MANAGEMENT PREROGATIVES

DISCIPLINE

JULITO SAGALES vs. RUSTAN'S COMMERCIAL CORPORATION

PARTIES AND THEIR Petitioner Julito Sagales was employed by respondent Rustan's Commercial Corporation. He was occupying the position of Chief Cook at the Yum Yum Tree Coffee Shop located at Rustan's
CONTENTION Supermarket in Ayala Avenue, Makati City. Petitioner conveyed to respondent his intention of retiring on October 31, 2001, after reaching thirty-one (31) years in service. Petitioner, however, was not
allowed to retire with his honor intact. On June 18,2001, Security Guard Waldo Magtangob apprehended petitioner in the act of taking out from Rustan's Supermarket a plastic bag. Upon examination, it
was discovered that the plastic bag contained 1.335 kilos of squid heads worth P50.00. Petitioner was not able to show any receipt when confronted. Thus, he was brought to the Security Office of
respondent corporation for proper endorsement to the Makati Headquarters of the Philippine National Police. Subsequently, petitioner was brought to the Makati Police Criminal Investigation Division
where he was detained. Petitioner was later ordered released pending further investigation. Respondent alleged that prior to his detention, petitioner called up Agaton Samson, Rustan's Branch
Manager, and apologized for the incident. Petitioner even begged Samson that he would just pay for the squid heads. Samson replied that it is not within his power to forgive him.

During the inquest proceedings for qualified theft, petitioner admitted that he was in possession of the plastic bag containing the squid heads, he denied stealing them because he actually paid for
them. As proof, petitioner presented a receipt. The only fault he committed was his failure to immediately show the purchase receipt when he was accosted because he misplaced it when he changed his
clothes. He also alleged that the squid heads were already "scraps" as these were not intended for cooking. Neither were the squid heads served to customers. He bought the squid heads so that they
could be eaten instead of being thrown away. If he intended to steal from respondent, he could have stolen other valuable items instead of scrap.

The criminal case filed against petitioner was dismissed for "lack of evidence." Notwithstanding the dismissal of the complaint, respondent, on June 25, 2001, required petitioner to explain in writing
within forty-eight (48) hours why he should not be terminated in view of the June 18, 2001 incident. Respondent also placed petitioner under preventive suspension. On June 29, 2001, petitioner was
informed that a formal investigation would be conducted by the Legal Department on July 6, 2001. Petitioner and his counsel attended the administrative investigation where he reiterated his defense
before the inquest prosecutor. Respondent did not find merit in the explanation of petitioner. Thus, petitioner was dismissed from service on July 26, 2001.12 At that time, petitioner had been under
preventive suspension for one (1) month. Aggrieved, petitioner filed a complaint for illegal dismissal against respondent. He also prayed for unpaid salaries/wages, overtime pay, as well as moral and
exemplary damages, attorney's fees, and service charges
CAUSE OF ACTION ILLEGAL DISMISSAL
ISSUES (1) Is the position of petitioner supervisory in nature which is covered by the trust and confidence rule?
(2) Is the evidence on record sufficient to conclude that petitioner committed the crime charged?
(3) Assuming that the answer is in the affirmative, is the penalty of dismissal proper?
DECISIONS LA: Dismissed the complaint. The nature of the responsibility of petitioner "was not that of an ordinary employee." It then went on to categorize petitioner as a supervisor in "a position of responsibility
where trust and confidence is inherently infused." As such, it behooved him "to be more knowledgeable if not the most knowledgeable in company policies on employee purchases of food scrap items in
the kitchen." Per the evidence presented by respondent, petitioner breached company policy which justified his dismissal.

NLRC: NLRC reversed the Labor Arbiter. The position of complainant is not supervisory covered by the trust and confidence rule. On the contrary, petitioner is a mere rank-and-file employee. The
evidence is also wanting that petitioner committed the crime charged. The NLRC did not believe that petitioner would trade off almost thirty-one (31) years of service for P50.00 worth of squid heads. It
further ruled that petitioner was illegally dismissed as respondent failed to establish a just cause for dismissal. However, the claim for damages was denied for lack of evidence.

CA: Reversed the decision of NLRC and reinstated the decision of the Labor Arbiter. The position of petitioner was supervisory in nature. The CA also held that the evidence presented by respondent
clearly established loss of trust and confidence on petitioner. Lastly, the CA, although taking note of the long years of service of petitioner and his numerous awards, refused to award separation pay in
his favor. According to the CA, "the award of separation pay cannot be sustained under the social justice theory" because the instant case "involves theft of the employer's property."

SC:
1) The position of petitioner is supervisory in nature which is covered by the trust and confidence rule.
The nature of the job of an employee becomes relevant in termination of employment by the employer because the rules on termination of managerial and supervisory employees are different from
those on the rank-and-file. Managerial employees are tasked to perform key and sensitive functions, and thus are bound by more exacting work ethics. As a consequence, managerial employees are
covered by the trust and confidence rule as well as supervisory employees occupying positions of responsibility. There is no doubt that the position of petitioner as chief cook is supervisory in nature. A
chief cook directs and participates in the preparation and serving of meals; determines timing and sequence of operations required to meet serving times; and inspects galley and equipment for
cleanliness and proper storage and preparation of food. Naturally, a chief cook falls under the definition of a supervisor, i.e., one who, in the interest of the employer, effectively recommends managerial
actions which would require the use of independent judgment and is not merely routinary or clerical.
Although petitioner changed his stance as far as his actual position is concerned. In his position paper, he alleged that at the time of his dismissal, he was "Chief Cook." However, in his memorandum, he
now claimed that he was an "Asst. Cook." The ploy is clearly aimed at giving the impression that petitioner is merely a rank-and-file employee. The change in nomenclature does not, however, help
petitioner, as he would still be covered by the trust and confidence rule.
2) The evidence on record is sufficient to conclude that petitioner committed the crime charged.
Security of tenure is a paramount right of every employee that is held sacred by the Constitution. The reason for this is that labor is deemed to be "property" within the meaning of constitutional
guarantees. Indeed, as it is the policy of the State to guarantee the right of every worker to security of tenure as an act of social justice, such right should not be denied on mere speculation of any similar
or unclear nebulous basis. Indeed, the right of every employee to security of tenure is all the more secured by the Labor Code by providing that "the employer shall not terminate the services of an
employee except for a just cause or when authorized" by law. Otherwise, an employee who is illegally dismissed "shall be entitled to reinstatement without loss of seniority rights and other privileges and
to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual
reinstatement."
Respondent has discharged its onus of proving that petitioner committed the crime charged. On this matter, petitioner presents as evidence the verified statement of security guard Aranas. Aranas
positively saw the private in the act of bringing out the purloined squid heads. Similarly, the statement of security guard Magtangob attested to the commission by private respondent of the offense
 charged. Further, the verified statement of Samson, store manager of petitioner corporation who is in charge of all personnel, including employees of the Yum Yum Tree Coffee Shop of which private
respondent was a former assistant cook, attested to the fact of private respondent seeking apology for the commission of the act. Likewise, the statement of Zenaida Castro , cashier of petitioner
corporation's supermarket, Makati Branch, Ayala Center, Makati City, confirmed that indeed the 1.335 kilos of squid heads amounting to fifty pesos (P50.00)per kilo, had not been paid for. The quantum
of proof required for the application of the loss of trust and confidence rule is not proof beyond reasonable doubt. It is sufficient that there must only be some basis for the loss of trust and confidence or
that there is reasonable ground to believe, if not to entertain the moral conviction, that the employee concerned is responsible for the misconduct and that his participation in the misconduct rendered
him absolutely unworthy of trust and confidence.
It is also of no moment that the criminal complaint for qualified theft against petitioner was dismissed. It is well settled that the conviction of an employee in a criminal case is not indispensable to
the exercise of the employer's disciplinary authority.

3) The penalty of dismissal is too harsh under the circumstances.

The free will of management to conduct its own business affairs to achieve its purpose cannot be denied. The only condition is that the exercise of management prerogatives should not be done in bad
faith or with abuse of discretion. Truly, while the employer has the inherent right to discipline, including that of dismissing its employees, this prerogative is subject to the regulation by the State in the
exercise of its police power.
In this regard, it is a hornbook doctrine that infractions committed by an employee should merit only the corresponding penalty demanded by the circumstance. The penalty must be commensurate
with the act, conduct or omission imputed to the employee and must be imposed in connection with the disciplinary authority of the employer.
For example, in Farrol v. Court of Appeals, the employee, who was a district manager of a bank, incurred a shortage of P50,985.37. He was dismissed although the funds were used to pay the retirement
benefits of five employees of the bank. The employee was also able to return the amount, leaving a balance of only P6,995.37 of the shortage. The bank argued that under its rules, the penalty for the
infraction of the employee is dismissal. The Court disagreed and held that the penalty of dismissal is too harsh. The Court took note that it is the first infraction of the employee and that he has rendered
twenty-four (24) long years of service to the bank. In the words of Mme. Justice Consuelo Ynares-Santiago, "the dismissal imposed on petitioner is unduly harsh and grossly disproportionate to the
infraction which led to the termination of his services. A lighter penalty would have been more just, if not humane."
In the case at bar, petitioner deserves compassion more than condemnation. At the end of the day, it is undisputed that: (1) petitioner has worked for respondent for almost thirty-one (31) years; (2)
his tireless and faithful service is attested by the numerous awards78 he has received from respondent; (3) the incident on June 18, 2001 was his first offense in his long years of service; (4) the value of
the squid heads worth P50.00 is negligible; (5) respondent practically did not lose anything as the squid heads were considered scrap goods and usually thrown away in the wastebasket; (6) the ignominy
and shame undergone by petitioner in being imprisoned, however momentary, is punishment in itself; and (7) petitioner was preventively suspended for one month, which is already a commensurate
punishment for the infraction committed. Truly, petitioner has more than paid his due.
In any case, it would be useless to order the reinstatement of petitioner, considering that he would have been retired by now. Thus, in lieu of reinstatement, it is but proper to award petitioner
separation pay computed at one-month salary for every year of service, a fraction of at least six (6) months considered as one whole year. In the computation of separation pay, the period where
backwages are awarded must be included.

MANAGEMENT PREROGATIVES
DISCIPLINE

NEGROS SLASHERS, INC., RODOLFO C. ALVAREZ AND VICENTE TAN vs. ALVIN L. TENG

PARTIES AND THEIR Respondent Alvin Teng is a professional basketball player who started his career as such in the Philippine Basketball Association and then later on played in the Metropolitan Basketball Association
CONTENTION (MBA). Teng signed a 3-year contract6 (which included a side contract and agreement for additional benefits and bonuses) with the Laguna Lakers. Before the expiration of his contract with the Laguna
Lakers on December 31, 2001, the Lakers traded and/or transferred Teng to petitioner Negros Slashers, with the latter assuming the obligations of Laguna Lakers under Teng’s unexpired contract,
including the monthly salary of which remained to be the obligation of the Laguna Lakers. The management of the Laguna Lakers formally informed Teng of his transfer to the Negros Slashers. Teng
executed with the Negros Slashers the Player’s Contract of Employment. On Game Number 4 of the MBA Championship Round for the year 2000 season, Teng had a below-par playing performance.
Because of this, the coaching staff decided to pull him out of the game. Teng then sat on the bench, untied his shoelaces and donned his practice jersey. On the following game, Game Number 5 of the
Championship Round, Teng called-in sick and did not play.

Vicente Tan, Finance Head of Negros Slashers, wrote Teng requiring him to explain in writing why no disciplinary action should be taken against him for his precipitated absence during the crucial
Game 5 of the National Championship Round. He was further informed that a formal investigation would be conducted on November 28, 2000. The hearing, however, did not push through because
Teng was absent on the said scheduled investigation. Hearing was rescheduled. On said date, the investigation proceeded, attended by Teng’s representatives, Atty. Arsenio Yulo and Atty. Jose
Aspiras. A subsequent meeting was also conducted attended by the management, coaching staff and players of the Negros Slashers team, wherein the team members and coaching staff unanimously
expressed their sentiments against Teng and their opposition against the possibility of Teng joining back the team. The management of Negros Slashers came up with a decision, and through its General
Manager, petitioner Rodolfo Alvarez, wrote Teng informing him of his termination from the team. Teng then filed a complaint before the Office of the Commissioner of the MBA pursuant to the
provision of the Uniform Players Contract which the parties had executed. Subsequently, Teng also filed an illegal dismissal case with the Regional Arbitration Branch No. VI of the NLRC.

PETITIONER’S CONTENTION: 1. Respondent Teng and his counsel committed a blatant violation of the rule against forum shopping. Petitioners aver that on July 28, 2001, Teng filed a complaint before
the MBA pursuant to the voluntary arbitration provision of the Uniform Players Contract he executed with Negros Slashers, Inc. During the pendency of said complaint, Teng filed another complaint for
 illegal dismissal with the Labor Arbiter.
2. The CA erred in ruling that Teng’s offenses were just minor lapses and irresponsible action not warranting the harsh penalty of dismissal. Petitioners allege that the CA paid scant attention to two very
important pieces of evidence which would clearly show the gravity and seriousness of the offenses committed by Teng. Petitioners claim that these two documents, i.e., the minutes of the meeting of
players, management, and coordinating staff, and a petition by the players to the management not to allow Teng to come back to the team, would show that Teng should not have been treated as an
ordinary working man who merely absented himself by feigning sickness when called upon to work.
3. Petitioners also argue that respondent’s petition for certiorari with the CA should have been dismissed outright because it was filed beyond the reglementary period.
RESPONDENT’S CONTENTION: 1. There is no violation of the rule against forum shopping. He submits that he indeed filed his complaint before the MBA as early as July 28, 2001. Unfortunately, for
more than three months, the supposed voluntary arbitration failed to yield any result until the MBA itself was dissolved. It was only on November 2001, after exhausting the arbitration process, did he
file his complaint before the Labor Arbiter. In other words, it was only after the MBA failed to come up with a resolution on the matter did he opt to seek legal redress elsewhere.
2. Teng also argues that the CA aptly clarified and explained the legal reason why the petition for certiorari was given due course despite some procedural lapses regarding the motion for
reconsideration with the NLRC. Teng stresses that jurisprudence allows the relaxation of procedural rules even of the most mandatory character in the interest of substantial justice. In this particular
case, justice and equity calls for the relaxation of the reglementary period for filing a motion for reconsideration as well as the rule prohibiting the filing of a petition for certiorari without first filing a
motion for reconsideration.
CAUSE OF ACTION ILLEGAL DISMISSAL
ISSUES 1. whether Teng violated the rule on forum shopping when he filed a complaint for illegal dismissal with the Regional Arbitration Branch of the NLRC while a similar complaint was pending in the Office
of the Commissioner of the MBA.
2. whether the CA erred in ruling that Teng’s dismissal from the Negros Slashers Team was unjustified and too harsh considering his misconduct.
DECISIONS LA: Teng’s dismissal illegal and ordering petitioner Negros Slashers, Inc. to pay Teng ₱2,530,000 representing his unpaid salaries, separation pay and attorney’s fees. The Labor Arbiter ruled that the
penalty of dismissal was not justified since the grounds relied upon by petitioners did not constitute serious misconduct or willful disobedience or insubordination that would call for the extreme
penalty of dismissal from service.

NLRC: Set aside the decision of the Labor Arbiter and entering a new one dismissing the complaint. The complaint was dismissed for being premature since the arbitration proceedings before the
Commissioner of the MBA were still pending when Teng filed his complaint for illegal dismissal.

CA: Assailed the the NLRC Decision, however on September 17, 2008 the CA rendered the assailed Decision setting aside the September 10, 2004 Decision and March 21, 2005 Resolution of the NLRC
and reinstating with modification the Labor Arbiter’s Decision.

Reason: The CA reinstated the findings of the Labor Arbiter that Teng was illegally dismissed because the grounds relied upon by petitioners were not enough to merit the supreme penalty of dismissal.
The CA held that there was no serious misconduct or willful disobedience or insubordination on Teng’s part. On the issue of jurisdiction, the CA ruled that the Labor Arbiter had jurisdiction over the case
notwithstanding the pendency of arbitration proceedings in the Office of the Commissioner of the MBA.

SC:
1) The Court find no merit in petitioners’ claim that respondent’s act of filing a complaint with the Labor Arbiter while the same case was pending with the Office of the Commissioner of the MBA
constituted forum shopping. For forum shopping to exist, it is necessary that (a) there be identity of parties or at least such parties that represent the same interests in both actions; (b) there be
identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two preceding particulars is such that any judgment rendered in one action will,
regardless of which party is successful, amount to res judicata in the other action.
Petitioners are correct as to the first two requisites of forum shopping. First, there is identity of parties involved: Negros Slashers Inc. and respondent Teng. Second, there is identity of rights asserted
i.e., the right of management to terminate employment and the right of an employee against illegal termination. However, the third requisite of forum shopping is missing in this case. Any judgment or
ruling of the Office of the Commissioner of the MBA will not amount to res judicata.
2) The penalty of dismissal handed out against Teng was indeed too harsh.
Petitioners rely heavily on the alleged effects of Teng’s actions on the rest of the team. However, such reaction from team members is expected after losing a game, especially a championship game. It
is also not unlikely that the team members looked for someone to blame after they lost the championship games and that Teng happened to be the closest target of the team’s frustration and
disappointment. But all these sentiments and emotions from Negros Slashers players and staff must not blur the eyes of the Court from objectively assessing Teng’s infraction in order to determine
whether the same constitutes just ground for dismissal. The incident in question should be clear: Teng had a below-par performance during Game Number 4 for which he was pulled out from the
game, and then he untied his shoelaces and donned his practice jersey. In Game Number 5, he did not play.
As an employee of the Negros Slashers, Teng was expected to report for work regularly. Missing a team game is indeed a punishable offense. Untying of shoelaces when the game is not yet
finished is also irresponsible and unprofessional. However, we agree with the Labor Arbiter that such isolated foolishness of an employee does not justify the extreme penalty of dismissal from service.
Petitioners could have opted to impose a fine or suspension on Teng for his unacceptable conduct. Other forms of disciplinary action could also have been taken after the incident to impart on the
team that such misconduct will not be tolerated.
In Sagales v. Rustan’s Commercial Corporation, this Court ruled:
Truly, while the employer has the inherent right to discipline, including that of dismissing its employees, this prerogative is subject to the regulation by the State in the exercise of its police power.
In this regard, it is a hornbook doctrine that infractions committed by an employee should merit only the corresponding penalty demanded by the circumstance. The penalty must be
commensurate with the act, conduct or omission imputed to the employee and must be imposed in connection with the disciplinary authority of the employer.
In the case at bar, the penalty handed out by the petitioners was the ultimate penalty of dismissal. There was no warning or admonition for respondent’s violation of team rules, only outright
termination of his services for an act which could have been punished appropriately with a severe reprimand or suspension.
 MANAGEMENT PREROGATIVES
DISCIPLINE

TABUK MULTI-PURPOSE COOPERATIVE, INC. (TAMPCO), JOSEPHINE DOCTOR, AND WILLIAM BAO-ANGAN, v. MAGDALENA DUCLAN
PARTIES AND THEIR CONTENTION Petitioner Tabuk Multi-Purpose Cooperative, Inc. (TAMPCO) is a duly registered cooperative based in Tabuk City, Kalinga. It is engaged in the business of obtaining investments from its members which
are lent out to qualified member-borrowers. The two other petitioners are both officers of TAMPCO. On the other hand, respondent Duclan, was employed as TAMPCO cashier. One of her duties as
Cashier was to sign checks for release.

In 2002, TAMPCO introduced Special Investment Loans (SILs) to its members and prospective borrowers. A year after introducing the SIL program, TAMPCO realized that a considerable amount of the
cooperative's loanable funds was being allocated to SILs, which thus adversely affected its ability to lend under the regular loan program. It further discovered that single individual borrowings under the
SIL program reached precarious levels, thus placing the resources of the cooperative at risk. Thus, in June 2003, the TAMPCO BOD issued BA No. 28, putting a cap on SIL borrowings at P5 million. In
October of the same year, BA No. 55 was issued, completely prohibiting the grant of SILs. Despite issuance of BA Nos. 28 and 55, respondent and the other officers of the cooperative including its former
General Manager, continued to approve and release SILs to borrowers, among them Falgui and Kotoken, who received millions of pesos in loans in January and December of 2004, and in January 2005.
Eventually, Falgui claimed insolvency, and Kotoken failed to pay back her loans.

Upon discovery of the said irregularity, TAMPCO BOD initiated an investigation. Respondent and the other officers who appeared to be responsible were made to explain. Respondent admitted to her
failure to obey BA Nos. 28 & 55 despite knowledge of the directives. Thus, TAMPCO BOD suspended them from work and were ordered to collect the amount lost by the cooperative with a threat that
should they fail to collect, they would be dismissed. Respondent failed to collect the amount she was told to collect and thereafter, after notice, the cooperative dismissed her service. Thus, respondent
filed a complaint for illegal dismissal.
CAUSE OF ACTION ILLEGAL DISMISSAL
ISSUES Whether or not the respondent was dismissed for a just cause.
DECISIONS LA: Respondent is illegally dismissed. The Labor Arbiter made the following findings: a) respondent's first suspension was for an indefinite period, hence illegal; b) respondent was not accorded the
opportunity to explain her side before she was meted the penalty of suspension; c) placing respondent on suspension and requiring her to personally pay the loan is not the proper way to collect
irregularly released loans; d) although respondent's indefinite suspension was eventually reduced to 15 days, by that time respondent was suspended for 20 days already; e) respondent was deprived of
the opportunity to explain her side when she was suspended the second time on November 8, 2004 to December 31, 2004; f) the second suspension was illegal because it was beyond 30 days; g)
respondent was suspended twice for the same infraction; h) the February 1, 2005 letter informing respondent of her termination is redundant since respondent has been deemed constructively
dismissed as early as February 23, 2004 when she was indefinitely suspended; i) as cashier, respondent's signing of the check before its release is merely ministerial; she has no hand in the processing or
approval of the loans; j) TAMPCO had previously tolerated the practice of releasing loans ahead of the processing of vouchers and board approval and during the prohibited period; and k) petitioners did
not terminate respondent's co-workers who were charged with committing the same infraction.

NLRC: REVERSED AND SET ASIDE the decision of the Labor Arbiter and DISMISSED the complaint for lack of merit. The NLRC did not give credence to respondent's assertion that as a mere cashier, she has
no discretion at all on the approval of the loans. The NLRC opined that respondent was the custodian of the entire funds of TAMPCO and also an honorary member of the BOD, advising the latter on
financial matters. The NLRC also held that the release of funds is not purely ministerial as respondent was expected to check all the supporting documents and whether pertinent policies regarding the
loan had been met by the applicant. For the NLRC, respondent's transgressions were deliberate infractions of clear and mandatory policies of TAMPCO amounting to gross misconduct.

CA: Reinstated the decision of the Labor Arbiter. The CA held that respondent's dismissal was illegal; that she was not guilty of violating her duties and responsibilities as Cashier; that she was under the
supervision of the cooperative's Finance and Credit Managers, who are primarily responsible for the approval of loan applications; that as Cashier, she was a mere co-signatory of check releases and
simply acts as a "check and balance on the power and authority of the General Manager;" that she does not exercise discretion on the matter of SILs - specifically the assessment, recommendation,
approval and granting thereof; that only the Loan Officers, as well as the Credit, Finance, and General Managers, have a direct hand in the evaluation, assessment and approval of SEL applications,
including their required attachments/documents; that while the questioned SILs were released without the approval of the BOD, such practice was sanctioned and had been adopted and tolerated within
TAMPCO ever since; that it is unjust to require respondent to pay the amounts released to SEL borrowers but which could no longer be collected; that it was unfair to condemn and punish respondent for
the anomalies, while her corespondents, particularly the former General Manager, was given a graceful exit, honorably discharged, and was even allowed to collect his retirement benefits in full; that
respondent's suspension from November 8 to December 31, 2004 was illegal; and that petitioners failed to comply with the twin-notice rule prior to her dismissal.

SC: The dismissal is proper. Under Article 282 of the Labor Code, the employer may terminate the services of its employee for the latter's serious misconduct or willful disobedience of its or its
representative's lawful orders. And for willful disobedience to constitute a ground, it is required that: "(a) the conduct of the employee must be willful or intentional; and (b) the order the employee
violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties that he had been engaged to discharge.
In releasing loan proceeds to SIL borrowers like Falgui and Kotoken even after the BOD issued BA Nos. 28 and 55, respondent, and the other cooperative officers, willfully and repeatedly defied a
necessary, reasonable and lawful directive of the cooperative's BOD, which directive was made known to them and which they were expected to know and follow as a necessary consequence of their
respective positions in the cooperative. They placed the resources of the cooperative - the hard-earned savings of its members - in a precarious state as a result of the inability to collect the loans owing
to the borrowers' insolvency or refusal to honor their obligations, Respondent committed gross insubordination which resulted in massive financial losses to the cooperative. Applying Article 282, her
dismissal is only proper.
In termination proceedings of employees, procedural due process consists of the twin requirements of notice and hearing. In this case, due process was properly observed since respondent was given
a chance to explain and was informed of the decision after a thorough investigation. Respondent cannot question the TAMPCO BOD’s decision as regards the General Manager, whom the BOD permitted
to retire and collect his benefits in full, for such decision is management’s prerogative on which the courts cannot interfere unless they violate labor laws, CBA and general principles of fairness & justice.
Finally, while the CA finds that it is unfair for TAMPCO to treat respondent differently from the former General Manager, who was permitted to retire and collect his benefits in full, the appellate
court must nonetheless be reminded that "[t]he law protects both the welfare of employees and the prerogatives of management. Courts will not interfere with prerogatives of management on the
discipline of employees, as long as they do not violate labor laws, collective bargaining agreements if any, and general principles of fairness and justice." Moreover, management is not precluded
from condoning the infractions of its employees; as with any other legal right, the management prerogative to discipline employees and impose punishment may be waived. As far as respondent is
concerned, the cooperative chose not to waive its right to discipline and punish her; this is its privilege as the holder of such right. Finally, it cannot be said that respondent was discriminated against
 or singled out, for among all those indicted, only the former General Manager was accorded leniency; the rest, including respondent, were treated on equal footing. As to why the former General
Manager was allowed to retire, this precisely falls within the realm of management prerogative; what matters, as far as the Court is concerned, is that respondent was not singled out and treated
unfairly.

