GR 162994
TECSON VS GLAXO
FACTS:
 GLAXO was a drug company who hired TECSON as a medical representative and
assigned him to Cam Norte and Cam Sur area. In his contract of employment with
said company, it states, among others that he agrees to:
 “study and abide by existing company rules; to disclose to management any existing
or future relationship by consanguinity or affinity with co-employees or employees
of competing drug companies and should management find that such relationship
poses a possible conflict of interest, to resign from the company. The Employee
Code of Conduct of Glaxo similarly provides that an employee is expected to inform
management of any existing or future relationship by consanguinity or affinity with
co-employees or employees of competing drug companies. If management perceives
a conflict of interest or a potential conflict between such relationship and the
employees employment with the company, the management and the employee will
explore the possibility of a transfer to another department in a non-counterchecking
position or preparation for employment outside the company after six months”
 However, Tecson entered into a romatic relationship with Betsy, an employee of
Astra Pharmaceuticals, a competitor of Glaxo. Bettsy was a Branch Coordinator in
Albay. She supervised the district managers and medical representatives of her
company and prepared marketing strategies for Astra in that area which Glaxo
considered to pose a real and potential conflict of interest. Astras products were in
direct competition with 67% of the products sold by Glaxo.
 The record shows that Glaxo gave Tecson several chances to eliminate the conflict
of interest brought about by his relationship with Bettsy. When their relationship
was still in its initial stage, Tecsons supervisors at Glaxo constantly reminded him
about its effects on his employment with the company and on the companys
interests. After Tecson married Bettsy, Glaxo gave him time to resolve the conflict
by either resigning from the company or asking his wife to resign from Astra. Glaxo
even expressed its desire to retain Tecson in its employ because of his satisfactory
performance and suggested that he ask Bettsy to resign from her company instead.
Glaxo likewise acceded to his repeated requests for more time to resolve the conflict
of interest. When the problem could not be resolved after several years of waiting,
Glaxo was constrained to reassign Tecson to a sales area different from that handled
by his wife for Astra.
 Petitioners filed the instant petition, arguing therein that (i) the Court of Appeals
erred in affirming the NCMBs finding that the Glaxos policy prohibiting its
employees from marrying an employee of a competitor company is valid; and (ii)
the Court of Appeals also erred in not finding that Tecson was constructively
dismissed when he was transferred to a new sales territory, and deprived of the
opportunity to attend products seminars and training sessions.
HELD:
No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxos policy
prohibiting an employee from having a relationship with an employee of a competitor
company is a valid exercise of management prerogative.
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and
other confidential programs and information from competitors, especially so that it and Astra
are rival companies in the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor
companies upon Glaxos employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of the company. In laying down the
assailed company policy, Glaxo only aims to protect its interests against the possibility that a
competitor company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied. No less than
the Constitution recognizes the right of enterprises to adopt and enforce such a policy to
protect its right to reasonable returns on investments and to expansion and growth. [20] Indeed,
while our laws endeavor to give life to the constitutional policy on social justice and the
protection of labor, it does not mean that every labor dispute will be decided in favor of the
workers. The law also recognizes that management has rights which are also entitled to respect
and enforcement in the interest of fair play.
In any event, from the wordings of the contractual provision and the policy in its employee
handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships
between its employees and those of competitor companies. Its employees are free to cultivate
relationships with and marry persons of their own choosing. What the company merely seeks
to avoid is a conflict of interest between the employee and the company that may arise out of
such relationships. As succinctly explained by the appellate court, thus:
The policy being questioned is not a policy against marriage. An employee of the company
remains free to marry anyone of his or her choosing. The policy is not aimed at restricting a
personal prerogative that belongs only to the individual. However, an employee’s personal
decision does not detract the employer from exercising management prerogatives to ensure
maximum profit and business success.
The Court of Appeals also correctly noted that the assailed company policy which forms part
of respondents Employee Code of Conduct and of its contracts with its employees, such as that
signed by Tecson, was made known to him prior to his employment. Tecson, therefore, was
aware of that restriction when he signed his employment contract and when he entered into a
relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a contract of
employment with Glaxo, the stipulations therein have the force of law between them and, thus,
should be complied with in good faith.[29] He is therefore estopped from questioning said
policy.
The Court finds no merit in petitioners’ contention that Tecson was constructively dismissed
when he was transferred from the Camarines Norte-Camarines Sur sales area to the Butuan
City-Surigao City-Agusan del Sur sales area, and when he was excluded from attending the
companys seminar on new products which were directly competing with similar products
manufactured by Astra. Constructive dismissal is defined as a quitting, an involuntary
resignation resorted to when continued employment becomes impossible, unreasonable, or
unlikely; when there is a demotion in rank or diminution in pay; or when a clear
discrimination, insensibility or disdain by an employer becomes unbearable to the employee.
[30]
 None of these conditions are present in the instant case. The record does not show that
Tecson was demoted or unduly discriminated upon by reason of such transfer. As found by the
appellate court, Glaxo properly exercised its management prerogative in reassigning Tecson to
the Butuan City sales area. –xxx-
GR NO 159119, March 14, 2006 the provisions of the Labor Code, specifically Book VI thereof, on Post-Employment, to
UY VS. BUENO apply. Since the employer-employee relationship between petitioner Uy and respondent Bueno
was not established, the labor arbiter never acquired jurisdiction over petitioner Uy.
FACTS: Consequently, whether petitioner Uy was properly served with summons is immaterial.
 Countrywide Rural Bank, is a private banking corporation duly licensed and Likewise, that she terminated the services of respondent Bueno in bad faith and with malice is
organized to engage in rural banking operations that offers a wide-range of deposit, of no moment. Her liability, if any, should be determined in another forum. –XXX-
financial and lending services through its network of branches nationwide. In April
1998, Countrywide Rural Bank experienced liquidity problems. A group of its
depositors, alarmed at the imminent prospect of not being able to recover their
deposits and other investments, organized themselves into a committee of
depositors. The committee elected petitioner Felix Yusay as Chairman, petitioner
Andrea Uy as Secretary, Manu Gidwani as Vice-Chairman and Pompeyo Querubin
as Treasurer.
 On January 18, 1999, the depositors of Countrywide Rural Bank - not the committee
of depositors led by petitioner Yusay - met at the Marbel Branch. In the course of
the meeting, respondent Amalia A. Bueno stood up and announced that her services
as Branch Manager of Marbel Branch were terminated by petitioner Uy. Petitioner
Uy, who was in the meeting, confirmed respondent Buenos declaration. She did not
elaborate on the basis of the termination explaining that it involved internal
problems that could not be discussed with the depositors.

HELD:
The findings of the Labor Arbiter, the NLRC and the CA as to the liability of petitioner Uy are
conflicting, thus, the application of the exception to the rule that only legal issues may be
raised in a petition for review on certiorari under Rule 45 of the Rules of Court.

Whether petitioner Uy should be held solidarily liable with Countrywide Rural Bank in the
illegal dismissal of respondent Bueno, depends on the jurisdiction of the Labor Arbiter over
the case at bar

The records show that petitioner Uy was a mere depositor of the bank who was elected Interim
President and Corporate Secretary by a committee of depositors to protect their interests given
the bad state of Countrywide Rural Banks affairs. In his findings, the Labor Arbiter mentioned
the meeting of the depositors on January 18, 1999 but he failed to account for the exact
personality of petitioner Uy whose statement relative to her role in the affairs of Countrywide
Rural Bank was related in the minutes of the same meeting. It was only through the NLRC
that petitioner Uys role was established, i.e., that she was one of the depositors of Countrywide
Rural Bank who formed themselves into a group or association indicating their intention to
help rehabilitate Countrywide Rural Bank.

Clearly, even respondent Bueno was uncertain as to the exact role of the Interim Board that
elected petitioner Uy as Interim President and Corporate Secretary. She herself questioned the
personality of the Interim Board in the management of Countrywide Rural Bank even while
she alleged that petitioner Uy as its Interim President and Corporate Secretary caused her
dismissal. More significantly, there is no evidence that the committee of depositors that
elected petitioner Uy as Interim President and Corporate Secretary was recognized by the
Bangko Sentral ng Pilipinas, and hence had the legal authority to act for the bank.

Lacking this evidence, the act of petitioner Uy in dismissing respondent cannot be deemed an
act as an officer of the bank. Consequently, it cannot be held that there existed an employer-
employee relationship between petitioner Uy and respondent Bueno when the former allegedly
dismissed the latter. This requirement of employer-employer relationship is jurisdictional for
GR NO 163782, March 24, 2006
LRTA VS. VENUS
FACTS:
 Petitioner LRTA is a government-owned and controlled corporation created by Executive
Order No. 603, Series of 1980, as amended, to construct and maintain a light rail transit
system and provide the commuting public with an efficient, economical, dependable and
safe transportation. Petitioner METRO, formerly Meralco Transit Organization, Inc., was
a qualified transportation corporation duly organized in accordance with the provisions of
the Corporation Code, registered with the Securities and Exchange Commission, and
existing under Philippine laws.
 LRTA constructed a light rail transit system to provide the commuting public with an
efficient and dependable light rail transit system and entered into a ten (10)-year
Agreement for the Management and Operation of the Metro Manila Light Rail Transit
System petitioner METRO. Pursuant to the Agreement, petitioner METRO hired its own
employees, including herein private respondents. Which had the stipulation:
 “…METRO shall be free to employ such employees and officers as it shall deem
necessary in order to carry out the requirements of [the] Agreement.  Such employees
and officers shall be the employees of METRO and not of the AUTHORITY
[LRTA].  METRO shall prepare a compensation schedule and the corresponding salaries
and fringe benefits of [its] personnel in consultation with the AUTHORITY [LRTA]…”
 Petitioner METRO thereafter entered into a collective bargaining agreement with
PIGLAS-METRO, INC. NFL KMU (Union), the certified exclusive collective bargaining
representative of the rank-and-file employees of petitioner METRO.
 Meanwhile, on June 9, 1989, petitioners LRTA and METRO executed a Deed of Sale
where petitioner LRTA purchased the shares of stocks in petitioner METRO. [2]However,
petitioners LRTA and METRO continued with their distinct and separate juridical
personalities.  corporate entity as to this transaction had at the time no separate mind, will or existence of its own;
 On July 25, 2000, the Union went on a strike against METRO on account of a deadlock
in the collective bargaining negotiation and completely paralyzed the operations of the
entire light rail transit system. Despite the issuance, posting, and publication of the
assumption of jurisdiction and return to work order, the Union officers and members,
including herein private respondent workers, failed to return to work, thus private
respondents, were considered dismissed from employment.
 Private respondents Venus, Jr., Santos, Jr., and Roy filed a complaint for illegal dismissal
before the National Labor Relations Commission (NLRC) and impleaded both petitioners
LRTA and METRO.
HELD:
We agree with petitioner LRTA. Section 2 (1), Article IX B, 1987 Constitution, expressly provides
that [t]he civil service embraces all branches, subdivisions, instrumentalities, and agencies of the
Government, including government-owned or controlled corporations with original
charters. Corporations with original charters are those which have been created by special law and
not through the general corporation law. The test in determining whether a government-owned or
controlled corporation is subject to the Civil Service Law is the manner of its creation such that
government corporations created by special charter are subject to its provisions while those
incorporated under the general Corporation Law are not within its coverage.[12] There should be no
dispute then that employment in petitioner LRTA should be governed only by civil service rules,
and not the Labor Code and beyond the reach of the Department of Labor and Employment, since
petitioner LRTA is a government-owned and controlled corporation with an original charter,
Executive Order No. 603, Series of 1980, as amended. In contrast, petitioner METRO is covered by
the Labor Code despite its later acquisition by petitioner LRTA.
METRO was originally organized under the Corporation Code, and only became a government-
owned and controlled corporation after it was acquired by petitioner LRTA. Even then, petitioner
METRO has no original charter, hence, it is the Department of Labor and Employment, and not the
Civil Service Commission, which has jurisdiction over disputes arising from the employment of its
workers. Consequently, the terms and conditions of such employment are governed by the Labor
Code and not by the Civil Service Rules and Regulations.
 
