Labor Standards Law: Case Digests

That in all things, God may be glorified.
LABOR STANDARDS LAW

CASE DIGESTS
TABLE OF CONTENTS
EMPLOYER EMPLOYEE RELATIONSHIP 4
1. FLORES V. NUESTRO 5
2. BRORTHERHOOD LABOR UNITY MOVEMENT OF THE PHILIPPINES V. ZAMORA 6
3. ZANOTTE SHOES V. NLRC 8
4. CONTINENTAL MARBLE V. NLRC 9
5. SEVILLA V. COURT OF APPEALS 10
6. FEATI UNIVERSITY V. BAUTISTA 12
7. SAN MIGUEL BREWERY SALES FORCE UNION V .OPLE 13
8. SAN MIGUEL BREWERY INC. V. DEMOCRATIC LABOR ORGANIZATION 14
HOURS OF WORK 15
9. JARDIN V. NLRC 16
10. STOLT-NIELSEN MARINE SERVICES V. NLRC 18
11. INTERPHIL LABORATORIES EMPLOYEES UNION FFW V. INTERPHIL LABORATORIES 20
12. PAN AMERICAN WORLD AIRWAYS SYSTEM V. 21
PAN AMERICAN EMPLOYEES ASSOCIATION 21
13. CAMPANGAN V. NLRC 22
14. MERCURY DRUG CO., INC. V. DAYAO 23
15. LUZON STEVEDORING CO., INC. V LUZON MARINE DEPARTMENT UNION 24
WAGES 25
16. PAL EMPLOYEES SAVINGS AND LOAN ASSOCIATION 26

17. SONGCO V. NLRC 27
18. MABEZA V. NLRC 29
19. INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS V. QUISUMBING 30
20. NESTLE PHILIPPINES V. NLRC 31
21. R. TIONGCO V. HON. VICENTE LEOGRADO 32
22. GLOBE MACKAY CABLE V. NLRC 33
23. NATIONAL SUGAR REFINERIES CORP. V. NLRC 35
24. LIBERATION STEAMSHIP V. COURT OF INDUSTRIAL RELATIONS 37
25. TRADERS ROYAL BANK V. NLRC 39
26. MANILA BANKING CORPORATION V. NLRC 40
LABOR-ONLY CONTRACTOR AND INDEPENDENT CONTRACTOR 42
27. TABAS V. CALIFORNIA MANUFACTURING CO., INC. 43

28. MAFINCO TRADING CORPORATION V. OPLE 44
29. RHONE-POULENC AGROCHEMICALS PHILIPPINES, INC. V. NLRC 45
30. AFP MUTUAL BENEFIT ASSOCIATION INC. V NLRC 47
31. COCA-COLA BOTTLERS PHILIPPINES, INC. V. HINGPIT 48
32. BROADWAY MOTORS, INC V. NLRC 49
33. PHILIPPINE BANK OF COMMUNICATIONS V. NLRC 50
INJURY, SICKNESS & DISABILITY 52
34. BELARMINO V. EMPLOYEES COMPENSATION COMMISSION 53
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35. HINOGUIN V. EMPLOYEES COMPENSATION COMMISSION 54

36. TANCINCO V. GOVERNMENT SERVICE INSURANCE SYSTEM 56
37. ILOILO DOCK & ENGINEERING CO. V. WORKMENS COMPENSATION COMMISSION 57
38. ALANO V. EMPLOYEES COMPENSATION COMMISSION 59
39. LAZO V. EMPLOYEES COMPENSATION COMMISSION 60
40. LUZON STEVEDORING CORP. V. WORKMENS COMPENSATION COMMISSION 61
41. VDA. DE INGUILLO V. EMPLOYEES COMPENSATION COMMISSION 62
42. MEEZ V. EMPLOYEES COMPENSATION COMMISSION 64
43. CLEMENTE V. GSIS 65
44. DABATIAN V. GOVERNMENT SERVICE INSURANCE SYSTEM 66
45. VILLONES V. ECC 67
46. RODRIGUEZ V. ECC 69
47. RARO V. EMPLOYEES COMPENSATION COMMISSION 70
48. MABUHAY SHIPPING SERVICES, INC. V. NLRC 71
49. YSMAEL MARITIME CORPORATION V. AVELINO 72
50. VICENTE V. EMPLOYEES COMPENSATION COMMISSION 73
51. GSIS V. GSIS EMPLOYEES ASSOCIATION 75
52. EMPLOYEES COMPENSATION COMMISSION V. SANICO 77
53. PRINCIPE V. PHILIPPINE-SINGAPORE TRANSPORT SERVICES, INC. 78
ARTICLE 279 - SECURITY OF TENURE 79
54. RANCE V. NLRC 80

55. KIAMCO V. NLRC 81
56. MAGTULAC V. NLRC 83
ARTICLE 280 KINDS OF EMPLOYMENT: REGULAR & CASUAL EMPLOYMENT 84
57. DE LEON V. NLRC 85

58. A.M. ORETA V. NLRC 87
59. ECAL V. NLRC 89
60. MAGANTE V. NLRC 90
61. BETA ELECTRIC CORPORATION V. NLRC 92
62. KIMBERLY INDEPENDENT LABOR UNION V. DRILON 93
63. CAPULE V. NLRC 95
PROJECT EMPLOYMENT 96
64. PHILIPPINE NATIONAL CONSTRUCTION CORPORATION V. NLRC 97

65. CARTAGENAS V. ROMAGO ELECTRIC COMPANY 98
66. MARAQUIMOT AND ENERO V. NLRC 99
SEASONAL EMPLOYMENT 101
67. MERCADO, SR. V. NLRC 102
FIXED PERIOD EMPLOYMENT 104
68. BRENT SCHOOL V. ZAMORA 105

69. CIELO V. NLRC 106
ARTICLE 282 - JUST CAUSES FOR TERMINATION OF EMPLOYMENT 108
70. A.M. ORETA AND COMPANY V. NLRC 109

71. BUISER V. HON. VICENTE LOEGARDO 111
72. SAN MIGUEL BREWERY SALES V. OPLE 113
73. INTERNATIONAL CATHOLIC MIGRATION COMMISSION V. NLRC 114

74. MERCURY DRUG CORPORATION V. NLRC 115

75. MANILA ELECTRIC COMPANY V. NLRC 116
76. FILIPRO, INC. V. NLRC 117
77. GOLD CITY INTEGRATED PORT SERVICES V. NLRC 118
78. ABBOT LABORATORIES V. NLRC 119
79. HOMWOWNERS SAVINGS AND LOAN ASSOCIATION V. NLRC 120
80. DOSCH V. NLRC AND NORTHWEST AIRLINES 122
81. PHILIPPINE TELEGRAPH AND TELEPHONE CORP. V. CA 124
82. CITIBANK V. GATCHALIAN 125
83. LABOR ET AL. V. NLRC 127
84. SAN MIGUEL CORPORATION V. NLRC 129
85. EQUITABLE BANKING CORPORATION V. NLRC 130
86. ROBUSTA AGRO MARINE PRODUCTS V. GAROMBALEM 131
87. OFFSHORE INDUSTRIES V. NLRC 132
86. WENPHIL CORPORATION V. NLRC 133
89. MANEJA V. NLRC AND MANILA MIDTOWN HOTEL 135
90. PEPSI COLA BOTTLING CO. V. NLRC 137
91. DIZON V. NLRC 139
92. PEPSI COLA BOTTLING CO. V. NL|RC 141
93. BUSTAMANTE V. NLRC 143
94. BLTB BUS CO. V. COURT OF APPEALS 146
95. HELLENIC PHILIPPINE SHIPPING V. NLRC AND E. SIETE 147
96. VIERNES V. NLRC AND BENGUET ELECTRIC CORPORATION 149
97. GLOBE-MACKAY CABLE AND RADIO CORPORATION V. NLRC 151
98. ROQUERO V. PHILIPPINE AIRLINES 153
99. MARANAW HOTEL V. NLRC 155
100. SUARIO V. BANK OF THE PHILIPPINE ISLAND 156
101. SUNIO V. NLRC 158
102. UICHICO V. NLRC 160
103. ASIONICS PHILIPPINES, INC. V. NLRC 162
ARTICLE 283 284: AUTHORIZED CAUSES FOR TERMINATION 164
104. WILTSHIRE FILE CO. V. NLRC 165

105. ESCAREAL V. NLRC 166
106. SAN MIGUEL CORPORATION V. NLRC 168
107. SERRANO V. NATIONAL LABOR RELATIONS COMMISSION 170
108. AHS/PHILIPPINES EMPLOYEES UNION V. NLRC 171
109. ASIAN ALCOHOLIC CORPORATION V. NLRC 173
110. ASIAN ALCOHOLIC CORPORATION V. NLRC 175
111. LOPEZ SUGAR CORPORATION V. FEDERATION OF FREE WORKERS 177
113. INDINO V. NLRC 179
114. CATATISTA V. NLRC 180
115. NORTH DAVAO MINING CORPORATION V. NLRC 182
116. REAH CORPORATION V. NLRC 183
115. SAN FELIPE NERI SCHOOL OF MANDALUYONG, INC. V. NLRC 184
118. FILIPINAS PORT SERVICES, INC. V. NLRC 185
119. CEBU ROYAL PLANT (SMC) V. DEPUTY MINISTER OF LABOR 186

Employer Employee
Relationship

1. Flores v. Nuestro
FLORES V. NUESTRO
160 SCRA 568
YAP, J.
FACTS
1. The petitioner, Herminio Flores and his wife, worked for respondent, Fortunato
Nuestro in his funeral parlor since June 1976 as helper-utility man and as
bookkeeper and cahier respectively.
2. On October 7, 1980, respondent registered the petitioner spouses with the SSS, as
his employee. Thereafter, the spouses received an increase in their respective
salaries.
3. On October 30, 1982, Herminio and Nuestro had an altercation, during which the
latter physically assaulted the former.
4. Herminio then filed a complaint for physical injuries against Nuestro.
5. As a result of the incident, the Flores family had to leave their quarters at the funeral
parlor and seek protection from the Pilar, Bataan Police.
6. Thereafter, petitioners filed illegal dismissal charges against respondent. On the part
of the respondent, he denied the existence of employer-employee relationship, and
further alleged that petitioners were the ones to voluntarily abandon their work
ISSUE
Was there an employee-employer relationship in this case?
HELD
YES. There was an employee-employer relationship. That the respondent registered the
petitioners with the Social Security System is proof that they were indeed his employees.
The coverage of the Social Security Law is predicated on the existence of an employer-
employee relationship.

2. Brortherhood Labor Unity Movement of the Philippines v. Zamora

BROTHERHOOD LABOR UNITY MOVEMENT OF THE PHILIPPINES V. ZAMORA
147 SCRA 49
GUTIERREZ, J.
FACTS
1. On July 11, 1969, Brotherhood Labor Unity Movement of the Philippines (BLUMP),
filed a complaint against San Miguel Corporation.
2. It alleged that respondents ordered the individual complainants to disaffiliate from the
complainant union, the management then dismissed the individual complainants
when they insisted on their union membership.
3. Petitioners are workers who have been employed at the San Miguel Parola Glass
Factory for nearly 7 years prior to their dismissal. They worked as cargadores or
pahinantes at the SMC plant loading, unloading, piling or palleting empty bottles and
wooded shells to and from company trucks and warehouses.
4. Respondents alleged that the complainants have never been their employees and
were employees of an independent contractor, Camahort.
5. Petitioners first reported for work to Camahort who signs their gate passes and the
respondent company provided them with tools, equipment and paraphernalia used in
loading, unloading, piling and hauling operations.
6. Job orders came from Camahort. The orders are then transmitted to an assistant-
officer-in-charge. In turn, the assistant informs the warehouseman and checkers
regarding the same. The latter, thereafter, relays said orders to the capatazes or
group leaders who then give orders to the workers as to where, when and what to
load, unload, pile, pallet or clean.
7. Petitioners were pain every 10 days on piece rate. The group leader notes down the
number or volume of work that each individual worker has accomplished. Camahort
approves the final report.
8. Petitioners also worked exclusively for SMC plnt, never having been assigned to
other companies or departments of SMC plant, even when the volume of work is
minimum.
ISSUE
Are the petitioners employees of private respondent, San Miguel Corporation?
HELD
YES. In determining the existence of employee-employer relationship, the elements that are
generally considered are the following:
1. the selection and engagement of the employee
2. the payment of wages
3. the power of dismissal
4. the employers power to control the employee with respect to the means and
methods by which the work is to be accomplished.
It is the so-called control test that is the most important element.
Applying the above criteria, the evidence strongly indicates the existence of an employer,
employee relationship between the petitioner workers and respondent San Miguel
Corporation. The respondent asserts that the petitioners are employees of the Guaranteed
Labor Contractor, an independent labor contracting firm.
The facts and evidence on record negate respondent SMC's claim.
The existence of an independent contractor relationship is generally established by the

following criteria: "whether or not the contractor is carrying on an independent business; the
nature and extent of the work; the skill required; the term and duration of the relationship;
the right to assign the performance of a specified piece of work; the control and supervision
of the work to another; the employer's power with respect to the hiring, firing and payment of

the contractor's workers; the control of the premises; the duty to supply the premises tools,
appliances, materials and labor; and the mode, manner and terms of payment."
None of the above criteria exists in the case at bar.
Highly unusual and suspect is the absence of a written contract to specify the performance
of a specified piece of work, the nature and extent of the work and the term and duration of
the relationship. The records fail to show that a large commercial outfit, such as the San
Miguel Corporation, entered into mere oral agreements of employment or labor contracting
where the same would involve considerable expenses and dealings with a large number of
workers over a long period of time. Despite respondent company's allegations not an iota of
evidence was offered to prove the same or its particulars. Such failure makes respondent
SMC's stand subject to serious doubts.
Uncontroverted is the fact that for an average of seven (7) years, each of the petitioners had
worked continuously and exclusively for the respondent company's shipping and
warehousing department. Considering the length of time that the petitioners have worked
with the respondent company, there is justification to conclude that they were engaged to
perform activities necessary or desirable in the usual business or trade of the respondent,
and the petitioners are, therefore regular employees.

3. Zanotte Shoes v. NLRC

ZANOTTE SHOES V. NLRC
241 SCRA 261
VITUG, J.
FACTS
1. Private respondents Joseph Lluz, et. al averred that they started to work for
petitioners Zanotte Shoes/ Leonardo Lorenzo between 1975 to 1987. They alleged
that they worked for a minimum of 12 hours daily, including Sundays and holidays
when needed and that they were paid on piece-work basis.
2. Private respondents claimed that it angered petitioner Lorenzo when they requested
to be made members of the SSS and that when they demanded an increase in their
pay rates, they were prevented from entering the work premises. Private
respondents filed a complaint for illegal discharge against petitioners.
3. Petitioners, in their Answer, claim that their business operations were only seasonal,
normally twice a year- one in June and another in December, when heavy job orders
would come in. They contend that private respondents were engaged on purely
contractual basis and paid the rates conformably with their respective agreements.
4. The Labor Arbiter rendered judgment in favor of private respondents. He declared
that there was an employer-employee relationship between petitioners and private
respondents and that the latter were regular employees of the former. The Labor
Arbiter concluded that there is neither dismissal nor abandonment, but ordered
petitioners to pay the private respondents their separation pay.
5. The NLRC, on appeal, affirmed the Labor Arbiters decision
ISSUE
Whether or not there is an employer-employee relationship between petitioners and private
respondents.
HELD
YES. There is an employer-employee relationship between petitioners and private
respondents. The work of private respondents is clearly related to and in the pursuit of the
principal activity of the petitioners. The indicia used for determining the existence of an
employer-employee relationship, all extant in the case at bench, include: (1) the selection
and engagement of the employee, (2) the payment of wages, (3)the power of dismissal, and
(4)the employers power to control the employee with respect to the result of the work to be
done and to the means and methods by which the work is to be accomplished. The last
requirement, so herein posed as an issue, refers to the existence of the right to control and
not necessarily to the actual exercise of the right.
The Court, however, finds the award of separation pay to be unwarranted.. The Labor
Arbiter, sustained by the NLRC, concluded that there was neither dismissal nor
abandonment. The fact of the matter is that petitioners have repeatedly indicated their
willingness to accept the private respondents, but the latter have steadfastly refused the
offer. For being without any clear legal basis, the award of separation pay must thus be set
aside. There is nothing, however, that prevents petitioners from voluntarily giving private
respondents some amounts on ex gratia basis.

4. Continental Marble v. NLRC

CONTINENTAL MARBLE V. NLRC
161 SCRA 151
PADILLA, J.
FACTS
1. Rodito Nasayao claimed that sometime in May 1974, he was appointed plant
manager of Continental Marble with an alleged compensation of P3,000.00 a month
or 25% of the monthly net income of the company, whichever is greater.
2. When the company failed to pay his salary for the months of May, June and July
1974, Nasayao filed a complaint with NLRC.
3. Continental Marble denied that Rodito Nasayao was its employee. They claimed
that the undertaking agreed by the parties was a joint venture, a sort of partnership,
wherein Nasayao was to keep the machinery in good working condition and in return,
he would get the contracts from end-users for the installation of marble products, in
which the company would not interfere.
4. In addition, Nasayao was to receive an amount equivalent to 25% of the net profits
that the petitioner corporation would realize, should there be any. Since there had
been no profits during said period, private respondent was not entitled to any
amount.
ISSUE
Whether or not the private respondent Nasayao was employed as plant manager of
petitioner Continental Marble Corporation.
HELD
NO. There was nothing in the record which would support the claim of Rodito Nasayao that
he was an employee of the petitioner corporation. He was not included in the company
payroll nor in the list of company employees furnished by the Social Security System.
Most of all the element of control is lacking.
It appears that the petitioner had no control over the conduct of Rodito Nasayao in the
performance of his work. He decided for himself on what was to be done and worked at his
own pleasure. He was not subject to indefinite hours or conditions of work and in turn was
compensated according to the results of his on effort. He has a free hand in running the
company and its business, so much so, that the petitioner did not know until very later that
Nasayao collected old accounts receivables, not covered by their agreement, which he
converted to his personal use.

5. Sevilla v. Court of Appeals

SEVILLA V. COURT OF APPEALS
160 SCRA 171
SARMIENTO, J.
FACTS
1. Mrs. Segundina Noguera leased her premises located at Ermita, Manila to Tourist
World Service, Inc. (TWSI), represented by Eliseo Canilao, for the latters use as
branch office. In the said contract Mrs. Lina Sevilla held herself solidarily liable with
TWSI for the prompt payment of the monthly rental agreed on.
2. When the branch office was opened, the same was run by petitioner Mrs. Sevilla,
who was designated as branch manager by TWSI. For any fare bought in on the
efforts of Mrs. Sevilla,, 4% was to go her and 3% was to be withheld by TWSI
3. In November 1961, TWSI was allegedly informed that Mrs. Sevilla was connected
with a rival travel firm. Since the branch office was losing, TWSI considered closing it
down. The firms board of directors issued two resolutions; the first abolishing the
office of manager of the Ermita Branch Office and the second, authorizing the
corporate secretary to receive the property of TWSI in said branch.
4. In January 1962, the lease contract to use the premises as branch office was
terminated. In June 1962, the Corporate Secretary went over to the office to comply
with the mandate of the resolutions. Finding the premises locked and unable to
contact Mrs. Sevilla, he padlocked the premises to protect the interests of TWSI
5. As such, petitioners Spouses Sevilla filed a complaint against respondents TWSI,
Canilao and Noguera, praying for mandatory preliminary injunction. Petitioners claim
that Mrs. Sevillas relationship with TWSI was one of joint business venture and not
one of employment.
6. In its answer, TWSI contend that Mrs. Sevilla was its employee and as such was
designated manager.
7. The trial court held for the private respondents. It ruled that TWSI, being the true
lessee, has the privilege to terminate the lease and padlock the premises. It also
held that Mrs. Sevilla was a mere employee of TWSI and that she was bound by the
act of her employer.
8. The Court of Appeals affirmed said decision, Hence, the instant petition.
ISSUE
Whether or not there is an employer-employee relationship between TWSI and Mrs. Sevilla.
HELD
NO. There is no employer-employee relationship between TWSI and Mrs. Sevilla. There has
been no uniform test to determine the existence of an employer-employee relation. In
general, The Court has relied in the so-called control test, where the person for whom the
services are performed reserves a right to control not only the end to be achieved but also
the means to be used in reaching such end.
The records will show that the petitioner, Lina Sevilla, was not subject to control by the
private respondent Tourist World Service, Inc., either as to the result to the means used in
connection therewith. In the first place, under the contract of lease covering the Tourist
Worlds Ermita office, she had bound herself in solidum as and for rental payments. A true
employee cannot be made to part with his own money in pursuance of his employers
business, or otherwise, assume any liability thereof. In that event, the parties must be bound
by some other relation, but certainly not employment. In the second place, when the branch
office was opened, the same was run by Mrs. Sevilla payable to TWSI. Thus it cannot be
said that she was under the control of TWSI as to the means used. She obviously relied on
her own capabilities.
It is further admitted that Mrs. Sevilla was not in the companys payroll. For her efforts, she
retained 4% in commissions from airline bookings, the remaining 3% going to TWSI. Unlike
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an employee then, who earns a fixed salary usually, Mrs. Sevilla earned compensation in
fluctuating amounts depending on her booking successes.
The fact that Sevilla had been designated branch manager does not make her, ergo,
TWSIs employee. Employment is determined by the right of control test and certain
economic parameters. Titles are weak indicators.
However, there is no joint venture or partnership between TWSI and Mrs. Sevilla, either. The
Court is of the opinion that the relationship of said parties is one that of a principal and an
agent. But unlike simple grants of a power of attorney, the agency that the Court hereby
declares to be compatible with the intent of the parties cannot be revoked at will. The reason
is that it is an agency coupled with an interest. Thus, TWSI is held liable for damages for its
unwarranted revocation of the contract of agency.

6. Feati University v. Bautista

FEATI UNIVERSITY V. BAUTISTA
18 SCRA 1191
ZALDIVAR, J.
FACTS
1. On January 14, 1963, the President of the respondent Feati University Faculty Club-
PAFLU wrote a letter to the President of petitioner Feati University informing her of
the organization of the Faculty Club into a registered labor union.
2. The Faculty Club is composed of members who are professors and/or instructors of
the University.
3. The President of the Faculty Club sent another letter containing twenty-six demands
that have connection with the employment of the members of the Faculty Club by the
University.
4. The University administration refused to bargain collectively and so PAFLUs
president filed a notice of strike with the Bureau of Labor. Thereafter, the members of
the Faculty Club declared a strike resulting to disruption of classes.
5. Despite further efforts of the officials of the Department of Labor, no settlement can
be reached between the parties. Subsequently, the President of the Philippines
certified to the Court of Industrial Relations the dispute between the management of
the University and the Faculty Club.
6. The University filed a motion to dismiss the case upon the ground that CIR has no
jurisdiction over the case because the Industrial Peace Act is not applicable to the
faculty members, they being independent contractors and not employees. The
respondent judge denied the motion but ordered the strikers to return to work and the
University to take them back.
ISSUE
Whether or not a charitable institution or one organized for profit is included in the definition
of employer?
HELD
YES. The term employer encompasses all employers except those specifically excluded in
the Industrial Peace Act. The Act itself specifically enumerated those who are not included
in term employer namely: (1) labor organization; (2) anyone acting in the capacity of officer
or agent of such labor organization (3) the Government and any political subdivision or
instrumentality. Among these statutory exemptions, educational institutions are not
included; hence they can be included in the term employer.
The Industrial Court has jurisdiction over unfair labor practice charges against institutions
that are organized, operated and maintained for profit. The Industrial Peace Act is
applicable to any organization or entity whatever may be its purpose when it was created
that is operated for profit or gain.

7. San Miguel Brewery Sales Force Union v .Ople

SAN MIGUEL BREWERY SALES FORCE UNION V. OPLE
170 SCRA 25
GRIO AQUINO, J
FACTS
1. On April 17, 1978, a collective bargaining agreement (effective on May 1, 1978 until
January 31, 1981) was entered into by petitioner San Miguel Corporation Sales
Force Union (PTGWO), and the private respondent, San Miguel Corporation, Section
1, of Article IV of which provided as follows:
Art. IV, Section 1. Employees within the appropriate bargaining unit shall be
entitled to a basic monthly compensation plus commission based on their
respective sales.
2. In September 1979, the company introduced a marketing scheme known as the
Complementary Distribution System (CDS) whereby its beer products were offered
for sale directly to wholesalers through San Miguels sales offices.
3. The labor union (herein petitioner) filed a complaint for unfair labor practice in the
Ministry of Labor, with a notice of strike on the ground that the CDS was contrary to
the existing marketing scheme whereby the Route Salesmen were assigned specific
territories within which to sell their stocks of beer, and wholesalers bad to buy beer
products from them, not from the company.
4. It was alleged that the new marketing scheme violates Section 1, Article IV of the
collective bargaining agreement because the introduction of the CDS would reduce
the take-home pay of the salesmen and their truck helpers for the company would be
unfairly competing with them.
ISSUES
Whether or not the Complementary Distribution System violates the collective bargaining
agreement.
Whether it is an indirect way of busting the union.
HELD
1. NO. The CDS was a valid exercise of management prerogative. Except as limited by
special laws, an employer is free to regulate, according to his own discretion and
judgment, all aspects of employment. Including hiring, work assignments, working
methods, time, place and manner of work, tools to be used, processes to be
followed, supervision of workers, working regulations, transfer of employees, work
supervision, layoff of workers and the discipline, dismissal and recall of work.
So long as a companys management prerogatives are exercised in good faith for the
advancement of the employers interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid
agreements, this Court will uphold them.
2. NO. San Miguel Corporations offer to compensate the members of its sales force
who will be adversely affected by the implementation of the CDS, by paying them a
so-called back adjustment commission to make up for the commissions they might
lose as a result of the CDS, proves the companys good faith and lack of intention to
bust their union.

8. San Miguel Brewery Inc. v. Democratic Labor Organization

SAN MIGUEL BREWERY V. DEMOCRATIC LABOR ORGANIZATION
8 SCRA 613
BAUTISTA, ANGELO, J.
FACTS
1. The Democratic Labor Association filed a complaint against the San Miguel Brewery,
Inc., embodying 12 demands for the betterment of the conditions of employment of
its members.
2. The company filed its answer to the complaint specifically denying its material
averments and answering the demands point by point. The company asked for the
dismissal of the complaint.
3. During the hearing, the union manifested its desire to confine its claim to its demands
for overtime, night-shift differential pay, and attorney's fees, although it was allowed
to present evidence on service rendered during Sundays and holidays, or on its
claim for additional separation pay and sick and vacation leave compensation.
4. After the case had been submitted for decision, Presiding Judge Jose S. Bautista,
who was commissioned to receive the evidence, rendered decision expressing his
disposition with regard to the points embodied in the complaint on which evidence
was presented.
5. The demands for the application of the Minimum Wage Law to workers paid on
"pakiao" basis, payment of accumulated vacation and sick leave and attorney's fees,
as well as the award of additional separation pay, were either dismissed, denied, or
set aside.
6. Its motion for reconsideration having been denied by the industrial court en bane,
which affirmed the decision of the court a quo with few exceptions, the San Miguel
Brewery, Inc. interposed the present petition for review.
ISSUE
Whether or not outside or field sales personnel are entitled to the benefits of the Eight-Hour
Labor Law.
HELD
NO. After the morning roll call, the employees leave the plant of the company to go on their
respective sales routes and they do not have a daily time record but the sales routes are so
planned that they can be completed within 8 hours at most, and they receive monthly
salaries and sales commission in variable amounts, so that they are made to work beyond
the required eight hours similar to piecework, "pakiao", or commission basis regardless of
the time employed, and the employees' participation depends on their industry, it is held that
the Eight-Hour Labor Law has no application to said outside or field sales personnel and
that they are not entitled to overtime pay.
The Court is in the opinion that the Eight-Hour Labor Law only has application where an
employee or laborer is paid in a monthly or daily basis, or is paid a monthly or daily
compensation, in which case, if he is made to work beyond the requisite period of 8 hours,
he should be paid the additional compensation prescribed by law. This law has no
application when the employee or laborer is paid on a piece-work, "pakiao", or commission
basis, regardless of the time employed. The philosophy behind this exemption is that his
earnings are in the form of commission based on the gross receipts of the day. His
participation depends upon his industry so that the more hours he employs in the work the
greater are his gross returns and the higher his commission. This philosophy is better
explained in Jewel Tea Co. vs. Willams, C.C.A. Okl., 118 F. 2d 202, as follows: "The
reasons for excluding an outside salesman are fairly apparent. Such salesman, to a great
extent, works individually. There are no restrictions respecting the time he shall work and he
can earn as much or as little, within the range of his ability, as his ambition dictates. In lieu
of overtime he ordinarily receives commissions as extra compensation. He works away from
his employer's place of business, is not subject to the personal supervision of his employer,
and his employer has no way of knowing the number of hours he works per day."

Hours of Work

9. Jardin v. NLRC
JARDIN V. NLRC
326 SCRA 299
QUISUMBING, J.
FACTS
1. Petitioners were drivers of respondent Philjama International Inc., a domestic
corporation engaged in the operation of "Goodman Taxi." Petitioners used to drive
private respondent's taxicabs every other day on a 24-hour work schedule under the
boundary system.
2. The petitioners earned an average of P400.00 daily from which respondent regularly
deducts the amount of P30.00 supposedly for the washing of the taxi units.
3. Believing that the deduction is illegal, petitioners decided to form a labor union to
protect their rights and interests.
4. Upon learning about the plan of petitioners, private respondent refused to let
petitioners drive their taxicabs when they reported for work on August 6, 1991, and
on succeeding days.
5. Petitioners suspected that they were singled out because they were the leaders and
active members of the proposed union. Aggrieved, petitioners filed with the labor
arbiter a complaint against private respondent for unfair labor practice, illegal
dismissal and illegal deduction of washing fees.
6. The labor arbiter dismissed said complaint for lack of merit.
7. On appeal, the NLRC reversed and set aside the judgment of the labor arbiter. The
labor tribunal declared that petitioners are employees of private respondent, and, as
such, their dismissal must be for just cause and after due process.
8. Private respondent's second motion for reconsideration was granted and said court
ruled that it lacks jurisdiction over the case as petitioners and private respondent
have no employer-employee relationship. Expectedly, petitioners sought
reconsideration of the labor tribunal's latest decision which was denied. Hence, the
instant petition.
ISSUE
Whether or not employer-employee relationship exists between the petitioners and
respondent Philjama International, Inc.
HELD
YES. In the determination the existence of employer-employee relationship, the Supreme
Court has applied the following four-fold test: '(1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of
control the employees conduct.' Under the control test, an employer-employee relationship
exists if the 'employer' has reserved the right to control the 'employee' not only as to the
result of the work done but also as to the means and methods by which the same is
to be accomplished. Otherwise, no such relationship exists.
In a number of cases decided by this Court, we ruled that the relationship between jeepney
owners/operators on one hand and jeepney drivers on the other under the boundary system
is that of employer-employee and not of lessor-lessee. We explained that in the lease of
chattels, the lessor loses complete control over the chattel leased although the lessee
cannot be reckless in the use thereof, otherwise he would be responsible for the damages to
the lessor. In the case of jeepney owners/operators and jeepney drivers, the former exercise
supervision and control over the latter. The management of the business is in the owner's
hands. The owner as holder of the certificate of public convenience must see to it that
the driver follows the route prescribed by the franchising authority and the rules promulgated
as regards its operation. Now, the fact that the drivers do not receive fixed wages but get
only that in excess of the so-called "boundary" they pay to the owner/operator is
not sufficient to withdraw the relationship between them from that of employer and
employee. We have applied by analogy the above-stated doctrine to the relationships
between bus owner/operator and bus conductor, auto-calesa owner/operator and driver, and
recently between taxi owners/operators and taxi drivers. Hence, petitioners are undoubtedly

employees of private respondent because as taxi drivers they perform activities which are
usually necessary or desirable in the usual business or trade of their employer.

10. Stolt-Nielsen Marine Services v. NLRC

STOLT-NIELSEN MARINE SERVICES V. NLRC
258 SCRA 643
ROMERO, J.
FACTS
1. Respondent Meynardo J. Hernandez was hired by Stolt-Nielsen Marine Services
(Phils.) Inc. as radio officer on board M/T Stolt Condor for a period of ten months. He
boarded the vessel on January 20, 1990.
2. On April 26, 1990, the ship captain ordered private respondent to carry the baggage
of crew member Lito Loveria who was being repatriated. He refused to obey the
order out of fear in view of the utterance of said crew member "makakasaksak ako"
and also because he did not perceive such task as one of his duties as radio officer.
3. As a result of such refusal, private respondent was ordered to disembark on April 30,
1990 and was himself repatriated on May 15, 1990. He was paid his salaries and
wages only up to May 16, 1990.
4. Private respondent filed before public respondent POEA a complaint for illegal
dismissal and breach of contract paying for, among other things, payment of salaries,
wages, overtime and other benefits due him for the unexpired portion of the contract
which was six (6) months and three (3) days.
5. Petitioner in its answer alleged that private respondent refused to follow the "request"
of the master of the vessel to explain to Lolito Loveria, the reason for the latter's
repatriation and to assist him in carrying his baggage, all in violation of Article XXIV,
Section I of the Collective Bargaining Agreement (CBA) and the POEA Standard
Contract. Hence, private respondent, after being afforded the opportunity to explain
his side, was dismissed for gross insubordination and serious misconduct.
6. Respondent denied that the master of the vessel requested him to explain to Loveria
the reason for the latter's repatriation.
7. Thereafter, POEA Administrator rendered an award in favor of private respondent.
8. Aggrieved, petitioner Stolt-Nielsen appealed to the National Labor Relations
Commission (NLRC). The NLRC concurred with the POEA Administrator in ruling
that private respondent, having been illegally dismissed, was, therefore, entitled to
the monetary award.
9. It further stated that private respondent's duty as a radio officer or radio operator
does not include the carrying of the luggage of any seaman or explaining to said
seaman the reason for his repatriation. Thus, concluded the NLRC, his termination
on this ground was not proper and, therefore, he had every right to the monetary
award. The NLRC likewise granted private respondent's claim for fixed overtime pay
and attorney's fees.
ISSUES
1. Whether or not private respondent was legally dismissed on the ground of gross
insubordination and serious misconduct.
2. Whether or not private respondent was entitled to the award of over-time pay.
HELD
1. YES. Willful disobedience of the employer's lawful orders, as a just cause for the
dismissal of an employee, envisages the concurrence of at least two (2) requisites.
The employee's assailed conduct must have been willful or intentional, the
willfulness being characterized by a "wrongful and perverse attitude", and the order
violated must have been reasonable, lawful, made known to the employee and must
pertain to the duties which he had been engaged to discharge. The Court agrees
that by virtue of the aforementioned CBA and POEA Standard Contract provisions
cited by petitioner, private respondent is indeed bound to obey the lawful commands
of the captain of the ship, but only as long as these pertain to his duties. The order to
carry the luggage of a crew member, while being lawful, is not part of the duties of a
radio officer. Assuming arguendo that lawful commands of a ship captain are
supposed to be obeyed by the complement of a ship, private respondent's so-called

"act of disobedience" does not warrant the supreme penalty of dismissal. In instant
case, the POEA found that private respondent's actuation which led to his dismissal
was the first and only act of disobedience during his service with the petitioner,
Furthermore, examination of the circumstances surrounding private respondent's
disobedience shows that the repatriated seaman's utterance of "makakasaksak ako"
so instilled fear in private respondent that he was deterred from carrying out the
order of the captain. Hence, his act could not be rightfully characterized as one
motivated by a "wrongful and perverse attitude." Besides, said incident posed no
serious or substantial danger to the well-being of his other co-employees or of the
general public doing business with petitioner employer, neither did such behavior
threaten substantial prejudice to the business of his employer.
2. NO. The Court reiterated that the rendition of overtime work and the submission of
sufficient proof that said work was actually performed are conditions to be satisfied
before a seaman could be entitled to overtime pay which should be computed on the
basis of 30% of the basic monthly salary. In short, the contract provision guarantees
the right to overtime pay but the entitlement to such benefit must first be established.
Realistically speaking, a seaman, by the very nature of his job, stays on board a ship
or vessel beyond the regular eight-hour work schedule. For the employer to give him
overtime pay for the extra hours when he might be sleeping or attending to his
personal chores or even just lulling away his time would be extremely unfair and
unreasonable.

11. Interphil Laboratories Employees Union FFW v. Interphil Laboratories

INTERPHIL LABORATORIES EMPLOYEES UNION FFW V. INTERPHIL
LABORATORIES
372 SCRA 658
KAPUNAN, J.
FACTS
1. Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining
agent of the rank-and file employees of Interphil Laboratories, Inc., a company
engaged in the business of manufacturing and packaging pharmaceutical products.
2. They had a Collective Bargaining Agreement (CBA) effective from August 1, 1990 to
July 31, 1993.
3. Prior to the expiration of the CBA, Allesandro Salazar, the vice-president of the HR
Department and Nestor Ocampo, the union president and Hernando Clemente, a
union director had a meeting. The representatives of the union were asking to make
the new CBA effective for 2 yeas.
4. Salazar informed them that it was still premature to discuss the new CBA.
5. The following day, all the rank-and-file employees refused to follow their regular two-
shift work schedule 6:00am to 6:00pm and from 6:00pm to 6:00am.
6. At 2:00 pm and 2:00 am respectively, the employees stopped working without
sealing the containers and securing the raw materials they were working on.
7. Enrico Gonzales, a union director, told Salazar that the employees would only return
to their normal work schedule if the company would agree to their demands as to the
effectivity and duration of the new CBA.
8. In addition, the employees started to engage in a work slowdown campaign during
the time they were working thus substantially delaying the production of the
company.
9. Respondent company filed with the NLRC to declare illegal the petitioner unions
overtime boycott and work slowdown which amounted to illegal strike.
10. The respondent company filed with the NCMB an urgent request for mediation.
However the parties failed to arrive at an agreement.
11. Petitioner union then filed with NCMB a notice of strike citing unfair labor practice
allegedly committed by respondent company.
12. In the interim, the case before NLRC continued. The labor arbiter then found that the
overtime boycott and the work slowdown as illegal strike.
13. Petitioner union contended that according to the provisions of their CBA on working
hours clearly state that the normal working hours were from 7:30 am to 4:30pm. The
labor arbiter should not have admitted other evidence than that stated in the CBA.
ISSUE
Whether or not the working hours of the petitioner is only from 7:30 am to 4:30 pm.
HELD
NO. The parties in the CBA stipulated that: the schedule of shift work shall be maintained;
however the company may change the prevailing work time at its discretion, should change
be necessary in the operations of the Company. All employees shall observe such rules as
have been laid down by the company for the purpose of effecting control over working
hours.
It is evident from the foregoing provisions that the working hours may be changed, at the
discretion of the company, should such change be necessary for its operations and that the
employees shall observe such rules as have been laid down by the company. The company
had to adopt a continuous 24-hour work daily schedule by reason of the nature of its
business and the demands of its clients. It was established that the employees adhered to
the said work schedule since 1988. The employees are deemed to have waived the eight-
hour schedule since they followed, without any question or complain, the two shift schedule
while their CBA was still in force and even prior thereto. As the employees assented by
practice to this arrangement, they cannot now be heard to claim that the overtime boycott is
justified because they were not obliged to work beyond eight hours.

12. Pan American World Airways System v.

Pan American Employees Association
PAN AMERICAN WORLD AIRWAYS SYSTEM V. PAN AMERICAN EMPLOYEES
ASSOCIATION
1 SCRA 527
REYES, JBL
FACTS
1. Petitioner herein claims that the one hour meal period should not be considered as
overtime work, because the evidence showed that complainants could rest
completely, and were not in any manner under the control of the company during that
period.
2. The court below found, on the contrary, that during the so-called meal period, the
mechanics were required to stand by for emergency work; that if they happened not
to be available when called, they were reprimanded by the lead man; that as in fact it
happened on many occasions, the mechanics had been called from their meals or
told to hurry up eating to perform work during this period.
ISSUE
Whether or not the 1 hour meal period of the mechanics is considered working time.
HELD
Yes. The Industrial Courts order for permanent adoption of a straight 8-hour shift including
the meal period was but a consequence of its finding that the meal hour was not one of
complete rest but was actually a work hour, since for its duration, the laborers had to be on
ready call.

13. Campangan v. NLRC

CAGAMPAN VS. NLRC
195 SCRA 533
FACTS
1. On April 17 and 18,1985, petitioners, all seamen, entered into separate contracts of
employment with the Golden Light Ocean Transport, Ltd., through its local agency,
private respondent ACE MARITIME AGENCIES, INC.
2. Petitioners were deployed on May 7, 1985, and discharged on July 12, 1986.
Thereafter, petitioners collectively and/or individually filed complaints for non-
payment of overtime pay, vacation pay and terminal pay against private respondent.
3. In addition, they claimed that they were made to sign their contracts in blank.
Likewise, petitioners averred that although they agreed to render services on board
the vessel Rio Colorado managed by Golden Light Ocean Transport, Ltd., the vessel
they actually boarded was MV "SOIC I" managed by Columbus Navigation.
4. Two (2) petitioners, Jorge de Castro and Juanito de Jesus, charged that although
they were employed as ordinary seamen (OS), they actually performed the work and
duties of Able Seamen (AB).
5. Private respondent was furnished with copies of petitioners' complaints and
summons, but it failed to file its answer within the reglementary period.
6. Thus, on January 12, 1987, an Order was issued declaring that private respondent
has waived its right to present evidence in its behalf and that the cases are submitted
for decision.
7. On August 5, 1987, the Philippine Overseas Employment Administration (POEA)
rendered a Decision dismissing petitioners' claim for terminal pay but granted their
prayer for leave pay and overtime pay. On appeal, the NLRC reversed the decision;
Hence, the petition. Petitioner contends, inter alia, that they are entitled to leave pay
and overtime pay.
ISSUE
Whether or not petitioners are entitled to leave pay and overtime pay
HELD
The court sustains the finding of respondent NLRC that petitioners were actually paid more
than the amounts fixed in their employment contracts. Even as the denial of petitioners'
terminal pay by the NLRC has been justified, such denial should not have been applied to
petitioners Julio Cagampan and Silvino Vicera. For, a deeper scrutiny of the records by the
Solicitor General has revealed that the fact of overpayment does not cover the aforenamed
petitioners since the amounts awarded them were equal only to the amounts stipulated in
the crew contracts. Since petitioners Cagampan and Vicera were not overpaid by the
company, they should be paid the amounts of US$583.33 and US$933.33, respectively. As
regards the question of overtime pay, the NLRC cannot be faulted for disallowing the
payment of said pay because it merely straightened out the distorted interpretation asserted
by petitioners and defined the correct interpretation of the provision on overtime pay
embodied in the contract conformably with settled doctrines on the matter. Notably, the
NLRC ruling on the disallowance of overtime pay is ably supported by the fact that
petitioners never produced any proof of actual performance of overtime work. In short, the
contract provision guarantees the right to overtime pay but the entitlement to such benefit
must first be established. Realistically speaking, a seaman, by the very nature of his job,
stays on board a ship or vessel beyond the regular eight-hour work schedule. For the
employer to give him overtime pay for the extra hours when he might be sleeping or
attending to his personal chores or even just lulling away his time would be extremely unfair
and unreasonable.

14. Mercury Drug Co., Inc. v. Dayao
MERCURY DRUG CO. INC. VS. DAYAO

117 SCRA 99
FACTS
1. This is a verified petition dated March 17, 1964 which was subsequently amended on
July 31, 1964 filed by Nardo Dayao and 70 others against Mercury Drug Co., Inc.,
and/or Mariano Que, President & General Manager, and Mercury Drug Co., Inc.
2. Employees Association praying, with respect to respondent corporation and its
president and general manager: 1) payment of their unpaid back wages for work
done on Sundays and legal holidays plus 25c/c additional compensation from date of
their employment up to June 30, 1962; 2) payment of extra compensation on work
done at night; 3) reinstatement of Januario Referente and Oscar Echalar to their
former positions with back salaries; and, as against the respondent union, for its
disestablishment and the refund of the money it had collected from petitioners.
3. The CIR sustained the claim of the petitioners for payment of back wages
correspoding to the first four hours work rendered on every other Sunday and first
four hours on legal holidays should be denied for lack of merit. The motion for
reconsideration was denied.
4. Thus, the instant petition contending that private respondents' claims for 25%
Sunday and Legal Holiday premiums are not supported by substantial evidence, thus
infringing upon the cardinal rights of the petitioner, and that assuming it is, such
premiums are already included in the salary of private respondents.
ISSUE
Whether or not private respondents are entitled to the 25% Sunday and Legal Holiday
premiums.
HELD
The contention is without merit. While an employer may compel his employees to perform
service on such days, the law nevertheless imposes upon him the obligation to pay his
employees at least 25% additional of their basic or regular salaries. Under Section 4 of
C. A. No. 444, no person, firm or corporation, business establishment or place of center of
labor shall compel an employee or laborer to work during Sundays and legal holidays unless
he is paid an additional sum of at least twenty-five per centum of his regular remuneration:
Provided, However, That this prohibition shall not apply to public utilities performing some
public service such as supplying gas, electricity, power, water, or providing means of
transportation or communication. Although a service enterprise, respondent company's
employees are within the coverage of C. A. No. 444, as amended known as the Eight Hour
Labor Law, for they do not fall within the category or class of employees or laborers
excluded from its provisions. In not giving weight to the evidence of the petitioner company,
the respondent court sustained the private respondents' evidence to the effect that their 25%
additional compensation for work done on Sundays and Legal Holidays were not included in
their respective monthly salaries. The private respondents presented evidence through the
testimonies of Nardo, Dayao, Ernesto Talampas, and Josias Federico who are themselves
among the employees who filed the case for unfair labor practice in the respondent court
and are private respondents herein. The petitioner- company's contention that the
respondent court's conclusion on the issue of the 25% additional compensation for work
done on Sundays and legal holidays during the first four hours that the private respondents
had to work under their respective contracts of employment was not supported by
substantial evidence is, therefore, unfounded.

