You are on page 1of 32

Diamond Farms, Inc.

vs Southern Philippines Federation Of Labor

G.R. Nos. 173254-55 & 173263, January 13, 2016
Jardeleza, J.
FACTS: This a consolidated case for review.
Diamond Farms Inc. (DFI) owns an 800-hectare banana plantation Alejal, Carmen, Davao.
Pursuant to Republic Act No. 6657 or the Comprehensive Agrarian Reform Law of 1988 ("CARL"),
the banana plantation was within the compulsory coverage. DFI was granted by DAR a deferment
privilege to continue agricultural operations until 1998. DFI experienced economic setbacks which
prompted them to close a portion of the plantation. To minimize losses, DPI offered to give up its
rights and interest over the original plantation in favor of the government by way of a Voluntary
Offer to Sell. The DAR accepted DFI's offer to sell, however, out of the total 800 hectares, the
DAR only approved the disposition of 689.88 hectares. The remaining area was called managed
area is subject to the outcome of the appeal on the cancellation of the deferment privilege before
the DAR Secretary.
DAR awarded parcel of lands to qualified agrarian reform beneficiaries ("ARBs") under the CARL.
These ARBs are the same farmers who were working in the original plantation. They subsequently
organized themselves into a multi-purpose cooperative named "DARBMUPCO."
DARBMUPCO entered into a Banana Production and Purchase Agreement ("BPPA") with DFI.
Under the BPPA, DARBMUPCO and its members as owners of the awarded plantation, agreed
to grow and cultivate only high grade quality exportable bananas to be sold exclusively to DPI. A
"Supplemental to Memorandum Agreement" ("SMA") was formally entered into by the parties after
their MOA. The SMA stated that DFI shall take care of the labor cost arising from the packaging
operation, cable maintenance, irrigation pump and irrigation maintenance that the workers of
DARBMUPCO shall conduct for DFI's account under the BPPA.
DARBMUPCO was hampered by lack of manpower to undertake the agricultural operation under
the BPPA because some of its members were not willing to work. Hence, to assist DARBMUPCO
in meeting its production obligations under the BPPA, DFI engaged the services of the
respondent-contractors, who in turn recruited the respondent-workers. Thus arose the problems
of employment problems.
In the first case, respondent Southern Philippines Federation of Labor (SPFL) represented the
workers of the contractor engaged by DFI, a legitimate labor organization, filed a petition for
certification election in the Office of the Med-Arbiter in Davao City. On the other hand,
DARBMUPCO and DFI dented that they are the employers of the respondent-workers. They
claimed, instead, that the respondent-workers are the employees of the respondentcontractors.The Med-Arbiter granted the petition for certification election. It directed the conduct
of certification election and declared that DARBMUPCO was the employer of the respondentworkers. On appeal, the SOLE thus declared DFI as the employer of the respondent-workers.
Petitioner DFI herein assails the validity of the certification election which was conducted while
they had filed a petition for certiorari with the CA.
In the second case, SPFL, together with more than 300 workers, filed a case for underpayment
of wages, nonpayment of 13th month pay and service incentive leave pay and attorney's fees
against DFI, DARBMUPCO and the respondent-contractors before the NLRC. DARBMUPCO

averred that it is not the employer of respondent-workers; neither is DFI. It asserted that the
money claims should be directed against the true employerthe respondent-contractors.
LA held that die respondent-contractors are "labor-only contractors." On appeal to the NLRC, it
declared that DARBMUPCO and DFI are the statutory employers of the workers rendering
services in the awarded plantation and the managed area, respectively.
Upon appeal to the CA, the said court was confronted with two issues, namely, whether or not
DFI DARBMUPCO is the statutory employer of the employees and where or not a certification
election may be conducted pending the resolution of the petition for certiorari filed before this
Court, the main issue of which is the identity of the employer of the in these petitions. On the first
issue, the CA ruled that DFI is the statutory employer of the respondent-workers. The CA also
ruled that DFI is the true employer of the respondent-workers because the respondent-contractors
are not independent contractors. The CA stressed that in its pleadings before the Med-Arbiter,
the SOLE, and the CA, DFI revealed that DARBMUPCO lacks manpower to fulfill the production
requirements under the BPPA. This impelled DFI to hire contractors to supply labor enabling
DARBMUPCO to meet its quota.
On the second issue, the CA held that absent an injunction from the CA, the pendency of a petition
for certiorari does not stay the holding of the certification election. The order then became final
and executory.
ISSUE: Whether or not DFI is engaged in the practice of labor-only contracting.
Yes. The Omnibus Rules Implementing the Labor Code distinguishes between permissible job
contracting (or independent contractorship) and labor-only contracting. Job contracting is
permissible under the Code if the following conditions are met:

The contractor carries on an independent business and undertakes the contract work
on his own account under his own responsibility according to his own manner and
method, free from the control and direction of his employer or principal in all matters
connected with the performance of the work except as to the results thereof; and


The contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of
his business.74

In contrast, job contracting shall be deemed as labor-only contracting, an arrangement prohibited

by law, if a person who undertakes to supply workers to an employer:

Does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises and other materials; and


The workers recruited and placed by such person are performing activities which are
directly related to the principal business or operations of the employer in which workers
are habitually employed.