MANAGEMENT PREROGATIVES
TRANSFER OF EMPLOYEES

SUMIFRU (PHILIPPINES) CORPORATION (surviving entity in a merger with Davao Fruits Corporation and other Companies) vs. BERNABE BAYA
PARTIES AND THEIR CONTENTION Baya had been employed by AMSFC and worked his way to a supervisory rank. As a supervisor, Baya joined the union of supervisors, and eventually, formed AMS Kapalong Agrarian Reform Beneficiaries
Multipurpose Cooperative (AMSKARBEMCO), the basic agrarian reform organization of the regular employees of AMSFC. In June 1999, Baya was reassigned to a series of supervisory positions in AMSFC' s
sister company, DFC, where he also became a member of the latter's supervisory union while at the same time, remaining active at AMSKARBEMCO. Later on and upon AMSKARBEMCO's petition before
the Department of Agrarian Reform (DAR), some 220 hectares of AMSFC's 513-hectare banana plantation were covered by the Comprehensive Agrarian Reform Law. Eventually, said portion was
transferred to AMSFC's regular employees as Agrarian Reform Beneficiaries (ARBs), including Baya.
Thereafter, the ARBs explored a possible agribusiness venture agreement with AMSFC, but the talks broke down, prompting the Provincial Agrarian Reform Officer to terminate negotiations and,
consequently, give AMSKARBEMCO freedom to enter into similar agreement with other parties. The ARBs held a referendum in order to choose as to which group between AMSKARBEMCO or SAFFP AI,
an association of pro-company beneficiaries, they wanted to belong wherein 280 went to AMSKARBEMCO while 85 joined SAFFPAI.
When AMSFC learned that AMSKARBEMCO entered into an export agreement with another company, it summoned AMSKARBEMCO officers, including Baya, to lash out at them and even threatened
them that the ARBs' takeover of the lands would not push through. Thereafter, Baya was again summoned, this time by a DFC manager, who told the former that he would be putting himself in a
"difficult situation" if he will not shift his loyalty to SAFFP AI; this notwithstanding, Baya politely refused to betray his cooperative. A few days later, Baya received a letter stating that his secondment with
DFC has ended, thus, ordering his return to AMSFC. However, upon Baya's return to AMSFC he was informed that there were no supervisory positions available; thus, he was assigned to different rank-
and-file positions instead. Baya' s written request to be restored to a supervisory position was denied, prompting him to file the instant complaint. On even date, the DAR went to the farms of AMSFC to
effect the ARBs' takeover of their awarded lands. The following day, all the members of AMSKARBEMCO were no longer allowed to work for AMSFC "as they have been replaced by newly hired contract
workers"; on the other hand, the SAFFP AI members were still allowed to do so.
In their defense, AMSFC and DFC maintained that they did not illegally/constructively dismiss Baya, considering that his termination from employment was the direct result of the ARBs' takeover of
AMSFC's banana plantation through the government's agrarian reform program. They even shifted the blame to Baya himself, arguing that he was the one who formed AMSKARBEMCO and, eventually,
caused the ARBs' aforesaid takeover.
CAUSE OF ACTION CONSTRUCTIVE DISMISSAL
ISSUE Whether or not the CA correctly ruled that the NLRC gravely abused its discretion, and consequently, held that AMSFC and DFC constructively dismissed Baya.
DECISIONS LA: LA ruled in Baya's favor. The LA found that since it was undisputed that Baya held supervisory positions in AMSFC and DFC, his demotion to various rank-and-file positions without any justifiable
reason upon his return to AMSFC constituted constructive dismissal. In this regard, the LA opined that the alleged lack of supervisory positions in AMSFC was not a valid justification for Baya's demotion
to rank-and-file, as AMSFC and DFC should not have caused Baya's return to AMSFC if there was indeed no available supervisory position. Further, the LA did not lend credence to AMSFC and DFC's
contention that Baya's termination was on account of the ARBs' takeover of the banana plantations, considering that: (a) the acts constituting constructive dismissal occurred when Baya returned to
AMSFC on August 30, 2002, while the takeover was done only on September 20, 2002; and (b) only members of AMSKARBEMCO were no longer allowed to work after the takeover, while members of
SAFFP AI, the pro-company cooperative, were retained.

NLRC: REVERSED AND SET ASIDE the decision of the Labor Arbiter except for the payment of 13th month pay which was affirmed with modification and DISMISSED the complaint for lack of merit. the
NLRC found that the termination of Baya's employment was not caused by illegal/constructive dismissal, but by the cessation of AMSFC's business operation or undertaking in large portions of its banana
plantation due to the implementation of the agrarian reform program. Thus, the NLRC opined that Baya is not entitled to separation pay as such cessation was not voluntary, but rather involuntary, on
the part of AMSFC as it was an act of the State, i.e., the agrarian reform program, that caused the same.

CA: Set aside the NLRC ruling and reinstated that of the LA with modification deleting the award of backwages, annual vacation leave pay, sick leave pay, monthly housing subsidy, electric light subsidy,
and exemplary damages. It also ordered AMSFC and DFC to solidarily pay Baya.
SC: 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. Aptly called a dismissal in disguise or an act amounting to dismissal but made to appear as if it were not, constructive dismissal may, likewise, exist if an act of clear
discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment." In case
of a constructive dismissal, the employer has the burden of proving that the transfer and demotion of an employee are for valid and legitimate grounds such as genuine business necessity. Particularly,
for a transfer not to be considered a constructive dismissal, the employer must be able to show that such 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. Failure of the employer to overcome this burden of proof, the employee's demotion shall no doubt be tantamount to
unlawful constructive dismissal.
In this case, a judicious review of the records reveals that the top management of both AMSFC and DFC, which were sister companies at the time, were well-aware of the lack of supervisory positions
in AMSFC. This notwithstanding, they still proceeded to order Baya's return therein, thus, forcing him to accept rank-and-file positions. Notably, AMSFC and DFC failed to refute the allegation that Baya's
"end of secondment with DFC" only occurred after: (a) he and the rest of AMSKARBEMCO officials and members were subjected to harassment and cooperative busting tactics employed by AMSFC and
DFC; and (b) he refused to switch loyalties from AMSKARBEMCO to SAFFP AI, the pro-company cooperative. In this relation, the Court cannot lend credence to the contention that Baya's termination was
due to the ARBs' takeover of the banana plantation, because the said takeover only occurred on September 20, 2002, while the acts constitutive of constructive dismissal were performed as early
as August 30, 2002, when Baya returned to AMSFC. Thus, AMSFC and DFC are guilty of constructively dismissing Baya.
However, in light of the underlying circumstances which led to Baya's constructive dismissal, it is clear that an atmosphere of animosity and antagonism now exists between Baya on the one hand,
and AMSFC and DFC on the other, which therefore calls for the application of the doctrine of strained relations. "Under the doctrine of strained relations, the payment of separation pay is considered an
 acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work
environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust."36 Thus, it is more prudent that Baya be
awarded separation pay, instead of being reinstated, as computed by the CA. Further, and as aptly pointed out by both the LA and the CA, the acts constitutive of Baya's constructive dismissal are clearly
tainted with bad faith as they were done to punish him for the actions of his cooperative, AMSKARBEMCO, and for not switching his loyalty to the pro-company cooperative, SAFFP AI. This prompted
Baya to litigate in order to protect his interest and to recover what is properly due him. Hence, the award of moral damages and attorney's fees are warranted.

MANAGEMENT PREROGATIVES
TRANSFER OF EMPLOYEES

CHATEAU ROYALE SPORTS and COUNTRY CLUB, INC., vs. RACHELLE G. BALBA and MARINEL N. CONSTANTE
PARTIES AND THEIR CONTENTION Petitioner, a domestic corporation operating a resort complex in Batangas, hired the respondents as Account Executives on probationary status. The respondents were promoted to Account Managers.
As part of their duties as Account Managers, they were instructed by the Director of Sales and Marketing to forward all proposals, event orders and contracts for an orderly and systematic bookings in the
operation of the petitioner' s business. However, they failed to comply with the directive. Accordingly, a notice to explain was served on them, to which they promptly responded. On October 4, 2005,
the management served notices of administrative hearing on the respondents. Thereupon, they sent a letter of said date asking for a postponement of the hearing. Their request was, however and at the
same time informed them that the petitioner's Corporate Infractions Committee had found them to have committed acts of insubordination, and that they were being suspended for seven days. The
suspension order was lifted even before its implementation on October 10, 2005.
On October 10, 2005, the respondents filed a complaint for illegal suspension and non-payment of allowances and commissions. The respondents amended their complaint to include constructive
dismissal as one of their causes of action based on their information from the Chief Financial Officer of the petitioner on the latter's plan to transfer them to the Manila Office. The proposed transfer was
prompted by the shortage of personnel at the Manila Office as a result of the resignation of three account managers and the director of sales and marketing. Despite attempts to convince them to accept
the transfer to Manila, they declined because their families were living in Nasugbu, Batangas.
The respondents received the notice of transfer directing them to report to work at the Manila Office effective January 9, 2006. They responded by letter addressed to Mr. Rowell David, the Human
Resource Consultant of the petitioner, explaining their reasons for declining the order of transfer. Consequently, another request for incident report was served on them regarding their failure to comply
with the directive to report at the Manila office. Following respondents' respective responses, the petitioner sent a notice imposing on them the sanction of written reprimand for their failure to abide by
the order of transfer.
PETITIONER’S CONTENTION: The resignations of the Account Managers and the Director of Sales and Marketing caused serious disruptions in the operations of the Manila office, thereby making the
immediate transfer of the respondents crucial and indispensable; that through their respective letters of appointment, the possibility of their transfer to the Manila office had been made known to them
even prior to their regularization; that if its intention had been to expel them from the company, it would not have rehired them as regular employees after the expiration of their probationary contract
and even promoted them as Account Managers; that there was no diminution of income and benefits as a result of the transfer; and that their immediate rejection of the transfer directive prevented the
parties from negotiating for additional allowances beyond their regular salaries.
RESPONDENT’S CONTENTION: There was no valid cause for their transfer; that they were forced to transfer to the Manila office without consideration of the proximity of the place and without
improvements in the employment package; that the alleged shortage of personnel in the Manila office due to the resignation of the account managers was merely used to conceal the petitioner's illegal
acts; and that notwithstanding their negative response upon being informed of their impending transfer to Manila by Chief Finance Officer Marquez, the petitioner still issued the transfer order directing
them to report to the Manila office effective January 9, 2006.
CAUSE OF ACTION CONSTRUCTIVE DISMISSAL
ISSUES Whether or not the respondents were constructively dismissed.
DECISIONS LA: The respondents had been constructively dismissed. The respondents' transfer to Manila would not only be physically and financially inconvenient, but would also deprive them of the psychological
comfort that their families provided; that being the top sales performers in Nasugbu, they should not be punished with the transfer; and that their earnings would considerably diminish inasmuch as sales
in Manila were not as lively as those in Nasugbu.

NLRC: Reversed the ruling of the Labor Arbiter, and dismissed the complaint for lack of merit. The NLRC found that the respondents had been informed through their respective letters of appointment of
the possibility of transfer in the exigency of the service; that the transfer was justified due to the shortage of personnel at the Manila office; that the transfer of the respondents, being bereft of improper
motive, was a valid exercise of management prerogative; and that they could not as employees validly decline a lawful transfer order on the ground of parental obligations, additional expenses, and the
anxiety of being away from his family.

CA: REVERSED and SET ASID the decision of the NLRC. Private respondent Chateau Royale is hereby ordered to REINSTATE petitioners Balba and Constante to their former positions without loss of
seniority rights and other privileges. The CA ruled that the transfer of the respondents from the office in Nasugbu, Batangas to the Manila office was not a legitimate exercise of management prerogative
and constituted constructive dismissal; that the transfer to the Manila office was not crucial as to cause serious disruption in the operation of the business if the respondents were not transferred
thereat; that the directive failed to indicate that the transfer was merely temporary; that the directive did not mention the shortage of personnel that would necessitate such transfer; and that the
transfer would be inconvenient and prejudicial to the respondents.

SC: The management has a wide discretion to regulate all aspects of employment, including the transfer and re-assignment of employees according to the exigencies of the business; and, on the other,
that the transfer constitutes constructive dismissal when it is unreasonable, inconvenient or prejudicial to the employee, or involves a demotion in rank or diminution of salaries, benefits and other
privileges, or when the acts of discrimination, insensibility or disdain on the part of the employer become unbearable for the employee, forcing him to forego her employment. In this case of constructive
dismissal, the burden of proof lies in the petitioner as the employer to prove that the transfer of the employee from one area of operation to another was for a valid and legitimate ground, like genuine
business necessity. We are satisfied that the petitioner duly discharged its burden, and thus established that, contrary to the claim of the respondents that they had been constructively dismissed,
their transfer had been an exercise of the petitioner's legitimate management prerogative.
1. The resignations of the account managers and the director of sales and marketing in the Manila office brought about the immediate need for their replacements with personnel having
 commensurate experiences and skills. With the positions held by the resigned sales personnel being undoubtedly crucial to the operations and business of the petitioner, the resignations gave rise to an
urgent and genuine business necessity that fully warranted the transfer from the Nasugbu, Batangas office to the main office in Manila of the respondents, undoubtedly the best suited to perform the
tasks assigned to the resigned employees because of their being themselves account managers who had recently attended seminars and trainings as such. The transfer could not be validly assailed as a
form of constructive dismissal, for, as held in Benguet Electric Cooperative v.Fianza, management had the prerogative to determine the place where the employee is best qualified to serve the interests
of the business given the qualifications, training and performance of the affected employee.
2. Although the respondents' transfer to Manila might be potentially inconvenient for them because it would entail additional expenses on their part aside from their being forced to be away from
their families, it was neither unreasonable nor oppressive. The petitioner rightly points out that the transfer would be without demotion in rank, or without diminution of benefits and salaries. Instead,
the transfer would open the way for their eventual career growth, with the corresponding increases in pay. It is noted that their prompt and repeated opposition to the transfer effectively stalled the
possibility of any agreement between the parties regarding benefits or salary adjustments.
3. The respondents did not show by substantial evidence that the petitioner was acting in bad faith or had ill-motive in ordering their transfer. In contrast, the urgency and genuine business necessity
justifying the transfer negated bad faith on the part of the petitioner.
4. The respondents, by having voluntarily affixed their signatures on their respective letters of appointment, acceded to the terms and conditions of employment incorporated therein. One of the
terms and conditions thus incorporated was the prerogative of management to transfer and re-assign its employees from one job to another "as it may deem necessary or advisable," to wit: The
company reserves the right to transfer you to any assignment from one job to another, or from one department/section to another, as it may deem necessary or advisable.
Having expressly consented to the foregoing, the respondents had no basis for objecting to their transfer. According to Abbot Laboratories(Phils.), Inc. v. National Labor Relations Commission, the
employee who has consented to the company's policy of hiring sales staff willing to be assigned anywhere in the Philippines as demanded by the employer's business has no reason to disobey the
transfer order of management. Verily, the right of the employee to security of tenure does not give her a vested right to her position as to deprive management of its authority to transfer or re-assign her
where she will be most useful.

MANAGEMENT PREROGATIVES
TRANSFER OF EMPLOYEES
UNIVERSAL CANNING INC., MS. MA. LOURDES A. LOSARIA, PERSONNEL OFFICER, AND ENGR. ROGELIO A. DESOSA, PLANT MANAGER v. COURT OF APPEALS AND DANTE SAROSAL, FRANCISCO
DUMAGAL, JR., NELSON E. FRANCISCO, ELMER C. SAROMINES AND SAMUEL D. CORONEL
PARTIES AND THEIR CONTENTION Petitioner Universal Canning Inc. is a domestic corporation duly authorized to engage in business by Philippine laws. Petitioners Ma. Lourdes A. Losaria and Engr. Rogelio Desosa are respectively
employed by the company as its Personnel Officer and Plant Manager. Respondents were employed by petitioner Universal Canning on various capacities. Respondents were caught by petitioner
company's Purchasing Officer, Falconieri Almazan, playing cards at the company's premises during working hours. The incident was immediately reported by Almazan to the Personnel Officer, Ma.
Lourdes Losaria, who immediately conducted an investigation to determine the names and of those who were involved in the gambling activities. On the same day, respondents were placed under
preventive investigation pending further investigation by a panel indicated in a memorandum addressed to and duly received by the individuals concerned. Under the same memorandum, respondents
were required by the petitioner to file their written explanation of the incident. Respondents complied with the directive.
In their letter-explanation, they denied that they were involved in gambling activities within the company's premises during work hours. It was argued by the respondents that while indeed they were
playing cards inside the company premises, it cannot be considered gambling as there was no money involved and that it took place during noon break. An investigation was conducted where
respondents were questioned regarding their participation in the 21 January 2009 activities inside the company's premises. After the inquiry, the Investigating Officer found that respondents were
playing cards during working hours which is considered an infraction of the company's rules and regulations. On the basis of the Investigation Report, respondents were dismissed from employment
through a notice which enumerated the grounds: (1) taking part in a betting, gambling or any unauthorized game of chance inside the company premises while on duty; and (2) for loss of trust and
confidence.
Aggrieved by the tum of events, respondents initiated an action for illegal dismissal, illegal suspension, payment of separation pay, rest day pay and moral and exemplary damages before the Labor
Arbiter.
CAUSE OF ACTION CONSTRUCTIVE DISMISSAL
ISSUES Whether or not the respondents were constructively dismissed.
DECISIONS LA: Dismissed the complaint. The Labor Arbiter held that respondents were dismissed for just cause and after compliance with due process.

NLRC: Affirmed the dismissal of respondents' complaint. It was declared by the Commission that "playing cards during office hours whether for a stake or fun is considered a dishonest act of stealing
company time. The company's working hours could be used for more profitable activities since they are paid by the company." Setting aside the claim of respondents that their length of service should be
considered a mitigating circumstance, the NLRC held that "the fact that respondents have been employed by the company for a long period of time could not work in their favor. Their attitude towards
their work is smocked (sic) with disloyalty, lack of concern and enthusiasm.

CA: Reversed and set aside the NLRC Decision on the ground that it was rendered with grave abuse of discretion amounting to lack or excess in jurisdiction. There exists no just cause to dismiss
respondents from employment. As rank and file employees, respondents could not be dismissed for lack of trust and confidence as they were not holding positions imbued with trust and confidence.

SC: While it is true that loss of trust and confidence alone could not stand as a ground for dismissal in this case since respondents are rank and file employees who are not occupying positions of trust and
confidence, such is not the only ground, relied by the company in terminating respondents' employment. Petitioner company also cited the infraction of company rules and regulations, in addition to loss
and trust of confidence. Infraction of the company rules and regulation which is akin to serious misconduct is a just cause for termination of employment recognized under Article 282 (a) of the Labor
Code.
Here, there is no question that respondents were caught in the act of engaging in gambling activities inside the workplace during work hours, a fact duly established during the investigation
conducted by the petitioner company and adopted by the labor tribunals below. As a matter of fact, respondents never controverted their participation in the gambling activities, but instead raised the
defense that it took place during noon break and that no stakes were involved; these claims even if were proven true, will however not save the day for the respondents. The use of the company's time
and premises for gambling activities is a grave offense which warrants the penalty of dismissal for it amounts to theft of the company's time and it is explicitly prohibited by the company rules on the
ground that it is against public morals.
Suffice it to state that an employee may be validly dismissed for violation of a reasonable company rule or regulation adopted for the conduct of the company's business. It is the recognized
 prerogative of the employer to transfer and reassign employees according to the requirements of its business. For indeed, regulation of manpower by the company clearly falls within the ambit of
management prerogative. A valid exercise of management prerogative is one which, among others, covers: work assignment, working methods, time, supervision of workers, transfer of employees,
work supervision, and the discipline, dismissal and recall of workers. Except as provided for, or limited by special laws, an employer is free to regulate, according to his own discretion and judgment,
all aspects of employment. As a general proposition, an employer has free reign over every aspect of its business, including the dismissal of his employees as long as the exercise of its management
prerogative is done reasonably, in good faith, and in a manner not otherwise intended to defeat or circumvent the rights of workers.

MANAGEMENT PREROGATIVES: TRANSFER OF EMPLOYEES: CONSTRUCTIVE DISMISSAL

DIVINE WORD COLLEGE OF LAOAG, vs. SHIRLEY B. MINA, as heir-substitute of the late DELFIN A. MINA
FACTS:  DWCL is run by the Society of Divine Word (SVD). Mina was first employed as a high school teacher and later on a high school principal at the Academy of
St. Joseph (ASJ), a school run by the SVD.
 He was later transferred to DWCL’s college department. He was transferred to the college department as an Associate Professor III. -Thereafter, Mina was
assigned as the College Laboratory Custodian and was divested of his teaching load. He was the only one among several teachers transferred to the college
department who was divested of teaching load.
 He was then offered early retirement but he declined since his family is still dependent on him for financial support.
 He later received a Memorandum from the Office of the Dean enumerating specific acts of gross negligence, insubordination and reporting for work under
influence of alcohol. It was made to appear that his services were terminated by reason of redundancy to avoid any tax implications.
 Mina was also made to sign a deed of waiver and quitclaim stating that he no longer has any claim against DWCL with respect to any matter arising from
his employment in the school
Cause  On September 21, 2004, he filed a case for illegal dismissal and recovery of separation pay and other monetary claims. Pending resolution of his
of case, Mina passed away on June 18, 2005.
Action
ISSUE  Was Mina constructively dismissed?
LA  The actuation of DWCL is not constitutive of constructive dismissal
NLRC  The NLRC ruled that Mina was constructively dismissed when he was appointed as College Laboratory Custodian and divested of his teaching load
without any justification.
 It also ruled that Mina was not deemed to have waived all his claims against DWCL as quitclaims cannot bar employees from demanding benefits to which
they are legally entitled
CA  It sustained the NLRC’s ruling that Mina was indeed constructively dismissed from work. The CA also held that Mina is entitled to receive backwages, to be
computed from the time of hiring on June 1, 1979 until the time of his death on June 18, 2005, as he was constructively dismissed from work
SC  THERE IS CONSTRUCTIVE DISMISSAL
 In this case, Mina’s transfer clearly amounted to a constructive dismissal. For almost 22 years, he was a high school teacher enjoying a permanent status
in DWCL’s high school department.
 In 2002, he was appointed as an associate professor at the college department but shortly thereafter, or on June 1, 2003, he was appointed as a college
laboratory custodian, which is a clear relegation from his previous position. Not only that. He was also divested of his teaching load. His appointment even
became contractual in nature and was subject to automatic termination after one year "without any further notification."
 Aside from this, Mina was the only one among the high school teachers transferred to the college department who was divested of teaching load. More
importantly, DWCL failed to show any reason for Mina’s transfer and that it was not unreasonable, inconvenient, or prejudicial to him.
 Also, the CA correctly ruled that Mina’s appointment as laboratory custodian was a demotion.
 There is demotion when an employee occupying a highly technical position requiring the use of one’s mental faculty is transferred to another position, where the employee
performed mere mechanical work – virtually a transfer from a position of dignity to a servile or menial job.
 The assessment whether Mina’s transfer amounted to a demotion must be done in relation to his previous position, that is, from an associate college
professor, he was made a keeper and inventory-taker of laboratory materials. Clearly, Mina’s new duties as laboratory custodian were merely perfunctory
and a far cry from his previous teaching job, which involved the use of his mental faculties. And while there was no proof adduced showing that his
salaries and benefits were diminished, there was clearly a demotion in rank.
 Given the finding of constructive dismissal, Mina, therefore, is entitled to reinstatement without loss of seniority rights, and payment of backwages
computed from the time compensation was withheld up to the date of actual reinstatement.
 The CA, however, computed the amount to be awarded as backwages from the time of Mina’s hiring on June 1, 1979 until the time of his death on June 18,
 2005, apparently interchanging backwages and separation pay. Aside from this, the CA omitted to include a separate award of separation pay.
 The Court has repeatedly stressed that the basis for the payment of backwages is different from that of the award of separation pay. "The basis for
computing separation pay is usually the length of the employee’s past service, while that for backwages is the actual period when the employee was
unlawfully prevented from working."
 The award of damages was also justified given the CA and NLRC’s finding that DWCL acted in a manner wherein Mina was not treated with utmost good
faith. The intention of the school to erase him out of employment is too apparent. The Court upholds the CA’s finding that when DWCL’s act of
unceremoniously demoting and giving Mina contractual employment for one year and citing him for numerous violations of school regulations when he
rejected the school’s offer to voluntarily retire is constitutive of bad faith
The Constitution and the Labor Code36 mandate that employees be accorded security of tenure. The right of employees to security of tenure,
however, does not give the employees vested rights to their positions to the extent of depriving management of its prerogative to change their
DOCTRINE

assignments or to transfer them. In cases of transfer of an employee, 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 employee’s transfer shall be tantamount to unlawful
constructive dismissal.