15. Luzon Stevedoring Co., Inc. v Luzon Marine Department Union

LUZON STEVEDORING Co. v. Luzon Marine department Union
101 SCRA 257
FELIX, J.
FACTS
1. On June 21, 1948, Luzon Marine Department Union filed a petition with the Court of
Industrial Relations containing several demands against Luzon Stevedoring Co., Inc.
2. While the case was still pending, the union declared a strike which was declared
illegal by the Court,
3. The union filed a Constancia with the Court of Industrial Relations praying that the
unresolved demands of the union in their original petition be granted.
4. Among the unions demands is that work performed beyond eight hours be paid
overtime pay of 50% the regular pay rate and that work performed on Sundays and
legal holidays be paid double the regular rate pay.
5. The trial Judge found that the employees worked from 6:00 AM to 6:00 PM daily and
for work performed in excess of 8 hours, the employees were given overtime pay of
P4.00 for officers, patrons and radio operators and P2.00 for the rest of the crew.
6. The counsel for the union filed a motion for reconsideration praying that the decision
be modified so as to declare and rule that the members of the Union who had
rendered services from 6:00 AM to 6:00 PM were entitled to 4 hours overtime pay
and that whatever little time allotted to the taking of their meal should not be
deducted from the four hours of overtime rendered by said employees.
7. Luzon Stevedoring also sought for the reconsideration of the decision only insofar as
it interpreted that the period during which the seaman is aboard a tugboat shall be
considered as working time for the purpose of the 8-hour law.
ISSUE
Is the definition for hours of work as presently applied to dryland laborers equally
applicable to seamen?
HELD
Section 1 of the Commonwealth Act 444 provides that the legal working day for any person
employed by another shall not be more than 8 hours daily. When work is not continuous,
the time during which the laborer is not working and can leave his working place and can
rest completely, shall not be counted.
For the purposes of this case, the Court need not set aside for seamen a criterion different
from that applied to laborers on land, for under the provisions of the law, the only thing to be
done is to determine the meaning and scope of the word working place used therein. As
the Court understand this term, a laborer need not leave the premises of the factory, shop or
boat in order that his period of rest shall not be counted, it being enough that he ceases to
work, may rest completely and leave or may leave at his will the spot where he actually
stays while working, to go somewhere else, whether within or outside the premises of said
factory, shop or boat. If these requisites are complied with, the period of such rest shall not
be counted.

Wages

16. PAL Employees Savings and Loan Association
PAL EMPLOYEES SAVINGS AND LOAN ASSOCIATION, INC. VS. NLRC

260 SCRA 758
FACTS
1. Private respondent Angel Esquejo started working with petitioner PAL Employees
Savings and Loan Association (PESALA) as a company guard and was receiving a
monthly basic salary of P 1,900 plus an emergency allowance in the amount of P
510.
2. He was required to work 12 hours a day. That during his entire period of employment
with petitioner, herein private respondent was required to perform overtime work
without any additional compensation from the latter.
3. Sometime later, private respondent was administratively charged with serious
misconduct or disobedience of the lawful orders of petitioner or its officers. As a
result, private respondent filed a detailed and itemized computation of his money
claims.
4. Thereafter, the labor Arbiter rendered a decision granting private respondent
overtime pay.
5. Aggrieved by the decision, petitioner appealed to the NLRC only to be rejected later.
6. In the meantime, petitioner filed the instant special civil action for certiorari citing as
reason that quite recently, the employee payroll sheets which contained the salaries
and overtime pay received by private respondent were located in the bodega of the
petitioner and based on the payroll sheets, it appears that substantial overtime pay
have been paid to private respondent.
ISSUE
Whether or not an employee is entitled to overtime pay for work rendered in excess of the
regular eight hour day given the fact that he entered into a contract of labor specifying a
work-day of twelve hours at a fixed monthly rate above the legislated minimum wage.
HELD
YES. The Supreme Court held that based on petitioners own computation, it appears that
the basic salary plus emergency allowance given to private respondent did not actually
include the overtime pay claimed by private respondent.
Moreover, there was no meeting of the minds between petitioner and private respondent as
to what is covered by the salary stipulated. The said contract was definite only as to the
number of hours to be rendered.
Furthermore, the subsequent act of private respondent in filing the money claims negates
the theory that there was a clear agreement as to the inclusion of his overtime pay in the
contracted salary rate.

17. Songco v. NLRC
SONGCO V. NLRC
183 SCRA 610
MEDIALDEA, J:
FACTS
1. Petitioners were members of the sales force of respondent Zuellig. Zuellig filed with
the DOLE an application seeking clearance to terminate the services of petitioners
allegedly on the ground of retrenchment due to financial losses. Petitioners opposed
said application alleging that the company is not suffering from losses and that they
are being dismissed because of their membership in the union.
2. During the last day of hearing of the case, the petitioners manifested that they are no
longer contesting their dismissal. The parties agreed that the sole issue to be
resolved is the basis of the separation pay due to petitioners.
3. Petitioners, as members of the sales force of Zuellig, received monthly salaries of at
least P400 plus commissions for every sale they made.
4. The Collective Bargaining Agreement entered into by Zuellig and Zuellig Employees
Association of which the petitioners are members, contains: Any employee, who is
separated from employment due to XXX permanent lay-off not due to the fault of said
employee shall receive from the company a retirement gratuity in an amount
equivalent to 1 months salary per year of service. One month of salary as used in
this paragraph shall be deemed equivalent to the salary date of retirement, years of
service shall be deemed equivalent to total service credits, a fraction of at least 6
months being considered 1 year, including probationary employment.
5. Article 284 of the Labor Code then prevailing likewise provides: The termination of
employment of any employee due to XXX retrenchment to prevent losses XXX shall
entitle the employee affected thereby to separation pay. XXX The separation pay
shall be equivalent to 1 month pay or at least 1 month pay for every year of service,
whichever is higher.
6. Petitioners argue that their sales commissions and allowances should be included in
the monthly salary for the purpose of computing their separation pay.
7. Zuellig contends that if it really were the intention of the Labor Code and its
Implementing Rules to include commissions in the computation of separation pay, it
could have explicitly said so in clear and equivocal terms. In addition, in the definition
of the term wage (Article 97), commission is used only as one of the features or
designations attached to the word remuneration or earnings
8. The labor arbiter rendered a decision ordering private respondent to pay the
petitioners separation pay equivalent to their 1 month salary (exclusive of
commissions allowances, etc) for every year of service. The labor arbiter ruled
wage as defined in Article 97(f) of the Code is not synonymous with salary as
provided in the CBA and Article 284.
9. Petitioners appeal to the NLRC was dismissed for lack of merit. Hence, the present
petition for review.
ISSUE
Whether or nor earned sales commissions and allowances be included in the monthly salary
of the petitioners for the purpose of computing their separation pay
HELD
YES. Anent the inclusion of allowances, the Court ruled in Santos v. NLRC that in the
computation of back wages and separation pay, account must be taken not only of the basis
salary of the petitioner but also her transportation and emergency living allowances.
Anent the inclusion of commissions, Art 97(f) by itself is explicit that commission is included
in the definition of the term wage. Where the law speaks in clear and categorical language,
there is no room for interpretation or construction; there is only room for application. The
ambiguity between Art 97(f), which defines the term wage and Article 284 and the CBA,
which mention the words pay and salary is more apparent than real. The word salary

means a recompense or consideration made to a person for his pains and industry in
another mans business. There is eminent authority for holding that the words wages
(Middle English: wagen) and salary (Latin: salarium) are essentially synonymous. Both
words are interchangeably used and refer to one and the same meaning: a reward or
recompense for services performed. Likewise, pay is synonymous with wage and
salary. Inasmuch as the three words have the same meaning and commission is included
in the definition of wage the logical conclusion is, in the computation of the separation pay
of the petitioners, their salary base should also include their earned sales commissions.
Granting, for the sake of argument that the commissions were in the form of incentives or
encouragement, so that the petitioners would be inspired to put little more industry on the
jobs assigned to them, these commissions are still direct remunerations for services
rendered which increased the income of Zuellig.
Commission is the recompense, compensation, or reward of an agent, salesman, executor,

trustee, receiver, when the same is calculated as a percentage on the amount of his
transactions or on the profit of the principal. The nature of the work of a salesman and the
reason for such type of remuneration for services rendered demonstrate clearly that
commissions are part of petitioners wage or salary. The Court takes judicial notice that
some salesmen do not receive basic salary but depend on commissions and allowances
alone, although an employer-employee relationship exists. If the opposite view is taken that
commissions do not form part of salary or wage, the Court will be saying that such salesmen
will not be entitled to separation pay, which is absurd. The workingmans welfare should be
the primordial concern in interpreting the Labor Code and its implementing rules and
regulations. All doubts should be resolved in favor of labor.

18. Mabeza v. NLRC

MABEZA V. NLRC
271 SCRA 670
KAPUNAN, J.
FACTS
1. Norma Mabeza was an employee of Hotel Supreme in Baguio City.
2. Sometime around May 1991, she and her co-employees were asked by the hotels
management to sign an instrument attesting to the latters compliance with minimum
wage order and other labor standard provisions of law.
3. Mabeza signed the affidavit but refused to go to the Prosecutors Office to swear to
the veracity of its contents.
4. The affidavit was drawn by the management was for the purpose of refuting the
findings of the Labor Inspector of DOLE in an inspection conducted in the
establishment of the private respondent.
5. After Mabeza refused to proceed to the Prosecutors Office, she was ordered by
management to turn over the keys to her living quarters and to remove all her
belongings from the hotel premises.
6. She thereafter filed a leave of absence which was denied by management. When
she attempted to return to work of May 10, 1991, she was advised to just continue
with her unofficial leave of absence.
7. Petitioner filed a complaint for illegal dismissal. She alleged in her complaint the
underpayment of wages, non-payment of holiday pay, service incentive leave pay,
13th month pay, night differential and other benefits.
8. Private respondent avers on the other hand that petitioner abandoned her job
without notice to management. They also contend that there was no basis for the
money claim for underpayment and other benefits as these were paid in the form of
facilities to petitioner and the hotels other employees.
ISSUE
Whether or not the wages received by the employees of private respondent are below the
minimum set by law.
HELD
YES. The Labor Arbiter accepted hook, line and sinker the private respondents bare claim
that the reason the monetary benefits received by petitioner between 1981 to 1987 were
less than the minimum wage was because petitioner did not factor in the meals, lodging,
electric consumption and the water she received during the period in her computations.
Granting that means and lodging were provided and indeed constituted facilities, such
facilities could not be deducted without the employer complying first with certain legal
requirements. Without satisfying these requirements, the employer simply cannot deduct
the value from the employees wages. First proof must be shown that such facilities are
customarily furnished by the trade. Second, the provision of deductible facilities must be
voluntarily accepted in writing by the employee. Finally, facilities must be charged at fair
and reasonable value.
These requirements were not met in the instance case.
More significantly, the food and lodging or the electricity and water consumed by the
petitioner were not facilities but supplements. A benefit or privilege granted to an employee
for the convenience of the employer is not a facility. The criterion in making a distinction
between the two not so much lies in the king (food, lodgingn) but the purpose. Considering
therefore, that hotel workers are required to work different shifts and are expected to be
available at various odd hours, their ready availability is necessary matter in the operations
of a small hotel, such as the private respondents hotel.

19. International School Alliance of Educators v. Quisumbing
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS VS. QUISUMBING

GR 128845, JUNE 1, 2000
FACTS
1. Private respondent International School Inc. is a domestic educational institution
established primarily for dependents of foreign diplomatic educational and other
temporary residents.
2. The school hires both foreign and local teachers as members of its faculty classifying
them as foreign hires and local hires.
3. The school grants foreign-hires certain benefits not accorded local hires such as
housing, transportation, and home leave travel allowance. Foreign hires are also
paid a salary rate 25% more than local hires.
4. The school justifies the difference on salary based on two significant economic
disadvantages foreign hires have to endure, that is the dislocation factor and the
limited tenure.
5. Petitioner International School Alliance of Educators contested the difference in
salary rates between foreign hire and local hires. They claim that the point of hire
classification employed by the School constitutes racial discrimination. However, the
Acting Secretary of DOLE upheld the point of hire classification for the distinction in
the salary rates. Hence, this petition.
ISSUE
Whether or not the difference in salary rates between foreign-hires and local hires is of
reasonable classification.
HELD
NO. It has been held that discrimination, particularly in terms of wages, is frowned upon by
the Labor Code. There must be equal pay for equal work. Persons who work with
substantially equal qualifications, skill, effort and responsibility under similar conditions,
should be paid similar salaries. This rule applies to the School, notwithstanding its
International character.
Moreover, the contention of the School that petitioner has not adduced evidence that local
hires perform work equal to that of foreign hires is no moment. It has been held that if an
employer accords employees the same position and rank, the presumption is that these
employees perform equal work. Furthermore, the dislocation factor and the limited tenure
cannot serve as valid basis for distinction in salary rates. The dislocation factor and limited
tenure affecting foreign hires are adequately compensated by certain benefits accorded
them which are not enjoyed by local hires such as housing, transportation and home leave
travel allowances.

20. Nestle Philippines v. NLRC
NESTLE PHILIPPINES V. NLRC

193 SCRA 504
GRIO-AQUINO, J
FACTS
1. After the four (4) bargaining agreements separately covering Nestle Philippines
employees expired, the Union of Filipro Employees (UFE) was certified the sole and
exclusive bargaining agent for all rank-and-file employees at the Cagayan de Oro
factory as well as in the Cebu/Davao Sales Office.
2. During negotiations, the employees at the Cabuyao factory resorted to a slowdown
and walkouts prompting the petitioner to shut down the factory.
3. Thereafter, UFE declared a bargaining deadlock.
4. On September 2, 1987, the Secretary of Labor assumed jurisdiction and issued a
return to work order.
5. In spite of that order, the union struck without notice in Alabang/Cabuyao factory, the
Cagayan de Oro factory and Makati office.
6. The company dismissed the union officers and members of the negotiating panel
who participated in the illegal strike.
7. On March 30, 1988, the petitioner were able to conclude a CBA with the union at the
Cebu/Davao Sales office and on August 5, 1988 with the Cagayan de Oro factory
workers.
8. UFE assailed the validity of the agreements and filed a case of unfair labor practice
against Nestle.
9. After the conciliation efforts of the National Conciliation and Mediation Board yielded
negative results, the dispute was certified to the NLRC by the Secretary of Labor.
10. The NLRC issued a resolution regarding the retirement plan of the workers which
provides:
a. For 15 years of service or less = 100% of the employees monthly salary for
year of service
b. More than 15 but less than 20 = 125% of the employees monthly salary for
year of service
c. 20 years or more = 150% of the employees monthly salary for year of service
11. Petitioner questions the retirement plan contending that since it is non-contributory,
Nestle has the sole and exclusive prerogative to define the terms of the plan
because workers have no vested and demandable rights thereunder, the grant
thereof being not contractual but gratuitous.
ISSUE
Whether or not Nestle has the sole and exclusive prerogative to define the terms of the plan
being non-contributory.
HELD
NO. The companys contention that the retirement plan is non-negotiable, is not well taken.
The inclusion of the retirement plan in the collective bargaining agreements part of the
package of economic benefits extended by the company to its employees to provide them a
measure of financial security after they shall have ceased to be employed in the company,
reward their loyalty, boost their morale and efficiency and promote industrial peace, gives a
contractual character to the plan so that it may not be terminated or modified at the will by
either party.
The petitioners contention that employees have no vested or demandable right to a non-
contributory retirement plan, has no merit for employees do have a vested and demandable
right over existing benefits voluntarily granted to them by their employer. The latter may not
unilaterally withdraw, eliminate or diminish such benefits.

21. R. Tiongco v. Hon. Vicente Leogrado
TIANGCO V. LEOGARDO, JR.

GR 57636, MAY 16, 1983
CONCEPCION, JR., J:
FACTS
1. The petitioner, Reynaldo Tiangco, is a fishing operator who owns the Reynaldo
Tiangco Fishing Company and a fleet of fishing vessels engaged in deep-sea fishing
which operates from Navotas, Rizal.
2. His business is capitalized at P2,000,000.00, while the petitioner, Victoria Tiangco, is
a fish broker whose business is capitalized at P100,000.00.
3. Some of the private respondents were engaged by Reynaldo Tiangco as batillos,
who were tasked to unload the fish catch from the vessels and take them to the Fish
Stall of the petitioner Victoria Tiangco. The other private respondents were batillos
engaged by Victoria Tiangco.
4. They were all working as part-time since their work were limited to days of arrival of
the fishing vessels and their working days in a month are comparatively few. Their
working hours average four (4) hours a day.
5. The private respondents filed a complaint against the petitioners with the Ministry of
Labor and Employment for non-payment of their legal holiday pay and service
incentive leave pay, as well as underpayment of their emergency cost of living
allowances which used to be paid in full irrespective of their working days, but which
were reduced effective February, 1980, in contravention of Article 100 of the new
Labor Code which prohibits the elimination or diminution of existing benefits.
6. The petitioners on the other hand, denied the laborers contention and stated that in
addition to their regular daily wage, a daily extra pay in amounts ranging from 30
centavos to 10 pesos were given to offset the laborers' claim for service incentive
leave and legal holiday pay. They however, admitted that they had discontinued their
practice of paying a fixed monthly allowance, and allowances for non-working days.
They invoked the principle of No work, no allowances and said that the payment of
such allowances will cause losses to their business.
7. The petitioners now filed a petition for certiorari and prohibition, with preliminary
mandatory injunction and/or restraining order to annul and set aside the order of the
respondent Deputy Minister of Labor which modified and affirmed the order of
Director of the National Capital Region of the Ministry of Labor, which directed the
petitioners to pay the private respondents their legal holiday pay, service incentive
pay, and differentials in their emergency cost of living allowances.
ISSUE
Whether the Deputy Minister of Labor and Employment acted in excess of jurisdiction in
deciding that there is diminution of benefits in the discontinuance of giving of allowance.
HELD
The Deputy Minister of Labor and Employment correctly ruled that, since the petitioners had
been paying the private respondents a fixed monthly emergency allowance since
November, 1976 up to February, 1980, as a mattter of practice and/or verbal agreement
between the petitioners and the private respondents, the discontinuance of the practice
and/or agreement unilaterally by the petitioners contravened the provisions of the Labor
Code, particularly Article 100 thereof which prohibits the elimination or diminution of existing
benefits.
Section 15 of the Rules on P.D. 525 and Section 16 pf the Rules on P.D. 1123 also prohibits
the diminution of any benefit granted to the employees under existing laws, agreements and
voluntary employer practice.
The decision of the Deputy Minister of Labor was modified, taking into consideration that the
respondent employees are employed by different individuals with varying capitalization.

22. Globe Mackay Cable v. NLRC

GLOBE MACKAY CABLE AND RADIO CORPORATION VS. NLRC, FFW- GLOBE
MACKAY EMPLOYEES UNION
G.R. NO. 74156. JUNE 29, 1988.
MELENCIO- HERRERA, J.
FACTS
1. Wage Order No. 6 increased the cost-of-living allowance of non-agricultural workers

in the private sector. Petitioner corporation (GMCR) complied with the said Wage
Order by paying its monthly-paid employees the mandated P3.00 per day COLA.
However, in computing said COLA, GMCR multiplied the P3.00 daily COLA by 22
days, which is the number of working days in the company.
2. Respondent Union disagreed with the computation of the monthly COLA claiming
that the daily COLA rate of P3.00 should be multiplied by 30 days to arrive at the
monthly COLA rate. The union alleged furthermore that prior to the effectivity of
Wage Order No. 6, GMCR had been computing and paying the monthly COLA on
the basis of thirty (30) days per month and that this constituted an employer practice,
which should not be unilaterally withdrawn.
3. The Labor Arbiter ruled that the monthly COLA should be computed on the basis of
twenty two (22) days, since the evidence showed that there are only 22 paid days in
a month for monthly-paid employees in the company. To compel the respondent
company to use 30 days in a month to compute the allowance and retain 22 days for
vacation and sick leave, overtime pay and other benefits is inconsistent and palpably
unjust. If 30 days is used as divisor, then it must be used for the computation of all
benefits, not just the allowance. But this is not fair to complainants, not to mention
that it will contravene the provision of the parties' CBA.
4. However, the NLRC reversed the Labor Arbiter and held that petitioner was guilty of
illegal deductions, upon the following considerations: (1) that the P3.00 daily COLA
should be paid and computed on the basis of thirty (30) days instead of twenty two
(22) days since workers paid on a monthly basis are entitled to COLA on Saturdays,
Sundays and legal holidays "even if unworked;" (2) that the full allowance enjoyed by
monthly-paid employees before the CBA executed in 1982 constituted voluntary
employer practice, which cannot be unilaterally withdrawn.
ISSUES
1. How should the COLA be computed?
2. Can the COLA be unilaterally withdrawn by the employer?
HELD
1. The primordial consideration for entitlement to COLA is that basic wage is being
paid. In other words, the payment of COLA is mandated only for the days that the
employees are paid their basic wage, even if said days are unworked. So that, on the
days that employees are not paid their basic wage, the payment of COLA is not
mandated. Peculiar to this case, however, is the circumstance that pursuant to the
Collective Bargaining Agreement (CBA) between Petitioner and Respondent Union,
the monthly basic pay is computed on the basis of five (5) days a week, or twenty
two (22) days a month.
In determining the hourly rate of monthly paid employees for purposes of computing
overtime pay, the monthly wage is divided by the number of actual work days in a
month and then, by eight (8) working hours. If a monthly-paid employee renders
overtime work, he is paid his basic salary rate plus one-half thereof. Thus, where the
company observes a 5-day work week, it will have to be held that the COLA should
be computed on the basis of twenty two (22) days, which is the period during which
the employees of petitioner receive their basic wage. The CBA is the law between
the parties and, if not acceptable, can be the subject of future re-negotiation.

2. Payment in full by petitioner of the COLA before the execution of the CBA in 1982
and in compliance with Wage Orders Nos. 1 (26 March 1981) to 5 (11 June 1984),
should not be construed as constitutive of voluntary employer practice, which cannot
now be unilaterally withdrawn by petitioner. To be considered as such, it should have
been practiced over a long period of time, and must be shown to have been
consistent and deliberate. Adequate proof is wanting in this respect. The test of long
practice has been enunciated in Oceanic Pharmaceutical Employees Union vs.
Inciong such that respondent company agreed to continue giving holiday pay
knowing fully well that said employees are not covered by the law requiring payment
of holiday pay."
Absent clear administrative guidelines, petitioner cannot be faulted for erroneous

application of the law. Payment may be said to have been made by reason of a
mistake in the construction or application of a "doubtful or difficult question of law."
Since it is a past error that is being corrected, no vested right may be said to have
arisen nor any diminution of benefit under Article 100 of the Labor Code may be said
to have resulted by virtue of the correction.

23. National Sugar Refineries Corp. v. NLRC

NATIONAL SUGAR REFINERIES CORPORATION VS. NLRC AND NBSR
SUPERVISORY UNION (PACIWU) TUCP
GR NO. 101761, MARCH 24, 1993
FACTS
1. Petitioner employer implemented a Job Evaluation program the purpose of which is
to rationalize the duties and functions of all positions, reestablish level of
responsibility, and reorganize both wage and operational structures.
2. As a result of said evaluation, jobs were then rank according to effort, responsibility,
training and working conditions, and relative worth of the job, which led to the
adjustments and increases in the benefits commensurate to the actual duties and
functions of the employees. One of which are the members of the supervisors union
which are now elevated to managerial positions.
3. Notable is the fact that that for ten years, previous to the job evaluation, it was a
practice in the company to treat members of the respondent supervisors union in the
same manner as rank-and-file employees. And as such, they are used to be paid
with overtime, rest day and holiday pay pursuant to arts. 87, 93 and 94 of the Labor
Code.
4. with the said evaluation, adjustments were made, to wit:
a. the members of the respondent union were re-classified under level S-5
to S-8 which are considered managerial staff for purpose of
compensation and benefits;
b. an increase of 50% of their basic pay, giving the union members a wide
gap over the basic pay of the highest paid rank-and-file employee;
c. longevity pay was increased on top of alignment adjustment;
d. increased COLA of P225.00 per month; and
e. Of P100.00 allowance for rest day/ holiday work.
5. Two years thereafter, the members of the respondent supervisors union filed a
complaint for nonpayment of overtime, rest and holiday pay allegedly in violation of
Art. 100 of the labor Code.
6. The labor arbiter said that the nonpayment of overtime, rest and holiday pay had
ripened into a contractual obligation considering the fact tat it was not paid for a long
period of time. Moreso, the arbiter ruled that the P100.00 is short of what the
supervisors ought to receive had the overtime pay, rest day and holiday pay not
been discontinued, hence, amounted to diminution of benefits.
ISSUE
Whether or not members of respondent supervisors union, after having been re-classified
as managerial staffs shall still be paid with overtime, rest day and holiday pay, the same
having been ripened into a contractual obligation.
HELD
THEY ARE MEMBERS OF THE MANAGERIAL STAFF. Respondent NLRC, in holding that the
union members are entitled o overtime, rest and holiday pay, and in ruling that the latter are not
managerial employees, adopted the definition in the statutory provision that . Managerial
employee is one who is vested with powers or prerogatives to lay down and execute
management p-policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees. Supervisory employees are those who, in the interest of the employer,
effectively recommend such managerial actions if the exercise of such authority is not merely
routinary or clerical in nature but required the use of independent judgment. All employees not
falling within any of the above definitions are considered rank-and-file employees for purposes of
this book.
It is the submission of petitioner that while the members of the respondent union, as supervisors,
may not be occupying managerial positions, they are clearly officers or members of te
managerial staff because they meet the all the conditions prescribed by law, and, hence, they
are not entitled to overtime, rest day and holiday pay.

The SC after the determination of the actions and functions of the respondent union (1. assists
the department superintendent, 2. observes, follows and implements company policies at all
times and recommends disciplinary action on erring subordinates, 3. train and guides
subordinates on how to assume responsibilities and become more productive, etc) ruled that the
members of the respondent union are officers or members of the managerial staff.
While the constitution is committed to the policy of social justice and the protection of the working
class, it should not be supposed that every labor dispute will be automatically decided in favor of
labor. Management also has its own rights which, as such, are entitled to respect and
enforcement in the interest of simple fair play. This is one such case where we are inclined to tip
the scales of justice in favor of the employer.
WE DO NOT SUBSCRIBE TO THE FINDING OF THE LABOR ARBITER THAT THE PAYMENT
OF THE QUESTIONED BENEFITS TO THE UNION MEMBERS HAS RIPENED INTO A
CONTRACTUAL OBLIGATION.
Prior to the JE program, the union members, while being supervisors, received benefits similar to
the rank and file employees such as overtime, rest ay and holiday pay, simply because they
were treated in the same manner as rank and file employees, and their basic pay was nearly on
the same level as those of the latter, aside from the fact that their specific functions and duties
then as supervisor had not been properly defined and delineated from those of rank and file.
Hence, it can be safely concluded therefrom that the members of respondent union were paid
the questioned benefits for the reason that, at that time, they were rightfully entitled thereto. Prior
to the JE program, they could not be categorically as members or officers of the managerial staff
considering that they were then treated merely on the same level as those of the ran and file
employees. Consequently, the payment thereof could not be construed as constitutive of
voluntary employer practice, which cannot now be unilaterally withdrawn be petitioner. To be
considered as such, it should have been practiced over a long period of time, and must be
shown to have been consistent and deliberate.
The test or rationale of this rule on long practice requires and indubitable showing that the
employer agreed to continue in giving the benefits, knowing fully well that said employees are
not covered by the law requiring payment thereof. In the case at bar, respondent union filed to
sufficiently establish that petitioner has been motivated or has wanted to give these benefits out
of pure generosity.
Quintessentially, with the promotion of the union members, they are no longer entitled to the
benefits which attach and pertain exclusively to their former positions. Entitlement to the benefits
provided for by law requires compliance with the conditions set forth therein. With the promotion
of the members of the respondent union, they occupied positions which no longer meet the
requirements imposed by law. Their assumption of these positions removed them from the
coverage of the law, ergo, their exemption therefrom.
Promotion of its employees is one of the jurisprudentially recognized exclusive prerogatives of

management, provided it is done in good faith. In the case at bar, private respondent union has
miserably failed to convince this court that the petitioner acted in bad faith in implementing the
JE program. There is no showing of respondent union of the benefits they used to receive.

24. Liberation Steamship v. Court of Industrial Relations

LIBERATION STEAMSHIP CO., INC., VS. COURT OF INDUSTRIAL RELATIONS
G.R. NO. L-25390, JUNE 27, 1968
REYES, J.B.L., J.
FACTS
1. Petitioner National Development Company (NDC), a government-owned and
controlled corporation, in 1961, was the owner and operator of the vessels M/S
"Dona Alicia", "Dona Nati" and "Dona Aurora". Prior to April 15, 1961, said
corporation decided to dispose of these three vessels and in the bidding that ensued,
Liberation Steamship Co., Inc.(LISTCO) won.
2. The crew members of the three vessels made representations with both the seller
and the purchaser to retain them in the service of the vessels. And when in the final
deed of sale no provision on the hiring of the complement of the vessels was
included, the crew-members declared a strike and was certified by the President to
the Court of Industrial Relations.
3. The Industrial Court declared that the strike was causing the corporation an actual
loss of about P15,000.00 daily, and thus issued a return-to-work order. A month and
a half after this order, representatives of the LISTCO posted notices around the M/S
"Dona Alicia" to the effect that the officers and members of the crew not otherwise
appointed by the said new owner will be ejected.
4. The unlicensed crew members of the three "Dona" vessels thus petitioned the
Industrial Court for an order to restrain LISTCO from carrying out its ejection threat of
the officers and/or crew members of the M/S "Dona Alicia" and of the two other
"Dona", vessels upon their delivery to the new owner.
5. A restraining order was issued against respondent NDC and/or its successor, the
LISTCO, directing the maintenance of status quo during the pendency of the dispute.
It, however, covered only the officers and unlicensed crew members of the "Dona
Nati" and "Dona Aurora". It did not extend to the crew of the "Dona Alicia", because
their dismissal had been already carried out.
6. Thereafter, an agreement was reached between the petitioning officers and crew
members of the M/S "Dona Alicia" and the LISTCO, by virtue of which those who
were laid off were readmitted to work. However, the NDC again took possession of
the vessels and resumed their operation.
7. The court rendered judgment denying the petitioners' demand for gratuity pay (from
the date of their employment to the sale of the vessels) on the ground that, with the
resumption of the operation of the vessels by NDC, this claim had become moot and
academic.
8. Considering that a new sale of the "Dona" vessels had taken place during the
pendency of the motion for reconsideration, the case was ordered reopened, but only
for the purpose of determining the merits of the demand for gratuity pay.
ISSUE
Whether or not the petitioners are entitled to gratuity pay.
HELD
The trial judge denied the employees' demands for payment by NDC of gratuity on the
ground that with the reacquisition by NDC of possession and management of the vessels
they had become academic. The court en banc, however, informed of the resale of the
vessels to another party during the pendency of the motion for reconsideration of the trial
court's decision, ordered the reopening of the case insofar as these demands for gratuity are
concerned. Petitioner contends such reopening to be error because gratuity is not
demandable by an employee as a matter of right, being a reward given by an employer in
recognition of the services rendered by the employee. It is argued further that there being no
showing that the collective bargaining contract between the employees and the NDC
provides for payment of gratuity by the employer upon termination of the employee's
services, the order to remand the case for reception of evidence lacks legal basis.
To this reasoning the Court can not agree. While normally discretionary, the grant of a
gratuity or bonus, by reason of its long and regular concession, may become regarded as

part of regular compensation. In order to determine whether such conditions operated in the
instant case, the reopening of the trial for receiving evidence on the point was evidently
proper.

25. Traders Royal Bank v. NLRC

TRADERS ROYAL BANK VS. NLRC
189 SCRA 274
GRINO-AQUINO, J.:
FACTS
1. On November 1986, TRB employees union filed a complaint with the NLRC for
diminution of benefits regarding holiday pay, mid-year and year-end bonuses.
2. NLRC ordered the Bank to pay the employees holiday pay differentials for 1983-1986, as
well as mid-year and year-end bonus differential for 1986.
ISSUE
Did the NLRC abuse its discretion in ordering the payment of mid-year and year-end bonus
differentials?
HELD
YES. A bonus is a gratuity or an act of liberality of the giver which the recipient has no right to
demand as a matter of right. The granting of bonus is basically a management prerogative which
cannot be forced upon the employer. In the case at bar, the matter of giving bonuses over and
above lawful salaries and allowances is entirely on the profits realized by the Bank. In 1986, the
Bank weakened considerably due to suspicions that it was a Marcos-owned and controlled bank,
and was placed under sequestration by the PCGG.
The union contention that the granting of bonuses has ripened into a company practice that may
not be adjusted to the prevailing financial condition of the Bank, has no legal or moral bases. Its
fiscal condition having declined, the Bank may not be forced to give bonuses it cannot pay, and
in effect, be penalized for its past generosity to its employees.
There can be no diminution of benefits because bonuses are not part of labor standards in the
same class as salaries, cost of living allowances, holiday pay and leave benefits.
The NLRC is modified by deleting the award for bonus differentials for 1986.

26. Manila Banking Corporation v. NLRC

THE MANILA BANKING CORPORATION V.THE NATIONAL LABOR RELATIONS
COMMISSION
GR 107487 & 107902, SEPTEMBER 29, 1997
FACTS
1. On June 5, 1984, petitioner Manila Banking Corporation (Manilabank) was
placed under comptrollership by then Central Bank in view of the bank's financial
distress.
2. 4 On May 22, 1987, the Monetary Board issued Resolution No. 505 prohibiting
Manilabank from doing business in the Philippines. Feliciano Miranda, Jr. was
designated as receiver.
3. He immediately took charge of the bank's assets and liabilities. He likewise
terminated the employment of about 343 officers and top managers of the bank.
All these officers and top managers, who are private respondents herein, were
paid whatever separation and/or retirement benefits were due them.
4. Private respondents filed a complaint against Manilabank and its statutory
receiver with. the arbitration branch of the National Labor Relations Commission
(NLRC) claiming entitlement to the following additional benefits alleged to have
accrued from 1984 to their effective dates of termination, viz: (a) Wage
increases; (b) Christmas bonuses; (c) Mid-year bonuses; (d) Profit sharing; (e)
Car and travel plans; (f) Gasoline allowances; (g) Differentials on accrued leaves,
retirement and other bonuses; (h) Longevity pay and loyalty pay; (i) Medical,
dental and optical benefits; and (j) Uniform allowances.
5. Such claim to entitlement of the foregoing benefits was based on Manilabank's
alleged practice, policy and tradition of awarding said benefits. They contended
that the policy has ripened into vested property rights in their favor.
6. On November 14, 1989, Labor Arbiter Felipe Pati rendered his decision ordering
Manilabank and its statutory receiver to pay in full all the claims of private
respondents amounting to P193,338,212. 33.
ISSUE
Whether or not private respondents are entitled to receive bonus despite the financial
distress of the company?
HELD
NO. By definition, a "bonus" is a gratuity or act of liberality of the giver which the recipient
has no right to demand as a matter of right. It is something given in addition to what is
ordinarily received by or strictly due the recipient. The granting of a bonus is basically a
management prerogative which cannot be forced upon the employer who may not be
obliged to assume the onerous burden of granting bonuses or other benefits aside from the
employee's basic salaries or wages, especially so if it is incapable of doing so. Clearly then,
a bonus is an amount given ex gratia to an employee by an employer on account of success
in business or realization of profits. How then can an employer be made liable to pay
additional benefits in the nature of bonuses to its employees when it has been operating on
considerable net losses for a given period of time? Records bear out that petitioner
Manilabank was already in dire financial straits in the mid-80's. As early as 1984, the Central
Bank found that Manilabank had been suffering financial losses. Presumably the problems
commenced even before their discovery in 1984. As earlier chronicled, the Central Bank
placed petitioner bank under comptrollership in 1984 because of liquidity problems and
excessive interbank borrowings. In 1987, it was placed under receivership and was ordered
to close operation. In 1988, it was ordered liquidated.
It is evident, therefore, that petitioner bank was operating on net losses from the years 1984,
1985 and 1986, thus, resulting to its eventual closure in 1987 and liquidation in 1988.
Clearly, there was no success in business or realization of profits to speak of that would
warrant the conferment of additional benefits sought by private respondents. No company
should be compelled to act liberally and confer upon its employees additional benefits over

and above those mandated by law when it is plagued by economic difficulties and financial
losses. No act of enlightened generosity and self-interest can be exacted from near empty, if
not empty, coffers. Consequently, on the ten (10) items awarded to herein private
respondents which represent additional benefits, they having already been paid separation
and retirement benefits.

Labor-only Contractor And

Independent Contractor

27. Tabas v. California Manufacturing Co., Inc.

TABAS VS. CALIFORNIA MANUFACTURING INC
GR NO. 806680, JANUARY 26, 1989
FACTS
1. Petitioners were the employees of Livi Manpower Services. They were assigned to
the respondent pursuant to a manpower supply agreement as promotional
merchandisers.
2. It was provided in the agreement that: 1) California would have no control or
supervision over the workers as to how they perform or accomplish their work, 2) Livi
is an independent contractor and that it has the sole responsibility of complying with
all the existing as well as future laws, rules and regulations pertinent to employment
of labor, 3) the assignment to California was seasonal and contractual, and 4)
payroll, including COLA and holiday pay shall be delivered Livi at Californias
premises.
3. Petitioners were made to sign 6-month employment contracts which were renewed
for the same period. Unlike regular employees of California, they did not receive
fringe benefits and bonuses and were paid only a daily allowance.
4. Petitioners contend that they have become regular employees of California.
Subsequent to their claim for regularization, California no longer re-hired them. Livi,
on the other hand, claims the workers as its employees and that it is an independent
contractor.
5. Labor Arbiter found that no employer-employee relationship existed. The NLRC
affirmed the ruling.
ISSUE
Is there an employer-employee relationship between California and the petitioners?
HELD
YES. The existence of an employer-employee relationship is a question of law and cannot
be made subject to agreement. The stipulations in the manpower supply agreement will not
erase either partys obligations as an employer.
Livi is a labor-only contractor, notwithstanding the provisions in the agreement. The nature
of ones business is not determined by self-serving appellations but by test provided by
statute and the prevailing case law.
Californias contention that the workers are not performing activities which are directly
related to its general business of manufacturing is untenable. The promotion or sale of
products, including the task of occasional price tagging, is an integral part of the
manufacturing business. Livi as a placement agency had simply supplied the manpower
necessary for California to carry out its merchandising activities, using the latters premises
and equipment. Merchandising is likewise not a specific project because it is an activity
related to the day-to-day operations of California.
Based on Article 106 of the Labor Code, the labor-only contractor is considered merely an
agent of the employer and liability must be shouldered by either one or by both.
Petitioners are ordered reinstated as regular employees.

28. Mafinco Trading Corporation v. Ople

MAFINCO TRADING CORPORATION VS. OPLE
GR NO. L-37790, MARCH 25, 1976
FACTS
1. Cosmos Aerated Water Factory, a firm based at Malabon, Rizal, appointed petitioner
Mafinco as its sole distributor of Cosmos soft drinks in Manila.
2. Rodrigo Repomanta and Mafinco executed a peddling contract whereby Repomanta
agreed to buy and sell Cosmos soft drinks. Rey Moralde entered into a similar
contract.
3. Months later, Mafinco terminated the peddling contract with Repomanta and
Moralde. Consequently, Repomanta and Moralde, through their union, filed a
compliant with the NLRC, charging the general manager of Mafinco for illegally
dismissing them.
4. Mafinco filed a motion to dismiss the complaint on the ground that the NLRC had no
jurisdiction because Repomanta and Moralde were not its employees but were
independent contractors. It stressed that there was termination of the contract not a
dismissal of an employee.
ISSUE
Whether or not there exist an employer-employee relationship between petitioner Mafinco
and private respondents Repomanta and Moralde.
HELD
The Supreme Court held that under the peddling contracts, Repomanta and Moralde were
not employees of Mafinco but were independent contractors as found by the NLC and its
fact finder and by the committee appointed by the Secretary of Labor to look into the status
of Cosmos and Mafinco peddlers.
A contract whereby one engages to purchase and sell soft drinks on trucks supplied by the
manufacturer but providing that the other party (peddler) shall have the right to employ his
own workers, shall post a bond to protect the manufacturer against losses, shall be
responsible for damages caused to third persons, shall obtain the necessary licenses and
permits and bear the expenses incurred in the sale of the soft drinks is not a contract of
employment.

29. Rhone-Poulenc Agrochemicals Philippines, Inc. v. NLRC

RHOUNE-POULENC AGROCHEMICALS PHILIPPINES, INC. VS. NLRC
G.R. NOS. 102633-35 JANUARY 19, 1993
FACTS
1. The petitioner is a domestic corporation engaged in the manufacture of agro-
chemicals. Its business operations involve the formulation, production, distribution
and sale in the local market of its agro-chemical products.
2. On January 1, 1988, as a consequence of the sale by Union Carbide, Inc. of all its
agricultural-chemical divisions worldwide in favor of Rhone-Poulenc Agrochemie,
France, the petitioner's mother corporation, the petitioner acquired from Union
Carbide Philippines Far East, Inc. the latter's agro-chemical formulation plant in
Namayan, Mandaluyong, Metro Manila.
3. In 1987, prior to the sale, Union Carbide had entered into a contract with CSI for the
latter's supply of janitorial services. During the transition period, Union Carbide
continued to avail itself of CSI's janitorial services. Thus, petitioner Rhone-Poulenc
found itself sharing the Namayan plant with Union Carbide while the factory was
being serviced and maintained by janitors supplied by CSI.
4. Midway through the transition period, Union Carbide instructed CSI to reduce the
number of janitors working at the plant from eight (8) to seven (7).
5. Private respondent Paulino Roman, one of the janitors, was recalled by CSI on
February 15, l988 for reassignment. However, Roman refused to acknowledge
receipt of the recall memorandum.
6. On March 9, 1988, Union Carbide formally notified CSI of the termination of their
janitorial service agreement, effective April 1, 1988, citing as reason the global buy-
out by Rhone-Poulenc, Agrochemie, France of Union Carbides Inc.'s agro-chemical
business.
7. CSI thereafter issued a memorandum dated March 20, 1988 to the seven remaining
janitors assigned to the Namayan plant, including respondent Urcisio Orain, recalling
and advising them to report to the CSI office for reassignment. Like Roman, the
janitors refused to acknowledge receipt of the recall memorandum.
8. Meanwhile, in anticipation of the March 31, 1988 pull-out by Union Carbide, the
petitioner started screening proposals by prospective service contractors. Rhone-
Poulenc likewise invited CSI to submit to its Bidding Committee a cost quotation of
its janitorial services. However, another contractor, the Marilag Business and
Industrial Services, Inc. passed the bidding committee's standards and obtained the
janitorial services contract.
9. On April 1, 1988, the eight janitors reported for work at the Namayan plant but were
refused admission and were told that another group of janitors had replaced them.
These janitors then filed separate complaints for illegal dismissal, payment of 13th
month salary, service leave and overtime pay against Union Carbide, Rhone-
Poulenc and CSI.
ISSUES
1. Whether or not the janitors were employees of Union Carbide
2. Whether or not the CSI is a labor only contractor
3. Whether or not petitioner absorbed the janitors in its workforce
HELD
The court held that the petition is meritorious. In determining the existence of employer-
employee relationship, the following elements are generally considered, namely: (1) the
selection and engagement of employees (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employee's conduct although the latter is the
most important element. There is no employer-employee relationship between Union
Carbide and the respondent janitors. The respondents themselves admitted that they were
selected and hired by CSI and were assigned to Union Carbide. CSI likewise acknowledged
that the two janitors were its employees. The janitors drew their salaries from CSI and not
from Union Carbide. CSI exercised control over these janitors through Richard Barroga, also
a CSI employee, who gave orders and instructions to CSI janitors assigned to the Namayan

plant. Moreover, CSI had the power to assign its janitors to various clients and to pull out, as
it had done in a number of occasions, any of its janitors working at Union Carbide. As to
whether CSI is engaged in labor-only contracting or in job contracting, applying the test
prescribed by the Labor Code and the implementing rules, the court finds sufficient basis
from the records to conclude that CSI is engaged in job contracting. Without regard to the
third issue, even if the janitors were, indeed, employees of Union Carbide or that CSI is a
labor-only contractor, thus making Union Carbide a direct employer of these janitors,
petitioner Rhone-Poulenc, as purchaser of Union Carbide's business is not compelled to
absorb these janitors into its workforce. An innocent transferee of a business establishment
has no liability to the employees of the transferor to continue employing them.

