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LabRel Batch 6 | Re

ARTICLE 300. [285] Termination by employee. - (a) An employee may terminate without just cause the
employee-employer relationship by serving a written notice on the employer at least one (1) month in
advance. The employer upon whom no such notice was served may hold the employee liable for damages.

(b) An employee may put an end to the relationship without serving any notice on the employer for any
of the following just causes:
1. Serious insult by the employer or his representative on the honor and person of the employee;
2. Inhuman and unbearable treatment accorded the employee by the employer or his representative;
3. Commission of a crime or offense by the employer or his representative against the person of the
employee or any of the immediate members of his family; and
4. Other causes analogous to any of the foregoing.

1. GAN VS GALDERMA, GR NO 177167, JANUARY 17, 2013

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FACTS: Respondent Galderma Philippines Inc. is engaged in the business of selling, marketing, and
distribution of Cetaphil Brand Product Lines. Private Respondent Rosendo Veneracion is the superior of
herein petitioner Nelson B. Gan, both are employees of Respondent Galderma.
Gan alleges that in the morning of March 4, 2002, he was summoned by Private Respondent Veneracion,
his superior, who informed him of his disgust in Gan's act of taking an emergency sick leave on 28 February
2002, immediately after availing of a five (5)-day vacation leave from 21-27 February 2002. Veneracion
also informed Gan that he disliked his act in applying for the emergency sick leave by merely texting
Veneracion's executive secretary instead of informing Veneracion himself. Gan apologized to Veneracion
and informed him that it will not be repeated.
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On March 7, 2002, Private Respondent Veneracion expressed his dissatisfaction with the work of
petitioner to the point that he questioned the competence of petitioner. Petitioner explained that the
product (Benzac Brand ie. pantanggal ng pimples) given to him was not only outside of his expertise but
also not included to the products assigned to him when he applied as Product Manager.

Veneracion, however, did not accept the explanation of Gan and started enumerating his dissatisfaction
with petitioner branding the latter as - "slow, lacking in initiative and uncooperative". Not satisfied,
Veneracion continued and then asked petitioner to reconsider his stay in Galderma. Petitioner refused.

Similar incidents happened subsequently. Veneracion told Gan to reconsider his stay in Galderma.
Veneracion told petitioner that he would be given 15 days to look for another job, as a gesture of his good
will. Petitioner, who had just lost his job, negotiated privately with Veneracion in the hope of salvaging a
better term for his forced exit in Galderma. Finally, Veneracion offered him as an alternative to him being
terminated in 15 days, to file his voluntary resignation that day, 11 April 2002, which resignation shall take
effect on 15 July 2002 or 90 days thereafter.

Three months thereafter, petitioner filed a Complaint for illegal constructive dismissal against
respondents Galderma and Veneracion. His allegations were grounded upon the coercive statements of
Veneracion equating to that of constructive dismissal. The Labor Arbiter dismissed the complaint. A
decision which both the NLRC and the Court of Appeals affirmed hence the present petition.
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HELD: NO. CONSTRUCTIVE DISMISSAL is defined as quitting or cessation of work because continued
employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or a
involuntary resignation due to the harsh, hostile, and unfavorable conditions set by the employer. The
test of constructive dismissal is whether a reasonable person in the employee's position would have felt
compelled to give up his employment/position under the circumstances.

RESIGNATION is the voluntary act of an employee who is in a situation where one believes that personal
reasons cannot be sacrificed in favor of the exigency of the service, and one has no other choice but to
dissociate oneself from employment. IT IS A FORMAL PRONOUNCEMENT OR RELINQUISHMENT OF AN
RELINQUISHMENT. As the intent to relinquish must concur with the overt act of relinquishment, the acts
of the employee before and after the alleged resignation must be considered in determining whether he
or she, in fact, intended to sever his or her employment.

In the case at hand, petitioner submitted a resignation letter, it is therefore incumbent upon him to prove
with clear, positive, and convincing evidence that his resignation was not voluntary but was actually a case
of constructive dismissal i.e. that it is a product of coercion or intimidation. COERCION EXISTS when there
is a reasonable or well-grounded fear of an imminent evil upon a person or his property or upon the person
or property of his spouse, descendants or ascendants. Such was not substantiated.
First, the words allegedly uttered by Veneracion which asked Gan to "reconsider his stay," "make his
move," or that "Galderma will be better off without him," are ambivalent and susceptible of varying
interpretations depending on one’s feelings, bias, and emotional threshold. All these are subjective and
highly speculative or even presumptuous. Veneracion’s intent to dismiss Gan cannot reasonably be
inferred therefrom. Much less, the words do not definitely show Veneracion's firm resolve to act on such
intent. At the most, the remarks may be regarded as sarcastic or suggestive of a plan of action which may
or may not include a plot to actually, or even constructively, dismiss Gan.

Second, petitioner repeatedly boasts of his "excellent performance" in and "immense contribution" to
Galderma's success. If that is the case, his proper mindset towards Veneracion's attacks on his purported
work ethics (such as slow, lacking in initiative, uncooperative, negative attitude, remiss in duties as
product manager, negative work behavior, poor performance, incompetence, distraction/liability in
Galderma) should have been to simply brush them aside and continue doing what he is supposed to do
as the product manager. Petitioner should have thought that his "good performance record" would speak
for itself and would stand the test of any baseless accusation, whether it be hurled to him in close-door
or in full view of others. Petitioner considered the comments as manifestations of "harassment." His
oversensitivity, which is rather surprising for an experienced sales and marketing manager who should
have been so used to customer rejection or indifference and to superior's assertive or temperamental
side due to constant pressure of keeping up and beating market competition, would not help him make a

Third, the revision of petitioner’s 2002 incentive scheme cannot be considered as a form of harassment.
The change is not a diminution of benefits, since Gan would have also received the same sum if he
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achieved the desired targets for the two new products which were added under his watch. Petitioner even
admitted that such act is a valid exercise of management prerogative; hence, he should have realized that
their inclusion necessarily called for a corresponding modification of the incentive scheme so as to
accurately measure his effectiveness in handling all three products, not just one or two of them.
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Petitioner’s resignation was a product of a mutually beneficial arrangement. The result of the
negotiation leading to petitioner’s resignation is a "win-win" solution for both parties. On one hand,
petitioner was able to obtain a favorable severance pay while getting flexible working hours to implement
his post-resignation career options. On the other hand, Galderma was able to cut its relation with an
employee perceived to be unwilling to perform additional product responsibilities while being given ample
time to look for an alternative to hire and train. Indeed, Gan voluntarily resigned from Galderma for a
valuable consideration. He negotiated for an improvement of the resignation package offered and he
managed to obtain an acceptable one. As opposed to the case of San Miguel Corporation v. NLRC,
petitioner was not tricked or was "morally and psychologically hoodwinked" to draft, sign, and tender his
resignation letter. It was not made without proper discernment and time to reflect; nor was it a knee-jerk
reaction that left him with no alternative but to accede.

2. D.M. CONSUNJI CORP VS BELLO, GR NO. 159371, JULY 29, 2013

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FACTS: Bello claimed that DMCI had employed him as a mason without any interruption from February 1,
1990 until October 10, 1997 at an hourly rate of ₱25.081; that his job as a mason had been necessary and
desirable in the usual business or trade of DMCI; that he had been diagnosed to be suffering from
pulmonary tuberculosis, thereby necessitating his leave of absence; that upon his recovery, he had
reported back to work, but DMCI had refused to accept him and had instead handed to him a termination
paper; that he had been terminated due to "RSD" effective November 5, 1997; that he did not know the
meaning of "RSD" as the cause of his termination; that the cause had not been explained to him; that he
had not been given prior notice of his termination; that he had not been paid separation pay as mandated
by law; that at that time of his dismissal, DMCI’s projects had not yet been completed; and that even if he
had been terminated due to an authorized cause, he should have been given at least one month pay or at
least one-half month pay for every year of service he had rendered, whichever was higher.

DMCI contended that Bello had only been a project employee, as borne out by his contract of employment
and appointment papers; that after his termination from employment, it had complied with the
reportorial requirements of the Department of Labor and Employment (DOLE) pursuant to the mandates
of Policy Instruction No. 20, as revised by Department Order No. 19, series of 1993; and that although his
last project employment contract had been set to expire on October 7, 1997, he had tendered his
voluntary resignation on October 4, 1997 for health reasons that had rendered him incapable of
performing his job, per his resignation letter.

The Executive Labor Arbiter ruled that DMCI is guilty of illegal dismissal. The NLRC ruled to set aside the
decision of LA. The Court of Appeals ruled that Bello had acquired the status of a regular employee
although he had started as a project employee of DMCI by his having been employed as a mason who had
performed tasks that had been usually necessary and desirable in the business or trade of DMCI, hence
the present petition.


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HELD: NO. The handwriting in the resignation letter was "undeniably different" from that of Bello could
not be ignored or shunted aside simply because she had no expertise to make such a determination. Her
supposed lack of expertise did not appear in the records, rendering the NLRC's statement speculative and

If we were now to outrightly discount her competence to make that observation, we would disturb the
time-honored practice of according respect to the findings of the first-line trier of facts in order to prefer
the speculative and whimsical statement of an appellate forum like the NLRC. Yet, even had the letter
been actually signed by him, the voluntariness of the resignation could not be assumed from such fact
alone. His claim that he had been led to believe that the letter would serve only as the means of extending
his sick leave from work should have alerted DMCI to the task of proving the voluntariness of the
resignation. DMCI became burdened with the obligation to prove the due execution and genuineness of
the document as a letter of resignation.

The Court reiterated the fact that it is axiomatic in labor law that the employer who interposes the
defense of voluntary resignation of the employee in an illegal dismissal case must prove by clear,
positive and convincing evidence that the resignation was voluntary; and that the employer cannot rely
on the weakness of the defense of the employee. The requirement rests on the need to resolve any
doubt in favor of the working man.
------------------------------------------------------------------------------In Re: Bello as a Regular Employee--------------
Bello acquired in time the status of a regular employee by virtue of his continuous work as a mason of
DMCI. The work of a mason like him – a skilled workman working with stone or similar material – was
really related to building or constructing, and was undoubtedly a function necessary and desirable to the
business or trade of one engaged in the construction industry like DMCI. His being hired as a mason by
DMCI in not one, but several of its projects revealed his necessity and desirability to its construction
business. In this regard, the length of time of the employee’s service, while not a controlling determinant
of project employment, is a strong factor in determining whether he was hired for a specific undertaking
or in fact tasked to perform functions vital, necessary and indispensable to the usual business or trade of
the employer. On the other hand, how DMCI chose to categorize the employment status of Bello was not
decisive of his employment status. What were of consequence in that respect were his actual functions
and the length of his stay with DMCI. Verily, the principal test for determining whether an employee is a
project employee, as distinguished from a regular employee, is whether or not he is assigned to carry out
a specific project or undertaking, the duration and scope of which are specified at the time he is engaged
for the project.
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FACTS: Petitioner was a former employee of respondent Saudi Arabian Airlines (Saudia), having been hired
as a Flight Attendant on May 13, 1986 until her separation from Saudi in September 2004. During the
course of her employment, petitioner was assigned to work at the Manila Office.

On August 25, 2004, the In-Flight Service Senior Manager of Saudi assigned in Manila received a
Memorandum from its Jeddah Office regarding the transfer of 10 flight attendants from Manila to Jeddah
effective September 1, 2004. Bilbao was among the 10 flight attendants to be transferred.

Petitioner initially complied with the transfer order and proceeded to Jeddah for her new assignment.
However, on September 7, 2004, she opted to resign and relinquish her post by tendering a resignation
and so for the month that followed, petitioner executed and signed an undertaking similar to that of a
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Receipt, Release and Quitclaim wherein she acknowledged receipt of a sum of money as full and complete
end-of-service award with final settlement and have no further claims whatsoever against Saudi Arabian

In spite of this undertaking, however, on July 2005, petitioner filed with the NLRC a complaint for
reinstatement and payment of full backwages, alleging that her resignation from Saudi was not voluntary
on the grounds that she was made to sign a pre-typed resignation letter and was even reminded that the
same was a better option than termination which would tarnish her record of service with Saudi.
Petitioner and her co-complainants shared a common theory that their transfer to Jeddah was a prelude
to their termination since they were all allegedly between 39 and 40 years of age.

Upon the other hand, Saudi averred that the resignation letters from petitioners were voluntarily made
since they were actually hand-written and duly signed. Saudi asserted that petitioners were not subjected
to any force, intimidation, or coercion when they wrote said resignation letters and even their
undertakings, after receiving without protest a generous separation package despite the fact that
employees who voluntarily resign are not entitled to any separation pay. Saudi also added that the
transfer of flight attendants from their Manila Office to the Jeddah Office was a valid exercise of its
management prerogative.

The Labor Arbiter rendered a decision finding the existence of illegal dismissal. The NLRC reversed the
decision of the Labor Arbiter. The Court of Appeals affirmed the Resolutions of the NLRC hence the present


HELD: NO. RESIGNATION is the voluntary act of an employee who is in a situation where one believes that
personal reasons cannot be sacrificed in favor of the exigency of the service, and one has no other choice
but to dissociate oneself from employment. It is a formal pronouncement or relinquishment of an office,
with the intention of relinquishing the office accompanied by the act of relinquishment. As the intent to
relinquish must concur with the overt act of relinquishment, the acts of the employee before and after the
alleged resignation must be considered in determining whether he or she, in fact, intended to sever his or
her employment.

In the case at hand, Bilbao tendered her resignation letter a week after her transfer to the Jeddah office.
In the said letter, Bilbao expressed her gratitude for the support which Saudi had given her for her
eighteen years of service. Clearly, her use of words of appreciation and gratitude negates the notion that
she was forced and coerced to resign. Besides, the resignation letter was hand-written by Bilbao on a
Saudi form and was in English, a language she is conversant in.
Additionally, instead of immediately filing a complaint for illegal dismissal after she was allegedly forced
to resign, Bilbao executed an Undertaking in favor of Saudi, wherein she declared that she received her
full and complete end-of-service award with final settlement. Petitioner even waited for more than 10
months after her separation from Saudi to file a complaint for illegal dismissal, an amount of time which
evidently belies her allegation of illegal dismissal.

Even assuming that Saudi prepared the form in which petitioner wrote her resignation letter as claimed,
the Court was not convinced that she was coerced and intimidated into signing it. Bilbao is no ordinary
employee who may not be able to completely comprehend and realize the consequences of her acts. She
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is an educated individual. It is highly improbable that with her long years in the profession and her
educational attainment, she could be tricked and forced into doing something she does not intend to do.
Under these circumstances, it can hardly be said that Bilbao was coerced into resigning from Saudi.
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FACTS: Private respondent Cabiles was initially hired by Intel Phil. on April 16, 1997 as an Inventory Analyst. He
later applied for a position at Intel Semiconductor Limited Hong Kong (Intel HK).

In a letter, dated December 2006, Cabiles received a letter offering the position of Finance Manager by Intel HK.
Before accepting the offer, he inquired from Intel Phil. the consequences of accepting the newly presented
opportunity in Hong Kong. He also clarified whether he will receive retirement benefits considering he will be in
the service for 10 years on April 16, 2007 with Intel and should he accept the offer of Intel HK, will the 9.5 years
in the service be rounded of to 10 years. Intel Phil. replied that he will not be eligible to receive his retirement
benefit not having reached 10 years of service at the time he moved to Hong Kong.

On January 31, 2007, Cabiles signed the job offer. Two months later, Intel Phil. issued Cabiles his "Intel Final Pay
Separation Voucher" indicating a net payout of P165,857.62. On the same month, Cabiles executed a Release,
Waiver and Quitclaim in favor of Intel Phil. acknowledging receipt of the aforesaid sum as the full and complete
settlement of all benefits due him by reason of his separation from Intel Phil.

On September 8, 2007, after seven (7) months of employment, Cabiles resigned from Intel HK.

About two years thereafter, Cabiles filed a complaint for non-payment of retirement benefits and for moral and
exemplary damages with the NLRC. He insisted that he was employed by Intel for 10 years and 5 months from
April 1997 to September 2007 a period which included his seven (7) month stint with Intel HK. Thus, he believed
he was qualified to avail of the benefits under the company's retirement policy allowing an employee who served
for 10 years or more to receive retirement benefits.

