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January 2010 Philippine Supreme Court

Decisions on Labor Law and Procedure


Labor Law
Acceptance of Benefits, render moot claim under other policies. As in the case of Capili v. National Labor
Relations Commission [273 SCRA 576], a claim for benefit under the companys retirement plan becomes
moot when the employee accepts retirement benefits on the basis of Article 287 of the Labor Code. By
Yusons acceptance of her retirement benefits through a compromise agreement entered into with her
employer, she is deemed to have opted to retire under Article 287. Korean Air Co., Ltd and Suk Kyoo Kim v.
Adelina A.S. Yuson, G.R. No. 170369, June 16, 2010.
Approval for companys early retirement program; management prerogative. Approval of applications for the
early retirement program (ERP) is within the employers management prerogatives. The exercise of
management prerogative is valid as long as it is not done in a malicious, harsh, oppressive, vindictive, or
wanton manner. In the present case, the Court sees no bad faith on the part of the employer. The 21 August
2001 memorandum clearly states that petitioner, on its discretion, was offering ERP to its employees. The
memorandum also states that the reason for the ERP was to prevent further losses. Petitioner did not abuse its
discretion when it excluded respondent in the ERP because the latter is already about to retire. To allow
respondent to avail of the ERP would have been contrary to the purpose of the program. Korean Air Co., Ltd
and Suk Kyoo Kim v. Adelina A.S. Yuson, G.R. No. 170369, June 16, 2010.
Agency; principle of apparent authority. There is ample evidence that the hospital held out to the patient that
the doctor was its agent. The two factors that determined apparent authority in this case were: first, the
hospitals implied manifestation to the patient which led the latter to conclude that the doctor was the hospitals
agent; and second, the patients reliance upon the conduct of the hospital and the doctor, consistent with
ordinary care and prudence.
It is of record that the hospital required a consent for hospital care to be signed preparatory to the surgery of
the patient. The form reads: Permission is hereby given to the medical, nursing and laboratory staff of the
Medical City General Hospital to perform such diagnostic procedures and to administer such medications and
treatments as may be deemed necessary or advisable by the physicians of this hospital for and during the
confinement of xxx.
By such statement, the hospital virtually reinforced the public impression that the doctor was a physician of its
hospital, rather than one independently practicing in it; that the medications and treatments he prescribed were
necessary and desirable; and that the hospital staff was prepared to carry them out. Professional Services, Inc.
vs. The Court of Appeals, et al./Natividad (substituted by her children Marcelino Agana III, Enrique Agana, Jr.
Emma Agana-Andaya, Jesus Agana and Raymund Agana and Errique Agana) vs. The Court of Appeals and
Juan Fuentes Miguel Ampil vs. Natividad and Enrique Agana, G.R. Nos. 126297/G.R. No. 126467/G.R. No.
127590, February 2, 2010.
Cancellation of union registration. Art. 234(c) of the Labor Code requires the mandatory minimum 20%
membership of rank-and-file employees in the employees union. Twenty percent (20%) of 112 rank-and-file
employees in Eagle Ridge would require a union membership of at least 22 employees (112 x 205 = 22.4).
When the EREU filed its application for registration on December 19, 2005, there were clearly 30 union
members. Thus, when the certificate of registration was granted, there is no dispute that the Union complied
with the mandatory 20% membership requirement. Accordingly, the retraction of six union members who later
severed and withdrew their union membership cannot cause the cancellation of the unions registration.
Besides, it cannot be argued that the affidavits of retraction retroacted to the time of the application for union
registration or even way back to the organizational meeting. Before their withdrawal, the six employees in
question were bona fide union members. They never disputed affixing their signatures beside their handwritten
names during the organizational meetings. While they alleged that they did not know what they were signing,
their affidavits of retraction were not re-affirmed during the hearings of the instant case rendering them of
little, if any, evidentiary value. In any case, even with the withdrawal of six union members, the union would
still be compliant with the mandatory membership requirement under Art. 234(c) since the remaining 24 union
members constitute more than the 20% membership requirement of 22 employees. Eagle Ridge Gold &
Country Club vs. Court of Appeals, et al., G.R. No. 178989, March 18, 2010 .
CBA; coverage. As regular employees, petitioners fall within the coverage of the bargaining unit and are
therefore entitled to CBA benefits as a matter of law and contract. Under the terms of the CBA, 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. Most importantly, the labor arbiters decision of January 17, 2002
affirmed all the way to the CA ruled against the companys submission that they are independent contractors.
Thus, as regular rank-and-file employees, they fall within the CBA coverage. And, under the CBAs express
terms, they are entitled to its benefits.
CBA coverage is not only a question of fact, but of law and contract. The factual issue is whether the
petitioners are regular rank-and-file employees of the company. The tribunals below uniformly answered this
question in the affirmative. From this factual finding flows legal effects touching on the terms and conditions
of the petitioners regular employment. Farley Fulache, et al. vs. ABS-CBN Broadcasting Corporation, G.R.
No. 183810, January 21, 2010.
Cessation of operations; financial assistance. Based on Article 283, in case of cessation of operations, the
employer is only required to pay his employees a separation pay of one month pay or at least one-half month
pay for every year of service, whichever is higher. That is all that the law requires.
In the case at bar, petitioner paid respondents the following: (a) separation pay computed at 150% of their
gross monthly pay per year of service; and (b) cash equivalent of earned and accrued vacation and sick leaves.
Clearly, petitioner had gone over and above the requirements of the law. Despite this, however, the Labor
Arbiter ordered petitioner to pay respondents an additional amount, equivalent to one months salary, as a form
of financial assistance.
The award of financial assistance is bereft of legal basis and serves to penalize petitioner who had complied
with the requirements of the law. The Court also point out that petitioner may, as it has done, grant on a
voluntary and ex gratia basis, any amount more than what is required by the law, but to insist that more
financial assistance be given is certainly something that the Court cannot countenance. Moreover, any award of
additional financial assistance to respondents would put them at an advantage and in a better position than the
rest of their co-employees who similarly lost their employment because of petitioners decision to cease its
operations. SolidBank Corporation vs. National Labor Relations Commission, et al., G.R. No. 165951, March
30, 2010 .
Compensable illness. Since cholecystolithiasis or gallstone has been excluded as a compensable illness under
the applicable standard contract for Filipino seafarers that binds the seafarer and the vessels foreign owner, it
was an error for the CA to treat such illness as work-related and, therefore, compensable. The standard
contract precisely did not consider gallstone as compensable illness because the parties agreed, presumably
based on medical science, that such affliction is not caused by working on board ocean-going vessels.
Nor is there any evidence to prove that the nature of the seafarers work on board a ship aggravated his
illness. No one knows if he had gallstone at the time he boarded the vessel. By the nature of this illness, it is
highly probable that he already had it when he boarded his assigned ship although it went undiagnosed because
he had yet to experience its symptoms. Bandila Shipping, Inc. et al. vs. Marcos C. Abalos, G.R. No. 177100,
February 22, 2010 .
Compensable illness; work related. Melanoma is not listed as an occupational disease under Annex A of the
Rules on Employees Compensation. Hence, respondent has the burden of proving, by substantial evidence, the
causal relationship between her illness and her working conditions.Substantial evidence means such relevant
evidence as a reasonable mind might accept to support a conclusion.
The Court in this case agreed with the petitioner and the ECC that respondent was not able to positively prove
that her ailment was caused by her employment and that the risk of contracting the disease was increased by
her working conditions. While the law requires only a reasonable work-connection and not a direct causal
relation, respondent still failed to show that her illness was really brought about by the wound she sustained
during the supervised gardening activity in school. The CA accepted the allegation that the mole appeared right
on the spot where respondent sustained the injury without any further proof that the mole appeared because of
the injury. The CA further ruled that the risk of acquiring the said ailment increased by the nature of
[respondents] work in going to school and in returning to her residence during school days x x x. However,
the CA failed to consider that in a tropical country like the Philippines, exposure to sunlight is
common. Unlike farmers, fishermen or lifeguards, it was not shown that respondent had chronic long-term
exposure to the sun considered necessary for the development of melanoma. Thus, the Court did not find the
risk of contracting the disease to have been heightened by respondents exposure to sunlight in going to work
and returning to her residence. Government Service Insurance System vs. Rosalinda A. Bernadas, G.R. No.
164731, February 11, 2010
Compensable illness. Jurisprudence provides that to establish compensability of a non-occupational disease,
reasonable proof of work-connection and not direct causal relation is required. Probability, not the ultimate
degree of certainty, is the test of proof in compensation proceedings.
In this case, the Court sustained the Labor Arbiter and the NLRC in granting total and permanent disability
benefits in favor of Villamater, as it was sufficiently shown that his having contracted colon cancer was, at the
very least, aggravated by his working conditions, taking into consideration his dietary provisions on board, his
age, and his job as Chief Engineer, who was primarily in charge of the technical and mechanical operations of
the vessels to ensure voyage safety. Leonis Navigation Co., Inc. and World Marine Panama, S.A. vs. Catalino
U. Villamater, et al., G.R. No. 179169, March 3, 2010 .
Compensable illness; entitlement. For disability to be compensable under Section 20 (B) of the 2000 POEA-
SEC, two elements must concur: (1) the injury or illness must be work-related; and (2) the work-related injury
or illness must have existed during the term of the seafarers employment contract. In other words, to be
entitled to compensation and benefits under this provision, it is not sufficient to establish that the seafarers
illness or injury has rendered him permanently or partially disabled; it must also be shown that there is a causal
connection between the seafarers illness or injury and the work for which he had been contracted.
The 2000 POEA-SEC defines work-related injury as injury(ies) resulting in disability or death arising out
of and in the course of employment and work-related illness as any sickness resulting to disability or death
as a result of an occupational disease listed under Section 32-A of this contract with the conditions set therein
satisfied.
Under Section 20 (B), paragraphs (2) and (3) of the 2000 POEA-SEC, it is the company-designated physician
who is entrusted with the task of assessing the seamans disability.
While it is true that medical reports issued by the company-designated physicians do not bind the courts, the
Courts examination of Dr. Ong-Salvadors Initial Medical Report have led it to agree with her findings. Dr.
Ong-Salvador was able to sufficiently explain her basis in concluding that the respondents illness was not
work-related: she found the respondent not to have been exposed to any carcinogenic fumes, or to any viral
infection in his workplace. Her findings were arrived at after the respondent was made to undergo a physical,
neurological and laboratory examination, taking into consideration his past medical history, family history, and
social history. In addition, the respondent was evaluated by a specialist, a surgeon and an oncologist. The
series of tests and evaluations show that Dr. Ong-Salvadors findings were not arrived at arbitrarily; neither
were they biased in the companys favor.
The respondent, on the other hand, did not adduce proof to show a reasonable connection between his work as
an assistant housekeeping manager and his lymphoma. There was no showing how the demands and nature of
his job vis--vis the ships working conditions increased the risk of contracting lymphoma. The non-work
relatedness of the respondents illness is reinforced by the fact that under the Implementing Rules and
Regulations of the Labor Code (ECC Rules), lymphoma is considered occupational only when contracted by
operating room personnel due to exposure to anesthetics. The records do not show that the respondents work
as an assistant housekeeping manager exposed him to anesthetics.
Accordingly, the Court held that the respondent is not entitled to total and permanent disability benefits on
account of his failure to refute the company-designated physicians findings that: (1) his illness was not work-
related; and (2) he was fit to resume sea duties. Magsaysay Maritime Corporation and/or Cruise Ships
Catering Services International N.V. vs. National Labor Relations Commissions, et al., G.R. No. 186180,
March 22, 2010 .
Cost of living allowance. COLA is not in the nature of an allowance intended to reimburse expenses incurred
by officials and employees of the government in the performance of their official functions. It is not payment
in consideration of the fulfillment of official duty. As defined, cost of living refers to the level of prices
relating to a range of everyday items or the cost of purchasing those goods and services which are included
in an accepted standard level of consumption. Based on this premise, COLA is a benefit intended to cover
increases in the cost of living. Thus, it is and should be integrated into the standardized salary rates.
In the present case, the Court is not persuaded that the continued grant of COLA to the uniformed personnel to
the exclusion of other national government officials run afoul the equal protection clause of the Constitution.
The fundamental right of equal protection of the laws is not absolute, but is subject to reasonable
classification. If the groupings are characterized by substantial distinctions that make real differences, one
class may be treated and regulated differently from another. The classification must also be germane to the
purpose of the law and must apply to all those belonging to the same class.
The Court found valid reasons to treat the uniformed personnel differently from other national government
officials. Being in charge of the actual defense of the State and the maintenance of internal peace and order,
they are expected to be stationed virtually anywhere in the country. They are likely to be assigned to a variety
of low, moderate, and high-cost areas. Since their basic pay does not vary based on location, the continued
grant of COLA is intended to help them offset the effects of living in higher cost areas. Victoria C. Gutierrez,
et al. vs. Department of Budget and Management, et al./Estrellita C. Amponin, et al. vs. Commission on Audit,
et al./Augusto R. Nieves, et al. vs. Department of Budget and Management, et al./Kapisanan ng mga
Manggagawa sa Bureau of Agricultural Statistic (KMB), et al. vs. Department of Budget and Management, et
al./National Housing Authority vs. Epifanio P. Recana, et al./ Insurance Commission Officers and Employees,
et al. vs. Department of Budget and Management, et al./Fiber Industry Development Authority Employees
Association (FIDAEA),et al. vs. Department of Budget and Management, et al./Bureau of Animal Industry
Employees Association (BAIEA), et al. vs. Department of Budget and Management, et al./Re: Request of
Sandiganbayan for authority to use their savings to pay their Cola Differential from July 1, 1989 to March 16,
1999, G.R. No. 153266/G.R. No. 159007/G.R. No. 159029/G.R. No. 170084/G.R. No. 172713/G.R. No.
173119/G.R. No. 176477/G.R. No. 177990/A.M. No. 06-4-02-SB. March 18, 2010 .
Constructive dismissal. In constructive dismissal cases, the employer has the burden of proving that its
conduct and action or the transfer of an employee are for valid and legitimate grounds such as genuine
business necessity. Particularly, for a transfer not to be considered a constructive dismissal, the employer
must be able to show that such transfer is not unreasonable, inconvenient, or prejudicial to the employee.
Failure of the employer to overcome this burden of proof taints the employees transfer as a constructive
dismissal.
In the present case, the employer failed to discharge this burden. The combination of harsh actions taken by
the bank rendered the employment condition of the employee hostile and unbearable for the following reasons:
First, there is no showing of any urgency or genuine business necessity to transfer the employee to the Makati
Head Office. The banks stated reason that the employee had to undergo branch head training because of his
gross inefficiency was not supported by any proof that the employee had a record of gross inefficiency.
Second, the employees transfer from Dumaguete to Makati City is clearly unreasonable, inconvenient and
oppressive, since the respondent and his family are residents of Dumaguete City. Third, the employer failed to
present any valid reason why it had to require the employee to go to the Makati Head Office to undergo branch
head training when it could have just easily required the latter to undertake the same training in the VISMIN
area. Finally, there was nothing in the order of transfer indicating the position which the employee would
occupy after his training; thus, the employee was effectively placed in a floating status. The banks
contention that the employee was assigned to a sensitive position in the DUHO Task Force is suspect when
considered with the fact that he was made to undergo branch head training which is totally different from a
position that entails reconciling book entries of all branches of the former. Reconciling book entries is
essentially an accounting task.
The test of constructive dismissal is whether a reasonable person in the employees position would have felt
compelled to give up his position under the circumstances. Based on the factual considerations in the present
case, the Court held that the hostile and unreasonable working conditions of the bank justified the finding of
the NLRC and the CA that the employee was constructively dismissed. Philippine Veterans Bank vs. National
Labor Relations Commission, et al., G.R. No. 188882, March 30, 2010 .
Disability benefits; entitlement. The seafarer, upon sign-off from his vessel, must report to the company-
designated physician within three working days from arrival for diagnosis and treatment. Applying Section
20(B), paragraph (3) of the 2000 Amended Standard Terms and Conditions Governing the Employment of
Filipino Seafarers on Board Ocean-Going Vessels, petitioner is required to undergo post-employment medical
examination by a company-designated physician within three working days from arrival, except when he is
physically incapacitated to do so, in which case, a written notice to the agency within the same period would
suffice. In Maunlad Transport, Inc. v. Manigo, Jr., [G.R. No.161416, 13 June 2008, 554 SCRA 446, 459] this
Court explicitly declared that it is mandatory for a claimant to be examined by a company-designated
physician within three days from his repatriation. The unexplained omission of this requirement will bar the
filing of a claim for disability benefits. Alex C. Cootauco vs. MMS Phil. Maritime Services, Inc. Ms. Mary C.
Maquilan, and/or MMS Co. Ltd., G.R. No. 184722, March 15, 2010.
Dismissal; due process. The essence of due process is the opportunity to be heard; it is the denial of this
opportunity that constitutes violation of due process of law. The employee was given the opportunity to be
heard when a proper notice of investigation was sent to him, although the notice did not reach him for reasons
outside the employers control. The employee was not also totally unheard on the matter as he was able to
explain his side through the two (2) explanation letters he submitted. These letters are clear indications that he
intimately knew of the matter for which he was being investigated. If he was denied due process at all, the
denial was with respect to the charges of extortion, tardiness and absenteeism, which are grounds invoked
separately from loss of trust and confidence. These grounds were not serious considerations in the dismissal
that followed, and therefore, were not considered by the Court as material to the present case. Bibiana Farms
and Mills, Inc. vs. Arturo Lado, G.R. No. 157861, February 2, 2010 .
Dismissal; due process. In an unlawful dismissal case, the employer has the burden of proving the lawful cause
sustaining the dismissal of the employee. The employer must affirmatively show rationally adequate evidence
that the dismissal was for a justifiable cause. The employees behavior constituted just cause. However, the
company cannot deny that it failed to observe due process. The law requires that the employer must furnish the
worker sought to be dismissed with two written notices before termination of employment can be legally
effected: (1) notice which apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) the subsequent notice which informs the employee of the employers decision to dismiss
him. Violation of the employees right to statutory due process, even if the dismissal was for a just cause,
warrants the payment of indemnity in the form of nominal damages. This indemnity is not intended to
penalize the employer but to vindicate or recognize the employees right to statutory due process, which was
violated by the employer in the present case. Hilton Heavy Equipment Corporation and Peter Lim vs. Ananias
Dy, G.R. No. 164860, February 2, 2010 .
Dismissal; due process. Failure to observe due process in the termination of employment for a just cause does
not invalidate the dismissal but makes the company liable for non-compliance with the procedural
requirements of due process. The violation of the employees right to statutory due process warrants the
payment of nominal damages, the amount of which is addressed to the sound discretion of the court, taking
into account the relevant circumstances. In the instant case, considering that the company already suffered
financially because of poor sales performance under the employees watch, it is proper to reduce the amount of
nominal damages awarded to petitioner to Thirty Thousand Pesos (P30,000.00). The amount of nominal
damages awarded is not intended to enrich the employee, but to deter employers from future violations of the
statutory due process rights of employees. Rolando P. Ancheta vs. Destiny Financial Plans, Inc. and Arsenio
Bartolome,G.R. No. 179702, February 16, 2010
Dismissal; due process. In the dismissal of employees, it has been consistently held that the twin requirements
of notice and hearing are essential elements of due process. The employer must furnish the worker with two
written notices before termination of employment can be legally effected: (1) a notice apprising the employee
of the particular acts or omissions for which his dismissal is sought, and (2) a subsequent notice informing the
employee of the employers decision to dismiss him. With regard to the requirement of a hearing, the essence
of due process lies simply in an opportunity to be heard, and not that an actual hearing should always and
indispensably be held.
Likewise, there is no requirement that the notices of dismissal themselves be couched in the form and language
of judicial or quasi-judicial decisions. What is required is for the employer to conduct a formal investigation
process, with notices duly served on the employees informing them of the fact of investigation, and
subsequently, if warranted, a separate notice of dismissal. Through the formal investigatory process, the
employee must be accorded the right to present his or her side, which must be considered and weighed by the
employer. The employee must be sufficiently apprised of the nature of the charge, so as to be able to
intelligently defend himself or herself against the charge. Wilfredo M. Baron, et al. vs. National Labor
Relations Commission, et al., G.R. No. 182299, February 22, 2010 .
Dismissal; gross neglect of duties. Article 282 (b) imposes a stringent condition before an employer may
terminate an employment due to gross and habitual neglect by the employee of his duties. To sustain a
termination of employment based on this provision of law, the negligence must not only be gross but also
habitual.
In the present case, the employer asserts that the employees failed to regularly undertake a monthly physical
inventory of the outlets merchandise. The Court was not persuaded as it found that inventory preparation and
reporting did not fall on the employees shoulders since they were to assist the [stock] clerk only. Kulas
Ideas & Creations, et al. vs. Juliet Alcoseba, et al., G.R. No. 180123, February 18, 2010 .
Dismissal; loss of trust and confidence. In Fungo v. Lourdes School of Mandaluyong, we restated the
guidelines for the application of loss of trust and confidence as a just cause for dismissal of an employee from
the service, thus: a) loss of confidence should not be simulated; b) it should not be used as subterfuge for
causes which are improper, illegal or unjustified; c) it may not be arbitrarily asserted in the face of
overwhelming evidence to the contrary; and d) it must be genuine, not a mere afterthought to justify earlier
action taken in bad faith. In the present case, the employee, who was a warehouseman, held a position of trust
and confidence and was given access to and authority over company property with clear tasks and guidelines
laid down very early in his employment. Like any business entity, the company has every right to protect itself
from actual threats to the viability of its operations. The employee, caught red-handed in a scheme to spirit off
unpaid company sacks, not only violated his fiduciary duty as custodian of company property resulting in the
companys loss of trust and confidence in him; he had also become a threat to the viability of company
operations. To rule that he should be reinstated would be oppressive to the company. The law, in protecting the
rights of the employee, authorizes neither the oppression nor the self-destruction of the employer. Bibiana
Farms and Mills, Inc. vs. Arturo Lado, G.R. No. 157861, February 2, 2010 .
Dismissal; loss of trust and confidence. The doctrine of loss of confidence requires the concurrence of the
following: (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; (4) it must be genuine, not a mere afterthought to justify an earlier action taken in bad
faith; and (5) the employee involved holds a position of trust and confidence. 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. He must be invested with confidence on delicate matters, such as the
custody, handling, care, and protection of the employers property and/or funds. 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.
The subject employee in this case is a managerial employee holding a highly sensitive position. Being the
Head of the Marketing Group of the company, he was in charge, among others, of the over-all production
and sales performance of the company. Thus, as aptly pointed out by the CA, his performance was practically
the lifeblood of the corporation, because its earnings depended on the sales of the marketing group, which he
used to head. The position held by the employee required the highest degree of trust and confidence of his
employer in the formers exercise of managerial discretion insofar as the conduct of the latters business was
concerned. The employees inability to perform the functions of his office to the satisfaction of his employer
and the formers poor judgment as marketing head caused the company huge financial losses. If these were not
timely addressed and corrected, the company could have collapsed, to the detriment of its policy holders,
stockholders, employees, and the public in general. Rolando P. Ancheta vs. Destiny Financial Plans, Inc. and
Arsenio Bartolome, G.R. No. 179702, February 16, 2010
Dismissal; loss of trust and confidence. The Court found convincing evidence that a pattern of concealment
and dishonesty marred the purchase of paper materials for the Womens Journals special project, with the
employee playing the principal and most active role. There is no question that the employee failed to make a
reasonable canvass of the prices of the paper materials required by a companys special project, resulting in
substantial losses to the company. That a rush job was involved, is no excuse as canvassing could be done
even in a days time as shown by the audit departments canvass. That the employee was responsible for
concealment and omissions also appears clear to us; he failed, under dubious circumstances, to seasonably
disclose to his employer material information with financial impact on the purchase transaction.
Thus, the Court cannot but conclude that substantial evidence exists justifying the employees dismissal for a
just cause loss of trust and confidence. For loss of trust and confidence to be a ground for dismissal, the law
requires only that there be at least some basis to justify the dismissal. The fact that the employee had been with
the company for 25 years cannot change the conclusion that he had become a liability to the company whose
interests he miserably failed to protect. Philippine Journalist, Inc. vs. Leozar Dela Cruz y Balobal, G.R. No.
187120, February 16, 2010 .
Dismissal; just cause; loss of trust and confidence. Loss of trust and confidence, as a cause for termination of
employment, is 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. Joeb Aliviado, et al. vs. Procter &
Gamble Philippines, Inc., et al., G.R. No. 160506, March 9, 2010 .
Dismissal; just cause; misconduct. 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 other words, 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 been performed with
wrongful intent. 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, the Court found them guilty of simple misconduct only, 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. Joeb Aliviado, et al. vs.
Procter & Gamble Philippines, Inc., et al., G.R. No. 160506, March 9, 2010 .
Dismissal; just cause; union security clause. In terminating the employment of an employee by enforcing the
union security clause, the employer is required only to determine and prove that: (1) the union security clause
is applicable; (2) the union is requesting for the enforcement of the union security provision in the CBA; and
(3) there is sufficient evidence to support the decision of the union to expel the employee from the union.
These requisites constitute just cause for terminating an employee based on the union security provision of the
CBA.
It is the third requisite that appears to be lacking in this case. It is apparent from the identical termination
letters that GMC terminated Casio, et al., by relying upon the resolutions of the union, which made no mention
at all of the evidence supporting the decision of the union to expel Casio, et al. from the union. GMC never
alleged nor attempted to prove that the company actually looked into the evidence of the union for expelling
Casio, et al. and made a determination on the sufficiency thereof. Without such a determination, GMC cannot
claim that it had terminated the employment of Casio, et al. for just cause. The failure of GMC to make a
determination of the sufficiency of evidence supporting the decision of the union constitutes non-observance
by GMC of procedural due process in the dismissal of employees. General Milling Corporation vs. Ernesto
Casio, et al. and Virgilio Pino, et al., G.R. No. 149552, March 10, 2010 .
Dismissal; requirements. Under the Labor Code, the requirements for the lawful dismissal of an employee are
two-fold, consisting of substantive and procedural aspects. Not only must the dismissal be for a just or
authorized cause; the basic requirements of procedural due process notice and hearing must likewise be
observed before an employee may be dismissed. The burden of proof rests on the employer to show that the
employees dismissal has met these due process requirements. The case of the employer must stand or fall on
its own merits and not on the weakness of the employees defense. Bibiana Farms and Mills, Inc. vs. Arturo
Lado, G.R. No. 157861, February 2, 2010 .
Dismissal; separation pay. Under Article 279 of the Labor Code, an illegally dismissed employee 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. In addition to full
backwages, the Court has also repeatedly ruled that in cases where reinstatement is no longer feasible due to
strained relations, then separation pay may be awarded instead of reinstatement. In Mt. Carmel College v.
Resuena, the Court reiterated that the separation pay, as an alternative to reinstatement, should be equivalent to
one (1) month salary for every year of service. Sargasso Construction and Development Corporation vs.
National Labor Relations Commission (4th Division) and Gorgonio Mongcal, G.R. No. 164118, February 9,
2010 .
Dismissal; serious misconduct. 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 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.
In the present case, the Court found substantial evidence to prove that a serious misconduct has been
committed to justify termination from employment. The Certified Public Accountant and Corporate Finance
Manager of the company submitted a report dated February 19, 2000 stating that in spite of managements
memorandum, the keys to the office and filing cabinets were not surrendered. It was likewise stated in the
report that petitioner Wilfredo Baron pulled out some records without allowing a representative from the
internal audit team to inspect them. He noticed Wilfredo Baron deleting some files from the computer, which
could no longer be retrieved. Moreover, a member of the audit team saw Cynthia Junatas (another petitioner)
carrying some documents, including a Daily Collection Report. When asked to present the documents for
inspection, Junatas refused and tore the document.
In addition, the audit team discovered that MSI incurred an inventory shortage of One Million Thirty Thousand
Two Hundred Fifty-Eight Pesos and Twenty-One Centavos (P1,030,258.21). It found that Wilfredo Baron, the
operations manager, in conspiracy with the other petitioners, orchestrated massive irregularities and grand
scale fraud, which could no longer be documented because of theft of company documents and deletion of
computer files. Unmistakably, the unauthorized taking of company documents and files, failure to pay
unremitted collections, failure to surrender keys to the filing cabinets despite earlier instructions, concealment
of shortages, and failure to record inventory transactions pursuant to a fraudulent scheme are acts of grave
misconduct, which are sufficient causes for dismissal from employment. Wilfredo M. Baron, et al. vs. National
Labor Relations Commission, et al., G.R. No. 182299, February 22, 2010 .
Dismissal; fraud and serious misconduct . In this case, the Court found that Pastoril was as actively involved as
Escoto and Omela in the sale of the Toyota Town Ace that resulted in a loss to the company. All three
participated in making the company believe that Aquino bought the Toyota Town Ace for P190,000.00 when in
fact, Aquino paid P200,000.00 for the vehicle. Thus, Pastoril acted in concert with Escoto and Omela in the
transaction that defrauded their employer in the amount of P10,000.00. Pastoril prepared and issued the deed
of sale indicating that the vehicle was sold for P190,000.00, although she knew that the buyer was being
charged P200,000.00 for the vehicle. Escoto, Omela and Pastoril helped themselves to the price difference and
tried to silence Rodriguez (who got wind of the anomaly) by giving him P1,000.00 and passing the P10,000.00
price difference off as the approved discount Aquino asked for. The Court held that there was a conspiracy
between and among the three employees, where every participant had made significant contributory
acts. White Diamond Trading Corporation and/or Jerry Uy vs. National Labor Relations Commission, et
al., G.R. No. 186019. March 29, 2010 .
Dismissal; backwages. Article 279 of the Labor Code provides that an employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his
full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from
the time his compensation was withheld from him up to the time of his actual reinstatement.
Thus, a number of cases holds that an illegally dismissed employee is entitled to two reliefs: backwages and
reinstatement. The two reliefs 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 the payment of backwages.
Since reinstatement is no longer feasible in the present case, the award of separation pay in lieu of
reinstatement is in order. Petitioners prayer for the award of backwages is meritorious, it, and the award of
separation pay not being mutually exclusive. Ferdinand A. Pangilinan vs. Wellmade Manufacturing
Corporation, G.R. No. 187005, April 7, 2010 .
Dismissal; backwages. Reprimand being the appropriate imposable penalty for respondents actuations from
the very beginning, the Court finds that respondent was unfairly denied from reporting for work and earning
his keep, thus, entitling him to the payment of backwages.
The Court is not unmindful of our previous pronouncements in similar cases involving suspension or dismissal
from service, wherein the penalty imposed was reduced, but the award of backwages was denied.
Given the circumstances of the case, however, where the proper penalty should only be a reprimand, the Court
finds the aforementioned cases to be inapplicable herein. On this note, the Court deems it proper to distinguish
between the penalties of dismissal or suspension and reprimand and their respective effects on the grant or
award of backwages. When an employee is dismissed or suspended it is but logical that since he is barred from
reporting to work the same negates his right to be paid backwages. He has no opportunity to work during the
period he was dismissed or suspended and, therefore, he has no salary to expect. However, the same does not
hold true for an employee who is reprimanded. A reprimand usually carries a warning that a repetition of the
same or similar act will be dealt with more severely. Under normal circumstances, an employee who is
reprimanded is never prevented from reporting to work. He continues to work despite the warning. Thus, in the
case at bar, since respondents penalty should only be a reprimand, the Court deems it proper and equitable to
affirm the Court of Appeals (CAs) award of backwages.
In two instances, the Court granted the award of backwages during the period the employees were prevented
from reporting to work despite concluding that the employee concerned violated reasonable office rules and
regulations and imposing the penalty of reprimand.
In Jacinto v. Court of Appeals [G.R. No. 124540, November 14, 1997, 281 SCRA 657], the Court awarded
petitioner Jacinto backwages after finding that she was only culpable of violating reasonable office rules and
regulations for not having asked permission from school authorities to leave the school premises and seek
medical attention and for not filing an application for sick leave for approval by the school authorities.
Also, in Bangalisan v. Court of Appeals [G.R. 124678, July 31, 1997, 276 SCRA 619, 633], after affirming the
findings that one of the petitioners, Rodolfo Mariano, is only liable for his violation of reasonable office rules
and regulations for attending the wake and internment of his grandmother without the benefit of an approved
leave of absence and the imposition of the penalty of reprimand, the Court still granted him backwages.
Consistent with the Courts rulings in Bangalisan and Jacinto, the grant of backwages to respondent is but
proper. It is to be stressed that when imposing penalties, it must not only be made within the parameters of the
law, but it should also satisfy the basic tenets of equity, justice, and fairplay. National Power Corporation vs.
Alan Olandesca, G.R. No. 171434, April 23, 2010.
Dismissal; dishonesty. In Philippine Amusement and Gaming Corporation v. Rilloroza [G.R. No. 141141, June
25, 2001], dishonesty is defined as the disposition to lie, cheat, deceive, or defraud; untrustworthiness; lack of
integrity; lack of honesty, probity or integrity in principle; lack of fairness and straightforwardness; disposition
to defraud, deceive or betray.
It is not disputed that respondent took several materials and supplies from petitioners warehouse without the
approved WRS. However, this should not be construed as dishonesty on the part of respondent that would
warrant his dismissal from the service for the following reasons: First, the withdrawals of the supplies were
duly recorded in the security guards logbook. If respondent intended to defraud petitioner, he could have
easily taken items from the warehouse without having them recorded as he was then the Supervising Property
Officer who had free access to the supplies. Second, right after withdrawing the items, respondent replaced
them on his own initiative, without anyone instructing him to do so. This act negates his intent to defraud
petitioner. Third, there is no clear showing that respondent misappropriated or converted the items for his own
personal use or benefit. Fourth, the Graft Investigation Officer of the Office of the Ombudsman, in its
Resolution dated February 5, 1999, in OMB-1-98-2011, dismissed a complaint for qualified theft filed
by Teodulo V. Largo, Section Chief, Power Generation Group of petitioner against respondent as there was no
competent and sufficient evidence on record to show that there was intent to gain on the part of the respondent,
considering that the materials and supplies taken by him were used in fencing the watershed and reservation
area of petitioner company. Likewise, there was no basis to charge him for malversation of public property as
there was no misappropriation of the supplies for his personal use and that the same were for general purpose
and not for any specific use.
Nonetheless, although the respondent did not commit an overt act of dishonesty, he is not exonerated from
liability. It was an established company procedure that before materials can be taken out from the warehouse,
the issuance of a WRS is an indispensable requirement. In fact, there was even a warning posted at the door of
the property office that states:
BAWAL MAGLABAS NG GAMIT O MAGKARGA NG GASOLINA NG WALANG APRUBADONG WR
S. Being the Supervising Property Officer, respondent knows fully well that taking items from the warehouse
without the required WRS is against the company rules and regulations. It is the paramount duty of respondent
to protect the properties in the warehouse and to ensure that none shall be taken away without proper
documentation.
The Machiavellian principle that the end justifies the means has no place in government service, which
thrives on the rule of law, consistency and stability. Respondent, by taking the said properties without the
approved WRS, violated reasonable office rules and regulations as provided in Section 52 (C), (3), Rule IV of
Civil Service Commission Memorandum Circular No. 19, series of 1999 (Uniform Rules on Administrative
Cases in the Civil Service). Since this is respondents first offense in his more than 16 years of service, the
appropriate penalty to be imposed against him is reprimand. National Power Corporation vs.
Alan Olandesca, G.R. No. 171434, April 23, 2010.
Dismissal; lost of trust and confidence. To terminate the services of an employee for loss of trust and
confidence, two requisites must concur: (1) the employee concerned must be holding a position of trust and
confidence and (2) there must be an act that would justify the loss of trust and confidence.
In the present case, respondent failed to justify its loss of trust and confidence on Consolacion even as it
imputed to him, via Notice of Formal Investigation of April 14, 2003, non-compliance with (a) established
non-written procedures and standards; (b) established written procedures and standards, and (c) verbal orders
and/or instructions. These alleged acts of non-compliance are too general and can encompass just about any
malfeasance. Nowhere in the Notice was there a detailed narration of the facts and circumstances that would
serve as bases to terminate Consolacion, thus leaving to surmise what those procedures, standards and orders
were. Anabel Benjamin, et al. vs. Amellar Corporation., G.R. No. 183383, April 5, 2010.
Dismissal; management prerogative. Respondents right of management prerogative was exercised in good
faith. Respondent presented evidence of the low volume of sales and orders for the production of industrial
paper in 1999, which inevitably resulted to the companys 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. As held in International Harvester Macleod, Inc. v.
Intermediate Appellate Court [233 Phil. 655,655-666 (1987)] 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, shutting down 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, did not dismiss the workers affected by the
closure of Paper Mill No. 4 outright but gave them an option to be transferred to posts of equal rank and pay.
Retrenchment was given only as an option in case the affected employee did not want to be transferred. The
Court viewed this as an indication of good faith on respondents part since it exhausted other possible measures
before retrenchment. Besides, the employers prerogative to bring down labor costs by retrenchment 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 belie petitioners
allegation that the streamlining scheme was implemented as a ploy to ease out employees. Apparently,
respondent implemented its streamlining or reorganization plan in good faith, not in an arbitrary manner and
without violating the tenurial rights of its employees. Dannie M. Pantoja vs. SCA Hygiene Products
Corporation, G.R. No. 163554, April 23, 2010.
Dismissal; retrenchment. The CA committed no reversible error in affirming the NLRC ruling that Talam was
validly dismissed on the ground of retrenchment. The Supreme Court came to this conclusion based on the
following considerations:
First, the decision to retrench had a basis; it was not simulated nor resorted to for the purpose of getting rid of
employees. The decision was upon the recommendation of the companys external auditor. Second, the cost-
cutting measure recommended involved reduction of TSFIs payroll expense account which, as the auditor
found, makes up 41% of the companys total operating expenses. Third, Talam was dismissed due to a cause
authorized by law retrenchment to prevent losses. At the time of Talams dismissal, TSFIs financial
condition, as found by the external auditor, showed that it was not just expecting losses, it already suffered a
net income loss of P2,474,418.00 and retained earnings deficit of P7,424,250.00 for the period ending
December 31, 2002. Fourth, TSFI resorted to other measures to abate its losses. It claimed that during the
crises period, it used as an office a small-room (a mere cubicle) with only a two-person support staff in the
persons of Grapilon and Hermle; it reduced the salaries of its employees by as much as 30%. This submission
by the company is substantiated by the schedule of Operating Expenses for the year ended December 31, 2002
and September 30, 2002. A quick glance at the schedule readily shows a reduction of TSFIs operating
expenses across the board. The schedule indicates a substantial decrease in operating expenses, from
P5,733,735.00 in September 2002 to P1,698,552.36 as of the end of December 2002. Francis Ray Talam vs.
National Labor Relations Commission, 4th Division, Cebu City, et al., G.R. No. 175040, April 6, 2010.
Dismissal; serious misconduct. The findings of the CA and National Labor Relations Commission (NLRC)
establish the following: (1) Agads request for withdrawal of the 190 cylinders of LPG as stated in a
Memorandum dated 12 February 1992 cannot be given credence since the Memorandum pertains to the
replacement of the scrap materials due to Boy Bato consisting of 3,000 kilograms of black iron plates and not
to the subject LPG cylinders; (2) Agad did not observe Caltexs rules and regulations when he transferred the
said cylinders to Millanes compound without the RMRD form as required under Caltexs Field Accounting
Manual; (3) Agad gave specific instructions to Millanes to sell the cylinders without bidding to third parties in
violation of company rules; (4) Agad failed to submit the periodic inventory report of the LPG cylinders to the
accounting department; (5) Agad did not remit the proceeds of the sale of the LPG cylinders; and (6) even if
considered as scrap materials, the LPG cylinders still had monetary value which Agad cannot appropriate for
himself without Caltexs consent.
Considering these findings, it is clear that Agad committed a serious infraction amounting to theft of company
property. This act is akin to serious misconduct or willful disobedience by the employee of the lawful orders
of his employer in connection with his work, a just cause for termination of employment recognized under
Article 282(a) of the Labor Code.
Misconduct has been defined as a transgression of some established and definite rule of action, a forbidden act,
a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. To be
serious, the misconduct must be of such grave and aggravated character. Caltex (Philippines), Inc., et. al. vs.
Hermie G. Abad, et. al., G.R. No. 163554, April 23, 2010.
Due Process; termination. The records belie Amulars claim of denial of procedural due process. He chose not
to present his side at the administrative hearing. In fact, he avoided the investigation into the charges against
him by filing his illegal dismissal complaint ahead of the scheduled investigation. These facts show that the
employee was given the opportunity to be heard and he cannot now come to the Court protesting that he was
denied this opportunity. To belabor a point the Court has repeatedly made in employee dismissal cases, the
essence of due process is simply an opportunity to be heard; it is the denial of this opportunity that constitutes
violation of due process of law. Technol Eight Philippines Corporation vs. National Labor Relations
Commission, et al.,G.R. No. 187605. April 13, 2010.
Dismissal; theft; degree of evidence. The long-standing rule is that the existence of a conspiracy must be
proved by clear, direct and convincing evidence. In Fernandez v. National Labor Relations Commission, The
Court expounded on the degree of evidence required to establish the existence of a conspiracy in this
wise: While it is true that in conspiracy, direct proof is not essential, it must however, be shown that it exists
as clearly as the commission of the offense itself. There must at least be adequate proof that the malefactors
had come to an agreement concerning the commission of a felony and decided to commit it. x x x For
conspiracy to exist, it is essential that there must be conscious design to commit an offense. Conspiracy is not
the product of negligence but of intentionality on the part of the cohorts.
Verily, there was a dearth of evidence directly linking the employee to the commission of the crime of theft, as
his mere act of loading the dump truck with aggregates did not show that he knew of the other persons plan to
deliver the load to a place other than the companys construction site. The only conclusion, therefore, is that
the company had illegally dismissed the employee in the present case. Sargasso Construction and
Development Corporation vs. National Labor Relations Commission (4th Division) and Gorgonio
Mongcal, G.R. No. 164118, February 9, 2010 .
Employer-employee relationship; control test. This Court still employs the control test to determine the
existence of an employer-employee relationship between hospital and doctor. In Calamba Medical Center, Inc.
v. National Labor Relations Commission, et al., the Court held that: 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. x x x That petitioner exercised control over
respondents gains light from the undisputed fact that in the emergency room, the operating room, or any
department or ward for that matter, the doctors work is monitored through the hospitals nursing supervisors,
charge nurses and orderlies. Without the approval or consent of the hospital or its medical director, no
operations can be undertaken in those areas. For the control test to apply, it is not essential for the employer to
actually supervise the performance by the employee of his duties, it being enough that it has the right to wield
the power. Professional Services, Inc. vs. The Court of Appeals, et al./Natividad (substituted by her children
Marcelino Agana III, Enrique Agana, Jr. Emma Agana-Andaya, Jesus Agana and Raymund Agana and
Errique Agana) vs. The Court of Appeals and Juan Fuentes Miguel Ampil vs. Natividad and Enrique
Agana, G.R. Nos. 126297/G.R. No. 126467/G.R. No. 127590, February 2, 2010.
Employer employee relationship . The elements to determine the existence of an employment relationship are:
(1) selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4)
the employers power to control the employees conduct. In filing a complaint for illegal dismissal, it is
incumbent upon Abueva to prove the relationship by substantial evidence.
In this regard, Abueva claims that he has worked with respondent hacienda for more than a year already and
that he was allowed to stay inside the hacienda. As such, he is a regular employee entitled to monetary claims.
However, petitioners have not presented competent proof that respondents engaged the services of Abueva;
that respondents paid his wages or that respondents could dictate what his conduct should be while at work. In
other words, Abuevas allegations did not establish that his relationship with respondents had the attributes of
an employer-employee relationship based on the four-fold test. Abueva was not able to discharge the burden of
proving the existence of an employer-employee relationship. Moreover, Abueva was not able to refute
respondents assertion that he hires other men to perform weeding job in the hacienda and that he is not
exclusively working for respondents. Romeo Basay, et al. vs. Hacienda Consolation, et al., G.R. No. 175532,
April 19, 2010.
Employee benefits; permanent disability benefits. In accordance with the avowed policy of the State to give
maximum aid and full protection to labor, the Court applied the Labor Code concept of permanent total
disability to Filipino seafarers. The Court held that the notion of disability is intimately related to the workers
capacity to earn. What is compensated is not the employees injury or illness but his inability to work resulting
in the impairment of his earning capacity; hence, disability should be understood less on its medical
significance but more on the loss of earning capacity.
In the present case, petitioner was able to secure a fit to work certification from a doctor only after more than
five months from the time he was medically repatriated due to a finding that his disability is considered
permanent and total. Significantly, petitioner remained unemployed even after he filed on February 26, 2002
his complaint to recover permanent total disability compensation and despite the August 31, 2005 Decision of
the NLRC which was affirmed by the Court of Appeals, ordering respondents to allow complainant to resume
sea duty.
That petitioner was not likely to fully recover from his disability is mirrored by the Labor Arbiters finding that
his illness would possibly recur once he resumes his sea duties. This could very well be the reason why
petitioner was not re-deployed by respondents. Petitioners disability being then permanent and total, he is
entitled to 100% compensation, i.e., US$80,000 for officers, as stipulated in par. 20.1.7 of the parties
CBA. Rizaldy M. Quitoriano vs. Jebsens Maritime, Inc./Ma. Theresa Gutay and/or Atle Jebsens Management
A/S, G.R. No. 179868, January 21, 2010.

Employee benefit; bonus. 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, the same partakes the nature of a 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.
All given, business losses are a feeble ground for petitioner to repudiate its obligation under the CBA. The rule
is settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished,
discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the
constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full
protection. Hence, absent any proof that the employers consent was vitiated by fraud, mistake or duress, it is
presumed that it entered into the CBA voluntarily and had full knowledge of the contents thereof and was
aware of its commitments under the contract. Lepanto Ceramics, Inc. vs. Lepanto Ceramics Employees
Association, G.R. No. 180866, March 2, 2010 .
Employee; monetary award. The law and the rules are consistent in stating that the employment permit must
be acquired prior to employment. The Labor Code states: Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign employer who desires to engage an alien for employment in
the Philippines shall obtain an employment permit from the Department of Labor. Section 4, Rule XIV, Book
1 of the Implementing Rules and Regulations provides: No alien seeking employment, whether as a resident
or non-resident, may enter the Philippines without first securing an employment permit from the Ministry. If
an alien enters the country under a non-working visa and wishes to be employed thereafter, he may only be
allowed to be employed upon presentation of a duly approved employment permit.
Galera worked in the Philippines without a proper work permit but now wants to claim employees benefits
under Philippine labor laws. She cannot come to this Court with unclean hands. To grant Galeras prayer is to
sanction the violation of the Philippine labor laws requiring aliens to secure work permits before their
employment. WPP Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M. Galera Vs. WPP
Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25, 2010 .
Employee; recovery of personal contributions. May a government employee, dismissed from the service for
cause, be allowed to recover the personal contributions he paid to the Government Service Insurance System
(GSIS)? The answer is yes.
Section 11(d) of Commonwealth Act No. 186, as amended, provides: Upon dismissal for cause or on
voluntary separation, he shall be entitled only to his own premiums and voluntary deposits, if any, plus interest
of three per centum per annum, compounded monthly. This provision continues to govern cases of employees
dismissed for cause and their claims for the return of their personal contributions.
Also, it should be remembered that the GSIS laws are in the nature of social legislation, to be liberally
construed in favor of the government employees. The money, subject of the employees request, consists of
personal contributions made by him, premiums paid in anticipation of benefits expected upon retirement. The
occurrence of a contingency, i.e., his dismissal from the service prior to reaching retirement age, should not
deprive him of the money that belongs to him from the outset. To allow forfeiture of these personal
contributions in favor of the GSIS would condone undue enrichment. Carmelita Lledo vs. Atty. Cesar V. Lledo,
Branch Clerk of Court, Regional Trial Court, Branch 94, Quezon City, A.M. No. P-95-1167, February 9, 2010 .
Employee expenses; in-service training.
In the present case, Article XXI, Section 6 of the CBA provides that All expenses of security guards in
securing /renewing their licenses shall be for their personal account. A reading of the provision would reveal
that it encompasses all possible expenses a security guard would pay or incur in order to secure or renew his
license. In-service training being a requirement for the renewal of a security guards license, expenses incurred
therefore are claimed to be for the security guards personal account. However, the 1994 Revised Rules and
Regulations Implementing the Private Security Agency Law (Republic Act No. 5487) provides that it shall be
the primary responsibility of the operators of private security agency and company security forces to maintain
and upgrade the standards of efficiency, discipline, performance and competence of their personnel. It further
provides that [T]o maintain and/or upgrade the standard of efficiency, discipline and competence of security
guards and detectives, company security force and private security agencies upon prior authority shall conduct-
in-service training The cost of training shall be pro-rated among the participating agencies/private
companies.
Since it is the primary responsibility of operators of company security forces to maintain and upgrade the
standards of efficiency, discipline, performance and competence of their personnel, it follows that the expenses
to be incurred therein shall be for the account of the company. Further, the intent of the law to impose upon the
employer the obligation to pay for the cost of its employees training is manifested in the aforementioned
provision of law. While the law mandates pro-rating of expenses because it would be impracticable and unfair
to impose the burden of expenses suffered by all participants on only one participating agency or company, if
there is no centralization, there can be no pro-rating, and therefore, the company that has its own security
forces must shoulder the entire cost for such training. If the intent of the law were to impose upon individual
employees the cost of training, the provision on the pro-rating of expenses would not have found print in the
law. Prior to the signing of the CBA, it was the company providing for the in-service training of the guards.
Thus, implicit from the companys actuations was its acknowledgment of its legally mandated responsibility to
shoulder the expenses for in-service training. PNCC Skyway Traffic Management and Security Division
Workers Organization (PSTMSWDO), represented by its President, Rene Soriano vs. PNCC Skyway
Corporation), G.R. No. 171231, February 17, 2010
Employee vs. corporate officer. Corporate officers are given such character either by the Corporation Code or
by the corporations by-laws. Under Section 25 of the Corporation Code, the corporate officers are the
president, secretary, treasurer and such other officers as may be provided in the by-laws. Other officers are
sometimes created by the charter or by-laws of a corporation, or the board of directors may be empowered
under the by-laws of a corporation to create additional offices as may be necessary.
An examination of WPPs by-laws resulted in a finding that Galeras appointment as a corporate officer (Vice-
President with the operational title of Managing Director of Mindshare) during a special meeting of WPPs
Board of Directors is an appointment to a non-existent corporate office. WPPs by-laws provided for only one
Vice-President. At the time of Galeras appointment on 31 December 1999, WPP already had one Vice-
President in the person of Webster. Galera cannot be said to be a director of WPP also because all five
directorship positions provided in the by-laws are already occupied. Finally, WPP cannot rely on its Amended
By-Laws to support its argument that Galera is a corporate officer. The Amended By-Laws provided for more
than one Vice-President and for two additional directors. Even though WPPs stockholders voted for the
amendment on 31 May 2000, the SEC approved the amendments only on 16 February 2001. Galera was
dismissed on 14 December 2000. WPP, Steedman, Webster, and Lansang did not present any evidence that
Galeras dismissal took effect with the action of WPPs Board of Directors.
Additionally, the following provisions in her employment contract are convincing indicators that Galera was an
employee and not a corporate officer: (1) it mandates where and how often she is to perform her work; (2) the
wages she receives are completely controlled by WPP; (3) she is subject to the regular disciplinary procedures
of WPP; (4) section 14 thereof clearly states that she is a permanent employee not a Vice-President or a
member of the Board of Directors; (5) the intellectual property rights created or discovered by petitioner
during her employment shall automatically belong to private respondent WPP [Under the Intellectual Property
Code, this condition prevails if the creator of the work subject to the laws of patent or copyright is an employee
of the one entitled to the patent or copyright]; and (6) the disciplinary procedure states that her right of redress
is through Mindshares Chief Executive Officer for the Asia-Pacific. This last circumstance implies that she
was not even under the disciplinary control of WPPs Board of Directors, and therefore, she could not have
been a WPP corporate officer as only the WPP Board of Directors could appoint and terminate its own
corporate officer. WPP Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn M. Galera vs.
WPP Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25, 2010 .
Illegal dismissal; backwages. 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 employees 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 [G.R. No.
178524, January 30, 2009] instructs that the award of separation pay is inconsistent with a finding that there
was no illegal dismissal, for under Article 279 of the Labor Code and as held in a catena of cases, an employee
who is dismissed without just cause and without due process is entitled to backwages and reinstatement or
payment of separation pay in lieu thereof. Thus, an illegally dismissed employee is entitled to two reliefs:
backwages and reinstatement. The two reliefs provided are separate and distinct. Golden Ace Builders
and Arnold U. Azur vs. Jose A. Talde,G.R. No. 187200, May 5, 2010.
Illegal dismissal; doctrine of strained relations. Under the doctrine of strained relations, the payment of
separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer
desirable 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 the
Court will not try facts anew and that findings of facts of quasi-judicial bodies are accorded great respect, even
finality. Golden Ace Builders and Arnold U. Azul vs. Jose A. Talde, G.R. No. 187200, May 5, 2010.
Illegal dismissal; separation pay. 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.
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. Golden Ace Builders and Arnold U. Azur vs. Jose A. Talde, G.R.
No. 187200, May 5, 2010.
Illegal dismissal. Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full
backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time
their actual compensation was withheld from them up to the time of their actual reinstatement but if
reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination
up to the finality of the decision.
The employees in this case are entitled to backwages and separation pay, considering that reinstatement is no
longer possible because the positions they previously occupied are no longer existing. General Milling
Corporation vs. Ernesto Casio, et al. and Virgilio Pino, et al., G.R. No. 149552, March 10, 2010.
Illegal dismissal. WPPs dismissal of Galera lacked both substantive and procedural due process. Apart from
Steedmans letter dated 15 December 2000 to Galera, WPP failed to prove any just or authorized cause for
Galeras dismissal. The law also requires that the employer must furnish the worker sought to be dismissed
with two written notices before termination of employment can be legally effected: (1) notice which apprises
the employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent
notice which informs the employee of the employers decision to dismiss him. Failure to comply with these
requirements taints the dismissal with illegality. WPPs acts clearly show that Galeras dismissal did not
comply with the two-notice rule. WPP Marketing Communications, Inc. et al. vs. Jocelyn M. Galera/Jocelyn
M. Galera Vs. WPP Marketing Communications, Inc. et al., G.R. No. 169207/G.R. No. 169239, March 25,
2010.
Illegal dismissal; abandonment. Petitioner was, for five times, notified in writing by respondent to resume
teaching for the second semester of school year 2003-2004 following the service of her suspension during the
first semester. She was advised that a teaching load had already been prepared for her. Respondent never
replied to those notices. Petitioners justification for her failure to respond to the notices was that her
acceptance of the offer could be construed as a waiver of her claims. The Court held that petitioners
justification is not a valid excuse.
Petitioner contends that her filing of a complaint for illegal dismissal was a manifestation of her desire to
return to her job and negated any intention to sever the employer-employee relationship. Petitioner forgets that
her complaint for illegal dismissal which she filed on June 5, 2003 sprang, not from her dismissal on
December 6, 2003 due to abandonment, but from her suspension during the first semester of school year 2003-
2004. While the filing of a complaint with a prayer for reinstatement negates an intention to sever the
employer-employee relationship, the same contemplates an action taken subsequent to dismissal and not after
an employee, by all indications, abandoned her job. Evangeline C. Cobarrubias vs. Saint Louis University,
Inc., G.R. No. 176717, March 17, 2010.
Illegal dismissal; monetary awards. 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.
Separation pay, on the other hand, is equivalent to one month pay for every year of service, a fraction of six
months to be considered as one whole year. Here that would begin from January 31, 1994 when petitioner
Belen began his service. Technically the computation of his separation pay would end on the day he was
dismissed on August 20, 1999 when he supposedly ceased to render service and his wages ended. But, since
Belen was entitled to collect backwages until the judgment for illegal dismissal in his favor became final, here
on September 22, 2008, the computation of his separation pay should also end on that date.
Further, since the monetary awards remained unpaid even after it became final on September 22, 2008 because
of issues raised respecting the correct computation of such awards, it is but fair that respondent Javellana be
required to pay 12% interest per annum on those awards from September 22, 2008 until they are paid. The
12% interest is proper because the Court treats monetary claims in labor cases the equivalent of a forbearance
of credit. It matters not that the amounts of the claims were still in question on September 22, 2008. What is
decisive is that the order to pay the monetary awards had long become final. Daniel P. Javellana, Jr. vs.
Albino Belen/Albino Belen Vs. Daniel P. Javellana, Jr. and Javellana Farms, Inc., G.R. No. 181913/G.R. No.
182158, March 5, 2010 .
Illegal dismissal . Contrary to the CAs perception, the Court finds a work-connection in Amulars and Ducays
assault on Mendoza. As the CA itself noted, the underlying reason why Amular and Ducay confronted
Mendoza was to question him about his report to De Leon Technols PCD assistant supervisor regarding
the duos questionable work behavior. The motivation behind the confrontation was rooted on workplace
dynamics as Mendoza, Amular and Ducay interacted with one another in the performance of their duties.
Under these circumstances, Amular undoubtedly committed misconduct or exhibited improper behavior that
constituted a valid cause for his dismissal under the law and jurisprudential standards. The circumstances of his
misdeed rendered him unfit to continue working for Technol. Thus, Amular was not illegally dismissed; he
was dismissed for cause. Technol Eight Philippines Corporation vs. National Labor Relations
Commission, et al., G.R. No. 187605. April 13, 2010.
Illegal Dismissal . If the school were to apply the probationary standards (as in fact it says it did in the present
case), these standards must not only be reasonable but must have also been communicated to the teachers at the
start of the probationary period, or at the very least, at the start of the period of application of the said
standards. These terms, in addition to those expressly provided by the Labor Code, would serve as the just
cause for the termination of the probationary contract. As explained above, the details of this finding of just
cause must be communicated to the affected teachers as a matter of due process.
AMACC, by its submissions, admits that it did not renew the petitioners contracts because they failed to pass
the Performance Appraisal System for Teachers (PAST) and other requirements for regularization that the
school implements to maintain its high academic standards. The evidence is unclear on the exact terms of the
standards, although the school also admits that these were standards under the Guidelines on the
Implementation of AMACC Faculty Plantilla put in place at the start of school year 2000-2001.
While the Court can grant that the standards were duly communicated to the petitioners and could be applied
beginning the 1
st
trimester of the school year 2000-2001, glaring and very basic gaps in the schools evidence
still exist. The exact terms of the standards were never introduced as evidence; neither does the evidence show
how these standards were applied to the petitioners. Without these pieces of evidence (effectively, the finding
of just cause for the non-renewal of the petitioners contracts), the Court has nothing to consider and pass upon
as valid or invalid for each of the petitioners. Inevitably, the non-renewal (or effectively, the termination of
employment of employees on probationary status) lacks the supporting finding of just cause that the law
requires and, hence, is illegal. Yolanda M. Mercado, et al. vs. Ama Computer College, Paraaque City, G.R.
No. 183572, April 13, 2010.
Illegal dismissal. The Court is not unmindful of the rule in labor cases that the employer has the burden of
proving that the termination was for a valid or authorized cause; however, it is likewise incumbent upon the
employees that they should first establish by competent evidence the fact of their dismissal from employment.
The one who alleges a fact has the burden of proving it and the proof should be clear, positive and convincing.
In this case, aside from mere allegations, no evidence was proffered by the petitioners that they were dismissed
from employment. The records are bereft of any indication that petitioners were prevented from returning to
work or otherwise deprived of any work assignment by respondents.
In Abad v. Roselle Cinema [G.R. No. 141371, March 24, 2006, 485 SCRA 262, 272], the Court ruled that the
substantial evidence proffered by the employer that it had not terminated the employee should not be ignored
on the pretext that the employee would not have filed the complaint for illegal dismissal if he had not really
been dismissed. The Court held that such non sequitur reasoning cannot take the place of the evidence of both
the employer and the employee. Romeo Basay, et al. vs. Hacienda Consolation, et al., G.R. No. 175532, April
19, 2010.
Illegal Dismissal. The Court views with approval the observation of the CA and the NLRC that the employer
cannot justify the defense of abandonment as it failed to prove that indeed the employee had abandoned her
work. It did not even bother to send a letter to her last known address requiring her to report for work and
explain her alleged continued absences.
The ratiocination of the NLRC on this score merits the Courts imprimatur, viz: The law clearly spells out the
manner by which an unjustified refusal to return to work by an employee may be established. Thus,
respondent should have given complainant a notice with warning concerning her alleged absences (Section 2,
Rule XIV, Book V, Implementing Rules and Regulations of the Labor Code). The notice requirement actually
consists of two parts to be separately served on the employee to wit: (1) notice to apprise the employee of his
absences with a warning concerning a possible severance of employment in the event of an unjustified excuse
therefor, and (2) subsequent notice of the decision to dismiss in the event of an employees refusal to pay heed
to such warning. Only after complying with those requirements can it be reasonably concluded that the
employee actually abandoned his job. In the present case, more than two (2) months had already lapsed since
the employee allegedly started to absent herself when she instituted her action for illegal dismissal. During the
said period of time, no action was taken by the company regarding the employees alleged absences, something
which is quite peculiar had her employment not been severed at all. Accordingly, the Court found no merit in
the companys defense of abandonment in view of an utter lack of evidence to support the same. Hence, the
employees charge of illegal dismissal stands uncontroverted. Diversified Security, Inc. vs. Alicia
V. Bautista. G.R. No. 152234, April 15, 2010.
Project employee. The test for distinguishing a project employee from a regular employee is whether or
not he has been assigned to carry out a specific project or undertaking, with the duration and scope of his
engagement specified at the time his service is contracted. Here, it is not disputed that petitioner company
contracted respondent Trinidads service by specific projects with the duration of his work clearly set out in his
employment contracts. He remained a project employee regardless of the number of years and the various
projects he worked for the company.
Generally, length of service provides a fair yardstick for determining when an employee initially hired on a
temporary basis becomes a permanent one, entitled to the security and benefits of regularization. But this
standard will not be fair, if applied to the construction industry, simply because construction firms cannot
guarantee work and funding for its payrolls beyond the life of each project. And getting projects is not a
matter of course. Construction companies have no control over the decisions and resources of project
proponents or owners. There is no construction company that does not wish it has such control but the reality,
understood by construction workers, is that work depended on decisions and developments over which
construction companies have no say.
In this case, respondent Trinidads series of employments with petitioner company were co-terminous with its
projects. When its Boni Serrano-Katipunan Interchange Project was finished in December 2004, Trinidads
employment ended with it. He was not dismissed. His employment contract simply ended with the project for
which he had signed up. His employment history belies the claim that he continuously worked for the
company. Intervals or gaps separated one contract from another. William Construction Corp. and/or Teresita
Uy and William Uy vs. Jorge R. Trinidad, G.R. No. 183250, March 12, 2010 .
Reinstatement; reimbursement. An employee cannot be compelled to reimburse the salaries and wages he
received during the pendency of his appeal, notwithstanding the reversal by the NLRC of the LAs order of
reinstatement. The pertinent law on the matter is not concerned with the wisdom or propriety of the LAs order
of reinstatement, for if it was, then it should have provided that the pendency of an appeal should stay its
execution. After all, a decision cannot be deemed irrefragable unless it attains finality. College of the
Immaculate Concepcion vs. National Labor Relations Commission and Atty. Marius F. Carlos, Ph.D, G.R. No.
167563, March 22, 2010 .
Labor Code; interpretation . Another basic principle is that expressed in Article 4 of the Labor Code that all
doubts in the interpretation and implementation of the Labor Code should be interpreted in favor of the
workingman. This principle has been extended by jurisprudence to cover doubts in the evidence presented by
the employer and the employee. The petitioner has, at very least, shown serious doubts about the merits of the
companys case, particularly in the appreciation of the clinching evidence on which the NLRC and CA
decisions were based. In such contest of evidence, the Court applied Article 4 as basis to rule in favor of the
employee. In this case, the Court held that petitioner was constructively dismissed given the hostile and
discriminatory working environment he found himself in, particularly evidenced by the escalating acts of
unfairness against him that culminated in the appointment of another HRD manager without any prior notice to
him. Where no less than the companys chief corporate officer was against him, petitioner had no alternative
but to resign from his employment.
The Court also gave significance to the fact that petitioner sought almost immediate official recourse to contest
his separation from service through a complaint for illegal dismissal, and held that this is not the act of one
who voluntarily resigned; his immediate filing of a complaint characterizes him as one who deeply felt that he
had been wronged. Manolo A. Peaflor vs. Outdoor Clothing Manufacturing Corporation, et al., G.R. No.
