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Faculty of Civil Law

Digest Pool 2010


ARELLANO UNIVERSITY EMPLOYEES AND WORKERS UNION, et al. v.
COURT OF APPEALS, et al.
502 SCRA 219 (2006), THIRD DIVISION (Carpio Morales, J.)

An ordinary striking worker may not be declared to have lost his employment status by mere participation in an
illegal strike.

The Arellano University Employees and Workers Union (the Union), the exclusive bargaining
representative of about 380 rank-and-file employees of Arellano University, Inc. (the University), filed
with the National Conciliation and Mediation Board (NCMB) a Notice of Strike charging the University
with Unfair Labor Practice (ULP). After several controversies and petitions, a strike was staged.

Upon the lifting of the strike, the University filed a Petition to Declare the Strike Illegal before
the National Labor Relations Commission (NLRC). The NLRC issued a Resolution holding that the
University was not guilty of ULP. Consequently, the strike was declared illegal. All the employees who
participated in the illegal strike were thereafter declared to have lost their employment status.

ISSUE:

Whether or not an employee is deemed to have lost his employment by mere participation in an
illegal strike

HELD:

Under Article 264 of the Labor Code, an ordinary striking worker may not be declared to have
lost his employment status by mere participation in an illegal strike. There must be proof that he
knowingly participated in the commission of illegal acts during the strike. While the University adduced
photographs showing strikers picketing outside the university premises, it failed to identify who they
were. It thus failed to meet the substantiality of evidence test applicable in dismissal cases.

With respect to the union officers, as already discussed, their mere participation in the illegal
strike warrants their dismissal.

Faculty of Civil Law
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ASIA PACIFIC CHARTERING (PHILS.) INC. v. MARIA LINDA R. FAROLAN
393 SCRA 454 (2002), THIRD DIVISION (Carpio Morales, J.)

The termination of a managerial employee on the ground of loss of confidence should have a basis and the
determination of the same cannot be left entirely to the employer.

Petitioner Asia Pacific Chartering (Phils.) Inc. (Asia) is tasked with the selling of passenger and
cargo spaces for Scandinavian Airlines System. Petitioner Asia, through its Vice President Catalino
Bondoc (Bondoc), offered Respondent Maria Linda R. Farolan (Farolan) the sales manager position to
which Farolan accepted.

Upon Vice President Bondocs request, Farolan submitted a detailed report attributing the drop
of sales revenue to market forces beyond her control. Consequently, Asia directed Roberto Zozobrado
(Zozobrado) to implement solutions. Zozobrado informally took over Farolans marketing and sales
responsibilities but she continued to receive her salary. Asia claims that the increase in sales revenue was
due to Zozobrados management.

Asia then sent a letter of termination to Farolan on the ground of loss of confidence, forcing
Farolan to file a complaint for illegal dismissal. The Labor Arbiter found that the dismissal was illegal for
lack of just cause, however, such decision was reversed by the National Labor Relations Commission
(NLRC) stating that the termination of employment due to loss of confidence is within management
prerogative. On appeal, the Court of Appeals upheld the labor arbiters decision. Hence, the filing of this
petition.

ISSUE:
Whether or not Respondent Farolans dismissal was illegal

HELD:

A statement of the requisites for a valid dismissal of an employee is thus in order, to wit: (a) the
employee must be afforded due process, i.e., he must be given opportunity to be heard and to defend
himself; and (b) dismissal must be for a valid cause. The manner by which Respondent Farolan was
dismissed violated the basic precepts of fairness and due process - Respondent Farolan was dismissed,
without being afforded the opportunity to be heard and to present evidence in her defense. She was
never given a written notice stating the particular acts or omission constituting the grounds for her
dismissal as required by law.

With respect to rank and file personnel, loss of trust and confidence as ground for valid
dismissal requires proof of involvement in the alleged events in question and that mere uncorroborated
assertions and accusations by the employer will not be sufficient. But as regards a managerial employee,
mere existence of a basis for believing that such employee has breached the trust of his employer would
suffice for his dismissal. Loss of trust and confidence to be a valid ground for an employees dismissal
must be based on a willful breach and founded on clearly established facts. A breach is willful if it is
done intentionally, knowingly and purposely, without justifiable excuse.

It is not disputed that Farolans job description, and the terms and conditions of her
employment, with the exception of her salary and allowances, were never reduced to writing. Even
assuming, however, that Farolan was a managerial employee, the stated ground (in the letter of
termination) for her dismissal, loss of confidence, should have a basis and determination thereof
cannot be left entirely to the employer.

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BACOLOD-TALISAY REALTY AND DEVELOPMENT CORPORATION, et al.
v. ROMEO DELA CRUZ
587 SCRA 304 (2009), SECOND DIVISION (Carpio Morales, J.)

The twin notice requirement provided by law should be observed in order for a dismissal to be valid.

Romeo dela Cruz (respondent) is an employee of Bacolod-Talisay Realty Development
Corporation (Bacolod-Talisay) as an overseer. He was suspended for 30 days for payroll paddling, selling
canepoints without the knowledge and consent of management and misappropriating the proceeds
thereof, and renting out tractor for use in another farm. After 30 days, he received a letter informing him
that he was dismissed from his work.

Respondent dela Cruz and Bacolod-Talisay had a confrontation before the barangay council but
they did not reach any settlement. A case for illegal dismissal was filed by dela Cruz, and it was dismissed
by the Labor Arbiter as well as the NLRC. On the other hand, the Court of Appeals reversed the
decision of the NLRC finding that the Bacolor-Dalisay did not comply with the guidelines for the
dismissal of an employee.

ISSUE:

Whether or not petitioner, Bacolod-Talisay observed due process in dismissing Romeo dela Cruz

HELD:

The Court of Appeals correctly held though that Bacolod-Talisay did not comply with the proper
procedure in dismissing respondent. In other words, Bacolod-Talisay failed to afford dela Cruz due process
by failing to comply with the twin notice requirement in dismissing him, viz: 1) a first notice to apprise him
of his fault, and 2) a second notice to him that his employment is being terminated.

The letter dated June 3, 1997 sent to dela Cruz was a letter of suspension. It did not comply with the
required first notice, the purpose of which is to apprise the employee of the cause for termination and to give
him reasonable opportunity to explain his side.

In fine, while the dismissal of dela Cruz was for a just cause, the procedure in effecting the same was
not observed.

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BILFLEX PHIL. INC. LABOR UNION et al. v. FILFLEX INDUSTRIAL AND
MANUFACTURING CORPORATION AND BILFLEX (PHILS.), INC.
511 SCRA 247 (2006), THIRD DIVISION (Carpio Morales, J.)

Any union officer who knowingly participates in an illegal strike and any worker or union who knowingly
participates in the commission of illegal acts during a strike may be declared to have lost his employment status.
Biflex Philippines Inc. Labor Union and Filflex Industrial and Manufacturing Labor Union are
the respective collective bargaining agents of the employees of the sister companies Biflex and Filflex
which are engaged in the garment business. They are situated in one big compound and they have a
common entrance.
On October 24, 1990, the labor sector staged a welga ng bayan to protest against oil price hike; the
unions staged a work stoppage which lasted for several days, prompting the companies to file a petition
to declare the work stoppage illegal for failure to comply with procedural requirements.
The Labor Arbiter held that the strike is illegal and declared the officers of the union to have lost
their employment status.
ISSUE:
Whether or not the staged strike is illegal and a ground for the lost of employment status of the
union officers
HELD:
Article 264 (a) of the Labor Code states that any union officer who knowingly participates in an
illegal strike and any worker or union who knowingly participates in the commission of illegal acts
during a strike may be declared to have lost his employment status.
Thus, a union officer may be declared to have lost his employment status if he knowingly
participates in an illegal strike and in this case, the strike is declared illegal by the court because the means
employed by the union are illegal.
Here, the unions blocked the egress and ingress of the company premises thus, a violation of
Article 264 (e) of the Labor Code which would affect the strike as illegal even if assuming arguendo that
the unions had complied with legal formalities and thus, the termination of the employees was valid.
The court said that the legality of a strike is determined not only by compliance with its legal
formalities but also by means by which it is carried out.

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CABALEN MANAGEMENT CO., INC., et al. v. JESUS P. QUIAMBAO, et al.
528 SCRA 153 (2007), SECOND DIVISION (Carpio Morales, J.)

It is a well-established rule that the employer has the burden of proving a valid dismissal of an employee, for which
it must be for a just or authorized cause and with due process.

Jesus Quiambao, et al. were charged of tip pocketing and swapping of dining order slips with bar
order slips, among others. They were dismissed from employment due to said acts. They filed a case
against Cabalen Management Co., Inc. (Cabalen) for illegal dismissal but the decision of the Labor
Arbiter and the National Labor Relations Commission was in favor of Cabalen. Quiambao, et al. elevated
the case to the Court of Appeals and the CA ruled otherwise. Cabalen sought to set aside the decision of
the CA which reversed the earlier rulings provided for by the Labor Arbiter and the NLRC. They also
questioned the Resolution given by CA which denied their Motion for Reconsideration.

The assailed CA decision held that except for respondents Vizier Inocencio and Vincent Edward
Mapa whose petitions were dismissed pursuant to Section 5, Rule 7 of the Rules of the Rules of Court
and Section 4 (a) of the Rules of Procedure of the NLRC, herein Quiambao, et al. were illegally dismissed
from their employment. The Supreme Court affirmed the CA decision, hence, Cabalens Motion for
Reconsideration became subject of this Resolution. To the Motion, Quiambao, et al. filed their
Opposition.

ISSUES:

Whether or not Quiambao, et al. were illegally dismissed

HELD:

It is a well-established rule that the employer has the burden of proving a valid dismissal of an
employee, for which two requisites must concur: (a) the dismissal must be for any of the causes
expressed in the Labor Code; and (b) the employee must be accorded due process, basic of which is the
opportunity to be heard and to defend himself.

To establish a just or authorized cause for dismissal, substantial evidence or "such amount of
relevant evidence which a reasonable mind might accept as adequate to justify a conclusion" is required.
Further required is that an employee sought to be dismissed must be served two written notices before
the termination of his employment. The first notice must appraise him of the particular acts or omissions
upon which his dismissal is grounded; the second, to inform him of the employers decision to terminate
his employment. While the failure of the employer to comply with these notice requirements does not
make the dismissal illegal as long as a just or authorized cause has been proved, it renders the employer
liable for payment of damages because of the violation of the workers right to statutory due process.

In the instant case, only photocopies of the statements of Balen and Malana form part of the
records despite Cabalens reliance thereon to prove respondents purported transgressions. Jarcia
Machine Shop and Auto Supply, Inc. v. NLRC held that the unsigned photocopies of daily time records
(DTRs), which were presented by the therein employer to show that its employee was neglectful of his
duties, were of "doubtful or dubious probative value."

Cabalen, et al. did not even heed their own procedures on disciplinary actions. The only facts
extant in the records are that respondents were issued above-said Corrective Action Report (CARE)
Forms asking them to explain their alleged infractions within 48 hours; and they subsequently received

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notices of dismissal after they submitted their written explanations. There is, however,
nothing to show that before their dismissal, Quimbao, et al. were informed of their
immediate supervisors decision to terminate their services, or that they were thereafter invited to an
administrative investigation before the HRD manager or officer who is tasked to conduct the
investigation in the presence of the employees immediate supervisor/s and the witnesses, if necessary, as
provided under Section IV of the companys Code of Conduct.

No record of any administrative investigation proceeding, which under the companys rules was
to be "minuted," had also been presented. Hence, only Cabalens allegation that the statements of the
witnesses were taken as part of the administrative investigation is before this Court. Allegations without
proof do not deserve consideration.

Finally, on the dismissal of Quiambao allegedly on the ground of business losses, it was
incumbent upon Cabe to len, et al. to prove it by substantial evidence. It did not, however. In fact,
Quiambao presented documents to disprove the validity of his retrenchment on that ground. For
petitioners failure to discharge its burden then, this Court is constrained to hold that Quiambaos
dismissal was not valid.


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CAPITOL WIRELESS, INC. v. CARLOS ANTONIO BALAGOT
513 SCRA 672 (2007), SECOND DIVISION (Carpio Morales, J.)

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

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CHUAYUCO STEEL MANUFACTURING CORPORATION AND/OR EDWIN
CHUA v. BUKLOD NG MANGGAGAWA SA CHUAYUCO
STEEL MANUFACTURING CORPORATION
513 SCRA 621 (2007), SECOND DIVISION, (Carpio Morales, J.)

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

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CITIBANK N.A. v. NATIONAL LABOR RELATIONS COMMISSION and
ROSITA TAN PARAGAS
563 SCRA 87 (2008), SECOND DIVISION, (Carpio Morales, J.)

The general prayer of other reliefs is applicable only to such other reliefs warranted by law and facts.

Rosita Tan Paragas (Paragas) worked as a filing clerk of Citibank, N.A. (Citibank) for eighteen
(18) years. She was terminated by Citibank for serious misconduct, willful disobedience, gross and
habitual neglect of duties and gross inefficiency. Paragas filed a complaint for illegal dismissal which was
dismissed for lack of merit, finding that the dismissal on the ground of work inefficiency was valid. The
National Labor Relations Commission (NLRC) affirmed the decision of the Labor Arbiter with the
modification that Paragas should be paid separation pay as a form of equitable relief in view of her
length of service with Citibank.

Paragas filed a Motion for Partial Reconsideration of the NLRC Resolution. She no longer
challenged her dismissal on the ground of work inefficiency, but prayed that Citibank be ordered to pay
her the Provident Fund benefits under its retirement plan for which she claimed to be qualified pursuant
to Citibanks Working Together Manual. The said manual provides that an employee discharged for
reasons other the misconduct will be paid a percentage of her share in the Fund.

Finding that Paragas dismissal was for causes other than misconduct, the NLRC granted
Paragas Motion. On appeal, the Court of Appeals dismissed the petition for lack of merit and
affirmed in toto the challenged NLRC Resolution.

ISSUE:

Whether or not the CA erred in affirming the NLRCs decision despite the latters lack of
authority to pass upon and resolve issues and grant claims not pleaded and proved before the Labor
Arbiter

HELD:

Paragas indeed prayed for "other just and equitable relief," but the same may not be interpreted so
broadly as to include even those which are not warranted by the factual premises alleged by a party. Thus
the January 24, 2003 Decision of the Court of Appeals correctly stated: "It has been ruled in this
jurisdiction that the general prayer for 'other reliefs' is applicable to such other reliefs which are
warranted by the law and facts alleged by the respondent in her basic pleadings and not on a newly
created issue."

Paragas assertion that she mentioned the matter regarding the Provident Fund even prior to her Motion
for Partial Reconsideration on page 14 of her position paper and again on pages 2 and 7 of her
"Notice of Appeal and Appeal Memorandum" is unavailing.

Her "Notice of Appeal and Appeal Memorandum" was filed after she had already submitted her position
paper. Thus, any mention of the Provident Fund therein would fail to adhere to the above-ruling in
Maebo, the thrust of which was precisely that all facts, evidence, and causes of action should already be
proffered in the position papers and the supporting documents thereto, not in any later pleading.

As to Paragas position paper, there was only the mere mention of "Provident A & C," with the
corresponding amount of P1,086,335.43, among the actual damages that she was allegedly suffering from

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her continued severance from employment. Paragas made no attempt to define what this
"Provident A & C" was, nor offer any substantiation for including it to be among her
actual damages. She did not even hint how "Provident A & C" had a bearing on retirement benefits.
Thus, while Paragas did refer to the Provident Fund in her position paper, such reference was too vague
to be a basis for any court or administrative body to grant her retirement benefits.

Paragas justifies her failure to claim for retirement benefits before the labor arbiter by alleging that it
would be inconsistent with her prayer for reinstatement. Paragas, however, could have easily claimed
such benefits as an alternative relief.

In any event, Paragas is not entitled to retirement benefits as this Court finds that she was validly
dismissed for serious misconduct and not merely for work inefficiency.


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DYNO NOBEL PHILIPPINES, INC. v. DWPI SUPERVISORY UNION
535 SCRA 466 (2007), SECOND DIVISION (CARPIO MORALES, J.)

When a Collective Bargaining Agreement provides for a mandated increase in salary, which was voluntarily agreed
upon by the parties, the same shall be complied with.

Edgar Ausejo (Ausejo) was hired by Dyno Noble Philippines, Inc. (DYNO-NOBEL) as a Store
Clerk. Having joined the DWPI Union (DWPIU) of the rank and file, his salary was increased by P500
per month effective January 1, 1996. Ausejo was then promoted to the position of General Stores
Supervisor. As per company and union regulations Ausejo ceased to be a member of the rank and file
union and joined the DWPI Supervisory Union (DWPSU). At the same time, DYNO-NOBEL started its
Salary Scaling Program which was intended to structure and align the salary scales of its employees.
Ausejo was evaluated to have no increase as per union regulations.

Ausejo and his former union filed a request for increase in salary to DYNO-NOBEL. Ausejo and
DWPIU invoked the provisions of the Collective Bargaining Agreement (CBA), contending that he is
entitled to a mandated increase of P1,150. In its reply, DYNO-NOBEL denied the motion contending
that Ausejo is not anymore a member of the rank and file union. DYNO-NOBEL also contended that
the increase in salary of Ausejo was reflected in his higher salary as a General Stores Supervisor.

ISSUES:
Whether or not the mandated increase of P1,150 under the CBA forged by DWPIU was already
integrated into the salary of Ausejo when he assumed the position of General Stores Supervisor

HELD:
An examination of Ausejos Position Paper shows that he, just like the two other supervisors,
received the same monthly salary for the year 1997 and 1998. Logically, in accordance with the 1996
CBA, for the year 1997, an increase of P1,050 was added to the salary of each of the three, to thereby
amount to a total salary.

Clearly, the Salary Scaling Program implemented by DYNO-NOBEL was primarily intended "to
restructure and align the salary scales of the employees on the basis of fairness and reasonable
classification of jobs.
It is hard to believe that, considering the closeness in the time between the implementation of
the Salary Scaling Program and the execution of the CBA a difference of eighteen days the
negotiating panel of the Union would not have known the rather substantial benefits and advantages
accruing to the Supervisors under the Salary Scaling Program. The purpose of the Salary Scaling
Program was intended to structure the salary scales of the employees on the basis of fairness and
reasonable classification of jobs. There is every reason to uphold the Program, and, to uphold the claim
of Ausejo that he is entitled to the [P]1,150.00 mandated increase for 1996 upon his appointment.



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EAGLE STAR SECURITY SERVICES, INC. v. BONOFACIO L. MIRANDO
594 SCRA 450 (2009), SECOND DIVISION (Carpio Morales, J.)

For off-detail to be valid, the employer must show and prove that there was lack of available posts.

Bonifacio Mirando was hired by Eagle Star Security Services, Inc. (Eagle Star) as a security guard.
When he reported for work, he was told by the detachment commander not to report for duty as
instructed by the head office. Mirando called the head office and was told that he was removed from
duty by Eagle Stars operations manager Ernesto Agodilla. As Mirando was thereafter no longer asked to
report for duty, he filed a complaint for illegal dismissal against Eagle Star before the National Labor
Relations Commission (NLRC).

Eagle Star alleged that Mirando went on absence without official leave (AWOL) and had not
thereafter reported for work drawing it to send him a notice to explain his absence but Mirando failed to
respond. It further alleged that in a Memorandum sent to Agodilla, the detachment commander reported
that Mirando pulled out his uniform and that according to him, he would render voluntary resignation.

The labor arbiter found that Mirando was illegally dismissed. On appeal, the NLRC affirmed the
labor arbiters decision. On appeals, the CA affirmed the judgment of the NLRC.


ISSUES:

Whether or not the Court of Appeals erred in holding the dismissal illegal


HELD:

The persistence of Mirando to resume his duties, not to mention his immediate filing of the
illegal dismissal complaint, should dissipate any doubt that he did not abandon his job.

Clutching at straws, Eagle Star argues that Mirando was on temporary off-detail, the period of
time a security guard is made to wait until he is transferred or assigned to a new post or client; and since
Eagle Stars business is primarily dependent on contracts entered into with third parties, the temporary
off-detail of Mirando does not amount to dismissal as long as the period does not exceed 6 months,
following Art. 286 of the Labor Code.

Eagle Stars citation of Article 286 of the Labor Code is misplaced. In the present case, there is
no showing that there was lack of available posts at Eagle Stars clients or that there was a request from
the client-bank, where Mirando was last posted and which continued to hire Eagle Stars services, to
replace Mirando with another. Eagle Star suddenly prevented him from reporting on his tour of duty at
the bank on December 15, 2001 and had not thereafter asked him to report for duty.

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ABELARDO P. ABEL v. PHILEX MINING CORPORATION
594 SCRA 683 (2009), SECOND DIVISION (Carpio Morales, J.)

Loss of trust and confidence, to be a valid ground for dismissal, must be based on willful breach of trust and must
be founded on clearly established facts.

Abelardo P. Abel, an employee of the Philex Mining Corporation, was implicated in an
irregularity occurring in the subsidence area of Philexs mine site. An investigation was promptly
launched by the corporations officers by conducting several fact-finding meetings. Philex found Abel
guilty of (1) fraud resulting in loss of trust and confidence and (2) gross neglect of duty, and was meted
out the penalty of dismissal from employment. Abel thus filed a complaint for illegal dismissal with the
National Labor Relations Commission (NLRC) with claims for annual vacation leave pay.

The Labor Arbiter ruled that Abel was dismissed illegally. He found that Philex failed to prove
by substantial evidence the alleged fraud committed by Abel, explaining that the suggestively
incriminating telephone conversations would not suffice to lay the basis for Philexs loss of trust and
confidence. On the charge of gross negligence, the Labor Arbiter held that no negligence was present as
Philex itself admitted that Abel reported the underloading to Tabogader, who was then in charge of the
subsidence area where the alleged anomaly was happening.

The NLRC reversed the decision of the Labor Arbiter finding that Abel was guilty of gross and
habitual neglect of duty as he approved the operations even with the gross underloading; and that he did
not act on Lupegas report concerning certain irregularities. Abels failure to perform his duty of
inspecting ANSECAs operations and vacillation on certain matters during the company investigation,
among other things, constituted sufficient basis for Philexs loss of trust and confidence. Abel appealed
to the Court of Appeals via certiorari which dismissed the motion. Hence, this petition.

