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Reyes, Hazel S.

Labor Law Rev Assignment


157802, OCT. 13, 2010)
Respondent Coros was dismissed by Petitioners Matling and other corporate officers. Coros then
filed a illegal dismissal case with in the NLRC, Sub-Regional Arbitration Branch XII, Iligan
City. Petitioners moved to dismiss the case, stating that the SEC has jurisdiction over the case.
Coros opposed such claiming that: he had not been formally elected as such; that he did not own
a single share of stock in Matling, considering that he had been made to sign in blank an undated
indorsement of the certificate of stock he had been given in 1992; that Matling had taken back
and retained the certificate of stock in its custody; and that even assuming that he had been a
Director of Matling, he had been removed as the Vice President for Finance and Administration,
not as a Director, a fact that the notice of his termination dated April 10, 2000 showed. The
Labor Arbiter dismissed the case. On Appeal, the NLRC set aside the decision of the LA, stating
that such VP position was not listed in the Company's Constitution and By-Laws; hence, Coros
was not a corporate officer. The motion for reconsideration by petitioners was denied. Petitioners
filed a petition for certiorari with the CA, to which the latter dismissed: Coros' position was not a
corporate office but an ordinary office.
Whether the respondent was a corporate officer of Matling or not. The resolution of the issue
determines whether the LA or the RTC had jurisdiction over his complaint for illegal dismissal.
Coros position was an ordinary office, not a corporate office. The Board of Directors of Matling
could not validly delegate the power to create a corporate office to the President, in light of
Section 25 of the Corporation Code requiring the Board of Directors itself to elect the corporate
officers. Verily, the power to elect the corporate officers was a discretionary power that the law
exclusively vested in the Board of Directors, and could not be delegated to subordinate officers
or agents. The office of Vice President for Finance and Administration created by Matlings
President pursuant to By Law No. V was an ordinary, not a corporate, office. LA has jurisdiction
over the case. Even though he might have become a stockholder of Matling in 1992, his
promotion to the position of Vice President for Finance and Administration in 1987 was by
virtue of the length of quality service he had rendered as an employee of Matling. His subsequent
acquisition of the status of Director/stockholder had no relation to his promotion. Besides, his
status of Director/stockholder was unaffected by his dismissal from employment as Vice
President for Finance and Administration. The criteria for distinguishing between corporate

officers who may be ousted from office at will, on one hand, and ordinary corporate employees
who may only be terminated for just cause, on the other hand, do not depend on the nature of the
services performed, but on the manner of creation of the office. In the respondents case, he was
supposedly at once an employee, a stockholder, and a Director of Matling.
GMC and the General Milling Corporation Independent Labor Union concluded a collective
bargaining agreement (CBA) which included the issue of representation effective for a term of
three years. The CBA was effective for three years retroactive to December 1, 1988. Hence, it
would expire on November 30, 1991. Later on, the Union tried to renew the CBA after it expired
and the Company did not recognize them to be existing due to alleged massive disaffiliation of
members with it. GMC dismissed Marcia Tumbiga, a union member, was dismissed on grounds
of incompetence. Union requested to have the matter submitted to the grievance procedure in the
CBA, but the Company did not.

Thus, the union filed, on July 2, 1992, a complaint against GMC with the NLRC, Arbitration
Division, Cebu City. The complaint alleged unfair labor practice on the part of GMC. he labor
arbiter dismissed the case with the recommendation that a petition for certification election be
held to determine if the union still enjoyed the support of the workers. The union appealed to the
NLRC. NLRC set aside the decision of the LA, stating that the Company abide by the 1991-1993
CBA draft that the union proposed, being still the exclusive bargaining agent. But later on,
NLRC set aside its decision on GMCs MR. CA however reversed the decision of the NLRC.
Whether or not GMC is guilty of unfair labor practice for violating the duty to bargain
collectively and/or interfering with the right of its employees to self-organization,
Whether or not the CA gravely abused its discretion in imposing upon GMC the draft CBA
proposed by the union for two years to begin from the expiration of the original CBA.
GMC is guilty on the first issue. It is indisputable that when the union requested for a
renegotiation of the economic terms of the CBA on November 29, 1991, it was still the certified
collective bargaining agent of the workers, because it was seeking said renegotiation within five
(5) years. GMCs failure to make a timely reply to the proposals presented by the union is
indicative of its utter lack of interest in bargaining with the union. Its excuse that it felt the union
no longer represented the workers, was mainly dilatory as it turned out to be utterly baseless.

There is no abuse. SC was not inclined to gratify GMC with an extended term of the old CBA
after it resorted to delaying tactics to prevent negotiations. Since it was GMC which violated the
duty to bargain collectively, based on Kiok Loy and Divine Word University of Tacloban, it had
lost its statutory right to negotiate or renegotiate the terms and conditions of the draft CBA
proposed by the union. As provided by Art 253 of the Labor Code, as amended, the provision
mandates the parties to keep the status quo while they are still in the process of working out their
respective proposal and counter proposal. However, when one of the parties abuses the grace
period by purposely delaying the bargaining process, a departure from the general rule is
On December 1992, Salvador Abtria, then President of respondent union initiated the
renegotiation of its Collective Bargaining Agreement with petitioner Colegio de San Juan de
Letran for the last two (2) years of the CBA's five (5) year lifetime from 1989-1994. Ambas,
newly elected union president wanted to continue the renegotiation of the CBA but petitioner,
through Fr. Edwin Lao, claimed that the CBA was already prepared for signing by the parties.
The parties submitted the disputed CBA to a referendum by the union members, who eventually
rejected the said CBA. The parties agreed to disregard the unsigned CBA and to start negotiation
on a new five-year CBA starting 1994-1999. During the course of the renegotiation, Ambas was
dismissed on the ground of insubordination. Later on, the union held a strike. Public respondent
the Secretary of Labor and Employment assumed jurisdiction and ordered all striking employees
including the union president to return to work and for petitioner to accept them back under the
same terms and conditions before the actual strike. Petitioner readmitted the striking members
except Ambas. The parties then submitted their pleadings including their position papers which
were filed on July 17, 1996. Illegal dismissal case on 2 counts of unfair labor practice was filed
against the School. The Secretary and the CA, on appeal to it, held in favor of the union. Hence
this petition,
Whether petitioner is guilty of unfair labor practice by refusing to bargain with the union when it
unilaterally suspended the ongoing negotiations for a new CBA upon mere information that a
petition for certification has been filed by another legitimate labor organization?
Whether the termination of the union president amounts to an interference of the employees'
right to self-organization?
Yes on both counts. Petitioner's utter lack of interest in bargaining with the union is obvious in
its failure to make a timely reply to the proposals presented by the latter and is an indication of
bad faith. More than a month after the proposals were submitted by the union, petitioner still had

not made any counter-proposals, in violation of the procedure in Article 250 of the Labor Code,
as amended.
The factual backdrop of the termination of Ms. Ambas leads us to no other conclusion that she
was dismissed in order to strip the union of a leader who would fight for the right of her coworkers at the bargaining table. Ms. Ambas, at the time of her dismissal, had been working for
the petitioner for ten (10) years already. In fact, she was a recipient of a loyalty award.
Moreover, for the past ten (10) years her working schedule was from Monday to Friday.
However, things began to change when she was elected as union president and when she started
negotiating for a new CBA. Thus, it was when she was the union president and during the period
of tense and difficult negotiations when her work schedule was altered from Mondays to Fridays
to Tuesdays to Saturdays. When she did not budge, although her schedule was changed, she was
outrightly dismissed for alleged insubordination. When management refused to treat the charge
of insubordination as a grievance within the scope of the Grievance Machinery, the action of the
College in finally dismissing her from the service became arbitrary, capricious and whimsical.
Private respondent SLMCEA-AFW brought to the attention of petitioner a letter dated July 4,
1990 that the 1987-1990 was about to expire, and manifested in the process that private
respondent wanted to renew the CBA. This development triggered round-table talks on which
occasions petitioner proposed, among other items, a maximum across-the-board monthly salary
increase of P375.00 per employee, to which proposal private respondent demanded a P1,500.00
hike or 50% increase based on the latest salary rate of each employee, whichever is higher. A
deadlock on issues, especially that bearing on across-the-board monthly and meal allowances
followed and to pre-empt the impending strike as voted upon by a majority of private
respondent's membership, petitioner lodged the petition below. The Secretary of Labor
immediately assumed jurisdiction and the parties submitted their respective pleadings. On
January 28, 1991, public respondent Secretary of Labor issued the Order now under challenge.
Said Order contained a disposition on both the economic and non-economic issues raised in the
petition. One of the rulings in the order is the granting of the retroactive effect to the
enforceability of the CBA.
Whether or not the CBA should be given retroactive effect
The effectivity of the Order of January 28, 1991, must retroact to the date of the expiration of
the previous CBA, contrary to the position of petitioner. Under the circumstances of the case,
Article 253-A cannot be property applied to herein case. Therefore, in the absence of a specific
provision of law prohibiting retroactivity of the effectivity of arbitral awards issued by the
Secretary of Labor pursuant to Article 263 (g) of the Labor Code, such as herein involved, public

respondent is deemed vested with plenary and discretionary powers to determine the effectivity
Petitioner corporation and private respondent labor union entered into a three-year Collective
Bargaining Agreement (CBA) with expiry date on November 27, 1991. During the freedom
period, NAFLU questioned the majority status of Private respondent through a petition for
certification election. The election conducted on February 27, 1992 was won by private
respondent. On March 19 19912, private respondent was certified as the sole and exclusive
bargaining agent of petitioners rank and file employees.
On June 22, 1992, private respondents CBA proposals were received by petitioner. Counterproposals were made by petitioner. Negotiations collapsed, and on August 24, 1992, privaterespondent filed a notice of strike with the NCMB. The NCMB tried but failed to settle the
parties controversy. On September 30, 1992, public respondent Secretary of Labor assumed
jurisdiction over the dispute. She resolved the bargaining deadlock between the parties through
an Rrder, dated March 4, 1993. On her order with regard to the effectivity of the CBA, she held
that the CBA shall be effective from the time she assumed jurisdiction over the dispute, that is,
on 22 September 1992, and shall remain effective for five (5) years thereafter. Petitioner sought
partial reconsideration of the order. On June 8, 1993, public respondent affirmed her findings,
except for the date of effectivity of the Collective Bargaining Agreement which was changed to
September 30, 1992. This is the date when she assumed jurisdiction over the deadlock.
Whether or not the Secretary of Labor committed grave abuse of discretion in making the CBA
effective on September 30, 1992 and not on March 4, 1993 when she rendered judgment over the
In the case of Lopez Sugar Corporation v. Federation of Free Workers,
(189 SCRA 179), this Court reiterated the rule that although a CBA has expired, it continues to
have legal effects as between the parties until a new CBA has been entered into. It is the duty of
both parties to the to keep the status quo (as provided in Art. 253 of the Labor Code, as
amended) and to continue in full force and effect the terms and conditions of the existing
agreement during the 5-day freedom period and/or until a new agreement is reached by the
parties. Applied to the case at bench, the legal effects of the immediate past CBA between
petitioner and private respondent terminated, and the effectivity of the new CBA began, only on
March 4, 1993 when public respondent resolved their dispute.


