Labor Standards Law - Recent Jurisprudence

Recent Jurisprudence (April 2012 – March 2015) Lab Stand
LABOR STANDARDS
ELEAZAR S. PADILLO v. RURAL BANK OF NABUNTURAN, INC., ET AL.

G.R. No. 199338, 21 January 2013
Termination of Employment; Disease: The Labor Code provision on termination on the ground of
disease under Article 297 does not apply in this case, considering that it was the Padillo and not
the Bank who severed the employment relations. A plain reading of the [Article 297 of the Labor
Code] clearly presupposes that it is the employer who terminates the services of the employee
found to be suffering from any disease and whose continued employment is prohibited by law or
is prejudicial to his health as well as to the health of his co-employees. It does not contemplate a
situation where it is the employee who severs his or her employment ties.
Retirement Benefits: In the absence of any applicable contract or any evolved company policy,
Padillo should have met the age and tenure requirements set forth under Article 300 of the Labor
Code to be entitled to the retirement benefits provided therein .
FACTS
Petitioner, the late Eleazar Padillo (Padillo), was employed by respondent Rural Bank of
Nabunturan, Inc. (Bank) as its SA Bookkeeper. Due to liquidity problems, the Bank took out
retirement/insurance plans with Philippine American Life (Philam Life) for all its employees,
including Padillo for a benefit amount of P100,000.00 and which was set to mature on July 2009.
Later on, the Bank’s liquidity was regained when respondent Mark Oropeza (Oropeza) took over
its management.
Padillo was diagnosed with Hypertension S/P CVA (Cerebrovascular Accident) with short
term memory loss, the nature of which had been classified as a total disability. Consequently, he
wrote a letter addressed to Oropeza expressing his intention to avail of an early retirement
package. Despite several follow-ups, his request remained unheeded. Later that year, Padillo
resigned from employment due to his poor and failing health. Not having received his claimed
retirement benefits provided under Article 300 of the Labor Code, Padillo a complaint for the
recovery of unpaid retirement benefits with the Labor Arbiter (LA).
The LA dismissed Padillo’s complaint but directed the Bank to pay him the amount
of P100,000.00 as financial assistance, treated as an advance from the amounts receivable under
the Philam Life Plan. The National Labor Relations Commission (NLRC) reversed the LA ruling and
ordered payment of separation pay pursuant to Article 297 (termination on the ground of
disease), on top of the P100,000.00 Philam Life Plan benefit. The Court of Appeals (CA) set aside
the NLRC ruling. It directed the Bank and Oropeza to pay Padillo the amount of P50,000.00 as
financial assistance exclusive of the P100,000.00 Philam Life Plan benefit which then already
matured.
RULING
The Labor Code provision on termination on the ground of disease under Article 297 does
not apply in this case, considering that it was the Padillo and not the Bank who severed the
employment relations.
As held in Villaruel v. Yeo Han Guan (Villaruel), a precedent which the CA correctly
applied, Article 297 of the Labor Code contemplates a situation where the employer, and not the
employee, initiates the termination of employment on the ground of the latter’s disease or
sickness, viz:
A plain reading of the [Article 297 of the Labor Code] clearly presupposes
that it is the employer who terminates the services of the employee found to be
suffering from any disease and whose continued employment is prohibited by law
or is prejudicial to his health as well as to the health of his co-employees. It does
not contemplate a situation where it is the employee who severs his or her
employment ties. This is precisely the reason why Section 8, Rule 1, Book VI of the
Omnibus Rules Implementing the Labor Code, directs that an employer shall not
terminate the services of the employee unless there is a certification by a
competent public health authority that the disease is of such nature or at such a
stage that it cannot be cured within a period of six (6) months even with proper
medical treatment.
Thus, given the inapplicability of Article 297 of the Labor Code to the case at bar, it
necessarily follows that Padillo’s claim for separation pay anchored on such provision must be
denied.
What remains applicable, however, is the Labor Code provision on retirement. In

particular, Article 300 of the Labor Code, as amended, partly provides:
Art. 300. Retirement. — Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other
applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement

benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements: Provided, however, That an employee's
retirement benefits under any collective bargaining and other agreements shall
not be less than those provided herein.1âwphi1
In the absence of a retirement plan or agreement providing for retirement benefits

of employees in the establishment, an employee upon reaching the age of sixty
(60) years or more, but not beyond sixty-five (65) years which is hereby declared
the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, a fraction of at least six
(6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one half (1/2) month
salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay
and the cash equivalent of not more than five (5) days of service incentive leaves.
All told, in the absence of any applicable contract or any evolved company policy, Padillo
should have met the age and tenure requirements set forth under Article 300 of the Labor Code to
be entitled to the retirement benefits provided therein. Unfortunately, while Padillo was able to
comply with the five (5) year tenure requirement – as he served for twenty-nine (29) years – he,
however, fell short with respect to the sixty (60) year age requirement given that he was only fifty-
five (55) years old when he retired. Therefore, without prejudice to the proceeds due under the
Philam Life Plan, petitioners’ claim for retirement benefits must be denied.
ROLANDO DS. TORRES v. RURAL BANK OF SAN JUAN, INC. ET AL.

G.R. No. 184520, March 13, 2013
J. Reyes
An employer has the right to dismiss an employee by reason of willful breach of the trust
and confidence reposed in him. To temper the exercise of such prerogative, the law imposes the
burden of proof upon the employer to show that the dismissal of the employee is for just cause
failing which would mean that the dismissal is not justified. The law mandates that before validity
can be accorded to a dismissal premised on loss of trust and confidence, two requisites must
concur, viz: (1) the employee concerned must be holding a position of trust; and (2) the loss of
trust must be based on willful breach of trust founded on clearly established facts. The SC ruled
that the act of issuing the clearance could not be considered a willful breach of that trust. The
Court has repeatedly emphasized that the act that breached the trust must be willful such that it
was done intentionally, knowingly, and purposely, without justifiable excuse
FACTS:
The petitioner was initially hired by Rural Bank of San Juan Inc. (RBSJI) as Personnel and
Marketing Manager in 1991. In 1996, the petitioner was given the position of Vice-President for
RBSJI’s newly created department, Allied Business Ventures. Subsequently, petitioner was
temporarily assigned as the manager of the N. Domingo branch of respondent RBSJI, in view of
the resignation of Jacinto Figuroa. Thereafter, Figuroa requested the petitioner to sign a standard
employment clearance pertaining to the former’s accountabilities with RBSJI. The petitioner,
however, issued a clearance only for Figuroa’s paid cash advances and salary loan, after being
shown receipts by the bank’s cashier.
It turned out that Figuroa is still liable for unpaid cash advances and is involved in a P11-
million fraudulent transaction that exposed the bank to a lawsuit. Because the clearance issued by
the petitioner effectively barred the bank from going after Figuroa, petitioner was dismissed from
service by RBSJI on the ground of loss of trust and confidence.
Aggrieved, the petitioner filed a complaint for illegal dismissal. The Labor Arbiter ruled in
favor of the petitioner holding that the act of issuing the clearance was not a valid and justifiable
ground for the bank to lose trust and confidence in him. The Labor Arbiter was affirmed by the
National Labor Relations Commission (NLRC). The Court of Appeals, however, reversed the ruling
of the NLRC and held that the petitioner was dismissed for just cause as he failed to exercise
prudence in clearing the bank manager of his accountabilities given that the same were yet to be
audited.
ISSUE:
Whether the petitioner was validly dismissed from employment
RULING:
As provided in Article 282 of the Labor Code, an employer has the right to dismiss an
employee by reason of willful breach of the trust and confidence reposed in him. To temper the
exercise of such prerogative, the law imposes the burden of proof upon the employer to show that
the dismissal of the employee is for just cause failing which would mean that the dismissal is not
justified.
The law mandates that before validity can be accorded to a dismissal premised on loss of
trust and confidence, two requisites must concur, viz: (1) the employee concerned must be
holding a position of trust; and (2) the loss of trust must be based on willful breach of trust
founded on clearly established facts.
The presence of the first requisite is thus certain. Anent the second requisite, the Court
finds that the respondents failed to meet their burden of proving that the petitioner’s dismissal
was for a just cause.
As correctly argued by the petitioner, the onus of submitting a copy of the clearance
allegedly exonerating Figuroa from all his accountabilities fell on the respondents. It was the
single and absolute evidence of the petitioner’s act that purportedly kindled the respondents’ loss
of trust. Without it, the respondents’ allegation of loss of trust and confidence has no leg to stand
on and must thus be rejected. Moreover, one can reasonably expect that a copy of the clearance,
an essential personnel document, is with the respondents. Their failure to present it and the lack
of explanation for such failure or the document’s unavailability props up the presumption that its
contents are unfavorable to the respondents’ assertions.
At any rate, the absence of the clearance upon which the contradicting claims of the
parties could ideally be resolved should work against the respondents. With only sworn pleadings
as proof of their opposite claims on the true contents of the clearance, the Court is bound to apply
the principle that the scales of justice should be tilted in favor of labor in case of doubt in the
evidence presented.
The SC ruled that the act of issuing the clearance could not be considered a willful breach
of that trust. The Court has repeatedly emphasized that the act that breached the trust must be
willful such that it was done intentionally, knowingly, and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.
THE ORCHARD GOLF AND COUNTRY CLUB v. AMELIA R. FRANCISCO

G.R. No. 178125, March 18, 2013
J. Del Castillo
Employee’s transfer without basis, resulting to her demotion is tantamount to constructive

dismissal. The fact that the employee continued to report for work does not necessarily suggest
that constructive dismissal has not occurred, nor does it operate as a waiver. Constructive
dismissal occurs not when the employee ceases to report for work, but when the unwarranted acts
of the employer are committed to the end that the employee’s continued employment shall
become so intolerable.
The dismissal of employees must be made within the parameters of the law and pursuant
to the basic tenets of equity, justice and fair play. It must not be done arbitrarily and without just
cause.
FACTS:
Amelia R. Francisco (Francisco) was employed as Club Accountant to head the Club’s
General Accounting Division. Francisco was charged of insubordination, when she had failed to
draft a letter to SGV & Co., the Club’s external auditor. This resulted to his suspension without pay
for a period of 15 days. Francisco then filed a Complaint for illegal dismissal against the Club. On
another instance, Francisco was suspended for another 15 days because of her unauthorized
leave/absence. After serving her suspension, Francisco again was placed on forced leave with pay
for 30 days for the alleged reason that the case of “betrayal of company trust” filed against her has
strained her relationship with her superiors. After the expiration of her forced leave, she has been
permanently transferred, without diminution of benefits, to the Club’s Cost Accounting Section.
Francisco protested that her permanent transfer was made in bad faith; and in her prayer, she
sought to be reinstated to her former position as Club Accountant. The club contends that the
transfer was made in good faith and was made in proper exercise of management prerogative.
ISSUE:
Whether the transfer of Francisco can be considered constructive dismissal
RULING:
The SC shares the CA’s observation that when Francisco was placed on forced leave and
transferred to the Cost Accounting Section, not once was Francisco given the opportunity to
contest these company actions taken against her. It has also not escaped our attention that just
when one penalty has been served by Francisco, another would instantaneously take its place. And
all these happened even while the supposed case against her, the alleged charge of "betrayal of
company trust", was still pending and remained unresolved. In fact, one of the memoranda was
served even at Francisco’s residence.
Not even the claim that her relations with her superiors have been strained could justify
Francisco’s transfer to Cost Accounting Section. Indeed, it appears that her charge was never
resolved. And if Famy, Nuevo and Clemente truly believed that their relations with Francisco have
been strained, then it puzzles the SC why, despite her transfer, she continues to remain under
Famy’s direct supervision.
The fact that Francisco continued to report for work does not necessarily suggest that
constructive dismissal has not occurred, nor does it operate as a waiver. Constructive dismissal
occurs not when the employee ceases to report for work, but when the unwarranted acts of the
employer are committed to the end that the employee’s continued employment shall become so
intolerable. In these difficult times, an employee may be left with no choice but to continue with
his employment despite abuses committed against him by the employer, and even during the
pendency of a labor dispute between them. This should not be taken against the employee.
Instead, we must share the burden of his plight, ever aware of the precept that necessitous men
are not free men.
An employer is free to manage and regulate, according to his own discretion and
judgment, all phases of employment, which includes hiring, work assignments, working methods,
time, place and manner of work, supervision of workers, working regulations, transfer of
employees, lay-off of workers, and the discipline, dismissal and recall of work. While the law
recognizes and safeguards this right of an employer to exercise what are clearly management
prerogatives, such right should not be abused and used as a tool of oppression against labor. The
company’s prerogatives must be exercised in good faith and with due regard to the rights of labor.
A priori, they are not absolute prerogatives but are subject to legal limits, collective bargaining
agreements and the general principles of fair play and justice. The power to dismiss an employee
is a recognized prerogative that is inherent in the employer’s right to freely manage and regulate
his business. x x x. Such right, however, is subject to regulation by the State, basically in the
exercise of its paramount police power. Thus, the dismissal of employees must be made within the
parameters of the law and pursuant to the basic tenets of equity, justice and fair play. It must not
be done arbitrarily and without just cause.
AUTOMOTIVE ENGINE REBUILDERS, INC. (AER), ET AL. v. PROGRESIBONG UNYON NG MGA
MANGGAGAWA SA AER, ET AL.
G.R. Nos. 160138, 160192, 16 January 2013
Illegal Dismissal; Backwages: It is basic in jurisprudence that illegally dismissed workers are
entitled to reinstatement with backwages plus interest at the legal rate.
FACTS
Thirty-two (32) employees filed and signed a complaint against Automotive Engine
Rebuilders, Inc. (AER). The complaint prayed that AER be declared guilty of Unfair Labor Practices,
Illegal Dismissal, Illegal Suspension, and Run-away shop; that the complainants be reinstated; and
that they be paid "full backwages and without loss of seniority rights and privileges, payment of
wages during suspension, plus moral and exemplary damages and attorney’s fees." On the other
hand, the earlier complaint filed by AER against Unyon and eighteen (18) of its members for
illegal concerted activities.
The Court found out both parties were at fault or in pari delicto and must bear the
consequences of their own wrongdoing. Thus, it decreed that the striking employees must be
restored to their respective positions prior to the illegal strike and illegal lockout. A Motion for
Partial Reconsideration was filed by Progresibong Unyon Ng Mga Manggagawa Sa AER (Unyon)
which questioned the Court’s July 13, 2011 Decision insofar as it failed to award backwages to
fourteen (14) of its members.
RULING
After going over the records again, the Court holds that only nine (9) of the fourteen (14)
excluded employees deserve to be reinstated immediately with backwages.
Records disclose that thirty-two (32) employees filed a complaint for illegal suspension
and unfair labor practice against AER. Out of these 32 workers, only eighteen (18) of them were
charged by AER with illegal strike leaving fourteen (14) of them excluded from its complaint.
Technically, as no charges for illegal strike were filed against these 14 employees, they cannot be
among those found guilty of illegal strike. They cannot be considered in pari delicto. They should
be reinstated and given their backwages.
Out of these 14 employees, however, five (5) failed to write their names and affix their
signatures in the Membership Resolution attached to the petition filed before the CA, authorizing
Union President Arnold Villota to represent them. It must be noted that Arnold Villota signed as
the Affiant in the Verification and Certification by virtue of the Membership Resolution.
Only the following nine (9) employees who signed their names in the petition can be
granted the relief prayed for therein. These excluded nine (9) workers, who signed their names in
their petition before the CA, deserve to be reinstated immediately and granted backwages. It is
basic in jurisprudence that illegally dismissed workers are entitled to reinstatement with
backwages plus interest at the legal rate.
— oOo —
ROLANDO L. CERVANTES v. PAL MARITIME CORPORATION and/or WESTERN SHIPPING

AGENCIES, PTE., LTD.
G.R. No. 175209, 16 January 2013
Resignation; Complaint for Illegal Dismissal: The rule that filing of a complaint for illegal dismissal
is inconsistent with resignation does not hold true in this case. The filing of the complaint one year
after his alleged termination, coupled with the clear tenor or his resignation letter should be
taken to mean that Cervantes's filing or the illegal dismissal case was a mere afterthought.
FACTS
Petitioner Rolando Cervantes (Cervantes) was hired as Master on board the vessel M/V
Themistocles by respondent PAL Maritime Corporation, the manning agent of respondent
Western Shipping Agencies, PTE., LTD. (Western Shipping). Cervantes sent a telex message
informing Western Shipping of the unbearable situation on board and asking for arrangement for
his reliever. In response to said message, Western Shipping sent a letter informing Cervantes that
the owners agreed to his request to prematurely terminate the contract. Cervantes replied that he
has no choice but to leave. Cervantes was repatriated to Manila. After one year, he then filed a
Complaint for illegal dismissal.
RULING
Resignation is the voluntary act of an employee who finds himself in a situation where he
believes that personal reasons cannot be sacrificed in favor of the exigency of the service, such
that he has no other choice but to disassociate himself from his employment. This is precisely what
obtained in this case.
The tenor of Cervantes’s telex message was an unmistakeable demand that he be relieved
of his assignment. Respondents met the challenge and accepted Cervantes’s resignation.
Cervantes even appeared resigned to his fate.
The statements of Cervantes were simple and straightforward. There is no merit to his
claim that he was forced to resign due to extreme pressure. Only two (2) days had elapsed from
the time Cervantes received a copy of the complaint from the owners of the vessel until his letter
demanding his relief. The telex message outlining numerous complaints against Cervantes
probably bruised his ego, causing Cervantes to react impulsively by resigning.
The rule that filing of a complaint for illegal dismissal is inconsistent with resignation does
not hold true in this case. The filing of the complaint one year after his alleged termination,
coupled with the clear tenor or his resignation letter should be taken to mean that Cervantes's
filing or the illegal dismissal case was a mere afterthought.
NELSON B. GAN vs. GALDERMA PHILIPPINES, INC. and ROSENDO C. VENERACION

G.R. No. 177167, 17 January 2013
Resignation: The resignation letter indicates that he was resigning "to pursue the establishment of
his own business or explore opportunities with other companies." The reasons stated for
relinquishing his position are but logical options for a person of his experience and standing.
FACTS
Petitioner Nelson B. Gan (Gan) was hired by respondent Galderma Philippines, Inc.
(GALDERMA) as its Product Manager to handle the marketing of Cetaphil Brand Product Lines
(CBPL). After more than just a year of employment, Gan submitted a resignation letter stating that
his reason for resigning was "to pursue the establishment of his own business or explore
opportunities with other companies." GALDERMA accepted Gan’s resignation thru the latter’s
immediate supervisor.
Subsequently, though, Gan filed a Complaint for illegal constructive dismissal against
GALDERMA and respondent Rosendo C. Veneracion (Veneracion), the company’s President and
General Manager. Gan alleged that his resignation was a result of intimidation and a number of
acts of harassment on the part of Veneracion that implied that he need to look for another job.
Gan, however, continued to do occasional field work for GALDERMA after he resigned.
The Labor Arbiter (LA) dismissed the Complaint. The National Labor Relations Commission
(NLRC), and the Court of Appeals (CA), thereafter affirmed the said LA ruling.
RULING
The instances of "harassment" alleged by Gan are more apparent than real. Aside from the
need to treat his accusations with caution for being self-serving due to lack of substantial
documentary or testimonial evidence to corroborate the same, the acts of "harassment," if true,
do not suffice to be considered as "peculiar circumstances" material to the execution of the
subject resignation letter.
What the records of this case reveal is that Gan deliberately wrote and filed a resignation
letter that is couched in a clear, concise, and categorical language. Its content confirmed his
unmistakable intent to resign. The resignation letter indicates that he was resigning "to pursue the
establishment of his own business or explore opportunities with other companies." The reasons
stated for relinquishing his position are but logical options for a person of his experience and
standing.
What is evident, therefore, is that Gan's resignation is NOT "a case of adherence, not of
choice," but was a product of a mutually beneficial arrangement. The Court agreed with
respondents that the result of the negotiation leading to Gan's resignation is a "win-win" solution
for both parties. On one hand, Gan was able to obtain a favorable severance pay while getting
flexible working hours to implement his post-resignation career options. Indeed, Gan voluntarily
resigned from Galderma for a valuable consideration. He negotiated for an improvement of the
resignation package offered and he managed to obtain an acceptable one. As opposed to the
case of San Miguel Corporation v. NLRC. Gan was not tricked or was "morally and psychologically
hoodwinked" to draft, sign, and tender his resignation letter. It was not made without proper
discernment and time to reflect; nor was it a knee-jerk reaction that left him with no alternative
but to accede.
GENERAL MILLING CORPORATION v. VIOLETA L. VIAJAR
G.R. No. 181738, 30 January 2013
Dismissal of Employee; Authorized Cause; Redundancy: The characterization of an employee’s

services as superfluous or no longer necessary and, therefore, properly terminable, is an exercise
of business judgment on the part of the employer. The exercise of such judgment, however, must
not be in violation of the law, and must not be arbitrary or malicious. A company cannot simply
declare redundancy without basis. To exhibit its good faith and that there was a fair and
reasonable criteria in ascertaining redundant positions, a company claiming to be over manned
must produce adequate proof of the same.
FACTS
General Milling Corporation (GMC) terminated the services of thirteen (13) employees for
redundancy including Violeta Viajar (Viajar). However, almost a month before the effectivity of
her termination, she was barred from entering GMC’s premises, denied access to her office
computer and was restricted from punching her daily time record in the bundy clock. Viajar
refused to affix her signature when she was asked to sign the Application for Retirement and
Benefits which they said was needed to process her separation pay.
Viajar filed a Complaint for Illegal Dismissal. The Labor Arbiter (LA) dismissed the case for
lack of merit. The NLRC affirmed the validity of termination. Viajar filed a petition
for certiorari before the CA. The CA granted the petition, reversing the decision of the NLRC
thereby declaring the dismissal as illegal.
RULING
It is imperative that the employer must comply with the requirements for a valid
implementation of the company’s redundancy program, to wit: (a) the employer must serve a
written notice to the affected employees and the DOLE at least one (1) month before the
intended date of retrenchment; (b) the employer must pay the employees a separation pay
equivalent to at least one month pay or at least one month pay for every year of service, whichever
is higher; (c) the employer must abolish the redundant positions in good faith; and (d) the
employer must set fair and reasonable criteria in ascertaining which positions are redundant and
may be abolished.
While it is true that the “characterization of an employee’s services as superfluous or no

longer necessary and, therefore, properly terminable, is an exercise of business judgment on the
part of the employer,” the exercise of such judgment, however, must not be in violation of the law,
and must not be arbitrary or malicious. The Court has always stressed that a company cannot
simply declare redundancy without basis. To exhibit its good faith and that there was a fair and
reasonable criteria in ascertaining redundant positions, a company claiming to be over manned
must produce adequate proof of the same.
In the instant case, the Court agrees with the CA when it held that the petitioner failed to
present substantial proof to support GMC’s general allegations of redundancy. On the other hand,
the respondent presented proof that the petitioner had been hiring new employees while it was
firing the old ones, negating the claim of redundancy. It must, however, be pointed out that in
termination cases, like the one before us, the burden of proving that the dismissal of the
employees was for a valid and authorized cause rests on the employer. It was incumbent upon the
petitioner to show by substantial evidence that the termination of the employment of the
respondent was validly made and failure to discharge that duty would mean that the dismissal is
not justified and therefore illegal.
Furthermore, the Court cannot overlook the fact that Viajar was prohibited from entering
the company premises even before the effectivity date of termination; and was compelled to sign
an “Application for Retirement and Benefits.” These acts exhibit the petitioner’s bad faith since it
cannot be denied that the respondent was still entitled to report for work until November 30,
2003. The demand for her to sign the “Application for Retirement and Benefits” also contravenes
the fact that she was terminated due to redundancy. Indeed, there is a difference between
voluntary retirement of an employee and forced termination due to authorized causes.
Clearly, the instant case is not about retirement since the term has its peculiar meaning
and is governed by Article 287 of the Labor Code. Rather, this is a case of termination due to
redundancy under Article 283 of the Labor Code. Thus, the demand of GMC for the respondent to
sign an “Application for Retirement and Benefits” is really suspect.
RICARDO E. VERGARA, JR. v. COCA-COLA BOTTLERS PHILIPPINES, INC.,

G.R. No. 176985, April 1, 2013
J. Peralta
The respondent’s isolated act of including the sales management incentive in the
retirement package of Velazquez could hardly be classified as a company practice that may be
considered an enforceable obligation. The principle against diminution of benefits is applicable
only if the grant or benefit is founded on an express policy or has ripened into a practice over a
long period of time which is consistent and deliberate. It presupposes that a company practice,
policy and tradition favorable to the employees has been clearly established; and that the
payments made by the company pursuant to it have ripened into benefits enjoyed by them.
Company practice, just like any other fact, habits, customs, usage or patterns of conduct, must be
proven by the offering party who must allege and establish specific, repetitive conduct that might
constitute evidence of habit or company practice. Certainly, a practice or custom is, as a general
rule, not a source of a legally demandable or enforceable right.
FACTS:
Petitioner was an employee of respondent from May 1968 until he retired on January 31,
2002 as a District Sales Supervisor (DSS). As stipulated in respondent’s existing Retirement Plan
Rules and Regulations at the time, the Annual Performance Incentive Pay of RSMs, DSSs, and SSSs
shall be considered in the computation of retirement benefits, as follows: Basic Monthly Salary +
Monthly Average Performance Incentive (which is the total performance incentive earned during
the year immediately preceding ÷ 12 months) × No. of Years in Service. Claiming his entitlement to
an additional P474,600.00 as Sales Management Incentives (SMI) and to the amount of
P496,016.67 which respondent allegedly deducted illegally, representing the unpaid accounts of
two dealers within his jurisdiction, petitioner filed a complaint before the NLRC for the payment of
his Full Retirement Benefits, Merit Increase, Commission/Incentives, Length of Service, Actual,
Moral and Exemplary Damages, and Attorney’s Fees.
The LA rendered a decision in favor of petitioner, directing respondent to reimburse the

amount illegally deducted from petitioner’s retirement package and to integrate therein his SMI
privilege. On appeal of respondent, the NLRC modified the award and deleted the payment of
SMI.
ISSUE:
Whether the sales management incentives (SMI) should be included in the computation of
petitioner’s retirement benefits on the ground of consistent company practice
RULING:
Upon review of the entire case records, the Supreme Court found no substantial evidence
to prove that the grant of sales management incentives to all retired DSSs, regardless of whether
or not they qualified for the same, had ripened into company practice. Petitioner utterly failed to
adduce proof to establish his allegation that the incentive has been consistently, deliberately and
voluntarily granted to all retired DSSs without any qualification or conditions whatsoever.
The only two pieces of evidence that he stubbornly presented throughout the entirety of
this case are the sworn statements of Renato C. Hidalgo and Ramon V. Velazquez, former DSSs of
respondent who retired in 2000 and 1998, respectively. They claimed that the sales management
incentive was included in their retirement package even if they did not meet the sales and
collection qualifiers. However, juxtaposing these with the evidence presented by respondent
would reveal the frailty of their statements.
The respondent’s isolated act of including the sales management incentive in the
retirement package of Velazquez could hardly be classified as a company practice that may be
considered an enforceable obligation. To repeat, the principle against diminution of benefits is
applicable only if the grant or benefit is founded on an express policy or has ripened into a
practice over a long period of time that is consistent and deliberate. It presupposes that a
company practice, policy and tradition favorable to the employees has been clearly established;
and that the payments made by the company pursuant to it have ripened into benefits enjoyed by
them. Certainly, a practice or custom is, as a general rule, not a source of a legally demandable or
enforceable right. Company practice, just like any other fact, habits, customs, usage or patterns of
conduct must be proven by the offering party, who must allege and establish specific, repetitive
conduct that might constitute evidence of habit or company practice.
ALEXANDER B. BAÑARES v. TABACO WOMEN'S TRANSPORT SERVICE COOPERATIVE,
REPRESENTED BY DIR. RENOL BARCEBAL, ET AL.
G.R. No. 197353, April 1, 2013
J. Velasco Jr.
An employee entitled to reinstatement shall either be admitted back to work under the
same terms and conditions prevailing prior to his dismissal or separation. An illegally dismissed
employee is entitled to reinstatement without loss of seniority rights and to other established
employment privileges, and to his full back wages. The boarding house privilege, being an
established perk accorded to petitioner, ought to have been granted him if a real and authentic
reinstatement to his former position as general manager is to be posited.
FACTS:
Petitioner Alexander B. Bañares worked for some time as general manager of respondent
Tabaco Women’s Transport Service Cooperative (TAWTRASCO). He filed a complaint for illegal
dismissal and payment of monetary claims against TAWTRASCO. The Labor Arbiter rendered a
decision in the illegal dismissal case ordering the reinstatement of the petitioner employee to his
former position as general manager of respondent transport company without loss of seniority
rights and granting his monetary claims.
In compliance with the decision,TAWTRASCO directed the petitioner to report at the

company’s Virac, Catanduanes terminal to supervise the terminal’s operations under a
memorandum order stating his duties and responsibilities as general manager. Barely a week into
his new assignment, petitioner, thru a memorandum report, proposed the
construction/rehabilitation of the passenger lounge in the Virac terminal, among other
improvements. The proposal came with a request for a monthly lodging accommodation
allowance which he used to enjoy in his previous assignment for the duration of his stay in Virac.
While the management eventually approved the desired construction projects, it denied
petitioner’s plea for cash lodging allowance. Hence, he stopped reporting to work and filed a
complaint for non-payment of salaries.
ISSUE:
Whether there was a proper and genuine reinstatement of petitioner to his former position of
General Manager of TAWTRASCO without loss of seniority rights and privileges
RULING:
The SC held that there was no real, bona fide reinstatement of the petitioner by virtue of
his assignment to the Virac, Catanduanes terminal of respondent transport company.
Under Article 223 of the Labor Code, an employee entitled to reinstatement “shall either
be admitted back to work under the same terms and conditions prevailing prior to his dismissal or
separation x x x.” An illegally dismissed employee is entitled to reinstatement without loss of
seniority rights and to other established employment privileges, and to his full back wages. The
boarding house privilege, being an established perk accorded to petitioner, ought to have been
granted him if a real and authentic reinstatement to his former position as general manager is to
be posited.
It cannot be stressed enough that TAWTRASCO withheld petitioner’s salaries for and after
his purported refusal to report for work at the Virac terminal. The reality, however, is that
TAWTRASCO directed petitioner to work under terms and conditions prejudicial to him, the most
hurtful cut being that he was required to work without a decent office, partly performing a
checker’s job. This embarrassing work arrangement is what doubtless triggered the refusal to work,
which under the premises appears justified.
Generally, employees have a demandable right over benefits voluntarily granted to them
by their employers. And if the grant or benefit is founded on an express policy or has, for a
considerable period, been given regularly and deliberately, then the grant ripens into a vested
right that the employer cannot unilaterally diminish, discontinue or eliminate. So it must be here
with respect, at the minimum, to the lodging accommodation which TAWTRASCO, as found by the
National Labor Relations Commission, appears to have regularly extended for free for some time
to petitioner.
VENANCIO S. REYES, EDGARDO C. DABBAY, ET AL. v.
RP GUARDIANS SECURITY AGENCY, INC.
G.R. No. 193756, April 10, 2013
J. Mendoza
An employee who is unjustly dismissed from work shall be entitled to reinstatement

without loss of seniority rights and other privileges, and to his full backwages, inclusive of
allowances and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld up to the time of actual reinstatement. If reinstatement is not
possible, however, the award of separation pay is proper.
Backwages and reinstatement are separate and distinct reliefs given to an illegally
dismissed employee in order to alleviate the economic damage brought about by the employee’s
dismissal. “Reinstatement is a restoration to a state from which one has been removed or
separated” while “the payment of backwages is a form of relief that restores the income that was
lost by reason of the unlawful dismissal.” Therefore, the award of one does not bar the other.
FACTS:
Petitioners Reyes, Dabbay, Vigilia, Calanno, Supe, Jr., Trinidad, and Duldulao (petitioners)
were hired by respondent as security guards. They were deployed to various clients of respondent,
the last of which were the different branches of Banco Filipino. In September 2006, respondent’s
security contract with Banco Filipino was terminated. In separate letters, petitioners were
individually informed of the termination of the security contract. Petitioners were directed to
turnover their duties and responsibilities to the incoming security agency and were advised that
they would be placed on floating status while waiting for available post. Petitioners waited for
their next assignment, but several months lapsed and they were not given new assignments.
Consequently, petitioners filed a complaint for constructive dismissal. Respondent claimed that
there was no dismissal, of petitioners, constructive or otherwise, and asserted that their
termination was due to the expiration of the service contract which was co-terminus with their
contract of employment.
The Labor Arbiter (LA), the National Labor Relations Commission (NLRC) and the Court of
Appeals (CA) found that petitioners were constructively dismissed. The CA, however, reduced the
computation of the LA and NLRC of the separation pay from one month to one-half month per
year of service.
ISSUE:
Whether the petitioners were constructively dismissed and they are entitled to separation pay and
backwages
RULING:
There is no doubt that petitioners were constructively dismissed. The LA, the NLRC and the
CA were one in their conclusion that respondent was guilty of illegal dismissal when it placed
petitioners on floating status beyond the reasonable six-month period after the termination of
their service contract with Banco de Oro.
Temporary displacement or temporary off-detail of security guard is, generally, allowed in

a situation where a security agency’s client decided not to renew their service contract with the
agency and no post is available for the relieved security guard. Such situation does not normally
result in a constructive dismissal. Nonetheless, when the floating status lasts for more than six (6)
months, the employee may be considered to have been constructively dismissed.
Settled is the rule that that an employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges, and to his full
backwages, inclusive of allowances and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld up to the time of actual reinstatement. If
reinstatement is not possible, however, the award of separation pay is proper.
Backwages and reinstatement are separate and distinct reliefs given to an illegally
dismissed employee in order to alleviate the economic damage brought about by the employee’s
dismissal. “Reinstatement is a restoration to a state from which one has been removed or
separated” while “the payment of backwages is a form of relief that restores the income that was
lost by reason of the unlawful dismissal.” Therefore, the award of one does not bar the other.
The normal consequences of respondents’ illegal dismissal, then, are reinstatement without
loss of seniority rights, and payment of backwages computed from the time compensation was
withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an
option, separation pay equivalent to one month salary for every year of service should be awarded
as an alternative. The payment of separation pay is in addition to payment of back wages.
In this case, respondent would have been liable for reinstatement and payment of back
wages. Reinstatement, however, was no longer feasible because, as found by the LA, respondent
had already ceased operation of its business. Thus, back wages and separation pay, in the amount
of one month for every year of service, should be paid in lieu of reinstatement.
ROYAL PLANT WORKERS UNION v.

COCA-COLA BOTTLERS PHILIPPINES, INC.-CEBU PLANT
G.R. No. 198783, April 15, 2013
J. Mendoza
The decision of the management to remove the operators’ chairs from the
production/manufacturing lines of its bottling plants was made in good faith and did not intend
to defeat or circumvent the rights of the workers. The removal of the chairs was designed to
increase work efficiency. Moreover, the operators’ chairs cannot be considered as one of the
employee benefits covered in Article 100 of the Labor Code. In the Court’s view, the term
"benefits" mentioned in the non-diminution rule refers to monetary benefits or privileges given
to the employee with monetary equivalents.
FACTS:
Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation engaged in the

manufacture, sale and distribution of soft drink products. It has several bottling plants all over the
country employing bottling operators for each bottling plant. The bottling operators, who are all
members of Royal Plant Workers Union (ROPWU), were provided with chairs upon their request;
however, the chairs provided for the operators were removed pursuant to a national directive of
CCBPI in line with the "I Operate, I Maintain, I Clean" program for bottling operators, wherein
every bottling operator is given the responsibility to keep the machinery and equipment assigned
to him clean and safe. The bottling operators took issue with the removal of the chairs. Through
the representation of CCBPI, they initiated the grievance machinery of the Collective Bargaining
Agreement (CBA). Even after exhausting the remedies contained in the grievance machinery, the
parties submitted the same for mediation and, then, for arbitration. Upon submission for
arbitration, CCBPI argued that the removal of the chairs is valid as it is a legitimate exercise of
management prerogative, it does not violate the Labor Code and it does not violate the CBA it
contracted with respondent. On the other hand, respondent espoused the contrary view. It
contended that the bottling operators have been performing their assigned duties satisfactorily
with the presence of the chairs; the removal of the chairs constitutes a violation of the
Occupational Health and Safety Standards, the policy of the State to assure the right of workers to
just and humane conditions of work as stated in Article 3 of the Labor Code and the Global
Workplace Rights Policy.
ISSUES:
1. Whether CCBPI validly exercised its management prerogative in removing the chairs
previously granted
2. Whether there is a violation of Article 100 of the Labor Code, covering employees benefits
RULING:
A Valid Exercise of Management Prerogative
The Court has held that management is free to regulate, according to its own discretion
and judgment, all aspects of employment, including hiring, work assignments, working methods,
time, place, and manner of work, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of workers, and discipline, dismissal
and recall of workers. The exercise of management prerogative, however, is not absolute as it must
be exercised in good faith and with due regard to the rights of labor.
In the present controversy, it cannot be denied that CCBPI removed the operators’ chairs
pursuant to a national directive and in line with its "I Operate, I Maintain, I Clean" program,
launched to enable the Union to perform their duties and responsibilities more efficiently. The
chairs were not removed indiscriminately. They were carefully studied with due regard to the
welfare of the members of the Union. The removal of the chairs was compensated by: a) a
reduction of the operating hours of the bottling operators from a two-and-one-half (2 ½)-hour
rotation period to a one-and-a-half (1 ½) hour rotation period; and b) an increase of the break
period from 15 to 30 minutes between rotations.
Apparently, the decision to remove the chairs was done with good intentions as CCBPI
wanted to avoid instances of operators sleeping on the job while in the performance of their duties
and responsibilities and because of the fact that the chairs were not necessary considering that the
operators constantly move about while working. In short, the removal of the chairs was designed to
increase work efficiency. Hence, CCBPI’s exercise of its management prerogative was made in
good faith without doing any harm to the workers’ rights.
No Violation of Article 100 of the Labor Code
The operators’ chairs cannot be considered as one of the employee benefits covered in
Article 100 of the Labor Code. In the Court’s view, the term "benefits" mentioned in the non-
diminution rule refers to monetary benefits or privileges given to the employee with monetary
equivalents. Such benefits or privileges form part of the employees’ wage, salary or compensation
making them enforceable obligations.
Without a doubt, equating the provision of chairs to the bottling operators is something
within the ambit of "benefits'' in the context of Article 100 of the Labor Code is unduly stretching
the coverage of the law. The interpretations of Article 100 of the Labor Code do not show even
with the slightest hint that such provision of chairs for the bottling operators may be sheltered
under its mantle.
ZENAIDA D. MENDOZA v. HMS CREDIT CORPORATION, et. al.

G.R. No. 187232, April 17, 2013
CJ. SERENO
Loss of trust is a legal ground for terminating the services of an employee particularly for
employees holding managerial positions. The discovery of a falsehood of a managerial employee
where she claimed to be a CPA but in fact was not is a ground constituting loss of trust.
But having a sufficient ground for termination is not enough– the Supreme Court
emphasized the need for performing the proper procedure for termination. If the dismissal is
based on just cause, then the non-compliance with non-procedural due process should not render
the termination from employment illegal or ineffectual. Instead, the employer must indemnify the
employee in the form of nominal damages.
FACTS:
Petitioner Zenaida D. Mendoza (Mendoza) was the Chief Accountant of respondent HMS
Credit Corporation (HMS Credit). During her employment, she simultaneously serviced three
other companies, all part of the Honda Motor Sports Group (HMS Group), namely, Honda Motor
Sports Corporation (Honda Motors), Beta Motor Trading Incorporated (Beta Motor) and Jianshe
Cycle World (Jianshe). Mendoza avers that after she submitted the audited financial statements of
Honda Motors, Beta Motor, and Jianshe, her superior summoned Mendoza to advise her of her
termination from service. She claims that she was even told to leave the premises without being
given the opportunity to collect her personal belongings and was prohibited from entering the
premises of the office. On the other hand, respondents maintain that Mendoza was hired on the
basis of her qualification as a Certified Public Accountant (CPA), which turned out to be a
misrepresentation. They likewise contend that not only did she fail to disclose knowledge of the
resignations of two HMS Group officers, Art Labasan (Labasan) and Jojit de la Cruz (de la Cruz),
and their subsequent transfer to a competitor company, but she also had a hand in pirating them.
Thus, on 12 April 2002, they supposedly confronted her about these matters. In turn, she allegedly
told them that if they had lost their trust in her, it would be best for them to part ways.
The accountant filed a case for illegal dismissal with the National Labor Relations
Commission (NLRC), where the Labor Arbiter ruled that she had been illegally dismissed and that
her dismissal was done in violation of due process requirements. On appeal, the NLRC found that
there was no illegal dismissal as the parties entered into a compromise agreement where the
accountant would voluntarily resign in exchange for separation benefits. This decision was
affirmed by the Court of Appeals.
ISSUES:
1. Whether HMS Credit Corporation et.al. had timely filed their appeal with the NLRC
2. Whether Mendoza was illegally dismissed
Ruling:
Timely filing of the appeal before the NLRC
The relevant portion of Article 223 of the Labor Code on appeals of decisions, awards or
orders of the Labor Arbiter as follows:
Art. 223. x x x In case of a judgment involving a monetary award, an appeal by

the employer may be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the Commission in
the amount equivalent to the monetary award in the judgment appealed from.
In Pasig Cylinder v. Rollo, this Court explained that the required posting of a bond
equivalent to the monetary award in the appealed judgment may be liberally interpreted as
follows:
x x x. True, Article 223 of the Labor Code requires the filing of appeal bond "in
the amount equivalent to the monetary award in the judgment appealed from."
However, both the Labor Code and this Court’s jurisprudence abhor rigid
application of procedural rules at the expense of delivering just settlement of
labor cases. Petitioners’ reasons for their filing of the reduced appeal bond —
the downscaling of their operations coupled with the amount of the monetary
award appealed — are not unreasonable. Thus, the recourse petitioners adopted
constitutes substantial compliance with Article 223 consistent with our ruling in
Rosewood Processing, Inc. v. NLRC, where we allowed the appellant to file a
reduced bond of P50,000 (accompanied by the corresponding motion) in its
appeal of an arbiter’s ruling in an illegal termination case awarding P789,154.39
to the private respondents.
Illegal dismissal of Mendoza
HMS Credit were unable to discharge their burden to prove the contemporaneous
existence of an intention on the part of Mendoza to resign and an overt act of resignation. Aside
from their self-serving allegation that she had offered to resign after they had expressed their loss
of trust in her, there is nothing in the records to show that she voluntarily resigned from her
position in their company. In this regard, it is worthy to underscore the established rule that the
filing of a complaint for illegal dismissal is inconsistent with resignation or abandonment.
Moreover, the conclusion of the NLRC and the CA that Mendoza voluntarily resigned in
consideration of respondents’ supposed payment of a settlement is bereft of any basis. The lower
tribunals merely surmised that the parties forged a compromise agreement despite respondents’
own admission that they never decided thereon. In fact, the records are clear that none of the
parties claimed the existence of any settlement in exchange for her resignation.
From the foregoing discussion, it is evident that although there was a just cause for
terminating the services of Mendoza, respondents were amiss in complying with the two-notice
requirement. Following the prevailing jurisprudence on the matter, if the dismissal is based on a
just cause, then the non-compliance with procedural due process should not render the
termination from employment illegal or ineffectual. Instead, the employer must indemnify the
employee in the form of nominal damages. Therefore, the dismissal of Mendoza should be upheld,
and respondents cannot be held liable for the payment of either backwages or separation pay.
Considering all the circumstances surrounding this case, this Courts finds the award of nominal
damages in the amount of P30,000 to be in order.
PHILIPPINE HAMMONIA SHIP AGENCY, INC. AND DORCHESTER MARINE, LTD. v. EULOGIO
DUMADAG
G.R. No. 194362, June 26, 2013
J. Brion
Every seaman and the vessel owner (directly or represented by a local manning agency)
are required to execute the POEA Standard Employment Contract as a condition sine qua non
prior to the deployment for overseas work. The POEA Standard Employment Contract is
supplemented by the CBA between the owner of the vessel and the covered seaman. The POEA-
SEC and the CBA govern the employment relationship between them. They are bound by their
terms and conditions, particularly in relation to this case, the mechanism prescribed to determine
liability for a disability benefits claim. Petitioner pursued his claim without observing the laid-out
procedure. Hence, Supreme Court ruled that non-referral to a third doctor is cause for dismissal
of petitioner’s claim.
FACTS:
Petitioner hired respondent Dumadag for four months as Able Bodied Seaman for the
vessel Al Hamra, pursuant to the POEA-SEC. Before he boarded the vessel, Dumadag underwent a
pre-employment medical examination and was declared fit to work. Dumadag had medical
consultations during his employment due to a sleeping disorder and body stiffness. On
repatriation, at the end of his contract, the Dumadag was referred to the company-designated
doctor, where he was diagnosed with carpal tunnel syndrome and an anxiety disorder. After
almost four months of treatment, the company-designated doctor declared Dumadag fit to return
to work on November 6 2007. On December 5 2007 Dumadag sought the medical opinion of an
orthopaedic doctor, who diagnosed him as still suffering from carpal tunnel syndrome and issued
him with a partial temporary disability assessment. On January 8 2008, Dumadag consulted a
psychiatrist, who found the seafarer to be suffering from minor depression. On March 8 2008
Dumadag consulted another doctor, who diagnosed him with carpal tunnel syndrome and an
adjustment disorder. Finally, on April 13 2008 Dumadag consulted a fourth doctor, who assessed
him with a permanent disability due to his medical condition. After consultation with four doctors,
Dumadag filed a complaint for payment of permanent total disability benefits.
The labour arbiter held that the seafarer was entitled to full disability benefits, given that
despite being declared fit to work by the company-designated doctor, he was found by his own
doctors to be still suffering from the same medical condition. The labour arbiter likewise noted
that the best indication that the seafarer was really unfit was that he was not rehired by the
company despite having served it for almost 15 years. The National Labour Relations Commission
(NLRC) and the Court of Appeals both affirmed the labour arbiter's decision.
ISSUE:
Whose disability assessment should prevail in a maritime disability claim–the fit-to-work

assessment of the company-designated physician or the contrary opinion of the seafarer‘s chosen
physicians that he is no longer fit to work
RULING:
In Vergara v. Hammonia Maritime Services, Inc., G.R. No. 172933, October 6, 2008 , the
Court said: “the DOLE, through the POEA, has simplified the determination of liability for work-
related death, illness or injury in the case of Filipino seamen working on foreign ocean-going
vessels. Every seaman and the vessel owner (directly or represented by a local manning agency)
are required to execute the POEA Standard Employment Contract as a condition sine qua non
prior to the deployment for overseas work. The POEA Standard Employment Contract is
supplemented by the CBA between the owner of the vessel and the covered seaman.”
In this case, Dumadag and the petitioners entered into a contract in accordance with the
POEA-SEC. They also had a CBA. Dumadag‘s claim for disability compensation could have been
resolved bilaterally had the parties observed the procedure laid down in the POEA-SEC and in
their CBA. Section 20(B)(3) of the POEA-SEC provides:
“Upon sign-off from the vessel for medical treatment, the seafarer is entitled
to sickness allowance equivalent to his basic wage until he is declared fit to work
or the degree of permanent disability has been assessed by the company-
designated physician but in no case shall this period exceed one hundred twenty
(120) days.
xxxx
If a doctor appointed by the seafarer disagrees with the assessment, a third
doctor may be agreed jointly between the employer and the seafarer. The third
doctor’s decision shall be final and binding on both parties.”
In this case, there was also a collective bargaining agreement which stated that the
assessment must be referred to a third doctor should the findings of the company-designated
doctor and the seafarer's personal doctor differ.
The POEA-SEC and the CBA govern the employment relationship between Dumadag and
the petitioners. The two instruments are the law between them. They are bound by their terms and
conditions, particularly in relation to this case, the mechanism prescribed to determine liability for
a disability benefits claim. Dumadag, however, pursued his claim without observing the laid-out
procedure. He consulted physicians of his choice regarding his disability after the company-
designated physician issued her fit-to-work certification for him. There is nothing inherently
wrong with the consultations as the POEA-SEC and the CBA allow him to seek a second opinion.
The problem only arose when he pre-empted the mandated procedure by filing a complaint for
permanent disability compensation on the strength of his chosen physicians‘ opinions, without
referring the conflicting opinions to a third doctor for final determination.
The company could not possibly have caused the referral to a third doctor, as it was
unaware that the seafarer was contesting the company-designated doctor's opinion and that he
had secured the opinion of his own doctors. Without a valid referral to a third doctor, the
complaint should be dismissed, as the company-designated doctor's findings should be upheld
based on the POEA contract and collective bargaining agreement.
The Supreme Court likewise was not persuaded by the argument that the non-hiring of the
seafarer was the best proof that he was disabled. The court noted that no evidence was presented
that the seafarer had sought re-employment with the company or any other company and was
turned down due to his illness. Likewise, it was not shown that as a matter of course the company
would have rehired the seafarer after the expiration of his contract.
ALFONSO L. FIANZA v. NATIONAL LABOR RELATIONS COMMISSION ET AL.
G.R. No. 163061, June 26, 2013
CJ. Sereno
Abandonment as a fact and a defense can only be claimed as a ground for dismissal if the
employer follows the procedure set by law. In line with the burden of proof set by law, the
employer who alleges abandonment “has the burden of proof to show a deliberate and unjustified
refusal of the employee to resume his employment without any intention of returning.” In this
case, the respondent company failed to prove the necessary elements of abandonment.
Additionally, the National Labor Relations Commission (NLRC) and the Court of Appeals (CA)
failed to take into account the strict requirements set by jurisprudence when they determined the
existence of abandonment on the basis of mere allegations that were contradicted by the
evidence shown.
FACTS:
Fianza was employed as Officer for Social Acceptance of Binga Hydroelectric Plant, Inc.
(BHPI). After 2 years of employment, Fianza did not receive his salary for the first 15 days of the
month of February. He was advised not to report for work until his status was officially clarified by
the Manila office.
Petitioner made several inquiries concerning his status and was told by a supervisor to
report for work. However, he was told that the new management committee had to concur in his
reappointment before he could be reinstated in the payroll. It also wanted an opportunity to
determine whether his services would still be necessary.
As the management committee did not act on his inquiries for several months, Fianza filed
a Complaint for illegal dismissal before the Labor Arbiter. Fianza argues that he was a supervisory
employee, as shown by the evidence he presented and the nature of his work. He further contends
that he did not abandon his work, because he always made sure he followed up the status of his
employment, and he was willing to go back to work once he was re-enrolled in the payroll. BHPI
asserts in its Memorandum that the former was a confidential consultant of its former president
and chairperson Catalino Tan. As such, petitioner’s tenure was therefore co-terminus with that of
Mr. Tan.
ISSUES:
1. Whether Fianza abandoned his work

2. Whether there exists an employer-employee relationship between BHPI and Fianza
RULING:
Fianza did not abandon his work
Abandonment as a fact and a defense can only be claimed as a ground for dismissal if the
employer follows the procedure set by law. In line with the burden of proof set by law, the
employer who alleges abandonment “has the burden of proof to show a deliberate and unjustified
refusal of the employee to resume his employment without any intention of returning.” As this
Court has stated in Agabon v. National Labor Relations Commission:
For a valid finding of abandonment, these two factors should be present: (1) the
failure to report for work or absence without valid or justifiable reason; and (2) a clear
intention to sever employer-employee relationship, with the second as the more
determinative factor which is manifested by overt acts from which it may be deduced that
the employees has no more intention to work. The intent to discontinue the employment
must be shown by clear proof that it was deliberate and unjustified.
From the foregoing, it is clear that BHPI failed to prove the necessary elements of
abandonment. Additionally, the NLRC and the CA failed to take into account the strict
requirements set by jurisprudence when they determined the existence of abandonment on the
basis of mere allegations that were contradicted by the evidence shown. The very act of filing the
Complaint for illegal dismissal should have negated any intention on petitioner’s part to sever his
employment. In fact, it should already have been sufficient evidence to declare that there was no
abandonment of work. The following circumstances evinced his intent to return to work: (1) His
continuous inquiry with respondent about the status of his work; (2) His willingness to return to
work at any time, subject to the approval of respondent, and his visits to the plant to apply for
work; and (3) His filing of an illegal dismissal case.
Fianza is a regular employee
BHPI claims that because Fianza was a confidential employee of its former president, his
tenure was co-terminus with that of his employer. BHPI, however, failed to realize however that
Mr. Tan, being its president, was clothed with authority to hire employees on its behalf. This was
precisely the import of Fianza’s appointment papers, which even carried the letterhead of the
company. There is no indication from the facts that his employment was of a confidential nature.
Several things stand out in Fianza’s appointment paper. First, its letterhead is that of
respondent company, indicating the official nature of the document. Second, there is no
indication that the employment is co-terminus with that of the appointing power, or that the
position was a confidential one. In fact, alongside the obligation of Fianza to report to Mr. Tan, is
that of reporting to those whom the latter had designated as well as to the management in case
the former had any suggestion. This description evinces a supervisory function, by which the
employee will carry out company policy, but can only give suggestions to management as to the
creation or implementation of a new policy. Finally, the appointment paper recognizes that the
petitioner would initially be on probation status for two months, at the end of which he would be
made a permanent employee should his services be found satisfactory by respondent. All these
circumstances are evident from the appointment paper itself, which belies the claim of BHPI that
it had no employer-employee relationship with Fianza.
7K CORPORATION v. EDDIE ALBARICO
G.R. No. 182295, June 26, 2013
CJ. Sereno
The failure of the parties to limit the issues specifically to that which was stated in
the Submission Agreement allowed the arbitrator to assume jurisdiction over the related issue. In
the present case, there is no indication that the issue of illegal dismissal should be treated,
as a two-tiered issue whereupon entitlement to backwages must be determined separately.
Since arbitration is a final resort for the adjudication of disputes, the voluntary arbitrator in
the present case can assume that he has the necessary power to make a final settlement.
FACTS:
Respondent Eddie Albarico (Albarico) was a regular employee of petitioner 7K

Corporation, a company selling water purifiers. He started working for the company in 1990 as a
salesman. Because of his good performance, his employment was regularized.
In April of 1993, the chief operating officer of petitioner 7K Corporation terminated

Albarico’s employment allegedly for his poor sales performance. Respondent had to stop
reporting for work, and he subsequently submitted his money claims against petitioner for
arbitration before the National Conciliation and Mediation Board (NCMB). The issue for voluntary
arbitration before the NCMB, according to the parties’ Submission Agreement dated 19 April
1993, was whether respondent Albarico was entitled to the payment of separation pay and the
sales commission reserved for him by the corporation.
While the NCMB arbitration case was pending, respondent Albarico filed a Complaint
against petitioner corporation with the Arbitration Branch of the National Labor Relations
Commission (NLRC) for illegal dismissal with money claims for overtime pay, holiday
compensation, commission, and food and travelling allowances. The Complaint was decided by
the labor arbiter in favor of respondent Albarico, who was awarded separation pay in lieu of
reinstatement, backwages and attorney’s fees.
On appeal by petitioner, the labor arbiter’s Decision was vacated by the NLRC for forum
shopping on the part of respondent Albarico, because the NCMB arbitration case was still
pending. The NLRC Decision, which explicitly stated that the dismissal was without prejudice to
the pending NCMB arbitration case, became final after no appeal was taken.
On 18 November 2005, the NCMB voluntary arbitrator rendered a Decision finding

petitioner corporation liable for illegal dismissal. The termination of respondent Albarico, by
reason of alleged poor performance, was found invalid. Additionally, in view of the finding that
Albarico had been illegally dismissed, the voluntary arbitrator also ruled that the former was
entitled to backwages.
Petitioner corporation subsequently appealed to the CA. The CA affirmed the Decision of
the voluntary arbitrator.
ISSUE:
Whether the CA committed reversible error in finding that the voluntary arbitrator properly
assumed jurisdiction to decide the issue of the legality of the dismissal of respondent as well as
the latter’s entitlement to backwages, even if neither the legality nor the entitlement was
expressly claimed in the Submission Agreement of the parties.
RULING:
The Petition is denied for being devoid of merit.
We rule that although petitioner correctly contends that separation pay may in fact be
awarded for reasons other than illegal dismissal, the circumstances of the instant case lead to no
other conclusion than that the claim of respondent Albarico for separation pay was premised on
his allegation of illegal dismissal. Thus, the voluntary arbitrator properly assumed jurisdiction over
the issue of the legality of his dismissal.
Having established that the issue of the legality of dismissal of Albarico was in fact
necessarily-albeit not explicitly- included in the Submission Agreement signed by the parties, this
Court rules that the voluntary arbitrator rightly assumed jurisdiction to decide the said issue.
Consequently, we also rule that the voluntary arbitrator may award backwages upon a finding of
illegal dismissal, even though the issue of entitlement thereto is not explicitly claimed in the
Submission Agreement. Backwages in general, are awarded on the ground of equity as a form of
relief that restores the income lost by the terminated employee by reason of his illegal dismissal.
The failure of the parties to limit the issues specifically to that which was stated allowed
the arbitrator to assume jurisdiction over the related issue. In the present case, there is no
indication that the issue of illegal dismissal should be treated, as a two-tiered issue whereupon
entitlement to backwages must be determined separately. Besides, "since arbitration is a final
resort for the adjudication of disputes," the voluntary arbitrator in the present case can assume
that he has the necessary power to make a final settlement. Thus, we rule that the voluntary
arbitrator correctly assumed jurisdiction over the issue of entitlement of respondent Albarico to
backwages on the basis of the former's finding of illegal dismissal.
POSEIDON INTERNATIONAL MARITIME SERVICES, IN., v. TITO R. TAMALA, FELIPE S. SAURIN,
JR., ARTEMIO A. BO-OC AND JOEL S. FERNANDEZ
G.R. No. 186475, June 26, 2013
J. Brion
The Supreme Court considered the quitclaim to be valid. Generally, the Court looks with
disfavor at quitclaims executed by employees for being contrary to public policy. However, when
the person making the waiver has done so voluntarily, with a full understanding of its terms and
with the payment of credible and reasonable consideration, the court have no option but to
recognize the transaction to be valid and binding.
FACTS:
In 2004, Poseidon hired the respondents, in behalf of Van Doorn, to man the fishing
vessels of Van Doorn and those of its partners – Dinko Tuna Farmers Pty. Ltd. (Dinko) and
Snappertuna Cv. Lda. (Snappertuna) - at the coastal and offshore area of Cape Verde Islands.
The fishing operations for which the respondents were hired started on September 17,
2004. On November 20, 2004, the operations abruptly stopped and did not resume. Prior to
disembarking the vessel, an agreement was entered into by the seafarers and the employer that
they will receive 100% of their salaries for the remainder of the unexpired portion of their pre-
terminated contract. The next day, another agreement was entered into by the parties where the
seafarers will receive 50% of their salaries for the remainder of the unexpired portion of the
contract. Upon repatriation, the seafarers received their settlement pay and executed quitclaims
accordingly. The seafarers, despite executing quitclaims, filed a complaint for payment of salaries
for the full unexpired portion of their contract. They alleged that they were coerced to accept the
50% settlement previously proposed by the employer because of dire need of finances and the
quitclaims should be invalidated.
The Labor Arbiter and the NLRC found that the quitclaims signed by the seafarers should
bar the claims. However, the Court of Appeals voided the quitclaims considering that the earlier
agreement of payment of 100% salaries for the unexpired portion of the contract was more in
keeping with the Migrant Workers Act for which reason, the issue was brought up to the Supreme
Court.
ISSUE:
Whether respondents’ waivers and quitclaims are valid and these should bar their claim for unpaid
salaries
RULING:
The waivers and quitclaims signed by the respondents are valid and binding.
Generally, this Court looks with disfavor at quitclaims executed by employees for being
contrary to public policy. Where the person making the waiver, however, has done so voluntarily,
with a full understanding of its terms and with the payment of credible and reasonable
consideration, we have no option but to recognize the transaction to be valid and binding.
The Court noted that that all the seafarers executed the quitclaim with a full
understanding of their import and consequences. Likewise, the amounts given to them in
exchange for the quitclaims were reasonable considering that they received more than what they
were entitled to under the POEA Contract. Under the POEA Contract, in case of termination of
employment due to discontinuance of voyage, termination pay is given to the seafarer equivalent
to his one month of his basic wage.
The management has the right to regulate the business and control its every aspect.
Included in this management right is the freedom to close or cease its operations for any reason,
as long as it is done in good faith and the employer faithfully complies with the substantive and
procedural requirements laid down by law and jurisprudence. The Court considered the cessation
of operations of the employer to have been done in good faith and without intent to defeat the
protected rights of the seafarers. However, the employer was adjudged to pay nominal damages
of PHP30,000 for failure to comply with the procedural requirements of terminating the
employment of the seafarers. Under the Labor Code, if employment is being terminated due to
an authorized cause such as cessation of business operations, the employer shall advise in writing
the affected employees and the Department of Labor and Employment of the intended date of
termination of employment at least one month prior to the cessation of operations. While this
would not affect the validity of the termination of employment, it subjects the employer to the
payment of indemnity in the form of nominal damages.
MANILA JOCKEY CLUB, INC. v. AIMEE TRAJANO

G.R. No. 160982, June 26, 2013

J. Bersamin
The loss of trust and confidence, to be a valid ground for dismissal, must be based on a
wilful breach of trust and confidence founded on clearly established facts.“A breach is wilful if it is
done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an
act done carelessly, thoughtlessly, heedlessly or inadvertently. It must rest on substantial grounds
and not on the employer‘s arbitrariness, whims, caprices or suspicion; otherwise, the employee
would eternally remain at the mercy of the employer. An ordinary breach is not enough.
Moreover, the loss of trust and confidence must be related to the employee‘s performance of
duties. In this case, as a selling teller, respondent held a position of trust and confidence.
Although the act complained of – the unauthorized cancellation of the ticket was related to her
work as a selling teller, petitioner did not establish that the cancellation of the ticket was
intentional, knowing and purposeful on her part in order for her to have breached the trust and
confidence reposed in her by petitioner, instead of being only out of an honest mistake.
FACTS:
MJCI had employed Trajano as a selling teller of betting tickets since November 1989. On
April 25, 1998, a complaint against Trajano brought to the reliever-supervisor by a certain bettor
named “Tito” who had reported the cancellation of his ticket that had already won the first leg
(Race 14) of the daily double bet. The reliever-supervisor told Trajano to submit a written
explanation about the ticket cancellation incident. The next day (April 26, 1998), she submitted
the handwritten explanation to Atty. Joey R. Galit, Assistant Racing Supervisor. She then resumed
her work as a selling teller, until later that day, when she received an inter-office correspondence
signed by Atty. Galit informing her that she was being placed under preventive suspension
effective April 28, 1998, for an unstated period of time. At the end of thirty days of her
suspension, Trajano reported for work. But she was no longer admitted. She then learned that she
had been dismissed when she read a copy of an inter-office correspondence about her
termination posted in a selling station of MJCI.
Trajano instituted a complaint for illegal dismissal against MJCI in the Department of
Labor and Employment (DOLE). She claimed that her dismissal was not based on any of the
grounds enumerated under Article 282 of the Labor Code; that her dismissal on the ground of
unauthorized cancellation of ticket had no basis.
The Labor Arbiter dismissed the complaint for illegal dismissal upon finding that Trajano’s
gross negligence in the performance of her job warranted the termination of her employment.
Trajano appealed to the NLRC. The NLRC rendered its decision reversing and setting aside the
decision of the Labor Arbiter and declaring Trajano to have been illegally dismissed by MJCI
without just or authorized cause and without due process of law. The CA upheld the decision of
the NLRC.
ISSUES:
1. Whether there was just cause when Petitioner (MJCI) dismissed Respondent Aimee O. Trajano
from the service
2. Whether Petitioner MJCI complied with the due process requirement when it effected the
dismissal of Respondent Trajano
RULING:
The valid termination of an employee may either be for just causes under Article 282 or for
authorized causes under Article 283 and Article 284 all of the Labor Code. Loss of the employer‘s
trust and confidence is a just cause under Article 282(c), a provision that ideally applies only to
cases involving an employee occupying a position of trust and confidence, or to a situation where
the employee has been routinely charged with the care and custody of the employer‘s money or
property. But the loss of trust and confidence, to be a valid ground for dismissal, must be based on
a willful breach of trust and confidence founded on clearly established facts. “A breach is willful,”
according to AMA Computer College, Inc. v. Garay, G.R. No. 162468, January 23, 2007 , “if it is
done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an
act done carelessly, thoughtlessly, heedlessly or inadvertently. It must rest on substantial grounds
and not on the employer‘s arbitrariness, whims, caprices or suspicion; otherwise, the employee
would eternally remain at the mercy of the employer.” An ordinary breach is not enough.
Moreover, the loss of trust and confidence must be related to the employee‘s performance
of duties. In this case, as a selling teller, respondent held a position of trust and confidence. The
nature of her employment required her to handle and keep in custody the tickets issued and the
bets made in her assigned selling station. The bets were funds belonging to her employer.
Although the act complained of – the unauthorized cancellation of the ticket (i.e., unauthorized
because it was done without the consent of the bettor) – was related to her work as a selling teller,
petitioner did not establish that the cancellation of the ticket was intentional, knowing and
purposeful on her part in order for her to have breached the trust and confidence reposed in her
by petitioner, instead of being only out of an honest mistake.
As for the requirement of giving the notice of dismissal, the posting of the notice of
termination at MJCI’s selling stations did not satisfy it, and the fact that Trajano was eventually
notified of her dismissal did not cure the infirmity. It is notable, indeed, that the NLRC explicitly
found in its October 27, 1999 decision that MJCI did not comply, to wit:
In this case, there is the first written notice required but none of the second
notice that informs her of the employer’s or MJCI’s decision to dismiss her. In fact,
it was not even shown that the investigator, Atty. Joey Galit, whose office is that
of an assistant racing manager, has the company’s authority to dismiss the
complainant, since that power is usually lodged with the head of the human
resource department or with the President, but unusual with an assistant
manager. The complainant asserts that she was never furnished a copy of her
termination letter and what she had submitted as evidence on record was one of
those copies posted on all selling stations of MJCI. This accusation was not
answered by the respondents nor have they ever proved that they had furnished
the complainant a written notice of the decision of MJCI to terminate her services
on the ground of serious violation of company policy (dishonesty).
CENTURY IRON WORKS, INC. and BENITO CHUA v. ELETO B. BAÑAS
G.R. No. 184116, June 19, 2013
J. Brion
Loss of confidence applies to: (1) employees occupying positions of trust and confidence,
the managerial employees; and (2) employees who are routinely charged with the care and
custody of the employer’s money or property which may include rank-and-file employees.
Examples of rank-and-file employees who may be dismissed for loss of confidence are cashiers,
auditors, property custodians, or those who, in the normal routine exercise of their functions,
regularly handle significant amounts of money or property. Thus, in this case, a rank-and-file
employee who is routinely charged with the care and custody of the employer‘s money or
property may be dismissed on the ground of loss of confidence.
FACTS:
Eleto B. Bañas worked at Century Iron as an inventory comptroller. Century Iron received
letters of complaint from its gas suppliers regarding alleged massive shortage of empty gas
cylinders; after investigation of Century Iron, it found that Bañas failed to make a report of the
missing cylinders. Century terminated Bañas’ services on grounds of loss of trust and confidence,
and habitual and gross neglect of duty making the latter file a case of illegal dismissal. Bañas
alleged that he merely worked as an inventory clerk who is not responsible for the lost cylinders
and pointed out that his tasks were limited to conducting periodic and yearly inventories, and
submitting his findings to the personnel officer. He maintained that unlike a supervisory
employee, he was not required to post a bond and he did not have the authority to receive and/or
release cylinders in the way that a warehouseman does. Therefore, he cannot be terminated on
the ground of loss of confidence. Century countered that Bañas was a supervisory employee who
was responsible for the lost cylinders. They maintained that Bañas committed numerous
infractions during his tenure amounting to gross and habitual neglect of duty. They reiterate that
since Bañas was a supervisory employee, he could be dismissed on the ground of loss of
confidence. Finally, the petitioners claim that Bañas was grossly and habitually negligent in his
duty which further justified his termination.
ISSUES:
1. Whether loss of confidence is a ground for terminating a rank-and-file employee who is not
routinely charged with the care and custody of the employer’s money or property
2. Whether Bañas was grossly and habitually neglectful of his duties
RULING:
Bañas did not occupy a position of trust and confidence nor was he in charge of the care and
custody of Century Iron’s money or property
Bañas did not occupy a position of trust and confidence nor was he routinely in charge
with the care and custody of Century Iron’s money or property, his termination on the ground of
loss of confidence was misplaced. The Supreme Court pointed out in this respect that loss of
confidence applies to: (1) employees occupying positions of trust and confidence, the managerial
employees; and (2) employees who are routinely charged with the care and custody of the
employer’s money or property which may include rank-and-file employees. Examples of rank-and-
file employees who may be dismissed for loss of confidence are cashiers, auditors, property
custodians, or those who, in the normal routine exercise of their functions, regularly handle
significant amounts of money or property. Thus, the phrasing of the petitioners’ second
assignment of error is inaccurate because a rank-and-file employee who is routinely charged with
the care and custody of the employer’s money or property may be dismissed on the ground of loss
of confidence.
Bañas was grossly and habitually neglectful of his duties
The evidence on record shows that Bañas committed numerous infractions in his one year
and eleven-month stay in Century Iron. On different instances, Century Iron gave Bañas a warning
for failing to check the right quantity of materials subject of his inventory; he also went undertime;
and two instances of an absence without asking for prior leave. He was further warned for failure
to implement proper warehousing and housekeeping procedures; and, he failed to ensure
sufficient supplies of oxygen-acetylene gases during business hours. Century Iron’s accounting
department also found out that Bañas made double and wrong entries in his inventory.
Under Article 282 of the Labor Code provides that one of the just causes for terminating
an employment is the employee’s gross and habitual neglect of his duties. This cause includes
gross inefficiency, negligence and carelessness. "Gross negligence connotes want or absence of or
failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless
disregard of consequences without exerting any effort to avoid them. Fraud and willful neglect of
duties imply bad faith of the employee in failing to perform his job, to the detriment of the
employer and the latter’s business. Habitual neglect, on the other hand, implies repeated failure
to perform one's duties for a period of time, depending upon the circumstances.
Such numerous infractions are sufficient to hold him grossly and habitually negligent. His
repeated negligence is not tolerable. The totality of infractions or the number of violations he
committed during his employment merits his dismissal. Moreover, gross and habitual negligence
includes unauthorized absences and tardiness, as well as gross inefficiency, negligence and
carelessness.
Besides, the determination of who to keep in employment and who to dismiss for cause is
one of Century Iron's prerogatives. Time and again, SC has recognized that the employer has the
right to regulate, according to its discretion and best judgment, all aspects of employment,
including work assignment, working methods, processes to be followed, working regulations,
transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall
of workers. It would be the height of injustice if we force an employer to retain the services of an
employee who does not value his work.
CONCRETE SOLUTIONS, INC. v. ARTHUR CABUSAS
G.R. No. 177812, June 19, 2013
J. Peralta
To constitute abandonment, two elements must concur, to wit: (1) the failure to report for
work or absence without valid or justifiable reason; and (2) a clear intention to sever the
employer-employee relationship, with the second element as the more determinative factor and
being manifested by some overt acts. Abandonment is a matter of intention and cannot lightly be
presumed from certain equivocal acts. To be a valid cause for dismissal for abandonment, there
must be clear proof of deliberate and unjustified intent to sever the employer employee
relationship. Clearly, the operative act is still the employee's ultimate act of putting an end to his
employment.
FACTS:
Respondent Arthur Cabusas (respondent) was hired by petitioner Primary Structures

Corporation (PSC) as transit mixer driver for petitioner Concrete Solutions Inc. (CSI) -
Batching Plant Project.
The respondent filed a complaint for unfair labor practice, illegal dismissal, non-payment
of holiday pay, premium pay for holiday, rest day, night shift premium, separation pay and moral
damages against petitioners. Respondent alleged that it was not true that he went on AWOL. He
alleged that when the administrative investigation on his alleged theft of company property was
conducted and terminated on May 4, 2001, his counsel asked to be furnished a copy of the result
of the investigation. Since then, they eagerly waited for such result, thus they were surprised to
receive a telegram on May 26, 2001 where he was said to have been AWOL since May 5, 2001.
Immediately upon receipt of the telegram, respondent went to petitioners' office, but he was
refused entry for the reason that he was AWOL. Moreover, there was no valid cause for his
dismissal and petitioners found the lame excuse of declaring him AWOL if only to create a
semblance of justification for his unlawful termination. He alleged that petitioners' imputation
that he committed dishonest acts was founded on falsehood and fabrications as no evidence was
presented during the so-called administrative hearing, except the self-serving and perjured
statements of petitioners' employees who were merely cajoled into making unfounded stories.
Respondent prayed for his reinstatement.
The Labor Arbiter dismissed the case and found that respondent was validly dismissed
from his employment as he abandoned his job; that he failed to report for work despite the
directive through a telegram for him to report back to work. The NLRC reversed the decision of
the Labor Arbiter. The CA affirmed the NLRC decision finding that respondent was illegally
dismissed. Hence, this petition.
ISSUE:
Whether respondent deliberately abandoned his work which is a just cause for his dismissal
RULING:
To constitute abandonment, two elements must concur, to wit: (1) the failure to report for
work or absence without valid or justifiable reason; and (2) a clear intention to sever the
employer-employee relationship, with the second element as the more determinative factor and
being manifested by some overt acts. Abandonment is a matter of intention and cannot lightly be
presumed from certain equivocal acts. To be a valid cause for dismissal for abandonment, there
must be clear proof of deliberate and unjustified intent to sever the employer employee
relationship. Clearly, the operative act is still the employee's ultimate act of putting an end to his
employment.
We find that the elements of abandonment are lacking. The CA did not commit any
reversible error in affirming the NLRC's decision that respondent was illegally dismissed for
petitioners' failure to substantiate their claim that the former abandoned his work. The
circumstances obtaining in this case do not indicate abandonment.
Respondent explained that his absence from work was due to the fact that he and his
counsel had asked and were waiting for a copy of result of the investigation on his alleged act of
theft or dishonesty conducted on May 4, 2001 but were not given at all. We find his absence
from work not sufficient to establish that he already had intention of abandoning his job. Besides,
settled is the rule that mere absence or failure to report for work is not tantamount to
abandonment of work. Even the failure to report for work after a notice to return to work has been
served does not necessarily constitute abandonment.
There is no showing of respondent's intent to sever the employer-employee relationship. It

is also notable that when respondent was refused entry to petitioners' premises and the letter of
former's counsel was refused acceptance by the latter, there is already constructive dismissal
which led respondent to seek recourse by filing an illegal dismissal case against petitioners on
May 30, 2001. The proximity of respondent's filing of the complaint from the time he received the
telegram and was refused entry to petitioners' premises showed that he had the least intention of
abandoning his job. Well-settled that the filing by an employee of a complaint for illegal dismissal
with a prayer for reinstatement is proof enough of his desire to return to work, thus, negating the
employer’s charge of abandonment.
Considering that respondent was dismissed prior to the expiration of the duration of his
employment and without a valid or just cause, his termination was therefore illegal. However,
respondent could no longer be reinstated since the project he was assigned to already completely
finished. However, we find that he is entitled to the salary corresponding to the unexpired portion
of his employment. Respondent is entitled to the payment of his salary from the time he was not
admitted back to work on May 26, 2001 up to June 23, 2001, the expiration of his employment
contract.
ROBERTO B. REBLORA v. ARMED FORCES OF THE PHILIPPINES
G.R. No. 195842, June 18, 2013
J. Perez
PD No. 1638 is the law that governs the retirement and separation of military officers and
enlisted personnel. With respect to the retirement of military officers and enlisted personnel, the
law provides for two kinds: compulsory retirement and optional retirement. Both kinds of
retirements contemplate the satisfaction of a certain age or length of service requirement by, or
the fulfillment of some other conditions on the part of, a military officer or personnel.
Petitioner’s civilian service at the DILG should and ought to be included as part of his
active service in the military for purposes of computing his retirement benefits under PD No.
1638.
FACTS:
The petitioner is a retired Captain of the Philippine Navy. Prior to entering military service,
the petitioner rendered civilian government service as a Barrio Development Worker at the
Department of the Interior and Local Government (DILG) from 6 January 1969 to 20 July 1974.
On 21 May 1973, the petitioner entered military service as a Probationary Ensign in the
Philippine Navy. On 22 May 2003, at the age of 59 and after a total of thirty-four (34) years of
active service, the petitioner was compulsorily retired from the military by virtue of General Order
No. 142. After his retirement, petitioner claimed retirement benefits under Section 17 of PD No.
1638.
The AFP granted petitioner’s claim of retirement benefits. In computing for petitioner’s
retirement benefit, however, the AFP did not include petitioner’s civilian government service at
the DILG. The AFP only considered petitioner’s actual military service.
The petitioner disagreed with computation of the AFP. He insisted that the computation
of his retirement benefit should include the period of his civilian government service at the DILG
immediately before he entered military service.
After an unsuccessful bid to obtain a favorable legal opinion from the AFP Judge Advocate
General, the petitioner requested assistance from the COA for the collection of his claimed
additional retirement benefit.
The COA rendered a Decision denying petitioner’s claim. The COA agreed with the
petitioner that his civilian service at the DILG should and ought to be included as part of his active
service in the military for purposes of computing his retirement benefits under PD No. 1638.
However, since his civilian service should be included as part of his active service in the military,
the COA opined that petitioner should also have been considered as compulsorily retired on 22
May 2000 and not on 22 May 2003. The COA found that, applying the provisions of PD No. 1638
as amended, petitioner was not actually underpaid but was rather overpaid his retirement benefit.
Aggrieved, petitioner questioned the Decision and Resolution of the COA via the present
Rule 45 petition before this Court.
ISSUE:
Whether the petitioner is entitled for additional retirement benefit
RULING:
This Court can very well dismiss the instant petition on account of it being the wrong
remedy. Decisions and resolutions of the COA are reviewable by this Court, not via an appeal by
certiorari under Rule 45, as is the present petition, but thru a special civil action of certiorari under
Rule in relation to Rule 65 of the Rules of Court.
Nevertheless, even if this Court should take a liberal appreciation of the present petition
as one that is filed under Rule 65, such petition would still fail. We have taken an extra step and
scoured the established facts vis-à-vis the allegations of the instant petition in search of any
vestiges of grave abuse of discretion on the part of the COA, but we found none. What we did
find, on the other hand, is that the assailed COA Decision and Resolution was rendered in accord
with law.
PD No. 1638, as amended, is the law that governs the retirement and separation of
military officers and enlisted personnel. With respect to the retirement of military officers and
enlisted personnel, the law provides for two kinds: compulsory retirement and optional
retirement. Both kinds of retirements contemplate the satisfaction of a certain age or length of
service requirement by, or the fulfillment of some other conditions on the part of, a military
officer or personnel. Retirement, however, is deemed compulsory if, upon the satisfaction of the
conditions prescribed by law, retirement of the concerned officer takes place by operation of law;
while retirement is deemed optional if, despite the satisfaction of such conditions, retirement
would only take place when elected by the officer himself.
Section 5(a) of PD No. 1638 explicitly provides that a military officer or enlisted personnel
who has reached the age of fifty-six (56) or who has rendered thirty (30) years of active service,
whichever comes later, shall be compulsorily retired.
Applying the foregoing provisions of PD No. 1638 to the circumstances surrounding

petitioner’s military service, this Court discerns that the COA was correct in holding that petitioner
should be considered as compulsorily retired on 22 May 2000 for purposes of computing his
retirement benefits under the same law.
The clear import of the assailed COA Decision and Resolution is that petitioner’s civilian
service at the DILG should be included in his active military service for the purpose of computing
his retirement benefits under PD No. 1638 only that the services he rendered after 22 May 2000,
for reasons explained above, should also be excluded from the same computation.
ALPS TRANSPORTATION AND/OR ALFREDO E. PEREZ v. ELIPIDIO M. RODRIGUEZ
G.R. No. 186732, June 13, 2013
CJ. Sereno
The employer failed to prove that the dismissal was due to a just cause. The Labor Code
provides that the burden of proving that the termination of an employee was for a just or
authorized cause lies with the employer. If the employer fails to meet this burden, the conclusion
would be that the dismissal was unjustified and, therefore, illegal.
An illegally dismissed employee is entitled to the twin remedies of reinstatement and
payment of full backwages. The normal consequences of a finding that an employee has been
illegally dismissed are, firstly, that the employee becomes entitled to reinstatement to his former
position without loss of seniority rights and, secondly, the payment of backwages corresponding
to the period from his illegal dismissal up to actual reinstatement.
FACTS:
Respondent Elpidio Rodriguez was employed as a bus conductor. He entered into an

employment contract with Contract Tours Manpower and was assigned to work with petitioner
ALPS Transportation.
During the course of his employment Rodriguez was found to have committed
irregularities on April 26, 2003, October 12, 2003 and January 26, 2005. The latest irregularity
report dated January 26, 2005 stated that he had collected bus fares without issuing
corresponding tickets for passengers. The report was annotated with the word “Terminate.”
Rodriguez alleged that he was dismissed from his employment on January 27, 2005, or the
day after the issuance of the last irregularity report. He did not however receive any written notice
of termination. He went back to the bus company a number of times but it refused to readmit him.
On August 11, 2005, Rodriguez filed before the labor arbiter a complaint for illegal
dismissal, nonpayment of 13th month pay, and damages against ALPS Transportation and Alfredo
E. Perez, the proprietor of petitioner bus company.
ISSUE:
Whether respondent Rodriguez was validly dismissed
RULING:
For a dismissal to be valid, the rule is that the employer must comply with both substantive
and procedural due process requirements. Substantive due process requires that the dismissal
must be pursuant to either a just or an authorized cause under Articles 282, 283 or 284 of the
Labor Code. Procedural due process, on the other hand, mandates that the employer must
observe the twin requirements of notice and hearing before a dismissal can be effected.
We find for respondent and rule that the employer failed to prove that the dismissal was
due to a just cause. The Labor Code provides that the burden of proving that the termination of an
employee was for a just or authorized cause lies with the employer. If the employer fails to meet
this burden, the conclusion would be that the dismissal was unjustified and, therefore, illegal.
Here, we agree with Rodriguez’s position that the 26 January 2005 irregularity report,
which served as the basis of his dismissal, may only be considered as an uncorroborated allegation
if unsupported by substantial evidence.
The nature of work of a bus conductor involves inherent or normal occupational risks of
incurring money shortages and uncollected fares. A conductor’s job is to collect exact fares from
the passengers and remit his collections to the company. Evidence must, therefore, be substantial
and not based on mere surmises or conjectures for to allow an employer to terminate the
employment of a worker based on mere allegations places the latter in an uncertain situation and
at the sole mercy of the employer.
An accusation that is not substantiated will not ripen into a holding that there is just cause
for dismissal. A mere accusation of wrongdoing or a mere pronouncement of lack of confidence is
not sufficient cause for a valid dismissal of an employee. Thus, the failure of the petitioners to
convincingly show that the respondent misappropriated the bus fares renders the dismissal to be
without a valid cause. To add, jurisprudence dictates that if doubt exists between the evidence
presented by the employer and the employee, the scales of justice must be tilted in favor of the
latter.
Thus, we rule that petitioners have failed to prove that the termination of Rodriguez’s
employment was due to a just cause. Having found that Rodriguez was illegally dismissed, we now
rule on petitioners’ liabilities and respondent’s entitlements under the law.
An illegally dismissed employee is entitled to the twin remedies of reinstatement and

payment of full backwages. The normal consequences of a finding that an employee has been
illegally dismissed are, firstly, that the employee becomes entitled to reinstatement to his former
position without loss of seniority rights and, secondly, the payment of backwages corresponding
to the period from his illegal dismissal up to actual reinstatement. The statutory intent on this
matter is clearly discernible. Reinstatement restores the employee who was unjustly dismissed to
the position from which he was removed, that is, to his status quo ante dismissal, while the grant of
backwages allows the same employee to recover from the employer that which he had lost by way
of wages as a result of his dismissal. These twin remedies — reinstatement and payment of
backwages — make the dismissed employee whole who can then look forward to continued
employment. Thus, do these two remedies give meaning and substance to the constitutional right
of labor to security of tenure.
Thus, the CA committed no reversible error in upholding the NLRC’s order to reinstate
Rodriguez and in directing the payment of his full backwages, from the time he was illegally
dismissed until his actual reinstatement.
JAIME N. GAPAYAO v. ROSARIO FULO, SOCIAL SECURITY SYSTEM AND SOCIAL SECURITY
COMMISSION
G.R. No. 193493. June 13, 2013
CJ. Sereno
Farm workers generally fall under the definition of seasonal employees. The Court has
consistently held that seasonal employees may be considered as regular employees. This rule,
however, is not absolute. Seasonal workers who have worked for one season only may not be
considered regular employees. Also when seasonal employees are free to contract their services
with other farm owners, then the former are not regular employees. For regular employees to be
considered as such, the primary standard used is the reasonable connection between the
particular activity they perform and the usual trade or business of the employer.
FACTS:
Jaime Fulo died of "acute renal failure secondary to 1st degree burn 70% secondary
electrocution" while doing repairs at the residence and business establishment of petitioner
Gapayao.
Allegedly moved by his Christian faith, Gapayao extended some financial assistance to
private respondent Rosario, wife of Jaime Fulo. Rosario then executed an Affidavit of
Desistance stating that she was not holding them liable for the death of her late husband, and was
waiving her right and desisting from filing any criminal or civil action against petitioner. Both
parties then executed a Compromise Agreement.
Thereafter, Rosario filed a claim for social security benefits with the SSS. However, upon
verification and evaluation, it was discovered that the deceased was not a registered member of
the SSS. Upon the insistence of Rosario that her late husband had been employed by petitioner,
the SSS conducted a field investigation to clarify his status of employment. In its field
investigation report, it found that Jaime Fulo is an employee of Mr. & Mrs. Jaime Gapayao.
Consequently, the SSS demanded that petitioner remit the social security contributions of the
deceased. Gapayao denied that the deceased was his employee.
In asserting the existence of an employer-employee relationship, Rosario alleges that her

late husband had been in the employ of petitioner for 14 years, from 1983 to 1997. During that
period, he was made to work as a laborer in the agricultural landholdings, a harvester in the abaca
plantation, and a repairman/utility worker in several business establishments owned by
petitioner. This view is bolstered by the admission of petitioner himself in the Compromise
Agreement that he was the deceased's employer.
Petitioner, on the other hand, insists that the deceased was not his employee. Petitioner
alleges that the deceased is a freelance worker. Since he was engaged on a pakyaw basis and
worked for a short period of time, in the nature of a farm worker every season, he was not
precluded from working with other persons and in fact worked for them.
ISSUE:
Whether there exists an employer-employee relationship between Jaime Fulo and petitioner that
would merit an award of benefits in favor of private respondent under social security laws
RULING:
Farm workers generally fall under the definition of seasonal employees. The Court has
consistently held that seasonal employees may be considered as regular employees. Regular
seasonal employees are those called to work from time to time. The nature of their relationship
with the employer is such that during the off season, they are temporarily laid off; but reemployed
during the summer season or when their services may be needed. They are in regular employment
because of the nature of their job, and not because of the length of time they have worked.
This rule, however, is not absolute. Seasonal workers who have worked for one season only
may not be considered regular employees. Also when seasonal employees are free to contract
their services with other farm owners, then the former are not regular employees.
For regular employees to be considered as such, the primary standard used is the
reasonable connection between the particular activity they perform and the usual trade or
business of the employer.
The records reveal that the deceased was indeed a farm worker who was in the regular
employ of petitioner. From year to year, the deceased had been working on petitioner's land by
harvesting abaca and coconut, processing copra, and clearing weeds. His employment was
continuous in the sense that it was done for more than one harvesting season. Moreover, no
amount of reasoning could detract from the fact that these tasks were necessary or desirable in
the usual business of petitioner. The other tasks allegedly done by the deceased outside his usual
farm work only bolster the existence of an employer-employee relationship. The deceased was a
construction worker in the building and a helper in the bakery, grocery, hardware, and piggery —
all owned by petitioner. This fact only proves that even during the off season, the deceased was
still in the employ of petitioner.
The most telling indicia of this relationship is the Compromise Agreement executed by
petitioner and private respondent. Petitioner entered into the agreement with full knowledge
that he was described as the employer of the deceased. This knowledge cannot simply be denied
by a statement that petitioner was merely forced or threatened into such an agreement.
In Legend Hotel Manila v. Realuyo, the Court held that "the power of the employer to
control the work of the employee is considered the most significant determinant of the existence
of an employer-employee relationship. This is the so-called control test and is premised on
whether the person for whom the services are performed reserves the right to control both the
end achieved and the manner and means used to achieve that end." It should be remembered that
the control test merely calls for the existence of the right to control, and not necessarily the
exercise thereof. It is not essential that the employer actually supervises the performance of
duties by the employee. It is enough that the former has a right to wield the power.
In this case, we agree with the CA that petitioner wielded control over the deceased in the
discharge of his functions. Being the owner of the farm on which the latter worked, petitioner —
on his own or through his overseer — necessarily had the right to review the quality of work
produced by his laborers. It matters not whether the deceased conducted his work inside
petitioner's farm or not because petitioner retained the right to control him in his work, and in
fact exercised it through his farm manager Amado Gacelo. The latter himself testified that
petitioner had hired the deceased as one of the pakyaw workers whose salaries were derived from
the gross proceeds of the harvest.
The right of an employee to be covered by the Social Security Act is premised on the
existence of an employer-employee relationship. That having been established, the Court hereby
rules in favor of private respondent.
ST. JOSEPH ACADEMY OF VALENZUELA FACULTY ASSOCIATION v. ST. JOSEPH
ACADEMY OF VALENZUELA, ET AL.
G.R. No. 182957, June 13, 2013
J. Reyes
Reinstatement or payment of separation pay and award of backwages is proper only in

cases of illegal dismissal. Nevertheless, the Court, in exceptional cases, has granted financial
assistance to legally dismissed employees as an act of “social justice” or based on “equity” so long
as the dismissal was not for serious misconduct, does not reflect on the employee’s moral
character, or would involve moral turpitude.
In this case, the dismissal of the 13 non-licensees was due to their failure to possess
teaching licenses. It was not due to any serious misconduct or infraction reflecting their moral
character. This being the case, the Court, in keeping with equity and social justice, grants the
award of financial assistance to the 13 non-licensees equivalent to one-half (1/2) month’s pay for
every year of service rendered with SJAV.
FACTS:
The dispute arose from a notice of strike filed by the petitioner against respondent St.
Joseph Academy of Valenzuela (SJAV) for illegal termination of non-licensees teachers and union
busting. The SOLE assumed jurisdiction after the parties agreed to submit the case for voluntary
arbitration.
The SOLE ordered the reinstatement of those non-licensees with a valid temporary or
special permit with full backwages up to the date of their actual reinstatement. The SOLE,
however, also ordered that they shall only serve for the remaining period corresponding to the
period of validity of their permit.
The CA, however, ruled that reinstatement is no longer possible inasmuch as it is the
Department of Education, Culture and Sports that can assign the para-teachers to schools as it
may determine. Moreover, SJAV cannot be deprived of its right to choose its teachers and the
positions have already been actually filled up. The CA also deleted the award of backwages since,
as found by the SOLE, there was no illegal dismissal committed by SJAV, the non-licensees not
being its regular employees. Hence, this petition.
ISSUE:
Whether the CA committed an error in deleting the award of backwages and reinstatement
originally granted by the SOLE
RULING:
Reinstatement or payment of separation pay, and award of backwages is proper only in

cases of illegal dismissal.
Generally, the finding of illegal dismissal entitles an employee to the twin remedies of
reinstatement and payment of backwages. Article 279 of the Labor Code states, in part, that an
employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.
In this case, the SOLE and the CA were one in ruling that there was no illegal dismissal
committed by SJAV against the non-licensees. As both stressed by the SOLE and the CA, R.A. No.
7836 provides that no person shall engage in teaching and/or act as professional teacher unless
he is a duly registered professional teacher, and a holder of a valid certificate of registration and a
valid professional license or a holder of a valid special/temporary permit. Obviously, aside from
the finding that there was no illegal dismissal, the non-licensees cannot be reinstated since they
do not possess the necessary qualification for them to be engaged in teaching and/or act as
professional teachers. This conclusion binds the Court, especially in the absence of any
circumstance that militates against such conclusion.
Consequently, the Court finds that the CA did not commit an error in ruling that
reinstatement is not possible. In the same light, the Court finds that the CA, likewise, did not
commit an error in deleting the award of backwages. As previously stressed, payment of
backwages and other benefits is justified only if the employee was illegally dismissed.
Nevertheless, the Court, in exceptional cases, has granted financial assistance to legally
dismissed employees as an act of “social justice” or based on “equity” so long as the dismissal was
not for serious misconduct, does not reflect on the employee’s moral character, or would involve
moral turpitude. In Nissan Motor Philippines, Inc. v. Angelo, the Court ruled that, inspired by
compassionate and social justice, it has in the past awarded financial assistance to dismissed
employees when circumstances warranted such an award. Meanwhile, in Pharmacia and Upjohn,
Inc. v. Albayda, Jr., the Court held that an award to the employee of separation pay by way of
financial assistance, equivalent to one-half (1/2) month’s pay for every year of service, is
equitable. The Court, in Pharmacia, noted, among others, that although the employee’s actions
constituted a valid ground to terminate his services, the same is not so reprehensible as to warrant
complete disregard of his long years of service.
Similarly in this case, the dismissal of the 13 non-licensees was due to their failure to
possess teaching licenses. It was not due to any serious misconduct or infraction reflecting their
moral character. Records also bear that they have been in the employ of SJAV from five (5) to nine
(9) years, and as observed by the SOLE, SJAV has not shown any dissatisfaction with their teaching
services, “otherwise, x x x, it would not have kept them under its [employ] for such quite a period
of time.” This being the case, the Court, in keeping with equity and social justice, grants the award
of financial assistance to the 13 non-licensees equivalent to one-half (1/2) month’s pay for every
year of service rendered with SJAV.
MELINDA L. OCAMPO v. COMMISSION ON AUDIT

G.R. No. 188716, June 10, 2013
J. Perez
The claim of petitioner for two (2) sets of retirement benefits under R.A. 1568 is not,
strictly speaking, a claim for double compensation prohibited under the first paragraph of Section
8, Article IX-B of the Constitution. Claims for double retirement benefits fall under the prohibition
against the receipt of double compensation when they are based on exactly the same services and
on the same creditable period. In this case, petitioner is not claiming two (2) sets of retirement
benefits for one and the same creditable period. Rather, petitioner is claiming a set of retirement
benefits for each of her two (2) retirements from the ERB.
However, there is nothing in R.A. 1568 as amended by R.A. 3595 that allows a qualified
retiree to therein recover two (2) sets of retirement benefits as a consequence of two (2)
retirements from the same covered agency. The mere circumstance that members and chairmen
of the ERB may be appointed to serve therein for more than one term does not mean that they
would be entitled a set of retirement benefits under R.A. 1568 for each of their completed term.
FACTS:
On March 1, 1996, petitioner retired from the NEA, after more than 17 years of service.
Petitioner availed of her retirement benefits. Thereafter, petitioner was appointed as Board
Member of the ERB. Upon expiration of her term, petitioner retired under E.O. 172, in relation to
R.A. 1568. Petitioner availed of the five year lump sum benefit and the corresponding monthly
pension to be paid out for the remainder of her life. On August 25, 1998, petitioner was again
appointed, this time as Chairman of ERB with a term of four (4) years. On August 15, 2001, the ERB
was abolished and replaced by the ERC. For the second time, petitioner sought retirement under
E.O. 172. Chairperson of the ERC approved the payment thereof to petitioner. However, on post-
audit of the transaction, the State Auditor, issued Notice of Suspension: (1) suspending payment
of the petitioner‘s second retirement gratuity computed on a pro-rata basis equivalent to only two
years, eleven months, and twenty days; and (2) requiring submission by the ERC of ―legal basis for
the payment of retirement gratuity twice under the same law (EO 172).
Petitioner posits that she should be separately paid retirement benefits for her respective
terms as Board Member and Chairperson of the ERB. In other words, petitioner claims two (2)
lump sum payments, and payment thereafter of two (2) monthly pensions. On the other hand, the
COA argues that: (1) the phrase ―for every year of service‖ limits the payment of the lump sum to
the employee‘s length of service and does not automatically entitle an employee to a lump sum
gratuity of five years; (2) Petitioner is not entitled to two (2) lump sum benefit of five years for
each term as it would run counter to the ―common-sense principle‖ laid down in jurisprudence;
(3) payment to petitioner of two retirement benefits under E.O. 172 for both her retirements,
albeit under different positions and offices, is unconstitutional as it violates the provision against
additional or double compensation; and (4) ultimately, petitioner should have received only a
prorated amount on her retirement gratuity based on her two years and four months as ERB Board
Member, and two years, eleven months and twenty days as ERB Chairperson.
ISSUES:
1. Is petitioner entitled to recover two (2) sets of retirement benefits under R.A. 1568
2. How much petitioner is entitled to receive as retirement benefits under the same law
RULING:
1. No. At the outset, it must be clarified that the claim of petitioner for two (2) sets of
retirement benefits under R.A. 1568 is not, strictly speaking, a claim for double compensation
prohibited under the first paragraph of Section 8, Article IX-B of the Constitution. Claims for
double retirement benefits fall under the prohibition against the receipt of double compensation
when they are based on exactly the same services and on the same creditable period. This is not,
however, the case herein.
Hence, in order to resolve her claim, what is only required is an interpretation of R.A.1568,
as amended. As can be seen from the discussion above, the success of petitioner‘s claim actually
depends on the existence of a provision in R.A. 1568 that allows her to recover two (2) set of
retirement benefits as a consequence of her two (2) retirements from the ERB. Petitioner hinges
her claim for two (2) sets of retirement benefits solely on the provisions of R.A. 1568 as amended
by R.A. 3595. There is nothing in R.A. 1568 as amended by R.A. 3595 that allows a qualified retiree
to therein recover two (2) sets of retirement benefits as a consequence of two (2) retirements
from the same covered agency. As worded, R.A. 1568, as amended, only allows payment of only a
single gratuity and a single annuity out of a single compensable retirement from any one of the
covered agencies. In fact, the contingency of multiple retirements from the same covered agency
could not have been contemplated by the law. Hence, R.A. 1568, as it was passed and in its
present form, cannot be said to have sanctioned the payment of more than one set of retirement
benefits to a retiree as a consequence of multiple retirements in one agency. The mere
circumstance that members and chairmen of the ERB may be appointed to serve therein for more
than one term does not mean that they would be entitled a set of retirement benefits under R.A.
1568 for each of their completed term. Since R.A. 1568, as amended by R.A. 3595 clearly does not
justify the payment of more than one gratuity and one annuity to a qualified retiree, petitioner
cannot claim two (2) sets of retirement benefits under the same law.
2. Petitioner may recover one gratuity in an amount equivalent to her last annual salary
multiplied by her actual years of service in the ERB but not to exceed five (5) years. In addition,
petitioner is entitled to receive only one annuity equivalent to the amount of her last monthly
salary. While petitioner is entitled to receive only one set of retirement benefits under R.A. 1568,
as amended, despite her two (2) retirements, the Court believe that her subsequent stint as
Chairman of the ERB and her consequent second retirement necessitated an adjustment of the
retirement benefits she is entitled to under the law. This is because R.A. 1568, as amended,
reckons the amount of gratuity on the retiree‘s last annual salary and actual years of service not
exceeding five (5) years, and it bases the amount of annuity on the retiree‘s last monthly salary.
Hence, for purposes of computing her gratuity, petitioner‘s last annual salary shall be that which
she was receiving at the time of her second retirement and her actual years of service shall be the
sum of her years of service both as ERB member and chairman, but not to exceed five (5) years. On
the other hand, for purposes of computing her annuity, petitioner‘s last monthly salary shall be
that which she was receiving monthly as of the date of her second retirement.
VIGILLA, ET. AL. v. PHILIPPINE COLLEGE OF CRIMINOLOGY, INC.