30. AFP Mutual Benefit Association Inc. v NLRC
AFP MUTUAL BENEFIT ASSOCIATION, INC. VS, NLRC

GR NO. 102199, JANUARY 28, 1997
FACTS
1. Eutiquio Bustamante had been an insurance underwriter of AFP Mutual Benefit
Association, Inc.. The Sales Agent's Agreement between them includes:
a. Bustamante shall solicit exclusively for AFPMBAI and shall be bound by
policies, memo circulars, rules and regulations which it may revise, modify or
cancel to serve interests and assign him on other areas on a case to case
basis.
b. There shall be no employer-employee relationship between the parties, the
SALES AGENT being hereby deemed an independent contractor."
2. AFPMBAI dismissed Bustamante for misrepresentation and for simultaneously
selling insurance for another life insurance company in violation of said agreement.
3. At the time of dismissal, Bustamante was entitled to accrued commissions equivalent
to P438,835. AFPMBAI Manager said he is only entitled to P75,000. Relying on the
computation he signed a quitclaim in favor of Petioner. Upon release of the check,
Bustamante noticed he is legally entitled to P354,769 of commissions. He filed for
the recovery of the correct amount in the Office of the Insurance Commissioner but
was advised that the DOLE has jurisdiction over his case. Bustamante filed under
the DOLE.
4. In decision of the case, Bustamantes dismissal was considered valid thus no
separation pay to be awarded. However, it granted the recovery of his unpaid
commissions.
5. The Labor arbiter relied on the provision that AFPMBAI may assign Bustamante in
other areas and impose quotas which is an existence of employer-employee
relationship. The decision was affirmed on appeal. Hence the present petition.
ISSUE
Whether or not there exist an employer-employee relationship thus vesting jurisdiction over
the case to DOLE.
HELD
The existence of an employer-employee relationship is ultimately a question of fact and that
the findings thereon by the labor arbiter and the National Labor Relations Commissions
shall be accorded not only repect but even finality when supported by substantial evidence.
The Court has applied the "four-fold" test in determining the existence of employer-
employee relationship. This tst considers the following elements: (1) the power to dismiss;
and (4) the power to control, the last being the most important element.
The fact that private respondent was required to solicit business exclusively for petitioner
could hardly be considered as control in labor jurisprudence. Thus, the exclusivity restriction
clearly springs from a regulation issued by the Insurance Commission, and not from an
intention by petitioner to establish control over the method and manner by which private
respondent shall accomplish his work. This feature is not meant to change the nature of the
relationship between the parties, nor does it necessarily imbue such relationship with the
quality of control envisioned by the law.

31. Coca-Cola Bottlers Philippines, Inc. v. Hingpit
COCA-COLA BOTTLERS PHIL., INC. VS. HINGPIT

294 SCRA 594
NARVASA, CJ
FACTS
1. Pioneer Multi-Services Co (PIONEER) and Lipercon Services, Inc (LIPERCON) are
manning companies with which Coca-Cola successively entered into contracts for
the supply of manpower needs of its plant in Tagbilaran.
2. Coca-Colas contract with Pioneer was executed on May 28, 1983 and that with
Lipercon, 5 years later, on December 17, 1988.
3. 11 persons were claiming they were employees of Coca-Cola in its Tagbilaran City
Plant. They filed a complaint against Coca-Cola with the Regional Arbitration Board
of the National Labor Relations Commission in Cebu City.
4. In the decision of the RAB, it was found that the complainants were supplied as
workers to Coca-Cola first by Pioneer and later by Lipercon. When Lipercon entered
into the picture, the complainants were already regular employees of Coca-Cola.
This is because while Lipercon was an independent contractor, its predecessor
Pioneer was not.
5. The Commission revered the Labor Arbiters conclusion that Lipercon was an
independent labor contractor. It declared it instead to be a mere labor-only
contractor.
ISSUE
Whether or not Lipercon is a labor only contractor.
HELD
The SC held in the negative. The NLRC grounded its decision solely on an earlier case
where the court held Lipercon to a be a Labor only contractor because it failed to prove
that it has substantial capital, investment, tools, etc.
It is not so in the present case. Here, there is substantial evidence detailed by the labor
arbiter, to establish Lipercons character as an independent contractor in the real sense of
the word. The Labor Arbiters ruling is therefore more acceptable that that of the
Commission because its decision was founded solely on an inapplicable precedent.
Lipercon proved to be an independent contractor. Aside from hiring its own employees and
paying the workers their salaries, it also exercised supervision and control over them which
is the most important aspect in determining employer-employee relations. That indeed has
substantial capital is proven by the fact that it did not depend upon its billing on respondent
regarding payment of workers salaries. And when complainants were separated from
Lipercon, they singed quitclaim and release documents.

32. Broadway Motors, Inc v. NLRC
BROADWAY MOTORS, INC. VS. NATIONAL LABOR RELATIONS COMMISSION AND

VICENTE APOLINARIO
156 SCRA 522
FELICIANO, J.:
FACTS
1. By virtue of a written undated "Work Contract," private respondent Vicente
Apolinario, sometime in March 1967, began work as an auto painter in the premises
of petitioner Broadway Motors, Inc.
2. Apolinario worked as an auto painter for a period of eighteen (18) years, until 23
January 1985 when he was barred from entering the premises of petitioner, and his
relationship with it effectively terminated, because of his alleged involvement in a fist-
fight with
3. the shop superintendent .
4. Apolinario complained for illegal dismissal.
5. The Labor Arbiter (LA) dismissed the complaint on the ground that Apolinario, having
supplied the workers-himself included-who performed the auto painting jobs for
petitioner, was a mere contractor thus not to be considered as the latter's employee.
6. Apolinario appealed to the NLRC.
7. NLRC found that there was a valid and binding employer-employee relationship.
Since Apolinario was dismissed without any investigation by petitioner Corporation to
ascertain his participation in the fistfight within company premises, his dismissal was,
illegal.
ISSUE
Whether or not the termination was valid or illegal.
HELD
YES. The dismissal is illegal. Firstly, there is an employer-employee relationship and
whenever there is such the employer cannot just validly terminate the services of an
employee without just cause. The petitioner insists that there is a valid labor contract
to justify its act of unilaterally dismissing the services of Apolinario et. al. which he cannot do
if there is a valid and binding employer-employee relationship. Apolinario was hired directly
by petitioner to work as an auto painter, evidenced by the undated Work Contract. That
petitioner reserved unto itself the power of dismissal is evident from the fact that petitioner
unilaterally undertook to terminate Apolinario's relationships with itself. Such act of
termination is unjustified for being in contravention of the procedural due process which is
accorded to employees to safeguard their constitutionally protected right of security of
tenure. Even though it appears that he was the one who supplied the labor, their
performance and work were closely supervised by the petitioner's supervisior. Petitioner
Corporation was the one who supplied all the tools necessary for Apolinario and his men to
carry out assigned painting jobs. There was, furthermore, no evidence adduced by petitioner
to show that Apolinario had substantial capital investment. We conclude that while there is
present in the relationship between petitioner Corporation and private respondent some
factors suggestive of an owner-independent contractor relationship (e.g., the manner of
payment of compensation to Apolinario and his 'Contract Workers"), many other factors are
present which demonstrate that the relationship is properly characterized as one of
employer-employee.

33. Philippine Bank of Communications v. NLRC
PHILIPPINE BANK OF COMMUNICATIONS, VS. NLRC

146 SCRA 347
FELICIANO, J.:
FACTS
1. Philippine Bank of Communications and the Corporate Executive Search Inc. (CESI)
entered into a letter agreement dated January 1976 under which (CESI) undertook to
provide temporary services to petitioner consisting of 11 messengers.
2. Ricardo Orpiada was thus assigned to work with the petitioner bank. As such, he
rendered services to the bank, within the premises of the bank and alongside other
people also rendering services to the bank.
3. There was some question as to when Ricardo Orpiada commenced rendering
services to the bank. As noted above, the letter agreement was dated January 1976.
However,
4. the position paper submitted by (CESI) to the National Labor Relations Commission
stated that (CESI) hired Ricardo Orpiada on 25 June 1975 as a Temporary Service
employee, and assigned him to work with the petitioner bank "as evidenced by the
appointment memo issued to him on 25 June 1975. "
5. On or about October 1976, the petitioner requested (CESI) to withdraw Orpiada's
assignment because, in the allegation of the bank, Orpiada's services "were no
longer needed."
6. Orpiada then instituted a complaint in the Department of Labor against the petitioner
for illegal dismissal and failure to pay the 13th month pay.
ISSUE
Whether or not there an employer-employee relationship exists.
HELD
YES. There are four way test to verify the existence of an employer-employee relationship.
These factors are: selection and engagement of the putative employee; payment of wages;
power of dismissal- and power to control the putative employees' conduct, although the
latter is the most important element.
In the present case, Orpiada was not previously selected by the bank. Rather, Orpiada was
assigned to work in the bank by (CESI). With respect to the payment of Orpiada's wages,
the bank remitted to CE SI amounts corresponding to the "daily service rate" of Orpiada and
the others similarly assigned by (CESI) to the bank, and (CESI) paid to Orpiada and the
others the wages pertaining to to them. In respect of the power of dismissal we note that the
bank requested (CESI) to withdraw Orpiada's assignment and that (CESI) did, in fact,
withdraw such assignment. Turning to the power to control
Orpiada's conduct, it should be noted immediately that Orpiada performed his sections
within the bank's premises, and not within the office premises of (CESI) As such, Orpiada
must have been subject to at least the same control and supervision that the bank exerciss.
Application of the above factors in the specific context of this case appears to yield mixed
results so far as concerns the existence of an employer- employer relationship between the
bank and Orpiada.
Under the general rule set out in the first and second paragraphs of Article 106, an employer
who enters into a contract with a contractor for the performance of work for the employer,
does not thereby create an employer-employee relationship between himself and the
employees of the contractor. Thus, the employees of the contractor remain the contractor's
employees and his alone. Nonetheless when a contractor fails to pay the wages of his
employees in accordance with the Labor Code, the employer who contracted out the job to
the contractor becomes jointly and severally liable with his contractor to the employees of
the latter "to the extent of the work performed under the contract" as such employer were
the employer of the contractor's employees. We hold that, in the circumstances 'instances of
this case, (CESI) was engaged in "labor-only" or attracting vis-a-vis the petitioner and in
respect Ricardo Orpiada, and that because there is labor-only contracting, the petitioner

bank is liable to Orpiada as if Orpiada had been directly, employed not only by (CESI) but
also by the bank. It may well be that the bank may in turn proceed against (CESI) to obtain
reimbursement of, or some contribution to, the amounts which the bank will have to pay to
Orpiada; but this it is not necessary to determine here.

Injury, Sickness & Disability

34. Belarmino v. Employees Compensation Commission
BELARMINO V. EMPLOYEES COMPENSATION COMMISSION

185 SCRA 304
GRIO-AQUINO, J.
FACTS
1. Oania Belarmino was a classroom teacher of the Department of Education Culture
and Sports assigned at the Burucan Elementary School in Dimasalang, Masbate for
11 years.
2. On January 14, 1982, Mrs. Belarmino who was in her 8th month of pregnancy,
accidentally slipped and fell on the classroom floor.
3. She complained of abdominal pain and stomach cramps but she continued reporting
for work because there was much work to do.
4. On January 25, 1982, she went into labor and prematurely delivered a baby girl at
home.
5. Her abdominal pain persisted even after delivery.
6. When she was brought to the hospital, her physician informed her that she was
suffering from septicemia post partum due to infected lacerations of the vagina.
7. After she was discharged from the hospital, she died three days thereafter.
8. The GSIS denied the claim on the ground that septicemia post partum, the cause of
death is an occupational disease and neither was there any showing that the ailment
was contracted by reason of her employment.
9. On appeal to the Employees Compensation Commission, latter also denied the claim
affirming the denial of the claim by GSIS.
ISSUE
Whether of not the cause death of Mrs. Belarmino is not work-related and therefore not
compensable.
HELD
NO. The death of Mrs. Belarmino from septicemia post partum is compensable because an
employment accident and the conditions of her employment contributed to its development.
The condition of the classroom floor caused Mrs. Belarmino to slip and fall and suffer injury
as a result. The fall precipitated the onset of recurrent abdominal pains which culminated in
the premature termination of her pregnancy with tragic consequences to her. Her fall on the
classroom floor brought about her premature delivery which caused the development of post
partum septicemia which resulted in death. Her fall therefore was the proximate cause1 that
set in motion an unbroken chain of events, leading to her demise.
The right to compensation extends to disability due to disease supervening upon and
proximately and naturally resulting from a compensable injury. Where the primary injury is
shown to have arisen in the course of employment, every natural consequence that flows
from the injury likewise arises out of the employment, unless it is the result of an
independent intervening cause attributable to claimants own negligence or misconduct.
Mrs. Belarminos fall was the primary injury that arose in the course of her employment as a
classroom teacher, hence, all the medical consequences flowing from it: her recurrent
abdominal pains, the premature delivery of her baby, her septicemia post partum and death
are compensable.
1
Proximate Cause the efficient cause which sets the others in motion and is to be distinguished from a mere pre-existing
condition upon which the effective cause operates and must have been adequate to produce the resultant damage without the
intervention of an independent cause.

35. Hinoguin v. Employees Compensation Commission
HINOGUIN V. EMPLOYEES COMPENSATION COMMISSION

172 SCRA 350
FELICIANO, J.
FACTS
1. Sgt. Lemick Hinoguin was a sergeant in A company, 14th Infantry Battalion, 5th
Infantry Division.
2. The headquarters of the 14th Infantry Battalion was located at Bical, Muoz, Nueva,
Ecija.
3. On August 1, 1985, Sgt. Hinoguin, Cpl. Rogelio Clavo and Dft. Nicomedes Alibuyog
sought permission from Capt. Frankie Besas, to go on overnight pass to Aritao,
Nueva Viscaya.
4. Capt. Besas orally granted them permission to go to Aritao and to take their issued
firearms with them considering that Aritao was regarded as a critical place.
5. The three soldiers went to Dft. Alibuyogs home for a meal and some drinks. At
around 7:00 PM, the soldiers headed back to the headquarters.
6. They boarded a tricycle, Hinoguin and Clavo seating themselves in the tricycle cab
while Alibuyog occupied the seat behind the tricycle driver. When they reached the
poblacion, Alibuyog dismounted from the tricycle. Not noticing that his rifles safety
lever was on semi-automatic, he accidentally touched the trigger, firing a single
shot in the process and hitting Sgt. Hinoguin in the left lower abdomen.
7. Sgt. Hinoguin died a few days after the incident.
8. In the investigation conducted by the 14th Infantry Battalion, it was found that the
shooting of Sgt. Hinoguin was purely accidental in nature and that he died in the line
of duty. The Life of Duty Board of Officers recommended that all benefits due the
legal dependents of the late Sgt. Hinoguin be given.
9. However, when the father of the deceased made a claim from GSIS, the same was
denied on the ground that the deceased was not at his work place nor performing his
duty as a soldier of the Philippine Army at the time of his death. This denial was
confirmed by the ECC.
ISSUE
Whether or not the death of Sgt. Hinoguin compensable under the applicable statute and
regulations.
HELD
YES. The amended Implementing Rules provides in part as follows:
SEC. 1. Conditions to Entitlement (a) The beneficiaries of a deceased employee shall be

entitled to an income benefit if all of the following conditions are satisfied:
The employee had been duly reported to the System;
He died as a result of injury or sickness; and
The System has been duly notified of his death, as well as the injury or sickness which
caused his death.
His employer shall be liable for the benefit if such death occurred before the employer is
duly reported for coverage of the System.
Art. 167 (k) of the Labor Code defines compensable injury quite simply as any harmful
change in the human organism from any accident arising out of and in the course of the
employment. The Amended Rules elaborated the succinct statutory provision:
SEC. 1 Grounds (a) For the injury and resulting disability or death to be compensable, the
injury must be the result of an employment accident satisfying all of the following grounds:
(1) The employee must have been injured at the place where his work requires him to
be.
(2) The employee must have been performing his official functions; and
(3) If the injury is sustained elsewhere, the employee must have been executing an
order for the employer.

The concept of work place referred in Ground 1, for instance, cannot always be literally
applied to a soldier on active duty status, as if he were a machine operator or a worker in
an assembly line in a factory or a clerk in a particular fixed office. A soldier must go where
his company is stationed. Aritao, Nueva Viscaya was not of course, Carranglan, Nueva
Ecija. Aritao being approximately 1 hours from the later by public transportation. But
Sgt. Hinoguin, Cpl. Clavo and Dft. Alibuyog had permission from their Commanding Officer
to proceed to Aritao and the place which soldiers have secured lawful permission to be at
cannot be very different, legally speaking, from a place where they are required to go by
their commanding officer. The soldiers were on an overnight pass. They were not on
vacation leave.
In this connection, a soldier on active duty status is really on 24 hours a day official duty
status and is subject to military discipline and military law 24 hours a day. He is subject to
call and to the orders of his superior officers at all times, 7 days a week, except, of course,
when he is on vacation leave status. A soldier should be presumed to be on official duty
unless he is shown to have clearly and unequivocally put aside that status or condition
temporarily by, e.g. going on an approved vacation leave.

36. Tancinco v. Government Service Insurance System

TANCINCO V. GOVERNMENT SERVICE INSURANCE SYSTEM
369 SCRA 221
DE LEON, JR.
FACTS
1. SPO1 Eddie Tancinco was a member of the NCR Security Protection Group of the
Philippine National Police.
2. On July 17, 1995, while he was repairing a service vehicle in front of his house, he
was shot dead by 5 unidentified armed men.
3. At the time of his death, he was assigned as part of the close-in security detail of
then VP Joseph Estrada. He was off-duty at the time since the Vice President was in
the US for medical treatment.
4. When his widow filed a claim with GSIS, the same was denied on the ground that
there was no proof that Tancincos death was work-related.
5. The denial was affirmed by the ECC.
ISSUE
Whether or not the death of SPO1 Tancinco is compensable.
HELD
NO. The pertinent guidelines of the ECC with respect to claims for death benefits, namely:
(a) that the employee must be at the place where his work requires him to be;
(b) that the employee must have been performing his official functions
(c) that if the injury is sustained elsewhere, the employee must have been executing an
order for the employer.
The aforesaid requirements have not been met. Anent the first, as part of the former VPs
security detail, the decedent was required to guard the person of the former; hence his
presence was officially required wherever the Vice-President would go. At the time of his
death, SPO1 Tancinco was off-duty since the Vice-President was out of the country.
As to the second requirement, it was not sufficiently established that SPO1 Tancinco died
while performing his official functions. The 24-hour duty doctrine, as applied to policemen
and soldiers serves more as an after-the-fact validation of their acts to place them within the
scope of the guidelines rather than a blanket license to benefit them in all situations that
may give rise to their deaths. In other words, the 24-hour duty doctrine should not be
sweepingly applied to all acts and circumstances causing the death of a police officer but
only to those which, although not an official duty, are nonetheless basically police service in
character. In the present case, the decedent was repairing a service vehicle when he was
killed. It cannot be said that the deceased was discharging official functions, if anything,
repairing a service vehicle is only incidental to his job.
Neither was the last requirement satisfied. As the fatal incident occurred when SPO1
Tancinco was at home, it was incumbent upon petitioner to show that her husband was
discharging a task pursuant to an order issued by his superiors. This was not done.

37. Iloilo Dock & Engineering Co. v. Workmens Compensation Commission

ILOILO DOC & ENGINEERING CO. V. WORKMENS COMPENSATION COMMISSION
27 SCRA 103
CASTRO, J.
FACTS
On January 29, 1960, Teodoro Pablo and Rodolfo Galopez, had just finished overtime
work at 5:00 pm and was going home.
At around 5:02 pm, while Pablo and Galopez was walking along the IDECO road, about
20 meters from the IDECO main gate, Pablo was shot by Martin Cordero.
The motive for the crime was and still unknown since Martin Cordero was himself killed
before he could be tried for Pablos death.
ISSUES
1. Whether or not Pablos death occurred in the course of employment and arising out
of the employment.
2. Whether the PROXIMITY RULE should apply in this case.
3. Whether the death of Pablo was an accident within the purview of the Workmens
Compensation Act.
HELD
1. YES. Workmens compensation is granted if the injuries result from an accident
which arise our of and in the course of employment. Both the arising factor and the
course factor must be present. If one factor is weak and the other is strong, the
injury is compensable but not where both factors are weak. Ultimately, the question
is whether the accident is work connected. The words arising out of refer to the
origin or cause of the accident and are descriptive of its character, while the words
in the course refer to the time, place and circumstances under which the accident
takes place.
The presumption that the injury arises out of and in the course of employment
prevails where the injury occurs on the employers premises. While the IDECO does
not own the private road, it cannot be denied that it was using the same as the
principal means of ingress and egress. The private road leads directly to its main
gate. Its right to use the road must then perforce proceed from either an easement
of right of way or a lease. Its right therefore is either a legal one or a contractual one.
In wither case the IDECO should logically and properly be charged with security
control of the road.
2. YES. The general rule in workmens compensation law known as going and coming
rule provides that in the absence of special circumstances, an employee injured in,
going to, or coming from his place of work is excluded from the benefits of
workmens compensation acts. The following are the exceptions:
a. Where the employee is proceeding to or from his work on the premises of his
employer
b. Where the employee is about to enter or about to leave the premises of his
employer by way of exclusive or customary means of ingress and egress
c. Where the employee is charged while on his way to or from his place of
employment or at his home or during his employment, with some duty or
special errand connected with his employment
d. Where the employer, as an incident of the employment provides the means of
transportation to and from the place of employment.
The second exception is known as the proximity rule. The place where the
employee was injured being immediately proximate to his place of work, the accident
in question must be deemed to have occurred within the zone of his employment and
therefore arose out of or in the course thereof.

3. YES. An assault although resulting from a deliberate act of the slayer, is

considered an accident within the meaning of the Workmens Compensation Act
since the word accident is intended to indicate that the act causing the injury shall be
casual or unforeseen, an act for which the injured party is not legally responsible.

38. Alano v. Employees Compensation Commission

ALANO V. EMPLOYEES COMPENSATION COMMISSION
158 SCRA 669
GUTIERREZ, JR. J.
FACTS
1. Dedicacion De Vera worked as principal of Salinap Community School in san Carlos
City, Pangasinan.
2. Her usual tour of duty was from 7:30 am to 5:30 pm. On November 29, 1976, at 7:00
AM while she was waiting for a ride at Plaza Jaycee in San Carlos City on her way to
school, she was bumped and ran over by a speeding Toyota mini-bus which resulted
to her instantaneous death.
3. Her brother Generoso Alano filed the instant claim for income benefit with the GSIS
for and in behalf of the decedents children.
4. The claim was denied by GSIS on the ground that the injury upon which
compensation is being claimed is not an employment accident satisfying all the
conditions prescribed by law.
5. The ECC affirmed the denial by GSIS. It claimed that the deceaseds accident did
not meet the conditions under the Amended Rules on Employees Compensation.
First, the accident occurred at about 7:00 am or thirty minutes before the deceaseds
working hours. Second, it happened not at her workplace but at the plaza where she
usually waits for a ride to her work. Third, she was not then performing her official
functions as school principal nor was she on a special errand for the school.
ISSUE
Whether or not the injury sustained by the deceased Dedicacion de Vera resulting in her
death is compensable under the law as an employment accident.
HELD
YES. The claim is compensable. When an employee is accidentally injured at a point
reasonably proximate to the place at work, while he is going to and from his work, such
injury is deemed to have arisen out of and in the course of his employment.
In this case, it is not disputed that the deceased died while going to her place of work. She
was at he place where, as the petitioner puts it, her job necessarily required her to be if she
was to reach her place of work on time. There was nothing private or personal about the
school principals being at the place of the accident. She was there because her
employment required her to be there.

39. Lazo v. Employees Compensation Commission

LAZO V. EMPLOYEES COMPENSATION COMMISSION
186 SCRA 569
PADILLA, J
FACTS
1. Salvador Lazo is a security guard of the Central Bank of the Philippines.
2. His shift is usually from 2:00 PM to 10:00 PM.
3. On June 18, 1986, the security guard who was to relieve him failed to arrive. Lazo
rendered overtime duty up to 5:00AM the following day.
4. Lazo, with the permission from his superior, to left early in order to take home his
sack of rice.
5. On his way home, the jeepney that he was riding on turned turtle due to the slippery
road.
6. Lazo sustained injuries and for which he seeks compensation.
7. The GSIS denied the claim on the ground that Lazo was not at his place of work
when the incident occurred. This denial of claim was affirmed by ECC.
ISSUE
Whether or not the injuries sustained by Lazo due to the vehicular accident on his way home
from work should be construed as arising out of or in the course of employment and thus
compensable.
HELD
YES. Employment includes not only the actual doing of the work, but a reasonable margin
of time and space necessary to be used in passing to and from the place where the work is
to be done. If the employee be injured while passing, with the express or implied consent of
the employer, to or from his work by a way over the employers premises, or over those of
another in such proximity and relation as to be in practical effect a part of the employers
premises, the injury is one arising out of and in the course of the employment as much as
though it had happened while the employee was engaged in his work at the place of its
performance.
It can be seen that petitioner left his station at the Central Bank several hours after his
regular time off, because the reliever did not arrive, and so petitioner was asked to go on
overtime. After permission to leave was given, he went home. There is no evidence on
record that petitioner deviated from his usual, regular homeward route or that interruptions
occurred in the journey.
There is no reason, in principle, why employees should not be protected for a reasonable
period of time prior to or after working hours and for a reasonable distance before reaching
or after leaving the employers premises.
While the presumption of compensability and theory of aggravation under the Workmens
Compensation Act may have been abandoned under the New Labor Code, it is significant
that the liberality of the law in general in favor of the workingman still subsists.
This kind of interpretation gives meaning and substance to the compassionate spirit of the
law as embodied in Article 4 of the Labor Code.
The policy then is to extend the applicability of the Labor Code to as many employees who
can avail of the benefits thereunder.

40. Luzon Stevedoring Corp. v. Workmens Compensation Commission

LUZON STEVEDORING CORP. V. WORKMENS COMPENSATION COMMISSION
27 SCRA 1132
REYES, JBL, J.
FACTS
1. Pastor Romano was a stevedore engaged by petitioner, Luzon Stevedoring
Corporation.
2. On the morning of November 30, 1964, Romano went to Pier 9 to wait for the arrival
of the barge of the petitioner.
3. Romano had an argument with Benjamin Valdez regarding the platform to be used in
the loading and unloading of the cargoes into or out of the watercraft.
4. Romano was able to get the platform from Valdez.
5. When Romano returned after lunch, Valdez was again in possession of the platform.
Another argument ensued.
6. Valdez eventually gave the platform to Romano but not before he had uttered threats
against the life of Romano.
7. When the barge did not arrive, Romano and his two companions boarded a
passenger jeepney bound for Tondo.
8. When Romano got off from the jeep near his house, he was met by Valdez who
stabbed him.
9. Romano died as a result thereof.
10. His widow filed a formal claim for death compensation against Luzon Stevedoring for
the death of her husband. The same was denied by Luzon Stevedoring on the
ground that the death of Romano was not compensable because it came when he
was outside of the company premises and not at work.
ISSUE
Whether or not the death of Pastor Romano is compensable.
HELD
YES. It is evident that the cause of the fatal stabbing by Benjamin Valdez can be traced to
their disagreement over the possession of a platform that was to be used in their work for
petitioner.
For an injury to be compensable, it is not necessary that the cause thereof shall take place
within the place of his employment. If a workman is acting within the scope of his
employment, his protection in the course of the employment usually continues, regardless
of the place of injury.
Furthermore, jurisprudence is to the effect that the injuries sustained by an employee while
in the course of his employment, as the result of an assault upon his person by another
employee, or by a third person, no question of the injured employees own culpability being
involved, is compensable where, from the evidence presented, a rational mind is able to
trace the injury to a cause set in motion by the nature of the employment, or some condition,
obligation or incident therein, and not by some other agency.

41. Vda. De Inguillo v. Employees Compensation Commission

VDA. DE INGUILLO V. EMPLOYEES COMPENSATION COMMISSION
174 SCRA 19
MELENCIO-HERRERA, J.
FACTS
1. Enrique Inguillo worked as a janitor at E. Jacinto Elementary School in Tondo,
Manila.
2. From February 24 to June 5, 1978 he was confined in the hospital due to complaints
of difficulty in swallowing food, siolid and liquid, accompanied by chest pains,
difficulty of breathing, fever and productive cough.
3. He died on June 20, 1978. The cause of death being attributed to Terminal
malignancy, Poorly diffrrentiated Esophageal Edenocarcinoma with Bone and Cervix
Metastasis Pneumonio.
4. The surviving spouse, Emilia Inguillo, filed a claim for death benefits with GSIS. The
claim was denied on the ground that the cause of death, cancer of the esophagus, is
not an occupational disease. This was affirmed by the ECC.
5. The instant petition is anchored on the provisions of the Workmans Compensation
Act, particularly on the presumption of compensability and the principle of
aggravation.
ISSUES
1. Whether or not the presumption of compensability and the principle of aggravation
apply in this case.
2. Whether or not the cause of death is an occupational disease, therefore
compensable.
HELD
1. NO. The deceased was confined from February 24, 1978 to June 5, 1978 and that
he later died on June 20, 1978 and absent any evidence as to when his ailment was
contracted, it is the New Labor Code that becomes the governing law. As
specifically provided in Art. 208, its provisions cover injury, sickness, disability or
death occurring on or after January 1, 1975. The concepts relied on by petitioner
under the former Workmens Compensation Act, therefore, have ceased to apply,
having been expressly discarded under the compensation scheme in the new Labor
Code.
2. YES. Art. 67 (1) defines compensable sickness. It means any illness definitely
accepted as an occupational disease listed by the Commission, or any illness
caused by employment subject to proof by the employee that the risk of contracting
the same is increased by working conditions. Se. 1(b) Rule III of the Amended Rules
on Employment Compensation further provides that for the sickness and resulting
disability or death to be compensable, the sickness must be the result of
occupational disease listed under Annex A of the Rules with the conditions set
therein satisfied.
Definitely, esophageal edenocarcinoma with bone and cervical metastasis cannot

be considered as an occupational disease since it is not one of those listed under
Annex A of the mentioned rules. The nature of a persons employment appears to
have no relevance.
However, the ECC failed to adequately take into consideration that there was
another cause of death which was pneumonia. Pneumonia is qualifiedly
occupational disease under all the following conditions:
a) There must be an honest and definite history of wetting and chilling during the
course of employment, also industrial injury to the chest wall with or without
rib fracture, or inhalation of noxious gases, fumes and deleterious substances
in the place of work.
b) There must be a direct connection between the offending agent or event and
the workers illness.

c) The signs of consolidation should appear soon (within few hours) and the
symptoms to initial chilling and fever should at least be 24 hours after the
injury.
d) The patient must present one of the following findings a few days of the
accident:
i. Severe chill and fever
ii. Headache and pain, agonizing in character in the side
iii. Short, dry, painful cough with blood-tinged expectoration
iv. Physical signs of consolidation with fine rales
A review of the deceased work activities, as janitor will show that they included the
regular use of deleterious substances such as muriatic acid, the fumes from which
are inhaled when used in cleaning and clearing of toilet bowls and the unclogging off
toilet pipes and plumbing connections. The deceased also performed other varied
manual work such as sweeping, scrubbing and mopping school corridors, with the
resultant inhalation of a` lot of dust, lifting heavy objects, painting classrooms,
preparing seats for pupils during school programs, as well as going to and from his
place of work thus exposing him to occasional wetting and chilling from downpours
and rains. The combination of all these, coupled with the fact that the decedent was
working in Tondo, a depressed area must have lowered his resistance to fight the
microbes causative of pneumonia. The risk of contracting the said disease, therefore
was increased by his working conditions, thereby satisfying an additional condition
for compensability.

42. Meez v. Employees Compensation Commission

MEEZ V. EMPLOYEES COMPENSATION COMMISSION
97 SCRA 87
MAKASIAR, J.
FACTS
1. Gloria Meez was a public school teacher. She was assigned to Raja Soliman High
School in Tondo-Binondo, Manila.
2. She retired on August 31, 1975 under the disability retirement plan at the age of 54
years after 32 years of teaching due to rheumatoid arthritis and pneumonitis.
3. Petitioner filed a claim for disability benefits with the GSIS. GSIS denied the claim
on the ground that petitioners ailments are not occupational diseases taking into
consideration the nature of her particular work.
4. ECC affirmed the denial of the claim by GSIS. It contended that Meezs
employment has nothing to do with the development of her disabling disease. They
are not listed as occupational disease as to merit compensation under the Labor
Code.
5. Petitioner however claims that she contracted the pneumonitis and/or bronchiectasis
with hemoptysis and rheumatoid arthritis on January 27, 1975 after wetting and
chilling during the course of employment which are permanent and recurring in
nature and work-connected. They arose in the course of her employment and were
aggravated by the condition and nature of her work.
ISSUES
Whether or not the illness of the petitioner may be considered occupational diseases.
HELD
YES. For an illness to be compensable, it must either be:
1. An illness definitely accepted as an occupational disease.
2. An illness caused by employment subject to proof by the employee that the risk of
contracting the same is increased by working conditions.
An occupational disease is one which results from the nature of the employment and by
nature is meant conditions to which all employees of a class are subject and which produce
the disease as a natural incident of a particular occupation and attach to that occupation a
hazard which distinguishes it from the usual run of occupations and is in excess of the
hazard attending the employment in general.
Rheumatoid arthritis and pneumonitis can be considered occupational diseases. All public
school teachers are subject to emotional strains and stresses, dealing as they to with
intractable teenagers, especially young boys and harassed as they are by various extra-
curricular or non-academic assignments, aside from preparing lesson plan until late at night,
if they are not badgered by very demanding superiors.
In her work, the petitioner also has to contend with the natural elements like the inclement
weather heavy rains, typhoons as well as dust and disease-ridden surrounding
peculiar to an insanitary slum area.
These unwholesome conditions are normal and consistently present in or are hazards
peculiar to the occupation of a public high school teacher.
But even if rheumatoid arthritis and pneumonitis are not occupational diseases, there is
ample proof that petitioner contracted such ailments by reason of her occupation as a public
high school teacher due to her exposure to the adverse working conditions above-
mentioned.

43. Clemente v. GSIS

CLEMENTE V. GSIS
152 SCRA 501
GUTIERREZ, JR., J.
FACTS
1. Pedro Clemente was a janitor of the Department of Health for 10 years.
2. He was assigned at Ilocos Norte Skin Clinic, Laoag City.
3. On November 3 to 14, 1976, he was hospitalised at the Central Luzon Sanitarium,
Tala Sanitarium in Caloocan City due to his ailment of nephritis. He was also found
to be suffering from such ailments as portal cirrhosis and leprosy also known as
Hansens Disease.
4. On November 14, 1976, he died of uremia due to nephritis.
5. His widow filed a claim for employees compensation under the Labor Code but the
same was denied by GSIS on the ground that the ailments of her husband are not
occupational diseases taking into consideration the nature of his work and were not
in the lease causally related to his duties and conditions.
6. Petitioner contended that the ailments of her husband were contracted in the course
of employment and were aggravated by the nature of his work. Being a janitor of
Ilocos Norte Skin Clinic, her husband worked in direct contact with people suffering
from different skin diseases and was exposed to obnoxious dusts and other dirt
which contributed to his ailment of Hansens disease.
7. The ECC affirmed this denial of the claim by GSIS. It contended that the decision of
GSIS was anchored upon the findings that the ailments were not listed as occupation
diseases and that there was no substantial evidence of causal connections.
ISSUES
1. What is the quantum of proof required in claims for compensation?
2. Was the disease of the decedent occupation and thus compensable?
HELD
1. Strict rules of evidence are not applicable in claims for compensation. The degree of
proof required under PD 626 is merely substantial evidence, which means such
relevant evidence as a reasonable mind might accept as adequate to support a
conclusion. The claimant must show, at least, by substantial evidence that the
development of the disease is brought largely by the conditions present in the nature
of the job. What the law requires is a reasonable work-connection and not a direct
causal relation. It is enough that the hypothesis on which the workmens claim is
bases is probable. Medical opinion to the contrary can be disregarded especially
where there is some basis in the facts for inferring a work-connection. Probability
and not certainty is the touchstone.
2. YES. The major ailments of the deceased could be traced to bacterial and viral
infections. In the case of leprosy, it is known that the source of infection is the
discharge from lesions of persons with active cases. It is believed that the bacillus
enters the body through the skin or through the mucous membrane of the nose and
throat.
The husband of the petitioner worked in a skin clinic. As a janitor of the skin clinic,
he was exposed to different carriers of viral and bacterial diseases. He had to clean
the clinic itself where patients with different illnesses come and go. He had to put in
order the hospital equipments that had been used. He had to dispose of garbage
and wastes that accumulated in the course of each working day. He was the
employee most exposed to the dangerous concentration of infected materials and
not being a medical practitioner, least likely to known how to avoid infection. It is
therefore not unreasonable to conclude that Mr. Clementes working conditions
definitely increased the risk of his contracting the diseases.

44. Dabatian v. Government Service Insurance System

DEBATIAN V. GOVERNMENT SERVICE INSURANCE SYSTEM
149 SCRA 123
GANCAYCO, J.
FACTS
1. Sigfredo Dabatian was employed as a Garbage Truck Driver in the General Services
Department of the City Government of Cagayan de Oro City.
2. He was usually assigned mostly in the night shift. At the time of his death, his shift
started from 10:00 PM to 6:00 AM.
3. Dabatian was a heavy coffee drinker which was his way of warding off sleepiness.
4. He was observed to have been getting paler and weaker while at work until the time
he collapsed.
5. Despite hospitalization, Dabatian died two weeks after he collapsed.
6. When his widow, Hilaria Dabatian filed a claim from GSIS, the same was denied on
the ground that the decedents ailment, Peptic Ulcer, is not an occupational disease
as listed under the present law on compensation.
7. Petitioner argues that the decedents predisposition to drinking coffee heavily
aggravated his contraction of the disease resulting to his death. Petitioners
argument is hinged on the presumption of compensability and principle of
aggravation as sufficient ground for entitlement under the Workmens Compensation
Act.
ISSUE
Whether or not under the premises the death of Sigfredo Dabation is compensable.
HELD
NO. Petitioner died on July 3, 1976 when the old compensation law had already been
abrogated. The present Labor Code as amended, abolished the presumption of
compensability and the rule on aggravation of illness caused by the nature of employment,
the reason being to restore a sensible equilibrium between the employers obligation to pay
workmens compensation and the employees right to receive reparation for work
connected death or disability.
Under the present law, in order for the employee to be entitled to sickness or death benefits,
the sickness or death resulting therefrom must be or must have resulted from either:
a) any illness definitely accepted as an occupational disease listed by the Commission;
or
b) any illness caused by employment subject to proof that the risk of contracting the
same is increased by working conditions.
Since peptic ulcer is not included in the list of occupational diseases as drawn up by the
Commission, then petitioner has the burden of proving that the nature of her husbands work
increased the risk of contracting the disease.
Aside from the undisputed fact that the diseased is a heavy coffee drinker, which was his
way of warding off sleepiness, no evidence was ever adduced by petitioner to bolster the
theory that her husbands work increased the risk of contracting the ailment.
Being a heavy coffee drinker may have aggravated his peptic ulcer, but, aggravation of an
illness is no longer a ground for compensation under the present law.

45. Villones v. ECC

VILLONES V. ECC
92 SCRA 320
MAKASIAR, J.
FACTS
1. Rolando Villones was employed as a secondary public school teacher assigned at
Dayhagan Barrio Highschool in Bongabon, Oriental Mindoro from July 3, 1972 up to
the time of his death on September 2, 1975.
2. He died of pulmonary tuberculosis.
3. When his father filed a claim with the GSIS together with the following documents:
a. Medical certificate showing that the deceased was on sick leave from
December 4 to 20, 1972 due to influenza.
b. Medical certificate issued by Dr. Fernando B. Viloria, Municipal Health Officer
of Bongabon certifying that he examined Rolando Villones on July 19, 1972
and found him to be physically and mentally fit for employment.
c. A certification from the principal to the effect that the actual duties of the
deceased were teaching secondary school subjects such as chemistry,
science, history and English. He also led students in other extra-curricular
activities.
4. GSIS denied the claim on the ground that although pulmonary tuberculosis is listed
as an occupational diseases, the petitioner failed to satisfy other conditions in order
to be compensable. According to GSIS, for it to be compensable, the employee
manifesting this disease should have an occupation involving close and frequent
contact with a source or sources of tuberculosis infection by reason of employment:
(a) in the medical treatment or nursing of a person suffering from tuberculosis; (b) as
a laboratory worker, pathologist or post mortem worker.
5. The ECC affirmed this decision of the GSIS.
ISSUES
1. Whether or not the death of Villones from pulmonary tuberculosis is compensable.
2. Whether or not the provisions of the Workmens Compensation Act is applicable in
this case.
HELD
1. YES. Records reveal that prior to the employment of the deceased, he was
physically and mentally fit to perform his duties. While he was employed as a
teacher, he went on sick leave for 16 days. His physician diagnosed the sickness as
influenza. Considering however the medical facilities in municipal health centers, it is
possible that what was diagnosed as influenza was actually pulmonary tuberculosis
in its incipient stage, which may not be easily detected by physical examination but
by extensive x-ray. Tuberculosis is not an instantaneous disease, it is an
imperceptible germ disease that feeds on the lungs whose presence in the body
cannot be easily discerned and its incipient stage may not be readily discovered.
Considering the nature of the deceaseds employment as certified by the principal, it

is not surprising that he contracted tuberculosis so that only after 5 months employed
as a teacher, he was forced to go on sick leave by reason of the aforesaid illness.
When he was able to resume work, he was again exposed to the same working
conditions thus aggravating his illness until he suddenly died of severe hemoptysis
due to PTB.
The Court has consistently held that the disease of tuberculosis is an occupational
disease or work-connected in such occupations as that of teacher, labourer, driver,
land inspector and such other occupations, hence compensable.
2. In the instant case, the cause of action accrued as early as December 4, 1972 when
Rolando Villones contracted his illness and continued to run until September 2, 1975
when he died by reason thereof; hence the cause of action accrued before the

effectivity of the New Labor Code. The governing law in the prosecution of the cause
of action which accrued of said cause of action. Since the Workmens
Compensation Act was then in full force and effect, then it should govern in the case
at bar.
It must be pointed out that as early as December 4 to 20, 1972, the deceased was
already entitled to disability benefits under Sec. 14 of the Workmens Compensation
Act because his illness prevented him from reporting to his work for more than 3
days and under such a situation, his employer was obligated under Sec. 37 to file a
notice of illness with the Workmens Compensation Commission and to manifest its
intention of whether or not to controvert his right to compensation.
Failure to comply with said sections constitutes a renunciation of the employers right
to controvert the claim resulting in the waiver of all its non-jurisdictional defenses,
such as non-compensability of the claim.

46. Rodriguez v. ECC

RODRIGUEZ V. ECC
178 SCRA 1989
REGALADO, J.
FACTS
1. Hector Rodriguez was a public school teacher assigned at Salaan Elementary
School in Mangaldan, Pangasinan.
2. On November 19, 1975, he went on sick leave and was hospitalised at Pangasinan
Provincial Hospital after he complained of severe stomach pains accompanied by
nausea and vomiting. He was later diagnosed to have an Intestinal Lipomatis of the
Large Colon with Obstruction of the Ascending Colon.
3. He underwent surgery but the same was unsuccessful. He died on December 2,
1975.
4. When his widow filed a claim with GSIS, the same was denied. GSIS contended that
the nature of the deceased duties as a teacher could not have directly caused his
ailment which eventuated in his subsequent death.
5. The ECC affirmed the decision of the GSIS.
6. Petitioner does not dispute the fact that the principal duties of her husband as a
classroom teacher alone would not have any connection with the disease. However,
she posits that the deceaseds auxiliary activities as a classroom teacher directly
affected his physical consatitution and caused him to have sustained some trauma in
his abdominal cavity and other parts of the body.
ISSUE
Whether or not the death of the deceased caused by Intestinal Lipomatis of the Large Colon
with Obstruction of the Ascending Colon, is compensable.
HELD
NO. Claims on death benefits under Art. 194 must result from an occupational disease. A
compensable disease means any illness accepted and listed by the ECC or any illness
caused by the employment subject to proof by the employee that the risk of contracting the
same was increased by the working conditions.
If the disease is listed in Annex A, no proof of causation is required.
If it is not so listed, it has been held that the employee, this time assisted by his employer, is
required to prove, a positive proposition, that is, that the risk of contracting the disease is
increased by working conditions.
Proof of direct causal relation is indispensably required. It is enough that the claimant
adduces proof of reasonable work connection, whereby the development of the disease was
brought about largely by the conditions present in the nature of the job. Strict rules of
evidence, which has been held to be such relevant evidence as a reasonable mind might
accept as sufficient to support a conclusion.
The circumstances alleged by the petitioner and the evidence she presented are not enough
to discharge the required quantum of proof, liberal as it is. There is no clear evidence as to
when the diseased commenced and supervened; the tumors which developed in the
deceaseds colon may have been growing for many years even before he was employed as
a teacher. The trauma that was supposed to have caused or at least contributed to the
disease was neither satisfactorily clarified nor adequately proved.