177114, January 21, 2010.
Labor only contracting. 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 an independent contractor because the current labor rules expressly prohibit labor-only
contracting. 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:
(i) the contractor or subcontractor does not have substantial capital or investment which relates to the job, work
or service to be performed and the 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 the contractual employee.
In the instant case, the financial statements of Promm-Gem show that it has authorized capital stock of P1
million and a paid-in capital, or capital available for operations, of P500,000.00 as of 1990. It also has long
term assets worth P432,895.28 and current assets of P719,042.32. 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 clients aside from P&G. Under the circumstances, we find that Promm-Gem has substantial
investment, which relates to the work to be performed. Under these circumstances, Promm-Gem cannot be
considered a labor-only contractor.
On the other hand, the Articles of Incorporation of SAPS show that it has a paid-in capital of only P31,250.00.
There is no other evidence to prove how much its working capital and assets are. Furthermore, there is no
showing of substantial investment in tools, equipment or other assets.
SAPS lack of substantial capital is highlighted by the records which show that its payroll for its merchandisers
alone for one month would already total P44,561.00. It had 6-month contracts with P&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 of P31,250.00 is sufficient for
the period required for it to generate revenues to sustain its operations independently. Substantial capital refers
to capitalization used in the performance or completion of the job, work or service contracted out. In the
present case, SAPS has failed to show substantial capital.
Furthermore, the employees in this case performed merchandising and promotion of the products of P&G,
which are activities that the Court has considered directly related to the manufacturing 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 SAPS is engaged in labor-
only contracting. Joeb Aliviado, et al. vs. Procter & Gamble Philippines, Inc., et al., G.R. No. 160506,
March 9, 2010 .
Dismissal pursuant to union security clause; separate notice and haring required. GMC illegally dismissed
Casio, et al. because not only did GMC fail to make a determination of the sufficiency of evidence to support
the unions decision to expel Casio, et al., it also failed to accord the expelled union members procedural due
process, i.e., notice and hearing, prior to the termination of their employment.
GMC, by its own admission, did not conduct a separate and independent investigation to determine the
sufficiency of the evidence supporting the unions expulsion of Casio, et al. It simply acceded to the unions
demand. Consequently, GMC cannot insist that it has no liability for the payment of backwages and damages
to Casio, et al., and that the liability for such payment should fall only upon the union officers and board
members who expelled Casio, et al. GMC completely missed the point that the expulsion of Casio, et al. by
the union and the termination of employment of the same employees by GMC, although related, are two
separate and distinct acts. Despite a closed shop provision in the CBA, law and jurisprudence impose upon
GMC the obligation to accord Casio, et al. substantive and procedural due process before complying with the
unions demand to dismiss the expelled union members from service. The failure of GMC to carry out this
obligation makes it liable for illegal dismissal of Casio, et al. General Milling Corporation vs. Ernesto Casio,
et al. and Virgilio Pino, et al., G.R. No. 149552, March 10, 2010 .

. Management prerogatives; contract of perpetual employment. The Court cannot countenance the employees
claim that a contract of perpetual employment was ever constituted. While the Constitution recognizes the
primacy of labor, it also recognizes the critical role of private enterprise in nation-building and the prerogatives
of management. A contract of perpetual employment deprives management of its prerogative to decide whom
to hire, fire and promote, and renders inutile the basic precepts of labor relations. While management may
validly waive it prerogatives, such waiver should not be contrary to law, public order, public policy, morals or
good customs. An absolute and unqualified employment for life in the mold of petitioners concept of
perpetual employment is contrary to public policy and good customs, as it unjustly forbids the employer from
terminating the services of an employee despite the existence of a just or valid cause. It likewise compels the
employer to retain an employee despite the attainment of the statutory retirement age, even if the employee has
became a non-performing asset or, worse, a liability to the employer. Ronilo Sorreda vs. Cambridge
Electronics Corporation, G.R. No. 172927, February 11, 2010 .
Quitclaim; elements. It is true that the law looks with disfavor on quitclaims and releases by employees who
have been inveigled or pressured into signing them by unscrupulous employers seeking to evade their legal
responsibilities and frustrate just claims of employees. In certain cases, however, the Court has given effect to
quitclaims executed by employees if the employer is able to prove the following requisites, to wit: (1) the
employee executes a deed of quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the
parties; (3) the consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary to
law, public order, public policy, morals or good customs, or prejudicial to a third person with a right
recognized by law. Goodrich Manufacturing Corporation & Mr. Nilo Chua Goy vs. Emerlina Ativo, et
al., G.R. No. 188002, February 1, 2010.
Quitclaim; validity. In the case at bar, both the Labor Arbiter and the NLRC ruled that the employees executed
their quitclaims without any coercion from the company following their voluntary resignation from the
company. The contents of the quitclaim documents are simple, clear and unequivocal. The records of the case
are bereft of any substantial evidence to show that the employees did not know that they were relinquishing
their right short of what they had expected to receive and contrary to what they have so declared. Put
differently, at the time they were signing their quitclaims, respondents honestly believed that the amounts
received by them were fair and reasonable settlements of the amounts, which they would have received had
they refused to voluntarily resign from the said company. Goodrich Manufacturing Corporation & Mr. Nilo
Chua Goy vs. Emerlina Ativo, et al., G.R. No. 188002, February 1, 2010.
Vacation leave; scheduling. Although the preferred vacation leave schedule of employees should be given
priority, they cannot demand, as a matter of right, for their request to be automatically granted by the company.
If the employees were given the exclusive right to schedule their vacation leave then said right should have
been incorporated in the CBA. In the absence of such right and in view of the mandatory provision in the CBA
giving the company the right to schedule the vacation leave of its employees, the CBA prevails.
In the grant of vacation leave privileges to an employee, the employer is given the leeway to impose conditions
on the entitlement to and commutation of the same, as the grant of vacation leave is not a standard of law, but a
prerogative of management. It is a mere concession or act of grace of the employer and not a matter of right on
the part of the employee. It is, therefore, well within the power and authority of an employer to impose certain
conditions, as it deems fit, on the grant of vacation leaves, such as having the option to schedule the
same. PNCC Skyway Traffic Management and Security Division Workers Organization (PSTMSWDO),
represented by its President, Rene Soriano vs. PNCC Skyway Corporation), G.R. No. 171231, February 17,
2010
Preventive Suspension; Process. What the Rules require is that the employer act on the suspended workers
status of employment within the 30-day period by concluding the investigation either by absolving him of the
charges, or meting the corresponding penalty if liable, or ultimately dismissing him. If the suspension exceeds
the 30-day period without any corresponding action on the part of the employer, the employer must reinstate
the employee or extend the period of suspension, provided the employees wages and benefits are paid in the
interim.
In the present case, petitioner company had until May 20, 2002 to act on Taroys case. It did by terminating
him through a notice dated May 10, 2002, hence, the 30-day requirement was not violated even if the
termination notice was received only on June 4, 2002, absent any showing that the delayed service of the
notice on Taroy was attributable to Genesis Transport. Genesis Transport Service, Inc. et al.
vs. Unyon ng Malayang Manggagawa ng Genesis (UMMGT), et al., G.R. No. 182114, April 5, 2010.
Preventive Suspension; Process. What the Rules require is that the employer act on the suspended workers
status of employment within the 30-day period by concluding the investigation either by absolving him of the
charges, or meting the corresponding penalty if liable, or ultimately dismissing him. If the suspension exceeds
the 30-day period without any corresponding action on the part of the employer, the employer must reinstate
the employee or extend the period of suspension, provided the employees wages and benefits are paid in the
interim.
In the present case, petitioner company had until May 20, 2002 to act on Taroys case. It did by terminating
him through a notice dated May 10, 2002, hence, the 30-day requirement was not violated even if the
termination notice was received only on June 4, 2002, absent any showing that the delayed service of the
notice on Taroy was attributable to Genesis Transport. Genesis Transport Service, Inc. et al.
vs. Unyon ng Malayang Manggagawa ng Genesis (UMMGT), et al., G.R. No. 182114, April 5, 2010.
Project employee. The test for distinguishing a project employee from a regular employee is whether or
not he has been assigned to carry out a specific project or undertaking, with the duration and scope of his
engagement specified at the time his service is contracted. Here, it is not disputed that petitioner company
contracted respondent Trinidads service by specific projects with the duration of his work clearly set out in his
employment contracts. He remained a project employee regardless of the number of years and the various
projects he worked for the company.
Generally, length of service provides a fair yardstick for determining when an employee initially hired on a
temporary basis becomes a permanent one, entitled to the security and benefits of regularization. But this
standard will not be fair, if applied to the construction industry, simply because construction firms cannot
guarantee work and funding for its payrolls beyond the life of each project. And getting projects is not a
matter of course. Construction companies have no control over the decisions and resources of project
proponents or owners. There is no construction company that does not wish it has such control but the reality,
understood by construction workers, is that work depended on decisions and developments over which
construction companies have no say.
In this case, respondent Trinidads series of employments with petitioner company were co-terminous with its
projects. When its Boni Serrano-Katipunan Interchange Project was finished in December 2004, Trinidads
employment ended with it. He was not dismissed. His employment contract simply ended with the project for
which he had signed up. His employment history belies the claim that he continuously worked for the
company. Intervals or gaps separated one contract from another. William Construction Corp. and/or Teresita
Uy and William Uy vs. Jorge R. Trinidad, G.R. No. 183250, March 12, 2010 .
Reinstatement; reimbursement. An employee cannot be compelled to reimburse the salaries and wages he
received during the pendency of his appeal, notwithstanding the reversal by the NLRC of the LAs order of
reinstatement. The pertinent law on the matter is not concerned with the wisdom or propriety of the LAs order
of reinstatement, for if it was, then it should have provided that the pendency of an appeal should stay its
execution. After all, a decision cannot be deemed irrefragable unless it attains finality. College of the
Immaculate Concepcion vs. National Labor Relations Commission and Atty. Marius F. Carlos, Ph.D, G.R. No.
167563, March 22, 2010 .
Separation pay; termination for cause. Separation pay is only warranted when the cause for termination is not
attributable to the employees 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.
Jurisprudence has classified theft of company property as a serious misconduct and denied the award of
separation pay to the erring employee. In this case, the Court saw no reason why this same rule should not be
similarly applied in the case of Capor. She attempted to steal the property of her long-time employer. For
committing such misconduct, she is definitely not entitled to an award of separation pay.
Capors argument that despite the finding of theft, she should still be granted separation pay in light of her long
years of service with the Company did not persuade the Court. Indeed, length of service and a previously
clean employment record cannot simply erase the gravity of the betrayal exhibited by a malfeasant employee.
Length of service is not a bargaining chip that can simply be stacked against the employer. After all, an
employer-employee relationship is symbiotic where both parties benefit from mutual loyalty and dedicated
service. If an employer had treated his employee well, has accorded him fairness and adequate compensation
as determined by law, it is only fair to expect a long-time employee to return such fairness with at least some
respect and honesty. Thus, it may be said that betrayal by a long-time employee is more insulting and odious
for a fair employer. While we sympathize with Capors plight, being of retirement age and having served
petitioners for 39 years, we cannot award any financial assistance in her favor because it is not only against the
law but also a retrogressive public policy. Reno Foods, Inc., and/or Vicente Khu vs. Nagkakaisang Lakas ng
Manggagawa (NLM) Katipunan on behalf of its member, Nenita Capor, G.R. No. 164016, March 15, 2010
Suspension; leave without prior authority. 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. The Court, in the present case, saw nothing
in the language 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
its prior approval. In fact, 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 from the terms of the CBA.
Despite managements disapproval of his requested leave, the employee still went on leave, in open disregard
of his superiors orders. This rendered the employee open to the charge of insubordination, separately from his
absence without official leave. Malayan Employees Association-FFW and Rodolfo Mangalino vs. Malayan
Insurance Company, Inc., G.R. No. 181357, February 2, 2010.
Representation and Transportation Allowance; entitlement. Statutory law, as implemented by administrative
issuances and interpreted in decisions, has consistently treated RATA as distinct from salary. Unlike salary,
which is paid for services rendered, RATA belongs to a basket of allowances to defray expenses deemed
unavoidable in the discharge of office. Hence, RATA is paid only to certain officials who, by the nature of
their offices, incur representation and transportation expenses.
At any rate, the denial of RATA must be grounded on relevant and specific provision of law. By insisting that,
as requisite for her receipt of RATA, respondent must discharge her office as Bacnotans treasurer while on
reassignment at the La Union treasurers office, the DBM effectively punishes respondent for acceding to her
reassignment. Surely, the law could not have intended to place local government officials like respondent in the
difficult position of having to choose between disobeying a reassignment order or keeping an allowance.
Department of Budget and Management (DBM) vs. Olivia D. Leones, G.R. No. 169726, March 18, 2010 .
Reinstatement. Given the period that has lapsed and the inevitable change of circumstances that must have
taken place in the interim in the academic world and at AMACC, which changes inevitably affect current
school operations, the Court holds that in lieu of reinstatement the petitioners should be paid separation pay
computed on a trimestral basis from the time of separation from service up to the end of the complete trimester
preceding the finality of this Decision. The separation pay shall be in addition to the other awards, properly
recomputed, that the LA originally decreed. Yolanda M. Mercado, et al. vs. Ama Computer
College, Paraaque City, G.R. No. 183572, April 13, 2010.
Release, Waiver and Quitclaim . Talam was not an unlettered employee; he was an information technology
consultant and must have been fully aware of the consequences of what he was entering into. The quitclaim
was a voluntary act as there is no showing that he was coerced into executing the instrument; he received a
valuable consideration for his less than two years of service with the company. Thus, from all indications, the
release and quitclaim was a valid and binding undertaking that should have been recognized by the labor
authorities and the CA.
While the law frowns upon releases and quitclaims executed 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 laborers claims should be respected by the courts as the law between
the parties. In the Courts view, Talams release and quitclaim fall into the category of legitimate waivers as
defined by the Court.
With Talams voluntary execution of the release and quitclaim, the Court found the filing of the illegal
dismissal case tainted with bad faith. Neither can TSFI be made to answer for failure to
afford Talam procedural due process. The release and quitclaim, in the Courts mind, erased whatever
infirmities there might have been in the notice of termination as Talam had already voluntarily accepted his
dismissal through the release and quitclaim. As such, the written notice became academic; the notice, after all,
is merely a protective measure put in place by law and serves no useful purpose after protection has been
assured. The Court thus finds no basis for the conclusion that TSFI violated procedural due process and should
pay nominal damages. Francis Ray Talam vs. National Labor Relations Commission, 4th Division, Cebu
City, et al., G.R. No. 175040, April 6, 2010.
Resignation of Employee. While the letter states that Peaflors resignation was irrevocable, it does not
necessarily signify that it was also voluntarily executed. Precisely because of the attendant hostile and
discriminatory working environment, Peaflor decided to permanently sever his ties with Outdoor Clothing.
This falls squarely within the concept of constructive dismissal that jurisprudence defines, among others, as
involuntarily resignation due to the harsh, hostile, and unfavorable conditions set by the employer. It arises
when a clear discrimination, insensibility, or disdain by an employer exists and has become unbearable to the
employee. The gauge for constructive dismissal is whether a reasonable person in the employees position
would feel compelled to give up his employment under the prevailing circumstances. With the appointment
of Buenaobra to the position he then still occupied, Peaflor felt that he was being eased out and this
perception made him decide to leave the company.
The fact of filing a resignation letter alone does not shift the burden of proving that the employees dismissal
was for a just and valid cause from the employer to the employee. In Mora v. Avesco [G.R. No. 177414,
November 14, 2008, 571 SCRA 226], the Court ruled that should the employer interpose the defense of
resignation, it is still incumbent upon the employer to prove that the employee voluntarily resigned. Manolo
A. Peaflor vs. Outdoor Clothing Manufacturing Corp., et al., G.R. No. 177114, April 13, 2010.
March 2010 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on April 26, 2010 by Leslie C. Dy Posted in Labor Law Tagged compensable illness, constructive
dismissal,estoppel, illegal dismissal, jurisdiction, labor-only contracting, parties, POEA, project employee
Here are selected March 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:
Labor law
April 2010 Philippine Supreme Court Decisions
on Labor Law and Procedure
.
Sec 28
Posted on May 19, 2010 by Leslie C. Dy Posted in Labor Law Tagged backwages, certiorari, dishonesty, due process,illegal
dismissal, loss of trust and confidence, misconduct, reinstatement, res judicata, resignation, retrenchment, serious
misconduct, suspension, waiver
Here are selected April 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:
Labor Law
Reinstatement. Given the period that has lapsed and the inevitable change of circumstances that must have
taken place in the interim in the academic world and at AMACC, which changes inevitably affect current
school operations, the Court holds that in lieu of reinstatement the petitioners should be paid separation pay
computed on a trimestral basis from the time of separation from service up to the end of the complete trimester
preceding the finality of this Decision. The separation pay shall be in addition to the other awards, properly
recomputed, that the LA originally decreed. Yolanda M. Mercado, et al. vs. Ama Computer
College, Paraaque City, G.R. No. 183572, April 13, 2010.
May 2010 Philippine Supreme Court Decisions
on Labor Law and Procedure
Posted on June 22, 2010 by Leslie C. Dy Posted in Labor Law Tagged backwages, illegal dismissal, judgment
Here are selected May 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:
Labor law
June 2010 Philippine Supreme Court Decisions
on Labor Law and Procedure
Constructive dismissal; definition; transfer as management prerogative. Constructive dismissal is defined as a
quitting because continued employment is rendered impossible, unreasonable or unlikely, or when there is a
demotion in rank or a diminution of pay. It 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.
Here, there was no diminution of petitioners salary and other benefits. There was no evidence that she was
harassed or discriminated upon, or that respondents made it difficult for her to continue with her other duties.
Absent any evidence of bad faith, it is within the exercise of respondents management prerogative to transfer
some of petitioners duties, if, in their judgment, this would be more beneficial to the corporation. Estrella
Velasco vs. Transit Automotive Supply, Inc. and Antonio de Dios, G.R. No. 171327, June 18, 2010.
Constructive dismissal; off-detailing; resignation; notice requirement . The company evidently placed petitioner
on floating status after being relieved of her position. But, as the Court has repeatedly ruled, such act of off-
detailing does not amount to a dismissal so long as the floating status does not continue beyond a reasonable
time. In this case, the employees floating status ran up to more than six months as of August 16, 2002. For
this reason, the company may be considered to have constructively dismissed the employee from work as of
that date. Hence, petitioners purported resignation on October 15, 2002 could not have been legally possible.
The company claims that it gave petitioner notices on August 23, 2002 and September 2, 2002, asking her to
explain her failure to report for work and informing her that the company would treat such failure as lack of
interest in her continued employment. But these notices cannot possibly take the place of the notices required
by law as they came more than six months after the company placed her on floating status, at which time, the
employee is already deemed to have been constructively dismissed her from work. Elsa S. Mali-on v.
Equitable General Services Inc., G.R. No. 185269, June 29, 2010.
Death benefits; entitlement . In order to avail of death benefits, the death of the employee should occur during
the term of the employment contract. For emphasis, we reiterate that the death of a seaman during the term of
employment contract makes the employer liable to his heirs for death benefits, but if the seaman dies after his
contract of employment has expired, his beneficiaries are not entitled to the death benefits. Southeastern
Shipping, Southeastern Shipping Group, Ltd. vs. Federico U. Navarra, Jr., G.R. No. 167678, June 22, 2010.
Death benefits; post-medical examination; inadvertence of employer. In the cases of Philippines., Inc. v.
Joaquin [437 SCRA 608] and Rivera v. Wallem Maritime Services, Inc.[474 SCRA 714], the Supreme Court
stressed the importance of a post-employment medical examination or its equivalent for the award of death
benefits to seafarers and/or their representatives in compliance with POEA Memorandum Circular No. 055-96
and Department Order No. 33, Series of 1996, which provide that the seafarer must report to his employer for a
post-employment medical examination within three working days from the date of arrival, otherwise, benefits
under the POEA standard employment contract would be nullified. However, in the present case, the absence
of a post-employment medical examination cannot be used to defeat respondents claim since the failure to
subject the seafarer to this requirement was not due to the seafarers fault but to the inadvertence or deliberate
refusal of petitioners. Interorient Maritime Enterprises, Inc. et al. v. Leonora S. Remo, G.R. No. 181112, June
29, 2010.
Dismissal; breach of trust; lack of loss not a defense. The acts of the employee revealed a mind that was
willing to disregard bank rules and regulations when other branch officers concurred. Her defense that the bank
suffered no loss is of no moment. The focal point is that she betrayed the trust of the bank. Hence, the bank
rightfully terminated the services of the employee for willful breach of the trust that it reposed in her.
Luzviminda A. Ang vs. Philippine National Bank, G.R. No. 178762, June 16, 2010.
Dismissal; burden of proof. In termination cases, the burden of proof rests upon the employer to show that the
dismissal of the employee is for just cause and failure to do so would mean that the dismissal is not justified.
This is in consonance with the guarantee of security of tenure in the Constitution, and elaborated in the Labor
Code. A dismissed employee is not required to prove his innocence to the charges leveled against him by his
employer. The determination of the existence and sufficiency of a just cause must be exercised with fairness
and in good faith and after observing due process. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy
Ann Beloy vs. Marlyn Cuavas, G .R. No. 169523, June 16, 2010 .
Dismissal; exercised with compassion and understanding; doubts resolved in favor of employee. While an
employer has its own interest to protect, and pursuant thereto, it may terminate a managerial employee for a
just cause, such prerogative to dismiss or lay off an employee must be exercised without abuse of discretion.
Its implementation should be tempered with compassion and understanding. The employer should bear in mind
that, in the exercise of the said prerogative, what is at stake is not only the employees position, but his very
livelihood, his very breadbasket. Indeed, the consistent rule is that if doubts exist between the evidence
presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. The
employer must affirmatively show rationally adequate evidence that the dismissal was for justifiable cause.
Thus, when the breach of trust or loss of confidence alleged is not borne by clearly established facts, as in this
case, such dismissal on the cited grounds cannot be allowed. Lima Land, Inc., Leandro Javier, Sylvia Duque
and Premy Ann Beloy vs. Marlyn Cuavas, G .R. No. 169523, June 16, 2010 .
Dismissal; gross neglect of duty; duty to family is no defense. Dr. Estampas defense is not acceptable. A
persons duty to his family is not incompatible with his job-related commitment to come to the rescue of
victims of disasters. Disasters do not strike every day. Besides, knowing that his job as senior medical health
officer entailed the commitment to make a measure of personal sacrifice, he had the choice to resign from it
when he realized that he did not have the will and the heart to respond. Dr. Edilberto Estampa, Jr. vs.
Government of Davao, G.R. No. 190681, June 21, 2010.
Dismissal; loss of confidence not entitled to separation pay . It is significant to stress that for there to be a valid
dismissal based on loss of trust and confidence, the breach of trust must 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 employers loss of confidence in the employee.
In the case of Aromin v. NLRC [553 SCRA 273], the assistant vice-president of BPI was validly dismissed for
loss of trust and confidence. The Court disallowed the payment of separation pay on the ground that he was
found guilty of willful betrayal of trust, a serious offense akin to dishonesty.Bank of the Philippine Islands and
BPI Family Bank vs. Hon. National Labor Relations Commission (1st Division) and Ma. Rosario N.
Arambulo, G.R. No. 179801. June 18, 2010.
Dismissal; loss of trust and confidence; managerial employees. Loss of trust and confidence, as a just cause for
termination of employment, is premised on the fact that an employee concerned holds a position where greater
trust is placed by management and from whom greater fidelity to duty is correspondingly expected. This
includes managerial personnel entrusted with confidence on delicate matters, such as the custody, handling, or
care and protection of the employers property. The betrayal of this trust is the essence of the offense for which
an employee is penalized.
It must be noted, however, that in a plethora of cases, the Supreme Court has distinguished the treatment of
managerial employees from that of rank-and-file personnel, insofar as the application of the doctrine of loss of
trust and confidence is concerned. Thus, with respect to rank-and-file personnel, loss of trust and confidence,
as ground for valid dismissal, requires proof of involvement in the alleged events in question, and that mere
uncorroborated assertions and accusations by the employer will not be sufficient. But as regards a managerial
employee, the mere existence of a basis for believing that such employee has breached the trust of his
employer would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond
reasonable doubt is not required, it being sufficient that there is some basis for such loss of confidence, such as
when the employer has reasonable ground to believe that the employee concerned is responsible for the
purported misconduct, and the nature of his participation therein renders him unworthy of the trust and
confidence demanded of his position. Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann Beloy vs.
Marlyn Cuavas, G .R. No. 169523, June 16, 2010 .
Dismissal; mere negligence or carelessness not sufficient ground for loss of confidence. Respondents
negligence or carelessness in her duties, however, are not justifiable grounds for petitioners loss of trust and
confidence in her, especially in the absence of any malicious intent or fraud on respondents part. Loss of trust
and confidence stems from a breach of trust founded on a dishonest, deceitful or fraudulent act. In the case at
bar, respondent did not commit any act which was dishonest or deceitful. She did not use her authority as the
Finance and Administration Manager to misappropriate company property nor did she abuse the trust reposed
in her by petitioners with respect to her responsibility to implement company rules. The most that can be
attributed to respondent is that she was remiss in the performance of her duties. This, though, does not
constitute dishonest or deceitful conduct which would justify the conclusion of loss of trust and confidence.
Lima Land, Inc., Leandro Javier, Sylvia Duque and Premy Ann Beloy vs. Marlyn Cuavas, G .R. No. 169523,
June 16, 2010.
Dismissal for just cause, separation pay allowed in exceptional cases. While 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 separation pay, the Court has allowed in numerous cases the grant of separation pay or some other
financial assistance to an employee dismissed for just causes on the basis of equity.
In the leading case of Philippine Long Distance Telephone Co. v. NLRC [164 SCRA 671] the Court stated that
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. In
granting separation pay to respondent, the NLRC and Court of Appeals both adhered to this jurisprudential
precept and cleared respondent of bad faith. Bank of the Philippine Islands and BPI Family Bank vs. Hon.
National Labor Relations Commission (1st Division) and Ma. Rosario N. Arambulo, G.R. No. 179801, June
18, 2010.
Employee benefit; total disability construed. It has been held that disability is intimately related to ones
earning capacity. It should be understood less on its medical significance but more on the loss of earning
capacity. Total disability does not mean absolute helplessness. In disability compensation, it is not the injury,
which is compensated, but rather the incapacity to work resulting in the impairment of ones earning capacity.
Thus, permanent disability is the inability of a worker to perform his job for more than 120 days, regardless of
whether or not he loses the use of any part of his body. Oriental Ship Management Co., Inc. vs. Romy B.
Bastol, G.R. No. 186289, June 29, 2010.
Employer-Employee Relationship; agents of insurance companies; exception to the Insular case; Our ruling in
the first Insular case [Insular Insurance v. NLRC, 179 SCRA 459] case did not foreclose the possibility of an
insurance agent becoming an employee of an insurance company; if evidence exists showing that the company
promulgated rules or regulations that effectively controlled or restricted an insurance agents choice of
methods or the methods themselves in selling insurance, an employer-employee relationship would be present.
The existence of an employer-employee relationship is thus determined on a case-to-case basis depending on
the evidence on record.Gregorio V. Tongko v. The Manufacturers Life Insurance Co. (Phils) and Renato A.
Vergel De Dios, G.R. No. 167622, June 29, 2010.
Nature of employer; privatization; entitlement to benefits. Although the transformation of the PNB from a
government-owned corporation to a private one did not result in a break in its life as juridical person, the same
idea of continuity cannot be said of its employees. Section 27 of Presidential Proclamation 50 provided for the
automatic termination of employer-employee relationship upon privatization of a government-owned and
controlled corporation. Further, such privatization cannot deprive the government employees involved of their
accrued benefits or compensation.
As for possible benefits accruing after privatization, the same should be deemed governed by the Labor Code
since the PNB that rehired the employee has become a private corporation. Under the Omnibus Rules
Implementing the Labor Code, Book VI, Rule I, Section 7, the employees separation from work for a just
cause does not entitle her to termination pay. Luzviminda A. Ang vs. Philippine National Bank, G.R. No.
178762, June 16, 2010.
Nature of employer; privatization no defense; continuity of offense . The offense for which petitioner was
removed took place when the government still owned PNB and she was then a government employee. But
while PNB began as a government corporation, it did not mean that its corporate being ceased and was
subsequently reestablished when it was privatized. It remained the same corporate entity before, during, and
after the change over with no break in its life as a corporation. Consequently, the offenses that were committed
against the bank before its privatization continued to be offenses against the bank after the
privatization. Luzviminda A. Ang vs. Philippine National Bank, G.R. No. 178762, June 16, 2010.
Prescription of labor claims; overseas contract workers. The employment of seafarers, including claims for
death benefits, is governed by the contracts they sign every time they are hired or rehired; and as long as the
stipulations therein are not contrary to law, morals, public order or public policy, they have the force of law
between the parties.
In Cadalin v. POEAs Administrator [238 SCRA 721, 764] we held that Article 291 of the Labor Code covers
all money claims from employer-employee relationship. It is not limited to money claims recoverable under
the Labor Code, but applies also to claims of overseas contract workers.
Article 291 of the Labor Code is the law governing prescription of money claims of seafarers, a class of
overseas contract workers. This law prevails over Section 28 of the Standard Employment Contract for
Seafarers, which provides for claims to be brought only within one year from the date of the seafarers return
to the point of hire. Thus, for the guidance of all, Section 28 of the Standard Employment Contract for
Seafarers, insofar as it limits the prescriptive period for the filing of money claims by seafarers, is hereby
declared null and void. The applicable provision is Article 291 of the Labor Code, it being more favorable to
the seafarers and more in accord with the States declared policy to afford full protection to labor, which
provides for a three-year prescriptive period. Southeastern Shipping, Southeastern Shipping Group, Ltd. vs.
Federico U. Navarra, Jr., G.R. No. 167678, June 22, 2010.
Quitclaims; general rule; requirements for validity; instances when it was annulled. As a rule, quitclaims,
waivers, or releases are looked upon with disfavor and are largely ineffective to bar claims for the measure of a
workers legal rights. To be valid, a Deed of Release, Waiver and/or Quitclaim must meet the following
requirements: (1) that there was no fraud or deceit on the part of any of the parties; (2) that the consideration
for the quitclaim is credible and reasonable; and (3) that the contract is not contrary to law, public order, public
policy, morals or good customs, or prejudicial to a third person with a right recognized by law.
Courts have stepped in to annul questionable transactions, especially where there is clear proof that a waiver,
for instance, was obtained from an unsuspecting or a gullible person; or where the agreement or settlement was
unconscionable on its face. A quitclaim is ineffective in barring recovery of the full measure of a workers
rights, and the acceptance of benefits therefrom does not amount to estoppel. Moreover, a quitclaim in which
the consideration is scandalously low and inequitable cannot be an obstacle to the pursuit of a workers
legitimate claim. Interorient Maritime Enterprises, Inc. et al. v. Leonora S. Remo, G.R. No. 181112, June 29,
2010.
Retirement benefits; does not include allowances. Executive Order No. 756 temporary measure; statutory
construction. Section 6 of Executive Order No. 756 (E.O. 756), which provides for the computation of
retirement proceeds including allowances, does not provide for a permanent retirement plan, as against the
prohibition of Section 28, Subsection (b) of Commonwealth Act No. 186 (C.A. 186), as amended. The E.O.
756 should be read adjunct to its mandate of reorganizing the Philippine International Trading Corporation.
The increased benefit under E.O. 756 was clearly meant as an incentive for employees who retire, resign or are
separated from service during or as a consequence of the reorganization. As a temporary measure, it cannot be
interpreted as an exception to the general prohibition against separate or supplementary insurance and/or
retirement or pension plans under C.A. 186, as amended.
In reconciling E.O. 756 with C.A.186, as amended, uppermost in the mind of the Court is the fact that the best
method of interpretation is that which makes laws consistent with other laws which are to be harmonized rather
than having one considered repealed in favor of the other. Philippine International Trading Corporation vs.
Commission on Audit, G.R. No. 183517, June 22, 2010.
Resignation; burden of proof. The rule in termination cases is that the employer bears the burden of proving
that he dismissed his employee for a just cause. And, when the employer claims that the employee resigned
from work, the burden is on the employer to prove that he did so willingly. Whether that is the case would
largely depend on the circumstances surrounding such alleged resignation. Those circumstances must be
consistent with the employees intent to give up work.Elsa S. Mali-on v. Equitable General Services Inc., G.R.
No. 185269, June 29, 2010.
Solidary liability of employers; proof of bad faith. Based on MAM Realty Development Corporation v.
NLRC [244 SCRA 797], for corporate officers to be held solidarily liable in labor disputes there must be
evidence of bad faith or malice. Querubin L. Alba and Rizalinda D. De Guzman vs. Robert L. Yupangco, G.R.
No. 188233, June 29, 2010.
.
July 2010 Philippine Supreme Court Decisions
on Labor Law and Procedure
Posted on August 27, 2010 by Leslie C. Dy Posted in Labor Law Tagged due process, employee benefits, employer-employee
relationship, illegal dismissal, intra-union dispute, jurisdiction, labor-only
contracting, NLRC, redundancy,retirement, retrenchment, suspension
Here are selected July 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:
Labor Law
Assumption of jurisdiction by Secretary of Labor; authority to decide on legality of dismissals arising from
strike. The assumption of jurisdiction powers granted to the Labor Secretary under Article 263(g) is not limited
to the grounds cited in the notice of strike or lockout that may have preceded the strike or lockout; nor is it
limited to the incidents of the strike or lockout that in the meanwhile may have taken place. As the term
assume jurisdiction connotes, the intent of the law is to give the Labor Secretary full authority to resolve all
matters within the dispute that gave rise to or which arose out of the strike or lockout, including cases over
which the labor arbiter has exclusive jurisdiction.
In the present case, what the Labor Secretary refused to rule upon was the dismissal from employment of
employees who violated the return to work order and participated in illegal acts during a strike. This was an
issue that arose from the strike and was, in fact, submitted to the Labor Secretary, through the unions motion
for the issuance of an order for immediate reinstatement of the dismissed officers and the companys
opposition to the motion. The dismissal issue was properly brought before the Labor Secretary and he was
mistaken in ruling that the matter is legally within the exclusive jurisdiction of the labor arbiter to
decide. Bagong Pagkakaisa ng Manggagawa ng Triumph International, et al. vs. Secretary of Department of
Labor and Employment, et al./Triumph International (phils.), Inc. vs. Bagong Pagkakaisa ng Manggagawa ng
Triumph International, et al., G.R. No. 167401, July 5, 2010.
Bargaining deadlock; award; findings of Secretary of Labor. Unless there is a clear showing of grave abuse of
discretion, the Court cannot, and will not, interfere with the expertise of the Secretary of Labor. The award
granted by the Labor Secretary in resolving the bargaining deadlock, drawn as they were from a close
examination of the submissions of the parties, do not indicate any legal error, much less any grave abuse of
discretion, and should not be disturbed. Bagong Pagkakaisa ng Manggagawa ng Triumph International, et al.
vs. Secretary of Department of Labor and Employment, et al./Triumph International (phils.), Inc. vs. Bagong
Pagkakaisa ng Manggagawa ng Triumph International, et al., G.R. No. 167401, July 5, 2010.
Dismissal of employees; just cause. Theft committed by an employee is a valid reason for his dismissal by the
employer. Although as a rule this Court leans over backwards to help workers and employees continue with
their employment or to mitigate the penalties imposed on them, acts of dishonesty in the handling of company
property, petitioners income in this case, are a different matter. Maribago Bluewater Beach Resort, Inc. vs.
Nito Dual, G.R. No. 180660, July 20, 2010.
Dismissal of employees; requirements. The validity of an employees dismissal from service hinges on the
satisfaction of the two substantive requirements for a lawful termination. These are, first, whether the
employee was accorded due process the basic components of which are the opportunity to be heard and to
defend himself. This is the procedural aspect. And second, whether the dismissal is for any of the causes
provided in the Labor Code of the Philippines. This constitutes the substantive aspect. Erector Advertising
Sign Group, Inc. and Arch Jimy C. Amoroto vs. Expedito Cloma, G.R. No. 167218, July 2, 2010.
Dismissal of employees; procedural due process. Furnishing the employee with a suspension order prior to his
notice of termination does not satisfy the requirement of a first notice. It implies that the employer has already
decided, for the reasons stated therein, to suspend the employee from work in the company, and the wording of
the order in the present case gives no indication that the employee is being given an opportunity to submit his
defense or explanation. Erector Advertising Sign Group, Inc. and Arch Jimy C. Amoroto vs. Expedito
Cloma, G.R. No. 167218, July 2, 2010.
Dismissal of employees; procedural due process. In order to validly dismiss an employee, he must be accorded
both substantive and procedural due process by the employer. Procedural due process requires that the
employee be given a notice of the charge against him, an ample opportunity to be heard, and a notice of
termination. Even if the aforesaid procedure is conducted after the filing of the illegal dismissal case, the
legality of the dismissal, as to its procedural aspect, will be upheld provided that the employer is able to show
that compliance with these requirements was not a mere afterthought. New Puerto Commercial and Richard
Lim vs. Rodel Lopez and Felix Gavan,G.R. No. 169999, July 26, 2010.
Employee benefits; 13th month pay; definition of basic salary. The term basic salary of an employee for the
purpose of computing the thirteenth-month pay was interpreted to include all remuneration or earnings paid by
the employer for services rendered, but does not include allowances and monetary benefits which are not
integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave
credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these
salary-related benefits should be included as part of the basic salary in the computation of the thirteenth-month
pay if, by individual or collective agreement, company practice or policy, the same are treated as part of the
basic salary of the employees. Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-
NLU, G.R. No. 188949, July 26, 2010
Employee benefits; 13th month pay; company policy or practice. The practice of petitioner in giving 13
th
-
month pay based on the employees gross annual earnings which included the basic monthly salary, premium
pay for work on rest days and special holidays, night shift differential pay and holiday pay continued for
almost thirty (30) years and has ripened into a company policy or practice which cannot be unilaterally
withdrawn. The petitioner cannot claim that the practice arose from an erroneous application of the law since
no doubtful or difficult question of law is involved in this case. The guidelines set by the law are not difficult
to decipher. Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU, G.R. No.
188949, July 26, 2010
Employee benefits; death benefits. For the death of a seafarer to be compensable under the 1996 POEA
Standard Employment Contract, the death must occur during the term of his contract of employment. In this
case, the seaman died 2 years after he was repatriated to the Philippines due to medical reasons, hence the
claimants are not entitled to receive death benefits under the contract. The decedents heirs claimed that the
death should be compensable since the nature of his work as a seaman triggered the illnesses that eventually
led to his death. However, the Court noted that though the immediate cause of the seamans death was
pneumonia, the underlying cause of death was advanced HIV (AIDS). Since the claimants failed to prove that
the decedent acquired HIV during his 2-month employment aboard the respondents vessel, their claim for
death benefits was denied. Lydia Escarcha vs. Leonis Navigation Co., Inc., et al., G.R. No. 182740, July 5,
2010.
Employees; government agency. The Armed Forces of the Philippines Commissary and Exchange Services
(AFPCES) is a government agency performing proprietary functions. By clear implication of law, all AFPCES
personnel should therefore be classified as government employees and any complaint for illegal dismissal
involving such employees should be filed with the CSC and not the NLRC. Such fact cannot be negated by the
failure of AFPCES to follow appropriate civil service rules in the hiring, appointment, discipline and dismissal
of employees. Neither can it be denied by the fact that AFPCES chose to enroll its employees in the SSS
instead of the GSIS. Such considerations cannot be used against the CSC to deprive it of its jurisdiction.
Hence, the Labor Arbiters decision in the illegal dismissal case filed by AFPCES employees is a total nullity
for having been rendered without jurisdiction. Magdalena Hidalgo, et al. vs. Republic of the Philippines, G.R.
No. 179793, July 5, 2010.
Employer-employee relationship; evidence. Any doubt arising from the evaluation of evidence as between the
employer and the employee must be resolved in favor of the latter. It is settled jurisprudence that the burden of
proving payment of monetary claims rests on the employer. It was entirely within the companys power to
present personnel files, payrolls, remittances, and other similar documents which would have proven payment
of respondents money claims as these documents should necessarily be in its possession; hence, failure to
present such evidence must be taken against it. Dansart Security Force & Allied Services Company and Danilo
A. Sarte vs. Ms. Jean O. Bagoy, G.R. No. 168495, July 2, 2010.
Government agencies; reorganization. A reorganization is valid provided it is done in good faith. As a general
rule, the test of good faith lies in whether the purpose of the reorganization is for economy or to make the
bureaucracy more efficient. Removal from office as a result of reorganization must, thus, pass the test of good
faith. A demotion in office is tantamount to removal if no cause is shown for it. Consequently, before a
demotion may be effected pursuant to a reorganization, the observance of the rules on bona fide abolition of
public office is essential.Virginia D. Bautista vs. Civil Service Commission and Devt. Bank of the
Philippines, G.R. No. 185215, July 22, 2010.
Government agencies; reorganization; personal liability of local official. The RTC of Cadiz declared void a
resolution that reorganized the city government and effectively purged the city government of Cadiz of all
employees who opposed the mayor politically or disagreed with him in his policies. The RTC ordered the
payment of moral damages to the workers, but it was not clear if the payment was to be made by the city
government or by Mayor Valera, in his personal capacity. The Court held that Varela is personally liable to pay
moral damages. Settled is the principle that a public official may be liable in his personal capacity for whatever
damage he may have caused by his act done with malice and in bad faith or beyond the scope of his authority
or jurisdiction. In the complaint, the employees stated that, due to the illegal acts of the Defendant, Plaintiffs
suffered mental torture and anguish, sleepless nights, wounded feelings, besmirched reputation and social
humiliation. The State can never be the author of illegal acts. The complaint merely identified Varela as the
mayor of Cadiz City. It did not categorically state that Varela was being sued in his official capacity. The
identification and mention of Varela as the mayor of Cadiz City did not automatically transform the action into
one against Varela in his official capacity. The allegations in the complaint determine the nature of the cause
of action. Eduardo Valera vs. Ma. Daisy Revalez, G.R. No. 171705, July 29, 2010.
Illegal dismissal; burden of proof; filing of complaint not sufficient to disprove abandonment. In illegal
dismissal cases, the employer bears the burden of proving that the termination was for a valid or authorized
cause. However, before the employer is asked to prove that the dismissal was legal, the employee must first
establish by substantial evidence the fact of his dismissal from service. Logically, if there is no dismissal, then
there can be no question as to its legality or illegality.
Under normal circumstances, an employees act of filing an illegal dismissal complaint against his employer is
inconsistent with abandonment. However, the courts should not use that one act to conclude that an employee
was constructively dismissed when substantial evidence proves otherwise. In this case, substantial evidence
proves that Pulgar was not constructively dismissed, and that he had abandoned his duties in order to avoid an
investigation being conducted by his employer. Philippine Rural Reconstruction vs. Virgilio Pulgar, G.R. No.
169227. July 5, 2010.
Illegal dismissal; misrepresentation of cause is an act of bad faith. The complainant, Rio Remo, was dismissed
from service on the ground of retrenchment. However, the records show that Sentinel hired a replacement soon
after Remos dismissal, proving that Sentinels financial distress was not as serious as it claimed, and that
retrenchment was not the real reason for Remos dismissal. Sentinel concealed its true intention and committed
misrepresentation when it claimed that Remos dismissal was due to serious financial losses. This act of
misrepresentation is an act of active bad faith that fatally tainted Remos dismissal and rendered it
illegal. Sentinel Integrated Services, Inc. vs. Rio Jose Remo, G.R. No. 188223, July 5, 2010.
Illegal dismissal; relief available to employee. An illegally dismissed employee is entitled to reinstatement
without loss of seniority rights and other privileges and to full backwages, inclusive of allowances, and to her
other benefits or their monetary equivalent, computed from the time the compensation was withheld up to the
time of actual reinstatement. Where reinstatement is no longer feasible, separation pay equivalent to at least
one month salary or one month salary for every year of service, whichever is higher, a fraction of at least six
months being considered as one whole year, should be awarded to respondent. An award for moral and
exemplary damages cannot be justified unless the employer had acted in bad faith. 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. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim
vs. Helen Binamira, G.R. No. 170464. July 12, 2010.
Labor-only contracting. Despite the fact that the service contracts contain stipulations which are earmarks of
independent contractorship, they do not make it legally so. The language of a contract is neither determinative
nor conclusive of the relationship between the parties. The parties cannot dictate, by a declaration in a contract,
the character of the contractors business as a labor-only contractor or a legitimate job contractor, which should
be determined by the criteria set by statute. Here, a closer look at AMPCOs actual status and participation
regarding the employment of the complainants clearly belie the contents of the written service contract. San
Miguel Corporation vs. Vicente Semillan, et al., G.R. No. 164257, July 5, 2010.
Labor-only contracting; evidence. A Certificate of Registration as an Independent Contractor is not conclusive
evidence of such status. In distinguishing between permissible job contracting and prohibited labor-only
contracting, the totality of the facts and the surrounding circumstances of the case are to be considered. San
Miguel Corporation vs. Vicente Semillan, et al., G.R. No. 164257, July 5, 2010.
Liability of officers for illegal dismissal. Corporate officers are only solidarily liable with the corporation for
the illegal termination of services of employees if they acted with malice or bad faith. In Philippine American
Life and General Insurance v. Gramaje, bad faith is defined as a state of mind affirmatively operating with
furtive design or with some motive of self-interest or ill will or for ulterior purpose. It implies a conscious and
intentional design to do a wrongful act for a dishonest purpose or moral obliquity. The lack of authorized or
just cause to terminate ones employment and the failure to observe due process do not ipso facto mean that the
corporate officer acted with malice or bad faith. There must be independent proof of malice or bad faith which
is lacking in the present case. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen
Binamira, G.R. No. 170464. July 12, 2010.
Preventive suspension. Preventive suspension is justified where the employees continued employment poses a
serious and imminent threat to the life or property of the employer or of the employees co-workers. Without
this kind of threat, preventive suspension is not proper. Jose P. Artificio vs. National Labor Relations
Commission, RP Guardians Security Agency, Inc. Juan Victor K. Laurilla, Alberto Aguirre, and Antonio A.
Andres, G.R. No. 172988, July 26, 2010
Public employees; demotion. There is demotion when an employee is appointed to a position that results in a
diminution in duties, responsibilities, status or rank which may or may not involve a reduction in salary. Where
an employee is appointed to a position with the same duties and responsibilities with a rank and salary higher
than those he enjoyed in his previous position, there is no demotion and the appointment is valid. Virginia D.
Bautista vs. Civil Service Commission and Devt. Bank of the Philippines, G.R. No. 185215, July 22, 2010.
Public employees; downgrading of employees. The summary reallocation of Gos position to a lower degree
resulting in the corresponding downgrading of his salary infringed the policy of non-diminution of pay which
the Court recognized and applied in Philippine Ports Authority v. Commission on Audit, as well as in the
subsequent sister cases involving benefits of government employees. Running through the gamut of these
cases is the holding that the affected government employees shall continue to receive benefits they were
enjoying as incumbents upon the effectivity of RA 6758. Relevant to the critical issue at hand is Sec. 15 (b) of
PD 985 which, as amended by Sec. 13 (a) of RA 6758, pertinently reads: Sec. 13. Pay Reduction If
an employee is moved from a higher to a lower class, he shall not suffer a reduction in salary: Provided, That
such movement is not the result of a disciplinary action or voluntary demotion. Gonzalo S. Go, Jr. vs. CA and
Office of the President, G.R. No. 172027. July 29, 2010
Redundancy; definition; requisites. Redundancy exists when the service capability of the workforce is in
excess of what is reasonably needed to meet the demands of the enterprise. A redundant position is one
rendered superfluous by any number of factors, such as over hiring of workers, decreased volume of business,
dropping of a particular product line previously manufactured by the company, or phasing out of a service
activity previously undertaken by the business. Under these conditions, the employer has no legal obligation to
keep in its payroll more employees than are necessary for the operation of its business.
For a valid implementation of a redundancy program, the employer must comply with the following requisites:
(1) written notice served on both the employees and the DOLE at least one month prior to the intended date of
termination of employment; (2) payment of separation pay equivalent to at least one month pay for every year
of service; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in
ascertaining what positions are to be declared redundant and accordingly abolished. Lambert Pawnbrokers and
Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No. 170464. July 12, 2010.
Retirement; retirement age. The retirement age is primarily determined by the existing agreement or
employment contract. Absent such an agreement, the retirement age under Article 287 of the Labor Code will
apply. Amelia R. Obusan vs. Philippine National Bank, G.R. No. 181178, July 26, 2010.
Retirement; retirement plan. Retirement plans allowing employers to retire employees who have not yet
reached the compulsory retirement age of 65 years are not per se repugnant to the constitutional guaranty of
security of tenure. By its express language, the Labor Code permits employers and employees to fix the
applicable retirement age at 60 years or below, provided that the employees retirement benefits under any
CBA and other agreements shall not be less than those provided by law. Amelia R. Obusan vs. Philippine
National Bank, G.R. No. 181178, July 26, 2010.
Retrenchment; definition; requisites. 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, seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of
materials, conversion of the plant to a new production program, or automation. It is a management prerogative
resorted to avoid or minimize business losses.
To effect a valid retrenchment, the following elements must be present: (1) the retrenchment is reasonably
necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but
substantial, serious and real, or only if expected, are reasonably imminent as perceived objectively and in good
faith by the employer; (2) the employer serves written notice both to the employee/s concerned and the DOLE
at least one month before the intended date of retrenchment; (3) the employer pays the retrenched employee
separation pay in an amount prescribed by law; (4) the employer exercises its prerogative to retrench in good
faith; and (5) the employer uses fair and reasonable criteria in ascertaining who would be retrenched or
retained. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim vs. Helen Binamira, G.R. No.
170464. July 12, 2010
Retrenchment; decrease in income is not business loss. A sharp drop in income from P1million to
only P665,000.00 is not the kind of business losses contemplated by the Labor Code that would justify a valid
retrenchment. A mere decline in gross income cannot in any manner be considered as serious business losses.
It should be substantial, sustained and real. Lambert Pawnbrokers and Jewelry corporation and Lambert Lim
vs. Helen Binamira, G.R. No. 170464. July 12, 2010.
Separation pay; as equitable relief. Having determined that the imposition of preventive suspension was proper
and that the complainant was not illegally dismissed, the Court found no basis to grant backwages. However,
given the attendant circumstances of the case that complainant had been working with the company for a
period of sixteen (16) years without any previous derogatory record the Court held that the ends of social and
compassionate justice would be served if the employee is given some equitable relief in the form of separation
pay. Jose P. Artificio vs. National Labor Relations Commission, RP Guardians Security Agency, Inc. Juan
victor K. Laurilla, Alberto Aguirre, and Antonio A. Andres, G.R. No. 172988, July 26, 2010
August 2010 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on September 16, 2010 by Leslie C. Dy Posted in Labor Law Tagged abandonment, backwages, breach of trust,burden
of proof, damages, employee benefits, illegal dismissal, illegal strike, labor-only contracting, loss of trust and
confidence, merger, negligence, NLRC, probationary employment, project
employee, rehabilitation, reinstatement,retirement, security of tenure, serious misconduct, union
Here are selected August 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:
Labor Law
Dismissal; abandonment. Time and again, the Supreme Court has held that abandonment is totally inconsistent
with the immediate filing of a complaint for illegal dismissal, more so if the same is accompanied by a prayer
for reinstatement. In the present case, however, petitioner filed his complaint more than one year after his
alleged termination from employment. Moreover, petitioner did not ask for reinstatement in the complaint
form, which he personally filled up and filed with the NLRC. The prayer for reinstatement is made only in the
Position Paper that was later prepared by his counsel. This is an indication that petitioner never had the
intention or desire to return to his job. Elpidio Calipay vs. National Labor Relations Commission, et al., G.R.
No. 166411, August 3, 2010.
Dismissal; burden of proof. In termination cases, the employer has the burden of proving, by substantial
evidence that the dismissal is for just cause. If the employer fails to discharge the burden of proof, the
dismissal is deemed illegal. In the present case, BCPI failed to discharge its burden when it failed to present
any evidence of the alleged fistfight, aside from a single statement, which was refuted by statements made by
other witnesses and was found to be incredible by both the Labor Arbiter and the NLRC. Alex Gurango vs.
Best Chemicals and Plastic, Inc., et al., G.R. No. 174593, August 25, 2010.
Dismissal; burden of proof. The law mandates that the burden of proving the validity of the termination of
employment rests with the employer. Failure to discharge this evidentiary burden would necessarily mean that
the dismissal was not justified and, therefore, illegal. Unsubstantiated suspicions, accusations, and conclusions
of employers do not provide for legal justification for dismissing employees. In case of doubt, such cases
should be resolved in favor of labor, pursuant to the social justice policy of labor laws and the
Constitution. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No.
171630, August 8, 2010.
Dismissal; due process. In termination proceedings of employees, procedural due process 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 apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the second informs the employee of the employers
decision to dismiss him. The requirement of a hearing is complied with as long as there was an opportunity to
be heard, and not necessarily that an actual hearing was conducted. Pharmacia and Upjohn, Inc., et al. vs.
Ricardo P. Albayda, Jr., G.R. No. 172724, August 23, 2010.
Dismissal; due process. The Labor Code recognizes the right to due process of all workers, without distinction
as to the cause of their termination, even if the cause was their supposed involvement in strike-related violence.
In the present case, PHIMCO sent a letter to the affected union members/officers, directing them to explain
within 24 hours why they should not be dismissed for the illegal acts they committed during the strike; three
days later, the union members/officers were informed of their dismissal from employment. We do not find this
company procedure to be sufficient compliance with due process. It does not appear from the evidence that the
union officers were specifically informed of the charges against them. Also, the short interval of time between
the first and second notice shows that a mere token recognition of the due process requirements was made,
indicating the companys intent to dismiss the union members involved, without any meaningful resort to the
guarantees accorded them by law. PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association
(PILA), et al., G.R. No. 170830, August 11, 2010.
Dismissal; employees past infractions. A previous offense may be used as valid justification for dismissal
from work only if the past infractions are related to the subsequent offense upon which the basis of termination
is decreed. The respondents previous incidents of tardiness in reporting for work were entirely separate and
distinct from his latest alleged infraction of forgery. Hence, the same could no longer be utilized as an added
justification for his dismissal. Besides, respondent had already been sanctioned for his prior infractions. To
consider these offenses as justification for his dismissal would be penalizing respondent twice for the same
offense. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No. 171630,
August 8, 2010.
Dismissal; feng shui; breach of trust and confidence. The Court finds that the complainants allegations are
more credible and that she was dismissed from her employment because the Feng Shui master found that
complainants Chinese Zodiac Sign was a mismatch to that of respondents. This is not a just and valid cause
for an employees dismissal.
In contrast, respondents pleadings and evidence suffer from several inconsistencies and the affidavits
presented by respondents only pertain to petty matters that are not sufficient to support respondents alleged
loss of trust and confidence. To be a valid cause for termination of employment, the act or acts constituting
breach of trust must have been done intentionally, knowingly, and purposely; and they must be founded on
clearly established facts. Wensha Spa Center, inc. and/or Xu Zhi Jie ,vs. Loreta T. Yung, G.R. No. 185122,
August 16, 2010.
Dismissal; gross negligence and loss of confidence. Gross negligence connotes want of care in the
performance of ones duties. Petitioners failure on 3 separate occasions to require clients to sign the requisite
documents constituted gross negligence. Furthermore, it has been held that if the employees are
cashiers, managers, supervisors, salesmen or other personnel occupying positions of responsibility, the
employers loss of trust and confidence in said employees may justify the termination of their employment. As
the Banks Personal Banking Manager, petitioners failure to comply with basic banking policies and
procedures were inimical to the interests of the bank, making his dismissal based on loss of confidence
justified. Jesus E. Dycoco, Jr.vs. Equitable PCI Bank (now Banco de Oro), Rene Bunaventura and Siles
Samalea, G.R. No. 188271, August 16, 2010.
Dismissal; loss of trust and confidence. Employers are allowed a wider latitude of discretion in terminating the
services of employees who perform functions which by their nature require the employers full trust and
confidence and the mere existence of basis for believing that the employee has breached the trust of the
employer is sufficient. However, this does not mean that the said basis may be arbitrary and unfounded. 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.
It must rest on substantial grounds and not on the employers arbitrariness, whim, caprice or suspicion;
otherwise, the employee would eternally remain at the mercy of the employer. Century Canning Corporation,
Ricardo T. Po, Jr., et al. vs. Vicente Randy R. Ramil, G.R. No. 171630, August 8, 2010.
Dismissal; probationary employment . Though the acts charged against de Castro took place when he was still
under probationary employment, the records show that de Castro was dismissed on the ninth month of his
employment with LBNI. By then, he was already a regular employee by operation of law. As a regular
employee, de Castro was entitled to security of tenure and his illegal dismissal from LBNI justified the awards
of separation pay, backwages, and damages Carlos De Castro vs. Liberty Broadcasting Network, Inc. and
Edgardo Quigue, G.R. No. 165153. August 25, 2010.
Dismissal; project employees; damages. Prior or advance notice of termination is not part of procedural due
process if the termination of a project employee is brought about by the completion of the contract or phase
thereof. This is because completion of the work or project automatically terminates the employment, in which
case, the employer is, under the law, only obliged to render a report to the DOLE. Therefore, failing to give
project employees advance notice of their termination is not a violation of procedural due process and cannot
be the basis for the payment of nominal damages. D.M. Consunji, Inc. vs. Antonio Gobres, et al., G.R. No.
169170, August 8, 2010.
Dismissal; separation pay and backwages. The awards of separation pay and backwages are not mutually
exclusive and both may be given to the respondent. The normal consequences of a finding that an employee
has been illegally dismissed are, firstly, that the employee becomes entitled to reinstatement to his former
position without loss of seniority rights and, secondly, the payment of backwages corresponding to the period
from his illegal dismissal up to actual reinstatement. These are two separate and distinct remedies granted to
the employee and the inappropriateness or non-availability of one does not carry with it the inappropriateness
or non-availability of the other. Under the doctrine of strained relations, the payment of separation pay has
been considered an acceptable alternative to reinstatement when the latter option is no longer desirable or
viable. The grant of separation pay is a proper substitute only for reinstatement; it cannot be an adequate
substitute for both reinstatement and backwages. Century Canning Corporation, Ricardo T. Po, Jr., et al. vs.
Vicente Randy R. Ramil, G.R. No. 171630, August 8, 2010.
Dismissal; serious misconduct. 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 under the law, (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.
It is noteworthy that prior to this incident, there had been several cases of theft and vandalism involving both
respondent companys property and personal belongings of other employees. In order to address this issue of
losses, respondent company issued two memoranda implementing an intensive inspection procedure and
reminding all employees that those who will be caught stealing and performing acts of vandalism will be dealt
with in accordance with the companys Code of Conduct. Despite these reminders, complainant took the
packing tape and was caught during the routine inspection. All these circumstances point to the conclusion that
it was not just an error of judgment, but a deliberate act of theft of company property. Nagkakaisang Lakas ng
Manggagawa sa Keihin (NLMK-OLALIA-KMU) and Helen Valenzuela vs. Keihin Philippines
Corporation, G.R. No. 171115, August 9, 2010.
Dismissal; union security. In terminating the employment of an employee by enforcing the union security
clause, the employer needs to determine and prove that: (1) the union security clause is applicable; (2) the
union is requesting for the enforcement of the union security provision in the CBA; and (3) there is sufficient
evidence to support the decision of the union to expel the employee from the union. These requisites constitute
just cause for terminating an employee based on the union security provision of the CBA.
The petitioner failed to satisfy the third requirement since nothing in the records would show that respondents
failed to maintain their membership in good standing in the union. Significantly, petitioners act of dismissing
respondents stemmed from the latters act of signing an authorization letter to file a petition for certification
election as they signed it outside the freedom period. The mere signing of an authorization letter before the
freedom period is not sufficient ground to terminate the employment of respondents inasmuch as the petition
itself was actually filed during the freedom period. The court emphasizes anew that the employer is bound to
exercise caution in terminating the services of his employees especially so when it is made upon the request of
a labor union pursuant to the Collective Bargaining Agreement. Picop Resources Incorporated (PRI) vs.
Anacleto L. Taeca, et al., G.R. No. 160828, August 9, 2010.
Dimissal; use of illegal drugs. The law is clear that drug tests shall be performed only by authorized drug
testing centers. In this case, Sulpicio Lines failed to prove that S.M. Lazo Clinic is an accredited drug testing
center nor did it deny the complainants allegation that S.M. Lazo Clinic was not accredited. Also, only a
screening test was conducted to determine if the complainant was guilty of using illegal drugs. Sulpicio Lines
did not confirm the positive result of the screening test with a confirmatory test as required by R.A. 9165.
Hence, Sulpicio Lines failed to indubitably prove that Nacague was guilty of using illegal drugs and failed to
clearly show that it had a valid and legal cause for terminating Nacagues employment. When the alleged valid
cause for the termination of employment is not clearly proven, as in this case, the law considers the matter a
case of illegal dismissal. Jeffrey Nacague vs. Sulpicio Lines, Inc., G.R. No. 172589, August 8, 2010.
Dismissal; validity. The company did not adduce any evidence to prove that Siazars dismissal had been for a
just or authorized cause, as in fact it had been its consistent stand that it did not terminate him and that he quit
on his own. But given the findings of the Court that the company had indeed dismissed Siazar and that such
dismissal has remained unexplained, there can be no other conclusion but that the dismissal was
illegal. Agricultural and Industrial Supplies Corporation, et al. vs. Jueber P. Siazar, et al., G.R. No. 177970,
August 25, 2010.
Due process; decision rendered without due process. The violation of a partys right to due process raises a
serious jurisdictional issue that cannot be glossed over or disregarded at will. Where the denial of the
fundamental right to due process is apparent, a decision rendered in disregard of that right is void for lack of
jurisdiction. This rule is equally true in quasi-judicial and administrative proceedings, for the constitutional
guarantee that no man shall be deprived of life, liberty, or property without due process is unqualified by the
type of proceedings (whether judicial or administrative) where he stands to lose the same. Winston F. Garcia
vs. Mario I. Molina, et al./Winston F. Garcia Vs. Mario I. Molina, et al., G.R. No. 157383/G.R. No. 174137,
August 10, 2010.
Employee; evaluation and promotion. The fact that employees were re-classified from Job Grade Level 1 to
Job Grade Level 2 as a result of a job evaluation program does not automatically entail a promotion or grant
them an increase in salary. Of primordial consideration is not the nomenclature or title given to the employee,
but the nature of his functions. What transpired in this case was only a promotion in nomenclature. The
employees continued to occupy the same positions they were occupying prior to the job evaluation. Moreover,
their job titles remained the same and they were not given additional duties and responsibilities. SCA Hygiene
Products Corporation Employees Association-FFW vs. SCA Hygiene Products Corporation, G.R. No. 182877,
August 9, 2010.
Employee; security of tenure. A workers security of tenure is guaranteed by the Constitution and the Labor
Code. Under the security of tenure guarantee, a worker can only be terminated from his employment for cause
and after due process. For a valid termination by the employer: (1) the dismissal must be for a valid cause as
provided in Article 282, or for any of the authorized causes under Articles 283 and 284 of the Labor Code; and
(2) the employee must be afforded an opportunity to be heard and to defend himself. A just and valid cause for
an employees dismissal must be supported by substantial evidence, and before the employee can be dismissed,
he must be given proper notice of such cause/s and an adequate opportunity to be heard. In the process, the
employer bears the burden of proving that the dismissal of an employee was for a valid cause. Its failure to
discharge this burden renders the dismissal unjustified and, therefore, illegal. Wensha Spa Center, Inc. and/or
Xu Zhi Jie vs. Loreta T. Yung, G.R. No. 185122, August 16, 2010.
Employee benefit; time of death. The death should be deemed compensable under the ECC since Henry was
on his way back to Manila in order to be on time and be ready for work the next day when his accidental death
occurred. He should already be deemed en route to the performance of his duty at the time of the accident. It
should be noted that Henrys superior allowed him to travel to La Union to visit his ailing mother on the
condition that that he return the next day. Under these facts, Henry was in the course of complying with his
superiors order when he met his fatal accident. To be sure, he was not in an actual firefighting or accident
situation when he died, but returning to work as instructed by his superior is no less equivalent to compensable
performance of duty under Section 1, Rule III of the ECC Rules. Government Service Insurance System vs.