G.R. No. 200094, June 10, 2013
J. Mendoza
In legitimate job contracting, the principal employer becomes jointly and severally liable
with the job contractor only for the payment of the employees' wages whenever the contractor
fails to pay the same. On the other hand, in labor-only contracting, the principal employer
becomes solidarily liable with the labor-only contractor for all the rightful claims of the
employees. In this case, the releases, waivers and quitclaims executed by employees in favor of
the labor-only contractor redounded to the benefit of the principal.
FACTS:
PCCr is a non-stock educational institution, while the petitioners were janitors, janitresses
and supervisor under the supervision and control of the PCCr‘s Senior Vice President for
Administration. The petitioners, however, were made to understand, upon application with
respondent school, that they were under MBMSI, a corporation engaged in providing janitorial
services to clients. PCCr‘s Senior Vice President for Administration is also the President and
General Manager of MBMSI.
Sometime in 2008, PCCr discovered that the Certificate of Incorporation of MBMSI had
been revoked as of July 2, 2003. On March 16, 2009, PCCr, through its President, citing the
revocation, terminated the school‘s relationship with MBMSI, resulting in the dismissal of the
employees or maintenance personnel under MBMSI. In September, 2009, the dismissed

employees filed their respective complaints for illegal dismissal and monetary benefits against
MBMSI and PCCr. In their complaints, they alleged that it was the school, not MBMSI, which was
their real employer because (1) MBMSI‘s certification had been revoked; (2) PCCr had direct
control over MBMSI‘s operations and (3)the selection and hiring of employees were undertaken
by PCCr. On the other hand, PCCr contended that PCCr could not have illegally dismissed the
complainants because it was not their direct employer. On September 11, 2009, PCCr submitted
several documents before the LA, including releases, waivers and quitclaims in favor of MBMSI
executed by the petitioners to prove that they were employees of MBMSI and not PCCr.
ISSUE:
Whether MBMSI is solidarily liable with PCCr
RULING:
The releases, waivers and quitclaims executed by petitioners in favor of MBMSI redounded
to the benefit of PCCr pursuant to Article 1217 of the New Civil Code. The reason is that MBMSI is
solidarily liable with the respondents for the valid claims of petitioners pursuant to Article 109 of
the Labor Code. As correctly pointed out by the respondents, the basis of the solidary liability of
the principal with those engaged in labor-only contracting is the last paragraph of Article 106 of
the Labor Code, which in part provides: “In such cases [labor-only contracting], the person or
intermediary shall be considered merely as an agent of the employer who shall be responsible to
the worker in the same manner and extent as if the latter were directly employed by him.”
Section 19 of D.O. No. 18-02 issued by the DOLE, which was still in effect at the time of
the promulgation of the subject decision and resolution, interprets Article 106 of the Labor Code
in this wise:
“Section 19. Solidary liability. The principal shall be deemed as the direct
employer of the contractual employees and therefore, solidarily liable with the
contractor or subcontractor for whatever monetary claims the contractual
employees may have against the former in the case of violations as provided for
in Sections 5 (Labor- Only contracting), 6 (Prohibitions), 8 (Rights of
Contractual Employees) and 16 (Delisting) of these Rules. In addition, the
principal shall also be solidarily liable in case the contract between the principal
and contractor or subcontractor is preterminated for reasons not attributable to
the fault of the contractor or subcontractor.
Considering that MBMSI, as the labor-only contractor, is solidarily liable with the
respondents, as the principal employer, then the respondents‘ solidary liability was already
expunged by virtue of the releases, waivers and quitclaims executed by each of the petitioners in
favor of MBMSI pursuant to Article 1217 of the Civil Code which provides that “ payment made by
one of the solidary debtors extinguishes the obligation.
In light of these conclusions, the Court holds that the releases, waivers and quitclaims
executed by petitioners in favor of MBMSI redounded to the respondents' benefit. The liabilities
of the respondents to petitioners are now deemed extinguished. The Court cannot allow
petitioners to reap the benefits given to them by MBMSI in exchange for the releases, waivers and
quitclaims and, again, claim the same benefits from PCCr. While it is the duty of the courts to
prevent the exploitation of employees, it also behooves the courts to protect the sanctity of
contracts that do not contravene the law. The law in protecting the rights of the laborer
authorizes neither oppression nor self-destruction of the employer. While the Constitution is
committed to the policy of social justice and the protection of the working class, it should not be
supposed that every labor dispute will be automatically decided in favor of labor. Management
also has its own rights, which, as such, are entitled to respect and enforcement in the interest of
simple fair play. Out of its concern for those with less privileges in life, the Court has inclined more
often than not toward the worker and upheld his cause in his conflicts with the employer. Such
favoritism, however, has not blinded the Court to the rule that justice is in every case for the
deserving, to be dispensed in the light of the established facts and applicable law and doctrine.
PEOPLE OF THE PHILIPPINES v. MARIA JENNY REA Y GUEVARRA AND ESTRELLITA TENDENILLA
G.R. No. 197049, June 10, 2013
Illegal recruitment is committed by persons who, without authority from the government,
give the impression that they have the power to send workers abroad for employment purposes.
To prove illegal recruitment, it must be shown that appellant gave complainants the distinct
impression that he had the power or ability to send complainants abroad for work such that the
latter were convinced to part with their money in order to be employed.
FACTS:
Appellants and Ginette Azul were charged with illegal recruitment before RTC. Private
complainants alleged that they met Tendenilla through Azul. Tendenilla personally, or through
Azul, assured them that she has the power and capacity to deploy workers to London. Private
complainants paid Tendenilla, directly or through Azul, placement fees in the amounts ranging
from P100,000.00 to P200,000.00 each. They were sent first to Thailand while waiting for the
processing of their working visas to London. They travelled to Penang, Malaysia to obtain a non-
immigrant Thailand visa to validate their stay in Thailand. Thereafter, they were arrested and
deported back to the Philippines by the Thailand immigration office.
The RTC rendered judgment convicting appellants of the crime of illegal recruitment in
large scale. The trial court found that all elements of illegal recruitment in large scale were
established through the testimonies of the private complainants and that appellants conspired to
commit the crime. The Court of Appeals affirmed the trial court's decision. Hence, this petition.
ISSUE:
Whether appellants are liable for the crime of illegal recruitment in large scale
RULING:
The crime of illegal recruitment in large scale is committed upon concurrence of these (3)
elements, namely: (1) the offenders undertake any activity within the meaning of recruitment and
placement defined in Article 13(b) or any prohibited practices enumerated in Article 34 of the
Labor Code; (2) the offenders have no valid license or authority required by law to enable them to
lawfully engage in the recruitment and placement of workers; and (3) the offenders commit the
acts against three or more persons, individually or as a group.
Recruitment and placement is defined in Article 13(b) of the Labor Code as “any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring worker; and includes
referrals, contract services, promising or advertising for employment, locally or abroad, whether
for profit or not.”
Simply put, illegal recruitment is committed by persons who, without authority from the
government, give the impression that they have the power to send workers abroad for
employment purposes.
That Tendenilla made misrepresentations concerning her purported power to recruit for
overseas employment; and personally, or through Azul but on her behalf, collected placement
fees from private complainants were clearly established from the testimonies of private
complainants.
To prove illegal recruitment, it must be shown that appellant gave complainants the
distinct impression that he had the power or ability to send complainants abroad for work such
that the latter were convinced to part with their money in order to be employed.
The first element of large scale illegal recruitment was proven by the testimonies of the
private complainants which the trial court found to be credible and convincing. We find that they
were given in a clear, positive and straightforward manner. Between the positive and categorical
testimonies of private complainants and the unsubstantiated denials of appellants, we give more
weight to the former.
The certification issued by the Philippine Overseas Employment Administration that

Tendenilla is not licensed to recruit workers for overseas employment constitutes the second
element of the crime of illegal recruitment.
The third element is likewise satisfied when at least six (6) individuals filed the case,
claimed and in fact, were found to have been defrauded by appellants.
We reiterate the findings of the Court of Appeals, to wit:
In the case at bar, it cannot be doubted that both accused-appellants

indispensably cooperated and coordinated in illegally recruiting the private
complainants. From the evidence, it can be seen that the success of the scheme
depended on accused-appellants’ joint efforts. Estrellita Tendenilla directly dealt
with the private complainants, promising them employment, demanding money
from them, conducting dubious trainings, and sending them to Thailand. Maria
Jenny Rea, on the other hand, covered the next phase of the process, that is,
travelling with the private complainants to Thailand, bringing them to the border
of Thailand and Malaysia, securing their fraudulent non-immigrant visas, and
accompanying them back to the Philippines.
Based on the foregoing, appellants were correctly found guilty of large scale illegal
recruitment tantamount to economic sabotage.
SURIGAO DEL NORTE ELECTRIC COOPERATIVE, INC. AND/OR DANNY Z. ESCALANTE v.
TEOFILO GONZAGA
G.R. No. 187722, June 10, 2013
J. Perlas-Bernabe
In termination cases, the burden of proof rests on the employer to show that the dismissal
is for a valid cause. Failing in which, the law considers the matter a case of illegal dismissal. The
Court finds that employer was able to prove, by substantial evidence, that there lies a valid cause
to terminate repondent’s employment.
However, jurisprudence dictates that it is not enough that the employee is given an
“ample opportunity to be heard” if company rules or practices require a formal hearing or
conference. In such instance, the requirement of a formal hearing and conference becomes
mandatory. Employer failed to comply with its own company policy, violating the proper
termination procedure. In this relation, case law states that an employer who terminates an
employee for a valid cause but does so through invalid procedure is liable to pay the latter
nominal damages.
FACTS:
Petitioner Surigao Del Norte Electric Cooperative, Inc. (SURNECO) hired Gonzaga as its
lineman. On June 26, 2001, petitioner Danny Escalante (Escalante), General Manager of
SURNECO, issued Memorandum with attached report of SURNECO’s Internal Auditor, Pedro
Denolos (Collection Report) and two (2) sets of summaries of collections and remittances
(Summaries), seeking an explanation from Gonzaga regarding his remittance shortages in the
total amount of ₱314,252.23.
Gonzaga asked for an extension of three (3) weeks within which to submit his explanation
since he needed to go over the voluminous receipts of collections and remittances with the
assistance of an accountant. On the same day, he sent another letter, denying any unremitted
amount on his part and thereby, requesting that the charges against him be lifted. Attached to the
same letter is an Audit Opinion prepared by one Leonides Laluna (Laluna), a certified public
accountant (CPA), stating that the Internal Auditor’s Report cannot accurately establish any
remittance shortage on Gonzaga’s part since the amount of collections stated in the Summaries
was not supported by any bills or official receipts. After due investigation, Gonzaga was found
guilty of gross and habitual neglect of duties and responsibilities, misappropriation of REC funds
and failure to remit collections/monies that would warrant his dismissal.
Gonzaga filed a complaint with NLRC Regional Arbitration- Butuan City for illegal
dismissal. The LA rendered a Decision, finding that petitioners were unable to show that
Gonzaga’s dismissal was just and valid and thus, ordered that the latter be reinstated to his former
position without loss of seniority rights and with payment of full backwages, moral and exemplary
damages, and attorney’s fees. Aggrieved, petitioners elevated the matter to the NLRC. The NLRC
vacated the ruling of the LA, finding Gonzaga to have been dismissed for a just and valid cause.
The CA reversed and set aside the NLRC’s ruling and, instead, reinstated the LA’s decision. Hence,
this petition.
ISSUE:
Whether respondent have been dismissed for a just and valid cause
RULING:
In termination cases, the burden of proof rests on the employer to show that the dismissal
is for a valid cause. Failing in which, the law considers the matter a case of illegal dismissal. In this
relation, the quantum of proof which the employer must discharge is substantial evidence which,
as defined in case law, means that amount of relevant evidence as a reasonable mind might
accept as adequate to support a conclusion, even if other minds, equally reasonable, might
conceivably opine otherwise. Applying the foregoing principles to this case, the Court finds that
petitioners were able to prove, by substantial evidence, that there lies a valid cause to terminate
Gonzaga’s employment.
The Court concurs with the NLRC’s finding that petitioners’ evidence adequately supports
the conclusion that Gonzaga misappropriated the funds of the cooperative. The data indicated
therein show gaping discrepancies between Gonzaga’s collections and remittances, of which he
was accountable for. In this accord, the burden of evidence shifted to Gonzaga to prove that the
reflected shortage was not attributable to him. However, despite being allowed to peruse the bills
and receipts on record together with the assistance of an accountant and a counsel during the
investigation proceedings, Gonzaga could not reconcile the amounts of his collections and
remittances and, instead, merely interposed bare and general denials.
All told, considering the totality of circumstances in this case, the Court finds the evidence
presented by the petitioners, as opposed to the bare denial of Gonzaga, sufficient to constitute
substantial evidence to prove that he committed serious misconduct and gross and habitual
neglect of duty to warrant his dismissal from employment. Such are just causes for termination.
Jurisprudence dictates that it is not enough that the employee is given an “ample
opportunity to be heard” if company rules or practices require a formal hearing or conference. In
such instance, the requirement of a formal hearing and conference becomes mandatory. The
rationale behind this mandatory characterization is premised on the fact that company rules and
regulations which regulate the procedure and requirements for termination, are generally binding
on the employer. Records reveal that while Gonzaga was given an ample opportunity to be heard
within the purview of the foregoing principles, SURNECO, however, failed to show that it
followed its own rules which mandate that the employee who is sought to be terminated be
afforded a formal hearing or conference. As above-discussed, SURNECO remains bound by – and
hence, must faithfully observe – its company policy embodied in Section 16.5 of its own Code of
Ethics.
Accordingly, since only an informal inquiry was conducted in investigating Gonzaga’s

alleged cash shortages, SURNECO failed to comply with its own company policy, violating the
proper termination procedure altogether. In this relation, case law states that an employer who
terminates an employee for a valid cause but does so through invalid procedure is liable to pay
the latter nominal damages. Hence, although the dismissal stands, the Court deems it appropriate
to award Gonzaga nominal damages in the amount of P30,000.00.
UNILEVER PHILIPPINES v. MARIA RUBY M. RIVERA

G.R. No. 201701, June 03, 2013
J. Mendoza
As a general rule, an employee who has been dismissed for any of the just causes
enumerated under Article 282 of the Labor Code is not entitled to a separation pay. In
exceptional cases, however, the Court has granted separation pay to a legally dismissed employee
as an act of “social justice” or on “equitable grounds.” In both instances, it is required that the
dismissal (1) was not for serious misconduct; and (2) did not reflect on the moral character of the
employee. In this case, the transgressions were serious offenses that warranted employees’
dismissal from employment. Hence, employee is not entitled to separation pay.
FACTS:
Respondent was employed by petitioner as its Area Activation Executive for Area 9.
Petitioner enforces a strict policy that every trade activity must be accompanied by a Trade
Development Program (TDP) and that the allocated budget for a specific activity must be used for
such activity only. Sometime in 2007, petitioner‘s internal auditor conducted a random audit and
found out that there were fictitious billings and fabricated receipts amounting to P11,200,000.00.
It was also discovered that some funds were diverted from the original intended projects. Upon
further verification, the fund deviations were upon the instruction of respondent. On July 16,
2007, petitioner issued a show-cause notice to respondent asking her to explain the following
charges, to wit: (a) Conversion and Misappropriation of Resources; (b) Breach of Fiduciary Trust;
(c) Policy Breaches; and (d) Integrity Issues. Responding through an email, dated July 16, 2007,
respondent admitted the fund diversions, but explained that such actions were mere resourceful
utilization of budget because of the difficulty of procuring funds from the head office. She insisted
that the diverted funds were all utilized in the company‘s promotional ventures in her area of
coverage. Through a letter, dated August 23, 2007, petitioner found respondent guilty of serious
breach of the company‘s Code of Business Principles compelling it to sever their professional
relations. In a letter, dated September 20, 2007, respondent asked for reconsideration and
requested petitioner to allow her to receive retirement benefits having served the company for
fourteen (14) years already. Petitioner denied her request, reasoning that the forfeiture of
retirement benefits was a legal consequence of her dismissal from work.
On Oct. 19, 2007, respondent filed a complaint for illegal dismissal and other monetary
claims against petitioner Unilever. The LA dismissed her complaint for lack of merit and denied
her claim for retirement benefits. When the case reached the National Labor Relations
Commission (NLRC), Unilever was ordered to pay respondent P30,000 as nominal damages,
retirement benefits and separation pay. Upon a motion for reconsideration filed by Unilever, the
NLRC, in a resolution of March 31, 2009, modified its ruling by deleting the award of separation
pay and reducing the nominal damages from P30,000 to P20,000 but affirmed the award of
retirement benefits. Unilever elevated the case to the Court of Appeals (CA), The CA deleted the
award for retirement benefit but awarded separation pay as a measure of social justice.
ISSUES:
1. Whether respondent, a validly dismissed employee, is entitled to an award of separation pay

2. Whether respondent is entitled to nominal damages
RULING:
As a general rule, an employee who has been dismissed for any of the just causes
enumerated under Article 282 of the Labor Code is not entitled to a separation pay. In exceptional
cases, however, the Court has granted separation pay to a legally dismissed employee as an act of
“social justice” or on “equitable grounds.” In both instances, it is required that the dismissal (1) was
not for serious misconduct; and (2) did not reflect on the moral character of the employee.
In this case, Rivera was dismissed from work because she intentionally circumvented a
strict company policy, manipulated another entity to carry out her instructions without the
company’s knowledge and approval, and directed the diversion of funds, which she even admitted
doing under the guise of shortening the laborious process of securing funds for promotional
activities from the head office. These transgressions were serious offenses that warranted her
dismissal from employment and proved that her termination from work was for a just cause.
Hence, she is not entitled to separation pay.
More importantly, Rivera did not appeal the March 31, 2009 ruling of the NLRC
disallowing the award of separation pay to her. It was Unilever who elevated the case to the CA. It
is axiomatic that a party who does not appeal, or file a petition for certiorari, is not entitled to any
affirmative relief.
Due process prevents the grant of additional awards to parties who did not appeal. An
appellee who is not an appellant may assign errors in his brief where his purpose is to maintain the
judgment, but he cannot seek modification or reversal of the judgment or claim affirmative relief
unless he has also appealed. It was, therefore, erroneous for the CA to grant an affirmative relief
to Rivera who did not ask for it.
Procedural due process must be observed in terminating an employee which are: (1) first
written notice [of show-cause]; (2) hearing or conference; and (3) second written notice [of
termination]; otherwise an employer is liable for nominal damages to the employee.
In this case, Unilever was not direct and specific in its first notice to Rivera. The words it
used were couched in general terms and were in no way informative of the charges against her
that may result in her dismissal from employment. Evidently, there was a violation of her right to
statutory due process warranting the payment of indemnity in the form of nominal damages.
PHILIPPINE JOURNALISTS, INC. v. JOURNAL EMPLOYEES UNION, FOR ITS UNION MEMBER,
MICHAEL ALFANTE
G.R. No. 192601, June 03, 2013
J. Bersamin
The coverage of the term legal dependent as used in a stipulation in a collective

bargaining agreement (CBA) granting funeral or bereavement benefit to a regular employee for
the death of a legal dependent, if the CBA is silent about it, is to be construed as similar to the
meaning that contemporaneous social legislations have set. This is because the terms of such
social legislations are deemed incorporated in or adopted by the CBA.
The civil status of the employee as either married or single is not the controlling
consideration in order that a person may qualify as the employee’s legal dependent. What is
rather decidedly controlling is the fact that the spouse, child, or parent is actually dependent for
support upon the employee.
FACTS:
Respondent Michael Alfante was hired by petitioner Philippine Journalists, Inc., as

computer technician for the management information system. While respondent Judith Pulido
was hired by petitioner as proofreader. Respondents Pulido and Alfante filed a complaint for
illegal dismissal and other monetary claims.
Petitioner denied liabilities as far as respondents‘ monetary claims are concerned.

With respect to the alleged non-adjustment of longevity pay and burial aid, petitioner pointed
out that it complies with the provisions of the CBA and that both respondents have not claimed for
the burial aid. Petitioner maintained that under Section 4, Article XIII of the CBA, funeral and
bereavement aid should be granted upon the death of a legal dependent of a regular employee;
that consistent with the definition provided by the Social Security System (SSS), the term legal
dependent referred to the spouse and children of a married regular employee, and to the parents
and siblings, 18 years old and below, of a single regular employee; that the CBA considered the
term dependents to have the same meaning as beneficiaries, as provided in Section 5, Article XIII
of the CBA on the payment of death benefits; that its earlier granting of claims for funeral and
bereavement aid without regard to the foregoing definition of the legal dependents of married
or single regular employees did not ripen into a company policy whose unilateral withdrawal
would constitute a violation of Article 100 of the Labor Code, the law disallowing the non-
diminution of benefits; that it had approved only four claims from 1999 to 2003 based on its
mistaken interpretation of the term legal dependents, but later corrected the same in 2000; that
the grant of funeral and bereavement aid for the death of an employee‘s legal dependent,
regardless of the employee‘s civil status, did not occur over a long period of time, was not
consistent and deliberate, and was partly due to its mistake in appreciating a doubtful question of
law; and that its denial of subsequent claims did not amount to a violation of the law against the
non-diminution of benefits. In their comment, respondents countered that the CBA was a bilateral
contractual agreement that could not be unilaterally changed by any party during its lifetime; and
that the grant of burial benefits had already become a company practice favorable to the
employees, and could not anymore be reduced, diminished, discontinued or eliminated by
petitioner.
When the case reached the Court of Appeals (CA), it modified the decision of the National
Labor Relations Commission (NLRC) by granting funeral or bereavement aid to respondent but
imposing, among others, the condition that he should present conclusive proof that the deceased
was his parent.
ISSUE:
Whether denial of respondents’ claims for funeral and bereavement aid granted under Section 4,
Article XIII of their CBA constitutes diminution of benefits in violation of Article 100 of the Labor
Code
RULING:
Social legislations contemporaneous with the execution of the collective bargaining

agreement (CBA) have given a meaning to the term legal dependent. First of all, Section 8(e) of
the Social Security Law provides that a dependent shall be the following, namely: (a) the legal
spouse entitled by law to receive support from the member; (b) the legitimate, legitimated, or
legally adopted, and illegitimate child who is unmarried, not gainfully employed and has not
reached 21 of age, or, if over 21 years of age, is congenitally or while still a minor has been
permanently incapacitated and incapable of self-support, physically or mentally; and (c) the
parent who is receiving regular support from the member.
Secondly, Section 4(f) of Republic Act 7875, as amended by RA 9241, enumerates who are
the legal dependents, to wit: (a) the legitimate spouse who is not a member; (b) the unmarried
and unemployed legitimate, legitimated, illegitimate, acknowledged children as appearing in the
birth certificate; legally adopted or step-children below 21 years of age; (c) children who are 21
years old and older but suffering from congenital disability, either physical or mental, or any
disability acquired that renders them totally dependent on the member of our support; and (d) the
parents who are 60 years old or older whose monthly income is below an amount to be
determined by the Philippine Health Insurance Corp. in accordance with the guiding principles
set forth in Article 1 of RA 7875.
And thirdly, Section 2(f) of Presidential Decree 1146, as amended by RA 8291, describes a
dependent as someone who depends for support upon the member or pensioner; (b) the
legitimate, legitimated, legally adopted child, including the illegitimate child, who is unmarried,
not gainfully employed, not over the age of majority, or is over the age of majority but
incapacitated and incapable of self-support due to a mental or physical defect acquired prior to
age of majority; and (c) the parents dependent upon the member for support.
It is clear from these statutory definitions of dependent that the civil status of the
employee as either married or single is not the controlling consideration in order that a person
may qualify as the employee’s legal dependent. What is rather decidedly controlling is the fact
that the spouse, child, or parent is actually dependent for support upon the employee. The
continuity in the grant of the funeral and bereavement aid to regular employees for the death of
their legal dependents has undoubtedly ripened into a company policy. With that, the denial of
Alfante's qualified claim for such benefit pursuant to Section 4, Article XIII of the CBA violated the
law prohibiting the diminution of benefits.
TAN BROTHERS CORPORATION OF BASILAN CITY THROUGH ITS OWNER/MANAGER, MAURO
F. TAN v. EDNA R. ESCUDERO
G.R. No. 188711, July 3, 2013
J. Perez
To constitute abandonment there must be a clear and deliberate intent to discontinue

one's employment without any intention of returning. In this regard, two elements must concur:
(1) failure to report for work or absence without valid or justifiable reason, and (2) a clear
intention to sever the employer-employee relationship. Otherwise stated, absence must be
accompanied by overt acts unerringly pointing to the fact that the employee simply does not want
to work anymore. It has been ruled that the employer has the burden of proof to show a
deliberate and unjustified refusal of the employee to resume his employment without any
intention of returning.
FACTS:
Edna Escudero (respondent) was hired as bookkeeper by Tan Brothers Corporation of

Basilan City (petitioners). Respondent filed against petitioners a complaint for illegal dismissal,
underpayment of wages, cost of living allowance and 13th month pay. In support of the complaint,
respondent alleged in her position paper that, starting July 2003, her monthly salary of P2,500.00
was not paid on time by petitioners. After having the corporation’s office remodeled in the early
part of 2004, petitioners allegedly rented out the office space respondent used to occupy and
ceased giving her further assignments. Eventually constrained to stop reporting for work ecause of
her dire financial condition, respondent claimed that petitioners “shrewdly maneuvered” her
illegal dismissal from employment.
On the other hand, petitioners averred that respondent was paid a daily wage of P155.00,
and she abandoned her employment when she stopped reporting for work in July 2003. Aside
from taking with her most of the corporation’s payrolls, vouchers and other material documents
evidencing due payment of wages and labor standard benefits, petitioners maintained that,
without its knowledge and consent, respondent appropriated for herself an Olivetti typewriter
worth P15,000.00. With respondent’s refusal to heed its demands for the return of the typewriter,
petitioners asseverated that it was left with no choice but to lodge a complaint with the barangay
authorities.
The LA rendered a decision, finding petitioners guilty of constructively dismissing

respondent from employment. On appeal, the Labor Arbiter’s decision was affirmed in toto.
ISSUES:
1. Whether respondent abandoned her employment

2. Whether respondent was constructively dismissed
RULING:
As defined under established jurisprudence, abandonment is the deliberate and

unjustified refusal of an employee to resume his employment It constitutes neglect of duty and is
a just cause for termination of employment under paragraph (b) of Article 282 of the Labor Code.
To constitute abandonment, however, there must be a clear and deliberate intent to discontinue
one's employment without any intention of returning. In this regard, two elements must concur:
(1) failure to report for work or absence without valid or justifiable reason, and (2) a clear
intention to sever the employer-employee relationship, with the second element as the more
determinative factor and being manifested by some overt acts. Otherwise stated, absence must be
accompanied by overt acts unerringly pointing to the fact that the employee simply does not want
to work anymore. It has been ruled that the employer has the burden of proof to show a deliberate
and unjustified refusal of the employee to resume his employment without any intention of
returning.
On the theory that the same is proof enough of the desire to return to work, the
immediate filing of a complaint for illegal dismissal – more so when it includes a prayer for
reinstatement – has been held to be totally inconsistent with a charge of abandonment While it is
true that respondent’s complaint prayed for separation pay in lieu of reinstatement, petitioners
loses sight of the fact, however, that it had the burden of proving its own allegation that
respondent had abandoned her employment in July 2003. As allegation is not evidence, the rule
has always been to the effect that a party alleging a critical fact must support his allegation with
substantial evidence which has been construed to mean such relevant evidence as a reasonable
mind will accept as adequate to support a conclusion. It is, on the other hand, doctrinal that
abandonment is a matter of intention and cannot, for said reason, be lightly inferred, much less
legally presumed from certain equivocal acts. Viewed in the light of respondent’s persistence in
reporting for work despite the irregular payment of her salaries starting July 2003, the Court
found that her subsequent failure to do so as a consequence of petitioners’ non-payment of her
salaries in May 2004 is hardly evincive of an intention to abandon her employment. Indeed, mere
absence or failure to report for work, even after a notice to return work has been served, is not
enough to amount to an abandonment of employment.
Constructive dismissal occurs when there is cessation of work because continued

employment is rendered impossible, unreasonable, or unlikely as 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 leaving the latter with no other option but to quit (The
University of Immaculate Conception v. NLRC, G.R. No. 181146, January 26, 2011). The test is
whether a reasonable person in the employee's position would have felt compelled to give up his
position under the circumstances (Philippine Veterans Bank v. NLRC, G.R. No. 188882, March 30,
2010). Much though petitioners may now be inclined to disparage the same as mere alibis, the
fact that respondent was deprived of office space, was not given further work assignment and was
not paid her salaries until she was left with no choice but stop reporting for work all combine to
make out a clear case of constructive dismissal. Having been constructively dismissed, Escudero
was correctly found entitled to backwages and attorney's fees by the Labor Arbiter, the NLRC and
the CA.
JENNY F. PECKSON v. ROBINSONS SUPERMARKET CORPORATION, JODY GADIA, ROENA SARTE
AND RUBY ALEX
G.R. No. 198534. July 3, 2013
J. Reyes
If the transfer of an employee is not unreasonable, or inconvenient, or prejudicial to him,

and it does not involve a demotion in rank or a diminution of his salaries, benefits and other
privileges, the employee may not complain that it amounts to a constructive dismissal.
FACTS:
The petitioner first joined the Robinsons Supermarket Corporation (RSC) as a Sales Clerk
on November 3, 1987. On October 26, 2006, she was holding the position of Category Buyer
when respondent Roena Sarte (Sarte), RSC’s Assistant Vice-President for Merchandising,
reassigned her to the position of Provincial Coordinator, effective November 1, 2006. Claiming
that her new assignment was a demotion because it was non-supervisory and clerical in
nature, the petitioner refused to turn over her responsibilities to the new Category Buyer, or to
accept her new responsibilities as Provincial Coordinator. The petitioner had already filed a
complaint for constructive dismissal against RSC, Sarte, Gadia and Alex (respondents).
The LA dismissed the petitioner’s complaint and ruled that job reassignment or
classification is a strict prerogative of the employer, and that the petitioner cannot refuse her
transfer from Category Buyer to Provincial Coordinator since both positions commanded the same
salary structure, high degree of responsibility and impeccable honesty and integrity. The NLRC
sustained the findings of the LA. The CA affirmed the decision of the NLRC.
ISSUE:
Whether petitioner’s reassignment was a demotion amounting to constructive dismissal
RULING:
This Court has consistently refused to interfere with the exercise by management of its
prerogative to regulate the employees’ work assignments, the working methods and the place and
manner of work.
As we all know, there are various laws imposing all kinds of burdens and obligations upon
the employer in relation to his employees, and yet as a rule this Court has always upheld the
employer’s prerogative to regulate all aspects of employment relating to the employees’ work
assignment, the working methods and the place and manner of work. Indeed, labor laws
discourage interference with an employer’s judgment in the conduct of his business.
In Philippine Japan Active Carbon Corporation v. NLRC, it was held that the exercise of
management’s prerogative concerning the employees’ work assignments is based on its
assessment of the qualifications, aptitudes and competence of its employees, and by moving them
around in the various areas of its business operations it can ascertain where they will function with
maximum benefit to the company.
As a privilege inherent in the employer’s right to control and manage its enterprise
effectively, its freedom to conduct its business operations to achieve its purpose cannot be
denied. We agree with the appellate court that the respondents are justified in moving the
petitioner to another equivalent position, which presumably would be less affected by her
habitual tardiness or inconsistent attendance than if she continued as a Category Buyer, a
“frontline position” in the day-to-day business operations of a supermarket such as Robinsons.
If the transfer of an employee is not unreasonable, or inconvenient, or prejudicial to him,

and it does not involve a demotion in rank or a diminution of his salaries, benefits and other
privileges, the employee may not complain that it amounts to a constructive dismissal.
In the case at bar, we agree with the appellate court that there is substantial showing that
the transfer of the petitioner from Category Buyer to Provincial Coordinator was not
unreasonable, inconvenient, or prejudicial to her. The petitioner failed to dispute that the job
classifications of Category Buyer and Provincial Coordinator are similar, or that they command a
similar salary structure and responsibilities. We agree with the NLRC that the Provincial
Coordinator’s position does not involve mere clerical functions but requires the exercise of
discretion from time to time, as well as independent judgment, since the Provincial Coordinator
gives appropriate recommendations to management and ensures the faithful implementation of
policies and programs of the company. It even has influence over a Category Buyer because of its
recommendatory function that enables the Category Buyer to make right decisions on assortment,
price and quantity of the items to be sold by the store.
PNOC-ENERGY DEVELOPMENT CORP., et al. v. JOSELITO L. ESTRELLA

G.R. No. 197789. July 8, 2013
J. Perlas-Bernabe
Fundamental is the rule that an employee can be dismissed from employment only for a
valid cause. Serious misconduct is one of the just causes for termination under Article 282 of the
Labor Code. Not every form of misconduct can be considered as a just cause for termination. For
misconduct to be serious and therefore a valid ground for dismissal, it must be (1) of grave and
aggravated character and not merely trivial or unimportant and (2) connected with the work of
the employee.
FACTS:
At the time of his dismissal, Estrella was the Senior Logistics Assistant at the Materials
Control Department of petitioner PNOC-Energy Development Corporation (PNOC-EDC), then a
government-owned and controlled corporation engaged in the exploration and utilization of
renewable energy resources. As Senior Logistics Assistant, Estrella’s duties included initiating and
handling the terms and conditions for the bidding of heavy and support equipment rentals for
PNOC-EDC’s project locations, and evaluating and recommending bid contracts for management
approval.
On July 5, 2005, Estrella was dismissed based on willful dishonesty, extortion, grave
misconduct and misbehavior, and abuse of authority, on account of his alteration, tampering or
manipulation of the Bid Summary as well as his attempt to extort from Jacabe, a contractor. This
prompted him to file a complaint for illegal dismissal, with prayer for reinstatement and payment
of full backwages and exemplary damages, against petitioners.
The Labor Arbiter found Estrella to have been illegally dismissed, observing that he did not
act with bad faith and malice in the performance of his duties. On appeal, the NLRC affirmed in
toto the LA’s decision. The CA affirmed the decision of the NLRC in sustaining the LA’s decision.
Nonetheless, the CA conceded that Estrella did indeed commit infractions but ruled that dismissal
was an inappropriate penalty, considering his 21 long years of unblemished service with PNOC-
EDC. Hence, this petition.
ISSUE:
Whether the CA erred in affirming the labor tribunals’ pronouncement that Estrella had been
illegally dismissed
RULING:
Fundamental is the rule that an employee can be dismissed from employment only for a
valid cause. Serious misconduct is one of the just causes for termination under Article 282 of the
Labor Code. Not every form of misconduct can be considered as a just cause for termination. The
law explicitly qualifies that the misconduct must be both serious and made in connection with the
employee’s work. As clarified in Cosmos Bottling Corp. v. Fermin:
Misconduct involves “the transgression of some established and definite rule of

action, forbidden act, a dereliction of duty, willful in character, and implies
wrongful intent and not mere error in judgment.” For misconduct to be serious and
therefore a valid ground for dismissal, it must be (1) of grave and aggravated
character and not merely trivial or unimportant and (2) connected with the work of
the employee.
Applying these principles to the case at bar, the Court finds that the CA committed no
reversible error when it found no grave abuse of discretion on the part of both the LA and NLRC in
ruling that Estrella was illegally dismissed from his employment.
Records disclose that PNOC-EDC dismissed Estrella on the ground of serious misconduct
which was mainly hinged on Estrella’s alteration and/or tampering of lessors’ bids and extortion.
Petitioners impute that Estrella used his position and authority to exert undue pressure on
Jacobe to give in to his personal demands, and in the process, tainted the integrity of PNOC-EDC’s
bidding process. This conclusion was largely based on the Committee’s finding that Estrella
altered JR Car Services’ bid from three (3) units to one (1) unit for the AUV Category, coupled with
the fact that Estrella sent several text messages to Jacobe asking for personal favors, such as a free
cable unit. Ruling on the matter, the LA, the NLRC, and the CA all observed that such infraction
was only minor in nature which did not warrant his dismissal.
GILDA C. FERNANDEZ, et al. v. NEWFIELD STAFF SOLUTIONS, INC., ET AL.
G.R. No. 201979, July 10, 2013
J. Villarama, Jr.
Employees who take steps to protest their dismissal cannot logically be said to have
abandoned their work. A charge of abandonment is totally inconsistent with the immediate filing
of a complaint for illegal dismissal. The filing thereof is proof enough of one’s desire to return to
work, thus negating any suggestion of abandonment.
FACTS:
Newfield Staff Solutions, Inc. (respondent) hired Gilda Fernandez (petitioner) as

Recruitment Manager. Respondent also hired petitioner Beltran as probationary Recruitment
Specialist. Petitioners guaranteed to perform their tasks for six months and breach of this
guarantee would make them liable for liquidated damages. It was further provided in their
employment agreements that if they want to terminate their employment agreements after the
“guaranteed period of engagement,” they should send a written notice 45 days before the
effective date of termination. They should also surrender any equipment issued to them and
secure a clearance. If they fail to comply, respondent can refuse to issue a clearance and to
release any amount due them.
On October 17, 2008, Lopez, Jr., respondent’s General Manager, asked petitioners to
come to his office and terminated their employment on the ground that they failed to perform
satisfactorily. Lopez, Jr. ordered them to immediately turn over the records in their possession to
their successors. A week later, petitioners received Lopez, Jr.’s return-to-work letters dated
October 22, 2008. The letters stated that they did not report since October 20, 2008 without
resigning, in violation of their employment agreements. They were directed to report and explain
their failure to file resignation letters. Eventually, they filed a complaint for illegal dismissal. In
their verified joint position paper, respondents stated that petitioners signed fixed-term
employment agreements where they agreed to perform their tasks for six months. They also
agreed to give a written notice 45 days in advance if they want to terminate their employment
agreements. But they never complied with their undertakings. Thus, respondent claims that
petitioners abandoned their jobs.
The Labor Arbiter ruled that petitioners’ dismissal was illegal. The NLRC affirmed the Labor
Arbiter’s decision. The CA reversed the NLRC and dismissed petitioners’ complaint for illegal
dismissal. Hence, this petition.
ISSUES:
1. Whether petitioners abandoned their employment

2. Whether petitioners were constructively dismissed
RULING:
Abandonment is a form of neglect of duty, one of the just causes for an employer to
terminate an employee (Galang v. Malasugui, G.R. No. 174173, March 7, 2012) . For abandonment
to exist, two factors must be present: (1) the failure to report for work or absence without valid or
justifiable reason; and (2) a clear intention to sever the employer-employee relationship, with the
second element as the more determinative factor being manifested by some overt acts (Josan,
JPS, Santiago Cargo Movers v. Aduna, G.R. No. 190794, February 22, 2012). Since both factors are
not present, petitioners are not guilty of abandonment. One, petitioners were absent because
Lopez, Jr. had fired them. Thus, it cannot fault them for refusing to comply with the return to-work
letters and responding instead with their demand letters. Neither can they be accused of being
AWOL or of breaching their employment agreements.
Indeed, as stated above, respondents cannot claim that no evidence shows that petitioners
were forced not to report for work. Two, petitioners’ protest of their dismissal by sending demand
letters and filing a complaint for illegal dismissal with prayer for reinstatement shows that
petitioners have no intention to sever the employment relationship. Employees who take steps to
protest their dismissal cannot logically be said to have abandoned their work. A charge of
abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal.
The filing thereof is proof enough of one’s desire to return to work, thus negating any suggestion
of abandonment.
Petitioners were illegally dismissed since there is no just cause for their dismissal. Under
Article 279 of the Labor Code, as amended, an employee unjustly dismissed from work is entitled
to reinstatement and full back wages from the time his compensation was withheld from him up to
the time of his actual reinstatement. However, the NLRC’s award of back wages for six months is
binding on petitioners who no longer contested and are therefore presumed to have accepted the
adjudication in the NLRC decision and resolution. This is in accord with the doctrine that a party
who has not appealed cannot obtain from the appellate court any affirmative relief other than the
ones granted in the appealed decision (Filflex Industrial & Manufacturing Corp. v. NLRC, G.R. No.
115395, February 12, 1998).
Similarly, the award of separation pay which was affirmed by the NLRC is binding on
petitioners who even admitted that reinstatement is no longer possible.
FIRST PHILIPPINE INDUSTRIAL CORPORATION v. RAQUEL M. CALIMBAS AND LUISA P.
MAHILOM
G.R. No. 179256, July 10, 2013
J. Peralta
The test to determine the existence of independent contractorship is whether one

claiming to be an independent contractor has contracted to do the work according to his own
methods and without being subjected to the control of the employer, except only to the results of
the work.. Petitioner cannot rightly claim that DGMS was an independent job contractor
inasmuch as respondents were subjected to the control and supervision of petitioner while they
were performing their job.
FACTS:
Private respondent First Philippine Industrial Corporation (FPIC) is a domestic

corporation primarily engaged in the transportation of petroleum products by pipeline.
Upon the other hand, petitioners Raquel Calimbas and Luisa Mahilom were engaged by De
Guzman Manpower Services ("DGMS") to perform secretarial and clerical jobs for FPIC.
DGMS is engaged in the business of supplying manpower to render general clerical, building and
grounds maintenance, and janitorial and utility services.
On March 29, 1993, petitioner First Philippine Industrial Corp. (FPIC) entered into a
Contract of Special Services with De Guzman Manpower Services (DGMS), where the latter
agreed to undertake some aspects of building and grounds maintenance at FPIC’s premises,
offices and facilities, as well as to provide clerical and other utility services as may be required
from time to time by FPIC. Pursuant to that contract, respondents Raquel Calimbas and Luisa
Mahilom were engaged by the DGMS to render services to FPIC. On June 21, 2001, petitioner
FPIC informed the respondents that their services would no longer be needed on July 31, 2001 as
a result of the “Pace-Setting” Study. Accordingly, DGMS formally notified both respondents that
their respective work assignments in FPIC were no longer available to them effective July 31,
2001. On Aug. 3, 2001, respondents Calimbas and Mahilom signed quitclaims, releasing and
discharging DGMS from whatever claims they might have against them by virtue of their past
employment upon receipt of the sums of P17,343.10 and P23,459.14, respectively. Despite having
executed the said quitclaims, respondents filed a complaint against FPIC for illegal dismissal, and
for money claims, damages and attorney’s fees alleging that they were regular employees of
petitioner FPIC after serving almost five years, and that they were dismissed without cause.
The Labor Arbiter rendered a Decision holding that respondents were regular employees
of petitioner, and that they were illegally dismissed when their employment was terminated
without just or authorized cause. The NLRC dismissed petitioner’s appeal and upheld the Labor
Arbiter’s decision. The CA reversed and set aside the NLRC’s resolutions.
ISSUES:
1. Whether respondents are employees of petitioner

2. Whether respondents were lawfully dismissed from their employment
RULING:
We sustain the findings of the CA that respondents are petitioner’s employees and that
DGMS is engaged in labor-only contracting.
First, in Vinoya v. National Labor Relations Commission, this Court categorically stated that
the actual paid-in capital of P75,000.00 could not be considered as substantial capital. Thus,
DGMS’s actual paid-in capital in the amount of P75,000.00 does not constitute substantial capital
essential to carry out its business as an independent job contractor. In spite of its bare assertion
that the Vinoya case does not apply in the present case, DGMS has not shown any serious and
cogent reason to disregard the ruling in the aforementioned case. Records likewise reveal that
DGMS has no substantial equipment in the form of tools, equipment and machinery. As a matter
of fact, respondents were using office equipment and materials owned by petitioner while they
were rendering their services at its offices.
Second, petitioner exercised the power of control and supervision over the respondents.
As aptly observed by the CA, “the daily time records of respondents even had to be countersigned
by the officials of petitioner to check whether they had worked during the hours declared therein.
Furthermore, the fact that DGMS did not assign representatives to supervise over respondents’
work in petitioner’s company tends to disprove the independence of DGMS. It is axiomatic that
the test to determine the existence of independent contractorship is whether one claiming to be
an independent contractor has contracted to do the work according to his own methods and
without being subjected to the control of the employer, except only to the results of the work.
Obviously, on this score alone, petitioner cannot rightly claim that DGMS was an independent job
contractor inasmuch as respondents were subjected to the control and supervision of petitioner
while they were performing their jobs.”
Third, also worth stressing are the points highlighted by respondents: (1) Respondents
worked only at petitioner’s offices for an uninterrupted period of five years, occupying the same
position at the same department under the supervision of company officials; (2) Three weeks
ahead of the termination letters issued by DGMS, petitioner’s HR Manager Lorna Young notified
respondents, in a closed-door meeting, that their services to the company would be terminated
by July 31, 2001; (3) In the termination letters prepared by DGMS, it was even stressed that the
said termination letters will formalize the verbal notice given by petitioner’s HR Administration
personnel; (4) The direct superiors of respondents were managerial employees of petitioner, and
had direct control over all the work-related activities of the latter. This control included the
supervision of respondents’ performance of their work and their compliance with petitioner’s
company policies and procedures. DGMS, on the other hand, never maintained any
representative at the petitioner’s office to oversee the work of respondents.
All told, an employer-employee relationship exists between petitioner and respondents.

And having served for almost five years at petitioner’s company, respondents had already attained
the status of regular employees.
As to the second issue, whether respondents were lawfully dismissed from their
employment, this Court rules in the negative.
In the present case, petitioners failed to show any valid or just cause under the Labor Code
on which it may justify the termination of services of respondents. Also, apart from notifying that
their services had already been terminated, petitioner failed to comply with the rudimentary
requirement of notifying respondents regarding the acts or omissions which led to the termination
of their services as well as giving them an ample opportunity to contest the legality of their
dismissal. Having failed to establish compliance with the requirements of termination of
employment under the Labor Code, respondents’ dismissal is tainted with illegality.
Resultantly, the CA correctly held that respondents are entitled to reinstatement without
loss of seniority rights, and other privileges and to their full backwages, inclusive of allowances
and other benefits or their monetary equivalent, computed from the time their compensation was
withheld up to the time of their actual reinstatement. Considering that reinstatement is no longer
feasible, respondents are entitled instead to separation pay equivalent to one month salary for
every year of service.
UNIVERSAL ROBINA CORPORATION AND LANCE Y. GOKONGWEI v. WILFREDO Z. CASTILLO
G.R. No. 189686, July 10, 2013
J. Perez
An employee who has been dismissed for a just cause under Article 282 of the Labor
Code is not entitled to separation pay. Labor adjudicatory officials and the CA must demur the
award of separation pay based on social justice when an employee’s dismissal is based on serious
misconduct or willful disobedience; gross and habitual neglect of duty; fraud or willful breach of
trust; or commission of a crime against the person of the employer or his immediate family—
grounds under Art. 282 of the Labor Code that sanction dismissals of employees.
FACTS:
Respondent Wilfredo Z. Castillo (Castillo) was hired by petitioner Universal Robina

Corporation (URC) as a truck salesman. He rose from the ranks and became a Regional Sales
Manager, until his dismissal on 12 January 2006. Respondent was dismissed as regional sales
manager of URC for just cause, specifically, for loss of trust and confidence under Article 282. He
was found to have accepted gift checks from a supplier.
The labor arbiter rendered a decision declaring respondent to have been illegally
dismissed and ordered the payment of backwages and separation pay. On appeal, the National
Labor Relations Commission (NLRC) found the appeal meritorious and reversed the decision of
the labor arbiter. This prompted respondent to file a petition for certiorari before the Court of
Appeals, which upheld his dismissal but awarded him separation pay “as a form of equitable
relief.” Hence, this petition.
ISSUE:
Whether a validly dismissed employee is entitled to separation pay
RULING:
The award of separation pay is authorized in the situations dealt with in Article 283 and
284 of the Labor Code, but not in terminations of employment based on instances enumerated in
Article 282.
Central Philippines Bandag Retreaders, Inc. cautioned labor tribunals in indiscriminately

awarding separation pay as a measure of social justice, in this wise:
“x x x [L]abor adjudicatory officials and the CA must demur the award of separation
pay based on social justice when an employee’s dismissal is based on serious
misconduct or willful disobedience; gross and habitual neglect of duty; fraud or
willful breach of trust; or commission of a crime against the person of the employer
or his immediate family— grounds under Art. 282 of the Labor Code that sanction
dismissals of employees. They must be most judicious and circumspect in awarding
separation pay or financial assistance as the constitutional policy to provide full
protection to labor is not meant to be an instrument to oppress the employers. The
commitment of the Court to the cause of labor should not embarrass us from
sustaining the employers when they are right, as here. In fine, we should be more
cautious in awarding financial assistance to the undeserving and those who are
unworthy of the liberality of the law.”
Respondent has committed acts constituting willful breach of trust and confidence
reposed on him by URC based on the facts established by the Court of Appeals.
In Bank of the Philippine Islands v. NLRC and Arambulo, we ruled that an employee who
has been dismissed for a just cause under Article 282 of the l.abor Code is not entitled to
separation pay. The complainant therein was likewise dismissed on the ground of loss of
trust and confidence. Applying that rule to the instant case, we here hold that respondent
is not entitled to separation pay.
JESSIE G. MARTINEZ v. CENTRAL PANGASINAN ELECTRIC COOPERATIVE, INC. (CENPELO)
G.R. No. 192306, July 15, 2013
J. Perlas-Bernabe
To validly dismiss an employee on the ground of loss of trust and confidence under Article
296(c) of the Labor Code, the following guidelines must be observed: (1) the employee concerned
must be holding a position of trust and confidence; and (2) there must be an act that would justify
the loss of trust and confidence. Petitioner's failure to properly account for his shortage of a
significant amount is enough reason for respondent to lose trust and confidence in him.
FACTS:
Respondent CENPELCO employed petitioner Jessie Martinez on a contractual basis and,

was subsequently regularized as a billing clerk at the former's main Designated Acting Member.
On January 7, 2002, respondent gave petitioner the position of teller. On April 26, 2002,
respondent’s Internal Audit Department (IAD) conducted a cash count audit, the IAD Officer-in-
Charge, analyzed the audit results and concluded that there was an error in the count of cashier
for Area VI, regarding the breakdown of collection turned over by petitioner for April 23, 2002. In
view of such audit, petitioner was required to submit explanation letter. He further admitted the
existence of such shortage and tried to offset the same with his alleged overage on April 23, 2002.
On June 30 2002, the Company’s Grievance Committee submitted its report recommending
petitioner’s termination from employment on the ground of loss of trust and confidence as well as
the filing of the appropriate case in court. On November 26, 2002, petitioner was dismissed from
service, prompting him to file a complaint for illegal dismissal.
The Labor Arbiter (LA) ruled Martinez’s dismissal illegal. The NLRC reversed the LA’s ruling,
declaring Martinez’s dismissal valid. The CA affirmed the NLRC’s ruling. The CA held that the
anomalies charged against Martinez are duly substantiated as such finding is supported by an
audit report.
ISSUE:
Whether petitioner’s dismissal on the ground of loss of trust and confidence is valid
RULING:
To validly dismiss an employee on the ground of loss of trust and confidence under Article
296(c) (formerly Article 282[c]) of the Labor Code, the following guidelines must be observed: (1)
the employee concerned must be holding a position of trust and confidence; and (2) there must
be an act that would justify the loss of trust and confidence (Philippine Plaza Holdings, Inc. v.
Epicospe, G.R. No. 192826, February 27, 2013).
Anent the first requisite, it is noteworthy to mention that there are two classes of positions
of trust, namely: (1) managerial employees whose primary duty consists of the management of the
establishment in which they are employed or of a department or a subdivision thereof, and to
other officers or members of the managerial staff; and (2) fiduciary rank-and-file employees such
as cashiers, auditors, property custodians, or those who, in the normal exercise of their functions,
regularly handle significant amounts of money or property. These employees, though rank-and-
file, are routinely charged with the care and custody of the employer’s money or property, and are
thus classified as occupying positions of trust and confidence. Being an employee tasked to collect
payments and remit the same to respondent, petitioner belongs to the latter class and thus,
occupies a position of trust and confidence.
Anent the second requisite, the audit report conducted on petitioner's cash count
revealed that he had a shortage in the amount of P44,846.77 in his remittance for April 25, 2002.
When asked to explain such shortage, petitioner not only admitted the same but even tried to
exculpate himself from liability by attempting to offset said shortage with his alleged overage on
April 23, 2002 in the amount of P45,682.58. This practice should never be countenanced because
it would allow the employees to patch up inaccuracies or even their own wrongdoings and thus,
the true revenues or losses of the company will never be correctly identified. Verily, this irregular
practice would be detrimental to the interests of the employer whose bread and butter depend
solely on realized profits. Perforce, petitioner's failure to properly account for his shortage of such
a significant amount is enough reason for respondent to lose trust and confidence in him.
SAMAR-MED DISTRIBUTION v. NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 162385, July 15, 2013
J. Bersamin
The non-inclusion in the complaint of the issue of dismissal did not necessarily mean that
the validity of the dismissal could not be an issue. The rules of the NLRC require the submission of
verified position papers by the parties should they fail to agree upon an amicable settlement, and
bar the inclusion of any cause of action not mentioned in the complaint or position paper from
the time of their submission by the parties. In view of this, respondent’s cause of action should be
ascertained not from a reading of his complaint alone but also from a consideration and
evaluation of both his complaint and position paper.
FACTS:
Respondent Josafat Gutang was hired by petitioner with the task of supervising the
company’s sales personnel and sales agents, and of representing in transactions with the
government in Region VIII. Respondent filed a complaint for money claims against petitioner
Samar-Med Distribution, a sole proprietorship registered in the name of Danilo V. Roleda. He
claimed that Samar-Med had difficulty paying his compensation during his employment, resulting
in his not being paid salaries since November 1995, allowances since June 1994 and commissions
from sales, and 13th month pay in 1996. He also alleged that Samar-Med made illegal deductions
in June 1994 and February 1995. Consequently, he had been compelled to look for other sources
of income beginning on March 26, 1996 in order to survive.
Petitioner denied liability for respondent’s monetary claims, contending that respondent
was not his employee but an employee of the City Council of Manila; that respondent had
approached and asked him if he could assist in the operation of the business in order to have extra
income; that respondent was thus permitted to sell petitioner’s products in his own hometown;
that respondent stopped selling and no longer returned to Manila after he was tasked to conduct
an investigation of the shortage in sales collections; that there was no dismissal of respondent, to
speak of, but abandonment on his part; and that the complaint was a harassment suit to retaliate
for the criminal case they had meanwhile filed against respondent for misappropriating
petitioner’s funds.
The LA ruled in favor of respondent for illegal dismissal. The NLRC initially denied Roleda’s
appeal for his failure to post the required appeal bond. The NLRC dismissed the complaint of
respondent. Respondent Gutang then assailed the outcome in the NLRC through a petition for
certiorari that he filed in the CA. The CA reversed the finding of NLRC. Petitioner asserts that it
was a mistake for CA to reverse the finding of NLRC that respondent Gutang was dismissed for a
cause. It raises, as an issue, among others, that respondent’s complaint did not include “illegal
dismissal” as his cause of action, thus, no cause of action for illegal dismissal.
ISSUE:
Whether respondent’s dismissal was a proper issue even if he had not raised it in his complaint
RULING:
The complaint of respondent was a mere checklist of possible causes of action that he
might have against petitioner. Such manner of preparing the complaint was obviously designed to
facilitate the filing of complaints by employees and laborers who are thereby enabled to
expediently set forth their grievances in a general manner.
But the non-inclusion in the complaint of the issue of dismissal did not necessarily mean
that the validity of the dismissal could not be an issue. The rules of the NLRC require the
submission of verified position papers by the parties should they fail to agree upon an amicable
settlement, and bar the inclusion of any cause of action not mentioned in the complaint or
position paper from the time of their submission by the parties. In view of this, respondent’s cause
of action should be ascertained not from a reading of his complaint alone but also from a
consideration and evaluation of both his complaint and position paper.
With respondent’s position paper having alleged not only the bases for his money claims,
but also that he had been “compelled to look for other sources of income in order to survive” and
that his employment had not been formally terminated, thereby entitling him to “full backwages
aside from his other claims for unpaid monies,” the consideration and ruling on the propriety of
respondent’s dismissal by the Labor Arbiter and the NLRC were proper.
ZUELLIG FREIGHT AND CARGO SYSTEMS v. NLRC AND SAN MIGUEL
G.R. No. 157900, July 22, 2013
J. Bersamin
A change in the corporate name does not make a new corporation, whether effected by a
special act or under a general law. It has no effect on the identity of the corporation, or on its
property, rights, or liabilities. The corporation, upon such change in its name, is in no sense a new
corporation, nor the successor of the original corporation. It is the same corporation with a
different name, and its character is in no respect changed.
FACTS:
Private respondent Ronaldo V. San Miguel was employed as a checker/customs

representative of Zeta Brokerage Corp. (Zeta) since Dec. 15, 1985. Respondent brought a
complaint for unfair labor practice, illegal dismissal, non-payment of salaries and moral damages
against petitioner, formerly known as Zeta. He alleged that he and other employees of Zeta were
informed that Zeta would cease operations and that all affected employees, including him, would
be separated from the service effective March 31, 1994. He reluctantly accepted separation pay
subject to the outstanding offer to be hired for his former position by the petitioner. On April 15,
1994, he was summarily terminated, without any valid cause and due process. Respondent
contended that the amendments of the articles of incorporation of Zeta were for the purpose of
changing the corporate name, broadening the primary functions, and increasing the capital stock;
and that such amendment could not mean that Zeta had been thereby dissolved.
Petitioner Zuellig Freight and Cargo Systems contended that San Miguel’s termination
from Zeta had been for a cause authorized by the Labor Code. Zeta, its predecessor-in-interest,
had complied with the requirements for termination due to the cessation of business operations.
Labor Arbiter rendered a decision holding that San Miguel had been illegally dismissed.
Petitioner appealed, but the NLRC affirmed the decision of the LA. Petitioner then filed a petition
for certiorari in the CA. The CA affirmed the decision of the NLRC.
ISSUE:
Whether the cessation of business of Zeta a bona fide closure to be regarded as a valid ground for
the termination of employment of respondent within the ambit of Article 283 of the Labor Code
RULING:
Article 283 provides that the employer may also terminate the employment of any
employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of this Title, by serving a written notice
on the workers and the Department of Labor and Employment at least one (1) month before the
intended date thereof. Verily, the amendments of the articles of incorporation of Zeta to change
the corporate name to Zuellig Freight and Cargo Systems, Inc. did not produce the dissolution of
the former as a corporation. For sure, the Corporation Code defined and delineated the different
modes of dissolving a corporation, and amendment of the articles of incorporation was not one of
such modes. The effect of the change of name was not a change of the corporate being, for, as
well stated in Philippine First Insurance Co., Inc. v. Hartigan: “The changing of the name of a
corporation is no more the creation of a corporation than the changing of the name of a natural
person is begetting of a natural person. The act, in both cases, would seem to be what the
language which we use to designate it imports – a change of name, and not a change of being.”
A change in the corporate name does not make a new corporation, whether effected by a
special act or under a general law. It has no effect on the identity of the corporation, or on its
property, rights, or liabilities. The corporation, upon such change in its name, is in no sense a new
corporation, nor the successor of the original corporation. It is the same corporation with a
different name, and its character is in no respect changed.
In short, Zeta and petitioner remained one and the same corporation. The change of name
did not give petitioner the license to terminate employees of Zeta like respondent without just or
authorized cause. The situation was not similar to that of an enterprise buying the business of
another company where the purchasing company had no obligation to rehire terminated
employees of the latter. Petitioner, despite its new name, was the mere continuation of Zeta’s
corporate being, and still held the obligation to honor all of Zeta’s obligations, one of which was
to respect respondent’s security of tenure. The dismissal of respondent from employment on the
pretext that petitioner, being a different corporation, had no obligation to accept him as its
employee, was illegal and ineffectual.
ABBOTT LABORATORIES, PHILS., et al. v. PEARLIE ANN F. ALCARAZ
G.R. No. 192571, July 23, 2013
J. Estella M. Perlas-Bernabe
A company policy partakes of the nature of an implied contract between the employer
and employee. Hence, given such nature, company personnel policies create an obligation on the
part of both the employee and the employer to abide by the same.
An employer who terminates an employee for a valid cause but does so through invalid
procedure is liable to pay the latter nominal damages. Abbott was held liable for P30,000 as
indemnity because it failed to comply with its own procedural process in terminating
probationary employees.
FACTS:
Respondent Pearlie Ann F. Alcaraz signed an employment contract with petitioner Abbott
Laboratories, Philippines, which stated, inter alia, that she was to be placed on probation for six
months, from Feb. 15, 2005 to Aug. 14, 2005. On May 23, 2005, the respondent received a letter
from petitioners stating that her services had been terminated effective May 19, 2005, because
she failed to meet the regularization standards for the position of regulatory affairs manager.
Respondent felt that she was unjustly terminated from her employment and thus, filed a
complaint for illegal dismissal. She contended that she should have already been considered as a
regular employee because the petitioners had failed to inform her of the reasonable standards for
her regularization upon her engagement as required under Article 295 of the Labor Code.
Abbott maintained that respondent was validly terminated from her probationary
employment given her failure to satisfy the prescribed standards for her regularization which were
made known to her at the time of her engagement.
The Labor Arbiter ruled that the dismissal had been valid. On appeal, the NLRC reversed
the findings of the LA and ruled that there was no evidence showing that respondent had been
apprised of her probationary status and the requirements which she should have complied with in
order to be a regular employee. The Court of Appeals (CA) found no grave abuse of discretion and
accordingly denied the Rule 65 petition that the petitioner Abbott brought.
ISSUE:
Whether the respondent was validly terminated from her employment

RULING:
The Supreme Court ruled that Alcaraz’s status as a probationary employee and her
consequent dismissal must stand. Consequently, in holding that Alcaraz was illegally dismissed
due to her status as a regular and not a probationary employee, the court finds that the National
Labor Relations Commission (NLRC) committed a grave abuse of discretion. The NLRC based its
decision on the premise that Alcaraz’s receipt of her job description and Abbott’s Code of
Conduct and Performance Modules was not equivalent to being actually informed of the
performance standards upon which she should have been evaluated on. It, however, overlooked
the legal implication of the other attendant circumstances as detailed herein, which should have
warranted a contrary finding that Alcaraz was indeed a probationary and not a regular employee
—more particularly the fact that she was well aware of her duties and responsibilities and that her
failure to adequately perform would lead to her non-regularization and eventually, her
termination.
A different procedure is applied when terminating a probationary employee; the usual

two-notice rule does not govern. Section 2, Rule I, Book VI of the Implementing Rules of the Labor
Code states that “[i]f the termination is brought about by the x x x failure of an employee to meet
the standards of the employer in case of probationary employment, it shall be sufficient that a
written notice is served the employee, within a reasonable time from the effective date of
termination.”
In this case, respondent’s dismissal was effected through a letter dated May 19, 2005
which she received on May 23, 2005 and again on May 27, 2005. Stated therein were the reasons
for her termination, i.e., that after proper evaluation, Abbott determined that she failed to meet
the reasonable standards for her regularization considering her lack of time and people
management and decision-making skills, which are necessary in the performance of her functions
as Regulatory Affairs Manager. Undeniably, this written notice sufficiently meets the criteria set
forth above, thereby legitimizing the cause and manner of respondent’s dismissal as a
probationary employee under the parameters set by the Labor Code.
Nonetheless, despite the existence of a sufficient ground to terminate respondent’s

employment and Abbott’s compliance with the Labor Code termination procedure, it is readily
apparent that Abbott breached its contractual obligation to respondent when it failed to abide by
its own procedure in evaluating the performance of a probationary employee. Veritably, a
company policy partakes of the nature of an implied contract between the employer and
employee.
Hence, given such nature, company personnel policies create an obligation on the part of
both the employee and the employer to abide by the same. Records show that Abbott’s PPSE
procedure mandates, inter alia, that the job performance of a probationary employee should be
formally reviewed and discussed with the employee at least twice: first on the third month and
second on the fifth month from the date of employment. Abbott is also required to come up with
a Performance Improvement Plan during the third month review to bridge the gap between the
employee’s performance and the standards set, if any. In addition, a signed copy of the PPSE form
should be submitted to Abbott’s HRD as the same would serve as basis for recommending the
confirmation or termination of the probationary employment. In this case, it is apparent that
Abbott failed to follow the above-stated procedure in evaluating respondent.
Case law has settled that an employer who terminates an employee for a valid cause but
does so through invalid procedure is liable to pay the latter nominal damages. Therefore, the
Court deems it appropriate to fix the amount of nominal damages at the amount of P30,000.00,
consistent with its rulings in both Agabon and Jaka.
BPI EMPLOYEES UNION-DAVAO CITY-FUBU (BPIEU-DAVAO CITY-FUBU) v. BANK OF THE

PHILIPPINE ISLANDS (BPI), AND BPI OFFICERS CLARO M. REYES, CECIL CONANAN AND
GEMMA VELEZ
G.R. No. 174912, July 24, 2013
J. Jose C. Mendoza
Contracting out of services is not illegal per se. It is an exercise of business judgment or
management prerogative. Absent proof that the management acted in a malicious or arbitrary
manner, the Court will not interfere with the exercise of judgment by an employer. BPI’s policy of
contracting out cashiering and bookkeeping services was considered as a valid exercise of
management prerogative which is further authorized by the Central Bank in CBP Circular No.
1388, Series of 199.
FACTS:
BOMC, which was created pursuant to Central Bank Circular No. 1388, Series of 1993, and
primarily engaged in providing and/or handling support services for banks and other financial
institutions, is a subsidiary of the BPI operating and functioning as an entirely separate and
distinct entity. In a service agreement between BPI and BOMC, BOMC undertook to provide
services such as check clearing, delivery of bank statements, fund transfers, card production,
operations accounting and control, and cash servicing, conformably with BSP Circular No. 1388.
The service agreement was implemented in Davao City. Later, a merger between BPI and
FEBTC took effect on April 10, 2000 with BPI as the surviving corporation. Thereafter, BPI’s
cashiering function and FEBTC’s cashiering, distribution and bookkeeping functions were handled
by BOMC. Consequently, twelve (12) former FEBTC employees were transferred to BOMC to
complete the latter’s service complement. BPI Davao’s rank and file collective bargaining agent,
BPI Employees Union Davao City-FUBU (Union), objected to the transfer of the functions and the
twelve (12) personnel to BOMC contending that the functions rightfully belonged to the BPI
employees and that the Union was deprived of membership of former FEBTC personnel who, by
virtue of the merger, would have formed part of the bargaining unit represented by the Union
pursuant to its union shop provision in the CBA. The Union is of the position that the outsourcing
of jobs included in the existing bargaining unit to BOMC is a breach of the union-shop agreement
in the CBA. In transferring the former employees of FEBTC to BOMC instead of absorbing them in
BPI as the surviving corporation in the merger, the number of positions covered by the bargaining
unit was decreased, resulting in the reduction of the Union’s membership. For the Union, BPI’s act
of arbitrarily outsourcing functions formerly performed by the Union members and, in fact,
transferring a number of its members beyond the ambit of the Union, is a violation of the CBA and
interfered with the employees’ right to self organization, and claims that it is unfair labor practice
for an employer to outsource the positions in the existing bargaining unit.
ISSUE:
Whether the outsourcing of jobs included in the existing bargaining unit is an unfair labor
practice
RULING:
The rule now is covered by Article 261 of the Labor Code, which provides that violations of
a Collective Bargaining Agreement, except those which are gross in character, shall no longer be
treated as unfair labor practice and shall be resolved as grievances under the Collective
Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining
Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions
of such agreement. Clearly, only gross violations of the economic provisions of the CBA are
treated as ULP. Otherwise, they are mere grievances.
In the present case, the alleged violation of the union shop agreement in the CBA, even
assuming it was malicious and flagrant, is not a violation of an economic provision in the
agreement. The provisions relied upon by the Union were those articles referring to the
recognition of the union as the sole and exclusive bargaining representative of all rank-and-file
employees, as well as the articles on union security, specifically, the maintenance of membership
in good standing as a condition for continued employment and the union shop clause. It failed to
take into consideration its recognition of the bank’s exclusive rights and prerogatives, likewise
provided in the CBA, which included the hiring of employees, promotion, transfers, and dismissals
for just cause and the maintenance of order, discipline and efficiency in its operations.
It is to be emphasized that contracting out of services is not illegal per se. It is an exercise
of business judgment or management prerogative. Absent proof that the management acted in a
malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an
employer. In this case, bad faith cannot be attributed to BPI because its actions were authorized
by CBP Circular No. 1388, Series of 1993 issued by the Monetary Board of the then Central Bank
of the Philippines (now Bangko Sentral ng Pilipinas). The circular covered amendments in Book I
of the Manual of Regulations for Banks and Other Financial Intermediaries, particularly on the
matter of bank service contracts. A finding of ULP necessarily requires the alleging party to prove
it with substantial evidence. Unfortunately, the Union failed to discharge this burden.
Verily, in one case, the Court held that it is management prerogative to farm out any of its
activities, regardless of whether such activity is peripheral or core in nature (Alviado v. Procter &
Gamble Phils., Inc., G.R. No. 160506, March 9, 2010). What is of primordial importance is that the
service agreement does not violate the employee's right to security of tenure and payment of
benefits to which he is entitled under the law. Furthermore, the outsourcing must not squarely fall
under labor-only contracting where the contractor or sub contractor merely recruits, supplies or
places workers to perform a job, work or service for a principal or if any of the following elements
are present: (a) The contractor or subcontractor does not have substantial capital or investment
which relates to the job, work or service to be performed and the employees recruited, supplied
or placed by such contractor or subcontractor are performing activities which are directly related
to the main business of the principal; or (b) The contractor does not exercise the right to control
over the performance of the work of the contractual employee.
MANILA POLO CLUB EMPLOYEES’ UNION (MPCEU) FUR-TUCP v. MANILA POLO CLUB, INC.
G.R. No. 172846, July 24, 2013
J. Peralta
This case involves a closure of business undertaking, not retrenchment. Unlike

retrenchment, closure or cessation of business, as an authorized cause of termination of
employment, need not depend for validity on evidence of actual or imminent reversal of the
employer's fortune. Article 283 authorizes termination of employment due to business closure,
regardless of the underlying reasons and motivations therefor, be it financial losses or not.
FACTS:
Petitioner Manila Polo Club Employees Union (MPCEU), which is affiliated with the
Federation of Unions of Rizal (FUR)-TUCP, is a legitimate labor organization duly registered with
the Department of Labor and Employment (DOLE), while respondent Manila Polo Club, Inc. is a
non-profit and proprietary membership organization which provides recreation and sports
facilities to its proprietary members, their dependents, and guests.
On December 13, 2001, the Board of Directors of respondent unanimously resolved to

completely terminate the entire operations of its Food and Beverage (F & B) outlets, except the
Last Chukker, and award its operations to a qualified restaurant operator or caterer. Subsequently,
on March 22, 2002, respondent’s Board approved the implementation of the retrenchment
program of employees who are directly and indirectly involved with the operations of the F & B
outlets and authorized then General Manager Philippe D. Bartholomi to pay the employees’
separation pay.
Treating the incident as respondent’s way of terminating union members under the
pretense of retrenchment to prevent losses, petitioner filed a Step II grievance and requested for
an immediate meeting with the Management. When the Management refused, petitioner filed a
Notice of Strike before the National Conciliation and Mediation Board (NCMB) for illegal
dismissal, violation/non-implementation of the Collective Bargaining Agreement (CBA), union
busting, and other unfair labor practices (ULP).
The Voluntary Arbitrator dismissed petitioner’s complaint for lack of merit, but without
prejudice to the payment of separation pay to the affected employees. Upon an exhaustive
examination of the evidence presented by the parties, the CA affirmed in toto the VA’s Decision
and denied the substantive aspects of petitioner’s motion for reconsideration; hence, this petition.
ISSUE:
Whether the retrenchment of the 117 union members is legal
RULING:
It is apparent from the records that this case involves a closure of business undertaking,
not retrenchment. The legal requirements and consequences of these two authorized causes in
the termination of employment are discernible.
Retrenchment is the reduction of personnel for the purpose of cutting down on costs of
operations in terms of salaries and wages resorted to by an employer because of losses in
operation of a business occasioned by lack of work and considerable reduction in the volume of
business. Closure of a business or undertaking due to business losses is the reversal of fortune of
the employer whereby there is a complete cessation of business operations to prevent further
financial drain upon an employer who cannot pay anymore his employees since business has
already stopped.
One of the prerogatives of management is the decision to close the entire establishment
or to close or abolish a department or section thereof for economic reasons, such as to minimize
expenses and reduce capitalization.
While the Labor Code provides for the payment of separation package in case of
retrenchment to prevent losses, it does not obligate the employer for the payment thereof if there
is closure of business due to serious losses.
Closure or cessation of business is the complete or partial cessation of the operations

and/or shut-down of the establishment of the employer. It is carried out to either stave off the
financial ruin or promote the business interest of the employer. Unlike retrenchment, closure or
cessation of business, as an authorized cause of termination of employment, need not depend for
validity on evidence of actual or imminent reversal of the employer's regardless of the underlying
reasons and motivations therefore, be it financial losses or not.
Closure or cessation of operations of establishment or undertaking may either be partial or

total. Closure or cessation of operations of establishment or undertaking may or may not be due
to serious business losses or financial reverses. However, in both instances, proof must be shown
that: (1) it was done in good faith to advance the employer’s interest and not for the purpose of
defeating or circumventing the rights of employees under the law or a valid agreement; and (2) a
written notice on the affected employees and the DOLE is served at least one month before the
intended date of termination of employment. (C) The employer can lawfully close shop even if not
due to serious business losses or financial reverses but separation pay, which is equivalent to at
least one month pay as provided for by Article 283 of the Labor Code, as amended, must be given
to all the affected employees. (D) If the closure or cessation of operations of establishment or
undertaking is due to serious business losses or financial reverses, the employer must prove such
allegation in order to avoid the payment of separation pay. Otherwise, the affected employees are
entitled to separation pay. (E) The burden of proving compliance with all the above-stated falls
upon the employer.
D.M. CONSUNJI CORPORATION v. COURT OF APPEALS AND ROGELIO P. BELLO
G.R. No. 159371, July 29, 2013
J. Bersamin
For the resignation of an employee to be a viable defense in an action for illegal dismissal,
an employer must prove that the resignation was voluntary, and its evidence thereon must be
clear, positive and convincing. The employer has the burden to prove the due execution and
genuineness of the document as a letter of resignation. The employer cannot rely on the
weakness of the employee's evidence.
FACTS:
Bello brought a complaint for illegal dismissal and damages against DMCI and/or Rachel
Consunji. In his position paper, he claimed that DMCI had employed him as a mason without any
interruption from February 1, 1990 until October 10, 1997. On the other hand, in its position
paper submitted on March 6, 2000, DMCI contended that Bello had only been a project
employee, as borne out by his contract of employment and appointment papers and that although
his last project employment contract had been set to expire on October 7, 1997, he had tendered
his voluntary resignation on October 4, 1997 for health reasons that had rendered him incapable
of performing his job, per his resignation letter.
The Executive Labor Arbiter (ELA) found petitioner guilty of illegal dismissal and was
ordered to reinstate respondent immediately. On appeal to the National Labor Relations
Commission, the ELA’s order was set aside on the ground that the employee was a project
employee and resigned voluntary. The Court of Appeals (CA) held that respondent had already
acquired the status of a regular employee because his “repeated re-hiring and the continuing
need for his services over a long span of time had undeniably made him a regular employee.” As a
regular employee, his removal was not one of the authorized causes found under the Labor Code.
Moreover, the mason’s supposedly voluntary resignation was not given merit since records
showed that the ELA “concluded that the handwriting in the supposed resignation letter was
undeniably different from that of complainant” and the construction company failed to rebut the
discrepancy in the signatures.
ISSUES:
1. Whether private respondent was a regular employee

2. Whether private respondent was dismissed or voluntarily resigned
RULING:
A project employee is, therefore, one who is hired for a specific project or undertaking,
and the completion or termination of such project or undertaking has been determined at the
time of engagement of the employee. In the context of the law, Bello was a project employee of
DMCI at the beginning of their employer-employee relationship. The project employment
contract they then entered into clearly gave notice to him at the time of his engagement about his
employment being for a specific project or phase of work. He was also thereby notified of the
duration of the project, and the determinable completion date of the project.
However, the history of Bello’s appointment and employment showed that he performed
his tasks as a mason in DMCI’s various constructions projects. Based on the foregoing, we affirm
the CA’s conclusion that Bello acquired in time the status of a regular employee by virtue of his
continuous work as a mason of DMCI.
It is settled that the extension of the employment of a project employee long after the
supposed project has been completed removes the employee from the scope of a project
employee and makes him a regular employee. In this regard, the length of time of the employee’s
service, while not a controlling determinant of project employment, is a strong factor in
determining whether he was hired for a specific undertaking or in fact tasked to perform functions
vital, necessary and indispensable to the usual business or trade of the employer. Verily, the
principal test for determining whether an employee is a project employee, as distinguished from a
regular employee, is whether or not he is assigned to carry out a specific project or undertaking,
the duration and scope of which are specified at the time he is engaged for the project.
The Supreme Court agreed with the ruling of the CA explaining that the CA’s reliance on
the ELA’s findings were warranted - The CA’s reliance on the conclusion and finding by ELA was
warranted. Her observation that the handwriting in the resignation letter was ‘undeniably
different’ from that of Bello could not be ignored or shunted aside simply because she had no
expertise to make such a determination… Yet, even had the letter been actually signed by him, the
voluntariness of the resignation could not be assumed from such fact alone. His claim that he had
been led to believe that the letter would serve only as the means of extending his sick leave from
work should have alerted DMCI to the task of proving the voluntariness of the resignation. It was
obvious that, if his claim was true, then he did not fully comprehend the import of the letter,
rendering the resignation farcical. Under the circumstances, DMCI became burdened with the
obligation to prove the due execution and genuineness of the document as a letter of resignation.
We reiterate that it is axiomatic in labor law that the employer who interposes the defense
of voluntary resignation of the employee in an illegal dismissal case must prove by clear, positive,
and convincing evidence that the resignation was voluntary; and that the employer cannot rely on
the weakness of the defense of the employee.
LUCIANO P. CAÑEDO v. KAMPILAN SECURITY AND DETECTIVE AGENCY AND RAMONCITO L.

ARQUIZA
G.R. No. 179326, July 31, 2013
J. Del Castillo
A “floating status” is lawful and not unusual for security guards employed in security
agencies as their assignments primarily depend on the contracts entered into by the agency with
third parties. A floating status can ripen into constructive dismissal only when it goes beyond the
six-month period allowed by law.
FACTS:
Respondent Kampilan Security and Detective Agency hired petitioner Luciano Cañedo as
a security guard on Nov. 20, 1996 and assigned him at the Naga Power Barge 102 of the National
Power Corp. (NPC) at Sigpit Load Ends, Lutopan, Toledo City. For not wearing proper uniform
while on duty per report of an NPC personnel, the petitioner was suspended for a month effective
May 8, 2002.
On June 17, 2003, petitione requested Ramoncito L. Arquiza, the respondent’s general
manager, to issue a certification in connection with his intended retirement effective that month.
Arquiza issued a certification dated June 25, 2003 the pertinent portion of which reads: “This is to
certify that Mr. Luciano Paragoso Cañedo, whose address is at Lower Bunga, Toledo City was
employed by this agency from Nov. 20, 1996 up to May 7, 2003 as security guard assigned at NPC,
Sigpit Substation. He was terminated from his employment by this agency on May 7, 2003 as per
client’s request.”
Five days after the issuance of the certification, the petitioner filed a complaint for illegal
dismissal, illegal suspension and non-payment of monetary benefits against respondents. He
insisted that the certification states in unequivocal language that he was terminated from the
service.
The labor arbiter ruled that the security guard was indeed illegally dismissed from service.
The National Labor Relations Commission (NLRC), however, found that no illegal dismissal took
place. The Court of Appeals (CA) likewise affirmed the NLRC decision. Hence, this petition.
ISSUE:
Whether petitioner was dismissed from service
RULING:
Petitioner relies on the word “terminated” as used in the June 25, 2003 Certification issued
him by respondent Arquiza and argues that the same is a clear indication that he was dismissed
from service. We are, however, not persuaded. Petitioner cannot simply rely on this piece of
document since the fact of dismissal must be evidenced by positive and overt acts of an employer
indicating an intention to dismiss. Here, aside from this single document, petitioner proffered no
other evidence showing that he was dismissed from employment. While it is true that he was not
allowed to report for work after the period of his suspension expired, the same was due to NPC’s
request for his replacement as NPC was no longer interested in his services. And as correctly
argued by respondents, petitioner from that point onward is not considered dismissed but merely
on a floating status. “Such a ‘floating status’ is lawful and not unusual for security guards
employed in security agencies as their assignments primarily depend on the contracts entered
into by the agency with third parties.
Countering such status, petitioner contends that even at present, he is still not given any
new duties. A floating status can ripen into constructive dismissal only when it goes beyond the
six-month maximum period allowed by law. In this case, petitioner filed the Complaint for illegal
dismissal even before the lapse of the six-month period. Hence, his claim of illegal dismissal lacks
basis. Moreover and as aptly observed by the NLRC, it was in fact petitioner who intended to
terminate his relationship with respondents through his planned retirement. This is further
bolstered by his prayer in his Complaint where he sought for separation pay and not for
reinstatement.
At any rate, upon a close reading of the June 25, 2003 certification, this Court is of the
opinion that the petitioner was not dismissed from service. The import of the said certification is
that petitioner was assigned in NPC from Nov. 20, 1996 up to May 7, 2003 and that on May 7,
2003, respondents terminated his assignment to NPC upon the latter’s request. This is the correct
interpretation based on the true intention of the parties as shown by their contemporaneous and
subsequent acts and the other evidence on record as discussed above. Section 12 of Rule 130 of
the Rules of Court states that in the construction and interpretation of a document, the intention
of the parties must be pursued. Section 13 of the same Rule further instructs that the
circumstances under which a document was made may be shown in order to ascertain the correct
interpretation of a document. To recap, petitioner was suspended effective May 8, 2003. On June
2, 2003, NPC requested for his replacement. He then intimated his desire to retire from service on
June 17, 2003. These circumstances negate petitioner’s claim that his services were terminated on
May 7, 2003. Clearly, there is no dismissal to speak of in this case.
PHILIPPINE NATIONAL BANK v. MARY SHEILA ARCOBILLAS
G.R. No. 179648, August 7, 2013
J. Del Castillo
The court ruled that employer’s act cannot be considered as gross as to warrant her
termination from employment. Gross neglect of duty denotes a flagrant and culpable refusal or
unwillingness of a person to perform a duty. It refers to negligence characterized by the want of
even slight care, acting or omitting to act in a situation where there is a duty to act, not
inadvertently but willfully and intentionally, with a conscious indifference to consequences insofar
as other persons may be affected. The misposting was not deliberately done as to constitute as
gross negligence. Rather, it was a case of simple neglect brought about by carelessness.
FACTS:
On May 15, 1998, the Foreign Currency Denomination Savings Account (FCD-S/A)
30570355-1 of Avelina Nomad-Spoor was credited with US$138.This account was with the
petitioner Philippine National Bank (PNB). However, instead of posting the peso equivalent of
P5,517.10, respondent Mary Sheila Arcobillas, the assigned administrative teller at PNB Bacolod-
Lacson branch, erroneously posted US$5,517.10, resulting in an overcredit of US$5,379.10. That
amount was later withdrawn by Nomad-Spoor on May 29, 1998 and June 8, 1998, to the damage
of PNB in the amount of P214,641.23.
PNB found Arcobillas guilty of gross neglect of duty and meted upon her the penalty of
forced resignation with benefits, to take effect immediately upon her receipt thereof. When her
plea for reconsideration was denied, Arcobillas instituted a complaint for illegal dismissal with
money claims against PNB, its senior manager and senior vice-president.
The labor arbiter ordered her reinstatement to her former position with full back wages
from the date of promulgation of the decision, and the payment of 13th month pay for the year
1999, unpaid salaries for the period February 2000 to March 15, 2000 and attorney’s fees. The
National Labor Relations Commission (NLRC) affirmed the decision with modification regarding
the sharing of financial losses. The Court of Appeals (CA) affirmed the decision of the NLRC with
modification on the sharing of losses between petitioner and respondent. From the CA decision,
petitioner PNB filed with the Supreme Court a petition for review on certiorari.
ISSUE:
Whether private respondent’s dismissal on the ground of habitual negligence was justified under
Article 282 of the Labor Code
RULING:
Taking into consideration the circumstances attendant to Arcobillas’s infraction, the

National Labor Relations Commission (NLRC) correctly affirmed the Labor Arbiter’s finding that
there was no sufficient basis to hold her guilty of gross and habitual neglect of duty, which would
justify her termination from employment. To warrant removal from service, the negligence should
be gross and habitual. Although it was her second time to commit misposting (i.e., the first
misposting was in 1995 while the second misposting was committed in 1998), Arcobillas’s act
cannot be considered as gross as to warrant her termination from employment. Gross neglect of
duty “denotes a flagrant and culpable refusal or unwillingness of a person to perform a duty.” It
“refers to negligence characterized by the want of even slight care, acting or omitting to act in a
situation where there is a duty to act, not inadvertently but willfully and intentionally, with a
conscious indifference to consequences insofar as other persons may be affected.” As aptly held
by the labor tribunals, the misposting was not deliberately done as to constitute as gross
negligence. Rather, it was a case of simple neglect brought about by carelessness which, as
satisfactorily explained by Arcobillas, was the effect of her heavy workload that day and the
headache she was experiencing.
As to the modification made by the CA, it may be recalled that it ordered PNB and
Arcobillas to share the financial losses of P214,641.23 in a 40-60 ratio. It ruled that PNB is partly
liable for its loss for being negligent in the selection and supervision of its employees, applying
the ruling made by this Court in The Consolidated Bank & Trust Corp. v. Court of Appeals and
Philippine Bank of Commerce v. Court of Appeals. In the said cases, the banks were made to
shoulder part of the loss suffered by its clients due to the negligence of its employees under the
principle of respondeat superior or command responsibility. The Court ruled that the banks have
a fiduciary relationship with its client and must be answerable for any breach in their contractual
duties to its clients.
We, however, find that the CA erred in applying the ruling in these cases since they involve
different sets of facts and are not decisive of the instant case. In both the cited cases, the banks,
through their employees, were negligent, and this caused damage to their clients. These differ
from the instant case in that the resulting damage here was caused to PNB and not to its clients.
And as PNB certainly has the right to expect diligence from its employees and has the prerogative
to discipline them for acts inimical to its interests, the NLRC is justified in allocating the loss
suffered by it among those employees who proved to be negligent in their respective duties.
VICENTE ANG v. CEREFINO SAN JOAQUIN, JR. AND DIOSDADO FERNANDEZ

G.R. No. 185549, August 7, 2013
J. Del Castillo
The employer's act of tearing to pieces the employee's time card may be considered an
outright - not only symbolic - termination of the parties' employment relationship.
Thus, when Ang tore the respondents’ time cards to pieces, he virtually removed them
from Virose’s payroll and erased all vestiges of respondents’ employment; respondents were
effectively dismissed from work.
FACTS:
Petitioner Vicente Ang (Ang) is the proprietor of Virose Furniture and Glass Supply
(Virose) in Tayug, Pangasinan, a wholesaler/retailer of glass supplies, jalousies, aluminum
windows, table glass, and assorted furniture. San Joaquin and Fernandez (respondents) were
employed by Vicente Ang (petitioner) in his business as helper and driver respectively. The
respondents testified against the petitioner in a hearing relative to 41 criminal cases filed by his
former employee. After the said hearing Ang began to treat respondents with hostility and
antagonism.
One day, a heated argument between San Joaquin and Ang's wife Rosa took place, in view
of the former's refusal to obey her instruction to transfer the monobloc chairs in her restaurant.
Upon reporting for work two days later, he found out that his DTR was torn into pieces by Ang.
He learned that the DTR of Fernandez also suffer the same fate after they testified in Court.
Fernandez was suspended for a week for insubordination but the act of insubordination was not
specified by Ang in his memorandum to the latter. Respondents filed complaints for illegal
constructive dismissal.
The LA dismissed the complaint for lack of merit. The NLRC affirmed the decision of the
LA. The CA reversed the decision of the NLRC. The CA held that the Labor Arbiter and the NLRC
misappreciated the facts which thus led to the erroneous conclusion that there was no
constructive dismissal. It considered Ang’s act of tearing the respondents’ DTRs or time cards as a
categorical indication of their dismissal from employment.
ISSUE:
Whether tearing of DTRs of the employees by the employer constitutes constructive dismissal
RULING:
Constructive dismissal exists where there is cessation of work because continued

employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in
rank and a diminution in pay.” It is a “dismissal in disguise or an act amounting to dismissal but
made to appear as if it were not.”Constructive dismissal may likewise exist if an “act of clear
discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the
employee that it could foreclose any choice by him except to forego his continued employment.”
“Constructive dismissal exists when the employee involuntarily resigns due to the harsh, hostile,
and unfavorable conditions set by the employer.” “The test of constructive dismissal is whether a
reasonable person in the employee’s position would have felt compelled to give up his position
under the circumstances.”
The CA is correct in its pronouncement that respondents were constructively dismissed

from work. Moreover, by destroying respondents’ time cards, Ang discontinued and severed his
relationship with respondents. The purpose of a time record is to show an employee’s attendance
in office for work and to be paid accordingly, taking into account the policy of “no work, no pay”.
A daily time record is primarily intended to prevent damage or loss to the employer, which could
result in instances where it pays an employee for no work done; it is a mandatory requirement for
inclusion in the payroll, and in the absence of an employment agreement, it constitutes evidence
of employment. Thus, when Ang tore the respondents’ time cards to pieces, he virtually removed
them from Virose’s payroll and erased all vestiges of respondents’ employment; respondents were
effectively dismissed from work. The act may be considered an outright – not only symbolic –
termination of the parties’ employment relationship; the “last straw that finally broke the camel’s
back”, as respondents put it in their Position Paper.
In addition, such tearing of respondents’ time cards confirms petitioner’s vindictive nature
and oppressive conduct, as well as his reckless disregard for respondents’ rights.
DARIO NACAR v. GALLERY FRAMES AND/OR FELIPE BORDEY, JR.
G.R. No. 189871, August 13, 2013

J. Peralta
The recomputation of the consequences of illegal dismissal upon execution of the

decision does not constitute an alteration or amendment of the final decision being
implemented. The illegal dismissal ruling stands; only the computation of monetary consequences
of this dismissal is affected, and this is not a violation of the principle of immutability of final
judgments.
FACTS:
Petitioner Dario Nacar filed a complaint for constructive dismissal against respondents
Gallery Frames (GF) and/or Felipe Bordey, Jr. On Oct. 15, 1998, the labor arbiter rendered a
decision finding him dismissed from employment without a valid or just cause. He was awarded
backwages and separation pay in lieu of reinstatement in the amount of P158,919.92.
Petitioner prevailed in his case throughout the National Labor Relations Commission
(NLRC), the Court of Appeals (CA), and the Supreme Court. After the finality of the SC decision,
Nacar filed a motion before the LA for recomputation as he alleged that his backwages should be
computed from the time of his illegal dismissal (January 24, 1997) until the finality of the SC
decision (May 27, 2002) with interest. The LA denied the motion as he ruled that the reckoning
point of the computation should only be from the time Nacar was illegally dismissed January 24,
1997) until the decision of the LA (October 15, 1998). The LA reasoned that the said date should
be the reckoning point because Nacar did not appeal hence as to him, that decision became final
and executory.
ISSUES:
1. Whether the LA is correct

2. Whether the recomputation violated the principle of immutability of judgments
RULING:
A recomputation (or an original computation, if no previous computation has been made)

is a part of the law – specifically, Article 279 of the Labor Code and the established jurisprudence
on this provision – that is read into the decision. By the nature of an illegal dismissal case, the
reliefs continue to add up until full satisfaction, as expressed under Article 279 of the Labor Code.
The recomputation of the consequences of illegal dismissal upon execution of the decision does
not constitute an alteration or amendment of the final decision being implemented. The illegal
dismissal ruling stands; only the computation of monetary consequences of this dismissal is
affected, and this is not a violation of the principle of immutability of final judgments.
That the amount respondents shall now pay has greatly increased is a consequence that it
cannot avoid as it is the risk that it ran when it continued to seek recourses against the Labor
Arbiter’s decision. Article 279 provides for the consequences of illegal dismissal in no uncertain
terms, qualified only by jurisprudence in its interpretation of when separation pay in lieu of
reinstatement is allowed. When that happens, the finality of the illegal dismissal decision
becomes the reckoning point instead of the reinstatement that the law decrees. In allowing
separation pay, the final decision effectively declares that the employment relationship ended so
that separation pay and back wages are to be computed up to that point.
Anent the issue of award interest in the form of actual or compensatory damages, to
recapitulate and for future guidance, the guidelines laid down in the case of Eastern Shipping
Lines G.R. No. 97412, July 12, 1994, 234 SCRA 78, are accordingly modified to embody BSP-MB
Circular No. 799, as follows:
II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a
loan or forbearance of money, the interest due should be that which may have been stipulated in
writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially
demanded. In the absence of stipulation, the rate of interest shall be six percent per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an

interest on the amount of damages awarded may be imposed at the discretion of the court at the
rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or
damages, except when or until the demand can be established with reasonable certainty.
Accordingly, where the demand is established with reasonable certainty, the interest shall begin
to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but
when such certainty cannot be so reasonably established at the time the demand is made, the
interest shall begin to run only from the date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been reasonably ascertained). The actual base
for the computation of legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory,
the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be
six percent per annum from such finality until its satisfaction, this interim period being deemed to
be by then an equivalent to a forbearance of credit.
SANOH FULTON PHILS., INC. AND EDDIE JOSE v. EMMANUEL BERNARDO AND SAMUEL
TAGHOY
G.R. No. 187214, August 14, 2013
J. Perez
In termination cases either by retrenchment or closure, the burden of proving that the
termination of services is for a valid or authorized cause rests upon the employer. Not every loss
incurred or expected to be incurred by an employer can justify retrenchment. The employer must
prove, among others, that the losses are substantial and that the retrenchment is reasonably
necessary to avert such losses. And to repeat, in closures, the bona fides of the employer must be
proven.
FACTS:
Petitioner Sanoh Fulton Phils., Inc. is a domestic corporation that manufactures

automotive parts and wire condensers for home appliances. In view of job order cancellations
relating to the manufacture of wire condensers by Matsushita, Sanyo and National Panasonic,
Sanoh decided to phase out the Wire Condenser Department. On Dec. 22, 2003, the Human
Resources manager of Sanoh informed the employees of that department of retrenchment
effective January 22, 2004. Respondents Emmanuel Bernardo and Samuel Taghoy filed complaints
for illegal dismissal, claiming there was no valid cause for retrenchment. Sanoh insists that it is the
prerogative of management to effect retrenchment as long as it is done in good faith. It claims
that it had in fact closed down the wire condenser in view of serious business losses.
The Labor Arbiter rendered a Decision dismissing the complaint for illegal dismissal. On
appeal, the National Labor Relations Commission (NLRC) affirmed in toto the decision of the
Labor Arbiter. The Court of Appeals overturned the findings of the Labor Arbiter and the NLRC,
and ruled that Sanoh failed to prove the existence of substantial losses that would justify a valid
retrenchment.
ISSUE:
Whether there is a valid cause for retrenchment
RULING:
Retrenchment to prevent losses and closure not due to serious business losses are two
separate authorized causes for terminating the services of an employee. The respective
requirements to sustain their validity are likewise different.
For retrenchment, the three (3) basic requirements are: (a) proof that the retrenchment is
necessary to prevent losses or impending losses; (b) service of written notices to the employees
and to the Department of Labor and Employment at least one (1) month prior to the intended
date of retrenchment; and (c) payment of separation pay equivalent to one (1) month pay, or at
least one-half (1/2) month pay for every year of service, whichever is higher.
In termination cases either by retrenchment or closure, the burden of proving that the
termination of services is for a valid or authorized cause rests upon the employer. Not every loss
incurred or expected to be incurred by an employer can justify retrenchment. The employer must
prove, among others, that the losses are substantial and that the retrenchment is reasonably
necessary to avert such losses. And to repeat, in closures, the bona fides of the employer must be
proven.
In this case, there was no valid retrenchment. Nor was there a closure of business.
We are mindful of the principle that losses in the operation of the enterprise, lack of work,
or considerable reduction on the volume of business may justify an employer to reduce the work
force. But a lull caused by lack of orders or shortage of materials must be of such nature as would
severely affect the continued business operations of the employer to the detriment of all and
sundry if not properly addressed. Sanoh asserts that cancelled orders of wire condensers led to the
phasing out of the Wire Condenser Department, which triggered retrenchment. Sanoh presented
the letters of cancellation given by Matsushita and Sanyo as evidence of cancelled orders. The
evidence presented by Sanoh barely established the connection between the cancelled orders
and the projected business losses that may be incurred by Sanoh.
Sanoh failed to prove that these cancelled orders would severely impact on their
production of wire condensers. The Court held in Lambert Pawnbrokers and Jewelry Corp. v.
Binamira, G.R. No. 170464, July 12, 2010, 624 SCRA 705, that the losses must be supported by
sufficient and convincing evidence and the normal method of discharging this is by the submission
of financial statements duly audited by independent external auditors. Petitioner failed to present
proof of the extent of the reduced order and its contribution to the sustainability of its business.
JEROME M. DAABAY v. COCA COLA BOTTLERS PHILS., INC.