ISSUE:

Whether or not the dismissal of Abel is valid

HELD:

The law mandates that the burden of proving the validity of the termination of employment rests
with the employer. Failure to discharge this evidentiary burden would necessarily mean that the dismissal
was not justified and, therefore, illegal. Unsubstantiated suspicions, accusations, and conclusions of
employers do not provide legal justification for dismissing employees. In case of doubt, such cases
should be resolved in favor of labor pursuant to the social justice policy of labor laws and the
Constitution.

The first requisite for dismissal on the ground of loss of trust and confidence is that the
employee concerned must be holding a position of trust and confidence. Verily, the Court must first
determine if Abel holds such a position.

The second requisite is that there must be an act that would justify the loss of trust and
confidence. Loss of trust and confidence, to be a valid cause for dismissal, must be based on a willful
breach of trust and founded on clearly established facts. The basis for the dismissal must be clearly and
convincingly established but proof beyond reasonable doubt is not necessary. Philex Mining
Corporations evidence against Abel fails to meet this standard.


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The Labor Arbiter correctly found that the alleged telephone conversations
between Abel and Didith Caballero of ANSECA would not suffice to lay the basis for
Philex Mining Corporations loss of trust and confidence in Abel.

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ALABANG COUNTRY CLUB, et al. v. NATIONAL LABOR
RELATIONS COMMISSION, et al.
466 SCRA 329 (2005), THIRD DIVISION, (Carpio Morales, J.)

The court cannot interfere with managements prerogative to close or cease its business operation just because the
business is not suffering from any loss or because of the desire to provide the workers continued employment.

Petitioner Alabang Country Club, Inc. (ACCI) requested its Internal Auditor Irene Campos-Ugalde
to conduct a study on the profitability of its Food and Beverage Department (F & B Department). Irene
found out that the business had been incurring substantial losses. Consequently, the management
decided to transfer the operation of the department to La Tasca Restaurant Inc. (La Tasca). ACCI then
sent its F & B Department employees individual letters informing them that their services were being
terminated and that they would receive separation pay.

The private respondent Alabang Country Club Independent Employees Union (Union) filed before
the National Labor Relations Commission (NLRC) a complaint for illegal dismissal, unfair labor practice,
regularization and damages with prayer for the issuance of a writ of preliminary injunction against ACCI.
The Labor Arbiter (LA) dismissed the complaint for illegal dismissal which was upheld by the NLRC.
The Court of Appeals (CA) reversed the decisions of the LA and NLRC.

ISSUE:

Whether or not the ACCI can terminate its business operation

HELD:

One of the prerogatives of management is the decision to close the entire establishment or to close
or abolish a department or section thereof for economic reasons, such as to minimize expenses and
reduce capitalization. While the Labor Code provides for the payment of separation package in case of
retrenchment to prevent losses, it does not obligate the employer for the payment thereof if there is
closure of business due to serious losses.

As in the case of retrenchment, however, for the closure of a business or a department due to
serious business losses to be regarded as an authorized cause for terminating employees, it must be
proven that the losses incurred are substantial and actual or reasonably imminent; that the same
increased through a period of time; and that the condition of the company is not likely to improve in the
near future.

The closure of operation of an establishment or undertaking not due to serious business losses or
financial reverses includes both the complete cessation of operations and the cessation of only part of a
companys activities.

For any bona fide reason, an employer can lawfully close shop anytime. Just as no law forces
anyone to go into business, no law can compel anybody to continue the same. It would be stretching the
intent and spirit of the law if a court interferes with managements prerogative to close or cease its
business operations just because the business is not suffering from any loss or because of the desire to
provide the workers continued employment.


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JERRY E. ACEDERA, et al. v. INTERNATIONAL
CONTAINER TERMINAL SERVICES INC.
395 SCRA 103 (2003), THIRD DIVISION (Carpio Morales, J.)
Ordinarily, a person whose interests are already represented will not be permitted to do the same except when there
is a suggestion of fraud or collusion or that the representative will not act in good faith.
Jerry Acedera, et al. are employees of International Container Terminal Services, Inc. (ICTSI) and
are members of Associated Port Checkers & Workers Union-International Container Terminal Services,
Inc. (APCWU-ICTSI), a duly registered labor organization. ICTSI entered into a five-year Collective
Bargaining Agreement (CBA) with APCWU which reduced the employees work days from 304 to 250
days a year.
The Wage Board decreed wage increases in NCR which affected ICTSI. Upon the request of
APCWU to compute the actual monthly increase in the employees salary by multiplying the mandated
increase by 365 days and dividing by 12 months, ICTSI stopped using 304 days as divisor and started
using 365 days to determine the daily wage.
Later on, ICTSI entered into a retrenchment program which prompted APCWU to file a
complaint before the Labor Arbiter (LA) for ICTSIs use of 365 days, instead of 250 days, as divisor in
the computation of wages. Acedera et al. filed a Motion to Intervene which was denied by the LA. On
appeal, National Labor Relations Commission (NLRC) affirmed LAs decision. Acedera et al. filed a
petition for certiorari to the Court of Appeals (CA) which was dismissed.
ISSUE:
Whether or not Acedera et al. have no legal right to intervene in the case as their intervention
was a superfluity

HELD:
Acedera et al. stress that they have complied with the requisites for intervention because (1) they
are the ones who stand to gain or lose by the direct legal operation and effect of any judgment that may
be rendered in this case, (2) no undue delay or prejudice would result from their intervention since their
Complaint-in-Intervention with Motion for Intervention was filed while the Labor Arbiter was still
hearing the case and before any decision thereon was rendered, and (3) it was not possible for them to
file a separate case as they would be guilty of forum shopping because the only forum available for them
was the Labor Arbiter.
Acedera et al., however, failed to consider, in addition to the rule on intervention, the rule on
representation. A labor union is one such party authorized to represent its members under Article 242(a)
of the Labor Code which provides that a union may act as the representative of its members for the
purpose of collective bargaining. This authority includes the power to represent its members for the
purpose of enforcing the provisions of the CBA. That APCWU acted in a representative capacity "for
and in behalf of its Union members and other employees similarly situated, the title of the case filed by it
at the Labor Arbiters Office so expressly states.
While a party acting in a representative capacity, such as a union, may be permitted to intervene
in a case, ordinarily, a person whose interests are already represented will not be permitted to do the
same except when there is a suggestion of fraud or collusion or that the representative will not act in
good faith for the protection of all interests represented by him.
Acedera et al. cite the dismissal of the case filed by ICTSI, first by the Labor Arbiter, and later by
the Court of Appeals. The dismissal of the case does not, however, by itself show the existence of fraud
or collusion or a lack of good faith on the part of APCWU. There must be clear and convincing evidence
of fraud or collusion or lack of good faith independently of the dismissal. This, Acedera et al. failed to
proffer.
Acedera et al. likewise express their fear that APCWU would not prosecute the case diligently
because of its "sweetheart relationship" with ICTSI. There is nothing on record, however, to support
this alleged relationship which allegation surfaces as a mere afterthought because it was never raised early

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on. It was raised only in petitioners-appellants reply to ICTSIs comment in the petition at
bar, the last pleading submitted to this Court, which was filed on June 20, 2001 or more
than 42 months after petitioners-appellants filed their Complaint-in-Intervention with Motion to
Intervene with the Labor Arbiter.
To reiterate, for a member of a class to be permitted to intervene in a representative action,
fraud or collusion or lack of good faith on the part of the representative must be proven. It must be
based on facts borne on record. Mere assertions, as what petitioners-appellants proffer, do not suffice.


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ALDEGUER & CO., INC. /LOALDE BOUTIQUE v. HONEYLINE TOMBOC
560 SCRA 49 (2008), SECOND DIVISION (Carpio Morales, J.)

Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative is a just cause for his dismissal from employment.

Petitioner Aldeguer and Co., Inc./Loalde Boutique promoted respondent Honeyline Tomboc
(Tomboc) as Officer-in-Charge (OIC) of its Loalde Ayala Boutique (Loalde Ayala) in the Ayala Center,
Cebu City. After conducting an audit of sales, Loalde Boutique concluded that Tomboc misappropriated
certain amount which is a just cause for termination. Consequently, Tombo was notified of the
termination of her services.

Tomboc subsequently filed a complaint in the National Labor Relations Commission (NLRC)
for illegal dismissal, illegal salary deductions, underpayment of wages, non-payment of 13
th
month pay
and damages. The Labor Arbiter dismissed the complaint which was upheld by the NLRC. On appeal,
the Court of Appeals reversed the NLRC decision and ordered her reinstatement with full payment of
back wages and without loss of seniority rights. The CA held Tomboc was illegally dismissed and was
denied of due process as she was not afforded a chance to refute the charge of misappropriation against
her.

ISSUES:

Whether or not the termination of Tomboc was for just cause

HELD:

Aldeguer and Co., Inc./Loalde Boutique has shown just cause for the termination of Tombocs
employment under Art. 282 of the Labor Code on the ground of fraud or willful breach by the
employee of the trust reposed in him by his employer or duly authorized representative.

The claim of Jinky, a cashier, in her affidavit that it was Tomboc who turned over the deposits to
the bank representative on May 13, 1997 was corroborated by Kay, the branch head of the Solidbank-
Gorordo Branch who personally picked up the deposits from Loalde Ayala on May 13 and 14, 1997.
Aldeguer and Co., Inc./Loalde Boutique in fact presented deposit slips showing that, contrary to its
policy, cash sales for the day were on several occasions not deposited on the next banking day.

Tombocs contention that the Labor Arbiter and the NLRC ignored the Memorandum issued by
Aldeguer and Co., Inc./Loalde Boutique on February 29, 1997 indicating her duties and responsibilities
which do not include handling cash collection of sales and making deposits with the bank does not lie.
It has been established that while a boutique-in-charge is ordinarily not allowed to handle cashiering, she
may do so, however, if the need arises. At any rate, Jinky and some of the affiants stated in their
affidavits that Tomboc interfered with cashiering tasks, in violation of company policy.




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CORAZON ALMIREZ v. INFINITE LOOP TECHNOLOGY CORPORATION,
et al.
481 SCRA 364 (2006), THIRD DIVISION (Carpio Morales, J.)
Under the control test, an employer-employee relationship exists where the person for whom the services are
performed reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that
end.
Petitioner Corazon Almirez was hired by respondent Infinite Loop Technology Corporation
(Infinite Loop) to be a Refinery Senior Process Design Engineer for a specific project starting October
18, 1999 with a guaranty of 12 continuous months of service or until a mutually agreed date. However,
Almirez was later on suspended. Hence, she filed an action before the National Labor Relations
Commission (NLRC) against Infinite Loop and its General Manager/President/co-petitioner Edwin R.
Rabino on the ground of breach of contract of employment.
Both the Labor Arbiter and the NLRC ruled that there is an existing employer-employee
relationship between Almirez and Infinite Loop since the latter exercises control over the means and
methods used by Almirez in the performance of her duties.
The Court of Appeals ruled that there was no existing employer-employee relationship between
the parties since Almirez was hired to render her professional service only for a specific project.
ISSUE:
Whether or not there is employee-employer relationship between Almirez and Infinite Loop
HELD:
To ascertain the existence of an employer-employee relationship, jurisprudence has invariably
applied the four-fold test, to wit: (1) the manner of selection and engagement; (2) the payment of wages;
(3) the presence or absence of the power of dismissal; and (4) the presence or absence of the power of
control. Of these four, the last one, the so called "control test" is commonly regarded as the most crucial
and determinative indicator of the presence or absence of an employer-employee relationship.
Under the control test, an employer-employee relationship exists where the person for whom the
services are performed reserves the right to control not only the end achieved, but also the manner and
means to be used in reaching that end.
From the earlier-quoted scope of Almirez professional services, there is no showing of a power
of control over petitioner. The services to be performed by her specified what she needed to achieve but
not on how she was to go about it.
Contrary to the finding of the Labor Arbiter, as affirmed by the NLRC, paragraph No. 6 of the
"Scope of [Almirez] Professional Services" requiring her to "[m]ake reports and recommendations to the
company management team regarding work progress, revisions and improvement of process design on a
regular basis as required by company management team" does not "show that the companys
management team exercises control over the means and methods in the performance of her duties as
Refinery Process Design Engineer." Having hired Almirez professional services on account of her
"expertise and qualifications" as Almirez herself proffers in her Position Paper, the company naturally
expected to be updated regularly of her "work progress," if any, on the project for which she was
specifically hired.
The deduction from Almirez remuneration of amounts representing SSS premiums, Philhealth
contributions and withholding tax, was made in the only pay slip issued to Almirez, that for the period of
January 16-31, 2000, the other amounts of remuneration having been documented by cash vouchers.
Such pay slip cannot prove the existence of an employer-employee relationship between the parties.
As for the designation of the payments to Almirez as "salaries," it is not determinative of the
existence of an employer-employee relationship. "Salary" is a general term defined as "a remuneration for
services given." It is the above-quoted contract of engagement of services-letter dated September 30,
1999, together with its attachments, which is the law between the parties. Even Almirez concedes
rendering service "based on the contract," which, as reflected earlier, is bereft of a showing of power of

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control, the most crucial and determinative indicator of the presence of an employer-
employee relationship.

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SPOUSES PONCIANO AYA-AY, SR. and CLEMENCIA AYA-AY v. ARPAPHIL
SHIPPING CORP., and MAGNA MARINE INC.
481 SCRA 282 (2006), THIRD DIVISION (Carpio Morales, J.)
Death benefits shall be awarded only when the cause of death of the employee was proved by substantial evidence to
be reasonably connected with his work or his working conditions.
Ponciano Aya-ay Jr. is a seaman engaged by Arpaphil Shipping Corporation to work under an
11-month contract of employment for co-respondent Magna Marine Inc. On board the vessel and while
performing his work, Aya-ay met an eye injury thereby requiring him to undergo a corneal transplant.
Upon mutual consent of Magna Marine and Aya-ay, Aya-ay was repatriated to Manila. While waiting for
an eye donor, Aya-ay died. The death certificate indicates that the immediate cause of his death is
cerebro-vascular accident (CVA) commonly known as stroke.
Petitioners Ponciano Aya-ay Sr. and Clemencia Aya-ay, parents of Aya-ay, now claims for death
compensation benefits from Arpaphil and Magna Marine, which the latter rejected.
Both the National Labor Relations Commission (NLRC) and the Court of Appeals (CA) denied
their claims. Hence, this appeal.
ISSUE:
Whether or not the heirs of Aya-ay are entitled to claim death benefits under POEA Standard
Employment Contract
HELD:
Part II, Section C, Nos. 1 and 3 of the POEA Standard Employment Contract Governing the
Employment of All Filipino Seamen on Board Ocean-Going Vessels provide, among other things that
compensation and benefits may be availed of by the worker provided he/she dies during the term of the
contract or he/she has died as a result of injury or illness during the term of the employment.
Upon mutual consent of Aya-ay and Arpaphil and Magna Marine, he was on July 5, 1995
repatriated on account of his eye injury. Thus his employment had been effectively terminated on that
particular date. At all events, under the October 15, 1994 Contract of Employment, Aya-ay ceased to be
an employee on September 26, 1995, hence, he was no longer an employee when he died on December
1, 1995.
It is, therefore, crucial to determine whether Aya-ay died as a result of, or in relation to, the eye
injury he suffered during the term of his employment. If the injury is the proximate cause, or at least
increased the risk, of his death for which compensation is sought, recovery may be had for said death.
Unless there is substantial evidence showing that: (a) the cause of Aya-ays death was reasonably
connected with his work; or (b) the sickness/ailment for which he died is an accepted occupational
disease; or (c) his working conditions increased the risk of contracting the disease for which he died,
death compensation benefits cannot be awarded.

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ARLYN D. BAGO v. NATIONAL LABOR RELATIONS COMMISSION and
STANDARD INSURANCE CO. INC. AND/OR ERNESTO ECHAUS
520 SCRA 644 (2007), SECOND DIVISION (Carpio-Morales, J.)

As a general rule, employers are given a wide latitude of discretion in terminating the employment of managerial
personnel or those who, while not of similar rank, perform functions which by their nature require the employers full trust
and confidence.

Arlyn Bago (Bago) and five other employees were dismissed by Celia P. Abordo (Abordo), head
of the Tuguegarao Branch of Standard Insurance Company Incorporated (SICI) for manipulating the
company funds and spreading damaging rumors. Bago, the auditor of the company, and the five other
employees apologized for spreading the rumors. Abordo issued a memo to the employees requiring an
explanation for the charges. Thinking that Abordo had already forgiven them, the employees did not
respond to the memo.

Not receiving any reply, the Human Resource Department of SICI proceeded with their
investigation and found all the employees guilty and dismissed them for loss of confidence and serious
misconduct. Bago filed a complaint for illegal dismissal. She contended that there was no due process in
the investigation and that dismissal is a severe penalty for the offenses charged.

The Labor Arbiter found that Bago was illegally dismissed but the National Labor Relations
Commission (NLRC), reversed the Labor Arbiter's decision and declared valid the termination of Arlyns
services on the grounds of loss of trust and confidence and dishonesty.

ISSUE:

Whether or not Bago was illegally dismissed by Standard Insurance Company Incorporated
HELD:
As a general rule, employers are allowed a wide latitude of discretion in terminating the
employment of managerial personnel or those who, while not of similar rank, perform functions which
by their nature require the employers full trust and confidence. Proof beyond reasonable doubt is not
required. It is sufficient that there is some basis for loss of confidence, such as when the employer has
reasonable ground to believe that the employee concerned is responsible for the purported misconduct,
and the nature of his participation therein renders him unworthy of the trust and confidence demanded
by his position.
This must be distinguished from the case of ordinary rank-and-file employees, whose
termination on the basis of these same grounds requires a higher proof of involvement in the events in
question; mere uncorroborated assertions and accusations by the employer will not suffice.
Even assuming that Arlyn may be considered a rank and file employee, sufficient evidence of her
involvement in the dishonest scheme of SICIs accountant and cashier who were also charged and found
guilty exists. Not only was her participation established by the internal audit conducted; the cashier
identified her as part of the scheme, and she herself admitted her involvement.

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CALAMBA MEDICAL CENTER v. NATIONAL LABOR RELATIONS
COMMISSION,et al.
571 SCRA 585 (2008), SECOND DIVISION (Carpio Morales, J.)

An employment relationship exists between a physician and a hospital if the hospital controls both the means and
the details of the process by which the physician is to accomplish his task.

Petitioner Calamba Medical Center (CMC), engaged the services of medical doctors-spouses
Ronaldo Lanzanas (Dr. Ronaldo) and Merceditha Lanzanas (Dr. Merceditha) as part of its team of
resident physicians. They were given, among others, identification cards and work schedules; and were
paid a monthly retainer. They were likewise enrolled in the Social Security System (SSS). Subsequently,
CMCs medical director issued a Memorandum to Dr. Ronaldo after a resident physician overheard Dr.
Ronaldo and a fellow employee discussing the low admission in the hospital. After the incident involving
her husband, Dr. Merceditha was no longer given any work assignments.

Afterwards, the rank and file employees union of Calamba Medical Center went on a strike. Dr.
Ronaldo and Dr. Merceditha meanwhile filed a complaint for illegal suspension and illegal dismissal,
respectively before the National Labor Relations Commission Regional Arbitration Board (NLRC-RAB).
Consequently, the Department of Labor and Employment (DOLE) issued a return to work order. Dr.
Ronaldo, on the other hand, received a notice of termination indicating his failure to return for work. Dr.
Ronaldo thus amended his complaint to illegal dismissal. The CMC contends that the doctors-spouses
are not employees of the same, so that they cannot be illegally dismissed.

ISSUES:

Whether or not an employee-employer relationship does not exist between Calamba Medical
Center and the doctors-spouses Lanzanas

HELD:

Under the control test, an employment relationship exists between a physician and a hospital if
the hospital controls both the means and the details of the process by which the physician is to
accomplish his task.

Where a person who works for another does so more or less at his own pleasure and is not
subject to definite hours or conditions of work, and is compensated according to the result of his efforts
and not the amount thereof, the element of control is absent.

As priorly stated, the spouses-doctors maintained specific work-schedules, as determined by
petitioner through its medical director, which consisted of 24-hour shifts totaling forty-eight hours each
week and which were strictly to be observed under pain of administrative sanctions.

That CMC exercised control over spouses-doctors gains light from the undisputed fact that in
the emergency room, the operating room, or any department or ward for that matter, spouses-doctors
work is monitored through its nursing supervisors, charge nurses and orderlies. Without the approval or
consent of CMC or its medical director, no operations can be undertaken in those areas. For control test
to apply, it is not essential for the employer to actually supervise the performance of duties of the
employee, it being enough that it has the right to wield the power.


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With respect to spouses-doctors sharing in some hospital fees, this scheme does
not sever the employment tie between them and CMC as this merely mirrors additional
form or another form of compensation or incentive similar to what commission-based employees
receive as contemplated in Article 97 (f) of the Labor Code.

The spouses-doctors were in fact made subject to petitioner-hospitals Code of Ethics, the
provisions of which cover administrative and disciplinary measures on negligence of duties, personnel
conduct and behavior, and offenses against persons, property and the hospitals interest.

More importantly, the CMC itself provided incontrovertible proof of the employment status of
respondents, namely, the identification cards it issued them, the payslips and BIR W-2 (now 2316)
Forms which reflect their status as employees, and the classification as salary of their remuneration.
Moreover, it enrolled respondents in the SSS and Medicare (Philhealth) program. It bears noting at this
juncture that mandatory coverage under the SSS Law is premised on the existence of an employer-
employee relationship,[35] except in cases of compulsory coverage of the self-employed. It would be
preposterous for an employer to report certain persons as employees and pay their SSS premiums as well
as their wages if they are not its employees.

And if the spouses-doctors were not CMCs employees, how does it account for its issuance of
the earlier-quoted March 7, 1998 memorandum explicitly stating that respondent is employed in it and
of the subsequent termination letter indicating Dr. Ronaldos employment status.

Finally, under Section 15, Rule X of Book III of the Implementing Rules of the Labor Code, an
employer-employee relationship exists between the resident physicians and the training hospitals, unless
there is a training agreement between them, and the training program is duly accredited or approved by
the appropriate government agency. In the spouses-doctors case, they were not undergoing any
specialization training. They were considered non-training general practitioners, assigned at the
emergency rooms and ward sections.