The LA held that Cabiles did not sever his employment with Intel Phil. when he moved to Intel HK. Both the NLRC
affirmed the LA decision.


HELD: NO. RESIGNATION is the formal relinquishment of an office, the overt act of which is coupled with an intent
to renounce. This intent could be inferred from the acts of the employee before and after the alleged resignation.

In contemplating whether to accept the offer from Intel HK, Cabiles wrote Intel Phil. This communication
manifested two of his main concerns: a) clearance procedures; and b) the probability of getting his retirement
pay despite the non-completion of the required 10 years of employment service. Beyond these concerns,
however, was his acceptance of the fact that he would be ending his relationship with Intel Phil. as his employer.

His acceptance of the offer meant letting go of the retirement benefits he now claims as he was informed
through email correspondence that his 9.5 years of service with Intel Phil. would not be rounded off in his favor.
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He, thus, placed himself in this position, as he chose to be employed in a company that would pay him more than
what he could earn in Chengdu or in the Philippines.
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THEORY OF SECONDMENT – Cabiles views his employment in Hong Kong as an assignment or an extension of
his employment with Intel Phil.

The continuity, existence or termination of an employer-employee relationship in a typical secondment contract

or any employment contract for that matter is measured by the following yardsticks: 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 employees conduct. Victorio Meteor v. Creative Creatures Inc, G.R. No. 171275, July 13, 2009

As applied, all of the above benchmarks ceased upon Cabiles assumption of duties with Intel HK on February 1,
2007. Intel HK became the new employer. Undoubtedly, Cabiles decision to move to Hong Kong required the
abandonment of his permanent position with Intel Phil. in order for him to assume a position in an entirely
different company. Clearly, the "transfer" was more than just an assignment. It constituted a severance of Cabiles
relationship with Intel Phil., for the assumption of a position with a different employer, rank, compensation and
benefits. Hence, Cabiles theory of secondment must fail.

What distinguishes Intel Chengdu and Intel Arizona from Intel HK is the lack of intervention of Intel Phil. on the
matter. In the two previous transfers, Intel Phil. remained as the principal employer while Cabiles was on a
temporary assignment.

RELEASE, WAIVER AND QUITCLAIM – Not all waivers and quitclaims are invalid as against public policy. If the
agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and
may not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver
was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face,
that the law will step in to annul the questionable transaction. But where it is shown that the person making the
waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim
is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. Goodrich
Manufacturing Corporation, v. Ativo, G.R. No. 188002, February 1, 2010

Suffice it to state that nothing is clearer than the words used in the Waiver duly signed by Cabiles - that all claims,
in the present and in the future, were waived in consideration of his receipt of the amount of P165,857.62.
Because the waiver included all present and future claims, the non-accrual of benefits cannot be used as a basis
in awarding retirement benefits to him.

RETIREMENT BENEFITS – Cabiles is not entitled to the Retirement Benefits. Having effectively resigned before
completing his 10th year anniversary with Intel Phil. and after having validly waived all the benefits due him, if
any, Cabiles is hereby declared ineligible to receive the retirement pay pursuant to the retirement policy of Intel
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FACTS: Jenette Crisologo, a lawyer, joined Globe as a manager in its corporate legal services department.
She was rushed to Makati Med due to profuse bleeding, which was diagnosed as a possible miscarriage.
A week after, she reported back to work (April 12, 2002) and tendered her resignation explaining that she
was advised to rest for the duration of her pregnancy, also she requested the permission to exhaust all
her leaves until the effectivity of her resignation (May 30, 2002), to which Globe accepted.
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April 30, she called her immediate supervisor, Gonzales, and in the course of their conversation she was
informed that an email about her allegedly solicited money from one of the company’s supplier circulated.
Crisologo requested a copy of such email and an opportunity to confront the person responsible, but
Gonzales declined stating that there was no reason to pursue the matter.

May 22, Crisologo sent Gonzales a letter complaining of her ill-treatment by the company after she
submitted her resignation letter and confided that she resigned only because the email damaged her
reputation and for that reason she requested Gonzales to issue a certification clearing her of any
wrongdoings, misconduct or transgression. Another letter was sent by her insinuating that Globe forced
her to resign, Gonzales informed her that she needed to settle first her obligations to Globe before they
could give her the clearance.

Crisologo filed a complaint for illegal dismissal against Globe, believing that Globe would not comply with
her demand, and alleged that she was fired due to the rumor that was not proven. Globe contended that
the resignation letter of Crisologo showed her unconditional desire to resign.

The Labor Arbiter dismissed the complaint. The NLRC affirmed the decision of the LA. The CA reversed
NLRC’s ruling, declaring that there is absence of sufficient proof that Crisologo voluntarily resigned.


HELD: NO. Crisologo’s resignation letter proves that she voluntarily resigned. This fact alone negated her
claim that Globe coerced her to resign on April 30, 2002. Her act of tendering a resignation letter two
weeks before the alleged incident belies her contention that she was forced to resign.

RESIGNATION is the voluntary act of an employee who finds herself in a situation where she believes that
personal reasons cannot be sacrificed in favor of the exigency of the service and that she has no other
choice but to disassociate herself from employment.

Employees resign for various reasons, human resource studies reveals that various factors in and out of
the workplace affect an employees’ employment decision. In this case it was for the sake her child’s
wellbeing with motherhood clearly taking precedence over her job. Crisologo could not have been coerced
or intimidated. COERCION EXIST when there is reasonable or well-grounded fear of an imminent evil upon
a person or his property or upon the person or property of his spouse, descendants or ascendant. No such
situation existed in this case.

In St. Michael Academy v NLRC, the court held that expressions of gratitude cannot possibly come from
an employee who is just forced to resign as they belie allegations of coercions.


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FACTS: Vicente was employed by respondent Cinderella Marketing Corporation (Cinderella) as Management
Coordinator in January 1990. Prior to her resignation in February 2000, she held the position of Consignment
Operations Manager. She was tasked with the oversight, supervision and management of the Consignment
Department dealing directly with Cinderella’s consignors.
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She alleged that it has been a practice among the employees of Cinderella to obtain cash advances by charging
the amount from the net sales of Cinderella’s suppliers/consignors and Mr. Tecson (AVP-Finance) approves the

After some time, one of Cinderella’s suppliers complained about the unauthorized deductions from the net sales
due them. Accordingly, an investigation was conducted and upon initial review of respondents business records,
it appears that petitioner was among those involved in the irregular and fraudulent preparation and encashment
of respondents corporate checks amounting to at least P500,000.00.

Vicente alleged that Mr. Tecson demanded her resignation on several occasions. Mr. Tecson allegedly told her
“MAG-RESIGN KANA AGAD KASI MAIIPIT KAMI.” As a result of this alleged force and intimidation, petitioner
tendered her resignation letter.

Three years after her resignation, petitioner filed a complaint against Cinderella alleging that her severance from
employment was involuntary amounting to constructive dismissal. The Labor Arbiter ruled that Vicente was
constructively and illegally dismissed, a decision which was subsequently affirmed by the NLRC. The Court of
Appeals, however, reversed LA and NLRC's decision. Hence the present petition.


HELD: NO. Vicente voluntarily resigned from work. In termination cases, burden of proof rests upon the employer
to show that the dismissal is for a just and valid cause and failure to do so would necessarily mean that the
dismissal was illegal. It is incumbent upon respondent company to prove that the employee voluntarily resigned.

From the totality of evidence on record, it was clearly demonstrated that respondent Cinderella has sufficiently
discharged its burden to prove that petitioner’s resignation was voluntary. IN VOLUNTARY RESIGNATION, the
employee is compelled by personal reason(s) to disassociate himself from employment. It is done with the
intention of relinquishing an office, accompanied by the act of abandonment.

the employee before and after the alleged resignation must be considered.

A perusal of the facts shows that the said letter reveals that it bears the signature of petitioner. More
importantly, petitioner admitted having submitted the said letter. Subsequently, petitioner stopped reporting
for work although she met with the officers of the corporation to settle her accountabilities but never raised the
alleged intimidation employed on her. Also, though the complaint was filed within the four year prescriptive
period, its belated filing supports the contention of respondent that it was a mere afterthought. Taken together,
these circumstances are substantial proof that petitioner’s resignation was voluntary.

Hence, petitioner cannot take refuge in the argument that it is the employer who bears the burden of proof that
the resignation is voluntary and not the product of coercion or intimidation. Having submitted a resignation letter,
it is then incumbent upon her to prove that the resignation was not voluntary but was actually a case of
constructive dismissal with clear, positive, and convincing evidence. Petitioner failed to substantiate her claim of
constructive dismissal.

7. SME BANK, INC. VS DE GUZMAN, GR 184517, OCTOBER 8, 2013

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FACTS: Respondents were employees of Small and Medium Enterprise Bank and the principal shareholders and
corporate directors of the bank were Agustin and De Guzman.
The bank experienced financial difficulties, hence, the bank officials proposed its sale to Abelardo Samson. In their
negotiations, Samson demanded the following conditions, which were accepted by Agustin & De Guzman:

4. You shall guarantee the peaceful turnover of all assets as well as the peaceful transition of
management of the bank and shall terminate/retire the employees we mutually agree upon, upon
transfer of shares in favor of our group’s nominees
7. All retirement benefits, if any of the above officers/stockholders/board of directors are hereby waived
upon consummation [sic] of the above sale. The retirement benefits of the rank and file employees
including the managers shall be honored by the new management...

Agustin and De Guzman sold 86.365% of the shares of stock of SME Bank to spouses Samson. The General
Manager of the bank, Espiritu, held a meeting with all the employees and asked them to tender their resignation
with a promise that they would be rehired upon reapplication. Relying on such, the employees tendered their
resignation and then submitted their application letters. Such rehiring, however, did not materialize which led to
the respondent employees to demand the payment of their separation pay, however, the same was denied.

The employees filed a complaint for illegal dismissal. Subsequently, they included Agustin and De Guzman as
respondents to the case. The Labor Arbiter ruled employees were illegally dismissed, a decision which was both
upheld by the NLRC and the Court of Appeals. Hence the present petition.


HELD: YES. The Samson Group contends respondents voluntarily resigned from their posts. As their resignations
and retirements were voluntary, they were not dismissed from their employment. In support of this argument, it
presented copies of their resignation and retirement letters which were couched in terms of gratitude.

The Court disagreed. While resignation letters containing words of gratitude may indicate that the employees
were not coerced into resignation this fact alone is not conclusive proof that they intelligently, freely and
voluntarily resigned. To rule that resignation letters couched in terms of gratitude are, by themselves, conclusive
proof that the employees intended to relinquish their posts would open the floodgates to possible abuse.

In order to withstand the test of validity, resignations must be made voluntarily and with the intention of
relinquishing the office, coupled with an act of relinquishment. Therefore, in order to determine whether the
employees truly intended to resign from their respective posts, the Court cannot merely rely on the tenor of
the resignation letters, but must take into consideration the totality of circumstances in each particular case.

In the case at hand, respondents only tendered resignation letters because they were led to believe that, upon
reapplication, they would be reemployed by the new management. As it turned out, they were not rehired by
the new management. Their reliance on the representation that they would be reemployed gives credence to
their argument that they merely submitted courtesy resignation letters because it was demanded of them, and
that they had no real intention of leaving their posts. We therefore conclude that respondents did not voluntarily
resign from their work; rather, they were terminated from their employment.
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The buyer of an enterprise is not bound to absorb its employees, unless there is an express stipulation
to the contrary.

There are two types of corporate acquisitions: asset sales and stock sales. In asset sales, the corporate
entity sells all or substantially all of its assets to another entity. In stock sales, the individual or corporate
shareholders sell a controlling block of stock to new or existing shareholders.

IN ASSET SALES, the rule is that the seller in good faith is authorized to dismiss the affected employees,
but is liable for the payment of separation pay under the law. The buyer in good faith, on the other hand,
is not obliged to absorb the employees affected by the sale, nor is it liable for the payment of their claims.
The most that it may do, for reasons of public policy and social justice, is to give preference to the qualified
separated personnel of the selling firm.

In contrast with asset sales, in which the assets of the selling corporation are transferred to another entity,
the transaction IN STOCK SALES takes place at the shareholder level. Because the corporation possesses
a personality separate and distinct from that of its shareholders, a shift in the composition of its
shareholders will not affect its existence and continuity. Thus, notwithstanding the stock sale, the
corporation continues to be the employer of its people and continues to be liable for the payment of their
just claims. Furthermore, the corporation or its new majority shareholders are not entitled to lawfully
dismiss corporate employees absent a just or authorized cause.

In the case at bar, the Letter Agreements show that their main object is the acquisition by the Samson
Group of 86.365% of the shares of stock of SME Bank. Hence, this case involves a stock sale, whereby the
transferee acquires the controlling shares of stock of the corporation. Thus, following the rule in stock
sales, respondent employees may not be dismissed except for just or authorized causes under the Labor
-----------------------------------------------------------------------------------------------End of Other Doctrines-------------
8. JO VS NLRC, GR NO. 121605, FEBRUARY 2, 2000
-----------------------------------------------------------------------------------------------Read first before using-------------
FACTS: Private respondent Peter Mejila worked as barber on a piece rate basis at Dinas Barber Shop. The Barber
Shop was bought by Paz Martin Jo and Cesar Jo. All the employees, including private respondent, were absorbed
by the new owners. The name of the barbershop was changed to Windfield Barber Shop. The owners and the
barbers shared in the earnings of the barber shop. The barbers got two-thirds (2/3) of the fee paid for every
haircut or shaving job done, while one-third (1/3) went to the owners of the shop. In 1977, petitioners designated
private respondent as caretaker of the shop. In 1986, when they transferred to new location, Mejila continued to
be a barber and caretaker, but with a fixed monthly honorarium as caretaker, to wit: from February 1986 to 1990
- P700; from February 1990 to March 1991 - P800; and from July 1992 P1,300.

In 1992, private respondent had an altercation with his co-barber, Jorge Tinoy. The labor official immediately
summoned private respondent and petitioners to a conference. Meanwhile, private respondent continued
reporting for work at the barbershop. But, on January 2, 1993, he turned over the duplicate keys of the shop to
the cashier and took away all his belongings therefrom. On January 8, 1993, he began working as a regular barber
at the newly opened Goldilocks Barbershop also in Iligan City.

Mejila filed illegal dismissal. Labor Arbiter ruled in favor of petitioners arguing that private respondent was an
employee of petitioners and was not dismissed but had left his job voluntarily because of his misunderstanding
with his co-worker. NLRC sustained the labor arbiters finding as to the existence of employer-employee
LabRel Batch 6 | Re

relationship between petitioners and private respondent, but it ruled that private respondent was illegally


HELD: NO. TO CONSTITUTE ABANDONMENT, there must be concurrence of the intention to abandon and some
overt acts from which it may be inferred that the employee concerned has no more interest in working.

In this case, the following circumstances clearly manifest private respondent’s intention to sever his ties with
petitioners. First, private respondent even bragged to his co-workers his plan to quit his job at Cesars Palace
Barbershop and Massage Clinic as borne out by the affidavit executed by his former co-workers. Second, he
surrendered the shops keys and took away all his things from the shop. Third, he did not report anymore to the
shop without giving any valid and justifiable reason for his absence. Fourth, he immediately sought a regular
employment in another barbershop, despite previous assurance that he could remain in petitioners employ. Fifth,
he filed a complaint for illegal dismissal without praying for reinstatement.

The rule that abandonment of work is inconsistent with the filing of a complaint for illegal dismissal is not
applicable in this case.
-----------------------------------------------------------------------In Re: Employer-Employee Relationship---------------
Absent a clear showing that petitioners and private respondent had intended to pursue a relationship of
industrial partnership, we entertain no doubt that private respondent was employed by petitioners as
caretaker-barber. Initially, petitioners, as new owners of the barbershop, hired private respondent as
barber by absorbing the latter in their employ.

Undoubtedly, the services performed by private respondent as barber is related to, and in the pursuit of
the principal business activity of petitioners. Later on, petitioners tapped private respondent to serve
concurrently as caretaker of the shop. Certainly, petitioners had the power to dismiss private respondent
being the ones who engaged the services of the latter. In fact, private respondent sued petitioners for
illegal dismissal, albeit contested by the latter. As a caretaker, private respondent was paid by petitioners
wages in the form of honorarium, originally, at the rate of one-third (1/3) of the shops net income but
subsequently pegged at a fixed amount per month. As a barber, private respondent earned two-thirds
(2/3) of the fee paid per haircut or shaving job done.