47. Raro v. Employees Compensation Commission

RARO V. EMPLOYEES COMPENSATION COMMISSION
172 SCRA 845
GUTIERREZ, JR., J.
FACTS
1. Zaida Raro was in perfect health when employed as clerk by the Bureau of Mines
and Geo-Sciences at the Regional Office in Daet, Camarines Sur on March 17,
1975.
2. Four years later, she began suffering from severe and recurrent heahaches coupled
with blurring of visions.
3. She was diagnosed at the Makati Medical Center to be suffering from brain tumor.
By that time her memory, sense of time and reasoning power have been lost.
4. A claim for disability benefits with GSIS was denied because there was no proof that
the disease is work-connected.
5. Petitioner contend on the other hand that if a claimant cannot prove the necessary
work connection because the causes of the disease are still unknown, it must be
presumed that working conditions increased the risk of contracting the ailment.
ISSUES
1. Whether brain tumor which causes are unknown but contracted during employment
is compensable under the present compensation laws.
2. Whether the presumption of compensability is absolutely inapplicable under the
present compensation laws when the disease is not listed as occupational disease.
HELD
1. NO. The first thing that stands in the way of this petition is the law itself. The law, as
it now stands requires the claimant to prove a positive thing that the illness was
caused by employment and the risk of contracting the disease is increased by
working conditions. To say that since proof is not available (since medical science
cannot positively identify the causes of various types of cancer), therefore the trust
fund has the obligation to pay is contrary to the legal requirement that proof must be
adduced. The existence or non-existence of proof cannot be presumed.
2. YES. The new law discarded the concepts of presumption of compensability and
aggravation and substituted a system based on social security principles. The
intent was to restore a sensible equilibrium between the employers obligation to pay
workemens compensation and the employees right to receive reparation for work-
connected or disability.
Instead of an adversarial contest by the worker or his family against the employer,
we nolw have a social insurance scheme where regular premiums are paid by the
employers to a trust fund and claims are pain from the trust fund to those who can
prove entitlement. It is now the trust fund and not the employer which suffers if
benefits are paid to claimants who are not entitled under the law. If diseases not
intended by the law to be compensated are inadvertently or recklessly included, the
integrity of the State Insurance Fund is endangered. Compassion for the victims of
diseases not covered by the law ignores the need to show a greater concern for the
trust fund to which tens of millions of workers and their families look for
compensation whenever covered accidents, diseases and deaths occur.

48. Mabuhay Shipping Services, Inc. v. NLRC

MABUHAY SHIPPING SERVICES, INC. V. NLRC
193 SCRA 141
GANCAYCO, J.
FACTS
th
1. Romulo Sentina was hired as 4 Engineer by Mabuhay Shipping Services for and in
behalf of Skippers Maritime Co., Ltd. to work aboard the M/V Harmony I for a period
of 1 year.
2. On January 16, 1988, while the vessel was docked alongside Drapetona Pier,
Piraeus, Greece, Sentina arrived aboard the ship from the shore visibly drunk.
3. He went to the messhall and took an axe and challenged those who are eating there.
4. He was pacified by his shipmates who led him to his cabin. However, he later went
out and became violent.
5. He smashed and threw a cup towards the head to an oiler, Emmanuel Ero. Ero
touched his head and noticed blood. This infuriated Ero which led to a fight between
the two.
6. Sentina was taken to the hospital where he passed away on January 17, 1988.
7. Cecilia Sentina filed a complaint against the petitioners with the POEA for payment
of death benefits, burial expenses, unpaid salaries on board and overtime pay with
damages.
8. POEA ordered the petitioners to pay the claim.
9. Petitioners appealed to the NLRC although such appeal was dismissed.
ISSUE
Is the employer exempted from liability in a case of one who ran amuck or who in the state
of intoxication provoked a fight as a result of which he was killed?
HELD
YES. The mere death of the seaman during the term of his employment does not
automatically give rise to compensation. The circumstances which led to the death as well
as the provisions of the contract, and the right and obligation of the employer and seaman
must be taken into consideration, in consonance with the due process and equal protection
clauses of the Constitution. There are limitations to the liability to pay death benefits.
When the death of the seaman resulted from a deliberate or wilful act on his own life, and it
is directly attributable to the seaman, such death is not compensable. No doubt a case of
suicide is covered by this provision.
By the same token, when as in this case the seaman, in a state of intoxication, ran amuck,
or committed an unlawful aggression against another, inflicting injury on the latter, so that in
his own defense the latter fought back and in the process killed the seaman, the
circumstances of the death of the seaman could be categorized as a deliberate and wilful
act on his own life directly attributable to him.

49. Ysmael Maritime Corporation v. Avelino

YSMAEL MARITIME CORPORATION V. AVELINO
151 SCRA 333
FERNAN, J.
FACTS
1. On December 22, 1971, Rolando Lim, a licensed second mate, died when the vessel
he was on board ran aground and sank near Sabtan, Batanes.
2. The vessel was owned by petitioner Ysmael Maritime Corporation.
3. The parents of the deceased claiming that the untimely death of their son was due to
the negligence of the petitioner, sued the petitioner in the CFI for damages.
4. By way of affirmative defense, petitioner claimed that the private respondents had
already been compensated by the Workmans Compensation Commission (WCC) for
the same incident, for which reason they are now precluded from seeking other
remedies against the same employer under the Civil Code.
ISSUE
Whether the compensation remedy under the Workmens Compensation Act (WCA), and
now under the Labor Code, for work-connected death or injuries sustained by an employee,
is exclusive of the other remedies under the Civil Code.
HELD
In the recent case of Floresca v. Philex Mining Company, the Court was confronted with
three divergent opinion on the exclusivity rule.
One view is that the injured employee or his heirs, in case of death, may initiate an action to
recover damages (not compensation under the Workmans Compensation Act) with the
regular courts on the basis of negligence of the employer pursuant to the Civil Code.
Another view, is that the remedy of an employee for work-connected injury or accident is
exclusive in accordance with Section 5 of WCA.
The third view is that the action is selective and the employee or his heirs have a choice of
availing themselves of the benefits under the WCA or of suing in the regular courts under
the Code for higher damages from the employer by reason of his negligence. But once the
election has been exercised, the employee or his heirs are no longer free to opt for the other
remedy.
This latter view was adopted by the Court in Floresca v. Philex Mining Company. In doing
so, the Court rejected the doctrine of exclusivity of the rights and remedies granted by the
WCA.
As thus applied to the case at bar, respondent Lim spouses cannot be allowed to maintain
their present action to recover additional damages against petitioner under the Civil Code.
In open court, respondent admitted that they had previously filed a claim for death benefits
with the WCC and had received the compensation payable to them under the WCA. It is
therefore clear that thew respondents had not only opted to recover under the Act but they
had also been duly paid. At the very least, a sense of fair play would demand that if a
person entitled to a choice of remedies made a first election and accepted the benefits
thereof, he should no longer be allowed to exercise the second option. Having staked his
fortunes on a particular remedy, he is precluded from pursuing the alternate course, at least
until the prior claim is rejected by the Compensation Commission.

50. Vicente v. Employees Compensation Commission

VICENTE V. EMPLOYEES COMPENSATION COMMISSION
193 SCRA 190
SARMIENTO, J.
FACTS
1. Domingo Vicente was formerly employed as a nursing attendant at the Veterans
Memorial Medical Center.
2. At the age of 45, after having rendered more than 25 years of government service,
he applied for optional retirement under the provisions of Sec. 12(c) of RA 1616,
giving his reason therefore his inability to continue working as a result of his physical
disability.
3. The petitioner likewise filed with the GSIS an application for income benefits claim
for payment under PD 626.
4. The petitioner submitted a Physicians Certification wherein his attending doctor had
dignosed him as suffering: Osteoarthritis multiple, Hypertensive Cardiovascular
Disease, Cardiomegaly, and Left Venticular Hypertrophy and classified him as being
under permanent total disability.
5. The GSIS granted the claim but only for permanent partial disability compensation or
for a period of 19 months. The petitioner was granted the equivalent of an additional
4 months benefits as a consequence of his motion for reconsideration.
6. Still unsatisfied, the petitioner again sent a letter to the GSIS Disability
Compensation Department Manager insisting that he should be compensated no
less than for permanent total disability.
7. The petitioners request was denied. He then elevated the case to the ECC which
however dismissed the petitioners appeal.
ISSUE
Does the petitioner suffer permanent total disability as he claims or from permanent partial
disability as the respondent Commission would have the Court believe?
HELD
The petitioner is suffering from permanent total disability. Employees Disability under the
Labor Code is classified into 3 distinct categories:
a. Temporary total disability if as a result of the injury or sickness the employee is
unable to perform any gainful occupation for a continuous period not exceeding 120
days except as otherwise provided in Rule X of the Amended Rules on Employees
Compensation.
b. A disability is total and permanent if a result of the injury or sickness the employee
is unable to perform any gainful occupation for a continuous period exceeding 120
days except as otherwise provided for in Rule X of the Amended Rules on
Employees Compensation.
c. A disability is partial permanent if as a result of the injury or sickness the
employee suffers a permanent partial loss of use of any part of his body
Permanent total disability invariably results in an employees loss for work or inability to
perform his usual work. Permanent partial disability, on the other hand, occurs when an
employee loses the use of any particular anatomical part of his body which disables him to
continue with his former work. The test of whether or not an employee suffers from
permanent total disability is a showing of the capacity of the employee to continue
performing his work notwithstanding the disability he incurred. Thus, if by reason of the
injury or sickness he sustained, the employee is unable to perform his customary job for
more than 120 days and he does not come within the coverage of Rule X of the Amended
Rules on Employees Compensability then the said employee undoubtedly suffers from
permanent total disability regardless of whether or not he loses the use of any part of his
body.
In the case at bar, the petitioners permanent total disability is established beyond doubt by
several factors and circumstances. Noteworthy is the fact that petitioners application for

optional retirement on the basis of his ailment has been approved. Considering that the
petitioner was only 45 years old when he retired and still entitled, under good behaviour, to
20 more years in service, the approval of his optional retirement application proves that he
was no longer fit to continue his employment. Further, the petitioners physician
categorically classified the petitioner under permanent total disability.

51. GSIS v. GSIS Employees Association

GSIS V. GSIS EMPLOYEES ASSOCIATION
157 SCRA 236
CORTES, J.
FACTS
1. On February 27, 1969, the President of the Philippines certified to the CIR a labor
dispute between the GSIS and GSISEA.
2. The CIR assumed jurisdiction and held conciliation and mediation proceedings
between the parties.
3. On March 5, 1965, it issued an order which provided that: any dismissal,
suspension, lay-off, transfer, demotion or promotion among the employees affected
by this Order shall be subject to prior approval by this Court before such action shall
be shall be implemented or effected by the Management of the GSIS.
4. The GSIS filed a Motion to Approve Resolution No. 611 relative to the appointment
of a number of employees.
5. Daniel Roberto, a ranking member of the union, filed a protest. Under Item 737 on
Resolution No. 611, it was shown that his appointment as Service Credit
Investigator was made effective January 1, 1968. He claims however that he has
been performing the task of credit investigator since July 1964, therefore his
appointment should be from that date.
6. The facts show that on July 1, 1964, Roberto was promoted to the position of Senior
Service Credit Adjudicator. However, on December 1965, an investigator was
promoted to another operating unit. Since then Roberto, who was still occupying the
position of Senior Service Credit Adjudicator has been performing investigation work
which is different from the work of an adjudicator.
7. The CIR issued an order approving Resolution No. 611 with the modification that the
appointment of Roberto as Service Credit Investigator should be from July 1964.
The CIR later modified this to December 1965.
ISSUE
1. Can CIR can interfere with management prerogatives?
2. Granted that it can interfere with management prerogatives, did it act with grave
abuse of discretion in this case?
HELD
1. YES. During the pendency of a labor dispute certified by the President to the
industrial court, the labor court may validly require that any contemplated transfer,
promotion, demotion or termination must first be submitted for approval. The CIR is
granted a great breadth of discretion in its quest for a solution to a labor problem.
Petitioner itself admits that the exercise by Management of its powers to effectuate
personnel movements, at least during the pendency of the dispute, may be subjected
to certain restrictions. It does not question the validity of the Order of March 5, 1969
requiring the GSIS to submit any dismissal, suspension, lay-off, transfer, demotion or
promotion for approval by the court. In fact, it impliedly admitted the validity of said
order when it filed its Motion dated September 15, 1970 asking the Court to approve
Resolution No. 611.
2. YES. The CIR in issuing the questioned orders, did so not to stop acts that mar the
process of solving the labor problem at hand. It issued its orders because (a)
Roberto had been recommended by his supervisors for promotion in July 1964 (b) It
would be unfair if the GSIS did not pay the salaries and emoluments of a credit
investigator, even as it enjoyed his services as such investigator (c) The CIR is
empowered to issue an order fixing the terms and conditions of employment which
includes the power of determining when an appointment should be made effective.
The first ground relied upon deserves scant considerations. Recommendations

cannot control the discretion of the appointing authority. The second ground likewise
deserves no merit. If accepted, it would authorize an employee, holding a specific

position, to perform tasks and responsibilities of another position so that he may be

justified in asking for the benefits and emoluments of the latter position. This
reasoning in effect deprives management of its power to determine its specific
manpower requirements in any given period of time.
The third reason fails to appreciate the legal significance of the power of the Court of
Industrial Relations to fix the terms and conditions of employment in compulsory
arbitration. Sec. 10 of the Industrial Peace Act provides that if no other solution to
the dispute is found, the Court may issue an order fixing the terms and conditions of
employment. The fixing by the Court of the terms and conditions of employment is
intended as a solution to the labor dispute which was certified by the President for
arbitration.
The CIRs power must be exercised with circumspection inasmuch as it interferes

with the management prerogative of controlling personnel movements. The only
reason why the CIRs approval is necessary before any intended transfer, promotion,
demotion or separation may be effected pending a dispute is to stop acts that mar
the process of solving the labor problem at hand; to produce the salutary effect of
preventing further deterioration of the already deteriorated relationship between the
employer and employees. Otherwise, the CIR would not be justified in interfering
with what, under normal circumstances, is purely a management prerogative.

52. Employees Compensation Commission v. Sanico

EMPLOYEES COMPENSATION COMMISSION V. SANICO
321 SCRA 268
KAPUNAN, J.
FACTS
1. Edmund Sanico was a former employee of John Gotamco and Sons. He was a
wood filer until he was separated from employment on December 31, 1991 due to
his illness.
2. His medical evaluation report dated September 31, 1991 showed that he was
suffering from pulmonary tuberculosis (PTB).
3. On November 9, 1994 Sanico filed with the SSS a claim for compensation benefits.
4. SSS denied the claim on the ground that of prescription. Under Art. 201 of the Labor
Code, a claim for compensation shall be given due course only when the same is
filed with the System 3 years from the time the cause of action accrued.
5. SSS reckoned the three-year prescriptive period on September 31, 1991 when PTB
first become manifest.
6. Sanico appealed to the ECC. ECC affirmed the decision of the SSS.
7. When the case was elevated to the CA, it ruled that the private respondents claim
was filed within the prescriptive period under the law. The CA reconciled Article 201
of the Labor Code with Art. 1144(2) of the Civil Code. Under the latter provision of
law, an action upon an obligation created by law must be filed within 10 years from
the time the cause of action accrues.
ISSUE
Whether or not private respondents claim for compensation benefit had already prescribed
when he filed his claim on November 9, 1994.
HELD
NO. The prescriptive period for filing compensation claims should be reckoned from the
time the employee lost his earning capacity, i.e. terminated from employment, due to his
illness and not when the same first became manifest. Indeed, a persons disability might not
emerge at one precise moment in time but rather over a period of time. In this case, private
respondents employment was terminated on December 31, 1991 due to his illness, he filed
his claim for compensation benefits on November 9, 1994. Accordingly, private
respondents claim was filed within the three-year prescriptive period under Art. 201 of the
Labor Code.

53. Principe v. Philippine-Singapore Transport Services, Inc.

PRINCIPE V. PHILIPPINE-SINGAPORE TRANSPORT SERVICES, INC.
176 SCRA 514
GANCAYCO, J.
FACTS
1. Abelardo Principe was the Chief Engineer of M/V OSAM Falcon, a commercial
vessel of Singaporean Registry owned by Chuan Hup Agencies Pte., Ltd., the
principal of Philippine-Singapore Transport Services, Inc.
2. The contract of employment provides among other things that the laws of Singapore
shall apply in cases of disputes arising out of the said appointment and that said
disputes are to be resolved by the courts of Singapore.
3. On September 15, 1982, while Principe was on duty in Malinto Field Palawan, he
suddenly contracted a serious illness which eventually resulted to his death.
4. Her widow filed a complaint against PSTSI with the Workers Assistance and
Adjudication Office of the POEA seeking the payment of death compensation
benefits and other benefits accruing to her deceased husband.
5. While the case was pending, a compromise agreement was entered into by the
parties. Petitioner executed a release and quitclaim in favor of PSTSI in
consideration for the sum of P7,000.00.
6. Consequently, the counsel of the petitioner with the latters consent, filed a motion to
dismiss and without prejudice as against Chuan Hup. POEA then issued an order
dismissing the complaint.
7. On April 21, 1986, petitioner filed with the POEA another claim for death benefits
against PSTSI, this time including Chuan Hup.
8. The new case was dismissed by POEA on the ground of res judicata and that the
present case is barred by prior judgment based on a compromise agreement in the
previous case.
ISSUE
Whether or not the release and quitclaim executed by the petitioner in favor of the employer
is valid.
HELD
NO. It is true that a compromise agreement once approved by the court has the effect of
res judicata between the parties and should not be disturbed except for vices of consent and
forgery. However, settled is the rule that the NLRC may disregard technical rules of
procedure in order to give life to the constitutional mandate affording protection to labor and
to conform to the need of protecting the working class whose inferiority against the employer
has always been earmarked by disadvantage.
The compromise agreement entered into by the petitioner in favor of PSTSI was not
intended to totally foreclose her right over the death benefits of her husband. First, the
motion to dismiss filed by the petitioner through her counsel before the POEA clearly reflects
the undertaking that the release is without prejudice as regards private respondent Chuan
Hup. It is surprising why both the POEA and the NLRC failed to consider this aspect in the
resolution of the second complaint by the petitioner PSTSI and Chuan Hup.
The second complaint was filed by the petitioner to enforce the joint and several liability of
PSTSI and Chuan Hup per joint affidavit of responsibility executed by the said parties in
entering into a principal-agent relationship after PSTSI failed to live up to its commitment to
assist petitioner in the recover of death compensation. The release is from any claim
against PSTSI. Chuan Hup is not a party thereto. He cannot be considered covered by the
release.
Even assuming for the sake of argument that the quitclaim had foreclosed petitioners right
over the death benefits of her husband, the fact that the consideration given in exchange
thereof was very much less than the amount the petitioner is claiming renders the quitclaim
null and void for being contrary to public policy.

Article 279 - Security of

Tenure

54. Rance v. NLRC

RANCE VS. NLRC
GR. NO. 68147; JUNE 30, 1988
FACTS
1. A Collective Bargaining Agreement was entered into on April 30, 1981 by and
between respondents Polybag Manufacturing Corporation and Polybag Workers
Union one of which is a stipulation that the former may dismiss any employee if they
would join other organizations aside from the existing one.
2. Petitioners were among the 125 members of the respondent union who were
expelled by the latter for disloyalty in that they allegedly joined the NAFLU a large
federation. Because of the expulsion, petitioners were dismissed by Respondent
Corporation. Petitioners sued for reinstatement and backwages stating their
dismissal was without due process. Losing both in the decisions of the Labor Arbiter
and the National Labor Relations Commission (NLRC), they elevated their cause to
the Supreme Court.
ISSUE
Whether or not the dismissal was due to a just cause.
HELD
The court held that the dismissal was made in bad faith. There was indeed connivance
between the corporation and the Union. The facts show that even if the workers sought help
from their union, they were disregarded by the leaders, who were not dismissed. Their
plights were not heeded by the corporation. Therefore, the main recourse is to seek help
from NAFLU, but such act did not authorize the federation to represent them. Nor is it an
act of disloyalty based on the CBA. The members did not even sign documents to prove the
allegations. In fact, it is there mere act of preserving what they have; their jobs. The state
recognizes the right of the workers to security of tenure and that they may not be terminated
without a just cause, which in this case is absent.

55. Kiamco v. NLRC

KIAMCO VS. NLRC
GR. NO. 129449; JUNE 29, 1999
FACTS
1. On 1 July 1992 private respondent PHILIPPINE NATIONAL OIL COMPANY (PNOC)
through its Energy Research and Development Division, later incorporated as
PNOC-EDC, hired petitioner Cisell Kiamco as a project employee in its Geothermal
Agro-Industrial Plant Project in Valencia, Negros Oriental.
2. The Contract of Employment stipulated among others that Kiamco was being hired
by the company as a technician for a period of five (5) months from 1 July 1992 to 30
November 1992, or up to the completion of the project, which ever would come first,
at a monthly salary of P3,500.00.
3. After the termination of the contract, a second one was entered into by the parties
containing basically the same terms and conditions except that the work-time was
reduced to twenty-two (22) days per month instead of twenty-six (26) days as
stipulated in the first contract. The period of employment was from 1 December 1992
to 30 April 1993.
4. Thereafter Kiamco was again re-hired, but the third contract was for six (6) months
spanning 1 May 1993 to 30 November 1993 with an increased salary of P3,850.00
per month.
5. Then, he received a memorandum about certain infractions he committed. He
explained his side, but a preventive suspension order was issued pending
investigation.
6. However, respondent contended that an investigation was not necessary since
Kiamco ceased to be an employee on November 30, 1993. He appealed before the
Labor Arbiter and NLRC but both were denied.
ISSUE
Was petitioner a regular employee entitled to notice and hearing prior to his termination?
HELD
Pursuant to the case of Violeta vs. NLRC, the principal test in determining if one is a regular
or project employee or not is whether they were assigned to carry out a "specific project or
undertaking," the duration and scope of which were specified at the time the employees
were engaged for that project. From the foregoing discussion it is apparent that Kiamco was
correctly labeled by the NLRC as a project employee. The basis for this conclusion is indeed
well-founded.
The three (3) Contracts of Employment entered into by Kiamco clearly established that he
was a project employee because (a) he was specifically assigned to work for a particular
project, which was the Geothermal Agro-Industrial Demonstration Plant Project of private
respondents, and (b) the termination and the completion of the project or undertaking was
determined and stipulated in the contract at the time of his employment. The argument of
private respondents that reinstatement and payment of back wages could not be made
since Kiamco was not a regular employee is apparently misplaced. As quoted above, the
normal consequences of an illegal dismissal are the reinstatement of the aggrieved
employee and the grant of back wages. These rights of an employee do not depend on the
status of his employment prior to his dismissal but rather to the legality and validity of his
termination.
The fact that an employee is not a regular employee does not mean that he can be
dismissed any time, even illegally, by his employer. It cannot be gainsaid that the dismissal
of an employee should be for any of the just and authorized causes enumerated in the
Labor Code. In this case, no proof or evidence was ever presented by private respondents
to justify his termination. They relied solely on the expiration of the employment contract to
legitimize his termination, instead of the administrative infractions he allegedly committed,
thus abandoning altogether any valid cause private respondents might have under the Labor

Code that could justify his dismissal. Furthermore, private respondents not only failed to give
a valid and justifiable reason to terminate Kiamco, but they also ignored the due process
requirement of the law. Due process in termination cases requires the employer to furnish
the worker or employee sought to be dismissed with two (2) written notices, i.e., a notice
which apprises the employee of the particular acts or omissions for which his dismissal is
sought, and a subsequent notice which informs the employee of the employer's decision to
dismiss him. The records show that the second written notice informing petitioner of his
actual dismissal was not complied with. When Kiamco returned to work he was bluntly
informed by private respondents that he was already terminated due to the expiration of his
employment contract. Indeed, the failure of private respondents to comply with the due
process requirement further tainted Kiamco's dismissal with irregularity.

56. Magtulac v. NLRC

MAGLUTAC VS. NLRC
GR. NO. 78345; SEPTEMBER 21, 1990
FACTS
1. Jose M. Maglutac was employed by Commart (Phils.), Inc. sometime in February,
1980 and rose to become the Manager of its Energy Equipment Sales.
2. On October 3, 1984, he received a notice of termination signed by Joaquin S.
Cenzon, Vice-President-General Manager and Corporate Secretary of CMS
International, a corporation controlled by Commart.
3. Thereafter, Jose Maglutac filed a complaint for illegal dismissal against Commart and
Jesus T. Maglutac, President and Chairman of the Board of Directors of Commart.
4. The complainant alleged that his dismissal was part of a vendetta drive against his
parents who dared to expose the massive and fraudulent diversion of company funds
to the company president's private accounts, stressing that complainant's efficiency
and effectiveness were never put to question when very suddenly he received his
notice of termination.
5. The Labor Arbiter and NLRC ruled that the termination was for a just cause, but the
latter deleted the amount of moral and exemplary damages. Hence, the instant
recourse then by both parties alleging grave abuse of discretion.
6. Complainant for his part, questioned the deletion of damages, and Jesus Maglutac
and Commart assailed the ruling that the dismissal was without cause.
ISSUE
Whether or not the dismissal was for a just cause which justifies the award of moral and
exemplary damages
HELD
In cases of illegal dismissal, in addition to the reliefs granted under the Labor Code, other
forms of damages under the Civil Code may be granted. From the findings of the Labor
Arbiter as affirmed by the NLRC, there is sufficient basis for an award of moral and
exemplary damages in the instant case. The alleged loss of trust and confidence on
complainant because of his family's establishment of MM International, a company allegedly
in direct competition with Commart, was belied by the findings of the Labor Arbiter. The
formation of another corporation by complainant's parents including the complainant himself
cannot be used to justify the termination of complainant. The formation came about before
complainant's parents brought a minority stockholders' derivative suit and in fact, this was
with the sanction of respondent company's president.

Article 280 Kinds of

Employment: Regular &
Casual Employment

57. De Leon v. NLRC

MOISES DE LEON VS. NATIONAL LABOR RELATIONS COMMISSION AND LA
TONDEA, INC.
GRN 70705 AUGUST 21, 1989
FERNAN, C.J :
FACTS
1. It appears that petitioner was employed by private respondent La Tondea, Inc. on
December 11, 1981, at the Maintenance Section of its Engineering Department in
Tondo, Manila. 1 His work consisted mainly of painting company building and
equipment, and other odd jobs relating to maintenance. He was paid on a daily basis
through petty cash vouchers.
2. In the early part of January, 1983, after a service of more than one (1) year,
petitioner requested from respondent company that he be included in the payroll of
regular workers, instead of being paid through petty cash vouchers.
3. Private respondent's response to this request was to dismiss petitioner from his
employment on January 16, 1983. Having been refused reinstatement despite
repeated demands, petitioner filed a complaint for illegal dismissal, reinstatement
and payment of backwages before the Office of the Labor Arbiter of the then Ministry
now Department of Labor and Employment.
4. Petitioner alleged that he was dismissed following his request to be treated as a
regular employee; that his work consisted of painting company buildings and
maintenance chores like cleaning and operating company equipment, assisting
Emiliano Tanque, Jr., a regular maintenance man; and that weeks after his
dismissal, he was re-hired by the respondent company indirectly through the Vitas-
Magsaysay Village Livelihood Council, a labor agency of respondent company, and
was made to perform the tasks which he used to do. Emiliano Tanque, Jr.
corroborated these averments of petitioner in his affidavit.
5. On the other hand, private respondent claimed that petitioner was not a regular
employee but only a casual worker hired allegedly only to paint a certain building in
the company premises, and that his work as a painter terminated upon the
completion of the painting job.
ISSUE
Whether or not the petitioner is a regular or casual employee.
HELD
The law on the matter is Article 281 of the Labor Code which defines regular and casual
employment as follows: Art. 281. Regular and casual employment. - The provisions of a
written agreement to the contrary notwithstanding and regardless of the oral agreements of
the parties, an employment shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or desirable in the usual business
or trade of the employer, except where the employment has been fixed for a specific project
or undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be performed is seasonal
in nature and the employment is for the duration of the season. An employment shall be
deemed to be casual if it is not covered by the preceding paragraph: Provided, That any
employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such actually exists.
The primary standard, therefore, of determining a regular employment is the reasonable

connection between the particular activity performed by the employee in relation to the usual
business or trade of the employer.
In the case at bar, the respondent company, which is engaged in the business of
manufacture and distillery of wines and liquors, claims that petitioner was contracted on a
casual basis specifically to paint a certain company building and that its completion
rendered petitioner's employment terminated. This may have been true at the beginning,

and had it been shown that petitioner's activity was exclusively limited to painting that certain
building, respondent company's theory of casual employment would have been worthy of
consideration. However, during petitioner's period of employment, the records reveal that
the tasks assigned to him included not only painting of company buildings, equipment and
tools but also cleaning and oiling machines, even operating a drilling machine, and other
odd jobs assigned to him when he had no painting job. A regular employee of respondent
company, Emiliano Tanque, Jr., attested in his affidavit that petitioner worked with him as a
maintenance man when there was no painting job. It is not tenable to argue that the painting
and maintenance work of petitioner are not necessary in respondent's business of
manufacturing liquors and wines, just as it cannot be said that only those who are directly
involved in the process of producing wines and liquors may be considered as necessary
employees. Otherwise, there would have been no need for the regular Maintenance Section
of respondent company's Engineering Department, manned by regular employees like
Emiliano Tanque, Jr., whom petitioner often worked with.

58. A.M. Oreta v. NLRC

A.M. ORETA & CO., INC. VS. NATIONAL LABOR RELATIONS
COMMISSION AND SIXTO GRULLA, JR.
GR NO 74004 AUGUST 10, 1989
MEDIALDEA, J
FACTS
1. Private respondent Grulla was engaged by Engineering Construction and Industrial
Development Company (ENDECO) through A.M. Oreta and Co., Inc. as a carpenter
in its project in Jeddah, Saudi Arabia.
2. The contract of employment, which was entered into on June 11, 1980 was for a
period of twelve (12) months. Respondent Grulla left the Philippines for Jeddah,
Saudi Arabia on August 5, 1980.
3. On August 15, 1980, Grulla met an accident which fractured his lumbar vertebrae
while working at the jobsite. He was rushed to the New Jeddah Clinic and was
confined there for twelve (12) days. On August 27, 1980, Grulla was discharged from
the hospital and was told that he could resume his normal duties after undergoing
physical therapy for two weeks.
4. On September 18, 1980, respondent Grulla reported back to his Project Manager
and presented to the latter a medical certificate declaring the former already
physically fit for work. Since then, he stated working again until he received a notice
of termination of his employment on October 9, 1980.
5. In December, 1981, respondent Grulla filed a complaint for illegal dismissal, recovery
of medical benefits, unpaid wages for the unexpired ten (10) months of his contract
and the sum of P1,000.00 as reimbursement of medical expenses against A.M.
Oreta and Company, Inc. and Engineering Construction and Industrial Development
Co. (ENDECO) with the Philippine Overseas and Employment Administration
(POEA).
6. The petitioner A.M. Oreta and Company, Inc. and ENDECO filed their answer and
alleged that the contract of employment entered into between petitioners and Grulla
provides, as one of the grounds for termination of employment, violation of the rules
and regulations promulgated by the contractor; and that Grulla was dismissed
because he has not performed his duties satisfactorily within the probationary period
of three months. Petitioner contends that the respondent Grulla was validly
dismissed because the latter was still a probationary employee; and that his
dismissal was justified on the basis of his unsatisfactory performance of his job
during the probationary period.
ISSUE
Whether or not petitioner is a regular employee.
Held:
Article 280 (formerly Article 281) of the Labor Code, as amended, provides: The provisions
of written agreement to the contrary notwithstanding and regardless of
the oral agreements of the parties, an employment shall be deemed to be regular where the
employee has been engaged to perform activities which are usually necessary or desirable
in the usual business or trade of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or termination
of which has been determined at the time of the engagement of the employment or where
the work or service to be performed is seasonal in nature and the employment is far the
duration of the season. An employment shall be deemed to be casual if it is not covered by
the preceding paragraph: Provided, that any employee who has rendered at least one year
of service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment shall
continue while such actually exists.
Petitioner admitted that respondent Grulla was employed in the company as a carpenter for
a period of twelve months before he was dismissed on October 9, 1980. A perusal of the
employment contract reveals that although the period of employment of respondent Grulla is

twelve (12) months, the contract period is renewable subject to future agreement of the
parties. It is clear from the employment contract that the respondent Grulla was hired by the
company as a regular employee and not just a mere probationary employee.

59. Ecal v. NLRC

ECAL V. NATIONAL LABOR RELATIONS COMMISSION
GR NO. 92777 MARCH 13, 1991
GANCAYCO, J.
FACTS
1. Isagani Ecal was an employee of Hi-Line sawmill.
2. On February 4, 1987, he tendered his resignation stating the following reasons: ako
po ay magreresign na sa aking trabaho bilang laborer sapagkat nakita ko na mas
malaki and kikitain kung mangongontrata na lamang.
3. Thereafter, Hi-Line does not choose the workers but merely accepts whoever may
be selected by Ecal.
4. Petitioners were not included in the payroll. Instead, a lump sum of P1,400.00 is
given to Ecal or his representative Solomon de los Santos, every four days, to cover
their wages for the period the petitioners divide among themselves.
5. Private respondents allege that Ecal customarily removes some of his laborers at the
Hi-Line sawmill and assigns them to other sawmill.
6. Petitioners worked the companys compound in Wakas, Bocaue, Bulacan at least
eight hours a day, seven days a week.
7. On June 6, 1987, the company unilaterally terminated the services of petitioners
without notice allegedly on the ground that its contract with Ecal has expired.
ISSUES
1. Whether or not Ecal is a labor only contractor.
2. Whether or not the petitioners are regular employees of Hi-Line.
HELD
1. YES. Isagani Ecal is a labor-only contractor, a mere supplier of manpower to Hi-
Line. Isagani was only a poor laborer at the time of his resignation who cannot even
afford to have his daughter treated for malnutrition. He resigned and became a
supplier of laborers for Hi-Line because he saw an opportunity for him to earn more
than what he was earning while still in the payroll of the company. At the same time,
he continued working for the company as laborer at the kiln drying section. He does
not have sufficient capital to invest in tools and machineries. Private respondents
however claim that the business contracted by Ecal did not require the use of tools,
equipment and machineries and the contracted task had to be executed in the
premises of Hi-Line where they use the machineries and equipment of the company
for the drying of lumber materials. Even the companys personnel officer Elizabeth
Natividad admitted that Ecal resigned in order to supply manpower to the company
on a task basis. By the very allegations of private respondents, it is quite clear that
Isagani Ecal only supplies man-power to Hi-Line within the context of labor-only
contracting as defined by law.
A finding that Isagani Ecal is a labor-only contractor is equivalent to finding that an

employer-employee relationship exist between the company and Ecal including the
latters contract workers, the relationship such as provided by the law itself.
2. YES. There is no question that the task performed by petitioners is directly-related to

the business of Hi-Line. Petitioners were assigned to sort out the lumber materials
whether wet or fresh kiln as to sizes and to carry them from the stockpile to the dryer
where they are loaded for drying after which they are unloaded. The work of
petitioners is an integral part of the operation of the sawmill of Hi-Line without which
production and company sales will suffer.

60. Magante v. NLRC

TELESFORO MAGANTE V. NATIONAL LABOR RELATIONS COMMISSION
G.R. NO. 74969 MAY 7, 1990
FERNAN, C.J.
FACTS
3. Private respondent Constress Philippines Inc. is engaged in the concrete structural
business. Petitioner Telesforo Magante, on the other hand, was employed by the
former as a carpenter from April 17, 1980 until his dismissal on March 6, 1982.
4. He earns three hundred pesos (P300.00), more or less, a week excluding allowance
and rendering about fourteen (14) hours of work daily from 7:00 in the morning to
10:00 in the evening.
5. His work involved the making of molds (forma or siding of cement post) for bridges,
buildings, charcoal builder sea file, and others. Petitioner was never assigned to
work outside the plant of private respondent.
6. Every three (3) months, petitioner was made to fill up and sign an employment
contract relating to a particular phase of work in a specific project. Allegedly, the
terms of the contract written in English were not understood by petitioner nor was the
same explained to him. The last hiring agreement entered into between petitioner
and private respondent was on December 7, 1981 which was to take effect on even
date with an agreed compensation of P21.36 a day.
7. On March 6, 1982, private respondent posted a notice of termination on its bulletin
board to take effect the following day, March 7, 1989, which included petitioner and
other employees as among those whose services were being terminated by private
respondent.
8. Petitioner was told that he cannot work anymore because he is already old, that his
contract had already expired and was not renewed being a project employee. The
termination of petitioner and his fellow workers was reported to the Ministry of Labor.
9. Consequently, petitioner filed a complaint with the then Ministry (now Department) of
Labor and Employment for illegal dismissal.
10. The Labor Arbiter rendered a decision founding for petitioner. The Labor Arbiter ruled
that petitioner is a regular worker, hence, entitled to reinstatement with full
backwages.
11. On appeal, the NLRC set aside the decision of the labor arbiter ruling that petitioner's
termination was due to the completion of the project for which he was hired. It held
that petitioner is a project employee within the purview of Policy Instructions No. 20,
a regulation intended for stabilizing employer-employee relations in the construction
industry.
ISSUE
Whether or not petitioner is a project employee as found by public respondent NLRC.
HELD
NO. Petitioner Telesforo Magante was a regular employee of private respondent. Article 281
of the Labor Code provides: The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreements of the parties, an employment shall
be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer
except where the employment has been fixed for a specific project or undertaking, the
completion or termination of which has been determined at the time of the engagement of
the employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season. An employment shall be deemed to be casual
if it is not covered by the preceding paragraph: Provided, that, any employee who has
rendered at least one year of service, whether such service is continuous or broken shall be
considered a regular employee with respect to the activity in which he is employed and his
employment shall continue while such actually exists.

Petitioner has established that since the very inception of his employment in 1980, he was
never deployed from project to project of private respondent but had been regularly
assigned to perform carpentry work under the supervision of a certain Bernardo Padaon
who, since 1964 until his resignation on January 2, 1982 worked for private respondent as
the supervisor of its Carpentry Department. This goes to show two things: that petitioner
was assigned to perform tasks which are usually necessary or desirable in the usual
business or trade of private respondent; and that said assignments did not end on a project
to project basis, although the contrary was made to appear by private respondent through
the signing of separate employment contracts allegedly for different projects because it is
indeed obvious that petitioner continued to perform the same kind of work throughout his
period of employment allegedly considered to have been done on a project to project basis.
Although petitioner had only rendered almost two years of service, nevertheless this should
not detract from his status of being a regular employee because as correctly stated by the
labor arbiter, the determining factor of the status of complainant- petitioner or any worker is
the nature of the work performed by the latter and the place where he performed his
assignment. Moreover, if petitioner were employed as a "project employee" private
respondent should have submitted a report of termination to the nearest public employment
office every time his employment is terminated due to completion of each construction
project, as required by Policy Instruction No. 20, which provides: Project employees are not
entitled to termination pay if they are terminated as a result of the completion of the project
or any phase thereof in which they are employed, regardless of the number of projects in
which they have been employed by a particular construction company. Moreover, the
company is not required to obtain a clearance from the Secretary of Labor in connection
with such termination. What is required of the company is a report to the nearest Public
Employment Office for statistical purposes. Throughout the duration of petitioner's
employment, there should have been filed as many reports of termination as there were
construction projects actually finished if it were true that petitioner Telesforo Magante was
only a project worker.

61. Beta Electric Corporation v. NLRC

BETA ELECTRIC CORPORATION V. NATIONAL LABOR RELATIONS COMMISSION
G.R. NO. 86408 FEBRUARY 15, 1990
SARMIENTO, J.:
FACTS
1. The petitioner hired the private respondent as clerk typist III effective December 15,
1986 until January 16, 1987, and was subsequently rehired on January 16, 1987 up
to February 15, 1987. On February 15, 1987, it gave her another extension up to
March 15, 1987. On March 15, 1987, it gave her a further extension until April 30,
1987. On May 1, 1987, she was given until May 31, 1987. On June 1, 1987, she was
given up to June 30, 1987.
2. Her appointments were covered by corresponding written contracts.
3. On June 22, 1987, her services were terminated without notice or investigation.
4. On the same day, she went to the labor arbiter on a complaint for illegal dismissal.
As the court has indicated, both the labor arbiter and the respondent National Labor
Relations Commission ruled for her.
5. The petitioner argues mainly that the private respondent's appointment was
temporary and hence she may be terminated at will.
ISSUE
Whether or not private respondent is temporary employee.
HELD
NO. The private respondent was to all intents and purposes, and at the very least, a
probationary employee, who became regular upon the expiration of six months. Under
Article 281 of the Labor Code, a probationary employee is "considered a regular employee"
if he has been "allowed to work after the probationary period." The fact that her employment
has been a contract-to- contract basis can not alter the character of employment, because
contracts can not override the mandate of law. Hence, by operation of law, she has become
a regular employee. In the case at bar, the private employee was employed from December
15, 1986 until June 22, 1987 when she was ordered laid off. Her tenure having exceeded six
months, she attained regular employment.

62. Kimberly Independent Labor Union v. Drilon

KIMBERLY INDEPENDENT LABOR UNION FOR SOLIDARITY, ACTIVISM AND
NATIONALISM- ORGANIZED LABOR ASSOCIATION IN LINE INDUSTRIES AND
AGRICULTURE (KILUSAN-OLALIA) V. HON. FRANKLIN M. DRILON
G.R. NO. L-77629 MAY 9, 1990
REGALADO, J.
FACTS
1. Kimberly-Clark Philippines, Inc. (KIMBERLY, for brevity) executed a three-year
collective bargaining agreement (CBA) with United Kimberly-Clark Employees Union-
Philippine Transport and General Workers' Organization (UKCEU-PTGWO) which
expired on June 30, 1986.
2. Within the 60-day freedom period prior to the expiration of and during the
negotiations for the renewal of the aforementioned CBA, some members of the
bargaining unit formed another union called "Kimberly Independent Labor Union for
Solidarity, Activism and Nationalism- Organized Labor Association in Line Industries
and Agriculture (KILUSAN-OLALIA).
3. On April 21, 1986, KILUSAN-OLALIA filed a petition for certification election in the
Ministry of Labor and Employment (MOLE). KIMBERLY and (UKCEU-PTGWO) did
not object to the holding of a certification election but objected to the inclusion of the
so-called contractual workers whose employment with KIMBERLY was coursed
through an independent contractor, Rank Manpower Company (RANK for short), as
among the qualified voters.
4. On June 2, 1986, Med-Arbiter Bonifacio Marasigan, who was handling the
certification election case, issued an order declaring those casuals who have worked
at least six (6) months as appearing in the payroll months prior to the filing of the
instant petition on April 21, 1986 as eligible to vote in the certification election.
5. During the pre-election conference, 64 casual workers were challenged by
KIMBERLY and (UKCEU-PTGWO) on the ground that they are not employees, of
KIMBERLY but of RANK.
6. It was agreed by all the parties that the 64 voters shall be allowed to cast their votes
but that their ballots shall be segregated and subject to challenge proceedings.
7. On July 2, 1986, KILUSAN-OLALIA filed with the med-arbiter a "Protest and Motion
to Open and Count Challenged Votes" on the ground that the 64 workers are
employees of KIMBERLY within the meaning of Article 212(e) of the Labor Code.
8. On July 7, 1986, KIMBERLY filed an opposition to the protest and motion, asserting
that there is no employer-employee relationship between the casual workers and the
company.
9. On November 13, 1986, then Minister Sanchez rendered a decision declaring that
the other casual employees not performing janitorial and yard maintenance services
were deemed labor-only contractual and since labor-only contracting is prohibited,
such employees were held to have attained the status of regular employees, the
regularization being effective as of the date of the decision.
10. On November 25, 1986, KIMBERLY flied a motion for reconsideration with respect to
the regularization of contractual workers.
ISSUE
Whether those engaged in janitorial or yard maintenance as well as the other casual
employees attained the status of regular employee on November 13, 1986.
HELD
YES. We find and so hold that the former labor minister gravely abused his discretion in
holding that those workers not engaged in janitorial or yard maintenance service attained
the status of regular employees only on November 13, 1986, which thus deprived them of
their constitutionally protected right to vote in the certification election and choose their
rightful bargaining representative.The Labor Code defines who are regular employees, as
follows: Art. 280. Regular and Casual Employment. The provisions of written agreement
to the contrary not withstanding and regardless of the oral agreements of the parties, an

employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or
trade of the employer, except where the employment has been fixed for a specific project or
under the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue
while such activity exists.
The law thus provides for two kinds of regular employees, namely:
1. those who are engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer; and
2. those who have rendered at least one year of service, whether continuous or broken,
with respect to the activity in which they are employed.
The individual petitioners herein who have been adjudged to be regular employees fall
under the second category. These are the mechanics, electricians, machinists machine
shop helpers, warehouse helpers, painters, carpenters, pipefitters and masons. It is not
disputed that these workers have been in the employ of KIMBERLY for more than one year
at the time of the filing of the Petition for certification election by KILUSAN-OLALIA. Owing
to their length of service with the company, these workers became regular employees, by
operation of law, one year after they were employed by KIMBERLY through RANK. While
the actual regularization of these employees entails the mechanical act of issuing regular
appointment papers and compliance with such other operating procedures as may be
adopted by the employer, it is more in keeping with the intent and spirit of the law to rule that
the status of regular employment attaches to the casual worker on the day immediately after
the end of his first year of service. To rule otherwise, and to instead make their
regularization dependent on the happening of some contingency or the fulfillment of certain
requirements, is to impose a burden on the employee which is not sanctioned by law.
That the first stated position is the situation contemplated and sanctioned by law is further
enhanced by the absence of a statutory limitation before regular status can be acquired by a
casual employee. The law is explicit. As long as the employee has rendered at least one
year of service, he becomes a regular employee with respect to the activity in which he is
employed. The law does not provide the qualification that the employee must first be issued
a regular appointment or must first be formally declared as such before he can acquire a
regular status. Obviously, where the law does not distinguish, no distinction should be
drawn.