Felicitas Zarate, as substituted by her heirs, namely Melanie Zarate, et al., G.R. No. 170847, August 3, 2010.
Illegal dismissal; effect of rehabilitation proceedings. The existence of the Stay Order which would generally
authorize the suspension of judicial proceedings could not have affected the Courts action on the present
case due to the petitioners failure to raise the pendency of the rehabilitation proceedings in its memorandum to
the Court. At any rate, a stay order simply suspends all actions for claims against a corporation undergoing
rehabilitation; it does not work to oust a court of its jurisdiction over a case properly filed before it. Thus, the
Courts ruling on the principal issue of the case stands. Nevertheless, with LBNIs manifestation that it is still
undergoing rehabilitation, the Court resolves to suspend the execution of our Decision until the termination of
the rehabilitation proceedings. Carlos De Castro vs. Liberty Broadcasting Network, Inc. and Edgardo
Quigue, G.R. No. 165153. August 25, 2010.
Job contracting. In permissible job contracting, the principal agrees to put out or farm out with a 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. The test is whether the independent contractor has contracted to do the
work according to his own methods and without being subject to the principals control except only as to the
results, he has substantial capital, and he has assured 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 and welfare benefits. Spic n Span Services Corp. vs. Gloria Paje, et al., G.R. No. 174084, August 25,
2010.
Management prerogative; transfer of employees. 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, privileges and other benefits. Should the employer fail to overcome this burden of
proof, the employees transfer shall be tantamount to constructive dismissal. Pharmacia and Upjohn, Inc., et
al. vs. Ricardo P. Albayda, Jr., G.R. No. 172724, August 23, 2010.
Merger; employee terms and conditions. That BPI is the same entity as FEBTC after the merger is but a legal
fiction intended as a tool to adjudicate rights and obligations between and among the merged corporations and
the persons that deal with them. Although in a merger it is as if there is no change in the personality of the
employer, there is in reality a change in the situation of the employee. Once an FEBTC employee is absorbed,
there are presumably changes in his condition of employment even if his previous tenure and salary rate is
recognized by BPI. It is reasonable to assume that BPI would have different rules and regulations and company
practices than FEBTC and it is incumbent upon the former FEBTC employees to obey these new. Not the least
of these changes is the fact that prior to the merger FEBTC employees were employees of an unorganized
establishment and after the merger they became employees of a unionized company that had an existing CBA
with the certified union. Thus, although in a sense BPI is continuing FEBTCs employment of these absorbed
employees, BPIs employment of these absorbed employees will not be under exactly the same terms and
conditions as stated in the latters employment contracts with FEBTC. Bank of the Philippine Islands vs. BPI
Employees Union-Davao Chapter-Federation of Unions in BPI Unibank, G.R. No. 164301, August 10, 2010.
Reinstatement of employee; doctrine of strained relations. Under the doctrine of strained relations, the payment
of separation pay has been considered an acceptable alternative to reinstatement when the latter option is no
longer desirable or viable. On the one hand, such payment liberates the employee from what could be a highly
oppressive work environment. On the other, the payment releases the employer from the grossly unpalatable
obligation of maintaining in its employ a worker it could no longer trust. Wensha Spa Center, Inc. and/or Xu
Zhi Jie vs. Loreta T. Yung,G.R. No. 185122, August 16, 2010.
Retirement pay; applicability to employees on commission basis. Even if the petitioner as bus conductor was
paid on commission basis, he falls within the coverage of R.A. 7641 and its implementing rules. Thus, his
retirement pay should include the cash equivalent of 5-days SIL and 1/12 of 13th month pay. The NLRCs
reliance on the case of R & E Transport, Inc. as a basis for ruling that bus conductors are not covered by the
law on SIL and 13
th
month pay is erroneous since that involved a taxi driver who was paid according to the
boundary system. There is a difference between drivers paid under the boundary system and conductors
who are paid on commission basis. In practice, taxi drivers do not receive fixed wages and retain only those
sums in excess of the boundary or fee they pay to the owners or operators of the vehicles. Conductors, on the
other hand, are paid a certain percentage of the bus earnings for the day. Rodolfo J. Serrano vs. Severino
Santos Transit and/or Severino Santos, G.R. No. 187698, August 9, 2010.
Separation pay. In those instances where an employee has been validly dismissed for causes other than serious
misconduct or those reflecting on his moral character, separation pay may still be granted after giving
considerable weight to his long years of employment. In this case, equity considerations dictate that
respondents tenure be computed from 1978, the year when respondent started working for Upjohn, and not
only from 1996, when the merger of Pharmacia and Upjohn took place. Pharmacia and Upjohn, Inc., et al. vs.
Ricardo p. Albayda, Jr., G.R. No. 172724, August 23, 2010.
Strike; validity of strike. Despite the validity of the purpose of a strike and the unions compliance with the
procedural requirements, a strike may still be held illegal where the means employed are illegal. While the
strike had not been marred by actual violence and patent intimidation, the picketing that respondent PILA
officers and members undertook as part of their strike activities effectively blocked the free ingress to and
egress from PHIMCOs premises, thus preventing non-striking employees and company vehicles from entering
the PHIMCO compound. In this manner, the picketers violated Article 264(e) of the Labor Code and tainted
the strike with illegality. PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association (PILA), et
al., G.R. No. 170830, August 11, 2010.
Union; eligibility of confidential employees to join. Confidential employees are defined as those who (1) assist
or act in a confidential capacity, (2) to persons who formulate, determine, and effectuate management policies
in the field of labor relations. The two criteria are cumulative, and both must be met if an employee is to be
considered a confidential employee that is, the confidential relationship must exist between the employee and
his supervisor, and the supervisor must handle the prescribed responsibilities relating to labor relations. In the
present case, there is no showing that the secretaries/clerks and checkers assisted or acted in a confidential
capacity to managerial employees and obtained confidential information relating to labor relations policies.
And even assuming that they had exposure to internal business operations of the company, as respondent
claims, this is not per se ground for their exclusion in the bargaining unit of the rank-and-file
employees. Tunay na Pagkakaisa ng Manggagawa sa Asia Brewery vs. Asia Brewery, Inc., G.R. No. 162025,
August 3, 2010.
Union; liability for invalid strike. The effects of illegal strikes, outlined in Article 264 of the Labor Code, make
a distinction between participating workers and union officers. The services of an ordinary striking worker
cannot be terminated for mere participation in an illegal strike; proof must be adduced showing that he or she
committed illegal acts during the strike. The services of a participating union officer, on the other hand, may be
terminated, not only when he actually commits an illegal act during a strike, but also if he knowingly
participates in an illegal strike.PHIMCO Industries, Inc. vs. PHIMCO Industries Labor Association (PILA), et
al., G.R. No. 170830, August 11, 2010.
Union shop; effect of merger. All employees in the bargaining unit covered by a Union Shop Clause in their
CBA with management are subject to its terms. However, under law and jurisprudence, the following kinds of
employees are exempted from its coverage, namely, (1) employees who at the time the union shop agreement
takes effect are bona fide members of a religious organization which prohibits its members from joining labor
unions on religious grounds; (2) employees already in the service and already members of a union other than
the majority at the time the union shop agreement took effect; (3) confidential employees who are excluded
from the rank and file bargaining unit; and (4) employees excluded from the union shop by express terms of
the agreement. In the absence of any of these recognized exceptions, there is no basis to conclude that the
terms and conditions of employment under a valid CBA in force in the surviving corporation should not be
made to apply to the absorbed employees. Bank of the Philippine Islands vs. BPI Employees Union-Davao
Chapter-Federation of Unions in BPI Unibank, G.R. No. 164301, August 10, 2010.
October 2010 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on November 22, 2010 by Leslie C. Dy Posted in Labor Law Tagged appeal, backwages, damages, employer-
employee relationship, evidence, illegal dismissal, jurisdiction, labor-only contracting, loss of
confidence, negligence,probationary employment, redundancy, reinstatement, retirement, separa, serious misconduct
Here are selected October 2010 rulings of the Supreme Court of the Philippine on labor law and procedure:
Compensable illness. Respondent is entitled to sickness wages because the shooting pain in his right foot is an
injury which he suffered during the course of his employment. This is in consonance with the Standard Terms
and Conditions Governing the Employment of Filipino Seafarers On Board Ocean-Going Vessels of the
Department of Labor and Employment. Applying the said provisions of this standard contract, respondent is
entitled to receive sickness wages covering the maximum period of 120 days. Moreover, petitioners violated
the contract when it failed to provide continuous treatment for respondent in accordance with the
recommendation of their company physician. Because of this failure, respondent was forced to seek
immediate medical attention at his own expense. Thus, he is also entitled to reimbursement of his medical
expenses. Varorient Shipping Co., Inc., et al. vs. Gil Flores, G.R. No. 161934, October 6, 2010
Compensable illness. For an injury or illness to be duly compensated under the terms of the Philippine
Overseas Employment Administration-Standard Employment Contract (POEA-SEC), there must be a showing
that the injury or illness and the ensuing disability occurred during the effectivity of the employment contract.
Moreover, all of these conditions must be satisfied 1.) The seafarers work must involve the risks described
in the POEA-SEC; 2.) The disease was contracted as a result of the seafarers exposure to the described risks;
3.) The disease was contracted within a period of exposure and under such other factors necessary to contract
it; and 4.) There was no notorious negligence on the part of the seafarer. Specifically, with respect to mental
diseases, the POEA-SEC requires that it must be due to traumatic injury to the head which did not occur in this
case. In fact, respondent claimed that he became depressed due to the frequent verbal abuse he received from
his German superiors. However, he failed to show concrete proof that, if indeed he was subjected to abuse, it
directly resulted in his depression. Philippine Transmarine Carriers, Inc., Global Navigation, Ltd. vs.. Silvino
A. Nazam, G.R. No. 190804. October 11, 2010.
Constructive dismissal; transfer. It is management prerogative to transfer or assign employees from one office
or area of operation to another. However, the employer must show that the transfer is not unreasonable,
inconvenient or prejudicial to the employee, or that it does not involve a demotion in rank or a diminution of
his salaries, privileges and other benefits. Should the employer fail to overcome this burden, the employees
transfer shall be tantamount to constructive dismissal. In the instant case, Del Villars demotion is readily
apparent in his new designation as a mere Staff Assistant to the Corporate Purchasing and Materials Control
Manager from being Transportation Services Manager. The two posts are not of the same weight in terms of
duties and responsibilities. Moreover, while Del Villars transfer did not result in the reduction of his salary,
there was a diminution in his benefits because as a mere Staff Assistant, he could no longer enjoy the use of a
company car, gasoline allowance, and annual foreign travel, which he previously enjoyed as Transportation
Services Manager. Thus, Del Villar was clearly constructively dismissed.Coca Cola Bottlers Philippines, Inc.
vs. Angel U. Del Villar, G.R. No. 163091, October 6, 2010.
Dismissal; closure of business. Petitioner terminated the employment of respondents on the ground of closure
or cessation of operation of the establishment which is an authorized cause for termination under Article 283 of
the Labor Code. While it is true that a change of ownership in a business concern is not proscribed by law, the
sale or disposition must be motivated by good faith as a condition for exemption from liability. In the instant
case, however, there was, in fact, no change of ownership. Petitioner did not present any documentary
evidence to support its claim that it sold the same to ALPS Transportation. On the contrary, it continuously
operates under the same name, franchises and routes and under the same circumstances as before the alleged
sale. Thus, no actual sale transpired and, as such, there is no closure or cessation of business that can serve as
an authorized cause for the dismissal of respondents. Peafrancia Tours and Travel Transport, Inc. vs. Joselito
P. Sarmiento and Ricardo S. Catimbang, G.R. No. 178397, October 20, 2010.
Dismissal; constructive dismissal. There is constructive dismissal if an act of clear discrimination, insensibility,
or disdain by an employer becomes so unbearable on the part of the employee that it would foreclose any
choice by him except to forego his employment. It also exists where there is cessation of work because
continued employment is rendered impossible, unreasonable or unlikely, such as when an offer involves a
demotion in rank and a diminution in pay. In the present case, what made it impossible, unreasonable or
unlikely for respondent to continue working for SHS was the unlawful withholding of his salary. He then lost
no time in submitting his resignation letter and eventually filing a complaint for illegal dismissal just a few
days after his salary was withheld. These circumstances are inconsistent with voluntary resignation and bolster
the finding of constructive dismissal. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No.
185814, October 13, 2010.
Dismissal; corporate officer. It is not the nature of the services performed, but on the manner of creation of the
office that distinguishes corporate officers who may be ousted from office at will and ordinary corporate
employees who may only be terminated for just cause. Under Section 25 of the Corporation Code, a position
must be expressly mentioned in the By-Laws in order to be considered as a corporate office. Thus, the creation
of an office pursuant to a By-Law provision giving a president the power to create an office does not qualify as
a By-Law position. In the present case, the position of Vice President for Finance and Administration which
respondent held was merely created by Matlings President pursuant to the companys By-Laws. It is not a
corporate office or By-Law position, and therefore, respondent was not a corporate officer who could be ousted
from office at will. Matling Industrial and Commercial Corp., et al. vs. Ricardo R. Coros, G.R. No. 157802,
October 13, 2010.
Dismissal; gross and habitual neglect. Under Article 282 (b) of the Labor Code, an employer may terminate an
employee for gross and habitual neglect of duties. Gross negligence connotes want of care in the performance
of ones duties. Habitual neglect implies repeated failure to perform ones 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. Assuming arguendo that respondent was negligent, although the Court found
otherwise, the lapse or inaction could only be regarded as a single or isolated act of negligence that cannot be
categorized as habitual and, hence, not a just cause for his dismissal. St. Lukes Medical Center, Inc. and
Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.
Dismissal; loss of confidence. Loss of confidence as a just cause for termination of employment is premised on
the fact that the employee concerned holds a position of trust and confidence. This situation holds where a
person is entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of
the employers property. However, 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. In the instant case, the Resolution of the PAL Board of Directors, underscored respondents acts of
mismanagement and gross incompetence which resulted in huge financial losses for petitioner. As a general
rule, employers are allowed wider latitude of discretion in terminating the employment of managerial
personnel or those who, while not of similar rank, perform functions which by their nature require the
employers full trust and confidence. This must be distinguished from the case of ordinary rank and file
employees, whose termination on the basis of these same grounds requires a higher proof of involvement in the
events in question. Philippine Airlines, Inc. vs. National Labor Relations Commission and Aida M.
Quijano, G.R. No. 123294, October 20, 2010
Dismissal; probationary employee . Although respondent was a probationary employee, he is nonetheless
entitled to security of tenure. Section 3 (2) Article 13 of the Constitution guarantees that right. In using the
expression all workers, the Constitution puts no distinction between a probationary and a permanent or
regular employee. This means that probationary employees cannot be dismissed except for cause or for failure
to qualify as regular employees (i.e., to meet the performance standards set by the company to be eligible for
regular employment). SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814, October 13,
2010.
Dismissal; requirement. In dismissing an employee, the employer must furnish him with two written notices:
the first notice apprises the employee of the particular acts or omissions for which his dismissal is sought, and
the second is a subsequent notice, which informs the employee of the employers decision to dismiss him. An
administrative hearing must likewise be held in order to give the employee a further opportunity to be heard.
Petitioner hospital failed to comply with the rule on twin notice and hearing as it merely required respondent to
give his written explanation and, thereafter, ordered his dismissal. St. Lukes Medical Center, Inc. and Robert
Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.
Dismissal; serious misconduct. Serious misconduct as a valid cause for the dismissal of an employee is defined
simply as improper or wrongful conduct. It is a transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of
judgment. To be serious, the misconduct must be of such grave and aggravated character and not merely trivial
or unimportant. Moreover, it must be related to the performance of the employees duties such as would show
him to be unfit to continue working for the employer. On the other hand, moral turpitude has been defined as
everything which is done contrary to justice, modesty, or good morals; an act of baseness, vileness or
depravity in the private and social duties which a man owes his fellowmen, or to society in general, contrary to
justice, honesty, modesty, or good morals. In the case at bar, the transgressions imputed to private respondent
have never been firmly established as deliberate and willful acts. At the very most, they can only be
characterized as unintentional, albeit major, lapses in professional judgment. Philippine Airlines, Inc. vs.
National Labor Relations Commission and Aida M. Quijano, G.R. No. 123294, October 20, 2010.
Employer-employee relationship. That complainants were employees of SIP is clear from the fact that SIP paid
their salary. When complainants charged SIP of underpayment, SIP even interposed the defense of free board
and lodging given to complainants. Furthermore, the IDs issued to complainants bear the signature of
Alejandro C. Pablo, proprietor of SIP. Likewise, the memoranda issued to complainants regarding their
absences without leave were signed by Pablo. All these clearly show that SIP is the employer of complainants.
Although GMPC engaged the services of SIP to operate a canteen, SIP and its proprietors could not be
considered as labor-only contractors or mere agents of GMPC because they exercised the essential elements of
an employment relationship with the complainants such as hiring, payment of wages and the power of
control.S.I.P. Food House and Mr. and Mrs. Alejandro Pablo Vs. Restituto Batolina, et al., G.R. No. 192473,
October 11, 2010.
Employer-employee relationship; test. The elements to determine the existence of an employment relationship
are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal;
and (d) the employers power to control the employees conduct. The most important of these elements is the
employers control of the employees conduct, not only as to the result of the work to be done, but also as to
the means and methods to accomplish it. It should be remembered that the control test merely calls for the
existence of the right to control, and not necessarily the exercise thereof. Based on this four-fold test, Manila
Water emerges as the employer of respondent collectors. Respondent bill collectors were individually hired by
the contractor, but were under the direct control and supervision of Manila Water. This control is manifested in
the fact that respondent bill collectors reported daily to the branch offices of Manila Water to remit their
collections with the specified monthly targets and comply with the collection reporting procedures prescribed
by the latter. Accordingly, respondent bill collectors are employees of petitioner Manila Water. Manila Water
Company, Inc. vs. Jose J. Dalumpines, et al., G.R. No. 175501, October 4, 2010.
Evidentiary doubts construed in favor of labor. Although it cannot be determined with certainty whether
respondent worked for the entire period from November 16 to November 30, 2005, the consistent rule is that if
doubt exists between the evidence presented by the employer and that by the employee, the scales of justice
must be tilted in favor of the latter in line with the policy mandated by Articles 2 and 3 of the Labor Code to
afford protection to labor and construe doubts in favor of labor. In view of petitioners failure to satisfy their
burden of proof, respondent is presumed to have worked during the period in question and is, accordingly,
entitled to his salary. Therefore, the withholding of respondents salary by petitioners is contrary to Article 116
of the Labor Code and, thus, unlawful. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No.
185814, October 13, 2010.
Illegal dismissal; full backwages and reinstatement. Under Republic Act No. 6715, employees who are
illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary
equivalent, computed from the time their actual compensation was withheld from them up to the time of their
actual reinstatement. If reinstatement is no longer possible, the backwages shall be computed from the time of
their illegal termination up to the finality of the decision. Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del
Villar, G.R. No. 163091, October 6, 2010.
Illegal dismissal; moral and exemplary damages. Award of moral and exemplary damages for an illegally
dismissed employee is proper where the employee had been harassed and arbitrarily terminated by the
employer. Moral damages may be awarded to compensate one for injuries such as mental anguish, besmirched
reputation, wounded feelings, and social humiliation occasioned by the employers unreasonable dismissal of
the employee. The award of such damages is based not on the Labor Code but on the Civil Code. These
damages, however, are not intended to enrich the illegally dismissed employee. Thus, the Court found it
proper to reduce the award of moral damages from P500,000 to P100,000.00 and exemplary damages from
P500,000 to P50,000.00. The reduced amounts are deemed sufficient to assuage the sufferings experienced by
Del Villar and to set an example for the public good. Coca Cola Bottlers Philippines, Inc. vs. Angel U. Del
Villar, G.R. No. 163091, October 6, 2010.
Illegal dismissal; reinstatement and full backwages. Probationary employees who are unjustly dismissed during
the probationary period are entitled to reinstatement and payment of full backwages and other benefits and
privileges from the time they were dismissed up to their actual reinstatement. Respondent is, thus, entitled to
reinstatement without loss of seniority rights and other privileges as well as to full backwages, inclusive of
allowances and other benefits or their monetary equivalent computed from the time his compensation was
withheld up to the time of actual reinstatement. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R.
No. 185814, October 13, 2010.
Illegal dismissal; reinstatement and payment of backwages. Petitioners lack of just cause and non-compliance
with the procedural requisites in terminating respondents employment renders them guilty of illegal
dismissal. Consequently, under Article 279 of the Labor Code, as amended, respondent is entitled to
reinstatement to his former position without loss of seniority rights and payment of backwages inclusive of
allowances and other benefits, or their monetary equivalent computed from the time the compensation was not
paid up to the time of actual reinstatement. St. Lukes Medical Center, Inc. and Robert Kuan vs. Estrelito
Nazario, G.R. No. 152166, October 20, 2010.
Illegal dismissal; separation pay in lieu of reinstatement. If reinstatement proves impracticable, and hardly in
the best interest of the parties, perhaps due to the lapse of time since the employees dismissal, or if the
employee decides not to be reinstated, respondent should be awarded separation pay in lieu of reinstatement.
In the present case, since reinstatement is no longer feasible due to the long passage of time, petitioners are
required to pay respondent his separation pay equivalent to one (1) months pay for every year of service.
Petitioners are thus ordered to pay respondent his backwages and separation pay. The awards of separation pay
and backwages are not mutually exclusive and both may be given to respondent. St. Lukes Medical Center,
Inc. and Robert Kuan vs. Estrelito Nazario, G.R. No. 152166, October 20, 2010.
Job contracting; conditions. Job contracting is permissible only if the following conditions are met: 1) the
contractor carries on an independent business and undertakes the contract work on his own 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 the work except as to the results
thereof; and 2) the contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of the business.
Substantial capital or investment refers to capital stocks and subscribed capitalization in the case of
corporations, tools, equipment, implements, machineries, and work premises, actually and directly used by the
contractor or subcontractor in the performance or completion of the job, work, or service contracted out. The
right to control refers to the right reserved to the person for whom the services of the contractual workers are
performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching
that end. Manila Water Company, Inc. vs. Jose J. Dalumpines, et al., G.R. No. 175501, October 4, 2010.
Jurisdiction; dismissal. Pursuant to Article 217 (a) 2 of the Labor Code, as amended, the illegal dismissal of an
officer or other employee of a private employer is properly cognizable by the labor arbiter. However, where the
complaint for illegal dismissal concerns a corporate officer, the controversy is considered an intra-corporate
dispute and falls under the jurisdiction of the Securities and Exchange Commission (SEC). This jurisdiction of
the SEC, however, was transferred to the RTC, pursuant to RA No. 8799 which became effective on August 8,
2000. Considering that the respondents complaint for illegal dismissal was commenced on August 10, 2000,
the appropriate jurisdiction lie with the RTC should it turn out that the respondent was a corporate, not a
regular, officer of Matling. Matling Industrial and Commercial Corp., et al. vs. Ricardo R. Coros, G.R. No.
157802, October 13, 2010.
Jurisdiction; labor dispute vs. intra-corporate dispute. Given Locsins status as a corporate officer, the RTC, not
the Labor Arbiter or the NLRC, has jurisdiction to hear the legality of the termination of his relationship with
Nissan. In a number of cases it has been held that a corporate officers dismissal is always a corporate act, or
an intra-corporate controversy so that the RTC should exercise jurisdiction. Locsin was undeniably Chairman
and President, and was elected to these positions by the Nissan board pursuant to its By-laws. As such, he was
a corporate officer, not an employee. Even as Executive Vice-President/Treasurer, Locsin already acted as a
corporate officer because the position of Executive Vice-President/Treasurer is provided for in Nissans By-
Laws. Arsenio Z. Locsin vs. Nissan Lease Phils. Inc. and Luis Banson, G.R. No. 185567, October 20, 2010.
Labor-only contracting; elements. The Labor Code expressly prohibits labor-only contracting which refers to
an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a
job, work, or service for a principal, and any of 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
performed and the 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 the performance of the work of the contractual employee. Using the above criteria, it is
clear that FCCSI is a labor-only contractor while the principal Manila Water is the real employer. FCCSI does
not have substantial capital or investment to qualify as an independent contractor as shown by the fact that
although it has an authorized capital stock of P400,000.00, only P100,000.00 of which is actually paid-up.
Also, it was Manila Water that provided the equipment and service vehicles needed in the performance of the
contracted service. Manila Water Company, Inc. vs. Jose J. Dalumpines, et al., G.R. No. 175501, October 4,
2010.
Loss of confidence; distinction between managerial personnel and rank and employees . As a general rule,
employers are allowed wider latitude of discretion in terminating the employment of managerial personnel or
those who, while not of similar rank, perform functions which by their nature require the employers full trust
and confidence. This must be distinguished from the case of ordinary rank and file employees, whose
termination on the basis of these same grounds requires a higher proof of involvement in the events in
question; mere uncorroborated assertions and accusations by the employer will not suffice. Leandro M.
Alcantara vs. The Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.
Motion to dismiss; appeal. Petitioner Locsins submission that the NCLPI improperly elevated the Labor
Arbiters denial of the Motion to Dismiss to the CA is correct. A denial of a motion to dismiss is an
interlocutory order and hence, cannot be appealed until a final judgment on the merits of the case is rendered.
As a general rule, an aggrieved partys proper recourse to the denial is to file his position paper, interpose the
grounds relied upon in the motion to dismiss such as lack of jurisdiction in the present case before the labor
arbiter, and actively participate in the proceedings. Thereafter, the labor arbiters decision can be appealed to
the NLRC, not to the CA. This NLRC rule is similar to the general rule observed in civil procedure. Under
the Rules of Court, the only other recourse of the aggrieved party is to file an appropriate special civil action
under Rule 65 but only when there is no appeal, or any plain, speedy, and adequate remedy in the ordinary
course of law. In the labor law setting, a plain, speedy and adequate remedy in the form of the corrective power
of the NLRC is still open to the aggrieved party when a labor arbiter denies a motion to dismiss. Arsenio Z.
Locsin vs. Nissan Lease Phils. Inc. and Luis Banson, G.R. No. 185567, October 20, 2010.
Petition; failure to attach documents. Failure to attach all pleadings and documents, by itself, is not a sufficient
ground to dismiss a petition. The courts may liberally construe procedural rules in order to meet and advance
the cause of substantial justice. Procedural lapses will be overlooked when they do not involve public policy,
when they arose from an honest mistake or unforeseen accident, and when they have not prejudiced the
adverse party or deprived the court of its authority. These conditions are present in the instant case.
Furthermore, after petitioners receipt of the Court of Appeals Resolution dismissing his petition for failure to
attach documents, he filed a Motion for Reconsideration along with the documents deemed by the Court of
Appeals as lacking in his original petition. Such subsequent submission should be deemed substantial
compliance as supported by jurisprudence. In these cases, the reasons behind the failure of the petitioners to
comply with the required attachments were no longer scrutinized. Clearly, the Court of Appeals erred in
dismissing petitioners special civil action for certiorari despite subsequent substantial compliance with the
rules on procedure. Leandro M. Alcantara vs. The Philippine Commercial and International Bank, G.R. No.
151349, October 20, 2010.
Private recruitment agencies; solidary liability. Republic Act No. 8042 provides for the joint and solidary
liability of private recruitment agencies with their foreign principals in any and all money claims against them.
Such provision is automatically incorporated by law in the contract for overseas employment and is a condition
precedent for its approval. This is to afford the OFWs immediate and sufficient payment of what is due them.
Moreover, such obligation is not coterminous with the agreement between the local agent and its foreign
principal so that if either or both of the parties decide to end the agreement, the responsibilities of such parties
towards the contracted employees under the agreement do not at all end, but the same extends up to and until
the expiration of the employment contracts of the employees recruited and employed pursuant to the said
recruitment agreement. Thus, to allow petitioners to simply invoke the immunity from suit of its foreign
principal or to wait for the judicial determination of the foreign principals liability before petitioner can be
held liable renders the law on joint and solidary liability inutile. ATCI Overseas Corporation, et al. vs. Ma.
Josefa Echin, G.R. No. 178551. October 11, 2010
Redundancy. Redundancy is one of the authorized causes for the dismissal of an employee under Article 283 of
the Labor Code. Redundancy, exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise. Such superfluity may be due to 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 determination of redundancy is an exercise of business
judgment of the employer the soundness of which 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. Thus, a company must not merely declare that it has become overmanned, it must also produce
adequate proof of such redundancy. Coca-Cola failed to overcome this burden in the instant case. Instead, it
offered proof of Del Villars poor performance which is irrelevant in relation to the issue on redundancy. Coca
Cola Bottlers Philippines, Inc. vs. Angel U. Del Villar, G.R. No. 163091, October 6, 2010.
Reinstatement; doctrine of strained relations. Under the doctrine of strained relations, the payment of
separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer
desirable or viable. Payment liberates the employee from what could be a highly oppressive work
environment, and at the same time releases the employer from the obligation of keeping in its employ a worker
it no longer trusts. In the instant case, respondents reinstatement is no longer feasible as antagonism has
caused a severe strain in his working relationship with petitioners. Therefore, a more equitable disposition
would be an award of separation pay equivalent to at least one month pay, in addition to his full backwages,
allowances and other benefits. SHS Perforated Materials, Inc., et al. vs. Manuel F. Diaz, G.R. No. 185814,
October 13, 2010.
Release and quitclaim; validity. Quitclaims executed by the employees are commonly frowned upon as
contrary to public policy. Thus, for quitclaims to be valid the following requisites must be complied with: (a)
that there was no fraud or deceit on the part of any of the parties; (b) that the consideration of the quitclaim is
credible and reasonable; and (c) that the contract is not contrary to law, public order, public policy, morals or
good customs, or prejudicial to a third person with a right recognized by law. Varorient Shipping Co., Inc., et
al. vs. Gil Flores, G.R. No. 161934, October 6, 2010
Retirement; compulsory. Article 287 of the Labor Code, as amended by R.A. No. 7641, pegs the age for
compulsory retirement at 65 years, while the minimum age for optional retirement is set at 60 years. An
employer is, however, free to impose a retirement age earlier than the foregoing mandates provided that the
prerogative is exercised pursuant to a mutually instituted early retirement plan. In the present case, not even an
iota of voluntary acquiescence to UNIPROMs early retirement age option is attributable to petitioner.
UNIPROMs Employees Non-Contributory Retirement Plan was unilaterally and compulsorily imposed on
them. Petitioner was forced to participate in the plan, and the only way she could have rejected the same was to
resign or lose her job. Such passive acquiescence on the part of employees cannot equate to voluntary
acceptance which must be explicit, voluntary, free, and uncompelled. Having terminated petitioner merely on
the basis of a provision in the retirement plan which was not freely assented to by her, UNIPROM is guilty of
illegal dismissal. Lourdes A. Cercado vs. Uniprom, Inc., G.R. No. 188154. October 13, 2010.
Rule on appeal from denial of motion to dismiss; exception. As a general rule, a Labor Arbiters denial of the
Motion to Dismiss on the ground of lack of jurisdiction is appealable to the NLRC and not to the CA by way of
Rule 65. However, we take exception to this general rule in the present case because a strict implementation of
these rules would cause substantial injustice to NCLPI. After all, the parties have sufficiently ventilated their
positions on the disputed employer-employee relationship and have, in fact, submitted the matter for the CAs
consideration. Moreover, the CA correctly ruled that Locsin was a corporate officer, not an employee and
therefore jurisdiction lies with the RTC and not the Labor Arbiter. Arsenio Z. Locsin vs. Nissan Lease Phils.
Inc. and Luis Banson,G.R. No. 185567, October 20, 2010.
Seaman as a contractual employee; disability claims. A seaman is a contractual and not a regular employee.
Thus, in claims of seamen for compensation and disability benefits, the Court cannot just disregard the
provisions of the POEA Standard Employment Contract (POEA SEC). In order to claim disability benefits
under the POEA SEC, it is the company-designated physician who must proclaim that the seaman suffered a
permanent disability, due to either injury or illness, during the term of the latters employment. In this case, the
findings of respondents designated physician that petitioner has been suffering from brief psychotic disorder
and that it is not work-related must be respected. While it is true that labor contracts are impressed with public
interest and the provisions of the POEA SEC must be construed logically and liberally in favor of Filipino
seamen in the pursuit of their employment on board ocean-going vessels, the rule is that justice is, in every
case, only for the deserving; it is to be dispensed with in the light of established facts, the applicable law, and
existing jurisprudence. Edgardo M. Panganiban vs. Tara Trading Ship Management Inc. and Shinline SDN
BHD, G.R. No. 187032, October 18, 2010
Separation pay; equity. In exceptional cases, this Court has granted separation pay to a legally dismissed
employee as an act of social justice or based on equity. In both instances, it is required that the dismissal
(1) was not for serious misconduct; and (2) does not reflect on the moral character of the employee or would
involve moral turpitude. There should be no question that where it comes to such valid but not iniquitous
causes as failure to comply with work standards, the grant of separation pay to the dismissed employee may be
both just and compassionate, particularly if he has worked for some time with the company. Philippine
Airlines, Inc. vs. National Labor Relations Commission and Aida M. Quijano, G.R. No. 123294, October 20,
2010.
Termination; loss of confidence. Loss of confidence as a just cause for termination of employment applies
when the employee concerned holds a position of trust and confidence. However, 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. Petitioner, who, as Branch Manager of the
respondent bank undoubtedly held a position of trust and confidence, admitted that he personally processed the
two Certificates of Time Deposit (CTDs) at issue, despite his knowledge that they were unfunded. By doing
so, he exposed his employer to great risk. Moreover, by issuing those CTDs, he was in effect certifying the
existence of time deposits in his branch that were actually fictitious. Thus, it can be said that his obvious laxity
or negligence in the issuance of the said CTDs was even tainted with dishonesty. Respondent bank was thus
justified in terminating petitioners employment on the ground of loss of trust and confidence. Leandro M.
Alcantara vs. The Philippine Commercial and International Bank, G.R. No. 151349, October 20, 2010.
Termination; procedural due process. Notice and hearing constitute the essential elements of due process in the
dismissal of employees. The employer must furnish the employee with two written notices before termination
of employment can be legally effected. With regard to the requirement of a hearing, the essence of due process
lies simply in an opportunity to be heard; an actual trial-type hearing is not indispensable. In this case,
respondent acted in accordance with procedural due process when it gave petitioner considerable leeway with
regard to the submission of his written explanation by allowing multiple extensions of time to submit the same
and by furnishing him the documents used in respondents investigation. Even assuming that petitioner was not
fully heard during the employers investigation, it was his fault because of his misguided insistence on having
a trial-type hearing. Leandro M. Alcantara vs. The Philippine Commercial and International Bank, G.R. No.
151349, October 20, 2010.
Termination; solidary liability of corporate directors and officers. Corporate directors and officers are only
solidarily liable with the corporation for termination of employment of corporate employees if such is effected
with malice or in bad faith. Bad faith does not connote bad judgment or negligence; it imports dishonest
purpose or some moral obliquity and conscious doing of wrong; it means breach of known duty through some
motive or interest or ill will; it partakes of the nature of fraud. To sustain such a finding, there should be
evidence on record that an officer or director acted maliciously or in bad faith in terminating the employee. In
the instant case, petitioners withheld respondents salary in the sincere belief that respondent did not work for
the period in question. Thus, although they unlawfully withheld respondents salary, it cannot be concluded
that such was made in bad faith. Accordingly, corporate officers, Hartmannshenn and Schumacher, cannot be
held personally liable for the corporate obligations of SHS. SHS Perforated Materials, Inc., et al. vs. Manuel F.
Diaz, G.R. No. 185814, October 13, 2010.
Wages; deduction by employer. The free board and lodging SIP furnished the employees cannot operate as a
set-off for the underpayment of their wages. It was held in Mabeza v. National Labor Relations Commission
that the employer cannot simply deduct from the employees wages the value of the board and lodging without
satisfying the following requirements: (1) proof that such facilities are customarily furnished by the trade; (2)
voluntary acceptance in writing by the employees of the deductible facilities; and (3) proof of the fair and
reasonable value of the facilities charged. It is clear from the records that SIP failed to comply with these
requirements.S.I.P. Food House and Mr. and Mrs. Alejandro Pablo Vs. Restituto Batolina, et al., G.R. No.
192473, October 11, 2010.
Wages, withholding. Management prerogative does not include the right to temporarily withhold wages
without the consent of the employee. Such an interpretation would be contrary to Article 116 of the Labor
Code, which provides that it shall be unlawful for any person, directly or indirectly, to withhold any amount
from the wages of a worker or induce him to give up any part of his wages by force, stealth, intimidation,
threat or by any other means without the workers consent. Withholding of wages is allowed only in the form
of wage deductions under the circumstances provided in Article 113 of the Labor Code such as: (a) In cases
where the worker is insured with his consent by the employer, and the deduction is to recompense the
employer for the amount paid by him as premium on the insurance; (b) For union dues, in cases where the
right of the worker or his union to check-off has been recognized by the employer or authorized in writing by
the individual worker concerned; and (c) In cases where the employer is authorized by law or regulations
issued by the Secretary of Labor. In the present case, the withholding of complainants wages does not fall
under the exceptions provided in Article 113 and is thus unlawful. SHS Perforated Materials, Inc., et al. vs.
Manuel F. Diaz, G.R. No. 185814, October 13, 2010.
Work-related illness; substantial evidence. Working conditions cannot be accepted to have caused or at least
increased the risk of contracting the disease in this case, brief psychotic disorder- in the absence of
substantial evidence. The evidence must be real and substantial, and not merely apparent. In sum, petitioner
failed to establish by substantial evidence that his brief psychotic disorder was caused by the nature of his
work as oiler of the company-owned vessel. In fact, he failed to elaborate on the nature of his job as oiler of
respondent company. The Court, therefore, has difficulty in finding any link between his position as oiler and
his illness. Petitioner points out that his brief psychotic disorder which was caused by a family problem is
work-related simply because had it been a land-based employment, petitioner would have easily gone home
and attended to the needs of his family. This is not the work-related instance contemplated by the provisions
of the employment contract in order to be entitled to the benefits. Otherwise, every seaman would
automatically be entitled to compensation because the nature of his work is not land-based. Edgardo M.
Panganiban vs. Tara Trading Ship Management Inc. and Shinline SDN BHD, G.R. No. 187032, October 18,
2010.
Writ of habeas data; labor disputes. Respondent questions her transfer and, through the extraordinary remedy
of habeas data, seeks the disclosure of the reasons behind it. However, since her real objective is to be spared
from complying with MERALCOs Memorandum directing her reassignment, respondent should instead lodge
her complaint with the NLRC and the Labor Arbiters which have jurisdiction over such concerns. The writ of
habeas data is a remedy available only to a person whose right to privacy in life, liberty or security is violated
or threatened by an unlawful act or omission of a public official or employee or of a private individual or entity
engaged in the gathering, collecting or storing of data or information regarding the person, family, home and
correspondence of the aggrieved party. Petitioners refusal to disclose the contents of reports which form the
basis of respondents transfer does not amount to a violation of her right to privacy.Manila Electric Company,
Alexander S. Deyto and Ruben A. Sapitula vs. Rosario Gopez Lim, G.R. No. 184769, October 5, 2010.
November 2010 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on December 13, 2010 by Leslie C. Dy Posted in Labor Law Tagged appeal, compensable illness, constructive
dismissal, employer-employee relationship, evidence, forum shopping, illegal dismissal, illegal strike, jurisdiction, labor-only
contracting, reinstatement, retirement, unfair labor practice
Here are selected November 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:
Appeal; determination of date of filing. Under Section 3, Rule 13 of the Rules of Court, where the filing of
pleadings, appearances, motions, notices, orders, judgments, and all other papers with the court/tribunal is
made by registered mail, the date of mailing, as shown by the post office stamp on the envelope or the registry
receipt, shall be considered as the date of filing. Thus, the date of filing is determinable from two sources:
from the post office stamp on the envelope or from the registry receipt, either of which may suffice to prove
the timeliness of the filing of the pleadings. If the date stamped on one is earlier than the other, the former may
be accepted as the date of filing. In this case, to prove that it mailed the notice of appeal and appeal
memorandum on October 27, 1997, instead of October 28, 1997, as shown by the stamped date on the
envelope, petitioner presented Registry Receipt No. 34581 bearing the earlier date. Government Service
Insurance System vs. National Labor Relations Commission (NLRC), Dionisio Banlasan, et al., G.R. No.
180045, November 17, 2010.
Appeal; filed out of time; exceptional cases. An appeal must be perfected within the statutory or reglementary
period. This is not only mandatory, but also jurisdictional. Failure to perfect the appeal on time renders the
assailed decision final and executory and deprives the appellate court or body of the legal authority to alter the
final judgment, much less entertain the appeal. However, in exceptional cases, a belated appeal may be given
due course if greater injustice will be visited upon the party should the appeal be denied. This is to serve the
greater principles of substantial justice and equity. Technical rules are not binding in labor cases and are not to
be applied strictly if the result would be detrimental to the working man. In the instant case, even if the appeal
was filed one day late, the same should have been entertained by the NLRC. Government Service Insurance
System vs. National Labor Relations Commission (NLRC), Dionisio Banlasan, et al., G.R. No. 180045,
November 17, 2010.
Compensable illness; work-relatedness. Granting arguendo that petitioners illness was not pre-existing, he
still had to show that his illness not only occurred during the term of his contract but also that it resulted from a
work-related injury or illness, or at the very least aggravated by the conditions of the work for which he was
contracted for. Petitioner failed to discharge this burden, however. That the exact and definite cause of
petitioners illness is unknown cannot be used to justify grant of disability benefits, absent proof that there is
any reasonable connection between work actually performed by petitioner and his illness. Jerry M. Francisco,
vs. Bahia Shipping Services, Inc. and/or Cynthia C. Mendoza, and Fred Olsen Cruise Lines, Ltd., G.R. No.
190545, November 22, 2010 .
Dismissal; illegal strike; distinction between union officers and mere members. The liabilities of individuals
who participate in an illegal strike must be determined under Article 264 (a) of the Labor Code which makes a
distinction between union officers and mere members. The law grants the employer the option of declaring a
union officer who knowingly participated in an illegal strike as having lost his employment. However, a
worker merely participating in an illegal strike may not be terminated from employment if he does not commit
illegal acts during a strike. Hence, with respect to respondents who are union officers, their termination by
petitioners is valid. Being fully aware that the proceedings before the Secretary of Labor were still pending as
in fact they filed a motion for reconsideration, they cannot invoke good faith as a defense. For the rest of the
individual respondents who are union members, they cannot be terminated for mere participation in the illegal
strike. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its
Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.
Dismissal; misconduct; substantial evidence. The general rule is that where the findings of the administrative
body are amply supported by substantial evidence, such findings are accorded not only respect but also finality,
and are binding on the Court. The standard of substantial evidence is satisfied when there is reasonable ground
to believe that a person is responsible for the misconduct complained of, even if such evidence might not be
overwhelming or even preponderant. In the present case, the testimonies of the witnesses, the statements
during the preliminary investigation, and the findings of the PNP Crime Lab on its examination of the
signatures, amounted to substantial evidence that adequately supported the conclusion that petitioner Nacu was
guilty of the acts complained of. Nacu was rightfully found guilty of grave misconduct, dishonesty, and
conduct prejudicial to the best interest of the service, and penalized with dismissal. Irene K. Nacu, Substituted
By Benjamin M. Nacu, Ervin K. Nacu, and Nejie N. De Sagun vs. Civil Service Commission and Philippine
Economic Zone Authority, G.R. No. 187752, November 23, 2010.
Employer-employee relationship. Generally, in a business establishment, IDs are issued to identify the holder
as a bona fide employee of the issuing entity. While petitioner Teng alleged that it was the maestros who hired
the respondent workers, it was his company that issued to the respondent workers IDs bearing their names as
employees and Tengs signature as the employer. For the 13 years that the respondent workers worked for
Teng, they received wages on a regular basis, in addition to their shares in the fish caught. More importantly,
the element of control which we have ruled in a number of cases to be a strong indicator of the existence of
an employer-employee relationship is present in this case. Teng not only owned the tools and equipment, he
directed how the respondent workers were to perform their job as checkers. Albert Teng vs. Alfredo S.
Pahagac, et al., G.R. No. 169704, November 17, 2010.
Forum shopping; elements. By forum shopping, a party initiates two or more actions in separate tribunals,
grounded on the same cause, hoping that one or the other tribunal would favorably dispose of the matter. The
elements of forum shopping are: (1) identity of parties, or at least such parties as would represent the same
interest in both actions; (2) identity of rights asserted and relief prayed for, the relief being founded on the
same facts; and (3) identity of the two preceding particulars such that any judgment rendered in the other
action will, regardless of which party is successful, amount to res judicata in the action under consideration. In
the instant case, petitioner CABEU-NFL merely raised the fact of the pendency of two cases without
demonstrating any similarity in the causes of action between the said cases and the present case. In the
absence of such evidence to show that the issues involved in these cases are the same, the Court cannot give
credence to petitioners claim of forum shopping. Central Azucarera De Bais Employees Union-NFL,
represented by its President, Pablito Saguran vs. Central Azucarera De Bais, Inc., represented by its President,
Antonio Steven L. Chan, G.R. No. 186605, November 17, 2010.
Illegal strike. Under Article 264 (a) of the Labor Code, as amended, a strike that is undertaken despite the
issuance by the Secretary of Labor of an assumption order and/or certification is illegal. So is a declaration of a
strike during the pendency of cases involving the same grounds for the strike. In the present case, there is no
dispute that when respondents conducted their mass actions on April 3 to 6, 2000, the proceedings before the
Secretary of Labor were still pending as both parties filed motions for reconsideration of the March 24, 2000
Order. Clearly, respondents knowingly violated the aforesaid provision by holding a strike in the guise of mass
demonstration. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union
and its Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.
Illegal strike; proof of illegal acts. To justify termination of a union member who participated in an illegal
strike, there must be proof that he or she committed illegal acts during a strike. Substantial evidence available
under the attendant circumstances, which may justify the imposition of the penalty of dismissal, may suffice.
Petitioners have not adduced evidence on such illegal acts committed by each of the individual respondents
who are union members. The dismissal of respondent-union members are therefore unjustified in the absence
of a clear showing that they committed specific illegal acts during the mass actions and concerted work
boycott. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its
Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.
Illegal dismissal; backwages. The award of backwages is a legal consequence of a finding of illegal dismissal.
However, assuming that respondent-union members have indeed reported back to work at the end of the
concerted mass actions but were soon terminated by petitioners who found their explanation unsatisfactory,
they are not entitled to backwages in view of the illegality of the said strike. Under the circumstances,
respondents reinstatement without backwages suffices for the appropriate relief. Solid Bank Corp. Ernesto U.
Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union and its Dismissed Officers and Members, et
al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.
Illegal dismissal; lack of substantive due process. The dismissal of an employee, which the employer must
validate, has a two-fold requirement: one is substantive, the other is procedural. Not only must the dismissal
be for a just or an authorized cause, as provided by law; the rudimentary requirements of due process the
opportunity to be heard and to defend oneself must be observed as well. The employer has the burden of
proving that the dismissal was for a just cause; failure to show this, as in the present case, would necessarily
mean that the dismissal was unjustified and, therefore, illegal. The respondent workers allegation that Teng
summarily dismissed them on suspicion that they were not reporting to him the correct volume of the fish
caught in each fishing voyage was never denied by Teng. Unsubstantiated suspicion is not a just cause to
terminate ones employment under Article 282 of the Labor Code. Albert Teng vs. Alfredo S. Pahagac, et
al., G.R. No. 169704, November 17, 2010.
Illegal dismissal; separation pay in lieu of reinstatement. Since reinstatement is no longer possible given the
lapse of considerable time from the occurrence of the strike, not to mention the fact that Solidbank had long
ceased its banking operations, the award of separation pay of one (1) month salary for each year of service, in
lieu of reinstatement, is in order. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs.
Solid Bank Union and its Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461,
November 15, 2010.
Illness; when deemed pre-existing and not compensable. Petitioners illness already existed when he
commenced his fourth contract of employment with respondents, hence, not compensable. Given that the
employment of a seafarer is governed by the contract he signs every time he is rehired and his employment is
terminated when his contract expires, petitioners illness during his previous contract with respondents is
deemed pre-existing during his subsequent contract. That petitioner was subsequently rehired by respondents
despite knowledge of his seizure attacks does not make the latter a guarantor of his health. Jerry M.
Francisco, vs. Bahia Shipping Services, Inc. and/or Cynthia C. Mendoza, and Fred Olsen Cruise Lines,
Ltd., G.R. No. 190545, November 22, 2010 .
Indirect employer; solidary liability. The fact that there is no actual and direct employer-employee relationship
between petitioner and respondents does not absolve the former from liability for the latters monetary claims.
When petitioner contracted DNL Securitys services, petitioner became an indirect employer of respondent
security guards, pursuant to Article 107 of the Labor Code. Thus, after the contractor DNL Security failed to
pay respondents the correct wages and other monetary benefits, petitioner, as principal, became jointly and
severally liable, as provided in Articles 106 and 109 of the Labor Code. It should be understood, though, that
the solidary liability of petitioner does not preclude the application of Article 1217 of the Civil Code on the
right of reimbursement from its co-debtor. Government Service Insurance System vs. National Labor Relations
Commission (NLRC), Dionisio Banlasan, et al., G.R. No. 180045, November 17, 2010.
Indirect employer; solidary liability; coverage. Petitioners liability as indirect employer covers the payment of
respondents salary differential and 13th month pay during the time they worked for petitioner. Petitioners
liability, however, cannot extend to the payment of separation pay. An order to pay separation pay is invested
with a punitive character, such that an indirect employer should not be made liable without a finding that it had
conspired in the illegal dismissal of the employees.Government Service Insurance System vs. National Labor
Relations Commission (NLRC), Dionisio Banlasan, et al., G.R. No. 180045, November 17, 2010.
Inefficiency of employee; condonation by employer. While it is acknowledged that petitioner Gregorios
service record shows that his performance as a security guard was below par, respondent Gulf Pacific never
issued any memo citing him for the alleged repeated errors, inefficiency, and poor performance while on duty,
and instead continued to assign him to various posts. This amounts to condonation by Gulf Pacific of
whatever infractions Gregorio may have committed. Even assuming the reasons for relieving Gregorio of his
position were true, it was incumbent upon Gulf Pacific to be vigilant in its compliance with labor laws. Bebina
G. Salvaloza vs. National Labor Relations Commission, Gulf Pacific Security Agency, Inc., and Angel
Quizon, G.R. No. 182086, November 24, 2010.
Jurisdiction; Secretary of Labor. It is well-settled that the Secretary of Labor, in the exercise of his power to
assume jurisdiction over a labor dispute under Art. 263 (g) [11] of the Labor Code, may resolve all issues
involved in the controversy including the award of wage increases and benefits. In the instant case, the fact that
the award was higher than that which was purportedly agreed upon in the MOA between management and the
labor union is of no moment because 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. Cirtek Employees Labor Union-Federation of Free Workers
vs. Cirtek Electronics, Inc., G.R. No. 190515, November 15, 2010.
Jurisdiction; divestment. It bears noting that 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. Thus, neither should
the provisions of the MOA restrict the Secretarys leeway in deciding the matters before him. Cirtek
Employees Labor Union-Federation of Free Workers vs. Cirtek Electronics, Inc.,G.R. No. 190515, November
15, 2010.
Labor-only contracting. Section 5 of the DO No. 18-02, which implements Article 106 of the Labor Code,
provides that, labor-only contracting shall refer to an arrangement where the contractor or subcontractor
merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of 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 performed and the 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 the contractual employee. In the present case, Teng admitted that he solely provided the capital and
equipment, while the maestros supplied the workers. Also, the power of control over the respondent workers
was lodged not with the maestros but with Teng. Moreover, they performed tasks that were necessary and
desirable in Tengs fishing business. Taken together, these incidents confirm the existence of a labor-only
contracting which is prohibited in our jurisdiction. Accordingly, a finding that the maestros are labor-only
contractors is equivalent to a finding that an employer-employee relationship exists between Teng and the
respondent workers. Albert Teng vs. Alfredo S. Pahagac, et al., G.R. No. 169704, November 17, 2010
Mootness; amicable settlement as final satisfaction of judgment award. The conditional settlement of the
judgment award insofar as it operates as a final satisfaction thereof renders the case moot and academic. In the
case at bar, the settlement grants the petitioner the luxury of having other remedies available to it such as its
petition for certiorari pending before the appellate court, and an eventual appeal to the Court. On the other
hand, respondent employee could no longer pursue other claims, including interests that may accrue during the
pendency of the case. The Labor Arbiter and the appellate court may not thus be faulted for interpreting
petitioners conditional settlement to be tantamount to an amicable settlement of the case resulting in the
mootness of the petition for certiorari. Career Philippines Ship Management, Inc., vs. Geronimo Madjus,G.R.
No. 186158, November 22, 2010.
Motion for reconsideration. As amended, Article 263 is now Article 262-A in which the word unappealable
from Article 263 has been deleted. Thus, although Art. 262-A makes the voluntary arbitration award final and
executory after ten calendar days from receipt of the copy of the award or decision by the parties, the decision
may still be reconsidered by the Voluntary Arbitrator on the basis of a motion for reconsideration duly filed
during that period. The absence of a categorical language in Article 262-A does not preclude the filing of a
motion for reconsideration of the VAs decision within the 10-day period. Therefore, petitioners allegation that
the VAs decision had become final and executory by the time the respondent workers filed an appeal with the
CA fails. It is consequently ruled that the respondent workers seasonably filed a motion for reconsideration of
the VAs judgment, and the VA erred in denying the motion. Albert Teng vs. Alfredo S. Pahagac, et al.,G.R. No.
169704, November 17, 2010.
Off-detail or Floating status. Temporary off-detail or floating status is the period of time when security
guards are in between assignments or when they are made to wait after being relieved from a previous post. It
takes place when the security agencys clients decide not to renew their contracts with the agency. It also
happens in instances where contracts for security services stipulate that the client may request the agency for
the replacement of the guards assigned to it, such that the replaced security guard may be placed on temporary
off-detail if there are no available posts under the agencys existing contracts. It does not constitute a
dismissal, as the assignments primarily depend on the contracts entered into by the security agencies with third
parties, so long as such status does not continue beyond a reasonable time period. Bebina G. Salvaloza vs.
National Labor Relations Commission, Gulf Pacific Security Agency, Inc., and Angel Quizon, G.R. No. 182086,
November 24, 2010.
Off-detail or Floating status; when deemed constructive dismissal. When a floating status lasts for more than
six (6) months, the employee may be considered to have been constructively dismissed. In the present case, of
the three instances when petitioner Gregorio was temporarily off-detailed, the last two already ripened into
constructive dismissal. Although it could have been difficult for respondent Gulf Pacific to post Gregorio
given his age and his service record, still the agency should not have allowed him to wait indefinitely for an
assignment if its clients were in truth less likely to accept him. If, indeed, Gregorio was undesirable as an
employee, Gulf Pacific could have dismissed him for cause. The unreasonable length of time that Gregorio
was not posted inevitably resulted in his being constructively dismissed from employment. Bebina G.
Salvaloza vs. National Labor Relations Commission, Gulf Pacific Security Agency, Inc., and Angel
Quizon, G.R. No. 182086, November 24, 2010.
Parol evidence; application in labor cases. The appellate courts brushing aside of the Paliwanag and the
minutes of the meeting because they were not verified and notarized, thus violating, so the appellate court
reasoned, the rules on parol evidence, does not lie. Like any other rule on evidence, parol evidence should not
be strictly applied in labor cases. Cirtek Employees Labor Union-Federation of Free Workers vs. Cirtek
Electronics, Inc., G.R. No. 190515, November 15, 2010.
Petition; service on counsel. Section 1, Rule 65 in relation to Section 3, Rule 46 of the Rules of Court, clearly
provides that in a petition filed originally in the CA, the petitioner is required to serve a copy of the petition on
the adverse party before its filing. If the adverse party appears by counsel, service shall be made on such
counsel pursuant to Section 2, Rule 13. Thus, in the instant case, petitioner CABEU-NFLs insistence that
service of the copy of the CA petition should have been made to it, rather than to its counsel, is
unavailing. Central Azucarera De Bais Employees Union-NFL, represented by its President, Pablito Saguran
vs. Central Azucarera De Bais, Inc., represented by its President, Antonio Steven L. Chan, G.R. No. 186605,
November 17, 2010.
Reinstatement; when not granted. Petitioner Gregorios position paper did not pray for reinstatement, but only
sought payment of money claims. Likewise, the strained relations between the parties make reinstatement
impracticable. What is more, even during the time of the LAs decision, reinstatement was no longer legally
feasible since Gregorio was past the age qualification for a security guard license. Section 5[33] of R.A. 5487,
enumerating the qualifications for a security guard, provides that the person should not be less than 21 nor over
50 years of age. And as previously mentioned, as early as June 13, 2002, Gregorio was no longer in
possession of a valid license. Thus, separation pay should be paid in lieu of reinstatement. Bebina G.
Salvaloza vs. National Labor Relations Commission, Gulf Pacific Security Agency, Inc., and Angel
Quizon, G.R. No. 182086, November 24, 2010.
Retirement laws; liberal construction. Retirement laws are liberally construed in favor of the retiree because
their objective is to provide for the retirees sustenance and, hopefully, even comfort, when he no longer has
the capability to earn a livelihood. The liberal approach aims to achieve the humanitarian purposes of the law
in order that efficiency, security, and well-being of government employees may be enhanced. Indeed,
retirement laws are administered in favor of the persons intended to be benefited, and all doubts are resolved in
their favor. In this case, as adverted to above, respondent was able to establish that he has a clear legal right to
the reinstatement of his retirement benefits. Government Service Insurance System vs. Fernando P. De
Leon, G.R. No. 186560, November 17, 2010.
Retirement benefit; entitlement. Respondents disqualification from receiving retirement benefits under R.A.
No. 910 does not mean that he is disqualified from receiving any retirement benefit under any other existing
retirement law. Prior to R.A. No. 8291, retiring government employees who were not entitled to the benefits
under R.A. No. 910 had the option to retire under either of two laws: Commonwealth Act No. 186, as
amended, or P.D. No. 1146. In his Comment, respondent implicitly indicated his preference to retire under P.D.
No. 1146, since this law provides for higher benefits. Because respondent had complied with the requirements
under the said law at the time of his retirement, a fact which GSIS does not dispute, he is entitled to receive the
benefits provided under the same law. Government Service Insurance System vs. Fernando P. De Leon, G.R.
No. 186560, November 17, 2010.
Strike; definition. Article 212 of the Labor Code, as amended, defines strike as any temporary stoppage of
work by the concerted action of employees as a result of an industrial or labor dispute. A labor dispute includes
any controversy or matter concerning terms and conditions of employment or the association or representation
of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment,
regardless of whether or not the disputants stand in the proximate relation of employers and employees. The
term strike shall also include slowdowns, mass leaves, sitdowns, attempts to damage, destroy or sabotage
plant equipment and facilities and similar activities. In the instant case, about 712 employees absented
themselves from work in a concerted fashion for three continuous days. Considering that these mass actions
stemmed from a bargaining deadlock and an order of assumption of jurisdiction had already been issued by the
Secretary of Labor to avert an impending strike, all the elements of strike are evident in the Union-instigated
mass actions. Solid Bank Corp. Ernesto U. Gamier, et al. and Solid Bank Corp., et al. vs. Solid Bank Union
and its Dismissed Officers and Members, et al. G.R. No. 159460 and G.R. No. 159461, November 15, 2010.
Unfair labor practice. For a charge of unfair labor practice to prosper, it must be shown that respondent CABs
suspension of negotiation with CABEU-NFL and its act of concluding a CBA with CABELA, another union in
the bargaining unit, were motivated by ill will, bad faith, or fraud, or was oppressive to labor, or done in a
manner contrary to morals, good customs, or public policy However, the facts show that CAB believed that
CABEU-NFL was no longer the representative of the workers. It just wanted to foster industrial peace by
bowing to the wishes of the overwhelming majority of its rank and file workers and by negotiating and
concluding in good faith a CBA with CABELA. Such actions of CAB are nowhere tantamount to anti-
unionism, the evil sought to be punished in cases of unfair labor practices. Central Azucarera De Bais
Employees Union-NFL, represented by its President, Pablito Saguran vs. Central Azucarera De Bais, Inc.,
represented by its President, Antonio Steven L. Chan, G.R. No. 186605, November 17, 2010.
Unfair labor practice; burden of proof. 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 CAB, CABEU-NFL has the
burden to present substantial evidence to prove the allegation of unfair labor practice. Apparently, CABEU-
NFL refers only to the execution of the supposed CBA between CAB and CABELA and the request to suspend
the negotiations, to conclude that bad faith attended CABs actions. The Court is of the view that CABEU-
NFL, in simply relying on the said circumstances, failed to substantiate its claim of unfair labor practice to
rebut the presumption of good faith.Central Azucarera De Bais Employees Union-NFL, represented by its
President, Pablito Saguran vs. Central Azucarera De Bais, Inc., represented by its President, Antonio Steven
L. Chan, G.R. No. 186605, November 17, 2010.
December 2010 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on January 24, 2011 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law Tagged certiorari,due
process, evidence, illegal dismissal, jurisdiction, labor-only contracting, loss of trust and confidence, reinstatement
Here are selected December 2010 rulings of the Supreme Court of the Philippines on labor law and procedure:
Dismissal; due process; trial-type hearing is not essential . The essence of due process is an opportunity to be
heard or, as applied to administrative proceedings, an opportunity to explain ones side. Records show that
Aboc was duly notified through a letter asking him to explain why his services should not be terminated. In
fact, he replied to the same by submitting a written explanation. He was likewise duly afforded ample
opportunity to defend himself during a conference conducted. Abocs contention that the conference he
attended cannot substitute the hearing mandated by the Labor Code is bereft of merit. A formal trial-type
hearing is not at all times and in all instances essential to due process. It is enough that the parties are given a
fair and reasonable opportunity to explain their respective sides of the controversy and to present supporting
evidence on which a fair decision can be based. Antonio A. Aboc vs. Metropolitan Bank And Trust Company /
Metropolitan Bank And Trust Company vs. Antonio A. Aboc, G.R. Nos. 170542-43 and G.R. No. 176460,
December 13, 2010.
Dismissal; due process; trial-type hearing is not essential. In dismissal cases, the essence of due process is a
fair and reasonable opportunity to be heard, or as applied to administrative proceedings, an opportunity to
explain ones side. A formal or trial type hearing is not at all times and in all instances essential. Neither is it
necessary that the witnesses be cross-examined. In the instant case, there was a proceeding where the
respondent was apprised of the charges against him as well as of his rights. Thereafter, he was notified of the
formal charges against him and was required to explain in writing why he should not be dismissed for serious
misconduct. A formal hearing was conducted and subsequently, respondent received a Notice of Termination
informing him that after a careful evaluation, he was found liable as charged and dismissed from the service
due to gross misconduct. Clearly, respondent was afforded ample opportunity to air his side and defend
himself. Hence, there was due process. Philippine Long Distance Telephone Company, vs. Eusebio M.
Honrado, G.R. No. 189366, December 8, 2010.
Dismissal; due process. Respondent harps on the fact that his dismissal was preconceived because there was
already a decision to terminate him even before he was given the show cause memorandum. Contrary to
respondents allegations, he was given more than enough opportunity to defend himself. The audit
committees conclusion to dismiss respondent from the service was merely recommendatory. It was not
conclusive upon the petitioner company. This is precisely the reason why the petitioner still conducted further
investigations. To reiterate, respondent was properly informed of the charges and had every opportunity to
rebut the accusations and present his version. Respondent was not denied due process of law for he was
adequately heard as the very essence of due process is the opportunity to be heard. Equitable PCI Bank (Now
Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.
Dismissal; loss of confidence; guidelines for application. The Court has set the guidelines for the application of
the doctrine of loss of confidence as follows: (a) Loss of confidence should not be simulated; (b) It should not
be used as a subterfuge for causes which are improper, illegal or unjustified; (c) It may not be arbitrarily
asserted in the face of overwhelming evidence to the contrary; and (d) It must be genuine, not a mere
afterthought to justify earlier action taken in bad faith. In the case at bar, no mention was made regarding
petitioners alleged loss of trust and confidence in respondent. Neither was there any explanation nor
discussion of the alleged sensitive and delicate position of respondent requiring the utmost trust of petitioner.
Because of its subjective nature, the Court has been very scrutinizing in cases of dismissal based on loss of
trust and confidence. Thus, when the breach of trust or loss of confidence is not clearly established by facts, as
in the instant case, such dismissal on the ground of loss and confidence cannot be countenanced. The Coca-
Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No. 149433, December 15, 2010 .