We therefore hold that the employees of petitioner METRO cannot be considered as employees of
petitioner LRTA. The employees hired by METRO are covered by the Labor Code and are under
the jurisdiction of the Department of Labor and Employment, whereas the employees of petitioner
LRTA, a government-owned and controlled corporation with original charter, are covered by civil
service rules. 
In regards the issue of illegal dismissal, private respondent workers could not have defied the return-
to-work order of the Secretary of Labor simply because they were dismissed immediately, even
before they could obey the said order. The records show that the assumption of jurisdiction and
return-to-work order was issued on July 25, 2000. The said order was served and posted by the
sheriffs of the Department of Labor and Employment the following day. Further, the said order of
assumption of jurisdiction was duly published on July 27, 2000 and on the same day also, private
respondent workers were dismissed. Neither could they be considered as having abandoned their
work. If petitioner METRO did not dismiss the strikers right away, and instead accepted them back
to work, the management agreement between petitioners LRTA and METRO could still have been
extended and the workers would still have had work to return to.
METRO LIABLE, LRTA NOT.
(SEGUE DISCUSSION ON PIERCING THE CORPORATE EVIL)
The test in determining the applicability of the doctrine of piercing the veil of corporate fiction is as
follows:
1. Control, not mere majority or complete stock control, but complete domination, not only of
finances but of policy and business practice in respect to the transaction attacked so that the
2. Such control must have been used by the defendant to commit fraud or wrong, to perpetuate
the violation of a statutory or other positive legal duty, or dishonest and unjust act in contravention
of plaintiffs legal rights; and
3. The aforesaid control and breach of duty must proximately cause the injury or unjust loss
complained of.
The absence of any one of these elements prevents piercing the corporate veil. In applying the
instrumentality or alter ego doctrine, the courts are concerned with reality and not form, with how
the corporation operated and the individual defendants relationship to that operation.
Here, the records do not show that control was used to commit a fraud or wrong. In fact, it appears
that piercing the corporate veil for the purpose of delivery of public service, would lead to a
confusing situation since the outcome would be that Metro will be treated as a mere alter ego of
LRTA, not having a separate corporate personality from LRTA, when dealing with the issue of
strike, and a separate juridical entity not covered by the Civil Service when it comes to other
matters. Under the Constitution, a government corporation is either one with original charter or one
without original charter, but never both

GR NO 110187, September 4, 1996
EBRO VS NLRC
FACTS:
 ICMC employed petitioner Jose G. Ebro III to teach English as a Second Language
and Cultural Orientation Training Program at the refugee processing center. The
employment contract provided the salary which will be given to Petitioner while in
the first 6 months of employment or the probationary period and that after the
probationary period, should he become a regular employee. Such contract also
provided for the causes of termination.
 After six months, ICMC notified petitioner that they were terminating him for his
failure to meet the requirements. Petitioner then filed a complaint for illegal
dismissal alleging that there was no objective evaluation of his performance to
warrant his dismissal and that he should have been considered a regular employee
from the start because ICMC failed to acquaint him with the standards under which
he must qualify as such.
 He prayed for reinstatement with back wages; P3,155.00 for probationary and
P3,445.00 for regular salary adjustments; value of lodging or dormitory privileges;
cost of insurance coverage for group life, medical, death, dismemberment and
disability benefits; moral, and exemplary, and nominal damages plus interest on the
above claims with attorney’s fees.
 Private respondents invoked their diplomatic immunity on the basis of the
Memorandum of Agreement signed on July 15, 1988 between the Philippine
government and ICMC.
 The Labor Arbiter held that petitioners’ legal immunity under the Memorandum
could not be given retroactive effect since [that would] deprive complainant’s
property right without due process and impair the obligation of contract of
employment. In addition, he expressed doubt about petitioner’s legal immunity on
the ground that it was provided for by agreement and not through an act of
Congress. The Labor Arbiter ruled in favor of the Petitioners.
 On appeal, NLRC ordered the case dismissed on the ground that, under the
Memorandum of Agreement between the Philippine government and ICMC, the
latter was immune from suit.
 THE BASIC ISSUE IN THIS CASE IS WHETHER THE MEMORANDUM OF
AGREEMENT EXECUTED ON JULY 15, 1988 GAVE ICMC IMMUNITY
FROM SUIT.  character to which the specialized agency is a party. Moreover, pursuant to Article IV of the
 The Court holds it did.  Consequently, both the Labor Arbiter and the NLRC had no
jurisdiction over the case.
HELD:
First, the grant of immunity to ICMC is in virtue of the Convention on the Privileges and
Immunities of Specialized Agencies of the United Nations, adopted by the UN General
Assembly, and concurred in by the Philippine Senate, thus has the force and effect of law,
considering that under the Constitution, the Philippines adopts the generally accepted
principles of international law as part of the law of the land. [3] The Memorandum of
Agreement in question merely carries out the Philippine government’s obligation under the
Convention.
In International Catholic Migration Commission v. Calleja
The grant of immunity from local jurisdiction to ICMC . . . is clearly necessitated by their
international character and respective purposes. The objective is to avoid the danger of
partiality and interference by the host country in their internal workings. The exercise of
jurisdiction by the Department of Labor in these instances would defeat the very purpose of
immunity, which is to shield the affairs of international organizations, in accordance with
international practice, from political pressure or control by the host country to the prejudice
of member States of the organization, and to ensure the unhampered performance of their
functions.
Second. Petitioner argues that such immunity cannot apply because it wasn’t in effect when
the petitioner filed the case. According to petitioner, his employment and subsequent dismissal
by ICMC took place prior to the execution of the Memorandum of Agreement (1988) and,
therefore, like in the 1989 ICMC case, the Memorandum should not be made to apply to him.
This Court did not really reject ICMCs invocation of immunity for causes of action accruing
prior to the execution of the Memorandum. It left open the possibility that ICMC may have
been tacitly enjoying diplomatic immunity beforehand. It is important to note that in the 1989
case ICMC did not invoke its immunity notwithstanding the fact that the Memorandum took
effect while the case was pending before the Court.[8]
The scope of immunity of the ICMC contained in the Convention on the Privileges and
Immunities of the Specialized Agencies of the United Nations is instructive. Art. III, 4 of the
Convention provides for immunity from every form of legal process. Thus, even if private
respondents had been served summons and subpoenas prior to the execution of the
Memorandum, they, as officers of ICMC, can claim immunity under the same in order to
prevent enforcement of an adverse judgment, since a writ of execution is a legal process
within the meaning of Article III, 4.[9]
Third. Another question is whether ICMC can invoke its immunity because it only did so in its
memorandum before the Labor Arbiter. It is contended that ICMC waived its immunity in any
event. Art. III, 4 of the Convention on the Privileges and Immunities of the Specialized
Agencies of the United Nations requires, however, that the waiver of the privilege must be
express. There was no such waiver of immunity in this case. Nor can ICMC be estopped from
claiming diplomatic immunity since estoppel does not operate to confer jurisdiction to a
tribunal that has none over a cause of action. [10]
Fourth. Finally, neither can it be said that recognition of ICMCs immunity from suit deprives
petitioner of due process. Petitioner is not exactly without remedy for whatever violation of
rights it may have suffered for the following reason:
Section 31 of the Convention on the Privileges and Immunities of the Specialized Agencies of
the United Nations provides that each specialized agency shall make provision for appropriate
modes of settlement of: (a) disputes arising out of contracts or other disputes of private
Memorandum of Agreement between ICMC and the Philippine Government, whenever there
is any abuse of privilege by ICMC, the Government is free to withdraw the privileges and
immunities accorded. – xxx –
CASE WAS DISMISSED

