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FACTS: The petitioner, Radin Alcira, was hired by the
FACTS: CALS Poultry Supply Corporation is engaged in respondent Middle by Philippines Corporation as
the business of selling dressed chicken and other related engineering support services supervisor under
products and managed by Danilo Yap probationary status for 6 months. Afterwards, the
CALS hired Alfredo Roco as its driver and Edna Roco, service of the petitioner was terminated by the
Alfredos sister, as a helper in the dressing room of CALS. respondent on the ground that the latter was not
On May 16, 1995, it hired Candelaria Roco, another satisfied on the performance of the former.
sister, as helper, also at its chicken dressing plant on an As a result, the petitioner filed a complaint foe illegal
probationary basis. dismissal in the National Labor Relations Commission
On March 5, 1996, Alfredo Roco and Candelaria Roco (NLRC) against the respondent.
filed a complaint for illegal dismissal against CALS and Petitioner contended that his termination in the service
Danilo Yap alleging that Alfredo and Candelaria were tantamount to illegal dismissal since he attained the
illegally dismissed on January 20, 1996 and November 5, status of a regular employee as of the time of dismissal.
1996, respectively. He presented the appointment paper showing that he
According to Candelaria Roco, she was terminated was hired on May 20, 1996, consequently, his dismissal
without cause from her job as helper after serving more on November 20, 1996 was illegal because at that time,
than six (6) months as probationary employee. he wa s already a regular employee since the 6-month
The Labor Arbiter on April 16, 1998, issued a decision probationary period ended on November 16, 1996.
dismissing the complaints for illegal dismissal for lack of The respondent, on the other hand, asserted that during
merit. the petitioner’s probationary period, he showed poor
In the case of Candelaria Roco, the Labor Arbiter upheld performance on his assigned tasks, was late couple of
CALS decision not to continue with her probationary times and violated the company’s rule.
employment having been found her unsuited for the Thus, the petitioner was terminated and his application
work for which her services were engaged. to become a regular employment was disapproved.
She was hired on May 16, 1995 and her services were The respondent also insisted that the removal of the
terminated on November 15, 1995. petitioner from office was within the probationary
ISSUE: WON Candelaria has attained the status of a The Labor Arbiter dismissed the complaint on the ground
regular employee. that the dismissal of the petitioner was done before his
regularization because the 6- month probationary period,
HELD: NO. We agree with CALS contention as upheld by counting from May 20, 1996 shall end on November 20,
both the Labor Arbiter and the NLRC that Candelarias 1996.
services was terminated within and not beyond the 6- The NLRC affirmed the decision of the Labor Arbiter. The
month probationary period. Court of Appeals affirmed the decision of NLRC.
In Cebu Royal v. Deputy Minister of Labor, our Hence, the present recourse.
computation of the 6-month probationary period is
reckoned from the date of appointment up to the same ISSUE: Whether the petitioner was already a regular
calendar date of the 6th month following. employee in respondent’s company at the
time of his dismissal from the service.

HELD: The Supreme Court ruled in the negative. The

status of the petitioner at the time of his termination was
still probationary.
His dismissal on November 20, 1996 was within the 6-
month probationary period.
Article 13 of the Civil Code provides that when the law
speaks of years, months, and days and nights, it shall be
understood that years are of 365 days, months of 30
days, days of 24 hours and nights are from sunset to
Since, one month is composed of 30 days, then, 6 months
shall be understood to be composed of 180 days.
And the computation of the 6- month period is reckoned
from the date of appointment up to the same calendar
date of the 6th month following.
Since, the number of days of a particular month is
irrelevant, petitioner was still a probation ary employee
at the time of his dismissal. Wherefore, the petition is

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IRENE R. RANCHEZ, respondents.
FACTS: Nelson Paras was hired on a probationary basis
as a manufacturing trainee at the Plant Engineering FACTS: Respondent Ranchez was a probationary
Maintenance Department of Mitsubishi Motors employee for 5 months. She was hired as a cashier by
Philippines Corporation (MMPC). Robinsons sometime within that period. Two weeks
He and the new and re-hired employees were given an after she was hired, she reported the loss of cash which
orientation respecting the company’s history, corporate she had placed in the company locker.
philosophy, organizational structure, and company rules She offered to pay for the lost amount but the Operations
and regulations, including the company standards for Manager of Robinsons had her strip-searched then
regularization, code of conduct and company-provided reported her to the police even though they found
benefits. nothing on her person. An information for Qualified Theft
Paras started reporting for work on May 27, 1996. As was filed with the Quezon City Regional Trial Court. She
part of the MMPC’s policy, Paras was evaluated by his was detained for 2 weeks for failure to immediately post
immediate supervisors Lito R. Lacambacal and Wilfredo J. bail.
Lopez7 after six (6) months, and received an average Weeks later, respondent Ranchez filed a complaint for
rating. illegal dismissal and damages. A year later, Robinsons
Later, Lacambacal informed Paras that based on his sent to respondent by mail a notice of termination
performance rating, he would be regularized. and/or notice of expiration of probationary employment.
However, the Department and Division Managers
reviewed the performance evaluation made on Paras. ISSUE: Whether respondent was illegally terminated
They unanimously agreed, along with Paras’ immediate from employment by petitioners.
supervisors, that the performance of Paras was
unsatisfactory. HELD: The petition is unmeritorious.
As a consequence, Paras was not considered for There is probationary employment when the employee
regularization. upon his engagement is made to undergo a trial period
On November 26, 1996, he received a Notice of during which the employer determines his fitness to
Termination dated November 25, 1996, informing him qualify for regular employment based on reasonable
that his services were terminated effective the said date standards made known to him at the time of engagement.
since he failed to meet the required company standards A probationary employee, like a regular employee, enjoys
for regularization. security of tenure.
However, in cases of probationary employment, aside
ISSUE: WON Paras, who continued to be employed even from just or authorized causes of termination, an
after the 180th day, had become a regular employee additional ground is provided under Article 281 of the
Labor Code,i.e., the probationary employee may also be
HELD: YES. Paras was employed as a management terminated for failure to qualify as a regular employee in
trainee on a probationary basis. During the orientation accordance with reasonable standards made known by
conducted on May 15, 1996, he was apprised of the the employer to the employee at the time of the
standards upon which his regularization would be based. engagement.
He reported for work on May 27, 1996. As per the Thus, the services of an employee who has been engaged
company’s policy, the probationary period was from on probationary basis may be terminated for any of the
three (3) months to a maximum of six (6) months. following: a just or; an authorized cause; and; when he
Applying Article 13 of the Civil Code, 31 the probationary fails to qualify as a regular employee in accordance with
period of six (6) months consists of one hundred eighty reasonable standards prescribed by the employer.
(180) days. This is in conformity with paragraph one, Article 277(b) of the Labor Code mandates that the
Article 13 of the Civil Code, which provides that the employer shall furnish the worker, whose employment is
months which are not designated by their names shall be sought to be terminated, a written notice containing a
understood as consisting of thirty (30) days each. statement of the causes of termination, and shall afford
The number of months in the probationary period, six the latter ample opportunity to be heard and to defend
(6), should then be multiplied by the number of days himself with the assistance of a representative if he so
within a month, thirty (30); hence, the period of one desires, in accordance with company rules and
hundred eighty (180) days. As clearly provided for in the regulations pursuant to the guidelines set by the
last paragraph of Article 13, in computing a period, the Department of Labor and Employment.
first day shall be excluded and the last day included.
Thus, the one hundred eighty (180) days commenced on
May 27, 1996, and ended on November 23, 1996.
The termination letter dated November 25, 1996 was
served on respondent Paras only at 3:00 a.m. of
November 26, 1996. He was, by then, already a regular
employee of the petitioner under Article 281 of the Labor

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5. ST. PAUL COLLEGE QUEZON CITY, SR. LILIA The closest they can resemble to are that of informal
THERESE TOLENTINO, SPC, SR. BERNADETTE correspondence among the said individuals.
RACADIO, SPC, and SR. SARAH MANAPOL, Petitioners, As such, petitioner school has the right not to renew the
v. REMIGIO MICHAEL A. ANCHETA II and CYNTHIA A. contracts of the respondents, the old ones having been
ANCHETA, Respondent. expired at the end of their terms.
FACTS: Remigio Michael was hired by the St. Paul College LILIBETH ONG and JOHNSON NG v. COURT OF
(SPCQC) as a teacher in the Gen. Education Dept. with a APPEALS and ROSEMARIE L. SY
probationary rank in SY 1996-1997 which was renewed
the following year. FACTS: It appears that on September 1, 2006, Sy was hired by
His wife, Cynthia was was also hired as a part time Tamsons as Assistant to the President. On February 24, 2007,
teacher of the Mass Comm Dept in the 2nd Sem SY 1996- four days before she completed her sixth month of working in
1997 and her appointment was renewed for SY 1997- Tamsons, Ng, Sy was informed that her services would be
terminated due to inefficiency.
1998. Sy claimed that the remarks of her superiors about her alleged
February 1998, the spouses both wrote a letter inefficiency were ill-motivated and made without any basis. She
addressed to Sr. Lilia asking for their contract to be had been rendering services for almost six (6) months before
renewed which was indeed granted by the College she was arbitrarily and summarily dismissed. The petitioners
Council as evidenced by a letter sent by petitioner. did not show her any evaluation or appraisal report regarding
April 22,1998, a letter, whose signatures includes that of her alleged inefficient performance. Petitioners asserted that
the respondents, was sent to Sr. Bernadette. before Sy was hired, she was apprised that she was being hired
The said letter contain teachers sentiments regarding as a probationary employee for six months, subject to extension
school policies. However, April 21, 1998, a letter written as a regular employee conditioned on her meeting the
standards of permanent employment set by the company. Her
by the latter was shown, reiterating the conversation of work performance was thereafter monitored and evaluated. On
Sr. Bernadette and Remigio regarding the noncompliance February 1, 2007, she was formally informed that her
of respondent to instructional school policies. employment would end because she failed to meet the
Accordingly, Sr. Bernadette wrote a letter endorsing the company's standards. Sy filed a case for illegal dismissal. The
termination of the spouses. ELA rendered a decision in favor of Sy, stating that a
Respondents submitted their comments however they termination, notwithstanding the probationary status, must be
were still terminated and their letter for reconsideration for a just cause. Dissatisfied, the petitioners appealed to the
denied thus the filling of a complaint for illegal dismissal NLRC.
which was dismissed by both NLRC and LA but was The NLRC reversed the ELAs finding. The NLRC reasoned out
that failure to qualify for regular employment is in itself a just
granted by the CA. Petitioners MR was denied hence the cause for termination of probationary employment.
present petition.
ISSUE: Was the termination of Sy, a probationary employee,
ISSUE: Whether or not the spouses were illegally
dismissed. HELD: Even if probationary employees do not enjoy
permanent status, they are accorded the constitutional
HELD: Respondent Remigio Michael's spouse shared the protection of security of tenure. They may only be terminated
same defenses and admissions as to the charges against for a just cause or when they otherwise fail to qualify as regular
employees in accordance with reasonable standards made
her. known to them by the employer at the time of their
The plain admissions of the charges against them were engagement. One of the conditions before an employer can
the considerations taken into account by the petitioner terminate a probationary employee is dissatisfaction on the
school in their decision not to renew the respondent part of the employer which must be real and in good faith, not
spouses' employment contracts. This is a right of the feigned so as to circumvent the contract or the law. Here,
school that is mandated by law and jurisprudence. It is absent any proof showing that the work performance of
the prerogative of the school to set high standards of petitioner was unsatisfactory, We cannot conclude that
efficiency for its teachers since quality education is a petitioner failed to meet the standards. This absence of proof
mandate of the Constitution. Schools cannot be required leads Us to infer that their dissatisfaction with her work
performance was contrived so as not to regularize her
to adopt standards which barely satisfy criteria set for employment. The power of the employer to terminate an
government recognition. The same academic freedom employee on probation is not without limitations. Here, the
grants the school the autonomy to decide for itself the petitioners failed to convey to Sy the standards upon which she
terms and conditions for hiring its teacher, subject of should measure up to be considered for regularization and how
course to the overarching limitations under the Labor the standards had been applied in her case. Petitioners
Code. dissatisfaction was at best self-serving and dubious as they
A probationary employee or probationer is one who is on could not present concrete and competent evidence
trial for an employer, during which the latter determines establishing her alleged incompetence. Failure on the part of
whether or not he is qualified for permanent the petitioners to discharge the burden of proof is indicative
that the dismissal was not justified. The law is clear that in all
employment. cases of probationary employment, the employer shall make
The probationary employment is intended to afford the known to the employee the standards under which he will
employer an opportunity to observe the fitness of a qualify as a regular employee at the time of his engagement.
probationary employee while at work, and to ascertain Where no standards are made known to the employee at that
whether he will become an efficient and productive time, he shall be deemed a regular employee.
employee. The word probationary, as used to describe The standards under which she would qualify as a regular
the period of employment, implies the purpose of the employee not having been communicated to her at the start of
term or period, not its length. It is important that the her probationary period, Sy qualified as a regular employee
contract of probationary employment specify the period Assuming that Sy failed to meet the standards that was made
known to her, the termination was still flawed flawed for failure
or term of its effectivity. The failure to stipulate its to give the required notice to Sy.
precise duration could lead to the inference that the In this case, the petitioners failed to comply with the
contract is binding for the full three-year probationary requirement of a written notice. Notably, Sy was merely
period. verbally informed that her employment would be terminated as
Therefore, the letters sent by petitioner, which were void admitted by the petitioners. Considering that the petitioners
of any specifics cannot be considered as contracts. failed to observe due process in dismissing her, the dismissal

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had no legal sanction. It bears stressing that a workers
employment is property in the constitutional sense.

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7. MANILA ELECTRIC CO. VS. GALA, G.R. NO. 191288 & conditions) laid down in his probationary employment
191304, MARCH 7, 2012 agreement. Under paragraph 8 of the agreement, he was
subject to strict compliance with, and non-violation of the
FACTS: Respondent Jan Carlo Gala was hired by Company Code on Employee Discipline, Safety Code,
petitioner Meralco as a probationary lineman on March 2, rules and regulations and existing policies.
2006. On July 27, 2006, barely four months on the job, Paragraph 10 required him to observe at all times the
Gala was dismissed for alleged complicity in pilferages of highest degree of transparency, selflessness and integrity
Meralco’s electrical supplies, particularly, for the incident in the performance of his duties and responsibilities, free
which took place on May 25, 2006. On that day, Gala and from any form of conflict or contradicting with his own
other Meralco workers were instructed to replace a personal interest.
worn-out electrical pole at the Pacheco Subdivision in On the whole, the totality of the circumstances obtaining
Valenzuela City. While the Meralco crew was at work, one in the case convinces us that Gala could not but have
Noberto Llanes, a non-Meralco employee, arrived. knowledge of the pilferage of company electrical supplies
He appeared to be known to the Meralco foremen as they on May 25, 2006; he was complicit in its commission, if
were seen conversing with him. not by direct participation, certainly, by his inaction
Llanes boarded the trucks, without being stopped, and while it was being perpetrated and by not reporting the
took out what were later found as electrical supplies. incident to company authorities.
Aside from Gala, the foremen and the other linemen who Thus, we find substantial evidence to support the
were at the worksite when the pilferage happened were conclusion that Gala does not deserve to remain in
later charged with misconduct and dishonesty for their Meralco’s employ as a regular employee.
involvement in the incident. Unknown to them, a He violated his probationary employment agreement,
Meralco surveillance task force was monitoring their especially the requirement for him “to observe at all
activities and recording everything with a video camera. times the highest degree of transparency, selflessness
Gala denied involvement in the pilferage, contending that and integrity in the performance of their duties and
even if his superiors might have committed a responsibilities.” He failed to qualify as a regular
wrongdoing, he had no participation in what they did. He employee.
claimed that: he was at some distance away from the
trucks when the pilferage happened; he did not have an
inkling that an illegal activity was taking place since his
supervisors were conversing with Llanes, giving him the
impression that they knew him; he did not call the
attention of his superiors because he was not in a
position to do so as he was a mere lineman; and he was
just following instructions in connection with his work
and had no control in the disposition of company
supplies and materials.
He maintained that his mere presence at the scene of the
incident was not sufficient to hold him liable as a
Despite Gala’s explanation, Meralco terminated his
employment. Gala responded by filing an illegal dismissal
complaint against Meralco.
The Labor Arbiter dismissed the complaint for lack of
She held that Gala’s participation in the pilferage of
Meralco’s property rendered him unqualified to become
a regular employee.
On appeal, the NLRC reversed the labor arbiter’s ruling.
It found that Gala had been illegally dismissed, since
there was “no concrete showing of complicity with the
alleged misconduct/dishonesty.
The CA denied Meralco’s petition for lack of merit and
partially granted Gala’s petition
It concurred with the NLRC that Gala had been illegally
It opined that nothing in the records show Gala’s
knowledge of or complicity in the pilferage.

ISSUE: Whether or not Gala was illegally dismissed.

HELD: We find merit in the petition. Contrary to the

conclusions of the CA and the NLRC, there is substantial
evidence supporting Meralco’s position that Gala had
become unfit to continue his employment with the
Gala was found, after an administrative investigation, to
have failed to meet the standards expected of him to
become a regular employee and this failure was mainly
due to his “undeniable knowledge, if not participation, in
the pilferage activities done by their group, all to the
prejudice of the Company’s interests.”
As probationary employee, his overall job performance
and his behavior were being monitored and measured in
accordance with the standards (i.e., the terms and
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CORPORATION FACTS: Carvajal was employed as a trainee-teller by
G.R. No. 185829. April 25, 2012. Luzon Development Bank (Bank) under a six-month
probationary employment contract. Ramirez is the
FACTS: On June 2, 2004, respondent Wide Wide World President and CEO of the Bank. A month into her
Express (WWWEC) employed petitioner Armando Aliling employment, she was send a Memorandum directing her
as account executive. The employment was for a six to explain in writing why she should not be subjected to
month probationary period. disciplinary action for her eight tardiness on November
On October 6, 2004, respondent terminated petitioner’s 2003. A second Memorandum was sent to her on
services owing to his non-satisfactory performance January for her again chronic tardiness on December
during his probationary period. Petitioner filed a 2003.
complaint for illegal dismissal alleging, among others, She submitted her written explanations for both events
that at the time of his engagement, respondent did not and manifested her acceptance of the consequences of
make known to him the standards under which he will her actions. She was terminated for three days effective
qualify as a regular employee. 21 January 2004. However, on 22 January, her
termination was lifted but at the same time, her services
ISSUE: WON Aliling’s contention is meritorious were terminated. In the respondents’ position paper to
the LA, they explained that the reasons for her absence
HELD: Yes. To note, that June, 2, 2004, letter-offer itself are chronic tardiness, absenteeism and failure to perform
states that the regularization standards or the satisfactorily as a probationary employee. LA
performance norms to be used are still to be agreed upon Decision: The petitioner was illegally dismissed because
by Aliling and his supervisor. WWWEC failed to prove she was not afforded the notice in writing informing her
that an agreement as regards thereto has been reached. of what the Bank would like to bring out to her for the
Clearly then, there were actually no performance latter to answer in writing. NLRC Decision: NLRC
standards to speak of. And lest it be overlooked, Aliling affirmed the decision of the LA. CA Decision: The CA
was assigned to GX Trucking sales, an activity entirely found that the petitioner was not entitled to backwages
different from the Seafreight Sales he was originally hired because she was rightfully dismissed for failure to meet
and trained for. Thus, at the time of his engagement, the the employment standards.
standards relative to his assignment with GX Sales could
not have plausibly been communicated to him as he was ISSUE: Whether the petitioner can be considered a
under Seafreight Sales. regular employee at the time of her dismissal.
Respondents further allege that San Mateo’s email dated
July 16, 2004 shows that the standards for his HELD: No. Carvajal’s appointment letter reads that
regularization were made known to Aliling at the time of “Possible extension of this contract will depend on the
his engagement. In that email, San Mateo reminded job requirements of the Bank and your overall
Aliling of the sales quota he ought to meet as a condition performance.
for his continued employment. Contrary to respondents’ Performance review will be conducted before possible
contention, San Mateo’s email cannot support their renewal can take effect.”
allegation on Aliling being informed of the standards for Therefore, petitioner knew, at the time of her
his continued employment, such as the sales quota, at the engagement, that she must comply with the standards set
time of his engagement. As it were, the email message forth by respondent and perform satisfactorily in order
was sent to Aliling more than a month after he signed his to attain regular status. Even the NLRC upheld the
employment contract with WWWEC. petitoner’s probationary status, stating that
Sec. 6 of the implementing Rules of Book VI, Rule VIII-A reinstatement is not synonymous to regularization.
of the Code specifically requires the employer to inform Although probationary employees also enjoy security of
the probationary employee of such reasonable standards tenure, he may still be terminated because of just and
at the time of his engagement, not at any time later; else, authorized causes of termination and the additional
the latter shall be considered a regular employee. ground under Article 281 of the Labor Code, i.e. the
probationary employee may also be terminated for
failure to qualify as a regular employee in accordance to
the reasonable standards set by the employer.
Punctuality is a reasonable standard imposed on every
employee, whether in government or private sector.
This, together with absenteeism, underperformance and
mistake in clearing a check are infractions that cannot be
tantamount to satisfactory standards.
In addition to the abovementioned, it has been previously
held in PDI vs. Magtibay, Jr., that the second requirement
under Article 281 does not require notice and hearing.
Due process of law for this second ground consists of
making the reasonable standards expected of the
employee during his probationary period known to him
at the time of his engagement.
By the very nature of probationary employment, the
employee knows from the very start that he will be under
close observation and continuous scrutiny by his
If termination is for cause, it may be done at anytime
during the probation.