As a general rule, a contractor is presumed to be a labor-only contractor, unless such contractor

overcomes the burden of proving that it has the substantial capital, investment, tools and the like.
Based on the conditions for permissible job contracting, we rule that respondent-contractors are
labor-only contractors. There is no evidence showing that respondent-contractors are
independent contractors. The respondent-contractors, DFI, and DARBMUPCO did not offer any
proof that respondent-contractors were not engaged in labor-only contracting. To support its
argument that respondent-contractors are the employers of respondent-workers, and not merely
labor-only contractors, DFI should have presented proof showing that respondent-contractors
carry on an independent business and have sufficient capitalization. The record, however, is
bereft of showing of even an attempt on the part of DFI to substantiate its argument.
Wherefore, the court held that DFI is the principal. The records show that it is DFI which hired the
individual [respondent-contractors] who in turn hired their own men to work in the 689.88 hectares
land of DARBMUPCO as well as in the managed area of the plantation. Further in, Alilin v. Petron,
this Court ruled that the presence of the power of control on the part of the principal over the
workers of the contractor, under the facts, prove the employer-employee relationship between the
former and the latter.

Milan vs NLRC
G.R. No. 202961, February 04, 2015
Leonen, J.
Respondent Solid Mills, Inc. allowed their employees together with their families to occupy
SMI Village, a property owned by respondent. Such act by respondent was out of liberality
and for the convenience of its employees and the housing privilege was conditioned that
the employees would vacate the premises anytime the Company deems fit.
Petitioners are respondent Solid Mills, Inc.s (Solid Mills) employees. They are
represented by the National Federation of Labor Unions (NAFLU), their collective
bargaining agent.
Petitioners were informed that effective October 10, 2003, Solid Mills would cease its
operations due to serious business losses. NAFLU recognized Solid Mills closure due to
serious business losses in the memorandum of agreement dated September 1, 2003.
The memorandum of agreement provided for Solid Mills grant of separation pay less
accountabilities, accrued sick leave benefits, vacation leave benefits, and 13th month pay
to the employees.
Solid Mills sent to petitioners individual notices to vacate SMI Village. They were required
to sign a memorandum of agreement with release and quitclaim before their vacation and
sick leave benefits, 13th month pay, and separation pay would be released. Employees
who signed the memorandum of agreement were considered to have agreed to vacate
SMI Village, and to the demolition of the constructed houses inside as condition for the
release of their termination benefits and separation pay. Petitioners refused to sign the
documents and demanded to be paid their benefits and separation pay.
Hence, petitioners filed complaints before the Labor Arbiter for alleged non-payment of
separation pay, accrued sick and vacation leaves, and 13th month pay. They argued that
their accrued benefits and separation pay should not be withheld because their payment
is based on company policy and practice. Their possession of Solid Mills property is not
an accountability that is subject to clearance procedures. They had already turned over
to Solid Mills their uniforms and equipment when Solid Mills ceased operations.
On the other hand, Solid Mills argued that petitioners complaint was premature because
they had not vacated its property.
LA ruled in favor of petitioners. On appeal, NLRC reversed the earlier decision. The CA
ruled that Solid Mills act of allowing its employees to make temporary dwellings in its
property was a liberality on its part. It may be revoked any time at its discretion. As a
consequence of Solid Mills closure and the resulting termination of petitioners, the
employer-employee relationship between them ceased to exist. There was no more
reason for them to stay in Solid Mills property. Moreover, the memorandum of agreement
between Solid Mills and the union representing petitioners provided that Solid Mills

payment of employees benefits should be less accountabilities. It maintained that it

found that Solid Mills act of withholding payment of benefits and separation pay was
proper. Petitioners terminal benefits and pay were withheld because of petitioners failure
to vacate Solid Mills property.
Petitioners on appeal pointed out that the National Labor Relations Commission and the
Court of Appeals have no jurisdiction to declare that petitioners act of withholding
possession of respondent Solid Mills property is illegal. The regular courts have
jurisdiction over this issue. It is independent from the issue of payment of petitioners
monetary benefits
ISSUE: Whether or not NLRC has jurisdiction over the issue of vacating Solid Mills
Yes. The National Labor Relations Commission has jurisdiction to determine,
preliminarily, the parties rights over a property, when it is necessary to determine an issue
related to rights or claims arising from an employer-employee relationship. Article 217
(now Art 224,) is controlling in this subject matter as it provides that:
(1) Except as otherwise provided under this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide within thirty (30) calendar days after the submission of
the case by the parties for decision without extension, even in the absence of stenographic notes,
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving
the legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims, arising from employer-employee relations including those of
persons in domestic or household service, involving an amount exceeding five thousand
pesos (P5,000.00), regardless of whether accompanied with a claim for reinstatement.
(2) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor

Claims arising from an employer-employee relationship are not limited to claims by an

employee. Employers may also have claims against the employee, which arise from the
same relationship. Hence, the claim for vacating the houses in Sold Mills property is
cognizable by the NLRC and LA as it directly stems from the employer-employee
relationship between petitioners and respondents.