Meralco Employees and Workers Association (MEWA) informed MERALCO of its intention to
re-negotiate the terms and conditions of their existing 1992-1997 Collective Bargaining
Agreement (CBA) covering the remaining period of two years starting from December 1, 1995
to November 30, 1997. owever, despite the series of meetings between the negotiating panels of
MERALCO and MEWA, the parties failed to arrive at terms and conditions acceptable to both of
them. Later MEWA filed a Notice of Strike with the NCMB. The NCMB then conducted a series
of conciliation meetings but the parties failed to reach an amicable settlement. Later on, the
Secretary assumed jurisdiction and made a Return-To-Work Order. The Secretary resolved and
awarded to respondents an alleged grossly exhorbitant package and others, and also making the
CBA effective not on the time the Secretary resolved such matter, exercising its discretion.
Whether or not retroactivity of arbitral awards shall commence at such time as granted by
In general, a CBA negotiated within six months after the expiration of the existing CBA retroacts
to the day immediately following such date and if agreed thereafter, the effectivity depends on
the agreement of the parties. On the other hand, the law is silent as to the retroactivity of a CBA
arbitral award or that granted not by virtue of the mutual agreement of the parties but by
intervention of the government. In the absence of a CBA, the Secretarys determination of the
date of retroactivity as part of his discretionary powers over arbitral awards shall control.
Consequently, we find no sufficient legal ground on the other justification for the retroactive
application of the disputed CBA, and therefore hold that the CBA should be effective for a term
of 2 years counted from December 28, 1996 (the date of the Secretary of Labors disputed order
on the parties motion for reconsideration) up to December 27, 1999.

Held 2: (August 1, 2000)

Upon a reconsideration of the Decision, this Court issued the assailed Resolution which ruled
that where an arbitral award granted beyond six months after the expiration of the existing CBA,
and there is no agreement between the parties as to the date of effectivity thereof, the arbitral
award shall retroact to the first day after the six-month period following the expiration of the last
day of the CBA.


LMG Chemicals Corp, (petitioner) is a domestic corporation engaged in the manufacture and
sale of various kinds of chemical substances, including aluminum sulfate which is essential in
purifying water, and technical grade sulfuric acid used in thermal power plants. Petitioner has
three divisions, namely: the Organic Division, Inorganic Division and the Pinamucan Bulk
Carriers. There are two unions within petitioners Inorganic Division. One union represents the
daily paid employees and the other union represents the monthly paid employees. Chemical
Workers Union, respondent, is a duly registered labor organization acting as the collective
bargaining agent of all the daily paid employees of petitioners Inorganic Division. Sometime in
December 1995, the petitioner and the respondent started negotiation for a new CBA as their old
CBA was about to expire. They were able to agree on the political provisions of the new CBA,
but no agreement was reached on the issue of wage increase. The economic issues were not also
settled. The parties failed to reach an amicable settlement with the NCMB. Secretary of Labor
and Employment granted an increase of P140 (higher than the offer of petitioner-company of
P135). Also, as to the effectivity of the new CBA was given at the discretion of the Secretary,
absent any agreement between the parties.

Whether or not the Secretary abused its discretion in setting the effectivity of the arbitral awards

It is well settled in our jurisprudence that the authority of the Secretary of Labor to assume
jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to national interest includes and extends to all questions and controversies arising
therefrom. The power is plenary and discretionary in nature to enable him to effectively and
efficiently dispose of the primary dispute. Therefore in the absence of the specific provision of
law prohibiting retroactivity of the effectivity of the arbitral awards issued by the Secretary of
Labor pursuant to Article 263(g) of the Labor Code, such as herein involved, public respondent
is deemed vested with plenary powers to determine the effectivity thereof.
5. NUBE vs. PEMA & PNB
Facts: Respondent Philippine National Bank (PNB) used to be a government-owned and
controlled banking institution. Its rank-and-file employees, being government personnel, were
represented for collective negotiation by the Philnabank Employees Association (PEMA), a

public sector union. In 1996, the Securities and Exchange Commission approved PNBs new
Articles of Incorporation and By-laws and its changed status as a private corporation. PEMA
affiliated with petitioner National Union of Bank Employees (NUBE), which is a labor
federation composed of unions in the banking industry, adopting the name NUBEPNB Employees Chapter
NUBE-PEC was certified as the sole and exclusive bargaining agent of the PNB rankand-file employees. A CBA was subsequently signed between NUBE-PEC and PNB covering
the period of January 1, 1997 to December 31, 2001. Pursuant to Article V on Check-off and
Agency Fees of the CBA, PNB shall deduct the monthly membership fee and other assessments
imposed by the union from the salary of each union member, and agency fee (equivalent to the
monthly membership dues) from the salary of the rank- and-file employees within the bargaining
unit who are not union members. Moreover, during the effectivity of the CBA, NUBE, being the
Federation union, agreed that PNB shall remit P15.00 of the P65.00 union dues per month
collected by PNB from every employee, and that PNB shall directly credit the amount to
NUBEs current account with PNB. Following the expiration of the CBA, the
Philnabank Employees Association-FFW (PEMA-FFW) filed on January 2, 2002 a petition for
certification election among the rank-and-file employees of PNB. The petition sought the
conduct of a certification election to be participated in by PEMA-FFW and NUBE-PEC.
While the petition for certification election was still pending, two significant events
transpired the independent union registration of NUBE- PEC and its disaffiliation with NUBE.
With a legal personality derived only from a charter issued by NUBE, decided to apply for a
separate registration with the (DOLE), then it was registered as an independent labor
Thereafter, the Board of Directors of NUBE-PEC adopted a Resolution disaffiliating
itself from NUBE. It is claimed that said Resolution was ratified by about eighty-one percent
(81%) of the total union membership. On June 25, 2003, NUBE-PEC filed a Manifestation and
Motion8 before the Med-Arbitration Unit of DOLE, praying that, in view of its independent
registration as a labor union and disaffiliation from NUBE, its name as appearing in the official
ballots of the certification election be changed to Philnabank Employees Association (PEMA)
or, in the alternative, both parties be allowed to use the name PEMA but with PEMA-FFW and
NUBE-PEC be denominated as PEMA-Bustria Group and PEMA-Serrana Group,
respectively. On the same date, PEMA sent a letter to the PNB management informing its
disaffiliation from NUBE and requesting to stop, effective immediately, the check-off of the
P15.00 due for NUBE. PNB informed NUBE of PEMAs letter and its decision to continue the
deduction of the P15.00 fees, but stop its remittance to NUBE effective July 2003. PNB also
notified NUBE that the amounts collected would be held in a trust account pending the
resolution of the issue on PEMAs disaffiliation. virtualaw library
NUBE replied that: it remains as the exclusive bargaining representative of the PNB
rank-and-file employees; by signing the Resolution (on disaffiliation), the chapter officers have
abandoned NUBE-PEC and joined another union; in abandoning NUBE-PEC, the chapter
officers have abdicated their respective positions and resigned as such; in joining another union,
the chapter officers committed an act of disloyalty to NUBE-PEC and the general membership;

the circumstances clearly show that there is an emergency in NUBE-PEC necessitating its
placement under temporary trusteeship; and that PNB should cease and desist from dealing with
Serrana, Roma, Latorre, Garcia, Medrano, and Magtibay, who are expelled from NUBEPEC. With regard to the issue of non-remittance of the union dues, NUBE enjoined PNB to
comply with the union check-off provision of the CBA; otherwise, it would elevate the matter to
the grievance machinery in accordance with the CBA.
Despite NUBEs response, PNB stood firm on its decision. NUBE brought the matter to
the (NCMB) for preventive mediation.In time, PNB and NUBE agreed to refer the case to the
Office of the DOLE Secretary for voluntary arbitration. Meantime, the DOLE denied PEMAs
motion to change its name in the official ballots. The certification election was finally held,
thereafter PEMA filed before the voluntary arbitrator an Urgent Motion for Intervention, alleging
that it stands to be substantially affected by whatever judgment that may be issued, because one
of the issues for resolution is the validity of its disaffiliation from NUBE.
Only NUBE opposed the motion, arguing that PEMA has no legal personality to
intervene, as it is not a party to the existing CBA; and that NUBE is the exclusive bargaining
representative of the PNB rank-and-file employees and, in dealing with a union other than
NUBE, PNB is violating the duty to bargain collectively, which is another form of ULP. A
month after, DOLE denied PEMAs motion for intervention and ordered PNB to release all
union dues withheld and to continue remitting the same to NUBE. It is well settled that [l]abor
unions may disaffiliate from their mother federations to form a local or independent union only
during the 60-day freedom period immediately preceding the expiration of the CBA. However,
such disaffiliation must be effected by a majority of the members in the bargaining unit.
Aggrieved, PEMA filed before the CA a petition under Rule 43 with prayer for the
issuance of TRO) or writ of preliminary injunction (WPI) which the CA denied. However,
petitioner again filed an Urgent Motion for the Issuance of a TRO against the Resolution of
DOLE, which ordered PNB to properly issue a check directly payable to the order of NUBE
covering the withheld funds from the trust account. Considering the different factual milieu, the
CA resolved to grant the motion. Subsequent to the parties submission of memoranda, the CA,
declaring the validity of PEMAs disaffiliation from NUBE and directing PNB to return to
the employees concerned the amounts deducted and held in trust for NUBE starting July 2003
and to stop further deductions in favor of NUBE. NUBE filed its MR, but it was denied, hence,
this petition.
Whether there was a valid disaffiliation.
Yes. The right of the local union to exercise the right to disaffiliate from its mother union is well
settled in this jurisdiction. A local union has the right to disaffiliate from its mother union or
declare its autonomy. A local union, being a separate and voluntary association, is free to serve
the interests of all its members including the freedom to disaffiliate or declare its autonomy from

the federation which it belongs when circumstances warrant, in accordance with the
constitutional guarantee of freedom of association. The purpose of affiliation by a local union
a federation is to increase by collective action the bargaining power in respect of the terms and
conditions of labor. Yet the locals remained the basic units of association, free to serve their own
and the common interest of all, subject to the restraints imposed by the Constitution and ByLaws of the Association, and free also to renounce the affiliation for mutual welfare upon the
terms laid down in the agreement which brought it into existence."
Thus, a local union which has affiliated itself with a federation is free to sever such
affiliation anytime and such disaffiliation cannot be considered disloyalty. In the absence of
specific provisions in the federation's constitution prohibiting disaffiliation or the declaration of
autonomy of a local union, a local may dissociate with its parent union. In the landmark case
of Liberty Cotton Mills Workers Union vs. Liberty Cotton Mills, Inc., we upheld the right of
local unions to separate from their mother federation on the ground that as separate and
voluntary associations, local unions do not owe their creation and existence to the national
federation to which they are affiliated but, instead, to the will of their members. The sole essence
of affiliation is to increase, by collective action, the common bargaining power of local unions
for the effective enhancement and protection of their interests. Admittedly, there are times when
without succor and support local unions may find it hard, unaided by other support groups, to
secure justice for themselves. Yet the local unions remain the basic units of association, free to
serve their own interests subject to the restraints imposed by the constitution and by-laws of the
national federation, and free also to renounce the affiliation upon the terms laid down in the
agreement which brought such affiliation into existence.
In the case at bar, there is nothing shown in the records nor is it claimed by NUBE that
PEMA was expressly forbidden to disaffiliate from the federation nor were there any conditions
imposed for a valid breakaway. This being so, PEMA is not precluded to disaffiliate from NUBE
after acquiring the status of an independent labor organization duly registered before the DOLE.
Also, there is no merit on NUBEs contention that PEMAs disaffiliation is invalid for nonobservance of the procedure that union members should make such determination through secret
ballot and after due deliberation, conformably with Article 241 (d) of the Labor Code, as
amended.38 Conspicuously, other than citing the opinion of a recognized labor law authority,
NUBE failed to quote a specific provision of the law or rule mandating that a local unions
disaffiliation from a federation must comply with Article 241 (d) in order to be valid and
effective. Consequently, by PEMA's valid disaffiliation from NUBE, the vinculum that
previously bound the two entities was completely severed. As NUBE was divested of any and all
power to act in representation of PEMA, any act performed by the former that affects the
interests and affairs of the latter, including the supposed expulsion of Serrana et al., is rendered
Also, in effect, NUBE loses it right to collect all union dues held in its trust by PNB. The
moment that PEMA separated from and left NUBE and exists as an independent labor
organization with a certificate of registration, the former is no longer obliged to pay dues and
assessments to the latter; naturally, there would be no longer any reason or occasion for PNB to
continue making deductions. The obligation of an employee to pay union dues is coterminous