GR NO 125039, November 20, 1998
NATIONAL MINES VS SAN ILDEFONSO COLLEGE
FACTS:
 In February 1991, ARROYO, a tenured teacher who later became a part-time
teacher, asked that she be allowed to teach on a full-time basis. [3] The COLLEGE,
however, denied her request for her failure to make use of the privilege of her study
leave in the two years she was allowed to do so. [4] The following month, the other
individual petitioners, who were issued yearly appointments, were informed of the
non-renewal of their respective contracts. The then Faculty Association was
formalized into a labor union and affiliated with NAMAWU.
 On 11 April, the individual petitioners and NAMAWU filed a complaint [5] for illegal
dismissal, unfair labor practice, forced resignation, harassment, underpayment of
wages, non-payment of service incentive leave pay, and violation of Wage Order
No. IV-1. They demanded reinstatement and payment of back wages and other
monetary claims. The complaint was subsequently amended to include tenure pay as
an additional claim.[6]
 Later, or on 27 May 1991, the individual petitioners wrote private respondents
indicating their desire to return to work, but private respondents refused to take them
back.
 The individual petitioners asserted that they were regular employees for having
rendered service for more than a year. They were thus entitled to security of tenure
notwithstanding the annual renewal of their contract with the COLLEGE.
 The COLLEGE denied said allegations of illegal dismissal and further asserted that
all money claims due the individual petitioners had been paid even beyond the
amount prescribed by law. Petitioners were receiving a monthly pay of at
least P1,994.00 for a regular five-day-work week, with the exclusion of Saturdays
and Sundays. Upon the effectivity of Wage Order No. IV-01, they were entitled to
an increase of P327.50, which the COLLEGE could not then afford. Nonetheless,
each individual petitioner was eventually paid P2,229.25, an amount higher than
what was due them, through the Government Assistance to Private Education. Anent
the tenure pay, the COLLEGE contended that the individual petitioners were not
entitled to such pay because they were not tenured teachers. It refused payment for
the service incentive leave pay, since all the individual petitioners had availed of
their service incentive leave.
HELD:
The individual petitioners, with the exception of ARROYO, were legally dismissed.
The charge of unfair labor practice was not substantiated by sufficient evidence. Other than the
allegations, no substantial evidence was offered to clearly show that the COLLEGE committed
acts to prevent the exercise of the employees right to self-organization – it was just that the
non-renewal of contracts coincided with their campaigning to be organized as a union.
On the issue of whether the individual petitioners were permanent employees, it is the Manual
of Regulations for Private Schools, and not the Labor Code, which is applicable. This was
settled in University of Sto. Tomas v. NLRC, [14] where we explicitly ruled that for a private
school teacher to acquire permanent status in employment and, therefore, to be entitled to
security of tenure, the following requisites must concur: (1) the teacher is a full-time teacher;
(2) the teacher must have rendered three (3) consecutive years of service; and (4) such service
must have been satisfactory.
NOT REGULAR; NO SECURITY OF TENURE. So upon expiration of contract; non-renewal
is legal termination
Eleven of the individual petitioners were full-time teachers during the school year 1990-1991,
[16]
 but only two, namely, had rendered three consecutive years of service. There is no showing,
however, that the two were on a full-time basis during those three years and that their services
were satisfactory. Evidently, not one of the said teachers can be considered to have acquired a
permanent status.
As to ARROYO, we are not persuaded by private respondents argument that ARROYO lost
her permanent status when she requested to teach on a part-time basis. The reason for the
request was that she wanted to pursue a masters degree. The COLLEGE approved the request,
and the study leave was extended for another year. It would have been unjust and
unreasonable to allow ARROYO to pursue her masters degree, from which the COLLEGE
would have also benefited in terms of her higher learning and experience, and at the same time
penalize her with the loss of permanent status. It would as well be absurd and illogical to
maintain that by teaching on a part-time basis after obtaining the permission to take up a
masters degree, ARROYO relinquished her permanent status.
Private respondents’ letter refusing Arroyo’s request on being full-time, served as notice of
ARROYOs termination from employment. No further notice was served. Further, the
COLLEGE failed to prove that a master’s degree was a prerequisite for ARROYOs teaching
position. ARROYO, a permanent teacher, could only be dismissed for just cause and only after
being afforded due process,[17]in light of paragraph (b), Article 277 of the Labor Code. [18]
It is well-settled that the due process contemplated by the law requires twin notices. The first
notice apprises the employee of the particular acts or omissions for which his dismissal is
sought, which may be loosely considered as the proper charge; while the second informs the
employee of the employer's decision to dismiss him. The latter must come only after the
employee is given a reasonable period from receipt of the first notice within which to answer
the charge, and ample opportunity to be heard and defend himself with the assistance of his
representative, if he so desires]
Lastly, The NLRC upheld the COLLEGEs computation of the basic salary which was based
on the actual number of working days. In resolving this issue, we ruled that off-days are rest
days for the worker. Since he is not required to work on such days, he cannot demand
corresponding pay. Should he work on an off-day, our labor laws reward him with a premium
higher than what he receives when he works on his regular working day. It follows that the
divisor in computing his basic daily wage should be the actual working days in a year.  The
number of off-days is not to be counted precisely because he is not required to work on said
days. – xxx -
INSULAR LIFE ASSURANCE CO., LTD. vs. NLRC and DE LOS REYES
Exclusivity of service, control of assignments and removal of agents under private respondents
Facts: unit, collection of premiums, furnishing of company facilities and materials as well as capital
 Petitioner entered into an agency contract with respondent Pantaleon de los described as Unit Development Fund are but hallmarks of the management system in which
Reyes authorizing the latter to solicit within the Philippines applications for life herein private respondent worked. This obtaining, there is no escaping the conclusion that
insurance and annuities for which he would be paid compensation in the form of private respondent Pantaleon de los Reyes was an employee of herein petitioner.
commissions. It contained the stipulation that no employer-employee relationship
shall be created between the parties and that the agent shall be free to exercise his
own judgment as to time, place and means of soliciting insurance. De los Reyes
however was prohibited by petitioner from working for any other life insurance
company, and violation of this stipulation was sufficient ground for termination of
the contract;
 Petitioner and private respondent entered into another contract where the latter was
appointed as Acting Unit Manager under its office the Cebu. As long as he was unit
manager in an acting capacity, De los Reyes was prohibited from working for other
life insurance companies or with the government. Furthermore, payment of financial
assistance would only be freely given to the unit manager upon fulfillment by him of
certain manpower and premium quota requirement. He could not also accept a
managerial or supervisory position in any firm doing business in the Philippines
without the written consent of petitioner. Private respondent worked concurrently as
agent and Acting Unit Manager until petitioner notified him that his services were
terminated. Thus, he filed a complaint before the Labor Arbiter on the ground that
he was illegally dismissed and that he was not paid his salaries and separation pay;
 Petitioner filed a motion to dismiss the complaint for lack of jurisdiction, which was
granted by the Labor Arbiter. On appeal by private respondent, the order of
dismissal was reversed by the National Labor Relations Commission (NLRC) which
ruled that respondent De los Reyes was an employee of petitioner. Petitioners motion
for reconsideration having been denied; the NLRC remanded the case to the Labor
Arbiter for hearing on the merits.

ISSUE: Whether or not there exists employer-employee relationship between petitioner and
De los Reyes

RULING: YES. The case of Insular Life Assurance Co., Ltd vs. NLRC and Basiao, as pointed
out by petitioner to be the basis of the ruling in this case, cannot be applied. In  Basiao, the
agent was appointed Agency Manager under an Agency Manager Contract. To implement his
end of the agreement, Melecio Basiao organized an agency office to which he gave the name
M. Basiao and Associates. Unlike Basiao, herein respondent De los Reyes was
appointed Acting Unit Manager, not agency manager. There is not evidence that to implement
his obligations under the management contract, De los Reyes had organized an office.
Petitioner in fact has admitted that it provided De los Reyes a place and a table at its office
where he reported for and worked whenever he was not out in the field. Under the
managership contract, De los Reyes was obliged to work exclusively for petitioner in life
insurance solicitation and was imposed premium production quotas. He was proscribed from
accepting a managerial or supervisory position in any other office including the government
without the written consent of petitioner. De los Reyes could only be promoted to permanent
unit manager if he met certain requirements and his promotion was recommended by the
petitioners District Manager and Regional Manager and approved by its Division Manager. As
Acting Unit Manager, De los Reyes performed functions beyond mere solicitation of insurance
business for petitioner. As found by the NLRC, he exercised administrative functions, which
were necessary and beneficial to the business of INSULAR LIFE.
LAZARO vs. SSC
Facts:
 Private respondent Rosalina M. Laudato (Laudato) filed a petition before the SSC
for social security coverage and remittance of unpaid monthly social security
contributions against her three (3) employers. Among the respondents was herein
petitioner Angelito L. Lazaro (Lazaro), proprietor of Royal Star Marketing (Royal
Star), which is engaged in the business of selling home appliances. Laudato alleged
that despite her employment as sales supervisor of the sales agents for Royal Star
from April of 1979 to March of 1986, Lazaro had failed during the said period, to
report her to the SSC for compulsory coverage or remit Laudato’s social security
contributions;
 Lazaro denied that Laudato was a sales supervisor of Royal Star, averring instead
that she was a mere sales agent whom he paid purely on commission basis. Lazaro
also maintained that Laudato was not subjected to  definite hours and conditions of
work. As such, Laudato could not be deemed an employee of Royal Star;
 SSC promulgated its ruling in favor of Laudato. Lazaro filed Motion for
Reconsideration, which was denied. He also filed Petition for Review with CA,
likewise denied;
 Hence, this petition.
Issue: Whether or not Laudato is considered an employee of Royal Star Marketing
Ruling: YES. It is an accepted doctrine that for the purposes of coverage under the Social
Security Act, the determination of employer-employee relationship warrants the application of
the control test, that is, whether the employer controls or has reserved the right to control the
employee, not only as to the result of the work done, but also as to the means and methods by
which the same is accomplished. The Supreme Court found no error in the decision of SSC, as
sustained by the Court of Appeals, applying the control test found that Laudato was an
employee of Royal Star.
The determination of an employer-employee relationship depends heavily on the particular
factual circumstances attending the professional interaction of the parties. The Court is not a
trier of facts and accords great weight to the factual findings of lower courts or agencies whose
function is to resolve factual matters.
It should also be emphasized that the SSC, also as upheld by the Court of Appeals, found that
Laudato was a sales supervisor and not a mere agent. As such, Laudato oversaw and
supervised the sales agents of the company, and thus was subject to the control of management
as to how she implements its policies and its end results. 
DOMASIG vs. NLRC, CATA GARMENTS CORP and OTTO ONG AND CATALINA
CO
Facts:
 Eddi Domasig filed a complaint against respondents Cata Garments Corporation,
former Cato Garments Corporation (changed its name because of a complaint
against it by its workers) for illegal dismissal, unpaid commission and other
monertary claims. He further claim that he started working with the respondent on
July 6, 1986;
 Respondent dismissed Domasig when it learned that he was being pirated by a rival
corporation, which offer he refused. Prior to the dismissal, omplainant alleged that
he was receiving a salary of P1,500.00 a month plus commission;
 Respondent denied the complainant’s claim that he is a regular employee contending
that he is a mere commission agent, had no regular time schedule and that the
company come into existence only on September 17, 1991;
 Labor Arbiter ruled in favor of the complainant. Private respondents appealed the
decision of the labor arbiter to NLRC, which later resolved to remand the case to the
labor arbiter for further proceeding;
Issue: Whether or not complainant was an employee of respondent
Ruling: YES. Contrary to the finding of the NLRC, the decision on the existence of an
employer-employee relationship between private respondents and petitioner, is supported by
substantial evidence on record.
In a business establishment, an identification card is usually provided not only as a security
measure but mainly to identify the holder thereof as a bona fide employee of the firm that
issues it. Together with the cash vouchers covering petitioner’s salaries for the months stated
therein, the SC with the labor arbiter that these matters constitute substantial evidence
adequate to support a conclusion that petitioner was indeed an employee of private respondent.
Having been in the employ of private respondents continuously for more than one year, under
the law, petitioner is considered a regular employee. Proof beyond reasonable doubt is not
required as a basis for judgment on the legality of an employer’s dismissal of an employee, nor
even preponderance of evidence for that matter, substantial evidence being sufficient.
Petitioners contention that private respondents terminated his employment due to their
suspicion that he was being enticed by another firm to work for it was not refuted by private
respondents. The labor arbiter’s conclusion that petitioner’s dismissal is therefore illegal, is
not necessarily arbitrary or erroneous. It is entitled to great weight and respect.
***Substantial evidence has been defined to be such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion, and its absence is not shown by stressing
that there is contrary evidence on record, direct or circumstantial, for the appellate court
cannot substitute its own judgment or criterion for that of the trial court in determining
wherein lies the weight of evidence or what evidence is entitled to belief.***
PHILIPPINE GLOBAL COMMUNICATIONS, INC. vs. RICARDO DE VERA
Finally, remarkably absent from the parties arrangement is the element of control, whereby the
Facts: employer has reserved the right to control the employee not only as to the result of the work
 Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation done but also as to the means and methods by which the same is to be accomplished.
engaged in the business of communication services and allied activities, while
respondent Ricardo De Vera is a physician by profession whom petitioner enlisted to Here, petitioner had no control over the means and methods by which respondent went about
attend to the medical needs of its employees, by virtue of a Retention Contract performing his work at the company premises. He could even embark in the private practice of
which will be for a period of one year subject to renewal; his profession, not to mention the fact that respondents work hours and the additional
 The retainership arrangement went on from 1981 to 1994 with changes in the compensation therefor were negotiated upon by the parties. In fine, the parties themselves
retainer’s fee. However, for the years 1995 and 1996, renewal of the contract was practically agreed on every terms and conditions of respondents engagement, which thereby
only made verbally. And in December 1996, PhilCom sent a letter bearing the negates the element of control in their relationship. For sure, respondent has never cited even a
Termination Retainership Contract with the respondent for practical purposes - single instance when petitioner interfered with his work. Clearly, the elements of an employer-
provide medical services to its employees through accredited hospitals near the employee relationship are wanting in this case.
company premises;
 In 1997, De Vera filed a complaint for illegal dismissal before the NLRC alleging
that he was employed by Philcom as its company physician since 1981 and was
dismissed without due process;
 Labor Arbiter dismissed the complaint for lack of merit, on the rationale that he was
an independent contractor and that he was not dismissed but rather his contract with
Philcom ended;
 In 2000, NLRC reversed the Labor Arbiter’s decision, directed the company to
reinstate him to his former position without loss of seniority rights and privileges
and with full backwages; CA affirmed NLRC’s judgment with modifications on
awards;
 Hence, this petition.