Manila Memorial Park Cemetery, Inc. vs Ezard D. Lluz,

G.R. No. 208451, February 03, 2016
Carpio, J.
Petitioner Manila Memorial Park Cemetery, Inc. (Manila Memorial) entered into a Contract
of Services with respondent Ward Trading and Services (Ward Trading). The Contract of
Services provided that Ward Trading, as an independent contractor, will render interment
and exhumation services and other related work to Manila Memorial in order to
supplement operations at Manila Memorial Park, Paranaque City. The Service Contract
provides that,
The COMPANY shall [sell] to the contractor the COMPANY owned equipment in the
amount of ONE
1,400,000.00) payable in two (2) years or a monthly payment of FIFTY EIGHT
58,335.00) to
be deducted from the CONTRACTOR'S billing.chanrsvirtuallawlibra

Ward Trading engaged the services of Ezard Lluz, Norman Corral, Erwm Fugaban,
Valdimar Balisi, Emilio Fabon, John Mark Aplicador, Michael Curioso, Junlin Espares,
and Gavino Farinas (respondents) to work at Manila Memorial Park. They worked six
days a week for eight hours daily and were paid P250 per day.
Respondents alleged that they asked Manila Memorial to consider them as regular
workers within the appropriate bargaining unit established in the collective bargaining
agreement by Manila Memorial and its union, the Manila Memorial Park Free Workers
Union (MMP Union). Manila Memorial refused the request since respondents were
employed by Ward Trading, an independent labor contractor. Thereafter, respondents
joined the MMP Union. The MMP Union, on behalf of respondents, sought their
regularization which Manila Memorial again declined. Respondents then filed the
complaint. Subsequently, respondents were dismissed by Manila Memorial. Thus,
respondents amended the complaint to include the prayer for their reinstatement and
payment of back wages.
Meanwhile, Manila Memorial sought the dismissal of the complaint for lack of jurisdiction
since there was no employer-employee relationship. Manila Memorial argued that
respondents were the employees of Ward Trading. It further contends that Ward Trading
has total assets in excess of P1.4 million, according to Ward Trading's financial
statements for the year 2006 (without any certification from and independent accountant),
proving that it has sufficient capitalization to qualify as a legitimate independent
contractor. Manila Memorial insists that nowhere is it provided in the Contract of Services
that Manila Memorial controls the manner and means by which respondents accomplish
the results of their work. Manila Memorial states that the company only wants its
contractors and the latter's employees to abide by company rules and regulations.
Respondents posits that they are regular employees of Manila Memorial since Ward
Trading cannot qualify as an independent contractor but should be treated as a mere

labor-only contractor. Respondents state that (1) there is enough proof that Ward Trading
does not have substantial capital, investment, tools and the like; (2) the workers recruited
and placed by the alleged contractors performed activities that were related to Manila
Memorial's business; and (3) Ward Trading does not exercise the right to control the
performance of the work of the contractual employees.
LA dismissed the case. On appeal, NLRC contended that there was an employeremployee relationship and it maintained that Wart Trading was a labor-only contractor
and an agent of Manila Memorial Park. CA affirimed the existence of employer-employee
relationship between petitioner and respondents.

Whether or not an employer-employee relationship exists between Manila Memorial and

respondents for the latter to be entitled to their claim for wages and other benefits
Yes. Article 106 of the Labor Code provides that, There is "labor-only" contracting where

the person supplying workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises, among others,
and the workers recruited and placed by such person are performing activities which are
directly related to the principal business of such employer. In such cases, the person or
intermediary shall be considered merely as an agent of the employer who shall be
responsible to the workers in the same manner and extent as if the latter were directly
employed by him.
In the present case, Manila Memorial entered into a Contract of Services with Ward
Trading. In the Contract of Services, it was provided that Ward Trading, as the contractor,
had adequate workers and substantial capital or investment in the form of tools,
equipment, machinery, work premises and other materials which were necessary in the
conduct of its business. However, a closer look at the Contract of Services reveals that
Ward Trading does not have substantial capital or investment in the form of tools,
equipment, machinery, work premises and other materials since it is Manila Memorial
which owns the equipment used in the performance of work needed for interment and
exhumation services. The pertinent provision in the Contract of Services which shows
that Manila Memorial owns the equipment. Further, the financial statement submitted by
Manila Memorial Park wasnt verified by an independent accountant.
With respect to the power of control over the respondents, petitioner had maintained
control over them with respect to the performance of their activities related to the work.
In this case, however, Manila Memorial failed to adduce evidence to prove that Ward
Trading had any substantial capital, investment or assets to perform the work contracted
for. Thus, the presumption that Ward Trading is a labor-only contractor stands.
Consequently, Manila Memorial is deemed the employer of respondents. As regular
employees of Manila Memorial, respondents are entitled to their claims for wages and
other benefits as awarded by the NLRC and affirmed by the CA.

Saudi Arabian Airlines vs Rebesencio

G.R. No. 189587; January 14, 2015
Leonen, J.
Respondents in this case were recruited and hired by petitioner airline as flight
attendants sometime in 1990. They were then separated from service in 2006.
Respondents hence filed a case of illegal dismissal in the Labor Arbiter contending that
they were forced to resign by petitioner on the ground of pregnancy and were
threatened the loss of benefits. Lastly, they aver that their resignation could not have
been voluntary since they merely applied for maternity leaves but were denied of the
same. Petitioner however contends that the Labor Arbiter has no jurisdiction on the
ground of forum non conveniens and that respondents have no cause of action because
they resigned voluntarily. The Labor Arbiter dismissed the case for lack of jurisdiction
but was reversed by the NLRC and affirmed by the Court of Appeals upon being
elevated. Hence, the instant petition.
Issue: 1. Whether or not the Labor Arbiter has jurisdiction in this case.
2. Whether or not respondents voluntarily resigned.
Held: 1. Yes. According to the Supreme Court, the doctrine of forum non conveniens can
only be invoked when the case is filed in another jurisdiction to unduly vex the other
party on the ground of inconvenience. The same cannot be applied when the parties are
all based in one jurisdiction as well as its material incidents thereof. Second is when the
Philippine tribunals is in the position to make an intelligible decision. Third is when the
Philippine tribunals are in a position to enforce their decisions. Here in this case, both
parties are in based in the Philippines since petitioners are engaged in business in the
latter. The case is about illegal dismissals of OFWs and that the same was entered in the
Philippines. The issue thus entitles the Philippine courts jurisdiction over the case.
Therefore, the doctrine of forum non conveniens does not apply.
2. No. According to the Supreme Court, there is a constructive dismissal if the
actuations and actions of the employer renders the employees no choice but to resign
because of the loss of benefits. Here in this case, when the respondents submitted their
application for maternity leave, the same was denied. They were instead contacted by
their employer, threatening them to resign otherwise, they would be terminated with
loss of benefits. Respondents were then forced to resign voluntarily than risk losing
their separation pay.
Therefore, respondents did not voluntarily resign but were rather illegally
dismissed through constructive dismissal.