Furthermore, the following facts indubitably reveal that petitioners controlled private respondents work
performance, in that: (1) private respondent had to inform petitioners of the things needed in the shop;
(2) he could only recommend the hiring of barbers and masseuses, with petitioners having the final
decision; (3) he had to be at the shop at 9:00 a.m. and could leave only at 9:00 p.m. because he was the
one who opened and closed it, being the one entrusted with the key. These duties were complied with by
private respondent upon instructions of petitioners.

Moreover, such task was far from being negligible as claimed by petitioners. On the contrary, it was crucial
to the business operation of petitioners as shown in the preceding discussion. Hence, there was enough
basis to declare private respondent an employee of petitioners. Accordingly, there is no cogent reason to
disturb the findings of the labor arbiter and NLRC on the existence of employer-employee relationship
between herein private parties.
-----------------------------------------------------------------------End of In Re: Employer-Employee Relationship -----
LabRel Batch 6 | Re


-----------------------------------------------------------------------------------------------Read first before using-------------
FACTS: Penaflor was hired on September 2, 1999 as probationary Human Resource Department (HRD) Manager
of respondent Outdoor Clothing Manufacturing Corporation (Outdoor Clothing or the company). Two staff
members were assigned to work with him to assist him in undertaking these functions.

His woes began when the company’s Vice President for Operations, Edgar Lee (Lee), left the company after a big
fight between Lee and Chief Corporate Officer Nathaniel Syfu (Syfu). Because of his close association with Lee,
Penaflor claimed that he was among those who bore Syfu’s ire.

When Outdoor Clothing began undertaking its alleged downsizing program due to negative business returns,
Penaflor alleged that his department had been singled out. On the pretext of retrenchment, Peaflors two staff
members were dismissed, leaving him as the only member of Outdoor Clothing’s HRD and compelling him to
perform all personnel-related work. He worked as a one-man department, carrying out all clerical, administrative
and liaison work.

When an Outdoor Clothing employee, Lynn Padilla (Padilla), suffered injuries in a bombing incident, the company
required Penaflor to attend to her hospitalization needs. As he was acting on the company’s orders, Penaflor
considered himself to be on official business, but was surprised when the company deducted six days salary
corresponding to the time he assisted Padilla. According to Finance Manager Medylene Demogena (Demogena),
he failed to submit his trip ticket, but Penaflor belied this claim as a trip ticket was required only when a company
vehicle was used and he did not use any company vehicle when he attended to his off-premises work.

After Penaflor returned from his field work on March 13, 2000, his officemates informed him that while he was
away, Syfu had appointed Nathaniel Buenaobra (Buenaobra) as the new HRD Manager. This information was
confirmed by Syfus memorandum of March 10, 2000 to the entire office stating that Buenaobra was the
concurrent HRD and Accounting Manager.

Penaflor claimed that under these circumstances, he had no option but to resign. He submitted a letter to Syfu
declaring his irrevocable resignation from his employment with Outdoor Clothing effective at the close of office
hours on March 15, 2000. Penaflor then filed a complaint for illegal dismissal with the labor arbiter, claiming that
he had been constructively dismissed.


HELD: YES. In employee termination disputes, the employer bears the burden of proving that the employee’s
dismissal was for just and valid cause. Penaflor did indeed file a letter of resignation does not help the company’s
case as, other than the fact of resignation, the company must still prove that the employee voluntarily resigned.

There can be no valid resignation where the act was made under compulsion or under circumstances
approximating compulsion, such as when an employee’s act of handing in his resignation was a reaction to
circumstances leaving him no alternative but to resign.
First, we regard the Syfu memorandum of March 1, 2000 and the memorandum of Buenaobra of March 3, 2000
accepting the position of HRD Head do not constitute conclusive evidence of their dates of preparation and
LabRel Batch 6 | Re

Second, Syfus March 1, 2000 memorandum to Buenaobra about Penaflor’s resignation and Buenaobras own
acknowledgment and acceptance were only presented to the NLRC on appeal, not before the labor arbiter. The
matter was not even mentioned in the company’s position paper filed with the labor arbiter. While the
presentation of evidence at the NLRC level on appeal is not unheard of in labor cases, still sufficient explanation
must be adduced to explain why this irregular practice should be allowed. In the present case, Outdoor Clothing
totally failed to explain the reason for its omission.

Third, the circumstances and other evidence surrounding Penaflor’s resignation support his claim that he was
practically compelled to resign from the company.

The memorandum of March 10, 2000 signed by Syfu informing the whole office about the designation of
Buenaobra as concurrent Accounting and HRD Manager properly bore signatures acknowledging receipt and
dates of receipt by at least five company officials, three of them acknowledged receipt on March 13, 2000,
showing that it was only on that day that the appointment of Buenaobra to the HRD position was disclosed.

As to downsizing, other than its bare claim that it was facing severe financial problems, Outdoor Clothing never
presented any evidence to prove both the reasons for its alleged downsizing and the fact of such downsizing. No
evidence was ever offered to rebut Penaflor’s claim that his staff members were dismissed to make his life as
HRD Head difficult.

Moreover, Penaflor started working for the company on September 2, 1999 so that by March 1, 2000, his
probationary period would have ended and he would have become a regular employee. We find it highly unlikely
that Penaflor would resign on March 1, 2000

It does not appear sound and logical that an employee would tender his resignation on the very same day he was
entitled by law to be considered a regular employee, especially when a downsizing was taking place and he could
have availed of its benefits if he would be separated from the service as a regular employee.

Penaflor’s record with the company is not that of a company official who would simply and voluntarily tender a
precipitate resignation on the excuse that he would devote his time to teaching a lame excuse at best considering
that March is the month the semester usually ends and is two or three months away from the start of another
school year.

Last but not the least, we have repeatedly given significance in abandonment and constructive dismissal cases to
the employees reaction to the termination of his employment and have asked the question: is the complaint
against the employer merely a convenient afterthought subsequent to an abandonment or a voluntary
resignation? We find from the records that Penaflor sought almost immediate official recourse to contest his
separation from service through a complaint for illegal dismissal.
-----------------------------------------------------------------------------------------------End of Ratio---------------------------
-----------------------------------------------------------------------------------------------Read first before using-------------
FACTS: Amalia P. Kawada (private respondent) started her employment with Uniwide as a saleslady. Over
the years, she attained the rank of Full Assistant Store Manager.

Kawada claims that from the months of February to June 1998, she had been subjected to constant
harassment, ridicule and inhumane treatment by Apduhan, with the hope that the latter can get the
private respondent to resign. The harassment allegedly came in the form of successive memoranda which
private respondent would receive almost every week, enumerating a litany of offenses and maligning her
LabRel Batch 6 | Re

reputation and spreading rumors among the employees that private respondent shall be dismissed soon.
The last straw of the imputed harassment was the July 31, 1998 incident wherein private respondents life
was put in danger when she lost consciousness due to hypertension as a result of Apduhans alleged
hostility and shouting.

On August 3, 1998, Private respondent filed a case for illegal dismissal before the Labor Arbiter.

On August 8, 1998, Apduhan sent a letter addressed to private respondent, which the latter received on
even date, advising private respondent to report for work, as she had been absent since August 1, 1998;
and warning her that upon her failure to do so, she shall be considered to have abandoned her job.

On September 1, 1998, Apduhan issued a Memorandum stating that since private respondent was unable
to attend the scheduled August 12, 1998 hearing, the case was evaluated on the basis of the evidence on
record; and enumerating the pieces of evidence of the irregularities and violations of company rules
committed by private respondent, the latters defenses and the corresponding findings by Uniwide.

The Labor Arbiter dismissed the complaint for lack of merit. The NLRC reversed ruling of the Labor Arbiter.
The Court of Appeals affirmed the NLRC’s decision.


HELD: NO. Allegations of constructive dismissal, when uncorroborated by the evidence on record, cannot
be given credence. The test of constructive dismissal is whether a reasonable person in the employee’s
position would have felt compelled to give up his position under the circumstances. It is an act amounting
to dismissal but made to appear as if it were not. In fact, the employee who is constructively dismissed
may be allowed to keep on coming to work. Constructive dismissal is therefore a dismissal in disguise. The
law recognizes and resolves this situation in favor of employees in order to protect their rights and interests
from the coercive acts of the employer.

The sending of several memoranda addressed to a managerial or supervisory employee concerning

various violations of company rules and regulations, committed on different occasions, are not unusual.
The alleged February to June 1998 series of memoranda given by petitioners to private respondent asking
the latter to explain the alleged irregular acts should not be construed as a form of harassment but merely
an exercise of management prerogative to discipline its employees.

The right to impose disciplinary sanctions upon an employee for just and valid cause, as well as the
authority to determine the existence of said cause in accordance with the norms of due process, pertains
in the first place to the employer. Precisely, petitioners gave private respondent successive memoranda
so as to give the latter an opportunity to controvert the charges against her. Clearly, the memoranda are
not forms of harassment, but petitioner’s compliance with the requirements of due process.

The July 31, 1998 confrontation where Apduhan allegedly shouted at private respondent which caused
the latter’s hypertension to recur and eventually caused her to collapse cannot by itself support a finding
of constructive dismissal by the NLRC and the CA. Even if true, the act of Apduhan in shouting at private
respondent was an isolated outburst on the part of Apduhan that did not show a clear discrimination or
insensibility that would render the working condition of private respondent unbearable.
LabRel Batch 6 | Re

The termination of private respondent was grounded on the existence of willful breach by the employee
of the trust reposed on him by his employer or a duly authorized representative. Private respondent
occupies a managerial position. As a managerial employee, mere existence of a basis for believing that
such employee has breached the trust of his employer would suffice for his dismissal.

In order to give private respondent an opportunity to explain the several violations of company rules she
allegedly committed, private respondent was given several memoranda, to which she initially responded.
Also, to give private respondent an opportunity to be heard, defend herself, confront the witnesses
against her as well as to present her own evidence, Apduhan scheduled a hearing on August 12, 1998,
notice of which was sent on August 2, 1998 and duly received by private respondents husband on the
same day. This fact alone would have indicated to private respondent that there was no intention on the
part of petitioners to effect her constructive dismissal. However, private respondent opted to file the
complaint for illegal dismissal the next day; and not to attend the scheduled hearing on August 12, 1998.
Thus, petitioners were justified to decide the case on the basis of the records at hand.

The irregularities and offenses committed by private respondent, corroborated by the various pieces of
evidence supporting such charges, i.e. records, reports and testimonies of Uniwide employees, in the mind
of the Court, constitute substantial evidence that private respondent is in fact responsible for the alleged

-----------------------------------------------------------------------------------------------Read first before using-------------
FACTS: Petitioner Ramon B. Formantes was employed as a medical representative by respondent Duncan
Pharmaceuticals, Phils. Inc.

On March 18, 1994, respondent asked petitioner to report at the head office. Thereafter, petitioner went
to the head office and was confronted by the Marketing and Sales Director, due to his attempt to sexually
force himself upon his subordinate (Cynthia Magat). After both petitioner and his subordinate had
separately relayed their sides of the incident, petitioner was compelled by respondent to take a leave of

Thereafter, respondent tried to induce petitioner to resign to which the latter refused. Petitioner's salary
was then withheld from him. He was not allowed to attend the meetings and activities of the company.
His subordinates no longer reported to him and the company directed one of its district managers to take
over his position and functions without prior notice to him. Due to the foregoing, petitioner was
constrained to file a case for constructive dismissal.

The Labor Arbiter rendered decision finding the dismissal of petitioner to be valid, a decision which both
the NLRC and the Court of Appeals affirmed, hence the present petition.


HELD: YES. In Rubberworld (Phils.), Inc. v. NLRC, the Court held that: It is now axiomatic that if just cause
for termination of employment actually exists and is established by substantial evidence in the course of
the proceedings before the Labor Arbiter, the fact that the employer failed, prior to such termination, to
accord to the discharged employee the right of formal notice of the charge or charges against him and a
LabRel Batch 6 | Re

right to ventilate his side with respect thereto, will not operate to eradicate said just cause so as to impose
on the employer the obligation of reinstating the employee and otherwise granting him such other
concomitant relief as is appropriate in the premises. x x x Although petitioner was dismissed from work by
the respondent on the ground of insubordination, this Court cannot close its eyes to the fact that the
ground of sexual abuse committed against petitioner's subordinate actually exists and was established by
substantial evidence before the LA.

As a manager, petitioner enjoyed the full trust and confidence of respondent and his subordinates. By
committing sexual abuse against his subordinate, he clearly demonstrated his lack of fitness to continue
working as a managerial employee and deserves the punishment of dismissal from the service. Aside from
the findings of sexual abuse, petitioner is also guilty of insubordination. Thus, we hold the dismissal as
valid, but we find that there was non-compliance with the twin procedural requirements of notice and
hearing for a lawful dismissal.

-----------------------------------------------------------------------------------------------Read first before using-------------
FACTS: Herein respondent, Melvin R. Gnilo, was initially hired by Norkis Trading Co., Inc. as Norkis
Installment Collector in April 1988. Respondent held various positions in the company until he was
appointed as Credit and Collection Manager of Magna Financial Services Group, petitioner’s sister

A special audit team was conducted in respondent's office from March to April 2000 where it was found
out that the monthly collection highlights submitted by respondent to the top management were all
overstated, appearing that the collection efficiency was higher than it actually was; and that the top
management was misled into believing that respondent’s area of responsibility obtained a favorable
collection efficiency.

Respondent was then charged by petitioners' Inquiry Assistance Panel with negligence of basic duties and
responsibilities resulting in loss of trust and confidence and laxity in directing and supervising his own
subordinates and so petitioner issued a memorandum placing respondent under suspension (15 days)
without pay, travel and transportation allowance, effective upon receipt thereof.

Another memorandum was issued to respondent requiring him to report on to the head office for a re-
training or a possible new assignment. He was then assigned to the Marketing Division. Respondent
requested petitioner that he be assigned as Sales Engineer or to any position commensurate with his
qualifications. However, respondent was formally appointed as Marketing Assistant, which position
respondent subsequently assumed. The following month, respondent filed with the Labor Arbiter a
complaint for constructive dismissal.

The Labor Arbiter dismissed the complaint, a decision which was reversed by the NLRC. The Court of
Appeals affirmed the NLRC’s decision. Hence the present petition.


HELD: YES. Constructive dismissal is defined as a quitting because continued employment is rendered
impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay. Likewise,
constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee, leaving him with no option but to forego his continued employment.
LabRel Batch 6 | Re

A TRANSFER is defined as a movement from one position to another which is of equivalent rank, level or
salary, without break in 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. Conversely, DEMOTION involves a situation in which an employee is relegated to a
subordinate or less important position constituting a reduction to a lower grade or rank, with a
corresponding decrease in duties and responsibilities, and usually accompanied by a decrease in salary.

In this case, while the transfer of respondent from Credit and Collection Manager to Marketing Assistant
did not result in the reduction of his salary, there was a reduction in his duties and responsibilities which
amounted to a demotion tantamount to a constructive dismissal.

-----------------------------------------------------------------------------------------------Read first before using-------------
FACTS: Herein petitioner, Ma. Socorro Mandapat, was hired by Add Force Personnel Services, Inc. (Add
Force) as Sales and Marketing Manager to negotiate and consummate contracts with clients who wanted
to avail of Add Force’s services.

Add Force gave Mandapat a show-cause notice directing her to explain why she should not be disciplined
for gross and habitual neglect of duties and willful breach of trust. The notice also placed her on preventive
suspension during the course of the investigation. According to Add Force, during her 5-month stint as
Sales and Marketing Manager, Mandapat failed to close a single deal, issued several proposals to clients
which were grossly disadvantageous to Add Force or disregarded the client’s budget ceiling, sent out
several communications to clients containing erroneous data and computations, consistently failed to
submit her reports, and submitted fictitious daily activity reports and reimbursement slips.