ICT MARKETING SERVICES, INC. (now known as SYKES MARKETING SERVICES, INC.) vs. MARIPHIL L. SALES
FACTS:  Petitioner ICT Marketing Services, Inc. (ICT) – now known as Sykes Marketing Services, Inc. – is a duly registered domestic corporation engaged in the
business of providing outsourced customer relations management and business process outsourcing solutions to various clients
 On February 22, 2006, petitioner hired respondent Mariphil L. Sales as its Customer Service Representative (CSR) or Telephone Service Representative
(TSR), and assigned her to its Capital One account. On August 21, 2006, respondent became a regular employee, and her monthly base salary was
increased to P16,350.00 and she was given monthly transportation and meal allowances.
 On February 21, 2007, respondent was assigned to the Washington Mutual account, where she was awarded with a certificate for being the "Top
Converter/Seller (Second Place)" for the month of April 2007.
 On July 3, 2007, respondent wrote to Glen Odom (Odom) – petitioner’s Vice President – complaining about supposed irregularities in the handling of
funds entrusted to petitioner by Washington Mutual which were intended for distribution to outstanding Washington Mutual CSRs and TSRs as prizes and
incentives. However, no action appears to have been taken on her complaint.
 Respondent was then transferred to the Bank of America account. Without prior notice to respondent, petitioner scheduled her for training on the very
same day of her transfer. On the third day of training, respondent was unable to attend. When she reported for training the next day, respondent was
informed that she could not be certified to handle calls for Bank of America due to her failure to complete the training. From then on, respondent was
placed on "floating status" and was not given any work assignment.
 In a September 28, 2007 letter to petitioner’s Human Resource (HR) Manager, respondent tendered her resignation from work, effective upon receipt of
the letter. Respondent wrote: I was forced to resign due to the reason that my employment was made on "floating status" effective August 4, 2007 and up to
present (almost two months)
 Allegation of Respondent: respondent claimed that for complaining about the supposed irregularities in the Washington Mutual account, petitioner
discriminated against her and unduly punished her
 Reply of Petitioner: arguing that respondent was transferred from the Washington Mutual account as an exercise of management initiative or
prerogative, and due to infractions committed by her, as well as attendance and punctuality issues that arose.
Cause  On October 2, 2007, respondent filed a complaint for constructive dismissal against petitioner and Odom
of
Action
ISSUE  Was respondent Sales constructively dismissed?
LA  finding complainant to have been constructively dismissed and awarding separation pay, moral and exemplary damages, and attorney’s fees to
respondent. The Labor Arbiter held:
 Complainant was indeed constructively dismissed from her employment and she quitted because her continued employment thereat is rendered
impossible, unreasonable or unlikely.
  Complainant’s resignation was sparked by her transfer of assignment and eventual placing her by the respondent company on a "on floating" status
NLRC  No constructive dismissal; in the past the complainant had been transferred from one program to another without any objection on her part. Insofar as
the instant case is concerned, it appears that the complainant, aside from having been given a warning for wrong disposition of a call, had been absent or
usually late in reporting for work, constraining the respondent ICT to transfer her to another program/account.
CA  There is constructive dismissal
 private respondent corporation failed to discharge this burden of proof considering the circumstances surrounding the petitioner’s July 2007 transfer to
another account. Prior to her reassignment, petitioner’s annual performance merited increase in her salary effective February 2007 and was also awarded
a certificate of achievement for performing well in April 2007. Her transfer was also abrupt as there was no written transfer agreement informing her of
the same and its requirements unlike her previous transfer from Capital One to Washington Mutual account.
SC THERE IS CONSTRUCTIVE DISMISSAL
*ON RESPODENT’S TRANSFER
 While the prerogative to transfer respondent to another account belonged to petitioner, it wielded the same unfairly. The evidence suggests that at the
time respondent was transferred from the Washington Mutual account to the Bank of America program, petitioner was hiring additional CSRs/TSRs. This
simply means that if it was then hiring new CSRs/TSRs, then there should be no need to transfer respondent to the Bank of America program; it could
simply train new hires for that program.
 Transferring respondent – an experienced employee who was already familiar with the Washington Mutual account, and who even proved to be
outstanding in handling the same – to another account means additional expenses for petitioner: it would have to train respondent for the Bank of
America account, and train a new hire to take her place in the Washington Mutual account. This does not make sense; quite the contrary, it is impractical
and entails more expense on petitioner’s part.
 If respondent already knew her work at the Washington Mutual account very well, then it is contrary to experience and logic to transfer her to another
account which she is not familiar with, there to start from scratch; this could have been properly relegated to a new hire.
 There can be no truth to petitioner’s claim either that respondent’s transfer was made upon request of the client. If she was performing outstanding work
and bringing in good business for the client, there is no reason – indeed it is beyond experience and logic – to conclude that the client would seek her
transfer.
 Thus, the only conceivable reason why petitioner transferred respondent to another account is the fact that she openly and bravely complained about the
supposed anomalies in the Washington Mutual account; it is not her "derogatory record" or her "attendance and punctuality issues", which are
insignificant and thus irrelevant to her overall performance in the Washington Mutual account. And, as earlier stated, respondent’s "attendance and
punctuality issues" were attributable to petitioner’s indifference, inaction, and lack of sensitivity in failing to timely address respondent’s complaint. It
should share the blame for respondent’s resultant delinquencies.
 Thus, in causing respondent’s transfer, petitioner clearly acted in bad faith and with discrimination, insensibility and disdain; the transfer was
effected as a form of punishment for her raising a valid grievance related to her work.
*ON RESPODENT’S TRANSFER
 In placing respondent on "floating status," petitioner further acted arbitrarily and unfairly, making life unbearable for her. In so doing, it treated
respondent as if she were a new hire; it improperly disregarded her experience, status, performance, and achievements in the company; and most
importantly, respondent was illegally deprived of her salary and other emoluments.
 For her single absence during training for the Bank of America account, she was refused certification, and as a result, she was placed on floating status
and her salary was withheld. Clearly, this was an act of discrimination and unfairness considering that she was not an inexperienced new hire, but a
promising and award-winning employee who was more than eager to succeed within the company.
 Besides, as correctly argued by respondent, there is no basis to place her on "floating status" in the first place since petitioner continued to hire new
CSRs/TSRs during the period, as shown by its paid advertisements and placements in leading newspapers seeking to hire new CSRs/TSRs and other
employees
*ON RESPODENT’S RESIGNATION
 Because she is deemed constructively dismissed from the time of her illegal transfer, her subsequent resignation became unnecessary and irrelevant.
There was no longer any position to relinquish at the time of her resignation.
*ON PECUNIARY AWARD
 With the foregoing pronouncements, an award of indemnity in favor of respondent should be forthcoming. In case of constructive dismissal, the employee
 is entitled to full backwages, inclusive of allowances, and other benefits or their monetary equivalent, as well as separation pay in lieu of reinstatement.
The readily determinable amounts, as computed by the Labor Arbiter and correspondingly reviewed and corrected by the appellate court, should be
accorded finality and deemed binding on this Court.
Concerning the transfer of employees, these are the following jurisprudential guidelines: (a) a transfer is a movement from one position to
DOCTRINE

another of equivalent rank, level or salary without break in the service or a lateral movement from one position to another of equivalent rank
or salary; (b) the employer has the inherent right to transfer or reassign an employee for legitimate business purposes; (c) a transfer becomes
unlawful where it is motivated by discrimination or bad faith or is effected as a form of punishment or is a demotion without sufficient cause;
(d) the employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee

GIRLY G. ICO vs. SYSTEMS TECHNOLOGY INSTITUTE, INC., MONICO V. JACOB and PETER K. FERNANDEZ
FACTS:  Respondent Systems Technology Institute, Inc. (STI) is an educational institution duly incorporated, organized, and existing under Philippine laws.
Respondents Monico V. Jacob (Jacob) and Peter K. Fernandez (Fernandez) are STI officers, the former being the President and Chief Executive Officer
(CEO) and the latter Senior Vice-President. Petitioner Girly G. Ico was hired as Faculty Member by STI College Makati.
 Girly Ico held several positions at STI from 1997-2003. She was initially hired as a faculty member, was later promoted to Dean, then, she was made Chief
Operating Officer (COO).
 In 2003, during her stint as COO and School Administrator of STI-Makati, a Plan of Merger was executed between STI and STI College Makati (Inc.),
whereby the latter would be absorbed by STI. STI College Makati (Inc.) thus ceased to exist.
 2004 – Pursuant to STI’s “organizational restructuring”, Ico’s post as COO at STI-Makati was abolished. She was designated as Compliance Manager and
was given a lower salary.
 STI conducted investigations and allegedly discovered several irregularities in Ico’s work. She was also subjected to other embarrassments, including a
meeting with STI Makati’s CEO (Fernandez) repeatedly shouted at her. Soon after petitioner was removed from the position, Fernandez was appointed to
take her place as STI-Makati COO; his appointment was even publicly announced via an official communication disseminated company-wide.
 PETITIONER ICO ARGUES: Her appointment to the position of Compliance Manager was in fact a demotion. She was subjected to harassment and
discrimination, humiliated (at one point, she wasn’t informed of a staff outing and she was left behind) and became the victim of STI’s fraudulent scheme
to illegally oust her from her position as STI-Makati COO.
 RESPONDENTS ARGUE: Petitioner’s transfer was in line with such merger and reorganization; no bad faith may thus be inferred from their actions. Also,
petitioner’s transfer did not amount to a demotion in rank, as the positions of COO and Compliance Manager are of equal importance.
 In a January 13, 2005 letter of notice of termination signed by Jacob, petitioner was dismissed from STI effective January 11, 2005
Cause  Illegal dismissal
of
Action
ISSUE  Was Ico illegal dismissed?
LA  Ico was illegally dismissed. STI was ordered to reinstate her+ pay full back wages
NLRC  Ico’s transfer to her new position as Compliance Manager became necessary, as the position of STI-Makati COO was abolished as a result of a
reorganization that was implemented pursuant to the merger. CA affirmed.
CA  Affirmed NLRC
SC THERE IS CONSTRUCTIVE ILLEGAL DISMISSAL: THERE WAS NO VALID ABOLITION OF POSITION OF ICO
 It appears, however, that the position of STI-Makati COO was actually never abolished. As a matter of fact, soon after petitioner was removed from the
position, Fernandez was appointed to take her place as STI-Makati COO; his appointment was even publicly announced via an official communication
disseminated company-wide.
 This thus belies respondents’ claim that the position of STI-Makati COO became unnecessary and was thus abolished. Respondents may argue, as they did
in their Reply to petitioner’s Position Paper, that Fernandez’s appointment as STI-Makati COO replacing petitioner was merely for oversight purposes.
Whatever the reason could be for Fernandez’s appointment as STI-Makati COO, the fact still remains that such position continued to exist.
  Next, petitioner’s appointment as Compliance Manager appears to be contrived as well. At the time of petitioner’s appointment, the only two Compliance
Manager positions within STI’s compliance department – the School Compliance Group – were already filled up as they were then occupied by Musico and
Gozum. None of them has been dismissed or resigned. Nor could petitioner have been appointed head of the department, as Paraiso was very much in
charge thereof, as its Compliance Group Head.
 The only positions within the department that were at the time vacant were those of Compliance Officers, which are of lower rank. In other words,
petitioner could not have been validly appointed as Compliance Manager, a position within STI that was then very much occupied; if ever, petitioner took
the position of a mere Compliance Officer, the only vacant position within the department.
 Thirdly, even though it is claimed that from May 28, 2004 up to June 10, 2004, STI’s Corporate Auditor/Audit Advisory Group conducted an audit of STI-
Makati covering the whole period of petitioner’s stint as COO/School Administrator, it appears that even prior to such audit, petitioner’s superior –
Fernandez – had already prejudged her case. The May 18, 2004 conversation between petitioner and Fernandez inside the latter’s office is quite revealing.
 To all intents and purposes, petitioner was punished even before she could be tried.
 The Court fails to discern any bad faith or negligence on the part of respondent Jacob. The principal character that figures prominently in this case is
Fernandez; he alone relentlessly caused petitioner’s hardships and suffering. He alone is guilty of persecuting petitioner. Indeed, some of his actions were
without sanction of STI itself, and were committed outside of the authority given to him by the school; they bordered on the personal, rather than official.
 A corporation, as a juridical entity, may act only through its directors, officers and employees. Obligations incurred as a result of the directors’ and
officers’ acts as corporate agents, are not their personal liability but the direct responsibility of the corporation they represent. As a rule,
they are only solidarily liable with the corporation for the illegal termination of services of employees if they acted with malice or bad faith.
 To hold a director or officer personally liable for corporate obligations, two requisites must concur:
(1) it must be alleged in the complaint that the director or officer assented to patently unlawful acts of the corporation or that the officer
was guilty of gross negligence or bad faith; and
(2) there must be proof that the officer acted in bad faith.
-Respondent Systems Technology Institute, Inc., is ordered to REINSTATE petitioner Girly G. Ico to the position of STI-Makati College Chief Operating Officer
and pay her the exact salary, benefits, privileges, and emoluments which respondent Peter K. Fernandez is receiving, but not less than what petitioner was
receiving at the time of her illegal constructive dismissal on May 18, 2004
DOCTRINE

When another employee is soon after appointed to a position which the employer claims has been abolished, while the employee who had to
vacate the same is transferred against her will to a position which does not exist in the corporate structure, there is evidently a case of illegal
constructive dismissal.

ECHO 2000 COMMERCIAL CORPORATION, EDWARD N. ENRIQUEZ, LEONORA K. BENEDICTO and ATTY. GINA WENCESLAO vs. OBRERO FILIPINO-ECHO 2000
CHAPTER-CLO, ARLO C. CORTES and DAVE SOMIDO
FACTS:  Echo is a provider of warehousing management and delivery services.
 King 8 Commercial Corporation (King 8), Echo's predecessor, initially employed Cortes on September 17, 2002, and Somido, on October 12, 2004. Echo
thereafter absorbed the respondents as employees on April 1, 2005. In 2008, Somido was made a Warehouse Checker, while Cortes, a Forklift Operator
 In January of 2009, the respondents and their co-workers formed Obrero Pilipino-Echo 2000 Commercial Chapter (Union). Cortes was elected as Vice-
President while Somido became an active member. The respondents claimed that the Union's President, Secretary and one of the board members were
subsequently harassed, discriminated and eventually terminated from employment by Echo.
 Echo received information about shortages in peso value arising from the movement of products to and from its warehouse. Since an uninterrupted
investigation was necessary, Echo, in the exercise of its management prerogative, decided to re-assign the staff. Cortes and Somido were among those
affected. They were transferred to the Delivery Section. The transfer would entail no change in ranks, status and salaries. Cortes and Somido declined
Echo’s offer of promotion as Delivery Supervisor/Coordinator.
 Somido wrote Echo a letter indicating his refusal to be promoted as a "Delivery Supervisor". He explained that he was already happy as a Warehouse
Checker. Further, he was not ready to be a Delivery Supervisor since the position was sensitive and required more expertise and training, which he did
 not have.
 Cortes similarly declined Echo's offer of promotion claiming that he was contented in his post then as a Forklift Operator. He also alleged that he would be
more productive as an employee if he remained in his post. He also lacked prior supervisory experience.
 Echo issued successive memoranda to Cortes and Somido, who refused to acknowledge receipt and comply with the directives therein regarding their
transfer. One memorandum suspended them without pay for 5 days for insubordination, another terminated them from employment by reason of their
repeated refusal to acknowledge receipt of Echo's memoranda and flagrant defiance to assume the duties of Delivery Coordinators.

Cause  a complaint against Echo for unfair labor practice, illegal dismissal, illegal suspension, illegal deductions and payment of money claims, damages and
of attorney's fees.
Action
ISSUE  Were Cortes and Somido illegally suspended and terminated?
LA  dismissed the respondents' complaint for reasons stated below: (a) the claims of union-busting, harassment and discrimination were not supported by
evidence; (b) no promotions occurred as the duties of the Delivery Supervisors/Coordinators were merely reportorial in nature and not indicative of any
authority to hire, fire or change the status of other employees; and (c) Echo properly exercised its management prerogative to order the transfer, and this
was done without intended changes in the ranks, salaries, status or places of assignment of the respondents
NLRC  The appealed decision of the [LA] dated April 20, 2010 is REVERSED and SET ASIDE and a new one is entered declaring [the petitioners] guilty of unfair
labor practice and illegal dismissal of the [respondents]. [The petitioners] are ordered to immediately reinstate [the respondents] to their previous
positions without loss of seniority rights and other privileges/benefits
CA  Affirmed in toto NLRC
SC Cortes and Somido illegally suspended and terminated but not entitled to payment of damages
 An employee is not bound to accept a promotion, which is in the nature of a gift or reward. Refusal to be promoted is a valid exercise of a right. Such
exercise cannot be considered in law as insubordination, or willful disobedience of a lawful order of the employer, hence, it cannot be the basis of an
employee's dismissal from service.
 In the case at bench, a Warehouse Checker and a Forklift Operator are rank-and-file employees. On the other hand, the job of a Delivery
Supervisor/Coordinator requires the exercise of discretion and judgment from time to time. Specifically, a Delivery Supervisor/Coordinator assigns teams
to man the trucks, oversees the loading of goods, checks the conditions of the trucks, coordinates with account specialists in the outlets regarding their
delivery concerns, and supervises other personnel about their performance in the warehouse. A Delivery Supervisor/Coordinator's duties and
responsibilities are apparently not of the same weight as those of a Warehouse Checker or Forklift Operator. Hence, despite the fact that no salary
increases were effected, the assumption of the post of a Delivery Supervisor/Coordinator should be considered a promotion. The respondents' refusal to
accept the same was therefore valid.
 Notwithstanding the illegality of the respondents' dismissal, the Court finds no sufficient basis to award moral and exemplary damages.

 In the instant case, the right not to accept an offered promotion pertained to each of the respondents. However, they exhibited disrespectful behavior by
their repeated refusal to receive the memoranda issued by Echo and by their continued presence in their respective areas without any work output. The
Court thus finds that although the respondents' dismissal from service for just cause was unwarranted, there is likewise no basis for the award of moral
and exemplary damages in their favor. Echo expectedly imposed disciplinary penalties upon the respondents for the latter's intransigence. Albeit the
Court is not convinced of the character and extent of the measures taken by Echo, bad faith cannot be inferred solely from the said impositions.
 Anent the NLRC and CA's conclusion that Echo committed unfair labor practice, the Court disagrees.
 Unfair labor practices violate the constitutional right of workers and employees to self-organization, are inimical to the legitimate interests of both labor
and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect,
disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations.41
 The respondents allege that their transfer/promotion was intended to deprive the Union of leadership and membership. They claim that other officers
were already dismissed. The foregoing, however, lacks substantiation. Unfair labor practice is a serious charge, and the respondents failed to show that
the petitioners conclusively interfered with, restrained, or coerced employees in the exercise of their right to self-organization.
 An employee is not bound to accept a promotion, which is in the nature of a gift or reward. Refusal to be promoted is a valid exercise of a right.
Such exercise cannot be considered in law as insubordination, or willful disobedience of a lawful order of the employer, hence, it cannot be the
 DOCTRINE
basis of an employee's dismissal from service.

SOLIMAN SECURITY SERVICES, INC. AND TERESITA L. SOLIMAN v. IGMEDIO C. SARMIENTO, JOSE JUN CADA AND ERVIN R. ROBIS
FACTS:  Igmedio Sarmiento, Jose Jun Cada, and Ervin R. Robis were hired as security guards by Soliman Security Services, Inc. and were assigned to Interphil
Laboratories, working seven (7) days a week for twelve (12) straight hours daily.
 They alleged that during their employment - from May 1997 until January 2007 for Robis and from May 2003 until January 2007 for Sarmiento and Cada
— they were paid only P275.00 a day for eight (8) hours of work or P325.00 for twelve (12) hours of work but were not paid ECOLA, night shift
differentials, holiday pay, as well as rest day premiums. For cash bond and mutual aid contributions, the amounts of P400.00 and P100.00, respectively,
were deducted from their salaries per month.
 Respondents claimed that they sought a discussion of the nonpayment of their benefits with petitioner Teresita Soliman but the latter refused to take
heed and told them to tender their resignations instead. According to respondents, on 21 January 2007, they received an order relieving them from their
posts and since then, they were not given any assignments.
 On the other hand, Soliman Security claimed that Igmedio et. al were actually only placed under a "floating status." The agency admitted relieving the
them from duty on 20 January 2007 but insists that the same was only done pursuant to its contract with client Interphil Laboratories. To support this
claim, Soliman Security presented a standing contract with Astrazeneca Pharmaceuticals, Interphil's predecessor-in-interest. The contract contained
stipulations pertaining to the client's policy of replacing guards on duty every six (6) months without repeat assignment. The agency further posits that
complainant guards were directed several times to report to the office for their new assignments but they failed to comply with such directives.
Cause  Hence, Igmedio, Jose, and Ervin filed a complaint for illegal dismissal and for monetary claims.
of
Action
ISSUE  Is there illegal dismissal in this case?
LA  Finding that respondents' failure to comply with the Memoranda amounted to abandonment, the Labor Arbiter dismissed the complaint. The Labor
Arbiter concluded that there can be no dismissal to speak of, much less an illegal dismissal
NLRC  NLRC reversed the decision of the the Executive Labor Arbiter, ultimately finding respondents to have been illegally dismissed. The NLRC ruled that the
letters directing respondents to "clarify their intentions" were not in the nature of return-to-work orders, which may effectively interrupt their floating
status. The NLRC observed that the Memoranda received by respondents were but mere afterthoughts devised after the case for illegal dismissal was filed
CA  Affirmed NLRC
SC THERE IS CONSTRUCTIVE DISMISSAL
 Though respondents were not per se dismissed on 20 January 2007 when they were ordered relieved from their posts, we find that they were
constructively dismissed when they were not given new assignments. As previously mentioned, placing security guards under floating status or
temporary off-detail has been an established industry practice. It must be emphasized, however, that they cannot be placed under floating status
indefinitely; thus, the Court has applied Article 292 (formerly Article 286) of the Labor Code by analogy to set the specific period of temporary off-detail to
a maximum of six (6) months
 It must also be clarified that such provision does not entitle agencies to retain security guards on floating status for a period of not more than six (6)
months for whatever reason. Placing employees on floating status requires the dire exigency of the employer's bona fide suspension of operation. In
security services, this happens when there is a surplus of security guards over available assignments as when the clients that do not renew their contracts
with the security agency are more than those clients that do
 Petitioner agency faults the respondents for their repeated failure to comply with the directives to report to the office for their new
assignments. To support its argument, petitioner agency submitted in evidence notices addressed to respondents, which
read:ChanRoblesVirtualawlibrary
You are directed to report to the undersigned to clarify your intentions as you have not been reporting to seek a new assignment after your relief from
Interphil. To this date, we have not received any update from you neither did you update your government requirements x x x
 We rule that such notices were mere afterthoughts. The notices were allegedly sent to respondents on 24 and 26 April 24 2007, a month after the hearing
 before the Executive Labor Arbiter. By the time the notices were sent, a complaint for illegal dismissal with a prayer for reinstatement was already filed.
In fact, the agency, through its representative, already had the chance to discuss new assignments during the hearing before the Labor Arbiter.
 Instead of taking the opportunity to clarify during the hearing that respondents were not dismissed but merely placed on floating status and instead of
specifying details about the available new assignments, the agency merely gave out empty promises.
 No mention was made regarding specific details of these pending new assignments. If respondent guards indeed had new assignments awaiting them, as
what the agency has been insinuating since the day respondents were relieved from their posts, the agency should have identified these assignments
during the hearing instead of asking respondents to report back to the office
*AWARDS:
Accordingly, petitioners Soliman Security Services, Inc. and Teresita L. Soliman are hereby ORDERED to pay respondents Igmedio C. Sarmiento, Jose Jun
Cada, and Ervin R. Robis, to wit:
1. Backwages from 21 January 2007 until finality of this decision;
2. Separation pay equivalent to one-month salary for every year of service from the date of employment as appearing in the complaint also up to finality
of this decision; and
3. Salary differentials for the period not yet barred by prescription.

When is a security guard on a floating status be considered as constructively dismiss?

IMPORTANT: DINISCUSS DAW TO NI MAAM NOON SA LABOR 2 CLASS NYA

Placement on floating status as a management prerogative

During the period of time when they are in between assignments or when they are made to wait for new assignments after being relieved from a previous post, guards
are considered on temporary "off-detail" or under "floating status". It has long been recognized by this Court that the industry practice of placing security
guards on floating status does not constitute dismissal, as the assignments primarily depend on the contracts entered into by the agency with third parties
and the same is a valid exercise of management prerogative. However, such practice must be exercised in good faith and courts must be vigilant in assessing the
different situations, especially considering that the security guard does not receive any salary or any financial assistance provided by law when placed on floating
status.

Constructive dismissal

Placing security guards under floating status or temporary off-detail has been an established industry practice. It must be emphasized, however, that they
cannot be placed under floating status indefinitely; thus, the Court has applied Article 292 (formerly Article 286) of the Labor Code by analogy to set the
specific period of temporary off-detail to a maximum of six (6) months.

It must also be clarified that such provision does not entitle agencies to retain security guards on floating status for a period of not more than six (6) months for
whatever reason. Placing employees on floating status requires the dire exigency of the employer's bona fide suspension of operation. In security services, this
happens when there is a surplus of security guards over available assignments as when the clients that do not renew their contracts with the security agency are more
than those clients that do.

Lack of service agreement for a continuous period of 6 months as an authorized cause for termination

-It is significant to note that had the reason for such failure to reassign respondents been the lack of service agreements for a continuous period of six (6) months,
 petitioner agency could have exercised its right to terminate respondents for an authorized cause upon compliance with the procedural requirements.

-It bears stressing that the only time a prolonged floating status is considered an authorized cause for dismissal is when the security agency experiences a surplus of
security guards brought about by lack of clients. Absent such justification, the placing of a security guard on floating status is tantamount to constructive dismissal.
And, when the floating status is justified, the lapse of a continuous period of six (6) months results in an authorized cause for termination of employment, the security
guard being entitled, however, to separation pay.

Summary:

The floating status period, wherein the security guards are not paid, should not last longer than six (6) months as provided by law. Before the lapse of six (6) months,
the agency should have recalled the security guard for a new assignment. If the agency failed to do so due to the lack of service agreements for a continuous period of
six (6) months, an authorized cause for dismissal as per DO 14-01, the security guard may be considered permanently retrenched and validly dismissed upon
compliance with the procedural requirements laid down by the Department Order and the Labor Code. It must be emphasized however, that in order for the dismissal
to be valid and in order for the employer agency to free itself from any liability for illegal dismissal, the justification for the failure to reassign should be the lack of
service agreements for a continuous period of six (6) months, aside from the other authorized causes provided by the Labor Code. Corollarily, placing the security
guard on floating status in bad faith, as when there is failure to reassign despite the existence of sufficient service agreements will make the employer agency liable for
illegal dismissal. In such cases, there is no bona fide business exigency which calls for the temporary retrenchment or laying-off of the security guards. Lastly, if six (6)
months have already lapsed and the employer agency failed to either (a) reassign the security guard or (b) validly dismiss and give him/her the corresponding
separation pay, the security guard may be considered to have been constructively dismissed.

REPUBLIC OF THE PHILIPPINES, represented by the CIVIL SERVICE COMMISSION vs. MINERVA M.P. PACHEO
FACTS:  Pacheo was a Revenue Attorney IV, Assistant Chief of the Legal Division of the Bureau of Internal Revenue (BIR) in Quezon City. The BIR issued Revenue
Travel Assignment Order ordering the reassignment of Pacheo as Assistant Chief, Legal Division from RR7 in Quezon City to RR4 in San Fernando,
Pampanga.
 Pacheo questioned the reassignment through her Letter addressed to Rene G. Banez, then Commissioner of Internal Revenue (CIR). She considered her
transfer from Quezon City to Pampanga as amounting to a constructive dismissal.
 Due to the then inaction of the BIR, Pacheo filed a complaint before the CSC, praying for the nullification of RTAO No. 25-2002. The BIR, through its
Deputy Commissioner for Legal and Inspection Group, Guevara, denied Pacheos protest for lack of merit. It contended that her reassignment could not be
considered constructive dismissal as she maintained her position as Revenue Attorney IV and was designated as Assistant Chief of Legal Division.
 Pacheo appealed to the CSC where the latter granted the same. However, the CSC held that rules and so holds that the withholding by the BIR of her
salaries is justified as she is not entitled thereto since she is deemed not to have performed any actual work in the government on the principle of no work
no pay. Still not satisfied, Pacheo moved for reconsideration. She argued that the CSC erred in not finding that she was constructively dismissed and,
therefore, entitled to back salary. However, the motion was dismissed.
Cause  Constructive dismissal
of
Action
ISSUE  Whether or not Pacheo was constructively dismissed and entitled to backwages
CA  The CA reversed the CSC’s decision and ordered her immediate reinstatement with full backwages and benefits.
 While this Court agrees that petitioner’s reassignment was not valid considering that a diminution in salary is enough to invalidate such reassignment, We
cannot agree that the latter has not been constructively dismissed as a result thereof
SC THERE IS CONSTRUCTIVE DISMISSAL
 While a temporary transfer or assignment of personnel is permissible even without the employee's prior consent, it cannot be done when the transfer is a
preliminary step toward his removal, or a scheme to lure him away from his permanent position, or when it is designed to indirectly terminate his service,
or force his resignation. Such a transfer would in effect circumvent the provision which safeguards the tenure of office of those who are in the Civil
Service.
  Significantly, Section 6, Rule III of CSC Memorandum Circular No. 40, series of 1998, defines constructive dismissal as a situation when an employee quits
his work because of the agency heads unreasonable, humiliating, or demeaning actuations which render continued work impossible. Hence, the employee
is deemed to have been illegally dismissed. This may occur although there is no diminution or reduction of salary of the employee. It may be a transfer
from one position of dignity to a more servile or menial job.
 The CSC, through the OSG, contends that the deliberate refusal of Pacheo to report for work either in her original station in Quezon City or her new place
of assignment in San Fernando, Pampanga negates her claim of constructive dismissal.
 It is clear, however, from E.O. 292, Book V, Title 1, Subtitle A, Chapter 5, Section 26 (7) that there is no such duty to first report to the new place of
assignment prior to questioning an alleged invalid reassignment imposed upon an employee. Pacheo was well within her right not to report immediately
to RR4, San Fernando, Pampanga, and to question her reassignment.
 Reassignments involving a reduction in rank, status or salary violate an employee’s security of tenure, which is assured by the Constitution, the
Administrative Code of 1987, and the Omnibus Civil Service Rules and Regulations. Security of tenure covers not only employees removed without cause,
but also cases of unconsented transfers and reassignments, which are tantamount to illegal/constructive removal.
 She is entitled to reinstatement, but finds itself unable to sustain the ruling that she is entitled to full back wages and benefits. It is a settled jurisprudence
that an illegally dismissed civil service employee is entitled to back salaries but limited only to a maximum period of five (5) years, and not full back
salaries from his illegal dismissal up to his reinstatement.
 The contention of the CSC, through the OSG, that the deliberate refusal of Pacheco to report to work either in her original station in QC or her new place of
assignment in Pampanga negates her claim of constructive dismissal is untenable. It was legally impossible for Pacheo to report to her original place of
assignment in Quezon City because the said RTAO also reassigned another personnel as Assistant Chief from Pampanga to QC, the very same position that
Pacheco held. It is also erroneous on the part of the CSC to argue that the subject RTAO was immediately executory, unless otherwise ordered by the CSC, and,
thus, it was incumbent upon Pacheco to report to her new place of assignment. The Court held that it is an order to detail that is immediately executory and
not reassignment. However, Pacheco is not entitled to full backwages and benefits. It is a settled jurisprudence\ that an illegally dismissed civil service
employee is entitled to back salaries but limited only to a maximum period of five (5) years, and not full back salaries from his illegal dismissal up to his
reinstatement.

