was no more work for Culili, it was
constrained to serve a final notice of
termination to Culili, which Culili ignored.
Thus, on March 26, 1999, ETPI tendered to
Culili his final pay check of P859,033.99
consisting of his basic salary, leaves, 13th
month pay and separation pay. ETPI claimed
that Culili refused to accept his termination
and continued to report for work.
Culili filed a complaint against ETPI
and its officers for illegal dismissal, unfair
labor practice, and money claims before the
Labor Arbiter.
The Labor Arbiter found ETPI guilty of
illegal dismissal and unfair labor practice.
On appeal, the NLRC affirmed the
Labor Arbiters decision but modified the
amount of moral and exemplary damages
awarded.
The Court of Appeals found that
Culilis position was validly abolished due to
redundancy. It further held that ETPI cannot
be held guilty of unfair labor practice as mere
contracting out of services being performed
by union members does not per se amount
to unfair labor practice unless it interferes
with the employees right to self-
organization. Hence, this petition.
ISSUE:
Whether or not Culili is illegally
dismissed.
HELD:
The decision of the Court of Appeals
is sustained.
LABOR LAW
There is redundancy when the
service capability of the workforce is greater
than what is reasonably required to meet the

demands of the business enterprise. A
position becomes redundant when it is
rendered superfluous by any number of
factors such as over-hiring of workers,
decrease in volume of business, or dropping
a particular product line or service activity
previously manufactured or undertaken by
the enterprise. Soriano, Jr. v. NLRC, G.R. No.
165594, April 23, 2007
This Court also held that the
following evidence may be proffered to
substantiate redundancy: the new staffing
pattern, feasibility studies/ proposal on the
viability of the newly created positions, job
description and the approval by the
management of the restructuring.
In the case at bar, ETPI was upfront
with its employees about its plan to
implement a Right-Sizing Program. Even in
the face of initial opposition from and
rejection of the said program by ETEU, ETPI
patiently negotiated with ETEUs officers to
make them understand ETPIs business
dilemma and its need to reduce its
workforce and streamline its organization.
This evidently rules out bad faith on the part
of ETPI.
The records show that ETPI had
sufficiently established not only its need to
reduce its workforce and streamline its
organization, but also the existence of
redundancy in the position of a Senior
Technician. ETPI explained how it failed to
meet its business targets and the factors that
caused this, and how this necessitated it to
reduce its workforce and streamline its
organization. ETPI also submitted its old and
new tables of organization and sufficiently
described how limited the functions of the
abolished position of a Senior Technician
were and how it decided on whom to absorb
these functions.
LABOR LAW
Although the Court finds Culilis
dismissal was for a lawful cause and not an
act of unfair labor practice, ETPI, however,
was remiss in its duty to observe procedural
due process in effecting the termination of
Culili.
229
For termination of employment as
defined in Article 283 of the Labor Code, the
requirement of due process shall be deemed
complied with upon service of a written
notice to the employee and the appropriate
Regional Office of the Department of Labor
and Employment at least thirty days before
effectivity of the termination, specifying the
ground or grounds for termination.
ETPI does not deny its failure to
provide DOLE with a written notice regarding
Culilis termination. It, however, insists that it
has complied with the requirement to serve
a written notice to Culili as evidenced by his
admission of having received it and
forwarding it to his union president.
The Court of Appeals, in finding that
Culili was not afforded procedural due
process, held that Culilis dismissal was
ineffectual, and required ETPI to pay Culili
full backwages in accordance with our
decision in Serrano v. NLRC, 387 Phil. 345
(2000).
Hence, since it has been established
that Culilis termination was due to an
authorized cause and cannot be considered
unfair labor practice on the part of ETPI, his
dismissal is valid. However, in view of ETPIs
failure to comply with the notice
requirements under the Labor Code, Culili is
entitled to nominal damages in addition to
his separation pay.
DENIED.
159 PHILIPPINE CHARITY SWEEPSTAKES
OFFICE BOARD OF DIRECTORS and
REYNALDO P. MARTIN v. MARIE JEAN C.
LAPID
FACTS:
An administrative complaint was
filed against the Respondent for allegedly
confronting, badmouthing and shouting
invectives at Mr. Guemo, in the presence of
other employees and seeking assistance
from the PSCO. The PCSO Board of Directors
found her guilty of discourtesy in the course
of official duties and grave misconduct and

imposed on her the penalty of dismissal from
service.
On appeal with the CSC, the
Commission dismissed the respondent’s
appeal for being moot and academic.
Moreover, they ruled that the respondent is
a casual employee which means that she is
not entitled to security of tenure. However,
the CA reversed the decision of the
Commission by reinstating the respondent in
the service until the expiration of her casual
employment.
ISSUE:
Did the CA gravely err in granting the
respondent’s petition, in effect, reversing
the CSC’s resolutions.
HELD:
A new ruling recognizes that casual
employees are covered by the security of
tenure and cannot be terminated within the
period of his employment except for cause.
Despite this new ruling, it is not the intention
of the Court to make the status of a casual
employee at par with that of a regular
employee, who enjoys permanence of
employment. The rule is still that casual
employment will cease automatically at the
end of the period unless renewed as stated
in the Plantilla of Casual Employment. Casual
employees may also be terminated anytime
though subject to certain conditions or
qualifications. Thus, they may be laid-off
anytime before the expiration of the
employment period provided any of the
following occurs:(1) when their services are
no longer needed; (2) funds are no longer
available; (3) the project has already been
completed/finished; or (4) their
performance are below par.
Equally important, they are entitled
to due process especially if they are to be
removed for more serious causes or for
causes other than the reasons mentioned in
CSC Form No. 001. The reason for this is that
their termination from the service could
carry a penalty affecting their rights and
future employment in the government.
230
In the case at bench, the CSC itself
found that Lapid was denied due process as
she was never formally charged with the
administrative offenses of Discourtesy in the
Course of Official Duties and Grave
Misconduct, for which she was dismissed
from the service. To somehow remedy the
situation, the petitioners mentioned in their
Memorandum before the CA that there was
no reason anymore to pursue the
administrative charge against Lapid and to
investigate further as this was superseded by
Memorandum dated September 14, 2005
recommending the termination of
respondent Lapid’s casual employment.
They pointed out that this was precisely the
reason why no Formal Charge was issued.
Clearly, the action of petitioners clearly
violated Lapid’s basic rights as a casual
employee.
Therefore, the petition is denied and
the respondent is allowed to continue
rendering services as teller of PCSO and is
also entitled to payment of backwages.
DENIED.
160 Concepcion vs. Minex Import Corp.,
G.R. No. 153569, January 24, 2012
Facts:
Respondent is engaged in the retail
of semi-precious stones, selling them in
kiosks or stalls installed in various shopping
centers. It employed the petitioner initially
as a salesgirl then later on as supervisor.
Working under her supervision were
salesgirls Cristina Calung and Lida Baquilar.
One day the petitioner and her
salesgirls had sales of crystal items totaling
P39,194.50. At the close of business that
day, they conducted a cashcount of their
sales proceeds, including those from the
previous two days and determined their
total for the three days to be P50,912.00.
The petitioner wrapped the amount in a
plastic bag and deposited it in the drawer of
the locked wooden cabinet of the kiosk.

The following day petitioner phoned
respondent Vina Mariano to report that the
P50,912.00 was missing, explaining how she
and her salesgirls had placed the wrapped
amount at the bottom of the cabinet the
night before, and how she had found upon
reporting to work that morning that the
contents of the cabinet were in disarray and
the money.
Later, while the petitioner was giving
a detailed statement on the theft to the
security investigator of Harrison Plaza, Vina
and Sylvia Mariano, her superiors, arrived
with a policeman who immediately placed
the petitioner under arrest and brought her
to a police station where she was
investigated her and detained for a day.
Subsequently petitioner filed a case
for illegal dismissal against respondent and
two days later respondent filed a criminal
case for qualified theft against petitioner.
The petitioner insisted on her innocence,
reiterating that on the time the alleged crime
took place she, together with her two
salesgirls, had first counted the cash before
placing it in a plastic bag that she deposited
inside the drawer of the cabinet with the
knowledge of the other salesgirls. One of the
salesgirls however averred that she had left
the petitioner alone because the latter had
still to change her clothes; and that that was
the first time that the petitioner had ever
asked to be left behind, for they had
previously left the kiosk together.
Respondent Vina declared that the
petitioner did not call the office of Minex for
the pick-up of the P39,194.50 cash sales on
that faithful day in violation of the standard
operating procedure (SOP) requiring cash
proceeds exceeding P10,000.00 to be
reported for pick-up if the amount could not
be
deposited in the bank. After the preliminary
investigation, the fiscal rendered a
resolution finding probable cause for
qualified theft and recommending the filing
of an information against the petitioner.
Thus, she was charged with qualified theft
before the Regional Trial Court.
231
The petitioner argued that there was
no evidence at all upon which Minex could
validly dismiss her considering that she had
not yet been found guilty beyond reasonable
doubt of the crime of qualified theft.
Issues:
Whether or not there was valid
ground to terminate the petitioner.
Ruling:
The petitioner’s argument is not
novel. It has been raised and rejected many
times before on the basis that neither
conviction beyond reasonable doubt for a
crime against the employer nor acquittal
after criminal prosecution was
indispensable. Nor was a formal charge in
court for the acts prejudicial to the interest
of the employer a pre-requisite for a valid
dismissal. The criminal charges initiated by
the company against private respondents
and the finding after preliminary
investigation of their prima facieguilt of the
offense charged constitute substantial
evidence ermination based on loss of trust
and confidence.
The Labor Tribunal need not have
gone further as to require private
respondent’s conviction of the crime
charged, or inferred innocence on their part
from their release from detention, which
was mainly due to their posting of bail. While
there is a valid ground to terminate
petitioner, respondent however failed to
comply with the requirements of due
process prior to the termination under the
implementing rules and regulations of the
Labor Code.
In all cases of termination of
employment, the following standards of due
process shall be substantially observed. For
termination of employment based on just
causes as defined in Article 282 of the Labor
Code:
(i) A written notice served on the
employee specifying the ground or grounds

for termination, and giving said employee
reasonable opportunity within which to
explain his side.
(ii) A hearing or conference during
which the employee concerned, with the
assistance of counsel if he so desires is given
opportunity to respond to the charge,
present his evidence, or rebut the evidence
presented against him.
(iii) A written notice of termination
served on the employee, indicating that
upon due consideration of all the
circumstances, grounds have been
established to justify his termination
In this case the respondents
immediately had her arrested and
investigated by the police authorities for
qualified theft which constitutes a denial of
her right to due process of law, consisting in
the opportunity to be heard and to defend
herself. In fact, their decision to dismiss her
was already final even before the police
authority commenced an investigation of
the theft, the finality being confirmed by no
less than Sylvia Mariano herself telling the
petitioner during their phone conversation
following the latter’s release from police
custody that she (Sylvia) “no longer wanted
to see” her.
The fact that the petitioner was the
only person suspected of being responsible
for the theft aggravated the denial of due
process.
161 Skippers United Pacific vs. Doza, G.R.
No. 175558, February 8, 2012
Facts:
Petitioner deployed De Gracia, Lata
and Aprosta to work on board the vessel MV
Wisdom Star. On December 3 1998, Skippers
alleges that De Garcia smelling strongly of
alcohol, went to the cabin of Gabriel Oleszek,
MV Wisdom Stars’ Master. Skippers claims
that he was rude and shouted noisily to the
232
master. De Gracia left the master’s cabin
after a few minutes and was heard shouting
very loudly somewhere down the corridors.
The incident was evidenced by the Captain’s
Report sent on said date.
Furthermore, Skippers also claim
that on January 22, 1999, Aprosta, De Gracia,
Lata and Daza arrived in the master’s cabin
and demanded immediate repatriation
because they were not satisfied with the
ship. De Gracia, et al. threatened that they
may become crazy any moment and
demanded for all outstanding payments due
to them. The incident is evidenced by a telex
of Cosmoship MV Wisdom to skippers but
had conflicting dates.
De Gracia claims that Skippers failed
to remit their respective allotments,
compelling them to vent their grievances
with the Romanian Seafarers Union. On
January 28, 1999, the Filipino seafarers were
unceremoniously discharged and
immediately repatriated. Upon arrival in the
Philippines, they filed a complaint for illegal
dismissal with the LA.
The LA dismissed the seafarers’
complaint as the seafarers’ demand for
immediate repatriation due to the
dissatisfaction with the ship is considered a
voluntary pre-termination of employment.
Such act was deemed akin to resignation
recognized under Article 285 of the LC. The
LA gave credence to the telex of the master’s
report that the seafarers indeed demanded
immediate repatriation.
The NLRC agreed with the LA’s
decision. The CA however reversed the LA’s
and the NLRC’s decision. The Court deemed
the telex message as a self-serving
document that does not
satisfy the requirement of substantial
evidence, or that amount of relevant
evidence which a reasonable mind might
accept as adequate to justify the conclusion
that petitioners indeed voluntarily
demanded their immediate repatriation.
Aggrieved, Skippers appeals the case with
the Supreme Court.

Issue:
Whether or not the seafarer’s
demand for immediate repatriation can be
considered an act of voluntary resignation.
Ruling:
For a worker's dismissal to be
considered valid, it must comply with both
procedural and substantive due process. The
legality of the manner of dismissal
constitutes procedural due process, while
the legality of the act of dismissal constitutes
substantive due process.
Procedural due process in dismissal cases
consists of the twin requirements of notice
and hearing. The employer must furnish the
employee with two written notices before
the termination of employment can be
effected: (1) the first notice apprises the
employee of the particular acts or omissions
for which his dismissal is sought; and (2) the
second notice informs the employee of the
employer's decision to dismiss him. Before
the issuance of the second notice, the
requirement of a hearing must be complied
with by giving the worker an opportunity to
be heard. It is not necessary that an actual
hearing be conducted.
Substantive due process, on the other hand,
requires that dismissal by the employer be
made under a just or authorized cause under
Articles 282 to 284 of the Labor Code.
In this case, there was no written
notice furnished to De Gracia, et al.,
regarding the cause of their dismissal.
Cosmoship furnished a written notice (telex)
to Skippers, the local manning agency,
claiming that De Gracia, et al., were
repatriated because the latter voluntarily
pre-terminated their contracts. This telex
was given credibility and weight by the Labor
Arbiter and NLRC in deciding that there was
pre-termination of the employment contract
"akin to resignation" and no illegal dismissal.
However, as correctly ruled by the CA, the
telex message is "a biased and self-serving
document that does not satisfy the
requirement of substantial evidence." If,
233
indeed, De Gracia, et al., voluntarily pre-
terminated their contracts, then De Gracia,
et al., should have submitted their written
resignations. Article 285 of the Labor Code
recognizes termination by the employee of
the employment contract by "serving
written notice on the employer at least one
(1) month in advance." Given that provision,
the law contemplates the requirement of a
written notice of resignation. In the absence
of a written resignation, it is safe to presume
that the employer terminated the seafarers.
In addition, the telex message relied upon by
the Labor Arbiter and NLRC bore conflicting
dates of 22 January 1998 and 22 January
1999, giving doubt to the veracity and
authenticity of the document.
In 22 January 1998, De Gracia, et al., were
not even employed yet by the foreign
principal.
162 SEBASTIAN F. OASAY, JR. Petitioner, v.
PALACIO DEL GOBERNADOR
CONDOMINIUM CORPORATION and/or
OMAR T. CRUZ, Respondents.
FACTS:
Respondent Palacio Del Gobernador
Condominium Corporation (PDGCC) is a
government-owned and controlled
corporation organized for the purpose of
owning and arranging the common areas of
Palacio Del Gobernador Condominium. The
said condominium, all the units therein
having been acquired by the government,
houses various government agencies such as
the Commission on Elections (COMELEC),
Bureau of Treasury and the Intramuros.
The Board of Directors of PDGCC,
through its Board Resolution No. 013 dated
October 27, 1994, appointed the petitioner
as its permanent Building Administrator
effective September 1, 1994.
PDGCC President Omar T. Cruz (Cruz)
required the petitioner to submit a written
report on the allowances and other
compensation, in connection with his duties
as Building Administrator, that he received

from the government offices housed in the
condominium. Apparently, the petitioner
had been earning additional income for
services that he rendered for the COMELEC.
Petitioner submitted his written
report wherein he admitted that he had
received additional compensation from the
COMELEC for services which he rendered
after his regular working hours and on
Saturdays, Sundays and holidays. He
explained that the COMELEC had caused the
rehabilitation of the 8th floor of the
condominium and that he was tasked by the
former, for a stated compensation, to
supervise and monitor the rehabilitation.
After investigating the allegations
against the petitioner, Atty. Bernardo
recommended to Cruz and the PDGCC Board
of Directors the filing of appropriate charges
against the petitioner for violation of
Republic Act No. 3019 (Anti-Graft and
Corrupt Practices Act) and Republic Act No.
6713 (Code of Conduct and Ethical Standards
for Public Officials and Employees).
Cruz then directed the petitioner to
turn over all of his accountabilities to PDGCC.
The foregoing was acknowledged by the
petitioner in his letter to the PDGCC Board of
Directors dated November 17, 2006.
Nevertheless, on January 23, 2007,
the petitioner filed a Complaint for
constructive dismissal with the arbitration
branch of the National Labor Relations
Commission (NLRC) in Quezon City against
PDGCC and Cruz.
The Labor Arbiter (LA) rendered a
Decision dismissing the petitioners
complaint, finding that there was substantial
evidence to conclude that the petitioner had
breached the trust and confidence of
PDGCC. The NLRC affirmed the LA decision.
Petitioner filed a petition for certiorari
before the CA but the same was denied.
Undaunted, the petitioner instituted the
instant petition for review on certiorari
before this Court.
ISSUE:
234
Whether or not the dismissal by
reason of breach of trust was valid
HELD:
Yes.
Labor Law
The first requisite for dismissal on the
ground of loss of trust and confidence is that
the employee concerned must be holding a
position of trust and confidence.
Here, it is indubitable that the
petitioner holds a position of trust and
confidence. The position of Building
Administrator, being managerial in nature,
necessarily enjoys the trust and confidence
of the employer.
The second requisite is that there
must be an act that would justify the loss of
trust and confidence. Loss of trust and
confidence, to be a valid cause for dismissal,
must be based on a willful breach of trust
and founded on clearly established facts. The
basis for the dismissal must be clearly and
convincingly established but proof beyond
reasonable doubt is not necessary.
PDGCC had established, by clear and
convincing evidence, the petitioners acts
which justified its loss of trust and
confidence on the former. On this score, the
LA keenly observed that:
Complainants breach of the trust
reposed in him as Building Administrator is
sufficiently supported by the evidence on
record. Complainants admission that he
received remuneration from Commission on
Elections (COMELEC) whose office is housed
at respondent Palacio Del Gobernador
Condominium justified his termination of
employment. Complainant cannot assert
that he rendered services to COMELEC only
after office hours as his functions as Building
Coordinator would definitely have favored
COMELEC in the performance of his
functions during regular office hours.
Likewise, as Building Administrator,
his active vigilance in reporting and
informing the respondents as to the expired
license to operate of the EGB Security
Agency and its revoked SEC Certificate of

Registration was his duty and look-out. In the
instant case, complainant instead of
informing the respondents, kept this
information from the knowledge of the
respondents and allowed the security
agency to render security services to the
premises of respondents despite its expired
license and revoked SEC Certificate of
Registration.
What escapes the foregoing
argument of the petitioner is that he is an
employee of PDGCC and not of the
COMELEC. It is undisputed that PDGCC did
not authorize nor was it informed of the
services rendered by the petitioner in favor
of the COMELEC. To make matters worse,
the said services rendered by the petitioner
are, essentially, related to the performance
of his duties as a Building Administrator of
the condominium.
DENIED
163 Lynvil Fishing Enterprises vs. Ariola,
G.R. No. 181974, February 1, 2012
Facts:
Petitioner Lynvil Fishing Enterprises,
Inc. (Lynvil) is engaged in deep-sea fishing.
Respondents’ services were engaged in
various capacities:
Andres G. Ariola, captain; Jessie D.
Alcovendas, chief mate; Jimmy B. Calinao,
chief engineer; Ismael G. Nubla, cook; Elorde
Bañez, oiler; and Leopoldo G. Sebullen,
bodegero.
On Aug. 1, 1998, Lynvil received a
report from Ramonito Clarido, one of its
employees, that on July 31, 1998, he
witnessed that while on board the company
vessel Analyn VIII, respondents conspired
with one another and stole eight tubs of
“pampano” and “tangigue” fish and
delivered them to another vessel.
Petitioner filed a criminal complaint
against respondents before the office of the
City Prosecutor of Malabon City which found
probable cause for indictment of
respondents for the crime of qualified theft.
235
Relying on the finding and Nasipit Lumber
Company v. NLRC, 257 Phil. 937 (1989),
Lynvil asserted there was sufficient basis for
valid termination of employment of
respondents based on serious misconduct
and/or loss of trust and confidence.
Issues:
Whether a finding of the city
prosecutor of probable cause to indict
employees of qualified theft is sufficient
basis for valid termination for serious
misconduct and/or loss of trust or
confidence?
Whether the employees were validly
terminated?
Ruling:
On the first issue, the Supreme Court
ruled in the negative. We ruled that proof
beyond reasonable doubt of an employee’s
misconduct is not required when loss of
confidence is the ground for dismissal. It is
sufficient if the employer has “some basis”
to lose confidence or that the employer has
reasonable ground to believe or to entertain
the moral conviction that the employee
concerned is responsible for the misconduct
and that the nature of his participation
therein rendered him absolutely unworthy
of the trust and confidence demanded by his
position.
Lynvil cannot argue that since the
Office of the Prosecutor found probable
cause for theft the Labor Arbiter must follow
the finding as a valid reason for the
termination of respondents’ employment.
The proof required for purposes that differ
from one and the other are likewise
different.
On the second question, the Court
stated that nonetheless, even without
reliance on the prosecutor’s finding, we find
that there was valid cause for respondents’
dismissal.
Just cause is required for a valid
dismissal. The Labor Code provides that an
employer may terminate an employment
based on fraud or willful breach of the trust

reposed on the employee. Such breach is
considered willful if it is done intentionally,
knowingly, and purposely, without
justifiable excuse, as distinguished from an
act done carelessly, thoughtlessly,
heedlessly or inadvertently. It must also be
based on substantial evidence and not on
the employer’s whims or caprices or
suspicions otherwise, the employee would
eternally remain at the mercy of the
employer. Loss of confidence must not be
indiscriminately used as a shield by the
employer against a claim that the dismissal
of an employee was arbitrary. And, in order
to constitute a just cause for dismissal, the
act complained of must be work-related and
shows that the employee concerned is unfit
to continue working for the employer. In
addition, loss of confidence as a just cause
for termination of employment is premised
on the fact that the employee concerned
holds a position of responsibility, trust and
confidence or that the employee concerned
is entrusted with confidence with respect to
delicate matters, such as the handling or
care and protection of the property and
assets of the employer. The betrayal
of this trust is the essence of the offense for
which an employee is penalized. Breach of
trust is present in this case.
However, Lynvil contends that it
cannot be guilty of illegal dismissal because
the private respondents were employed
under a fixed-term contract which expired at
the end of the voyage. Contrarily, the private
respondents (employees) contend that they
became regular employees by reason of
their continuous hiring and performance of
tasks necessary and desirable in the usual
trade and business of Lynvil.
Jurisprudence, laid two conditions
for the validity of a fixed-contract agreement
between the employer and employee: first,
the fixed period of employment was
knowingly and voluntarily agreed upon by
the parties without any force, duress, or
improper pressure being brought to bear
upon the employee and absent any other
circumstances vitiating his consent; or
236
second, it satisfactorily appears that the
employer and the employee dealt with each
other on more or less equal terms with no
moral dominance exercised by the former or
the latter.
In the context of the facts that: (1) the
respondents were doing tasks necessarily to
Lynvil’s fishing business with positions
ranging from captain of the vessel to
bodegero; (2) after the end of a trip, they will
again be hired for another trip with new
contracts; and (3) this arrangement
continued for more than ten years, the clear
intention is to go around the security of
tenure of the respondents as regular
employees. And respondents are so by the
express provisions of the second paragraph
of Article 280, thus: xxx Provided, That any
employee who has rendered
at least one year of service, whether such
service is continuous or broken, shall be
considered a regular employee with respect
to the activity in which he is employed and
his employment shall continue while such
activity exists.
Having found that respondents are
regular employees who may be, however,
dismissed for cause as we have so found in
this case, there is a need to look into the
procedural requirement of due process in
Section 2, Rule XXIII, Book V of the Rules
Implementing the Labor Code. It is required
that the employer furnish the employee with
two written notices: (1) a written notice
served on the employee specifying the
ground or grounds for termination, and
giving to said employee reasonable
opportunity within which to explain his side;
and (2) a written notice of termination
served on the employee indicating that upon
due consideration of all the circumstances,
grounds have been established to justify his
termination. In this case, it is clear that the
employees were not given the final written
notices of dismissal.
The Court ruled that since employees
were dismissed for just cause, they were not
entitle to separation pay and backwages.
However, they were to be granted nominal

damages for failure of the employer to
comply with statutory due process.
164 Norkis vs. Buat - GR No. 185255
FACTS:
Respondent Delfin S. Descallar was
assigned at the Iligan City Branch of
petitioner Norkis Distributors, Inc., a
distributor of Yamaha motorcycles. He
became a regular employee and was
promoted as Branch Manager. He acted as
branch administrator and had supervision
and control of all the employees.
Respondent was also responsible for sales
and collection
In a memorandum, petitioners
required respondent to explain in writing
within 48 hrs why he should not be penalized
or terminated for being absent without
official leave (AWOL) or rendering under-
time service on certain dates. Respondent
explained that he reported to the office on
those dates, but he either went to the bank
or followed-up on prospects. As he was still
within city limits, he did not file any official
leave or travel record.
Norkis conducted an investigation.
Finding that respondent was not able to
prove that he was really in the branch or on
official travel, petitioners suspended him for
15 days without pay. According to
petitioners, respondent admitted during the
investigation that he used company time for
his personal affairs, but only for a few hours
and not the whole day.
While respondent was still
suspended, Norkis also found that
Respondent committed some inappropriate
and irregular acts such as unexplained low
performance of his branch, missing funds,
unauthorized disbursement of funds,
irregular transactions.
Petitioners terminated respondent’s
services for loss of trust and confidence and
gross inefficiency. Respondent filed a
complaint for illegal suspension and illegal
dismissal. LA favored respondent.
237
Petitioners appealed to NLRC. NLRC reversed
the LA’s decision and found respondent to
have been validly dismissed. The NLRC,
however, upheld the LA’s finding that
petitioners are liable to respondent for
unpaid wages. Respondent filed MR. It was
denied so he filed with the CA a petition for
certiorari. CA reinstated with modification
the decision of the LA. Respondent filed a
motion for clarification as to the awards of
separation pay and back wages while
petitioners filed MR. CA issued a Resolution
stating that as regards respondent’s motion
for clarification, the separation pay and back
wages shall be reckoned from the time
respondent was illegally suspended until
finality of its earlier Decision. The CA likewise
denied petitioners’ MR. Hence, petitioners
filed the present petition.
ISSUE:
Was the failure of respondent to
reach his monthly sales quota a valid basis
for loss of trust and confidence?
RULING:
NO. Loss of trust and confidence as a
ground for termination of an employee
under Article 282 of the Labor Code requires
that the breach of trust be willful, meaning it
must be done intentionally, knowingly, and
purposely, without justifiable excuse. The
basic premise for dismissal on the ground of
loss of confidence is that the employee
concerned holds a position of trust and
confidence. It is the breach of this trust that
results in the employer’s loss of confidence
in the employee.
Here, there is no question that as
petitioners’ Branch Manager in Iligan City,
respondent was holding a position of trust
and confidence. He was responsible for the
administration of the branch, and exercised
supervision and control over all the
employees. He was also incharge of sales
and collection.
In termination cases, the burden of
proof rests upon the employer to show that
the dismissal is for a just and valid cause and

failure to do so would necessarily mean that
the dismissal was illegal. The quantum of
proof required in determining the legality of
an employee’s dismissal is only substantial
evidence. CA correctly held that petitioners
failed to discharge this burden.
Failure to reach the monthly sales
quota cannot be considered an intentional
and unjustified act of respondent amounting
to a willful breach of trust on his part that
would call for his termination based on loss
of confidence. This is not the willful breach
of trust and confidence contemplated in
Article 282(c) of the Labor Code. Low sales
performance could be attributed to several
factors which are beyond respondent’s
control. To be a valid ground for an
employee’s dismissal, loss of trust and
confidence must be based on a willful
breach. To repeat, a breach is willful if it is
done intentionally, knowingly and
purposely, without justifiable excuse.
Petitioners having failed to establish
by substantial evidence any valid ground for
terminating respondent’s services, we
uphold the finding of the Labor Arbiter and
the CA that respondent was illegally
dismissed.
An illegally dismissed employee is
entitled to two reliefs: back wages and
reinstatement. The two reliefs provided are
separate and distinct. In instances where
reinstatement is no longer feasible because
of strained relations between the employee
and the employer, separation pay is granted.
The normal consequences of respondent’s
illegal dismissal, then, are reinstatement
without loss of seniority rights, and payment
of back wages computed from the time
compensation was withheld from him up to
the date of actual reinstatement. Where
reinstatement is no longer viable as an
option, separation pay equivalent to one
month salary for every year of service should
be awarded as an alternative. The payment
of separation pay is in addition to payment
of back wages.
The CA merely clarified the period of
payment of back wages and separation pay
238
up to the finality of its decision modifying the
LA’s decision. In view of the modification of
monetary awards in the Labor Arbiter’s
decision, the time frame for the payment of
back wages and separation pay is
accordingly modified to the finality of the CA
decision.
WHEREFORE, the petition for review
on certiorari is DENIED.
165 Armando Ailing, Petitioner vs. Jose B.
Feliciano, Manuel F. San Mateo III, et al.,
Respondents
FACTS:
Via a letter dated June 2, 2004,
respondent Wide Wide World Express
Corporation (WWWEC) offered to employ
petitioner Armando Aliling (Aliling) as
“Account Executive (Seafreight Sales),” with
the following compensation package: a
monthly salary of PhP 13,000, transportation
allowance of PhP 3,000, clothing allowance
of PhP 800, cost of living allowance of PhP
500, each payable on a per month basis and
a 14th month pay depending on the
profitability and availability of financial
resources of the company. The offer came
with a six (6)-month probation period
condition with this express caveat:
“Performance during probationary period
shall be made as basis for confirmation to
Regular or Permanent Status.”
On June 11, 2004, Aliling and
WWWEC inked an Employment Contract
under the following terms, among others:
Conversion to regular status shall be
determined on the basis of work
performance; and
Employment services may, at any
time, be terminated for just cause or in
accordance with the standards defined at
the time of engagement.
Training then started. However,
instead of a Seafreight Sale assignment,
WWWEC asked Aliling to handle Ground
Express (GX), a new company product

launched on June 18, 2004 involving
domestic cargo forwarding service for Luzon.
Marketing this product and finding daily
contracts for it formed the core of Aliling’s
new assignment.
Barely a month after, Manuel F. San
Mateo III (San Mateo), WWWEC Sales and
Marketing Director, emailed Aliling to
express dissatisfaction with the latter’s
performance.
Thereafter, in a letter of September
25, 2004, Joseph R. Lariosa (Lariosa), Human
Resources Manager of WWWEC, asked
Aliling to report to the Human Resources
Department to explain his absence taken
without leave from September 20, 2004.
Aliling responded two days later. He
denied being absent on the days in question,
attaching to his reply-letter a copy of his
timesheet which showed that he worked
from September 20 to 24, 2004. Aliling’s
explanation came with a query regarding the
withholding of his salary corresponding to
September 11 to 25, 2004.
In a separate letter dated September
27, 2004, Aliling wrote San Mateo stating:
“Pursuant to your instruction on September
20, 2004, I hereby tender my resignation
effective October 15, 2004.” While WWWEC
took no action on his tender, Aliling
nonetheless demanded reinstatement and a
written apology, claiming in a subsequent
letter dated October 1, 2004 to management
that San Mateo had forced him to resign.
Lariosa’s response-letter of October
1, 2004, informed Aliling that his case was
still in the process of being evaluated. On
October 6, 2004, Lariosa again wrote, this
time to advise Aliling of the termination of
his services effective as of that date owing to
his “non-satisfactory performance” during
his probationary period. Records show that
Aliling, for the period indicated, was paid his
outstanding salary which consisted of:
PhP 4,988.18 (salary for the
September 25, 2004 payroll)
Php 1,987.28 (salary for 4 days in
October 2004)
PhP 6,975.46 Total
239
Earlier, however, or on October 4,
2004, Aliling filed a Complaint for illegal
dismissal due to forced resignation,
nonpayment of salaries as well as damages
with the NLRC against WWWEC. Appended
to the complaint was Aliling’s Affidavit dated
November 12, 2004, in which he stated: “5.
At the time of my engagement, respondents
did not make known to me the standards
under which I will qualify as a regular
employee.”
Refuting Aliling’s basic posture,
WWWEC stated in its Position Paper dated
November 22, 2004 that, in addition to the
letter-offer and employment contract
adverted to, WWWEC and Aliling have
signed a letter of appointment on June 11,
2004 containing the following terms of
engagement:
Additionally, upon the effectivity of
your probation, you and your immediate
superior are required to jointly define your
objectives compared with the job
requirements of the position. Based on the
pre-agreed objectives, your performance
shall be reviewed on the 3rd month to assess
your competence and work attitude. The 5th
month Performance Appraisal shall be the
basis in elevating or confirming your
employment status from Probationary to
Regular.
Failure to meet the job requirements
during the probation stage means that your
services may be terminated without prior
notice and without recourse to separation
pay.
WWWEC also attached to its Position
Paper a memo dated September 20, 2004 in
which San Mateo asked Aliling to explain
why he should not be terminated for failure
to meet the expected job performance,
considering that the load factor for the GX
Shuttles for the period July to September
was only 0.18% as opposed to the allegedly
agreed upon load of 80% targeted for August
5, 2004. According to WWWEC, Aliling,
instead of explaining himself, simply
submitted a resignation letter.