Mandapat gave Add Force her response to the show-cause memorandum along with her resignation letter
supposedly in protest of the preventive suspension. Subsequently, she filed a complaint with the labor
arbiter, claiming she was constructively dismissed when she was placed on preventive suspension, her
access to the internet cut-off, and then pressured by Add Force to resign in exchange for separation pay.
She denied that she was negligent, and faulted the Chief Executive Officer for his indecisiveness and the
lack of support staff for the sales department. She claimed that her preventive suspension was illegal for
being indefinite, since its duration was not stated in the show-cause memorandum. She argued that she
did pose any danger to the lives of Add Force’s officers or its properties to warrant the preventive

Add Force insisted that Mandapat resigned and was not dismissed. It explained that Mandapat was placed
on preventive suspension because of the risk she posed on its property and business. Add Force added
that Mandapat’s preventive suspension for 1 day can hardly be considered indefinite, given that she
immediately resigned 1 day after the suspension.

The Labor Arbiter declared Mandapat to have been constructively dismissed, a decision which was upheld
by the NLRC. The Court of Appeals Reversed LA and NLRC’s decision.


HELD: NO. CONSTRUCTIVE DISMISSAL EXISTS when an act of clear discrimination, insensibility or disdain
by an employer has become so unbearable to the employee leaving him with no option but to forego his
LabRel Batch 6 | Re

continued employment. There was no act of discrimination committed against Mandapat that would
render her employment unbearable.

There was no coercion employed on Mandapat to resign. Mere allegations of threat or force do not
constitute evidence to support a finding of forced resignation.

In order for intimidation to vitiate consent, the following requisites must concur: (1) the intimidation
caused the consent to be given; (2) the threatened act is unjust or unlawful; (3) the threat is real or serious,
there being evident disproportion between the evil and the resistance which all men can offer, leading to
the choice of doing the act which is forced on the person to do as the lesser evil; and (4) it produces a
well-grounded fear from the fact that the person from whom it comes has the necessary means or ability
to inflict the threatened injury to his person or property. None of these requisites was proven by
Mandapat. No demand was made on her to resign. At most, she was merely given the option to either
resign or face disciplinary investigation, which Add Force had every right to conduct in light of her
numerous infractions. There was nothing irregular in providing an option to her. Ultimately, the final
decision on whether to resign or face disciplinary action rested on her alone.
------------------------------------------------------------------------------In Re: Preventive Suspension----------------------
Preventive suspension may be legally imposed on employee whose alleged violation is the subject of an
investigation. The purpose of his suspension is to prevent him from causing harm or injury to the company
as well as to his fellow employees (Section 8, Rule XXIII, Book V, Omnibus Rules Implementing the Labor
Code, as amended by Department Order No. 9, Series of 1997). No preventive suspension shall last longer
than 30 days and the employer shall thereafter reinstate the worker in his former or in a substantially
equivalent position or the employer may extend the period of suspension provided that during the period
of extension, he pays the wages and other benefits due to the worker (Section 9, Rule XXIII, Book V,
Omnibus Rules Implementing the Labor Code, as amended by Department Order No. 9, Series of 1997).
When preventive suspension exceeds the maximum period allowed without reinstating the employee
either by actual or payroll reinstatement or when preventive suspension is for an indefinite period, only
then will constructive dismissal set in.

While no period was mentioned in the show-cause memorandum, the inclusion of the phrase “during the
course of investigation” would lead to a reasonable and logical presumption that said suspension in fact
had a duration which could very well be not more than 30 days as mandated by law. And, as the CA
correctly observed, the suspension was rendered moot by Mandapat’s resignation tendered a day after
the suspension was made effective.

The preventive suspension was also necessary to protect Add Force’s assets and operations pending
investigation of Mandapat. As Sales Manager, Mandapat had the power to enter into contracts that would
bind Add Force, regardless of whether these contracts would prove to be beneficial or prejudicial to its
interest. The cutting-off of Mandapat’s internet access was not harassment but a consequence of the
investigation against her and was intended to prevent her from having further access to the company’s
network-based documents and forms. Add Force’s acts were just measures to protect itself while the
investigation was ongoing.
------------------------------------------------------------------------------End of In Re: Preventive Suspension-------------
14. LEDESMA, JR. VS NLRC, GR NO. 174585, OCTOBER 19, 2007
-----------------------------------------------------------------------------------------------Read first before using-------------
DOCTRINE: In cases before administrative, and quasi-judicial bodies, substantial evidence must be given
which is relevant evidence as a reasonable mind might accept as adequate to support a conclusion.
LabRel Batch 6 | Re

Even though the employer is burdened with proving that the dismissal of the employee is indeed legal and
valid, the employee must first present substantial evidence that there was dismissal. Failure to do so
warrants that the dismissal is valid as it can be held that there is no dismissal in the first place.

FACTS: Federico Ledesma is employed as a service/company driver of the company, Philippine Nautical
Training Inc., on probationary status under the supervision of the site administrator, Pablo de Leon.

Ledesma filed a complaint against his supervisor for allegedly using the company resources and property
for personal use which was duly received by the Chief Accountant. Sometime thereafter, de Leon filed a
report which posits that Ledesma is a drug user. Due to de Leon’s report, the Human Resources Manager
of the company required Ledesma to explain why no disciplinary action should be taken against him in
lieu of furnishing him a notice.

Ledesma thereafter filed a complaint of illegal dismissal against the company. He claims that the report
submitted by his supervisor is retaliatory in nature and that when he reported to the company’s main
office in Espana, Manila, the notice was taken back since the drug test confirms that he is indeed a drug
user. Ledesma claims that the company gave him a chance to sign a resignation letter in order for him to
receive a separation pay to which he passed for the moment in order for him to think about the said offer.
He undertook a drug test in St. Dominic Medical Center which states a negative result. He then reported
for work but was apparently banned from the premises.

The company, for its part, said that there was no dismissal but merely a notice and said that Ledesma was
not banned from the evidence which can be proven when he received his remuneration from the dates
he averred to have been denied to enter.

The Labor Arbiter granted in favor of Ledesma but denied reinstatement. The NLRC and CA ruled


HELD: NO. Even though the employer is burdened with proving that the dismissal of the employee is
indeed legal and valid, the employee must first present substantial evidence that there was dismissal.
Failure to do so warrants that the dismissal is valid as it can be held that there is no dismissal in the first

In the case of Ledesma, his statements were uncorroborated and was not substantiated by evidence.
There is no showing that there is a company directive or statement that he is dismissed from service when
he is shown to still be in the company payroll even after said notice was given.

Ledesma claims that the notice or offer given to him was in itself an order of dismissal, while this is not
condoned, it cannot be construed to be an order of dismissal when the choice falls upon him to continue
his employment. Whether or not to resign and receive separation pay or continue working but face
disciplinary action is definitely different against dismissal.

-----------------------------------------------------------------------------------------------Read first before using-------------
FACTS: Petitioner Chiang Kai Shek College is a private educational institution. Individual petitioner
Carmelita Espino is the Vice-President of the school. Respondent Rosalinda Torres had been employed as
LabRel Batch 6 | Re

a grade school teacher of the school. Respondent was accused of leaking a copy of a special quiz given to
Grade 5 students of HEKASI. Petitioners came to know about the leakage from one of the teachers of
HEKASI 5, Aileen Benabese (Ms. Benabese). Ms. Benabese narrated that after giving a special quiz, she
borrowed the book of one of her students, Aileen Regine M. Anduyan (Aileen), for the purpose of making
an answer key. When she opened Aileen’s book, a piece of paper fell. Said paper turned out to be a copy
of the same quiz she had just given and the same already contained answers.

Ms. Benabese informed the school’s Assistant Supervisor Mrs. Gloria Caneda (Mrs. Caneda) about the
incident. Mrs. Caneda conferred with Assistant Supervisor Encarnacion Koo (Mrs. Koo), who was in charge
of the HEKASI area, and Supervisor Luningning Tibi (Ms. Tibi). Mrs. Koo confronted respondent, who had
initially denied leaking the test paper but later on admitted that she gave the test paper to Mrs. Teresita
Anduyan (Mrs. Anduyan), her co-teacher and the mother of Aileen. Respondent and Mrs. Anduyan were
both directed to submit their written statement on the incident.

Respondent submitted her Comment. She insisted that Mrs. Anduyan asked her to see the special quiz.
She was not aware that Mrs. Anduyan did not return the copy of the special quiz back to her. The
Investigating Committee held a meeting and found respondent and Mrs. Anduyan guilty of committing a
grave offense of the school policies by leaking a special quiz. According to petitioners, their Investigating
Committee had actually decided to terminate respondent and had in fact prepared a memorandum of
termination, but in a short letter respondent allegedly pleaded for a change of punishment from
termination to suspension and that she will be resigning at the end of the school year.

Respondent filed a complaint for constructive dismissal and illegal suspension with the Labor Arbiter. She
also sought payment of unpaid salary, backwages, holiday pay, service incentive leave pay, 13th month
pay, separation pay, retirement benefits, damages and attorney’s fees.

In her Position Paper, respondent alleged that she was forced and pressured to submit the written request
for a change of penalty and commitment to resign at the end of the school year. She was threatened by
the school management with immediate dismissal from service if she did not submit the written
statement. She claimed that she was not formally charged with any offense and she was not served a copy
of the notice of the school’s decision to terminate her services.

The Labor Arbiter Eduardo J. Carpio dismissed respondent’s complaint for lack of merit. The Labor Arbiter
deemed respondent’s suspension coupled with petitioner’s allowance of respondent’s resignation at the
end of the school year as generous acts considering the offense committed. The Labor Arbiter held that
there was no constructive dismissal because respondent was not coerced nor pressured to write her
resignation letter.

On appeal, the Second Division of the NLRC rendered a Decision affirming the Labor Arbiter’s findings but
ordering petitioners to pay respondent separation pay equivalent to one-half (1/2) month salary for every
year of service on the grounds of equity and social justice.

Respondent elevated the case to the Court of Appeals. The Court of Appeals reversed the NLRC Decision
and ruled that petitioner did not voluntarily resign but was constructively dismissed. Petitioners moved
for reconsideration but it was denied. Hence, this petition for review.


LabRel Batch 6 | Re

HELD: NO. RESIGNATION is the voluntary act of an employee who is in a situation where one believes that
personal reasons cannot be sacrificed for the favor of employment, and opts to leave rather than stay
employed. It is a formal pronouncement or relinquishment of an office, with the intention of relinquishing
the office accompanied by the act of relinquishment. As the intent to relinquish must concur with the
overt act of relinquishment, the acts of the employee before and after the alleged resignation must be
considered in determining whether, he or she, in fact, intended to sever his or her employment.

The Court did not find anything irregular with respondent’s handwritten letter. The letter came about
because respondent was faced with an imminent dismissal and opted for an honorable severance from
employment. That respondent voluntarily resigned is a logical conclusion. Respondent’s infraction and
the inevitable and justifiable consequence of that infraction, i.e., termination of employment, induced her
to resign or promise to resign by the end of the school year.

There is constructive dismissal when there is cessation of work, because continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in
pay and other benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made to
appear as if it were not, constructive dismissal may, likewise, exist if an act of clear discrimination,
insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could
foreclose any choice by him except to forego his continued employment. There was here no discrimination
committed by petitioners. While respondent did not tender her resignation wholeheartedly,
circumstances of her own making did not give her any other option. With due process, she was found to
have committed the grave offense of leaking test questions. Dismissal from employment was the justified
equivalent penalty. Having realized that, she asked for, and was granted, not just a deferred imposition
of, but also an acceptable cover for the penalty.

-----------------------------------------------------------------------------------------------Read first before using-------------
FACTS: Ramon M. Garcia started working with petitioner Metro Transit Organization (METRO) as a station
telle. He called up the office of METRO and asked if he could go on leave of absence as he was proceeding
to Cebu to look for his wife and children who suddenly left home without his knowledge. After a few
weeks of fruitless search he returned to Manila.

Garcia was not allowed to resume work when he reported to the office. He was directed by his section
head to proceed to the legal department of METRO where he would undergo investigation.

He was asked by one Noel Pill about his absence from work. After he explained to Pill his predicament, Pili
cut short the inquiry and informed him right away that it would be better for him to resign rather than be
terminated for his absences. Still in a state of extreme agitation and weighed down by a serious family
problem, Garcia at once prepared a resignation letter. He then left again for the province to look for his
family. But like his first attempt his effort came to naught. Soon or after, his resignation letter was

METRO paid no heed to the problem and rejected Garcia's plea that he be not considered resigned from
his employment. Thus, Garcia filed a complaint for illegal dismissal.

At the hearings, petitioner maintained that private respondent absented himself without official leave
and then later on freely and willingly relinquished his employment because he was establishing his own
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The Labor Arbiter found for private respondent and ordered petitioner to immediately reinstate
complainant Ramon M. Garcia to his former position. The NLRC affirmed the decision of the Labor Arbiter.


HELD: YES. The Court was not persuaded that Garcia had already made up his mind to resign, even before
he was told by an immediate superior to report to the legal department for investigation. If this was so,
he would have already prepared a formal letter of resignation to hand over to management as soon as he
reported for work. Notably, it was only after Garcia met with Investigating Officer Noel Pili to explain the
reason for his absence that he wrote a resignation letter as prompted by pill. The resignation was clearly
an offshoot of that fateful meeting.

An examination of the circumstances surrounding the submission of the letter indicates that the
resignation was made without proper discernment so that it could not have been intelligently and
voluntarily done.

During his encounter with Pili, respondent Garcia asked, " . . . ano ba ang gagawin ko kasi aalis uli ako,
kailangan kong ayusin ang problema ko. . . sabi n'ya mag-resign ka na lang para hindi ka na ma-terminate"
Verily, what Pili did as petitioner's representative was to advise Garcia, who at that time was thoroughly
confused and bothered no end by a serious family problem, that he had better resign or face the prospect
of an unceremonious termination from service for abandonment of work. At that precise moment, the
employee could not be said to have fully understood what he was doing.

Petitioner could have fairly settled the problem of its employee and avoided litigation had it listened
judiciously to the former's explanation for his absences. An employer may have to bend a little backwards
if only to accommodate an employee who is heavily burdened with a grave family crisis. For it is worth
remembering that the objectives of social justice can be realized only if employers in appropriate
situations extend their hand to their employees in dire need of help. Certainly, a termination without just
cause entitles a worker to reinstatement.

17. ICO VS STI; GR NO. 185100, JULY 9, 2014

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FACTS: Systems Technology Institute, Inc. (STI) is an educational institution incorporated, organized, and
existing under Philippine laws. Monico V. Jacob is the President and CEO and Peter K. Fernandez is the
Senior Vice-President.

Girly G. Ico was hired as Faculty Member by STI College Makati. Afterwards, she was promoted to Chief
Operating Officer of STI-Makati, concurrently serving as its School Administrator. A plan of merger was
then executed between STI and STI College Makati. She was reappointed as the COO of STI-Makati under
Fernandez but two months after the confirmation of her appointment, she was reassigned as a
Compliance Manager. According to STI, the organizational restructuring was undertaken in order to
streamline the operations and in the process, it abolished the positions of CEO and COO.

Prior to her reassignment as compliance manager, she was accused by Fernandez to have committed
several violations which the latter refused to specify or put into writing. Thereafter, Ico has been
discriminated against. She has been left alone in the office while everyone went to Baguio for a planning
session and on that same day, there was an announcement via email informing everyone of Jacob’s
LabRel Batch 6 | Re

appointment as President and CEO, Fernandez’s appointment as the new COO of STI-Makati and Victoria
Luz as the new STI-Makati School Administrator. There was no announcement as to her appointment as
Compliance Manager.

Pursuant to Fernandez’s allegations, an audit report was made accusing Ico of several violations. This led
the former to recommend the latter’s preventive suspension which Jacob approved. Then, Ico received
another memo stating that charges have been filed against her based on the audit findings. However, she
was not informed of the particular charges and results of the audit nor was she furnished a copy thereof.
When she filed a labor case, her suspension was lifted and she was ordered to return to work.
Subsequently, Ico was invited to a meeting to discuss the charges against her but she was not given a copy
of the complaint. Thereafter, she went on sanctioned leave of absence and after the lapse of her approved
leave, no longer returned to work. STI then issued a memo withholding her incentives pending the
investigation. Thereafter, she was dismissed.

The labor arbiter found that Ico has been constructively dismissed but it was set aside by the NLRC which
the CA confirmed.