63. Capule v. NLRC

CAPULE VS. NATIONAL LABOR RELATIONS COMMISSION
G.R. NO. 90653. NOVEMBER 12, 1990
GANCAYCO, J.
FACTS
1. Private respondent company is engaged in the manufacture of cultures milk which is
sold under the brand name "Yakult".
2. Petitioners were hired to cut cogon grass and weeds at the back of the factory
building used by private respondents.
3. They were not required to work on fixed schedule and they worked on any day of the
week on their own discretion and convenience.
4. The services of the petitioners were terminated by the private respondent on July 13,
1987.
5. Petitioners filed a complaint for illegal dismissal with the NLRC. The latter rendered
its decision in favor of petitioners, ruling that they were illegally dismissed and
ordered their reinstatement with full bakwages and without loss of seniority rights .
ISSUE
Whether or not petitioners are regular employees of private respondent
HELD
NO. the usual business or trade of private respondents is the manufacture of cultured milk.
The cutting of the cogon grasses in the premises of its factory is hardly necessary or
desirable in the usual business of the private respondents, indeed, it is alien thereto.
Thus, petitioners are casual employees who cannot be considered regular employees under
Article 280 of the Labor Code. Nevertheless, they maybe considered regular employees if
they have rendered services for at least one (1) year when, as in this case, they were
dismissed from their employment before the expiration of the one-year period. They cannot
lawfully claim that their dismissal was illegal. Indeed, private respondent had shown that the
services of the petitioners were found to be unsatisfactory, so, their termination.

Project Employment

64. Philippine National Construction Corporation v. NLRC

PHILIPPINE NATIONAL CONSTRUCTION CORPORATION V. NLRC
GR 85323, JUNE 20, 1989
GRIO, AQUINO, J.
FACTS
1. The private respondent was employed by PNCC as an oiler from November 4, 1973
until he was terminated on April 20, 1986, on the ground of completion of the project
to which he was assigned.
2. The private respondent, in his complaint for illegal dismissal, alleged that he was
discharged not for cause, but because the newly designated supervisor, Reynaldo
Bonifacio, wanted to put in his own man.
ISSUE
Whether the private respondent was a member of the work pool, therefore, considered a
regular employee (Art. 280, Labor Code), or a project employee, whose employment was
co-terminus with the projects to which he was assigned.
HELD
The private respondent was a member of the work pool and that he was illegally dismissed
from his job.
Members of a work pool from which a construction company draws its project employees, if
considered employee of the construction company while in the work pool, are non-project
employees or employees for an indefinite period. If they are employed in a particular project,
the completion of the project or any phase thereof will not mean severance of employer-
employee relationship.
Any employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to the activity
which he is employed and his employment shall continue while such actually exists. (Art.
280, Labor Code.)
A project employee is one whose "employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of the
nature and the employment is for the duration of the season." (Sec. 280, Labor Code;
Sandoval Shipping Inc. vs. NLRC, 136 SCRA 674.)
In finding that Porciuncula was a regular employee, the Labor Arbiter noted that it was the
petitioner's practice to rehire him after the completion of every project and this re-hiring
continued throughout Porciuncula's 13 years of employment in the company.
The Labor Arbiter also observed that the petitioner never reported the completion of its
projects and the termination of the employees (like Porciuncula) in its finished projects, to
the nearest Public Employment Office as required by Policy Instruction No. 20 of the
Secretary of Labor. In the case of Ochoco vs. NLRC, 120 SCRA 774, the failure of the
employer to report to the nearest employment office the termination of the workers
everytime it completed a project was considered by this Court as proof that they were not
project employees.

65. Cartagenas v. Romago Electric Company

CARTAGENAS V. ROMAGO ELECTRIC COMPANY
GR NO. 82973, SEPTEMBER 15, 1989
GRIO-AQUINO, J.
FACTS
1. Respondent Romago is a general contractor engaged in contracting and sub-
contracting of specific building construction projects or undertaking such as
electrical, mechanical and civil engineering aspects in the repair of buildings and
from other kindred services.
2. Individual complainants and Lawrence Deguit were temporarily laid-off by virtue of a
memorandum issued by the respondent. In said memorandum they were also
informed that a meeting regarding the resumption of operation will be held on July
16, 1986 and that they will be notified as to when they will resume work.
3. On July 28, 1986, complainants filed the instant case for illegal dismissal but before
the respondent could receive a copy of the complaint and the notification and
summons issued by the NLRC National Capital Region (actually received only on
August 22, 1986, page 4, records) individual complainants re-applied with the
respondent and were assigned to work with its project at Robinson-EDSA.
ISSUE
Whether the petitioners are project employees of the private respondent Romago Electric
Company, Inc., as found by the National Labor Relations Commission, or regular employees
as found by the Labor Arbiter.
HELD
As an electrical contractor, the private respondent depends for its business on the contracts
it is able to obtain from real estate developers and builders of buildings. Since its work
depends on the availability of such contracts or "projects," necessarily the duration of the
employment of its work force is not permanent but co-terminus with the projects to which
they are assigned and from whose payrolls they are paid. It would be extremely
burdensome for their employer who, like them, depends on the availability of projects, if it
would have to carry them as permanent employees and pay them wages even if there are
no projects for them to work on. We hold, therefore, that the NLRC did not abuse its
discretion in finding, based on substantial evidence in the records, that the petitioners are
only project workers of the private respondent

66. Maraquimot and Enero v. NLRC

MARAGUINOT AND ENERO V. NLRC
GR 120969 JANUARY 22, 1998
DAVIDE, JR. J.
FACTS
1. Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private
respondents on 18 July 1989 as part of the filming crew with a salary of P375.00 per
week. About four months later, he was designated Assistant Electrician with a weekly
salary of P400.00, which was increased to P450.00 in May 1990. In June 1991, he
was promoted to the rank of Electrician with a weekly salary of P475.00, which was
increased to P539.00 in September 1991.
2. Petitioner Paulino Enero, on his part, claims that private respondents employed him
in June 1990 as a member of the shooting crew with a weekly salary of P375.00,
which was increased to P425.00 in May 1991, then to P475.00 on 21 December
1991.
3. Petitioners' tasks consisted of loading, unloading and arranging movie equipment in
the shooting area as instructed by the cameraman, returning the equipment to Viva
Films' warehouse, assisting in the "fixing" of the lighting system, and performing
other tasks that the cameraman and/or director may assign.
4. Sometime in May 1992, petitioners sought the assistance of their supervisors, Mrs.
Alejandria Cesario, to facilitate their request that private respondents adjust their
salary in accordance with the minimum wage law.
5. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario would agree
to increase their salary only if they signed a blank employment contract.
6. As petitioners refused to sign, private respondents forced Enero to go on leave in
June 1992, then refused to take him back when he reported for work on 20 July
1992.
7. Meanwhile, Maraguinot was dropped from the company payroll from 8 to 21 June
1992, but was returned on 22 June 1992.
8. He was again asked to sign a blank employment contract, and when he still refused,
private respondents terminated his services on 20 July 1992. Petitioners thus sued
for illegal dismissal before the Labor Arbiter.
9. The Labor Arbiter ruled that complainants are the employees of the respondents.
The producer cannot be considered as an independent contractor but should be
considered only as a labor-only contractor and as such, acts as a mere agent of the
real employer, the herein respondent. Respondents even failed to name and specify
who are the producers. Also, it is an admitted fact that the complainants received
their salaries from the respondents. The Labor Arbiter also declared that
complainants were illegally dismissed.
10. Private respondents appealed to the NLRC reversing the Labor Arbiter, then
concluded that complainants were project employees.
ISSUE
Are petitioners project employees?
HELD
Private respondents contend that petitioners were project employees whose employment
was automatically terminated with the completion of their respective projects. Petitioners
assert that they were regular employees who were illegally dismissed.
It may not be ignored, however, that private respondents expressly admitted that petitioners
were part of a work pool; and, while petitioners were initially hired possibly as project
employees, they had attained the status of regular employees in view if VIVA's conduct.
A project employee or a member of a work pool may acquire the status of a regular
employee when the following concur:
1) There is a continuous rehiring of project employees even after cessation of a project; and

2) The tasks performed by the alleged "project employee" are vital, necessary and
indispensable to the usual business or trade of the employer.
However, the length of time during which the employee was continuously re-hired is not
controlling, but merely serves as a badge of regular employment.
In the instant case, the evidence on record shows that petitioner Enero was employed for a
total of two (2) years and engaged in at least eighteen (18) projects, while petitioner
Maraguinot was employed for some three (3) years and worked on at least twenty-three (23)
projects. Moreover, as petitioners' tasks involved, among other chores, the loading,
unloading and arranging of movie equipment in the shooting area as instructed by the
cameramen, returning the equipment to the Viva Films warehouse, and assisting in the
fixing of the lighting system, it may not be gainsaid that these tasks were vital, necessary
and indispensable to the usual business or trade of the employer. As regards the
underscored phrase, it has been held that this is ascertained by considering the nature of
the work performed and its relation to the scheme of the particular business or trade in its
entirety.
Truly, the cessation of construction activities at the end of every project is a foreseeable
suspension of work. Of course, no compensation can be demanded from the employer
because the stoppage of operations at the end of a project and before the start of a new one
is regular and expected by both parties to the labor relations. Similar to the case of regular
seasonal employees, the employment relation is not severed by merely being suspended.
The employees are, strictly speaking, not separated from services but merely on leave of
absence without pay until they are reemployed. Thus we cannot affirm the argument that
non-payment of salary or non-inclusion in the payroll and the opportunity to seek other
employment denote project employment.
While Lao admittedly involved the construction industry, to which Policy Instruction No.
20/Department Order No. 19 regarding work pools specifically applies, there seems to be
no impediment to applying the underlying principles to industries other than the construction
industry. Neither may it be argued that a substantial distinction exists between the projects
undertaken in the construction industry and the motion picture industry. On the contrary, the
raison d' etre of both industries concern projects with a foreseeable suspension of work.
At this time, we wish to allay any fears that this decision unduly burdens an employer by
imposing a duty to re-hire a project employee even after completion of the project for which
he was hired. The import of this decision is not to impose a positive and sweeping obligation
upon the employer to re-hire project employees. What this decision merely accomplishes is
a judicial recognition of the employment status of a project or work pool employee in
accordance with what is fait accompli, i.e., the continuous re-hiring by the employer of
project or work pool employees who perform tasks necessary or desirable to the employer's
usual business or trade. Let it not be said that this decision "coddles" labor, for as Lao has
ruled, project or work pool employees who have gained the status of regular employees are
subject to the "no work-no pay" principle.

Seasonal Employment

67. Mercado, Sr. v. NLRC

MERCADO SR. VS. NLRC
G.R. NO 79869, SEPTEMBER 5, 1991
PADILLA, J.
FACTS
1. Petitioners alleged in their complaint that they were agricultural workers utilized by
private respondents in all the agricultural phases of work on the 7 1/2 hectares of ace
land and 10 hectares of sugar land owned by the Aurora L. Cruz, Francisco Borja,
Leticia C. Borja and Sto. Nio Realty Incorporated.
2. Fortunato Mercado, Sr. and Leon Santillan worked in the farm of private respondents
since 1949, Fortunato Mercado, Jr. and Antonio Mercado since 1972 and the rest of
the petitioners since 1960 up to April 1979, when they were all allegedly dismissed
from their employment.
3. Private respondent Aurora Cruz in her answer to petitioners' complaint denied that
said petitioners were her regular employees and instead averred that she engaged
their services, through Spouses Fortunato Mercado, Sr. and Rosa Mercado, their
"mandarols", that is, persons who take charge in supplying the number of workers
needed by owners of various farms, but only to do a particular phase of agricultural
work necessary in rice production and/or sugar cane production, after which they
would be free to render services to other farm owners who need their services.
4. Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private respondents
and held that petitioners were not regular and permanent workers of the private
respondents, for the nature of the terms and conditions of their hiring reveal that they
were required to perform phases of agricultural work for a definite period of time after
which their services would be available to any other farm owner.
5. The NLRC ruled in favor of private respondents affirming the decision of the
respondent Labor Arbiter, with the modification of the deletion of the award for
financial assistance to petitioners.
ISSUE
Whether or not petitioners employment that continued for so many years could be
considered regular and permanent by express provision of Article 280.
HELD
NO. The contention of petitioners that the second paragraph of Article 280 of the Labor
Code should have been applied in their case presents an opportunity to clarify the afore-
mentioned provision of law.
The first paragraph of Article 280 answers the question of who are employees. It states that,
regardless of any written or oral agreement to the contrary, an employee is deemed regular
where he is engaged in necessary or desirable activities in the usual business or trade of
the employer, except for project employees.
A project employee has been defined to be one whose employment has been fixed for a
specific project or undertaking, the completion or termination of which has been determined
at the time of the engagement of the employee, or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the season as in
the present case.
The second paragraph of Art. 280 demarcates as "casual" employees, all other employees
who do not fan under the definition of the preceding paragraph. The proviso, in said second
paragraph, deems as regular employees those "casual" employees who have rendered at
least one year of service regardless of the fact that such service may be continuous or
broken.
Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is
applicable to their case and that the Labor Arbiter should have considered them regular by
virtue of said proviso. The contention is without merit.

The general rule is that the office of a proviso is to qualify or modify only the phrase
immediately preceding it or restrain or limit the generality of the clause that it immediately
follows. The proviso is applicable only to the employees who are deemed "casuals" but not
to the "project" employees nor the regular employees treated in paragraph one of Art. 280.
Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal
employees, their employment legally ends upon completion of the project or the season.
The termination of their employment cannot and should not constitute an illegal dismissal.

Fixed Period Employment

68. Brent School v. Zamora

BRENT SCHOOL VS. ZAMORA
G.R. NO. 48494, FEBRUARY 5, 1990
FACTS
1. In virtue of an employment contract Doroteo R. Alegre was engaged as athletic
director by Brent School, Inc. at a yearly compensation of P20,000 .00.
2. The contract fixed a specific term for its existence, five (5) years, i.e., from July 18,
1971, the date of execution of the agreement, to July 17,1976.
3. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and
September 14, 1974 reiterated the same terms and conditions, including the expiry
date, as those contained in the original contract of July 18, 1971.
4. When the employment contract was signed between Brent School and Alegre
(before the Labor Code was Passed) it was perfectly valid for them to enter into
stipulations fixing the duration thereof.
5. Some three months before the expiration of the stipulated period, or more precisely
on April 20, 1976, Alegre was given a copy of the report filed by Brent School with
the Department of Labor advising of the termination of his services effective on July
16, 1976. The stated ground for the termination was, "completion of contract,
expiration of the definite period of employment."
6. However, at the investigation conducted by a Labor Conciliator of said report of
termination of his services, Alegre protested the announced termination of his
employment. He argued that although his contract did stipulate that the same would
terminate on July 17,1976, since his services were necessary and desirable in the
usual business of his employer, and his employment had lasted for five years, he
had acquired the status of a regular employee and could not be removed except for
valid cause.
ISSUE
Whether or not Alegre was lawfully terminated and that he is entitled to reinstatement.
HELD
NO. Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to
exhaust the gamut of employment contracts to which the lack of a fixed period would be an
anomaly, but would also appear to restrict, without reasonable. distinctions, the right of an
employee to freely stipulate with his employer the duration of his engagement, it logically
follows that such a literal interpretation should be eschewed or avoided. The law must be
given a reasonable interpretation, to preclude absurdity in its application. Outlawing the
whole concept of term employment and subverting to boot the principle of freedom of
contract to remedy the evil of employers' using it as a means to prevent their employees
from obtaining security of tenure is like cutting off the nose to spite the face or, more
relevantly, curing a headache by lopping off the head.
Article 280 does not proscribe or prohibit an employment contract with a fixed period,
provided the same is entered into by the parties without any force, duress or improper
pressure being brought to bear upon the employee and absent any other circumstance
vitiating consent. It does not necessarily follow that where the duties of the employee consist
of activities usually necessary or desirable in the usual business of the employer, the parties
are forbidden from agreeing on a period of time for the performance of such activities. There
is thus nothing essentially contradictory between a definite period of employment and the
nature of the employees duties.

69. Cielo v. NLRC

CIELO VS. NLRC
G.R. NO. 78693, JANUARY, 1991
FACTS
1. Petitioner was engaged as a truck driver of private respondent Henry Lei Trucking
Company.
2. They entered into an agreement and it provides under paragraph 1 That the term of
this Agreement is six (6) months from and after the execution hereof, unless
otherwise earlier terminated at the option of either party. It also provides under
paragraph 2 that there is no employer/employee relationship between the parties,
the nature of this Agreement being contractual.
3. The agreement was supposed to have commenced on June 30 1984, and to end on
December 31, 1984.
4. On December 22, 1984: however, the petitioner was formally notified by the private
respondent of the termination of his services on the ground of expiration of their
contract.
5. Soon thereafter, on January 22, 1985, the petitioner filed his complaint with the
Ministry of Labor and Employment.
6. The private respondent rests its case on the agreement and maintains that the labor
laws are not applicable because the relations of the parties are governed by their
voluntary stipulations. The contract having expired, it was the prerogative of the
trucking company to renew it or not as it saw fit.
ISSUE
Whether or not the petitioner was a regular employee.
HELD
YES. The private respondent's intention is obvious. There is no question that the purpose
behind these individual contracts was to evade the application of the labor laws by making it
appear that the drivers of the trucking company were not its regular employees.
Under these arrangements, the private respondent hoped to be able to terminate the
services of the drivers without the inhibitions of the Labor Code. All it had to do was refuse
to renew the agreements, which, significantly, were uniformly limited to a six-month period.
No cause had to be established because such renewal was subject to the discretion of the
parties. In fact, the private respondent did not even have to wait for the expiration of the
contract as it was there provided that it could be "earlier terminated at the option of either
party." By this clever scheme, the private respondent could also prevent the drivers from
becoming regular employees and thus be entitled to security of tenure and other benefits,
such as a minimum wage, cost-of-living allowances, vacation and sick leaves, holiday pay,
and other statutory requirements. The private respondent argues that there was nothing
wrong with the affidavit because all the affiant acknowledged therein was full payment of the
amount due him under the agreement.
The petitioner was a regular employee of the private respondent. The private respondent is
engaged in the trucking business as a hauler of cattle, crops and other cargo for the
Philippine Packing Corporation. This business requires the services of drivers, and
continuously because the work is not seasonal, nor is it limited to a single undertaking or
operation. Even if ostensibly hired for a fixed period, the petitioner should be considered a
regular employee of the private respondent, conformably to the 1st paragraph of Article 280
of the Labor Code providing as follows:
Art. 280. Regular and Casual Employment. -The provision of written agreement to the
contrary notwithstanding and regardless: of the oral agreement of the parties, an
perform activities which are usually necessary or desirable in the usual business or trade of
the employer, except where the employment has been fixed for a specific project or



Article 282 - Just Causes for

Termination of Employment

70. A.M. Oreta and Company v. NLRC

A.M. ORETA & CO., INC. VS. NATIONAL LABOR RELATIONS COMMISSION
G.R. NO. 74004, AUGUST 10, 1989
MEDIALDEA, J.
FACTS
1. Private respondent Grulla was engaged by Engineering Construction and Industrial
Development Company (ENDECO) through A.M. Oreta and Co., Inc., as a carpenter
in its projects in Jeddah, Saudi Arabia. The contract of employment, which was
entered into June 11, 1980 was for a period of twelve (12) months.
2. On August 15, 1980, Grulla met an accident which fractured his lumbar vertebra
while working at the jobsite. He was confined to the New Jeddah Clinic for twelve
(12) days. On August 27, 1980, Grulla was discharged from the hospital and was told
that he could resume his normal duties after undergoing physical therapy for two
weeks.
3. On September 18, 1980, respondent Grulla reported back to his Project Manager
and presented to the latter a medical certificate declaring the former already fit for
work. Since then, he started working again until he received a notice of termination of
his employment on October 9, 1980.
4. In December, 1981, respondent Grulla filed a complaint for illegal dismissal, recovery
of medical benefits, unpaid wages for the unexpired ten (10) months of his contract
and the sum of P1,000.00 as reimbursement of medical expenses against A.M.
Oreta and Company, Inc., and Engineering Construction and Industrial Development
Co. (ENDECO) with the Philippine Overseas Employment Administration (POEA).
5. The petitioner A.M. Oreta and Company, Inc and ENDECO filed their answer and
alleged that the contract of employment entered into between petitioners and Grulla
provides, as one of the grounds for termination, violations of the rules and
regulations promulgated by the contractor; and that Grulla was dismissed because
he has not performed his duties satisfactorally within the probationary period of three
months.
6. POEA held that complainants dismissal was illegal. NLRC affirmed the decision of
POEA.
ISSUE
Was private respondent Grullas employment probationary rendering his dismissal valid?
HELD
Petitioner contends that the respondent Grulla was validly dismissed because the latter was
still a probationary employee; and that his dismissal was justified on the basis of his
unsatisfactory performance of his job during the probationary period. This contention has no
merit.
Petitioner admitted that respondent Grulla was employed in the company as carpenter for a
period of twelve (12) months before he was dismissed. A perusal of the employment
contract reveals that although the period of employment of respondent Grulla is twelve (12)
months, the contract is renewable subject to future agreements of the parties. It is clear from
the employment contract that the respondent Grulla was hired by the company as a regular
employee and not just mere probationary employee.
Article 281 of the Labor Code is clear to the effect that in all cases involving employees
engaged on probationary period basis, the employer shall make known to the employee at
the time he is hired, the standards by which he will qualify as a regular employee. Nowhere
in the employment contract executed between petitioner company and respondent Grulla is
there a stipulation that the latter shall undergo a probationary period for three months before
he can qualify as a regular employee. There is also no evidence on record showing that the
respondent Grulla has been appraised of his probationary status and the requirements
which he should comply in order to be a regular employee. In the absence of this requisites,
there is justification in concluding that respondent Grulla was a regular employee at the time
he was dismissed by petitioner. As such, he is entitled to security of tenure during his period

of employment and his services cannot be terminated except for just and authorized causes
enumerated under the Labor Code and under the employment contract.
Granting, in gratia argumenti, that respondent is a probationary employee, he cannot,

likewise, be removed except for cause during the period of probation. Although a
probationary or temporary employee has limited tenure, he still enjoys security of tenure.
During his tenure of employment or before his contract expires, he cannot be removed
except for cause as provided by law.
The alleged ground of unsatisfactory performance relied upon by petitioner for dismissing
respondent Grulla is not one of the just causes for dismissal provided in the Labor Code.
Neither is it included among the grounds for termination of employment under Article VII of
the contract of employment executed by petitioner company and respondent Grulla.
Moreover, petitioner has failed to show proof of the particular acts or omissions constituting
the unsatisfactory performance of Grulla of his duties, which was allegedly due to his poor
physical state after the accident. Contrary to petitioner's claims, records show that the
medical certificate issued by the hospital where respondent Grulla was confined as a result
of the accident, clearly and positively stated that Grulla was already physically fit for work
after he was released from the hospital.

71. Buiser v. Hon. Vicente Loegardo

ILUMINADA VER BUISER, ET AL. VS. VICENTE LEOGARDO, ET AL.
G.R. NO. L-63316, JULY 31, 1984
GUERRERO, J.
FACTS
1. Petitioners were employed by the private respondent GENERAL TELEPHONE
DIRECTORY COMPANY as sales representatives and charged with the duty of
soliciting advertisements for inclusion in a telephone directory.
2. The records show that petitioners Iluminada Ver Buiser and Ma. Mercedes P.
Intengan entered into an "Employment Contract (on Probationary Status)" with
private respondent, a corporation engaged in the business of publication and
circulation of the directory of the Philippine Long Distance Telephone Company.
Their "Employment Contract (On Probationary Status)" provided among others that:
The company hereby employs the employee as telephone representative on a
probationary status for a period of eighteen (18) months, i.e. from May 1980 to
October 1981, inclusive. It is understood that darung the probationary period of
employment, the Employee may be terminated at the pleasure of the company
without the necessity of giving notice of termination or the payment of termination
pay.
The Employee recognizes the fact that the nature of the telephone sales
representative's job is such that the company would be able to determine his true
character, conduct and selling capabilities only after the publication of the
directory, and that it takes about eighteen (18) months before his worth as a
telephone saw representative can be fully evaluated inasmuch as the
advertisement solicited by him for a particular year are published in the directory
only the following year.
3. Corollary to this, the private respondent prescribed sales quotas to be accomplished
or met by the petitioners. Failing to meet their respective sales quotas, the petitioners
were dismissed from the service by the private respondent.
4. Thus petitioners filed with the National Capital Region, Ministry of Labor and
Employment, a complaint for illegal dismissal with claims for backwages, earned
commissions and other benefits. The Regional Director dismissed the complaints of
the petitioners. On appeal, Deputy Minister Vicente Leogardo, Jr. of the Ministry of
Labor affirmed the Regional Director's Order
ISSUE
Was there illegal dismissal in that probationary employment may not exceed 6 months?
HELD
Generally, the probationary period of employment is limited to six (6) months. The exception
to this general rule is When the parties to an employment contract may agree otherwise,
such as when the same is established by company policy or when the same is required by
the nature of work to be performed by the employee. In the latter case, there is recognition
of the exercise of managerial prerogatives in requiring a longer period of probationary
employment, such as in the present case where the probationary period was set for
eighteen (18) months, i.e. from May, 1980 to October, 1981 inclusive, especially where the
employee must learn a particular kind of work such as selling, or when the job requires
certain qualifications, skills, experience or training.
In the case at bar, it is shown that private respondent Company needs at least eighteen (18)
months to determine the character and selling capabilities of the petitioners as sales
representatives. The Company is engaged in advertisement and publication in the Yellow
Pages of the PLDT Telephone Directories. Publication of solicited ads are only made a year
after the sale has been made and only then win the company be able to evaluate the
efficiency, conduct, and selling ability of its sales representatives, the evaluation being
based on the published ads. Moreover, an eighteen month probationary period is

recognized by the Labor Union in the private respondent company in the Collective
Bargaining Agreement.

72. San Miguel Brewery Sales v. Ople

SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO) V. OPLE
GR 53515, FEBRUARY 8, 1989
GRIO, AQUINO, J.
FACTS
1. In September 1979, the company introduced a marketing scheme known as the
"Complementary Distribution System" (CDS) whereby its beer products were offered
for sale directly to wholesalers through San Miguel's sales offices.
2. The labor union (herein petitioner) filed a complaint for unfair labor practice in the
Ministry of Labor, with a notice of strike on the ground that the CDS was contrary to
the existing marketing scheme whereby the Route Salesmen were assigned specific
territories within which to sell their stocks of beer, and wholesalers had to buy beer
products from them, not from the company.
3. It was alleged that the new marketing scheme violates Section 1, Article IV of the
collective bargaining agreement because the introduction of the CDS would reduce
the take-home pay of the salesmen and their truck helpers for the company would be
unfairly competing with them.
4. The labor union filed a complaint in the Minister of Labor. The Minister of Labor
stated that it is undisputable that the establishment of such scheme was part of its
overall plan to improve efficiency and economy and at the same time gain profit to
the highest. While it may be admitted that the introduction of new sales plan
somewhat disturbed the present set-up, the change however was too insignificant as
to convince this Office to interpret that the innovation interferred with the worker's
right to self-organization. Therefore, their petition was dismissed.
I
ISSUE
Whether the CDS is a valid exercise of management prerogatives.
HELD
Public respondent was correct in holding that the CDS is a valid exercise of management
prerogatives: Except as limited by special laws, an employer is free to regulate, according to
his own discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work, tools to be used,
processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers and the discipline, dismissal and recall of
work.
Every business enterprise endeavors to increase its profits. In the process, it may adopt or
devise means designed towards that goal. In Abbott Laboratories vs. NLRC, 154 SCRA 713,
We ruled: Even as the law is solicitous of the welfare of the employees, it must also protect
the right of an employer to exercise what are clearly management prerogatives. The free will
of management to conduct its own business affairs to achieve its purpose cannot be denied.
So long as a company's management prerogatives are exercised in good faith for the
advancement of the employer's interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid agreements,
this Court will uphold them San Miguel Corporation's offer to compensate the members of its
sales force who will be adversely affected by the implementation of the CDS by paying them
a so-called "back adjustment commission" to make up for the commissions they might lose
as a result of the CDS proves the company's good faith and lack of intention to bust their
union.

73. International Catholic Migration Commission v. NLRC

INTERNATIONAL CATHOLIC MIGRATION COMMISSION VS. NLRC
GR 72222, JANUARY 30, 1989
FACTS
1. Petitioner ICMC engaged the services of Bernadette on January 24, 1983 as a
probationary cultural orientation teacher.
2. Three months later, petitioner ICMC informed her, orally and in writing, that her
services were being terminated for her failure to meet the prescribed standards as
reflected in the performance evaluation by her supervisors. As a result, Bernadette
filed a complaint for illegal dismissal and prayed for reinstatement with back wages,
exemplary and moral damages.
3. The labor arbiter dismissed the complaint as well as the complaint for damages but
ordered ICMC to pay her P6,000 as payment for the last three months of the agreed
employment period pursuant to her verbal contract of employment. Both parties
appealed.
4. The NLRC dismissed both appeals and sustained the labor arbiters decision.
ISSUE
Whether or not petitioner ICMC must pay Bernadette her salary for the unexpired portion of
her six-month probationary employment.
HELD
NO. There was no circumvention of the rights of Bernadette when she was informed of her
termination. Her dismissal was not arbitrary or whimsical. She was duly notified that her
services were terminated for failure to meet the prescribed standards. The dissatisfaction of
petitioner ICMC over her performance is a legitimate exercise of its prerogative to select
whom to hire or refuse employment for the success of its program or undertaking.
Moreover, failure to qualify as a regular employee in accordance with the reasonable

standards of the employer is a just cause for terminating a probationary employee specially
recognized under Article 281 of the Labor Code.

74. Mercury Drug Corporation v. NLRC

MERCURY DRUG CORPORATION V. NATIONAL LABOR RELATIONS COMMISSION
177 SCRA 580
FERNAN, CJ
FACTS
1. Private respondent Ladisla was employed by petitioner Mercury Drug Corporation as
a Stock Analyst.
2. He had been with the company for at least two years when he was apprehended by
the representatives of Mercury Drug while in the act of pilfering company property.
3. Private respondent admitted his guilt to the investigating representatives of petitioner
company and executed a handwritten admission.
4. Petitioner, while simultaneously placing private respondent on preventive
suspension, filed before the Department of Labor an application for the termination of
private respondent on the grounds of dishonesty and breach of trust.
5. Private respondent opposed the aforesaid application alleging, among others, that
his suspension and proposed dismissal were unfounded and baseless and that he
was not given the opportunity to be heard nor allowed to explain his side before he
was summarily suspended.
6. Petitioner also filed a criminal case against private respondent for attempted qualified
theft but the same was dismissed. Later, the case was re-filed with the Regional Trial
Court and private respondent was convicted for the crime of simple theft.
7. The Labor Arbiter rendered its decision sustaining the validity of private respondents
dismissal and granting petitioners clearance but this was reversed by the National
Labor Relations Commission.
ISSUE
Whether or not petitioner company has reasonable ground to terminate the employment of
private respondent Ladisla.
HELD
Dismissal of a dishonest employee is to the best interest not only of the management but
also of labor. As a measure of self-protection against acts inimical to its interest, a company
has the right to dismiss its erring employees. An employer cannot be compelled to continue
in employment an employee guilty of acts inimical to its interest, justifying loss of confidence
in him. The law does not impose unjust situations on either labor or management. We
therefore find justification in the termination of private respondent Ladislas employment by
petitioner Mercury Drug Corporation.

75. Manila Electric Company v. NLRC

MANILA ELECTRIC COMPANY VS. NLRC
175 SCRA 277
MEDIALDEA, J.
FACTS
1. Private respondent Signo was employed in petitioner company as supervisor-
leadman since January 1963 up to the time when his services were terminated on
May 18,1983.
2. In 1981, a certain Fernando de Lara filed an application with the petitioner company
for electrical services at his residence.
3. Private respondent Signo facilitated the processing of the said application as well as
the required documentation for said application. In consideration thereof, private
respondent received from De Lara the amount of P7,000. Signo thereafter filed the
application for electric services with the Power Sales Division of the company.
4. Since De Laras residence was not yet serviceable, certain employees of the
company, including respondent Signo, made it appear in the application that the sari-
sari store at the corner of Marcos Highway, an entrance to the subdivision, is
applicant de Laras establishment, which, in reality is not owned by the latter.
5. As a result of this scheme, the electrical connections to de Laras residence were
installed and made possible. However, due to the fault of Power Sales Division of
petitioner company, Fernando de Lara was not billed for more than a year.
6. Petitioner conducted an investigation of the matter and found respondent Signo
responsible for the said irregularity in the installation. Thus, the services of the latter
were terminated.
ISSUE
Whether or not respondent Signo should be dismissed from petitioner company on grounds
of serious misconduct and loss of trust and confidence.
HELD
There is no question that herein respondent Signo is guilty of breach of trust and violation of
company rules, the penalty for which ranges from reprimand to dismissal depending on the
gravity of the offense. However, as earlier stated, the respondent Commission and the
Labor Arbiter found that dismissal should not be meted to respondent Signo considering his
20 years of service in the employ of petitioner, without any previous derogatory record, in
addition to the fact that petitioner company had awarded him in the past, 2 commendations
for honesty. If ever the petitioner suffered losses resulting from the unlisted electric
consumption of de Lara, this was found to be the fault of petitioners Power Sales Division.
We find no reason to disturb these findings. Well established is the principle that findings
of administrative agencies which have acquired expertise because their jurisdiction is
confined to specific matters are generally accorded not only respect but even finality.
Judicial review by this Court on labor cases does not go so far as to evaluated the
sufficiency of the evidence upon which the proper labor officer or office based his or its
determination but is limited to issues of jurisdiction or grave abuse of discretion. This Court
has held time and again, in a number of decisions, that notwithstanding the existence of a
valid cause for dismissal, such as breach of trust by an employee, nevertheless, dismissal
should not be imposed, as it is too severe a penalty if the latter has been employed for a
considerable length of time in the service of his employer.

76. Filipro, Inc. v. NLRC

FILIPRO, INCORPORATED VS. NATIONAL LABOR RELATIONS COMMISSIONS
145 SCRA 123
ALAMPAY, J.:
FACTS
1. Private respondent Danila C. Parino was hired as salesman of Petitioner Filipro, Inc.
After undergoing mandatory probationary period of 6 months, he became a regular
employee.
2. Sometime in the latter part of March, 1980, petitioner received several telephone
complaints from its customers and its dealers in the area assigned to private
respondent. They averred that they were not being served by the latter.
3. These complaints led to diverse investigations conducted on March 27 and 29, 1980
by Mr. Raymond P. Velasco, petitioners sales supervisor for the Metro Manila area.
4. Mr. Velasco discovered that private respondent committed table distribution by
misreporting fictitious sales and that the latter sought monetary benefits from one
dealer who in return would be extended more favorable treatment than other
customers.
5. For this initial infraction, private respondent was suspended for a period of 2 weeks
beginning June 28 until July 13, 1979 and warned that a repetition thereof would
merit a more sever penalty.
ISSUE
Whether or not the private respondent should be dismissed.
HELD
The Court differed strongly and disagreed with public respondent NLRCs judgment.
Although the Court often takes a lenient view when it considers the employee to be in a less
advantageous position as his employer, this consideration, however, should not be applied
in this case where there is clearly an attendant breach of trust and confidence almost
equivalent to dishonesty and infidelity in the handling of the companys products. The
irregularities done by private respondent have far reaching effect. Private respondent, as a
salesman charged with the distribution of petitioners products is the principal person with
whom the buyers of petitioners products have to deal with. In the final analysis, the
consideration, goodwill, and marketability of the products of petitioner company would
depend on the fairness and behavior displayed by private respondent. He is a key man and
the importance of his role in the organization cannot be minimized. His misdeeds cannot be
glossed over as trivial. The initial decision of the Labor Arbiter decreeing the dismissal of
private respondent herein is fully justified by the provisions of Article 283 of the Labor
Code, already above quoted.
It is not moral for a salesman to extend treatment to a few customers for a fee.

77. Gold City Integrated Port Services v. NLRC

GOLD CITY INTEGRATED PORT SERVICES, INC. VS. NLRC
189 SCRA 811
FACTS
1. Private respondent Jose Bacalso was employed as an admeasurer by petitioner
Gold City.
2. He was suspected by management of undermeasuring cargo. Hence, the cargo
control officer ordered two other admeasurers to re-measure three pallets of
bananas which had already been measured by private respondent.
3. As it turned out, the re-measurement revealed that respondent had under-measured
the bananas by 1.427 cubic meters.
4. Feeling insulted by the re-measurement, private respondent confronted and
quarreled with Mabalacad, on of the two admeasurers, in the office of Chief
Admeasurer Guangco. Guangco told the two to stop fighting and behave properly but
this order was ignored and a fistfight ensued.
5. Thereafter, private respondent was charged with assaulting a co-employee and
falsifying reports and records of the company. He was then preventively suspended
pending investigation of the grievance committee.
6. The committee recommended a forty-five day suspension but apparently, Guanco
and Mabalacad did not consider suspension an adequate sanction.
7. Subsequently, private respondent received a notice of termination upon the grounds
of assaulting a co-employee and of insubordination.
8. Private respondent filed a complaint for illegal dismissal with the Labor Arbiter, which
granted such motion but did not order respondents reinstatement.
9. On appeal, the NLRC modified the ruling of the Labor Arbiter.
ISSUE
1. Whether or not private respondent was denied due process in the course of his
dismissal.
2. Whether or not private respondent was dismissed for a just cause.
HELD
It must be noted that petitioner did not properly inform private respondent of all the
infractions of company regulations which subsequently became the justification for his
dismissal. After being preventively suspended, he was charged with assaulting a co-
employee and falsifying reports and records of the company relating to his duties. But it
came to pass that when private respondent received his notice of termination, the causes
therefor were stated as assault on a co-employee and insubordination. The Court considers
that there was here at least a partial deprivation of private respondents right to procedural
due process. He could not be expected adequately to defend himself as he was not fully or
correctly informed of the charges against him which management intend to prove. It is less
than fair for management to charge an employee with one offense and then to dismiss him
for having committed another offense with which he had not been charged against and
which he was therefore unable adequately to defend himself.
Willful disobedience of the employers lawful orders, as a just cause for the dismissal of an
employee, envisages the concurrence of at least two requisites: that the employees
assailed conduct must have been willful or intentional, the willfulness being characterized by
a wrongful and perverse attitude; and the order violated must have been reasonable,
lawful, made known to the employee and must pertain to the duties which he had been
engaged to discharge. Both requisites are present in the instant case. It does not follow,
however, that private respondents services were lawfully terminated. We believe that not
every case of insubordination id reasonably penalized with dismissal.
For one thing, Article 282 (a) of the Labor Code refers to serious misconduct or willful
disobedience. There must be reasonably proportionality between the willful disobedience by
the employee and the penalty imposed therefor.

78. Abbot Laboratories v. NLRC

ABBOT LABORATORIES PHILIPPINES, INC. V. NLRC
154 SCRA 713
J. GUTIERREZ, JR.
FACTS
1. Albert Bobadilla was a professional medical representative (PMR) of petitioner
Abbott Laboratories (Phils.) Inc. and was assigned to cover the sales territory
comprising of Sta. Cruz, Binondo and a part of Quiapo and Divisoria.
2. It has been a policy and established practice of petitioner that the PMRs hired are
those who are willing to take provincial assignments. In Bobadillas application for
employment, he agreed that he will accept assignment in the provinces and/or cities
anywhere in the Philippines and that he is willing and can move into and live in the
territory assigned to him.
3. Later on, Bobadilla was informed that he was being transferred to the newly opened
Cagayan territory comprising the provinces of Cagayan, Nueva Vizcaya and Isabela.
4. Bobadilla objected to the transfer on the ground that it was not only a demotion but
also personal and punitive in nature without basis legally and factually.
5. Bobadilla was given a deadline to comply with the transfer order otherwise he would
be dropped from the payroll for having abandoned his job but he failed to report to
his assignment.
6. Subsequently, Bobadilla filed a complaint against petitioner. The Labor Arbiter
dismissed the complaint. On appeal, the NLRC entered a new decision ordering
Bobadillas reinstatement with full backwages.
ISSUE
Whether or not Bobadilla could be validly dismissed from his employment on the ground of
insubordination fro refusing to accept his new assignment
HELD
YES. As a general rule, the right to transfer or reassign an employee is recognized as an
employers exclusive right and the prerogative of the management. Abbott, in accordance
with the demands and requirements of its marketing and sales operations, adopted a policy
to hire only sales applicants who are willing to accept assignments in the provinces
anywhere in the Philippines, and to move into and live in the territory assigned to them,
Bobadilla was precisely hired because he manifested at the outset as a job applicant his
willingness to follow the conditions of his employment. Moreover, he was selected as PMR
for the region primarily because he was a veteran and seasoned PMR who can operate
immediately with minimum training and supervision. Thus, the judgment to transfer is valid
and not attended by malice.
Therefore, Bobadilla had no valid reason to disobey the order of transfer. He has tacitly
given his consent thereto when he acceded to the petitioners policy of hiring sales staff who
are willing to be assigned anywhere in the Philippines which is demanded by petitioners
business.

79. Homwowners Savings and Loan Association v. NLRC

HOMEOWNERS SAVINGS AND LOAN ASSOCIATION, INC. VS. NLRC
262 SCRA 406
J. HERMOSISIMA, JR.
FACTS
1. Private respondent Marilyn Cabatbat a Certified Public Accountant employed as a
Branch Accountant in petitioners branch office in San Carlos, Pangasinan.
2. On 1981, she was re-assigned to the Sta. Barbara, Pangasinan branch office of
petitioner. After brief stint in Sta. Barbara, she was returned to her old post in San
Carlos City, for the same position.
3. Petitioner issued a memorandum announcing managements decision to promote
five (5) junior officers and to move four (4) of its employees to new assignments.
Private respondent was among those moved from her old post in San Carlos branch.
4. She was transferred to the petitioners branch in Urdaneta, also in Pangasinan. Both
the promoted and the transfer employees received corresponding increases in their
salaries.
5. Private respondent made a letter requesting for the deferment of her new
assignment, citing as her reason the fact that she was on her sixth month of
pregnancy. The request was granted.
6. After private respondents delivery, petitioner again ordered private respondent to
report to her new assignment. She again requested that the order to re-assign her be
reconsidered because of some very personal reasons. She protested that her new
assignment will entail additional expenses and physical exhaustion as Urdaneta is
too far for her to commute everyday.
7. Thereafter, she wrote petitioner a letter, this time bluntly refusing her assignment on
the pretext that her new assignment was a promotion, in which case, she has the
option to reject or accept the same. She was given a warning by petitioner that her
continued defiance will be dealt with according to law. However, she continued
reporting to the San Carlos branch.
8. Private respondent was issued a notice of termination. She then filed a complaint for
illegal dismissal against petitioner. Labor Arbiter dismissed the complaint, which was
reversed on appeal to the NLRC. Hence, this petition.
ISSUE
1. Whether or not private respondents re-assignment from San Carlos branch to
Urdaneta involved a promotion which she can rightfully decline without being guilty of
willful disobedience, a just cause for termination.
2. Whether or not she was illegally dismissed.
HELD
1. NO. A cursory reading of the memorandum unmistakably shows that Marilyn
Cabatbat is one among the four employees that was considered for movement from
the San Carlos branch to Urdaneta branch with no corresponding change in her
position as branch accountant. Henceforth, the clear intention of the petitioner
corporation was merely to transfer, and not to promote, the private respondent to a
new post.
2. NO. Of relevant significance is the right of the employer to transfer employees in

their work station. It is the employers prerogative, based on its assessment and
perception of its employees qualifications, aptitudes and competence to move them
around in the various areas of its business operations in order to ascertain where
they will function with maximum benefit to the company. The rationale for this rule is
that an employees right to security of tenure does not give him such a vested right in
his position as would deprive the company of its prerogative to change his
assignment or transfer him where he will be most useful. Of course, the managerial
prerogative must be exercised without grave abuse of discretion and putting to mind
the basic elements of justice and fair play. Thus, it cannot be used as a subterfuge
by the employer to rid himself of an undesirable worker nor to penalize an employee

for his union activities and thereby defeat his right to self-organization. But the
transfer can be upheld when there is no showing that it is unnecessary, inconvenient
and prejudicial to the displaced employee.
The case at bench is bereft of any circumstance that would indicate that petitioners
decision to transfer private respondent to Urdaneta branch was made with grave
abuse of discretion. The reason for her transfer was due to the exigency to uplift the
operational efficiency of Urdaneta branch.
This was the very same situation the Court faced in Philippine Telegraph and
Telephone Corp. vs. Laplana. In that case, the employee Laplana, was a cashier at
the Baguio City branch of PT&T who was directed to transfer tpo the companys
branch office at Laoag City. The employee refused the transfer averring that it will
involve additional expenses and it will be a big sacrifice for being away from her
family which might adversely affect her efficiency. In ruling for the employer, the
Court upheld the transfer from one city to another within the country as valid as long
as there is no bad faith on the part of the employer. Surely, Cabatbat is in a better
position that Laplana. The distance between her new assignment in Urdaneta
Pangasinan and her place of residence is only about 30 kilometers while the
distance between Baguio and Laoag City is definitely beyond 30 kilometers. Since
the Court ruled that the transfer of Laplana from Baguio to Laoag was valid, we see
no reason to resolve that the transfer of Cabatbat from San Carlos to Urdaneta is
improper, absent any showing of bad faith on the part of the employer. Prtivate
respondents refusal to obey the transfer order constitutes willful disobedience of a
lawful order of her employer sanctioned under Article 282 of the Lsbor Code, and
therefore, warrants dismissal.
The decision of NLRC is nullified and set aside. The decision of the Labor Arbiter is
reinstated.