G.R. No. 199890. August 19, 2013
J. Reyes
. The Court has ruled, time and again, that financial assistance, or whatever name it is
called, as a measure of social justice is allowed only in instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on his moral character.
Clearly, considering that Daabay was dismissed on the grounds of serious misconduct,
breach of trust and loss of confidence, the award based on equity was unwarranted.
FACTS:
Petitioner Jerome M. Daabay filed a complaint for illegal dismissal, illegal suspension,
unfair labor practice and monetary claims against respondent Coca-Cola Bottlers Philippines, Inc.
The Executive Labor Arbiter (ELA) declared his dismissal illegal. The National Labor Relations
Commission (NLRC) reversed the finding of illegal dismissal and dismissed the complaint, but
granted Daabay retirement benefits pursuant to their Collective Bargaining Agreement (CBA).
Coca-Cola appealed the decision to the Court of Appeals (CA) while the petitioner’s Motion for
Reconsideration was unresolved by the NLRC. The CA ordered the award of retirement benefits be
deleted.
It bears stressing that although the assailed CA decision and resolution are confined to the
issue of Daabay’s entitlement to retirement benefits, Daabay attempts to revive through the
present petition the issue of whether or not his dismissal had factual and legal bases. Thus,
instead of confining itself to the issue of whether or not Daabay should be entitled to the
retirement benefits that were awarded by the NLRC, the petition includes a plea upon the Court
to affirm ELA’s Decision, with the modification to include: (a) his allowances and other benefits or
their monetary equivalent in the computation of his backwages; (b) his actual reinstatement; and
(c) damages, attorney’s fees and litigation expenses.
ISSUE:
Is the issue of whether petitioner’s dismissal had factual and legal basis, appropriately raised
RULING:
We emphasize that the appeal to the CA was brought not by Daabay but by Coca-Cola,
and was limited to the issue of whether or not the award of retirement benefits in favor of Daabay
was proper. Insofar as CA-G.R. SP No. 03369-MIN was concerned, the correctness of the NLRC’s
pronouncement on the legality of Daabay’s dismissal was no longer an issue, even beyond the
appellate court’s authority to modify.” In Andaya v. NLRC, 502 Phil. 151 (2005), the Court
emphasized that a party who has not appealed from a decision may not obtain any affirmative
relief from the appellate court other than what he had obtained from the lower court, if any,
whose decision is brought up on appeal.
Further, the Court explained in Yano v. Sanchez, G.R. No. 186640, Feb. 11, 2010, 612 SCRA
347, that the entrenched procedural rule in this jurisdiction is that a party who did not appeal
cannot assign such errors as are designed to have the judgment modified. All that he can do is to
make a counter-assignment of errors or to argue on issues raised below only for the purpose of
sustaining the judgment in his favor. Due process prevents the grant of additional awards to
parties who did not appeal. Considering that Daabay had not yet appealed the NLRC’s resolution
to the CA, his plea for the modification of the NLRC’s findings was then misplaced. For the Court
to review all matters that are raised in the petition would be tolerant of what Daabay was barred
to do before the appellate court.
Even as we limit our present review to the lone issue that was involved in the assailed CA
decision and resolution, the Court finds no cogent reason to reverse the ruling of the CA. Daabay
was declared by the NLRC to have been lawfully dismissed by Coca-Cola on the grounds of serious
misconduct, breach of trust and loss of confidence. Our pronouncement in Philippine Airlines, Inc.
v. NLRC on the issue of whether an employee who is dismissed for just cause may still claim
retirement benefits equally applies to this case. We held:
At the risk of stating the obvious, private respondent was not separated from petitioner’s
employ due to mandatory or optional retirement but, rather, by termination of employment for a
just cause. Thus, any retirement pay provided by PAL’s “Special Retirement & Separation
Program” dated February 15, 1988 or, in the absence or legal inadequacy thereof, by Article 287
of the Labor Code does not operate nor can be made to operate for the benefit of private
respondent. Even private respondent’s assertion that, at the time of her lawful dismissal, she was
already qualified for retirement does not aid her case because the fact remains that private
respondent was already terminated for cause thereby rendering nugatory any entitlement to
mandatory or optional retirement pay that she might have previously possessed.
Being intended as a mere measure of equity and social justice, the NLRC’s award was then
akin to a financial assistance or separation pay that is granted to a dismissed employee
notwithstanding the legality of his dismissal. Jurisprudence on such financial assistance and
separation pay then equally apply to this case. The Court has ruled, time and again, that financial
assistance, or whatever name it is called, as a measure of social justice is allowed only in instances
where the employee is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character.
Clearly, considering that Daabay was dismissed on the grounds of serious misconduct,
breach of trust and loss of confidence, the award based on equity was unwarranted.
MZR INDUSTRIES, MARILOU R. QUIROZ AND LEA TIMBAL v. MAJEN COLAMBOT
G.R. No. 179001. August 28, 2013
J. Peralta
In illegal dismissal cases, the employer bears the burden of proving that the termination
was for a valid or authorized cause, in the present case, however, the facts and the evidence do
not establish a prima facie case that the employee was dismissed from employment. Before the
employer must bear the burden of proving that the dismissal was legal, the employee must first
establish by substantial evidence the fact of his dismissal from service. If there is no dismissal, then
there can be no question as to the legality or illegality thereof.
FACTS:
Petitioner Marilou Quiroz, Owner and Vice- President for Finance and Marketing of MZR,
hired respondent Majen Colambot (Colambot) as messenger. Colambot's duties and
responsibilities included field, messengerial and other liaison work.
However, beginning 2002, Colambot's work performance started to deteriorate.

Petitioners issued several memoranda to Colambot for habitual tardiness, negligence, and
violations of office policies. He was also given written warnings for insubordination committed on
August 27, 2003 and September 11-12, 2003;on September 16, 2003 for negligence caused by
careless handling of confidential office documents; on September 22, 2004 for leaving his post
without proper turnover; and, on October 4, 2004 for insubordination.
Petitioners claimed that despite written warnings for repeated tardiness and
insubordination, Colambot failed to mend his ways. Hence, in a Memorandum11dated October
25, 2004 issued by petitioner Lea Timbal (Timbal), MZR's Administrative Manager, Colambot was
given a notice of suspension for insubordination and negligence.
Petitioners claimed they waited for Colambot to report back for work on December 7,
2004, but they never heard from him anymore. Later, petitioners were surprised to find out that
Colambot had filed a complaint for illegal suspension, underpayment of salaries, overtime pay,
holiday pay, rest day, service incentive leave and 13th month pay. On December 16, 2004, the
complaint was amended to illegal dismissal, illegal suspension, underpayment of salaries, holiday
pay, service incentive pay, 13th month pay and separation pay.
The labor arbiter rendered a decision declaring respondents not guilty of illegal dismissal.
The NLRC pointed out that Colambot's complaint was unsupported by any evidence and was not
even made under oath, thus, lacking in credibility and probative value. The Court of Appeals
granted the petition and reversed the decision of NLRC.
ISSUE:
Whether the complainant was illegally dismissed from the service
RULING:
While we recognize the rule that in illegal dismissal cases, the employer bears the burden
of proving that the termination was for a valid or authorized cause, in the present case, however,
the facts and the evidence do not establish a prima facie case that the employee was dismissed
from employment. Before the employer must bear the burden of proving that the dismissal was
legal, the employee must first establish by substantial evidence the fact of his dismissal from
service. If there is no dismissal, then there can be no question as to the legality or illegality
thereof.
In the present case, other than Colambot's unsubstantiated allegation of having been
verbally terminated from his work, there was no evidence presented to show that he was indeed
dismissed from work or was prevented from returning to his work. In the absence of any showing
of an overt or positive act proving that petitioners had dismissed respondent, the latter's claim of
illegal dismissal cannot be sustained – as the same would be self-serving, conjectural and of no
probative value.
However, while the Court concurs with the conclusion of the NLRC that there was no
illegal dismissal, no dismissal having actually taken place, the Court does not agree with its
findings that Colambot committed abandonment of work.
In a number of cases, this Court consistently held that to constitute abandonment of work,
two elements must be present: first, the employee must have failed to report for work or must
have been absent without valid or justifiable reason; and second, there must have been a clear
intention on the part of the employee to sever the employer-employee relationship manifested by
some overt act.
In the instant case, other than Colambot's failure to report back to work after suspension,
petitioners failed to present any evidence which tend to show his intent to abandon his work. It is
a settled rule that mere absence or failure to report for work is not enough to amount to
abandonment of work. There must be a concurrence of the intention to abandon and some overt
acts from which an employee may be deduced as having no more intention to work.
Suffice it to say that, it is the employer who has the burden of proof to show a deliberate
and unjustified refusal of the employee to resume his employment without any intention of
returning. It is therefore incumbent upon petitioners to ascertain the respondents’ interest or non-
interest in the continuance of their employment. This, petitioners failed to do so.
INTEGRATED MIRCOELECTRONICS, INC. v. ADONIS A. PIONILLA
G.R. No. 200222, August 28, 2013
J. Perlas-Bernabe
As a general rule, an illegally dismissed employee is entitled to reinstatement (or

separation pay, if reinstatement is not viable) and payment of full backwages. In certain cases,
however, the Court has carved out an exception to the foregoing rule and thereby ordered the
reinstatement of the employee without backwages on account of the following: (a) the fact that
dismissal of the employee would be too harsh of a penalty; and (b) that the employer was in good
faith in terminating the employee.
FACTS:
On November 14, 1996, Pionilla was hired by IMI as its production worker. On May
5, 2005, Pionilla received a notice from IMI requiring him to explain the incident which
occurred the day before where he was seen escorting a lady to board the company shuttle bus at
the Alabang Terminal. It was reported by the bus marshall that the lady was wearing a company
identification card (ID) – which serves as a free pass for shuttle bus passengers – even if she was
just a job applicant at IMI. In this regard, Pionilla admitted that he lent his ID to the lady who
turned out to be his relative. He further intimated that he risked lending her his ID to save on their
transportation expenses. Nevertheless, he apologized for his actions.
IMI found Pionilla guilty of violating Article 6.12 of the Company Rules and Regulations
(CRR) which prohibits the lending of one’s ID since the same is considered a breach of its security
rules and carries the penalty of dismissal. Subsequently, or on August 17, 2005, Pionilla received a
letter dated August 16, 2005 informing him of his dismissal from service. Three days after, he filed
a complaint for illegal dismissal with damages against IMI.
The Labor Arbiter (LA) rendered a Decision finding Pionilla to have been illegally
dismissed by IMI and, as such, ordered the latter to reinstate him to his former position and to pay
him backwages. On appeal, the NLRC reversed the LA’s ruling, finding Pionilla’s dismissal to be
valid. The CA rendered a Decision granting Pionilla’s petition. It found that while IMI’s regulations
on company IDs were reasonable, the penalty of dismissal was too harsh and not commensurate to
the misdeed committed. Hence, this petition.
ISSUE:
Whether the award to Pionilla of reinstatement and full backwages is excessive and unfair, and
contrary to existing principles of law and jurisprudence
RULING:
As a general rule, an illegally dismissed employee is entitled to reinstatement (or

separation pay, if reinstatement is not viable) and payment of full backwages. In certain cases,
however, the Court has carved out an exception to the foregoing rule and thereby ordered the
reinstatement of the employee without backwages on account of the following: (a) the fact that
dismissal of the employee would be too harsh of a penalty; and (b) that the employer was in good
faith in terminating the employee. The aforesaid exception was recently applied in the case of
Pepsi-Cola Products, Phils., Inc. v. Molon, wherein the Court, citing several precedents, held as
follows:
An illegally dismissed employee is entitled to either reinstatement, if viable, or separation

pay if reinstatement is no longer viable, and backwages. In certain cases, however, the Court has
ordered the reinstatement of the employee without backwages considering the fact that (1) the
dismissal of the employee would be too harsh a penalty; and (2) the employer was in good faith in
terminating the employee. For instance, in the case of Cruz v. Minister of Labor and
Employmentthe Court ruled as follows:
The Court is convinced that petitioner's guilt was substantially established. Nevertheless,
we agree with respondent Minister's order of reinstating petitioner without backwages instead of
dismissal which may be too drastic. Denial of backwages would sufficiently penalize her for her
infractions. The bank officials acted in good faith. They should be exempt from the burden of
paying backwages. The good faith of the employer, when clear under the circumstances, may
preclude or diminish recovery of backwages. Only employees discriminately dismissed are entitled
to backpay.
Likewise, in the case of Itogon-Suyoc Mines, Inc. v. National Labor Relations Commission,
the Court pronounced that “the ends of social and compassionate justice would therefore be
served if private respondent is reinstated but without backwages in view of petitioner's good
faith.”
The factual similarity of these cases to Remandaban’s situation deems it appropriate to

render the same disposition.
In this case, the Court observes that: (a) the penalty of dismissal was too harsh of a
penalty to be imposed against Pionilla for his infractions; and (b) IMI was in good faith when
it dismissed Pionilla as his dereliction of its policy on ID usage was honestly perceived to be
a threat to the company's security. In this respect, since these concurring circumstances
trigger the application of the exception to the rule on backwages as enunciated in the
above-cited cases, the Court finds it proper to accord the same disposition and
consequently directs the deletion of the award of back wages in favor of Pionilla,
notwithstanding the illegality of his dismissal.
NATHANIEL DONGON v. RAPID MOVERS AND FORWARDERS CO., INC., ET AL.
G.R. No. 163431. August 28, 2013
J. Bersamin
Willful disobedience to the lawful orders of an employer is one of the valid grounds to
terminate an employee under Article 296 of the Labor Code. For willful disobedience to be a
ground, it is required that: (a) the conduct of the employee must be willful or intentional; and (b)
the order the employee violated must have been reasonable, lawful, made known to the
employee, and must pertain to the duties that he had been engaged to discharge. Under the
foregoing standards, the disobedience attributed to the employee could not be justly
characterized as willful within the contemplation of Article 296 of the Labor Code. He neither
benefitted from it, nor thereby prejudiced the business interest of Rapid Movers.
FACTS:
Petitioner Rapid is engaged in the hauling and trucking business while private respondent
Nathaniel T. Dongon is a former truck helper leadman. Private respondent’s area of assignment is
the Tanduay Otis Warehouse where he has a job of facilitating the loading and unloading of the
petitioner’s trucks. On 23 April 2001, private respondent and his driver, Vicente Villaruz, were in
the vicinity of Tanduay as they tried to get some goods to be distributed to their clients. Tanduay’s
security guard called the attention of private respondent as to the fact that Mr. Villaruz’s was not
wearing an Identification Card (I.D. Card). Private respondent, then, assured the guard that he
will secure a special permission from the management to warrant the orderly release of goods.
Instead of complying with his compromise, private respondent lent his I.D. Card to Villaruz; and by
reason of such misrepresentation, private respondent and Mr. Villaruz got a clearance from
Tanduay for the release of the goods. However, the security guard, who saw the misrepresentation
committed by private respondent and Mr. Villaruz, accosted them and reported the matter to the
management of Tanduay.
On 23 May 2001, after conducting an administrative investigation, private respondent was

dismissed from the petitioning Company. On 01 June 2001, private respondent filed a Complaint
for Illegal Dismissal.
The Labor Arbiter dismissed the complaint, and ruled that respondent Rapid Movers
rightly exercised its prerogative to dismiss petitioner. On appeal, however, the NLRC reversed the
Labor Arbiter, and held that Rapid Movers had not discharged its burden to prove the validity of
petitioner’s dismissal from his employment. The CA reinstated the decision of the Labor Arbiter,
and upheld the right of Rapid Movers to discipline its workers.
ISSUE:
Whether the dismissal of petitioner on the ground of willful disobedience to the company
regulation lawful
RULING:
Petitioner maintains that willful disobedience could not be a ground for his dismissal
because he had acted in good faith and with the sole intention of facilitating deliveries for Rapid
Movers when he allowed Villaruz to use his company ID.
Willful disobedience to the lawful orders of an employer is one of the valid grounds to
terminate an employee under Article 296 (formerly Article 282) of the Labor Code. For willful
disobedience to be a ground, it is required that: (a) the conduct of the employee must be willful
or intentional; and (b) the order the employee violated must have been reasonable, lawful, made
known to the employee, and must pertain to the duties that he had been engaged to discharge.
Willfulness must be attended by a wrongful and perverse mental attitude rendering the
employee’s act inconsistent with proper subordination. In any case, the conduct of the employee
that is a valid ground for dismissal under the Labor Code constitutes harmful behavior against the
business interest or person of his employer. It is implied that in every act of willful disobedience,
the erring employee obtains undue advantage detrimental to the business interest of the
employer.
Under the foregoing standards, the disobedience attributed to petitioner could not be
justly characterized as willful within the contemplation of Article 296 of the Labor Code. He
neither benefitted from it, nor thereby prejudiced the business interest of Rapid Movers. His
explanation that his deed had been intended to benefit Rapid Movers was credible. There could
be no wrong or perversity on his part that warranted the termination of his employment based on
willful disobedience.
It is true that an employer is given a wide latitude of discretion in managing its own affairs.
The broad discretion includes the implementation of company rules and regulations and the
imposition of disciplinary measures on its employees. But the exercise of a management
prerogative like this is not limitless, but hemmed in by good faith and a due consideration of the
rights of the worker. In this light, the management rerogative will be upheld for as long as it is not
wielded as an implement to circumvent the laws and oppress labor.
To us, dismissal should only be a last resort, a penalty to be meted only after all the
relevant circumstances have been appreciated and evaluated with the goal of ensuring that the
ground for dismissal was not only serious but true.
REYNALDO HAYAN MOYA
v. FIRST SOLID RUBBER INDUSTRIES, INC.
G.R. No. 184011, September 18, 2013
J. Perez
In the case of supervisors or personnel occupying positions of responsibility, loss of trust

justifies termination. Loss of confidence as a just cause for termination of employment is premised
on the fact that an employee concerned holds a position of trust and confidence. This situation
holds where a person is entrusted with confidence on delicate matters, such as the custody,
handling, or care and protection of the employer’s property. But, in order to constitute a just
cause for dismissal, the act complained of must be "work-related" such as would show the
employee concerned to be unfit to continue working for the employer.
FACTS:
Reynaldo Moya (Moya) was hired by First Solid Rubber Industries (FSRI) as a machine
operator. He was later promoted as head of the Tire Curing Department of the company.
However, an incident about an under curing of tires had happened within his department leading
to the damage of five tires. Despite Moya’s explanation, he was terminated by the company. From
the foregoing, he prayed that payment of backwages, separation pay, moral damages and
exemplary damages be adjudged in his favor by reason of illegal dismissal. FSRI averred that
Moya’s dismissal was valid and maintained that such act was a valid exercise of management
prerogative.
The Labor Arbiter (LA) ruled in favor of FSRI. The LA decided that it was for the best
interest of both parties to award a separation pay of one (1) month salary for every year of
credited service. NLRC affirmed the decision. The CA reversed the decision.
ISSUE:
Whether Moya is entitled to separation pay based on his length of service
RULING:
Petitioner is not entitled to separation pay. Payment of separation pay cannot be justified
by his length of service. It must be stressed that Moya was not an ordinary rank-and-file
employee. He was holding a supervisory rank being an Officer-in-Charge of the Tire Curing
Department. The position, naturally one of trust, required of him abiding honesty as compared to
ordinary rank-and-file employees. When he made a false report attributing the damage of five
tires to machine failure, he breached the trust and confidence reposed upon him by the company.
Following the ruling in the Coca-Cola Export Corporation v. Gacayan, the employers have
a right to impose a penalty of dismissal on employees by reason of loss of trust and confidence.
More so, in the case of supervisors or personnel occupying positions of responsibility, loss of trust
justifies termination. Loss of confidence as a just cause for termination of employment is premised
on the fact that an employee concerned holds a position of trust and confidence. This situation
holds where a person is entrusted with confidence on delicate matters, such as the custody,
handling, or care and protection of the employer’s property. But, in order to constitute a just
cause for dismissal, the act complained of must be "work-related" such as would show the
employee concerned to be unfit to continue working for the employer.
Moya’s dismissal is based on one of the grounds under Art. 282 of the Labor Code which is
willful breach by the employee of the trust reposed in him by his employer. Also, he is outside the
protective mantle of the principle of social justice as his act of concealing the truth from the
company is clear disloyalty to the company which has long employed him.
ERIC ALVAREZ, substituted by ELIZABETH ALVAREZ-CASAREJOS
v. GOLDEN TRI BLOC, INC. and ENRIQUE LEE
G.R. No. 202158, September 25, 2013
J. REYES
The Supreme Court had ruled that the position the accused is holding is unmistakably one
imbued with trust and confidence as he is charged with the delicate task of overseeing the
operations and manpower of three stores owned by GTBI. As a supervisor, a high degree of
honesty and responsibility, as compared with ordinary rank-and-file employees, would be
required and expected of him. The fact that he was not charged with the custody of the
company’s money or property is inconsequential because he belongs to the first class of
employees occupying position of trust and not to the fiduciary rank and file class.
FACTS:
Golden Tri Bloc, Inc. (GTBI) hired Eric Valdez as a Service Crew in one of its Dunkin Donuts
franchise store. He was then promoted as Outlet Supervisor and was assigned to three (3) Dunkin
Donuts outlets. In May 2009, the petitioner reported for duty at around 12:30 in the afternoon at
Dunkin Donuts, Super 8, Masinag branch. Since his timecard was at the San Roque branch, he
telephoned Chastine Kaye Sambo (Sambo), shift leader, and requested her to "punch-in" his time
card to reflect that he is already on duty, which Sambo obliged. Roland Salindog (Salindog), the
petitioner’s senior officer called the Super 8, Masinag branch and verified that he has indeed
reported for work. The following day, however, the petitioner was informed by Sambo that both of
them are suspended and thereafter, GTBI notified the petitioner of its decision to terminate his
employment effective that day on the ground of loss of trust. He then filed a complaint for illegal
dismissal arguing that the ground relied upon for his termination is not applicable to him because
he is a supervisor and not a managerial employee. For its part, GTBI maintained that it had
justifiable reason to lose trust in and dismiss the petitioner for having committed a dishonest act
punishable under the company’s Code of Conduct and Discipline with termination from
employment. The Labor Arbiter ruled in favor of Valdez. The NLRC affirmed but on
reconsideration, reversed its ruling. The CA upheld NLRC’s conclusions.
ISSUE:
Whether Valdez was illegally dismissed
RULING:
Loss of trust and confidence will validate an employee’s dismissal only upon compliance
with certain requirements, namely: (1) the employee concerned must be holding a position of
trust and confidence; and (2) there must be an act that would justify the loss of trust and
confidence.
It is undisputed that at the time of his dismissal, the petitioner was holding supervisory
position after having risen from the ranks since the start of his employment. His position is
unmistakably one imbued with trust and confidence as he is charged with the delicate task of
overseeing the operations and manpower of three stores owned by GTBI. As a supervisor, a high
degree of honesty and responsibility, as compared with ordinary rank-and-file employees, was
required and expected of him. The fact that he was not charged with the custody of the company’s
money or property is in consequential because he belongs to the first class of employees
occupying position of trust and not to the fiduciary rank and file class.
The second requirement for dismissal due to loss of trust and confidence is further
qualified by jurisprudence. The complained act must be work related such as would show the
employee concerned to be unfit to continue working for the employer and it must be based on a
willful breach of trust and founded on clearly established facts. The basis for the dismissal must be
clearly and convincingly established but proof beyond reasonable doubt is not necessary.
The analogous factual findings of the CA and the NLRC conform to the foregoing
guidelines. The punching of time card is undoubtedly work related. It signifies and records the
commencement of one’s work for the day. It is from that moment that an employee dons the cape
of duties and responsibilities attached to his position in the workplace. It is the reckoning point of
the employer’s corresponding obligation to him – to pay his salary and provide his occupational
and welfare protection or benefits. Any form of dishonesty with respect to time cards is thus no
trivial matter especially when it is carried out by a supervisory employee like the petitioner.
The transgression imputed to the petitioner was likewise attended with willfulness. It must
be noted that the petitioner misled the labor tribunals in claiming that during his entire 12-year
stint with GTBI, he was never meted with any disciplinary action. Records, however, disprove such
claim. Additional evidence were submitted by GTBI before the NLRC on appeal and as correctly
ruled by the CA, the same may be allowed as the rules of evidence prevailing in courts of law or
equity are not controlling in labor proceedings.
A repetition of the same offense for which one has been previously disciplined and
cautioned evinces deliberateness and willful intent; it negates mere lapse or error in judgment.
The NLRC and the CA were thus correct in applying the totality of infractions rule and in
adjudging that the petitioner's dismissal was grounded on a just and valid cause. Furthermore, the
standards of procedural due process were likewise observed in effecting the petitioner's dismissal.
SME BANK INC., ABELARDO P. SAMSON, OLGA SAMSON AND AURELIO VILLAFLOR, JR. v.
PEREGRIN T. DE GUZMAN, ET. AL.
G.R. No. 184517/G.R. No. 186641, October 8, 2013
EN BANC
The Samson Group contends that Elicerio, et al., voluntarily resigned from their posts,
while Eufemia retired from her position. SC disagrees. While resignation letters containing words
of gratitude may indicate that the employees were not coerced into resignation, this fact alone is
not conclusive proof that they intelligently, freely and voluntarily resigned. To rule that
resignation letters couched in terms of gratitude are, by themselves, conclusive proof that the
employees intended to relinquish their posts would open the floodgates to possible abuse. In
order to withstand the test of validity, resignations must be made voluntarily and with the
intention of relinquishing the office, coupled with an act of relinquishment. Therefore, in order to
determine whether the employees truly intended to resign from their respective posts, we cannot
merely rely on the tenor of the resignation letters, but must take into consideration the totality of
circumstances in each particular case.
FACTS:
Respondent employees Elicerio Gaspar (Elicerio), et al., were employees of Small and
Medium Enterprise Bank, Incorporated (SME Bank). Originally, the principal shareholders and
corporate directors of the bank were Eduardo M. Agustin, Jr. (Agustin) and Peregrin de Guzman,
Jr. (De Guzman). SME Bank experienced financial difficulties. To remedy the situation, the bank
officials proposed its sale to Abelardo Samson (Samson).
Pursuant to Samson, Agustin and De Guzman’s agreement, Simeon Espiritu (Espiritu), then
the general manager of SME Bank, held a meeting with all the employees of the head office and
of the Talavera and Muñoz branches of SME Bank and persuaded them to tender their
resignations, with the promise that they would be rehired upon reapplication. Relying on this
representation, some of the respondents tendered their resignation and retirements. After the
sale had taken place, the respondent employees, except for Simeon, Jr., were not rehired. After a
month in service, Simeon, Jr. again resigned on October 2001. Respondent-employees demanded
the payment of their respective separation pays, but their requests were denied.
Respondent employees filed a Complaint before the National Labor Relations Commission
(NLRC) for unfair labor practice; illegal dismissal; illegal deductions; underpayment; and
nonpayment of allowances, separation pay and 13th month pay. The Labor arbiter (LA) ruled that
the buyer of an enterprise is not obliged to absorbed the former employees unless there is an
express stipulation. LA also found that respondent employees were illegally dismissed, however, it
only held that the former employees were liable for the employee’s claims. The NLRC affirmed the
decision of LA that the respondents were, indeed, illegally dismissed but modified the decision
ruling that Agustin, De Guzman and the Samson Group should be held jointly and severally liable
for the employees’ separation pay and backwages. CA affirmed NLRC’s ruling.
The Samson Group contends that Elicerio, et al., voluntarily resigned from their posts,
while Eufemia retired from her position. As their resignations and retirements were voluntary, they
were not dismissed from their employment. In support of this argument, it presented copies of
their resignation and retirement letters, which were couched in terms of gratitude.
ISSUE:
Whether respondent employees were illegally dismissed and, if so, which of the parties are liable
for the claims of the employees and the extent of the reliefs that may be awarded to these
employees
RULING:
While resignation letters containing words of gratitude may indicate that the employees
were not coerced into resignation, this fact alone is not conclusive proof that they intelligently,
freely and voluntarily resigned. To rule that resignation letters couched in terms of gratitude are,
by themselves, conclusive proof that the employees intended to relinquish their posts would open
the floodgates to possible abuse. In order to withstand the test of validity, resignations must be
made voluntarily and with the intention of relinquishing the office, coupled with an act of
relinquishment. Therefore, in order to determine whether the employees truly intended to resign
from their respective posts, the Court cannot merely rely on the tenor of the resignation letters,
but must take into consideration the totality of circumstances in each particular case.
Here, the records show that Elicerio, et al., only tendered resignation letters because they
were led to believe that, upon reapplication, they would be reemployed by the new
management. As it turned out, except for Simeon, Jr., they were not rehired by the new
management. Their reliance on the representation that they would be reemployed gives credence
to their argument that they merely submitted courtesy resignation letters because it was
demanded of them, and that they had no real intention of leaving their posts. The Court therefore
concludes that Elicerio, et al., did not voluntarily resign from their work; rather, they were
terminated from their employment.
REXIE A. HORMILLOSA v. COCA-COLA BOTTLERS PHILS., INC.,

represented by its Iloilo Plant Human Resource Head, ROBERTO RICHARD H. DOLAR, G.R. No.
198699, October 9, 2013
J. Mendoza
There are two (2) classes of positions of trust. The first class consists of managerial
employees. They are defined as those vested with the powers or prerogatives to lay down
management policies and to hire, transfer suspend, lay-off, recall, discharge, assign or discipline
employees or effectively recommend such managerial actions.The second class consists of
cashiers, auditors, property custodians, etc. They are defined as those who in the normal and
routine exercise of their functions, regularly handle significant amounts of money or property.
Clearly, Hormillosa occupies a position of trust. As correctly pointed out by the CA, there
was a high degree of trust and confidence reposed on him and when this confidence was
breached, the employer was justified in taking the appropriate disciplinary action.
FACTS:
Rexie Hormillosa was employed as a route salesman by Coca-Cola Bottlers Phils., Inc.
(CBPI). His duties included, among others, selling CBPI’s soft drink products, either on cash or on
credit basis; receiving payments from proceeds of the sale or payments of past due or current
accounts; issuing sales invoices; and receiving empty bottles and cases of soft drinks (empties).
Concerning the sales invoices, he was authorized to issue them on a cash and credit basis.
He prepared the invoices stating the names of the customers, the quantity and kind of
merchandise purchased, and the corresponding amounts. He was required to make the customers
sign the invoices, especially in cases they were on credit basis, and leave copies with them. The
invoices were then submitted to the Finance Department for accounting and auditing. Due to
their delicate position, route salesmen, like Hormillosa, were given a handbook entitled, CCBPI
Employee Code of Disciplinary Rules and Regulations. This set of rules and regulations served as
their guide in the performance of their duties. Hormillosa received his copy.
Sometime in the early part of 1999, the then CBPI District Sales Supervisor, Raul S.
Tiosayco III (Tiosayco), conducted a verification and audit of the accounts handled by Hormillosa.
He discovered transactions in violation of CCBPI Employee Code of Disciplinary Rules and
Regulations and for failure to explain such violation, Hormillosa was terminated. In addition to his
termination, CBPI also filed several criminal cases against him citing his fraudulent acts.
Hormillosa filed a complaint for ULP (harassment due to union activities and union
busting), Illegal Dismissal, Illegal Deduction, Illegal Grounding, Non-payment of Commission,
Non-payment of 13th Month pay, Violation of CBA, alleging that he was a member of the Board of
Directors of CBPI’s employees union and he became its secretary.
Labor Arbiter (LA) dismissed Hormillosa’s complaint for illegal dismissal, ruling that his
termination was proper. The NLRC ordered the remand of the case to the SRAB to give Hormillosa
the opportunity to confront the witnesses and evidence against him. On the SRAB, LA Acosta,
found that Hormillosa was illegally dismissed but did not order his reinstatement due to strained
relations. NLRC affirmed LA Acosta’s ruling. CA nullified and set aside the NLRC decision and held
that the dismissal of Hormillosa was valid.
ISSUE:
Whether Hormillosa was illegally dismissed
RULING:
In Bristol Myers Squibb (Phils.), Inc. v. Baban, the Court held that Article 282(c) of the
Labor Code allows an employer to terminate the services of an employee for loss of trust and
confidence. The right of employers to dismiss employees by reason of loss of trust and confidence
is well established in jurisprudence.
The first requisite for dismissal on the ground of loss of trust and confidence is that the
employee concerned must be one holding a position of trust and confidence. There are two (2)
classes of positions of trust. The first class consists of managerial employees. They are defined as
those vested with the powers or prerogatives to lay down management policies and to hire,
transfer suspend, lay-off, recall, discharge, assign or discipline employees or effectively
recommend such managerial actions. The second class consists of cashiers, auditors, property
custodians, etc. They are defined as those who in the normal and routine exercise of their
functions, regularly handle significant amounts of money or property. Clearly, Hormillosa
occupies a position of trust. There was a high degree of trust and confidence reposed on him and
when this confidence was breached, the employer was justified in taking the appropriate
disciplinary action.
With regard to the second requisite for dismissal on the ground of loss of trust and
confidence, the Court finds that Hormillosa committed acts which warranted his dismissal from
employment.
Hormillosa cannot deny that fact that he issued sales invoices to Arnold Store, a store
unregistered or unaccredited with CBPI. He transacted with the said store using the account of
Virgie Bucaes, proprietor of Virgie’s Eatery. Bucaes, who had an outlet profile with CBPI, was
assigned with Control No. 0027069. Hormillosa extended credit to Arnold Store, an unknown
customer to CBPI, as documented by two credit sales invoices, Invoice Nos. 79872 and 79873,
amounting to P5,600.00 and P4,806.00 respectively. By doing so, he gave a false and misleading
representation that the account was that of Bucaes. CBPI had a set of rules and regulations, one of
which was that only those outlets, which had outlet control, were entitled to enjoy credit from
CBPI. Salesmen were not allowed to extend credit to those who had no outlet numbers or outlet
profiles from CBPI. Evidently, Hormillosa disregarded and disobeyed the company rules.
In the case at bench, the cause for the dismissal from employment of Hormillosa clearly
falls under Article 282 of the Labor Code. Therefore, he is not entitled to any separation pay.
ERIC V. CHUANICO v. LEGACY CONSOLIDATED PLANS, INC.,

G.R. No. 181852, October 9, 2013
J. Abad
While Legacy Consolidated enjoyed wide latitude in evaluating Atty. Chuanico’s work and
attitude and in terminating his employment on the ground of loss of trust and confidence, these
are broad principles that do not themselves show when, where, and how Atty. Chuanico betrayed
the trust that Legacy Consolidated gave him as in-house counsel. To be a valid cause for dismissal,
the loss of trust must be based on a willful breach of such trust and founded on clearly established
facts. The company charged him with having mishandled two things that were assigned to him,
the drafting of an answer in one and the preparation of a complaint affidavit in the other. It failed
to present proof, however, of such mishandling.
FACTS:
Legacy Plans Philippines, Inc. (Legacy Plans) hired Atty. Eric V. Chuanico as Assistant Vice-
President for legal services. He was to serve as in-house counsel for the company and its
subsidiaries under the supervision of Atty. Christine A. Cruz (Atty. Cruz), the Senior Vice-President
for Legal Affairs. In the same year, Legacy Plans merged with Consolidated Plans Philippines, Inc.
to become Legacy Consolidated Plans, Inc. (Legacy Consolidated), the respondent in this case.
Thereafter, Atty. Cruz wrote Atty. Chuanico a memorandum, requiring him to explain why
no administrative action should be taken against him for mishandling two cases. Despite the
explanation of Atty. Chuanico, Legacy Consolidated dismissed Atty. Chuanico for serious
misconduct, willful disobedience to lawful orders, gross and habitual neglect of duties, and willful
breach of trust. This prompted him to file a complaint for illegal dismissal with claims for his
unpaid December 2002 salary and 13th-month pay plus moral and exemplary damages and
attorney’s fees.
The Labor Arbiter (LA) rendered a decision finding Legacy Consolidated guilty of illegal
dismissal and awarded Atty. Chuanico with full backwages from December 20, 2002 and
separation pay in lieu of reinstatement computed at one month pay for every year of service
inclusive of the period when the case was pending. On appeal, the National Labor Relations
Commission (NLRC) affirmed the LA’s Decision. The CA reversed the NLRC.
ISSUE:
Whether Atty. Chuanico was illegally dismissed
RULING:
The CA found reasonable basis for believing that Atty. Chuanico had breached his
employer’s trust. He was not a mere rank-and-file employee but an in-house counsel. Thus, Legacy
Consolidated enjoyed wide latitude in evaluating his work and attitude and in terminating his
employment on the ground of loss of trust and confidence. His mishandling of the cases assigned
to him shows that he had been unfit to continue working for his employer.
But these are broad principles that do not themselves show when, where, and how Atty.
Chuanico betrayed the trust that Legacy Consolidated gave him as in-house counsel. To be a valid
cause for dismissal, the loss of trust must be based on a willful breach of such trust and founded on
clearly established facts. The company charged him with having mishandled two things that were
assigned to him, the drafting of an answer in one and the preparation of a complaint affidavit in
the other. It failed to present proof, however, of such mishandling.
In the first case, the charge is that the draft-answer Atty. Chuanico prepared for Bank of
East Asia was so haphazardly done that the lawyers assigned to handle them had to prepare
another answer that was eventually filed in court. Yet, as the LA found, Legacy Consolidated did
not bother to present the draft-answer Atty. Chuanico prepared and demonstrate why it regarded
the same as haphazardly done. Besides, as Atty. Chuanico said, he was given only one day within
which to finish the draft-answer and Legacy Consolidated did not contest this fact. Consequently,
he could not be expected to do more than an adequate pleading.
In the second case, Legacy Consolidated accused Atty. Chuanico of failing to prepare a
complaint-affidavit against a certain De Rama. Atty. Chuanico denied that the matter had been
assigned to him. Yet, as the LA and the NLRC noted, Legacy Consolidated did not bother to
present some note or logbook to refute this denial. It only presented the sworn statement of the
office secretary, supposedly competent, who relied merely on her memory for ascertaining
individual work assignments in a law practice that served a number of affiliated companies.
The Court held in CAPANELA v. National Labor Relations Commission that the factual
findings of quasi-judicial bodies, which are triers of facts on matters within their expertise, should
be considered, when supported by substantial evidence, binding and conclusive on appellate
courts. Here the LA and the NLRC were in better positions to assess and evaluate the credibility of
the parties' claims and the weight to which the irrespective evidence is entitled.
VICTORINO OPINALDO v. NARCISA RAVINA

G.R. No. 196573, October 16, 2013
J. Villarama, Jr.
Abandonment is the deliberate and unjustified refusal of an employee to resume his

employment. To constitute abandonment of work, two elements must concur: (1) the employee
must have failed to report for work or must have been absent without valid or justifiable reason;
and, (2) there must have been a clear intention on the part of the employee to sever the
employer-employee relationship manifested by some overt act. None of these elements is
present in the case at bar.
Respondent did not properly exercise her management prerogative when she withheld
petitioner’s employment without due process. She failed to prove that she has notified petitioner
that her continuous refusal to provide him any work assignment was due to his non-submission of
the medical certificate. It is a time-honored legal principle that the employer has the onus
probandi to show that the dismissal or termination was for a just and authorized cause under the
Labor Code.
FACTS:
Victorino Opinaldo (Opinaldo) was hired by Narcisa Ravina (Ravina), the general manager
and sole proprietor of St. Louisse Secuity Agency and was detailed to PAIJR Furniture Accessories
(PAIJR). The owner of PAIJR submitted a written complaint to Navina requesting to relive
Opinaldo from his post as he is no longer physically fit to perform his duties and responsibilities as
a company guard because of his health condition. Ravina, acceding to PAIJR’s request, relieved
Opinaldo from his work, and further required the latter to submit medical certificate to prove that
he is physically and mentally fit for work as security guard. Thereafter, Navina reassigned
Opinaldo to Gomez Construction. After working for a period of two weeks for Gomez
Construction and upon receipt of his salary for services rendered within the said two-week period,
Opinaldo ceased to report for work. The records show that Opinaldo’s post at Gomez
Construction was the last assignment given to him by respondent.
Opinaldo filed a complaint against Ravina with the Department of Labor and Employment
(DOLE) for underpayment of salary and nonpayment of other labor standard benefits. The parties
agreed to settle and reached a compromise agreement, Opinaldo signed a Quitclaim and
Release for the amount of P5,000. Then, Opinaldo returned to Navina’s office. Petitioner claims
that when he asked respondent to sign an SSS Sickness Notification which he was going to use in
order to avail of the discounted fees for a medical check-up, respondent allegedly refused and
informed him that he was no longer an employee of the Agency. Respondent allegedly told him
that when he signed the quitclaim and release form at the DOLE Regional Office, she already
considered him to have quit his employment. Respondent, on the other hand, counterclaims that
she did not illegally dismiss petitioner and that it was a valid exercise of management prerogative
that he was not given any assignment pending the submission of the required medical certificate
of his fitness to work.
Opinaldo filed a Complaint for Illegal Dismissal with a prayer for the payment of
separation pay in lieu of reinstatement against respondent and the Agency before the NLRC.
Labor Arbiter rendered a Decision holding respondent and the Agency liable for illegal dismissal
and ordering them to pay petitioner separation pay and back wages. NLRC affirmed the decision
of the LA. CA reversed the decision of NLRC, thus, this petition.
ISSUE:
Whether Opinaldo was illegally dismissed
RULING:
All said, what behooves the Court is the lack of evidence on record which establishes that
respondent informed petitioner that his failure to submit the required medical certificate will
result in his lack of work assignment. It is a basic principle of labor protection in this jurisdiction
that a worker cannot be deprived of his job without satisfying the requirements of due
process. Labor is property and the right to make it available is next in importance to the rights of
life and liberty. As enshrined under the Bill of Rights, no person shall be deprived of life, liberty or
property without due process of law. The due process requirement in the deprivation of one’s
employment is transcendental that it limits the exercise of the management prerogative of the
employer to control and regulate the affairs of the business. In the case at bar, all that respondent
employer needed to prove was that petitioner employee was notified that his failure to submit the
required medical certificate will result in his lack of work assignment – and eventually the
termination of his employment – as a security guard. There is no iota of evidence in the records,
save for the bare allegations of respondent, that petitioner was notified of such consequence for
non-submission. In truth, the facts of the case clearly show that respondent even reassigned
petitioner to Gomez Construction from his PAIJR post despite the non-submission of a medical
certificate. If it was indeed the policy of respondent not to give petitioner any work assignment
without the medical certificate, why was petitioner reassigned despite his noncompliance?
That is not all. In addition to invoking management prerogative as a defense, respondent

also alleges abandonment. Respondent claims that after petitioner received his last salary from his
assignment with Gomez Construction, he no longer reported for work.
Abandonment is the deliberate and unjustified refusal of an employee to resume his

employment. To constitute abandonment of work, two elements must concur: (1) the employee
and, (2) there must have been a clear intention on the part of the employee to sever the
employer-employee relationship manifested by some overt act. None of these elements is present
in the case at bar.
Finally, respondent harps that she could not be held liable for illegal dismissal because, in
the first place, she did not dismiss petitioner. Respondent maintains that she merely refused to
give petitioner any work assignment until the submission of a medical certificate. On this issue,
the CA concurred with respondent and ruled that petitioner failed to "establish the facts which
would paint the picture that respondent terminated him."
We need not reiterate that respondent did not properly exercise her management
prerogative when she withheld petitioner’s employment without due process. Respondent failed
to prove that she has notified petitioner that her continuous refusal to provide him any work
assignment was due to his non-submission of the medical certificate. Had respondent exercised
the rules of fair play, petitioner would have had the option of complying or not complying with
the medical certificate requirement – having full knowledge of the consequences of his actions.
Respondent failed to do so and she cannot now hide behind the defense that there was no illegal
termination because petitioner cannot show proof that he had been illegally dismissed. It is a
time-honored legal principle that the employer has the onus probandi to show that the dismissal
or termination was for a just and authorized cause under the Labor Code. Respondent failed to
show that the termination was justified and authorized, nor was it done as a valid exercise of
management prerogative. Given the circumstances in the case at bar, it is not fair to shift the
burden to petitioner, and rule that he failed to prove his claim, when respondent had successfully
terminated the employer-employee relationship without leaving a paper trail in a clear case o
illegal dismissal.
HECHANOVA BUGAY VILCHEZ LAWYERS, HECHANOVA & CO., INC.,

ATTY. EDITHA R. HECHANOVA
v. ATTY. LENY O. MATORRE, Respondent.
G.R. No. 198261, October 16, 2013
J. Villarama, Jr.
Having submitted a resignation letter, it is then incumbent upon the employee to prove
that the resignation was not voluntary but was actually a case of constructive dismissal with clear,
positive, and convincing evidence. Petitioner failed to substantiate her claim of constructive
dismissal. the act of HBV Law Firm of moving the effectivity date of Atty. Matorre’s resignation
from September 30, 2008 to September 15, 2008 is not an act of harassment, as Atty. Matorre
would have the Court to believe. The 30-day notice requirement for an employee’s resignation is
actually for the benefit of the employer who has the discretion to waive such period. Its purpose is
to afford the employer enough time to hire another employee if needed and to see to it that
there is proper turn-over of the tasks which the resigning employee may be handling. The rule
requiring an employee to stay or complete the 30-day period prior to the effectivity of his
resignation becomes discretionary on the part of management as an employee who intends to
resign may be allowed a shorter period before his resignation becomes effective.
FACTS:
Atty. Matorre was hired by by HBV Law Firm as a Senior Associate Attorney. As the
managing partner of HBV Law Firm, Atty. Hechanova was the one who supervised Atty. Matorre
and gave her work assignments. However, as soon as Atty. Matorre started working she had
already express her feelings of being harassed by Atty. Hechanova. Atty. Matorre also
explained that she intended to improve her work and that she was not making excuses when she
could not accomplish assigned tasks on time. During a meeting between Atty. Matorre and Atty.
Hechanova, the former told Atty. Hechanova that since she (Atty. Hechanova) was not satisfied
with her work and because they were frequently arguing with each other, it would be best if she
(Atty. Matorre) resigns from the firm. Atty. Matorre requested that her resignation be made
effective on September 30, 2008, but thinking that the said date was too far off, Atty. Hechanova
accepted the resignation, with the condition that it be made effective on September 15, 2008.
Atty. Matorre filed a complaint for constructive illegal dismissal, nonpayment of

separation pay, and for payment of moral and exemplary damages and attorneys’ fees against
HBV Law Firm. Labor Arbiter (LA) rendered judgment in favor of HBV Law Firm and held that Atty.
Matorre voluntarily resigned from her employment. The NLRC reversed the LA. CA upheld the
ruling of the NLRC and held that no voluntary resignation was made by Atty. Matorre.
ISSUE:
Whether Atty. Matorre’s resignation was voluntary
RULING:
SC finds the petition meritorious. The resignation of Atty. Matorre was voluntary and she
was not constructively dismissed.
First, having submitted a resignation letter, it is then incumbent upon her to prove that the
resignation was not voluntary but was actually a case of constructive dismissal with clear, positive,
and convincing evidence. Petitioner failed to substantiate her claim of constructive dismissal.
Second, the act of HBV Law Firm of moving the effectivity date of Atty. Matorre’s
resignation from September 30, 2008 to September 15, 2008 is not an act of harassment, as Atty.
Matorre would have the Court to believe. The 30-day notice requirement for an employee’s
resignation is actually for the benefit of the employer who has the discretion to waive such period.
Its purpose is to afford the employer enough time to hire another employee if needed and to see
to it that there is proper turn-over of the tasks which the resigning employee may be handling.
The rule requiring an employee to stay or complete the 30-day period prior to the effectivity of
his resignation becomes discretionary on the part of management as an employee who intends to
resign may be allowed a shorter period before his resignation becomes effective.
Moreover, the act of HBV Law Firm of moving the effectivity date of Atty. Matorre’s
resignation to an earlier date cannot be seen as a malicious decision on the part of the firm in
order to deprive Atty. Matorre of an opportunity to seek new employment. This decision cannot
be viewed as an act of harassment but rather merely the exercise of the firm’s management
prerogative. Surely, the Court cannot expect employers to maintain in their employ employees
who intend to resign, just so the latter can have continuous work as they look for a new source of
income.
Third, the fact that HBV Law Firm was no longer assigning new work to Atty. Matorre after
her resignation is not an act of harassment, but is also an exercise of management prerogative.
Expecting that Atty. Matorre would no longer be working for HBV Law Firm after three to four
weeks, she was no longer given additional assignments to ensure a smooth turn-over of duties and
work. Indeed, having an employee focus on her remaining tasks and not assigning new ones to her
would be beneficial on the part of HBV Law Firm as there would in fact be less tasks to be turned
over to Atty. Matorre’s replacement. Said actuation is well within the ambit of the firm’s
management prerogative, and is certainly not an act of harassment.
CANDIDO S. GEMINA JR. v. BANKWISE INC. (Thrift Bank), LAZARO LL. MADARA PERFECTO M.
PASCUA and OSMENIO R. GALAPATE
G.R. No. 175365, October 23, 2013
J. Reyes
Gemina claims that he was illegally terminated by the petitioner, however, it is a well-
settled rule, however, that before the employer must bear the burden of proving that the
dismissal was legal, the employee must first establish by substantial evidence the fact of his
dismissal from service. Bare allegations of constructive dismissal, when uncorroborated by the
evidence on record, cannot be given credence.
FACTS:
Candido S. Gemina, Jr. signed an employment contract with Bankwise, Inc.

(Bankwise). Gemina had a satisfactory performance and was able to bring in new and former
clients to Bankwise. However, when Bankwise was embroiled in a controversy involving the
deposits of Foreign Retirees Association, he started to experience difficulty in soliciting new
depositors. To alleviate the situation, he suggested innovations in Bankwise’s marketing strategies
to his immediate superiors, Perfecto Pascua (Pascua) and Osmenio Galapate (Galapate), who then
worked out promotional schemes without his participation. The schemes, however, failed to
materialize and he was blamed for the failure. Thereafter, he was subjected to several forms of
harassment by some officers of Bankwise by forcing him to file an indefinite leave of absence,
demanding for the return of his service vehicle and intentionally delaying the release of his
salaries and allowances. Gemina filed a complaint for constructive dismissal against Bankwise.
For its part, Bankwise pointed out that Gemina’s employment contract stipulated for a
fund level commitment of P100,000,000.00 for the first six (6) months of employment which
Gemina failed to attain. Gemina also incurred absences without leave and did not bother to
inform the bank regarding the reason therefor. Pascua and Galapate tried to contact him to
inquire about the reason of his long absence and requested him to return the company vehicle but
to no avail.
ISSUE:
Whether Gemina was constructively dismissed
RULING:
There was no constructive dismissal. There is constructive dismissal when "there is

cessation of work, because ‘continued employment is rendered impossible, unreasonable or
unlikely, as an offer involving a demotion in rank or a diminution in pay’ and other benefits. Aptly
called a dismissal in disguise or an act amounting to dismissal but made to appear as if it were not,
constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or disdain
by an employer becomes so unbearable on the part of the employee that it could foreclose any
choice by him except to forego his continued employment."
A close scrutiny of the facts of the case will bear out that Gemina indeed failed to state
circumstances substantiating his claim of constructive dismissal. To begin with, he does not claim
to have suffered a demotion in rank or diminution in pay or other benefits. What he claims is that
he had been subjected to several acts of harassment by some of the officers of Bankwise by way of
(1) asking him to take a forced leave of absence, (2) demanding for the return of his service
vehicle, and (3) delaying the release of his salaries and allowances in order to compel him to quit
employment.
It is a well-settled rule, however, that before the employer must bear the burden of
proving that the dismissal was legal, the employee must first establish by substantial evidence the
fact of his dismissal from service. Bare allegations of constructive dismissal, when uncorroborated
by the evidence on record, cannot be given credence. In the instant case, the records are bereft of
substantial evidence that will unmistakably establish a case of constructive dismissal. An act, to be
considered as amounting to constructive dismissal, must be a display of utter discrimination or
insensibility on the part of the employer so intense that it becomes unbearable for the employee
to continue with his employment. Here, the circumstances relayed by Gemina were not clear-cut
indications of bad faith or some malicious design on the part of Bankwise to make his working
environment insufferable.
MAYNILAD WATER SUPERVISORS ASSOCIATION, represented by ROBERTA ESTINO v.

MAYNILAD WATER SERVICES, INC.
G.R. No. 198935, November 27, 2013
J. Perez
Petitioners argues the associations’ entitlement to cost of living allowances (COLA),

however, after the absorption of MWSS by Maynilad, the said COLA had already been integrated
with the employees basic salary. It is undisputed that Maynilad complied with such commitment.
It cannot, however, be compelled to assume the payment of an allowance which was not agreed
upon. Such would not only be unreasonable but also unfair for Maynilad. MWSS and Maynilad
could not have presumed that the COLA was part of the agreement when it was no longer being
received by the employees at the time of the execution of the contract, which is the reckoning
point of their new employment.
FACTS:
Petitioner Maynilad Water Supervisors Association (MWSA) is an association composed of

former supervisory employees of Metropolitan Waterworks and Sewerage System (MWSS). These
employees claim that during their employment with MWSS, they were receiving a monthly cost of
living allowance (COLA) equivalent to 40% of their basic pay. The payment of these allowances
and other additional compensation, including the COLA were, however, discontinued without
qualification effective 1 November 1989 when the Department of Budget and Management
(DBM) issued Corporate Compensation Circular No. 10 (CCC No. 10). In 1997, MWSS was
privatized and part of it, MWSS West, was acquired by Maynilad Water Services, Inc. (Maynilad).
Some of the employees of MWSS, which included members of MWSA, were absorbed by
Maynilad subject to the terms and conditions of a Concession Agreement and the payment of
COLA was not among those listed as benefits in Exhibit "F."
In 1998, the Supreme Court promulgated a Decision declaring DBM CCC No.10

ineffective for failure to comply with the publication requirement. Consequently, MWSS partially
released the COLA payments for its employees, including members of MWSA, covering the years
1989 to 1997, and up to year 1999 for its retained employees. In 2002, MWSA filed a complaint
before the Labor Arbiter praying for the payment of their COLA from the year 1997, the time its
members were absorbed by Maynilad, up to the present. MWSA argued that since DBM CCC No.
10 was rendered ineffective, the COLA should be paid as part of the benefits enjoyed by their
members at the time of their separation from MWSS, and which should form part of their salaries
and benefits with Maynilad.
Labor Arbiter (LA) granted MWSA’s claim and directed Maynilad to pay the COLA of the
supervisors retroactive to the date when they were hired in 1997, with legal interest from the date
of promulgation of the decision. NLRC reversed LA’s ruling. CA set aside NLRC’s ruling and
reinstated the decision of the LA, however, on the Motion for Reconsideration of Maynilad, CA
affirmed the ruling of NLRC.
ISSUE:
Whether the CA erred in not holding that the MWSA members are entitled to COLA under the
Concession Agreement
RULING:
COLA is not in the nature of an allowance intended to reimburse expenses incurred by

officials and employees of the government in the performance of their official functions. It is not
payment in consideration of the fulfillment of official duty. As defined, cost of living refers to "the
level of prices relating to a range of everyday items" or "the cost of purchasing those goods and
services which are included in an accepted standard level of consumption." Based on this premise,
COLA is a benefit intended to cover increases in the cost of living. Thus, it is and should be
integrated into the standardized salary rates.
It is evident therefore, that at the time the MWSS employees were absorbed by Maynilad
in 1997, the COLA was already part and parcel of their monthly salary. The non-publication of
DBM CCC No. 10 in the Official Gazette or newspaper of general circulation did not nullify the
integration of COLA into the standardized salary rates upon the effectivity of R.A. No. 6758. As
held by this Court in Phil. International Trading Corp. v. COA, the validity of R.A. No. 6758 should
not be made to depend on the validity of its implementing rules. To grant COLA to herein
petitioners now would create an absurd situation wherein they would be receiving an additional
COLA in the amount equivalent to 40% of their basic salary even if the Court has already ruled
that the COLA is already integrated in the employee’s basic salary. Such conclusion would give the
absorbed employees far greater rights than their former co-employees or other government
employees from whom COLA was eventually disallowed.
The ruling of the Labor Arbiter which MWSA insists on is also erroneous in that it seeks to
have the COLA incorporated in the monthly compensation to be received by the absorbed
employees. It failed to consider that the employment contracts of the MWSA members with
MWSS were terminated prior to their employment with MAYNILAD. Although they may have
continued performing the same function, their employment is already covered by an entirely new
employment contract.
This Court has ruled that unless expressly assumed, labor contracts such as employment
contracts and collective bargaining agreements are not enforceable against a transferee of an
enterprise, labor contracts being in personam, thus binding only between the parties. In the
instant case, the only commitment of Maynilad under the Concession Agreement it entered with
MWSS was to provide the absorbed employees with a compensation package "no less favorable
than those granted to [them] by the MWSS at the time of their separation from MWSS,
particularly those set forth in Exhibit ‘F’ x x x." It is undisputed that Maynilad complied with such
commitment. It cannot, however, be compelled to assume the payment of an allowance which was
not agreed upon. Such would not only be unreasonable but also unfair for Maynilad. MWSS and
Maynilad could not have presumed that the COLA was part of the agreement when it was no
longer being received by the employees at the time of the execution of the contract, which is the
reckoning point of their new employment.
In Norton Resources and Development Corporation v. All Asia Bank Corporation, this

Court ruled that the agreement or contract between the parties is the formal expression of the
parties’ rights, duties and obligations. It is the best evidence of the intention of the parties. Thus,
when the terms of an agreement have been reduced to writing, it is considered as containing all
the terms agreed upon and there can be no evidence of such terms other than the contents of the
written agreement between the parties and their successors in interest. Time and again, we have
stressed the rule that a contract is the law between the parties, and courts have no choice but to
enforce such contract so long as it is not contrary to law, morals, good customs or public policy.
Otherwise, courts would be interfering with the freedom of contract of the parties. Simply put,
courts cannot stipulate for the parties or amend the latter’s agreement, for to do so would be to
alter the real intention of the contracting parties when the contrary function of courts is to give
force and effect to the intention of the parties.
SKM ART CRAFT CORPORATION v. EFREN BAUCA, PATRICIO OLMILLA ZALDY ESCALARES, et al.
G.R. No. 171282, November 27, 2013
J. Villarama, Jr.
In case, where the the business of the employee was suspended because of a fire that
caused severe damage. The respondents were already illegally dismissed noting that the
petitioner’s manifestation dated October 2, 2001 that it is willing to admit respondents if they
return to work was belatedly made, almost one year after petitioner’s suspension of operations
expired in November 2000. We find that petitioner no longer recalled, nor wanted to recall,
respondents after six months, pursuant to Art 286 of the Labor Code, bona fide suspension.
FACTS:
The 23 respondents were employed by petitioner SKM Art Craft Corporation which is
engaged in the handicraft business. On April 18, 2000, a fire occurred at the inspection and
receiving/repair/packing area of petitioner’s premises in Intramuros, Manila. Because of the
severe damage, petitioner informed respondents that it will suspend its operations for six months,
effective May 9, 2000.
On May 16, 2000, after receiving notice of the suspension of petitioner’s operations, the
23 respondents (and other co-workers) filed a complaint for illegal dismissal, they alleged that
there was discrimination in choosing the workers to be laid off and that petitioner had discovered
that most of them were members of a newly-organized union. Petitioner denied the claim of
illegal dismissal and said that Article 286 7 of the Labor Code allows the bona fide suspension of a
business or undertaking for a period not exceeding six months.
Labor Arbiter (LA) ruled that respondents were illegally dismissed and ordered petitioner
to reinstate them and pay them back wages. The National Labor Relations Commission (NLRC) set
aside the Labor Arbiter’s Decision and ruled that there was no illegal dismissal. The NLRC ordered
that respondents be reinstated to their former positions but it deleted the award of back wages.
The CA set aside the NLRC Decision and Resolution and reinstated the Labor Arbiter’s Decision.
ISSUE:
Whether the respondents have been illegally dismissed
RULING:
SC agrees with the NLRC that the suspension of petitioner’s operation is valid, the Labor
Arbiter and the CA are correct that respondents were illegally dismissed since they were not
recalled after six months, after the bona fide suspension of petitioner’s operations.
Under Article 286 of the Labor Code, the bona fide suspension of the operations of a
business or undertaking for a period not exceeding six months shall not terminate employment.
Article 286 provides:
ART. 286. When employment not deemed terminated. – The bona fide suspension of the
operations of a business or undertaking for a period not exceeding six (6) months, or the
fulfillment by the employee of a military or civic duty shall not terminate employment.
In all such cases, the employer shall reinstate the employee to his former position without
loss of seniority rights if he indicates his desire to resume his work not later than one (1) month
from the resumption of operations of his employer or from his relief from the military or civic duty.
The NLRC correctly noted that the complaint for illegal dismissal filed by respondents was
premature since it was filed only eight days after petitioner announced that it will suspend its
operations for six months. In Nippon Housing Phil., Inc. v. Leynes, we said that a complaint for
illegal dismissal filed prior to the lapse of said six months is generally considered as prematurely
filed.
In this case, however, we agree with the Labor Arbiter and the CA that respondents were
already considered illegally dismissed since petitioner failed to recall them after six months, when
its bona fide suspension of operations lapsed. We stress that under Article 286 of the Labor Code,
the employment will not be deemed terminated if the bona fide suspension of operations does
not exceed six months. But if the suspension of operations exceeds six months, the employment
will be considered terminated. In Valdez v. NLRC, we explained:
Under Article 286 of the Labor Code, the bona fide suspension of the operation of
a business or undertaking for a period not exceeding six months shall not terminate
employment. Consequently, when the bona fide suspension of the operation of a business
or undertaking exceeds six months, then the employment of the employee shall be
deemed terminated. By the same token and applying said rule by analogy, if the employee
was forced to remain without work or assignment for a period exceeding six months, then
he is in effect constructively dismissed.
In Waterfront Cebu City Hotel v. Jimenez, we also said:
Under Art. 286 of the Labor Code, a bona fide suspension of business operations
for not more than six (6) months does not terminate employment. After six (6) months, the
employee may be recalled to work or be permanently laid off. In this case, more than six
(6) months have elapsed from the time the Club ceased to operate. Hence, respondents’
termination became permanent.
Indeed, petitioner’s manifestation dated October 2, 2001 that it is willing to admit

respondents if they return to work was belatedly made, almost one year after petitioner’s
suspension of operations expired in November 2000. We find that petitioner no longer recalled,
nor wanted to recall, respondents after six months.
GMA NETWORK, INC., v. CARLOS P. PABRIGA, GEOFFREY F. ARIAS, et al.

G.R. No. 176419, November 27, 2013
J. Leonardo-De Castro
The respondents’ jobs and undertakings are clearly within the regular or usual business of
the employer company and are not identifiably distinct or separate from the other undertakings
of the company. There is no denying that the manning of the operations center to air
commercials, acting as transmitter/VTR men, maintaining the equipment, and acting as
cameramen are not undertakings separate or distinct from the business of a broadcasting
company. As regular employees, they are entitled to security of tenure and therefore their
services may be terminated only for just or authorized causes. Since petitioner failed to prove any
just or authorized cause for their termination, we are constrained to affirm the findings of the
NLRC and the Court of Appeals that they were illegally dismissed.
FACTS:
On July 1999, due to the miserable working conditions private respondents were forced to
file a complaint against petitioner before the National Labor Relations Commission Regional
Arbitration Cebu City. Thereafter, the private respondents were summoned to the office of
petitioner’s Area Manager, Mrs. Susan Aliño, and they were made to explain why they filed the
complaint. The next day, private respondents were barred from entering and reporting for work
without any notice stating the reasons therefor. Private respondents, through their counsel, wrote
a letter to Mrs. Susan Aliño requesting that they be recalled back to work. On a reply letter from
Mr. Bienvenido Bustria, petitioner’s head of Personnel and Labor Relations Division, admitted the
non-payment of benefits but did not mention the request of private respondents to be allowed to
return to work.
Private respondents, then, sent another letter to Mr. Bustria reiterating their request to
work but the same was totally ignored. Private respondents filed an amended complaint raising
the following additional issues: 1) Unfair Labor Practice; 2) Illegal dismissal; and 3) Damages and
Attorney’s fees.
Labor Arbiter dismissed the complaint of respondents for illegal dismissal and unfair labor
practice, but held petitioner liable for 13th month pay. The NLRC reversed the Decision of the
Labor Arbiter. Petitioner elevated the case to the Court of Appeals via a Petition for Certiorari, the
appellate court rendered its Decision denying the petition for lack of merit.
ISSUE:
Whether CA erred in finding respondents are regular employees
RULING:
In order to safeguard the rights of workers against the arbitrary use of the word "project"
to prevent employees from attaining the status of regular employees, employers claiming that
their workers are project employees should not only prove that the duration and scope of the
employment was specified at the time they were engaged, but also that there was indeed a
project. As discussed above, the project could either be (1) a particular job or undertaking that is
within the regular or usual business of the employer company, but which is distinct and separate,
and identifiable as such, from the other undertakings of the company; or (2) a particular job or
undertaking that is not within the regular business of the corporation. As it was with regard to the
distinction between a regular and casual employee, the purpose of this requirement is to
delineate whether or not the employer is in constant need of the services of the specified
employee. If the particular job or undertaking is within the regular or usual business of the
employer company and it is not identifiably distinct or separate from the other undertakings of
the company, there is clearly a constant necessity for the performance of the task in question, and
therefore said job or undertaking should not be considered a project.
The respondents’ jobs and undertakings are clearly within the regular or usual business of
the employer company and are not identifiably distinct or separate from the other undertakings
of the company. There is no denying that the manning of the operations center to air
commercials, acting as transmitter/VTR men, maintaining the equipment, and acting as
cameramen are not undertakings separate or distinct from the business of a broadcasting
company.
Petitioner’s allegation that respondents were merely substitutes or what they call pinch-
hitters (which means that they were employed to take the place of regular employees of
petitioner who were absent or on leave) does not change the fact that their jobs cannot be
considered projects within the purview of the law. Every industry, even public offices, has to deal
with securing substitutes for employees who are absent or on leave. Such tasks, whether
performed by the usual employee or by a substitute, cannot be considered separate and distinct
from the other undertakings of the company. While it is management’s prerogative to device a
method to deal with this issue, such prerogative is not absolute and is limited to systems wherein
employees are not ingeniously and methodically deprived of their constitutionally protected right
to security of tenure. We are not convinced that a big corporation such as petitioner cannot
device a system wherein a sufficient number of technicians can be hired with a regular status who
can take over when their colleagues are absent or on leave, especially when it appears from the
records that petitioner hires so-called pinch-hitters regularly every month.
In affirming the Decision of the NLRC, the Court of Appeals furthermore noted that if
respondents were indeed project employees, petitioner should have reported the completion of
its projects and the dismissal of respondents in its finished projects:
There is another reason why we should rule in favor of private respondents. Nowhere in
the records is there any showing that petitioner reported the completion of its projects and the
dismissal of private respondents in its finished projects to the nearest Public Employment Office as
per Policy Instruction No. 20 of the Department of Labor and Employment [DOLE]. Jurisprudence
abounds with the consistent rule that the failure of an employer to report to the nearest Public
Employment Office the termination of its workers’ services everytime a project or a phase thereof
is completed indicates that said workers are not project employees.
In sum, we affirm the findings of the NLRC and the Court of Appeals that respondents are
regular employees of petitioner. As regular employees, they are entitled to security of tenure and
therefore their services may be terminated only for just or authorized causes. Since petitioner
failed to prove any just or authorized cause for their termination, we are constrained to affirm the
findings of the NLRC and the Court of Appeals that they were illegally dismissed.
RE: APPLICATION FOR SURVIVORSHIP PENSION BENEFITS UNDER REPUBLIC ACT NO. 9946 OF
MRS. PACITA A. GRUBA, SURVIVING SPOUSE OF THE LATE MANUEL K. GRUBA, FORMER CTA
ASSOCIATE JUDGE.
A.M. No. 14155-Ret., November 19, 2013
J. Leonen
Where a judge of the Court of Tax Appeals who died while in service and prior to the
enactment of Republic Act No. 9946, which substantially amended the benefits provided in
Republic Act No. 910, the SC grants the applicability of RA 9946 to Judge Gruba. Providing
retroactivity to judges and justices who died while in service conforms with the doctrine that
retirement laws should be liberally construed and administered in favor of persons intended to be
benefited. “[T]he liberal approach aims to achieve the humanitarian purposes of the law in order
that the efficiency, security, and well-being of government employees may be enhanced.”
FACTS:
Manuel K. Gruba (Judge Gruba) was born on April 19, 1941. He began his government
service on December 3, 1979 at the Bureau of Internal Revenue. He rose from the ranks at the
Bureau of Internal Revenue until he was appointed as an Associate Judge of the Court of Tax
Appeals on September 17, 1992. On June 25, 1996, Judge Gruba passed away. The cause of his
death was natural. He was 55 years old when he died. He was in government service for a total of
16 years, six (6) months, and 21 days. In those years, he rendered service for three (3) years, nine
(9) months, and eight (8) days in the Judiciary.
The surviving spouse of Judge Gruba, Mrs. Pacita A. Gruba (Mrs. Gruba), applied for
retirement/gratuity benefits under Republic Act No. 910. Upon the grant of the Court of
retirement benefits under RA 910, Congress amended Republic Act No. 910 and passed Republic
Act No. 9946 which provides for more benefits, including survivorship pension benefits, among
others. The law also provides a retroactivity provision.
Mrs. Gruba now applies for survivorship pension benefits under Republic Act No. 9946.
ISSUE:
Whether Republic Act No. 9946 applies to Judge Gruba
RULING:
Republic Act No. 9946 provides for a retroactivity clause in Section 4, adding Section 3-B
to Republic Act No. 910:
SEC. 3-B. The benefits under this Act shall be granted to all those who have retired
prior to the effectivity of this Act: Provided, That the benefits shall be applicable only to
the members of the Judiciary: Provided, further, That the benefits to be granted shall be
prospective.
An initial look at the law might suggest that the retroactivity of Republic Act No. 9946 is
limited to those who retired prior to the effectivity of the law. However, a holistic treatment of
the law will show that the set of amendments provided by Republic Act No. 9946 is not limited to
justices or judges who retired after reaching a certain age and a certain number of years in service.
The changes in the law also refer to justices or judges who "retired" due to permanent disability or
partial permanent disability as well as justices or judges who died while in active service. In light of
these innovations provided in the law, the word "retired" in Section 3-B should be construed to
include not only those who already retired under Republic Act No. 910 but also those who retired
due to permanent disability. It also includes judges and justices who died or were killed while in
service.
Providing retroactivity to judges and justices who died while in service conforms with the
doctrine that retirement laws should be liberally construed and administered in favor of persons
intended to be benefited."[T]he liberal approach aims to achieve the humanitarian purposes of
the law in order that the efficiency, security, and well-being of government employees may be
enhanced." Ensuring the welfare of families dependent on government employees is achieved in
the changes made in Republic Act No. 9946. It will be consistent with the humanitarian purposes
of the law if the law is made retroactive to benefit the heirs of judges and justices who passed
away prior to the effectivity of Republic Act No. 9946.
Judge Gruba who passed away prior to the effectivity of Republic Act No. 9946 is still
covered by the law by virtue of Section 3-B. "Retired" here is not construed in the strict dictionary
definition but in its more rational sense of discontinuance of service due to causes beyond one’s
control. It should include the cessation of work due to natural causes such as death. Therefore, the
death of Judge Gruba produces effects under Republic Act No. 9946 for his family.
In the past, this Court has liberally granted benefits to surviving heirs of deceased
members of the Judiciary despite incomplete compliance with the requisites of Republic Act No.
910. Since there was a gap in the law, this Court’s Resolution dated September 30, 2003 in Re:
Resolution Granting Permanent Total Disability Benefits to Heirs of Justices and Judges Who Die
In Actual Service provided for benefits of judges and justices who died in actual service but were
not able to comply with the age and service requirements stated in Republic Act No. 910. This
Resolution was incorporated in Republic Act No. 9946.
This Court also applied the survivorship pension benefits to surviving spouses of justices
and judges who died prior to the enactment of Republic Act No. 9946 in 2010. For example, Chief
Justice Enrique M. Fernando passed away in 2004, but his widow, Mrs. Emma Q. Fernando, was
given survivorship pension benefits despite the fact that Chief Justice Fernando’s death occurred
prior to the enactment of Republic Act No. 9946.
Congress has been liberal in according retirement and death benefits to justices and
judges. These benefits are incentives for talented individuals to join the Judiciary. For current
members, these benefits assure them that the government will continue to ensure their welfare
even in their twilight years. These benefits allow the best and the brightest lawyers to remain in
the Judiciary despite its risks because they know that their family’s welfare will be addressed even
in their passing.
BAGUIO CENTRAL UNIVERSITY v. IGNACIO GALLENTE

G.R. No. 188267, December 2, 2013
J. Brion
They are not required to present proof beyond reasonable doubt as the mere existence of

a basis for believing that such employee has breached the trust of the employer would suffice for
the dismissal. Thus, as long as the employer “has reasonable ground to believe that the
employee concerned is responsible for the purported misconduct, and the nature of his
participation therein renders him unworthy of the trust and confidence demanded of
his position,” the dismissal on this ground is valid.
FACTS:
Baguio Central University (BCU) hired petitioner Ignacio Gallente as instructor and was
later on promoted as the dean of BCU’s College of Arts and Sciences and Public Administration.
Gallente, using the name “Genesis Gallente,” along with six other incorporators, organized the
GRC Review and Language Center, Inc. (GRC). The GRC’s Articles of Incorporation (AOI) listed its
primary purpose as “to conduct review classes for teachers, nursing, engineering and other
professional and technical for Board Licensure examinations and Civil Service Professional
examination,” and its secondary purpose as “to conduct tutorial and proficiency trainings for
foreign languages.” This AOI also listed the BCU as the GRC’s primary address.
The BCU’s President, Dr. Margarita Fernandez, subsequently called Gallente’s attention
regarding the establishment of the GRC and his use of the BCU as the GRC’s address and of the
BCU’s resources. The BCU’s officers conducted grievance meetings with Gallente to allow him to
explain his side. On September 30, 2005, Gallente tendered his resignation by letter.
Gallente filed before the LA a complaint for illegal (constructive) dismissal.
The LA found that Gallente was illegally dismissed. NLRC partially granted BCU’s appeal.
The NLRC found justifiable grounds for the BCU’s loss of trust and confidence that rendered
Gallente’s dismissal valid. The CA set aside NLRC’s ruling and reinstated LA’s ruling.
ISSUE:
Whether Gallante was validly dismissed on the ground of loss of trust and confidence
RULING:
Loss of trust and confidence is a just cause for dismissal under Article282(c) of the Labor
Code. Article 282(c) provides that an employer may terminate an employment for “fraud or willful
breach by the employee of the trust reposed in him by his employer or duly authorized
representative.” However, in order for the employer to properly invoke this ground, the employer
must satisfy two conditions.
First, the employer must show that the employee concerned holds a position of trust and
confidence. Jurisprudence provides for two classes of positions of trust. The first class consists of
managerial employees, or those who by the nature of their position, are entrusted with
confidential and delicate matters and from whom greater fidelity to duty is correspondingly
expected.
Article 212(m) of the Labor Code defines managerial employees as those who are “vested
with powers or prerogatives to lay down and execute management polices and/or to hire,
transfer, suspend, lay-off, recall, discharge, assign or discipline employees, or to effectively
recommend such managerial actions.” The second class includes “cashiers, auditors, property
custodians, or those who, in the normal and routine exercise of their functions, regularly handle
significant amounts of [the employer’s] money or property”
Second, the employer must establish the existence of an act justifying the loss of trust and
confidence. To be a valid cause for dismissal, the act that betrays the employer’s trust must be
real, i.e., founded on clearly established facts and the employee’s breach of the trust must be
wilful, i.e., it was done intentionally, knowingly and purposely, without justifiable excuse
In Lopez v. Keppel Bank Philippines, Inc., the Court repeated the guidelines for the

application of loss of confidence as follows: (1) loss of confidence should not be simulated; (2) it
should not be used as a subterfuge for causes which are improper, illegal or unjustified; (3) it may
not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and (4) it must be
genuine, not a mere afterthought to justify an earlier action taken in bad faith. As applied to the
dismissal of managerial employees, employers – as a rule – enjoy wider latitude of discretion.
They are not required to present proof beyond reasonable doubt as the mere existence of

a basis for believing that such employee has breached the trust of the employer would suffice for
the dismissal. Thus, as long as the employer “has reasonable ground to believe that the employee
concerned is responsible for the purported misconduct, and the nature of his participation therein
renders him unworthy of the trust and confidence demanded of his position,” the dismissal on this
ground is valid.
XAVIER C. RAMOS v. BPI FAMILY SAVINGS BANK AND/OR ALFONSO L. SALCEDO, JR.
G.R. No. 203186, December 04, 2013
J. Perlas-Bernabe
It is readily apparent that Ramos’s action of issuing the Purchase Order and Authority to
Deliver ahead of the approval of the credit committee was actually conformant to regular
company practice which BPI Family itself sanctioned. As such, Ramos cannot be said to have been
negligent in his duties. To this end, it is well to note that in loan transactions, banks are mandated
to ensure that their clients wholly comply with all the documentary requirements in relation to the
approval and release of loan applications. As BPI Family “uncharacteristically relaxed supervision
over its divisions,” yielding as it did to the demands of industry competition, it is but reasonable
that it solely bears the loss of its own shortcomings.
FACTS:
Xavier Ramos was employed by BPI Family and eventually became its Vice–President for
Dealer Network Marketing/Auto Loans Division. During his tenure, a client named Trezita B.
Acosta (Acosta) entered into and obtained several auto and real estate loans from BPI Family
which were duly approved and promptly paid. On December 15, 2004, Acosta purportedly
secured another auto loan from BPI Family for the purchase of a Toyota Prado vehicle (subject
loan) which had remained unpaid. As it turned out, Acosta did not authorize nor personally apply
for the subject loan, rendering the transaction fraudulent.
After investigation, BPI Family discovered that: (a) a person misrepresented herself as
Acosta and succeeded in obtaining the delivery of a Toyota Prado from the Toyota–Pasong Tamo
Branch, pursuant to the Purchase Order (PO) and Authority to Deliver (ATD) issued by Ramos; ( b)
Ramos released these documents without the prior approval of BPI Family’s credit committee; and
(c) Ramos was grossly remiss in his duties since his subordinates did not follow the bank’s safety
protocols, particularly those regarding the establishment of the loan applicant’s identity, and that
the promissory note was not even signed by the applicant in the presence of any of the marketing
officers.
As a consequence, BPI Family lost P2,294,080.00, which amount was divided between
Ramos and his three (3) other subordinates, with Ramos shouldering the proportionate amount of
P546,000.00. The foregoing amount was subsequently deducted from Ramos’s benefits which
accrued upon his retirement on May 1, 2006. In relation thereto, he executed a Release, Waiver
and Quitclaim dated June 21, 2006, agreeing to release the bank from any claim or liability with
respect to, inter alia, his separation pay or retirement benefits.
Claiming that the deductions made by BPI Family were illegal, Ramos filed a complaint for
underpayment of retirement benefits and non–payment of overtime and holiday pay and
premium pay against BPI Family and/or its President at that time, Alfonso L. Salcedo, Jr., before
the Regional Arbitration Branch of the NLRC.
The Labor Arbiter (LA) dismissed Ramos’s complaint, ruling that the deduction made on his
retirement benefits was “legal and even reasonable” since Ramos was negligent in running his
department. NLRC reversed the LA’s Decision. CA affirmed the finding of negligence on the part
of Ramos, however it also attributed negligence on the part of BPI Family, the CA found it
improper to deduct the entire P546,000.00 from Ramos’s retirement benefits and, instead,
equitably reduced the same to the amount of P200,000.00.
ISSUE:
Whether the CA erred in attributing grave abuse of discretion on the part of the NLRC when it
found the deduction made from Ramos’s retirement benefits to be illegal and unreasonable
RULING:
The petition is meritorious.

The requirement that the NLRC’s findings should be supported by substantial evidence is
clearly expressed in Section 5, Rule 133 of the Rules of Court which provides that “[i]n cases filed
before administrative or quasi–judicial bodies, a fact may be deemed established if it is supported
by substantial evidence, or that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.”
Applying the foregoing considerations, the Court finds the CA to have erred in attributing
grave abuse of discretion on the part of the NLRC in finding that the deduction made from
Ramos’s retirement benefits was improper. Two reasons impel the foregoing conclusion:
First, as correctly observed by the NLRC, BPI Family was not able to substantially prove its
imputation of negligence against Ramos. Well–settled is the rule that the burden of proof rests
upon the party who asserts the affirmative of an issue. 45 In this case, BPI Family failed to establish
that the duty to confirm and validate information in credit applications and determine credit
worthiness of prospective loan applicants rests with the Dealer Network Marketing Department,
which is the department under the supervision of Ramos. Quite the contrary, records show that
these responsibilities lie with the bank’s Credit Services Department, namely its Credit Evaluation
Section and Loans Review and Documentation Section, of which Ramos was not part of.
Second, as similarly observed by the NLRC, Ramos merely followed standing company
practice when he issued the PO and ATD without prior approval from the bank’s Credit Services
Department. In fact, as the CA itself notes, BPI Family adopted the practice of processing loans
with extraordinary haste in order to overcome arduous competition with other banks and lending
institutions, despite compromising procedural safeguards, viz.:
In a separate audit report, it was noted that marketing officers regularly issue or
release purchase orders and authorities to deliver to car dealers (in case of dealer
generated auto loan wherein a loan originates from the automobile dealer who
submits the financing transactions, down payment and mortgage fee by the
debtor–car purchaser to the bank) before the approval of the documents. The
report further noted that the practice has been adopted due in part to the stiff
competition with other banks and lending institutions. Resultantly, in 2005 alone,
approximately 111 car loan applications were released ahead of the approval of
the credit evaluation section.
Such findings of the auditing division have not been rebutted or countered as
erroneous. In fact, in all 111 instances, the bank did not attempt to rectify the flaw by calling the
respondent’s attention to the manner by which he disregarded important bank procedure or
protocol in accommodating car loan applications. It would seem unthinkable that respondent
bank has had no knowledge thereof when its credit evaluation committee could have easily
relayed the variations to the management for expedient solution. Any conscientious, well–
meaning banking institution (such as respondent bank, We imagine) would have raised the red
flag the moment the violation is first discovered. However, in the case before Us, respondent bank
did not sound alarm until the discovery of the first defraudation. Without doubt, its
uncharacteristically relaxed supervision over its divisions contributed to a large extent to the
unfortunate attainment of fraud. x x x
Based on the foregoing, it is readily apparent that Ramos’s action of issuing the PO and
ATD ahead of the approval of the credit committee was actually conformant to regular company
practice which BPI Family itself sanctioned. As such, Ramos cannot be said to have been negligent
in his duties. To this end, it is well to note that in loan transactions, banks are mandated to ensure
that their clients wholly comply with all the documentary requirements in relation to the approval
and release of loan applications. As BPI Family “uncharacteristically relaxed supervision over its
divisions,” yielding as it did to the demands of industry competition, it is but reasonable that it
solely bears the loss of its own shortcomings.
SANGWOO PHILIPPINES, INC. and/or SANG IK JANG, JISSO JANG, WISSO JANG and
NORBERTO TADEO v. SANGWOO PHILIPPINES, INC. EMPLOYEE UNION - OLALIA, represented
by PORFERIA
G.R. No. 173154, December 9, 2013
J. PERLAS-BERNABE
In this case, considering that SPI closed down its operations due to serious business losses
and that said closure appears to have been done in good faith, the Court -similar to the case of
Industrial Timber -deems it just to reduce the amount of nominal damages to be awarded to each
of the minority employees from P50,000.00 to P10,000.00. To be clear, the foregoing award
should only obtain in favor of the minority employees and not for those employees who already
received sums equivalent to separation pay and executed quitclaims "releasing [SPI] now and in
the future any claims and obligation which may arise as results of [their] employment with the
company." For these latter employees who have already voluntarily accepted their dismissal, their
executed quitclaims practically erased the consequences of infirmities on the notice of dismissal,
at least as to them.
FACTS:
During the collective bargaining agreement (CBA) negotiations between Sangwoo

Philippines, Inc. Employees Union – Olalia (SPEU) and Sangwoo Philippines, Inc.(SPI), the latter
filed with the Department of Labor and Employment (DOLE) a letter-notice of temporary
suspension of operations for one (1) month, beginning September 15, 2003, due to lack of orders
from its buyers. Negotiations on the CBA, however, continued and on September 10, 2003, the
parties signed a handwritten Memorandum of Agreement. Thereafter, SPI posted, in conspicuous
places within the company premises, notices of its permanent closure and cessation of business
operations, effective March 16, 2004, due to serious economic losses and financial reverses. The
DOLE was furnished a copy of said notice on February 13, 2004, together with a separate letter
notifying it of the company’s permanent closure. SPEU was also furnished with a copy of the
notice of permanent closure. Forthwith, SPI offered separation benefits of one-half (½) month pay
for every year of service to each of its employees. 234 employees of SPI accepted the offer,
received the said sums and executed quitclaims. Those who refused the offer, i.e., the minority
employees, were nevertheless given until March 25, 2004 to accept their checks and
correspondingly, execute quitclaims. However, the minority employees did not claim the said
checks.
SPEU filed a complaint for unfair labor practice, illegal closure, illegal dismissal, damages
and attorney’s fees before the Regional Arbitration Branch IV of the NLRC.
The Labor Arbiter (LA) ruled in favor of SPI. Consequently, the LA held that SPI was not
guilty of unfair labor practice, and similarly observed that it duly complied with the requirement
of furnishing notices of closure to its employees and the DOLE. NLRC sustained the ruling of the
LA, albeit with modification. The CA held that the minority employees were not entitled to
separation pay considering that the company’s closure was due to serious business losses.
ISSUES:
1. Whether the minority employees are entitled to separation pay

2. Whether SPI complied with the notice requirement of Article 297 (formerly Article 283) of
the Labor Code
RULING:
Non-entitlement to Separation Benefits
Closure of business is the reversal of fortune of the employer whereby there is a complete
cessation of business operations and/or an actual locking-up of the doors of establishment,
usually due to financial losses. Closure of business, as an authorized cause for termination of
employment, aims to prevent further financial drain upon an employer who cannot pay anymore
his employees since business has already stopped. In such a case, the employer is generally
required to give separation benefits to its employees, unless the closure is due to serious business
losses.
In this case, the LA, NLRC, and the CA all consistently found that SPI indeed suffered from
serious business losses which resulted in its permanent shutdown and accordingly, held the
company’s closure to be valid. It is a rule that absent any showing that the findings of fact of the
labor tribunals and the appellate court are not supported by evidence on record or the judgment
is based on a misapprehension of facts, the Court shall not examine a new the evidence submitted
by the parties. Perforce, without any cogent reason to deviate from the findings on the validity of
SPI’s closure, the Court thus holds that SPI is not obliged to give separation benefits to the
minority employees pursuant to Article 297 of the Labor Code as interpreted in the case
of Galaxie. As such, SPI should not be directed to give financial assistance amounting
to P15,000.00 to each of the minority employees based on the Formal Offer of Settlement. If at
all, such formal offer should be deemed only as a calculated move on SPI’s part to further
minimize the expenses that it will be bound to incur should litigation drag on, and not as an
indication that it was still financially sustainable. However, since SPEU chose not to accept, said
offer did not ripen into an enforceable obligation on the part of SPI from which financial
assistance could have been realized by the minority employees.
Insufficient Notice of Closure.
Article 297 of the Labor Code provides that before any employee is terminated due to
closure of business, it must give a one (1) month prior written notice to the employee and to the
DOLE. In this relation, case law instructs that it is the personal right of the employee to be
personally informed of his proposed dismissal as well as the reasons therefor; and such
requirement of notice is not a mere technicality or formality which the employer may dispense
with. Since the purpose of previous notice is to, among others, give the employee some time to
prepare for the eventual loss of his job, the employer has the positive duty to inform each and
every employee of their impending termination of employment. To this end, jurisprudence states
that an employer’s act of posting notices to this effect in conspicuous areas in the workplace is not
enough. Verily, for something as significant as the involuntary loss of one’s employment, nothing
less than an individually-addressed notice of dismissal supplied to each worker is proper. As
enunciated in the case of Galaxie:
Finally, with regard to the notice requirement, the Labor Arbiter found, and it was
upheld by the NLRC and the Court of Appeals, that the written notice of closure or
cessation of Galaxie’s business operations was posted on the company bulletin
board one month prior to its effectivity. The mere posting on the company bulletin
board does not, however, meet the requirement under Article [297] of "serving a
written notice on the workers."The purpose of the written notice is to inform the
employees of the specific date of termination or closure of business operations,
and must be served upon them at least one month before the date of effectivity to
give them sufficient time to make the necessary arrangement. In order to meet the
foregoing purpose, service of the written notice must be made individually upon
each and every employee of the company.(Emphasis and underscoring supplied;
citations omitted)
Keeping with these principles, the Court finds that the LA, NLRC, and CA erred in ruling
that SPI complied with the notice requirement when it merely posted various copies of its notice
of closure in conspicuous places within the business premises. As earlier explained, SPI was
required to serve written notices of termination to its employees, which it, however, failed to do.It
is well to stress that while SPI had a valid ground to terminate its employees, i.e., closure of
business, its failure to comply with the proper procedure for termination renders it liable to pay
the employee nominal damages for such omission.
In this case, considering that SPI closed down its operations due to serious business losses
and that said closure appears to have been done in good faith, the Court -similar to the case of
Industrial Timber -deems it just to reduce the amount of nominal damages to be awarded to each
of the minority employees from P50,000.00 to P10,000.00. To be clear, the foregoing award
should only obtain in favor of the minority employees and not for those employees who already
received sums equivalent to separation pay and executed quitclaims "releasing [SPI] now and in
the future any claims and obligation which may arise as results of [their] employment with the
company." For these latter employees who have already voluntarily accepted their dismissal, their
executed quitclaims practically erased the consequences of infirmities on the notice of dismissal,
at least as to them.
PHILIPPINE CARPET MANUFACTURING CORPORATION, PACIFIC CARPET MANUFACTURING

CORPORATION, MR. PATRICIO LIM and MR. DAVID LIM
v. IGNACIO B. TAGYAMON,PABLITO L. LUNA, FE B. BADA YOS, GRACE B. MARCOS, ROGELIO C.
NEMIS, ROBERTO B. ILAO, ANICIA D. DELA CRUZ and CYNTHIA L. COMANDAO
G.R. No. 191475, December 11, 2013
J. Peralta
The respondents were dismissed by the petitioner following a retrenchment and voluntary
retirement program of the latter. Having similar instances with the Philcea Case, the Court
applied Stare Decisis stating that just like the union members in the Philcea case, respondents
Tagyamon, Luna, Badayos, Dela Cruz, and Comandao received similarly worded memorandum of
dismissal effective April 15, 2004 based on the same ground of slump in the market demand for
the company’s products. As such, they are similarly situated in all aspects as the union members.
With respect to respondents Marcos, Nemis and Ilao, although they applied for voluntary
retirement, the same was not accepted by petitioner. Instead, it issued notice of termination
dated March 6, 2004 to these same employees. And while it is true that petitioner paid them
separation pay, the payment was in the nature of separation and not retirement pay. In other
words, payment was made because of the implementation of the retrenchment program and not
because of retirement. As their application for availing of the company’s voluntary retirement
program was based on the wrong premise, the intent to retire was not clearly established, or
rather that the retirement is involuntary. Thus, they shall be considered discharged from
employment. Consequently, they shall be treated as if they are in the same footing as the other
respondents herein and the union members in the Philcea case.
FACTS:
Petitioner Philippine Carpet Manufacturing Corporation (PCMC) is a corporation

registered in the Philippines engaged in the business of manufacturing wool and yarn carpets and
rugs. Respondents were its regular and permanent employees, but were affected by petitioner’s
retrenchment and voluntary retirement programs. On March 15, 2004, Tagyamon, Luna,
Badayos, Dela Cruz, and Comandao received a uniformly worded Memorandum of dismissal. As to
Marcos, Ilao, and Nemis, they claimed that they were dismissed effective March 31, 2004,
together with fifteen (15) other employees on the ground of lack of market/slump in
demand. PCMC, however, claimed that they availed of the company’s voluntary retirement
program and, in fact, voluntarily executed their respective Deeds of Release, Waiver, and
Quitclaim.
Claiming that they were aggrieved by PCMC’s decision to terminate their employment,
respondents filed separate complaints for illegal dismissal against PCMC. They explained that
PCMC did not, in fact, suffer losses shown by its acts prior to and subsequent to their
termination. They also insisted that their acceptance of separation pay and signing of quitclaim is
not a bar to the pursuit of illegal dismissal case.
PCMC, for its part, defended its decision to terminate the services of respondents being a
necessary management prerogative. It pointed out that as an employer, it had no obligation to
keep in its employ more workers than are necessary for the operation of his business. Thus, there
was an authorized cause for dismissal. Petitioners also stressed that respondents belatedly filed
their complaint as they allowed almost three years to pass making the principle of laches
applicable.
Labor Arbiter (LA) rendered a Decision dismissing the complaint for lack of merit. The LA
found no flaw in respondents’ termination as they voluntarily opted to retire and were
subsequently re-employed on a contractual basis then regularized, terminated from employment
and were paid separation benefits. On appeal, the National Labor Relations Commission ( NLRC)
sustained the LA decision. CA reversed the earlier decisions of the LA and the NLRC, the CA
refused to apply the principle of laches, because the case was instituted prior to the expiration of
the prescriptive period set by law which is four years.
ISSUE:
Whether the case of Philcea is applicable in the case following the doctrine of Stare Decisis
RULING:
This case and the Philcea case involve the same period which is March to April 2004; the
issuance of Memorandum to employees informing them of the implementation of the cost
reduction program; the implementation of the voluntary retirement program and retrenchment
program, except that this case involves different employees; the execution of deeds of release,
waiver, and quitclaim, and the acceptance of separation pay by the affected employees.
The illegality of the basis of the implementation of both voluntary retirement and
retrenchment programs of petitioners had been thoroughly ruled upon by the Court in the Philcea
case. It discussed the requisites of both retrenchment and redundancy as authorized causes of
termination and that petitioners failed to substantiate them. In ascertaining the bases of the
termination of employees, it took into consideration petitioners’ claim of business losses; the
purchase of machinery and equipment after the termination, the declaration of cash dividends to
stockholders, the hiring of 100 new employees after the retrenchment, and the authorization of
full blast overtime work for six hours daily. These, said the Court, are inconsistent with petitioners’
claim that there was a slump in the demand for its products which compelled them to implement
the termination programs. In arriving at its conclusions, the Court took note of petitioners’ net
sales, gross and net profits, as well as net income. The Court, thus, reached the conclusion that the
retrenchment effected by PCMC is invalid due to a substantive defect.
Just like the union members in the Philcea case, respondents Tagyamon, Luna, Badayos,
Dela Cruz, and Comandao received similarly worded memorandum of dismissal effective April 15,
2004 based on the same ground of slump in the market demand for the company’s products. As
such, they are similarly situated in all aspects as the union members. With respect to respondents
Marcos, Nemis and Ilao, although they applied for voluntary retirement, the same was not
accepted by petitioner. Instead, it issued notice of termination dated March 6, 2004 to these same
employees. And while it is true that petitioner paid them separation pay, the payment was in the
nature of separation and not retirement pay. In other words, payment was made because of the
implementation of the retrenchment program and not because of retirement. As their application
for availing of the company’s voluntary retirement program was based on the wrong premise, the
intent to retire was not clearly established, or rather that the retirement is involuntary. Thus, they
shall be considered discharged from employment. Consequently, they shall be treated as if they
are in the same footing as the other respondents herein and the union members in the Philcea
case.
UNIVERSAL ROBINA SUGAR MILLING CORPORATION AND RENE CABATI v. FERDINAND
ACIBO, ET AL.
G.R. No. 186439, 15 January 2014
J. Brion
The period denominated in the contract of employment is not the basis in determining
whether an employee is seasonal or regular.
FACTS:
Ferdinand Acibo, et al. were employees of Universal Robina Sugar Milling Corporation
(URSUMCO). Acibo, et al. signed contracts of employment for a given period and after its
expiration, URSUMCO repeatedly hired these employees to perform the same duties and
obligations.
Acibo, et al. filed a complaint before the Labor Arbiter for regularization however it was
denied because the LA argued that they were seasonal employees. Seven of the 22 complainants
filed an appeal to the NLRC. The latter reversed the LA’s ruling claiming that they were regular
employees. The CA affirmed NLRC’s decision but excluded the Acibo, et al. from monetary
benefits under the CBA.
ISSUE:
Whether Acibo, et al. are regular employees of URSUMCO
RULING:
Plantation workers or mill employees only work on seasonal basis. This, however, does not
exclude them from the benefits of regularization. Being in such nature, Acibo, et al. are
considered to be regular employees.
Regular employment means that there was an arrangement between the employee and
the employer that the former will be engaged to perform activities which are necessary or
desirable to the usual business or trade of the latter. On the other hand, a project employment is
an arrangement for a specific project or undertaking whose termination is determined by the
completion of the project.
The nature of the employment does not depend solely on the will or word of the employer
or on the procedure for hiring and the manner of designating the employee. Rather, the nature of
the employment depends on the nature of the activities to be performed by the employee,
considering the nature of the employer’s business, the duration and scope to be done.
Accordingly, Acibo, et al. are neither project nor seasonal employees.
Acibo, et al. were made to perform tasks that does not pertain to milling operations of
URSUMCO. However, their duties are regularly and habitually needed in URSUMCO’s operation.
Moreover, they were regularly and repeatedly hired to perform the same tasks. Being repeatedly
hired for the same purpose makes them regularized employees.
The plantation workers or the mill employees do not work continuously for 1 whole year
but only for the duration of the growing or the sugarcane or the milling season. Their seasonal
work, however, does not detract from considering them in regular employment.
JONAS MICHAEL R. GARZA v. COCA-COLA BOTTLERS PHILIPPINES, INC,ET AL.
G.R. No. 180972, January 20, 2014
J. Del Castillo
Where the accused was dismissed for alleged unliquidated collection and cash shortage,
the SC ruled that the petitioner could not be accused of embezzlement or failure to remit as
defined and punished under CCBPI’s November 18, 2002 Inter-Office Memorandum, because he
received no cash or check from Asanza. Without receiving anything from her, there was nothing
for petitioner to embezzle or remit, and thus CCBPI had no basis to charge him for violation of the
November 18, 2002 Inter-Office Memorandum which punished embezzlement and failure/delay
in remitting collections.
FACTS:
Petitioner Jonas Michael R. Garza (petitioner) became a regular employee of CCBPI on