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CLARION PRINTING HOUSE, INC. et al. v. NATIONAL LABOR
RELATIONS COMMISSION et al.
461 SCRA 272 (2005), THIRD DIVISION (Carpio Morales, J.)

Retrenchment is a valid ground for the dismissal of an employee.

Clarion Printing House (Clarion), a company owned by EYCO Group of Companies (EYCO)
hired Michelle Miclat (Miclat) as marketing assistant on a probationary basis. During that time, she was
not informed of the standards that she should meet to qualify as a regular employee.

EYCO subsequently filed a petition for petition for suspension of payment as well as an
appointment of a rehabilitation receivership committee before SEC on the ground that they are suffering
financial difficulty. Pursuant to this, a retrenchment occurred, thus terminating Miclat.

Conversely, Miclat filed a complaint for illegal dismissal before the NLRC. Miclat contends that
assuming her termination is necessary, it was not done in a proper manner; there was no notice that was
given to her. On the other hand, Clarion contends that they are not liable for retrenching some
employees because EYCO is being placed under receivership, and a memorandum was given to
employees, hence they substantially complied with the notice requirement. NLRC rendered its decision
in favor of Miclat and found that she was illegally dismissed. On appeal, the Court of Appeals held that
Clarion failed to prove its ground for retrenchment as well as compliance with the mandated procedure.
It further ruled that Miclat should be reinstated and paid backwages. Hence, this petition.

Issue:

Whether or not Miclat was illegally dismissed

Held:

It is likewise well-settled that for retrenchment to be justified, any claim of actual or potential
business losses must satisfy the following standards: (1) the losses are substantial and not de minimis; (2)
the losses are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to
be effective in preventing expected losses; and (4) the alleged losses, if already incurred, or the expected
imminent losses sought to be forestalled, are proven by sufficient and convincing evidence.

From the provisions of P.D. No. 902-A, as amended, the appointment of a receiver or
management committee by the SEC presupposes a finding that, inter alia, a company possesses sufficient
property to cover all its debts but "foresees the impossibility of meeting them when they respectively fall
due" and "there is imminent danger of dissipation, loss, wastage or destruction of assets of other
properties or paralization of business operations."
That the SEC, mandated by law to have regulatory functions over corporations, partnerships or
associations, appointed an interim receiver for the EYCO Group of Companies on its petition in light
of, as quoted above, the therein enumerated "factors beyond the control and anticipation of the
management" rendering it unable to meet its obligation as they fall due, and thus resulting to
"complications and problems . . . to arise that would impair and affect [its] operations . . ." shows that
CLARION, together with the other member-companies of the EYCO Group of Companies, was
suffering business reverses justifying, among other things, the retrenchment of its employees.

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ERIC DELA CRUZ et al. v. COCA-COLA BOTTLERS PHILS. INC.
594 SCRA 761 (2009), SECOND DIVISION (Carpio Morales, J.)

Acts by employees which are inimical to the employers interest are deemed willful breach of the trust and
confidence reposed in them.

Raymund Sales, a salesman of Coca-Cola Bottlers Phils. Inc (Coca-Cola), figured an accident while
driving a vehicle he was not authorized to use. Sales was hospitalized and was observed that he was under the
influence of liquor at the time of the accident and was included in the police blotter.

Respondent Coca-Cola discovered that Sales co-employees secured a police report and medical
certificate which omitted the fact that Sales was under the influence of alcohol. Coca-Cola required Sales
Supervisors John Espina, Raul M. Lacuata (Lacuata), and Eric dela Cruz (dela Cruz), to explain why no
disciplinary action be taken against them. Espina denied the fact that he altered the documents. Petitioner
Dela Cruz said that he just asked for a copy of the police report one Melvin Asuncion. And lastly, Petitioner
Lacuata said that he has no participation in the alleged alteration because he only picked-up the medical
certificate from the Hospital. Further investigation shows that they conspired to alter the medical certificate
and the police report. After such finding they were dismissed from employment. Espina, Lacuata and dela
Cruz filed separate complaints for illegal dismissal with the contention that the alleged altering of documents
is work related and is a willful breach of confidence.

The Labor Arbiter dismissed Espinas complaint for lack of merit. Dela Cruz was found to be
illegally dismissed. Lacuata was found to be at fault for doing nothing to stop Espina from obtaining false
police and medical reports. The respondent Coca-Cola was ordered to reinstate dela Cruz and pay both
petitioners dela Cruz and Lacuata their respective back wages, 13
th
month pay and separation pay. On appeal,
the National Labor Relations Commission (NLRC) affirmed the Labor Arbiters decision but deleted the
award of moral damages in favor of dela Cruz. Its motion for reconsideration having been denied, respondent
filed a Petition for Certiorari before the Court of Appeals (CA). The CA set aside the NLRC decision and
held that petitioners Lacuata and dela Cruz were validly dismissed.

ISSUE:

Whether or not Lacuata and dela Cruz were validly dismissed on the grounds of altering the medical
certificate and police report of Sales

HELD:

Dela Cruz et al. contend, however, that for loss of trust and confidence to be a ground for
termination of employment, it must be willful and must be connected with the employees work.

By obtaining an altered police report and medical certificate, Dela Cruz et al. deliberately
attempted to cover up the fact that Sales was under the influence of liquor at the time the accident took
place. In so doing, they committed acts inimical to respondents interests. They thus committed a work-
related willful breach of the trust and confidence reposed in them.

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PHILIPPINE DIAMOND HOTEL AND RESORT, INC. (MANILA DIAMOND
HOTEL) v. MANILA DIAMOND HOTEL EMPLOYEES UNION
494 SCRA 195 (2006), THIRD DIVISION (Carpio Morales, J.)

An ordinary striking worker cannot be dismissed for mere participation in an illegal strike unless there be a proof
that he committed illegal acts during a strike.

The Diamond Hotel Employee's Union (the union) filed a petition for Certification Election
before the DOLE-National Capital Region (NCR) seeking certification as the exclusive bargaining
representative of its members. The DOLE-NCR denied said petition as it failed to comply with the legal
requirements.

The Union later notified petitioner hotel of its intention to negotiate for collective bargaining
agreement (CBA). The Human Resource Department of Diamond Hotel rejected the notice and advised
the union since it was not certified by the DOLE as the exclusive bargaining agent, it could not be
recognized as such. Since there was a failure to settle the dispute regarding the bargaining capability of
the union, the union went on to file a notice of strike due to unfair labor pracritce (ULP) in that the
hotel refused to bargain with it and the rank-and-file employees were being harassed and prevented from
joining it. In the meantime, Kimpo filed a complaint for ULP against petitioner hotel.

After several conferences, the union suddenly went on strike. The following day, the National
Union of Workers in the Hotel, Restaurant and Allied Industries (NUWHRAIN) joined the strike and
openly extended its support to the union. The some of the entrances were blocked by the striking
employees. The National Labour Relations Commission (NLRC) representative who conducted an
ocular inspection of the Hotel premises confirmed in his Report that the strikers obstructed the free
ingress to and egress from the Hotel. The NLRC thus issued a Temporary Restraining Order (TRO)
directing the strikers to immediately "cease and desist from obstructing the free ingress and egress from
the Hotel premises. During the implementation of the order, the striking employees resisted and some
of the guards tasked to remove the barricades were injured. The NLRC declared that the strike was
illegal and that the union officers and members who participated were terminated on the grounds of
participating in an illegal strike.

The union contended that the strike was premised on valid ground and that it had the capacity to
negotiate the CBA as the representatives of the employees of Diamond Hotel. The union contended
that their dismissal is tantamount to an unfair labour practice and union busting.
On appeal, the Court of Appeals affirmed the NLRC Resolution dismissing the complaints of Mary
Grace, Agustin and Rowena and of the union. It modified the NLRC Resolution, however, by ordering
the reinstatement with back wages of union members.

ISSUE:

Whether or not the dismissal of the union members is valid on the grounds of participating in an
illegal strike

HELD:

Even if the purpose of a strike is valid, the strike may still be held illegal where the means
employed are illegal. Thus, the employment of violence, intimidation, restraint or coercion in carrying
out concerted activities which are injurious to the rights to property renders a strike illegal. And so is

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picketing or the obstruction to the free use of property or the comfortable enjoyment of
life or property, when accompanied by intimidation, threats, violence, and coercion as to
constitute nuisance.

As the appellate court correctly held, the union officers should be dismissed for staging and
participating in the illegal strike, following paragraph 3, Article 264(a) of the Labor Code which provides
that ". . .any union officer who knowingly participates in an illegal strike and any worker or union officer
who knowingly participates in the commission of illegal acts during strike may be declared to have lost
his employment status . . ."

An ordinary striking worker cannot, thus be dismissed for mere participation in an illegal strike.
There must be proof that he committed illegal acts during a strike, unlike a union officer who may be
dismissed by mere knowingly participating in an illegal strike and/or committing an illegal act during a
strike.



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DIGITEL TELECOMMUNICATIONS PHILIPPINES, INC.,
et al. v. MARIQUIT SORIANO
492 SCRA 704 (2006), THIRD DIVISION (Carpio Morales, J.)
Forced resignation must be sufficiently established by substantial, concrete and credible evidence.

Mariquit Soriano (Soriano) was hired as Director of Marketing by Digitel Telecommunications
Philippines, Inc. (Digitel). Soriano worked under Vice President for Business Division Eric J. Severino
(Severino) and Senior Executive Vice President Johnson Robert L. Go (Go). Following a professional
dispute against Severino and Go, Soriano filed a resignation letter which was accepted by her superiors.

After her resignation, Soriano filed a suit for illegal termination alleging that she was forced to
resign due to professional and sexual harassment. She alleged that her superiors are preventing her
former colleagues in testifying to the sexual harassment. She produced an affidavit by one of the persons
involved with Digitel stating that the employees of the company were being forced not to testify against
Go and Severino. In defense, Go and Severino provided witnesses that testified that the acts alleged by
Soriano din not happen.

The Labor Arbiter held that Mariquit voluntarily resigned, thus dismissing the complaint. On
appeal, the NLRC affirmed the findings of the Labor Arbiter. The Court of Appeals reversed the
decision of NLRC. Hence,this petition.

ISSUE:

Whether or not the Soriano was forced to resign, due to professional and sexual harassment,
thus amounting to constructive dismissal.

HELD:

Soriano's own allegation, although they are so detailed, appear incredible if not downright puny.
An analysis of her statements shows that her own conclusion that she was being sexually and
professionally harassed was on the basis of her own suppositions, conjectures, and surmises.

She could not satisfactorily explain her allegation that she was consistently professionally
harassed by respondent Severino. The latter's alleged words: "How come you claim you know so much
yet nothing ever gets done in your department?" do not jurisprudentially constitute nor clearly establish
"professional harassment." Aside from these words, the complainant could only venture to allege
instances in general and vague terms. As to the facts allegedly constituting "sexual harassment" advanced
by Go and Severino, after an objective analysis over their assertions as stated in their respective counter-
affidavits and further considering the other supporting documents attached to the respondents'
pleadings, it is found that these far out weigh the Soriano's own evidence

A reading of the affidavit of the witness, who was never an employee nor present at the party of
Digitel, reveals, however, that she merely "concluded" that the employees of Digitel were instructed or
harassed not to testify in favor of Soriano when they failed to meet one Matet Ruiz, a Digitel employee
"who kept avoiding to meet

With such tendency to threaten resignation everytime higher management would refuse her
demand to transfer subordinates who had administrative differences with her, we therefore have no
doubt that complainant voluntarily resigned when respondent Severino refused to heed her demand that

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Ms. Arnedo and Ms. Inductivo, her subordinates, be transferred to other departments. We
also have no doubt that such resignation does not constitute constructive dismissal, much
less an illegal one.

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DE LA SALLE UNIVERSITY and DR. CARMELITA I. QUEBENGCO v. DE LA
SALLE UNIVERSITY EMPLOYEES ASSOCIATION (DLSU-NAFTEU)
584 SCRA 592 (2009), SECOND DIVISION (Carpio Morales, J.)

It is axiomatic in labor relations that a Collective Bargaining Agreement entered into by a legitimate labor
organization and an employer becomes the law between the parties, compliance with which is mandated by express policy of
the law.

In 2001, a splinter group of the De La Salle University Employees Association (DLSU-
NAFTEU) led by one Belen Aliazas (Aliazas group) filed a petition for conduct of elections with the
Department of Labor and Employment (DOLE), alleging that the then incumbent officers of DLSU-
NAFTEU had failed to call for a regular election since 1985. DOLE-NCR held that the holdover
authority of DLSU-NAFTEUs incumbent set of officers had been extinguished by virtue of the
execution of the CBA. It accordingly ordered the conduct of elections to be placed under the control
and supervision of its Labor Relations Division and subject to pre-election conferences. Even with the
conditions for the conduct of election imposed by the DOLE-NCR, DLSU-NAFTEU called for a
regular election without prior notice to the DOLE and without the conduct of pre-election conference.
The incident prompted the Aliazas group to file an Urgent Motion for Intervention with the Bureau of
Labor Relations (BLR) of the DOLE. The BLR granted the Aliazas groups motion for intervention
three days before the intended date of election.

The Aliazas group requested the University to escrow all union dues/agency fees and whatever
money considerations deducted from salaries of concerned co-academic personnel until such time that
an election of union officials has been scheduled and subsequent elections has been held. DLSU and
Quebengcos move prompted DLSU-NAFTEU to file a complaint for Unfair Labor Practice (ULP
complaint), claiming that they unduly interfered with its internal affairs and discriminated against its
members.

The Labor Arbiter dismissed DLSU-NAFTEUs ULP complaint. The Court of Appeals reversed
the said Order of the NLRC with respect to the subsuming of ULPs complaint under the certified
case, the ULP complaint having been, at the time the NLRC Third Division Order was issued, already
disposed of by the Arbiter and was in fact pending appeal before the NLRC Second Division.

ISSUE:

Whether or not DLSU and Quebengco is guilty of unfair labor practice

HELD:

On the other matter raised by DLSU and Quebengco that their acts of withholding union and
agency dues and suspension of normal relations with respondents incumbent set of officers pending the
intra-union dispute did not constitute interference, the Court finds for DLSU-NAFTEU.

Pending the final resolution of the intra-union dispute, DLSU-NAFTEUs officers remained
duly authorized to conduct union affairs. It bears noting that at the time DLSU and Quebengcos
questioned moves were adopted, a valid and existing CBA had been entered between the parties. It thus
behooved DLSU to observe the terms and conditions thereof bearing on union dues and representation.
It is axiomatic in labor relations that a CBA entered into by a legitimate labor organization and an
employer becomes the law between the parties, compliance with which is mandated by express policy of
the law.

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Respecting the issue of damages, DLSU-NAFTEU, in its Position Paper before
the Labor Arbiter, prayed for the award of exemplary damages, nominal damages, and attorneys fees.

Exemplary or corrective damages are imposed by way of example or correction for the public
good in addition to the moral, temperate, liquidated or compensatory damages. While the amount of
exemplary damages need not be proved, respondent must show proof of entitlement to moral, temperate
or compensatory damages before the Court may consider awarding exemplary damages. No such
damages were prayed for, however, hence, the Court finds no basis to grant the prayer for exemplary
damages.



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CARMEN B. DY-DUMALASA v. DOMINGO SABADO S. FERNANDEZ, et al.
593 SCRA 656, (2009), SECOND DIVISION (Carpio Morales, J.)

Procedural rules governing service of summons, in quasi-judicial proceedings, are not strictly construed.

Domingo Fernandez, et al., former employees of Helios Manufacturing Corporation (HELIOS),
filed a complaint for illegal dismissal or illegal closure of business, non-payment of salaries and other
money claims against HELIOS. The Labor Arbiter found that the closure of the Muntinlupa
office/plant was a sham, as HELIOS simply relocated its operations to a new plant in Carmona, Cavite
under the new name of Pat & Suzara, in response to the newly-established local union. HELIOS and it
Board of Directors and stockholders were held liable.

The NLRC modified the Labor Arbiters Order, holding that Dumalasa is not jointly and
severally liable with HELIOS for Fernandez, et al.s claim, there being no showing that she acted in bad
faith nor that HELIOS cannot pay its obligations. Dumalasa moved for reconsideration, but this was
denied, hence, she appealed to the Court of Appeals.

The appellate court reversed and set aside the NLRC Resolution, holding that what the NLRC,
in effect, modified was not the Order denying the Motion to Quash the Writ of Execution, but the
Labor Arbiters Decision itself. This is an impermissible act since the Decision has become final and
executor; hence, it could no longer be reversed or modified.

Respecting NLRCs pronouncement that Dumalasa was not jointly and severally liable, the
appellate court held that the same is a superfluity since there was no statement, either in the main case or
in the Writ, that the liability is solidary. Therefore, Dumalasa is merely jointly liable for the judgment
award. Dumalasa moved for reconsideration of the appellate courts Decision, which was denied. Hence,
this petition.

ISSUES:

1.) Whether or not the Labor Arbiter acquired jurisdiction over Dumalasa

2.) Whether or not Dumalasa is solidarily liable with HELIOS for the judgment award

HELD:

Contrary to Dumalasas contention, the Labor Arbiter acquired jurisdiction over her person
regardless of the fact that there was allegedly no valid service of summons. It bears noting that, in quasi-
judicial proceedings, procedural rules governing service of summons are not strictly construed.
Substantial compliance therewith is sufficient. In the cases at bar, Dumalasa, her husband and three
other relatives, were all individually impleaded in the complaint. The Labor Arbiter furnished her with
notices of the scheduled hearings and other processes. It is undisputed that HELIOS, of which she and
her therein co-respondents in the subject cases were the stockholders and managers, was in fact heard,
proof of which is the attendance of her husband, President-General Manager of HELIOS, together with
counsel in one such scheduled hearing and the Labor Arbiters consideration of their position paper in
arriving at the Decision, albeit the same position paper was belatedly filed.

Clearly, Dumalasa was adequately represented in the proceedings conducted by the Labor
Arbiter by the lawyer retained by HELIOS.


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Taking into account the peculiar circumstances of the cases, HELIOS knowledge
of the pendency thereof and its efforts to resist them are deemed to be knowledge and
action of petitioner. That Dumalasa and her fellow members of the Board refused to heed the summons
and avail of the opportunity to defend themselves as they instead opted to hide behind the corporate veil
does not shield them from the application of labor laws.

Dumalasa cannot now thus question the implementation of the Writ of Execution on her on the
pretext that jurisdiction was not validly acquired over her person or that HELIOS has a separate and
distinct personality as a corporate entity. To apply the normal precepts on corporate fiction and the
technical rules on service of summons would be to overturn the bias of the Constitution and the laws in
favor of labor.

On Carmens liability

A perusal of the Labor Arbiters Decision readily shows that, notwithstanding the finding of bad
faith on the part of the management, the dispositive portion did not expressly mention the solidary
liability of the officers and Board members, including Dumalasa.

Ineluctably, absent a clear and convincing showing of the bad faith in effecting the closure of
HELIOS that can be individually attributed to petitioner as an officer thereof, and without the
pronouncement in the Decision that she is being held solidarily liable, petitioner is only jointly liable.

The Court in fact finds that the present action is actually a last-ditch attempt on the part of
Dumalasa to wriggle its way out of her share in the judgment obligation and to discuss the defenses
which she failed to interpose when given the opportunity. Even as Dumalasa avers that she is not
questioning the final and executory Decision of the Labor Arbiter and admits liability, albeit only joint,
still, she proceeds to interpose the defenses that jurisdiction was not acquired over her person and that
HELIOS has a separate juridical personality.

As for Dumalasas questioning the levy upon her house and lot, she conveniently omits to
mention that the same are actually conjugal property belonging to her and her husband. Whether
petitioner is jointly or solidarily liable for the judgment obligation, the levied property is not fully
absolved from any lien except if it be shown that it is exempt from execution.

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DYNAMIC SIGNMAKER OUTDOOR ADVERTISING SERVICES, INC., et al.
v. FRANCISCO POTONGAN
461 SCRA 328 (2005), THIRD DIVISION (Carpio Morales, J.)
If exercised in good faith for the purpose of advancing business interests, not of defeating or circumventing the rights
of employees, the managerial prerogative to transfer personnel from one area of operation to another is justified.

Respondent Francisco Potongan (Potongan) worked for Dynamic Signmaker Outdoor
Advertising Services (Corporation) as a Production Supervisor. The union of rank-and-file employees of
corporation declared a strike on the ground that the corporation replaced all its supervisors.
Subsequently Potongan did not receive his salary and he was advised to take an indefinite leave of
absence. Then Potongan was being charge by the company for the alleged burning of corporations main
building and for the disruption of work. However, Potangan denied all allegations. Potongan then filed a
complaint for illegal dismissal with NLRC against corporation.

The Labor Arbiter dismissed the case on the ground that the action was barred by prior
judgment regarding the strike of union. Potongan then appealed, contending that the Labor Arbiter did
not acquire jurisdiction over him because he was not even a member of the union. The NLRC set aside
the Labor Arbiters decision and directed respondent Potongan to go back to work.

The Labor Arbiter eventually dismissed Potongans complaint for lack of merit, holding that,
inter alia, Potongan should have reported back to work and/or inquired into the results of the
investigation of the charges against him; and that the belated filing of his complaint partakes of a "fishing
expedition."

On appeal, the NLRC affirmed the decision of the Labor Arbiter. The Court of Appeals (CA)
however, reversed the decision of NLRC holding that Potongan was denied due process and was
dismissed without cause.

ISSUE:

Whether or not the dismissal of Potongan was a valid exercise of management prerogatives

HELD:

The Supreme Court recognizes that management has wide latitude to regulate, according to its
own discretion and judgment, all aspects of employment, including the freedom to transfer and reassign
employees according to the requirements of its business. The scope and limits of the exercise of
management prerogatives, must, however, be balanced against the security of tenure given to labor.

If exercised in good faith for the purpose of advancing business interests, not of defeating or
circumventing the rights of employees, the managerial prerogative to transfer personnel from one area of
operation to another is justified.