Hijo Resources vs Mejares

G.R. No. 208986; Janurary 13, 2016
Carpio, J.
Respondents in this case are farm workers employed by petitioner HRC in
Davao Del Norte. They allege that they were also working under several contractorgrowers who did not have capital of their own. Sometime in 2007, the respondents
formed a union and filed a petition for certification election with the Med-Arbiter. Upon
knowledge of the formation of union, the three contractor-growers ceased their
operation causing the termination of respondents in this case. The Med-Arbiter hence
denied the petition due to the absence of an employer-employee relationship.
Respondents did not appeal the formers ruling but instead proceeded with the illegal
dismissal case with the Labor Arbiter. Petitioner however filed a motion to dismiss on
the ground of res juridicata due to the finality of the Med-Arbiters ruling. The Labor
Arbiter denied the motion to dismiss but was reversed by the NLRC and was
subsequently reversed again by the Court of Appeals, remanding the case back to the
Labor Arbiter. Hence, this instant petition.
Issue: Whether or not the Med-Arbiters ruling constituted res juridicata in this case.
Held: No. According to the Supreme Court, the Labor Arbiter is not bound by the
ruling of the Med-Arbiter in this case because the respondents were dismissed before
the Med-Arbiter denied their petition for certification-election. The act of the employer
in this case constituted a runaway shop which is a form of unfair labor practice. It
would have been futile for the respondents to appeal the case to the Secretary of Labor
since they were already stripped of its personality to challenge the Med-Arbiters
decision. Thus, the members of the union were left with no choice but to pursue their
illegal dismissal case.
Therefore, the ruling of the Med-Arbiter did not constitute res juridicata.

Bergonio vs Sea-air
G.R. No. 195227; April 21, 2014
Brion, J.
Petitioners in this case were dismissed illegally by respondents causing the Labor
Arbiter to order their immediate reinstatement sometime in 2005. In response to the
said ruling, respondent filed for the quashal of the writ of execution issued by the Labor
Arbiter but the same was denied. Respondent also subsequently filed for the suspension
of the proceedings as well as a motion for recomputation which subsequently granted.
In 2006, the respondents issued a Memorandum to order the petitioners to return to
work but the same was not complied. Respondents therefore filed an appeal with the
NLRC which was denied on the ground of failure of perfection. Petitioners again filed
for the issuance of an order for garnishment which was granted by the Labor Arbiter, as
affirmed by the NLRC. Upon elevation, the Court of Appeals partially reversed the
ruling of the NLRC declaring that the dismissal was valid. Hence, this instant petition
with prayer of reinstatement with payment of backwages by the petitioners.
Issue: Whether or not petitioners are entitled to payment of backwages.
Held: Yes. According to Article 223 of the Labor Code, the order of the Labor Arbiter
for reinstatement is immediately executory and self-executing. Thus, the employer is
obliged to reinstate the dismissed employers physically or through payroll until a
higher tribunal reversed the ruling of the Labor Arbiter. An exception to this is when
there is delay in the collection of backwages by causes not due to the fault of the
employer. Here in this case, the facts show that the respondent was in bad faith in not
reinstating petitioners. There was neither any positive act from the former to actually
reinstate petitioners nor through payroll. From the 2005 ruling of the Labor Arbiter up
to its reversal by the Court of Appeals in 2007, petitioners were not reinstated. Worse,
respondents merely filed several pleadings to delay the execution of the Labor Arbiters
order. Despite the existence of the memorandum in 2006, respondents did not
sufficiently notify petitioners of its intent to reinstate since they only handed one notice
to one of the petitioners who did not act in representation of the others. Such actions of
the respondents does not put them under the exception provided by law.
Therefore, petitioners are entitled to backwages.