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11. ATLANTA INDUSTRIES, INC. and/or ROBERT Tongko appealed the arbiter's Decision to the NLRC
CHAN, VS APRILITO R. SEBOLINO, KHIM V. COSTALES, which reversed the same... the CA issued the assailed
ALVIN V. ALMOITE, and JOSEPH S. SAGUN, Decision... finding the absence of an employer-employee
G.R. No. 187320, January 26, 2011 relationship between the parties

FACTS: The complainants filed a case against Atlanta ISSUE: Did the Supreme Court err in issuing the June 29,
Industries Inc. for non-regularization, underpayment, 2010 resolution, reversing its earlier decision that an
nonpayment of wages and other money claims, as well as employer-employee relationship existed?
claims for moral and exemplary damages and attorney’s
fees against the petitioners Atlanta Industries, Inc. HELD: The Supreme Court finds no reason to reverse the
They alleged that they had attained regular status as they June 29, 2010 decision. Control over the performance of
were allowed to work with Atlanta for more than six (6) the task of one providing service both with respect to the
months from the start of a purported apprenticeship means and manner, and the results of the service is the
agreement between them and the company. primary element in determining whether an employment
They claimed that they were illegally dismissed when relationship exists. The Supreme Court ruled petitioners
the apprenticeship agreement expired. Atlanta Inc. Motion against his favor since he failed to show that the
argued that the workers were not entitled to control Manulife exercised over him was the control
regularization and to their money claims because they required to exist in an employer-employee relationship;
were engaged as apprentices under a government- Manulifes control fell short of this norm and carried only
approved apprenticeship program. the characteristic of the relationship between an
The company offered to hire them as regular employees insurance company and its agents, as defined by the
in the event vacancies for regular positions occur in the Insurance Code and by the law of agency under the Civil
section of the plant where they had trained. Code.
Then the labor arbiter dismiss the complain but the CA
reversed it. In the Supreme Courts June 29, 2010 Resolution, they
noted that there are built-in elements of control specific
ISSUE: Whether complainants are employees of Atlanta to an insurance agency, which do not amount to the
and entitled to be payed. elements of control that characterize an employment
relationship governed by the Labor Code.The Insurance
RULING: Yes, Even if we recognize the company’s need to Code provides definite parameters in the way an agent
train its employees through apprenticeship, we can only negotiates for the sale of the companys insurance
consider the first apprenticeship agreement for the products, his collection activities and his delivery of the
purpose. insurance contract or policy. They do not reach the level
With the expiration of the first agreement and the of control into the means and manner of doing an
retention of the employees, Atlanta had, to all intents and assigned task that invariably characterizes an
purposes, recognized the completion of their training and employment relationship as defined by labor law.
their acquisition of a regular employee status.
To foist upon them the second apprenticeship agreement To reiterate, guidelines indicative of labor law "control"
for a second skill which was not even mentioned in the do not merely relate to the mutually desirable result
agreement itself, is a violation of the Labor Code’s intended by the contractual relationship; they must have
implementing rules and is an act manifestly unfair to the the nature of dictating the means and methods to be
employees, to say the least. employed in attaining the result. Tested by this norm,
On the supposed apprenticeship agreements they Manulifes instructions regarding the objectives and sales
entered into, Costales, Almoite, Sebolino and Sagun targets, in connection with the training and engagement
refuse to accept the agreements’ validity, contending that of other agents, are among the directives that the
the company’s apprenticeship program is merely a ploy principal may impose on the agent to achieve the
“to continually deprive [them] of their rightful wages and assigned tasks.They are targeted results that Manulife
benefits which are due them as regular employees.” The wishes to attain through its agents. Manulifes codes of
petition is denied. conduct, likewise, do not necessarily intrude into the
insurance agents means and manner of conducting their
12. GREGORIO V. TONGKO v. THE MANUFACTURERS sales. Codes of conduct are norms or standards of
LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. behavior rather than employer directives into how
VERGEL DE DIOS specific tasks are to be done.

In sum, the Supreme Court found absolutely no evidence

FACTS: Gregorio V. Tongko started his professional of labor law control. DENIED.
relationship with Manulife by virtue of a Career Agent's
Agreement he executed with Manulife.
In the Agreement, it is provided that the Agent is an
independent contractor and nothing contained herein
shall be construed or interpreted as creating an
employer-employee relationship between the Company
and the Agent. De Dios wrote Tongko another letter
terminating Tongko's services Tongko filed a Complaint
against Manulife for illegal dismissal. Tongko, in a bid to
establish an employer-employee relationship, alleged
that De Dios gave him specific directives on how to
manage his area of responsibility. He further claimed that
Manulife exercised control over him
Labor Arbiter Marita V. Padolina dismissed the complaint
for lack of an employer-employee relationship. Padolina
found that applying the four-fold test in determining the
existence of an employer-employee relationship, none
was found in the instant case.
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FACTS: An administrative complaint was filed against and MIGUEL BOBILLO, Respondent.
the Respondent for allegedly confronting, badmouthing
and shouting invectives at Mr. Guemo, in the presence of FACTS: Petitioner Exodus International Construction
other employees and seeking assistance from the PSCO. Corporation (Exodus) is a duly licensed labor contractor
The PCSO Board of Directors found her guilty of for the painting of residential houses, condominium units
discourtesy in the course of official duties and grave and commercial buildings.
misconduct and imposed on her the penalty of dismissal In the furtherance of its business, Exodus hired
from service. respondents as painters on different dates. Guillermo,
On appeal with the CSC, the Commission dismissed the Fernando, Ferdinand, and Miguel filed a complaint for
respondent’s appeal for being moot and academic. illegal dismissal and non-payment of holiday pay, service
Moreover, they ruled that the respondent is a casual incentive leave pay, 13th month pay and night-shift
employee which means that she is not entitled to security differential pay.
of tenure. The Labor Arbiter rendered a Decision exonerating
However, the CA reversed the decision of the petitioners from the charge of illegal dismissal as
Commission by reinstating the respondent in the service respondents chose not to report for work.
until the expiration of her casual employment. However, she allowed the claims for holiday pay, service
incentive leave pay and 13th month pay.
The Decision was affirmed by the NLRC and the CA.
ISSUE: Did the CA gravely err in granting the They opined that in a situation where the employer has
respondent’s petition, in effect, reversing the CSC’s complete control over the records and could thus easily
resolutions. rebut any monetary claims against it but opted not to lift
any finger, the burden is on the employer and not on the
HELD: A new ruling recognizes that casual employees are complainants.
covered by the security of tenure and cannot be
terminated within the period of his employment except ISSUE: Whether or not the CA erred and committed
for cause. grave abuse of discretion in ordering the reinstatement
Despite this new ruling, it is not the intention of the Court of respondents to their former positions and affirming
to make the status of a casual employee at par with that the award granted by the lower tribunals.
of a regular employee, who enjoys permanence of
employment. HELD: The petition is partly meritorious.
The rule is still that casual employment will cease In illegal dismissal cases, it is incumbent upon the
automatically at the end of the period unless renewed as employees to first establish the fact of their dismissal
stated in the Plantilla of Casual Employment. before the burden is shifted to the employer to prove that
Casual employees may also be terminated anytime the dismissal was legal.
though subject to certain conditions or qualifications. Here, there was no evidence that respondents were
Thus, they may be laid-off anytime before the expiration dismissed nor were they prevented from returning to
of the employment period provided any of the following their work. It was only respondents’ unsubstantiated
occurs: when their services are no longer needed; funds conclusion that they were dismissed.
are no longer available; the project has already been Clearly therefore, there was no dismissal, much less
completed/finished; or their performance are below par. illegal, and there was also no abandonment of job to
Equally important, they are entitled to due process speak of.
especially if they are to be removed for more serious The Labor Arbiter is therefore correct in ordering that
causes or for causes other than the reasons mentioned in respondents be reinstated but without any backwages.
CSC Form No. 001. However, petitioners are of the position that the
The reason for this is that their termination from the reinstatement of respondents to their former positions,
service could carry a penalty affecting their rights and which were no longer existing, is impossible, highly
future employment in the government. unfair and unjust.
In the case at bench, the CSC itself found that Lapid was Petitioners are misguided.
denied due process as she was never formally charged They forgot that there are two types of employees in the
with the administrative offenses of Discourtesy in the construction industry.
Course of Official Duties and Grave Misconduct, for which The first is referred to as project employees or those
she was dismissed from the service. employed in connection with a particular construction
To somehow remedy the situation, the petitioners project or phase thereof and such employment is
mentioned in their Memorandum before the CA that coterminous with each project or phase of the project to
there was no reason anymore to pursue the which they are assigned.
administrative charge against Lapid and to investigate The second is known as non-project employees or those
further as this was superseded by Memorandum dated employed without reference to any particular
September 14, 2005 recommending the termination of construction project or phase of a project.
respondent Lapid’s casual employment. The second category is where respondents are classified.
They pointed out that this was precisely the reason why Petition is PARTLY GRANTED.
no Formal Charge was issued. Clearly, the action of
petitioners clearly violated Lapid’s basic rights as a
casual employee.
Therefore, the petition is denied and the respondent is
allowed to continue rendering services as teller of PCSO
and is also entitled to payment of backwages.

Page 8 of 38
15. D.M. CONSUNJI, INC. and/or DAVID M. CONSUNJI, CA pointed out that the primary standard for determining
Petitioners, v. ESTELITO L. JAMIN, Respondent. regular employment is the reasonable connection between a
particular activity performed by the employee vis-vis the usual
FACTS: Petitioner D.M. Consunji, Inc. (DMCI), a construction trade or business of the employer.
company, hired respondent Estelito L. Jamin as a laborer. As the complainants have been performing their respective
Sometime in 1975, Jamin became a helper carpenter. Since his tasks for at least one year, these same tasks, regardless of
initial hiring, Jamins employment contract had been renewed a whether the performance was continuous or intermittent,
number of times. On March 20, 1999, his work at DMCI was constitutes sufficient evidence of the necessity, if not
terminated due to the completion of the SM Manila project. indispensability, of the activity to URSUMCOs business.
This termination marked the end of his employment with DMCI
as he was not rehired again. Jamin filed a complaintfor illegal ISSUE: Whether or not the respondents are regular employees
dismissal, with several money claims (including attorney’s of URSUMCO?
fees), against DMCI and its President/General Manager, David
M. Consunji. Jamin alleged that DMCI terminated his HELD: The respondents are regular seasonal employees of
employment without a just and authorized cause at a time when URSUMCO Article 280 of the Labor Code provides for three
he was already 55 years old and had no independent source of kinds of employment arrangements, namely: regular,
livelihood. He claimed that he rendered service to DMCI project/seasonal and casual. Regular employment refers to that
continuously for almost 31 years. DMCI denied liability. It arrangement whereby the employee has been engaged to
argued that it hired Jamin on a project-to-project basis, from the perform activities which are usually necessary or desirable in
start of his engagement in 1968 until the completion of its SM the usual business or trade of the employer. By way of an
Manila project on March 20, 1999 where Jamin last worked. exception, paragraph 2, Article 280 of the Labor Code also
With the completion of the project, it terminated Jamins considers regular a casual employment arrangement when the
employment. The LA dismissed the complaint for lack of merit. casual employees engagement has lasted for at least one year,
On appeal, the NLRC affirmed the decision of the LA. On further regardless of the engagements continuity. The controlling test
appeal, the CA reversed the NLRC decision and ruled that Jamin in this arrangement is the length of time during which the
was a regular employee. Hence, DMCI seeks a reversal of the CA employee is engaged. Project employment, on the other hand,
rulings on the ground that the appellate court committed a contemplates on arrangement whereby the employment has
grave error in annulling the decisions of the labor arbiter and been fixed for a specific project or undertaking whose
the NLRC. completion or termination has been determined at the time of
the engagement of the employee. The services of the project
ISSUE: Whether or not Jamin is a regular employee employees are legally and automatically terminated upon the
end or completion of the project as the employees services are
HELD: Yes. CA Decision Affirmed. Once a project or work pool coterminous with the project. Seasonal employment operates
employee has been: continuously, as opposed to intermittently, much in the same way as project employment, albeit it involves
rehired by the same employer for the same tasks or nature of work or service that is seasonal in nature or lasting for the
tasks; and these tasks are vital, necessary and indispensable to duration of the season. To exclude the asserted seasonal
the usual business or trade of the employer, then the employee employee from those classified as regular employees, the
must be deemed a regular employee. While the contracts employer must show that: the employee must be performing
indeed show that Jamin had been engaged as a project work or services that are seasonal in nature; and he had been
employee, there was an almost unbroken string of Jamins employed for the duration of the season.
rehiring from December 17, 1968 up to the termination of his Hence, when the seasonal workers are continuously and
employment on March 20, 1999. While the history of Jamins repeatedly hired to perform the same tasks or activities for
employment (schedule of projects) relied upon by DMCI shows several seasons or even after the cessation of the season, this
a gap of almost four years in his employment for the period length of time may likewise serve as badge of regular
between July 28, 1980 (the supposed completion date of the employment. Casual employment refers to any other
Midtown Plaza project) and June 13, 1984 (the start of the IRRI employment arrangement that does not fall under any of the
Dorm IV project), the gap was caused by the companys first two categories. In the case at bar, the respondents were
omission of the three projects above mentioned. To reiterate, made to perform various tasks that did not at all pertain to any
Jamins employment history with DMCI stands out for his specific phase of URSUMCO's strict milling operations that
continuous, repeated and successive rehiring in the companys would ultimately cease upon completion of a particular phase in
construction projects. In all the 38 projects where DMCI the milling of sugar; rather, they were tasked to perform duties
engaged Jamins services, the tasks he performed as a carpenter regularly and habitually needed in URSUMCO's operations
were indisputably necessary and desirable in DMCIs during the milling season. The respondents duties as loader
construction business. He might not have been a member of a operators, hookers, crane operators and drivers were necessary
work pool as DMCI insisted that it does not maintain a work to haul and transport the sugarcane from the plantation to the
pool, but his continuous rehiring and the nature of his work mill; laboratory attendants, workers and laborers to mill the
unmistakably made him a regular employee. Nevertheless, it is sugar; and welders, carpenters and utility workers to ensure
vital in determining if the employee was hired for a specific the smooth and continuous operation of the mill for the
undertaking or tasked to perform functions vital, necessary and duration of the milling season, as distinguished from the
indispensable to the usual business or trade of the employer. production of the sugarcane which involves the planting and
Here, private respondent had been a project employee several raising of the sugarcane until it ripens for milling. They
times over. His employment ceased to be coterminous with perform activities that are necessary and desirable in sugarcane
specific projects when he was repeatedly re-hired due to the production.
demands of petitioners business. Without doubt, Jamins case Also, the respondents were regularly and repeatedly hired to
fits squarely into the employment situation just quoted. perform the same tasks year after year. This regular and
repeated hiring of the same workers (two different sets) for
16. UNIVERSAL ROBINA SUGAR MILLING two separate seasons has put in place, principally through
jurisprudence, the system of regular seasonal employment in
CORPORATION and RENE CABATI v. FERDINAND the sugar industry and other industries with a similar nature of
ACIBO operations. Therefore, the nature of the employment does not
depend solely on the will or word of the employer or on the
FACTS: The complainants were employees of URSUMCO, and procedure for hiring and the manner of designating the
were hired on various dates between 1988 and 1996, and on employee. Rather, the nature of the employment depends on
different capacities. The complainants signed contracts of the nature of the activities to be performed by the employee,
employment for a period of 1 month or for a given season, and considering the nature of the employers business, the duration
were repeatedly hired to perform the same duties and, for and scope to be done, and, in some cases, even the length of
every engagement, were required to sign new employment time of the performance and its continued existence.
contracts for the same duration of one month or given season.
The complainants filed before the Labor Arbiter complaints for
regularization, entitlement to the benefits under the existing
Collective Bargaining Agreement (CBA), and attorney’s fees.

Page 9 of 38
FACTS: ABS-CBN signed an Agreement (Agreement) with FACTS: Farley Fulache, et al filed two separate
the Mel and Jay Management and Development complaints for regularization, unfair labor practice and
Corporation (MJMDC). ABS-CBN was represented by its several money claims (regularization case) against ABS-
corporate officers while MJMDC was represented by CBN Broadcasting Corporation-Cebu.
SONZA, as President and General Manager, and Carmela They alleged that ABS-CBN and the ABS-CBN Rank-and-
Tiangco (TIANGCO), as EVP and Treasurer. File Employees Union (Union) executed a collective
Referred to in the Agreement as AGENT, MJMDC agreed bargaining agreement (CBA) where they learned that
to provide SONZAs services exclusively to ABS-CBN as they had been excluded from its coverage as ABS-CBN
talent for radio and television. considered them temporary and not regular employees,
ABS-CBN agreed to pay for SONZAs services a monthly in violation of the Labor Code.
talent fee of P310,000 for the first year and P317,000 for They claimed they had already rendered more than a
the second and third year of the Agreement. year of service in the company and, therefore, should
ABS-CBN would pay the talent fees on the 10th and 25th have been recognized as regular employees entitled to
days of the month. On 1 April 1996, SONZA wrote a letter security of tenure and to the privileges and benefits
to ABS-CBNs President regarding the resignation of Mr. enjoyed by regular employees. ABS-CBN explained the
Jose Sonza, consequently serving notice of rescission of nature of the petitioners employment within the
said Agreement. framework of its operations. It further claimed that to
SONZA filed a complaint against ABS-CBN before the cope with fluctuating business conditions, it contracts on
Department of Labor and Employment, National Capital a caseto-case basis the services of persons who possess
Region in Quezon City. the necessary talent, skills, training, expertise or
SONZA complained that ABS-CBN did not pay his salaries, qualifications to meet the requirements of its programs
separation pay, service incentive leave pay, 13th month and productions. These contracted persons are called
pay, signing bonus, travel allowance and amounts due talents and are considered independent contractors who
under the Employees Stock Option Plan (ESOP). offer their services to broadcasting companies. ABS-CBN
ABS-CBN filed a Motion to Dismiss on the ground that no alleged that the petitioners services were contracted on
employer-employee relationship existed between the various dates by its Cebu station as independent
parties. contractors/off camera talents, and they were not
The Labor Arbiter rendered his Decision dismissing the entitled to regularization in these capacities.
complaint for lack of jurisdiction, and that Sonza cannot
be considered as an employee by reason of the peculiar ISSUE: WON they are ABS-CBNs regular employees
circumstances surrounding the engagement of his entitled to the benefits and privileges of regular
services. employees.
That he was engaged by respondent by reason of his
peculiar skills and talent as a TV host and a radio HELD: They are ABS-CBNs regular employees entitled to
broadcaster. the benefits and privileges of regular employees. These
Unlike an ordinary employee, he was free to perform the benefits and privileges arise from entitlements under the
services he undertook to render in accordance with his law (specifically, the Labor Code and its related laws),
own style. and from their employment contract as regular ABS-CBN
Whatever benefits complainant enjoyed arose from employees, part of which is the CBA if they fall within the
specific agreement by the parties and not by reason of coverage of this agreement. Thus, what only needs to be
employer-employee relationship. resolved as an issue for purposes of implementation of the
The fact that complainant was made subject to decision is whether the petitioners fall within CBA
respondents Rules and Regulations, likewise, does not coverage. The parties 1999-2002 CBA provided in its
detract from the absence of employer-employee Article I (Scope of the Agreement) that:
relationship. Section 1. APPROPRIATE BARGAINING UNIT.
The parties agree that the appropriate bargaining unit
ISSUE: WON employer-employee relationship existed shall be regular rank-and-file employees of ABS-CBN
between Sonza and ABS-CBN. BROADCASTING CORPORATION but shall not include:
Personnel classified as Supervisor and
HELD: NO. Independent contractors often present Confidential employees; Personnel who are on casual or
themselves to possess unique skills, expertise or talent to probationary status as defined in Section 2 hereof;
distinguish them from ordinary employees. Personnel who are on contract status or who are paid for
The specific selection and hiring of SONZA, because of his specified units of work such as writer-producers, talent-
unique skills, talent and celebrity status not possessed by artists, and singers. The inclusion or exclusion of new job
ordinary employees, is a circumstance indicative, but not classifications into the bargaining unit shall be subject of
conclusive, of an independent discussion between the COMPANY and
contractual relationship. the UNION. Under these terms, the petitioners are
If SONZA did not possess such unique skills, talent and members of the appropriate bargaining unit because they
celebrity status, ABS-CBN would not have entered into are regular rank-and-file employees and do not belong to
the Agreement with SONZA but would have hired him any of the excluded categories.
through its personnel department just like any other Specifically, nothing in the records shows that they
employee. are supervisory or confidential employees; neither are
In any event, the method of selecting and engaging they casual nor probationary employees.
SONZA does not conclusively determine his status. We Most importantly, the labor arbiters decision of January
must consider all the circumstances of the relationship, 17, 2002 affirmed all the way up to the
with the control test being the most important element. CA level ruled against ABS-CBNs submission that they are
independent contractors.
Page 10 of 38
Thus, as regular rank-and-file employees, they fall within
CBA coverage under the CBAs express terms
and are entitled to its benefits.