with his affiliation or membership. "The employees' check-off authorization, even if declared
irrevocable, is good only as long as they remain members of the union concerned." A contract
between an employer and the parent organization as bargaining agent for the employees is
terminated bv the disaffiliation of the local of which the employees are members.
On the other hand, it was entirely reasonable for PNB to enter into a CBA with PEMA.
Since PEMA had validly separated itself from NUBE, there would be no restrictions which could
validly hinder it from collectively bargaining with PNB.
Petitioner school assails the petition for certification election filed by private respondent PinagIsang Tinig at Lakas ng Anakpawis Holy Child Catholic School Teachers and Employees
Labor union (HCCS-TELU-PIGLAS). There are approximately 120 teachers and employees in
the proposed bargaining unit. Petitioner alleges that respondent violates Art. 245 of the Labor
Code and lacks the personality to file a petition for certification elections. The case of Toyota is
cited by the petitioner and argues that the members of the union are an inappropriate bargaining
unit and lacks mutuality of interest, there being a mixture of rank-and-file and managerial or
supervisory employees.
Among the 120 members, some are vice-principals, department heads, coordinators,
supervisors, and other non-teaching personnel along with regular teaching staff. Respondents
counter that petitioner failed to substantiate its claim that some of the members are managerial or
supervisory employees. In any case, the qualifications of the member employees may be
threshed out in an inclusion-exclusion proceeding.
Respondents also state that the teaching and non-teaching personnel have similar working
conditions. Med-Arbiter: denied the petition for certification election on the ground that the
bargaining unit sought to be represented is inappropriate. SOLE: set aside the ruling of the MedArbiter and directed the conduct of two separate certification elections. Recognized the
difference between the teaching and non-teaching personnel but stated that the inappropriateness
of the bargaining unit is not a ground for a petition for certification election.
Cited the case of University of the Philippines v Ferrer-Calleja, where the SC did not
order the dismissal of the petition of the UP Workers Union composed of academic and nonacademic personnel. CA: no grave abuse of discretion on the part of the SOLE. Toyota
inapplicable since the vice-principals, department heads, coordinators, and supervisors are not
managerial employees.While the CA agreed with the petitioner that the work of teaching and
non-teaching personnel do not coincide, they nevertheless found that the SOLE appropriately
ordered the conduct of two separate certification elections based on the ruling in UP v FerrerCalleja.

WON mixture of employees in the same bargaining unit renders the labor organization illegal.
NO. SC first invoked the a Bystander Role, that certification elections are the sole concern of
the employees. The employer us merely a bystander that lacks the personality to dispute the
election and has no right to interfere therein. As to the mixture of employees in one bargaining
unit, there is no provision in the law that renders the union illegal for having such mixture in the
bargaining unit it represents. The Court looked at the past laws that governed this situation. RA
No. 875, Section 3 provided: Individuals employed as supervisors shall not be eligible for
membership in a labor organization of employees under their supervision but may form separate
organizations of their own. While Sec. 11, Rule II, Book V of the Omnibus Rules provides:
Members of supervisory unions who do not fall within the definition of managerial
employees shall become eligible to join or assist the rank and file organization. Art. 245 of
the Labor Code and Sec. 1 of Rule II, Book V of the Rules meanwhile state: Supervisory
employees shall not be eligible for membership in a labor organization of the rank-and-file
employees but may join, assist or form separate labor organizations of their own. As part of the
petition for certification election, RA 6715 required the (c) description of the bargaining unit
which shall be the employer unit unless circumstances otherwise require; and provided further,
that the appropriate bargaining unit of the rank-and-file employees shall not include supervisory
employees and/or security guards By that provision, any questioned mingling will prevent an
otherwise legitimate and duly registered labor organization from exercising its right to file a
petition for certification election. It was under the last provision that Toyota was decided,
prohibiting the certification election of a union that had managerial/supervisory and rank-and-file
employees as the bargaining unit. However, after Toyota was decided, DO No. 9, s. 1997 was
issued, which deleted the requirement that petition for certification election should indicate that
he bargaining unit of rank-and-file employees has not been mingled with supervisory employees.
It provided:
Sec. 4. Forms and contents of petition. - The petition shall be in writing and under oath
and shall contain, among others, the following: (c) The description of the bargaining unit. The
Supreme Court ruled in the later case of Tagaytay Highlands that a labor organization has been
registered, it may exercise all the rights and privileges of a legitimate labor organization. Any
mingling between supervisory and rank-and-file employees in its membership cannot affect its
legitimacy for that is not among the grounds for cancellation of its registration, unless such
mingling was brought about by misrepresentation, false statement or fraud under Article 239
(now 245) of the Labor Code. The Court abandoned the ruling in Dunlop and Toyota in that
case. Moreover, the employer cannot collaterally attack the legitimacy of the union by praying
for the dismissal of the petition for certification election. The determination of whether union
membership comprises managerial and/or supervisory employees is a factual issue that is best
left for resolution in the inclusion-exclusion proceedings, which has not yet happened in this case
so still premature to pass upon. There is also a difference between the concept of bargaining
unit and union; the inappropriateness of the bargaining unit does not remove the
legitimacy of the union. The Labor Code defines union as "any union or association of
employees which exists in whole or in part for the purpose of collective bargaining or of dealing
with employers concerning terms and conditions of employment.

Meanwhile, a bargaining unit is a "group of employees of a given employer, comprised

of all or less than all of the entire body of employees, which the collective interests of all the
employees, consistent with equity to the employer, indicated to be best suited to serve reciprocal
rights and duties of the parties under the collective bargaining provisions of the law."


Petitioner Goya Inc. (Goya) hired contractual employees from PESO Resources Development
Corporation (PESO). This prompted Goya, Inc. Employees Union-FFW (Union) to request for a
grievance conference on the ground that the contractual workers do not belong to the categories
of employees stipulated in their CBA. The Union also argued that hiring contractual employees
is contrary to the union security clause embodied in the CBA. When the matter remained
unresolved, the grievance was referred to the NCMB for voluntary arbitration. The Union argued
that Goya is guilty of ULP for gross violation of the CBA. The voluntary arbitrator dismissed the
Unions charge of ULP but Goya was directed to observe and comply with the CBA. While the
Union moved for partial consideration of the VA decision, Goya immediately filed a petition for
review before the Court of Appeals to set aside the VAs directive to observe and comply with the
CBA commitment pertaining to the hiring of casual employees. Goya argued that hiring
contractual employees is a valid management prerogative. The Court of Appeals dismissed the
Whether the act of hiring contractual employees is a valid exercise of management prerogative?
The petition must fail. The CA did not commit serious error when it sustained the ruling that the
hiring of contractual employees from PESO was not in keeping with the intent and spirit of the
CBA. In this case, a complete and final adjudication of the dispute between the parties
necessarily called for the resolution of the related and incidental issue of whether the Company
still violated the CBA but without being guilty of ULP as, needless to state, ULP is committed
only if there is gross violation of the agreement.
On Feb. 8, 2000, petitioner Marilou Quiroz, Owner and Vice-President for Finance and
Marketing of MZR, hired respondent Majen Colambot as messenger. Colambot's duties and
responsibilities included field, messengerial and other liaison work. However, beginning 2002,

Colambot's work performance started to deteriorate. Petitioners issued several memoranda to

Colambot for habitual tardiness, negligence, and violations of office policies. He was also given
written warnings for insubordination committed, for negligence caused by careless handling of
confidential office documents, for leaving his post without proper turnover and insubordination.
Petitioners claimed that despite written warnings for repeated tardiness and
insubordination, Colambot failed to mend his ways. Hence, in a Memorandum dated October 25,
2004 issued by petitioner Lea Timbal (Timbal), MZR's Administrative Manager, Colambot was
given a notice of suspension for insubordination and negligence.Again, in a Memorandum dated
November 25, 2004, Colambot was suspended from November 26, 2004 until December 6, 2004
for insubordination. Allegedly, Colambot disobeyed and left the office despite clear instructions
to stay in the office because there was an important meeting in preparation for a very important
activity the following day.
Petitioners claimed they waited for Colambot to report back for work on December 7,
2004, but they never heard from him anymore. Later, petitioners were surprised to find out that
Colambot had filed a complaint for illegal suspension, underpayment of salaries, overtime pay,
holiday pay, rest day, service incentive leave and 13th month pay. On December 16, 2004, the
complaint was amended to illegal dismissal, illegal suspension, underpayment of salaries,
holiday pay, service incentive pay, 13th month pay and separation pay. Colambot narrated that
he worked as a messenger for petitioners since February 2000. That on November 2004, he was
directed to take care of the processing of a document in Roxas Boulevard, Pasay City. When he
arrived at the office around 6 to 7 o'clock in the evening, he looked for petitioner Quiroz to give
the documents. The latter told him to wait for her for a while. When respondent finally had the
chance to talk to Quiroz, she allegedly told him that she is dissatisfied already with his work
performance. Afterwards, Colambot claimed that he was made to choose between resigning from
the company or the company will be the one to terminate his services. He said he refused to
resign. Colambot alleged that Quiroz made him sign a memorandum for his suspension, from
November 26 to December 6, 2004. After affixing his signature, Quiroz told him that effective
December 7, 2004, he is already deemed terminated. Later, on December 2, 2004, respondent
went back to the company to look for Timbal to get his salary. He claimed that Timbal asked him
to turn over his company I.D. Petitioners, however, insisted that while Colambot was suspended
due to insubordination and negligence, they maintained that they never terminated
Colambot's employment. They added that Colambot's failure to report for work since December
7, 2004 without any approved vacation or sick leave constituted abandonment of his work, but
they never terminated his employment. Petitioners further emphasized that even with Colambot's
filing of the complaint against them, his employment with MZR has not been terminated.
Colambot, meanwhile, argued that contrary to petitioners claim that he abandoned his
job, he claimed that he did not report back to work after the expiration of his suspension on
December 6, 2004, because Quiroz told him that his employment was already terminated
effective December 7, 2004. On April 28, 2006, the Labor Arbiter rendered a Decision declaring
respondents guilty of ILLEGAL DISMISSAL and hereby ORDERED to reinstate complainant to
his former position with full backwages from date of dismissal until actual reinstatement and
moral and exemplary damages in the sum of P100,000.00 and P50,000.00.