Manila Mining Corporation (MMC) v. Lowlito Amor GR. No. 182800 April 20,2015 Perez, J;
Respondents Lowito Amor, Rollybie Ceredon, Julius Cesar, Ronito Martinez and Fermin Tabili, Jr. were
regular employees of petitioner Manila Mining Corporation. When the mine tailings being pumped
reached the maximum level in December 2000, petitioner temporarily shut down its mining operations
pending approval of its application to increase said faciltys capacity by the Department of Environment
and Natural Resources-Environment Management Bureau (DENR-EMB), Butuan City. Although the
DENR-EMB issued a temporary authority for it to be able to continue operating TP No. 7 for another six
(6) months and to increase its capacity, petitioner failed to secure an extension permit when said
temporary authority eventually lapsed.On 27 July 2001, petitioner served a notice, informing its
employees and the Department of Labor and Employment Regional Office No. XII (DOLE) of the
temporary suspension of its operations for six months and the temporary lay- off of two-thirds of its
employees.After the lapse of said period, petitioner notified the DOLE on 11 December 2001 that it was
extending the temporary shutdown of its operations for another six months.Adversely affected by
petitioners continued failure to resume its operations, respondents filed the complaint for constructive
dismissal and monetary claims which was docketed before the Regional Arbitration Branch No. XIII of the
National Labor Relations Commission (NLRC).
On 25 October 2004, Labor Arbiter ruled in favor of the respondent holding MMC liable for constructive
dismissal and ordering payment of their separation pay equivalent plus damages and attorney's fees in
the aggregate amount of P2,138,190.02.
MMC appealed the decision to the NLRC posted a bond in the amt of P100,000 and a motion to reduce
bond assailing financial losses for their failure to post a bond equivalent to the judgment award.
CA decreed that the Labor Arbiters Decision had already attained finality and, for said reason, had been
placed beyond the NLRCs power of review.
1. Whether or not there is substantial compliance of the requisites for perfecting an appeal?
2. Whether or not CA erred in reversing the NLRC decision without reviewing merits of the case?
3. Whether or not the dismissed employees are entitled to separation pay?
1. No. As pronounced in the McBurnie ruling, xxx (a) The filing of a motion to reduce appeal bond shall be
entertained by the NLRC subject to the following conditions: (1) there is meritorious ground; and (2) a
bond in a reasonable amount is posted; xxx In this case, we see that with no proof to substantiate its
claim, petitioner moved for a reduction of the appeal bond on the proferred basis of serious losses and
reverses it supposedly sustained in the years prior to the rendition of the Labor Arbiter's decision.
The first condition may be left for the nonce. As to the second condition, respondent correctly called
attention to the fact that the check submitted by petitioner was dishonored upon presentment for
payment, thereby rendering the tender thereof ineffectual. The record shows that petitioner only
manifested its deposit of the funds for the check 24 days before the resolution of its appeal or 116 days
after its right to appeal the Labor Arbiters decision had expired. Having filed its motion and memorandum
on the very last day of the reglementary period for appeal, moreover, petitioner had no one but itself to

blame for failing to post the full amount pending the NLRCs action on its motion for reduction of the
appeal bond.
2. NO. Viewed in the light of the foregoing considerations, the CA cannot be faulted for no longer
discussing the merits of petitioners case. Although appeal is an essential part of our judicial process, it
has been held, time and again, that the right thereto is not a natural right or a part of due process but is
merely a statutory privilege. Thus, the perfection of an appeal in the manner and within the period
prescribed by law is not only mandatory but also jurisdictional and failure of a party to conform to the rules
regarding appeal will render the judgment final and executory. Once a decision attains finality, it becomes
the law of the case and can no longer be revised, reviewed, changed or altered.
3. YES. Not having resumed its operations within six months from the time it suspended its operations on
27 July 2001, it necessarily follows that petitioner is liable to pay respondents separation pay45
computed at one (1) month pay or at least one-half (1/Without proof of the serious business losses it
allegedly sustained and/or compliance with the reportorial requirements under Article 283 of the Labor
Code, petitioner cannot expediently plead exemption from said liabilities due to the supposed financial
reverses which led to the eventual closure of its business. It is essentially required that the alleged losses
in business operations must be proven for, otherwise, said ground for termination would be susceptible to
abuse by scheming employers who might be merely feigning business losses or reverses in their
business ventures in order to ease out employees.

Abaria vs. NLRC GR No. 154113 December 7, 2011 VILLARAMA, JR., J.:
The consolidated petitions before us involve the legality of mass termination of hospital employees who
participated in strike and picketing activities.
The National Federation of Labor (NFL) is the exclusive bargaining representative of the rank-and-file
employees of Metro Cebu Community Hospital, Inc. (MCCHI), presently known as the Visayas
Community Medical Center (VCMC). Perla Nava (President of Nagkahiusang Mamumuo sa MCCH),
wrote Rev. Iyoy (hospital administrator) expressing the unions desire to renew the CBA, attaching to her
letter a statement of proposals signed/endorsed by 153 union members. However, MCCHI returned the
CBA proposal for Nava to secure first the endorsement of the legal counsel of NFL as the official
bargaining representative of MCCHI employees. Meanwhile, Atty. Alforque (NFL Legal Counsel) informed
MCCHI that the proposed CBA submitted by Nava was never referred to NFL and that NFL has not
authorized any other legal counsel or any person for collective bargaining negotiations. MCCHI attempted
to take over the room being used as union office but was prevented to do so by Nava and her group who
protested these actions and insisted that management directly negotiate with them for a new CBA. In his
letter addressed to the union officers, Atty. Alforque suspended their union membership for serious
violation of the Constitution and By-Laws. Several union members led by Nava launched a series of mass
actions such as wearing black and red armbands/headbands, marching around the hospital premises and
putting up placards, posters and streamers. NFL immediately disowned the concerted activities being
carried out by union members which are not sanctioned by NFL. MCCHI directed the union officers led by
Nava to submit a written explanation why they should not be terminated for having engaged in illegal
concerted activities amounting to strike, and placed them under immediate preventive suspension.
Responding to this directive, Nava and her group denied there was a temporary stoppage of work,
explaining that employees wore their armbands only as a sign of protest and reiterating their demand for
MCCHI to comply with its duty to bargain collectively. Rev. Iyoy, having been informed that Nava and her
group have also been suspended by NFL, directed said officers to appear before his office for
investigation in connection with the illegal strike wherein they reportedly uttered slanderous and scurrilous
words against the officers of the hospital, threatening other workers and forcing them to join the strike.
Said union officers, however, invoked the grievance procedure provided in the CBA to settle the dispute
between management and the union. The Department of Labor and Employment (DOLE) issued
certifications stating that there is nothing in their records which shows that NAMA-MCCH-NFL is a
registered labor organization. NAMA-MCCH-NFL filed a Notice of Strike but the same was deemed not
filed for want of legal personality on the part of the filer. Despite such rebuff, Nava and her group still
conducted a strike vote during which an overwhelming majority of union members approved the strike.
Thereafter, MCCHI sent termination letters to union leaders and other members who participated in the
strike and picketing activities. It also issued a cease-and-desist order to the rest of the striking employees
stressing that the wildcat concerted activities spearheaded by the Nava group is illegal without a valid
Notice of Strike and warning them that non-compliance will compel management to impose disciplinary
actions against them. Unfazed, the striking union members held more mass actions. The means of
ingress to and egress from the hospital were blocked so that vehicles carrying patients and employees
were barred from entering the premises. Placards were placed at the hospitals entrance gate stating:
Please proceed to another hospital and we are on protest. Employees and patients reported acts of
intimidation and harassment perpetrated by union leaders and members. With the intensified atmosphere
of violence and animosity within the hospital premises as a result of continued protest activities by union
members, MCCHI suffered heavy losses due to low patient admission rates. The hospitals suppliers also
refused to make further deliveries on credit. Several complaints for illegal dismissal and unfair labor