Page 11 of 38
FACTS: The resident physicians formed a union called LABOR RELATIONS COMMISSION
the UERMMC-Resident Doctors Union and filed the
petition for certification so that it will be recognized as FACTS: Ronaldo Lanzanas and Merceditha Lanzanas are
the exclusive bargaining agent of all the resident doctors employed by Calamba Medical Center, Inc.
physicians in the hospital for purposes of collective They are given a retainer’s fee by the hospital as well as
bargaining. shares from fees obtained from patients.
The petition for certification was dismissed by the One time, Ronaldo was overheard by Dr. Trinidad talking
Undersecretary, acting under the authority of the to another doctor about how low the admission rate to
Secretary of Labor, on the ground that there exist no the hospital is.
employer-employee relationship between the resident That conversation was reported to Dr. Desipeda who was
doctors and the hospital. then the Medical Director of the hospital.
Eventually Ronaldo was suspended. Ronaldo filed a case
ISSUE: WON resident doctors are employees of the for Illegal Suspension in March 1998.
In the same month, the rank and file employees
HELD: The resident doctors are not employees of the organized a strike against the hospital for unfair labor
hospital. It is clear that physicians undergo residency practices.
training in order to hone their skills and develop or Desipeda eventually fired Ronaldo for his alleged
improve their knowledge in a specialized medical field or participation in the strike, which is not allowed under the
discipline. Hence, residency is basically and simply a Labor Code for he is a managerial employee.
continuation of their medical course. However, they are Desipeda also fired Merceditha on the ground that she is
not required or mandated under any law to further the wife of Ronaldo who naturally sympathize s
undergo a residence training program. Having passed with him.
the medical board examinations, they are already The Labor Arbiter ruled that there was no Illegal
licensed physicians and could very well engage in the Suspension for there was no employer employee
general practice of medicine. It is for the practice of relationship because the hospital has no control over
highly specialized medical disciplines which necessitates Ronaldo as he is a doctor who even gets shares from the
further on-the-job training thereon. hospitals earnings.
Viewed from this perspective, residency training clearly The National Labor Relations Commission as well as the
amounts to a pursuit of further education on a specific Court of Appeals reversed the LA.
Thus, the relationship between the teaching/training ISSUE: Whether or not there is an employer-employee
hospital and the resident doctor is not one of employer- relationship?
The training/teaching hospital may simply be likened to HELD: Yes. Under the control test, an employment
a medical school/university, but in this instance, the relationship exists between a physician and a hospital if
emphasis is on the practical application and training of the hospital controls both the means and the details of
its students, the resident doctors. the process by which the physician is to accomplish his
There is control in this case because of the fact that
Desipeda schedules the hours of work for Ronaldo and
his wife. The doctors are also registered by the hospital
under the SSS which is premised on an employer-
employee relationship.
There is Illegal Dismissal committed against Rolando for
there was no notice and hearing held.
It was never shown that Rolando joined the strike.
But even if he did, he has the right to do so for he is not a
part of the managerial or supervisory employees.
As a doctor, their decisions are still subject to revocation
or revision by Desipeda.
There is Illegal Dismissal committed against Merceditha
for the ground therefor was not
mentioned in Article 282 of the Labor Code.
When is Control (One of the Four Tests of Employer-
Employee Relationship) Absent?
Where a person who works for another does so more or
less at his own pleasure and is not subject to definite
hours or conditions of work, and is compensated
according to the result of his efforts and not the amount
thereof, the element of control is absent.

Page 12 of 38
21. RAMOS VS COURT OF APPEALS Scientific studies point out that intubation problems are
responsible for 1/3 of deaths and serious injuries
FACTS: Plaintiff Erlinda Ramos was, until the afternoon associated with anesthesia.
of June 17, 1985 a 47-year old robust woman. Except for Nevertheless, 98% or the vast majority of difficult
occasional complaints of discomfort due to pains intubation may be anticipated by performing a thorough
allegedly caused by presence of a stone in her gall evaluation of the patient’s airway prior to the operation.
bladder, she was as normal as any other woman. Married As stated beforehand, respondent, Dra. Guttierez failed to
to Rogelio Ramos, an executive of Philippine Long observe the proper pre-operative protocol which could
Distance Telephone Company (PLDT), she has have prevented this unfortunate
three children whose names are Rommel, Roy Roderick, incident.
and Ron Raymond. Had appropriate diligence and reasonable care been used
Because of the discomforts somehow interfered with her in the pre –operative evaluation, respondent physician
normal ways, she sough t professional advice. could have been more prepared to meet the contingency
She was told to undergo an operation for the removal of a brought about by the perceived atomic variations in the
stone in her gall bladder. She underwent series of patient’s neck and oral area; defects
examination which revealed that she was fit for the said which could have been easily overcome by a prior
surgery. Through the intercession of a mutual friend, she knowledge of those va riations together with
and her husband met Dr. Osaka for the first time and she a change in technique.
was advised by Dr. Osaka to go under the operation In other words, an experienced anesthesiologist,
called cholecystectomy and the same was agreed to be adequately alerted by a thorough pre-operative
scheduled on June 17,1985 at 9:00am at the Delos Santos evaluation, would have had little difficulty going around
Medical Center Rogelio asked Dr. Osaka to look for a good the short neck and potruding teeth.
anesthesiologist to which the latter agreed to. Having failed to observe common medical standards in
A day before the scheduled operation, she was admitted pre-operative management and intubation, respondent
at the hospital and on the day of the operation, Erlinda’s Dra. Guttierez negligence resulted in cerebral anoxia and
sister was with her insider the operating room. eventual coma of Erlinda.
Dr. Osaka arrived at the hospital late, Dr. Guttierez, the
anesthesiologist, started to intubate Erlina when
Herminda heard her say that intubating Erlinda is quite
difficult and there were complications.
This prompt Dr. Osaka to order a call to another
anesthesiologist, Dr. Caldron who successfully
intubated Erlina.
The patient’s nails became bluish and the patient was
placed in a trendelenburg position.
After the operation, Erlina was diagnosed to be suffering
from diffuse cerebral parenchymal damage and that the
petitioner alleged that this was due to lack of oxygen
supply to Erlinda’s brain which resulted from the

ISSUE: Whether or not the doctors and the hospital are

liable for damages against petitioner
for the result to Erlinda of the said operation.

HELD: Yes. The private respondents were unable to

disprove the presumption of negligence on their part in
the care of Erlinda and their negligence was the
proximate case of her piteous condition.
Nevertheless, despite the fact that the scope of res ipsa
liquitor has been measurably enlarged, it does not
automatically follow that it apply to all cases of medical
negligence as to mechanically shift the burden of proof to
the defendant to show that he is not guilty of the ascribed
Res ipsa liquitor is not a rigid or ordinary doctrine to be
perfunctorily used but a rule to be cautiously applied,
dependin g upon the circumstances of each case.
It is generally restricted to situations in malpractice
cases where a layman is able to say, as a matter
of common knowledge and observation, that the
consequences of professional care were not as such as
would ordinarily have followed if due care had been
A distinction must be made between the failure to secure
results, and the occurrence of something more unusual
and not ordinarily found if the service or treatment
rendered followed the usual procedure of
those skilled in that particular practice.
It must be conceded that the doctrine of res ipsa
liquitor can have no application in a suit against a
physician or surgeon which involves the merits of a
diagnosis or of a scientific treatment.

Page 13 of 38
22. PROFESSIONAL SERVICES, INC. VS. CA which the latter are employed or on the occasion of their
FACTS: April 4, 1984: Natividad Agana was rushed to the
Medical City General Hospital because of difficulty of Employers shall be liable for the damages caused by their
bowel movement and bloody anal discharge. Dr. Miguel employees and household helpers acting within the
Ampil diagnosed her to be suffering from cancer of the scope of their assigned tasks even though the former are
sigmoid. April 11, 1984: Dr. Ampil performed an anterior not engaged in any business or industry.
resection surgery on Natividad and found that the The responsibility treated of in this article shall cease
malignancy in her sigmoid area had spread on her left when the persons herein mentioned prove that they
ovary, necessitating the removal of certain portions of it observed all the diligence of a good father of a family to
Dr. Ampil obtained the consent of Natividad’s husband, prevent damage.
Enrique Agana to perform hysterectomy. After a couple failed to adduce evidence showing that it exercised the
of days, Natividad consulted both Dr. Ampil and Dr. diligence of a good father of a family in the accreditation
Fuentes about the excruciating pain in her anal region. and supervision private hospitals, hire, fire and exercise
Dr. Ampil recommended that she consult an oncologist. real control over their attending and visiting ‘consultant’
May 9, 1984: The Aganas went to the United States to staff control test is determining for the purpose of
seek further treatment and was told she was FREE from allocating responsibility in medical negligence cases, an
cancer. employer-employee relationship in effect exists between
August 31, 1984: Natividad's daughter found a piece of hospitals and their attending and visiting physicians
gauze protruding from her vagina. ART. 1869. Agency may be express, or implied from the
Dr. Ampil proceeded to her house and extracted by hand acts of the principal, from his silence or lack of action, or
a piece of gauze measuring 1.5 inches in width and his failure to repudiate the agency, knowing that another
assuring that the pain will vanish. When the pain person is acting on his behalf without authority.
intensified, Nativided went to Polymedic General By accrediting Dr. Ampil and Dr. Fuentes and publicly
Hospital where Dr. advertising their qualifications, the hospital created the
Ramon Gutierrez found a foul-smelling gauze measuring impression that they were its agents, authorized to
1.5 inches in width which badly perform medical or surgical services for its patients
infected her vaginal vault which formed a recto-vaginal doctrine of corporate negligence or corporate
fistula forcign her stool to excrete responsibility knowledge of any of the staff of Medical
through the vagina. October 1984: Natividad underwent City Hospital constitutes knowledge of PSI It is worthy to
another surgery to remedy the damage. February 16, note that Dr. Ampil and Dr. Fuentes operated on
1986: Natividad died so she was substituted by her Natividad with the assistance of the Medical City
children Hospital’s staff, composed of resident doctors, nurses,
RTC: PSI solidarily liable with Dr. Ampil and Dr. Fuentes and interns
for damages for negligence and malpractice
CA: absolved Dr. Fuentes upon the same advice from the
PRC Board of Medicine for failure to show that he placed
the guages or concealed the fact from Natividad.

ISSUE: W/N Dr. Fuentes may be held liable under the

principle of res ipso loquitor

HELD: NO. CA affirmed Dr. Ampil as the negligent party

surgeons used gauzes as sponges to control the bleeding
of the patient during the surgical operation immediately
after the operation, the nurses who assisted in the
surgery noted in their report 2 sponges lacking 2 gauzes
were extracted from the same spot of the body of Mrs.
Agana element 3 "control and management of the thing
which caused the injury" to be wanting Dr. Fuentes
performed the surgery and thereafter reported and
showed his work to Dr. Ampil who allowed Dr. Fuentes to
leave the operating room. Under the "Captain of the Ship"
rule, the operating surgeon is the person in complete
charge of the surgery room and all personnel connected
with the operation res ipsa loquitur not a rule of
substantive law, hence, does not per se create or
constitute an
independent or separate ground of liability, being a mere
evidentiary rule mere invocation and application of the
doctrine does not dispense with the requirement of proof
of negligence
Art. 2176. Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay
for the damage done. Such fault or negligence, if there is
no pre-existing contractual relation between the parties,
is called a quasi-delict and is governed by the provisions
of this Chapter.
ART. 2180. The obligation imposed by Article 2176 is
demandable not only for one’s own acts or omissions, but
also for those of persons for whom one is responsible.
The owners and managers of an establishment or
enterprise are likewise responsible for damages caused
by their employees in the service of the branches in
Page 14 of 38
TRYCO PHARMA CORPORATION FACTS: Manila Jockey Club Employees Labor Union-
PTGWO and respondent Manila Jockey Club, Inc., a
FACTS: Tryco Pharma Corporation (Tryco) is a corporation with a legislative franchise to conduct,
manufacturer of veterinary medicines and its principal operate and maintain horse races, entered into a
office is located in Caloocan City. Collective Bargaining Agreement (CBA). The CBA
Joselito Lariño, Vivencio Barte, Saturnino Egera an d governed the economic rights and obligations of
Simplicio Aya-ay are its regular employees, occupying the respondents regular monthly paid rank-and-file
positions of helper, shipment helper and factory workers, employees. In the CBA, the parties agreed to a 7-hour
respectively, assigned to the Production Department. work schedule from 9:00 a.m. to 12:00noon and from
They are members of Bisig Manggagawa sa Tryco (BMT), 1:00 p.m. to 5:00 p.m. on a work week of Monday to
the exclusive bargaining representative of the rank- Saturday. Respondent issued an inter-office
andfile employees. memorandum declaring that, effective April 20, 1999, the
Tryco received a Letter from the Bureau of Animal hours of work of regular monthlypaid employees shall be
Industry of the Department of Agriculture reminding it from 1:00 p.m. to 8:00 p.m. when horse races are held,
that its production should be conducted in San Rafael, that is, every Tuesday and Thursday.
Bulacan, not in Caloocan City, hence, Tryco issued a The memorandum, however, maintained the 9:00 a.m. to
Memorandum dericting petitioner Aya-ay to report to the 5:00 p.m. schedule for non-race days.
company's plant site in Bulacan. Petitioner and respondent entered into an Amended and
When petitioner Aya -ay refused to obey, Tryco Supplemental CBA retaining Section 1 of Article IV and
reiterated the order. Section 2 of Article XI, supra, and clarified that any
Subsequently, through a Memorandum, Tryco also conflict arising therefrom shall be referred to a voluntary
directed petitioners Egera, Lariño and Barte to report to arbitrator for resolution.
the company's plant site in Bulacan. Subsequently, before a panel of voluntary arbitrators of
Petitioners then filed their separate complaints for illegal the N ational Conciliation and Mediation Board (NCMB),
dismissal, underpayment of wages, nonpayment of petitioner questioned the above office memorandum as
overtime pay and service incentive leave. violative of the prohibition against non-diminution of
The alleged that the management transferred petitioners wages and benefits guaranteed under Section 1, Article
Lariño, Barte, Egera and Aya-ay from Caloocan to San IV, of the CBA which specified the work schedule of
Rafael, Bulacan to paralyze the union. respondent's employees to be from 9:00 a.m. to 5:00 p.m.
In their defense, respondents averred that the petitioners Petitioner claimed that as a result of the memorandum,
were not dismissed but they refused to comply with the the employees are precluded from rendering their usual
management's directive for them to report to the overtime work from 5:00 p.m. to 9:00 p.m.
company's plant in San Rafael, Bulacan.
ISSUE: WON MJCI relinquish part of its management
ISSUE: WON management’s prerogative of transferring prerogative when it stipulated a work schedule in the
and reassigning employees from one CBA.
area of operation to another in order to meet the
requirements of the business constitutes HELD: NO. MJCI did not relinquish part of its
constructive dismissal. management prerogative when it stipulated a work
schedule in the CBA.
HELD: NO. Management’s prerogative of transferring and Every business enterprise endeavors to increase profits.
reassigning employees from one area of operation to As it is, the Court will not interfere with the business
another in order to meet the requirements of the judgment of an employer in the exercise of its
business is, generally not constitutive of constructive prerogative to devise means to improve its operation,
dismissal. provided that it does not violate the law, CBAs, and the
This prerogative extends to the management's right to general principles of justice and fair play.
regulate, according to its own discretion and udgment, We have thus held that management is free to regulate,
all aspects of employment, including according to its own discretion and judgment, all aspects
the freedom to transfer and reassign employees of employment, including hiring, work assignments,
according to the requirements of its business. working methods, time, place and manner of work,
Management's prerogative of transferring and processes to be followed, supervision of workers,
reassigning employees from one area of operation to working regulations, transfer of employees, work
another in order to meet the requirements of the supervision, layoff of workers and discipline, dismissal,
business is, therefore, generally not constitutive of and recall of workers.
constructive dismissal.
Thus, the consequent transfer of Tryco's personnel,
assigned to the Production Department was well within
the scope of its management prerogative.

Page 15 of 38

FACTS: Respondents were among the Supervisory Security

Guards of the Beer Division of the San Miguel Corporation 26.PHILIPPINE AIRLINES, INC. (PAL) vs. NLRC
with offices at No. 40 San Miguel venue, Mandaluyong City.
They started working as guards assigned to the Beer FACTS: Philippine Airlines, Inc. (PAL) completely revised
Division on different dates until such time that they were its 1966 Code of Discipline. The Code was circulated
promoted as supervising security guards. From the among the employees and was immediately
commencement of their employment, the private implemented, and some employees were forthwith
respondents were required to punch their time cards for subjected to the disciplinary measures embodied therein.
purposes of determining the time they would come in and
Thus, the Philippine Airlines Employees Association
out of the companys work place. Corollary, the private
(PALEA) filed a complaint before the National Labor
respondents were availing the benefits for overtime, holiday
and night premium duty
Relations Commission (NLRC) for unfair labor practice
through time card punching. However, in the early 1990s, with the following remarks: "ULP with arbitrary
the San Miguel Corporation embarked on a Decentralization implementation of PAL's Code of Discipline without
Program aimed at enabling the separate divisions of the San notice and prior discussion with Union by Management".
Miguel Corporation to pursue a more efficient and effective In its position paper, PALEA contended that PAL, by its
management of their respective operations. As a result of unilateral implementation of the Code, was guilty of
the Decentralization Program, the Beer Division of the San unfair labor practice. PALEA alleged that copies of the
Miguel Corporation implemented a no time card policy Code had been circulated in limited numbers; that being
whereby the Supervisory I and II composing of the penal in nature the Code must conform with the
supervising security guards of the Beer Division were no requirements of sufficient publication, and that the Code
longer required to punch their time cards. Consequently, was arbitrary, oppressive, and prejudicial to the rights of
without prior consultation with the private respondents, the the employees.
time cards were ordered confiscated and the latter were no PAL filed a motion to dismiss the complaint, asserting its
longer allowed to render overtime work. However, in lieu of prerogative as an employer to prescibe rules and
the overtime pay and the premium pay, the personnel of the regulations regarding employees' conduct in carrying out
Beer Division affected by the No Time Card Policy were their duties and functions, and alleging that by
given a 10% across-the-board increase on their basic pay implementing the Code, it had not violated the collective
while the supervisors who were assigned in the night shift
bargaining agreement (CBA) or any provision of the
(6:00 p.m. to 6:00 a.m.) were given night shift allowance
Labor Code
ranging from P2,000.00 to P2,500.00 a month. Respondents
filed a complaint for unfair labor practice, violation of Article
100 of the Labor Code of the Philippines, and violation of the ISSUE: Whether the management may be compelled to
equal protection clause and due process of law in relation to share with the union or its employees its prerogative of
paragraphs 6 and 8 of Article 32 of the New Civil Code of the formulating a code of discipline.
Philippines SMC maintained that respondents were
supervisory security guards who were exempt from the HELD: YES. PAL asserts that when it revised its Code on
provisions of the Labor Code on hours of work, weekly rest March 15, 1985, there was no law which mandated the
periods, and rest days. sharing of responsibility therefor between employer and
The no time card policy did not just prevent respondents employee.
from punching their time cards, but it also granted Indeed, it was only on March 2, 1989, with the approval
respondents an across-the board increase of 10% of basic of Republic Act No. 6715, amending Article 211 of the
salary and either a P2,000 or P2,500 night shift allowance Labor Code, that the law explicitly considered it a State
on top of their yearly merit increase. They further asserted policy "(to ensure the participation of workers in
that the no time card policy was a valid exercise of decision and policy-making processes affecting the rights,
management prerogative and that all supervisors in the duties and
Beer Division were covered by the no time card policy, welfare."
which classification was distinct and separate from the However, even in the absence of said clear provision of
other divisions within SMC.
law, the exercise of management prerogatives was never
considered boundless. Thus, in Cruz vs. Medina (177
ISSUE: Whether the implementation of the no time card
policy was a valid exercise of management prerogative.
SCRA 565 [1989]) it was held that management's
prerogatives must be without abuse of discretion.
HELD: Yes. Given the discretion granted to the various In San Miguel Brewery Sales Force Union (PTGWO) vs.
divisions of SMC in the management and operation of their Ople (170 SCRA 25 [1989]), we upheld the company's
respective businesses and in the formulation and right to implement a new system of distributing its
implementation of policies affecting their operations and products, but gave the following caveat: So long as a
their personnel, the no time card policy affecting all of the company's management prerogatives are exercised in
supervisory employees of the Beer Division is a valid good faith for the advancement of the employer's interest
exercise of management prerogative. The no time card and not for the purpose of defeating or circumventing the
policy undoubtedly caused pecuniary loss to respondents. rights of the employees under special laws or under valid
However, petitioners granted to respondents and other agreements, this Court will uphold the.
supervisory employees a 10% across-the-board All this points to the conclusion that the exercise of
increase in pay and night shift allowance, in addition to their managerial prerogatives is not unlimited. It is
yearly merit increase in basic salary, to cushion the impact circumscribed by limitations found in law, a collective
of the loss. So long as a company’s management bargaining agreement, or the general principles of fair
prerogatives are exercised in good faith for the play and justice
advancement of the employers interest and not for the Moreover, as enunciated in Abbott Laboratories (Phil.),
purpose of defeating or circumventing the rights of the
vs. NLRC (154 713 [1987]), it must be duly established
employees under special laws or under valid agreements,
that the prerogative being invoked is clearly a managerial
this Court will uphold them.