The Supreme Court finds it difficult, however, to attribute good faith on the part of Dynamic.
Potongan was instructed to go on indefinite leave. He was asked to return to work only after more than
three years from the time he was instructed to go on indefinite leave during which period his salaries
were withheld, and only after the NLRC promulgated its decision of May 21, 1998 reversing the labor
arbiters dismissal of his complaint.

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ARNULFO O. ENDICO v. QUANTUM DISTRIBUTION CENTER
577 SCRA 299 (2009), FIRST DIVISION (Carpio Morales, J.)
The right of employees to security of tenure does not give them vested rights to their positions to the extent of
depriving management of its prerogative to change their assignments or to transfer them.
Quantum Foods Center hired Arnulfo O. Endico (Endico) as Field Supervisor of Davao City.
He was later on transferred in Cebu. Due to Endicos achievements and contributions to Quantum
Foods, he was promoted as Area Manager of Cebu. However, after fruitful years of employment,
Quantum Foods was adversely affected by economic slowdown, which compelled it to streamline its
operations through the reduction of the companys contractual merchandisers to save on operation cost.
Thereafter, for some misfortunate events, Endico was immediately relieved from service. Endico
thereafter filed a complaint for constructive illegal dismissal.

The Labor Arbiter rendered a decision in Endicos favor. Quantum Foods appealed to the
National Labor Relations Commission (NLRC) which affirmed the Labor Arbiters decision with
modification. Quantum Foods then filed a Petition for Certiorari before the Court of Appeals (CA) who
ruled in favor of Quantum Foods. The Court of Appeals ruled that Quantum Foods had yet to decide
on the administrative case when Endico immediately filed the complaint for constructive dismissal. The
CA concluded that Endico filed the complaint in anticipation of what he perceived to be the final
outcome of the administrative investigation. Hence, this petition.


ISSUE:
Whether or not Endico was constructively dismissed

HELD:
Jurisprudence recognizes the exercise of management prerogatives. Labor laws also discourage
interference with an employers judgment in the conduct of its business. For this reason, the Court often
declines to interfere in legitimate business decisions of employers. The law must protect not only the
welfare of employees, but also the right of employers.
In the pursuit of its legitimate business interests, especially during adverse business conditions,
management has the prerogative to transfer or assign employees from one office or area of operation to
another provided there is no demotion in rank or diminution of salary, benefits and other privileges
and the action is not motivated by discrimination, bad faith, or effected as a form of punishment or
demotion without sufficient cause. This privilege is inherent in the right of employers to control and
manage their enterprises effectively. The right of employees to security of tenure does not give them
vested rights to their positions to the extent of depriving management of its prerogative to change their
assignments or to transfer them.
Managerial prerogatives, however, are subject to limitations provided by law, collective
bargaining agreements, and general principles of fair play and justice.
In this case, the Court finds no reason to disturb the conclusion of the CA that there was no
constructive dismissal. Reassignments made by management pending investigation of violations of
company policies and procedures allegedly committed by an employee fall within the ambit of
management prerogative. The decision of Quantum Foods to transfer Endico pending investigation was
a valid exercise of management prerogative to discipline its employees. The transfer, while incidental to
the charges against Endico, was not meant as a penalty, but rather as a preventive measure to avoid
further loss of sales and the destruction of Quantum Foods image and goodwill. It was not designed to
be the culmination of the then on-going administrative investigation against Endico.
Neither was there any demotion in rank or any diminution of Endicos salary, privileges and
other benefits. Endico was being transferred to the head office as area sales manager, the same position

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Endico held in Cebu. There was also no proof that the transfer involved a diminution of
Endicos salary, privileges and other benefits.
On the alleged inconvenience on Endico and his family because of the transfer from Cebu to the
head office in Paraaque, the Court rules that the transfer is valid, there being no showing that there was
bad faith on the part of Quantum Foods. Moreover, the Court finds that Quantum Foods, considering
the declining sales and the loss of a major account in Cebu, was acting in the legitimate pursuit of what it
considered its best interest in deciding to transfer Endico to the head office.



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FE LA ROSA, et al. v. AMBASSADOR HOTEL
581 SCRA 340 (2009), SECOND DIVISION (Carpio Morales, J.)

Case law holds that constructive dismissal occurs when there is cessation of work because continued employment is rendered
impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear discrimination,
insensibility, or disdain by an employer becomes unbearable to the employee.

Petitioners Fe La Rosa, Ofelia Velez, Cely Domingo, Jona Natividad and Edgar De Leon (La
Rosa, et al.), were employees of respondent Ambassador Hotel. La Rosa, et al. filed before the National
Labor Relations Commission (NLRC) several complaints for illegal dismissal, illegal suspension, and
illegal deductions against the hotel and its manager. La Rosa, et al. alleged that after filing their
complaints with the Department of Labor, the latter inspected the hotels premises. The hotel was
thereafter found to have been violating labor standards laws. Consequently, after such incident, the
management of the hotel retaliated by suspending and/or constructively dismissing them by drastically
reducing their work days through the adoption of a work reduction/rotation scheme. The hotel however
countered that such reduction/rotation scheme was an exercise of its management prerogative due to
business losses.

The labor arbiter found the hotel and its manager guilty of illegal dismissal. The hotel appealed
to the NLRC but the latter affirmed the labor arbiters ruling with modification. The hotel appealed and
prayed for the issuance of an injunctive writ before the Court of Appeals. The appellate court reversed
the NLRC decision and dismissed the petitioners complaints, stating that there was no constructive
dismissal.

ISSUES:

Whether or not La Rosa et al. were constructively dismissed

HELD:

The records fail, however, to show any documentary proof that the work reduction scheme was
adopted due to Ambassadors business reverses. The hotels memorandum dated April 5, 2000 (sic,
should be 2002) informing La Rosa et al. of the adoption of a two-day work scheme effective April 5,
2002 made no mention why such scheme was being adopted. Neither do the records show any
documentary proof that the hotel suffered financial losses to justify its adoption of the said scheme to
stabilize its operations.

What is undisputed, as found by both the labor arbiter and the NLRC and admitted by
respondent itself, is that the complaints for violation of labor standards laws were filed by La Rosa et al.
against Ambassador Hotel at the DOLE-NCR, some of which complaints were partially settled; and that
almost immediately after the partial settlement of the said complaints, the work reduction/rotation
scheme was implemented.

Case law holds that constructive dismissal occurs when there is cessation of work because continued
employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay
or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee.
The hotels sudden, arbitrary and unfounded adoption of the two-day work scheme which greatly reduced La Rosa, et
al.s salaries renders it liable for constructive dismissal.


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Upon the other hand, La Rosa et al.s immediate filing of complaints for illegal
suspension and illegal dismissal after the implementation of the questioned work scheme,
which scheme was adopted soon after petitioners complaints against respondent for violation of labor
standards laws were found meritorious, negates respondents claim of abandonment. An employee who
takes steps to protest his dismissal cannot by logic be said to have abandoned his work.

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ADELINO FELIX v. NATIONAL LABOR RELATIONS COMMISSION and
REPUBLIC ASAHI GLASS CORPORATION
442 SCRA 465 (2004), THIRD DIVISION (Carpio Morales, J.)

Substantial evidence must support the dismissal of an employee on the ground of loss of trust and confidence.
Petitioner Adelino Felix was hired by the Republic Asahi Glass Corporation as a Cadet Engineer.
Sometime in 1992, Felix was offered a chance to train and qualify for the position of Assistant Manager
but he declined and waived the opportunity to the one who was next-in-line. By Felix's claim, he was
asked by certain officers of the company to resign and accept a separation package, failing which he
would be terminated for loss of confidence.
Felix, however, refused to resign and accept separation benefits, drawing the officers of the
company to, by his claim, start harassing him. Thus, he was not given work and another employee, Mr.
Elmer Tacata, was assigned to take over his post and function. Unable to withstand the manner by which
he was being treated by the company, Felix, through his lawyer, warned the Republic Asahi Glass
Corporation about the illegality of its actions. Felix attributed the company's harassment against him to
his being a member of the supervisory union then being formed. The Republic Asahi Glass Corporation
subsequently terminated Felixx services for loss of trust and confidence.
Felix thus lodged a complaint for illegal dismissal. The Labor Arbiter dismissed Felix's
complaint. On appeal, the National Labor Relations Commission (NLRC) dismissed Felix's complaint
for lack of merit. The Court of Appeals likewise dismissed the complaint.
ISSUE:

Whether or not the companys loss of trust and confidence is founded on facts established by
substantial and competent evidence

HELD:

The rule is that high respect is accorded to the findings of fact of quasi-judicial agencies, more so
in the case at bar where both the Labor Arbiter and the NLRC share the same findings. The rule is not
however, without exceptions one of which is when the findings of fact of the labor officials on which
the conclusion was based are not supported by substantial evidence. The same is true when it is
perceived that far too much is concluded, inferred or deducted from bare facts adduced in evidence.

The employers evidence, although not required to be of such degree as that required in criminal
cases i.e. proof beyond reasonable doubt, must be substantial it must clearly and convincingly establish
the facts upon which loss of confidence in the employee may be made to rest. In the case at bar, the
company failed to discharge this burden.

Felix was hastily dismissed by ASAHI as the former was not given adequate time to prepare for
his defense but was preemptorily dismissed even without any formal investigation or hearing. It is settled
that where the employee denies the charges against him, a hearing is necessary to thresh out any doubt.
The failure of the company to give petitioner, who denied the charges against him, the benefit of a
hearing and an investigation before his termination constitutes an infringement of his constitutional right
to due process.

It bears emphasis that the matter of determining whether the cause for dismissal is justified on
the ground of loss of confidence cannot be left entirely to the employer. Impartial tribunals do not only
rely on the statement made by the employer that there is loss of confidence unless duly proved or
sufficiently substantiated.


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At all events, even if all the allegations are true, they are not of such nature to
merit the penalty of dismissal given the 14 years in service of Felix. Dismissal is unduly
harsh and grossly disproportionate to the charges. This rule on proportionality that the penalty
imposed should commensurate to the gravity of the offense has been observed in a number of cases.

There being no basis in law or in fact justifying Felixs dismissal on the basis of loss of trust and
confidence, his dismissal was illegal.


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G & M (PHIL.), INC., v. WILLIE BATOMALAQUE
461 SCRA 111 (2005), THIRD DIVISION (Carpio Morales, J.)
The burden of proving payment of monetary claims rests on the employer.

Abdul Aziz Abdullah Al Muhaimid Najad Car Maintenance Association (Abdul Aziz) hired
Willie Batomalaque as car painter through a recruiter and agent petitioner G & M Phil., Inc. (G&M).
Their contract is for 2 years.

Batomalaque started working on March 10, 1992, but on June 7, 1994, he was repatriated. He
then filed a complaint against G&M, Abdul Aziz and Country Empire Insurance Company for non-
payment and underpayment of salaries and damages with the Philippine Overseas Employment
Administration (POEA). The Labor Arbiter (LA) credited Batomalaques complaint for underpayment
of salaries during the first year of his contract but denied his other claims, and ordered G&M and other
defendants to pay Batomalaque. On appeal, the National Labor Relations Commission affirmed the
decision of the LA.

ISSUE:

Whether or not G&M has the obligation to prove that Batomalaque was paid his salaries in full

HELD:

Specifically with respect to labor cases, the burden of proving payment of monetary claims rests
on the employer, the rationale being that the pertinent personnel files, payrolls, records, remittances and
other similar documents which will show that overtime, differentials, service incentive leave and other
claims of workers have been paid are not in the possession of the worker but in the custody and
absolute control of the employer.

Aside, however, from its bare allegation that its principal Abdul Aziz had fully paid
Batomalaques salaries, G&M did not present any evidence, e.g., payroll or payslips, to support its
defense of payment. G&M thus failed to discharge the onus probandi. G&M, as the recruiter and agent of
Abdul Aziz, is thus solidarily liable with the latter for the unpaid wages of Batomalaque.

On repeated occasions, the Court ruled that the debtor has the burden of showing with legal
certainty that the obligation has been discharged by payment. To discharge means to extinguish an
obligation, and in contract law discharge occurs either when the parties have performed their obligations
in the contract, or when an event the conduct of the parties, or the operation of law releases the parties
from performing. Thus, a party who alleges that an obligation has been extinguished must prove facts or
acts giving rise to the extinction.

The fact of underpayment does not shift the burden of evidence to Batomalaque because partial
payment does not extinguish the obligation. Only when the debtor introduces evidence that the
obligation has been extinguished does the burden of evidence shift to the creditor who is then under a
duty of producing evidence to show why payment does not extinguish the obligation.

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LUNESA O. LANSANGAN AND ROCITA CENDAA v. AMKOR
TECHNOLOGY PHILIPPINES
577 SCRA 493 (2009), SECOND DIVISION (Carpio Morales, J.)

Payment of backwages and other benefits is justified only if the employee was unjustly dismissed.

An email was sent to Amkor Technology Philippines (Amkor) through their General Manager
alleging that the Lunesa Lansangan (Lansangan) and Rocita Cendana (Cendana) stole company time.
Lansangan and Cendana admitted to the wrongdoing and were terminated for extremely serious
offenses. The two then filed a case of illegal dismissal against Amkor. The Labor Arbiter (LA) ordered
for their reinstatement to their former positions without backwages, but dismissed the complaint on
basis of Lansangan and Cendanas guilt. The two did not appeal the finding that they were guilty, and
moved for the writ of execution. Amkor appealed the decision to the National Labor Relations
Commissions (NLRC) and was subsequently granted. The NLRC deleted the grant for reinstatement of
the LA.

The Court of Appeals affirmed the decision of the NLRC that Lansangan and Cendana are guilty
and should not be reinstated but modified in so far as backwages are concerned that it must be paid in
full.


ISSUE:
Whether or not Lansangan and Cendana are entitled to backwages and reinstatement

HELD:

The Arbiter found Lansangan and Cendanas dismissal to be valid. Such finding had, as stated
earlier, become final, they not having appealed it. Lansangan and Cendanas are not entitled to full
backwages as their dismissal was not found to be illegal. Agabon v. NLRC so states payment
of backwages and other benefits is justified only if the employee was unjustly dismissed.


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PANFILO MACASERO v. SOUTHERN INDUSTRIAL GASES PHILIPPINES
and/or NEIL LINDSAY
577 SCRA 500 (2009), SECOND DIVISION (Carpio Morales, J.)

An illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. In instances where
reinstatement is no longer feasible, separation pay is granted. In effect, an illegally dismissed employee is entitled to either
reinstatement, if viable, or if not, separation pay and backwages.

Panfilo Macasero works as Carbon Dioxide Bulk Tank Escort for Southern Industrial Gases,
Philippines (SIGP). He was severed from his job for the reason that his services were no longer needed.
Macasero filed a case of illegal dismissal against SIGP before the Labor Arbiter (LA) who ruled that he is
considered a regular employee but was not illegally dismissed and that he is entitled to separation pay
equivalent to 1 month for every year of service plus 13
th
month pay.

The National Labor Relations Commission (NLRC) affirmed the decision of the LA but
modified the computation for the separation pay. The Court of Appeals (CA) also affirmed the decision
of the NLRC.

ISSUE:

Whether or not Macasero is illegally dismissed and is entitled to separation pay

HELD:
While both labor tribunals and the appellate court held that Macasero failed to prove the fact of
his dismissal, they oddly ordered the award of separation pay in lieu of reinstatement in light of SIGP
companys "firm stance that Macasero was not its employee vis a vis the unflinching assertion of
Macasero that he was which does not create a fertile ground for reinstatement." It goes without saying
that the award of separation pay is inconsistent with a finding that there was no illegal dismissal, for
under Article 279 of the Labor Code and as held in a catena of cases, an employee who is dismissed
without just cause and without due process is entitled to backwages and reinstatement or payment of
separation pay in lieu thereof.
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement.
The two reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible
because of strained relations between the employee and the employer, separation pay is granted. In
effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and backwages.

The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is
no longer practical or in the best interest of the parties. Separation pay in lieu of reinstatement may
likewise be awarded if the employee decides not to be reinstated.





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Reynaldo Madrigalejos v. Geminilou Trucking Service Liberty Galotera et al.
G. R. No. 179174, 24 December 2008, SECOND DIVISION (Carpio-Morales, J.)

The test of constructive dismissal is whether a reasonable person in the employee's position would have felt
compelled to give up his job under the circumstances.

Reynaldo Madrigalejos was hired by Geminilou Trucking Service Liberty Galotera as a truck
driver to haul and deliver products of San Miguel Pure Foods Company, Inc. Madrigalejos claimed that
he was requested by Geminilou Trucking Service Liberty Galotera et al. to sign a contract entitled
Kasunduan Sa Pag-Upa ng Serbisyo which he refused as he found it to alter his status as a regular
employee to merely contractual, and it contained a waiver of benefits that had accrued since he started
working for respondents.

Claiming that he was terminated by not signing the Kasunduan, Madrigalejos filed with the National
Labor Relations Commission (NRLC) a complaint for constructive dismissal against Geminilou
Trucking Service Liberty Galotera et al.

Geminilou Trucking Service Liberty Galotera et al. denied dismissing Madrigalejos from his
employment, explaining that he unilaterally decided to stop reporting for work, following the filing by a
fellow driver of a complaint against him for allegedly attacking his fellow driver with a knife.

The Labor Arbiter declared that Madrigalejos had been illegally dismissed. The NLRC reversed
the Decision ruling that there was no termination of employment. The appellate court denied petitioners
appeal finding that even assuming that Madrigalejos was required but refused to sign the Kasunduan, his
refusal does not per se adequately support the charge of dismissal. The appellate court added that while
technical rules on evidence are not strictly followed in the NLRC, a charge of dismissal must still be
supported by substantial evidence at the very least, or such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.

ISSUE:

Whether or not the employer bears the burden of proof to show that there was unjustified
refusal to report for work

HELD:

The Court's examination of the records reveals that the factual findings of the NLRC, as
affirmed by the appellate court, are supported by substantial evidence, hence, there is no cogent reason
for the Court to modify or reverse the same.

Constructive dismissal is a cessation of work because continued employment is rendered
impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or
when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the
employee. The test of constructive dismissal is whether a reasonable person in the employee's position
would have felt compelled to give up his job under the circumstances.

In the present case, the records on hand show that the lone piece of evidence submitted by
petitioner to substantiate his claim of constructive dismissal is an unsigned copy of the Kasunduan. This
falls way short of the required quantum of proof which, as the appellate court pointed out, is substantial

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evidence, or such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion.

Under the circumstances, the Court finds that the appellate court did not err in sustaining
Geminilou Trucking Service Liberty Galotera et als claim that Madrigalejos was not dismissed, but that
he simply failed to report for work after an altercation with a fellow driver, which incident was the
subject of conciliation proceedings before the Sangguniang Barangay.


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MAJURINE L. MAURICIO v. NATIONAL LABOR RELATIONS
COMMISSION, et al.
475 SCRA 323 (2005), THIRD DIVISION (Carpio Morales J.)

One of the inherent powers of courts which should apply in equal force to quasi-judicial bodies is to amend and
control its processes so as to make them conformable to law and justice. This includes the right to reverse itself, especially
when in its opinion it has committed an error or mistake in judgment and adherence to its decision would cause injustice.

Majurine L. Mauricio (Majurine) started working as an Administrative Assistant in the Legal
Department of the Manila Banking Corporation as a probationary employee. As a pre-employment
requirement, the bank directed the submission by Mauricio of some required documents. However, she
failed to do so. She was advised that the processing of her regularization as employee would be held in
abeyance. The bank gave her extension dates twice with information that her failure to do so would
cause the termination of her employment. Despite the deadline given her, she still failed to comply with
the requirements.

Mauricio, informed the bank that she could not secure a clearance from her previous employer,
the Manila Bankers Life Insurance Corporation (MBLIC), a sister company of the bank, as she had a
pending case with it. She requested that any action relative to her employment be held in abeyance as
she was still following up the early resolution of the case. In response, the bank denied her request.
Thus, she filed a complaint for illegal dismissal, unpaid salary, and moral and exemplary damages against
the bank before the Labor Arbiter, but such was dismissed.

On Mauricios appeal, the National Labor Relations Commission (NLRC), reversed the decision
of the Labor Arbiter (LA). On the banks Motion for Reconsideration, however, the NLRC, reinstated
in toto the Decision of the LA. Mauricio thereupon challenged via Certiorari under Rule 65 before the
Court of Appeals (CA). The CA affirmed the NLRC decision.


ISSUE

Whether or not NLRC committed grave abuse of discretion when it reversed its original
Decision and reinstated in toto Decision of the Labor Arbiter

HELD

There is nothing radical and highly questionable with the NLRC reversing its original decision
if supported with substantial evidence. Respecting Mauricios contention that in its earlier Decision, the
NLRC already passed upon the arguments raised by respondents in their Motion for Reconsideration
before it, Mauricio herself provides the answer when she quotes in her present petition what she terms
as the trenchant observation of the High Court.

In her petition, while Mauricio quotes at length the September 24, 2001 original decision of the
NLRC, she fails to explain why the NLRC should not have reversed it and why the Court of Appeals
should not have sustained the reversal. And what error of law should be reviewed by this Court,
Mauricio likewise fails to point out.

One of the inherent powers of courts which should apply in equal force to quasi-judicial bodies
is to amend and control its processes so as to make them conformable to law and justice. This includes
the right to reverse itself, especially when in its opinion it has committed an error or mistake in

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judgment and adherence to its decision would cause injustice. This, the NLRC exercised
which bore the imprimatur of the CA. Mauricio has, however, failed to advance any
meritorious ground why the Court should disturb such exercise.




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MCDONALDS (KATIPUNAN BRANCH), et al. v. MA. DULCE ALBA
574 SCRA 427 (2008), SECOND DIVISION (Carpio Morales, J.)

Violation of established rules and policies, to be considered serious misconduct, should be performed with wrongful
intent.

Ma. Dulce Alba (Alba) was hired as part of the service crew of McDonalds Katipunan Branch.
During the orientation of newly hired employees, McDonalds provided Alba with a copy of the Crew
Employee Handbook on rules and regulations including its meal policies, which state that an employee
was not permitted to eat inside the crew room while on duty, and that doing so would result in summary
dismissal.