The Labor Arbiter held that there was no abandonment as there was no deliberate intent
on the part of Colambot to sever the employer-employee relationship. The Labor Arbiter
likewise noted that Colambot should have been notified to return back to work, which petitioner
failed to do. Aggrieved, petitioners appealed the decision before the NLRC, which was
GRANTED. Setting aside the judgment of the LA.
The NLRC pointed out that Colambot's complaint was unsupported by any evidence and
was not even made under oath, thus, lacking in credibility and probative value. The NLRC
further believed that Colambot abandoned his work due to his refusal to report for work after his
suspension. The failure of MZR to notify Colambot to return back to work is not tantamount to
actual dismissal.
Colambot filed MR but was denied. Thus, via a petition for certiorari under Rule 65
raising grave abuse of discretion as a ground, Colambot appealed before the CA. The CA granted
the petition and reversed the assailed Decision of the NLRC. The Decision of the LA was
ordered reinstated with modification that in lieu of reinstatement, petitioners were ordered to pay
respondent separation pay equivalent to one (1) month pay for every year of service in addition
to full backwages. The appellate court ruled that Colambot was illegally dismissed based on the
grounds that: (1) MZR failed to prove abandonment on the part of Colambot, and (2) MZR failed
to serve Colambot with the required written notices of dismissal. Petitioners appealed, but was
WON The respondent was illegally dismissed and WON the respondent abandoned his work.
No. the employer bears the burden of proving that the termination was for a valid or authorized
cause, in the present case, however, the facts and the evidence do not establish a prima facie case
that the employee was dismissed from employment. Before the employer must bear the burden
of proving that the dismissal was legal, the employee must first establish by substantial evidence
the fact of his dismissal from service. If there is no dismissal, then there can be no question as to
the legality or illegality thereof. A review of the Notice of Suspension dated November 25, 2004
shows that respondent was merely suspended from work for 6 days, there was, however, no
evidence that Colambot was terminated from work.
In the instant case, other than Colambot's failure to report back to work after suspension,
petitioners failed to present any evidence which tend to show his intent to abandon his work. It is
a settled rule that mere absence or failure to report for work is not enough to amount to
abandonment of work. There must be a concurrence of the intention to abandon and some overt
acts from which an employee may be deduced as having no more intention to work.
Mere absence or failure to report for work, even after notice to return, is not tantamount
to abandonment. The burden of proof to show that there was unjustified refusal to go back to
work rests on the employer. Abandonment is a matter of intention and cannot lightly be

presumed from certain equivocal acts. To constitute abandonment, there must be clear proof of
deliberate and unjustified intent to sever the employer-employee relationship. Clearly, the
operative act is still the employees ultimate act of putting an end to his employment.
Furthermore, it is a settled doctrine that the filing of a complaint for illegal dismissal is
inconsistent with abandonment of employment. An employee who takes steps to protest his
dismissal cannot logically be said to have abandoned his work. the filing of such complaint is
proof enough of his desire to return to work, thus negating any suggestion of abandonment.
COOPERATIVE, INC.,Petitioner, vs. SALVADOR M. BANDIOLA, JR., Respondent.
Respondent was employed by petitioner as bookkeeper. Petitioner's Board of Directors (the
Board) received a letter from a certain Napoleon Gao-ay (Napoleon) reporting the alleged
immoral coaduct and unbecoming behavior of respondent by having an illicit relationship with
Napoleons sister, Thelma G. Palma (Thelma). This prompted the Board to conduct a
preliminary investigation. Respondent, on the other hand, denied the accusation against him. He,
instead, claimed that the accusation was a result of the insecurity felt by some members of the
cooperative and of the Board because of his growing popularity owing to his exemplary record
as an employee. Thelma executed an affidavit likewise denying the allegations of extra-marital
WON there was illegal dismissal.
It is undisputed that respondent was dismissed from employment for engaging in extramarital
affairs, a ground for termination of employment stated in petitioners Personnel Policy. This
basis of termination was made known to respondent as early as the first communication made by
petitioner. In its June 20, 1997 letter, petitioner directed respondent to explain in writing or
personal confrontation why he should not be terminated for violation of Section 4.1.4 of the
Personnel Policy. Respondent merely denied the accusation against him and did not question the
basis of such termination. When the LA was called upon to decide the illegal dismissal case, it
ruled in favor of petitioner and upheld the basis of such dismissal which is the cited Personnel
Policy. To be sure, an employer is free to regulate all aspects of employment. It may make
reasonable rules and regulations for the government of its employees which become part of the
contract of employment provided they are made known to the employee. In the event of a
violation, an employee may be validly terminated from employment on the ground that an
employer cannot rationally be expected to retain the employment of a person whose lack of
morals, respect and loyalty to his employer, regard for his employers rules and application of
the dignity and responsibility, has so plainly and completely been bared.

While respondents act of engaging in extra--marital affairs may be considered personal to him
and does not directly affect the performance of his assigned task as bookkeeper, aside from the
fact that the act was specifically provided for by petitioners Personnel Policy as one of the
grounds for termination of employment, said act raised concerns to petitioner as the Board
received numerous complaints and petitions from the cooperative members themselves asking
for the removal of respondent because of his immoral conduct. In this case, respondent was
adequately afforded the opportunity to defend himself and explain the accusation against him.

10. PICOP Resources Inc vs Taneca

Respondents were regular rank-and-file employees of PRI and bona fide members
of Nagkahiusang Mamumuo sa PRI Southern Philippines Federation of Labor (NAMAPRISPFL), which is the collective bargaining agent for the rank-and-file employees of petitioner
PRI. PRI has a CBA with NAMAPRI-SPFL. The CBA contained the following union security
Article II- Union Security and Check-Off
Section 6. Maintenance of membership.
6.1 All employees within the appropriate bargaining unit who are members of the UNION at the
time of the signing of this AGREEMENT shall, as a condition of continued employment by the
COMPANY, maintain their membership in the UNION in good standing during the effectivity of
6.3 The COMPANY, upon the written request of the UNION and after compliance with the
requirements of the New Labor Code, shall give notice of termination of services of any
employee who shall fail to fulfill the condition provided in Section 6.1 and 6.2 of this Article
Atty. Fuentes sent a letter to the management of PRI demanding the termination of employees
who allegedly campaigned for, supported and signed the Petition for Certification Election of the
Federation of Free Workers Union (FFW) during the effectivity of the CBA. NAMAPRI-SPFL
considered said act of campaigning for and signing the petition for certification election of FFW
as an act of disloyalty and a valid basis for termination for a cause in accordance with its
Constitution and By-Laws, and the terms and conditions of the CBA, specifically Article II,
Sections 6.1 and 6.2 on Union Security Clause.
On October 16, 2000, PRI served notices of termination for causes to employees whom
NAMAPRIL-SPFL sought to be terminated on the ground of acts of disloyalty committed
against it when respondents allegedly supported and signed the Petition for Certification Election
of FFW before the freedom period during the effectivity of the CBA. A Notice dated October
21, 2000 was also served on the DOLE, Caraga Region. Respondents then accused PRI of ULP.

WON respondents were validly terminated.
Union security is a generic term, which is applied to and comprehends closed shop, union
shop, maintenance of membership, or any other form of agreement which imposes upon
employees the obligation to acquire or retain union membership as a condition affecting
employment. There is union shopwhen all new regular employees are required to join the union
within a certain period as a condition for their continued employment. There is maintenance of
membership shop when employees, who are union members as of the effective date of the
agreement, or who thereafter become members, must maintain union membership as a condition
for continued employment until they are promoted or transferred out of the bargaining unit, or
the agreement is terminated. A closed shop may be defined as an enterprise in which, by
agreement between the employer and his employees or their representatives, no person may be
employed in any or certain agreed departments of the enterprise unless he or she is, becomes,
and, for the duration of the agreement, remains a member in good standing of a union entirely
comprised of or of which the employees in interest are a part.
However, in terminating the employment of an employee by enforcing the union security clause,
the employer needs to determine and prove that: (1) the union security clause is applicable; (2)
the union is requesting for the enforcement of the union security provision in the CBA; and (3)
there is sufficient evidence to support the decision of the union to expel the employee from the
union. These requisites constitute just cause for terminating an employee based on the union
security provision of the CBA.

As to the first requisite, there is no question that the CBA between PRI and respondents included
a union security clause. Secondly, it is likewise undisputed that NAMAPRI-SPFL, in two (2)
occasions demanded from PRI, in their letters dated May 16 and 23, 2000, to terminate the
employment of respondents due to their acts of disloyalty to the Union. However, as to the third
requisite, we find that there is no sufficient evidence to support the decision of PRI to terminate
the employment of the respondents.
The mere signing of the authorization in support of the Petition for Certification Election of FFW
on March 19, 20 and 21, or before the freedom period, is not sufficient ground to terminate the
employment of respondents inasmuch as the petition itself was actually filed during the freedom
period. Nothing in the records would show that respondents failed to maintain their membership
in good standing in the Union. Respondents did not resign or withdraw their membership from
the Union to which they belong. Respondents continued to pay their union dues and never joined
the FFW. Petition denied.

11. Erector Advertsing Sign Group, Inc. v. NLRC, G.R. No. 167218, July 2, 2010 G.R. No.
167218 July 2, 2010
Petitioner Erector Advertising Sign Group, Inc. is a domestic corporation engaged in the
business of constructing billboards and advertising signs. Sometime in the middle of 1996,
petitioner engaged the services of ExpeditoCloma (Cloma) as company driver and the latter had
served as such until his dismissal from service in May 2000
In his Complaint filed with the National Labor Relations Commission (NLRC), Cloma alleged
that he was illegally suspended and then dismissed from his employment without due process of
law. He likewise claimed his unpaid monetary benefits such as overtime pay, premium pay for
worked rest days, service incentive leave pay and 13th month pay, as well as moral, exemplary
and actual damages and attorneys fees. It is conceded by petitioner that Cloma has been
suspended several times from work due to frequent tardiness and absenteeism, but the instant
case appears to be likewise the result of documented instances of absenteeism without prior
notice to and approval from his superior, and of misbehavior. The former happened between
May 12 and May 15, 2000 when Cloma supposedly failed to report for work without prior notice
and prior leave approval[6] which thus effectively prevented the other workers from being
transported to the job site as there was no other driver available; whereas the latter incident
happened on May 11, 2000 when allegedly, Cloma, without authority, suddenly barged into the
premises of the Outright Division and, without being provoked, threatened the employees with
bodily harm if they did not stop from doing their work. This second incident was supposedly
narrated fully in a letter dated May 13, 2000 addressed to the personnel manager and signed by
one Victor Morales and Ruben Que. The NLRC pointed out that not only was Cloma dismissed
without due process but also, that he was dismissed without just cause. The NLRC based its
finding on the termination letter served by petitioner on Cloma such that with respect to the first
ground of termination Hence, this petition,
Whether Cloma was dismissed with just cause and with due process of law.
We find no merit in the petition. The validity of an employees dismissal from service hinges on
the satisfaction of the two substantive requirements for a lawful termination. These are, first,
whether the employee was accorded due process the basic components of which are the
opportunity to be heard and to defend himself. This is the procedural aspect. And second,
whether the dismissal is for any of the causes provided in the Labor Code of the Philippines.
This constitutes the substantive aspect. With respect to due process requirement, the employer is
bound to furnish the employee concerned with two (2) written notices before termination of
employment can be legally effected. One is the notice apprising the employee of the particular
acts or omissions for which his dismissal is sought and this may loosely be considered as the
proper charge. The other is the notice informing the employee of the managements decision to
sever his employment. This decision, however, must come only after the employee is given a