Issue: Whether or not an employer-employee relationship exists between Philcom and De

Vera

Ruling: NO. In a long line of decisions, the Court, in determining the existence of an
employer-employee relationship, has invariably adhered to the four-fold test, to wit: [1] the
selection and engagement of the employee; [2] the payment of wages; [3] the power of
dismissal; and [4] the power to control the employees conduct, or the so-called control test,
considered to be the most important element

Applying the four-fold test to this case, it was found that it was respondent himself who sets
the parameters of what his duties would be in offering his services to petitioner, as evidenced
in a letter sent by respondent – proposing to extend his time with the respondent and seeking
additional compensation for said extension. This shows that the respondent PHILCOM did not
have control over the schedule of the complainant as it [is] the complainant who is proposing
his own schedule and asking to be paid for the same. This is proof that the complainant
understood that his relationship with the respondent PHILCOM was a retained physician and
not as an employee. If he were an employee he could not negotiate as to his hours of work.

Furthermore, the records are replete with evidence showing that respondent had to bill
petitioner for his monthly professional fees. It simply runs against the grain of common
experience to imagine that an ordinary employee has yet to bill his employer to receive his
salary.

Also, that the power to terminate the parties’ relationship was mutually vested on both. Either
may terminate the arrangement at will, with or without cause.
MANILA ELECTRIC COMPANY VS. QUISUMBING
Facts:
 Secretary of Labor required MERALCO and its rank and file union – Meralco
Workers Association (MEWA) to execute a collective bargaining agreement (CBA)
to incorporate in the new CBA the union’s demands on economic (i.e. wage
increase) and non-economic (i.e. transfer of assignment and job security, contracting
out, retroactive application of arbitral awards) issues;
 MERALCO filed a motion for reconsideration, alleging that the Secretary of Labor
did not properly appreciate the effect of the awarded wages and benefits on
MERALCOs financial viability as a public utility affected with national interest;
 MEWA informed MERALCO of its intention to re-negotiate the terms and
conditions of their existing 1992-1997 Collective Bargaining Agreement (CBA)
covering the remaining period of two years; MERALCO agreed. However, despite
the series of meetings between the negotiating panels of MERALCO and MEWA,
the parties failed to arrive at terms and conditions acceptable to both of them;
 MEWA filed a Notice of Strike with the National Conciliation and Mediation Board
(NCMB) of the Department of Labor and Employment (DOLE) on the grounds of
bargaining deadlock and unfair labor practices. MERALCO filed Urgent Petition to
enjoin the striking employees to go back to work;
 Labor Secretary granted petition. Thereafter, Secretary conceded with the proposed
changes in the CBA by the MEWA. MERALCO filed a motion for reconsideration
Issues: (1) Whether or not Christmas bonuses may be demanded from MERALCO;
(2)Whether or not confidential employees should be excluded from the rank and file
bargaining
unit;
(3) Whether or not contracting out is a proprietary right of MERALCO;
Ruling:
1. YES. As a rule, a bonus is not a demandable and enforceable obligation; it may
nevertheless be granted on equitable consideration as when the giving of such
bonus has been the company’s long and regular practice. To be considered a
regular practice, 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. Thus we have ruled
in National Sugar Refineries Corporation vs. NLRC: “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.”
In the case at bar, the record shows the MERALCO, aside from complying with the
regular 13th month bonus, has further been giving its employees an additional
Christmas bonus at the tail-end of the year since 1988. While the special bonuses
differed in amount and bore different titles, it can not be denied that these were
given voluntarily and continuously on or about Christmas time. The considerable
length of time MERALCO 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.
Indeed, a company practice favorable to the employees has been established and the
payments made by MERALCO pursuant thereto ripened into benefits enjoyed by the
employees. Consequently, the giving of the special bonus can no longer be
withdrawn by the company as this would amount to a diminution of the employees
existing benefits.
2. YES. Both MERALCO and the Office of the Solicitor General dispute this ruling
because it disregards the rule the SC have established on the exclusion
of confidential employee from the rank and file bargaining unit.
In Pier 8 Arrastre vs. Confesor and General Maritime and Stevedores Union,[40] we
ruled that:
Put another way, the confidential employee does not share in the same community
of interest that might otherwise make him eligible to join his rank and file co-
workers, precisely because of a conflict in those interests.
Thus, in Metrolab Industries vs. Roldan-Confesor,[41] We ruled: that the Secretary’s
order should exclude the confidential employees from the regular rank and file
employees qualified to become members of the MEWA bargaining unit.
From the foregoing disquisition, it is clear that employees holding a confidential
position are prohibited from joining the union of the rank and file employees.
(3) YES. This issue is limited to the validity of the requirement that the union be
consulted before the implementation of any contracting out that would last for 6
months or more. Proceeding from our ruling in San Miguel Employees Union-
PTGWO vs Bersamina,[43] (where we recognized that contracting out of work is a
proprietary right of the employer in the exercise of an inherent management
prerogative) the issue we see is whether the Secretary’s consultation requirement is
reasonable or unduly restrictive of the company’s management prerogative. We
note that the Secretary himself has considered that management should not be
hampered in the operations of its business when he said that:
We feel that the limitations imposed by the union advocates are too specific and may
not be applicable to the situations that the company and the union may face in the
future. To our mind, the greater risk with this type of limitation is that it will tend to
curtail rather than allow the business growth that the company and the union must
aspire for. Hence, we are for the general limitations we have stated above because
they will allow a calibrated response to specific future situations the company and
the union may face
We recognize that contracting out is not unlimited; rather, it is a prerogative that
management enjoys subject to well-defined legal limitations. As we have previously
held, the company can determine in its best business judgment whether it should
contract out the performance of some of its work for as long as the employer is
motivated by good faith, and the contracting out must not have been resorted to
circumvent the law or must not have been the result of malicious or arbitrary action.
The Labor Code and its implementing rules also contain specific rules governing
contracting out.
Given these realities, we recognize that a balance already exist in the parties
relationship with respect to contracting out; MERALCO has its legally defined and
 protected management prerogatives while workers are guaranteed their own
protection through specific labor provisions and the recognition of limits to the
exercise of management prerogatives. From these premises, we can only conclude
that the Secretary’s added requirement only introduces an imbalance in the parties
collective bargaining relationship on a matter that the law already sufficiently
regulates. Hence, we rule that the Secretary’s added requirement, being
unreasonable, restrictive and potentially disruptive should be struck down.

** The Court ruled that, after considering the parties position and the evidence on record, the
Secretary of Labor disregarded and misappreciated evidence, particularly with respect to the
wage award.  The Secretary of Labor apparently also acted arbitrarily and even whimsically in
ordering the inclusion of benefits, terms and conditions that the law and the parties did not
intended to be reflected in thier CBA; even the Solicitor General himself considered that the
Secretary gravely abused his discretion on at least three major points: (a) on the signing bonus;
(b) on the inclusion of confidential employees in the rank and file bargaining unit; and (c) in
mandating a union security closed shop regime in the bargaining agreement.  The petition is
granted and the orders of the public respondent Secretary of Labor dated August 19 1996 and
December 28, 1996 were set aside.  The parties were directed to execute a Collective
Bargaining Agreement incorporating the terms and conditions contained in the unaffected
portions of the Secretary of Labors orders and the modifications set forth in the instant case.
The retirement issue is remanded to the Secretary of Labor for reception of evidence and
determination of the legal personality of the MERALCO retirement fund.
COCA COLA BOTTLERS PHILS, INC vs. NLRC and CANONICATO their services, then it only follows that it also has the power to dismiss them when justified
under the circumstances.
Facts:
 In 1986, Coca Cola entered into a contract of janitorial services with Bacolod Lastly, BJS has the power to control the conduct of the janitors. The supervisors of petitioner,
Janitorial Services (BJS), as an independent contractor. being interested in the result of the work of the janitors, also gives suggestions as to the
 In 1989, Coca Cola hired private respondent Ramon Canonicato as a casual performance of the janitors, but this does not mean that BJS has no control over them.  The
employee and assigned him to the bottling crew as a substitute for absent employees. interest of petitioner is only with respect to the result of their work. On the other hand, BJS
A year after, his casual employment terminated and thereafter, Coca Cola again oversees the totality of their performance.
availed his services, this time as a painter in contractual projects which lasted 15 to
30 days;
 In 1991, Canonicato was hired as a janitor by BJS, which assigned him to COCA
COLA considering his familiarity with its premises. Goaded by information that
COCA COLA employed previous BJS employees who filed a complaint against the
company for regularization pursuant to a compromise agreement, Canonicato
submitted a similar complaint against COCA COLA to the Labor Arbiter;
 Without notifying BJS, Canonicato no longer reported to his COCA COLA
assignment starting Sept 1993. Later, he sent his sister Rowena to collect his salary
from BJS. BJS released his salary but advised Rowena to tell Canonicato to report
for work. Claiming that he was barred from entering the premises of COCA COLA,
Canonicato met with the proprietress of BJS, Gloria Lacson, who offered him
assignments in other firms which he however refused;
 Canonicato amended his complaint against COCA COLA by citing instead as
grounds therefor illegal dismissal and underpayment of wages. He included BJS
therein as a co-respondent. In September 1993, BJS sent him a letter advising him to
report for work within three (3) days from receipt, otherwise, he would be
considered to have abandoned his job;
 Labor Arbiter dismissed the complaint. On the other hand, NLRC rejected on appeal
the decision of Labor Arbiter on the ground that the janitorial services of Canonicato
were found to be necessary in the usual business or trade of Coca Cola. NLRC
denied Coca Cola’s Motion for Reconsideration.
 Hence, this petition.