80. Dosch v. NLRC and Northwest Airlines

DOSCH VS. NATIONAL LABOR RELATIONS COMMISSION
G.R. NO. L-51182 JULY 5, 1983
PONENTE: GUERRERO, J.
FACTS
1. Petitioner Helmut Dosch, an American citizen married to a Filipina, was the resident
Manager of Northwest Airlines, Inc. in the Philippines.
2. Sometime in 1975, he received an inter-office communication from R.C. Jenkins,
Northwests Vice President, promoting him to the position of Director of International
Sales and transferring him to Northwests General Office in Minneapolis, USA.,
effective on the same day.
3. Petitioner, acknowledging the receipt, expressed his appreciation for the promotion
and at the same time regretted that for personal reasons and reasons involving my
family, I am unable to accept a transfer from the Philippines.
4. The Vice President advised petitioner that in view of the foregoing, your status as an
employee of the company ceased on the close of business, and the company
considers your letter to be a resignation without notice.
5. Northwest filed a Report on resignation of Managerial Employee before the
Department of Labor.
6. The Report was contested by the petitioner and was thus certified to the NLRC for
compulsory arbitration.
7. The Labor Arbiter rendered a decision ordering Northwest to reinstate petitioner.
Respondent appealed to the NLRC which reversed the decision.
ISSUE
1. Whether or not the transfer was a valid exercise of management prerogative.
2. Whether or not the refusal of petitioner to accept the letter of Northwest constitutes
insubordination which is a valid cause for his dismissal.
HELD
1. NO. The Jenkins letter directing the promotion of the petitioner from his position as
Philippine manager to Director of International Sales in Minneapolis, USA is not a
mere transfer order alone but it is more in the nature of a promotion, the former being
merely incidental to such promotion.
A transfer is a movement from one position to another of equivalent rank, level or

salary, without break in the service. Promotion, on the other hand, is the
advancement from one position to another with an increase in duties and
responsibilities as authorized by law, and usually accompanied by an increase in
salary. Whereas a promotion denotes a scalar ascent of a senior officer or employee
to another position, higher either in rank or salary, transfer refers to lateral movement
from one position to another, of equivalent rank, level or salary.
There is no law that compels an employee to accept a promotion, as is in the nature

of a gift or a reward, which a person has a right to refuse. When petitioner refused to
accept his promotion, he was exercising a right and cannot be punished for it as qui
jure suo utitur neminem laedit. He who uses his own legal right injures no one.
There can be no dispute that the constitutional guarantee of security of tenure

mandated under the Constitution applies to all employees and laborers, whether in
the government service or in the private sector. The fact that petitioner is a
managerial employee does not by itself exclude him from this protection. Even a
manager in a private concern has the right to be secure in his position, to decline a
promotion where, although the promotion carries an increase in his salary and rank
but results in his transfer to a new place of assignment or station and away from his
family. Such an order constitutes removal without just cause and is illegal. Nor can
the removal be justified on the ground of loss of confidence as now claimed by

private respondent, insisting that by petitioners alleged contumacious refusal to obey

the transfer, said petitioner was guilty or insubordination.
2. NO. Neither is the other ground alleged by Northwest in dismissing petitioner which
is loss of confidence, supported by evidence. The fact that Northwest wanted to
promote petitioner to Director of International Sales indicated that Northwest had full
confidence in petitioner. The outright dismissal of petitioner from his position as
Manager-Philippines of Northwest is much too severe, considering the length of
service that petitioner rendered for eleven years.
While a managerial employee may be dismissed merely on the ground of loss of

confidence, the matter of determining whether the cause for dismissing an employee
is justified on ground of loss of confidence, cannot be left entirely to the employer.
The charges against petitioner were not fully substantiated, and there can be no valid
reason for said loss of confidence. Justice and equity call for petitioners
reinstatement
The decision of NLRC is reversed and set aside and the decision of the Labor Arbiter
ordering the petitioners reinstatement to his former position with full back wages, is
reinstated.

81. Philippine Telegraph and Telephone Corp. v. CA

PHILIPPINE TELEGRAPH & TELEPHONE CORPORATION V. COURT OF APPEALS
412 SCRA 263
CALLEJO, SR., J.:
FACTS
1. The petitioner is a domestic corporation engaged in the business of providing
telegraph and communication services thru its branches all over the country.
2. Pursuant to its Relocation and Restructuring Program, private respondents and other
petitioners employees were directed to relocate and report to their respective new
PT&T Branches.
3. The petitioner offered benefits and allowances to those employees who would agree
to be transferred under its new program.
4. The private respondents rejected the petitioners offer as it would cause enormous
difficulties to them particularly the separation from their respective families.
5. Dissatisfied with the explanation, the petitioner considered the private respondents
refusal as insubordination and willful disobedience to a lawful order; hence, the
private respondents were dismissed from their work.
6. They forthwith filed their respective complaints against the petitioner before the
appropriate sub-regional branches of the NLRC.
7. A complaint against the petitioner for illegal dismissal and unfair labor practice was
then filed. The Labor Arbiter dismissed the complaint, which was thereafter reversed
by the NLRC ruling that petitioner illegally dismissed the private respondents.
ISSUE
Whether or not petitioner illegally dismissed the private respondents.
HELD
YES. An employee cannot be promoted, even if merely as a result of a transfer, without his
consent. A transfer that results in promotion or demotion, advancement or reduction or a
transfer that aims to lure the employee away from his permanent position cannot be done
without the employees consent. there is no law that compels an employee to accept a
promotion for the reason that a promotion is in the nature of a gift or reward, which a person
has a right to refuse. Hence, the exercise by the private respondents of their right cannot be
considered in law as insubordination, or willful disobedience of a lawful order of the
employer. As such, there was no valid cause for the private respondents dismissal.
As the questioned dismissal is not based on any of the just or valid grounds under Article
282 of the Labor Code, the NLRC correctly ordered the private respondents reinstatement
without loss of seniority rights and the payment of backwages from the time of their
dismissal up to their actual reinstatement.

82. Citibank v. Gatchalian

CITIBANK, N.A. V. GATCHALIAN
240 SCRA 212
PUNO, J.:
FACTS
1. Respondent Llonillo, together with Teresita Supnad, her co-employee and Florence
Verendia, an employee of Asian-Pacific Broadcasting Company, Inc. (APBCI), were
implicated in a scheme to defraud petitioner bank.
2. Petitioner bank received 31 applications from alleged APBCI employees for the
issuance of Citibank credit cards, known as Mastercard. The applications were
approved and the corresponding new and unsigned cards were issued after verifying
the applications by a Citibank employee from Verendia, as secretary of the
Geneneral Manager of APBCI.
3. Petitioner banks policy is for new and unsigned credit cards to be released only to
cardholders concerned or their duly authorized representatives.
4. However, a Citibank employee may himself take delivery of new and unsigned credit
cards after accomplishing a Card Pull-Out Request Form wherein the employee
assumes the responsibility of delivering the same to the cardholder.
5. Supnad and Verendia took delivery of 19 credit cards issued in the name of the
alleged APBCI credit applicants. On the other hand, on 5 separate occasions,
respondent Llonillo personally picked up the newly approved and unsigned credit
cards issued to 7 alleged APBCI employees and delivered them to Verendia.
6. When the bank discovered that the credit card applicants were fictitious, Llonillo was
made to explain. She alleged that she wanted to help the bank deliver fast,
competent, and problem-free service to clients and disclaimed any knowledge that
the APBCI applicants were fictitious and denied participation in the fraudulent use of
the credit cards.
7. Petitioner bank dismissed Llonillo. However, pursuant to the collective bargaining
agreement and after presentation of evidence, Voluntary Arbitrator rendered a
decision ordering the reinstatement of respondent Llonillo without payment of
backwages.
ISSUE
Whether or not the reinstatement of respondent Llonillo is proper.
HELD
NO. Gross negligence implies a want or absence of or failure to exercise slight care or
diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences
without exerting any effort to avoid them.
She admitted that the first time she was asked by Verendia to pick up one of the newly
approved and unsigned credit cards, she immediately acceded. Yet, at that time, she had
not personally met nor previously seen Verendia. She said that Verendia described herself
over the phone and that was how she was able to indentify her when they first met. Thus, on
the basis of a mere description over the telephone, respondent Llonillo delivered the credit
cards to Verendia. Respondent Llonillos negligence was also shown when she gave the
credit cards to a messenger when she had not seen before but who merely represented to
her that he was the messenger sent, and without asking to sign a receipt evidencing the
acceptance.
It was also ruled that her negligence is both gross and habitual. It was proved that she
picked up the newly approved credit cards on 5 separate occasions and delivered the same
to Verendia and the latters messenger. Certainly, these repetitive acts and omissions
bespeak of habituality.
The longer an employee stays in the service of the company, the greater is his responsibility
for knowledge and compliance with the norms of conduct and the code of discipline of the

company. Hence, respondents 22 years of service would not, by itself, mitigate her
negligence, especially in view of the substantial loss incurred by petitioner bank.

83. Labor et al. v. NLRC

LABOR VS. NATIONAL LABOR RELATIONS COMMISSION
G.R. NO. 110388, SEPTEMBER 14, 1995
DAVIDE, JR. J.:
FACTS
1. The petitioners are employees of Gold City at its Eye Ball disco at Davao City, who
filed a complaint with the DOLE against the latter for violations of labor standards
laws.
2. Thereafter, they alleged that Gold City prevented them from entering their work
place, their time cards were taken off the time card rack and were advised to resign.
3. They assailed the notice of termination given to them by Gold City and denied that
they abandoned their work.
4. A complaint was filed by petitioners with the NLRC and charged Gold City for unfair
labor practices for illegally dismissing them in retaliation for their having filed a
complaint for labor standards violation against it.
5. The Labor Arbiter rendered a decision in favor of petitioners, declaring their dismissal
illegal. Gold City appealed to the NLRC which reversed the decision.
6. According to the NLRC, the filing of the petitioners of their complaint with the DOLE
was made to preempt respondents lawful prerogatives. It was also ruled that there
was abandonment by petitioners and that Gold City, in terminating them, complied
with the procedural requirements. Hence, this petition.
ISSUE
Whether or not the petitioners abandoned their jobs and consequently, whether their
dismissal due to abandonment was lawful.
HELD
NO. To constitute abandonment, two elements must concur: (1) the failure to report for work
or absence without valid or justifiable reason, and (2) a clear intention to sever the
employer-employee relationship. Mere absence is not sufficient. It is the employer who has
the burden of proof to show a deliberate and unjustified refusal of the employee to resume
his employment without any intention of returning. Gold city failed to discharge this burden.
It did not adduce any proof of some overt act of the petitioners that clearly and unequivocally
show their intention to abandon their posts. On the contrary, the petitioners lost not Time in
filing the case for illegal dismissal against them, taking only four days from the time most of
them from entering their workplace. The filing of an employee of a complaint for illegal
dismissal is a proof enough of his desire to return to work, thus negating the employers
charge of abandonment. The timing of Gold Citys alleged refusal to allow petitioners to
enter their work place is highly suspicious. It happened two days after the petitioner filed
their complaint for labor standards violations with DOLE.
Equally baseless is the charge of dishonesty which Gold City also relies on upon to justify
the dismissal of the petitioners from their employment. A charge of dishonesty involves
serious misconduct on the part of the employee, a breach of the trust reposed by the
employer upon him. For loss of trust and confidence to be a valid ground of an employees
dismissal, it must be substantial and not arbitrary, and must be founded on clearly
established facts sufficient to warrant the employees separation from work. Unfortunately
for Gold City, the evidence it adduced is insubstantial, inadequate and unreliable to support
a conclusion that the petitioners are even remotely guilty of the acts they are accused of
committing.
There being no abandonment or commission of dishonest acts by the petitioners, no just

cause exists to dismiss them, hence their termination by Gold City is illegal. When
petitioners were dismissed by preventing them from entering their work place, no previous
notice of any kind was given to them at all. The case of illegal dismissal was filed at least
eleven days before the date of the notices. The subsequent notices cannot cure the lack of
notice prior to the illegal dismissal of the petitioners.

A finding that an employee is illegally dismissed entitles him to reinstatement to his former
position without loss of seniority rights and the payment of back wages. But in this case, the
petitioners did not pray for reinstatement. The Labor ordered the payment of separation pay
in lieu of reinstatement which is hereby affirmed. If the employee does not desire to be
reinstated, the employer shall pay him separation pay in lieu of reinstatement. This is only
just and practical because the reinstatement of petitioners will no longer be in the best
interest of petitioners and Gold City considering the animosity and antagonism that exists
between them brought about by the filing of charges of both parties against each other. As a
rule, full back wages are computed from the time the employees illegal dismissal until his
actual reinstatement, but since in this case, reinstatement is not possible, the back wages
must be computed from the time of the petitioners illegal dismissal until the finality of the
decision.
The decision of NLRC is set aside and the decision of the Labor Arbiter is reinstated.

84. San Miguel Corporation v. NLRC

SAN MIGUEL CORPORATION VS. NLRC
174 SCRA 510
GRIO-AQUINO, J.:
FACTS
1. The complainants were former securtiy guards of the petitioner which dismissed
them for falsification of their time cards.
2. They made false entries in their time cards showing tha they reported for work on
February 19 and 20, 1983 when the truth was that they went on a hunting trip to San
Juan, Batangas, with their chief, Major Martin Asaytuno, then head of the
Adminsitrative Services Department of the Securtiy Directorate of the petitioner.
3. The Labor Arbiter found that the complainants did go on a hunting trip upon the
invitation of their department head, Major Asaytuno.
4. They went along to please him because they believed that his invitation was
equivalent to a command. Being an army man, Asaytuno expected total obedience
from his subordinates.
5. But the Labor Arbiter as well as the NLRC reinstated the complainants on the ground
that the complainants were not guilty of serious misconduct, fraud, and willful breach
of trust.
ISSUE
Whether or not complainants are guilty of serious misconduct.
HELD
Although it may be conceded that the private respondents acted under some degree of
moral compulsion when they agreed to accompany Major Asaytuno on a hunting trip, they
were certainly under no compulsion from him to falsify their time cards and thereby defraud
the company by collecting wages for the dates whey they did not report for work. The
falsification and fraud which the private respondents committed against their employer were
inexcusable. Their acts constituted dishonesty and serious misconduct, lawful grounds for
their dismissal under Art 282 subpars. (a) and (c)of the Labor Code.

85. Equitable Banking Corporation v. NLRC

EQUITABLE BANKING CORPORATION VS. NLRC
273 SCRA 352
VITUG, J.
FACTS
1. Private respondent Atty. Ricardo Sadac was appointed Vice-President for the Legal
Department of petitioner bank by its then President, Manuel L. Morales, with a
monthly salary of P8,000 plus an allowance of P4,500 and a Christmas bonus
equivalent to a two-month salary.
2. The turning point in the relationship among the parties surfaced, when, on 26 June
1989, nine lawyers of the bank's Legal Department, who were all under private
respondent, addressed a letter-petition to the Chairman of the Board of Directors,
accusing private respondent of abusive conduct, inefficiency, mismanagement,
ineffectiveness and indecisiveness.
3. One of the bank's directors, Heminio Banico was directed to look further into the
matter and to determine a course of action for the best interest of the bank.
4. Banico concluded that the charge of abusive conduct is true and this is supported
by overwhelming evidence. The charge of mismanagement is also supported by
abundant evidence.
5. A memorandum was issued to private respondent stating that the Board of Directors
has chosen the more compassionate option of waiting for the voluntary resignation of
private respondent Sadac.
6. Reacting to the memorandum, private respondent addressed a letter to Board
Chairman to the effect that the report of Mr. Banico contained libelous statements
and requested for a full hearing by the Board of Directors so that he could clear his
name. But to no avail.
7. The Board adopted a resolution terminating the services of private respondent in
view of his belligerence and the Board's honest belief that the relationship between
private respondent and petitioner bank was one of client and lawyer.
8. Private respondent was removed from his office occupancy in the bank and ordered
disentitled, starting 10 August 1989, to any compensation and other benefits.
ISSUE
Whether or not private respondent was denied due process.
HELD
The Court resolved first the issue of employee-employer relationship and ruled in the
affirmative on the ground that private respondent participated as part of management and is
one of its senior officers holding the position of Vice-President. Upon finding that private
respondent is an employee of petitioner, the latter violated the right to due process of private
respondent when the latter's request of full hearing was not granted. While it is true that the
essence of due process is simply an opportunity to be heard or, as applied in administrative
proceedings, an opportunity to explain one's side, meetings in the nature of consultation and
conferences such as the case here, however, may not be valid substitutes for the proper
observance of notice and hearing.
However, reinstatement, which is the consequence of illegal dismissal, has markedly been
rendered undesirable. Private respondent shall, instead, be entitled to backwages from the
time of his dismissal until reaching sixty years of age and, thereupon, to retirement benefits
in accordance with Article 287 of the Labor Code and Sec 14, Rule 1, Book VI of the
Implementing rules of the Labor Code.

86. Robusta Agro Marine Products v. Garombalem

ROBUSTA AGRO MARINE PRODUCTS, INC. VS. GOROMBALEM
175 SCRA 93
FACTS
1. Gorombalem filed a complaint against Robusta Agro Marine Products, Inc. with the
NLRC on grounds of unfair labor practice, illegal suspension, non payment of
overtime, premium for holiday, nightshift differential and rest day, violation of
minimum wage and allowances, unpaid wages, commissions and separation pay.
Notice for initial hearing was sent to Robusta.
2. The hearing was reset for non appearance of both parties.
3. Further resets due to inappearance were made, first was for Gorombalem and the
next from Robusta. A hearing for possible amicable settlement was set, but the
parties failed to settle.
4. Gorombalem made a Sinumpaang Salaysay as ordered by the Labor Arbiter.
5. However, Robusta repeatedly asked for extensions until the Labor Arbiter compelled
them to submit within three days or else decision will be based on documents
presented by Gorombalem. Robusta complied.
6. The Sinumpaang Salaysay submitted by Gorombalem stated that he was illegally
dismissed on account of inquiring why his rations of gata has decreased. Prior to
that, Gorombalem, working as fishpond guard under Robusta was already
complaining of unpaid hours worked and other benefits due to him.
7. Robusta answered that the dismissal was for just cause stating that Gorombalem
voluntarily stopped from work and has abandoned his post due to possible retaliation
of a victim which filed a criminal complaint against him. He returned to work only
after a period of time in which Robusta invokes prescription from granting the claims.
8. The Labor Arbiter rendered a decision in favor of Gorombalem. The Second Division
of the NLRC modified the decision and eventually affirmed by the NLRC.
ISSUE
Whether or not administrative due process was denied the petitioners when the respondent
Labor Arbiter rendered a decision based on position papers filed by the parties without
conducting a trial.
HELD
Petition is dismissed for lack of merit. What clearly appears in the record is contrary to
Robustas claim that it was denied administrative due process. The simple meaning of
procedural due process is that a party to a case must be given sufficient opportunity to be
heard. Its very essence is to allow all parties opportunity to present evidence.
In the present case, it is crystal clear from the record that Robusta was given several
opportunities to present evidence in its favor, but it failed to do so. At no time did Robusta
ever ask that there be a trial on the merits. All that it submitted was its position paper. It
was within the competence of the labor arbiter to determine if there was a need for a
hearing. In this case, the labor arbiter did not deem it necessary to conduct hearing.
Robusta was never denied due process.

87. Offshore Industries v. NLRC

OFFSHORE INDUSTRIES, INC. VS. NLRC
177 SCRA 50
FACTS
1. Alfredo F. Osorio is an employee of Offshore Industries Inc., which is engaged in
lighterage. Osorio was a barge master when he was dismissed on account of his
alleged negligence.
2. VIT Corp. chartered two barges by Offshore for transportation of goods from Negros
Occidental to Manila.
3. Both barges were loaded and set out to leave port despite the rough sea and the
high winds that day.
4. On its way out of port, one of the chartered barges ran aground. A tugboat tried to
pull the barge but was unsuccessful.
5. On account of the incident, Offshore incurred expenses for transferring the cargo to
another barge.
6. VIT Corp. reported the incident. Although recognizing the rough sea and high winds,
the incident was nevertheless attributed to the negligence of Barge Master Osorio for
failure to release the anchor upon the signal of the tug master.
7. No untoward incident occurred to the other barge because of compliance to the
anchor release. Also, there was alleged lost of goods also on account of Osorios
negligence as barge master.
8. Osorios employment was terminated. He filed a complaint for illegal dismissal with
the NLRC with prayer for overtime pay, nightshift differential, premium for holiday
and rest day as well as service incentive leave pay.
9. In justifying dismissal, Offshore contended that they conducted inquiries pointing out
to Osorios negligence and such cannot be ignored due to his duty as barge master.
Regarding the claims, Offshore contended they have already paid submitting as
evidence a personnel change memo and check voucher.
10. Osorio answered that his dismissal was without cause. That the incident was caused
not of his negligence but the overloading of the barge as well as tide being low.
Such overloading is not of his but of the Charterers liability.
11. The Labor Arbiter signed the case in favor of Osorio, ruling that the grounds for
dismissal does not clearly justify the termination. Offshore appealed to the NLRC and
affirmed the Labor Arbiters decision.
ISSUE
Whether or not Osorios dismissal is valid.
HELD
NO. In fine, Offshore failed to show that the dismissal of the private respondents is for just
cause. The burden of proof in termination cases rests upon the employer to show that the
dismissal is for just cause and the failure to do so means that the dismissal is not justified
and the employee is entitled to the reinstatement. As to the propriety of the awards, the
Offshore failed to substantiate its allegations that Osorio has already been paid. The
personnel change and cash voucher are not sufficient evidence of payment. Actual receipts
signed by Osorio, if any, would have been more appropriate. To reiterate, the burden of
proof rests on the party asserting the affirmative. Since the petitioner failed to prove its
assertion that the money claims of Osorio had been paid, NLRC correctly resolved the
matter in favor of Osorio.

86. Wenphil Corporation v. NLRC

WENPHIL CORPORATION V. NATIONAL LABOR RELATIONS COMMISSION
170 SCRA 69
GANCAYCO, J.
FACTS
1. Private respondent Roberto Mallare was hired by petitioner Wenphil as a crew
member at its Cubao Branch. He thereafter became the assistant head of the
Backroom Department.
2. On May 20, 1985, private respondent had an altercation with a co-employee, Job
Barrameda regarding the tending of the salad bar. Mallare slapped Barramedas cap,
stepped on the latters foot, and picked up the ice scooper and brandished it against
the latter.
3. The incident was reported to the assistant manager, Delilah Hermosura, who
immediately asked Mallare to see her. Mallare refused to see Hermosura and it took
the security guard to bring him to her. Mallare then shouted profane words instead of
making an explanation before her. He stated that the matter should be settled only
by him and Barrameda.
4. The store manager, on the basis of Hermosuras report, suspended Mallare and
Barrameda until further notice. Later that day, the store manager issued a
memorandum suspending Barrameda for one week and dismissing Mallare from
service, in accordance with their Personnel Manual. The notice of dismissal was
served on Mallare on May 25, 1985.
5. Respondent Mallare filed a complaint against petitioner Wenphil for unfair labor
practice, illegal suspension, and illegal dismissal.
6. Petitioner contended that under its Personnel Manual, which had been read and
understood by respondent Mallare, an investigation shall only be conducted if the
offense committed by the erring employee is punishable with a penalty higher than
suspension of fifteen says and the erring employee requests for an investigation of
the incident. Petitioner alleged that since respondent Mallare did not ask for an
investigation, he is deemed to have waived such right.
7. The Labor Arbiter dismissed the complaint for lack of merit, since hearing cannot be
conducted due to the repeated absence of private respondents counsel.
8. The NLRC set aside the appealed decision and ordered the reinstatement of the
private respondent to his former position, without loss of seniority and other benefits
and one (1) year backwages without qualification and deduction. Hence, the instant
petition for review.
ISSUES
1. Whether or not petitioner Wenphil has a just and valid cause to dismiss private
respondent Roberto Mallare.
2. Whether or not the due process requirement in the manner of dismissal has been
complied with.
3. Whether or not private respondent is entitled to reinstatement without loss of
seniority rights and with payment of full backwages for 3 years, without qualification,
in case he was dismissed for a cause but without due process.
HELD:
1. YES. The Supreme Court ruled with the Labor Arbiter that the dismissal of private
respondent Mallare was for a just cause. He was found guilty of grave misconduct
and insubordination. This is borne by the sworn statements of witnesses.
2. NO. The aforementioned provision of the Personnel Manual of Wenphil which may
effectively deprive its employees of the right to due process is clearly against the law
and hence, null and void. The security of tenure of a laborer or employee is
enshrined in the Constitution, the Labor Code and other related laws.

Under Section 1, Rule XIV of the Implementing Rules and Regulations of the Labor
Code, no worker shall be dismissed except for a just and authorized cause provided
by the law and after due process. Sections 2, 5, 6, and 7 of the same Rules require
that before an employee may dismiss an employee, the latter must be given a written
notice stating the particular act or omission constituting the grounds thereof; that the
employee may answer the allegations with a reasonable period; that the employer
shall afford him ample opportunity to be heard and to defend oneself with the
assistance of his representative, if he so desires; and that it is only then that the
employer may dismiss the employee by notifying him of the decision in writing,
stating clearly the reasons therefor. The failure of petitioner Wenphil to give private
respondent Roberto Mallare the benefit of a hearing before he was dismissed
constitutes an infringement of his constitutional right to due process of law and equal
protection of the laws.
3. NO. The Supreme Court held that said policy must be reexamined. .It will be highly
prejudicial to the interests of the employer to impose on him the services of an
employee who has been shown guilty of the charges that warranted his dismissal
from employment. Indeed, it will demoralize the rank and file if the undeserving, if not
the undesirable, remains in the service.
Thus, in the present case, where the private respondent, who appears to be of
violent temper, caused trouble during office hours and even defied his superiors as
they tried to pacify him, should not be rewarded with reemployment and backwages.
It may encourage him to do even worse and will render a mockery of the rules of
discipline that employees are required to observe. Under the circumstances, the
dismissal of the private respondent should be maintained, He has no right to return
to his former employer.
However, the petitioner must nevertheless be held to account for failure to extend to
private respondent his right to an investigation before causing his dismissal.
Petitioner must be imposed a sanction for said failure. Considering the
circumstances of the case, petitioner must indemnify the private respondent the
amount of P1,000.00The measure of this ward depends on the facts of each case
and the gravity of the omission committed by the employer. The petition is granted.

89. Maneja v. NLRC and Manila Midtown Hotel

MANEJA VS. NLRC
290 SCRA 603
MARTINEZ, J.
FACTS
1. Petitioner was a telephone operator at the Manila Midtown Hotel since 1985 and was
a member of union with an existing CBA with the private respondent Hotel.
2. In February 1990, she and a fellow telephone operator Rowena Loleng received two
Requests for Long Distance Call (RLDC), which were both accompanied by the a
500-peso deposit. Both overseas calls went unanswered.
3. After two days, the hotel cashier inquired about the deposits and the bills were found
after a search. One bill was inserted in the guest folio and the other was inside the
folder for cancelled calls.
4. The petitioner realized that the second RDLC was not time-stamped so she placed it
in the machine which stamped the date. Because the calls were made two days
earlier, she wrote and changed the date to reflect the true time when the call was
made.
5. The petitioner and Loleng were issued a memorandum to explain the incident and
they both submitted written explanations. Chief telephone operator issued a
recommendation that the offenses were covered by the Offenses Subject to
Disciplinary Action (OSDA) stipulated in the CBA: 1) forging, falsifying official
document(s), and 2) culpable carelessness-negligence or failure to follow specific
instructions or established procedure.
6. In March 1990, petitioner was served a notice of dismissal and criminal cases for
Falsification of Private Document and Qualified Theft were filed. The City Prosecutor
dismissed these charges however.
7. Labor Arbiter ruled that there was illegal dismissal and ordered the Hotel to reinstate
the petitioner and to pay back wages, 13th month and moral and exemplary
damages. The NLRC reversed the decision, ruling that the Labor Arbiter was without
jurisdiction because the grievance procedure in the CBA provided for Voluntary
Arbitration which was not conducted.
8. Petitioner contends that the procedures she allegedly failed to follow were not
followed by the operators and hotel employees when the circumstances warrant. For
example, when the cashiers are busy and cannot attend to the RLDCs, the forms
and the deposit are brought directly to them by the page boys. Sometimes, the
RLDCs are even recycled.
ISSUE
Was there a valid dismissal?
HELD
NO. The requisites of a valid dismissal are: 1) dismissal must be for any of the causes
expressed in Article 282 of the Labor Code, and 2) the employee must be given the
opportunity to be heard and defend himself.
As pointed out by the Labor Arbiter, the CBA requires that the failure to follow procedures
must result in loss or damage to company property and no proof was adduced that this
occurred due to the infraction. As for the alleged falsification, the CBA also provides that the
act must be done in such a way as to mislead the users thereof. This was likewise not
proved. In fact, in dismissing the criminal case, the City Prosecutor said that alteration that
makes the document speak the truth cannot be the foundation of a criminal action.
Given the factual circumstances, no dishonesty can be deduced from the act or omission of
the petitioner. Our norms of social justice demand that we credit employees with the
presumption of good faith in the performance of their duties. Given that dismissal is the
ultimate penalty that can be meted an employee, its imposition cannot be justified where the
evidence is ambivalent.

As to due process, the record shows that no hearing was conducted before the petitioner
was dismissed. While she submitted a written explanation, she was not accorded the
opportunity to fully defend herself. Consultations or conferences may not be a substitute for
an actual hearing.
The Labor Arbiter decision was reinstated.

90. Pepsi Cola Bottling Co. v. NLRC

PEPSI-COLA BOTTLING CO. VS. NLRC
G.R. NO. 101900; JUNE 23, 1992
FACTS
1. On September 1, 1986, private respondent, a licensed mechanical and electrical
engineer, was employed by Petitioner Corporation as maintenance manager of its
beverage plant at Tanauan, Leyte.
2. Sometime in January 1988, the plant CEM-72 soaker machine needed rehabilitation.
3. Rehabilitation work on the soaker machine was commenced about the middle of
March 1988 by a crew of fifteen (15) to twenty (20) men from PREMACOR.
However. PREMACOR failed to make the soaker machine fully operational.
4. Petitioner Castillo then asked private respondent to take over the work. Assisted by
the men directly under him, private respondent did so and in three weeks time, the
soaker machine became operational again at an efficiency rate of sixty-five per cent
[65%].
5. On May 9, 1988, Leah Danaquel, personnel manager of the company informed
private respondent that this position may be sacrificed because of the delay in the
rehabilitation of the soaker machine. Disappointed, private respondent want on leave
from May 9 to 17, 1988.
6. Private respondent was told to resign and offered the amount of P12,000.00 if he did.
Private respondent rejected the offer. May 25, 1988, a latter of termination was sent
to private respondent through a security guard of the company.
7. On May 30, 1988, private respondent filed a complaint for illegal dismissal and unfair
labor practice against petitioners before the National Labor Relations Commission.
8. Both the Labor Arbiter and the NLRC ordered private respondent to reinstate
petitioner. In the motion for reconsideration filed with the NLRC, the petitioners
alleged that reinstatement is no longer possible since the petitioner company closed
down its business on July 24, 1989 and the new franchise holder, Pepsi-Cola
Products Philippines (PCPPI) is a new entity.
ISSUE
Whether or not public respondents committed grave abuse of discretion in ruling that private
respondent was terminated from employment without just cause.
HELD
While it is true that loss of trust and confidence is one of the just causes for termination,
such loss of trust and confidence must however have some basis. Proof beyond reasonable
doubt is not required. It is sufficient that there is some basis for such loss of confidence or
that there must be some reasonable grounds to believe, if not to entertain the moral
conviction that the employee concerned is responsible for the misconduct and that the
nature of his participation therein rendered him absolutely unworthy of trust and confidence
demanded by his position.
Apart from the Labor Arbiter's finding that there is no sufficient basis for the petitioners to
justify private respondent s dismissal on the ground of loss of trust and confidence, it
appears that the dismissal of the private respondent was merely an afterthought to cover up
management's embarrassment. The private respondent was by-passed and ignored in the
task of rehabilitating the soaker machine and he is now being punished for the mistake of
management and the failure of its hired contractor and its favored supervisor.
The law requires that the employer must furnish the worker sought to be dismissed with two
(2) written notices before termination of employment can be legally effected: (1) notice which
apprises the employee of the particular acts or omissions for which his dismissal is sought;
and (2) the subsequent notice which informs the employee of the employer's decision to
dismiss him. Failure to comply with the requirements taints the dismissal with illegality. This
procedure is mandatory; in the absence of which, any judgment reached by management is
void and inexistent.

. The petitioners' contention is untenable. The law is clear on the matter. In fact, when
private respondent's lawyer called up Danaquel by phone to inquire categorically if he "had
been or was about to be dismissed" Danaquel emphatically answered "No." Then dew days
later or on May 25, 1988, the private respondent was handed his termination letter. The
employer's action was drastic. Under the circumstances, it cannot be stated that the private
respondent was given the opportunity to prepare for his defense.
However, to order reinstatement at this juncture would serve no prudent purpose

considering the supervening facts and circumstances of the case. Not only is PCPPI a new
corporation continuing the business and operations of PCD, there is also no doubt that the
relationship between the petitioners and the private respondent has been strained by reason
of their respective imputations of bad faith which is quite evident from the vehement and
consistent stand of the petitioners in refusing to reinstate the private respondent. Thus, in
order to prevent further delay in the execution of the decision to the prejudice of the private
respondent and to spare him the agony of having to work anew with the petitioners under an
atmosphere of antagonism, and so that the latter do not have to endure the continued
services of the private respondent in whom they have lost liking and, at this stage,
confidence, the private respondent should be awarded separation pay as an alternative to
reinstatement.

91. Dizon v. NLRC

DIZON VS. NLRC
G.R. NO. 79554; DECEMBER 14, 1989
FACTS
1. On 4 December 1981, petitioner Leopoldo Dizon entered into an Overseas
Employment Contract 1 with respondent Consunji.
2. Sometime in April 1982, petitioner, according to him, became afflicted with skin
rashes which forced him to seek medical help from the Company's clinic at the
project site. He was treated there on the following dates: 13, 29 April; 3, 25, 28, 29
May; 1 and 7 June.
3. On 17 May 1982, petitioner was again absent from his work place when
respondent's workers in the New Istana Project staged a strike demanding an
increase of salary.
4. POEA Director issued on 21 May 1982 a return-to-work order. Petitioner failed to
comply with that directive; according to him, he was then still suffering from severe
skin rashes. Barely three (3) months from the date of effectivity of petitioner's
employment contract, Consunji terminated the services of some three hundred sixty
(360) workers in the New Istana Project, including those of petitioner, upon the
ground that they had breached paragraphs (e) and (f) of clause 13 of their
employment contracts.
5. Petitioner commenced a case charging Consunji with illegal dismissal. Consunji
denied the illegal dismissal charge and claimed that petitioner had been validly
dismissed, considering that he had breached the contract of employment by taking
part in an illegal strike and disobeying the return-to-work order issued by the POEA
Director.
6. The Administrator of POEA rendered a decision in favor of petitioner. Consunji went
on appeal to the NLRC. The NLRC reversed the POEA Administrator in a decision
dated March 1987 declaring petitioner's dismissal to have been effected for
justifiable cause. Hence this recourse on certiorari.
ISSUE
Whether or not the dismissal of petitioner Dizon is justified on the ground that he had
participated in the illegal strike and had refused to obey Director Imsons return-to-work
order.
HELD
It is firmly settled that in an unlawful dismissal case, the employer has the burden of proving
the lawful cause sustaining the dismissal of the employee. Respondent Consunji did show
that petitioner Dizon was not in his workplace on 17 May 1982, the day the strike was
declared and went into effect, as well as on 24 May 1982, the day the return-to-work order
became effective; actually, petitioner himself so stated in his pleadings before the POEA.
Thus, Consunji was able to make out (even if only by petitioner's own statements) a prima
facie case that petitioner had joined in the strike and had failed to comply with the return-to-
work order of Director Imson, which constituted grounds for holding petitioner liable for
breach of his contract of employment and hence for dismissing him from his employment. It
must be noted, however, that petitioner Dizon showed, by a letter dated 4 January 1983 of
respondent Consunji's project-nurse, that he had been afflicted with severe skin rashes for
sometime and that he had reported at the Company clinic thrice before 17 May 1982 and
visited the same clinic five (5) times after 21 May 1982, for treatment and medication.
Petitioner Dizon denied participation in the strike and disclaimed any intent to defy the
return-to-work order.
Thus, while petitioner's evidence (as distinguished from his pleadings) did not show
affirmatively that he had indeed visited the Company clinic on 17 May 1982, it appears to
the Court that petitioner submitted on at least prima facie basis an adequate explanation for
his absence from his work station on the day the strike began and the day the return-to-work
order went effective. Petitioner, in other words, offset or negatived the prima facie case

made out by private respondent Consunji for a lawful dismissal: the balance of evidence
thus moved to equipoise.
But equipoise is not enough; the employer must affirmatively show rationally adequate
evidence that the dismissal was for a justifiable cause. The burden of proof in effect moved
back to and once again rested on respondent Consunji, the employer asserting the
existence of a just cause for dismissal. This burden of proof Consunji did not discharge.
The failure of Consunji to discharge the onus probandi resting on it, must be taken in
conjunction with its conceded failure to conduct an investigation on the project site before
serving Dizon his notice of termination. It may be supposed that the carrying out of such an
investigation on site before repatriation, would not have been easy. But petitioner was
entitled under our law to an investigation where he would be informed of the charges against
him and have an opportunity to present his defense or explanation before being dismissed.
What is at stake in such a case is not simply a property right but also the employee's means
of livelihood. Besides, if an investigation had been conducted, Consunji might well have
been convinced by Dizon's explanation.

92. Pepsi Cola Bottling Co. v. NL|RC

PEPSI-COLA DISTRIBUTORS OF THE PHILIPPINES, INC. VS. NLRC
G.R. NO. 106831; MAY 6, 1997
FACTS
1. Private respondent was employed by petitioner as a salesman of its softdrink
products. On March, 1985, he was promoted as Field Sales Manager assigned by
petitioner at its Warehouse in Urdaneta, Pangasinan.
2. Three (3) years later, on May, 1988, private respondent received various
memoranda from petitioner suspending him from work due to the following acts: (1)
negligence in performance of duties particularly, his incomplete and improper
accomplishment of Route Sales Report; (2) failure to achieve sales commitments,
and (3) unauthorized extension of credit (IOUs) to customers.
3. In two memoranda, private respondent was suspended for a total of 3 days due to
said acts. In a third memorandum, he was meted with another suspension for an
unspecified duration effective May 25, 1988. He was also notified to explain his side
on the case.
4. Earlier, on May 23, 1988, the salesmen and helpers at the Urdaneta Warehouse
signed a letter address to the Regional Sales Manager (Mr. Ernesto Cabuco)
charging private respondent with the following acts and requesting that he be
transferred to another station:
a. sleeping inside the route truck during route rides instead of alighting from the
vehicle to talk to customers;
b. obligating his men to pay for his meals and demanding their meal receipts for
his own reimbursement from the company;
c. fictitiously purchasing 2,000 cases of petitioners assorted Pepsi products
knowing that the price thereof will increase and later selling them at the
adjusted price using petitioners resources for his own benefit;
d. Inhuman treatment of the salesmen and helpers who are his subordinates.
5. He was again suspended and was eventually dismissed from work. Arguing that his
dismissal was illegal, private respondent sued petitioner before the Labor Arbiter
praying for backwages, reinstatement, payment of 13th month pay and other claims.
The Labor Atbiter and the NLRC ruled in favor of private respondent.
ISSUE
Whether or not the termination of private respondent was lawful.
HELD
The validity of private respondents dismissal hinges on the satisfaction of the two
substantive requirements for a lawful termination of an employees services, to wit: [18] (1)
the employee was accorded due process, basic of which are opportunity to be heard and to
defend himself, and (2) the dismissal must be for any of the causes provided in Article 282
of the Labor Code.
On the first requirement, contrary to the findings of public respondents, evidence on record
shows that private respondent was accorded due process before his dismissal on October
7, 1988. Administrative due process does not require an actual hearing. The essence
thereof is simply an opportunity to be heard. In this case, private respondent was not only
given two opportunities to explain his case, but actually availed thereof by submitting his
position paper.
Although, as a general rule findings of facts of an administrative agency which has acquired
expertise in the particular field of its endeavor, are accorded great weight on appeal, such
rule cannot be applied with respect to the assailed findings on due process in this case.
Rather, what applies is the recognized exception that if such findings are not supported by
substantial evidence, the Court can make its own independent evaluation of the facts. Upon
scrutiny of the evidence on record, particularly the notice of preventive suspension, the
ruling below that there was no due process before the dismissal cannot stand. In conformity
with Article 277(b) of the Labor Code, the said notice specifically and particularly stated the

acts leveled against private respondent and also informed him that a hearing is set on a
specific time and date for him to explain his version.
First, for the charge of misbehavior and abuse of authority, there is scant evidence on
record which would show that private respondent is guilty thereof. Mere accusations and
declarations by certain persons that the latter attempted to bribe or had engaged in fistfight,
cannot support a finding that he indeed committed such acts. Unsubstantiated accusation
without more is not synonymous with guilt.
With respect to the charge of dishonesty and conflict of interest, evidence on record shows
that private respondent purchased 2,000 cases of Pepsi products in his personal capacity,
aware that the prices thereof (Pepsi products) will increase. However, he made it appear
that said products was bought by a certain customer who later executed an affidavit denying
such purchase. When the price of Pepsi products increased, private respondent sold as his
own the 2000 cases at the adjusted price thereby accruing benefit to himself. In said
fictitious sale, he utilized petitioners resources and company time for which the former was
duly paid. By making such transaction, he also engaged himself in business competing with
his employer and thus comes in conflict of interest against petitioner. He cannot serve
himself and petitioner at the same time all at the expense of the latter. It would be unfair to
compensate private respondent who does not devote his time and effort to his employer.
The primary duty of the employee is to carry out his employers policies. Moreover, the
fictitious sale is an act of dishonesty. Route salesman, like private respondent, is a highly
individualistic personnel who roam around doing field work of selling softdrinks, deal with
customers practically on their own and are entrusted with large amounts of funds and
properties of the employer. There is a high degree of trust and confidence repose on them
and when that confidence is breach, as in this case, proper disciplinary actions may be
taken. The foregoing acts of dishonesty and conflict of interest justifies disciplinary
sanctions provided it is commensurate with the gravity of the act. Under the factual milieu of
this case a disciplinary sanction less punitive than the harsh penalty of dismissal meted on
private respondent would suffice, considering his ten (10) years of service with petitioner
and this being the first time he was charged with and investigated for such acts. There is no
evidence that he has committed infractions against the company before this incident,
otherwise, he would not have been promoted in the first place.