In a Reply-Affidavit dated December
13, 2004, Aliling denied having received a
copy of San Mateo’s September 20, 2004
letter.
ISSUE:
Whether or not there was a due
process.
RULING:
No. The petition is partly meritorious.
Petitioner is a regular employee.
On a procedural matter, petitioner
Aliling argues that WWWEC, not having
appealed from the judgment of CA which
declared Aliling as a regular employee from
the time he signed the employment
contract, is now precluded from questioning
the appellate court’s determination as to the
nature of his employment.
Petitioner errs. The Court has, when
a case is on appeal, the authority to review
matters not specifically raised or assigned as
error if their consideration is necessary in
reaching a just conclusion of the case. We
said as much in Sociedad Europea de
Financiacion, SA v. Court of Appeals, “It is
axiomatic that an appeal, once accepted by
this Court, throws the entire case open to
review, and that this Court has the authority
to review matters not specifically raised or
assigned as error by the parties, if their
consideration is necessary in arriving at a just
resolution of the case.”
The Labor Arbiter cryptically held in
his decision dated April 25, 2006 that:
Be that as it may, there appears no showing
that indeed the said September 20, 2004
Memorandum addressed to complainant
was received by him. Moreover,
complainant’s tasked where he was assigned
was a new developed service. In this regard,
it is noted:
“Due process dictates that an
employee be apprised beforehand of the
conditions of his employment and of the
terms of advancement therein. Precisely,
implicit in Article 281 of the Labor Code is the
requirement that reasonable standards be
240
previously made known by the employer to
the employee at the time of his engagement
(Ibid, citing Sameer Overseas Placement
Agency, Inc. vs. NLRC, G.R. No. 132564,
October 20, 1999).
From our review, it appears that the
labor arbiter, and later the NLRC, considered
Aliling a probationary employee despite
finding that he was not informed of the
reasonable standards by which his
probationary employment was to be judged.
The CA, on the other hand, citing Cielo
v. National Labor Relations Commission,
ruled that petitioner was a regular employee
from the outset inasmuch as he was not
informed of the standards by which his
probationary employment would be
measured. The CA wrote:
Petitioner was regularized from the
time of the execution of the employment
contract on June 11, 2004, although
respondent company had arbitrarily
shortened his tenure. As pointed out,
respondent company did not make known
the reasonable standards under which he
will qualify as a regular employee at the time
of his engagement. Hence, he was deemed
to have been hired from day one as a regular
employee.
WWWEC, however, excepts on the
argument that it put Aliling on notice that he
would be evaluated on the 3rd and 5th
months of his probationary employment. To
WWWEC, its efforts translate to sufficient
compliance with the requirement that a
probationary worker be apprised of the
reasonable standards for his regularization.
WWWEC invokes the ensuing holding in
Alcira v. National Labor Relations
Commission to support its case:
Conversely, an employer is deemed to
substantially comply with the rule on
notification of standards if he apprises the
employee that he will be subjected to a
performance evaluation on a particular date
after his hiring. We agree with the labor
arbiter when he ruled that:
In the instant case, petitioner cannot
successfully say that he was never informed

by private respondent of the standards that
he must satisfy in order to be converted into
regular status. This rans counter to the
agreement between the parties that after
five months of service the petitioner’s
performance would be evaluated. It is only
but natural that the evaluation should be
made vis-à-vis the performance standards
for the job. Private respondent Trifona
Mamaradlo speaks of such standard in her
affidavit referring to the fact that petitioner
did not perform well in his assigned work
and his attitude was below par compared to
the company’s standard required of him.
WWWEC’s contention is untenable.
To note, the June 2, 2004 letter-offer
itself states that the regularization standards
or the performance norms to be used are still
to be agreed upon by Aliling and his
supervisor. WWWEC has failed to prove that
an agreement as regards thereto has been
reached. Clearly then, there were actually no
performance standards to speak of. And lest
it be overlooked, Aliling was assigned to GX
trucking sales, an activity entirely different
to the Seafreight Sales he was originally
hired and trained for. Thus, at the time of his
engagement, the standards relative to his
assignment with GX sales could not have
plausibly been communicated to him as he
was under Seafreight Sales. Even for this
reason alone, the conclusion reached in
Alcira is of little relevant to the instant case.
Finally, legal interest shall be imposed
on the monetary awards herein granted at
the rate of 6% per annum from October 6,
2004 (date of termination) until fully paid.
166 PRUDENTIAL GUARANTEE AND
ASSURANCE EMPLOYEE LABOR UNION and
SANDY T. VALLOTA, Petitioners, vs.
NATIONAL LABOR RELATIONS
COMMISSION, PRUDENTIAL GUARANTEE
AND ASSURANCE INC., and/or JOCELYN
RETIZOS, Respondents.
FACTS:
241
Vallota was employed by Prudential
Guarantee as a Junior Programmer on May
16, 1995. He reported directly to Gerald Dy
Victory, then head of the EDP, until his
replacement by respondent Jocelyn Retizos
sometime in 1997. In August of 2005, Vallota
was elected to the Board of Directors of the
Union.
On November 11, 2005, HR Manager,
Atty. Rillo informed Union President, Mike
Apostol that PGAI was going to conduct an
on-the-spot security check in the
Information and Technology Department.
The inspection team proceeded to
the IT Department, and the EDP head,
through PGAI network administrator Angelo
Gutierrez initiated the spot check of IT
Department computers, beginning with the
one assigned to Vallota. After exploring the
contents of all the folders and subfolders in
the "My Documents" folder, a folder named
AAwas found, which Vallota claimed to be
about a mutual life fund. Retizos, on the
other hand, asked Vallota if was working for
MAA Mutual Life and sending them
confidential documents of PGAI.
Sensing that Vallota was being
singled out, Apostol insisted that all the
computers in the IT Department, including
that of Retizos, be also subjected to a spot
security check. Later, at Retizosoffice, and in
the presence of Atty. Rillo, Vallota was
informed that Retizos and Atty. Rillo would
print the files found in his computer under
the folder "MAA." Vallota did not object.
After the files were printed, Vallota and the
Union Secretary were asked to sign each
page of the printout. Vallota, however, was
not given a copy of the printed file.
On November 14, 2005, Vallota
received a memorandum directing him to
explain within 72 hours why highly
confidential files were stored in his
computer, which also informed him that he
was being placed under preventive
suspension for 30 days effective upon
receipt of the said notice. A second
memorandum, also dated November 14,
2005, notified Vallota of the extension of his

preventive suspension for another 30 days,
in view of the fact that the management
needed more time to evaluate the
administrative case against him.
On November 24, 2005, PGAI sent
him another memorandum requesting
further details on some of the matters he
raised in his response. In a letter dated
December 6, 2005, Vallota requested a
conference, to be attended by a Union
representative and counsel. PGAI sent
Vallota another memorandum dated
December 7, 2005, which, among others, set
a new deadline for Vallota to submit his reply
and evidence in his defense. In compliance
with the deadline set, Vallota submitted his
reply-memorandumdated December 12,
2005, outlining his response to the charges.
Meanwhile, the Union sent a letterto
PGAI President Philip K. Rico requesting that
a grievance committee be convened and
that the contents of the computers of other
IT personnel be similarly produced. The
request for the convening of a grievance
committee was ignored. On December 21,
2005, Vallota was given a notice of
termination of his employment effective
January 10, 2006 on the ground of loss of
trust and confidence.
Thus, the petitioners filed a
complaint for illegal dismissal with claims for
full backwages, moral and exemplary
damages, and attorney fees.
On March 31, 2006, Labor Arbiter
Aliman D. Mangandog rendered a decisionin
favor of the petitioners. The respondents
filed their Memorandum of Appealdated
May 19, 2006. On June 30, 2006, the
National Labor Relations Commission
dismissed the appeal on the ground that the
respondents failed to submit a certificate of
non-forum shopping in accordance with the
Rules of Procedure of the NLRC.
The respondents filed their Motion
for Reconsideration dated July 17, 2006,
which the Union opposed. On October 31,
2007, the NLRC granted the
respondentsmotion for reconsideration and
reversed and set aside the decision of the LA.
242
ISSUE:
Whether or not Vallota was validly
dismissed on the ground of loss of trust and
confidence?
HELD:
The Court discussion in Mabeza v.
National Labor Relations Commission is
instructive:
Loss of confidence as a just cause for
dismissal was never intended to provide
employers with a blank check for
terminating their employees. Such a vague,
all-encompassing pretext as loss of
confidence, if unqualifiedly given the seal of
approval by this Court, could readily reduce
to barren form the words of the
constitutional guarantee of security of
tenure. Having this in mind, loss of
confidence should ideally apply only to cases
involving employees occupying positions of
trust and confidence or to those situations
where the employee is routinely charged
with the care and custody of the employer's
money or property. To the first class belong
managerial employees, i.e., those vested
with the powers or prerogatives to lay down
management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge,
assign or discipline employees or effectively
recommend such managerial actions; and to
the second class belong cashiers, auditors,
property custodians, etc., or those who, in
the normal and routine exercise of their
functions, regularly handle significant
amounts of money or property.
In Bristol Myers Squibb (Phils.), Inc. v.
Baban,the Court discussed the requisites for
a valid dismissal on the ground of loss of
trust and confidence:
It is clear that Article 282(c) of the
Labor Code allows an employer to terminate
the services of an employee for loss of trust
and confidence. The right of employers to
dismiss employees by reason of loss of trust
and confidence is well established in
jurisprudence.

The first requisite for dismissal on the
ground of loss of trust and confidence is that
the employee concerned must be one
holding a position of trust and confidence.
There are two (2) classes of positions of
trust. The first class consists of managerial
employees. They are defined as those vested
with the powers or prerogatives to lay down
management policies and to hire, transfer
suspend, lay-off, recall, discharge, assign or
discipline employees or effectively
recommend such managerial actions. The
second class consists of cashiers, auditors,
property custodians, etc. They are defined as
those who in the normal and routine
exercise of their functions, regularly handle
significant amounts of money or property.
Xxx
The second requisite is that there
must be an act that would justify the loss of
trust and confidence. Loss of trust and
confidence to be a valid cause for dismissal
must be based on a willful breach of trust
and founded on clearly established facts. The
basis for the dismissal must be clearly and
convincingly established but proof beyond
reasonable doubt is not necessary.
Thus, the first question to be
addressed is whether Vallota held a position
of trust and confidence. Vallota was
employed by PGAI as a Junior Programmer
assigned to the EDP Department. Based on
the standards set by previous jurisprudence,
Vallota position as Junior Programmer is
analogous to the second class of positions of
trust and confidence. Though he did not
physically handle money or property, he
became privy to confidential data or
information by the nature of his functions. At
a time when the most sensitive of
information is found not printed on paper
but stored on hard drives and servers, an
employee who handles or has access to data
in electronic form naturally becomes the
unwilling recipient of confidential
information.
Having addressed the nature of his
position, the next question is whether the
act complained of justified the loss of trust
243
and confidence of Vallota employer so as to
constitute a valid cause for dismissal. It must,
thus, be determined whether the alleged
basis for dismissal was based on clearly
established facts.
The act alleged to have caused the
loss of trust and confidence of PGAI in
Vallota was the presence in his computer
hard drive of a folder named "MAA"
allegedly containing files with information
on MAA Mutual Life Philippines, a domestic
corporation selling life insurance policies to
the buying public, and files relating to PGAI
internal affairs.
While the law and this Court
recognize the right of an employer to dismiss
an employee based on loss of trust and
confidence, the evidence of the employer
must clearly and convincingly establish the
facts upon which the loss of trust and
confidence in the employee is based.
To be a valid ground for dismissal,
loss of trust and confidence must be based
on a willful breach of trust and founded on
clearly established facts. A breach is willful if
it is done intentionally, knowingly and
purposely, without justifiable excuse, as
distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. It
must rest on substantial grounds and not on
the employer arbitrariness, whims, caprices
or suspicion; otherwise, the employee would
remain eternally at the mercy of the
employer.Further, in order to constitute a
just cause for dismissal, the act complained
of must be work-related and show that the
employee concerned is unfit to continue
working for the employer.Such ground for
dismissal has never been intended to afford
an occasion for abuse because of its
subjective nature.
In this case, there was no other
evidence presented to prove fraud in the
manner of securing or obtaining the files
found in Vallota computer. In fact, aside
from the presence of these files in Vallota
hard drive, there was no other evidence to
prove any gross misconduct on his part.
There was no proof either that the presence

of such files was part of an attempt to
defraud his employer or to use the files for a
purpose other than that for which they were
intended. If anything, the presence of the
files reveals some degree of carelessness or
neglect in his failure to delete them, but it is
an extremely farfetched conclusion
bordering on paranoia to state that it is part
of a larger conspiracy involving corporate
espionage.
Moreover, contrary to the
respondentsallegations, the MAA files found
in Vallota computer, the prospectus and
corporate profile, are not sensitive
corporate documents. These are documents
routinely made available to the public, and
serve as means to inform the public about
the company and to disseminate
information about the products it sells or the
services it provides, in order that potential
clients may make a sound and informed
decision whether or not to purchase or avail
of such goods and services.
If anything, the presence of the files
would merely merit the development of
some suspicion on the part of the employer,
but should not amount to a loss of trust and
confidence such as to justify the termination
of his employment. Such act is not of the
same class, degree or gravity as the acts that
have been held to be of such character.
While Vallota act or omission may have been
done carelessly, it falls short of the standard
required for termination of employment. It
does not manifest either that the employee
concerned is unfit to continue working for
his employer.
Procedural due process
requirements for termination - In this case,
the two-notice requirement was complied
with. By the petitionersown admission, PGAI
issued to Vallota a written Notice of Charges
& Preventive Suspension dated November
14, 2005. After an exchange of memoranda,
PGAI then informed Vallota of his dismissal
in its decision dated December 21, 2005.
Given, however, that the petitioners
expressly requested a conference or a
convening of a grievance committee,
244
following the Court ruling in the Perez case,
which was later cited in the recent case of
Lopez v. Alturas Group of Companies, such
formal hearing became mandatory. After
PGAI failed to affirmatively respond to such
request, it follows that the hearing
requirement was not complied with and,
therefore, Vallota was denied his right to
procedural due process.
Reinstatement and backwages - In
light of the above discussion, Vallota is
entitled to reinstatement and backwages,
reckoned from the date he was illegally
dismissed until the finality of this decision in
accordance with jurisprudence.
In view of the strained relations
between Vallota and PGAI, however, it is not
in the best interest of the parties, nor is it
advisable or practical to order
reinstatement. Where reinstatement is no
longer viable as an option, separation pay
equivalent to one (1) month salary for every
year of service should be awarded as an
alternative. It must be stressed, however,
that an illegally dismissed employee is
entitled to two reliefs: backwages and
reinstatement, which are separate and
distinct. In Golden Ace Builders v. Tagle, it
was written:
Thus, an illegally dismissed employee
is entitled to two reliefs: backwages and
reinstatement. The two reliefs provided are
separate and distinct. In instances where
reinstatement is no longer feasible because
of strained relations between the employee
and the employer, separation pay is granted.
In effect, an illegally dismissed employee is
entitled to either reinstatement, if viable, or
separation pay if reinstatement is no longer
viable, and backwages.
The normal consequences of
respondentsillegal dismissal, then, are
reinstatement without loss of seniority
rights, and payment of backwages computed
from the time compensation was withheld
up to the date of actual reinstatement.
Where reinstatement is no longer viable as
an option, separation pay equivalent to one
(1) month salary for every year of service

should be awarded as an alternative. The
payment of separation pay is in addition to
payment of backwages.
Velasco v. National Labor Relations
Commission, emphasizes:
The accepted doctrine is that
separation pay may avail in lieu of
reinstatement if reinstatement is no longer
practical or in the best interest of the parties.
Separation pay in lieu of reinstatement may
likewise be awarded if the employee decides
not to be reinstated.
Under the doctrine of strained
relations, the payment of separation pay is
considered an acceptable alternative to
reinstatement when the latter option is no
longer desirable or viable. On one hand, such
payment liberates the employee from what
could be a highly oppressive work
environment. On the other hand, it releases
the employer from the grossly unpalatable
obligation of maintaining in its employ a
worker it could no longer trust.
GRANTED
167 DANILO LEONARDO vs. NATIONAL
LABOR RELATIONS COMMISSION
FACTS:
AURELIO FUERTE was employed by
REYNALDOS MARKETING CORPORATION his
compensation was P122.00 a day,
augmented by a weekly supervisors
allowance of P600.00.
FUERTE alleges that he was instructed to
report at private respondents main office
where he was informed by the companys
personnel manager that he would be
transferred to
its Sucat plant due to his failure to meet his
sales quota, and for that reason, his
supervisors
allowance would be withdrawn. For a short
time, FUERTE reported for work at the Sucat
plant;
however, he protested his transfer,
subsequently filing a complaint for illegal
termination.
245
Private respondent contends that it never
terminated petitioners services. Private
respondent claims that Fuerte was demoted
pursuant to a company policy intended to
foster
competition among its employees.
Under this scheme, private
respondents employees are required to
comply with a
monthly sales quota. Should a supervisor
such as FUERTE fail to meet his quota for a
certain
number of consecutive months, he will be
demoted, whereupon his supervisors
allowance will
be withdrawn and be given to the individual
who takes his place. When the employee
concerned succeeds in meeting the quota
again, he is re-appointed supervisor and his
allowance is restored.
ISSUE:
WON Fuerte was constructively
dismissed.
HELD:
NO. An employer acts well within its
rights in transferring an employee as it sees
fit
provided that there is no demotion in rank or
diminution in pay. ] The two circumstances
are
deemed badges of bad faith, and thus
constitutive of constructive dismissal.
Constructive
dismissal is defined in the following manner:
an involuntary resignation resorted to when
continued employment becomes
impossible, unreasonable, or unlikely; when
there is a
demotion in rank or diminution in pay; or
when a clear discrimination, insensibility or
disdain by
an employer becomes unbearable to the
employee. To constitute such a ground for
dismissal,
there must be (1) failure to report for work
or absence without valid or justifiable

reason; and
(2) a clear intention, as manifested by some
overt acts, to sever the employer-employee
relationship.
168 Julie’s Bakeshop and/or Edgar
Reyes, Petitioners, vs. HENRY ARNAIZ,
EDGAR NAPAL,⃰ and Jonathan
Tolores, Respondents.
FACTS:
Julie’s Bakeshop and/or Edgar Reyes
(Reyes) assail the decision of the CA which
reversed the Resolutions of the NLRC and
ordered petitioners to reinstate respondents
Henry Arnaiz (Arnaiz), Edgar Napal (Napal)
and Jonathan Tolores (Tolores) and to pay
them their backwages for having been
constructively dismissed, as well as their
other monetary benefits.
THE CASE:
Reyes hired respondents as chief
bakers in his three franchise branches of
Julie’s Bakeshop in Sibalom and San Jose,
Antique. Respondents filed separate
complaints against petitioners for
underpayment of wages, payment of
premium pay for holiday and rest day,
service incentive leave pay, 13th month pay,
cost of living allowance (COLA) and
attorney’s fees. These complaints were later
on consolidated.
Subsequently, in a memorandum
dated February 16, 2000, Reyes reassigned
respondents as utility/security personnel
tasked to clean the outside vicinity of his
bakeshops and to maintain peace and order
in the area. Upon service of the memo,
respondents, however, refused to sign the
same and likewise refused to perform their
new assignments by not reporting for work.
LABOR ARBITER:
expressed dismay over respondents’
lack of good faith in negotiating a
settlement. The Labor Arbiter denounced
the way respondents dealt with Atty.
246
Delicana during their discussions for a
possible settlement since respondents
themselves later on informed the said
tribunal that at the time of the said
discussions, they no longer considered Atty.
Delicana as their counsel. Despite this, the
Labor Arbiter still required the parties to
submit their respective position papers. And
as respondents’ position paper was filed late
and no evidence was attached to prove the
allegations therein, the Labor Arbiter
resolved to dismiss the complaints.
NLRC overruled the Decision of the
Labor Arbiter and held that the burden of
proof lies on herein petitioners as Reyes
admitted being the employer of Tolores.
Hence, petitioners not Tolores, had the duty
to advance proof. With respect to Arnaiz and
Napal, the NLRC noted that since their
alleged employer was not impleaded, said
respondents’ cases should be remanded to
the Labor Arbiter, and tried as new and
separate cases.
NLRC (MR) found merit in
respondents’ Motion for
Reconsideration. The NLRC ruled that
respondents’ demotion in rank from chief
bakers to utility/security personnel is
tantamount to constructive dismissal which
entitles them to the reliefs available to
illegally dismissed employees. NLRC
ratiocinated that the employer bears the
burden of proving that the employees
received their wages and benefits. In this
case, however, no proof of such payment
was presented by the petitioners.
NLRC (MR NANAMAN), in its
Resolution dated December 18, 2003, again
reconsidered its own ruling and held that
respondents were not dismissed, either
actually or constructively, but instead
willfully disobeyed the return to work order
of their employer. The NLRC upheld
petitioners’ prerogative to transfer
respondents if only to serve the greater
interest, safety and well-being of the buying
public by forestalling irregular acts of said
employees. The NLRC then put the blame on
respondents for disobeying the lawful orders

of their employer, noting that it was the
same attitude displayed by them in their
dealings with their counsel, Atty. Delicana, in
the proceedings before the Labor Arbiter.
CA ruled that respondents were
constructively dismissed since their
designation from chief bakers to
utility/security personnel is undoubtedly a
demotion in rank which involved “a drastic
change in the nature of work resulting to a
demeaning and humiliating work
condition.” Further, respondents could not
be held guilty of abandonment of work as
this was negated by their immediate filing of
complaints to specifically ask for
reinstatement.
ISSUE:
WAS THE TRANSFER/REASSIGNMENT
OF RESPONDENTS TO ANOTHER POSITION
WITHOUT DIMINUTION IN PAY AND OTHER
PRIVILEGES TANTAMOUNT TO
CONSTRUCTIVE DISMISSAL?
HELD:
The Court of Appeals is correct in
reviewing the findings of the National Labor
Relations Commission. ( reinstatement
without loss of seniority rights, full
backwages, inclusive of allowances, and
other benefits or their monetary equivalent,
computed from the time their compensation
was withheld up to the time of their actual
reinstatement, should be granted)
The transfer/reassignment of respondents
constitutes constructive dismissal.
We have held that management is
free to regulate, according to its own
discretion and judgment, all aspects of
employment, including hiring, work
assignments, working methods, time, place
and manner of work, processes to be
followed, supervision of workers, working
regulations, transfer of employees, work
supervision, lay off of workers and discipline,
dismissal and recall of workers. The exercise
of management prerogative, however, is not
absolute as it must be exercised in good faith
and with due regard to the rights of labor.
247
In constructive dismissal cases, the
employer has the burden of proving that
the transfer of an employee is for just or
valid ground, such as genuine business
necessity. The employer must demonstrate
that the transfer is not unreasonable,
inconvenient, or prejudicial to the
employee and that the transfer does not
involve a demotion in rank or a diminution
in salary and other benefits. “If the
employer fails to overcome this burden of
proof, the employee’s transfer is
tantamount to unlawful constructive
dismissal.”
In this case, petitioners insist that the
transfer of respondents was a measure of
self-preservation and was prompted by a
desire to protect the health of the buying
public, claiming that respondents should be
transferred to a position where they could
not sabotage the business pending
resolution of their cases. According to
petitioners, the possibility that respondents
might introduce harmful substances to the
bread while in the performance of their
duties as chief bakers is not imaginary but
real as borne out by what Tolores did in one
of the bakeshops in Culasi, Antique where he
was assigned as baker.
This postulation is not well-taken. On
the contrary, petitioners failed to satisfy the
burden of proving that the transfer was
based on just or valid ground. Petitioners’
bare assertions of imminent threat from the
respondents are mere accusations which are
not substantiated by any proof. This Court is
proscribed from making conclusions based
on mere presumptions or suppositions. An
employee’s fate cannot be justly hinged
upon conjectures and surmises.
The act attributed against Tolores
does not even convince us as he was merely
a suspected culprit in the alleged sabotage
for which no investigation took place to
establish his guilt or culpability. Besides,
Reyes still retained Tolores as an employee
and chief baker when he could have
dismissed him for cause if the allegations
were indeed found true. In view of these,

this Court finds no compelling reason to
justify the transfer of respondents from
chief bakers to utility/security personnel.
What appears to this Court is that
respondents’ transfer was an act of
retaliation on the part of petitioners due to
the former’s filing of complaints against
them, and thus, was clearly made in bad
faith. In fact, petitioner Reyes even admitted
that he caused the reassignments due to the
pending complaints filed against him.
“[D]emotion involves a situation in
which an employee is relegated to a
subordinate or less important position
constituting a reduction to a lower grade or
rank, with a corresponding decrease in
duties and responsibilities, and usually
accompanied by a decrease in salary.“
Although there was no diminution in
pay, there was undoubtedly a demotion in
titular rank. One cannot deny the disparity
between the duties and functions of a chief
baker to that of a utility/security personnel
tasked to clean and manage the orderliness
of the outside premises of the bakeshop.
Respondents were even prohibited from
entering the bakeshop. The change in the
nature of their work undeniably resulted to
a demeaning and humiliating work
condition.
Respondents cannot be faulted for
refusing to report for work as they were
compelled to quit their job due to a
demotion without any just cause. Moreover,
we have consistently held that a charge of
abandonment is inconsistent with the filing
of a complaint for constructive
dismissal. Respondents’ demand to maintain
their positions as chief bakers by filing a case
and asking for the relief of reinstatement
belies abandonment.
169 MA. MELISSA A. GALANG, Petitioner,
v. JULIA MALASUGUI, Respondent.
FACTS:
Malasugui filed a complaint for illegal
dismissal before the National Labor
248
Relations Commission against Galang.
Malasugui alleged that she was hired by
Galang to take care, oversee and man the
premises of the Davao Royal Garden
Compound (Pangi Property) the main
compound of Galang where the orchids and
other ornamental plants used for the
business were nursed and propagated. In
November 1998, she became sick with
severe cough and asked for financial
assistance from Galang for medical check-
up. The coughing became incessant which
prompted Galang to bring her to a doctor
and made to undergo a series of
examinations including chest radiographic
examination. Thereafter, she was
terminated from work and barred from
entering the Pangi property.
Galang, on the other hand, denied
that Malasugui was her employee. When the
family driver left the other bunkhouse,
Malasugui occupied it and brought along her
family as well.The Galang family tolerated
this arrangement for around six years as an
act of kindness. During these times,
Malasugui did not look for any job as initially
intended. They did not require Malasugui to
pay for rentals, electricity, water and other
utilities. In return, Malasugui helped in
weeding, watering, spraying chemicals on
the orchids in gratitude for the hospitality of
the Galang family. Admittedly, Galang
occasionally gave money to Malasugui out of
charity. She even answered for the medical
expenses of Malasugui when the latter
became sick of excessive coughing early in
1999. She even made an arrangement with a
radiologist for her diagnostic examination
but Malasugui did not show up at the
appointed time. When confronted by Galang
about this, Malasugui packed her belongings
and left the Pangi property. She was not
asked nor forced to leave the premises by
any member of the Galang family.
The Labor Arbiter ruled that there
was an employer-employee relationship
between Galang and Malasugui, however, it
ruled that there was no substantial evidence
that Malasugui was illegally dismissed and

barred from entering the property after she,
without any notice to her employer, packed
her belongings and left the Pangi property.
The NLRC affirmed the decision of the Labor
Arbiter. The CA however ruled that
respondent was illegally dismissed by
Galang.
ISSUES:
1. Whether or not Malasugui is an
employee of Galang.
2. Whether or not Malasugui was
constructively dismissed.
HELD:
Court of Appeals decision is
affirmed.
LABOR LAW
All three, Labor Arbiter, the NLRC and
the CA ruled that there was an employer-
employee relationship between Galang and
Malasugui, therefore, there is no need to
routinely undertake the re-examination of
the evidence presented by the contending
parties for the factual findings of the labor
officials who have acquired expertise in their
own fields are accorded respect and even
finality if affirmed on appeal to the Court of
Appeals.
Such principle cannot, however,
apply to the finding of illegal dismissal
against Galang. The Labor Arbiter and the
NLRC both ruled that there was no illegal
dismissal, but the Court of Appeals reversed
such findings. When supported by
substantial evidence, the findings of fact of
the CA are conclusive and binding on the
parties and are not reviewable by this Court,
unless the case falls under any of the
following recognized exceptions:
(1) When the conclusion is a finding
grounded entirely on speculation, surmises
and conjectures;
(2) When the inference made is
manifestly mistaken, absurd or impossible;
(3) Where there is a grave abuse of
discretion;
(4) When the judgment is based on a
misapprehension of facts;
249
(5) When the findings of fact are
conflicting;
(6) When the Court of Appeals, in
making its findings, went beyond the issues
of the case and the same is contrary to the
admissions of both appellant and appellee;
(7) When the findings are contrary to
those of the trial court [in this case the
administrative bodies of Labor Arbiter and
NLRC];
(8) When the findings of fact are
conclusions without citation of specific
evidence on which they are based;
(9) When the facts set forth in the
petition as well as in the petitioners' main
and reply briefs are not disputed by the
respondents; and
(10) When the findings of fact of the
Court of Appeals are premised on the
supposed absence of evidence and
contradicted by the evidence on record.
Jurisprudence provides that the
burden of proof to show that the dismissal
was for a just cause is on the employer.
Respondent has been in the employ
of petitioner for six years when the alleged
abandonment happened. Being scolded, if it
were true, is hardly a reason for a gardener
of six years to just pack up and leave the
work premises where she was even allowed
to reside, at a time when she was ill and
needed medical attention. Indeed, the
alleged scolding is itself incredible. The given
reason was that respondent failed to show
up at her arranged appointment with the
radiologist. It is hard to believe that a sick
gardener, certainly of minimal means, would
refuse the offer of medical services. In fact,
the basic allegation in respondents
complaint for illegal dismissal was that
petitioners treatment to her became sour
especially when she requested that she be
examined by a doctor for her cough. And,
completely belying the petitioners assertion
that respondent failed to show up at the
appointed time with the radiologist are two
certificates issued by Radiologist Susan R.
Gaspar stating that on 30 January 1999 and
on 1 February 1999 respondent had her

chest x-ray taken at the Radiology Section of
the Polyclinic Davao.
The overt act relied upon by
petitioner is not only a doubtful occurrence
but is, if it did transpire, even consistent with
the dismissal from employment posited by
the respondent. The factual appraisal of the
Court of Appeals is correct. Petitioner was
displeased after incurring expenses for
respondents medical check-up and, it is
credible that, thereafter, respondent was
prevented entry into the work premises. This
is tantamount to constructive dismissal.
Constructive dismissalexists where
there is cessation of work because continued
employment is rendered impossible,
unreasonable or unlikely, as an offer
involving a demotion in rank and a
diminution in pay. Constructive dismissal is a
dismissal in disguise or an act amounting to
dismissal but made to appear as if it were
not.
DENIED
170 MISAMIS ORIENTAL II ELECTRIC
SERVICE COOPERATIVE (MORESCO II) VS
VIRGILIO CAGALAWAN
Facts
- MORESCO II, a rural electric
cooperative, hired Cagalawan as a
Disconnection Lineman on a probationary
basis. On March 1, 1994 Cagalawan was
appointed to the same post this time on a
permanent basis.
- July 17, 2001, he was designated as
Acting Head of the disconnection crew in
one of the sub-offi in Misamis Oriental. In a
Memorandum, MORESCO II General
Manager Ke-e
transferred Cagalawan to another area as a
member of the disconnection crew.
- In a letter dated May 15, 2002,
cagalawan assailed his transfer claiming he
was effctively demoted to his position as
head of the disconnection crew to a mere
member. He also averted that such transfer
was inconvenient and prejudicial to him.
250
- In a memorandum dated May 16,
2002 the Ke-e explained that said transfer
was not a demotion since he was holding the
position only by mere designation and not
appointment. Meanwhile and in view of
Cagalawan’s transfer, Ke-e issued an order
recalling the former’s previous designation
as Acting Head of the disconnection crew of
the Balingasag sub-offi.
- Cagalawan eventually stopped
reporting for work. On July 1, 2002, he fied a
complaint for constructive dismissal before
the Arbitration branch of the NLRC against
MORESCO II and its
offirs, Ke-e and Danilo Subrado, in their
capacities as General Manager and Board
Chairman, respectively.
- In reply, Cagalawan claimed that
was transferred because he executed an
Affivit in support of his co-employee Jessie
Rances, who fied an illegal dismissal case
against MORESCO II.
Issues
MORESCO II thus fied this petition
raising the following issues:
(1)Was the respondent
constructively dismissed by the petitioner?
(2) Did the Court of Appeals err in
reversing the NLRC?
Ruling
The petition has no merit MORESCO
II’s belated submission of evidence cannot
be permitted.
Labor tribunals, such as the NLRC, are
not precluded from receiving evidence
submitted on appeal as technical rules are
not binding in cases submitted before them.
However, any delay in the submission of
evidence should be adequately explained
and should adequately prove the allegations
sought to be proven. In the present case,
MORESCO II did not cite any reason why it
had failed to fie its position paper or present
its cause before the Labor Arbiter despite
suffient notice and time given to do so. Only
after an adverse decision was rendered did it
present its defense and rebut the evidence

of Cagalawan by alleging that his transfer
was
made in response to the letter-request of the
area manager of the Gingoog sub-offi asking
for additional personnel to meet its
collection quota. To our mind, however, the
belated submission of the said letter-
request without any valid explanation casts
doubt on
its credibility, specially so when the same is
not a newly discovered evidence. For one,
the letter-request was dated May 8, 2002 or
a day before the memorandum for
Cagalawan’s transfer was issued.
MORESCO II could have easily
presented the letter in the proceedings
before the Labor Arbiter for serious
examination. Why it was not presented at
the earliest opportunity is a serious question
which lends credence to Cagalawan’s theory
that it may have just
been fabricated for the purpose of appeal.
It should also be recalled that after
Cagalawan received th memorandum for his
transfer to the Gingoog sub-offi, h
immediately questioned the basis thereof
through a letter addressed
to Ke-e. If at that time there was already a
letter- request from the Gingoog area
manager, Ke-e could have easily referred to
o specifid this in his subsequent
memorandum of May 16, 2002
which served as his response to Cagalawan’s
queries about the transfer. However, the
said memorandum was silent in this respect.
Nevertheless, Cagalawan, for his
part, faithfully complied with t transfer order
but with the reservation to contest its
validity precisely because he was not
adequately informed of its real basis.
The rule is that it is within the ambit
of the employer’s prerogative to transfer an
employee for valid reasons and according to
the requirement of its business, provided
that the transfer does not result in demotion
in rank or diminution of salary, benefis and
other privileges.45 This Court has always
considered the management’s prerogative
to transfer its employees in pursuit of its
251
legitimate interests. But this prerogative
should be exercised
without grave abuse of discretion and with
due regard to the basic elements of justice
and fair play, such that if there is a showing
that the transfer was unnecessary or
inconvenient and prejudicial to the
employee, it cannot be upheld.46 Here,
while we fid that the transfer of Cagalawan
neither entails any demotion in rank since he
did not have tenurial security over
the position of head of the disconnection
crew, nor result to diminution in pay as this
was not suffiently proven by him, MORESCO
II’s evidence is nevertheless not enough to
show that
said transfer was required by the exigency of
the electric cooperative’s business interest.
Simply stated, the evidence sought to be
admitted by MORESCO II is not substantial to
prove that there was a genuine business
urgency that necessitated the transfer.
xxx xxxClearly, not only was the delay
in the submission of MORESCO II’s evidence
not explained, there was also failure on its
part to suffiently support its allegation that
the transfer of Cagalawan was for a
legitimate purpose. This being the case,
MORESCO II’s plea that its evidence be
admitted in the interest of justice does not
deserve any merit.xxx xxx
WHEREFORE, the petition is DENIED.
The Decision dated July 26, 2005 or the Court
of Appeals in CA-G.R. SP No. 84991 and its
Resolution dated September 6, 2006, are
AFFIRMED.
SO ORDERED.
171 STANDARD ELECTRIC
MANUFACTURING CORPORATION vs
STANDARD ELECTRIC
EMPLOYEES UNION-NAFLU-KMU and
ROGELIO JAVIER,
FACTS:
Rogelio Javier was employed by the
Standard Electric Manufacturing
Corporation

(SEMC) as radial spot machine operator in its
Production Department. Javier was a
member of
the Standard Electric Employees Union-
NAFLU (Union). Javier failed to report for
work and
failed to notify the SEMC of the reason for his
absences. He was arrested and detained for
the
charge of rape. Later, the SEMC received a
letter from Javier, through counsel,
informing the
SEMC that Javier was detained for the charge
of rape and for that reason failed to report
for
work. He requested the SEMC to defer the
implementation of its intention to dismiss
him. The
SEMC denied Javiers request and issued a
Memorandum terminatin g his employment
for (a)
having been absent without leave (AWOL)
for more than fifteen days; and (b) for
committing
rape. Javier was his release from jail and
shortly thereafter reported for work, but the
SEMC
refused to accept him back.
Javier filed a Complaint for illegal
dismissal and averred that since the reason
for his
detention for rape was non-existent, the
termination of his employment was illegal.
The SEMC averred that Javiers prolonged
absences caused irreparable damages to its
orderly operation; he had to be replaced so
that the continuity and flow of production
would
not be jeopardized. It could not afford to
wait for Javiers indefinite return from
detention, if at
all. The SEMC insisted that conformably with
its Rules and Regulations, it was justified in
dismissing Javier for being absent without
leave for fifteen days or so.
ISSUE:
WON Javier dismissal was valid.
252
HELD:
NO. Respondent Javier was dismissed
by the petitioner effective February 5, 1996
for (a)
being AWOL from July 31, 1995 up to January
30, 1996; and (b) committing rape. However,
on
demurrer to evidence, respondent Javier
was acquitted of the charge. With
respondent Javiers
acquittal, the cause of his dismissal from his
employment turned out to be non-existent.
Respondent Javiers absence from August 9,
1995 cannot be deemed as an
abandonment of his work.
Abandonment is a matter of
intention and cannot lightly be inferred or
legally presumed
from certain equivocal acts. To constitute as
such, two requisites must concur: first, the
employee must have failed to report for
work or must have been absent without valid
or
justifiable reason; and second, there must
have been a clear intention on the part of the
employee to sever the employer-employee
relationship as manifested by some overt
acts, with
the second element being the more
determinative factor. Abandonment as a just
ground for
dismissal requires clear, willful, deliberate,
and unjustified refusa l of the employee to
resume
his employment.
Mere absence or failure to report for
work, even after notice to return, is not
tantamount to abandonment.
The petitioner acted with precipitate
haste in terminating respondent Javiers
employment on the ground that he had
raped the complainant therein. Respondent
Javier had
yet to be tried for the said charge. In fine, the
petitioner prejudged him, and pre-empted
the
ruling of the RTC. The petitioner had, in
effect, adjudged respondent Javier guilty

without due
process of law. While it may be true that
after the preliminary investigation of the
complaint,
probable cause for rape was found and
respondent Javier had to be detained, these
cannot be
made as legal bases for the immediate
termination of his employment.
Moreover, the petitioner did not
accord respondent Javier an opportunity to
explain his
absences. It bears stressing that for a
dismissal to be validly effected, the twin
requirements of
due process notice and hearing must be
observed. In dismissing an employee, an
employer has
the burden of proving that the former
worker has been served two notices: (1) one
to apprise
him of the particular acts or omissions for
which his dismissal is sought; and (2) the
other to
inform him of his employers decision to
dismiss him. As to the requirement of a
hearing, the
essence of due process lies in an opportunity
to be heard, and not always and
indispensably in
an actual hearing.
But Javier is not entitled to any salary
during the period of his detention. His
entitlement
to full backwages commenced from the time
the petitioner refused his reinstatement. In
the
instant case, when respondent Javier was
freed by virtue of the judgment of acquittal,
he
immediately proceeded to the petitioner but
was not accepted back to work; hence, the
reckoning point for the grant of backwages
started therefrom.
172 RUFINA SORIANO vs NLRC & KINGLY
COMMODITIES TRADERS AND MULTI-
253
RESOURCES,
INC.
FACTS:
Rufina Soriano worked as Investment
Counselor in 1977 and eventu ally became
the
Vice-President, Marketing of Kingly
Commodities Traders and Multi-Resources,
Inc.
On 1984, she was charged with allowing or
failing to supervise and monitor certain
activities of investment counsellors in her
department (which includes the signing of a
contract
opening an account for client, transfer of
funds and so on, without the knowledge and
authority
of the client of the said Corporation) which
results in loss of confidence in her.
Soriano was preventively suspended and
was required to explain her acts of failure to
act. She submitted her detailed answer in
her explanation. Thereafter, unsatisfied with
the
explanation of Soriano, the Executive VP and
General Manager of Kingly notified Soriano
that
the Corporation has lost confidence in her
ability to discharge the functions of her
office, thus
terminated her services.
Soriano filed a complaint for illegal
suspension and dismissal against Kingly.
That, Kingly
acted in bad faith in suspending and
termination her services and that kingly
violated her right
to due process by suspending her
immediately without the benefit of hearing
and argues that
the notice of preventive suspension was the
living proof that the corporation had already
concluded she was guilty of the charges
levelled against her even before she could
submit her
written explanation.
ISSUE:

Whether or not Rufina Soriano was
illegally suspended.
HELD:
No. Preventive suspension does not
in itself prove that the company had
prejudged that
Soriano was guilty of the charges she was
asked to answer and explain.
Preventive suspension may be
necessary for the protection of the company,
its
operation and assets, pending investigation
of the alleged malfeasance or misfeasance
on the
part of officers or employees of the company
and pending a decision on the part of th e
company.
Hence, considering the very senior
and sensitive character of petitioner’s
position as
head of a Department, a line position and
considering the unauthorized transactions
then just
discovered by the Kingly, the Court belie that
the preventive suspension was an arbitrary
and
capricious act amounting to bad faith on the
part of Kingly.
173 Manila Pavilion Hotel vs. Delada, G.R.
No. 189947, January 25, 2012
Facts:
Delada was the Union President of
the Manila Pavilion Supervisors Association
at MPH. He was originally assigned as Head
Waiter of Rotisserie, a fine-dining restaurant
operated by petitioner. Pursuant to a
supervisory personnel reorganization
program, MPH reassigned him as
Head Waiter of Seasons Coffee Shop,
another restaurant operated by petitioner at
the same hotel. Respondent declined the
inter-outlet transfer and instead asked for a
grievance meeting on the matter, pursuant
to their Collective Bargaining Agreement
(CBA). He also requested his
retention as Head Waiter of Rotisserie while
254
the grievance procedure was ongoing.
MPH replied and told respondent to report
to his new assignment for the time being,
without prejudice to the resolution of the
grievance involving the transfer. He
adamantly refused to assume his new post at
the Seasons Coffee Shop and instead
continued to report to his previous
assignment at Rotisserie. Thus, MPH sent
him several memoranda on various dates,
requiring him to explain in writing why he
should not be penalized for the following
offenses: serious misconduct; willful
disobedience of the lawful orders of the
employer; gross insubordination; gross and
habitual neglect of duties; and willful breach
of trust. Despite the notices from MPH,
Delada persistently rebuffed orders for him
to report to
his new assignment. According to him, since
the grievance machinery under their CBA
had already been initiated, his transfer must
be held in abeyance. Thus, on 9 May 2007,
MPH initiated administrative proceedings
against him.
Issue:
Whether MPH retained the authority
to continue with the administrative case
against Delada for insubordination and
willful disobedience of the transfer order.
Rulings:
Accordingly, we rule in this case that
MPH did not lose its authority to discipline
respondent for his continued refusal to
report to his new assignment. In relation to
this point, we recall our Decision in Allied
Banking Corporation v. Court of Appeals. In
Allied Banking Corporation, employer Allied
Bank reassigned respondent Galanida from
its Cebu City branch to its Bacolod and
Tagbilaran branches. He refused to follow
the transfer order and instead filed a
Complaint before the Labor Arbiter for
constructive dismissal. While the case was
pending, Allied Bank insisted that he report
to his new assignment. When he continued
to refuse, it directed him to explain in writing

why no disciplinary action should be meted
out to him. Due to his continued refusal to
report to his new assignment, Allied Bank
eventually terminated his services. When
the issue of whether he could validly refuse
to obey the transfer orders was brought
before this Court, we ruled thus: The refusal
to obey a valid transfer order constitutes
willful disobedience of a lawful order of an
employer. Employees may object to,
negotiate and seek redress against
employers for rules or orders that they
regard as unjust or illegal. However, until
and unless these rules or orders are declared
illegal or improper by competent authority,
the employees ignore or disobey them at
their peril. For Galanida’s continued refusal
to obey Allied Bank's transfer orders, we
hold that the bank dismissed Galanida for
just cause in accordance with Article 282(a)
of the Labor Code.
Galanida is thus not entitled to
reinstatement or to separation pay.
(Emphasis supplied, citations omitted).
It is important to note what the PVA
said on Delada’s defiance of the transfer
order:
In fact, Delada cannot hide under the legal
cloak of the grievance machinery of the CBA
or the voluntary arbitration proceedings to
disobey a valid order of transfer from the
management of the hotel. While it is true
that Delada’s transfer to Seasons is the
subject of the grievance
machinery in accordance with the provisions
of their CBA, Delada is expected to comply
first with the said lawful directive while
awaiting th results of the decision in the
grievance proceedings. This issue falls
squarely in the case of Allied Banking
Corporation vs. Court of Appeals x x x.
Pursuant to Allied Banking, unless
the order of MPH is rendered invalid, there
is a presumption of the validity of that order.
Since the PVA eventually ruled that the
transfer order was a valid exercise of
management prerogative, we hereby
reverse the Decision and the Resolution of
the CA affirming the Decision of the PVA in
255
this respect. MPH had the authority to
continue with the administrative
proceedings for insubordination and willful
disobedience against Delada and to impose
on him the penalty of suspension. As a
consequence, petitioner is not liable to pay
back wages and other benefits for the period
corresponding to the penalty of 90-day
suspension.
174 VICENTE SY,,et.al vs. HON. COURT OF
APPEALS and JAIME SAHOT
FACTS:
Jaime Sahot started working as a
truck helper for family-owned trucking
business named
Vicente Sy Trucking. In 1965, he became a
truck driver of the same family business,
renamed T.
Paulino Trucking Service, later 6B’s Trucking
Corporation in 1985, and thereafter known
as SBT
Trucking Corporation since 1994. In April
1994, Sahot was already 59 years old. He had
been
incurring absences as he was suffering from
various ailments. Particularly causing him
pain was
his left thigh, which greatly affected the
performance of his task as a driver. He
inquired about
his medical and retirement benefits with the
Social Security System (SSS) on April 25,
1994, but
discovered that his premium payments had
not been remitted by his employer.
Sahot had filed a week-long leave as
he was medically examined and treated for
EOR,
presleyopia, hypertensive retinopathy G II,
HPM, UTI, Osteoarthritis, and heart
enlargement.
On said grounds, Belen Paulino of the SBT
Trucking Service management told him to
file a
formal request for extension of his leave. At
the end of his week-long absence, Sahot
 256

applied Art. 284. Disease as a ground for

for extension of his leave for the whole termination- An employer may terminate
month of June, 1994. It was at this time the services
when of an employee who has been found to be
petitioners allegedly threatened to suffering from any disease and whose
terminate his employment should he refuse continued
to go back to employment is prohibited by law or
work. Petitioners then carried out their prejudicial to his health as well as the health
threat and dismissed him from work. He of his co employees: xxx
ended up sick, However, in order to validly
jobless and penniless. Sahot filed, a terminate employment on this ground, Book
complaint for illegal dismissal Petitioners VI, Rule I,
contend that Section 8 of the Omnibus Implementing
Sahot was not illegally dismissed as a driver Rules of the Labor Code requires:
because he was in fact petitioner’s industrial Sec. 8. Disease as a ground for dismissal-
partner. Sahot become an employee of the Where the employee suffers from a disease
company only in year 1994 wh en SBT and his continued employment is prohibited
Trucking by law or prejudicial to his health or to the
Corporation was established and prior he health
went on leave, Sahot was not able to report of his coemployees, the employer shall not
for work terminate his employment unless there i s a
for almost seven days. And after the certification by competent public health
expiration of his leave, he never reported authority that the disease is of such nature
back to work nor or at such a
did he file an extension of his leave. Instead, stage that it cannot be cured within a period
he filed the complaint for illegal dismissal of six (6) months even with proper medical
against treatment. If the disease or ailment can be
the trucking company and its owners. cured within the period, the employer shall
Petitioners add that due to Sahot’s refusal to not
work after terminate the employee but shall ask the
the expiration of his authorized leave of employee to take a leave. The employer shall
absence, he should be deemed to have reinstate such employee to his former
voluntarily position immediately upon the restoration
resigned from his work. They contended that of his normal
Sahot had all the time to extend his leave or health. (Italics supplied).
at The requirement for a medical
least inform petitioners of his health certificate under Article 284 of the Labor
condition. Code cannot be
dispensed with; otherwise, it would sanction
ISSUE: the unilateral and arbitrary determination by
Whether or not there was valid the
dismissal employer of the gravity or extent of the
employee’s illness and thus defeat the public
HELD: policy in
There was an invalid dismissal. Article the protection of labor.
284 of the Labor Code authorizes an In the case at bar, the employer
employer to terminate an employee on the clearly did not comply with the medical
ground of disease, viz: certificate
requirement before Sahot’s dismissal was

effected. In the same case of Sevillana vs. I.T.
(International) Corp., we ruled:
Since the burden of proving the
validity of the dismissal of the employee
rests on the
employer, the latter should likewise bear
the burden of showing that the requisites
for a valid
dismissal due to a disease have been
complied with. In the absence of the
required
certification by a competent public health
authority, this Court has ruled against the
validity
of the employee’s dismissal. It is therefore
incumbent upon the private respondents to
prove
by the quantum of evidence required by law
that petitioner was not dismissed, or if
dismissed,
that the dismissal was not illegal; otherwise,
the dismissal would be unjustified. This
Court will
not sanction a dismissal premised on mere
conjectures and suspicions, the evidence
must be
substantial and not arbitrary and must be
founded on clearly established facts
sufficient to
warrant his separation from work. In
addition, we must likewise determine if the
procedural
aspect of due process had been complied
with by the employer.
From the records, it clearly appears
that procedural due process was not
observed in
the separation of private respondent by the
management of the trucking company. The
employer is required to furnish an employee
with two written notices before the latter is
dismissed: (1) the notice to apprise the
employee of the particular acts or omissions
for which
his dismissal is sought, which is the
equivalent of a charge; and (2) the notice
informing the
employee of his dismissal, to be issued after
the employee has been given reasonable
257
opportunity to answer and to be heard on his
defense. These, the petitioners failed to do,
even
only for record purposes. What
management did was to threaten the
employee with dismissal,
then actually implement the threat when the
occasion presented itself because of private
respondent’s painful left thigh.
All told, both the substantive and
procedural aspects of due process were
violated.
Clearly, therefore, Sahot’s dismissal is
tainted with invalidity.
175 ALEXANDER B. GATUS v. SOCIAL
SECURITY SYSTEM
FACTS:
Gatus worked at the Central
Azucarera de Tarlac beginning on January 1,
1972. He was a covered member of the SSS.
He optionally retired from Central Azucarera
de Tarlac upon reaching 30 years of service
on January 31, 2002, at the age of 62
years.By the time of his retirement, he held
the position of Tender assigned at the
Distillery Cooling Tower.
Sometime in 1995, he was diagnosed
to be suffering from Coronary Artery Disease
(CAD): Triple Vessel and Unstable Angina. His
medical records showed him to be
hypertensive for 10 years and a smoker.
On account of his CAD, he was given
by the SSS the following EC/SSS Permanent
Partial Disability (PPD) benefits: (a) 8
monthly pensions effective September 1,
1994 and (b) 4 monthly pensions effective
January 3, 1997. He became an SSS
retirement pensioner on February 1, 2002.
Sometime in 2003, an SSS audit
revealed the need to recover the EC benefits
already paid to him on the ground that his
CAD, being attributed to his chronic
smoking, was not work-related. He was
notified thereof through a letter dated July
31, 2003.

Convinced that he was entitled to the
benefits, he assailed the decision but the SSS
maintained its position. The SSS also denied
his motion for reconsideration.
Gatus then elevated the case to the
Employers Compensation Commission,
which held that although his CAD was a
cardiovascular disease listed as an
occupational disease under Annex A of the
Implementing Rules on Employees
Compensation, nothing on record
established the presence of the qualifying
circumstances for responsibility; that it was
incumbent upon him to prove that the
nature of his previous employment and the
conditions prevailing therein had increased
the risk of contracting his CAD; and that he
had failed to prove this requisite.
The Court of Appeals also agreed
with the Employees Compensation
Commission despite petitioner Gatus's
allegation that his ailment was caused by his
exposure to harmful fuel and smoke
emissions due to the presence of methane
gas from a nearby biological waste as well as
a railway terminal where diesel-fed
locomotive engines spewed black smoke.
This allegation, according to the findings,
was not backed up by any scientific and
factual evidence.
ISSUE:
Did the Court of Appeals commit
grave abuse of discretion in affirming the
finding of the ECC that petitioners ailment
is not compensable under Presidential
Decree No. 626, as amended?
HELD:
Social Security System Benefits - As
found by the Court of Appeals, petitioner
failed to submit substantial evidence that
might have shown that he was entitled to
the benefits he had applied for. The Supreme
Court affirmed the findings of the CA that
according to Section 1, Rule III of the
Amended Rules on Employees'
Compensation, a ground for compensability
is that for the sickness and the resulting
258
disability or death be compensable, the
sickness must be the result of an
occupational disease listed under Annex "A"
of the said rules with the conditions set
therein satisfied. Otherwise, proof must be
shown that the risk of contracting the
disease is increased by the working
conditions.
Moreover, according to the Annex
"A" of the Amended Rules, for an
occupational disease and the resulting
disability or death to be compensable, all of
the following conditions must be satisfied:
1. The employee's work must involve
the risks described herein;
2. The disease was contracted as a
result of the employee's exposure to the
described risks;
3. The disease was contracted within
a period of exposure and under such other
factors necessary to contract it;
4. There was no notorious negligence
on the part of the employee.
Cardiovascular diseases are
considered as occupational when contracted
under any of the following conditions:
(a) If the heart disease was known to
have been present during employment there
must be proof that an acute exacerbation
clearly precipitated by the unusual strain by
reason of the nature of his work.
(b) The strain of work that brings
about an acute attack must be of sufficient
severity and must be followed within
twenty-four (24) hours by the clinical signs of
a cardiac insult to constitute causal
relationship.
(c) If a person who was apparently
asymptomatic before subjecting himself 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.
The petitioner failed to submit
substantial evidence that might have shown
that he was entitled to the benefits he
applied for. The quantum of proof needed in
this case is substantial evidence, which

means such relevant evidence as a
reasonable mind might accept as adequate
to support a conclusion. Gatus did not
discharge the burden of proof imposed
under the Labor Code to show that his
ailment was work-related. While he might
have been exposed to various smoke
emissions at work for 30 years, he did not
submit satisfactory evidence proving that
the exposure had contributed to the
development of his disease or had increased
the risk of contracting the illness. Neither did
he show that the disease had progressed due
to conditions in his job as a factory worker.
In fact, he did not present any physicians
report in order to substantiate his allegation
that the working conditions had increased
the risk of acquiring the cardiovascular
disease.
DENIED
176 Villaruel vs. Yeo Han Guan, G.R. No.
169191, June 1, 2011
Facts:
Petitioner alleged that in June 1963,
he was employed as a machine operator by
Ribonette Manufacturing Company, an
enterprise engaged in the business of
manufacturing and selling PVC pipes and is
owned and managed by herein respondent
Yeo Han Guan. Over a period of almost
twenty (20) years, the company changed its
name four times. Starting in 1993 up to the
time of the filing of petitioner's complaint in
1999, the company was operating under the
name of Yuhans Enterprises. Despite the
changes in the company's name, petitioner
remained in the employ of respondent.
Petitioner further alleged that on October 5,
1998, he got sick and was confined in a
hospital; on December 12, 1998, he reported
for work but was no longer permitted to go
back because of his illness; he asked that
respondent allow him to continue working
but be assigned a lighter kind of work but his
request was denied; instead, he was offered
a sum of P15,000.00 as his separation pay;
259
however, the said amount
corresponds only to the period between
1993 and 1999; petitioner prayed that he be
granted separation pay computed from his
first day of employment in June 1963, but
respondent refused. Aside from separation
pay, petitioner prayed for the payment of
service incentive leave for three years as well
as attorney's fees.
The Labor Arbiter found for the
respondent, granting him separation pay
from the June 1963 up to the time of
separation, and service incentive leave
equivalent to 15 days. The NLRC affirmed.
On appeal, the CA reversed the NLRC on the
issue of separation pay.
Issue:
The assigned errors in the instant
petition essentially boil down to the
question of whether petitioner is entitled to
separation pay under the provisions of the
Labor Code, particularly Article 284 thereof,
which reads as follows:
An employer may terminate the
services of an employee who has been found
to be suffering from any disease and whose
continued employment is prohibited by law
or is prejudicial to his health as well as to the
health of his co-employees: Provided, That
he is paid separation pay equivalent to at
least one (1) month salary or to one-half (½)
month salary for every year of service
whichever is greater, a fraction of at least six
months being considered as one (1) whole
year.
Held:
A plain reading of the abovequoted
provision clearly presupposes that it is the
employer who terminates the services of the
employee found to be suffering from any
disease and whose continued employment is
prohibited by law or is prejudicial to his
health as well as to the health of his
coemployees. It does not contemplate a
situation where it is the employee who
severs his or her employment ties. This is
precisely the reason why Section 8, Rule 1,

Book VI of the Omnibus Rules Implementing
the Labor Code, directs that an employer
shall not terminate the services of the
employee unless there is a certification by a
competent public health authority that the
disease is of such nature or at such a stage
that it cannot be cured within a period of six
(6) months even with proper medical
treatment.
On the other hand, the Court agrees
with the CA in its observation of the
following circumstances as proof that
respondent did not terminate petitioner's
employment: first, the only cause of action
in petitioner's original complaint is that he
was “offered a very low separation pay”;
second, there was no allegation of illegal
dismissal, both in petitioner's original and
amended complaints and position paper;
and, third, there was no prayer for
reinstatement.
In consonance with the above
findings, the Court finds that petitioner was
the one who initiated the severance of his
employment relations with respondent. It is
evident from the various pleadings filed by
petitioner that he never intended to return
to his employment with respondent on the
ground that his health is failing. Indeed,
petitioner did not ask for reinstatement. In
fact, he rejected respondent's offer for him
to return to work.
This is tantamount to resignation.
Resignation is defined as the voluntary act of
an employee who finds himself in a situation
where he believes that personal reasons
cannot be
sacrificed in favor of the exigency of the
service and he has no other choice but to
disassociate himself from his employment.
It may not be amiss to point out at
this juncture that aside from Article 284 of
the Labor Code, the award of separation pay
is also authorized in the situations dealt with
in Article 283 [16] of the same Code and
under Section 4 (b), Rule I, Book VI of the
Implementing Rules and Regulations of the
said Code[17] where there is illegal dismissal
and reinstatement is no longer feasible. By
260
way of exception, this Court has allowed
grants of separation pay to stand as “a
measure of social justice” where the
employee is validly dismissed for causes
other than serious misconduct or those
reflecting on his moral character. [18]
However, there is no provision in the Labor
Code which grants separation pay to
voluntarily resigning employees. In fact, the
rule is that an employee who voluntarily
resigns from employment is not entitled to
separation pay, except when it is stipulated
in the employment contract or CBA, or it is
sanctioned by established employer practice
or policy. [19] In the present case, neither
the abovementioned provisions of the Labor
Code and its implementing rules and
regulations nor the exceptions apply
because petitioner was not dismissed from
his employment and there is no evidence to
show that payment of separation pay is
stipulated in his employment contract or
sanctioned by established practice or policy
of herein respondent, his employer.
Since petitioner was not terminated
from his employment and, instead, is
deemed to have resigned therefrom, he is
not entitled to separation pay under the
provisions of the Labor Code. The foregoing
notwithstanding, this Court, in a number of
cases, has granted financial assistance to
separated employees as a measure of social
and compassionate justice and as an
equitable concession. Taking into
consideration the factual circumstances
obtaining in the present case, the Court finds
that petitioner is entitled to this kind of
assistance.
In this regard, the Court finds credence in
petitioner's contention that he is in the
employ of respondent for more than 35
years. In the absence of a substantial
refutation on the part of respondent, the
Court agrees with the findings of the Labor
Arbiter and the NLRC that respondent
company is not distinct from its
predecessors but, in fact, merely continued
the operation of the latter under the same
owners and the same business venture. The

Court further notes that there is no evidence
on record to show that petitioner has any
derogatory record during his long years of
service with respondent and that his
employment was severed not by reason of
any infraction on his part but because of his
failing physical
condition. Add to this the willingness of
respondent to give him financial assistance.
Hence, based on the foregoing, the Court
finds that the award of P50,000.00 to
petitioner as financial assistance is deemed
equitable under the circumstances.
177 Wilfredo Y. Antiquina v. Magsaysay
Maritime Corporation and/or Masterbulk
Pte., Ltd., G.R. No. 168922. April 13, 2011.
Rules of Procedure; liberal construction in
favor of working class.
Petitioner claimed disability benefits
under a Collective Bargaining Agreement
that the respondent employer entered into
with a foreign union. The Court of Appeals
refused to admit the evidence of petitioner
showing his membership in the union on the
ground that it was submitted only with the
Motion for Reconsideration. The Supreme
Court, in agreeing to examine the evidence
belatedly submitted by petitioner, pointed
out that technical rules of procedure shall be
liberally construed in favor of the working
class in accordance with the demands of
substantial justice. Rules of procedure and
evidence should not be applied in a very rigid
and technical sense in labor cases in order
that technicalities would not stand in the
way of equitably and completely resolving
the rights and obligations of the parties.
Wilfredo Y. Antiquina v. Magsaysay Maritime
Corporation and/or Masterbulk Pte.,
Ltd., G.R. No. 168922. April 13,
2011. Disability Benefits; entitlement and
burden of proof. Petitioner suffered a
fractured arm while working on
respondent‟s vessel. He filed a complaint for
permanent disa bility benefits, among
others. Petitioner claims that he is entitled to
261
the higher amount of disability benefits
under the Collective Bargaining Agreement
which respondent entered into with a union
of which petitioner was a member. The
Court of Appeals den ied the petitioner‟s
claim. The Supreme Court, in upholding the
Court of Appeals, held that the burden of
proof rests upon the party who asserts the
affirmative of an issue. And in labor cases,
the quantum of proof necessary is
substantial evidence, or such amount of
relevant evidence which a reasonable mind
might accept as adequate to justify a
conclusion. Petitioner had the duty to prove
by substantial evidence his own positive
assertions. He did not discharge this burden
of proof when he submitted
photocopied portions of a different CBA
with a different union. Wilfredo Y. Antiquina
v. Magsaysay Maritime Corporation and/or
Masterbulk Pte., Ltd., G.R. No. 168922. April
13, 2011. Public office; casual employees.
Respondent was a casual teller who was
dismissed from service by petitioner
without being formally charged. On appeal,
the Civil Service Commission (CSC) upheld
the dismissal and reasoned that respondent
was a casual employee, and therefore her
services may be terminated at any time,
without need of a just cause. Upon review,
both the Court of Appeals and the Supreme
Court found that respondent was illegally
terminated. The Supreme Court recognized
its prono uncement in a recent case that
“Even a casual or temporary employee
enjoys security of tenure and cannot be
dismissed except for cause enumerated in
Sec. 22, Rule XIV of the Omnibus Civil Service
Rules and Regulations and other pertinent
laws.” However, the Court also went on to
state that, despite this new ruling on casual
employees, it is not the intention of the
Court to make the status of a casual
employee at par with that of a regular
employee, who enjoys permanence of
employment. The rule is still that casual
employment will cease automatically at the
end of the period unless renewed. Casual
employees may also be terminated anytime

though subject to certain conditions or
qualifications with reference to the CSC
Form No. 001. Thus, they may be laid-off
anytime before the expiration of the
employment period provided any of the
following occurs: (1) when their services are
no longer needed; (2) funds are no longer
available; (3) the project has already been
completed/finished; or (4)
their performance are below par. Philippine
Charity Sweepstakes Office Board of
Directors and Reynaldo P. Martin v. Marie
Jean C. Lapid, G.R. No. 191940. April 12,
2011. Public office; security of tenure.
Respondent was a casual teller who, having
been found guilty of „Discourtesy in the
Course of Official Duties‟ and of „Grave
Misconduct‟, was dismissed from service by
petitioner. On appeal, the Civil Service
Commission (CSC) ruled that despite lapses
in procedural due process committed by
petitioner employer, the dismissal was
proper since respondent belonged to the
category of a casual employee which does
not enjoy security of tenure. Hence, she may
be separated from service at any time, there
being no need to show cause. The Court of
Appeals disagreed and declared the
dismissal illegal. The Supreme Court
affirmed the findings of the Court of Appeals.
In doing so, the Court relied on Section 3(2),
Article XIII of the Constitution which
guarantees the rights of all workers to
security of tenure. The Court also recognized
its pronouncement in a recent case that
“Even a casual or temporary employee
enjoys security of tenure and cannot be
dismissed except for cause enumerated in
Sec. 22, Rule XIV of the Omnibus Civil Service
Rules and Regulations and other pertinent
laws.”
178 COASTAL SAFEWAY MARINE SERVICES
INC., Petitioner, v. ELMER T. ESGUERRA,
Respondent.
FACTS:
262
Elmer T. Esguerra (Esguerra) was
hired by Coastal Safeway Marine Services,
Inc. (CSMSI) sometime in 2003 as Third Mate
for the M/V Mr. Nelson, an ocean-going
vessel under the flag of the United Arab
Emirates (UAE) owned by its foreign
principal, Canada & Middle East General
Trading (CMEGT). Subject to the provisions
of the POEA-SEC, the contract of
employment executed by the parties on 9
May 2003 provided a term of one (1) year
and a basic monthly salary of US$800.00 for
a 48-hour work-week, with provisions for
overtime pay and vacation leave with
pay.Rather than the aforesaid vessel,
however, it appears that, on 13 May 2003,
Esguerra, as Second Officer, eventually
boarded the vessel M/V Gondwana which
was likewise manned by CSMSI on behalf of
Nabeel Shipmanagement Ltd. Fze. (NSLF).
On 28 June 2003 or after forty six (46)
days of shipboard employment, Esguerra
requested medical attention for back and
chest pains while M/V Gondwana was
docked at Port Jebel Ali, UAE. Examined on 5
July 2003 at the Jebel Ali Medical Centre,
Esguerra was declared "not fit for work until
complete cardiac evaluation is done" and
"advised to rest until then" by Dr. Zarga S.
Tulmar. Thereafter, Esguerra insisted on
going home on the ground that he had been
rendered unfit for work. Alleging that he had
yet to receive his salary for June 2003 and
that his employer was making him shoulder
his repatriation expenses as a consequence
of his failure to finish his contract, Esguerra
also sought assistance from the Jebel Ali
police/coastguard regarding his
predicament.Subsequent to his arrival in the
Philippines on 7 July 2003, Esguerra went to
the Philippine Heart Center (PHC), the
Philippine Orthopedic Hospital (POH) and
the Philippine General Hospital (PGH) for
medical evaluation and treatment.
On 16 July 2003, Esguerra filed
against CSMSI, its president, Benedicto C.
Morcilla (Morcilla), and CMEGT, the
complaint for medical reimbursement,
sickness allowance, permanent disability

benefits, damages and attorney fees before
the arbitral level of the NLRC. Subsequent to
the filing of said complaint, Dr. Vicaldo and
Dr. Saguin of the PGH issued separate
medical certificates both declaring Esguerra
unfit for work.
In refutation, CSMSI, Morcilla and
CMEGT averred that the tests administered
on Esguerra at the Jebel Ali Medical Centre
revealed that he was in good health; and,
that disregarding the finding that he
continued to be fit for work, Esguerra
insisted on his repatriation and filed his
complaint without submitting himself to a
post-employment medical examination
within three (3) working days upon his
return.
The Labor Arbiter, as affirmed by the
NLRC, dismissed the complaint on the
ground that Esguerra failed to prove his
disability and to submit himself to a post-
employment medical examination by a
company-designated physician, pursuant to
Section 20-B of the POEA SEC.
Through a petition for certiorari with
the CA, Esguerra received a favorable
decision. The CA reversed the NLRC ruling
and CSMSI subsequent motion for
reconsideration was denied. Hence, this
petition.
ISSUE:
Whether or not the Court of Appeals
misappreciated the evidence and applied the
POEA Standard Employment Contract of
1996 instead of the Revised Terms and
Conditions for Seafarers on Board Ocean-
Going vessels, which is part and parcel of the
Contract of Employment entered into
between Esguerra and the petitioner on May
9, 2003?
HELD:
The petition is impressed with merit.
Viewed in light of the fact that
Esguerra contract of employment was
executed on 9 May 2003, CSMSI correctly
faults the CA for applying POEA
Memorandum Circular No. 055-96 instead of
263
the 2000 POEA-SEC which took effect on 25
June 2000. Deemed written in the seafarer's
contract of employment,the 2000 POEA-SEC
like its predecessor was designed primarily
for the protection and benefit of Filipino
seamen in the pursuit of their employment
on board ocean-going vessels.ection 20-B (3)
thereof has been interpreted to mean that it
is the company-designated physician who is
entrusted with the task of assessing the
seaman's disability,whether total or partial,
due to either injury or illness, during the
term of the latter's employment.
Concededly, this does not mean that
the assessment of said physician is final,
binding or conclusive on the claimant, the
labor tribunal or the courts. Should he be so
minded, the seafarer has the prerogative to
request a second opinion and to consult a
physician of his choiceregarding his ailment
or injury, in which case the medical report
issued by the latter shall be evaluated by the
labor tribunal and the court, based on its
inherent merit.For the seaman 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 POEA-
SEC.
There is no dispute regarding the fact
that Esguerra had altogether failed to
comply with the above-discussed mandatory
reporting requirement. Beyond his bare
assertion, however, that CSMSI "never gave
him referrals to continue his medications as
recommended by the foreign doctor"
despite his call on 8 July 2003 "to inform
them that he will report the next day in order
to submit his medical evaluation abroad,"
Esguerra did not present any evidence to
prove justification for his inability to submit
himself to a post-employment medical
examination by a company-designated
physician. If a written notice is required of a
seafarer who is physically incapacitated for

purposes of compliance with said
requirement, the Court fails to see why a
more tangible proof should not likewise be
expected of Esguerra who, after his arrival
on 7 July 2003, appears to have been well
enough to consult with Dr. Vicaldo and Dr.
Saguin on 9 July 2003.
Esguerra compliance with the
mandatory reporting requirement under the
POEA-SEC was made even more imperative
by the fact that his repatriation for medical
reasons was categorically disputed by
CSMSI. Consistent with the 5 July 2003
diagnosis made by Dr. Tulmar at the Jebel Ali
Medical Centre declaring him "not fit for
work until complete cardiac evaluation is
done" and advising him "to rest until then,"
it appears that Esguerra underwent
serology, hematology, biochemistry and x-
ray diagnostic tests which yielded no
significant findings relative to the back and
chest pains he claims to have
suffered.Although the 5 July 2003 notation
made on the M/V Gondwana Chief Officer
Logbook states that he was "advised to be
repatriated" on the same day and "to
continue his medication in the Philippines,"
no less than Esguerra himself confirmed in
his 6 July 2003 letter to the Jebel Ali
police/coastguard that he had yet to
undergo a compete cardiac evaluation and
that CSMSI foreign principal, NSLF, had
refused to shoulder his repatriation
expenses on the ground that he was unable
to finish his contract.
Quite significantly, Esguerra also filed
his complaint on 16 July 2003, before his
impediment rating was definitively assessed
by either Dr. Vicaldo or Dr. Saguin. Perusal of
the record further shows that, by and of
themselves, the medical certifications upon
which Esguerra anchored his claims for
disability benefits and sickness allowance
were not supported by such diagnostic tests
and/or procedures as would adequately
refute the normal results of those
administered to him at the Jebel Ali Medical
Centre.
264
Granted that strict rules of evidence
are not applicable in claims for
compensation and mere probability and not
the ultimate degree of certainty is regarded
as the touchstone or test of proof in
compensation proceedings, it cannot be
gainsaid that awards of compensation
cannot rest in speculations or presumptions.
In the absence of showing of adequate tests
and reasonable findings to support the
same, the divergent Impediment Grades
assessed by Dr. Vicaldo and Dr. Saguin
cannot be expediently taken at face value. In
Magsaysay Maritime Corporation vs.
Velasquez,this Court significantly brushed
aside the evidentiary value of a
recommendation made by Dr. Vicaldo which
was likewise "based on a single medical
report which outlined the alleged findings
and medical history" of the claimant-
seafarer. In Montoya vs. Transmed Manila
Corporation, a similar fate was dealt the
same doctor's plain statement of the
supposed work-relation/work-aggravation
of a seafarer's ailment which was "not
supported by any reason or proof submitted
together with the assessment or in the
course of the arbitration."
GRANTED.
179 MAGSAYSAY MARITIME
CORPORATION and/or WASTFEL-LARSEN
MANAGEMENT A/S, Petitioners, v.
OBERTO S. LOBUSTA, Respondent.
FACTS:
Respondent Oberto S. Lobusta is a
seaman who has worked for Magsaysay
Maritime Corporation since 1994. In March
1998, he was hired again as Able Seaman by
Magsaysay Maritime Corporation. Lobusta
boarded MV "Fossanger" on March 16, 1998.
After two months, he complained of
breathing difficulty and back pain.
On May 12, 1998, while the vessel
was in Singapore, Lobusta was admitted at
Gleneagles Maritime Medical Center and
was diagnosed to be suffering from severe