reasonable period from receipt of the first notice within which to answer the charge, thereby
giving him ample opportunity to be heard and defend himself with the assistance of his
representative should he so desire. The requirement of notice, it has been stressed, is not a mere
technicality but a requirement of due process to which every employee is entitled. In this case,
we find that Clomas dismissal from service did not comply with this basic precept. Finally,
anent the charge that Cloma had terrorized the staff of the Outright Division and incited a work
stoppage, it is clear, from the May 17, 2000 suspension order, that he has already been penalized
with suspension for this offense and, hence, this act may no longer be added to support the
imposition of the ultimate penalty of dismissal from service nor may it be used as an independent
ground to that end. All told, we find that no error has been committed by the Court of Appeals in
ruling that Clomas dismissal from service was both without just cause and without due process
of law.
Petitioner Ma. Ana M. Tamonte was a regular employee of the Hongkong and Shanghai
Banking Corporation Ltd. and a member of the Hongkong and Shanghai Banking Corporation
Staff Retirement Plan (HSBC SRP). Petitioner Ana applied for a housing loan with the HSBC
SRP. To secure the said loan, petitioners and respondent HSBC SRP entered into a real estate
mortgage contract, where petitioners mortgaged their property covered by TCT No. 17169 of the
Register of Deeds of Paraaque. The monthly amortizations of the loan were paid by petitioner
Ana through automatic payroll deductions. In January 1993, a labor dispute arose between the
bank and the employees' union, where petitioner Ana was a member thereof, which culminated
in a strike staged on December 22, 1993. Majority of the bank employees, which included
petitioner Ana, were dismissed from service for abandonment. The union filed an illegal
dismissal case n the labor arbiter, where it was dismissed, stating that the strike was illegal. The
case is now pending in the US court since they file a petition to review.
On November 28, 1994 HSBC SRP sent a letter to petitioner Ana demanding the
payment of her unpaid accounts as of November 25, 1994, which included her housing
loan. Petitioners failed to settle their obligation; thus, respondent HSBC SRP effected the
foreclosure of petitioners' property subject of the real estate mortgage. The foreclosure
proceeding was conducted on May 28, 1996 with Alejandro L. Custodio, one of the herein
respondents, emerging as the highest bidder. On October 29, 1997, petitioners filed with the RTC
of Paraaque, Metro Manila, a Complaint for Annulment of the Entire Proceedings in
Foreclosure. In response, Respondents HSBC SRP and Custodio filed a Motion to Dismiss, they
stated that petitioners had not made any single payment since December 1993 which made them
in default under their mortgage contract. Respondent bank filed a Motion to Dismiss, alleging,
among others, that no cause of action existed against it, since it was not a party to the mortgage
contract nor did it participate in the foreclosure proceedings sought to be annulled.

Respondent HSBC SRP filed a Supplemental Motion to Dismiss stating that their case
was anchored on the same facts obtaining in the case of Cadena v. HSBC filed in the RTC which
had already been dismissed by the RTC after finding that the employee concerned had defaulted
in the payment of her monthly amortizations which gave rise to the foreclosure of the mortgaged
property Petitioners filed their Consolidated Opposition to the Motion to Dismiss, Petitioners did
not deny that no amortization payments were made after December 1993, but claimed that it was
not the cause of the foreclosure action but petitioner Ana's termination.
In an Order dated January 8, 1998, the RTC dismissed the complaint. The RTC found
that petitioners did not pay their monthly amortizations after petitioner Ana's termination in
December 1993 which was a violation of the terms and conditions of their housing loan and the
real estate mortgage contract they executed as security therefor; that when petitioners defaulted
in the payment of their monthly amortizations, respondent HSBC SRP had the right to foreclose
the mortgage property pursuant to their mortgage contract. The RTC also ruled that petitioners'
obligation to regularly pay their housing loan was purely a civil obligation which arose from a
contract which had the force of law between the parties and should be complied with in good
faith. Petitioners' motion for reconsideration was denied in an Order dated June 1, 1999. In a
Decision dated October 12, 2004, the CA dismissed the appeal and affirmed the RTC
decision. Petitioners filed their motion for reconsideration, which the CA denied in a Resolution
dated January 25, 2005.

Whether or not the Court Of Appeals committed grave error in sustaining the finding that
petitioners had no cause of action
Denied. The decision of the court of appeals dated on January 25, 2005 was affirmed.
Respondent HSBC SRP and petitioners agreed in their mortgage contract that HSBC SRP as
mortgagee was authorized to foreclose the mortgaged property in the event that the petitionersmortgagors failed to pay the sum of money secured by the mortgage. After petitioners failed to
pay upon demand, the civil obligation of the petitioners under the mortgage contract must be
enforced to protect HSBC SRP's interest in the housing loan. The dismissal of petitioners'
complaint for the annulment of the foreclosure proceedings is, therefore, valid and proper.

13. Varorient Shipping Co., INC. vs Gil A. Flores

Petitioners employed respondent for the position of Chief Officer on board M/V Aria per
Contract of Employmentduly approved by the Philippine Overseas Employment Administration
(POEA). He was deployed aboard M/V Aria in Bangkok, Thailand. The master of the vessel sent
respondent to the Centre Medical de Ngodi at Doula, Cameroon, where he was treated for three

days due to the shooting pain in the lower extremities, particularly on his right foot. Respondent
was declared not fit to work. The doctor recommended respondentsrepatriation to the Philippines
for continuing treatment.
In a Certification dated November 7, 1997, Dr. Copernico J. Villaruel, Jr., attending orthopedic
surgeon at the Philippine General Hospital, stated that respondent has been admitted under his
care from October 9 to 10, 1997 for hemilaminectomy and foraminotomy of L4-L5 and L5-SI,
due to the pain in his right foot, and that respondent is now fit to go back to work. In a letter to
petitioner Varorient dated July 29, 1997, respondent, through his counsel, stated that due to the
gross and evident bad faith of petitioners in refusing to grant him continued medical assistance
until he becomes fit to work, as recommended by their company doctors, he was forced to seek
medical treatment at his own expense. Respondent demanded that petitioners should provide him
medical treatment and pay him sickness wages and disability compensation, within five (5) days
from receipt of the letter; otherwise, he would be constrained to institute appropriate legal action
against them.
Whether the petitioner, Varorient, is required to pay the respondents medical treatment until he
was declared fit to go back to work.
Whether the quitclaim was issued with voluntariness.
Respondent should be reimbursed the amount of P13,579.76, representing the balance of the
sickness wages due him, the cost of the prescribed medicines he purchased, and the surgical
expenses he incurred, as evaluated by the CA.
Quitclaims executed by the employees are thus commonly frowned upon as contrary to public
policy and ineffective to bar claims for the full measure of the workers legal rights, considering
the economic disadvantage of the employee and the inevitable pressure upon him by financial
necessity.Thus, it is never enough to assert that the parties have voluntarily entered into such a
quitclaim. There are other requisites, to wit:
(a) that there was no fraud or deceit on the part of any of the parties;
(b) that the consideration of the quitclaim is credible and reasonable; and
(c) that the contract is not contrary to law, public order, public policy, morals or good
customs, or prejudicial to a third person with a right recognized by law.

14. Bright Maritime Corporation vs Fantonial

A Contract of Employment was executed by petitioner Bright Maritime Corporation (BMC), a
manning agent and respondent Ricardo B. Fantonial, which contract was verified and approved
by the Philippine Overseas Employment Administration (POEA) on January 17, 2000. The

employment contract provided that respondent shall be employed as boatswain of the foreign
vessel M/V AUK for one year, with a basic monthly salary of US$450, plus an allowance of
US$220. Respondent was made to undergo a medical examination at the Christian Medical
Clinic, which was petitionersaccredited medical clinic. Respondent was issued a Medical
Certificate dated January 17, 2000, which certificate had the phrase FIT TO WORK stamped on
its lower and upper portion. On May 16, 2000, respondent filed a complaint against petitioners
for illegal dismissal, payment of salaries for the unexpired portion of the employment contract
and for the award of moral, exemplary, and actual damages as well as attorneys fees before the
Regional Arbitration Branch No. 7 of the NLRC in Cebu City.
Whether respondent Ricardo B. Fantonial is entitled to back wages provided there was no
employer-employee relationship and moral and exemplary damages.
Petitioners act of preventing respondent from leaving and complying with his contract of
employment constitutes breach of contract for which petitioner BMC is liable for actual damages
to respondent for the loss of one-year salary as provided in the contract. The monthly salary
stipulated in the contract is US$670, inclusive of allowance. An employment contract, like any
other contract, is perfected at the moment (1) the parties come to agree upon its terms; and (2)
concur in the essential elements thereof: (a) consent of the contracting parties, (b) object certain
which is the subject matter of the contract, and (c) cause of the obligation. The object of the
contract was the rendition of service by respondent on board the vessel for which service he
would be paid the salary agreed upon.
The Court upholds the award of moral damages in the amount of P30,000.00, as the Court
of Appeals correctly found petitioners act was tainted with bad faith, considering that
respondents Medical Certificate stated that he was fit to work on the day of his scheduled
departure, yet he was not allowed to leave allegedly for medical reasons.
Further, the Court agrees with the Court of Appeals that petitioner BMC is liable to respondent
for exemplary damages, which are imposed by way of example or correction for the public good
in view of petitioners act of preventing respondent from being deployed on the ground that he
was not yet declared fit to work on the date of his departure, despite evidence to the contrary. In
this case, petitioner should be held liable to respondent for exemplary damages in the amount
of P50,000.00.

15. Lirio vs Genovia

Respondent Wilmer D. Genovia filed a complaint against petitioner Cesar Lirio and/or Celkor
Ad Sonicmix Recording Studio for illegal dismissal, non-payment of commission and award of
moral and exemplary damages. In his Position Paper alleged that he was hired as studio manager

by petitioner Lirio, owner of Celkor Ad Sonicmix Recording Studio (Celkor). Petitioner

approached him and told him about his project to produce an album for his 15-year-old daughter,
Celine Mei Lirio, a former talent of ABS-CBN Star Records. Petitioner asked respondent to
compose and arrange songs for Celine and promised that he (Lirio) would draft a contract to
assure respondent of his compensation for such services. Respondent alleged that before the end
of September 2001, he reminded petitioner about his compensation as composer and arranger of
the album. Petitioner verbally assured him that he would be duly compensated. On February 26,
2002, respondent again reminded petitioner about the contract on his compensationas composer
and arranger of the album. On March 14, 2002, petitioner verbally terminated respondents
services, and he was instructed not to report for work.
In defense, petitioner stated in his Position Paper that respondent was not hiredas studio
manager, composer, technician or as an employee in any other capacity of Celkor.
Whether there is an employer-employee relationship when the respondent was hired to allegedly
compose and arrange songs for Celkor and to petitioners daughter Celine Lirio.
Before a case for illegal dismissal can prosper, it must first be established that an employeremployee relationship existed between petitioner and respondent. The elements to determine the
existence of an employment relationship are: (a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the
employees conduct. The most important element is the employers control of the employees
conduct, not only as to the result of the work to be done, but also as to the means and methods to
accomplish it.
It is settled that no particular form of evidence is required to prove the existence of an employeremployee relationship. Any competent and relevant evidence to prove the relationship may be
admitted. In this case, the documentary evidence presented by respondent to prove that he was an
employee of petitioner are as follows: (a) a document denominated as "payroll" (dated July 31,
2001 to March 15, 2002) certified correct by petitioner, which showed that respondent received a
monthly salary of P7,000.00 (P3,500.00 every 15th of the month and another P3,500.00 every
30th of the month) with the corresponding deductions due to absences incurred by respondent;
and (2) copies of petty cash vouchers, showing the amounts he received and signed for in the