Page 16 of 38
Page 17 of 38
FACTS: Vicente T. Ong was the Sales Manager of
Wiltshire File Co., Inc. ("Wiltshire"). As such, he received FACTS: Farle P. Almodiel is a certified public accountant
a monthly salary excluding commissions from sales. He who was as Cost Accounting Manager of Raytheon
also enjoyed vacation leave with pay, as well as Philippines, Inc. through a reputable placement firm,
hospitalization privileges per year. Upon private John Clements Consultants, Inc. He started as a
respondent's return from a business and pleasure trip probationary or temporary employee. After a few
abroad, he was informed by the President of Wiltshire months, he was given a regularization increase. Not long
that his services were being terminated. Ong maintains thereafter, his salary was also increased. Almodiel
that he tried to get an explanation from management of recommended and submitted a Cost Accounting/Finance
his dismissal but to no avail. When private respondent Reorganization, affecting the whole finance group but the
again tried to speak with the President of Wiltshire, the same was disapproved by the Controller. However, he
company's security guard handed him a letter which was assured by the Controller that should his position or
formally informed him that his services were being department which was apparently a one-man
terminated upon the ground of redundancy. Ong filed a department with no staff becomes untenable or unable to
complaint before the Labor Arbiter for illegal dismissal deliver the needed service due to manpower constraint,
alleging that his position could not possibly be redundant he would be given a three (3) year advance notice. In the
because nobody (save himself) in the company was then meantime, the standard cost accounting system was
performing the same duties. He further contended that installed and used at the Raytheon plants and
retrenching him could not prevent further losses because subsidiaries worldwide. Almodiel was summoned by his
it was in fact through his remarkable performance as immediate boss and in the presence of IRD Manager, Mr.
Sales Manager that Rolando Estrada, was told of the abolition of his position
the Company had an unprecedented increase in domestic on the ground of redundancy. He pleaded with
market share the preceding year. For that management to defer its action or transfer him to
accomplishment, he continued, he was promoted to another department, but he was told that the decision of
Marketing Manager and was authorized by the President management was final and that the same has been
to hire four (4) Sales Executives five (5) months prior to conveyed to the Department of Labor and Employment.
his termination. Wiltshire alleged that the termination of Thus, he was constrained to file the complaint for illegal
Ong's services was a cost-cutting measure: that the dismissal. Petitioner claims that the functions of his
company had experienced an unusually low volume of position were absorbed by the Payroll/Mis/Finance
orders: and that it was in fact forced to rotate its Department under the management of Danny Ang Tan
employees in order to save the company. Chai, a resident alien without any working permit from
Despite the rotation of employees, it continued to the Department of Labor and Employment as required by
experience financial losses and Ong's position, Sales law. And granting that his department has to be declared
Manager of the company, became redundant. During the redundant, he claims that he should have been the
proceedings before the Labor Arbiter, Wiltshire notified Manager of the Payroll/Mis/Finance Department which
the DOLE that it would close its doors permanently due handled general accounting, payroll and encoding. As a B.
to substantial business losses. S. Accounting graduate, a CPA with M.B.A. units, 21 years
of work experience, and a natural born Filipino, he claims
HIRING ISSUE: It is of no legal moment that the financial that he is better qualified than Ang Tan Chai, a B.S.
troubles of the company were not of Ong's making. Ong Industrial Engineer, hired merely as a Systems Analyst
cannot insist on the retention of his position upon the Programmer or its equivalent in early 1987, promoted as
ground that he had not contributed to the financial MIS Manager only during the middle part of 1988 and a
problems of Wiltshire. The characterization of private resident alien. Petitioner also assails Raytheon's choice of
respondent's services as no longer necessary or Ang Tan Chai to head the Payroll/Mis/Finance
sustainable, and therefore properly terminable, was an Department, claiming that he is better qualified
exercise of business judgment on the part of petitioner for the position.
company. The wisdom or soundness of such
characterization or decision was not subject to HELD: It has been consistently held that an objection
discretionary review on the part of the Labor Arbiter nor founded on the ground that one has better credentials
of the NLRC so long, of course, as violation of law or over the appointee is frowned upon so long as the latter
merely arbitrary and malicious action is not shown. possesses the minimum qualifications for the position.
The determination of the continuing necessity of a In the case at bar, since petitioner does not allege that
particular officer or position in a business corporation is Ang Tan Chai does not qualify for the position, the Court
management's prerogative, and the courts will not cannot substitute its discretion and judgment for that
interfere with the exercise of such so long as no abuse of which is clearly and exclusively management prerogative.
discretion or merely arbitrary or malicious action on the To do so would take away from the employer what
part of management is shown. rightly belongs to him as aptly explained in National
Federation of Labor Unions v. NLRC:
It is a well-settled rule that labor laws do not authorize
interference with the employer's judgment in the conduct
of his business. The determination of the qualification and
fitness of workers for hiring and firing, promotion or
reassignment are exclusive prerogatives of
management. The Labor Code and its implementing Rules
do not vest in the Labor Arbiters nor in the different
Divisions of the NLRC (nor in the courts) managerial
authority. The employer is free to determine, using his own
discretion and business judgment, all elements of
employment, "from hiring to firing" except in cases of
unlawful discrimination or those which may be provided
by law. There is none in the instant case.
Page 18 of 38
29. PRIMO E. CAONG, JR., ALEXANDER J. TRESQUIO, HELD: The petition is without merit.The Labor Arbiter,
AND LORIANOD. DALUYON, PETITIONERS,- VERSUS - the NLRC, and the CA uniformly declared that petitioners
AVELINO REGUALOS, RESPONDENT were not dismissed from employment but merely
suspended pending payment of their arrears. We have no
FACTS: Petitioners were employed by reason to deviate from such findings. Indeed, petitioners’
respondent Avelino Regualos under a suspension cannot be categorized as dismissal,
boundary agreement, as drivers of his brand considering that there was no intent on the part of
new jeepneys. On November 4, 2001 a meeting was cond respondent to sever the employer-employee relationship
ucted by respondent. During the said meeting, between him and petitioners. In fact, it was made clear
respondent informed his employees, including that petitioners could put an end to the suspension if they
petitioners, to strictly comply with the policy regarding only pay their recent arrears. As it was, the suspension
remittances and warned them that they would not be dragged on for years because of petitioners’ stubborn
allowed to take out the jeepneys if they did not remit the refusal to pay.
full amount of the boundary. Despite the said reminder It is acknowledged that an employer has free rein and
given by the respondent, Daluyon, Tresquio and Caong enjoys wide latitude of discretion to regulate all aspects
failed to remit the entire amount of boundary on of employment, including the prerogative to instil
November 7, 8, 9, 2001, respectively, and when they discipline on his employees and to impose
returnedfor work after their rest day, respondent barred penalties, including dismissal, if warranted, upon erring
them from driving because of the deficiency in the employees.
boundary payment. They pleaded with the respondent to This is a management prerogative. Indeed, the manner in
allow them to drive but to no avail. Thus, they filed an which management conducts its own affairs to achieve its
illegal dismissal case against the respondent. During the purpose is within the management’s discretion.
mandatory conference, respondent manifested that The only limitation on the exercise of management
petitioners were not dismissed and that they could drive prerogative is that the policies, rules, and regulations on
his jeepneys once they paid their arrears. work-related activities of the employees must always be
Petitioners, however, refused to doso. On March 31, fair and reasonable, and the corresponding penalties,
2003, the Labor Arbiter decided the case in favor of when prescribed, commensurate to the offense involved
respondent. and to the degree of the infraction.
Petitioners appealed the decision to the National Labor Petitioners’ concern relates to the implementation of the
Relations Commission (NLRC). policy, which is another matter.
In its resolution] dated March 31, 2004, the NLRC agreed A company policy must be implemented in such manner
with the Labor Arbiter and dismissed the appeal. as will accord social justice and compassion to the
It also denied petitioners’ motion for reconsideration. employee.
Forthwith, petitioners filed a petition for certiorari with In case of noncompliance with the company policy, the
the CA. employer must consider the surrounding circumstances
In its Decision dated December 14, 2006, the CA found no and the reasons why the employee failed to comply.
grave abuse of discretion on the part of the NLRC. When the circumstances merit the relaxation of the
According to the CA, the employer-employee relationship application of the policy, then its noncompliance must be
of the parties has not been severed, but merely excused.
suspended when respondent refused to allow petitioners In the case at bench, private respondent, upon finding
to drive the jeepneys while there were unpaid boundary that petitioners had consistently failed to remit the full
obligations. The CA pointed out that the fact that it was amount of the boundary, conducted a meeting on
within the power of petitioners to return to work is proof November 4, 2001 informing them to strictly comply
that there was no termination of employment. with the policy regarding their remittances and warned
The condition that petitioners should first pay their them to discontinue driving if they still failed to remit the
arrears only for the period of November 5-9,2001 before full amount of the boundary.
they can be readmitted to work is neither impossible nor WHEREFORE, premises considered, the petition
unreasonable if their total unpaid boundary obligations is DENIED. TheCourt of Appeals Decision dated
and the need to sustain the financial viability of the December 14, 2006 and Resolution datedJuly 16, 2007
employer’s enterprise—which would ultimately redound are AFFIRMED
to the benefit of the employees—are taken into
The CA went on to rule that petitioners were not denied
their right to due process.
It pointed out that the case does not involve a
termination of employment; hence, the strict application
of the twin-notice rule is not warranted.
According to the CA, what is important is that petitioners
were given the opportunity to be heard.
The meeting conducted by respondent on November 4,
2001 served as sufficient notice to petitioners
During the said meeting, respondent informed his
employees, including petitioners, to strictly comply with
the policy regarding remittances and warned them that
they would not be allowed to take out the jeepneys if
they did not remit the full amount of the boundary.

ISSUE: Whether or not the petitioners were illegally

dismissed by the respondent andthat such dismissal was
made in violation of the due process requirements ofthe

Page 19 of 38
30. PHILIPPINE TELEGRAPH AND TELEPHONE underhanded motives on the part of either party, it is the
CORPORATION vs. ALICIA LAPLANA, ET.AL employee's wishes that should be made to prevail. In adopting
that proposition by way of resolving the controversy, the
FACTS: Alicia Laplana was the cashier of the Baguio City Branch respondent NLRC gravely abused its discretion.
Office of the Philippine Telegraph and Telephone Corporation.
PT & T's treasurer, Mrs. Alicia A. Arogo, directed Laplana to 31. BLUE DAIRY CORPORATION vs. NLRC and ELVIRA
transfer to the company's branch office at Laoag City. Laplana R. RECALDE
refused the reassignment and proposed instead that qualified
clerks in the Baguio Branch be trained for the purpose. She set FACTS: BLUE DAIRY CORPORATION hired Elvira R. Recalde as a
out her reasons therefor in her letter to Mrs. Arogo. Mrs. Arogo food technologist in its laboratory. Recalde accompanied
reiterated her directive for Laplana's transfer to the Laoag Production Manager Editha N. Nicolas in conductin g a sensory
Branch, this time in the form of a written Memorandum, evaluation of vanilla syrup in one of the outlets of a client.
informing Laplana that she will be reassigned to Laoag branch While on their way back to the office a post fell on the company
assuming the same position of branch cashier and ordering her vehicle they were riding due to a raging typhoon damaging the
"to turn over her accountabilities and files to Rose Ca ysido who vehicle's windshield and side mirror.
will be in charge of cashiering in Baguio." Apparently Laplana Later, Recalde was transferred from the laboratory to the
was not allowed to resume her work as Cashier of the Baguio vegetable processing section where she cored lettuce, minced
Branch when the time came. She thereupon wrote again to Mrs. and repacked garlic and performed similar work, and was
Arogo advising that the directed transfer was unacceptable, restricted from entering the laboratory. She was unhappy.
reiterating the reasons already given by her in her first letter. She considered her new job humiliating and menial. She later
Laplana later received a telegram from Mrs. Arogo requiring stopped reporting for work. The following day she sent a letter
her to report to Manila for a new job assignment, that failure to to Blue Dairy Corporation that she will no longer report for
report shall constitute abandonment of her job, which might work because of their drastic and oppressive action. Recalde
constrain them to impose disciplinary actions against her. then filed a complaint against Blue Dairy Corporation for
Laplana in turn sent a telex message to Mrs. Arogo refusing the constructive dismissal and non-payment of premium pay.
job offer in Manila and requested that she be retrenched Petitioners contended that Recalde was given a less sensitive
instead. Termination of Laplana's employment on account of assignment outside of the laboratory on account of her
retrenchment thereupon followed. Laplana then filed a dishonesty which resulted in loss of trust and confidence. They
complaint against PT & T its "Baguio Northwestern Luzon seriously took into account the result of the
Branch, Baguio City," and Paraluman Bautista, Area Manager. investigation that Recalde was actually scouting for a new
In her complaint, she set forth substantially the facts just residence using company vehicle without prior permission
narrated, and alleged, as right of action, that "when she insisted from the General Manager and during office hours, in violation
on her right of refusing to be transferred, the Defendants made of par. IV, subpars. B and G, of the company's General Rules and
good its warning by terminating her services on May 16, 1984 Regulation, to that effect such act of dishonesty could even have
on alleged ground of "retrenchment," although the truth is, she merited dismissal from employment had they adhered simply
was forced to be terminated and that there was n o ground at all to jurisprudential rule but took into account instead the spirit of
for the retrenchment;" that the company's "act of transferring is the approaching Christmas season. The Labor Arbiter ruled that
not only without any valid ground but also arbitrary and petitioners were guilty of constructive dismissal as he found the
without any purpose but to harass and force . . . (her) to justification for Recaldes transfer unreasonable.
eventually resign." Petitioners insist that the transfer of Recalde from the
In answer, the defendants alleged that Laplana "was being laboratory to the vegetable processing section was effected i n
transferred to Laoag City because of ncrease in sales due to the the exercise of management prerogative.
additional installations of vodex line and the company "was
exercising management prerogatives in transferring ISSUE: WON Recaldes transfer was unreasonable.
complainant . . . and there is no showing that this exercise was
arbitrarily and whimsically done;" HELD: YES. It is the prerogative of management to transfer an
employee from one office to another within the business
ISSUE: WON Laplana was illegally dismissed. establishment based on its assessment and perception of the
employees qualifications, aptitudes and competence, and in
HELD: NO. In this case, the employee (Laplana) had to all order to ascertain where he can function with maximum benefit
intents and purposes resigned from her position. She had to the company. This is a privilege inherent in the employers
unequivocally asked that she be considered dismissed, herself right to control and manage his enterprise effectively. The
suggesting the reason therefor –– retrenchment. When so freedom of management to conduct its business operations to
dismissed, she accepted separation pay. On the other hand, the achieve its purpose cannot be denied. But, like other rights,
employer has not been shown to be acting otherwise than in there are limits thereto. The managerial prerogative to transfer
good faith, and in the legitimate pursuit of what it considered its personnel must be exercised without grave abuse of discretion,
best interests, in deciding to transfer her to bearing in mind the basic elements of justice and fair play.
another office. There is no showing whatever that the employer Having the right should not be confused with the manner in
was transferring Laplana to another work place, not because which that right is exercised. Thus, it cannot be used as a
she would be more useful there, but merely "as a subterfuge to subterfuge by the employer to rid himself of an undesirable
rid . . . (itself) of an undesirable worker," or "to penalize an worker. In particular, the employer must be able to show that
employee for . . . union activities. . . ." The employer was the transfer is not unreasonable, inconvenient or prejudicial to
moreover not unmindful of Laplana's initial plea for the employee; nor does it involve a demotion in rank or a
reconsideration of the directive for her transfer to Laoag; in diminution of his salaries, privileges and other benefits. Should
fact, in response to that plea not to be moved to the the employer fail to overcome this burden of proof, the
Laoag Office, the employer opted instead to transfer her to employees transfer shall be tantamount to constructive
Manila, the main office, offering at the same time the normal dismissal, which has been defined as a quitting because
benefits attendant upon transfers from an office to another. continued employment is rendered impossible, unreasonable or
The situation here presented is of an employer transferring an unlikely; as an offer involving a demotion in rank and
employee to another office in the diminution in pay. Likewise, constructive dismissal exists when
exercise of what it took to be sound business judgment and in an act of clear discrimination, insensibility or disdain by an
accordance with pre-determined and established office policy employer has become so unbearable to the employee leaving
and practice, and of the latter having what was believed to be him with no option but to forego with his continued
legitimate reasons for declining that transfer, rooted in employment In the present case, petitioners failed to justify
considerations of personal convenience and difficulties for the Recaldes transfer from the position of food technologist in the
family. Under these circumstances, the solution proposed by the laboratory to a worker in the vegetable processing section. In
employee herself, of her voluntary termination of her petitioners view, she was dishonest such that they lost their
employment and the delivery to her of corresponding trust and confidence in her. Yet, it does not appear that Recalde
separation pay, would appear to be the most equitable. was provided an opportunity to refute the reason for the
Certainly, the Court cannot accept the proposition that when an transfer. Nor was Recalde notified in advance of her impending
employee opposes his employer's decision to transfer which was, as we shall elucidate later, a demotion in
transfer him to another work place, there being no bad faith or rank.
Page 20 of 38
32. PHARMACIA and UPJOHN, INC. vs. RICARDO P. Petitioners posture that the transfer of respondent was a
ALBAYDA, JR valid exercise of a legitimate management prerogative to
maximize business opportunities, growth and
FACTS: Ricardo P. Albayda, Jr. was an employee of development of personnel and that the expertise of
Upjohn, Inc. in 1978 and continued working there until respondent was needed to build the companys business
1996 when a merger between Pharmacia and Upjohn in Cagayan de Oro City which dismally performed in
was created. After the merger, Abayda was designated 1999, that the reassignment of respondent was not a
by Pharmacia and Upjohn (Pharmacia) as District Sales demotion as he will also be assigned as a District Sales
Manager assigned to District XI in the Western Visayas Manager in Mindanao or in Metro Manila and that the
area, where respondent settled in Bacolod City. notice of his transfer did
A district meeting was held in Makati City wherein one of not indicate that his emoluments will be reduced.
the topics discussed was the district territorial He was even entitled to Relocation Benefits and
configuration for the new marketing and sales direction. Allowance in accordance with petitioners Benefits
Later, Abayda received a Memorandum announcing the Manual.
sales force structure and that he was reassigned as The allegation of complainant that his income will be
District Sales Manager to District XII in the Northern affected because his wife who is doing business in
Mindanao area. Abayda questioned his transfer from Bacolod City and earns P50,000.00, should not be taken
District XI to District XII, that he has always been in consideration of his transfer.
assigned to the Western Visayas area and that he felt that What is contemplated here is the diminution of the salary
he could not improve the sales of products if he was of the complainant but not his wife.
assigned to an unfamiliar territory. He then concluded Besides, even if complainant may accept his new
that his transfer might be a way for his managers to assignment in Cagayan de Oro or in Metro Manila, his
dismiss him from employment. He added that he could wife may still continue to do her business in Bacolod City.
not possibly accept his new assignment in Cagayan de Anyway, Bacolod City and Manila is just
Oro City because he will be dislocated from his family; his one (1) hour travel by plane.
wife runs an established business in Bacolod City; his Lastly, in respondents contract of employment, he agreed
eleven- year-old daughter is studying in Bacolod City; and to be assigned to any work or workplace as may be
his two-year-old son is under his and his wifes direct determined by the company whenever the
care. Petitioner then deny the request of Abayda to be operations require such assignment.
reassigned to the Western Visayas area. It explained that
the factors used in determining assignments of managers
are to maximize business opportunities and growth and
development of personnel.
Abayda likened his transfer to Mindanao as a form of
punishment. He argued that Chu failed to face and
address the issues he raised regarding the loss of his
family income, the additional cost of housing and other
additional expenses he will incur in Mindanao.
Abayda was then given an option to be assigned in Metro
Manila and is entitled to Relocation Benefits and
Allowance pursuant to the companys Benefits Manual
and was then directed to report for work in Manila .
However, Abayda did not replied to their last
memorandum and was warned that the same would be a
final notice for him to report for work in Manila within 5
working days from receipt of the memo; otherwise, his
services will be terminated on the basi s of being absent
without official leave (AWOL).
A memorandum was then sent notifying Abayda of the
company’s decision to terminate his services after he
repeatedly refused to report for work despite due notice,
Abayda filed a Complaint for constructive di smissal but
was later dismissed.