Although reassignment is a management prerogative, the same must be done in the exigency of the service without diminution in rank, status and
salary on the part of the officer or employee being temporarily reassigned. Reassignment of small salaried employees, however is not allowed if
it will cause significant financial dislocation to the employee reassigned. Otherwise the Commission will have to intervene.

The primary purpose of emphasizing small salaried employees in the foregoing rule is to protect the rank and file employees from possible abuse
by the management in the guise of transfer/reassignment. The Supreme Court in Alzate v. Mabutas, (51 O.G. 2452) ruled:
DOCTRINE

x x x The protection against invalid transfer is especially needed by lower ranking employees. The Court emphasized this need when it ruled that officials
in the unclassified service, presidential appointees, men in the government set up occupy positions in the higher echelon should be entitled to security of
tenure, unquestionable a lesser solicitude cannot be meant for the little men, that great mass of Common underprivileged employees-thousand there are
of them in the lower bracket, who generally are without connections and who pin their hopes of advancement on the merit system instituted by our civil
service law.
TOPIC: MANAGEMENT PREPROGATIVE (3. Contracting & Reorganization)

MANILA MEMORIAL PARK CEMETERY, INC. v. EZARD D. LLUZ, NORMAN CORRAL, ERWIN FUGABAN, VALDIMAR BALISI, EMILIO FABON, JOHN MARK APLICADOR,
MICHAEL CURIOSO, JUNLIN ESPARES, GAVINO FARINAS, AND WARD TRADING AND SERVICES

Manila Memorial entered into a Contract of Services with Ward Trading, which provides that Ward Trading, as an independent contractor, will render interment (burial) and exhumation
(digging up) services and other related work to Manila Memorial in order to supplement operations at Manila Memorial Park, Paranaque City.

Lluz, et.al were assigned by Ward Trading to perform services at the memorial park. Lluz, et.al filed a Complaint for regularization and Collective Bargaining Agreement benefits against
Manila Memorial, and Ward Trading. The management declined their request for regularization and to be recognized as legitimate members of the existing labor union. Manila Memorial
dismissed their services. Lluz, et. al then filed an amended complaint to include illegal dismissal, underpayment of 13th month pay, and payment of attorney's fees.

Manila Memorial argues that:

1. No employer-employee relationship between the company and respondents.
2. Respondents were the employees of Ward Trading.

CONTENTION

P: 1. Ward Trading has total assets in excess of P1.4 million, proving that it has sufficient capitalization as a legitimate independent contractor.
2. Nowhere in the Contract of Services that Manila Memorial controls the manner and means by which respondents accomplish the results of their work. They only want its
contractors and the latter's employees to abide by company rules and regulations.
R: they are regular employees of Manila Memorial since Ward Trading cannot qualify as an independent contractor but should be treated as a mere labor-only contractor: (1) Ward
Trading does not have substantial capital, investment, tools and the like; (2) performed activities of workers were related to Manila Memorial's business (3) Ward Trading does
not exercise the right to control the performance of the work of the contractual employees.

Cause of Action: illegal dismissal, underpayment of 13th month pay, and payment of attorney's fees.

Issue: whether or not an employer-employee relationship exists between Manila Memorial and respondents for the latter to be entitled to their claim for wages and other benefits.

DECISION

LA Dismissed the complaint failed to prove the existence of an employer-employee relationship.

NLRC Reversed the Labor Arbiter's findings.  Ward Trading was a labor-only contractor and an agent of Manila Memorial. (MR denied)

CA CA affirmed the ruling of the NLRC. found the existence of an employer-employee relationship (MR denied)

SC EE-ER relationship exists between Manila Memorial & Respondents

"labor-only" contracting: the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries,
work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of
such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.

In this case, The Contract of Services proved the existence of labor-only contracting between Manila Memorial and Ward Trading.

1. performing activities which are directly related to the principal business of such employer The Contract of Services provided that Ward Trading, as an
independent contractor, will render interment and exhumation services and other related work to Manila Memorial.
2. Ward Trading does not have substantial capital or investment in the form of tools, equipment, machinery, work premises and other materials since it is Manila
 Memorial which owns the equipment used in the performance of work needed for interment and exhumation services.
3. Although, Ward shall be in charge of the supervision over individual respondents, the exercise of its supervisory function is heavily dependent upon the needs of
petitioner Memorial Park.
4. The contract further provides that petitioner has the option to take over the functions of Ward's personnel if it finds any part or aspect of the work or service
provided to be unsatisfactory
Manila Memorial failed to prove that Ward Trading had any substantial capital, investment or assets to perform the work contracted for. Thus, the presumption that Ward
Trading is a labor-only contractor stands. Consequently, Manila Memorial is deemed the employer of respondents.

TOPIC: MANAGEMENT PREPROGATIVE (3. Contracting & Reorganization)

DIAMOND FARMS, INC., v. SOUTHERN PHILIPPINES FEDERATION OF LABOR (SPFL), DIAMOND FARMS AGRARIAN REFORM BENEFICIARIES MULTI-PURPOSE
COOPERATIVE (DARBMUPCO), VOLTER LOPEZ, RUEL ROMERO, PATRICK CAPRECHO, REY DIMACALI, ELESIO EMANEL, VICTOR SINGSON, NILDA DIMACALI,
PREMITIVO* DIAZ, RUDY VISTAL, ROGER MONTERO, JOSISIMO GOMEZ AND MANUEL MOSQUERA (Individual respondent- contractors)

DARBMUPCO is a multi-purpose cooperative, which are organized farmers who are agrarian reform beneficiaries of the lands of DFI

DFI and DARBMUPCO entered into a Banana Production and Purchase Agreement to grow & cultivate high grade quality exportable bananas to be sold exclusively to DFI, effective
for 10 years.

DARBMUPCO was troubled by lack of manpower to undertake the agricultural operation under the BPPA because some members were not willing to work. DFI engaged the services
of the respondent-contractors, who in turn recruited the respondent-workers to assist DARBMUPCO in meeting its production obligations under the BPPA.

Respondent-contractors, Voltaire Lopez, Jr., et al., were commissioned and contracted by DFI to recruit farm workers, who are the complaining respondent-workers represented by
SPFL.

SPFL filed a petition for certification election in the Office of the Med-Arbiter on behalf of some 400 workers (the respondent-workers in this petition) "jointly employed by DFI and
DARBMUPCO" working in the awarded plantation.

In another case, SPFL, together with more than 300 workers, filed a case for underpayment of wages, nonpayment of 13th month pay and service incentive leave pay and attorney's
fees against DFI, DARBMUPCO and the respondent-contractors before the National Labor Relations Commission ("NLRC").

DARBMUPCO and DFI denied that they are the employers of the respondent-workers. They claimed, instead, that the respondent-workers are the employees of the respondent-
contractors.

CONTENTION

P: 1. Ward Trading has total assets in excess of P1.4 million, proving that it has sufficient capitalization as a legitimate independent contractor.
2. Nowhere in the Contract of Services that Manila Memorial controls the manner and means by which respondents accomplish the results of their work. They only want its
contractors and the latter's employees to abide by company rules and regulations.
R: they are regular employees of Manila Memorial since Ward Trading cannot qualify as an independent contractor but should be treated as a mere labor-only contractor:

(1) Ward Trading does not have substantial capital, investment, tools and the like; (2) performed activities of workers were related to Manila Memorial's business 3) Ward Trading
does not exercise the right to control the performance of the work of the contractual employees.

Cause of Action: nonpayment of 13th month pay and service incentive leave pay and attorney's fees

Issue: who among DFI, DARBMUPCO and the respondent-contractors is the employer of the respondent-workers?
 The Omnibus Rules Implementing the Labor Code

Job contracting (PERMISSIBLE) Labor-only contracting (PROHIBITED)

(1) The contractor carries on an independent business and undertakes the (1) Does not have substantial capital or investment in the form of tools, equipment, machineries,
contract work on his own account under his own responsibility according to his work premises and other materials; and
own manner and method, free from the control and direction of his employer or
principal in all matters connected with the performance of the work except as to (2) The workers recruited and placed by such person are performing activities which are directly
the results thereof; and related to the principal business or operations of the employer in which workers are habitually
employed.
(2) The contractor has substantial capital or investment in the form of tools,
equipment, machineries, work premises, and other materials which are necessary
in the conduct of his business.

DECISION

Med- Granted petition for certification election, directed the conduct of certification election & declared DARBMUPCO as employer of respondent-workers
Arbiter

SOLE Modified Med-Arbiter’s decision: Declared DFI as employer  through its manager and personnel, supervised and directed the performance of the work of respondent-
contractors

CA CA affirmed the ruling of SOLE.

DFI hired respondent-contractors, who then hired their own men to work in the land of DARBMUPCO.

DFI admitted that respondent- contractors worked under direction & supervision of DFI’s manager & personnel.

DFI paid for contractor’s services

DFI is the TRUE EMPLOYER because respondent-contractors are not independent contractors (MR denied)

SC Respondent-contractors are the labor-only contractors, agents of DFI, their principal.

There is no evidence showing that respondent-contractors are independent contractors. The respondent-contractors, DFI, and DARBMUPCO did not offer any proof that
respondent-contractors were not engaged in labor-only contracting.

1. Respondent-contractors were commissioned and contracted by DFI to recruit farm workers

2. Farm tools, implements and equipment necessary to performance of farm activities were supplied by DFI.
3. Voltaire Lopez, Jr. et. al. had no adequate capital to acquire or purchase such tools, implements, equipment, etc.
4. Voltaire Lopez, Jr., et. al. as well as SPFL, et. al. were being directly supervised, controlled and managed by petitioner DFI farm managers and supervisors, specifically
on work assignments and performance targets.
A finding that a contractor is a labor-only contractor is equivalent to a declaration that there is an employer-employee relationship between the principal, and the workers of
the labor-only contractor; the labor-only contractor is deemed only as the agent of the principal. Thus, in this case, respondent-contractors are the labor-only contractors and
either DFI or DARBMUPCO is their principal.DFI shall be solidarily liable with the respondent-contractors for the rightful claims of the respondent-workers, to the same
manner and extent, as if the latter are directly employed by DFI.
TOPIC: MANAGEMENT PREPROGATIVE (3. Contracting & Reorganization)

BANKARD, INC., v. NATIONAL LABOR RELATIONS COMMISSION- FIRST DIVISION, PAULO BUENCONSEJO, BANKARD EMPLOYEES UNION-AWATU

Bankard implemented Manpower Rationalization Program (MRP), to further enhance its efficiency and be more competitive in the credit card industry.

The MRP was an invitation to the employees to tender their voluntary resignation, with entitlement to separation pay equivalent to at least 2 months salary for every year of service.
Those eligible under the company's retirement plan would still receive additional pay. Thereafter, majority of the Phone Center and the Service Fulfilment Division availed of the MRP.

Thus, Bankard contracted an independent agency to handle its call center needs.

The Union filed before the National Conciliation and Mediation Board (NCMB) its first Notice of Strike, alleging commission of unfair labor practices by Bankard.

Labor Secretary of the DOLE issued the order certifying the labor dispute to the NLRC upon the Bankard’s request.

The Union filed its second NOS the day after it declared deadlock, alleging bargaining in bad faith on the part of Bankard. Bankard then again asked the Office of the Secretary of Labor
to assume jurisdiction, which was granted and certified the labor dispute to the NLRC.

CONTENTION

P: 1. Job contractualization or outsourcing or contracting-out of jobs was a legitimate exercise of management prerogative and did not constitute unfair labor practice.
2. The issue of bad faith in bargaining had become moot and academic
 It came up with counter-offers to the Union's proposals, but the latter's demands were far beyond what management could give. Nonetheless, Bankard continued to
negotiate in good faith until agreement was reached. The CBA was overwhelmingly ratified by the Union members.

R: 1. Regular employees had been reduced substantially through the management scheme of freeze-hiring policy on positions vacated by regular employees on the basis of
cost-cutting measures and the introduction of a more drastic formula of reorganizating its regular employees through the MRP.
2. Bankard's proposals were way below their demands, showing that the management had no intention of reaching an agreement. It was a scheme calculated to force the
Union to declare a bargaining deadlock.
Cause of Action: unfair labor practices by: 1) job contractualization; 2) outsourcing/contracting-out jobs; 3) manpower rationalizing program; and 4) discrimination.

Issue: Is job contractualization or outsourcing or contracting-out an unfair labor practice considering there was no bad faith?

DECISION

NLRC the management committed acts considered as unfair labor practice

The MRP defeats the purpose or reason for streamlining the employees. The ultimate effect is to reduce the number of union members and increasing the number of
contractual employees who could never be members of the union for lack of qualification. Consequently, the union was effectively restrained in their movements as a union
on their rights to self-organization. Management had successfully limited and prevented the growth of the Union and the acts are clear violation of the provisions of the Labor
Code and could be considered as Unfair Labor Practice

CA CA affirmed the ruling of NLRC

Promotion of the program enticing employees to tender their voluntary resignation in exchange for financial packages, resulted to a union dramatically reduced in numbers.
Coupled with the management's policy of "freeze-hiring" of regular employees and contracting out jobs to contractual workers, petitioner was able to limit and prevent the
growth of the Union, an act that clearly constituted unfair labor practice.
SC Reversed ruling of CA

Contracting out of services is an exercise of business judgment or management prerogative. Absent any proof that management acted in a malicious or arbitrary
manner, the Court will not interfere with the exercise of judgment by an employer.

The Union, which had the burden of presenting substantial evidence to support its allegations of ULP, failed to discharge such burden.

Nothing in the records strongly proves that Bankard intended the MRP, as a tool to drastically and deliberately reduce union membership.

no proof that the program was meant to encourage the employees to disassociate themselves from the Union or to restrain them from joining any union or organization.

no showing that it was intentionally implemented to stunt the growth of the Union or that Bankard discriminated, or in any way singled out the union members who had
availed of the retirement package under the MRP.

***The program might have affected the number of union membership because of the employees’ voluntary resignation and availment of the package, but it does not
necessarily follow that Bankard indeed purposely sought such result. It must be recalled that the MRP was implemented as a valid cost-cutting measure, well within
the ambit of the management prerogatives.***

TOPIC: MANAGEMENT PREPROGATIVE (3. Contracting & Reorganization)

EUGENE S. ARABIT, EDGARDO C. SADSAD, LOWELL C. FUNTANOZ, GERARDO F. PUNZALAN, FREDDIE M. MENDOZA, EMILIO B. BELEN, VIOLETA C. DIUMANO and MB
FINANCE EMPLOYEES ASSOCIATION FFW CHAPTER (FEDERATION OF FREE WORKERS), v.JARDINE PACIFIC FINANCE, INC. (FORMERLY MB FINANCE)

Arabit, et. al. were former regular employees of respondent Jardine Pacific Finance, Inc. (formerly MB Finance). They were also officers and members of MB Finance Employees
Association-FFW Chapter, a legitimate labor union and the sole exclusive bargaining agent of the employees of Jardine.

On the claim of financial losses, Jardine decided to reorganize and implement a redundancy program among its employees. Arabit, et. al. were among those affected by the redundancy
program.

Jardine thereafter hired contractual employees to undertake the functions these employees used to perform.

The petitioners and the Union filed a complaint against Jardine with the NLRC for illegal dismissal and unfair labor practice.

CONTENTION

P: 1. Because of these serious business losses, Jardine asserted that it had to lay-off some of its employees and reorganize its ranks to eliminate positions that were in
excess of what its business required.

2. hiring of contractual employees was a valid exercise of its management prerogative.

distinction between redundancy and retrenchment is not material; an employer resorts to retrenchment or redundancy for the same reason, namely the economics of business.
Since Jardine successfully established that it incurred serious business losses, then termination of employment of the petitioners was valid for all intents and purposes.

R: 1. Their dismissal was illegal and was tainted with bad faith as their positions were not redundant. They argued that if their positions had really been redundant, then
Jardine should have not hired contractual workers to replace them.
2. Jardine was guilty of unfair labor practice for contracting out services that the petitioners previously held.

Cause of Action: illegal dismissal and unfair labor practice

Issue: was the retrenchment/ redundancy program valid?

DECISION

LA LA ruled in the petitioners favor.

NLRC Affirmed LA

CA The CA reversed the LAs and the NLRCs rulings, and granted Jardines petition for certiorari. Jardines act of hiring contractual employees in replacement of the petitioners
does not negate to the argument that their positions are already redundant.

SC Reversed CA decision: The retrenchment was invalid

Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant
where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of workers, decreased volume of business,
or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.

The redundancy program was not valid because Jardine hired contractual employees as replacements, thus, contradicting underlying reasons of redundancy.

To dismiss the petitioners and hire new contractual employees as replacements necessarily give rise to the soundconclusion that the petitioners’ services have not really
become in excess of what Jardine’s business requires. To replace the petitioners who were all regular employees with contractual ones would amount to a violation of their
rightto security of tenure
TOPIC: MANAGEMENT PREPROGATIVE (3. Contracting & Reorganization)

BANKARD, INC., v. NATIONAL LABOR RELATIONS COMMISSION- FIRST DIVISION, PAULO BUENCONSEJO, BANKARD EMPLOYEES UNION-AWATU

Bankard implemented Manpower Rationalization Program (MRP), to further enhance its efficiency and be more competitive in the credit card industry.

The MRP was an invitation to the employees to tender their voluntary resignation, with entitlement to separation pay equivalent to at least 2 months salary for every year of service.
Those eligible under the company's retirement plan would still receive additional pay. Thereafter, majority of the Phone Center and the Service Fulfilment Division availed of the MRP.

Thus, Bankard contracted an independent agency to handle its call center needs.

The Union filed before the National Conciliation and Mediation Board (NCMB) its first Notice of Strike, alleging commission of unfair labor practices by Bankard.

Labor Secretary of the DOLE issued the order certifying the labor dispute to the NLRC upon the Bankard’s request.

The Union filed its second NOS the day after it declared deadlock, alleging bargaining in bad faith on the part of Bankard. Bankard then again asked the Office of the Secretary of Labor
to assume jurisdiction, which was granted and certified the labor dispute to the NLRC.

CONTENTION

P: 3. Job contractualization or outsourcing or contracting-out of jobs was a legitimate exercise of management prerogative
and did not constitute unfair labor practice.
4. The issue of bad faith in bargaining had become moot and academic
 It came up with counter-offers to the Union's proposals, but the latter's demands were far beyond what management
could give. Nonetheless, Bankard continued to negotiate in good faith until agreement was reached. The CBA was
overwhelmingly ratified by the Union members.

R: 3. Regular employees had been reduced substantially through the management scheme of freeze-hiring policy on positions
vacated by regular employees on the basis of cost-cutting measures and the introduction of a more drastic formula of
reorganizating its regular employees through the MRP.
4. Bankard's proposals were way below their demands, showing that the management had no intention of reaching an
agreement. It was a scheme calculated to force the Union to declare a bargaining deadlock.
Cause of Action: unfair labor practices by: 1) job contractualization; 2) outsourcing/contracting-out jobs; 3) manpower rationalizing program; and 4) discrimination.

Issue: Is job contractualization or outsourcing or contracting-out an unfair labor practice considering there was no bad faith?

DECISION

NLRC the management committed acts considered as unfair labor practice

The MRP defeats the purpose or reason for streamlining the employees. The ultimate effect is to reduce the number of
union members and increasing the number of contractual employees who could never be members of the union for lack of
qualification. Consequently, the union was effectively restrained in their movements as a union on their rights to self-
organization. Management had successfully limited and prevented the growth of the Union and the acts are clear violation
of the provisions of the Labor Code and could be considered as Unfair Labor Practice

CA CA affirmed the ruling of NLRC

Promotion of the program enticing employees to tender their voluntary resignation in exchange for financial packages,
resulted to a union dramatically reduced in numbers. Coupled with the management's policy of "freeze-hiring" of regular
 employees and contracting out jobs to contractual workers, petitioner was able to limit and prevent the growth of the Union,
an act that clearly constituted unfair labor practice.

SC Reversed ruling of CA

Contracting out of services is an exercise of business judgment or management prerogative. Absent any proof that
management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an
employer.

The Union, which had the burden of presenting substantial evidence to support its allegations of ULP, failed to discharge
such burden.

Nothing in the records strongly proves that Bankard intended the MRP, as a tool to drastically and deliberately reduce
union membership.

no proof that the program was meant to encourage the employees to disassociate themselves from the Union or to
restrain them from joining any union or organization.

no showing that it was intentionally implemented to stunt the growth of the Union or that Bankard discriminated, or in any
way singled out the union members who had availed of the retirement package under the MRP.

***The program might have affected the number of union membership because of the employees’ voluntary resignation and
availment of the package, but it does not necessarily follow that Bankard indeed purposely sought such result. It must be
recalled that the MRP was implemented as a valid cost-cutting measure, well within the ambit of the management
prerogatives.***

TOPIC: MANAGEMENT PREPROGATIVE (3. Contracting & Reorganization)

EUGENE S. ARABIT, EDGARDO C. SADSAD, LOWELL C. FUNTANOZ, GERARDO F. PUNZALAN, FREDDIE M. MENDOZA, EMILIO B. BELEN, VIOLETA C. DIUMANO and MB
FINANCE EMPLOYEES ASSOCIATION FFW CHAPTER (FEDERATION OF FREE WORKERS), v.JARDINE PACIFIC FINANCE, INC. (FORMERLY MB FINANCE)

Arabit, et. al. were former regular employees of respondent Jardine Pacific Finance, Inc. (formerly MB Finance). They were also officers and members of MB Finance Employees
Association-FFW Chapter, a legitimate labor union and the sole exclusive bargaining agent of the employees of Jardine.

On the claim of financial losses, Jardine decided to reorganize and implement a redundancy program among its employees. Arabit, et. al. were among those affected by the redundancy
program.

Jardine thereafter hired contractual employees to undertake the functions these employees used to perform.

The petitioners and the Union filed a complaint against Jardine with the NLRC for illegal dismissal and unfair labor practice.

CONTENTION
P: 3. Because of these serious business losses, Jardine asserted that it had to lay-off some of its employees and reorganize its ranks to eliminate positions that were in
excess of what its business required.

4. hiring of contractual employees was a valid exercise of its management prerogative.

distinction between redundancy and retrenchment is not material; an employer resorts to retrenchment or redundancy for the same reason, namely the economics of
business. Since Jardine successfully established that it incurred serious business losses, then termination of employment of the petitioners was valid for all intents and
purposes.

R: 3. Their dismissal was illegal and was tainted with bad faith as their positions were not redundant. They argued that if their positions had really been redundant, then
Jardine should have not hired contractual workers to replace them.

4. Jardine was guilty of unfair labor practice for contracting out services that the petitioners previously held.
Cause of Action: illegal dismissal and unfair labor practice

Issue: was the retrenchment/ redundancy program valid?

DECISION

LA LA ruled in the petitioners favor.

NLRC Affirmed LA

CA The CA reversed the LAs and the NLRCs rulings, and granted Jardines petition for certiorari.

Jardines act of hiring contractual employees in replacement of the petitioners does not negate to the argument that their positions are already redundant.

SC Reversed CA decision: The retrenchment was invalid

Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is
redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of workers, decreased volume
of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.

The redundancy program was not valid because Jardine hired contractual employees as replacements, thus, contradicting underlying reasons of
redundancy.

To dismiss the petitioners and hire new contractual employees as replacements necessarily give rise to the soundconclusion that the petitioners’ services have not really
become in excess of what Jardine’s business requires. To replace the petitioners who were all regular employees with contractual ones would amount to a violation of
their right to security of tenure
TOPIC: MANAGEMENT PREPROGATIVE (3. Contracting & Reorganization)

Manalang-Demigillo v. Trade and Investment Development Corporation of the Philippines

Facts:

Philippine Export and Foreign Loan Guarantee was renamed Trade and Investment Development Corporation of the Philippines (TIDCORP) pursuant to Republic Act No. 8494
reorganized the structure of TIDCORP. Demigillo was appointed as Senior Vice President with permanent status, and was assigned to the Legal and Corporate Services Department
(LCSD) of TIDCORP.

The Board of Directors passed Resolution No. 1365, to approve an Organizational Refinement/Restructuring Plan. During the implementation of the Organizational
Refinement/Restructuring Plan, the Legal and Corporate Services Department was abolished. Demigillo, retaining her position as a Senior Vice President, was assigned to head the
Remedial and Credit Management Support Sector. On the same date, President Valdes issued her appointment as head of RCMSS, such appointment being in nature a reappointment
under the reorganization plan.

Demigillo challenged before the Board of Directors the validity of her assignment to the RCMSS. She averred that she had been thereby illegally removed from her position of Senior
Vice President in the LCSD to which she had been previously assigned. She insisted that the Board of Directors had not been authorized to undertake the reorganization and corporate
restructuring.

Pending determination of her challenge by the Board of Directors, Demigillo appealed to the Civil Service Commission (CSC), raising the same issues. The Board decided to DISMISS
the appeal of Atty. Ma Rosario Demigillo for lack of merit. In the meanwhile, President Valdes informed Demigillo of her poor performance rating. Records show that she consistently
behaved as an obstructionist in the implementation of the Corporate Business Plan.

President Valdes issued a memorandum to Demigillo stating that he found no justification to change the poor rating given to her.

Demigillo received a memorandum from President Valdes stating that her performance rating for the next periods "needs improvement," attaching the pertinent Performance Evaluation
Report Form that she was instructed to return "within 24 hours from receipt."

Not in conformity with the performance rating, Demigillo scribbled on the right corner of the memorandum the following comments: "I do not agree and accept. I am questioning the
same. This is pure harassment."

She then appealed the poor performance rating, calling the rating a part of Valdes’ "unremitting harassment and oppression on her."

CSC:

Organizational Refinements or Restructuring Plan of TIDCORP had been valid for being authorized by Republic Act. No. 6656

The CSC held, however, that TIDCORP’s implementation of its reorganization did not comply with Section 6 of Republic Act No. 6656; that although there was no diminution in
Demigillo’s rank, salary and status, there was nonetheless a demotion in her functions and authority, considering that the 2002 reorganization reduced her authority and functions from
being the highest ranking legal officer in charge of all the legal and corporate affairs of TIDCORP to being the head of the RCMSS reporting to the Executive Vice President and having
only two departments under her supervision; and that the functions of Demigillo’s office were in fact transferred to the Operations Group.

Dropping from the rolls of Demigillo did not comply with the mandatory requirement under Section 2, particularly 2.2 Rule XII of the Revised Omnibus Rules on Appointments and Other
Personnel Actions Memorandum Circular No. 40, Series of 1998.

Subsequently, TIDCORP reinstated Demigillo to the position of Senior Vice President in RCMSS, a position she accepted without prejudice to her right to appeal the decision of the
CSC.