16. Nissan Motors Philippines vsVictorino Angelo

Respondent Victorino Angelo was employed by Nissan as one of its payroll staff. On April 7 to
17, 2000, respondent was on sick leave, thus, he was not able to prepare the payroll for the said
period. Again, on April 27 and 28, 2000, respondent was on an approved vacation leave which

again resulted in the non-preparation of the payroll for that particular period. As a consequence
of all these, the manufacturing employees, numbering about 350 people or about 65% of
[Nissan's total population], since April 16, have started to decline rendering overtime work. In
sum, the company has suffered massive loss of opportunity to sell because of failure to produce
in the production area due to non-availability of workers rendering overtime, high absenteeism
rate among plant direct workers primarily due to the payroll problem.
Whether the termination of the respondent is one of the authorized just causes of NLRC.
Yes. It must be emphasized at this point that the onus probandi to prove the lawfulness of the
dismissal rests with the employer. In termination cases, the burden of proof rests upon the
employer to show that the dismissal is for just and valid cause. Failure to do so would necessarily
mean that the dismissal was not justified and, therefore, was illegal.In this case, both the Labor
Arbiter and the NLRC were not amiss in finding that the dismissal of respondent was legal or for
a just cause based on substantial evidence presented by petitioner. Substantial evidence, which is
the quantum of proof required in labor cases, is that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion.
One of the just causes enumerated in the Labor Code is serious misconduct. Misconduct is
improper or wrong conduct. It is the transgression of some established and definite rule of action,
a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not
mere error in judgment. Such misconduct, however serious, must nevertheless be in connection
with the employee's work to constitute just cause for his separation. Thus, for misconduct or
improper behavior to be a just cause for dismissal, (a) it must be serious; (b) it must relate to the
performance of the employees duties; and (c) it must show that the employee has become unfit to
continue working for the employer.
Another just cause cited by the petitioner is willful disobedience. One of the fundamental duties
of an employee is to obey all reasonable rules, orders and instructions of the
employer. Disobedience, to be a just cause for termination, must be willful or intentional,
willfulness being characterized by a wrongful and perverse mental attitude rendering the
employees act inconsistent with proper subordination. A willful or intentional disobedience of
such rule, order or instruction justifies dismissal only where such rule, order or instruction is (1)
reasonable and lawful, (2) sufficiently known to the employee, and (3) connected with the duties
which the employee has been engaged to discharge. This allegation of willful disobedience can
still be adduced and proven from the same Letter-Explanation cited earlier. However, although
the dismissal was legal, respondent is still entitled to a separation pay as a measure of financial
assistance, considering his length of service and his poor physical condition which was one of
the reasons he filed a leave of absence.

Respondents Remigio Michael Ancheta II and Cynthia Ancheta were hired in the School Year
(SY) 1996-1997 by the St. Paul College Quezon City as a General Education teacher with
probationary rank and as a part time Mass Communication teacher, respectively. Their
appointments were renewed for SY 1997-1998. On February 13, 1998, the spouses wrote a letter
to SPCQC President, Sr. Lilia Tolentino signifying their intention to renew their contract for SY
1998-1999. College Dean Sr. Bernadette responded through two letters dated March 9, 1998
informing the spouses that the school is extending to them new contracts for SY 1998-1999. On
April 30, 1998, however, Sr. Bernadette wrote a letter to Sr. Lilia, endorsing the immediate
termination of the teaching services of the spouses on the following grounds:
1. Non-compliance with the departmental policy to submit their final test
questions to their respective program coordinators for checking/comments
(violating par. 7.1, p. 65 of the Faculty Manual).
This policy was formulated to ensure the validity and reliability of test questions
of teachers for the good of the students. This in effect can minimize if not prevent
unnecessary failure of students.
2. Non-compliance with the standard format (multiple choice) of final test
questions as agreed upon in the department. Mr. Ancheta prepared purely essay
questions for the students.
Well-prepared multiple choice questions are more objective, and develop critical
thinking among students.
3. Failure to encode their modular grade reports as required (violating par. H. 8, p.
66 of our Faculty manual).
4. Failure to submit and update required modules (syllabi) of their subject despite
reminders (violating D, 1.5, p. 40 of our Faculty Manual).
5. Both spouses have a gross number of failure in their class.
The spouses were given an opportunity to comment. Subsequently, they received their
respective letters of termination on May 14, 1998. Their letter for reconsideration was denied.
Their complaint for illegal dismissal was dismissed by the Labor Arbiter on November 20, 2000
and was affirmed by the NLRC on February 28, 2003. The CA however, in a petition for
certiorari, reversed the decision of the Labor Arbiter and the NLRC. Hence, this petition.
Whether there was illegal dismissal.

Employment on probationary status of teaching personnel is not governed purely by the Labor
Code. The Labor Code is supplemented with respect to the period of probation by special rules
found in the Manual of Regulations for Private Schools.
The common practice is for the employer and the teacher to enter into a contract,
effective for one school year. At the end of the school year, the employer has the option not to
renew the contract, particularly considering the teacher's performance. If the contract is not
renewed, the employment relationship terminates. If the contract is renewed, usually for another
school year, the probationary employment continues. Again, at the end of that period, the parties
may opt to renew or not to renew the contract. If renewed, this second renewal of the contract for
another school year would then be the last year since it would be the third school year of
probationary employment. At the end of this third year, the employer may now decide whether to
extend a permanent appointment to the employee, primarily on the basis of the employee having
met the reasonable standards of competence and efficiency set by the employer. For the entire
duration of this three-year period, the teacher remains under probation. Upon the expiration of
his contract of employment, being simply on probation, he cannot automatically claim security
of tenure and compel the employer to renew his employment contract. Section 91 of the Manual
of Regulations for Private Schools, states that: Section 91. Employment Contract. Every contract
of employment shall specify the designation, qualification, salary rate, the period and nature of
service and its date of effectivity, and such other terms and condition of employment as may be
consistent with laws and rules, regulations and standards of the school. A copy of the contract
shall be furnished the personnel concerned.
It is important that the contract of probationary employment specify the period or term of
its effectivity. The failure to stipulate its precise duration could lead to the inference that the
contract is binding for the full three-year probationary period. Therefore, the letters sent by
petitioner Sr. Racadio, which were void of any specifics cannot be considered as contracts. The
closest they can resemble to are that of informal correspondence among the said individuals. As
such, petitioner school has the right not to renew the contracts of the respondents, the old ones
having been expired at the end of their terms.
Assuming, arguendo, that the employment contracts between the petitioner school and
the respondent spouses were renewed, this Court finds that there was a valid and just cause
for their dismissal. The Labor Code commands that before an employer may legally dismiss an
employee from the service, the requirement of substantial and procedural due process must be
complied with. Under the requirement of substantial due process, the grounds for termination of
employment must be based on just or authorized causes.
The plain admissions of the charges against them were the considerations taken into
account by the petitioner school in their decision not to renew the respondent spouses'
employment contracts. This is a right of the school that is mandated by law and jurisprudence. It

is the prerogative of the school to set high standards of efficiency for its teachers since quality
education is a mandate of the Constitution. As long as the standards fixed are reasonable and
not arbitrary, courts are not at liberty to set them aside. Schools cannot be required to adopt
standards which barely satisfy criteria set for government recognition. The same academic
freedom grants the school the autonomy to decide for itself the terms and conditions for
hiring its teacher, subject of course to the overarching limitations under the Labor Code.
The authority to hire is likewise covered and protected by its management prerogative the right
of an employer to regulate all aspects of employment, such as hiring, the freedom to prescribe
work assignments, working methods, process to be followed, regulation regarding transfer of
employees, supervision of their work, lay-off and discipline, and dismissal and recall of workers.
The Court, in G.R. No. 110399 entitled San Miguel Corporation Supervisors and Exempt Union
v. Laguesma, held that supervisory employees 3 and 4 and the exempt employees of San Miguel
Foods, Inc. are not to be considered confidential employees because the confidential data they
handle do not pertain to labor relations, particularly, negotiation and settlement of grievances,
thus they were allowed to form an appropriate bargaining unit for the purpose of collective
bargaining. The Court also declared that the employees belonging to the three different plants of
San Miguel Corporation Magnolia Poultry Products Plants in Cabuyao, San Fernando, and Otis,
having community or mutuality of interests, constitute a single bargaining unit. They perform
work of the same nature, receive the same wages and compensation, and most importantly, share
a common stake in concerted activities. Pursuant to such ruling, the DOLE-NCR conducted preelection conferences. On September 30, 1998, a certification election was conducted. On the
same date, petitioner filed the Omnibus Objections and Challenge to Voters, questioning the
eligibility to vote by some of its employees on the grounds that some employees do not belong to
the bargaining unit which respondent seeks to represent or that there is no existence of employeremployee relationship with petitioner.
The Med-Arbiter issued an order, based on the results of the certification election, stating
that respondent is certified to be the exclusive bargaining agent of the supervisors and exempt
employees of petitioner's Magnolia Poultry Products Plants in Cabuyao, San Fernando, and Otis.
The DOLE Undersecretary affirmed the said Order with modification excluding four employees
from the bargaining unit. The CA affirmed the decision of the DOLE Undersecretary with
modification excluding those holding the positions of Human Resource Assistant and Personnel
Assistant from the bargaining unit. Hence, this petition.

Whether the CA departed from jurisprudence when it expanded the scope of the bargaining unit
defined by the ruling in G.R. No. 110399.
Whether the CA departed from jurisprudence on the Courts definition of a confidential
Whether the Employer has personality to question a certification election.
a. In G.R. No. 110399, the Court explained that the employees of San Miguel Corporation
Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single
bargaining unit, which is not contrary to the one-company, one-union policy. An appropriate
bargaining unit is defined as a group of employees of a given employer, comprised of all or less
than all of the entire body of employees, which the collective interest of all the employees,
consistent with equity to the employer, indicate to be best suited to serve the reciprocal rights
and duties of the parties under the collective bargaining provisions of the law.
There should be only one bargaining unit for the employees in Cabuyao, San Fernando, and Otis
of Magnolia Poultry Products Plant involved in dressed chicken processing and Magnolia
Poultry Farms engaged in live chicken operations. Certain factors, such as specific line of work,
working conditions, location of work, mode of compensation, and other relevant conditions do
not affect or impede their commonality of interest. Although they seem separate and distinct
from each other, the specific tasks of each division are actually interrelated and there exists
mutuality of interests which warrants the formation of a single bargaining unit.
b. Confidential employees are defined as those who (1) assist or act in a confidential capacity, in
regard (2) to persons who formulate, determine, and effectuate management policies in the field
of labor relations. The two criteria are cumulative, and both must be met if an employee is to be
considered a confidential employee - that is, the confidential relationship must exist between the
employee and his supervisor, and the supervisor must handle the prescribed responsibilities
relating to labor relations. The exclusion from bargaining units of employees who, in the normal
course of their duties, become aware of management policies relating to labor relations is a
principal objective sought to be accomplished by the confidential employee rule.
The CA correctly held that the position of Payroll Master does not involve dealing with
confidential labor relations information in the course of the performance of his functions. Since
the nature of his work does not pertain to company rules and regulations and confidential labor
relations, it follows that he cannot be excluded from the subject bargaining unit.

c. It bears stressing that a certification election is the sole concern of the workers; hence, an
employer lacks the personality to dispute the same. The general rule is that an employer has no
standing to question the process of certification election, since this is the sole concern of the
workers. Law and policy demand that employers take a strict, hands-off stance in certification
elections. The bargaining representative of employees should be chosen free from any
extraneous influence of management. A labor bargaining representative, to be effective, must
owe its loyalty to the employees alone and to no other. The only exception is where the employer
itself has to file the petition pursuant to Article 258 of the Labor Code because of a request to
bargain collectively.
On November 6, 2000, respondent Waterfront Insular Hotel Davao sent the DOLE, Region XI,
Davao City, a Notice of Suspension of Operations notifying the same that it will suspend its
operations for a period of six months due to severe and serious business losses. In said notice,
respondent assured the DOLE that if the company could not resume its operations within the sixmonth period, the company would pay the affected employees all the benefits legally due to
During the period of the suspension, Domy R. Rojas, the President of Davao Insular
Hotel Free Employees Union (DIHFEU-NFL), the recognized labor organization in Waterfront
Davao, sent respondent a number of letters asking management to reconsider its decision. After
series of negotiations, respondent and DIHFEU-NFL signed a Memorandum of Agreement
wherein respondent agreed to re-open the hotel subject to certain concessions offered by
DIHFEU-NFL in its Manifesto. Accordingly, respondent downsized its manpower structure to
100 rank-and-file employees as set forth in the terms of the MOA. Moreover, as agreed upon in
the MOA, a new pay scale was also prepared by respondent. On June 15, 2001, respondent
resumed its business operations. On August 22, 2002, Darius Joves and Debbie Planas, claiming
to be local officers of the National Federation of Labor (NFL), filed a Notice of Mediation before
the National Conciliation and Mediation Board (NCMB), Region XI, Davao City. In said Notice,
it was stated that the Union involved was DARIUS JOVES/DEBBIE PLANAS ET. AL, National
Federation of Labor. The issue raised in said Notice was the Diminution of wages and other
benefits through unlawful Memorandum of Agreement.
The Respondent maintained that the NCMB had no the jurisdiction over the Notice of
Mediation and manifested its intention to withdraw from the proceedings. The Voluntary
Arbitrator, however, ruled in favor of petitioner. The CA ruled in favor of respondent. Hence,
this petition.