Rizza Santiago (Santiago), another crew member, reported to the store manager Kit Alvarez
(Alvarez) that she witnessed Alba eating inside the crew room during her duty. McDonalds thus
suspended Alba for five days because of the incident. When asked about it, Alba explained that she did
indeed ate inside the crew room but that it was only because she was had a stomach ache due to hunger.
Nevertheless, McDonalds found Alba guilty of flouting company regulations and immediately
terminated her services. Alba thus lodged a complaint against McDonalds before the National Labor
Relations Commission (NLRC) which dismissed it without prejudice.

Alba re-filed her complaint, and after submission of the parties respective position papers and
responsive pleadings, Labor Arbiter Pablo Espiritu Jr. found in favor of Alba, holding that while she
violated the meal policy of McDonalds, dismissal was too harsh a penalty, and suspension without pay
would have sufficed. McDonalds appealed the finding of the Labor Arbiter to the NLRC, which denied
the same.

ISSUE:

Whether or not the violation of the meal policy amounts to serious or willful misconduct which
would justify dismissal

HELD:

There is no dispute that Alba violated McDonalds meal policy. The only issue is whether such
violation amounts to or borders on "serious or willful" misconduct or willful disobedience, as petitioners
posit, to call for respondents dismissal. By any measure, the Supreme Court holds not.

With respect to serious misconduct, it is not sufficient that the act or the conduct complained of
must have violated some established rules or policies. It must have been performed with wrongful intent.

McDonalds, on which the onus of proving lawful cause in sustaining the dismissal of Alba lies,
failed to prove that her misconduct was induced by a perverse and wrongful intent, they having merely
anchored their claim that she was on her knowledge of the meal policy.

While McDonalds wields a wide latitude of discretion in the promulgation of policies, rules and
regulations on work-related activities of its employees, these must, however, be fair and reasonable at all
times, and the corresponding sanctions for violations thereof, when prescribed, must be commensurate
thereto as well as to the degree of the infraction.


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Given Albas claim that she was having stomach pains due to hunger, which is not
implausible, the same should have been properly taken into account in the imposition of
the appropriate penalty for violation of the meal policy. McDonalds suspension for five days sufficed.
With that penalty, the necessity of cautioning other employees who may be wont to violate the same
policy was not compromised.

Moreover, McDonalds likewise failed to prove any resultant material damage or prejudice on
their part as a consequence of respondent's questioned act. Their claim that the act would cause
"irremediable harm to the companys business" is too vague to merit consideration.


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MILAGROS PANUNCILLO v. CAP PHILIPPINES, INC.
515 SCRA 323 (2007), SECOND DIVISION (Carpio Morales, J.)
The protection of the rights of the laborers does not authorize the oppression or self-destruction of the employer.
Milagros Panuncillo was hired as Office Senior Clerk by CAP Philippines Inc. In order to secure
the education of her son, Panuncillo procured an educational plan which she had fully paid but which
she later sold to Josefina Pernes for P37,000. Before the actual transfer of the plan could be effected,
however, Panuncillo pledged it for P50,000 to John Chua who, however, sold it to Benito Bonghanoy.
Bonghanoy in turn sold the plan to Gaudioso R. Uy for P60,000.
Having gotten wind of the transactions subsequent to her purchase of the plan, Josefina
informed CAP Philippines Inc. that Panuncillo had "swindled" her but that she was willing to settle the
case amicably as long as Panuncillo will pay the amount involved and the interest.
CAP Philippines Inc. terminated the services of Panuncillo. Panuncillo sought reconsideration of
her dismissal. Acting on Panuncillos motion for reconsideration, CAP Philippines Inc. denied the same.
Panuncillo thus filed a complaint for illegal dismissal, 13th month pay, service incentive leave pay,
damages and attorneys fees against CAP Philippines Inc.
The Labor Arbiter, while finding that the dismissal was for a valid cause, found the same too
harsh. He thus ordered the reinstatement of Panuncillo to a position one rank lower than her previous
position. On appeal, the National Labor Relations Commission (NLRC) reversed the decision of the
Labor Arbiter. It held that Panuncillos dismissal was illegal and accordingly ordered her reinstatement to
her former position.
CAP Philippines Inc. challenged the NLRC Decision before the appellate court via Petition for
Certiorari. The appellate court reversed the NLRC Decision and held that the dismissal was valid and that
CAP Philippines Inc. complied with the procedural requirements of due process. Hence, the present
petition.
ISSUE:
Whether or not Milagros has been illegally dismissed
HELD:
Panuncillos repeated violation of Section 8.4 of CAP Philippines Incs Code of Discipline, she
violated the trust and confidence of CAP Philippines Inc. and its customers. To allow her to continue
with her employment puts CAP Philippines Inc. under the risk of being embroiled in unnecessary
lawsuits from customers similarly situated as Josefina, et al. Clearly, CAP Philippines Inc. exercised its
management prerogative when it dismissed Panuncillo.
Under the Labor Code, the employer may terminate an employment on the ground of serious
misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work. Infractions of company rules and regulations have been
declared to belong to this category and thus are valid causes for termination of employment by the
employer.
The employer cannot be compelled to continue the employment of a person who was found
guilty of maliciously committing acts which are detrimental to his interests. It will be highly prejudicial to
the interests of the employer to impose on him the charges that warranted his dismissal from
employment. Indeed, it will demoralize the rank and file if the undeserving, if not undesirable, remain in
the service. It may encourage him to do even worse and will render a mockery of the rules of discipline
that employees are required to observe. This Court was more emphatic in holding that in protecting the
rights of the laborer, it cannot authorize the oppression or self-destruction of the employer.
There can thus be no doubt that Panuncillo was given ample opportunity to explain her side.
Parenthetically, when an employee admits the acts complained of, as in Panuncillos case, no formal
hearing is even necessary.

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NOEL E. MORA v. AVESCO MARKETING CORPORATION
571 SCRA 226 (2008), SECOND DIVISION (Carpio Morales, J.)
Voluntary resignations being unconditional in nature, both the intent and the overt act of relinquishment should
concur.

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

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ANICETO W. NAGUIT JR. v. NATIONAL LABOR
RELATIONS COMMISSION, et al.
408 SCRA 617 (2003), THIRD DIVISION (Carpio Morales, J.)
In order for affidavits to be admissible as evidence, the Labor Code provides that the adverse party should be given
opportunity to cross-examine the affiants.
Petitioner Aniceto Naguit was employed as an administrative officer of the Manila Electric
Company (MERALCO). Naguit rendered overtime work 8am to 12pm. Upon the preparation of his
timesheet, it was reflected that he worked until 5pm instead of 12pm. Naguit did not inform the
timekeeper of this fact. Furthermore, Naguit being the custodian of petty cash, released to Fidel Cabuhat
the amount representing meal allowance and rental for a jeep covering his alleged overtime work. Two
years later, he was charged with violating company policy because of said incident. In the administrative
hearing, MERALCOs evidence consisted primarily of the sworn statements of Cabuhat alleging that he
was induced by Naguit to falsify the time cards. Naguit was dismissed after 32 years of service.

Naguit appealed his dismissal. The Labor Arbiter rendered decision in favor of Naguit. On
appeal, the National Labor Relations Commission (NLRC) reversed the decision of the Labor Arbiter.
The Court of Appeals affirmed the NLRCs decision.

Issue:

Whether or not the NLRC erred in giving full credence to the affidavit of Cabuhat

Held:
In fine, the Court credits that Naguit was in good faith when he did not correct the entry in the
Notice of Overtime and Timesheet reflecting that he worked up to 5:00 p.m. on June 6, 1987. The
charge of falsification against him does not thus lie.
In labor cases, the Court has consistently held that where the adverse party is deprived of
opportunity to cross-examine the affiants, affidavits are generally rejected for being hearsay, unless the
affiant themselves are placed on the witness stand to testify thereon. Thusly, such affidavits of Cabuhat
are inadmissible as evidence against Naguit.
Naguit contends that the NLRC committed grave abuse of discretion in giving full credence to
the affidavits of Cabuhat claiming that he was induced by Naguit to claim overtime pay despite
Cabuhat's failure to affirm them during the arbitral proceedings, he having failed to show up, thus
making them inadmissible under the hearsay rule.


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NEW SUNRISE METAL CONSTRUCTION, et al. v. VICTOR PIA, et al.
527 SCRA 289 (2007), SECOND DIVISION (Carpio Morales, J.)

Unsatisfactory performance, under the Labor Code, must be gross and habitual to constitute just cause for dismissal.

Victor Pia, et al. were hired by New Sunrise under separate 6-month contracts but their services
were subsequently terminated even before the expiration of said contract due to alleged poor
performance. Pia, et al. filed a complainant for illegal dismissal and underpayment of wages as well as
non-payment of other benefits before the Labor Arbiter. The Labor Arbiter ruled in favor of Pia, et al
New Sunrise was ordered to pay Pia, et al. their proportionate 13
th
month pay and corresponding salaries
for the unexpired portion.

New sunrise appealed to the National Labor and Relations Commission (NLRC) but NLRC
dismissed the appeal. A motion for reconsideration was filed. The NLRC reversed its resolution finding
the dismissal to be based on just cause. On appeal, the Court of Appeals affirmed the Labor Arbiters
decision. Hence, this petition.

ISSUE:

Whether or not incompetence or poor performance, not amounting to gross and habitual
neglect of duties, can be a valid cause for termination of employment

HELD:

The Supreme Court upheld the decision of the Labor Arbiter positing that at all events,
unsatisfactory performance cannot be considered a just cause for dismissal under the Labor Code if it
does not amount to gross and habitual neglect of duties. On this score, New Sunrise failed to prove that
the alleged inefficiency of the 12 respondents amounted to gross and habitual neglect of duties.

There is no denying that the unsatisfactory performance of the employees were proven in the
report provided by New Sunrise but sad to say, it is not enough proof that it amounted to gross and
habitual neglect of duties.

Further, New Sunrise failed to establish that they were informed, at the time of hiring, of the
standards they were expected to meet, i.e., that they were supposed to reach certain quotas. This is not to
mention that New Sunrise failed to present proof that respondents were apprised of their poor or below
average performance after each evaluation period to at least give them the opportunity to improve their
performance.


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RONALDO NICOL et al. v. FOOT JOY INDUSTRIAL CORP. et al.
528 SCRA 300 (2007), SECOND DIVISION (Carpio Morales, J.)

The New Rules of Procedure of the NLRC, as amended, allows the reduction of the appeal bond.

News of a temporary shutdown of respondent Foot Joy Industrial Corp. came about on
February 2, 2001. Two days after, a fire razed the company and its premises. Subsequently, the
employees filed with the National Labor Relations Commission (NLRC) two separate complaints for
illegal closure resulting to illegal dismissal and nonpayment of wage increase. The company declared the
total closure and cessation of its business operations allegedly because of severe losses and notified the
employees that they shall be terminated from employment. The Labor Arbiter (LA) found Ronaldo
Nicol, et al. were constructively dismissed and awarded them separation pay.

Foot Joy filed a Motion to Reduce Bond with their appeal to the NLRC but the Motion was
denied. As Foot Joy failed to post the additional bond the NLRC dismissed Foot Joys appeal for non-
perfection thereof.

On appeal, the Court of Appeals (CA) reversed the NLRC.

ISSUE:

Whether or not a motion to reduce the appeal bond can be given due course even if it is not
accompanied by a bond in a reasonable amount

HELD:

It is provided in Article 223 of the Labor Code that in case of a judgment involving a monetary
award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to
the monetary award in the judgment appealed from.
Also, Sections 4(a) of Rule VI of the New Rules of Procedure of the NLRC the states that one
of the requisites for perfection of appeal is that it shall be filed with proof of payment of the required
appeal fee and surety bond as provided in Section 6 of the Rule. Section 6 provides that In case the
decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety bond. The appeal bond shall either
be in cash or surety in an amount equivalent to the monetary award, exclusive of damages and attorneys
fees.
The necessary import of the foregoing provisions is that in the case of an employer appealing the
labor arbiters decision to the NLRC, the posting of a cash or surety bond to perfect an appeal of a
monetary judgment is not only mandatory but also jurisdictional, non-compliance with which has the
effect of rendering the judgment final and executory.
As stressed in Ong v. Court of Appeals, it is the intention of the lawmakers to make the bond an
indispensable requisite for the perfection of an appeal by the employer.
Be that as it may, Section 6 of Rule VI of the New Rules of Procedure of the NLRC, as
amended, allows the reduction of the appeal bond. This practice-evolved rule has been made explicit by
Resolution 01-02, series of 2002, subject to the conditions that (1) the motion to reduce the bond shall
be based on meritorious grounds; and (2) a reasonable amount in relation to the monetary award is
posted by the appellant, otherwise the filing of the motion to reduce bond shall not stop the running of
the period to perfect an appeal.

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There is no dispute that respondents filed a Notice of Appeal and complied with
the other requirements for perfecting an appeal, save for the posting of the full amount of
the bond, on December 20, 2001 or nine days after receipt of the labor arbiters decision. And
admittedly, respondents Motion to Reduce Bond was accompanied by an actual tender of a P10 million
surety bond executed by the Security Pacific Assurance Corporation.

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PHILIPPINE AIRLINES, INC. v. ENRIQUE LIGAN, et al.
G.R. No. 146408, 30 April 2009, SPECIAL SECOND DIVISION (Carpio Morales,
J.)

It must be stressed that respondents, having been declared to be regular employees, had acquired security of
tenure. As such, they could only be dismissed by the real employer, on the basis of just or authorized cause, and with
observance of procedural due process.

Enrique Ligan, et al. and the other respondents were employees of Synergy Services Corporation
(Synergy) which provides manpower for Philippine Airlines. It was later discovered that Synergy is a
labor-only contractor. They were dismissed by Philippine Airlines on several grounds, one of which is in
the guise of retrenchment. The legality of the dismissal of the Ligan, et al. has been pending before the
Court of Appeals.

Philippine Airlines paid the wages of the Ligan, et al. but contested the employment status of
Roque Pilapil for he is already terminated and Benedicto Auxtero who signed the Release and Quitclaim
and Waiver. Philippine Airlines therefore pleads to the court to reconsider its first Decision on the
payment of wages and benefits.

ISSUE:

Whether or not the Supreme Court shall overrule its first decision regarding the grant of wages
and benefits to Ligan, et al.

HELD:

In light of these recent manifestations-informations of the parties, the Court finds that a
modification of the Decision is in order, the claims with respect to Pilapil and Auxtero having been
deemed extinguished even before the promulgation of the Decision. That Pilapil was a regular employee
yields to the final finding of a valid dismissal in the supervening case involving his own misconduct,
while Auxteros attempt at forum-shopping should not be countenanced.

IN ALL OTHER RESPECTS, the Court finds no sufficient reason to deviate from its Decision,
but proceeds, nonetheless, to clarify a few points. While this Courts Decision ruled on the regular status
of Ligan, et al., it must be deemed to be without prejudice to the resolution of the issue of illegal
dismissal in the proper case.

Notably, subject of the Decision was Ligan, et al.s complaints for regularization and under-/non-
payment of benefits. The Court did not and could not take cognizance of the validity of the eventual
dismissal of Ligan, et al. because the matter of just or authorized cause is beyond the issues of the
case. That is why the Court did not order reinstatement for such relief presupposes a finding of illegal
dismissal in the proper case which, as the parties now manifest, pends before the appellate court.

All told, the pending illegal dismissal case in CA-G.R. SP No. 00922 may now take its
course. The Courts finding that Ligan, et al. are regular employees of PAL neither frustrates nor
preempts the appellate courts proceedings in resolving the issue of retrenchment as an authorized cause
for termination. If an authorized cause for dismissal is later found to exist, PAL would still have to pay
Ligan, et al. their corresponding benefits and salary differential up to June 30, 1998. Otherwise, if there is
a finding of illegal dismissal, an order for reinstatement with full backwages does not conflict with the
Courts declaration of the regular employee status of Ligan, et al.

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LORNA DISING PUNZAL v. ETSI TECHNOLOGIES, INC., et al.
518 SCRA 66 (2007), SECOND DIVISION (Carpio Morales, J.)

No matter how much the employee dislikes the employer professionally, he cannot afford to be disrespectful.

Petitioner Lorna Dising Punzal (Punzal) had been working for respondent ETSI Technologies,
Inc. (ETSI) as Department Secretary. Punzal sent an e-mail message to her officemates announcing the
holding of a Halloween Party that was to be held in the office. Her immediate superior, respondent
Carmelo Remudaro advised her to first secure the approval of the SVP, respondent Werner Geisert.
When Geisert did not approve of the plan, Punzal then sent a second e-mail to her officemates that
states Geisert was so unfair . . . para bang palagi siyang iniisahan sa trabaho. . . Anyway, solohin na
lang niya bukas ang office."

Punzals superiors required her to explain her actions which found such as unacceptable. She
was then dismissed from employment due to improper conduct or act of discourtesy or disrespect and
making malicious statements concerning company officer. Punzal filed before the National Labor
Relations Commission (NLRC) a complaint for illegal dismissal against ETSI, Geisert, and Remudaro.
The complaint was dismissed by the Labor Arbiter. On appeal, the NLRC found that while she was
indeed guilty of misconduct, the penalty of dismissal was disproportionate to her infraction. The Court
of Appeals held that Punzals dismissal was in order.

ISSUE:

Whether or not there was a valid cause to dismiss Punzal

HELD:

A cordial or, at the very least, civil attitude, according due deference to ones superiors, is still
observed, especially among high-ranking management officers. The Court takes judicial notice of the
Filipino values of pakikisama and paggalang which are not only prevalent among members of a family and
community but within organizations as well, including work sites. An employee is expected to extend
due respect to management, the employer being the "proverbial hen that lays the golden egg," so to
speak. An aggrieved employee who wants to unburden himself of his disappointments and frustrations
in his job or relations with his immediate superior would normally approach said superior directly or
otherwise ask some other officer possibly to mediate and discuss the problem with the end in view of
settling their differences without causing ferocious conflicts. No matter how much the employee dislikes
the employer professionally, and even if he is in a confrontational disposition, he cannot afford to be
disrespectful and dare to talk with an unguarded tongue and/or with a bileful pen.

Punzal sent the e-mail message in reaction to Geiserts decision which he had all the right to
make. That it has been a tradition in ETSI to celebrate occasions such as Christmas, birthdays,
Halloween, and others does not remove Geiserts prerogative to approve or disapprove plans to hold
such celebrations in office premises and during company time. Given the reasonableness of Geiserts
decision that provoked Punzal to send the second e-mail message, the observations of the Court of
Appeals that "the message x x x resounds of subversion and undermines the authority and credibility of
management" and that petitioner "displayed a tendency to act without managements approval, and even
against managements will" are well taken.

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RFM CORPORATION-FLOUR DIVISION and SFI FEEDS DIVISION v.
KASAPIAN NG MANGGA-GAWANG PINAGKAISA-RFM (KAMPI-NAFLU-
KMU) and SANDIGAN AT UGNAYAN NG MANGGAGAWANG PINAGKAISA-SFI
(SUMAPI-NAFLU-KMU)
578 SCRA 34 (2009), SECOND DIVISION (Carpio Morales, J.)
If the terms of the Collective Bargaining Agreement are clear and leave no doubt upon the intention of the
contracting parties, its literal meaning shall prevail.
Petitioner RFM Corporation, a domestic corporation entered into collective bargaining
agreements (CBAs) with the Kasapian ng Manggagawang Pinagkaisa-RFM (KAMPI-NAFLU-KMU) and
Sandigan at Ugnayan ng Manggagawang Pinagkaisa-SFI (SUMAPI-NAFLU-KMU).
Under the CBA, RFM agreed to make payment to all daily paid employees on Black Saturday,
November 1 and December 31 if declared as special holidays by the national government.
During the first year of the effectivity of the CBAs in 2000, December 31 which fell on a Sunday
was declared by the national government as a special holiday. Respondent unions thus claimed payment
of their members salaries, invoking the CBA provision. RFM refused the claims for payment, averring
that December 31, 2000 was not compensable as it was a rest day. The controversy resulted in a
deadlock, drawing the parties to submit the same for voluntary arbitration.
The Voluntary Arbitrator (VA) declared that the provision of the CBA is clear, ruling in favor of
KAMPI- NAFLU-KMU and SUMAPI-NAFLU-KMU and ordered RFM to pay their salaries. The
Court of Appeals (CA) affirmed the decision.
ISSUE:
Whether or not the employees are entitled to the questioned salary according to the provision of
the CBA
HELD:
If the terms of a CBA are clear and have no doubt upon the intention of the contracting parties,
as in the herein questioned provision, the literal meaning thereof shall prevail. That is settled.

As such,
the daily-paid employees must be paid their regular salaries on the holidays which are so declared by the
national government, regardless of whether they fall on rest days.
Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State
shall afford protection to labor. Its purpose is not merely "to prevent diminution of the monthly income
of the workers on account of work interruptions. In other words, although the worker is forced to take a
rest, he earns what he should earn, that is, his holiday pay."
The CBA is the law between the parties, hence, they are obliged to comply with its provisions.

Indeed, if petitioner and respondents intended the provision in question to cover payment only during
holidays falling on work or weekdays, it should have been so incorporated therein.
RFM maintains, however, that the parties failed to foresee a situation where the special holiday
would fall on a rest day. The Court is not persuaded. The Labor Code specifically enjoins that in case of
doubt in the interpretation of any law or provision affecting labor, it should be interpreted in favor of
labor.


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ROSA C. RODOLFO v. PEOPLE OF THE PHILIPPINES
498 SCRA 377 (2006), THIRD DIVISION (Carpio Morales, J.)

Promises or offers for a fee employment is sufficient to warrant conviction for illegal recruitment.

Petitioner Rosa C. Rodolfo approached private complainants Necitas Ferre and Narciso Corpus
individually and invited them to apply for overseas employment in Dubai. Rodolfo, being their neighbor,
Ferre and Corpus agreed and went to the formers office. The office bore the business name Bayside
Manpower Export Specialist. In that office, Ferre gave P1,000.00 as processing fee and another
P4,000.00. Likewise, Corpus gave Rodolfo P7,000.00. Rodolfo then told Ferre and Corpus that they were
scheduled to leave for Dubai. However, private complainants and all the other applicants were not able to
depart on the scheduled date as their employer allegedly did not arrive. Thus, their departure was
rescheduled, but the result was the same. Suspecting that they were being hoodwinked, Ferre and Corpus
demanded of Rodolfo to return their money. Except for the refund of P1,000.00 to Ferre, Rodolfo was
not able to return Ferres and Corpus money. Ferre, Corpus and three others then filed a case for illegal
recruitment in large scale with the Regional Trial Court (RTC) against Rodolfo.