HELD: YES. The Court found that the position of STI-Makati COO was never abolished and that petitioner’s
appointment as Compliance Manager was contrived, which confirms the view that petitioner was not
transferred to the School Compliance Group as a matter of necessity, but as punishment for her perceived
irregularities. In effect, petitioner was demoted and relegated to a position of insignificance within STI,
there to suffer for what her employer alleged were transgressions committed by her. To all intents and
purposes, petitioner was punished even before she could be tried. Petitioner could not be faulted for taking
an indefinite leave of absence, and for altogether failing to report for work after August 9, 2004. Human
nature dictates that petitioner should refuse to subject herself to further embarrassment and indignities
from the respondents and her colleagues. All told, petitioner was deemed constructively dismissed as of
May 18, 2004.
The position of STI-Makati COO was actually never abolished. As a matter of fact, soon after petitioner
was removed from the position, Fernandez was appointed to take her place as STI-Makati COO; his
appointment was even publicly announced via an official communication disseminated company-wide.
This thus belies respondents’ claim that the position of STI-Makati COO became unnecessary and was thus

Ico’s appointment as Compliance Manager appears to be contrived as well. At the time of her
appointment, the only two Compliance Manager positions were already filled up by Musico and Gozum.
None of them has been dismissed or resigned. Nor could petitioner have been appointed head of the
department, as Paraiso was its Compliance Group Head. The only positions within the department that
were at the time vacant were those of Compliance Officers, which are of lower rank. In other words,
petitioner could not have been validly appointed as Compliance Manager, a position within STI that was
then very much occupied; if ever, petitioner took the position of a mere Compliance Officer, the only
vacant position within the department.
-----------------------------------------------------------------------------------------------End of Ratio---------------------------
-----------------------------------------------------------------------------------------------Read first before using-------------
LabRel Batch 6 | Re

FACTS: Complainants worked in respondents’ paper manufacturing business in various capacities as

machine operator, bookbinding head and/or helper. They claimed that, for refusal to sign for the
ratification of an addendum to an existing Collective Bargaining Agreement which was intended to effect
a reduction in their leave benefits of fifteen (15) days for every year of service, they were subjected to
acts of harassment such that, on November 11, 1998, when they reported for work, they were not allowed
entry by respondent company’s security guard and that, they were instead instructed by the company’s
Personnel Manager, to receive a Memorandum of Transfer which they refused. Complainants alleged
that their transfer to a provincial post constituted a case of constructive dismissal.

Respondents denied the charge, averring that the transfer had, for its sole consideration, the best interest
of the company and that it was an undertaking which the complainants agreed when they signed their
employment contracts with the respondent company.

Respondents further alleged that there was no reason to get back at the complainants on account of their
refusal to sign the adverted signature sheet for the ratification of an Addendum to the 1995 CBA, since
the majority of the employees in the bargaining unit had already ratified the said addendum; that during
their employment, complainants committed several offenses in that, Tungpalan failed to report for work
on March 12, 1998 then broke a breaker in August 1998, signed an overtime form but did not render
overtime work, and had several unexcused absences; Espiritu was also cited for a number of tardiness and
absences; that Regalado was suspended for seven (7) days in November 1997 for absences, issued a
memorandum for not wearing the proper uniform and for tardiness likewise; and that Paguirigan in 1998
had ten (10) unexcused absences and was suspended twice on such account.

The Labor Arbiter dismissed the complaint, a decision which was affirmed by the NLRC but was
subsequently reversed by the Court of Appeals.


HELD: YES. It must be stressed that where an employee complains of constructive dismissal, it is the
employer who bears the burden of proving that the transfer of an employee is for just and valid grounds,
such as genuine business necessity, and such transfer is not unreasonable, inconvenient, or prejudicial to
the employee. An employer’s failure to discharge such burden would make him liable for unlawful
constructive dismissal.

The main argument of petitioner is that the transfers were an act of management right and prerogative
and respondents should not complain about such transfers since from the beginning of their employment,
they signified their willingness to be transferred to any of petitioner’s branches as shown in the
Information Sheet each of them accomplished as a pre-requisite for employment. Be that as it may,
petitioner must show that the transfer was done in good faith. The management prerogative to transfer
personnel must be exercised without grave abuse of discretion and putting to mind the basic elements
of justice and fair play. There must be no showing that it is unnecessary, inconvenient and prejudicial to
the displaced employee.

The combined circumstances of the immediate transfer of respondents to far-off provinces after their
refusal to sign the signature sheet of the document for the ratification of the Addendum to the Collective
Bargaining Agreement of 1995, and petitioner’s emphasis on respondents’ alleged previous infractions at
work, point to the fact that the transfers are motivated by ill-will on the part of petitioner. Petitioner’s
order for respondents to report for work in petitioner’s provincial branches on the very same day that
LabRel Batch 6 | Re

they were served with the Memo of Transfer is extremely unreasonable as the relocation would unduly
inconvenience not only respondents but their respective families. Petitioner, therefore, failed to
sufficiently prove that respondents’ transfer is for a just and valid cause and not unreasonable,
inconvenient, or prejudicial to the employee, making it liable for constructive dismissal.


-----------------------------------------------------------------------------------------------Read first before using-------------
FACTS: Herein petitioner, Jenny F. Peckson, was holding the position of Category Buyer at Robinsons
Supermarket Corporation (RSC) when respondent reassigned her to the position of Provincial Coordinator,
effective November 1, 2006.

Claiming that her new assignment was a demotion because it was non-supervisory and clerical in nature,
the petitioner refused to turn over her responsibilities to the new Category Buyer, or to accept her new
responsibilities as Provincial Coordinator.

In a memorandum to the petitioner, the ROBINSONS SUPERMARKET CORPORATION (RSC), through Sarte,
demanded an explanation from her within 48 hours for her refusal to accept her new assignment despite
written and verbal demands. Sarte cited a company rule which provided that disobedience, refusal or
failure to do assigned task or to obey superior’s/official’s orders/instructions, or to follow established
procedures or practices without valid reason would be meted the penalty of suspension.

Petitioner replied that she could not accept the position of Provincial Coordinator since she saw it as a
demotion. As it turned out, however, the petitioner had already filed a complaint for constructive
dismissal against the respondent.

Petitioner maintains that her lateral transfer from Category Buyer to Provincial Coordinator was a
demotion amounting to constructive dismissal because her reassignment was not a valid exercise of
management prerogative, but was done in bad faith and without due process, that the company
deliberately embarrassed her when it cut off her email access.

Respondents replied that her transfer was not a demotion since the Provincial Coordinator occupied a
"Level 5" position with the same work conditions, salary and benefits. Respondent denied that the
reassignment of the petitioner as Provincial Coordinator was motivated by a desire to besmirch the name
of the latter, and asserted that it was made in the exercise of management prerogative and sound


HELD: YES. The Court has consistently refused to interfere with the exercise by management of its
prerogative to regulate the employees’ work assignments, the working methods and the place and
manner of work. Indeed, labor laws discourage interference with an employer’s judgment in the conduct
of his business.

UNDER THE DOCTRINE OF MANAGEMENT PREROGATIVE, every employer has the inherent right to
regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, the time, place and manner of work, work supervision, transfer of
employees, lay-off of workers, and discipline, dismissal, and recall of employees. The only limitations to
LabRel Batch 6 | Re

the exercise of this prerogative are those imposed by labor laws and the principles of equity and
substantial justice.

It is the employer’s 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. When his transfer is not
unreasonable, nor inconvenient, nor prejudicial to him, and it does not involve a demotion in rank or a
diminution of his salaries, benefits, and other privileges, THE EMPLOYEE MAY NOT COMPLAIN THAT IT

20. ALMARIO VS PAL; GR NO. 170928, SEPT 11, 2007

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DOCTRINE: Courts will not allow one party to enrich himself at the expense of another. Unjust enrichment:
Article 22, CC recognizes the principle that one may not enrich himself at the expense of another. Form of
"enrichment:" Enrichment of the defendant consists in every patrimonial, physical, or moral advantage, so
long as it is appreciable in money

FACTS: On April 28, 1995, Almario, then about 39 years of age and a Boeing 737 (B-737) First Officer at
PAL, successfully bid for the higher position of Airbus 300 (A-300) First Officer. Since said higher position
required additional training, he underwent, at PAL‘s expense, more than five months of training consisting
of ground schooling in Manila and flight simulation in Melbourne, Australia. After completing the training
course, Almario served as A-300 First Officer of PAL, but after eight months of service as such, he tendered
his resignation, for ―personal reasons. Despite a letter coming from PAL to reconsider his resignation
otherwise he will bear the cost of training, Mr. Almario still proceeded with his resignation.

Later on, PAL filed a Complaint against Almario before the Regional Trial Court (RTC), for reimbursement
of P851,107 worth of training costs, attorney‘s fees equivalent to 20% of the said amount, and costs of
litigation. PAL invoked the existence of an innominate contract of do ut facias (I give that you may do)
with Almario in that by spending for his training, he would render service to it until the costs of training
were recovered in at least three (3) years. Almario having resigned before the 3-year period, PAL prayed
that he should be ordered to reimburse the costs for his training. In his Answer, Almario denied the
existence of any agreement with PAL that he would have to render service to it for three years after his
training failing which he would reimburse the training costs. He pointed out that the Collective Bargaining
Agreement (CBA) between PAL and the Airline Pilot‘s Association of the Philippines (ALPAP), of which he
was a member, carried no such agreement.

Almario‘s contention was confirmed by the RTC but was reversed by the Court of Appeals (CA) which
found Almario liable under the CBA between PAL and ALPAP and, in any event, under Article 22 of the
Civil Code. Thus, this action for review on Certiorari.


HELD: YES. Article XXIII, Section 1 of the CBA provides that pilots fifty-seven (57) years of age shall be
frozen in their position and shall not be permitted to occupy any position in the company‘s turbo-jet fleet.
The reason why pilots who are 57 years of age are no longer qualified to bid for a higher position is because
they have only three (3) years left before the mandatory retirement age of 60 and to send them to training
at that age, PAL would no longer be able to recover whatever training expenses it will have to incur.
LabRel Batch 6 | Re

Simply put, the foregoing provision clearly and unequivocally recognizes the prohibitive training cost
principle such that it will take a period of at least three (3) years before PAL could recover from the training
expenses it incurred.

The rationale of the three-year period is the prohibitive training costs. At an earlier time, when the CBA
between PAL and its employees were still negotiated, the Secretary of Labor basically ruled that PAL
should be allowed a return on investment for their pilots’ training expenses. Thus, the provisions that
pilots 57 years of age shall be frozen and pilots less than 57, provided they have previously qualified in
any company’s turbo-jet aircraft, shall be permitted to occupy any position in the company’s turbo-jet
fleet, were incorporated in later incarnations of the CBA.

When Almario took the training course, he was about 39 yrs old, 21 yrs away from the retirement age of
60. Hence, with the maturity, expertise and experience he gained from the training course, he was
expected to serve PAL for at least three years to offset “the prohibitive costs” thereof.

Admittedly, PAL invested for the training of Almario to enable him to acquire a higher level of skill,
proficiency, or technical competence so that he could efficiently discharge the position of A-300 First
Officer. Given that, PAL expected to recover the training costs by availing of Almario‘s services for at least
three years. The expectation of PAL was not fully realized, however, due to Almario‘s resignation after
only eight months of service following the completion of his training course. He cannot, therefore, refuse
to reimburse the costs of training without violating the principle of unjust enrichment.
------------------------------------------------------------------------------In Re: Enrichment-------------------------------------
Enrichment of the defendant consists in every patrimonial, physical, or moral advantage, so long as it is
appreciable in money. It may consist of some positive pecuniary value incorporated into the patrimony of
the defendant, such as: (1) the enjoyment of a thing belonging to the plaintiff; (2) the benefits from service
rendered by the plaintiff to the defendant; (3) the acquisition of a right, whether real or personal; (4) the
increase of value of property of the defendant; (5) the improvement of a right of the defendant, such as
the acquisition of a right of preference; (6) the recognition of the existence of a right in the defendant;
and (7) the improvement of the conditions of life of the defendant.

The enrichment of the defendant must have a correlative prejudice, disadvantage, or injury to the
plaintiff. This prejudice may consist, not only of the loss of property or the deprivation of its enjoyment,
but also of non-payment of compensation for a prestation or service rendered to the defendant without
intent to donate on the part of the plaintiff, or the failure to acquire something which the latter would
have obtained. The injury to the plaintiff, however, need not be the cause of the enrichment of the
defendant. It is enough that there be some relation between them, that the enrichment of the defendant
would not have been produced had it not been for the fact from which the injury to the plaintiff is derived.
------------------------------------------------------------------------------End of In Re: Enrichment----------------------------
-----------------------------------------------------------------------------------------------Read first before using-------------
FACTS: Atty. Matorre claimed that she was employed by HBV Law Firm as a Senior Associate Attorney. As
the managing partner of HBV Law Firm, Atty. Hechanova was the one who supervised Atty. Matorre and
gave her work assignments.

On August 2008, Atty. Matorre started to express her feelings of being harassed by Atty. Hechanova. In
an e-mail sent to petitioner, Atty. Matorre wrote:
“I regret to realize [sic] that you seem to be not pleased with my work output so far, even if I am
trying and doing my best to adjust with your work style here.
LabRel Batch 6 | Re

Honestly, I get seriously offended every time you speak to me because you always get irritated
about the things I say, that I hesitate now to approach you personally to find out what I need to
know about a certain assignment.
I feel so humiliated whenever you scold me or whenever you raise your voice within the hearing of
other associate lawyers at a distance. I feel so embarrassed because it seems that you make it
appear I am so stupid.
Hoping for your understanding and I pray that you would have a not-so-stressful work schedule,
so that you can keep your cool at all times.
Thanks a lot.”

During a meeting between Atty. Matorre and Atty. Hechanova, Atty. Matorre told Atty. Hechanova that
since she (Atty. Hechanova) was not satisfied with Atty. Matorre and because they were frequently
arguing with each other, it would be best if Atty. Matorre resigns from the firm. Atty. Matorre requested
that her resignation be made effective on September 30, 2008, but thinking that the said date was too far
off, Atty. Hechanova accepted the resignation, with the condition that it be made effective on September
15, 2008.

On September 1, 2008, Atty. Matorre received a letter from Atty. Hechanova conveying the latter’s
acceptance of her oral resignation. Atty. Hechanova’s secretary, Gladies Nepomuceno, attested that when
Atty. Matorre received the aforementioned letter, Atty. Matorre merely said "okay" without displaying
any sign of protest.

Atty. Matorre filed a complaint for constructive illegal dismissal against HBV Law Firm. The Labor Arbiter
rendered judgment in favor of HBV Law Firm. The NLRC reversed the Decision of the Labor Arbiter. The
Court of Appeals upheld the ruling of the NLRC.


HELD: NO. The resignation of Atty. Matorre was voluntary and she was not constructively dismissed. the
allegation that Mr. Tecson threatened and forced petitioner to resign was other than being
unsubstantiated and self-serving, but is also insufficient to support the finding of force, intimidation, and
ultimately constructive dismissal.

In the case of Atty. Matorre, she presented no evidence of constructive dismissal, apart from her self-
serving and uncorroborated allegations.
First, Atty. Matorre was not able to present a single witness to corroborate her claims of verbal abuse and
insults from Atty. Hechanova. She was only able to adduce transcriptions of what she claims were
conversations between her and Atty. Hechanova, and nothing more. These are indeed self-serving and
uncorroborated and should not be given evidentiary weight.

On the other hand, the body of evidence presented by HBV Law Firm would show affidavits demonstrating
that the other personnel in the said law firm neither heard nor saw any inappropriate behavior on the
part of Atty. Hechanova towards Atty. Matorre.

Second, the act of HBV Law Firm of moving the effectivity date of Atty. Matorre’s resignation from
September 30, 2008 to September 15, 2008 is not an act of harassment, as Atty. Matorre would have us
believe. The 30-day notice requirement for an employee’s resignation is actually for the benefit of the
LabRel Batch 6 | Re

employer who has the discretion to waive such period. Its purpose is to afford the employer enough time
to hire another employee if needed and to see to it that there is proper turn-over of the tasks which the
resigning employee may be handling.

Moreover, the act of HBV Law Firm of moving the effectivity date of Atty. Matorre’s resignation to an
earlier date cannot be seen as a malicious decision on the part of the firm in order to deprive Atty. Matorre
of an opportunity to seek new employment. This decision cannot be viewed as an act of harassment but
rather merely the exercise of the firm’s management prerogative.