ISSUE: WON Abayda’s reassignment was a valid exercise

of petitioners management prerogative.

HELD: YES. Jurisprudence recognizes the exercise of

management prerogative to transfer or assign employees
from one office or area of operation to another, provided
there is no demotion in rank or diminution of salary,
benefits, and other privileges, and the action is not
motivated by discrimination, made in bad faith, or
effected as a form of punishment or demotion without
sufficient cause.
To determine the validity of the transfer of employees,
the employer must show that the transfer is not
unreasonable, inconvenient, or prejudicial to the
employee; nor does it involve a demotion in rank or a
diminution of his salaries, privileges and other benefits.
Should the employer fail to overcome this burden of
proof, the employee's transfer shall be tantamount to
constructive dismissal.

Page 21 of 38
FACTS: Zel T. Zafra was hired by PLDT as Operations Analyst II
while Edwin B. Ecarma was hired as Junior Operations Analyst FACTS: The petitioner is a domestic corporation engaged in the
I. Both were regular rank-and-file employees assigned at the business of providing telegraph and communication services
Regional Operations and Maintenance Control Center (ROMCC) thru its branches all over the country. After conducting a series
of PLDTs Cebu Provincial Division. Petitioners were chosen for of studies regarding the profitability of its retail operations, it
the OMC Specialist and System Software Acceptance Training came up with a Relocation and Restructuring Program designed
Program in Germany. They left for Germany and while they to sustain its (PT&Ts) retail operations; decongest surplus
were in Germany, a certain Mr. R. Relucio, SwitchNet Division workforce in some branches, to promote efficiency and
Manager, requested advice, through an inter-office productivity; lower expenses incidental to hiring and training
memorandum, from the Cebu and Davao Provincial Managers if new personnel; and avoid retrenchment of employees
any of the training participants were interested to transfer to occupying redundant positions.
the Sampaloc ROMCC to address the operational requirements Cristina Rodiel, Jesus Paracale, Romeo Tee, Benjamin
therein. Upon petitioners return from Germany, they were Lakandula, Avelino Acha, Ignacio Dela Cerna and Guillermo
informed about the memorandum. They balked at the idea, but Demigillo received separate letters from the petitioner, giving
PLDT, through an inter-office memorandum proceeded to them the option to choose the branch to which they could be
transfer petitioners to the Sampaloc ROMCC. Petitioners left transferred.
Cebu for Manila to air their grievance to PLDT and to seek Thereafter they were directed to relocate to their new PT&T
assistance from their union head office in Mandaluyong. PLDT Branches. They were directed to report to their respective
ordered petitioners to report for work but they asked for a relocation assignments. Meanwhile, the petitioner offered
deferment to February 1, 1996. benefits/allowances to those employees who would agree to be
Petitioners reported for work at the Sampaloc office on January transferred under its new program. Moreover, the employees
29, 1996. Meanwhile PLDT moved the effectivity date of their who would agree to the transfers would be considered
transfer to March 1, 1996. On March 13, 1996, petitioners again promoted. However, private respondents rejected the
appealed to PLDT to no avail. And, because all their appeals fell petitioners offer. Petitioner sent letters to the private
on deaf ears, petitioners, while in Manila, tendered their respondents requiring them to explain in writing why no
resignation letters. Petitioners then filed a com plaint for disciplinary action should be taken against them for their
alleged refusal to be transferred/relocated. Private respondents
constructive dismissal and non-payment of benefits under the explained that: the transfers imposed by the management
Collective Bargaining Agreement PLDT averred that petitioners would cause enormous difficulties on the individual
agreed to accept any assignment within PLDT in their complainants. For one, their new assignment involve distant
application for employment and also in the undertaking they places which would require their separation from their
executed prior to their training in Germany. respective families. Dissatisfied with this explanation, the
petitioner considered the private respondents refusal as
ISSUE: WON Petitioners transfer was a valid exercise of insubordination and wilful disobedience to a lawful order;
management prerogative. hence, the private respondents were dismissed from work.
Respondents then filed their respective complaints against the
HELD: NO. The fact that petitioners, in their application for petitioner declaring that their refusal to transfer could not
employment agreed to be transferred or assigned to any branch possibly give rise to a valid dismissal on the ground of wilful
should not be taken in isolation, but rather in conjunction with disobedience, as their transfer was prejudicial and
the established company practice in PLDT. The standard inconvenient; thus unreasonable.
operating procedure in PLDT is to Petitioner alleged that the transfers were made in the lawful
inform personnel regarding the nature and location of their exercise of its management prerogative and were done in good
future assignments after training abroad. This prevailing faith.
company practice is evidenced by the inter-office The transfers were aimed at decongesting surplus employees
memorandum. Under these circumstances, the need for the and detailing them to a more demanding branch.
dissemination of notice of transfer to employees before sending
them abroad for training should be deemed necessary and later ISSUE: WON private respondents transfers were made in the
to have ripened into a company practice or policy that could no lawful exercise of its management
longer be peremptorily withdrawn, discontinued, or eliminated prerogative. WON it was transfer or promotion.
by the employer. Fairness at the workplace and settled
expectations among employees require that we honor this HELD: NO. The increase in the respondents responsibility can
practice and commend this policy. Needless to say, had they be ascertained from the scalar ascent of their job grades. With
known about their pre-planned reassignments, petitioners or without a corresponding increase in salary, the respective
could have declined the foreign training intended for personnel transfer of the private respondents were in fact promotions,
assigned to the Manila office. following the ruling enunciated in Homeowners Savings and
The lure of a foreign trip is fleeting while a reassignment from Loan Association, Inc. v. NLRC: [P]romotion, as we defined in
Cebu to Manila entails major and permanent readjustments for Millares v, Subido, is the advancement from one position to
petitioners and their families. The transfer of an employee another with an increase in du ties and responsibilities as
ordinarily lies within the ambit of management prerogatives. authorized by law, and usually accompanied by an increase in
However, a transfer amounts to constructive dismissal when salary. Apparently, the indispensable element for there to be a
the transfer is unreasonable, inconvenient, or prejudicial to the promotion is that there must be an advancement from one
employee, and involves a demotion in rank or diminution of position to another or an upward vertical movement of the
salaries, benefits, and other privileges. In the present case, employees rank or position. Any increase in salary should only
petitioners were unceremoniously transferred, necessitating be considered incidental but never determinative of whether or
their families relocation from Cebu to Manila. This act of not a promotion is bestowed upon an employee. This can be
management appears to be arbitrary without the usual notice likened to the upgrading of salaries of government employees
that should have been done even prior to their training abroad. without conferring upon the, the concomitant elevation to the
From the employees viewpoint, such action affecting their higher positions. ] An employee cannot be promoted, even if
families are burdensome, economically and emotionally. It is no merely as a result of a transfer, without his consent. A transfer
exaggeration to say that their forced transfer is not only that results in promotion or demotion, advancement or
unreasonable, inconvenient, and prejudicial, but to our mind, reduction or a transfer that aims to lure the employee away
also in defiance of basic due process and fair play in from his permanent position cannot be done without the
employment relations. employees consent. There is no law that compels an employee
to accept a promotion for the reason that a promotion is in the
nature of a gift or reward, which a person has a right to refuse.
Hence, the exercise by the private respondents of their right
cannot be considered in law as insubordination, or wilful
disobedience of a lawful order of the employer.
As such, there was no valid cause for the private respondents
Page 22 of 38
35. PHILIPPINE INDUSTRIAL SECURITY AGENCY workstation. As regards the Security Bank assignment, he
CORPORATION vs. VIRGILIO DAPITON & NLRC failed to take the neurological test for lack of money to
pay for the examination fee. Petitioner cannot
FACTS: Petitioner hired Dapiton as a security guard. His overinflate the significance of the fact that respondent
initial assignment was at PCIBank in Caloocan City. often absented himself from work without an approved
During his tour of duty at PCIBank, Dapiton had a heated leave. It is a settled rule that mere absence or failure to
argument with his fellow security guard. The incident report for work is not tantamount to abandonment of
almost led to a shootout. Respondent was suspended work. Even the failure to report for work after a notice to
from work for seven (7) days. Petitioner alleged that return to work has been served does not necessarily
respondent did not serve his suspension and instead constitute abandonment nor does it bar reinstatement.
went on a leave of absence. Nonetheless, he was assigned The burden of proving that respondent has abandoned
at the BPI Family Bank in Navotas when he reported back his job rests with petitioner. However, petitioner failed
for duty. Allegedly, respondent refused to accept his miserably to discharge the burden. The records show no
assignment. Respondent was assigned at Sevilla Candle memoranda concerning respondents alleged
Factory in Malabon. Three (3) weeks later, he abandoned unauthorized absences and refusal to work. Even the
his post and went on absence without leave (AWOL). telegram petitioner sent to respondent after he allegedly
Respondent was given another assignment at Security went on AWOL merely required respondent to report to
Bank and Trust Company. He was required to report for its office for a conference but
an interview and to undergo a neurological examination. did not mention anything about his absences. We find it
Respondent refused and allegedly again went on AWOL. incredible that petitioner did not even
Respondent filed the present illegal dismissal case. write respondent on his alleged refusal to accept the
Respondent denied petitioners allegations. He claimed posts assigned to him and the abandonment of his posts
that after he served his suspension, he was assigned at considering that such acts constitute willful disobedience
BPI Family Bank in Navotas. He accepted the new post. and gross neglect of duty which are valid grounds for
However, after a short period, he was relieved and was dismissal.
transferred to the Mercury Drugstore in Grand Central,
Kalookan City. Again, after a brief tour of duty, he was
relieved. He was posted at Sevilla Candle Factory. While
on duty, he witnessed some shabu dealers doing their
illegal trade. Fearful for his life, he left his post and
requested petitioner to transfer him to another post. He
admitted that his assignment at Security Bank did not
materialize for he failed to take the neurological test. He
explained he could not pay the examination fee in the
amount of P250.00. He asked petitioner to pay the said
amount but it refused. Respondent alleged that
thereafter, he was reduced to a mere reliever of absent
security guards and was frequently transferred from one
post to another. His last assignment was at the
Philippine Savings Bank (PSB) in Makati. It lasted for only
one (1) day. Since April 13, 1994, he was not given any
assignment. He reported to petitioners office regularly
for his posting but to no avail.
Consequently, on April 22, 1994, he sued petitioner for
illegal dismissal and asked for separation pay.

ISSUE: WON petitioner was constructively dismissed.

HELD: YES. Constructive dismissal is defined as a

quitting because continued employment is rendered
impossible, unreasonable or unlikely; as an offer
involving a demotion in rank and diminution in pay. On
the other hand, abandonment of work means a clear,
deliberate and unjustified refusal of an employee to
resume his employment and a clear intention to sever the
employer-employee relationship. Abandonment is
incompatible with constructive dismissal. In the case at
bar, we hold that there was no d eliberate intent on the
part of the respondent to abandon his employment with
The clear evidence that respondent did not wish to be
separated from work is that, after his last assignment he
reported to petitioners office regularly for a new posting
but to no avail. He then lost no time in filing the illegal
dismissal case.
An employee who forthwith takes steps to protest his
layoff cannot by any logic be said to have abandoned his
Moreover, respondent's failure to assume his posts in
Sevilla Candle Factory and the Security Bank and Trust
Company is not without reason. He explained that he
requested for a transfer of assignment from Sevilla
Candle Factory because he feared for his life after he
witnessed shabu dealers doing their business in his
Page 23 of 38
36. CONSOLIDATED FOODCORPORATION/PRESIDENT Re-assignments made by management pending
JOHN GOKONGWEI, et .al. vs. NLRC AND WILFREDO M. investigation of irregularities allegedly committed by an
BARON employee fall within the ambit of management
FACTS: Consolidated Food Corporation (CFC) is a The purpose of reassignments is no different from that of
domestic corporation engaged in the sale of food preventive suspension which management could validly
products. Wilfredo M. Baron was a Bonded Merchandiser impose as a disciplinary measure for the protection of the
at CFC, was thereafter assigned as Acting Section company's property pending investigation of any alleged
Manager for Northern Luzon (NL) — 2 Area covering malfeasance or misfeasance committed by the employee.
Baguio City, La Trinidad and Benguet. He was tasked, The audit result also showed that Baron failed to
among others, to deliver for sale CFC Presto Ice Cream account for his expense allowance fund. Although Baron
Products to stores and outlets in Baguio City, make had given his written explanation, petitioners found it
inventories thereof, replace or retrieve bad orders or unsatisfactory and his defense inexcusable.
damaged ice cream stocks, and to handle funds in While there may be no direct evidence to prove that
relation to his functions. A killer earthquake hit Baguio Baron actually and deliberately committed fraud or
City causing severe damage in the area. Power lines were misappropriation of Company funds, there was
cut off and the roads to and from the city became substantial proof of the existence of irregularities
impassable. Hence, the Presto ice cream products in the committed by him in the use of the funds.
possession of customers and sales outlets in Baguio were We have ruled that substantial proof, and not clear and
damaged and became bad orders. Unit Mgr. Abalos issued convincing evidence or proof beyond reasonable doubt, is
an Action Plan which provided among others the cut-off sufficient as basis for the imposition of any
audit of Wilfredo M. Baron to determine accountabilities disciplinary action upon the employee.
that should be liquidated on account of non –sales The standard of substantial evidence is satisfied where
operations. The Field Audit Group of CFC conducted an the employer has reasonable ground to believe that the
audit on the accountabilities of Baron that reflected a employee is responsible for the misconduct and his
shortage of P1,985.12 in the cash purchase fund and participation therein renders him unworthy of the trust
expense allowance fund. Unit Mgr. Abalos requested a and confidence demanded by his position.
field audit of the area to further evaluate private We find that petitioners' acts of conducting audits and
respondent's exposure, particularly on sales account, investigation on the alleged irregularities committed by
freezer and bad orders stocks. private respondent and in reassigning him to another
Baron was then directed to temporarily stop routing in place of work pending the results of the investigation were
his assigned areas until such time that the complete audit based on valid and legitimate grounds.
of the customers' bad orders stocks within the area had As such, these acts of management cannot amount to
been finished and was ordered to turnover constructive dismissal.
his accountabilities Calura, who is to take over the route It is worthy to note that petitioners gave Baron every
operation of Baguio City as Baron’s presence would be opportunity to raise his defense and fully explain the
required in the audit being conducted on bad orders discrepancies in the funds in his possession.
stocks caused by the earthquake. In fact private respondent i nformed petitioners that he
A memorandum was sent to Baron informing him of the would be returning for work on 5 March 1991 after his
discrepancies appearing in the audit of accountabilities sick leave.
and giving him opportunity to explain his side in writing. But instead of doing so, he filed a complaint for
Meanwhile, his normal sales route was temporarily constructive dismissal before the Labor Arbiter.
suspended until further notice but he was
instructed to report daily to the head office in Pasig City.
Baron submitted his answer.
Private respondent was required to submit his written
explanation on the points indicated within a
period of seven (7) days from receipt of the
memorandum and was also requested to explain
why no additional action should be taken against him for
his continued absence.
Petitioners sent notice to private respondent requiring
him to explain within ten (10) days why he should
not be dismissed from the service for having been absent
without leave (AWOL).
Baron sent a letter to petitioners stating that he was
advised by his doctor not to report for work because he
was sick and would have to take his medication. Baron
then filed a complaint with the Labor Arbiter for
constructive dismissal, non-payment of salaries,
commissions, service incentive leave pay and allowances.

HELD: A valid exercise of management prerogative is one

which covers hiring, work assignment, working methods,
time, place and manner of work, tools to be used,
processes to be followed, supervision of workers,
working regulations, transfer of employees, work
supervision, lay-off of workers and the discipline,
dismissal and recall of workers.
Except as provided for or limited by special laws,
employers are free to regulate, according to their own
discretion and judgment, all aspects of employment.

Page 24 of 38
37. JOSEPHINE RUIZ VS WENDEL OSAKA REALTY HELD: In cases involving the illegal termination of
employment, it is fundamental that the employer must
FACTS: Petitioner was hired as secretary to respondent observe the mandate of the Labor Code, i.e., the employer
(Delfin), the president of DMWAI there after appointed as has the burden of proving that the dismissal is for a cause
executive assistant to the president of respondent WORC. provided by the law[ and that it afforded the employee an
Sometime in 2002, the BIR informed Delfin of the tax opportunity to be heard and to defend himself
deficiency allegations against his companies. The employer must comply with the twin requirements
On November 2002, he discovered that “various very of two notices and hearing.
important files”11 of DMWAI were missing. The first notice is that which apprises the employee
He required the employees to answer a questionnaire but of the particular acts or omissions for which his dismissal
the petitioner failed to comply. is sought, and after affording the employee an
Thus Delfin sent a letter17 to petitioner informing her opportunity to be heard, a subsequent notice informing
that she would be placed under a 30-day preventive the latter of the employers decision to dismiss him from
suspension and another 15 days with pay. work.
After 45 day period, she reported back to work and was As regards the first notice, RCPI simply required
transferred to the Cavite city branch. petitioner to "explain in writing why he failed to account"
Thereafter, petitioner amended her Complaint for illegal for the shortage and demanded that he restitute the
suspension to include constructive illegal dismissal. same.
CA ruled, that the transfer of petitioner was justified, On the assumption that the foregoing statement satisfies
considering the gravity of the offense she was being the first notice, the second notice sent by RCPI to
charged with.41 petitioner does not "clearly" cite the reasons for the
dismissal, contrary to the requirements set by the above-
ISSUE: w/n the transfer is valid. quoted Section 6 of Book V, Rule XIV of the
Omnibus Rules.
HELD: Yes. An employer has the inherent right to RCPIs dismissal notice reveals that it merely stated a
transfer or assign an employee in pursuance of its conclusion to the effect that the withholding was
legitimate business interest, subject only to the condition deliberately done to hide alleged malversation or
that the move be not motivated by bad faith. misappropriation without, however, stating the facts and
Having lost his trust and confidence in petitioner, circumstances in support thereof.
respondent Delfin had the right to transfer her to ensure It further mentioned that the position of cashier requires
that she would no longer have access to the companies’ utmost trust and confidence but failed to allege the
confidential files. breach of trust on the part of petitioner and how the
Although it is true that petitioner has yet to be proven alleged breach was committed.
guilty, respondents had the authority to reassign her, On the assumption that there was indeed a breach, there
pending investigation. is no evidence that petitioner was a managerial employee
of respondent RCPI. It should be noted that the term
"trust and confidence" is restricted to managerial
38 WENIFREDO FARROL vs. CA and RCPI employees.
It may not even be presumed that when there is a
FACTS: Wenifredo Farrol was employed as station shortage, there is also a corresponding breach of trust.
cashier at RCPIs Cotabato City station. RCPIs district Cash shortages in a cashiers work may happen, and when
manager in Cotabato City informed their main office that there is no proof that the same was deliberately done for
"Peragram funds"[ from said branch were used for the a fraudulent or wrongful purpose, it cannot constitute
payment of retirement benefits of five employees. Farrol breach of trust so as to render the dismissal from work
verified as correct RCPIs Field Auditors report that there invalid.
was a shortage of P50,985.37 in their branchs Peragram, Assuming further that there was breach of trust and
Petty and General Cash Funds. Consequently, petitioner confidence, it appears that this is the first infraction
was required by the Field Auditor to explain the cash committed by petitioner.
shortage within 24 hours from notice. Although the employer has the prerogative to discipline or
The next day, petitioner paid to RCPI P25,000.00 of the dismiss its employee, such prerogative cannot be exercised
cash shortage. RCPI required petitioner to explain why he wantonly, but must be controlled by substantive due
should not be dismissed from employment. Two days process and tempered by the fundamental policy of
thereafter, petitioner wrote a letter to the Field Auditor protection to labor enshrined in the Constitution.
stating that the missing funds were used for the payment Infractions committed by an employee should merit only
of the retirement benefits earlier referred to by the the corresponding sanction demanded by the
branch manager and that he had already paid P25,000.00 circumstances.
to RCPI. After making two more payments of the cash The penalty must be commensurate with the act, conduct
shortage to RCPI, petitioner was informed by the district or omission imputed to the employee and
manager that he is being placed under preventive imposed in connection with the employers disciplinary
suspension. Thereafter, he again paid two more sums on authority.
different dates to RCPI leaving a balance of P6,995.37 of RCPI alleged that under its rules, petitioners infraction is
the shortage. RCPI claims that it sent a letter to petitioner punishable by dismissal. Petitioner has no previous
informing him of the termination of his services on the record in his twenty-four long years of service - this
ground that the position of Station Cashier is one which would have been his first offense.
requires utmost trust and confidence. Unaware of the The Court thus holds that the dismissal imposed on
termination letter, Farrol requested that he be reinstated petitioner is unduly harsh and grossly disproportionate
considering that the period of his preventive suspension to the infraction which led to the termination of his
had expired. He likewise manifested to RCPI his services. A lighter penalty would have been more just, if
willingness to settle his case provided he is given his not humane. In any case, petitioner paid back the cash
retirement benefits. shortage in his accounts.
However, RCPI informed petitioner that his employment Considering, however, that the latter is about to retire or
had already been terminated earlier may have retired from work, it would no longer be
practical to order his reinstatement.