acute bronchial asthma with secondary
infection and lumbosacral muscle strain. Dr.
C K Lee certified that Lobusta was fit for
discharge on May 21, 1998, for repatriation
for further treatment.
Upon repatriation, Lobusta was
referred to Metropolitan Hospital. The
medical coordinator, Dr. Robert Lim, issued
numerous medical reports regarding
Lobustas condition. Upon reexamination by
the Orthopedic Surgeon on August 11, 1998,
he opined that Lobusta needs surgery, called
decompression laminectomy, which was
done on August 30, 1998.
As the parties failed to reach a
settlement as to the amount to which
Lobusta is entitled, Lobusta filed on October
2, 2000, a complaint for disability/medical
benefits against petitioners before the
National Labor Relations Commission
(NLRC).
The Labor Arbiter rendered a
decision ordering petitioners to pay Lobusta
(a) US$2,060 as medical allowance, (b)
US$20,154 as disability benefits, and (c) 5%
of the awards as attorneys fees. On appeal,
the NLRC affirmed the LA decision.
Unsatisfied, Lobusta brought the case to the
CA. The CA granted the petition for certiorari
of Lobusta and modified the findings of the
NLRC. As aforesaid, the CA declared that
Lobusta is suffering from permanent total
disability and increased the award of
disability benefits in his favor to US$60,000.
Hence, this petition.
Petitioners argue that the CA erred in
applying the provisions of the Labor Code
instead of the provisions of the POEA
contract in determining Lobustas disability,
and in ruling that the mere lapse of 120 days
entitles Lobusta to total and permanent
disability benefits. The CA allegedly erred
also in holding them liable for attorneys fees,
despite the absence of legal and factual
bases.
ISSUE:
Whether or not the CA erred in in
applying the provisions of the Labor Code
265
instead of the provisions of the POEA
contract in determining Lobustas disability,
and in ruling that the mere lapse of 120 days
entitles Lobusta to total and permanent
disability benefits.
HELD:
No. CA Decision Affirmed.
Labor Law
Standard terms of the POEA Standard
Employment Contract agreed upon are
intended to be read and understood in
accordance with Philippine laws,
particularly, Articles 191 to 193 of the Labor
Code, as amended, and the applicable
implementing rules and regulations in case
of any dispute, claim or grievance.
Petitioners are mistaken that it is
only the POEA Standard Employment
Contract that must be considered in
determining Lobusta's disability. In Palisoc v.
Easways Marine, Inc., we said that whether
the Labor Codes provision on permanent
total disability applies to seafarers is already
a settled matter.
In Palisoc, we cited the earlier case of
Remigio v. National Labor Relations
Commission where we said (1) that the
standard employment contract for seafarers
was formulated by the POEA pursuant to its
mandate under Executive Order No. 247 "to
secure the best terms and conditions of
employment of Filipino contract workers
and ensure compliance therewith," and "to
promote and protect the well-being of
Filipino workers overseas"; (2) that Section
29 of the 1996 POEA Standard Employment
Contract 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; and (3) that even without this
provision, a contract of labor is so impressed
with public interest that the 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.
Temporary total disability only
becomes permanent when so declared by
the company physician within the periods he
is allowed to do so, or upon the expiration of
the maximum 240-day medical treatment
period without a declaration of either fitness
to work or the existence of a permanent
disability.
To be sure, there is one Labor Code
concept of permanent total disability, as
stated in Article 192(c)(1) of the Labor Code,
as amended, and the ECC Rules. We also
note that the first paragraph of Section
20(B)(3) of the 2000 POEA Standard
Employment Contract was lifted verbatim
from the first paragraph of Section 20(B)(3)
of the 1996 POEA Standard Employment
Contract, to wit:
Upon sign-off from the vessel for
medical treatment, the seafarer is entitled to
sickness allowance equivalent to his basic
wage until he is declared fit to work or the
degree of permanent disability has been
assessed by the company-designated
physician, but in no case shall this period
exceed one hundred twenty (120) days.
Applying the foregoing
considerations, we agree with the CA that
Lobusta suffered permanent total disability.
On this point, the NLRC ruling was not in
accord with law and jurisprudence.
Upon repatriation, Lobusta was first
examined by the Pulmonologist and
Orthopedic Surgeon on May 22, 1998. The
maximum 240-day (8-month) medical-
treatment period expired, but no declaration
was made that Lobusta is fit to work. Nor
was there a declaration of the existence of
Lobustas permanent disability. On February
16, 1999, Lobusta was still prescribed
medications for his lumbosacral pain and
was advised to return for reevaluation. May
22, 1998 to February 16, 1999 is 264 days or
6 days short of 9 months.
In fact, the CA has found that Lobusta
was not able to work again as a seaman and
that his disability is permanent "as he has
266
been unable to work since 14 May 1998 to
the present or for more than 120 days." This
period is more than eight years, counted
until the CA decided the case in August 2006.
On the CA ruling that Lobustas disability is
permanent since he was unable to work "for
more than 120 days," we have clarified in
Vergara that this "temporary total disability
period may be extended up to a maximum of
240 days."
Thus, we affirm the award to Lobusta
of US$60,000 as permanent total disability
benefits, the maximum award under Section
30 and 30-A of the 1996 POEA Standard
Employment Contract. We also affirm the
award of US$2,060 as sickness allowance
which is not contested and appears to have
been accepted by the parties.
DENIED
180 Philasia Shipping Agency Corporation,
et al. vs. Andres G. Tomacruz. G.R. No.
181180, August 15, 2012.
Disability benefits; entitlement.
Entitlement of seafarers to disability
benefits is governed not only by medical
findings but also by contract and by law. By
contract, Department Order No. 4, series of
2000, of the Department of Labor and
Employment and the parties’ Collective
Bargaining Agreement bind the seafarer and
the employer. By law, the Labor Code
provisions on disability apply with equal
force to seafarers. The seafarer, upon sign-
off from his vessel, must report to the
company-designated physician within three
(3) days from arrival for diagnosis and
treatment. For the duration of the treatment
but in no case to exceed 120 days, the
seaman is on temporary total disability as he
is totally unable to work. He receives his
basic wage during this period until he is
declared fit to work or his temporary
disability is acknowledged by the company
to be permanent, either partially or totally,
as his condition is defined under the POEA
Standard Employment Contract and by

applicable Philippine laws. If the 120 days
initial period is exceeded and no such
declaration is made because the seafarer
requires further medical attention, then the
temporary total disability period may be
extended up to a maximum of 240 days,
subject to the right of the employer to
declare within this period that a permanent
partial or total disability already exists. The
seaman may of course also be declared fit to
work at any time such declaration is justified
by his medical condition.
From the time Tomacruz was
repatriated on November 18, 2002, he
submitted himself to the care and treatment
of the company-designated physician. When
the company-designated physician made a
declaration on July 25, 2003 that Tomacruz
was already fit to work, 249 days had already
lapsed from the time he was repatriated. As
such, his temporary total disability should be
deemed total and permanent, pursuant to
Article 192 (c)(1) of the Labor Code and its
implementing rule.
181-182 JESSIE V. DAVID, represented by
his wife, MA. THERESA S. DAVID, and
children, KATHERINE AND KRISTINA
DAVID,Petitioners, v. OSG
SHIPMANAGEMENT MANILA, INC. AND/OR
MICHAELMAR SHIPPING SERVICES,
Respondents.
FACTS:
Petitioner Jessie David (David)
entered into a six-month Contract of
Employment with respondent OSG
Shipmanagement Manila, Inc. (OSG Manila),
for and in behalf of its principal Michaelmar
Shipping Services, Inc., (Michaelmar) as a
Third Officer of the crude tanker M/T
Raphael. Part of his duties as a Third Officer
of the crude tanker involved overseeing the
loading, stowage, securing and unloading of
cargoes. David was also frequently exposed
to the crude oil that M/T Raphael was
carrying.
Barely six months into his
employment, David complained of an
267
intolerable pain on his left foot. Thus, David
was repatriated to the Philippines to
undergo treatment.
Immediately after his return to the
country, OSG Manila referred David to the
company-designated physician, Dr. Robert
Lim, who referred him to the Cardinal Santos
Medical Center for a Magnetic Resonance
Imaging (MRI). The pathology report showed
that David was suffering from malignant
fibrous histiocytoma (MFH) in his left thigh.
Due to his condition, David underwent
chemotherapy. However, despite several
requests, OSG Manila and Michaelmar
refused to shoulder Davids expenses and
medication.
Hence, David filed a complaint to
recover his disability benefits. The LA ruled
in favor of David. The NLRC affirmed the
Decision of the LA. However, the CA ruled
against Davids entitlement to the benefits he
claimed.
ISSUE:
Whether or not Davids illness is
compensable?
HELD:
The petition has merit.
LABOR LAW: compensability of
illness
In this case, David suffered from
malignant fibrous histiocytoma (MFH) in his
left thigh. MFH is not one of the diseases
enumerated under Sec. 32 of the POEA-SEC.
However, Sec. 20(B)(4) of the POEA-SEC
clearly established a disputable presumption
in favor of the compensability of an illness
suffered by a seafarer during the term of his
contract. This disputable presumption works
in favor of the employee pursuant to the
mandate under Executive Order No. (EO)
247 dated July 21, 1987 under which the
POEA-SEC was created: "to secure the best
terms and conditions of employment of
Filipino contract workers and ensure
compliance therewith" and "to promote and
protect the well-being of Filipino workers
overseas." Hence, unless contrary evidence

is presented by the seafarers employer/s,
this disputable presumption stands.
David showed that part of his duties
as a Third Officer of the crude tanker M/T
Raphael involved "overseeing the loading,
stowage, securing and unloading of
cargoes." As a necessary corollary, David was
frequently exposed to the crude oil that M/T
Raphael was carrying. The chemical
components of crude oil include, among
others, sulphur, vanadium and arsenic
compounds. Hydrogen sulphide and carbon
monoxide may also be encountered, while
benzene is a naturally occurring chemical in
crude oil. It has been regarded that these
hazardous chemicals can possibly contribute
to the formation of cancerous masses.
It is not necessary that the nature of
the employment be the sole and only reason
for the illness suffered by the seafarer. It is
sufficient that there is a reasonable linkage
between the disease suffered by the
employee and his work to lead a rational
mind to conclude that his work may have
contributed to the establishment or, at the
very least, aggravation of any pre-existing
condition he might have had.
Petition is GRANTED.
183 Skippers United Pacific vs. Doza, G.R.
No. 175558, February 8, 2012
Facts:
Petitioner deployed De Gracia, Lata
and Aprosta to work on board the vessel MV
Wisdom Star.
On December 3 1998, Skippers
alleges that De Garcia smelling strongly of
alcohol, went to the cabin of Gabriel Oleszek,
MV Wisdom Stars’ Master. Skippers claims
that he was rude and shouted noisily to the
master. De Gracia left the master’s cabin
after a few minutes and was heard shouting
very loudly somewhere down the corridors.
The incident was evidenced by the Captain’s
Report sent on said date.
Furthermore, Skippers also claim
that on January 22, 1999, Aprosta, De Gracia,
268
Lata and Daza arrived in the master’s cabin
and demanded immediate repatriation
because they were not satisfied with the
ship. De Gracia, et al. threatened that they
may become crazy any moment and
demanded for all outstanding payments due
to them. The incident is evidenced by a telex
of Cosmoship MV Wisdom to skippers but
had conflicting dates.
De Gracia claims that Skippers failed
to remit their respective allotments,
compelling them to vent their grievances
with the Romanian Seafarers Union. On
January 28, 1999, the Filipino seafarers were
unceremoniously discharged and
immediately repatriated. Upon arrival in the
Philippines, they filed a complaint for illegal
dismissal with the LA.
The LA dismissed the seafarers’
complaint as the seafarers’ demand for
immediate repatriation due to the
dissatisfaction with the ship is considered a
voluntary pre-termination of employment.
Such act was deemed akin to resignation
recognized under Article 285 of the LC. The
LA gave credence to the telex of the master’s
report that the seafarers indeed demanded
immediate repatriation.
The NLRC agreed with the LA’s
decision. The CA however reversed the LA’s
and the NLRC’s decision. The Court deemed
the telex message as a self-serving
document that does not
satisfy the requirement of substantial
evidence, or that amount of relevant
evidence which a reasonable mind might
accept as adequate to justify the conclusion
that petitioners indeed voluntarily
demanded their immediate repatriation.
Aggrieved, Skippers appeals the case
with the Supreme Court.
Issue:
Whether or not the seafarer’s
demand for immediate repatriation can be
considered an act of voluntary resignation.
Ruling:

For a worker's dismissal to be
considered valid, it must comply with both
procedural and substantive due process. The
legality of the manner of dismissal
constitutes procedural due process, while
the legality of the act of dismissal constitutes
substantive due process.
Procedural due process in dismissal
cases consists of the twin requirements of
notice and hearing. The employer must
furnish the employee with two written
notices before the termination of
employment can be effected: (1) the first
notice apprises the employee of the
particular acts or omissions for which his
dismissal is sought; and (2) the second notice
informs the employee of the employer's
decision to dismiss him. Before the issuance
of the second notice, the requirement of a
hearing must be complied with by giving the
worker an opportunity to be heard. It is not
necessary that an actual hearing be
conducted.
Substantive due process, on the
other hand, requires that dismissal by the
employer be made under a just or
authorized cause under Articles 282 to 284
of the Labor Code.
In this case, there was no written
notice furnished to De Gracia, et al.,
regarding the cause of their dismissal.
Cosmoship furnished a written notice (telex)
to Skippers, the local manning agency,
claiming that De Gracia, et al., were
repatriated because the latter voluntarily
pre-terminated their contracts. This telex
was given credibility and weight by the Labor
Arbiter and NLRC in deciding that there was
pre-termination of the employment contract
"akin to resignation" and no illegal dismissal.
However, as correctly ruled by the CA, the
telex message is "a biased and self-serving
document that does not satisfy the
requirement of substantial evidence." If,
indeed, De Gracia, et al., voluntarily pre-
terminated their contracts, then De Gracia,
et al., should have submitted their written
resignations.
269
Article 285 of the Labor Code
recognizes termination by the employee of
the employment contract by "serving
written notice on the employer at least one
(1) month in advance." Given that provision,
the law contemplates the requirement of a
written notice of resignation. In the absence
of a written resignation, it is safe to presume
that the employer terminated the seafarers.
In addition, the telex message relied upon by
the Labor Arbiter and NLRC bore conflicting
dates of 22 January 1998 and 22 January
1999, giving doubt to the veracity and
authenticity of the document.
In 22 January 1998, De Gracia, et al.,
were not even employed yet by the foreign
principal.
184 Eligir v. PAL, G.R. No. 181995, July 16,
2012
Facts:
Petitioner Bibiano C. Elegir
(petitioner) was hired by Philippine Airlines,
Inc.
(PAL) as a commercial pilot in 1971. Pursuant
to a new flght program adopted by
PAL, petitioner was appointed as one of the
pilots for the B747-400 captain
positions. He and the other pilots were sent
to Seattle to undergo training for the
new aircraft which he completed in 1995. He
decided to retire on May 5, 1996,
after rendering a total of more than 25 years
in service which is an option
allowed by the CBA between the airline and
the Airline Pilots Association of the
Philippines where he is a member of good
standing. PAL asked him to reconsider
his decision saying that they have not yet
fully recovered the full value of his
training and that if he should continue with
his decision to retire the airline will
be constrained to deduct the expenses of his
training from his retirement pay.
On November 6, 1996, the petitioner went
on terminal leave for thirty (30) days
and thereafter made effctive his retirement
from service. Upon securing his

clearance, however, he was informed that
the costs of his training will be
deducted from his retirement pay, which will
be computed at the rate of P
5,000.00 per year of service. The petitioner
argued that his retirement benefis
should be based on the computation stated
in Article 287 of the Labor Code, as
amended by Republic Act (R.A.) No. 7641,
and that the costs of his training
should not be deducted therefrom.
PAL refused and argued that
petitioner's retirement pay should be based
on
PALALPAP Retirement Plan of 1967 (PAL-
ALPAP Retirement Plan) and that he
should reimburse the company with the
proportionate costs of his training. Thus,
on August 27, 1997, the petitioner fied a
complaint for non-payment of
retirement pay, moral damages, exemplary
damages and attorney’s fees against
PAL.
LA: On February 6, 1998, the Labor
Arbiter (LA) rendered the decision for the
payment of retirement benefis to the
petitioner for a total of P 4,150,106.20
saying that the law intended to give bigger
and better benefis to workers under
existing laws or CBA agreements and that
PAL had no right to withhold the
petitioner's retirement benefis due to his
retirement before the lapse of three
years. There was no document showing that
the petitioner was required to stay
with the airline for three years after the
training or that he was required to
reimburse the cost of his training from his
retirement benefis should he retire
earlier than the three year period. The LA
also dismissed PAL's claim that
petitioner's submission of his bid for the
position created an innominate contract
du ut facis between him and the company.
NLRC: Modifid the decision of the LA.
Petitioner was only 52 years old when he
opted to retire and therefore was not
qualifid to receive the benefis offred
under Article 287 of the Labor Code, but he
270
was eligible for retirement under the
CBA since he had served for more than 25
years with the same company. It ruled
that the benefis should be computed in
accordance with both Article 287 of the
Code and the Retirement Plan of the CBA. It
also ruled that petitioner is under
obligation to reimburse a portion of the
expense for his training program as
captain since it would be grossly unfair for
petitioner to reap the fruits of his
training if he would not be made to return
the said benefis in form of service for
a reasonable period of time. Both parties
fied MR’s. It denied PAL’s MR
CA: Reversed the decision of the NLRC. It
ruled that retirement pay should be
computed in accordance with CBA
retirement plan as ruled in PAL v. Airline
Pilots
Association of the Philippines. It denied
petitioner’s MR.
Issues:
Should retirement benefis be
computed based on Article 287 of the
Labor Code?
Ruling:
Petitioner’s retirement pay should be
based on the PAL retirement plans. The two
retirement schemes are alternative in nature
such that the retired pilot
can only be entitled to that which provides
for the superior benefi. Even if there
is an existing CBA but if it provides lesser
benefis than what is provided in the
Labor Code , the Code will apply to assure
the retiree of the reasonable amount
of retirement pay. Consistent with the
purpose of the law, the CA correctly held
that the PAL retirement plan applies because
it provides for higher benefis.
Under the PAL retirement plan
petitioner qualifid for late retirement sine he
rendered more than 20 years as pilot and is
entitled to receive a lump sum of P
125, 000 for his services. He is also entitled
to equity of the retirement fund

under the Retirement Benefi Plan. This is
more compared to what he will receive
under the Labor Code which is equivalent to
at least ½ of his monthly salary for
every year of service. The benefis under the
PAL retirement plan are to the
petitioner’s advantage.
It also ruled that the petitioner shall
reimburse PAL for his training costs. The
court recognized PAL’s right to recoup losses
incurred due to pilot training and
modifid the provision on age limits for pilots
seeking advanced positions. Pilots
57 years old shall be frozen in their position
while those 55 years of age that
have previously qualifid in the company
turbo jet aircraft are permitted to
occupy any position in the turbo jet flet.
Allowing the petitioner to leave the
company before he has t fulfiled is
reasonable expectation of service will result
to unjust enrichment since the training gave
him new skills and increased his
salary. Reason and fairness dictate that he
must return to PAL a proportionate
costs of training.
185 INC SHIPMANAGEMENT, INC.,
CAPTAIN SIGFREDO E. MONTERROYO
AND/OR INTERORIENT NAVIGATION
LIMITED, Petitioners, v. ALEXANDER L.
MORADAS, Respondent.
FACTS:
Alexander L. Moradas (respondent)
was employed as wiper for the vessel MV
Commander (vessel) by petitioner INC
Shipmanagement, Inc., for a period of 10
months.
On October 13, 2000, respondent
claimed that while he was disposing of the
garbage in the incinerator room of the
vessel, certain chemicals splashed all over
his body because of an explosion. He was
sent to the hospital. The attending physician
of St. Luke's Medical Center, Dr. Alegre,
reported that the respondents thermal
burns were estimated to fully heal within a
period of 3 to 4 months. Respondent
demanded for the payment of his full
271
disability benefits under the Philippine
Overseas Employment Agency Standard
Employment Contract (POEA-SEC), in the
amount of US$60,000.00, which petitioners
refused to heed.
The petitioners denied respondent's
claims, contending his injury was self-
inflicted. They denied that the incinerator
exploded and claimed that respondent
burned himself by pouring paint thinner on
his overalls and thereafter set himself on
fire. They averred that he was led to commit
such act after he was caught stealing the
vessels supplies. They also alleged that there
was a flooding incident caused by the
respondent. All allegations were supported
by affidavits and statements executed by
vessel officers and crew members. In
addition, Antonio Gile (Gile), attested that he
saw respondent go to the paint room and
there soak his hands in a can full of thinner.
The Labor Arbiter ruled in favor or
petitioners, dismissing respondents
complaint for lack of merit. The Labor Arbiter
also held that respondent's injury was self-
inflicted and that no incinerator explosion
occurred that would have caused the latter's
injuries.
The National Labor Relations
Commission (NLRC) sustained the findings of
the Labor Arbiter. It pointed out that
respondents mental or physical fitness was
not at issue since respondent was motivated
to inflict injury to himself for reasons related
to his impending discharge and not because
of his disposition. The NLRC denied the
motion for reconsideration filed by the
respondent.
The CA rendered a decision holding
that grave abuse of discretion tainted the
NLRC ruling. It found that it was contrary to
human nature and experience for
respondent to burn himself. It also pointed
out that no evidence was presented to show
that respondent had no business near the
engine room. The CA denied the motion for
reconsideration filed by the petitioners.
ISSUE:

Did the CA err in finding that the
NLRC gravely abused its discretion when it
denied respondent's claim for disability
benefits?
HELD:
The prevailing rule under Section
20(B) of the 1996 POEA-SEC on
compensation and benefits for injury or
illness was that an employer shall be liable
for the injury or illness suffered by a seafarer
during the term of his contract. There was no
need to show that such injury was work-
related except that it must be proven to have
been contracted during the term of the
contract. The rule, however, is not absolute
and the employer may be exempt from
liability if he can successfully prove that the
cause of the seaman's injury was directly
attributable to his deliberate or willful act as
provided under Section 20 (D) thereof, to
wit: D. No compensation shall be payable in
respect of any injury, incapacity, disability or
death of the seafarer resulting from his
willful or criminal act, provided however,
that the employer can prove that such injury,
incapacity, disability or death is directly
attributable to seafarer.
Records show that the LA and NLRC
gave credence to the corroborating
testimonies of the crewmen pointing to
respondent as the person who deliberately
caused the flooding incident. In particular,
respondent was seen alone in the vicinity of
the portside sea chest which cover was
found to have been intentionally removed
and thereby caused the flooding.
The purported explosion in the
incinerator was belied by Gile who also
claimed that there was no fire in the
incinerator room at the time respondent got
burned. This was corroborated by Bejada
who testified having ordered an ordinary
seaman that was burning deck waste in the
incinerator early that day to extinguish the
fire with water and close up the incinerator
door because of bad weather conditions.
272
Accordingly, an inspection of the incinerator
after the incident showed that there were
unburnt cardboard cartons found inside with
no sign of explosion and the steel plates
surrounding it were cool to the touch.
Both the LA and the NLRC made a
factual finding that prior to the burning
incident, respondent was caught pilfering
the vessels supplies for which he was told
that he was to be relieved from his duties.
This adequately supports the reasonable
conclusion that respondent may have
harbored a grudge against the captain and
the chief steward who denied giving him the
questioned items. At the very least, it was
natural for him to brood over feelings of
resentment considering his impending
dismissal. These incidents shore up the
theory that he was motivated to commit an
act of sabotage which, however, backfired
into his own burning.
GRANTED
186 ALPHA SHIP MANAGEMENT
CORPORATION/JUNEL M CHAN and/or
CHUO-KAIUN COMPANY, LIMITED v.
ELEOSIS v.
FACTS:
Respondent Calo worked for
petitioners Alpha Ship, Junel M. Chan and
their foreign principal, (CKCL) under 7
employment contracts. While MV Iris was in
China, respondent suffered back pain on the
lower part of his lumbar region and urinated
with solid particles. On checkup, the doctor
found him suffering from urinary tract
infection and renal colic, and was given
antibiotics. When respondent’s condition
did not improve, he consulted another
doctor in Chile and was found to have kidney
problems and urinary tract infection but was
declared fit for work on a "light duty" basis.
In Japan, respondent was diagnosed with
suspected renal and/or ureter calculus and
was declared "unfit for work”. Respondent
was thus repatriated and was referred by
petitioners to Dr. Cruz, the company-

designated physician who continously
examined respondent from 2004-2005.
Respondent, who felt that his condition has
not improved – consulted another specialist
in internal medicine, Dr. Vicaldo, who issued
the following diagnosis: that it was
Impediment Grade X, that he is now unfit to
resume work as seaman in any capacity and
that his illness is considered work
aggravated/related. Respondent filed a
claim for disability benefits with petitioners,
but the claim was denied. LA: granted
permanent total disability benefits and
attorney’s fees to respondent, but denied his
claim for moral and exemplary damages.
NLRC: Appeal is granted. The decision of the
Labor Arbiter was vacated and set aside. The
complaint for dismissed for lack of merit. CA:
NLRC decision was reversed. Decision of the
Labor Arbiter was reinstated.
ISSUE:
Whether respondent’s claim for
disability benefits should prosper. SC
RULING:
YES. An employee’s disability
becomes permanent and total when so
declared by the company-designated
physician, or, in case of absence of such a
declaration either of fitness or permanent
total disability, upon the lapse of the 120 or
24045-day treatment period, while the
employee’s disability continues and he is
unable to engage in gainful employment
during such period, and the company-
designated physician fails to arrive at a
definite assessment of the employee’s
fitness or disability. This is true "regardless of
whether the employee loses the use of any
part of his body." Respondent was
repatriated on October 12, 2004 and
underwent treatment by the company-
designated physician, Dr. Cruz, until October
14, 2005, or for a continuous period of over
one year – or for more than the statutory
120-day47 or even 240-day48 period. During
said treatment period, Dr. Cruz did not arrive
at a definite assessment of respondent’s
273
fitness or disability; thus, respondent’s
medical condition remained unresolved. It
was only on July 18, 2006 that respondent
was declared fit to work by Dr. Cruz. Such
declaration, however, became irrelevant, for
by then, respondent had been under medical
treatment and unable to engage in gainful
employment for more than 240 days.
Pursuant to the doctrine in Kestrel, the
conclusive presumption that the respondent
is totally and permanently disabled thus
arose. 48 4S (A.Y. 2015-2016) That in all
things, God may be glorified! San Beda
College of Law LABOR LAW REVIEW CASE
DIGESTS In the same manner, the issue of
which among the two diagnoses or opinions
should prevail – that of Dr. Cruz or Dr.
Vicaldo – is rendered irrelevant in view of the
lapse of the said 240-day period. As far as the
parties are concerned, respondent’s medical
treatment and disability continued for more
than 240 days without any finding or
diagnosis by the company-designated
physician that he was fit to resume work.
Thus, consonant with law and jurisprudence,
respondent is entitled to a declaration of
permanent total disability, as well as the
corresponding benefit attached thereto in
the amount of US$60,000.00.
187 Social Security System vs. Efren
Capada, et al., G.R. No. 168501, January
31, 2011.
Collection of accrued wages; two-fold test.
After the Labor Arbiter’s decision is
reversed by a higher tribunal, the employee
may be barred from collecting the accrued
wages, if it is shown that the delay in
enforcing the reinstatement pending appeal
was without fault on the part of the
employer. The two-fold test in determining
whether an employee is barred from
recovering his accrued wages requires that
— (1) there must be actual delay or that the
order of reinstatement pending appeal was
not executed prior to its reversal; and (2) the
delay must not be due to the employer’s

unjustified act or omission. If the delay is
due to the employer’s unjustified refusal, the
employer may still be required to pay the
salaries notwithstanding the reversal of the
Labor Arbiter’s Decision.
188 THE UNIVERSITY OF THE IMMACULATE
CONCEPCION and MO. MARIA ASSUMPTA
DAVID, RVM, petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION and
TEODORA AXALAN, respondents.
FACTS:
Private respondent Axalan is a
regular faculty member in the University of
Immaculate Concepcion and also the elected
president of the employees' union. She
attended a seminar in Quezon City on
website development. However, she
received a letter from the Dean asking her to
explain why she should not be dismissed for
having been absent without official leave.
She explained that she still held online
classes while she was away and that she
thought she would not be considered absent
because of such action. The Dean asked her
to write a letter of apology but she opted not
to comply, believing she could not be
deemed absent since she held online classes.
By then, an ad hoc grievance committee had
been created to investigate the AWOL
charge.
Thereafter, Axalan attended another
seminar, this time on advanced paralegal
training. The Dean informed her that her
participation in said seminar was the subject
of a second AWOL charge. Axalan explained
that she sought the approval of the Vice-
President for Academics. However, the Vice-
President denied having approved the
application for official leave.
Meanwhile, the ad hoc grievance
committee found Axalan to have incurred
AWOL on both instances and recommended
that Axalan be suspended without pay for 6
months on each AWOL charge. The
university president approved the
recommendation. After the expiration of the
274
suspension period, Axalan resumed teaching
in the university.
Axalan filed a complaint against the
University for illegal suspension,
constructive dismissal, reinstatement with
backwages and unfair labor practice. The
university moved to dismiss the complaint
on the ground of jurisdiction but this was
denied.
The Labor Arbiter ruled that Axalan's
suspension amounted to constructive
dismissal, entitling her to reinstatement and
payment of backwages, salary differentials,
damages and attorney's fees. The university
appealed the decision to the NLRC on the
subject of jurisdiction but the NLRC upheld
the ruling of the Labor Arbiter and so did the
CA.
ISSUE:
Whether the CA erred in ruling that
Axalan was constructively dismissed.
HELD:
The petition is meritorious.
LABOR LAW; Constructive dismissals
Constructive dismissal occurs when
there is cessation of work because continued
employment is rendered impossible,
unreasonable, or unlikely as when there is a
demotion in rank or diminution in pay or
when a clear discrimination, insensibility, or
disdain by an employer becomes unbearable
to the employee leaving the latter with no
other option but to quit.
In this case however, there was no
cessation of employment relations between
the parties. It is unrefuted that Axalan
promptly resumed teaching at the university
right after the expiration of the suspension
period. In other words, Axalan never quit.
Hence,Axalan cannot claim that she was left
with no choice but to quit, a crucial element
in a finding of constructive dismissal.
Thus,Axalan cannot be deemed to have been
constructively dismissed.
Significantly, at the time the Labor
Arbiter rendered his Decision on 11 October
2004, Axalan had already returned to her

teaching job at the university on 1 October
2004. The Labor Arbiters Decision ordering
the reinstatement of Axalan, who at the time
had already returned to work, is thus absurd.
Petition is DENIED.
189 RENATO REAL VS. SANGU
PHILIPPINES, INC AND/OR KIICHI ABE
FACTS:
Real was the manager Sangu Phils.
Inc., which is engaged in providing
manpower for general services.
Petitioner was dismissed from
employment due to alleged gross act of
misconduct and for his participation in
staging strike and barricading the premises
of the respondent company. The Labor
Arbiter decided in favor of Real and ordered
for his reinstatement with full backwages.
On appeal, the NLRC dismissed the case
holding that Real is a stockholder and
corporate officer of the respondent
company and therefore it is a intra-
corporate dispute over which the Labor
Arbiter has no jurisdiction.
ISSUE:
Does the complaint constitutes an
intra-corporate dispute and thus beyond the
jurisdiction of the Labor Arbiter?
LAW:
Art. 217 of the Labor Code on
Jurisdiction of Labor Arbiters and the
Commission
RULING:
This case is not intra-corporate
dispute but rather is a termination dispute
and, consequently falls under jurisdiction of
the Labor Arbiter pursuant to Section 217 of
the Labor Code. The better policy to be
followed in determining jurisdiction over a
case should be to consider concurrent
factors such as status or relationship of the
parties or the nature of the question that is
275
subject of their controversy. In the absence
of these factors RTC will not have jurisdiction
OPINION:
The case at bar is a termination
dispute not an intra-corporate dispute. Not
all conflicts between the stockholders and
the corporations are classified as intra-
corporate dispute. There are factors to
consider in determining whether the dispute
involves corporate matters as to consider
them, intra-corporate controversies. The
fact that Real is a stockholder does not
automatically classifies the case as intra-
corporate dispute, therefore Labor arbiter
correctly assumed jurisdiction over the case
190 PAQUITO V. ANDO VS. ANDRESITO Y.
CAMPO ET. AL.
FACTS:
Campo and co-respondents were
hired by Premier Allied Contracting Services,
Inc. (PACSI), an independent labor
contractor headed by Ando as its president.
They filed an illegal dismissal case and some
money claims with the NLRC against PACSI.
The Labor Arbiter ruled in favor of Campo
and his co-respondents. A writ of execution
of personal property was issued to answer
for the monetary award.
Ando filed an action for prohibition
and damages with TRO before the RTC
claiming that the property belong to him
and his wife and not to the corporation. RTC
denied the petition holding that it has no
jurisdiction to try and decide the case and
ruled that the petitioner’s remedy is to file a
third party complaint with the NLRC Sheriff.
ISSUE:
Did RTC correctly rule that it has no
jurisdiction over the case?
LAW:

NLRC Manual in Execution of
Judgment (in relation to Scope of Jurisdiction
of Labor Tribunals under the Labor Code)
RULING
Yes, RTC correctly ruled that it has no
jurisdiction over the case. The regular courts
have no jurisdiction to hear and decide
questions which arise from and are
incidental to the enforcement of decisions,
orders and awards rendered in labor cases
by appropriate officers and tribunals of
DOLE. To hold otherwise is to sanction
splitting jurisdiction which is obnoxious to
the orderly administration of justice. It is the
NLRC Manual on the Execution of Judgment
that governs any question on the execution
of judgment of that body. The Rules of Court
apply only by analogy of in a suppletory
character.
OPINION:
I concur with the decision of the
Supreme Court that the RTC has no
jurisdiction over the case as the subject
matter of the petition is the execution of
judgment of the NLRC’s decision. We must
take note that, jurisdiction once acquired,
continues until the case is finally terminated
and there can be no end to a case without
the implementation of the decision which
decision must be exercised by the body who
rendered it and not the courts. Especially in
this case, the NLRC Manual specifically
provides for the procedures to be followed
in the execution of judgment promulgated
by NLRC
191 Bello vs. Bonifacio Security Services,
G.R. No. 188086, August 3, 2011
Facts:
Respondent Bonifacio Security
Services, Inc. (BSSI)is a domestic private
corporation engaged in the business of
providing security services. In July 2001, the
BSSI hired Bello as a roving traffic marshal to
manage traffic and to conduct security and
276
safety-related operations in the Bonifacio
Global City (BGC). In August 2001, Bello was
posted at the Negros Navigation Company in
Pier 2, North Harbor, to supervise sectoral
operations. In November 2001, he was
assigned at BGC as assistant detachment
commander. After a week, he was
transferred to Pacific Plaza Towers as
assistant detachment commander and later
as detachment commander. In June 2002, he
was assigned at Pier 2, North Harbor as
assistant detachment commander, but later
reassigned to BGC. In August 2002, the BSSI
hired a new operations manager, resulting in
the reorganization of posts. In October 2002,
Bello was assigned as roving traffic marshal
at the BGC. On October 25, 2002, he filed an
indefinite leave of absence when his new
assignment took effect.
On November 5, 2002, Bello filed a
complaint against the BSSI and its General
Manager, respondent Samuel Tomas, with
the National Labor Relations Commission
(NLRC), claiming that he had been
constructively dismissed when he was
demoted from a detachment commander to
a mere traffic marshal. He alleged that he
received a series of promotions from 2001 to
2002, from traffic marshal to supervisor, to
assistant detachment commander, and to
detachment commander.
The BSSI denied Bello's claim of
constructive dismissal, arguing that no
promotion took place; Bello's designation as
assistant detachment commander or
detachment commander was not an
employment position but a duty-related
assignment; Bello abandoned his job when
he went on an indefinite leave of absence
and did not report for work.
Labor Arbiter Cresencio G. Ramos, Jr.
found that Bello was illegally dismissed,
noting that the BSSI failed to adduce
evidence that Bello abandoned his
employment.
In its March 26, 2008 resolution, the
NLRC affirmed the labor arbiter's decision,
finding that Bello had been constructively
dismissed when he was demoted to the

rank-and-file position of traffic marshal after
occupying the supervisory position of
assistant detachment commander and
detachment commander.
The CA nullified the NLRC
resolutions, finding the records bereft of
evidence substantiating the labor arbiter's
and the NLRC's conclusions that Bello had
been constructively dismissed. It noted that
Bello offered no evidence to prove that there
was a series of promotions that would justify
his claim of subsequent demotion. The CA
denied
the BSSI's motion for reconsideration, paving
the way for the present petition.
Issue:
Whether or not, Bello was illegally
dismissed.
Ruling:
We find no reason to disturb the CA
conclusion that there was no constructive
dismissal. Case law defines constructive
dismissal as a cessation of work because
continued employment has been rendered
impossible, unreasonable, or unlikely, as
when there is a demotion in rank or
diminution in pay, or both, or when a clear
discrimination, insensibility, or disdain by an
employer becomes unbearable to the
employee.
Other than his bare and self-serving
allegations, Bello has not offered any
evidence that he was promoted in a span of
four months since his employment as traffic
marshal in July 2001 to a detachment
commander in November 2001. During his
six-month probationary period of
employment, it is highly improbable that
Bello would be promoted after just a month
of employment, from a traffic marshal in July
2001 to supervisor in August 2001, and three
months later to assistant detachment
commander and to detachment commander
in November 2001. At most, the BSSI merely
changed his assignment or transferred him
to the post where his service would be most
beneficial to its clients. The management's
277
prerogative of transferring and reassigning
employees from one area of operation to
another in order to meet the requirements
of
the business is generally not constitutive of
constructive dismissal. We see this to be the
case in the present dispute so that the
consequent reassignment of Bello to a traffic
marshal post was well within the scope of
the BSSI's management prerogative.
192 CLAUDIA S. YAP, Petitioner, v.
THENAMARIS SHIPS MANAGEMENT and
INTERMARE MARITIME AGENCIES,
INC.,Respondents.
FACTS:
Petitioner was employed as an
electrician of the vessel, M/T SEASCOUT by
Intermare Maritime Agencies, Inc. in behalf
of its principal, Vulture Shipping Limited.The
contract was for 12 months.On 23 August
2001,Yapboarded M/T SEASCOUT and
commenced his job as electrician. However,
on or about 08 November 2001, the vessel
was sold.
Yap received his seniority bonus,
vacation bonus, extra bonus along with the
scrapping bonus.However, he insisted that
he was entitled to the payment of the
unexpired portion of his contract since he
was illegally dismissed from employment.He
alleged that he opted for immediate transfer
but none was made.
Respondents contended that Yap
was not illegally dismissed.They further
alleged that Yaps contract was validly
terminated due to the sale of the vessel and
no arrangement was made for Yaps transfer
to Thenamaris other vessels.
Thus, Yap brought the issue before
the Labor Arbiter (LA) which ruled that
petitioner was illegally dismissed; that
respondents acted in bad faith when they
assured petitioner of re-embarkation but he
was not able to board; and that petitioner
was entitled to his salaries for the unexpired
portion of his contract for a period of nine

months (US$12,870.00), P100,000 for moral
damages, and P50,000 for exemplary
damages with 10% of the same for Attys
fees.
Respondents sought recourse from
the NLRC which modified the award of
salaries from that corresponding to nine
months to only three months (US$4,290.00)
pursuant to Section 10 R.A. No. 8042.
Respondents and petitioner both
filed a Motion for Partial Reconsideration.
NLRC affirmed the finding of Illegal
Dismissal and Bad Faith on the part of
respondent. However, the NLRC reversed its
earlier Decision, holding that "there can be
no choice to grant only 3 months salary for
every year of the unexpired term because
there is no full year of unexpired term which
this can be applied."
Respondents filed an MR, which the
NLRC denied. Undaunted, respondents filed
a petition forcertiorariunder Rule 65 before
the CA.
The CA affirmed the findings and
ruling of the LA and the NLRC. However, the
CA ruled that the NLRC erred in sustaining
the LAs interpretation of Section 10 of R.A.
No. 8042. The CA relied on the clause "or for
three months for every year of the unexpired
term, whichever is less" provided in the 5th
paragraph of Section 10 of R.A. No. 8042.
Both parties filed their respective
MRs which the CA denied. Thus, this
petition.
ISSUE:
[1] Whether Section 10 of R.A. 8042,
to the extent that it affords an illegally
dismissed migrant worker the lesser benefit
of "salaries for [the] unexpired portion of his
employment contract for three (3) months
for every year of the unexpired
term,whichever is less" is constitutional;
[2] Assuming that it is, whether the
CA gravely erred in granting petitioner only
three (3) months backwages when his
unexpired term of 9 months is far short of the
"every year of the unexpired term" threshold.
278
HELD:
The petition is impressed with merit.
We have previously declared that the
clause "or for three months for every year of
the unexpired term, whichever is less" is
unconstitutional for being violative of the
rights of (OFWs) to equal protection.
Moreover, the subject clause does not state
any definitive governmental purpose, hence,
it also violates petitioner's right to
substantive due process.
Generally, an unconstitutional act is
not a law. An exception to this is the doctrine
of operative fact applied when a declaration
of unconstitutionality will impose an undue
burden on those who have relied on the
invalid law. This case should not be included
in the exception. It was not the fault of
petitioner that he lost his job due to an act
of illegal dismissal committed by
respondents.
Also, we cannot subscribe to
respondents postulation that the tanker
allowance of US$130.00 should not be
included in the computation of the lump-
sum salary. First, fair play, justice, and due
process dictate that this Court cannot now,
for the first time on appeal, pass upon this
question. Second, the allowance was
encapsulated in the basic salary clause.
193 E.G & I. CONSTRUCTION
CORPORATION and EDSEL GALEOS,
Petitioners, v. ANANIAS P. SATO, NILO
BERDIN, ROMEO M. LACIDA, JR., and HEIRS
OF ANECITO S. PARANTAR, SR., namely:
YVONNE, KIMBERLY MAE, MARYKRIS,
ANECITO, JR., and JOHN BRYAN, all
surnamed PARANTAR, Respondents.
FACTS:
Respondent Sato was hired in
October 1990 by petitioner E.G. & I.
Construction Corporation as a grader
operator, which is considered as technical
labor. In April 2004, Sato discovered that
petitioner corporation had not been

remitting his premium contributions to the
Social Security System (SSS). When Sato kept
on telling petitioners to update his premium
contributions, he was removed as a grader
operator and made to perform manual
labor, such as tilling the land in a private
cemetery and/or digging earthworks in
petitioner corporation’s construction
projects. Thereafter, petitioners told Sato
that they could no longer afford to pay his
wages, and he was advised to look for
employment in other construction
companies.
Meanwhile, the project engineer of
respondents Berdin, Parantar, and Lacida
instructed them to affix their signatures on
various documents. They refused to sign the
documents because they were written in
English, a language that they did not
understand. Irked by their disobedience, the
project engineer terminated their
employment.
Petitioners denied that they illegally
terminated respondents’ employment.
According to them, respondents abandoned
their work when they failed to report for
work
The Labor Arbiter rendered a
decision finding that respondents were
illegally dismissed from employment. In lieu
of reinstatement, due to the strained
relations of the parties and as prayed for by
respondents, each of them was granted
separation pay equivalent to one (1) month
pay for every year of service. On appeal, the
National Labor Relations Commission (NLRC)
reversed the ruling of the Labor Arbiter. This
was then reversed by the CA and ruled that
the respondents were illegally dismissed.
ISSUE:
Whether or not the CA erred in
reinstating the decision of the Labor Arbiter,
declaring that respondents were illegally
terminated from employment by petitioner
corporation.
HELD:
The petition lacks merit.
279
LABOR LAW: Abandonment
Petitioner corporation failed to prove
that respondents were dismissed for just or
authorized cause. In an illegal dismissal case,
theonus probandi rests on the employer to
prove that the dismissal of an employee is
for a valid cause.
For abandonment to exist, it is
essential (a) that the employee must have
failed to report for work or must have been
absent without valid or justifiable reason;
and (b) that there must have been a clear
intention to sever the employer-employee
relationship manifested by some overt acts.
The employer has the burden of proof to
show the employee's deliberate and
unjustified refusal to resume his
employment without any intention of
returning. Mere absence is not sufficient.
There must be an unequivocal intent on the
part of the employee to discontinue his
employment. Here, the reason why
respondents failed to report for work was
because petitioner corporation barred them
from entering its construction sites.
DENIED.
194 EXODUS INTERNATIONAL
CONSTRUCTION CORPORATION vs.
GUILLERMO BISCOCHO et.
Facts:
Exodus International Construction
Corporation obtained a contract from Dutch
Boy Philippines, Inc. for the painting of the
Imperial Sky Garden located in Binondo,
Manila. Dutch Boy awarded another
contract to Exodus for the painting of Pacific
Plaza, Towers in Fort Bonifacio, Taguig City.
In the furtherance of its business, Exodus
hired respondents as painters on different
dates.
On November 27, 2000, respondents
filed a complaint for illegal dismissal and
non-payment of holiday pay, service
incentive leave pay, 13th month pay and
night-shift differential pay.

Petitioners denied respondents'
allegations. As regards Gregorio, petitioners
averred that he absented himself from work
and applied as a painter with SAEI-EEI which
is the general building contractor of Pacific
Plaza Towers. Since then, he never reported
back to work.
Guillermo absented himself from work
without leave. When he reported for work
the following day, he was reprimanded so he
worked only halfday and thereafter was
unheard of until the filing of the instant
complaint.
Fernando, Ferdinand, and Miguel
were caught eating during working hours for
which they were reprimanded by their
foreman. Since then they no longer reported
for work.
The Labor Arbiter exonerated Exodus from
the charge of illegal dismissal as respondents
chose not to report for work. Since there is
neither illegal dismissal nor abandonment of
job, respondents were ordered be reinstated
but without any backwages.
Issues:
WON respondents were illegally
dismissed for abandonment of work
WON they are regular employees,
thus entitled to reinstatement
Ruling:
(1) No. There was no dismissal, much
less illegal, and there was also no
abandonment of job to speak of.
As found by the Labor Arbiter, there
was no evidence that respondents were
dismissed nor were they prevented from
returning to their work. It was only
respondents' unsubstantiated conclusion
that they were dismissed. As a matter of fact,
respondents could not name the particular
person who effected their dismissal and
under what particular circumstances. Absent
any showing of an overt or positive act
proving that petitioners had dismissed
respondents, the latters' claim of illegal
dismissal cannot be sustained. Indeed, a
280
cursory examination of the records reveal no
illegal dismissal to speak of.
The Labor Arbiter is also correct in
ruling that there was no abandonment on
the part of respondents that would justify
their dismissal from their employment.
Abandonment is the deliberate and
unjustified refusal of an employee to resume
his employment. It is a settled rule that mere
absence or failure to report for work is not
enough to amount to abandonment of work.
To constitute abandonment of work, two
elements must concur: the employee must
have failed to report for work or must have
been absent without valid or justifiable
reason and there must have been a clear
intention on the part of the employee to
sever the employer-employee relationship
manifested by some overt act.
It is the employer who has the burden of
proof to show a deliberate and unjustified
refusal of the employee to resume his
employment without any intention of
returning." It is therefore incumbent upon
petitioners to ascertain the respondents'
interest or non-interest in the continuance
of their employment. However, petitioners
failed to do so.
Petitioners posit that the
reinstatement of respondents to their
former positions, which were no longer
existing, is impossible, highly unfair and
unjust. The project was already completed
by petitioners, having completed their tasks,
their positions automatically ceased to exist.
Consequently, there were no more
positions where they can be reinstated as
painters.
(2) Respondents are regular employees of
petitioners. It is clear from the records that
when one project is completed, respondents
were automatically transferred to the next
project awarded to petitioners. There was
no employment agreement given to
respondents which clearly spelled out the
duration of their employment, the specific
work to be performed and that such is made
clear to them at the time of hiring . It is now
too late for petitioners to claim that

respondents are project employees whose
employment is coterminous with each
project or phase of the project to which they
are assigned.
Nonetheless, assuming that
respondents were initially hired as project
employees, a project employee may acquire
the status of a regular employee.
The evidence on record shows that
respondents were employed and assigned
continuously to the various projects of
petitioners. As painters, they performed
activities which were necessary and
desirable in the usual business of petitioners,
who are engaged in subcontracting jobs for
painting of residential units, condominium
and commercial buildings. As regular
employees, respondents are entitled to be
reinstated without loss of seniority rights.
Respondents are also entitled to their money
claims such as the payment of holiday pay,
service incentive leave pay, and 13th month
pay.However, they cannot be entitled to
backwages. In cases where there is no
evidence of dismissal, the remedy is
reinstatement but without
backwages.
195 BANAHAW BROADCASTING
CORPORATION, Petitioner, v. CAYETANO
PACANA III, NOE U. DACER, JOHNNY B.
RACAZA, LEONARDO S. OREVILLO, ARACELI
T. LIBRE, GENOVEVO E. ROMITMAN,
PORFERIA M. VALMORES, MENELEO G.
LACTUAN, DIONISIO G. BANGGA,
FRANCISCO D. MANGA, NESTOR A.
AMPLAYO, LEILANI B. GASATAYA, LORETA
G. LACTUAN, RICARDO B. PIDO, RESIGOLO
M. NACUA and ANACLETO C. REMEDIO,
Respondents.
FACTS:
Respondents in the case at bar (the
DXWG personnel), are employees of the
DXWG-Iligan City radio station which is
owned by petitioner Banahaw Broadcasting
Corporation (BBC), a corporation managed
281
by Intercontinental Broadcasting
Corporation (IBC).
On August 29, 1995, the DXWG
personnel filed a complaint for illegal
dismissal, unfair labor practice,
reimbursement of unpaid Collective
Bargaining Agreement (CBA) benefits, and
attorneys fees against IBC and BBC.
On June 21, 1996, Labor Arbiter (LA)
decided in favour of the DXWG personnel.
Both, parties, however, appealed to
the National Labor Relations Commission
(NLRC).
On May 15, 1997, a Motion to
Dismiss, Release, Waiver and Quitclaim, was
jointly filed by IBC and the DXWG personnel
based on the latter's admission that IBC is
not their employer as it does not own
DXWG-Iligan City.The NLRC granted the
Motion with respect to IBC.
BBC filed an MR.
On December 12, 1997, the NLRC
issued a Resolution vacating the Decision of
LA and remanding the case to the arbitration
branch of origin on the ground that while the
complaint was filed against both IBC and
BBC, only IBC was served with summons,
ordered to submit a position paper, and
furnished a copy of the assailed decision.
On October 15, 1998, the new LA
rendered a Decision adjudging BBC to be
liable for the same amount discussed in the
vacated original Decision of the previous LA.
Both BBC and respondents appealed
to the NLRC.BBC challenged the monetary
award itself. In the same Memorandum of
Appeal, BBC incorporated a Motion for the
Recomputation of the Monetary Award (of
the Labor Arbiter),in order that the appeal
bond may be reduced.
On September 16, 1999, the NLRC
issued an Order Denying the Motion for the
Recomputation of the Monetary Award. The
NLRC ordered BBC to post the required bond
within 10 days from receipt of said Order,
with a warning that noncompliance will
cause the dismissal of the appeal for non-
perfection.Instead of complying with the
Order to post the required bond, BBC filed a

Motion for Reconsideration,alleging this
time that since it is wholly owned by the
Republic of the Philippines, it need not post
an appeal bond.
On November 22, 1999, the NLRC
rendered its Decision. In said Decision, the
NLRC denied the MR of BBC and accordingly
dismissed the appeal of BBC for non-
perfection.
BBC filed an MR which was denied by
the NLRC.
BBC filed with the CA a Petition for
Certiorari under Rule 65.
On April 15, 2005, the CA rendered
the assailed Decision denying BBCs Petition
forCertiorari.The CA held that BBC, though
owned by the government, is a corporation
with a personality distinct from the Republic
or any of its agencies or instrumentalities,
and therefore do not partake in the latter's
exemption from the posting of appeal
bonds.
The Court of Appeals denied the
MR.Hence, this Petition for Review.
ISSUE:
Whether BBC is exempt from
posting an appeal bond.
HELD:
Petition denied.
GOCCs NOT EXEMPT FROM POSTING
BOND
Generally, the government and all
the attached agencies with no legal
personality distinct from the former are
exempt from posting appeal bonds, whereas
government-owned and controlled
corporations (GOCCs) are not similarly
exempted except if it is sued in relation to its
governmental functions. Here, BBC was
organized as a private corporation,
sequestered in the 1980s and the ownership
of which was subsequently transferred to
the government. Its primary function is to
engage in commercial radio and television
broadcasting. It is therefore clear that BBCs
function is commercial or proprietary and
not governmental.As such, BBC is not
282
entitled to an exemption from the posting of
an appeal bond.
FAILURE TO POST BOND
CONSTITUTED NON-PERFECTION OF
APPEAL
In case of a judgment involving a
monetary award, an appeal by the employer
may be perfected only upon the posting of a
cash or surety bond issued by a reputable
bonding company duly accredited by the
Commission in the amount equivalent to the
monetary award in the judgment appealed
from.The posting of the appeal bond within
the period provided by law is not merely
mandatory but jurisdictional.The failure on
the part of BBC to perfect the appeal thus
had the effect of rendering the judgment
final and executory.
196 MIGUEL DELA PENA
BARAIRO,Petitioner, v. OFFICE OF THE
PRESIDENT and MST MARINE SERVICES
(PHILS.), INC. et al.,Respondents.
FACTS:
Miguel Barairo (petitioner) was hired
on June 29, 2004 by respondent MST Marine
Services (Phils.) Inc., (MST) for its principal,
TSM International, Ltd., as Chief Mate of the
vesselMaritina, for a contract period of six
months.He boarded the vessel and
discharged his duties on July 23, 2004, but
was relievedon August 28, 2004 ostensibly
for transfer to another
vessel,Solar.Petitioner thus disembarked in
Manila on August 29, 2004.
Petitioner was later to claim that he
was not paid the promised "stand-by fee" in
lieu of salary that he was to receive while
awaiting transfer to another vessel as in fact
the transfer never materialized.
On October 20, 2004, petitioner
signed a new Contract of Employmentfor a
six-month deployment as Chief Mate in a
newly-built Japanese vessel, M/THaruna.He
was paid a one-month "standby fee" in
connection with theMaritinacontract.

Petitioner boarded the
M/THarunaon October 31, 2004 but he
disembarked a week later as MST claimed
that his boarding of M/THarunawas a "sea
trial" which, MST maintains, was priorly
made known to him on a "stand-by" fee.MST
soon informed petitioner that he would be
redeployed to the M/THarunaon November
30, 2004, but petitioner refused, prompting
MST to file a complaintfor breach of contract
against him before the Philippine Overseas
Employment Administration (POEA).
Petitioner claimed, however, that he
was placed on "forced vacation" when he
was made to disembark from the
M/THaruna, and that not wanting to
experience a repetition of the previous
"termination" of his employment aboard
theMaritina,he refused to be redeployed to
the M/THaruna.
By Orderof April 5, 2006, then POEA
Administrator Rosalinda D. Baldoz penalized
petitioner with one year suspension from
overseas deployment upon a finding that his
refusal to complete his contract aboard the
M/THarunaconstituted a breach thereof.
On appeal by petitioner, the
Secretary of Labor, by Orderof September
22, 2006, noting that it was petitioners first
offense,modifiedthe POEA Order by
shortening the period of suspension from
one year to six months.
The Office of the President (OP), by
Decision of November 26, 2007, dismissed
petitioners appeal for lack of jurisdiction.
The OP held that appeals to it in labor
cases, except those involving national
interest, have been eliminated.Petitioners
motion for partial reconsideration was
denied by Resolutionof June 26, 2009,
hence, the present petition.
ISSUE:
Whether an appeal to the Office of
the President is proper in this case
HELD:
NO
283
LABOR LAW: Labor Relations,
Appeals
Following settled jurisprudence, the
proper remedy to question the decisions or
orders of the Secretary of Labor is via
Petition for Certiorari under Rule 65, not via
an appeal to the OP.For appeals to the OP in
labor cases have indeed been eliminated,
except those involving national interest over
which the President may assume
jurisdiction.
Petitioners appeal of the Secretary of
Labors Decision to the Office of the President
did not toll the running of the period, hence,
the assailed Decisions of the Secretary of
Labor are deemed to have attained finality.
At all events, on the merits, the
petition just the same fails.
As found by the POEA Administrator
andthe Secretary of Labor, through
Undersecretary Danilo P. Cruz,petitioners
refusal to board the M/THarunaon
November 30, 2004 constituted unjustified
breach ofhis contract of employment under
Section 1 (A-2) Rule II,Part VI[sic] of the POEA
Seabased Rules and Regulations.That
petitioner believed that respondent
company violated his rights when the period
of his earlier Maritinacontract was not
followed and his "stand-by fees" were not
fully paid did not justify his refusal to abide
by the valid and existingHaruna contract
requiring him to serve aboard
M/THaruna.For, as noted in the assailed
DOLE Order, "if petitioners rights has been
violated as he claims, he has various
remedies under the contract which he did
not avail of."
Parenthetically, the Undersecretary
of Labor declared that "the real reason
[petitioner] refused to re-joinHarunaon
November 30, 2004, is that he left the
Philippines on November 29, 2004 to join
MTAdriatiki, a vessel of another manning
agency," which declaration petitioner has
not refuted.
PETITION DENIED.

197 UNIVERSITY PLANS INCORPORATED,
Petitioner, v. BELINDA P. SOLANO, TERRY
A. LAMUG, GLENDA S. BELGA, MELBA S.
ALVAREZ, WELMA R. NAMATA, MARIETTA
D. BACHO and MANOLO L. CENIDO,
Respondents.
FACTS:
Respondents filed before the Labor
Arbiter complaints for illegal dismissal, illegal
deductions, overriding commissions, unfair
labor practice, moral and exemplary
damages, and actual damages against
petitioner University Plans Incorporated.
The Labor Arbiter found petitioner
guilty of illegal dismissal and ordered
respondents reinstatement as well as the
payment of their full backwages,
proportionate 13th month pay,
moral/exemplary damages, and attorney's
fees.
On appeal, petitioner likewise
Motion to Reduce Bond alleging that it was
under receivership and that it cannot
dispose of its assets at such a short
notice.Because of this, it could not post the
required bond.Nevertheless, it has
P30,000.00 available for immediate
disposition and thus prayed that said
amount be deemed sufficient to satisfy the
required bond for the perfection of its
appeal. But the NLRC denied petitioners
Motion to Reduce Bond and directed it to
post an additional appeal bond in the
amount ofP3,013,599.50 within a non-
extendible period of 10 days from notice,
otherwise the appeal shall be dismissed for
non-perfection pursuant to Article 223 of the
Labor Code.
Petitioner filed a Motion for
Reconsideration Insisting that the NLRC has
the discretion to reduce the appeal bond
upon motion of appellant and on
meritorious grounds. The NLRC, however,
denied the same.It ruled that while it has the
discretion to reduce the appeal bond, it is
nevertheless not persuaded that petitioner
was incapable of posting the required
bond.It noted that petitioner failed to
284
submit any financial statement or provide
details anent its alleged receivership or its
sources of income.
On review, the CA held that the NLRC
in meritorious cases and upon motion by the
appellant may reduce the amount of the
bond.However, in order for the NLRC to
exercise this discretion, it is imperative for
the petitioner to show veritable proof that it
is entitled to the same.Since petitioner failed
to provide the NLRC with sufficient basis to
determine its incapacity to post the required
appeal bond, the CA opined that the NLRC's
denial of petitioner's Motion to Reduce Bond
was justified.Hence, this petition.
ISSUE:
Did the NLRC and CA err when it
denied petitioners motion to reduce bond?
HELD:
Posting of bond is indispensable to
the perfection of an appeal in cases involving
monetary awards from the Decision of the
Labor Arbiter pursuant to Art 223 of the
Labor Code in relation to Sections 4 and 6,
Rule VI of the Revised Rules of Procedure of
the NLRC.
The abovementioned provisions
highlight the importance of posting a cash or
surety bond in the perfection of an appeal to
the NLRC from the Labor Arbiters judgment
involving a monetary award.
Under the Rules, appeals involving
monetary awards are perfected only upon
compliance with the following mandatory
requisites, namely: (1) payment of the
appeal fees; (2) filing of the memorandum of
appeal; and (3)payment of the required cash
or surety bond.
The intention of the lawmakers to
make the bond a mandatory requisite for the
perfection of an appeal by the employer is
clearly expressed in the provision that an
appeal by the employer may be perfected
only upon the posting of a cash or surety
bond.The word only in Article 223 of the
Labor Code makes it unmistakably plain that
the lawmakers intended the posting of a

cash or surety bond by the employer to be
the essential and exclusive means by which
an employers appeal may be perfected.The
word may refers to the perfection of an
appeal as optional on the part of the
defeated party, but not to the compulsory
posting of an appeal bond, if he desires to
appeal.The meaning and the intention of the
legislature in enacting a statute must be
determined from the language employed;
and where there is no ambiguity in the words
used, then there is no room for construction.
(Ramirez v. Court of Appeals,G.R. No.
182626, December 4, 2009)
Notably, however, under Section 6,
Rule VI of the NLRC's Revised Rules of
Procedure, the bond may be reduced albeit
only on meritorious grounds and upon
posting of a partial bond in a reasonable
amount in relation to the monetary
award.Suffice it to state that while said Rules
allows the Commission to reduce the
amount of the bond, the exercise of the
authority is not a matter of right on the part
of the movant, but lies within the sound
discretion of the NLRC upon a showing of
meritorious grounds.
Petitioner attached to its Motion to
Reduce Bond the SEC Orders dated August
23, 1999 and May 23, 2000. From the said
SEC Orders, it is unmistakable that petitioner
was under receivership.And from the tenor
and contents of said Orders, it is possible
that petitioner has no liquid asset which it
could use to post the required amount of
bond.Also, it is quite understandable that
because of petitioners financial state, it
cannot raise the amount of more thanP3
million within a period of 10 days from
receipt of the Labor Arbiters judgment.
However, the NLRC ignored
petitioners allegations and instead remained
adamant that since the amount of bond is
fixed by law, petitioner must post an
additional bond of more thanP3 million. It is
an utter disregard of the provision of the
Labor Code and of the NLRC Revised Rules of
Procedure allowing the reduction of bond in
meritorious cases.While the NLRC tried to
285
correct this error in its March 21, 2003
Resolution By further explaining that it was
not persuaded by petitioners alleged
incapability of posting the required amount
of bond for failure to submit financial
statement, list of sources of income and
other details with respect to the alleged
receivership, we still find the hasty denial of
the motion to reduce bond not proper.
Notwithstanding petitioner's failure
to submit its financial statement and list of
sources of income and to give more details
relative to its receivership, it was
nevertheless able to show through the
abovementioned SEC Orders that it was
indeed under a state of receivership.This
should have been sufficient reason for the
NLRC to not outrightly deny petitioners
motion. Here, considering the clear showing
of petitioners state of receivership, the NLRC
should have conducted such preliminary
determination and therein require the
submission of said documents and other
necessary evidence before proceeding to
resolve the subject motion.
After all, the present case falls under
those cases where the bond requirement on
appeal may be relaxed considering that (1)
there was substantial compliance with the
Rules; (2) the surrounding facts and
circumstances constitute meritorious
grounds to reduce the bond; and (3) the
petitioner, at the very least, exhibited its
willingness and/or good faith by posting a
partial bond during the reglementary period.
Thus, it was an error on the part of the NLRC
when it denied petitioners Motion to Reduce
Bond and likewise on the part of the CA
when it affirmed said denial.
CA REVERSED
198 Semblante vs. CA, G.R. No. 196426,
August 15, 2011
Facts:
Petitioners Marticio Semblante and
Dubrick Pilar worked in the Gallera de
Mandaue owned by the respondents-

spouses Vicente and Maria Luisa Loot. The
petitioners rendered their services as the
official massiador and sentenciador in 1993.
As the masiador, Semblante calls and takes
the bets from the gamecock owners and
other bettors and orders the start of the
cockfight. He also distributes the winnings
after deducting the arriba, or the
commission for the cockpit. Meanwhile, as
the sentenciador, Pilar oversees the proper
gaffing of fighting cocks, determines the
fighting cocks' physical condition and
capabilities to continue the cockfight, and
eventually declares the result of the
cockfight. As masiador and sentenciador,
Semblante receives PhP2,000 per week or a
total of PhP8,000 per month, while Pilar gets
PhP3,500 a mere gestures.
week or PhP14,000 per month. They work
every Tuesday, Wednesday, Saturday, and
Sunday every week, excluding monthly
derbies and cockfights held on special
holidays. Their working days start at 1:00
p.m. and last until 12:00 midnight, or until
the early hours of the morning
depending on the needs of the cockpit.
Petitioners had both been issued employees'
identification cards that they wear every
time they report for duty. However on
November 14,1993, petitioners were denied
entry into the cockpit upon the instructions
of respondents and were informed of the
termination of their employment effective
that date.
Respondents denied that petitioners were
their employees and alleged that they were
associates of respondents‘ independent
contractor, Tomas Vega. They claimed that
petitioners have no regular working time or
day and they are free to decide for
themselves whether to report for work or
not on any cockfighting day. And the
identification card issued was only to free
them from the normal entrance fees and to
differentiate them from the general public.
The Labor Arbiter found that there
exist an employer-employee relationship
between the petitioner and the respondents
because the latter performed the works
286
necessary and indispensable to the usual
trade or business of the respondents for a
number of years. It h as ruled that
petitioners were illegally dismissed and are
entitled to their backwages and separation
pay. However, the NLRC reversed the Labor
Arbiter‘s decision. It held that respondents
having no power on the selection and
engagement of petitioners and that no
separate individual contract with
respondents was ever executed by
petitioners. In its appeal to the CA, the latter
ruled in favor for the respondents and held
that referees and
bet-takers in a cockfight need to have the
kind of expertise that is characteristic of the
game to interpret messages conveyed by
Hence, petitioners are akin to
independent contractors who possess
unique skills , expertise and talent to
distinguish them from ordinary employees.
Further, petitioners were not provided by
tools and instrumentalities they needed to
perform their work. They only need their
unique skills and talents in the performance
of their job as masiador and sentenciador.
Issue:
Whether or not the dismissal of the
petitioners is illegal on the ground that that
they are regular employees of the
respondents?
Ruling:
Respondents had no part in
petitioners' selection and management;
petitioners' compensation was paid out of
the arriba (which is a percentage deducted
from the total bets), not by petitioners; and
petitioners performed their functions as
masiador and sentenciador free from the
direction and control of respondents. In the
conduct of their work, petitioners relied
mainly on their "expertise that is
characteristic of the cockfight gambling,"
and were never given by respondents any
tool needed for the performance of their
work. Respondents, not being petitioners'

employers, could never have dismissed,
legally or illegally, petitioners, since
respondents were without power or
prerogative to do so in the first place. The
rule on the posting of an appeal bond cannot
defeat the substantive rights of respondents
to be free from an unwarranted burden of
answering for an illegal dismissal for which
they were never responsible.
199 RODOLFO LUNA, Petitioner, v. ALLADO
CONSTRUCTION CO., INC., and/or RAMON
ALLADO, Respondents.
FACTS:
Sometime in the afternoon of
November 24, 2001, petitioner alleges that
he was given a travel order dated to proceed
to respondents main office in Davao City for
reassignment. Upon arrival at the office, he
was asked to sign several sets of "Contract of
Project Employment". He refused. Thus, he
was not given a reassignment or any other
work. These incidents prompted him to file
the complaint.
Respondents, on the other hand,
alleged that petitioner applied for a leave of
absence which was granted. Upon expiration
of his leave, he was advised to report to the
companys project in Sarangani Province.
However, he refused and claimed instead
that he had been dismissed illegally.
Finding that petitioner is deemed
resigned, the Labor Arbiter (LA) dismissed
petitioners complaint for illegal dismissal,
but ordered respondent to pay the former
the amount ofP18,000.00 by way of financial
assistance.
Respondents appealed with the
National Labor Relations Commission (NLRC)
which reversed the decision of the LA,
declared respondents guilty of illegal
dismissal, and ordered them to pay
petitioner one-month salary for every year
of service as separation pay. Respondents
moved for reconsideration but their motion
was denied.
287
Respondents elevated their cause to
the CAviaa petition forcertiorariunder Rule
65. The CA granted respondents petition
forcertiorariand deleted the award of
financial assistance. Further, the CA held
that it was grave abuse of discretion for the
NLRC to rule on the issue of illegal dismissal
when such issue was not raised on appeal.
Petitioner filed an MR but this was
denied by the CA.
ISSUE:
(1) Whether the NLRC could still
review issues not brought during the appeal,
(2) Whether the CA exercised grave
abuse of discretion in disregarding the
findings of fact by the NLRC, the principle of
social justice, and jurisprudence with respect
to the award of financial assistance, and
(3) Whether the CA exhibited bias and
partiality when it rendered the decision and
resolution considering the hasty and
improvident issuance of a writ of preliminary
injunction to frustrate petitioner in
implementing the final and executor
judgment of the NLRC favouring petitioner.
HELD:
The petition is PARTLY
GRANTED.The award of financial assistance
is REINSTATED.
I. The 2002 Rules of Procedure of the
NLRC, which was in effect at the time
respondents appealed the Labor Arbiters
decision, provided that the NLRC shall limit
itself only to the specific issues that were
elevated for review. Here, the NLRC passed
upon the issue of illegal dismissal although
this was not brought up in the appeal.
Therefore, by considering the arguments
and issues in the reply/opposition to appeal
which were not properly raised by timely
appeal nor comprehended within the scope
of the issue raised in petitioners appeal,
public respondent committed grave abuse of
discretion amounting to excess of
jurisdiction.
II. As shown by the records,
inconsistent with his claim that he was

actually dismissed petitioner applied for and
was granted a week long leave. Petitioner
did not deny this. He merely claimed that he
went on leave since he was not given any
work assignment by the Company.However,
the leave application form which bore his
signature clearly stated that his reason for
going on leave was "to settle [his] personal
problem." Indeed, the NLRC gravely abused
its discretion in reversing the Labor Arbiters
decision on mere conjectures and
insubstantial grounds.
III. We are not unmindful of the rule
that financial assistance is allowed only in
instances where the employee is validly
dismissed for causes other than serious
misconduct or those reflecting on his moral
character. But we must stress that this Court
did allow the grant of financial assistance as
a measure of social justice and exceptional
circumstances, and as an equitable
concession.There appears to be no reason
why petitioner, who has served respondent
corporation for more than eight years
without committing any infraction, cannot
be extended the reasonable financial
assistance of P18,000.00 as awarded by the
Labor Arbiter on equity considerations.
IV. Granting of a TRO by a justice of
the CA even without the concurrence of the
other associate justices in the division, is
allowed in cases of extreme urgency. Here,
the records of this case would attest to the
urgency of the situation. When the TRO was
issued, the NLRC Regional Arbitration Branch
No. XI was already in the process of
enforcing the assailed Resolution of the
NLRC dated May 9, 2003 as evidenced by its
issuance of a Notice of Hearingfor a pre-
execution conference which was impelled by
a motion made by petitioner. The pre-
execution conference was conducted as
scheduled, thus, respondents filed with the
Court of Appeals an Urgent Motion for the
Issuance of a Temporary Restraining Order
and/or Writ of Preliminary Injunction.
288
200 PAQUITO V. ANDO, Petitioner, v.
ANDRESITO Y. CAMPO, ET AL.,,
Respondents.
FACTS:
Petitioner was the president of
PACSI, an independent labor contractor.
Respondents were hired by PACSI as pilers or
haulers. They filed a case for illegal dismissal
and some money claims with the National
Labor Relations Commission (NLRC)
The Labor Arbiter ruled in
respondents’ favor. To answer for the
monetary award, NLRC issued a Notice of
Sale on Execution of Personal Property over
the property in the name of “Paquito V.
Ando x x x married to Erlinda S. Ando.
Petitioner then filed an action for
prohibition and damages with prayer for the
issuance of a temporary restraining order
(TRO) before the Regional Trial Court (RTC).
Petitioner claimed that the property
belonged to him and his wife, not to the
corporation, and, hence, could not be
subject of the execution sale. The RTC
denied petitioner’s prayer for a TRO, holding
that the trial court had no jurisdiction to try
and decide the case. The CA affirmed the RTC
Order.
Petitioner then filed the present
petition seeking the nullification of the CA
Decision. He argued that there was no
indication in the body of the Decision that he
was solidarily liable with the corporation.
ISSUE:
Whether or not the CA erred in
upholding the RTC Decision
HELD:
The petition is meritorious.
LABOR LAW: Execution
The power of the NLRC, or the courts,
to execute its judgment extends only to
properties unquestionably belonging to the
judgment debtor alone. A sheriff, therefore,
has no authority to attach the property of
any person except that of the judgment