Third, the fact that HBV Law Firm was no longer assigning new work to Atty. Matorre after her resignation
is not an act of harassment, but is also an exercise of management prerogative. Expecting that Atty.
Matorre would no longer be working for HBV Law Firm after three to four weeks, she was no longer given
additional assignments to ensure a smooth turn-over of duties and work. Indeed, having an employee
focus on her remaining tasks and not assigning new ones to her would be beneficial on the part of HBV
Law Firm as there would in fact be less tasks to be turned over to Atty. Matorre’s replacement. Said
actuation is well within the ambit of the firm’s management prerogative, and is certainly not an act of
-----------------------------------------------------------------------------------------------End of Ratio---------------------------
ARTICLE 301[286] When employment not deemed terminated. - The bona-fide suspension of the
operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the
employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall
reinstate the employee to his former position without loss of seniority rights if he indicates his desire to
resume his work not later than one (1) month from the resumption of operations of his employer or from
his relief from the military or civic duty.

-----------------------------------------------------------------------------------------------Read first before using-------------
FACTS: Irvine Construction Corp. (Irvine) initially hired Crispin Lopez as laborer in November 1994 and,
thereafter, designated him as a guard at its warehouse in the year 2000, with a salary of ₱238.00 per day
and working hours from 7 o'clock in the morning until 4 o'clock in the afternoon, without any rest day. On
December 18, 2005, Lopez was purportedly terminated from his employment, whereupon he was told
"Ikaw ay lay-off muna." Thus, he filed a complaint for illegal dismissal with prayer for the payment of
separation benefits against Irvine before the NLRC.

Irvine denied Lopez's claims, alleging that he was employed only as a laborer who, sometimes doubled as
a guard. As laborer, Lopez's duty was to bring construction materials from the suppliers' vehicles to the
company warehouse when there is a construction project in Cavite. As evidenced by an Establishment
Termination Report dated December 28, 2005, Lopez was temporarily laid-off on December 27, 2005 after
the Cavite project was finished. Eventually, Lopez was asked to return to work through a letter dated June
5, 2006 (return to work order), allegedly sent to him within the six ( 6) month period under Article 286 of
the Labor Code which pertinently provides that "[t]he bona-fide suspension of the operation of a business
or undertaking for a period not exceeding six (6) months x x x shall not terminate employment." As such,
Irvine argued that Lopez's filing of the complaint for illegal dismissal was premature.

Labor Arbiter Lopez was illegally dismissed, a decision which was approved by the NLRC. The Court of
Appeals, however, reversed the decision of the NLRC.
LabRel Batch 6 | Re


HELD: YES. In this case, the NLRC found that no substantial evidence had been presented by Irvine to show
that Lopez had been assigned to carry out a "specific project or undertaking," with its duration and scope
specified at the time of engagement. As a regular employee, Lopez is entitled to security of tenure, and,
hence, dismissible only if a just or authorized cause exists therefor.

Among the authorized causes for termination under Article 283 of the Labor Code is retrenchment, or
what is sometimes referred to as a “LAY-OFF” which is defined as the severance of employment, through
no fault of and without prejudice to the employee, resorted to by management during the periods of
business recession, industrial depression, or seasonal fluctuations, or during lulls caused by lack of orders,
shortage of materials, conversion of the plant to a new production program or the introduction of new
methods or more efficient machinery, or of automation.

In both a permanent and temporary lay-off, jurisprudence dictates that the one-month notice rule to both
the DOLE and the employee under Article 283 of the Labor Code is mandatory. Also, in both cases, the
lay-off, being an exercise of the employer's management prerogative, must be exercised in good faith -
that is, one which is intended for the advancement of employers' interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws or under valid agreements.

In this case, the supposed lay-off of Lopez was hardly justified considering the absence of any causal
relation between the cessation of Irvine's project in Cavite with the suspension of Lopez's work. To
repeat, Lopez is a regular and not a project employee. Hence, the continuation of his engagement with
Irvine, either in Cavite, or possibly, in any of its business locations, should not have been affected by the
culmination of the Cavite project alone. Irvine should have established the bona fide suspension of its
business operations or undertaking that would have resulted in the temporary lay-off of its employees.
Irvine failed to prove compliance with the parameters of Article 286 of the Labor Code. CA therefore erred
in granting Irvine’s certiorari petition. NLRC resolution is reinstated, Lopez was illegally dismissed.
------------------------------------------------------------------------------See Article 283 & 286 for Reference-------------
23. SEBUGUERO VS NLRC, GR NO. 115394, SEPTEMBER 27, 1995.
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FACTS: Petitioners were among the regular employees of the private respondent, GTI Sportswear
Corporation (GTI) who were initially under “temporary lay- off” yet were no longer recalled after the lapse
of 6 months. Believing that their "temporary lay-off" was a ploy to dismiss them, because of their union
activities, and that such was in violation of their right to security of tenure since there was no valid ground
therefor, the laid-off employees filed with the Labor Arbiter for illegal dismissal.

Private respondent GTI denied the claim of illegal dismissal and asserted that it was its prerogative to lay-
off its employees temporarily for a period not exceeding six months to prevent losses due to lack of work
or job orders from abroad, and that the lay-off affected both union and non-union members. It justified
its failure to recall the 38 laid-off employees after the lapse of six months because of the subsequent
cancellations of job orders made by its foreign principals, a fact which was communicated to the
petitioners and the other complainants who were all offered severance pay. Twenty-two (22) of the 38
complainants accepted the separation pay. The petitioners herein did not.

The Labor Arbiter dismissed the complaint, a decision which was affirmed by the NLRC, hence the present
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HELD: NO. Article 283 speaks of a permanent retrenchment as opposed to a temporary lay-off as is the
case here. There is no specific provision of law which treats of a temporary retrenchment or lay-off and
provides for the requisites in effecting it or a period or duration therefor. These employees cannot,
however, forever be temporarily laid-off.

To remedy this situation or fill the hiatus, Article 286 may be applied but only by analogy to set a specific
period that employees may remain temporarily laid-off or in floating status. Six months is the period set
by law that the operation of a business or undertaking may be suspended, thereby suspending the
employment of the employees concerned. The temporary lay-off wherein the employees likewise cease
to work should also not last longer than six months. After six months, the employees should either be
recalled to work or permanently retrenched following the requirements of the law, and that failing to
comply with this would be tantamount to dismissing the employees and the employer would thus be liable
for such dismissal.

Under the Article 283 of the Labor Code, there are three basic requisites for a valid retrenchment:
(1) the retrenchment is necessary to prevent losses and such losses are proven;
(2) written notice to the employees and to the Department of Labor and Employment at least
one month prior to the intended date of retrenchment; and
(3) payment of separation pay equivalent to one month pay or at least 1/2 month pay for every
year of service, whichever is higher.

As for the 1st requisite, private respondent was suffering and would continue to suffer serious losses,
thereby justifying the retrenchment of some of its employees, including the petitioners. It is settled that
findings of quasi-judicial agencies which have acquired expertise in the matters entrusted to their
jurisdiction are accorded by this Court not only with respect but with finality if they are supported by
substantial evidence. No claim was made by any of the parties that such a finding was not supported by
substantial evidence. Furthermore, the petitioners did not appeal the finding of the Labor Arbiter that
their temporary lay-off to prevent losses was amply justified. They cannot now question this finding that
there is a valid ground to lay-off or retrench them.

2nd requisite: It is undisputed that the petitioners were given notice of the temporary lay-off. There is,
however, no evidence that any written notice to permanently retrench them was given at least one month
prior to the date of the intended retrenchment. GTI conveyed to the petitioners the impossibility of
recalling them due to the continued unavailability of work, however, what the law requires is a written
notice to the employees concerned and that requirement is mandatory. The notice must also be given
at least one month in advance of the intended date of retrenchment to enable the employees to look for
other means of employment and therefore to ease the impact of the loss of their jobs and the
corresponding income.

That they were already on temporary lay-off at the time notice should have been given to them is not an
excuse to forego the one-month written notice because by this time, their lay-off is to become permanent
and they were definitely losing their employment. There is also nothing in the records to prove that a
written notice was ever given to the DOLE as required by law. The lack of written notice to the petitioners
and to the DOLE does not, however, make the petitioners' retrenchment illegal such that they are entitled
to the payment of back wages and separation pay in lieu of reinstatement as they contend. Their
LabRel Batch 6 | Re

retrenchment, for not having been effected with the required notices, is merely defective. But here, such
a cause is present as found by both the Labor Arbiter and the NLRC. There is only a violation by GTI of the
procedure prescribed in Article 283 of the Labor Code in effecting the retrenchment of the petitioners.

It is now settled that where the dismissal of an employee is in fact for a just and valid cause and is so
proven to be but he is not accorded his right to due process, i.e., he was not furnished the twin
requirements of notice and the opportunity to be heard, THE DISMISSAL SHALL BE UPHELD BUT THE

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FACTS: Petitioner had a three-year collective bargaining agreement (CBA) covering the period December
15, 1987 until December 15, 1990, with herein private respondent, Nagkabiusang Mamumuo sa San Pedro
Hospital of Digos — National Federation of Labor (NAMASAP-NFL), the exclusive bargaining agent of the
hospital’s rank-and-file workers. After the parties failed to reach agreement on the issues of raising wages,
the union during the meeting of February 19, 1991 declared a deadlock.

On February 20, 1991, respondent union saturated petitioner’s premises with streamers and picketed the
hospital. The operations of the hospital having come to a grinding halt, the hospital management
considered the union actions as tantamount to a strike. On May 28, 1991, respondent union struck.
Despite the NCMB’s call for a conciliation conference, nurses and nurse aides who were members of the
union abandoned their respective department and joined the picket line a week later. Doctors began
leaving the hospital and the number of patients dwindled. The last patient was discharged on June 10,

On June 12, 1991, a “Notice of Temporary Suspension of Operation” was issued by petitioner hospital and
submitted to the local office of the NCMB on June 14, 1991. Then Secretary of Labor Nieves Confessor
assumed jurisdiction over the labor dispute and issued an order directing all workers to return to work.
However, this order was received by petitioner only on June 20, 1991. In the meantime, it had already
notified the DOLE via its letter dated June 13, 1991, which was received by the DOLE on June 14, 1991,
that it would temporarily suspend operations for six (6) months effective June 15, 1991, or up to
December 15, 1991. Petitioner thus refused the return of its striking workers on account of such
suspension of operations.


HELD: YES. TEMPORARY SUSPENSION OF OPERATIONS is recognized as a valid exercise of management

prerogative provided it is not carried out in order to circumvent the provisions of the Labor Code or to
defeat the rights of the employees under the Code. The determination to cease or suspend operations is
a prerogative of management that the State usually does not interfere with, as no business can be required
to continue operating at a loss simply to maintain the workers in employment. Such an act would be
tantamount to a taking of property without due process of law, which the employer has a right to resist.
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The burden of proving that such a temporary suspension is bona fide falls upon the employer. In this
instance, petitioner had to establish the fact of its precarious financial health, its cessation of operation
was really necessitated by its financial condition, and that said condition would probably be alleviated or
improved, or its losses abated, by undertaking such suspension of operation. The fact that the conciliator
never asked for them is no sufficient excuse for not presenting the same, as such was petitioner’s duty.
Neither is it acceptable for petitioner to allege that latest financial statement (for the year 1991) were still
being prepared by its accountants and not yet ready for submission, since the financial statement for the
prior years 1989 and 1990 would have sufficed.

It is a basic that employers who contemplate terminating the services of their workers must base their
decisions on more than just flimsy excuses, considering that the dismissal of an employee from work
involves not only the loss of his position but, what is more important, his means of livelihood. The same
principle applies in temporary suspension of operations, as in this case, considering that it involves laying
off employees for a period of six months. Petitioner, having wretchedly failed to justify by even the most
rudimentary proof its temporary suspension of operations, must bear the consequences thereof. We thus
hold that the Secretary of Labor and Employment did not act with grave abuse of discretion in finding the
temporary suspension unjustified and illegal.

Secretary was of the impression that petitioner would operate again after the lapse of the six-month
suspension of operations on December 16, 1991, and so ordered the parties to enter into and formalize a
new CBA to govern their relations upon resumption of operations. On the other hand, the aforequoted
portion of the Order must be understood in the context of the Secretary’s finding that the temporary
suspension was only for circumventing the return-to-work order, but in spite of which he held that he
could not order petitioner to continue operations as “this would infringe on its inherent right to manage
and conduct its own business affairs”; he thus ordered instead the payment of backwages to the returning
workers who were refused admittance by petitioner on June 21, 1991. And as above adverted to, he also
ordered the parties to execute a new CBA to govern their relations upon the expiry of the period of
suspension and the resumption of normal operations.

Did the Secretary act in excess of jurisdiction in imposing the wage increase and union shop provision
on the petitioner? The Court held that he did not. While petitioner cannot be forced to abandon its
suspension of operations even if said suspension be declared unjustified, illegal and invalid, neither can
petitioner evade its obligation to bargain with the union, using the cessation of its business as reason
therefor. For, as already indicated above, the employer-employee relationship was merely suspended
(and not terminated) for the duration of the temporary suspension. Using the suspension as an excuse to
evade the duty to bargain is further proof of its illegality. It shows abuse of this option and bad faith on
the part of petitioner. And since it refused to bargain, without valid and sufficient cause, the Secretary in
the exercise of his powers under Article 263(i) of the Labor Code to decide and resolve labor disputes,
properly granted the wage increase and imposed the union shop provision.

Notwithstanding that respondent Secretary did not act with grave abuse of discretion in issuing the
challenged Orders, we cannot ignore the supervening event which occurred after December 15, 1991, i.e.,
the subsequent permanent cessation of petition of petitioner on account of losses. Thus, despite the
absence of grave abuse of discretion on the part of the respondent Secretary, this Court cannot impose
upon petitioner the directive to enter into a new CBA with the union for the very simple reason that to do
so would be to compel petitioner to continue its business when it had already decided to close shop, and
that would be judicial tyranny on our part.
LabRel Batch 6 | Re

ARTICLE 302[287] Retirement. - Any employee may be .retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.

In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have
earned under existing laws and any collective bargaining agreement and other agreements: Provided,
however, that an employee’s retirement benefits under any collective bargaining and other agreements
shall not be less than those provided herein.

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five
(65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years
in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-
half (1/2) month salary for every year of service, a fraction of at least six (6) months-being considered as
one (1) whole year.

Unless the parties provide for broader inclusions, the term ‘one-half (1/2) month salary shall mean fifteen
(15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5)
days of service incentive leaves.

An underground or surface mining employee upon reaching the age of fifty (50) years or more, but not
beyond sixty (60) years which is hereby declared the compulsory retirement age for both underground
and surface mine workers, who has served at least five (5) years as underground or surface mine worker
may retire and shall be entitled to all the retirement benefits provided for in this Article.

For purposes of this Act, surface mine workers shall only include mill plant workers, electrical, mechanical
and tailings pond personnel.

Retail, service and agricultural establishments or operations employing not more than ten (10) employees
or workers are exempted from the coverage of this provision.

Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under
Article 302 of this Code.

Nothing in this Article shall deprive any employee of benefits to which he may be entitled under Section
12-B of Republic Act No. 1161, as amended, otherwise known as the Social Security Act of 1997 and other
existing laws or company policies or practices.

25. OXALES VS UNILAB; GR NO. 152991, JULY 21, 2008

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FACTS: An employee of UNILAB becomes a member of the URP upon his regularization in the company.
The URP mandates the compulsory retirement of any member-employee who reaches the age of 60.
Oxales joined UNILAB on September 1, 1968. He was compulsorily retired by UNILAB when he reached his
60th birthday on September 7, 1994, after having rendered service of twenty-five (25) years, eleven (11)
months, and six (6) days. In computing the retirement benefits of Oxales based on the 1 months for every
year of service under the URP, UNILAB took into account only his basic monthly salary. It did not include
LabRel Batch 6 | Re

as part of the salary base the permanent and regular bonuses, reasonable value of food allowances, 1/12
of the 13th month pay, and the cash equivalent of service incentive leave for a total of 2.1M.