December 16, 1997, designated as its Salesman in Iriga City. In 2001, he was promoted to the
position of Dealer Development Coordinator and assigned at Tabaco City. In 2003, due to
changes in CCBPI’s structure and operating systems, the position of Dealer Development
Coordinator was abolished, and petitioner was designated as Account Specialist and assigned to
the CCBPI Naga City Plant and at Iriga City. He was then dismissed by CCBPI for alleged past
unliquidated collections and cash shortage. Thus, petitioner filed for illegal dismissal.
Labor Arbiter (LA) ruled in favor of the petitioner declaring his termination from
employment as illegal. NLRC affirmed LA’s ruling with modification. The NLRC reversed the Labor
Arbiter’s order of reinstatement, finding that relations between the petitioner and CCBPI have
been strained. CA ruled that petitioner’s dismissal was proper.
ISSUE:
Whether the petitioner was illegally dismissed
RULING:
The petitioner was illegally dismissed.
One of CCBPI’s policies requires that, on a daily basis, CCBPI Salesmen/ Account
Specialists must account for their sales/collections and obtain clearance from the company
Cashier before they are allowed to leave company premises at the end of their shift and report for
work the next day. If there is a shortage/failure to account, the concerned Salesmen/Account
Specialist is not allowed to leave the company premises until he settles the same. In addition,
shortages are deducted from the employee’s salaries. Petitioner made repeated reiterations of
this company policy all throughout the proceedings, and not once did respondents deny or
dispute its existence and implementation. In fact, respondents confirmed existence of this policy
when they stated in their Position Paper, that "[a]s a matter of policy, salesmen in respondent’s
company are obliged to remit all cash sales and credit cash collections to the company office on
the same day that said payments are made by various customers, dealers and outlets."
It is altogether reasonable to suppose that this policy actually exists, because undeniably,
such policy insured a fool-proof system of accountability within CCBPI, where shortages are
immediately detected, presumably through the reconciliation of daily orders and deliveries to
customers with the daily collections of CCBPI’s salesmen, and simultaneously accounted for. With
such a policy, no transaction is left unnoticed, and erring salesmen are instantaneously made to
account for their shortages before they can even leave the premises and come back to work the
following day.
Within the context of said policy, it can be said that since petitioner continued to work for
CCBPI until June 2004, this should necessarily mean that he was clear of daily cash and check
accountabilities, including those transactions covered by the charges against him. If not, the
company cashier would not have issued the required clearance and petitioner would have been
required to settle these shortages as soon as they were incurred. Indeed, he would not have been
allowed to leave company premises until they were settled in accordance with company policy.
And he would not have been allowed to report for work the following day.
The irregularity attributed to petitioner with regard to the Asanza account should fail as
well. To be sure, Asanza herself confirmed that she did not make any payment in cash or check
of P8,160.00 covering the October 15, 2003 delivery for which petitioner is being held to account.
This being the case, petitioner could not be charged with embezzlement/failure to remit for the
simple reason that as regards such October 15, 2003 delivery, there was nothing to embezzle or
remit because no payment thereon has as yet been made by the customer Asanza. It may appear
from Official Receipt No. 303203 issued to Asanza that the October 15 delivery of products to her
has been paid; but as admitted by her, she has not paid for the said delivered products. The reason
for petitioner’s issuance of said official receipt to Asanza is the latter’s concurrent promise that
she would immediately issue the check covering the said amount, which she nevertheless failed to
do.
Although petitioner may be faulted for this act – issuing an official receipt without
receiving the corresponding payment – he could not be accused of embezzlement or failure to
remit as defined and punished under CCBPI’s November 18, 2002 Inter-Office Memorandum,
because he received no cash or check from Asanza. Without receiving anything from her, there
was nothing for petitioner to embezzle or remit, and thus CCBPI had no basis to charge him for
violation of the November 18, 2002 Inter-Office Memorandum which punished embezzlement
and failure/delay in remitting collections.
The Court likewise finds convincing petitioner’s arguments that it was impossible for him
to embezzle/not remit the other customers’ cash and check payments, not only because of the
existence of the abovementioned policy, but likewise due to the sworn avowals of these customers
that all their check payments have been issued in CCBPI’s name and have been duly debited from
their accounts. Certainly, petitioner could not have encashed check payments because they were
issued in the name of CCBPI; for the same reason, he could not have engaged in kiting operations.
Quite certainly, he would have easily been found out.
GRAND ASIAN SHIPPING LINES, INC., EDUARDO P. FRANCISCO and WILLIAM HOW, v.
WILFREDO GALVEZ, JOEL SALES, ET AL.
G.R. No. 178184, January 29, 2014
J. Del Castillo
Despite the charge against the respondent of qualified theft, the mere filing of a formal
charge, to our mind, does not automatically make the dismissal valid. Evidence submitted to
support the charge should be evaluated to see if the degree of proof is met to justify respondents’
termination. The affidavit executed by Montegrico simply contained the accusations of Abis that
respondents committed pilferage, which allegations remain uncorroborated. "Unsubstantiated
suspicions, accusations, and conclusions of employers do not provide for legal justification for
dismissing employees.” The other bits of evidence were also inadequate to support the charge of
pilferage.
FACTS:
One of the vessel’s Oilers, Richard Abis (Abis), reported to Grand Asian Shipping Lines, Inc.
(GASLI) Office and Crewing Manager, Elsa Montegrico (Montegrico), an alleged illegal activity
being committed by respondents aboard the vessel. Abis revealed that after about four to five
voyages a week, a substantial volume of fuel oil is unconsumed and stored in the vessel’s fuel
tanks. However, Gruta, one of the respondents, would misdeclare it as consumed fuel in the
Engineer’s Voyage Reports. Then, the saved fuel oil is siphoned and sold to other vessels out at sea
usually at nighttime. Respondents would then divide among themselves the proceeds of the sale.
An investigation on the alleged pilferage was conducted. After audit and examination of
the Engineer’s Voyage Reports, GASLI’s Internal Auditor that for the period June 30, 1999 to
February 15, 2000 fuel oil consumption was overstated by 6,954.3 liters amounting to P74,737.86.
A case of qualified theft was filed against the respondents and GASLI placed respondents
under preventive suspension. After conducting administrative hearings, petitioners decided to
terminate respondents from employment. It appears that several other employees and
crewmembers of GASLI’s two other vessels were likewise suspended and terminated from
employment.
Crewmembers of the two other vessels filed with the NLRC separate complaints for illegal
suspension and dismissal, underpayment/non-payment of salaries/wages, overtime pay, premium
pay for holiday and rest day, holiday pay, service incentive leave pay, hazard pay, tax refunds and
indemnities for damages and attorney’s fees against petitioners.
Labor Arbiter rendered a Decision finding the dismissal of all 21 complainants illegal. As
regards the dismissal of herein respondents, the Labor Arbiter ruled that the filing of a criminal
case for qualified theft against them did not justify their termination from employment.
ISSUE:
Whether the accused were validly dismissed
RULING:
As specified in the termination notice, respondents were dismissed on the grounds of (i)
serious misconduct, particularly in engaging in pilferage while navigating at sea, (ii) willful breach
of the trust reposed by the company, and (iii) commission of a crime or offense against their
employer. Petitioners claim that based on the sworn statement of Abis, joint affidavit of Bernabe
and De la Rama, letter of petitioner Francisco requesting assistance from the CIDG, formal
complaint sheet, complaint and supplementary complaint affidavit of Montegrico, CIDG’s letter
referring respondents’ case to the Office of the City Prosecutor of Manila, resolution of the City
Prosecutor finding a prima facie case of qualified theft, and the Information for qualified theft,
there is a reasonable ground to believe that respondents were responsible for the pilferage of
diesel fuel oil at M/T Dorothy Uno, which renders them unworthy of the trust and confidence
reposed on them.
After examination of the evidence presented, however, we find that petitioners failed to
substantiate adequately the charges of pilferage against respondents. "[T]he quantum of proof
which the employer must discharge is substantial evidence. x x x Substantial evidence is that
amount of relevant evidence as a reasonable mind might accept as adequate to support a
conclusion, even if other minds, equally reasonable, might conceivably opine otherwise."
Here, the mere filing of a formal charge, to our mind, does not automatically make the
dismissal valid. Evidence submitted to support the charge should be evaluated to see if the degree
of proof is met to justify respondents’ termination. The affidavit executed by Montegrico simply
contained the accusations of Abis that respondents committed pilferage, which allegations
remain uncorroborated. "Unsubstantiated suspicions, accusations, and conclusions of employers
do not provide for legal justification for dismissing employees.” The other bits of evidence were
also inadequate to support the charge of pilferage. The findings made by GASLI’s port captain and
internal auditor and the resulting certification executed by De la Rama merely showed an
overstatement of fuel consumption as revealed in the Engineer’s Voyage Reports. The report of
Jade Sea Land Inspection Services only declares the actual usage and amount of fuel consumed
for a particular voyage. There are no other sufficient evidence to show that respondents
participated in the commission of a serious misconduct or an offense against their employer.
As for the second ground for respondents’ termination, which is loss of trust and
confidence, distinction should be made between managerial and rank and file employees. "[W]ith
respect to rank-and-file personnel, loss of trust and confidence, as ground for valid dismissal,
requires proof of involvement in the alleged events x x x [while for] managerial employees, the
mere existence of a basis for believing that such employee has breached the trust of his employer
would suffice for his dismissal."
In the case before us, Galvez, as the ship captain, is considered a managerial employee
since his duties involve the governance, care and management of the vessel. Gruta, as chief
engineer, is also a managerial employee for he is tasked to take complete charge of the technical
operations of the vessel. As captain and as chief engineer, Galvez and Gruta perform functions
vested with authority to execute management policies and thereby hold positions of responsibility
over the activities in the vessel. Indeed, their position requires the full trust and confidence of
their employer for they are entrusted with the custody, handling and care of company property
and exercise authority over it.
Thus, we find that there is some basis for the loss of confidence reposed on Galvez and
Gruta. The certification issued by De la Rama stated that there is an overstatement of fuel
consumption. Notably, while respondents made self-serving allegations that the computation
made therein is erroneous, they never questioned the competence of De la Rama to make such
certification. Neither did they question the authenticity and validity of the certification. Thus, the
fact that there was an overstatement of fuel consumption and that there was loss of a
considerable amount of diesel fuel oil remained unrefuted. Their failure to account for this loss of
company property betrays the trust reposed and expected of them. They had violated petitioners’
trust and for which their dismissal is justified on the ground of breach of confidence.
As for Arguelles, Batayola, Fresnillo, Noble, Dominico, Nilmao and Austral, proof of
involvement in the loss of the vessel’s fuel as well as their participation in the alleged theft is
required for they are ordinary rank and file employees. And as discussed above, no substantial
evidence exists in the records that would establish their participation in the offense charged. This
renders their dismissal illegal, thus, entitling them to reinstatement plus full backwages, inclusive
of allowances and other benefits, computed from the time of their dismissal up to the time of
actual reinstatement.
MANILA WATER COMPANY v. CARLITO DEL ROSARIO

G.R. No. 188747, January 29, 2014
J. Perez
The attendant circumstances in the present case considered, we are constrained to deny
Del Rosario separation pay since the admitted cause of his dismissal amounts to serious
misconduct. He is not only responsible for the loss of the water meters in flagrant violation of the
company’s policy but his act is in utter disregard of his partnership with his employer in the pursuit
of mutual benefits.
FACTS:
Carlito Del Rosario was employed as Instrument Technician by Metropolitan Waterworks

and Sewerage System (MWSS). In May 2000, Manila Water discovered that 24 water meters were
missing in its stockroom. Upon initial investigation, it appeared that Del Rosario and his co-
employee, a certain Danilo Manguera, were involved in the pilferage and the sale of water meters
to the company’s contractor. Manila Water issued a Memorandum directing Del Rosario to
explain why he should not be dealt with administratively for the loss of the said water meters. Del
Rosario confessed his involvement in the act charged and pleaded for forgiveness, promising not
to commit similar acts in the future. During the formal investigation Del Rosario was found
responsible for the loss of the water meters and therefore liable for violating the Company’s Code
of Conduct. Manila Water proceeded to dismiss Del Rosario from employment.
Del Rosario filed an action for illegal dismissal claiming that his severance from
employment is without just cause. Del Rosario averred that his admission to the misconduct
charged was not voluntary but was coerced by the company. On the other hand, Manila Water
pointed out that he was indeed involved in the taking of the water meters from the company’s
stock room and of selling these to a private contractor for personal gain.
Labor Arbiter issued a Decision dismissing for lack of merit the complaint filed by Del
Rosario who was, however, awarded separation pay. NLRC dismissed the appeal interposed by
Manila Water for its failure to append a certification against forum shopping in its Memorandum
of Appeal. Court of Appeals reversed NLRC’s Resolution and held that it committed a grave abuse
of discretion when it dismissed Manila Water’s appeal on mere technicality. The appellate court,
however, proceeded to affirm the decision of the Labor Arbiter awarding separation pay to Del
Rosario.
ISSUE:
Whether Del Rosario is entitled to the separation pay
RULING:
In Tirazona v. Phillippine EDS Techno-Service, Inc. (PET, Inc.), we denied the award of
separation pay to an employee who was dismissed from employment due to loss of trust and
confidence.
While [this] Court commiserates with the plight of Tirazona, who has recently manifested
that she has since been suffering from her poor health condition, the Court cannot grant her plea
for the award of financial benefits based solely on this unfortunate circumstance. For all its
conceded merit, equity is available only in the absence of law and not as its replacement. Equity as
an exceptional extenuating circumstance does not favor, nor may it be used to reward, the
indolent or the wrongdoer for that matter. This Court will not allow a party, in guise of equity, to
benefit from its own fault.
The attendant circumstances in the present case considered, we are constrained to deny
Del Rosario separation pay since the admitted cause of his dismissal amounts to serious
misconduct. He is not only responsible for the loss of the water meters in flagrant violation of the
company’s policy but his act is in utter disregard of his partnership with his employer in the pursuit
of mutual benefits.
In the recent case of Daabay v. Coca-Cola Bottlers, this Court reiterated our ruling in
Toyota and disallowed the payment of separation pay to an employee who was found guilty of
stealing the company’s property. We repeated that an award of separation pay in such an instance
is misplaced compassion for the undeserving who may find their way back and weaken the fiber of
labor.
That Del Rosario rendered 21 years of service to the company will not save the day for him.
To this case, Central Pangasinan Electric Cooperative, Inc. v. National Labor Relations Commission
is on all fours, thus:
Although long years of service might generally be considered for the award of separation
benefits or some form of financial assistance to mitigate the effects of termination, this case is not
the appropriate instance for generosity under the Labor Code nor under our prior decisions. The
fact that private respondent served petitioner for more than twenty years with no negative record
prior to his dismissal, in our view of this case, does not call for such award of benefits, since his
violation reflects a regrettable lack of loyalty and worse, betrayal of the company. If an
employee's length of service is to be regarded as a justification for moderating the penalty of

dismissal, such gesture will actually become a prize for disloyalty, distorting the meaning of social
justice and undermining the efforts of labor to cleanse its ranks of undesirables.
Indubitably, the appellate court erred in awarding separation pay to Del Rosario without
taking into consideration that the transgression he committed constitutes a serious offense. The
grant of separation pay to a dismissed employee is determined by the cause of the dismissal. The
years of service may determine how much separation pay may be awarded. It is, however, not the
reason why such pay should be granted at all.
In sum, we hold that the award of separation pay or any other kind of financial assistance to Del
Rosario, under the nomenclature of compassionate justice, is not warranted in the instant case. A
contrary rule would have the effect of rewarding rather than punishing an erring employee,
disturbing the noble concept of social justice.
INTERNATIONAL SCHOOL MANILA AND/OR BRIAN McCAULEY, v. INTERNATIONAL SCHOOL
ALLIANCE OF EDUCATORS (ISAE) AND MEMBERS REPRESENTED BY RAQUEL DAVID CHING,
PRESIDENT, EVANGELINE SANTOS, JOSELYN RUCIO AND METHELYN FILLER
G.R. No. 167286, February 5, 2014
J. Leonardo-De Castro
Gross inefficiency falls within the purview of “other cause analogous to the foregoing,”
and constitutes therefore, just cause to terminate an employee under Article 282 of the Labor
Code. It is closely related to “gross neglect”, for both involve specific acts of omissions on the part
of the employee resulting in damage to the employer or to his business. It has been settled that
failure to prescribe standards of work, or to fulfill reasonable work assignment due to inefficiency
may constitute just cause for dismissal.
FACTS:
Santos was hired by the School in 1978 as a full-time Spanish language teacher. Upon her
return after her leave of absence for the school year 1992-1993, only one class of Spanish was
available for her to teach. Thus, for the next school year, she agreed to teach one class of Spanish
and four other classes of Filipino that were left behind by a retired teacher. Since it was her first
time to teach Filipino, the school administrators observed the way she conducted her classes and
the results of which were summarized in Classroom Standards Evaluation Forms. Specifying certain
aspects with which she needs improvement, she was required to undergo the remediation phase
of the evaluation process through a Professional Growth Plan. However, notwithstanding the one-
year remediation period wherein school administrators met with her no less than thirty times to
check on her, clarify and discuss her planning process, and help her improve her performance, she
repeatedly failed to meet the standards required by the school from 1993 to 1997. She was later
on directed, through a letter sent to her, to explain in writing why her employment from the
School should not be terminated due to her substandard performance as a teacher. Her letter-
reply blamed the school for her predicament stating that she had been forced to teach Filipino, a
subject which she had no preparation for. A formal administrative investigation was then set by
the School giving her opportunity to explain her side. Charged with gross inefficiency or
negligence in the performance of her assigned work, her employment with the school was
terminated on June 7, 1997.
ISSUES:
1. Whether Santos has been illegally dismissed

2. Whether she is entitled to reinstatement or separation pay with backwages
RULING:
We find that the petitioners had sufficiently proved the charge of gross inefficiency, which
warranted the dismissal of Santos from the school.
In Pena v NLRC, it has been ruled that “it is the prerogative of the school to set high
standards of efficiency for its teachers since quality education is a mandate of the Constitution. As
long as the standards fixed are reasonable and not arbitrary, courts are not at liberty to set them
aside.” Moreover, the prerogative of a school to provide standards for its teachers and to
determine whether these standards have been met is in accordance with academic freedom,
which gives the educational institution the right to choose who should teach.
Contrary to the ruling of the Labor Arbiter, it is not accurate to state that Santos was
dismissed by the School for inefficiency on account of the fact that she was caught only once
without a lesson plan. There had been numerous instances when Santos failed to observe the
prescribed standards of performance set by the School despite all the efforts exerted by the
school administrators to improve her performance. Thus, the School was left with no choice but to
terminate her employment.
Furthermore, there is a need to stress that Santos voluntarily agreed to teach Filipino
classes. No force was applied upon her, in fact, she was given the option to teach only one Spanish
class and not have any Filipino teaching loads. However, she said that if she took that option she
would have been underpaid and her salary would not have been the same. She even made it
known to the school that for the school years 1994-1995 and 1995-1196, she did not prefer a
change in her teaching assignment. Thus, when she consented to take on the Filipino classes, it
was her responsibility to teach them well within the standards of teaching required by the School,
as she had done previously as a teacher of Spanish. Falling in this, she must answer for the
consequences.
In view of the finding that Santos was validly dismissed from employment, she would not
ordinarily be entitled to separation pay. However, applying the principle of social justice,
separation pay shall be allowed as a measure of social justice only in those instances where the
employee is validly dismissed for causes other than serious misconduct or those reflecting on his
moral character.
The Court finds equitable and proper the award of separation pay in favor of Santos in
view of the length of her service with the school prior to the events that led to the termination of
her employment. She was first employed by the School in 1978 and during this time, the records
of this case are silent as to the fact of any infraction that she committed and/or any other
administrative case against her that was filed by the School. Thus, an award of separation pay
equivalent to one-half (1/2) month pay for every year of service is awarded in favor of Santos on
grounds of equity and social justice.
RAUL C. COSARE v. BROADCOM ASIA, INC. AND DANTE AREVALO
G.R. No. 201298, February 5, 2014
J. Reyes
Constructive dismissal occurs when there is cessation of work because continued

employment is rendered impossible, unreasonable or unlikely as when there is demotion in rank
or dimunition in pay or when a clear discrimination, insensibility, or disdain by an employer
becomes unbearable to the employee leaving the latter with no option but to quit.
The test of constructive dismissal is whether a reasonable person in the employee’s

position would have felt compelled to give up his position under the circumstances. It is an act
amounting to dismissal but is made to appear as if it were not. Constructive dismissal is therefore
a dismissal in disguise. The law recognizes and resolves the situation in favor of employees in
order to protect their rights and interests from the coercive acts of the employer.
FACTS:
In April 1993, Raul Cosare was employed as a salesman by Arevalo in the latter’s business
of selling broadcast equipment needed by television networks and production houses. Continuing
his line of business, in December 2000, he set up the company Broadcom. The former was named
as an incorporator having been assigned 100 shares of stock with par value of P1.00 per share.
Later on he was promoted to the position of Assistant Vice President for Sales and Head of the
Technical Coordination. In 2003, Alex Abiog was appointed as Broadcom’s Vice President for Sales
and thus, became Cosare’s immediate superior. On March 23, 2009, Cosare sent a confidential
memo to Arevalo informing him of the anomalies allegedly committed by Abiog against the
company. Apparently, Arevalo failed to act on his accusations. Instead, he was called for a meeting
wherein he was asked to tender his resignation in exchange for “financial assistance” in the
amount of P300,000.00. When he refused to comply with the directive, he later on received a
memo charging him of serious misconduct and willful breach of trust.
He was given forty-eight hours from the date of the memo within which to present his
explanation on the charges. He was also “suspended from having access to any and all company
files/records and use of company assets effective immediately.” He claimed that he was precluded
from reporting for work on March 31, 2009 and was even prevented from retrieving his personal
belongings from the office. Thereafter, he was barred from entering the company premises. On
the following day, he attempted to furnish the company with a Memo by which he addressed and
denied the accusations against him. The respondents refused to receive the memo on the ground
of late filing, prompting him to serve a copy thereof by registered mail.
He then filed the subject labor complaint, claiming that he was constructively dismissed
from employment and was illegally suspended as he placed no serious and imminent threat to the
life or property of his employer and co-employees. In refuting Cosare’s complaint, the
respondents used the same allegations as stated in the Memo sent to him and contended that
Cosare abandoned his job by continually failing to report for work beginning April 1, 2009,
prompting them to issue on April 14, 2009 a memorandum accusing Cosare of absence of work
without leave beginning April 1, 2009.
ISSUES:
1 Whether the case instituted by Cosare was an intra-corporate dispute that was within the
original jurisdiction of the RTC
2 Whether Cosare was constructively and illegally dismissed from employment by the respondents
RULING:
The Court has determined that contrary to the ruling of the CA, it is the LA, and not the
regular courts, which has the original jurisdiction over the subject controversy. The mere fact that
Cosare was a stockholder and an officer of Broadcom at the time the subject controversy
developed failed to necessarily make the case an intra-corporate dispute. Although he is an

officer of Broadcom for being its AVP for Sales, he was not a “corporate officer” as the term is
defined by law. There are two circumstances which must concur in order for an individual to be
considered as such, namely: (1) the creation of the position is under the corporation’s charter or
by-laws; and (2) the election of the officer is by the directors or stockholders. Furthermore,
following the “controversy test” which enunciates that the status or relationship of the parties and
the nature of the question that is the subject of the controversy must be taken into account, the
instance case cannot be deemed intra-corporate. Clearly, the pending dispute particularly relates
to Cosare’s rights and obligations as a regular officer of Broadcom, instead of as a stockholder of
the corporation.
Cosare was constructively and illegally dismissed by respondents. The fact that no further
investigation and final disposition appeared to have been made by the respondents on his case
only negated the claim that they actually intended to first look into the matter before making a
final determination as to the guilt or innocence of their employee. This was also manifested from
the fact that even before he was required to present his side on the charges of serious misconduct
and willful breach of trust, he was summoned to Arevalo’s office and was asked to tender his
immediate resignation in exchange for financial assistance.
Respondents’ discrimination, disdain and insensibility towards Cosare was also signified in
their refusal to accept his explanation as it was filed beyond the mere 48-hour period which they
granted to him. The Court emphasized in King of Kings Transport Inc v. Mamac the standards to
be observed by employers in complying with the service of notices prior to termination:
The first written notice to be served on the employees should contain specific causes or
grounds for termination against them, and a directive that the employees are given the
opportunity to submit their written explanation within a reasonable period. “Reasonable
opportunity” under the Omnibus Rules means every kind of assistance that management must
accord to the employees to enable them to prepare adequately for their defense. This should be
construed as a period of at least five calendar days from receipt of the notice to give the
employees an opportunity to study the accusation against them, consult a union official or lawyer,
gather data and evidence, and decide on the defenses they will raise against the complaint.
Moreover, in order to enable the employees to intelligently prepare their explanation and
defenses, the notice should contain a detailed narration of the facts and circumstances that will
serve as basis for the charge against the employees. A general description of the charge will not
suffice. Lastly, the notice should specifically mention which company rules, if any, are violated
and/or which among the grounds under Art. 282 is being charged against the employees.”
Moreover, the charge of abandonment allegedly signified by his failure to report to work
or file a leave of absence beginning April 1, 2009 was inconsistent with the imposed sanction
effective March 30, 2009. Abandonment is the deliberate and unjustified refusal of an employee
to resume his employment. To constitute abandonment of work, two elements must concur: (1)
the employee must have failed to report for work or must have been absent without valid or
justifiable reason; and (2) there must have been a clear intention on the part of the employee to
sever the employer-employee relationship manifested by some overt act. His failure to work was
neither voluntary nor indicative of an intention to sever his employment with Broadcom. It was
illogical to be requiring him to report for work, and imputing fault when he failed to do so after he
was specifically denied access to all of the company’s assets.
UNITED TOURIST PROMOTIONS (UTP) AND ARIEL D. JERSEY v. HARLAND B. KEMPLIN

G.R. No. 205453, February 5, 2014
J. Reyes
An employment after the expiration of a fixed term employment is already regular.

Therefore, an employee is guaranteed security of tenure and can only be removed from service
for cause and after compliance with due process.
FACTS:
In 1995, Ariel Jersey, with the help of two American expatriates, Kemplin and the late
Mike Dunne, formed UTP. In 2002, UTP employed Kemplin to be its President for a period of five
years, to commence on March 1, 2002 and to end on March 1, 2007, “renewable for the same
period, subject to new terms and conditions”. He continued to render his service to UTP even
after his fixed term contract of employment expired. Records show that on May 12, 2009,
Kemplin, signing as President of UTP, entered into advertisement agreements with Pizza Hut and
M. Lhuillier. On July 30, 2009, UTP’s legal counsel sent Kemplin a letter stating that because of his
past services to the company despite the fact that his service is no longer needed, he was
tolerated to come in the office and were given monthly commissions with allowances. However,
because of his inhuman treatment of the rank and file employees which caused great damage and
prejudices to the company as evidenced by many cases filed against him, the company was left
with no other recourse but to cease and desist from entering the premises of the main office.
On August 10, 2009, Kemplin filed against UTP and its officers a complaint for illegal
dismissal. He argued that even after the expiration of his employment contract on March 1, 2007,
he rendered his services as President and General Manager of UTP wherein he began examining
the company’s finances, with the end in mind of collecting from delinquent accounts of UTP’s
distributors. It was on this pretext that he received a notice from the UTP’s counsel. The company,
on the other hand, contended that the termination letter sent to Kemplin was based on (a)
expiration of the fixed term of employment contract they had entered into, and (b) an employer’s
prerogative to terminate an employee, who commits criminal and illegal acts prejudicial to
business.
ISSUE:
Whether Kemplin has been illegally terminated due to the failure of the company to afford him
due process of law
RULING:
Considering that he continued working as President for UTP for about one (1) year and
five (5) months and since it is not covered by another fixed term employment contract, his
employment after the expiration of his fixed term employment is already regular. Therefore, he is
guaranteed security of tenure and can only be removed from service for cause and after
compliance with due process. This is notwithstanding the company’s insistence that they merely
tolerated his “consultancy” for humanitarian reasons.
It has been settled that the employer bears the burden of proving that the dismissal of the
employee is for a just or an unauthorized cause. Failure to dispose of the burden would imply that
the dismissal is not lawful, and that the employee is entitled to reinstatement, backwages and
accruing benefits. Clearly, the twin notice requirement and hearing mandated by law has not been
observed by UTP. Its letter sent to Kemplin is a lame attempt to comply with such requirement.
The charges against him were not clearly specified. While it stated that his employment contract
had expired, it likewise made general references to alleged criminal suits filed against him. One
who reads the letter is inevitably bound to ask if he is being terminated due to the expiration of
his contract, or by reason of the pendency of suits filed against him. Besides, an employee’s guilt
or innocence in a criminal case is not determinative of the existence of a just or authorized cause
for his dismissal. The pendency of a criminal suit against an employee, does not, by itself,
sufficiently establish a ground for an employer to terminate the former. Furthermore, the said
letter failed to categorically indicate which of the policies of UTP he violated to warrant his
dismissal from service. He was also never given the chance to refute the charges against him as no
hearing and investigation were conducted. Thus, in the absence of a hearing and investigation,
the existence of just cause to terminate Kemplin could not have been sufficiently established. He
should have been promptly apprised of the issue of loss of trust and confidence in him before and
not after he was already dismissed.
INTEL TECHNOLOGY PHILIPPINES, INC. v. NATIONAL LABOR RELATIONS COMMISSION AND

JEREMIAS CABILES,
G.R. No. 200575, February 5, 2014
J. Mendoza
Resignation is the formal relinquishment of an office, the overt act of which is coupled
with an intent to renounce. This intent could be inferred from the acts of the employee before
and after the alleged resignation.
FACTS:
Jeremias Cabiles was initially hired by Intel Phil. on April 6, 1997 as an Inventory Analyst.
He was subsequently promoted several times over the years and was also assigned at Intel Arizona
and Intel Chengdu. He later applied and was offered the position of Finance Manager at Intel
Semiconductor Limited Hong Kong (Intel HK). Before accepting the offer, he inquired from Intel
Phil., through an email, the consequences of accepting the same. Said communication was
centered on his query regarding his entitlement to retirement benefits which has been given to
employees who has completed ten years of service with Intel Phil. He has only rendered 9.5 years
of service and as he will be moving to Intel HK, he also inquired if the number of years of service
will be rounded up as it has been close enough to the required ten years. On January 23, 2007,
Intel Phil replied in the negative stating that they do not round up the number of years of service
and that he was not eligible to receive his retirement benefit. On January 31, 2007, he signed the
job offer. On March 8, 2007, Intel Phil issued Cabiles his “Intel Final Pay Separation Voucher” and
consequently, he executed a Release, Waiver and Quitclaim in favor of the former acknowledging
receipt of P165, 857.62 as full and complete settlement of all benefits due him by reason of his
separation from the said company. After seven months of employment in Intel HK, he resigned.
After two years, Cabiles filed a complaint for non-payment of retirement benefits and for
moral and exemplary damages. He insisted that he was employed by Intel for 10 years and 5
months – a period which included his seven month stint with Intel HK. Thus, he believed he was
qualified to avail of the benefits under the company’s retirement policy.
ISSUE:
Whether Cabiles resigned from Intel Phil. when he moved to Intel HK causing discontinuance in
his years of service with the former and thus affecting his entitlement to its retirement benefits
RULING:
Cabiles was not eligible to receive his retirement benefits as he failed to meet the required
ten years length of service when he resigned from Intel Phil. when he moved to Intel HK.
Resignation is the formal relinquishment of an office, the overt act of which is coupled with an
intent to renounce. This intent could be inferred from the acts of the employee before and after
the alleged resignation.
The Court is not convinced with Cabiles’ contention that his employment with Intel HK is a
continuation of his service with Intel Phil alleging that it was but an assignment by his principal
employer, similar to his assignments to Intel Arizona and Intel Chengdu.
First, he still accepted the offer of Intel HK despite a non-favorable reply to his retirement
concerns. Thus, such acceptance meant letting go of the retirement benefits he now claims.
Clearly, it was his choice to forego his tenure with Intel Phil., with all its associated benefits, in
favor of a more lucrative job for him and his family with Intel HK.
Second, the court does not agree with his argument that his employment in Hong Kong is
an assignment or extension of his employment with Intel Phil. The continuity, existence or
termination of an employer-employee relationship in a typical secondment contract or any
employment contract for that matter is measured by the following yardsticks: first, the selection
and engagement of the employee; second, the payment of wages; third, the power of dismissal;
and fourth, the employer’s power to control the employee’s conduct. When he assumed duties
with Intel HK, the latter became the new employer. It provided his compensation. He then
became subject to Hong Kong labor laws, and necessarily, the rights appurtenant thereto,
including the right of Intel HK to fire him on available grounds. Lastly, it had control and
supervision over him as its new Finance Manager. Evidently, Intel Phil. no longer had any control
over him.
Third, although in various instances, his move to Hong Kong was referred to as an
“assignment,” it bears stressing that it was categorized as a “permanent transfer.” It is clear that
his decision to move to Hong Kong required the abandonment of his permanent position with
Intel Phil. in order for him to assume a position in an entirely different company, with a different
employer, rank, compensation and benefits.
MACARTHUR MALICDEM AND HERMENIGILDO FLORES v. MARULAS INDUSTRIAL
CORPORATION AND MIKE MANCILLA
G.R. No. 204406, February 26, 2014
J. Mendoza
An employee who is allowed to work after a probationary period shall be considered a

regular employee. When an employer renews a contract of employment after the lapse of the six-
month probationary period, the employee thereby becomes a regular employee. No employer is
allowed to determine indefinitely the fitness of its employees. While length of time is not 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 of trade of the employer.
FACTS:
Malicdem and Flores were first hired by Marulas as extruder operators in 2006, as shown
by their employment contracts. They were responsible for the bagging of filament yarn, the
quality of pp yarn package and the cleanliness of the work place area. Their employment
contracts were for a period of one (1) year. Every year thereafter, they would sign a
Resignation/Quitclaim in favor of Marulas a day after their contracts ended, and then sign another
contract for one (1) year. Until one day, on December 16, 2010, Flores was told not to report for
work anymore after being asked to sign a paper by Marulas' HR Head to the effect that he
acknowledged the completion of his contractual status. On February 1, 2011, Malicdem was also
terminated after signing a similar document. Thus, both claimed to have been illegally dismissed.
Marulas countered, on the other hand, that their contracts showed that they were fixed-term
employees for a specific undertaking which was to work on a particular order of a customer for a
specific period. Thus, their severance from employment was due to the expiration of their
contracts. The Labor Arbiter ruled that as their employment naturally ceased when their contracts
expired, there is no illegal dismissal. Petitioners found relief when the NLRC partially granted
their appeal with the award of payment of 13th month pay, service incentive leave and holiday
pay for three (3) years. However, said ruling was subsequently overturned when the CA ruled that
payment of backwages, separation pay, damages, and attorney's fees had no factual and legal
bases.
ISSUE:
Whether petitioners were illegally dismissed and were thus entitled to full backwages and other
entitlements
RULING:
A reading of the 2008 employment contracts, denominated as "Project Employment

Agreement," reveals that there was a stipulated probationary period of six (6) months from its
commencement. It was provided therein that in the event that they would be able to comply with
the company’s standards and criteria within such period, they shall be reclassified as project
employees with respect to the remaining period of the effectivity of the contract.
Under Article 281 of the Labor Code, however, "an employee who is allowed to work after
a probationary period shall be considered a regular employee." When an employer renews a
contract of employment after the lapse of the six-month probationary period, the employee
thereby becomes a regular employee. No employer is allowed to determine indefinitely the
fitness of its employees. While length of time is not 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 of trade of the employer. Thus,
in the earlier case of Maraguinot, Jr. v. NLRC it was ruled that a project or work pool employee,
who has been: (1) continuously, as opposed to intermittently, rehired by the same employer for
the same tasks or nature of tasks; and (2) those tasks are vital, necessary and indispensable to the
usual business or trade of the employer, must be deemed a regular employee. To rule otherwise
would allow circumvention of labor laws in industries not falling within the ambit of Policy
Instruction No. 20/Department Order No. 19, hence allowing the prevention of acquisition of
tenurial security by project or work pool employees who have already gained the status of regular
employees by the employer's conduct.
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. 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.
There being no actual project, there was clearly a deliberate intent to prevent the
regularization of the petitioners. The respondents cannot use the alleged expiration of the
employment contracts of the petitioners as a shield of their illegal acts. The project employment
contracts that the petitioners were made to sign every year since the start of their employment
were only a stratagem to violate their security of tenure in the company. As restated in Poseidon
Fishing v. NLRC "if from the circumstances it is apparent that periods have been imposed to
preclude acquisition of tenurial security by the employee, they should be disregarded for being
contrary to public policy."
Thus, since the petitioners were regular employees, their termination is considered illegal
for lack of just or authorized causes. Under Article 279 of the Labor Code, an employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or
their monetary equivalent computed from the time his compensation was withheld from him up to
the time of his actual reinstatement.
DIAMOND TAXI and/or BRYAN ONG v. FELIPE LLAMAS, JR.

G.R. No. 190724, March 12, 2014
J. Brion
The respondent’s failure to attach the required certification of non-forum shopping does
not render the immediate dismissal of the petition. Llamas adequately explained, in his motion for
reconsideration, the inadvertence and presented a clear justifiable ground to warrant the
relaxation of the rules. The SC ruled that indeed, while the requirement as to the certificate of
non-forum shopping is mandatory, this requirement should not, however, be interpreted too
literally and thus defeat the objective of preventing the undesirable practice of forum-shopping.
FACTS:
Felipe Llamas, Jr. (Llamas) worked as a taxi driver for petitioner Diamond Taxi, owned and
operated by petitioner Bryan Ong. Llamas filed before the Labor Arbiter (LA) a complaint for
illegal dismissal against the petitioners, however, Llamas failed to seasonably file his position
paper. LA held that Llamas was not dismissed, legally or illegally, rather, the LA declared that
Llamas left his job and had been absent for several days without leave.
In his position paper, Llamas claimed that he failed to seasonably file his position paper
because his previous counsel, hence, he was forced to secure the services of another counsel in
order to comply with the LA’s directive. On the merits of his complaint, Llamas alleged that he had
a misunderstanding with Aljuver Ong, Bryan’s brother and operations manager of Diamond Taxi.
Stating that when he reported for work the next day, Bryan refused to give him the key to his
assigned taxi cab unless he would sign a prepared resignation letter. Thus, he filed the illegal
dismissal complaint.
On January 16, 2006, Llamas filed before the LA a motion for reconsideration of its
November 29, 2005 decision. The LA treated Llamas’ motion as an appeal per Section 15, Rule V
of the 2005 Revised Rules of Procedure of the NLRC (2005 NLRC Rules) (the governing NLRC
Rules of Procedure at the time Llamas filed his complaint before the LA). The NLRC dismissed for
non-perfection Llamas’ motion for reconsideration treated as an appeal. The NLRC pointed out
that Llamas failed to attach the required certification of non-forum shopping per Section 4, Rule
VI of the 2005 NLRC Rules. Llamas moved to reconsider the May 30, 2006 NLRC resolution; he
attached the required certification of non-forum shopping. When the NLRC denied his motion for
reconsideration in its August 31, 2006 resolution, Llamas filed before the CA a petition for
certiorari. CA reversed and set aside NLRC’s resolution.
ISSUES:
1. Whether NLRC committed grave abuse of discretion in dismissing Llamas’ appeal on mere
technicality
2. Whether Llamas was constructively dismissed
RULING:
SC does not find the petition meritorious.
The NLRC committed grave abuse of discretion in dismissing Llamas’ appeal on mere technicality
The requirement for a sworn certification of non-forum shopping was prescribed by the
Court under Revised Circular 28-91, as amended by Administrative Circular No. 04-94, to prohibit
and penalize the evils of forum shopping. Revised Circular 28-91, as amended by Administrative
Circular No. 04-94, requires a sworn certificate of non-forum shopping to be filed with every
petition, complaint, application or other initiatory pleading filed before the Court, the CA, or the
different divisions thereof, or any other court, tribunal or agency.
Ordinarily, the infirmity in Llamas’ appeal would have been fatal and would have justified
an end to the case. A careful consideration of the circumstances of the case, however, convinces
us that the NLRC should, indeed, have given due course to Llamas’ appeal despite the initial
absence of the required certificate. We note that in his motion for reconsideration of the NLRC’s
May 30, 2006 resolution, Llamas attached the required certificate of non-forum shopping.
Llamas adequately explained, in his motion for reconsideration, the inadvertence and
presented a clear justifiable ground to warrant the relaxation of the rules. To recall, Llamas was
able to file his position paper, through his new counsel, only on December 20, 2005. He hired the
new counsel on December 19, 2005 after several repeated, albeit failed, pleas to his former
counsel to submit, on or before October 25, 2005 per the LA’s order, the required position paper.
On November 29, 2005, however, the LA rendered a decision that Llamas and his new counsel
learned and received a copy of only on January 5, 2006. Evidently, the LA’s findings and
conclusions were premised solely on the petitioners’ pleadings and evidence. And, while not the
fault of the LA, Llamas, nevertheless, did not have a meaningful opportunity to present his case,
refute the contents and allegations in the petitioners’ position paper and submit controverting
evidence.
Faced with these circumstances, i.e., Llamas’ subsequent compliance with the certification-
against-forum-shopping requirement; the utter negligence and inattention of Llamas’ former
counsel to his pleas and cause, and his vigilance in immediately securing the services of a new
counsel; Llamas’ filing of his position paper before he learned and received a copy of the LA’s
decision; the absence of a meaningful opportunity for Llamas to present his case before the LA;
and the clear merits of his case (that our subsequent discussion will show), the NLRC should have
relaxed the application of procedural rules in the broader interests of substantial justice.
Indeed, while the requirement as to the certificate of non-forum shopping is mandatory, this
requirement should not, however, be interpreted too literally and thus defeat the objective of
preventing the undesirable practice of forum-shopping.
Llamas did not abandon his work; he was constructively dismissed
"Abandonment is the deliberate and unjustified refusal of an employee to resume his

employment." It is a form of neglect of duty that constitutes just cause for the employer to dismiss
the employee.
To constitute abandonment of work, two elements must concur: "(1) x x x the employee
and (2) x x x there must have been a clear intention [on the part of the employee] to sever the
employer-employee relationship manifested by some overt act." The employee’s absence must be
accompanied by overt acts that unerringly point to the employee’s clear intention to sever the
employment relationship. And, to successfully invoke abandonment, whether as a ground for
dismissing an employee or as a defense, the employer bears the burden of proving the employee’s
unjustified refusal to resume his employment. Mere absence of the employee is not enough.
Guided by these parameters, we agree that the petitioners unerringly failed to prove the
alleged abandonment. They did not present proof of some overt act of Llamas that clearly and
unequivocally shows his intention to abandon his job. We note that, aside from their bare
allegation, the only evidence that the petitioners submitted to prove abandonment were the
photocopy of their attendance logbook and the July 15, 2005 memorandum that they served on
Llamas regarding the July 13, 2005 incident. These pieces of evidence, even when considered
collectively, indeed failed to prove the clear and unequivocal intention, on Llamas’ part, that the
law requires to deem as abandonment Llamas’ absence from work. Quite the contrary, the
petitioners’ July 15, 2005 memorandum, in fact, supports, if not strengthens, Llamas' version of the
events that led to his filing of the complaint, i.e., that as a result of the July 13, 2005 incident, the
petitioners refused to give him the key to his assigned taxi cab unless he would sign the
resignation letter.
The CA, therefore, correctly regarded Llamas as constructively dismissed for the
petitioners' failure to prove the alleged just cause -abandonment - for his dismissal. Constructive
dismissal exists when there is cessation of work because continued employment is rendered
impossible, unreasonable or unlikely. Constructive dismissal is a dismissal in disguise or an act
amounting to dismissal but made to appear as if it were not. In constructive dismissal cases, the
employer is, concededly, charged with the burden of proving that its conduct and action were for
valid and legitimate grounds. The petitioners' persistent refusal to give Llamas the key to his
assigned taxi cab, on the condition that he should first sign the resignation letter, rendered,
without doubt, his continued employment impossible, unreasonable and unlikely; it, thus,
constituted constructive dismissal.
SOUTH EAST INTERNATIONAL RATTAN, INC. and/or ESTANISLAO AGBAY
v. JESUS J. COMING
G.R. No. 186621, March 12, 2014
J. Villarama, Jr.
Petitioners’ admission that the five affiants were their former employees is binding upon
them. While they claim that respondent was the employee of their suppliers Mayol and Apondar,
they did not submit proof that the latter were indeed independent contractors; clearly,
petitioners failed to discharge their burden of proving their own affirmative allegation. There is
thus no showing that the five former employees of SEIRI were motivated by malice, bad faith or
any ill-motive in executing their affidavit supporting the claims of respondent.
In any controversy between a laborer and his master, doubts reasonably arising from the
evidence are resolved in favor of the laborer.
FACTS:
Jesus J. Coming (Coming) was hired by South East International Rattan, Inc. (SEIRI) initially
in “pakiao” basis compensation but it was later on fixed at Php 150.00 per day. In 1990, without
any apparent reason, his employment was interrupted as he was told by petitioners to resume
work in two months time. Being an uneducated person, respondent was persuaded by the
management as well as his brother not to complain, as otherwise petitioners might decide not to
call him back for work. Fearing such consequence, respondent accepted his fate. Nonetheless,
after two months he reported back to work upon order of management.
On January, 2002, Coming was dismissed without lawful cause by SEIRI. SEIRI denies hiring
Coming and contending that the latter actually worked for SEIRI’s furniture suppliers.
Labor Arbiter (LA) ruled that respondent is a regular employee of SEIRI and that the
termination of his employment was illegal. On appeal to the National Labor Relations Commission
(NLRC)-Cebu City, the decision of the LA was set aside. Respondent elevated the case to the CA
finding that there exist employer-employee relationship between SEIRI and Coming, reversing
NLRC’s decision.
ISSUE:
Whether there exists an employer-employee relationship between SEIRI and Coming
RULING:
In their comment to the petition filed by respondent in the CA, petitioners emphasized
that in the certifications issued by Mayol and Apondar, it was shown that respondent was
employed and working for them in those years he claimed to be working for SEIRI. However, a
reading of the certification by Mayol would show that while the latter claims to have respondent
under his employ in 1997, 1998 and 1999, respondent’s services were not regular and that he
works only if he wants to. Apondar’s certification likewise stated that respondent worked for him
since 1999 through his brother Vicente as "sideline" but only after regular working hours and "off
and on" basis. Even assuming the truth of the foregoing statements, these do not foreclose
respondent’s regular or full-time employment with SEIRI. In effect, petitioners suggest that
respondent was employed by SEIRI’s suppliers, Mayol and Apondar but no competent proof was
presented as to the latter’s status as independent contractors.
In the same comment, petitioners further admitted that the five affiants who attested to
respondent’s employment with SEIRI are its former workers whom they describe as "disgruntled
workers of SEIRI" with an axe to grind against petitioners, and that their execution of affidavit in
support of respondent’s claim is "their very way of hitting back the management of SEIRI after
disciplinary measures were meted against them." This allegation though was not substantiated by
petitioners. Instead, after the CA rendered its decision reversing the NLRC’s ruling, petitioners
subsequently changed their theory by denying the employment relationship with the five affiants
in their motion for reconsideration, thus:
x x x Since the five workers were occupying and working on a leased premises of the
private respondent, they were called workers of SEIRI (private respondent). Such
admission however, does not connote employment. For the truth of the matter, all of the
five employees of the supplier assigned at the leased premises of the private respondent.
Because of the recommendation of the private respondent with regards to the disciplinary
measures meted on the five workers, they wanted to hit back against the private
respondent. Their motive to implicate private respondent was to vindicate. Definitely, they
have an axe to grind against the private respondent. Mention has to be made that despite
the dismissal of these five (5) witnesses from their service, none of them ever went to the
National Labor [Relations] Commission and invoked their rights, if any, against their
employer or at the very least against the respondent. The reason is obvious, since they
knew pretty well that they were not employees of SEIRI but rather under the employ of
Allan Mayol and Faustino Apondar, working on a leased premise of respondent. x x x
Petitioners’ admission that the five affiants were their former employees is binding upon
them. While they claim that respondent was the employee of their suppliers Mayol and Apondar,
they did not submit proof that the latter were indeed independent contractors; clearly, petitioners
failed to discharge their burden of proving their own affirmative allegation. There is thus no
showing that the five former employees of SEIRI were motivated by malice, bad faith or any ill-
motive in executing their affidavit supporting the claims of respondent.
In any controversy between a laborer and his master, doubts reasonably arising from the
evidence are resolved in favor of the laborer.
As a regular employee, respondent enjoys the right to security of tenure under Article
279 of the Labor Code and may only be dismissed for a just or authorized cause, otherwise the
dismissal becomes illegal.
Respondent, whose employment was terminated without valid cause by petitioners, is

entitled to reinstatement without loss of seniority rights and other privileges and to his full back
wages, inclusive of allowances and other benefits or their monetary equivalent, computed from
the time his compensation was withheld from him up to the time of his actual reinstatement.
Where reinstatement is no longer viable as an option, back wages shall be computed from the
time of the illegal termination up to the finality of the decision. Separation pay equivalent to one
month salary for every year of service should likewise be awarded as an alternative in case
reinstatement in not possible.
DREAMLAND HOTEL RESORT AND WESTLEY PRENTICE v. STEPHEN JOHNSON
G.R. No. 191455. March 12, 2014
J. Reyes
There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by

an employer becomes so unbearable on the part of the employee that it would foreclose any
choice by him except to forego his continued employment. It exists where there is cessation of
work because continued employment is rendered impossible, unreasonable or unlikely, as an offer
involving a demotion in rank and a diminution in pay.
FACTS:
Dreamland is a corporation engaged in hotel, restaurant and allied businesses. Prentice is

its current President and Chief Executive Officer. Prentice offered employment and convinced
Johnson to give out a loan, purportedly so the resort can be completed and operational by August
2007. Believing the representations of petitioner Prentice, private respondent Johnson accepted
the employment as Resort Manager and loaned money to petitioners in the amount of One
Hundred Thousand US Dollars (USD 100,000.00) to finish construction of the resort.
For a number of months, Johnson did his work but was not paid a salary. He was also
denied the benefits promised him as part of his compensation such as service vehicles, meals and
insurance. He was often berated and embarrassed in front of other personnel and guests, for
which reason he tendered his resignation, effective after three months thereafter.
Johnson filed a Complaint for illegal dismissal and non-payment of salaries, among others,
against the petitioners. The Labor Arbiter (LA) rendered a Decision dismissing Johnson’s complaint
for lack of merit with the finding that he voluntarily resigned from his employment and was not
illegally dismissed. The NLRC reversed the decision of the LA. On appeal, the CA affirmed the
decision of the NlRC.
ISSUE:
Whether the respondent was constructively dismissed and did not abandoned his work
RULING:
As regards the NLRC findings that Johnson was constructively dismissed and did not
abandon his work, the Court is in consonance with this conclusion with the following basis:
Even the most reasonable employee would consider quitting his job after working for
three months and receiving only an insignificant fraction of his salaries. There was, therefore, not
an abandonment of employment nor a resignation in the real sense, but a constructive dismissal,
which is defined as an involuntary resignation resorted to when continued employment is
rendered impossible, unreasonable or unlikely x x x.
The petitioners aver that considering that Johnson tendered his resignation and
abandoned his work, it is his burden to prove that his resignation was not voluntary on his part.
With this, the Court brings to mind its earlier ruling in the case of SHS Perforated Materials, Inc.v.
Diaz where it held that:
“There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by

an employer becomes so unbearable on the part of the employee that it would foreclose any
choice by him except to forego his continued employment. It exists where there is cessation of
work because continued employment is rendered impossible, unreasonable or unlikely, as an offer
involving a demotion in rank and a diminution in pay.”
It is impossible, unreasonable or unlikely that any employee, such as Johnson would

continue working for an employer who does not pay him his salaries. Applying the Court’s
pronouncement in Duldulao v. CA, the Court construes that the act of the petitioners in not
paying Johnson his salaries for three months has become unbearable on the latter’s part that he
had no choice but to cede his employment with them.
Since Johnson was constructively dismissed, he was illegally dismissed. As to the reliefs
granted to an employee who is illegally dismissed, Golden Ace Builders v. Talde referring to
Macasero v. Southern Industrial Gases Philippines is instructive:
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and

reinstatement. The two reliefs provided are separate and distinct. In instances where
reinstatement is no longer feasible because of strained relations between the employee and the
employer, separation pay is granted. In effect, an illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages.
The case of Golden Ace further provides:

“The accepted doctrine is that separation pay may avail in lieu of reinstatement if
reinstatement is no longer practical or in the best interest of the parties. Separation pay in lieu of
reinstatement may likewise be awarded if the employee decides not to be reinstated.” x x x
Under the doctrine of strained relations, the payment of separation pay is considered an
acceptable alternative to reinstatement when the latter option is no longer desirable or viable.
On one hand, such payment liberates the employee from what could be a highly oppressive work
environment. On the other hand, it releases the employer from the grossly unpalatable obligation
of maintaining in its employ a worker it could no longer trust.
ASHMOR M. TESORO, PEDRO ANG AND GREGORIO SHARP v. METRO MANILA RETREADERS,
INC. (BANDAG) AND/OR NORTHERN LUZON RETREADERS, INC (BANDAG) AND/OR POWER
TIRE AND RUBBER CORP. (BANDAG)
G.R. No. 171482. March 12, 2014
J. Abad
Franchising involves the use of an established business expertise, trademark, knowledge,

and training. As such, the franchisee is required to follow a certain established system.
Accordingly, the franchisors may impose guidelines that somehow restrict the franchisees’
conduct which do not necessarily indicate “control” The important factor to consider is still the
element of control over how the work itself is done, not just its end result.
FACTS:
Petitioners Ashmor M. Tesoro, Pedro Ang, and Gregorio Sharp used to work as
salesmen for respondents Metro Manila Retreaders, Inc., Northern Luzon Retreaders, Inc., or
Power Tire and Rubber Corporation, apparently sister companies, collectively called "Bandag."
Bandag offered repair and retread services for used tires. In 1998, however, Bandag developed a
franchising scheme that would enable others to operate tire and retreading businesses using its
trade name and service system.
Petitioners quit their jobs as salesmen and entered into separate Service Franchise
Agreements (SFAs) with Bandag for the operation of their respective franchises. Under the SFAs,
Bandag would provide funding support to the petitioners subject to a regular or periodic
liquidation of their revolving funds. The expenses out of these funds would be deducted from
petitioners’ sales to determine their incomes.
At first, petitioners managed and operated their respective franchises without any
problem. After a length of time, however, they began to default on their obligations to submit
periodic liquidations of their operational expenses in relation to the revolving funds Bandag
provided them. Consequently, Bandag terminated their respective SFA. Aggrieved, petitioners
filed a complaint for constructive dismissal, non-payment of wages, incentive pay, 13th month pay
and damages against Bandag with the National Labor Relations Commission (NLRC).
The Labor Arbiter rendered a Decision, dismissing the complaint on the ground that no
employer-employee relationship existed between Bandag and petitioners. Upon petitioners’
appeal to the NLRC the latter affirmed the Labor Arbiter’s Decision. It also denied petitioners’
motion for reconsideration. Undaunted, petitioners filed a petition for certiorari under Rule 65
with the Court of Appeals (CA) ascribing grave abuse of discretion. The CA rendered a Decision,
dismissing the petition for lack of merit. Hence, this petition.
ISSUE:
Whether petitioners remained to be Bandag’s salesmen under the franchise scheme it entered
into with them
RULING:
Franchising is a business method of expansion that allows an individual or group of

individuals to market a product or a service and to use of the patent, trademark, trade name and
the systems prescribed by the owner.
In this case, Bandag’s SFAs created on their faces an arrangement that gave petitioners the
privilege to operate and maintain Bandag branches in the way of franchises, providing tire repair
and retreading services, with petitioners earning profits based on the performance of their
branches.
The question is: did petitioners remain to be Bandag’s employees after they began
operating those branches? The tests for determining employer-employee relationship are: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal;
and (d) the employer’s power to control the employee with respect to the means and methods by
which the work is to be accomplished. The last is called the “control test,” the most important
element.
When petitioners agreed to operate Bandag’s franchise branches in different parts of the
country, they knew that this substantially changed their former relationships. They were to cease
working as Bandag’s salesmen, the positions they occupied before they ventured into running
separate Bandag branches. They were to cease receiving salaries or commissions. Their incomes
were to depend on the profits they made. Yet, petitioners did not then complain of constructive
dismissal. They took their chances, ran their branches, Gregorio Sharp in La Union for several
months and Ashmor Tesoro in Baguio and Pedro Ang in Pangasinan for over a year. Clearly, their
belated claim of constructive dismissal is quite hollow.
Control in employer-employee relationships addresses the details of day to day work like
assigning the particular task that has to be done, monitoring the way tasks are done and their
results, and determining the time during which the employee must report for work or accomplish
his assigned task.
Franchising involves the use of an established business expertise, trademark, knowledge,

and training. As such, the franchisee is required to follow a certain established system.
Accordingly, the franchisors may impose guidelines that somehow restrict the petitioners’ conduct
which do not necessarily indicate “control.” The important factor to consider is still the element
of control over how the work itself is done, not just its end result.
THE NATIONAL WAGES AND PRODUCTIVITY COMMISSION (NWPC), ET AL. v. THE ALLIANCE
OF PROGESSIVE LABOR (APL), ET AL.
G.R. No. 150326. March 12, 2014
J. Bersamin
The NWPC had the authority to prescribe the rules and guidelines for the determination
of the minimum wage and productivity measures, and the RTWPB-NCR had the power to issue
wage orders. The RTWPB has also the power to issue exemptions from the application of the wage
orders subject to the guidelines issued by the NWPC.
.
FACTS:
On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to rationalize
wages throughout the Philippines, Republic Act No. 6727 created the NWPC and the RTWPBs of
the different regions.
Consequently, the RTWPB-NCR issued Wage Order No. NCR-07 on October 14, 1999
imposing an increase of P25.50/day on the wages of all private sector workers and employees in
the NCR and pegging the minimum wage rate in the NCR at P223.50/day. However, Section 2 and
Section 9 of Wage Order No. NCR-07 exempted certain sectors and industries from its coverage.
Feeling aggrieved by their non-coverage by the wage adjustment, the Alliance of

Progressive Labor (APL) and the Tunay na Nagkakaisang Manggagawa sa Royal (TNMR) filed an
appeal with the NWPC assailing Section 2(A) and Section 9(2) of Wage Order No. NCR-07. They
contended that neither the NWPC nor the RTWPB-NCR had the authority to expand the non-
coverage and exemptible categories under the wage order; hence, the assailed sections of the
wage order should be voided.
The NWPC upheld the validity of Section 2(A) and Section 9(2) of Wage Order No. NCR-
07. The CA upheld that the powers and functions of the NWPC and RTWPB-NCR as set forth in
Republic Act No. 6727 did not include the power to grant additional exemptions from the
adjusted minimum wage. Hence, this petition.
ISSUES:
1. Whether the RTWPB-NCR had the authority to provide additional exemptions from the
minimum wage adjustments embodied in Wage Order No. NCR-07
2. Whether Wage Order No. NCR-07 complied with the requirements set by NWPC
Guidelines No. 01, Series of 1996
RULING:
Indisputably, the NWPC had the authority to prescribe the rules and guidelines for the
determination of the minimum wage and productivity measures, and the RTWPB-NCR had the
power to issue wage orders.
Pursuant to its statutorily defined functions, the NWPC promulgated NWPC Guidelines
No. 001-95 (Revised Rules of Procedure on Minimum Wage Fixing) to govern the proceedings in
the NWPC and the RTWPBs in the fixing of minimum wage rates by region, province and industry.
Section 1 of Rule VIII of NWPC Guidelines No. 001-95 recognized the power of the RTWPBs to
issue exemptions from the application of the wage orders subject to the guidelines issued by the
NWPC.
The NWPC also issued NWPC Guidelines No. 01, Series of 1996, to fix the rules on the
exemption from compliance with the wage increases prescribed by the RTWPBs.
Under the guidelines, the RTWPBs could issue exemptions from the application of the
wage orders as long as the exemptions complied with the rules of the NWPC. In its rules, the
NWPC enumerated four exemptible establishments, but the list was not exclusive. The RTWPBs
had the authority to include in the wage orders establishments that belonged to, or to exclude
from the four enumerated exemptible categories. If the exempted category was one of the listed
ones, the RTWPB issuing the wage order must see to it that the requisites stated in Section 3
and Section 4 of the NWPC Guidelines No. 01, Series of 1996 were complied with before granting
fully or partially the application of an establishment seeking to avail of the exemption.
On the other hand, if the exemption was outside of the four exemptible categories, like
here, the exemptible category should be: (1) in accord with the rationale for exemption; (2)
reviewed/approved by the NWPC; and (3) upon review, the RTWPB issuing the wage order must
submit a strong and justifiable reason or reasons for the inclusion of such category. It is the
compliance with the second requisite that is at issue here.
The wage orders issued by the RTWPBs could be reviewed by the NWPC motu proprio or
upon appeal. Any party aggrieved by the wage order issued by the RTWPBs could appeal. Here,
APL and TNMR appealed on October 26, 1999, submitting to the NWPC precisely the issue of the
validity of the Section 2(A) and Section 9(2) of Wage Order No. NCR-07. The NWPC, in arriving
at its decision, weighed the arguments of the parties and ruled that the RTWPB-NCR had
substantial and justifiable reasons in exempting the sectors and establishments enumerated in
Section 2(A) and Section 9(2) based on the public hearings and consultations, meetings,
social-economic data and informations gathered prior to the issuance of Wage Order No.
NCR-07. The very fact that the validity of the assailed sections of Wage Order No. NCR-07
had been already passed upon and upheld by the NWPC meant that the NWPC had
already given the wage order its necessary legal imprimatur. Accordingly, the requisite
approval or review was complied with.
NAVOTAS SHIPYARD CORPORATION AND JESUS VILLAFLOR v. INNOCENCIO MONTALLANA,
ET AL.
G.R. No. 190053. March 24, 2014
J. Brion
The term “backwages” presupposes illegal termination of employment. It is restitution of

earnings unduly withheld from the employee because of illegal termination. Hence, where there
is no illegal termination, there is no basis for claim or award of backwages.
If the dismissal is by virtue of a just or authorized cause, but without due process, the
dismissed workers are entitled to an indemnity in the form of nominal damages.
FACTS:
The case arose when respondents filed a complaint for illegal (constructive) dismissal,
with money claims, against the petitioners, Navotas Shipyard Corporation (company) and its
President/General Manager, Jesus Villaflor. The respondents alleged that on October 20, 2003,
the company’s employees (about 100) were called to a meeting where Villaflor told them:
“Magsasara na ako ng negosyo, babayaran ko na lang kayo ng separation pay dahil wala na akong
pangsweldo sa inyo. Marami akong mga utang sa krudo, yelo, at iba pa .” Since then, they were
not allowed to report for work but Villaflor’s promise to give them separation pay never
materialized despite their persistent demands and follow-ups.
The petitioners, on the other hand, claimed that due to the “seasonal lack of fish caught
and uncollected receivables,” the company suffered financial reverses. It was thus constrained to
temporarily cease operations. They projected that the company could resume operations before
the end of six months or on April 22, 2004. It reported the temporary shutdown to the
Department of Labor and Employment, National Capital Region (DOLE-NCR) and filed an
Establishment Termination Report.
The LA dismissed the complaint for lack of merit, but awarded the respondents 13 th month
pay and service incentive leave pay. The NLRC dismissed the appeal for lack of merit and affirmed
LA Bartolabac’s decision in toto. The CA set aside the challenged NLRC decision and granted the
respondents’ claims for service incentive leave pay, 13th month pay, separation pay and
backwages.
ISSUE:
Whether the respondents illegally dismissed and entitled to the CA award
RULING:
Under the circumstances, we cannot say that the company’s employees were illegally
dismissed; rather, they lost their employment because the company ceased operations after
failing to recover from their financial reverses. The CA itself recognized what happened to the
company when it observed: “The temporary shutdown has ripened into a closure or cessation of
operations. In this situation, private respondents are definitely entitled to the corresponding
benefits of separation.” Even the respondents had an inkling of the company’s fate when they
claimed before the LA that on October 20, 2003, they were called, together with all the other
employees of the company, by Villaflor; the latter allegedly told them that he would be closing
the company, but would give them their separation pay. He also disclosed to them the reason –
he could no longer pay their salaries due to the company’s unsettled financial obligations on fuel
and ice and other indebtedness.
The CA misappreciated the facts when it opined that the respondents were illegally
dismissed because they were not reinstated by the petitioners after the lapse of the company’s
temporary shutdown. It lost sight of the fact that the company did not resume operations
anymore, a situation the CA itself recognized. The respondents, therefore, had no more jobs to go
back to; hence, their non-reinstatement.
In these lights, the CA was not only incorrect from the point of law; it likewise disregarded,
or at the very least, grossly misappreciated the evidence on record – that the petitioner was in
distress and had temporarily suspended its operations, and duly reflected these circumstances to
the DOLE. From this perspective, there was no grave abuse of discretion to justify the CA’s reversal
of the NLRC’s findings and conclusions.
Since there was no illegal dismissal, the respondents are not entitled to backwages. The
term “backwages” presupposes illegal termination of employment. It is restitution of earnings
unduly withheld from the employee because of illegal termination. Hence, where there is no
illegal termination, there is no basis for claim or award of backwages.
Pursuant to existing jurisprudence, if the dismissal is by virtue of a just or authorized cause,

but without due process, the dismissed workers are entitled to an indemnity in the form of
nominal damages. In the present case, the evidence on hand substantially shows that the company
closed down due to serious business reverses, an authorized cause for termination of employment.
The failure to notify the respondents in writing of the closure of the company will not invalidate
the termination of their employment, but the company has to pay them nominal damages for the
violation of their right to procedural due process.
SUTHERLAND GLOBAL SERIVES (PHILIPPINES), INC. AND JANETTE G. LAGAZO v. LARRY S.
LABRADOR
G.R. No. 193107. March 24, 2014
J. Brion
The power to dismiss an employee is a recognized prerogative inherent in the employer's

right to freely manage and regulate his business. The law, however, in protecting the rights of the
laborers, authorizes neither oppression nor self-destruction of the employer. The worker's right
to security of tenure is not an absolute right, for the law provides that he may be dismissed for
cause.
FACTS:
Petitioner Sutherland Global Services (Philippines), Inc. (Sutherland) is engaged in the

business of process outsourcing and technology consulting services for international clients.
Sutherland hired Labrador as one of its call center agents with the main responsibility of
answering various queries and complaints through phoned-in calls.
Labrador was charged with violation for transgressing the “Non-Compliance Sale
Attribute” policy clause stated in the Employee Handbook. Allegedly, on May 13, 2008, one of
Sutherland’s customers complained that Labrador initially asked for her credit card account, but
only for purposes of verification. As it turned out, a second account was created and a new order
was placed under the same customer’s name. Thus, two sets of packages were shipped to the
customer who had to pay twice for the same product. After investigation, Labrador was found
guilty of violating the Employee Handbook due to gross or habitual neglect of duty. The
petitioner requested Labrador to tender his resignation instead of termination. Thereafter,
Labrador submitted his resignation letter.
Labrador filed a complaint for constructive/illegal dismissal before the NLRC. The LA
dismissed the complaint for lack of merit. The NLRC reversed the LA’s ruling. The CA affirmed the
NLRC’s finding that Labrador had been illegally dismissed.
ISSUES:
1. Whether labrador was illegally terminated and did not voluntarily resign
2. Whether labrador’s offense constitutes gross negligence as to warrant his dismissal from
the service
RULING:
We do not agree with the findings of the NLRC, as affirmed by the CA, that Labrador was
illegally dismissed.
In the evidence leading to Labrador’s dismissal – evidence that Labrador had

acknowledged to have received, thus binding him to its terms – no dispute exists that Labrador
committed several infractions. In fact, the final infraction that brought on his termination was
actually a repetition of the first offense.
The first offense (committed on September 24, 2007) already gave rise to a “Last Written
Warning” with the statement that it was a serious offense, constituting neglect of duty for
deviating from the program/department’s standard operating procedures. Under this clear
warning, a second similar offense would necessarily lead to his dismissal; otherwise the purpose of
a “Last Written Warning” would have been negated. The NLRC, unfortunately, completely
disregarded this piece of important evidence. This disregard – a gross failure to recognize
undisputed evidence on record – constitutes grave abuse of discretion.
We have consistently ruled that the power to dismiss an employee is a recognized

prerogative inherent in the employer's right to freely manage and regulate his business. The law,
however, in protecting the rights of the laborers, authorizes neither oppression nor self-
destruction of the employer. The worker's right to security of tenure is not an absolute right, for
the law provides that he may be dismissed for cause. Furthermore, Article 282 of the Labor Code
provides that an employee may be terminated from the service based on just causes.
The failure to faithfully comply with the company rules and regulations is considered to be
a just cause in terminating one’s employment, depending on the nature, severity and
circumstances of non-compliance. “An employer ‘has the right to regulate, according to its
discretion and best judgment, all aspects of employment, including work assignment, working
methods, processes to be followed, working regulations, transfer of employees, work supervision,
lay-off of workers and the discipline, dismissal and recall of workers.”
Thus, it was within Sutherland’s prerogative to terminate Labrador’s employment when he

committed a serious infraction and, despite a previous warning, repeated it. To reiterate, he
opened another client account without the latter’s consent, with far-reaching and costly effects
on the company. For one, the repeated past infractions would have resulted in negative
feedbacks on Sutherland’s performance and reputation. It would likewise entail additional
administrative expense since Sutherland would have to address the complaints – an effort that
would entail investigation costs and the return of the doubly-delivered merchandise. As a rule,
“an employer cannot be compelled to continue with the employment of workers when continued
employment will prove inimical to the employer's interests.”
HOCHENG PHILIPPINES CORPORATION vs. ANTONIO M. FARRALES
G.R. No. 211497, 18 March 2015
Facts:
Farrales was employed by HPC as Assistant Unit Chief of Production in 2008, a supervisory
position with a monthly salary of P17,600.00. He was a consistent recipient of citations for
outstanding performance, as well as appraisal and year-end bonuses. A report reached HPC
management that a motorcycle helmet of an employee, Reymar Solas (Reymar), was stolen at the
parking lot within its premises. A video sequence recorded on closed-circuit television (CCTV)
showed Farrales taking the missing helmet from a parked motorcycle. HPC sent Farrales a notice
to explain his involvement in the alleged theft. HPC issued a Notice of Termination to Farrales
dismissing him for violation of Article 69, Class A, Item No. 29 of the HPC Code of Discipline,
which provides that “stealing from the company, its employees and officials, or from its
contractors, visitors or clients,” is akin to serious misconduct and fraud or willful breach by the
employee of the trust reposed in him by his employer or duly authorized representative , which are
just causes for termination of employment under Article 282 of the Labor Code. Farrales filed a
complaint for illegal dismissal, non-payment of appraisal and mid-year bonuses, service incentive
leave pay and 13th month pay. He also prayed for reinstatement, or in lieu thereof, separation pay
with full backwages, plus moral and exemplary damages and attorney’s fees.
Issue:
Whether or not respondent was validly dismissed.
Ruling:
The Court resolves to deny the petition.
To validly dismiss an employee, the law requires the employer to prove the existence of any of the
valid or authorized causes, As a supervisorial employee, Farrales is admittedly subject to stricter
rules of trust and confidence, and thus pursuant to its management prerogative HPC enjoys a
wider latitude of discretion to assess his continuing trustworthiness, than if he were an ordinary
rank-and-file employee.
Farrales committed no serious or willful misconduct or disobedience to warrant his dismissal. It is

not disputed that Farrales lost no time in returning the helmet to Reymar the moment he was
apprised of his mistake by Eric, which proves, according to the CA, that he was not possessed of a
depravity of conduct as would justify HPC’s claimed loss of trust in him. Farrales immediately
admitted his error to the company guard and sought help to find the owner of the yellow helmet,
and this, the appellate court said, only shows that Farrales did indeed mistakenly think that the
helmet he took belonged to Eric. Theft committed by an employee against a person other than
his employer, if proven by substantial evidence, is a cause analogous to serious misconduct.
Misconduct is improper or wrong conduct, it is the transgression of some established and definite
rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful
intent and not mere error in judgment. The misconduct to be serious must be of such grave and
aggravated character and not merely trivial or unimportant. Such misconduct, however serious,
must, nevertheless, be in connection with the employee’s work to constitute just cause for his
separation.
But where there is no showing of a clear, valid and legal cause for termination of employment, the
law considers the case a matter of illegal dismissal. If doubts exist between the evidence
presented by the employer and that of the employee, the scales of justice must be tilted in favor
of the latter. The employer must affirmatively show rationally adequate evidence that the
dismissal was for a justifiable cause.
FONTERRA BRANDS PHILS., INC. vs. LEONARDO LARGADO

AND TEOTIMO ESTRELLADO
G.R. No. 205300, 18 March 2015
Facts:
Petitioner Fonterra Brands Phils., Inc. (Fonterra) contracted the services of Zytron Marketing and
Promotions Corp. (Zytron) for the marketing and promotion of its milk and dairy products.
Fonterra sent Zytron a letter terminating its promotions contract. Fonterra then entered into an
agreement for manpower supply with A.C. Sicat Marketing and Promotional Services (A.C. Sicat).
Desirous of continuing their work as TMRs, respondents submitted their job applications with A.C.
Sicat, which hired them for a term of five (5) monthS. When respondents’ 5-month contracts with
A.C. Sicat were about to expire, they allegedly sought renewal thereof, but were allegedly
refused. This prompted respondents to file complaints for illegal dismissal, regularization, non-
payment of service incentive leave and 13th month pay, and actual and moral damages, against
petitioner, Zytron, and A.C. Sicat.
Issue:
(1) Whether or not Zytron and A.C. Sicat are labor-only contractors, making Fonterra the
employer of herein respondents; and (2) whether or not respondents were illegally dismissed.
Ruling:
Respondents voluntarily terminated their employment with Zytron, contrary to their allegation
that their employment with Zytron was illegally terminated. The termination of respondents’
employment with Zytron was brought about by the cessation of their contracts. By refusing to
renew their contracts with Zytron, respondents effectively resigned from the latter. Resignation is
the voluntary act of employees who are compelled by personal reasons to dissociate themselves
from their employment, done with the intention of relinquishing an office, accompanied by the
act of abandonment. Respondents voluntarily terminated their employment with Zytron by
refusing to renew their employment contracts with the latter, applying with A.C. Sicat, and
working as the latter’s employees, thereby abandoning their previous employment with Zytron.
Resignation is inconsistent with illegal dismissal. This being the case, Zytron cannot be said to
have illegally dismissed respondents.
Fonterra’s issuance of Merchandising Guidelines, stock monitoring and inventory forms, and
promo mechanics, for compliance and use of A.C. Sicat’s employees assigned to them, does not
establish that Fonterra exercises control over A.C. Sicat. A.C. Sicat carries out its merchandising
and promotions business, independent of Fonterra’s business. Thus, A.C. Sicat is a legitimate job
contractor.
The termination of respondents’ employment with the A.C. Sicat was simply brought about by the
expiration of their employment contracts. Foremost, respondents were fixed-term employees.
Fixed-term employment contracts are not limited to those by nature seasonal or for specific
projects with predetermined dates of completion; they also include those to which the parties by
free choice have assigned a specific date of termination. The determining factor of such contracts
is not the duty of the employee but the day certain agreed upon by the parties for the
commencement and termination of the employment relationship. Respondents were employed
by A.C. Sicat as project employees. Respondents, by accepting the conditions of the contract with
A.C. Sicat, were well aware of and even acceded to the condition that their employment thereat
will end on said pre-determined date of termination. Non-renewal of their contracts by A.C. Sicat
is a management prerogative, and failure of respondents to prove that such was done in bad faith
militates against their contention that they were illegally dismissed. The expiration of their
contract with A.C. Sicat simply caused the natural cessation of their fixed-term employment there
at.
ST. LUKE’S MEDICAL CENTER, INC. VS. MARIA THERESA V. SANCHEZ

G.R. No. 212054, 11 March 2015
Facts:
Sanchez was hired by petitioner St. Luke’s Medical Center, Inc. (SLMC) as a Staff Nurse. At the end
of her shift, the Security Guard on duty noticed a pouch in her bag and asked her to open the
same. When opened, said pouch contained assortment of medical stocks which were
subsequently confiscated. She was brought to the SLMC In-House Security Department (IHSD)
where she was directed to write an Incident Report explaining why she had the questioned items
in her possession. Sanchez submitted explained that the questioned items came from the
medication drawers of patients who had already been discharged, and, as similarly practiced by
the other staff members, she started saving these items as excess stocks in her pouch, along with
other basic items that she uses during her shift. She then put the pouch inside the lowest drawer of
the bedside table in the treatment room for use in immediate procedures in case replenishment of
stocks gets delayed. However, on the day of the incident, she failed to return the pouch inside the
medication drawer upon getting her tri-colored pen and calculator and, instead, placed it inside
her bag. Eventually, she forgot about the same as she got caught up in work, until it was noticed by
the guard on duty on her way out of SMLC’s premises.
Consequently, Sanchez was placed under preventive suspension until the conclusion of the
investigation.
After hearing her side, SLMC, informed Sanchez of its decision to terminate her employment. This
prompted her to file a complaint for illegal dismissal. The Labor Arbiter (LA) ruled that Sanchez
was validly dismissed for intentionally taking the property of SLMC’s clients for her own personal
benefit, which constitutes an act of dishonesty. The NLRC reversed and set aside the LA ruling,
and held that Sanchez was illegally dismissed. The CA upheld the NLRC, ruling that the latter did
not gravely abuse its discretion in finding that Sanchez was illegally dismissed.
Issue:
Whether or not Sanchez was illegally dismissed by SLMC.
Ruling:
The dismissal of Sanchez was for a just cause. The Court finds that Sanchez was validly dismissed
by SLMC for her willful disregard and disobedience of Section 1, Rule I of the SLMC Code of
Discipline, which reasonably punishes acts of dishonesty, i.e., “theft, pilferage of hospital or co-
employee property, x x x or its attempt in any form or manner from the hospital, co-employees,
doctors, visitors, [and] customers (external and internal)” with termination from employment. Such
act is obviously connected with Sanchez’s work, who, as a staff nurse, is tasked with the proper
stewardship of medical supplies. Note that Section 1, Rule 1 of the SLMC Code of Discipline is
further supplemented by the company policy requiring the turn-over of excess medical
supplies/items for proper handling and providing a restriction on taking and bringing such items
out of the SLMC premises without the proper authorization or “pass” from the official concerned,
which Sanchez was equally aware thereof. Nevertheless, Sanchez failed to turn-over the
questioned items and, instead, “hoarded” them, as purportedly practiced by the other staff
members in the Pediatric Unit. As it is clear that the company policies subject of this case are
reasonable and lawful, sufficiently known to the employee, and evidently connected with the
latter’s work, the Court concludes that SLMC dismissed Sanchez for a just cause.
THE COFFEE BEAN AND TEA LEAF PHILIPPINES, INC.

AND WALDEN CHU vs. ROLLY P. ARENAS
G.R. No. 208908, 11 March 2015
Facts:
Coffee Bean and Tea Leaf Philippines, Inc. (CBTL) hired Rolly P. Arenas (Arenas) to work as a
“barista” at its Paseo Center Branch. His principal functions included taking orders from customers
and preparing their ordered food and beverages. Upon signing the employment contract, Arenas
was informed of CBTL’s existing employment policies. A mystery guest shopper submitted a
report stating that Arenas was seen eating non-CBTL products at CBTL’s al fresco dining area while
on duty. As a result, the counter was left empty without anyone to take and prepare the
customers’ orders. On another occasion, the duty manager of CBTL, conducted a routine
inspection of the Paseo Center Branch. While inspecting the store’s products, she noticed an iced
tea bottle being chilled inside the bin where the ice for the customers’ drinks is stored. Based on
the mystery guest shopper and duty manager’s reports, Arenas was required to explain his alleged
violations. However, CBTL found Arenas’ written explanation unsatisfactory, hence CBTL
terminated his employment.
Issue:
Whether CBTL illegally dismissed Arenas from employment.
Ruling:
The infractions which Arenas committed do not justify the application of the severe penalty of
termination from service. For willful disobedience to be a valid cause for dismissal, these two
elements must concur: (1) the employee’s assailed conduct must have been willful, that is,
characterized by a wrongful and perverse attitude; and (2) the order violated must have been
reasonable, lawful, made known to the employee, and must pertain to the duties which he had
been engaged to discharge. Arenas’ alleged infractions do not amount to such a wrongful and
perverse attitude. Though Arenas may have admitted these wrongdoings, these do not amount to
a wanton disregard of CBTL’s company policies. As Arenas mentioned in his written explanation,
he was on a scheduled break when he was caught eating at CBTL’s al fresco dining area. During
that time, the other service crews were the one in charge of manning the counter. Notably, CBTL’s
employee handbook imposes only the penalty of written warning for the offense of eating non-
CBTL products inside the store’s premises.
Arenas’ three counts of tardiness cannot be considered as gross and habitual neglect of duty. The
infrequency of his tardiness already removes the character of habitualness. These late attendances
were also broadly spaced out, negating the complete absence of care on Arenas’ part in the
performance of his duties. Even CBTL admitted in its notice to explain that this violation does not
merit yet a disciplinary action and is only an aggravating circumstance to Arenas’ other violations.
For misconduct or improper behavior to be a just cause for dismissal, (a) it must be serious; (b) it
must relate to the performance of the employee’s duties; and (c) it must show that the employee
has become unfit to continue working for the employer. However, the facts on record reveal that
there was no active dishonesty on the part of Arenas. When questioned about who placed the
bottled iced tea inside the ice bin, his immediate reaction was not to deny his mistake, but to
remove the bottle inside the bin and throw it outside. More importantly, when he was asked to
make a written explanation of his action, he admitted that the bottled iced tea was his. His
subsequent act of owing to his mistake only shows the absence of a deliberate intent to lie or
deceive his CBTL superiors. On this score, we conclude that Arenas’ action did not amount to
serious misconduct.
METROGUARDS SECURITY AGENCY CORPORATION (FORMERLY KNOWN AS BEEGUARDS

CORPORATION) AND MS. MILAGROS T. CHAN vs. ALBERTO N. HILONGO
G.R. No. 215630, 09 March 2015
Facts:
Judgment is rendered by the Labor Arbiter finding the dismissal of complainant [Hilongo] as
illegal and ordering the respondents [herein petitioners] to pay complainant [Hilongo] his
backwages from the date of dismissal to the date of this decision and separation pay of one month
pay per year of service, plus 10% thereof as attorney’s fees The NLRC reversed the ruling of the
Labor Arbiter. The CA reversed the NLRC decision and reinstated the Labor Arbiter’s Decision.
The CA granted the motion for entry of judgment and noted Hilongo’s motion for clarification of
Decision/Resolution. The CA held that when an appellate court affirms the Labor Arbiter’s ruling,
it is understood that awards due to the illegally dismissed employee shall be recomputed in order
to account for the period of time that has lapsed from the rendition of the Labor Arbiter’s decision
up to its finality.
The case was remanded to the Labor Arbiter. Respondent Hilongo filed a motion for issuance of
writ of execution alleging that the CA Resolution had confirmed that the amount of P170,520.31
awarded by the Labor Arbiter is not sufficient, and that there is a need to compute additional
monetary awards reckoned from May 1, 2010 up to April 26, 2013 or the date Hilongo presumed
as the date of finality of the decision. The Labor Arbiter directed the issuance of a writ of
execution and ruled that the award of P170,520.31 the NLRC dismissed the petition. Hilongo
filed a petition for certiorari before the CA. The CA ordered the Labor Arbiter to re-compute
Hilongo’s monetary awards
Issue:
Whether the CA erred in ordering the re-computation of Hilongo’s monetary awards.
Ruling:
No. The re-computation of the consequences of illegal dismissal upon execution of the decision
does not constitute an alteration or amendment of the final decision being implemented. The
illegal dismissal ruling stands; only the computation of monetary consequences of this dismissal is
affected, and this is not a violation of the principle of immutability of final judgments.
The CA Decision dated September 7, 2012 became final and executory on April 26, 2013. Thus,
the April 30, 2010 Decision of the Labor Arbiter which ordered the payment of separation pay in
lieu of reinstatement, effectively ended the employment relationship of the parties on April 26,
2013, the date the CA decision became final. Since the Labor Arbiter’s computation of Hilongo’s
monetary award was up to the date of his April 30, 2010 Decision only, the CA properly decreed
the computation of additional back wages and separation pay.
However, the CA incorrectly concluded that the April 30, 2010 Decision of the Labor Arbiter
became final on June 11, 2013, contrary to its own finding that it became final and executory on
April 26, 2013. This led to its erroneous computation of the additional back wages and separation
pay of Hilongo, as well as reckoning the date of the 12% legal interest. Following the teaching of
Nacar v. Gallery Frames that the computation of the monetary consequences (back wages and
separation pay) of the illegal dismissal decision should be reckoned from its finality, the additional
back wages and separation pay of Hilongo should be computed from May 1, 2010 to April 26,
2013. Further, the payment of legal interest of 12% per annum should also be from April 26, 2013
up to June 30, 2013. Thereafter, in accordance with Bangko Sentral ng Pilipinas Monetary Board’s
Circular No. 799, series of 2013, the legal interest computed from July 1, 2013 until the monetary
awards were fully satisfied will be 6% per annum.
ONOFRE V. MONTERO, EDGARDO N. ESTRAÑERO, RENING P. PADRE, GABRIEL A. MADERA,

HERMINIO T. TACLA, NELSON C. VILORIA, DEMETRIO Q. PAJARILLO, ALFREDO R. AGANON,
REYNALDO AVILA, ALBERT T. RUIZ, NESTOR Y. YAGO, HARTY M. TUPASI, AGUSTIN R. AVILA, JR.
OR MARCOS R. AVILA, BONIFACIO B. GAANO, JOSELITO D. CUENTA, JONAS P. ESTILONG,
DOMINADOR C. CANARIA, GENARO C. RONDARIS, HERARDO M. DULAY, FRANKLIN A.
RAVINA, JR., AND RUBEN C. CABELLO vs. TIMES TRANSPORTATION CO., INC., AND SANTIAGO
RONDARIS, MENCORP TRANSPORT SYSTEMS, INC., VIRGINIA R. MENDOZA AND REYNALDO
MENDOZA
G.R. No. 215630, 09 March 2015
Facts:
Respondent Times Transportation Co., Inc., (TTCI) is a company engaged in the business of land
transportation for passengers and goods serving the Ilocos Region to Metro Manila route. TTCI
employed the herein 21 petitioners as bus drivers, conductors, mechanics, welders, security
guards and utility personnel. Members of TEUnion went on strike; a return-to-work Order was
issued which ended the strike and enjoined the parties from committing any other act that may
intensify the situation.
TTCI Board of Directors approved a resolution to gradually dispose the assets of the TTCI and
adopted a company-wide retrenchment program. The sale of 25 buses of TTCI, as well as the
Certificates of Public Convenience for the operation of the buses, were likewise approved.
Thereafter, several union members received notices that they were being retrenched TEU
declared a strike against TTCI, but the latter merely reiterated the earlier return-to-work order of
the Labor Secretary. For disregarding the said return-to-work order, two notices of termination
terminating some 106 workers and increasing the number of dismissed employees to 119, for
participating in the illegal strike.
Several complaints for unfair labor practice, illegal dismissal with money claims, damages and
attorney’s fees were filed against TTCI, In response, TTCI asserted that the petitioners’ cause of
action had already been barred by prescription because the complaints were filed only in June
2002 or after almost five years from the date of their dismissal. MENCORP, on the other hand,
raised the defense of lack of employer-employee relationship since it never engaged the services
of the petitioners when TTCI sold to them its buses and the Certificates of Public Convenience.
ISSUE: Whether or not the petitioners’ complaints for illegal dismissal have already prescribed.
RULING: A prudent review of the antecedents of the claim reveals that it has in fact prescribed
due to the petitioners’ withdrawal of their labor case. Hence, while the filing of the said case
could have interrupted the running of the four-year prescriptive period, the voluntary withdrawal
of the petitioners effectively cancelled the tolling of the prescriptive period within which to file
their illegal dismissal case, leaving them in exactly the same position as though no labor case had
been filed at all. The running of the four-year prescriptive period not having been interrupted by
the filing of NLRC RAB-I-01-1007, the petitioners’ cause of action had already prescribed in four
years after their cessation of employment on October 26, 1997 and November 24, 1997.
Consequently, when the petitioners filed their complaint for illegal dismissal, separation pay,
retirement benefits, and damages in 2002, their claim, clearly, had already been barred by
prescription.
VICENTE C. TATEL vs. JLFP INVESTIGATION SECURITY AGENCY, INC., JOSE LUIS F. PAMINTUAN,
AND/OR PAOLO C. TURNO
G.R. No. 206942, 25 February 2015
Facts:
Respondent JLFP Investigation Security Agency, Inc. (JLFP), a business engaged as a security
agency, hired Tatel as one of its security guards. Tatel alleged that he was last posted at
BaggerWerken Decloedt En Zoon (BaggerWerken) located at the Port Area in Manila. He was
required to work twelve (12) hours everyday from Mondays through Sundays and received only
P12,400.00 as monthly salary. On October 14, 2009, Tatel filed a complaint before the NLRC
against JLFP and its officer, for underpayment of salaries and wages, non-payment of other
benefits, 13th month pay, and attorney's fees. Tatel was placed on "floating status". After the
lapse of six (6) months, without having been given any assignments, he filed another complaint
against JLFP and its officers for illegal dismissal, reinstatement, backwages, refund of cash bond
deposit amounting to P25,400.00, attorney's fees, and other money claims. Respondents sent a
Memorandum directing Tatel to report back to work, despite receipt of the said memorandum,
respondents averred that Tatel ignored the same and failed to appear; hence, he was deemed to
have abandoned his work. LA dismissed Tatel's illegal dismissal complaint for lack of merit. NLRC
reversed and set aside the LA's Decision and found Tatel to have been illegally dismissed. CA
reversed and set aside the NLRC's Decision and reinstated the LA's Decision dismissing the illegal
dismissal complaint filed by Tatel
Issue:
Whether or not the CA erred in ruling that the NLRC gravely abused its discretion in finding Tatel
to have been illegally dismissed.
Ruling:
The petition is meritorious. The Court is convinced that Tatel was constructively, not actually,
dismissed after having been placed on "floating status" for more than six (6) months, reckoned
from October 24, 2009, the day following his removal from his last assignment with IPVG on
October 23, 2009, and not on August 24, 2009 as erroneously held by the NLRC. Constructive
dismissal exists when an act of clear discrimination, insensibility, or disdain, on the part of the
employer has become so unbearable as to leave an employee with no choice but to forego
continued employment, or when there is cessation of work because continued employment is
rendered impossible, unreasonable, or unlikely, as an offer involving a demotion in rank and a
diminution in pay.
Respondents failed to establish that Tatel abandoned his work. To constitute abandonment, two
elements must concur: (a) the failure to report for work or absence without valid or justifiable
reason, and (b) a clear intention to sever the employer-employee relationship, with the second
element as the more determinative factor and being manifested by some overt acts. Mere
absence is not sufficient. The employer has the burden of proof to show a deliberate and
unjustified refusal of the employee to resume his employment without any intention of returning.
Abandonment is incompatible with constructive dismissal. An employee who forthwith takes
steps to protest his layoff cannot, as a general rule, be said to have abandoned his work, and the
filing of the complaint is proof enough of his desire to return to work, thus negating any
suggestion of abandonment. As the Court sees it, it is simply incongruent for Tatel to refuse any
offer of an assignment and thereafter, seek redress by filing a case for illegal dismissal.
Tatel is entitled to reinstatement and back wages. However, as reinstatement is no longer feasible
in this case because of the strained relations between the parties and the fact that Tatel had since
been employed with another company, separation pay is awarded in lieu of reinstatement.
ZENAIDA PAZ vs. NORTHERN TOBACCO REDRYING CO., INC.,

AND/OR ANGELO ANG
G.R. No. 199554, 18 February 2015
Facts:
Northern Tobacco Redrying Co., Inc. (NTRCI), a flue-curing and redrying of tobacco leaves
business, hired Zenaida Paz (Paz) as a seasonal sorter. NTRCI regularly re-hired her every tobacco
season since then. She signed a seasonal job contract at the start of her employment and a pro-
forma application letter prepared by NTRCI in order to qualify for the next season. Paz was 63
years old when NTRCI informed her that she was considered retired under company policy. A year
later, NTRCI told her she would receive P12,000.00 as retirement pay. Paz, filed a Complaint for
illegal dismissal against NTRCI. NTRCI countered that no Collective Bargaining Agreement (CBA)
existed between NTRCI and its workers. Thus, it computed the retirement pay of its seasonal
workers based on Article 287 of the Labor Code. The Court of Appeals dismissed the Petition and
modified the National Labor Relations Commission’s Decision in that “financial assistance is
awarded to Zenaida Paz in the amount of P60,356.25”
Issue:
Whether or not Paz is considered a regular seasonal employee.
Ruling:
Jurisprudence recognizes the status of regular seasonal employees. Seasonal workers who are
called to work from time to time and are temporarily laid off during off-season are not separated
from service in said period, but are merely considered on leave until re-employed. The services
petitioner Paz performed as a sorter were necessary and indispensable to respondent NTRCI’s
business of flue-curing and redrying tobacco leaves. She was also regularly rehired as a sorter
during the tobacco seasons for 29 years since 1974. These considerations taken together allowed
the conclusion that petitioner Paz was a regular seasonal employee, entitled to rights under
Article 279 of the Labor Code.
Petitioner Paz was only 63 years old on May 18, 2003 with two more years remaining before she
would reach the compulsory retirement age of 65. Petitioner Paz never abandoned her argument
of illegal dismissal despite the amendment of her Complaint. Thus, she should be considered as
illegally dismissed from May 18, 2003 until she reached the compulsory retirement age of 65 in
2005 and should be entitled to full backwages for this period. In the absence of a retirement plan
or agreement providing for retirement benefits of employees in the establishment, an employee
upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is
hereby declared the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half
(1/2) month salary for every year of service, a fraction of at least six (6) months being considered
as one whole year.
While the present case involves retirement pay and not separation pay, Article 287 of the Labor
Code on retirement pay similarly provides that “a fraction of at least six (6) months being
considered as one whole year.” In addition, this court agrees with the Court of Appeals’ award of
financial assistance. Private respondent Paz rendered almost three decades of dedicated service
to petitioner, and to that, she gave away the prime of her life. In those long years of hard work, not
a single transgression or malfeasance of any company rule or regulation was ever reported against
her. Old age and infirmity now weaken her chances of employment. Veritably, We can call upon
the same “social and compassionate justice” allowing financial assistance in special circumstances.
These circumstances indubitably merit equitable concessions, via the principle of “compassionate
justice” for the working class.
EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO DAVID, BONIFACIO

MATUNDAN, NORA MENDOZA, ET AL. VS. NATIONAL LABOR RELATIONS COMMISSION,
SOLID MILLS, INC., AND/OR PHILIP ANG
G.R. No. 202961, 04 February 2015
Facts:
Petitioners are respondent’s employees. Petitioners and their families were allowed to occupy
SMI Village, a property owned by Solid Mills. According to Solid Mills, this was out of liberality
and for the convenience of its employees and on the condition that the employees would vacate
the premises anytime the Company deems fit. Petitioners were informed that Solid Mills would
cease its operations due to serious business losses. Solid Mills sent to petitioners individual
notices to vacate SMI Village. Petitioners were no longer allowed to report for work. Petitioners
demanded to be paid their benefits and separation pay. Hence, petitioners filed complaints
before the LA for alleged non-payment of separation pay, accrued sick and vacation leaves, and
13th month pay. Petitioners argue that their possession of Solid Mills property is not an
accountability that is subject to clearance procedures. They had already turned over to Solid Mills
their uniforms and equipment when Solid Mills ceased operations.
Issue:
Whether or not the monetary claims of petitioners should be held in abeyance pending
compliance of their accountabilities to respondent Solid Mills by turning over the subject lots they
respectively occupy.
Ruling:
An employer is allowed to withhold terminal pay and benefits pending the employee’s return of its
properties. Requiring clearance before the release of last payments to the employee is a standard
procedure among employers, whether public or private. Clearance procedures are instituted to
ensure that the properties, real or personal, belonging to the employer but are in the possession
of the separated employee, are returned to the employer before the employee’s departure.
As a general rule, employers are prohibited from withholding wages from employees except for
debt. “Debt” in this case refers to any obligation due from the employee to the employer. It
includes any accountability that the employee may have to the employer. There is no reason to
limit its scope to uniforms and equipment, as petitioners would argue. As long as the debt or
obligation was incurred by virtue of the employer-employee relationship, generally, it shall be
included in the employee’s accountabilities that are subject to clearance procedures. It may be
true that not all employees enjoyed the privilege of staying in respondent Solid Mills’ property.
However, this alone does not imply that this privilege when enjoyed was not a result of the
employer-employee relationship. Those who did avail of the privilege were employees of
respondent Solid Mills. Petitioners’ possession should, therefore, be included in the term
“accountability.” Petitioners were merely allowed to possess and use it out of respondent Solid
Mills’ liberality. The employer may, therefore, demand the property at will. The return of the
property’s possession became an obligation or liability on the part of the employees when the
employer-employee relationship ceased. Thus, respondent Solid Mills has the right to withhold
petitioners’ wages and benefits because of this existing debt or liability.
Withholding of payment by the employer does not mean that the employer may renege on its
obligation to pay employees their wages, termination payments, and due benefits. The employees’
benefits are also not being reduced. It is only subjected to the condition that the employees
return properties properly belonging to the employer. This is only consistent with the equitable
principle that “no one shall be unjustly enriched or benefited at the expense of another. For these
reasons, we cannot hold that petitioners are entitled to interest of their withheld separation
benefits. These benefits were properly withheld by respondent Solid Mills because of their refusal
to return its property.
ROMEO BASAN, DANILO DIZON, JAIME L. TUMABIAO, JR., ROBERTO DELA RAMA, JR., RICKY S.
NICOLAS, CRISPULO D. DONOR, GALO FALGUERA, AND NATIONAL LABOR RELATIONS
COMMISSION vs. COCA-COLA BOTTLERS PHILIPPINES
G.R. Nos. 174365-66, 04 February 2015
Facts:
Petitioners filed a complaint for illegal dismissal with money claims against respondent Coca-Cola
Bottlers Philippines, alleging that respondent dismissed them without just cause and prior written
notice required by law. Respondent corporation, however, countered that it hired petitioners as
temporary route helpers to act as substitutes for its absent regular route helpers merely for a fixed
period in anticipation of the high volume of work in its plants or sales offices. As such, petitioners’
claims have no basis for they knew that their assignment as route helpers was temporary in
duration.
The Labor Arbiter ruled in favor of petitioners and found that since they were performing
activities necessary and desirable to the usual business of petitioner for more than the period for
regularization, petitioners are considered as regular employees, and thus, their dismissal was done
contrary to law in the absence of just cause and prior written notice. NLRC affirmed the Labor
Arbiter’s decision and rejected respondent’s contention that petitioners were merely employed
for a specific project or undertaking the completion or termination of which has been determined
at the time of their engagement. The CA consolidated respondent’s two (2) petitions for certiorari
and reversed the rulings of the NLRC and the Labor Arbiter stating that the respondent’s repeated
hiring for various periods (ranging from more than six months for private respondent Basan to
eight years in the case of private respondent Dizon) would not automatically categorize them as
REGULAR EMPLOYEES.
Issue:
Whether or not the Petitioners are considered as regular employees.
Ruling:
The petition is impressed with merit. Respondent expressly admitted that petitioners were
employed as route helpers in anticipation of the high volume of work in its plants and sales offices.
As such, respondent’s contention that petitioners could not have attained regular employment
status for they merely rendered services for periods of less than a year cannot be sustained.
Indeed, the “pernicious practice” of engaging employees for a fixed period short of the six-month
probationary period of employment, and again, on a day-to-day basis thereafter, mocks the law.
Regular employees are classified into: (1) regular employees by nature of work; and (2) regular
employees by years of service. The former refers to those employees who perform a particular
activity which is necessary or desirable in the usual business or trade of the employer, regardless
of their length of service; while the latter refers to those employees who have been performing
the job, regardless of the nature thereof, for at least a year. Petitioners, in this case, fall under the
first kind of regular employee above.
While fixed term employment is not per se illegal or against public policy, the criteria that 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 upon the employee and absent any
other circumstances vitiating his consent; or satisfactorily appears that the employer and the
employee dealt with each other on more or less equal terms with no moral dominance exercised
by the former or the latter must first be established to the satisfaction of this Court. Records of this
case reveal that for years, petitioners were repeatedly engaged to perform functions necessary to
respondent’s business for fixed periods short of the six-month probationary period of
employment. Respondent’s act of hiring and re-hiring petitioners for periods short of the legal
probationary period evidences its intent to thwart petitioner’s security of tenure, especially in
view of an awareness that ordinary workers, such as petitioners herein, are never on equal terms
with their employers.
MA. CHARITO C. GADIA, ERNESTO M. PEÑAS, GEMMABELLE B. REMO, LORENA S. QUESEA,