Dismissal; serious misconduct; wrongful intent required. 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. In the present case, the
alleged infractions of respondent could hardly be considered serious misconduct. In order to constitute serious
misconduct which will warrant the dismissal of an employee, 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 been done with wrongful intent. Such is, however, lacking in the instant case. The
Coca-Cola Export Corporation, vs. Clarita P. Gacayan, G.R. No. 149433, December 15, 2010 .
Dismissal; substantial evidence. The quantum of proof required in determining the legality of an employees
dismissal is only substantial evidence. In a similar case, the Court held that the standard of substantial evidence
is met where the employer, as in this case, has reasonable ground to believe that the employee is responsible
for the misconduct and his participation in such misconduct makes him unworthy of the trust and confidence
demanded by his position. In the present case, petitioner has sufficiently established that respondent solicited,
collected and received the P1,500.00 down payment illegally from the spouses Mueda. Taken together, the
petitioner has discharged its burden of establishing the serious misconduct committed by respondent. Such
misconduct makes him unworthy of the trust and confidence demanded by his position. Philippine Long
Distance Telephone Company, vs. Eusebio M. Honrado, G.R. No. 189366, December 8, 2010.
Dismissal; substantial evidence. The burden of proof rests on the employer to show that the dismissal was for a
just cause or authorized cause. Dismissal due to serious misconduct and loss of trust and confidence must be
supported by substantial evidence which is that amount of relevant evidence as a reasonable mind might accept
as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine
otherwise. In the present case, evidence clearly shows that the acts of Aboc in helping organize the credit
unions and in the operations thereof constituted serious misconduct or breach of trust and confidence. His
participation in the credit unions is highly irregular and clearly in conflict with Metrobanks business. Aboc
claimed that he was only an unwilling participant doing a ministerial job. The investigation, however,
showed otherwise. Antonio A. Aboc vs. Metropolitan Bank And Trust Company / Metropolitan Bank And Trust
Company vs. Antonio A. Aboc, G.R. Nos. 170542-43 and G.R. No. 176460, December 13, 2010 .
Dismissal; two-notice rule. The requirements of procedural due process were complied with when petitioner
sent a memo to respondent informing him of the specific charges and giving him opportunity to air his side.
Subsequently, in a letter, respondent was informed that on the basis of the results of the investigation
conducted, his written explanation, the written explanation of other employees as well as the audit report, the
management has decided to terminate him. The two-notice requirement, which includes a written notice of the
cause of dismissal to afford the employee ample opportunity to be heard and defend himself, and written notice
of the decision to terminate him which states the reasons therefor, was thus complied with. Equitable PCI
Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8,
2010.
Dismissal; willful disobedience. To justify willful disobedience or insubordination as a valid ground for
termination, the employees assailed conduct must have been willful or characterized by a wrongful or
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. In the case at bar, while petitioners manual
of procedures does not absolutely prohibit the negotiation or acceptance of second-endorsed checks for
deposits, it expressly disallows the acceptance of checks endorsed by corporations, societies, firms, etc. and
checks with unusual endorsements. As shown by the records, this explicit policy was transgressed by
respondent intentionally and willfully. Respondent was instructed by management to stop the transgression but
he did not stop. Respondent admittedly disobeyed not only his superiors directives but also simple bank
rules. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A. Dompor, G.R. Nos. 163293 &
163297, December 8, 2010.
Dismissal; willful breach of trust. Willful breach of trust requires that the loss of confidence must not be
simulated; it should not be used as a subterfuge for causes which are illegal, improper or unjustified; it may not
be arbitrarily asserted in the face of overwhelming evidence to the contrary; it must be genuine, not a mere
afterthought to justify earlier action taken in bad faith; and, the employee involved holds a position of trust and
confidence. Respondent, as bank manager, has the duty to ensure that bank rules are strictly complied with to
serve the best interest of the bank as he holds a position of trust and confidence. Any negligence in the
exercise of his responsibilities can be sufficient ground for loss of trust and confidence. As held in one case,
the mere existence of a basis for believing that a managerial employee has breached the trust of his employer
would suffice for his dismissal. Proof beyond reasonable doubt is not required. In the case at bar, respondents
wanton violation of bank policies equates to abuse of authority and, therefore, abuse of the trust reposed in
him. Such is enough for his dismissal from service. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.),
vs. Castor A. Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.
Illegal dismissal; reinstatement and backwages. 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 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. Respondent is entitled to such award. The Coca-Cola Export Corporation, vs. Clarita P.
Gacayan, G.R. No. 149433, December 15, 2010 .
Job contracting; conditions. Permissible job contracting or subcontracting refers to an arrangement whereby a
principal agrees to farm out to the contractor the performance of a specific work, or service within a
predetermined period, regardless of whether such work, or service is to be performed within or outside the
premises of the principal. Thus, the following conditions must concur: (a) The contractor carries on a distinct
and independent business and undertakes the contract work on his account under his own responsibility
according to his own manner and method, free from the control and direction of his 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 assures the contractual
employees entitlement to all labor and occupational safety and health standards, free exercise of the right to
self-organization, security of tenure, and social welfare benefits. In the case at bar, BMSI is engaged in labor-
only contracting for LSC. First, petitioners worked at LSCs premises, and nowhere else. There was no
evidence that BMSI exercised control over them. Second, there is no proof that BMSI had substantial capital.
The equipment used by BMSI was merely rented from LSC. Third, petitioners performed activities which
were directly related to the main business of LSC. Lastly, BMSI had no other client except for
LSC. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa,
Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No.
186091, December 15, 2010.
Jurisdiction of Supreme Court; errors of fact; exceptions. The Court has stressed that its jurisdiction in a
petition for review on certiorari under Rule 45 of the Rules of Court is limited to reviewing only errors of law,
not of fact, unless the findings of fact complained of are devoid of support by the evidence on record, or the
assailed judgment is based on the misapprehension of facts. In previous rulings, the Court has declared that
when there is enough basis on which a proper evaluation of the merits can be made, it may dispense with the
time-consuming procedure in order to prevent further delays in the disposition of the case. However, in the
case at bar, based on the nature of the two remaining issues which involve factual issues, and given the
inadequacy of the records, pleadings, and other evidence available before the Court to properly resolve those
questions, it is constrained to refrain from passing upon them. South Cotabato Communications Corporation
and Gauvain J. Benzonan vs. Hon. Patricia A. Sto. Tomas, Secretary Of Labor And Employment, Rolando
Fabrigar, Merlyn Velarde, Vince Lamboc, Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos,
Merlyn Coliao And Edgar Jopson, G.R. No. 173326, December 15, 2010.
Labor-only contracting and job contracting; how determined. The character of a business, that is, whether as
labor-only contractor or as job contractor, should be determined in terms of the criteria set by statute. In one
case the Court has explained that despite the fact that the service contracts contain stipulations which are
earmarks of independent contractorship, they do not make it legally so. The language of a contract is neither
determinative nor conclusive of the relationship between the parties. The parties cannot dictate, by a
declaration in a contract, the character of a business. Thus, in distinguishing between the prohibited labor-only
contracting and permissible job contracting, the totality of the facts and the surrounding circumstances of the
case are to be considered. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi
Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping
Corporation,G.R. No. 186091, December 15, 2010.
Labor-only contracting; elements. Labor-only contracting, a 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. Emmanuel
Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr.,
Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No. 186091, December 15,
2010.
Labor-only contracting; workers are regular employees of principal. Indubitably, BMSI can only be classified
as a labor-only contractor. Consequently, the workers that BMSI supplied to its principal LSC became regular
employees of the latter. Having gained regular status, petitioners were entitled to security of tenure and could
only be dismissed for just or authorized causes and after they had been accorded due process. The termination
of LSCs Agreement with BMSI cannot be considered a just or an authorized cause for petitioners
dismissal. Emmanuel Babas, Danilo T. Banag, Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa,
Maximo Soriano, Jr., Arsenio Estorque, And Felixberto Anajao, vs. Lorenzo Shipping Corporation, G.R. No.
186091, December 15, 2010.
Payroll reinstatement; effect of reversal on appeal. Since Metrobank chose payroll reinstatement for Aboc, he
then became a reinstated regular employee. This means that he was restored to his previous position as a
regular employee without loss of seniority rights and other privileges appurtenant thereto. His payroll
reinstatement put him on equal footing with the other regular employees insofar as entitlement to the benefits
given under the Collective Bargaining Agreement is concerned. The fact that the decision of the LA was
reversed on appeal has no controlling significance. The rule is that even if the order of reinstatement of the LA
is reversed on appeal, 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 final reversal by the higher court. Antonio A. Aboc vs.
Metropolitan Bank And Trust Company / Metropolitan Bank And Trust Company vs. Antonio A. Aboc, G.R.
Nos. 170542-43 and G.R. No. 176460, December 13, 2010 .
Petition for certiorari; period for filing; retroactive application of amendments. By virtue of the latest
amendment of Section 4, Rule 65 of the 1997 Rules of Civil Procedure introduced by Circular No. 56-2000,
the 60-day period to file a petition for certiorari should be reckoned from the date of receipt of the notice of the
denial of the motion for reconsideration or new trial, if one was filed. Being a curative statute, Circular No. 56-
2000 has been applied by Court retroactively in a number of cases. Given the above, respondent had a fresh
60-day period from the date she received a copy of the NLRC Resolution denying her motion for
reconsideration within which to file the petition for certiorari. Thus, the Court ruled that respondent
seasonably filed the petition within the reglementary period provided. The Coca-Cola Export Corporation, vs.
Clarita P. Gacayan, G.R. No. 149433, December 15, 2010 .
Registration as independent contractor; effect of. The CA erred in considering BMSIs Certificate of
Registration as sufficient proof that it is an independent contractor. In the case of San Miguel Corporation v.
Vicente B. Semillano, et. al., the Court has held that a Certificate of Registration issued by the Department of
Labor and Employment is not conclusive evidence of such status. The fact of registration simply prevents the
legal presumption of being a mere labor-only contractor from arising. Emmanuel Babas, Danilo T. Banag,
Arturo V. Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And
Felixberto Anajao, vs. Lorenzo Shipping Corporation,G.R. No. 186091, December 15, 2010.
Reinstatement; immediately executory pending appeal. Under Article 223 of the Labor Code, the decision of
the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is
concerned, shall be immediately executory pending appeal. The employee shall either be admitted back to
work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the
employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution
for reinstatement provided herein. In the case at bench, it cannot be denied that Metrobank opted to reinstate
Aboc in its payroll.Antonio A. Aboc vs. Metropolitan Bank And Trust Company / Metropolitan Bank And
Trust Company vs. Antonio A. Aboc, G.R. Nos. 170542-43 and G.R. No. 176460, December 13, 2010 .
Separation pay as a measure of social justice; when awarded. In several instances the Court has awarded
separation pay as a measure of social justice. However, the matter has been clarified in PLDT Co. v. NLRC
where the Court categorically declared that separation pay shall be allowed as a measure of social justice only
in those instances where the employee is validly dismissed for cause other than serious misconduct. In another
case, the Court ruled that in addition to serious misconduct, separation pay should not be conceded to an
employee who was dismissed based on willful disobedience. In the case at bar, it was established that the
infractions committed by the respondent constituted serious misconduct or willful disobedience resulting to
loss of trust and confidence. Clearly therefore, even based on equity and social justice, respondent does not
deserve the award of separation pay. Equitable PCI Bank (Now Banco De Oro Unibank, Inc.), vs. Castor A.
Dompor, G.R. Nos. 163293 & 163297, December 8, 2010.
Termination; grounds. Under the requirement of substantial due process, the grounds for termination of
employment must be based on just or authorized causes. Article 282 of the Labor Code enumerates the just
causes for the termination of employment, thus: (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. The Coca-Cola Export Corporation, vs.
Clarita P. Gacayan, G.R. No. 149433, December 15, 2010 .
Verification and certification; effect of failure to sign. A petition satisfies the formal requirements only with
regard to those who signed the petition, but not the co-petitioners who did not sign nor authorize the other
petitioners to sign it on their behalf. In the case at bar, only seven (7) of the nine petitioners signed the
verification and certification against forum shopping. Thus, the other petitioners who did not sign cannot be
recognized as petitioners and have no legal standing before the Court. The petition should be dismissed
outright with respect to such non-conforming petitioners. Emmanuel Babas, Danilo T. Banag, Arturo V.
Villarin, Sr., Edwin Javier, Sandi Bermeo, Rex Allesa, Maximo Soriano, Jr., Arsenio Estorque, And Felixberto
Anajao, vs. Lorenzo Shipping Corporation,G.R. No. 186091, December 15, 2010.
Verification and certification; substantial compliance rule. The requirement of the certification of non-forum
shopping is rooted in the principle that a party-litigant shall not be allowed to pursue simultaneous remedies in
different fora. However, the Court has relaxed the rule under justifiable circumstances, considering that,
although it is obligatory, it is not jurisdictional. Not being jurisdictional, it can be relaxed under the rule of
substantial compliance. In the case at bar, the Court holds that there has been substantial compliance on the
petitioners part in consonance with our ruling in one case that the President of a petitioner-corporation is in a
position to verify the truthfulness and correctness of the allegations in the petition. Petitioner Benzonan clearly
satisfies the aforementioned jurisprudential requirement because he is the President of petitioner-corporation.
Moreover, he is also named as co-respondent of petitioner-corporation in the labor case which is the subject
matter of the special civil action. South Cotabato Communications Corporation and Gauvain J. Benzonan
vs. Hon. Patricia A. Sto. Tomas, Secretary Of Labor And Employment, Rolando Fabrigar, Merlyn Velarde,
Vince Lamboc, Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel Roderos, Merlyn Coliao And Edgar
Jopson, G.R. No. 173326, December 15, 2010.
Verification and certification; who can sign for the company without need of board resolution. In previous
cases, the Court has held that the following can sign the verification and certification against forum shopping
without need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the President of a
corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and (5) an
Employment Specialist in a labor case. While the above cases do not provide a complete listing of authorized
signatories, the determination of the sufficiency of the authority was done on a case to case basis. In the
foregoing cases the authority of said corporate representatives to sign the verification or certificate is justified
in their being in a position to verify the truthfulness and correctness of the allegations in the petition. However,
the better procedure is still to append a board resolution to the complaint or petition to obviate questions
regarding the authority of the signatory of the verification and certification. South Cotabato Communications
Corporation and Gauvain J. Benzonan vs. Hon. Patricia A. Sto. Tomas, Secretary Of Labor And Employment,
Rolando Fabrigar, Merlyn Velarde, Vince Lamboc, Felipe Galindo, Leonardo Miguel, Julius Rubin, Edel
Roderos, Merlyn Coliao And Edgar Jopson, G.R. No. 173326, December 15, 2010.
January 2011 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on February 18, 2011 by Leslie C. Dy Posted in Labor Law Tagged backwages, compensable
illness, complaint,constructive dismissal, due process, employee benefits, employer-employee relationship, illegal
dismissal, illegal recruitment, jurisdiction, NLRC
Here are selected January 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:
Apprenticeship agreement; validity. The apprenticeship agreements did not indicate the trade or occupation in
which the apprentice would be trained; neither was the apprenticeship program approved by the Technical
Education and Skills Development Authority (TESDA). These were defective as they were executed in
violation of the law and the rules. Moreover, with the expiration of the first agreement and the retention of the
employees, the employer, 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 Codes implementing
rules and is an act manifestly unfair to the employees. Atlanta Industries, Inc. and/or Robert Chan vs. Aprilito
R. Sebolino, et al., G.R. No. 187320, January 26, 2011.
Complaint; reinstatement. Petitioners question the order to reinstate respondents to their former positions,
considering that the issue of reinstatement was never brought up before the Court of Appeals and respondents
never questioned the award of separation pay to them. 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
evidence 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 in addition to the specific remedy sought, if the facts alleged in the
complaint and the evidence introduced so warrant. 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. Therefore, the court may
grant relief warranted by the allegations and the proof even if no such relief is 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. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado
Garcia, et al., G.R. No. 167291, January 12, 2011.
Collection of accrued wages; two-fold test. After the Labor Arbiters 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 employers unjustified act or omission. If the delay is due to the employers unjustified
refusal, the employer may still be required to pay the salaries notwithstanding the reversal of the Labor
Arbiters Decision. Social Security System vs. Efren Capada, et al., G.R. No. 168501, January 31, 2011.
Disciplinary measures; management prerogative. The policy of suspending drivers pending payment of arrears
in their boundary obligations is reasonable. It is acknowledged that an employer has free rein and enjoys a
wide latitude of discretion to regulate all aspects of employment, including the prerogative to instill discipline
on his employees and to impose penalties, including dismissal, if warranted, 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 managements discretion. The only limitation on the exercise of management prerogative
is that the policies, rules, and regulations on work-related activities of the employees must always be fair and
reasonable, and the corresponding penalties, when prescribed, commensurate to the offense involved and to the
degree of the infraction. Primo E. Caong, Jr., et al. vs. Avelino Regualos, G.R. No. 179428, January 26, 2011.
Dismissal; constructive dismissal. Respondent was suspended for one year after being charged with and found
liable for AWOL. After serving her suspension, respondent was allowed to return to work. Respondent cannot
be considered to have been constructively dismissed by the petitioner during her period of suspension.
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, there was no cessation of employment relations between the
parties. It is unrefuted that respondent promptly resumed teaching at the university right after the expiration of
the suspension period. In other words, respondent never quit. Hence, she cannot claim to have been left with
no choice but to quit, a crucial element in a finding of constructive dismissal. The University of the
Immaculate Conception, et al. vs. NLRC, et al., G.R. No. 181146, January 26, 2011.
Dismissal; due process. Respondent employee reported to the petitioner employer the loss of cash which she
placed inside the company locker. Immediately, petitioner ordered that she be strip-searched by the company
guards. However, the search on her and her personal belongings yielded nothing. The petitioner also reported
the matter to the police and requested the Prosecutors Office for an inquest. Respondent was constrained to
spend two weeks in jail for failure to immediately post bail. The Court ruled that petitioners failed to accord
respondent substantive and procedural due process. Article 277(b) of the Labor Code mandates that subject to
the constitutional right of workers to security of tenure and their right to be protected against dismissal, except
for just and authorized cause and without prejudice to the requirement of notice under Article 283 of the same
Code, 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. The due process
requirements under the Labor Code are mandatory and may not be supplanted by police investigation or court
proceedings. The criminal aspect of the case is considered independent of the administrative aspect. Thus,
employers should not rely solely on the findings of the Prosecutors Office. They are mandated to conduct their
own separate investigation, and to accord the employee every opportunity to defend himself. Robinsons
Galleria/Robinsons Supermarket Corp. and/or Jess Manuel vs. Irene R. Ranchez, G.R. No. 177937, January
19, 2011.
Dismissal; neglect of duty. 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 ones duties. Habitual neglect implies repeated
failure to perform ones 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. Hospital Management
Services Medical Center Manila vs. Hospital Management Services, Inc. Medical Center Manila
Employees Association-AFW., G.R. No. 176287, January 31, 2011.
Dismissal; negligence in patient management. 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. Hospital Management Services Medical
Center Manila vs. Hospital Management Services, Inc. Medical Center Manila Employees Association-
AFW., G.R. No. 176287, January 31, 2011.
Employee benefits; compensable illness. The degree of proof required under P.D. 626 is merely substantial
evidence, which means such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion. Accordingly, the claimant must show, at least by substantial evidence that the development of the
disease was brought about largely by the conditions present in the nature of the job. What the law requires is a
reasonable work connection, not a direct causal relation. Alexander B. Gatus vs. Social Security System, G.R.
No. 174725, January 26, 2011.
Employer-employee relationship; jeepney driver. It is already settled that the relationship
betweenjeepney owners/operators and jeepney drivers under the boundary system is that of employer-
employee and not of lessor-lessee. The fact that the drivers do not receive fixed wages but only get the amount
in excess of the so-called boundary that they pay to the owner/operator is not sufficient to negate the
relationship between them as employer and employee. Primo E. Caong, Jr., et al. vs. Avelino Regualos, G.R.
No. 179428, January 26, 2011.
Employer-employee relationship; primary element. 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. Petitioner asserts that his employer Manulifes control
over him was demonstrated (1) when it set the objectives and sales targets regarding production, recruitment
and training programs; and (2) when it prescribed the Code of Conduct for Agents and the Manulife Financial
Code of Conduct to govern his activities. However, the court ruled that all these appear to speak of control by
the insurance company over its agents. 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. They are, however, controls aimed only at specific results in undertaking an insurance agency,
and are, in fact, parameters set by law in defining an insurance agency and the attendant duties and
responsibilities an insurance agent must observe and undertake. 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. Petitioner is an insurance agent not an
employee. Gregorio V. Tongko vs. The Manufacturers Life Insurance Co. (Phils.), Inc. and Renato A. Vergel de
Dios, G.R. No. 167622, January 25, 2011.
Employer-employee relationship; probationary employment. 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. Robinsons Galleria/Robinsons Supermarket
Corp. and/or Jess Manuel vs. Irene R. Ranchez, G.R. No. 177937, January 19, 2011.
Employer-employee relationship; regular employment. The respondent employees were already rendering
service to the company when they were made to undergo apprenticeship. The respondent were regular
employees because they occupied positions such as machine operator, scaleman and extruder operator tasks
that are usually necessary and desirable in petitioner employers usual business or trade as manufacturer of
plastic building materials. These tasks and their nature characterized the respondents 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. Atlanta
Industries, Inc. and/or Robert Chan vs. Aprilito R. Sebolino, et al., G.R. No. 187320, January 26, 2011.
Illegal dismissal; strained relations. Article 279 of the Labor Code provides that an employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges, to
full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement. However, due to the
strained relations of the parties, the payment of separation pay has been considered an acceptable alternative to
reinstatement, when the latter option is no longer desirable or viable. On the one hand, such payment liberates
the employee from what could be a highly oppressive work environment. On the other, the payment releases
the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer
trust. Thus, as 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. Robinsons Galleria/Robinsons
Supermarket Corp. and/or Jess Manuel vs. Irene R. Ranchez,G.R. No. 177937, January 19, 2011.
Illegal recruitment; elements. Recruitment and placement refers to the act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not. When a person or entity, in any
manner, offers or promises for a fee employment to two or more persons, that person or entity shall be deemed
engaged in recruitment and placement. Article 38(a) of the Labor Code, as amended, specifies that recruitment
activities undertaken by non-licensees or non-holders of authority are deemed illegal and punishable by law.
And when the illegal recruitment is committed against three or more persons, individually or as a group, then it
is deemed committed in large scale and carries with it stiffer penalties as the same is deemed a form of
economic sabotage. But to prove illegal recruitment, it must be shown that the accused, without being duly
authorized by law, gave complainants the distinct impression that he had the power or ability to send them
abroad for work, such that the latter were convinced to part with their money in order to be employed. It is
important that there must at least be a promise or offer of an employment from the person posing as a recruiter,
whether locally or abroad. People of the Philippines vs. Teresita Tessie Laogo, G.R. No. 176264, January
10, 2011.
Illegal dismissal; execution of waiver and quitclaim. An employees execution of a final settlement and receipt
of amounts agreed upon does not foreclose his right to pursue a claim for illegal dismissal. Thus, an employee
illegally retrenched is entitled to reinstatement without loss of seniority rights and privileges, as well as to
payment of full backwages from the time of her separation until actual reinstatement, less the amount which
he/she received as retrenchment pay.Bernadeth Londonio and Joan Corcoro vs. Bio Research, Inc. and Wilson
Y. Ang, G.R. No. 191459, January 17, 2011.
Jurisdiction; labor arbiter. Petitioner was removed from his position as a manager through a Board Resolution.
Petitioner filed a complaint for illegal dismissal before the labor arbiter. Respondents claimed that petitioner is
both a stockholder and a corporate officer of respondent corporation, hence, his action against respondents is
an intra-corporate controversy over which the Labor Arbiter has no jurisdiction. The Court ruled that this is
not an intra-corporate controversy but a labor case cognizable by the labor arbiter. To determine whether a case
involves an intra-corporate controversy that is to be heard and decided by the branches of the RTC specifically
designated by the Court to try and decide such cases, two tests must be applied: (a) the status or relationship
test, and (2) the nature of the controversy test. The first test requires that the controversy arise out of intra-
corporate or partnership relations among the stockholders, members or associates of the corporation,
partnership or association, between any or all of them and the corporation, partnership or association of which
they are stockholders, members or associates; between such corporation, partnership, or association and the
public or between such corporation, partnership, or association and the State insofar as it concerns its
franchise, license or permit to operate. The second test requires that the dispute among the parties be
intrinsically connected with the regulation of the corporation. The Court in this case held that petitioner is not
a corporate officer because he was not validly appointed by the Board, thus, failing the relationship test, and
that this is a case of employment termination which is a labor controversy and not an intra-corporate dispute,
thus failing the nature of the controversy test. Renato Real vs. Sangu Philippines, Inc. et al.,G.R. No. 168757.
January 19, 2011.
Jurisdiction; labor dispute. Article 217 of the Labor Code states that unfair labor practices and termination
disputes fall within the original and exclusive jurisdiction of the Labor Arbiter. As an exception, under Article
262 the Voluntary Arbitrator, upon agreement of the parties, shall also hear and decide all other labor disputes
including unfair labor practices and bargaining deadlocks. For the exception to apply, there must be 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 the parties have agreed to resort to voluntary
arbitration. The University of the Immaculate Conception, et al. vs. NLRC, et al., G.R. No. 181146, January 26,
2011.
NLRC; factual findings. Factual findings of labor officials, who are deemed to have acquired expertise in
matters within their jurisdiction, are generally accorded not only respect but even finality by the courts when
supported by substantial evidence, i.e., the amount of relevant evidence which a reasonable mind might accept
as adequate to justify a conclusion. But 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 grant the petition forcertiorari if it finds that the NLRC, in its assailed decision or resolution, made a
factual finding not supported by substantial evidence. Thus, it is within the jurisdiction of the CA to review the
findings of the NLRC. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia, et al., G.R. No.
167291, January 12, 2011.
Petition; certificate of non-forum shopping. While the general rule is that the certificate of non-forum shopping
must be signed by all the plaintiffs in a case and the signature of only one of them is insufficient, the Court has
stressed that the rules on forum shopping, which were designed to promote and facilitate the orderly
administration of justice, should not be interpreted with such absolute literalness as to subvert its own ultimate
and legitimate objective. Strict compliance with the provision regarding the certificate of non-forum shopping
underscores its mandatory nature in that the certification cannot be altogether dispensed with or its
requirements completely disregarded. It does not, however, prohibit substantial compliance therewith under
justifiable circumstances, considering especially that although it is obligatory, it is not jurisdictional. In a
number of cases, the Court has consistently held that when all the petitioners share a common interest and
invoke a common cause of action or defense, the signature of only one of them in the certification against
forum shopping substantially complies with the rules. Prince Transport, Inc. and Mr. Renato Claros vs.
Diosdado Garcia, et al., G.R. No. 167291, January 12, 2011.
Petition; failure to attach documents. The respondent workers sought that the petition be dismissed outright for
the petitioners failure to attach to the petition a copy of the Production and Work Schedule and a copy of the
compromise agreement allegedly entered into material portions of the record that should accompany and
support the petition, pursuant to Section 4, Rule 45 of the Rules of Court. In Mariners Polytechnic Colleges
Foundation, Inc. v. Arturo J. Garchitorena the Court held that the phrase of the pleadings and other material
portions of the record xxx as would support the allegation of the petition clearly contemplates the exercise of
discretion on the part of the petitioner in the selection of documents that are deemed to be relevant to the
petition. The crucial issue to consider then is whether or not the documents accompanying the petition
sufficiently supported the allegations therein. The failure to attach copy of the subject documents is not fatal
as the challenged CA decision clearly summarized the labor tribunals rulings. Atlanta Industries, Inc. and/or
Robert Chan vs. Aprilito R. Sebolino, et al., G.R. No. 187320, January 26, 2011.
Petition; verification. The verification requirement is deemed substantially complied with when some of the
parties who undoubtedly have sufficient knowledge and belief to swear to the truth of the allegations in the
petition had signed the same. Such verification is deemed a sufficient assurance that the matters alleged in the
petition have been made in good faith or are true and correct, and not merely speculative. In any case, the
settled rule is that a pleading which is required by the Rules of Court to be verified, may be given due course
even without a verification if the circumstances warrant the suspension of the rules in the interest of justice.
Indeed, the absence of a verification is not jurisdictional, but only a formal defect, which does not of itself
justify a court in refusing to allow and act on a case. Hence, the failure of some of the respondents to sign the
verification attached to their Memorandum of Appeal filed with the NLRC is not fatal to their cause of
action. Prince Transport, Inc. and Mr. Renato Claros vs. Diosdado Garcia, et al., G.R. No. 167291, January
12, 2011.
Regional director; review of decision. Petitioner appealed an adverse decision to the BLR. BLR Director
inhibited himself from the case because he had been a former counsel of respondent. In view of the inhibition,
DOLE Secretary took cognizance of the appeal. Jurisdiction to review the decision of the Regional Director
lies with the BLR. Once jurisdiction is acquired by the court, it remains with it until the full termination of the
case. Thus, jurisdiction remained with the BLR despite the BLR Directors inhibition. When the DOLE
Secretary resolved the appeal, she merely stepped into the shoes of the BLR Director and performed a function
that the latter could not himself perform. She did so pursuant to her power of supervision and control over the
BLR. The Heritage Hotel Manila, acting through its owner, Grand Plaza Hotel, Corp. 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.
Union registration; cancellation. The amendment introduced by RA 9481 sought to strengthen the workers
right to self-organization and enhance the Philippines compliance with its international obligations as
embodied in the International Labour Organization (ILO) Convention No. 87, pertaining to the non-dissolution
of workers organizations by administrative authority. ILO Convention No. 87 provides that workers and
employers organizations shall not be liable to be dissolved or suspended by administrative authority. The ILO
has expressed the opinion that the cancellation of union registration by the registrar of labor unions, which in
our case is the BLR, is tantamount to dissolution of the organization by administrative authority when such
measure would give rise to the loss of legal personality of the union or loss of advantages necessary for it to
carry out its activities, which is true in our jurisdiction. Although the ILO has allowed such measure to be
taken, provided that judicial safeguards are in place, i.e., the right to appeal to a judicial body, it has
nonetheless reminded its members that dissolution of a union, and cancellation of registration for that matter,
involve serious consequences for occupational representation. It has, therefore, deemed it preferable if such
actions were to be taken only as a last resort and after exhausting other possibilities with less serious effects on
the organization. It is undisputed that appellee failed to submit its annual financial reports and list of individual
members in accordance with Article 239 of the Labor Code. However, the existence of this ground should not
necessarily lead to the cancellation of union registration. At any rate, the Court in this case took note of the fact
that on 19 May 2000, appellee had submitted its financial statement for the years 1996-1999. With this
submission, appellee has substantially complied with its duty to submit its financial report for the said
period. The Heritage Hotel Manila, acting through its owner, Grand Plaza Hotel, Corp. 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.
Wages; payment pending reinstatement. Employees are entitled to their accrued salaries during the period
between the Labor Arbiters order of reinstatement pending appeal and the resolution of the National Labor
Relations Commission (NLRC) overturning that of the Labor Arbiter. Otherwise stated, even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, the employer is still obliged to reinstate and pay the
wages of the employee during the period of appeal until reversal by a higher court or tribunal. On the other
hand, if the employee has been reinstated during the appeal period and such reinstatement order is reversed
with finality, the employee is not required to reimburse whatever salary he received for he is entitled to such,
more so if he actually rendered services during the period. Social Security System vs. Efren Capada, et al.,G.R.
No. 168501, January 31, 2011.
February 2011 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on March 18, 2011 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law
Taggedabandonment, burden of proof, certiotari, constructive dismissal, due process, execution, illegal
dismissal, jurisdiction,project employee, quitclaim, redundancy, retrenchment, unfair, union
Here are selected February 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:
Abandonment; elements. Respondents filed an illegal dismissal case against the petitioner-corporation. For its
defense, petitioner-corporation alleged that the respondents abandoned their work and were not dismissed, and
that it sent letters advising respondents to report for work, but they refused. The Court held that 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 employees 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. Based on the evidence presented, 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 the known concept of what constitutes
abandonment. E.G. & I. Construction Corporation and Edsel Galeos v. Ananias P. Sato, et al., G.R. No.
182070, February 16, 2011.
Certification election; petition for cancellation of union registration. Respondent union filed a petition for
certification election. Petitioner moved to dismiss the petition for certification election alleging the pendency
of a petition for cancellation of the unions registration. The DOLE Secretary ruled in favor of the legitimacy
of the respondent as a labor organization and ordered the immediate conduct of a certification election.
Pending appeal in the Court of Appeals, the petition for cancellation was granted and became final and
executory. Petitioner argued that the cancellation of the unions certificate of registration should retroact to the
time of its issuance. Thus, it claimed that the unions petition for certification election and its demand to enter
into collective bargaining agreement with the petitioner should be dismissed due to respondents lack of legal
personality. The Court ruled that the pendency of a petition for cancellation of union registration does not
preclude collective bargaining, and that an order to hold a certification election is proper despite the pendency
of the petition for cancellation of the unions registration because at the time the respondent union filed its
petition, it still had the legal personality to perform such act absent an order cancelling its registration. Legend
International Resorts Limited v. Kilusang Manggagawa ng Legenda, G.R. No. 169754, February 23, 2011.
Certiorari under Rule 65; review of facts by the Court of Appeals. While it is true that factual findings made by
quasi-judicial and administrative tribunals, if supported by substantial evidence, are accorded great respect and
even finality by the courts, this general rule admits of exceptions. When there is a showing that a palpable and
demonstrable mistake that needs rectification has been committed or when the factual findings were arrived at
arbitrarily or in disregard of the evidence on record, these findings may be examined by the courts. In the
present case, the Court of Appeals found itself unable to completely sustain the findings of the NLRC thus, it
was compelled to review the facts and evidence and not limit itself to the issue of grave abuse of
discretion. Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, February
9, 2011.
Construction Industry; project employees. Petitioner is a duly licensed labor contractor engaged in painting
houses and buildings. Respondents, former painters of the petitioner, filed an illegal dismissal case against
petitioner. Petitioner alleged that the respondents abandoned their job and were not dismissed by the petitioner.
The Labor Arbiter ruled that there was neither illegal dismissal nor abandonment of job and that the
respondents should be reinstated but without any backwages. On appeal, petitioner alleged that the
reinstatement of respondents to their former positions, which were no longer existing, is impossible, highly
unfair and unjust. It further alleged that the project they were working on at the time of their alleged dismissal
was already completed. Having completed their tasks, their positions automatically ceased to exist. Thus, there
were no more positions where they can be reinstated as painters. The Court ruled 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.
Respondents belonged to the second type and are classified as regular employees of petitioner. It is clear from
the records of the case 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 and the specific work to be performed and there is no proof that
they were made aware of these terms and conditions of their employment at the time of hiring. Thus, it is now
too late for petitioner 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 when the
following factors concur: (1) There is a continuous rehiring of project employees even after cessation of a
project; and (2) The tasks performed by the alleged project employee are vital, necessary and indispensable to
the usual business or trade of the employer. In this case, 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 petitioner, which was 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. Exodus International
Construction Corporation, et al. v. Guillermo Biscocho, et al., G.R. No. 166109, February 23, 2011.
Constructive Dismissal; security guards. Respondent was hired by petitioner, a security agency, as a security
guard. He was assigned at the Philippine Heart Center until his relief on January 30, 2006. Respondent was
not given any assignment thereafter. Thus, on August 2, 2006, he filed a complaint for constructive dismissal
and nonpayment of 13
th
month pay, with prayer for damages against petitioner. To refute the claim, petitioner
alleged that respondent was not constructively or illegally dismissed, but had voluntarily resigned. The Court
held that respondent was constructively dismissed. In cases involving security guards, a relief and transfer
order in itself does not sever employment relationship between a security guard and his agency. An employee
has the right to security of tenure, but this does not give him a vested right to his position as would deprive the
company of its prerogative to change his assignment or transfer him where his service, as security guard, will
be most beneficial to the client. Temporary off-detail or the period of time security guards are made to wait
until they are transferred or assigned to a new post or client does not constitute constructive dismissal, so long
as such status does not continue beyond six months. Theonus of proving that there is no post available to
which the security guard can be assigned rests on the employer. In the instant case, the failure of petitioner to
give respondent a work assignment beyond the reasonable six-month period makes it liable for constructive
dismissal. Nationwide Security and Allied Services, Inc. v. Ronald P. Valderama, G.R. No. 186614, February
23, 2011.
Constructive dismissal; defense of abandonment. Respondent filed an illegal dismissal case against the
petitioner. Petitioner alleged that respondent abandoned his job and was not dismissed. The Court held that
respondent was illegally dismissed. The jurisprudential rule on abandonment is constant. It is a matter of
intention and cannot lightly be presumed from certain equivocal acts. To constitute abandonment, two elements
must concur: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear
intent, manifested through overt acts, to sever the employer-employee relationship. In this case, petitioner
failed to establish clear evidence of respondents intention to abandon his employment. Except for petitioners
bare assertion that respondent did not report to the office for reassignment, no proof was offered to prove that
respondent intended to sever the employer-employee relationship. Besides, the fact that respondent filed the
instant complaint negates any intention on his part to forsake his work. It is a settled doctrine that the filing of
a complaint for illegal dismissal is inconsistent with the charge of abandonment, for an employee who takes
steps to protest his dismissal cannot by logic be said to have abandoned his work. Nationwide Security and
Allied Services, Inc. v. Ronald P. Valderama, G.R. No. 186614, February 23, 2011.
Constructive dismissal; defense of resignation. Respondent, a security guard, filed an illegal dismissal case
against the petitioner. To refute the claim, petitioner alleged that respondent was not constructively or illegally
dismissed, but had voluntarily resigned. Petitioner alleged that respondents resignation is evident from his
withdrawal of his cash and firearm bonds. Resignation is the voluntary act of an employee who is in a situation
where one believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and one
has no other choice but to dissociate oneself from employment. It is a formal pronouncement or relinquishment
of an office. The intent to relinquish must concur with the overt act of relinquishment. Thus, the acts of the
employee before and after the alleged resignation must be considered in determining whether, he or she, in
fact, intended to sever his or her employment. Should the employer interpose the defense of resignation, it is
incumbent upon the employer to prove that the employee voluntarily resigned. On this point, the Court held
that petitioner failed to discharge its burden. Moreover, the filing of a complaint belies petitioners claim that
respondent voluntarily resigned. Nationwide Security and Allied Services, Inc. v. Ronald P. Valderama, G.R.
No. 186614, February 23, 2011.
Execution of Judgment; properties covered. Premier Allied and Contracting Services, Inc. (PACSI) and its
President, the petitioner, were held liable to pay the respondents separation pay and attorneys fees. To execute
this judgment, the NLRC sheriff issued a Notice of Sale of a property with a TCT in the name of the petitioner
and his wife. The Court ruled that the Notice of Sale is null and void. 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. The
TCT of the property bears out that, indeed, it belongs to petitioner and his wife. Thus, even if we consider
petitioner as an agent of the corporation and, therefore, not a stranger to the case such that the provision on
third-party claims will not apply to him, the property was registered not only in the name of petitioner but also
of his wife. She stands to lose the property subject of execution without ever being a party to the case. This
will be tantamount to deprivation of property without due process. Paquito V. Ando v. Andresito Y. Campo, et
al., G.R. No. 184007, February 16, 2011.
Illegal dismissal; burden of proof. Respondents filed an illegal dismissal case against petitioner. Petitioner
alleged that the respondents abandoned their work and were never dismissed by the petitioner. NLRC ruled
that the respondents were not illegally dismissed since they failed to present a written notice of termination.
This was however reversed by the Court of Appeals. The Court held that a written notice of dismissal is not a
pre-requisite for a finding of illegal dismissal. Petitioner failed to prove that respondents were dismissed for a
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. E.G. & I. Construction Corporation and Edsel Galeos v.
Ananias P. Sato, et al., G.R. No. 182070, February 16, 2011.
Illegal dismissal; burden of proof. Respondents filed an illegal dismissal case against the petitioners.
Petitioners, in their defense, alleged that the respondents abandoned their work and were not dismissed by the
petitioners. Although In cases of illegal dismissal, the employer bears the burden of proof to prove that the
termination was for a valid or authorized cause, the employee must first establish by substantial evidence the
fact that he was dismissed. If there is no dismissal, then there can be no question as to the legality or illegality
thereof. In the present case, the Court held that there was no evidence that respondents were dismissed or that
they were 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. Exodus
International Construction Corporation, et al. v. Guillermo Biscocho, et al., G.R. No. 166109, February 23,
2011.
Illegal dismissal; final and executory judgment. Respondent employee filed an illegal dismissal case against
the petitioner-company and Tom Madula, its operations manager. The case was dismissed by the labor arbiter
and the dismissal was affirmed by NLRC. On August 29, 2002, the Court of Appeals reversed and set aside the
NLRC decision and resolution. The CA ordered the petitioner company to pay respondent separation pay,
moral and exemplary damages, and attorneys fees. The decision became final and executory on February 27,
2004, and consequently a writ of execution was issued. Petitioner-company filed a Motion to Quash Writ of
Execution. The Labor Arbiter granted the Motion and exonerated the petitioner company from paying
backwages and held that it was petitioner Madula who should be liable to pay backwages. Respondent then
filed before the CA a Very Urgent Motion for Clarification of Judgment. On December 10, 2004, CA granted
the Motion and held that petitioner-company is solely liable for the judgment award. 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
underlying reason for the rule is two-fold: (1) to avoid delay in the administration of justice and thus make
orderly the discharge of judicial business, and (2) to put judicial controversies to an end, at the risk of
occasional errors, inasmuch as controversies cannot be allowed to drag on indefinitely and the rights and
obligations of every litigant must not hang in suspense for an indefinite period of time. What the CA rendered
on December 10, 2004 was a nunc pro tunc order clarifying the decretal portion of its August 29, 2002
Decision. 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. It is
not to correct judicial errors, such as to render a judgment anew in place of the one it rendered, nor to supply
nonaction by the court, however erroneous the judgment may have been. Filipinas Palmoil Processing, Inc.
and Dennis T. Villareal v. Joel P. Dejapa, represented by his Attorney-in-Fact Myrna Manzano, G.R. No.
167332, February 7, 2011.
Illegal dismissal; liability of corporate officers. Petitioner filed a complaint against respondent company and its
officers for illegal dismissal, unfair labor practice, and money claims. Petitioner alleged that the officers should
be held personally liable for the acts of company which were tainted with bad faith and arbitrariness. 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. 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. Moral damages are awarded only where the dismissal was attended by bad faith or fraud,
or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public
policy. Exemplary damages may avail if the dismissal was effected in a wanton, oppressive or malevolent
manner. In the present case, the Court held that petitioner failed to prove that his dismissal was orchestrated by
the individual respondents and their acts were attended with bad faith or were done oppressively. Nelson A.
Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011 .
Illegal dismissal; redundancy. Respondent-company, due to business troubles and losses, implemented a Right-
Sizing Program which entailed a company-wide reorganization involving the transfer, merger, absorption or
abolition of certain departments of the company. As a result, respondent-company terminated the services of
petitioner on account of redundancy. Petitioner filed a complaint against respondent-company and its officers
for illegal dismissal, unfair labor practice, and money claims. The Court ruled that petitioner was validly
dismissed. 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.
The Court has been consistent in holding that the determination of whether or not an employees services are
still needed or sustainable properly belongs to the employer. Provided there is no violation of law or a
showing that the employer was prompted by an arbitrary or malicious act, the soundness or wisdom of this
exercise of business judgment is not subject to the discretionary review of the Labor Arbiter and the NLRC.
However, an employer cannot simply declare that it has become overmanned and dismiss its employees
without producing adequate proof to sustain its claim of redundancy. 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 Court also held that the following evidence may be proffered to
substantiate redundancy: adoption of a 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. Nelson A.
Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011.
Labor Union; collateral attack on legal personality. . Petitioner moved to dismiss the petition for certification
election filed by respondent union by questioning the validity of the respondents union registration. The Court
held that legitimacy of the legal personality of respondent cannot be collaterally attacked in a petition for
certification election proceeding but only through a separate action instituted particularly for the purpose of
assailing it. The Implementing Rules stipulate that a labor organization shall be deemed registered and vested
with legal personality on the date of issuance of its certificate of registration. Once a certificate of registration
is issued to a union, its legal personality cannot be subject to a collateral attack. It may be questioned only in
an independent petition for cancellation in accordance with Section 5 of Rule V, Book V of the Implementing
Rules. Legend International Resorts Limited v. Kilusang Manggagawa ng Legenda, G.R. No.
169754 , February 23, 2011 .
Money claims; burden of proof. Respondents alleged that petitioner-corporation failed to pay them their full
compensation. The Labor Arbiter granted their monetary claims but the NLRC reversed the award considering
that the petitioner-corporation submitted copies of payrolls, which it annexed to its memorandum on appeal,
showing full 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. In this case, the submission by petitioner-corporation of the
time records and payrolls only when the case was on appeal before the NLRC is contrary to the elementary
precepts of justice and fair play. Respondents were not given the opportunity to check the authenticity and
correctness of the evidence submitted on appeal. Thus, the Supreme Court held that the monetary claims of
respondents should be granted. It is a time-honored principle that if doubts exist between the evidence
presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. It is the
rule in controversies between a laborer and his master that doubts reasonably arising from the evidence, or in
the interpretation of agreements and writing, should be resolved in the formers favor. E.G. & I. Construction
Corporation and Edsel Galeos v. Ananias P. Sato, et al., G.R. No. 182070 ,February 16, 2011.
National Labor Relations Commission; jurisdiction. Respondents filed an illegal dismissal case against
Premier Allied and Contracting Services, Inc. (PACSI) and its President, the petitioner. PACSI and the
petitioner were held liable to pay the respondents separation pay and attorneys fees. To execute this judgment,
NLRC sheriff issued a Notice of Sale of a property with TCT in the name of the petitioner and his wife.
Petitioner filed an action for prohibition and damages with prayer for the issuance of a temporary restraining
order (TRO) before the Regional Trial Court (RTC). The Court ruled that the RTC lacks jurisdiction to resolve
the matter. The Court has long recognized that regular courts have no jurisdiction to hear and decide questions
which arise from and are incidental to the enforcement of decisions, orders, or awards rendered in labor cases
by appropriate officers and tribunals of the Department of Labor and Employment. To hold otherwise is to
sanction splitting of jurisdiction which is obnoxious to the orderly administration of justice. The NLRC
Manual on the Execution of Judgment deals specifically with third-party claims in cases brought before that
body. It defines a third-party claim as one where a person, not a party to the case, asserts title to or right to the
possession of the property levied upon. It also sets out the procedure for the filing of a third-party claim, to wit:
such person shall make an affidavit of his title thereto or right to the possession thereof, stating the grounds of
such right or title and shall file the same with the sheriff and copies thereof served upon the Labor Arbiter or
proper officer issuing the writ and upon the prevailing party. In the present case, there is no doubt that
petitioners complaint is a third-party claim within the cognizance of the NLRC. Petitioner may indeed be
considered a third party in relation to the property subject of the execution since there is no question that the
property belongs to petitioner and his wife, and not to the corporation. It can be said that the property belongs
to the conjugal partnership, and not to petitioner alone. At the very least, the Court can consider petitioners
wife to be a third party within the contemplation of the law. Paquito V. Ando v. Andresito Y. Campo, et al., G.R.
No. 184007, February 16, 2011.
Placement Fee; proof of excessive collection. Petitioner filed a complaint against respondent for collection of
excess placement fee defined in Article 34(a) of the Labor Code. Petitioner presented as her evidence a
promissory note reflecting excessive fees and testified as to the deductions made by her foreign employer. On
the other hand, respondent presented an acknowledgment receipt reflecting collection of an amount authorized
by POEA. The Court held that the pieces of evidence presented by petitioner are not substantial enough to
show that the respondent collected from her more than the allowable placement fee. In proceedings before
administrative and quasi-judicial agencies, the quantum of evidence required to establish a fact is substantial
evidence, or that level of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion. The Court gave more credence to respondents evidence consisting of the acknowledgment receipt
showing the amount paid by petitioner and received by respondent. A receipt is a written and signed
acknowledgment that money or goods have been delivered. Although a receipt is not conclusive evidence, an
exhaustive review of the records of the case fails to disclose any other evidence sufficient and strong enough to
overturn the acknowledgment embodied in respondents receipt as to the amount it actually received from
petitioner. Having failed to adduce sufficient rebuttal evidence, petitioner is bound by the contents of the
receipt issued by respondent. The subject receipt remains as the primary or best evidence. The promissory note
presented by petitioner cannot be considered as adequate evidence to show the excessive placement fee. It
must be emphasized that a promissory note is a solemn acknowledgment of a debt and a formal commitment to
repay it on the date and under the conditions agreed upon by the borrower and the lender. A person who signs
such an instrument is bound to honor it as a legitimate obligation duly assumed by him through the signature
he affixes thereto as a token of his good faith. The fact that respondent is not a lending company does not
preclude it from extending a loan to petitioner for her personal use. As for the deductions purportedly made by
petitioners foreign employer, the Court noted that there is no single piece of document or receipt showing that
deductions have in fact been made, or is there any proof that these deductions from the salary formed part of
the subject placement fee. To be sure, mere general allegations of payment of excessive placement fees cannot
be given merit as the charge of illegal exaction is considered a grave offense which could cause the suspension
or cancellation of the agencys license. They should be proven and substantiated by clear, credible, and
competent evidence. Avelina F. Sagun v. Sunace International Management Services, Inc., G.R. No. 179242,
February 23, 2011.
Procedural due process; notice requirements. Petitioner was dismissed by respondent-company due to
redundancy. However, it failed to provide the Department of Labor and Employment with a written notice
regarding petitioners termination. The notice of termination was also not properly served on the petitioner.
Further, a reading of the notice shows that respondent-company failed to properly inform the petitioner of the
grounds for his termination. There are two aspects which characterize the concept of due process under the
Labor Code: one is substantive whether the termination of employment was based on the provision of the
Labor Code or in accordance with the prevailing jurisprudence; the other is procedural the manner in which
the dismissal was effected. There is a psychological effect or a stigma in immediately finding ones self laid off
from work. This is why our labor laws have provided for procedural due process. While employers have the
right to terminate employees it can no longer sustain, our laws also recognize the employees right to be
properly informed of the impending termination of his employment. Though the failure of respondent-
company to comply with the notice requirements under the Labor Code did not affect the validity of the
dismissal, petitioner is however entitled to nominal damages in addition to his separation pay. Nelson A. Culili
v. Eastern Telecommunications Philippines, Inc., et al. G.R. No. 165381, February 9, 2011.
Quitclaims; validity. Respondents were terminated from employment due to retrenchment implemented by
petitioner. Upon their dismissal, the respondents signed individual Release Waiver and Quitclaim. The Court
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. In this case, the respondents were sufficiently apprised of their rights
under the waivers and quitclaims that they signed. Each document contained the signatures of the union
president and its counsel, which proved that respondents were duly assisted when they signed the waivers and
quitclaims. Hence, the Court upheld the validity of the waivers and quitclaims signed by the respondents in this
case. Plastimer Industrial Corporation and Teo Kee Bin v. Natalia C. Gopo, et al., G.R. No. 183390, February
16, 2011.
Retrenchment; notice requirements. Petitioner issued a Memorandum informing all its employees of the
decision of the companys Board of Directors to downsize and reorganize its business operations due to the
change of its corporate structure. Petitioner served the individual notice of termination on its employees on
May 14, 2004 or 30 days before the effective date of their termination on 13 June 2004, while it submitted the
notice of termination to the Department of Labor and Employment only on 26 May 2004, short of the one-
month prior notice requirement under Article 283 of the Labor Code. The Court held that petitioners failure to
comply with the one-month notice to the DOLE is only a procedural infirmity and does not render the
retrenchment illegal. When the dismissal is for a just cause, the absence of proper notice will not nullify the
dismissal or render it illegal or ineffectual. Instead, the employer should indemnify the employee for violation
of his statutory rights. Plastimer Industrial Corporation and Teo Kee Bin v. Natalia C. Gopo, et al., G.R. No.
183390, February 16, 2011.
Retrenchment; notice requirements. In 2004, the petitioner had to retrench and consequently terminate the
employment of the respondents. Respondents questioned the validity of the retrenchment, and alleged that
though petitioners financial statements in 2001 and 2002 reflected losses, it declared net income in 2003. The
Court ruled that the fact that there was a net income in 2003 does mean that there was no valid reason for the
retrenchment. Records showed that the net income of P6,185,707.05 in 2003 was not enough to allow
petitioners to recover the loss ofP52,904,297.88 which it suffered 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. Plastimer
Industrial Corporation and Teo Kee Bin v. Natalia C. Gopo, et al., G.R. No. 183390, February 16, 2011.
Unfair Labor Practice; right to self-organize. Respondent-company implemented a company-wide
reorganization which resulted in the abolition of petitioners position. Petitioner alleged that he was illegally
dismissed and that respondent-company is guilty of unfair labor practice because his functions were
outsourced to labor-only contractors. The Supreme Court held unfair labor practice refers to acts that violate
the workers right to organize. The prohibited acts are related to the workers right to self-organization and to
the observance of a CBA. Thus, an employer may be held liable for unfair labor practice only if it can be
shown that his acts interfere with his employees right to self-organization. Since there is no showing that the
respondent companys implementation of the Right-Sizing Program was motivated by ill will, bad faith or
malice, or that it was aimed at interfering with its employees right to self-organization, there is no unfair labor
practice to speak of in this case. Nelson A. Culili v. Eastern Telecommunications Philippines, Inc., et al. G.R.
No. 165381, February 9, 2011.
March 2011 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on April 14, 2011 by Leslie C. Dy Posted in Labor Law
Here are selected March 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:
Abandonment; elements. Respondent employee was dismissed by petitioners on the ground of alleged habitual
absenteeism and abandonment of work. Jurisprudence provides for two essential requirements for
abandonment of work to exist: (1) the failure to report for work or absence without valid or justifiable reason,
and (2) clear intention to sever the employer-employee relationship manifested by some overt acts should both
concur. Further, the employees deliberate and unjustified refusal to resume his employment without any
intention of returning should be established and proven by the employer. The Court held that petitioners failed
to prove that it was respondent employee 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. Petitioners failed to present evidence
that they sent these notices to respondent employees last known address for the purpose of warning him that
his continued failure to report would be construed as abandonment of work. Moreover, the fact that
respondent employee never prayed for reinstatement and has sought employment in another company which is
a competitor of petitioners cannot be construed as his overt acts of abandoning employment. Neither can the
delay of four months be taken as an indication that the respondent employees filing of a complaint for illegal
dismissal is a mere afterthought. Records show that respondent employee attempted to get his separation pay
and alleged commissions from the company, but it was only after his requests went unheeded that he resorted
to judicial recourse. Harpoon Marine Services, Inc., et al. v. Fernan H. Francisco, GR No. 167751, March 2,
2011.
Corporate officer; solidary liability. Respondent employee filed an illegal dismissal case against the Petitioner
Corporation and its President. Though the Court found that Respondent was illegally dismissed, it held that the
President of the Petitioner Corporation should not be held solidarily liable with Petitioner Corporation.
Obligations incurred by corporate officers, acting as such corporate agents, are not theirs but the direct
accountabilities of the corporation they represent. Thus, they should not be generally held jointly and solidarily
liable with the corporation. The general rule is grounded on the theory that a corporation has a legal personality
separate and distinct from the persons comprising it. As exceptions to the general rule, solidary liability may be
imposed: (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; (c) are guilty of conflict of interest to the prejudice of the corporation, its stockholders or
members, and other persons; (2) When the director or officer has consented to the issuance of watered stock or
who, having knowledge thereof, did not forthwith file with the corporate secretary his written objection
thereto; (3) When a director, trustee or officer has contractually agreed or stipulated to hold himself personally
and solidarily liable with the corporation; (4) When a director, trustee or officer is made, by specific provision
of law, personally liable for his corporate action. To warrant the piercing of the veil of corporate fiction, the
officers bad faith or wrongdoing must be established clearly and convincingly as bad faith is never
presumed. Harpoon Marine Services, Inc., et al. v. Fernan H. Francisco, GR No. 167751, March 2, 2011.
Labor organization; collateral attack on legal personality. Respondent company questioned the legal
personality of the petitioner union in a certification election proceeding. The Court ruled that the legal
personality of the petitioner union cannot be collaterally attacked by respondent company. Except when it is
requested to bargain collectively, an employer is a mere bystander to any petition for certification election;
such proceeding is non-adversarial and merely investigative, considering that its purpose is to determine if the
employees would like to be represented by a union and to select the organization that will represent them in
their collective bargaining with the employer. The choice of their representative is the exclusive concern of the
employees; the employer cannot have any partisan interest therein; it cannot interfere with, much less oppose,
the process by filing a motion to dismiss or an appeal from it; not even the allegation that some employees
participating in a petition for certification election are actually managerial employees will give an employer
legal personality to block the certification election. The employers only right in the proceeding is to be
notified or informed thereof. Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the
Philippines for Empowerment and Reforms [SMCC-SUPER], Zacarrias Jerry Victorio Union President v.
Charter Chemical and Coating Corporation, G.R. No. 169717, March 16, 2011 .
Labor organization; membership of supervisory employees. Petitioner union filed a Petition for Certification
Election among the regular rank-and-file employees of the respondent company. Respondent contends that
petitioner union is not a legitimate labor organization because its composition is a mixture of supervisory and
rank-and-file employees. The Court ruled that the inclusion of the supervisory employees in petitioner union
does not divest it of its status as a legitimate labor organization. After a labor organization has been registered,
it may exercise all the rights and privileges of a legitimate labor organization. Any mingling between
supervisory and rank-and-file employees in its membership cannot affect its legitimacy for that is not among
the grounds for cancellation of its registration, unless such mingling was brought about by misrepresentation,
false statement or fraud under Article 239 of the Labor Code. Samahang Manggagawa sa Charter Chemical
Solidarity of Unions in the Philippines for Empowerment and Reforms [SMCC-SUPER], Zacarrias Jerry
Victorio Union President v. Charter Chemical and Coating Corporation,G.R. No. 169717, March 16, 2011 .
Labor organization; registration. Petitioner union filed a Petition for Certification Election among the regular
rank-and-file employees of the respondent company. Respondent company filed an Answer with Motion to
Dismiss on the ground that petitioner union is not a legitimate labor organization because of its failure to
comply with the documentary requirements set by law, i.e. non-verification of the charter certificate. The Court
ruled that it was not necessary for the charter certificate to be certified and attested by the local/chapter
officers. Considering that the charter certificate is prepared and issued by the national union and not the
local/chapter, it does not make sense to have the local/chapters officers certify or attest to a document which
they did not prepare. In accordance with this ruling, 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. Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for
Empowerment and Reforms [SMCC-SUPER], Zacarrias Jerry Victorio Union President v. Charter Chemical
and Coating Corporation, G.R. No. 169717, March 16, 2011 .
Reinstatement; accrued backwages. The Labor Arbiter and the NLRC held that petitioner employer illegally
dismissed the respondent employee. On appeal, the Court of Appeals reversed the decision and ruled that the
dismissal was valid. However, the Court of Appeals ordered petitioner employer to pay respondent employee
her salary from the date of the Labor Arbiters decision ordering her reinstatement until the Court of Appeals
rendered its decision declaring the dismissal valid. Petitioner employer questioned the order and refused to pay.
The Court held that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, 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. On the other hand, if the employee has been reinstated
during the appeal period and such reinstatement order is reversed with finality, the employee is not required to
reimburse whatever salary he received, more so, if he actually rendered services during the period. The
payment of such wages cannot be deemed as unjust enrichment on respondents part. Pfizer, Inc., et al. v.
Geraldine Velasco, G.R. No. 177467, March 9, 2011 .
Reinstatement; immediately executory order. The Labor Arbiter held that petitioner employer illegally
dismissed the respondent employee. Pending its appeal, petitioner employer failed to immediately admit
respondent employee back to work despite of an order of reinstatement. The Court held that that the provision
of Article 223 is clear that an award by the Labor Arbiter for reinstatement shall be immediately executory
even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement.
The legislative intent is to make an award of reinstatement immediately enforceable, even pending appeal. To
require the application for and issuance of a writ of execution as prerequisites for the execution of a
reinstatement award would certainly betray the executory nature of a reinstatement order or award. In the case
at bar, petitioner employer did not immediately admit respondent employee 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. Pfizer, Inc., et al. v. Geraldine Velasco, G.R. No.
177467, March 9, 2011 .
Reinstatement; terms and conditions. Due to the order of reinstatement issued by the Labor Arbiter, petitioner
employer sent a letter to the respondent employee to report back to work and assigned her to a new location.
The Court held that such is not a bona fide reinstatement. Under Article 223 of the Labor Code, an employee
entitled to reinstatement shall either be admitted back to work under the same terms and conditions prevailing
prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. It is
established in jurisprudence that reinstatement means restoration to a state or condition from which one had
been removed or separated. The person reinstated assumes the position he had occupied prior to his dismissal.
Reinstatement presupposes that the previous position from which one had been removed still exists, or that
there is an unfilled position which is substantially equivalent or of similar nature as the one previously
occupied by the employee. Applying the foregoing principle, it cannot be said that petitioner employer has a
clear intent to reinstate respondent employee to her former position under the same terms and conditions nor to
a substantially equivalent position. To begin with, the return-to-work order petitioner sent to respondent
employee is silent with regard to the position it wanted the respondent employee to assume. Moreover, a
transfer of work assignment without any justification therefor, even if respondent employee would be
presumably doing the same job with the same pay, cannot be deemed as faithful compliance with the
reinstatement order. Pfizer, Inc., et al. v. Geraldine Velasco, G.R. No. 177467, March 9, 2011 .
Termination by employer; willful disobedience. Petitioner employer ordered the respondent employee to
prepare checks for payment of petitioners obligations. Respondent did not immediately comply with the
instruction since petitioner employer has no sufficient funds to cover the checks. Petitioner employer dismissed
respondent employee for willful disobedience. The Court held that respondent employee was illegally
dismissed. The offense of willful disobedience requires the concurrence of two (2) requisites: (1) the
employees 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. Though there is nothing unlawful in the directive of
petitioner employer to prepare checks in payment of petitioners obligations, respondent employees initial
reluctance to prepare the checks, although seemingly disrespectful and defiant, was for honest and well
intentioned reasons. Protecting the petitioner employer from liability under the Bouncing Checks Law was
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 respondent employee, despite her initial
reluctance, eventually did prepare the checks on the same day she was tasked to do it. Lores Realty
Enterprises, Inc., Lorenzo Y. Sumulong III v. Virginia E. Pacia, G.R. No. 171189, March 9, 2011 .
Wages; facilities and supplements. Respondent employees alleged underpayment of their wages. Petitioner
employer claimed that the cost of food and lodging provided by petitioner to the respondent employees should
be included in the computation of the wages received by respondents. The Court makes a distinction between
facilities and supplements. Supplements constitute extra remuneration or special privileges or benefits
given to or received by the laborers over and above their ordinary earnings or wages. Facilities, on the other
hand, are items of expense necessary for the laborers and his familys existence and subsistence so that by
express provision of law, they form part of the wage and when furnished by the employer are deductible
therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same. In short,
the benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic
or ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers basic
wages, it is a facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus or
sick leave) given, but in the purpose for which it is given. In the case at bench, the items provided were given
freely by petitioner employer for the purpose of maintaining the efficiency and health of its workers while they
were working at their respective projects. Thus, the Court is of the view that the food and lodging, or the
electricity and water allegedly consumed by respondents in this case were not facilities but supplements which
should not be included in the computation of wages received by respondent employees. SLL International
Cables Specialist and Sonny L. Lagon v. NLRC, Roldan Lopez, et al., G.R. No. 172161, March 2, 2011 .
Wages; proof of payment. In an illegal dismissal case against the petitioner employer, respondent employees
alleged that they were underpaid. In their defense, petitioner employer alleged that respondent employees
actually received wages higher than the prescribed minimum. The Court held that as a general rule, a party
who alleged payment of wages as a defense has the burden of proving it. Specifically with respect to labor
cases, the burden of proving payment of monetary claims rests on the employer, the rationale being that the
pertinent personnel files, payrolls, records, remittances and other similar documents which will show that
overtime, differentials, service incentive leave and other claims of workers have been paid are not in the
possession of the worker but in the custody and absolute control of the employer. In this case, petitioner
employer, aside from bare allegations that respondent employees received wages higher than the prescribed
minimum, failed to present any evidence, such as payroll or payslips, to support their defense of payment.