Issue: Whether there exists an employment bond between Coca Cola and Canonicato

Ruling: NO. In determining the existence of an employer-employee relationship it is necessary

to determine whether the following factors are present: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power to dismiss; and, (d) the power to control
the employee's conduct. Notably, these are all found in the relationship between BJS and
Canonicato and not between Canonicato and petitioner COCA COLA. 

In the instant case, the selection and engagement of the janitors for petitioner were done by
BJS. The application form and letter submitted by private respondent (Canonicato) to BJS
show that he acknowledged the fact that it was BJS who did the hiring and not petitioner x x x
x

BJS paid the wages of private respondent, as evidenced by the fact that on July 15, 1993,
private respondent sent his sister to BJS with a note authorizing her to receive his pay.

Power of dismissal is also exercised by BJS and not petitioner. BJS is the one that assigns the
janitors to its clients and transfers them when it sees fit. Since BJS is the one who engages
G. R. No. 148492. May 9, 2003
MAGSALIN vs. NATIONAL ORGANIZATION OF WORKING MEN
*Affirmed CA decision; Ordered to pay financial assistance*
Facts:
 Petitioner Coca-Cola Bottlers Phils., Inc. engaged the services of respondent
workers as sales route helpers for five months. After five months, respondent
workers were employed by Coca-Cola on a day-to-day basis, in order to substitute
the regular sales route helpers whenever the latter would be unavailable or in case of
unexpected shortage of manpower. The practice was for the workers to wait every
morning outside the gates of the sales office of Coca-Cola, and if hired on that day,
would then be paid their wages at the end of the day;
 Therafter, respondent workers asked Coca-Cola to extend them with regular
appointments – to which Coca-Cola refused. Subsequently, the workers filed a
complaint for regularization of their employment. Coca-Cola terminated them which
prompted them to file a notice of strike and a complaint for illegal dismissal and
unfair labor practice with the NLRC;
 Parties agreed to submit the controversy for voluntary arbitration. And the voluntary
arbitrator dismissed the complaint of workers on the ground that they are not regular
employees. Workers filed a petition for review with CA, which reversed the decision
– declaring that the workers are regular employees, their dismissal is illegal and they
be entitle to reinstatement with full backwages. Hence, this petition.
The repeated rehiring of respondent workers and the continuing need for their services clearly
attest to the necessity or desirability of their services in the regular conduct of the business or
trade of petitioner company. The Court of Appeals has found each of respondents to have
worked for at least one year with petitioner company. The pernicious practice of having
employees, workers and laborers, engaged for a fixed period of few months, short of the
normal six-month probationary period of employment, and, thereafter, to be hired on a day-to-
day basis, mocks the law. Any obvious circumvention of the law cannot be countenanced. The
fact that respondent workers have agreed to be employed on such basis and to forego the
protection given to them on their security of tenure, demonstrate nothing more than the serious
problem of impoverishment of so many of our people and the resulting unevenness between
labor and capital. A contract of employment is impressed with public interest. The provisions
of applicable statutes are deemed written into the contract, and the parties are not at liberty to
insulate themselves and their relationships from the impact of labor laws and regulations by
simply contracting with each other.

Issue: W/N the nature of work of respondents in the company is of such nature as to be
deemed necessary and desirable in the usual business or trade of petitioner that could qualify
them to be regular employees

Ruling: YES. In determining whether an employment should be considered regular or non-

regular, the applicable test is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the employer.  The
standard, supplied by the law itself, is whether the work undertaken is necessary or desirable
in the usual business or trade of the employer, a fact that can be assessed by looking into the
nature of the services rendered and its relation to the general scheme under which the business
or trade is pursued in the usual course. It is distinguished from a specific undertaking that is
divorced from the normal activities required in carrying on the particular business or
trade. But, although the work to be performed is only for a specific project or seasonal, where
a person thus engaged has been performing the job for at least one year, even if the
performance is not continuous or is merely intermittent, the law deems the repeated and
continuing need for its performance as being sufficient to indicate the necessity or desirability
of that activity to the business or trade of the employer. The employment of such person is
also then deemed to be regular with respect to such activity and while such activity exists.
The argument of petitioner that its usual business or trade is softdrink manufacturing and that
the work assigned to respondent workers as sales route helpers so involves merely
postproduction activities, one which is not indispensable in the manufacture of its products,
scarcely can be persuasive. If, as so argued by petitioner company, only those whose work are
directly involved in the production of softdrinks may be held performing functions necessary
and desirable in its usual business or trade, there would have then been no need for it to even
maintain regular truck sales route helpers. The nature of the work performed must be viewed
from a perspective of the business or trade in its entirety and not on a confined scope.
G.R. NO. 148893 July 12, 2006
SKIPPERS UNITED PACIFIC, INC. vs. NLRC
*Petition Denied*
Facts:
 Respondent Gervacio Rosaroso signed up as a Third Engineer with Nicolakis
Shipping, S.A through petitioner Skippers United, a recruitment and manning
agency. The term of the contract was for one year. Barely a month after the
boarding the vessel, respondent was ordered to disembark in Bulgaria and
repatriated to the Philippines. Immediately upon arriving in the Philippines,
respondent filed a complaint for illegal dismissal and monetary claims, which was
granted by Labor Artibiter and affirmed by NLRC and by the CA. Hence, this
petition;
Issue: Whether or not Rosaroso is entitled to backwages
Ruling: YES. The rule in labor cases is that the employer has the burden of proving that the
dismissal was for a just cause; failure to show this would necessarily mean that the dismissal
was unjustified and, therefore, illegal. The two-fold requirements for a valid dismissal are as
follows: (1) dismissal must be for a cause provided for in the Labor Code, which is
substantive; and (2) the observance of notice and hearing prior to the employees dismissal,
which is procedural
There is nothing on record that shows that furnishing respondent with a notice of
dismissal will pose a clear and present danger to the vessel and its crew. And even if the
Master was justified in dispensing with the required notice, still, it was essential that a
complete report, substantiated by witnesses, testimonies and any other documents in support
thereof, was sent to the manning agency. The record of this case is bereft of any such report
and supporting documents. Instead, respondent was verbally ordered to disembark the vessel
and repatriated to the Philippines without being told of the reasons why. Clearly, respondent
was not accorded due process.
A seafarer is not a regular employee as defined in Article 280 of the Labor Code.  paid wages.[57] Of the four, the control test is the most important element.
Hence, he is not entitled to full backwages and separation pay in lieu of reinstatement as
provided in Article 279 of the Labor Code. Seafarers are contractual employees whose rights
and obligations are governed primarily by the POEA Standard Employment Contract for
Filipino Seamen, the Rules and Regulations Governing Overseas Employment, and, more
importantly, by Republic Act (R.A.) No. 8042, or the Migrant Workers and Overseas Filipinos
Act of 1995. While the POEA Standard Employment Contract for Filipino Seamen and the
Rules and Regulations Governing Overseas Employment do not provide for the award of
separation or termination pay, Section 10 of R.A. 8042 provides for the award of money
claims in cases of illegal dismissals.
The award of salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term, whichever is less, is not an award of
backwages or separation pay, but a form of indemnity for the worker who was illegally
dismissed. The Labor Arbiter may have mislabeled it as separation pay, nonetheless, the award
was made in conformity with law.
[G.R. No. 154472. June 30, 2005]
LOPEZ vs. METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM
Facts:
 By virtue of an Agreement, petitioners were engaged by the Metropolitan
Waterworks and Sewerage System (MWSS) as collectors-contractors, wherein the
former agreed to collect from the concessionaires of MWSS, charges, fees,
assessments of rents for water, sewer and/or plumbing services which the MWSS
bills from time to time;
 Thereafter, MWSS entered into a Concession Agreement with Manila Water
Service, Inc. and Benpress-Lyonnaise, wherein the collection of bills was transferred
to said private concessionaires, effectively terminating the contracts of service
between petitioners and MWSS. Regular employees of the MWSS, except those
who had retired or opted to remain with the latter, were absorbed by the
concessionaires. Regular employees of the MWSS were paid their retirement
benefits, but not petitioners. Instead, they were refused said benefits, MWSS relying
on a resolution of the Civil Service Commission (CSC) that contract-collectors of
the MWSS are not its employees and therefore not entitled to the benefits due
regular government employees;
 Petitioners filed a complaint with the CSC, which was denied because contract
services/job orders are not considered as government services. CA affirmed the
CSC’s decision;
Issue: W/N petitioners were employees of the MWSS and, consequently, entitled to the
benefits they claim
Ruling: YES. For purposes of determining the existence of employer-employee relationship,
the Court has consistently adhered to the four-fold test, namely: (1) whether the alleged
employer has the power of selection and engagement of an employee; (2) whether he has
control of the employee with respect to the means and methods by which work is to be
accomplished; (3) whether he has the power to dismiss; and (4) whether the employee was
A review of the circumstances surrounding the case reveals that petitioners are
employees of MWSS. Despite the obvious attempt of MWSS to categorize petitioners as mere
service providers, not employees, by entering into contracts for services, its actuations show
that they are its employees, pure and simple. MWSS wielded its power of selection when it
contracted with the individual petitioners, undertaking separate contracts or agreements. The
same goes true for the power to dismiss. Although termed as causes for termination of
the Agreement, a review of the same shows that the grounds indicated therein can similarly be
grounds for termination of employment.
(NOT TAPOS)
G.R. No. 164736 October 14, 2005
UNIVERSAL ROBINA vs. CATAPANG
Facts:
 Petitioner Randy Gregorio is the manager of Petitioner Universal Robina Corporation’s
duck farm in Calauan, Laguna. Individual respondents were hired by Universal Robina to
work at its duck farm under an employment contract for a five-month period. After the
expiration of said contracts, Universal will renew them and reemploy the respondents.
Such practice continued until 1996, until Universal informed respondents that they were
no longer renewing their employment contracts;
 30 Respondents then filed separate complaints for illegal dismissal, reinstatement,
backwages, damages and attorneys fees against petitioners, which were later
consolidated;
 Labor Arbiter ruled that respondents are regular employees and were illegally dismissed,
thereafter, issued a Writ of Execution enforcing the immediate reinstatement of
respondents; 17 employees were reinstated; remaining 13 moved for immediate
reinstatement;
 Universal failed and refused to comply, thereafter, 2 Alias Writ of execution were issued
(on different dates) together with a notice of garnishment to collect accumulated withheld
wages of 17 reinstated employees (P649,400.00);
 In case of failure to comply with reinstatement of 13 employees, the Labor Arbiter
directed the petitioner company to pay them separation pay instead;
 Universal filed a Memorandum of Notice of Appeal with prayer for the issuance of TRO
with NLRC (beyond the 15-day reglementary period); NLRC affirmed the decision of
Labor Arbiter; CA denied Universal’s petition for certiorari. Hence, this petition.
Issue: W/N respondents are regular employees of Universal Robina
Ruling: YES. The primary standard of determining regular employment is the reasonable
connection between the particular activity performed by the employee in relation to the usual trade
or business of the employer. The test is whether the former is usually necessary or desirable in the
usual business or trade of the employer. The connection can be determined by considering the
nature of work performed and its relation to the scheme of the particular business or trade in its
entirety. Also, if the employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems repeated and continuing need
for its performance as sufficient evidence of the necessity if not indispensability of that activity to
the business. Hence, the employment is considered regular, but only with respect to such activity
and while such activity exists.
Thus, we quote with approval the following excerpt from the decision of the CA:  In this case, petitioners did not have that kind of agreement with respondents.
 