The RTC rendered judgement against Rodolfo but in imposing the penalty, the RTC took note of
the fact that while the information reflected the commission of illegal recruitment in large scale, only the
complaint of two (Ferre and Corpus) of the five complainants was proven. Rodolfo appealed to the
Court of Appeals (CA). The CA dismissed the petition but modified the penalty imposed by the trial
court. The CA also dismissed Rodolfos Motion for Reconsideration.
ISSUE:
Whether or not Rodolfo is guilty of illegal recruitment in large scale
HELD:
The elements of the offense of illegal recruitment, which must concur, are: (1) that the offender
has no valid license or authority required by law to lawfully engage in recruitment and placement of
workers; and (2) that the offender undertakes any activity within the meaning of recruitment and
placement under Article 13(b), or any prohibited practices enumerated under Article 34 of the Labor
Code. If another element is present that the accused commits the act against three or more persons,
individually or as a group, it becomes an illegal recruitment in a large scale.
Article 13 (b) of the Labor Code defines recruitment and placement as [a]ny act of canvassing,
enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract
services, promising or advertising for employment, locally or abroad, whether for profit or not.
That the first element is present in the case at bar, there is no doubt. Jose Valeriano, Senior
Overseas Employment Officer of the Philippine Overseas Employment Administration, testified that the
records of the POEA do not show that Rodolfo is authorized to recruit workers for overseas employment.
A Certification to that effect was in fact issued by Hermogenes C. Mateo, Chief of the Licensing Division
of POEA.
The second element is doubtless also present. The act of referral, which is included in recruitment,
is the act of passing along or forwarding of an applicant for employment after an initial interview of a
selected applicant for employment to a selected employer, placement officer or bureau. Rodolfos
admission that she brought private complainants to the agency whose owner she knows and her
acceptance of fees including those for processing betrays her guilt.
Rodolfo issued provisional receipts indicating that the amounts she received from the private
complainants were turned over to Luzviminda Marcos and Florante Hinahon does not free her from
liability. For the act of recruitment may be for profit or not. It is sufficient that the accused promises
or offers for a fee employment to warrant conviction for illegal recruitment. Parenthetically, why Rodolfo
accepted the payment of fees from the private complainants when, in light of her claim that she merely

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brought them to the agency, she could have advised them to directly pay the same to the
agency, she proferred no explanation.
On Rodolfos reliance on Seoron, true, the Court held that issuance of receipts for placement fees
does not make a case for illegal recruitment. But it went on to state that it is rather the undertaking of
recruitment activities without the necessary license or authority that makes a case for illegal recruitment.

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SAN MIGUEL CORPORATION v. PROSPERO A. ABALLA et al.
461 SCRA 392 (2005), THIRD DIVISION (Carpio Morales, J.)

The language of a contract disavowing the existence of an employer-employee relationship is not determinative of the
parties relationship. It is the totality of the facts and surrounding circumstances of the case.

Petitioner San Miguel Corporation (SMC) and Sunflower Multi-Purpose Cooperative
(Sunflower) entered into a one-year Contract of Service and such contract is renewed on a monthly basis
until terminated. Pursuant to this, respondent Prospero Aballa et al. rendered services to SMC.

After one year of rendering service, Aballa et al., filed a complaint before National Labor
Relations Commission (NLRC) praying that they be declared as regular employees of SMC. On the other
hand, SMC filed before the Department of Labor and Employment (DOLE) a Notice of Closure due to
serious business losses. Hence, the labor arbiter dismissed the complaint and ruled in favor of SMC.
Aballa et al. then appealed before the NLRC. The NLRC dismissed the appeal finding that Sunflower is
an independent contractor.

On appeal, the Court of Appeals reversed NLRCs decision on the ground that the agreement
between SMC and Sunflower showed a clear intent to abstain from establishing an employer-employee
relationship.

ISSUE:

Whether or not Aballa et al. are employees of SMC

HELD:

The test to determine the existence of independent contractorship is whether one claiming to be
an independent contractor has contracted to do the work according to his own methods and without
being subject to the control of the employer, except only as to the results of the work.

In legitimate labor contracting, the law creates an employer-employee relationship for a limited
purpose, i.e., to ensure that the employees are paid their wages. The principal employer becomes jointly
and severally liable with the job contractor, only for the payment of the employees wages whenever the
contractor fails to pay the same. Other than that, the principal employer is not responsible for any claim
made by the employees.

In labor-only contracting, the statute creates an employer-employee relationship for a
comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely
an agent of the principal employer and the latter is responsible to the employees of the labor-only
contractor as if such employees had been directly employed by the principal employer.

The Contract of Services between SMC and Sunflower shows that the parties clearly disavowed
the existence of an employer-employee relationship between SMC and private respondents. The
language of a contract is not, however, determinative of the parties relationship; rather it is the totality of
the facts and surrounding circumstances of the case. A party cannot dictate, by the mere expedient of a
unilateral declaration in a contract, the character of its business, i.e., whether as labor-only contractor or
job contractor, it being crucial that its character be measured in terms of and determined by the criteria
set by statute.

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What appears is that Sunflower does not have substantial capitalization or
investment in the form of tools, equipment, machineries, work premises and other materials to qualify it
as an independent contractor. On the other hand, it is gathered that the lot, building, machineries and all
other working tools utilized by Aballa et al. in carrying out their tasks were owned and provided by SMC.
And from the job description provided by SMC itself, the work assigned to Aballa et al. was
directly related to the aquaculture operations of SMC. As for janitorial and messengerial services, that they
are considered directly related to the principal business of the employer has been jurisprudentially
recognized.

Furthermore, Sunflower did not carry on an independent business or undertake the performance
of its service contract according to its own manner and method, free from the control and supervision of its
principal, SMC, its apparent role having been merely to recruit persons to work for SMC.

All the foregoing considerations affirm by more than substantial evidence the existence of an
employer-employee relationship between SMC and Aballa et al. Since Aballa et al. who were engaged in
shrimp processing performed tasks usually necessary or desirable in the aquaculture business of SMC,
they should be deemed regular employees of the latter and as such are entitled to all the benefits and
rights appurtenant to regular employment. They should thus be awarded differential pay corresponding
to the difference between the wages and benefits given them and those accorded SMCs other regular
employees.



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SUNACE INTERNATIONAL MANAGEMENT SERVICES, INC. v.
NATIONAL LABOR RELATIONS COMMISSION et al.
480 SCRA 146 (2006), THIRD DIVISION (Carpio Morales, J.)
There is an implied revocation of an agency relationship when after the termination of the original employment
contract, the foreign principal directly negotiated with the employee and entered into a new and separate employment contract.
Respondent Divina Montehermozo is a domestic helper deployed to Taiwan by Sunace
International Management Services (Sunace) under a 12-month contract. Such employment was made
with the assistance of Taiwanese broker Edmund Wang. After the expiration of the contract,
Montehermozo continued her employment with her Taiwanese employer for another 2 years.
When Montehermozo returned to the Philippines, she filed a complaint against Sunace, Wang,
and her Taiwanese employer before the National Labor Relations Commission (NLRC). She alleges that
she was underpaid and was jailed for three months in Taiwan. She further alleges that the 2-year
extension of her employment contract was with the consent and knowledge of Sunace. Sunace, on the
other hand, denied all the allegations.
The Labor Arbiter ruled in favor of Montehermozo and found Sunace liable thereof. The
National Labor Relations Commission and Court of Appeals affirmed the labor arbiters decision.
Hence, the filing of this appeal.
ISSUE:
Whether or not the 2-year extension of Montehermozos employment was made with the
knowledge and consent of Sunace
HELD:
Contrary to the Court of Appeals finding, the alleged continuous communication was with the
Taiwanese broker Wang, not with the foreign employer.
The finding of the Court of Appeals solely on the basis of the telefax message written by Wang
to Sunace, that Sunace continually communicated with the foreign "principal" (sic) and therefore was
aware of and had consented to the execution of the extension of the contract is misplaced. The message
does not provide evidence that Sunace was privy to the new contract executed after the expiration on
February 1, 1998 of the original contract. That Sunace and the Taiwanese broker communicated
regarding Montehermozos allegedly withheld savings does not necessarily mean that Sunace ratified the
extension of the contract.
As can be seen from that letter communication, it was just an information given to Sunace that
Montehermozo had taken already her savings from her foreign employer and that no deduction was
made on her salary. It contains nothing about the extension or Sunaces consent thereto.
Parenthetically, since the telefax message is dated February 21, 2000, it is safe to assume that it
was sent to enlighten Sunace who had been directed, by Summons issued on February 15, 2000, to
appear on February 28, 2000 for a mandatory conference following Montehermozos filing of the
complaint on February 14, 2000.
Respecting the decision of Court of Appeals following as agent of its foreign principal, [Sunace]
cannot profess ignorance of such an extension as obviously, the act of its principal extending
[Montehermozos] employment contract necessarily bound it,

it too is a misapplication, a misapplication
of the theory of imputed knowledge.
The theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the principal,
employer, not the other way around
.
The knowledge of the principal-foreign employer cannot,
therefore, be imputed to its agent Sunace.
There being no substantial proof that Sunace knew of and consented to be bound under the 2-
year employment contract extension, it cannot be said to be privy thereto. As such, it and its "owner"
cannot be held solidarily liable for any of Montehermozos claims arising from the 2-year employment
extension. As the New Civil Code provides, Contracts take effect only between the parties, their assigns,
and heirs, except in case where the rights and obligations arising from the contract are not transmissible
by their nature, or by stipulation or by provision of law.

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Furthermore, as Sunace correctly points out, there was an implied revocation of its
agency relationship with its foreign principal when, after the termination of the original
employment contract, the foreign principal directly negotiated with Montehermozo and entered into a
new and separate employment contract in Taiwan. Article 1924 of the New Civil Code states that the
agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly
with third persons.


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TAGAYTAY HIGHLANDS INTERNATIONAL GOLF CLUB
INCORPORATED v. TAGAYTAY HIGHLANDS EMPLOYEES UNION-
PGTWO
395 SCRA 638 (2003), THIRD DIVISION (Carpio Morales, J.)

After a certificate of registration is issued to a union, its legal personality cannot be subject to collateral attack and
may be questioned only in an independent petition for cancellation.
Respondent Tagaytay Highlands Employees Union (THEU)-Philippine Transport and General
Workers Organization (PTGWO), a legitimate labor organization representing majority of the rank-and-
file employees of petitioner Tagaytay Highlands International Golf Club Inc. (THIGCI), filed a petition
for certification election before the DOLE Mediation-Arbitration Unit.
THIGCI opposed the petition of THEU on the ground that out of 192 signatories to the
petition, only 71 were actual rank-and-file employees of THIGCI. The others were supervisors, resigned,
terminated, AWOL and employees, while some others are employees from a different corporation.
The DOLE Med-Arbiter issued an order to the hold the certification election among the rank-
and-file employees of THIGCI. On appeal, Department of Labor and Employment (DOLE)
Undersecretary and the Court of Appeals (CA) affirmed Med Arbiters decision and ordered that
supervisory employees and non-employees could simply be removed from the roster of rank-and-file
membership.
ISSUE:
Whether or not the CA erred in holding that supervisory employees and non-employees could
simply be removed from THEUs roster of rank-and-file membership instead of resolving the legitimacy
of unions status

HELD:
After a certificate of registration is issued to a union, its legal personality cannot be subject to
collateral attack. It may be questioned only in an independent petition for cancellation.
The grounds for cancellation of union registration are provided for under Article 239 of the
Labor Code, two of the grounds are 1.) Misrepresentation, false statement or fraud in connection
with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of
ratification, and the list of members who took part in the ratification; 2.) Misrepresentation, false
statements or fraud in connection with the election of officers, minutes of the election of officers, the
list of voters, or failure to subject these documents together with the list of the newly elected/appointed
officers and their postal addresses within thirty (30) days from election;
The inclusion in a union of disqualified employees is not among the grounds for cancellation,
unless such inclusion is due to misrepresentation, false statement or fraud under the circumstances
enumerated in Sections (a) and (c) of Article 239 of above-quoted Article 239 of the Labor Code.
THEU, having been validly issued a certificate of registration, should be considered to have
already acquired juridical personality which may not be assailed collaterally.

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U-BIX CORPORATION and EDILBERTO B. BRAVO v. VALERIE ANNE H.
HOLLERO
570 SCRA 373 (2008), SECOND DIVISION (Carpio Morales, J.)
An employer who seeks to dismiss an employee must afford the latter ample opportunity to be heard and to defend
himself with the assistance of his representative if he so desires.
Valerie Anne H. Hollero was hired as a management trainee and was eventually promoted to
facilities manager by U-Bix Corporation (U-Bix). Hollero and three other employees were later sent to
the United States for two months of training for a newly acquired franchise. Before she left, she signed a
contract with U-Bix which reads that VALERIE ANNE H. HOLLERO shall remain in the employ of
U-BIX CORPORATION for a period of five (5) years from completion of her U.S. Training otherwise
she shall reimburse U-BIX CORPORATION for all costs (prorated) and expenses which U-BIX
CORPORATION incurred for her (Hollero's) training in the U.S

U-Bix, citing Holleros supposed pattern of tardiness, absences, neglect of duties and lack of
interest, terminated her employment for loss of trust and confidence. U-Bix then filed against Hollero
before the Labor Arbiter for the reimbursement of training expenses and damages. Subsequently,
Hollero also filed a complaint against U-Bix for illegal dismissal.

The Labor Arbiter (LA) rendered a decision declaring that the dismissal of Hollero is valid and
legal and ordered her to pay U-Bix the reimbursement of her training. It dismissed Holleros complaint
for lack of merit. On appeal before the National Labor Relations Commission (NLRC), the NLRC
reversed the LAs decision. A Motion for Reconsideration was filed but subsequently denied by NLRC.
The Court of Appeals affirmed the lower courts decision.

ISSUES:

Whether or not Hollero was illegally dismissed by U-Bix

HELD:

U-Bix failed to discharge the burden of proof that Holleros dismissal is for a valid and just
cause

In termination cases, the employer has the burden of proving that the dismissal is for a valid and
just cause. While an employer enjoys a wider latitude of discretion in terminating the employment of
managerial employees, managerial employees are also entitled to security of tenure and cannot be
arbitrarily dismissed at any time and without cause as reasonably established in an appropriate
investigation.

In the case at bar, U-Bix failed to substantiate their allegations of Holleros habitual absenteeism,
habitual tardiness, neglect of duties, and lack of interest. Daily time records, attendance records, or other
documentary evidence attesting to these grounds could have readily been presented to support the
allegations but none was.

The merits of a complaint for illegal dismissal do not depend on its prayer but on whether the
employer discharges its burden of proving that the dismissal is valid.

U-Bix failed to comply with the procedural due process of dismissing an employee


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In another vein, the Court finds that U-Bix and Bravo failed to comply with the
procedural requirements for a valid dismissal. Hollero being a manager did not excuse
them from observing such procedural requirements.
The notice does not inform outright the employee that an investigation will be conducted on the
charges particularized therein which, if proven, will result to her dismissal. It does not contain a plain
statement of the charges of malfeasance or misfeasance nor categorically state the effect on her
employment if the charges are proven to be true. It does not apprise Hollero of possible dismissal
should her explanation prove unsatisfactory. Besides, the U-Bix and Bravo did not even establish that
Hollero received the memorandum.
Neither did U-Bix and Bravo show that they conducted a hearing or conference during which
Hollero, with the assistance of counsel if she so desired, had opportunity to respond to the charge,
present her evidence, or rebut the evidence presented against her. The meeting with Hollero on
December 23, 1996 did not satisfy the hearing requirement, for Hollero was not given the opportunity to
avail herself of counsel.
Article 277(b) of the Labor Code mandates that an employer who seeks to dismiss an employee
must afford the latter ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires. Expounding on this provision, the Court held that '[a]mple
opportunity' connotes every kind of assistance that management must accord the employee to enable
him to prepare adequately for his defense including legal representation.

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UNIVERSITY OF SAN AGUSTIN, INC. v. UNIVERSITY OF SAN AGUSTIN
EMPLOYEES UNION-FFW
593 SCRA 663 (2009), Carpio Morales, J.

A collective bargaining agreement, when voluntarily entered into by the parties, becomes the law between them.
In the Collective Bargaining Agreement (CBA) between University of San Agustin and its
Employees Union, the parties agreed to include a provision on salary increases based on the incremental
tuition fee increases or tuition incremental proceeds (TIP). However, the parties disagreed whether or
not the term salary increases includes other increases in benefits received by the employee.

The Voluntary Arbiter held that the salary increase shall be paid out of 80% of the TIP, should it
be higher than P1,500. Moreover, scholarship grants and tuition fee discounts given by the university
should not be deducted from the TIP. The appellate court sustained the interpretation of the CBA but
revised TIP computation. The present petition questions only the interpretation of the CBA provision by
the appellate court.

ISSUES:

Whether or not the provisions of the CBA should be applied

HELD:

It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties
and they are obliged to comply with its provisions. If the terms of a contract, in this case the CBA, are
clear and leave no doubt upon the intention of the contracting parties, the literal meaning of their
stipulations shall control.
A reading of the provisions of the CBA shows that the parties agreed that 80% of the TIP or at
the least the amount of P1,500 is to be allocated for individual salary increases.
The CBA does not speak of any other benefits or increases which would be covered by the
employees share in the TIP, except salary increases. The CBA reflects the incorporation of different
provisions to cover other benefits such as Christmas bonus (Art. VIII, Sec. 1), service award (Art. VIII,
Sec.5), leaves (Article IX), educational benefits (Sec.2, Art. X), medical and hospitalization benefits (Secs.
3, 4 and 5, Art. 10), bereavement assistance (Sec. 6, Art. X), and signing bonus (Sec. 8, Art. VIII),
without mentioning that these will likewise be sourced from the TIP. Thus, the universitys belated claim
that the 80% TIP should be taken to mean as covering ALL increases and not merely the salary increases
as categorically stated in Sec. 3, Art. VIII of the CBA does not lie.
In the present case, the university could have, during the CBA negotiations, opposed the
inclusion of or renegotiated the provision allotting 80% of the TIP to salary increases alone, as it was and
is not under any obligation to accept respondents demands hook, line and sinker. Art. 252 of the Labor
Code is clear on the matter.
The records are thus bereft of any showing that the university had made it clear during the CBA
negotiations that it intended to source not only the salary increases but also the increases in other
employee benefits from the 80% of the TIP. Absent any proof that the universitys consent was vitiated
by fraud, mistake or duress, it is presumed that it entered into the CBA voluntarily, had full knowledge
of the contents thereof, and was aware of its commitments under the contract.
It is axiomatic that labor laws setting employee benefits only mandate the minimum that an
employer must comply with, but the latter is not proscribed from granting higher or additional benefits if
it so desires, whether as an act of generosity or by virtue of company policy or a CBA, as it would appear
in this case. While, in following to the letter the subject CBA provision the petitioner will, in effect, be
giving more than 80% of the TIP as its personnels share in the tuition fee increase, the universitys

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remedy lies not in the Courts invalidating the provision, but in the parties clarifying the
same in their subsequent CBA negotiations.

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PLACIDO O. URBANES, JR. v. SECRETARY OF LABOR AND
EMPLOYMENT
397 SCRA 531 (2003), THIRD DIVISION (Carpio Morales, J.)
When the relief sought is not under the Labor Code but for payment of a sum of money and damages on a breach
of contract, it is within the realm of civil law and jurisdiction belongs to the regular courts.
Petitioner Placido O. Urbanes agreed to provide security services to Social Security Systems
(SSS). During the pendency of their agreement, Urbanes requested SSS for an upward adjustment of
their contract rate in compliance with the mandated wage increases.
SSS ignored the request which led Urbanes to pull out his agencys services and to subsequently
file a complaint against SSS for the implementation of the wage increase. The Regional Director of the
DOLE-NCR issued an order in favor of Urbanes. SSS filed an appeal to the Secretary of Labor who later
on set aside the order of the Regional Director.
Urbanes filed an appeal by certiorari to the Supreme Court stating that the Secretary of Labor
does not have jurisdiction to review appeals from decisions of the Regional Director over complaints for
recovery of wages when it should have been appealed to the National Labor Relations Commission. SSS,
on the other hand, contends that Art. 128, not Art. 129 of the Labor Code should be applied.
ISSUE:

Whether or not the DOLE Secretary can exercise jurisdiction over decisions of Regional
Directors involving complaints for recovery of wages

HELD:

Neither the Ubanes contention nor the SSS is impressed with merit. Lapanday Agricultural
Development Corporation v. Court of Appeals instructs so. In that case, the security agency filed a complaint
before the Regional Trial Court (RTC) against the principal or client Lapanday for the upward
adjustment of the contract rate in accordance with Wage Order Nos. 5 and 6. Lapanday argued that it is
the National Labor Relations Commission, not the civil courts, which has jurisdiction to resolve the issue
in the case, it involving the enforcement of wage adjustment and other benefits due the agencys security
guards as mandated by several wage orders.
The Court ruled in Lapanday that the RTC has jurisdiction over the subject matter of the present
case. It is well settled in law and jurisprudence that where no employer-employee relationship exists
between the parties and no issue is involved which may be resolved by reference to the Labor Code,
other labor statutes or any collective bargaining agreement, it is the Regional Trial Court that has
jurisdiction. In its complaint, private respondent is not seeking any relief under the Labor Code but seeks
payment of a sum of money and damages on account of petitioner's alleged breach of its obligation
under their Guard Service Contract. The action is within the realm of civil law hence jurisdiction over
the case belongs to the regular courts. While the resolution of the issue involves the application of labor
laws, reference to the labor code was only for the determination of the solidary liability of the petitioner
to the respondent where no employer-employee relation exists.
In the case at bar, even if Urbanes filed the complaint on his and also on behalf of the security
guards, the relief sought has to do with the enforcement of the contract between him and the SSS which
was deemed amended by virtue of Wage Order No. NCR-03. The controversy subject of the case at bar
is thus a civil dispute, the proper forum for the resolution of which is the civil courts.
But even assuming arguendo that Urbanes complaint were filed with the proper forum, for lack of
cause of action it must be dismissed. In fine, the liability of the SSS to reimburse Urbanes arises only if
and when Urbanes pays his employee-security guards the increases mandated by Wage Order No.
NCR-03.