Thus, petitioner employer utterly failed to discharge the onus probandi. SLL International Cables Specialist
and Sonny L. Lagon v. NLRC, Roldan Lopez, et al., G.R. No. 172161, March 2, 2011 .
Wages; value of facilities. Petitioner employer alleged that the cost of facilities must be included in the
computation of wages paid. The Court held that before the value of facilities can be deducted from the
employees wages, the following requisites must all be attendant: first, proof must be shown that such facilities
are customarily furnished by the trade; second, the provision of deductible facilities must be voluntarily
accepted in writing by the employee; and finally, facilities must be charged at reasonable value. Mere
availment is not sufficient to allow deductions from employees wages. These requirements, however, have not
been met in this case. Petitioner employer failed to present any company policy or guideline showing that
provisions for meals and lodging were part of the employees salaries. It also failed to provide proof of the
employees written authorization, much less show how they arrived at their valuations. At any rate, it is not
even clear whether respondent employees actually enjoyed said facilities. SLL International Cables Specialist
and Sonny L. Lagon v. NLRC, Roldan Lopez, et al., G.R. No. 172161, March 2, 2011 .
April 2011 Philippine Supreme Court Decisions
on Labor Law and Procedure
Posted on May 19, 2011 by Leslie C. Dy Posted in Labor Law Tagged certiorari, illegal dismissal, loss of trust and confidence

Here are selected April 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:
Dismissal; breach of trust and confidence. Petitioner was employed as Assistant Vice-President of the Jewelry
Department in respondent bank. His employment was terminated on the ground of willful breach of trust and
confidence. Jurisprudence provides for two requisites for dismissal on the ground of loss of trust and
confidence; (1) the employee concerned must be holding a position of trust and confidence, and (2) there must
be an act that would justify the loss of trust and confidence. 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.
Furthermore, the burden of establishing facts as bases for an employers loss of confidence is on the employer.
The court held that the termination of petitioner was without just cause and therefore illegal. Although the first
requisite was present, the respondent failed to satisfy the second requisite. Respondent bank was not able to
show any concrete proof that petitioner had participated in the approval of the questioned accounts. The
invocation by respondent of the loss of trust and confidence as ground for petitioners termination has
therefore no basis at all. James Ben L. Jerusalem v. Keppel Monte Bank, et al., G.R. No. 169564. April 6, 2011 .
Breach of Trust and Confidence; duties of employee. Petitioner was employed as Assistant Vice-President in
respondent bank. His employment was terminated on the ground of willful breach of trust and confidence for
endorsing VISA card applicants who later turned out to be impostors resulting in financial losses to respondent
bank. The court held that petitioner was illegally dismissed. As provided in Article 282 of the Labor Code, an
employer may terminate an employees employment for fraud or willful breach of trust reposed in him.
However, 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. The act of betrayal of
trust, if any, must have been committed by the employee in connection with the performance of his function or
position. The court found that the element of work-connection was not present in this case since petitioner
was assigned under the Jewelry department, and therefore had nothing to do with the approval of VISA Cards,
which was under a different department altogether. James Ben L. Jerusalem v. Keppel Monte Bank, et al., G.R.
No. 169564. April 6, 2011 .
Certiorari under Rule 45; questions of law and exceptions . The Labor Arbiter and the NLRC found that
respondent employer neglected to pay petitioners sickness allowance. However, on appeal, the Court of
Appeals reversed such findings and held that petitioner already received his sickness allowance from
respondent. Petitioner questioned the ruling of the Court of Appeals by filing a petition for review on
certiorari under Rule 45. The Supreme Court held that, as a rule, only questions of law, not questions of fact,
may be raised in a petition for review on certiorari under Rule 45. However, this principle is subject to
recognized exceptions. In the labor law setting, the Court will delve into factual issues when conflict of factual
findings exists among the labor arbiter, the NLRC, and the Court of Appeals. Considering that in the present
case there were differing factual findings on the part of the Court of Appeals, on one hand, and the Labor
Arbiter and the NLRC, on the other, the Supreme Court found it necessary to make an independent evaluation
of the evidence on record. 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
respondents vessel. He filed a complaint for permanent disability 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 denied the
petitioners 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 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. 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. Philippine Charity Sweepstakes Office Board of Directors and
Reynaldo P. Martin v. Marie Jean C. Lapid, G.R. No. 191940. April 12, 2011 .
Dismissal; due process. Respondent was dismissed from her post as casual teller. When respondent appealed
her dismissal to the Civil Service Commission (CSC), the latter found that respondent was never formally
charged for the administrative offenses for which she was dismissed. However, despite finding that procedural
due process was not complied with, the CSC nevertheless upheld the dismissal on the ground that being a
casual employee, respondent enjoyed no security of tenure and can be dismissed anytime. The Court found that
respondent was illegally terminated and ordered her reinstatement. Casual employees 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. This is pursuant to Section 2, Article IX(B) of the Constitution. Furthermore,
Section 46 of the Civil Service Law provides that no officer or employee in the Civil Service shall be
suspended or dismissed except for cause as provided by law after due process. The reason for this is that their
termination from the service could carry a penalty affecting their rights and future employment in the
government. Philippine Charity Sweepstakes Office Board of Directors and Reynaldo P. Martin v. Marie Jean
C. Lapid, G.R. No. 191940. April 12, 2011 .
May 2011 Philippine Supreme Court Decisions
on Labor Law and Procedure
Posted on June 21, 2011 by Leslie C. Dy Posted in Constitutional Law, Labor Law Tagged appeal, due process, equal
protection, illegal dismissal, resignation
Here are selected May 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:
Section 10, Republic Act No. 8042; unconstitutional. Petitioner Yap was employed as an electrician for
respondents vessel under a 12-month contract. He was found to be illegally terminated with nine months
remaining on his contract term. The Court of Appeals (CA) awarded petitioner salaries for three months as
provided under Section 10 of Republic Act No. 8042. On certiorari, the Supreme Court reversed the CA and
declared that petitioner was entitled to his salaries for the full unexpired portion of his contract. The Court has
previously declared in Serrano v. Gallant Maritime Services, Inc. (2009) that 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 is unconstitutional for being violative of the rights of Overseas Filipino Workers (OFWs) to equal
protection of the laws. The subject clause contains a suspect classification in that, in the computation of the
monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim
of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other
OFWs or local workers with fixed-term employment. The subject clause singles out one classification of
OFWs and burdens it with a peculiar disadvantage. Moreover, the subject clause does not state or imply any
definitive governmental purpose; hence, the same violates not just petitioners right to equal protection, but
also his right to substantive due process under Section 1, Article III of the Constitution. Claudio S. Yap vs.
Thenamaris Ships Management and Intermare Maritime Agencies, Inc., G.R. No. 179532, May 30, 2011
Doctrine of Operative Fact; applied as a matter of equity and fair play. Petitioner Yap was employed on
respondents vessel under a 12-month contract. Upon finding that he was illegally terminated, the Court of
Appeals (CA) awarded petitioner salaries for three months as provided under Section 10 of Republic Act No.
8042 (RA 8042). While the case was pending in the Supreme Court, Section 10 of RA 8042 was declared
unconstitutional. In deciding to award petitioner his salaries for the entire unexpired portion of his contract, the
Supreme Court rejected the application of the operative fact doctrine. As an exception to the general rule, the
doctrine applies only as a matter of equity and fair play. It recognizes that the existence of a statute prior to a
determination of unconstitutionality is an operative fact and may have consequences which cannot always be
ignored. The doctrine is applicable 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 aforementioned exception.
After all, it was not the fault of petitioner that he lost his job due to an act of illegal dismissal committed by
respondents. To rule otherwise would be iniquitous to petitioner and other OFWs, and would, in effect, send a
wrong signal that principals/employers and recruitment/manning agencies may violate an OFWs security of
tenure which an employment contract embodies and actually profit from such violation based on an
unconstitutional provision of law. Claudio S. Yap vs. Thenamaris Ships Management and Intermare Maritime
Agencies, Inc., G.R. No. 179532, May 30, 2011 .
Migrant workers; computation of salary award. Petitioner Yap was employed as an electrician for respondents
vessel under a 12-month contract. He was found to be illegally terminated with nine months remaining on his
contract term, and was declared to be entitled to his salaries for the balance of his contract. Respondents claim
that the tanker allowance should be excluded from the definition of the term salary. The Supreme Court,
after examining the relevant clauses of the contract, rejected respondents claim. The word salaries in Section
10 (5) does not include overtime and leave pay. For seafarers, DOLE Department Order No. 33, series 1996,
provides a Standard Employment Contract of Seafarers, in which salary is understood as the basic
wage, exclusive of overtime, leave pay and other bonuses. A close perusal of the contract reveals that the tanker
allowance of US$130.00 was not categorized as a bonus but was rather encapsulated in the basic salary clause,
hence, forming part of the basic salary of petitioner. If respondents intended it differently, the contract per
se should have indicated that said allowance does not form part of the basic salary or, simply, the contract
should have separated it from the basic salary clause. Claudio S. Yap vs. Thenamaris Ships Management and
Intermare Maritime Agencies, Inc. G.R. No. 179532, May 30, 2011 .
Termination for Just Cause; separation pay by way of financial assistance. Petitioner Juliet Apacible was
employed as Assistant Area Sales Manager for respondents Cebu operations. She was informed that she would
be transferred to the Pasig office on account of the ongoing reorganization. Petitioners repeated refusal to
comply with the transfer order was treated by respondent as insubordination and grounds for her dismissal. The
Labor Arbiter, the NLRC and the Court of Appeals all found that petitioner was justly dismissed from
employment. The NLRC awarded separation pay as financial assistance, however, noting that petitioners
obstinacy was upon the advice of her counsel and, therefore, there was a modicum of good faith on her part.
On appeal, the Court of Appeals (CA) deleted the award of separation pay. The Supreme Court upheld the CA
and declared 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. In this
case, petitioners adamant refusal to transfer, coupled with her failure to heed the order for her to 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. Juliet G. Apacible vs. Multimed Industries, et al., G.R. No. 178903, May 30, 2011 .
Appeal; posting of Appeal Bond; Governments exemption from the same. Respondents are supervisory and
rank and file employees of the DXWG-Iligan City radio station which is owned by petitioner Banahaw
Broadcasting Corporation (BBC). Respondents filed a complaint for illegal dismissal, unfair labor practice,
and reimbursement of unpaid Collective Bargaining Agreement (CBA) benefits against petitioner. The Labor
Arbiter rendered a decision ordering petitioner BBC to pay the money claims. On appeal to the NLRC,
petitioner BBC averred that since it is wholly owned by the Republic of the Philippines, it need not post an
appeal bond. The NLRC dismissed the appeal of BBC for non-perfection. The Court of Appeals affirmed the
NLRC. The Supreme Court, in sustaining the CA, held that as a general rule, the government and all the
attached agencies with no legal personality distinct from the former are exempt from posting appeal bonds.
The rationale is to protect the presumptive judgment creditor against the insolvency of the presumptive
judgment debtor. When the State litigates, it is not required to put up an appeal bond because it is presumed to
be always solvent. This exemption, however, does not, as a general rule, apply to government-owned and
controlled corporations (GOCCs) for the reason that the latter has a personality distinct from its shareholders.
In this case, 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 latters exemption from
the posting of appeal bonds. Banahaw Broadcasting Corporation vs. Cayetano PACANa III, et al, G.R. No.
171673, May 30, 2011 .
Appeal; posting of appeal bond within the 10-day period is mandatory and jurisdictional. Respondents filed a
complaint for illegal dismissal, unfair labor practice, and reimbursement of unpaid Collective Bargaining
Agreement (CBA) benefits against petitioner. The Labor Arbiter rendered a decision in favor of respondents
and ordered petitioner BBC to pay the money claims. Petitioner appealed to the NLRC, and without posting
the appeal bond, filed a Motion for the Re-computation of the Monetary Award in order that the appeal bond
may be reduced. The NLRC denied the motion and dismissed the appeal of BBC for non-perfection. The Court
of Appeals and the Supreme Court both sustained the dismissal by the NLRC. The Motion for the Re-
computation of the Monetary Award filed by BBC was tantamount to a motion for extension to perfect the
appeal, which is prohibited by the rules. The payment of the appeal bond within the period provided by law is
an indispensable and jurisdictional requisite and not a mere technicality of law or procedure. Hence, the failure
on the part of BBC to perfect the appeal had the effect of rendering the judgment final and
executory. Banahaw Broadcasting Corporation vs. Cayetano PACANa III, et al, G.R. No. 171673, May 30,
2011.
Voluntary Resignation; financial assistance may be awarded on equity considerations. Petitioner filed a
complaint for illegal dismissal against respondent. Finding instead that petitioner had voluntarily resigned, the
Labor Arbiter dismissed the complaint against respondent, but ordered the latter to pay P18,000.00 by way of
financial assistance. On appeal, the NLRC found petitioner to be illegally dismissed. The Court of Appeals
reaffirmed the findings of the LA but deleted the award of financial assistance, ruling that the same may not be
awarded in cases of voluntary resignation. The Supreme Court, in upholding the award of financial assistance,
stated that while the rule is 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, there are
instances when financial assistance may be allowed as a measure of social justice and as an equitable
concession. In this case, petitioner, who has served respondent for more than eight years without committing
any infraction, may be granted such financial assistance on equity considerations. Rodolfo Luna vs. Allado
Construction Company, Inc. and/or Ramon Allado, G.R. No. 175251, May 30, 2011 .
National Labor Relations Commission; authority to review is limited to issues specifically brought before it on
appeal. Petitioner filed a complaint for illegal dismissal against respondent. Finding that petitioner had
voluntarily resigned, the Labor Arbiter dismissed the complaint against respondent, but ordered the latter to
pay P18,000.00 by way of financial assistance. Respondents interposed an appeal with the National Labor
Relations Commission (NLRC), purely for the purpose of questioning the validity of the grant of financial
assistance made by the Labor Arbiter. Instead, the NLRC ruled that petitioner was illegally dismissed and was
entitled to separation pay. The Court of Appeals (CA) held that it was grave abuse of discretion for the NLRC
to rule on the issue of illegal dismissal when the only issue raised to it on appeal was the propriety of the award
of financial assistance. The Supreme Court sustained the view of the CA, reasoning that Section 4(d), Rule VI
of the 2005 Revised Rules of Procedure of the NLRC expressly provides that, on appeal, the NLRC shall limit
itself only to the specific issues that were elevated for review. In the case at bar, the NLRC evidently went
against its own rules of procedure when it passed upon the issue of illegal dismissal although this question was
not raised by respondents in their appeal. Rodolfo Luna vs.Allado Construction Company, Inc. and/or Ramon
Allado, G.R. No. 175251, May 30, 2011 .
June 2011 Philippine Supreme Court Decisions
on Labor Law and Procedure
Posted on July 10, 2011 by Leslie C. Dy Posted in Labor Law Tagged appeal, collective bargaining
agreement, damages,Department of Labor and Employment, dismissal, independent contractor, jurisdiction, labor-only
contracting, loss of trust and confidence, misconduct
Here are selected June 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:
Appeal; decision of DOLE Secretary. For petitioners refusal to comply with his deployment assignment,
respondent manning agency filed a complaint against him for breach of contract before the Philippine Overseas
Employment Administration (POEA). The POEA penalized petitioner with one year suspension from overseas
deployment. The suspension was reduced to six months by the Secretary of Labor. Petitioner appealed the
latters decision with the Office of the President (OP). The Supreme Court ruled that petitioners appeal was
erroneous. The proper remedy to question the decisions or orders of the Secretary of Labor is via Petition for
Certiorari under Rule 65. Appeals to the OP in labor cases have been eliminated, except those involving
national interest over which the President may assume jurisdiction. The present case does not affect national
interest. Hence, petitioners appeal to the OP did not toll the running of the period and the assailed decision of
the Secretary of Labor is deemed to have attained finality. Miguel Dela Pena Barairo vs. Office of the
President and MST Marine Services (Phils.) Inc., G.R. No. 189314. June 15, 2011 .
Appeal from decisions of labor arbiter; bond requirement for perfection of appeal may be relaxed in
meritorious cases. The posting of a bond is indispensable to the perfection of an appeal in cases involving
monetary awards from the decision of the labor arbiter. However, under Section 6, Rule VI of the NLRCs
Revised Rules of Procedure, the bond may be reduced albeit only (1) on meritorious grounds and (2) upon
posting of a partial bond in a reasonable amount in relation to the monetary award. For this purpose, the NLRC
is not precluded from conducting a preliminary determination of the employers financial capability to post the
required bond, without necessarily passing upon the merits. In the present case, the NLRC gravely abused its
discretion in denying petitioners motion to reduce bond peremptorily without considering the evidence
presented by petitioner showing that it was under a state of receivership. Such circumstance constitutes
meritorious grounds to reduce the bond. Moreover, the petitioner exhibited its good faith by posting a partial
cash bond during the reglementary period. University Plans, Inc. vs. Belinda P. Solano, et al., G.R. No.
170416, June 22, 2011
Certiorari; substantial compliance. The three material dates which should be stated in the petition
for certiorari under Rule 65 are the dates when the notice of judgment was received, when a motion for
reconsideration was filed and when the notice of the denial of the motion for reconsideration was received.
These dates should be reflected in the petition to enable the reviewing court to determine if the petition was
filed on time. In the present case, the petition filed with the Court of Appeals failed to state when petitioner
received the assailed NLRC Decision and when he filed his partial motion for reconsideration. However, this
omission is not at all fatal because these material dates are reflected in petitioners Partial Motion for
Reconsideration attached to the petition. The failure to state these two dates in the petition may be excused if
the same are evident from the records of the case. The Court further stated that the more important material
date which must be duly alleged in the petition is the date of receipt of the resolution of denial of the motion
for reconsideration. Since petitioner has duly complied with this rule, there was substantial compliance with
the requisite formalities. William Endeliseo Barroga vs. Data Center College of the Philippines, et al., G.R.
No. 174158. June 27, 2011
Collective bargaining agreement; duty of parties to maintain status quo pending renegotiation. Article 253 of
the Labor Code mandates the parties to keep the status quo and 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. The law does not provide for any exception nor qualification
on which economic provisions of the existing agreement are to retain its force and effect. Likewise, the law
does not distinguish between a CBA duly agreed upon by the parties and an imposed CBA like the one in the
present case. Hence, considering that no new CBA had been, in the meantime, agreed upon by respondent
GMC and the Union, the provisions of the imposed CBA continues to have full force and effect until a new
CBA is entered into by the parties. General Milling Corporation-Independent Labor Union [GMC-ILU] vs.
General Milling Corporation/General Milling Corporation vs.General Milling Corporation-Independent
Labor Union [GMC-ILU], et al., G.R. Nos. 183122/183889, June 15, 2011.
Damages; fraud or bad faith for the award of moral damages. 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. In the present case, P&G
dismissed its employees in a manner oppressive to labor. The sudden and peremptory barring of petitioners
from work, and from admission to the work place, after just a one-day verbal notice, and for no valid cause,
constitutes oppression and utter disregard of the right to due process of the concerned petitioners. Hence, the
Supreme Court held that an award of moral damages is called for under the circumstances. Joeb M. Aliviado,
et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011 .
Dismissal; constructive dismissal. Petitioner was employed as an instructor of Data Center College located in
Ilocos Norte. When the college proposed to transfer him to Abra, he filed a complaint alleging constructive
dismissal since 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. The Supreme Court affirmed the findings of the
lower bodies and declared that petitioners re-assignment did not amount to constructive dismissal.
Constructive dismissal is quitting because continued employment is rendered impossible, unreasonable or
unlikely, or because of a demotion in rank or a diminution of pay. It exists when there is a clear act of
discrimination, insensibility or disdain by an employer which becomes unbearable for the employee to
continue his employment. In the present case, the colleges right to transfer petitioner is based on contractual
stipulation, particularly the condition laid down in petitioners 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. Since respondents have shown that it was experiencing some financial constraints at the
time, the re-assignment was not tainted with bad faith. Furthermore, petitioner failed to present evidence that
respondents committed to provide the additional allowance or that they were consistently granting such benefit
as to have ripened into a practice which cannot be peremptorily withdrawn. Hence, there is no violation of the
rule against diminution of pay. William Endeliseo Barroga vs. Data Center College of the Philippines, et
al., G.R. No. 174158. June 27, 2011 .
Dismissal; elements for loss of trust or confidence. Petitioners were employees of Promm-Gem, a legitimate
independent contractor, and were hired to work as merchandisers for respondent P&G. When petitioners filed a
claim against P&G for regularization and other benefits, it likewise attacked Promm-Gem as being merely a
labor-only contractor. The latter treated such move as an act of disloyalty against Promm-Gem and petitioners
were dismissed on the ground of grave misconduct and breach of trust. The Supreme Court declared such
termination illegal for being without valid cause. Loss of trust and confidence, as a cause for termination of
employment, is 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. Moreover, 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 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. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et
al., G.R. No. 160506, June 6, 2011 .
Dismissal; elements for serious misconduct. Petitioners were employees of Promm-Gem, a legitimate
independent contractor. After several years of working as merchandisers for respondent P&G, petitioners filed
a claim against P&G for regularization and other benefits, and asserted incidentally that Promm-Gem was
merely a labor-only contractor. The latter treated such move as an act of disloyalty against Promm-Gem and
petitioners were dismissed on the ground of grave misconduct and breach of trust. The Supreme Court declared
such termination illegal for lack of a valid clause. 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 other words, in order to constitute serious misconduct
under Article 282 (a) 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 been
performed with wrongful intent. In the instant case, petitioners 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, the court found them guilty of simple misconduct only which does not warrant a
dismissal. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No. 160506, June 6, 2011 .
Dismissal; financial assistance based on equity . The award of separation pay is authorized under Article 283
and 284 of the Labor Code, and under Section 4 (b), Rule I, Book VI of the Implementing Rules and
Regulations where there is illegal dismissal and reinstatement is no longer feasible. By way of exception, the
courts have allowed grants of separation pay to stand as a measure of social justice where the employee is
validly dismissed for causes other than serious misconduct or those reflecting on his moral character. However,
there is no provision in the Labor Code which grants separation pay to voluntarily resigning employees. In
fact, the rule is that an employee who voluntarily resigns from employment is not entitled to separation pay,
except when it is stipulated in the employment contract or collective bargaining agreement (CBA), or it is
sanctioned by established employer practice or policy. In the present case, neither the abovementioned
provisions of the Labor Code nor the exceptions apply because petitioner was not dismissed from his
employment nor is there any evidence to show that payment of separation pay is stipulated in his employment
contract or sanctioned by established practice or policy of his employer. Nevertheless, the Court noted that
petitioner never had 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. Hence, as a measure of social and compassionate justice and as an equitable concession, the Court
granted separation pay to petitioner by way of financial assistance. Romeo Villaruel vs. Yeo Han Guan, doing
business under the name and style Yuhans Enterprises, G.R. No. 169191, June 1, 2011 .
Dismissal; separation pay due to disease. Petitioner was employed as a machine operator until he stopped
working when he suffered from an illness. After his recovery, petitioner was directed to report for work but he
refused. Instead, he filed a case with the NLRC demanding his separation pay. The NLRC awarded him
separation benefits under Article 284 of the Labor Code. However, the Court of Appeals (CA) deleted such
award. On appeal, the Supreme Court stated that Article 284 presupposes that it is the employer who
terminates the services of the employee found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees. It
does not contemplate a situation where it is the employee who severs his or her employment ties. This is
precisely the reason why Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code,
directs that an employer shall not terminate the services of the employee unless there is a certification by a
competent public health authority that the disease is of such nature or at such a stage that it cannot be cured
within a period of six (6) months even with proper medical treatment. In the present case, petitioner was not
terminated from his employment and, instead, is deemed to have resigned therefrom, and therefore he is not
entitled to separation pay under Article 284 of the Labor Code.Romeo Villaruel vs. Yeo Han Guan, doing
business under the name and style Yuhans Enterprises, G.R. No. 169191, June 1, 2011 .
DOLE assumption of jurisdiction; effects. A strike conducted after the Secretary of Labor has assumed
jurisdiction over a labor dispute is illegal and any union officer who knowingly participates in the strike may
be declared as having lost his employment. The present case involved 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
Supreme Court upheld the finding that the union officers committed illegal acts that warranted their dismissal
from work when they refused to work or abandoned their work to join union assemblies after the Labor
Secretary assumed jurisdiction over the labor dispute. Yolito Fadriquelan, et al. vs. Monterey Foods
Corporation/Monterey Foods Corporation v. Bukluran ng mga Manggagawa sa Monterey-ILAW, et al., G.R.
No. 178409/G.R. No. 178434, June 8, 2011 .
Independent job contracting; required substantial capital. Petitioners assert that they are employees of P&G
and that Promm-Gem and SAPS are merely labor-only contractors providing manpower services to P&G.
There is labor-only contracting where the person supplying workers to an employer does not have substantial
capital or investment in the form of tools, equipment, machineries, work premises, among others, and the
workers recruited and placed by such person are performing activities which are directly related to the
principal business of such employer. In the instant case, the Supreme Court found that Promm-Gem has
substantial investment which relates to the work to be performed. The financial statementsshow that it has
authorized capital stock of P1 million and a substantial amount of paid-in capital and other assets to support its
operations. Under the circumstances, Promm-Gem cannot be considered a labor-only contractor; it is in fact a
legitimate independent contractor. On the other hand, the financial records of SAPS show that it has a paid-in
capital of only P31,250.00. 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.
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, SAPS is considered to be engaged in
labor-only contracting. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et al., G.R. No.
160506, June 6, 2011 .
Labor law; labor-only contracting v. independent job contracting. The law allows contracting arrangements for
the performance of specific jobs, works or services, 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 an independent contractor
because the current labor rules expressly prohibit labor-only contracting. 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 principaland any of 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 performed and the 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 of control on the
performance of the work of the contractual employee. Where labor-only contracting exists, the law
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. In the present case, petitioners, who were recruited by Promm-Gem and SAPS to work as
merchandisers of respondent P&G, filed a complaint against the latter for regularization, service incentive
leave pay and other benefits on the ground that they were employees of P&G. With respect to the contractor
Promm-Gem, it was found to be a legitimate independent job contractor; hence, there was no employer-
employee relationship between its workers and P&G. On the other hand, SAPS was found to be engaged in
labor-only contracting. Consequently, the petitioners who have been recruited and supplied by SAPSare
considered to be the employees of P&G. Joeb M. Aliviado, et al. vs. Procter and Gamble Phils., Inc., et
al., G.R. No. 160506, June 6, 2011 .
Labor strikes; liability of union officers and participating workers. A distinction exists between the ordinary
workers liability for illegal strike and that of the union officers who participated in it. 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 terminated upon mere proof that he knowingly
participated in the illegal strike. Moreover, the participating union officers have to be properly identified. In the
present case, with respect to those union officers whose identity and participation in the strike having been
properly established, the termination was legal. Yolito Fadriquelan, et al. vs. Monterey Foods
Corporation/Monterey Foods Corporation v. Bukluran ng mga Manggagawa sa Monterey-ILAW, et al., G.R.
No. 178409/G.R. No. 178434, June 8, 2011 .
Secretary of Labor; power to give arbitral awards. The Secretary of Labor is empowered to give arbitral
awards in the exercise of his authority to assume jurisdiction over labor disputes under Art. 263 (g) of the
Labor Code. In the present case, the Supreme Court upheld the authority of the Secretary of Labor to impose
arbitral awards higher than what was supposedly agreed upon in the Memorandum of Agreement (MOA)
between the parties. The Court further stated that while an arbitral award cannot per se be categorized as an
agreement voluntarily entered into by the parties because it requires the interference and imposing power of
the State thru the Secretary of Labor when he assumes jurisdiction, the award can be considered as 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 between the parties. Cirtek Employees
Labor Union-Federation of Free workers vs. Cirtek Electronics, Inc., G.R. No. 190515. June 6, 2011 .
Termination of employment; resignation v. dismissal. Petitioner claims he was dismissed on the ground of
illness and was therefore entitled to separation benefits under Article 284 of the Labor Code. The Supreme
Court (SC) disagreed and instead found that petitioner was the one who initiated the severance of his
employment relations on the ground that his health was failing. In fact, he rejected respondents offer for him
to return to work. The SC declared that 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.

Romeo Villaruel vs. Yeo Han Guan, doing business under the name and style Yuhans
Enterprises, G.R. No. 169191, June 1, 2011 .
Unions; disaffiliation. A local union may disaffiliate at any time from its mother federation, absent any
showing that the same is prohibited under its constitution or rules. Such disaffiliation, however, does not result
in it losing its legal personality. A local union does not owe its existence to the federation with which it is
affiliated. It is a separate and distinct voluntary association owing its creation to the will of its members. The
mere act of affiliation does not divest the local union of its own personality, neither does it give the mother
federation the license to act independently of the local union. It only gives rise to a contract of agency where
the former acts in representation of the latter. In the present case, whether the FFW went against the will of its
principal (the member-employees) by pursuing the case despite the signing of the MOA, is not for the Court,
nor for respondent employer to determine, but for the Union and FFW to resolve on their own pursuant to their
principal-agent relationship. Moreover, the issue of disaffiliation is an intra-union dispute which must be
resolved in a different forum in an action at the instance of either or both the FFW and the union or a rival
labor organization, but not the employer as in this case. Cirtek Employees Labor Union-Federation of Free
workers vs. Cirtek Electronics, Inc., G.R. No. 190515. June 6, 2011 .
August 2011 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on September 15, 2011 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law
Here are selected August 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:
Labor relations; appropriate bargaining unit. 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. In this case, there should be only one bargaining unit
for the employees in the Cabuyao, San Fernando, and Otis plants of the Magnolia Poultry Products 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. San Miguel Foods, Inc. vs. San Miguel
Corp. Supervisors and Exempt Union, G.R. No. 146206. August 1, 2011 .
Labor organization; confidential employees. Confidential employees are defined as those who (1) assist or act
in a confidential capacity, in regard (2) to persons who formulate, determine, and effectuate management
policies in the field of labor relations. The two criteria are cumulative, and both must be met if an employee is
to be considered a confidential employee. 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. However, such fact does not apply to the position of Payroll Master (as in this case) and the whole
gamut of employees who has access to salary and compensation data. The CA correctly held that the position
of Payroll Master does not involve dealing with confidential labor relations information in the course of the
performance of his functions. In other words, since the nature of his work does not pertain to company rules
and regulations and confidential labor relations, it follows that he cannot be excluded from the subject
bargaining unit. San Miguel Foods, Inc. vs. San Miguel Corp. Supervisors and Exempt Union, G.R. No.
146206. August 1, 2011 .
Labor organization; ineligibility to join. Although Article 245 of 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. 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 ones 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, ones 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 petitioners 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. San Miguel Foods,
Inc. vs. San Miguel Corp. Supervisors and Exempt Union,G.R. No. 146206. August 1, 2011 .
Certification election; role of employers. The general rule is that an employer has no standing to question the
process of certification election, since this is the sole concern of the workers. Law and policy demand that
employers take a strict, hands-off stance in certification elections. The bargaining representative of employees
should be chosen free from any extraneous influence of management. The only exception is where the
employer itself has to file the petition pursuant to Article 258 of the Labor Code because of a request to
bargain collectively. San Miguel Foods, Inc. vs.San Miguel Corp. Supervisors and Exempt Union, G.R. No.
146206. August 1, 2011 .
Appeal of the decision of the labor arbiter; posting of bond. The posting of a bond is indispensable to the
perfection of an appeal in cases involving monetary awards from the Decision of the Labor Arbiter. However,
the Supreme Court, considering the substantial merits of the case, has on certain occasions relaxed this rule on,
and excused the late posting of, the appeal bond when there are strong and compelling reasons for the
liberality. In this case, the exception applies. 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 since no employer-employee relationship existed between the
two. Marticio Semblante and Dubrick Pilar vs. Court of Appeals, G.R. No. 196426. August 15, 2011 .
Employer-employee relationship; four-fold test. Petitioners are not employees of respondents, since their
relationship failed to pass the four-fold test of employment: (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 employees conduct,
which is the most important element. As found by both the NLRC and the CA, respondents had no part in
petitioners selection and management; petitioners compensation was paid out of the arriba (which is a
percentage deducted from the total bets), not by petitioners; and petitioners performed their functions
as masiador and sentenciadorfree from the direction and control of respondents. Marticio Semblante and
Dubrick Pilar vs. Court of Appeals, G.R. No. 196426. August 15, 2011 .
Labor; illegal recruitment in large scale. To prove illegal recruitment, it must be shown that appellant gave
complainants the distinct impression that she had the power or ability to send complainants abroad for work
such that the latter were convinced to part with their money in order to be employed. All eight private
complainants in this case consistently declared that Ochoa offered and promised them employment overseas.
Moreover, Ochoa can also be convicted for illegal recruitment based on Section 6 of Republic Act No. 8042,
which clearly provides that any person, whether or not a licensee or holder of authority may be held liable for
illegal recruitment for certain acts as enumerated in paragraphs (a) to (m). Among such acts is the failure to
reimburse expenses incurred by the worker in connection with his documentation and processing for purposes
of deployment, in cases where the deployment does not actually take place without the workers fault. In this
case, Ochoa received placement and medical fees from private complainants and failed to reimburse the
private complainants the amounts they had paid when they were not able to leave for Taiwan and Saudi Arabia,
through no fault of their own. People of the Philippines vs. Rosario Rose Ochoa, G.R. No. 173792. August
31, 2011.
Illegal recruitment; admissibility of POEA certification. Section 36, Rule 130 of the Revised Rules on
Evidence, states that a witness can testify only to those facts which he knows of or comes from his personal
knowledge, that is, which are derived from his perception. This is known as the hearsay rule. The law,
however, provides for specific exceptions to the hearsay rule, and one of the exceptions refers to entries in
official records made in the performance of duty by a public officer. Accordingly, in the case at bar, although
Dir. Mateo was not presented in court or did not testify during the trial to verify the said certification, such
certification is considered as prima facieevidence of the facts stated therein and is therefore presumed to be
truthful, because Ochoa did not present any plausible proof to rebut its truthfulness. People of the Philippines
vs. Rosario Rose Ochoa, G.R. No. 173792. August 31, 2011 .
Illegal recruitment and estafa; may be charged separately. A person may be charged and convicted separately
of illegal recruitment under Republic Act No. 8042, in relation to the Labor Code, and estafa under Article 315,
paragraph 2(a) of the Revised Penal Code. The offense of illegal recruitment is malum prohibitum, while
estafa is malum in se. In this case, therefore, Ochoa may also be charged and correspondingly held liable for
estafa since all the elements for the crime are present in Criminal Case Nos. 98-77301, 98-77302, and 98-
77303. Ochoas deceit was evident in her false representation to private complainants Gubat, Cesar, and
Agustin that she possessed the authority and capability to send said private complainants to Taiwan/Saudi
Arabia for employment as early as one to two weeks from completion of the requirements, among which were
the payment of placement fees and submission of a medical examination report. People of the Philippines
vs.Rosario Rose Ochoa, G.R. No. 173792. August 31, 2011 .
Floating status; validity. The rule is settled 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 the six-month period and/or the actual dismissal of the employee
is generally considered as prematurely filed. In this case, the evidence adduced a quo clearly indicates that
petitioners were not in bad faith when they placed Leynes under floating status. Disgruntled by NHPIs
countermanding of her decision to bar Engr. Cantuba from the Project, Leynes twice signified her intention to
resign from her position on 12 February 2002. In view of the sensitive nature of Leynes position and the
critical stage of the Projects business development, NHPI was constrained to hire Engr. Jose as Leynes
replacement as a remedial measure. Nippon Housing Phil. Inc., et al. vs. Maiah Angela Leynes, G.R. No.
177816, August 3, 2011.
Constructive dismissal; burden of proof. 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. In constructive dismissal cases, the employer is, concededly,
charged with the burden of proving that its conduct and action or the transfer of an employee are for valid and
legitimate grounds such as genuine business necessity. The Supreme Court found that in this case, respondents
have more than amply discharged this burden with proof of the circumstances surrounding Engr. Carlos
employment as Property Manager for the Project and the consequent unavailability of a similar position for
Leynes. Nippon Housing Phil. Inc., et al. vs. Maiah Angela Leynes, G.R. No. 177816, August 3, 2011.
Pleading; verification. 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. 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. In this case, the Supreme Court found that the petitions verification substantially complied with the
requirements of the rules. The SPA authorized Bello-Ona to represent Bello in the case from which the present
petition with the Supreme Court 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 lower
tribunals and the appellate court. Francis Bello, represented herein by his daughter and attorney-in-fact,
Geraldine Bello-Ona vs. Bonifacio Security Services, Inc. and Samuel Tomas, G.R. No. 188086, August 3,
2011.
Dismissal; 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. In this case, 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. 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
managements 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 was
what exactly occurred in this case. Francis Bello, represented herein by his daughter and attorney-in-fact,
Geraldine Bello-Ona vs. Bonifacio Security Services, Inc. and Samuel Tomas,G.R. No. 188086, August 3,
2011.
Procedural rules; failure to attach duplicate original or certified true copy of the assailed decision. The refusal
of the Court of Appeals to consider the petition was the absence of a duplicate original or certified true copy of
the assailed NLRC decision, in violation of Section 3, Rule 46 of the Rules of Court (in relation to Section 1,
Rule 65). The company, however, corrected the procedural lapse by attaching a certified copy of the NLRC
decision to its motion for reconsideration. The Supreme Court found that the CA precipitately denied the
petition for certiorari based on an overly rigid application of the rules of procedure. In effect, it sacrificed
substance to form in a situation where the petitioners recourse was not patently frivolous or meritless. Thus,
the case was remanded to the NLRC for resolution of its appeal. Jobel Enterprises and/or Mr. Benedict Lim
vs. NLRC and Eric Martinez, Sr., G.R. No. 194031, August 8, 2011.
Appeal; decision or resolution of NLRC. As was enunciated in the case of St. Martin Funeral Home v.
NLRC, the special civil action of certiorari under Rule 65 of the Rules of Civil Procedure, which is filed
before the CA, is the proper vehicle for judicial review of decisions of the NLRC. The petition should be
initially filed before the Court of Appeals in strict observance of the doctrine on hierarchy of courts as the
appropriate forum for the relief desired. Thus, respondents recourse to the CA was the proper remedy to
question the resolution of the NLRC. Atok Big Wedge Company, Inc. vs. Jesus P. Gison, G.R. No. 169510,
August 8, 2011.
Employer-employee relationship; four-fold test. 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
employees conduct, or the so-called control test. Applying the aforementioned test, an employer-employee
relationship was found to be absent in the case at bar. Among other things, respondent was not required to
report everyday during regular office hours of petitioner. Respondents 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.
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. Atok Big Wedge Company, Inc. vs. Jesus P. Gison, G.R. No. 169510, August 8,
2011.
Employment; regular employee. 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. The
Supreme Court has ruled that said provision is not the yardstick for determining the existence of an
employment relationship because it merely distinguishes between two kinds of employees, i.e., regular
employees and casual employees, for purposes of determining the right of an employee to certain benefits, to
join or form a union, or to security of tenure; it does not apply where the existence of an employment
relationship is in dispute. It is, therefore, erroneous on the part of the Court of Appeals to rely on Article 280
in determining whether an employer-employee relationship exists between respondent and the petitioner.
Therefore, despite the fact that petitioner made use of the services of respondent as a part-time consultant on
retainer basis for eleven years, he still cannot be considered as a regular employee of petitioner using only as
basis Article 280 of the Labor Code. Atok Big Wedge Company, Inc. vs. Jesus P. Gison, G.R. No. 169510,
August 8, 2011.
Claim of disability benefits and sickness allowance; reporting requirements. Anent a seafarers entitlement to
compensation and benefits for injury and illness, Section 20-B (3) of 2000 POEA-SEC provides that in order
for the seafarer to claim the said benefits, he must submit himself to a post-employment medical examination
by a company-designated physician within three working days upon his return, except when he is physically
incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as
compliance. Failure of the seafarer to comply with the mandatory reporting requirement shall result in his
forfeiture of the right to claim the above benefits. In this case, there was no dispute regarding the fact that
Esguerra had altogether failed to comply with the mandatory reporting requirement. Esguerra also 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. Self-serving and unsubstantiated declarations are
insufficient to establish a case before quasi-judicial bodies where the quantum of evidence required in
establishing a fact is substantial evidence. Coastal Safeway Marine Services vs. Esguerra,G.R. No. 185352,
August 10, 2011.
September 2011 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on October 19, 2011 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law
Here are selected September 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:
Employee; probationary employee. Employment on probationary status of teaching personnel is not only
governed by the Labor Code but also by the Manual of Regulations for Private Schools. Section 91 of the
Manual of Regulations for Private Schools, states that: Every contract of employment shall specify the
designation, qualification, salary rate, the period and nature of service and its date of effectivity, and such other
terms and condition of employment as may be consistent with laws and rules, regulations and standards of the
school. Thus, it is important that the contract of probationary employment specify the period or term of its
effectivity. In this case, therefore, the letters sent by petitioner College Dean Sr. Racadio, which were devoid
of 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 expired at the end of their terms. Assuming,arguendo, that the
employment contracts between the petitioner school and the respondent spouses were renewed, the SC found
that there was a valid and just cause for their dismissal since petitioners have repeatedly violated several
departmental and instructional policies, such as the late submission of final grades, failure to submit final test
questions to the Program Coordinator, the giving of tests in essay form instead of the multiple choice format as
mandated by the school and the high number of students with failing grades in the classes that he handled. St.
Paul College Quezon City, et al. vs. Remigio Michael A. Ancheta II and Cynthia A. Ancheta, G.R. No. 169905.
September 7, 2011.
Employee; existence of employer-employee relationship. To determine the existence of an employer-employee
relationship, case law has consistently applied the four-fold test. Respondents argue that the element of control
is lacking in this case, making petitioner-referee an independent contractor and not an employee of
respondents. The Supreme Court agreed as it found that there was no control over the means and methods by
which petitioner performs his work as a referee officiating a PBA basketball game. The contractual stipulations
in the retainer contracts do not pertain to, much less dictate, how and when petitioner will blow the whistle and
make calls. On the contrary, they merely serve as rules of conduct or guidelines in order to maintain the
integrity of the professional basketball league. Moreover, the following circumstances indicate that petitioner
is an independent contractor: (1) the referees are required to report for work only when PBA games are
scheduled, which is three times a week spread over an average of only 105 playing days a year, and they
officiate games at an average of two hours per game; and (2) the only deductions from the fees received by the
referees are withholding taxes. There are no deductions for contributions to the Social Security System,
Philhealth or Pag-Ibig, which are the usual deductions from employees salaries. These undisputed
circumstances buttress the fact that petitioner is an independent contractor, and not an employee of
respondents. Jose Mel Bernante vs. Philippine Basketball Association, et al., G.R. No. 192084. September 14,
2011.
Employee benefits; principle against diminution of benefits. The issue in this case was whether or not the
change in the scheme of distribution of the incremental proceeds from tuition fee increase is a diminution of
benefit. The Court held that it was not. Generally, employees have a vested right over existing benefits
voluntarily granted to them by their employer. The principle against diminution of benefits, however, is
applicable only if the grant or benefit is founded on an express policy or has ripened into a practice over a long
period of time which is consistent and deliberate. In other words, the benefit must be characterized by
regularity and the voluntary and deliberate intent of the employer to grant the benefits over a significant period
of time. In the case at bench, contrary to UEEAs claim, the distribution of the 70% incremental proceeds
based on equal sharing scheme cannot be held to have ripened into a company practice since the practice has
not been for a long period of time. The same could not also have ripened into a vested right because such grant
was not a deliberate and voluntary act on the part of the petitioner. The Supreme Court held that the grant by
an employer of benefits through an erroneous application of the law due to the absence of clear administrative
guidelines is not considered a voluntary act which cannot be unilaterally discontinued. University of the East
vs. University of the East Employees Association, G.R. No. 179593. September 14, 2011.
Employment benefits; entitlement to vacation and sick leave. BPI contends that at the time of Uys dismissal,
she was no longer functioning as a teller of the bank but as a low-counter staff and as such, Uy is not anymore
entitled to the tellers functional allowance pursuant to company policy. BPI further argues that Uy is neither
entitled to the monetary conversion of vacation and sick leaves for failure to prove that she is entitled to these
benefits at the time of her dismissal. The Supreme Court ruled that Uy is entitled to the tellers functional
allowance but not to the monetary conversion of vacation and sick leaves. Uys function as a teller at the time
of her dismissal was factually established and was never impugned by the parties during the proceedings held
in the main case. Besides, BPI did not present any evidence to substantiate its allegation that Uy was assigned
as a low-counter staff at the time of her dismissal. It is a hornbook rule that he who alleges must prove. As to
the vacation and sick leave cash conversion benefit, the Supreme Court held that entitlement to the same
should be necessarily proved since this privilege is not statutory or mandatory in character but only voluntarily
granted. As such, the existence of this benefit as well as the employees entitlement thereto cannot be
presumed but should be proved by the employee. In this case, however, the records failed to prove that Uy
was receiving this benefit at the time of her dismissal on December 14, 1995. BPI Employees Union-Metro
Manila, et al. vs. Bank of the Philippine Islands/Bank of the Philippine Islands vs. BPI Employees Union-
Metro Manila, et al., G.R. Nos. 178699/178735. September 21, 2011.
Termination; constructive dismissal. The concept of constructive dismissal is inapplicable to respondents in
this case. 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. That the respondents were indeed not constructively
dismissed was found by the Supreme Court to be supported by substantial evidence. First, respondents
Domingo and Remigio, even while their petition for certiorari was pending before the CA, remained
employed at UNILAB. In those instances, there was actually no dismissal to speak of. Second, the
respondents positions were not abolished, unlike its provincial depots where the employees therein were
considered redundant employees. In this case, their accounting functions were merely consolidated under the
Finance Division of Unilab pursuant to its Shared Services Policy (SSP). Respondents, who are accounting
employees, cannot refuse their assignment to the Finance Division. The Supreme Court noted that it cannot
accept the proposition that when an employee opposes his employers decision to transfer him to another work
place, there being no bad faith or underhanded motives on the part of either party, that the employees wishes
should be made to prevail. United Laboratories, Inc. vs.Jaime Domingo Substituted by his spouse Carmencita
Punzalan Domingo, et al., G.R. No. 186209, September 21, 2011.
Termination; loss of trust and confidence. Loss of confidence should ideally apply only to: (1) cases involving
employees occupying positions of trust and confidence, or (2) situations where the employee is routinely
charged with the care and custody of the employers money or property. As branch manager of the bank,
Lopez occupied a position of trust. His hold on his position and his stay in the service depend on the
employers trust and confidence in him and on his managerial services. In this case, the Supreme Court found
that Lopezs dismissal was justified. He betrayed the trust and confidence of the employer-bank when he
issued the subject purchase orders without authority and despite the express directive of the bank to put the
clients application on hold. The bank had a genuine concern over the granted loan applications 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 banks direct order left Lopez without any authority to clear the loan application on his
own. Elmer Lopez vs. Keppel Bank Philippines, Inc. et al., G.R. No. 176800. September 5, 2011.
Termination; loss of trust and confidence. Jumuad was found to have willfully breached her duties as to be
unworthy of the trust and confidence of Hi-Flyer. First, Jumuad was a managerial employee; she executed
management policies and had the power to discipline the employees of KFC branches in her area. She
recommended actions on employees to the head office. According to the Supreme Court, based on established
facts, the mere existence of the grounds for the loss of trust and confidence justifies petitioners dismissal. In
the present case, the CERs reports of Hi-Flyer show that there were anomalies committed in the KFC
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 in KFC-Bohol, 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 prevented the whole debacle
from occurring. Pamela Florentina P. Jumuad vs. Hi-Flyer Food, Inc. and/or Jesus R. Montemayor, G.R. No.
187887. September 7, 2011.
Termination; illegal dismissal. In the case at bar, respondent security guards were relieved from their posts
because they filed with the Labor Arbiter a complaint against their employer for money claims due to
underpayment of wages. The Supreme Court found that this was not a valid cause for dismissal. The Labor
Code 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. Alert Security and Investigation
Agency, Inc., et al. vs. Saidali Pasawilan, et al., G.R. No. 182397. September 14, 2011.
Termination; abandonment of work. Petitioners aver that respondents were merely transferred to a new post
wherein the wages are adjusted to the current minimum wage standards. They maintain that the respondents
voluntarily abandoned their jobs when they failed to report for duty in the new location. Assuming that this
contention was true, the Supreme Court held that there was no abandonment of work. For there to be
abandonment: first, there should be a failure of the employee to report for work without a valid or justifiable
reason, and second, there should be a showing that the employee intended to sever the employer-employee
relationship. The fact that petitioners filed a complaint for illegal dismissal is indicative of their intention to
remain employed with private respondent. On the first element of failure to report for work, in this case, there
was 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. Therefore, the Court held that there was no abandonment of work in this case. Alert Security and
Investigation Agency, Inc., et al. vs. Saidali Pasawilan, et al., G.R. No. 182397. September 14, 2011.
Termination; gross and habitual neglect. Neglect of duty, to be a ground for dismissal, must be both gross and
habitual. In this case, Respondents repeated failure to turn over his task of preparing the payroll of the
petitioners employees to someone capable of performing the vital tasks which he could not effectively
perform or undertake because of his heart ailment or condition constitutes gross neglect. However, although
the dismissal was legal, respondent was still held to be entitled to a separation pay as a measure of
compassionate justice, considering his length of service and his poor physical condition which was one of the
reasons he filed a leave of absence. 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 separation pay. By way of exception,
however, the grant of separation pay or some other financial assistance may be allowed to an employee
dismissed for just causes on the basis of equity. Nissan Motors Phils., Inc. vs. Victorino Angelo, G.R. No.
164181. September 14, 2011.
Termination; award of backwages. The base figure in computing the award of back wages to an illegally
dismissed employee is the employees basic salary plus regular allowances and benefits received at the time of
dismissal, unqualified by any wage and benefit increases granted in the interim. The full backwages, as
referred to in the body of the March 31, 2005 Supreme Court decision pertains to backwages as defined in
Republic Act No. 6715. Under said law, and as provided in jurisprudence, full backwages means backwages
without any deduction or qualification, including benefits or their monetary equivalent the employee is
enjoying at the time of his dismissal. Consequently, any benefit or allowance over and above that allowed and
provided by said law is deemed excluded under the said Supreme Court Decision. BPI Employees Union-
Metro Manila, et al. vs. Bank of the Philippine Islands/Bank of the Philippine Islands vs. BPI Employees
Union-Metro Manila, et al., G.R. Nos. 178699/178735. September 21, 2011.
November 2011 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on December 16, 2011 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law
Here are selected November 2011 rulings of the Supreme Court of the Philippines on labor law and procedure:
Award of attorneys fees; concepts. There are two commonly accepted concepts of attorneys fees the
ordinary and extraordinary. In its ordinary concept, an attorneys fee is the reasonable compensation paid to a
lawyer by his client for the legal services the former renders; compensation is paid for the cost and/or results of
legal services per agreement or as may be assessed. In its extraordinary concept, attorneys fees are deemed
indemnity for damages ordered by the court to be paid by the losing party to the winning party. This
is payable not to the lawyer but to the client, unless the client and his lawyer have agreed that the award shall
accrue to the lawyer as additional or part of his compensation. Article 111 of the Labor Code, as amended,
contemplates the extraordinary concept of attorneys fees. Although an express finding of facts and law is still
necessary to prove the merit of the award, there need not be any showing that the employer acted maliciously
or in bad faith when it withheld the wages. Thus the SC concluded that the CA erred in ruling that a finding of
the employers malice or bad faith in withholding wages must precede an award of attorneys fees under
Article 111 of the Labor Code. To reiterate, a plain showing that the lawful wages were not paid without
justification is sufficient. Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-East Zone Union
and Eduardo Borela, etc. vs. Manila Water Company, Inc., G.R. No. 174179. November 16, 2011.
Award of attorneys fees; Article 111. One of the issues of this case involved the effect of the Memorandum of
Agreement provision that attorneys fees shall be deducted from the amelioration allowance (AA) and CBA
receivables. In this regard, the CA held that the additional grant of 10% attorneys fees by the NLRC violates
Article 111 of the Labor Code, considering that the MOA between the parties already ensured the payment of
10% attorneys fees deductible from the AA and CBA receivables of the Unions members. In the present case,
the Union bound itself to pay 10% attorneys fees to its counsel under the MOA and also gave up the attorneys
fees awarded to the Unions members in favor of their counsel. The award by the NLRC cannot be taken to
mean an additional grant of attorneys fees, in violation of the ten percent (10%) limit under Article 111 of the
Labor Code since it rests on an entirely different legal obligation than the one contracted under the MOA.
Simply stated, the attorneys fees contracted under the MOA do not refer to the amount of attorneys fees
awarded by the NLRC; the MOA provision on attorneys fees does not have any bearing at all to the attorneys
fees awarded by the NLRC under Article 111 of the Labor Code. Based on these considerations, it is clear that
the CA erred in ruling that the LAs award of attorneys fees violated the maximum limit of ten percent (10%)
fixed by Article 111 of the Labor Code. Kaisahan at Kapatiran ng mga Manggagawa at Kawani sa MWC-
East Zone Union and Eduardo Borela, etc. vs. Manila Water Company, Inc., G.R. No. 174179. November 16,
2011.
Disability benefits; compensable. In this case, respondent was diagnosed with Central Retinal Vein Occlusion
of his left eye. Central retinal vein occlusion causes painless vision loss which is usually sudden, but it can
also occur gradually over a period of days to weeks. This condition, despite numerous medical procedures
undertaken, eventually led to a total loss of sight of respondents left eye. Loss of one bodily function falls
within the definition of disability which is essentially loss or impairment of a physical or mental function
resulting from injury or sickness. The disputable presumption that a particular injury or illness that results in
disability, or in some cases death, is work-related stands in the absence of contrary evidence. In the case at
bench, the said presumption was not overturned by the petitioners. Although, the employer is not the insurer
of the health of his employees, he takes them as he finds them and assumes the risk of liability. Consequently,
the Court concurred with the finding of the lower courts that respondents disability is compensable. Fil-star
Maritime Corporation, et al. vs. Hanziel O. Resete, G.R. No. 192686. November 23, 2011.
Disability benefits; total disability. A total disability does not require that the employee be completely
disabled, or totally paralyzed. What is necessary is that the injury must be such that the employee cannot
pursue his or her usual work and earn from it. On the other hand, a total disability is considered permanent if it
lasts continuously for more than 120 days. What is crucial is whether the employee who suffers from
disability could still perform his work notwithstanding the disability he incurred. Evidently, respondent was
not able to return to his job as a seafarer after his left eye was declared legally blind. Records showed that the
petitioners did not give him a new overseas assignment after his disability. This only proved that his disability
effectively barred his chances to be deployed abroad as an officer of an ocean-going vessel. Hence, the
Supreme Court found it fitting that respondent be entitled to permanent total disability benefits considering that
he would not be able to resume his position as a maritime officer, and the probability that he would be hired by
other maritime employers would be close to impossible. Fil-star Maritime Corporation, et al. vs. Hanziel O.
Resete, G.R. No. 192686. November 23, 2011.
Dismissal; gross and habitual neglect of duties. 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. In the case at bench, Padao was accused of having presented a fraudulently
positive evaluation of the business, credit standing/rating and financial capability of Reynaldo and Luzvilla
Baluma and eleven other loan applicants. Some businesses were eventually found not to exist at all, while in
other transactions, the financial status of the borrowers simply could not support the grant of loans in the
approved amounts. Moreover, Padao over-appraised the collateral of spouses Gardito and Alma Ajero, and that
of spouses Ihaba and Rolly Pango. Padaos 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. Philippine National Bank vs. Dan
Padao, G.R. Nos. 180849 and 187143. November 16, 2011.
Dismissed employees; separation pay. Padao is not entitled to financial assistance. The rule regarding
separation pay as a measure of social justice is that it shall be paid only in those instances where the employee
is validly dismissed for causes other than serious misconduct, willful disobedience, gross and habitual neglect
of duty, fraud or willful breach of trust, commission of a crime against the employer or his family, or those
reflecting on his moral character. In this case, Padao was guilty of gross and habitual neglect of
duties. Philippine National Bank vs. Dan Padao, G.R. Nos. 180849 and 187143. November 16, 2011.
Employment of seafarers. The employment of seafarers, including claims for death benefits, is governed by the
contracts they sign every time they are hired or rehired; and as long as the stipulations therein are not contrary
to law, morals, public order or public policy, they have the force of law between the parties. While the seafarer
and his employer are governed by their mutual agreement, the POEA rules and regulations require that the
POEA Standard Employment Contract (POEA-SEC) be integrated in every seafarers contract. In this case,
considering that petitioner executed an overseas employment contract with respondent company in November
1999, the 1996 POEA-SEC should govern. The 2000 POEA-SEC initially took effect on June 25, 2000.
Thereafter, the Court issued the Temporary Restraining Order (TRO) which was later lifted on June 5, 2002.
Thus, petitioner cannot simply rely on the disputable presumption provision mentioned in Section 20 (B)(4) of
the 2000 POEA-SEC which states that: Those illnesses not listed in Section 32 of this Contract are disputably
presumed as work related. Gilbert Quizora vs. Denholm Crew Management (Philippines), Inc., G.R. No.
185412. November 16, 2011.
Employment of seafarers; disability compensation. Granting that the provisions of the 2000 POEA-SEC apply,
the disputable presumption provision in Section 20 (B) does not allow petitioner to just sit down and wait for
respondent company to present evidence to overcome the disputable presumption of work-relatedness of the
illness. Contrary to his position, the seafarer still has to substantiate his claim in order to be entitled to
disability compensation. He has to prove that the illness he suffered was work-related and that it must have
existed during the term of his employment contract. For disability to be compensable under Section 20 (B) of
the 2000 POEA-SEC, two elements must concur: (1) the injury or illness must be work-related; and (2) the
work-related injury or illness must have existed during the term of the seafarers employment contract. In
other words, to be entitled to compensation and benefits under this provision, it is not sufficient to establish
that the seafarers illness or injury has rendered him permanently or partially disabled; it must also be shown
that there is a causal connection between the seafarers illness or injury and the work for which he had been
contracted. Unfortunately for petitioner, he failed to prove that his varicose veins arose out of his employment
with respondent company. Gilbert Quizora vs. Denholm Crew Management (Philippines), Inc., G.R. No.
185412. November 16, 2011.
Employees compensation; increased risk theory. For a sickness or resulting disability or death to be
compensable, the claimant must prove either (1) that the employees sickness was the result of an occupational
disease listed under Annex A of the Amended Rules on Employees Compensation, or (2) that the risk of
contracting the disease was increased by his working conditions. Under the increased risk theory, there must
be a reasonable proof that the employees working condition increased his risk of contracting the disease, or
that there is a connection between his work and the cause of the disease. In this case, since Besitans ailment,
End Stage Renal Disease secondary to Chronic Glomerulonephritis is not among those listed under Annex
A, of the Amended Rules on Employees Compensation, he needs to show by substantial evidence that his
risk of contracting the disease was increased by his working condition. Government Service Insurance System
vs. Manuel P. Besitan, G.R. No. 178901. November 23, 2011.
Employeess Compensation; proceedings; quantum of proof. Direct and clear evidence, is not necessary to
prove a compensable claim. Strict rules of evidence do not apply as PD No. 626 only requires substantial
evidence. The SC found that Besitan has sufficiently proved that his working condition increased his risk of
contracting Glomerulonephritis, which according to GSIS may be caused by bacterial, viral, and parasitic
infection. When Besitan entered the government service in 1976, he was given a clean bill of health. In 2005,
he was diagnosed with End Stage Renal Disease secondary to Chronic Glomerulonephritis. It would appear
therefore that the nature of his work could have increased his risk of contracting the disease. His frequent
travels to remote areas in the country could have exposed him to certain bacterial, viral, and parasitic infection,
which in turn could have caused his disease. Delaying his urination during his long trips to the provinces
could have also increased his risk of contracting the disease. As a matter of fact, even the Bank Physician of
Bangko Sentral ng Pilipinas, Dr. Gregorio Suarez II, agreed that Besitans working condition could have
contributed to the weakening of his kidneys, which could have caused the disease. This Medical Certificate is
sufficient to prove that the working condition of Besitan increased his risk of contracting Glomerulonephritis.
In claims for compensation benefits, a doctors certification as to the nature of a claimants disability deserves
full credence because no medical practitioner would issue certifications indiscriminately. Government Service
Insurance System vs. Manuel P. Besitan, G.R. No. 178901. November 23, 2011.
Illegal dismissal; employer-employee relationship. The elements to determine the existence of an employment
relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employers power to control the employees conduct. In this case, the documentary
evidence presented by respondent to prove that he was an employee of petitioner are as follows: (a) a
document denominated as payroll (dated July 31, 2001 to March 15, 2002) certified correct by petitioner,
which showed that respondent received a monthly salary of P7,000.00 with the corresponding deductions due
to absences incurred by respondent; and (2) copies of petty cash vouchers, showing the amounts he received
and signed for in the payrolls. These documents showed that petitioner hired respondent as an employee and
he was paid monthly wages of P7,000.00. Additionally, as to the existence of the power of control, it is not
essential for the employer to actually supervise the performance of duties of the employee. It is sufficient that
the former has a right to wield the power. In this case, petitioner even stated in his Position Paper that it was
agreed that he would help and teach respondent how to use the studio equipment. In such case, petitioner
certainly had the power to check on the progress and work of respondent. Cesar C. Lirio, doing business
under the name and style of Celkor Ad Sonimix vs. Wilmer D. Genovia, G.R. No. 169757. November 23, 2011.
Illegal recruitment; elements. The crime of illegal recruitment is committed when two elements concur,
namely: (1) the offender has no valid license or authority required by law to enable one to lawfully engage in
recruitment and placement of workers; and (2) he undertakes either any activity within the meaning of
recruitment and placement defined under Article 13 (b), or any prohibited practices enumerated under Article
34 of the Labor Code. First, the petitioner was found not to have been issued a license as proven by the
certification from the DOLE-Dagupan District Office stating that petitioner has not been issued any license by
the POEA and neither is it a holder of an authority to engage in recruitment and placement activities. Second,
from the testimonies of the private respondents, it is apparent that petitioner was able to convince the private
respondents to apply for work in Israel after parting with their money in exchange for the services she would
render. The said act of the petitioner, without a doubt, falls within the meaning of recruitment and placement
as defined in Article 13 (b) of the Labor Code. Finally, the Supreme Court noted that in illegal recruitment
cases, the failure to present receipts for money that was paid in connection with the recruitment process will
not affect the strength of the evidence presented by the prosecution as long as the payment can be proved
through clear and convincing testimonies of credible witnesses. Delia D. Romero vs. People of the
Philippines, Romulo Padlan and Aruturo Siapno, G.R. No. 171644. November 23, 2011.
Probationary employment; security of tenure. It is settled that even if probationary employees do not enjoy
permanent status, they are accorded the constitutional protection of security of tenure. This means they may
only be terminated for 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. In this case,
the justification given by the petitioners for Sys dismissal was her alleged failure to qualify by the companys
standard. Other than the general allegation that said standards were made known to her at the time of her
employment, however, no evidence, documentary or otherwise, was presented to substantiate the same.
Neither was there any performance evaluation presented to prove that indeed hers was unsatisfactory. Hence,
for failure of the petitioners to support their claim of unsatisfactory performance by Sy, the SC held that Sys
employment was unjustly terminated to prevent her from acquiring a regular status in circumvention of the law
on security of tenure. Tamsons Enterprises, Inc., et al. vs. Court of Appeals and Rosemarie L. Sy, G.R. No.
192881. November 16, 2011.
Probationary employment; termination. Even on the assumption that Sy indeed failed to meet the standards set
by the petitioner-employer and made known to the former at the time of her engagement, still, the termination
was flawed for failure to give the required notice to Sy. Section 2, Rule I, Book VI of the Implementing Rules
provides that: If the termination is brought about by the completion of a contract or phase thereof, or by
failure of an employee to meet the standards of the employer in the case of probationary employment, it shall
be sufficient that a written notice is served the employee, within a reasonable time from the effective date of
termination. Tamsons Enterprises, Inc., et al. vs. Court of Appeals and Rosemarie L. Sy, G.R. No. 192881.
November 16, 2011.
Termination of employment; when company tolerated violation of company policy. 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. This principle, however, 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. In this case, Padao, in
affixing his signature on the fraudulent reports, attested to the falsehoods contained therein. Moreover, by
doing so, he repeatedly failed to perform his duties as a credit investigator. Thus, the termination of his
employment is justified. Philippine National Bank vs. Dan Padao, G.R. Nos. 180849 and 187143. November
16, 2011.