Whether the NCMB has jurisdiction over the Notice of Mediation.
While it is undisputed that a submission agreement was signed by respondent and IHEU-NFL,
then represented by Joves and Cullo, this Court finds that there are two circumstances which
affect its validity: first, the Notice of Mediation was filed by a party who had no authority to do
so; second, that respondent had persistently voiced out its objection questioning the authority of
Joves, Cullo and the individual members of the Union to file the complaint before the NCMB.
Procedurally, the first step to submit a case for mediation is to file a notice of preventive
mediation with the NCMB. It is only after this step that a submission agreement may be entered
into by the parties concerned.
Section 3, Rule IV of the NCMB Manual of Procedure provides who may file a notice of
preventive mediation, to wit:
Who may file a notice or declare a strike or lockout or request preventive
mediation. Any certified or duly recognized bargaining representative may file a notice or
declare a strike or request for preventive mediation in cases of bargaining
deadlocks and unfair labor practices. The employer may file a notice or declare a
lockout or request for preventive mediation in the same cases. In the absence of a
certified or duly recognized bargaining representative, any legitimate labor
organization in the establishment may file a notice, request preventive mediation
or declare a strike, but only on grounds of unfair labor practice.
From the foregoing, it is clear that only a certified or duly recognized bargaining agent
may file a notice or request for preventive mediation. It is curious that even Cullo himself
admitted, in a number of pleadings, that the case was filed not by the Union but by individual
members thereof. Clearly, therefore, the NCMB had no jurisdiction to entertain the notice filed
before it.
Respondent Ricardo Albayda, Jr. was an employee of Upjohn, Inc. in 1978 and continued
working there until 1996 when a merger between Pharmacia and Upjohn was created. After the
merger, respondent was designated by petitioner Pharmacia and Upjohn as District Sales

Manager assigned to District XI in the Western Visayas area. During the period of his
assignment, respondent settled in Bacolod City. In December 1999, respondent received a
memorandum reassigning him as District Sales Manager to District XII in the Northern
Mindanao area. In several letters, respondent requested that he be reassigned in Western Visayas
area but such was denied. Later on, he was given an option to be assigned in Metro Manila,
however respondent reiterated the concerns he previously raised in his previous letters.
Due to the failure of respondent to report for work, a memorandum, dated June 15, 2000,
was sent to him directing him to report for work within 5 working days from receipt thereof.
Another Memorandum was sent on June 26, 2000. Respondent was warned that the same would
be a final notice for him to report for work in Manila within 5 working days from receipt of the
memo; otherwise, his services will be terminated on the basis of being absent without official
leave (AWOL). On July 13, 2000 another memorandum was sent to respondent notifying him of
their decision to terminate his services after he repeatedly refused to report for work despite due
The respondent filed a complaint with the NLRC for constructive dismissal. The Labor
Arbiter dismissed the case. On appeal, the NLRC affirmed the decision of the Labor Arbiter.
Motion for reconsideration was likewise denied. In a petition for Certiorari, the CA ruled in
favor of respondent and denied the motion for reconsideration. Hence, this petition.
Whether there was valid dismissal.
The petition is meritorious.
On petitioners exercise of management prerogative
Jurisprudence recognizes the exercise of management prerogative to transfer or assign
employees from one office or area of operation to another, provided there is no demotion in rank
or diminution of salary, benefits, and other privileges, and the action is not motivated by
discrimination, made in bad faith, or effected as a form of punishment or demotion without
sufficient cause. To determine the validity of the transfer of employees, the employer must show
that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should
the employer fail to overcome this burden of proof, the employee's transfer shall be tantamount
to constructive dismissal. Both the LA and the NLRC ruled that the reassignment of
respondent was a valid exercise of petitioners management prerogative. The rule in our
jurisdiction is that findings of fact of the NLRC, affirming those of the LA, are entitled to great

weight and will not be disturbed if they are supported by substantial evidence. Substantial
evidence is an amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion. Based on the foregoing, this Court rules that the CA had overstepped its
legal mandate by reversing the findings of fact of the LA and the NLRC as it appears that both
decisions were based on substantial evidence. There is no proof of arbitrariness or abuse of
discretion in the process by which each body arrived at its own conclusions. Thus, the CA should
have deferred to such specialized agencies which are considered experts in matters within their
On the existence of grounds to dismiss respondent from the service
This Court has long stated that the objection to the transfer being grounded solely upon
the personal inconvenience or hardship that will be caused to the employee by reason of the
transfer is not a valid reason to disobey an order of transfer. Such being the case, respondent
cannot adamantly refuse to abide by the order of transfer without exposing himself to the risk of
being dismissed. Hence, his dismissal was for just cause in accordance with Article 282(a) of the
Labor Code.
Lastly, while it is understandable that respondent does not want to relocate his family,
this Court agrees with the NLRC when it observed that such inconvenience is considered an
employment or professional hazard which forms part of the concessions an employee is deemed
to have offered or sacrificed in the view of his acceptance of a position in sales.
On the observance of due process
In termination proceedings of employees, procedural due process consists of the twin
requirements of notice and hearing. The employer must furnish the employee with two written
notices before the termination of employment can be effected: (1) the first apprises the employee
of the particular acts or omissions for which his dismissal is sought; and (2) the second informs
the employee of the employers decision to dismiss him. The requirement of a hearing is
complied with as long as there was an opportunity to be heard, and not necessarily that an actual
hearing was conducted. While no actual hearing was conducted before petitioners dismissed
respondent, the same is not fatal as only an ample opportunity to be heard is what is required in
order to satisfy the requirements of due process. The reassignment of respondent to another
territory was a valid exercise of petitioners management prerogative and, consequently, his
dismissal was for cause and in accordance with the due process requirement of law.
On the payment of separation pay
An employee who is dismissed for cause is generally not entitled to any financial
assistance. Equity considerations, however, provide an exception. Equity has been defined as
justice outside law, being ethical rather than jural and belonging to the sphere of morals than of

law. It is grounded on the precepts of conscience and not on any sanction of positive law, for
equity finds no room for application where there is law.
In the instant case, this Court rules that an award to respondent of separation pay by way
of financial assistance, equivalent to one-half (1/2) months pay for every year of service, is
equitable. Although respondent's actions constituted a valid ground to terminate his services, the
same is to this Court's mind not so reprehensible as to warrant complete disregard of his long
years of service. It also appears that the same is respondent's first offense. While it may be
expected that petitioners will argue that respondent has only been in their service for four years
since the merger of Pharmacia and Upjohn took place in 1996, equity considerations dictate that
respondent's tenure be computed from 1978, the year when respondent started working for

21. Bank of the Philippines Islands vs Bank of the Philippines Employees Union Metro
Manila (case cannot be found)

22. Duty Free Philippines Services, Inc. vs. Manolito Tria

Petitioner Duty Free Philippines Services, Inc. is a manpower agency that provides personnel to
Duty Free Philippines(DFP). Manolo Tria was employed by Petitioner and was seconded to DFP
as a Warehouse Supervisor. In an Audit Report it was found out that there were glaring
discrepancies in the documents of its products which indicate a malicious attempt to conceal an
anomalous irregularity. It was found to have been fabricated and all signatories therein, namely,
Ed Garcia, Stockkeeper; Catherino A. Bero, DIU Supervisor; and Constantino L. Cruz, were
held accountable for the irregular loss of the unaccounted Marlboro KS Pack of 5.
Garcia disclosed that it was respondent Manolito Tria who ordered him to look for a van for the
supposed direct condemnation of the subject merchandise. Respondent denied his participation
in the illegal transaction. DFP Discipline Committee issued a Joint Resolution holding
respondent GUILTY OF DISHONESTY for (his) direct participation in the fake condemnation
and pilferage of the missing 1,020 Marlboro Pack of 5s cigarettes and orders (his) DISMISSAL
from the service. Petitioner sent respondent a memorandum terminating his employment with
Petitioner. Respondent filed a Complaint against Petitioner for Illegal Dismissal and for payment
of backwages, attorneys fees and damages. Labor Arbiter rendered a Decision finding respondent
to have been illegally dismissed from employment. NLRC affirmed the LA decision. When
petitioner elevated the case to the CA, it denied for the first time the existence of employeremployee relationship and pointed to DFP as respondents real employer. The appellate court,
however, considered said defense barred by estoppel for its failure to raise the defense before the
LA and the NLRC. Petitioner elevates the case before the Court in this petition for review
on certiorari.

WON the absence of employer - employee relationship cannot be raised for the first time on
appeal and is barred by estoppel.
Yes. It is a matter of law that when a party adopts a particular theory and the case is tried and
decided upon that theory in the court below, he will not be permitted to change his theory on
appeal. The case will be reviewed and decided on that theory and not approached and resolved
from a different point of view.
The review of labor cases is confined to questions of jurisdiction or grave abuse of
discretion. The alleged absence of employer-employee relationship cannot be raised for the first
time on appeal. The resolution of this issue requires the admission and calibration of evidence
and the LA and the NLRC did not pass upon it in their decisions. We cannot permit petitioner to
change its theory on appeal. It would be unfair to the adverse party who would have no more
opportunity to present further evidence, material to the new theory, which it could have done had
it been aware earlier of the new theory before the LA and the NLRC. More so in this case as the
supposed employer of respondent which is DFP was not and is not a party to the present case.
In this case, petitioner insisted that respondent was dismissed from employment for cause and
after the observance of the proper procedure for termination. Consequently, petitioner cannot
now deny that respondent is its employee. While indeed, jurisdiction cannot be conferred by acts
or omission of the parties, petitioners belated denial that it is the employer of respondent is
obviously an afterthought, a devise to defeat the law and evade its obligations. We agree with the
appellate court that DFPDCs conclusions are not supported by clear and convincing evidence to
warrant the dismissal of respondent. 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 petition is DENIED for lack of merit. The Court of Appeals Decision is AFFIRMED.