CA:
reorganizations are as valid provided they are pursued in good faith. Reorganization is carried out in good faith if it is for the purpose of economy or to make bureaucracy more efficient.

Demigillo failed to present sufficient evidence that the reorganization did not bear the earmarks of economy and efficiency. Good faith is always presumed.

Demigillo could not be reinstated to her previous position of Senior Vice President of the LCSD in view of the legality of the 2002 reorganization being upheld

Demigillo had been demoted and invalidly dropped from the rolls by TIDCORP. One of the highest ranking officers of the corporation, was demoted when she was designated to be the
head of merely one sector. She may have retained her title as SVP, but she was deprived of the authority she previously enjoyed and stripped of the duties and responsibilities assigned
to her under the Legal and Corporate Services. In utter disregard of respondent Demigillo’s right to security of tenure, petitioner TIDCORP demoted her in the guise of "reorganization."

Issue: Whether or not the reorganization is valid resulting to Demigillo’s reassignment valid.

Held: Yes.

the reorganization was not arbitrary and whimsical. It had been formulated following lengthy consultations and close coordination with the affected offices within TIDCORP in order for
them to come up with various functional statements relating to the new organizational setup.

The result of the lengthy consultations and close coordination was the comprehensive reorganization plan that included a new organizational structure, position classification and
staffing pattern, qualification standards, rules and regulations to implement the reorganization, separation incentive packages and timetable of implementation. Undoubtedly, TIDCORP
effected the reorganization within legal bounds and in response to the perceived need to make the agency more attuned to the changing times.

Demigillo’s contention that she was specifically appointed to the position of Senior Vice President in the LCSD was bereft of factual basis. The records indicate that her permanent
appointment pertained only to the position of Senior Vice President. Her appointment did not indicate at all that she was to hold that specific post in the LCSD. Hence, her re-assignment
to the RCMSS was not a diminution in rank and status considering that she maintained the same rank of Senior Vice President with an accompanying increase in pay grade.

The assignment to the RCMSS did not also violate Demigillo’s security of tenure as protected by Republic Act No. 6656. We have already upheld reassignments In the Civil Service
resulting from valid reorganizations. Nor could she claim that her reassignment was invalid because it caused the reduction in her rank, status or salary. On the contrary, she was
reappointed as Senior Vice President, a position that was even upgraded like all the other similar positions to Pay Grade 16, Step 4, Level II. In every sense, the position to which she
was reappointed under the 2002 reorganization was comparable with, if not similar to her previous position.

That the RCMSS was a unit smaller than the LCSD did not necessarily result in or cause a demotion for Demigillo. Her new position was but the consequence of the valid
reorganization, the authority to implement which was vested in the Board of Directors by Republic Act No. 8494. Indeed, we do not consider to be a violation of the civil servant’s right to
security of tenure the exercise by the agency where she works of the essential prerogative to change the work assignment or to transfer the civil servant to an assignment where she
would be most useful and effective. That prerogative is vested with the employer, whether public or private.

Demigillo was not demoted because she did not suffer any diminution in her rank, status and salary under the reorganization. Her reassignment to the RCMSS, a smaller unit compared
to the LCSD, maintained for her the same rank of Senior Vice-President with a corresponding increase in pay grade. The reassignment resulted from the valid reorganization.
 CARLOS COTIANGCO, LUCIO SALAS, EDITHA SALONOY, MA. FILIPINA CALDERON, ROSALINDA ABILAR, MEDARDA LARIBA, TITO GUTIERREZ, BENJAMIN LUCIANO,
MYRNA FILAMOR AND MONIANA NAJARRO, V THE PROVINCE OF BILIRAN AND THE COURT OF APPEALS

Sangguniang Panlalawigan of Biliran passed SP Resolution No. 102, Series of 1998, approving the revised structure and staffing pattern of the provincial government submitted by its
then incumbent governor, Danilo Parilla.

Pursuant to said Resolution, Governor Parilla issued Executive Order No. 98-07, declaring all positions in the provincial government of Biliran as abolished except those of the
Provincial Treasurer and all elective positions.

EO No. 98-07 was revoked by EO No. 98-08, Series of 1998, which in turn declared "all positions under the new staffing pattern vacant" and directed "all permanent employees to
submit their application within 15 days from the date of posting of the approved new staffing pattern.

Petitioners filed a suit for Prohibition to question the validity of EO No. 98-08, Series of 1998.

Meanwhile, pursuant to said EO, a Personnel Placement Committee (Committee) was created to screen and evaluate all applicants for the vacant positions.

Petitioners failed/refused to apply for any position under the new staffing pattern, claiming that to do so would be inconsistent with their pending suit for prohibition. At any rate,
petitioners argue that under Rule VI, Section 9 of Civil Service Commission (CSC) Resolution No. 91-1631,3 as well as Sections 5 and 6 of the Rules on Government Reorganization,
there should be a screening of the qualifications of all existing employees, and not merely of those who filed their respective applications under the new staffing pattern.

As a result of the reorganization, the positions in the Biliran Provincial Health Service occupied by petitioners were excluded or abolished:

Petitioners then received their notices of termination/non-reappointment.

Appeal denied: governer/ CSC/ CA

ISSUE: Was the reorganization valid?

Ruling: YES

1. Petitioners failed to show that the reorganization was done in bad faith. They have not adduced sufficient evidence to establish the existence of bad faith.

It is a basic principle that good faith is presumed and that the party who alleges bad faith has the burden of proving the allegation. Petitioners therefore had the burden of
proving bad faith on the part of the province when it undertook the reorganization.

The provincial government argued, and the CSC found, that the Biliran Province had a total of 162 personnel in 1990. However, this number swelled to 381 personnel in 1998.
Reorganization was therefore called for to lessen the budget allocation for personnel services; and to increase that for development projects, the purchase of medicines and
supplies, and the maintenance of infrastructure.

2. Petitioners were not deprived of due process when they were not screened and evaluated for possible appointment to new positions, as they had not filed their applications
notwithstanding the invitation for them to do so.

The law mandates that only those who have filed the requisite applications for the subject position may be considered by the placement committee for possible appointment.
The intent of this law is clear enough. After all, it is the submission of the application form that signals an employee’s interest in a position. The placement committee cannot
spend its limited time and resources in considering the qualifications of all previous employees of the agency being reorganized, even if they have not signified their intention to
continue working in the said agency. Otherwise, there is a possibility that it would recommend the appointment of a person to a position in which the latter is not interested.
Also, without the filing of the requisite application form, there would hardly be a basis for evaluating the qualifications of the candidates for employment.
 GRANT OF BONUS AND ALLOWANCES

MEGA MAGAZINE PUBLICATIONS, INC., JERRY TIU, AND SARITA V. YAP v. MARGARET A. DEFENSOR; G.R. No. 162021, June 16, 2014
Facts: 1. Petitioner Mega Magazine Publications, Inc. (MMPI) first employed the respondent as an Associate Publisher in 1996, and later promoted her as a Group Publisher. In a memorandum dated February 25, 1999,
the respondent proposed to MMPI’s Executive Vice-President Sarita V. Yap (Yap) year-end commissions for herself and a special incentive plan for the Sales Department.
2. Yap made marginal notes of her counter-proposals on her copy of the respondent’s memorandum dated February 25, 1999 itself, proposing instead that outright commissions be at 0.1% of P35-P38 million.
3. The respondent sent another memorandum on April 5, 1999 setting out the 1999 advertisement sales, target and commissions, and proposing that the schedule of her outright commissions should start at
.05% of P34.5 million total revenue, or P175,000.00;6 and further proposing that the special incentives be given when total revenues reached P35-P38 million.
4. On August 31, 1999, the respondent sent Yap a report on sales and sales targets. On October 1999, the respondent tendered her letter of resignation effective at the end of December 1999. Yap accepted the
resignation.
5. On December 8, 1999, Yap responded with a “formalization” of her approval of the 1999 special incentive scheme proposed by the respondent through her memorandum dated February 25, 1999,10 revising
anew the schedule The respondent replied to Yap, pointing out that her memorandum dated April 5, 1999 had been the result of Yap’s own comments on the special incentive scheme she had proposed, and that
she had assumed that Yap had been amenable to the proposal when she did not receive any further reaction from the latter.12
6. On May 2000, after the respondent had left the company, she filed a complaint for payment of bonus and incentive compensation with damages,13 specifically demanding the payment of P271,264.68 as sales
commissions, P60,000.00 as 14th month pay, and P8,500.00 as her share in the incentive scheme for the advertising and sales staff.
Labor The Labor Arbiter (LA) dismissed the respondent’s complaint, ruling that the respondent had not presented any evidence showing that MMPI had agreed or committed to the terms proposed in her memorandum
Arbiter of April 5, 1999; that even assuming that the petitioners had agreed to her terms, the table she had submitted justifying a gross revenue of P36,216,624.07 was not an official account by MMPI;16 and that the
petitioners had presented a 1999 statement of income and deficit prepared by the auditing firm of Punongbayan & Araullo showing MMPI’s gross revenue for 1999 being only P31,947,677.00.
NLRC NLRC denied the appeal for its lack of merit,18 with the NLRC concurring with the LA’s ruling that there had been no agreement between the petitioners and the respondent on the terms and conditions of the
incentives reached.
CA CA dismissed the respondent’s petition for certiorari and upheld the resolutions of the NLRC.

On motion for reconsideration by the respondent, however, the CA promulgated on November 19, 2003 its assailed amended decision granting the motion for reconsideration and giving due course to the
respondent’s petition for certiorari; annulling the challenged resolutions of the NLRC; and remanding the case to the NLRC for the reception of additional evidence. The CA opined that the NLRC had committed a
grave abuse of discretion in finding that there had been no special incentive scheme approved and implemented for 1999,22 and in disallowing the respondent from presenting additional evidence that was crucial in
establishing her claim about MMPI’s gross revenue.
Issue Is the respondent entitled to the commissions and the incentive bonus being claimed?
Ruling YES.

The grant of a bonus or special incentive, being a management prerogative, is not a demandable and enforceable obligation, except when the bonus or special incentive is made part of the wage, salary or
compensation of the employee,29 or is promised by the employer and expressly agreed upon by the parties.30 By its very definition, bonus is a gratuity or act of liberality of the giver,31 and cannot be considered part
of an employee’s wages if it is paid only when profits are realized or a certain amount of productivity is achieved. If the desired goal of production or actual work is not accomplished, the bonus does not accrue.

Due to the nature of the bonus or special incentive being a gratuity or act of liberality on the part of the giver, the respondent could not validly insist on the schedule proposed in her memorandum of April 5, 1999
considering that the grant of the bonus or special incentive remained a management prerogative. However, the Court agrees with the CA’s ruling that the petitioners had already exercised the management
prerogative to grant the bonus or special incentive. At no instance did Yap flatly refuse or reject the respondent’s request for commissions and the bonus or incentive. This is plain from the fact that Yap even
“bargained” with the respondent on the schedule of the rates and the revenues on which the bonus or incentive would be pegged.

Accordingly, the Court concludes that the respondent was entitled to her 0.05% outright commissions and to the special incentive bonus of P8,500.00 based on MMPI having reached the minimum target of P35
million in gross revenues paid in “bartered goods and cash in direct proportion to percentage of cash and bartered goods revenue for the year,” as provided in Yap’s memorandum of December 8, 1999.

Accordingly, the Court concludes that the respondent was entitled to her 0.05% outright commissions and to the special incentive bonus of P8,500.00 based on MMPI having reached the minimum target of P35
million in gross revenues paid in “bartered goods and cash in direct proportion to percentage of cash and bartered goods revenue for the year,” as provided in Yap’s memorandum of December 8, 1999.

DP WHEREFORE, the Court REVERSES AND SETS ASIDE the amended decision promulgated on November 19, 2003; ENTERS a new decision granting respondent Margaret A. Defensor’s claim for outright commissions
in the amount of P181,083.12 and special incentive bonus of P8,500.00, or a total of P189,583.12; and DIRECTS petitioner Mega Magazine Publications, Inc. to pay the costs of suit.
EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., v. EASTERN TELECOMS EMPLOYEES UNION; G.R.No.185665;February 8, 2012
Facts: 1. Eastern Telecommunications Phils., Inc. (ETPI) is a corporation engaged in the business of providing telecommunications facilities. Eastern Telecoms Employees Union (ETEU) is the certified exclusive bargaining
agent of the company’s rank and file employees. It has an existing CBA with the company to expire in the year 2004 with a Side Agreement signed on September 3, 2001.
2. In essence, the labor dispute was a spin-off of the company’s plan to defer payment of the 2003 14th, 15th and 16th month bonuses sometime in April 2004. The company’s main ground in postponing the payment
of bonuses is due to allege continuing deterioration of company’s financial position which started in the year 2000. However, ETPI while postponing payment of bonuses sometime in April 2004, such payment would
also be subject to availability of funds.
3. Invoking the Side Agreement of the existing CBA for the period 2001-2004 between ETPI and ETEU, the union strongly opposed the deferment in payment of the bonuses by filing a preventive mediation
complaint with the NCMB.
4. Later, the company made a sudden turnaround in its position by declaring that they will no longer pay the bonuses until the issue is resolved through compulsory arbitration.
5. Thus ETEU filed a Notice of Strike on the ground of unfair labor practice for failure of ETPI to pay the bonuses in gross violation of the economic provision of the existing CBA.
6. ETPI insists that it is under no legal compulsion to pay 14th, 15th and 16th month bonuses for the year 2003 and 14th month bonus for the year 2004 contending that they are not part of the demandable wage or
salary and that their grant is conditional based on successful business performance and the availability of company profits from which to source the same. To thwart ETEU’s monetary claims, it insists that the
distribution of the subject bonuses falls well within the company’s prerogative, being an act of pure gratuity and generosity on its part. Thus, it can withhold the grant thereof especially since it is currently plagued
with economic difficulties and financial losses.
7. ETPI further avers that the act of giving the subject bonuses did not ripen into a company practice arguing that it has always been a contingent one dependent on the realization of profits and, hence, the workers are
not entitled to bonuses if the company does not make profits for a given year. It asseverates that the 1998 and 2001 CBA Side Agreements did not contractually afford ETEU a vested property right to a perennial
payment of the bonuses. It opines that the bonus provision in the Side Agreement allows the giving of benefits only at the time of its execution. For this reason, it cannot be said that the grant has ripened into a
company practice.
NLRC NLRC RULING: On April 28, 2005, the NLRC issued its Resolution dismissing ETEU’s complaint and held that ETPI could not be forced to pay the union members the 14th, 15th and 16th month bonuses for the year
2003 and the 14th month bonus for the year 2004 inasmuch as the payment of these additional benefits was basically a management prerogative, being an act of generosity and munificence on the part of the
company and contingent upon the realization of profits. The NLRC pronounced that ETPI may not be obliged to pay these extra compensations in view of the substantial decline in its financial condition.

Respondent ETEU moved for reconsideration but the motion was denied by the NLRC in its Resolution dated August 31, 2005.
CA CA RULING: Aggrieved, ETEU filed a petition for certiorari8 before the CA ascribing grave abuse of discretion on the NLRC for disregarding its evidence which allegedly would prove that the subject bonuses were
part of the union members’ wages, salaries or compensations. In addition, ETEU asserted that the NLRC committed grave abuse of discretion when it ruled that ETPI is not contractually bound to give said bonuses to
the union members.
In its assailed June 25, 2008 Decision, the CA declared that the Side Agreements of the 1998 and 2001 CBA created a contractual obligation on ETPI to confer the subject bonuses to its employees without
qualification or condition. It also found that the grant of said bonuses has already ripened into a company practice and their denial would amount to diminution of the employees’ benefits. It held that ETPI could not
seek refuge under Article 1267 of the Civil Code because this provision would apply only when the difficulty in fulfilling the contractual obligation was manifestly beyond the contemplation of the parties, which was
not the case therein.
Issue Is the petitioner (ETPI) liable to pay 14th, 15th and 16th month bonuses for the year 2003 and 14th month bonus for the year 2004 to the members of respondent union?
Ruling YES. From a legal point of view, a bonus is a gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right. The grant of a bonus is basically a management prerogative which
cannot be forced upon the employer who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employee’s basic salaries or wages.

A bonus, however, becomes a demandable or enforceable obligation when it is made part of the wage or salary or compensation of the employee. Particularly instructive is the ruling of the Court in Metro Transit
Organization, Inc. v. NLRC, where it was written:
Whether or not a bonus forms part of wages depends upon the circumstances and conditions for its payment. If it is additional compensation which the employer promised and agreed to give without any conditions
imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or if a certain level of productivity is achieved, it cannot be
considered part of the wage. Where it is not payable to all but only to some employees and only when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefore,
not a part of the wage.

In the case at bench, it is indubitable that ETPI and ETEU agreed on the inclusion of a provision for the grant of 14th, 15th and 16th month bonuses in the 1998-2001 CBA Side Agreement, as well as in the 2001-2004
CBA Side Agreement, which was signed on September 3, 2001. The provision, which was similarly worded, states:

Employment-Related Bonuses: The Company confirms that the 14th, 15th and 16th month bonuses (other than the 13th month pay) are granted.

A reading of the above provision reveals that the same provides for the giving of 14th, 15th and 16th month bonuses without qualification. The wording of the provision does not allow any other interpretation. There
were no conditions specified in the CBA Side Agreements for the grant of the benefits contrary to the claim of ETPI that the same is justified only when there are profits earned by the company. Terse and clear, the
said provision does not state that the subject bonuses shall be made to depend on the ETPI’s financial standing or that their payment was contingent upon the realization of profits. Neither does it state that if the
company derives no profits, no bonuses are to be given to the employees. In fine, the payment of these bonuses was not related to the profitability of business operations.

The records are also bereft of any showing that the ETPI made it clear before or during the execution of the Side Agreements that the bonuses shall be subject to any condition. Indeed, if ETPI and ETEU intended that
the subject bonuses would be dependent on the company earnings, such intention should have been expressly declared in the Side Agreements or the bonus provision should have been deleted altogether. Verily, by
virtue of its incorporation in the CBA Side Agreements, the grant of 14th, 15th and 16th month bonuses has become more than just an act of generosity on the part of ETPI but a contractual obligation it has
undertaken. Moreover, the continuous conferment of bonuses by ETPI to the union members from 1998 to 2002 by virtue of the Side Agreements evidently negates its argument that the giving of the subject bonuses
is a management prerogative.

Granting arguendo that the CBA Side Agreement does not contractually bind petitioner ETPI to give the subject bonuses, nevertheless, the Court finds that its act of granting the same has become an established
 company practice such that it has virtually become part of the employees’ salary or wage. A bonus may be granted on equitable consideration when the giving of such bonus has been the company’s long and regular
practice. In Philippine Appliance Corporation v. CA, it was pronounced:

To be considered a “regular practice,” however, the giving of the bonus should have been done over a long period of time, and must be shown to have been consistent and deliberate. The test or rationale of this rule on
long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment thereof.

The records show that ETPI, aside from complying with the regular 13th month bonus, has been further giving its employees 14th month bonus every April as well as 15th and 16th month bonuses every December of
the year, without fail, from 1975 to 2002 or for 27 years whether it earned profits or not. The considerable length of time ETPI has been giving the special grants to its employees indicates a unilateral and voluntary
act on its part to continue giving said benefits knowing that such act was not required by law. Accordingly, a company practice in favor of the employees has been established and the payments made by ETPI pursuant
thereto ripened into benefits enjoyed by the employees.
The giving of the subject bonuses cannot be peremptorily withdrawn by ETPI without violating Article 100 of the Labor Code:
Art. 100. Prohibition against elimination or diminution of benefits. – Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of
promulgation of this Code.
The rule is settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded
on the constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full protection.22

Interestingly, ETPI never presented countervailing evidence to refute ETEU’s claim that the company has been continuously paying bonuses since 1975 up to 2002 regardless of its financial state. Its failure to
controvert the allegation, when it had the opportunity and resources to do so, works in favor of ETEU. Time and again, it has been held that should doubts exist between the evidence presented by the employer
and the employee, the scales of justice must be tilted in favor of the latter.
DP WHEREFORE, the petition is DENIED. The June 25, 2008 Decision of the Court of Appeals and its December 12, 2008 Resolution are AFFIRMED.

ZAMBOANGA CITY WATER DISTRICT v. COMMISSION ON AUDIT; G.R. No. 213472, January 26, 2016
Facts: 1. Petitioner Zamboanga City Water District (ZCWD) is a government-owned and/and controlled corporation (GOCC) which was created pursuant to the provisions of Presidential Decree (P.D.) No. 198 or the
Provincial Water Utilities Act of 1973 (PWUA), as amended by Republic Act (R.A.) No. 9286. On January 9, 2007, Catalino S. Genel, Audit Team Leader for ZCWD, Zamboanga City, issued the following Notices of
Disallowance (ND) for ZCWD's various payments
2. The NDs covered the disbursements made during the tenure of then General Manager Juanita L. Bucoy (GM Bucoy).7 On April 12, 2007, ZCWD filed its omnibus appeal before the LAO.

LAO LAO rendered a decision upholding all the NDs in the aggregate amount of P27,293,621.40. Undaunted, ZCWD appealed before the COA.
1. LAO disagreed with the contention of the ZCWD that its Board of Directors (BOD) had the right to fix the compensation of its GM pursuant to R.A. No. 9286. 9 It stated that the compensation of the GMs of
Local Water Districts (LWDs) was still subject to the provisions of R.A. No. 6758 or the Salary Standardization Law (SSL). Further, it emphasized that any salary increase of government employees must be
authorized through a legislative enactment or pronouncement from the President, through the DBM.
2. LAO opined that the payment of the Representation Allowance and Transportation Allowance (RATA) of the GM and the Representation Allowance (RA) of the Assistant GMs and the back payment of the Cost
of Living Allowance (COLA) and the Amelioration Allowance (AA) were correctly disallowed because LWDs were not covered by Letter of Implementation (LOI) No. 97. Further, even if LWDs were covered by LOI
No. 97, the payment of RATA and RA should still be disallowed because they were receiving the RATA at the rate of 20% of their basic salary, and not the rate provided for by LOI No. 97.
3. LAO also insisted that the payments corresponding to the midyear incentive and the Collective Negotiation Agreement (CNA) incentives were improper because they were without basis. It opined that ZCWD
could not rely on the CSC approval10 of its Program on Awards and Incentives for Service Excellence (PRAISE) because it had no authority to do so. Likewise, it noted that ZCWD failed to establish compliance with
Public Sector Labor Management Council (PSLMC) Resolution No. 2 to warrant the payment of CNA incentives. Moreover, the LAO pointed out that the payment of life insurance benefits other than that
provided by the GSIS was contrary to Section 28(b) of Commonwealth Act (C.A.) No. 186,11 as amended by R.A. No.4968.
4. LAO found that the per diems paid to the BOD, as well as the 141 month pay given to ZCWD employees, were in excess of the amount allowed by law. The LOA stated that the per diems granted to the
members of the BOD were in excess of the amount allowed by Administrative Order (A.O.) No. 103 and the 14th month pay was in excess of the amount authorized under R.A. No. 8441.

COA NLRC denied the appeal for its lack of merit,18 with the NLRC concurring with the LA’s ruling that there had been no agreement between the petitioners and the respondent on the terms and conditions of the
incentives reached.
CA On October 28, 2010, the COA rendered the assailed decision affirming the LAO ruling. The COA highlighted that the CNA incentives should not be paid because ZCWD failed to prove compliance with PSLMC
Resolution No. 2, particularly: (a) identifying specific cost-cutting measures; and (b) proof that the funds for the incentives were taken from savings as a result of the cost-saving measures.

Aggrieved, ZCWD moved for reconsideration but its motion was denied by the COA in its assailed resolution, dated June 6, 2014.

Issue (1) Were the disbursements under the NDs improper; and (2) in the event the disbursements were improper, is the petitioner liable to refund the same?
Petitioner’s 1. Petitioner ZCWD insists that its BOD has the power to determine and fix the salaries and compensation of its GM, in accordance with Section 23 of P.D. No. 198, as amended. It contends that its employees
Contetions were entitled to COLA and AA pursuant to the ruling of the Court in PPA Employees hired after July 1, 1989 v. COA (PPA Employees),13 which stated that the government employees were entitled to the said
allowances as the integration of benefits took place only on March 16, 1999 when Department of Budget and Management (DBM) Corporate Compensation Circular (CCC) No. 10 took effect.
2. Moreover, ZCWD claims that the payment of the CNA incentives was in accordance with the requirements of PSLMC Resolution No. 2. It pointed out that its employees had always been paid the 14th month
pay since July 1, 1989 and that disallowing the payment of the 14th month pay to employees hired after July 1, 1989 would violate the equal protection clause.
3. Furthermore, ZCWD argues that the payment of the per diems to its BOD was in order because, prior to the passage of A.O. No. 103, its BOD had a fixed right to the new rate of per diems.

Ruling 1. ZCWD's contention that, pursuant to Section 23 of P.D. No. 198, as amended by R.A. No. 9286, the BOD has the discretion to fix the compensation of the GM is misplaced. As held in Mendoza v. COAX
(Mendoza),16 unless specifically exempted by its charter, GOCCs are covered by the provisions of the SSL. The Court in Mendoza recognized the power of the BOD to fix the compensation of the GM but limited
the same to the extent that the rates approved must be in accordance with the position classification system under the SSL. Here in this case, the salary increase of GM Bucoy, including the corresponding
increase in her monetized leave credits, was properly disallowed for being in excess of the amounts allowed under the SSL.
2. The Court agrees with ZCWD that LWDs are within the coverage of LOI No. 97. Nevertheless, the payment of RATA and RA in favor of the GM and Assistant GMs of ZCWD based on the rates under LOI No. 97 is
inappropriate. In the case at bench, GM Bucoy and the assistant GMs of ZCWD, although incumbent as of July 1, 1989, were not receiving RATA, a non-integrated benefit, based on the rates provided in LOI No.
97. Consequently, they are no longer entitled to enjoy the RATA benefit given by LOI No. 97.
3. ZCWD employees not entitled to back payment of COLA and AA. Pursuant to Section 12 of the SSL, employee benefits, save for some exceptions, are deemed integrated into the salary. In Maritime Industry
Authority v. CO A (MIA),21 the Court emphasized that the general rule was that all allowances were deemed included in the standardized salary and the issuance of the DBM was required only if additional non-
integrated allowances would be identified. In accordance with the MIA ruling, the COLA and AA were already deemed integrated in the standardized salary.
4. ZCWD employees not entitled to 14th month pay. The COA disallowed the 14th month pay on the ground that ZCWD failed to prove that it had granted the same to its employees since July 1, 1989 and even it
were true, it could not be extended to employees hired after the said date. ZCWD is adamant that it submitted documentary evidence to support the payment of 14th month pay even before July 1, 1989. It
asserts that the documents it presented showed that what was paid to the employees was the "Year-end Christmas Bonus" but it claims that the same was the 14th month pay.

The Court agrees with the COA that the documents presented by ZCWD did not unequivocally show that it had paid its employees the 14th month pay because the "Year-end Christmas Bonus" could have
referred to the usual year-end benefit equivalent to one (1) month salary as provided by Memorandum Order No. 324.

Even if ZCWD could prove that it had granted the 14th month pay to its employees, it could not insist that the same should be given to the employees hired after July 1, 1989. The 14 th month pay was in the
nature of an additional benefit, a non-integrated benefit, which had been given on top of an employee's usual salary. As discussed above, in order for a non-integrated benefit to be continuously enjoyed, it must
have been given since July 1, 1989 to incumbents as of the said date. It could not be extended to employees hired after July 1, 1989 or to those which had replaced the incumbents as of July 1, 1989.