January 2012 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on February 17, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases
Here are selected January 2012 rulings of the Supreme Court of the Philippines on labor law and procedure:
Certiorari; effect of receipt of award. The prevailing partys receipt of the full amount of the judgment award
pursuant to a writ of execution issued by the labor arbiter does not close or terminate the case if such receipt is
qualified as without prejudice to the outcome of the petition for certiorari pending with the Court of
Appeals. Timoteo H. Sarona vs. National Labor Relations Commission, Royale Security Agency, et al., G.R.
No. 185280, January 18, 2011.
Constructive dismissal; change in position. Constructive dismissal exists where there is cessation of work
because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a
demotion in rank or a diminution in pay and other benefits. Aptly called a dismissal in disguise of an act
amounting to dismissal but made to appear as if it were not,constructive dismissal may, likewise, exist if an act
of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the
employee that it could foreclose any choice by him except to forego his continued employment.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.Jonathan V. Morales
vs. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2011.
Contract; novation. Novation is the extinguishment of an obligation by the substitution or change of the
obligation by a subsequent one which extinguishes or modifies the first, either by changing the object or
principal conditions, or, by substituting another in place of the debtor, or by subrogating a third person in the
rights of the creditor. In order for novation to take place, the concurrence of the following requisites is
indispensable: (1) There must be a previous valid obligation; (2) There must be an agreement of the parties
concerned to a new contract; (3) There must be the extinguishment of the old contract; and (4) There must be
the validity of the new contract. The parties impliedly extinguished the first contract by agreeing to enter into
the second contract. The records also reveal that the 2
nd
contract extinguished the first contract by changing its
object or principal. These contracts were for overseas employment aboard different vessels. The first contract
was for employment aboard the MV Stolt Aspiration while the second contract involved working in another
vessel, the MV Stolt Pride. Petitioners and Madequillo, Jr. accepted the terms and conditions of the second
contract. Undoubtedly, he was still employed under the first contract when he negotiated with petitioners on
the second contract. Since Madequillo was still employed under the first contract when he negotiated with
petitioners on the second contract, novation became an unavoidable conclusion. Stolt-Nielsen Transportation
Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.
Employee; money claims. On the issue of how the seafarer will be compensated by reason of the unreasonable
non-deployment, the Supreme Court decreed the application of Section 10 of Republic Act No. 8042 (Migrant
Workers Act) which provides for money claims by reason of a contract involving Filipino workers for overseas
deployment. The law provides:
Sec. 10. Money Claims. Notwithstanding any provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and
decide, within ninety (90) calendar days after the filing of the complaint, the 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. x x x (Underscoring supplied)
Following the law, the claim is still cognizable by the labor arbiters of the NLRC under the second phrase of
the provision. Applying the rules on actual damages, Article 2199 of the New Civil Code provides that one is
entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly
proved. Stolt-Nielsen Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18,
2011.
Employee; preventive suspension; penalty of suspension. Preventive suspension is a disciplinary measure
resorted to by the employer pending investigation of an alleged malfeasance or misfeasance committed by an
employee. The employer temporarily bars the employee from working if his continued employment poses a
serious and imminent threat to the life or property of the employer or of his co-workers. On the other hand, the
penalty of suspension refers to the disciplinary action imposed on the employee after an official investigation
or administrative hearing is conducted. The employer exercises its right to discipline erring employees
pursuant to company rules and regulations. In the present case, Henry Delada filed a grievance against Manila
Pavilion Hotel (MPH). Failing to reach a settlement, Delada lodged a Complaint before the National
Conciliation and Mediation Board, which was eventually referred to a panel of voluntary arbitrators (PVA).
Meanwhile, citing security and safety reasons, MPH placed Delada on a 30-day preventive suspension and
proceeded with the administrative case against him. MPH eventually found Delada liable for insubordination
and willful disobedience of the transfer order and imposed upon him a penalty of 90-day suspension. The PVA
ruled that there was no legal and factual basis to support MPHs imposition of preventive suspension on
Delada, and that the penalty of 90-day suspension imposed by MPH against Delada went beyond the 30-day
period of preventive suspension prescribed by the Implementing Rules of the Labor Code. PVA also ruled that
MPH lost its authority to continue with the administrative proceedings for insubordination and willful
disobedience of the transfer order and to impose the penalty of 90-day suspension on Delada. According to the
panel, it acquired exclusive jurisdiction over the issue when the parties submitted the aforementioned issues
before it. The Supreme Court held that MPH did not lose its authority to discipline, and that 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. Manila Pavilion Hotel, etc. vs. Henry Delada, G.R.
No. 189947, January 25, 2011.
Employee; release and quitclaim. 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 laborers claims should be
respected by the courts as the law between the parties. Considering the petitioners claim of fraud and bad faith
against Philcomsat to be unsubstantiated, the Supreme Court found the quitclaim in dispute to be a legitimate
waiver. The Court of Appeals and the National Labor Relations Commission were unanimous in holding that
the petitioner voluntarily executed the subject quitclaim. The Supreme Court is not a trier of facts, and this
doctrine applies with greater force in labor cases. Factual questions are for the labor tribunals to resolve and
whether the petitioner voluntarily executed the subject quitclaim is a question of fact. In this case, the factual
issues have already been determined by the National Labor Relations Commission and its findings were
affirmed by the Court of Appeals. Judicial review by the Supreme Court does not extend to a reevaluation of
the sufficiency of the evidence upon which the proper labor tribunal has based its determination. Hypte R.
Aujero vs. Philippine Communications Satellite Corporation, G.R. No. 193484, January 18, 2011.
Employee benefit; holiday pay, service incentive leave pay and proportionate 13
th
month pay. Under the Labor
Code, the employee is entitled to his regular rate on holidays even if he does not work. Likewise, express
provision of the law entitles him to service incentive leave benefit if he has rendered service for more than a
year already. Furthermore, under Presidential Decree No. 851, the employee should be paid his 13
th
month
pay. The employer has the burden of proving that it has paid these benefits to its employees. AbdulJuahid R.
Pigcaulan vs. Security and Credit Investigation, Inc. and/or Rene Amby Reyes, G.R. No. 173648, January 16,
2011.
Employee benefit; overtime pay. In the absence of any concrete proof that additional service beyond the
normal working hours and days had been rendered, overtime pay cannot be granted. Handwritten itemized
computations are self-serving, unreliable and unsubstantiated evidence to sustain the grant of salary
differentials, particularly overtime pay. Unsigned and unauthenticated as they are, there is no way of verifying
the truth of the handwritten entries stated therein.AbdulJuahid R. Pigcaulan vs. Security and Credit
Investigation, Inc. and/or Rene Amby Reyes, G.R. No. 173648, January 16, 2011.
Employee benefit; permanent disability. The Supreme Court reiterated Remigio v. National Labor Relations
Commission, G.R. No. 159887, April 12, 2006, which stated that: Thus, the Court has applied the Labor Code
concept of permanent total disability to the case of seafarers. In Philippine Transmarine Carriers v. NLRC,
G.R. No. 123891, February 28, 2001, seaman Carlos Nietes was found to be suffering from congestive heart
failure and cardiomyopathy and was declared as unfit to work by the company-accredited physician. The Court
affirmed the award of disability benefits to the seaman, citing ECC v. Sanico, G.R. No. 134028, December 17,
1999, GSIS v. CA, G.R. No. 117572, January 29, 1998, GSIS v. CA, G.R. No. 116015, July 31,
1996 and Bejerano v. ECC, G. R. No. 84777, January 30, 1992, that disability should not be understood more
on its medical significance but on the loss of earning capacity. Permanent total disability means disablement of
an employee to earn wages in the same kind of work, or work of similar nature that [he] was trained for or
accustomed to perform, or any kind of work which a person of [his] mentality and attainment could do. It does
not mean absolute helplessness. It likewise cited Bejerano to reiterate that in a disability compensation, it is
not the injury which is compensated, but rather it is the incapacity to work resulting in the impairment of ones
earning capacity. The Court also cited the more recent case ofCrystal Shipping, Inc. v. Natividad, G.R. No.
154798, October 20, 2005, applying the same principles, andGSIS v. Cadiz, G.R. No. 145093, July 8, 2003,
and Ijares v. CA, G.R. No. 105854, August 26, 1999, which declared that permanent disability is the inability
of a worker to perform his job for more than 120 days, regardless of whether or not he loses the use of any part
of his body. Magsaysay Maritime Corporation, et al. vs. Oberto S. Lobusta, G.R. No. 177578, January 25,
2011.
Employee dismissal; due process. Notice and hearing constitute the essential elements of due process in the
dismissal of employees. The employer must furnish the employee with two written notices before termination
of employment can be legally effected. The first apprises the employee of the particular acts or omissions for
which dismissal is sought. The second informs the employee of the employers decision to dismiss him. With
regard to the requirement of a hearing, the essence of due process lies simply in an opportunity to be heard,
and not that an actual hearing should always and indispensably be held. These requirements were satisfied in
this case. The first required notice was dated November 3, 2003, sufficiently notifying Yabut of the particular
acts being imputed against him, as well as the applicable law and the company rules considered to have been
violated. On November 17, 2003, Meralco conducted a hearing on the charges against the petitioner where he
was accorded the right to air his side and present his defenses on the charges against him. Significantly, a high-
ranking officer of the supervisory union of Meralco assisted him during the said investigation. His sworn
statement that forms part of the case records even listed the matters that were raised during the investigation.
Finally, Meralco served a notice of dismissal dated February 4, 2004 upon Yabut. Such notice notified the latter
of the companys decision to dismiss him from employment on the grounds clearly discussed therein.Norman
Yabut vs. Manila Electric Company and Manuel M. Lopez, G.R. No. 190436, January 16, 2011.
Employee dismissal; due process. Even if there is a just or valid cause for terminating an employee, it is
necessary to comply with the requirements of due process prior to the termination. Lolita S. Concepcion vs.
Minex Import Corporation/Minerama Corporation, et al., G.R. No. 153569, January 24, 2011.
Employee dismissal; gross negligence; habitual neglect. Gross negligence has been defined as the want of
care in the performance of ones duties and habitual neglect has been defined as repeated failure to perform
ones duties for a period of time, depending upon the circumstances. 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:
[xxx](b) Gross and habitual neglect by the employee of his duties; [xxx] Diosdado Bitara was dismissed from
service due to habitual tardiness and absenteeism, and for having continued disregarding attendance policies
despite his undertaking to report on time. His weekly time record for the first quarter of the year 2000 revealed
that he came late 19 times out of the 47 times he reported for work. He also incurred 19 absences out of the 66
working days during the quarter. His absences without prior notice and approval from March 11-16, 2000 were
considered to be the most serious infraction of all because of its adverse effect on business operations. The
Supreme Court held that even in the absence of a written company rule defining gross and habitual neglect of
duties, Bitaras omissions qualify as such warranting his dismissal from the service. Mansion Printing Center
and Clement Cheng vs. Diosdado Bitara, Jr., G.R. No. 168120, January 25, 2011.
Employee dismissal; just cause; loss of confidence. To dismiss an employee, the law requires the existence of a
just and valid cause. Article 282 of the Labor Code enumerates the just causes for termination by the
employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or the latters representative in connection with the employees 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 his 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.
It is unfair to require an employer to first be morally certain of the guilt of the employee by awaiting a
conviction before terminating him when there is already sufficient showing of the wrongdoing. Requiring that
certainty may prove too late for the employer, whose loss may potentially be beyond repair. In the present case,
no less than the DOJ Secretary found probable cause for qualified theft against Concepcion. That finding was
enough to justify her termination for loss of confidence. Lolita S. Concepcion vs. Minex Import
Corporation/Minerama Corporation, et al., G.R. No. 153569, January 24, 2011.
Employee dismissal; loss of trust and confidence. 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 employers arbitrariness, whims, caprices or suspicion. Manila
Electric Company (Meralco) vs. Ma. Luisa Beltran, G.R. No. 173774, January 30, 2011.
Employee dismissal; misconduct. Article 282(a) provides that an employer may terminate an employment
because of an employees serious misconduct, a cause that was present in this case in view of the petitioners
violation of his employers 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 employees duties; and (c) it
must show that the employee has become unfit to continue working for the employer. Installation of shunting
wires is without doubt a serious wrong as it demonstrates an act that is willful or deliberate, pursued solely to
wrongfully obtain electric power through unlawful means. The act clearly relates to the petitioners
performance of his duties given his position as branch field representative who is equipped with knowledge on
meter operations, and who has the duty to test electric meters and handle customers violations of contract.
Instead of protecting the companys interest, the petitioner himself used his knowledge to illegally obtain
electric power from Meralco. His involvement in this incident deems him no longer fit to continue performing
his functions for respondent-company.Norman Yabut vs. Manila Electric Company and Manuel M.
Lopez, G.R. No. 190436, January 16, 2011.
Employer-employee relationship; commencement. The POEA Standard Employment Contract provides that
employment shall commence upon the actual departure of the seafarer from the airport or seaport in the port
of hire. Distinction must be made between the perfection of the employment contract and the commencement
of the employer-employee relationship. The perfection of the contract, which in this case coincided with the
date of execution thereof, occurred when petitioner and respondent agreed on the object and the cause, as well
as the rest of the terms and conditions therein. The commencement of the employer-employee relationship
would have taken place had petitioner been actually deployed from the point of hire. Stolt-Nielsen
Transportation Group, Inc., et al. vs. Sulpecio Modequillo, G.R. No. 177498, January 18, 2011.
Judgment; finality. The petition was brought only on behalf of Pigcaulan. The CA Decision has already
become final and executory as to Canoy since he did not appeal from it. Canoy cannot now simply incorporate
in his affidavit a verification of the contents and allegations of the petition as he is not one of the petitioners
therein. AbdulJuahid R. Pigcaulan vs. Security and Credit Investigation, Inc. and/or Rene Amby Reyes, G.R.
No. 173648, January 16, 2011.
Judgment; res judicata. The doctrine of res judicata lays down two main rules which may be stated as follows:
(1) The judgment or decree of a court of competent jurisdiction on the merits concludes the parties and their
privies to the litigation and constitutes a bar to a new action or suit involving the same cause of action either
before the same or any other tribunal; and (2) Any right, fact, or matter in issue directly adjudicated or
necessarily involved in the determination of an action before a competent court in which a judgment or decree
is rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated between
the parties and their privies whether the claim or demand, purpose, or subject matter of the two suits is the
same or not. These two main rules mark the distinction between the principles governing the two typical cases
in which a judgment may operate as evidence. In speaking of these cases, the first general rule, and which
corresponds to paragraph (b) of Section 47 of Rule 39 of the Rules of Court is referred to as bar by former
judgment while the second general rule, which is embodied in paragraph (c) of the same section, is known as
conclusiveness of judgment. The present labor case is closely related to the civil case that was decided with
finality. The acts and omissions alleged by the Bank in the civil case as basis of its counterclaim against
Mauricio are the very same acts and omissions which were used as grounds to terminate his employment.
Considering that it has already been conclusively determined with finality in the civil case that the questioned
acts of Mauricio were well within his discretion as branch manager and approving officer of the Bank, and the
same were sanctioned by the Head Office, the Supreme Court found that the Court of Appeals did not err in
holding that there was no valid or just cause for the Bank to terminate Mauricios employment.Prudential
Bank (now Bank of the Philippine Islands) vs. Antonio S.A. Mauricio, substituted by his legal heirs Maria Fe,
Voltaire, Antonio, Jr., Antonio, Earl John, and Francisco Roberto all surnamed Mauricio,G.R. No. 183350,
January 18, 2011.
Jurisdiction; voluntary arbitrators. In Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin, G.R. No.
90426, December 15, 1989, the Supreme Court ruled that the voluntary arbitrator had plenary jurisdiction and
authority to interpret the agreement to arbitrate and to determine the scope of his own authority subject only,
in a proper case, to the certiorari jurisdiction of this Court. It was also held in that case that the failure of the
parties to specifically limit the issues to that which was stated allowed the arbitrator to assume jurisdiction over
the related issue. In Ludo & Luym Corporation v. Saornido, G.R. No. 140960, January 20, 2003, the Supreme
Court recognized that voluntary arbitrators are generally expected to decide only those questions expressly
delineated by the submission agreement; that, nevertheless, they can assume that they have the necessary
power to make a final settlement on the related issues, since arbitration is the final resort for the adjudication of
disputes. Thus, the Supreme Court ruled that even if the specific issue brought before the arbitrators merely
mentioned the question of whether an employee was discharged for just cause, they could reasonably assume
that their powers extended beyond the determination thereof to include the power to reinstate the employee or
to grant back wages. In the same vein, if the specific issue brought before the arbitrators referred to the date of
regularization of the employee, law and jurisprudence gave them enough leeway as well as adequate
prerogative to determine the entitlement of the employees to higher benefits in accordance with the finding of
regularization. Indeed, to require the parties to file another action for payment of those benefits would certainly
undermine labor proceedings and contravene the constitutional mandate providing full protection to labor and
speedy labor justice. Manila Pavilion Hotel, etc. vs. Henry Delada, G.R. No. 189947, January 25, 2011.
Procedural rules; liberal application; when waived. Procedural rules may be waived or dispensed with in
absolutely meritorious cases. The Supreme Court, in past cases, has adhered to the strict implementation of the
rules and considered them inviolable when it is shown that the patent lack of merit of the appeals render liberal
interpretation pointless and naught. The contrary obtains in this case as Philcomsats case is not entirely
unmeritorious. Specifically, Philcomsat alleged that the petitioners execution of the subject quitclaim was
voluntary despite his claim that he did not do so. Philcomsat likewise argued that the petitioners educational
attainment and the position he occupied in Philcomsats hierarchy militate against his claim that he was
pressured or coerced into signing the quitclaim. The emerging trend in our jurisprudence is to afford every
party-litigant the amplest opportunity for the proper and just determination of his cause free from the
constraints of technicalities. Far from having gravely abused its discretion, the NLRC correctly prioritized
substantial justice over the rigid and stringent application of procedural rules. In the present case, the Supreme
Court held that the CA was correct in not finding grave abuse of discretion in the NLRCs decision to give due
course to Philcomsats appeal despite its being belatedly filed. Hypte R. Aujero vs. Philippine Communications
Satellite Corporation, G.R. No. 193484, January 18, 2011.
Public officers; reassignment; constructive dismissal. While a temporary transfer or assignment of personnel is
permissible even without the employees prior consent, it cannot be done when the transfer is a preliminary
step toward his removal, or a scheme to lure him away from his permanent position, or when it is designed to
indirectly terminate his service, or force his resignation. Such a transfer would in effect circumvent the
provision which safeguards the tenure of office of those who are in the Civil Service. Significantly, Section 6,
Rule III of CSC Memorandum Circular No. 40, series of 1998, defines constructive dismissal as a situation
when an employee quits his work because of the agency heads unreasonable, humiliating, or demeaning
actuations which render continued work impossible. Hence, the employee is deemed to have been illegally
dismissed. This may occur although there is no diminution or reduction of salary of the employee. It may be a
transfer from one position of dignity to a more servile or menial job. Republic of the Phil., represented by the
Civil Service Commission vs. Minerva M.P. Pacheco, G.R. No. 178021, January 31, 2011.
Reinstatement; not possible; backwages. 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 employees actual receipt of the full amount of his
separation pay that will effectively terminate the employment of an illegally 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 illegally dismissed
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. Timoteo H. Sarona vs. National Labor Relations Commission, Royale Security Agency, et al., G.R.
No. 185280, January 18, 2011.
Reorganization; management prerogative. 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. Jonathan V.
Morales was hired by Harbour Centre Port Terminal, Inc. (HCPTI) as an Accountant and Acting Finance
Officer, with a monthly salary of P18,000.00. Regularized on November 17, 2000, Morales was promoted to
Division Manager of the Accounting Department, for which he was compensated a monthly salary
ofP33,700.00, plus allowances starting July 1, 2002. Subsequent to HCPTIs transfer to its new offices at Vitas,
Tondo, Manila on January 2, 2003, Morales received an inter-office memorandum dated March 27, 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. The memorandum was issued by HCPTIs new Administration
Manager, duly noted by its new Vice President for Administration and Finance, and approved by its President
and Chief Executive Officer. Morales protested that his reassignment was a clear demotion since the position
to which he was transferred was not even included in HCPTIs plantilla. In response to Morales grievance that
he had been effectively placed on floating status, an inter-office memorandum was issued on April 4, 2003 to
the effect that transfer of employees is a management prerogative and that HCPTI had the right and
responsibility to find the perfect balance between the skills and abilities of employees to the needs of the
business. However, the Supreme Court found that HCPTI did not even bother to show that it had
implemented a corporate reorganization and/or approved a new plantilla of positions which included the one to
which Morales was being transferred. Thus, the Court reinstated the NLRCs July 29, 2005 Decision which
found Morales reassignment to be a clear demotion despite lack of showing of diminution of salaries and
benefits. Jonathan V. Morales vs. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2011.
Rule 45; question of law. As a general rule, the Supreme Court is not a trier of facts and a petition for review
on certiorari under Rule 45 of the Rules of Court must exclusively raise questions of law. Moreover, if factual
findings of the National Labor Relations Commission and the Labor Arbiter have been affirmed by the Court
of Appeals, the Supreme Court accords them the respect and finality they deserve. It is well-settled and oft-
repeated that findings of fact of administrative agencies and quasi-judicial bodies, which have acquired
expertise because their jurisdiction is confined to specific matters, are generally accorded not only respect, but
finality when affirmed by the Court of Appeals.Nevertheless, the Supreme Court will not hesitate to deviate
from what are clearly procedural guidelines and disturb and strike down the findings of the Court of Appeals
and those of the labor tribunals if there is a showing that they are unsupported by the evidence on record or
there was a patent misappreciation of facts. Indeed, that the impugned decision of the Court of Appeals is
consistent with the findings of the labor tribunals does not per se conclusively demonstrate the correctness
thereof. By way of exception to the general rule, the Supreme Court will scrutinize the facts if only to rectify
the prejudice and injustice resulting from an incorrect assessment of the evidence presented. Timoteo H.
Sarona vs. National Labor Relations Commission, Royale Security Agency, et al., G.R. No. 185280, January
18, 2011.
February 2012 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on March 5, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law Tagged appeal, Civil
Service Commission, constructive dismissal, dismissal, employee benefits, employer-employee relationship, forum
shopping, NLRC, probationary employment, reinstatement, res judicata, security of tenure
Here are select February 2012 rulings of the Supreme Court on labor law and procedure:
Appeal; factual finding of NLRC. Findings of fact of administrative agencies and quasi-judicial bodies, which
have acquired expertise because their jurisdiction is confined to specific matters, are generally accorded not
only respect but finality when affirmed by the Court of Appeals. Factual findings of quasi-judicial bodies like
the NLRC, if supported by substantial evidence, are accorded respect and even finality by the Supreme Court,
more so when they coincide with those of the Labor Arbiter. Such factual findings are given more weight when
the same are affirmed by the Court of Appeals. In the present case, the Supreme Court found no reason to
depart from these principles since the Labor Arbiter found that there was substantial evidence to conclude that
Oasay had breached the trust and confidence of Palacio Del Gobernador Condominium Corporation, which
finding the NLRC had likewise upheld. Sebastian F. Oasay, Jr. vs. Palacio del Gobernador Condominium
Corporation and Omar T. Cruz, G.R. No. 194306, February 6, 2012.
Civil Service; Clark Development Corporation. Clark Development Corporation (CDC) owes its existence to
Executive Order No. 80 issued by then President Fidel V. Ramos. It was meant to be the implementing and
operating arm of the Bases Conversion and Development Authority tasked to manage the Clark Special
Economic Zone. Expressly, CDC was formed in accordance with Philippine corporation laws and existing
rules and regulations promulgated by the Securities and Exchange Commission pursuant to Section 16 of
Republic Act 7227. CDC, a government owned or controlled corporation without an original charter, was
incorporated under the Corporation Code. Pursuant to Article IX-B, Sec. 2(1) of the Constitution, the civil
service embraces only those government owned or controlled corporations with original charter. As such, CDC
and its employees are covered by the Labor Code and not by the Civil Service Law. Antonio B. Salenga, et al.
vs. Court of Appeals, et al., G.R. No. 174941, February 1, 2012 .
Dismissal; resignation vs. illegal dismissal; telex is not equivalent to tender of resignation. 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 this case, the Supreme Court found the dismissal of De Gracia, et al. to be illegal
since Cosmoship merely sent a telex to Skippers, the local manning agency, claiming that De Gracia, et al.
were repatriated because the latter voluntarily pre-terminated their contracts. Skippers United Pacific, Inc. and
Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al., G.R. No. 175558. February 8, 2012 .
Dismissal; substantive and procedural due process. For a workers 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 employers 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 based on 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 telex to Skippers, the local manning agency, claiming that
De Gracia, et al. were repatriated because they 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. Skippers United Pacific, Inc. and Skippers Maritime Services, Inc.
Ltd. vs. Nathaniel Doza, et al., G.R. No. 175558. February 8, 2012 .
Employee benefits; right to bonus; diminution. From a legal point of view, a bonus is a gratuity or act of
liberality of the giver which the recipient cannot demand as a matter of right. The grant of a bonus is basically
a management prerogative which cannot be forced upon the employer who may not be obliged to assume the
onerous burden of granting bonuses. However, a bonus becomes a demandable or enforceable obligation if the
additional compensation is granted without any conditions imposed for its payment. In such case, the bonus is
treated as part of the wage, salary or compensation of the employee. Particularly instructive is the ruling of the
Court in Metro Transit Organization, Inc. v. National Labor Relations Commission (G.R. No. 116008, July 11,
1995) where the Court said:
Whether or not a bonus forms part of wages depends upon the circumstances and conditions for its payment. If
it is additional compensation which the employer promised and agreed to give without any conditions imposed
for its payment, such as success of business or greater production or output, then it is part of the wage. But if it
is paid only if profits are realized or if a certain level of productivity is achieved, it cannot be considered part
of the wage. Where it is not payable to all but only to some employees and only when their labor becomes
more efficient or more productive, it is only an inducement for efficiency, a prize therefore, not a part of the
wage.
In this case, there is no dispute that Eastern Telecommunications Phils., Inc. and Eastern Telecoms Employees
Union agreed on the inclusion of a provision for the grant of 14th, 15th and 16th month bonuses in the 1998-
2001 CBA Side Agreement, as well as in their 2001-2004 CBA Side Agreement, which contained no
qualification for its payment. There were no conditions specified in the CBA Side Agreements for the grant of
the bonus. There was nothing in the relevant provisions of the CBA which made the grant of the bonus
dependent on the companys financial standing or contingent upon the realization of profits. There was also no
statement that if the company derives no profits, no bonus will be given to the employees. In fine, the payment
of these bonuses was not related to the profitability of business operations. Consequently, the giving of the
subject bonuses cannot be peremptorily withdrawn by Eastern Telecommunications Phils., Inc. without
violating Article 100 of the Labor Code, which prohibits the unilateral elimination or diminution of benefits by
the employer. The rule is settled that any benefit and supplement being enjoyed by the employees cannot be
reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits
is founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to
afford labor full protection. Eastern Telecommunications Philippines, Inc. vs. Eastern Telecoms Employees
Union, G.R. No. 185665, February 8, 2012.
Employee dismissal; constructive dismissal. 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 employees transfer is tantamount to unlawful
constructive dismissal. [Merck Sharp and Dohme (Philippines) v. Robles, G.R. No. 176506, November 25,
2009] 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. The Supreme Court agreed with the Court of Appeals in ruling that the transfer of
respondents amounted to a demotion. Julies Bakeshop and/or Edgar Reyes vs. Henry Arnaiz, et al., G.R. No.
173882, February 15, 2012.
Employee dismissal; disease; dereliction of duties. With regard to disease as a ground for termination, Article
284 of the Labor Code provides that 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. In order to validly terminate employment on this
ground, Section 8, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code requires that: (i) the
employee be suffering from a disease and his continued employment is prohibited by law or prejudicial to his
health or to the health of his co-employees, and (ii) a certification by a competent public health authority that
the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even
with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not
terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee
to his former position immediately upon the restoration of his normal health. In Triple Eight Integrated
Services, Inc. v. NLRC (G.R. No. 129584, December 3, 1998),the Court held that the requirement for a medical
certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the
unilateral and arbitrary determination by the employer of the gravity or extent of the employees illness and,
thus, defeat the public policy on the protection of labor.
In this case, Ynson should have reported back to work or attended the investigations conducted by Wuerth
Philippines, Inc. immediately upon being permitted to work by his doctors, knowing that his position remained
vacant for a considerable length of time. However, he did not even show any sincere effort to return to work.
Clearly, since there is no more hindrance for him to return to work and attend the investigations set by Wuerth
Philippines, Inc., Ynsons failure to do so was without any valid or justifiable reason. His conduct shows his
indifference and utter disregard of his work and his employers interest, and displays his clear, deliberate, and
gross dereliction of duties. The power to dismiss an employee is a recognized prerogative inherent in the
employers right to freely manage and regulate his business. The law, in protecting the rights of the laborers,
authorizes neither oppression nor self-destruction of the employer. The workers right to security of tenure is
not an absolute right, for the law provides that he may be dismissed for cause. As a general rule, employers are
allowed wide latitude of discretion in terminating the employment of managerial personnel. The mere
existence of a basis for believing that such employee has breached the trust and confidence of his employer
would suffice for his dismissal. Needless to say, an irresponsible employee like Ynson does not deserve a
position in the workplace, and it is Wuerth Philippines, Inc.s management prerogative to terminate his
employment. To be sure, an employer cannot be compelled to continue with the employment of workers when
continued employment will prove inimical to the employers interest. Wuerth Philippines, Inc. vs. Rodante
Ynson, G.R. No. 175932, February 15, 2012.
Employee dismissal; due process. With respect to due process requirement, the employer is bound to furnish
the employee concerned with two (2) written notices before termination of employment can be legally
effected. One is the notice apprising the employee of the particular acts or omissions for which his dismissal is
sought and this may loosely be considered as the proper charge. The other is the notice informing the
employee of the managements decision to sever his employment. This decision, however, must come only
after the employee is given a reasonable period from receipt of the first notice within which to answer the
charge, thereby giving him ample opportunity to be heard and defend himself with the assistance of his
representative should he so desire. The requirement of notice, it has been stressed, is not a mere technicality
but a requirement of due process to which every employee is entitled. Here, Palacio Del Gobernador
Condominium Corporation complied with the two-notice rule stated above. Sebastian F. Oasay, Jr. vs.
Palacio del Gobernador Condominium Corporation and Omar T. Cruz, G.R. No. 194306, February 6, 2012.
Employee dismissal; due process. Cityland did not afford Galang the required notice before he was dismissed.
As the Court of Appeals noted, the investigation conference Tupas called to look into the janitors complaints
against Galang did not constitute the written notice required by law as he had no clear idea what the charges
against him were. Romeo A. Galang vs. Citiland Shaw Tower, Inc. and Virgilio Baldemor, G.R. No. 173291,
February 8, 2012.
Employee dismissal; grounds. The validity of an employees dismissal from service hinges on the satisfaction
of the two substantive requirements for a lawful termination. These are, first, whether the employee was
accorded due process the basic components of which are the opportunity to be heard and to defend himself.
This is the procedural aspect. And second, whether the dismissal is for any of the causes provided in the Labor
Code of the Philippines. This constitutes the substantive aspect. On the substantive aspect, the Supreme Court
found that Palacio Del Gobernador Condominium Corporations termination of the Oasays employment was
for a cause provided under the Labor Code. In terminating Oasays employment, Palacio Del Gobernador
Condominium Corporation invoked loss of trust and confidence. 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 Oasay 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. Palacio Del Gobernador Condominium Corporation had established, by
clear and convincing evidence, Oasays acts which justified its loss of trust and confidence on the
former. Sebastian F. Oasay, Jr. vs. Palacio del Gobernador Condominium Corporation and Omar T.
Cruz, G.R. No. 194306, February 6, 2012.
Employee dismissal; just cause. The Supreme Court found that Galang had become unfit to continue his
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.
Quoting the Court of Appeals decision with approval, the Supreme Court held: Without offering any possible
ill motive that might have impelled [the respondents] to summarily dismiss [Galang], who admitted having
been absorbed by the former as janitor upon the termination of his contract with his agency, this Court is more
inclined to give credence to the evidence pointing to the conclusion that [Galangs] employment was actually
severed for a just cause. Romeo A. Galang vs. Citiland Shaw Tower, Inc. and Virgilio Baldemor, G.R. No.
173291, February 8, 2012.
Employer; right to discipline employee. In Sagales v. Rustans Commercial Corporation (G.R. No. 166554,
November 27, 2008), the Supreme Court ruled:
Truly, 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. (Emphasis in the original.)
In the case at bar, the penalty handed out by the petitioners was the ultimate penalty of dismissal. There was
no warning or admonition for respondents 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. Negros Slashers,
Inc., Rodolfo C. Alvarez and Vicente Tan vs. Alvin L. Teng, G.R. No. 187122, February 22, 2012.
Employer-employee relationship; onus probandi. The onus probandi falls on petitioner to establish or
substantiate such claim by the requisite quantum of evidence. The issue of Javiers alleged illegal dismissal is
anchored on the existence of an employer-employee relationship between him and Fly Ace. As the records bear
out, the Labor Arbiter and the Court of Appeals found Javiers claim of employment with Fly Ace as wanting
and deficient. Although Section 10, Rule VII of the New Rules of Procedure of the NLRC allows a relaxation
of the rules of procedure and evidence in labor cases, this rule of liberality does not mean a complete
dispensation of proof. Labor officials are enjoined to use reasonable means to ascertain the facts speedily and
objectively with little regard to technicalities or formalities but nowhere in the rules are they provided a license
to completely discount evidence, or the lack of it. The quantum of proof required, however, must still be
satisfied. Hence, when confronted with conflicting versions on factual matters, it is for them in the exercise of
discretion to determine which party deserves credence on the basis of evidence received, subject only to the
requirement that their decision must be supported by substantial evidence. [Salvador Lacorte v. Hon. Amado
G. Inciong, 248 Phil. 232 (1988)] Accordingly, Javier needs to show by substantial evidence that he was
indeed an employee of the company against which he claims illegal dismissal. Bitoy Javier (Danilo P. Javier)
vs. Fly Ace Corporation/Flordelyn Castillo, G.R. No. 192558, February 15, 2012.
Employer-employee relationship; test. To determine the existence of an employer-employee relationship, the
following are considered: (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 employees conduct. Of these elements, the most
important criterion is whether the employer controls or has reserved the right to control the employee not only
as to the result of the work but also as to the means and methods by which the result is to be accomplished. In
this case, Javier was not able to persuade the Court that the above elements exist in his case. He could not
submit competent proof that Fly Ace engaged his services as a regular employee; that Fly Ace paid his wages
as an employee, or that Fly Ace could dictate what his conduct should be while at work. In other words,
Javiers allegations did not establish that his relationship with Fly Ace had the attributes of an employer-
employee relationship on the basis of the above-mentioned four-fold test. Worse, Javier was not able to refute
Fly Aces assertion that it had an agreement with a hauling company to undertake the delivery of its goods. It
was also baffling to realize that Javier did not dispute Fly Aces denial of his services exclusivity to the
company. In short, all that Javier laid down were bare allegations without corroborative proof. Bitoy Javier
(Danilo P. Javier) vs. Fly Ace Corporation/Flordelyn Castillo, G.R. No. 192558, February 15, 2012.
Employment contract; stages. Contracts undergo three distinct stages, to wit: negotiation; perfection or birth;
and consummation. Negotiation begins from the time the prospective contracting parties manifest their interest
in the contract and ends at the moment of agreement of the parties. Perfection or birth of the contract takes
place when the parties agree upon the essential elements of the contract. Consummation occurs when the
parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof.
Under Article 1315 of the Civil Code, a contract is perfected by mere consent and from that moment the parties
are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences
which, according to their nature, may be in keeping with good faith, usage and law. An employment contract,
like any other contract, is perfected at the moment (1) the parties come to agree upon its terms; and (2) concur
in the essential elements thereof: (a) consent of the contracting parties, (b) object certain which is the subject
matter of the contract and (c) cause of the obligation. In the present case, C.F. Sharp, on behalf of its principal,
International Shipping Management, Inc., hired Agustin and Minimo as Sandblaster/Painter for a 3-month
contract, with a basic monthly salary of US$450.00. Thus, the object of the contract is the service to be
rendered by Agustin and Minimo on board the vessel while the cause of the contract is the monthly
compensation they expect to receive. These terms were embodied in the Contract of Employment which was
executed by the parties. The agreement upon the terms of the contract was manifested by the consent freely
given by both parties through their signatures in the contract. Neither parties disavow the consent they both
voluntarily gave. Thus, there is a perfected contract of employment. C.F. Sharp & Co. Inc. and John J. Rocha
vs. Pioneer Insurance and Surety Corporation, et al.,G.R. No. 179469, February 15, 2012.
Employment relationship; commencement. The commencement of an employer-employee relationship must
be treated separately from the perfection of an employment contract. Santiago v. CF Sharp Crew
Management, Inc., (G.R. No. 162419, 10 July 2007) is an instructive precedent on this point. In that case, the
Supreme Court made a distinction between the perfection of the employment contract and the commencement
of the employer-employee relationship, thus:
The perfection of the contract, which in this case coincided with the date of execution thereof, occurred when
petitioner and respondent agreed on the object and the cause, as well as the rest of the terms and conditions
therein. The commencement of the employer-employee relationship, as earlier discussed, would have taken
place had petitioner been actually deployed from the point of hire. Thus, even before the start of any employer-
employee relationship, contemporaneous with the perfection of the employment contract was the birth of
certain rights and obligations, the breach of which may give rise to a cause of action against the erring party.
Despite the fact that the employer-employee relationship has not commenced due to the failure to deploy
Agustin and Minimo in this case, Agustin and Minimo are entitled to rights arising from the perfected Contract
of Employment, such as the right to demand performance by C.F. Sharp of its obligation under the
contract. C.F. Sharp & Co. Inc. and John J. Rocha vs. Pioneer Insurance and Surety Corporation, et al., G.R.
No. 179469, February 15, 2012.
Forum shopping; elements; res judicata. For forum shopping to exist, it is necessary that (a) there be identity of
parties or at least such parties that represent the same interests in both actions; (b) there be identity of rights
asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two
preceding particulars is such that any judgment rendered in one action will, regardless of which party is
successful, amount to res judicata in the other action. Petitioners are correct as to the first two requisites of
forum shopping. First, there is identity of parties involved: Negros Slashers Inc. and respondent Teng. Second,
there is identity of rights asserted i.e., the right of management to terminate employment and the right of an
employee against illegal termination. However, the third requisite of forum shopping is missing in this case.
Any judgment or ruling of the Office of the Commissioner of the Metropolitan Basketball Association will not
amount to res judicata. Res judicata is defined in jurisprudence as to have four basic elements: (1) the
judgment sought to bar the new action must be final; (2) the decision must have been rendered by a court
having jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment
on the merits; and (4) there must be as between the first and second action, identity of parties, subject matter,
and causes of action. Here, although contractually authorized to settle disputes, the Office of the Commissioner
of the Metropolitan Basketball Association is not a court of competent jurisdiction as contemplated by law
with respect to the application of the doctrine of res judicata. At best, the Office of the Commissioner of the
Metropolitan Basketball Association is a private mediator or go-between as agreed upon by team management
and a player in the Metropolitan Basketball Association Players Contract of Employment. Any judgment that
the Office of the Commissioner of the Metropolitan Basketball Association may render will not result in a bar
for seeking redress in other legal venues. Hence, respondents action of filing the same complaint in the
Regional Arbitration Branch of the NLRC does not constitute forum shopping. Negros Slashers, Inc., Rodolfo
C. Alvarez and Vicente Tan vs. Alvin L. Teng, G.R. No. 187122, February 22, 2012.
Jurisdiction; NLRC. It is clear from the NLRC Rules of Procedure that appeals must be verified and certified
against forum-shopping by the parties-in-interest themselves. The purpose of verification is to secure an
assurance that the allegations in the pleading are true and correct and have been filed in good faith. In the case
at bar, the parties-in-interest are petitioner Salenga, as the employee, and respondent Clark Development
Corporation as the employer. A corporation can only exercise its powers and transact its business through its
board of directors and through its officers and agents when authorized by a board resolution or its bylaws. The
power of a corporation to sue and be sued is exercised by the board of directors. The physical acts of the
corporation, like the signing of documents, can be performed only by natural persons duly authorized for the
purpose by corporate bylaws or by a specific act of the board. Absent the requisite board resolution, neither
Timbol-Roman nor Atty. Mallari, who signed the Memorandum of Appeal and Joint Affidavit of Declaration
allegedly on behalf of respondent corporation, may be considered as the appellant and employer referred
to by the NLRC Rules of Procedure. As such, the NLRC had no jurisdiction to entertain the appeal. Antonio B.
Salenga, et al. vs. Court of Appeals, et al., G.R. No. 174941, February 1, 2012 .
Labor; effect if procedural due process not followed but with a valid cause for termination. 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. The twin
requirements of notice and hearing constitute the elements of due process in cases of employees dismissal.
The requirement of notice is intended to inform the employee concerned of the employers intent to dismiss
and the reason for the proposed dismissal. Upon the other hand, the requirement of hearing affords the
employee an opportunity to answer his employers charges against him and accordingly, to defend himself
therefrom before dismissal is effected. Obviously, the second written notice, as indispensable as the first, is
intended to ensure the observance of due process. In this case, there was only one written notice which
required respondents to explain within five (5) days why they should not be dismissed from the service.
Alcovendas was the only one who signed the receipt of the notice. The others, as claimed by Lynvil, refused to
sign. The other employees argue that no notice was given to them. Despite the inconsistencies, what is clear
is that no final written notice or notices of termination were sent to the employees. Due to the failure of Lynvil
to follow the procedural requirement of two-notice rule, nominal damages in the amount of P50,000 were
granted to Ariola, et al. despite their dismissal for just cause. Lynvil Fishing Enterprises, Inc. vs. Andres G.
Ariola, et al., G.R. No. 181974, February 1, 2012 .
Labor; liability of officers if termination is attended with bad faith. In labor cases, the corporate directors and
officers are solidarily liable with the corporation for the termination of employment of employees done with
malice or in bad faith. Indeed, moral damages are recoverable when the dismissal of an employee is attended
by bad faith or fraud or constitutes an act oppressive to labor, or is done in a manner contrary to good morals,
good customs or public policy. The term bad faith contemplates a state of mind affirmatively operating with
furtive design or with some motive of self-interest or will or for ulterior purpose. The Supreme Court agreed
with the ruling of both the NLRC and the Court of Appeals when they pronounced that there was no evidence
on record that indicates commission of bad faith on the part of De Borja, the general manager of Lynvil, who
was tasked with the supervision of the employees and the operation of the business. There is no proof that he
imposed on Ariola, et al. the por viaje provision for purpose of effecting their summary dismissal. Lynvil
Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012 .
Labor; nature of employment; security of tenure. In the context of these facts (1) Ariola, et al. were doing
tasks necessary to Lynvils 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 Court believed that Lynvil intended to go around the security of tenure
of Ariola, et al. as regular employees. The Court held that by the express provisions of the second paragraph of
Article 280 which cover casual employment, Ariola, et al. had become regular employees of Lynvil. Lynvil
Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012 .
Labor; procedural and substantive due process; grounds for valid termination; breach of trust. 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 employers 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 in 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. The Supreme Court found that breach of trust is present in this case, when
Ariola (the captain), Alcovendas (Chief Mate), Calinao (Chief Engineer), Nubla (cook), Baez (oiler), and
Sebullen (bodegero) conspired with one another and stole pampano and tangigue fish and delivered them
to another vessel, to the prejudice of Lynvil. Lynvil Fishing Enterprises, Inc. vs. Andres G. Ariola, et al.,G.R.
No. 181974, February 1, 2012 .
Labor; public prosecutors decision not binding on the labor tribunal. The Supreme Court has held in Nicolas
v. National Labor Relations Commission [327 Phil. 883, 886-887 (1996)] that a criminal conviction is not
necessary to find just cause for employment termination. Otherwise stated, an employees acquittal in a
criminal case, especially one that is grounded on the existence of reasonable doubt, will not preclude a
determination in a labor case that he is guilty of acts inimical to the employers interests. In the reverse, the
finding of probable cause is not followed by automatic adoption of such finding by the labor tribunals. In other
words, whichever way the public prosecutor disposes of a complaint, the finding does not bind the labor
tribunal. Lynvil contends that the filing of a criminal case before the Office of the Prosecutor is sufficient basis
for a valid termination of employment based on serious misconduct and/or loss of trust and confidence. The
Supreme Court held that 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. Lynvil
Fishing Enterprises, Inc. vs. Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012 .
Labor; regular employee; fixed-contract agreement, requisites for validity. Prior Supreme Court decisions
have laid two conditions for the validity of a fixed-contract agreement between the employer and
employee: First, the fixed period of employment was knowingly and voluntarily agreed upon by the parties
without any force, duress, or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or Second, it satisfactorily appears that the 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. Lynvil contends that Ariola, et al. were employed under a fixed-term contract which expired at the end of
the voyage. Contrarily, Ariola, et al. 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. Textually,
the provision in the contract between Lynvil and Ariola, et al. that: NA ako ay sumasang-ayon na maglingkod
at gumawa ng mga gawain sang-ayon sa patakarang por viaje na magmumula sa pagalis sa Navotas
papunta sa pangisdaan at pagbabalik sa pondohan ng lantsa sa Navotas, Metro Manila is for a fixed period
of employment. In the context, however, of the facts that: (1) Ariola, et al. were doing tasks necessarily to
Lynvils 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 Ariola, et al. as regular employees.
As such, the Supreme Court found that Ariola, et al. are regular employees. Lynvil Fishing Enterprises, Inc. vs.
Andres G. Ariola, et al., G.R. No. 181974, February 1, 2012 .
Labor Code; maximum award of attorneys fees in cases of recovery of wages. Article 111 of the Labor Code
provides for a maximum award of attorneys fees in cases of recovery of wages:
a. In cases of unlawful withholding of wages, the culpable party may be assessed attorneys fees equivalent to
ten percent of the amount of wages recovered.
b. It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for
the recovery of wages, attorneys fees which exceed ten percent of the amount of wages recovered.
Since De Gracia, et al. had to secure the services of the lawyer to recover their unpaid salaries and protect their
interest, attorneys fees in the amount of ten percent (10%) of the total claims was imposed. Skippers United
Pacific, Inc. and Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al.,G.R. No. 175558. February 8,
2012.
Labor contracting; elements. There is labor-only contracting where: (a) the person supplying workers to an
employer does not have substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others; and (b) the workers recruited and placed by such person are performing activities
which are directly related to the principal business of the employer. In the present case, the Supreme Court
found that both the capitalization requirement and the power of control on the part of Requio are wanting.
Generally, the presumption is that the contractor is a labor-only contractor unless such contractor overcomes
the burden of proving that it has the substantial capital, investment, tools and the like. In the present case,
though Garden of Memories is not the contractor, it has the burden of proving that Requio has sufficient
capital or investment since it is claiming the supposed status of Requio as independent contractor. Garden of
Memories, however, failed to adduce evidence purporting to show that Requio had sufficient capitalization.
Neither did it show that she invested in the form of tools, equipment, machineries, work premises and other
materials which are necessary in the completion of the service contract.Garden of Memories Park and Life
Plan, Inc., et al. vs. NLRC, 2nd Div., et al., G.R. No. 160278, February 8, 2012.
Migrant Workers; RA No. 8042; money claims in cases of unjust termination. Section 10 of Republic Act No.
8042 (Migrant Workers Act) provides for money claims in cases of unjust termination of employment
contracts:
In case of termination of overseas employment without just, valid or authorized cause as defined by law or
contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve
percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three
(3) months for every year of the unexpired term, whichever is less.
The Migrant Workers Act provides that salaries for the unexpired portion of the employment contract or three
(3) months for every year of the unexpired term, whichever is less, shall be awarded to the overseas Filipino
worker, in cases of illegal dismissal. However, in 24 March 2009,Serrano v. Gallant Maritime Services and
Marlow Navigation Co. Inc. (G.R. No. 167614), the Court, in an En Banc Decision, declared unconstitutional
the clause or for three months for every year of the unexpired term, whichever is less and awarded the entire
unexpired portion of the employment contract to the overseas Filipino worker. On 8 March 2010, however,
Section 7 of Republic Act No. 10022 (RA 10022) amended Section 10 of the Migrant Workers Act, and once
again reiterated the provision of awarding the unexpired portion of the employent contract or three (3) months
for every year of the unexpired term, whichever is less. Nevertheless, since the termination occurred on
January 1999 before the passage of the amendatory RA 10022, the Supreme Court applied RA 8042, without
touching on the constitutionality of Section 7 of RA 10022. The declaration in March 2009 of the
unconstitutionality of the clause or for three months for every year of the unexpired term, whichever is less
in RA 8042 shall be given retroactive effect to the termination that occurred in January 1999 because an
unconstitutional clause in the law confers no rights, imposes no duties and affords no protection. The
unconstitutional provision is inoperative, as if it was not passed into law at all. Skippers United Pacific, Inc.
and Skippers Maritime Services, Inc. Ltd. vs. Nathaniel Doza, et al.,G.R. No. 175558. February 8, 2012 .
NLRC; contempt powers. Under Article 218 the Labor Code, the NLRC (and the labor arbiters) may hold any
offending party in contempt, directly or indirectly, and impose appropriate penalties in accordance with law.
The penalty for direct contempt consists of either imprisonment or fine, the degree or amount depends on
whether the contempt is against the Commission or the labor arbiter. The Labor Code, however, requires the
labor arbiter or the Commission to deal with indirect contempt in the manner prescribed under Rule 71 of the
Rules of Court. Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate indirect
contempt proceedings before the trial court. This mode is to be observed only when there is no law granting
them contempt powers. As is clear under Article 218(d) of the Labor Code, the labor arbiter or the
Commission is empowered or has jurisdiction to hold the offending party or parties in direct or indirect
contempt. Robosa, et al., therefore, have not improperly brought the indirect contempt charges against the
respondents before the NLRC. Federico S. Robosa, et al. vs. National Labor Relations Commission (First
Division), et al., G.R. No. 176085, February 8, 2012.
NLRC; factual findings. It is a well-entrenched rule that findings of facts of the NLRC, affirming those of the
Labor Arbiter, are accorded respect and due consideration when supported by substantial evidence. The
Supreme Court, however, found that the doctrine of great respect and finality has no application to the case at
bar. The Labor Arbiter dismissed Arnaiz, et al.s complaints on mere technicality. The NLRC, upon appeal,
then came up with three divergent rulings. At first, it remanded the case to the Labor Arbiter. However, in a
subsequent resolution, it decided to resolve the case on the merits by ruling that Arnaiz, et al. were
constructively dismissed. But later on, it again reversed itself in its third and final resolution of the case and
ruled in favor of Julies bakeshop. Therefore, contrary to Reyess claim, the NLRC did not, on any occasion,
affirm any factual findings of the Labor Arbiter. The Court of Appeals is thus correct in reviewing the entire
records of the case to determine which findings of the NLRC is sound and in accordance with law. Besides,
the Court of Appeals may still resolve factual issues by express mandate of the law despite the respect given to
administrative findings of fact. Julies Bakeshop and/or Edgar Reyes vs. Henry Arnaiz, et al., G.R. No.
173882, February 15, 2012.
Probationary employee; valid cause for dismissal but without procedural due process; employee entitled to
nominal damages. Section 2, Rule I, Book VI of the Labor Codes Implementing Rules and Regulations
provides: If the termination is brought about by the completion of a contract or phase thereof, or by failure of
an employee to meet the standards of the employer in the case of probationary employment, it shall be
sufficient that a written notice is served the employee within a reasonable time from the effective date of
termination. Dalangin was hired by Canadian Opportunities as Immigration and Legal Manager, subject to a
probationary period of six months. One month after hiring Dalangin, the company terminated his employment,
declaring him unfit and unqualified to continue as Immigration and Legal Manager, for reasons which
included obstinacy and utter disregard of company policies. Propensity to take prolonged and extended lunch
breaks, shows no interest in familiarizing oneself with the policies and objectives, lack of concern for the
companys interest despite having just been employed in the company (Declined to attend company sponsored
activities, seminars intended to familiarize company employees with Management objectives and enhancement
of company interest and objectives), lack of enthusiasm toward work, and lack of interest in fostering
relationship with his co-employees. The company contends that it complied with the rule on procedural due
process when it asked Dalangin, through a Memorandum, to explain why he could not attend the seminar.
When he failed to submit his explanation, the company served him a notice the following day terminating his
employment. According to the Supreme Court, the notice to Dalangin was not served within a reasonable time
from the effective date of his termination as required by the rules since he was dismissed on the very day the
notice was given to him. However, because of the existence of a valid cause for termination, the Supreme
Court did not invalidate his dismissal but penalized the company for its non-compliance with the notice
requirement, and ordered the company to pay an indemnity, in the form of nominal damages amounting
to P10,000. Canadian Opportunities Unlimited, Inc. vs. Bart Q. Dalangin, Jr., G.R. No. 172223, February 6,
2012.
Probationary employee; valid dismissal even before 6 months. The essence of a probationary period of
employment fundamentally lies in the purpose or objective of both the employer and the employee during the
period. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain whether
he is qualified for permanent employment, the latter seeks to prove to the former that he has the qualifications
to meet the reasonable standards for permanent employment. The trial period or the length of time the
probationary employee remains on probation depends on the parties agreement, but it shall not exceed six (6)
months under Article 281 of the Labor Code. The Supreme Court found substantial evidence indicating that the
company was justified in terminating Dalangins probationary employment. Dalangin admitted in compulsory
arbitration that the proximate cause for his dismissal was his refusal to attend the companys Values
Formation Seminar scheduled for October 27, 2001, a Saturday. He refused to attend the seminar after he
learned that it had no relation to his duties, as he claimed, and that he had to leave at 2:00 p.m. because he
wanted to be with his family in the province. When the Chief Operations Officer, insisted that he attend the
seminar to encourage his co-employees to attend, he stood pat on not attending, arguing that marked
differences exist between their positions and duties, and insinuating that he did not want to join the other
employees. He also questioned the scheduled 2:00 p.m. seminars on Saturdays as they were not supposed to be
doing a company activity beyond 2:00 p.m. He considers 2:00 p.m. as the close of working hours on
Saturdays; thus, holding them beyond 2:00 p.m. would be in violation of the law. This incident reveals
Dalangins lack of interest in establishing a good working relationship with his co-employees, especially the
rank and file; he did not want to join them because of his view that the seminar was not relevant to his position
and duties. It also betrays his arrogant and condescending attitude towards his co-employees, and a lack of
support for the company objective. Dalangin also exhibited negative working habits, particularly with respect
to the one hour lunch break policy of the company and the observance of the companys working hours.
Dalangin would take prolonged lunch breaks or would go out of the office without leave of the company
and call the personnel manager later only to say that he would be unable to return to the office because of some
personal matters he needs to attend to. Canadian Opportunities Unlimited, Inc. vs. Bart Q. Dalangin, Jr., G.R.
No. 172223, February 6, 2012 .
Procedural rules; liberal application. Ordinarily, rules of procedure are strictly enforced by courts in order to
impart stability in the legal system. However, in not a few instances, the Supreme Court has relaxed the rigid
application of the rules of procedure to afford the parties the opportunity to fully ventilate their cases on the
merits. This is in line with the time honored principle that cases should be decided only after giving all the
parties the chance to argue their causes and defenses. In that way, the ends of justice would be better served.
For indeed, the general objective of procedure is to facilitate the application of justice to the rival claims of
contending parties, bearing always in mind that procedure is not to hinder but to promote the administration of
justice. In Ong Lim Sing, Jr. v. FEB Leasing and Finance Corporation (G.R. No. 168115, June 8, 2007), the
Supreme Court ruled:
Courts have the prerogative to relax procedural rules of even the most mandatory character, mindful of the
duty to reconcile both the need to speedily put an end to litigation and the parties right to due process. In
numerous cases, this Court has allowed liberal construction of the rules when to do so would serve the
demands of substantial justice and equity. x x x
Indeed the prevailing trend is to accord party litigants the amplest opportunity for the proper and just
determination of their causes, free from the constraints of needless technicalities. In this case, besides the fact
that a denial of the recourse to the Court of Appeals would serve more to perpetuate an injustice and violation
of Tengs rights under our labor laws, the Supreme Court found that as correctly held by the Court of Appeals,
no intent to delay the administration of justice could be attributed to Teng. The Court of Appeals therefore did
not commit reversible error in excusing Tengs one-day delay in filing his motion for reconsideration and in
giving due course to his petition for certiorari. Negros Slashers, Inc., Rodolfo C. Alvarez and Vicente Tan vs.
Alvin L. Teng, G.R. No. 187122, February 22, 2012.
Reinstatement; backwages. Employees who are illegally dismissed are entitled to full backwages, inclusive of
allowances and other benefits or their monetary equivalent, computed from the time their actual compensation
was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible,
the backwages shall be computed from the time of their illegal termination up to the finality of the decision.
Thus, when there is an order of reinstatement, the computation of backwages shall be reckoned from the time
of illegal dismissal up to the time that the employee is actually reinstated to his former position. Pursuant to the
order of reinstatement rendered by the Labor Arbiter, the Bank of Lubao sent Manabat a letter requiring him to
report back to work on May 4, 2007. Notwithstanding the said letter, Manabat opted not to report for work.
Thus, it is but fair that the backwages to be awarded to Manabat should be computed from the time that he was
illegally dismissed until the time when he was required to report for work, i.e. from September 1, 2005 until
May 4, 2007. Bank of Lubao, Inc. vs. Rommel J. Manabat, et al., G.R. No. 188722, February 1, 2012 .
Reinstatement; doctrine of strained relations; when applicable. Under the law and prevailing jurisprudence, an
illegally dismissed employee is entitled to reinstatement as a matter of right. However, if reinstatement would
only exacerbate the tension and strained relations between the parties, or where the relationship between the
employer and the employee has been unduly strained by reason of their irreconcilable differences, particularly
where the illegally dismissed employee held a managerial or key position in the company, it would be more
prudent to order payment of separation pay instead of reinstatement. 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. In such cases, it should be proved that
the employee concerned occupies a position where he enjoys the trust and confidence of his employer; and that
it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely
affect the efficiency and productivity of the employee concerned. In the present case, the Supreme Court found
that the relations between the parties had been already strained thereby justifying the grant of separation pay in
lieu of reinstatement in favor of Manabat. Manabats reinstatement to his former position would only serve to
intensify the atmosphere of antipathy and antagonism between the parties. Undoubtedly, Bank of Lubaos
filing of various criminal complaints against Manabat for qualified theft and the subsequent filing by the latter
of the complaint for illegal dismissal against the former, taken together with the pendency of the instant case
for more than six years, had caused strained relations between the parties. Considering that Manabats former
position as bank encoder involves the handling of accounts of the depositors of the Bank of Lubao, it would
not be equitable on the part of the Bank of Lubao to be ordered to maintain the former in its employ since it
may only inspire vindictiveness on the part of Manabat. Also, the refusal of Manabat to return to work is in
itself an indication of the existence of strained relations between him and the petitioner.Bank of Lubao, Inc.
vs. Rommel J. Manabat, et al., G.R. No. 188722, February 1, 2012 .
Seafarers; employment contract; perfection stage vs. commencement stage. An employment contract, like any
other contract, is perfected at the moment (1) the parties come to agree upon its terms; and (2) concur in the
essential elements thereof: (a) consent of the contracting parties, (b) object certain which is the subject matter
of the contract, and (c) cause of the obligation. The object of the contract was the rendition of service by
Fantonial on board the vessel for which service he would be paid the salary agreed upon. In this case, the
employment contract was perfected on January 15, 2000 when it was signed by the parties who entered into the
contract in behalf of their principal. However, the employment relationship never commenced since Fantonial
was not allowed to leave on January 17, 2000 and go on board the vessel M/V AUK in Germany on the ground
that he was not yet declared fit to work on the day of his scheduled departure. But, even if no employer-
employee relationship commenced, there was, contemporaneous with the perfection of the employment
contract, the birth of certain rights and obligations, the breach of which may give rise to a cause of action
against the erring party. Bright Maritime Corporation (BMC) / Desiree P. Tenorio vs. Ricardo B.
Fantonial, G.R. No. 165935, February 8, 2012 .
March 2012 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on April 20, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law Tagged Department of
Labor and Employment, dismissal, illegal strike, loss of trust and confidence, probationary employment, project employee
Here are select March 2012 rulings of the Supreme Court of the Philippines on labor law and procedure.
Dismissal; constructive dismissal. 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. Constructive dismissal is a dismissal in disguise or an act amounting to dismissal
but made to appear as if it were not. In constructive dismissal cases, the employer is, concededly, charged with
the burden of proving that its conduct and action or the transfer of an employee are for valid and legitimate
grounds such as genuine business necessity. In the instant case, 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. The Supreme Court
agreed with the Court of Appeals that the incredibility of petitioners submission about abandonment of work
renders credible the position of respondent that she was prevented from entering the property. This was even
corroborated by the affidavits of Siarot and Mendoza which were made part of the records of this case. Ma.
Melissa A. Galang vs. Julia Malasuqui, G.R. No. 174173. March 7, 2012.
Dismissal; loss of trust and confidence. 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 employees termination from service is
for a just and valid cause. The employers 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.
In the case at bar, the Supreme Court agreed with the petitioners that mere substantial evidence and not proof
beyond reasonable doubt is required to justify the dismissal from service of an employee charged with theft of
company property. However, the Court found no error in the CAs 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 latters termination from
employment on the ground of loss of trust and confidence. Blue Sky Trading Company, Inc. et al. vs. Arlene P.
Blas and Joseph D. Silvano,G.R. No. 190559. March 7, 2012.
Dismissal; probationary employees. Gala insists that he cannot be sanctioned for the theft of company property
on May 25, 2006. He maintains that he had no direct participation in the incident and that he was not aware
that an illegal activity was going on as he was at some distance from the trucks when the alleged theft was
being committed. He adds that he did not call the attention of the foremen because he was a mere lineman and
he was focused on what he was doing at the time. He argues that in any event, his mere presence in the area
was not enough to make him a conspirator in the commission of the pilferage.
Gala misses the point. He forgets that as a 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. Par. 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. Manila Electric Company vs. Jan Carlo
Gala, G.R. No. 191288. March 7, 2012.
Dismissal; relief of illegally dismissed employee. 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. In effect, an illegally dismissed employee is entitled to either reinstatement if such is
viable, or separation pay if reinstatement is no longer viable, and to back wages. The normal consequences of
respondents 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.
Petitioners question the CA Resolution dated October 24, 2008, arguing that it modified its March 31, 2008
Decision which has already attained finality insofar as respondent is concerned. Such contention is misplaced.
The CA merely clarified the period of payment of back wages and separation pay up to the finality of its
decision (March 31, 2008) modifying the Labor Arbiters decision. In view of the modification of monetary
awards in the Labor Arbiters decision, the time frame for the payment of back wages and separation pay is
accordingly modified to the finality of the CA decision. Norkis Distribution, Inc., et al. vs. Delfin S. Descallar,
G.R. No. 185255. March 14, 2012
Employees; project vs. regular employees. The principal test for determining whether particular employees are
properly characterized as project employees as distinguished from regular employees is whether or not the
project employees were assigned to carry out a specific project or undertaking, the duration and scope of
which were specified at the time the employees were engaged for that project.
In a number of cases, the Court has held that the length of service or the re-hiring of construction workers on a
project-to-project basis does not confer upon them regular employment status, since their re-hiring is only a
natural consequence of the fact that experienced construction workers are preferred. Employees who are hired
for carrying out a separate job, distinct from the other undertakings of the company, the scope and duration of
which has been determined and made known to the employees at the time of the employment are properly
treated as project employees and their services may be lawfully terminated upon the completion of a project.
Should the terms of their employment fail to comply with this standard, they cannot be considered project
employees.
Applying the above disquisition, the Court agreed with the findings of the CA that petitioners were project
employees. It is not disputed that petitioners were hired for the construction of the Cordova Reef Village
Resort in Cordova, Cebu. By the nature of the contract alone, it is clear that petitioners employment was to
carry out a specific project. Wilfredo Aro, Ronilo Tirol, et al. vs. NLRC, Fourth Division, et al., G.R. No.
174792. March 7, 2012.
Jurisdiction; power of the DOLE to determine the existence of employer-employee relationship. If a complaint
is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly with the
Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and
exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and
conditions of employment, if accompanied by a claim for reinstatement.
