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Topic/Syllabus Abandonment; elements.

Salient Discussion Respondents filed an illegal dismissal case against the petitioner-corporation. For its defense, petitionercorporation 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-emmployee 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. 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.

Apprenticeship agreement; validity.

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.

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.

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.

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.

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.

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.

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. 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.

Dismissal; neglect of duty.

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.

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.

Employer-employee relationship; jeepney driver.

It is already settled that the relationship between jeepney 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.

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. 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.

Employer-employee relationship; probationary employment.

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.

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.

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.

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. 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. 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.

Jurisdiction; labor arbiter.

Jurisdiction; labor dispute.

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 for certiorari 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.

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.

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.

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.

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.

Union registration; cancellation.

Wages; payment pending reinstatement.

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. 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.

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.

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 13th 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. The onus 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.

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.

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.

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.

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.

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.

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.

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.

Illegal dismissal; redundancy.

Labor Union; collateral attack on legal personality.

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. 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.

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 petitionercorporation 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 petitionercorporation 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.

National Labor Relations Commission; jurisdiction.

Placement Fee; proof of excessive collection.

Procedural due process; notice requirements.

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. 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 quasijudicial 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. 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.

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.

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.

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 of P52,904,297.88 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.

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.

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. 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. 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.

Corporate officer; solidary liability.

Labor organization; collateral attack on legal personality.

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.

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.

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.

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.

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. 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.

Termination by employer; willful disobedience.

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. 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.

Wages; proof of payment.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

Dismissal; constructive dismissal.

Dismissal; elements for loss of trust or confidence.

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 reassignment 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. 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.

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.

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. 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.

Dismissal; separation pay due to disease.

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.

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.

Labor-only contracting v. independent job contracting.

Labor strikes; liability of union officers and participating workers.

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. 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.

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.

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.

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.

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.

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.

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.

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.

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.

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 sentenciador free from the direction and control of respondents.

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.

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 facie evidence of the facts stated therein and is therefore presumed to be truthful, because Ochoa did not present any plausible proof to rebut its truthfulness

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.

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.

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.

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.

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.

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.

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.

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.

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.

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. Selfserving 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.

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. 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 petitionerreferee 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.

Employee; existence of employer-employee relationship.

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.

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.

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.

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.

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 HiFlyer. 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 HiFlyer 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.

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.

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.

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.

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. For a transfer not to be considered a constructive dismissal, the employer must be able to show that the transfer is for a valid reason, entails no diminution in the terms and conditions of employment, and must not be unreasonably inconvenient or prejudicial to the employee. If the employer fails to meet these standards, the employees transfer shall amount, at the very least, to constructive dismissal. In this case, the Supreme Court found that the real reason Menese was transferred from being the agencys payroll and billing clerk of the PGH detachment to being a lady guard in the agencys main office, was because of the request of Dapula, the new chief of the UP-PGH Security Division. The latters request was based on the fact that she had committed the previous position of Menese to a certain Amy Claro, a protge of Dapula. Thus, the Supreme Court found justification for Meneses refusal to be transferred. Not only was the transfer arbitrary and done in bad faith, it would also result in a demotion in rank and a diminution in pay: (1) she would hold the position of lady guard and (2) she would be paid in accordance with the statutory minimum wage, or from P11,720.00 to P7,500.00. Clearly, there was a demotion in rank and salary undertaken in bad faith amounting to constructive dismissal.

Dismissal; constructive dismissal.

Dismissal; illegal.

Resignation is defined as the voluntary act of employees who are compelled by personal reasons to disassociate themselves from their employment. It must be done with the intention of relinquishing an office, accompanied by the act of abandonment. In this case, the evidence on record suggested that petitioner did not resign; he was orally dismissed by Sy. The crucial factor is the verbal order directly given by Sy, the company president, for petitioner to immediately turn over his accountabilities. It is this lack of clear, valid and legal cause, not to mention due process that made his dismissal illegal, warranting reinstatement and the award of backwages. Moreover, the filing of a complaint for illegal dismissal just three weeks later is difficult to reconcile with voluntary resignation. Had petitioner intended to voluntarily relinquish his employment after being unceremoniously dismissed by no less than the company president, he would not have sought redress from the NLRC and vigorously pursued this case against the respondents.

Employee; death benefits.