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The Court in Lapanday Agricultural Development Corporation v. Court of Appeals held
that: It is only when the contractor pays the increases mandated that it can claim an
adjustment from the principal to cover the increases payable to the security guards.
The records do not show that Urbanes has paid the mandated increases to the security guards.
The security guards in fact have filed a complaint with the NLRC against Urbanes relative to, among
other things, underpayment of wages.


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GALAXIE STEEL WORKERS UNION (GSWU-NAFLU-KMU), et al. v.
NATIONAL LABOR RELATIONS COMMISSION, GALAXIE STEEL
CORPORATION and RICARDO CHENG
504 SCRA 692 (2006), THIRD DIVISION, (Carpio Morales, J.)
The requirement of the Labor Code that notice shall be served on the workers is not complied with by the mere
posting of the notice on the bulletin board.

On account of serious business losses which occurred in 1997 up to mid-1999 totaling
around P127,000,000.00, Galaxie Steel Workers Union decided to close down its business operations. It
thereafter filed a written notice with the Department of Labor and Employment (DOLE) informing the
latter of its intended closure and the consequent termination of its employees effective August 31,
1999. It posted the notice of closure on the corporate bulletin board.

On September 8, 1999, Galaxie Steel Workers Union and Galaxie employees filed a complaint
for illegal dismissal, unfair labor practice, and money claims against Galaxie. The Labor Arbiter, NLRC
and the Court of Appeals were unanimous in ruling that Galaxies closure or cessation of business
operations was due to serious business losses or financial reverses, and not because of any alleged anti-
union position.

The workers union and employees contend that Galaxie did not serve written notices of the
closure of business operations upon them, it having merely posted a notice on the company bulletin
board.

ISSUE:
Whether or not the written notice posted by [Galaxie] on the company bulletin board sufficiently
complies with the notice requirement under Article 283 of the Labor Code.

HELD:

The mere posting on the company bulletin board does not meet the requirement under Article
283 of serving a written notice on the workers. The purpose of the written notice is to inform the
employees of the specific date of termination or closure of business operations, and must be served
upon them at least one month before the date of effectivity to give them sufficient time to make the
necessary arrangements. In order to meet the foregoing purpose, service of the written notice must be
made individually upon each and every employee of the company.


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RAMY GALLEGO v. BAYER PHILIPPINES INC., et al.
594 SCRA 730 (2009), SECOND DIVISION (Carpio Morales, J.)
In distinguishing between permissible job contracting and prohibited labor-only contracting, the totality of the facts
and the surrounding circumstances of the case are to be considered, each case to be determined by its own facts, and all the
features of the relationship assessed.
Petitioner Ramy Gallego was contracted by Bayer Philippines Inc. (BAYER) as crop protection
technician. When Gallegos employment came to a halt, BAYER reemployed Gallego through Product
Image and Marketing Services, Inc. (PRODUCT IMAGE) performing the same tasks as that of a crop
protection technician.

After a few years, Gallego claims that he was directed to submit a resignation latter, but he
refused. He was later on transferred to Luzon; moreover, his co-workers allegedly spread rumors there
that he was not anymore connected with BAYER. Believing himself to be illegally dismissed, he filed
with the National Labor Relations Commission (NLRC) claiming he is entitled for reinstatement,
backwages, and etc. BAYER denied that existence of an employer-employee relationship between
BAYER and Gallego since Gallego was actually under the control and supervision of PRODUCT
IMAGE, an independent contractor.

The Labor Arbiter found BAYER, et al. guilty of illegal dismissal and ordered the reinstatement
of Gallego. The NLRC reversed the decision of the Labor Arbiter. Gallego then appealed to the Court
of Appeals via Certiorari, which was dismissed. Hence, this petition.

ISSUES:

Whether or not PRODUCT IMAGE is a labor-only contractor and BAYER should be deemed
Gallegos principal employer


HELD:
Permissible job contracting or subcontracting refers to an arrangement whereby a principal
agrees to farm out with a contractor or subcontractor the performance of a specific job, work, or service
within a definite or predetermined period, regardless of whether such job, work or, service is to be
performed or completed within or outside the premises of the principal. Under this arrangement, the
following conditions must be met: (a) the contractor carries on a distinct and independent business and
undertakes the contract work on his account under his own responsibility according to his own manner
and method, free from the control and direction of his employer or principal in all matters connected
with the performance of his work except as to the results thereof; (b) the contractor has substantial
capital or investment; and (c) the agreement between the principal and contractor or subcontractor
assures the contractual employees entitlement to all labor and occupational safety and health standards,
free exercise of the right to self-organization, security of tenure, and social welfare benefits.
In distinguishing between permissible job contracting and prohibited labor-only contracting, the
totality of the facts and the surrounding circumstances of the case are to be considered, each case to be
determined by its own facts, and all the features of the relationship assessed.
In the case at bar, the Court finds substantial evidence to support the finding of the NLRC that
PRODUCT IMAGE is a legitimate job contractor.
The Court notes that PRODUCT IMAGE was issued by the Department of Labor and
Employment (DOLE) Certificate of Registration Numbered NCR-8-0602-176. The DOLE certificate
having been issued by a public officer, it carries with it the presumption that it was issued in the regular
performance of official duty.Gallegos bare assertions fail to rebut this presumption. Further, since the
DOLE is the agency primarily responsible for regulating the business of independent job contractors,

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the Court can presume, in the absence of evidence to the contrary, that it had thoroughly
evaluated the requirements submitted by PRODUCT IMAGE before issuing the
Certificate of Registration.
Independently of the DOLEs Certification, among the circumstances that establish the status of
PRODUCT IMAGE as a legitimate job contractor are: (1) PRODUCT IMAGE had, during the period
in question, a contract with BAYER for the promotion and marketing of BAYER products; (2)
PRODUCT IMAGE has an independent business and provides services nationwide to big companies
such as Ajinomoto Philippines and Procter and Gamble Corporation; and (3) PRODUCT IMAGEs
total assets from 1998 to 2000 amounted to P405,639, P559,897, and P644,728, respectively. PRODUCT
IMAGE also posted a bond in the amount of P100,000 to answer for any claim of its employees for
unpaid wages and other benefits that may arise out of the implementation of its contract with BAYER.
PRODUCT IMAGE cannot thus be considered a labor-only contractor.

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GLORIA ARTIAGA v. SILIMAN UNIVERSITY MEDICAL CENTER/
SILIMAN UNIVERSITY MEDICAL CENTER FOUNDATION, INC.
585 SCRA 552 (2009), SECOND DIVISION (Carpio Morales, J.)

Constructive dismissal does not exist when an employee furnished the employer a letter signifying his resignation.

Petitioner Gloria Artiaga was hired by respondent Siliman University Medical Center (SUMC) as
Credit and Collection officer. Artiaga sent a letter to SUMC stating her wish to resign from said post.
Subsequently, three years after she sent such letter, Artiaga filed a Complaint for constructive dismissal
against SU, SUMC and the Foundation.

SUMC alleged that there was no constructive dismissal. It found that there were discrepancies in
the transactions under Artiagas control and supervision. It was shown that SUMC wrote Artiaga
requiring her to explain in writing why no disciplinary action should be taken against her, she was also
preventively suspended for 30 days and requested to turn over all monies, files, and records within her
control. Artiaga complied with SUMCs request by giving such letter of explanation and at the same time
tendered her resignation, in which SUMC accepted.

The Labor Arbiter dismissed the complaint for lack of legal and factual basis. On appeal, the
National Labor Relations Commission (NLRC) set aside the Labor Arbiters Decision, finding that
Artiaga was constructively dismissed. SUMC then filed a Petition before the Court of Appeals. The CA
reversed the NLRC decision and reinstated the Labor Arbiters decision.


ISSUES:

Whether or not Artiaga was constructively dismissed

HELD:

In reversing the Labor Arbiters decision, the NLRC upheld Artiagas version and found her to
have been constructively dismissed. Artiaga presented no evidence to substantiate her claim, however.

On the other hand, SUMCs evidence of Artiagas irregular acts is documented. And it sent
Artiaga a Notice requiring her to explain her side and placing her under preventive suspension. Artiagas
letter-explanation cum resignation is self-explanatory.

Against the documentary evidence of SUMC, Artiagas claim thus fails.

Artiagas claim that SMUCs pieces of evidence were fabricated does not persuade. Artiagas
explanation-resignation letter unquestionably shows that she received the notices referred to, otherwise,
to what matters she was explaining therein?

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J-PHIL MARINE, INC. and/or JESUS CANDAVA and NORMAN SHIPPING
SERVICES v.
NATIONAL LABOR COMMISSION and WARLITO E. DUMALAOG
561 SCRA 675 (2008), SECOND DIVISION (Carpio Morales, J.)

A compromise agreement is valid as long as the consideration is reasonable and the employee signed the waiver
voluntarily, with a full understanding of what he was entering into.

Worked as a cook on aboard vessels plying overseas, Warlito E. Dumalaog was employed as a cook
on board vessels plying overseas. He filed a pro-forma complaint on March 4,2002 before the National
Labor Relations Commission (NLRC) against J-Phil Marine, Inc., its then president Jesus Candava, and its
foreign principal Norman Shipping Services.

The Labor Arbiter dismissed the complaint for lack of merit. On appeal, the NLRC reversed the
decision of the Labor Arbiter. The Court of Appeals affirmed the dismissal for failure to attach to the petition
all material documents and for defective verification and certification. Consequently, a petition was filed
before the Court of Appeals.

While the case was pending in the Supreme Court, the respondent entered into a compromise
agreement and signed Quitclaims and Release. The same has been subscribed and sworn to before the Labor
Arbiter. Accordingly, the case was dismissed.

ISSUES:

Whether or not the compromise agreement entered into by the respondent, without his counsel, is
valid

HELD:

A compromise agreement is valid as long as the consideration is reasonable and the employee signed
the waiver voluntarily, with a full understanding of what he was entering into. All that is required for the
compromise to be deemed voluntarily entered into is personal and specific individual consent. Thus, contrary
to Dumalaoag's contention, the employee's counsel need not be present at the time of the signing of the
compromise agreement.

The relation of attorney and client is in many respects one of agency, and the general rules of agency
apply to such relation. The acts of an agent are deemed the acts of the principal only if the agent acts within
the scope of his authority. The circumstances of this case indicate that Dumalaoag's counsel is acting beyond
the scope of his authority in questioning the compromise agreement.

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JEROMIE D. ESCASINAS and EVAN RIGOR SINGCO v. SHANGRI-LAS
MACTAN ISLAND RESORT and DR. JESSICA J.R. PEPITO
580 SCRA 604 (2009), SECOND DIVISION (Carpio Morales, J.)

The requirements for the existence of an employer-employee relationship are different from the requisites for the
existence of an independent and permissible contractor relationship.

Jeromie D. Escasinas and Evan Rigor Singco were registered nurses, engaged by respondent Dr.
Jessica Joyce R. Pepito to work in her clinic at respondent Shangri-Las Mactan Island Resort (Shangri-
La). Escasinas and Singco filed with the National Labor Relations Commission (NLRC) a complaint for
regularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13
th

month pay against Shangrila et al., claiming that they are regular employees of Shangri-La.

Shangri-la claimed that Escasinas and Singco were not its employees but of Dr. Pepito, whom it
retained via Memorandum of Agreement (MOA) pursuant to Article 157 of the Labor Code. Dr. Pepito
for her part claimed that Escasinas and Singco were already working for the previous retained physicians
of Shangri-la before she was retained. Escasinas and Singco, however, insist that under Article 157 of the
Labor Code, Shangri-la is required to hire full-time registered nurse, hence their engagement should be
deemed as regular employment. They maintain that Dr. Pepito is a labor-only contractor for she has no
license or business permit and no business name registration as mandated by Sec. 19 and 20 of the
Implementing Rules and Regulations of the Labor Code.

The labor arbiter declared Escasinas and Singco to be regular employees of Shangri-la. The
National Labor Relations Commission, on the other hand, granted Shangri-las and Dr. Pepitos appeal
and dismissed Escasinas and Singco complaint for lack of merit, finding that no employer-employee
relationship exists between Shangri-la and petitioners.


ISSUES:

Whether or not Escasinas and Singco are regular employees of Shangri-la and Dr. Pepito


HELD:

The existence of an independent and permissible contractor relationship is generally established
by considering the following determinants: whether the contractor is carrying on an independent
business; the nature and extent of the work; the skill required; the term and duration of the relationship;
the right to assign the performance of a specified piece of work; the control and supervision of the work
to another; the employer's power with respect to the hiring, firing and payment of the contractor's
workers; the control of the premises; the duty to supply the premises, tools, appliances, materials and
labor; and the mode, manner and terms of payment.

On the other hand, existence of an employer- employee relationship is established by the
presence of the following determinants: (1) the selection and engagement of the workers; (2) power
of dismissal; (3) the payment of wages by whatever means; and (4) the power to control the worker's
conduct, with the latter assuming primacy in the overall consideration.

Against the above-listed determinants, the Court holds that Dr. Pepito is a legitimate
independent contractor. That Shangri-la provides the clinic premises and medical supplies for use of its

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employees and guests do not necessarily prove that respondent doctor lacks substantial
capital and investment. Besides, the maintenance of a clinic and provision of medical
services to its employees is required under Art. 157, which are not directly related to Shangri-las
principal business operation of hotels and restaurants.

As to payment of wages, Dr. Pepito is the one who underwrites the following: salaries, SSS
contributions and other benefits of the staff; group life, group personal accident insurance and
life/death insurance for the staff with minimum benefit payable at 12 times the employees last drawn
salary, as well as value added taxes and withholding taxes, sourced from her P60,000.00 monthly retainer
fee and 70% share of the service charges from Shangri-las guests who avail of the clinic services. It is
unlikely that Dr. Pepito would report Escasinas and Singco as workers, pay their SSS premium as well as
their wages if they were not indeed her employees.

With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a
document, Clinic Policies and Employee Manual claimed to have been prepared by Dr. Pepito exists,
to which Escasinas and Singco gave their conformity and in which they acknowledged their co-terminus
employment status. It is thus presumed that said document, and not the employee manual being
followed by Shangri-las regular workers, governs how they perform their respective tasks and
responsibilities.

Contrary to Escasinas and Singco contention, the various office directives issued by Shangri-las
officers do not imply that it is Shangri-las management and not Dr. Pepito who exercises control over
them or that Shangri-la has control over how the doctor and the nurses perform their work.

In fine, as Shangri-la does not control how the work should be performed by Escasinas and
Singco, it is not Escasinas and Singcos employer.


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LILIA P. LABADAN v. FOREST HILLS ACADEMY et al.
575 SCRA 262 (2008), SECOND DIVISION (Carpio Morales, J.)

While in cases of illegal dismissal, the employer bears the burden of proving that the dismissal is for a valid or
authorized cause, the employee must first establish by substantial evidence the fact of dismissal.

Lilian L. Labadan (Labadan) was hired by Forest Hills Mission Academy (Forest Hills) as an
elementary school teacher in 1989. After one year of employment, she was made registrar and secondary
school teacher. In 2003, Labadan filed a complaint against Forest Hills for illegal dismissal, non-payment
of overtime pay, holiday pay, allowances, 13
th
month pay, service incentive leave, illegal deductions, and
damages. She alleged that she was allowed to go on leave, and albeit she had exceeded her approved
leave period, its extension was impliedly approved by the school principal because Labadan received no
warning or reprimand, and was in fact retained in the payroll. Labadan further alleged that since 1990,
tithes to the Seventh Day Adventist church, of which she was a member, have been illegally deducted
from her salary; and she was not paid overtime pay for overtime service, 13
th
month pay, five days
service incentive leave pay, and holiday pay; and that her SSS contributions have not been remitted.

Forest Hills claims that Labadan was permitted to go on leave for two weeks but did not return
for work after the expiration of the period granted. Because of Labadans failure to report to work
despite promises to do so, Forest Hills hired a temporary employee to accomplish the needed reports.
When Labadan did return for work, classes for the school year were already underway. With regard to
the charge for illegal deduction, Forest Hills claimed that the Seventh Day Adventist church requires its
members to pay tithes equivalent to 10% of their salaries, and that Labadan never questioned the
deduction of the tithe from her salary. As regards the non-payment of overtime pay, holiday pay, and
allowances, Forest Hills noted that petitioner proffered no evidence to support the same.

The Labor Arbiter decided in favor of Labadan, and found that she was illegally dismissed, and
dismissed her claims for overtime pay, holiday pay, allowances, 13
th
month pay, service incentive leave.
The National Labor Relations Commission (NLRC) reversed and set aside the Labor Arbiters decision
with regard to the finding of illegal dismissal. Labadan then filed a Petition for Certiorari with the Court
of Appeals, which was dismissed by the same. Hence, this Petition for Review on Certiorari.

ISSUES:

Whether or not Labadan was illegally dismissed by Forest Hills

HELD:

While in cases of illegal dismissal, the employer bears the burden of proving that the dismissal is
for a valid or authorized cause, the employee must first establish by substantial evidence the fact of
dismissal.

The records do not show that petitioner was dismissed from the service. They in fact show that
despite petitioners absence from July 2001 to March 2002 which, by her own admission, exceeded her
approved leave, she was still considered a member of the Forest Hills faculty which retained her in its
payroll.

Labadan argues, however, that she was constructively dismissed when Forest Hills merged her
class with another "so much that when she reported back to work, she has no more claims to hold and
no more work to do."

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Labadan, however, failed to refute Forest Hills claim that when she expressed her
intention to resume teaching, classes were already ongoing for School Year 2002-2003. It bears noting
that petitioner simultaneously held the positions of secondary school teacher and registrar and, as the
NLRC noted, she could have resumed her work as registrar had she really wanted to continue working
with Forest Hills.

Labadans affidavit and those of her former colleagues, which she attached to her Position
Paper, merely attested that she was dismissed from her job without valid cause, but gave no particulars
on when and how she was dismissed.


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BERNARDINO S. MANIOSO v. GOVERNMENT SERVICE INSURANCE
SYSTEM
457 SCRA 607 (2005), THIRD DIVISION (Carpio Morales, J.)

Benefits due an employee due to work-related sickness shall be provided until he becomes gainfully employed, or
until his recovery or death.

Bernardino Manioso is an Accounting Clerk I who started working at the Budget Commission
on July 13, 1959. He was transferred to the Bureau of Forestry with the same position on August 10,
1959. He was promoted to the position of Senior Bookkepeer of the Department of Environment and
Natural Resources, Region IV, Manila. It was in 1978 when Manioso was found to be suffering from
Hypertensive Vascular Disease. Since then, Manioso was already in and out the hospital for the purpose
of having tests conducted on him and to be hospitalized on several instances. From January 11, 1995 up
to May 15,1995 when Manioso compulsory retired from the government service on reaching 65 years of
age and after serving almost 36 years, he no longer reported for work. His sick leave covering the said
period was duly approved.

Manioso filed with the GSIS for additional benefits claiming that the ailments for which he was
hospitalized several times in 1997 developed from his work related illnesses.The GSIS disapproved
petitioners request upon the ground that he was already paid the maximum monthly income benefit for
eight (8) months covering the period from May 15, 1995 to January 14, 1996 commensuarate to the
degree of his disability at the time of his retirement. On appeal, the GSISs ruling was also affirmed.
Hence, this petition.

ISSUE:

Whether or not the Manioso is entitled to Permanent Total Disability Benefits

HELD:

Under Article 192 (a) of the Labor Code, any employee who contacts sickness or sustains an
injury resulting in PTD shall, for each month until his death, be paid by the [GSIS] during such disability,
an amount equivalent to the monthly income benefit, plus ten percent thereof for each dependent child,
but not exceeding five. And under Article 192 (b) of the same Code, the only time the income benefits,
which are guaranteed for five years, shall be suspended is if the employee becomes gainfully employed,
or recovers from his PTD or fails to be present for examination at least once a year upon notice by the
GSIS.

As Manioso's medical records show that the ailments that he suffered in 1997 are complications
that resulted from his work-related ailments, 'the right to compensation extends to disability due to
disease supervening upon and proximately and naturally resulting from compensable injury.

Manioso's retirement from the service does not prevent him from availing of the PTD benefits
to which he is entitled. For as stated earlier, benefits due an employee due to work-related sickness shall
be provided until he becomes gainfully employed, or until his recovery or death. None of these is present
in Manioso's case.

It would be an affront to justice if Manioso, a government employee who had served for thirty
six (36) years, is deprived of the benefits due him for work-related ailments that resulted in his
Permanent Total Disability.

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MOTOROLA PHILIPPINES, INC., et al. v. IMELDA B. AMBROCIO, et al.
582 SCRA 502 (2009), SECOND DIVISION (Carpio Morales, J.)

When a company provides a Redundancy Program in favor of the dismissed employees, the latter already received
what was due them under the law.

Sometime in 1997, Motorola Philippines, Inc. (MPI) decided to close its Paraaque plant in
order to consolidate its operations. It thus offered to its affected employees a redundancy/separation
package consisting of separation pay equivalent to two months salary per year of service, insurance
policies, etc. After availing the separation package, 236 employees filed complaints against MPI for
payment of retirement pay equivalent to one-month salary per year of service. MPI, on the other hand,
insisted that Ambrocio, et al. had already received such one-month pay, the same having been included in
the cash component of the separation/redundancy package paid to them.

The Labor Arbiter found MPI liable to Ambrocio et al. for the payment of "retirement pay
service benefits" since retirement pay is separate and distinct from separation pay. The NLRC, however,
granted MPIs appeal and dismissed the complaint of Ambrocio, et al. holding that the benefits received
by Ambrocio, et al. for involuntary separation under MPIs retirement plan included the service pay
benefits, which both grant one months pay for every year of service. Ambrocio, et al. appealed to the
Court of Appeals (CA) which ruled In favor of Ambrocio et al. Hence, the filing of this appeal.