In the present case, the finding of the DOLE Regional Director that there was an employer-employee
relationship has been subjected to review by the Supreme Court, with the finding being that there was no
employer-employee relationship between petitioner and private respondent, based on the evidence presented.
The DOLE had no jurisdiction over the case, as there was no employer-employee relationship present. Thus,
the dismissal of the complaint against petitioner is proper. Peoples Broadcasting Service (Bombo Rado Phils.,
Inc.) vs. The Secretary of the Dept. of Labor & Employment, et al. G.R. No. 179652. March 6, 2012.
Management prerogative; resignation of employees running for public office. The Supreme Court has
consistently held that 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, the Court will uphold them. In the instant case, ABS-
CBN validly justified the implementation of Policy No. HR-ER-016. It is well within its rights to ensure that it
maintains its objectivity and credibility and freeing itself from any appearance of impartiality so that the
confidence of the viewing and listening public in it will not be in any way eroded. Even as the law is solicitous
of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its own business affairs to achieve its
purpose cannot be denied. Ernesto Ymbong vs. ABS-CBN Broadcasting Corporation, Veranda Sy & Dante
Luzon, G.R. No. 184885. March 7, 2012.
Separation pay; payment to those who participated in illegal strikes. 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.
Here, 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, as the Court has concluded in other cases it has previously decided, such Union officers are not
entitled to the award of separation pay in the form of financial assistance. C. Alcantara & Sons, Inc. vs. Court
of Appeals, et al./Nagkahiusang Mamumuo sa Alsons-SPFL, et al. vs. C. Alcantara & Sons, Inc., et
al./Nagkahiusang Mamumuo sa Alsons-SPFL, et al. vs. C. Alcantara & Sons, Inc., et al. G.R. No. 155109/G.R.
No. 155135/G.R. No. 179220. March 14, 2012.
April 2012 Philippine Supreme Court Decisions
on Labor Law and Procedure
Posted on May 10, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law Tagged dismissal, due
process, employer-employee relationship, probationary employment, project employee, retrenchment
Here are select April 2012 rulings of the Supreme Court of the Philippines on labor law and procedure:
Dismissal; due process. 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. MGG Marine Services, Inc. v. NLRC 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.
Here, the first and second notice requirements have not been properly observed. The adverted memo 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. Neither was there compliance with the
imperatives of a hearing or conference. Suffice it to point out that the record is devoid of any showing of a
hearing or conference having been conducted. And the written notice of termination itself did not indicate all
the circumstances involving the charge to justify severance of employment. For violating petitioners right to
due process, the Supreme Court ordered the payment to petitioner of the amount of P30,000 as nominal
damages. Armando Ailing vs. Jose B. Feliciano, Manuel F. San Mateo III, et al., G.R. No. 185829. April 25,
2012.
Dismissal; just cause. 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. Armando Ailing vs. Jose B. Feliciano, Manuel F. San Mateo III, et al., G.R. No. 185829.
April 25, 2012.
Dismissal; retrenchment. 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
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, x x x efficiency, seniority, physical fitness, age, and
financial hardship for certain workers.
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 petitioners 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. 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 (citing Philippine National Bank v. Cabansag, G.R. No. 157010,
June 21, 2005, 460 SCRA 514, 518 and Royal Crown Internationale v. NLRC, G.R. No. 78085, October 16,
1989, 178 SCRA 569.) International Management Services/Marilyn C. Pascual vs. Roel P. Logarta, G.R. No.
163657, April 18, 2012.
Employee; probationary employee. 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.
The letter-offer to Aliling states that the regularization standards or the performance norms to be used are still
to be agreed upon by him and his supervisor. Moreover, Aliling was assigned to GX trucking sales, an activity
entirely different to the Seafreight Sales for which he was originally hired and trained for. In the present case,
there was no proof that Aliling was informed of the standards for his continued employment, such as the sales
quota, at the time of his engagement. Armando Ailing vs. Jose B. Feliciano, Manuel F. San Mateo III, et
al., G.R. No. 185829. April 25, 2012.
Employee; separation package. Article 283 of the Labor Code provides only the required minimum amount of
separation pay, which employees dismissed for any of the authorized causes are entitled to receive. Employers,
therefore, have the right to create plans, providing for separation pay in an amount over and above what is
imposed by Article 283. There is nothing therein that prohibits employers and employees from contracting on
the terms of employment, or from entering into agreements on employee benefits, so long as they do not
violate the Labor Code or any other law, and are not contrary to morals, good customs, public order, or public
policy.
Consequently, petitioners are not allowed to receive separation pay from both the Labor Code, on the one
hand, and the New Gratuity Plan and the SSP, on the other, they would receive double compensation for the
same cause (i.e., separation from the service due to redundancy). Ma. Corina C. Jiao, et al. vs. Global
Business Bank, Inc., et al., G.R. No. 182331, April 18, 2012.
Employer-employee relationship. In determining the presence or absence of an employer-employee
relationship, the Court has consistently looked for the following incidents, to wit: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers
power to control the employee on the means and methods by which the work is accomplished. The last
element, the so-called control test, is the most important element.
It can be deduced from the March 1996 affidavit of petitioner that respondents challenged his authority to
deliver some 158 checks to SFC. Considering that petitioner contested respondents challenge by pointing to
the existing arrangements between BCC and SFC, it should be clear that respondents did not exercise the
power of control over petitioner, because he thereby acted for the benefit and in the interest of SFC more than
of BCC. Charlie Jao vs. BCC Products Sales, Inc. and Terrance Ty, G.R. No. 163700, April 18, 2012.
Project employee; conversion into regular employee. 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 since DMCI insisted that it does not
maintain a work pool, but his continuous rehiring in 38 projects over a period of 31 years and the nature of his
work unmistakably made him a regular employee. In Maraguinot, Jr. v. NLRC, 348 Phil. 580 (1998), the Court
held that once a project or work pool employee has been: (1) continuously, as opposed to intermittently, rehired
by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and
indispensable to the usual business or trade of the employer, then the employee must be deemed a regular
employee.
Surely, length of time is not the controlling test for project employment but it is vital in determining if the
employee was hired for a specific undertaking or if it is 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. The nature of his employment ceased to be project-based when he was repeatedly
re-hired due to the demands of petitioners business.D.M. Consunji, Inc. and/or David M. Consunji vs.
Estelito, G.R. No. 192514, April 18, 2012.
Dismissal; willful disobedience. For willful disobedience to be a valid cause for dismissal, these two elements
must concur: (1) the employees 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.
The petitioners arbitrary defiance to Graphics, Inc.s order for him to render overtime work constitutes willful
disobedience. Because of his refusal to render overtime work, the company failed to meet its printing
deadlines, resulting in losses to the company. The Supreme Court took into account the fact that petitioner was
inclined to absent himself and to report late for work despite being previously penalized, and affirmed the CAs
ruling that the petitioner is indeed utterly defiant of the lawful orders and the reasonable work standards
prescribed by his employer. The Court reiterated its previous rulings stating that an employer has the right to
require the performance of overtime service in any of the situations contemplated under Article 89 of the Labor
Code and an employees non-compliance is willful disobedience. Realda v. New Age Graphics, Inc. et. al. G.R.
No. 192190, April 25, 2012.
Dismissal; inefficiency. The petitioners 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 clients
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. The employee in this case failed to observe this simple procedure and
proceeded to print without making sure that the colors were at par with the clients demands. This resulted to
delays in the delivery of output, client dissatisfaction, and additional costs to Graphics, Inc.. Realda v. New
Age Graphics, Inc. et. al. G.R. No. 192190, April 25, 2012.
Dismissal; due process. In King of Kings Transport, Inc. v. Mamac, this Court laid down the manner by which
the procedural due requirements of due process can be satisfied:
(1) The first written notice to be served on the employees should contain the specific causes or grounds
for termination against them, and a directive that the employees are given the opportunity to submit their
written explanation within a reasonable period. Reasonable opportunity under the Omnibus Rules means
every kind of assistance that management must accord to the employees to enable them to prepare adequately
for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the
notice to give the employees an opportunity to study the accusation against them, consult a union official or
lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover,
in order to enable the employees to intelligently prepare their explanation and defenses, the notice should
contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the
employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention
which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged
against the employees.
(2) After serving the first notice, the employers should schedule and conduct
a hearing orconference wherein the employees will be given the opportunity to: (a) explain and clarify their
defenses to the charge against them; (b) present evidence in support of their defenses; and (c) rebut the
evidence presented against them by the management. During the hearing or conference, the employees are
given the chance to defend themselves personally, with the assistance of a representative or counsel of their
choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an
amicable settlement.
(3) After determining that termination of employment is justified, the employers shall serve the employees
a written notice of termination indicating that: (1) all circumstances involving the charge against the
employees have been considered; and (2) grounds have been established to justify the severance of their
employment.
Graphics, Inc. failed to afford the petitioner with a reasonable opportunity to be heard and defend itself. An
administrative hearing set on the same day that the petitioner received the memorandum and the 24-hour
period given to him to submit a written explanation is far from reasonable. Furthermore, there is no indication
that Graphics, Inc. issued a second notice, informing the petitioner of his dismissal. Graphics, Inc. admitted
that it decided to terminate the petitioners employment when he ceased to report for work after being served
with 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. Notwithstanding the existence of a just cause to terminate
petitioners employment, respondent was ordered to pay P30,000 as nominal damages for violation of the
employees right to due process. Realda v. New Age Graphics, Inc. et. al. G.R. No. 192190, April 25, 2012.
Dismissal; willful disobedience. Willful disobedience requires the concurrence of two elements: (1) the
employees 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.
First, at no point did the dismissed employees deny Kingspoint Express claim that they refused to comply
with the directive for them to submit to a drug test or, at the very least, explain their refusal. This gives rise to
the impression that their non-compliance is deliberate. The utter lack of reason or justification for their
insubordination indicates that it was prompted by mere obstinacy, hence, willful thereby justifying their
dismissal. Second, that the companys order to undergo a drug test is necessary and relevant in the performance
of petitioners functions as drivers of Kingspoint Express is obvious. 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 employees incapable of performing their duties. Not only are they acting against the interests of
Kingspoint Express, they also pose a threat to the public. Kakampi and its members, et al. v. Kingspoint
Express and Logistic and/or Mary Ann Co, G.R. No. 194813, April 25, 2012.
Dismissal; procedural due process requirements. While Kingspoint Express had reason to sever petitioners
employment, 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. Mamac as a period of at least five (5) calendar days from
receipt of the notice.
Thus, even if a just cause exists for the dismissal of petitioners, 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.Kakampi and its members,
et al. v. Kingspoint Express and Logistic and/or Mary Ann Co, G.R. No. 194813, April 25, 2012.
June 2012 Philippine Supreme Court Decisions
on Labor Law and Procedure
Posted on July 20, 2012 by Leslie C. Dy Posted in Labor Law Tagged abandonment, appeal, attorney's
fees, damages,dismissal, due process, independent contractor, jurisdiction, loss of trust and
confidence, NLRC, reinstatement,retirement, retrenchment
Here are select June 2012 rulings of the Supreme Court of the Philippine on labor law and procedure:
Appeal; issue of employer-employee relationship raised for the first time on appeal. It is a fundamental rule of
procedure that higher courts are precluded from entertaining matters neither alleged in the pleadings nor raised
during the proceedings below, but ventilated for the first time only in a motion for reconsideration or on
appeal. The alleged absence of employer-employee relationship cannot be raised for the first time on appeal.
The resolution of this issue requires the admission and calibration of evidence and the LA and the NLRC did
not pass upon it in their decisions. Petitioner is bound by its submissions that respondent is its employee and it
should not be permitted to change its theory. Such change of theory cannot be tolerated on appeal, not on
account of the strict application of procedural rules, but as a matter of fairness. Duty Free Philippines Services,
Inc. vs. Manolito Q. Tria. G.R. No. 174809. June 27, 2012 .
Dismissal; abandonment. 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. Polyfoam-RGC International, Corporation and Precilla A.
Gramaje vs. Edgardo Concepcion. G.R. No. 172349, June 13, 2012 .
Dismissal; due process. To meet the requirements of due process in the dismissal of an employee, an employer
must furnish the worker with two written notices: (1) a written notice specifying the grounds for termination
and giving to said employee a reasonable opportunity to explain his side and (2) another written notice
indicating that, upon due consideration of all circumstances, grounds have been established to justify the
employers decision to dismiss the employee. The law does not require that an intention to terminate ones
employment should be included in the first notice. It is enough that employees are properly apprised of the
charges brought against them so they can properly prepare their defenses. It is only during the second notice
that the intention to terminate ones employment should be explicitly stated.
The guiding principles in connection with the hearing requirement in dismissal cases are the following:
1. Ample opportunity to be heard means any meaningful opportunity (verbal or written) given to the
employee to answer the charges against him and submit evidence in support of his defense, whether in
a hearing, conference or some other fair, just and reasonable way.
2. A formal hearing or conference becomes mandatory only when requested by the employee in writing
or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar
circumstances justify it.
3. The ample opportunity to be heard standard in the Labor Code prevails over the hearing or
conference requirement in the implementing rules and regulations.
The existence of an actual, formal trial-type hearing, although preferred, is not absolutely necessary to
satisfy the employees right to be heard. Esguerra was able to present her defenses; and only upon proper
consideration of it did Valle Verde send the second memorandum terminating her employment. Since Valle
Verde complied with the two-notice requirement, no procedural defect exists in Esguerras
termination. Dolores T. Esguerra vs. Valle Verde Country Club, Inc. and Ernesto Villaluna. G.R. No.
173012, June 13, 2012.
Dismissal; loss of trust and confidence. There are two (2) classes of positions of trust. The first class consists
of managerial employees, or those vested with the power to lay down management policies; and the second
class consists of cashiers, auditors, property custodians or those who, in the normal and routine exercise of
their functions, regularly handle significant amounts of money or property. Esguerra held the position of Cost
Control Supervisor and had the duty to remit to the accounting department the cash sales proceeds from every
transaction she was assigned to. This is not a routine task that a regular employee may perform; it is related to
the handling of business expenditures or finances. For this reason, Esguerra occupies a position of trust and
confidence a position enumerated in the second class of positions of trust. Any breach of the trust imposed
upon her can be a valid cause for dismissal.
Loss of confidence as a just cause for termination of employment can be invoked when an employee holds a
position of responsibility, trust and confidence. In order to constitute a just cause for dismissal, the act
complained of must be related to the performance of the duties of the dismissed employee and must show that
he or she is unfit to continue working for the employer for violation of the trust reposed in him or her. It was
Esguerras responsibility to account for the cash proceeds; in case of problems, she should have promptly
reported it, regardless of who was at fault. Instead, she settled the unaccounted amount only after the
accounting department informed her about the discrepancy, almost one month following the incident.
Esguerras failure to make the proper report reflects her irresponsibility in the custody of cash for which she
was accountable. Dolores T. Esguerra vs. Valle Verde Country Club, Inc. and Ernesto Villaluna. G.R. No.
173012, June 13, 2012.
Dismissal; serious misconduct and loss of trust and confidence. Dejan is liable for violation of Section 7,
paragraphs 4 and 11 of the Company Code of Employee Discipline, constituting serious misconduct, fraud and
willful breach of trust of the employer, which are just causes for termination of employment under the law.
There is no dispute about the release of the meter sockets. Also, the persons involved were clearly identified
Dejan; Gozarin, a private electrician who received the meter sockets; Reyes, the owner of the jeep where the
meter sockets were loaded by Gozarin; Duenas, a Meralco field representative; and Depante, another private
electrician who purportedly owned the meter sockets. The release by Dejan of the meter sockets to Gozarin
without the written authority or SPA from the customer or customers who applied for electric connection (as a
matter of company policy) served as a key element in proving the private contracting activity for electric
service connection being undertaken by Dejan and Duenas.
Moreover, it was bad enough that Dejan failed to ask for a written authorization from the customers for the
release of the meter sockets as required by company policy, but the elaborate scheme pursued by Dejan in
concert with Duenas, were all undertaken to defraud Meralco. Hence, Meralco had valid reasons for losing its
trust and confidence in Dejan. He is no ordinary employee. As branch representative, he was principally
charged with the function and responsibility to accept payment of fees required for the installation of electric
service and facilitate issuance of meter sockets. The duties of his position require him to always act with the
highest degree of honesty, integrity and sincerity, as the company puts it. In light of his fraudulent act,
Meralco, an enterprise imbued with public interest, cannot be compelled to continue Dejans employment, as it
would be inimical to its interest. Manila Electric Company (Meralco) vs. Herminigildo H. Dejan. G.R. No.
194106, June 18, 2012.
Employee benefit; attorneys fees. Lazaro must establish a legal basis either by law, contract or other sources
of obligations to merit the receipt of the additional 10% attorneys fees collected in the various foreclosure
procedures he settled as the banks legal officer. Lazaro has not produced any contract or provision of law that
would warrant the payment of the additional attorneys fees. He is only entitled to his salaries as the banks
legal officer, because the services he rendered in the foreclosure proceedings were part of his official
tasks. Banco Filipino Savings and Mortgage Bank vs. Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco
Filipino Savings and Mortgage Bank, et al. G.R. No. 185346 & G.R. No. 185442. June 27, 2012 .
Employee benefit; retirement pay. Banco Filipino maintains that the seven-year period when it was under
liquidation should not be credited in computing Lazaros retirement pay because, during that period, the bank
was considered closed. The Supreme Court held that banks under liquidation retain their legal personality. In
fact, even if they are prohibited from conducting regular banking business, it is necessary that debts owed to
them be collected. Lazaro performed the duty of foreclosing debts in favor of Banco Filipino. It cannot
rightfully disclaim Lazaros work that benefitted it.
As found in the Implementing Rules of the Retirement Pay Law and in jurisprudence, only in the absence of an
applicable retirement agreement shall Article 287 of the Labor Code apply. There is aproviso however, that an
employees retirement benefits under any agreement shall not be less than those provided in the said article.
The Rules of the Banco Filipino Retirement Fund do not provide for benefits lower than those in the Labor
Code. In fact, the bank offers a retirement pay equivalent to one andone-half month salary for every year of
service, a rate over and above the one-half month salary threshold provided by the law. Although the Rules of
the Banco Filipino Retirement Fund do not grant a rounding off scheme, they nonetheless provide that prorated
credit shall be given for incomplete years, regardless of the fraction of months in the retirees length of service.
Notwithstanding the lack of a rounding-up provision, still, the higher retirement pay, together with the prorated
crediting, cannot be deemed to be less favorable than that provided for by the law. Ultimately, the more
important threshold to be considered in construing whether the retirement agreement provides less benefits,
compared to those provided by the Retirement Pay Law, is that the retirement benefits in the said agreement
should at least amount to one-half of the employees monthly salary. Banco Filipino Savings and Mortgage
Bank vs. Miguelito M. Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and Mortgage Bank, et al. G.R.
No. 185346 & G.R. No. 185442. June 27, 2012
Employee dismissal. 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. 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, absent any showing of bad faith or ill motive
on the part of the employer, the transfer remains valid. Salvador O. Mojar, et al. vs. Agro Commercial Security
Service Agency, et al. G.R. No. 187188, June 27, 2012 .
Employee dismissal; burden of proof. 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. The companys evidence on the respondents alleged infractions do not substantially
show that they violated company rules and regulations to warrant their dismissal. 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. Philbag Industrial Manufacturing
Corp. vs. Philbag Workers Union-Lakas at Gabay ng Manggagawang Nagkakaisa. G.R. No. 182486, June 20,
2012.
Employee dismissal; due process. Retrenchment is subject to faithful compliance with the substantive 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 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 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 in 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, the 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. Waterfront Cebu City Hotel vs. Ma. Melanie
P. Jimenez, et al. G.R. No. 174214, June 13, 2012.
Employee dismissal; due process. The following are the guiding principles in connection with the hearing
requirement in dismissal cases:
1. Ample opportunity to be heard means any meaningful opportunity (verbal or written) given to the
employee to answer the charges against him and submit evidence in support of his defense, whether in
a hearing, conference or some other fair, just and reasonable way.
2. A formal hearing or conference becomes mandatory only when requested by the employee in writing
or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar
circumstances justify it.
3. The ample opportunity to be heard standard in the Labor Code prevails over the hearing or
conference requirement in the implementing rules and regulations.
Given that the petitioners expressly requested a conference or a convening of a grievance committee, 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. Prudential Guarantee and Assurance Employee Labor Union and Sandy T. Vallota vs. NLRC,
Prudential Guarantee and Assurance Inc., and/or Jocelyn Retizos.G.R. No. 185335, June 13, 2012 .
Employee dismissal; just cause. 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 as a cause for termination of
employment. 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. 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. Cosmos Bottling Corp. vs. Wilson
Fermin/Wilson Fermin vs. Cosmos Bottling Corp. and Cecilia Bautista. G.R. No. 193676 & G.R. No.
194303. June 20, 2012.
Employee dismissal; loss of trust and confidence. The Labor Code recognizes that an employer, for just cause,
may validly terminate the services of an employee for serious misconduct or willful disobedience of the lawful
orders of the employer or representative in connection with the employees work. Fraud or willful breach by
the employee of the trust reposed by the employer in the former, or simply loss of confidence, also justifies an
employees dismissal from employment. Willful breach of trust or loss of confidence requires that the
employee (1) occupied a position of trust or (2) was routinely charged with the care of the employers property.
To warrant dismissal based on loss of confidence, there must be some basis for the loss of trust or the employer
must have reasonable grounds to believe that the employee is responsible for the misconduct that renders the
latter unworthy of the trust and confidence demanded by his or her position. For more than a month, the
petitioners did not even inform PLDT of the whereabouts of the plant materials. Instead, he stocked these
materials at his residence even if they were needed in the daily operations of the company. In keeping with the
honesty and integrity demanded by his position, he should have turned over these materials to the plants
warehouse. Thus, PLDT reasonably suspected petitioner of stealing the companys property. At that juncture,
the employer may already dismiss the employee since it had reasonable grounds to believe or to entertain the
moral conviction that the latter was responsible for the misconduct, and the nature of his participation therein
rendered him absolutely unworthy of the trust and confidence demanded by his position.Romeo E. Paulino vs.
NLRC, Philippine Long Distance Co., Inc. G.R. No. 176184, June 13, 2012 .
Employee dismissal; loss of trust and confidence. Loss of confidence as a just cause for dismissal was never
intended to provide employers with a blank check for terminating their employees. It 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 employers 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.
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. The second requisite is that there must be an act that
would justify the loss of trust and confidence. Vallotas 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. There was no other evidence presented to prove fraud in the manner of securing or obtaining the
files found in Vallotas computer. 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. Prudential Guarantee and Assurance Employee Labor Union and Sandy T.
Vallota vs. NLRC, Prudential Guarantee and Assurance Inc., and/or Jocelyn Retizos. G.R. No. 185335, June
13, 2012.
Employee dismissal; loss of trust and confidence. To validly dismiss an employee on the ground of loss of trust
and confidence under Article 282 (c) of the Labor Code of the Philippines, the following guidelines must be
observed: 1) loss of confidence should not be simulated; 2) it should not be used as subterfuge for causes
which are improper, illegal or unjustified; 3) it may not be arbitrarily asserted in the face of overwhelming
evidence to the contrary; and 4) it must be genuine, not a mere afterthought to justify earlier action taken in
bad faith. More importantly, it must be based on a willful breach of trust and founded on clearly established
facts. The testimony of Lobitaa constitutes substantial evidence to prove that respondent, as the then Power
Plant Manager, accepted commissions and/or kickbacks from suppliers, which is a clear violation of Section
2.04 of petitioners Company Rules and Regulations. Jurisprudence consistently holds that for managerial
employees, the mere existence of a basis for believing that such employee has breached the trust of his
employer would suffice for his dismissal. Respondents termination was for a just and valid cause. Apo Cement
Corporation Vs. Zaldy E. Baptisma. G.R. No. 176671. June 20, 2012 .
Employee dismissal; order of reinstatement. 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. 3rd Alert Security and Detective Services, Inc. vs. Romualdo Navia. G.R. No. 200653, June 13,
2012.
Employee dismissal; retrenchment. 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 this
case, the closure of a department or division of a company constitutes retrenchment by, and not closure of, the
company itself. Petitioner has not totally ceased its business operations. It merely ceased operations of a
department. Waterfront Cebu City Hotel vs. Ma. Melanie P. Jimenez, et al. G.R. No. 174214, June 13, 2012 .
Employee dismissal; willful breach of trust. The loss of trust and confidence must be based on willful breach
of the trust reposed in the employee by his employer. Such breach is willful if it is done intentionally,
knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. Moreover, it must be based on substantial evidence and not on the
employers whims or caprices or suspicions otherwise, the employee would eternally remain at the mercy of
the employer. The Supreme Court has laid down the guidelines for the application of the loss of trust and
confidence doctrine: (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. Villanueva worked for Meralco as a Branch Representative whose tasks
included the issuance of Contracts for Electric Service after receipt of the amount due for service connection
from customers. Obviously, he was entrusted not only with the responsibility of handling company funds but
also to cater to customers who intended to avail of Meralcos services. This is nothing but an indication that
trust and confidence were reposed in him by the company, although his position was not strictly managerial by
nature. Meralcos loss of trust and confidence arising out of Villanuevas act of misappropriation of company
funds in the course of processing customer applications has been proven by substantial evidence, thus,
justified. Verily, the issuance of additional receipts for excessive payments exacted from customers is a willful
breach of the trust reposed in him by the company. Vicente Villanueva, Jr. vs.. The National Labor Relations
Commission, Third Division, Manila Electric Company, Manuel Lopez, Chairman and CEO, and Francisco
Collantes, Manager. G.R. No. 176893, June 13, 2012 .
Employee suit; damages. To obtain moral damages, the claimant must prove the existence of bad faith by clear
and convincing evidence, for the law always presumes good faith. It is not even enough that one merely
suffered sleepless nights, mental anguish and serious anxiety as the result of the actuations of the other party.
In this case, Lazaro did not state any moral anguish that he suffered. Neither did he substantiate his
imputations of malice to Banco Filipino. He only made a sweeping declaration, without concrete proof, that the
bank in refusing his claim maliciously damaged his property rights and interest. Accordingly, neither moral
damages nor exemplary damage can be awarded to him.
With respect to attorneys fees, an award is proper only if that person was forced to litigate and incur expenses
to protect ones rights and interest by reason of an unjustified act or omission of the party for whom it is
sought. Banco Filipino had a prima facie legitimate defense that, because it underwent liquidation proceedings,
it cannot be compelled to credit that period in the computation of the employees the retirement pay and profit
shares. Considering that Banco Filipinos refusal cannot be accurately characterized as unjustified, Lazaro
cannot claim an award of attorneys fees.Banco Filipino Savings and Mortgage Bank vs. Miguelito M.
Lazaro/Miguelito M. Lazaro vs. Banco Filipino Savings and Mortgage Bank, et al. G.R. No. 185346 & G.R.
No. 185442. June 27, 2012 .
Independent contractor; tests. Permissible job contracting or subcontracting refers to an arrangement whereby
a principal agrees to put out or farm out to a 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 or subcontractor carries on a distinct and independent business and undertakes to perform
the job, work or service on its own account and under its own responsibility according to its own manner and
method, and free from the control and direction of the principal in all matters connected with the performance
of the work except as to the results thereof;
(b) The contractor or subcontractor has substantial capital or investment; and
(c) The agreement between the principal and contractor or subcontractor assures the contractual employees
entitlement to all labor and occupational safety and health standards, free exercise of the right to self-
organization, security of tenure, and social welfare benefits.
In contrast, labor-only contracting, a 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, are performing activities
which are directly related to the main business of the principal.
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.
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. Neither Gramaje nor Polyfoam
presented evidence showing Gramajes ownership of the equipment and machineries used in the performance
of the alleged contracted job.
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 Polyfoams foam products in Polyfoams premises. As to the recruitment of
respondent, petitioners were able to establish only that respondents application was referred to Gramaje, but
that is all. Prior to his termination, respondent had been performing the same job in Polyfoams business for
almost six (6) years. He was even furnished a copy of Polyfoams Mga Alituntunin at Karampatang
Parusa,which embodied Polyfoams rules on attendance, the manner of performing the employees 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 Polyfoams supervisor,
claiming that the latter did not exercise supervision over respondent because the latter was not Polyfoams but
Gramajes employee, 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 to Polyfoam. It was never established that Gramaje took entire charge, control and supervision of the
work and service agreed upon. Polyfoam-RGC International, Corporation and Precilla A. Gramaje vs.
Edgardo Concepcion.G.R. No. 172349, June 13, 2012 .
NLRC; jurisdiction over interpretation or implementation of the CBA. 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 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. 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. This issue clearly involves the interpretation or implementation of
the said CBA. Thus, the specific or special provisions of the Labor Code govern.
CBA is the law or contract between the parties. Article 13.1 of the CBA entered into by and between
respondent GCI and AMOSUP provides that the Company and the Union agree that in case of dispute or
conflict in the interpretation or application of any of the provisions of this Agreement, or enforcement of
Company policies, the same shall be settled through negotiation, conciliation or voluntary arbitration. The
provisions of 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 for OFWs with collective bargaining agreements, the case shall be submitted
for voluntary arbitration in accordance with Articles 261 and 262 of the Labor Code. 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. Estate of Nelson R. Dulay, represented by his wife Meddiry Jane P.
Dulay vs. Aboitiz Jebsen Maritime, Inc. and General Charterers, Inc. G.R. No. 172642, June 13, 2012 .
Service; proof of service. Petitioners allege that no affidavit of service was attached to the CA Petition.
However, the Supreme Court noted that in the CA Resolution, the appellate court stated that their records
revealed that Atty. Espinas, petitioners counsel of record at the time, was duly served a copy of the following:
CA Resolution granting respondents Motion for Extension of Time to file the CA Petition; CA Resolution
requiring petitioners to file their Comment on the CA Petition; and CA Resolution, submitting the case for
resolution, as no comment was filed. Such service to Atty. Espinas was valid despite the fact he was already
deceased at the time. If a party to a case has appeared by counsel, service of pleadings and judgments shall be
made upon his counsel or one of them, unless service upon the party is specifically ordered by the court. It is
not the duty of the courts to inquire, during the progress of a case, whether the law firm or partnership
representing one of the litigants continues to exist lawfully, whether the partners are still alive, or whether its
associates are still connected with the firm. Salvador O. Mojar, et al. vs. Agro Commercial Security Service
Agency, et al. G.R. No. 187188, June 27, 2012 .
July 2012 Philippine Supreme Court Decisions
on Labor Law and Procedure
Posted on August 8, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Law Tagged due process, employer-employee
relationship, illegal dismissal, loss of trust and confidence, retirement
Here are select July 2012 rulings of the Supreme Court of the Philippines on labor law and procedure:
Dismissal; due process. Due process requirement is met when there is simply an opportunity to be heard and
to explain ones side even if no hearing is conducted. An employee may be afforded ample opportunity to be
heard by means of any method, verbal or written, whether in a hearing, conference or some other fair, just and
reasonable way. After receiving the first notice apprising him of the charges against him, the employee may
submit a written explanation (which may be in the form of a letter, memorandum, affidavit or position paper)
and offer evidence in support thereof, like relevant company records and the sworn statements of his witnesses.
For this purpose, he may prepare his explanation personally or with the assistance of a representative or
counsel. He may also ask the employer to provide him copy of records material to his defense. His written
explanation may also include a request that a formal hearing or conference be held. In such a case, the conduct
of a formal hearing or conference becomes mandatory, just as it is where there exist substantial evidentiary
disputes or where company rules or practice requires an actual hearing as part of employment pre-termination
procedure.
Petitioners written response to the prerequisite notice provided her with an avenue to explain and defend her
side and thus served the purpose of due process. That there was no hearing, investigation or right to appeal,
which petitioner opined to be a violation of company policies, is of no moment since the record is bereft of any
showing that there is an existing company policy that requires these procedures with respect to the termination
of a CHR Director like petitioner or that company practice calls for the same. There was also no request for a
formal hearing on the part of petitioner. As she was served with a notice apprising her of the charges against
her and also a subsequent notice informing her of the managements decision to terminate her services after
respondents found her written response to the first notice unsatisfactory, petitioner was clearly afforded her
right to due process. Flordeliza Maria Reyes-Rayel vs. Philippine Luen Thai Holdings Corporation, et al. G.R.
No. 174893, July 11, 2012.
Dismissal; loss of trust and confidence. An employer has a distinct prerogative and wider latitude of discretion
in dismissing a managerial personnel who performs functions which by their nature require the employers full
trust and confidence.As distinguished from a rank and file personnel, mere existence of a basis for believing
that a managerial employee has breached the trust of the employer justifies dismissal. Loss of confidence as a
ground for dismissal does not require proof beyond reasonable doubt as the law requires only that there be at
least some basis to justify it.
Petitioner was L&Ts CHR Director for Manufacturing, which is a managerial position saddled with great
responsibility. As such, she was directly responsible for managing her own departmental staff. Because of this,
petitioner must enjoy the full trust and confidence of her superiors. However, petitioner delivered dismal
performance and displayed poor work attitude, which constitute sufficient reasons for an employer to terminate
an employee on the ground of loss of trust and confidence. First, records show that petitioner indeed
unreasonably failed to effectively communicate with her immediate superior. Second, the affidavits of
petitioners co-workers revealed her negative attitude and unprofessional behavior towards them and the
company. Lastly, petitioner displayed inefficiency and ineptitude in her job as a CHR Director. Taking all these
circumstances collectively, the Court is convinced that respondents have sufficient and valid reasons for
terminating the services of petitioner as her continued employment would be patently inimical to respondents
interest. Flordeliza Maria Reyes-Rayel vs. Philippine Luen Thai Holdings Corporation, et al. G.R. No.
174893, July 11, 2012.
Employee dismissal; validity of termination. Retrenchment is one of the authorized causes for the dismissal of
employees recognized by the Labor Code. It is a management prerogative resorted to by employers to avoid or
to minimize business losses. The Court has laid down the following standards that an employer should meet to
justify retrenchment and to foil abuse, namely:
(a) The expected losses should be substantial and not merely de minimis in extent;
(b) The substantial losses apprehended must be reasonably imminent;
(c) The retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and
(d) The alleged losses, if already incurred, and the expected imminent losses sought to be forestalled must be
proved by sufficient and convincing evidence
In termination cases, the burden of proving that the dismissal was for a valid or authorized cause rests upon the
employer. The petitioner did not submit evidence of the losses to its business operations and the economic
havoc it would thereby imminently sustain. It only claimed that respondents termination was due to its
present business/financial condition. This bare statement fell short of the norm to show a valid retrenchment.
Indeed, not every loss incurred or expected to be incurred by an employer can justify retrenchment. The
employer must prove, among others, that the losses are substantial and that the retrenchment is reasonably
necessary to avert such losses. Thus, by its failure to present sufficient and convincing evidence to prove that
retrenchment was necessary, respondents termination due to retrenchment is not allowed. Legend Hotel
[Manila], owned by Titatium Corporation, et al. vs. Hernani S. Realuyo, also known as Joey Roa. G.R. No.
153511, July 18, 2012.
Employee training; reimbursement. The Supreme Court recognized the right of PAL to recoup the costs of a
pilots training in the form of service for a period of at least three (3) years. By carrying over the same
stipulation setting the age of fifty-seven (57) years as the reckoning point when a pilot becomes disqualified to
bid for a higher position in the present CBA, both PAL and ALPAP recognized that the companys effort in
sending pilots for training abroad is an investment which necessarily expects a reasonable return in the form of
service for a period of at least three (3) years. This stipulation had been repeatedly adopted by the parties in the
succeeding renewals of their CBA, thus validating the impression that it is a reasonable and acceptable term to
both PAL and ALPAP. Consequently, the petitioner cannot conveniently disregard this stipulation by simply
raising the absence of a contract expressly requiring the pilot to remain within PALs employ within a period of
3 years after he has been sent on training. The supposed absence of contract being raised by the petitioner
cannot stand as the CBA clearly covered the petitioners obligation to render service to PAL within 3 years to
enable it to recoup the costs of its investment. Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995,
July 16, 2012.
Employer-employee relationship; existence. The issue of whether or not an employer-employee relationship
existed is essentially a question of fact. The factors that determine the issue include who has the power to
select the employee, who pays the employees wages, who has the power to dismiss the employee, and who
exercises control of the methods and results by which the work of the employee is accomplished. Although no
particular form of evidence is required to prove the existence of the relationship, and any competent and
relevant evidence to prove the relationship may be admitted, a finding that the relationship exists must
nonetheless rest on substantial evidence, which is that amount of relevant evidence that a reasonable mind
might accept as adequate to justify a conclusion.
A review of the circumstances reveals that respondent was, indeed, petitioners employee. He was undeniably
employed as a pianist in petitioners Restaurant. First of all, petitioner actually wielded the power of selection
at the time it entered into the service contract with respondent. The power of selection was firmly evidenced
by, among others, the express written recommendation by petitioners restaurant manager, for the increase of
his remuneration. Secondly, there is no denying that the remuneration denominated as talent fees was fixed on
the basis of his talent and skill and the quality of the music he played during the hours of performance each
night, taking into account the prevailing rate for similar talents in the entertainment industry. Respondents
remuneration, albeit denominated as talent fees, was still considered as included in the term wagein the sense
and context of the Labor Code, regardless of how petitioner chose to designate the remuneration. Thirdly, the
petitioner has the power to dismiss respondent. The memorandum informing respondent of the discontinuance
of his service because of the present business or financial condition of petitioner showed that the latter had the
power to dismiss him from employment. Lastly, 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. Respondent performed his work as a pianist under petitioners supervision and control. Petitioners
control of both the end achieved and the manner and means used to achieve that end was demonstrated by the
following, to wit: (1)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; (2)He could not choose the place of his performance; (3) The
restaurants 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 (4)He was subjected to the rules on employees
representation check and chits, a privilege granted to other employees. Legend Hotel [Manila], owned by
Titatium Corporation, et al. vs. Hernani S. Realuyo, also known as Joey Roa. G.R. No. 153511, July 18, 2012.
Management prerogative; transfer of employees. An employers decision to transfer an employee, if made in
good faith, is a valid exercise of a management prerogative, although it may result in personal inconvenience
or hardship to the employee. 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 companys property pending investigation of any alleged
malfeasance or misfeasance committed by the employee.
As the executive assistant of the president, petitioner undeniably occupied a sensitive position that required her
employers utmost trust and confidence. 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. When petitioner was assigned to Cavite, there was an ongoing investigation of the
charges filed against her. It is undisputed that she refused to fill up, for no justifiable reasons, the questionnaire
distributed by her employer to determine who among those who had access to the confidential files was
responsible for their taking. Furthermore, a witness had executed an Affidavit claiming that she found the
missing files, and that her husband told her that it was petitioner who handed those files to him. Lastly, the
person who supposedly received these documents from petitioner did not deny or rebuke the statements made
by his wife. Josephine Ruiz vs. Wendel Osaka Realty Corp., et al.G.R. No. 189082, July 11, 2012.
Retirement Pay; collective bargaining agreement. Article 287 of the Labor Code provides that it is applicable
only to a situation where (1) there is no CBA or other applicable employment contract providing for retirement
benefits for an employee, or (2) there is a CBA or other applicable employment contract providing for
retirement benefits for an employee, but it is below the requirement set by law. The rationale for the first
situation is to prevent the absurd situation where an employee, deserving to receive retirement benefits, is
denied to them through the nefarious scheme of employers to deprive employees of the benefits due them
under existing labor laws. On the other hand, the second situation aims to prevent private contracts from
derogating from the public law. The determining factor in choosing which retirement scheme to apply is still
superiorityin terms of benefits provided. Thus, even if there is an existing CBA but the same does not provide
for retirement benefits equal or superior to that which is provided under Article 287 of the Labor Code, the
latter will apply.
There are two retirement schemes at point in this case: (1) Article 287 of the Labor Code, and; (2) the PAL-
ALPAP Retirement Plan and the PAL Pilots Retirement Benefit Plan. The two retirement schemes are
alternative in nature such that the retired pilot can only be entitled to that which provides for superior benefits.
Comparing the benefits under the two (2) retirement schemes, it can readily be perceived that the 22.5 days
worth of salary for every year of service provided under Article 287 of the Labor Code cannot match the 240%
of salary or almost two and a half worth of monthly salary per year of service provided under the PAL Pilots
Retirement Benefit Plan, which will be further added to the 125,000.00 to which the petitioner is entitled
under the PAL-ALPAP Retirement Plan. Clearly then, it is to the petitioners advantage that PALs retirement
plans were applied in the computation of his retirement benefits. Bibiano C. Elegir vs. Philippine Airlines,
Inc. G.R. No. 181995, July 16, 2012.
Unjust enrichment. There is unjust enrichment when a person unjustly retains a benefit at the loss of another,
or when a person retains the money or property of another against the fundamental principles of justice, equity
and good conscience. Two conditions must concur: (1) a person is unjustly benefited; and (2) such benefit is
derived at the expense of or with damages to another. The enrichment may consist of a patrimonial, physical,
or moral advantage, so long as it is appreciable in money. It must have a correlative prejudice, disadvantage or
injury to the plaintiff which may consist, not only of the loss of the property or the deprivation of its
enjoyment, but also of the non-payment of compensation for a prestation or service rendered to the defendant
without intent to donate on the part of the plaintiff, or the failure to acquire something that the latter would
have obtained.
PAL invested a considerable amount of money in sending the petitioner abroad to undergo training to prepare
him for his new appointment as B747-400 Captain. In the process, the petitioner acquired new knowledge and
skills which effectively enriched his technical know-how. As all other investors, PAL expects a return on
investment in the form of service by the petitioner for a period of 3 years, which is the estimated length of time
within which the costs of the latters training can be fully recovered. The petitioner is, thus, expected to work
for PAL and utilize whatever knowledge he had learned from the training for the benefit of the company.
However, after only one (1) year of service, the petitioner opted to retire from service, leaving PAL stripped of
a necessary manpower. Undeniably, the petitioner was enriched at the expense of PAL. After undergoing the
training fully shouldered by PAL, he acquired a higher level of technical competence which, in the professional
realm, translates to a higher compensation. Further, his training broadened his opportunities for a better
employment as in fact he was able to transfer to another airline company immediately after he left PAL. To
allow the petitioner to simply leave the company without reimbursing it for the proportionate amount of the
expenses it incurred for his training will only magnify the financial disadvantage sustained by PAL. Reason
and fairness dictate that he must return to the company a proportionate amount of the costs of his
training. Bibiano C. Elegir vs. Philippine Airlines, Inc. G.R. No. 181995, July 16, 2012.
August 2012 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on September 10, 2012 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law, Philippines -
Regulation
Here are select rulings of the Philippine Supreme Court on labor law and procedure:
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.Philasia Shipping Agency Corporation, et al. vs.
Andres G. Tomacruz. G.R. No. 181180, August 15, 2012.
Employee dismissal; due process requirements. 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.
Petitioners evidence fails to prove their contention that they afforded Atencio with due process. The June 21,
1999 letter, which allegedly proves Atencios knowledge of the charges against him, and which allegedly
constitutes Atencios explanation, clearly discusses an entirely different topic which is the removal of his
construction company from the Caltex project. As for the May 24, 1999 letter, which allegedly constitutes the
notice of termination of Atencios employment as JARLs chief operating manager, the said letter involves the
termination of the subcontracting agreement between JARL and Atencios company, and not the termination of
Atencios employment. For petitioners failure to observe the two-notice rule under Article 277(b) of the Labor
Code, respondent is entitled to nominal damages. Jarl Construction and Armando K. Tejada vs. Simeon A.
Atencio. G.R. No. 175969, August 1, 2012.
Judgment; law of the case.The law of the case has been defined as the opinion delivered on a former appeal. It
means that whatever is once irrevocably established as the controlling legal 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.
Both G.R. No. 168477 and this petition are offshoots of petitioners purported temporary measures to preserve
its neutrality with regard to the perceived void in the union leadership. While these two cases arose out of
different notices to strike, it is undeniable that the facts cited and the arguments raised by petitioner are almost
identical. Inevitably, G.R. No. 168477 and this petition seek only one relief, that is, to absolve petitioner from
respondents charge of committing an unfair labor practice. For this reason, we are constrained to apply the law
of the case doctrine in light of the finality of our July 20, 2005 and September 21, 2005 resolutions in G.R. No.
168477. In other words, our previous affirmance of the Court of Appeals finding that petitioner erred in
suspending collective bargaining negotiations with the union and in placing the union funds in escrow
considering the intra-union dispute between the Aliazas and Baez factions was not a justification therefor
is binding in the present case. De la Salle University vs. De la Salle University Employees Association. G.R.
No. 169254. August 23, 2012.
Lien; unpaid wages. Under Republic Act No. 10142, otherwise known as the Financial Rehabilitation and
Insolvency Act of 2010, the right of a secured creditor to enforce his lien during liquidation proceedings is
retained. On the right of first preference as regards unpaid wages, a distinction should be made between a
preference of credit and a lien. A preference applies only to claims which do not attach to specific properties. A
lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized
by Article 110 of the Labor Code does not constitute a lien on the property of the insolvent debtor in favor of
workers. It is but a preference of credit in their favor, a preference in application. It is a method adopted to
determine and specify the order in which credits should be paid in the final distribution of the proceeds of the
insolvents assets. It is a right to a first preference in the discharge of the funds of the judgment debtor.
Consequently, the right of first preference for unpaid wages may not be invoked in this case to nullify the
foreclosure sales conducted pursuant to PNBs right as a secured creditor to enforce its lien on specific
properties of its debtor, ARCAM. Manuel D. Yngson, Jr., (in his capacity as the Liquidator of ARCAM & Co.,
Inc.) vs. Philippine National Bank. G.R. No. 171132, August 15, 2012.
NLRC; jurisdiction. Although Republic Act No. 8042, through its Section 10, transferred the original and
exclusive jurisdiction to hear and decide money claims involving overseas Filipino workers from the POEA to
the Labor Arbiters, the law did not remove from the POEA the original and exclusive jurisdiction to hear and
decide all disciplinary action cases and other special cases administrative in character involving such workers.
The obvious intent of Republic Act No. 8042 was to have the POEA focus its efforts in resolving all
administrative matters affecting and involving such workers. The NLRC had no appellate jurisdiction to
review the decision of the POEA in disciplinary cases involving overseas contract workers.
Although, as a rule, all laws are prospective in application unless the contrary is expressly provided, or unless
the law is procedural or curative in nature, there is no serious question about the retroactive applicability of
Republic Act No. 8042 to the appeal of the POEAs decision on petitioners disciplinary action against
respondents. In a way, Republic Act No. 8042 was a procedural law due to its providing or omitting guidelines
on appeal. Republic Act No. 8042 applies to petitioners complaint by virtue of the case being then still
pending or undetermined at the time of the laws passage, there being no vested rights in rules of procedure.
They could not validly insist that the reckoning period to ascertain which law or rule should apply was the time
when the disciplinary complaint was originally filed in the POEA in 1993. Moreover, Republic Act No. 8042
and its implementing rules and regulations were already in effect when petitioners took their appeal. When
Republic Act No. 8042 withheld the appellate jurisdiction of the NLRC in respect of cases decided by the
POEA, the appellate jurisdiction was vested in the Secretary of Labor in accordance with his power of
supervision and control under Section 38(1), Chapter 7, Title II, Book III of the Revised Administrative Code
of 1987. Eastern Mediterranean Maritime Ltd., et al. vs. Estanislao Surio, et al. G.R. No. 154213, August 23,
2012.
Petition for review; question of fact. While generally, only questions of law can be raised in a petition for
review on certiorari under Rule 45 of the Rules of Court, the rule admits of certain exceptions, namely: (1)
when the findings are grounded entirely on speculations, surmises, or conjectures; (2) when the inference made
is manifestly mistaken, absurd, or impossible; (3) when there is a grave abuse of discretion; (4) when the
judgment is based on misappreciation of facts; (5) when the findings of fact are conflicting; (6) when in
making its findings, the same are contrary to the admissions of both appellant and appellee; (7) when the
findings are contrary to those of the trial court; (8) when the findings 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 respondent; and (10) when the findings of fact are
premised on the supposed absence of evidence and contradicted by the evidence on record. The illegality of
petitioners dismissal was an issue that was squarely raised before the NLRC. When the NLRC decision was
reversed by the Court of Appeals, there was a situation where the findings of facts are conflicting. The
petition for review filed by the Petitioner comes within the purview of exception (5) and by analogy, exception
(7). Mylene Carvajal vs. Luzon Development Bank and/or Oscar Z. Ramirez. G.R. No. 186169, August 1,
2012.
Probationary employee; security of tenure. 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.
Punctuality is a reasonable standard imposed on every employee, whether in government or private sector. As a
matter of fact, habitual tardiness is a serious offense that may very well constitute gross or habitual neglect of
duty, a just cause to dismiss a regular employee. Assuming that petitioner was not apprised of the standards
concomitant to her job, it is but common sense that she must abide by the work hours imposed by the bank.
Satisfactory performance is and should be one of the basic standards for regularization. Naturally, before an
employer hires an employee, the former can require the employee, upon his engagement, 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.
It is evident that the primary cause of respondents dismissal from her probationary employment was her
chronic tardiness. At the very start of her employment, petitioner already exhibited poor working habits.
Even during her first month on the job, she already incurred eight (8) tardiness. Respondent also cited other
infractions such as unauthorized leaves of absence, mistake in clearing of a check, and underperformance. All
of these infractions were not refuted by petitioner.Mylene Carvajal vs. Luzon Development Bank and/or Oscar
Z. Ramirez. G.R. No. 186169, August 1, 2012.
Salaries; burden of proof of payment. When there is an allegation of nonpayment of salaries and other
monetary benefits, it is the employers burden to prove its payment to its employee. The employers evidence
must show, with a reasonable degree of certainty, that it paid and that the workers actually received the
payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other
similar documents are not in the possession of the worker but are in the custody and absolute control of the
employer. In the case at bar, the two official receipts issued by Safemark, and offered as JARLs evidence, only
prove that JARL made a total partial payment of P1,891,509.50 to the said company for its professional
services. Since JARL admits that the said company actually rendered services for JARL on its Caltex project,
the payment can only be assumed as covering for the said services. There is nothing on the face of the receipts
to support the conclusion that Atencio (and not his company) received it as payment for his service as a JARL
employee. Jarl Construction and Armando K. Tejada vs. Simeon A. Atencio. G.R. No. 175969, August 1, 2012.
Seafarers; contract. The employment of seafarers, and its incidents, including claims for death benefits, is
governed by the contracts they sign every time they are hired or rehired. Such contracts have the force of law
between the parties as long as their stipulations are not contrary to law, morals, public order or public policy.
While the seafarers and their employers are governed by their mutual agreements, the POEA rules and
regulations require that the POEA Standard Employment Contract, which contains the standard terms and
conditions of the seafarers employment in foreign ocean-going vessels, be integrated in every seafarers
contract. The pertinent provision of the 1996 POEA SEC, which was in effect at the time of Tanawans
employment, was Section 20(B) Compensation and Benefits. Wallem Maritime Services, Inc. vs. Ernesto C.
Tanawan. G.R. No. 160444. August 29, 2012 .
Seafarers; disability benefits. The one tasked to determine whether the seafarer suffers from any disability or is
fit to work is the company-designated physician. As such, the seafarer must submit himself to the company-
designated physician for a post-employment medical examination within three days from his repatriation. But
the assessment of the company-designated physician is not final, binding or conclusive on the seafarer, the
labor tribunals, or the courts. The seafarer may request a second opinion and consult a physician of his choice
regarding his ailment or injury, and the medical report issued by the physician of his choice shall also be
evaluated on its inherent merit by the labor tribunal and the court.
Tanawan submitted himself to Dr. Lim, the company-designated physician, for a medical examination within
the 3-day reglementary period from his repatriation. The medical examination conducted focused on
Tanawans foot injury, the cause of his repatriation. Dr. Lim treated Tanawan for the foot injury from
December 1, 1997 until May 21, 1998, when Dr. Lim declared him fit to work. Within that period that lasted
172 days, Tanawan was unable to perform his job, an indication of a permanent disability. Under the law, there
is permanent disability if a worker is unable to perform his job for more than 120 days, regardless of whether
or not he loses the use of any part of his body. Disability should be understood more on the loss of earning
capacity rather than on the medical significance of the disability. Even in the absence of an official finding by
the company-designated physician to the effect that the seafarer suffers a disability and is unfit for sea duty, the
seafarer may still be declared to be suffering from a permanent disability if he is unable to work for more than
120 days. On the other hand, Tanawans claim for disability benefits due to the eye injury was already barred
by his failure to report the injury and to have his eye examined by a company-designated physician. The
rationale for the rule is that reporting the illness or injury within three days from repatriation fairly makes it
easier for a physician to determine the cause of the illness or injury.
Under the 1996 POEA SEC, it was enough to show that the injury or illness was sustained during the term of
the contract. The Court has declared that the unqualified phrase during the term found in Section 20(B)
thereof covered all injuries or illnesses occurring during the lifetime of the contract. Whoever claims
entitlement to the benefits provided by law should establish his right to the benefits by substantial evidence.
Tanawan did not present any proof of having sustained the eye injury during the term of his contract. All that
he submitted was his bare allegation that his eye had been splashed with some thinner while he was on board
the vessel. Wallem Maritime Services, Inc. vs. Ernesto C. Tanawan. G.R. No. 160444. August 29, 2012 .
September 2012 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on October 8, 2012 by Leslie C. Dy Posted in Labor Law
Here are select September 2012 rulings of the Philippine Supreme Court on labor law and procedure:
Breach of contract; Contract substitution; Constructive dismissal; Illegal recruitment. The agency and its
principal, Modern Metal, committed a prohibited practice and engaged in illegal recruitment when they altered
or substituted the contracts approved by the Philippine Overseas Employment Administration (POEA). Article
34 (i) of the Labor Code provides: It shall be unlawful for any individual, entity, licensee, or holder of
authority to substitute or alter employment contracts approved and verified by the Department of Labor from
the time of actual signing thereof by the parties up to and including the period of expiration of the same
without the approval of the Secretary of Labor. Meanwhile, Article 38 (i) of the Labor Code, as amended by
R.A. 8042, defined illegal recruitment to include the substitution or alteration, to the prejudice of the worker,
of employment contracts approved and verified by the Department of Labor and Employment from the time of
actual signing thereof by the parties up to and including the period of the expiration of the same without the
approval of the Department of Labor and Employment.
Furthermore, the agency and Modern Metal committed breach of contract by providing substandard working
and living arrangements, when the contract provided free and suitable housing. The living quarters were
cramped as they shared them with 27 other workers. The lodging house was far from the jobsite, leaving them
only three to four hours of sleep every workday because of the long hours of travel to and from their place of
work, not to mention that there was no potable water in the lodging house which was located in an area where
the air was polluted. They complained with the agency about the hardships that they were suffering, but the
agency failed to act on their reports. Significantly, the agency failed to refute their claims.
Thus, with their original contracts substituted and their oppressive working and living conditions unmitigated
or unresolved, the decision to resign is not surprising. They were compelled by the dismal state of their
employment to give up their jobs; effectively, they were constructively dismissed. A constructive dismissal or
discharge is a quitting because continued employment is rendered impossible, unreasonable or unlikely, as, an
offer involving a demotion in rank and a diminution in pay.
Without doubt, continued employment with Modern Metal had become unreasonable. A reasonable mind
would not approve of a substituted contract that pays a diminished salary from 1350 AED a month in the
original contract to 1,000 AED to 1,200 AED in the appointment letters, a difference of 150 AED to 250 AED
(not just 50 AED as the agency claimed) or an extended employment (from 2 to 3 years) at such inferior terms,
or a free and suitable housing which is hours away from the job site, cramped and crowded, without potable
water and exposed to air pollution.
We thus cannot accept the agencys insistence that the respondents voluntarily resigned since they personally
prepared their resignation letters in their own handwriting. Pert/CPM Manpower Exponent Co., Inc. vs.
Amando A. Vinuya, et al. G.R. No. 197528. September 5, 2012.
Disability benefit. Deemed read and incorporated into the Contract of Employment between David and
respondents are the provisions of the 2000 Philippine Overseas Employment Agency Standard Employment
Contract (POEASEC). 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. Hence, unless
contrary evidence is presented by the seafarers employer/s, this disputable presumption stands.
In this case, David not only relies on this disputable presumption of the compensability of his illness but David
has provided more than a reasonable nexus between the nature of his job and the disease that manifested itself
on the sixth month of his last contract with respondents.
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.
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, sulfur, vanadium and arsenic compounds. Hydrogen sulfide 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.
In this case, David was diagnosed with MFH (now known as undifferentiated pleomorphic sarcoma [UPS]),
which is a class of soft tissue sarcoma or an illness that account for approximately 1% of the known malignant
tumors. As stated by Dr. Pea of the MMC, who was consulted by the company-designated physician, the
etiology of soft tissue sarcomas are multifactorial. However, some factors are associated with a higher risk.
These factors include exposure to chemical carcinogens like some of the chemical components of crude
oil. Jessie V. David, represented by his wife, Ma. Theresa S. David, and children, Katherine and Kristina
David vs. OSG Shipmanagement Manila, Inc. and/or Michaelmar Shipping Services. G.R. No. 197205.
September 26, 2012.
Dismissal; Unfair labor practice; Liability of corporate officers; Moral and exemplary damages. The requisites
for a valid dismissal are: (a) the employee must be afforded due process, i.e., he must be given an opportunity
to be heard and defend himself; and (b) the dismissal must be for a valid cause as provided in Article 282 of
the Labor Code, or for any of the authorized causes under Articles 283 and 284 of the same Code. In the case
before us, both elements are completely lacking. Respondents were dismissed without any just or authorized
cause and without being given the opportunity to be heard and defend themselves. The law mandates that the
burden of proving the validity of the termination of employment rests with the employer. Failure to discharge
this evidentiary burden would necessarily mean that the dismissal was not justified and, therefore, illegal.
Unsubstantiated suspicions, accusations, and conclusions of employers do not provide for legal justification for
dismissing employees. In case of doubt, such cases should be resolved in favor of labor, pursuant to the social
justice policy of labor laws and the Constitution.
Anent the charge of unfair labor practice, Article 248 (a) of the Labor Code considers it an unfair labor practice
when an employer interferes, restrains or coerces employees in the exercise of their right to self-organization
or the right to form an association. In order to show that the employer committed unfair labor practice under
the Labor Code, substantial evidence is required to support the claim. Substantial evidence has been defined as
such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. In the case at
bar, respondents were indeed unceremoniously dismissed from work by reason of their intent to form and
organize a union.
A corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations
incurred by them, while acting as corporate agents, are not their personal liability but the direct accountability
of the corporation they represent. However, corporate officers may be deemed solidarily liable with the
corporation for the termination of employees if they acted with malice or bad faith. In the present case, the
lower tribunals unanimously 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 in order to suppress
their right to self-organization. Section 31 of the Corporation Code makes a director personally liable for
corporate debts if he willfully and knowingly votes for or assents to patently unlawful acts of the corporation.
It also makes a director personally liable if he is guilty of gross negligence or bad faith in directing the affairs
of the corporation. Thus, Percy and Harbutt, having acted in bad faith in directing the affairs of Burgos, are
jointly and severally liable with the latter for respondents dismissal.
The awards of moral and exemplary damages in favor of respondents are also in order. Moral damages may be
recovered where the dismissal of the employee was tainted by bad faith or fraud, or where it constituted an act
oppressive to labor, and done in a manner contrary to morals, good customs or public policy, while exemplary
damages are recoverable only if the dismissal was done in a wanton, oppressive, or malevolent manner. The
grant of attorneys fees is likewise proper. Attorneys fees may likewise be awarded to respondents who were
illegally dismissed in bad faith and were compelled to litigate or incur expenses to protect their rights by
reason of the oppressive acts of petitioners. The unjustified act of petitioners had obviously compelled
respondents to institute an action primarily to protect their rights and interests which warrants the granting of
the award. Park Hotel, et al. vs. Manolo Soriano, et al. G.R. No. 171118. September 10, 2012.
Employment termination; Substantive and procedural due process; Mass leave; Strike. Petitioners were
illegally dismissed as they were not afforded substantive and procedural due process. 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 present a copy of the
rules and to prove that petitioners were made aware of such regulations. The accusation is for engaging in a
mass leave tantamount to an illegal strike. The phrase mass leave may refer to a simultaneous availment of
authorized leave benefits by a large number of employees in a company. Here, only 5 employees were absent
on the same day. They did not go on strike, which is a 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. They
were in different places to attend to their personal needs or affairs.
The petitioners were charged with conducting an illegal strike, not a mass leave, without specifying the exact
acts that the company considers as constituting an illegal strike or violative of company policies. Such
allegation falls short of the requirement in King of Kings Transport, Inc. of a detailed narration of the facts
and circumstances that will serve as basis for the charge against the employees. A bare mention of an illegal
strike will not suffice. 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.
In addition, Biomedica did not set the charges against petitioners for hearing or conference. While petitioners
did not submit any written explanation to the charges, it is incumbent for Biomedica to set the matter for
hearing or conference to hear the defenses and receive evidence of the employees. More importantly,
Biomedica is duty-bound to exert efforts, during said hearing or conference, to hammer out a settlement of its
differences with petitioners. These prescriptions Biomedica failed to satisfy. Lastly, Biomedica again deviated
from the dictated contents of a written notice of termination as laid down in Sec. 2, Book V, Rule XIII of the
Implementing Rules that it should embody the facts and circumstances to support the grounds justifying the
termination. Alex Q. Naranjo, et al. vs. Biomedica Health Care, Inc., et al. G.R. No. 193789. September 19,
2012.
Employee dismissal; Reinstatement. 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 one (1) day prior to his compulsory retirement on May 2, 2007, his reinstatement is no
longer feasible. Accordingly, the NLRC correctly held him entitled to the payment of his retirement benefits
pursuant to the CBA. On the other hand, his backwages should be computed only for days prior to his
compulsory retirement which in this case is only a day. Consequently, the award of reinstatement wages
pending appeal must be deleted for lack of basis. The New Philippine Skylanders, Inc. and/or Jennifer M.
Eano-Bote vs. Francisco N. Dakila.G.R. No. 199547. September 24, 2012
Evidence; Constructive dismissal; Transfer; Substantial evidence. In labor cases, strict adherence with the
technical rules is not required. This liberal policy, however, should still conform to the rudiments of equitable
principles of law. For instance, belated submission of evidence may only be allowed if the delay is adequately
justified and the evidence is clearly material to establish the partys cause. 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 IIs belated
submission of evidence cannot be permitted. MORESCO II did not cite any reason why it had failed to file its
position paper or present its cause before the Labor Arbiter despite sufficient 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 Ginoog sub-
office 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, especially so
when the same is not a newly discovered evidence.
The rule is that it is within the ambit of the employers 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, benefits and other privileges. This Court has always considered the managements
prerogative to transfer its employees in pursuit of its 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. Here, while we find 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 sufficiently proven by him, MORESCO IIs evidence is nevertheless not
enough to show that said transfer was required by the exigency of the electric cooperatives 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.
When there is doubt between the evidence submitted by the employer and that submitted by the employee, the
scales of justice must be tilted in favor of the employee. This is consistent with the rule that an employers
cause could only succeed on the strength of its own evidence and not on the weakness of the employees
evidence. Thus, MORESCO II cannot rely on the weakness of Ortizs certification in order to give more credit
to its own evidence. Self-serving and unsubstantiated declarations are not sufficient where the quantum of
evidence required to establish a fact is substantial evidence, described as more than a mere scintilla. The
evidence must be real and substantial, and not merely apparent. MORESCO II has miserably failed to
discharge the onus of proving the validity of Cagalawans transfer. Misamis Oriental II Electric Service
Cooperative (MORESCO II) vs. Virgilio M. Cagalawan. G.R. No. 175170. September 5, 2012.
Retirement benefits. While it is true that based on prevailing jurisprudence, disallowed benefits received in
good faith need not be refunded, the case before us may be distinguished from those cases with that ruling
because the monies involved here are retirement benefits. Retirement benefits belong to a different class of
benefits. All the cases with that ruling involved benefits such as cash gifts, representation allowances, rice
subsidies, uniform allowances, per diems, transportation allowances, and the like. The foregoing allowances
or fringe benefits are given in addition to ones salary, either to reimburse him for expenses he might have
incurred in relation to his work, or as a form of supplementary compensation. On the other hand, retirement
benefits are given to one who is separated from employment either voluntarily or compulsorily. Such benefits,
subject to certain requisites imposed by law and/or contract, are given to the employee on the assumption that
he can no longer work. They are also given as a form of reward for the services he had rendered. The purpose
is not to enrich him but to help him during his non-productive years.