The death of a seaman during the term of employment makes the employer liable to his heirs for death compensation benefits. This rule, however, is not absolute. The employer may be exempt from liability if he can successfully prove that the seamans death was caused by an injury directly attributable to his deliberate or willful act. The Supreme Court agreed that Danilo died of Asphyxia by strangulation as proved by the NBI post-mortem findings and certification issued by the medico-legal officer, Dr. Reyes. The photocopy of the fax transmission of the purported English translation of Dr. Hameeds medical report to prove that Danilo committed suicide should not be considered since the medical reports genuineness and due execution were unverifiable: (1) the existence of the original medical report, which was written in the arabic language, was not even attached to the records and has not been proved; (2) the identity of the person who made the translation and whether the translator has the recognized competence in both English and the language the medical report was originally written were not established; (3) the alleged translated medical report was not even signed by Dr. Hameed which creates doubt as to its authenticity. The unsigned translated medical report is nothing but a self-serving document which ought to be treated as a mere scrap of paper devoid of any evidentiary value even in administrative proceedings.

Employee benefits; entitlement to retirement benefits.

A separation pay at the time of the reorganization of the National Power Corporation and retirement benefits at the appropriate future time are two separate and distinct entitlements. Stated otherwise, a retirement plan is a different program from a separation package. In R.A. No. 1616, the retirees are entitled to gratuity benefits to be paid by the last employer and refund of premiums to be paid by the GSIS. On the other hand, retirement benefits under C.A. No. 186, as amended by R.A. No. 8291, are to be paid by the GSIS. In view of the fact that separation pay and retirement benefits are different entitlements, as they have different legal bases, different sources of funds, and different intents, the exclusiveness of benefits rule provided under R.A. No. 8291 is not applicable. (Section 55 of R.A. No. 8291 states: Whenever other laws provide similar benefits for the same contingencies covered by this Act, the member who qualifies to the benefits shall have the option to choose which benefits will be paid to him.)

Employee; overtime pay.

A claim for overtime pay will not be granted in the absence of any factual and legal basis. In this respect, the records indicated that the labor arbiter granted Meneses claim for holiday pay, rest day and premium pay on the basis of payrolls. There is no such proof in support of Meneses claim for overtime pay other than her contention that she worked from 8:00 a.m. up to 5:00 p.m. She presented no evidence to show that she was working during the entire one hour meal break. The Supreme Court thus found the NLRCs deletion of the overtime pay award in order.

Employee; permanent disability benefits.

Permanent disability refers to the inability of a worker to perform his job for more than 120 days, regardless of whether he loses the use of any part of his body. What determines petitioners entitlement to permanent disability benefits is his inability to work for more than 120 days. The certification by the companydesignated physician that petitioner is fit to work was issued after 199 days or more than 120 days from the time he was medically repatriated to the Philippines. Petitioner herein was medically repatriated to the Philippines on October 8, 2001. However, it was only on April 25, 2002 or after a lapse of 199 days that Dr. Cruz issued a certification declaring him fit to work. Thus, the Supreme Court found that petitioners disability is considered permanent and total because the fit to work certification was issued by Dr. Cruz only on April 25, 2002, or more than 120 days after he was medically repatriated on October 8, 2001. Furthermore, the company-designated physicians certification that petitioner is fit to work does not make him ineligible for permanent total disability benefits. It does not matter that the company-designated physician assessed petitioner as fit to work. It is undisputed that from the time petitioner was repatriated on October 8, 2001, he was unable to work for more than 120 days as he was only certified fit to work on April 25, 2002. Consequently, petitioners disability is considered permanent and total.

GSIS; retirement plan.

Section 41(n) of Republic Act No. 8291 contemplates a situation wherein GSIS, due to a reorganization, a streamlining of its organization, or some other circumstance, which calls for the termination of some of its employees, must design a plan to encourage, induce, or motivate these employees, who are not yet qualified for either optional or compulsory retirement under our laws, to instead voluntarily retire. Such is not the case with the GSIS RFP. Its very objective, to motivate and reward employees for meritorious, faithful, and satisfactory service, contradicts the nature of an early retirement incentive plan, or a financial assistance plan, which involves a substantial amount that is given to motivate employees to retire early. Instead, it falls exactly within the purpose of a retirement benefit, which is a form of reward for an employees loyalty and lengthy service, in order to help him or her enjoy the remaining years of his life. Without a doubt, the GSIS RFP is a supplementary retirement plan, which is prohibited by the Teves Retirement Law.

Strike; illegal strike.