DP WHEREFORE, the October 28, 2010 Decision and the June 6, 2014 Resolution of the Commission on Audit are AFFIRMED with MODIFICATION in that the recipients and the officers who had authorized the
following disbursements be absolved from refunding the amounts paid in connection with the following: (1) the salary increase of GM Bucoy and the corresponding increase in her monetized leave credits; (2)
the back payment of the COLA and AA; and (3) the midyear incentives, pursuant to its PRAISE Program. As to the other items, only the officers who authorized their release are bound to refund the same.

DUTY FREE PHILIPPINES CORPORATION v. COMMISSION ON AUDIT; G.R. No. 210991, July 12, 2016
Facts: 1. Executive Order (EO) No. 46 authorized the Ministry (now Department) of Tourism (DOT), through the Philippine Tourism Authority (PTA), to operate stores and shops that would sell tax and duty free
merchandise, goods and articles, in international airports and sea ports throughout the country. The Duty Free was established pursuant to this authority.
2. The Duty Free Philippines Services, Inc. (DFPSI), a private contracting agency, initially provided the manpower needs of the Duty Free. The DFPSI employees organized the Duty Free Philippines Employees
Association (DFPEA) and filed a petition for certification election with the Department of Labor and Employment.On April 22, 1997, the Med-Arbiter granted the application for certification election. The Med-
Arbiter found that the Duty Free was the direct employer of the contractual employees and that DFPSI was a labor-only contractor.
3. The Duty Free subsequently terminated its manpower services contract with DFPSI and assumed the obligations of the latter as the employer of the contractual personnel.
4. In 2002, the Duty Free granted the 14th Month Bonus to its officials and employees in the grand sum of Php 14,864,500.13.
5. On July 13, 2006, the COA Director disallowed the payment of the 14th Month Bonus. as the same constitutes irregular expenditures and unnecessary use of public funds and the said grant being without the
approval from the [PTA] Board of Directors and Office of the President as required under Section 5 of P.D. No. 159712 and Memorandum Order No. 20.
*The Duty Free moved for reconsideration before the COA Legal and Adjudication Sector (LAS).
6. The COA LAS denied the motion for reconsideration17 and ruled that: (1) pursuant to this Court's ruling in Duty Free Philippines v. Mojica, the Duty Free is a government entity under the exclusive authority of
the PTA, a corporate body attached to the DOT;19 and thus, (2) the Duty Free is not bound to pay the employee benefits previously granted by DFPSI, a private entity.
7. The COA LAS explained that the finding of the Med-Arbiter that DFPSI is a labor-only contractor converted the status of the employees from private to government. Thus, the non-payment of the 14th Month
Bonus is not a diminution of the workers' benefits since their salaries and benefits are governed by law, rules and regulations applicable to government employees.
8. The Duty Free appealed to the COA Proper and claimed that: (1) this Court in Duty Free Philippines v. Duty Free Philippines Employees Association (DFPEA)20 mandated the grant of the 14th Month Bonus; (2) the
COA erred in applying the Mojica case; and (3) the grant of the 14th Month Bonus had legal basis.
COA The COA partly granted the Duty Free's petition for review and ruled as follows:
1. First, the DFPEA case did not rule that the Duty Free is bound to pay the 14th Month Bonus.22 In that case, the Court denied through a minute resolution, the Duty Free's petition questioning the Med-Arbiter
decision allowing the certification election. The Duty Free's petition was insufficient in form (lacks material dates) and substance (the Med-Arbiter did not gravely abuse his discretion).23 This Court did not resolve
the propriety of the 14th Month Bonus.
2.Second, the Duty Free employees are government employees. Their compensation structure is subject to Republic Act No. 6758 or the Salary Standardization Law (SSL for brevity). Applying our decision
in Philippine Ports Authority v. COA,25cralawred the COA ruled that the additional (i.e., not integrated with the base salary) allowances and benefits granted to incumbent government employees before the
effectivity of the SSL (July 1, 1989)26 shall not be diminished. The Duty Free employees who have been receiving the 14th Month Bonus as of July 1, 1989 shall continue to receive it. The Duty Free employees hired
after July 1, 1989 shall not be entitled to the 14th Month Bonus although their employment contracts with DFPSI gave such entitlement.
*Citing the Civil Code, the COA stressed that contracting parties may establish stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.28 Since salaries and compensation benefits of government employees are governed by the SSL, they cannot be the subject of negotiation, and any benefit not allowed
under the SSL although stipulated in the employment contracts is disallowed.

Duty Free’s Contention The Duty Free maintains that it was authorized and had the duty to grant the 14th Month Bonus on the main ground that it would have diminished the employees' benefits if it had discontinued the payment. The
Duty Free argues that there is no substantial distinction between the employees hired before the effectivity of the SSL and the employees hired after. All Duty Free employees whether hired before or after July 1,
1989 had the vested right to the 14th Month Bonus granted under their employment contracts.

The Duty Free submits that the distinction between employees hired before and after the effectivity of the SSL in Philippine Ports Authority case is inapplicable here. Unlike the Philippine Ports Authority
employees who are clearly government employees, the Duty Free employees were initially hired by DFPSI, a private contracting agency.

The Duty Free posits that the Med-Arbiter's ruling did not allow the diminution of employee benefits. In any case, it was only in 1998 in the DFPEA case that this Court upheld that the Duty Free is the employer of
the DFPSI personnel. Even then, it was only in the 2005 Mojica case that this Court held that the Duty Free officials and employees are subject to Civil Services rules. The Duty Free underscores that before Mojica,
disputes in Duty Free involving terms of employment were resolved under the Labor Code. The Duty Free also insists that the COA erred when it invoked the 2005 Mojica case in disallowing the payment of the
14th Month Bonus made in 2002. Assuming the SSL is applicable to the Duty Free employees, it should only be applied to cases after Mojica.

Finally, the Duty Free submits that the payment of the 14th Month Bonus was made in good faith, supported by then existing jurisprudence, and based on the recognition of the Duty Free employees' vested rights
to the benefits granted under their employment contracts.

COA’s comment The COA refutes the Duty Free's claims on the following grounds:
1. First, the Med-Arbiter did not rule that the Duty Free must continue paying all the benefits enjoyed by the contractual personnel supplied by DFPSI. The Med-Arbiter's determination of the employer-employee
relationship between the Duty Free and the members of the DFPEA was necessary in deciding whether to allow the certification election. That determination did not require the Duty Free to pay the 14th Month
Bonus.
The COA posits that when we dismissed the Duty Free's petition questioning the Med-Arbiter decision, what we upheld was the propriety of the certification election and not the payment of the 14 th Month
Bonus.
2. Second, the July 1, 1989 cut-off date to determine the entitlement of the Duty Free employees to the 14th Month Bonus is consistent with the Court's past ruling42 construing Section 1243 of the SSL on the
consolidation of allowances and compensation. The Court has held that incumbent government employees as of July 1, 1989, who were receiving allowances or fringe benefits, whether or not included in the
standardized salaries under the SSL, should continue to enjoy such benefits.
3. Third, the Duty Free employees are government employees subject to the SSL.45 The employees did not retain their benefits under the employment contracts with DFPSI when, in view of the Med-Arbiter's
decision, Duty Free terminated its manpower services contract with DFPSI.

Issues 1. The basic issue is whether the COA gravely abused its discretion when it disallowed the payment of the 14th Month Bonus.
2. We also resolve whether the concerned Duty Free officers and employees may be held personally liable for the disallowed amount.
Ruling 1. The Duty Free employees are government employees subject to the SSL.
There is no dispute that PTA, a government-owned and controlled corporation attached to the DOT, operates and manages the Duty Free.46 There is also no question that the employees supplied by DFPSI became
government employees when the Duty Free terminated its manpower services contract with DFPSI. The only question now is whether the Duty Free had the duty to continue paying the 14 th Month Bonus. The
Duty Free argues in the affirmative and invokes the principle of non-diminution of benefits. The COA insists the opposite and cites the SSL, the primary law on the compensation structure of government
employees.

We agree with the COA's contention. The Duty Free was established under Executive Order (EO) No. 46 to improve the service facilities for tourists and to generate revenues for the government. In order for the
government to exercise direct and effective control and regulation over the tax and duty free shops, their establishment and operation were vested in the DOT through its implementing arm, the PTA. All the net
profits from the merchandising operations of the shops accrued to the DOT. Thus, the Duty Free is without a doubt a government entity.

Executive Order No. 180, on the other hand, defines government employees as all employees of all branches, subdivisions, instrumentalities, and agencies, of the Government, including government-owned or
controlled corporations with original charters. Plainly, as government employees working in a government entity, the Duty Free personnel's compensation structure must comply with and not contradict the SSL.

For better focus, we identify when the SSL became applicable to the Duty Free employees originally supplied by DFPSI.

The record does not disclose the exact date but based on the COA's findings, the Duty Free terminated its manpower services contract with DFPSI after this Court denied its petition questioning the Med-Arbiter's
decision in 1998, but before it paid the 14th Month Bonus in 2002.
At the time the Duty Free paid the disallowed amount, the employees were already under its direct supervision and control. They were by then government employees, whose compensation and benefits must,
from that point onward, be consistent with the SSL.

We emphasize that Section 12 of the SSL mandates that only incumbents as of July 1, 1989 are entitled to continue receiving additional compensation, whether in cash or in kind, not integrated with the
standardized salary rates.52 The 14th Month Bonus was an additional benefit granted under the employees' contracts with DFPSI. The COA thus correctly ruled that the 14th Month Bonus had no legal basis as far as
the employees hired after July 1, 1989 are concerned.

Viewed from another perspective, there is no diminution of benefits because the SSL is deemed to have superseded the contracts of the employees with DFPSI. The link between DFPSI and the employees was
severed when the Duty Free terminated its manpower services contract with DFPSI and assumed the obligations of the latter. The Duty Free, however, could not legally assume an obligation (granting the
14th Month Bonus) that contradicts an express provision of law (Section 12 of the SSL).

We thus uphold the COA's ruling that only those incumbents as of July 1, 1989 are entitled to continue receiving the 14th Month Bonus. We are aware, however, that the Duty Free employees and management
had been exempted from the coverage of the SSL upon the effectivity of Republic Act No. 9593 or the Tourism Act of 2009.53 Our ruling here is thus relevant only to the period before the employees' exemption
from the SSL.

Finally, we reject the Duty Free's claim that we upheld the payment of the 14th Month Bonus in the DFPEA case.

In that case, we denied, through a minute resolution, the Duty Free's petition for certiorari, which sought to void the Med-Arbiter's order to conduct a certification election. We did not discuss the propriety of the
14th Month Bonus because the sole issue was whether the Med-Arbiter gravely abused his discretion. The DFPEA case had nothing to do with the legality of the 14th Month Bonus.

2. The Duty Free officers who approved and the employees who received the 14th Month Bonus are not required to return the disallowed amount.
Although the 14th Month Bonus may have been paid without legal basis, we find that the Duty Free officials who approved and the employees who received the disallowed amount can take refuge under the good
faith doctrine.

Good faith, in relation to the requirement of refund of disallowed benefits or allowances, is "that state of mind denoting 'honesty of intention, and freedom from knowledge of circumstances which ought to put
the holder upon inquiry; an honest intention to abstain from taking any unconscientious advantage of another, even through technicalities of law, together with absence of all information, notice, or benefit or
belief of facts which render transactions unconscientious."

Citing earlier jurisprudence, this Court in Mendoza v. COA55 and in the more recent case of Zamboanga Water District v. COA56 recognized that the officers who approved and the employees who received the
disallowed amount may not be held personally liable for refund absent a showing of bad faith or malice. This recognition stems from the rule that every public official is entitled to the presumption of good faith in
the discharge of official duties.
In particular, we held in Zamboanga Water District that lack of knowledge of a similar ruling by this Court prohibiting a particular disbursement is a badge of good faith. Applying these rulings to the present case,
we find no credible basis to hold the concerned Duty Free officials and employees personally liable for the disallowed amount. On the contrary, we find that there are compelling grounds to believe that they acted
in good faith.
DP WHEREFORE, in view of the foregoing findings and legal premises, we PARTLY GRANT the petition and MODIFY the August 17, 2011 decision and December 6, 2013 resolution of the Commission on Audit in
Decision No. 2011-059, such that the officers who approved and the employees who received the 14th Month Bonus are NOT personally liable to refund the disallowed amount.

The Temporary Restraining Order issued on April 22, 2014 is LIFTED

 PHILIPPINE ECONOMIC ZONE AUTHORITY (PEZA) v. COMMISSION ON AUDIT (COA) AND HON. MA. GRACIA M. PULIDO TAN, CHAIRPERSON, COMMISION ON AUDIT; G.R. No. 210903, October 11, 2016
Facts: 1. The PEZA Charter, Republic Act (R.A.) No. 7916, was amended by R.A. No. 8748 in 1999 exempting PEZA from existing laws, rules and regulations on compensation, position classification and qualification standards.
The PEZA Board in Resolution No. M-99-266 dated October 29, 1999, adjusted PEZA's compensation plan and included in the said compensation plan is the grant of Christmas bonus in such amount as may be fixed by
the Board and such other emoluments. Petitioner PEZA had been granting Christmas bonus in the amount of Fifty Thousand Pesos (P50,000.00) to each of its officers and employees for CY 2000 to 2004, however, for
the years 2005 to 2008, the Christmas bonus was gradually increased per PEZA Board Resolution Nos. 05-450 and 06-462 dated November 28, 2005 and September 26, 2006, respectively. For 2005, the Christmas
bonus was increased to P60,000.00 and was again increased to P70,000.00 in 2006 and 2007. In 2008, the Christmas bonus was increased to P75,000.00 per PEZA officer/employee.
2. State Auditor V Aurora Liveta-Funa, on May 27, 2010, issued Notice of Disallowance (ND) No. 10-001-101-(05-08)6 that was received by PEZA on May 31, 2010. The ND stated that the payment of additional
Christmas bonus to PEZA officers and employees for calendar years 2005-2008 violated Section 3 of Memorandum Order (M.O.) No. 20 dated June 25, 2001 which provides that any increase in salary or compensation
of government-owned and controlled corporations (GOCCs) and government financial institutions (GFIs) that is not in accordance with the Salary Standardization Law shall be subject to the approval of the President.
3. The matter was brought to the Corporate Government Sector-B which later on rendered the Decision No. 2011-008 dated August 31, 2011 not giving credence to the arguments of petitioner and affirmed the Notice
of Disallowance No. 10-001-101-(05-08) dated May 27, 2010 in the aggregate amount of Php20,438,750.00. Thereafter, pursuant to Rules V and VII of the 2009 Revised Rules of Procedure of the COA, petitioner filed
the Petition for Review with respondent COA.
4. The COA in its Decision No. 2013-231 dated December 23, 2013 ruled that notwithstanding Section 16 of the PEZA Charter, petitioner is still duty-bound to observe the guidelines and policies as may be issued by the
President citing Intia, Jr. v. COA9 where this Court ruled that the power of the board to fix the compensation of the employees is not absolute. The COA further cited Section 6 of Presidential Decree (P.D.) No. 1597
which mandates presidential review and approval, through the Department of Budget and Management (DBM), of the position classification and compensation plan of an agency exempt from the Office of
Compensation and Position Classification (OCPC) coverage.
5. Furthermore, according to the COA, M.O. No. 20 requires presidential approval on salary increases, while Administrative Order (A.O.) No. 103 suspends the grant of new or additional benefits in line with the
austerity measures of the government. The COA added that these presidential issuances are not abhorrent to the authority of the PEZA Board of Directors to fix the remuneration of PEZA officers and employees. It
stated that the requirement of presidential approval does not remove from the board the power to fix the compensation and allowances of PEZA officers and employees but is meant to determine whether or not the
standards set by law have been complied with.
Issues DID COA ERR IN RULING THAT THE ADDITIONAL CHRISTMAS BONUS TO PEZA OFFICERS AND EMPLOYEES NEEDS THE APPROVAL OF THE OFFICE OF THE PRESIDENT BECAUSE REPUBLIC ACT NO. 7916, AS AMENDED BY
REPUBLIC ACT NO. 8748, AUTHORIZES THE PEZA BOARD OF DIRECTORS TO FIX THE REMUNERATIONS AND OTHER EMOLUMENTS OF PEZA OFFICERS AND EMPLOYEES.

PEZA’ (Petitioner) Petitioner argues that it is not covered by P.D. No. 1597 because its provisions are inconsistent with R.A. No. 7916, as amended, which authorizes the PEZA Board to determine the compensation of its officers and
Contention employees and that even assuming without admitting that it is covered by P.D. No. 1597, the law mentions of reporting to the President through the Budget Commission and does not say that the approval of the
President, through the Budget Commission, should be secured.
OSG’s Contention The Office of the Solicitor General (OSG), on the other hand, claims that despite the exception clause in Section 16 of R.A. No. 7916, as amended, said provision should nonetheless be read in conjunction with the
existing laws pertaining to compensation among government agencies, as it is undoubtedly a GOCC over which the President exercises his power of control, through the DBM, aside from the parameter set by the
provision itself, i.e., that PEZA "shall, however, endeavor to make its system conform as closely as possible with the principles under Republic Act. No. 6758.”
Ruling NO. Court finds no merit to the petition.

It is not disputed that after the enactment of the Salary Standardization Law (Republic Act No. 6758 became effective on July 1, 1989), laws have been passed exempting some government entities from its coverage.
The said government entities were allowed to create their own compensation and position classification systems that apply to their respective offices, usually through their Board of Directors. Petitioner's Charter is no
different from those
Government entities.

In fact, a close reading of the charters of those other government entities exempted from the Salary Standardization Law shows a common provision stating that although the board of directors of the said entities has
the power to set a compensation, position classification system and qualification standards, the same entities shall also endeavor to make the system to conform as closely as possible to the principles and modes
provided in R.A. No. 6758. This Court, in Trade and Investment Development Corporation of the Philippines v. Civil Service Commission,22 recognized the Trade and Investment Development Corporation's exemption
from the Salary Standardization Law. However, this Court ruled that the said Corporation should, however, "endeavor" to conform to the principles and modes of the Salary Standardization Law in making its own
system of compensation and position classification. The phrase "to endeavor" means "to devote serious and sustained effort" and "to make an effort to do." It is synonymous with the words to strive, to struggle and to
seek. The use of "to endeavor" in the context of Section 7 of R.A. No. 8494 means that despite TIDCORP's exemption from laws involving compensation, position classification and qualification standards, it should still
strive to conform as closely as possible with the principles and modes provided in R.A. No. 6758. The phrase "as closely as possible," which qualifies TIDCORP's duty "to endeavor to conform," recognizes that the law
allows TIDCORP to deviate from R.A. No. 6758, but it should still try to hew closely with its principles and modes. Had the intent of Congress been to require TIDCORP to fully, exactly and strictly comply with R.A. No.
6758, it would have so stated in unequivocal terms. Instead, the mandate it gave TIDCORP was to endeavor to conform to the principles and modes of R.A. No. 6758, and not to the entirety of this law.2

Thus, the charters of those government entities exempt from the Salary Standardization Law is not without any form of restriction. They are still required to report to the Office of the President, through the DBM the
details of their salary and compensation system and to endeavor to make the system to conform as closely as possible to the principles and modes provided in Republic Act No. 6758. Such restriction is the most
apparent indication that the legislature did not divest the President, as Chief Executive of his power of control over the said government entities.

It must always be remembered that under our system of government all executive departments, bureaus and offices are under the control of the President of the Philippines. This precept is embodied in Section 17,
Article VII of the Constitution which provides as follows:

Sec. 17. The President shall have control of all the executive departments, bureaus and offices. He shall ensure that the laws be faithfully executed.
Thus, respondent COA was correct in claiming that petitioner has to comply with Section 325cralawred of M.O. No. 20 dated June 25, 2001 which provides that any increase in salary or compensation of GOCCs/GFIs
that is not in accordance with the Salary Standardization Law shall be subject to the approval of the President. The said M.O. No. 20 is merely a reiteration of the President's power of control over the GOCCs/CFIs
notwithstanding the power granted to the Board of Directors of the latter to establish and fix a compensation and benefits scheme for its employees.
DP WHEREFORE, the Petition dated February 6, 2014 of petitioner Philippine Economic Zone Authority (PEZA) is DISMISSED. Consequently, Commission on Audit Decision No. 2013-231 dated December 23, 2013, which
affirmed Corporate Government Sector-B Decision No. 2011-008 dated August 31, 2011 and Notice of Disallowance No. 10-001-101-(05-08) dated May 27, 2010, disallowing the payment of additional Christmas
bonus/cash gifts to PEZA officers and employees for Calendar Years (CY) 2005 to 2008 is AFFIRMED. However, PEZA and its officers are absolved from refunding the amount covered by the same notice of disallowance.

PHILIPPINE HEALTH INSURANCE CORPORATION v. COMMISSION ON AUDIT, MA. GRACIA PULIDO TAN, CHAIRPERSON; AND JANET D. NACION, DIRECTOR IV; G.R. No. 213453, November 29, 2016
Facts: The instant case stems from petitioner PHIC's grant of several allowances to its officers and employees that were subsequently disallowed by respondent COA.

1. On February 7, 2008, however, pursuant to the recommendations of the Supervising Auditor of the PHIC in various Audit Observation Memoranda (AOM),8 respondent Janet D. Nacion, Director IV of the Legal and
Adjudication Office - Corporate of the COA, issued ND PHIC 2008-003 (2004), disallowing the payment of the aforementioned allowances granted to PHIC officers and employees in the total amount of P87,699,144.00.
2. According to respondent Nacion, the payment of the Collective Negotiation Agreement Signing Bonus (CNASB) was contrary to the doctrine enunciated in Social Security System (SSS) v. COA10 wherein the Court expressly
invalidated the payment of the same. With respect to the Welfare Support Assistance (WESA), Nacion maintained that its payment was made without legal basis in the absence of approval from the Office of the President.11 As
for the payment of the LMRG, Nacion found that it was merely a duplication of the Performance Incentive Bonus (PIB) which was granted to employees based on their good performance, increased efficiency and productivity.
Lastly, Nacion disallowed the payment of back Cost of Living Allowance COLA to PHIC personnel ratiocinating that it should be collected not from petitioner PHIC but from the government agency where the services have been
rendered prior to its creation in January 1995.
3. Petitioner filed its motion for reconsideration which was, however, denied by the COA Legal Services Sector (LSS) in its Decision No. 2010-02013 issued on May 21, 2010. On appeal, the COA Commission Proper (CP) sustained
the disallowance in its Decision No. 2013-208 dated November 20, 2013.14 Thereafter, in a Resolution15 dated April 4, 2014, the COA CP en banc further denied petitioner's motion for reconsideration.

Aggrieved, petitioner filed the instant petition before the Court raising the following issues:
Issues: 1. WHETHER THE COA DISREGARDED THE FISCAL AUTONOMY GRANTED TO PHIC UNDER SECTION 16 (N), R.A. 7875, AS AMENDED, AS WELL AS EXISTING AND RELEVANT JURISPRUDENCE, IN AFFIRMING THE ND PHIC 2008-003
(2004).chanroblesvirtuallawlibrary
2. WHETHER PHIC'S PAYMENTS OF THE CNASB, LMRG, WESA, AND BACK COLA IN FAVOR OF ITS OFFICERS AND EMPLOYEES AMOUNTING TO PHP87,699,144.00 WAS PROPER.
3. GRANTING THAT THE PAYMENTS WERE NOT PROPER, WHETHER THE PHIC OFFICERS AND EMPLOYEES CAN BE REQUIRED TO REFUND THE AMOUNTS RECEIVED.

Petitioner’s Petitioner PHIC raises several infirmities attendant in respondent COA's disallowance. First, contrary to respondent's findings, petitioner paid the CNASB to its regular plantilla personnel in 2001 and not in 2004 as evinced by the
Contention Certification and payrolls it duly presented.16 During said year, such grant was expressly sanctioned by Budget Circular No. 2000-19 issued by the Department of Budget and Management (DBM) on December 15, 2000 which
authorizes the payment of the signing bonus to each entitled rank-and-file personnel. During said year, moreover, the ruling in SSS v. COA17 had not yet been laid down by the Court, which was actually promulgated on July 11,
2002, or more than a year after the payment of the subject CNASB. Thus, on the basis of the established principle of prospective application of laws, the invalidation of the CNASB enunciated in the SSS case cannot be used as
legal basis in disallowing the issuance of said bonus.18

Second, petitioner asserts that the WESA was duly granted in compliance with applicable law, particularly R.A. No. 7305 or the Magna Carta of Public Health Workers (PHW). According to petitioners, the WESA was issued in lieu
of the subsistence and laundry allowance due to PHWs under Section 22 of the Magna Carta, which provides that said subsistence allowance shall be "computed in accordance with prevailing circumstances as determined by
the Health Secretary in consultation with the Management Health Worker's Consultative Councils." Petitioner explains that respondent COA's assertion that the WESA should be disallowed because it was granted without the
participation of the Health Secretary is not entirely accurate. Under Section 18 (a) of R.A. No. 7875, the Board of Directors of the PHIC is composed of eleven (11) members (which was increased to sixteen (16) members under
R.A. No. 10606 passed in June 2013) with the Health Secretary sitting as the Ex-Officio19 As part of said PHIC board, its unanimous passage of PHIC Board Resolution No. 385, s. 2001 granting the subject WESA was compliantly
the positive act of then Health Secretary Dr. Alberto G. Romualdez, Jr. required under the law.20 Any official act of the PHIC Board, with the Health Secretary sitting as Ex-Officio Chairperson, cannot be considered as an exclusive
act of the board, but also as an act of the Health Secretary in his primary capacity as such.

Third, petitioner contends that contrary to respondent's allegation, the LMRG is not merely a duplicate of the PIB. The LMRG was passed in the exercise of the PHIC Board of its "fiscal autonomy" to fix compensation and
benefits of its personnel under Section 16 (n) of R.A. No. 7875 in recognition of notable labor-management relations, while the PIB was granted as a performance-based incentive under Executive Order (E.O.) No. 486,
entitled Establishing a Performance-Based Incentive System for Government-Owned or Controlled Corporations and for Other Purposes.21 In addition, the two (2) grants not only have different requirements for entitlement but
also differ in their amounts and manner of computation.

Fourth, with respect to the grant of the COLA back pay, petitioner posits that while it agrees with the position taken by respondent COA Director Nacion that the Court, in De Jesus v. COA,22 has given imprimatur on the propriety
of the said COLA during the time when the DBM Corporate Compensation Circular (CCC) 10 was in legal limbo, it, nevertheless, disagrees with her view that the PHIC is not legally bound to pay the same to its absorbed
personnel for their services were not rendered to PHIC but to another government agency prior to PHIC's creation. 23 Petitioner recounts that the COLA back pay was for services rendered between July 1989 and January 1995
when the payment of the same had been discontinued by reason of DBM CCC 10 issued in July 1995, pursuant to R.A. No. 6758, or the Salary Standardization Law (SSL). But the failure to publish the DBM CCC 10 integrating
COLA into the standardized salary rates meant that the COLA was not effectively integrated as of July 1989 but only on March 16, 1999 when the circular was published as required by law. Thus, in between those two dates, the
employees were still entitled to receive the COLA. But unlike respondent Nacion, who opined that petitioner PHIC has no business to settle the obligations of other government entities having a separate and distinct legal
personality therefrom, petitioner PHIC invokes Section 51 of R.A. No. 7875 which transfers all the functions and assets of the defunct PMCC to PHIC. According to petitioner, the term "functions" necessarily means to include
then PMCC's obligation to pay the benefits due to its employees who have been absorbed by PHIC such as the COLA that was unduly withdrawn from their salaries after the issuance of DBM CCC 10 in 1989.24 This is in keeping
with the principle of equal protection of laws guaranteed under the Constitution. In the end, petitioner posits that since PHIC personnel received the CNASB, WESA, LMRG and back COLA in good faith, they should not be
required to refund them.
COA’s COA asseverates that PHIC's socalled "fiscal autonomy" does not preclude the COA's power to disallow the grant of allowances. 27 In the exercise of said power, respondent COA claims that petitioner, in granting the subject
comment allowances, cannot rely on Section 16 (n)28 of R.A. No. 7875. This is because as held in Government Service Insurance System (GSIS) v. Civil Service Commission,29 the term "compensation" "excludes all bonuses, per diems,
allowances and overtime pay, or salary pay or compensation given in addition to the base pay of the position or rank as fixed by law or regulations."