Our Decision does not preclude the retirees from receiving retirement benefits provided by existing retirement
laws. What they are prohibited from getting are the additional benefits under the GSIS RFP, which we found
to have emanated from a void and illegal board resolution. To allow the payees to retain the disallowed
benefits would amount to their unjust enrichment to the prejudice of the GSIS, whose avowed purpose is to
maintain its actuarial solvency to finance the retirement, disability, and life insurance benefits of its
members. Government Service Insurance System (GSIS), et al. vs. Commission on Audit (COA), et al. G.R. No.
162372. September 11, 2012.
Release/Quitclaim; Separation pay. The release/quitclaim affidavits are invalid for being against public policy
for two reasons: (1) the terms of the settlement are unconscionable; the separation pay for termination due to
reorganization/restructuring was deficient by Php400,000.00 for each employee; they were given only half of
the amount they were legally entitled to; and (2) the absence of voluntariness when the employees signed the
document, it was their dire circumstances and inability to support their families that finally drove them to
accept the amount offered. Without jobs and with families to support, they dallied in executing the quitclaim
instrument, but were eventually forced to sign given their circumstances. To be sure, a settlement under these
terms is not and cannot be a reasonable one, given especially the respondents length of service 25 years for
Ybarola and 19 years for Rivera. Radio Mindanao Network, Inc. and Eric S. Canoy vs. Domingo Z. Ybarola,
et al. G.R. No. 198662. September 12, 2012.
Res judicata. Res judicata means a matter adjudged; a thing judicially acted upon or decided; a thing or matter
settled by judgment. It denotes that a final judgment or decree on the merits by a court of competent
jurisdiction is conclusive of the rights of the parties or their privies in all latter suits on all points and matters
determined in the former suit. For res judicata, in its concept as a bar by former judgment to apply, the
following must be present:
1. The former judgment or order is final;
2. It is rendered by a court having jurisdiction over the subject matter and the parties;
3. It is a judgment or an order on the merits; and,
4. There is between the first and the second identity of parties, identity of subject matter, and identity of
cause of action.
The Decision of this Court in G.R. Nos. 159460 and 159461 became final and executory on May 20, 2011. It
is a decision based on the merits of the case and rendered by this Court in the exercise of its appellate
jurisdiction after the parties invoked its jurisdiction. There is also, between the two sets of consolidated cases,
identity of the parties, subject matter and causes of action. The parties in G.R. No. 159460 and 159461 are
also impleaded as parties in these consolidated cases. And while some of the parties herein are not included in
G.R. Nos. 159460 and 159461, the same are only few. In any event, it is well-settled that only substantial, and
not absolute, identity of the parties is required for res judicata to lie. There is substantial identity of the
parties when there is a community of interest between a party in the first case and a party in the second case
albeit the latter was not impleaded in the first case.
With regard to identity of cause of action, it has been held that there is identity of causes of action when the
same evidence will sustain both actions or when the facts essential to the maintenance of the two actions are
identical. Here, the bone of contention in both sets of consolidated cases boils down to the nature and
consequences of complainants April 3, 2000 mass action. The antecedent facts that gave rise to all the cases
were the same. Necessarily, therefore, the same evidence would sustain all actions. Such similarity in the
evidence required to sustain all actions is also borne out by the identity of the issues involved in all these
cases. While the parties have presented a plethora of arguments which we earlier discussed at length, the same
nonetheless boil down to the same crucial issues formulated in G.R. Nos. 159460 and 159461.
It should be recalled that in G.R. No. 153799, the complainants assailed the Resolutions dated January 14,
2002 and February 20, 2002 of the CAs Fourth Division granting Metrobanks request for injunctive reliefs.
They claimed that the reinstatement aspect of the Labor Arbiters Decision is immediately executory. Hence,
they are entitled to backwages from the time the Labor Arbiter promulgated his Decision until it was reversed
by the NLRC.
As discussed above, however, the November 15, 2010 Decision of this Court in G.R. Nos. 159460 and 159461
already adjudicated the respective rights and liabilities of the parties. Said Decision pronouncing the monetary
awards to which the parties herein are entitled became final and executory on May 20, 2011. Under the rule on
immutability of judgment, this Court cannot alter or modify said Decision. It is a well-established rule that
once a judgment has become final and executory, it is no longer susceptible to any modification. Solidbank
Union, et al. vs. Metropolitan Bank and Trust Company/Metropolitan Bank and Trust Company vs. Solidbank
Union, et al./Solidbank Corporation, etc., et al. vs. Solidbank Union, et al./Solidbank Union, et al. vs.
Metropolitan Bank and Trust Company. G.R. No. 153799/G.R. No. 157169/G.R. No. 157327/G.R. No.
157506. September 17, 2012.
Reinstatement; Strained relations. A determination of the applicability of the doctrine of strained relations is
essentially a factual question and, thus, not a proper subject in this petition. This rule, however, admits of
exceptions. In cases where the factual findings of the LA and the NLRC are conflicting, the Court, in the
exercise if equity jurisdiction, may review and re-evaluate the factual issues and look into the records of the
case and re-examine the questioned findings.
As the records bear out, the LA found that patent animosity existed between ACMC and Bides considering the
confrontation that took place between the latter and Matthew. The confrontation coupled with Bides refusal to
be reinstated led to the LAs finding of strained relations necessitating an award of separation pay in lieu of
reinstatement. The NLRC, on the other hand, deleted the said award for lack of factual basis. The CA
reinstated the LAs finding of strained relations and explained that too much enmity had developed between
ACMC and Bides that necessarily barred the latters reinstatement.
The Court is well aware that reinstatement is the rule and, for the exception of strained relations to apply, it
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.
Apo Chemical Manufacturing and Michael Cheng vs. Ronaldo A. Bides. G.R. No. 186002. September 19,
2012.
Seafarers disability benefits; Attorneys fees. In determining the disability benefits due a seafarer the POEA
Standard Employment Contract (SEC), specifically its schedule of benefits, medical findings, Article 192 (c)
(1) of the Labor Code, and Rule X, Section 2 of its implementing rules and regulations must be considered.
The initial treatment period of 120 days may be extended up to a maximum of 240 days under the conditions
prescribed by law.
Under Article 2298 of the Civil Code, attorneys fees can be recovered [w]hen the defendants act or omission
has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. This
Court sees no reason why damages or attorneys fees should be awarded to Penales. It is obvious that he did
not give the petitioners company-designated physician ample time to assess and evaluate his condition, or to
treat him properly for that matter. The petitioners had a valid reason for refusing to pay his claims, especially
when they were complying with the terms of the POEA SEC with regard to his allowances and
treatment. Pacific Ocean Manning Inc., et al. vs. Benjamin D. Penales. G.R. No. 162809. September 5, 2012.
January 2013 Philippine Supreme Court
Decisions on Labor Law and Procedure
Posted on February 11, 2013 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law
Tagged appeal,arbitration, backwages, forum shopping, NLRC, redundancy, reinstatement
Here are select January 2013 rulings of the Supreme Court of the Philippines on labor law and procedure:
Appeal to the National Labor Relations Commission (NLRC); Requisites for perfection of appeal; Joint
declaration under oath accompanying the surety bond; Substantial compliance with procedural rules. There
was substantial compliance with the NLRC Rules of Procedure when the respondents PAL Maritime
Corporation and Western Shipping Agencies, Pte., Ltd. filed, albeit belatedly, the Joint Declaration Under
Oath, which is required when an employer appeals from the Labor Arbiters decision granting a monetary
award and posts a surety bond. Under the NLRC rules, the following requisites are required to perfect the
employers appeal: (1) it must be filed within the reglementary period; (2) it must be under oath, with proof of
payment of the required appeal fee and the posting of a cash or surety bond; and (3) it must be accompanied by
typewritten or printed copies of the memorandum of appeal, stating the grounds relied upon, the supporting
arguments, the reliefs prayed for, and a statement of the date of receipt of the appealed decision, with proof of
service on the other party of said appeal. If the employer posts a surety bond, the NLRC rules further require
the submission by the employer, his or her counsel, and the bonding company of a joint declaration under oath
attesting that the surety bond posted is genuine and that it shall be in effect until the final disposition of the
case.
In the case at bar, the respondents posted a surety bond equivalent to the monetary award and filed the notice
of appeal and the appeal memorandum within the reglementary period. When the NLRC subsequently
directed the filing of a Joint Declaration Under Oath, the respondents immediately complied with the said
order. There was only a late submission of the Joint Declaration. Considering that there was substantial
compliance with the rules, the same may be liberally construed. The application of technical rules may be
relaxed in labor cases to serve the demands of substantial justice. Rolando L. Cervantes vs. PAL Maritime
Corporation and/or Western Shipping Agencies, Pte., Ltd. G.R. No. 175209. January 16, 2013.
Completeness of service by registered mail; Exception to the general rule regarding a corporations verification
and certification of non-forum shopping; Interpretation of school CBA. A school CBA must be read in
conjunction with statutory and administrative regulations governing faculty qualifications. Such regulations
form part of a valid CBA without need for the parties to make express reference to the same.
In the case at bar, the University of the East (UE) repeatedly extended only semester-to-semester faculty
appointments to the respondents Pepanio and Bueno, since they had not completed postgraduate degrees. The
respondents, however, claimed that the 1994 CBA between UE and the faculty union did not yet require a
masters degree for a teacher to acquire regular status. Having rendered more than three consecutive years of
full-time service to the school, the respondents insisted that UE should have given them permanent
appointments.
The Supreme Court observed that the policy requiring college teachers to have postgraduate degrees was
provided in the Manual of Regulations issued as early as 1992 by the Department of Education, Culture and
Sports (DECS), now the Department of Education. In promulgating the Manual of Regulations, DECS
exercised its power of regulation over educational institutions, which includes prescribing the minimum
academic qualifications for teaching personnel. The legislature subsequently transferred the power to
prescribe such qualifications for teachers in institutions of higher learning to the Commission on Higher
Education (CHED). However, the 1992 Manual of Regulations issued by DECS continued to apply to colleges
and universities until 2010, when CHED issued a Revised Manual of Regulations.
Thus, the requirement of a masters degree for college teachers, as originally provided in the 1992 Manual of
Regulations, was deemed incorporated in the 1994 CBA between UE and the faculty union. Furthermore, the
subsequent CBA in 2001, which provided for the extension of conditional probationary status to the
respondents, subject to their obtaining a masters degree within the probationary period, clearly showed that
UE intended to subject the respondents appointments to the standards set by the law.
The requirement of a masters degree for tertiary education teachers is not unreasonable, considering that the
operation of educational institutions involves public interest. The government has a right to ensure that only
qualified persons, in possession of sufficient academic knowledge and teaching skills, are allowed to teach in
such institutions.
The Supreme Court also overruled the respondents contention that UE filed its appeal to the NLRC beyond
the required ten (10)-day period. For completeness of service by registered mail, the reckoning period starts
either from the date of actual receipt of the mail by the addressee or after five (5) days from the date he or she
received the first notice from the postmaster. In this case, the respondents averred that, on March 17, 2005, the
postmaster gave UEs counsel a notice to claim the mail containing the Labor Arbiters decision. The
respondents claimed that UEs counsel was deemed in receipt of the decision 5 days after the giving of the
notice, or on March 22, 2005. Thus, according to the respondents, when UE filed its appeal to the NLRC on
April 14, 2005, the 10-day reglementary period had already lapsed. The Supreme Court, however, ruled that
there must be conclusive proof that the registry notice was received by or at least served on the addressee. In
this case, the records did not show that UEs counsel in fact received the alleged registry notice requiring him
to claim the mail. On the other hand, UE was able to present a registry return receipt showing that its counsel
actually received a copy of the Labor Arbiters decision on April 4, 2005. Reckoned from this date, the 10-day
reglementary period had not yet lapsed when UE filed its appeal to the NLRC on April 14, 2005.
Anent UEs failure to comply with the general rule that the Board of Directors or Board of Trustees of a
corporation must authorize the person who shall sign the verification and certification of non-forum shopping
accompanying a petition, the Supreme Court held that such authorization is not necessary when it is self-
evident that the signatory is in a position to verify the truthfulness and correctness of the allegations in the
petition. The Supreme Court declared that Dean Eleanor Javier, who signed UEs verification and
certification, was in such a position, since she knew the factual antecedents of the case and she actually
communicated with the respondents regarding the required postgraduate qualification. University of the East,
et al. vs. Analiza F. Pepanio and Mariti D. Bueno. G.R. No. 193897. January 23, 2013.
Disease as a ground for termination; Retirement under the Labor Code; Age and tenure requirements for
retirement; Financial assistance. Under the Labor Code provision on disease as a ground for termination
(formerly, Article 284, but now renumbered pursuant to Republic Act No. 10151), it must be the employer who
initiates the termination of the employees services. The aforementioned provision cannot be applied in this
case, considering that it was the late petitioner Padillo, and not the Rural Bank of Nabunturan, Inc. (Bank),
who severed the employment relations. With his memory impaired after suffering a mild stroke due to
hypertension, Padillo wrote a letter to the Bank, expressing his intention to avail of an early retirement
package. The clear import of Padillos letter and the fact that he had stopped reporting for work even before
sending the said letter shows that he voluntarily retired. Given the inapplicability of the Labor Code provision
on disease as a ground for termination, it necessarily follows that Padillos claim for separation pay must be
denied.
As regards Padillos claim for retirement benefits, the provision of the Labor Code on retirement (formerly,
Art. 287, but now renumbered pursuant to R.A. No. 10151) states that, in the absence of any applicable
agreement, an employee who has served at least five (5) years in the company may retire upon reaching the
age of sixty (60) years, but not beyond sixty-five (65) years, to be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, with a fraction of at least six (6) months being
considered as one whole year. Notably, the aforementioned age and tenure requirements are cumulative, and
non-compliance with either negates the employees entitlement to the retirement pay under the Labor Code. In
this case, the Bank did not have a retirement plan or any other contract with its employees, setting the terms
and conditions for retirement. Padillo also served the Bank for twenty-nine (29) years, far more than the 5-
year tenure requirement. Padillo, however, did not meet the age requirement, considering that he was only
fifty-five (55) years old, or less than 60 years of age, when he retired. Thus, Padillos claim for retirement pay
must also be denied.
Nevertheless, the Supreme Court awarded Padillo financial assistance in the amount of P75,000, considering
the length of time which had supervened before the disposition of this case and Padillos unblemished record
of 29 years of service to the Bank. The award was in addition to the P100,000 benefit receivable under the
Philam Life Plan that the Bank had procured in favor of Padillo. Eleazar S. Padillo vs. Rural Bank of
Nabunturan, Inc., et al. G.R. No. 199338. January 21, 2013.
Redundancy as an authorized cause for termination; Difference between retirement and termination due to
redundancy; General rule regarding the factual findings of the NLRC and the exceptions thereto. Under the
Labor Code, redundancy is one of the authorized causes for termination of employment. The following are the
requisites for the valid implementation of a redundancy program: (a) the employer must serve a written notice
to the affected employees and to the Department of Labor and Employment (DOLE) at least one month before
the intended date of termination; (b) the employer must pay the employees separation pay equivalent to at least
one month pay or at least one month pay for every year of service, whichever is higher; (c) the employer must
abolish the redundant positions in good faith; and (d) the employer must set fair and reasonable criteria in
ascertaining which positions are redundant and may be abolished. The Supreme Court has also held that a
company cannot simply declare redundancy without basis. To exhibit its good faith and to show that there
were fair and reasonable criteria in ascertaining redundant positions, a company claiming to be over manned
must produce adequate proof of the same.
In the case at bar, the General Milling Corporation (GMC) furnished respondent Viajar a written notice
informing her of the termination of her services on the ground of redundancy. GMC also submitted to the
DOLE an Establishment Termination Report, regarding the employees, including Viajar, whose positions were
deemed redundant. Viajar and the DOLE received the respective notices one month before the effective date
of the employees termination. Furthermore, GMC issued to Viajar two checks amounting to P440,253.02 and
P21,211.35, representing her separation pay. However, the Supreme Court held that, notwithstanding
compliance with the requirements on notice and the payment of separation pay, GMC is still considered to
have illegally dismissed Viajar because the company failed to present substantial proof to support its general
allegations of redundancy. GMC could have presented evidence to substantiate redundancy, such as a new
staffing pattern or feasibility studies or proposals on the viability of newly created positions, job descriptions
and the approval by management of the restructuring program, or the companys audited financial reports.
However, no such evidence was submitted by GMC.
On the other hand, Viajar presented proof negating GMCs claim of redundancy and clearly showing GMCs
bad faith in implementing the redundancy program: (1) GMC had hired new employees before it terminated
Viajars employment; (2) Vaijar was barred from entering the company premises even before the effectivity of
her separation; and (3) Viajar was also forced to sign an Application for Retirement and Benefits so that she
could avail of her separation pay. The last circumstance is significant, considering that there is a difference
between voluntary retirement and forced termination of an employee. Retirement from service is contractual
or based on a bilateral agreement of the employer and the employee, while termination of employment is
statutory or governed by the Labor Code and other related laws. Voluntary retirement cuts employment ties,
leaving no residual employer liability; involuntary retirement amounts to a discharge, rendering the employer
liable for termination without cause. GMCs demand that Viajar sign an Application for Retirement and
Benefits, when she had already been informed of the termination of her services due to redundancy, shows that
this case involves not a voluntary retirement, but an illegal termination.
While the Labor Arbiter and the NLRC both found that Viajar was validly dismissed, the general rule that the
factual findings of the NLRC must be accorded respect and finality is not applicable in this case. One of the
exceptions to the said rule covers instances when the findings of fact of the trial court, or of the quasi-judicial
agencies concerned, are conflicting or contradictory with those of the Court of Appeals, as in the present case.
Another exception to the general rule is when the said findings are not supported by substantial evidence or the
inference or conclusion arrived at is manifestly erroneous. In the case at bar, the Supreme Court agreed with
the Court of Appeals that the NLRCs conclusion that Viajar was legally dismissed is manifestly
erroneous. General Milling Corporation vs. Violeta L. Viajar. G.R. No. 181738. January 30, 2013.
Reinstatement; Backwages. It is basic in jurisprudence that illegally dismissed workers are entitled to
reinstatement with backwages plus interest at the legal rate.
This labor controversy started when the employer Automotive Engine Rebuilders, Inc. (AER) and the
Progresibong Unyon ng mga Manggagawa sa AER (Union) filed charges against each other for violating labor
laws. AER filed a complaint against the Union and eighteen (18) of its members for conducting an illegal
strike. On the other hand, thirty-two (32) employees filed a complaint against AER for unfair labor practices,
illegal dismissal, illegal suspension, and run-away shop. In a previous decision (G.R. No. 160138, July 13,
2011), the Supreme Court had held that both parties were at fault or in pari delicto; hence, the complaining
employees should be reinstated but without backwages. The Motion for Partial Reconsideration filed by the
Union is resolved in the present case.
The Supreme Court found that, of the 32 employees who filed the complaint against AER, only 18 had been
charged by AER with illegal strike, leaving 14 excluded from the employers complaint. As no charges had
been filed against the 14 workers, they cannot be found guilty of illegal strike. Neither can they be
considered in pari delicto. However, of the 14 employees, five failed to write their names and affix their
signatures in the Membership Resolution attached to their petition before the Court of Appeals, authorizing the
union president to represent them. Thus, while these five employees will also be reinstated, they cannot be
granted backwages. On the other hand, the nine workers who signed their names in the aforementioned
Membership Resolution will be reinstated with backwages plus interest at the legal rate. Automotive Engine
Rebuilders, Inc. (AER), et al. vs. Progresibong Unyon ng mga Manggagawa sa AER, et al. / Progresibong
Unyon ng mga Manggagawa sa AER, et al. vs. Automotive Engine Rebuilders, Inc., et al. G.R. Nos. 160138
and 160192. January 16, 2013.
Resignation; Resignation in relation to the subsequent filing of an illegal dismissal case. Petitioner Cervantess
claim that he did not resign but was terminated from employment is untenable. Resignation is 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, such that he has no other choice but to disassociate himself
from his employment.
In the present case, Cervantess employer merely informed him of the numerous complaints against him. It
was Cervantes himself who opted to be relieved from his post and who initiated his repatriation to Manila.
This is clear from the tenor of his telex message, which reads in part: ANYHOW TO AVOID REPETITION
[ON] MORE HARSH REPORTS TO COME. BETTER ARRANGE MY RELIEVER [AND] C/O
BUSTILLO RELIEVER ALSO. UPON ARR NEXT USA LOADING PORT FOR THEIR
SATISFACTION. Cervantess message contains an unmistakable demand to be relieved of his assignment.
His employer merely accepted his resignation. Thus, the rule that the filing of a complaint for illegal dismissal
is inconsistent with resignation does not hold true in this case. The clear tenor of Cervantess resignation letter
and the filing of this case one year after his alleged termination shows that the complaint for illegal dismissal
was a mere afterthought. Rolando L. Cervantes vs. PAL Maritime Corporation and/or Western Shipping
Agencies, Pte., Ltd. G.R. No. 175209. January 16, 2013.
Voluntary Arbitration; Plenary authority and jurisdiction of a voluntary arbitrator; Concept and exercise of
management prerogative; Limitations on the exercise of management prerogative; Nature of collective
bargaining agreements (CBA). Goya, Inc.s contention that the Voluntary Arbitrator (VA) exceeded his power
in ruling on a matter not covered by the sole issue submitted for voluntary arbitration is untenable. In a prior
case, the Supreme Court has ruled that, in general, the arbitrator is expected to decide those questions
expressly stated and limited in the submission agreement. However, since arbitration is the final resort for the
adjudication of disputes, the arbitrator can assume that he has the power to make a final settlement. The VA
has plenary jurisdiction and authority to interpret the CBA and to determine the scope of his or her own
authority. Subject to judicial review, this leeway of authority and adequate prerogative is aimed at
accomplishing the rationale of the law on voluntary arbitration speedy labor justice.
In the case at bar, Goya, Inc. and Goya, Inc. Employees Union (Union) submitted for voluntary arbitration the
sole issue of whether or not the company is guilty of an unfair labor practice in engaging the services of PESO,
a third party service provider, under existing CBA, laws, and jurisprudence. The Union claimed that the hiring
of contractual workers from PESO violated the CBA provision that prescribes only three categories of workers
in the company, namely: the probationary, the regular, and the casual employees. Instead of hiring contractual
workers, Goya, Inc. should have hired probationary or casual employees, who could have become additional
Union members, pursuant to the union security clause in the CBA. The VA ruled that while Goya, Inc. was not
guilty of any unfair labor practice, it still committed a violation of the CBA, though such violation was not
gross in character. The Supreme Court held that the VAs ruling is interrelated and intertwined with the sole
issue submitted for arbitration. The ruling was necessary to make a complete and final adjudication of the
dispute between the parties.
Furthermore, Goya, Inc.s assertion that its hiring of contractual workers was a valid exercise of management
prerogative is erroneous. Declaring that a particular act falls within the concept of management prerogative is
significantly different from acknowledging that such act is a valid exercise thereof. While the VA and the
Court of Appeals ruled that the act of contracting out or outsourcing work is within the purview of
management prerogative, they did not declare such act to be a valid exercise thereof. As repeatedly held, the
exercise of management prerogative is not unlimited; it is subject to the limitations found in the law, CBA, or
general principles of fair play and justice.
In this case, the CBA provision prescribing the categories of employees in the company and the union security
clause are interconnected and must be given full force and effect. The parties in a CBA are free to establish
such stipulations they may deem convenient, provided that the same are not contrary to law, morals, good
customs, public order, or public policy. Where the CBA is clear and unambiguous, the literal meaning of its
stipulations shall control. The CBA becomes the law between the parties, and compliance therewith is
mandated by the express policy of the law. Goya, Inc. vs. Goya, Inc. Employees Union-FFW. G.R. No.
170054. January 21, 2013.
December 2013 Philippine Supreme Court
Decisions on Labor Law
Posted on January 17, 2014 by Leslie C. Dy Posted in Labor Law, Philippines - Cases, Philippines - Law
Here are select December 2013 rulings of the Supreme Court of the Philippines on labor law:
Appeal; NLRC; accredited bonding company; revocation of authority is prospective in application. The
respondents filed a surety bond issued by Security Pacific Assurance Corporation (Security Pacific) on June
28, 2002. At that time, Security Pacific was still an accredited bonding company. However, the NLRC revoked
its accreditation on February 16, 2003. This subsequent revocation should not prejudice the respondents who
relied in good faith on the then subsisting accreditation of Security Pacific. In Del Rosario v. Philippine
Journalists, Inc. (G.R. No. 181516, August 19, 2009), it was held that a bonding companys revocation of
authority is prospective in application. Nonetheless, the respondents should post a new bond issued by an
accredited bonding company in compliance with paragraph 4, Section 6, Rule 6 of the NLRC Rules of
Procedure, which states that [a] cash or surety bond shall be valid and effective from the date of deposit or
posting, until the case is finally decided, resolved or terminated or the award satisfied. Wilgen Loon, et al. v.
Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.
Appeal; NLRC; bond; jurisdictional. Paragraph 2, Article 223 of the Labor Code provides that [i]n case of a
judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a
cash or surety bond issued by a reputable bonding company duly accredited by the NLRC in the amount
equivalent to the monetary award in the judgment appealed from. Contrary to the respondents claim, the
issue of the appeal bonds validity may be raised for the first time on appeal since its proper filing is a
jurisdictional requirement. The requirement that the appeal bond should be issued by an accredited bonding
company is mandatory and jurisdictional. The rationale of requiring an appeal bond is to discourage the
employers from using an appeal to delay or evade the employees just and lawful claims. It is intended to
assure the workers that they will receive the money judgment in their favor if the employers appeal is
dismissed. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.
Appeal; NLRC; verification; formal requisite, not jurisdictional. Neither the laws nor the rules require the
verification of the supplemental appeal. Furthermore, verification is a formal, not a jurisdictional, requirement.
It is mainly intended to give assurance that the matters alleged in the pleading are true and correct and not of
mere speculation. Also, a supplemental appeal is merely an addendum to the verified memorandum on appeal
that was earlier filed in the case; hence, the requirement for verification has been substantially
complied. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.
Appeal; Rule 45; limited to review of questions of law. In this Rule 45 petition for review on certiorari, the
Supreme Court (SC) reviewed the Court of Appeals (CA) decision of a Rule 65 petition for certiorari. The
Supreme Courts power of review in such case is limited to legal errors that the CA might have committed in
issuing its assailed decision, in contrast with the review for jurisdictional errors which it undertakes in an
original certiorari (Rule 65) action filed with it. The SC examines the CA decision based on how it determined
the presence or absence of grave abuse of discretion in the manner by which the NLRC rendered its decision
and not on the basis of whether the NLRC decision on the merits of the case was correct. Moreover, the
Courts power in a Rule 45 petition limits it to a review of questions of law raised against the assailed CA
decision. Baguio Central University v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.
Attorneys fees; when entitled. An employee is entitled to an award of attorneys fees equivalent to ten percent
(10%) of the amount of the wages in actions for unlawful withholding of wages pursuant to Article 111 of the
Labor Code. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.
Backwages; when entitled. In termination cases, the burden of proving just and valid cause for dismissing an
employee from his employment rests upon the employer. The employers failure to discharge this burden in the
instant case arising from their non-submission of evidence at the proceedings before the labor arbiter resulted
in the finding that the dismissal is unjustified. Thus, the employees are entitled to the payment of backwages.
Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.
Deeds of release and quitclaim; grounds to invalidate. As a rule, deeds of release and quitclaim cannot bar
employees from demanding benefits to which they are legally entitled or from contesting the legality of their
dismissal. The acceptance of those benefits would not amount to estoppel. To excuse respondents from
complying with the terms of their waivers, any one of the following grounds must exist: (1) the employer used
fraud or deceit in obtaining the waivers; (2) the consideration the employer paid is incredible and
unreasonable; or (3) the terms of the waiver are contrary to law, public order, public policy, morals, or good
customs or prejudicial to a third person with a right recognized by law. The Court concluded that the instant
case falls under the first situation.
As the ground for termination of employment was illegal, the quitclaims are deemed illegal because the
employees consent had been vitiated by mistake or fraud. The law looks with disfavor upon quitclaims and
releases by employees pressured into signing by unscrupulous employers minded to evade legal
responsibilities. The circumstances show that petitioners misrepresentation led its employees, specifically
respondents herein, to believe that the company was suffering losses which necessitated the implementation of
the voluntary retirement and retrenchment programs, and eventually the execution of the deeds of release,
waiver and quitclaim. The amounts already received by respondents as consideration for signing the releases
and quitclaims, however, should be deducted from their respective monetary awards. Philippine Carpet
Manufacturing Corporation, et al. v. Ignacio B. Tagyamon, et al., G.R. No. 191475, December 11, 2013.
Disability benefits; principle of work-aggravation; concept of. Compensability may be established on the basis
of the theory of work aggravation if, by substantial evidence, it can be demonstrated that the working
conditions aggravated or at least contributed in the advancement of respondents cancer. As held in Rosario v.
Denklav Marine, the burden is on the beneficiaries to show a reasonable connection between the causative
circumstances in the employment of the deceased employee and his death or permanent total disability. In the
present case, both parties failed to discharge their respective burdens for petitioners, they failed to prove the
non-work-relatedness of the disease; and for respondent, he failed to prove that his work aggravated his
condition. Thus, the Court had to resolve the case on some other basis. The Court held that disability should be
understood not more on its medical significance, but on the loss of earning capacity. Permanent total disability
means disablement of an employee to earn wages in the same kind of work or work of similar nature that he
was trained for or accustomed to perform, or any kind of work which a person of his mentality and attainment
could do. It does not mean absolute helplessness. Evidence of this condition can be found in a certification of
fitness/unfitness to work issued by the company-designated physician. In this case, records reveal that the
medical report issued by the company-designated oncologist was bereft of any certification that respondent
remained fit to work as a seafarer despite his cancer. This is important, according to the Court, since the
certification is the document that contains the assessment of his disability which can be questioned in case of
disagreement as provided under Section 20 (B) (3) of the POEA-SEC. In the absence of any certification, the
law presumes that the employee remains in a state of temporary disability. Should no certification be issued
within 240 day maximum period, as in this case, the pertinent disability becomes permanent in nature.
Accordingly, the Court affirmed respondents entitlement to permanent total disability benefits awarded to
him. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076, December 4, 2013.
Disability benefits; principle of work-relation; concept of. As a general rule, the principle of work-relation
requires that the disease in question must be one of those listed as an occupational disease under Sec. 32-A of
the POEA-SEC. Nevertheless, should it be not classified as occupational in nature, Section 20 (B) paragraph 4
of the POEA-SEC provides that such diseases are disputably presumed as work-related.
In this case, it is undisputed that Nasopharyngeal Carcinoma (NPC) afflicted respondent while on board the
petitioners vessel. As a non-occupational disease, it has the disputable presumption of being work-related.
This presumption obviously works in the seafarers favor. Hence, unless contrary evidence is presented by the
employers, the work-relatedness of the disease must be sustained. The Court held that the petitioners, as
employers, failed to disprove the presumption of NPCs work-relatedness. The petitioners primarily relied on
the medical report issued by Dr. Co Pefia which, however, failed to make a categorical statement confirming
the total absence of work relation. As the doctor opined only a probability, there was no certainty that his
condition was not work related. There being no certainty, the Court will lean in favor of the seafarer consistent
with the mandate of POEA-SEC to secure the best terms and conditions of employment for Filipino workers.
Hence, the presumption of NPCs work-relatedness stays. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R.
No. 204076, December 4, 2013.
Illegal dismissal; burden of proof. In termination cases, the burden of proving just and valid cause for
dismissing an employee from his employment rests upon the employer. The employers failure to discharge
this burden results in the finding that the dismissal is unjustified.
Failing to prove just and valid cause for the dismissal, the Court held that the petitioners are entitled to salary
differential, service incentive, holiday, and thirteenth month pays. As in illegal dismissal cases, the general
rule is that the burden rests on the defendant to prove payment rather than on the plaintiff to prove non-
payment of these money claims. However, the Court decided that they are not entitled to overtime and
premium pays. The burden of proving entitlement to overtime pay and premium pay for holidays and rest days
rests on the employee because these are not incurred in the normal course of business. In the present case, the
petitioners failed to adduce any evidence that would show that they actually rendered service in excess of the
regular eight working hours a day, and that they in fact worked on holidays and rest days. Wilgen Loon, et al. v.
Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.
Labor cases; strict adherence to the technical rules of procedure is not required; when liberality allowed. In
labor cases, strict adherence to the technical rules of procedure is not required. Time and again, the Court has
allowed evidence to be submitted for the first time on appeal with the NLRC in the interest of substantial
justice. Thus, it has consistently supported the rule that labor officials should use all reasonable means to
ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, in
the interest of due process. However, this liberal policy should still be subject to rules of reason and fairplay.
The liberality of procedural rules is qualified by two requirements: (1) a party should adequately explain any
delay in the submission of evidence; and (2) a party should sufficiently prove the allegations sought to be
proven. The reason for these requirements is that the liberal application of the rules before quasi-judicial
agencies cannot be used to perpetuate injustice and hamper the just resolution of the case. Neither is the rule
on liberal construction a license to disregard the rules of procedure. In the present case, the Court held that the
respondents failed to adequately explain their delay in the submission of evidence and prove the allegations
sought to be proven. Wilgen Loon, et al. v. Power Master, Inc., et al., G.R. No. 189404, December 11, 2013.
Labor; ground for valid dismissal; loss of trust and confidence; requisites. Loss of trust and confidence is a just
cause for dismissal under Article 282(c) of the Labor Code. Article 282(c) provides that an employer may
terminate an employment for fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative. However, in order for the employer to properly invoke this
ground, the employer must satisfy two conditions. First, the employer must show that the employee concerned
holds a position of trust and confidence. Second, the employer must establish the existence of an act justifying
the loss of trust and confidence. To be a valid cause for dismissal, the act that betrays the employers trust must
be real, i.e., founded on clearly established facts, and the employees breach of the trust must be willful, i.e., it
was done intentionally, knowingly and purposely, without justifiable excuse.
In Lopez v. Keppel Bank Philippines, Inc. (G.R. No. 176800, September 5, 2011), the Court repeated 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.
As applied to the dismissal of managerial employees, employers as a rule enjoy wider latitude of
discretion. They are not required to present proof beyond reasonable doubt as the mere existence of a basis for
believing that such employee has breached the trust of the employer would suffice for the dismissal. Thus, as
long as the employer has reasonable ground to believe that the employee concerned is responsible for the
purported misconduct, and the nature of his participation therein renders him unworthy of the trust and
confidence demanded of his position, the dismissal on this ground is valid.
The Court held that there was sufficient basis to dismiss the respondent for loss of trust and confidence. First,
the Court believed that the respondent held a position of trust and confidence because he was a managerial
employee of the petitioner. As the Dean of two of the petitioners departments, he was tasked, among others,
to assist the school head in all matters affecting the general policies of the entire institution, to direct and
advise the students in their programs of study and to approve their subject load and exercise educational
leadership among his faculty. These tasks involved the exercise of powers and prerogatives equivalent to
managerial actions. Second, the Court ruled that the respondent committed wilful breach of trust sufficient to
justify dismissal. The heart of the loss-of-trust charge is the employees betrayal of the employers trust.
Damage aggravates the charge but its absence does not mitigate nor negate the employees liability. The
respondent betrayed his owed fidelity the moment he engaged in a venture that required him to perform tasks
and make calculated decisions which his duty to the petitioner would have equally required him to perform or
would have otherwise required him to oppose. The Court was convinced that actual conflict of interest existed
when respondent sought to conduct review courses for nursing examination knowing that the petitioner was
already offering similar classes. The respondents good intentions were beside the point. Ultimately, the
determinant is his deliberate engagement in a venture that would have directly conflicted with the petitioners
interests. If respondent merely intended to help the petitioner and its students in increasing their chances of
passing the Civil Service Examination, he could have just offered, as part of the BCUs course curriculum,
review classes for the Civil Service Examination instead of altogether organizing a review center that
obviously will offer the course to everyone minded to enroll. Baguio Central University v. Ignacio
Gallente, G.R. No. 188267, December 2, 2013.
Labor; valid dismissal; requisites. Our Constitution, statutes and jurisprudence uniformly guarantee to every
employee or worker tenurial security. What this means is that an employer shall not dismiss an employee
except for just or authorized cause and only after due process is observed. Thus, for an employees dismissal to
be valid, the employer must meet these basic requirements of: (1) just or authorized cause (which constitutes
the substantive aspect of a valid dismissal); and (2) observance of due process (the procedural aspect). Baguio
Central University v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.
Petition for review on certiorari; only questions of law can be reviewed; exceptions.The well-entrenched rule
in this jurisdiction is that only questions of law may be entertained by the SC in a petition for review on
certiorari under Rule 45. This rule, however, is not absolute and admits certain exceptions, such as when the
petitioner persuasively alleges that there is insufficient or insubstantial evidence on record to support the
factual findings of the tribunal or court a quo as Section 5, Rule 133 of the Rules of Court states in express
terms that in cases filed before administrative or quasi-judicial bodies, a fact may be deemed established only
if supported by substantial evidence. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No. 204076,
December 4, 2013.
Probationary employment; concept of; probationer can only qualify upon fulfillment of the reasonable
standards set for permanent employment of a teaching personnel. Probationary employment refers to the trial
stage or period during which the employer examines the competency and qualifications of job applicants, and
determines whether they are qualified to be extended permanent employment status. Such an arrangement
affords an employer the opportunity before the full force of the guarantee of security of tenure comes into
play to fully scrutinize and observe the fitness and worth of probationers while on the job and to determine
whether they would become proper and efficient employees. It also gives the probationers the chance to prove
to the employer that they possess the necessary qualities and qualifications to meet reasonable standards for
permanent employment.
Mere completion of the three-year probation, even with an above-average performance, does not guarantee that
the employee will automatically acquire a permanent employment status. It is settled jurisprudence that the
probationer can only qualify upon fulfillment of the reasonable standards set for permanent employment of a
teaching personnel.
The Court ruled that the requirement to obtain a masters degree was made known to the petitioner. The
contract she signed clearly incorporates the rules, regulations, and employment conditions contained in the
SSC Faculty Manual. The Manual provided for a criteria for permanency which includes, among others, the
requirement that the faculty member must have completed at least a masters degree. Viewed next to the
statements and actions of Manaois i.e., the references to obtaining a masters degree in her application letter,
in the subsequent correspondences between her and SSC, and in the letter seeking the extension of a teaching
load for the school year 2003-2004; and her submission of certifications from UP and from her thesis adviser
the Court found that there is indeed substantial evidence proving that she knew about the necessary academic
qualifications to obtain the status of permanency. Jocelyn Herrera-Manaois v. St. Scholasticas College, G.R.
No. 188914, December 11, 2013.
Probationary employment; part-time member of the academic personnel; requisites to acquire permanence of
employment and security of tenure. Pursuant to the 1992 Manual of Regulations for Private Schools, private
educational institutions in the tertiary level may extend full-time faculty status only to those who possess,
inter alia, a masters degree in the field of study that will be taught. This minimum requirement is neither
subject to the prerogative of the school nor to the agreement between the parties. For all intents and purposes,
this qualification must be deemed impliedly written in the employment contracts between private educational
institutions and prospective faculty members. The issue of whether probationers were informed of this
academic requirement before they were engaged as probationary employees is thus no longer material, as those
who are seeking to be educators are presumed to know these mandated qualifications. Thus, all those who fail
to meet the criteria under the 1992 Manual cannot legally attain the status of permanent full-time faculty
members, even if they have completed three years of satisfactory service.
Further, the Court stated that in line with academic freedom and constitutional autonomy, an institution of
higher learning has the discretion and prerogative to impose standards on its teachers and determine whether
these have been met. Upon conclusion of the probation period, the college or university, being the employer,
has the sole prerogative to make a decision on whether or not to re-hire the probationer. The probationer cannot
automatically assert the acquisition of security of tenure and force the employer to renew the employment
contract. In the case at bar, petitioner failed to comply with the stated academic qualifications required for the
position of a permanent full-time faculty member. Jocelyn Herrera-Manaois v. St. Scholasticas College,G.R.
No. 188914, December 11, 2013.
Question of law; distinguished from a question of fact. A question of law arises when the doubt or controversy
concerns the correct application of law or jurisprudence to a certain set of facts. In contrast, a question of fact
exists when a doubt or difference arises as to the truth or falsehood of facts.
In this petition, the petitioner essentially asks the question whether, under the circumstances and the
presented evidence, the termination of respondents employment was valid. As framed, therefore, the question
before the Court is a proscribed factual issue that it cannot generally consider in this Rule 45 petition, except to
the extent necessary to determine whether the CA correctly found the NLRC in grave abuse of its discretion in
considering and appreciating this factual issue.
Nonetheless, as an exception to the Rule 45 requirement, the Court deemed it proper to review the conflicting
factual findings of the LA and the CA, on the one hand, and the NLRC, on the other. Such exception applies
when, based on the records, the factual findings of the tribunals below are in conflict. Baguio Central
University v. Ignacio Gallente, G.R. No. 188267, December 2, 2013.
Stare decisis ; doctrine of . Under the doctrine of stare decisis, when a court has laid down a principle of law as
applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in which the
facts are substantially the same, even though the parties may be different. Where the facts are essentially
different, however, stare decisis does not apply because a perfectly sound principle as applied to one set of
facts might be entirely inappropriate when a factual variant is introduced.
This case and the Philippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas case (Philcea case;
G.R. No. 168719, February 22, 2006), involve the same period which is March to April 2004; the issuance of
the Memorandum to employees informing them of the implementation of the cost reduction program; the
implementation of the voluntary retirement program and retrenchment program, except that this case involves
different employees; the execution of deeds of release, waiver, and quitclaim, and the acceptance of separation
pay by the affected employees. As the respondents here were similarly situated as the union members in the
Philcea case, and considering that the questioned dismissal from the service was based on the same grounds
under the same circumstances, there is no need to re-litigate the issues presented herein. In short, stare
decisis applies and the Court deems it wise to adopt its earlier findings in the Philcea case that there was no
valid ground to terminate the services of the employees. Philippine Carpet Manufacturing Corporation, et al.
v. Ignacio B. Tagyamon, et al., G.R. No. 191475, December 11, 2013.
Substantial evidence; definition of. The assertions of respondent do not constitute as substantial evidence that a
reasonable mind might accept as adequate to support the conclusion that there is a causal relationship between
his illness and the working conditions on board the petitioners vessel. Although the Court has recognized as
sufficient that work conditions are proven to have contributed even to a small degree, such must, however, be
reasonable, and anchored on credible information. The claimant must, therefore, prove a convincing
proposition other than by his mere allegations. Jebsens Maritime, Inc., et al. v. Eleno A. Baol, G.R. No.
204076, December 4, 2013.
Termination of employment; authorized causes; retrenchment. The illegality of the basis of the implementation
of both voluntary retirement and retrenchment programs of petitioners had been thoroughly ruled upon by the
Court in Philippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas (G.R. No. 168719,
February 22, 2006). It discussed the requisites of both retrenchment and redundancy as authorized causes of
termination and concluded that petitioners failed to substantiate them. In ascertaining the bases of the
termination of employees, it took into consideration petitioners claim of business losses; the purchase of
machinery and equipment after the termination, the declaration of cash dividends to stockholders, the hiring of
100 new employees after the retrenchment, and the authorization of full blast overtime work for six hours
daily. These, said the Court, are inconsistent with petitioners claim that there was a slump in the demand for
its products which compelled them to implement the termination programs. In arriving at its conclusions, the
Court took note of petitioners net sales, gross and net profits, as well as net income. The Court, thus, reached
the conclusion that the retrenchment effected by the company is invalid due to a substantive defect. Philippine
Carpet Manufacturing Corporation, et al. v. Ignacio B. Tagyamon, et al., G.R. No. 191475, December 11,
2013.
Termination of employment; ground; closure of business due to serious business losses; notice requirement.
Article 297 of the Labor Code provides that before any employee is terminated due to closure of business, it
must give one (1) months prior written notice to the employee and to the Department of Labor and
Employment. In this relation, case law instructs that it is the personal right of the employee to be personally
informed of his proposed dismissal as well as the reasons therefor; and such requirement of notice is not a
mere technicality or formality which the employer may dispense with. Since the purpose of previous notice is
to, among others, give the employee some time to prepare for the eventual loss of his job, the employer has the
positive duty to inform each and every employee of their impending termination of employment. To this end,
jurisprudence states that an employers act of posting notices to this effect in conspicuous areas in the
workplace is not enough. Verily, for something as significant as the involuntary loss of ones employment,
nothing less than an individually-addressed notice of dismissal supplied to each worker is proper. The Court
held that the Labor Arbiter, NLRC, and Court of Appeals erred in ruling that SPI complied with the notice
requirement when it merely posted various copies of its notice of closure in conspicuous places within the
business premises. SPI is required to serve individual written notices of termination to its
employees. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al. v. Sangwoo Philippines, Inc.
Employees Union-OLALIA, rep. by Porferia Salibongcogon/Sangwoo Philippines, Inc. Employees Union-
OLALIA, rep. by Porferia Salibongcogon v. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et
al., G.R. No. 173154./G.R. No. 173229, December 9, 2013
Termination of employment; authorized cause; closure of business due to serious business losses; separation
pay. Closure of business is the reversal of fortune of the employer whereby there is a 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. In such a
case, the employer is generally required to give separation benefits to its employees, unless the closure is due
to serious business losses. As explained in the case of Galaxie Steel Workers Union (GSWU-NAFLU-KMU)
v. NLRC (G.R. No. 165757, October 17, 2006): The Constitution, while affording full protection to labor,
nonetheless, recognizes the right of enterprises to reasonable returns on investments, and to expansion and
growth. In line with this protection afforded to business by the fundamental law, Article [297] of the Labor
Code clearly makes a policy distinction. It is only in instances 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 that employees whose employment has been terminated as a result are entitled to separation
pay. In other words, Article [297] of the Labor Code does not obligate an employer to pay separation benefits
when the closure is due to serious losses. To require an employer to be generous when it is no longer in a
position to do so, in our view, would be unduly oppressive, unjust, and unfair to the employer. Ours is a system
of laws, and the law in protecting the rights of the working man, authorizes neither the oppression nor the self-
destruction of the employer.
In this case, the Labor Arbiter, NLRC, and the Court of Appeals all consistently found that petitioners indeed
suffered from serious business losses which resulted in its permanent shutdown and accordingly, held the
companys closure to be valid. It is a rule that absent any showing that the findings of fact of the labor tribunals
and the appellate court are not supported by evidence on record or the judgment is based on a misapprehension
of facts, the Court shall not examine anew the evidence submitted by the parties. Perforce, without any cogent
reason to deviate from the findings on the validity of respondents closure, the Court held that it is not obliged
to give separation benefits to minority employees pursuant to Article 297 of the Labor Code. Sangwoo
Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al. v. Sangwoo Philippines, Inc. Employees Union-
OLALIA, rep. by Porferia Salibongcogon/Sangwoo Philippines, Inc. Employees Union-OLALIA, rep. by
Porferia Salibongcogon v. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al.,G.R. No.
173154./G.R. No. 173229, December 9, 2013.
Termination of employment due to closure; procedural infirmity; nominal damages as sanction. It is well to
stress that while respondent had a valid ground to terminate its employees, i.e., closure of business, its failure
to comply with the proper procedure for termination renders it liable to pay the employee nominal damages for
such omission. Based on existing jurisprudence, an employer which has a valid cause for dismissing its
employee but conducts the dismissal with procedural infirmity is liable to pay the employee nominal damages
in the amount of P30,000.00 if the ground for dismissal is a just cause, or the amount of P50,000.00 if the
ground for dismissal is an authorized cause. However, case law exhorts that in instances where the payment of
such damages becomes impossible, unjust, or too burdensome, modification becomes necessary in order to
harmonize the disposition with the prevailing circumstance. In this case, considering that SPI closed down its
operations due to serious business losses and that said closure appears to have been done in good faith, the
Court as in the case of Industrial Timber Corporation v. Ababon (G.R. No. 164518, March 30, 2006), deems it
just to reduce the amount of nominal damages to be awarded to each of the minority employees from
P50,000.00 to Pl0,000.00. Sangwoo Philippines, Inc. and/or Sang Ik Jang, Jisso Jang, et al. v. Sangwoo
Philippines, Inc. Employees Union-OLALIA, rep. by Porferia Salibongcogon/Sangwoo Philippines, Inc.
Employees Union-OLALIA, rep. by Porferia Salibongcogon v. Sangwoo Philippines, Inc. and/or Sang Ik Jang,
Jisso Jang, et al., G.R. No. 173154./G.R. No. 173229, December 9, 2013.
January 2014 Philippine Supreme Court
Decisions on Labor Law
Backwages; when awarded.
As a general rule, backwages are granted to indemnify a dismissed employee for his loss of earnings during
the whole period that he is out of his job. Considering that an illegally dismissed employee is not deemed to
have left his employment, he is entitled to all the rights and privileges that accrue to him from the employment.
The grant of backwages to him is in furtherance and effectuation of the public objectives of the Labor Code,
and is in the nature of a command to the employer to make a public reparation for dismissing the employee in
violation of the Labor Code.
The Court held that the respondents are not entitled to the payment of backwages. The Court, citing G&S
Transport Corporation v. Infante (G. R. No. 160303, September 13, 2007) stated that the principle of a fair
days wage for a fair days labor remains as the basic factor in determining the award thereof. An exception
to the rule would be if the laborer was able, willing and ready to work but was illegally locked out, suspended
or dismissed or otherwise illegally prevented from working. It is, however, required, for this exception to
apply, that the strike be legal, a situation which does not obtain in the case at bar. Visayas Community Medical
Center (VCMC) formerly known as Metro Cebu Community Hospital (MCCH) v. Erma Yballe, et al.,G.R. No.
196156, January 15, 2014
Dismissal; burden of proof on employer.
The burden is on the employer to prove that the termination was for valid cause. Unsubstantiated accusations
or baseless conclusions of the employer are insufficient legal justifications to dismiss an employee. The
unflinching rule in illegal dismissal cases is that the employer bears the burden of proof.
One of CCBPIs policies requires that, on a daily basis, CCBPI Salesmen/Account Specialists must account for
their sales/collections and obtain clearance from the company Cashier before they are allowed to leave
company premises at the end of their shift and report for work the next day. If there is a shortage/failure to
account, the concerned Salesmen/Account Specialist is not allowed to leave the company premises until he
settles the same. In addition, shortages are deducted from the employees salaries. If CCBPI expects to proceed
with its case against petitioner, it should have negated this policy, for its existence and application are
inextricably tied to CCBPIs accusations against petitioner. In the first place, as petitioners employer, upon it
lay the burden of proving by convincing evidence that he was dismissed for cause. If petitioner continued to
work until June 2004, this meant that he committed no infraction, going by this company policy; it could also
mean that any infraction or shortage/non-remittance incurred by petitioner has been duly settled. Respondents
decision to ignore this issue generates the belief that petitioner is telling the truth, and that the alleged
infractions are fabricated, or have been forgiven. Coupled with Macatangays statement which remains
equally unrefuted that the charges against petitioner are a scheme by local CCBPI management to cover up
problems in the Naga City Plant, the conclusion is indeed telling that petitioner is being wrongfully made to
account. Jonas Michael R. Garza v. Coca-Cola Bottlers Phils., Inc., et al.,G.R. No. 180972. January 20, 2014.
Embezzlement; failure to remit collections. The irregularity attributed to petitioner with regard to the Asanza
account should fail as well. To be sure, Asanza herself confirmed that she did not make any payment in cash or
check of P8,160.00 covering the October 15, 2003 delivery for which petitioner is being held to account. This
being the case, petitioner could not be charged with embezzlement for failure to remit funds which he has not
collected. There was nothing to embezzle or remit because the customer made no payment yet. It may appear
from Official Receipt No. 303203 issued to Asanza that the October 15 delivery of products to her has been
paid; but as admitted by her, she has not paid for the said delivered products. The reason for petitioners
issuance of said official receipt to Asanza is the latters concurrent promise that she would immediately issue
the check covering the said amount, which she failed to do. Jonas Michael R. Garza v. Coca-Cola Bottlers
Phils., Inc., et al.,G.R. No. 180972. January 20, 2014
Grave abuse of discretion; concept of. Having established through substantial evidence that respondents injury
was self-inflicted and, hence, not compensable pursuant to Section 20 (D) of the 1996 POEA-SEC, no grave
abuse of discretion can be imputed against the NLRC in upholding LAs decision to dismiss respondents
complaint for disability benefits. It is well-settled that an act of a court or tribunal can only be considered to be
tainted with grave abuse of discretion when such act is done in a capricious or whimsical exercise of judgment
as is equivalent to lack of jurisdiction. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or
Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014
Illegal strike and illegal acts during the strike; distinction between union members and union officers in
determining when they lose their employment status. The Supreme Court stressed that the law makes a
distinction between union members and union officers. A union member who merely participates 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.
NAMA-MCCH-NFL is not a legitimate labor organization, thus, the strike staged by its leaders and members
was declared illegal. The union leaders who conducted the illegal strike despite knowledge that NAMA-
MCCH-NFL is not a duly registered labor union were declared to have been validly terminated by petitioner.
However, as to the respondents who were mere union members, it was not shown that they committed any
illegal act during the strike. The Labor Arbiter and the NLRC were one in finding that respondents actively
supported the concerted protest activities, signed the collective reply of union members manifesting that they
launched the mass actions to protest managements refusal to negotiate a new CBA, refused to appear in the
investigations scheduled by petitioner because it was the unions stand that they would only attend these
investigations as a group, and failed to heed petitioners final directive for them to desist from further taking
part in the illegal strike. The CA, on the other hand, found that respondents participation in the strike was
limited to the wearing of armbands. Since an ordinary striking worker cannot be dismissed for such mere
participation in the illegal strike, the CA correctly ruled that respondents were illegally dismissed. However,
the CA erred in awarding respondents full back wages and ordering their reinstatement despite the prevailing
circumstances. Visayas Community Medical Center (VCMC) formerly known as Metro Cebu Commnunity
Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156, January 15, 2014
Labor law; kinds of employment; casual employment; requisites. Casual employment, the third kind of
employment arrangement, refers to any other employment arrangement that does not fall under any of the first
two categories, i.e., regular or project/seasonal. Universal Robina Sugar Milling Corporation and Rene
Cabati, G.R. No. 186439. January 15, 2014.
Labor law; kinds of employment; fixed term employment; requisites. The Labor Code does not mention
another employment arrangement contractual or fixed term employment (or employment for a term) which,
if not for the fixed term, should fall under the category of regular employment in view of the nature of the
employees engagement, which is to perform an activity usually necessary or desirable in the employers
business.
In Brent School, Inc. v. Zamora (G.R. No. L-48494, February 5, 1990), the Court, for the first time,
recognized and resolved the anomaly created by a narrow and literal interpretation of Article 280 of the
Labor Code that appears to restrict the employees right to freely stipulate with his employer on the duration of
his engagement. In this case, the Court upheld the validity of the fixed-term employment agreed upon by
the employer, Brent School, Inc., and the employee, Dorotio Alegre, declaring that the restrictive clause in
Article 280 should be construed to refer to the substantive evil that the Code itself x x x singled out:
agreements entered into precisely to circumvent security of tenure. It should have no application to instances
where [the] fixed period of employment was agreed upon knowingly and voluntarily by the parties x x x
absent any x x x circumstances vitiating [the employees] consent, or where [the facts satisfactorily show] that
the employer and [the] employee dealt with each other on more or less equal terms[.] The indispensability or
desirability of the activity performed by the employee will not preclude the parties from entering into an
otherwise valid fixed term employment agreement; a definite period of employment does not essentially
contradict the nature of the employees duties as necessary and desirable to the usual business or trade of the
employer.
Nevertheless, where the circumstances evidently show that the employer imposed the period precisely
to preclude the employee from acquiring tenurial security, the law and this Court will not hesitate to strike
down or disregard the period as contrary to public policy, morals, etc. In such a case, the general restrictive
rule under Article 280 of the Labor Code will apply and the employee shall be deemed regular. Universal
Robina Sugar Milling Corporation and Rene Cabati,G.R. No. 186439. January 15, 2014.
Labor law; kinds of employment; nature of the employment depends on the nature of the activities to be
performed by the employee. 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, taking into account the
nature of the employers business, the duration and scope of work to be done, and, in some cases, even the
length of time of the performance and its continued existence. Universal Robina Sugar Milling Corporation
and Rene Cabati, G.R. No. 186439. January 15, 2014.
Labor law; kinds of employment; project employment; requisites; length of time not controlling. A 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[.] Two requirements, therefore, clearly need to be satisfied to remove the
engagement from the presumption of regularity of employment, namely: (1) designation of a specific project
or undertaking for which the employee is hired; and (2) clear determination of the completion or termination of
the project at the time of the employees engagement. 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. Unlike in a regular employment under Article 280 of the Labor Code, however, the length of
time of the asserted project employees engagement is not controlling as the employment may, in fact, last
for more than a year, depending on the needs or circumstances of the project. Nevertheless, this length of time
(or the continuous rehiring of the employee even after the cessation of the project) may serve as a badge of
regular employment when the activities performed by the purported project employee are necessary and
indispensable to the usual business or trade of the employer. In this latter case, the law will regard the
arrangement as regular employment. Universal Robina Sugar Milling Corporation and Rene Cabati,G.R. No.
186439. January 15, 2014.
Labor law; kinds of employment; regular employment; requisites. 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[.] Under this definition, the primary
standard that determines regular employment is the reasonable connection between the particular activity
performed by the employee and the usual business or trade of the employer; the emphasis is on the
necessity or desirability of the employees activity. Thus, when the employee performs activities considered
necessary and desirable to the overall business scheme of the employer, the law regards the employee as
regular.
By way of an exception, paragraph 2, Article 280 of the Labor Code also considers as regular, a casual
employment arrangement when the casual employees engagement is made to last for at least one year,
whether the service is continuous or broken. The controlling test in this arrangement is the length of time
during which the employee is engaged. Universal Robina Sugar Milling Corporation and Rene Cabati, G.R.
No. 186439. January 15, 2014.
Labor law; kinds of employment; seasonal employment; requisites. Seasonal employment operates much in
the same way as project employment, albeit it involves work or service that is seasonal in nature or lasting
for the duration of the season. As with project employment, although the seasonal employment
arrangement involves work that is seasonal or periodic in nature, the employment itself is not automatically
considered seasonal so as to prevent the employee from attaining regular status. To exclude the asserted
seasonal employee from those classified as regular employees, the employer must show that: (1) the
employee must be performing work or services that are seasonal in nature; and (2) he had been employed for
the duration of the season. Hence, when the seasonal workers are continuously and repeatedly hired to
perform the same tasks or activities for several seasons or even after the cessation of the season, this length of
time may likewise serve as badge of regular employment. In fact, even though denominated as seasonal
workers, if these workers are called to work from time to time and are only temporarily laid off during the
off-season, the law does not consider them separated from the service during the off-season period. The law
simply considers these seasonal workers on leave until re-employed. Universal Robina Sugar Milling
Corporation and Rene Cabati, G.R. No. 186439. January 15, 2014.
Overseas employment; that the entitlement of seamen on overseas work to disability benefits is a matter
governed, not only by medical findings, but by law and by contract. With respect to the applicable rules, it is
doctrinal that the entitlement of seamen on overseas work to disability benefits is a matter governed, not only
by medical findings, but by law and by contract. The material statutory provisions are Articles 191 to 193
under Chapter VI (Disability Benefits) of the Labor Code, in relation [to] Rule X of the Rules and Regulations
Implementing Book IV of the Labor Code. By contract, the POEA-SEC, as provided under Department Order
No. 4, series of 2000 of the Department of Labor and Employment, and the parties Collective Bargaining
Agreement bind the seaman and his employer to each other.
In the foregoing light, the Court observes that respondent executed his contract of employment on July 17,
2000, incorporating therein the terms and conditions of the 2000 POEA-SEC which took effect on June 25,
2000. However, since the implementation of the provisions of the foregoing 2000 POEA-SEC was temporarily
suspended by the Court on September 11, 2000, particularly Section 20, paragraphs (A), (B), and (D) thereof,
and was lifted only on June 5, 2002, through POEA Memorandum Circular No. 2, series of 2002, the
determination of respondents entitlement to the disability benefits should be resolved under the provisions of
the 1996 POEA-SEC as it was, effectively, the governing circular at the time respondents employment
contract was executed. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient
Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014
Payment of separation pay as alternative relief for union members who were dismissed for having participated
in an illegal strike is in lieu of reinstatement; circumstances when applicable. The alternative relief for union
members who were dismissed for having participated in an illegal strike is the payment of separation pay in
lieu of reinstatement under the following circumstances: (a) when reinstatement can no longer be effected in
view of the passage of a long period of time or because of the realities of the situation; (b) reinstatement is
inimical to the employers interest; (c) reinstatement is no longer feasible; (d) reinstatement does not serve the
best interests of the parties involved; (e) the employer is prejudiced by the workers continued employment; (f)
facts that make execution unjust or inequitable have supervened; or (g) strained relations between the employer
and employee.
The Court ruled that the grant of separation pay to respondents is the appropriate relief under the circumstances
considering that 15 years had lapsed from the onset of this labor dispute, and in view of strained relations that
ensued, in addition to the reality of replacements already hired by the hospital which had apparently recovered
from its huge losses, and with many of the petitioners either employed elsewhere, already old and sickly, or
otherwise incapacitated. Visayas Community Medical Center (VCMC) formerly known as Metro Cebu
Commnunity Hospital (MCCH) v. Erma Yballe, et al.,G.R. No. 196156, January 15, 2014
Rule 45; only questions of law are allowed in a petition for review on certiorari . It is a settled rule in this
jurisdiction that only questions of law are allowed in a petition for review on certiorari. The Courts power of
review in a Rule 45 petition is limited to resolving matters pertaining to any perceived legal errors, which the
CA may have committed in issuing the assailed decision. In reviewing the legal correctness of the CAs Rule
65 decision in a labor case, the Court examines the CA decision in the context that it determined whether or not
there is grave abuse of discretion in the NLRC decision subject of its review and not on the basis of whether
the NLRC decision on the merits of the case was correct. Universal Robina Sugar Milling Corporation and
Rene Cabati, G.R. No. 186439. January 15, 2014.
Rule 45; the Courts jurisdiction in a Rule 45 petition is limited to the review of pure questions of law;
exceptions. The Courts jurisdiction in cases brought before it from the CA via Rule 45 of the Rules of Court is
generally limited to reviewing errors of law. The Court is not the proper venue to consider a factual issue as it
is not a trier of facts. This rule, however, is not ironclad and a departure therefrom may be warranted where the
findings of fact of the CA are contrary to the findings and conclusions of the NLRC and LA, as in this case. In
this regard, there is therefore a need to review the records to determine which of them should be preferred as
more conformable to evidentiary facts. INC Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or
Interorient Navigation Limited v. Alexander L. Moradas,G.R. No., January 15, 2014.
Section 20 (B) of the 1996 POEA-SEC; an employer shall be liable for the injury or illness suffered by a
seafarer during the term of his contract; exception. 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. To be compensable, the injury or illness
must be proven to have been contracted during the term of the contract. However, the employer may be exempt
from liability if he can successfully prove that the cause of the seamans 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.
Hence, the onus probandi falls on the petitioners herein to establish or substantiate their claim that the
respondents injury was caused by his willful act with the requisite quantum of evidence.INC
Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L.
Moradas,G.R. No., January 15, 2014
Substantial evidence; concept of. In labor cases, as in other administrative proceedings, only substantial
evidence or such relevant evidence as a reasonable mind might accept as sufficient to support a conclusion is
required. To note, considering that substantial evidence is an evidentiary threshold, the Court, on exceptional
cases, may assess the factual determinations made by the NLRC in a particular case.
The Court ruled that NLRC had cogent legal bases to conclude that petitioners have successfully discharged
the burden of proving by substantial evidence that respondents injury was directly attributable to himself.
Records bear out circumstances which all lead to the reasonable conclusion that respondent was responsible for
the flooding and burning incidents. While respondent contended that the affidavits and statements of the
vessels officers and his fellow crew members should not be given probative value as they were biased, self-
serving, and mere hearsay, he nonetheless failed to present any evidence to substantiate his own theory.
Besides, as correctly pointed out by the NLRC, the corroborating affidavits and statements of the
vessels officers and crew members must be taken as a whole and cannot just be perfunctorily dismissed as
self-serving absent any showing that they were lying when they made the statements therein. INC
Shipmanagement, Inc. Captain Sigfredo E. Monterroyo and/or Interorient Navigation Limited v. Alexander L.
Moradas,G.R. No., January 15, 2014