There is no question that the May 6, 2002 strike was illegal, first, because when Kilusang Manggagawa ng LGS, Magdala Multipurpose and Livelihood Cooperative (KMLMS) filed the notice of strike on March 5 or 14, 2002, it had not yet acquired legal personality and, thus, could not legally represent the eventual union and its members. And second, similarly, when KMLMS conducted the strike-vote on April 8, 2002, there was still no union to speak of, since KMLMS only acquired legal personality as an independent legitimate labor organization only on April 9, 2002 or the day after it conducted the strike-vote. Consequently, the mandatory notice of strike and the conduct of the strike-vote report were ineffective for having been filed and conducted before KMLMS acquired legal personality as a legitimate labor organization, violating Art. 263(c), (d) and (f) of the Labor Code and Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code. It is, thus, clear that KMLMS did not comply with the mandatory requirement of law and implementing rules on possession of a legal personality as a legitimate labor organization.

Union shop; new employees.

May a corporation invoke its merger with another corporation as a valid ground to exempt its absorbed employees from the coverage of a union shop clause contained in its existing Collective Bargaining Agreement (CBA) with its own certified labor union? The Supreme Court ruled in the negative. The former FEBTC employees retained the regular status that they possessed while working for their former employer upon their absorption by petitioner BPI. This fact would not remove them from the scope of the phrase new employees as contemplated in the Union Shop Clause of the CBA. The Union Shop Clause in the CBA simply states that new employees who during the effectivity of the CBA may be regularly employed by the Bank must join the union within thirty (30) days from their regularization. The plain language of the CBA provision notwithstanding, the SC held that there is nothing in the said clause that limits its application to only new employees who possess non-regular status, meaning probationary status, at the start of their employment. What is indubitable from the Union Shop Clause is that upon the effectivity of the CBA, petitioners new regular employees (regardless of the manner by which they became employees of BPI) are required to join the Union as a condition of their continued employment.

NLRC; Certiorari.

A writ of certiorari is a remedy to correct errors of jurisdiction, for which reason it must clearly show that the public respondent has no jurisdiction to issue an order or to render a decision. Rule 65 of the Rules of Court has instituted the petition for certiorari to correct acts of any tribunal, board or officer exercising judicial or quasi-judicial functions with grave abuse of discretion amounting to lack or excess of jurisdiction. This remedy serves as a check on acts, either of excess or passivity, that constitute grave abuse of discretion of a judicial or quasi-judicial function. In this case, the SC found that the CA proceeded to review the records and to rule on issues that were no longer disputed during the appeal to the NLRC, such as the existence of an employer-employee relationship. The pivotal issue before the NLRC was whether petitioners telling respondent to take a rest, or to have a break, was already a positive act of dismissing him. This issue was not discussed by the CA. The SC reviewed the NLRC Resolution that reversed the LA Decision and found nothing in it that was whimsical, unreasonable or patently violative of the law. It was the CA which erred in finding faults that were inexistent in the NLRC Resolution.

NLRC; motion for reconsideration.

Award of attorneys fees; concepts.

On the issue of the propriety of entertaining the Petition for Certiorari despite the prescribed Motion for Reconsideration with the NLRC, the SC found that the CA committed error when it entertained the petition for certiorari and explained that when respondent failed to file a Motion for Reconsideration of the NLRCs 30 November 2006 Resolution within the reglementary period, the Resolution attained finality and could no longer be modified by the Court of Appeals. Untimeliness in filing motions or petitions is not a mere technical or procedural defect, as leniency regarding this requirement will impinge on the right of the winning litigant to peace of mind resulting from the laying to rest of the controversy. 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.

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.

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.

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.

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 overappraised 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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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 preterminated their contracts.

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.

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. 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.

Employee dismissal; constructive dismissal.

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 coemployees, 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.

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.

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.

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. 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.

Employee dismissal; just cause.

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.

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 employeremployee 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.

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.

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.

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.

Forum shopping; elements; res judicata.

Jurisdiction; NLRC.

Termination; effect if procedural due process not followed but with valid cause

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. It is clear from the NLRC Rules of Procedure that appeals must be verified and certified against forumshopping 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. 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.

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.

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.

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. 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.

Labor; public prosecutors decision not binding on the labor tribunal.

Labor; regular employee; fixedcontract 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. 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.

Labor Code; maximum award of attorneys fees in cases of recovery of wages.

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.

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.

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.

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.

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.

Probationary employee; valid dismissal even before 6 months.

Procedural rules; liberal application.

Reinstatement; backwages.

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. 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. 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.

Reinstatement; doctrine of strained relations; when applicable.

Seafarers; employment contract; perfection stage vs. commencement stage.

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. 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.

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.

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.

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 nonviolation 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.

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.

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.

Jurisdiction; power of the DOLE to determine the existence of employeremployee 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.

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.

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.