93. Bustamante v. NLRC

BUSTAMANTE V. NATIONAL LABOR RELATIONS COMMISSION
265 SCRA 61
PADILLA, J.:
FACTS
1. Private respondent Evergreen Farms, Inc. is engaged in the business of producing
high-grade bananas in its plantation in Davao del Norte. Petitioners were employed
as laborers, harvesters, and sprayers in respondent company's plantation.
2. Petitioners signed contracts of employment for a period of six (6) months from 2
January 1990 to 2 July 1990, but they had started working sometime in September
1989. Previously, they were hired to do the same work for periods lasting a month or
more, from 1985 to 1989
3. Before the contracts of employment expired, petitioners' employments were
terminated on 25 June 1990 on the ground of poor performance on account of age,
as not one of them was allegedly below forty (40) years old.
4. Petitioners filed a complaint for illegal dismissal before the Regional Arbitration
Branch of the NLRC in Davao City.
5. Respondent company contends that the petitioners employments were terminated
due to the expiration of their probationary period in June 1990.
6. The Labor Arbiter rendered judgment in favor of petitioners, declaring their dismissal
illegal and ordering respondent Evergreen Farms, Inc. to immediately reinstate
complainants to their former position with six (6) months backwages. However, if
reinstatement is no longer feasible an additional one (1) month salary shall be
awarded as a form of separation pay.
7. The NLRC dismissed the appeal and the subsequent motion for reconsideration of
private respondent company for lack of merit. It found that petitioners had become
regular employees after serving for more than one (1) year of broken or non-
continuous service as probationary employees. However, it deleted the award of
backwages on the ground that the termination of petitioners' services "was the result
of the private respondents mistaken interpretation of the law and that the same was
therefore not necessarily attended by bad faith, or arbitrariness.
8. Petitioners filed the instant petition assailing the NLRCs resolution that removed the
award of backwages in their favor.
ISSUE
Whether or not petitioners are entitled to full backwages
HELD
YES. It is undisputed that petitioners were illegally dismissed from employment. Article 280
of the Labor Code states:
Art. 280. Regular and Casual Employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an
perform activities which are usually necessary or desirable in the usual business or trade of
the employer, except where the employment has been fired for a specific project or
An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, that, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while such
activity exists.
This provision draws a line between regular and casual employment, a distinction however
often abused by employers. It enumerates two (2) kinds of employees, the regular
employees and the casual employees. The regular employees consist of the following:

1. Those engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer; and
2. Those who have rendered at least one year of service whether such service is
continuous or broken.
The law distinguishes between the two (2) kinds of employees to protect the interests of
labor, particularly the tenurial interest of the worker who may be denied the rights and
benefits due a regular employee by virtue of lopsided agreements with the economically
powerful employer who can maneuver to keep an employee on a casual status for as long
as convenient.
In the case at bar, petitioners were employed at various periods from 1985 to 1989 for the
same kind of work they were hired to perform in September 1989. Both the Labor Arbiter
and the NLRC agree that petitioners were employees engaged to perform activities
necessary in the usual business of the employer. As laborers, harvesters or sprayers in an
agricultural establishment which produces high grade bananas, petitioners' tasks are
indispensable to the year-round operations of respondent company. This belies the theory of
respondent company that the employment of petitioners was terminated due to the
expiration of their probationary period in June 1990. If at all significant, the contract for
probationary employment was utilized by respondent company as a chicanery to deny
petitioners their status as regular employees and to evade paying them the benefits
attached to such status.
Some of the petitioners were hired as far back as 1985, although the hiring was not
continuous. They were hired and re-hired in a span of from two to four years to do the same
type of work which conclusively shows the necessity of petitioners' service to the respondent
company's business. Petitioners have, therefore, become regular employees after
performing activities which are necessary in the usual business of their employer. But, even
assuming that the activities of petitioners in respondent company's plantation were not
necessary or desirable to its business, the Court affirms the NLRC's finding that all of the
petitioners have rendered non-continuous or broken service for more than one (1) year and
are consequently considered regular employees.
The Court does not sustain NLRCs theory that private respondent should not be made to
compensate petitioners for backwages because its termination of their employment was not
made in bad faith. The act of hiring and re-hiring the petitioners over a period of time without
considering them as regular employees evidences bad faith on the part of private
respondent. The subsequent rehiring of petitioners on a probationary status "clearly appears
to be a convenient subterfuge on the part of management to prevent petitioners from
becoming regular employees.
In the case at bar, there is no valid cause for dismissal. The petitioners have not performed
any act to warrant termination of their employment. Consequently, petitioners are entitled to
their full backwages and other benefits from the time their compensation was withheld from
them up to the time of their actual reinstatement.
Private respondent moved to reconsider the Courts (First Division) aforesaid decision on
grounds that: (a) Petitioners are not entitled to recover backwages because they were not
actually dismissed but their employment was not converted to permanent employment; and
(b) assuming that petitioners are entitled to backwages, computation thereof should not start
from cessation of work up to actual reinstatement and that salary earned elsewhere (during
the period of illegal dismissal) should be deducted from the award of such backwages.
The Court En Banc declared that there is no compelling reason to reconsider the decision of
the Court (First Division). However, the Court En Banc clarified the computation of
backwages due an employee on account of his illegal dismissal from employment The Court
declared: The Court deems it appropriate to reconsider the earlier ruling on the computation
of backwages as enunciated in the Pines City Educational Center case, by now holding that
conformably with the evident legislative intent as expressed in R.A. No. 6715, backwages to
be awarded to an illegally dismissed employee, should not, as a general rule, be diminished
or reduced by the earnings derived by him elsewhere during the period of his illegal
dismissal. The underlying reason for this ruling is that the employee, while litigating the

legality (illegality) of his dismissal, must still earn a living to support himself and family, while
full backwages have to be paid by the employer as part of the price or penalty he has to pay
for illegally dismissing his employee. The clear legislative intent of the amendment in R.A.
6715 is to give more benefits to workers than was previously given them under the Mercury
Drug rule or the deduction of earnings elsewhere rule. A closer adherence to R.A. No.
6715 points to full backwages as meaning that i.e,. without deducting from backwages the
earnings derived elsewhere by the concerned employee during the period of his illegal
dismissal. In other words, the provision calling for full backwages to illegally dismissed
employees is clear, plain, and free from ambiguity and therefore, must be applied without
attempted or strained interpretation.

94. BLTB Bus Co. v. Court of Appeals

BATANGAS LAGUNA TAYABAS BUS CO. VS. COURT OF APPEALS
71 SCRA 470
FACTS
1. Teotimo de Mesa was employed by BTLB Co. as a bus conductor. He rendered his
services until the company ceased operations due to WWII outbreak. In resuming
business after the war, de Mesa rejoined BTLB Co. as an administrative officer with
a salary of P1,000/month. He had a total length of service of 31 years.
2. Teotimo de Mesas termination was caused by his act in withdrawing two cash
advances or vales of P100 each from the companys Infanta, Quezon station which
is in violation of a memorandum restricting cash advances of confidential employees
to P100 each payroll period.
3. Contending that BTLB Bus Co. has no valid grounds or cause of terminating his
services, de Mesa filed a complaint before the trial court to recover separation pay,
retirement benefits, his would be earnings had he not been separated and reached
compulsory retirement age, an amount for loss of Social Security benefits, moral
damages, exemplary damages and attorneys fees for expenses for litigation.
4. The Trial Court rendered a decision in favor of BTLB Bus Co., stating the dismissal
was for lawful cause. However, it still directed the company to pay but limited to
retirement benefits plus interest and attorneys fees. Both parties appealed. The
Court of appeals modified the decision but still in favor of BTLB Bus Co.. That in
addition to the awards stated by the trial court, they are to pay separation pay and an
amount representing de Mesas indebtedness to his employer including legal
interest. Hence, the petition for review.
ISSUE
1. Whether or not respondent de Mesas dismissal was for just cause.
2. Whether or not an employee who has received his separation pay can still recover
retirement benefits from his employer.
HELD
On the first issue, the SC held in the negative. On the second issue, an affirmative. It is a
fundamental duty of an employee to yield to all reasonable rules, orders and instructions of
the employer and that as a general rule, willful or intentional disobedience thereof justifies
termination of service. However, the employees conduct must have been willful or
intentional, willfulness being characterized by a wrongful and perverse mental attitude
rendering the employees act inconsistent with proper subordination. The rules, orders or
instructions must be reasonable and lawful, known to the employee and pertain to duties
which the employees discharge. In the case at bar, de Mesa has shown disregard to the
memorandum issued by BTLB Bus Co. However, the rules, instructions or commands
limiting the cash advances of confidential employees do not pertain to the duties which the
petitioner has been engage to discharge. The memo was primarily intended for the benefit
of the company itself and has nothing to do with the duties of its employees and therefore
cannot be valid ground for their discharge on the score of disobedience.
An employee dismissed without cause is entitled to a separation pay and to retirement

benefits where both the Labor Agreement and Termination Pay Law do not preclude the
said employee from recovering other benefits. In the present case, there is an absence of
such prohibition.

95. Hellenic Philippine Shipping v. NLRC and E. Siete

HELLENIC PHILIPPINE SHIPPING, INC. V. SIETE
195 SCRA 179
CRUZ, J.
FACTS
1. Private respondent Epifanio Siete was employed as Master of M/V Houda G by
Sultan Shipping Co. Ltd. Through its crewing agent, petitioner Hellenic Philippine
Shipping. He boarded the vessel on May 24, 1985 at Cyprus. The vessel sailed to El
Ferrol Spain where it loaded cargo that it subsequently discharged at Tripoli, Libya. It
then proceeded back to Cyprus, arriving there on June 30, 1985
2. On July 8, 1985, Capt. Wilfredo Lim boarded the vessel and advised Siete that he
had instructions from the owners to take over its command. These instructions were
later confirmed by a telex sent by Sultan Shipping to Siete. Neither Lim nor the telex
indicated the reason for Sietes dismissal. Siete claims that this information was also
withheld from him by petitioner Hellenic Shipping upon his repatriation to Manila.
3. Siete filed with the POEA a complaint against the petitioner for illegal dismissal and
nonpayment of his salary and other benefits under their employment contract.
4. In its Answer, petitioner alleged that Siete had been dismissed because of his failure
to erase the timber load line on the vessel, as instructed, and for his negligence in
supervising the discharge of cargo at Tripoli that resulted in the replacement of
certain damaged equipment.
5. POEA Administrator Tomas Achacoso dismissed the complaint for lack of merit and
held that there was valid cause for Sietes removal, based on the communications
presented in evidence by Hellenic Shipping.
6. The NLRC reversed the POEA Administrator, holding that the dismissal violated due
process and that the documents submitted by petitioner were hearsay, self-serving
and unverified.
7. Petitioner filed the present petition for review on certiorari, contending that Siete had
not been denied due process, considering the summary nature of the proceeding
that had to be taken in view of the nature of his position. Moreover, petitioner avers
that Siete is a managerial employee and may be dismissed on the basis of loss of
confidence.
ISSUE
Whether or not private respondent was illegally dismissed
HELD
YES. Substantial evidence has been established that the private respondent was indeed not
notified of the charges against him and that no investigation was conducted to justify his
dismissal. Moreover, the petitioner has failed to prove that Siete had been instructed to
erase the timber load lines and that he had been negligent in the cargo unloading at Tripoli.
The Court noted that the reports submitted by the petitioner to prove its charges were all
prepared after the fact of Sietes dismissal and were signed by its own employees. Their
motives are necessarily suspect. The excuse of the petitioner that it itself did not know why
Siete was dismissed, being only a crewing agent of Sultan Shipping, deserves no comment
The Labor Code provides that no worker shall be dismissed except for a just or authorized
cause provided by law and after due process. Any employer who seeks to dismiss a worker
shall furnish him a written notice stating the particular act or omission constituting the
grounds for his dismissal. The employee may answer the allegation stated against him in
the notice of dismissal within a reasonable period from receipt of such notice. The employer
shall afford the worker ample opportunity to be heard and to defend himself with the
assistance of his representative, if he so desires. The employer shall immediately notify a
worker in writing of a decision to dismiss him stating clearly the reasons therefor.
The argument that the aforequoted provisions are not applicable to the private respondent
because he was a managerial employee must also be rejected. It is not correct to say that
managerial employees may be arbitrarily dismissed at any time and without just cause as

established in an appropriate investigation. Managerial employees, no less than rank-and-

file laborers, are entitled to due process. Loss of confidence, which is the usual ground for
the removal of the managerial employee, must be established like any other lawful cause.
Even if it be assumed that Siete was a managerial employee- an issue which was not earlier
raised or resolved- the petitioner has not satisfactorily proved the reason for its supposed
loss of confidence in him.
It is not true that the vessel would be left unattended if the captain were to be placed under
investigation because he would not have a ready replacement. Under Article 627 of the
Code of Commerce: The sailing mate, as second chief of the vessel and unless the ship
agent does not order otherwise, shall take the place of the captain in case of absence,
sickness or death, and shall then assume all his powers, obligations and liabilities. In the
instant case, there was even a ready replacement for Siete. Petition is dismissed and the
assailed decision is affirmed, with the deduction of $400.90 from respondents total award.

96. Viernes v. NLRC and Benguet Electric Corporation

VIERNES VS. NLRC AND BENGUET ELECTRIC COOPERATIVE, INC. (BENECO)
G.R. NO. 108405. APRIL 4, 2003.
AUSTRIA- MARTINEZ, J.
FACTS
1. Petitioners services as meter readers were contracted for hardly a months duration,
from October 8 to 31, 1990.
2. The said term notwithstanding, petitioners were allowed to work until January 2,
1991.
3. On January 3, 1991, they were each served their identical notices of termination.
4. On the same date, they filed complaints for illegal dismissal. They contended that
they were not apprentices but regular employees whose services were illegally and
unjustly terminated in a manner that was whimsical and capricious.
5. On the other hand, private respondent BENECO invoked Article 283 of the Labor
Code in defense of the questioned dismissal.
6. The Labor Arbiter dismissed the complaints for lack of merit. However, it ordered
BENECO to extend to the petitioners the contract of temporary employment that the
former had offered, with the exception of Jaime Viernes. Also, the Labor Arbiter
directed BENECO to pay each the amount equivalent to their monthly salary as
indemnity for its failure to give complainants the 30-day notice mandated under
Article 283 of the Labor Code.
7. Modifying the Arbiters decision, the NLRC rendered that the dismissal was illegal. It
ordered petitioners reinstatement to their former position as meter readers or to any
equivalent position with payment of backwages limited to one year deleting the
award of indemnity.
ISSUES
1. Whether or not the petitioners should be reinstated to their former position as meter
readers on probationary status despite the finding that they are regular employees
under Article 280 of the Labor Code.
2. Whether or not the petitioners should be awarded indemnity pay.
HELD
1. YES. Reinstatement means restoration to a state or condition from which one had
been removed or separated. In case of probationary employment, Article 281 of the
Labor Code requires the employer to make known to his employee at the time of the
latters engagement of the reasonable standards under which they may qualify as a
regular employee.
In the case at bar, there is nothing on the letter of appointment that their employment
as meter readers was on probationary basis. It was not shown that they were
informed either, at the time of their appointment, the reasonable standards under
which they could qualify as regular employees. Instead, they were initially engaged
to perform their job for a limited period, their employment being fixed for a definite
period.
The principle enunciated in Brent School, Inc. vs. Zamora applies only to fixed term
employments. While it is true that the petitioners were initially employed on a fixed
term basis as their employment contracts were only for a month, they were allowed
to continue working in the same capacity as meter readers without the benefit of a
new contract or without the term of their employment being fixed a new. After
October 31, 1991, the employment of petitioners is no longer on a fixed term basis.
The complexion of the employment relationship is totally changed for the petitioners
have attained the status of regular employees.
Under Article 280 of the Labor Code, there are two instances whereby it is
determined that an employee is regular: (1) the particular activity performed by the
employee is necessary or desirable to the usual trade or business of the employer;

or (2) if the employee has been performing the job for at least one year. The
petitioners fall under the first category. The job of a meter reader is necessary to the
business of BENECO since unless the meter reader records the electric
consumption of the subscribing public, there could not be a valid basis for billing the
customers of BENECO. The fact that the petitioners were allowed to continue
working after the expiration of their employment is evidence of the necessity and
desirability of their service to BENECOs business. Since petitioners are already
regular employees at the time of their illegal dismissal from employment, they are
entitled to be reinstated to their former position as regular employees, not merely
probationary.
Moreover, under Article 279, as amended by R.A. No. 6715, an illegally dismissed
employee is entitled to 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. Therefore, petitioners
backwages should not be limited to one year only.
2. YES. An employer becomes liable to pay indemnity to an employee who has been
dismissed if, in effecting such dismissal, the employer fails to comply with the
requirements of due process. The indemnity is in the form of nominal damages
intended not to penalize the employer but to vindicate or recognize the employees
right of procedural due process which was violated by the employer. Indemnity is not
incompatible with the award of backwages since they are awards based on different
considerations. Backwages are granted on the grounds of equity to workers for
earnings lost due to their illegal dismissal from work. On the other hand, indemnity is
meant to vindicate the right of an employee to due process which has been violated
by the employer.
In the case at bar, BENECO failed to comply with the provisions of Article 283 of the
Labor Code which requires an employer to server a notice of dismissal upon the
employees sought to be terminated and to the Department of Labor, at least one
month before the intended date of termination. Therefore, it was held that the NLRC
committed grave abuse of discretion in deleting the award of indemnity.

97. Globe-Mackay Cable and Radio Corporation v. NLRC

GLOBE- MACKAY CABLE AND RADIO CORPORATION VS. NLRC
G.R. NO. 82511. MARCH 3, 1992.
ROMERO, J.
FACTS
1. Sometime in 1984, petitioner GMCR, prompted by reports that company equipment
and spare parts worth thousands of dollars under the custody of Saldivar were
missing, caused the investigation of the latter's activities.
2. The report prepared by the company's internal auditor, Mr. Agustin Maramara,
indicated that Saldivar had entered into a partnership styled Concave Commercial
and Industrial Company with Richard A. Yambao, owner and manager of Elecon
Engineering Services (Elecon), a supplier of petitioner often recommended by
Saldivar.
3. The report also disclosed that Saldivar had taken petitioner's missing Fedders
airconditioning unit for his own personal use without authorization and also connived
with Yambao to defraud petitioner of its property. The airconditioner was recovered
only after petitioner GMCR filed an action for replevin against Saldivar.
4. Moreover, it appeared in the investigation that Imelda Salazar violated company
regulations by involving herself in transactions conflicting with the company's
interests. Evidence showed that she signed as a witness to the articles of partnership
between Yambao and Saldivar. It also appeared that she had full knowledge of the
loss and whereabouts of the Fedders airconditioner but failed to inform her employer.
5. Consequently, in a letter dated October 8, 1984, GMCR placed private respondent
Salazar under preventive suspension for one (1) month, effective October 9, 1984,
thus giving her thirty (30) days within which to explain her side. But instead of
submitting an explanation, three (3) days later or on October 12, 1984, Salazar filed
a complaint against petitioner for illegal suspension, which she subsequently
amended to include illegal dismissal, after petitioner notified her in writing that
effective November 8,1984, she was considered dismissed "in view of (her) inability
to refute and disprove these findings."
6. After due hearing, the Labor Arbiter ordered GMCR to reinstate private respondent to
her former or equivalent position and to pay her full backwages and other benefits
she would have received were it not for the illegal dismissal. Petitioner was also
ordered to pay private respondent moral damages of P50,000.00.
7. On appeal, the NLRC in its resolution affirmed the said decision with respect to the
reinstatement of Salazar but limited the backwages to a period of two (2) years and
deleted the award for moral damages.
ISSUES
1. Whether or not the suspension of Salazar was illegal.
2. Whether or not Salazar was entitled to reinstatement and two (2) years' backwages
with respect to her subsequent dismissal.
HELD
1. YES. The investigative findings of Mr. Maramara, which pointed to Delfin Saldivar's
acts in conflict with his position as technical operations manager, necessitated
immediate and decisive action on any employee closely associated with Saldivar.
The suspension of Salazar was further impelled by the discovery of the missing
airconditioning unit inside the apartment private respondent shared with Saldivar.
Under such circumstances, preventive suspension was the proper remedial recourse
available to the company pending Salazar's investigation. By itself, preventive
suspension does not signify that the company has adjudged the employee guilty of
the charges she was asked to answer and explain. Such disciplinary measure is
resorted to for the protection of the company's property pending investigation of any
alleged malfeasance or misfeasance committed by the employee. Thus, it is not
correct to conclude that petitioner GMCR had violated Salazar's right to due process
when she was promptly suspended. If at all, the fault lay with private respondent
when she ignored petitioner's memorandum "giving her ample opportunity to present

(her) side to the Management." Instead, she went directly to the Labor Department
and filed her complaint for illegal suspension without giving her employer a chance to
evaluate her side of the controversy.
2. YES. Under Art. 279 of the Labor Code, as amended: Security of Tenure.-In cases
of regular employment, the employer shall not terminate the services of an employee
except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement."
In the case at bar, there was no evidence which clearly showed an authorized, much
less a legal, cause for the dismissal of private respondent, she had every right, not
only to be entitled to reinstatement, but as well, to full backwages. The intendment
of the law in prescribing the twin remedies of reinstatement and payment of
backwages is, in the former, to restore the dismissed employee to her status before
she lost her job, for the dictionary meaning of the word "reinstate is "to restore to a
state, condition, position, etc. from which one had been removed" and in the latter, to
give her back the income lost during the period of unemployment. Both remedies,
looking to the past, would perforce make her "whole."
The Labor Code is clear and unambiguous: "An employee who is unjustly dismissed
from work shall be entitled to reinstatement ... and to his full backwages . . ." Neither
does the provision admit of any qualification. An exception to the rule is when the
reinstatement may be inadmissible due to ensuing strained relations between the
employer and the employee. In such cases, it should be proved that the employee
concerned occupies a position where he enjoys the trust and confidence of his
employer; and that it is likely that if reinstated, an atmosphere of antipathy and
antagonism may be generated as to adversely affect the efficiency and productivity
of the employee concerned.
The principle of "strained relations" cannot be applied indiscriminately. Otherwise,

reinstatement can never be possible simply because some hostility is invariably
engendered between the parties as a result of litigation. That is human nature.
Besides, no strained relations should arise from a valid and legal act of asserting
one's right; otherwise an employee who shall assert his right could be easily
separated from the service, by merely paying his separation pay on the pretext that
his relationship with his employer had already become strained.
Here, it has not been proved that the position of private respondent as systems
analyst is one that may be characterized as a position of trust and confidence such
that if reinstated, it may well lead to strained relations between employer and
employee. Hence, this does not constitute an exception to the general rule
mandating reinstatement for an employee who has been unlawfully dismissed. As a
system analyst, Salazar was very far removed from operations involving the
procurement of supplies.
In the instant case, petitioner has predicated its dismissal of Salazar on loss of
confidence. As has been held before, while loss of confidence or breach of trust is a
valid ground for termination, it must rest on some basis which must be convincingly
established. An employee may not be dismissed on mere presumptions and
suppositions. While the Court should not condone the acts of disloyalty of an
employee, neither should it dismiss him on the basis of suspicion derived from
speculative inferences. To rely on the Maramara report as a basis for Salazar's
dismissal would be most inequitous because the bulk of the findings centered
principally Saldivars alleged thievery and anomalous transactions as technical
operations' support manager. Said report merely insinuated that in view of Salazar's
special relationship with Saldivar, Salazar might have had direct knowledge of
Saldivar's questionable activities. Direct evidence implicating private respondent is
wanting from the records. Thus, she was illegally dismissed.

98. Roquero v. Philippine Airlines

ROQUERO VS. PHILIPPINE AIRLINES, INC.
G.R. NO. 152329. APRIL 22, 2003.
PUNO, J.
FACTS
1. Petitioner Alejandro Roquero and Rene Pabayo were ground equipment mechanics
of respondent Philippine Airlines, Inc. (PAL). They were caught red-handed
possessing shabu within the company premises by PAL Security and NARCOM
personnel.
2. Subsequently, they received a notice of administrative charge for violating the PAL
Code of Discipline. They were required to answer the charges and were placed
under preventive suspension. In their answer, petitioner and Pabayo alleged that
they were instigated by PAL to take the drugs.
3. In a Memorandum, Roquero and Pabayo were dismissed by PAL. Thus, they filed a
case for illegal dismissal. The Labor Arbiter upheld the dismissal but awarded the
parties separation pay. During the period of their appeal with the NLRC, the
complainants were acquitted by the RTC in the criminal case charging them of
violation of Republic Act 6425.
4. The NLRC ruled in favor of the complainants finding PAL guilty of instigation.
However, it ordered reinstatement to their former positions but without backwages.
Roquero and Pabayo did not appeal the decision but filed a motion for a writ of
execution of the reinstatement order. The Labor Arbiter granted the motion but PAL
refused to executed on the ground that they have already filed a petition for review
before the Supreme Court.
5. During the pendency of the case, PAL and Pabayo executed a compromise
agreement and the latter withdrew the case with regard to him. The Court of Appeals
upheld the dismissal but did not award the separation pay on the ground that one
who has been validly dismissed is not entitled to those benefits.
ISSUES
1. Was Roqueros dismissal valid?
2. Can the executory nature of the reinstatement order be halted by a petition filed in
the higher courts without any restraining order or preliminary injunction having been
ordered in the meantime?
HELD
1. YES. Roquero is guilty of serious misconduct for possessin and using shabu. He
violated Chapter 2,Article VII, section 4 of the PAL Code of Discipline stating, any
employee who, while in the company premises or on duty, takes or is under the
influence of prohibited or controlled drugs, or hallucinogenic substances or narcotics
shall be dismissed.
Serious misconduct is defined as the transgression of some established and definite

rule of action, a forbidden act, a dereliction of duty, willful in character, and implies
wrongful intent and not mere error in judgement. For serious misconduct to warrant
the dismissal of an employee, it (1) must be serious; (2) must relate to the
performance of the employees duty; and (3) must show that the employee has
become unfit to continue working for the employer.
It is of public knowledge that drugs can damage the mental faculties. Roqueros job
was with the maintenance and repair of PALs airplanes. He cannot discharge that
duty if he is a drug user. His failure to do this job can mean great loss of lives and
properties. Hence, even if he was instigated to take the drugs, he has no right to be
reinstated to his position. Petitioner cannot also complain that he was denied
procedural due process for PAL complied with the two-notice requirement before
dismissing him. The twin-notice rule requires (1) the notice which apprises the
employee of the particular acts or omissions for which his dismissal is being sought
along with the opportunity for the employee to air his side, and (2) the subsequent

notice to of the employers decision to dismiss him. Both were given by respondent
PAL.
2. NO. Article 223, paragraph 3 of the Labor Code, as amended by Section 12 of

Republic Act No. 6715, and Section 2 of the NLRC Interim Rules on Appeals under
RA No. 6715, provide that an order of reinstatement by the Labor Arbiter is
immediately executory even pending appeal. The rationale being the law itself laid
down a compassionate policy as to vivify and enhance the provisions of the 1987
Constitution on labor and the working man.
The order of reinstatement is immediately executory. The unjustified refusal of the

employer to reinstate a dismissed employee entitles him to payment of his salaries
effective from the time the employer failed to reinstate him despite the issuance of a
writ of execution. Unless there is a restraining order issued, it is ministerial upon the
Labor Arbiter to implement the order of reinstatement. In the case at bar, no
restraining order was granted. Thus, it was mandatory for PAL to actually reinstate
Roquero or reinstate him in the payroll. Having failed to do so, PAL must pay
Roquero the salary he is entitled to, as if he was reinstated, from the time of the
decision of the NLRC until the finality of the decision of the SC.
Technicalities have no room in labor case where the Rules of Court are applied only
in a suppletory manner and only to effectuate the objectives of the Labor Code and
not to defeat it. Hence, even if the reinstatement order of the Labor Arbiter is
reversed on appeal, it is obligatory on the part of the employer to reinstate and pay
the wages of the dismissed employee during the period of appeal until reversal of the
higher court. On the other hand, if the employee has been reinstated during the
appeal period and such order is reversed with finality, the employee is not required to
reimburse whatever salary he has received for he is entitled to such, more so if he
actually rendered services during the period.

99. Maranaw Hotel v. NLRC

MARANAW HOTEL RESORT CORPORATION VS. NLRC
238 SCRA 190
DAVIDE, JR., J.:
FACTS
1. On June 16, 1990, Gina G. Castro, was hired on a probationary basis for 6 months
as a guest relations officer of the Century Park Sheraton Hotel owned by petitioner
Maranaw Hotel.
2. On Nov. 10, 1990, she was dismissed on the ground of failure to meet the standards
set forth in her probationary employment contract. She then filed with the Arbitration
Branch of the NLRC a complaint for illegal dismissal.
3. The Labor Arbiter rendered a decision finding the dismissal of Castro as illegal and
ordered her reinstatement. The petitioner filed for a motion for execution which was
not acted upon.
4. The NLRC reversed the findings of the Labor Arbiter and held that there was no
illegal dismissal but rather failure of the private respondent to comply with the
petitioner's standards for permanent employment.
5. However, notwithstanding the above pronouncements, the NLRC considered
petitioner on payroll reinstatement from the time of filling motion for execution until
promulgation of its decision.
6. The NLRC based its decision on Art. 223 of the Labor Code. Art. 223 provides that
the decision of the Labor Arbiter reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is concerned, shall immediately be executory,
even pending appeal. The employee shall either be admitted back to work under the
terms and conditions prevailing prior to his dismissal or separation or, at the option of
the employer, merely reinstated in the payroll.
7. Maranaw filed a petition for certiorari alleging that the NLRC committed grave abuse
of discretion.
ISSUE
Whether or not NLRC committed grave abuse of discretion.
HELD
YES. It is clear from art. 223 that if execution pending appeal is granted, the employee
concerned shall be admitted back to work under terms and conditions prevailing prior to is
dismissal or separation. However, instead of doing so, the employer is granted the option to
merely reinstate the employee in the payroll. This would simply mean that although not
admitted back to work, the employee would nevertheless be included in the payroll and
entitled to receive her salary and other benefits as if she were in fact working. It must be
stressed, however, that although the reinstatement aspect of the decision is immediately
executory, it does not follow that it is self-executory. There must be a writ of execution which
is not present in the case at bar for the motion for execution was not acted upon.

100. Suario v. Bank of the Philippine Island

SUARIO VS. BANK OF THE PHILIPPINE ISLANDS
G.R. NO. L-50459 AUGUST 25, 1989
FACTS
1. The petitioner, filed this petition for review of the decision of the National Labor
Relations Commission (NLRC) which denied his claim for damages arising from an
alleged illegal dismissal. In addition to the separation pay already awarded to him,
the petitioner asks for P9,995.00 actual damages, P300,000.00 moral damages,
P200,000.00 exemplary damages, and attorney's fees to be determined by the
Court.
2. Complainant has been a loyal employee of the respondent bank since March, 1969,
first assigned as a saving clerk, then rose to become the head of the loan section in
1976 with an official designation as Credit Investigator Appraiser-Credit Analyst.
During the time of the complainant' s employment with the respondent bank, he
pursued his studies of law without criticism or adverse comments from the
respondent bank.
3. Sometime in March, 1976, the complainant verbally requested the then Asst. Vice-
President and Branch Manager, Mr. Armando N. Guilatco, for a 6-month leave of
absence without pay purposely to take the 1976 pre-bar review in Manila and that
the said Mr. Guilatco informed the complainant that there would be no problem as
regards the requested leave of absence;
4. That sometime in May, 1976, the complainant received a verbal notice from the new
Branch Manager, Mr. Vicente Casino, that the respondent's Head Office approved
only a 30-day leave of absence without pay but that Mr. Guilatco, then assigned in
Head Office as Vice President, advised him (Casino) to inform the complainant to
just avail of the 30-day leave of absence first and then proceed to Manila for the
review since the request would be ultimately granted;
5. Complainant never suspected that his application would be disapproved, much less
any bad faith on the part of the respondent bank to discriminate union member (sic),
since it has been the policy of the respondent bank to grant request of this nature as
shown in the case of four (4) former employees who were all granted leave of
absence without pay.
6. During the last week of August, 1976, the complainant received another letter from
Douglas E. Aurelio, attaching a xerox copy of the application for a Clearance to
terminate on the ground of resignation/ or abandonment. ...The complainant failed to
file his opposition since as above averred to, he was already in Manila taking up the
review and was then very busy since the bar examination was only two months shy;
Sometime during the first week of December, 1976, the complainant went to the
respondent bank but was verbally informed that he was already dismissed;
ISSUE
Whether or not the NLRC committed grave abuse of discretion in denying the petitioner's
claim for actual, moral and exemplary damages plus attorney's fees in addition to his
separation pay.
HELD
NO. We do not find any bad faith or fraud on the part of the bank officials who denied the
petitioner's request for a six months' leave of absence without pay. If the petitioner was
made to believe that his request would be granted, we can not fault the branch
manager or his subsequent replacement for giving their assurances. They were merely
personal assurances which could be reconsidered on the basis of later developments or
upon consultation with higher authorities and which are not binding. Certainly, the bank
officials who gave their verbal assurances had only the petitioner's paramount
welfare in their minds. There is no evidence to show that they meant to deceive the
petitioner. They themselves thought that such a request would be granted. Unfortunately,
company policy had to be followed. The fact that the petitioner's request for six months'
leave of absence was denied does not ipso facto entitle him to damages. It is incumbent
upon the petitioner to prove that there was malice or bad faith on the part of the private

respondents in terminating him On the contrary, the records of this petition show that the
private respondent acted in accordance with law before effecting the dismissal. The records
also show that there was a prior application with the Ministry of Labor to terminate the
petitioner's employment. A copy of said application was furnished to the petitioner. The
petitioner, however, did not oppose such application nor did he do anything to preserve his
right. Neither can we consider the private respondents' response to the petitioner's query
regarding his status as having given him false hopes. The referral to the personnel
department was merely a part of the formal procedure undertaken by the bank. Such referral
does not show that the bank acted in a wanton or willful manner.

101. Sunio v. NLRC

SUNIO VS. NLRC
127 SCRA 390
MELENCIO-HERRERA, J.
FACTS
1. EMRACO and CIPI, sister corporations , sold an iceplant to RDFC, with a mortgage
on the same properties constituted the latter in favor of the former to secure the
payment of the balance of the purchase price.
2. By virtue of that sale, EMRACO-CIPI, terminated the services of all their employees
including private respondents herein, and paid them their separation pay. RDFC
hired its own employees and operated the plant.
3. In 1973, RDFC sold the iceplant to petitioner ICC, headed by its President and
General Manager, petitioner Alberto Sunio.
4. Petitioners also hired their own employees as private respondents were no longer in
the plant.
5. The sale was subject to the mortgage in favor of EMRAC-CIPI.
6. Both RDFC-ICC failed to pay the balance of the purchase price, as a consequence
of which, EMRACO-CIPI instituted extra-judicial foreclosure proceedings. The
properties were sold at public auction, the highest bidder being EMRACO-CIPI.
7. That day, EMRACO-CIPI sold the ice plant to Nilo Villanueva, subject to the right of
redemption of RDFC. Nilo Villanueva then rehired private respondents.
8. RDFC subsequently redeemed the ice plant. Petitioners did not re-employ private
respondents. The latter filed complaints against petitioners for illegal dismissal before
the Regional Office of Ministry of Labor and Employment. The Assistant Regional
Director of the latter declared its decision ordering the reinstatement of private
respondent. On appeal, NLRC affirmed the Regional Director's decision.
ISSUE
Whether or not the NLRC acted with grave abuse of discretion amounting to lack or excess
of jurisdiction in ordering the reinstatement of private respondents and the payment of their
backwages.
HELD
Petitioners argue, among others, that no employer-employee relationship exists between
them and private respondents because there is no privity of contract that exist between
them, the latter being employees of Nilo Villanueva who re-hired them when he took
over the operation of the ice plant from CIPI; and that no succession of rights and
obligations took place between Villanueva and petitioners as the transfer of possession was
a consequence of the exercise of the right of redemption. Private respondents, on the other
hand, countered that the sale of a business of a going concern does not ipso facto terminate
employer-employee relations when the successor-employer continues the business
operation of the predecessor-employer in an essentially unchanged manner. Private
respondents argue that the change of management or ownership is not one of the just
causes for the termination of services of employees under Article 283 of the Labor
Code, as amended.
We sustain petitioners. It is true that the sale of a business of going concern does not ipso
facto terminate the employer-employee relations insofar as the successor-employer is
concerned, and that change of ownership or management of an establishment or
company is not one of the just causes provided by law for the termination of employment.
The situation here, however, was not one of simple change of ownership. Of not is the fact
that when EMRACO-CIPI sold the plant to RDFC, CIPI had terminated the services of its
employees, including herein private respondents, giving them their separation pay which
they accepted. When RDFC took over ownership and management, therefore, it hired its
own employees, not the private respondents, who were no longer there. Thus, it cannot be
justifiably said that the plant together with its staff and personnel moved from one ownership
to another, No succession of employment rights and obligations can be said to have taken
place between EMRACO-CIPI-Nilo Villanueva, on the one hand, and petitioners on the

other. As regards the personal liability of Sunio, he cannot be made jointly and severally
liable with petitioner company and CIPI for the payment of backwages of private
respondents. He was impleaded in the Complaint in his capacity as General Manager or
petitioner corporation. There appears to be no evidence on the record that he
acted maliciously or in bad faith in terminating the services of private respondents. His act is
therefore within the scope of his authority and was a corporate act. It is basic that a
corporation is invested by law with a personality separate and distinct from those
of the persons composing it as well as from that of any other legal entity to which it may be
related. Therefore, petitioner Sunio should not have been made personally answerable for
the payment of private respondents back salaries.

102. Uichico v. NLRC

UICHICO V. NLRC
237 SCRA 35
HERMOSISIMA, JR., J.
FACTS
1. Private respondents were employed by Crispa, Inc. for many years in the latter's
garments factory located in Pasig Boulevard, Pasig City.
2. Sometime in September, 1991, private respondents' services were terminated on the
ground of retrenchment due to alleged serious business losses suffered by Crispa,
Inc. in the years immediately preceding 1990.
3. Respondent employees, on November, 1991, filed before the NLRC, National Capital
Region, Manila, three (3) separate complaints for illegal dismissal and diminution of
compensation against Crispa, Inc., Valeriano Floro , and the petitioners. Valeriano
Floro was a major stockholder, incorporator and Director of Crispa, Inc., while the
petitioners were high ranking officers and directors of the company.
4. After due hearing, the Labor Arbiter rendered a decision dismissing the complaints
for illegal dismissal but at the same time ordering Crispa, Inc., Floro and the
petitioners to pay respondent employees separation pays equivalent to seventeen
(17) days for every year of service. Upon motion of reconsideration, NLRC affirmed
the Labor Arbiter's decision.
ISSUE
Whether or not Crispa, Inc. is guilty in illegally dismissing private respondents; and whether
or not petitioners herein should be held jointly and severally liable with Crispa for all
the money claims of the private respondents.
HELD
Retrenchment, or "lay-off" in layman's parlance, is the termination of employment initiated by
the employer through no fault of the employee's and without prejudice to the latter, resorted
to by the management during periods of business recession, industrial depression, or
seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials,
conversion of a plant for a new production program or the introduction of new methods or
more efficient machinery, or of automation. We are more in accord with the aforequoted
observations made by the NLRC. It is true that administrative and quasi-judicial bodies like
the NLRC are not bound by the technical rules of procedure in the adjudication of cases.
However, this procedural rule should not be construed as a license to disregard certain
fundamental evidentiary rules. While the rules of evidence prevailing in the courts of law or
equity are not controlling in proceedings before the NLRC, the evidence presented before it
must at least have a modicum of admissibility for it to be given some probative value. The
Statement of Profit and Losses submitted by Crispa, Inc. to prove its alleged losses, without
the accompanying signature of a certified public accountant or audited by an independent
auditor, are nothing but self-serving documents which ought to be treated as a mere scrap
of paper devoid of any probative value. For sure, this is not the kind of sufficient and
convincing evidence necessary to discharge the burden of proof required of petitioners to
establish the alleged losses suffered by Crispa, Inc. in the years immediately preceding
1990 that would justify the retrenchment of respondent employees. In fact, petitioners, as
directors and officers of Crispa, Inc., already concede, albeit quite belatedly, in its Reply to
Comment of Public Respondent, the finding of public respondent NLRC that petitioners
utterly failed to establish the alleged financial losses borne by Crispa, Inc., thus making the
company guilty of illegal dismissal against the private respondents. According to petitioners,
what they are actually assailing is the decision of the NLRC holding them solidarily liable
with the company for the payment of separation pay and backwages to the private
respondents. It is the contention of the petitioners that the award of backwages and
separation pay is a corporate obligation and must therefore be assumed by Crispa, Inc.
alone.
We do not agree. In labor cases, particularly, corporate directors and officers are solidariy
liable with the corporation for the termination of employment of corporate employees done

with malice or in bad faith. In this case, it is undisputed that petitioners have a direct hand in
the illegal dismissal of respondent employees. They were the ones, who as high-ranking
officers and directors of Crispa, Inc., signed the Board Resolution retrenching the private
respondents on the feigned ground of serious business losses that had no basis apart from
an unsigned and unaudited Profit and Loss Statement which, to repeat, had no evidentiary
value whatsoever. This is indicative of bad faith on the part of petitioners for which they can
be held jointly and severally liable with Crispa, Inc. for all the money claims of the illegally
terminated respondent employees in this case.

103. Asionics Philippines, Inc. v. NLRC

ASIONICS PHILIPPINES VS. NLRC
290 SCRA 164
VITUG, J.
FACTS
1. API is a domestic corporation engaged in the business of assembling semi-
conductor chips and other electronic products mainly for export.
2. Yolanda Boaquina and Juana Gayola started working for API in 1979 and 1988,
respectively, as material control clerk and as production operator.
3. During the third quarter of 1992, API commenced negotiations with the duly
recognized bargaining agent of its employees, the Federation of Free Workers
("FFW"), for a Collective Bargaining Agreement ("CBA").
4. A deadlock, however, ensued and the union decided to file a notice of strike. This
event prompted the two customers of API, Indala and CP Clare Theta J, to
thereupon refrain from sending to API additional kits or materials for assembly.
5. API, given the circumstance that its assembly line had to thereby grind to a halt, was
forced to suspend operations pursuant to Article 286 of the Labor Code. Private
respondents Boaquina and Gayola were among the employees asked to take a
leave from work.
6. Upon the resolution of the bargaining deadlock in October of 1992, a CBA was
concluded between API and FFW.
7. Subsequently, and inasmuch as its business activity remained critical, API was
constrained to implement a company-wide retrenchment affecting one hundred five
(105) employees from a work force that otherwise totalled three hundred four (304).
8. Boaquina and Gayola were ordered by API to take an indefinite leave of absence.
They were not recalled since then.
9. Private respondents joined the Lakas ng Manggagawa sa Pilipinas Labor Union
(Lakas Union) and, through the latter union, filed a notice of strike against API on the
ground of unfair labor practice. The Labor Arbiter declared the strike as illegal.
10. Meanwhile, at the instance of several employees which included private respondents
Boaquina and Gayola, a complaint for illegal dismissal, violation of labor standards
and separation pay, as well as for recovery of moral and exemplary damages, was
filed against API and/or Frank Yih (API's President) before the NLRC National
Capital Region Arbitration Branch.
11. The Labor Arbiter declared the private respondent's dismissal as illegal. On appeal,
NLRC modified the Labor Arbiter's decision declaring that private respondents were
not illegally dismissed but were validly terminated due to the retrenchment policy
implemented by API.
ISSUE
1. Whether or not private respondents who are officers of Lakas Union are still entitled
to separation pay and indemnity despite having participated in a strike that has been
declared illegal.
2. Whether or not a stockholder/director/officer of a corporation can be held liable for
the obligation of the corporation absent any proof and finding of bad faith.
HELD
Anent the first issue, we must rule in the negative. It is quite evident that the termination of
employment of privaterespondents was due to the retrenchment policy adopted by API and
not because of the former's union activities. The decision of Labor Arbiter, declaring private
respondents to have lost their employment status due to their participation in an illegal strike
is of no really significance to petitioners. It should suffice to say, as so aptly observed by the
NLRC, that the retrenchment of private respondents has, in fact, preceded the declaration of
strike. It is, instead, on the issue of joint and solidary liability of petitioner Frank Yih with API
that the Court has decided to give due course to the instant petition. The court cannot agree
with the Solicitor-General in suggesting that even if Frank Yih had no direct hand in the
dismissal of the respondents he should be personally liable therefor on account alone of his
being the President and majority stockholder of the company. In Sunio vs. NLRC, petitioner

Sunio was impleaded in the Complaint in his capacity as General Manager of petitioner
corporation. We ruled therein that "there appears to be no evidence on record that he acted
maliciously or in bad faith in terminating the services of private respondents. His act,
therefore, was within the scope of his authority and was a corporate act." Thus he was not
jointly and severally liable. In the instant case, Nothing on record is shown to indicate that
Frank Yih has acted in bad faith or with malice in carrying out the retrenchment program of
the company. His having been held by the NLRC to be solidarily and personally liable with
API is thus legally unjustified.

Article 283 284: Authorized

Causes for Termination

104. Wiltshire File Co. v. NLRC

WILTSHIRE FILE CO., INC. VS. NLRC
193 SCRA 665
FELICIANO, J.:
FACTS
1. Private respondent Vicente Ong was the Sales Manager of petitioner from March 16,
1981 up to June 18, 1985.
2. On 13 June 1985, upon private respondent's return from a business and pleasure
trip abroad, he was informed by the President of petitioner that his services were
being terminated.
3. Private respondent maintains that he tried to get an explanation from management of
his dismissal but to no avail.
4. When private respondent again tried to speak with the President of petitioner, the
company's security guard handed him a letter which formally informed him that his
services were being terminated upon the ground of redundancy.
ISSUE
Whether or not private respondent is validly terminated.
HELD
The Court indeed found that petitioner had serious financial difficulties before, during and
after the termination of the services of private respondent. The company showed a net loss
of P4,431,321.00 in its audited financial statements. Moreover, Wiltshire finally closed its
doords and terminated all operations in the Philippines on January 1987, barely 2 years
after the termination of private respondent. The Court considered that finally shutting down
business operations constitutes strong confirmatory evidence of petitioner's previous
financial distress.
It is also to be noted that the letter informing private respondents of the termination of his
services used the word redundant, that letter also referred to the company having incurred
financial losses which in fact has compelled it to resort to retrenchment to prevent further
losses. Thus, what the letter was in effect saying was that because of financial losses,
retrenchment was necessary, which in turn resulted in the redundancy of private
respondent's position.
That no other person was holding the same position that private respondent held prior to the
termination of his services, does not show that his position had not become redundant.
Redundancy, for purposes of the Labor Code, exists where the services of an employee are
in excess of what is reasonably demanded by the actual requirements of the enterprise. A
position is redundant where it is superfluous, and superfluity of a position or positions may
be the outcome of a number of factors such as overhiring of workers, decreased volume of
business, or dropping of a particular product line or service activity previously manufactured
or undertaken by the enterprise.