MARIE JOY FRANCISCO, BEVERLY A. CABINGAS, IVEE U. BALINGIT, ROMA ANGELICA O. BORJA,
MARIE JOAN RAMOS, KIM GUEVARRA, LYNN S. DE LOS SANTOS, CAREN C. ENCANTO, EIDEN
BALDOVINO, JACQUELINE B. CASTRENCE, MA. ESTRELLA V. LAPUZ, JOSELITO L. LORD,

RAYMOND G. SANTOS, ABIGAIL M. VILORIA, ROMMEL C. ACOSTA, FRANCIS JAN S. BAYLON,
ERIC O. PADIERNOS, MA. LENELL P. AARON, CRISNELL P. AARON, AND LAWRENCE
CHRISTOPHER F. PAPA VS. SYKES ASIA, INC./ CHUCK SYKES/ MIKE HINDS/ MICHAEL
HENDERSON
G.R. No. 209499, 28 January 2015
Facts: Sykes Asia is a corporation engaged in Business Process Outsourcing (BPO) Alltel
Communications, Inc. (Alltel), a United States-based telecommunications firm, contracted Sykes
Asia’s services to accommodate the needs and demands of Alltel clients for its post paid and
prepaid services (Alltel Project). Thus, on different dates, Sykes Asia hired petitioners as customer
service representatives, team leaders, and trainers for the Alltel Project. Alltel sent two (2) letters
to Sykes Asia informing the latter that it was terminating all support services provided by Sykes
Asia related to the Alltel Project. In view of this development, Sykes Asia sent each of the
petitioners end-of-life notices, informing them of their dismissal from employment due to the
termination of the Alltel Project. Petitioners filed separate complaints for illegal dismissal against
respondents praying for reinstatement, backwages, 13th month pay, service incentive leave pay,
night shift differential, moral and exemplary damages, and attorney’s fees. In their complaints,
petitioners alleged that their dismissal from service was unjust as the same was effected without
substantive and procedural due process. The CA held that a perusal of petitioners’ respective
employment contracts readily shows that they were hired exclusively for the Alltel Project and
that it was specifically stated therein that their employment would be project-based.
Issue:
Whether or not the CA correctly granted respondents’ petition for certiorari, thereby setting aside
the NLRC’s decision holding that petitioners were regular employees and reinstating the LA ruling
that petitioners were merely project-based employees, and thus, validly dismissed from service.
Ruling:
The petition is without merit. The Court finds that the CA correctly granted respondents’
certiorari petition before it, since the NLRC gravely abused its discretion in ruling that petitioners
were regular employees of Sykes Asia when the latter had established by substantial evidence that
they were merely project-based. Verily, for an employee to be considered project-based, the
employer must show compliance with two (2) requisites, namely that: (a) the employee was
assigned to carry out a specific project or undertaking; and (b) the duration and scope of which
were specified at the time they were engaged for such project. In this case, records reveal that
Sykes Asia adequately informed petitioners of their employment status at the time of their
engagement, as evidenced by the latter’s employment contracts which similarly provide that they
were hired in connection with the Alltel Project, and that their positions were “project-based and
as such is co-terminus to the project.” In this light, the CA correctly ruled that petitioners were
indeed project-based employees, considering that: (a) they were hired to carry out a specific
undertaking, i.e., the Alltel Project; and (b) the duration and scope of such project were made
known to them at the time of their engagement, i.e., “co-terminus with the project.” Sykes Asia
substantially complied with this requisite when it expressly indicated in petitioners’ employment
contracts that their positions were “co-terminus with the project.” To the mind of the Court, this
caveat sufficiently apprised petitioners that their security of tenure with Sykes Asia would only last
as long as the Alltel Project was subsisting. In other words, when the Alltel Project was terminated,
petitioners no longer had any project to work on, and hence, Sykes Asia may validly terminate
them from employment.
ESSENCIA Q. MANARPIIS VS. TEXAN PHILIPPINES, INC., RICHARD TAN AND CATHERINE P.
RIALUBIN-TAN
G.R. No. 197011. January 28, 2015
Facts:
Texan Philippines, Inc. (TPI), is a domestic corporation engaged in the importation, distribution
and marketing of imported fragrances and aroma and other specialized products and services.
respondents hired petitioner as Sales and Marketing Manager of the company’s Aroma Division.
Claiming insurmountable losses, respondents served a written notice addressed to all their
employees that TPI will cease operations. Petitioner filed a complaint for illegal dismissal, non-
payment of overtime pay, holiday pay, service incentive leave pay, unexpired vacation leave and
13th month pay and with prayer for moral and actual damages. Subsequently, petitioner amended
her complaint to state the true date of her dismissal which is July 27, 2000 and not August 31,
2000. She averred that on the same day she was served with notice of company closure,
respondents barred her from reporting for work and paid her last salary up to the end of July 2000.
The LA rendered a Decision declaring the dismissal of petitioner as illegal. The NLRC affirmed the
LA’s decision. The CA reversed the NLRC and ruled that petitioner was validly dismissed.
Issue:
Whether or not Petitioner was validly dismissed.
Ruling:
No. Closure or cessation of business is the complete or partial cessation of the operations and/or
shut-down of the establishment of the employer. It is carried out to either stave off the financial
ruin or promote the business interest of the employer. Closure of business as an authorized cause
for termination of employment is governed by Article 283 of the Labor Code, as amended. If the
business closure is due to serious losses or financial reverses, the employer must present sufficient
proof of its actual or imminent losses; it must show proof that the cessation of or withdrawal from
business operations was bona fide in character. A written notice to the DOLE thirty days before
the intended date of closure is also required, the purpose of which is to inform the employees of
the specific date of termination or closure of business operations, and which must be served upon
each and every employee of the company one month before the date of effectivity to give them
sufficient time to make the necessary arrangement.
The ultimate test of the validity of closure or cessation of establishment or undertaking is that it
must be bona fide in character. And the burden of proving such falls upon the employer. After
evaluating the evidence on record, we uphold the factual findings and conclusions of the labor
tribunals that petitioner was dismissed without just or authorized cause, and that the announced
cessation of business operations was a subterfuge for getting rid of petitioner.
The normal consequences of petitioner’s illegal dismissal are reinstatement without loss of
seniority rights, and payment of back wages computed from the time compensation was withheld
up to the date of actual reinstatement. Where reinstatement is no longer viable as an option,
separation pay equivalent to one month salary for every year of service should be awarded as an
alternative. The payment of separation pay is in addition to payment of back wages. 35 Given the
strained relations between the parties, the award of separation pay, in lieu of reinstatement, is in
order. The schemes implemented by the respondents to justify petitioner’s baseless dismissal, and
the manner by which such schemes were effected showed malice and bad faith on their part.
Consequently, its affirmance of the order of the LA that the amounts awarded to petitioner are
“payable in solidum by respondents” is proper. The NLRC likewise correctly upheld the award of
attorney’s fees considering that petitioner was assisted by a private counsel to prosecute her
illegal dismissal complaint and enforce her rights under our labor laws.
G.J.T. REBUILDERS MACHINE SHOP, GODOFREDO TRILLANA, AND JULIANA TRILLANA VS.
RICARDO AMBOS, BENJAMIN PUTIAN, AND RUSSELL AMBOS
G.R. No. 174184, 28 January 2015
Facts:
G.J.T. Rebuilders is a single proprietorship owned by the Spouses Godofredo and Juliana Trillana
(Trillana spouses). It was engaged in steel works and metal fabrication, employing Ricardo Ambos
(Ricardo), Russell Ambos (Russell), and Benjamin Putian (Benjamin) as machinists. A fire partially
destroyed the FEA Building. G.J.T. Rebuilders left its rented space and closed the machine shop. It
then filed an Affidavit of Closure before the Department of Labor and Employment and a sworn
application to retire its business operations. Having lost their employment without receiving
separation pay, Ricardo, Russell, and Benjamin filed a Complaint for illegal dismissal before the
Labor Arbiter. They prayed for payment of allowance, separation pay, and attorney’s fees The
Court of Appeals reversed the National Labor Relations Commission’s Decision, agreeing with
Labor Arbiter Leda that G.J.T. Rebuilders failed to prove its alleged serious business losses.
Issue:
Whether petitioners sufficiently proved that G.J.T. Rebuilders suffered from serious business
losses.
Ruling:
This petition should be denied. To prove serious business losses, employers must present in
evidence financial statements showing the net losses suffered by the business within a sufficient
period of time. Generally, it cannot be based on a single financial statement showing losses.
Absent this proof, employers closing their businesses must pay the dismissed employees
separation pay equivalent to one-month pay or to at least one-half-month pay for every year of
service, whichever is higher.
The decision to close one’s business is a management prerogative that courts cannot interfere
with. However, despite this management prerogative, employers closing their businesses must
pay the affected workers separation pay equivalent to one-month pay or to at least one-half-
month pay for every year of service, whichever is higher. The reason is that an employee dismissed,
even for an authorized cause, loses his or her means of livelihood. The only time employers are
not compelled to pay separation pay is when they closed their establishments or undertaking due
to serious business losses or financial reverses. Serious business losses are substantial losses, not
de minimis. “Losses” means that the business must have operated at a loss for a period of time for
the employer “to [have] perceived objectively and in good faith” that the business’ financial
standing is unlikely to improve in the future. The burden of proving serious business losses is with
the employer. The employer must show losses on the basis of financial statements covering a
sufficient period of time. G.J.T. Rebuilders failed to sufficiently prove its alleged serious business
losses. We find the two-year period covered by the financial statement insufficient for G.J.T.
Rebuilders to have objectively perceived that the business would not recover from the loss. no
continuing pattern of loss within a sufficient period of time is present in this case. Considering
that G.J.T. Rebuilders failed to prove its alleged serious business losses, it must pay respondents
their separation pay equivalent to one-month pay or at least one-half-month pay for every year of
service, whichever is higher In addition to separation pay, G.J.T. Rebuilders must pay each of the
respondents nominal damages for failure to comply with the notice requirement under Article
283 of the Labor Code. In the present case, there is no unlawful withholding of wages or an award
of attorney’s fees arising from collective bargaining negotiations. That respondents were
“constrained to engage the services of counsel to prosecute their claims” is not enough
justification since “no premium should be placed on the right to litigate.”
JOEL N. MONTALLANA v. LA CONSOLACION COLLEGE MANILA,

SR. IMELDA A. MORA, AND ALBERT D. MANALILI
G.R. No. 208890, December 08, 2014
Facts:
Montallana was a faculty member of La Consolacion’s College of Arts and Sciences.
On January 16, 2009, Mrs. Nerissa D. Del Fierro-Juan (Juan), the Assistant Dean of the College of
Arts and Sciences and the immediate superior of Montallana, filed a formal administrative
complaint with La Consolacion against Montallana, charging him of: ( a) oral defamation (or
slander); (b) disorderly conduct in the school premises; and (c) discourteous/indecent behavior or
using profane or obscene language in addressing co-employees, superiors, or anybody within the
school premises.
The said complaint arose from an incident that occurred in the faculty room on January 12, 2009
while Dean’s Secretary Ann Ruiz (Ruiz) and student assistant Kathlyn Saez (Saez) were numbering
the lockers, pursuant to a policy implemented by Juan. At that time, Montallana was conversing
with a co-faculty member, Dr. Beatriz V. Pabito (Pabito), when the latter asked Ruiz and Saez what
they were doing. Upon learning of the re-assignment of lockers of faculty members through
drawing of lots, Pabito commented, saying “para naman tayong bata nyan,” to which Montallana
followed suit and, in a loud voice, remarked “oo nga naman para tayong mga grade one nyan,
anong kabubuhan ng grade one yan.” Juan heard Montallana’s remark and confronted him,
resulting in a heated altercation that ended with the latter walking out of the room while Juan was
still talking to him.
After due investigation, La Consolacion’s fact-finding committee found Montallana guilty of

serious misconduct in making derogatory and insulting remarks about his superior, aggravated by
the fact that he made such remarks in a loud voice so that Juan would hear them. While noting
that the foregoing may be considered as a just cause for Montallana’s termination, the committee
observed that it was his first offense and stressed on the reformative and redemptive facets of the
case. In fine, Montallana was only meted the penalty of suspension without pay for a period of two
(2) months and directed him to submit a written public apology to Juan in a tenor satisfactory to
her and La Consolacion’s Human Resource Department (HRD).
In a letter dated April 22, 2009, Montallana sought reconsideration of his suspension and
explained that a written public apology was inappropriate at that time in view of the pendency of
a criminal complaint for grave oral defamation filed by Juan against him before the City
Prosecutor’s Office. He mentioned that his issuance of a written public apology while the criminal
case was being heard might incriminate himself, adding too that it was his lawyer who advised him
to invoke his right against self-incrimination.
The request having been denied by La Consolacion’s President, respondent Sr. Imelda A. Mora
(Mora), Montallana filed a complaint for illegal suspension and unfair labor practice, with prayer
for payment of salaries during the period of suspension, and moral and exemplary damages
against respondents La Consolacion and Mora before the NLRC. The case was eventually
dismissed at the Commission Level.
Thereafter, on June 1, 2011, La Consolacion, through its HRD Director, respondent Albert D.
Manalili (Manalili), directed Montallana to explain in writing why he should not be dismissed for
failure to submit his written public apology which formed part of the disciplinary sanction that was
sustained with finality by the NLRC.
In a letter dated June 9, 2011, Montallana begged for La Consolacion’s indulgence, explaining
that he had no intention of defying the directive to submit a written public apology and that his
inability to comply therewith was, to reiterate, only in view of the pendency of the criminal case
against him. He, nonetheless, expressed his willingness to comply with the directive once the said
case was resolved with finality. Finding Montallana’s written explanation unsatisfactory, Manalili
terminated him from work on June 13, 2011.
Asserting that his dismissal for failure to submit a written public apology was unjustified and was,
in fact, connected to his position as an officer of La Consolacion’s newly formed and recognized
Union, Montallana filed a complaint for illegal dismissal with money claims against respondents
La Consolacion, Mora, and Manalili (respondents).
Issue:
Whether or not Montallana’s termination from work was lawful and justified.c
Ruling:
In the case at bar, respondents failed to prove, by substantial evidence, that Montallana’s non-
compliance with respondents’ directive to apologize was “willful or intentional.” The Court finds
itself in complete agreement with the NLRC that the disobedience attributed to Montallana could
not be justly characterized as “willful” within the contemplation of Article 296 of the Labor Code,
in the sense above-described.
As culled from the records, aside from the administrative complaint filed by Juan against
Montallana for his serious misconduct, the former also filed a criminal complaint for grave oral
defamation for the utterances he made arising from the same incident before the Manila City
Prosecutor’s Office. In the honest belief that issuing a letter of apology would incriminate him in
the said criminal case – and upon the advice of his own lawyer at that – Montallana wrote to
respondents and voluntarily communicated that he was willing to issue the required apology, but
only had to defer the same in view of his legal predicament. As the Court sees it, the tenor of his
letters, and the circumstances under which they were taken, at the very least, exhibited
Montallana’s good faith in dealing with respondents. This, therefore, negates the theory that his
failure to abide by respondents’ directive to apologize was attended by a “wrong and perverse
mental attitude rendering the employee’s act inconsistent with proper subordination,” which
would warrant his termination from employment.
It beckons clarification that respondents’ submission of the prosecutor’s March 5, 2010 Resolution
to show that Juan’s criminal complaint against Montallana was dismissed way earlier than their
June 1, 2011 directive to explain is not enough to show that the latter took a willfully defiant
attitude against a lawful order, considering that no other evidence was presented to prove that
the said Resolution had already attained finality. In fact, as pointed out by the NLRC, it was only
on September 11, 2012 that Montallana was able to obtain a copy of the prosecutor’s March 5,
2010 Resolution, or long after he had already submitted his letter of explanation on June 9, 2011.
Therefore, respondents’ assertion that Montallana had lied to them cannot be given any credence.
Besides, even on the assumption that there was willful disobedience, still, the Court finds the
penalty of dismissal too harsh. It bears to stress that not every case of insubordination or willful
disobedience by an employee reasonably deserves the penalty of dismissal. The penalty to be
imposed on an erring employee must be commensurate with the gravity of his offense. To the
Court’s mind, the case of an employee who is compelled to apologize for a previous infraction but
fails to do so is not one which would properly warrant his termination, absent any proof that the
refusal was made in brazen disrespect of his employer.
FUJI TELEVISION NETWORK, INC. v. ARLENE S. ESPIRITU

G.R. No. 204944-45, December 03, 2014
Facts:
In 2005, Arlene S. Espiritu (“Arlene”) was engaged by Fuji Television Network, Inc. (“Fuji”) as a
news correspondent/producer “tasked to report Philippine news to Fuji through its Manila Bureau
field office.” Arlene’s employment contract initially provided for a term of one (1) year but was
successively renewed on a yearly basis with salary adjustment upon every renewal.
Sometime in January 2009, Arlene was diagnosed with lung cancer. She informed Fuji about her
condition. In turn, the Chief of News Agency of Fuji, Yoshiki Aoki, informed Arlene “that the
company will have a problem renewing her contract” since it would be difficult for her to perform
her job. She “insisted that she was still fit to work as certified by her attending physician.”
After several verbal and written communications, Arlene and Fuji signed a non-renewal contract
on May 5, 2009 where it was stipulated that her contract would no longer be renewed after its
expiration on May 31, 2009. The contract also provided that the parties release each other from
liabilities and responsibilities under the employment contract.
In consideration of the non-renewal contract, Arlene “acknowledged receipt of the total amount
of US$18,050.00 representing her monthly salary from March 2009 to May 2009, year-end bonus,
mid-year bonus, and separation pay.” However, Arlene affixed her signature on the non-renewal
contract with the initials “U.P.” for “under protest.”
On May 6, 2009, the day after Arlene signed the non-renewal contract, she filed a complaint for
illegal dismissal and attorney’s fees with the National Capital Region Arbitration Branch of the
National Labor Relations Commission. She alleged that she was forced to sign the non-renewal
contract when Fuji came to know of her illness and that Fuji withheld her salaries and other
benefits for March and April 2009 when she refused to sign.
Arlene claimed that she was left with no other recourse but to sign the non-renewal contract, and
it was only upon signing that she was given her salaries and bonuses, in addition to separation pay
equivalent to four (4) years.
The Labor Arbiter dismissed Arlene’s complaint. Citing Sonza v. ABS-CBN and applying the four-
fold test, the Labor Arbiter held that Arlene was not Fuji’s employee but an independent
contractor.
Arlene appealed before the National Labor Relations Commission. The National Labor Relations
Commission reversed the Labor Arbiter’s decision. It held that Arlene was a regular employee with
respect to the activities for which she was employed since she continuously rendered services that
were deemed necessary and desirable to Fuji’s business. The National Labor Relations Commission
ordered Fuji to pay Arlene backwages, computed from the date of her illegal dismissal.
Arlene and Fuji filed separate motions for reconsideration. Both motions were denied by the
National Labor Relations Commission for lack of merit in the resolution dated April 26,
2010.nRoblesvirtualLawlibrary
From the decision of the National Labor Relations Commission, both parties filed separate
petitions for certiorari before the Court of Appeals. The Court of Appeals consolidated the
petitions.
In the assailed decision, the Court of Appeals affirmed the National Labor Relations Commission
with the modification that Fuji immediately reinstate Arlene to her position as News Producer
without loss of seniority rights, and pay her backwages, 13th-month pay, mid-year and year-end
bonuses, sick leave and vacation leave with pay until reinstated, moral damages, exemplary
damages, attorney’s fees, and legal interest of 12% per annum of the total monetary awards.
Issues:
Based on the arguments of the parties, there are procedural and substantive issues for resolution:
I. Whether the Court of Appeals correctly determined that no grave abuse of discretion was
committed by the National Labor Relations Commission when it ruled that Arlene was a
regular employee, not an independent contractor, and that she was illegally dismissed;
and
II. Whether the Court of Appeals properly modified the National Labor Relations
Commission’s decision by awarding reinstatement, damages, and attorney’s fees.
Ruling:
Application of the four-fold test
The Court of Appeals did not err when it relied on the ruling in Dumpit-Murillo and affirmed the
ruling of the National Labor Relations Commission finding that Arlene was a regular employee.
Arlene was hired by Fuji as a news producer, but there was no showing that she was hired because
of unique skills that would distinguish her from ordinary employees. Neither was there any
showing that she had a celebrity status. Her monthly salary amounting to US$1,900.00 appears to
be a substantial sum, especially if compared to her salary when she was still connected with GMA.
Indeed, wages may indicate whether one is an independent contractor. Wages may also indicate
that an employee is able to bargain with the employer for better pay. However, wages should not
be the conclusive factor in determining whether one is an employee or an independent
contractor.
Fuji had the power to dismiss Arlene, as provided for in paragraph 5 of her professional
employment contract. Her contract also indicated that Fuji had control over her work because she
was required to work for eight (8) hours from Monday to Friday, although on flexible time. Sonza
was not required to work for eight (8) hours, while Dumpit-Murillo had to be in ABC to do both
on-air and off-air tasks.
On the power to control, Arlene alleged that Fuji gave her instructions on what to report. Even the
mode of transportation in carrying out her functions was controlled by Fuji. Paragraph 6 of her
contract states:
6. During the travel to carry out work, if there is change of place or change of place of work,
the train, bus, or public transport shall be used for the trip. If the Employee uses the
private car during the work and there is an accident the Employer shall not be responsible
for the damage, which may be caused to the Employee.
Thus, the Court of Appeals did not err when it upheld the findings of the National Labor Relations
Commission that Arlene was not an independent contractor.
Arlene was a regular employee with a fixed-term contract

The test for determining regular employment is whether there is a reasonable connection
between the employee’s activities and the usual business of the employer. Article 280 provides
that the nature of work must be “necessary or desirable in the usual business or trade of the
employer” as the test for determining regular employment.
However, there may be a situation where an employee’s work is necessary but is not always
desirable in the usual course of business of the employer. In this situation, there is no regular
employment.
Fuji is engaged in the business of broadcasting, including news programming. It is based in Japan
and has overseas offices to cover international news.
Based on the record, Fuji’s Manila Bureau Office is a small unit and has a few employees. As such,
Arlene had to do all activities related to news gathering. Although Fuji insists that Arlene was a
stringer, it alleges that her designation was “News Talent/Reporter/Producer.”
A news producer “plans and supervises newscast . . . [and] work[s] with reporters in the field
planning and gathering information. . . .” Arlene’s tasks included “[m]onitoring and [g]etting
[n]ews [s]tories, [r]eporting interviewing subjects in front of a video camera,” “the timely
submission of news and current events reports pertaining to the Philippines[,] and traveling [sic] to
[Fuji’s] regional office in Thailand.” She also had to report for work in Fuji’s office in Manila from
Mondays to Fridays, eight (8) hours per day. She had no equipment and had to use the facilities of
Fuji to accomplish her tasks.
The Court of Appeals affirmed the finding of the National Labor Relations Commission that the
successive renewals of Arlene’s contract indicated the necessity and desirability of her work in the
usual course of Fuji’s business. Because of this, Arlene had become a regular employee with the
right to security of tenure.
Moreover, the Court of Appeals explained that Fuji’s argument that no employer-employee
relationship existed in view of the fixed-term contract does not persuade because fixed-term
contracts of employment are strictly construed. Further, the pieces of equipment Arlene used
were all owned by Fuji, showing that she was a regular employee and not an independent
contractor.
The Court of Appeals likewise cited Dumpit-Murillo, which involved fixed-term contracts that
were successively renewed for four (4) years. This court held that “[t]his repeated engagement
under contract of hire is indicative of the necessity and desirability of the petitioner’s work in
private respondent ABC’s business.”
With regard to Fuji’s argument that Arlene’s contract was for a fixed term, the Court of Appeals
cited Philips Semiconductors, Inc. v. Fadriquela and held that where an employee’s contract “had
been continuously extended or renewed to the same position, with the same duties and remained
in the employ without any interruption,” then such employee is a regular employee. The
continuous renewal is a scheme to prevent regularization. On this basis, the Court of Appeals
ruled in favor of Arlene.
Arlene’s contract indicating a fixed term did not automatically mean that she could never be a
regular employee. This is precisely what Article 280 seeks to avoid. The ruling in Brent remains as
the exception rather than the general rule.
Further, an employee can be a regular employee with a fixed-term contract. The law does not
preclude the possibility that a regular employee may opt to have a fixed-term contract for valid
reasons. This was recognized in Brent: For as long as it was the employee who requested, or
bargained, that the contract have a “definite date of termination,” or that the fixed-term contract
be freely entered into by the employer and the employee, then the validity of the fixed-term
contract will be upheld.
Fuji argues that the Court of Appeals erred when it held that Arlene was illegally dismissed, in
view of the non-renewal contract voluntarily executed by the parties. Fuji also argues that Arlene’s
contract merely expired; hence, she was not illegally dismissed.
Arlene alleges that she had no choice but to sign the non-renewal contract because Fuji withheld
her salary and benefits.
With regard to this issue, the Court of Appeals held:
We cannot subscribe to Fuji’s assertion that Espiritu’s contract merely expired and that she
voluntarily agreed not to renew the same. Even a cursory perusal of the subject Non-Renewal
Contract readily shows that the same was signed by Espiritu under protest. What is apparent is
that the Non-Renewal Contract was crafted merely as a subterfuge to secure Fuji’s position that it
was Espiritu’s choice not to renew her contract.
As a regular employee, Arlene was entitled to security of tenure and could be dismissed only for
just or authorized causes and after the observance of due process.
The expiration of Arlene’s contract does not negate the finding of illegal dismissal by Fuji. The
manner by which Fuji informed Arlene that her contract would no longer be renewed is
tantamount to constructive dismissal. To make matters worse, Arlene was asked to sign a letter of
resignation prepared by Fuji. The existence of a fixed-term contract should not mean that there
can be no illegal dismissal. Due process must still be observed in the pre-termination of fixed-
term contracts of employment.
In addition, the Court of Appeals and the National Labor Relations Commission found that Arlene
was dismissed because of her health condition.
Disease as a ground for termination is recognized under Article 284 of the Labor Code.
For dismissal under Article 284 to be valid, two requirements must be complied with: (1) the
employee’s disease cannot be cured within six (6) months and his “continued employment is
prohibited by law or prejudicial to his health as well as to the health of his co-employees”; and (2)
certification issued by a competent public health authority that even with proper medical
treatment, the disease cannot be cured within six (6) months. The burden of proving compliance
with these requisites is on the employer. Non-compliance leads to the conclusion that the
dismissal was illegal.
There is no evidence showing that Arlene was accorded due process. After informing her
employer of her lung cancer, she was not given the chance to present medical certificates. Fuji
immediately concluded that Arlene could no longer perform her duties because of chemotherapy.
It did not ask her how her condition would affect her work. Neither did it suggest for her to take a
leave, even though she was entitled to sick leaves. Worse, it did not present any certificate from a
competent public health authority. What Fuji did was to inform her that her contract would no
longer be renewed, and when she did not agree, her salary was withheld. Thus, the Court of
Appeals correctly upheld the finding of the National Labor Relations Commission that for failure
of Fuji to comply with due process, Arlene was illegally dismissed.
Whether the Court of Appeals properly modified the National

Labor Relations Commission’s decision when it awarded
reinstatement, damages, and attorney’s fees
The National Labor Relations Commission awarded separation pay in lieu of reinstatement, on the
ground that the filing of the complaint for illegal dismissal may have seriously strained relations
between the parties. Backwages were also awarded, to be computed from date of dismissal until
the finality of the National Labor Relations Commission’s decision.
The Court of Appeals affirmed the National Labor Relations Commission’s decision but modified it
by awarding moral and exemplary damages and attorney’s fees, and all other benefits Arlene was
entitled to under her contract with Fuji. The Court of Appeals also ordered reinstatement,
reasoning that the grounds when separation pay was awarded in lieu of reinstatement were not
proven.
The Court of Appeals’ modification of the National Labor Relations Commission’s decision was
proper because the law itself provides that illegally dismissed employees are entitled to
reinstatement, backwages including allowances, and all other benefits.
On reinstatement, the National Labor Relations Commission ordered payment of separation pay
in lieu of reinstatement, reasoning “that the filing of the instant suit may have seriously abraded
the relationship of the parties so as to render reinstatement impractical.” The Court of Appeals
reversed this and ordered reinstatement on the ground that separation pay in lieu of
reinstatement is allowed only in several instances such as (1) when the employer has ceased
operations; (2) when the employee’s position is no longer available; (3) strained relations; and (4)
a substantial period has lapsed from date of filing to date of finality.
The Court of Appeals reasoned that strained relations are a question of fact that must be
supported by evidence. No evidence was presented by Fuji to prove that reinstatement was no
longer feasible. Fuji did not allege that it ceased operations or that Arlene’s position was no
longer available. Nothing in the records shows that Arlene’s reinstatement would cause an
atmosphere of antagonism in the workplace. Arlene filed her complaint in 2009. Five (5) years are
not yet a substantial period to bar reinstatement.
On the award of damages, Fuji argues that Arlene is not entitled to the award of damages and
attorney’s fees because the non-renewal agreement contained a quitclaim, which Arlene signed.
Quitclaims in labor cases do not bar illegally dismissed employees from filing labor complaints
and money claim. As explained by Arlene, she signed the non-renewal agreement out of necessity.
With regard to the Court of Appeals’ award of moral and exemplary damages and attorney’s fees,
this court has recognized in several cases that moral damages are awarded “when the dismissal is
attended by bad faith or fraud or constitutes an act oppressive to labor, or is done in a manner
contrary to good morals, good customs or public policy.” On the other hand, exemplary damages
may be awarded when the dismissal was effected “in a wanton, oppressive or malevolent manner.”
The Court of Appeals and National Labor Relations Commission found that after Arlene had
informed Fuji of her cancer, she was informed that there would be problems in renewing her
contract on account of her condition. This information caused Arlene mental anguish, serious
anxiety, and wounded feelings that can be gleaned from the tenor of her email dated March 11,
2009.
Apart from Arlene’s illegal dismissal, the manner of her dismissal was effected in an oppressive
approach with her salary and other benefits being withheld until May 5, 2009, when she had no
other choice but to sign the non-renewal contract. Thus, there was legal basis for the Court of
Appeals to modify the National Labor Relations Commission’s decision.
However, Arlene received her salary for May 2009. Considering that the date of her illegal
dismissal was May 5, 2009, this amount may be subtracted from the total monetary award.
With regard to the award of attorney’s fees, Article 111 of the Labor Code states that “[i]n cases of
unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent to
ten percent of the amount of wages recovered.” Likewise, this court has recognized that “in
actions for recovery of wages or where an employee was forced to litigate and, thus, incur
expenses to protect his rights and interest, the award of attorney’s fees is legally and morally
justifiable.” Due to her illegal dismissal, Arlene was forced to litigate.
ABOSTA SHIP MANAGEMENT AND/OR ARTEMIO CORBILLA

v. WILHILM M. HILARIO
G.R. No. 195792, 24 November 2014
Facts:
An employment contract was executed by petitioner, on behalf of its foreign principal Panstar
Shipping Co., Ltd., and respondent. In this contract, the latter was hired as a bosun (boatswain) of
the foreign vessel Grand Mark for a period of nine months, with a monthly salary of USD566.4 The
contract was duly approved by the Philippine Overseas Employment Agency (POEA). Upon
reporting to the office of petitioner, respondent was informed that the latter's deployment had
been postponed due to shifting demands of the foreign principal. It appears, though, that the
foreign principal decided to promote an able seaman on board the vessel instead of hiring
respondent. Petitioner thus requested respondent to wait for another two to three months for a
vacancy to occur. In the meantime, respondent was allowed to make cash advances as financial
assistance.
Respondent filed a Complaint with the POEA against petitioner for violation of Section 2(r), Rule I,
Part VI of the 2002 POEA Rules by failing to deploy respondent within the prescribed period
without any valid reason. Respondent likewise filed a Complaint with the Labor Arbiter on 6
February 2003 based on the same ground and sought actual, moral and exemplary damages and
attorney's fees. The Labor Arbiter found that the contract executed between the parties and the
non-fulfillment thereof entitled respondent to his salary for the whole duration of the contract.
NLRC held that respondent's non-deployment was due to a valid exercise of the foreign principal's
management prerogative, which should be given due respect. On petition, the CA granted the
Petition for Certiorari and held that the NLRC committed grave abuse of discretion by holding
that the able seaman's promotion was a valid management prerogative. The CA further ruled that
since respondent had already been hired for the same position, then there was no longer any
vacant position to which to promote the able seaman.
Issue:
Whether there is breach of contract which would entitle respondent to the payment of actual
damages for the failure of petitioner to comply with the latter's obligations in accordance with the
employment contract.
Ruling:
The failure to deploy respondent was an exercise of a management prerogative that went beyond
its limits and resulted in a breach of contract. In turn, petitioner's breach gave rise to respondent's
cause of action to claim actual damages for the pecuniary loss suffered by the latter in the form of
the loss of nine months' worth of salary as provided in the POEA-approved contract of
employment.
The contract was already perfected on the date of its execution, which occurred when petitioner
and respondent agreed on the object and the cause, as well as on the rest of the terms and
conditions therein. Naturally, contemporaneous with the perfection of the employment contract
was the birth of certain rights and obligations, a breach of which may give rise to a cause of action
against the erring party.16 Also, the POEA Standard Contract must be recognized and respected.
Thus, neither the manning agent nor the employer can simply prevent a seafarer from being
deployed without a valid reason.
Under the principle of equity and substantial justice, change of mind was not a valid reason for the
non-deployment of respondent. He lost the opportunity to apply for other positions in other
agencies when he signed the contract of employment with petitioner. Simply put, that contract
was binding on the parties and may not later be disowned simply because of a change of mind of
either one of them.
The unilateral and unreasonable failure to deploy respondent constitutes breach of contract,
which gives rise to a liability to pay actual damages. The sanctions provided for non-deployment
do not end with the suspension or cancellation of license or the imposition of a fine and the return
of all documents at no cost to the worker. They do not forfend a seafarer from instituting an action
for damages against the employer or agency that has failed to deploy him.
Considering that it was petitioner who entered into the contract of employment with respondent
for and on behalf of the foreign principal, it has the primary obligation to ensure the
implementation of that contract. Furthermore, in line with the policy of the state to protect and
alleviate the plight of the working class, Section 1, paragraph f (3) of Rule II of the POEA Rules and
Regulations, clearly provides that the private employment agency shall assume joint and solidary
liability with the employer.
PHILIPPINE AIRLINES, INC. v. REYNALDO V. PAZ
G.R. No. 192924, November 26, 2014
Facts:
Reynaldo V. Paz (respondent) was a former commercial pilot of PAL and a member of the Airlines
Pilots Association of the Philippines (ALPAP), the sole and exclusive bargaining representative of
all the pilots in PAL. ALPAP filed a notice of strike with the National Conciliation and Mediation
Board of the Department of Labor and Employment (DOLE). Pursuant to Article 263(g) of the
Labor Code, the DOLE Secretary assumed jurisdiction over the labor dispute and enjoined the
parties from committing acts which will further exacerbate the situation. Notwithstanding the
directive of the DOLE Secretary, the ALPAP officers and members staged a strike and picketed at
the PAL’s premises. To control the situation, the DOLE Secretary issued a return-to-work order
directing all the striking officers and members of ALPAP to return to work within 24 hours from
notice of the order. The said order was served upon the officers of ALPAP on June 8, 1998 by the
DOLE Secretary himself. Even then, the striking members of ALPAP did not report for work. When
the striking members of the ALPAP reported for work on the following day, the security guards of
PAL denied them entry. Pending the resolution of the motions, PAL filed a petition for approval of
rehabilitation plan and for appointment of a rehabilitation receiver with the Securities and
Exchange Commission (SEC), claiming serious financial distress brought about by the strike.
Subsequently, on June 23, 1998, the SEC appointed a rehabilitation receiver for PAL and declared
the suspension of all claims against it. DOLE Secretary resolved the motions for reconsideration
filed by both parties and declared the strike staged by ALPAP illegal and that the participants
thereof are deemed to have lost their employment.
The respondent filed a complaint for illegal dismissal against PAL for not accepting him back to
work, claiming non-participation in the illegal strike. In his position paper, he alleged that on the
day the ALPAP staged a strike he was off-duty from work and was in Iligan City. However, when he
reported back to work after a week-long break, he was no longer allowed to enter PAL’s premises
in Nichols, Pasay City. He learned that the DOLE Secretary issued a return-to-work order,
requiring all the striking pilots to return to work within 24 hours from notice. Notwithstanding his
non-participation in the strike, he signed the logbook at the entrance of PAL’s office on the
following day. When he tried to report for work, however, he was denied entry by the PAL’s
security guards. The Labor Arbiter (LA) rendered a Decision holding that the respondent was
illegally dismissed.The NLRC ruled that the pieces of evidence presented by PAL proved that the
respondent participated in the strike and defied the return-to-work order of the DOLE Secretary;
hence, he is deemed to have lost his employment. The CA ruled that while the respondent is
entitled to reinstatement, the prevailing circumstances rendered the same difficult if not
impossible to execute.
Issue: Whether or not the respondent’s failure to reinstate the respondent is justified.
Ruling:
The rule is that the employee is entitled to reinstatement salaries notwithstanding the reversal of
the LA decision granting him said relief. The test is two-fold: (1) there must be actual delay or the
fact that the order of reinstatement pending appeal was not executed prior to its reversal; and (2)
the delay must not be due to the employer’s unjustified act or omission. If the delay is due to the
employer’s unjustified refusal, the employer may still be required to pay the salaries
notwithstanding the reversal of the Labor Arbiter’s decision.
It is clear from the records that PAL failed to reinstate the respondent pending appeal of the LA
decision to the NLRC. It can be recalled that the LA rendered the decision ordering the
reinstatement of the respondent And, despite the self-executory nature of the order of
reinstatement, the respondent nonetheless secured a partial writ of execution on Even then, the
respondent was not reinstated to his former position or even through payroll. A scrutiny of the
circumstances, however, will show that the delay in reinstating the respondent was not due to the
unjustified refusal of PAL to abide by the order but because of the constraints of corporate
rehabilitation. The inopportune event of PAL’s entering rehabilitation receivership justifies the
delay or failure to comply with the reinstatement order of the LA.
In light of the fact that PAL’s failure to comply with the reinstatement order was justified by the
exigencies of corporation rehabilitation, the respondent may no longer claim salaries which he
should have received during the period that the LA decision ordering his reinstatement is still
pending appeal until it was overturned by the NLRC. Thus, the CA committed a reversible error in
recognizing the respondent’s right to collect reinstatement salaries albeit suspending its
execution while PAL is still under corporate rehabilitation.
STANLEY FINE FURNITURE, ELENA AND CARLOS WANG v.

VICTOR T. GALLANO AND ENRIQUITO SIAREZ
G.R. No. 190486, November 26, 2014
Facts:
Stanley Fine Furniture (Stanley Fine), through its owners Elena and Carlos Wang, hired
respondents Victor T. Gallano and Enriquito Siarez in 1995 as painters/carpenters. Victor and
Enriquito filed a labor complaint for underpayment/non-payment of salaries, wages, Emergency
Cost of Living Allowance (ECOLA), and 13 th month pay. They indicated in the complaint form that
they were “still working” for Stanley Fine. Victor and Enriquito were allegedly scolded for filing a
complaint for money claims. Later on, they were not allowed to work. On the other hand,
petitioner Elena Briones claimed that Victor and Enriquito were “required to explain their
absences for the month of May 2005, but they refused.”
The NLRC reversed the LA’s decision, ruling that the Labor Arbiter erred in considering the
statement, “due to the filing of an unmeritorious labor case,” as an admission against interest. The
Court of Appeals, thus, granted the petition.
Issue:
Whether the Court of Appeals erred in ruling that Victor Gallano and Enriquito Siarez were
illegally dismissed.
Ruling:
To terminate the employment of workers simply because they asserted their legal rights by filing a
complaint is illegal. It violates their right to security of tenure and should not be tolerated. There
was no just cause in the dismissal of respondents. No valid cause for dismissal was shown. Also,
there was no compliance with the two-notice requirement.
Elena admitted that no notices of dismissal were issued to respondents. However, memoranda
were given to respondents, requiring them to explain their absences. She claimed that the notices
to explain disprove respondents’ allegation that there was intent to dismiss them.
Although abandonment of work is not included in the enumeration, this court has held that
“abandonment is a form of neglect of duty.” To prove abandonment, two elements must concur:
1. Failure to report for work or absence without valid or justifiable reason; and
2. A clear intention to sever the employer-employee relationship.
Long standing is the rule that the filing of the complaint for illegal dismissal negates the
allegation of abandonment. Human experience dictates that no employee in his right mind would
go through the trouble of filing a case unless the employer had indeed terminated the services of
the employee.
In this case, Elena failed to pinpoint the overt acts of respondents that show they had abandoned
their work. There was a mere allegation that she was “forced to declare them dismissed due to
their failure to report back to work for a considerable length of time” but no evidence to prove
the intent to abandon work. It is the burden of the employer to prove that the employee was not
dismissed or, if dismissed, that such dismissal was not illegal. Unfortunately for Elena, she failed to
do so.
The Court of Appeals did not err in upholding the Labor Arbiter’s award of moral and exemplary
damages. Indeed, there was malice when, as a retaliatory measure, petitioners dismissed
respondents because they filed a labor complaint. Further, Elena violated respondents’ rights to
substantive and procedural due process when she failed to issue notices to explain and notices of
termination.
PEAK VENTURES CORPORATION AND/OR EL TIGRE SECURITY AND INVESTIGATION AGENCY v.

HEIRS OF NESTOR B. VILLAREAL
G.R. No. 184618, November 19, 2014
Facts:
Peak Ventures hired Villareal as security guard and assigned him at East Greenhills Village. He was
relieved from duty without any apparent reason and was later informed by the management that
he would no longer be given any assignment because of his age. His repeated requests for a new
posting were likewise declined. Due to his prolonged lack of assignment and dwindling resources,
Villareal was constrained to claim his security bond deposits from petitioners. However, he was
advised to first tender a letter of resignation before the same could be released to him. Out of
sheer necessity, Villareal submitted a letter of resignation. He stated therein that he was
constrained to resign since he cannot expect to be given any assignment for another one and a
half months and that he can no longer afford the fare going to petitioners’ office. Villareal alleged
that the tenor of his resignation letter was not acceptable to petitioners, who required him to
submit another one stating that his resignation is voluntary.
Villareal filed before the Labor Arbiter a Complaint for illegal dismissal. The Labor Arbiter
concluded that there was no valid and effective resignation on the part of Villareal; that he was
constructively dismissed by petitioners; and that his dismissal was carried out without due process
of law. Villareal subsequently died. The CA noted that petitioners failed to afford Villareal
substantive and procedural due process when he was relieved from duty and also when he was not
given a new post. And as a result of the unjustified relief and non-posting, his situation became
unbearable, leaving him with no choice but to forego employment. To the CA, this is a clear case
of constructive dismissal.
Petitioners insist that Villareal was not illegally dismissed. He voluntarily resigned from his work.
Hence, he is not entitled to backwages and separation pay.
Issue:
Whether or not Villareal was constructively and illegally dismissed.
Ruling:
The Court subscribes to the uniform rulings of the Labor Arbiter, the NLRC and the CA that
Villareal was constructively and illegally dismissed.
When Villareal was relieved from duty, he was placed on floating status. “A floating status
requires the dire exigency of the employer’s bona fide suspension of operation, business or
undertaking.” “It takes place when the security agency’s clients decide not to renew their
contracts with the agency x x x” and also “in instances where contracts for security services
stipulate that the client may request the agency for the replacement of the guards assigned to it x
x x.” In the latter case, the employer should prove that there are no posts available to which the
employee temporarily out of work can be assigned.
Petitioners failed to discharge the burden of proving that there were no other posts available for
Villareal after his recall from his last assignment. Worse, no sufficient reason was given for his
relief and continued denial of a new assignment. And because of the dire financial straits brought
about by these unjustified acts of petitioners, Villareal was forced to resign and execute
documents in a manner as directed by petitioners in order to claim his security bond deposits.
From these circumstances, petitioners’ claim of voluntary resignation is untenable. What is clear
instead is that Villareal was constructively dismissed. There is constructive dismissal when an act of
clear discrimination, insensitivity or disdain on the part of the employer has become so
unbearable as to leave an employee with no choice but to forego continued employment.
“Constructive dismissal exists where there is cessation of work because continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a

diminution in pay.” Moreover, Villareal’s immediate filing of a Complaint for illegal dismissal to
ask for reinstatement negates the fact of voluntary resignation.
Villareal’s backwages must be computed from the time of his unjustified relief from duty up to his
actual reinstatement; the award of separation pay must be deleted.
UNIVERSITY OF PANGASINAN, INC., CESAR DUQUE/JUAN LLAMAS AMOR/DOMINADOR

REYES v. FLORENTINO FERNANDEZ AND HEIRS OF NILDA FERNANDEZ
G.R. No. 211228, November 12, 2014
Facts:
This case arose from a complaint for illegal dismissal filed by [Florentino and Nilda] against [UPl],
Labor Arbiter Rolando D. Gambito (LA Gambito)] ruled that [Florentino and Nilda] were illegally
dismissed by [the petitioners]. Aggrieved, [Florentino and Nilda] filed a Petition for Certiorari
with [the CA] to annul the NLRC's Resolution reversing LA’s decision. The CA rendered a Decision
granting the petition. The Supreme Court affirmed the CA’s decision and issued an Entry of
Judgment.
Subsequently, [Florentino and Nilda] moved for a re-computation of their award to include their
backwages and other benefits from the date of the decision of [LA Gambito] up to the finality of
the decision on July 11, 2005. They likewise moved for the issuance of a writ of execution. During
the pre-execution conference, [UPI] questioned the re-computation of [Florentino and Nilda's]
backwages and awards. In view of a stand-off, [LA Flores] required both parties to submit their
respective computations and justifications.
Issue:
What is the proper basis for the computation of backwages and benefits to be paid to an
employee?
Ruling:
Updating the computation of awards to include as well backwages and separation pay
corresponding to the period after the rendition of LA Gambito's decision on November 6, 2000 up
to its finality on July 11, 2005 is not violative of the principle of immutability of a final and
executory judgment.
The Court finds no reversible error committed by the CA when it affirmed LA Flores' Order which
allowed the updating beyond November 6, 2000 of the computation of backwages and separation
pay awarded to the respondents. The CA correctly ruled that the backwages should be computed
from May 9, 2000, the date of illegal dismissal, up to July 11, 2005, the date of the Entry of
Judgment, while separation pay should be reckoned from the respective first days of employment
of Florentino and Nilda up to July 11, 2005 as well.
While the dispositive portion of the herein assailed CA decision did not explicitly refer to the 13th
month pay, its inclusion in the computation approved by LA Flores is proper. Presidential Decree
No. 851 (P.D. No. 851) is the law directing the 13 th month payment. On the other hand, Article
279 of the Labor Code in part provides that an illegally-dismissed employee shall be entitled to
full backwages, inclusive of allowances, and other benefits or their monetary equivalent
computed from the time compensation was withheld up to the time of actual reinstatement.
Entitlement to it is a right granted by P.D. No. 851. Besides, the computation of award for
backwages and other benefits is a mere legal consequence of the finding that there was illegal
dismissal.
In computing the backwages and benefits awarded to the respondents, the reckoning period is
not interrupted by the NLRC's reversal of LA Gambito's finding of illegal dismissal. There is no
preclusion to apply the doctrine that there should be no gap or interruption in the reckoning
period during which the dismissed employee is entitled to backwages and benefits. The statutory
intent in the award of backwages and benefits is clear. An employer takes a risk in assailing the
LA's finding of illegal dismissal, but there is no insulation from the consequences therefrom.
The CA properly imposed a legal interest upon the total monetary award reckoned from the Entry
of Judgment on July 11, 2005 until full satisfaction thereof, but the Court modifies the rate
indicated in the assailed decision. The CA properly imposed the legal interest upon the total
monetary award even if none was explicitly included in the fine print of LA Gambito's decision and
LA Flores' order. The imposition of legal interest is not to be considered as an alteration of the
final judgment to be executed. The legal interest is already deemed read into the decision.
As to the correct rate of imposable interest, the petitioners argue that only 6% and not 12% is
mandated in the case of Florentino and Nilda, LA Gambito's decision became final and executory
on July 11, 2005, during which time, the prevailing rate of legal interest was 12%. Note, however,
that LA Gambito's decision and subsequently, even LA Flores' Order, dated August 22, 2006, made
no explicit award of legal interest. As discussed above though, the imposition of the legal interest
is already deemed read into the decision and order. For the same reason, the CA, in the herein
assailed decision, expressly included the said interest in the computation.
P.J. LHUILLIER, INC. AND MARIO RAMON LUDEÑA v. FLORDELIZ VELAYO

G.R. No. 198620, November 12, 2014
Facts:
PJ (CEBU) LHUILLIER, INC. (PJ LHUILLIER for brevity) hired FLORDELIZ M. ABATAYO as
Accounting Clerk appellant (herein private respondent) was served with a Show Cause Memo by
MARIO RAMON LUDENA, Area Operations Manager of PJ Lhuillier (herein petitioner), ordering
her to explain within 48 hours why no disciplinary action should be taken against her for
dishonesty, misappropriation, theft or embezzlement of company funds. Thereafter, she was
placed under preventive suspension. Complainant (herein private respondent) submitted her
reply and admitted that she was not able to report the overage to the supervisor since the latter
was on leave on that day and that she was still tracing the overage; and that the omission or failure
to report immediately the overage was just a simple mistake without intent to defraud her
employer.
PJ LHUILLIER (herein petitioner) terminated her employment as per Notice of Termination on

grounds of serious misconduct and breach of trust. Respondent filed a complaint for illegal
dismissal, separation pay and other damages.
The LA found that the respondent's termination was valid and based not on a mere act of simple
negligence in the performance of her duties as cashier. The NLRC countermanded the LA, holding
that the respondent was illegally dismissed since the petitioners failed to prove a just cause of
serious misconduct and willful breach of trust. The CA agreed with the NLRC that the respondent
should have been reinstated without loss of seniority rights and other privileges, with payment of
her full backwages, inclusive of allowances and other benefits or their monetary equivalent
computed from the time her compensation was withheld up to the time of actual reinstatement.
However, with the parties' relations now strained, the CA conceded that the payment of a
separation pay, along with backwages as a separate and distinct relief, is an acceptable alternative
to reinstatement. The CA further awarded the respondent attorney's fees since she was forced to
litigate and incur expenses to protect her rights and interests by reason of the unjustified acts of
the petitioners.
Issue:
Whether or not the misappropriation by a pawnshop personnel in the amount of [p]540.00,

coupled with subsequent denials, amount to a serious misconduct in office? As such, whether the
termination from office upon a pawnshop personnel who misappropriated an amount of p540.00
from the coffers of the pawnshop, and who made subsequent denials, is cruel and unjust?
Ruling:
There is merit in the petition. The respondent's misconduct must be viewed in light of the strictly
fiduciary nature of her position. It need not be stressed that the nature or extent of the penalty
imposed on an erring employee must be commensurate to the gravity of the offense as weighed
against the degree of responsibility and trust expected of the employee's position. On the other
hand, the respondent is not just charged with a misdeed, but with loss of trust and confidence
under Article 282(c) of the Labor Code, a cause premised on the fact that the employee holds a
position whose functions may only be performed by someone who enjoys the trust and confidence
of management. Needless to say, such an employee bears a greater burden of trustworthiness
than ordinary workers, and the betrayal of the trust reposed is the essence of the loss of trust and
confidence which is a ground for the employee's dismissal.
There are two classes of corporate positions of trust: on the one hand are the managerial
employees whose primary duty consists of the management of the establishment in which they are
employed or of a department or a subdivision thereof, and other officers or members of the
managerial staff; on the other hand are the fiduciary rank-and-file employees, such as cashiers,
auditors, property custodians, or those who, in the normal exercise of their functions, regularly
handle significant amounts of money or property. These employees, though rank-and-file, are
routinely charged with the care and custody of the employer's money or property, and are thus
classified as occupying positions of trust and confidence.
The series of willful misconduct committed by the respondent in mishandling the unaccounted
cash receipt exposes her as unworthy of the utmost trust inherent in her position as branch cashier
and vault custodian and bookkeeper.
In order that an employer may invoke loss of trust and confidence in terminating an employee
under Article 282(c) of the Labor Code, certain requirements must be complied with, namely: (1)
the employee must be holding a position of trust and confidence; and (2) there must be an act
that would justify the loss of trust and confidence. While loss of trust and confidence should be
genuine, it does not require proof beyond reasonable doubt, it being sufficient that there is some
basis to believe that the employee concerned is responsible for the misconduct and that the
nature of the employee's participation therein rendered him unworthy of trust and confidence
demanded by his position.
As a matter of strict company policy, unexplained cash is recognized at the end of the day as
miscellaneous income. Inexplicably, despite being with the company for four years as accounting
clerk and cashier, the respondent failed to make the required entry in the branch operating
system recognizing miscellaneous income. Such an entry could have been easily reversed once it
became clear how the overage came about. But the respondent obviously thought that by
skipping the entry, she could keep Tuling from learning about the overage. Her trustworthiness as
branch cashier and bookkeeper has been irreparably tarnished. The respondent's
untrustworthiness is further demonstrated when she began to concoct lies concerning the
overage: first, by denying its existence to Tuling and again to the company auditor; later, when she
falsely claimed that a computer glitch or malfunction had prevented her from posting the amount
on October 29, 2007; and finally, when she was forced to admit before the company's
investigating panel that she took and spent the money.
Mere substantial evidence is sufficient to establish loss of trust and confidence. The respondent's
actuations were willful and deliberate. A cashier who, through carelessness, lost a document
evidencing a cash receipt, and then wilfully chose not to record the excess cash as miscellaneous
income and instead took it home and spent it on herself, and later repeatedly denied or
concealed the cash overage when confronted, deserves to be dismissed.
As a general rule, employers are allowed a wider latitude of discretion in terminating the services
of employees who perform functions which by their nature require the employer's full trust and
confidence. Mere existence of basis for believing that the employee has breached the trust of the
employer is sufficient and does not require proof beyond reasonable doubt. Thus, when an
employee has been guilty of breach of trust or his employer has ample reason to distrust him, a
labor tribunal cannot deny the employer the authority to dismiss him. x x x. Furthermore, it must
also be stressed that only substantial evidence is required in order to support a finding that an
employer's trust and confidence accorded to its employee had been breached.
In holding a position requiring full trust and confidence, the respondent gave up some of the rigid
guarantees available to ordinary employees. She insisted that her misconduct was just an
"innocent mistake," and maybe it was, had it been committed by other employees. But surely not
as to the respondent who precisely because of the special trust and confidence given her by her
employer must be penalized with a more severe sanction.
A cashier's inability to safeguard and account for missing cash is sufficient cause to dismiss her. It
would be most unfair to require an employer to continue employing as its cashier a person whom
it reasonably believes is no longer capable of giving full and wholehearted trustworthiness in the
stewardship of company funds.
GOODYEAR PHILIPPINES, INC. AND REMEGIO M. RAMOS

v. MARINA L. ANGUS
G.R. No. 185449, 12 November 2014
Facts:
Angus was employed by Goodyear and occupied the position of Secretary to the Manager of
Quality and Technology. In order to maintain the viability of its operations in the midst of
economic reversals, Goodyear implemented cost-saving measures which included the
streamlining of its workforce. Consequently, Angus received from Ramos, the Human Resources
Director of Goodyear, a letter terminating her services and offered an early retirement. Angus
accepted the offer for early retirement but not on the terms states as Angus is asking for
premiums of additional 3 days for every year of services or a total of 50 days. Angus however
accepted the checks which covered payment of her retirement benefits computed at 47 days' pay
per year of service and other company benefits. However, she received under protest.
In response to Angus' protest, Ramos wrote her a letter11dated November 29, 2001 explaining that
the company has already offered her the most favorable separation benefits due to redundancy,
And based on the Retirement Plan under the Collective Bargaining Agreement (CBA) and the
parties' Employment Contract, Angus is entitled to only one of the following kinds of separation
pay: (1) normal retirement which is payable at 47 days' pay per year of service; (2) early retirement
at a maximum of 47 days' pay per year of service; (3) retrenchment, redundancy, closure of
establishment at 45 days' pay per year of service; (4) medical disability at 45 days' pay per year of
service; or (5) resignation at 20 days' pay per year of service. Because of these, Ramos informed
Angus that the company cannot anymore entertain any of her additional claims. Angus reiterated
her claim for both termination pay and early retirement benefits.
Angus finally accepted a check in the amount of P1,958,927.89 purportedly inclusive of all
termination benefits computed at 47 days' pay per year of sendee. She likewise executed a
Release and Quitclaim in favor of Goodyear. Angus filed with the Labor Arbiter a complaint for
illegal dismissal with claims for separation pay, damages and attorney's fees against petitioners.
The Labor Arbiter held that the grant of both is not allowed under the Retirement Plan/CBA.
The CA rendered a Decision partially granting Angus' Petition. While it found her dismissal valid in
both substance and procedural aspects, it declared Angus entitled to separation pay in addition to
the retirement pay she already received.
Issue:
Whether the CA erred in ordering the company to still pay Angus separation pay as she was
already paid the same at the rate used for computing early retirement benefits.
Ruling:
Angus is entitled to both separation pay and early retirement benefit due to the absence of a
specific provision in the CBA prohibiting recovery of both.
The retirement benefits and separation pay are not mutually exclusive. Retirement benefits are a
form of reward for an employee's loyalty and service to an employer and are earned under
existing laws, CBAs, employment contracts and company policies. On the other hand, separation
pay is that amount which an employee receives at the time of his severance from employment,
designed to provide the employee with the wherewithal during the period that he is looking for
another employment and is recoverable only in instances enumerated under Articles 283 and 284
of the Labor Code or in illegal dismissal cases when reinstatement is not feasible. In the case at
bar, Article 283 clearly entitles Angus to separation pay apart from the retirement benefits she
received from petitioners.
The release and quitclaim signed by Angus cannot be used by petitioners to legalize the denial of
Angus' rightful claims release and quitclaims are often looked upon with disfavor when the waiver
was not done voluntarily by employees who were pressured into signing them by unscrupulous
employers seeking to evade their obligations.
Petitioners' false contention over what has been paid to Angus suggests an attempt to feign
compliance with their legal obligation to grant their employee all the benefits provided for by
agreement and law. Their bad faith is evident in the intent to circumvent this legal mandate. And
as Angus was then forced to litigate her just claims when petitioners refused to heed her demands
for the payment of separation pay, the award of attorney's fees equivalent to 10% of the amount
of separation pay is also in order.
RICARDO N. AZUELO, PETITIONER, VS. ZAMECO II ELECTRIC COOPERATIVE, INC.,

RESPONDENT.
G.R. No. 192573, 22 October 2014
Facts
Petitioner Ricardo N. Azuelo (Azuelo) was employed by the respondent ZAMECO II Electric
Cooperative, Inc. (ZAMECO) as a maintenance worker. It appears that sometime in March 2006,
Azuelo filed with the Regional Arbitration Branch (RAB) of the NLRC in San Fernando City,
Pampanga a Complaint for illegal dismissal and non-payment of benefits against ZAMECO. After
several mediations, The Labor Arbiter LA ordered the parties to submit their respective position
papers on July 14, 2006.
On July 14, 2006, Azuelo, instead of submitting his position paper, moved that the submission of
his position paper be extended to August 4, 2006, which was granted by LA Bactin. On August 4,
2006, Azuelo again failed to submit his position paper. LA Bactin then directed Azuelo to submit
his position papers on August 22, 2006. On the said date, Azuelo, instead of submitting his
position paper, moved for the issuance of an order directing ZAMECO to furnish him with a
complete copy of the investigation report as regards his dismissal. ZAMECO opposed the said
motion, asserting that it has already furnished Azuelo with a copy of its investigation report.
Because of Azuelo’s failure to submit his position paper despite ample opportunity given him, the
LA issued an Order dismissing the case for lack of merit. Azuelo received a copy of LA Bactin's
Order dated November 6, 2006 on November 17, 2006.
On November 21, 2006, Azuelo again filed a complaint with the RAB of the NLRC in San Fernando
City, Pampanga for illegal dismissal with money claims against ZAMECO, containing the same
allegations in his first complaint.
Issue:
Whether the dismissal of his first complaint for illegal dismissal, on the ground of lack of interest
on his part to prosecute the same, bars the filing of another complaint for illegal dismissal against
ZAMECO based on the same allegations.
Ruling
After a thorough review of the records of the instant case, the Court finds that the CA did not
commit any reversible error in upholding the dismissal of Azuelo's second complaint for illegal
dismissal on the ground of res judicata. The NLRC did not abuse its discretion in ruling that the
Order issued on November 6, 2006 by LA Bactin, which dismissed the first complaint filed by
Azuelo, was an adjudication on the merits.
At the core of the instant petition is the determination of the nature of the dismissal of Azuelo's
first complaint, i.e., whether the dismissal is with prejudice as held by the labour tribunals. The
Order issued on November 6, 2006 by LA Bactin is silent as to the nature of the dismissal; it merely
stated that the complaint was dismissed due to Azuelo's failure, despite ample opportunity
afforded him, to submit his position paper.
Ultimately, the question that has to be resolved is this - whether the dismissal of a complaint for
illegal dismissal due to the unreasonable failure of the complainant to submit his position paper
amounts to a dismissal with prejudice.
The 2005 Revised Rules of Procedure of the NLRC (2005 Revised Rules), the rules applicable at the
time of the controversy, is silent as to the nature of the dismissal of a complaint on the ground of
unreasonable failure to submit a position paper by the complainant. Nevertheless, the 2005
Revised Rules, particularly Section 3, Rule I thereof, provides for the suppletory application of the
Rules of Court to arbitration proceedings before the LAs and the NLRC in the absence of any
applicable provisions therein.
The unjustified failure of a complainant in arbitration proceedings before the LA to submit his
position paper is akin to the case of a complainant's failure to prosecute his action for an
unreasonable length of time in ordinary civil proceedings. In both cases, the complainants are
remiss, sans reasonable cause, to prove the material allegations in their respective complaints.
Accordingly, the Court sees no reason not to apply the rules relative to unreasonable failure to
prosecute an action in ordinary civil proceedings to the unjustified failure of a complainant to

submit his position paper in arbitration proceedings before the LA.
Thus, in arbitration proceedings before the LA, the dismissal of a complaint on account of the
unreasonable failure of the complainant to submit his position paper is likewise regarded as an
adjudication on the merits and with prejudice to the filing of another complaint, except when the
LA's order of dismissal expressly states otherwise.
As already stated, the Order dated November 6, 2006, which dismissed Azuelo's first complaint
due to his unreasonable failure to submit his position paper is unqualified. It is thus considered as
an adjudication on the merits and with prejudice to filing of another complaint. Accordingly, the
NLRC did not abuse its discretion when it affirmed LA Abdon's dismissal of the second complaint
for illegal dismissal. Azuelo's filing of a second complaint for illegal dismissal against ZAMECO
based on the same allegations cannot be permitted lest the rule on res judicata be transgressed.
IMASEN PHILIPPINE MANUFACTURING CORPORATION v.

RAMONCHITO T. ALCON AND JOANN S. PAPA
G.R. No. 194884, October 22, 2014
Facts:
Petitioner Imasen Philippine Manufacturing Corporation is a domestic corporation engaged in the

manufacture of auto seat-recliners and slide-adjusters. It hired the respondents as manual welders
in 2001.
On October 5, 2002, the respondents reported for work on the second shift - from 8:00 pm to 5:00
am of the following day. At around 12:40 am, Cyrus A. Altiche, Imasen's security guard on duty,
went to patrol and inspect the production plant's premises. When Altiche reached Imasen's Press
Area, he heard the sound of a running industrial fan. Intending to turn the fan off, he followed the
sound that led him to the plant's "Tool and Die" section.
At the "Tool and Die" section, Altiche saw the respondents having sexual intercourse on the floor,
using a piece of carton as mattress. Altiche immediately went back to the guard house and relayed
what he saw to Danilo S. Ogana, another security guard on duty.
On Altiche's request, Ogana made a follow-up inspection. Ogana went to the "Tool and Die"
section and saw several employees, including the respondents, already leaving the area. He
noticed, however, that Alcon picked up the carton that Altiche claimed the respondents used as
mattress during their sexual act, and returned it to the place where the cartons were kept. Altiche
then submitted a handwritten report of the incident to Imasen's Finance and Administration
Manager.
On October 14, 2002, Imasen issued the respondents separate interoffice memoranda informing
them of Altiche's report on the October 5, 2002 incident and directing them to submit their
individual explanation. The respondents complied with the directive; they claimed that they were
merely sleeping in the "Tool and Die" section at the time of the incident. They also claimed that
other employees were near the area, making the commission of the act charged impossible.
On October 22, 2002, Imasen issued the respondents another interoffice memorandum directing
them to appear at the formal hearing of the administrative charge against them. The hearing was
conducted on October 30, 2002, presided by a mediator and attended by the representatives of
Imasen, the respondents, Altiche and Ogana. Altiche and Ogana reiterated the narrations in
Altiche's handwritten report.
On December 4, 2002, Imasen issued the respondents separate interoffice

memoranda terminating their services. It found the respondents guilty of the act charged which it
considered as "gross misconduct contrary to the existing policies, rules and regulations of the
company."
On December 5, 2002, the respondents filed before the LA the complaint for illegal dismissal. The
respondents maintained their version of the incident.
Issue:
Whether the respondents' infraction — engaging in sexual intercourse inside company premises
during work hours — amounts to serious misconduct within the terms of Article 282 (now Article
296) of the Labor Code justifying their dismissal.
Ruling:
The respondents' infraction amounts to serious misconduct within the terms of Article 282 (now
Article 296) of the Labor Code justifying their dismissal
Dismissal situations (on the ground of serious misconduct) involving sexual acts, particularly sexual
intercourse committed by employees inside company premises and during work hours, are not
usual violations and are not found in abundance under jurisprudence. Thus, in resolving the
present petition, we are largely guided by the principles we discussed above, as applied to the
totality of the circumstances that surrounded the petitioners' dismissal.
In other words, we view the petitioners' act from the prism of the elements that must concur for an
act to constitute serious misconduct, analyzed and understood within the context of the overall
circumstances of the case. In taking this approach, we are guided, too, by the jurisdictional
limitations that a Rule 45 review of the CA's Rule 65 decision in labor cases imposes on our
discretion.
In addressing the situation that we are faced with in this petition, we determine whether Imasen
validly exercised its prerogative as employer to dismiss the respondents-employees who, within
company premises and during work hours, engaged in sexual intercourse. As framed within our
limited Rule 45 jurisdiction, the question that we ask is: whether the NLRC committed grave abuse
of discretion in finding that the respondents' act amounted to what Article 282 of the Labor Code
textually considers as serious misconduct to warrant their dismissal.
After due consideration, we find the NLRC legally correct and well within its jurisdiction when it
affirmed the validity of the respondents' dismissal on the ground of serious misconduct.
Sexual acts and intimacies between two consenting adults belong, as a principled ideal, to the
realm of purely private relations. Whether aroused by lust or inflamed by sincere affection, sexual
acts should be carried out at such place, time and circumstance that, by the generally accepted
norms of conduct, will not offend public decency nor disturb the generally held or accepted social
morals. Under these parameters, sexual acts between two consenting adults do not have a place in
the work environment.
Indisputably, the respondents engaged in sexual intercourse inside company premises and during

work hours. These circumstances, by themselves, are already punishable misconduct. Added to
these considerations, however, is the implication that the respondents did not only disregard
company rules but flaunted their disregard in a manner that could reflect adversely on the status
of ethics and morality in the company.
Additionally, the respondents engaged in sexual intercourse in an area where co-employees or

other company personnel have ready and available access. The respondents likewise committed
their act at a time when the employees were expected to be and had, in fact, been at their
respective posts, and when they themselves were supposed to be, as all other employees had in
fact been, working.
Under these factual premises and in the context of legal parameters we discussed, we cannot help
but consider the respondents' misconduct to be of grave and aggravated character so that the
company was justified in imposing the highest penalty available — dismissal. Their infraction
transgressed the bounds of socially and morally accepted human public behavior, and at the same
time showed brazen disregard for the respect that their employer expected of them as employees.
By their misconduct, the respondents, in effect, issued an open invitation for others to commit the
same infraction, with like disregard for their employer's rules, for the respect owed to their
employer, and for their co-employees' sensitivities. Taken together, these considerations reveal a
depraved disposition that the Court cannot but consider as a valid cause for dismissal.
In ruling as we do now, we considered the balancing between the respondents' tenurial rights and
the petitioner's interests - the need to defend their management prerogative and to maintain as
well a high standard of ethics and morality in the workplace. Unfortunately for the respondents, in
this balancing under the circumstances of the case, we have to rule against their tenurial rights in
favor of the employer's management rights.
All told, the respondents' misconduct, under the circumstances of this case, fell within the terms of
Article 282 (now Article 296) of the Labor Code. Consequently, we reverse the CA's decision for its
failure to recognize that no grave abuse of discretion attended the NLRC's decision to support the
respondents' dismissal for serious misconduct.
AM-PHIL FOOD CONCEPTS, INC. v. PAOLO JESUS T. PADILLA

G.R. No. 188753, October 01, 2014
Facts:
Padilla’s position paper states that he was hired as a Marketing Associate by Am-Phil, a
corporation engaged in the restaurant business. Am-Phil sent Padilla a letter confirming his
regular employment. Am-Phil informed Padilla that Am-Phil would be implementing a
retrenchment program that would be affecting three (3) of its employees, Padilla being one of
them. The retrenchment program was allegedly on account of serious and adverse business
conditions, i.e., lack of demand in the market, stiffer competition, devaluation of the Philippine
peso, and escalating operation costs. Padilla questioned Am-Phil’s choice to retrench him. He
noted that Am-Phil had six (6) contractual employees, while he was a regular employee who had a
good evaluation record. He pointed out that Am-Phil was actually then still hiring new employees.
He also noted that Am-Phil's sales have not been lower relative to the previous year. Am-Phil sent
Padilla a memorandum notifying him of his retrenchment. Padilla filed the complaint for illegal
dismissal (with claims for backwages, damages, and attorney’s fees), Am-Phil claimed that Padilla
was not illegally terminated and that it validly exercised a management prerogative. Labor Arbiter
Eric V. Chuanico (Labor Arbiter Chuanico) rendered the decision finding that Padilla was illegally
dismissed. The National Labor Relations Commission issued the resolution affirming Labor Arbiter
Chuanico’s ruling, the Court of Appeals denied Am-Phil's motion for reconsideration in its July 3,
2009 resolution.
Issue:
Whether respondent Paolo Jesus T. Padila was dismissed through a valid retrenchment
implemented by petitioner Am-Phil Food Concepts, Inc.
Ruling:
Labor Arbiter Chuanico was under no obligation to grant Am-Phil’s motion for leave to admit
supplemental rejoinder and, thereby, consider the supplemental rejoinder’s averments and
annexes. That Am-Phil had to file a motion seeking permission to file its supplemental rejoinder
(i.e., motion for leave to file) is proof of its own recognition that the labor arbiter is under no
compulsion to accept any such pleading and that the supplemental rejoinder’s admission rests on
the labor arbiter’s discretion. Its three (3) pleadings having been allowed, Am-Phil had no
shortage of opportunities to plead its claims and to adduce its evidence. It has no basis for
claiming that it was not “afforded [a] fair and reasonable opportunity to explain [its side] of the
controversy.” The filing of its motion for leave to admit supplemental rejoinder represents nothing
more than a belated and procedurally inutile attempt at resuscitating its case.
Retrenchment is not a tool to be wielded and used nonchalantly. To justify retrenchment, it “must
be due to business losses or reverses which are serious, actual and real.” There are substantive
requirements relating to the losses or reverses that must underlie a retrenchment. That these
losses are serious relates to their gravity and that they are actual and real relates to their veracity
and verifiability. Likewise, that a retrenchment is anchored on serious, actual, and real losses or
reverses is to say that the retrenchment is done in good faith and not merely as a veneer to
disguise the illicit termination of employees. Equally significant is an employer’s basis for
determining who among its employees shall be retrenched. Apart from these substantive
requirements are the procedural requirements imposed by Article 283 of the Labor Code.
Am-Phil’s 2001 to 2004 audited financial statements, the sole proof upon which Am-Phil relies on
to establish its claim that it suffered business losses, have been deemed unworthy of
consideration. These audited financial statements were mere annexes to the motion for leave to
admit supplemental rejoinder which Labor Arbiter Chuanico validly disregarded. No credible
explanation was offered as to why these statements were not presented when the evidence-in-
chief was being considered by the labor arbiter. It follows that there is no clear and convincing
evidence to sustain the substantive ground on which the supposed validity of Padilla’s
retrenchment rests.
Moreover, it is admitted that Am-Phil did not serve a written notice to the DOLE one (1) month
before the intended date of Padilla’s retrenchment, as required by Article 283 of the Labor Code.
While it is true that Am-Phil gave Padilla separation pay, compliance with none but one (1) of the
many requisites for a valid retrenchment does not absolve Am-Phil of liability. It is of no
consequence that Padilla ostensibly executed a quitclaim and release in favor of Am-Phil.
Considering that the ground for retrenchment availed of by petitioners was not sufficiently and
convincingly established, the retrenchment is hereby declared illegal and of no effect. The
quitclaims executed by retrenched employees in favor of petitioners were therefore not
voluntarily entered into by them. Their consent was similarly vitiated by mistake or fraud. The law
looks with disfavor upon quitclaims and releases by employees pressured into signing by
unscrupulous employers minded to evade legal responsibilities. As a rule, deeds of release or
quitclaim cannot bar employees from demanding benefits to which they are legally entitled or
from contesting the legality of their dismissal. The acceptance of those benefits would not amount
to estoppel. The amounts already received by the retrenched employees as consideration for
signing the quitclaims should, however, be deducted from their respective monetary awards.
FVR SKILLS AND SERVICES EXPONENTS, INC. (SKILLEX), FULGENCIO V. RANA AND MONINA R.
BURGOS v. JOVERT SEVA, JOSUEL V. VALENCERINA, JANET ALCAZAR, ANGELITO AMPARO,
BENJAMIN ANAEN, JR., JOHN HILBERT BARBA, BONIFACIO BATANG, JR., VALERIANO BINGCO,
JR., RONALD CASTRO, MARLON CONSORTE, ROLANDO CORNELIO, EDITO CULDORA, RUEL
DUNCIL, MERV1N FLORES, LORD GALISIM, SOTERO GARCIA, JR., REY GONZALES, DANTE ISIP,
RYAN ISMEN, JOEL JUNIO, CARLITO LATOJA, ZALDY MARRA, MICHAEL PANTANO, GLENN
PILOTON, NORELDO QUIRANTE, ROEL RANCE, RENANTE ROSARIO AND LEONARDA TANAEL
G.R. No. 200857, October 22, 2014
Facts
The twenty-eight (28) respondents in this case were employees of petitioner FVR Skills and
Services Exponents, Inc. (petitioner), an independent contractor engaged in the business of
providing janitorial and other manpower services to its clients. As early as 1998, some of the
respondents had already been under the petitioner's employ.
On April 21, 2008, the petitioner entered into a Contract of Janitorial Service ( service
contract) with Robinsons Land Corporation (Robinsons). Both agreed that the petitioner shall
supply janitorial, manpower and sanitation services to Robinsons Place Ermita Mall for a period of
one year -from January 1, 2008 to December 31, 2008. Pursuant to this, the respondents were
deployed to Robinsons.
Halfway through the service contract, the petitioner asked the respondents to execute individual
contracts which stipulated that their respective employments shall end on December 31, 2008,
unless earlier terminated.
The petitioner and Robinsons no longer extended their contract of janitorial services.
Consequently, the petitioner dismissed the respondents as they were project employees whose
duration of employment was dependent on the petitioner's service contract with Robinsons.
The respondents responded to the termination of their employment by filing a complaint for
illegal dismissal with the NLRC. They argued that they were not project employees; they were
regular employees who may only be dismissed for just or authorized causes. The respondents also
asked for payment of their unpaid wage differential, 13 th month pay differential, service incentive
leave pay, holiday pay and separation pay.
Issue:
Whether respondents were regular or project employees?
Ruling:
The respondents are regular employees, not project employees.
Article 280 (now Article 294) of the Labor Code governs the determination of whether an
employee is a regular or a project employee.
Under this provision, there are two kinds of regular employees, namely: (1) those who were
engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer; and (2) those casual employees who became regular after one year of
service, whether continuous or broken, but only with respect to the activity for which they have
been hired.
We distinguish these two types of regular employees from a project employee, or one whose
employment was fixed for a specific project or undertaking, whose completion or termination had
been determined at the time of engagement.
A careful look at the factual circumstances of this case leads us to the legal conclusion that the
respondents are regular and not project employees.
The primary standard in determining regular employment is the reasonable connection between

the particular activity performed by the employee and the employer's business or trade. This
connection can be ascertained by considering the nature of the work performed and its relation to
the scheme of the particular business, or the trade in its entirety.
Guided by this test, we conclude that the respondents' work as janitors, service crews and
sanitation aides, are necessary or desirable to the petitioner's business of providing janitorial and
manpower services to its clients as an independent contractor.
Also, the respondents had already been working for the petitioner as early as 1998. Even before
the service contract with Robinsons, the respondents were already under the petitioner's employ.
They had been doing the same type of work and occupying the same positions from the time they
were hired and until they were dismissed in January 2009. The petitioner did not present any
evidence to refute the respondents' claim that from the time of their hiring until the time of their
dismissal, there was no gap in between the projects where they were assigned to. The petitioner
continuously availed of their services by constantly deploying them to its clients.
Lastly, under Department Order (DO) 18-02, the applicable labor issuance to the petitioner's case,
the contractor or subcontractor is considered as the employer of the contractual employee for
purposes of enforcing the provisions of the Labor Code and other social legislation.
DO 18-02 grants contractual employees all the rights and privileges due a regular employee,
including the following: (a) safe and healthful working conditions; (b) labor standards such as
service incentive leave, rest days, overtime pay, holiday pay, 13th month pay and separation pay;
(c) social security and welfare benefits; (d) self-organization, collective bargaining and peaceful
concerted action; and (e) security of tenure.
In this light, we thus conclude that although the respondents were assigned as contractual
employees to the petitioner's various clients, under the law, they remain to be the petitioner's
regular employees, who are entitled to all the rights and benefits of regular employment.
The respondents' employment contracts, which were belatedly signed, are voidable.
The records show that at the time of the respondents' dismissal, they had already been
continuously working for the petitioner for more than a year. Despite this, they never signed any
employment contracts with the petitioner, except the contracts they belatedly signed when the
petitioner's own contract of janitorial services with Robinsons neared expiration.
As already discussed, for an employee to be validly categorized as a project employee, it is

necessary that the specific project or undertaking had been identified and its period and
completion date determined and made known to the employee at the time of his
engagement. This provision ensures that the employee is completely apprised of the terms of his
hiring and the corresponding rights and obligations arising from his undertaking. Notably, the
petitioner's service contract with Robinsons was from January 1 to December 31, 2008. The
respondents were only asked to sign their employment contracts for their deployment with
Robinsons halfway through 2008, when the petitioner's service contract was about to expire.
We find the timing of the execution of the respondents' respective employment contracts to be
indicative of the petitioner's calculated plan to evade the respondents' right to security of tenure,
to ensure their easy dismissal as soon as the Robinsons' contract expired. The attendant
circumstances cannot but raise doubts as to the petitioner's good faith.
If the petitioner really intended the respondents to be project employees, then the contracts
should have been executed right from the time of hiring, or when the respondents were first
assigned to Robinsons, not when the petitioner's service contract was winding up. The terms and
conditions of the respondents' engagement should have been disclosed and explained to them
from the commencement of their employment. The petitioner's failure to do so supports the
conclusion that it had been in bad faith in evading the respondents' right to security of tenure.
In Glory Philippines, Inc. v. Vergara, the Court rejected the validity of a fixed term contract
belatedly executed, and ruled that its belated signing was a deliberate employer ploy to evade
the employees' right to security of tenure. As the Court explained:
To us, the private respondent's illegal intention became clearer from such acts. Its making the
petitioners sign written employment contracts a few days before the purported end of their
employment periods (as stated in such contracts) was a diaphanous ploy to set periods with a view
for their possible severance from employment should the private respondent so willed it. If the
term of the employment was truly determined at the beginning of the employment, why was
there delay in the signing of the ready-made contracts that were entirely prepared by the
employer? Also, the changes in the positions supposedly held by the petitioners in the company
belied the private respondent's adamant contention that the petitioners were hired solely for the
purpose of manning PIS during its alleged dry run period that ended on October 20, 1998. We
view such situation as a very obvious ploy of the private respondent to evade the petitioner's
eventual regularization. [Emphasis ours]
Moreover, under Article 1390 of the Civil Code, contracts where the consent of a party was
vitiated by mistake, violence, intimidation, undue influence or fraud, are voidable or annullable.
The petitioner's threat of nonpayment of the respondents' salaries clearly amounted to
intimidation. Under this situation, and the suspect timing when these contracts were executed, we
rule that these employment contracts were voidable and were effectively questioned when the
respondents filed their illegal dismissal complaint.
The respondents were illegally dismissed.
To be valid, an employee's dismissal must comply with the substantive and procedural
requirements of due process. Substantively, a dismissal should be supported by a just or
authorized cause. Procedurally, the employer must observe the twin notice and hearing
requirements in carrying out an employee's dismissal.
The petitioner argues that these substantive and procedural requisites do not apply to the
respondents' case since they were employed under fixed term contracts. According to the
petitioner, the respondents' employment contracts lapsed by operation of law as the necessary
consequence of the termination and non-renewal of its service contract with Robinsons. Because
of this, there was no illegal dismissal to speak of, only contract expiration.
We do not agree with the petitioner.
Having already determined that the respondents are regular employees and not project
employees, and that the respondents' belated employment contracts could not be given any
binding effect for being signed under duress, we hold that illegal dismissal took place when the
petitioner failed to comply with the substantive and procedural due process requirements of the
law.
The petitioner also asserts that the respondents' subsequent absorption by Robinsons' new
contractors - Fieldmen Janitorial Service Corporation and Altaserv - negates their illegal dismissal.
This reasoning is patently erroneous. The charge of illegal dismissal was made only against the
petitioner which is a separate juridical entity from Robinsons' new contractors; it cannot escape
liability by riding on the goodwill of others.
By law, the petitioner must bear the legal consequences of its violation of the respondents' right
to security of tenure. The facts of this case show that since the respondents' hiring, they had been
under the petitioner's employ as janitors, service crews and sanitation aides. Their services had
been continuously provided to the petitioner without any gap. Notably, the petitioner never
refuted this allegation of the respondents. Further, there was no allegation that the petitioner
went out of business after the non-renewal of the Robinsons' service contract. Thus, had it not
been for the respondents' dismissal, they would have been deployed to the petitioner's other
existing clients.
In DM. Consunji, Inc. v. Jamin , an employee was dismissed after the expiration of the project he
was last engaged in. After ruling that the respondent-employee was a regular and not a project
employee, this Court affirmed the grant of backwages, computed from the time of the employee's
illegal dismissal until his actual reinstatement. In these lights, we rule that the respondents are
entitled to their full backwages, inclusive of their allowances and other benefits from the time of
their dismissal up to their actual reinstatement.
With regard to the award of separation pay, we agree with the CA's finding that this litigation
resulted to strained relations between the petitioner and the respondents. Thus, we also affirm
the CA's ruling that instead of reinstatement, the respondents should be paid their respective
separation pays equivalent to one (1) month pay for every year of service.
We cannot give credence to the petitioner's assertion that under Section 10 of DO 18-02, the
respondents are not entitled to separation pay because their employment was terminated due to
the completion of the project where they had been engaged. This provision must be construed
with the rest of DO 18-02's other provisions.
As earlier pointed out, Section 7 of DO 18-02 treats contractual employees as the independent
contractor's regular employees for purposes of enforcing the Labor Code and other social
legislation laws. Consequently, a finding of regular employment entitles them to the rights
granted to regular employees, particularly the right to security of tenure and to separation pay.
Thus, a holistic reading of DO 18-02, guides us to the conclusion that Section 10 only pertains to
contractual employees who are really project employees. They are not entitled to separation pay
since the end of the project for which they had been hired necessarily results to the termination of
their employment. On the other hand, we already found that the respondents are the petitioner's
regular employees. Thus, their illegal dismissal entitles them to backwages and reinstatement or
separation pay, in case reinstatement is no longer feasible.
EXOCET SECURITY AND ALLIED SERVICES CORPORATION and/or MA. TERESA MARCELO vs.
ARMANDO D. SERRANO
G.R. No. 198538, 29 September 2014
Facts:
Petitioner Exocet is engaged in the provision of security personnel to its various clients or
principals. Exocet assigned respondent as "close-in" security personnel for one of JG Summit's
corporate officers. Serrano was relieved by JG Summit from his duties. For more than six months
after he reported back to Exocet, Serrano was without any reassignment. Serrano filed a
complaint for illegal dismissal against Exocet with the National Labor Relations Commission
(NLRC).
Since, at that time, Exocet did not have clients in need of VIP security assignment, Serrano was
temporarily assigned to general security service. Exocet maintained that it was Serrano who
declined the assignment on the ground that he is not used to being a regular security guard.
Serrano, Exocet added, even refused to report for immediate duty, as he was not given a VIP
security assignment. LA ruled that Serrano was illegally dismissed as he was placed on a floating
status for more than six months and so, was deemed constructively dismissed. The NLRC
proceeded to affirm in toto the decision of the Labor Arbiter on the ground that Exocet did not
interpose the appeal. The CA rendered a Decision in Serrano’s favor,
Issue:
Whether or not Serrano was constructively dismissed.
Ruling:
The petition has merit. While there is no specific provision in the Labor Code which governs the
“floating status” or temporary “off-detail” of security guards employed by private security
agencies, this situation was considered by this Court in several cases as a form of temporary
retrenchment or lay-off. The concept has been defined as that period of time when security
guards are in between assignments or when they are made to wait after being relieved from a
previous post until they are transferred to a new one.
The Court has ruled that when a security guard is placed on a “floating status,” he or she does not
receive any salary or financial benefit provided by law. There is no specific provision of law which
treats of a temporary retrenchment or lay-off and provides for the requisites in effecting it or a
period or duration therefor. These employees cannot forever be temporarily laid-off. Six months
is the period set by law that the operation of a business or undertaking may be suspended thereby
suspending the employment of the employees concerned. The temporary lay-off wherein the
employees likewise cease to work should also not last longer than six months. After six months, the
employees should either be recalled to work or permanently retrenched following the
requirements of the law, and that failing to comply with this would be tantamount to dismissing
the employees and the employer would thus be liable for such dismissal.
Serrano, was placed on floating status after his relief from his post as a VIP security by his security
agency’s client. Yet, there is no showing that his security agency, petitioner Exocet, acted in bad
faith when it placed Serrano on such floating status. What is more, the present case is not a
situation where Exocet did not recall Serrano to work within the six-month period as required by
law and jurisprudence. Exocet did, in fact, make an offer to Serrano to go back to work. It is just
that the assignment—although it does not involve a demotion in rank or diminution in salary, pay,
benefits or privileges—was not the security detail desired by Serrano.
Clearly, Serrano’s lack of assignment for more than six months cannot be attributed to petitioner
Exocet. one month after Serrano was relieved as a VIP security, Exocet had already offered
Serrano a position in the general security service because there were no available clients requiring
positions for VIP security. Notably, even though the new assignment does not involve a demotion
in rank or diminution in salary, pay, or benefits, Serrano declined the position because it was not
the post that suited his preference, as he insisted on being a VIP Security.
To repeat for emphasis, the security guard’s right to security of tenure does not give him a vested
right to the position as would deprive the company of its prerogative to change the assignment of,
or transfer the security guard to, a station where his services would be most beneficial to the
client. Indeed, an employer has the right to transfer or assign its employees from one office or
area of operation to another, or in pursuit of its legitimate business interest, provided there is no
demotion in rank or diminution of salary, benefits, and other privileges, and the transfer is not
motivated by discrimination or bad faith, or effected as a form of punishment or demotion
without sufficient cause.
Thus, it is manifestly unfair and unacceptable to immediately declare the mere lapse of the six-
month period of floating status as a case of constructive dismissal, without looking into the
peculiar circumstances that resulted in the security guard’s failure to assume another post. This is
especially true in the present case where the security guard’s own refusal to accept a non-VIP
detail was the reason that he was not given an assignment within the six-month period. The
security agency, Exocet, should not then be held liable.
Indeed, from the facts presented, Serrano was guilty of wilful disobedience to a lawful order of his
employer in connection with his work, which is a just cause for his termination under Art. 288
(previously Art. 282) of the Labor Code. Nonetheless, Exocet did not take Serrano’s wilful
disobedience against him. Hence, Exocet is considered to have waived its right to terminate
Serrano on such ground.
In this factual milieu, since respondent Serrano was not actually or constructively dismissed from
his employment by petitioner Exocet, it is best that petitioner Exocet direct him to report for
work, if any security assignment is still available to him. If respondent Serrano still refuses to be
assigned to any available guard position, he shall be deemed to have abandoned his employment
with petitioner.
ROSALIE L. GARGOLES v. REYLITA S. DEL ROSARIO, DOING BUSINESS UNDER THE NAME AND
STYLE JAY ANNE'S ONE HOUR PHOTO SHOP
G.R. No. 158583, September 10, 2014
Facts:
On February 20, 1992, the petitioner started working as an “all-around employee” acting as
“cashier, sales clerk, xerox operator, janitress, photo printer, and messenger/delivery person” at
Jay-Anne’s One Hour Photo Shop, the proprietress of which was respondent Reylita S. Del
Rosario. On March 28, 1998, the petitioner received a letter terminating her employment for
dishonesty. As a result, she lodged a complaint for illegal dismissal, seeking her reinstatement and
backwages.
To answer the complaint for illegal dismissal, Del Rosario laid out the reason for the termination
of the petitioner in her position paper, as follows:
Through incisive sleuthing, records inspection and investigation in the second week of March,
1998, it was discovered that complainant, tampered with the daily printer's production
reports/sales which[,] as consequence thereof, the total number of prints made for the day was
podded [sic] and erroneously reported thru double entries of the same job envelope and one (1)
twin check number for every fresh role [sic] of film for photo-developing and printing or even
recopying; it was on the same entry with two (2) twin check numbers instead of just one (1)
number of the same job envelope that complainant pocketed and appropriated for her own
benefit and gain the cash value or cash equivalent of the excessive or padded daily total of
number of prints made and erroneously reported to the respondent store damage and prejudice
amounting to P11,305.00 computed at 2,207 prints x P5.00 per print during the period December
1, 1997 to March 25, 1998 x x x.
The Labor Arbiter dismissed the petitioner’s complaint for lack of merit. The National Labor
Relations Commission (NLRC) subsequently affirmed the decision of the Labor Arbiter. Thereafter,
CA affirmed the NLRC’s Decision.
Issue:
Whether there was just cause for petitioner’s dismissal.
Ruling:
The just and valid causes for the dismissal of an employee, as enumerated in Article 282 of
the Labor Code, include: (a) serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with her work; (b) gross and habitual
neglect by the employee of her duties; (c) fraud or willful breach by the employee of the trust
reposed in her by her employer or duly authorized representative; (d) commission of a crime or
offense by the employee against the person of her employer or any immediate member of her
family or her duly authorized representative; and (e) other causes analogous to the foregoing.
The dishonesty imputed to the petitioner included the making of double entries in the production
reports and thereby enriching herself by pocketing the extra cash generated from the double
entries. Contrary to her assertion that there was no substantial evidence to justify her dismissal,
the production reports containing the double entries were presented as evidence; and her double
entries were confirmed in the affidavit executed by Redelito Caranay, Jr., her co-employee. As
such, the finding of the just cause for her dismissal did not emanate from mere speculation,
suspicion or assumption.
The petitioner casts doubt on the affidavit of Caranay, Jr. by stating that he was only forced to
execute the affidavit in view of his being under the control and moral domination of the
respondent. The Court cannot sustain her, however, considering that she did not present evidence
either to discredit his execution of the affidavit or to show his ill will or malice towards her.
The petitioner argues that she did not need to dispute the charge of dishonesty or theft of her
employer’s funds because she had the presumption of innocence in her favor.
The argument is untenable. It is true that every person is entitled to be presumed innocent of
wrongdoing. The objective of the presumption has been to lay the burden of proof on the
shoulders of the alleger of wrongdoing. The presumption extends to the petitioner and to every
other employee charged with any wrongdoing that may cause them to be sanctioned, including
being dismissed from employment. But the presumption, which is disputable, by no means excuses
the employee charged with wrongdoing from answering and defending herself once the
presumption has been overcome by a showing to the contrary. The failure of the employee to
rebut or disprove the proof of wrongdoing then establishes the charge against her. This is
especially true in a case for dismissal grounded on loss of confidence or breach of trust, in which
the employer may proceed to dismiss the erring employee once the employer becomes morally
convinced that she was guilty of a breach of trust and confidence. Based on the record, the
petitioner did not sufficiently contradict or rebut the charge of dishonesty.
TEMIC AUTOMOTIVE (PHILIPPINES), INC., VS. RENATO M. CANTOS

G.R. No. 200729 September 29, 2014
Facts:
Respondent Cantosfiled a complaint for illegal dismissal against petitioner Cantos started his
employment with Temic as Special Projects Officer of the company's Materials Department. he
was appointed Purchasing & Import-Export Manager (Purchasing Manager) of the Logistics
Department and, he was named Warehouse & Import-Export Manager (Wimpex Manager), the
last position he held before he was allegedly dismissed illegally. Temic believed the irregularities
could only have happened with the participation of personnel in the Purchasing and
Manufacturing departments. It stressed that initial findings indicated that Cantos, as former
Purchasing Manager, "was likely involved in said transactions." Temic issued a Show Cause and
Preventive Suspension Notice8 to Cantos, requiring him to explain in writing several infractions
which he allegedly committed during his stint as Purchasing Manager. LA Reyno declared that
Cantos, a managerial employee, had lost the trust and confidence of his employer for the various
infractions he committed as company Purchasing Manager. The NLRC affirmed LA Reyno's ruling
and dismissed the appeal. The CA granted the petition. It reversed the NLRC rulings and declared
that Cantos had been illegally dismissed. It found no valid cause for his dismissal and he was not
accorded due process.
Issue: Whether or not Cantos was validly dismissed.
Ruling:
We are convinced that the NLRC committed grave abuse of discretion in upholding Cantos'
dismissal. We find no substantial evidence in the records in support of its ruling. We agree with
the CA pronouncement. Other than the fact that Cantos was the Purchasing Manager at the time
and was a signatory to the PDTAs in question, we find no other indication of his involvement in the
execution of the subject PDTAs. More importantly, his position as Purchasing Manager and his
signature appearing on the PDTAs do not prove that the PDTAs [eleven (11) out of thirty thousand
(30,000) POs during his term as Purchasing Manager)] were executed in violation of Temic's
purchasing procedures and that he was responsible for their execution. Indeed, there is no
evidence on record that it was Cantos who caused the execution of the subject PDTAs or that he
did it for his personal gain or in collusion with Navarro and Balita of CTEPIs Manufacturing
Department who were suspected to be involved in fraudulent purchase transactions — discovered
by the audit team from Germany — in favor of certain suppliers. The minutes of the investigation
are crucial, especially since Cantos has persistently denied that he made the admission of
wrongdoing during the investigation. Ignacio's affidavit, as well as that of Human Resource
Manager Del Rosario in the same tenor, cannot substitute for the minutes of the investigation
whose absence in the evidence presented remains unexplained. Under the circumstances, we
cannot accept the affidavits of Ignacio and Del Rosario as evidence of Cantos' purported
admission that he violated Temic's purchasing procedures. In sum, we reiterate and emphasize
that the NLRC committed grave abuse of discretion in validating the dismissal of Cantos as we find
no substantial evidence in support of this pronouncement.
NANCY S. MONTINOLA v. PHILIPPINE AIRLINES

G.R. No. 198656, September 08, 2014
Facts:
Montinola was employed as a flight attendant of Philippine Airlines (PAL) since 1996. On January
29, 2008, Montinola and other flight crew members were subjected to custom searches in
Honolulu, Hawaii, USA. Items from the airline were recovered from the flight crew by customs
officials. Nancy Graham (Graham), US Customs and Border Protection Supervisor, sent an email to
PAL regarding the search. The email contained a list of PAL flight crew members involved in the
search. Another email enumerated the list of items taken from the crew members.
PAL conducted an investigation. Montinola was among those implicated because she was
mentioned in Graham’s email. On February 1, 2008, PAL’s Cabin Services Sub-Department
required Montinola to comment on the incident. She gave a handwritten explanation three days
after, stating that she did not take anything from the aircraft. She also committed to give her full
cooperation should there be any further inquiries on the matter.
On February 22, 2008, PAL’s International Cabin Crew Division Manager, Jaime Roberto A.
Narciso (Narciso), furnished Montinola the emails from the Honolulu customs official. This was
followed by a notice of administrative charge which Narciso gave Montinola on March 25, 2008.
On April 12, 2008, there was a clarificatory hearing. The clarificatory hearing was conducted by a
panel of PAL’s Administrative Personnel, namely, Senior Labor Counsel Atty. Crisanto U. Pascual
(Atty. Pascual), Narciso, Salvador Cacho, June Mangahas, Lina Mejias, Carolina Victorino, and
Ruby Manzano.
Montinola alleged that her counsel objected during the clarificatory hearing regarding PAL’s
failure to specify her participation in the alleged pilferage. Atty. Pascual threatened Montinola
that a request for clarification would result in a waiver of the clarificatory hearing. This matter was
not reflected in the transcript of the hearing. Despite her counsel’s objections, Montinola allowed
the clarificatory hearings to proceed because she “wanted to extend her full cooperation [in] the
investigation[s].”
PAL found Montinola guilty of 11 violations of the company’s Code of Discipline and Government
Regulation. She was meted with suspension for one (1) year without pay.
Montinola brought the matter before the Labor Arbiter. The Labor Arbiter found her suspension
illegal, finding that PAL never presented evidence that showed Montinola as the one responsible
for any of the illegally taken airline items. The Labor Arbiter ordered Montinola’s reinstatement
with backwages, inclusive of allowances and benefits.
In addition, the Labor Arbiter awarded moral damages and exemplary damages.ed
PAL appealed the Labor Arbiter’s decision to the National Labor Relations Commission (NLRC).
The NLRC affirmed the decision of the Labor Arbiter. PAL appealed the Commission’s decision to
the Court of Appeals through a petition for certiorari.
The Court of Appeals affirmed the decisions of the Labor Arbiter and National Labor Relations
Commission in finding the suspension illegal. However, the Court of Appeals modified the award
and deleted the award for moral and exemplary and attorney’s fees.
Issue:
The sole issue in this case is whether Montinola’s illegal suspension entitled her to an award of
moral and exemplary damages and attorney’s fees.
Ruling:
Montinola is entitled to moral and exemplary damages. She is also entitled to attorney’s fees.
In this case, PAL complied with procedural due process as laid out in Article 277, paragraph (b) of
the Labor Code. PAL issued a written notice of administrative charge, conducted a clarificatory
hearing, and rendered a written decision suspending Montinola. However, we emphasize that the
written notice of administrative charge did not serve the purpose required under due process. PAL
did not deny her allegation that there would be a waiver of the clarificatory hearing if she insisted
on a specific notice of administrative charge. With Montinola unable to clarify the contents of the
notice of administrative charge, there were irregularities in the procedural due process accorded
to her.
Moreover, PAL denied Montinola substantial due process.
Just cause has to be supported by substantial evidence. Substantial evidence, or “such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion,” is the quantum
of evidence required in administrative bodies such as the National Labor Relations Commission. It
is reasonable to expect the employer to consider substantial evidence in disciplinary proceedings
against its employees. The employer’s decision will be subject to review by the Labor Arbiter and
National Labor Relations Commission.
The employer has the burden of proof in showing that disciplinary action was made for lawful
cause. The employer must consider and show facts adequate to support the conclusion that an
employee deserves to be disciplined for his or her acts or omissions.
PAL, however, merely relied on these pieces of information in finding administrative liability
against Montinola:
1) a list of offenses found in PAL’s Code of Discipline that Montinola allegedly violated;
2) a list of flight crew members that were checked at the Honolulu airport; and
3) a list of all items confiscated from all these flight crew members.
The lists are not sufficient to show the participation of any of the flight crew members, least of all
Montinola. None of the evidence presented show that the customs officials confiscated any of
these items from her. Thus, the evidence by themselves do not show that Montinola pilfered
airline items.
Together with the manner in which the investigation proceeded, i.e., that Montinola was
prevented from asking for clarification of the charges against her, the absence of substantial
evidence is so apparent that disciplining an employee only on these bases constitutes bad faith.
The employee is entitled to moral damages when the employer acted a) in bad faith or fraud; b) in
a manner oppressive to labor; or c) in a manner contrary to morals, good customs, or public policy.
Bad faith “implies a conscious and intentional design to do a wrongful act for a dishonest purpose
or moral obliquity.” Cathay Pacific Airways v. Spouses Vazquez established that bad faith must be
proven through clear and convincing evidence. This is because “[b]ad faith and fraud . . . are
serious accusations that can be so conveniently and casually invoked, and that is why they are
never presumed. They amount to mere slogans or mudslinging unless convincingly substantiated
by whoever is alleging them.” Here, there was clear and convincing evidence of bad faith adduced
in the lower tribunals.
PAL’s actions in implicating Montinola and penalizing her for no clear reason show bad faith. PAL’s
denial of her request to clarify the charges against her shows its intent to do a wrongful act for
moral obliquity. If it were acting in good faith, it would have gathered more evidence from its
contact in Honolulu or from other employees before it started pointing fingers. PAL should not
have haphazardly implicated Montinola and denied her livelihood even for a moment.
PAL apparently granted Montinola procedural due process by giving her a notice of administrative
charge and conducting a hearing. However, this was more apparent than real. The notice of
administrative charge did not specify the acts committed by Montinola and how these acts
violated PAL’s Code of Discipline. The notice did not state which among the items confiscated by
the US customs officials were originally found in Montinola’s possession. Worse, the panel of PAL
officers led by Atty. Pascual did not entertain any query to clarify the charges against her.
There is denial of an opportunity to be heard if the employee is not clearly apprised of the acts she
committed that constituted the cause for disciplinary action. The Omnibus Rules Implementing
the Labor Code requires that “a written notice [be] served on the employee specifying the ground
or grounds for termination, and giving said employee reasonable opportunity within which to
explain his side.” Reasonable opportunity has been described as “every kind of assistance that
management must accord to the employees to enable them to prepare adequately for their
defense.”
When the alleged participation of the employee in the illicit act which serves as a basis for the
disciplinary action is not clear from the notice, the opportunity to be heard will not be reasonable.
The notice fails to meet reasonable standards. It does not have enough information to enable the
employee to adequately prepare a defense.
Moreover, the list of provisions in PAL’s Code of Discipline allegedly violated was long and
exhaustive.
To constitute proper notice, the facts constitutive of the violations of these rules — and not just
the rules of conduct — must be clearly stated. Proper notice also requires that the alleged
participation of the employee be clearly specified. Without these, the most fundamental
requirement of a fair hearing cannot be met.
Montinola was found by PAL to be guilty of all the charges against her. According to PAL, “[t]hese
offenses call for the imposition of the penalty of Termination, however, we are imposing upon you
the reduced penalty of One (01) year Suspension.” It is not clear how she could violate all the
prestations in the long list of rules she allegedly violated. There is also no clear explanation why
termination would be the proper penalty to impose. That the penalty was downgraded, without
legal explanation, to suspension appears as a further badge of intimidation and bad faith on the
part of the employer.
Nothing in PAL’s action supports the finding that Montinola committed specific acts constituting
violations of PAL’s Code of Discipline.
This act of PAL is contrary to morals, good customs, and public policy. PAL was willing to deprive
Montinola of the wages she would have earned during her year of suspension even if there was no
substantial evidence that she was involved in the pilferage.
Moral damages are, thus, appropriate. In Almira v. B.F. Goodrich Philippine s, this court noted that
unemployment “brings untold hardships and sorrows on those dependent on the wage-
earner.”81 This is also true for the case of suspension. Suspension is temporary unemployment.
During the year of her suspension, Montinola and her family had to survive without her usual
salary. The deprivation of economic compensation caused mental anguish, fright, serious anxiety,
besmirched reputation, and wounded feelings. All these are grounds for an award of moral
damages under the Civil Code.
Montinola is also entitled to exemplary damages.