It is obvious that the said five-month contract of employment was used by petitioners as a
convenient subterfuge to prevent private respondents from becoming regular employees. Such
contractual arrangement should be struck down or disregarded as contrary to public policy or
morals. To uphold the same would, in effect, permit petitioners to avoid hiring permanent or
regular employees by simply hiring them on a temporary or casual basis, thereby violating the
employees security of tenure in their jobs.
Petitioners act of repeatedly and continuously hiring private respondents in a span of 3 to 5 years to
do the same kind of work negates their contention that private respondents were hired for a specific
project or undertaking only.
G.R. No. 141168 April 10, 2006
ABESCO CONSTRUCTION vs. RAMIREZ
Facts:
 Petitioner Abesco Construction and Development Corporation was engaged in a
construction business where respondents were hired on different dates from 1976 to
1992 either as laborers, road roller operators, painters or drivers;
 This is a consolidated case filed by respondents for illegal dismissal against Abesco
and its General Manager before the Labor Arbiter; they also included claims for
non-payment of 13th month pay, five days service incentive leave pay, premium pays
for holidays and rest days and moral and exemplary damages. LA declared
respondents as regular workers because they belong to a work pool from which the
company drew workers for assignment to different project at its discretion;
 Petitioners denied liability to respondents and countered that respondents were
project employees since their services were necessary only when the company had
projects to be completed;
 NLRC affirmed LA’s decision; CA also affirmed. Hence, this petition.
Issue: W/N respondents were regular employees
Ruling: YES. Contrary to the disquisitions of the LA, employees (like respondents) who work
under different project employment contracts for several years do not automatically become
regular employees; they can remain as project employees regardless of the number of years
they work. Length of service is not a controlling factor in determining the nature of ones
employment.
Moreover, employees who are members of a work pool from which a company
(like petitioner corporation) draws workers for deployment to its different projects do not
become regular employees by reason of that fact alone. The Court has enunciated in some
cases that members of a work pool can either be project employees or regular employees.
 
The principal test for determining whether employees are project employees or
regular employees is whether they are assigned to carry out a specific project or undertaking,
the duration and scope of which are specified at the time they are engaged for that
project. Such duration, as well as the particular work/service to be performed, is defined in an
employment agreement and is made clear to the employees at the time of hiring.
Neither did they inform respondents of the nature of the latters work at the time of hiring.
Hence, for failure of petitioners to substantiate their claim that respondents were project
employees, we are constrained to declare them as regular employees. 
440 SCRA 121 GR 150793, Nov. 19, 2004
CHUA vs. CA Notes:

Facts: Under Section 36[13] of the Corporation Code, read in relation to Section 23, [14] where a
 Private respondent Lydia Hao, treasurer of Siena Realty Corporation, filed a corporation is an injured party, its power to sue is lodged with its board of directors or
complaint-affidavit with the City Prosecutor of Manila charging Francis Chua and trustees.[15] An individual stockholder is permitted to institute a derivative suit on behalf of the
his wife, Elsa Chua, of four counts of falsification of public documents for corporation wherein he holds stocks in order to protect or vindicate corporate rights,
indicating in the Minutes of the Annual Stock Holders Meeting on 1994 that Hao whenever the officials of the corporation refuse to sue, or are the ones to be sued, or hold the
has participated in the proceedings to the prejudice of public interest and in violation control of the corporation. In such actions, the suing stockholder is regarded as a nominal
of public faith and destruction of truth; party, with the corporation as the real party in interest. [16]
 Prosecutor docketed the criminal case against Francis Chua but dismissed accusation A derivative action is a suit by a shareholder to enforce a corporate cause of action. The
against Elsa Chua. However, private prosecutors Atty. Sua-Kho and Atty. Rivera corporation is a necessary party to the suit. And the relief which is granted is a judgment
were excluded from actively participating in the criminal case on the ground that against a third person in favor of the corporation. Similarly, if a corporation has a defense to
Hao failed to allege and prove any civil liability in the case; an action against it and is not asserting it, a stockholder may intervene and defend on behalf
 A petition for certiorari filed by Hao for and in behalf of Siena Realty Corporation of the corporation
against Chua was granted by the RTC;
 Chua, now, filed a petition before the CA arguing that that respondent had no
authority whatsoever to bring a suit in behalf of the Corporation since there was no
Board Resolution authorizing her to file the suit; For her part, respondent Hao
claimed that the suit was brought under the concept of a derivative suit.
 The CA held that the action was indeed a derivative suit, for it alleged that petitioner
falsified documents pertaining to projects of the corporation and made it appear that
the petitioner was a stockholder and a director of the corporation. According to the
appellate court, the corporation was a necessary party to the petition filed with the
RTC and even if private respondent filed the criminal case, her act should not divest
the Corporation of its right to be a party and present its own claim for damages. 

W/N the criminal complaint is a derivative suit

YES. The basic requirement in determining whether an appeal is a derivative suit is that it
must be alleged in the complaint that the shareholder is suing on a derivative cause of action
for and in behalf of the corporation and other shareholders who wish to join.
In Criminal Case, the complaint was instituted by respondent against petitioner for
falsifying corporate documents whose subject concerns corporate projects of Siena Realty
Corporation. Clearly, Siena Realty Corporation is an offended party. Hence, Siena Realty
Corporation has a cause of action. And the civil case for the corporate cause of action is
deemed instituted in the criminal action. However, the board of directors of the corporation in
this case did not institute the action against petitioner. Private respondent was the one who
instituted the action. Private respondent asserts that she filed a derivative suit in behalf of the
corporation. This assertion is inaccurate. In the criminal complaint filed by herein respondent,
nowhere is it stated that she is filing the same in behalf and for the benefit of the corporation.
Thus, the criminal complaint including the civil aspect thereof could not be deemed in the
nature of a derivative suit.
W/N Siena Realty Corporation is a proper party
YES. In the instant case, we find that the recourse of the complainant to the respondent Court
of Appeals was proper. The petition was brought in her own name and in behalf of the
Corporation. Although, the corporation was not a complainant in the criminal action, the
subject of the falsification was the corporations project and the falsified documents were
corporate documents. Therefore, the corporation is a proper party in the petition for certiorari
because the proceedings in the criminal case directly and adversely affected the corporation.
G.R. No. 148102 July 11, 2006
LABAYOG vs. M.Y. SAN BISCUITS
Facts:
 On various dates in 1992, petitioners entered into contracts of employment with
respondent MY SANS as mixers, packers and machine operators for a fixed term.
On the expiration of their contracts, their services were terminated. Forthwith, they
each executed a quitclaim.  Year Expansion Program. Petitioners, along with other employees, filed a
 Subsequently, petitioners filed complaints for illegal dismissal, underpayment of
wages, non-payment of overtime, night differential and 13 th month pay, damages and
attorneys fees. The labor arbiter ruled their dismissal to be illegal on the ground that
they had become regular employees who performed duties necessary and desirable
in respondent companys business. The labor arbiter ordered the reinstatement of
petitioners with award of backwages, 13th month pay and service incentive leave
pay, all other claims were denied;
 On appeal, NLRC set aside the LA’s decision. Having entered into their
employment contracts freely and voluntarily, they knew that their employment was
only for a fixed period and would end on the prescribed expiration date. Petitioners
motion for reconsideration was denied. Hence, this petition.
Issue: W/N the respondents are regular employees
Ruling: NO. Article 280 does not proscribe or prohibit an employment contract with a fixed
period provided it is not intended to circumvent the security of tenure.  It is quite evident that petitioners were employed for a specific project or projects
 
Two criteria validate a contract of employment with a fixed period: (1) the fixed
period of employment was knowingly and voluntarily agreed upon by the parties without any
force, duress or improper pressure being brought to bear on the employee and without any
circumstances vitiating consent or, (2) it satisfactorily appears that the employer and employee
dealt with each other on more or less equal terms with no moral dominance whatever being
exercised by the former on the latter.  [12] Against these criteria, petitioners contracts of
employment with a fixed period were valid.  of machinery and equipment and the commissioning of such machinery - only for
 
Each contract provided for an expiration date. Petitioners knew from the beginning
that the employment offered to them was not permanent but only for a certain fixed period.
[13]
 They were free to accept or to refuse the offer. When they expressed their acceptance, they
bound themselves to the contract. Also, there was no allegation of vitiated consent.
Respondents did not exercise moral dominance over petitioners. The contracts were mutually
advantageous to the parties. While respondents were able to augment increased demand in
production by hiring petitioners on an as-needed basis, petitioners found gainful employment
if only for a few months.  component projects of the FYEP because they were qualified. Thus, the Court is convinced
 
Simply put, petitioners were not regular employees. While their employment as
mixers, packers and machine operators was necessary and desirable in the usual business of
respondent company, they were employed temporarily only, during periods when there was
heightened demand for production. Consequently, there could have been no illegal dismissal
when their services were terminated on expiration of their contracts. There was even no need
for notice of termination because they knew exactly when their contracts would end. Contracts
of employment for a fixed period terminate on their own at the end of such period.
[G.R. No. 120064. August 15, 1997]
PALOMARES vs. NLRC
Facts:
 Petitioners Ferdinand Palomares and Teodulo Mutia were hired by respondent
National Steel Corporation (NSC) by virtue of contracts of employment for its Five
consolidated petition for regularization, wage differential, CBA coverage and other
benefits. Labor Arbiter ordered the dismissal of the complaint with respect to 26
complainants but ruled in favor of petitioners and four others, who were adjudged as
regular employees;
 On appeal, NLRC reversed the findings of the LA and held that petitioners were
project employees and that their assumption of regular jobs were mainly due to
peakloads or the absence of regular employees during the latters temporary leave;
 Motion for reconsideration denied. Hence, this petition.
Issue: W/N petitioners should be considered regular employees of respondent corporation
Ruling: NO. The principal test for determining whether an employee is a project employee and
not a regular employee is whether he was assigned to carry out a specific project or
undertaking, the duration and scope of which were specified at the time he was engaged for
that project.
undertaken by respondent corporation. The component projects of the latters Five Year
Expansion Program include the setting up of a Cold Rolling Mill Expansion Project,
establishing a Billet Steel-Making Plant, installation of a Five Stand TDM and Cold Mill
Peripherals Project.
Each component project, of course, begins and ends at specified times, which had
already been determined by the time petitioners were engaged. We also note that NSC did the
work here involved - the construction of buildings and civil and electrical works, installation
itself. Private respondent NSC was not in the business of constructing buildings and installing
plant machinery for the general business community, i.e., for unrelated, third party,
corporations. NSC did not hold itself out to the public as a construction company or as an
engineering corporation.
The records show that petitioners were hired to work on projects for FYEP I and II-
A. On account of the expiration of their contracts of employment and/or project completion,
petitioners were terminated from their employment. They were, however, rehired for other
that petitioners were engaged only to augment the workforce of NSC for its aforesaid
expansion program.
G.R. No. 152427. August 9, 2005
INTEGRATED CONTRACTOR AND PLUMBING WORKS vs. NLRC

Facts: Note:
 Petitioner Integrated Contractor and Plumbing Works, Inc. is a plumbing contractor
whose business depends on the number and frequency of the projects it is able to Project refers to a particular job or undertaking that is within the regular or usual business of
contract with its clients, where private respondent Glen Solon works; the employer, but which is distinct and separate and identifiable from the undertakings of the
company. Such job or undertaking begins and ends at determined or determinable times. [14]
 In 1998, while private respondent was about to log out from work, he was informed
by the warehouseman that the main office had instructed them to tell him it was his
last day of work as he had been terminated. When private respondent went to the
petitioner’s office to verify his status, he found out that indeed, he had been
terminated. He went back to petitioner’s office, a few days after, to sign a clearance
so he could claim his 13 th month pay and tax refunds. However, he had second
thoughts and refused to sign the clearance when he read the clearance indicating he
had resigned. Thus, he filed a complaint alleging that he was illegally dismissed
without just cause and without due process;
 Labor Arbiter ruled that private respondent was a regular employee and ordered his
reinstatement; NLRC affirmed LA’s decision. MOR denied. Hence, this petition.