On August 21, 1997, Oxales wrote UNILAB, claiming that he should have been paid P1,775,907.23 more
in retirement pay and unused leave credits. He insisted that his bonuses, allowances and 13th month pay
should have been factored in the computation of his retirement benefits. UNILAB wrote back and
reminded Oxales about the provision of the URP excluding any commissions, overtime, bonuses or extra
compensations in the computation of the basic salary of the retiring employee. That urged oxalis to file a
case against Unilab before the Labor Arbiter.

The Labor Arbiter held that the URP clearly excludes commission, overtime, bonuses, or other extra
compensation. Hence, the benefits asked by Oxales to be included in the computation of his retirement
benefits should be excluded. The Arbiter also held that the inclusion of the fringe benefits claimed by
Oxales would put UNILAB in violation of the terms and conditions set forth by the Bureau of Internal
Revenue (BIR) when it approved the URP as a tax-qualified plan. Oxales appealed to the NLRC. It would
also expose the trustees of the URP to liabilities and prejudice the other employees. Worse, the BIR might
even withdraw the tax exemption granted to the URP. Lastly, the Labor Arbiter opined that the URP
precludes the application of the provisions of R.A. No. 7641. On February 8, 1999, the NLRC affirmed the
decision of the Labor Arbiter. Just like the Labor Arbiter and the NLRC, the CA also held that R.A. No. 7641
is applicable only in the absence of a retirement plan or agreement providing for the retirement benefits
of employees in an establishment.


HELD: NO. The obligations arising from the agreement between the employer and the employee have the
force of law between them and should be complied with in good faith. However, though the employer
and the employee are given the widest latitude possible in the crafting of their contract, such right is not
absolute. There is no such thing as absolute freedom of contract. A limitation is provided for by the law
itself. Their stipulations, clauses, terms, and conditions should not be contrary to law, morals, good
customs, public order, or public policy.

Oxales is not entitled to the additional retirement benefits he is asking. The URP is very clear: basic
monthly salary for purposes of computing the retirement pay is the basic monthly salary, or if daily[,]
means the basic rate of pay converted to basic monthly salary of the employee excluding any
commissions, overtime, bonuses, or extra compensations. The URP is not contrary to law, morals, good
customs, public order, or public policy to merit its nullification.

135136, MAY 19, 1999.
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FACTS: In 1949, Delfin A. Brion became a member of South Philippine Union Mission of the Seventh Day
Adventist Church (SDA). He started as a literature evangelist, then a janitor or office helper, and became
an ordained minister and president of the Northeastern Mindanao Mission of the SDA in Butuan City.
SDA claims that due to corruption charges, Brion was transferred to the Davao Mission of the SDA. Then
allegedly due to an act of indiscretion with a masseuse, he was demoted to the position of Sabbath School
Director at the Northern Mindanao Mission of the SDA in Cagayan de Oro City.
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In 1983, Brion retired and he received a monthly retirement benefit pursuant to the General Conference
Working Policy of the SDA. Thereafter, Brion got into an argument with another pastor of the SDA, which
culminated in the establishment by Brion of a rival religious group he called the “Home Church.” He even
succeeded in converting SDA members to join him.

On July 3, 1993, Brion was excommunicated by the SDA and his retirement benefit was discontinued.
Brion filed an action for mandamus asking that SDA restore his monthly retirement benefit. The RTC ruled
in favor of Brion, however, the same was reversed by the Court of Appeals.


HELD: YES. Pursuant to Art. 287 of the Labor Code on retirement, the employer and employee are free to
stipulate on retirement benefits, as long as these do not fall below the floor limits provided by law. The
following provisions of the General Conference Working Policy of the SDA are important in resolving the

Beneficiaries of Retirement Plan- The benefits of the retirement plan are designed for those who have
devoted their lives to the work of the Seventh-day Adventist Church and are eligible to retire for reasons
of old age and/or disability.

Termination of Benefits- The benefits shall terminate with the decease of the beneficiary, except where
there is an eligible surviving spouse and/or children.

It has been held that before a right to retirement benefits or pension vests in an employee, he must
have met the stated conditions of eligibility with respect to the nature of employment, age, and length of
service. This is a condition precedent to his acquisition of rights thereunder.

SDA argues that an employee must" devote his life to the work of the Seventh-day Adventist Church" even
after retirement to continue enjoying retirement benefits. SDA's theory negates the very concept of
retirement. RETIREMENT means to withdraw from one's office, occupation, or duty. To require Brion to
continue "devoting his life to the work of the Seventh-day Adventist Church" would mean that he never
really withdraws from his office or occupation, that of working for the church. In fact, SDA's General
Conference Working Policy provides retirement benefits terminate only with the decease of the
beneficiary, which has not yet transpired here.

The conditions of eligibility for retirement must be met at the time of retirement at which juncture the
right to retirement benefits or pension, if the employee is eligible, vests in him. With the termination of
employment, the right of the employer to control the employee's conduct, the so- called "control test" also
terminates. Hence, after retirement, the SDA may no longer require Brion to devote his life to the work
of the church, it having lost control over its employee. While paying retirement benefits to Brion may be
odious and abhorrent to the SDA, in the absence of any other stipulation for the termination of
petitioner's retirement benefits, the SDA must comply with its contractual obligations, the contract being
the law between the parties. Dura lex sed lex.

27. NESTLE PHILS V. NLRC; GR 91231, FEBRUARY 4, 1991

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FACTS: -------------------------------------------------------------------------------------Unimportant--------------------------
LabRel Batch 6 | Re

Four (4) collective bargaining agreements separately covering the petitioner's employees in each of its
various factories and offices.
1. Alabang/Cabuyao factories represented by respondent, Union of Filipro Employees (UFE);
2. Makati Administration Office represented also by UFE;
3. Cagayan de Oro Factory represented by WATU; and
4. Cebu/Davao Sales Offices represented by the Trade Union of the Philippines and Allied
Services (TUPAS),
All of which expired on June 30, 1987. Thereafter, UFE was then certified as the sole and exclusive
bargaining agent for all regular rank-and-file employees.
-----------------------------------------------------------------------------------------------End of Unimportant-----------------
In August 1987, while the parties [Petitioner and respondent Union of Filipro Employees (UFE)], were
negotiating, the employees at the Cabuyao factory of petitioner resorted to "slowdown" and walk-outs
prompting the petitioner to shut down the factory. The following month, the UFE declared a bargaining
deadlock. On the same month, the Secretary of Labor assumed jurisdiction and issued a return to work
order. In spite of that order, the union struck, without notice, at the Alabang/Cabuyao factory, the Makati
office and Cagayan de Oro factory until December 1987. The company retaliated by dismissing the union
officers and members of the negotiating panel who participated in the illegal strike. The NLRC affirmed
the dismissals. On January 1988, UFE filed a notice of strike on the same ground of the CBA deadlock and
unfair labor practices.

However, on March 1988, the company was able to conclude a CBA with the union at a different office,
namely the Cebu/Davao Sales Office, and then on August 1988, with the Cagayan de Oro factory workers.
The union assailed the validity of those agreements and filed a case of unfair labor practice against the
company on November 16, 1988. After conciliation efforts of the National Conciliation and Mediation
Board (NCMB) yielded negative results, the dispute was certified to the NLRC.

The NLRC ordered that the company shall continue implementing its retirement plan as modified by the
NLRC. Both parties separately moved for reconsideration of the decision, however, the same was denied.
Petitioner alleges that since its retirement plan is non-contributory, Nestle has the sole and exclusive
prerogative to define the terms of the plan because the workers have no vested and demandable rights,
the grant thereof being not a contractual obligation but merely gratuitous. Hence the present petition.


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 CONSENSUAL
-----------------------------------------------------------------------------------------------Other doctrines-----------------------
(NLRC), UPHELD ON APPEAL. — The Court agrees with the NLRC’s finding that the Retirement Plan was
"a collective bargaining issue right from the start" for the improvement of the existing Retirement Plan
was one of the original CBA proposals submitted by the UFE on May 8, 1987 to Arthur Gilmour, president
of Nestle Philippines. The union’s original proposal was to modify the existing plan by including a provision
for early retirement. The company did not question the validity of that proposal as a collective bargaining
LabRel Batch 6 | Re

issue but merely offered to maintain the existing non-contributory retirement plan which it believed to
be still adequate for the needs of its employees, and competitive with those existing in the industry. The
union thereafter modified its proposal, but the company was adamant. Consequently, the impass on the
retirement plan become one of the issues certified to the NLRC for compulsory arbitration.


NEGOTIATION. — The fact that the retirement plan is non-contributory, i.e., that the employees
contribute nothing to the operation of the plan, does not make it a non-issue in the CBA negotiations. As
a matter of fact, almost all of the benefits that the petitioner has granted to its employees under the CBA
— salary increases, rice allowances, midyear bonuses, 13th and 14th month pay, seniority pay, medical
and hospitalization plans, health and dental services, vacation, sick & other leaves with pay — are non-
contributory benefits. Since the retirement plan has been an integral part of the CBA since 1972, the
Union’s demand to increase the benefits due the employees under said plan, is a valid CBA issue. The
deadlock between the company and the union on this issue was resolvable by the Secretary of Labor, or
the NLRC, after the Secretary had assumed jurisdiction over the labor dispute (Art. 263, subparagraph [i]
of the Labor Code).


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. (Art. 100, Labor Code; Tiangco, Et. Al. v. Hon. Leogardo, Et
Al., 122 SCRA 267).
-----------------------------------------------------------------------------------------------End of other doctrines--------------
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FACTS: Petitioner Capili was employed by private respondent University of Mindanao (UM) as a college
instructor. UM informed the petitioner that under the law and UM's retirement program, he would be
eligible for retirement when he would reach the age of 60 years on 18 August 1993. In his answer, the
petitioner informed UM that pursuant to Section 4, Rule II, Book VI of the Rules Implementing the Labor
Code that he was not opting to retire but would continue to serve until he reaches the compulsory
retirement age of 65. UM reiterated its position that under the university’s retirement plan, it could retire
him and the employee has the option only in the absence of a retirement plan.

Petitioner filed a complaint for illegal dismissal. UM invoked Article 287 of the Labor Code which provides
that any employee may be retired upon reaching the retirement age established in the collective
bargaining agreement or other applicable employment contract. It contended that it has a retirement
plan, the University of Mindanao & Associated Enterprises Retirement Plan, under which it could retire
the petitioner upon his reaching the age of 60. UM also cited Policy Instruction No. 25 which provides that
in the absence of a retirement plan, any teacher or other employee in a private educational institution
may retire or be retired from the service upon reaching the age of 60 years.

The petitioner maintained that private respondent’s retirement plan applies only to members thereof and
that since he is not a member of the Plan, he is not covered by it. He further contended that Policy
Instruction No. 25 was abrogated by Republic Act No. 7641 and that pursuant to the new Rule II, Book VI
of the Omnibus Rules Implementing the Labor Code, which also took effect on 7 January 1993, he has the
option whether or not to retire upon attaining the age of 60 years.
LabRel Batch 6 | Re

Labor Arbiter dismissed the complaint. NLRC dismissed the appeal for having been filed out of time. Upon
motion for reconsideration, NLRC dismissed the appeal for lack of merit and affirmed the Labor Arbiter’s
decision. Hence the present petition.


1) NO. The applicable law on the matter is Article 287 of the Labor Code. The article provides for two
types of retirement: (a) compulsory and (b) optional. The first takes place at age 65, while the
second is primarily determined by the CBA or other employment contract or employer’s
retirement plan.

The DOLE had provided a separate rule for employees of private educational institutions under
Policy Instruction No. 25:
I - If there is a retirement plan under a collective agreement or employer policy in private
educational institutions, any teacher and/or employee who retires or is retired from the service
pursuant to the same shall be entitled to all the retirement benefits provided therein.
II - In the absence of any such company policy or collective agreement providing for a retirement
plan for teachers and other employees in private educational institutions, any teacher and/or
employee may retire or be retired from the service upon reaching the age of sixty (60) years and
shall be paid the equivalent of at least one month salary or one-half month salary for every year
of service, whichever is higher, a fraction of at least six (6) months being considered as one whole

However, this power of the employer to retire an employee at age 60 no longer exists under R.A.
No. 7641, which unequivocally provides that the option to retire upon reaching the age of 60 years
or more but not beyond 65 is the exclusive prerogative of the employee if there is no provision
on retirement in a collective bargaining agreement or any other agreement or if the employer has
no retirement plan.

Under UM’s Retirement Plan, only members are covered by it and it defines a Member as an
employee who chooses to contribute to the Fund as provided for in Article IV, Section 1 hereof.
UM failed to prove that petitioner became a member of its Retirement Plan at any time after his
employment in 1982 but before 18 August 1993.

2) YES. During the pendency of petitioner’s appeal with the NLRC, he received full payment of his
retirement benefits amounting to the sum of P60,015.45 which was partially released to him and
he received the balance of his retirement benefits in the sum of P15,322.65 as shown by his
signature appearing on the Journal Voucher). By his acceptance of retirement benefits, the
petitioner is deemed to have opted to retire under the third paragraph of Article 287 of the Labor

Also worth noting is his statement that he had long and unjustly been denied of his retirement
benefits since August 18, 1993 without justifiable reason. This could only mean that he has already
acceded to his retirement, effective on the date when he reached the age of 60.
LabRel Batch 6 | Re


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FACTS: Fifty-seven-year-old petitioner has been working for Silliman University for 35 years, and informed
the petitioner that she was due for automatic retirement pursuant to respondent’s retirement plan which
provided that its members could be automatically retired upon reaching the age of 63 or after 35 years of
uninterrupted service.

Petitioner insisted that the compulsory retirement under the plan was tantamount to a dismissal and be
allowed to work until the age of 60 because this was the minimum age at which she could qualify for SSS
pension. Respondent however did not listen to her case, and stood firm on its decision to retire her, citing
“company policy”

The Labor Arbiter ruled that was illegal dismissal. NLRC: Reversed and dismissed the case for lack of merit,
a decision which the Court of Appeals affirmed.


HELD: YES. The rules and regulations of respondent’s retirement plan runs afoul of the constitutional
guarantee of security of tenure contained in Art. XIII, also known as the provision on Social Justice and
Human Rights.

The contract fixing for the scheme provided for in the private respondent compulsorily retired the
petitioner not based on the CBA but on the retirement scheme provided for in the private respondent’s
retirement plan. The contract fixing for retirement age as allowed under Art. 287 of the Labor Code does
not exclusively refer to CBA which provides for an agreed retirement age. The said provision explicitly
allows, as well, other applicable employment contract to fix retirement age.

Moreover, from the language of the respondent’s plan rules, the compulsory nature of both membership
in a contribution to the plan debunked CBA theory that petitioner’s voluntary contributions were evidence
of her willing participation therein. It was through no voluntary act of her own that petitioner become a
member of the plan.

Neither the respondent cited any agreement to justify its imposition of early retirement age in its
retirement plan. Not only was the petitioner still a good eight years away from the compulsory retirement
age but she was also still fully capable of discharging her duties as shown by the fact that respondent’s
board of trustees seriously considered rehiring her after the effectivity of her compulsory retirement.

30. UST V. NLRC, GR NO. 89885, AUGUST 6, 1990

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FACTS: The UST Faculty Union and the University of Sto. Tomas entered into a collective bargaining
agreement which provided as follows:
Section 1. Retirement age — It is hereby agreed and stipulated that the compulsory retirement
age for faculty members is 65 years, provided that faculty members who have reached the age of
65 years may be granted extension of tenure unless they are physically incapacitated or are
manifestly inefficient or incompetent, or are otherwise removed for cause. They shall continue to
enjoy the usual benefits and privileges until the extension of their tenure is validly denied by the
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UNIVERSITY in consultation with the UNION or until they are validly separated from the service,
provided that their period of extended service shall not be credited for purposes of retirement.

On July 6, 1986, Tranquilina J. Mariño, a faculty member of the Faculty of Pharmacy, reached the
retirement age of 65. She was allowed to continue her teaching stint until the end of school year 1986-
1987 and was further-allowed an extension of tenure for the school year 1987-1988. However, she was
denied extension of tenure for the school year 1988-1989.

In the same school year (1988-1989), Professor Francisco Bonifacio of the College of Education was denied
extension of tenure after he reached the age of 65. Several faculty members of the Department of Civil
Law were allegedly similarly denied extension of tenure.

On July 12, 1988, a complaint for unfair labor practice was lodged by the Union which the Labor Arbiter
dismissed for lack of merit. The NLRC affirmed the assailed decision, hence the present petition.