practice were filed by the terminated employees against MCCHI, Rev. Iyoy, UCCP and members of the
Board of Trustees of MCCHI.
Ruling of the LA: The Labor Arbiter dismissed the complaints for unfair labor practice. The Labor Arbiter
declared the strike and picketing activities illegal having been conducted by NAMA-MCCH-NFL which is
not a legitimate labor organization. The termination of union leaders were upheld as valid but MCCHI was
directed to grant separation pay equivalent to one-half month for every year of service, in the total amount
of P3,085,897.40 for the 84 complainants.
Ruling of the NLRC: The Commission affirmed the LAs dismissal of the ULP cases. The NLRC modified
the LAs decision as regards the illegal dismissal case.
Ruling of the CA: The CA dismissed the petition on the ground that out of 88 petitioners only 47 have
signed the certification against forum shopping. However, that the dismissal of union members who
merely participated in the illegal strike was illegal hence, it ordered the reinstatement of some of the union
Issues: 1. Whether or not the strike and picketing activities conducted by union officers and members
were illegal. 2. What are the consequences of illegal strike to union officers and members. Held: 1. Yes,
NAMA-MCCH-NFL was not a duly registered or an independently registered union at the time it filed the
notice of strike and when it conducted the strike vote. It could not then legally represent the union
members. Consequently, the mandatory notice of strike and the conduct of the strike vote report were
ineffective for having been filed and conducted by NAMA-MCCH-NFL which has no legal personality as a
legitimate labor organization, in violation of Art. 263 (c), (d) and (f) of the Labor Code and Rule XXII, Book
V of the Omnibus Rules Implementing the Labor Code. Furthermore, the strike was illegal due to the
commission of the following prohibited activities: (1) violence, coercion, intimidation and harassment
against non-participating employees; and (2) blocking of free ingress to and egress from the hospital,
including preventing patients and their vehicles from entering the hospital and other employees from
reporting to work, the putting up of placards with a statement advising incoming patients to proceed to
another hospital because MCCHI employees are on strike/protest. As shown by photographs submitted
by MCCHI, as well as the findings of the NCMB and Cebu City Government, the hospital premises and
sidewalk within its vicinity were full of placards, streamers and makeshift structures that obstructed its use
by the public who were likewise barraged by the noise coming from strikers using megaphones. On the
other hand, the affidavits executed by several hospital employees and patients narrated in detail the
incidents of harassment, intimidation, violence and coercion, some of these witnesses have positively
identified the perpetrators. The prolonged work stoppage and picketing activities of the striking employees
severely disrupted hospital operations that MCCHI suffered heavy financial losses. 2. Art. 264 (a) makes
a distinction between workers and union officers who participate in an illegal strike: an ordinary striking
worker cannot be terminated for mere participation in an illegal strike. There must be proof that he or she
committed illegal acts during a strike. A union officer, on the other hand, may be terminated from work
when he knowingly participates in an illegal strike, and like other workers, when he commits an illegal act
during a strike. Considering their persistence in holding picketing activities despite the declaration by the
NCMB that their union was not duly registered as a legitimate labor organization and the letter from NFLs
legal counsel informing that their acts constitute disloyalty to the national federation, and their filing of the
notice of strike and conducting a strike vote notwithstanding that their union has no legal personality to
negotiate with MCCHI for collective bargaining purposes, there is no question that NAMA-MCCH-NFL
officers knowingly participated in the illegal strike. With respect to the dismissed union members, although
MCCHI submitted photographs taken at the picket line, it did not individually name those striking
employees and specify the illegal act committed by each of them. As to the affidavits executed by non-

striking employees, they identified mostly union officers as the persons who blocked the hospital
entrance, harassed hospital employees and patients whose vehicles were prevented from entering the
premises. Only some of these witnesses actually named a few union members who committed similar
acts of harassment and coercion.