Issue: Whether the respondent is a regular employee of the petitioner

Ruling: YES. The test to determine whether employment is regular or not is the reasonable
connection between the particular activity performed by the employee in relation to the usual
business or trade of the employer. Also, if the employee has been performing the job for at
least one year, even if the performance is not continuous or merely intermittent, the law deems
the repeated and continuing need for its performance as sufficient evidence of the necessity, if
not indispensability of that activity to the business. [18] Thus, we held that where the
employment of project employees is extended long after the supposed project has been
finished, the employees are removed from the scope of project employees and are considered
regular employees.[19]
While length of time may not be the controlling test for project employment, it is vital in
determining if the employee was hired for a specific undertaking or tasked to perform
functions vital, necessary and indispensable to the usual business or trade of the employer.
Here, private respondent had been a project employee several times over. His employment
ceased to be coterminous with specific projects when he was repeatedly re-hired due to the
demands of petitioners business.[20] Where from the circumstances it is apparent that periods
have been imposed to preclude the acquisition of tenurial security by the employee, they
should be struck down as contrary to public policy, morals, good customs or public order. [21]
Further, Policy Instructions No. 20 requires employers to submit a report of an
employees termination to the nearest public employment office every time his employment
was terminated due to a completion of a project. The failure of the employer to file termination
reports is an indication that the employee is not a project employee. [22]Department Order No.
19 superseding Policy Instructions No. 20 also expressly provides that the report of
termination is one of the indications of project employment. [23] In the case at bar, there was
only one list of terminated workers submitted to the Department of Labor and Employment.
[24]
 If private respondent was a project employee, petitioner should have submitted a
termination report for every completion of a project to which the former was assigned.
G.R. No. 148738 June 29, 2004
Juxtaposing private respondents employment history, vis the requirements in the test to MITSUBISHI MOTORS vs. CHRYSLER PHILIPPINES
determine if he is a regular worker, we are constrained to say he is.

Facts:
 Mitsubishi Motors Philippines Corporation (MMPC) is a domestic corporation
engaged in the assembly and distribution of motor vehicles, whereas Chrysler
Philippines Labor Union (CPLU) is a legitimate labor organization of the rank and
file employees of MMPC. Nelson Paras was a member of CPLU while her wife was
the President of Chrysler Philippines Salaried Employees Union;
 Nelson was first employed by MMPC as a a shuttle driver, in 1976 but he resigned
after two years. He was then hired as a diesel mechanic and equipment operator in
Saudi Arabia from 1982 to 1993. Upon his return to the Philippines, he was re-hired
as a welder-fabricator at the MMPC tooling shop until March 1995;
 In May 27, 1996, Nelson was re-hired and reported for work, on a probationary basis
as manufacturing trainee at the Plant Engineering Maintenance Department of
MMPC. As part of the MMPCs policy, Paras was evaluated by his immediate
supervisors Lacambacal and Lopez after six (6) months, and received an average
rating. Later, Lacambacal informed Paras that based on his performance rating, he
would be regularized;
 However, the Department and Division Managers unanimously agreed, along with
Paras’ immediate supervisors, that the performance of Paras was unsatisfactory. As a
consequence, Paras was not considered for regularization. On November 26, 1996,
he received a Notice of Termination dated November 25, 1996, informing him that
his services were terminated effective the said date since he failed to meet the
required company standards for regularization;
 Utilizing the grievance machinery in the CBA, the CPLU demanded the settlement
of the dispute on Paras’ termination. The dispute was thereafter submitted for
voluntary arbitration. Later, the Voluntary Arbitrator rendered a decision finding the
dismissal of Paras valid for his failure to pass the probationary standards of MMPC,
stating that it was part of MMPC’s management prerogative;
 Paras and CLPU filed a petition for review with CA pursuant to Article 13 of NCC
that the period of May 27, 1996 to November 26, 1996 consisted of one hundred
eighty-three (183) days. CA, supported by OSG, reversed the VA’s decision. Hence,
this petition.
Issue: Whether or not respondent Paras was already a regular employee on November 26,
1996
Ruling: YES. Indeed, an employer, in the exercise of its management prerogative, may hire an
employee on a probationary basis in order to determine his fitness to perform work.  Under
Article 281 of the Labor Code, the employer must inform the employee of the standards for
which his employment may be considered for regularization. Such probationary period, unless
covered by an apprenticeship agreement, shall not exceed six (6) months from the date the
employee started working. The employees services may be terminated for just cause or for his
failure to qualify as a regular employee based on reasonable standards made known to him.
 
Respondent Paras was employed as a management trainee on a probationary basis. During
the orientation conducted on May 15, 1996, he was apprised of the standards upon which his
regularization would be based. He reported for work on May 27, 1996. As per the company’s
policy, the  probationary period was from three (3) months to a maximum of six (6) months.  Cecille Paras, the President of the Chrysler Philippines Salaried Employees Union (CPSU) and Paras wife,
 
Applying Article 13 of the Civil Code, the probationary period of six (6) months consists
of one hundred eighty (180) days. This is in conformity with paragraph one, Article 13 of the
Civil Code, which provides that the months which are not designated by their names shall be
understood as consisting of thirty (30) days each. The number of months in the probationary
period, six (6), should then be multiplied by the number of days within a month, thirty (30);
hence, the period of one hundred eighty (180) days. 
 
As clearly provided for in the last paragraph of Article 13, in computing a period, the first
day shall be excluded and the last day included. Thus, the one hundred eighty (180) days
commenced on May 27, 1996, and ended on November 23, 1996. The termination letter dated
November 25, 1996 was served on respondent Paras only at 3:00 a.m. of November 26, 1996.
He was, by then, already a regular employee of the petitioner under Article 281 of the Labor
Code.
W/N the dismissal is valid
The basis for which respondent Paras services were terminated was his alleged
unsatisfactory rating arising from poor performance. It is a settled doctrine that the employer
has the burden of proving the lawfulness of his employees dismissal. The validity of the
charge must be clearly established in a manner consistent with due process.
Under Article 282 of the Labor Code, an unsatisfactory rating can be a just cause for
dismissal only if it amounts to gross and habitual neglect of duties. Gross negligence has been
defined to be the want or absence of even slight care or diligence as to amount to a reckless
disregard of the safety of person or property. It evinces a thoughtless disregard of
consequences without exerting any effort to avoid them. A careful perusal of the records of
this case does not show that respondent Paras was grossly negligent in the performance of his
duties. 
  
In the present case, the immediate supervisor of respondent Paras gave him an average
performance rating and found him fit for regularization. Thereafter, his immediate supervisor
and the department head reviewed the said rating, which was duly noted by the personnel
manager. However, in a complete turn around, the petitioner made it appear that after the
performance evaluation of respondent Paras was reviewed by the department and division
heads, it was unanimously agreed that the respondents performance rating was unsatisfactory,
making him unfit for regularization. Considering that respondent Paras was not dismissed for a
just or authorized cause, his dismissal from employment was illegal. Furthermore, the
petitioners failure to inform him of any charges against him deprived him of due process.
Clearly, the termination of his employment based on his alleged unsatisfactory performance
rating was effected merely to cover up and deodorize the illegality of his dismissal.
Note: Computation of six-month period
May 27-31 =  4 days
Jun(e) 1-30 =  1 month (30 days)
July 1-31 =  1 month (30 days)
Aug(.) 1-31 =  1 month (30 days)
Sept(.) 1-30 =  1 month (30 days)
Oct(.) 1-31  = 1 month (30 days)
Nov(.) 1-26 =  26 days
**According to CPLU and Paras, the latters dismissal was an offshoot of the heated argument during the
CBA negotiations between MMPC Labor Relations Manager, Atty. Carlos S. Cao, on the one hand, and
on the other.**
G.R. No. 72222 January 30, 1989
INTERNATIONAL CATHOLIC MIGRATION COMMISSION vs. NLRC
 six-month probationary employment when she was validly terminated during her probationary
Facts: employment.
 International Catholic Migration Commission (ICMC), a non-profit organization
dedicated to refugee service, engaged the services of private respondent Bernadette
Galang as a probationary cultural orientation teacher;
 Three (3) months thereafter, private respondent was informed, orally and in writing,
that her services were being terminated for her failure to meet the prescribed Note:
standards of petitioner as reflected in the performance evaluation of her supervisors
Private respondent’s lame contention 
during the teacher evaluation program she underwent along with other newly-hired
It must be noted that notwithstanding the finding of legality of the termination of private
personnel;
respondent, public respondent justified the award of salary for the unexpired portion of the
 Despite her termination, Galang did not leave the ICMC refugee camp; a month
probationary employment on the ground that a probationary employment for six (6) months is
after her termination, Galang returned to Morong, Bataan and in the evening of same
an employment for a "definite period" which requires the employer to exhaust the entire
day, she was found at the Freedom Park of Morong wet and shivering from the rain
probationary period to give the employee the opportunity to meet the required standards. 
and acting bizarrely. She was taken to petitioner’s hospital and was givel necessary
medical attention;
 Two days later, she was taken to her residence in Manila. On the same day, her
father received, on her behalf, the proportionate amount of her 13 th month pay and
two-week pay;
 Thereafter, Galang filed a complaint for illegal dismissal, unfair labor practice and
unpaid wages against ICMC with the Ministry of Labor; Labor Arbiter dismissed the
complaint but ordered the payment of Galang’s three-month wage (P6000);
 NLRC sustained the decision of Labor Arbiter; Dissatisfied, ICMC filed the instant
petition.