HELD: NO. It is important to state that upon the compulsory retirement of an employee or official in the
public or private service his employment is deemed terminated. The matter of extension of service of such
employee or official is addressed to the sound discretion of the employer. It is a privilege only the
employer can grant.

A reading of the aforesaid Section 1, Article XII of the Collective Bargaining Agreement shows the
following: (1) that the compulsory age for retirement for a faculty member is 65 years; (2) upon having
reached the age of 65 years they may be granted an extension of tenure unless they are manifestly
inefficient or incompetent or are otherwise removed for cause; (3) that they shall continue to enjoy the
usual benefits and privileges until the extension of their tenure is validly denied by the university in
consultation with the Union or until they are validly separated from the service; and (4) that the period of
extended service shall not be credited for purposes of retirement.

In the present case, under the rule aforestated, a member of the faculty of UST who reaches the age of
65 is retired or separated from the service thereby. However, the UST may grant extension of tenure to
such a retiree unless they are manifestly inefficient or manifestly physically incapacitated or are otherwise
removed for cause.

The grant of such extension may be made in accordance with existing rules and regulations of the UST. It
appears that on March 1, 1988, the Rector of the UST laid down the procedure for the extension of service
of retired faculty members as follows:
1. He must apply in writing to the Dean of his College of Affiliation;
2. His application is subject to the decision of the Dean and the Faculty Council en banc;
3. A majority vote of the Dean and the Faculty Council en banc is required for the
recommendation of the extension of appointment to the Council of Regents and Academic
4. The Council of Regents and the Academic Senate must meet separately for purposes of
making their respective decision subject to the approval of the Father Rector.


1. Must be mentally and physically fit to discharge his obligation as a faculty member;
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2. His subject is highly specialized and that presently there is no available replacement to take
the place of (the) mandatory retired faculty member once he gets out of the service. For this
reason, Deans are required to prepare younger faculty members for purposes of replacement;
3. A retired faculty member whose age is above 70 is no longer qualified for extension of

Under the foregoing rules, for a retiree to be granted extension, he must apply in writing to the Dean of
the college to which he or she is affiliated. His application is subject to the decision of the Dean and Faculty
Council en banc, a majority of the vote of which is required for a recommendation of the extension of the
applicant to the Council of Regents and Academic Senate. The Council of Regents and Academic Senate
will then meet separately and make the decision subject to the approval of the Father Rector.
When the decision is for a denial of the extension of tenure of a retiree the decision should be made in
consultation with the Union. However, such consultation is not necessary when the retiree is validly
separated from the service.

In the case of Prof. Mariño, she was, as aforestated, allowed an extension of two (2) years in her teaching
stint in the Faculty of Pharmacy for the school years 1986-1988. However, she was denied extension of
tenure for the school year 1988-1989. Contrary to the claim of petitioner that there was no consultation
with the Union, it appears that on June 20, 1988, the Union wrote the Rector of UST on the matter of
extension of the service of Prof. Marino. In a letter of June 27, 1988, the Union was informed by the Rector
of the reasons why the extension was denied, as follows:
1. No recommendation on Mrs. Mariño's extension for another year was made by the Dean and
Faculty Council of the Faculty of Pharmacy, which recommendation is condition sine qua non
for the yearly grant of extension.
2. The two (2) subjects assigned to and being handled by Mrs. Mariño last second semester of
school year 1987-1988 are general and common subjects not necessitating the specialized
knowledge of Mrs. Mariño and which can properly, sufficiently and adequately handled by
non-extendee regular, tenured, willing and able faculty members.
3. It is the position of Management that the matter of extension of the term of service of
professors beyond the compulsory retirement age of sixty five (65) years is not a matter of
right, legally enforceable and demandable, but a mere privilege which the University may
withhold in the rightful exercise of its discretionary power and prerogative. To make it a
legally enforceable and demandable right would certainly defeat the very purpose and reason
behind the compulsory retirement scheme and would prevent the infusion of young blood in
the academic community of the University.
4. While it is true that the Collective Bargaining Agreement (CBA) provides for "consultation with
the union" in cases of denial of extension, however, in this particular case of Mrs. Mariño, it
is the position of Management that no further consultation is necessary since her case has
been the subject of discussion for quite some time between the union and Management as
shown by the numerous exchange of communications thereon.

In any event, the consultation provision in the CBA does not operate to totally deprive the University of
its sole and exclusive prerogative and discretion to determine the professors who deserve to be extended.
The clause "Consultation with the Union" in the CBA should not be interpreted or construed to mean
"approval" or "consent" of the Union. Consultation, however we define the term, legally, literally or
otherwise, only means that management will hear the advice, position or opinion of the Union but has no
legal duty or obligation to priority secure the approval or consent thereof. The Union's role, therefore, is
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nothing but advisory in nature; and being so, management may either adopt or reject it, wholly or partly.
In other words, the final decision still rests with Management .

Moreover, it appears that there are two (2) reasons why extension was not granted to Prof. Mariño
namely: (1) she did not apply for an extension so no recommendation for her extension could have been
granted; and (2) the subjects assigned to her do not require specialized knowledge and may be adequately
handled by non-extendee regular faculty members.

Consequently, the Court holds that in the case of Prof. Mariño she was validly separated from the service
not only because she did not apply for an extension but because her service does not appear to be
indispensable. In accordance with the aforestated CBA, inasmuch as she was validly separated, a
consultation with the Union was unnecessary.

2. No, in the case of Prof. Francisco Bonifacio, the non-extension of his service was because he did
not apply for the same but also because at the time he retired there was an administrative case against
him for allegedly immoral acts. Nevertheless, he executed an affidavit stating that he did not authorize
the filing of the petition in his behalf and that he is not interested in the extension of his service.

In the case of the three 3) professors of the Faculty of Civil Law, namely: Messrs. Jose Feria, Antonio
Gregorio (deceased) and Voltaire Garcia, aside from the fact that none of them applied for the extension
of tenure, all of them have reached the age of 70 beyond which no extension may be granted under the
rules of the school.

The public respondent did not commit a grave abuse of discretion in dismissing the complaint of
petitioner. In the same light, the UST did not commit an unfair labor practice in denying the extension of
the service of Prof. Mariño even without consultation with petitioner.

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FACTS: Petitioner and respondent Union entered into a Collective Bargaining Agreement (CBA) on 15
November 1990 covering a period of five (5) years. On 18 July 1993 when the economic negotiations were
on-going petitioner dismissed on the ground of redundancy eight (8) out of its eleven (11) couriers who
were Union members. Union filed a notice of strike with the National Conciliation and Mediation Board
(NCMB) on the ground of bargaining deadlock and unfair labor practice, specifically, for illegal dismissal
and violations of the CBA but no agreement was held.Then, respondent Secretary assumed jurisdiction
over the controversy and held that the dismissal of the eight (8) employees on the ground of redundancy
was upheld, but due to defective implementation by petitioner the latter was ordered to pay each of the
former an indemnity equivalent to two (2) months salary based on their adjusted rate for the fourth year
in addition to the separation benefits due them under the law and the CBA, and if still unpaid, petitioner
to pay the same immediately; and the charge of unfair labor practice was dismissed for lack of merit.


HELD: NO. Asiaworld Publishing House, Inc. v. Ople which petitioner asserts its claim, in selecting
employees to be dismissed a fair and reasonable criteria must be used, such as but not limited to: (a) less
preferred status (e.g., temporary employee), (b) efficiency and (c) seniority. Although the case of Asiaworld
dealt with retrenchment, still the principle is applicable to the present case because in effecting the
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dismissals petitioner had to select from among its employees. To stress, the redundancy was implemented
without the Company so much apprising the Union of any fair and reasonable criteria for implementation.
The Sec of Labor called the parties to a conference on 14 March 1994, at which the Company was given
an opportunity to clarify the criteria it used in effecting redundancy. Represented by Ms. Ma. Lourdes
Mendoza of Mercado and Associates, its counsel of record, the Company submitted quitclaims which do
not contain any amounts purportedly executed by five of the eight dismissed employees. More
importantly, the minutes of the conference show that within two days thereafter, the Company
committed to submit a pleading to explain the criteria it used in effecting the redundancy; where no such
submission is made by 17 March 1994, the case shall be deemed submitted for resolution.

The Company never complied with this commitment. An authorized cause for dismissal was found but
the same should have been communicated to the affected employees prior to or simultaneously with the
implementation of the redundancy, or at the very least, before the assailed order was rendered. One
should also consider that the redundancy was implemented at the height of bargaining negotiations.
The bargaining process could have been the best opportunity for the Company to apprise the Union of the
necessity for redundancy. For unknown reasons, the Company did not take an advantage of it. Intended
or not, the redundancy reinforced the conditions for a deadlock, giving the Union members the impression
that it was being used by the Company to obtain a bargaining leverage.

32. R&E TRANSPORT, INC. VS LATAG, GR 155214, FEBRUARY 13, 2004

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FACTS: Pedro Latag was a regular employee of La Mallorca Taxi. When La Mallorca ceased from business
operations, Latag transferred to R & E Transport, Inc. Latag got sick and was forced to apply for partial
disability with the SSS, which was granted. When he recovered, he reported for work but was no longer
allowed to continue working on account of his old age. Latag thus asked Felix Fabros, the administrative
officer of petitioners, for his retirement pay pursuant to Republic Act 7641 but he was ignored. Thus, Latag
filed a case for payment of his retirement pay before the NLRC.

Latag however died and subsequently, his wife, Avelina Latag, substituted him. The Labor Arbiter rendered
a decision in favor of respondent. Respondent Avelina Latag, with her then counsel was invited to the
office of petitioners’ counsel and was offered the amount of P38,500.00 which she accepted.
[Respondent] was also asked to sign an already prepared quitclaim and release and a joint motion to
dismiss the case.

Petitioners filed the quitclaim and motion to dismiss but was dismissed. Thereafter, they appealed before
the NLRC but was also dismissed. Petitioners filed a motion for reconsideration and was granted.
Respondent appealed to the CA, contending that under Article 223 of the Labor Code and Section 3, Rule
VI of the New Rules of Procedure of the NLRC, an employer’s appeal of a decision involving monetary
awards may be perfected only upon the posting of an adequate cash or surety bond.

CA ruled that petitioners appeal before the NLRC was not accompanied by an appropriate cash or surety
bond, such appeal was not perfected. The CA thus ruled that the labor arbiter’s order had already become
final and executory.

Petitioners maintain that the CA erred in disregarding the factual findings of the NLRC and in deciding to
affirm those of the labor arbiter. Allegedly, the NLRC findings were based on substantial evidence, while
those of the labor arbiter were groundless. Hence, this petition.
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HELD: YES. Petitioners do not dispute the fact that the late Pedro M. Latag is entitled to retirement
benefits. Rather, the bone of contention is the number of years that he should be credited with in
computing those benefits. On the one hand, we have the findings of the labor arbiter, which the CA
affirmed. According to those findings, the 23 years of employment of Pedro with La Mallorca Taxi must
be added to his 14 years with R & E Transport, Inc., for a total of 37 years.

After a careful and painstaking review of the evidence on record, we support the NLRCs findings. The labor
arbiter’s conclusion -- that Mallorca Taxi and R & E Transport, Inc., are one and the same entity -- is
negated by the documentary evidence presented by petitioners. The Court concluded that Latag’s stint
with the Enriquez family dated back since February 1961 and thus, he should be entitled to retirement
benefits for 37 years, as of the date of the filing of this case on December 12, 1998. Furthermore, basic is
the rule that the corporate veil may be pierced only if it becomes a shield for fraud, illegality or inequity
committed against a third person.

Philippine National Bank v. Andrada Electric & Engineering Company, we said: Any application of the
doctrine of piercing the corporate veil should be done with caution. A court should be mindful of the milieu
where it is to be applied. It must be certain that the corporate fiction was misused to such an extent that
injustice, fraud, or crime was committed against another, in disregard of its rights. The wrongdoing must
be clearly and convincingly established; it cannot be presumed. Otherwise, an injustice that was never
unintended may result from an erroneous application.

Respondent has not shown by competent evidence that one taxi company had stock control and complete
domination over the other or vice versa. In fact, no evidence was presented to show the alleged renaming
of La Mallorca Taxi to R & E Transport, Inc. The seven-year gap between the time the former closed shop
and the date when the latter came into being also casts doubt on any alleged intention of petitioners to
commit a wrong or to violate a statutory duty. This lacuna in the evidence compels us to reverse the
Decision of the CA affirming the labor arbiters finding of fact that the basis for computing Pedros
retirement pay should be 37 years, instead of only 14 years.


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DOCTRINE: In the absence of an express or implied prohibition against it, collection of both retirement
benefits and separation pay upon severance from employment is allowed. This is grounded on the social
justice policy that doubts should always be resolved in favor of labor rights.

FACTS: Herein respondent, Marina L. Angus was employed by Goodyear as a secretary to the manager of
quality and technology. Goodyear implemented cost saving measures which included streamlining of its
workforce. Respondent received a letter stating that her position is already redundant and should be
abolished effective today, Sept 18, 2001 and that her services shall be terminated on October 18, 2001.

She responded to the letter stating that she accept the decision to avail the early retirement benefit but
requested to adjust the computation to an additional 3 days per year of service.

she received the check for her retirement benefit at 47 days per year of service accompanied by an
acknowledgement receipt with an annotation with respect to her 3 days per year of service and that the
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early retirement benefits is separate from her separation pay. Goodyear took back the checks for her
refusal to sign a Release and Quitclaim.

Goodyear, in response to Angus’ protest, stated that it had offered her the most favorable separation
benefits due to the redundancy. Based on the CBA, the employee shall be entitled to only one of the
(1) Normal retirement which is payable at 47 days' pay per year of service; (2) early retirement at a
maximum of 47 days' pay per year of service;
(2) Retrenchment, redundancy, closure of establishment at 45 days' pay per year of service;
(3) Medical disability at 45 days' pay per year of service; or
(4) Resignation at 20 days' pay per year of service.

On January 17, 2002 Angus finally accepted the check inclusive of all termination benefits at 47 days per
year of service and signed a Release and Quitclaim in favor of Goodyear.

On February 5, 2002, Angus filed with the Labor Arbiter a complaint for illegal dismissal. The Labor arbiter
upheld the validity of Angus' termination from employment and that the amount she had received from
the company is actually payment of separation pay due to redundancy and that the grant of both the
separation pay and retirement benefits is not allowed under the Retirement plan/CBA. The NLRC affirmed
the LA's Decision. Upon appeal, the Court of Appeals partially granted the petition stating that the
dismissal is valid, however declared that Angus is entitled to separation pay in addition to the retirement
she had already received in view of the absence of any provision on the CBA prohibiting the payment of
both. Moreover, the CA declared that Angus did not voluntarily sign the release and quitclaim as under its
terms, she would receive less than what she is legally entitled to.


HELD: YES. Angus is entitled to both separation pay and early retirement benefit due to the absence of a
specific provision in the CEA prohibiting recovery of both.

The SC, citing Batangas Laguna Tayabas Bus Company v. Court of Appeals and University of the East v.
Hon. Minister of Labor, held that tan employee is entitled to recover both separation pay and retirement
benefits in the absence of a specific provision in the Retirement Plan or CBA. The Court Ruled that an
employee's right to receive separation pay in addition to retirement pay depends upon the provisions of
the company's Retirement Plan or CBA.

The petitioners were even explicit in stating in the said letter that the amount she was to receive would
come from the company's Pension Fund, which, as correctly asserted by Angus, was created to cover
retirement benefit payment of employees and with the letters sent to her, it was clear that the company
agreed to provide her with her early retirement.

While it is obvious that Angus is not entitled to compulsory retirement as she has not yet reached the age
of 60, there is no denying, however, that she is qualified for early retirement. At the time of her
termination, Angus was already 57 years of age and had been in the service for more than 34 years.

Retirement benefits are a form of reward for an employee's loyalty and service to an employer and are
earned under existing laws, CBAs, employment contracts and company policies.
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On the other hand, separation pay is that amount which an employee receives at the time of his severance
from employment, designed to provide the employee with the wherewithal during the period that he is
looking for another employment and is recoverable only in instances enumerated under Articles 283 and
284 of the Labor Code or in illegal dismissal cases when reinstatement is not feasible.

In the case at bar, Article 283 clearly entitles Angus to separation pay apart from the retirement benefits
she received.