debtor. Likewise, there is no showing that
the sheriff ever tried to execute on the
properties of the corporation.
Petition is GRANTED.
201 FILIPINAS PALMOIL PROCESSING, INC.
and DENNIS T. VILLAREAL, Petitioners, v.
JOEL P. DEJAPA, represented by his
Attorney-in-Fact MYRNA MANZANO,
Respondent.
FACTS:
In 1997, respondent Joey Dejapa filed
a Complaint for illegal dismissal and money
claims against petitioner Asian Plantation
Phils., Inc. (formerly Veg. Oil Phils. Inc.), now
Filipinas Palmoil Processing, Inc., Dennis T.
Villareal and Tom Madula. The Labor Arbiter
(LA) dismissed respondent's complaint for
lack of merit. The NLRC affirmed this.
The CA reversed and set aside the
NLRC decision and resolution. It found that
petitioner company was respondent's
employer and that Tom Madula was not
really an independent contractor, but
petitioner company's Operations Manager.
It ruled that respondent was illegally
dismissed by petitioner company.
Respondent filed with the LA a
Motion for Execution and Computation of
the Award. The LA issued a Writ of
Execution. Petitioners filed a Motion to
Quash Writ of Execution on the ground that
it can be held liable only insofar as the
reinstatement aspect and/or the monetary
award were concerned, pursuant to the CA
Decision dated August 29, 2002, but not to
backwages.
Respondent then filed before the CA
a Very Urgent Motion for Clarification of
Judgment, praying that the CA Decision
dated August 29, 2002 be clarified to the
effect that petitioner be made solely liable to
the judgment award and, as a consequence
thereof, to order the NLRC and the LA to
implement the same and to direct the UCPB
to release the garnished amount. The CA, in
a new Resolution, then ordered the
289
reinstatement of respondent, and the
payment of his backwages.
ISSUE:
Whether or not the CA erred in
reinstating respondent.
HELD:
The petition lacks merit.
LABOR LAW: Judgment nunc pro
tunc
As a general rule, final and executory
judgments are immutable and unalterable,
except under these recognized exceptions,
to wit: (a) clerical errors; (b) nunc pro tunc
entries which cause no prejudice to any
party; and (c) void judgments.
The object of a judgment nunc pro
tunc is not the rendering of a new judgment
and the ascertainment and determination of
new rights, but is one placing in proper form
on the record, the judgment that had been
previously rendered, to make it speak the
truth, so as to make it show what the judicial
action really was, not to correct judicial
errors, such as to render a judgment which
the court ought to have rendered, in place of
the one it did erroneously render, nor to
supply nonaction by the court, however
erroneous the judgment may have been.
Petition is DENIED. The decision of
CA is affirmed.
202 PFIZER, INC. AND/OR REY GERARDO
BACARRO, AND/OR FERDINAND CORTES,
AND/OR ALFRED MAGALLON, AND/OR
ARISTOTLE ARCE, Petitioners, v.
GERALDINE VELASCO, Respondent.
FACTS:
Private respondent Geraldine L.
Velasco was terminated from employment
with petitioner PFIZER, INC. The Labor
Arbiter rendered its decision declaring the
dismissal of Velasco illegal, ordering her
reinstatement. PFIZER appealed to the
National Labor Relations Commission (NLRC)
but its appeal was denied. The CA upheld the

validity of respondents dismissal from
employment but ordered Pfizer to pay
Velasco wages from the date of the Labor
Arbiters decision ordering her reinstatement
until November 23, 2005, when the Court of
Appeals rendered its decision declaring
Velasco's dismissal valid.
ISSUE:
Did the CA commit a serious but
reversible error when it ordered Pfizer to
pay Velasco wages from the date of the
Labor Arbiters decision ordering her
reinstatement until November 23, 2005,
when the Court of Appeals rendered its
decision declaring Velascos dismissal valid?
HELD:
The order of reinstatement is
immediately executory. The unjustified
refusal of the employer to reinstate a
dismissed employee entitles him to payment
of his salaries effective from the time the
employer failed to reinstate him despite the
issuance of a writ of execution. Unless there
is a restraining order issued, it is ministerial
upon the Labor Arbiter to implement the
order of reinstatement. In the case at bar, no
restraining order was granted. PFIZER did
not immediately admit respondent back to
work which, according to the law, should
have been done as soon as an order or award
of reinstatement is handed down by the
Labor Arbiter without need for the issuance
of a writ of execution.Thus, respondent was
entitled to the wages paid to her under the
writ of execution.
203 ANTONIO P. SALENGA and
NATIONAL LABOR RELATIONS COMMISSIO
N vs COURT OF APPEALS and CLARK DEVEL
OPMENT CORPORATION
G.R. Nos. 174941, February 1, 2012
FACTS:
President/Chief Executive Officer (CE
O) Rufo Colayco issued an Order informing S
290
alenga that, pursuant to the decision of the
board of directors of respondent CDC, the p
osition of head executive assistant the positi
on held by petitioner was declared redunda
nt. His employment was then terminated. H
e then filed illegal dismissal case against CD
C and Colayco. The Labor Arbiter ruled in fa
vor of Salenga. When the Decision was rend
ered, CDC was already under the leadership
of Sergio T. Naguiat. He instructed Atty. Mo
nina C. Pineda, manager of the Corporate a
nd Legal Services Department and concurre
nt corporate board secretary, not to appeal
the Decision and to so inform the OGCC. Ho
wever, two separate appeals were filed bef
ore LA Darlucio. One from the OGCC on beh
alf of respondent CDC and Rufo Colayco and
the second from Rufo Colayco.
Petitioner opposed the two appeals
on the grounds that both appellants had fail
ed to observe Rule VI, Sections 4 to 6 of the
NLRC Rules of Procedure; and that appellant
s had not been authorized by respondent’s
board of directors to represent the corporat
ion and, thus, they were not the “employer”
whom the Rules referred to.
ISSUE:
Whether or not NLRC can entertain
an appeal absent a board resolution allowin
g it.
HELD:
No. The NLRC had no jurisdiction to
entertain the appeal filed by TimbolRoman
and former CDC CEO Colayco.
A corporation can only exercise its p
owers and transact its business through its
board of directors and through its officers a
nd agents when authorized by a board resol
ution or its bylaws. The power of a corporati
on to sue and be sued is exercised by the bo
ard of directors. The physical acts of the cor
poration, like the signing of documents, can
be performed only by natural persons duly
authorized for the purpose by corporate byl
aws or by a specific act of the board. The pu
rpose of verification is to secure an assuranc
e that the allegations in the pleading are tru

e and correct and have been filed in good fa
ith.
Thus, absent the requisite board res
olution, neither TimbolRoman nor Atty. Mal
lari, who signed the Memorandum of Appea
l and Joint Affidavit of Declaration allegedly
on behalf of respondent corporation, may b
e considered as the “appellant” and “emplo
yer” referred to by Rule VI, Sections 4 to 6 o
f the NLRC Rules of Procedure, which provid
es that appeal shall be verified by appellant
himself in accordance with Section 4, Rule 7
of the Rules of Court. The OGCC failed to pr
oduce any valid authorization from the boar
d of directors despite petitioner Salenga’s re
peated demands. And the socalled appeal w
as done against the instructions of then Pre
sident/CEO Naguiat not to file an appeal.
204 ESTATE OF NELSON R. DULAY,
represented by his wife MERRIDY JANE P.
DULAY, Petitioner, v. ABOITIZ JEBSEN
MARITIME, INC. and GENERAL
CHARTERERS, INC., Respondents.
FACTS:
Since 1986, Nelson Dulay was
employed as an ordinary seaman and later as
bosun on contractual basis by General
Charters, Inc,, a subsidiary of Aboitiz Jebsen
Maritime. From September 3, 1999 up to
July 19, 2000, Nelson was detailed in
petitionersvessel, the MV Kickapoo Belle.
At the time of his death on August 13,
2000, he was a bona fide member of the
AMOSUP, GCI collective bargaining agent.
Nelson widow, Merridy Jane, thereafter
claimed for death benefits through the
grievance procedure of the CBA between
AMOSUP and GCI. However, on January 29,
2001, the grievance procedure was
"declared deadlocked" as petitioners
refused to grant the benefits sought by the
widow.
On March 5, 2001, Merridy Jane filed
a complaint with the NLRC against GCI for
death and medical benefits and damages.
Merridy Jane claimed $90,000.00 however,
291
CGI awarded P20,000.00 to Nelson brother.
Merridy Jane is now claiming the $90,000.00
less the P20,000.00 that Nelson brother
received.
Respondents asserted that the NLRC
had no jurisdiction over the action on
account of the absence of employer-
employee relationship between GCI and
Nelson at the time of the latter death.
Nelson also had no claims against petitioners
for sick leave allowance/medical benefit by
reason of the completion of his contract with
GCI.
The Labor Arbiter ruled in favor of
petitioner and ordered respondents to pay
P4,621,300.00, the equivalent of
US$90,000.00 less P20,000.00, at the time of
judgment. The Labor Arbiter also ruled that
the proximate cause of Nelson death was not
work-related.
On appeal, the NLRC affirmed the
Labor Arbiter decision as to the grant of
death benefits under the CBA but reversed
the latter ruling as to the proximate cause of
Nelson death.
A special civil action for certiorari was
filed with the CA. The appellate court
granted the petition and referred the case to
the NCMB for the appropriate resolution of
the issue on the matter of the applicable CBA
provision.
The CA ruled that while the suit filed
by Merridy Jane is a money claim, the same
basically involves the interpretation and
application of the provisions in the subject
CBA. As such, jurisdiction belongs to the
voluntary arbitrator and not the labor
arbiter.
ISSUE:
Whether or not the CA committed
error in ruling that the Labor Arbiter has no
jurisdiction over the case?
HELD:
Petitioner contends that Section 10
of Republic Act (R.A.) 8042, otherwise known
as the Migrant Workers and Overseas

Filipinos Act of 1995, vests jurisdiction on the
appropriate branches of the NLRC to
entertain disputes regarding the
interpretation of a collective bargaining
agreement involving migrant or overseas
Filipino workers. Petitioner argues that the
abovementioned Section amended Article
217 (c) of the Labor Code which, in turn,
confers jurisdiction upon voluntary
arbitrators over interpretation or
implementation of collective bargaining
agreements and interpretation or
enforcement of company personnel policies.
It is true that R.A. 8042 is a special
law governing overseas Filipino workers.
However, there is no specific provision
thereunder which provides for jurisdiction
over disputes or unresolved grievances
regarding the interpretation or
implementation of a CBA. Section 10 of R.A.
8042, which is cited by petitioner, simply
speaks, in general, of "claims arising out of
an employer-employee relationship or by
virtue of any law or contract involving
Filipino workers for overseas deployment
including claims for actual, moral, exemplary
and other forms of damages."
On the other hand, Articles 217(c)
and 261 of the Labor Code are very specific
in stating that voluntary arbitrators have
jurisdiction over cases arising from the
interpretation or implementation of
collective bargaining agreements. Stated
differently, the instant case involves a
situation where the special statute (R.A.
8042) refers to a subject in general, which
the general statute (Labor Code) treats in
particular.
In the present case, the basic issue
raised by Merridy Jane in her complaint filed
with the NLRC is: which provision of the
subject CBA applies insofar as death benefits
due to the heirs of Nelson are concerned.
The Court agrees with the CA in holding that
this issue clearly involves the interpretation
or implementation of the said CBA. Thus, the
specific or special provisions of the Labor
Code govern.
292
In any case, the Court agrees with
petitioner's contention that the CBA is the
law or contract between the parties.
Upon this Court reading of the
pertinent provisions of the CBA, it is clear
that the parties really intended to bring to
conciliation or voluntary arbitration any
dispute or conflict in the interpretation or
application of the provisions of their CBA. It
is settled that when the parties have validly
agreed on a procedure for resolving
grievances and to submit a dispute to
voluntary arbitration then that procedure
should be strictly observed.
It may not be amiss to point out that
the CBA are in consonance with Rule VII,
Section 7 of the present Omnibus Rules and
Regulations Implementing the Migrant
Workers and Overseas Filipinos Act of 1995,
as amended by Republic Act No. 10022,
which states that "[f]or OFWs with collective
bargaining agreements, the case shall be
submitted for voluntary arbitration in
accordance with Articles 261 and 262 of the
Labor Code." The Court notes that the said
Omnibus Rules and Regulations were
promulgated by the Department of Labor
and Employment (DOLE) and the
Department of Foreign Affairs (DFA) and that
these departments were mandated to
consult with the Senate Committee on Labor
and Employment and the House of
Representatives Committee on Overseas
Workers Affairs.
In consultation with the counterparts
of the DOLE in the respective committees of
the Senate and the House of
Representatives, as well as the DFA and the
POEA is that with respect to disputes
involving claims of Filipino seafarers wherein
the parties are covered by a collective
bargaining agreement, the dispute or claim
should be submitted to the jurisdiction of a
voluntary arbitrator or panel of arbitrators.
It is only in the absence of a collective
bargaining agreement that parties may opt
to submit the dispute to either the NLRC or
to voluntary arbitration. It is elementary that
rules and regulations issued by

administrative bodies to interpret the law
which they are entrusted to enforce, have
the force of law, and are entitled to great
respect. Such rules and regulations partake
of the nature of a statute and are just as
binding as if they have been written in the
statute itself.
DENIED
205 Wilfredo Y. Antiquina v. Magsaysay
Maritime Corporation and/or Masterbulk
Pte., Ltd., G.R. No. 168922. April 13, 2011.
Rules of Procedure; liberal construction in
favor of working class.
Petitioner claimed disability benefits
under a Collective Bargaining Agreement
that the respondent employer entered into
with a foreign union. The Court of Appeals
refused to admit the evidence of petitioner
showing his membership in the union on the
ground that it was submitted only with the
Motion for Reconsideration. The Supreme
Court, in agreeing to examine the evidence
belatedly submitted by petitioner, pointed
out that technical rules of procedure shall be
liberally construed in favor of the working
class in accordance with the demands of
substantial justice. Rules of procedure and
evidence should not be applied in a very rigid
and technical sense in labor cases in order
that technicalities would not stand in the
way of equitably and completely resolving
the rights and obligations of the parties.
Wilfredo Y. Antiquina v. Magsaysay Maritime
Corporation and/or Masterbulk Pte.,
Ltd., G.R. No. 168922. April 13,
2011. Disability Benefits; entitlement and
burden of proof. Petitioner suffered a
fractured arm while working on
respondent‟s vessel. He filed a complaint for
permanent disa bility benefits, among
others. Petitioner claims that he is entitled to
the higher amount of disability benefits
under the Collective Bargaining Agreement
which respondent entered into with a union
of which petitioner was a member. The
Court of Appeals den ied the petitioner‟s
293
claim. The Supreme Court, in upholding the
Court of Appeals, held that the burden of
proof rests upon the party who asserts the
affirmative of an issue. And in labor cases,
the quantum of proof necessary is
substantial evidence, or such amount of
relevant evidence which a reasonable mind
might accept as adequate to justify a
conclusion. Petitioner had the duty to prove
by substantial evidence his own positive
assertions. He did not discharge this burden
of proof when he submitted
photocopied portions of a different CBA
with a different union.
Wilfredo Y. Antiquina v.
Magsaysay Maritime Corporation and/or
Masterbulk Pte., Ltd., G.R. No. 168922. April
13, 2011. Public office; casual employees.
Respondent was a casual teller who was
dismissed from service by petitioner
without being formally charged. On appeal,
the Civil Service Commission (CSC) upheld
the dismissal and reasoned that respondent
was a casual employee, and therefore her
services may be terminated at any time,
without need of a just cause. Upon review,
both the Court of Appeals and the Supreme
Court found that respondent was illegally
terminated. The Supreme Court recognized
its prono uncement in a recent case that
“Even a casual or temporary employee
enjoys security of tenure and cannot be
dismissed except for cause enumerated in
Sec. 22, Rule XIV of the Omnibus Civil Service
Rules and Regulations and other pertinent
laws.” However, the Court also went on to
state that, despite this new ruling on casual
employees, it is not the intention of the
Court to make the status of a casual
employee at par with that of a regular
employee, who enjoys permanence of
employment. The rule is still that casual
employment will cease automatically at the
end of the period unless renewed. Casual
employees may also be terminated anytime
though subject to certain conditions or
qualifications with reference to the CSC
Form No. 001. Thus, they may be laid-off
anytime before the expiration of the

employment period provided any of the
following occurs: (1) when their services are
no longer needed; (2) funds are no longer
available; (3) the project has already been
completed/finished; or (4)
their performance are below par. Philippine
Charity Sweepstakes Office Board of
Directors and Reynaldo P. Martin v. Marie
Jean C. Lapid, G.R. No. 191940. April 12,
2011. Public office; security of tenure.
Respondent was a casual teller who, having
been found guilty of „Discourtesy in the
Course of Official Duties‟ and of „Grave
Misconduct‟, was dismissed from service by
petitioner. On appeal, the Civil Service
Commission (CSC) ruled that despite lapses
in procedural due process committed by
petitioner employer, the dismissal was
proper since respondent belonged to the
category of a casual employee which does
not enjoy security of tenure. Hence, she may
be separated from service at any time, there
being no need to show cause. The Court of
Appeals disagreed and declared the
dismissal illegal. The Supreme Court
affirmed the findings of the Court of Appeals.
In doing so, the Court relied on
Section 3(2), Article XIII of the Constitution
which guarantees the rights of all workers to
security of tenure. The Court also recognized
its pronouncement in a recent case that
“Even a casual or temporary employee
enjoys security of tenure and cannot be
dismissed except for cause enumerated in
Sec. 22, Rule XIV of the Omnibus Civil Service
Rules and Regulations and other pertinent
laws.”
206 Atok Big Wedge Company vs. Gison,
G.R. No. 169510, August 8, 2011
Facts:
The respondent in this case, Jesus P.
Gison, was engaged as part-time consultant
of the petitioner, Atok Big Wedge Company
thorugh its then Asst. VP and Acting Resident
Manager, Rutillo A. Torres. As a consultant
on retainer basis, the former assisted the
294
petitioner‘s retained legal counsel with
matters pertaining to the prosecution of
cases against illegal surface occupants within
the area covered by the company‘s mineral
claims. He also tasked to perform liason
work with government agencies which he
said his expertise. Respondent is not
required to report to its office on a regular
basis, except when occassionally requested
by the management to discuss the matters
which needs of his expertise as aconsultant.
He is paid a retainer fee of 3,000Php a month
and delivered to him either in his residence
or in a local restaurant. They have al so
executed a retainer agreement however was
misplaced and can no longer be found. This
kind of arrangement continued on for the
next 11 years. Since respondent was getting
old, he requested petitioner to cause his
registration with the Social Security System
but petitioner did not accede to his request
considering the former only a
retainer/consultant.
Respondent herein, filed a complaint
with SSS against petitioner‘s refusal to cause
his registration with the SSS. The Resident
Manager of the petitioner issued then a
Memorandum advising respondent that
within 30 days from receipt thereof,
petitioner‘s services as a retainer/consultant
will be terminated since his services are no
longer necessary. As a result, respondent
filed a complaint for illegal dismissal, unfair
labor practice, underpayment of wages, non-
payment of 13th Month pay, vacation pay
and sick leave with the NLRC, Regional
Arbitration Branch and Cordillera
Administrative Region against the petitioner.
The Labor Arbiter rendered a
decision in favor of the petitioner ruling that
there is no employer-employee relationship
and dismissed the complaint for lack of
merit. An appeal was made before the NLRC
but same was dismissed and affirmed the
decision of the Labor Arbiter.
A petition for review was filed under
Rule 65 before the Court of Appeals. The
Court of Appeals annuled and has set aside
the d ecision of NLRC. The CA opined that,

both the Labor Arbiter and NLRC overlooked
Article 280 of the Labor Code, which
distinguishes between the two kinds of
employees, i.e., regular and casual
employees. The respondent is deemed a
regular employee of the petitioner after the
lapse of one year from his employment.
Considering also that the respondent had
been performing services for the petitioner
for the last 11 years en titling him to the
rights and privileges of a regular employee.
The CA added that although there was an
agreement between the parties that the
employment of the
respondent will be only temporary, it clearly
disregarded the same by repeatedly giving
petitioner several tasks to perform.
Moreover, although the respondent may
have waived his right to attain a regular
status when he agreed to perform these
tasks on a temporary employment status,
still it was the law that recognized and
considered him a regular employee after his
first year of rendering service to petitioner.
As such, the waiver is ineffective.
Petitioner herein posits that CA erred
in applying Article 280 of the Labor Code in
determining whether there exists an
employer-employee relationship. Petitioner
contends that where the existence of an
employer-employee relationship is in
dispute, Article 280 of the Labor Code is
inapplicable. The said article only set the
distinction between a casual employee from
a regular employee for purposes of
determining the rights
of an employee to be entitled to certain
benefits.
Issue:
Whether or not CA erred in applying
Article 280?
Ruling:
Well-entrenched is the doctrine that
the existence of an employer-employee
relationship is ultimately a question of fact
and that the findings thereon by the Labor
Arbiter and the NLRC shall be accorded not
only respect but even finality when
295
supported by substantial evidence. Being a
question of fact, the determination whether
such a relationship exists between petitioner
and respondent was well within the province
of the
Labor Arbiter and the NLRC. Being supported
by substantial evidence, such determination
should have been accorded great weight by
the CA in resolving the issue. To ascertain the
existence of an employer-employee
relationship jurisprudence has invariably
adhered to the four-fold test, to wit: (1) the
selection and engagement of the employee;
(2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the
employee's conduct, or the so-called
"control test." The so-called "control test" is
commonly regarded as the most crucial and
determinative indicator of the presence or
absence of an employer-employee
relationship
Applying the aforementioned test, an
employer-employee relationship is
apparently absent in the case at bar. Among
other things, respondent was not required to
report everyday during regular office hours
of petitioner. Respondent's monthly retainer
fees were paid to him either at his residence
or a local restaurant. More importantly,
petitioner did not prescribe the manner in
which respondent would accomplish any of
the tasks in which his expertise as a liaison
officer was needed; respondent was left
alone and given the freedom to accomplish
the tasks using his own means and method.
Respondent was assigned tasks to perform,
but petitioner did not control the manner
and methods by which respondent
performed these tasks. Verily, the absence
of the element of control on the part of the
petitioner engenders a conclusion that he is
not an employee of the petitioner.
Moreover, the absence of the parties'
retainership agreement notwithstanding,
respondent clearly admitted that petitioner
hired him in a limited capacity only and that
there will be no employer-employee
relationship between them.

Respondent was well aware of the
agreement that he was hired merely as a
liaison or consultant of the petitioner and he
agreed to perform tasks for the petitioner on
a temporary employment status only.
However, respondent anchors his claim that
he became a regular employee of the
petitioner based on his contention that the
"temporary" aspect of his job and its
"limited" nature could not have lasted for
eleven years unless some time during that
period, he became a regular employee of the
petitioner by continually performing services
for the company.
Respondent is not an employee,
much more a regular employee of petitioner.
The appellate court's premise that regular
employees are those who perform activities
which are desirable and necessary for the
business of the employer is not
determinative in this case. In fact, any
agreement may provide that one party shall
render services for and in behalf of another,
no matter how necessary for the latter's
business, even without being hired as an
employee. Hence,respondent's length of
service and petitioner's repeated act of
assigning responden t some tasks to be
performed did not result to respondent's
entitlement to the rights and privileges of a
regular employee.
Furthermore, despite the fact that
petitioner made use of the services of
respondent for eleven years, he still cannot
be con sidered as a regular employee of
petitioner. Article 280 of the Labor Code, in
which the lower court used to buttress its
findings that respondent became a regular
employee of the petitioner, is not applicable
in the case at bar. Indeed, the Court has
ruled that said provision is not the yardstick
for determining the existence of an
employment relationship because it merely
distinguishes between two kinds of
employees, i.e., regular employees and
casual employees, for purposes of
determining the right of an employee to
certain benefits, to join or form a union, or
to security of tenure; it does not apply where
296
the existence of an employment relationship
is in dispute.It is, therefore, erroneous on
the part of the Court of Appeals to rely on
Article 280 in determining whether an
employer-employee relationship exists
between respondent and the petitioner.
Considering that there is no
employer-employee relationship between
the parties, the termination of respondent's
services by the petitioner after due notice
did not constitute illegal dismissal
warranting his reinstatement and the
payment of full backwages, allowances and
other benefits.
207 ATLANTA INDUSTRIES, INC. and/or
ROBERT CHAN, petitioners, vs. APRILITO R.
SEBOLINO, KHIM V. COSTALES, ALVIN V.
ALMONTE, and JOSEPH H. SAGUN,
respondents.
FACTS:
Sebolino et al. filed several
complaints for illegal dismissal,
regularization, underpayment, nonpayment
of wages and other money claims as well as
damages. They alleged that they had
attained regular status as they were allowed
to work with Atlanta for more than six (6)
months from the start of a purported
apprenticeship agreement between them
and the company. They claimed that they
were illegally dismissed when the
apprenticeship agreement expired.
In defense, Atlanta and Chan argued
that the workers were not entitled to
regularization and to their money claims
because they were engaged as apprentices
under a government-approved
apprenticeship program. The company
offered to hire them as regular employees in
the event vacancies for regular positions
occur in the section of the plant where they
had trained. They also claimed that their
names did not appear in the list of
employees (Master List) prior to their
engagement as apprentices.

The Labor Arbiter found the dismissal
to be illegal with respect to nine out of the
twelve complainants. Atlanta appealed the
decision to the NLRC which reversed the
illegal dismissal decision with respect to
Sebolino and three others. They moved for
reconsideration but this was denied. They
then brought the case up to the Court of
Appeals, which held that Sebolino and the
three others were illegally dismiised.
The CA ruled that Sebolino and the
three others were already employees of the
company before they entered into the first
and second apprenticeship agreements. For
example, Sebolino was employed by Atlanta
on March 3, 2004 then he entered into his
first apprenticeship agreement with the
company on March 20, 2004 to August 19,
2004. The second apprenticeship agreement
was from May 28, 2004 to October 8, 2004.
However, the CA found the apprenticeship
agreements to be void because they were
executed in violation of the law and the
rules. Therefore, in the first place, there
were no apprenticeship agreements.
Also, the positions occupied by the
respondents machine operator, extruder
operator and scaleman are usually necessary
and desirable in the manufacture of plastic
building materials, the companys main
business. Sebolino and the three others
were, therefore, regular employees whose
dismissals were illegal for lack of a just or
authorized cause and notice.
ISSUE:
Whether or not the CA erred in
ruling that Sebolino and three others were
illegally dismissed.
HELD:
The petition is unmeritorious.
LABOR LAW - Illegal dismissals
The CA committed no reversible
error in nullifying the NLRC decision and in
affirming the labor arbiters ruling, as it
applies toCostales, Almoite, Sebolino and
Sagun. Specifically, the CA correctly ruled
that the four were illegally dismissed
297
because (1) they were already employees
when they were required to undergo
apprenticeship and (2) apprenticeship
agreements were invalid.
The following considerations support
the CA ruling.
FBased on company operations at
the time material to the case, Costales,
Almoite, Sebolino and Sagun were already
rendering service to the company as
employees before they were made to
undergo apprenticeship. The company itself
recognized the respondents status through
relevant operational records in the case of
Costales and Almoite, the CPS monthly
report for December 2003 which the NLRC
relied upon and, for Sebolino and Sagun, the
production and work schedule for March 7
to 12, 2005 cited by the CA.
The CA correctly recognized the
authenticity of the operational documents,
for the failure of Atlanta to raise a challenge
against these documents before the labor
arbiter, the NLRC and the CA itself. The
appellate court, thus, found the said
documents sufficientto establish the
employment of the respondents before their
engagement as apprentices.
The fact that Sebolino and the three
others were already rendering service to the
company when they were made to undergo
apprenticeship (as established by the
evidence) renders the apprenticeship
agreements irrelevant as far as the four are
concerned. This reality is highlighted by the
CA finding that the respondents occupied
positions such as machine operator,
scaleman and extruder operator - tasks that
are usually necessary and desirable in
Atlantas usual business or trade as
manufacturer of plastic building materials.
These tasks and their nature characterized
the four as regular employees under Article
280 of the Labor Code.Thus, when they were
dismissed without just or authorized cause,
without notice, and without the opportunity
to be heard, their dismissal was illegal under
the law.

208 Prince Transport, Inc. and Mr. Renato
Claros v. Diosdado Garcia, Luisito Garcia,
Et. Al.
G.R. No. 167291, January 12, 2011
FACTS:
Prince Transport, Inc. (PTI), is a
company engaged in the business of
transporting passengers by land;
respondents were hired either as drivers,
conductors, mechanics or inspectors, except
for respondent Diosdado Garcia (Garcia),
who was assigned as Operations Manager.
Sometime in October 2007 the commissions
received by the respondents were reduced
to 7 to 9% from 8 to 10%. This led
respondents and other employees of PTI to
hold a series of meetings to discuss the
protection of their interests as employees.
Ranato Claros, president of PTI, made known
to Garcia his objections to the formation of a
union and in order to block the continued
formation of the union, PTI caused the
transfer of all union members and
sympathizers to one of its sub-companies,
Lubas Transport (Lubas). The business of
Lubas deteriorated because of the refusal of
PTI to maintain and repair the units being
used therein, which resulted in the virtual
stoppage of its operations and respondents'
loss of employment. Hence, the respondent-
employees filed complaints against PTI for
illegal dismissal and unfair labor practice. PTI
contended that it has nothing to do with the
management and operations of Lubas as
well as the control and supervision of the
latter's employees.
ISSUE:
Whether or not the order to reinstate
respondents was valid considering that the
issue of reinstatement was never brought up
before the CA and respondents never
questioned the award of separation pay.
HELD:
YES. It is clear from the complaints
filed by respondents that they are seeking
298
reinstatement. Section 2 (c), Rule 7 of the
Rules of Court provides that a pleading shall
specify the relief sought, but may add a
general prayer for such further or other
reliefs as may be deemed just and equitable.
Under this rule, a court can grant the relief
warranted by the allegation and the proof
even if it is not specifically sought by the
injured party; the inclusion of a general
prayer may justify the grant of a remedy
different from or together with the specific
remedy sought, if the facts alleged in the
complaint and the evidence introduced so
warrant. The general prayer is broad enough
“to justify extension of a remedy different
from or together with the specific remedy
sought.” Even without the prayer for a
specific remedy, proper relief may be
granted by the court if the facts alleged in
the complaint and the evidence introduced
so warrant. The court shall grant relief
warranted by the allegations and the proof
even if no such relief is prayed for. The
prayer in the complaint for other reliefs
equitable and just in the premises justifies
the grant of a relief not otherwise specifically
prayed for. In the instant case, aside from
their specific prayer for reinstatement,
respondents, in their separate complaints,
prayed for such reliefs which are deemed
just and equitable.
209 The Heritage Hotel Manila vs.
NATIONAL UNION OF WORKERS IN THE
HOTEL, RESTAURANT AND ALLIED
INDUSTRIES-HERITAGE HOTEL MANILA
SUPERVISORS CHAPTER (NUWHRAIN-
HHMSC) G.R. No. 178296, January 12, 2011
FACTS:
The respondent’s petition for certific
ation election was granted. Petitioner then
discovered that respondent had failed to su
bmit to the Bureau of Labor Relations (BLR)
its annual financial report for several years
and the list of its members since it filed its r
egistration papers in 1995. Consequently, it
filed a Petition for Cancellation of Registrati

on of respondent, on the ground of the non
submission of the said documents. Petitione
r prayed that respondent’s Certificate of Cre
ation of Local/Chapter be cancelled and its
name be deleted from the list of legitimate l
abor organizations. It further requested the
suspension of the certification election proc
eedings. Nevertheless, the certification elec
tion pushed through and the respondent w
on.
The Regional Director of DOLENCR a
nd DOLE Secretary both held that constituti
onally guaranteed freedom of association a
nd right of workers to selforganization outw
eighed respondent’s noncompliance with th
e statutory requirements to maintain its sta
tus as a legitimate labor organization.
ISSUE:
Whether or not the failure to compl
y with the statutory requirement(filing finan
cial reports and the list of its members) suffi
cient ground for the cancellation of registrat
ion of the respondent as a labor union.
HELD:
No, the noncompliance should not b
e a ground for the cancellation. Articles 238
and 239 of the Labor Code provide that failu
re to file financial reports and the list of its
members are grounds for the cancellation o
f Union Organization. However, considerati
on must be taken of the fundamental rights
guaranteed by Article XIII, Section 3 of the C
onstitution, i.e., the rights of all workers to s
elforganization, collective bargaining and ne
gotiations, and peaceful concerted activities
. Labor authorities should bear in mind that
registration confers upon a union the status
of legitimacy and the concomitant right and
privileges granted by law to a legitimate lab
or organization, particularly the right to part
icipate in or ask for certification election in
a bargaining unit. Thus, the cancellation of a
certificate of registration is the equivalent
of snuffing out the life of a labor organizatio
n. For without such registration, it loses as a
rule its rights under the Labor Code.
299
Furthermore, that the Labor Code’s
provisions on cancellation of union registrat
ion and on reportorial requirements have b
een recently amended by Republic Act (R.A.
) No. 9481, An Act Strengthening the Worke
rs’ Constitutional Right to SelfOrganization,
Amending for the Purpose Presidential Decr
ee No. 442, As Amended, Otherwise Known
as the Labor Code of the Philippines, which
says that failure to file financial reports and
list of union members shall not be a ground
for cancellation of union registration but sh
all subject the erring officers or members to
suspension, expulsion from membership, o
r any appropriate penalty.
210 NELSON A. CULILI, Petitioner, v.
EASTERN TELECOMMUNICATIONS
PHILIPPINES, INC., SALVADOR HIZON
(President and Chief Executive Officer),
EMILIANO JURADO (Chairman of the
Board), VIRGILIO GARCIA (Vice President)
and STELLA GARCIA (Assistant Vice
President), Respondents.
FACTS:
Respondent Eastern
Telecommunications Philippines, Inc. (ETPI)
is a telecommunications company engaged
mainly in the business of establishing
commercial telecommunications systems
and leasing of international datalines or
circuits that pass through the international
gateway facility (IGF). The other respondents
are ETPIs officers.
Petitioner Nelson A. Culili was
employed by ETPI as a Technician in its Field
Operations Department in 1981. In 1996,
Culili was promoted to Senior Technician in
the Customer Premises Equipment
Management Unit of the Service Quality
Department.
As a telecommunications company
and an authorized IGF operator, ETPI was
required, under RA No. 7925 and EO No. 109,
to establish landlines in Metro Manila and
certain provinces. However, due to
interconnection problems with the PLDT,

poor subscription and cancellation of
subscriptions, and other business difficulties,
ETPI was forced to halt its roll out of 129,000
landlines already allocated to a number of its
employees.
In 1998, due to business troubles and
losses, ETPI was compelled to implement a
Right-Sizing Program which consisted of two
phases: the first phase involved the
reduction of ETPIs workforce to only those
employees that were necessary and which
ETPI could sustain; the second phase
entailed a company-wide reorganization
which would result in the transfer, merger,
absorption or abolition of certain
departments of ETPI.
As part of the first phase, ETPI
offered to its employees who had rendered
at least fifteen years of service, the Special
Retirement Program, which consisted of the
option to voluntarily retire at an earlier age
and a retirement package equivalent to two
and a half (2) months salary for every year of
service. This offer was initially rejected by
the Eastern Telecommunications Employees
Union (ETEU), ETPIs duly recognized
bargaining agent, which threatened to stage
a strike. ETPI explained to ETEU the exact
details of the Right-Sizing Program and the
Special Retirement Program and after
consultations with ETEUs members, ETEU
agreed to the implementation of both
programs. Thus, ETPI re-offered the Special
Retirement Program and the corresponding
retirement package to the one hundred two
(102) employees who qualified for the
program. Of all the employees who qualified
to avail of the program, only Culili rejected
the offer.
Among the departments abolished
was the Service Quality Department. The
functions of the Customer Premises
Equipment Management Unit, Culilis unit,
were absorbed by the Business and
Consumer Accounts Department. As a result,
Culilis position was abolished due to
redundancy and his functions were absorbed
by the Business and Consumer Accounts
Department.
300
ETPI, through its Assistant Vice
President Stella Garcia, informed Culili of his
termination from employment effective
April 8, 1999.
Culili alleged that neither he nor the
DOLE were formally notified of his
termination. Culili believed that ETPI had
already decided to dismiss him even prior to
the March 8, 1999 letter. Moreover, Culili
asserted that ETPI had contracted out the
services he used to perform to a labor-only
contractor which not only proved that his
functions had not become unnecessary, but
which also violated their Collective
Bargaining Agreement (CBA) and the Labor
Code. Aside from these, Culili also alleged
that he was discriminated against when ETPI
offered some of his co-employees an
additional benefit in the form of motorcycles
to induce them to avail of the Special
Retirement Program, while he was not.
ETPI denied singling Culili out for
termination. ETPI claimed that because
there was no more work for Culili, it was
constrained to serve a final notice of
termination to Culili, which Culili ignored.
Thus, on March 26, 1999, ETPI tendered to
Culili his final pay check of P859,033.99
consisting of his basic salary, leaves, 13th
month pay and separation pay. ETPI claimed
that Culili refused to accept his termination
and continued to report for work.
Culili filed a complaint against ETPI
and its officers for illegal dismissal, unfair
labor practice, and money claims before the
Labor Arbiter.
The Labor Arbiter found ETPI guilty of
illegal dismissal and unfair labor practice.
On appeal, the NLRC affirmed the
Labor Arbiters decision but modified the
amount of moral and exemplary damages
awarded.
The Court of Appeals found that
Culilis position was validly abolished due to
redundancy. It further held that ETPI cannot
be held guilty of unfair labor practice as mere
contracting out of services being performed
by union members does not per se amount
to unfair labor practice unless it interferes

with the employees right to self-
organization. Hence, this petition.
ISSUE:
Whether or not Culili is illegally
dismissed.
HELD:
The decision of the Court of Appeals
is sustained.
LABOR LAW
There is redundancy when the
service capability of the workforce is greater
than what is reasonably required to meet the
demands of the business enterprise. A
position becomes redundant when it is
rendered superfluous by any number of
factors such as over-hiring of workers,
decrease in volume of business, or dropping
a particular product line or service activity
previously manufactured or undertaken by
the enterprise. Soriano, Jr. v. NLRC, G.R. No.
165594, April 23, 2007
This Court also held that the
following evidence may be proffered to
substantiate redundancy: the new staffing
pattern, feasibility studies/ proposal on the
viability of the newly created positions, job
description and the approval by the
management of the restructuring.
In the case at bar, ETPI was upfront
with its employees about its plan to
implement a Right-Sizing Program. Even in
the face of initial opposition from and
rejection of the said program by ETEU, ETPI
patiently negotiated with ETEUs officers to
make them understand ETPIs business
dilemma and its need to reduce its
workforce and streamline its organization.
This evidently rules out bad faith on the part
of ETPI.
The records show that ETPI had
sufficiently established not only its need to
reduce its workforce and streamline its
organization, but also the existence of
redundancy in the position of a Senior
Technician. ETPI explained how it failed to
meet its business targets and the factors that
caused this, and how this necessitated it to
301
reduce its workforce and streamline its
organization. ETPI also submitted its old and
new tables of organization and sufficiently
described how limited the functions of the
abolished position of a Senior Technician
were and how it decided on whom to absorb
these functions.
LABOR LAW
Although the Court finds Culilis
dismissal was for a lawful cause and not an
act of unfair labor practice, ETPI, however,
was remiss in its duty to observe procedural
due process in effecting the termination of
Culili.
For termination of employment as
defined in Article 283 of the Labor Code, the
requirement of due process shall be deemed
complied with upon service of a written
notice to the employee and the appropriate
Regional Office of the Department of Labor
and Employment at least thirty days before
effectivity of the termination, specifying the
ground or grounds for termination.
ETPI does not deny its failure to
provide DOLE with a written notice regarding
Culilis termination. It, however, insists that it
has complied with the requirement to serve
a written notice to Culili as evidenced by his
admission of having received it and
forwarding it to his union president.
The Court of Appeals, in finding that
Culili was not afforded procedural due
process, held that Culilis dismissal was
ineffectual, and required ETPI to pay Culili
full backwages in accordance with our
decision in Serrano v. NLRC, 387 Phil. 345
(2000).
Hence, since it has been established
that Culilis termination was due to an
authorized cause and cannot be considered
unfair labor practice on the part of ETPI, his
dismissal is valid. However, in view of ETPIs
failure to comply with the notice
requirements under the Labor Code, Culili is
entitled to nominal damages in addition to
his separation pay. DENIED.
211 Barroga vs. Data Center College, G.R.
No. 174158, June 27, 2011