Page 25 of 38
39. MANILA WATER COMPANY, Petitioner,vs. However, in exceptional cases, separation pay has been
CARLITO DEL ROSARIO, Respondent. granted to a legally dismissed employee as an act of
“social justice” or on “equitable grounds.”
PRINCIPLE: The grant of separation pay to a dismissed In either case, “it is required that the dismissal was not
employee is determined by the cause of the dismissal. for serious misconduct; and did not reflect on the moral
The years of service may determine how much character of the employee.”
separation pay may be awarded. Citing the leading case of PLDT v. NLRC (247 Phil. 641,
It is, however, not the reason why such pay should be 1988), the Supreme Court laid down the rule “that
granted at all. separation pay shall be allowed as a measure of social
justice only in the instances where the employee is
FACTS: Del Rosario was employed as Instrument validly dismissed for causes other than serious
Technician by Metropolitan Waterworks and Sewerage misconduct reflcting his moral character…”
System (MWSS). MWSS was reorganized pursuant to In subsequent cases, the high tribunal “expanded the
Republic Act No. 8041 or the National Water Crisis Act of exclusions and elucidated that separation pay shall be
1995, and its implementing guidelines − Executive Order allowed as a measure of social justice only in instances
No. 286. Because of the reorganization, Manila Water where the employee is validly dismissed for causes other
absorbed some employees of MWSS including Del than serious misconduct, willful disobedience, gross and
Rosario. Manila Water discovered that 24 water meters habituals neglect of duty, fraud or willful breach of trust,
were missing in its stockroom. Upon initial investigation, commission of a crime against the employer or his family,
it appeared that Del Rosario and his co-employee, Danilo or those reflcting on his moral character…”
Manguera, were involved in the pilferage and the sale of Although long years of service might generally be
water meters to the company’s contractor. When Del considered for the award of separation benefis or some
Rosario was directed to explain, he confessed his form of fiancial assistance to mitigate the effcts of
involvement in the act charged and pleaded for termination, this case is not the appropriate instance for
forgiveness, promising not to commit similar acts in the generosity under the Labor Code nor under our prior
future. During the formal investigation Del Rosario was decisions.
found responsible for the loss of the water meters and The fact that private respondent served petitioner for
therefore liable for violating Section 11.1 of the more than twenty years with no negative record prior to
Company’s Code of Conduct. Hence, the dismissal of Del his dismissal, in our view of this case, does not call for
Rosario from employment. such award of benefis, since his violation reflcts a
This prompted Del Rosario to fie an action for illegal regrettable lack of loyalty and worse, betrayal of the
dismissal claiming that his severance from employment company.
is without just cause. Del Rosario averred in his position If an employee's length of service is to be regarded as a
paper that his admission to the misconduct charged was justifiation for moderating the penalty of dismissal, such
not voluntary but was coerced by the company. gesture will actually become a prize for disloyalty,
Such admission therefore, made without the assistance of distorting the meaning of social justice and undermining
a counsel, could not be made basis in terminating his the effrts of labor to cleanse its ranks of undesirables.
employment. The grant of separation pay to a dismissed employee is
Manila Water answered and pointed out that he was determined by the cause of the dismissal.The years of
involved in the taking of the water meters from the service may determine how much separation pay may be
company’s stock room and of selling these to a private awarded. It is, however, not the reason why such pay
contractor for personal gain. should be granted at all.
Invoking Section 11.1 of the Company’s Code of Conduct, In sum, we hold that the award of separation pay or any
Manila Water averred that such act of stealing the other kind of fiancial assistance to Del Rosario, under the
company’s property is punishable by dismissal. nomenclature of compassionate justice, is not warranted
They further averred that Del Rosario himself confessed in the instant case.
his involvement to the loss of the water meters not only A contrary rule would have the effct of rewarding rather
in his letter-explanation, but also during the formal than punishing an erring employee, disturbing the noble
investigation, and in both instances, pleaded for his concept of social justice.
employer’s forgiveness.
Labor Arbiter - dismissing for lack of merit the complaint
fied by Del Rosario who was, however, awarded
separation pay. According to the Labor Arbiter, Del
Rosario’s length of service for 21 years, without previous
derogatory record, warrants the award of separation pay.
Separation pay equivalent to one-half (1/2) month’s
salary for every year of service based on his basic salary
Php 11,244.00 at the time of his dismissal.
This shall be computed from [1 August 1997] up to June
2000, the total amount of which is Php 118,062.00.
Manila Waters fied a MR to NLRC however, it is denied.
CA – affied the granting of Separation Pay by the Labor

ISSUE: WON Respondent Del Rosario is entitled for

Separation Pay

RULING: No. “As a general rule, an employee who has

been dismissed for any of the just causes enumerated
under Article 282 of the Labor Code is not entitled to a
separation pay.”

Page 26 of 38
40. SALVADOR O. MOJAR VS AGRO COMMERCIAL transfer them where their services, as security guards,
SECURITY SERVICE AGENCY will be most beneficial to the client. An employer has the
right to transfer or assign its employees from one office
FACTS: Petitioners were employed as security guards by or area of operation to another in pursuit of its legitimate
respondent and assigned to the various branches of the business interest, provided there is no demotion in rank
Bank of Commerce in Pangasinan, La Union and Ilocos or diminution of salary, benefits, and other privileges;
Sur. Petitioners were relieved from their respective and the transfer is not motivated by discrimination or
posts and directed to report to their new assignments in bad faith, or effected as a form of punishment or
Metro Manila. They, however, failed to report for duty in demotion without sufficient cause. While petitioners
their new assignments. On 15 February 2005, petitioners may claim that their transfer to Manila will cause added
filed a Complaint for illegal dismissal against respondent expenses and inconvenience, the court agree with the CA
and the Bank of Commerce, Dagupan Branch. Petitioners that, absent any showing of bad faith or ill motive on the
claimed, among others, that their reassignment was a part of the employer, the transfer remains valid.
scheme to sever the employer-employee relationship and
was done in retaliation for pressing their claim for salary
differential, which they had earlier filed against 41. PHILBAG INDUSTRIAL MANUFACTURING
respondent and the Bank of Commerce before the NLRC. CORPORATION, Petitioner, v. PHILBAG WORKERS
They also contended that the transfer to Manila was UNION-LAKAS AT GABAY NG MANGGAGAWANG
inconvenient and prejudicial, since they would incur NAGKAKAISA, Respondent.
additional expenses for board and lodging. The Labor
Arbiter rendered a Decision finding that petitioners were FACTS: Edwin Mauricio and Zharralyn Camacho were
illegally dismissed and ordered respondents to reinstate employees of the petitioner, Philbag Industrial
all the complainants to their former assignment in Manufacturing Corporation (company), until their
Pangasinan with full backwages and if reinstatement is dismissal in the second half of 2004. Mauricio and
no longer possible, to pay separation pay of one month Camacho protested their dismissal, prompting the union
for every year of service each of the seven complainant and the company to convene the CBAs grievance
security guards. On appeal, the NLRC affirmed the LA’s machinery in an effort to resolve the matter at plant level.
ruling, with the modification that the Complaint against Unable to reach a settlement, they agreed to have the
the Bank of Commerce was dismissed The CA found the dispute resolved through voluntary arbitration. To avoid
Orders transferring petitioners to Manila to be a valid liability, the company maintained that both Mauricio and
exercise of management prerogative. The CA further Camacho violated company rules on employee discipline,
ruled that the records were bereft of any showing that thereby incurring demerit points that justified their
the subject transfer involved a diminution of rank or separation from the service. It pointed out that Mauricio
salaries. Further, there was no showing of bad faith or ill was observed idling and wasting company time for two
motive on the part of the employer. Thus, petitioners’ hours on May 24, 2004 as reported by Reinoso who
refusal to comply with the transfer orders constituted witnessed the incident. With respect to Camacho, the
willful disobedience of a lawful order of an employer and company stressed that she failed to follow the procedure
abandonment, which were just causes for termination in taking a leave of absence (filing the required form) or
under the Labor Code. However, respondent failed to getting permission from or notifying management that
observe the due process requirements in terminating she could not report for work from March 15 to 21, 2004
them. and to have her medical certificate countersigned by the
company doctor.
ISSUE: Whether or not an employee may be considered VA Ancheta declared Mauricio and Camachos dismissal
to have been constructively dismissed if his floating valid. With the ruling, VA Ancheta upheld the companys
status lasts for more than six months. prerogative to impose disciplinary action on its
employees who violate company rules and regulations.
RULING: The Petition is DENIED and the court The union sought relief from the CA through a petition
AFFIRMED the Court of Appeals decision. Petitioners for review under Rule 43 of the Rules of Court.
argue that they were illegally dismissed, based on the CA granted the petition and reversed VA Anchetas ruling.
1989 case Agro Commercial Security Services Agency, It found "no plausible reason for [the company] to
Inc. v. NLRC., which holds that when the floating status of [impose] demerit points on Mauricio and Camacho as a
employees lasts for more than six (6) months, they may result of the subject incidents.
be considered to have been illegally dismissed from the The CA thus ruled that Mauricio and Camacho were
service. Unfortunately, the above-mentioned case is not illegally dismissed. The company moved for
applicable here. In Agro, the service contracts of the reconsideration, which was denied by the CA.
security agency therein with various corporations and
government agencies – to which the security guards were ISSUE: Whether or not Mauricio and Camacho were
previously assigned – were terminated, generally due to illegally dismissed?
the sequestration of the said offices. Accordingly, many of
the security guards were placed on floating status. HELD: Court of Appeals decision is sustained.
“Floating status” means an indefinite period of time when Under the law, the burden of proving that the
one does not receive any salary or financial benefit termination of employment was for a valid or authorized
provided by law. In this case, petitioners were actually cause rests on the employer. Failure to discharge this
reassigned to new posts, albeit in a different location burden would result in an unjust or illegal dismissal, as
from where they resided. Thus, there can be no floating aptly pointed out by the CA. We find such a failure on the
status or indefinite period to speak of. Instead, part of the employer in this case. It is obvious that the
petitioners were the ones who refused to report for work company overstepped the bounds of its management
in their new assignment. In cases involving security prerogative in the dismissal of Mauricio and Camacho. It
guards, a relief and transfer order in itself does not sever lost sight of the principle that management prerogative
the employment relationship between the security must be exercised in good faith and with due regard to
guards and their agency. Employees have the right to the rights of the workers in the spirit of fairness and with
security of tenure, but this does not give them such a justice in mind. In sum, we find Mauricio and Camachos
vested right to their positions as would deprive the dismissal without a valid cause and, therefore, illegal.
company of its prerogative to change their assignment or
Page 27 of 38
FACTS: Jean Aurelio started as clinical instructor of the MACASPAC, MARY ANN MACASPAC, ROMULO
College of Nursing of Northwestern College (NWC). ALBASIN, MELCHOR CACHUCHA, GILBERT RIVERA
Later, she was appointed as Dean of the College of and FLORA BALBINO, respondents.
Nursing. Again, petitioner was promoted to College
Administrator or Vice-President for Administration, FACTS: The complainants alleged that in the first week of
retaining concurrently her position of Dean of the College May 1992 they organized a labor union. On 22 May 1992
of Nursing, with an increased salary. She was later Cristina Balingit, wife of the union Chairman, was
promoted to Executive Vice-President. This new dismissed from employment as sewer. In the last week of
management unleashed a series of reorganization May union Chairman Deogracias Balingit himself was,
affecting the petitioner. suspended from work as knitting operator. On 1 June
Without prior notice, petitioner's office was stripped of 1992 petitioners shortened the number of working days
its facilities, her salary was reduced from P7,500.00 to of the union officers and members from six (6) to three
P5,000.00 then to P2,500.00 a month, and while (3) days a week. Petitioners contended that they resorted
petitioner was absent because of influenza, respondents to rotation of work, which affected practically all
assigned her office room to the Chairman on employees, because of the low demand for their towels
Management and Planning; the Nursing conference room and shirts. Petitioners also avowed that they validly
was assigned as the lounge room of the members of the dismissed five (5) of the complainants. According to
Board of Directors. Because of the indignities and petitioners, some slashed several bundles of towels on 3
humiliation suffered by the petitioner, she wrote a letter July 1992, while the positions of some became
informing the President of Northwestern College that she redundant. One of them threatened the Personnel
was going on an indefinite leave. Manager and violated company rules by removing her
Petitioner sent a copy of the letter to the Secretary of time card from the rack, while another one was not
DECS for assistance. The matter of petitioner's dismissed but abandoned his employment on 7 July
resumption of her position as Dean of the College of 1992. LABOR ARBITER ruled that they were validly
Nursing was addressed by the DECS to the attention of dismissed, while the reduction of working days and
respondents but it did not answer. They refused to suspension or dismissal of union officers or members
accept petitioner. Hence, petitioner filed her complaint were not shown to have been done in retaliation to the
for illegal dismissal against private respondents. NWC, complainants’ act of organizing a union. NLRC reversed
on its part, was compelled to abolish the administrative the ruling for a number of the complainants, holding that
positions held by petitioner, which she did not contest, they were illegally dismissed.
because they realized after a study of the realignment of
the positions that the functions and duties of ISSUE: WON they were validly dismissed
Administrator/Vice President for Administration were
being performed by the President. Consequently, the HELD: SA MGA NANG SLASH UG TOWEL:
former positions had become redundant. We find that petitioners were unable to substantiate
the charge of serious misconduct against the ones who
ISSUE: WON the Management is at liberty to abolish slashed the towels. They were likewise denied
positions no longer necessary. procedural due process. As correctly observed by
respondent NLRC, petitioners failed to afford Macaspac
HELD: YES. The Board of Directors, composed of the and Albasin the benefit of hearing and investigation
individual private respondents herein, has before termination. It is also our observation that neither
the power granted by the Corporation Code to implement did petitioners comply with the requirement on notices.
a reorganization of respondent college's offices, including An established rule of long standing is that to effect a
the abolition of various positions, since it is implied or completely valid and unassailable dismissal, an employer
incidental to its power to conduct the regular business must show not only sufficient ground therefor but must
affairs of the corporation. The prerogative of also prove that procedural due process has been
management to conduct its own business affairs to observed by giving the employee two (2) notices: one, of
achieve its purposes cannot be denied. the intention to dismiss, indicating therein his acts or
Management is at liberty, absent any malice on its part, to omissions complained against, and two, notice of the
abolish positions which it deems no decision to dismiss. DUN SA NANG THREATEN NG
longer necessary. MANAGER: The utterances by an employee of obscene,
Thus, when petitioner was stripped by the Board of her insulting or offensive words against a superior justify his
positions as Executive Vice President and Vice President dismissal for gross misconduct. The scornful attitude is
for Administration, with a corresponding reduction in also destructive of his co-employees’ morale. However,
salary, the Board did not act in a capricious, whimsical, the dismissal will not be upheld where it appears, as in
and arbitrary manner, thus negating malice and bad faith. this case, that the employee’s act of disrespect was
provoked by the employer. Balbino hurled invectives at
petitioner Bico because she was provoked by the
baseless suspension imposed on her. Under the
circumstances, we believe that dismissal was a harsh
penalty; one (1) week suspension would have sufficed.
DUN SA NAG ABANDON NG WORK It is essential that: the
employee must have failed to report for work or must
have been absent without valid or justifiable reason; and,
there must have been a clear intention to sever the
employer-employee relationship manifested by some
overt acts. The circumstance that Cachucha lost no time
in filing a complaint for illegal dismissal against
petitioners on 16 July 1992 is incompatible with the
charge of abandonment and confirms in fact that he was
refused entry into the company premises on 6 July 1992.
Page 28 of 38
44. PANTRANCO NORTH EXPRESS, INC., VS. NLRC & independence for the retiree who, up till then, had to
URBANO SUÑIGA contend with life's vicissitudes within the parameters of
his fortnightly or weekly wages.
FACTS: Private respondent was hired by petitioner in Thus we are now seeing many CBAs with such early
1964 as a bus conductor. He eventually joined the retirement provisions.
Pantranco Employees Association-PTGWO. He continued And the same cannot be considered a diminution of
in petitioner's employ until August 12, 1989, when he employment benefits.
was retired at the age of fifty-two (52) after having Being a product of negotiation, the CBA between the
rendered twenty five years' service. petitioner and the union intended the provision on
The basis of his retirement was the compulsory compulsory retirement to be beneficial to the employees-
retirement provision of the collective bargaining union members, including herein private respondent.
agreement between the petitioner and the aforenamed When private respondent ratified the CBA with the union,
union. On February 1990, private respondent filed a he not only agreed to the CBA but also agreed to conform
complaint for illegal dismissal against petitioner with to and abide by its provisions.
NLRC. The complaint was consolidated with two other Thus, it cannot be said that he was illegally dismissed
cases of illegal dismissal having similar facts and issues, when the CBA provision on compulsory retirement was
filed by other employees, non -union members. applied to his case.
Labor Arbiter rendered his decision finding that the three Incidentally, we call attention to Republic Act No. 7641,
complainants were illegally and unjustly dismissed and known as "The Retirement Pay Law", which went into
order the respondent to reinstate them to their former or effect on January 7, 1993. Although passed many years
substantially equivalent positions without loss of after the compulsory retirement of herein private
seniority rights with full back wages and other benefits. respondent, nevertheless, the said statute sheds light on
Petitioner appealed to public respondent, which issued the present discussion when it amended
the questioned Resolution affirming the labor arbiter's Art. 287 of the Labor Code, to make it read as follows:
decision in toto. Retirement. — Any employee may be retired upon
reaching the retirement age establish in the collective
ISSUE: Whether or not the CBA stipulation on bargaining agreement or other applicable employment
compulsory retirement after twenty-five years contract.
In the absence of a retirement plan or agreement
RULING: The Court rules that the CBA stipulation is legal providing for retirement benefits of employees in the
and enforceable. The bone of contention in this case is establishment, an employee upon reaching the age of
the provision on compulsory retirement after 25 years of sixty (60) years or more, but not beyond sixty-five (65)
service. Article XI, Section 1 (e) (5) of the May 2, 1989 years which is hereby declared the compulsory
Collective Bargaining Agreement 8 between petitioner retirement age, who has served at least five (5) years in
company and the union states: the said establishment may retire . . ."
Section 1. The COMPANY shall formulate a retirement The aforequoted provision makes clear the intention and
plan with the following main spirit of the law to give employers and employees a free
features: hand to determine and agree upon the terms and
(e) The COMPANY agrees to grant the retirement benefits conditions of retirement.
herein provided to regular employees who may be Providing in a CBA for compulsory retirement of
separated from the COMPANY for any of the following employees after twenty-five (25) years of service is legal
reasons: and enforceable so long as the parties agree to be
(5) Upon reaching the age of sixty (60) years or upon governed by such CBA.
completing twenty-five (25) years of service to the The law presumes that employees know what they want
COMPANY, whichever comes first, and the employee shall and what is good for them absent any showing that fraud
be compulsory retired and paid the retirement benefits or intimidation was employed to secure their consent
herein provided." thereto.
The said Code provides: Art. 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 or
other agreement."
The Court agrees with petitioner and the Solicitor
General. Art. 287 of the Labor Code as worded permits
employers and employees to fix the applicable retirement
age at below 60 years.
Moreover, providing for early retirement does not
constitute diminution of benefits.
In almost all countries today, early retirement, i.e., before
age 60, is considered a reward for services rendered
since it enables an employee to reap the fruits of his labor
— particularly retirement benefits, whether lump-sum or
otherwise — at an earlier age, when said employee, in
presumably better physical and mental condition, can
enjoy them better and longer.
As a matter of fact, one of the advantages of early
retirement is that the corresponding retirement benefits,
usually consisting of a substantial cash windfall, can early
on be put to productive and profitable uses by way of
income-generating investments, thereby affording a
more significant measure of financial security and
Page 29 of 38
45 PANTOJA V. SCA HYGIENE This fact was corroborated by respondents VP-Tissue
Manufacturing Director and was not disputed by
FACTS: Respondent employed petitioner as a utility man petitioner.
on March 15, 1987. Petitioner was eventually assigned at Exercising its management prerogative and sound
respondent's Paper Mill No. 4, the section which business judgment, respondent decided to cut down on
manufactures the company's industrial paper products, operational costs by shutting down one
as a back tender in charge of the proper operation of the of its paper mill.
sections machineries. The determination of the need to phase out a particular
In a Notice of Transfer dated March 27, 1999, respondent department and consequent reduction of personnel and
informed petitioner of its reorganization plan and offered reorganization as a labor and cost saving device is a
him a position at Paper Mill No. 5 under the same terms recognized management prerogative which the courts
and conditions of employment in anticipation of the will not generally interfere with.
eventual closure and permanent shutdown of Paper Mill In this case, the abolishment of Paper Mill No. 4 was
No. 4 effective May 5, 1999. undoubtedly a business judgment arrived at in
The closure and concomitant reorganization is in line the face of the low demand for the production of
with respondents decision to streamline and phase out industrial paper at the time.
the company's industrial paper manufacturing Despite an apparent reason to implement a retrenchment
operations due to financial difficulties brought about by program as a cost-cutting measure, respondent, however,
the low volume of sales and orders for industrial paper did not outrightly dismiss the workers affected by the
products. However, petitioner rejected respondents offer closure of Paper Mill No. 4 but gave them an option to be
for his transfer. transferred to posts of equal rank and pay.
Thus, a notice of termination of employment effective As can be seen, retrenchment was utilized by respondent
May 5, 1999 was sent to petitioner as his position was only as an available option in case the affected employee
declared redundant by the closure of Paper Mill No. 4. would not want to be transferred.
He then received his separation pay and thereafter Respondent did not proceed directly to retrench.
executed a release and quitclaim in favor of respondent. This is an indication of good faith on respondents part as
On April 5, 1999, respondent informed the Dep artment it exhausted other possible measures other than
of Labor and Employment (DOLE) of its reorganization retrenchment.
and partial closure by submitting with the said office an Besides, the employers prerogative to bring down labor
Establishment Termination Report together with the list costs by retrenching must be exercised essentially as a
of 31 terminated employees. measure of last resort, after less drastic means have been
Petitioner filed a complaint for illegal dismissal against tried and found wanting.
respondent assailing his termination as without any valid Giving the workers an option to be transferred
cause. without any diminution in rank and pay specifically belie
He averred that the alleged redundancy never occurred petitioners allegation that the alleged
as there was no permanent shutdown of Paper Mill No. 4 streamlining scheme was implemented as a ploy to ease
due to its continuous operation since his termination. out employees, thus, the absence of bad faith.
A co-employee, Nestor Agtang, confirmed this fact and Apparently, respondent implemented its streamlining or
further attested that several contractual workers were reorganization plan with good faith, not in an arbitrary
employed to operate Paper Mill No. 4. manner and without prejudicing the tenurial rights of its
Petitioner also presented in evidence documents employees.
pertaining to the actual and continuous operation of
Paper Mill No. 4 such as the Paper Mill Personnel
Schedule for July 2-8, 2000 and 23-29, 2000 and
Paper Machine No. 4 Production Report and Operating
Data dated April 28, 2000 and May 18, 2000.
In its defense, respondent refuted petitioners claim of
illegal dismissal.
It argued that petitioner has voluntarily separated
himself from service by opting to avail of the separation
benefits of the company instead of accepting
reassignment/transfer to another position of equal rank
and pay.
According to respondent, petitioners discussion on the
alleged resumption of operation of Paper Mill No. 4 is
rendered moot by the fact of petitioner's voluntary
The Labor Arbiter rendered a Decision dismissing
petitioners complaint for lack of merit.
Upon appeal by petitioner, the NLRC reversed the Labor
Arbiters Decision by finding petitioners separation from
employment illegal.
Aggrieved, respondent filed a petition for certiorari with
the CA. The CA reversed the NLRC's Decision and
reinstated the Labor Arbiters Decision dismissing the