Under Article 2229 of the Civil Code, “[e]xemplary or corrective damages are imposed, by way of
example or correction for the public good, in addition to the moral, temperate, liquidated or
compensatory damages.”
If the case involves a contract, Article 2332 of the Civil Code provides that “the court may award
exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner.” Thus, in Garcia v. NLRC, this court ruled that in labor cases, the court may
award exemplary damages “if the dismissal was effected in a wanton, oppressive or malevolent
manner.”l
It is socially deleterious for PAL to suspend Montinola without just cause in the manner suffered by
her. Hence, exemplary damages are necessary to deter future employers from committing the
same acts.
Montinola is also entitled to attorney’s fees.
First, considering that we have awarded exemplary damages in this case, attorney’s fees can
likewise be awarded.
Second, PAL’s acts and omissions compelled Montinola to incur expenses to protect her rights
with the National Labor Relations Commission and the judicial system.
NORTHWEST AIRLINES, INC. v. MA. CONCEPCION M. DEL ROSARIO

G.R. No. 157633, September 10, 2014
Facts:
Petitioner Northwest Airlines, Inc. employed respondent Ma. Concepcion M. Del Rosario on
December 10, 1994 as one of its Manila-based flight attendants. On May 18, 1998, Del Rosario
was assigned at the Business Class Section of Northwest Flight NW 26 bound for Japan. During
the boarding preparations, Kathleen Gamboa, another flight attendant assigned at the First Class
Section of Flight NW 26, needed to borrow a wine bottle opener from her fellow attendants
because her wine bottle opener was dull. Vivien Francisco, Gamboa’s runner, went to the Business
Class Section to borrow a wine bottle opener from Del Rosario, but the latter remarked that any
flight attendant who could not bring a wine bottle opener had no business working in the First
Class Section. Upon hearing this, Aliza Ann Escaño, another flight attendant, offered her wine
bottle opener to Francisco. Apparently, Gamboa overheard Del Rosario’s remarks, and later on
verbally confronted her. Their confrontation escalated into a heated argument.
The parties differed on what happened thereafter. Del Rosario claimed that only an animated
discussion had transpired between her and Gamboa, but Morales insisted that it was more than an
animated discussion, recalling that Del Rosario had even challenged Gamboa to a brawl
(sabunutan). Morales asserted that she had tried to pacify Del Rosario and Gamboa, but the two
did not stop; that because the two were still arguing although the Business Class passengers were
already boarding, she ordered them out of the plane and transfer to another nearby Northwest
aircraft; that she inquired from them about what had happened, and even asked if they were
willing to fly on the condition that they would have to stay away from each other during the entire
flight; that because Del Rosario was not willing to commit herself to do so, she decided not to
allow both of them on Flight NW 26, and furnished them a Notice of Removal from Service
(effectively informing Del Rosario of her dismissal from the service pending an investigation of the
fighting incident between her and Gamboa).
On May 19, 1998, Morales sent a letter to Del Rosario telling her that Northwest would conduct
an investigation of the incident involving her and Gamboa. The investigation was held on May 28,
1998 before Atty. Ceazar Veneracion III, Northwest’s Legal Counsel and Head of its Human
Resources Department. All the parties attended the investigation
On June 19, 1998, Del Rosario was informed of her termination from the service. Northwest stated
that based on the results of the investigation, Del Rosario and Gamboa had engaged in a fight on
board the aircraft, even if there had been no actual physical contact between them; and that
because fighting was strictly prohibited by Northwest to the point that fighting could entail
dismissal from the service even if committed for the first time, Northwest considered her dismissal
from the service justified and in accordance with the Rules of Conduct for Employees.
Del Rosario subsequently filed her complaint for illegal dismissal against Northwest.
Labor Arbiter ruled in favor of Northwest, holding that the dismissal of Del Rosario had been
justified.
Upon appeal, the NLRC reversed the decision of the Labor Arbiter, and ruled in favor of Del
Rosario, declaring that the incident between her and Gamboa could not be considered as
synonymous with fighting as the activity prohibited by Northwest’s Rules of Conduct.
The CA subsequently sustained the NLRC through its decision promulgated on June 21, 2002,
observing the NLRC had correctly held that Del Rosario’s conduct did not constitute serious
misconduct, because the NLRC, in determining the usual, ordinary and commonly understood
meaning of the word fighting, had resorted to authoritative lexicons that supported its conclusion
that the exchange of words between Del Rosario and Gamboa did not come within the definition
of the word fighting.
Issue:
Was Del Rosario’s dismissal from the service valid?
Ruling:
Northwest argues that Del Rosario was dismissed on the grounds of serious misconduct and willful
disobedience. Misconduct refers to the improper or wrong conduct that transgresses some
established and definite rule of action, a forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not mere error in judgment. But misconduct or improper
behavior, to be a just cause for termination of employment, must: ( a) be serious; (b) relate to the
performance of the employee’s duties; and (c) show that the employee has become unfit to
continue working for the employer.
There is no doubt that the last two elements of misconduct were present in the case of Del
Rosario. The cause of her dismissal related to the performance of her duties as a flight attendant,
and she became unfit to continue working for Northwest. Remaining to be determined is,
therefore, whether the misconduct was serious as to merit Del Rosario’s dismissal. In that respect,
the fight between her and Gamboa should be so serious that it entailed the termination of her
employment even if it was her first offense. Northwest insists that what transpired on May 18,
1998 between her and Gamboa was obviously a form of fight that it strictly prohibited, but Del
Rosario disputes this by contending that it was only an animated discussion between her and
Gamboa. She argues that as settled in American jurisprudence fight pertained to combat or
battle, like the hostile encounter or engagement between opposing forces, suggesting primarily
the notion of a brawl or unpremeditated encounter, or of a pugilistic combat; while argument was
a connected discourse based upon reason, or a course of reasoning tending and intended to
establish a position and to induce belief.
In several rulings where the meaning of fight was decisive, the Court has observed that the term
fight was considered to be different from the term argument. In People v. Asto, for instance, the
Court characterized fight as not just a merely verbal tussle but a physical combat between two
opposing parties, to wit:
Well into their second bottle of gin, at about eleven o'clock that morning, Fernando
Aquino and Peregrino had a verbal tussle. Fernando Aquino declared that he was going to
run for councilor of Alcala, Pangasinan. Peregrino countered by saying: “If you will run for
that post, cousin, I will fight you.” After a brief exchange of words, Fernando Aquino,
laughing, went to sit beside Abagat. As Aquino continued with his mirth, Abagat stared at
Peregrino with contempt.
xxx. A few minutes later, he heard a commotion in the plantation some two hundred
meters away. He claims to have seen several people fighting each other with pieces of
wood but did not go to the field to check what was happening. (Italics supplied.)
Similarly, in Pilares, Sr. v. People, fight was held to be more than just an exchange of words that
usually succeeded the provocation by either party, thus:
When the petitioner was about to hand over the bottles of beer to the private
complainant, the latter called him “coward” and dared him to get out for a fight. Insulted,
the petitioner went out of his store and chased the private complainant. (Italics supplied.)
Based on the foregoing, the incident involving Del Rosario and Gamboa could not be justly
considered as akin to the fight contemplated by Northwest. In the eyes of the NLRC, Del Rosario
and Gamboa were arguing but not fighting. The understanding of fight as one that required
physical combat was absent during the incident of May 18, 1998. Moreover, the claim of Morales
that Del Rosario challenged Gamboa to a brawl (sabunutan) could not be given credence by virtue
of its being self-serving in favor of Northwest, and of its being an apparent afterthought on the
part of Morales during the investigation of the incident, without Del Rosario having the
opportunity to contest Morales’ statement. In that context, the investigation then served only as
Northwest’s means to establish that the grounds of a valid dismissal based on serious misconduct
really existed.
Moreover, even assuming arguendo that the incident was the kind of fight prohibited by
Northwest’s Rules of Conduct, the same could not be considered as of such seriousness as to
warrant Del Rosario’s dismissal from the service. The gravity of the fight, which was not more than
a verbal argument between them, was not enough to tarnish or diminish Northwest’s public
image.
Under the circumstances, therefore, the CA properly ruled that the NLRC did not gravely abuse its
discretion amounting to lack or excess of jurisdiction by declaring Del Rosario’s dismissal
unjustified. Northwest as the petitioner for certiorari must demonstrate grave abuse of discretion
amounting to lack or excess of jurisdiction on the part of the NLRC. Grave abuse of
discretion, according to De los Santos v. Metropolitan Bank and Trust Company, “must be grave,
which means either that the judicial or quasi-judicial power was exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, or that the respondent judge, tribunal
or board evaded a positive duty, or virtually refused to perform the duty enjoined or to act in
contemplation of law, such as when such judge, tribunal or board exercising judicial or quasi-
judicial powers acted in a capricious or whimsical manner as to be equivalent to lack of
jurisdiction.” Alas, Northwest did not show how the NLRC could have abused its discretion, let
alone gravely, in ruling adversely against it.
ROSALIE L. GARGOLES v. REYLITA S. DEL ROSARIO, DOING BUSINESS UNDER THE NAME AND
STYLE JAY ANNE'S ONE HOUR PHOTO SHOP
G.R. No. 158583, September 10, 2014
Facts:
On February 20, 1992, the petitioner started working as an “all-around employee” acting as
“cashier, sales clerk, xerox operator, janitress, photo printer, and messenger/delivery person” at
Jay-Anne’s One Hour Photo Shop, the proprietress of which was respondent Reylita S. Del
Rosario. On March 28, 1998, the petitioner received a letter terminating her employment for
dishonesty. As a result, she lodged a complaint for illegal dismissal, seeking her reinstatement and
backwages.
To answer the complaint for illegal dismissal, Del Rosario laid out the reason for the termination
of the petitioner in her position paper, as follows:
Through incisive sleuthing, records inspection and investigation in the second week of March,
1998, it was discovered that complainant, tampered with the daily printer's production
reports/sales which[,] as consequence thereof, the total number of prints made for the day was
podded [sic] and erroneously reported thru double entries of the same job envelope and one (1)
twin check number for every fresh role [sic] of film for photo-developing and printing or even
recopying; it was on the same entry with two (2) twin check numbers instead of just one (1)
number of the same job envelope that complainant pocketed and appropriated for her own
benefit and gain the cash value or cash equivalent of the excessive or padded daily total of
number of prints made and erroneously reported to the respondent store damage and prejudice
amounting to P11,305.00 computed at 2,207 prints x P5.00 per print during the period December
1, 1997 to March 25, 1998 x x x.
The Labor Arbiter dismissed the petitioner’s complaint for lack of merit. The National Labor
Relations Commission (NLRC) subsequently affirmed the decision of the Labor Arbiter. Thereafter,
CA affirmed the NLRC’s Decision.
Issue:
Whether there was just cause for petitioner’s dismissal.
Ruling:
The just and valid causes for the dismissal of an employee, as enumerated in Article 282 of
the Labor Code, include: (a) serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with her work; (b) gross and habitual
neglect by the employee of her duties; (c) fraud or willful breach by the employee of the trust
reposed in her by her employer or duly authorized representative; (d) commission of a crime or
offense by the employee against the person of her employer or any immediate member of her
family or her duly authorized representative; and (e) other causes analogous to the foregoing.
The dishonesty imputed to the petitioner included the making of double entries in the production
reports and thereby enriching herself by pocketing the extra cash generated from the double
entries. Contrary to her assertion that there was no substantial evidence to justify her dismissal,
the production reports containing the double entries were presented as evidence; and her double
entries were confirmed in the affidavit executed by Redelito Caranay, Jr., her co-employee. As
such, the finding of the just cause for her dismissal did not emanate from mere speculation,
suspicion or assumption.
The petitioner casts doubt on the affidavit of Caranay, Jr. by stating that he was only forced to
execute the affidavit in view of his being under the control and moral domination of the
respondent. The Court cannot sustain her, however, considering that she did not present evidence
either to discredit his execution of the affidavit or to show his ill will or malice towards her.
The petitioner argues that she did not need to dispute the charge of dishonesty or theft of her
employer’s funds because she had the presumption of innocence in her favor.
The argument is untenable. It is true that every person is entitled to be presumed innocent of
wrongdoing. The objective of the presumption has been to lay the burden of proof on the
shoulders of the alleger of wrongdoing. The presumption extends to the petitioner and to every
other employee charged with any wrongdoing that may cause them to be sanctioned, including
being dismissed from employment. But the presumption, which is disputable, by no means excuses
the employee charged with wrongdoing from answering and defending herself once the
presumption has been overcome by a showing to the contrary. The failure of the employee to
rebut or disprove the proof of wrongdoing then establishes the charge against her. This is
especially true in a case for dismissal grounded on loss of confidence or breach of trust, in which
the employer may proceed to dismiss the erring employee once the employer becomes morally
convinced that she was guilty of a breach of trust and confidence. Based on the record, the
petitioner did not sufficiently contradict or rebut the charge of dishonesty.
GEORGE A. ARRIOLA vs. PILIPINO STAR .NGAYON, INC.

and/or MIGUEL G. BELMONT
G.R. No. 175689, August 13, 2014
Facts:
The prescriptive period for filing an illegal dismissal complaint is four years from the time the
cause of action accrued. This four-year prescriptive period, not the three-year period for filing
money claims under Article 291 of the Labor Code, applies to claims for backwages and damages
due to illegal dismissal.
In July 1986, Pilipino Star Ngayon, Inc. employed George A. Arriola as correspondent assigned in
Olongapo Cityand Zambales. Arriola had held various positions in Pilipino Star Ngayon, Inc.
before becoming a section editor and writer of its newspaper. He wrote "Tinig ng Pamilyang
OFWs" until his column was removed from publication on November 15, 1999. Since then, Arriola
never returned for work.
On November 15, 2002, Arriola filed a complaint for illegal dismissal, non-payment of

salaries/wages, moral and exemplary damages, actual damages, attorney's fees, and full
backwages with the National Labor Relations Commission. In his position paper, Arriola alleged
that Pilipino Star Ngayon, Inc. "arbitrarily dismissed" him on November 15, 1999. Arguing that he
was a regular employee, Arriola contended that his rights to security of tenure and due process
were violated when Pilipino Star Ngayon, Inc. illegally dismissed him. Pilipino Star Ngayon, Inc.
and Miguel G. Belmonte denied Arriola’s allegations. In their position paper, they alleged that
around the third week of November 1999, Arriola suddenly absented himself from work and never
returned despite Belmonte’s phone callsand beeper messages. After a few months, they learned
that Arriola transferred to a rival newspaper publisher, Imbestigador, to write "Boses ng Pamilyang
OFWs."
In his reply, Arriola denied that he abandoned his employment. He maintained that Pilipino Star
Ngayon, Inc. ordered him to stop reporting for work and to claim his separation pay.
Issues:
I. Whether Arriola’s money claims have prescribed

II. Whether Pilipino Star Ngayon, Inc. illegally dismissed Arriol
Ruling:
Arriola’s claims for backwages and damages have not yet

prescribed when he filed his complaint with the National Labor
Relations Commission
The Labor Arbiter, the National Labor Relations Commission, and the Court of Appeals all ruled
that Arriola’s claims for unpaid salaries, backwages, damages, and attorney’s fees have prescribed.
They cited Article 291 of the Labor Code, which requires that money claims arising from
employer-employee relations be filed within three years from the time the cause of action
accrued:
Art. 291. MONEY CLAIMS. All money claims arising from employer-employee relations accruing
during the effectivity of this Code shall be filed within three (3) years from the time the cause of
action accrued; otherwise they shall be forever barred.
Article 291 covers claims for overtime pay, holiday pay, service incentive leave
pay, bonuses, salary differentials, and illegal deductions by an employer. It also covers money
claims arising from seafarer contracts.
The provision, however, does not cover "money claims" consequent to an illegal dismissal such as
backwages. It also does not cover claims for damages due to illegal dismissal. These claims are
governed by Article 1146 of the Civil Code of the Philippines, which provides:
Art. 1146. The following actions must be instituted within four years:
(1) Upon injury to the rights of the plaintiff[.]
In Callanta v. Carnation Philippines, Inc., Virgilio Callanta worked as a salesperson for Carnation

Philippines, Inc. beginning in January 1974. On June 1, 1979, Carnation filed with the Regional
Office No. X of the then Ministry of Labor and Employment an application for issuance of
clearance to terminate Callanta. The application was granted, and Callanta’s employment was
declared terminated effective June 1, 1979.
On July 5, 1982, Callanta filed a complaint for illegal dismissal with claims for backwages and
damages. In its defense, Carnation argued that Callanta’s complaint was barred by prescription.
Carnation stressed that Callanta filed his complaint three years, one month, and five days after his
termination. Since illegal dismissal is a violation of the Labor Code, Carnation argued that
Callanta’s complaint was barred by Article 290 of the Labor Code. Under Article 290, offenses
penalized under the Code shall prescribe in three years.
As to Callanta’s claims for backwages and damages, Carnation contended that these claims arose
from employer-employee relations. Since Callanta filed his complaint beyond the three-year
period under Article 291 of the Labor Code, his claims for backwages and damages were forever
barred.
This court ruled that Callanta’s complaint for illegal dismissal had not yet prescribed. Although
illegal dismissal is a violation of the Labor Code, it is not the "offense" contemplated in Article
290. Article 290 refers to illegal acts penalized under the Labor Code, including committing any of
the prohibited activities during strikes or lockouts, unfair labor practices, and illegal recruitment
activities. The three-year prescriptive period under Article 290, therefore, does not apply to
complaints for illegal dismissal.
Instead, "by way of supplement," Article 1146 of the Civil Code of the Philippines governs
complaints for illegal dismissal. Under Article 1146, an action based upon an injury to the rights of
a plaintiff must be filed within four years. This court explained:
. . . when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action
instituted to contest the legality of one's dismissal from employment constitutes, in essence, an
action predicated "upon an injury to the rights of the plaintiff," as contemplated under Art. 1146
of the New Civil Code, which must be brought within four [4] years.
This four-year prescriptive period applies to claims for backwages, not the three-year prescriptive
period under Article 291 of the Labor Code. A claim for backwages, according to this court, may
be a money claim "by reason of its practical effect." Legally, however, an award of backwages "is
merely one of the reliefs which an illegally dismissed employee prays the labor arbiter and the
NLRC to render inhis favor as a consequence of the unlawful act committed by the
employer." Though it results "in the enrichment of the individual [illegally dismissed], the award of
backwages is not in redress of a private right, but, rather, is in the nature of a command upon the
employer to make public reparation for his violation of the Labor Code."
Actions for damages due to illegal dismissal are likewise actions "upon an injury to the rights of
the plaintiff." Article 1146 of the Civil Code of the Philippines, therefore, governs these actions.
Callanta filed his complaint for illegal dismissal with claims for backwages and damages three
years, one month, and five days from his termination. Thus, this court ruled that Callanta filed his
claims for backwages and damages well within the four-year prescriptive period.
This court applied the Callanta ruling in Texon Manufacturing v. Millena. In Texon, Marilyn and
Grace Millena commenced work for Texon Manufacturing in 1990 until Texon terminated their
employment. Texon first dismissed Grace on May 31, 1994 then dismissed Marilyn on September
8, 1995.
On August 21, 1995, Grace filed a complaint for money claims representing underpayment and
non-payment of wages, overtime pay, and holiday pay with the National Labor Relations
Commission. Marilyn filed her own complaint for illegal dismissal with prayer for payment of full
backwages and benefits on September 11, 1995.
Texon filed a motion to dismiss both complaints on the ground of prescription. It argued that
Grace and Marilyn’s causes of action accrued from the time they began working in Texon. Their
complaints, therefore, were filed beyond the three-year prescriptive period under Article 291 of
the Labor Code.
This court ruled that both complaints had not yet prescribed. With respect to Grace’s complaint
for overtime pay and holiday pay, this court ruled that the three-year prescriptive period under
Article 291 of the Labor Code applied. Since Grace filed her claim one year, one month, and 21
days from her dismissal, her claims were filed within the three-year prescriptive period. With
respect to Marilyn’s complaint for illegal dismissal with claims for backwages, this court while
citing Callanta as legal basis ruled that the four-year prescriptive period under Article 1146 of the
Civil Code of the Philippines applied. Since Marilyn filed her complaint three days from her
dismissal, she filed her complaint well within the four-year prescriptive period.
Applying these principles in this case, we agree that Arriola’s claims for unpaid salaries have
prescribed. Arriola filed his complaint three years and one day from the time he was allegedly
dismissed and deprived of his salaries. Since a claim for unpaid salaries arises from employer-
employee relations, Article 291 of the Labor Code applies. Arriola’s claim for unpaid salaries was
filed beyond the three-year prescriptive period.
However, we find that Arriola’s claims for backwages, damages, and attorney’s fees arising from
his claim of illegal dismissal have not yet prescribed when he filed his complaint with the Regional
Arbitration Branch for the National Capital Region of the National Labor Relations Commission.
As discussed, the prescriptive period for filing an illegal dismissal complaint is four years from the
time the cause of action accrued. Since an award of backwages is merely consequent to a
declaration of illegal dismissal, a claim for backwages likewise prescribes in four years.
The four-year prescriptive period under Article 1146 also applies to actions for damages due to
illegal dismissal since such actions are based on an injury to the rights of the person dismissed. In
this case, Arriola filed his complaint three years and one day from his alleged illegal dismissal .He,
therefore, filed his claims for backwages, actual, moral and exemplary damages, and attorney’s
fees well within the four-year prescriptive period.
Arriola abandoned his employment with Pilipino Star Ngayon, Inc.
We agree that Pilipino Star Ngayon, Inc. did not illegally dismiss Arriola. As the Court of Appeals
ruled, "the removal of [Arriola’s] column from private respondent [Pilipino Star Ngayon, Inc.’s
newspaper] is not tantamount to a termination of his employment as his job is not dependent on
the existence of the column ‘Tinig ng Pamilyang OFWs.’" When Pilipino Star Ngayon, Inc.
removed "Tinig ng Pamilyang OFWs" from publication, Arriola remained as section editor.
Moreover, a newspaper publisher has the management prerogative to determine what columns to
print in its newspaper. As the Court of Appeals held:
. . . it is a management prerogative of private respondent [Pilipino Star Ngayon, Inc.] to

decide on what sections should and would appear in the newspaper publication taking
into consideration the business viability and profitability of each section. Respondent
[Pilipino Star Ngayon, Inc.] decided to replace the "Pamilyang OFWs"section with another
which it ought would better sell to the reading public. Every business enterprise endeavors
to increase its profits. In the process, it may adopt or devise means designed towards that
goal. Even as the law is solicitous of the welfare of the employees, it must also protect the
right of an employer to exercise what are clearly management prerogatives. . . . The free
will of management to conduct its own business affairs to achieve its purposes cannot be
denied.
Arriola abandoned his employment with Pilipino Star Ngayon, Inc. Abandonment is the "clear,
deliberate and unjustified refusal of an employee to continue his employment, without any
intention of returning." It has two elements: first, the failure to report for work or absence without
valid or justifiable reason and, second, a clear intention to sever employer-employee relations
exists. The second element is "the more determinative factor and is manifested by overt acts from
which it may be deduced that the employee has no more intention to work." Assuming that Arriola
started writing for Imbestigador only on February 17, 2003, he nonetheless failed to report for
work at Pilipino Star Ngayon, Inc. after November 15, 1999 and only filed his illegal dismissal
complaint on November 15, 2002. He took three years and one day to remedy his dismissal. This
shows his clear intention to sever his employment with Pilipino Star Ngayon, Inc.
Contrary to Arriola’s claim, Villar v. NLRC, Globe Telecom, Inc. v. Florendo-Flores, and Anflo

Management & Investment Corp. v. Bolanio do not apply to this case. In these cases, the dismissed
workers immediately took steps to remedy their dismissal, unlike Arriola who "slept on his
rights." In Villar, the workers filed their complaint within the month they were dismissed. In
Globe,the employee filed her complaint two months after she had been constructively
dismissed. In Anflo,the employee filed his complaint one day after he had been dismissed.
BENSON INDUSTRIES EMPLOYEES UNION-ALU-TUCP AND/OR VILMA GENON, EDISA

HORTELANO, LOURDES ARANAS, TONY FORMENTERA, RENEBOY LEYSON, MA. ALONA
ACALDO, MA. CONCEPCION ABAO, TERESITA CALINAWAN, NICIFORO CABANSAG,
STELLA BARONGO, MARILYN POTOT, WELMER ABANID, LORENZO ALIA, LINO
PARADERO, DIOSDADO ANDALES, LUCENA ABESIA, AND ARMANDO
YBAÑEZ, v. BENSON INDUSTRIES, INC.
G.R. No. 200746, August 06, 2014
The Facts
Respondent Benson Industries, Inc. (Benson) is a domestic corporation engaged in the

manufacturing of green coils with the brand name Lion-Tiger Mosquito Killer. On February 12,
2008, Benson sent its employees, including herein petitioners, a notice informing them of their
intended termination from employment, to be effected on March 15, 2008 on the ground of
closure and/or cessation of business operations. In consequence, the majority of Benson’s
employees resigned. Meanwhile, petitioners, through Benson Industries Employees Union-ALU-
TUCP (Union), filed a notice of strike, claiming that the company’s supposed closure was merely a
ploy to replace the union members with lower paid workers, and, as a result, increase its profit at
their expense. The strike did not, however, push through due to the parties’ amicable settlement
during the conciliation proceedings before the NCMB, whereby petitioners accepted Benson’s
payment of separation pay, computed at 15 days for every year of service, as per the parties’
Memorandum of Agreement dated April 9, 2008.cralawred
This notwithstanding, petitioners proffered a claim for the payment of additional separation pay
at the rate of four (4) days for every year of service. As basis, petitioners invoked Section 1, Article
VIII of the existing collective bargaining agreement (CBA) executed by and between the Union
and Benson which states that “[Benson] shall pay to any employee/laborer who is terminated from
the service without any fault attributable to him, a ‘Separation Pay’ equivalent to not less than
nineteen (19) days’ pay for every year of service based upon the latest rate of pay of the
employee/laborer concerned.” Benson opposed petitioners’ claim, averring that the separation
pay already paid to them was already more than what the law requires. Reaching an impasse on
the conflict, the parties referred the issue to voluntary arbitration, wherein the validity of Benson’s
closure was brought up as well.
In a Decision dated October 24, 2008, the VA ruled in favor of petitioners, and, thus, ordered
Benson to pay each of them separation benefits in “an amount equivalent to four (4) days for every
year of service based on the latest rate of pay of the [individual petitioner] concerned subject to
whatever legally valid deductions chargeable against [said individual petitioner] whenever
applicable.”
The VA ratiocinated that in computing the amount of separation benefits due to petitioners, the
basis should be the provision of the existing CBA between Benson and the Union which explicitly
states that should the employees be terminated through no fault of their own, they should be
awarded separation benefits at the rate of 19 days for every year of service. In this regard, the VA
opined that the provisions of the CBA should be given effect because it expresses the latest
agreement of the union and the company, not to mention the fact that it gives more benefits to
the employees.
Separately, the VA found adequate proof to support Benson’s position that it was indeed in a state
of insolvency, which, therefore, justified its closure and/or cessation of business operations on the
ground of serious business losses and/or financial reverses.
The CA reversed and set aside the VA’s ruling, and accordingly deleted the award of additional
separation benefits equivalent to four (4) days of work for every year of service. It held that
despite the express provision in the CBA stating that Benson should pay its employees who were
terminated without their fault separation benefits equivalent to at least 19 days’ pay for every year
of service, Benson cannot be compelled to do so considering its current financial status.
The Issues
Whether or not the CA correctly deleted the award to petitioners of additional separation
benefits equivalent to four (4) days of work for every year of service.
Ruling
Closure of business may be considered as a reversal of an employer’s fortune whereby there is a

complete cessation of business operations and/or an actual locking-up of the doors of the
establishment, usually due to financial losses. Under the Labor Code, it is treated as an authorized
cause for termination, aimed at preventing further financial drain upon an employer who cannot
anymore pay its employees since business has already stopped. As a form of recompense, the
employer is required to pay its employees separation benefits, except when the closure is due to
serious business losses. Article 297 (formerly Article 283) of the Labor Code, as amended, states
this rule:
Art. 297. Closure of Establishment and Reduction of Personnel. The employer may also terminate
the employment of any employee due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the provisions of this Title, x x x.
In case of retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (½) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall be considered
one (1) whole year. (Emphasis and underscoring supplied)
While serious business losses generally exempt the employer from paying separation benefits, it
must be pointed that the exemption only pertains to the obligation of the employer under Article
297 of the Labor Code. This is because of the law’s express parameter that mandates payment of
separation benefits “in case of closures or cessation of operations of establishment or undertaking
not due to serious business losses or financial reverses.” The policy distinction underlying Article
297 – that is, the distinction between closures due to serious business losses and those which are
not – was deftly discussed by the Court in the case of Cama v. Joni’s Food Services, Inc., as follows:
The Constitution, while affording full protection to labor, nonetheless, recognizes “the
right of enterprises to reasonable returns on investments, and to expansion and growth.”
In line with this protection afforded to business by the fundamental law, Article 283
[(now, Article 297)] of the Labor Code clearly makes a policy distinction. It is only in
instances of “retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business losses or
financial reverses” that employees whose employment has been terminated as a result
are entitled to separation pay. In other words, Article 283 [(now, Article 297)] of the
Labor Code does not obligate an employer to pay separation benefits when the closure
is due to serious losses. To require an employer to be generous when it is no longer in a
position to do so, in our view, would be unduly oppressive, unjust, and unfair to the
employer. Ours is a system of laws, and the law in protecting the rights of the working
man, authorizes neither the oppression nor the self-destruction of the employer. x x
x. (Emphasis supplied)
When the obligation to pay separation benefits, however, is not sourced from law (particularly,
Article 297 of the Labor Code), but from contract, such as an existing collective bargaining
agreement between the employer and its employees, an examination of the latter’s provisions
becomes necessary in order to determine the governing parameters for the said obligation. To
reiterate, an employer which closes shop due to serious business losses is exempt from paying
separation benefits under Article 297 of the Labor Code for the reason that the said provision
explicitly requires the same only when the closure is not due to serious business losses; conversely,
the obligation is maintained when the employer’s closure is not due to serious business losses. For
a similar exemption to obtain against a contract, such as a CBA, the tenor of the parties’
agreement ought to be similar to the law’s tenor. When the parties, however, agree to deviate
therefrom, and unqualifiedly covenant the payment of separation benefits irrespective of the
employer’s financial position, then the obligatory force of that contract prevails and its terms
should be carried out to its full effect. Verily, it is fundamental that obligations arising from
contracts have the force of law between the contracting parties and thus should be complied with
in good faith; and parties are bound by the stipulations, clauses, terms and conditions they have
agreed to, the only limitation being that these stipulations, clauses, terms and conditions are not
contrary to law, morals, public order or public policy. Hence, if the terms of a CBA are clear and
there is no doubt as to the intention of the contracting parties, the literal meaning of its
stipulations shall prevail.
In this case, it is undisputed that a CBA was forged by the employer, Benson, and its employees,
through the Union, to govern their relations effective July 1, 2005 to June 30, 2010. It is equally
undisputed that Benson agreed to and was thus obligated under the CBA to pay its employees
who had been terminated without any fault attributable to them separation benefits at the rate of
19 days for every year of service.
As may be gleaned from the following whereas clauses in a Memorandum of Agreement dated

November 20, 2003 between the parties, Benson had been fully aware of its distressed financial
condition even at the time of the previous CBA (effective from July 1, 2000 to June 30, 2005).
Benson even admits in its Comment that it was already saddled with loan from banks as early as
1997 and that it had been unable to service its loan obligations. And yet, nothing appears on
record to discount the fact that it still unqualifiedly and freely agreed to the separation pay
provision in the July 1, 2005 to June 30, 2010 CBA, its distressed financial condition
notwithstanding.
Thus, in view of the foregoing, the Court disagrees with the CA in negating Benson’s obligation to
pay petitioners their full separation benefits under the said agreement. The postulation that
Benson had closed its establishment and ceased operations due to serious business losses cannot
be accepted as an excuse to clear itself of any liability since the ground of serious business losses is
not, unlike Article 297 of the Labor Code, considered as an exculpatory parameter under the
aforementioned CBA. Clearly, Benson, with full knowledge of its financial situation, freely and
voluntarily entered into such agreement with petitioners. Hence, having failed to show that the
subject CBA provision on separation benefits is contrary to law, morals, public order or public
policy, or that the same can be interpreted as one with a condition – for instance, that the parties
actually contemplated non-payment of separation benefits in the event of closure due to serious
business losses – the Court is constrained to reinstate the October 24, 2008 VA Decision ordering
Benson to pay each of the petitioners separation benefits in “an amount equivalent to four (4)
days for every year of service based on the latest rate of pay of the [individual petitioner]
concerned, subject to whatever legally valid deductions chargeable against [said individual
petitioner], whenever applicable.”
Accordingly, finding no cogent reason for Benson not to comply with its obligations under the July
1, 2005 to June 30, 2010 CBA, and considering further that the interpretation of any law or
provision affecting labor should be interpreted in favor of labor, the Court hereby reverses the CA
Decision and reinstates the October 24, 2008 VA Decision.
GRACE CHRISTIAN HIGH SCHOOL, REPRESENTED BY ITS PRINCIPAL, DR. JAMES

TAN v. FILIPINAS A. LAVANDERA
G.R. No. 177845, August 20, 2014
The Facts
Filipinas was employed by petitioner Grace Christian High School (GCHS) as high school teacher
since June 1977, with a monthly salary of P18,662.00 as of May 31, 2001.
On August 30, 2001, Filipinas filed a complaint for illegal (constructive) dismissal, non-payment of
service incentive leave (SIL) pay, separation pay, service allowance, damages, and attorney’s fees
against GCHS and/or its principal, Dr. James Tan. She alleged that on May 11, 2001, she was
informed that her services were to be terminated effective May 31, 2001, pursuant to GCHS’
retirement plan which gives the school the option to retire a teacher who has rendered at least 20
years of service, regardless of age, with a retirement pay of one-half (½) month for every year of
service. At that time, Filipinas was only 58 years old and still physically fit to work. She pleaded
with GCHS to allow her to continue teaching but her services were terminated, contrary to the
provisions of Republic Act No. (RA) 7641, otherwise known as the “Retirement Pay Law.”
For their part, GCHS denied that they illegally dismissed Filipinas. They asserted that the latter
was considered retired on May 31, 1997 after having rendered 20 years of service pursuant to
GCHS’ retirement plan and that she was duly advised that her retirement benefits in the amount
of P136,210.00 based on her salary at the time of retirement, i.e., P13,621.00, had been deposited
to the trustee-bank in her name. Nonetheless, her services were retained on a yearly basis until
May 11, 2001 when she was informed that her year-to-year contract would no longer be renewed.
In a Decision dated March 26, 2002, the Labor Arbiter (LA) dismissed the illegal dismissal
complaint for lack of merit. The LA ruled that Filipinas was not terminated from employment but
was considered retired as of May 31, 1997 after rendering 20 years of service and was only
allowed by GCHS to continue teaching on a year-to-year basis (until May 31, 2001) in the exercise
of its option to do so under the aforementioned retirement plan until she was informed that her
contract would not be renewed.
Nonetheless, the LA found the retirement benefits payable under GCHS retirement plan to be
deficient vis-à-vis those provided under RA 7641, and, accordingly, awarded Filipinas retirement
pay differentials based on her latest salary.
GCHS filed an appeal before the NLRC.
The NLRC set aside the LA’s award, and ruled that Filipinas’ retirement pay should be computed
based on her monthly salary at the time of her retirement on May 31, 1997, i.e., P13,621.00.
Moreover, it held that under Article 287 of the Labor Code, as amended by RA 7641, the
retirement package consists of 15 days salary, plus 13th month pay and SIL pay pro-rated to their
one-twelfth (1/12) equivalent.
In view of the foregoing, the NLRC awarded Filipinas retirement pay differentials in the amount of
P27,057.20 consisting of one-twelfth (1/12) of the 13th month pay and SIL pay based on her salary
at the time of her retirement on May 31, 1997, or P13,621.00 multiplied by 20 years. It, however,
deleted the award of attorney’s fees for failure of Filipinas to show that GCHS had unreasonably
and in bad faith refused to pay her retirement benefits.
Aggrieved, Filipinas filed a petition for certiorari before the CA.
The CA affirmed with modification the NLRC’s Decision. It held that the Court, in the case
of Capitol Wireless, Inc. v. Sec. Confesor, has simplified the computation of “one-half month
salary” by equating it to “22.5 days” which is “arrived at after adding 15 days plus 2.5 days
representing one-twelfth of the 13th month pay, plus 5 days of [SIL].”
The CA further imposed legal interest at the rate of six percent (6%) per annum on the award
reckoned from the date of the filing of the illegal dismissal complaint until actual
payment pursuant to the Court’s Decision in Manuel L. Quezon University v. NLRC (MLQU v.
NLRC).
Unperturbed, GCHS filed the instant petition.
Issue
The essential issue in this case is whether or not the CA committed reversible error in using the
multiplier “22.5 days” in computing the retirement pay differentials of Filipinas.
Ruling
RA 7641, which was enacted on December 9, 1992, amended Article 287 of the Labor Code,
providing for the rules on retirement pay to qualified private sector employees in the absence of
any retirement plan in the establishment. The said law states that “an employee’s retirement
benefits under any collective bargaining [agreement (CBA)] and other agreements shall not be
less than those provided” under the same – that is, at least one-half (½) month salary for every
year of service, a fraction of at least six (6) months being considered as one whole year – and that
“[u]nless the parties provide for broader inclusions, the term one-half (½) month salary shall mean
fifteen (15) days plus one-twelfth (1/12) of the 13 th month pay and the cash equivalent of not
more than five (5) days of service incentive leaves.”
The foregoing provision is applicable where (a) there is no CBA or other applicable agreement
providing for retirement benefits to employees, or (b) there is a CBA or other applicable
agreement providing for retirement benefits but it is below the requirement set by law. Verily, the
determining factor in choosing which retirement scheme to apply is still superiority in terms of
benefits provided.
In the present case, GCHS has a retirement plan for its faculty and non-faculty members, which
gives it the option to retire a teacher who has rendered at least 20 years of service, regardless of
age, with a retirement pay of one-half (½) month for every year of service. Considering, however,
that GCHS computed Filipinas’ retirement pay without including one-twelfth (1/12) of her
13th month pay and the cash equivalent of her five (5) days SIL, both the NLRC and the CA
correctly ruled that Filipinas’ retirement benefits should be computed in accordance with Article
287 of the Labor Code, as amended by RA 7641, being the more beneficent retirement scheme.
They differ, however, in the resulting benefit differentials due to divergent interpretations of the
term “one-half (½) month salary” as used under the law.
The Court, in the case of Elegir v. Philippine Airlines, Inc., has recently affirmed that “one-half (½)
month salary means 22.5 days: 15 days plus 2.5 days representing one-twelfth (1/12) of the 13th
month pay and the remaining 5 days for [SIL].” The Court sees no reason to depart from this
interpretation. GCHS’ argument therefore that the 5 days SIL should be likewise pro-rated to their
1/12 equivalent must fail.
Section 5.2, Rule II of the Implementing Rules of Book VI of the Labor Code, as amended,
promulgated to implement RA 7641, further clarifies what comprises the “½ month salary” due a
retiring employee, to wit:
RULE II
Retirement Benefits
xxxx
SEC. 5. Retirement Benefits.
xxxx
5.2 Components of One-half (½) Month Salary. — For the purpose of determining the minimum
retirement pay due an employee under this Rule, the term “one-half month salary” shall include all
the following:
(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used herein, the term
“salary” includes all remunerations paid by an employer to his employees for services rendered
during normal working days and hours, whether such payments are fixed or ascertained on a time,
task, piece or commission basis, or other method of calculating the same, and includes the fair and
reasonable value, as determined by the Secretary of Labor and Employment, of food, lodging or
other facilities customarily furnished by the employer to his employees. The term does not include
cost of living allowance, profit-sharing payments and other monetary benefits which are not
considered as part of or integrated into the regular salary of the employees.
(b) The cash equivalent of not more than five (5) days of service incentive leave;
(c) One-twelfth of the 13th month pay due the employee.
(d) All other benefits that the employer and employee may agree upon that should be included in
the computation of the employee’s retirement pay.
x x x x (Emphases supplied)
The foregoing rules are, thus, clear that the whole 5 days of SIL are included in the computation of
a retiring employees’ pay, as correctly ruled by the CA.
Nonetheless, the Court finds that the award of legal interest at the rate of 6% per annum on the
amount of P68,150.00 representing the retirement pay differentials due Filipinas should be
reckoned from the rendition of the LA’s Decision on March 26, 2002 and not from the filing of the
illegal dismissal complaint as ordered by the CA, in accordance with the ruling in Eastern Shipping
Lines, Inc. v. CA (Eastern Shipping). Unlike in MLQU v. NLRC, where the retired teachers sued for
the payment of the deficiency in their retirement benefits, Filipinas’ complaint was for illegal
(constructive) dismissal, and the obligation to provide retirement pay was only determined upon
the rendition of the LA’s Decision, which also found the same to be deficient vis-à-vis those
provided under RA 7641. As such, it is only from the date of the LA’s Decision that GCHS’
obligation to pay Filipinas her retirement pay differentials may be deemed to have been
reasonably ascertained and its payment legally adjudged to be due, although the actual base for
the computation of legal interest shall be on the amount finally adjudged.
CRISPIN B. LOPEZ v. IRVINE CONSTRUCTION CORP. AND TOMAS SY SANTOS

G.R. No. 207253, August 20, 2014
The Facts
Respondent Irvine Construction Corp. (Irvine) is a construction firm with office address at San
Juan, Manila. It initially hired Lopez as laborer in November 1994 and, thereafter, designated him
as a guard at its warehouse in Dasmarifias, Cavite in the year 2000, with a salary of P238.00 per
day and working hours from 7 o'clock in the morning until 4 o'clock in the afternoon, without any
rest day. On December 18, 2005, Lopez was purportedly terminated from his employment,
whereupon he was told "Ikaw ay lay-off muna." Thus, on January 10, 2006, he filed a complaint for
illegal dismissal with prayer for the payment of separation benefits against Irvine before the
NLRC.
For its part, Irvine denied Lopez's claims, alleging that he was employed only as a laborer who,
however, sometimes doubled as a guard. As laborer, Lopez's duty was to bring construction
materials from the suppliers' vehicles to the company warehouse when there is a construction
project in Cavite. As evidenced by an Establishment Termination Report dated December 28,
2005 which Irvine previously submitted before the Department of Labor and Employment (DOLE),
Lopez was, however, temporarily laid-off on December 27, 2005 after the Cavite project was
finished. Eventually, Lopez was asked to return to work through a letter dated June 5, 2006 (return
to work order), allegedly sent to him within the six (6) month period under Article 286 of the
Labor Code which pertinently provides that "[t]he bona-fide suspension of the operation of a
business or undertaking for a period not exceeding six (6) months x x x shall not terminate
employment." As such, Irvine argued that Lopez's filing of the complaint for illegal dismissal was
premature.
Issue:
Whether or not Lopez was illegally dismissed.
Ruling
In the case at bar, Irvine asserts that it only temporarily laid-off Lopez from work on December 27,
2005 for the reason that its project in Cavite had already been finished. To support its claim, it
submitted the following pieces of evidence: ( a) a copy of an Establishment Termination Report
evidencing Lopez's lay-off; (b) a copy of the return to work order dated June 5, 2006; and (c) an
affidavit from Irvine's personnel manager, Aguinaldo Santos, which purports that said return to
work order was sent to Lopez by ordinary mail on June 5, 2006. The CA gave credence to the
foregoing and thus granted Irvine's certiorari petition against the NLRC ruling which affirmed the
LA's finding of illegal dismissal.
The CA is mistaken.
As the NLRC correctly ruled in this case, Lopez, who, as earlier discussed was a regular employee
of Irvine, was not merely temporarily laid off from work but was terminated from his employment
without any valid cause therefor; thus, the proper disposition is to affirm the LA's ruling that Lopez
had been illegally dismissed.
Although the NLRC did not expound on the matter, it is readily apparent that the supposed lay-off
of Lopez was hardly justified considering the absence of any causal relation between the cessation
of Irvine's project in Cavite with the suspension of Lopez's work. To repeat, Lopez is a regular and
not a project employee. Hence, the continuation of his engagement with Irvine, either in Cavite,
or possibly, in any of its business locations, should not have been affected by the culmination of
the Cavite project alone. In light of the well-entrenched rule that the burden to prove the validity
and legality of the termination of employment falls on the employer, Irvine should have
established the bona fide suspension of its business operations or undertaking that would have
resulted in the temporary lay-off of its employees for a period not exceeding six (6) months in
accordance with Article 286 of the Labor Code. As enunciated in Nasipit Lumber Co. v. National
Organization of Workingmen (NOWM), citing Somerville Stainless Steel Corporation v. NLRC:
[T]he burden of proving, with sufficient and convincing evidence, that such closure or suspension
is bonafide falls upon the employer. As we ruled in Somerville Stainless Steel Corporation v. NLRC:
Considering the severe consequences occasioned by retrenchment on the livelihood of the
employee(s) to be dismissed, and the avowed policy of the State - under Sec. 3, Art. XIII of the
Constitution, and Art. 3 of the Labor Code - to afford full protection to labor and to assure the
employee's right to enjoy security of tenure, the Court reiterates that "not every loss incurred or
expected to be incurred by a company will justify retrenchment. The losses must be substantial
and the retrenchment must be reasonably necessary to avert such losses. Settled is the rule that
the employer bears the burden of proving this allegation of the existence or imminence of
substantial losses, which by its nature is an affirmative defense. It is the duty of the employer to
prove with Clear and satisfactory evidence that legitimate business reasons exist to justify
retrenchment. Failure to do so "inevitably results in a finding that the dismissal is unjustified." And
the determination of whether an employer has sufficiently and successfully discharged this burden
of proof "is essentially a question of fact for the Labor Arbiter and the NLRC to determine."
Otherwise, such ground for termination would be susceptible to abuse by scheming employers
who might be merely feigning business losses or reverses in their business ventures to ease out
employees. Emphasis supplied; citations omitted)
In this case, Irvine failed to prove compliance with the parameters of Article 286 of the Labor
Code. As the records would show, it merely completed one of its numerous construction projects
which does not, by and of itself, amount to a bona fide suspension of business operations or
undertaking. In invoking Article 286 of the Labor Code, the paramount consideration should be
the dire exigency of the business of the employer that compels it to put some of its employees
temporarily out of work. This means that the employer should be able to prove that it is faced with
a clear and compelling economic reason which reasonably forces it to temporarily shut down its
business operations or a particular undertaking, incidentally resulting to the temporary lay-off of
its employees.
Due to the grim economic consequences to the employee, case law states that the employer
should also bear the burden of proving that there are no posts available to which the employee
temporarily out of work can be assigned. Thus, in the case of Mobile Protective & Detective
Agency v. Ompad, the Court found that the security guards therein were constructively dismissed
considering that their employer was not able to show any dire exigency justifying the latter's
failure to give said employees any further assignment, viz.:
[Article 286 of the Labor Code] has been applied by analogy to security guards in a security
agency who are placed "off detail" or on "floating" status. In security agency parlance, to be
placed "off detail" or on "floating" status means "waiting to be posted." Pursuant to Article 286 of
the Labor Code, to be put off detail or in floating status requires no less than the dire exigency of
the employer's bona fide suspension of operation, business or undertaking. In security services,
this happens when there is a surplus of security guards over available assignments as when the
clients that do not renew their contracts with the security agency are more than those clients that
do and the new ones that the agency gets.
Again, petitioners only alleged that respondent's last assignment was with VVCC for the period of
September 29 to October 31, 1997. He was not given further assignment as he allegedly went on
AWOL and lost interest to work. As explained, these claims are unconvincing. Worse still, they are
inadequate under the law. The records do not show that there was a lack of available post after
October 1997. It appears that petitioners simply stopped giving respondent any
assignment. Absent any dire exigency justifying their failure to give respondent further
assignment, the only logical conclusion is that respondent was constructively
dismissed. (Emphases supplied)
The same can be said of the employee in this case as no evidence was submitted by Irvine to show
any dire exigency which rendered it incapable of assigning Lopez to any of its projects. Add to this
the fact that Irvine did not proffer any sufficient justification for singling out Lopez for lay-off
among its other three hundred employees, thereby casting a cloud of doubt on Irvine's good faith
in pursuing this course of action. Verily, Irvine cannot conveniently suspend the work of any of its
employees in the guise of a temporary lay-off when it has not shown compliance with the legal
parameters under Article 286 of the Labor Code. With Irvine failing to prove such compliance, the
resulting legal conclusion is that Lopez had been constructively dismissed; and since the same was
effected without any valid cause and due process, the NLRC properly affirmed the LA's ruling that
Lopez's dismissal was illegal.
OUR HAUS REALTY DEVELOPMENT CORPORATION v. ALEXANDER PARIAN, JAY

C. ERINCO, ALEXANDER CANLAS, BERNARD TENEDERO AND JERRY SABULAO
G.R. No. 204651, August 06, 2014
Facts
Respondents Alexander Parian, Jay Erinco, Alexander Canlas, Jerry Sabulao and Bernardo
Tenedero were all laborers working for petitioner Our Haus Realty Development Corporation
(Our Haus), a company engaged in the construction business.
Sometime in May 2010, Our Haus experienced financial distress. To alleviate its condition, Our
Haus suspended some of its construction projects and asked the affected workers, including the
respondents, to take vacation leaves.
Eventually, the respondents were asked to report back to work but instead of doing so, they filed
with the LA a complaint for underpayment of their daily wages. They claimed that except for
respondent Bernardo N. Tenedero, their wages were below the minimum rates prescribed in the
following wage orders from 2007 to 2010:
1. Wage Order No. NCR-13, which provides for a daily minimum wage rate ofP362.00 for the
non-agriculture sector (effective from August 28, 2007 until June 13, 2008); and
2. Wage Order No. NCR-14, which provides for a daily minimum wage rate ofP382.00 for the
non-agriculture sector (effective from June 14, 2008 until June 30, 2010).
The respondents also alleged that Our Haus failed to pay them their holiday, service incentive
leave (SIL), 13th month and overtime pays.
Before the LA, Our Haus primarily argued that the respondents’ wages complied with the law’s
minimum requirement. Aside from paying the monetary amount of the respondents’ wages, Our
Haus also subsidized their meals (3 times a day), and gave them free lodging near the construction
project they were assigned to. In determining the total amount of the respondents’ daily wages,
the value of these benefits should be considered, in line with Article 97(f) of the Labor Code.
Our Haus also rejected the respondents’ other monetary claims for lack of proof that they were
entitled to it.
On the other hand, the respondents argued that the value of their meals should not be considered
in determining their wages’ total amount since the requirements set under Section 4 of DOLE
Memorandum Circular No. 2 were not complied with.
The respondents pointed out that Our Haus never presented any proof that they agreed in writing
to the inclusion of their meals’ value in their wages. Also, Our Haus failed to prove that the value
of the facilities it furnished was fair and reasonable. Finally, instead of deducting the maximum
amount of 70% of the value of the meals, Our Haus actually withheld its full value (which was
Php290.00 per week for each employee).l
The LA ruled in favor of Our Haus. He held that if the reasonable values of the board and lodging
would be taken into account, the respondents’ daily wages would meet the minimum wage
rate. As to the other benefits, the LA found that the respondents were not able to substantiate
their claims for it.
The respondents appealed the LA’s decision to the NLRC, which in turn, reversed it. Citing the
case of Mayon Hotel & Restaurant v. Adana, the NLRC noted that the respondents did not
authorize Our Haus in writing to charge the values of their board and lodging to their wages.
Thus, the same cannot be credited.
The CA dismissed Our Haus’ certiorari petition and affirmed the NLRC rulings in toto
Ruling
No substantial distinction between

deducting and charging a facility’s
value from the employee’s wage;
the legal requirements for creditability
apply to both
To justify its non-compliance with the requirements for the deductibility of a facility, Our Haus
asks us to believe that there is a substantial distinction between the deduction and the charging of
a facility’s value to the wages. Our Haus explains that in deduction, the amount of the wage
(which may already be below the minimum) would still be lessened by the facility’s value, thus
needing the employee’s consent. On the other hand, in charging, there is no reduction of the
employee’s wage since the facility’s value will just be theoretically added to the wage for purposes
of complying with the minimum wage requirement.
Our Haus’ argument is a vain attempt to circumvent the minimum wage law by trying to create a
distinction where none exists.
In reality, deduction and charging both operate to lessen the actual take-home pay of an
employee; they are two sides of the same coin. In both, the employee receives a lessened amount
because supposedly, the facility’s value, which is part of his wage, had already been paid to him in
kind. As there is no substantial distinction between the two, the requirements set by law must
apply to both.
As the CA correctly ruled, these requirements, as summarized in Mabeza, are the following:
a. proof must be shown that such facilities are customarily furnished by the trade;
b. the provision of deductible facilities must be voluntarily accepted in writing by the
employee; and
c. The facilities must be charged at fair and reasonable value.
We examine Our Haus’ compliance with each of these requirements in seriatim.
The facility must be customarily

furnished by the trade
In a string of cases, we have concluded that one of the badges to show that a facility is customarily
furnished by the trade is the existence of a company policy or guideline showing that provisions
for a facility were designated as part of the employees’ salaries. To comply with this, Our Haus
presented in its motion for reconsideration with the NLRC the joint sinumpaang salaysay of four
of its alleged employees. These employees averred that they were recipients of free lodging,
electricity and water, as well as subsidized meals from Our Haus.
We agree with the NLRC’s finding that the sinumpaang salaysay statements submitted by Our
Haus are self-serving. For one, Our Haus only produced the documents when the NLRC had
already earlier determined that Our Haus failed to prove that it was traditionally giving the
respondents their board and lodging. This document did not state whether these benefits had
been consistently enjoyed by the rest of Our Haus’ employees. Moreover, the records reveal that
the board and lodging were given on a per project basis. Our Haus did not show if these benefits
were also provided in its other construction projects, thus negating its claimed customary nature.
Even assuming the sinumpaang salaysay to be true, this document would still work against Our
Haus’ case. If Our Haus really had the practice of freely giving lodging, electricity and water
provisions to its employees, then Our Haus should not deduct its values from the respondents’
wages. Otherwise, this will run contrary to the affiants’ claim that these benefits were traditionally
given free of charge.
Apart from company policy, the employer may also prove compliance with the first requirement
by showing the existence of an industry-wide practice of furnishing the benefits in question
among enterprises engaged in the same line of business. If it were customary among construction
companies to provide board and lodging to their workers and treat their values as part of their
wages, we would have more reason to conclude that these benefits were really facilities.
However, Our Haus could not really be expected to prove compliance with the first requirement
since the living accommodation of workers in the construction industry is not simply a matter of
business practice. Peculiar to the construction business are the occupational safety and health
(OSH) services which the law itself mandates employers to provide to their workers. This is to
ensure the humane working conditions of construction employees despite their constant exposure
to hazardous working environments. Under Section 16 of DOLE Department Order (DO) No. 13,
series of 1998, employers engaged in the construction business are required to provide the
following welfare amenities:
16.1 Adequate supply of safe drinking water
16.2 Adequate sanitary and washing facilities
16.3 Suitable living accommodation for workers, and as may be applicable, for their families
16.4 Separate sanitary, washing and sleeping facilities for men and women workers. [emphasis
ours]
Moreover, DOLE DO No. 56, series of 2005, which sets out the guidelines for the implementation
of DOLE DO No. 13, mandates that the cost of the implementation of the requirements for the
construction safety and health of workers, shall be integrated to the overall project cost. The
rationale behind this is to ensure that the living accommodation of the workers is not substandard
and is strictly compliant with the DOLE’s OSH criteria.
As part of the project cost that construction companies already charge to their clients, the value of
the housing of their workers cannot be charged again to their employees’ salaries. Our Haus
cannot pass the burden of the OSH costs of its construction projects to its employees by
deducting it as facilities. This is Our Haus’ obligation under the law.
Lastly, even if a benefit is customarily provided by the trade, it must still pass the purpose test set
by jurisprudence. Under this test, if a benefit or privilege granted to the employee is clearly for
the employer’s convenience, it will not be considered as a facility but a supplement. Here, careful
consideration is given to the nature of the employer’s business in relation to the work performed
by the employee. This test is used to address inequitable situations wherein employers consider a
benefit deductible from the wages even if the factual circumstances show that it clearly redounds
to the employers’ greater advantage.
While the rules serve as the initial test in characterizing a benefit as a facility, the purpose test
additionally recognizes that the employer and the employee do not stand at the same bargaining
positions on benefits that must or must not form part of an employee’s wage. In the ultimate
analysis, the purpose test seeks to prevent a circumvention of the minimum wage law.
a1. The purpose test in jurisprudence
Under the law, only the value of the facilities may be deducted from the employees’ wages but not
the value of supplements. Facilities include articles or services for the benefit of the employee or
his family but exclude tools of the trade or articles or services primarily for the benefit of the
employer or necessary to the conduct of the employer’s business.
The law also prescribes that the computation of wages shall exclude whatever benefits
supplements or allowances given to employees. Supplements are paid to employees on top of
their basic pay and are free of charge. Since it does not form part of the wage, a supplement’s
value may not be included in the determination of whether an employer complied with the
prescribed minimum wage rates.
In the present case, the board and lodging provided by Our Haus cannot be categorized
as facilities but as supplements. In SLL International Cables Specialist v. National Labor Relations
Commission,49 this Court was confronted with the issue on the proper characterization of the free
board and lodging provided by the employer. We explained:
The Court, at this point, makes a distinction between “facilities” and “supplements”. It is of the
view that the food and lodging, or the electricity and water allegedly consumed by private
respondents in this case were not facilities but supplements. In the case of Atok-Big Wedge Assn.
v. Atok-Big Wedge Co., the two terms were distinguished from one another in this wise:
“Supplements”, therefore, constitute extra remuneration or special privileges or benefits given to

or received by the laborers over and above their ordinary earnings or wages. “Facilities”, on the
other hand, are items of expense necessary for the laborer's and his family's existence and
subsistence so that by express provision of law (Sec. 2[g]), they form part of the wage and when
furnished by the employer are deductible therefrom, since if they are not so furnished, the laborer
would spend and pay for them just the same.
In short, the benefit or privilege given to the employee which constitutes an extra remuneration
above and over his basic or ordinary earning or wage is supplement; and when said benefit or
privilege is part of the laborers' basic wages, it is a facility. The distinction lies not so much in the
kind of benefit or item (food, lodging, bonus or sick leave) given, but in the purpose for which it is
given. In the case at bench, the items provided were given freely by SLL for the purpose of
maintaining the efficiency and health of its workers while they were working at their respective
projects.
Ultimately, the real difference lies not on the kind of the benefit but on the purpose why it was
given by the employer. If it is primarily for the employee’s gain, then the benefit is a facility; if its
provision is mainly for the employer’s advantage, then it is a supplement. Again, this is to ensure
that employees are protected in circumstances where the employer designates a benefit as
deductible from the wages even though it clearly works to the employer’s greater convenience or
advantage.
Under the purpose test, substantial consideration must be given to the nature of the employer’s
business in relation to the character or type of work performed by the employees involved.
Our Haus is engaged in the construction business, a labor-intensive enterprise. The success of its
projects is largely a function of the physical strength, vitality and efficiency of its laborers. Its
business will be jeopardized if its workers are weak, sickly, and lack the required energy to
perform strenuous physical activities. Thus, by ensuring that the workers are adequately and well
fed, the employer is actually investing on its business.
Unlike in office enterprises where the work is focused on desk jobs, the construction industry
relies heavily and directly on the physical capacity and endurance of its workers. This is not to say
that desk jobs do not require muscle strength; we simply emphasize that in the construction
business, bulk of the work performed are strenuous physical activities.
Moreover, in the construction business, contractors are usually faced with the problem of meeting
target deadlines. More often than not, work is performed continuously, day and night, in order to
finish the project on the designated turn-over date. Thus, it will be more convenient to the
employer if its workers are housed near the construction site to ensure their ready availability
during urgent or emergency circumstances. Also, productivity issues like tardiness and
unexpected absences would be minimized. This observation strongly bears in the present case
since three of the respondents are not residents of the National Capital Region. The board and
lodging provision might have been a substantial consideration in their acceptance of employment
in a place distant from their provincial residences.
Based on these considerations, we conclude that even under the purpose test, the subsidized
meals and free lodging provided by Our Haus are actually supplements. Although they also work
to benefit the respondents, an analysis of the nature of these benefits in relation to Our Haus’
business shows that they were given primarily for Our Haus’ greater convenience and advantage.
If weighed on a scale, the balance tilts more towards Our Haus’ side. Accordingly, their values
cannot be considered in computing the total amount of the respondents’ wages.
Under the circumstances, the daily wages paid to the respondents are clearly below the
prescribed minimum wage rates in the years 2007-2010.
The provision of deductible facilities

must be voluntarily accepted in writing
by the employee
In Mayon Hotel, we reiterated that a facility may only be deducted from the wage if the
employer was authorized in writing by the concerned employee. As it diminishes the take-home
pay of an employee, the deduction must be with his express consent.
Again, in the motion for reconsideration with the NLRC, Our Haus belatedly submitted five
kasunduans, supposedly executed by the respondents, containing their conformity to the inclusion
of the values of the meals and housing to their total wages. Oddly, Our Haus only offered these
documents when the NLRC had already ruled that respondents did not accomplish any written
authorization, to allow deduction from their wages. These five kasunduans were also undated,
making us wonder if they had really been executed when respondents first assumed their jobs.
Moreover, in the earlier sinumpaang salaysay by Our Haus’ four employees, it was not mentioned
that they also executed a kasunduan for their board and lodging benefits. Because of these
surrounding circumstances and the suspicious timing when the five kasunduans were submitted as
evidence, we agree with the CA that the NLRC committed no grave abuse of discretion in
disregarding these documents for being self serving.
The facility must be charged at a fair and reasonable value

Our Haus admitted that it deducted the amount of P290.00 per week from each of the
respondents for their meals. But it now submits that it did not actually withhold the entire amount
as it did not figure in the computation the money it expended for the salary of the cook, the
water, and the LPG used for cooking, which amounts to P249.40 per week per person. From these,
it appears that the total meal expense per week for each person is P529.40, making Our Haus’
P290.00 deduction within the 70% ceiling prescribed by the rules.
However, Our Haus’ valuation cannot be plucked out of thin air. The valuation of a facility must be
supported by relevant documents such as receipts and company records for it to be considered as
fair and reasonable. In Mabeza, we noted:
Curiously, in the case at bench, the only valuations relied upon by the labor arbiter in his decision
were figures furnished by the private respondent's own accountant, without corroborative
evidence. On the pretext that records prior to the July 16, 1990 earthquake were lost or
destroyed, respondent failed to produce payroll records, receipts and other relevant documents,
where he could have, as has been pointed out in the Solicitor General's manifestation, “secured
certified copies thereof from the nearest regional office of the Department of Labor, the SSS or
the BIR”. [emphasis ours]
In the present case, Our Haus never explained how it came up with the values it assigned for the
benefits it provided; it merely listed its supposed expenses without any supporting document.
Since Our Haus is using these additional expenses (cook’s salary, water and LPG) to support its
claim that it did not withhold the full amount of the meals’ value, Our Haus is burdened to present
evidence to corroborate its claim. The records however, are bereft of any evidence to support Our
Haus’ meal expense computation. Even the value it assigned for the respondents’ living
accommodations was not supported by any documentary evidence. Without any corroborative
evidence, it cannot be said that Our Haus complied with this third requisite.
DR. PHYLIS C. RIO vs. COLEGIO DE STA. ROSA MAKATI

and/or SR. MARILYN B. GUSTILO
G.R. No. 189629, August 6, 2014
The Facts
Petitioner was hired by respondent Colegio De Sta. Rosa-Makati as a part-time school physician in
June 1993. Petitioner was required to report for work for four (4) hours every week with a salary
of P12,640.00 per month.
In February 2002 or after almost ten (10) years of service, petitioner received a Contract of
Appointment from Sr. Marilyn B. Gustilo (respondent Gustilo), Directress/Principal, requiring
petitioner to report from Monday to Friday, from 8:00 a.m. to 3:00 p.m., with a salary
of P12,500.00 per month. Due to the substantial change in the work schedule and decrease in her
salary, petitioner declined the Contract of Appointment.
On 24 June 2002, through a Memorandum from respondent Gustilo, petitioner was informed of a
new work schedule. The Memorandum required petitioner to report daily during the work week,
to wit: Mondays, Wednesdays, Fridays from 8:00 a.m. to11:00 a.m.; Tuesdays and Thursdays at 1:00
p.m. to 4:00 p.m.
In opposition, petitioner wrote respondent Gustilo a letter refusing the unilateral change in her
work schedule. In response, respondent Gustilo revised the new work schedule to every Tuesdays
from 7:00 a.m. to 11:00 a.m.
In a letter dated 30 July 2002, respondent Gustilo charged petitioner and Mrs. Neneth Alonzo
(Alonzo), the school nurse, of "grave misconduct, dishonesty and/or gross neglect of duty
detrimental not only to the school but, principally, to the health and well-being of the pupils
based on the Manual of Regulations for Private Schools and Section 94 (a) and (b) and Article 282
(a), (b) and (c) of the LaborCode." In the same letter, petitioner and Alonzo were preventively
suspended for a period of thirty (30) days, effective 30 July 2002.
Petitioner was made to answer for the following: (1) nine (9) students have medical records for
school years during which they were not in the school yet, thus could not havebeen the subject of
medical examination/evaluation; (2) seventy-nine (79) students of several classes/sections during
certain school years were not given any medical/health evaluation/examination; and (3) failure to
conduct medical/health examination on all students of several classes of different grade levels for
the school year 2001-2002.
Petitioner denied the charges through a letter to respondent on 2 August 2002. On 9 August 2002
petitioner filed a complaint for constructive dismissal and illegal suspension against respondents
Colegio de Sta. RosaMakati and Gustilo before the Labor Arbiter.
Upon the filing of the parties’ respective Position Papers, Labor Arbiter Manuel Manansala ruled
in favor of petitioner and Alonzo, declaring that they were illegally dismissed.
On 10 January 2005, the NLRC reversed the ruling of the Labor Arbiter and likewise denied
petitioner’s subsequent motion for reconsideration on 7 April 2005.
Aggrieved, petitioner filed a Petition for Certiorari with the CA, which the CA denied.
Ruling
Petitioner failed to show that the NLRC exercised its judgment capriciously, whimsically,
arbitrarily or despotically by reason of passion and hostility. Such a showing is needed for a
reversal of the ruling of the CA here questioned.
In fact, the antecedents of the letter dated 30 July 2002 show that respondent Colegio de Sta.
Rosa-Makati had enough reason to, as it did, terminate the services of petitioner.
Based on Article 282 of the Labor Code, in relation to Section 94 of the 1992 Manual of
Regulations for Private Schools, petitioner was legally dismissed on the ground of gross
inefficiency and incompetence, and negligence in the keeping of school or student records, or
tampering with or falsification of records.
As we already held, gross inefficiency is closely related to gross neglect because both involve
specific acts of omission resulting in damage to another. Gross neglect of duty or gross negligence
refers to negligence characterized by the want of even slight care, acting or omitting to act in a
situation where there is a duty to act, not inadvertently but willfully and intentionally, with a
conscious indifference to consequences insofar as other persons may be affected. As borne by the
records, petitioner’s actions fall within the purview of the above-definitions. Petitioner failed to
diligently perform her duties. It was unrefuted that: (1) there were dates when a medical
examination was supposed to have been conducted and yet the dates fell on weekends; (2) failure
to conduct medical examination on all students for two (2) to five (5) consecutive years; (3) lack of
medical records on all students; and (4) students having medical records prior to their enrollment.
As her defense, petitioner maintains that the discrepancies were due to the loss of the cabinet
key, which was misplaced by Sr. Zenaida, the personin-charge. Because the cabinet, which
contains the official medical records, could not be opened, Alonzo had to record the medical
examinations temporarily. Due to pressure and time constraints, Alonzo erroneously transferred
the entries of the medical examinations tothe official records.
However, petitioner waited for two (2) years to finally have the cabinet opened. As correctly
found by the CA:
x x x If petitioner had beenattentive to her work as she claims, this cabinet could not have been
left dormant for two years as she would have been regularly updating her records and checking on
them. x x x Assuming that the cabinet was indeed locked, the fact that she did not bother to have
it opened for two years only showed that she had no need to use the files contained therein
because she had not been maintaining and updating the medical records as she had not been
performing her job actively conducting routine physical examination on the students as required
of her.19 x x x
The CA went further, stating, "even assuming that petitioner was telling the truth, the fact remains
that she had been grossly inefficient and negligent for failing to provide a proper system of
maintaining and updating the students' medical records over the years of her employment with
respondent." Indeed, petitioner was grossly inefficient and negligent in performing her duties.
CONRADO A. LIM v. HMR PHILIPPINES, INC., TERESA SANTOS-CASTRO, HENRY BUNAG AND
NELSON CAMILLER
G.R. No. 201483, August 04, 2014
Facts:
Petitioner filed a case for illegal dismissal and money claims against respondents, HMR
Philippines, Inc. (HMR) and its officers The LA dismissed the complaint for lack of merit. The
National Labor Relations Commission (NLRC) reversed the LA and declared Lim to have been
illegally dismissed. The LA issued the order granting the motion for execution filed by Lim.
Holding that the backwages should be reckoned until April 11, 2003 only in accordance with the
NLRC decision.
Issue:
Whether the computation of backwages should be reckoned until the promulgation of the NLRC
Decision on April 11, 2003 or until actual reinstatement?
Ruling:
It is beyond question that Lim was illegally dismissed by HMR. All that remains to be settled is the
exact amount owing to petitioner as an illegally dismissed employee. Article 279 of the Labor
Code is clear in providing that an illegally dismissed employee is entitled to his full backwages
computed from the time his compensation was withheld up to the time of his actual
reinstatement.
The act of complainant-appellant herein, do not constitute a serious misconduct as to justify his
dismissal. As such, he is, thus, entitled to reinstatement to his former position as Assistant
Technical Manager, unless such position no longer exists, in which case, he shall be given a
substantially equivalent position without loss of seniority rights. He is, likewise, entitled to his full
backwages from the time he was illegally dismissed until his actual reinstatement. Considering
that the judgment decreeing the computation of backwages up to the promulgation of the NLRC
decision has long become final and executory, the key question is whether a recomputation of
backwages up to the date of the actual reinstatement of Lim would violate the principle of
immutability of judgments.
The rule is that it is the dispositive portion that categorically states the rights and obligations of
the parties to the dispute as against each other. Thus, it is the dispositive portion that must be
enforced to ensure the validity of the execution. That a judgment should be implemented
according to the terms of its dispositive portion is a long and well-established rule. A companion
to this rule is the principle of immutability of final judgments. Save for recognized exceptions, a
final judgment may no longer be altered, amended or modified, even if the alteration,
amendment or modification is meant to correct what is perceived to be an erroneous conclusion
of fact or law and regardless of what court renders it. Any attempt to insert, change or add matters
not clearly contemplated in the dispositive portion violates the rule on immutability of judgments.
No essential change is being made by a recomputation because such is a necessary consequence

which flows from the nature of the illegality of the dismissal. To reiterate, a recomputation, or an
original computation, if no previous computation was made, as in the present case, is a part of the
law that is read into the decision, namely, Article 279 of the Labor Code and established
jurisprudence.31 Article 279 provides for the consequences of illegal dismissal, one of which is the
payment of full backwages until actual reinstatement,qualified only by jurisprudence when
separation pay in lieu of reinstatement is allowed, where the finality of the illegal dismissal
decision instead becomes the reckoning point.32cralawred
The nature of an illegal dismissal case requires that backwages continue to add on until full
satisfaction. The computation required to reflect full satisfaction does not constitute an alteration
or amendment of the final decision being implemented as the illegal dismissal ruling stands. Thus,
in the present case, a computation of backwages until actual reinstatement is not a violation of
the principle of immutability of final judgments.wred
It must be noted that the NLRC did not err in awarding the unpaid salary increase for the years
1998-2000 as such did not constitute backwages as a consequence of the petitioner’s illegal
dismissal, but was earned and owing to the petitioner before he was illegally terminated. Whether
or not holiday pay is included in the monthly salary of an employee, may be gleaned from the
divisors used by the company in the computation of overtime pay and employees’ absences. An
HMR employee is entitled to conversion of unused sick leave, subject only to the general
manager’s discretion as to the form it will take, namely – cash, time-off, or vacation allowance.
Considering that the conversion options of time-off and vacation allowance are no longer feasible
because the petitioner was illegally dismissed, he is now entitled to have his unused sick leaves
converted to cash.
MONCHITO R. AMPELOQUIO v. JAKA DISTRIBUTION, INC.,

G.R. No. 196936, July 02, 2014
Facts;
Petitioner Monchito R. Ampeloquio (Ampeloquio) is a reinstated employee of respondent Jaka

Distribution, Inc. (JAKA), formerly RMI Marketing Corporation (RMI).
Previously, Ampeloquio had filed a complaint for illegal dismissal against RMI before the National
Labor Relations Commission (NLRC). Subsequently, the Labor Arbiter found RMI guilty of illegal
dismissal.
On 6 August 2004, Ampeloquio resumed work as merchandiser at JAKA and reported at JAKA’s
outlets within Metro Manila, Shopwise Makati and Alabang. He received a daily wage of P252.00,
without meal and transportation allowance.
On 4 April 2005, Ampeloquio was transferred outside of Metro Manila, to Lucena City and
subsequently to San Pablo City. At that time, he was receiving the same daily wage of P252.00,
without meal and transportation allowance. Ampeloquio was given a monthly cost of living
allowance (COLA) of P720.00.
In a Letter dated 16 March 2005 addressed to JAKA’s general manager, Ampeloquio requested for
salary adjustment and benefits retroactive to the date of his reinstatement, 6 August 2004, and
payment of salary differential in the total amount of P42,196.00.
In another Letter dated 7 July 2006, Ampeloquio wrote JAKA reiterating his request for salary
adjustment and payment of benefits retroactive to his reinstatement, and an increase from his
previous request of salary differential which amounted to a total of P180,590.00.
Ampeloquio based his request on what other merchandisers of JAKA received:
[The] supposed daily wage [prevailing at the time of his reinstatement] was P394.12, COLA
at P1,200.00 per month, meal allowance of P60.00 and transportation allowance from
house to outlet [and] vice-versa that his co-employees in the same job received P4,500.00
or P281.25 daily wage actual cost of transportation expenses and meal allowance of
P60.00 per day; that a messengerial employee receives P394.21 or P9,641.00 monthly
salary plus transportation and meal allowance; x x x.
Because of the discrepancy in wages, Ampeloquio filed anew before the NLRC, a complaint for
underpayment of wages, COLA, non-payment of meal and transportation allowances docketed as
NLRC NCR Case No. 00-06-04702-06.
On 25 May 2007, Labor Arbiter Renaldo O. Hernandez granted Ampeloquio’s complaint for
underpayment of wages, basic and COLA and non-payment of allowances, meal and
transportation.
On appeal by JAKA, the NLRC proper, in its Resolution dated 29 November 2007 in NLRC LAC
NO. 08-002252-07, noted the exemption of JAKA from the pertinent Wage Order Nos. 10 & 11,
and consequently, modified the amounts ordered by the Labor Arbiter to be paid by JAKA to
Ampeloquio.
Aggrieved by the NLRC’s modification of what Ampeloquio obviously perceived as an acceptable

monetary award, the latter filed a petition for certiorari before the Court of Appeals bewailing
grave abuse of discretion in: (1) the reduction of his award of salary differential to only
P22,172.00; (2) the deletion of his entitlement to transportation expenses; and (3) the deletion of
the award of moral and exemplary damages.
The appellate court in dismissed Ampeloquio’s petition for certiorari finding no grave abuse of
discretion in the NLRC’s ruling and finding that, in fact, it is supported by substantial evidence.
Issue:
The scope viz-a-viz wages of reinstatement “without loss of seniority rights and other privileges.”
Ruling:
Seniority rights refer to the creditable years of service in the employment record of the illegally
dismissed employee as if he or she never ceased working for the employer. In other words, the
employee’s years of service is deemed continuous and never interrupted. Such is likewise the
rationale for reinstatement’s twin relief of full backwages.
Ampeloquio is correct in asserting that he is a senior employee compared to the other

merchandisers whom he himself designates as casual or contractual merchandisers. He is likewise
senior to other regular employees subsequently hired by JAKA, specifically two regular messenger
employees which Ampeloquio claims receive wages higher than what he is receiving from JAKA.
Attached to the recognition of seniority rights of a reinstated employee who had been illegally
dismissed is the entitlement to wages appurtenant thereto.
The case of Ampeloquio is outside the ordinary. His reinstatement was ordered when
merchandisers like him were no longer employed by JAKA.
He is not entitled to the same terms and conditions of employment as that which was offered to
the other regular employees (not merchandisers) subsequently hired by JAKA.
JAKA’s decision to grant or withhold certain benefits to other employees is part of its
management prerogative as a function of an employer’s constitutionally protected right to
reasonable return on investments.
Ampeloquio cannot likewise compare his wages to that received by “casual or contractual
merchandisers” or merchandisers who are admittedly outsourced from manpower agencies or
those who are considered seasonal employees hired only during peak season when JAKA is in
need of extra merchandisers.
To say the least, these merchandisers are not, strictly speaking, employees of JAKA, but of a
service provider company which has a service contract with JAKA. The merchandisers in this case
simply perform the work at JAKA’s outlets, wearing uniforms approved by JAKA but provided by
the service company who is actually their employer. There is no employer-employee relationship
between JAKA and these merchandisers.
Receipt by these merchandisers of a benefit such as transportation or meal allowance is part of the
monies they receive from their employer and embedded in the contract price of the service
agreement the employer has with JAKA.
The existence of an independent and permissible contractor relationship is generally established

by considering the following determinants: whether the contractor is carrying on an independent
business; the nature and extent of the work; the skill required; the term and duration of the
relationship; the right to assign the performance of a specified piece of work; the control and
supervision of the work to another; the employer's power with respect to the hiring, firing and
payment of the contractor's workers; the control of the premises; the duty to supply the premises,
tools, appliances, materials and labor; and the mode, manner and terms of payment.
On the other hand, existence of an employer-employee relationship is established by the

presence of the following determinants: (1) the selection and engagement of the workers; (2)
power of dismissal; (3) the payment of wages by whatever means; and (4) the power to control the
worker's conduct, with the latter assuming primacy in the overall consideration. 16
Section 8 of DOLE Department Order No. 10, series of 1997, illuminate:
Sec. 8. Job contracting. - There is job contracting permissible under the Code if the
following conditions are met:
(1) The contractor carries on an independent business and undertakes the contract work
on his own account under his own responsibility according to his own manner and method,
free from the control and direction of his employer or principal in all matters connected
with the performance of the work except as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of his
business.
In the same vein, seasonal employees hired only for the peak season do not have the same status
as regular employees and do not receive amounts considered as part of a compensation and
benefits scheme for regular employees. These seasonal employees only receive payment for work
rendered during the period for which they were hired, i.e., peak season. The wages and other
monies seasonal employees may receive for the duration of their limited employment period
constitute bulk or wholesale payment for services rendered.
Seasonal employment involves work or service that is seasonal in nature or lasting for the duration
of the season. Seasonal employees differ from those classified as regular employees, in that: (1)
the employee must be performing work or services that are seasonal in nature; and (2) he had
been employed for the duration of the season.
The phrase without loss of seniority rights applies with practical and real effect to Ampeloquio
upon his retirement because he will reach earlier than other regular employees of JAKA the
required number of years of service to qualify for retirement.
In all, the labor tribunals were right in using as guidepost the existing statutory minimum wages
and COLA during the three (3) year prescriptive period within which Ampeloquio can make his
money claims.
We are not unaware that reinstatement is the rule and such covers reinstatement to the same or
substantially equivalent position without loss of seniority rights and privileges.
In this case, JAKA did not claim exceptions to the rule of reinstatement, i.e., (1) strained relations,
or (2) abolition of the position; JAKA immediately complied with the Labor Arbiter’s order of
reinstatement.
We note that, specifically, JAKA could have claimed that the position of merchandiser no longer
exists and has been abolished with the contracting of this job function. However, it merely opted
to reinstate Ampeloquio to the same position. There is no quarrel that with his reinstatement,
Ampeloquio is now the lone regular merchandiser of JAKA.
The option of reinstatement to a substantially equivalent position does not apply herein as
reinstatement to a substantially equivalent position entails the same or similar job functions and
not just same wages or salary. As applied to this case, Ampeloquio cannot be reinstated to a
messengerial position although such is a regular employment enjoying the same employment
benefits and privileges. His employment cannot likewise be converted into a contractual
employment as such is actually a downgrade from his regular employment enjoying security of
tenure with JAKA.
As the sole regular merchandiser of JAKA, Ampeloquio’s reinstatement entitles him, at the
minimum, to the standard minimum wage at the time of his employment and to the wages he
would have received from JAKA had he not been illegally dismissed, as if there was no cessation of
employment. Ampeloquio is likewise entitled to any increase which JAKA may have given across
the board to all its regular employees. To repeat, Ampeloquio is not entitled to all benefits or
privileges received by other employees subsequently hired by JAKA just by the fact of his seniority
in the service with JAKA.
The Court of Appeals was correct in its disquisition that:

x x x [W]ithout loss of seniority rights and benefits, this does not necessarily mean equal or
more rights than those employees hired by JAKA prior or subsequent to his reinstatement.
The rule on how much pay a reinstated employee shall receive is governed by paragraph 3
of Article 223 of the Labor Code which provides as follows:
x x x In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated in the payroll. The posting of a bond by the
employer shall not stay the execution for reinstatement provided therein.
xxxx
When [Ampeloquio] was reinstated on August 6, 2004, he is entitled to receive a salary
under the same terms and conditions prevailing prior to his dismissal, provided this
complies with the minimum wage law prevailing at the time of reinstatement, in
consonance to Article 99, 100 of P.D. No. 442, as amended. Thus, this Court finds and
agrees with the computation by the NLRC of [Ampeloquio’s] wage rate. While he
[Ampeloquio] may have been ordered reinstated to his former position without loss of
seniority rights and benefits, this Court cannot agree [with] the strained interpretation
given by [Ampeloquio] that since he is the most senior among his co-employees, he should
be entitled to the same amount of wages and benefits as that being received by them. x x x
Thus, when he was reinstated on August 6, 2004, the salary scale that governs shall be the
minimum wage rate then prevailing or his actual daily wage rate, which ever is higher.
The reduction of the salary differential award to Ampeloquio by the NLRC, and affirmed by the
appellate court, was correct given the exemption to Wage Order Nos. 10 & 11 granted to JAKA.
CRISANTO F. CASTRO, JR. vs ATENEO DE NAGA UNIVERSITY, FR. JOEL ABORA, and MR. EDWIN
BERNAL
G.R. No. 175293, July 23, 2014
Facts:
The petitioner started his employment with respondent Ateneo de Naga University (University) in
the first semester of school year 1960-1961. At the time of his dismissal, he was a regular and full-
time faculty member of the University's Accountancy Department in the College of Commerce.
Allegedly, he received on February 22, 2000 a letter from respondent Fr. Joel Tabora, SJ., the
University President, informing him that his contract (which was set to expire on May 31, 2000)
would no longer be renewed. After several attempts to discuss the matter with Fr. Tabora in
person, and not having been given any teaching load or other assignments effective June 2000, he
brought his complaint for illegal dismissal.
The University denied the allegation of illegal dismissal, and maintained that the petitioner was a
participant and regular contributor to the Ateneo de Naga Employees Retirement Plan (Plan); that
upon reaching the age of 60 years on June 26, 1999, he was deemed automatically retired under
the Plan; and that he had been allowed to teach after his retirement only on contractual basis.
On September 3, 2001, Labor Arbiter (LA) Jesus Orlando M. Quinones ruled in favor of the
petitioner. The LA declared the dismissal of complainant to be illegal and directed the
respondents to reinstate him and pay his backwages, moral and exemplary damages and
attorney’s fees.
Aggrieved, the respondents appealed to the NLRC. Simultaneously, they submitted a

manifestation stating that neither actual nor payroll reinstatement of the petitioner could be
effected because he had meanwhile been employed as a Presidential Assistant for Southern Luzon
Affairs with the position of Undersecretary; and that his reinstatement would result in dual
employment and double compensation which were prohibited by existing civil service rules and
regulations.
On July 12, 2002, the petitioner, citing the executory nature of the order for his reinstatement,
filed his motion to order the respondents to pay his salaries and benefits accruing in the period
from September 3, 2001 until July 3, 2002.
In his order dated October 10, 2002, LA Quinones, explaining that Article 223 of the Labor Code
granted to the employer the option to implement either a physical or a payroll reinstatement, and
that, therefore, the respondents must first exercise the option regardless of the petitioner's
employment with the Government, denied the petitioner's motion, but ordered the respondents
to exercise the option of either actual or payroll reinstatement of the petitioner
Dissatisfied, the petitioner filed a notice of partial appeal, but the notice was denied due course
on June 30, 2003.
Upon the denial of his motion for reconsideration, the petitioner elevated the matter to the CA by
petition for certiorari.
In the interim, on June 26, 2004, the petitioner executed a receipt and quitclaim in favor of the
University respecting his claim for the benefits under the Plan acknowledging his receipt of full
payment of benefits due him pursuant to the Employees’ retirement plan.
Meanwhile, the NLRC rendered its decision affirming with modification the ruling of the LA on the
petitioner's illegal dismissal case.
On motion for reconsideration, the NLRC reversed its ruling on August 31, 2005 and dismissed the
complaint for lack of merit.
In justifying its reversal of its decision, the NLRC held that his execution of the receipt and
quitclaim respecting his benefits under the Plan estopped the petitioner from pursuing other
claims arising from his employer-employee relationship with the University.
The Issues
Whether or not the petitioner's claim for the payment of accrued salaries and benefits for the
period that he was not reinstated was rendered moot and academic by: (a) his receipt of the
retirement benefits and execution of the corresponding receipt and quitclaim in favor of the
respondents; and (b) the dismissal of his complaint for illegal dismissal by the NLRC.
Ruling
Execution of the receipt and quitclaim was not a settlement

of the petitioner's claim for accrued salaries
The NLRC held that the petitioner was estopped from pursuing his complaint for illegal dismissal
upon his receipt of the benefits and his execution of the receipt and quitclaim. He insists,
however, that the payment he had received in protest pertained only to his retirement benefits.
We agree with the petitioner.
The text of the receipt and quitclaim was clear and straightforward, and it was to the effect that
the sum received by the petitioner represented ''full payment of benefits ... pursuant to the
Employee's retirement plan." As such, both the NLRC and the CA should have easily seen that the
quitclaim related only to the settlement of the retirement benefits, which benefits could not be
confused with the reliefs related to the complaint for illegal dismissal.
Worthy to stress is that retirement is of a different species from the reliefs awarded to an illegally
dismissed employee. Retirement is a form of reward for an employee's loyalty and service to the
employer, and is intended to help the employee enjoy the remaining years of his life, and to lessen
the burden of worrying about his financial support or upkeep. In contrast, the reliefs awarded to
an illegally dismissed employee are in recognition of the continuing employer-employee
relationship that has been severed by the employer without just or authorized cause, or without
compliance with due process.
Claim for accrued benefits should be sustained despite

dismissal of the petitioner's complaint
The petitioner argues that according to Roquero v. Philippine Airlines, Inc., the employer is
obliged to reinstate and to pay the wages of the dismissed employee during the period of appeal
until its reversal by the higher Court; and that because he was not reinstated either actually or by
payroll, he should be held entitled to the accrued salaries.
The argument of the petitioner is correct.
Article 279 of the Labor Code, as amended, entitles an illegally dismissed employee to
reinstatement. Article 223 of the Labor Code requires the reinstatement to be immediately
executory even pending appeal. With its intent being ostensibly to promote the benefit of the
employee, Article 223 cannot be the source of any right of the employer to remove the employee
should he fail to immediately comply with the order of reinstatement. In Roquero, the Court ruled
that the unjustified refusal of the employer to reinstate the dismissed employee would entitle the
latter to the payment of his salaries effective from the time when the employer failed to reinstate
him; thus, it became the ministerial duty of the LA to implement the order of reinstatement.
According to Triad Security & Allied Services v. Ortega, Jr., the law mandates the prompt
reinstatement of the dismissed or separated employee, without need of any writ of execution.
Furthermore, the rule is that all doubts in the interpretation and implementation of labor laws
should be resolved in favor of labor. In ruling that an order or award for reinstatement does not
require a writ of execution, the Court is simply adhering and giving meaning to this rule.
Henceforth, we rule that an award or order for reinstatement is self-executory. After receipt of
the decision or resolution ordering the employee's reinstatement, the employer has the right to
choose whether to re-admit the employee to work under the same terms and conditions
prevailing prior to his dismissal or to reinstate the employee in the payroll. In either instance, the
employer has to inform the employee of his choice. The notification is based on practical
considerations for without notice, the employee has no way of knowing if he has to report for
work or not.
Hence, for as long as the employer continuously fails to actually implement the reinstatement
aspect of the decision of the LA, the employer's obligation to the employee for his accrued
backwages and other benefits continues to accumulate.
The next issue concerns whether or not the petitioner's claim for accrued salaries from the time of
the issuance of the order of reinstatement by LA Quinones until his actual reinstatement in
November 2002 was rendered moot and academic by the reversal of the decision of the LA.
The Court holds that the order of reinstatement of the petitioner was not rendered moot and
academic. He remained entitled to accrued salaries from notice of the LA's order of reinstatement
until reversal thereof. In Islriz Trading v. Capada, we even clarified that the employee could be
barred from claiming accrued salaries only when the failure to reinstate him was without the fault
of the employer.
Considering that the respondents reinstated the petitioner only in November 2002, and that their
inability to reinstate him was without valid ground, they were liable to pay his salaries accruing
from the time of the decision of the LA (i.e., September 3, 2001) until his reinstatement in
November 2002. It did not matter that the respondents had yet to exercise their option to choose
between actual or payroll reinstatement at that point because the order of reinstatement was
immediately executory.
COLEGIO DE SAN JUAN DE LETRAN-CALAMBA

vs. ENGR. DEBORAH P. TARDEO
G.R. No. 190303 July 9, 2014
The Facts
Petitioner is an educational institution created and existing under Philippine laws with principal
office at Brgy. Bucal, Calamba City, Laguna. Respondent, on the other hand, was employed as a
full-time faculty member of the petitioner since 1985. In August 2006, responden twas elected as
Union President of Letran-Calamba Faculty and Employees Association (LECFEA) and served in
such capacity until she was suspended from work in 2008.
Respondent’s suspension arose from her request for Faculty Development Program and Fund
Assistance submitted for consideration of petitioner. In a Letter dated 25 March 2008, addressed
to Vice-President for Academic Affairs Dr. Rhodora Odejar, respondent manifested her intention
to participate in the 30th National Physics Seminar Workshop Convention in Siquijor State
College. In connection therewith, she requested for fund assistance in the amount of P17,000.00.
Attached to her request was a two-page invitation allegedly downloaded from Philippine Physics
Society’s (PPS) website which detailed the supposed expenses in the upcoming convention. The
foregoing request was recommended for approval by the Dean for College of Engineering, Engr.
Delfin Jacob (Jacob) and the Human Resource Director, Prof. Dulce Corazon T. Barraquio. During
pre-audit, the Vice-Presidentfor Finance and concurrently Letran’s Controller Rodolfo Ondevilla
(Ondevilla) noted that the supporting document appended to respondent’s request was altered.
While the documents appeared to have been taken from the PPS website, significant portions
thereof were missing which led him to conclude that the said parts were deliberately omitted by
respondent.
The missing portion reads:
The registration fee is P1,200.00. This covers seminar kit, certificates, snacks, membership fee,
Philippine Physics Journal, one dinner, and an educational trip. x x x Food costs P50.00 upwards
per meal.
It was gathered from the missing portions that respondent requested for the amount of P600.00
for the workshop kit when the same was already covered by the registration fee asit appears in the
PPS website.
Consequently, Ondevilla disapproved respondent’s request for fund assistance on the ground that
her fund request was significantly higher compared to the amount requested by another faculty
member who also wanted to participate in the same convention. While respondent requested for
the disbursement of the amount of P17,000.00, a certain Delorino only asked for P11,000.00. It
was noted that after the convention, Delorino’s actual expense was only P10,754.00.
Convinced that the misrepresentation committed by respondent constitutes a grave offense,