Facts:
On November 11, 1991, petitioner
was employed as an Instructor in Data
Center College Laoag City branch in Ilocos
Norte. In a Memorandum dated June 6,
1992, respondents transferred him to
University of Northern Philippines (UNP) in
Vigan, Ilocos Sur where the school had a tie-
up program. Petitioner was informed
through a letter dated June 6, 1992 that he
would be receiving, in addition to his
monthly salary, a P1,200.00 allowance for
board and lodging during his stint as
instructor in UNP-Vigan. In 1994, he was
recalled to Laoag campus. On October 3,
2003, petitioner received a Memorandum
transferring him to Data Center College
Bangued, Abra branch as Head for
Education/Instructor due to an urgent need
for an experienced officer and computer
instructor thereat.
However, petitioner declined to
accept his transfer to Abra citing the
deteriorating health condition of his father
and the absence of additional remuneration
to defray expenses for board and lodging
which constitutes implicit diminution of his
salary.
On November 10, 2003, petitioner
filed a Complaint for constructive dismissal
against respondents. Petitioner alleged that
his proposed transfer to Abra constitutes a
demotion in rank and diminution in pay and
would cause personal inconvenience and
hardship.
For their part, respondents claimed that they
were merely exercising their management
prerogative to transfer employees for the
purpose of advancing the school‘s interests.
They argued that petitioner‘s refusal to be
transferred to Abra constitutes
insubordination.
Ruling:
Petitioner‘s transfer is not
tantamount to constructive dismissal.
Petitioner was originally appointed as
instructor in 1991 and was given additional
302
administrative functions as Head for
Education during his stint in Laoag branch.
He did not deny having been designated as
Head for Education in a temporary capacity
for which he cannot invoke any tenurial
security. Hence, being temporary in
character, such designation is terminable at
the pleasure of respondents who made such
appointment.
Moreover, respondents‘ right to
transfer petitioner rests not only on
contractual stipulation but also on
jurisprudential authorities. The Labor Arbiter
and the NLRC both relied on the condition
laid down in petitioner‘s employment
contract that respondents have the
prerogative to assign petitioner in any of its
branches or tie-up schools as the necessity
demands. In any event, it is management
prerogative for employers to transfer
employees on just and valid grounds such as
genuine business necessity. It is also
important to stress at this point that
respondents have shown that it was
experiencing some financial constraints.
Because of this, respondents opted to
temporarily suspend the post-graduate
studies of petitioner and some other
employees who were given scholarship
grants in order to prioritize more important
expenditures.
212 HYPTE R. AUJERO v. PHILIPPINE
COMMUNICATIONS SATELLITE
CORPORATION G.R. No. 193484, 18
January 2012, SECOND DIVISION (Perez, J.)
FACTS:
Absent any evidence that any of the
vices of consent is present, the quitclaim
executed by a party constitutes a valid and
binding agreement. Petitioner Hypte Aujero
was the Vice President of respondent
company Philippine Communications
Satellite Corporation (Philcomsat). After 34
years, he applied for an early retirement
which was approved. This entitled Aujero to
receive his retirement benefits at a rate

equivalent to one and a half of his monthly
salary for every year of service. Aujero
subsequently executed a Deed of Release
and Quitclaim in Philcomsat’s favor following
his receipt from the latter of a check in the
amount of P9,439,327.91. After 3 years,
Aujero filed a complaint for unpaid
retirement benefits claiming that the actual
amount of his retirement pay is
P14,015,055.00. Aujero contends that the
significantly deficient amount he previously
received was more than an enough reason to
declare his quitclaim null and void. Aujero
further claimed that he had no choice but to
accept the lesser amount as he was in dire
need of money. The Labor Arbiter (LA) ruled
in favor of Aujero and directed Philcomsat to
pay the balance of his retirement pay. The LA
maintained that Philcomsat failed to
substantiate its claim that the amount
received by Aujero was a product of
negotiations between the parties. On
appeal, the National Labor Relations
Commissions (NLRC) reversed the decision
of the LA and decided in favor of Philcomsat.
The Court of Appeals affirmed the decision
of the NLRC.
ISSUE:
Whether the quitclaim executed by
the petitioner in Philcomsat’s favor is valid,
thereby foreclosing his right to institute any
claim against Philcomsat
HELD:
Petition GRANTED. While the law
looks with disfavor upon releases and
quitclaims by employees who are inveigled
or pressured into signing them by
unscrupulous employers seeking to evade
their legal responsibilities, a legitimate
waiver representing a voluntary settlement
of a laborer's claims should be respected by
the courts as the law between the parties.
Considering Aujero’s claim of fraud and bad
faith against Philcomsat to be
unsubstantiated, the Court finds the
quitclaim in dispute to be legitimate waiver.
That Aujero was all set to return to his
303
hometown and was in dire need of money
would likewise not qualify as undue pressure
sufficient to invalidate the quitclaim. Dire
necessity may be an acceptable ground to
annul quitclaims if the consideration is
unconscionably low and the employee UST
Law Review, Vol. LVII No. 1, November 2012
was tricked into accepting it, but is not an
acceptable ground for annulling the release
when it is not shown that the employee has
been forced to execute it. While it is the
Court’s duty to prevent the exploitation of
employees, it also behooves this Court to
protect the sanctity of contracts that do not
contravene our laws.
Aujero’s educational background and
employment stature render it improbable
that he was pressured, intimidated or
inveigled into signing the subject quitclaim.
The Court cannot permit the petitioner to
relieve himself from the consequences of his
act, when his knowledge and understanding
thereof is expected. Also, the period of time
that Aujero allowed to lapse before filing a
complaint to recover the supposed
deficiency in his retirement pay clouds his
motives, leading to the reasonable
conclusion that his claim of being aggrieved
is a mere afterthought, if not a mere
pretention
213 SAN MIGUEL FOODS, INCORPORATED
VS SAN MIGUEL CORPORATION
SUPERVISORS and EXEMPT UNION G.R. No.
146206
FACTS:
In the case of San Miguel Corporation
Supervisors and Exempt Union v. Laguesma,
the Court held that even if they handle
confidential data regarding technical and
internal business operations, supervisory
employees 3 and 4 and the exempt
employees of petitioner San Miguel Foods,
Inc. are not to be considered confidential
employees, because the same do not pertain
to labor relations, particularly, negotiation
and settlement of grievances. Consequently,

they were allowed to form an appropriate
bargaining unit for the purpose of collective
bargaining. The Court also declared that the
employees belonging to the three different
plants of San Miguel Corporation Magnolia
Poultry Products Plants in Cabuyao, San
Fernando, and Otis, having community or
mutuality of interests, constitute a single
bargaining unit.
A certification election was
conducted. On the date of the election,
petitioner filed the Omnibus Objections and
Challenge to Voters, questioning the
eligibility to vote by some of its employees
on the grounds that some employees do not
belong to the bargaining unit which
respondent seeks to represent or that there
is no existence of employer-employee
relationship with petitioner.
Based on the results of the election,
the Med-Arbiter issued the Order stating
that since the Yes vote received 97% of the
valid votes cast, respondent is certified to be
the exclusive bargaining agent of the
supervisors and exempt employees of
petitioner's Magnolia Poultry Products
Plants in Cabuyao, San Fernando, and Otis.
On appeal, the then Acting DOLE
Undersecretary, in the Resolution, affirmed
the Order of the Med-Arbiter.
CA affirmed the Resolution of DOLE
Undersecretary with modification stating
that those holding the positions of Human
Resource Assistant and Personnel Assistant
are excluded from the bargaining unit.
Hence, this petition by the San
Miguel Foods
ISSUE:
W/N CA departed from jurisprudence
when it expanded the scope of the
bargaining unit.
RULING:
No. In San Miguel vs Laguesma, the
Court explained that the employees of San
Miguel Corporation Magnolia Poultry
Products Plants of Cabuyao, San Fernando,
and Otis constitute a single bargaining unit,
which is not contrary to the one-company,
304
one-union policy. An appropriate bargaining
unit is defined as a group of employees of a
given employer, comprised of all or less than
all of the entire body of employees, which
the collective interest of all the employees,
consistent with equity to the employer,
indicate to be best suited to serve the
reciprocal rights and duties of the parties
under the collective bargaining provisions of
the law.
It held that while the existence of a
bargaining history is a factor that may be
reckoned with in determining the
appropriate bargaining unit, the same is not
decisive or conclusive. Other factors must be
considered. The test of grouping is
community or mutuality of interest. This is so
because the basic test of an asserted
bargaining unit’s acceptability is whether or
not it is fundamentally the combination
which will best assure to all employees the
exercise of their collective bargaining rights.
Certainly, there is a mutuality of interest
among the employees. Their functions mesh
with one another. One group needs the
other in the same way that the company
needs them both. There may be differences
as to the nature of their individual
assignments, but the distinctions are not
enough to warrant the formation of a
separate bargaining unit.
The Court affirms the finding of the
CA that there should be only one bargaining
unit for the employees in Cabuyao, San
Fernando, and Otis of Magnolia Poultry
Products Plant involved in dressed chicken
processing and Magnolia Poultry Farms
engaged in live chicken operations. Certain
factors, such as specific line of work, working
conditions, location of work, mode of
compensation, and other relevant
conditions do not affect or impede their
commonality of interest. Although they
seem separate and distinct from each other,
the specific tasks of each division are actually
interrelated and there exists mutuality of
interests which warrants the formation of a
single bargaining unit.

DISPOSITIVE:
Respondent won
DOCTRINE:
An appropriate bargaining unit is
defined as a group of employees of a given
employer, comprised of all or less than all of
the entire body of employees, which the
collective interest of all the employees,
consistent with equity to the employer,
indicate to be best suited to serve the
reciprocal rights and duties of the parties
under the collective bargaining provisions of
the law.
It held that while the existence of a
bargaining history is a factor that may be
reckoned with in determining the
appropriate bargaining unit, the same is not
decisive or conclusive. Other factors must be
considered. The test of grouping is
community or mutuality of interest. This is so
because the basic test of an asserted
bargaining unit’s acceptability is whether or
not it is fundamentally the combination
which will best assure to all employees the
exercise of their collective bargaining rights.
Certainly, there is a mutuality of interest
among the employees. Their functions mesh
with one another. One group needs the
other in the same way that the company
needs them both. There may be differences
as to the nature of their individual
assignments, but the distinctions are not
enough to warrant the formation of a
separate bargaining unit.
214-215 CIRTEK EMPLOYEES LABOR
UNION-FEDERATION OF FREE WORKERS,
Petitioner, v. CIRTEK ELECTRONICS, INC.,
Respondent.
FACTS:
Prior to the 3rd year of the CBA of
respondent and petitioner, the parties
renegotiated its economic provisions but
failed to reach a settlement, particularly on
the issue of wage increases. Petitioner
thereupon declared a bargaining deadlock
305
and filed a Notice of Strike. Respondent,
upon the other hand, filed a Notice of
Lockout.
In the meantime, as amicable
settlement of the CBA was deadlocked,
petitioner went on strike. The Secretary of
Labor assumed jurisdiction over the
controversy and issued a Return to Work
Order which was complied with.
Before the Secretary of Labor could
rule on the controversy, respondent created
a Labor Management Council through which
it concluded with the remaining officers of
petitioner a Memorandum of Agreement
providing for daily wage increases.
The Secretary of Labor resolved the
CBA deadlock by awarding a wage increase.
Respondent moved for a
reconsideration of the Decision stating that
the union members were waiving their rights
and benefits under the Secretarys Decision.
Reconsideration of the Decision was denied.
Hence, respondent filed a petition for
certiorari before the Court of Appeals.
The appellate court ruled in favor of
respondent and accordingly set aside the
Decision of the Secretary of Labor. It held
that the Secretary of Labor gravely abused
his discretion in not respecting the MOA.
ISSUE:
Whether or not the Secretary of
Labor is authorized to give an award higher
than that agreed upon in the MOA?
HELD
LABOR LAW
It is well-settled that the Secretary of
Labor, in the exercise of his power to assume
jurisdiction under Art. 263 (g) of the Labor
Code, may resolve all issues involved in the
controversy including the award of wage
increases and benefits. While an arbitral
award cannot per sebe categorized as an
agreement voluntarily entered into by the
parties because it requires the intervention
and imposing power of the State thru the
Secretary of Labor when he assumes
jurisdiction, the arbitral award can be

considered an approximation of a collective
bargaining agreement which would
otherwise have been entered into by the
parties, hence, it has the force and effect of
a valid contract obligation.
That the arbitral award was higher
than that which was purportedly agreed
upon in the MOA is of no moment. For the
Secretary, in resolving the CBA deadlock, is
not limited to considering the MOA as basis
in computing the wage increases. He could,
as he did, consider the financial documents
submitted by respondent as well as the
parties bargaining history and respondents
financial outlook and improvements as
stated in its website.
It bears noting that since the filing
and submission of the MOA did not have the
effect of divesting the Secretary of his
jurisdiction, or of automatically disposing
the controversy, then neither should the
provisions of the MOA restrict the Secretarys
leeway in deciding the matters before him.
While a contract constitutes the law
between the parties, this is so in the present
case with respect to the CBA, not to the MOA
in which even the unions signatories had
expressed reservations thereto. But even
assuming arguendo that the MOA is treated
as a new CBA, since it is imbued with public
interest, it must be construed liberally and
yield to the common good.
While the terms and conditions of a
CBA constitute the law between the parties,
it is not, however, an ordinary contract to
which is applied the principles of law
governing ordinary contracts. A CBA, as a
labor contract within the contemplation of
Article 1700 of the Civil Code of the
Philippines which governs the relations
between labor and capital, is not merely
contractual in nature butimpressed with
public interest, thus, it must yield to the
common good. As such, it must be construed
liberally rather than narrowly and
technically, and the courts must place
apractical and realistic construction upon it,
giving due consideration to the context in
306
which it is negotiated and purpose which it is
intended to serve.
GRANTED
216 THE HERITAGE HOTEL
MANILA v. NATIONAL UNION OF WORKERS
IN THE HOTEL, RESTAURANT AND ALLIED
INDUSTRIES-HERITAGE HOTEL MANILA
SUPERVISORS CHAPTER (NUWHRAIN-
HHMSC)
FACTS:
Respondents filed a petition for
certification of pre-election with the DOLE.
The Med-Arbiter approved the pre-election.
However, the certification election was
delayed, but pushed through nonetheless.
Petitioner filed for cancellation of the
certification due to the failure of respondent
to submit its financial statements to the
Bureau of Labor Relations. The Med-Arbiter
still ruled in favor of respondents. Petitioner
appealed the decision to the regional
director of the DOLE. The Regional director
still rendered a decision in favor of
respondents, which prompted petitioners to
appeal the decision to the director of the
Bureau of Labor Relations. The director of
the BLR inhibited from the issue, as he was
previously the counsel of respondents. The
Secretary of Labor resolved the issue in the
stead of the BLR director. She ruled in favor
of respondents. The petitioner filed a motion
for reconsideration of the decision, but was
turned down. Petitioner then filed for
certiorari, challenging the jurisdiction of the
DOLE Secretary. An appeal from the decision
of the Regional Director is supposed to be
under the jurisdiction of the BLR. Also,
petitioner claims to have been deprived of
due process as it was not informed of the
inhibition of the BLR director.
ISSUES:
Is the ruling of the secretary of labor
valid?
Was petitioner deprived of due
process?

HELD:
It is without question that the appeal
from the decision of the regional office is
within the jurisdiction of the BLR. Given the
circumstances, the BLR director inhibited
himself. Petitioner insists that the case
should have gone to the subordinates of the
BLR director. However, this happens in cases
where the director is incapacitated. This
does not obtain as the director merely
inhibited himself. On the other hand, the
Secretary of DOLE has powers of supervision
and control over the BLR. As such, it may
validly step into the shoes of the BLR director
and resolve the issue.
The concept of due-process is
different in proceedings before the courts,
and before administrative agencies. For the
latter, the essence is the opportunity to be
heard. In this case, the petitioner was able to
file a motion for reconsideration on the
decision of the DOLE Secretary, albeit was
denied. Petitioner was given due-process,
and its contention that it was unaware of the
inhibition of the BLR director is of no
moment.
217 SAMAHANG MANGGAGAWA SA
CHARTER CHEMICAL SOLIDARITY OF
UNIONS IN THE PHILIPPINES FOR
EMPOWERMENT AND REFORMS (SMCC-
SUPER), ZACARRIAS JERRY VICTORIO Union
President, Petitioner, v. CHARTER
CHEMICAL AND COATING CORPORATION,
Respondent.
FACTS:
Samahang Manggagawasa Charter
Chemical Solidarity of Unions in the
Philippines for Empowerment and Reforms
(petitioner union) filed a petition for
certification election among the regular
rank-and-file employees of Charter Chemical
and Coating Corporation (respondent
company) with the Mediation Arbitration
Unit of the DOLE. Respondent company
opposedon the ground that petitioner union
307
is not a legitimate labor organization
because of failure to comply with the
documentation requirements set by law the
charter certificate was not executed under
oath, and the inclusion of supervisory
employees within petitioner union. The
Med-Arbiter dismissed the petition. The
DOLE, on appeal, granted the petition for
certification election but the CA reversed the
DOLE decision. The appellate court gave
credence to the findings of the Med-Arbiter.
Petitioner union claims that the
litigation of the issue as to its legal
personality to file the subject petition for
certification election is barred by the
Decision of the DOLE. In this decision, the
DOLE ruled that petitioner union complied
with all the documentation requirements
and that there was no independent evidence
presented to prove an illegal mixture of
supervisory and rank-and-file employees in
petitioner union. After the promulgation of
this Decision, respondent company did not
move for reconsideration, thus, this issue
must be deemed settled.
ISSUE:
Whether or not petitioner union has
legal personality to file for a petition for
certification election.
HELD:
Court of Appeals decision is
LABOR LAW
The right to file a petition for
certification election is accorded to a labor
organization provided that it complies with
the requirements of law for proper
registration. The inclusion of supervisory
employees in a labor organization seeking to
represent the bargaining unit of rank-and-
file employees does not divest it of its status
as a legitimate labor organization.
Petitioner unions charter certificate
need not be executed under oath.
Consequently, it validly acquired the status
of a legitimate labor organization upon
submission of (1) its charter certificate,(2)
the names of its officers, their addresses,

and its principal office,and (3) its
constitution and by-laws the last two
requirements having been executed under
oath by the proper union officials as borne
out by the records.
Petitioner union correctly argues that
its legal personality cannot be collaterally
attacked in the certification election
proceedings.
GRANTED.
218 LEGEND INTERNATIONAL RESORTS
LIMITED, Petitioner, v. KILUSANG
MANGGAGAWA NG LEGENDA (KML-
INDEPENDENT), Respondent.
FACTS:
KML filed with the Med-Arbitration
Unit of the DOLE, San Fernando, Pampanga,
a Petition for Certification Election. LEGEND
moved to dismiss the petition alleging that
KML is not a legitimate labor organization
because its membership is a mixture of rank
and file and supervisory employees in
violation of Article 245 of the Labor Code.
KML argued that even if 41 of its members
are indeed supervisory employees and
therefore excluded from its membership,
the certification election could still proceed
because the required number of the total
rank and file employees necessary for
certification purposes is still sustained. KML
also claimed that its legitimacy as a labor
union could not be collaterally attacked in
the certification election proceedings but
only through a separate and independent
action for cancellation of union registration.
The Med-Arbiter rendered judgment
dismissing for lack of merit the petition for
certification election. Since Article 245 of the
Labor Code expressly prohibits supervisory
employees from joining the union of rank
and file employees, the Med-Arbiter
concluded that KML is not a legitimate labor
organization.
The Office of the Secretary of DOLE
rendered its Decision granting KML’s appeal
thereby reversing and setting aside the Med-
308
Arbiter’s Decision. The Office of the
Secretary of DOLE held that KML’s legitimacy
as a union could not be collaterally attacked.
It declared that any violation of the provision
of Article 245 does not ipso facto render the
existence of the labor organization illegal.
LEGEND filed a Petition for Certiorari
with the Court of Appeals , which found no
grave abuse of discretion on the part of the
Office of the Secretary of DOLE. LEGEND filed
a Petition for Certiorari with the Court of
Appeals. held that the issue on the
legitimacy of KML as a labor organization has
already been settled with finality in Case No.
RO300-0108-CP-001. The March 26, 2002
Decision of the Bureau of Labor Relations
upholding the legitimacy of KML as a labor
organization had long become final and
executory for failure of LEGEND to appeal
the same.
ISSUE:
Whether or not the the CA erred in
denying the petition for certiorari.
HELD:
The petition is partly meritorious.
LABOR LAW: Certification election
Records show that (in the
cancellation of registration case) LEGEND
has timely filed on September 6, 2002 a
petition forcertiorari before the Court of
Appeals which was docketed as CA-G.R. SP
No. 72659 assailing the March 26, 2002
Decision of the Bureau of Labor Relations.
However, a certification election may
still be conducted during the pendency of
the cancellation proceedings. This is because
at the time the petition for certification was
filed, the petitioning union is presumed to
possess the legal personality to file the same.
There is therefore no basis for LEGEND’s
assertion that the cancellation of KML’s
certificate of registration should retroact to
the time of its issuance or that it effectively
nullified all of KML’s activities, including its
filing of the petition for certification election
and its demand to collectively bargain. Also,
the legitimacy of the legal personality of KML

cannot be collaterally attacked in a petition
for certification election proceeding.
Petition is PARTLY GRANTED. The CA
Decision insofar as it affirms the Secretary's
Decision is AFFIRMED.
219-220 SAN MIGUEL FOODS,
INCORPORATED v. SAN MIGUEL
CORPORATION SUPERVISORS and EXEMPT
UNION,
FACTS:
In G.R. No. 110399, entitled San
Miguel Corporation Supervisors and Exempt
Union v. Laguesma, the Court held that even
if they handle confidential data regarding
technical and internal business operations,
supervisory employees 3 and 4 and the
exempt employees of petitioner San Miguel
Foods, Inc. (SMFI) are not to be considered
confidential employees, because the same
do not pertain to labor relations,
particularly, negotiation and settlement of
grievances. Consequently, they were
allowed to form an appropriate bargaining
unit for the purpose of collective bargaining.
The Court also declared that the employees
belonging to the three different plants of San
Miguel Corporation Magnolia Poultry
Products Plants in Cabuyao, San Fernando,
and Otis, having "community or mutuality of
interests," constitute a single bargaining
unit.
Pursuant thereto, a certification
election was conducted on September 30,
1998. On the date of the election, petitioner
filed the Omnibus Objections and Challenge
to Voters, questioning the eligibility to vote
by some of its employees on the grounds
that certain employees should not be
allowed to vote as they are:
(1) confidential employees;
(2) employees assigned to the live
chicken operations, which are not covered
by the bargaining unit;
309
(3) employees whose job grade is
level 4, but are performing managerial work
and scheduled to be promoted;
(4) employees who belong to the
Barrio Ugong plant;
(5) non-SMFI employees; and
(6) employees who are members of
other unions.
Respondent averred that (1) the
bargaining unit contemplated in the original
petition is the Poultry Division of San Miguel
Corporation, now known as San Miguel
Foods, Inc.; (2) it covered the operations in
Calamba, Laguna, Cavite, and Batangas and
its home base is either in Cabuyao, Laguna or
San Fernando, Pampanga; and (3) it
submitted individual and separate
declarations of the employees whose votes
were challenged in the election.
Based on the results of the votes, the
Med-Arbiter issued the Orderstating that
since the "Yes" vote received 97% of the
valid votes cast, respondent is certified to be
the exclusive bargaining agent of the
supervisors and exempt employees of
petitioner's Magnolia Poultry Products
Plants in Cabuyao, San Fernando, and Otis.
On appeal, the then Acting DOLE
Undersecretary affirmed the Order dated
April 13, 1999, with modification that four
(4) voters be excluded from the bargaining
unit which respondent seeks to represent.
She opined that the challenged voters
should be excluded from the bargaining unit,
because two (2) are members of Magnolia
Poultry Processing Plants Monthly
Employees Union, while the other two (2)
are employees of San Miguel Corporation,
which is a separate and distinct entity from
petitioner.
The Court of Appeals affirmed with
modification the Resolution of the DOLE
Undersecretary, stating that those holding
the positions of Human Resource Assistant
and Personnel Assistant are excluded from
the bargaining unit.
ISSUE:

Did the CA err in expanding the
scope of the bargaining unit so as to include
employees who do not belong to or who are
not based in its Cabuyao or San Fernando
plants?
HELD:
Petitioner contentions are
erroneous. In G.R. No. 110399, the Court
explained that the employees of San Miguel
Corporation Magnolia Poultry Products
Plants of Cabuyao, San Fernando, and Otis
constitute a single bargaining unit, which is
not contrary to the one-company, one-union
policy. An appropriate bargaining unit is
defined as a group of employees of a given
employer, comprised of all or less than all of
the entire body of employees, which the
collective interest of all the employees,
consistent with equity to the employer,
indicate to be best suited to serve the
reciprocal rights and duties of the parties
under the collective bargaining provisions of
the law.
The test of grouping is community or
mutuality of interest. This is so because the
basic test of an asserted bargaining unit
acceptability is whether or not it is
fundamentally the combination which will
best assure to all employees the exercise of
their collective bargaining rights. Certainly,
there is a mutuality of interest among the
employees, their functions mesh with one
another. One group needs the other in the
same way that the company needs them
both. There may be differences as to the
nature of their individual assignments, but
the distinctions are not enough to warrant
the formation of a separate bargaining unit.
Thus, the Court affirms the finding of
the CA that there should be only one
bargaining unit for the employees in
Cabuyao, San Fernando, and Otisof Magnolia
Poultry Products Plant involved in "dressed"
chicken processing and Magnolia Poultry
Farms engaged in "live" chicken operations.
Certain factors, such as specific line of work,
working conditions, location of work, mode
of compensation, and other relevant
310
conditions do not affect or impede their
commonality of interest. Although they
seem separate and distinct from each other,
the specific tasks of each division are actually
interrelated and there exists mutuality of
interests which warrants the formation of a
single bargaining unit.
Although Article 245of the Labor
Code limits the ineligibility to join, form and
assist any labor organization to managerial
employees, jurisprudence has extended this
prohibition to confidential employees or
those who by reason of their positions or
nature of work are required to assist or act
in a fiduciary manner to managerial
employees and, hence, are likewise privy to
sensitive and highly confidential
records.Confidential employees are thus
excluded from the rank-and-file bargaining
unit. A confidential employee is one
entrusted with confidence on delicate, or
with the custody, handling or care and
protection of the employer
property.Confidential employees, such as
accounting personnel, should be excluded
from the bargaining unit, as their access to
confidential information may become the
source of undue advantage. The rationale for
their separate category and disqualification
to join any labor organization is similar to the
inhibition for managerial employees,
because if allowed to be affiliated with a
union, the latter might not be assured of
their loyalty in view of evident conflict of
interests and the union can also become
company-denominated with the presence of
managerial employees in the union
membership. Having access to confidential
information, confidential employees may
also become the source of undue advantage.
Said employees may act as a spy or spies of
either party to a collective bargaining
agreement.
In this regard, the CA correctly ruled
that the positions of Human Resource
Assistant and Personnel Assistant belong to
the category of confidential employees and,
hence, are excluded from the bargaining
unit, considering their respective positions

and job descriptions. As Human Resource
Assistant,the scope of one work necessarily
involves labor relations, recruitment and
selection of employees, access to
employees' personal files and compensation
package, and human resource management.
As regards a Personnel Assistant,one's work
includes the recording of minutes for
management during collective bargaining
negotiations, assistance to management
during grievance meetings and
administrative investigations, and securing
legal advice for labor issues from the
petitioner team of lawyers, and
implementation of company programs.
Therefore, in the discharge of their
functions, both gain access to vital labor
relations information which outrightly
disqualifies them from union membership.
DENIED
221 BANK OF THE PHILIPPINE ISLANDS v.
BPI EMPLOYEES UNION-DAVAO CHAPTER-
FEDERATION OF UNIONS IN BPI UNIBANK
FACTS:
In 2000, Far East Bank and trust
Company (FEBTC) merged with Bank of the
Philippine Islands. Petitioner had a Union
Shop agreement with respondent BPI
Employees Union-Davao Chapter-
Federation of Unions in BPI Unibank (the
Union).Pursuant to the merger, respondent
requested BPI to terminate the employment
of those new employees from FEBTC who did
not join the union.
BPI refused to undertake such action
and brought the controversy before a
voluntary arbitrator. Although BPI won the
initial battle at the Voluntary Arbitrator
level, BPIs position was rejected by the Court
of Appeals which ruled that the Voluntary
Arbitrators interpretation of the Union Shop
Clause was at war with the spirit and
rationale why the Labor Code allows the
existence of such provision.
This was followed and affirmation by
the Supreme Court of the CA decision
311
holding that former employees of the Far
East Bank and Trust Company (FEBTC)
"absorbed" by BPI pursuant to the two banks
merger. The absorbed employees were
covered by the Union Shop Clause in the
then existing collective bargaining
agreement (CBA)of BPI with respondent BPI
Employees Union-Davao Chapter-
Federation of Unions in BPI Unibank (the
Union). Petitioners, despite the August 2010
decision moved for a Motion for
reconsideration of the decision.
ISSUE:
May the "absorbed" FEBTC
employees fell within the definition of "new
employees," under the Union Shop Clause,
such that they be required to join
respondent union or suffer termination
upon request by the union?
HELD:
The court agreed with Justice Brion's
view that it is more in keeping with the
dictates of social justice and the State policy
of according full protection to labor to
deem employment contracts as
automatically assumed by the surviving
corporation in a merger, without break in
the continuity of their employment, and
even in the absence of an express
stipulation in the articles of merger or the
merger plan.
By upholding the automatic
assumption of the non-surviving
corporations existing employment contracts
by the surviving corporation in a merger, the
Court strengthens judicial protection of the
right to security of tenure of employees
affected by a merger and avoid confusion
regarding the status of their various
benefits.However, it shall be noted that
nothing in the Resolution shall impair the
right of an employer to terminate the
employment of the absorbed employees for
a lawful or authorized cause or the right of
such an employee to resign, retire or
otherwise sever his employment, whether

before or after the merger, subject to
existing contractual obligations.
Although by virtue of the merger BPI
steps into the shoes of FEBTC as a successor
employer as if the former had been the
employer of the latters employees from the
beginning it must be emphasized that, in
reality, the legal consequences of the merger
only occur at a specific date,i.e.,upon its
effectivity which is the date of approval of
the merger by the SEC.Thus, the court
observed in the Decision that BPI and FEBTC
stipulated in the Articles of Merger that they
will both continue their respective business
operations until the SEC issues the certificate
of merger and in the event no such
certificate is issued, they shall hold each
other blameless for the non-consummation
of the merger.
In other words, the obligation of BPI
to pay the salaries and benefits of the former
FEBTC employees and its right of discipline
and control over them only arose with the
effectivity of the merger.Concomitantly, the
obligation of former FEBTC employees to
render service to BPI and their right to
receive benefits from the latter also arose
upon the effectivity of the merger.What is
material is that all of these legal
consequences of the merger took place
during the life of an existing and valid CBA
between BPI and the Union wherein they
have mutually consented to include a Union
Shop Clause.
222 GENERAL MILLING CORPORATION-
INDEPENDENT LABOR UNION (GMC-ILU),
Petitioner, v. GENERAL MILLING
CORPORATION, Respondent.
FACTS:
On April 28, 1989, GMC and
theUnionentered into a CBA which provided,
among other terms, the latters
representation of the collective bargaining
unit for a three-year term made to retroact
to 1 December 1988.On 29 November 1991
312
or one day before the expiration of the
subject CBA, the Union sent a draft CBA
proposal to GMC, with a request for counter-
proposals from the latter, for the purpose of
renegotiating the existing CBA between the
parties.In view of GMCs failure to comply
with said request, theUnioncommenced the
complaint for unfair labor practice which
was dismissed for lack of merit. On appeal,
however, said dismissal was reversed and set
aside in the 30 January 1998 decision
rendered by the Fourth Division of the NLRC
in NLRC Case No. V-0112-94. The Supreme
Court found GMC guilty of unfair labor
practice.
Thus, the Union filed a motion for
issuance of a writ of execution to enforce the
claims of the covered employees which it
computed in the sum ofP433,786,786.36.
However, GMC opposed said motion on the
ground, among other matters, that the
bargaining unit no longer exist in view of the
resignation, retrenchment, retirement and
separation from service of workers who have
additionally executed waivers and quitclaims
acknowledging full settlement of their
claims; that the covered employees have
already received salary increases and
benefits for the period 1991 to 1993; and,
that aside from the aforesaid supervening
events which precluded the enforcement
thereof, the decision rendered in the case
simply called for the execution of a CBA
incorporating the Unions proposal, not the
outright computation of benefits
thereunder.
27 October 2005 , the LA rendered a
decision limiting the computation of the
benefits of theUnions CBA proposal to the
remaining two years of the duration of the
original CBA or from 1 December 1991 up to
30 November 1993.
On appeal, the NLRC affirmed the
decision of the LA, finding, among other
matters, that the duty to maintain thestatus
quoand to continue in full force and effect
the terms of the existing agreement under
Article 253 of theLabor Code of the
Philippinesapplies only when the parties