ISSUE: Whether or not respondent is guilty of illegal


HELD: Respondent presented evidence of the low volume

of sales and orders for the production of industrial paper
in 1999 which inevitably resulted to the company's
decision to streamline its operations.
Page 30 of 38
46. JONATHAN V. MORALES, Petitioner, v. HARBOUR Accounting" on 27 March 2003, without any mention of
CENTRE PORT TERMINAL, INC. Respondent. the position to which he was actually being transferred.
That the reassignment was a demotion is, however,
FACTS: Regularized on 17 November 2000, Morales was evident from Morales new duties which, far from being
promoted to Division Manager of the Accounting managerial in nature, were very simply and vaguely
Department, for which he was compensated a monthly described as inclusive of "monitoring and evaluating all
salary of P33,700.00, plus allowances starting 1 July consumables requests, gears and equipments related to
2002. Subsequent to HCPTIs transfer to its new offices at HCPTIs operations" as well as "close interaction with its
Vitas, Tondo, Manila on 2 January 2003, Morales received sub-contractor Bulk Fleet Marine Corporation."
an inter-office memorandum dated 27 March 2003, Admittedly, the right of employees to security of tenure
reassigning him to Operations Cost Accounting, tasked does not give them vested rights to their positions to the
with the duty of "monitoring and evaluating all extent of depriving management of its prerogative to
consumables requests, gears and equipment" related to change their assignments or to transfer them.
the corporations operations and of interacting with its By management prerogative is meant the right of an
sub-contractor, Bulk Fleet Marine Corporation. employer to regulate all aspects of employment, such as
Morales wrote Singson, protesting that his reassignment the freedom to prescribe work assignments, working
was a clear demotion since the position to which he was methods, processes to be followed, regulation regarding
transferred was not even included in HCPTIs plantilla. transfer of employees, supervision of their work, lay-off
Singson, the Administration Manager, answered by and discipline, and dismissal and recall of workers.
stating that the transfer was a management prerogative. Although jurisprudence recognizes said management
For the whole of the ensuing month Morales was absent prerogative, it has been ruled that the exercise thereof,
from work and/or tardy. while ordinarily not interfered with, is not absolute and
Singson issued to Morales a 29 April 2003 inter-office is subject to limitations imposed by law, collective
memorandum denominated as a First Warning. bargaining agreement, and general principles of fair play
In view of the absences Morales continued to incur, and justice.
HCPTI issued a Second Warning. Thus, an employer may transfer or assign employees
In the meantime, Morales filed a complaint dated 25 April from one office or area of operation to another, provided
2003 against HCPTI, Filart and Singson, for constructive there is no demotion in rank or diminution of salary,
dismissal, moral and exemplary damages as well as benefits, and other privileges, and the action is not
attorney’s fees. motivated by discrimination, made in bad faith, or
LA dismissed the complaint for lack of merit. It ruled that effected as a form of punishment or demotion without
Morales reassignment was a valid exercise of HCPTIs sufficient cause.
management prerogative which cannot be construed as Indeed, having the right should not be confused with the
constructive dismissal absent showing that the same was manner in which that right is exercised.
done in bad faith and resulted in the diminution of his GRANTED
salary and benefits.
The NLRC however, reversed the decision.
Its subsequent denial of HCPTIs motion for
reconsideration prompted the latter to file a petition for
certiorari before the CA.
The CA reversed the findings of the NLRC.
Hence, this petition.

ISSUE: Whether or not petitioner was constructively


HELD: Yes. CA Decision reversed and set aside

Constructive dismissal exists where 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.
In cases of a transfer of an employee, the rule is settled
that the employer is charged with the burden of proving
that its conduct and action are for valid and legitimate
grounds such as genuine business necessity and that the
transfer is not unreasonable, inconvenient or prejudicial
to the employee.
If the employer cannot overcome this burden of proof,
the employees transfer shall be tantamount to unlawful
constructive dismissal.
Record shows that HCPTI miserably failed to discharge
the foregoing onus.
While there was a lack of showing that the transfer or
reassignment entailed a diminution of salary and
benefits, one fact that must not be lost sight of was that
Morales was already occupying the position of Division
Manager at HCPTIs Accounting Department as a
consequence of his promotion to said position on 22
October 2002.
Concurrently appointed as member of HCPTIs
Management Committee (MANCOM) on 2 December
2002, Morales was subsequently reassigned by HCPTI
"from managerial accounting to Operations Cost
Page 31 of 38
47. STAR PAPER CORPORATION vs. RONALDO D. work performance. These courts also find the no-spouse
SIMBOL, ET.AL. employment policy invalid for failure of the employer to
present any evidence of business necessity other than the
FACTS: Josephine Ongsitco is the Manager of the general perception that spouses in the same workplace
Personnel and Administration Department while might adversely affect the business. They hold that the
Sebastian Chua is its Managing Director of Star Paper absence of such a bona fide occupational qualification
Corporation. Meanwhile, Ronaldo D. Simbol (Simbol), invalidates a rule denying employment to one spouse due
Wilfreda N. Comia (Comia) and Lorna E. Estrella to the current employment of the other spouse in the
(Estrella) were all regular employees of the company. same office. Thus, they rule that unless the employer can
Simbol was employed by the company where he met prove that the reasonable demands of the business require
Alma Dayrit, also an employee of the company, whom he a distinction based on marital status and there is no better
also married. Prior to the marriage, Ongsitco available or acceptable policy which would better
advised the couple that should they decide to get accomplish the business purpose, an employer may not
married, one of them should resign pursuant discriminate against an employee based on the identity of
to a company policy. Simbol then resigned pursuant to the employees spouse. This is known as the bona fide
the company policy. Comia was hired by the company occupational qualification exception.
where she met Howard Comia, a co-employee, and whom We note that since the finding of a bona fide occupational
she later married. Ongsitco likewise reminded them that qualification justifies an employers no-spouse rule, the
pursuant to company policy, one must resign should they exception is interpreted strictly and narrowly by these
decide to get married. Comia then resigned later on. state courts. There must be a compelling business
Estrella was hired by the company, and there she met necessity for which no alternative exists other than the
Luisito Zuiga (Zuiga), also a co-worker. Petitioners stated discriminatory practice. To justify a bona fide
that Zuiga, a married man, got Estrella pregnant. The occupational qualification, the employer must prove two
company allegedly could have terminated her services factors: that the employment qualification is reasonably
due to immorality but she opted to resign. However, related to the essential operation of the job involved; and,
Simbol and Comia allege that they did not that there is a factual basis for
resign voluntarily; they were compelled to resign in view believing that all or substantially all persons meeting the
of an illegal company policy. As to respondent Estrella, qualification would be unable to properly perform the
she alleges that she had a relationship with co-worker duties of the job. We do not find a reasonable business
Zuiga who misrepresented himself as a married but necessity in the case at bar. Petitioners sole contention
separated man. After he got her pregnant, she discovered that the company did not just want to have two (2) or
that he was not separated. Thus, she severed her more of its employees related between the third degree
relationship with him to avoid dismissal due to the by affinity and/or consanguinity is lame.
company policy. Estrella met an accident and when she That the second paragraph was meant to give teeth to
returned to work she found out that she was being the first paragraph of the questioned rule is evidently not
dismissed for immoral conduct. She refused to sign the the valid reasonable business necessity required by the
memorandum because she was on leave for twenty-one law. It is significant to note that in the case at bar,
(21) days and has not been given a chance to explain. respondents were hired after they were found fit
The management asked her to write an explanation. for the job, but were asked to resign when they married a
But she was nonetheless dismissed by the company. Due co-employee. Petitioners failed to show how the marriage
to her urgent need for money, she later submitted a letter of Simbol, then a Sheeting Machine Operator, to Alma
of resignation in exchange for her thirteenth month pay. Dayrit, then an employee of the Repacking Section, could
be detrimental to its business operations.
ISSUE: WON Respondents company policy is illegal and Neither did petitioners explain how this detriment will
contraven es Article 136 of the Labor Code/ Whether the happen in the case of Wilfreda Comia, then a
policy of the employer banning spouses from working in Production Helper in the Selecting Department, who
the same company violates the rights of the employee married Howard Comia, then a helper in
under the Constitution and the Labor Code or is a valid the cutter-machine. The policy is premised on the mere
exercise of management prerogative. fear that employees married to each other will be less
efficient. If we uphold the questioned rule without valid
HELD: YES. It is true that the policy of petitioners justification, the employer can create policies based on an
prohibiting close relatives from working in the same unproven presumption of a perceived danger at the
company takes the nature of an anti-nepotism expense of an employees right to security of tenure.
employment policy. Companies adopt these policies to Petitioners contend that their policy will
prevent the hiring of unqualified persons based on their apply only when one employee marries a co-employee,
status as a relative, rather than upon their ability. With but they are free to marry persons other than co-
more women entering the workforce, employers are also employees. The questioned policy may not facially
enacting employment policies specifically prohibiting violate Article 136 of the Labor Code but it creates a
spouses from working for the same company. disproportionate effect and under the disparate impact
Two types of employment policies involve spouses: theory, the only way it could pass judicial scrutiny is a
policies banning only spouses from working in the same showing that it is reasonable despite the
company (no-spouse employment policies), and those discriminatory, albeit disproportionate, effect.
banning all immediate family members, including The failure of petitioners to prove a legitimate business
spouses, from working in the same company concern in imposing the questioned policy cannot
(antinepotism employment policies). prejudice the employees right to be free from arbitrary
The courts that have broadly construed the term marital discrimination based upon stereotypes of married
status rule that it encompassed the identity, occupation persons working together in one company.
and employment of one's spouse. They strike down the Thus, for failure of petitioners to present undisputed
no-spouse employment policies based on the broad proof of a reasonable business necessity, we rule that the
legislative intent of the state statute. They reason that questioned policy is an invalid exercise of management
the no-spouse employment policy violate the marital prerogative.
status provision because it arbitrarily discriminates
against all spouses of present employees without regard
to the actual effect on the individual's qualifications or
Page 32 of 38
FACTS: THIS case portrays the peculiar story of an
FACTS: Pedro A. Tecson (Tecson) was hired by international flight steward who was dismissed because of his
respondent Glaxo Wellcome Philippines, Inc. (Glaxo) as failure to adhere to the weight standards of the airline
medical representative. Tecson signed a contract of company. The proper weight for a man of his height and body
structure is from 147 to 166 pounds, the ideal weight being 166
employment which stipulates, among others, that he pounds, as mandated by the Cabin and Crew Administration
agrees to study and abide by existing company rules; to Manual of PAL. In 1984, the weight problem started, which
disclose to management any existing or future prompted PAL to send him to an extended vacation until
relationship by consanguinity or affinity with co- November 1985. He was allowed to return to work once he lost
employees or employees of competing drug companies all the excess weight. But the problem recurred. He again went
and should management find that such relationship on leave without pay from October 17, 1988 to February 1989.
poses a possible conflict of interest, to resign from the Despite the lapse of a ninety-day period given him to reach his
company. Tecson was initially assigned to market Glaxos ideal weight, petitioner remained overweight. On January 3,
products in the Camarines Sur-Camarines Norte sales 1990, he was informed of the PAL decision for him to remain
grounded until such time that he satisfactorily complies with
area. Subsequently, Tecson entered into a romantic the weight standards.
relationship with Bettsy, an employee of Astra Again, he was directed to report every two weeks for weight
Pharmaceuticals (Astra), a competitor of Glaxo. Bettsy checks, which he failed to comply with. On April 17, 1990,
was Astras Bra nch Coordinator in Albay. She supervised petitioner was formally warned that a repeated refusal to
the district managers and medical representatives of her report for weight check would be dealt with accordingly. He
company and prepared marketing strategies for Astra in was given another set of weight check dates, which he did not
that area. Even before they got married, Tecson received report to. On November 13, 1992, PAL finally served petitioner
several reminders from his District Manager regarding a Notice of Administrative Charge for violation of company
the conflict of interest which his relationship with Bettsy standards on weight requirements. Petitioner insists that he is
being discriminated as those similarly situated were not treated
might engender. Still, Tecson married Bettsy. Tecsons the same. On June 15, 1993, petitioner was formally informed
superiors informed him that his marriage to Bettsy gave by PAL that due to his inability to attain his ideal weight, “and
rise to a conflict of interest. Tecson requested for time to considering the utmost leniency” extended to him “which
comply with the company policy against entering into a spanned a period covering a total of almost five (5) years,” his
relationship with an employee of a competitor company. services were considered terminated “effective immediately.”
Later Tecson applied for a transfer in Glaxos milk LABOR ARBITER: held that the weight standards of PAL are
division, thinking that since Astra did not have a milk reasonable in view of the nature of the job of petitioner.
division, the potential conflict of interest would be However, the weight standards need not be complied with
eliminated. However, his application was denied. under pain of dismissal since his weight did not hamper the
performance of his duties.NLRC affirmed. CA: the weight
Thus, Glaxo transferred Tecson to the Butuan standards of PAL are reasonable.
City Surigao City-Agusan del Sur sales area. Tecson asked Thus, petitioner was legally dismissed because he repeatedly
Glaxo to reconsider its decision, but failed to meet the prescribed weight standards. It is obvious
his request was denied. Tecson defied the transfer order that the issue of discrimination was only invoked by petitioner
and continu ed acting as medical representative in the for purposes of escaping the result of his dismissal for being
Camarines Sur-Camarines Norte sales area. overweight.

ISSUE: WON Glaxos policy prohibiting its employees ISSUE: WON he was validly dismissed.
from having personal relationships with
HELD: YES. A reading of the weight standards of PAL would
employees of competitor companies is a valid exercise of lead to no other conclusion than that they constitute a
its management prerogatives. continuing qualification of an employee in order to keep the job.
The dismissal of the employee would thus fall under Article
HELD: YES. Glaxo has a right to guard its trade secrets, 282(e) of the Labor Code.
manufacturing formulas, marketing strategies and other In the case at bar, the evidence on record militates against
confidential programs and information from competitors, petitioner’s claims that obesity is a disease. That he was able to
especially so that it and Astra are rival companies in the reduce his weight from 1984 to 1992 clearly shows that it is
highly competitive pharmaceutical industry. The possible for him to lose weight given the proper attitude,
prohibition against personal or marital relationships determination, and self-discipline. Indeed, during the
clarificatory hearing on December 8, 1992, petitioner himself
with employees of competitor companies upon Glaxos claimed that “*t+he issue is could I bring my weight down to
employees is reasonable under the circumstances ideal weight which is 172, then the answer is yes. I can do it
because relationships of that nature might compromise now.”
the interests of the company. In laying down the assailed Petitioner has only himself to blame. He could ha ve easily
company policy, Glaxo only aims to protect its interests availed the assistance of the company physician, per the advice
against the possibility that a competitor company of PAL. In fine, We hold that the obesity of petitioner, when
will gain access to its secrets and procedures. That Glaxo placed in the context of his work as flight attendant, becomes an
possesses the right to protect its economic interests analogous cause under Article 282(e) of the Labor Code that
justifies his dismissal from the service. His obesity may not be
cannot be denied. No less than the Constitution
unintended, but is nonetheless voluntary. As the CA correctly
recognizes the right of enterprises to adopt and enforce puts it, “*voluntariness basically means that the just cause is
such a policy to protect its right to reasonable returns on solely attributable to the employee without any external force
investments and to expansion and growth. influencing or controlling his actions.
Indeed, while our laws endeavor to give life to the This element runs through all just causes under Article 282,
constitutional policy on social justice and the protection whether they be in the nature of a wrongful action or omission.
of labor, it does not mean that every labor dispute will be Gross and habitual neglect, a recognized just cause, is
decided in favor of the workers. The law also recognizes considered voluntary although it lacks the element of intent
that management has rights which are also entitled to found in Article 282(a), (c), and (d).”
respect and enforcement in the interest of fair play.

Page 33 of 38
FACTS: Leticia Luna worked as a supervisor. MARIBEL S. SANTOS vs. NATIONAL LABOR
Subsequently, when Avon Cosmetics took over the RELATIONS COMMISSION
management and operations of Beautifront, Avon and
Luna entered into an agreement through which she FACTS: Maribel S. Santos was hired as X-Ray Technician in the
became a part of the independent sales force of Avon. The Radiology department of private respondent St. Lukes Medical
pertinent provision is: “That the Supervisor shall sell or Center, Inc. (SLMC). Congress passed and enacted Republic Act
offer to sell, display or promote, only and exclusively the No. 7431 known as the Radiologic Technology Act of 1992.
Said law requires that no person shall practice or offer to
products sold by the company.” practice as a radiology and/or x-ray technologist in the
Luna was invited by a former Avon employee to become Philippines without having obtained the proper certificate of
Group Franchise Director of another company, Sander registration from the Board of Radiologic Technology. SLMC
Philippines, which sells vitamins and other food issued a final notice to all practitioners of Radiologic
supplements. Luna consulted with a law firm to render a Technology to comply with the requirement of Republic Act No.
legal opinion as to the legal consequence of the 7431 otherwise, the unlicensed employee will be transferred to
Supervisor’s Agreement with Avon. In response to that, an area which does not require a license to practice if a slot is
the firm explained the Supervisor’s agreement was available. Later, a notice was issued to Maribel S. Santos
informing the latter that the management of private respondent
contrary to law and public policy. Subsequently, Avon
SLMC has approved her retirement in lieu of separation pay, but
caught wind of Luna’s position as Group Franchise Santos refused to accept SLMCs offer for early retirement.
Director of another company, and ordered for the SLMC again issued a Notice of Separation from the Company to
cancellation of the Supervisor’s Agreement. petitioner Maribel S. Santos after the latter failed to present/
submit her appeal for rechecking to the Professional Regulation
ISSUE: WON the agreement is null and void for being Commission (PRC) of the recent board examination which she
contrary to public policy took and failed.