Jacob convened the Committee of Discipline to investigate the matter pursuant to the mandate of
the Faculty Handbook of 2006.
In a Letter dated 28 May 2008, respondent was informed that she is under investigation for
dishonesty and serious misconduct and was given the opportunity to defend herself.
During the hearing, respondent raised as a defense her good faith in omitting some parts of the
PPS invitation and asserted that she found no reason to attach the said portions since those are
not applicable to her.
After investigation, the Committee of Discipline found that respondent is guilty of dishonesty and
serious misconduct and meted out the penalty of suspension for one semester starting 19 August
2008 up to 20 December 2008. The Committee of Discipline found that respondent’s guilt was
established by her own admission that she deleted certain portions from the invitation before
attaching it to her fund request, and by the apparent disparity between the amount requested by
the respondent from that of another faculty member who also applied for fund assistance for the
same purpose.
Feeling aggrieved, respondent assailed the adverse decision of the Committee of Discipline to the
Office ofthe Voluntary Arbitrator arguing that she was denied of her right to due process when
she was not allowed to confront Ondevilla in person during the hearing. In her Complaint for
Illegal Suspension, respondent argued that she was unlawfully deprived of her salary and her
economic and social benefits under the Collective Bargaining Agreement (CBA) when petitioner
hastily suspended her from employment. Respondent finally claimed that petitioner was guilty of
unfair labor practice when, after her suspension from her job, she was prevented from entering
the school premises to perform her task as President of LECFEA.
The Issue
Whether or not respondent committed dishonesty and serious misconduct in knowingly

submitting a materially altered document to support her funding request.
Ruling
Petitioner contends that during the hearing before the Committee of Discipline, respondent
admitted that she altered a portion of the PPS invitation by knowingly deleting some information.
Petitioner argues that such alteration was done by respondent in order to hike up her expenses for
the convention from the actual and official fees as detailed by the organizers in their website. It
insists that such deletion was effected in order to justify her fund request for workshop kit in the
amount of P600.00 when in fact it is already covered by the seminar fee of P1,200.00. Contrary to
the ruling of the appellate court that respondent was not guilty of dishonesty, petitioner claims
that the deleted portion was necessary in order to conceal her falsification.
Banking on the findings of the appellate court, respondent, on the other hand, argues that her act
of omitting a portion of the invitation would not amount to serious misconduct or even simple
misconduct when ranged against the standards of existing jurisprudence. While respondent
concedes that she did attach some parts of the invitation to her fund request, she maintains that it
was done in good faith and it was not intended to cause damage to petitioner. Respondent claims
that her suspension was part of the management’s scheme to preclude her from performing her
functions as the Union President and exclude her from the CBA negotiation since her suspension
coincided with the contract negotiation period for CBA 2008-2013.
The Office of the Voluntary Arbitrator and the Court of Appeals are one in holding that
respondent was not guilty of serious misconduct when she omitted a portion of the invitation, and,
in effect, declared respondent’s suspension from employment for one semester, unlawful. For
failing to adduce substantial evidence to prove that respondent was guilty of serious misconduct,
both bodies held that respondent’s suspension from employment is unwarranted.
Misconduct is defined as improper and wrongful conduct. It is the transgression of some

established and definite rule of action, a forbidden act, a dereliction of duty, willful in character,
and implies wrongful intent and not mere error in judgment. Of course, ordinary misconduct
would not justify the termination of the services of an employee. The law is explicit that the
misconduct should be serious. It is settled that in order for misconduct to be serious, it must be of
such grave and aggravated character and not merely trivial or unimportant. As amplified by
jurisprudence, the misconduct must (1) be serious; (2) relate to the performance of the employee’s
duties; and (3) show thatthe employee has become unfit to continue working for the employer.
Under Article 282 of the labor Code, the misconduct, to be just cause for termination, must be
serious. This implies that it must be of such grave and aggravated character and not merely trivial
or unimportant. Examples of serious misconduct justifying termination, as held in some of our
decisions, include: sexual harassment (the manager’s acts of fondling the hands, massaging the
shoulder and caressing the nape of the secretary); fighting within company premises, uttering
obscene, insulting or offensive words against a superior; misrepresenting that a student is his
nephew and pressuring and intimidating a co-teacher to change a student’s failing grade to
passing.
Although respondent was not terminated from employment but was merely suspended from work
for one semester or equivalent to 101 days school days, her infraction should still be measured
against the foregoing standards considering that the charge leveled against her is serious
misconduct.
A cursory reading of the records reveals no reason for us to depart from the findings of the Court
of Appeals. Well–settled is the rule that the factual findings of the Court of Appeals are conclusive
on the parties and are not reviewable by the Supreme Court. And they carry even more weight
when the Court of Appeals affirms the factual findings of a lower fact finding body, in this case the
Voluntary Arbitrator. Likewise, findings of fact of administrative agencies and quasi-judicial
bodies which have acquired expertise because their jurisdiction is confined to specific matters are
generally accorded not only great respect but even finality. They are binding upon this Court
unless there is a showing of grave abuse of discretion or where it is clearly shown that they were
arrived at arbitrarily or in utter disregard of the evidence on record.
As correctly pointed out by the appellate court, there is no substantial evidence to prove that in
not including a portion of the invitation to her fund request, respondent acted in malicious and
contemptuous manner with the intent to cause damage to the petitioner. In other words, there is
no basis for the allegation that respondent’s act constituted serious misconduct that warrants the
imposition of penalty of suspension. Indeed, considering the fact that before the act complained
of, respondent has been rendering service untarnished for 23 years, it is not easy to conclude that
for P600.00, respondent would willfully and for wrongful intentions omit portions of the
documents taken from the PPS website. In other words, as found by the Voluntary Arbitrator and
the Court of Appeals, there is no substantial proof of petitioner's allegation of malicious conduct
against respondent.
The Court recognizes the right of the employers to discipline its employees for serious violations
of company rules after affording the latter due process and if the evidence warrants. Such right,
however, should be exercised in consonance with sound discretion putting into mind the basic
elements of justice and fair play.
ARIEL L. DAVID, DOING BUSINESS UNDER THE NAME AND

STYLE “YIELS HOG DEALER” VS. JOHN G. MACASIO

G.R. No. 195466, July 02, 2014
Facts:
In January 2009, Macasio filed before the LA a complaint against petitioner Ariel L. David, doing
business under the name and style “Yiels Hog Dealer,” for non-payment of overtime pay, holiday
pay and 13th month pay. He also claimed payment for moral and exemplary damages and
attorney’s fees. Macasio also claimed payment for service incentive leave (SIL).
Macasio alleged before the LA that he had been working as a butcher for David since January 6,
1995. Macasio claimed that David exercised effective control and supervision over his work,
pointing out that David: (1) set the work day, reporting time and hogs to be chopped, as well as
the manner by which he was to perform his work; (2) daily paid his salary of P700.00, which was
increased from P600.00 in 2007, P500.00 in 2006 and P400.00 in 2005; and (3) approved and
disapproved his leaves. Macasio added that David owned the hogs delivered for chopping, as well
as the work tools and implements; the latter also rented the workplace. Macasio further claimed
that David employs about twenty-five (25) butchers and delivery drivers.
In his defense, David claimed that he started his hog dealer business in 2005 and that he only has
ten employees. He alleged that he hired Macasio as a butcher or chopper on “ pakyaw” or task
basis who is, therefore, not entitled to overtime pay, holiday pay and 13 th month pay pursuant to
the provisions of the Implementing Rules and Regulations (IRR) of the Labor Code. David pointed
out that Macasio: (1) usually starts his work at 10:00 p.m. and ends at 2:00 a.m. of the following
day or earlier, depending on the volume of the delivered hogs; (2) received the fixed amount of
P700.00 per engagement, regardless of the actual number of hours that he spent chopping the
delivered hogs; and (3) was not engaged to report for work and, accordingly, did not receive any
fee when no hogs were delivered.
Macasio disputed David’s allegations. He argued that, first, David did not start his business only in
2005. He pointed to the Certificate of Employment that David issued in his favor which placed the
date of his employment, albeit erroneously, in January 2000. Second, he reported for work every
day which the payroll or time record could have easily proved had David submitted them in
evidence.
Refuting Macasio’s submissions, David claims that Macasio was not his employee as he hired the
latter on “pakyaw” or task basis. He also claimed that he issued the Certificate of Employment,
upon Macasio’s request, only for overseas employment purposes. He pointed to the
“Pinagsamang Sinumpaang Salaysay,” executed by Presbitero Solano and Christopher (Antonio
Macasio’s co-butchers), to corroborate his claims.
In the April 30, 2009 decision, the LA dismissed Macasio’s complaint for lack of merit.
In its May 26, 2010 decision, the NLRC affirmed the LA ruling.
In its November 22, 2010 decision, the CA partly granted Macasio’s certiorari petition and
reversed the NLRC’s ruling for having been rendered with grave abuse of discretion.
While the CA agreed with the LA and the NLRC that Macasio was a task basis employee, it
nevertheless found Macasio entitled to his monetary claims.
The Issue
The issue revolves around the proper application and interpretation of the labor law provisions on
holiday, SIL and 13th month pay to a worker engaged on “pakyaw” or task basis.
Ruling:
Macasio is engaged on “pakyaw” or task basis
A distinguishing characteristic of “pakyaw” or task basis engagement, as opposed to straight-hour

wage payment, is the non-consideration of the time spent in working. In a task-basis work, the
emphasis is on the task itself, in the sense that payment is reckoned in terms of completion of the
work, not in terms of the number of time spent in the completion of work. Once the work or task is
completed, the worker receives a fixed amount as wage, without regard to the standard
measurements of time generally used in pay computation.
In Macasio’s case, the established facts show that he would usually start his work at 10:00 p.m.
Thereafter, regardless of the total hours that he spent at the workplace or of the total number of
the hogs assigned to him for chopping, Macasio would receive the fixed amount of P700.00 once
he had completed his task. Clearly, these circumstances show a “ pakyaw” or task basis
engagement that all three tribunals uniformly found.
In sum, the existence of employment relationship between the parties is determined by applying
the “four-fold” test; engagement on “pakyaw” or task basis does not determine the parties’
relationship as it is simply a method of pay computation. Accordingly, Macasio is David’s
employee, albeit engaged on “pakyaw” or task basis.
As an employee of David paid on pakyaw or task basis, we now go to the core issue of whether
Macasio is entitled to holiday, 13th month, and SIL pay.
On the issue of Macasio’s entitlement to holiday, SIL and 13th month pay
The LA dismissed Macasio’s claims pursuant to Article 94 of the Labor Code in relation to Section
1, Rule IV of the IRR of the Labor Code, and Article 95 of the Labor Code, as well as Presidential
Decree (PD) No. 851. The NLRC, on the other hand, relied on Article 82 of the Labor Code and the
Rules and Regulations Implementing PD No. 851. Uniformly, these provisions exempt workers
paid on “pakyaw” or task basis from the coverage of holiday, SIL and 13th month pay.
In reversing the labor tribunals’ rulings, the CA similarly relied on these provisions, as well as on
Section 1, Rule V of the IRR of the Labor Code and the Court’s ruling in Serrano v. Severino Santos
Transit. These labor law provisions, when read together with the Serrano ruling, exempt those
engaged on “pakyaw” or task basis only if they qualify as “field personnel.”
In other words, what we have before us is largely a question of law regarding the correct
interpretation of these labor code provisions and the implementing rules; although, to conclude
that the worker is exempted or covered depends on the facts and in this sense, is a question of
fact: first, whether Macasio is a “field personnel”; and second, whether those engaged on
“pakyaw” or task basis, but who are not “field personnel,” are exempted from the coverage of
holiday, SIL and 13th month pay.
To put our discussion within the perspective of a Rule 45 petition for review of a CA decision
rendered under Rule 65 and framed in question form, the legal question is whether the CA
correctly ruled that it was grave abuse of discretion on the part of the NLRC to deny Macasio’s
monetary claims simply because he is paid on a non-time basis without determining whether he is
a field personnel or not.
To resolve these issues, we need to re-visit the provisions involved.
Provisions governing SIL and holiday pay
Article 82 of the Labor Code provides the exclusions from the coverage of Title I, Book III of the
Labor Code - provisions governing working conditions and rest periods.
Art. 82. Coverage. — The provisions of [Title I] shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, managerial employees,
field personnel, members of the family of the employer who are dependent on him for support,
domestic helpers, persons in the personal service of another, and workers who are paid by results
as determined by the Secretary of Labor in appropriate regulations.
xxxx
“Field personnel” shall refer to non-agricultural employees who regularly perform their duties
away from the principal place of business or branch office of the employer and whose actual hours
of work in the field cannot be determined with reasonable certainty. [emphases and underscores
ours]
Among the Title I provisions are the provisions on holiday pay (under Article 94 of the Labor Code)
and SIL pay (under Article 95 of the Labor Code). Under Article 82, “field personnel” on one hand
and “workers who are paid by results” on the other hand, are not covered by the Title I provisions.
The wordings of Article 82 of the Labor Code additionally categorize workers “paid by results” and
“field personnel” as separate and distinct types of employees who are exempted from the Title I
provisions of the Labor Code.
The pertinent portion of Article 94 of the Labor Code and its corresponding provision in the IRR
reads:
Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly employing less than (10) workers[.]
[emphasis ours]
xxxx
SECTION 1. Coverage. – This Rule shall apply to all employees except:

xxxx
(e) Field personnel and other employees whose time and performance is unsupervised by the
employer including those who are engaged on task or contract basis, purely commission basis, or
those who are paid a fixed amount for performing work irrespective of the time consumed in the
performance thereof. [emphases ours]
On the other hand, Article 95 of the Labor Code and its corresponding provision in the IRR 48
pertinently provides:
Art. 95. Right to service incentive. (a) Every employee who has rendered at least one year of
service shall be entitled to a yearly service incentive leave of five days with pay.
(b) This provision shall not apply to those who are already enjoying the benefit herein provided,
those enjoying vacation leave with pay of at least five days and those employed in establishments
regularly employing less than ten employees or in establishments exempted from granting this
benefit by the Secretary of Labor and Employment after considering the viability or financial
condition of such establishment. [emphases ours]
xxxx
Section 1. Coverage. – This rule shall apply to all employees except:

xxxx
(e) Field personnel and other employees whose performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those who
are paid a fixed amount for performing work irrespective of the time consumed in the
performance thereof. [emphasis ours]
Under these provisions, the general rule is that holiday and SIL pay provisions cover all employees.
To be excluded from their coverage, an employee must be one of those that these provisions
expressly exempt, strictly in accordance with the exemption.
Under the IRR, exemption from the coverage of holiday and SIL pay refer to “field personnel and
other employees whose time and performance is unsupervised by the employer including those
who are engaged on task or contract basis[.]” Note that unlike Article 82 of the Labor Code , the
IRR on holiday and SIL pay do not exclude employees “engaged on task basis” as a separate and
distinct category from employees classified as “field personnel.” Rather, these employees are
altogether merged into one classification of exempted employees.
Because of this difference, it may be argued that the Labor Code may be interpreted to mean that
those who are engaged on task basis, per se, are excluded from the SIL and holiday payment since
this is what the Labor Code provisions, in contrast with the IRR, strongly suggest. The arguable
interpretation of this rule may be conceded to be within the discretion granted to the LA and
NLRC as the quasi-judicial bodies with expertise on labor matters.
However, as early as 1987 in the case of Cebu Institute of Technology v. Ople the phrase “those
who are engaged on task or contract basis” in the rule has already been interpreted to mean as
follows:
[the phrase] should however, be related with "field personnel" applying the rule on ejusdem
generis that general and unlimited terms are restrained and limited by the particular terms that
they follow xxx Clearly, petitioner's teaching personnel cannot be deemed field personnel which
refers "to non-agricultural employees who regularly perform their duties away from the principal
place of business or branch office of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty. [Par. 3, Article 82, Labor Code of the
Philippines]. Petitioner's claim that private respondents are not entitled to the service incentive
leave benefit cannot therefore be sustained.
In short, the payment of an employee on task or pakyaw basis alone is insufficient to exclude one
from the coverage of SIL and holiday pay. They are exempted from the coverage of Title I
(including the holiday and SIL pay) only if they qualify as “field personnel.” The IRR therefore
validly qualifies and limits the general exclusion of “workers paid by results” found in Article 82
from the coverage of holiday and SIL pay. This is the only reasonable interpretation since the
determination of excluded workers who are paid by results from the coverage of Title I is
“determined by the Secretary of Labor in appropriate regulations.”
The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus Transport Systems, Inc., v.
Bautista:
A careful perusal of said provisions of law will result in the conclusion that the grant of service
incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code
to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the
Implementing Rules, Service Incentive Leave shall not apply to employees classified as “field
personnel.” The phrase “other employees whose performance is unsupervised by the employer”
must not be understood as a separate classification of employees to which service incentive leave
shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of
field personnel under the Labor Code as those “whose actual hours of work in the field cannot be
determined with reasonable certainty.”
The same is true with respect to the phrase “those who are engaged on task or contract basis,
purely commission basis.” Said phrase should be related with “field personnel,” applying the rule
on ejusdem generis that general and unlimited terms are restrained and limited by the particular
terms that they follow.
The Autobus ruling was in turn the basis of Serrano v. Santos Transit which the CA cited in support
of granting Macasio’s petition.
In Serrano, the Court, applying the rule on ejusdem generis declared that “employees engaged on
task or contract basis xxx are not automatically exempted from the grant of service incentive
leave, unless, they fall under the classification of field personnel.” The Court explained that the
phrase “including those who are engaged on task or contract basis, purely commission basi s”
found in Section 1(d), Rule V of Book III of the IRR should not be understood as a separate
classification of employees to which SIL shall not be granted. Rather, as with its preceding phrase -
“other employees whose performance is unsupervised by the employer” - the phrase “including
those who are engaged on task or contract basis ” serves to amplify the interpretation of the Labor
Code definition of “field personnel” as those “whose actual hours of work in the field cannot be
determined with reasonable certainty.”
In contrast and in clear departure from settled case law, the LA and the NLRC still interpreted the
Labor Code provisions and the IRR as exempting an employee from the coverage of Title I of the
Labor Code based simply and solely on the mode of payment of an employee. The NLRC’s utter
disregard of this consistent jurisprudential ruling is a clear act of grave abuse of discretion.52 In
other words, by dismissing Macasio’s complaint without considering whether Macasio was a “field
personnel” or not, the NLRC proceeded based on a significantly incomplete consideration of the
case. This action clearly smacks of grave abuse of discretion.
Entitlement to holiday pay
Evidently, the Serrano ruling speaks only of SIL pay. However, if the LA and the NLRC had only
taken counsel from Serrano and earlier cases, they would have correctly reached a similar
conclusion regarding the payment of holiday pay since the rule exempting “field personnel” from
the grant of holiday pay is identically worded with the rule exempting “field personnel” from the
grant of SIL pay. To be clear, the phrase “employees engaged on task or contract basis” found in
the IRR on both SIL pay and holiday pay should be read together with the exemption of “field
personnel.”
In short, in determining whether workers engaged on “ pakyaw” or task basis” is entitled to holiday
and SIL pay, the presence (or absence) of employer supervision as regards the worker’s time and
performance is the key: if the worker is simply engaged on pakyaw or task basis, then the general
rule is that he is entitled to a holiday pay and SIL pay unless exempted from the exceptions
specifically provided under Article 94 (holiday pay) and Article 95 (SIL pay) of the Labor Code.
However, if the worker engaged on pakyaw or task basis also falls within the meaning of “field
personnel” under the law, then he is not entitled to these monetary benefits.
Macasio does not fall under the classification of “field personnel”
Based on the definition of field personnel under Article 82, we agree with the CA that Macasio
does not fall under the definition of “field personnel.” The CA’s finding in this regard is supported
by the established facts of this case: first, Macasio regularly performed his duties at David’s
principal place of business; second, his actual hours of work could be determined with reasonable
certainty; and, third, David supervised his time and performance of duties. Since Macasio cannot
be considered a “field personnel,” then he is not exempted from the grant of holiday, SIL pay even
as he was engaged on “pakyaw” or task basis.
Not being a “field personnel,” we find the CA to be legally correct when it reversed the NLRC’s
ruling dismissing Macasio’s complaint for holiday and SIL pay for having been rendered with grave
abuse of discretion.
Entitlement to 13th month pay
With respect to the payment of 13 th month pay however, we find that the CA legally erred in
finding that the NLRC gravely abused its discretion in denying this benefit to Macasio.
The governing law on 13th month pay is PD No. 851. As with holiday and SIL pay, 13 th month pay
benefits generally cover all employees; an employee must be one of those expressly enumerated
to be exempted. Section 3 of the Rules and Regulations Implementing P.D. No. 851 enumerates
the exemptions from the coverage of 13th month pay benefits. Under Section 3(e), “employers of
those who are paid on xxx task basis, and those who are paid a fixed amount for performing a
specific work, irrespective of the time consumed in the performance thereof” are exempted.
Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules and
Regulations Implementing PD No. 851 exempts employees “paid on task basis” without any
reference to “field personnel.” This could only mean that insofar as payment of the 13th month
pay is concerned, the law did not intend to qualify the exemption from its coverage with the
requirement that the task worker be a “field personnel” at the same time.
FLP ENTERPRISES INC. - FRANCESCO SHOES/EMILIO FRANCISCO

B. PAJARO vs. MA. JOERALYN D. DELA CRUZ and VILMA MALUNES
G.R. No. 198093, July 28, 2014
Facts:
Petitioner FLPE hired respondent Dela Cruz in 1991 and respondent Malunes in 1998 as sales
ladies and assigned them both at its Alabang Town Center store in Muntinlupa City. On March 10,
2008, at around 10:00 a.m., it was discovered that the store’s sales proceeds for March 7 to March
9, 2008, amounting to 26,372.75, were missing. The investigating authorities found that it resulted
from an "inside job" since the cash register remained closed and there was no indication of forced
entry into the store. FLPE thus required respondents to explain in writing why they should not be
terminated. It contended that respondents clearly violated its company policy prohibiting sales
proceeds from being stored in the cash register. Accordingly, Dela Cruz and Malunes submitted
their respective written explanations. They both denied the existence of such company policy and
having knowledge thereof.
FLPE thereafter removed respondents from service, which took effect on May 26, 2008.
Aggrieved, respondents filed a complaint for illegal dismissal with money claims against the
company.
On December 8, 2008, the LA dismissed respondents’ claim and held that FLPE was able to
sufficiently prove that respondents were guilty of habitually violating the company standard
procedure on safekeeping of cash collection.
Upon appeal, the Third Division of the NLRC affirmed the LA Decision in its entirety.
Subsequently, respondents elevated the case to the CA, imputing grave abuse of discretion on the
NLRC’s part.
On February 22, 2011, the CA set aside the NLRC ruling and pronounced respondents as having
been illegally dismissed by FLPE
Issue:
Whether the respondents were illegally dismissed.

Ruling
After a thorough review of the case, the Court finds no cogent reason to deviate from the CA’s
determination of grave abuse of discretion on the NLRC and its consequent substitution of its own
ruling over that of the latter. Generally, the findings of facts and conclusion of quasi-judicial
agencies like the NLRC are entitled to great weight and respect, and even clothed with finality
and deemed conclusive upon the parties and binding on the Court, as long as they are supported
by substantial evidence. The findings of fact of an administrative agency, which has acquired
expertise in the particular field of its endeavor, are accorded great weight on appeal. This rule,
however, is not absolute and admits of certain well-recognized exceptions, such as when, as in this
case, the labor tribunals’ findings of fact are not supported by substantial evidence. The CA may
then make its own independent evaluation of the facts, even if it may be contrary to that of the LA
and the NLRC. Also, where the contesting party's claim appears to be clearly meritorious, or where
the broader interest of justice and public policy so requires, the court may, in a certiorari
proceeding, correct the error committed. The CA, in view of its expanded jurisdiction over labor
cases, may look into the records of the case and re-examine the questioned findings if it considers
the same to be necessary to arrive at a just and equitable decision.
It is a fundamental rule that an employee can be discharged from employment only for a valid
cause. Here, both the LA and the NLRC found that respondents have been validly terminated for
gross and habitual neglect of duties, constituting just cause for termination under Article 282 of
the Labor Code. As a valid ground for dismissal under said provision, neglect of duty must be both
gross and habitual. Gross negligence entails want of care in the performance of one’s duties, while
habitual neglect imparts repeated failure to perform such duties for a period of time, depending
on the circumstances.
Substantial evidence is also necessary for an employer to effectuate any dismissal.

Uncorroborated assertions and accusations by the employer would not suffice, otherwise, the
constitutional guaranty of security of tenure would be put in jeopardy.
In this case, as the CA correctly ruled, in order to sustain herein respondents’ dismissal, FLPE must
show, by substantial evidence, that the following are extant:
1) the existence of the subject company policy;

2) the dismissed employee must have been properly informed of said policy;
3) actions or omissions on the part of the dismissed employee manifesting deliberate
refusal or wilfuldisregard of said company policy; and
4) such actions or omissions have occured repeatedly.
FLPE claims that its company policy that requires its sales managers and staff to keep the sales
proceeds in a shoebox in the stockroom and not inside the cash register, have been in existence
since October 23, 2003. As proof, it presented the following Memorandum:
TO : ALL MANAGERS & STAFF

FROM : EMILIO FRANCISCO B. PAJARO
RE : SAFEKEEPING OF CASH SALES & COLLECTIONS
DATE : October 23. 2003
Nais naming pa-alalahanan ang lahat tungkol sa ating policy na ang benta ay dapat
itago sa box ng sapatos sa loob ng stockroom.
At kung sino ang nagtago ay s’ya lang ang [nakakaalam] kung saan n’ya ito inilagay.
Announced & Posted.
However, FLPE failed to establish that such a company policy actually exists, and if it does truly
exist, that it was, in fact, posted and/or disseminated accordingly. Neither is there anything in the
records which reveals that the dismissed respondents were informed of said policy. The company
vehemently insists that it posted, announced, and implemented the subject Safekeeping Policy in
all its retail stores, especially the one in Alabang Town Center. It, however, failed to substantiate
said claim. It could have easily produced a copy of said memorandum bearing the signatures of
Dela Cruz and Malunes to show that, indeed, they have been notified of the existence of said
company rule and that they have received, read, and understood the same. FLPE could likewise
have simply called some of its employees to testify on the rule’s existence, dissemination, and
strict implementation. But aside from its self-serving and uncorroborated declaration, and a copy
of the supposed policy as contained in the October 23, 2003 Memorandum, FLPE adduced
nothing more.
In termination cases, the burden of proof rests on the employer to show that the dismissal is for a
just cause. The one who alleges a fact has the burden of proving it; thus, FLPE should prove its
allegation that it terminated respondents for a valid and just cause. It must be stressed that the
evidence to prove this fact mustbe clear, positive, and convincing. 18 When there is no showing of a
clear, valid, and legal cause for the termination of employment, the law considers the matter a
case of illegal dismissal.19 Unfortunately, FLPE miserably failed to discharge this burden. To rule
otherwise and simply allow the presumption as tothe existence and dissemination of the supposed
company policy would lead to a proliferation of fabricated notices, and entice further abuse by
unscrupulous persons. Workers could then be arbitrarily terminated without much of an effort,
running afoul of the State’s clear duty to show compassion and afford the utmost protection to
laborers.
Assuming arguendo that respondents were aware of the alleged company policy, FLPE failed to
prove that they are guilty of disobedience amounting to gross and habitual neglectof duty. On
March 9, 2008, Dela Cruz did not even report to work because it was her rest day. As for Malunes,
she admitted putting the sales proceeds inside the cash register but she only did so upon the
instructions ofthe store manager, who is basically part of management. There is likewise want of
competent evidence showing that respondents have repeatedly violated said policy in the past.
True, an employer has the discretion to regulate all aspects of employment and the workers have
the corresponding obligation to obey company rules and regulations. Deliberately disregarding or
disobeying the rules cannot be countenanced, and any justification that the disobedient
employee might put forth is deemed inconsequential. However, the Court must emphasize that
the prerogative of an employer to dismiss an employee on the ground of willful disobedience to
company policies must be exercised in good faith and with due regard to the rights of labor.
For lack of any clear, valid, and just cause in terminating respondents' employment, FLPE is
indubitably guilty of illegal dismissal. The rate of interest, however, should be changed to 6%
starting July 1, 2013, pursuant to the Bangko Sentral ng Pilipinas Circular No. 799, Series of 2013.
IMMACULATE CONCEPTION ACADEMY/DR. JOSE

PAULO E. CAMPOS v. EVELYN E. CAMILON
G.R. No. 188035, July 02, 2014
Facts:
Petitioner Immaculate Conception Academy (ICA) is an educational corporation duly organized

and existing under the laws of the Philippines with principal address at Malihan Street, Poblacion,
Dasmariñas, Cavite (Zone IV, Aguinaldo Highway, Dasmariñas, Cavite). Co-petitioner Dr. Jose
Paulo Campos is the president of ICA.
Respondent Evelyn Camilon was an employee of ICA for 12 years. She was ICA’s Chief Accountant
and Administrator from June 2000 until her dismissal. As Chief Accountant, respondent was
responsible, among others, for pre-auditing the school cashier’s report, checking the entries
therein and keeping custody of the petty cash fund. She has also direct supervision over the
School Cashier, Janice Loba (Loba).
In July 2004, ICA’s Treasurer, Shirley Enobal, received a complaint from the father of one student
who claimed that his son was denied issuance of an examination permit for nonpayment of tuition
fees despite the fact that the said fees had already been paid.
In August 2004, Cristina Javier, Internal Auditor of ICA, conducted an audit upon the instruction of
petitioner Campos. She made the following findings:
a) There were several payments of tuition and school fees made by a number of ICA students
which were neither accounted for, turned over and/or posted by the ICA Cashier, Ms.
Janice C. Loba, to the students’ subsidiary ledgers, nor were the collected amounts
deposited in ICA’s account with the Rural Bank of Dasmariñas, Inc.;
b) The unaccounted collections received from more or less 186 ICA students amount to ONE
MILLION ONE HUNDRED SIXTY SEVEN THOUSAND ONE HUNDRED EIGHTY-ONE
PESOS and 45/100 (P1,167,181.45).
c) There were missing or unsurrendered booklets of official receipts issued to and received
by Ms. Janice C. Loba as cashier which were not accounted for, the amount of collection
made therein is still undetermined.
d) Ms. Janice C. Loba manipulated entries in the computerized subsidiary ledger and
destroyed records so that the unaccounted amounts collected by her and the missing
official receipts issued to her as cashier could not be traced or detected.
In a letter dated September 1, 2004, petitioner Campos placed respondent under suspension
pending investigation of the case in light of her duties and responsibilities as Chief Accountant of
ICA.
In a letter-reply dated September 13, 2004, respondent denied any involvement in the
irregularities committed and claimed that she had no intention of profiting at the expense of the
school or of betraying the trust reposed on her by the corporation.
On October 27, 2004, petitioners terminated the services of respondent after finding that
respondent was negligent and remiss in her duties as the superior officer of Loba.
On November 26, 2004, respondent filed a complaint for illegal dismissal and other money claims
against petitioners. Respondent claimed that petitioners failed to cite specific negligent acts or to
state the manner and means she employed in assisting or cooperating with the cashier in the
misappropriation of school funds. Respondent claimed that she was suspended from work without
pay despite the absence of any evidence directly or indirectly implicating her in the financial
irregularity from September 1, 2004 until her termination on October 27, 2004. Also, she was not
given her salary from August 16-30, 2004 and the proportionate sick leave pay and 13th month
pay.
On June 5, 2007, the Labor Arbiter rendered a Decision, declaring ICA guilty of illegal dismissal.
On February 29, 2008, the NLRC rendered a decision finding respondent’s dismissal and
preventive suspension legal and setting aside the awards for back wages, separation pay and
attorney’s fees. However, the awards for unpaid salary for the period from August 15-30, 2004,
13th month pay and service incentive leave pay which respondent already earned even prior to
her dismissal was upheld. The NLRC likewise ordered the payment to respondent of her unpaid
salaries for the number of working days she remained under preventive suspension beyond 30
days.
On March 30, 2009, the CA rendered a Decision affirming the ruling of the NLRC but with the
modification that petitioners are held liable to pay separation pay to respondent.
Not agreeing with the ruling, petitioners filed the present petition claiming that the CA erred in
awarding separation pay to respondent who was dismissed because of her gross and habitual
negligence, a more serious offense than mere inefficiency at work. Petitioners assert that
respondent is not entitled to separation pay since her negligence resulted in a substantial amount
of loss and destruction of official receipts and schools records. Petitioners also claim that
separation pay cannot be justified on the basis of respondent’s length of service considering the
gravity of the offense committed.
Issue:
Whether the award of separation pay in favor of the respondent is justifiable.
Ruling:
Now to the main issue of whether the CA correctly granted an award of separation pay to
respondent as a measure of social justice.
The issue of whether a validly dismissed employee is entitled to separation pay has been settled in
the 2007 case of Toyota Motor Philippines Corporation Workers Association (TMPCWA) v. NLRC,
where it was further clarified that “in addition to serious misconduct, in dismissals based on other
grounds under Art. 282 like willful disobedience, gross and habitual neglect of duty, fraud or
willful breach of trust, and commission of a crime against the employer or his family, separation
pay should not be conceded to the dismissed employee.”
This ruling was reiterated in the case of Central Philippines Bandag Retreaders, Inc. v. Diasnes ,
where the Court set aside the award of separation pay to Diasnes in view of the latter’s gross and
habitual negligence. To quote:
To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur
the award of separation pay based on social justice when an employee’s dismissal is
based on serious misconduct or willful disobedience; gross and habitual neglect of
duty; fraud or willful breach of trust; or commission of a crime against the person of
the employer or his immediate family – grounds under Art. 282 of the Labor Code that
sanction dismissals of employees. They must be most judicious and circumspect in
awarding separation pay or financial assistance as the constitutional policy to provide
full protection to labor is not meant to be an instrument to oppress the employers. The
commitment of the Court to the cause of labor should not embarrass us from
sustaining the employers when they are right, as here. In fine, we should be more
cautious in awarding financial assistance to the undeserving and those who are
unworthy of the liberality of the law.
Pursuant to the aforementioned rulings, respondent is clearly not entitled to separation pay.
Respondent was holding a position which involves a high degree of responsibility requiring trust
and confidence as it involves the financial interests of the school. However, respondent proved to
be unfit for the position when she failed to exercise the necessary diligence in the performance of
her duties and responsibilities as Chief Accountant, thus justifying her dismissal from service.
Respondent was guilty of gross and habitual negligence when she failed to regularly pre-audit the
report of the school cashier, check the entries therein and keep custody of the petty cash fund.
Had respondent been assiduously doing her job, the unaccounted school funds would have been
discovered right away. Respondent’s dereliction in her duties spanned a period of 11 months thus
enabling the school cashier to misappropriate tuition fee payments, manipulate the school
records and destroy official receipts, in the total amount of P1,167,181.45 to the prejudice of
petitioners. Hence, she should not be granted separation pay. To rule otherwise would be to
reward respondent for her negligent acts instead of punishing her for her offense. As we held in
Reno Foods, Inc. v. Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan, “[s]eparation pay is
only warranted when the cause for termination is not attributable to the employee's fault, such as
those provided in Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in
which reinstatement is no longer feasible. It is not allowed when an employee is dismissed for just
cause.”
As to whether respondent’s length of service with petitioners justifies the award of separation pay,
we rule in the negative. Respondent’s 12 years of service and clean employment record cannot
simply erase her gross and habitual negligence in her duties. Length of service is not a bargaining
chip that can simply be stacked against the employer.
ROYALE HOMES MARKETING CORPORATION v. FIDEL P. ALCANTARA [DECEASED],

SUBSTITUTED BY HIS HEIRS
G.R. No. 195190, July 28, 2014
Facts
In 1994, Royale Homes, a corporation engaged in marketing real estates, appointed Alcantara as
its Marketing Director for a fixed period of one year. His work consisted mainly of marketing
Royale Homes’ real estate inventories on an exclusive basis. Royale Homes reappointed him for
several consecutive years, the last of which covered the period January 1 to December 31, 2003
where he held the position of Division 5 Vice-President-Sales.
Proceedings before the Labor Arbiter
On December 17, 2003, Alcantara filed a Complaint for Illegal Dismissal against Royale Homes
and its President Matilde Robles, Executive Vice-President for Administration and Finance Ma.
Melinda Bernardino, and Executive Vice- President for Sales Carmina Sotto. Alcantara alleged
that he is a regular employee of Royale Homes since he is performing tasks that are necessary and
desirable to its business; that in 2003 the company gave him P1.2 million for the services he
rendered to it; that in the first week of November 2003, however, the executive officers of Royale
Homes told him that they were wondering why he still had the gall to come to office and sit at his
table; and that the acts of the executive officers of Royale Homes amounted to his dismissal from
work without any valid or just cause and in gross disregard of the proper procedure for dismissing
employees. Thus, he also impleaded the corporate officers who, he averred, effected his dismissal
in bad faith and in an oppressive manner.
Alcantara prayed to be reinstated to his former position without loss of seniority rights and other
privileges, as well as to be paid backwages, moral and exemplary damages, and attorney’s fees. He
further sought that the ownership of the Mitsubishi Adventure with Plate No. WHD-945 be
transferred to his name.
Royale Homes, on the other hand, vehemently denied that Alcantara is its employee. It argued
that the appointment paper of Alcantara is clear that it engaged his services as an independent
sales contractor for a fixed term of one year only. He never received any salary, 13th month pay,
overtime pay or holiday pay from Royale Homes as he was paid purely on commission basis. In
addition, Royale Homes had no control on how Alcantara would accomplish his tasks and
responsibilities as he was free to solicit sales at any time and by any manner which he may deem
appropriate and necessary. He is even free to recruit his own sales personnel to assist him in
pursuance of his sales target.
According to Royale Homes, Alcantara decided to leave the company after his wife, who was once
connected with it as a sales agent, had formed a brokerage company that directly competed with
its business, and even recruited some of its sales agents. Although this was against the exclusivity
clause of the contract, Royale Homes still offered to accept Alcantara’s wife back so she could
continue to engage in real estate brokerage, albeit exclusively for Royale Homes. In a special
management committee meeting on October 8, 2003, however, Alcantara announced publicly
and openly that he would leave the company by the end of October 2003 and that he would no
longer finish the unexpired term of his contract. He has decided to join his wife and pursue their
own brokerage business. Royale Homes accepted Alcantara’s decision. It then threw a despedida
party in his honor and, subsequently, appointed a new independent contractor.
Two months after he relinquished his post, however, Alcantara appeared in Royale Homes and
submitted a letter claiming that he was illegally dismissed.
Issue:
The pivotal issue to be resolved in this case is whether Alcantara was an independent contractor or
an employee of Royale Homes
Ruling
The juridical relationship of the parties based on their written contract
The primary evidence of the nature of the parties’ relationship in this case is the written contract
that they signed and executed in pursuance of their mutual agreement. While the existence of
employer-employee relationship is a matter of law, the characterization made by the parties in
their contract as to the nature of their juridical relationship cannot be simply ignored, particularly
in this case where the parties’ written contract unequivocally states their intention at the time
they entered into it.
In this case, the contract, duly signed and not disputed by the parties, conspicuously provides that
“no employer-employee relationship exists between” Royale Homes and Alcantara, as well as his
sales agents. It is clear that they did not want to be bound by employer-employee relationship at
the time of the signing of the contract.
Since “the terms of the contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations should control.” No construction is even
needed as they already expressly state their intention. Also, this Court adopts the observation of
the NLRC that it is rather strange on the part of Alcantara, an educated man and a veteran sales
broker who claimed to be receiving P1.2 million as his annual salary, not to have contested the
portion of the contract expressly indicating that he is not an employee of Royale Homes if their
true intention were otherwise.
The juridical relationship of the parties based on Control Test
In concluding that Alcantara is an employee of Royale Homes, the CA ratiocinated that since the
performance of his tasks is subject to company rules, regulations, code of ethics, and periodic
evaluation, the element of control is present.
Not every form of control is indicative of employer-employee relationship. A person who

performs work for another and is subjected to its rules, regulations, and code of ethics does not
necessarily become an employee. As long as the level of control does not interfere with the means
and methods of accomplishing the assigned tasks, the rules imposed by the hiring party on the
hired party do not amount to the labor law concept of control that is indicative of employer-
employee relationship. In Insular Life Assurance Co., Ltd. v. National Labor Relations Commission
it was pronounced that:
Logically, the line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be
employed in attaining it, and those that control or fix the methodology and bind or restrict the
party hired to the use of such means. The first, which aim only to promote the result, create no
employer-employee relationship unlike the second, which address both the result and the means
used to achieve it. x x x
In this case, the Court agrees with Royale Homes that the rules, regulations, code of ethics, and
periodic evaluation alluded to by Alcantara do not involve control over the means and methods by
which he was to perform his job. Understandably, Royale Homes has to fix the price, impose
requirements on prospective buyers, and lay down the terms and conditions of the sale, including
the mode of payment, which the independent contractors must follow. It is also necessary for
Royale Homes to allocate its inventories among its independent contractors, determine who has
priority in selling the same, grant commission or allowance based on predetermined criteria, and
regularly monitor the result of their marketing and sales efforts. But to the mind of this Court,
these do not pertain to the means and methods of how Alcantara was to perform and accomplish
his task of soliciting sales. They do not dictate upon him the details of how he would solicit sales or
the manner as to how he would transact business with prospective clients.
As the party claiming the existence of employer-employee relationship, it behoved upon

Alcantara to prove the elements thereof, particularly Royale Homes’ power of control over the
means and methods of accomplishing the work. He, however, failed to cite specific rules,
regulations or codes of ethics that supposedly imposed control on his means and methods of
soliciting sales and dealing with prospective clients. On the other hand, this case is replete with
instances that negate the element of control and the existence of employer-employee
relationship. Notably, Alcantara was not required to observe definite working hours. Except for
soliciting sales, Royale Homes did not assign other tasks to him. He had full control over the
means and methods of accomplishing his tasks as he can “solicit sales at any time and by any
manner which [he may] deem appropriate and necessary.” He performed his tasks on his own
account free from the control and direction of Royale Homes in all matters connected therewith,
except as to the results thereof.
Neither does the repeated hiring of Alcantara prove the existence of employer-employee
relationship. As discussed above, the absence of control over the means and methods disproves
employer-employee relationship. The continuous rehiring of Alcantara simply signifies the
renewal of his contract with Royale Homes, and highlights his satisfactory services warranting the
renewal of such contract. Nor does the exclusivity clause of contract establish the existence of the
labor law concept of control.
In Consulta v. Court of Appeals, it was held that exclusivity of contract does not necessarily result
in employer-employee relationship, viz:
x x x However, the fact that the appointment required Consulta to solicit business exclusively for
Pamana did not mean that Pamana exercised control over the means and methods of Consulta’s
work as the term control is understood in labor jurisprudence. Neither did it make Consulta an
employee of Pamana. Pamana did not prohibit Consulta from engaging in any other business, or
from being connected with any other company, for as long as the business [of the] company did
not compete with Pamana’s business.
The same scenario obtains in this case. Alcantara was not prohibited from engaging in any other
business as long as he does not sell projects of Royale Homes’ competitors. He can engage in
selling various other products or engage in unrelated businesses.
Payment of Wages
The element of payment of wages is also absent in this case. As provided in the contract,
Alcantara’s remunerations consist only of commission override of 0.5%, budget allocation, sales
incentive and other forms of company support. There is no proof that he received fixed monthly
salary. No payslip or payroll was ever presented and there is no proof that Royale Homes
deducted from his supposed salary withholding tax or that it registered him with the Social
Security System, Philippine Health Insurance Corporation, or Pag-Ibig Fund. In fact, his Complaint
merely states a ballpark figure of his alleged salary of P100,000.00, more or less. All of these
indicate an independent contractual relationship. Besides, if Alcantara indeed considered himself
an employee of Royale Homes, then he, an experienced and professional broker, would have
complained that he was being denied statutorily mandated benefits. But for nine consecutive
years, he kept mum about it, signifying that he has agreed, consented, and accepted the fact that
he is not entitled to those employee benefits because he is an independent contractor.
This Court is, therefore, convinced that Alcantara is not an employee of Royale Homes, but a mere
independent contractor. The NLRC is, therefore, correct in concluding that the Labor Arbiter has
no jurisdiction over the case and that the same is cognizable by the regular courts.
AVELINO ALILIN, et al. v. PETRON CORPORATION

G.R. No. 177592, 09 June 2014
Facts:
Petron is a domestic corporation engaged in the oil business. It owns several bulk plants in the
country for receiving, storing and distributing its petroleum products.
In 1968, Romualdo D. Gindang Contractor, which was owned and operated by Romualdo D.
Gindang (Romualdo), started recruiting laborers for fielding to Petron’s Mandaue Bulk Plant.
When Romualdo died in 1989, his son Romeo D. Gindang (Romeo), through Romeo D. Gindang
Services (RDG), took over the business and continued to provide manpower services to Petron.
Petitioners were among those recruited by Romualdo D. Gindang Contractor and RDG sometime
to work in the premises of the said bulk plant. The petitioners started to work for Petron in 1968,
1979, 1981, 1987, 1990, 1992 and 1993. They were given various work assignments such as tanker
receiving, barge loading, sounding, gauging, warehousing, mixing, painting, carpentry, driving,
gasul filling and other utility works.
On June 1, 2000, Petron and RDG entered into a Contract for Services for the period from June 1,
2000 to May 31, 2002, whereby RDG undertook to provide Petron with janitorial, maintenance,
tanker receiving, packaging and other utility services in its Mandaue Bulk Plant. This contract was
extended on July 31, 2002 and further extended until September 30, 2002. Upon expiration
thereof, no further renewal of the service contract was done.
Alleging that they were barred from continuing their services on October 16, 2002, petitioners
filed a Complaint for illegal dismissal, underpayment of wages, damages and attorney’s fees
against Petron and RDG on November 12, 2002.
Issue:
The primary issue to be resolved in this case is whether RDG is a legitimate job contractor. Upon
such finding hinges the determination of whether an employer-employee relationship exists
between the parties as to make Petron liable for petitioners’ dismissal.
Ruling
Generally, the contractor is presumed to be a labor-only contractor, unless such contractor

overcomes the burden of proving that it has the substantial capital, investment, tools and the like.
However, where the principal is the one claiming that the contractor is a legitimate contractor, as
in the present case, said principal has the burden of proving that supposed status. It is thus
incumbent upon Petron, and not upon petitioners as Petron insists, to prove that RDG is an
independent contractor.
Petron failed to discharge the burden of proving

that RDG is a legitimate contractor. Hence, the
presumption that RDG is a labor-only contractor
stands.
Here, the audited financial statements and other financial documents of RDG for the years 1999
to 2001 establish that it does have sufficient working capital to meet the requirements of its
service contract. In fact, the financial evaluation conducted by Petron of RDG’s financial
statements for years 1998-2000 showed RDG to have a maximum financial capability of Php4.807
Million as of December 1998, and Php1.611 Million as of December 2000. Petron was able to
establish RDG’s sufficient capitalization when it entered into the service contract in 2000. The
Court stresses though that this determination of RDG’s status as an independent contractor is only
with respect to its financial capability for the period covered by the financial and other documents
presented. In other words, the evidence adduced merely proves that RDG was financially qualified
as a legitimate contractor but only with respect to its last service contract with Petron in the year
2000.
As may be recalled, petitioners have rendered work for Petron for a long period of time even
before the service contract was executed in 2000. The respective dates on which petitioners claim
to have started working for Petron, as well as the fact that they have rendered continuous service
to it until October 16, 2002, when they were prevented from entering the premises of Petron’s
Mandaue Bulk Plant, were not at all disputed by Petron. In fact, Petron even recognized that some
of the petitioners were initially fielded by Romualdo Gindang, the father of Romeo, through
RDG’s precursor, Romualdo D. Gindang Contractor, while the others were provided by Romeo
himself when he took over the business of his father in 1989. Hence, while Petron was able to
establish that RDG was financially capable as a legitimate contractor at the time of the execution
of the service contract in 2000, it nevertheless failed to establish the financial capability of RDG at
the time when petitioners actually started to work for Petron in 1968, 1979, 1981, 1987, 1990,
1992 and 1993.
Sections 8 and 9, Rule VIII, Book III of the implementing rules of the Labor Code, in force since
1976 and prior to DOLE Department Order No. 10, series of 1997, provide that for job contracting
to be permissible, one of the conditions that has to be met is that the contractor must have
substantial capital or investment. Petron having failed to show that this condition was met by
RDG, it can be concluded, on this score alone, that RDG is a mere labor-only contractor.
The Court also finds, as will be discussed below, that the works performed by petitioners were
directly related to Petron’s business, another factor which negates Petron’s claim that RDG is an
independent contractor.
Petron’s power of control over petitioners exists in

this case.
“[A] finding that a contractor is a ‘labor-only’ contractor is equivalent to declaring that there is an
employer-employee relationship between the principal and the employees of the supposed
contractor.” In this case, the employer-employee relationship between Petron and petitioners
becomes all the more apparent due to the presence of the power of control on the part of the
former over the latter.
Hence, the facts that petitioners were hired by Romeo or his father and that their salaries were
paid by them do not detract from the conclusion that there exists an employer-employee
relationship between the parties due to Petron’s power of control over the petitioners.
One manifestation of the power of control is the power to transfer employees from one work
assignment to another. Here, Petron could order petitioners to do work outside of their regular
“maintenance/utility” job. Also, petitioners were required to report for work everyday at the bulk
plant, observe an 8:00 a.m. to 5:00 p.m. daily work schedule, and wear proper uniform and safety
helmets as prescribed by the safety and security measures being implemented within the bulk
plant. All these imply control. In an industry where safety is of paramount concern, control and
supervision over sensitive operations, such as those performed by the petitioners, are inevitable if
not at all necessary. Indeed, Petron deals with commodities that are highly volatile and flammable
which, if mishandled or not properly attended to, may cause serious injuries and damage to
property and the environment. Naturally, supervision by Petron is essential in every aspect of its
product handling in order not to compromise the integrity, quality and safety of the products that
it distributes to the consuming public.
Petitioners already attained regular status as

employees of Petron.
Petitioners were given various work assignments such as tanker receiving, barge loading,
sounding, gauging, warehousing, mixing, painting, carpentry, driving, gasul filling and other utility
works. Petron refers to these work assignments as menial works which could be performed by any
able-bodied individual. The Court finds, however, that while the jobs performed by petitioners
may be menial and mechanical, they are nevertheless necessary and related to Petron’s business
operations. If not for these tasks, Petron’s products will not reach the consumers in their proper
state. Indeed, petitioners’ roles were vital inasmuch as they involve the preparation of the
products that Petron will distribute to its consumers.
Furthermore, while it may be true that any able-bodied individual can perform the tasks assigned
to petitioners, the Court notes the undisputed fact that for many years, it was the same able-
bodied individuals (petitioners) who performed the tasks for Petron. The engagement of
petitioners for the same works for a long period of time is a strong indication that such works were
indeed necessary to Petron’s business. In view of these, and considering further that petitioners’
length of service entitles them to become regular employees under the Labor Code, petitioners
are deemed by law to have already attained the status as Petron’s regular employees. As such,
Petron could not terminate their services on the pretext that the service contract it entered with
RDG has already lapsed. For one, and as previously discussed, such regular status had already
attached to them even before the execution of the service contract in 2000. For another, the same
does not constitute a just or authorized cause for a valid dismissal of regular employees.
In sum, the Court finds that RDG is a labor-only contractor. As such, it is considered merely as an
agent of Petron. Consequently, the employer-employee relationship which the Court finds to exist
in this case is between petitioners as employees and Petron as their employer. Petron therefore,
being the principal employer and RDG, being the labor-only contractor, are solidarily liable for
petitioners’ illegal dismissal and monetary claims.
MARLO A. DEOFERIO v INTEL TECHNOLOGY PHILIPPINES, INC.

and/or MIKE WENTLING
G.R. No. 202996, June 18, 2014
Facts:
On February 1, 1996, respondent Intel Technology Philippines, Inc. (Intel) employed Deoferio as a
product quality and reliability engineer. In July 2001, Intel assigned him to the United States as a
validation engineer for an agreed period of two years. On January 27, 2002, Deoferio was
repatriated to the Philippines after being confined at Providence St. Vincent Medical Center for
major depression with psychosis. In the Philippines, he worked as a product engineer.
Deoferio underwent a series of medical and psychiatric treatment at Intel’s expense after his
confinement in the United States. In 2002, Dr. Elizabeth Rondain of Makati Medical Center
diagnosed him to be suffering from mood disorder, major depression, and auditory hallucination.
He was also referred to Dr. Norieta Balderrama, Intel’s forensic psychologist, and to a certain Dr.
Cynthia Leynes who both confirmed his mental condition.
On August 8, 2005, Dr. Paul Lee, a consultant psychiatrist of the Philippine General Hospital,
concluded that Deoferio was suffering from schizophrenia. After several consultations, Dr. Lee
issued a psychiatric report dated January 17,2006 concluding and stating that Deoferio’s
psychotic symptoms are not curable within a period of six months and "will negatively affect his
work and social relation with his co-worker[s]." Pursuant to these findings, Intel issued Deoferio a
notice of termination on March 10, 2006.
Deoferio responded to his termination of employment by filing a complaint for illegal dismissal
with prayer for money claims against respondents Intel and Mike Wentling (respondents). He
denied that he ever had mental illness and insisted that he satisfactorily performed his duties as a
product engineer. He argued that Intel violated his statutory right to procedural due process
when it summarily issued a notice of termination. He further claimed that he was entitled to a
salary differential equivalent to the pre-terminated period of his assignment in the United States
minus the base pay that he had already received. Deoferio also prayed for backwages, separation
pay, moral and exemplary damages, as well as attorney’s fees.
In defense, the respondents argued that Deoferio’s dismissal was based on Dr. Lee’s certification
that: (1) his schizophrenia was not curable within a period of six months even with proper medical
treatment; and (2) his continued employment would be prejudicial to his and to the other
employees’ health. The respondents also insisted that Deoferio’s presence at Intel’s premises
would pose an actual harm to his co-employees as shown by his previous acts.
The respondents further asserted that the twin-notice requirement in dismissals does not apply to
terminations under Article 284 of the Labor Code. They emphasized that the Labor Code’s
implementing rules (IRR) only requires a competent public health authority’s certification to
effectively terminate the services of an employee.
Issues
(1) Whether Deoferio was suffering from schizophrenia and whether his continued
employment was prejudicial to his health, as well as to the health of his co-employees;
(2) Whether the twin-notice requirement in dismissals applies to terminations due to
disease; and
As part of the second issue, the following issues are raised:
(a) Whether Deoferio is entitled to nominal damages for violation of his right to statutory
procedural due process; and
(3) Whether Deoferio is entitled to salary differential, backwages, separation pay, moral
and exemplary damages, as well as attorney’s fees.
Ruling
Intel had an authorized cause to dismiss

Deoferio from employment
The present case involves termination due to disease – an authorized cause for dismissal under
Article 284 of the Labor Code. As substantive requirements, the Labor Code and its IRR require the
presence of the following elements:
(1) An employer has been found to be suffering from any disease.

(2) His continued employment is prohibited by law or prejudicial to his health, as
well as to the health of his co-employees.
(3) A competent public health authority certifies that the disease is of such nature
or at such a stage that it cannot be cured within a period of six months even with
proper medical treatment. With respect to the first and second elements, the
Court liberally construed the phrase "prejudicial to his health as well as to the
health of his co-employees" to mean "prejudicial to his health or to the health of
his co-employees." We did not limit the scope of this phrase to contagious diseases
for the reason that this phrase is preceded by the phrase "any disease" under
Article 284 of the Labor Code, to wit:
Art. 284. Disease as ground for termination. – An employer may terminate the services of an
employee who has been found to be suffering from any disease and whose continued employment
is prohibited by law or is prejudicial to his health as well as to the health of his co-employees:
Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half
(1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6)
months being considered as one (1) whole year. [underscores, italics and emphases ours]
Consistent with this construction, we applied this provision in resolving illegal dismissal cases due
to non-contagious diseases such as stroke, heart attack, osteoarthritis, and eye cataract, among
others. In Baby Bus, Inc. v. Minister of Labor, we upheld the labor arbitration’s finding that Jacinto
Mangalino’s continued employment – after he suffered several strokes – would be prejudicial to
his health. In Duterte v. Kingswood Trading Co., Inc., we recognized the applicability of Article
284 of the Labor Code to heart attacks. In that case, we held that the employer- company’s failure
to present a certification from a public health authority rendered Roque Duterte’s termination
due to a heart attack illegal. We also applied this provision in Sy v. Court of Appeals to determine
whether Jaime Sahot was illegally dismissed dueto various ailments such as presleyopia,
hypertensive retinopathy, osteoarthritis, and heart enlargement, among others. In Manly Express,
Inc. v. Payong, Jr., we ruled that the employer-company’s non-presentment of a certification from
a public health authority with respect to Romualdo Payong Jr.’s eye cataract was fatal to its
defense.
The third element substantiates the contention that the employee has indeed been suffering from
a disease that: (1) is prejudicial to his health as well as to the health of his co-employees; and (2)
cannot be cured within a period of six months even with proper medical treatment. Without the
medical certificate, there can be no authorized cause for the employee’s dismissal. The absence of
this element thus renders the dismissal void and illegal.
Simply stated, this requirement is not merely a procedural requirement, but a substantive one. The
certification from a competent public health authority is precisely the substantial evidence
required by law to prove the existence of the disease itself, its non-curability within a period of six
months even with proper medical treatment, and the prejudice that it would cause to the health
of the sick employee and to those of his co-employees.
In the current case, we agree with the CA that Dr. Lee’s psychiatric report substantially proves that
Deoferio was suffering from schizophrenia, that his disease was not curable within a period of six
months even with proper medical treatment, and that his continued employment would be
prejudicial to his mental health. This conclusion is further substantiated by the unusual and bizarre
acts that Deoferio committed while at Intel’s employ.
The twin-notice requirement applies to

terminations under Article 284 of the Labor Code
The Labor Code and its IRR are silent on the procedural due process required in terminations due
to disease. Despite the seeming gap in the law, Section 2, Rule 1, Book VI of the IRR expressly
states that the employee should be afforded procedural due process in all cases of dismissals.
In Sy v. Court of Appeals and Manly Express, Inc. v. Payong, Jr., promulgated in 2003 and 2005,
respectively, the Court finally pronounced the rule that the employer must furnish the employee
two written notices in terminations due to disease, namely: (1) the notice to apprise the employee
of the ground for which his dismissal is sought; and (2) the notice informing the employee of his
dismissal, to be issued after the employee has been given reasonable opportunity to answer and to
be heard on his defense. These rulings reinforce the State policy of protecting the workers from
being terminated without cause and without affording them the opportunity to explain their side
of the controversy.
From these perspectives, the CA erred in not finding that the NLRC gravely abused its discretion
when it ruled that the twin-notice requirement does not apply to Article 284 of the Labor Code.
This conclusion is totally devoid of any legal basis; its ruling is wholly unsupported by law and
jurisprudence.
Deoferio is entitled to nominal damages for violation

of his right to statutory procedural due process
With respect to Article 284 of the Labor Code, terminations due to disease do not entail any
wrongdoing on the part of the employee. It also does not purely involve the employer’s willful and
voluntary exercise of management prerogative – a function associated with the employer's
inherent right to control and effectively manage its enterprise. Rather, terminations due to
disease are occasioned by matters generally beyond the worker and the employer's control.
In fixing the amount of nominal damages whose determination is addressed to our sound
discretion, the Court should take into account several factors surrounding the case, such as: (1) the
employer’s financial, medical, and/or moral assistance to the sick employee; (2) the flexibility and
leeway that the employer allowed the sick employee in performing his duties while attending to
his medical needs; (3) the employer’s grant of other termination benefits in favor of the employee;
and (4) whether there was a bona fide attempt on the part of the employer to comply with the
twin-notice requirement as opposed to giving no notice at all.
We award Deoferio the sum of P30,000.00 as nominal damages for violation of his statutory right
to procedural due process. In so ruling, we take into account Intel’s faithful compliance with
Article 284 of the Labor Code and Section 8, Rule 1, Book 6 of the IRR. We also note that
Deoferio’s separation pay equivalent to one-half month salary for every year of service was validly
offset by his matured car loan. Under Article 1278 of the Civil Code, in relation to Article 1706 of
the Civil Code and Article 113(c) of the Labor Code, compensation shall take place when two
persons are creditors and debtors of each other in their own right. We likewise consider the fact
that Intel exhibited real concern to Deoferio when it financed his medical expenses for more than
four years. Furthermore, prior to his termination, Intel liberally allowed Deoferio to take lengthy
leave of absences to allow him to attend to his medical needs.
Deoferio is not entitled to salary differential,

backwages, separation pay, moral and
exemplary damages, as well as attorney's fees
Deoferio's claim for salary differential is already barred by prescription. Under Article 291 of the
Labor Code, all money claims arising from employer-employee relations shall be filed within three
years from the time the cause of action accrued. In the current case, more than four years have
elapsed from the pre-termination of his assignment to the United States until the filing of his
complaint against the respondents. We thus see no point in further discussing this matter. His
claim for backwages, separation pay, moral and exemplary damages, as well as attorney's fees
must also necessarily fail as a consequence of our finding that his dismissal was for an authorized
cause and that the respondents acted in good faith when they terminated his services.
LIBCAP MARKETING CORP., JOHANNA J. CELIZ, and MA. LUCIA G. MONDRAGON vs LANNY
JEAN B. BAQUIAL
G.R. No. 192011, June 30, 2014
Facts:
Petitioner Libcap Marketing Corporation (Libcap) is engaged in the freight forwarding business
with offices in Iloilo City. Petitioner Johanna J. Celiz (Celiz) is Libcap’s Human Resources Division
Head, and petitioner Ma. Lucia G. Mondragon is Libcap’s Vice-President for Administration.
Respondent Lanny Jean B. Baquial was employed by Libcap on October 12, 1999 as accounting
clerk for Libcap’s Super Express branch in Cagayan de Oro City. Her functions included depositing
Libcap’s daily sales and collections in Libcap’s bank account with Global Bank (now PSBank).
Sometime in March 2003, an audit of Libcap’s Super Express branch in Cagayan de Oro City was
conducted, and the resulting audit report showed that respondent made a double reporting of a
single deposit made on April 2,2001. In other words, a single April 2, 2001 bank deposit of
P1,437.00 was used to cover or account for two days’ sales of apparently identical amounts,
covering the undeposited collection for March 19, 2001 and current sales for March 31, 2001.
In a March 28, 2003 letter, Celiz required respondent to explain in writing within 24 hours why the
cash sales of P1,437.00 each for March 31, 2001 and April 1, 2001 – as reported in the daily
collection reports – were covered by a single April 2, 2001 validated bank deposit slip for only
P1,437.00.
In an April 1, 2003 written reply, respondent claimed that on April 2, 2001, she deposited with the
bank two separate amounts of P1,437.00 each, but that it appears that both separate deposits
were covered by a single bank validation, which defect should not be blamed on her but on the
bank. Respondent then forwarded to Libcap’s head office two bank deposit slips to show that she
deposited two amounts of P1,437.00 each on April 2,2001 with Global Bank.
Libcap discovered that only one P1,437.00 deposit was made on April 2, 2001. On verification with
PS Bank, its branch head confirmed in an August 7, 2003 letter that only a single deposit of
P1,437.00 was posted on April 2, 2001, and that there was no misposting or deposits to other
accounts of the same amount made on such date. The two bank deposit slips forwarded by
respondent revealed that only one of them was validated by the bank. Libcap’s bank account
passbook showed that only one deposit for P1,437.00 was made on April 2, 2001. Finally, Libcap’s
Global Bank bank statement covering April 1–30, 2001 showed that only one cash deposit of
P1,437.00 was made on April 2, 2001.
Meanwhile, the amount of P1,437.00 was deducted from respondent’s salary each payday on a
staggered basis – or on April 30, June 15, and June 30, 2003, respectively.
On July 26, 2003, respondent received a Notice of Administrative Investigation requiring her to
attend a July 28, 2003 investigation at Libcap’s Iloilo office. Respondent was unable to attend due
to lack of financial resources.
On July 28, 2003, respondent received a 2nd Notice of Administrative Investigation requiring her
to attend an August4, 2003 investigation in Iloilo City. Again, respondent failed to attend.
Respondent was placed on preventive suspension from July 29, 2003 to August 12, 2003.
Respondent sent petitioners an August 6, 2003 written explanation.
On August 16, 2003, respondent received a Notice of Termination dated August 9, 2003, stating
that she was terminated from employment effective August 12, 2003 for dishonesty,
embezzlement, inefficiency, and for commission of acts inconsistent with Libcap’s work standards.
Respondent filed a labor complaint for illegal dismissal against petitioners.
Issues:
1.) Whether the respondent was accorded due process
2.) Whether respondent is entitled to nominal damages
Ruling
Respondent was denied due process.
Respondent’s case has been pre-judged even prior to the start of the investigation. This is evident
from the fact that the amount of P1,437.00 – or the amount which petitioners claim was
embezzled – was peremptorily deducted each payday from respondent’s salary on a staggered
basis, culminating on June 30, 2003, or nearly one month prior to the scheduled investigation on
July 28, 2003. In doing so, petitioners have made it clear that they considered respondent as the
individual responsible for the embezzlement; thus, in petitioners’ eyes, respondent was adjudged
guilty even before she could be tried – the payroll deductions being her penalty and recompense.
By pre-judging respondent’s case, petitioners clearly violated her right to due process from the
very beginning, and from then on it could not be expected that she would obtain a fair resolution
of her case. In a democratic system, the infliction of punishment before trial is fundamentally
abhorred. What petitioners did was clearly illegal and improper.
While it is correct to conclude that there was valid cause for dismissal considering that
respondent did not contest the NLRC or CA findings to such effect through an appropriate appeal
or petition, the only issue that remains to be tackled is the correctness of the award of nominal
damages.
Entitlement to nominal damages

Petitioners claim that respondent is not entitled to financial assistance given that she is guilty of
theft or embezzlement. The law and jurisprudence, on the other hand, allow the award of nominal
damages in favor of an employee in a case where a valid cause for dismissal exists but the
employer fails to observe due process in dismissing the employee. Financial assistance is granted
as a measure of equity or social justice, and is in the nature or takes the place of severance
compensation.
On the other hand, nominal damages "may be awarded to a plaintiff whose right has been
violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, and
not for indemnifying the plaintiff for any loss suffered by him. Its award is thus not for the purpose
of indemnification for a loss but for the recognition and vindication of a right." The amount of
nominal damages to be awarded the employee is addressed to the sound discretion of the court,
taking into consideration the relevant circumstances.
Though the Court is given the latitude to determine the amount of nominal damages to be
awarded to an employee who was validly dismissed but whose due process rights were violated, a
distinction should be made between a valid dismissal due to just causes under Article 282 of the
Labor Code and those based on authorized causes, under Article 283.
A dismissal for just cause under Article 282 implies that the employee concerned has committed,
or is guilty of, some violation against the employer, i.e. the employee has committed some serious
misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has neglected his
duties. Thus, it can be said that the employee himself initiated the dismissal process.
On another breath, a dismissal for an authorized cause under Article 283 does not necessarily
imply delinquency or culpability on the part of the employee. Instead, the dismissal process is
initiated by the employer’s exercise of his management prerogative, i.e. when the employer opts
to install labor saving devices, when he decides to cease business operations or when, as in this
case, he undertakes to implement a retrenchment program.
If the dismissal is based on a just cause under Article 282 but the employer failed to comply with
the notice requirement, the sanction to be imposed upon him should be tempered because the
dismissal process was, in effect, initiated by an act imputable to the employee; and if the dismissal
is based on an authorized cause under Article 283 but the employer failed to comply with the
notice requirement, the sanction should be stiffer because the dismissal process was initiated by
the employer’s exercise of his management prerogative.
Prescinding from the foregoing, we find it necessary to reduce the amount of nominal damages
the CA awarded from P100,000.00 to P30,000.00. We cannot subscribe to the CA’s ratiocination
that since respondent rendered overtime work for four years without receiving any overtime pay,
she is entitled to P100,000.00 nominal damages. Nominal damages are awarded for the purpose
of vindicating or recognizing a right and not for indemnifying a loss. Hence, the CA should have
limited the justification of the award of nominal damages to petitioners’ violation of respondent’s
right to due process in effecting her termination. It should not have considered the claimed
unpaid overtime pay.
MCMER CORPORATION, INC., eta l. v. NATIONAL LABOR RELATIONS COMMISSION AND

FELICIANO C. LIBUNAO, JR.
G.R. No. 193421, June 04, 2014
The facts:
Private respondent was employed by petitioner McMer Corporation, Inc. ( McMer) on August 5,
1999 as Legal Assistant and was eventually promoted as Head of Legal Department, and
concurrently, as Officer-in-Charge of petitioner McMer’s Legal and Administrative Department,
effective on January 3, 2000 with a monthly salary of P10,500.00 as basic pay plus P3,500.00 as
living and representation allowance, plus the sum of P5,000.00 which is not reflected on the
payroll.
According to private respondent, for quite some time, he and petitioners, specifically Macario D.
Roque, Jr. (Roque) and Cecilia R. Alvestir (Alvestir), McMer’s General Manager and President,
respectively, have been on a cold war brought often by the disagreement in the design and
implementation of company policies and procedures. However, the subsisting rift between him
and petitioners heightened on July 10, 2007 when petitioner McMer started verbally and
maliciously imputing against Ms. Ginalita C. Guiao, Department Head III, Logistics Department,
and another officer of the Logistics Department, Ms. Marissa A. Rebulado, Department Head I,
certain unfounded score of inefficient performance of duty.
At around noon on July 20, 2007, petitioner Roque gave an immediate summon upon private
respondent to proceed to his office to discuss administrative matters, including but not limited to
the alleged absence and tardiness of private respondent.
Private respondent, sensing some unusual development in the attitude of petitioner Roque,
instead of responding to the summon, went to petitioner Alvestir’s office, and informed her of
petitioner Roque’s disposition and his fear of a perceived danger to his person. He then requested
for petitioner Alvestir to go to petitioner Roque’s office instead, of which petitioner Alvestir
conceded. Moments later, petitioner Roque, at the height of anger, confronted private
respondent and commanded him to proceed to his office. At this juncture, private respondent was
too scared to confront Roque as the latter may inflict physical harm on him.
As a consequence of the foregoing, private respondent elected to discontinue work that

afternoon and immediately proceeded to the Valenzuela Police Headquarters to report on the
incident in the police blotter. Private respondent did not report for work from July 21, 2007 up to
July 30, 2007. Because of this, petitioner McMer, through petitioner Alvestir, issued a
Memorandum dated July 30, 2007 directing private respondent to explain within five (5) days why
no disciplinary action should be imposed upon him for being in absence without official leave
(AWOL). In response, private respondent sent a letter dated August 6, 2007 explaining the reason
why he refused to report for work during the aforesaid period.
On August 6, 2007, private respondent Feliciano C. Libunao, Jr. filed a complaint for unfair labor
practices, constructive illegal dismissal, non-payment of 13th month pay and separation pay,
moral and exemplary damages, as well as attorney’s fees, against petitioners McMer Corporation,
Inc., Roque, and Alvestir.
In response, petitioners sent a letter dated August 9, 2007 acknowledging private respondent’s
letter dated August 6, 2007 and informing the latter that his letter is being judiciously considered
by management.
On August 18, 2007, a conciliary meeting was held inside petitioners’ premises to discuss the
possibility of an amicable settlement. In the end, however, private respondent was informed
verbally by petitioner Alvestir that on account of strained relationship brought about by the
institution of a labor case against petitioners, the latter is inclined to dismiss him from office.
Private respondent was, likewise, offered a separation pay in the sum of P55,000.00.
Issue:
Whether or not private respondent was constructively dismissed
Ruling:
After a careful consideration of the evidence and records at hand, we uphold the factual and legal
findings of the CA that there was constructive dismissal because of the following acts committed
by petitioners against private respondent, to wit:
1. About noon of July 20, 2007, petitioner Roque went to private respondent’s
office at the height of his anger with threat to inflict physical harm, shouted a
command for private respondent to proceed to petitioner’s office;
2. Private respondent was approached sarcastically with commanding voice by

petitioner Roque even in front of some officers and rank-and-file employees and
newly-hired employees; and
3. Private respondent’s professional ethic or moral belief was compromised due to

certain business practices of petitioner McMer that were never exposed due to
the employee’s fear of reprisal, as shown in private respondent’s Position Paper.
We disagree with petitioners’ view that the Affidavit executed by Guiao is insufficient to depict
the hostile working environment petitioner McMer maintains. It bears stressing that Guiao has
actual knowledge of facts derived from her personal observation of what transpired on July 20,
2007.
As correctly observed by the CA, the sworn statement of Guiao is not only relevant and material
evidence, the same is likewise reliable and competent given that Guiao was physically present at
petitioner Alvestir’s office when the incident happened, and has therefore personal knowledge of
what transpired therein. Further, we find her description of petitioner Roque’s disposition
adequate to support a conclusion that private respondent was caught in the state of humiliation
and embarrassment in the presence of his co-employees as a result thereof.
Indeed, the CA’s Decision was not decided only on what transpired on July 20, 2007. Various
factors were considered in determining the working environment of petitioner McMer, to
determine whether or not private respondent was in a position wherein he would have felt
compelled to give up his position under the circumstances because continued employment was
just impossible, unreasonable or unlikely.
As may gleaned from the records, what transpired on July 20, 2007 was not merely an isolated
outburst on the part of petitioner Roque. The latter’s behaviour towards his employees shows a
clear insensibility rendering the working condition of private respondent unbearable. Private
respondent had reason to dawdle and refuse to comply with the summon of petitioner Roque out
of severe fear that he will be physically harmed. In fact, the same was clearly manifested by his
immediate reaction to the situation by going to the Valenzuela Police to report the incident.
Moreover, after a judicious scrutiny of the records, we find that private respondent has exhibited a
strong opposition to some company practices resulting in a severe marginal distance between him
and petitioners Roque and Alvestir at the workplace. This, together with the harassment and
intimidation displayed by petitioner Roque to his employees, became so unbearable for private
respondent to continue his employment with petitioner McMer. The fact that none of the
employees complained or brought this to the attention of the appropriate authority does not
validate petitioners’ actions. For private respondent, retaining the employment despite his despair
was a matter of principle. Private respondent reasoned that it was difficult for him to look for
another employment, considering that at the time he filed his Position Paper, he was already 58
years old. His eventual decision to leave petitioners due to the agonizing situation at the
workplace cannot, therefore, be discounted.
The NLRC and the CA, therefore, correctly appreciated the foregoing events as badges of
constructive dismissal, since private respondent could not have given up a job he has engaged in
for eight years unless it has become so unbearable for him to stay therein. Indeed, private
respondent felt compelled to give up his employment.
As far as private respondent is concerned, how the working place is being run has caused
inordinate strain on his professional work and moral principles, even stretching to desecration of
dignity in the workplace. The allegation that all of private respondent’s staff were removed one by
one until finally only the latter was left alone performing managerial and clerical duties is merely
part of the greater scheme brought forth by the insensibility of petitioners in dealing with the
employees.
In Siemens Philippines, Inc. v. Domingo, we have declared that “an employee who is forced to
surrender his position through the employer's unfair or unreasonable acts is deemed to have been
illegally terminated and such termination is deemed to be involuntary.” Constructive dismissal
does not always involve forthright dismissal or diminution in rank, compensation, benefit and
privileges. There may be constructive dismissal if an act of clear discrimination, insensibility or
disdain by an employer becomes so unbearable on the part of the employee that it could
foreclose any choice by him except to forego his continued employment.
We ought to remind petitioners regarding the doctrine we laid down in Aguilar v. Burger Machine
Holdings Corporation, to wit –
The test of constructive dismissal is whether a reasonable person in the employee’s position would
have felt compelled to give up his position under the circumstances . Based on the factual
considerations in the instant case, we hold that the hostile and unreasonable working conditions
of petitioner justified the finding of the Labor Arbiter and the NLRC that petitioner was
constructively dismissed. Petitioner’s performance may not have been exceptional as he ranked
14th in the quality food service control survey for the 1st quarter of 2002. But he was certainly not
grossly inefficient as Burger Machine pictured him to be. In fact, he received several citations and
was able to comply with the directive to reduce his shortages for the month of November 2001.
From all indications, there is really no ground to dismiss petitioner for gross inefficiency. And, as
Burger Machine saw it, the only way to get rid of the latter was to constructively dismiss him .
No employee should be subjected to constant harassment, ridicule and inhumane treatment on
the basis of management prerogative or even for poor performance at work. While we concur
with petitioners that raising one’s voice in the workplace as a result of displeasure in the
performance of an employee is not illegal per se, the right to impose disciplinary sanctions upon
an employee for just and valid cause is not without limit. The means does not justify the end; thus,
the same should be in accordance with the norms of due process.
In view of the foregoing, we find that the evidence on record is consistent with the ruling of the
NLRC, as affirmed by the CA, that private respondent was constructively dismissed.
NETLINK COMPUTER INCORPORATED

vs. ERIC DELMO
G.R. No. 160827, June 18, 2014
Facts:
On November 3, 1991, Netlink Computer, Inc. Products and Services (Netlink) hired Eric S. Delmo
(Delmo) as account manager tasked to canvass and source clients and convince them to purchase
the products and services of Netlink. Delmo worked in the field most of the time. He and his
fellow account managers were not required to accomplish time cards to record their personal
presence in the office of Netlink. He was able to generate sales worth P35,000,000.00, more or
less, from which he earned commissions amounting to P993,558.89 and US$7,588.30. He then
requested payment of his commissions, but Netlink refused and only gave him partial cash
advances chargeable to his commissions. Later on, Netlink began to nitpick and fault find, like
stressing his supposed absences and tardiness. In order to force him to resign, Netlink issued
several memoranda detailing his supposed infractions of the company’s attendance policy.
Despite the memoranda, Delmo continued to generate huge sales for Netlink.
On November 28, 1996, Delmo was shocked when he was refused entry into the company
premises by the security guard pursuant to a memorandum to that effect. His personal belongings
were still inside the company premises and he sought their return to him. This
Issue
Whether or not the payment of the commissions should be in US dollars;
Ruling
As a general rule, all obligations shall be paid in Philippine currency. However, the contracting
parties may stipulate that foreign currencies may be used for settling obligations. This is pursuant
to Republic Act No. 8183, which provides as follows:
Section 1. All monetary obligations shall be settled in the Philippine currency

which is legal tender in the Philippines. However, the parties may agree that the
obligation ortransaction shall be settled in any other currency at the time of
payment.
We remarked in C.F. Sharp & Co. v. Northwest Airlines, Inc. that the repeal of Republic Act No.
529 had the effect of removing the prohibition on the stipulation of currency other than
Philippine currency, such that obligations or transactions could already be paid in the currency
agreed upon by the parties. However, both Republic Act No. 529 and Republic Act No. 8183 did
not stipulate the applicable rate of exchange for the conversion of foreign currency-incurred
obligations to their peso equivalent. It follows, therefore, that the jurisprudence established under
Republic Act No. 529 with regard to the rate of conversion remains applicable. In C.F. Sharp, the
Court cited Asia World Recruitment,Inc. v. NLRC, to the effect that the real value of the foreign
exchange-incurred obligation up to the date of its payment should be preserved.
There was no written contract between Netlink and Delmo stipulating that the latter’s
commissions would be paid in US dollars. The absence of the contractual stipulation
notwithstanding, Netlink was still liable to pay Delmo in US dollars because the practice of paying
its sales agents in US dollars for their US dollar-denominated sales had become a company policy.
This was impliedly admitted by Netlink when it did not refute the allegation that the commissions
earned by Delmo and its other sales agents had been paid in US dollars. Instead of denying the
allegation, Netlink only sought a declaration that the US dollar commissions be paid using the
exchange rate at the time of sale. The principle of non-diminution of benefits, which has been
incorporated in Article 100 of the Labor Code, forbade Netlink from unilaterally reducing,
diminishing, discontinuing or eliminating the practice. Verily, the phrase "supplements, or other
employee benefits" in Article 100 is construed to mean the compensation and privileges received
by an employee aside from regular salaries or wages.
With regard to the length of time the company practice should have been observed to constitute
a voluntary employer practice that cannot be unilaterally reduced, diminished, discontinued or
eliminated by the employer, we find that jurisprudence has not laid down any rule requiring a
specific minimum number of years. In Davao Fruits Corporation v. Associated Labor Unions, the
company practice lasted for six years. In Davao Integrated Port Stevedoring Services v. Abarquez,
the employer, for three years and nine months, approved the commutation to cash of the
unenjoyed portion of the sick leave with pay benefits of its intermittent workers. In Tiangco v.
Leogardo, Jr., the employer carried on the practice of giving a fixed monthly emergency
allowance from November 1976 to February 1980, or three years and four months. In Sevilla
Trading Company v. Semana, the employer kept the practice of including non-basic benefits such
as paid leaves for unused sick leave and vacation in the computation of their 13th-month pay for
at least two years.
With the payment of US dollar commissions having ripened into a company practice, there is no
way that the commissions due to Delmo were to be paid in US dollars or their equivalent in
Philippine currency determined at the time of the sales. To rule otherwise would be to cause an
unjust diminution of the commissions due and owing to Delmo.
DIONARTO Q. NOBLEJAS v. ITALIAN MARITIME ACADEMY PHILS,

INC., et al.
G.R. No. 207888, June 09, 2014
Facts:
Petitioner Dionarto Q. Noblejas (Noblejas) filed a complaint for illegal dismissal, tax refund, moral
and exemplary damages, non-payment of 13 th month pay, food, gasoline and schooling
allowances, health insurance, monetized leave, and attorney’s fees, against Italian Maritime
Academy Phils., Inc. (IMAPI), Capt. Nicolo S. Terrei (Capt. Terrei), Raceli S. Ferrez (Ferrez), and Ma.
Teresa R. Mendoza (Mendoza).
IMAPI was a training center for seamen and an assessment center for determination of the
qualifications and competency of seamen and officers for possible promotion. Capt. Terrei was
the Managing Director of IMAPI while Ferrez was his secretary. Mendoza was the company’s
Administrative Manager.
Record shows that Procerfina SA. Terrei, IMAPI President, wrote a letter to Noblejas informing
him that he had been appointed as training instructor/assessor of the company on a contractual
basis for a period of three (3) months effective May 20, 2009, with a monthly salary of
Php75,000.00 inclusive of tax. After the expiration of the 3-month period, IMAPI hired Noblejas
anew as training instructor/assessor with the same salary rate, but no written contract was drawn
for his rehiring.
The absence of a written contract to cover the renewal of his employment became Noblejas’
major concern. To address all his apprehensions, he wrote Capt. Terrei a letter, dated March 9,
2010, requesting that a new contract be executed to reflect the following provisions that they had
allegedly agreed upon during their conversation on May 19, 2009, to wit: 1] that his monthly
salary would be ?75,000.00, tax excluded, and that 50% of his SSS premium would be shouldered
by the company; and 2] that after the completion of his 3-month contract, he would be given the
option to choose either - a) to be regularly employed as an instructor of IMAPI; or b) to go on
board a vessel with the company extending him financial aid for the processing of pertinent
documents, which amount would be later on deducted from his salary. Likewise in the same letter,
Noblejas intimated that he was electing to continue working for the company as its regular
instructor.
Noblejas averred that the company did not act on his letter-request, so he sought an audience
with Capt. Terrei on March 16, 2010. During the meeting, an altercation between them ensued.
He claimed that after that incident, Capt. Terrei instructed Ferrez to dismiss him from
employment. He claimed that when he asked from Ferrez for a copy of his old contract, she
allegedly replied, “No, you better pack up all your things now and go, you are now dismissed and
you are no longer part in this office – clearly, you are terminated from this day on. ”
In their position paper, respondents submitted that they could not be adjudged guilty of illegal
dismissal because there was no positive and overt act of dismissing Noblejas from employment.
Respondents presented a different version of what took place on March 16, 2010. According to
respondents, Noblejas got angry, hurled invectives against Ferrez and even threatened to file a
case against them after she had relayed to him the response of Capt. Terrei to his March 9, 2010
letter to the effect that there was no previous agreement to grant him tax refund, health
insurance and food, schooling and gasoline allowances and that he had to render at least one year
of service before the company could decide whether to accord him the status of a regular
employee. The following day, March 17, 2010, he did not report for work anymore and filed the
complaint against them.
Respondents theorized that the complaint was filed on the mistaken impression by Noblejas that
the failure to meet his demands, enumerated in his March 9, 2010 letter, was tantamount to his
termination from employment. They, however, insisted that he was not entitled to 13th month pay
because he was hired as a consultant and not as a regular employee. For unused leave credits, they
posited that IMAPI could not be held liable in view of their payment to him of his sick leave pay in
the aggregate amount of P21,075.00.
Ruling:
Nature of Noblejas’ employment
Pursuant to Article 280 of the Labor Code, there are two kinds of regular employees, namely: (1)
those who are engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer; and (2) those who have rendered at least one year of service,
whether continuous or broken, with respect to the activities in which they are employed. 13 Regular
employees are further classified into (1) regular employees - by nature of work and (2) regular
employees - by years of service. The former refers to those employees who perform a particular
function which is necessary or desirable in the usual business or trade of the employer, regardless
of their length of service; while the latter refers to those employees who have been performing
the job, regardless of its nature thereof, for at least a year.
In the case at bench, Noblejas was employed by IMAPI as a training instructor/assessor for a
period of three (3) months effective May 20, 2009. After the end of the 3-month period, he was
rehired by IMAPI for the same position and continued to work as such until March 16, 2010. There
is no dispute that the work of Noblejas was necessary or desirable in the business or trade of
IMAPI, a training and assessment center for seamen and officers of vessels. Moreover, such
continuing need for his services is sufficient evidence of the necessity and indispensability of his
services to IMAPI’s business. Taken in this light, Noblejas had indeed attained the status of a
regular employee at the time he ceased to report for work on March 17, 2010.
No illegal dismissal
There was, however, no illegal dismissal.
Fair evidentiary rule dictates that before employers are burdened to prove that they did not
commit illegal dismissal, it is incumbent upon the employee to first establish by substantial
evidence the fact of his or her dismissal. The Court is not unmindful of the rule in labor cases that
the employer has the burden of proving that the termination was for a valid or authorized cause. It
is likewise incumbent upon the employees, however, that they should first establish by competent
evidence the fact of their dismissal from employment. It is an age-old rule that the one who
alleges a fact has the burden of proving it and the proof should be clear, positive and convincing.
Mere allegation is not evidence.
Aside from his mere assertion, no corroborative and competent evidence was adduced by
Noblejas to substantiate his claim that he was dismissed from employment. The record is bereft of
any indication that he was prevented from returning to work or otherwise deprived of any work
assignment. It is also noted that no evidence was submitted to show that respondent Ferrez, the
secretary of Capt. Terrei, was actually authorized by IMAPI to terminate the employment of the
company’s employees or that Ferrez was indeed instructed by Capt. Terrei to dismiss him from
employment.
The Court finds it odd that, instead of clarifying from Capt. Terrei what he heard from Ferrez,
Noblejas immediately instituted an illegal dismissal case against the respondents the day
following the alleged incident and never reported back for work since then.
Let it be underscored that the fact of dismissal must be established by positive and overt acts of an
employer indicating the intention to dismiss. Indeed, a party alleging a critical fact must support
his allegation with substantial evidence, for any decision based on unsubstantiated allegation
cannot stand without offending due process. Here, there is no sufficient proof showing that
Noblejas was actually laid off from work. In any event, his filing of a complaint for illegal dismissal,
irrespective of whether reinstatement or separation pay was prayed for, could not by itself be the
sole consideration in determining whether he has been illegally dismissed. All circumstances
surrounding the alleged termination should also be taken into account.
For the above reasons, the Court sustains the LA in granting Noblejas proportionate 13th month
pay covering the period of January 1, 2010 to March 15, 2010 in the aggregate amount of
P15,625.00.
Furthermore, the respondents should accept him back and reinstate him to his former position.
There should, however, be no payment of backwages under the principle of “no work, no pay.”
PHILIPPINE SPRING WATER RESOURCES INC. /DANILO Y. LUA v.

COURT OF APPEALS AND JUVENSTEIN B. MAHILUM
G.R. No. 205278, June 11, 2014
The Facts:
Petitioner Philippine Spring Water Resources, Inc. (PSWRI), engaged in the business of
manufacturing, selling and distributing bottled mineral water, hired Mahilum as Vice-President
for Sales and Marketing, for a monthly salary of P15,000.00 plus 0.25% commission on every cash
on delivery and another 0.25% on new accounts from July to August, 2004.
Sometime in November 2004, the inauguration of PSWRI’s Bulacan plant would be celebrated at
the same time with the company’s Christmas party. Mahilum was designated as over-all chairman
of the affair to be held on December 19, 2004. A few days after his designation, Mahilum called all
committee chairpersons to a meeting for the program of action and budget plan. The meeting,
however, was reset to the following day as some visitors arrived without prior appointment.
Mahilum and his guests discussed sensitive legal issues relative to PSWRI’s water drilling inside
the plant over the protest of nearby residents and the local water district.
The next day, Mahilum requested Ms. Vicky Evangelista (Evangelista), Vice-President for
Administration and Finance, to take charge of the meeting for the inauguration should he fail to
come back on time. He attended a prior appointment with major clients in Makati City. Later,
Mahilum learned that Evangelista postponed the meetings because she accompanied the
daughter of petitioner Danilo Lua (Lua), President and Chief Executive Officer (CEO), to Bulacan.
Thereafter, meetings on the program of activities for the inauguration and Christmas party were
conducted without Mahilum’s presence. Evangelista took charge and assumed the lead role until
the day of the affair.
On the inaugural day, Mahilum was not seen around to supervise the program proper as he
entertained some visitors of the company. According to him, he delegated the task to Evangelista.
Mahilum’s attention was, however, called when Lua got furious because he was not recognized
during the program. He was not mentioned in the opening remarks or called to deliver his
inaugural speech. Upon inquiry from the emcees of the program, Mahilum learned that they were
not apprised of Lua’s decision to deliver the speech considering that he previously declined to
have a part in the program as he would be very busy during the affair. Thus, Lua’s speech appeared
to be “optional” in the printed program during the affair.
On the following day, Mahilum was required to explain why Lua was not recognized and made to
deliver his speech. At the same time, he was placed under preventive suspension for thirty (30)
days. Mahilum submitted his written explanation. Subsequently, an investigation was conducted.
When his 30-day suspension ended, Mahilum reported for work but was prevented from entering
the workplace. Sometime in the first week of March 2005, he received a copy of the
Memorandum, dated January 31, 2005, terminating his services effective the next day or on
February 1, 2005. On February 9, 2005, a clearance certificate was issued to Mahilum. He received
the amount of PhP43,998.56 and was made to execute the Release, Waiver and Quitclaim in favor
of the company and Lua.
Mahilum filed a complaint for illegal dismissal with prayer for reinstatement, payment of back
wages and damages. He argued that he was illegally suspended and, thereafter, dismissed
constructively from the service. He also claimed that he was forced to sign the waiver.
On April 25, 2006, the Labor Arbiter (LA) dismissed Mahilum’s complaint for lack of merit on the
ground that the quitclaim he had executed barred his right to question his dismissal under the
principle of estoppel.
Aggrieved, Mahilum appealed the decision to the National Labor Relations Commission (NLRC).
In its October 11, 2006 Decision, the NLRC ruled in his favor on the ground that the subject
quitclaim did not bar the institution of the case for illegal dismissal. It held that while not all
waivers and quitclaims were invalid as against public policy, the LA’s consideration of the waiver
did not constitute a reasonable settlement of his cause of action. The amount he received from
the company consisted of his 13 th month pay, salaries for the period subsequent to his preventive
suspension and earned commissions. These were benefits which Mahilum had earned by virtue of
his employment and not in consideration of his separation from service.
Anent the issue of illegal termination, the NLRC held that Mahilum was illegally dismissed by
PSWRI. While he may have failed to discharge his duties as chairman of the inauguration of the
Bulacan plant, the same was not sufficient to deprive him of his employment on the ground of loss
of confidence. Although he shared a substantial part of it, Mahilum could not be entirely blamed
for the fiasco. Loss of trust and confidence could not be indiscriminately used by employers to
justify almost every instance of termination of a managerial employee and as a defense against
claim of arbitrary dismissal.
The CA reversed the NLRC decision. It ruled that Mahilum’s conduct during the inauguration did
not constitute wilful disobedience or breach of trust, hence, rendering his termination as illegal
and without cause. However, it upheld the validity of the executed quitclaim. As a top executive
of the company, Mahilum could not have been an unsuspecting or gullible person who
misunderstood the import of the document.
Ruling:
Mahilum was illegally dismissed
According to the petitioners, Mahilum’s behavior during the inauguration/party was allegedly
tantamount to: 1] serious misconduct, as displayed by a drinking binge with his own visitors
causing the shame and humiliation of Lua; and 2] willful disobedience, as shown by his refusal to
carry out legitimate orders.
As previously explained, Mahilum was a regular employee who was entitled to security of tenure.
Thus, he could only be dismissed from service for causes provided in Article 282 of the Labor
Code. At this point, it bears stressing that the NLRC and the CA, in their decisions, both found
Mahilum to have been illegally dismissed.
The well-entrenched rule, especially in labor cases, is that findings of fact of quasi-judicial bodies,
like the NLRC, are accorded with respect, even finality, if supported by substantial evidence.
Particularly when passed upon and upheld by the CA, they are binding and conclusive upon the
Court and will not normally be disturbed. Although this doctrine is not without exceptions, the
Court finds that none is applicable to the present case. Here, the CA affirmed the ruling of the
NLRC and adopted as its own the latter's factual findings as to Mahilum’s illegal dismissal.
Consequently, the Court finds no reason to depart from the finding that Mahilum’s failure to
effectively discharge his assignment as the over-all chairman of the festivities was due to mere
inadvertence and the mistaken belief that he had properly delegated the details of the program
to another officer.
Further, his designation as the chairman of the whole affair did not form part of his duty as a
supervisor. Mahilum was engaged to supervise the sales and marketing aspects of PSWRI’s
Bulacan Plant. Verily, the charge of loss of trust and confidence had no leg to stand on, as the act
complained of was not work-related. Simply put, the petitioners were not able to prove that
Mahilum was unfit to continue working for the company.
Likewise, warranting the agreement of the Court is the finding of the CA in its Amended Decision
that the quitclaim executed by Mahilum did not operate to bar a cause of action for illegal
dismissal. That the amounts received by Mahilum were only those owing to him under the law
indeed bolstered the fact that the quitclaim was executed without consideration. Suffice it to say,
the subject quitclaim may not be considered as a valid and binding undertaking.
Entitlement to monetary claims
Article 279 of the Labor Code provides that an employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority rights and other privileges, to full
backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed
from the time his compensation was withheld from him up to the time of his actual reinstatement.
Due to the strained relations of the parties, however, the payment of separation pay has been
considered an acceptable alternative, when reinstatement is no longer desirable or viable. On the
one hand, such payment liberates the employee from what could be a highly oppressive work
environment. On the other, the payment releases the employer from the grossly unpalatable
obligation of maintaining in its employ a worker it could no longer trust. 17 Thus, as an illegally or
constructively dismissed employee, the respondent is entitled to: (1) either reinstatement, if
viable, or separation pay, if reinstatement is no longer viable; and (2) backwages. These two reliefs
are separate and distinct from each other and are awarded conjunctively.
Mahilum, as a regular employee at the time of his illegal dismissal, is entitled to separation pay
and backwages, computed from the time of his dismissal up to the finality of the decision. As
correctly ruled by the NLRC, reinstatement is no longer viable considering the circumstances of
animosity between Mahilum and Lua.
Propriety of awarding commissions

and damages
Be that as it may, the Court resolves to delete the inclusion of 0.25% commission on cash and
delivery sales as part of Mahilum’s backwages.
Back wages are granted on grounds of equity to workers for earnings lost due to their illegal
dismissal from work. They are a reparation for the illegal dismissal of an employee based on
earnings which the employee would have obtained, either by virtue of a lawful decree or order, as
in the case of a wage increase under a wage order, or by rightful expectation, as in the case of
one’s salary or wage. The outstanding feature of backwages is thus the degree of assuredness to
an employee that he would have had them as earnings had he not been illegally terminated from
his employment. [Emphasis supplied]
Backwages are granted on grounds of equity to workers for earnings lost due to their illegal
dismissal from work. They represent reparation for the illegal dismissal of an employee based on
earnings which the employee would have obtained, either by virtue of a lawful decree or order, as
in the case of a wage increase under a wage order, or by rightful expectation, as in the case of
one’s salary or wage. The outstanding feature of backwages is the degree of assuredness to an
employee that he would have had them as earnings had he not been illegally terminated from his
employment.
It is well-established in jurisprudence that the determination of whether or not a commission

forms part of the basic salary depends upon the circumstances or conditions for its payment. In
Phil Duplicators, Inc. v. NLRC, the Court held that commissions earned by salesmen form part of
their basic salary. The salesmen’s commissions, comprising a pre-determined percentage of the
selling price of the goods sold by each salesman, were properly included in the term basic salary
for purposes of computing the 13th month pay. The salesmen’s commissions are not overtime
payments, nor profit-sharing payments nor any other fringe benefit, but a portion of the salary
structure which represents an automatic increment to the monetary value initially assigned to
each unit of work rendered by a salesman. On the other hand, in Boie-Takeda Chemicals, Inc. v.
De la Serna, the so-called commissions paid to or received by medical representatives were
excluded from the term basic salary because these were paid to the medical representatives and
rank-and-file employees as productivity bonuses, which were generally tied to the productivity, or
capacity for revenue production, of a corporation and such bonuses closely resemble profit-
sharing payments and had no clear direct or necessary relation to the amount of work actually
done by each individual employee.
In Mahilum’s case, Phil. Duplicator cannot be automatically applied without considering his
position as Vice-President for sales and marketing of the PSWRI’s Bulacan-South Luzon Area. This
factor constrains the Court to hold that Mahilum’s 0.25% commission based on the monthly sales
and 0.25% commission for cash payments must be taken to come in the nature of overriding
commission, not sales commission. The latter is not properly includable in the basic salary as it
must be earned by actual market transactions attributable to the claimant. Curiously, Mahilum did
not comment on the petitioners’ objection to the award. Not being a salesman who directly
effected any sale of a product, the commission embodied in the agreement partook of the nature
of profit-sharing business based on quota. In fine, the alleged commissions were profit-sharing
payments and had no clear, direct or necessary relation to the amount of work he actually
performed.
Abbott Laboratories vs. Alcaraz

G.R. No. 192571, 22 April 2014
For resolution is respondent Pearlie Ann Alcaraz's (Alcaraz) Motion for Reconsideration dated
August 23, 2013 of the Court's Decision dated July 23, 2013 (Decision).
[The Decision ruled that respondent was not illegally dismissed, because she was a probationary
and not a regular employee, that she was well-aware of her duties and responsibilities and that
her failure to adequately perform the same would lead to her non-regularization and eventually,
her termination. It also ruled that Abbot sufficiently met the criteria for termination procedure set
forth in Section 2, Rule I, Book VI of the Implementing Rules of the Labor Code. However, it failed
to comply with its own policy, so the Court deemed it appropriate to fix the amount of nominal
damages at the amount of P30,000.00, consistent with its rulings in both Agabon v. NLRC and Jaka
Food Processing Corporation v. Pacot.]
Manner of review
Alcaraz contends that the Court should not have conducted a re-weighing of evidence since a
petition for review on certiorari under Rule 45 of the Rules of Court (Rules) is limited to the review
of questions of law. She submits that since what was under review was a ruling of the Court of
Appeals (CA) rendered via a petition for certiorari under Rule 65 of the Rules, the Court should
only determine whether or not the CA properly determined that the National Labor Relations
Commission (NLRC) committed a grave abuse of discretion.
A careful perusal of the questioned Decision will reveal that the Court actually resolved the
controversy under the above-stated framework of analysis. Essentially, the Court found the CA to
have committed an error in holding that no grave abuse of discretion can be ascribed to the NLRC
since the latter arbitrarily disregarded the legal implication of the attendant circumstances in this
case which should have simply resulted in the finding that Alcaraz was apprised of the
performance standards for her regularization and hence, was properly a probationary employee.
As the Court observed, an employee’s failure to perform the duties and responsibilities which have
been clearly made known to him constitutes a justifiable basis for a probationary employee’s non-
regularization. As detailed in the Decision, Alcaraz was well-apprised of her duties and
responsibilities as well as the probationary status of her employment
While NLRC decisions are, by their nature, final and executory and, hence, not subject to
appellate review, the Court is not precluded from considering other questions of law aside from
the CA’s finding on the NLRC’s grave abuse of discretion. While the focal point of analysis revolves
on this issue, the Court may deal with ancillary issues – such as, in this case, the question of how a
probationary employee is deemed to have been informed of the standards of his regularization –
if only to determine if the concepts and principles of labor law were correctly applied or
misapplied by the NLRC in its decision. In other words, the Court’s analysis of the NLRC’s
interpretation of the environmental principles and concepts of labor law is not completely
prohibited in – as it is complementary to – a Rule 45 review of labor cases.
Finally, it bears pointing out that no "factual appellate review" was conducted by the Court in the
Decision. Rather, the Court proceeded to interpret the relevant rules on probationary
employment as applied to settled factual findings. Besides, even on the assumption that a scrutiny
of facts was undertaken, the Court is not altogether barred from conducting the same. (See
Career Philippines Shipmanagement, Inc. v. Serna)
Standards for regularization; conceptual underpinnings.
Alcaraz posits that, contrary to the Court’s Decision, one’s job description cannot by and of itself
be treated as a standard for regularization as a standard denotes a measure of quantity or quality.
By way of example, Alcaraz cites the case of a probationary salesperson and asks how does such
employee achieve regular status if he does not know how much he needs to sell to reach the same.
First off, the Court must correct Alcaraz’s mistaken notion: it is not the probationary employee’s
job description but the adequate performance of his duties and responsibilities which constitutes
the inherent and implied standard for regularization. To echo the fundamental point of the
Decision, if the probationary employee had been fully apprised by his employer of these duties
and responsibilities, then basic knowledge and common sense dictate that he must adequately
perform the same, else he fails to pass the probationary trial and may therefore be subject to
termination.
The determination of "adequate performance" is not, in all cases, measurable by quantitative

specification, such as that of a sales quota in Alcaraz’s example. It is also hinged on the qualitative
assessment of the employee’s work; by its nature, this largely rests on the reasonable exercise of
the employer’s management prerogative. While in some instances the standards used in
measuring the quality of work may be conveyed – such as workers who construct tangible
products which follow particular metrics, not all standards of quality measurement may be
reducible to hard figures or are readily articulable in specific pre-engagement descriptions. The
employer cannot bear out in exacting detail at the beginning of the engagement what he deems
as "quality work" especially since the probationary employee has yet to submit the required
output. In the ultimate analysis, the communication of performance standards should be
perceived within the context of the nature of the probationary employee’s duties and
responsibilities.
The same logic applies to a probationary managerial employee who is tasked to supervise a
particular department, as Alcaraz in this case. It is hardly possible for the employer, at the time of
the employee’s engagement, to map into technical indicators, or convey in precise detail the
quality standards by which the latter should effectively manage the department. Factors which
gauge the ability of the managerial employee to either deal with his subordinates (e.g., how to
spur their performance, or command respect and obedience from them), or to organize office
policies, are hardly conveyable at the outset of the engagement since the employee has yet to be
immersed into the work itself. Given that a managerial role essentially connotes an exercise of
discretion, the quality of effective management can only be determined through subsequent
assessment. While at the time of engagement, reason dictates that the employer can only inform
the probationary managerial employee of his duties and responsibilities as such and provide the
allowable parameters for the same. Verily, as stated in the Decision, the adequate performance of
such duties and responsibilities is, by and of itself, an implied standard of regularization.
In this relation, it bears mentioning that the performance standard contemplated by law should
not, in all cases, be contained in a specialized system of feedbacks or evaluation. The Court takes
judicial notice of the fact that not all employers, such as simple businesses or small-scale
enterprises, have a sophisticated form of human resource management, so much so that the
adoption of technical indicators as utilized through "comment cards" or "appraisal" tools should
not be treated as a prerequisite for every case of probationary engagement. In fact, even if a
system of such kind is employed and the procedures for its implementation are not followed, once
an employer determines that the probationary employee fails to meet the standards required for
his regularization, the former is not precluded from dismissing the latter. The rule is that when a
valid cause for termination exists, the procedural infirmity attending the termination only
warrants the payment of nominal damages. (See Agabon v. NLRC and Jaka Food Processing
Corporation v. Pacot)
In the assailed Decision, the Court actually extended the application of the Agabon and Jaka
rulings to breaches of company procedure, notwithstanding the employer’s compliance with the
statutory requirements under the Labor Code. Hence, although Abbott did not comply with its
own termination procedure, its non-compliance thereof would not detract from the finding that
there subsists a valid cause to terminate Alcaraz’s employment. Abbott, however, was penalized
for its contractual breach and thereby ordered to pay nominal damages.
Eugene Arabit, et al. vs. Jardine Pacific Finance, Inc.