G.R. No. 192488, April 19, 2016

Petitioners, v. JOCELYN L. NAVAL, Respondent.
FACTS: By virtue of a Memorandum of Agreement (MOA), Ateneo de Manila University (ADMU), owner
of the Moro Lorenzo Sports Center (MLSC) located within the ADMU compound, gave petitioner BEMI
the authority to manage and operate the certain businesses at MLSC. During its first year of operation in
2005, petitioner BEMI suffered financial losses. In an attempt to reduce its financial losses, the
Management of petitioner BEMI (Management) resolved sometime in January 2006 to decrease the
operational expenses of the company by downsizing of its workforce. Pursuant to such decision of the
Management and taking into consideration the employees' positions and tenures, respondent was one of
the five employees identified to be subject to retrenchment. Respondent was included in the list because
she was one of the employees with the shortest tenures as she was hired only on January 15, 2005 as
member of maintenance staff.
During the meeting in February 20, 2006 and before the actual commencement of the retrenchment
proceedings, respondent decided to accept the offer of petitioner BEMI wherein the employees who
would choose to resign would no longer be required to report for work after their resignation but would still
be paid their full salary for February 2006 and other monetary benefits. Respondent then executed a
resignation letter in her own handwriting and in Filipino, which was approved by petitioner.
Respondent however filed a complaint for illegal dismissal against petitioners before the NLRC when her
offer to return to work was rejected by petitioners.
The Labor Arbiter held (and the Court of Appeals subsequently affirmed) that respondent involuntary
resigned finding that she only resigned after being deceived into believing that her removal through
retrenchment was inevitable, as well as after being threatened that her husband's employment would also
be at risk if she did not submit her handwritten resignation letter
ISSUE: Whether or not respondent's resignation was voluntary.
HELD: Yes, the respondent voluntarily resigned as sufficiently proven by the petitioner. Resignation is
inconsistent with the filing of the complaint for illegal dismissal. However, the employee's filing of the
complaint for illegal dismissal by itself is not sufficient to disprove that said employee voluntarily resigned.
There must be other attendant circumstances and/or submitted evidence which would raise a cloud of
doubt as to the voluntariness of the resignation. In the present case, respondent's actions were more
consistent with an intentional relinquishment of her position pursuant to an agreement reached with
petitioners. After respondent submitted her resignation letter written in Tagalong using simple terms, she
no longer reported for work. There is no showing that respondent made any attempt to contest her
resignation, or to report for work but was prevented from doing so by petitioners. Furthermore, even if
said resignation letter also constituted a quitclaim, respondent cannot simply renege on the same.
As to the retrenchment, there was ground for the company to implement a retrenchment of its employees
at the time respondent resigned as borne out by BEMI's Financial Statements for 2005. Petitioner BEMI
had to act swiftly and decisively to avert its loss since its MOA with ADMU for the conduct of its business
at MLSC was for a period of only a little over three years. However, because the five employees to be
retrenched opted to voluntarily resign instead and avail themselves of the financial package offered, there

was no more need for petitioner BEMI to comply with the notice requirement to the Department of Labor
and Employment.
As to the alleged threats, the Court ruled that aside from respondent's bare allegations, there is no proof
of such threat ever being made. Without such details, there is no basis for determining the extent of
control or influence petitioners actually had over the employment of respondent's husband as to make
said threat plausible. Therefore, it could not be said that respondent's consent to execute the resignation
letter was vitiated by coercion or intimidation.


G.R. No. 173154 December 9, 2013
Perlas- Bernabe, J.
The SPI temporarily ceased operations with a notice filed with the DOLE and successively filed 2 letters
copy furnished the SPEU for the extension of the temporary shutdown. Meanwhile, the SPEU filed a
complaint for ULP, illegal closure, illegal dismissal, damages and attorneys fees before the NLRC.
Subsequently, SPI posted, in conspicuous places within the company premises, notices of its permanent
closure due to serious economic losses. Forthwith, 234 employees of SPI accepted its offer of separation
benefits who executed quitclaims but not the minority employees. The LA ruled that since SPIs closure of
business was due to serious business losses, it was not mandated by law to grant separation benefits to
the minority employees. This was sustained by the NLRC albeit with modification that the members of
SPEU are entitled to payment of separation pay. NLRC's decision was reversed by the CA; hence, this
1. Whether or not the minority employees are entitled to separation pay.
2. Whether or not SPI complied with the notice requirement of Article 297 (formerly Article 283) of the
Labor Code.
1. No, the minority employees are not entitled to separation pay. Article [297] of the Labor Code does not
obligate an employer to pay separation benefits when the closure is due to serious losses.
In this case, the LA, NLRC, and the CA consistently found that SPI indeed suffered from serious business
losses which resulted in its permanent shutdown. Perforce, without any cogent reason to deviate from the
findings on the validity of SPIs closure, the Court thus holds that SPI is not obliged to give separation
benefits to the minority employees pursuant to Article 297 of the Labor Code
2.No, SPI did not comply with the notice requirement. Article 297 of the Labor Code provides that before
any employee is terminated due to closure of business, it must give a one (1) month prior written notice to
the employee and to the DOLE. In this relation, case law instructs that it is the personal right of the
employee to be personally informed of his proposed dismissal as well as the reasons therefor.
In the case at bar, SPI failed to comply with the notice requirement when it merely posted various copies
of its notice of closure in conspicuous places within the business premises.
It is well to stress that while SPI had a valid ground to terminate its employees, i.e., closure of business.
However, its failure to comply with the proper procedure for termination renders it liable to pay the
employee nominal damages for such omission.