105. Escareal v. NLRC

ESCAREAL VS. NLRC
G.R. NO 99359 SEPTEMBER 2,1992
DAVIDE, JR., J.:
FACTS
1. The controversy stemmed from the dismissal of the petitioner from the private
respondent Philippine Refining Company, Inc. (hereinafter, PRC) after almost eleven
(11) years of gainful employment.
2. Petitioner was hired by the PRC for the position of Pollution Control Manager
effective on 16 September 1977 with a starting monthly pay of P4,230.00; the
employment was made permanent effective on 16 March 1978.
3. Bases for the hiring of the petitioner are Letter of Instruction (LOD No. 588
implementing the National Pollution Control Decree, P.D. No. 984, dated 1.9 August
1977, the pertinent portion of which reads: All local governments, development
authorities, government-owned or controlled corporations, industrial, commercial and
manufacturing establishments, and all other public and private entities, whose
functions involve the discharge or emission of pollutants into the water, air and/or
land resources or the operation, installation or construction of any anti-pollution
device, treatment work or facility, sewerage or sewerage disposal system, shall each
appoint and/or designate a Pollution Control Officer." and Memorandum Circular No.
02,6 dated 3 August 1981 and implementing LOI No. 588, which amended
Memorandum Circular No. 007, Series of 1977, issued by the National Pollution
Control Commission (NPCC).
4. On 1 April 1979, petitioner was also designated as Safety Manager pursuant to
Article 162 of the Labor Code (P.D. 442, as amended) and the pertinent
implementing rule thereon.
5. In the course of his employment, petitioner's salary was regularly upgraded.
6. Sometime in the first week of November 1987, private respondent George B.
Ditching, who was then PRC's Personnel Administration Manager, informed
petitioner about the company's plan to declare the position of Pollution Control and
Safety Manager redundant.
7. Ditching attempted to convince petitioner to accept the redundancy offer or avail of
the company's early retirement plan. Petitioner refused.
8. Notwithstanding the petitioners refusal however, his services were terminated.
9. On the date of the effectivity of his termination, petitioner was only fifty seven (57)
years of age. He had until 21 July 1991, his sixtieth (60th) birth anniversary, before
he would have been compulsorily retired.
10. In view of all this, petitioner filed a complaint for illegal dismissal with damages
against the private respondent PRC.
ISSUE
Whether or not petitioners services were validly terminated on the ground of redundancy
HELD
NO. In Wiltshire File Co., Inc. vs. NLRC, this Court held that redundancy, for purposes of the
Labor Code, exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise; a position is redundant when it is
superfluous, and superfluity of a position or positions may be the outcome of a number of
factors, such as the overhiring of workers, a decreased volume of business or the dropping
of a particular product line or service activity previously manufactured or undertaken by the
enterprise.
Private respondent PRC had no valid and acceptable basis to declare the position of
Pollution Control and Safety Manager redundant as the same may not be considered as
superfluous by the express mandate of the provisions earlier cited, said positions are
required by law. Thus, it cannot be gainsaid that the services of the petitioner are in excess
of what is reasonably required by the enterprise.

If the change was effected to consolidate the functions of the pollution control and safety
officer with the duties of the Industrial Engineering Manager, as private respondent
postulates, such substitution was done in bad faith for as had already been pointed out, the
Industrial Engineering Manager was hardly qualified for the position.
If the aim was to generate savings in terms of the salaries that PRC would not be paying the
petitioner any more as a result of the streamlining of operations for improved efficiency,
such a move could hardly be justified in the face of PRC's hiring of ten (10) fresh graduates
for the position of Management Trainee and advertising for vacant positions in the
Engineering/Technical Division at around the time of the termination.
Besides, there would seem to be no compelling reason to save money by removing such an
important position. As shown by their recent financial statements, PRC's yearend net profits
had steadily increased from 1987 to 199038 While concededly, Article 283 of the Labor
Code does not require that the employer should be suffering financial losses before he can
terminate the services of the employee on the ground of redundancy, it does not mean
either that a company which is doing well can effect such a dismissal whimsically or
capriciously. The fact that a company is suffering from business losses merely provides
stronger justification for the termination.
In this regard, it could be concluded that the respondent PRC was merely in a hurry to
terminate the services of the petitioner as soon as possible in view of the latters impending
retirement; it appears that said company was merely trying to avoid paying the retirement
benefits the petitioner stood to receive upon reaching the age of 60. PRC acted in bad faith.

106. San Miguel Corporation v. NLRC

SAN MIGUEL CORPORATION VS. NLRC
GR. NO. 99266 MARCH 2, 1999
PURISIMA, J.:
FACTS
1. In July 1990, San Miguel Corporation, alleging the need to streamline its operations
due to financial losses, shut down some of its plants and declared 55 positions as
redundant, listed as follows: seventeen (17) employees in the Business Logistics
Division ("BLD"), seventeen (17) in the Ayala Operations Center (AOC), and
eighteen (18) in the Magnolia-Manila Buying Station ("Magnolia-MBS").
2. Consequently, the private respondent union filed several grievance cases for the
said retrenched employees, praying for the redeployment of the said employees to
the other divisions of the company.
3. Grievance proceedings were conducted. However, most of the employees were
redeployed, while others accepted early retirement. As a result only 17 employees
remained when the parties proceeded to the third level (Step 3) of the grievance
procedure.
4. In a meeting on October 26, 1990, petitioner informed private respondent union that
if by October 30, 1990, the remaining 17 employees could not yet be redeployed;
their services would be terminated on November 2, 1990. The said meeting
adjourned when Mr. Daniel S. L. Borbon II, a representative of the union, declared
that there was nothing more to discuss in view of the deadlock.
ISSUE
1. Whether or not San Miguel Corporation exercised a management prerogative.
2. Whether or not San Miguel Corporation violated the Collective Bargaining
Agreement.
HELD
1. YES. Abolition of departments or positions in the company is one of the recognized
management prerogatives. Noteworthy is the fact that the private respondent does
not question the validity of the business move of petitioner. In the absence of proof
that the act of petitioner was ill-motivated, it is presumed that petitioner San Miguel
Corporation acted in good faith. In fact, petitioner acceded to the demands of the
private respondent union by redeploying most of the employees involved; such that
from an original 17 excess employees in BLD, 15 were successfully redeployed. In
AOC, out of the 17 original excess, 15 were redeployed. In the Magnolia - Manila
Buying Station, out of 18 employees, 6 were redeployed and only 12 were
terminated
2. NO, alleged violation of the CBA, is chargeable against the private respondent union.
In abandoning the grievance proceedings and stubbornly refusing to avail of the
remedies under the CBA, private respondent violated the mandatory provisions of
the collective bargaining agreement.
Collective Bargaining Deadlock is defined as "the situation between the labor and the
management of the company where there is failure in the collective bargaining
negotiations resulting in a stalemate" This situation, is non-existent in the present
case since there is a Board assigned on the third level (Step 3), of the grievance
machinery to resolve the conflicting views of the parties. Instead of asking the
Conciliation Board composed of five representatives each from the company and the
union, to decide the conflict, private respondent union declared a deadlock, and
thereafter, filed a notice of strike.
The main purpose of the parties in adopting a procedure in the settlement of their
disputes is to prevent a strike. This procedure must be followed in its entirety if it is to
achieve its objective. x x x strikes held in violation of the terms contained in the
collective bargaining agreement are illegal, specially when they provide for

conclusive arbitration clauses. These agreements must be strictly adhered to and

respected if their ends have to be achieved.

107. Serrano v. National Labor Relations Commission
SERRANO V. NLRC
323 SCRA 445
MENDOZA, J.
FACTS
1. Ruben Serrano was hired by Isetann Department Store as a security checker to
apprehend shoplifters and prevent pilferage of merchandise.
2. He was initially hired a contractual but he eventually became a regular employee on
April 4, 1985. In 1988, he became the head of the Security Checkers Section of
Isetann.
3. In 1991, as a cost-cutting measure, Isetann decided to phase out its entire security
section and engage the services of an independent security agency.
4. On October 11, 1991, Serrano was given a letter which provides the following: In
view of the retrenchment program of the company, we hereby reiterate our verbal
notice to you of your termination as Security Section Head effective October 11,
1991.
5. The loss of his employment prompted Serrano to file a complaint for illegal dismissal,
illegal layoff, unfair labor practice, underpayment of wages and nonpayment of salary
and overtime pay.
ISSUE
What are the sanctions for violations of the notice requirements in Articles 282 and 283 of
the Labor Code?
HELD
In the case at bar, petitioner was given a notice of termination on October 11, 1991. On the
same day, his services were terminated. He was thus denied his right to be given written
notice before the termination of his employment and the question is the appropriate sanction
for the violation of petitioners right.
In the case of Wenphil Corp. v. NLRC, the court ruled that it will be highly prejudicial to the
interest of the employer to impose on him the services of an employee who has been shown
to be guilty of the charges that warranted his dismissal from employment. The employer
must nevertheless held to account for the failure to extend to the employee the right to
investigation before causing his dismissal. Considering the circumstances of the case, the
employer was ordered to indemnify the employee the amount of P1,000.00. The measure
of this award depends on the facts of each case and the gravity of the emission committed
by the employer.
The number of cases involving dismissals without the requisite notice to the employee,
although effected for just or authorized causes, suggests that the imposition of fire for
violation of the notice requirement has not been effective in deterring violations of the notice
requirement.
The remedy is to order the payment to the employee of the full backwages from the time of
his dismissal until the court finds that the dismissal was for a just cause. But otherwise, his
dismissal must be upheld and he should not be reinstated. This is because his dismissal is
ineffectual.
For the same reason, if an employee is laid off for any of the causes in Articles 283-284 but
the employer did not give him and the DOLE a 30-day written notice of termination in
advance, then the termination of his employment should be considered ineffectual and he
should be paid backwages. However, the termination of his employment should not be
considered void but should simply be paid sepration pay as provided in Article 283 in
addition to backwages.

108. AHS/Philippines Employees Union v. NLRC

AHS/PHILIPPINE EMPLOYEES UNION VS. NLRC
G.R. NO. 73721 MARHCH 30, 1987
FERNAN, J.
FACTS
1. Petitioner AHS/Philippines Employees Union [FFW] was the recognized collective
bargaining agent of the rank-and-file employees of private respondent
AHS/Philippines Inc., a company engaged in the sale of hospital and laboratory
equipment and Berna and Pharmaton products.
2. A collective bargaining agreement [CBA] was concluded between the parties for the
period commencing December 1, 1981 to November 30, 1984.
3. Private respondent company claim that as early as October 1983, its operations had
been seriously affected by the suspension of trade and foreign credit facilities, which
situation grew worse in early 1984 when its suppliers of Berna and Pharmaton
products insisted on a cash LIC basis or M guarantee by the mother company.
4. As respondent company could not comply with these requirements, it decided to
strengthen its other division, the HML Division, which sold hospital and laboratory
equipment bought from the parent company.
5. It posted a job-opening notice for 7 to 10 medical representatives and one field
supervisor for the HML Division. Amelita. Calderon, a member of petitioner union
applied for the position of medical representative, but was rejected for lack of the
necessary educational attainment and unwillingness to accept provincial
assignments.
6. When the economic crisis continued until mid-year of 1984, respondent company
decided to change its marketing strategy for the Berna and Pharmaton products to
ensure the whole company's viability. Instead of ethical selling through the field
representatives, it was decided to shift to the over-the counter [OTC] method and to
appoint Zuellig Pharma as national distributor.
7. As this move would result in the abolition of the Pharmaceutical Division, the union
president was advised on July 26, 1984 of the impending dissolution of said division
and was asked to suggest ways and means by which the termination could be
effected in the smoothest manner possible and with least pain.
8. On August 1, 1984, the union president categorically stated to the company
president that the union would oppose any termination at all costs, respondent
company decided to proceed with the announcement of the termination by serving
notice on the same day to the 31 employees of the Pharmaceutical Division, said
termination to take effect immediately upon service thereof.
9. In lieu of the 3O day notice required by law, the employees were paid one month's
salary. Fifteen accepted their termination.
ISSUE
Whether or not private respondent company validly terminated its employees.
HELD
NO. Under the New Labor Code, even if the dismissal is based on a just cause under Article
284, the one-month written notice to both the affected employee and the Minister of Labor is
required, on top of the separation pay. Hence, unlike in the old termination pay laws,
payment of a month's salary cannot be considered substantial compliance with the
provisions of Art. 284 of the Labor Code. Since the dismissal of the 31 employees of the
Pharmaceutical Division of respondent company was effected in violation of the above-cited
provision, the same is illegal.
Needless to say, in the absence of a showing that the illegal dismissal was dictated by anti-
union motives, the same does not constitute an unfair labor practice as would be a valid
ground for a strike. The remedy is an action for reinstatement with backwages and
damages. Nevertheless, we take this actuation of respondent company as evidence of the
abusive and Oppressive manner by which the retrenchment was effected. And while the
lack of proper notice could not be a ground for a strike, this does not mean that the strike

staged by petitioner union was illegal because it was likewise grounded on a violation by
respondent company of the CBA, enumerated as an unfair labor Practice under Art. 249 [i]
of the Labor Code.

109. Asian Alcoholic Corporation v. NLRC

ASIAWORLD PUBLISHING HOUSE VS. OPLE
152 SCRA 219
GUTIERREZ, JR., J.:
FACTS
1. Private respondent Concepcion Joaquin was hired by Asiaworld Publishing House,
Inc., as its advertising sales director.
2. As such, she managed and supervised the petitioner's advertising sales force,
prepared advertising sales campaign programs, and solicited advertisements from
local and foreign adversities.
3. Due to the respondent's able management and hard work, Asiaworld's income from
sales advertising increased tremendously.
4. Sometime in 1976, Vicente Pesayco, Jr., the corporation's president and private
respondent's immediate superior, requested Ms. Joaquin not to go on vacation leave
because she was needed to help direct the advertising sales campaign of Asia
Forum, a magazine the petitioner had newly acquired.
5. Respondent Joaquin acceded to such request. She did not avail of her vacation
leave benefits for three times at the request of Pesayco.
6. Meanwhile, in October of 1976, the respondent was eventually designated to take
charge of the advertising sales work for Asia Forum. In 1977, the private respondent
was appointed Vice President for marketing in a concurrent capacity and her monthly
compensation was increased to P2,300.00.
7. On May 3, 1978, the petitioner advised the private respondent in writing that her
services would be terminated effective May 16, 1978 because of continued losses
and offered to pay her one (1) month's salary for her more than three (3) years of
service.
8. The private respondent filed a complaint with the Office of the Regional Director,
National Capital Region (NCR), Minister of Labor and Employment for illegal
dismissal and for recovery of unpaid earned and unused vacation leave credits and
reimbursement of representation expenses which she advanced for the petitioner.
9. Minister of Labor ruled in favor of the private respondent and ordered her
reinstatement. Petitioner appealed the decision.
ISSUE
1. Whether or not private respondent was illegally dismissed.
2. May the private respondent be reinstated?
HELD
1. The finding of facts by the Minister of Labor is binding upon this court. Even if we
treat the instant petition captioned as "Petition for Review" as a petition for certiorari,
there is still no reason why we should arrive at different factual findings. In the first
place, the only justification presented by the petitioner for dismissing the private
respondent was its financial statement showing a loss of P196,087.83 for the year
1977. Asiaworld failed to show that fair and reasonable standards were used in
ascertaining who would be dismissed and who would be retained among its
employees.
As the Solicitor General correctly stated, there must be fair and reasonable criteria to
be used in selecting employees to be dismissed, such as: (a) less preferred status
(e.g. temporary employee); (b) efficiency rating, and (c) seniority. (Fernandez, P.V.,
The Law of Employee Dismissal, pp. 130-131, 1976 Ed.) In the case at bar, the
petitioner never denied the fact that the private respondent was performing her job
satisfactorily so much so that its income from sales advertising increased.
2. However, as regards the order of reinstatement, we have to take into account that
antagonism between the petitioner and the private respondent has been brought
about by the filing of this case plus the fact that a new employee had been hired to
take over the place of the respondent. There is no showing that an equivalent

position is available to Ms. Joaquin. All of these militate against the propriety of
reinstating the respondent.
I
f the respondent had been a laborer, clerk, or other rank and file employee, there
would be no problem in ordering her reinstatement with facility. But she was Vice
President for Marketing of Asiaworld. An officer in such a key position can work
effectively only if she enjoys the full trust and confidence of top management. It
should be underscored that the backwages are being awarded on the basis of equity
or in the nature of a severance pay. This means that a monetary award is to be paid
to the striking employees as an alternative to reinstatement which can no longer be
effected in view of the long passage of time or because of the realities of the
situation. We, therefore, affirm the award of backwages with modifications as an
alternative to reinstatement.

110. Asian Alcoholic Corporation v. NLRC

ASIAN ALCOHOL CORPORATION VS. NATIONAL LABOR RELATIONS COMMISSION
305 SCRA 416
J. PUNO
FACTS
1. In September, 1991, the Parsons family, who originally owned the controlling stocks
in Asian Alcohol, sold their majority rights to Prior Holdings, Inc.
2. The next month, Prior Holdings took over its management and operation.
3. To thwart further losses, Prior Holdings implemented are organizational plan and
other cost-saving measures.
4. Some one hundred seventeen (117) employees out of a total workforce of three
hundred sixty (360) were separated.
5. Seventy two (72) of them occupied redundant positions that were abolished. Of
these positions, twenty one (21) held by union members and fifty one (51) by non-
union members.
6. The six (6) private respondents are among those union members 5 whose positions
were abolished due to redundancy.
7. On December 18, 1992 the six (6) private respondents filed with the NLRC
complaints for illegal dismissal with a prayer for reinstatement with backwages, moral
damages and attorney's fees.
8. They alleged that Asian Alcohol used the retrenchment program as a subterfuge for
union busting. They claimed that they were singled out for separation by reason of
their active participation in the union. They also asseverated that Asian Alcohol was
not bankrupt as it has engaged in an aggressive scheme of contractual hiring.
9. The executive Labor Arbiter dismissed the complainants. Private respondents
appealed to the NLRC. NLRC ruled in favor of private respondents. Asian Alcohol
moved for reconsideration of the foregoing decision. On September 25, 1997, the
NLRC denied the motion.
ISSUE
Were the private respondents illegally dismissed?
HELD
NO. The right of management to dismiss workers during periods of business recession and
to install labor saving devices to prevent losses is governed by Art. 283 of the labor Code,
as amended. Under Art. 283, retrenchment and redundancy are just causes for the
employer to terminate the services of workers to preserve the viability of the business. In
exercising its right, however, management must faithfully comply with the substantive and
procedural requirements laid down law and jurisprudence.
In the instant case, private respondents never contested the veracity of the audited financial
documents proffered by Asian Alcohol before the Executive Labor Arbiter. Neither did they
object to their admissibility.
We find that the reorganizational plan and comprehensive cost-saving program to turn the
business around were not designed to bust the union of the private respondents.
Retrenched were one hundred seventeen (117) employees. Seventy two (72) of them
including private respondents were separated because their positions had become
redundant.
Redundancy exists when the service capability of the work force is in excess of what is
reasonably needed to meet the demands on the enterprise. A redundant position is one
rendered superfluous by any number of factors, such as overhiring of workers, decreased
volume of business, dropping of a particular product line previously manufactured by the
company or phasing out of a service activity priorly undertaken by the business. For the
implementation of a redundancy program to be valid, the employer must comply with the
following requisites:
1. written notice served on both the employees and the Department of Labor and
Employment at least one month prior to the intended date of retrenchment;

2. payment of separation pay equivalent to at least one month pay or at least one
month pay for every year of service, whichever is higher;
3. good faith in abolishing the redundant positions; and
4. fair and reasonable criteria in ascertaining what positions are to be declared
redundant and accordingly abolished.
In the case at bar, private respondents failed to proffer any proof that the management
acted in a malicious or arbitrary manner. Absent such proof, the Court has no basis to
interfere with the bona fide decision of management to effect more economic and efficient
methods of production.

111. Lopez Sugar Corporation v. Federation of Free Workers

LOPEZ SUGAR CORPORATION V. FEDERATION OF FREE WORKERS, PHILIPPINE
LABOR UNION ASSOCIATION (PLUA-NACUSIP) AND NATIONAL LABOR RELATIONS
COMMISSION
189 SCRA 179
J. FELICIANO.
FACTS
Private respondent Federation of Free Workers ("FFW"), as the certified bargaining
agent of the rank-and-file employees of petitioner, filed with the Ministry of Labor and
Employment a complaint for unfair labor practices and recovery of union dues.
In said complainant, FFW claimed that the terminations undertaken by petitioner were
violative of the security of tenure of its members and were intended to "bust" the
union and hence constituted an unfair labor practice.
FFW claimed that after the termination of the services of its members, petitioner advised
110 casuals to report to its personnel office. FFW further argued that to justify
retrenchment, serious business reverses must be "actual, real and amply supported
by sufficient and convincing evidence." FFW prayed for reinstatement of its members
who had been retired or retrenched.
The Labor Arbiter denied petitioner's application for clearance to retrench its employees
on the ground that for retrenchment to be valid, the employer's losses must be
serious, actual and real and must be amply supported by sufficient and convincing
evidence.
Petitioner was ordered to reinstate twenty-seven retired or retrenched employees
represented by private respondent Philippine Labor Union Association and FFW and
to pay them full backwages from the time of termination until actual reinstatement.
Both dissatisfied with the Labor Arbiter's decision, petitioner and respondent FFW
appealed the case to public respondent NLRC. On appeal, the NLRC, finding no
justifiable reason for disturbing the decision of the Labor Arbiter, affirmed that
decision. Hence, this Petition for certiorari.
ISSUE
Is petitioner justified in the retrenchment of the private respondents?
HELD
NO. The retrenchment is unjustified. Petitioner argues that under the law, it has the right to
reduce its workforce if made necessary by economic factors which would endanger its
existence, and that for retrenchment to be valid, it is not necessary that losses be actually
sustained. Article 283 of the Labor Code provides for the authorized causes of termination of
employment. In its ordinary connotation, he phrase "to prevent losses" means that
retrenchment or termination of the services of some employees is authorized to be
undertaken by the employer sometime before the losses anticipated are actually sustained
or realized. It is not, in other words, the intention of the lawmaker to compel the employer to
stay his hand and keep all his employees until sometime after losses shall have in fact
materialized ; if such an intent were expressly written into the law, that law may well be
vulnerable to constitutional attack as taking property from one man to give to another. This
is simple enough.
At the other end of the spectrum, it seems equally clear that not every asserted possibility of
loss is sufficient legal warrant for reduction of personnel. In the nature of things, the
possibility of incurring losses is constantly present, in greater or lesser degree, in the
carrying on of business operations, since some, indeed many, of the factors which impact
upon the profitability or viability of such operations may be substantially outside the control
of the employer. Thus, the difficult question is determination of when, or under what
circumstances, the employer becomes legally privileged to retrench and reduce the number
of his employees.
The following are the general standards in terms of which the acts of petitioner employer
must be appraised. 1. The losses expected should be substantial and not merely de minimis

in extent. 2. The substantial loss apprehended must be reasonably imminent, as such

imminence can be perceived objectively and in good faith by the employer. There should, in
other words, be a certain degree of urgency for the retrenchment, which is after all a drastic
recourse with serious consequences for the livelihood of the employees retired or otherwise
laid-off. Because of the consequential nature of retrenchment, it must, 3. be reasonably
necessary and likely to effectively prevent the expected losses. The employer should have
taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs
than labor costs. Whether or not an employer would imminently suffer serious or substantial
losses for economic reasons is essentially a question of fact for the Labor Arbiter and the
NLRC to determine. In the instant case, the Labor Arbiter found no sufficient and convincing
evidence to sustain petitioner's essential contention that it was acting in order to prevent
substantial and serious losses.

113. Indino v. NLRC

BENJAMIN G. INDINO, VS. NAT'L LABOR RELATIONS COM.
G.R. NO. 80352, SEPTEMBER 29, 1989
SARMIENTO, J.
FACTS
The petitioner, Benjamin G. Indino, joined the Philippine National Construction
Corporation (PNCC) as a project personnel officer on December 12, 1974. On
January 6, 1981, he was transferred to private respondent DISC, a sister corporation
of PNCC, which assigned him to its Philphos Project in Isabel, Leyte.
On July 27, 1983, while the petitioner was on a paid vacation leave, he received a
"letter-memorandum" from Roman B. Lopez, DISC personnel manager, informing
him that his services were no longer needed at the Philphos Project in Leyte.
Immediately after receipt of the "letter-memorandum," the petitioner filed with the NLRC
a complaint for illegal dismissal against private respondent DISC; it was docketed as
NLRC-NCR CASE No. 7- 3590-83. 4 The case, however, was prematurely
terminated upon a joint motion to dismiss filed by the parties.
On the basis of that agreement, the petitioner was reinstated on October 1, 1983 at
respondent DISC's central office, occupying the position of Project Administrative
Officer III. 6 Barely two months after his reinstatement, however, or on December 14,
1983, the petitioner received another "letter-memorandum" from respondent DISC,
again terminating his services.
Accordingly, pursuant to this "formal separation," the petitioner received from DISC the
amount of P20,458.52 as separation benefits which the petitioner, however, refused
to accept. He then filed a complaint for illegal dismissal.
The labor arbiter dismissed the petitioner's complaint for lack of merit, whose decision
was affirmed by NLRC.
ISSUE
Does Indinos removal from employment amount to an illegal dismissal due to failure of the
respondent DISC to show that it was incurring, or at least about to incur, losses?
HELD
The failure of the respondent DISC to show proof of its actual or imminent losses that would
justify drastic cuts in personnel or costs, is fatal to its cause. Article 283 (then Article 284) of
the Labor Code provides that an "employer may also terminate the employment of any
employee due to the installation of labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the provisions of this title." Clearly,
under the said provision of law, the right of an employer to terminate the services of any
employee is predicated on the existence of any of the following causes: (1) installation of
labor- saving devices; (2) redundancy; (3) retrenchment to prevent losses; and (4) the
closing or cessation of operation of the establishment or undertaking, unless the closing is
for the purpose of circumventing the provisions of law. Thus, while business reverses can be
a just cause for terminating employees, they must be sufficiently proven by the employer. 14
This is precisely mandated under par. (b) of Article 277 (formerly 278) of the Labor Code
which states, among others, that "(T) he burden of proving that the termination was for a
valid or authorized cause shall rest on the employer."
It is almost an inflexible rule that employers who contemplate terminating the services of
their workers cannot be so arbitrary and ruthless as to find flimsy excuses for their decisions.
This must be so considering that the dismissal of an employee from work involves not only
the loss of his position but more important, his means of livelihood. Applying this caveat to
the case at bar, it was therefore incumbent for respondent DISC, before putting into effect
any retrenchment process on its work force, to show by convincing evidence that it was
being wrecked by serious financial problems. Simply stating its state of insolvency or its
impending doom will not be sufficient. To do so would render the security of tenure of
workers and employees illusory. In a grander scale, to hold as valid and legal the
respondent DISC's act would be disastrous to labor.

114. Catatista v. NLRC

ANTONIO CATATISTA, ET AL. VS. NLRC, ET AL.
G.R. NO. 102422, AUGUST 3, 1995
ROMERO, J.
FACTS
1. Petitioners were regular plantation workers in Hacienda Binanlutan, one of the six
haciendas operated and managed by private respondent Victorias Milling Company,
Inc.
2. Sometime in June 1984, private respondent decided to permanently stop and close
its sugarcane operations in Hacienda Binanlutan "due to low sugar prices which
affected the viability and profitability of said hacienda" and convert it instead into an
ipil-ipil plantation. In view of such decision, management subsequently held a
conference with all thirteen field workers to explain to them the reason for this move,
as well as the computation of their termination pay.
3. In a letter dated July 10, 1984, each of the thirteen petitioners was formally informed
of private respondent's decision to close and stop sugarcane operations and the
reason for such closure. Petitioners received their termination pay or retirement pay
under the pension plan, whichever was higher.
4. Petitioners filed a complaint against private respondent with the arbitration branch of
the National Labor Relations Commission for illegal dismissal. The labor arbiter
rendered a decision ordering reinstatement of the complainants. On appeal, the
National Labor Relations Commission reversed the decision of the Labor Arbiter.
ISSUE
Were the petitioners illegally terminated from work resulting from the closure of Hacienda
Binanlutan?
HELD
The termination of employment of the employees of Hacienda Binanlutan brought about by
the closure is to be considered as retrenchment as Hacienda Binanlutan is only one of the
six haciendas of private respondent. Clearly, private respondent's purpose in converting said
hacienda into an ipil-ipil plantation and terminating the service of petitioners is to cut down
on losses which it had adequately shown to have suffered through an income statement for
the fiscal year which ended August 31, 1984.
This Court has held that "the requisites of a valid retrenchment are: (a) the losses expected
should be substantial and not merely de minimis in extent; (b) the substantial losses
apprehended must be reasonably imminent; (c) the retrenchment must be reasonably
necessary and likely to effectively prevent the expected losses; and (d) the alleged losses, if
already incurred, and the expected imminent losses sought to be forestalled, must be
proved by sufficient and convincing evidence.
We see no grave abuse of discretion on the part of NLRC when it found that "company
haciendas including Hacienda Binanlutan incurred huge losses from years 1982 to 1983 in
the amount of P2,842,778.03. Private respondent showed that Hacienda Binanlutan itself
suffered a net loss of P22,624.88. It is significant to note that petitioners failed to dispute
these submissions of private respondent which more than satisfy the first and fourth
requirements for a valid retrenchment. The losses incurred are clearly substantial and
sufficiently proven by means of an income statement of Hacienda Binanlutan and the
financial statement of the company haciendas. Said losses are not only imminent but had, in
fact, already been incurred by private respondent since 1982. This was even more alarming
in 1984 considering the worldwide economic situation, as well as the low sugar prices during
that year, events which were obviously beyond the control of private respondent.
Considering the losses suffered by private respondent, it is logical for it to implement a
retrenchment program to prevent further losses. Private respondent's personnel reduction
program was meant to reduce excessive labor costs in the company. Having determined
that private respondent suffered losses and had to resort to retrenchment of its employees
in Hacienda Binanlutan to prevent further losses, this Court holds that private respondent

was within its rights in closing Hacienda Binanlutan and in terminating the service of
petitioners.

115. North Davao Mining Corporation v. NLRC

NORTH DAVAO MINING CORPORATION V. NLRC
254 SCRA 721
J. PANGANIBAN
FACTS
1. Petitioner was incorporated in 1974 as a 100% privately owned company, but was
co-owned by PNB later as a result of a conversion into equity of a portion of loans
obtained by petitioner from said bank. PNB later transferred all its loans to and equity
in North Davao in favor of the national government.
2. Respondent Wilfredo Guillema is one among several employees of petitioner who
were separated by reason of the companys closure, and who were the
complainants.
3. On May 31, 1992, petitioner completely ceased operations due to serious business
reverses. From 1988 until its closure in 1992, North Davao suffered net losses
averaging P 3 billion per year each of the five years prior to its closure.
4. When it ceased operations, its remaining employees were separated and given the
equivalent of 12.5 days pay for every year of service, computed on their basic
monthly pay, in addition to the commutation to cash of their unused vacation and sick
leaves.
5. However, it appears that, during the life of the petitioner corporation, from the
beginning of operations in 1981 until its closure in 1992, it had been paying
separation pay equivalent to 30 days pay for every year of service.
6. The NLRC ruled affirming the Labor Arbiters decision that the separation pay
equivalent to 30 days pay for every year of service has ripened into an obligation and
depriving respondents would be discriminatory.
ISSUE
Whether or not an employer whose business operations ceased due to serious business
losses or financial reverses is obliged to pay separation pay to its employees separated by
reason of such closure.
HELD
NO. the companys practice of giving one moths pay for every year of service could no
longer be continued precisely because the company could not afford it anymore. It was
forced to close down on account of accumulated losses of over P20 billion. The fact that
less separation benefits were granted when the company finally met its business death
cannot be characterized as discrimination. Such action was dictated not by a discriminatory
management option but by its complete inability to continue its business life due to
accumulated losses. Indeed, one cannot squeeze blood out of a dry stone. To require it to
continue being generous when it is no longer in a position to do so would certainly be unduly
oppressive, unfair and most revolting to the conscience.

116. Reah Corporation v. NLRC

REAHS CORPORATION VS. NLRC
271 SCRA 247
PADILLA, J.
FACTS
1. This is a petition for certiorari to annul and set aside the decision rendered by the
National Labor Relations Commission (NLRC) which affirmed the decision of the
labor arbiter holding individual petitioners jointly and severally liable with petitioner
Reahs Corporation to pay private respondents claims for underpayment of wages,
holiday pay, 13th month pay and separation pay.
2. Reahs is engaged in the business of a sing-along, coffee shop and massage clinic
and the private respondents were employees therein.
3. Petitioners claim that due to poor business, increase in the rental cost and the failure
of Meralco to reconnect the electrical services in the establishment, it suffered losses
leading to its closure.
4. Petitioners contend mainly that Article 283 of the Labor Code, exempts
establishment(s) from payment of termination pay when the closure of the business
is due to serious business loses or financial reverses; that petitioners Castulo,
Pascua and Valenzuela, while admittedly the acting chairman of the board, board
member and accountant-acting manager respectively of Reahs Corporation, cannot
be held jointly and severally liable with Reahs unless there is evidence to show that
the cause of the closure of the business was due to the criminal negligence of the
officers.
ISSUE
Whether or not petitioners-officers can be held jointly and severally liable with the
corporation in the payment of separation pay to private respondents under Article 283 of the
Labor Code.
HELD
Article 283 provides as an authorized cause in the termination of employment the closing or
cessation of operation of the establishment or undertaking. However, the burden of proving
that the termination was for a valid or authorized cause shall rest on the employer. In the
absence of such proof of serious business losses or financial reverses, the employer closing
his business is obligated to pay his employees and workers their separation pay. In the case
at bar, the corporations alleged serious business losses and financial reverses were not
amply shown or proved. To justify solidary liability, there must be an allegation or showing
that the officers of the corporation deliberately or maliciously designed to evade the financial
obligation of the corporation to its employees, or a showing that the officers indiscriminately
stopped its business to perpetrate an illegal act, as a vehicle for the evasion of existing
obligations, in circumvention of statutes, and to confuse legitimate issues. In this case, the
issue is not limited to payment of separation pay but also payment of labor standard benefits
such as underpayment of wages, holiday pay and 13th month pay. In fine, these officers
were conscious that the corporation was violating labor standard provisions but they did not
act to correct theses violations, instead, they abruptly closed business. Neither did they offer
separation pay to the employees as they conveniently resorted to a lame excuse that they
suffered serious business losses, knowing fully well that they had no substantial proof in
their hands to prove such losses.

115. San Felipe Neri School of Mandaluyong, Inc. v. NLRC

SAN FELIPE NERI SCHOOL OF MANDALUYONG, INC. VS. NLRC
201 SCRA 478
FACTS
1. San Felipe Neri School of Mandaluyong Inc. sold its properties and assets to the
Roman Catholic Archbishop of Manila (RCAM). Immediately thereafter, RCAM as
transferee-purchaser, continued the operation of the school, but applied for a new
permit to operate the same.
2. RCAM required the respondent teachers to apply as new employees subject to the
usual probation. Demoted to probationary status and their past services not
recognized by the new employer, the teachers inquired about their rights from the
former employer, herein petitioners, but to no avail. Instead, they were referred to
the new owners of the school.
3. The teachers then filed a complaint before the Labor Arbiter against all the
petitioners, including RCAM, the vendee-transferee, as alternative defendant for
separation pay, differential pay and other claims.
ISSUE
Whether or not respondent teachers employment was terminated by the sale and transfer of
San Felipe Neri School of Mandaluyong, Inc. to the Archbishop of Manila that would entitle
them to separation pay.
HELD
Change of ownership or management of an establishment or company, however, is not one
of the just causes provided by law for the termination of employment. There can be no
controversy, however, for it is a principle well-recognized, that it is within the employer's
legitimate sphere of management control of the business to adopt economic policies or
make some changes or adjustments in their organization or operations that would insure
profit to itself or protect the investment of its stockholders. As in the exercise of such
management prerogative, the employer may merge or consolidate its business with another,
or sell or dispose all or substantially all of its assets and properties which may bring about
the dismissal or termination of its employees in the process. Such dismissal or termination
should not, however, be interpreted in such a manner as to insulate the employer or selling
corporation (petitioner school) from its obligation to its employees, particularly the payment
of separation pay. Such situation is not envisioned in the law. It strikes at the very concept of
social justice.
A close scrutiny of the pertinent Deed of Sale dated April 18, 1981 reveals no express
stipulation whatsoever relative to the continued employment by the transferee, RCAM of the
employees (herein private respondents) of the erstwhile employer (petitioner). On the
contrary, records show that RCAM expressly manifested its unwillingness to absorb the
petitioner school's employees or to recognize their prior service. As correctly found by the
Labor Arbiter and the NLRC, respondent teachers' employment has been effectively
terminated and there was in effect a closure. Obviously, therefore, the fate of private
respondents under the new owner (RCAM) appeared unprovided for. And there is no law
which requires the purchaser to absorb the employees of the selling corporation.
As there is no such law, the most that the purchasing company may do, for purposes of
public policy and social justice, is to give preference to the qualified separated employees of
the selling company, who in their judgment are necessary in the continued operation of the
business establishment. This, RCAM did. It required private respondents to re-apply as new
employees as a condition for rehiring, subject to the usual probationary status, the latter's
past services with the petitioners-transferors not recognized.

118. Filipinas Port Services, Inc. v. NLRC

FILIPINAS PORT SERVICES, INC. VS. NLRC
200 SCRA 773
PARAS, J.;
FACTS
1. In view of the government policy which ordained that cargo handling operations
should be limited to only one cargo handling operator-contractor for every port, the
different stevedoring and arrastre corporations operating in the Port of Davao were
integrated into a single dockhandlers corporation, known as the Davao
Dockhandlers, Inc., which was registered with the SEC on July 13, 1976.
2. Due to the late receipt of its permit to operate, Davao Dockhandlers, Inc., which was
subsequently renamed Filport, actually started its operation on February 16, 1977.
3. As a result of the merger, Filports labor force was mostly taken from the integrating
corporations, among them were the private respondents.
4. Private respondent Paterno Liboon and 18 others filed a complaint with the DOLE
Regional Office in Davao City, alleging that they were employees of Filport since
1955 through 1958 up to December 31, 1986 when they retired; that they were paid
retirement benefits computed from February 16,1977 up to December 31, 1986 only;
and that taking into consideration their continuous length of service, they are entitled
to be paid retirement benefits differentials from the time they started working with the
predecessors of Filport up to the time they were absorbed by the latter in 1977.
5. Finding Filport a mere alter ego of the different integrating corporations, the Labor
Arbiter held Filport liable for retirement benefits due private respondents for services
rendered prior to February 16, 1977.
6. Said decision was affirmed by the NLRC on appeal. Filport filed a petition for
certiorari with the claiming that it is an entirely new corporation with a separate
juridical personality from the integrating corporations; and that Filport is not a
successor-employer, liable for the obligations of private respondents' previous
employers.
ISSUE
Whether or not Filport is liable for the retirement benefits due private respondents for
services rendered prior to Feb. 16, 1977.
HELD
Filport is liable for the retirement benefits due private respondents for the services rendered
prior to Feb. 16, 1977 being a survivor entity as it merely absorbed the integrating workers in
its labor force.
It was mandated that Filport shall absorb all labor force and necessary personnel
complement of the merging operators, thus, clearly indicating the intention to continue the
employer-employee relationships of the individual companies with its employees through
Filport. Thus, Filport has the obligation not only to absorb the workers of the dissolved
companies but also to include the length of service earned by the absorbed employees with
their former employees as well. To rule otherwise would be manifestly less than fair,
certainly, less than just and equitable. Finally, to deny the private respondents the fruits of
their labor corresponding to the time they worked with their previous employers would
render at naught the constitutional provisions on labor protection. In interpreting the
protection to labor and social justice provisions of the Constitution and the labor laws, and
rules and regulations implementing the constitutional mandate, the Supreme Court has
always adopted the liberal approach which favors the exercise of labor rights.

119. Cebu Royal Plant (SMC) v. Deputy Minister of Labor

CEBU ROYAL PLANT VS. DEPUTY MINISTER OF LABOR
153 SCRA 38
CRUZ, J.
FACTS
Private respondent Ramon Pilones, an employee engaged in the processing of soft
drinks of Petitioner, filed a complaint for illegal dismissal with the Regional Director of
DOLE. The latter dismissed the complaint but was reversed by the Deputy Minister
of Labor finding that the private respondent, was already a permanent employee at
the time of his dismissal and so was entitled to security of tenure.
The alleged ground for his removal, to wit, "pulmonary tuberculosis minimal," (PTB
Minimal) was not certified as incurable within six months as to justify his separation.
Additionally, the private respondent insists that the petitioner should have first
obtained a clearance, as required by the regulations then in force, for the termination
of his employment. With this, the Deputy Minister ordered to reinstate the separated
employee and pay him back wages.
Petitioner for its part claims that the private respondent was still on probation at the time
of his dismissal and so had no security of tenure. His dismissal was not only in
conformity with company policy but also necessary for the protection of the public
health, as he was handling ingredients in the processing of soft drinks which were
being sold to the public.
ISSUE
Whether or not private respondent was a probationary employee who can be justly
dismissed after the termination of the probationary period.
HELD
Private respondent ceased to be a probationary employee at the time of his termination
thus, making him a regular employee entitled to security of tenure.
The petitioner claims it could not have dismissed the private respondent earlier because the
x-ray examination was made only on August 17, 1978, and the results were not immediately
available. That excuse is untenable. We note that when the petitioner had all of six months
during which to conduct such examination, it chose to wait until exactly the last day of the
probation period. In the light of such delay, its protestations now that reinstatement of
Pilones would prejudice public health cannot but sound hollow and hypocritical. By its own
implied admission, the petitioner had exposed its customers to the employee's disease
because of its failure to examine him before entrusting him with the functions of a "syrup
man." Its belated concern for the consuming public is hardly persuasive, if not clearly
insincere and self-righteous.
We are satisfied that whether his employment began on February 16, 1978, or even earlier
as he claims, the private respondent was already a regular employee when he was
dismissed on August 21, 1978. As such, he could validly claim the security of tenure
guaranteed to him by the Constitution and the Labor Code.
Moreover, the record does not contain the certification required in Sec. 8, Rule 1, Book VI of
the Implementing Rules of the Labor Code. The medical certificate offered by the petitioner
came from its own physician, who was not a "competent public health authority," and merely
stated the employee's disease, without more. We may surmise that if the required
certification was not presented, it was because the disease was not of such a nature or
seriousness that it could not be cured within a period of six months even with proper medical
treatment. If so, dismissal was unquestionably a severe and unlawful sanction.
We agree that there was here an attempt to circumvent the law by separating the employee
after five months' service to prevent him from becoming a regular employee, and then
rehiring him on probation, again without security of tenure.

Labor Standards Law: Case Digests

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Labor Standards Law: Case Digests

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That in all things, God may be glorified.

LABOR STANDARDS LAW

EMPLOYER EMPLOYEE RELATIONSHIP 4

16. PAL EMPLOYEES SAVINGS AND LOAN ASSOCIATION 26

LABOR-ONLY CONTRACTOR AND INDEPENDENT CONTRACTOR 42

27. TABAS V. CALIFORNIA MANUFACTURING CO., INC. 43

INJURY, SICKNESS & DISABILITY 52

34. BELARMINO V. EMPLOYEES COMPENSATION COMMISSION 53

CSB DIGESTS LABOR STANDARDS LAW -1-

35. HINOGUIN V. EMPLOYEES COMPENSATION COMMISSION 54

ARTICLE 279 - SECURITY OF TENURE 79

54. RANCE V. NLRC 80

ARTICLE 280 KINDS OF EMPLOYMENT: REGULAR & CASUAL EMPLOYMENT 84

57. DE LEON V. NLRC 85

64. PHILIPPINE NATIONAL CONSTRUCTION CORPORATION V. NLRC 97

SEASONAL EMPLOYMENT 101

67. MERCADO, SR. V. NLRC 102

FIXED PERIOD EMPLOYMENT 104

68. BRENT SCHOOL V. ZAMORA 105

ARTICLE 282 - JUST CAUSES FOR TERMINATION OF EMPLOYMENT 108

70. A.M. ORETA AND COMPANY V. NLRC 109

CSB DIGESTS LABOR STANDARDS LAW -2-

74. MERCURY DRUG CORPORATION V. NLRC 115

ARTICLE 283 284: AUTHORIZED CAUSES FOR TERMINATION 164

104. WILTSHIRE FILE CO. V. NLRC 165

CSB DIGESTS LABOR STANDARDS LAW -3-

CSB DIGESTS LABOR STANDARDS LAW -4-

CSB DIGESTS LABOR STANDARDS LAW -5-

2. Brortherhood Labor Unity Movement of the Philippines v. Zamora

The facts and evidence on record negate respondent SMC's claim.

The existence of an independent contractor relationship is generally established by the

CSB DIGESTS LABOR STANDARDS LAW -6-

None of the above criteria exists in the case at bar.

CSB DIGESTS LABOR STANDARDS LAW -7-

3. Zanotte Shoes v. NLRC

CSB DIGESTS LABOR STANDARDS LAW -8-

4. Continental Marble v. NLRC

Most of all the element of control is lacking.

CSB DIGESTS LABOR STANDARDS LAW -9-

5. Sevilla v. Court of Appeals

CSB DIGESTS LABOR STANDARDS LAW - 10 -

CSB DIGESTS LABOR STANDARDS LAW - 11 -

6. Feati University v. Bautista

CSB DIGESTS LABOR STANDARDS LAW - 12 -

7. San Miguel Brewery Sales Force Union v .Ople

CSB DIGESTS LABOR STANDARDS LAW - 13 -

8. San Miguel Brewery Inc. v. Democratic Labor Organization

CSB DIGESTS LABOR STANDARDS LAW - 14 -

CSB DIGESTS LABOR STANDARDS LAW - 15 -

CSB DIGESTS LABOR STANDARDS LAW - 16 -

CSB DIGESTS LABOR STANDARDS LAW - 17 -

10. Stolt-Nielsen Marine Services v. NLRC

CSB DIGESTS LABOR STANDARDS LAW - 18 -

CSB DIGESTS LABOR STANDARDS LAW - 19 -

11. Interphil Laboratories Employees Union FFW v. Interphil Laboratories

CSB DIGESTS LABOR STANDARDS LAW - 20 -

12. Pan American World Airways System v.

CSB DIGESTS LABOR STANDARDS LAW - 21 -

13. Campangan v. NLRC

CSB DIGESTS LABOR STANDARDS LAW - 22 -

14. Mercury Drug Co., Inc. v. Dayao

MERCURY DRUG CO. INC. VS. DAYAO

CSB DIGESTS LABOR STANDARDS LAW - 23 -