Respondent COA further insists that with respect to the CNASB, the payment of the same was made not in 2001, as petitioner claims, but on June 11, 2004, based on an Automatic Debit Advice "dated 6-11-
2004."30 Consequently, SSS v. COA31 is applicable. In fact, in a letter dated October 18, 2004, the DBM reminded the PHIC of the said ruling. Thus, respondent COA posits that while it is true that the payment of the CNASB was
allowed under DBM Budget Circular No. 2000-19, dated December 15, 2000, which was the basis of PHIC Board Resolution No. 406, s. 2001 approving said grant, actual payment thereof by petitioner PHIC, however, was made
only on June 11, 2004, or after the pronouncement in SSS v. COA. Moreover, said Board Resolution has already been made ineffective by Resolution No. 04, s. 2002 and Resolution No. 02, s. 2003 of the Public Sector Labor-
Management Council (PSLMC), which allows the grant of the CNA Incentive but declares the CNASB illegal as a form of additional compensation. 32 Respondent adds that the pieces of evidence submitted by petitioner consisting
of the Certification and payrolls are self-serving for they were made out of court, the COA having no opportunity to impugn the same in open court.33

Respondent COA also rejects petitioner's assertions on the validity of the grant of the WESA claiming that the act of the PHIC Board is not the act of the individual composing the Board in view of the settled rule that a
corporation is invested by law with a personality separate and distinct from those of the persons composing it. 34 Thus, the act of the PHIC Board of which the Health Secretary is the ex-officio chair is separate and distinct from
the Health Secretary. Consequently, the benefit given as WESA is invalid because the rate thereof was not determined by the Health Secretary as mandated by the Magna Carta of PHWs.

As regards the LMRG, respondent maintains that it is exactly the same as the PIB earlier granted to PHIC employees based on their good performance, increased productivity and efficiency, for good performance is the result of
a harmonious relationship between the employees and the management.35 Even assuming that the LMRG does not partake of the nature of the PIB, the former nonetheless remains an additional benefit that requires prior
approval of the Office of the President (OP) as mandated by Memorandum Order (MO) No. 20 dated June 25, 2001. Said MO requires presidential approval, for any increases in salary or compensation of Government-Owned
and Controlled Corporations (GOCCs) that are not in accordance with the SSL.
Ruling Petitioner's contentions are devoid of merit.

The extent of the power of GOCCs to fix compensation and determine the reasonable allowances of its officers and employees had already been conclusively laid down in Philippine Charity Sweepstakes Office (PCSO) v.
COA,49 to wit: The PCSO stresses that it is a self-sustaining government instrumentality which generates its own fund to support its operations and does not depend on the national government for its budgetary support. Thus, it
enjoys certain latitude to establish and grant allowances and incentives to its officers and employees.

We do not agree. Sections 6 and 9 of R.A. No. 1169, as amended, cannot be relied upon by the PCSO to grant the COLA. Section 6 merely states, among others, that fifteen percent (15%) of the net receipts from the sale of
sweepstakes tickets (whether for sweepstakes races, lotteries, or other similar activities) shall be set aside as contributions to the operating expenses and capital expenditures of the PCSO. Also, Section 9 loosely provides that
among the powers and functions of the PCSO Board of Directors is "to fix the salaries and determine the reasonable allowances, bonuses and other incentives of its officers and employees as may be recommended by the
General Manager x x x subject to pertinent civil service and compensation laws." The PCSO charter evidently does not grant its Board the unbridled authority to set salaries and allowances of officials and employees. On the
contrary, as a government owned and/or controlled corporation (GOCC), it was expressly covered by P.D. No. 985 or "The Budgetary Reform Decree on Compensation and Position Classification of 1976," and its 1978
amendment, P.D. No. 1597 (Further Rationalizing the System of Compensation and Position Classification in the National Government), and mandated to comply with the rules of then Office of Compensation and Position
Classification (OCPC) under the DBM.

Even if it is assumed that there is an explicit provision exempting the PCSO from the OCPC rules, the power of the Board to fix the salaries and determine the reasonable allowances, bonuses and other incentives was still
subject to the DBM review. In Intia, Jr. v. COA, the Court stressed that the discretion of the Board of Philippine Postal Corporation on the matter of personnel compensation is not absolute as the same must be exercised in
accordance with the standard laid down by law, i.e., its compensation system, including the allowances granted by the Board, must strictly conform with that provided for other government agencies under R.A. No. 6758 in
relation to the General Appropriations Act. To ensure such compliance, the resolutions of the Board affecting such matters should first be reviewed and approved by the DBM pursuant to Section 6 of P.D. No. 1597.

The Court, in the same case, further elaborated on the rule that notwithstanding any exemption granted under their charters, the power of GOCCs to fix salaries and allowances must still conform to compensation and
position classification standards laid down by applicable law.

Accordingly, that Section 16(n) of R.A. 7875 granting PHIC's power to fix the compensation of its personnel does not explicitly provide that the same shall be subject to the approval of the OBM or the OP as in Section 19(d)
thereof does not necessarily mean that the PHIC has unbridled discretion to issue any and all kinds of allowances, limited only by the provisions of its charter. As clearly expressed in PCSO v. COA, even if it is assumed that there
is an explicit provision exempting a GOCC from the rules of the then Office of Compensation and Position Classification (OCPC) under the OBM, the power of its Board to fix the salaries and determine the reasonable allowances,
bonuses and other incentives was still subject to the standards laid down by applicable laws: P.O. No. 985, 52 its 1978 amendment, P.O. No. 1597,53 the SSL, and at present, R.A. 10149.54 To sustain petitioners' claim that it is the
PHIC, and PHIC alone, that will ensure that its compensation system conforms with applicable law will result in an invalid delegation of legislative power, granting the PHIC unlimited authority to unilaterally fix its compensation
structure.55 Certainly, such effect could not have been the intent of the legislature.

Thus, the general rule is that all allowances are deemed included in the standardized salary except for the following: (1) representation and transportation allowances; (2) clothing and laundry allowances; (3) subsistence
allowance of marine officers and crew on board government vessels and hospital personnel; (4) hazard pay; (5) allowances of foreign service personnel stationed abroad; and (6) such other additional compensation not
otherwise specified herein as may be determined by the DBM.

Time and again, the Court has ruled that Section 12 of the SSL is self-executing. This means that even without DBM action, the standardized salaries of government employees are already inclusive of all allowances, save for
those expressly identified in said section.58 It is only when additional non-integrated allowances will be identified that an issuance of the DBM is required. Thus, until and unless the DBM issues rules and regulations identifying
those excluded benefits, the enumerated nonintegrated allowances in Section 12 remain exclusive.59 When a grant of an allowance, therefore, is not among those excluded in the Section 12 enumeration or expressly excluded
by law or DBM issuance, such allowance is deemed already given to its recipient in their basic salary. As a result, the unauthorized issuance and receipt of said allowance is tantamount to double compensation justifying COA
disallowance.

In view of the foregoing, the Court holds that the PHIC Board members who approved PHIC Board Resolution No. 717, series of2004 and the PHIC officials who authorized its release are bound to refund the LMRG. It is unclear,
however, from a review of the records of the case, which of the PHIC Board members and officials named in the COA's Notice of Disallowance were the ones responsible for the issuance of the LMRG, considering that what was
 listed therein were the "Persons Liable" for the grant and release of all four (4) allowances lumped together as subject of the instant case, without any distinction as to the particular set of officers responsible for the approval of
a respective type of allowance as well as its corresponding amount.95 Hence, for the proper implementation of this judgment, the COA is hereby ordered to identify, in a clear and certain manner, the specific PHIC Board
members and officials who approved the grant of the LMRG and authorized its release as well as to compute the exact amount they received.

With respect to the PHIC officials and employees, however, who merely received the subject LMRG but had no participation in the approval and release thereof, the Court deems them to have acted in good faith, honestly
believing that the PHIC Board Resolution was issued in the Board's valid exercise of its power. Thus, they are absolved from refunding the LMRG they received.

DP WHEREFORE, premises considered, the instant petition is PARTLY GRANTED. The November 20, 2013 Decision and April 4, 2014 Resolution of the COA Commission Proper, which affirmed the Notice of Disallowance PHIC 2008-
003 (2004) dated February 7, 2008, are AFFIRMED WITH MODIFICATION. The recipients and officers who authorized the following disbursements need not refund the amounts paid in connection therewith: (1) the Collective
Negotiation Agreement Signing Bonus; (2) the Welfare Support Assistance; and (3) the back payment of Cost of Living Allowance. As for the Labor Management Relations Gratuity, only the PHIC Board members who approved
PHIC Board Resolution No. 717, series of 2004 and the PHIC officials who authorized its release are bound to refund the same. For this purpose, the COA is hereby ordered to: (1) particularly identify the PHIC Board members
and officials responsible for the approval and release of the LMRG; and (2) compute the exact amount of the LMRG that said officers and employees respectively received.

Intec Cebu Inc. et al vs. Court of Appeals, et al.

G.R. No 189951

Doctrine: Change of Working Hours/Reduction of Workweek

Facts: Petitioner, Intec Cebu Inc. is engaged in the manufacture and assembly of mechanical system and printed circuit board for cassette
tape recorder, CD and CD Rom player while respondents were hired as production workers.

Decision of Lower Courts
Sometime 2005, the respondents working hours were reduced from 6 to 2-4 days which according to petitioner is attributed to
lack of job orders. Initially, the working hours reduction covers only the period January – April 2006 which was however extended to
June 2006. This prompted the respondents to file for a case for illegal dismissal. On its defense, Intec Cebu justified the reduction of
working days due to financial loses.
Labor Arbiter
There was illegal dismissal, thus, ordered the payment of separation pay and back wages.

NLRC
Set aside the decision of the Labor Arbiter and held that Intec’s act was justified by tremendous financial losses. They were
entitled to separation pay but not back wages.

Court of Appeals
Reversed ruling of NLRC and institutionalized decision of Labor Arbiter. The constructive dismissal is predicated on the claim
that the implementation of the reduced work week is illegal.

Issue 1. Whether or not the reduction of work week is illegal.

2. In relation to Number 1, was there illegal dismissal?
Supreme Court Ruling 1. Intec committed illegal reduction of work hours.

Management is free to regulate, according to its own discretion and judgment, all aspects of employment,
including hiring, work assignments, working methods, time, place, and manner of work, processes to be followed,
 supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers, and
discipline, dismissal and recall of workers. The exercise of management prerogative, however, is not absolute as it
must be exercised in good faith and with due regard to the rights of labor.

It is incumbent upon Intec to prove that the implementation of the reduced working days is valid and done in
good faith.

a. An examination of the Financial Statements for the fiscal year May 2005-April 2006 however shows that
the company earned Net Income of P 9,568,674. Thus, it is safe to presume that when the reduced
workday scheme was implemented, the company was still benefiting from its gains.
b. As to Intec’s claim of slump in demand, it was a mere projection and lacking in specifics with no
corresponding sales or delivery receipts.
c. As to the hiring of the 188 workers which the company claimed to be mere OJTs or interns, it still
necessitates cost and no proof was submitted that these newly hired employees were performing work
different from regular workers.

The totality of the facts now leads to the conclusion of illegal reduction of working hours.

2. Yes, there was constructive dismissal.

Constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible,
unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear
discrimination, insensibility, or disdain by an employer becomes unbearable to the employee.

Capin-Capiz vs Brent Hospital and Colleges, Inc., February 2016

Doctrine: Marital Discrimination

FACTS: Cadiz was the Human Resource Officer of respondent Brent Hospital and Colleges, Inc. (Brent). She was suspended for
an indefinite period for grounds of Unprofessionalism and Unethical Behavior resulting to Unwed Pregnancy. It appears that
she became pregnant out of wedlock and Brent Hospital imposed such suspension until such time that she marries her
boyfriend.

She then filed for Unfair Labor Practice, Constructive Dismissal, Non-Payment of Wages and Damages with prayer for
Reinstatement.

Decision of Lower Courts Labor Arbiter

Cadiz indefinite suspension amounted to constructive dismissal; nevertheless she was not illegally dismissed as there was
just cause for her dismissal, that is, she engaged in premarital sexual relations with her boyfriend resulting in a pregnancy out
of wedlock. That her acts amounted to immoral conduct as Brent is an institution of the Episcopal Church in the Philippines.
 CA
Affirmed the decision of the Labor Arbiter that Cadiz’s dismissal from employment was valid.

Petitioner Cadiz’s Contention

1. Getting pregnant outside of wedlock is not grossly immoral, especially when both partners do not have any legal
impediment to marry. Cadiz surmises that the reason for her suspension was not because of her relationship with her
then boyfriend but because of the resulting pregnancy.
2. Cadiz also lambasts Brent's condition for her reinstatement - that she gets married to her boyfriend - saying that this
violates the stipulation against marriage under Article 136 of the Labor Code.

ISSUE: Whether or not there was illegal dismissal.

Supreme Court Ruling HELD:
To determine the presence or absence of illegal dismissal, it is imperative to discuss below concepts.

1. Immorality as a Just Cause for Termination of Employment

Whether a conduct is considered disgraceful or immoral should be made in accordance with the prevailing norms of
conduct, which, as stated in Leus, refer to those conducts which are proscribed because they are detrimental to conditions
upon which depend the existence and progress of human society. The fact that a particular act does not conform to the
traditional moral views of a certain sectarian institution is not sufficient reason to qualify such act as immoral unless it,
likewise, does not conform to public and secular standards. More importantly, there must be substantial evidence to
establish that premarital sexual relations and pregnancy out of wedlock is considered disgraceful or immoral

The totality of the circumstances of this case does not justify the conclusion that Cadiz committed acts of immorality.
Similar to Leus, Cadiz and her boyfriend were both single and had no legal impediment to marry at the time she committed
the alleged immoral conduct.

"premarital sexual relations between two consenting adults who have no impediment to marry each other, and,
consequently, conceiving a child out of wedlock, gauged from a purely public and secular view of morality, does not
amount to a disgraceful or immoral conduct under Section 94(e) of the 1992 MRPS

2. Marriage as a condition for reinstatement

The doctrine of management prerogative gives an employer the right to "regulate, according to his own discretion and
judgment, all aspects of employment, including hiring, work assignments, working methods, the time, place and manner of
work, work supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of employees.

Safeguards Against Marital Discrimination

a. 1987 Constitution
"State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.

b. Labor Code
 Art. 136. Stipulation against marriage. It shall be unlawful for an employer to require as a condition of employment or
continuation of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon
getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of her marriage.

c. RA 9710 or the Magna Carta for Women

protects women against discrimination in all matters relating to marriage and family relations, including the right to
choose freely a spouse and to enter into marriage only with their free and full consent.

Weighed against these safeguards, it becomes apparent that Brent's condition is coercive, oppressive and
discriminatory

Exception: When does a Marriage or No-Marriage becomes a bonafide occupational qualification

Two factors necessitating its imposition, viz: (
1) that the employment qualification is reasonably related to the essential operation of the job involved; and
(2) that there is a factual basis for believing that all or substantially all persons meeting the qualification would be
unable to properly perform the duties of the job.

Brent has not shown the presence of neither of these factors. Perforce, the Court cannot uphold the validity of said
condition.

Cheryll Santos Leus vs. St. Scholastica’s College Westgrove, et al

Doctrine: Marital Discrimination

Facts: St. Scholastica is a catholic and sectarian educational institution. When petitioner got pregnant out of wedlock, she was asked
to file a resignation letter. That this is a serious misconduct. Pre-marital sexual relations even between two consenting adults
without legal impediment to marry, is considered a disgraceful and immoral conduct or a serious misconduct, which are
grounds for the termination of employment under the 1992 MRPS and the Labor Code.

She was then terminated on the ground of serious misconduct.

Petitioner’s Contention The petitioner claimed that SSCW gravely abused its management prerogative as there was no just cause for her
dismissal. She maintained that her pregnancy out of wedlock cannot be considered as serious misconduct since the same is a
purely private affair and not connected in any way with her duties as an employee of SSCW. Further, the petitioner averred
that she and her boyfriend eventually got married even prior to her dismissal.
School’s Contention There is a valid exercise of management prerogative to discipline and impose penalties on erring employees pursuant to its
policies, rules and regulations.

They pointed out that SSCW is a Catholic educational institution, which caters exclusively to young girls; that SSCW would
 lose its credibility if it would maintain employees who do not live up to the values and teachings it inculcates to its students.
SSCW further asserted that the petitioner, being an employee of a Catholic educational institution, should have strived to
maintain the honor, dignity and reputation of SSCW as a Catholic school.
Issue: Whether or not petitioner’s dismissal is a valid exercise of Management prerogative.

Supreme Court Ruling HELD:

For a particular conduct to constitute “disgraceful and immoral” behavior under civil service laws, it must be
regulated on account of the concerns of public and secular morality. It cannot be judged based on personal bias, specifically
those colored by particular mores. Nor should it be grounded on “cultural” values not convincingly demonstrated to have
been recognized in the realm of public policy expressed in the Constitution and the laws. At the same time, the
constitutionally guaranteed rights (such as the right to privacy) should be observed to the extent that they protect behavior that
may be frowned upon by the majority.

Under these tests, two things may be concluded from the fact that an unmarried woman gives birth out of wedlock:

(1) If the father of the child is himself unmarried, the woman is not ordinarily administratively liable for disgraceful and
immoral conduct. It may be a not-so-ideal situation and may cause complications for both mother and child but it does not
give cause for administrative sanction. There is no law which penalizes an unmarried mother under those circumstances by
reason of her sexual conduct or proscribes the consensual sexual activity between two unmarried persons. Neither does the
situation contravene any fundamental state policy as expressed in the Constitution, a document that accommodates various
belief systems irrespective of dogmatic origins.

(2)If the father of the child born out of wedlock is himself married to a woman other than the mother, then there is a cause for
administrative sanction against either the father or the mother. In such a case, the “disgraceful and immoral conduct” consists
of having extramarital relations with a married person. The sanctity of marriage is constitutionally recognized and likewise
affirmed by our statutes as a special contract of permanent union. Accordingly, judicial employees have been sanctioned for
their dalliances with married persons or for their own betrayals of the marital vow of fidelity.

In this case, it was not disputed that, like respondent, the father of her child was unmarried.

The petitioner’s pregnancy out of wedlock is not a disgraceful or immoral conduct since she and the father of her child
have no impediment to marry each other.

The exercise of management prerogative, however, is not absolute as it must be exercised in good faith and with due
regard to the rights of labor.” Management cannot exercise its prerogative in a cruel, repressive, or despotic manner.

SSCW, as employer, undeniably has the right to discipline its employees and, if need be, dismiss them if there is a valid cause
to do so. However, as already explained, there is no cause to dismiss the petitioner. Her conduct is not considered by
law as disgraceful or immoral. Further, the respondents themselves have admitted that SSCW, at the time of the
controversy, does not have any policy or rule against an employee who engages in pre-marital sexual relations and conceives
a child as a result thereof. There being no valid basis in law or even in SSCW’s policy and rules, SSCW’s dismissal of the
petitioner is despotic and arbitrary and, thus, not a valid exercise of management prerogative.
 Star Paper Corp vs. Simbol, GR 164744
12 April 2006

Doctrine: Marital Discrimination

Facts: Respondents Comia and Simbol both got married to their fellow employees. Estrella on the other hand had a
relationship with a co-employee resulting to her pregnancy on the belief that such was separated. The respondents
allege that they were forced to resign as a result of the implementation of the said assailed company policy.

Under the policy of Star Paper the employees are:

1. New applicants will not be allowed to be hired if in case he/she has a relative, up to the 3rd degree of
relationship, already employed by the company.
2. In case of two of our employees (singles, one male and another female) developed a friendly relationship
during the course of their employment and then decided to get married, one of them should resign to preserve
the policy stated above.

Decision of Lower Courts The Labor Arbiter and the NLRC ruled in favor of petitioner. The decision was appealed to the Court of Appeals
which reversed the decision.
Issue: Whether or not the company policy of the employer of banning spouses from working in the same company a valid
exercise of management prerogative.

Held: No, it is not a valid exercise of management prerogative and violates the rights of employees under the constitution.

The case at bar involves Article 136 of the Labor Code which provides “it shall be unlawful for an employer to
require as a condition of employment or continuation of employment that a woman employee shall not get married, or
to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated , or
to actually dismiss, discharge , discriminate or otherwise prejudice a woman employee merely by reason of her
marriage.”

It is significant to note that in the case at bar, respondents were hired after they were found fit for the job, but were
asked to resign when they married a co-employee. Petitioners failed to show how the marriage of Simbol, then a
Sheeting Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could be detrimental to its
business operations. Neither did petitioners explain how this detriment will happen in the case of Wilfreda Comia, then
a Production Helper in the Selecting Department, who married Howard Comia, then a helper in the cutter-machine. The
policy is premised on the mere fear that employees married to each other will be less efficient. If we uphold the
questioned rule without valid justification, the employer can create policies based on an unproven presumption of a
perceived danger at the expense of an employee’s right to security of tenure.

The company policy of Star Paper, to be upheld, must clearly establish the requirement of reasonableness. In the case at
bar, there was no reasonable business necessity. Petitioners failed to show how the marriage of Simbol, then a Sheeting
 Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could be detrimental to its business
operations.

The questioned policy may not facially violate Article 136 of the Labor Code but it creates a disproportionate effect and
under the disparate impact theory, the only way it could pass judicial scrutiny is a showing that it is reasonable despite
the discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a legitimate business concern in
imposing the questioned policy cannot prejudice the employee’s right to be free from arbitrary discrimination based
upon stereotypes of married persons working together in one company.

Lastly, the absence of a statute expressly prohibiting marital discrimination in our jurisdiction cannot benefit the
petitioners. The protection given to labor in our jurisdiction is vast and extensive that we cannot prudently draw
inferences from the legislature’s silence that married persons are not protected under our Constitution and declare valid
a policy based on a prejudice or stereotype. Thus, for failure of petitioners to present undisputed proof of a reasonable
business necessity, we rule that the questioned policy is an invalid exercise of management prerogative. Corollary, the
issue as to whether respondents Simbol and Comia resigned voluntarily has become moot and academic.

In the case of Estrella, the petitioner failed to adduce proof to justify her dismissal. Hence, the Court ruled that it was
illegal.

Rivera vs. Solidbank Corp. GR 163269

19 April 2006

Topic: Post Employment Ban

Petitioner: Rolando Rivera He was an employee of Solid Bank Corporation. He applied for the Special Retirement Program under which a retiring
employee would receive 250% of the gross monthly salary multiplied by the number of years in service.

As a condition for this, he was asked to sign an undertaking where he promised that he will not seek employment from a
competitor bank or financial institution within one year from separation, that any breach thereof will entitle Solidbank to a
cause of action.

Post-employment, he was employed as a Manager if Equitable Banking Corporation prompting Solidbank to demand all the
return of monetary benefits he received under the Special Retirement Program.

Rolando’s Contention
- He alleged that the undertaking to "seek employment with any competitor bank or financial institution within one (1)
year from February 28, 1995" was void for being contrary to the Constitution, the law and public policy, that it was
unreasonable, arbitrary, oppressive, discriminatory, cruel, unjust, inhuman, and violative of his human rights.
- He further claimed that the Undertaking was a contract of adhesion because it was prepared solely by Solidbank
without his participation; considering his moral and economic disadvantage, it must be liberally construed in his favor
and strictly against the bank.
 Petitioner further maintains that respondent’s management prerogative does not give it a license to entice its employees to retire
at a very young age and prohibit them from seeking employment in a so-called competitor bank or financial institution, thus
prevent them from working and supporting their families (considering that banking is the only kind of work they know).
Petitioner avers that "management’s prerogative must be without abuse of discretion. A line must be drawn between
management prerogative regarding business operations per se and those which affect the rights of the employees. In treating its
employees, management should see to it that its employees are at least properly informed of its decision or modes of action."
Respondent: Solidbank Respondent’s Contention
Corp. Solidbank alleged that whether or not the employment ban provision contained in the Undertaking is unreasonable, arbitrary, or
oppressive is a question of law. It insisted that Rivera signed the Undertaking voluntarily and for valuable consideration; and
under the Release, Waiver and Quitclaim, he was obliged to return the P963,619.28 upon accepting employment from a
competitor bank within the one-year proscribed period.

ISSUE 1. Whether or not the One-year employment ban is null and void for being unreasonable and oppressive and for
constituting restraint of trade which violates public policy as enunciated in our Constitution and Laws.
Decision of Lower Courts RTC
According to the RTC, the prohibition incorporated in the Undertaking was not unreasonable. To allow Rivera to be excused
from his undertakings in said deed and, at the same time, benefit therefrom would be to allow him to enrich himself at the
expense of Solidbank.

CA
It ratiocinated that the agreement between Rivera and Solidbank was the law between them, and that the interpretation of the
stipulations therein could not be left upon the whims of Rivera. According to the CA, Rivera never denied signing the Release,
Waiver, and Quitclaim, including the Undertaking regarding the employment prohibition. He even admitted joining Equitable
as an employee within the proscribed one-year period. The alleged defenses of Rivera, the CA declared, could not prevail over
the admissions in his pleadings.1avvphil.netMoreover, Rivera’s justification for taking the job with Equitable, “dire necessity,”
was not an acceptable ground for annulling the Undertaking since there were no earmarks of coercion, undue influence, or fraud
in its execution.

Supreme Court Ratio The post-retirement competitive employment ban is unreasonable because it has no geographical limits. The respondent is
barred from accepting any kind of employment in any competitive bank within the proscribed period.

Retirement plans, in light of the constitutional mandate of affording full protection to labor, must be liberally construed in favor
of the employee, it being the general rule that pension or retirement plans formulated by the employer are to be construed
against it. Retirement benefits, after all, are intended to help the employee enjoy the remaining years of his life, releasing him
from the burden of worrying for his financial support, and are a form of reward for being loyal to the employer. Respondent is
burdened to establish that a restrictive covenant barring an employee from accepting a competitive employment after retirement
or resignation is not an unreasonable or oppressive, or in undue or unreasonable restraint of trade, thus, unenforceable for being
repugnant to public policy

In cases where an employee assails a contract containing a provision prohibiting him or her from accepting competitive
employment as against public policy, the employer has to adduce evidence to prove that the restriction is reasonable and not
 greater than necessary to protect the employer’s legitimate business interests. The restraint may not be unduly harsh or
oppressive in curtailing the employee’s legitimate efforts to earn a livelihood and must be reasonable in light of sound public
policy.