G.R. No. 209499 January 28, 2015
Perlas-Bernabe, J.
Alltel Communications, Inc. (Alltel) contracted Sykes Asias services to accommodate the
needs and demands of Alltel clients for its services (Alltel Project). Thus, Sykes Asia hired
petitioners for the Alltel Project. Services for the said project went on smoothly until Alltel
informed Sykes that it was terminating all support services provided by it. Sykes Asia then
sent each of the petitioners notice of dismissal due to the termination of the Alltel Project.
petitioners filed separate complaints for illegal dismissal against respondents. In their
defense, respondents averred that petitioners were merely project-based employees, and as
such, the termination of the Alltel Project served as a valid ground for their dismissal. The
LA concluded that the cessation of the Alltel Project naturally resulted in the termination of
petitioners employment in Sykes Asia. The NLRC modified the LA Decision, ruling that
petitioners are regular employees but were validly terminated due to redundancy. The CA
annulled and set aside the ruling of the NLRC, and accordingly, reinstated that of the LA;
hence, this case.
Whether or not petitioners were merely project-based employees, and thus, validly
dismissed from service.
Yes, petitioners were project based employees. For an employee to be considered projectbased, the employer must show compliance with two (2) requisites, namely that: (a) the
employee was assigned to carry out a specific project or undertaking; and (b) the duration
and scope of which were specified at the time they were engaged for such project.
In this case, the requisites concur considering that: (a) they were hired to carry out a
specific undertaking, i.e., the Alltel Project; and (b) the duration and scope of such project
were made known to them at the time of their engagement, i.e., co-terminus with the
project. Thus, the petitioners were validly classified as project-based employees and
dismissed from service.

G.R. No. 174912, July 24, 2013

FACTS: BPI Operations Management Corporation (BOMC), which was created pursuant to Central Bank Circular No.
1388, Series of 1993 (CBP Circular No. 1388, 1993), and primarily engaged in providing and/or handling support services
for banks and other financial institutions, is a subsidiary of the Bank of Philippine Islands (BPI) operating and functioning
as an entirely separate and distinct entity.
A service agreement between BPI and BOMC was initially implemented in BPIs Metro Manila branches. In this
agreement, BOMC undertook to provide services such as check clearing, delivery of bank statements, fund transfers, card
production, operations accounting and control, and cash servicing, conformably with BSP Circular No. 1388. Not a single
BPI employee was displaced and those performing the functions, which were transferred to BOMC, were given other
Later, a merger between BPI and Far East Bank and Trust Company (FEBTC) took effect with BPI as the surviving
corporation. Thereafter, BPIs cashiering function and FEBTCs cashiering, distribution and bookkeeping functions were
handled by BOMC. Consequently, twelve (12) former FEBTC employees were transferred to BOMC to complete the
latters service complement.
Thereafter,as BPI allegedly ignored the demand for submission of matter to grievance machinery, the Union filed a notice
of strike before the National Conciliation and Mediation Board (NCMB) on the following grounds: a) Contracting out
services/functions performed by union members that interfered with, restrained and/or coerced the employees in the
exercise of their right to self-organization;b) Violation of duty to bargain; and c) Union busting.
After certification of case and due hearing, NLRC upheld the validity of the service agreement between BPI and BOMC
and dismissing the charge of ULP. NLRC also ruled that the DOLE DO no 10 did not apply as BPI, being a commercial
bank, its transactions were subject to the rules and regulations of the BSP.
ISSUE: Whether or not the act of BPI to outsource the cashiering, distribution and bookkeeping functions to BOMC is in
conformity with the law and the existing CBA.
Whether or not DOLE DEPARTMENT ORDER NO. 10 apply in this case.
Yes, act of BPI is in conformity with law and existing CBA.
As provided under Article 216 of the Labor Code, only gross violations of the economic provisions of the CBA are treated
as ULP. Otherwise, they are mere grievances. In the present case, the alleged violation of the union shop agreement in
the CBA, even assuming it was malicious and flagrant, is not a violation of an economic provision in the agreement. The
provisions relied upon by the Union were those articles referring to the recognition of the union as the sole and exclusive
bargaining representative of all rank-and-file employees, as well as the articles on union security, specifically, the
maintenance of membership in good standing as a condition for continued employment and the union shop clause.It failed
to take into consideration its recognition of the banks exclusive rights and prerogatives, likewise provided in the CBA,
which included the hiring of employees, promotion, transfers, and dismissals for just cause and the maintenance of order,
discipline and efficiency in its operations. Also, it is incomprehensible how the reduction of positions in the collective
bargaining unit interferes with the employees right to self-organization because the employees themselves were neither
transferred nor dismissed from the service. Further, BPI stresses that not a single employee or union member was or
would be dislocated or terminated from their employment as a result of the Service Agreement.30 Neither had it resulted
in any diminution of salaries and benefits nor led to any reduction of union membership.

As far as the twelve (12) former FEBTC employees are concerned, the Union failed to substantially prove that their
transfer, made to complete BOMCs service complement, was motivated by ill will, anti-unionism or bad faith so as to
affect or interfere with the employees right to self-organization.
Yes, DO 10 is applicable in the case at bar in conjunction with CBP Circular No. 1388.
While the Central Bank regulates banking, the Labor Code and its implementing rules regulate the employment
relationship. The fact that banks are of a specialized industry must, however, be taken into account. The competence in
determining which banking functions may or may not be outsourced lies with the BSP. This does not mean that banks can
simply outsource banking functions allowed by the BSP through its circulars, without giving regard to the guidelines set
forth under D.O. No. 10 issued by the DOLE. Further, D.O. No. 10 is but a guide to determine what functions may be
contracted out, subject to the rules and established jurisprudence on legitimate job contracting and prohibited labor-only