agreed to the terms and conditions of the
CBA, the NLRC upheld the Executive Labor
Arbiters computation on the ground, among
others, that the decision sought to be
enforced covered only the remaining two
years of the duration of the original CBA.
On their petitions before the CA,
Unions petition (CA-G.R. CEB-SP No. 02226)
was partially granted on October 10, 2007,
upon the finding that the parties old CBA was
superseded by the imposed CBA which
provided a term of five years from 1
December 1991 and remained in force until
a new CBA is concluded between the parties.
The CA, however, faulted the Union for its
hasty and premature filing of its motion for
issuance of a writ of execution, instead of
first demanding the enforcement of the
imposed CBA from GMC and, failing the
same, referring the matter to the grievance
machinery or voluntary arbitration provided
under the imposed CBA, in accordance with
Articles 260 and 261 of theLabor Code.
On the other hand, GMCs petition
(CA-G.R. SP No. CEB-SP No. 02232) was
dismissed for lack of merit on November 16,
2007, finding that both parties were given an
opportunity to present their respective
positions during the pre-execution
conference conducteda quo, the CA ruled
that the LAs 27 October 2005 order had
attained finality insofar as GMC is
concerned, in view of its failure to perfect an
appeal therefrom by paying the required
appeal fee and posting the cash or surety
bond in an amount equivalent to the
benefits computed. The CA likewise held
that quitclaims did not extend to the
benefits provided under the imposed CBA
and that the additional benefits supposedly
received by GMCs employees should not be
deducted therefrom, for lack of sufficient
evidence to prove the same.
Hence, this petition.
ISSUE:
Whether or not the imposed CBA
which provided a term of five years from 1
313
December 1991 remains in force until a new
CBA is concluded between the parties?
HELD:
CA-G.R. CEB-SP Nos. 02226 and
02232 are reversed and set aside.
LABOR LAW
Article XIV of the imposed CBA
provides that (t)his Agreement shall be in full
force and effect for a period of five (5) years
from 1 December 1991, provided that sixty
(60) days prior to the lapse of the third year
of effectivity hereof, the parties shall open
negotiations on economic aspect for the
fourth and fifth years effectivity of this
Agreement. Considering that no new CBA
had been, in the meantime, agreed upon by
GMC and the Union, we find that the CAs
Special Twentieth Division correctly ruled in
CA-G.R. CEB-SP No. 02226 that, pursuant to
Article 253 of theLabor Code, the provisions
of the imposed CBA continues to have full
force and effect until a new CBA has been
entered into by the parties.Article 253
mandates the parties to keep thestatus
quoand to continue in full force and effect
the terms and conditions of the existing
agreement during the 60-day period prior to
the expiration of the old CBA and/or until a
new agreement is reached by the parties. In
the same manner that it does not provide for
any exception nor qualification on which
economic provisions of the existing
agreement are to retain its force and
effect,the law does not distinguish between
a CBA duly agreed upon by the parties and
an imposed CBA like the one under
consideration.
Considering that the 30 January 1998
decision sought to be enforced confined the
application of the imposed CBA to the
remaining two-year duration of the original
CBA, we find that the computation of the
benefits due GMCs covered employees was
correctly limited to the period 1 December
1991 to 30 November 1993 in the 27 October
2005 order issued by Executive Labor Arbiter
Violeta Ortiz-Bantug and the 20 July 2006

decision rendered by the NLRC in NLRC Case
No. V-000632-2005.
Consequently, insofar as the
execution of the 30 January 1998 decision is
concerned, theUnionis out on a limb in
espousing a computation which extends the
benefits of the imposed CBA beyond the
remaining two-year duration of the original
CBA.The rule is, after all, settled that an
order of execution which varies the tenor of
the judgment or exceeds the terms thereof
is a nullity. Since execution not in harmony
with the judgment is bereft of validity,it must
conform, more particularly, to that ordained
or decreed in the dispositive portion of the
decision sought to be enforced.Considering
that the decision sought to be enforced
pertains to the period 1December 1991 to 30
November 1993, it necessarily follows that
the computation of benefits under the
imposed CBA should be limited to covered
employees who were in GMCs employ
during said period of time.While it is true
that the provisions of the imposed CBA
extend beyond said remaining two-year
duration of the original CBA in view of the
parties admitted failure to conclude a new
CBA, the corresponding computation of the
benefits accruing in favor of GMCs covered
employees after the term of the original CBA
was correctly excluded in the aforesaid 27
October 2005 order issued in RAB VII-06-
0475-1992.Rather than the abbreviated pre-
execution proceedings before Executive
Labor ArbiterVioleta Ortiz-Bantug, the
computation of the same benefits beyond 30
November 1993 should, instead, be
threshed out by GMC and theUnionin
accordance with theGrievance Procedure.
Article II of the imposed CBA,
relatedly, provides that (t)he employees
covered by this Agreement are those
employed as regular monthly paid
employees at the [GMC] offices in Cebu City
and Lapulapu City, including cadet
engineers, salesmen, veterinarians, field and
laboratory workers, with the exception of
managerial employees, supervisory
employees, executive and confidential
314
secretaries, probationary employees and the
employees covered by a separate Collective
Bargaining Agreement at the Companys Mill
in Lapulapu City. Gauged from the express
language of the foregoing provision, we find
that Executive Labor ArbiterVioleta Ortiz-
Bantug correctly excluded the following
employees fromthe list of 436 employees
submitted by the Union andthe computation
of the benefitsfor the period 1December
1991 to 30 November 1993, to wit: (a) 77
employees who were hired or regularized
after 30 November 1993; (b)36 daily paid
rank and file employees who were covered
by a separate CBA; (c) 41
managerial/supervisory employees; and, (d)
1 employee for whom no salary-rate
information was submitted in the premises.
However, we find that the 234 employees
who had already been separated from GMCs
employ by the time of the rendition of the 11
February 2004 decision in G.R. No. 146728
should further be added to these excluded
employees.
The record shows that said 234
employees were union members whose
employment with GMC ceased as a
consequence of death, termination due to
redundancy, termination due to closure of
plant, termination for cause, voluntary
resignation, separation or dismissal from
service as well as retirement. Upon
compliance with GMCs clearance
requirements and in consideration of sums
ranging fromP38,980.12 toP631,898.72, due
payment and receipt of which were duly
acknowledged, it appears that said
employees executed deeds of waiver,
release and quitclaim.
REMEDIAL LAW
The conflicting decisions in CA-G.R.
CEB-SP Nos. 02226 and 02232 would have
been, in the first place, avoided had the CA
consolidated said cases pursuant to Section
3, Rule III of its 2002 Internal Rules (IRCA).
Being intimately and substantially related
cases, their consolidation should have been

ordered to avert the possibility of conflicting
decisions in the two cases.
Although rendered on the merits by
a court of competent jurisdiction acting
within its authority, neither one of said
decisions can, however, be invoked as law of
the case insofar as the other case is
concerned.The doctrine of law of the case
means that whatever is once irrevocably
established as the controllinglegal rule or
decision between the same parties in the
same case continues to be the law of the
case,whether correct on general principles
or not, so long as the facts on which such
decision was predicated continue to be the
facts of the case before the
court.Considering that a decision becomes
the law of the case once it attains finality, it
is evident that, without having achieved said
status, the herein assailed decisions cannot
be invoked as the law of the case by either
GMC or theUnion.
The October 27, 2005 order by the
Labor Arbiter is reinstated and modified.
223 MAGDALA MULTIPURPOSE &
LIVELIHOOD COOPERATIVE and SANLOR
MOTORS CORP., vs. KILUSANG
MANGGAGAWA NG LGS, MAGDALA
MULTIPURPOSE & LIVELIHOOD
CORPERATIVE (KMLMS) and UNION
MEMBERS/ STRIKERS
FACTS:
KMLMS filed a notice of strike on
March 5, 2002 and conducted its strike-vote
on April 8, 2002. However, KMLMS only
acquired legal personality when its
registration as an independent labor
organization was granted on April 9, 2002 by
the Department of Labor and Employment.
On April 19, 2002, it became officially
affiliated as a local chapter of the
Pambansang Kaisahan ng Manggagawang
Pilipino when its application was granted by
the Bureau of Labor Relations.
On May 6, 2002, KMLMS, now a
legitimate labor organization (LLO), staged a
315
strike where several prohibited and illegal
acts were committed by its participating
members.
On the ground of lack of valid notice
of strike, ineffective conduct of a strike-vote
and commission of prohibited and illegal
acts, petitioners filed their Petition to
Declare the Strike of May 6, 2002 Illegal
before the NLRC. Petitioners prayed, inter
alia, that the officers and members of
respondent KMLMS who participated in the
illegal strike and who knowingly committed
prohibited and illegal activities, respectively,
be declared to have lost or forfeited their
employment status.
On the ground of non-compliance
with the strict and mandatory requirements
for a valid conduct of a strike under Article
263(c), (d) and (f) of the Labor Code and Rule
XXII, Book V of the Omnibus Rules
Implementing the Labor Code, LA Aglibut
found the May 6, 2002 strike illegal and
accordingly dismissed all the 14 union
officers of KMLMS. LA Aglibut likewise found
27 identified members of KMLMS to have
committed prohibited and illegal acts
proscribed under Art. 264 of the Labor Code
and accordingly declared them to have
forfeited their employment.
Both parties appealed the Decision of
LA Aglibut before the NLRC
NLRC affirmed with modification LA
Aglibut’s Decision by declaring an additional
seven (7) union members to have forfeited
their employment status.
Both parties again filed their
respective appeals before the CA. CA
affirmed the NLRC decision
Petitioners prayed to SC for a partial
modification of the assailed CA Decision by
declaring additional 72 similarly erring
KMLMS members to have lost their
employment.
ISSUE:
Whether or not the CA erred in
refusing to similarly declare as having lost
their employment status the rest of the
union strikers who have participated in the
 316

illegal strike and commited prohibited / The petitioners have substantially

illegal acts, to the prejudice of petitioner's proved the identity of 72 other union
business operations. members who committed prohibited and
illegal acts during the May 6, 2002 illegal
HELD: strike. Thus, the 72 union members who
There is no question that the May 6, committed prohibited and illegal acts during
2002 strike was illegal, first, because when the May 6, 2002 strike are also declared to
KMLMS filed the notice of strike, it had not have forfeited their employment.
yet acquired legal personality and, thus,
could not legally represent the eventual
union and its members. And second,
similarly when KMLMS conducted the strike-
vote, there was still no union to speak of,
since KMLMS only acquired legal personality
as an independent LLO only on the day after
it conducted the strike-vote. These factual
findings are undisputed and borne out by the
records. Consequently, the mandatory
notice of strike and the conduct of the strike-
vote report were ineffective for having been
filed and conducted before KMLMS acquired
legal personality as an LLO, violating Art.
263(c), (d) and (f) of the Labor Code and Rule
XXII, Book V of the Omnibus Rules
Implementing the Labor Code.
When the May 6, 2002 illegal strike
was conducted, the members of
respondent KMLMS committed prohibited
and illegal acts which doubly constituted the
strike illegal. Proper sanctions for the
conduct of union officers in an illegal strike
and for union members who committed
illegal acts during a strike. Art. 264 of the
Code presents a substantial distinction of the
consequences of an illegal strike between
union officers and mere members of the
union.
For union officers, knowingly
participating in an illegal strike is a valid
ground for termination of their employment.
But for union members who participated in
a strike, their employment may be
terminated only if they committed
prohibited and illegal acts during the strike
and there is substantial evidence or proof of
their participation, that they are clearly
identified to have committed such
prohibited and illegal acts.

224 VISAYAS COMMUNITY MEDICAL
CENTER (VCMC), formerly known as
METRO CEBU COMMUNITY HOSPITAL
(MCCH), Petitioner, v. ERMA YBALLE, NELIA
ANGEL, ELEUTERIA CORTEZ and EVELYN
ONG, Respondents.
FACTS:
Respondents were hired as staff
nurses (Ong and Angel) and midwives (Yballe
and Cortez) by petitioner Visayas
Community Medical Center (VCMC),
formerly the Metro Cebu Community
Hospital, Inc. (MCCHI). MCCHI is a non-stock,
non-profit corporation hich operates the
Metro Cebu Community Hospital (MCCH), a
tertiary medical institution owned by the
United Church of Christ in the Philippines
(UCCP).
The National Federation of Labor
(NFL) is the exclusive bargaining
representative of the rank-and-file
employees of MCCHI.Under the 1987 and
1991 Collective Bargaining Agreements
(CBAs).
On December 6, 1995, Nava wrote
Rev. Iyoy expressing the union desire to
renew the CBA, attaching to her letter a
statement of proposals signed/endorsed by
153 union members.Nava subsequently
requested that the following employees be
allowed to avail of one-day union leave with
pay on December 19, 1995. However, MCCHI
returned the CBA proposal for Nava to
secure first the endorsement of the legal
counsel of NFL as the official bargaining
representative of MCCHI employees.
Meanwhile, Atty. Alforque informed
MCCHI that the proposed CBA submitted by
Nava was never referred to NFL and that NFL
has not authorized any other legal counsel or
any person for collective bargaining
negotiations.
On February 26, 1996, upon the
request of Atty. Alforque, MCCHI granted
one-day union leave with pay for 12 union
members. The next day, several union
members led by Nava and her group
launched a series of mass actions such as
317
wearing black and red
armbands/headbands, marching around the
hospital premises and putting up placards,
posters and streamers.Atty. Alforque
immediately disowned the concerted
activities being carried out by union
members which are not sanctioned by
NFL.MCCHI directed the union officers led by
Nava to submit within 48 hours a written
explanation why they should not be
terminated for having engaged in illegal
concerted activities amounting to strike, and
place them under immediate preventive
suspension.
Responding to this directive, Nava
and her group denied there was a temporary
stoppage of work, explaining that employees
wore their armbands only as a sign of protest
and reiterating their demand for MCCHI to
comply with its duty to bargain collectively.
On March 13 and 19, 1996, the
Department of Labor and Employment
(DOLE) Regional Office No. 7 issued
certifications stating thatthere is nothing in
their records which shows thatNAMA-
MCCH-NFL isa registered labor organization,
and that said union submitted only a copy of
its Charter Certificate on January 31,
1995.MCCHI then sent individual notices to
all union members asking them to submit
within 72 hours a written explanation why
they should not be terminated for having
supported the illegal concerted activities of
NAMA-MCCH-NFL which has no legal
personality as per DOLE records.
On March 13, 1996, NAMA-MCCH-
NFL filed a Notice of Strike but the same was
deemed not filed for want of legal
personality on the part of the filer.
Meanwhile, the scheduled
investigations did not push through because
the striking union members insisted on
attending the same only as a group.MCCHI
again sent notices informing them that their
refusal to submit to investigation is deemed
a waiver of their right to explain their side
and management shall proceed to impose
proper disciplinary action under the
circumstances.

Unfazed, the striking union members
held more mass actions.The means of
ingress to and egress from the hospital were
blocked so that vehicles carrying patients
and employees were barred from entering
the premises.Placards were placed at the
hospital entrance gate stating: lease proceed
to another hospitaland e are on protest.
Employees and patients reported acts of
intimidation and harassment perpetrated by
union leaders and members.With the
intensified atmosphere of violence and
animosity within the hospital premises as a
result of continued protest activities by
union members, MCCHI suffered heavy
losses due to low patient admission rates.
The hospital suppliers also refused to
make further deliveries on credit.With the
volatile situation adversely affecting hospital
operations and the condition of confined
patients, MCCHI filed a petition for
injunction in the NLRC on July 9, 1996.A
temporary restraining order (TRO) was
issued on July 16, 1996. MCCHI presented 12
witnesses (hospital employees and patients),
including a security guard who was stabbed
by an identified sympathizer while in the
company of Nava group.MCCHI petition was
granted and a permanent injunction was
issued on September 18, 1996 enjoining the
Nava group from committing illegal acts
mentioned in Art. 264 of the Labor Code.
Thereafter, several complaints for
illegal dismissal and unfair labor practice
were filed by the terminated employees
against MCCHI. Rev. Iyoy, UCCP and
members of the Board of Trustees of MCCHI.
Executive Labor Arbiter Reynoso A.
Belarmino rendered in his decision
dismissing the claim of unfair labor practice
and illegal dismissal and declaring the
termination of the following as an offshoot
of the illegal strike.
NLRC dismissed the motion for
reconsideration filed by the respondents.
CA reversed the rulings of the Labor
Artbiter and NLRC, ordered the
reinstatement of respondents and the
payment of their full back wages.
318
ISSUE:
whether or not respondents did not
commit illegal acts during strike?
HELD:
The strike held by respondents were
illegal.
Labor Law - Illegal Strike
Paragraph 3, Article 264(a) of the
Labor Code provides that . .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.
. We stress that the law makes a
distinction between union members and
union officers. A worker merely participating
in an illegal strike may not be terminated
from employment.It is only when he
commits illegal acts during a strike that he
may be declared to have lost employment
status. In contrast, a union officer may be
terminated from employment for knowingly
participating in an illegal strike or
participates in the commission of illegal acts
during a strike.The law grants the employer
the option of declaring a union officer who
participated in an illegal strike as having lost
his employment. It possesses the right and
prerogative to terminate the union officers
from service.
In this case, the NLRC affirmed the
finding of the Labor Arbiter that respondents
supported and took part in the illegal strike
and further declared that they were guilty of
insubordination.It noted that the striking
employees were determined to force
management to negotiate with their union
and proceeded with the strike despite
knowledge that NAMA-MCCH-NFL is not a
legitimate labor organization and without
regard to the consequences of their acts
consisting of displaying placards and
marching noisily inside the hospital
premises, and blocking the entry of vehicles
and persons

Are respondents then entitled to
back wages? In G & S Transport Corporation
v. Infante, ruled in the negative: with respect
to backwages, the principle of a air day wage
for a fair day labor remains as the basic
factor in determining the award thereof.If
there is no work performed by the employee
there can be no wage or pay unless, of
course, the laborer was able, willing and
ready to work but was illegally locked out,
suspended or dismissed or otherwise
illegally prevented from working. x x xIn
Philippine Marine Officers Guild v. Compaia
aritima, as affirmed in Philippine Diamond
Hotel and Resort v. Manila Diamond Hotel
Employees Union, the Court stressed that for
this exception to apply, it is required that the
strike be legal, a situation that does not
obtain in the case at bar.
In fine, we sustain the CA in ruling
that respondents who are mere union
members were illegally dismissed for
participating in the illegal strike conducted
by the Nava group.However, we set aside
the order for their reinstatement and
payment of full backwages.
Petition for review on certiorari is
PARTLY GRANTED.
225 C. ALCANTARA & SONS, INC.,
Petitioner, v. COURT OF APPEALS
FACTS:
These cases were consolidated based
on the following facts as follows:
The negotiation between CASI and
the Union on the economic provisions of the
CBA ended in a deadlock prompting the
Union to stage a strike,but the strike was
later declared by the LA to be illegal in
violation of the CBAs no strike-no lockout
provision.Consequently, the Union officers
were deemed to have forfeited their
employment with the company and made
them liable for actual damages plus interest
and attorneys fees, while the Union
members were ordered to be reinstated
without backwages there being no proof
319
that they actually committed illegal acts
during the strike.
Notwithstanding the provision of the
Labor Code mandating that the
reinstatement aspect of the decision be
immediately executory, the LA refused to
reinstate the dismissed Union members. On
November 8, 1999, the NLRC affirmed the LA
decision insofar as it declared the strike
illegal and ordered the Union officers
dismissed from employment and liable for
damages but modified the same by
considering the Union members to have
been validly dismissed from employment for
committing prohibited and illegal acts.
On petition forcertiorari, the CA
annulled the NLRC decision and reinstated
that of the LA. Aggrieved, CASI, the Union
and the Union officers and members
elevated the matter to the Court.
During the pendency of the cases,
the affected Union members (who were
ordered reinstated) filed with the LA a
motion for reinstatement pending appeal
and the computation of their backwages. But
the LA awarded separation pay and other
benefits. On appeal, the NLRC denied the
Union members claim for separation pay,
accrued wages and other benefits.When
elevated to the CA, the appellate court held
that reinstatement pending appeal applies
only to illegal dismissal cases under Article
223 of the Labor Code and not to cases under
Article 263. Hence, the petition by the Union
and its officers and members in G.R. No.
179220.
The Court agreed with the CA on the
illegality of the strike as well as the
termination of the Union officers, but
disagreed with the CA insofar as it affirmed
the reinstatement of the Union members.
The Court, instead, sustained the dismissal
not only of the Union officers but also the
Union members who, during the illegal
strike, committed prohibited acts by
threatening, coercing, and intimidating non-
striking employees, officers, suppliers and
customers; obstructing the free ingress to
and egress from the company premises; and

resisting and defying the implementation of
the writ of preliminary injunction issued
against the strikers.
The Court further held that the
terminated Union members, who were
ordered reinstated by the LA, should have
been immediately reinstated due to the
immediate executory nature of the
reinstatement aspect of the LA decision. In
view, however, of CASIs failure to reinstate
the dismissed employees, the Court ordered
CASI to pay the terminated Union members
their accrued backwages from the date of
the LA decision until the eventual reversal by
the NLRC of the order of reinstatement. In
addition to the accrued backwages, the
Court awarded separation pay as a form of
financial assistance to the Union members
equivalent to one-half month salary for
every year of service to the company up to
the date of their termination.
Hence, this motion for partial
reconsideration by the petitioner.
ISSUE:
Whether or not the petitioner is liable
to pay the accrued wages of the dismissed
employees?
Whether or not the Court erred in
awarding separation pay to the dismissed
union officers and employees?
HELD:
The motion for partial
reconsideration is partly granted.
LABOR LAW
Article 264 (a) of the Labor Code
provides for the liabilities of the Union
officers and members participating in illegal
strikes and/or committing illegal acts. Thus,
the said provision sanctions the dismissal of
a Union officer who knowingly participates
in an illegal strike or who knowingly
participates in the commission of illegal acts
during a lawful strike. In this case, the Union
officers were in clear breach of the above
provision of law when they knowingly
participated in the illegal strike.
As to the Union members, the same
provision of law provides that a member is
320
liable when he knowingly participates in the
commission of illegal acts during a strike. We
find no reason to reverse the conclusion of
the Court that CASI presented substantial
evidence to show that the striking Union
members committed the following
prohibited acts: (a) They threatened,
coerced, and intimidated non-striking
employees, officers, suppliers and
customers;(b) They obstructed the free
ingress to and egress from the company
premises; and (c) They resisted and defied
the implementation of the writ of
preliminary injunction issued against the
strikers.
The commission of the above
prohibited acts by the striking Union
members warrants their dismissal from
employment.
Records show that the LA found the
strike illegal and sustained the dismissal of
the Union officers, but ordered the
reinstatement of the striking Union
members for lack of evidence showing that
they committed illegal acts during the illegal
strike. This decision, however, was later
reversed by the NLRC.Pursuant to Article
223of the Labor Code and well-established
jurisprudence, the decision of the LA
reinstating a dismissed or separated
employee, insofar as the reinstatement
aspect is concerned, shall immediately be
executory, pending appeal.[28]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
employee, merely reinstated in the payroll.
It is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed
employee during the period of appeal until
reversal by the higher court.If the employer
fails to exercise the option of re-admitting
the employee to work or to reinstate him in
the payroll, the employer must pay the
employees salaries during the period
between the LAs order of reinstatement
pending appeal and the resolution of the
higher court overturning that of the LA.

In this case, CASI is liable to pay the
striking Union members their accrued wages
for four months and nine days, which is the
period from the notice of the LAs order of
reinstatement until the reversal thereof by
the NLRC.
LABOR LAW
Separation pay may be given as a
form of financial assistance when a worker is
dismissed in cases such as the installation of
labor-saving devices, redundancy,
retrenchment to prevent losses, closing or
cessation of operation of the establishment,
or in case the employee was found to have
been suffering from a disease such that his
continued employment is prohibited by
law.It is a statutory right defined as the
amount that an employee receives at the
time of his severance from the service and is
designed to provide the employee with the
wherewithal during the period that he is
looking for another employment. It is
oriented towards the immediate future, the
transitional period the dismissed employee
must undergo before locating a replacement
job.As a general rule, when just causes for
terminating the services of an employee
exist, the employee is not entitled to
separation pay because lawbreakers should
not benefit from their illegal acts.The rule,
however, is subject to exceptions.
In the case at bar, not only did the
Court declare the strike illegal, rather, it
also found the Union officers to have
knowingly participated in the illegal strike.
Worse, the Union members committed
prohibited acts during the strike. Thus, the
awards of separation pay as a form of
financial assistance is deleted.
The motion for partial consideration
by the petitioner is partly granted. The
decision of the Court is partly reconsidered.
226 YOLITO FADRIQUELAN, et al.,
Petitioners, v. MONTEREY FOODS
CORPORATION, Respondent.
321
FACTS:
On April 30, 2002 the three-year CBA
between the union Bukluran ng
Manggagawa sa Monterey-Ilaw at Buklod ng
Manggagawa (the union) and Monterey
Foods Corporation (the company) expired.
On March 28, 2003 after the negotiation for
a new CBA reached a deadlock, the union
filed a notice of strike with the National
Conciliation and Mediation Board (NCMB).
To head off the strike, on April 30, 2003 the
company filed with the DOLE a petition for
assumption of jurisdiction over the dispute
in view of its dire effects on the meat
industry. In an Order dated May 12, 2003,
the DOLE Secretary assumed jurisdiction
over the dispute and enjoined the union
from holding any strike. It also directed the
union and the company to desist from taking
any action that may aggravate the situation.
On May 21, 2003 the union filed a
second notice of strike before the NCMB on
the alleged ground that the company
committed unfair labor practices. On June
10, 2003 the company sent notices to the
union officers, charging them with
intentional acts of slowdown. Six days later
or on June 16 the company sent new notices
to the union officers, informing them of their
termination from work for defying the DOLE
Secretary's assumption order.
On June 23, 2003, the DOLE Secretary
included the unions second notice of strike
in his earlier assumption order. But, on the
same day, the union filed a third notice of
strike based on allegations that the company
had engaged in union busting and illegal
dismissal of union officers. On July 7, 2003
the company filed a petition for certification
of the labor dispute to the NLRC for
compulsory arbitration but the DOLE
Secretary denied the motion. He, however,
subsumed the third notice of strike under
the first and second notices.
The DOLE upheld the company's
termination of the 17 union officers. On
appeal, the CA upheld the validity of the

company's termination of 10 union officers
but declaring illegal that of the other seven.
Both parties sought recourse to this Court,
the union in G.R. 178409 and the company in
G.R. 178434.
ISSUES:
Whether or not the CA erred in
holding that slowdowns actually transpired
at the company's farms; and Whether or not
the CA erred in holding that union officers
committed illegal acts that warranted their
dismissal from work.
HELD:
The decision of the Court of Appeals
is overruled.
LABOR LAW
No strike shall be declared after the
Secretary of Labor has assumed jurisdiction
over a labor dispute. A strike conducted after
such assumption is illegal and any union
officer who knowingly participates in the
same may be declared as having lost his
employment. Labor Code, Article 264 (a).
Here, what is involved is a slowdown
strike. Unlike other forms of strike, the
employees involved in a slowdown do not
walk out of their jobs to hurt the company.
They need only to stop work or reduce the
rate of their work while generally remaining
in their assigned post.
The Court finds that the union
officers and members in this case held a
slowdown strike at the company's farms
despite the fact that the DOLE Secretary had
on May 12, 2003 already assumed
jurisdiction over their labor dispute. The
evidence sufficiently shows that union
officers and members simultaneously
stopped work at the company's Batangas
and Cavite farms at 7:00 a.m. on May 26,
2003.
LABOR LAW
The ordinary worker cannot be
terminated for merely participating in the
strike. There must be proof that he
committed illegal acts during its conduct. On
the other hand, a union officer can be
322
terminated upon mere proof that he
knowingly participated in the illegal strike.
Still, the participating union officers
have to be properly identified.The CA held
that the company illegally terminated union
officers Ruben Alvarez, John Asotigue,
Alberto Castillo, Nemesio Agtay, Carlito
Abacan, Danilo Rolle, and Juanito Tenorio,
there being no substantial evidence that
would connect them to the slowdowns. The
CA said that their part in the same could not
be established with certainty.
The Court sustains the validity of the
termination of the rest of the union officers.
The identity and participations of petitioners
in the slowdowns were properly established.
These officers simply refused to work or they
abandoned their work to join union
assemblies.
In termination cases, the dismissed
employee is not required to prove his
innocence of the charges against him. The
burden of proof rests upon the employer to
show that the employees dismissal was for
just cause. The employers failure to do so
means that the dismissal was not
justified.Here, the company failed to show
that all 17 union officers deserved to be
dismissed.
227 NELSON A. CULILI, Petitioner, v.
EASTERN TELECOMMUNICATIONS
PHILIPPINES, INC., SALVADOR HIZON
(President and Chief Executive Officer),
EMILIANO JURADO (Chairman of the
Board), VIRGILIO GARCIA (Vice President)
and STELLA GARCIA (Assistant Vice
President), Respondents.
FACTS:
Respondent Eastern
Telecommunications Philippines, Inc. (ETPI)
is a telecommunications company engaged
mainly in the business of establishing
commercial telecommunications systems
and leasing of international datalines or
circuits that pass through the international

gateway facility (IGF). The other respondents
are ETPIs officers.
Petitioner Nelson A. Culili was
employed by ETPI as a Technician in its Field
Operations Department in 1981. In 1996,
Culili was promoted to Senior Technician in
the Customer Premises Equipment
Management Unit of the Service Quality
Department.
As a telecommunications company
and an authorized IGF operator, ETPI was
required, under RA No. 7925 and EO No. 109,
to establish landlines in Metro Manila and
certain provinces. However, due to
interconnection problems with the PLDT,
poor subscription and cancellation of
subscriptions, and other business difficulties,
ETPI was forced to halt its roll out of 129,000
landlines already allocated to a number of its
employees.
In 1998, due to business troubles and
losses, ETPI was compelled to implement a
Right-Sizing Program which consisted of two
phases: the first phase involved the
reduction of ETPIs workforce to only those
employees that were necessary and which
ETPI could sustain; the second phase
entailed a company-wide reorganization
which would result in the transfer, merger,
absorption or abolition of certain
departments of ETPI.
As part of the first phase, ETPI
offered to its employees who had rendered
at least fifteen years of service, the Special
Retirement Program, which consisted of the
option to voluntarily retire at an earlier age
and a retirement package equivalent to two
and a half (2) months salary for every year of
service. This offer was initially rejected by
the Eastern Telecommunications Employees
Union (ETEU), ETPIs duly recognized
bargaining agent, which threatened to stage
a strike. ETPI explained to ETEU the exact
details of the Right-Sizing Program and the
Special Retirement Program and after
consultations with ETEUs members, ETEU
agreed to the implementation of both
programs. Thus, ETPI re-offered the Special
Retirement Program and the corresponding
323
retirement package to the one hundred two
(102) employees who qualified for the
program. Of all the employees who qualified
to avail of the program, only Culili rejected
the offer.
Among the departments abolished
was the Service Quality Department. The
functions of the Customer Premises
Equipment Management Unit, Culilis unit,
were absorbed by the Business and
Consumer Accounts Department. As a result,
Culilis position was abolished due to
redundancy and his functions were absorbed
by the Business and Consumer Accounts
Department.
ETPI, through its Assistant Vice
President Stella Garcia, informed Culili of his
termination from employment effective
April 8, 1999.
Culili alleged that neither he nor the
DOLE were formally notified of his
termination. Culili believed that ETPI had
already decided to dismiss him even prior to
the March 8, 1999 letter. Moreover, Culili
asserted that ETPI had contracted out the
services he used to perform to a labor-only
contractor which not only proved that his
functions had not become unnecessary, but
which also violated their Collective
Bargaining Agreement (CBA) and the Labor
Code. Aside from these, Culili also alleged
that he was discriminated against when ETPI
offered some of his co-employees an
additional benefit in the form of motorcycles
to induce them to avail of the Special
Retirement Program, while he was not.
ETPI denied singling Culili out for
termination. ETPI claimed that because
there was no more work for Culili, it was
constrained to serve a final notice of
termination to Culili, which Culili ignored.
Thus, on March 26, 1999, ETPI tendered to
Culili his final pay check of P859,033.99
consisting of his basic salary, leaves, 13th
month pay and separation pay. ETPI claimed
that Culili refused to accept his termination
and continued to report for work.
Culili filed a complaint against ETPI
and its officers for illegal dismissal, unfair

labor practice, and money claims before the
Labor Arbiter.
The Labor Arbiter found ETPI guilty of
illegal dismissal and unfair labor practice.
On appeal, the NLRC affirmed the
Labor Arbiters decision but modified the
amount of moral and exemplary damages
awarded.
The Court of Appeals found that
Culilis position was validly abolished due to
redundancy. It further held that ETPI cannot
be held guilty of unfair labor practice as mere
contracting out of services being performed
by union members does not per se amount
to unfair labor practice unless it interferes
with the employees right to self-
organization. Hence, this petition.
ISSUE:
Whether or not Culili is illegally
dismissed.
HELD:
The decision of the Court of Appeals
is sustained.
LABOR LAW
There is redundancy when the
service capability of the workforce is greater
than what is reasonably required to meet the
demands of the business enterprise. A
position becomes redundant when it is
rendered superfluous by any number of
factors such as over-hiring of workers,
decrease in volume of business, or dropping
a particular product line or service activity
previously manufactured or undertaken by
the enterprise. Soriano, Jr. v. NLRC, G.R. No.
165594, April 23, 2007
This Court also held that the
following evidence may be proffered to
substantiate redundancy: the new staffing
pattern, feasibility studies/ proposal on the
viability of the newly created positions, job
description and the approval by the
management of the restructuring.
In the case at bar, ETPI was upfront
with its employees about its plan to
implement a Right-Sizing Program. Even in
the face of initial opposition from and
324
rejection of the said program by ETEU, ETPI
patiently negotiated with ETEUs officers to
make them understand ETPIs business
dilemma and its need to reduce its
workforce and streamline its organization.
This evidently rules out bad faith on the part
of ETPI.
The records show that ETPI had
sufficiently established not only its need to
reduce its workforce and streamline its
organization, but also the existence of
redundancy in the position of a Senior
Technician. ETPI explained how it failed to
meet its business targets and the factors that
caused this, and how this necessitated it to
reduce its workforce and streamline its
organization. ETPI also submitted its old and
new tables of organization and sufficiently
described how limited the functions of the
abolished position of a Senior Technician
were and how it decided on whom to absorb
these functions.
LABOR LAW
Although the Court finds Culilis
dismissal was for a lawful cause and not an
act of unfair labor practice, ETPI, however,
was remiss in its duty to observe procedural
due process in effecting the termination of
Culili.
For termination of employment as
defined in Article 283 of the Labor Code, the
requirement of due process shall be deemed
complied with upon service of a written
notice to the employee and the appropriate
Regional Office of the Department of Labor
and Employment at least thirty days before
effectivity of the termination, specifying the
ground or grounds for termination.
ETPI does not deny its failure to
provide DOLE with a written notice regarding
Culilis termination. It, however, insists that it
has complied with the requirement to serve
a written notice to Culili as evidenced by his
admission of having received it and
forwarding it to his union president.
The Court of Appeals, in finding that
Culili was not afforded procedural due
process, held that Culilis dismissal was
ineffectual, and required ETPI to pay Culili
 325

full backwages in accordance with our officers andemployees. Obligations incurred

decision in Serrano v. NLRC, 387 Phil. 345
(2000).
Hence, since it has been established
that Culilis termination was due to an
authorized cause and cannot be considered
unfair labor practice on the part of ETPI, his
dismissal is valid. However, in view of ETPIs
failure to comply with the notice
requirements under the Labor Code, Culili is
entitled to nominal damages in addition to
his separation pay.
DENIED.
228 Park Hotel vs. Soriano
FACTS:
Soriano was initially hired by Park
Hotel but was transferred to Burgos
Corporation.Gonzales and Badilla were
employees of Burgos Corporation.Burgos is a
sister company of Park Hotel. Harbutt and
Percy are the General Managerand owner,
respectively, of Park Hotel. Percy, Harbutt
and Atty. Roberto Enriquez are also
theofficers and stockholders of Burgos
Corporation.Soriano, Gonzales and Badilla
were dismissed from work for allegedly
stealing companyproperties. As a result,
respondents filed complaints for illegal
dismissal, unfair labor practice,before the
Labor Arbiter (LA). In their complaints,
respondents alleged that the real reason
fortheir dismissal was that they were
organizing a union for the company's
employees.
by them, while acting as corporate agents,
are not theirpersonal liability but the direct
accountability of the corporation they
represent. However,corporate officers may
be deemed solidarily liable with the
corporation for the termination
ofemployees if they acted with malice or bad
faith. In the present case, the lower
tribunalsunanimously found that Percy and
Harbutt, in their capacity as corporate
officers of Burgos,acted maliciously in
terminating the services of respondents
without any valid ground and inorder to
suppress their right to self-
organization.Section 31 of the Corporation
Code makes a director personally liable for
corporatedebts if he willfully and knowingly
votes for or assents to patently unlawful acts
of thecorporation. It also makes a director
personally liable if he is guilty of gross
negligence or badfaith in directing the affairs
of the corporation. Thus, Percy and Harbutt,
having acted in badfaith in directing the
affairs of Burgos, are jointly and severally
liable with the latter forrespondents'
dismissal

ISSUE:
Whether or not corporate officers
are solidarily and personally liable in a case
for illegaldismissal and unfair labor practice

HELD:
A corporation, being a juridical
entity, may act only through its directors,