G.R. No. 181719, 21 April 2014
Facts:
Petitioners were former regular employees of respondent Jardine Pacific Finance, Inc. (formerly
MB Finance). The petitioners were also officers and members of MB Finance Employees
Association-FFW Chapter (the Union), a legitimate labor union and the sole exclusive bargaining
agent of the employees of Jardine.
On the claim of financial losses, Jardine decided to reorganize and implement a redundancy
program. Jardine thereafter hired contractual employees to undertake the functions the affected
employees (including petitioners) used to perform.
The Union filed a notice of strike with the National Conciliation and Mediation Board (NCMB),
questioning the termination of employment of the petitioners who were also union officers. The
Union alleged unfair labor practice on the part of Jardine, as well as discrimination in the dismissal
of its officers and members.
Negotiations ensued and both parties eventually reached an amicable settlement. In the
settlement, the petitioners accepted their redundancy pay without prejudice to their right to
question the legality of their dismissal with the NLRC. Jardine paid the petitioners a separation
package composed of their severance pay, plus their grossed up transportation allowance.
The petitioners and the Union filed a complaint against Jardine with the NLRC for illegal dismissal
and unfair labor practice.
The LA ruled in the petitioners’ favor. The LA held that the hiring of contractual employees to
replace the petitioners directly contradicts the concept of redundancy which involves the
trimming down of the workforce because a task is being carried out by too many people. The LA
further held that it was error for Jardine to simply lump together the seven petitioners as
employees whose positions have become redundant without explaining why their respective
positions became superfluous in relation to the other positions and employees of the company.
On the petitioners’ allegation of unfair labor practice, the LA held that not enough evidence was
presented to prove the claim against Jardine. The NLRC affirmed this decision.
The CA reversed the LA’s and the NLRC’s rulings, and granted Jardine’s petition for certiorari. It
ruled that the hiring of contractual employees is a management prerogative that Jardine has the
right to exercise. In the absence of any showing of malice or arbitrariness on the part of Jardine in
implementing its redundancy program, the courts must not interfere with the company’s exercise
of a bona fide management decision. The CA further held that Jardine successfully established
that for the years 1996 to 1998, the company incurred serious losses.
Ruling:
Redundancy in contrast with retrenchment

The fact that redundancy and retrenchment are found together in just one provision does not
necessarily give rise to the conclusion that the difference between them is immaterial. This Court
has already ruled before that retrenchment and redundancy are two different concepts; they are
not synonymous; thus, they should not be used interchangeably.
Redundancy exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise. A position is redundant where it is
superfluous, and superfluity of a position or positions may be the outcome of a number of factors,
such as over hiring of workers, decreased volume of business, or dropping of a particular product
line or service activity previously manufactured or undertaken by the enterprise.
Retrenchment, on the other hand, is used interchangeably with the term "lay-off." It is the
termination of employment initiated by the employer through no fault of the employee’s and
without prejudice to the latter, resorted to by management during periods of business recession,
industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of orders,
shortage of materials, conversion of the plant for a new production program or the introduction of
new methods or more efficient machinery, or of automation. Simply put, it is an act of the
employer of dismissing employees because of losses in the operation of a business, lack of work,
and considerable reduction on the volume of his business, a right consistently recognized and
affirmed by this Court
Redundancy does not require proof of business losses
Redundancy does not need to be always triggered by a decline in the business. Primarily,
employers resort to redundancy when the functions of an employee have already become
superfluous or in excess of what the business requires. Thus, even if a business is doing well, an
employer can still validly dismiss an employee from the service due to redundancy if that
employee’s position has already become in excess of what the employer’s enterprise requires.
Replacing regular employees with contractual employees to

perform their job belies claim of superfluity of position
From this perspective, it is illogical for Jardine to terminate the petitioners’ employment and
replace them with contractual employees. The replacement effectively belies Jardine’s claim that
the petitioners’ positions were abolished due to superfluity. Redundancy could have been justified
if the functions of the petitioners were transferred to other existing employees of the company.
To dismiss the petitioners and hire new contractual employees as replacements necessarily give
rise to the sound conclusion that the petitioners’ services have not really become in excess of what
Jardine’s business requires. To replace the petitioners who were all regular employees with
contractual ones would amount to a violation of their right to security of tenure.
Declaring a position as redundant, while an exercise of management prerogative, must not be

tainted with arbitrariness or ill-motives
Management has the prerogative to characterize an employee’s services as no longer necessary or

sustainable, and therefore properly terminable.
In the absence of proof that the management abused its discretion or acted in a malicious or
arbitrary manner in replacing dismissed employees with contractual ones, judicial intervention
should not be made in the company’s exercise of its management prerogative. (See De Ocampo,
et al., v. NLRC)
The employer’s exercise of its management prerogative, however, is not an unbridled right that
cannot be subjected to this Court’s scrutiny. The exercise of management prerogative is subject to
the caveat that it should not performed in violation of any law and that it is not tainted by any
arbitrary or malicious motive on the part of the employer.
Requisites for valid implementation of redundancy program
For the implementation of a redundancy program to be valid, the employer must comply with the
following requisites: (1) written notice served on both the employees and the Department of
Labor and Employment at least one month prior to the intended date of retrenchment; (2)
payment of separation pay equivalent to at least one month pay or at least one month pay for
every year of service, whichever is higher; (3) good faith in abolishing the redundant positions; and
(4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and
accordingly abolished. (See Asian Alcohol Corp. v. NLRC)
Admittedly, Jardine complied with guidelines 1 and 2 of the guidelines in Asian Alcohol.
Guidelines 3 and 4 of Asian Alcohol, however, are different matters. These last two guidelines are
interrelated to ensure good faith in abolishing redundant positions.
Jardine was never able to explain in any of its pleadings why the petitioners’ positions were
redundant. It never even attempted to discuss the attendant facts and circumstances that led to
the conclusion that the petitioners’ positions had become superfluous and unnecessary to
Jardine’s business requirements. Thus, we can only speculate on what actually happened.
As the LA correctly found, Jardine lumped together the seven petitioners into one group whose
positions had become redundant. This move was despite the fact that not all of them occupied the
same positions and performed the same functions. Under the circumstances of the case, Jardine’s
move was thus illegal.
Fair and reasonable criteria in the selection of employees to be dismissed
The employer must use fair and reasonable criteria in the selection of employees who will be
dismissed from employment due to redundancy. Such fair and reasonable criteria may include the
following, but are not limited to: (a) less preferred status (e.g. temporary employee); (b) efficiency;
and (c) seniority. The presence of these criteria used by the employer shows good faith on its part
and is evidence that the implementation of redundancy was painstakingly done by the employer
in order to properly justify the termination from the service of its employees. (See Golden Thread
Knitting Industries, Inc. v. NLRC)
As the petitioners pointed out, the records are bereft of indications that Jardine employed clear
criteria when it decided who among its employees, who held similar positions as the petitioners,
should be removed from their posts because of redundancy. Jardine never bothered to explain
how and why the petitioners were the ones dismissed. Jardine’s acts became more suspect given
that the petitioners were all union officers and some of them were panel members in the
scheduled CBA negotiations between Jardine and the Union.
Based on the guidelines set by the Court in the cases of Golden Thread and Asian Alcohol, it is
found that at two levels, Jardine failed to set the required fair and reasonable criteria in the
termination of the petitioners’ employment, leading to the conclusion that the termination from
the service was arbitrary and in bad faith.
The first level, based on Asian Alcohol, is broader as the case recognized distinctions on a per
position basis. At this level, Jardine failed to explain why among all of the existing positions in its
organization, Jardine chose the petitioners’ posts as the ones which have already become
redundant and terminable.
The second level, derived from Golden Thread, is more specific. Here the distinction narrows
down to the particular employees occupying the same positions which were already declared to
be redundant. At this level, Jardine’s lapse is shown by its failure to explain why among all of its
employees whose positions were determined to be redundant, the petitioners were the ones
selected to be dismissed from the service.
Froilan M. Bergonio, Jr. vs. South East Asian Airlines

G.R. No. 195227, 21 April 2014
Facts:
The petitioners (Bergonio, Jr. et al) filed before the LA a complaint for illegal dismissal and illegal
suspension with prayer for reinstatement against respondents South East Asian Airlines (SEAIR)
and Irene Dornier as SEAIR’s President.
The LA found the petitioners illegally dismissed and ordered the respondents, among others, to
immediately reinstate the petitioners with full backwages.
Petitioners filed a motion for execution which respondents opposed claiming that the relationship
between them had already been strained because of the petitioners’ threatening text messages
which precluded the latter’s reinstatement.
The LA nevertheless granted the petitioners’ motion and issued a writ of execution.
The respondents moved to quash the writ of execution with a prayer to hold in abeyance the
implementation of the reinstatement order.
The writ of execution was returned unsatisfied. In response, the petitioners filed a motion for re-
computation of accrued wages and a motion for execution of that amount, which were granted.
The respondents issued a return-to-work Memorandum to the petitioners but the latter failed to
report for work on the appointed date (February 24, 2006). The respondents moved before the LA
to suspend the order for the petitioners’ reinstatement.
Meanwhile, the respondents appealed with the NLRC the illegal dismissal ruling of the LA.
The NLRC dismissed the respondents’ appeal for non-perfection. The NLRC likewise denied the
respondents’ motion for reconsideration, prompting the respondents to file before the CA a
petition for certiorari.
The CA partly granted the petition of respondents. The CA declared the petitioners’ dismissal
valid and awarded them P30,000.00 as nominal damages for the respondents’ failure to observe
due process. The case was elevated to the Supreme Court which denied the petitioners' appeal.
The petitioners filed with the LA an Urgent Ex-Parte Motion for the Immediate Release of the
Garnished Amount, which was granted. The NLRC affirmed this. The respondents then filed this
petition for certiorari with the CA.
The CA agreed that the reinstatement aspect of the LA’s decision is immediately executory even
pending appeal, such that the employer is obliged to reinstate and pay the wages of the dismissed
employee during the period of appeal until the decision (finding the employee illegally dismissed
including the reinstatement order) is reversed by a higher court. Applying this principle, the CA
noted that the petitioners’ accrued wages could have been properly computed until December
18, 2007, the date of the CA’s decision finding the petitioners validly dismissed.
The CA, however, pointed out that when the LA’s decision is "reversed by a higher tribunal, an
employee may be barred from collecting the accrued wages if shown that the delay in enforcing
the reinstatement pending appeal was without fault" on the employer’s part.
Thus, the CA declared that, given this peculiar circumstance (of the petitioners’ failure to report
for work), the petitioners’ accrued wages should only be computed until February 24, 2006 when
they were supposed to report for work per the return-to-work Memorandum. Accordingly, the CA
reversed, for grave abuse of discretion, the NLRC’s decision that affirmed the LA’s order to release
the garnished amount.
Ruling:
Labor Arbiter’s order of reinstatement is immediately executory pending appeal by employer;
order is self-executory
Article 223 (now Article 229) of the Labor Code governs appeals from, and the execution of, the
LA’s decision. Under paragraph 3, Article 223 of the Labor Code, the LA’s order for the
reinstatement of an employee found illegally dismissed is immediately executory even during
pendency of the employer’s appeal from the decision.
Under this provision, the employer must reinstate the employee – either (i) by physically admitting
him under the conditions prevailing prior to his dismissal, and paying his wages; or, (2) at the
employer’s option, merely reinstating the employee in the payroll until the decision is reversed by
the higher court. Failure of the employer to comply with the reinstatement order, by exercising
the options in the alternative, renders him liable to pay the employee’s salaries.
Otherwise stated, a dismissed employee whose case was favorably decided by the LA is entitled to
receive wages pending appeal upon reinstatement, which reinstatement is immediately
executory. Unless the appellate tribunal issues a restraining order, the LA is duty bound to
implement the order of reinstatement and the employer has no option but to comply with it.
Moreover an order of reinstatement issued by the LA is self-executory, i.e., the dismissed

employee need not even apply for and the LA need not even issue a writ of execution to trigger
the employer’s duty to reinstate the dismissed employee.
The Court’s consistent and prevailing treatment and interpretation of the reinstatement order as
immediately enforceable, in fact, merely underscores the right to security of tenure of employees
that the Constitution protects.
Entitlement to wages pending reversal of LA’s finding of illegal dismissal
An employer is obliged to immediately reinstate the employee upon the LA’s finding of illegal
dismissal; if the employer fails, it is liable to pay the salary of the dismissed employee. Of course, it
is not always the case that the LA’s finding of illegal dismissal is, on appeal by the employer,
upheld by the appellate court. After the LA’s decision is reversed by a higher tribunal, the
employer’s duty to reinstate the dismissed employee is effectively terminated. This means that an
employer is no longer obliged to keep the employee in the actual service or in the payroll. The
employee, in turn, is not required to return the wages that he had received prior to the reversal of
the LA’s decision.
The reversal by a higher tribunal of the LA’s finding (of illegal dismissal), notwithstanding, an
employer, who, despite the LA’s order of reinstatement, did not reinstate the employee during the
pendency of the appeal up to the reversal by a higher tribunal may still be held liable for the
accrued wages of the employee, i.e., the unpaid salary accruing up to the time the higher tribunal
reverses the decision. The rule, therefore, is that an employee may still recover the accrued wages
up to and despite the reversal by the higher tribunal. This entitlement of the employee to the
accrued wages proceeds from the immediate and self-executory nature of the reinstatement
aspect of the LA’s decision.
Circumstances that bar an employee from collecting accrued wages arising from reinstatement
order
By way of exception to the above rule, an employee may be barred from collecting the accrued
wages if shown that the delay in enforcing the reinstatement pending appeal was without fault on
the part of the employer.
To determine whether an employee is thus barred, two tests must be satisfied: (1) actual delay or
the fact that the order of reinstatement pending appeal was not executed prior to its reversal; and
(2) the delay must not be due to the employer’s unjustified act or omission. Note that under the
second test, the delay must be without the employer’s fault. If the delay is due to the employer’s
unjustified refusal, the employer may still be required to pay the salaries notwithstanding the
reversal of the LA’s decision.
Application of the two-fold test (petitioners are entitled to receive their accrued salaries until
December 18, 2007)
First, the existence of delay. There was actual delay in the execution of the reinstatement aspect
of the LA’s decision before it was reversed in the CA’s decision. From the time the respondents
received copy of the LA’s decision finding the petitioners illegally dismissed and ordering their
immediate reinstatement (on July 8, 2005) until the reversal of the LA decision by the Court of
Appeal (on December 17, 2008), the respondents had not reinstated the petitioners, either by
actual reinstatement or in the payroll. This continued non-execution of the reinstatement order in
fact moved the LA to issue an alias writ of execution on February 16, 2006 and another writ of
execution on April 24, 2007.
Second, the cause of the delay. The delay in the execution of the reinstatement pending appeal
was due to the respondents’ unjustified acts. For one, the respondents filed several pleadings to
suspend the execution of the LA’s reinstatement order. These pleadings show a determined effort
on the respondents’ part to prevent or suspend the execution of the reinstatement pending
appeal. Another reason is that the respondents, contrary to the CA’s conclusion, did not
sufficiently notify the petitioners of their intent to actually reinstate them; neither did the
respondents give them ample opportunity to comply with the return-to-work directive. These
facts – when taken together with the fact of delay – reveal the respondents’ obstinate resolve and
willful disregard of the immediate and self-executory nature of the reinstatement aspect of the
LA’s decision
Duty to show compliance with reinstatement order
Per the 2005 Revised Rules of Procedure of the NLRC (2005 NLRC Rules), employers are required
to submit a report of compliance within ten (10) calendar days from receipt of the LA’s decision,
noncompliance with which signifies a clear refusal to reinstate. Arguably, the 2005 NLRC Rules
took effect only on January 7, 2006; hence, the respondents could not have been reasonably
expected to comply with this duty that was not yet in effect when the LA rendered its decision
(finding illegal dismissal) and issued the writ of execution in 2005. Nevertheless, when the LA
issued the February 16, 2006 alias writ of execution and the April 24, 2007 writ of execution, the
2005 NLRC Rules was already in place such that the respondents had become duty-bound to
submit the required compliance report; their noncompliance with this rule all the more showed a
clear and determined refusal to reinstate.
Bluer Than Blue Joint Ventures Company vs. Glyza Esteban (2014)
G.R. No. 192582, 7 April 2014
Facts:
Respondent Glyza Esteban was employed in January 2004 as Sales Clerk, and assigned at Bluer
Than Blue Joint Ventures Company's (petitioner) EGG boutique. Part of her primary tasks were
attending to all customer needs, ensuring efficient inventory, cashiering and reporting to the
accounting department.
The petitioner received a report that several employees have access to its point-of-sale (POS)
system through a universal password given by Elmer Flores. Upon investigation, it was discovered
that it was Esteban who gave Flores the password. The petitioner sent a letter memorandum to
Esteban asking her to explain in writing why she should not be disciplinary dealt with for
tampering with the company’s POS system through the use of an unauthorized password. Esteban
was also placed under preventive suspension for ten days.
Esteban admitted that she used the universal password three times on the same day, after she
learned of it from two other employees who she saw browsing through the petitioner’s sales
inquiry. She inquired how the employees were able to open the system and she was told that they
used the "123456" password.
A notice of termination was sent to Esteban finding her explanation unsatisfactory and
terminating her employment immediately on the ground of loss of trust and confidence.
Esteban filed a complaint for illegal dismissal, illegal suspension, holiday pay, rest day and
separation pay. The Labor Arbiter (LA) ruled in favor of Esteban and found that she was illegally
dismissed.
The NLRC reversed the decision of the LA and dismissed the case for illegal dismissal.
Ruling:
Loss of trust and confidence as a valid ground for dismissal from employment
(a) Employee must occupy a position of trust and confidence
Loss of trust and confidence is premised on the fact that the employee concerned holds a position
of responsibility, trust and confidence. The employee must be invested with confidence on
delicate matters, such as the custody, handling, care and protection of the employer’s property
and funds.
With respect to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal
requires proof of involvement in the alleged events in question, and that mere uncorroborated
assertions and accusations by the employer will not be sufficient.
Among the fiduciary rank-and-file employees are cashiers, auditors, property custodians, or those
who, in the normal exercise of their functions, regularly handle significant amounts of money or
property. These employees, though rank-and-file, are routinely charged with the care and custody
of the employer’s money or property, and are thus classified as occupying positions of trust and
confidence.
In this case, Esteban was a sales clerk. Her duties, however, were more than that of a sales clerk.
Aside from attending to customers and tending to the shop, Esteban also assumed cashiering
duties. As consistently ruled by the Court, it is not the job title but the actual work that the
employee performs that determines whether he or she occupies a position of trust and
confidence.
(b) Work-related
Loss of trust and confidence to be a valid cause for dismissal must be work related such as would
show the employee concerned to be unfit to continue working for the employer and it must be
based on a willful breach of trust and founded on clearly established facts.
(c) Willful breach of trust
Such breach is willful if it is done intentionally, knowingly, and purposely, without justifiable
excuse as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.
The loss of trust and confidence must spring from the voluntary or willful act of the employee, or
by reason of some blameworthy act or omission on the part of the employee.
Esteban was illegally dismissed
In this case, the Court finds that the acts committed by Esteban do not amount to a wilful breach
of trust. She admitted that she accessed the POS system with the use of the unauthorized
"123456" password. She did so, however, out of curiosity and without any obvious intention of
defrauding the petitioner. Moreover, the petitioner even admitted that Esteban has her own
password to the POS system. If it was her intention to manipulate the store’s inventory and funds,
she could have done so long before she had knowledge of the unauthorized password. But the
facts on hand show that she did not.
The petitioner also failed to establish a substantial connection between Esteban’s use of the
"123456" password and any loss suffered by the petitioner. Indeed, it may be true that, as posited
by the petitioner, it is the fact that she used the password that gives cause to the loss of trust and
confidence on Esteban. However, as ruled above, such breach must have been done intentionally,
knowingly, and purposely, and without any justifiable excuse, and not simply something done
carelessly, thoughtlessly, heedlessly or inadvertently. To the Court’s mind, Esteban’s lapse is, at
best, a careless act that does not merit the imposition of the penalty of dismissal.
The Court is not saying that Esteban is innocent of any breach of company policy. That she relayed
the password to another employee is likewise demonstrative of her mindless appreciation of her
duties as a sales clerk in the petitioner’s employ. But absent any showing that her acts were done
with "moral perverseness" that would justify the claimed loss of trust and confidence attendant to
her job, the Court must sustain the conclusion that Esteban was illegally dismissed.
Preventive suspension during investigation
Preventive suspension is a measure allowed by law and afforded to the employer if an employee’s
continued employment poses a serious and imminent threat to the employer’s life or property or
of his co-workers. It may be legally imposed against an employee whose alleged violation is the
subject of an investigation.
In this case, the petitioner was acting well within its rights when it imposed a 10-day preventive
suspension on Esteban. While it may be that the acts complained of were committed by Esteban
almost a year before the investigation was conducted, still, it should be pointed out that Esteban
was performing functions that involve handling of the petitioner’s property and funds, and the
petitioner had every right to protect its assets and operations pending Esteban’s investigation.
Sales negative variances as wage deductions
Petitioner deducted P 8,304.93 from Esteban's last salary, representing the store's negative
variance for the year 2005 to 2006. The petitioner justifies the deduction on the basis of alleged
trade practice and that it is allowed by the Labor Code
Article 113 of the Labor Code provides that no employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except in cases where the
employer is authorized by law or regulations issued by the Secretary of Labor and Employment,
among others.
The Omnibus Rules Implementing the Labor Code, meanwhile, provides:
SECTION 14. Deduction for loss or damage. - Where the employer is engaged in a trade,
occupation or business where the practice of making deductions or requiring deposits is
recognized to answer for the reimbursement of loss or damage to tools, materials, or equipment
supplied by the employer to the employee, the employer may make wage deductions or require
the employees to make deposits from which deductions shall be made, subject to the following
conditions:
(a) That the employee concerned is clearly shown to be responsible for the loss or damage;
(b) That the employee is given reasonable opportunity to show cause why deduction should not be
made;
(c) That the amount of such deduction is fair and reasonable and shall not exceed the actual loss
or damage; and
(d) That the deduction from the wages of the employee does not exceed 20 percent of the
employee's wages in a week.
Petitioner failed to sufficiently establish that Esteban was responsible for the negative variance it
had in its sales for the year 2005 to 2006 and that Esteban was given the opportunity to show
cause why the deduction from her last salary should not be made. The Court cannot accept the
petitioner’s statement that it is the practice in the retail industry to deduct variances from an
employee’s salary, without more.
Employer policies on cash bond requirements and wage deductions

The petitioners should first establish that the making of deductions from the salaries is authorized
by law, or regulations issued by the Secretary of Labor. Further, the posting of cash bonds should
be proven as a recognized practice in the jewelry manufacturing business, or alternatively, the
petitioners should seek for the determination by the Secretary of Labor through the issuance of
appropriate rules and regulations that the policy the former seeks to implement is necessary or
desirable in the conduct of business. Xxx It bears stressing that without proofs that requiring
deposits and effecting deductions are recognized practices, or without securing the Secretary of
Labor's determination of the necessity or desirability of the same, the imposition of new policies
relative to deductions and deposits can be made subject to abuse by the employers. This is not
what the law intends." (See Niña Jewelry Manufacturing of Metal Arts, Inc. v. Montecillo)
Chiang Kai Shek College vs. Torres (2014)

G.R. No. 189456, 2 April 2014
Facts:
Petitioner Chiang Kai Shek College is a private educational institution that offers elementary to
college education to the public. Individual petitioner Carmelita Espino is the Vice-President of the
school. Respondent Rosalinda Torres had been employed as a grade school teacher of the school
from July 1970 until 31 May 2003.
Respondent was accused of leaking a copy of a special quiz given to Grade 5 students of HEKASI.
The Investigating Committee found her guilty. They penalized her formally with 1 month
suspension without pay and forfeiture of bonuses.
According to petitioners, their Investigating Committee had actually decided to terminate

respondent and had in fact prepared a memorandum of termination, but respondent allegedly
pleaded for a change of punishment in a short letter entitled "Request for change of punishment
from termination to suspension and I am resigning at the end of the school year." They acceded to
this request.
Before the school year ended, however, respondent’s counsel sent a letter to petitioners,
demanding backwages, bonuses, damages, and a cease and desist from calling for her resignation.
Respondent filed a complaint for constructive dismissal and illegal suspension with the Labor
Arbiter. She also sought payment of unpaid salary, backwages, holiday pay, service incentive leave
pay, 13th month pay, separation pay, retirement benefits, damages and attorney’s fees.
Respondent alleged that she was forced and pressured to submit the written request for a change
of penalty and commitment to resign at the end of the school year. She was threatened by the
school management with immediate dismissal from service if she did not submit the written
statement. She claimed that she was not formally charged with any offense and she was not served
a copy of the notice of the school’s decision to terminate her services.
Petitioners insisted that respondent voluntarily resigned. Petitioners averred that respondent was
accorded her right to due process prior to her termination. A formal investigation was conducted
during which respondent was given the opportunity to defend herself and confront her accusers.
The Labor Arbiter ruled in favor of petitioners. The NLRC affirmed.
The Court of Appeals reversed and ruled that respondent did not voluntarily resign but was
constructively dismissed. The appellate court cited respondent’s years in service; her consistent
denials of the accusations against her; her alleged resignation letter which did not contain any
reason for her resignation; and the unsigned memorandum of termination which militate against
the voluntariness of resignation. The appellate court also foreclosed any interpretation that
respondent was validly dismissed for a just cause because respondent was already meted the
penalty of suspension without pay and forfeiture of her bonuses. The appellate court found it
unjust to penalize respondent twice for the same offense.
Ruling:
Resignation
Resignation is the voluntary act of an employee who is in a situation where one believes that
personal reasons cannot be sacrificed for the favor of employment, and opts to leave rather than
stay employed. It is a formal pronouncement or relinquishment of an office, with the intention of
relinquishing the office accompanied by the act of relinquishment. As the intent to relinquish
must concur with the overt act of relinquishment, the acts of the employee before and after the
alleged resignation must be considered in determining whether, he or she, in fact, intended to
sever his or her employment.
Respondent Voluntarily Resigned
The Investigating Committee found respondent guilty of leaking a copy of the special quiz. Based
on this infraction alone, Chiang Kai Shek College would have been justified to validly terminate
respondent from service. Under Chiang Kai Shek College Faculty Manual, leaking and selling of
test questions is classified as a grave offense punishable by dismissal/termination.
Before the Investigating Committee could formalize respondent’s dismissal, respondent

handwrote a letter requesting that the penalty be lowered from dismissal to suspension in
exchange for respondent’s resignation at the end of the school year. There is nothing irregular
with respondent’s handwritten letter. The letter came about because respondent was faced with
an imminent dismissal and opted for an honorable severance from employment. That respondent
voluntarily resigned is a logical conclusion. Justice Arturo D. Brion correctly observed that
respondent’s infraction and the inevitable and justifiable consequence of that infraction, i.e.,
termination of employment, induced her to resign or promise to resign by the end of the school
year.
No Constructive Dismissal
There is constructive dismissal when there is cessation of work, because continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a
diminution in pay and other benefits. Aptly called a dismissal in disguise or an act amounting to
dismissal but made to appear as if it were not, constructive dismissal may, likewise, exist if an act
of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part
of the employee that it could foreclose any choice by him except to forego his continued
employment.
There is no constructive dismissal in this case. There was here no discrimination committed by
petitioners. While respondent did not tender her resignation wholeheartedly, circumstances of
her own making did not give her any other option. With due process, she was found to have
committed the grave offense of leaking test questions. Dismissal from employment was the
justified equivalent penalty. Having realized that, she asked for, and was granted, not just a
deferred imposition of, but also an acceptable cover for the penalty.
Respondent’s profession, the gravity of her infraction, and the fact that she waited until the close
of the school year to challenge her impending resignation demonstrate that respondent had
bargained for a graceful exit and is now trying to renege on her obligation. Associate Justice
Antonio T. Carpio accordingly noted that petitioners should not be punished for being
compassionate and granting respondent's request for a lower penalty. Put differently, respondent
should not be rewarded for reneging on her promise to resign at the end of the school year.
Otherwise, employers placed in similar situations would no longer extend compassion to
employees. Compromise agreements, like that in the instant case, which lean towards desired
liberality that favor labor, would be discouraged.
Emeritus Security and Maintenance Systems, Inc. vs. Janrie C. Dailig

G.R. No. 204761, 2 April 2014
Facts:
Petitioner Emeritus Security and Maintenance Systems, Inc. (Emeritus) hired respondent Janrie
Dailig as one of its security guards. During his employment, Dailig was assigned to Emeritus’
various clients, the last of which was Panasonic.
When he was relieved from his post, Dailig filed a complaint for illegal dismissal and payment of
separation pay against petitioner Emeritus before the Conciliation and Mediation Center of the
NLRC. Dailig filed another complaint for illegal dismissal, underpayment of salaries and non-
payment of full backwages before the NLRC.
Dailig claimed that he repeatedly went to Emeritus’ office to follow-up his next assignment. After
more than six months since his last assignment, still Dailig was not given a new assignment. Dailig
argued that if an employee is on floating status for more than six months, such employee is
deemed illegally dismissed.
Emeritus denied dismissing Dailig. Emeritus admitted that it relieved Dailig from his last
assignment on 10 December 2005; however, Emeritus required Dailig to report to the head office
within 48 hours from receipt of the order of relief. Dailig allegedly failed to comply. Emeritus
claimed that it sent Dailig a notice to his last known address requiring him to report to the head
office within 72 hours from receipt of the said notice. Emeritus further alleged that it had
informed Dailig that he had been absent without official leave for the month of January 2006, and
that his failure to report within 72 hours from receipt of the notice would mean that he was no
longer interested to continue his employment.
The Labor Arbiter ruled in Dailig's favor. Emeritus’ appeal and motion for reconsideration were
denied.
The Court of Appeals affirmed the finding of the Labor Arbiter and the NLRC that Dailig was
illegally dismissed by Emeritus. However, the Court of Appeals set aside the Labor Arbiter and the
NLRC’s reinstatement order. Instead, the Court of Appeals ordered the payment of separation
pay, invoking the doctrine of strained relations between the parties.
Ruling:
Floating status that lasts for more than six months is tantamount to constructive dismissal
The Court affirms the finding of illegal dismissal of the Labor Arbiter, NLRC, and Court of Appeals.
However, the Court sets aside the Court of Appeals’ award of separation pay in favor of Dailig,
and reinstates the Labor Arbiter’s reinstatement order.
Dailig was placed on floating status from 10 December 2005 to 16 June 2006 or more than six
months. Emeritus’ allegation of sending respondent a notice sometime in January 2006, requiring
him to report for work, is unsubstantiated, and thus, self-serving.
A floating status of a security guard for more than six months constitutes constructive dismissal.
The temporary inactivity or "floating status" of security guards should continue only for six
months. Otherwise, the security agency concerned could be liable for constructive dismissal. The
failure of petitioner to give respondent a work assignment beyond the reasonable six-month
period makes it liable for constructive dismissal. (See Nationwide Security and Allied Services, Inc.
v. Valderama)
Factual findings of quasi-judicial bodies given great weight
The Labor Arbiter, NLRC, and Court of Appeals unanimously found that Dailig was illegally
dismissed by petitioner. Factual findings of quasi-judicial bodies like the NLRC, if supported by
substantial evidence, are accorded respect and even finality by this Court, more so when they
coincide with those of the Labor Arbiter. Such factual findings are given more weight when the
same are affirmed by the Court of Appeals. The Court finds no reason to depart from the
foregoing rule.
In case of illegal dismissal, reinstatement is the general rule, while the award of separation pay is
the exception
Article 279 of the Labor Code of the Philippines mandates the reinstatement of an illegally
dismissed employee. Thus, reinstatement is the general rule, while the award of separation pay is
the exception.
Over time, the following reasons have been advanced by the Court for denying reinstatement
under the facts of the case and the law applicable thereto:
(i) that reinstatement can no longer be effected in view of the long passage of time (22 years of
litigation) or because of the realities of the situation;
(ii) that it would be ‘inimical to the employer’s interest;’ or
(iii) that reinstatement may no longer be feasible; or,
(iv) that it will not serve the best interests of the parties involved; or
(v) that the company would be prejudiced by the workers’ continued employment; or
(vi) that it will not serve any prudent purpose as when supervening facts have transpired which
make execution on that score unjust or inequitable or,
(vii) to an increasing extent, due to the resultant atmosphere of ‘antipathy and antagonism’ or
‘strained relations’ or ‘irretrievable estrangement’ between the employer and the employee. (See
Globe-Mackay Cable and Radio Corporation v. National Labor Relations Commission)
Emeritus claims that it complied with the reinstatement order of the Labor Arbiter. Dailig admits
receiving a reinstatement notice from petitioner. Thereafter, Dailig was assigned to one of
Emeritus' clients. However, Dailig points out that he was not reinstated by Emeritus Security and
Maintenance Systems, Inc. but was employed by another company, Emme Security and
Maintenance Systems, Inc. (Emme). Thus, according to Dailig, he was not reinstated at all.
Considering petitioner's undisputed claim that Emeritus and Emme are one and the same, there is
no basis in Dailig's allegation that he was not reinstated to his previous employment. Besides,
Dailig assails the corporate personalities of Emeritus and Emme only in his Comment filed before
this Court. Further, Dailig did not appeal the Labor Arbiter's reinstatement order.
Contrary to the Court of Appeals' ruling, there is nothing in the records showing any strained
relations between the parties to warrant the award of separation pay. There is neither allegation
nor proof that such animosity existed between petitioner and respondent. In fact, petitioner
complied with the Labor Arbiter's reinstatement order.
Considering that (1) petitioner reinstated respondent in compliance with the Labor Arbiter's
decision, and (2) there is no ground, particularly strained relations between the parties, to justify
the grant of separation pay, the Court of Appeals erred in ordering the payment thereof, in lieu of
reinstatement.
Land Bank of the Philippines vs. Naval, Jr.

G.R. No. 195687, April 7, 2014
Facts:
In accordance with Letters of Implementation No. (LOI) 104, petitioner Land Bank of the
Philippines (LBP) granted its officers and employees Cost of Living Allowance (COLA) equivalent
to PhP 300 or 40% of their monthly basic salary, whichever is higher, every month.
Further, pursuant to LO1 116, LBP gave its employees a monthly allowance called a "Bank Equity
Pay" (BEP). For employees whose monthly basic salary is PhP 1,501 and above, the amount of BEP
is PhP 500, while for those with a basic pay of PhP 1,500 and below, the monthly BEP is PhP 550.
The LBP Board of Directors issued Resolution No. 88-1098 integrating the COLA into the basic pay
of LBP employees.
Republic Act No. (RA) 6758, otherwise known as the Salary Standardization Law (SSL), was
enacted. Section 12 of said law provides for the integration/consolidation of allowances and
additional compensation into the standardized salary rates save for certain additional
compensation enumerated therein and others that the Department of Budget and Management
(DBM) is mandated to determine.
DBM issued Corporate Compensation Circular No. 10 (DBM-CCC No. 10) which provided that the
COLA and BEP granted to employees of Government-Owned and/or Controlled Corporations
(GOCCs) and Government Financial Institutions (GFIs) shall be deemed integrated into the basic
salary effective July 1, 1989.
Thus, in conformity with the provisions of DBM-CCC No. 10, LBP likewise integrated the BEP into
the basic pay of its employees effective as of July 1, 1989.
On February 23, 1995, RA 7907 removed petitioner LBP from the coverage of the SSL.
On August 12, 1998, the Supreme Court then nullified DBM-CCC No. 10 in De Jesus v.
Commission on Audit for the reason that it was not published in the Official Gazette or in a
newspaper of general circulation, as required by law.
The DBM remedied its circular’s defect by publishing DBM-CCC No. 10 in the Official Gazette
which was released on July 1, 1999. Hence, DBM-CCC No. 10, as published, took effect on July 16,
1999.
It appears that after the publication of the Decision in De Jesus, respondents started negotiating
with petitioner LBP for the payment of their COLA and BEP benefits over and above their monthly
basic salaries, and back payment of the same from the time that LBP stopped to extend them until
the finality of the Decision in De Jesus.
Respondents wrote then LBP President Margarito Teves appealing for the restoration of their
COLA and BEP.
Petitioner LBP, however, denied respondents’ appeal based on a Civil Service Commission (CSC)
ruling citing DBM Budget Circular 2001-03 which prohibits the payment of COLA and similar
allowances on top of the basic salary on the ground that it would constitute double compensation.
Thus, respondents instituted a Petition for Mandamus to compel LBP to pay their COLA and the
BEP allowances over and above their basic salaries because of their alleged clear legal right to
receive these allowances under LOI Nos. 104 and 116.
The RTC issued a Decision in respondents’ favor, granting the petition for mandamus and ordering
LBP to pay herein respondents’ claim.
In sustaining the decision of the RTC, the CA stated that DBM-CCC No. 10, which allowed the
integration of the COLA and BEP into the basic pay cannot operate to validate the acts of LBP as
the issuance was subsequently nullified for non-publication.
The CA also pointed out that LBP officers and employees were already taken out of the coverage
of SSL by RA 7907, more than 4 years before the publication of DBM CCC No. 10; thus, the LBP
officers and employees shall continue to receive their COLA and BEP on top of their basic salaries,
as there has been no law that effectively repealed LOI Nos. 104 and 116.
The question presented is whether or not respondents and intervenors are entitled to the COLA
and the BEP on top of their basic salaries from 1989 up to the present.
Ruling:
The SSL Remained Valid Despite the Nullification of DBM-CCC No. 10
Respondents’ demand for the payment of their COLA and BEP on top of their basic salaries came
after the Court’s promulgation of De Jesus, which nullified DBM-CCC No. 10 for non-publication.
It is their position that by the nullification of DBM-CCC No. 10 (which expressly named the COLA
and BEP as integrated into the basic salary), LBP’s integration of the COLA and the BEP is likewise
invalid.
The nullity of DBM-CCC No. 10, will not affect the validity of R.A. No. 6758 (Salary
Standardization Law). It is a cardinal rule in statutory construction that statutory provisions control
the rules and regulations which may be issued pursuant thereto. Such rules and regulations must
be consistent with and must not defeat the purpose of the statute. The validity of R.A. No. 6758
should not be made to depend on the validity of its implementing rules. (See Napocor Employees
Consolidated Union (NECU) v. National Power Corporation, citing Philippine International
Trading Corporation v. Commission on Audit)
COLA should be integrated into the standardized salary rates
The SSL mandates the integration of all allowances except for those items enumerated in Section
12 thereof. Since the COLA and the BEP are NOT among those expressly excluded by the SSL from
integration, they should be considered as deemed integrated in the standardized salaries of LBP
employees under the general rule of integration.
The Court finds the inclusion of COLA in the standardized salary rates proper. In National Tobacco
Administration v. Commission on Audit , the Court ruled that the enumerated [exceptions under
Sec 12 of SSL] have one thing in common—they belong to one category of privilege called
allowances which are usually granted to officials and employees of the government to defray or
reimburse the expenses incurred in the performance of their official functions. Consequently, if
these allowances are consolidated with the standardized salary rates, then the government official
or employee will be compelled to spend his personal funds in attending to his duties.
COLA is not in the nature of an allowance intended to reimburse expenses incurred by officials
and employees of the government in the performance of their official functions. It is not payment
in consideration of the fulfillment of official duty. As defined, cost of living refers to “the level of
prices relating to a range of everyday items” or “the cost of purchasing those goods and services
which are included in an accepted standard level of consumption.” Based on this premise, COLA is
a benefit intended to cover increases in the cost of living. Thus, it is and should be integrated into
the standardized salary rates. (see Gutierrez v. DBM)
BEP should be integrated into the standardized salary rates
Similar to the COLA, the BEP had been extended by the LBP pursuant to LOI 116. Significantly, LOI
116 directed the payment of a "cost of living allowance." It is more than reasonable to infer that
the BEP is in fact an additional COLA extended to LBP employees under LOI 116. Thus, similar to
the COLA, the payment of the BEP separately from the basic salary cannot be allowed because (1)
it has not been expressly excluded from the general rule on integration by the first sentence of
Sec. 12 of the SSL and (2) it has not been granted to reimburse LBP employees for the expenses
incurred in the performance of their official duties.
The LOIs Extending the COLA and BEP Do Not Prohibit Integration
A closer look at these LOIs would argue against the idea that they prohibit the integration of
either allowance into the basic pay of GFI employees. Nowhere in either issuances is it mandated
that these allowances can only be paid on top of, and separate from, the basic and net pay of the
employees of GFIs. In other words, LOI Nos. 104 and 116 are not controlling in the manner of the
payment of these allowances to the employees.
Even assuming arguendo that these LOIs proscribe the integration of these allowances into the
basic pay, this proscription has been effectively repealed by the SSL under Sec. 16.
As both LOI Nos. 104 and 116 have been promulgated under authority of Sec. 2, PD 985, any
mandate arguably contained in the LOIs regarding the manner of payment of the COLA and/or
the BEP had been effectively revoked by the SSL.
Parenthetically, even before the effectivity of the SSL, the allowances given to GOCCs had already
been tempered by Memorandum Order (MO) No. 177, Series of 1998, issued by then President
Corazon Aquino. Thus, respondents and intervenors’ claim that they have a vested right over the
payment of the COLA and the BEP on top of the monthly basic salary is unfounded. Lest it be
forgotten, the rule is that the payment of a salary may be amended by the power which granted it
in the first place.
LBP Now Has the Autonomy to Design its Compensation Plan
Respondents and intervenors’ reliance on RA 7907 to support their claimed entitlement to COLA
and BEP on top of their basic salaries is, furthermore, misplaced. The law that exempted petitioner
LBP from the coverage of the SSL does not retroactively obliterate the integration rule laid down
in the SSL. Neither did RA 7907 order the separation of the COLA and the BEP from the basic
monthly.
By RA 7907, petitioner LBP had been given sufficient independence and autonomy to design its
own compensation plan, i.e., to decide whether to integrate the COLA and the BEP into the basic
pay. This Court cannot dictate the inclusion of the COLA and BEP contrary to the sound business
judgment of LBP recognized and sustained in RA 7907. In other words, after RA 7907 became
effective, it is with more reason that petitioner LBP cannot be ordered to pay the COLA and the
BEP on top of the basic salary.
Double Compensation
The appellate court found there was in fact an integration of the subject allowances to the basic
pay of the employees of LBP, albeit supposedly insufficient. The actual integration of these
allowances to the basic salary defeats the allegation of a total deprivation and/or withholding of
these allowances. As such, to order the payment of the COLA and the BEP on top of what has
already been paid by LBP—the basic pay with the COLA and the BEP incorporated—will constitute
a prohibited double compensation.
Galang is Not Determinative of the Manner of the Payment of COLA
There is nothing in Galang v. Land Bank of the Philippines that mandates the payment of the
COLA as a separate item from the basic salary of LBP employees. At most, the portion in the fallo
regarding the payment of the COLA from 1990 to 1995 to Galang was merely to put emphasis to
the fact that he was entitled to the allowance he was totally deprived of.
The validity of the integration of the COLA and the BEP into the basic salaries of LBP employees
was never put in issue in that case. Our discussion in Galang even further disproves the
entitlement of LBP employees to COLA up until the finality of the resolution of the case. As we
discussed therein, the COLA had long been replaced by PERA such that there may not even be a
need for the payment of the COLA after its replacement.
SPI Technologies, Inc. vs. Mapua

G.R. No. 191154, 7 April 2014
Facts:
Victoria K. Mapua was hired in 2003 by SPI Technologies, Inc. (SPI) and was the Corporate
Development’s Research/Business Intelligence Unit Head and Manager of the company.
Subsequently the then Vice President and Corporate Development Head, Peter Maquera hired
Elizabeth Nolan as Mapua’s supervisor.
The hard disk on Mapua’s laptop crashed, causing her to lose files and data. Mapua retrieved the
lost data. Yet, Nolan informed Mapua that she was realigning Mapua’s position to become a
subordinate of co-manager Sameer Raina (Raina) due to her missing a work deadline and less than
satisfactory performance.
Mapua saw the new table of organization of the Corporate Development Division which would be
renamed as the Marketing Division. The new structure showed that Mapua’s level will be again
downgraded because a new manager will be hired and positioned between her rank and Raina’s.
Raina informed Mapua over the phone that her position was considered redundant and that she is
terminated from employment effective immediately. She received a termination letter dated
March 21, 2007.
Subsequently, Mapua was sent a third notice of termination dated March 21, 2007 but the date of
effectivity of the termination was changed from March 21 to April 21, 2007. Mapua refused to
receive the notice, thus, a notation "refused to sign and acknowledge" was noted on the letter. On
that same day, SPI filed an Establishment Termination Report with the DOLE-NCR informing the
latter of Mapua’s termination.
Mapua was offered her separation and final pay, which she refused to receive. Before the effective
date of her termination, she no longer reported for work. SPI has not hired a Corporate
Development Manager since then.
Mapua filed with the Labor Arbiter (LA) a complaint for illegal dismissal, claiming reinstatement or
if deemed impossible, for separation pay.
SPI sent a demand letter to Mapua, asking her to pay for the remaining net book value of the
company car assigned to her under SPI’s car plan policy. Under the said plan, Mapua should pay
the remaining net book value of her car if she resigns within five years from start of her
employment date.
In her Reply and Rejoinder, Mapua submitted an affidavit and alleged that Prime Manpower
Resources Development posted an advertisement for Corporate Development Manager in an
unnamed BPO company located in Parañaque City. Mapua suspected that this advertisement was
for SPI because the writing style used was similar to Raina’s. She also claimed that SPI is the only
BPO office in Parañaque City at that time. Thereafter, she applied for the position under the
pseudonym of "Jeanne Tesoro". On the day of her interview with Prime Manpower’s consultant,
Ms. Portia Dimatulac, the latter allegedly revealed to Mapua that SPI contracted Prime
Manpower’s services to search for applicants for the Corporate Development Manager position.
Because of these developments, Mapua was convinced that her former position is not redundant.
SPI stated that the company regularly makes an evaluation and assessment of its
corporate/organizational structure due to the unexpected growth of its business. As a result, SPI
underwent a reorganization of its structure with the objective of streamlining its operations,
embodied in an Inter-Office Memorandum. It was then discovered that the duties of a Corporate
Development Manager could be performed/were actually being performed by other
officers/managers/departments of the company.
The LA ruled that Mapua's dismissal was illegal. SPI was ordered to pay her backwages, separation
pay in lieu of reinstatement, moral and exemplary damages and attorney’s fees totalling
P2,915,332.62.
The NLRC reversed the LA, holding that "[t]he determination of whether [Mapua’s] position as
Corporate Development Manager is redundant is not for her to decide. It essentially and
necessarily lies within the sound business management."
The CA reversed the NLRC decision and reinstated the LA's decision.
Ruling:
Redundancy, Requisites for Validity
For a valid implementation of a redundancy program, the employer must comply with the
following requisites:
(i) written notice served on both the employee and the DOLE at least one month prior to the
intended date of termination;
(ii) payment of separation pay equivalent to at least one month pay or at least one month pay for
every year of service, whichever is higher;
(iii) good faith in abolishing the redundant position; and
(iv) fair and reasonable criteria in ascertaining what positions are to be declared
redundant. (See Asian Alcohol Corporation v. NLRC)
Prior written notice requirement
Anent the first requirement which is written notice served on both the employee and the DOLE at
least one month prior to the intended date of termination, SPI had discharged the burden of
proving that it submitted a notice to the DOLE on March 21, 2007, stating therein that the
effective date of termination is on April 21, 2007. It is, however, quite peculiar that two kinds of
notices were served to Mapua. One termination letter stated that its date of effectivity is on the
same day, March 21, 2007. The other termination letter sent through mail to Mapua’s residence
stated that the effective date of her termination is on April 21, 2007.
The question of the court is, after Mapua initially refused to accept the letter, why did SPI make a
new letter instead of just giving her the first one – which the Court notes was already signed and
witnessed by other employees? Curiously, there was neither allegation nor proof that the original
letter was misplaced or lost which would necessitate the drafting of a new one. SPI did not even
explain in the second letter that the same was being sent in lieu of the one given to her. Hence,
SPI must shoulder the consequence of causing the confusion brought by the variations of
termination letters given to Mapua.
On the matter of separation pay, there is no question that SPI indeed offered separation pay to
Mapua, but the offer must be accompanied with good faith in the abolishment of the redundant
position and fair and reasonable criteria in ascertaining the redundant position. It is insignificant
that the amount offered to Mapua is higher than what the law requires because the Court has
previously noted that "a job is more than the salary that it carries. There is a psychological effect
or a stigma in immediately finding one’s self laid off from work."
Declaration of redundancy of a position, as an exercise of business judgment, must be done in

good faith
SPI asserted that an employer has the unbridled right to conduct its own business in order to
achieve the results it desires. In this regard, may the affidavit provided by SPI which enumerated
the various functions of a Corporate Development Manager being performed by other SPI
employees be considered as sufficient proof to uphold SPI’s redundancy program?
The presentation of the new table of the organization and the certification of the Human
Resources Supervisor that the positions occupied by the retrenched employees are redundant are
inadequate as evidence to support [the] redundancy program. "As they are, they are grossly
inadequate and mainly self-serving. More compelling evidence would have been a comparison of
the old and new staffing patterns, a description of the abolished and newly created positions, and
proof of the set business targets and failure to attain the same which necessitated the
reorganization or streamlining." (See AMA Computer College, Inc. v. Garcia, et al.)
Creation of new position must pertain to new functions, not merely change in job title
Even if we disregard Mapua’s affidavit as regards the Prime Manpower advertisement, SPI
admitted that it caused the Inquirer advertisement for a Marketing Communications Manager
position. Instead of explaining how the functions of a Marketing Communications Manager differ
from a Corporate Development Manager, SPI hardly disputed Mapua. SPI, being the employer,
has possession of valuable information concerning the functions of the offices within its
organization. Nevertheless, it did not even bother to differentiate the two positions.
On the assumption that the functions of a Marketing Communications Manager are different from
that of a Corporate Development Manager, it was not even discussed why Mapua was not
considered for the position. While SPI had no legal duty to hire Mapua as a Marketing
Communications Manager, it could have clarified why she is not qualified for that position.
Of primordial consideration is not the nomenclature or title given to the employee, but the nature
of his functions." "It is not the job title but the actual work that the employee performs." Also,
change in the job title is not synonymous to a change in the functions. A position cannot be
abolished by a mere change of job title. In cases of redundancy, the management should adduce
evidence and prove that a position which was created in place of a previous one should pertain to
functions which are dissimilar and incongruous to the abolished office. (See Caltex (Phils.), Inc.
(now Chevron Phils., Inc.) v. NLRC)
In illegal dismissal cases, corporate officers incur personal liability only under certain conditions
On the issue of the solidary obligation of the corporate officers impleaded vis-à-vis the
corporation for Mapua’s illegal dismissal, "[i]t is hornbook principle that personal liability of
corporate directors, trustees or officers attaches only when:
(a) they assent to a patently unlawful act of the corporation, or when they are guilty of bad faith or
gross negligence in directing its affairs, or when there is a conflict of interest resulting in damages
to the corporation, its stockholders or other persons;
(b) they consent to the issuance of watered down stocks or when, having knowledge of such
issuance, do not forthwith file with the corporate secretary their written objection;
(c) they agree to hold themselves personally and solidarily liable with the corporation; or
(d) they are made by specific provision of law personally answerable for their corporate action."
While the Court finds Mapua’s averments against Villanueva, Nolan, Maquera and Raina as
detailed and exhaustive, the Court takes notice that these are mostly suppositions on her part.
Thus, the Court cannot apply the above-enumerated exceptions when a corporate officer
becomes personally liable for the obligation of a corporation to this case.
Recovery between Employer and Dismissed Employee under Company Car Plan is a matter for the
regular courts, not labor court
With respect to the vehicle under the company car plan which the LA awarded to Mapua, the
Court rules that the subject matter is not within the jurisdiction of the LA but with the regular
courts, the remedy being civil in nature arising from a contractual obligation.
Moral and Exemplary damages
The Court sustains the CA’s award of moral and exemplary damages. Award of moral and
exemplary damages for an illegally dismissed employee is proper where the employee had been
harassed and arbitrarily terminated by the employer. Moral damages may be awarded to
compensate one for diverse injuries such as mental anguish, besmirched reputation, wounded
feelings, and social humiliation occasioned by the employer’s unreasonable dismissal of the
employee. The Court has consistently accorded the working class a right to recover damages for
unjust dismissals tainted with bad faith; where the motive of the employer in dismissing the
employee is far from noble.
The award of such damages is based not on the Labor Code but on Article 220 of the Civil Code.
However, the Court observes that the CA decision affirming the LA’s award of P500,000.00 and
P250,000.00 as moral and exemplary damages, respectively, is evidently excessive because the
purpose for awarding damages is not to enrich the illegally dismissed employee. Consequently,
the Court hereby reduces the amount of P50,000.00 each as moral and exemplary damages.
Attorney’s Fees at 10% of monetary award
Mapua is also entitled to attorney’s fees but the Court is modifying the amount of P196,848.42
awarded by the LA and fix such attorney’s fees in the amount of ten percent (10%) of the total
monetary award, pursuant to Article 111 of the Labor Code.
Tenazas vs. R. Villegas Taxi Transport

G.R. No. 192998, 2 April 2014
Facts:
Bernard Tenazas and Jaime Francisco filed a complaint for illegal dismissal against R. Villegas Taxi
Transport and/or Romualdo Villegas (Romualdo) and Andy Villegas (Andy) (respondents). At that
time, a similar case had already been filed by Isidro Endraca against the same respondents. The
two (2) cases were subsequently consolidated.
Tenazas alleged that he got sideswept by another vehicle causing a dent on his taxi, and the cost
of repair for the damage was estimated at P500.00. Upon reporting the incident to the company,
he was scolded by respondents Romualdo and Andy and was told to leave the garage for he is
already fired. Tenazas reported for work on the following day but was told that he can no longer
drive any of the company’s units as he is already fired.
Francisco, on the other hand, averred that his dismissal was brought about by the company’s
unfounded suspicion that he was organizing a labor union. He was instantaneously terminated,
without the benefit of procedural due process.
Endraca, for his part, alleged that his dismissal was instigated by an occasion when he fell short of
the required boundary for his taxi unit. Before he was dismissed, he brought his taxi unit to an auto
shop for an urgent repair. He was charged the amount of P700.00 for the repair services and the
replacement parts. As a result, he was not able to meet his boundary for the day. His driver’s
license was confiscated and was told to settle the deficiency in his boundary first before his license
will be returned to him.
The respondents admitted that Tenazas and Endraca were employees of the company, the former
being a regular driver and the latter a spare driver. The respondents, however, denied that
Francisco was an employee of the company or that he was able to drive one of the company’s units
at any point in time.
The respondents further alleged that Tenazas was never terminated by the company. They
claimed that Tenazas was told that his taxi is due for overhaul because of some mechanical
defects. He was thus advised to wait for further notice from the company if his unit has already
been fixed. However, upon being informed that his unit is ready for release, Tenazas failed to
report back to work for no apparent reason.
As regards Endraca, the respondents alleged that they hired him as a spare driver. They allow him
to drive a taxi unit whenever their regular driver will not be able to report for work. However,
Endraca stopped reporting for work without informing the company of his reason. Subsequently,
the respondents learned that a complaint for illegal dismissal was filed by Endraca against them.
They strongly maintained, however, that they could never have terminated Endraca in March 2006
since he already stopped reporting for work as early as July 2003. Even then, they expressed
willingness to accommodate Endraca should he wish to work as a spare driver for the company
again since he was never really dismissed from employment anyway.
The petitioners, by registered mail, filed a Motion to Admit Additional Evidence. They alleged that
after diligent efforts, they were able to discover new pieces of evidence that will substantiate the
allegations in their position paper. Attached with the motion are the following: (a) Joint Affidavit
of the petitioners; (2) Affidavit of Good Faith of Aloney Rivera, a co-driver; (3) pictures of the
petitioners wearing company shirts; and (4) Tenazas’ Certification/Record of Social Security
System (SSS) contributions.
The Labor Arbiter ruled that "the complaint herein is one of actual dismissal. But there was no
formal investigations, no show cause memos, suspension memos or termination memos were
never issued. Otherwise stated, there is no proof of overt act of dismissal committed by herein
respondents." Thus, there was no illegal dismissal.
The NLRC reversed the appealed decision of the LA, holding that the additional pieces of
evidence belatedly submitted by the petitioners sufficed to establish the existence of employer-
employee relationship and their illegal dismissal.
The CA agreed with the NLRC’s finding that Tenazas and Endraca were employees of the
company, but ruled otherwise in the case of Francisco for failing to establish his relationship with
the company. It also deleted the award of separation pay and ordered for the reinstatement of
Tenazas and Endraca.
Ruling:
Judicial review of decisions of the NLRC
In reviewing the decision of the NLRC, the CA found that no substantial evidence was presented
to support the conclusion that Francisco was an employee of the respondents and accordingly
modified the NLRC decision. It stressed that with the respondents’ denial of employer-employee
relationship, it behooved Francisco to present substantial evidence to prove that he is an
employee before any question on the legality of his supposed dismissal becomes appropriate for
discussion. Francisco, however, did not offer evidence to substantiate his claim of employment
with the respondents. Short of the required quantum of proof, the CA correctly ruled that the
NLRC’s finding of illegal dismissal and the monetary awards which necessarily follow such ruling
lacked factual and legal basis and must therefore be deleted.
[J]udicial review of decisions of the NLRC via petition for certiorari under Rule 65, as a general
rule, is confined only to issues of lack or excess of jurisiction and grave abuse of discretion on the
part of the NLRC. The CA does not assess and weigh the sufficiency of evidence upon which the LA
and the NLRC based their conclusions. The issue is limited to the determination of whether or not
the NLRC acted without or in excess of its jurisdiction, or with grave abuse of discretion in
rendering the resolution, except if the findings of the NLRC are not supported by substantial
evidence. (See Anonas Construction and Industrial Supply Corp., et al. v. NLRC, et al.)
Quantum of proof in labor cases
It is an oft-repeated rule that in labor cases, as in other administrative and quasi-judicial

proceedings, "the quantum of proof necessary is substantial evidence, or such amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion." "[T]he
burden of proof rests upon the party who asserts the affirmative of an issue." Corollarily, as
Francisco was claiming to be an employee of the respondents, it is incumbent upon him to proffer
evidence to prove the existence of said relationship.
Evidence required to prove employer-employee relationship
In this case, however, Francisco failed to present any proof substantial enough to establish his
relationship with the respondents. He failed to present documentary evidence like attendance
logbook, payroll, SSS record or any personnel file that could somehow depict his status as an
employee. Anent his claim that he was not issued with employment records, he could have, at
least, produced his social security records which state his contributions, name and address of his
employer, as his co-petitioner Tenazas did. He could have also presented testimonial evidence
showing the respondents’ exercise of control over the means and methods by which he undertakes
his work.
No particular form of evidence is required to prove the existence of an employer-employee

relationship. Any competent and relevant evidence to prove the relationship may be admitted.
For, if only documentary evidence would be required to show that relationship, no scheming
employer would ever be brought before the bar of justice, as no employer would wish to come out
with any trace of the illegality he has authored considering that it should take much weightier
proof to invalidate a written instrument. (See Opulencia Ice Plant and Storage v. NLRC)
Francisco simply relied on his allegation that he was an employee of the company without any
other evidence supporting his claim. Unfortunately for him, a mere allegation in the position
paper is not tantamount to evidence. Bereft of any evidence, the CA correctly ruled that Francisco
could not be considered an employee of the respondents.
In case of illegal dismissal, separation pay awarded only if reinstatement no longer practical or
feasible
The CA’s order of reinstatement of Tenazas and Endraca, instead of the payment of separation
pay, is also well in accordance with prevailing jurisprudence. [A]n illegally dismissed employee is
entitled to two reliefs: backwages and reinstatement. The two reliefs provided are separate and
distinct.
In instances where reinstatement is no longer feasible because of strained relations between the
employee and the employer, separation pay is granted. In effect, an illegally dismissed employee
is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable,
and backwages.
The normal consequences of respondents’ illegal dismissal, then, are reinstatement without loss of
seniority rights, and payment of backwages computed from the time compensation was withheld
up to the date of actual reinstatement. Where reinstatement is no longer viable as an option,
separation pay equivalent to one (1) month salary for every year of service should be awarded as
an alternative. The payment of separation pay is in addition to payment of backwages. (See
Macasero v. Southern Industrial Gases Philippines)
It is only when reinstatement is no longer feasible that the payment of separation pay is ordered in
lieu thereof. For instance, if reinstatement would only exacerbate the tension and strained
relations between the parties, or where the relationship between the employer and the employee
has been unduly strained by reason of their irreconcilable differences, it would be more prudent
to order payment of separation pay instead of reinstatement.
Doctrine of strained relations
This doctrine of strained relations, however, should not be used recklessly or applied loosely nor
be based on impression alone. "It bears to stress that reinstatement is the rule and, for the
exception of strained relations to apply, it should be proved that it is likely that if reinstated, an
atmosphere of antipathy and antagonism would be generated as to adversely affect the efficiency
and productivity of the employee concerned."
Strained relations must be demonstrated as a fact, however, to be adequately supported by

evidence—substantial evidence to show that the relationship between the employer and the
employee is indeed strained as a necessary consequence of the judicial controversy. (See Golden
Ace Builders v. Talde)
After a perusal of the NLRC decision, this Court failed to find the factual basis of the award of
separation pay to the petitioners. The NLRC decision did not state the facts which demonstrate
that reinstatement is no longer a feasible option that could have justified the alternative relief of
granting separation pay instead.
Finally, the Court finds the computation of the petitioners' backwages at the rate of P800.00 daily
reasonable and just under the circumstances. The said rate is consistent with the ruling of this
Court in Hyatt Taxi Services, Inc. v. Catinoy, which dealt with the same matter.
United Philippine Lines, Inc. vs. Sibug

G.R. No. 201072, 2 April 2014
Facts:
Petitioners United Philippine Lines, Inc. and Holland America Line hired Generoso Sibug as waste
handler on board the vessel MIS Volendam. Sibug fell from a ladder on the job and injured his
knee. He was repatriated and had anterior cruciate ligament (ACL) reconstruction surgery, then
declared fit to work after recovering.
Sibug sought reemployment and was re-hired by petitioners in the same capacity for the vessel
M/S Ryndam. On board Ryndam, Sibug met another accident while driving a forklift and injured
his right hand and wrist. After repatriation and surgery, the company-designated doctor issued a
medical report that Sibug has a permanent but incomplete disability, specifying it as a grade 10
disability.
Sibug filed two complaints for disability benefits, illness allowance, damages and attorney’s fees
against petitioners for both instances. The Labor Arbiter (LA) dismissed the Volendam case on the
ground that Sibug was declared fit to work after his ACL reconstruction surgery and was re-
employed. As regards the Ryndam case, the Labor Arbiter awarded to Sibug US$10,075 which is
the equivalent award for the grade 10 disability rating issued by the company-designated doctor.
The National Labor Relations Commission (NLRC) reversed the Labor Arbiter’s Decision. It ruled
that Sibug is entitled to permanent and total disability benefit of US$60,000 for his Volendam
injury and another US$60,000 for his Ryndam injury. It also awarded attorney’s fees to Sibug. On
reconsideration, the NLRC reversed itself and reinstated the LA's decision.
The CA however reinstated the NLRC's first decision. It ruled that Sibug was unable to perform his
customary work for more than 120 days on account of his Volendam and Ryndam injuries. Thus, he
is entitled to permanent and total disability benefit for both injuries.
Ruling:
Permanent and Total Disability
The Petition is partly meritorious. Sibug is not entitled to permanent and total disability benefit
for his Volendam injury. But he is entitled to permanent and total disability benefit for his Ryndam
injury and to attorney’s fees.
Sibug is not entitled to permanent and total disability benefit for his Volendam injury since he
became already fit to work again as a seaman. He was also declared fit for sea service after his
pre-employment medical examination when he sought reemployment with petitioners. The
medical certificate declaring Sibug fit for sea service even bears his signature. And he was able to
work again in the same capacity as waste handler in Ryndam.
As regards his Ryndam injury, Sibug is entitled to permanent and total disability benefit
amounting to US$60,000.
The following are circumstances when a seaman may be allowed to pursue an action for
permanent and total disability benefits:
(a) The company-designated physician failed to issue a declaration as to his fitness to engage in
sea duty or disability even after the lapse of the 120-day period and there is no indication that
further medical treatment would address his temporary total disability, hence, justify an extension
of the period to 240 days;
(b) 240 days had lapsed without any certification issued by the company-designated physician;
(c) The company-designated physician declared that he is fit for sea duty within the 120-day or
240-day period, as the case may be, but his physician of choice and the doctor chosen under
Section 20-B(3) of the POEA-SEC are of a contrary opinion;
(d) The company-designated physician acknowledged that he is partially permanently disabled

but other doctors who he consulted, on his own and jointly with his employer, believed that his
disability is not only permanent but total as well;
(e) The company-designated physician recognized that he is totally and permanently disabled but
there is a dispute on the disability grading;
(f) The company-designated physician determined that his medical condition is not compensable
or work-related under the POEA-SEC but his doctor-of-choice and the third doctor selected under
Section 20-B(3) of the POEA-SEC found otherwise and declared him unfit to work;
(g) The company-designated physician declared him totally and permanently disabled but the
employer refuses to pay him the corresponding benefits; and
(h) The company-designated physician declared him partially and permanently disabled within
the 120-day or 240-day period but he remains incapacitated to perform his usual sea duties after
the lapse of said periods. (See Millan v. Wallem Maritime Services, Inc.)
After lapse of 240 days without certification from company-designated physician, disability is
legally deemed Permanent and Total
Paragraph (b) applies to Sibug’s case. The company-designated doctor failed to issue a
certification with a definite assessment of the degree of Sibug’s disability for his Ryndam injury
within 240 days.
Company-designated physician must arrive at a definite assessment of the seafarer’s fitness to

work or permanent disability within the period of 120 or 240 days, pursuant to Article 192 (c)(1) of
the Labor Code and Rule X, Section 2 of the Amended Rules on Employees Compensation. If he
fails to do so and the seafarer’s medical condition remains unresolved, the latter shall be deemed
totally and permanently disabled. This definite assessment of the seaman’s permanent disability
must include the degree of his disability, as required by Section 20-B of the POEA-SEC. (See Fil-
Pride Shipping Company, Inc., et al. v. Balasta)
The company-designated doctor must declare the seaman fit to work or assess the degree of his
permanent disability. (See Oriental Shipmanagement Co., Inc. v. Bastol)
In this case, Sibug was repatriated and arrived in the country on January 15, 2007 after his Ryndam
injury. He had surgery on his injured hand. On September 7, 2007, the company-designated
doctor issued a medical report that Sibug has a permanent but incomplete disability. But this
medical report failed to state the degree of Sibug’s disability. Only in an email dated September
28, 2007 was Sibug’s disability from his Ryndam injury classified as a grade 10 disability by the
company-designated doctor. By that time, however, the 240-day extended period when the
company-designated doctor must give the definite assessment of Sibug’s disability had lapsed.
From January 15, 2007 to September 28, 2007 is 256 days. Hence, Sibug’s disability is already
deemed permanent and total.
In Magsaysay Maritime Corporation v. Lobusta, the Court also affirmed the award of US$60,000 as
permanent and total disability benefit when after the lapse of 240 days there was no declaration
of Lobusta’s permanent disability.
Award of Attorney’s Fees

In addition, the Court grants Sibug attorney’s fees of US$6,000 since he was forced to litigate to
protect his valid claim. Where an employee is forced to litigate and incur expenses to protect his
right and interest, he is entitled to an award of attorney’s fees equivalent to 10% of the award.
Universidad De Sta. Isabel vs. Sambajon, Jr.

G.R. Nos. 196280 & 196286, 2 April 2014
Facts:
Universidad de Sta. Isabel (petitioner) is a non-stock, non-profit religious educational institution

in Naga City. Petitioner hired Marvin-Julian L. Sambajon, Jr. (respondent) as a full-time college
faculty member with the rank of Assistant Professor on probationary status.
After the original contract expired, petitioner continued to give teaching loads to Sambajon who
remained a full-time faculty member.
After Sambajon completed his course in Master of Arts in Education, major in Guidance and
Counseling, he submitted the corresponding Special Order from the Commission on Higher
Education (CHED), together with his credentials for the said master’s degree, to the Human
Resources Department of petitioner for the purpose of salary adjustment/increase. Subsequently,
Sambajon’s salary was increased starting October 1-15, 2004. He was likewise re-ranked from
Assistant Professor to Associate Professor.
Sambajon vigorously argued that his salary increase should be made effective as of June 2003 and
demanded the payment of his salary differential. The school administration thru Sr. Purita
Gatongay, D.C., replied by explaining its policy on re-ranking of faculty members, that teachers in
the Universidad are not re-ranked during their probationary period. Sambajon pointed out that a
fellow colleague also on probationary status had his salary supposedly adjusted by petitioner at
the start of school year (June) after he/she had completed his/her master’s degree in March.
A dialogue was held between the parties to no avail. Sambajon received his letter of termination.
He filed a complaint for illegal dismissal against the petitioner. The Labor Arbiter ruled that there
was no just or authorized cause in the termination of Sambajon’s probationary employment.
Consequently, petitioner was found liable for illegal dismissal.
Petitioner appealed to the NLRC raising the issue of the correct interpretation of Section 92 of
the Manual of Regulations for Private Schools and DOLE-DECS-CHED-TESDA Order No. 01, series
of 1996, insofar as the probationary period for teachers. The NLRC rendered its Decision affirming
the Labor Arbiter and holding that Sambajon had acquired a permanent status pursuant to
Sections 91, 92 and 93 of the 1992 Manual of Regulations for Private Schools, in relation to Article
281 of the Labor Code, as amended.
Petitioner and Sambajon sought reconsideration of the above decision, with the former
contending that the NLRC resolved an issue not raised in the appeal memorandum, while the
latter asserted that the NLRC erred in not awarding him full back wages so as to conform to the
finding that he had acquired a permanent status. Both motions were denied by the NLRC which
ruled that regardless of whether or not the parties were aware of the rules for the acquisition of
permanent status by private school teachers, these rules applied to them and overrode their
mistaken beliefs. As to Sambajon’s plea for back wages, the NLRC said the award of back wages
was not done in this case because Sambajon did not appeal the Labor Arbiter’s decision.
Both parties filed separate appeals before the CA. The CA sustained the conclusion of the NLRC
that Sambajon had already acquired permanent status when he was allowed to continue teaching
after the expiration of his first appointment-contract on March 30, 2003. However, the CA found
it necessary to modify the decision of the NLRC to include the award of back wages to Sambajon.
Ruling:
NLRC shall limit itself to the issues raised on appeal
Section 4(d), Rule VI of the 2005 Revised Rules of Procedure of the NLRC, which was in force at
the time petitioner appealed the Labor Arbiter’s decision, expressly provided that, on appeal, the
NLRC shall limit itself only to the specific issues that were elevated for review. The clear import of
the aforementioned procedural rule is that the NLRC shall, in cases of perfected appeals, limit
itself to reviewing those issues which are raised on appeal. As a consequence thereof, any other
issues which were not included in the appeal shall become final and executory.
Petitioner sought the correct interpretation of the Manual of Regulations for Private School
Teachers and DOLE-DECS-CHED-TESDA Order No. 01, series of 1996, insofar as the probationary
period for teachers. In reviewing the Labor Arbiter’s finding of illegal dismissal, the NLRC
concluded that Simbajon had already attained regular status after the expiration of his first
appointment contract as probationary employee. Such conclusion was but a logical result of the
NLRC’s own interpretation of the law. Since petitioner elevated the questions of the validity of
respondent’s dismissal and the applicable probationary period under the aforesaid regulations,
the NLRC did not gravely abuse its discretion in fully resolving the said issues.
Probationary Employment Period
A probationary employee is one who is on trial by the employer during which the employer
determines whether or not said employee is qualified for permanent employment. A probationary
appointment is made to afford the employer an opportunity to observe the fitness of a
probationary employee while at work, and to ascertain whether he will become a proper and
efficient employee. The word probationary as used to describe the period of employment implies
the purpose of the term or period, but not its length.
It is well settled that the employer has the right or is at liberty to choose who will be hired and
who will be denied employment. In that sense, it is within the exercise of the right to select his
employees that the employer may set or fix a probationary period within which the latter may test
and observe the conduct of the former before hiring him permanently. The law, however,
regulates the exercise of this prerogative to fix the period of probationary employment. While
there is no statutory cap on the minimum term of probation, the law sets a maximum "trial period"
during which the employer may test the fitness and efficiency of the employee.
Probationary and Permanent Status of teachers is governed primarily by the Manual of

Regulations for Private Schools, and not the Labor Code
The probationary employment of teachers in private schools is not governed purely by the Labor
Code. The Labor Code is supplemented with respect to the period of probation by special rules
found in the Manual of Regulations for Private Schools.
On the matter of probationary period, Section 92 of the 1992 Manual of Regulations for Private
Schools regulations states that "[s]ubject in all instances to compliance with the Department and
school requirements, the probationary period for academic personnel shall not be more than
three (3) consecutive years of satisfactory service for those in the elementary and secondary levels,
six (6) consecutive regular semesters of satisfactory service for those in the tertiary level, and nine
(9) consecutive trimesters of satisfactory service for those in the tertiary level where collegiate
courses are offered on a trimester basis."
It is the Manual of Regulations for Private Schools, and not the Labor Code, that determines
whether or not a faculty member in an educational institution has attained regular or permanent
status. Section 93 of the 1992 Manual of Regulations for Private Schools provides that full-time
teachers who have satisfactorily completed their probationary period shall be considered regular
or permanent.
Since it was explicitly provided in the third appointment contract dated February 26, 2004 that
unless renewed in writing Sambajon’s appointment automatically expires at the end of the
stipulated period of employment, the CA erred in concluding that simply because the word
"probationary" no longer appears below the designation (Full-Time Faculty Member), Simbajon
had already become a permanent employee. Noteworthy is Sambajon’s admission of being still
under probationary period in his letter to Sr. Evidente reiterating his demand for salary
differential, which letter was sent almost one year after he signed the February 26, 2004
appointment contract.
Probationary employment period may be reduced by the parties
Sambajon nonetheless claims that subsequently, the probationary period of three years under the
regulations was shortened by petitioner as relayed to him by Sr. Evidente herself. However, the
latter, together with Sr. Real, categorically denied having informed Sambajon that his
probationary period was abbreviated, allegedly the reason his salary adjustment was not made
retroactive. Apart from his bare assertion, Sambajon has not adduced proof of any decision of the
school administration to shorten his probationary period.
The three (3)-year period of service mentioned in paragraph 75 [of the Manual of Regulations for
Private Schools] is of course the maximum period or upper limit of probationary employment
allowed in the case of private school teachers. This necessarily implies that a regular or permanent
employment status may, under certain conditions, be attained in less than three (3) years. By and
large, however, whether or not one has indeed attained permanent status in one’s employment,
before the passage of three (3) years, is a matter of proof. (See Rev. Fr. Labajo v. Alejandro)
There can be no dispute that the period of probation may be reduced if the employer, convinced
of the fitness and efficiency of a probationary employee, voluntarily extends a permanent
appointment even before the three-year period ends. Conversely, if the purpose sought by the
employer is neither attained nor attainable within the said period, the law does not preclude the
employer from terminating the probationary employment on justifiable ground; or, a shorter
probationary period may be incorporated in a collective bargaining agreement. But absent any
circumstances which unmistakably show that an abbreviated probationary period has been agreed
upon, the three-year probationary term governs.
Renewal of employment contract of probationary teacher does not automatically make his status
permanent or regular, probationary status continues within the three year period
As to the Certificate of Employment, it simply stated that Sambajon "was a full time faculty
member in the Religious Education Department of this same institution" and that he holds the
rank of Associate Professor. There was no description or qualification of respondent’s employment
as regular or permanent. It bears stressing that full-time teaching primarily refers to the extent of
services rendered by the teacher to the employer school and not to the nature of his appointment.
Its significance lies in the rule that only full-time teaching personnel can acquire regular or
permanent status.
The circumstance that Sambajon’s services were hired on semester basis did not negate the
applicable probationary period, which is three school years or six consecutive semesters. The
common practice is for the employer and the teacher to enter into a contract, effective for one
school year. At the end of the school year, the employer has the option not to renew the contract,
particularly considering the teacher’s performance. If the contract is not renewed, the
employment relationship terminates. If the contract is renewed, usually for another school year,
the probationary employment continues. Again, at the end of that period, the parties may opt to
renew or not to renew the contract. If renewed, this second renewal of the contract for another
school year would then be the last year – since it would be the third school year – of probationary
employment. At the end of this third year, the employer may now decide whether to extend a
permanent appointment to the employee, primarily on the basis of the employee having met the
reasonable standards of competence and efficiency set by the employer. For the entire duration of
this three-year period, the teacher remains under probation. Upon the expiration of his contract
of employment, being simply on probation, he cannot automatically claim security of tenure and
compel the employer to renew his employment contract. It is when the yearly contract is renewed
for the third time that Section 93 of the Manual becomes operative, and the teacher then is
entitled to regular or permanent employment status. (See Magis Young Achievers’ Learning
Center v. Manalo)
The teacher remains under probation for the entire duration of the three-year period.
Subsequently, in the case of Mercado v. AMA Computer College-Parañaque City, Inc . the Court
recognized the right of respondent school to determine for itself that it shall use fixed-term
employment contracts as its medium for hiring its teachers. Nevertheless, the Court held that the
teachers’ probationary status should not be disregarded simply because their contracts were
fixed-term.
Employee enjoys security of tenure even during period of probation
Notwithstanding the limited engagement of probationary employees, they are entitled to

constitutional protection of security of tenure during and before the end of the probationary
period. The services of an employee who has been engaged on probationary basis may be
terminated for any of the following: (a) a just or (b) an authorized cause; and (c) when he fails to
qualify as a regular employee in accordance with reasonable standards prescribed by the

employer.
Thus, while no vested right to a permanent appointment had as yet accrued in favor of Sambajon
since he had not completed the prerequisite three-year period (six consecutive semesters)
necessary for the acquisition of permanent status as required by the Manual of Regulations for
Private Schools -- which has the force of law -- he enjoys a limited tenure. During the said
probationary period, he cannot be terminated except for just or authorized causes, or if he fails to
qualify in accordance with reasonable standards prescribed by petitioner for the acquisition of
permanent status of its teaching personnel.
Illegal Dismissal
Sambajon’s termination after five semesters of satisfactory service was illegal. He is entitled to
continue his three-year probationary period. However, given the discordant relations that had
arisen from the parties’ dispute, it can be inferred with certainty that petitioner had opted not to
retain respondent in its employ beyond the three-year period.
On the appropriate relief and damages, we adhere to our disposition in Magis Young Achievers’
Learning Center: the award of backwages as a consequence of the finding of illegal dismissal in
favor of respondent should be confined to the three-year probationary period, inclusive of
proportionate 13th month pay.
Wenphil Corporation vs. Abing and Tuazon

G.R. No. 207983, 7 April 2014
Facts:
This case stemmed from a complaint for illegal dismissal filed by the respondents Almer Abing and
Annabelle Tuazon against Wenphil Corporation.
The LA ruled that the respondents had been illegally dismissed by Wenphil since the allegation of
serious misconduct against the respondents had no factual and legal basis.
Wenphil and the respondents entered into a compromise agreement before the LA. They agreed
to the respondents’ payroll reinstatement while Wenphil’s appeal with the NLRC was ongoing.
Wenphil also agreed to pay the accumulated salaries of the respondents for the payroll period
from April 5, 2001 until October 15, 2001. As for the remaining payroll period starting October
16, 2001, Wenphil committed itself to credit the respective salaries of the respondents to their
ATM payroll accounts until such time that the questioned decision of LA Bartolabac is either
modified, amended or reversed by the Honorable National Labor Relations Commission .
The NLRC issued a resolution affirming the LA's decision with modifications. Instead of ordering
the respondents’ reinstatement, the NLRC directed Wenphil to pay the respondents their
respective separation pay at the rate of one (1) month salary for every year of service. Also, the
NLRC found that while the respondents had been illegally dismissed, they had not been illegally
suspended. Thus, the period from February 3 to February 28, 2000 during which the respondents
were on preventive suspension – was excluded by the NLRC in the computation of the
respondents’ backwages.
Wenphil thereafter went up to the CA via a petition for certiorari. The CA reversed the NLRC and
found that respondents’ dismissal was for a valid cause. The SC affirmed the CA and the decision
became final and executory on February 15, 2007.
After the SC decision became final and executory, the respondents filed with LA Bartolabac a
motion for computation for the backwages they are entitled to from the time of their dismissal
until the NLRC’s decision finding them to be illegally dismissed was reversed with finality. The LA
granted their motion and directed Wenphil to pay each complainant their salaries on
reinstatement covering the period from February 15, 2002 (the date Wenphil last paid the
respondents’ respective salaries) to November 8, 2002 (since the NLRC’s decision finding the
respondents illegally dismissed became final and executory on February 28, 2002).
Notwithstanding the appeal by both parties, the NLRC affirmed the LA’s computation.
The CA reversed the NLRC and prescribed a different computation period.
The CA cited the case of Pfizer v. Velasco where this Court ruled that even if the order of
reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the
employer to reinstate and pay the dismissed employee’s wages during the period of appeal until
reversal by the higher court. The CA construed this "higher court" to be the CA, not the SC. Thus,
the period for computation should end when it (CA) promulgated its decision reversing that of the
NLRC, and not on the date when the SC affirmed its decision.
Wenphil reiterates that under the compromise agreement the parties executed before the LA,
Wenphil’s obligation to pay the respondents’ backwages should cease as soon as LA Bartolabac’s
decision was “modified, amended or reversed” by the NLRC. Since the NLRC modified the LA’s
ruling by ordering the payment of separation pay in lieu of reinstatement, then the respondents
were entitled to backwages only up to the finality of the NLRC decision.
Ruling:
Employee entitled to collect wages during period of reinstatement pending appeal until finding
of illegal dismissal is reversed
An order of reinstatement is immediately executory even pending appeal. The employer has the
obligation to reinstate and pay the wages of the dismissed employee during the period of appeal
until reversal by the higher court.
Under Article 223 of the Labor Code, "the decision of the Labor Arbiter reinstating a dismissed or
separated employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work under the
same terms and conditions prevailing prior to his dismissal or separation, or at the option of the
employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay
the execution for reinstatement."
Since the decision is immediately executory, it is the duty of the employer to comply with the
order of reinstatement, which can be done either actually or through payroll reinstatement. As
provided under Article 223 of the Labor Code, this immediately executory nature of an order of
reinstatement is not affected by the existence of an ongoing appeal. The employer has the duty to
reinstate the employee in the interim period until a reversal is decreed by a higher court or
tribunal.
If the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part
of the employer to reinstate and pay the wages of the dismissed employee during the period of
appeal until reversal by the higher court.
Payroll reinstatement
In the case of payroll reinstatement, even if the employer’s appeal turns the tide in its favor, the
reinstated employee has no duty to return or reimburse the salary he received during the period
that the lower court or tribunal’s governing decision was for the employee’s illegal dismissal.
Notably, the option of payroll reinstatement belongs to the employer, even if the employee is
able and raring to return to work. (See Garcia v. Philippine Airlines)
Separation pay not a substitute for payment of backwages
The reinstatement salaries due to the respondents were, by their nature, payment of unworked
backwages. These were salaries due to the respondents because they had been prevented from
working despite the LA and the NLRC findings that they had been illegally dismissed.
Reinstatement and backwages are two separate reliefs available to an illegally dismissed
employee. The normal consequences of a finding that an employee has been illegally dismissed
are: first, that the employee becomes entitled to reinstatement to his former position without loss
of seniority rights; and second, the payment of backwages covers the period running from his
illegal dismissal up to his actual reinstatement. These two reliefs are not inconsistent with one
another and the labor arbiter can award both simultaneously.
Moreover, the relief of separation pay may be granted in lieu of reinstatement but it cannot be a
substitute for the payment of backwages. In instances where reinstatement is no longer feasible
because of strained relations between the employee and the employer, separation pay should be
granted. In effect, an illegally dismissed employee should be entitled to either reinstatement – if
viable, or separation pay if reinstatement is no longer be viable, plus backwages in either instance.
Apparently, when the NLRC changed the LA’s decision (specifically, the order to award separation
pay in lieu of reinstatement), Wenphil read this to mean to be the "modification" envisioned in
the compromise agreement, Wenphil likewise effectively concluded that separation pay and
backwages are the same or are interchangeable reliefs. This conclusion can be deduced from
Wenphil’s insistence not to pay the respondent’s remaining backwages under its erroneous
reasoning that this was the effect of the NLRC’s order to Wenphil to pay separation pay in lieu of
reinstatement.
The basis for the payment of backwages is different from that of the award of separation pay.
Separation pay is granted where reinstatement is no longer advisable because of strained
relations between the employee and the employer. Backwages represent compensation that
should have been earned but were not collected because of the unjust dismissal. The basis for
computing separation pay is usually the length of the employee’s past service, while that for
backwages is the actual period when the employee was unlawfully prevented from working.
Had Wenphil really wanted to put a stop to the running of the period for the payment of the
respondents’ backwages, then it should have immediately complied with the NLRC’s order to
award the employees their separation pay in lieu of reinstatement. This action would have
immediately severed the employer-employee relationship. However, the records are bereft of any
evidence that Wenphil actually paid the respondents’ separation pay. Thus, the employer-
employee relationship between Wenphil and the respondents never ceased and the employment
status remained pending and uncertain until the CA actually rendered its decision that the
respondents had not been illegally dismissed. In the context of the parties’ agreement, it was only
at this point that the payment of backwages should have stopped.
In the present case, the parties’ compromise agreement simply provided that Wenphil’s
obligation to pay the respondents’ backwages shall end the moment the NLRC modifies, amends
or reverses the illegal dismissal decision of LA Bartolabac. On its face, there is nothing invalid with
such stipulation. Indeed, had the NLRC reversed the LA, the obligation to pay backwages would
have stopped. The NLRC, however, did not decree a reversal of the finding of illegal dismissal. In
fact, it affirmed the illegal dismissal conclusion, confining itself merely to a modification of the
consequences of the illegal dismissal – from reinstatement to the payment of separation pay.
This "modification" cannot be accepted; the option under the legal policy is solely limited to a
ruling that the respondents had not been illegally dismissed. Otherwise, we would be violating the
Labor Code’s policy entitling illegally dismissed employees to their right to backwages even
during the period of appeal.
Separation pay cannot be a substitute for backwages but only for reinstatement. The award of
separation pay is not inconsistent with the payment of backwages. Thus, until a higher court’s or
tribunal’s reversal of the finding that an employee had been illegally dismissed, the employee
would be entitled to receive his reinstatement salary or backwages during the period of appeal
until such reversal.
Computation of backwages
The period for computing the backwages due to the respondents during the period of appeal
should end on the date that a higher court reversed the labor arbitration ruling of illegal dismissal.
In this case, the higher court which first reversed the NLRC’s ruling was not the SC but rather the
CA. In this light, the CA was correct when it found that that the period of computation should end
on August 27, 2003. The date when the SC’s decision became final and executory need not matter
as the rule in jurisprudence merely referred to the date of reversal, not the date of the ultimate
finality of such reversal.

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Labor Standards Law - Recent Jurisprudence

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Recent Jurisprudence (April 2012 – March 2015) Lab Stand

ELEAZAR S. PADILLO v. RURAL BANK OF NABUNTURAN, INC., ET AL.

What remains applicable, however, is the Labor Code provision on retirement. In

In case of retirement, the employee shall be entitled to receive such retirement

In the absence of a retirement plan or agreement providing for retirement benefits

ROLANDO DS. TORRES v. RURAL BANK OF SAN JUAN, INC. ET AL.

Whether the petitioner was validly dismissed from employment

distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.

THE ORCHARD GOLF AND COUNTRY CLUB v. AMELIA R. FRANCISCO

Employee’s transfer without basis, resulting to her demotion is tantamount to constructive

Whether the transfer of Francisco can be considered constructive dismissal

ROLANDO L. CERVANTES v. PAL MARITIME CORPORATION and/or WESTERN SHIPPING

NELSON B. GAN vs. GALDERMA PHILIPPINES, INC. and ROSENDO C. VENERACION

Dismissal of Employee; Authorized Cause; Redundancy: The characterization of an employee’s

While it is true that the “characterization of an employee’s services as superfluous or no

RICARDO E. VERGARA, JR. v. COCA-COLA BOTTLERS PHILIPPINES, INC.,

The LA rendered a decision in favor of petitioner, directing respondent to reimburse the

In compliance with the decision,TAWTRASCO directed the petitioner to report at the

An employee who is unjustly dismissed from work shall be entitled to reinstatement

their service contract with Banco de Oro.

Temporary displacement or temporary off-detail of security guard is, generally, allowed in

ROYAL PLANT WORKERS UNION v.

Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation engaged in the

A Valid Exercise of Management Prerogative

No Violation of Article 100 of the Labor Code

ZENAIDA D. MENDOZA v. HMS CREDIT CORPORATION, et. al.

Timely filing of the appeal before the NLRC

Art. 223. x x x In case of a judgment involving a monetary award, an appeal by

Illegal dismissal of Mendoza

Whose disability assessment should prevail in a maritime disability claim–the fit-to-work

1. Whether Fianza abandoned his work

Fianza did not abandon his work

Fianza is a regular employee

Respondent Eddie Albarico (Albarico) was a regular employee of petitioner 7K

In April of 1993, the chief operating officer of petitioner 7K Corporation terminated

On 18 November 2005, the NCMB voluntary arbitrator rendered a Decision finding

The Petition is denied for being devoid of merit.

MANILA JOCKEY CLUB, INC. v. AIMEE TRAJANO

G.R. No. 160982, June 26, 2013

Bañas was grossly and habitually neglectful of his duties

Respondent Arthur Cabusas (respondent) was hired by petitioner Primary Structures

There is no showing of respondent's intent to sever the employer-employee relationship. It

Whether the petitioner is entitled for additional retirement benefit

Applying the foregoing provisions of PD No. 1638 to the circumstances surrounding

Respondent Elpidio Rodriguez was employed as a bus conductor. He entered into an

Whether respondent Rodriguez was validly dismissed

An illegally dismissed employee is entitled to the twin remedies of reinstatement and

In asserting the existence of an employer-employee relationship, Rosario alleges that her

Reinstatement or payment of separation pay and award of backwages is proper only in

Reinstatement or payment of separation pay, and award of backwages is proper only in

MELINDA L. OCAMPO v. COMMISSION ON AUDIT

VIGILLA, ET. AL. v. PHILIPPINE COLLEGE OF CRIMINOLOGY, INC.

employees or maintenance personnel under MBMSI. In September, 2009, the dismissed

Whether MBMSI is solidarily liable with PCCr

The certification issued by the Philippine Overseas Employment Administration that

We reiterate the findings of the Court of Appeals, to wit:

In the case at bar, it cannot be doubted that both accused-appellants

Accordingly, since only an informal inquiry was conducted in investigating Gonzaga’s

UNILEVER PHILIPPINES v. MARIA RUBY M. RIVERA

1. Whether respondent, a validly dismissed employee, is entitled to an award of separation pay

The coverage of the term legal dependent as used in a stipulation in a collective

Respondent Michael Alfante was hired by petitioner Philippine Journalists, Inc., as

Petitioner denied liabilities as far as respondents‘ monetary claims are concerned.