Issue: W/N an employee who was terminated during the probationary period of her
employment is entitled to her salary for the unexpired portion of her six-month probationary
employment

Ruling: NO. There is justifiable basis for the reversal of public respondent's award of salary
for the unexpired three-month portion of private respondent's six-month probationary
employment in the light of its express finding that there was no illegal dismissal. There is no
dispute that private respondent was terminated during her probationary period of employment
for failure to qualify as a regular member of petitioner's teaching staff in accordance with its
reasonable standards. Records show that private respondent was found by petitioner to be
deficient in classroom management, teacher-student relationship and teaching
techniques. 8 Failure to qualify as a regular employee in accordance with the reasonable
standards of the employer is a just cause for terminating a probationary employee specifically
recognized under Article 282 (now Article 281) of the Labor Code

There was no showing, as borne out by the records, that there was circumvention of
the rights of private respondent when she was informed of her termination. Her dismissal does
not appear to us as arbitrary, fanciful or whimsical. Private respondent was duly notified,
orally and in writing, that her services as cultural orientation teacher were terminated for
failure to meet the prescribed standards of petitioner as reflected in the performance evaluation
conducted by her supervisors during the teacher evaluating program. The dissatisfaction of
petitioner over the performance of private respondent in this regard is a legitimate exercise of
its prerogative to select whom to hire or refuse employment for the success of its program or
undertaking. More importantly, private respondent failed to show that there was unlawful
discrimination in the dismissal. 
It was thus a grave abuse of discretion on the part of public respondent to order G.R. No. 149859. June 9, 2004
petitioner to pay private respondent her salary for the unexpired three-month portion of her ALCIRA vs. NLRC
Facts:
 Respondent Middleby Philippines Corporation hired petitioner Radin Alcira as
engineering support services supervisor on a probationary basis for six months. However,
unhappy with Alcira’s performance, respondet Middleby terminated petitioner’s services;
 The parties, presenting their respective copies of Alcira’s appointment paper, claimed
conflicting starting dates of employment: May 20, 1996 according to petitioner and May
27, 1996 according to respondent. Both documents indicated petitioner’s employment
status as probationary (6 mos.) and a remark that after five months (petitioners)
performance shall be evaluated and any adjustment in salary shall depend on (his) work
performance;
 Petitioner asserts that, on November 20, 1996, in the presence of his co-workers and
subordinates, a senior officer of respondent Middleby in bad faith withheld his time card
and did not allow him to work. Considering this as a dismissal after the lapse of his
probationary employment, petitioner filed a complaint in the NLRC against respondent
Middleby contending that he had already become a regular employee as of the date he
was illegally dismissed;
 In their defense, respondents claim that, during petitioners probationary employment, he
showed poor performance in his assigned tasks, incurred ten absences, was late several
times and violated company rules on the wearing of uniform. Since he failed to meet
company standards, petitioners application to become a regular employee was
disapproved and his employment was terminated;
 Labor Arbiter dismissed the complaint; NLRC affirmed; CA affirmed. Hence, this
petition.
Issue: W/N the petitioner was already a regular employee in respondent’s company at the time of his
dismissal from the service
Ruling: NO. Petitioner claims that under the terms of his contract, his probationary employment
was only for five months as indicated by the remark “Please be informed that after five months,
your performance shall be evaluated and any adjustment in salary shall depend on your work
performance.” The argument lacks merit. As correctly held by the labor arbiter, the appointment
contract also stated in another part thereof that petitioners employment status was probationary (6
mos.). The five-month period referred to the evaluation of his work.
Petitioner’s contention that he was dismissed on November 20, 1996, he was already a regular
employee is incorrect. As ruled in several cases, our computation of the 6-month probationary
period is reckoned from the date of appointment up to the same calendar date of the 6th month
following. Since the number of days in each particular month was irrelevant, petitioner was still a
probationary employee when respondent Middleby opted not to regularize him on November 20,
1996.
Furthermore, it is settled that even if probationary employees do not enjoy permanent status,
they are accorded the constitutional protection of security of tenure. This means they may only be
terminated for just cause or when they otherwise fail to qualify as regular employees in accordance
with reasonable standards made known to them by the employer at the time of their engagement. In
the case at bar, respondent Middleby exercised its option not to renew the contract when it informed
petitioner on the last day of his probationary employment that it did not intend to grant him a regular
status.
G.R. No. L-54285 December 8, 1988
CEBU STEVEDORING vs. MINISTER OF LABOR
Facts:
 Private respondents Arsenio Gelig and Maria Luz Quijano were former employees
of the Cebu Customs Arrastre Service (CCAS), which was abolished in 1977. All
the employees of CCAS including herein private respondents, were absorbed by
petitioner Cebu Stevedoring Co., Inc. (CSCI), with the same positions they held in
CCAS. However, private respondents were dismissed by CSCI without prior
clearance due to redundancy;
 A complaint for reinstatement with backwages filed by private respondents before
the Ministry of Labor was ruled in favor of respondents, which was affirmed by
Labor Regional Director, stating among others that, “xxx complainants who were
employed by Cebu Arrastre Service upon being absorbed by respondent for the
same function and work need not undergo another probationary test in the same line
of work where they have gained a latitude of expertise”;
 CSCI elevated the case to the Office of the President. Hence, this petition.
Issue: Whether or not private respondents are casuals/probationary employees
Ruling: NO. We agree with the Regional Director that private respondents could not be
considered probationary employees because they were already well-trained in their respective
functions. This conclusion is further bolstered by the factual findings of the Labor Minister
that said order of the Director was supported by substantial evidence. As stressed by the
Solicitor General, while private respondents were still with the CCAS they were already
clerks. Respondent Gelig had been a clerk for CCAS for more than ten (10) years, while
respondent Quijano had slightly less than ten (10) years of service. They were, therefore, not
novices in their jobs but experienced workers. 19
As regular employees, therefore, private respondents may not be dismissed and
petitioner cannot terminate their services except for a just or authorized cause provided by law
and with scrupulous observance of due process requirements. 
It is true that Article 283 of the Labor Code provides that an "employer may also
terminate the employment of any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking." However, the records fail to establish clearly and convincingly
that the positions occupied by private respondents are Identical with those presently existing in
petitioner's office. 
Furthermore, petitioner kept private respondents in its employ for almost six months
without raising this issue. It does not mention which positions are allegedly duplicated by the
positions held by private respondents. It does not even explain why the private respondents
should be the ones to be terminated, without regard to the comparative lengths of service,
qualifications and performance of all employees concerned. 
PETITION DISMISSED.
G.R. No. 152988. August 24, 2004
CHIANG KAI SHEK COLLEGE vs. CA

Facts:
 Diana P. Belo, a teacher of Chiang Kai Shek College since 1977, applied for a leave
of absence for the school year 1992-1993 because her children of tender age had no
one to take care of them, which was approved by the then principal Mrs. Cotio;
 Subsequently, Ms. Belo received a letter informing her of the school’s existing
policy stating the non-assurance of a teaching load to a teacher who took a leave of
absence and the non-applicability to children of teachers on leave of the free tuition
fee benefits extended to children of teachers in service. She nonetheless took her
leave of absence. However, she learned that one of her three children studying at
CKSC was sent out of the examination room because his tuition fees were not paid,
so she paid, under protest;
 A year after her absence, Ms. Belo presented herself to Mrs. Cotio and signified her
readiness to teach for SY 1993-1994, however, denied by Mrs. Cotio because her
filing was late and there was no available teaching load;
 Adversely affected by the development, Ms. Belo filed with the Labor Arbitration
Office a complaint for illegal dismissal; non-payment of salaries, 13 th month pay,
living allowance, teacher's day pay; loss of income; and moral damages. Labor
Arbiter dismissed the complaint reasoning that Ms. Belo was not dismissed but that
there was simply no available teaching load for her;
 On appeal, NLRC reversed the Labor Arbiter’s decision, which was affirmed by the
CA when it ascertained that Ms. Belo was constructively dismissed. Hence, this
petition.
Issue: Whether the Court of Appeals is correct in affirming the NLRC decision that Ms. Belo
was constructively illegally dismissed and is, therefore, entitled to reinstatement and back
wages.
Ruling: YES. It must be noted at the outset that Ms. Belo had been a full-time teacher in
petitioner CKSC continuously for fifteen years or since 1977 until she took a leave of absence
for the school year 1992-1993. Under the Manual of Regulations for Private Schools, for a
private school teacher to acquire a permanent status of employment and, therefore, be entitled
to a security of tenure, the following requisites must concur: (a) the teacher is a full-time
teacher; (b) the teacher must have rendered three consecutive years of service; and (c) such
service must have been satisfactory.
known to the employees and uniformly implemented to the body of employees as a whole and
not in isolation.
The continued employment of Ms. Belo was also rendered unlikely by the insistence
of the petitioners in implementing the alleged policy that a teacher who goes on leave for one
year is not assured of a teaching load. While this alleged policy was mentioned in Mr. Chiens
letter of 9 June 1992, it was not included in the schools written statement of policies dated 13
March 1992. Hence, it was then a non-existent policy. When a non-existent policy is
implemented and, in this case, only to Ms. Belo, it constitutes a clear case of discrimination.
Petitioners invocation of the third policy that of giving teaching assignments to
probationary teachers in April to justify their refusal to provide Ms. Belo a teaching load is,
therefore, a lame excuse that rings of untruth and dishonesty. Patently clear is the illegal
manner by which the petitioners eased out Ms. Belo from the teaching corps.
Thus, the Court of Appeals justification in upholding the NLRC ruling attains an added
judicial and logical sting:
When respondent Belo reported for work after the termination of her one-year leave of
absence, it was obligatory for petitioner school to give her a teaching load. It was
improper for petitioner school to farm out subjects of respondent Belo to provisionary
[sic] teacher [sic]. The petitioner school should have assumed that respondent Belo was
returning for work after the expiration of her leave. It would have been a different story,
if after the start of classes, respondent Belo failed to report for work, then the school had
a right to institute the necessary proceeding for the termination of her employment.
Note: Constructive dismissal as a cessation from work because continued employment is
rendered impossible, unreasonable, or unlikely; when there is a demotion in rank or a
diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an
employer becomes unbearable to the employee

Since Ms. Belo has measured up to these standards, she therefore enjoys security of
tenure. The fundamental guarantees of security of tenure and due process dictate that no
worker shall be dismissed except for just and authorized cause provided by law and after due
notice and hearing.
The company policies are addressed to all teachers and staff of petitioner
school. However, the policy that employees not in service are not entitled to any benefit
extended by the school was not listed in the written statement of policies dated 13 March
1992. The policy made its maiden appearance in petitioner’s statement of policies one year
after or on 12 March 1993. It was, therefore, the policy of extending free tuition fees to
children of teachers of the school, whether on service or on leave, which existed as a matter of
custom and practice. That is why the school modified the privilege in written form.
Thus, when the petitioners retroactively applied the modified written policy to Ms. Belo,
they considered her already a teacher not in service. Ms. Belo was definitely singled out in the
implementation of a future policy. This is grossly unfair and unjust. The petitioners did not
take heed of the principle enshrined in our labor laws that policies should be adequately