Consideration must be given to the employee’s right to earn a living and to his ability to determine with certainty the area
within which his employment ban is restituted. A provision on territorial limitation is necessary to guide an employee of what
constitutes as violation of a restrictive covenant and whether the geographic scope is co-extensive with that in which the
employer is doing business. In considering a territorial restriction, the facts and circumstances surrounding the case must be
considered.

PROMOTION
G.R. No. 183934
ERNESTO GALANG and MA. OLGA JASMIN CHAN vs BOIE TAKEDA CHEMICALS, INC. ( BTCI) and/or KAZUHIKO NOMURA

Facts:
BTCI hired petitioners Ernesto Galang and Ma. Olga Jasmin Chan in August 28, 1975 and July 20, 1983, respectively. Through the years, petitioners rose from the ranks and were promoted to Regional Sales Managers in
2000. Petitioners held these positions until their separation from BTCI on May 1, 2004.
In 2002, when the National Sales Director position became vacant (after the retirement of Melchor Barretto), petitioners assumed and shared (with the general manager) the functions and responsibilities of this higher
position, and reported directly to the General Manager.
In February 2003, the new General Manager, Kazuhiko Nomura (Nomura), asked petitioners to apply for the position of National Sales Director. In the end, Nomura hired an outsider from Novartis Company as Marketing
Director, while the position of National Sales Director remained vacant. Later, however, petitioners were informed that BTCI promoted Villanueva as National Sales Director effective May 1,2004. The promotion of
Villanueva as the National Sales Director caused ill-feelings on petitioners' part. After Villanueva's promotion, petitioners claimed that Nomura threatened to dismiss them from office if they failed to perform well under the
newly appointed National Sales Director.
On April 28, 2004, petitioners intimated their intention to retire in a joint written letter of resignation dated April 28, 2002 (sic) to Nomura, effective on April 30, 2004. Upon petitioners' retirement, the positions of Regional
Sales Manager were abolished, and a new position of Operations Manager was created.
On October 20, 2004, petitioners filed the complaint for constructive dismissal and money claims before the NLRC Regional Arbitration Branch.

LA Decision:
Labor Arbiter ruled that petitioners were constructively dismissed. The Labor Arbiter explained that petitioners were forced to retire because Villanueva's appointment constituted an abuse of exercise of management
prerogative; and that subsequent events, such as the abolition of the positions of Regional Sales Managers and the creation of the position of the Operations Manager show that petitioners' easing out from service were
orchestrated. It also found that petitioners were discriminated as to their retirement package.

NLRC Decision:
It reversed and set aside the LA Decision, and dismissed the complaint. In said decision, the NLRC ruled that petitioners failed to prove that they were constructively dismissed.

CA Decision:
It reviewed and reassessed the facts and evidence on record and made a finding that the NLRC did not commit grave abuse of discretion.

Issues:
Whether petitioners were constructively dismissed from service
Petitioners’ contention:
• Villanueva did not apply for the position
• has only three years of experience in sales
• was reportedly responsible for losses in the marketing department
• the appointment was made only because he threatened to leave the office along with the company's top cardio-medical doctors
• Nomura threatened to dismiss them if they do not perform well under the newly-appointed National Sales Director.
• the retirement package given to them is lower compared to others who were holding the similar position at the time of their retirement.

Respondent’s contention:
• the complaint is only an attempt to extort additional benefits from the company
• that no constructive dismissal can occur because there was no movement or transfer of position or diminution of salaries or benefits
• The appointment of Villanueva was within the sphere of management's prerogatives, and was arrived at after careful consideration
• petitioner's decision to retire was voluntary and of their own volition
• BTCI insists that petitioners have been paid according to the Collective Bargaining Agreement (CBA) between BTCI and BTCI Supervisory Union
Ruling:
The reluctance to interfere with management's prerogative in determining who to promote all the more applies when we consider that the position of National Sales Director is a managerial position. Managerial positions
are offices which can only be held by persons who have the trust of the corporation and its officers. The promotion of employees to managerial or executive positions rests upon the discretion of management. Thus, we
have repeatedly reminded that the Labor Arbiters, the different Divisions of the NLRC, and even courts, are not vested with managerial authority. The employer's exercise of management prerogatives, with or without
reason, does not per se constitute unjust discrimination, unless there is a showing of grave abuse of discretion. In this case, there is none.
Petitioners' allegation that Villanueva was appointed only because of the threats the latter made to management militates against their claim. If BTCI management was merely forced to appoint Villanueva, petitioners
cannot claim that BTCI intentionally and maliciously orchestrated their easement from the company.
Petitioners cannot also argue that BTCI's caution to dismiss them if they do not perform well under the newly-appointed National Sales Director constituted a threat to their employment. This is merely a warning for them to
cooperate with the new National Sales Director. Such warning is expected of management as part of its supervision and disciplining power over petitioners given their unwelcoming reactions to Villanueva's appointment.
In sum, we hold that petitioners voluntarily retired from service and received their complete retirement package and other monetary claims from BTCI.

GRANT OF SEPARATION BENEFITS TO PERSONNEL ENGAGED IN SERVICE AGREEMENTS

G.R. No. 223625
NATIONAL TRANSMISSION CORPORATION vs. COMMISSION ON AUDIT (COA) and COA CHAIRPERSON MICHAEL G. AGUINALDO

Facts:
National Transmission Corporation (TransCo) is a GOCC created under R.A. No. 9136 or the Electric Industry Reform Act of 2001 (EPIRA). On March 1, 2003, it began to operate and manage the power transmission
system that links power plants to the electric distribution utilities nationwide.
On April 1, 2003, Transco engaged the services of Benjamin B. Miranda (Miranda) until his services were terminated on June 30, 2009. From April 1, 2003 to March 21, 2004, however, Miranda was a contractual employee
with the position of Senior Engineer pursuant to the Service Agreement.
In December 2007, a public bidding was conducted which awarded the concession to the National Grid Corporation of the Philippines (NGCP), which was eventually granted a congressional franchise to operate the
transmission network through the enactment of R.A. No. 9511. On February 28, 2008, the Power Sector Assets and Liabilities Management and Transco executed a Concession Agreement with NGCP setting forth the
parties' rights and obligations for the concession.
On January 15, 2009, TransCo turned over the management and operation of its nationwide transmission system to NGCP. As such, several Transco personnel, including Miranda, were terminated on June 30, 2009.8
Miranda received his separation pay benefits in the aggregate amount of ₱401,91 l.90.
On January 26, 2011, Transco received the Notice of Disallowance (ND) which disallowed in audit the amount of ₱55, 758.26 corresponding to inclusion of Miranda's service from April 1, 2003 to April 15, 2004 in
computing his separation benefits. Aggrieved, it appealed the said ND to the COA-CGS.

COA-CGS Ruling:
COA-CGS upheld the ND. It noted that the terms of the Service Agreement clearly stated that there shall be no employer-employee relationship between Miranda and Transco and that the services rendered are not
considered or will not be credited as government service. Thus, it concluded that the Transco Board of Directors (BOD) erred in including the contractual employees in availing separation benefits.

COA Ruling:
COA sustained the COA-CGS decision. The COA noted that under the EPIRA and its implementing rules and regulations (IRR), separation benefits may be extended to casual or contractual employees, provided
their appointments were approved or attested to by the Civil Service Commission (CSC), and they had rendered services for at least one (1) year at the time of the effectivity of the EPIRA. It explained that Miranda was not
entitled to separation benefits for the period in question as there was nothing in the records which would prove that his appointment was duly approved or attested to by the CSC. Moreover, the COA expounded that the
Service Agreement explicitly stated that no employer-employee relationship existed between Miranda and Transco and that he was not entitled to the benefits enjoyed by government employees.

Issue:
Whether or not the grant of financial assistance/separation benefit to former Transco personnel engaged by virtue of service agreements is prohibited

Petitioner’s contention:
• Transco argues that it was within its corporate powers to grant separation benefits to its personnel separated due to the privatization of its operations.
• It explains that it was for this reason it passed the resolution providing separation benefit to all employees, whether appointed on permanent, contractual or casual basis.
• Transco bewails that Miranda was entitled to the separation benefits despite the provisions of the service contract, and the fact this his appointment lacked CSC approval.

Respondent’s contention:
• COA explained that Miranda's appointment from April 1, 2003 to April 15, 2004 was neither approved nor attested to by the CSC.
• The COA surmised that pursuant to the EPIRA and its IRR, casual and contractual employees are entitled to separation benefits only if their contract of service had been approved or attested by the CSC.
• It reiterated that the contract of service explicitly stated that Miranda's services shall not be deemed as government service and that no employer-employee relationship existed.
• Likewise, the COA opined that Miranda was bound to refund the excess of his separation benefits on the principle of solutio indebiti because he had no legal right to receive and retain the questioned benefits.

Ruling:
The Court finds that the COA did not gravely abuse its discretion in upholding the questioned ND. GOCCs employees are bound by the provisions of the GOCC 's special charter and civil service laws.
It is undisputed that Transco is a GOCC as it was created by virtue of the EPIRA. As such, it was bound by civil service laws. Under the Constitution, the Civil Service Commission (CSC) is the central personnel
agency of the government, including GOCCs. It primarily deals with matters affecting the career development, rights and welfare of government employees.
In addition, Transco is bound by the provisions of its charter. Thus, a review of the law creating Transco and pertinent CSC issuances is in order to determine the propriety of the benefits Miranda received.
It is clear that based on the EPIRA and its IRR that all employees of Transco are entitled to separation benefits, with an additional requirement imposed on casual or contractual employees - their appointments must have
been approved or attested by the CSC. Hence, the COA correctly disallowed Miranda's separation benefit in the amount of ₱55,758.26 because it pertained to services rendered under the service contract which was not
attested to by the CSC.

STANDARD FOR REGULARIZATION

G.R. No. 192571 April 22, 2014
ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D. FEIST, MARIA OLIVIA T. YABUT-MISA, TERESITA C. BERNARDO, AND ALLAN G. ALMAZAR vs. PEARLIE ANN F. ALCARAZ

Facts:
On June 27, 2004, [Abbott Laboratories, Philippines (Abbott)] caused the publication in a major broadsheet newspaper of its need for a Regulatory Affairs Manager, indicating therein the job description for as well as
the duties and responsibilities attendant to the aforesaid position; this prompted Alcaraz to submit her application to Abbott on October 4, 2004.
In Abbott’s December 7, 2004 offer sheet, it was stated that Alcaraz was to be employed on a probationary status.
On February 12, 2005, Alcaraz signed an employment contract which specifically stated, inter alia, that she was to be placed on probation for a period of six (6) months beginning February 15, 2005 to August 14, 2005.
On the day Alcaraz accepted Abbott’s employment offer, Bernardo sent her copies of Abbott’s organizational structure and her job description through e-mail.
Alcaraz was made to undergo a pre-employment orientation where [Allan G. Almazar] informed her that she had to implement Abbott’s Code of Conduct and office policies on human resources and finance and that she
would be reporting directly to [Kelly Walsh].

Alcaraz was also required to undergo a training program as part of her orientation.
Alcaraz received copies of Abbott’s Code of Conduct and Performance Modules from [Maria Olivia T. Yabut-Misa] who explained to her the procedure for evaluating the performance of probationary employees; she was
further notified that Abbott had only one evaluation system for all of its employees.
Moreover, Alcaraz had previously worked for another pharmaceutical company and had admitted to have an "extensive training and background" to acquire the necessary skills for her job.

NLRC Decision:
Alcaraz was illegally dismissed due to her status as a regular and not a probationary employee.

CA Decision:
CA found that the NLRC did not commit grave abuse of discretion.

Issue:
How a probationary employee is deemed to have been informed of the standards of his regularization

Respondents contention:
Alcaraz posits that, contrary to the Court’s Decision, one’s job description cannot by and of itself be treated as a standard for regularization as a standard denotes a measure of quantity or quality. By way of example,
Alcaraz cites the case of a probationary salesperson and asks how does such employee achieve regular status if he does not know how much he needs to sell to reach the same.
Ruling:
The argument is untenable.
First off, the Court must correct Alcaraz’s mistaken notion: it is not the probationary employee’s job description but the adequate performance of his duties and responsibilities which constitutes the inherent and implied
standard for regularization.
If the probationary employee had been fully apprised by his employer of these duties and responsibilities, then basic knowledge and common sense dictate that he must adequately perform the same, else he fails to pass
the probationary trial and may therefore be subject to termination.
In this relation, it bears mentioning that the performance standard contemplated by law should not, in all cases, be contained in a specialized system of feedbacks or evaluation. The Court takes judicial notice of the fact
that not all employers, such as simple businesses or small-scale enterprises, have a sophisticated form of human resource management, so much so that the adoption of technical indicators as utilized through "comment
cards" or "appraisal" tools should not be treated as a prerequisite for every case of probationary engagement. In fact, even if a system of such kind is employed and the procedures for its implementation are not followed,
once an employer determines that the probationary employee fails to meet the standards required for his regularization, the former is not precluded from dismissing the latter. The rule is that when a valid cause for
termination exists, the procedural infirmity attending the termination only warrants the payment of nominal damages. This was the principle laid down in the landmark cases of Agabon v. NLRC (Agabon) and Jaka Food
Processing Corporation v. Pacot10 (Jaka). In the assailed Decision, the Court actually extended the application of the Agabon and Jaka rulings to breaches of company procedure, notwithstanding the employer’s
compliance with the statutory requirements under the Labor Code.
Hence, although Abbott did not comply with its own termination procedure, its non-compliance thereof would not detract from the finding that there subsists a valid cause to terminate Alcaraz’s employment. Abbott,
however, was penalized for its contractual breach and thereby ordered to pay nominal damages.
Records show that Alcaraz was terminated because she (a) did not manage her time effectively; (b) failed to gain the trust of her staff and to build an effective rapport with them; (c) failed to train her staff effectively; and (d)
was not able to obtain the knowledge and ability to make sound judgments on case processing and article review which were necessary for the proper performance of her duties. Due to the nature and variety of these
managerial functions, the best that Abbott could have done, at the time of Alcaraz's engagement, was to inform her of her duties and responsibilities, the adequate performance of which, to repeat, is an inherent and
implied standard for regularization; this is unlike the circumstance in Aliling where a quantitative regularization standard, in the term of a sales quota, was readily articulable to the employee at the outset. Hence, since the
reasonableness of Alcaraz's assessment clearly appears from the records, her termination was justified.

ANTI-DRUGS POLICY G.R. No. 181490; April 23, 2014 MIRANT (PHILIPPINES) CORPORATION AND EDGARDO A. BAUTISTA vs. JOSELITO A. CARO

Facts:
Respondent was a Logistics officer of petitioner corporation.
Pursuant to its Anti-drug policy, the corporation conducted its random drug testing in which respondent was one of the subjects.
On the day of respondent's drug test schedule, he failed to present himself because he received a phone call from a colleague of his wife regarding an explosion in Israel, where the latter was employed and he had
to confirm with the Israeli Embassy the fact of said incident.
Upon his return to the company office, he received a text from a Drug Watch Committee officer of petitioner, informing him that he must submit himself to drug test. He replied, explaining the reason for his non-
appearance.
After five (5) days, respondent received a show cause notice from petitioner to explain his "unjustified refusal to submit to drug testing"
Petitioner's investigative panel held respondent guilty of "unjustified refusal to submit to drug testing" and recommending a penalty of suspension from work for 4 weeks.
Upon the corporation's deliberation, the penalty imposed was termination from service which led to respondent's dismissal
Hence, this case

Respondents defense:
 Respondent avers that at around 11:30 a.m. of the same day, he received a phone call from his wife’s colleague who informed him that a bombing incident occurred near his wife’s work station in Tel Aviv, Israel
where his wife was then working as a caregiver.
Respondent claims that after the said phone call, he proceeded to the Israeli Embassy to confirm the news on the alleged bombing incident. Respondent further claims that before he left the office on the day of the random
drug test, he first informed the secretary of his Department, Irene Torres (Torres), at around 12:30 p.m. that he will give preferential attention to the emergency phone call that he just received.

Issue:
Is the Anti-drug policy of petitioner, which led to the dismissal of respondent is NOT fair and reasonable and tantamount to illegal dismissal?

Ruling:
Yes. First. The policy was not clear on what constitutes "unjustified refusal" when the subject drug policy prescribed that an employee’s "unjustified refusal" to submit to a random drug test shall be punishable by the penalty
of termination for the first offense. To be sure, the term "unjustified refusal" could not possibly cover all forms of "refusal" as the employee’s resistance, to be punishable by termination, must be "unjustified." To the mind of
the Court, it is on this area where petitioner corporation had fallen short of making it clear to its employees – as well as to management – as to what types of acts would fall under the purview of "unjustified refusal." Even
petitioner corporation’s own Investigating Panel recognized this ambiguity, viz.:
The Panel also recommends that Management review the Mirant Drug Policy specifically "Unjustified [R]efusal to submit to random drug testing." The Panel believes that the term "refusal" casts certain ambiguities and
should be clearly defined.48
The fact that petitioner corporation’s own Investigating Panel and its Vice President for Operations, Sliman, differed in their recommendations regarding respondent’s case are first-hand proof that there, indeed, is ambiguity
in the interpretation and application of the subject drug policy. The fact that petitioner corporation’s own personnel had to dissect the intended meaning of "unjustified refusal" is further proof that it is not clear on what
context the term "unjustified refusal" applies to. It is therefore not a surprise that the Labor Arbiter, the NLRC and the CA have perceived the term "unjustified refusal" on different prisms due to the lack of parameters as to
what comes under its purview. To be sure, the fact that the courts and entities involved in this case had to engage in semantics – and come up with different constructions – is yet another glaring proof that the subject
policy is not clear creating doubt that respondent’s dismissal was a result of petitioner corporation’s valid exercise of its management prerogative.
It is not a mere jurisprudential principle, but an enshrined provision of law, that all doubts shall be resolved in favor of labor. Thus, in Article 4 of the Labor Code, as amended, "[a]ll doubts in the implementation and
interpretation of the provisions of [the Labor] Code, including its implementing rules and regulations, shall be resolved in favor of labor." In Article 1702 of the New Civil Code, a similar provision states that "[i]n case of
doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer." Applying these provisions of law to the circumstances in the case at bar, it is not fair for this Court
to allow an ambiguous policy to prejudice the rights of an employee against illegal dismissal. To hold otherwise and sustain the stance of petitioner corporation would be to adopt an interpretation that goes against the very
grain of labor protection in this jurisdiction. As correctly stated by the Labor Arbiter, "when a conflicting interest of labor and capital are weighed on the scales of social justice, the heavier influence of the latter must be
counter-balanced by the sympathy and compassion the law must accord the underprivileged worker."49
Second. The penalty of termination imposed by petitioner corporation upon respondent fell short of being reasonable. Company policies and regulations are generally valid and binding between the employer and the
employee unless shown to be grossly oppressive or contrary to law50 – as in the case at bar. Recognizing the ambiguity in the subject policy, the CA was more inclined to adopt the recommendation of petitioner
corporation’s own Investigating Panel over that of Sliman and the NLRC. The appellate court succinctly but incisively pointed out, viz.:
x x x We find, as correctly pointed out by the investigating panel, that the [petitioner corporation’s] Anti-Drug Policy is excessive in terminating an employee for his "unjustified refusal" to subject himself to the random drug
test on first offense, without clearly defining what amounts to an "unjustified refusal."
Thus, We find that the recommended four (4) working weeks’ suspension without pay as the reasonable penalty to be imposed on [respondent] for his disobedience. x x x51 (Additional emphasis supplied.)
To be sure, the unreasonableness of the penalty of termination as imposed in this case is further highlighted by a fact admitted by petitioner corporation itself: that for the ten-year period that respondent had been employed
by petitioner corporation, he did not have any record of a violation of its company policies.

TEMPORARY WITHHOLDING OF SALARY/WAGES G.R. No. 185814; October 13, 2010 SHS PERFORATED MATERIALS, INC., WINFRIED HARTMANNSHENN, and HINRICH JOHANN SCHUMACHER vs.
MANUEL F. DIAZ

Facts:
Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and existing under the laws of the Republic of the Philippines and registered with the Philippine Economic Zone Authority. Petitioner
Winfried Hartmannshenn (Hartmannshenn), a German national, is its president, in which capacity he determines the administration and direction of the day-to-day business affairs of SHS. Manuel F. Diaz (respondent) was
hired by petitioner SHS as Manager for Business Development on probationary status.
On November 29, 2005, Hartmannshenn instructed Taguiang not to release respondent’s salary. Later that afternoon, respondent called and inquired about his salary. Taguiang informed him that it was being withheld and
that he had to immediately communicate with Hartmannshenn. Respondent denied having received such directive.
The next day, on November 30, 2005, respondent served on SHS a demand letter and a resignation letter. In the evening of the same day, November 30, 2005, respondent met with Hartmannshenn in Alabang. The latter
told him that he was extremely disappointed for the following reasons: his poor work performance; his unauthorized leave and malingering from November 16 to November 30, 2005; and failure to immediately meet
Hartmannshenn upon his arrival from Germany.

Issue:
WON the temporary withholding of respondent’s salary/wages by petitioners was a valid exercise of management prerogative.

Held: Although management prerogative refers to “the right to regulate all aspects of employment,” it cannot be understood to include the right to temporarily withhold salary/wages without the consent of the employee. To
sanction such an interpretation would be contrary to Article 116 of the Labor Code, which provides:
ART. 116. Withholding of wages and kickbacks prohibited. – It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker or induce him to give up any part of his wages
by force, stealth, intimidation, threat or by any other means whatsoever without the worker’s consent.
Any withholding of an employee’s wages by an employer may only be allowed in the form of wage deductions under the circumstances provided in Article 113 of the Labor Code, as set forth below:
ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.
Absent a showing that the withholding of complainant’s wages falls under the exceptions provided in Article 113, the withholding thereof is thus unlawful.
Petitioners argue that Article 116 of the Labor Code only applies if it is established that an employee is entitled to his salary/wages and, hence, does not apply in cases where there is an issue or uncertainty as to whether
an employee has worked and is entitled to his salary/wages, in consonance with the principle of “a fair day’s wage for a fair day’s work.” Petitioners contend that in this case there was precisely an issue as to whether
respondent was entitled to his salary because he failed to report to work and to account for his whereabouts and work accomplishments during the period in question.
The Court finds petitioners’ evidence insufficient to prove that respondent did not work from November 16 to November 30, 2005. As can be gleaned from respondent’s Contract of Probationary Employment and the
exchanges of electronic mail messages between Hartmannshenn and respondent, the latter’s duties as manager for business development entailed cultivating business ties, connections, and clients in order to make sales.
Such duties called for meetings with prospective clients outside the office rather than reporting for work on a regular schedule. In other words, the nature of respondent’s job did not allow close supervision and monitoring
by petitioners. Neither was there any prescribed daily monitoring procedure established by petitioners to ensure that respondent was doing his job. Therefore, granting that respondent failed to answer Hartmannshenn’s
mobile calls and to reply to two electronic mail messages and given the fact that he admittedly failed to report to work at the SHS plant twice each week during the subject period, such cannot be taken to signify that he did
not work from November 16 to November 30, 2005.

CLOSURE OF BUSINESS GR No. 184841, Nov 21, 2016 GERINO YUKIT v. TRITRAN

Doctrine: That the financial statements are audited by independent auditors safeguards the same from the manipulation of the figures therein to suit the company's needs. The auditing of financial reports by independent
external auditors are strictly governed by national and international standards and regulations for the accounting profession. It bears to stress that the financial statements submitted by respondent were audited by
reputable auditing firms. Hence, petitioner's assertion that respondent merely manipulated its financial statements to make it appear that it was suffering from business losses that would justify the retrenchment is incredible
and baseless. (Manatad v. Philippine Telegraph and Telephone Corp.)

Facts:
Petitioners were former employed as drivers and conductors of Respondent Tritran.
Tritran was a corporation engaged in the business of transporting persons and property as a common carrier.
Operated a fleet of buses in designated routes between Manila, Batangas and Laguna.
Tritran informed DOLE Regional Office of its decision to temporarily close the establishment and cease operations effective January 2004
This decision was made after Tritran laid off a total of 114 employees in 2003 (in accordance with the retrenchment program to cut down costs)
March 2004 – Petitioners filed complaint in the NLRC against Tritran (including the president Jose Alvarez and VP for finance and administration Jehu Sebastian)
Petitioners’ position paper alleges:
• Illegally terminated as a result of an invalid closure of the company and entitled to reinstatement
• Tritran never ceased operations due to the continued operation of its buses under the management of JAM Transit, Inc. (Also owned by Alvarez)
• Employees were asked to sign voluntary resignation letters if they wanted to be absorbed by the new management.
• Mere ploy to circumvent their security of tenure and avoid the payment of separation benefits
Respondent’s Position paper denied the allegations.
• Article 283 LC, justifies the closure of the business.
• Audited Financial Statements showed losses of PhP 30M in 2000, PhP 37M in 2001, and PhP 34M in 2002.
• The decision to close the business is a collective business judgment, hence Alvarez and Sebastian cannot be held liable.
• May 2004, Tritran sent a Notice of Closure/Cessation of Business to the Regional Director of DOLE
• Due to irreversible business losses
• However, respondent still undertook to pay the separation pay to its employees

LA: Ruled in favor of Petitioners. Awarded them full back wages, separation pay and attorney’s fees. Audited Financial Statements were highly “suspicious” due to the expenditures for security.

NLRC: Initially affirmed the ruling on April 2006. Reversed on August 2006 and gave weight to the audited financial statement. It also referred to itse decision in Antonio de Chavez v. Tritran, Inc. which upheld the validity of
the dismissal of certain employees of Tritran due to the closure of the company citing the principle of stare decisis (“to stand by things decided”).

CA: Affirmed NLRC.

Issue:
W/N the principle of stare decisis was correctly applied?
W/N the closure of Tritran was justified? (IMPORTANT)
W/N petitioners were validly dismissed from employment?

Held:
NO. Chavez v. Tritran is only a NLRC case not SC case. It must be emphasized that only final decisions of this Court are deemed precedents that form part of our legal system. Decisions of lower courts or other divisions
of the same court are not binding on others. Consequently, it was incorrect for the NLRC to consider De Chavez - a ruling rendered by the same NLRC division - as a binding precedent applicable to the present case.
YES. Financial statements may establish the economic status of a company. If prepared by external auditors, these statements are particularly entitled to weight and credence. Manatad v. Philippine Telegraph and
Telephone Corp. (see doctrine) Petitioner’s allegation that there are ‘suspicious’ expenses The burden of proof is on the petitioner that there are actually irregular expenses in the Financial Statements.
Petitioners failed to prove such accusations. Petitioner alleges that the buses owned by Tritran are still plying the same routes

SC:
These allegations are unsubstantiated. The LA, NLRC and CA all confirmed the cessation of operations.
YES. Since the closure of Tritran was carried out for legitimate reasons, it follows that the dismissal of the employees are valid in accordance with Article 283.
Tritran's compliance with the notice requirement under the Labor Code has been sufficiently proven. The company sent a written notice to its workers at least one month prior to the effective date of its closure. It also
informed the DOLE Regional Office of the intended cessation of operations within the deadline. Since the closure of Tritran was due to serious business losses, petitioners would ordinarily not be entitled to separation
benefits under Article 283. However, the Court notes that the company voluntarily obligated itself to pay severance benefits to the employees, notwithstanding its financial condition. In its letter to the DOLE Regional Office
and the written notices it sent to its workers, Tritran expressly promised to pay separation benefits to the employees, less their actual accountabilities with the company.