ISSUES:

Whether or not Ambrocios, et al. were entitled to additional retirement benefits

HELD:
Separation pay has been defined as the amount that an employee receives at the time of his
severance and is designed to provide the employee with the wherewithal during the period he is looking
for another employment,

and is recoverable only in the instances enumerated under Articles 283 and 284
of the Labor Code, as amended, or in illegal dismissal cases when reinstatement is no longer possible.
Retirement pay, on the other hand, presupposes that the employee entitled to it has reached the
compulsory retirement age or has rendered the required number of years as provided for in the collective
bargaining agreement (CBA), the employment contract or company policy, or in the absence thereof, in
Republic Act No. 7641 or the Retirement Law.
It is admitted that Ambrocio were terminated pursuant to a redundancy, and not due to
retirement program, hence, they were entitled to a separation pay of one-month salary per year of
service.
As correctly ruled by the NLRC, by whatever version of MPIs Retirement Plan would be made
applicable, of Ambrocio, et al. are entitled to a separation pay of one-month salary per year of service.
Under Sec. III-B of the Plan on which of Ambrocio, et al. rely, "[i]n case of involuntary separation with
the company due to retrenchment/redundancy, the employee shall be given a service benefit equivalent
to one month per year of service." On the other hand, based on Policy 1215 on which MPI relies, under
the same circumstances, the company shall provide its employee a separation pay equivalent to one (1)
months pay per year of service, inclusive of any service benefit eligibility under the Retirement Plan.
Thus, when of Ambrocio, et al. were paid a separation pay of two months salary for every year
of service under the Redundancy Package, they already received what was due them under the law and in
accordance with MPIs plan.

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IBARRA P. ORTEGA v. SOCIAL SECURITY COMMISSION and SOCIAL
SECURITY SYSTEM
555 SCRA 53 (2008), SECOND DIVISION (Carpio Morales, J.)

Claims under the Labor Code for compensation and under the Social Security Law for benefits are not the same
as to their nature and purpose.

Petitioner Ibarra Ortega, member of respondent Social Security System (SSS) filed claims for
partial permanent disability benefits on account of his illness with SSS, which the latter granted for total
of 23 months. After the expiration of his pension, Ortega then applied for total permanent disability
benefits but such application was denied by SSS. SSS observed that Ibarra was already granted benefits
under the same illness and his physical examination showed no progression of his illness. Accordingly,
Ortega filed before Social Security Commission (SSC) a petition alleging that SSS ignored the fact that
his attending physician diagnosed him of progressed illness. After exhausting administrative remedies,
SSC took cognizance of the petition and after hearing on the merits, it denied Ortegas claim for
entitlement to total permanent disability.

On appeal, the Court of Appeals affirmed in toto the SSC order.

ISSUE:

Whether or not Ibarra can claim under Social Security Law for work connected disability claims
insofar as it relates to a demonstration of disability to perform his trade and profession

HELD:

The conclusion that Ibarra is not entitled to total permanent disability benefits under the Social
Security Law was reached after petitioner was examined not just by one but four SSS physicians, namely,
Dr. Juanillo Descalzo III, Dr. Carlota A. Cruz-Tutaan, Dr. Jesus S. Tan and Dr. Rebecca Sison.

The initial physical examination and interview revealed that Ibarra had slight limitation of
grasping movement for both hands. According to Dr. Descalzo, this finding was not enough to grant an
extension of benefit since Ibarra had already received benefits equivalent to 30% of the body.
Responding to the allegation that the April 2000 physical examination was performed in a short period
of time, the doctor credibly explained that petitioner's movements were already being monitored and
evaluated from a distance as part of the examination of his extremities in order to minimize malingering
and overacting. 45

Indeed, the evidence indicates that petitioner's condition at the time material to the case does not
fall under the enumeration in the above-quoted provisions of the Social Security Law. Moreover, as
correctly held by the appellate court, the proviso of such provisions on the percentage degree of
disability applies when there is a related deterioration of the illness previously considered as partial
permanent disability. In this case, there is dearth of evidence on the proposition that petitioner's array of
illnesses is related to Generalized Arthritis and Partial Ankylosis of the specific body parts.

Ibarra's reliance on jurisprudence on work-connected disability claims insofar as it relates to a
demonstration of disability to perform his trade and profession is misplaced.

Claims under the Labor Code for compensation and under the Social Security Law for benefits
are not the same as to their nature and purpose. On the one hand, the pertinent provisions of the Labor

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Code govern compensability of work-related disabilities or when there is loss of income
due to work-connected or work-aggravated injury or illness. On the other hand, the
benefits under the Social Security Law are intended to provide insurance or protection against the
hazards or risks of disability, sickness, old age or death, inter alia, irrespective of whether they arose from
or in the course of the employment. And unlike under the Social Security Law, a disability is total and
permanent under the Labor Code if as a result of the injury or sickness the employee is unable to
perform any gainful occupation for a continuous period exceeding 120 days regardless of whether he
loses the use of any of his body parts.



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SAN MIGUEL FOODS INC. v. SAN MIGUEL CORPORATION EMPLOYEES
UNION-PTWGO
535 SCRA 133 (2007), SECOND DIVISION, (Carpio Morales, J)

Gross or flagrant violation of the seniority rule under the CBA is an unfair labor practice which the Labor
Arbiter has jurisdiction.
Some employees of San Miguel Foods Inc. (SMFI) brought grievance against Finance Manager
Gideo Montesa for discrimination, favouritism, unfair labor practice and harassment. SMFI failed to act
on the complaint which prompted San Miguel Corporation Employees Union PTWGO (the Union) to
filea case with the National Labor Relations Commission against SMFI, its President Amadeo Veloso
and Montesa. It prayed that SMFI et al. be ordered to promote the therein named employees with the corresponding
pay increases or adjustment including payment of salary differentials plus attorney' s fees[,] and to cease and desist from
committing the same unjust discrimination in matters of promotion.
SMFI filed a motion to dismiss on the alleged ground that the grievance issue should be resolved
in the grievance machinery provided in the collective bargaining. The Union opposed the motion to
dismiss. The NLRC dismissed the complaint. On appeal, the Court of Appeals affirmed the NLRCs
decision. Hence, this petition.
ISSUE:
Whether or not complaints for violation of seniority rule under the CBA falls within the Labor
Arbiters jurisdiction
HELD:
As for the alleged ULP committed under Article 248 (i), for violation of a CBA, this Article is
qualified by Article 261 of the Labor Code, provides that violations of a Collective Bargaining
Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice
and shall be resolved as grievances under the Collective Bargaining Agreement.
As reflected in the above-quoted allegations of the Union in its Position Paper, the Union
charges SMFI to have violated the grievance machinery provision in the CBA. The grievance machinery
provision in the CBA is not an economic provision, however, hence, the second requirement for a Labor
Arbiter to exercise jurisdiction of a ULP is not present.
The Union likewise charges SMFI, however, to have violated the Job Security provision in the
CBA, specifically the seniority rule, in that SMFI "appointed less senior employees to positions at its
Finance Department, consequently intentionally by-passing more senior employees who are deserving of
said appointment.
As above-stated, the Union charges SMFI to have promoted less senior employees, thus
bypassing others who were more senior and equally or more qualified. It may not be seriously disputed
that this charge is a gross or flagrant violation of the seniority rule under the CBA, a ULP over which the
Labor Arbiter has jurisdiction.
SMFI, at all events, questions why the Court of Appeals came out with a finding that it (SMFI)
disregarded the seniority rule under the CBA when its petition before said court merely raised a question
of jurisdiction. The Court of Appeals having affirmed the NLRC decision finding that the Labor Arbiter
has jurisdiction over the Union complaint and thus remanding it to the Labor Arbiter for continuation of
proceedings thereon, the appellate court said finding may be taken to have been made only for the
purpose of determining jurisdiction.


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STA. CATALINA COLLEGE, et al. v. NATIONAL LABOR RELATIONS
COMMISION, et al.
416 SCRA 233 (2003), THIRD DIVISION (Carpio Morales, J.)

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

Hilaria Tercero (Tercero) was hired as an elementary school teacher at the Sta. Catalina College
(Sta. Catalina) in June 1955. Fifteen years thereafter, on account of the illness of her mother, she applied
for and was granted a one year leave of absence without pay. After the expiration of her leave of
absence, she had not been heard from by petitioner school. In 1982, she applied anew at petitioner
school which hired her. On March 1997, Hilaria was awarded a Plaque of Appreciation for thirty years of
service and a gratuity pay. On May 1997, she reached the compulsory retirement age of
65. Terceros retirement benefits were computed on the basis of fifteen years of service from 1982 to
1997 and her service from 1955 to 1970 was excluded in the computation. Sta. Catalina asserted that she
had, in 1971, abandoned her employment. From the retirement benefits was deducted the amount
representing reimbursement of the employers contribution to her retirement benefits under the Private
Education Retirement Annuity Association (PERAA) which Tercero had already received. Deducted
too was the gratuity pay which was given to her.

Tercero filed a complaint before the NLRC Regional Arbitration, against Sta. Catalina for non-
payment of retirement benefits. By Decision of October 30, 1998 , Labor Arbiter Pedro C. Ramos ruled
in favor of the petitioner school. On appeal, however, the NLRC, set aside the Labor Arbiters decision.

Sta. Catalina then brought the case on certiorari to the CA. The appellate court however, dismissed
the petition, holding that Sta. Catalina failed to prove that Tercero had abandoned her position in 1970,
as Sta. Catalina even gave her a Plaque of Appreciation for thirty years of service precisely because of
her thirty year continuous service, and that Sta. Catalina never sent notice to her dismissing her, hence,
the employer-employee relationship was not severed and, therefore, her services for Sta. Catalina during
the period from 1955-1970 should be credited in the computation of her retirement benefits

ISSUE:

Whether or not Tercero is entitled to the retirement benefits differential computed by the NLRC
based on her 29 years of service when she merely rendered 15 continuous years of service prior to her
retirement

HELD:

The Court is not unmindful of Terceros rendition of a total of thirty years of teaching in Sta.
Catalina College and should be accorded ample support in her twilight years. Sta. Catalina in fact
acknowledges her dedicated service to its students. She can, however, only be awarded with what she is
rightfully entitled to under the law.

As a general rule, the factual findings and conclusion of quasi-judicial agencies such as the
NLRC are, on appeal, accorded great weight and respect and even finality as long as they are supported
by substantial evidence or that amount of relevant evidence which a reasonable man might accept as
adequate to justify a conclusion. Where as in the present case, the findings of the NLRC contradict those

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of the Labor Arbiter, the Court must of necessity examine the records and the evidence
presented to determine which finding should be preferred as more conformable with
evidentiary facts.

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

To prove abandonment, the employer must show that the employee deliberately and
unjustifiably refused to resume his employment without any intention of returning.

Abandonment of work being a just cause for terminating the services of Hilaria, petitioner
school was under no obligation to serve a written notice to her.



Faculty of Civil Law
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ROSALINA TAGLE v. COURT OF APPEALS, et al.
466 SCRA 521 (2005), THIRD DIVISION (Carpio Morales, J.)

When the provisions of the employment contract are clear and unambiguous, its literal meaning controls.

Wilfredo Tagle (Wilfredo), husband of petitioner Rosalina Tagle (Rosalina), was recruited by
respondent Fast International Corporation (FIC) to work as fisherman at Taiwan for its principal,
respondent Kuo Tung Yu Huang (Huang). They then executed an employment contract for one year,
extendible for another year upon mutual agreement of the parties.

During the duration of the contract, the fishing vessel boarded by Wilfredo in Taiwan collided
with another and thereafter sank. Despite efforts to look for Wilfredos corpus, the same proved futile. He
was therefore presumed dead. Rosalina thus filed a claim for death benefits with FIC. The claim was
approved and Philippine Prudential Life Insurance Co., Inc., (PPLICI) issued a check in the amount of
P650,000.00. Upon receipt by Rosalina of the check, she accomplished a Release, Waiver and Quitclaim
stating that such would be an absolute bar to any suit that either is now pending or may be henceforth
prosecuted concerning claims, demands, causes of action, etc. Rosalina, however, subsequently filed
before the National Relations Commission (NLRC), a complaint for additional labor insurance in the
amount of NT$300,000.00. On motion of FIC, the Labor Arbiter dismissed the complaint of Rosalina
on the ground that by her prior execution of the Release, Waiver and Quitclaim she is barred from filing
any subsequent action against FIC.

Rosalina appealed to the NLRC which affirmed the Labor Arbiters decision stating that nothing
on record would indicate that the P650,000.00 paid by PPLICI is separate and distinct from the
obligation of the FIC and its principal Huang arising from the employment contract and the release and
quitclaim forever barred the filing of any subsequent action against FIC. Upon Petition for Certiorari
before the Court of Appeals (CA), it approved the NLRC resolution finding no shred of capriciousness
or arbitrariness on the part of the NLRC in dismissing her appeal.

ISSUE:

Whether or not the Release, Waiver and Quitclaim executed by Rosalina included the additional
labor insurance she is entitled to as provided for in Section 10, Article II of her deceased husbands
employment contract

HELD:

Death could be a result of accident, but accident does not necessarily result to death.

Compensation benefits for illness, death, accident which does not result to death, and partial or
total disability are treated separately and differently in the 3-paragraph provision of Article II, Section 10
of the employment contract. The said provision in the employment contract being clear and
unambiguous, its literal meaning controls.

To uphold Tagles claim for additional insurance for accident, assuming that one for the purpose
was secured, after receiving insurance benefits for death arising from accident, would violate the clear
provision of Article II, Section 10 of the employment contract, the law between the parties. And it would
trifle with the Release, Waiver and Quitclaim, another contract between the parties, barring Tagle from
claiming other or additional benefits arising from Tagles husbands death-basis of the release of the
insurance proceeds to her.

Faculty of Civil Law
Digest Pool 2010
PATRICIA I. TIONGSON, et al. v. NATIONAL HOUSING AUTHORITY
558 SCRA 56 (2008), SECOND DIVISION, (Carpio Morales, J.)

In a situation where a government agency, in this case the National Housing Authority, took possession of
properties belonging to private individuals for purposes of expropriation and the laws by virtue of which such government
agency expropriated the subject properties were subsequently declared to be unconstitutional by the Supreme Court, the
determination of just compensation should be reckoned from the date of filing the complaint for expropriation and not from
the time of actual taking of the properties.

Respondent National Housing Authority (NHA) took possession in 1978, for purposes of
expropriation, of properties belonging to petitioners Patricia L. Tiongson, et al. pursuant to P.D. Nos.
1669 and 1670. The two P.D.s were thereafter declared unconstitutional by the Supreme Court. On
September 14, 1987, the NHA filed before the Regional Trial Court (RTC) a complaint against
Tiongson, et al. for expropriation of parcels of land which were covered by P.D. Nos. 1669 and 1670.

The RTC held that the determination of just compensation of the properties should be reckoned
from the date of filing of NHAs petition or on September 14, 1987. However, on appeal, the Court of
Appeals reversed and set aside the trial courts orders and held that the just compensation should be
based on the actual taking of the property in 1978. Hence, this petition.

ISSUE:

Whether or not just compensation should be reckoned from the time of the taking of the
property or on the filing of the complaint

H ELD:

In declaring, in its challenged Decision, that the determination of just compensation should be
reckoned from NHAs taking of the properties in 1978, the appellate court simply relied on Annex C
of NHAs petition before it, the Order dated June 15, 1988 of the then Presiding Judge of the trial court,
and thus concluded that the parties admitted that [NHA] took possession of the subject properties as
early as 1978. The appellate court reached that conclusion, despite its recital of the antecedents of the
case including Tiongson, sustained moves, even before the trial court, in maintaining that the reckoning
of just compensation should be from the date of filing of the petition for expropriation on September
14, 1987.

The earlier-quoted allegations of the body and prayer in NHAs Petition for Expropriation filed
before the RTC constitute judicial admissions of NHAthat it possessed the subject properties until
this Courts declaration, in its above-stated Decision in G.R. No. L-55166 promulgated on May 21, 1987,
that P.D. No. 1669 pursuant to which NHA took possession of the properties of petitioners in 1978 was
unconstitutional and, therefore, null and void. These admissions, the appellate court either unwittingly
failed to consider or escaped its notice.

Tiongson, et al., even brought to the appellate courts attention, in their Motion for
Reconsideration of its Decision of June 16, 1999, the fact that they had called the trial courts attention
to NHAs allegation-admissions in the body and prayer of its petition. But the appellate court, by
resolution of October 7, 1999, denied petitioners motion upon the ground that it raised substantially the
same issues that were already considered and passed upon in arriving at its decision. The appellate courts
June 16, 1999 decision glaringly shows, however, that the matter of judicial admissions of NHA in the
body and prayer in its petition were not considered by it.

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Vis-a-vis the factual backdrop of the case, the just compensation of Tiongson, et
al.s properties must be determined as of the date of . . . the filing of [NHAs] complaint on September
14, 1987.

Faculty of Civil Law
Digest Pool 2010
UNITED PHILIPPINE LINES, INC. and/or HOLLAND AMERICA LINE,
INC. v. FRANCISCO BESERIL
487 SCRA 248 (2006), THIRD DIVISION (Carpio Morales, J.)

The law does not require that the illness should be incurable, what is important is that he was unable to perform
his customary work for more than 120 days which constitutes permanent total disability, thus, an award of a total and
permanent disability benefit is in order.

Francisco Beseril (Francisco) was hired by United Philippine Line, Inc. (UPL) in behalf of its
principal, Holland America Line (HAL). He is usually rehired by UPL to serve as one of the seaman in
HALs vessel as an assistant cook. In the middle of his service he started to feel chest pain and was
brought ashore and underwent Triple Heart By-Pass. When he was brought to Manila he underwent
several rehabilitation and physical therapy. One of Franciscos doctors found that he was unfit to work.

Relying on the findings of the doctor, Francisco and his counsel demanded for disability pay
from his employer UPL and/or HAL. UPL directed Francisco to undergo an examination with their
company doctor. The company doctor found that Francisco is in fact fit to work as a seaman. Francisco
agreed to work again for UPL but did not show up in their office.

Francisco filed a complaint in the NLRC against ULP and HAL claiming disability benefits, loss
of earning and capacity and damages. The Labor Arbiter awarded Francisco full amount of the benefits
and damages. The NLRC modified the decision of the Labor Arbiter and deleted the award for disability
benefits. ULP and HAL contended that there should be no grant of Disability Benefit because their
company physician certified that he is fit to go back to work. On appeal, the Court of Appeals reversed
the decision of the Labor Arbiter and ruled that the disability benefit should be awarded

Hence, this petition.

ISSUE:

Whether or not Disability Benefit should be awarded to Francisco Beseril

HELD:

That Francisco was found to be "fit to return to work" by Clinica Manila (where he underwent
regular cardiac rehabilitation program and physical therapy from January 15 to May 28, 1998 under
UPL's account) on September 22, 1998, or a few months after his rehabilitation does not matter.

UPL tried to contest the above findings by showing that respondent was able to work again as a
chief mate in March 2001. Nonetheless, this information does not alter the fact that as a result of his
illness, respondent was unable to work as a chief mate for almost three years. It is of no consequence
that respondent was cured after a couple of years.

The law does not require hat the illness should be incurable. What is important is that he was
unable to perform his customary work for more than 120 days which constitutes permanent total
disability. An award of a total and permanent disability benefit would be germane to the purpose of the
benefit, which is to help the employee in making ends meet at the time when he is unable to work


Faculty of Civil Law
Digest Pool 2010
VIRGEN SHIPPING CORPORATION, et al. v. JESUS B. BARRAQUIO
597 SCRA 411 (2009), SECOND DIVISION (Carpio Morales, J.)

Resignation is defined as the voluntary act of an employee who finds himself in a situation where he believes that
personal reasons cannot be sacrificed in favor of the exigency of the service and he has no other choice but to disassociate
himself from his employment.

Odyssey Maritime, PTE. Ltd, through Virgen Shipping Corporation, hired Jesus Barraquio
(Barraquio ) as chief cook on board a vessel for a period of ten (10) months. While the vessel was
docked in Korea, Barraquio requested medical assistance and was diagnosed with suspected ischemic
heart disease and hypertension. Barraquios wrote a letter to the captain informing them that he has
decided to quit his job and will be joining the next disembarkation crew. He signed a Statement of
Account acknowledging set-off of his vacation leave pay from the cost of finding his replacement and
the cost of repatriation.

A year later, respondent filed a complaint for non-payment of 120 days sickness allowance under
Section 20 (B) paragraph 2 of the Standard Employment Contract for Seafarers, disability benefits, legal
interest, reimbursement of medical expenses, and damages. Barraquio alleged that due to constant verbal
abuse from the ship master, he suffered dizziness, chest pains, headaches and irregular sleep leading to
hypertension. Barraquio alleged that he was forced to execute the request for disembarkation for fear
that his health would worsen; and that medical findings that he was fit to sail is proof that his condition
developed while on board.

The Labor Arbiter rendered judgment in favor of Barraquio finding the foreign principal and
manning agency liable to pay to complainant his money claims. On appeal, the National Labor Relations
Commission (NLRC) reversed the ruling of the Labor Arbiter and dismissed the complaint, finding
Barraquios resignation voluntary; The Court of Appeals reversed the NLRC Decision in light of the
observation that Barraquios hypertension probably developed while on board the vessel

ISSUES:

Whether or not Barraquio voluntarily resigned

HELD:

From a considered review, the Court finds that respondents resignation was voluntary.

Resignation is defined as the voluntary act of an employee who finds himself in a situation where
he believes that personal reasons cannot be sacrificed in favor of the exigency of the service and he has
no other choice but to disassociate himself from his employment.

Barraquios resignation can be gleaned from the unambiguous terms of his letter to Captain
Cristino. Barraquios bare claim that he was forced to execute his resignation letter deserves no merit.
Bare allegations of threat or force do not constitute substantial evidence to support a finding of forced
resignation. That such claim was proferred a year later all the more renders his contention bereft of
merit.

Ischemic heart disease cannot develop in a short span of time that Barraquio served as chief
cook for petitioners. In fact, as indicated above, the Gleneagles Maritime Medical Centre doctor who
treated respondent in May 2000 for abscess in his left hand had noted Barraquios [h]istory of

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hypertension for 3 years. Moreover, the Korean physician did not make any
recommendation as to Barraquios bill of health for petitioners to assume that he was fit
for repatriation.