23. ESTATE OF NELSON R. DULAY, represented by his wife MERRIDY JANE P.

Nelson R. Dulay was employed by respondent General Charterers Inc. (GCI), a subsidiary of
Aboitiz Jebsen Maritime Inc. since 1986. On August 13, 2000, or 25 days after the completion of
his employment contract, Nelson died due to acute renal failure secondary to septicemia. At the
time of his death, Nelson was a bona fide member of the Associated Marine Officers and
Seamans Union of the Philippines (AMOSUP), GCIs collective bargaining agent. Nelsons
widow, Merridy Jane, thereafter claimed for death benefits through the grievance procedure of
the Collective Bargaining Agreement (CBA) between AMOSUP and GCI. However, on January

29, 2001, the grievance procedure was "declared deadlocked" as petitioners refused to grant the
benefits sought by the widow.
Merridy Jane filed a complaint with the NLRC Sub-Regional Arbitration Board against GCI for
death and medical benefits and damages. Joven Mar, Nelsons brother, received P20,000.00 from
respondents pursuant to the CBA and signed a "Certification" acknowledging receipt of the
amount and releasing AMOSUP from further liability. Merridy Jane contended that she is
entitled to the aggregate sum $90,000. Merridy Jane averred that the P20,000.00 already received
by Joven Mar should be considered advance payment of the total claim of US$90,000.
Respondents, on the other hand, asserted that the NLRC had no jurisdiction over the action on
account of the absence of employer-employee relationship between GCI and Nelson at the time
of the latters death.
The Labor Arbiter ruled in favor of private respondent. It ordered the petitioner to
pay P4,621,300.00, the equivalent of US$90,000.00 less P20,000.00. NLRC affirmed. Appeal to
the CA. The CA ruled that while the suit filed by Merridy Jane is a money claim, the same
basically involves the interpretation and application of the provisions in the subject CBA. As
such, jurisdiction belongs to the voluntary arbitrator and not the labor arbiter. Petitioner contends
that Section 10 of R.A. 8042 vests jurisdiction on the appropriate branches of the NLRC to
entertain disputes regarding the interpretation of a collective bargaining agreement involving
migrant or overseas Filipino workers. Petitioner argues that the abovementioned Section
amended Article 217 (c) of the Labor Code which, in turn, confers jurisdiction upon voluntary
arbitrators over interpretation or implementation of collective bargaining agreements and
interpretation or enforcement of company personnel policies. Hence, the instant petition.
Whether or not the CA committed error in ruling that the Labor Arbiter has no jurisdiction over
the case.
The petition is without merit. It is true that R.A. 8042 is a special law governing overseas
Filipino workers. However, a careful reading of this special law would readily show that there is
no specific provision thereunder which provides for jurisdiction over disputes or unresolved
grievances regarding the interpretation or implementation of a CBA. Section 10 of R.A. 8042,
which is cited by petitioner, simply speaks, in general, of "claims arising out of an employeremployee relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of damages."
On the other hand, Articles 217(c) and 261 of the Labor Code are very specific in stating that
voluntary arbitrators have jurisdiction over cases arising from the interpretation or
implementation of collective bargaining agreements. Stated differently, the instant case involves
a situation where the special statute (R.A. 8042) refers to a subject in general, which the general
statute (Labor Code) treats in particular.5 In the present case, the basic issue raised by Merridy
Jane in her complaint filed with the NLRC is: which provision of the subject CBA applies
insofar as death benefits due to the heirs of Nelson are concerned. The Court agrees with the CA

in holding that this issue clearly involves the interpretation or implementation of the said CBA.
Thus, the specific or special provisions of the Labor Code govern.
In any case, the Court agrees with petitioner's contention that the CBA is the law or contract
between the parties. Article 13.1 of the CBA entered into by and between respondent GCI and
AMOSUP, the union to which petitioner belongs, provides as follows:
The Company and the Union agree that in case of dispute or conflict in the interpretation or
application of any of the provisions of this Agreement, or enforcement of Company policies, the
same shall be settled through negotiation, conciliation or voluntary arbitration. It is only in the
absence of a collective bargaining agreement that parties may opt to submit the dispute to either
the NLRC or to voluntary arbitration.


Respondent De Castro started working as a staff nurse at petitioner hospital since September 28,
1990, until she was dismissed on July 20, 1999. While respondent De Castro and ward-clerk
orientee Gina Guillergan were at the nurse station on night, one Rufina Causaren, an 81-year-old
patient of petitioner hospital for "gangrenous wound on her right anterior leg and right forefoot"
scheduled for operation fell from the right side of the bed as she was trying to reach for the
bedpan. Instead of personally seeing the patient, respondent De Castro directed ward-clerk
orientee Guillergan to check the patient. The vital signs of the patient were normal. Later, the
physician on duty and the nursing staff on duty for the next shift again attended to patient
Chief Nurse Josefina M. Villanueva informed Dr. Asuncion Abaya-Morido, president and
hospital director, about the incident and requested for a formal investigation. The legal counsel
of petitioner hospital directed respondent De Castro and three other nurses on duty, Staff Nurse
Janith V. Paderes and Nursing Assistants Marilou Respicio and Bertilla T. Tatad, to appear
before the Investigation Committee. The committee recommended that despite her more than
seven years of service, respondent De Castro should be terminated from employment for her
lapse in responding to the incident and for trying to manipulate and influence her staff to coverup the incident.
HRD Officer of petitioner hospital, issued a notice of termination for alleged violation of
company rules and regulations, particularly:(1) negligence to follow company policy on what to
do with patient Rufina Causaren who fell from a hospital bed; (2) failure to record and refer the
incident to the physician-[on- duty and allowing a significant lapse of time before reporting the
incident; (3) deliberately instructing the staff to follow her version of the incident in order to
cover up the lapse; and (4) negligence and carelessness in carrying out her duty as staff nurse-onduty when the incident happened. Respondent De Castro, with the assistance of respondent

Hospital Management Services Inc.-Medical Center Manila Employees Association-AFW, filed

a Complaint7 for illegal dismissal against petitioners with prayer for reinstatement and payment
of full backwages without loss of seniority rights, P20,000.00 moral damages, P10,000.00
exemplary damages, and 10% of the total monetary award as attorney's fees.
Labor Arbiter rendered a Decision,8 ordering petitioner hospital to reinstate respondent De
Castro to her former position or by payroll reinstatement, at the option of the former, without
loss of seniority rights, but without backwages. NLRC reversed the findings of the Labor
Arbiter. It observed that respondent De Castro lacked diligence and prudence in carrying out her
duty when, instead of personally checking on the condition of patient Causaren after she fell
from the bed, she merely sent ward-clerk orientee Guillergan to do the same in her behalf and for
influencing her staff to conceal the incident. CA reversed and set aside the Decision of the
NLRC and reinstated the Decision of the Labor Arbiter. CA ruled that while respondent De
Castro's failure to personally attend to patient Causeran amounted to misconduct, however, being
her first offense, such misconduct could not be categorized as serious or grave that would
warrant the extreme penalty of termination. Hence, this present petition.
WON deliberate refusal to attend to patient Causaren after the latter fell from the bed justifies
respondent De Castro's termination from employment due to serious misconduct.
No. Article 282 (b) of the Labor Code provides that an employer may terminate an employment
for gross and habitual neglect by the employee of his duties.
Neglect of duty, to be a ground for dismissal, must be both gross and habitual.1wphi1 Gross
negligence connotes want of care in the performance of one's duties. Habitual neglect implies
repeated failure to perform one's duties for a period of time, depending upon the circumstances.
A single or isolated act of negligence does not constitute a just cause for the dismissal of the
employee. Despite our finding of culpability against respondent De Castro; however, we do not
see any wrongful intent, deliberate refusal, or bad faith on her part when, instead of personally
attending to patient Causaren, she requested Nursing Assistant Tatad and ward-clerk orientee
Guillergan to see the patient, as she was then attending to a newly-admitted patient at Room 710.
It was her judgment call, albeit an error of judgment, being the staff nurse with presumably more
work experience and better learning curve, to send Nursing Assistant Tatad and ward-clerk
orientee Guillergan to check on the health condition of the patient, as she deemed it best, under
the given situation, to attend to a newly-admitted patient who had more concerns that needed to
be addressed accordingly. Being her first offense, respondent De Castro cannot be said to be
grossly negligent so as to justify her termination of employment.
The Court emphasizes that the nature of the business of a hospital requires a higher degree of
caution and exacting standard of diligence in patient management and health care as what is
involved are lives of patients who seek urgent medical assistance. However, in some cases, the
Court had ruled that sanctioning an erring employee with suspension would suffice as the
extreme penalty of dismissal would be too harsh.13 Considering that this was the first offense of

respondent De Castro in her nine (9) years of employment with petitioner hospital as a staff
nurse without any previous derogatory record and, further, as her lapse was not characterized by
any wrongful motive or deceitful conduct, the Court deems it appropriate that, instead of the
harsh penalty of dismissal, she would be suspended for a period of six (6) months without pay,
inclusive of the suspension for a period of 14 days which she had earlier served. Thereafter,
petitioner hospital should reinstate respondent Edna R. De Castro to her former position without
loss of seniority rights, full backwages, inclusive of allowances and other benefits, or their
monetary equivalent, computed from the expiration of her suspension of six (6) months up to the
time of actual reinstatement.


Respondent Mongcal alleged that on May 7, 1993, he was employed as a payloader operator by
the respondent company. That on June 29, 1995, a dump truck driver of the respondent company
for truck No. 25, requested respondent to load his dump truck with construction materials at the
crusher site. He willingly obliged to do his job; that it was later on discovered that said Aldrin
Rasote had diverted the delivery of said materials loaded to another person; that as a result of this
incident, complainant was dismissed from his job effective 30 June 1995. Respondent denies
having a hand nor was he involved in the act committed by truck driver Aldrin Rasote.
Mongcal alleged that his dismissal from work was effected without any valid ground and
violative of the rules on due process; that he was not informed of the reasons for his termination
from the service nor was he given an opportunity to explain his side, and hence, he was deprived
of his means of livelihood without due process of law. Hence, he prays for reinstatement,
backwages, and separation pay if reinstatement is no longer feasible.
The Labor Arbiter ruled in favor of petitioner by dismissing the complaint but ordered petitioner
to pay herein private respondent P1,000.00 for failure to observe due process requirements of
law. On appeal, the NLRC overturned the Labor Arbiter's ruling ordering Sargasso Construction
and Development Corporation to pay Gorgonio Mongcal separation pay and backwages. CA
affirmed NLRC with modification: the separation pay should be computed from the date of
private respondent's employment until the finality of this decision while his backwages should be
computed from the time of his alleged dismissal up to the finality of this decision, and in both
cases, using his monthly salary of P3,380.00 as basis of computation

Whether the Honorable Court Of Appeals committed grave error in sustaining the award of
separation pay and backwages to private respondent.
No. Under Article 279 of the Labor Code, an illegally dismissed employee "shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement." In
addition to full backwages, the Court has also repeatedly ruled that in cases where reinstatement
is no longer feasible due to strained relations, then separation pay may be awarded instead of
reinstatement.10 In Mt. Carmel College v. Resuena,11 the Court reiterated that the separation pay,
as an alternative to reinstatement, should be equivalent to one (1) month salary for every year of
The Decision and Resolution of the Court of Appeals are affirmed. Petitioner is ordered to pay
respondent Gorgonio Mongcal (a) separation pay in the amount equivalent to one (1) month pay
for every year of service; and (b) backwages, computed from the time compensation of
respondent Mongcal was withheld from him when he was unjustly terminated, up to the time of
payment thereof. For this purpose, the records of this case are hereby REMANDED to the Labor
Arbiter for proper computation of said awards. Costs against petitioner.