HELD: No. There is nothing invalid or contrary to public ISSUE: Whether petitioner Santos was illegally dismissed by
policy in the agreement. Such prohibition is neither private respondent SLMC on the basis of her inability to secure
a certificate of registration from the Board of Radiologic
directed to eliminate the competition like Sandre Phils Technology.
nor foreclose new entrants to the market. Sandre Phils, is
still very much free to distribute its products in the HELD: NO. While the right of workers to security of tenure is
market but it must do so at its own expense. The guaranteed by the Constitution, its exercise may be reasonably
exclusivity clause does not in any way limit its selling regulated pursuant to the police power of the State to safeguard
opportunities, just the undue use of the resources of health, morals, peace, education, order, safety, and the general
petitioner Avon. It would be unfai to Avon if the talents welfare of the people. Consequently, persons who desire to
and skills Luna acquired while working under it would be engage in the learned professions requiring scientific or
shared to its competitor Sandre Phils. This would be technical knowledge may be required to take an examination as
a prerequisite to engaging in their chosen careers. The most
tantamount to unjust enrichment. concrete example of this would be in the field of medicine, the
In business parlance, this is commonly termed as the practice of which in all its branches has been closely regulated
“exclusivity clause.” This is defined as agreements which by the State. It has long been recognized that the regulation of
prohibit the obligor from engaging in business in this field is a reasonable method of protecting the health and
competition with the obligee. This exclusivity clause is safety of the public to protect the public from the potentially
more often the subject of critical scrutiny when it is deadly effects of incompetence and ignorance among those who
perceived to collide with the Constitutional proscription would practice medicine. The same rationale applies in the
against ‘reasonable restraint of trade or occupation’ regulation of the practice of radiologic and x-ray technology.
(Article 19). No malice or ill-will can be imputed upon private respondent as
the separation of petitioner Santos was undertaken by it
First off, restraint of trade or occupation embraces acts, conformably to an existing statute. It is undeniable that her
contracts, agreements or combinations which restrict continued employment without the required Board certification
competition or obstruct due course of trade. Whether exposed the hospital to possible sanctions and even to a
under the particular circumstances of the case and the revocation of its license to operate. Certainly, private
nature of the particular contract involved, such contract respondent could not be expected to retain petitioner Santos
is, or is not, against public interest. despite the inimical threat posed by the latter to its business.
Contracts requiring exclusivity are not per se void. Each This notwithstanding, the records bear out the fact that
contract must be viewed vis-à-vis all the circumstances petitioner Santos was given ample opportunity to qualify for
surrounding such agreement in deciding whether a the position and was sufficiently warned that her failure to do
so would result in her separation from work in the event there
restrictive practice should be prohibited as imposing an were no other vacant positions to which she could be
unreasonable restraint or competition. When is a transferred. Despite these warnings, petitioner Santos was still
restraint in trade unreasonable? Authorities are one in unable to comply and pass the required exam. To reiterate, the
declaring that a restraint in trade is unreasonable when it requirement for Board certification was set by statute. Justice,
is contrary to public policy or public welfare. And what is fairness and due process demand that an employer should not
public policy? That principle of the law which holds that be penalized for situations where it had no participation or
no subject or citizen can lawfully do that which has a control. It would be unreasonable to compel private
tendency to be injurious or against the public good. respondent to wait until its license is cancelled and it is
Applied to contracts, in the absence of express legislation materially injured before removing the cause of the impending
evil. Neither can the courts step in to force private respondent
or constitutional prohibition, a court, in order to declare to reassign or transfer petitioner Santos under these
a contract void as against public policy, one must find circumstances. Petitioner Santos is not in the position to
that the contract as to the consideration or thing to be demand that she be given a different work assignment when
done, has a tendency to injure the public, is against the what necessitated her transfer in the first place was her own
public good, or contravenes some established interests of fault or failing. The prerogative to determine the place or
society, or is inconsistent with sound policy and good station where an employee is best qualified to serve the
morals, or tends clearly to undermine the security of interests of the company on the basis of the his or her
individual rights, whether personal liability or of private qualifications, training and performance belongs solely to the
property. employer.[ The Labor Code and its implementing Rules do not
vest in the Labor Arbiters nor in the different Divisions of the
NLRC (nor in the courts) managerial authority.

Page 34 of 38
52. DANILO LEONARDO, petitioner, vs. NATIONAL amount ofP18,000.00 by way of financial assistance.
LABOR RELATIONS COMMISSION, ET.AL. Respondents appealed with the National Labor Relations
Commission (NLRC) which reversed the decision of the
FACTS: AURELIO FUERTE was originally employed by LA, declared respondents guilty of illegal dismissal, and
REYNALDOS MARKETING CORPORATION as a muffler ordered them to pay petitioner one-month salary for
specialist. He alleges that he was instructed to report at every year of service as separation pay. Respondents
private respondents main office where he was informed moved for reconsideration but their motion was denied.
by the companys personnel manager that he would be Respondents elevated their cause to the CA viaa petition
transferred to its Sucat plant due to his failure to meet his for certiorari under Rule 65. The CA granted respondents
sales quota, and for that reason, his supervisors petition for certiorari and deleted the award of financial
allowance would be withdrawn. For a short time, assistance. Further, the CA held that it was grave abuse
FUERTE reported for work at the Sucat plant; however, of discretion for the NLRC to rule on the issue of illegal
he protested his transfer, subsequently filing a complaint dismissal when such issue was not raised on appeal.
for illegal termination. Private respondent contends that
it never terminated petitioners services. In FUERTEs ISSUE:
case, they claimed that the latter was demoted pursuant Whether the CA exercised grave abuse of discretion in
to a company policy intended to foster competition disregarding the findings of fact by the NLRC, the
among its employees. Under this scheme, private principle of social justice, and jurisprudence with respect
respondents employees are required to comply with a to the award of financial assistance, and
monthly sales quota. Should a supervisor such as Whether the CA exhibited bias and partiality when it
FUERTE fail to meet his quota for a certain number of rendered the decision and resolution considering the
consecutive months, he will be demoted, whereupon his hasty and improvident issuance of a writ of preliminary
supervisors allowance will be withdrawn and be given to injunction to frustrate petitioner in implementing the
the individual who takes his place. final and executor judgment of the NLRC favouring
When the employee concerned succeeds in meeting the petitioner.
quota again, he is reappointed supervisor and his
allowance is restored. HELD: The petition is PARTLY GRANTED.The award of
financial assistance is REINSTATED.
ISSUE: WON the right to demote an employee falls within
the category of management prerogatives. As shown by the records, inconsistent with his claim that
he was actually dismissed petitioner applied for and was
HELD: YES. This arrangement appears to us to be an granted a week long leave.
allowable exercise of company rights. An employer is Petitioner did not deny this. He merely claimed that he
entitled to impose productivity standards for its workers, went on leave since he was not given any work
and in fact, non compliance may be visited with a penalty assignment by the Company.
even more severe than demotion. Thus, [t]he practice of However, the leave application form which bore his
a company in laying off workers because they failed to signature clearly stated that his reason for going on leave
make the work quota has been recognized in this was "to settle [his] personal problem." Indeed, the NLRC
jurisdiction. In the case at bar, the petitioners failure to gravely abused its discretion in reversing the Labor
meet the sales quota assigned to each of them constitute Arbiters decision on mere conjectures and insubstantial
a just cause of their dismissal, regardless of the grounds.
permanent or probationary status of their employment.
Failure to observe prescribed standards of work, or to We are not unmindful of the rule that financial assistance
fulfill reasonable work assignments due to inefficiency is allowed only in instances where the employee is
may constitute just cause for dismissal. Such inefficiency validly dismissed for causes other than serious
is understood to mean failure to attain work goals or misconduct or those reflecting on his moral character.
work quotas, either by failing to complete the same But we must stress that this Court did allow the grant of
within the allotted reasonable period, or by producing financial assistance as a measure of social justice and
unsatisfactory results. exceptional circumstances, and as an equitable
This management prerogative of requiring standards concession.
may be availed of so long as they are exercised in good There appears to be no reason why petitioner, who has
faith for the advancemen t of the employers interest. served respondent corporation for more than eight years
without committing any infraction, cannot be extended
53. RODOLFO LUNA, Petitioner, v. ALLADO the reasonable financial assistance of P18,000.00 as
CONSTRUCTION CO., INC., and/or RAMON ALLADO, awarded by the Labor Arbiter on equity considerations.
Granting of a TRO by a justice of the CA even without the
FACTS: Sometime in the afternoon of November 24, concurrence of the other associate justices in the division,
2001, petitioner alleges that he was given a travel order is allowed in cases of extreme urgency.
dated to proceed to respondents main office in Davao Here, the records of this case would attest to the urgency
City for reassignment. Upon arrival at the office, he was of the situation.
asked to sign several sets of "Contract of Project When the TRO was issued, the NLRC Regional Arbitration
Employment". He refused. Thus, he was not given a Branch No. XI was already in the process of enforcing the
reassignment or any other work. These incidents assailed Resolution of the NLRC dated May 9, 2003 as
prompted him to file the complaint. Respondents, on the evidenced by its issuance of a Notice of Hearingfor a pre-
other hand, alleged that petitioner applied for a leave of execution conference which was impelled by a motion
absence which was granted. Upon expiration of his leave, made by petitioner.
he was advised to report to the companys project in The pre-execution conference was conducted as
Sarangani Province. scheduled, thus, respondents filed with the Court of
However, he refused and claimed instead that he had Appeals an Urgent Motion for the Issuance of a
been dismissed illegally. Temporary Restraining Order and/or Writ of Preliminary
Finding that petitioner is deemed resigned, the Labor Injunction.
Arbiter (LA) dismissed petitioners complaint for illegal
dismissal, but ordered respondent to pay the former the
Page 35 of 38
FACTS: On Jan. 1, 1996, ABS-CBN Head Office issued
Policy no. HR-ER-016 requiring that an employee who
intends to run for any public office must file a letter of FACTS: Private respondent argues that the mid-year and
resignation. On March 25, 1998, Dante Luzon who was Christmas bonuses, by reason of their having been given
then the Cebu assistant station manager, issued a for thirteen consecutive years, have ripened into a vested
memorandum informing the petitioner, Ymbong that per right and, as such, can no longer be unilaterally
company policy, any employee/talent who wants to run withdrawn by petitioner without violating Article 100 of
for any position in the then coming election will have to Presidential Decree No. 442 which prohibits the
file a leave of absence. Petitioner Ymbong claims that diminution or elimination of benefits already being
pursuant to the March 25 memorandum, he informed enjoyed by the employees.
Luzon that he would take a leave of absence since he was Although private respondent concedes that the grant of a
running for coucilor of Lapu-Lapu city. When he lost his bonus is discretionary on the part of the employer, it
bid, he tried to come back to ABS-CBN but was turned argues that, by reason of its long and regular concession,
down because of company policy. Thus, he filed a it may become part of the employees regular
complaint for illegal dismissal contending that the compensation. On the other hand, Petitioner asserts that
ground relied upon by respondents is not among the just it cannot be compelled to pay the alleged bonus
and authorized cause provided in the Labor Code. differentials due to its depressed financial condition, as
evidenced by the fact that in 1984 it was placed under
ISSUE: WON the dismissal was valid conservatorship by the Monetary Board. Moreover, the
collective bargaining agreement of the parties does not
HELD: The SC has consistently held that so long as a provide for the payment of any mid -year or Christmas
company’s management prerogatives are exercised in bonus.
good faith for the advancement of the employer’s interest On the contrary, in the CBA it states that any other
and not for the purpose of defeating or circumventing the benefits or privileges which are not expressly provided,
rights of the employees under special laws or under valid even if now accorded or hereafter accorded to the
agreements, the court will uphold them. In the instant employees, shall be deemed purely acts of grace
case, ABSCBN validly justified the implementation of the dependent upon the sole judgment and discretion of the
policy. It is well within its rights to ensure that it BANK to grant, modify or withdraw.
maintains its objectivity and credibility and frees itself
from any appearance of impartiality so that the
confidence of the viewing and listening public in it will HELD: A bonus is an amount granted and paid to an
not be in any way eroded. employee for his industry and loyalty which contributed
Even as the law is solicitious of the welfare of the to the success of the employers business and made
employees, it must also protect the right of an employer possible the realization of profits. It is an act of
to exercise what are clearly management prerogatives. generosity granted by an enlightened employer to spur
The free will of management to conduct its own business the employee to greater efforts for the success of the
affairs to achieve its purpose cannot be denied. business and realization of bigger profits.
It is worth noting that such exercise of management The granting of a bonus is a management prerogative,
prerogative has earned a stamp of approval from no less something given in addition to what is ordinarily
than our Congress itself when on Feb 12 2001, it enacted received by or strictly due the recipient.
RA 9006, otherwise known as the fair elections act. Thus, a bonus is not a demandable and enforceable
obligation, except when it is made part of the wage,
salary or compensation of the employee.
However, an employer cannot be forced to distribute
bonuses which it can no longer afford to pay. To hold
otherwise would be to penalize the employer for his past

Page 36 of 38
FACTS: Lepanto Ceramics Employees Association is a
legitimate labor organization duly registered with the FACTS: Interphil Laboratories Employees Union-FFW is
Department of Labor and Employment. the sole and exclusive bargaining agent of the rank-and-
It is the sole and exclusive bargaining agent of Lepanto file employees of Interphil Laboratories, Inc., a company
Ceramics, Incorporated. In December 1998, Petitioner engaged in the business of manufacturing and packaging
gave a P3,000.00 bonus to its employees. pharmaceutical products.
Subsequently, in September 1999, petitioner and They had a Collective Bargaining Agreement (CBA). On
respondent Association entered into a CBA which 16 April 1993, all the rank-and-file employees of the
provides for, among others, the grant of a Christmas gift company refused to follow their regular two-shift work
package/bonus to the members of the respondent schedule of from 6:00 a.m. to 6:00 p.m., and from 6:00
Association. p.m. to 6:00 a.m. At 2:00 p.m. and 2:00 a.m., respectively,
The Christmas bonus was one of the enumerated existing the employees stopped working and left their workplace
benefit, practice of traditional rights which shall remain without sealing the containers and securing the raw
in full force and effect. In the succeeding years, the bonus materials they were working on.
was not in cash. When Salazar inquired about the reason for their refusal
Instead, petitioner gave each of the members of to follow their normal work schedule, the employees told
respondent Association Tile Redemption Certificates him to "ask the union officers." To minimize the damage
equivalent to P3,000.00. On 2002, Petitioner gave a the overtime boycott was causing the company, Salazar
yearend cash benefit of Six Hundred Pesos (P600.00) and immediately asked for a meeting with the union officers.
offered a cash advance to interested employees In the meeting, Enrico Gonzales, a union director, told
equivalent to one (1) month salary payable in one year. Salazar that the employees would only return to their
The respondent Association objected to the P600.00 cash normal work schedule if the company would agree to
benefit and argued that this was in violation of the CBA it their demands as to the effectivity and duration of the
executed with the petitioner. new CBA. Salazar again told the union officers that the
matter could be better discussed during the formal
renegotiations of the CBA.
HELD: By definition, a bonus is a gratuity or act of
liberality of the giver. It is something given in addition to HELD: It is evident from the foregoing provision that the
what is ordinarily received by or strictly due the working hours may be changed, at the discretion of the
recipient. company, should such change be necessary for its
A bonus is granted and paid to an employee for his operations, and that the employees shall observe such
industry and loyalty which contributed to the success of rules as have been laid down by the company.
the employers business and made possible the In the case before us, Labor Arbiter Caday found that
realization of profits. respondent company had to adopt a continuous 24-hour
A bonus is also granted by an enlightened employer to work daily schedule by reason of the nature of its
spur the employee to greater efforts for the success of the business and the demands of its clients. It was
business and realization of bigger profits. Generally, a established that the employees adhered to the said work
bonus is not a demandable and enforceable obligation. schedule since 1988. The employees are deemed to have
For a bonus to be enforceable, it must have been waived the eight-hour schedule since they followed,
promised by the employer and expressly agreed upon by without any question or complaint, the two shift schedu
the parties. Given that the bonus in this case is integrated le while their CBA was still in force and even prior
in the CBA, the same partakes the nature of a demandable thereto. The two-shift schedule effectively changed the
obligation. working hours stipulated in the CBA. As the employees
Verily, by virtue of its incorporation in the CBA, the assented by practice to this arrangement, they cannot
Christmas bonus due to respondent Association has now be heard to claim that the overtime boycott is
become more than just an act of generosity on the part of justified because they were not obliged to work beyond
the petitioner but a contractual obligation it has eight hours.

Page 37 of 38
INSURANCE COMPANY, INC. FACTS: Respondent Alvin Teng is a professional
basketball player who started his career as such in the
FACTS: The union is the exclusive bargaining agent of the Philippine Basketball Association and then later on
rank-and-file employees of the company. played in the Metropolitan Basketball Association (MBA).
A provision in the unions collective bargaining Some time in one of his games, particularly Game
agreement (CBA) with the company allows union officials Number 4 of the MBA Championship Round for the year
to avail of union leaves with pay for a total of ninety-man 2000 season, Teng had a below-par playing
days per year for the purpose of attending grievance performance.
meetings, Labor-Management Committee meetings, Because of this, the coaching staff decided to pull him out
annual National Labor Management Conferences, labor of the game. Teng then sat on the bench, untied his
education programs and seminars, and other union shoelaces and donned his practice jersey. On the
activities. following game, Game Number 5 of the Championship
The company issued a rule in November 2002 requiring Round, Teng called-in sick and did not play.
not only the prior notice that the CBA expressly requires, On March 16, 2001, because of what happened, the
but prior approval by the department head before the management of Negros Slashers came up with a decision,
union and its members can avail of union leaves. and through its General Manager, petitioner Rodolfo
The rule was placed into effect in November 2002 Alvarez, wrote Teng informing him of his termination
without any objection from the union until a union from the team.
officer, Mangalino, filed union leave applications in
January and February, 2004. ISSUE: Whether or not Teng’s dismissal from the Negros
His department head disapproved the applications Slashers Team was unjustified and too harsh considering
because the department was undermanned at that time. his misconduct.
Despite the disapproval, Mangalino proceeded to take the
union leave. RULING: YES.
He said he believed in good faith that he had complied As ruled in Sagales v. Rustan’s Commercial Corporation,
with the existing company practice and with the while the employer has the inherent right to discipline,
procedure set forth in the CBA. including that of dismissing its employees, this
The company responded by suspending him for one prerogative is subject to the regulation by the State in the
week and, thereafter, for a month, for his second offense exercise of its police power.
in February 2004. In this regard, it is a hornbook doctrine that infractions
committed by an employee should merit only the
ISSUE: WON regulation of the use of union leaves is corresponding penalty demanded by the circumstance.
within the companys management prerogative The penalty must be commensurate with the act, conduct
or omission imputed to the employee and must be
HELD: YES. While it is true that the union and its imposed in connection with the disciplinary authority of
members have been granted union leave privileges under the employer.
the CBA, the grant cannot be considered separately from In the case at bar, the penalty handed out by the
the other provisions of the CBA, particularly the petitioners was the ultimate penalty of dismissal. There
provision on management prerogatives where the CBA was no warning or admonition for respondent’s violation
reserved for the company the full and complete authority of team rules, only outright termination of his services
in managing and running its business. for an act which could have been punished appropriately
We see nothing in the wordings of the union leave with a severe reprimand or suspension.
provision that removes from the company the right to
prescribe reasonable rules and regulations to govern the
manner of availing of union leaves, particularly the
prerogative to require prior approval.
Precisely, prior notice is expressly required under the
CBA so that the company can appropriately respond to
the request for leave. In this sense, the rule requiring
prior approval only made express what is implied in the
terms of the CBA.
The prior approval policy fully supported the validity of
the suspensions the company imposed on Mangalino.
We point out additionally that as an employee, Mangalino
had the clear obligation to comply with the management
disapproval of his requested leave while at the same time
registering his objection to the company regulation and
That he still went on leave, in open disregard of his
superiors orders, rendered Mangalino open to the
charge of insubordination, separately from his absence
without official leave.
This charge, of course, can no longer prosper even if laid
today, given the lapse of time that has since transpired.

Page 38 of 38